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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 June 30, 2022

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 8, 2022, the registrant had 58,881,833 shares of common stock, $0.0001 par value per share, outstanding.

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Table of Contents

 

 

Page

PART I.

FINANCIAL INFORMATION

6

Item 1.

Financial Statements:

6

Consolidated Balance Sheets as of June 30, 2022 (unaudited) and December 31, 2021

6

Consolidated Statements of Operations and Comprehensive Loss for the three and six months ended June 30, 2022 and 2021 (unaudited)

7

Consolidated Statements of Changes in Convertible Preferred Stock and Stockholders’ Equity (Deficit) for the three and six months ended June 30, 2022 and 2021 (unaudited)

8

Consolidated Statements of Cash Flows for the six months ended June 30, 2022 and 2021 (unaudited)

9

Notes to Unaudited Consolidated Financial Statements

10

Item 2.

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

34

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

49

Item 4.

Controls and Procedures

49

PART II.

OTHER INFORMATION

51

Item 1.

Legal Proceedings

51

Item 1A.

Risk Factors

51

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

51

Item 3.

Defaults Upon Senior Securities

51

Item 4.

Mine Safety Disclosures

51

Item 5.

Other Information

51

Item 6.

Exhibits

52

Signatures

53

2

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, included in this Quarterly Report on Form 10-Q regarding our strategy, future operations, future financial position, future revenues, projected costs, prospects, plans and objectives of management are forward-looking statements. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “will,” “would,” “could,” “should,” “potential,” “seek,” “evaluate,” “pursue,” “continue,” “design,” “impact,” “affect,” “forecast,” “target,” “outlook,” “initiative,” “objective,” “designed,” “priorities,” “goal,” or the negative of such terms and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Such statements are based on assumptions and expectations that may not be realized and are inherently subject to risks, uncertainties and other factors, many of which cannot be predicted with accuracy and some of which might not even be anticipated.

The forward-looking statements in this Quarterly Report on Form 10-Q include, among other things, 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, and measures taken to contain its spread ultimately impact our business, including development activities, preclinical studies, future clinical trials, supply chain and labor force;
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 filings for 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;

3

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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;
our reliance on the maintenance of our collaborative relationship with Bristol-Myers Squibb Company, or Bristol-Myers Squibb, in connection with the furtherance of our collaboration programs;
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;
the volatility of capital markets and other macroeconomic factors, including due to inflationary pressures, geopolitical tensions or the outbreak of hostilities or war; and
developments relating to our competitors and our industry; and
other risks and uncertainties, including those described under the caption “Risk factors” in our Annual Report on Form 10-K for the year ended December 31, 2021.

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 I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 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

4

Table of Contents

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.

5

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

CENTURY THERAPEUTICS, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)

June 30, 2022

December 31, 2021

    

(unaudited)

    

Assets

Current assets

Cash and cash equivalents

$

112,787

$

56,445

Short-term investments

 

265,971

 

166,434

Escrow deposits, current

 

471

 

502

Prepaid expenses and other current assets

 

4,564

 

4,773

Total current assets

 

383,793

 

228,154

Property and equipment, net

 

69,971

 

57,967

Operating lease right-of-use assets

24,728

11,854

Restricted cash

1,979

1,717

Escrow deposits, non-current

220

Long-term investments

 

50,607

 

135,914

Security deposits

 

1,506

 

1,549

Total assets

$

532,584

$

437,375

Liabilities, convertible preferred stock, and stockholders’ equity

 

  

 

  

Current liabilities

 

 

  

Accounts payable

$

4,048

$

7,596

Accrued expenses and other liabilities

 

7,246

 

6,040

Deposit liability

857

980

Long-term debt, current

1,594

1,039

Deferred revenue, current

7,824

Total current liabilities

 

21,569

 

15,655

Operating lease liability, long term

 

30,433

 

14,559

Deposit liability, non-current

1,220

2,020

Deferred revenue, non-current

112,909

Long-term debt, net

 

8,501

 

8,903

Total liabilities

 

174,632

 

41,137

Commitments and contingencies (Note 12)

 

  

 

  

Stockholders' equity:

Preferred stock, $ 0.0001 par value, 10,000,000 shares authorized at June 30, 2022 and December 31, 2021, respectively, and 0 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively

Common stock, $0.0001 par value, 300,000,000 shares authorized at June 30, 2022 and December 31, 2021, respectively; 57,857,921 and 55,005,523 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively

6

5

Additional paid-in capital

 

818,047

 

785,049

Accumulated deficit

(456,667)

(388,166)

Accumulated other comprehensive loss

(3,434)

(650)

Total stockholders’ equity

357,952

396,238

Total liabilities and stockholders’ equity

$

532,584

$

437,375

See accompanying notes to the consolidated financial statements.

6

Table of Contents

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

Six Months Ended

Six Months Ended

    

June 30, 2022

    

June 30, 2021

June 30, 2022

June 30, 2021

Collaboration revenue

$

1,396

$

$

2,454

$

Operating expenses

Research and development

24,494

18,933

45,690

34,307

General and administrative

 

8,253

 

4,088

 

15,551

 

6,776

In-process research and development

 

-

 

-

 

10,000

 

Total operating expenses

 

32,747

 

23,021

 

71,241

 

41,083

Loss from operations

 

(31,351)

 

(23,021)

 

(68,787)

 

(41,083)

Interest expense

 

(330)

 

(318)

 

(644)

 

(632)

Other income, net

711

 

66

 

964

 

94

Total other income (expense)

381

(252)

320

(538)

Loss before provision for income taxes

(30,970)

(23,273)

(68,467)

(41,621)

Provision for income taxes

(18)

(34)

Net loss

$

(30,988)

$

(23,273)

$

(68,501)

$

(41,621)

Net loss per common share
Basic and Diluted

(0.54)

(1.93)

(1.19)

(4.26)

Weighted average common shares outstanding
Basic and Diluted

57,685,006

12,044,610

57,370,022

9,775,840

Other comprehensive loss

Net loss

$

(30,988)

$

(23,273)

$

(68,501)

$

(41,621)

Unrealized (loss) gain on investments

(780)

32

(2,766)

5

Foreign currency translation

(12)

(9)

(18)

(5)

Comprehensive loss

$

(31,780)

$

(23,250)

$

(71,285)

$

(41,621)

See accompanying notes to the consolidated financial statements.

7

Table of Contents

CENTURY THERAPEUTICS, INC.

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

(Unaudited)

(In thousands, except share amounts)

Series A

Series B

Series C

Accumulated

Convertible

Convertible

Convertible

Additional

Other

Total

Preferred Stock

Preferred Stock

Preferred Stock

Common Stock

Paid-in

Subscription

Accumulated

Comprehensive

Stockholders’

    

Shares

  

Amount

    

Shares

  

Amount

  

Shares

  

Amount

  

  

Shares

  

Amount

  

Capital

  

 Receivable

  

Deficit

  

Loss

    

Equity

Balance, December 31, 2021

$

$

$

55,005,523

5

$

785,049

$

$

(388,166)

$

(650)

$

396,238

Issuance of stock to collaboration partner

 

2,160,760

1

26,812

26,813

Issuance of common stock upon the exercise of stock options

85,396

65

65

Vesting of restricted stock

 

161,159

Vesting of early exercise stock options

 

173,192

673

673

Stock based compensation

 

2,380

2,380

Unrealized loss on investments

 

(1,986)

(1,986)

Foreign currency translation

 

(6)

(6)

Net loss

 

(37,512)

(37,512)

Balance, March 31, 2022

 

$

 

$

$

57,586,030

$

6

$

814,979

$

$

(425,679)

$

(2,642)

 

$

386,664

Issuance of common stock upon the exercise of stock options

31,381

47

47

Vesting of restricted stock

 

136,425

Vesting of early exercise stock options

 

104,085

250

250

Stock based compensation

 

2,771

2,771

Unrealized loss on investments

 

(780)

(780)

Foreign currency translation

 

(12)

(12)

Net loss

 

(30,988)

(30,988)

Balance, June 30, 2022

 

$

 

$

$

57,857,921

$

6

$

818,047

$

$

(456,667)

$

(3,434)

 

$

357,952

Series A

Series B

Series C

Accumulated

Convertible

Convertible

Convertible

Additional

 Other 

Total

Preferred Stock

Preferred Stock

Preferred Stock

Common Stock

Paid-in

Subscription

Accumulated

Comprehensive

Stockholders’

    

Shares

  

Amount

    

Shares

  

Amount

Shares

  

Amount

  

Shares

  

Amount

Capital

  

 Receivable

  

Deficit

  

Loss

    

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 cost

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

See accompanying notes to the consolidated financial statements.

8

Table of Contents

CENTURY THERAPEUTICS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Six Months Ended

Six Months Ended

June 30, 2022

June 30, 2021

    

(unaudited)

    

(unaudited)

Cash flows from operating activities

 

  

 

  

 

Net loss

$

(68,501)

$

(41,621)

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

 

 

Depreciation

 

2,828

 

1,653

Amortization of deferred financing cost

152

152

Non-cash operating lease expense

626

442

Stock based compensation

 

5,151

 

1,806

Change in operating assets and liabilities:

 

 

Escrow deposit

 

251

 

532

Prepaid expenses and other assets

 

241

 

(2,497)

Operating lease liability

2,479

132

Deferred revenue

120,733

Accounts payable

 

(3,861)

 

(3,562)

Accrued expenses and other liabilities

 

1,099

 

2,295

Net cash provided by (used in) operating activities

 

61,198

 

(40,668)