production takes place primarily in the United States and Argentina. Warehousing for seed storage, which is conducted by a third-party contractor, is located primarily in Minnesota and Wisconsin. We may use a limited number of processing partners which may be located in concentrated areas. We take precautions to safeguard our facilities, including insurance, health and safety protocols, andoff-site storage of critical research results and computer data. However, a natural disaster, such as a hurricane, drought, fire, flood, tornado, earthquake, or acts of vandalism, could cause substantial delays in our operations, damage or destroy our equipment, inventory or development projects, and cause us to incur additional expenses.
Government policies and regulations, particularly those affecting the agricultural sector and related industries, could adversely affect our operations and profitability.
Agricultural production and trade flows are subject to government policies and regulations. Governmental policies and approvals of technologies affecting the agricultural industry, such as taxes, tariffs, duties, subsidies, incentives and import and export restrictions on agricultural commodities and commodity products can influence the planting of certain crops, the location and size of crop production, and the volume and types of imports and exports. Future government policies in the United States or in other countries may discourage food manufacturers or farmers from using our products or encourage the use of products more advantageous to our competitors, which would put us at a commercial disadvantage and could negatively impact our future revenues and results of operations.
The overall agricultural industry is susceptible to commodity price changes and we, along with our food manufacturing customers and farmer customers, are exposed to market risks from changes in commodity prices.
Changes in the prices of certain commodity products could result in higher overall cost along the agricultural supply chain, which may negatively affect our ability to commercialize our products. We will be susceptible to changes in costs in the agricultural industry as a result of factors beyond our control, such as general economic conditions, seasonal fluctuations, weather conditions, demand, food safety concerns, product recalls and government regulations. As a result, we may not be able to anticipate or react to changing costs by adjusting our practices, which could cause our operating results to deteriorate. We do not engage in hedging or speculative financial transactions nor do we hold or issue financial instruments for trading purposes.
Risks Related to Intellectual Property
Our ability to compete may decline if we do not adequately protect our proprietary rights.
Our commercial success depends, in part, on obtaining and maintaining proprietary rights to our and our licensors’ intellectual property estate, including with respect to our product candidates, as well as successfully defending these rights against third-party challenges. We will only be able to protect our product candidates from unauthorized use by third parties to the extent that valid and enforceable patents, or effectively protected trade secrets, cover them. Our ability to obtain patent protection for our product candidates is uncertain due to a number of factors, including:
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Even if we own, obtain orin-license patents covering our product candidates or compositions, we may still be barred from making, using and selling our product candidates or technologies because of the patent rights or other intellectual property rights of others. Others may have filed, and in the future may file, patent applications covering compositions, products or methods that are similar or identical to ours, which could materially affect our ability to successfully develop and, if approved, commercialize our product candidates. In addition, because patent applications can take many years to issue, there may be currently pending applications unknown to us that may later result in issued patents that our product candidates or compositions may infringe. These patent applications, including intermediate documents, may have priority over patent applications filed by us or our licensors.
Obtaining and maintaining a patent portfolio entails significant expense of resources. Part of such expense includes periodic maintenance fees, renewal fees, annuity fees and various other governmental fees on patents and/or applications due over the course of several stages of prosecuting patent applications, and over the lifetime of maintaining and enforcing issued patents. We or our licensors may or may not choose to pursue or maintain protection for particular intellectual property in our or our licensors portfolio. If we or our licensors choose to forgo patent protection or to allow a patent application or patent to lapse purposefully or inadvertently, our competitive position could suffer. In some cases, the prosecution and maintenance of our licensed patents is controlled by the applicable licensor. If such licensor fails to properly prosecute and maintain such patents, we could lose our rights to them, which could materially impair any competitive advantage afforded by such patents. Furthermore, we and our licensors employ reputable law firms and other professionals to help us comply with the various procedural, documentary, fee payment and other similar provisions we and they are subject to and, in many cases, an inadvertent lapse can be cured by payment of a late fee or by other means in accordance with the applicable rules.
There are situations, however, in which failure to make certain payments or noncompliance with certain requirements in the patent prosecution and maintenance process can result in abandonment or lapse of a patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. In such an event, our competitors might be able to enter the market, which would have a material adverse effect on our business.
Legal action that may be required to enforce our patent rights can be expensive and may involve the diversion of significant management time. In addition, these legal actions could be unsuccessful and could also result in the invalidation or transfer of ownership of our or our licensors’ patents or a finding that they are unenforceable. We or our licensors may or may not choose to pursue litigation or other actions against those that have infringed on our or their patents, or have used them without authorization, due to the associated expense and time commitment of monitoring these activities. In some cases, the enforcement and defense of patents wein-license is controlled by the applicable licensor. If such licensor fails to actively enforce and defend such patents, any competitive advantage afforded by such patents could be materially impaired. In addition, some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we or our licensors can because of their greater financial resources and more mature and developed intellectual property portfolios. Accordingly, despite our efforts, we may not be able to prevent third parties from infringing upon or misappropriating or from successfully challenging or claiming ownership over our intellectual property rights. If we fail to protect or to enforce our intellectual property rights successfully, our competitive position could suffer, which could harm our results of operations.
If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed.
47In addition to patent protection, because we operate in the highly technical field of development of therapies, we rely in part on trade secret protection in order to protect our proprietary technology and processes. However, trade secrets are difficult to protect. Monitoring unauthorized uses and disclosures is difficult, and we do not know whether the steps we have taken to protect our proprietary technologies will be effective or sufficient.
In addition to contractual measures that we implement in our agreements with third-party service providers and in licensing agreements, we try to protect the confidential nature of our proprietary information using physical and technological security measures. Such measures may not provide adequate protection for our proprietary information. For example, our security measures may not prevent an employee, consultant, or collaborator with authorized access from misappropriating our trade secrets and providing them to a competitor, and the recourse we have available against such misconduct may not provide an adequate or sufficiently swift remedy to protect our interests fully. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret can be difficult, expensive and time consuming, and the outcome is unpredictable. In addition, courts outside the United States may be less willing to protect trade secrets. Furthermore, our proprietary information may be independently developed or lawfully reverse-engineered by others in a manner that could prevent legal recourse by us.
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We cannot guarantee that our trade secrets and other proprietary and confidential information will not be disclosed or that competitors will not otherwise gain access to our trade secrets. If any of our confidential or proprietary information, including our trade secrets, were to be disclosed or misappropriated, or if any such information was independently developed by a competitor, our competitive position could be harmed.
Patents and patent applications involve highly complex legal and factual questions, which, if determined adversely to us, could negatively impact our competitive position.
The patent positions of biotechnology and biopharmaceutical companies and other actors in our fields of business can be highly uncertain and typically involve complex scientific, legal and factual analyses. In particular, the interpretation and breadth of claims allowed in some patents covering biological and biopharmaceutical compositions may be uncertain and difficult to determine, and are often affected materially by the facts and circumstances that pertain to the patented compositions and the related patent claims. The standards of the United States Patent and Trademark Office, or USPTO, and foreign patent offices are sometimes uncertain and could change in the future. Consequently, the issuance and scope of patents cannot be predicted with certainty. Patents, if issued, may be challenged, invalidated, narrowed or circumvented. U.S. patents and patent applications may also be subject to interference proceedings, and U.S. patents may be subject to reexamination proceedings, post-grantpost- grant review,inter partes review, or other administrative proceedings in the USPTO. Foreign patents as well may be subject to opposition or comparable proceedings in the corresponding foreign patent offices. Challenges to our or our licensors’ patents and patent applications, if successful, may result in the denial of our or our licensors’ patent applications or the loss or reduction in their scope. For example, on February 2022, following an opposition before the European Patent Office, the EP3004349 patent entitled “a method for producing precise DNA cleavage using CAS9 double nickase activity” was revoked. In addition, such interference, reexamination, post-grant review,inter partes review, opposition proceedings and other administrative proceedings may be costly and involve the diversion of significant management time. Accordingly, rights under any of our or our licensors’ patents may not provide us with sufficient protection against competitive products or processes and any loss, denial or reduction in scope of any such patents and patent applications may have a material adverse effect on our business.
Furthermore, even if not challenged, our or our licensors’ patents and patent applications may not adequately protect our product candidates or technology or prevent others from designing their products or technology to avoid being covered by our or our licensors’ patent claims. If the breadth or strength of protection provided by the patents we own or license with respect to our product candidates is threatened, it could dissuade companies from collaborating with us to develop, and could threaten our ability to successfully commercialize, our product candidates. Furthermore, for U.S. patent applications in which claims are entitled to a priority date before March 16, 2013, an interference proceeding can be provoked by a third party or instituted by the USPTO in order to determine who was the first to invent any of the subject matter covered by such patent claims.
In addition, changes in, or different interpretations of, patent laws in the United States and other countries may permit others to use our discoveries or to develop and commercialize our technology and products without providing any notice or compensation to us, or may limit the scope of patent protection that we or our licensors are able to obtain. The laws of some countries do not protect intellectual property rights to the same extent as U.S. laws and those countries may lack adequate rules and procedures for defending our intellectual property rights.
If we or our licensors fail to obtain and maintain patent protection and trade secret protection of our product candidates and technology, we could lose our competitive advantage and competition we face would increase, reducing any potential revenues and have a material adverse effect on our business.
The lives of our patents may not be sufficient to effectively protect our products and business.
Patents have a limited lifespan. In the United States, the natural expiration of a patent is generally 20 years after its first effective filing date. Although various extensions may be available, the life of a patent, and the protection it affords, is limited. Our or our licensors’ issued patents and pending patent applications will expire on dates ranging from 20192024 to 2033,2042, subject to any patent extensions that may be available for such patents. In addition, although upon issuance in the United States a patent’s life can be increased based on certain delays caused by the USPTO, this increase can be reduced or eliminated based on certain delays caused by the patent applicant during patent prosecution. In the EU, Supplementary Protection Certificates (SPCs) are available to extend a patent term for up to five years to compensate for patent protection lost during regulatory review. Although all EU Member States must provide SPCs, SPCs must still be applied for and granted on a country-by-country basis and their protection is subject to exceptions. If we or our licensors do not have sufficient patent life to protect our products, our business and results of operations will be adversely affected.
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Developments in patent law could have a negative impact on our business.
From time to time, the United States Supreme Court, or the Supreme Court, other federal courts, the United States Congress, the USPTO and similar foreign authorities may change the standards of patentability and any such changes could have a negative impact on our business.
The Leahy-Smith America Invents Act, or the America Invents Act, which was signed into law in 2011, includes a number of significant changes to U.S. patent law. These changes include a transition from a“first-to-invent” system to a“first-to-file” system, changes to the way issued patents are challenged, and changes to the way patent applications are disputed during the examination process. As a result of these changes, the patent law in the United States may favor larger and more established companies that have greater resources to devote to patent application filing and prosecution. The USPTO has developed new and untested regulations and procedures to govern the full implementation of the America Invents Act, and many of the substantive changes to patent law associated with the America Invents Act, and, in particular, thefirst-to-file provisions became effective on March 16, 2013. Substantive changes to patent law associated with the America Invents Act may affect our ability to obtain patents, and if obtained, to enforce or defend them. Accordingly, it is not clear what, if any, impact the America Invents Act will have on the cost of prosecuting our or our licensors’ patent applications and the ability of us and our licensors’ to obtain patents and to enforce or defend any patents that may issue from such patent applications, all of which could have a material adverse effect on our business.
In addition, recent Supreme Court rulings have narrowed the scope of patent protection available in certain circumstances and weakened the rights of patent owners in certain situations. This combination of events has created uncertainty with respect to the validity and enforceability of patents, once obtained. Depending on future actions by the Supreme Court, the United States Congress, the federal courts, the USPTO and similar foreign authorities, the laws and regulations governing patents could change in unpredictable ways that could have a material adverse effect on our existing patent portfolio and our ability to protect and enforce our intellectual property in the future.
If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed.
In addition to patent protection, because we operate in the highly technical field of development of therapies, we rely in part on trade secret protection in order to protect our proprietary technology and processes. However, trade secrets are difficult to protect. Monitoring unauthorized uses and disclosures is difficult, and we do not know whether the steps we have taken to protect our proprietary technologies will be effective. We cannot guarantee that our trade secrets and other proprietary and confidential information will not be disclosed or that competitors will not otherwise gain access to our trade secrets. Despite these efforts, any of these parties may breach the agreements and disclose our proprietary information, including our trade secrets, and we may not be able to obtain adequate remedies for such breaches.
Because we rely on third parties for the advancement of our products platform,pre-clinical testing, quality control, clinical trials, and manufacturing activities, we must, at times, share trade secrets with them, and our collaborations with Servier and Pfizer, and any collaborations we may enter into in the future, may also lead to share certain of our trade secrets with our collaborators.
We seek to protect our proprietary technology in part by entering into confidentiality agreements and, if applicable, material transfer agreements, intellectual property assignment, collaborative research agreements, consulting agreements or other similar agreements with our employees, consultants, outside scientific collaborators, sponsored researchers, and other advisors. These agreements generally require that the other party keep confidential and not disclose to third parties all confidential information developed by the party or made known to the party by us during the course of the party’s relationship with us. These agreements also generally provide that inventions conceived by the party in the course of rendering services to us will be our exclusive property. However, these agreements may be breached or held unenforceable and may not effectively assign intellectual property rights to us.
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In addition to contractual measures, we try to protect the confidential nature of our proprietary information using physical and technological security measures. Such measures may not provide adequate protection for our proprietary information. For example, our security measures may not prevent an employee or consultant with authorized access from misappropriating our trade secrets and providing them to a competitor, and the recourse we have available against such misconduct may not provide an adequate remedy to protect our interests fully. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret can be difficult, expensive and time consuming, and the outcome is unpredictable. In addition, courts outside the United States may be less willing to protect trade secrets. Furthermore, our proprietary information may be independently developed by others in a manner that could prevent legal recourse by us. If any of our confidential or proprietary information, including our trade secrets, were to be disclosed or misappropriated, or if any such information was independently developed by a competitor, our competitive position could be harmed.
We will not seek to protect our intellectual property rights in all jurisdictions throughout the world and we may not be able to adequately enforce our intellectual property rights even in the jurisdictions where we seek protection.
Filing, prosecuting and defending patents on our product candidates in all countries and jurisdictions throughout the world would be prohibitively expensive, and our intellectual property rights in some countries outside the United States could be less extensive than those in the United States, assuming that rights are obtained in the United States. In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as federal and state laws in the United States. Consequently, we may not be able to prevent third parties from practicing our inventions in all countries outside the United States, or from selling or importing products made using our inventions in and into the United States or other jurisdictions.
Competitors may use our technologies in jurisdictions where we or our licensors do not pursue and obtain patent protection to develop their own products and further, may export otherwise infringing products to territories where we or our licensors have patent protection, but where the ability to enforce our or our licensors’ patent rights is not as strong as in the United States. These products may compete with our products and our intellectual property rights and such rights may not be effective or sufficient to prevent such competition.
The laws of some foreign countries do not protect intellectual property rights to the same extent as the laws of the United States. Patent protection must be sought on acountry-by-country basis, which is an expensive and time-consuming process with uncertain outcomes. Accordingly, we or our licensors may choose not to seek patent protection in certain countries, and we will not have the benefit of patent protection in such countries. In addition, the legal systems of some countries, particularly developing countries, do not favor the enforcement of patents and other intellectual property protection, especially those relating to biopharmaceuticals or biotechnologies, and the requirements for patentability differ, in varying degrees, from country to country, and the laws of some foreign countries do not protect intellectual property rights, including trade secrets, to the same extent as federal and state laws of the United States. As a result, many companies have encountered significant problems in protecting and defending intellectual property rights in
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certain foreign jurisdictions. Such issues may make it difficult for us to stop the infringement, misappropriation or other violation of our intellectual property rights. For example, many foreign countries, including the EU countries, have compulsory licensing laws under which a patent owner must grant licenses to third parties. In addition, many countries limit the enforceability of patents against third parties, including government agencies or government contractors. In these countries, patents may provide limited or no benefit. In those countries, we and our licensors may have limited remedies if patents are infringed or if we or our licensors are compelled to grant a license to a third party, which could materially diminish the value of those patents. This could limit our potential revenue opportunities. Accordingly, our and our licensors’ efforts to enforce intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we own or license. Similarly, if our trade secrets are disclosed in a foreign jurisdiction, competitors worldwide could have access to our proprietary information and we may be without satisfactory recourse. Such disclosure could have a material adverse effect on our business. Moreover, our ability to protect and enforce our intellectual property rights may be adversely affected by unforeseen changes in foreign intellectual property laws.
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Furthermore, proceedings to enforce our and our licensors’ patent rights and other intellectual property rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our or our licensors’ patents at risk of being invalidated or interpreted narrowly, could put our or our licensors’ patent applications at risk of not issuing and could provoke third parties to assert claims against us or our licensors. We may not prevail in any lawsuits that we initiate and the damages or other remedies awarded to us, if any, may not be commercially meaningful, while the damages and other remedies we may be ordered to pay such third parties may be significant. Accordingly, our or our licensors’ efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license.
Third parties may assert rights to inventions we develop or otherwise regard as our own.
Third parties may in the future make claims challenging the inventorship or ownership of our or our licensors’ intellectual property. We have written agreements with collaborators that provide for the ownership of intellectual property arising from our strategic alliances.licensing arrangements. These agreements provide that we must negotiate certain commercial rights with such collaborators with respect to joint inventions or inventions made by our collaborators that arise from the results of the strategic alliance.arrangement. In some instances, there may not be adequate written provisions to address clearly the allocation of intellectual property rights that may arise from the respective alliance.licensing arrangement. If we cannot successfully negotiate sufficient ownership and commercial rights to the inventions that result from our use of a third-party collaborator’s materials when required, or if disputes otherwise arise with respect to the intellectual property developed through the use of a collaborator’s samples, we may be limited in our ability to capitalize on the full market potential of these inventions. In addition, we may face claims by third parties that our agreements with employees, contractors, or consultants obligating them to assign intellectual property to us are ineffective, or are in conflict with prior or competing contractual obligations of assignment, which could result in ownership disputes regarding intellectual property we have developed or will develop and could interfere with our ability to capture the full commercial value of such inventions. Litigation may be necessary to resolve an ownership dispute, and if we are not successful, we may be precluded from using certain intellectual property and associated products and technology, or may lose our rights in that intellectual property. Either outcome could have a material adverse effect on our business.
In addition, the research resulting in certain of ourin-licensed patent rights and technology was funded in part by the United States government. As a result, the United States government has certain rights to such patent rights and technology, which includemarch-in rights. When new technologies are developed with government funding, the government generally obtains certain rights in any resulting patents, including anon-exclusive license authorizing the government to use the invention or to have others use the invention on its behalf. The government can exercise itsmarch-in rights if it determines that action is necessary because we fail to achieve practical application of the government-funded technology, or because action is necessary to alleviate health or safety needs, to meet requirements of federal regulations, or to give preference to the United States industry. Any exercise by the government of any of the foregoing rights could have a material adverse effect on our business.
We may not identify relevant third partythird-party patents or may incorrectly interpret the relevance, scope or expiration of a third partythird-party patent which might adversely affect our ability to develop and market our products.
We cannot guarantee that any of our patent searches or analyses, including but not limited to the identification of relevant patents, the scope of patent claims or the expiration of relevant patents, are complete or thorough, nor can we be certain that we have identified each and every third party patent and pending application in the United States and abroad that is relevant to or necessary for the commercialization of our product candidates in any jurisdiction.
The scope of a patent claim is determined by an interpretation of the law, the written disclosure in a patent and the patent’s prosecution history.
Our interpretation of the relevance or the scope of a patent or a pending application may be incorrect, which may negatively impact our ability to market our products. We may incorrectly determine that our products are not covered by a third partythird-party patent or may incorrectly predict whether
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a third party’s pending application will issue with claims of relevant scope. Our determination of the expiration date of any patent in the United States or abroad that we consider relevant may be incorrect, which may negatively impact our ability to develop and market our product candidates. Our failure to identify and correctly interpret relevant patents may negatively impact our ability to develop and market our products.
Third parties may assert that our employees or consultants have wrongfully used or disclosed confidential information or misappropriated trade secrets.
We currently employ, and may in the future employ, individuals who were previously employed or worked as an intern at universities or other biotechnology or biopharmaceutical companies, including our competitors or potential competitors. Although we try to ensure that our employees and consultants do not use the proprietary information orknow-how of others in their work for us, we may be subject to claims that we or our employees, consultants or independent contractors have inadvertently or otherwise used or disclosed intellectual property, including trade secrets or other proprietary information, of a former employer or other third parties. Litigation may be necessary to defend against these claims. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees.
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A dispute concerning the infringement or misappropriation of our proprietary rights or the proprietary rights of others could be time consuming and costly, and an unfavorable outcome could harm our business.
There is significant litigation in the biopharmaceutical industry regarding patent and other intellectual property rights. Although we are not currently subject to any material pending intellectual property litigation, and are not aware of any such threatened litigation, we may be exposed to future litigation by third parties based on claims that our product candidates, technologies or activities infringe the intellectual property rights of others.
Our success will depend in part on our ability to operate without infringing, misappropriating or otherwise violating the intellectual property and proprietary rights of third parties. Other parties may allege that our or our collaborators’ products or product candidates or the use of our or our collaborators’ technologies infringe, misappropriate or otherwise violate patent claims or other intellectual property rights held by them or that we or our collaborators’ are employing their proprietary technology without authorization.
If our development activities are found to infringe any such patents or other intellectual property rights, we may have to pay significant damages or seek licenses to such patents.patents or other intellectual property. A patentee could prevent us from using the patented drugs or compositions. We may need to resort to litigation to enforce a patent issued to us, to protect our trade secrets, or to determine the scope and validity of third-party proprietary rights.
From time to time, we may hire scientific personnel or consultants formerly employed by other companies involved in one or more areas similar to the activities conducted by us. Either we or these individuals may be subject to allegations of trade secret misappropriation or other similar claims as a result of prior affiliations. If we become involved in litigation, it could consume a substantial portion of our managerial and financial resources, regardless of whether we win or lose. We may not be able to afford the costs of litigation. Any adverse ruling or perception of an adverse ruling in defending ourselves against these claims could have a material adverse impact on our cash position. Any legal action against us or our collaborators could lead to:
Any infringement, misappropriation or other violation by us of intellectual property rights of others may prevent or delay our product development efforts and may prevent or increase the costs of our successfully commercializing our product candidates, if approved.
Our success will depend in part on our ability to operate without infringing, misappropriating or otherwise violating the intellectual property and proprietary rights of third parties. We cannot assure you that our business
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operations, products, product candidates and methods and the business operations, products, product candidates and methods of our collaborators do not or will not infringe, misappropriate or otherwise violate the patents or other intellectual property rights of third parties.
The biotechnology and biopharmaceutical industry is characterized by extensive litigation regarding patents and other intellectual property rights. Other parties may allege that our products, product candidates or the use of our technologies infringe, misappropriate or otherwise violate patent claims or other intellectual property rights held by them or that we are employing their proprietary technology without authorization. Patent and other types of intellectual property litigation can involve complex factual and legal questions, and their outcome is uncertain.
Any claim relating to intellectual property infringement that is successfully assertedlegal action against us may require us to pay substantial damages, including treble damages and attorneys’ fees if we or our collaborators could lead to:
Even if we are successful inAny of these proceedings, we may incur substantial costs and divert management time and attention pursuing these proceedings, whichoutcomes could have a material adverse effect on us. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments and if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our common stock. Such litigation or proceedings could substantially increase our operating losses and reduce the resources available for development activities or any future sales, marketing or distribution activities If we are unable to avoid infringing the patent rights of others, we may be required to seek a license, defend an infringement action or challenge the validity of the patents in court, or redesign our products. Patent litigation is costly and time consuming. We may not have sufficient resources to bring these actions to a successful conclusion. In addition, intellectual property litigation or claims could force us to do one or more of the following:
Any of these risks coming to fruition could have a material adverse effectimpact on our business, results of operations,cash position and financial condition and prospects.our ability to develop and commercialize our product candidates.
Issued patents covering our product candidates could be found invalid or unenforceable if challenged in court.
If we or one of our licensing partners initiated legal proceedings against a third party to enforce a patent covering our product candidate, the defendant could counterclaim that the patent covering our product candidate is invalid and/or unenforceable. In patent litigation in the United States, defendant counterclaims alleging invalidity and/or unenforceability are commonplace. Furthermore, third parties may petition courts for
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declarations of invalidity or unenforceability with respect to our patents or individual claims there.claims. If successful, such claims could narrow the scope of protection afforded our product candidates and future products, if any. Grounds for a validity challenge include alleged failures to meet any of several statutory requirements, including lack of novelty, obviousness ornon-enablement. Grounds for unenforceability assertions include allegations that someone connected with prosecution of the patent withheld relevant information from the USPTO, or made a misleading statement, during prosecution. Third parties may also raise similar claims before administrative bodies in the United States or abroad, even outside the context of litigation. Such mechanisms includere-examination, post grant review and equivalent proceedings in foreign jurisdictions, e.g., opposition proceedings.jurisdictions. Such proceedings could result in revocation or amendment of our patents in such a way that they no longer cover our product candidates or competitive products. The outcome following legal assertions of invalidity and unenforceability is unpredictable. With respect to validity, for example, we cannot be certain that there is no invalidating prior art, of which we and the patent examiner were unaware during prosecution. If a defendant were to prevail on a legal assertion of invalidity and/or unenforceability, we would lose at least part, and perhaps all, of the patent protection on our product candidates. Such a loss of patent protection would have a material adverse impact on our business.
We may be unsuccessful in licensing or acquiring intellectual property from third parties that may be required to develop and commercialize our product candidates.candidates from third parties.
We have rights, through licenses from third parties and under patents that we own, to the intellectual property to develop our product candidates. Because our programs may involve additional product candidates or improved formulations of existing product candidates that may require the use of intellectual property or proprietary rights held by third parties, the growth of our business will likelymay depend in part on our ability to acquire,in-license or use thesesuch intellectual property and proprietary rights. In addition, our product candidates may require specific formulations to work effectively and efficiently, and these rights may be held by others. We may be unable to acquire orin-license any third-party intellectual property or proprietary rights. Even if we are able to acquirerights orin-license such rights, we may be unable to do so on commercially reasonable terms. For example, we sometimes collaborate with academic institutions to accelerate our research or development under written agreements with these institutions. Typically, these institutions provide us with an option to negotiate a license to any of the institution’s rights in technology resulting from the collaboration. Regardless of such option, we may be unable to negotiate a license within the specified time frame or under terms that are acceptable to us, and the institution may license such intellectual property rights to third parties, potentially blocking our ability to pursue our development and commercialization plans.
The licensing and acquisition of third-party intellectual property and proprietary rights is a competitive area, and a number of more established companies are also pursuing strategies to license or acquire third-party intellectual property and proprietary rights that we may consider attractive or necessary. These established companies may have a competitive advantage over us due to their size and greater capital resources and development and commercialization capabilities.
For example, we sometimes collaborate with academic institutions to accelerate our research or development under written agreements with these institutions. Typically, these institutions provide us with an option to negotiate a license to any of the institution’s rights in technology resulting from the strategic alliance. Regardless of such option, we may be unable to negotiate a license within the specified time frame or under terms that are acceptable to us, and the institution may license such intellectual property rights to third parties, potentially blocking our ability to pursue our development and commercialization plans.
In addition, companies that perceive us to be a competitor may be unwilling to assign or license to us intellectual property and proprietary rights. We also may be unable to license or acquire third-party intellectual property and proprietary rights on terms that would allow us to make an appropriate return on our investment or at all. us.
If we are unable to successfully acquire orin-license rights to required third-party intellectual property and proprietary rights or maintain the existing intellectual property and proprietary rights we have, we may have to cease development of the relevant the relevant program, product or product candidate, which could have a material adverse effect on our business.
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If we fail to comply with our obligations in the agreements under which we license intellectual property rights from third parties or otherwise experience disruptions to our business relationships with our licensors, we could lose license rights that are important to our business.
We are a party to a number of intellectual property license agreements that are important to our business and expect to enter into additional license agreements in the future. Our existing license agreements impose, and we
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expect that future license agreements will impose, various diligence, milestone payment, royalty and other obligations on us. If we fail to comply with our obligations under these agreements, or we are subject to a bankruptcy, our licensors may have the right to terminate the license, in which event we would not be able to market products or product candidates covered by the license.
In addition, disputes may arise regarding the payment of the royalties or other consideration due to licensors in connection with our exploitation of the rights we license from them. Licensors may contest the basis of payments we retained and claim that we are obligated to make payments under a broader basis. In addition to the costs of any litigation we may face as a result, any legal action against us could increase our payment obligations under the respective agreement and require us to pay interest and potentially damages to such licensors.
In some cases, patent prosecution of our licensed technology is controlled solely by the licensor. If such licensor fails to obtain and maintain patent or other protection for the proprietary intellectual property we license from such licensor, we could lose our rights to such intellectual property or the exclusivity of such rights, and our competitors could market competing products using such intellectual property. In addition, these patents and applications may not be prosecuted and enforced in a manner consistent with the best interests of our business. In that event, we may be required to expend significant time and resources to develop or license replacement technology. If we are unable to do so, we may be unable to develop or commercialize the affected products and product candidates, which could harm our business significantly. In other cases, we control the prosecution of patents resulting from licensed technology. In the event we breach any of our obligations related to such prosecution, we may incur significant liability to our licensing partners. We may also require the cooperation of our licensors to enforce any licensed patent rights, and such cooperation may not be provided. Moreover, we have obligations under these license agreements, and any failure to satisfy those obligations could give our licensor the right to terminate the agreement. Termination of a necessary license agreement could have a material adverse impact on our business.
Under each of the material exclusive licenses granted to us, the licensor controls the prosecution of patents covered by the license. Under our collaboration agreement with Pfizer, we and Pfizer each generally control the prosecution of our respective owned patents, and Pfizer has the first right to elect to control the prosecution of certain jointly-developed intellectual property. Under our collaboration agreement with Servier, we and Servier each generally control the prosecution of our respective owned patents, and we generally control the prosecution of joint patents, unless Servier exercises its option under the agreement to obtain an exclusive license to further develop, manufacture and commercialize a product candidate, in which case Servier will control prosecution of the joint patents. In addition, Servier currently controls prosecution of those patent rights covering solely UCART19. Licensing of intellectual property is of critical importance to our business and involves complex legal, business and scientific issues and is complicated by the rapid pace of scientific discovery in our industry. Disputes may arise regarding intellectual property subject to a licensing agreement, including:
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If disputes over intellectual property that we have licensed from third parties prevent or impair our ability to maintain our current licensing arrangements on acceptable terms, we may be unable to successfully develop and commercialize the affected product candidates.
Risks Related to Our Organization, Structure and OperationHuman Capital
We will need to develop and expand our company, and we may encounter difficulties in managing this development and expansion, which could disrupt our operations.
As of December 31, 2017, we had 131 full-time employees and we expect to increase our number of employees and the scope and location of our operations. To manage our anticipated development and expansion, including the development and the commercialization of our product candidates, we must continue to implement and improve our managerial, operational and financial systems, expand our facilities and continue to recruit and train additional qualified personnel. Also, our management may need to divert a disproportionate amount of its attention away from itsday-to-day activities and devote a substantial amount of time to managing these development activities. Due to our limited resources, we may not be able to effectively manage the expansion of our operations or recruit and train additional qualified personnel. This may result in weaknesses in our infrastructure, give rise to operational mistakes, loss of business opportunities, loss of employees and reduced productivity among remaining employees. The physical expansion of our operations may lead to significant costs and may divert financial resources from other projects, such as the development of our product candidates. If our management is unable to effectively manage our expected development and expansion, our expenses may increase more than expected, our ability to generate or increase our revenue could be reduced and we may not be able to implement our business strategy. Our future financial performance and our ability to commercialize our product candidates, if approved, and compete effectively will depend, in part, on our ability to effectively manage the future development and expansion of our company.
We depend on key management personnel and attracting and retaining other qualified personnel, and our business could be harmed if we lose key management personnel or cannot attract and retain other qualified personnel.
Our success depends to a significant degree upon the technical skills and continued service of certain members of our management team, including Dr. André Choulika, ourco-founder and Chief Executive Officer;Officer and Dr. David Sourdive, ourco-founder and Executive Vice President Technical Operations; Eric Dutang,CMC and Manufacturing. Although we maintain “key person” insurance policies on the lives of our Chief Financial Officer; and Dr. Philippe Duchateau, our Chief Scientific Officer. Theco-founders, the loss of the services of theseour co-founders or other key executive officers could have a material adverse effect on us.
Our success also will depend upon our ability to attract and retain additional qualified management, regulatory, medical, technical, and sales and marketingtechnical executives and personnel. The failure to attract, integrate, motivate, and retain additional skilled and qualified personnel, or to find suitable replacements upon departures, could have a material adverse effect on our business.
We compete for such personnel against numerous companies, including larger, more established companies with significantly greater financial resources than we possess. In addition, failure to succeed in our product candidates’ development may make it more challenging to recruit and retain qualified personnel. There can be no assurance that we will be successful in attracting or retaining such personnel and the failure to do so could have a material adverse effect on our business, financial condition, and results of operations.
In order to induce valuable employees to remain at Cellectis, we have provided over the last yearsfrom time to time free shares and stock options to purchase ordinary shares that vest over time. The value to employees of free shares and stock options that vest over time may be significantly affected by movements in the price of our ordinary shares that are beyond our control, and may at any time be insufficient to counteract more lucrative offers from other companies. In addition, our board’s authority to grant equity incentive instruments is subject to an approval of a two-thirds majority of the votes cast of our shareholders. Our shareholders may vote against some or all resolutions giving authority to our board to grant such equity awards.
DespiteRisks Relating to Our Status as a Foreign Private Issuer and a French Company
We are limited in our effortsability to retain valuable employees,raise additional share capital, which may make it difficult for us to fund our operations.
Under French law, our share capital generally may be increased with the approval of a two-thirds majority of the votes cast of the shareholders present, represented by proxy, or voting by mail at an extraordinary general shareholders’ meeting following the
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recommendation of our board of directors. The shareholders may delegate to our board of directors either the authority (délégation de compétence) or the power (délégation de pouvoir) to carry out any increase in the share capital. Accordingly, our board of directors may be precluded from issuing additional share capital if the prior approval of the shareholders is not duly obtained.
Our By-laws and French corporate law contain provisions that may delay or discourage a takeover attempt.
Provisions contained in our By-laws and French corporate law could make it more difficult for a third party to acquire us, even if doing so might be beneficial to our shareholders. In addition, provisions of French law and our By-laws impose various procedural and other requirements, which could make it more difficult for shareholders to effect certain corporate actions. These provisions include the following:
The rights of shareholders in companies subject to French corporate law differ in material respects from the rights of shareholders of corporations incorporated in the United States.
We are a French company with limited liability. Our corporate affairs are governed by our By-laws and by the laws governing companies incorporated in France. The rights of shareholders and the responsibilities of members of our management, scientificboard of directors are in many ways different from the rights and development teams may terminate their employment with us. The lossobligations of shareholders in companies governed by the serviceslaws of anyU.S. jurisdictions. For example, in the performance of its duties, our board of directors is required by French law to consider the interests of our key executive officers company, its shareholders, its employees and other stakeholders, rather than solely our shareholders and/or creditors. It is possible that some of these parties will have interests that are different from, or in addition to, the interests of our shareholders. See the sections of this Annual Report titled “Memorandum and Articles of Association” and “Corporate Governance.”
French law may limit the amount of dividends we are able to distribute, and we do not currently intend to pay dividends.
56We have never declared or paid any cash dividends on our share capital and do not currently intend to do so for the foreseeable future. We currently intend to invest our future earnings, if any, to fund our growth. Therefore, holders of our ordinary shares and ADSs are not likely to receive any dividends for the foreseeable future and any increase in value will depend solely upon any future
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appreciation. Consequently, holders of our equity securities may need to sell all or part of their holdings after price appreciation, which may never occur, as the only way to realize any future gains.
other officers or senior employees within a short timeframe, and our inabilityFurther, under French law, the determination of whether we have been sufficiently profitable to find suitable replacements could potentially harm our business, prospects, financial condition or results of operations. We do maintain “key man” insurance policiespay dividends is made on the livesbasis of ourco-founders. Our success also depends statutory financial statements prepared and presented in accordance with standard applicable in France. Please see the section of this Annual Report titled “Memorandum and Articles of Association” for further details on the limitations on our ability to continue to attract, retaindeclare and motivate highly skilled junior,mid-level, and senior managers as well as junior,mid-level, and senior scientific and medical personnel.
The requirements of being a U.S. public company require significant resources and management attention and affectpay dividends. Therefore, we may be more restricted in our ability to attract and retain executive management and qualified board members.declare dividends than companies not based in France.
As a U.S. public company, we incur significant legal, accounting, and other expenses. We are subject to the Exchange Act, including the reporting requirements thereunder, the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Nasdaq listing requirements and other applicable securities rules and regulations. Compliance with these rules and regulations results in substantial legal and financial compliance costs and makes some activities more difficult, time-consuming or costly and increases demand on our systems and resources. These costs and other impacts would increase if we ceased to qualify as a foreign private issuer, in which case we would be required to comply with the enhanced reporting and governance requirements applicable to U.S. domestic reporting companies.
In addition, our subsidiary Calyxt is a U.S. public company, and is also subject to the Exchange Act, including the reporting requirements thereunder, the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Nasdaq listing requirements and other applicable securities rules and regulations. Having a U.S. public company subsidiary has impacted the disclosure of our financial information and has increased our legal and financial compliance costs.
Further, being a U.S. public company and a French public company has impacted the disclosure of information and required compliance with two sets of applicable rules. From time to time, this may result in uncertainty regarding compliance matters and has resulted in higher costs necessitated by legal analysis of dual legal regimes, ongoing revisions to disclosure and adherence to heightened governance practices. As a result of the enhanced disclosure requirements of the U.S. securities laws, business and financial information that we report is broadly disseminated and highly visible to investors, which we believe may increase the likelihood of threatened or actual litigation, including by competitors and other third parties, which could, even if unsuccessful, divert financial resources and the attention of our management from our operations.
We must maintain effective internal control over financial reporting, and if we are unable to do so, the accuracy and timeliness of our financial reporting may be adversely affected, which could have a material adverse effect on our business, investor confidence and market price.
We must maintain effective internal control over financial reporting in order to accurately and timely report our results of operations and financial condition. In addition, as a public company, the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, requires, among other things, that we assess the effectiveness of our disclosure controls and procedures and the effectiveness of our internal control over financial reporting at the end of each fiscal year. Pursuant to Section 404 of the Sarbanes-Oxley Act, we are required to furnish a report by our management on our internal control over financial reporting, and we are required to include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm. The rules governing the standards that must be met for our management to assess our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act are complex and require significant documentation, testing and possible remediation. These stringent standards require that our audit and finance committee be advised and regularly updated on management’s review of internal control over financial reporting.
Our compliance with applicable provisions of Section 404 requires that we incur substantial accounting expense and expend significant management attention and time on compliance-related issues as we implement additional corporate governance practices and comply with reporting requirements.
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If we fail to staff our accounting and finance function adequately or maintain internal control over financial reporting adequate to meet the requirements of the Sarbanes-Oxley Act, our business and reputation may be harmed. Moreover, if we are not able to comply with the applicable requirements of Section 404 in a timely manner, we may be subject to sanctions or investigations by regulatory authorities, including the SEC and Nasdaq. Furthermore, if we are unable to conclude that our internal control over financial reporting is effective or if our independent registered public accounting firm identifies deficiencies in our internal control over financial reporting that are deemed to be material weaknesses, we could lose investor confidence in the accuracy and completeness of our financial reports, the market price of our stock could decline, and we could be subject to sanctions or investigations by the SEC, Nasdaq or other regulatory authorities. Failure to implement or maintain effective internal control systems required of public companies could also restrict our access to the capital markets. The occurrence of any of the foregoing would also require additional financial and management resources.
Our failure to maintain certain tax benefits applicable to French technology companies may adversely affect our results of operations.
As a French technology company, we have benefited from certain tax advantages, including for example, the French research tax credit (Cré(Crédit d’Impôt Recherche)Recherche), or CIR. The CIR is a French tax credit aimed at stimulating research and development. The CIR can be offset against French corporate income tax due and the portion in excess (if any) may be refunded at the end of a three fiscal-year period (or, sooner, for smaller companies such as ours)in certain cases). The CIR receivable of $8.2 millionResearch tax credit receivables as of December 31, 2017,2023 include the accrual for a French research tax credit related to 2022 for $5.6 million and research tax credit related to previous periods for $15 million. The CIR is calculated based on our claimed amount of eligible research and development expenditures in France. The French tax authority with the assistance of the Research and Technology Ministry may audit each research and development program in respect of which a CIR benefit has been claimed and assess whether such program qualifies in their view for the CIR benefit, in accordance with the French tax code (code(code général des impôts)ts) and the releventrelevant official guidelines. The
During December 2018, the French Tax Authority initiated an audit related to the 2014, 2015, 2016 and 2017 French research tax authorities may challenge our eligibilitycredits. In January 2022, the administrative court (tribunal administratif) of Paris confirmed that Cellectis was entitled to or our calculation of certainreceive the amounts related to 2017 and 2018 tax reductions and/or deductionscredits. $0.8 million were collected in respect of our research and development activities and, shouldFebruary 2022. On March 15, 2022, the French tax authorities appealed this decision to the Paris Administrative Court of Appeal (Cour administrative d'appel de Paris) and requested that the decision be successful, we may be liable for additional corporate income tax,reversed. On May 18, 2022, the Company filed its observations in defense. By a decision dated December 13, 2023, the Paris Administrative Court of Appeal overturned the first-instance decision and penalties and interest related thereto, or we may not obtainordered the refunds for which we have applied, which could have a significant impact on our resultsreimbursement by the Company of operations and future cash flows. $0.7 million.
Furthermore, if the French Parliament decides to eliminate, modify, or reduce the scope or the rate of the CIR benefit, either of which it could decide to do at any time, our results of operations could be adversely affected.
We may be exposed to significant foreign exchange risk, which may adversely affect our financial condition, results of operations and cash flows.
We incur portions of our expenses and may in the future derive revenues in currencies other than the euro, including, in particular, the U.S. dollar. As a result, we are exposed to foreign currency exchange risk as our results of operations and cash flows are subject to fluctuations in foreign currency exchange rates. While we are engaged in hedging transactions to minimize the impact of uncertainty in future exchange rates on cash flows, we may not hedge all of our foreign currency exchange rate risk. In addition, hedging transactions carry their own risks and costs, including the possibility of a default by the counterpart to the hedge transaction. We cannot predict the impact of foreign currency fluctuations, and foreign currency fluctuations in the future may adversely affect our financial condition, results of operations and cash flows.
We may use hazardous chemicals and biological materials in our business. Any claims relating to improper handling, storage or disposal of these materials could be time consuming and costly.
We are subject to numerous environmental, health and safety laws and regulations, including those governing laboratory procedures and the handling, use, storage, treatment, manufacture and disposal of hazardous materials and wastes. Our research and development processes may involve the controlled use of hazardous materials, including chemicals and biological materials. We cannot eliminate the risk of accidental
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contamination or discharge and any resultant injury from these materials. We may be sued for any injury or contamination that results from our use or the use by third parties of these materials, and our liability may exceed any insurance coverage and our total assets. Federal, state, local or foreign laws and regulations govern the use, manufacture, storage, handling and disposal of these hazardous materials and specified waste products, as well as the discharge of pollutants into the environment and human health and safety matters. Compliance with environmental laws and regulations may be expensive and may impair our research and development efforts. If we fail to comply with these requirements, we could incur delays, substantial costs, including civil or criminal fines and penalties,clean-up costs or capital expenditures for control equipment or operational changes necessary to achieve and maintain compliance. In addition, we cannot predict the impact on our business of new or amended environmental laws or regulations or any changes in the way existing and future laws and regulations are interpreted and enforced. These current or future laws and regulations may impair our research, development or production efforts.
Our internal computer systems, or those of our third-party contractors or consultants, may fail or suffer security breaches, which could result in a material disruption of our product development programs or loss of personal data.
Despite the implementation of security measures, our internal computer systems and those of our third-party contractors and consultants are vulnerable to damage from computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures. While we do not believe that we have experienced any such system failure, accident, or security breach to date, if such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our programs. For example, the loss of clinical trial data for our product candidates could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. To the extent that any disruption or security breach results in a loss of or damage to our data or applications or other data or applications relating to our technology or product candidates, or inappropriate disclosure of confidential or proprietary information, we could incur liabilities and the further development of our product candidates could be delayed.
We may acquire businesses or products, or form strategic alliances, in the future, and we may not realize the benefits of such acquisitions.
Our current strategy does not involve plans to acquire companies or technologies facilitating or enabling us to access to new medicines, new technologies, new research projects, or new geographical areas, or enabling us to express synergies with our existing operations. However, if such acquisitions were to become necessary or attractive in the future, we may not be able to identify appropriate targets or make acquisitions under satisfactory conditions, in particular, satisfactory price conditions. In addition, we may be unable to obtain the financing for these acquisitions under favorable conditions, and could be led to finance these acquisitions using cash that could be allocated to other purposes in the context of existing operations. If we acquire businesses with promising markets or technologies, we may not be able to realize the benefit of acquiring such businesses if we are unable to successfully integrate them with our existing operations and company culture. We may encounter numerous difficulties in developing, manufacturing and marketing any new products resulting from a strategic alliance or acquisition that delay or prevent us from realizing their expected benefits or enhancing our business. We cannot assure you that, following any such acquisition, we will achieve the expected synergies to justify the transaction, which could have a material adverse effect on our business, financial conditions, earnings and prospects.
Recently enacted U.S. federal income tax reform may adversely affect the operations of our U.S. subsidiaries.
On December 22, 2017, U.S. tax reform legislation known as the Tax Cuts and Jobs Act (the “Act”) was signed into law. The Act makes substantial changes to U.S. tax law, including a reduction in the corporate tax rate, a limitation on the use of new operating losses to offset future taxable, the modification or repeal of certain business deductions and credits, and new rules designed to prevent erosion of the U.S. income tax base such as a new minimum tax, called the Base Erosion and Anti-abuse Tax, applicable to certain U.S. corporations that make
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certain payments to related foreign persons). Furthermore, the subject to the possibility of future legislation, provisions of the Act relating to certain agricultural cooperatives disadvantage independent companies such as Calyxt, which originate grain from farmers. We expect the TCJA to have significant effects on our U.S. subsidiaries, some of which may be adverse. The extent of the impact remains uncertain at this time and is subject to other regulatory or administrative developments, including any regulations or other guidance promulgated by the U.S. Internal Revenue Service, or IRS.
Risks Related to Ownership of Our Ordinary Shares and ADSs
Although not free from doubt, we do not believe we were a “passive foreign investment company,” or PFIC, for U.S. federal income tax purposes for the 2017 taxable year and do not anticipate becoming a PFIC for the current or future taxable years.ended December 31, 2023. However, we cannot assure you that we will not be classified as a PFIC for the currenttaxable year ended December 31, 2023 or any future taxable year, which may result in adverse U.S. federal income tax consequences to U.S. holders (as defined in the section titled “Taxation—Material U.S. Federal Income Tax Considerations” in this Annual Report).
Anon-U.S. corporation will be considered a PFIC for any taxable year if either (1) at least 75% of its gross income for such year is passive income or (2) at least 50% of the value of its assets (based on an average of the quarterly values of the assets during such year) is attributable to assets that produce or are held for the production of passive income. While we may have been a PFIC for previous taxable years and althoughAlthough the matter is not free from doubt, we do not believe that we were a PFIC for U.S. federal income tax purposes for the 2017 taxable year ended December 31, 2023. Because certain aspects of the PFIC rules are not entirely certain and because this determination is dependent upon a number of factors, there can be no assurance that we were not a PFIC for such taxable year or that the IRS will agree with any position we take regarding our PFIC status.
Further, no assurances may be given at this time do not anticipate becoming aas to our PFIC status for the current or future taxable years. The determination of PFIC status is fact-specific, and a separate determination must be made each taxable year as to whether we are a PFIC (after the close of each such taxable year). It is possible that we could be classified as a PFIC for the currenttaxable year ended December 31, 2023 or future taxable years due to changes in the composition of our assets or income, as well as changes to the market value of our market capitalization.assets. The market value of our assets may be determined in large part by reference to our market capitalization (and, therefore, the market price of the ADSs and our stock,ordinary shares, which has fluctuated and is likely to continue to fluctuate, substantially. substantially).
If we are a PFIC for any taxable year during which a U.S. holder holds ADSs, the U.S. holder may be subject to adverse tax consequences, including (1) the treatment of all or a portion of any gain on disposition of the ADSs as ordinary income, (2) the application of an interest charge with respect to such gain and certain dividends and (3) compliance with certain reporting requirements. Each U.S. holder is strongly urged to consult its tax advisor regarding these issues and any available elections to mitigate such tax consequences. See the section titled “Taxation—Material U.S. Federal Income Tax Considerations” in this Annual Report.
The market priceWe may have to take undesirable actions to avoid being deemed an investment company under the US Investment Company Act of 1940.
We are engaged in the development of therapeutic products based on gene-editing, with a portfolio of allogeneic Chimeric Antigen Receptor T-cell product candidates in the field of immune-oncology and gene-edited hematopoietic stem and progenitor cells product candidates in other therapeutic indications. Although we do not make speculative investments in third-party companies’ securities, from time to time, we have entered into licensing or other commercial agreements for our ADSs may be volatilewhich we have agreed to accept company securities as
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consideration. Currently, we have entered into such arrangements with Primera Therapeutics, Inc. We believe we are not an investment company within the meaning of Section 3(a)(1)(C) of the Investment Company Act of 1940, or may decline regardlessthe US Investment Company Act. However, as a result of these and other investments, volatility in the value of our operating performance.
investments could result in us being deemed an investment company within the meaning of Section 3(a)(1)(C). We will monitor our assets regularly and take all necessary steps in order to seek to ensure that we are not deemed an investment company within the meaning of Section 3(a)(1)(C) or otherwise are required to register as an investment company under the US Investment Company Act in the future. The trading price of the ADSs has fluctuated, and is likelysteps we may need to continue to fluctuate, substantially. The trading pricetake could include selling all or part of our ADSs depends oninvestments in those companies or investing in a numbergreater proportion of factors, including those described in this “Risk Factors” section, many of which are beyond our control and may not be related to our operating performance.
Since the ADSs were sold in our initial public offering in March 2015 at a price of $41.50 per share, the price per ADS has ranged as low as $16.09 and as high as $50.00 through March 12, 2018. The market price of the ADSs may fluctuate significant in response to numerous factors, many of which are beyond our control, including:
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Thesetiming and other market and industry factors, may cause the market price and demand for our ADSs to fluctuate substantially, regardless of our actual operating performance, which may limit or prevent holders from readily selling their ADSs and may otherwise negatively affect the liquidity of our capital shares. In addition, the stock market in general, and biopharmaceutical companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies.
Share ownership is concentrated in the hands of our principal shareholders and management, who will continue to be able to exercise a direct or indirect controlling influence on us.
Our executive officers, directors, current 5% or greater shareholders and affiliated entities beneficially own approximately 47.21% of our ordinary shares outstanding (including those underlying our ADSs) as of February 28, 2018. As a result, these shareholders, acting together, have significant influence over all matters that require approval by our shareholders, including the election of directors and approval of significant corporate transactions. Corporate action might be taken even if other shareholders oppose them. This concentration of ownership might also have the effect of delaying or preventing a change of control of our company that other shareholders may view as beneficial.
If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, the price of our ADSs and trading volume could decline.
The trading market for our ADSs depends in part on the research and reports that securities or industry analysts publish about us or our business. If few or no securities or industry analysts cover us, the trading price
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for our ADSs would be negatively impacted. If one or more of the analysts who covers us downgrades our ADSs or publishes incorrect or unfavorable research about our business, the price of our ADSs would likely decline. Iftaking one or more of these analysts ceases coveragesteps may serve as a distraction of management’s attention from our primary business or may require us to transact at undesirable market prices. If we are unable to take the necessary steps to avoid being inadvertently deemed an investment company or failsotherwise being required to publish reports on us regularly, or downgradesregister under the US Investment Company Act, we would not be able to offer our ADSs,securities in the United States until we were no longer deemed an investment company under the US Investment Company Act. We could also causebe subject to other adverse consequences as a result thereof.
As a foreign private issuer, we are exempt from a number of rules under the price of our ADSs or trading volumeU.S. securities laws and are permitted to decline.
We do not currently intend to pay dividends on our securities. In addition, French lawfile less information with the SEC than a U.S. company. This may limit the amountinformation available to holders of dividendsADSs.
We are a “foreign private issuer,” as defined in the SEC’s rules and regulations and, consequently, we are ablenot subject to distribute.
We have never declaredall of the disclosure requirements applicable to public companies organized within the United States. For example, we are exempt from certain rules under the Exchange Act that regulate disclosure obligations and procedural requirements related to the solicitation of proxies, consents or paid any cash dividends onauthorizations applicable to a security registered under the Exchange Act, including the U.S. proxy rules under Section 14 of the Exchange Act. In addition, our share capitalofficers and do not currently intenddirectors are exempt from the reporting and “short-swing” profit recovery provisions of Section 16 of the Exchange Act and related rules with respect to do so for the foreseeable future. We currently intend to invest our future earnings, if any, to fund our growth. Therefore, holderstheir purchases and sales of our ordinary sharessecurities. Moreover, while we currently make annual and ADSsquarterly filings with the SEC, we are not likelyrequired to receive any dividends forfile periodic reports and financial statements with the foreseeable futureSEC as frequently or as promptly as U.S. domestic public companies and any increaseare not required to file quarterly reports on Form 10-Q or current reports on Form 8-K under the Exchange Act. Accordingly, there may be less publicly available information concerning our company than there would be if we were a U.S. domestic issuer.
As a foreign private issuer, we follow certain home country practices in value will depend solely upon any future appreciation. Consequently, holders of our equity securitiesrelation to corporate governance matters that differ significantly from Nasdaq corporate governance standards. These practices may needafford less protection to sell all or part of their holdings after price appreciation, which may never occur, as the only way to realize any future gains.shareholders than they would enjoy if we complied fully with Nasdaq’s corporate governance standards.
Further, under French law, the determination of whether we have been sufficiently profitable to pay dividends is madeAs a foreign private issuer listed on the basisNasdaq Global Market, we are subject to Nasdaq’s corporate governance standards. However, as a foreign private issuer, Nasdaq’s rules permit us to follow the corporate governance practices of our statutory financial statements prepared and presented in accordance with French generally accepted accounting principles called“Plan Comptable Général” defined by the regulation99-03France, which differ significantly from the Committeecertain corporate governance standards of the French Accountancy Regulation. In addition, payment of dividends may subject us to additional taxes under French law. Please see the section of this Annual Report titled “Memorandum and Articles of Association” for further details on the limitations on our ability to declare and pay dividends and the taxes that may become payable by us if we elect to pay a dividend. Therefore, we may be more restricted in our ability to declare dividends than companies not based in France.
In addition, exchange rate fluctuations may affect the amount of euros that we are able to distribute, and the amount in U.S. dollars that our shareholders receive upon the payment of cash dividends or other distributions we declare and pay in euros, if any. These factors could harm the value of our equity securities, and, in turn, the U.S. dollar proceeds that holders receive from the sale of ADSs.
Future sales of ordinary shares or ADSs by existing shareholders could depress the market price of the ADSs.
We believe that additional capital may be needed in the future to continue our planned operations, including conducting our planned clinical trials, manufacturing and commercialization efforts, expanded research and development activities and costs associated with operating as a public company. As of February 28, 2018, approximately 7,664,904 of our outstanding ordinary shares (excluding those underlying ADSs) are held by directors, executive officers and other affiliates and continue to be subject to resale limitations under Rule 144 under the Securities Act. If our existing shareholders sell, or indicate an intent to sell, substantial amounts of ordinary shares or ADSs in the public market, the trading price of our ordinary shares and/or ADSs could decline significantly. In addition, the sale of these securities could impair our ability to raise capital through the sale of additional securities.
Risks Related to Investing in a Foreign Private Issuer or French Company
OurBy-laws and French corporate law contain provisions that may delay or discourage a takeover attempt.
Provisions contained in ourBy-laws andNasdaq. For example, neither the corporate laws of France the country innor our By-laws require a majority of our directors to be independent and our independent directors are not required to hold regularly scheduled meetings at which weonly independent directors are incorporated, could make it more difficult for a third party to acquire us, even if doing so might be beneficial to our shareholders.present. In addition, provisionsFrench governance practice does not require us to maintain a nominating and corporate governance committee or to maintain a compensation committee composed entirely of French law andindependent directors. Currently, we follow home country practice in certain key respects. Therefore, ourBy-laws impose various procedural and other requirements, shareholders may be afforded less protection than they otherwise would have under corporate governance listing standards applicable to U.S. domestic issuers. A discussion of our corporate governance practices is set forth in the section titled “Management—Corporate Governance Practices.”
We may lose our foreign private issuer status in the future, which could make it more difficult for shareholders to effect certain corporate actions. These provisions include the following:result in significant additional cost and expense.
a merger (i.e., in a French law context, stock-for-stock exchange after whichBased on our company would be dissolved without being liquidated into the acquiring entity and our shareholders would become
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We will lose our foreign private issuer status if, as of the European Union would require the unanimous approvalrelevant determination date, more than 50% of our shareholders;
As of June 30, 2023, approximately 22.4% of our securities were held by persons who were U.S. residents.
The regulatory and compliance costs to increase our share capital or to issue additional ordinary shares or otherus under U.S. securities (for example, warrants) to our shareholders, the public or qualified investors, includinglaws as a possible defence followingU.S. domestic public company would be significantly more than the launching ofcosts we currently incur as a tender offer for our shares;
Certain members of any additional shares or securities giving the right, immediately or in the future, to new shares for cash or a set-off of cash debts, which rights may only be waived by the extraordinary general meeting (by atwo-thirds majority vote) of our shareholders or on an individual basis by each shareholder;
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indemnification from the directors of a director, subjectcompany in the company’s interest if it fails to bring such legal action itself. If so, any damages awarded by the court are paid to the approval by the shareholders ofcompany and any legal fees relating to such appointment at the next shareholders’ meeting, which prevents shareholders from having the sole right to fill vacancies on our board of directors;
The enforceability of any judgment in addition to other certain obligations; seeFrance will depend on the section of this Annual Report titled “Declaration of Crossing of Ownership Thresholds”; and
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Risks Related to Ownership of Our ADSs
Holders of our ADSs do not directly hold our ordinary shares.
As an ADS holder, youHolders of ADSs are not treated as one of our shareholders and you do not have ordinary shareholder rights. French law governs shareholder rights. The depositary, Citibank, N.A.,through the custodian or the custodian’s nominee, is the holder of the ordinary shares underlying yourall ADSs. As a holderHolders of ADSs you have only ADS holder rights. Among other things, ADS holder rights do not provide for double voting rights, which otherwise would be available to holders of ordinary shares held in a shareholders’ name for a period of at least two years. A double voting right is attached to each registered share which is held in the name of the same shareholder for at least two years. The deposit agreement among us, the depositary and you,purchasers of ADSs in the U.S. offering, as an ADS holder, and all other persons directly and indirectly holding ADSs, sets out ADS holder rights, as well as the rights and obligations of us and the depositary.
Holders of our ADSs may not be able to exercise their right to vote the ordinary shares underlying such ADSs.
Holders of ADSs may exercise voting rights with respect to the ordinary shares represented by the ADSs only in accordance with the provisions of the deposit agreement and not as a direct shareholder. The deposit agreement provides that, upon receipt of notice of any meeting of holders of our ordinary shares, the depositary will fix a record date for the determination of ADS holders who shall be entitled to give instructions for the exercise of voting rights. Upon timely receipt of notice from us, if we so request, the depositary shall distribute to the holders as of the record date (1) the notice of the meeting or solicitation of consent or proxy sent by us and (2) a statement as to the manner in which instructions may be given by the holders.
Holders of ADSs may instruct the depositary of the ADSs to vote the ordinary shares underlying such ADSs. Otherwise, holders of our ADSs will not be able to exercise their right to vote, unless they withdraw the ordinary shares underlying such ADSs. However, holders of our ADSs may not know about the meeting far enough in advance to withdraw those ordinary shares. If we ask for instructions, the depositary, upon timely notice from us, will notify holders of our ADSs of the upcoming vote and arrange to deliver our voting materials to such holders. We cannot guarantee that holders of our ADSs will receive the voting materials in time to ensure that they can instruct the depositary to vote such ordinary shares or to withdraw such ordinary shares so as to vote them directly. If the depositary does not receive timely voting instructions from holders of our ADSs, it may give a proxy to a person designated by us to vote the ordinary shares underlying such ADSs in accordance with the recommendation of our board of directors. In addition, the depositary and its agents are not responsible for failing to carry out voting instructions or for the manner of carrying out voting instructions. This means that holders of our ADSs may not be able to exercise their right to vote, and there may be nothing such holders can do if the ordinary shares underlying such ADSs are not voted as requested.
The rights of shareholders in companies subject to French corporate law differ in material respects from the rights of shareholders of corporations incorporated in the United States.
We are French société anonyme with our registered office in France. Our corporate affairs are governed by our By-laws and by the laws governing companies incorporated in France. The rights of shareholders and the responsibilities of members of our board of directors are in many ways different from the rights and obligations of shareholders in companies governed by the laws of U.S. jurisdictions. For example, in accordance with French law, while a double voting right is attached to each ordinary share which is held in registered form in the name of the same shareholder for at least two years, ordinary shares deposited with the depositary will not be entitled to double voting rights. Therefore, holders of ADSs who wish to obtain double voting rights will need to surrender their ADSs, withdraw the deposited shares, and take the necessary steps to hold such ordinary shares in registered form in the holder's name for at least two years. See "Item 16G—Corporate Governance".
The right of holders of our ADSs to participate in any future preferential subscription rights or to elect to receive dividends in shares may be limited, which may cause dilution to holders of ADSs.ADSs; Our preferred shares may cause further dilution.
According to French law, if we issue additional shares or securities for cash, giving right, immediately or in the future, to new shares, current shareholders will have preferential subscription rights for these securities proportionally to their shareholding in our company unless they waive those rights at an extraordinary meeting of our shareholders (by atwo-thirds majority vote) or individually by each shareholder. However, our ADS holders in the United States will not be entitled to exercise or sell such rights unless we register the rights and the securities to which the rights relate under the Securities Act or an exemption from the registration requirements is available. In addition, the deposit agreement for our ADSs provides that the depositary will not make rights available to holders of our ADSs unless the distribution to ADS holders of both the rights and any related securities are either registered under the Securities Act or exempted from registration under the Securities Act. Further, if we offer holders of our ordinary shares the option to receive dividends in either cash or shares, under the deposit agreement the depositary may require satisfactory assurances from us that extending the offer to holders of ADSs does not require registration of any securities under the Securities Act before making the option available to holders of ADSs. We are under no obligation to file a registration statement with respect to any such
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rights or securities or to endeavor to cause such a registration statement to be declared effective. Moreover, we may not be able to establish an exemption from registration under the Securities Act. Accordingly, ADS holders may be unable to participate in our rights offerings or to elect to receive dividends in shares and may experience dilution in their holdings. In addition, if the depositary is unable to sell rights that are not exercised or not distributed or if the sale is not lawful or reasonably practicable, it will allow the rights to lapse, in which case holders of our ADSs willholdings and may receive no value for these rights.
Our "class A" preferred shares and our "class B" preferred shares once issued pursuant to the Subsequent Investment Agreement would benefit from a preferential distribution right in the event of a liquidation of the Company, which could cause substantial dilution and have an adverse effect on the value of our ordinary shares. In addition, our "class A" preferred shares and our "class B" preferred shares would be convertible, in whole or in part, at their holder’s option, into ordinary shares of the Company. Such conversion of our "class A" preferred shares and our "class B" preferred shares could result in significant dilution to our shareholders. For more information
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on our "class A" preferred shares and our "class B" preferred shares to be issued, see Exhibit 2.3 to this Annual Report, which is incorporated by reference herein.
Holders of our ADSs may be subject to limitations on the transfer of such ADSs and the withdrawal of the underlying ordinary shares.
ADSs, which may be evidenced by American Depositary Receipts, or ADRs, are transferable on the books of the depositary. However, the depositary may close its books at any time or from time to time when it deems expedient in connection with the performance of its duties. The depositary may refuse to deliver, transfer or register transfers of ADSs generally when our books or the books of the depositary are closed, or at any time if we or the depositary think it is advisable to do so because of any requirement of law, government or governmental body, or under any provision of the deposit agreement, or for any other reason subject to an ADS holders’ right to cancel such ADSs and withdraw the underlying ordinary shares. Temporary delays in the cancellation of such ADSs and withdrawal of the underlying ordinary shares may arise because the depositary has closed its transfer books or we have closed our transfer books, the transfer of ordinary shares is blocked to permit voting at a shareholders’ meeting or we are paying a dividend on our ordinary shares. In addition, holders of our ADSs may not be able to cancel such ADSs and withdraw the underlying ordinary shares when such holders owe money for fees, taxes and similar charges and when it is necessary to prohibit withdrawals in order to comply with any laws or governmental regulations that apply to ADSs or to the withdrawal of ordinary shares or other deposited securities.
The market price for our ADSs may be volatile or may decline regardless of our operating performance.
The trading price of the ADSs has fluctuated, and is likely to continue to fluctuate, substantially. Since the ADSs were sold in our initial public offering in March 2015 at a price of $41.50 per share, the price per ADS has ranged as low as $0.97 and as high as $47.66 through April 29, 2024. The market price of the ADSs may fluctuate significant in response to numerous factors, including those described in this “Risk Factors” section, many of which are beyond our control. The market price and demand for our ADSs may also fluctuate substantially, regardless of our actual operating performance, which may limit or prevent holders from readily selling their ADSs and may otherwise negatively affect the liquidity of our capital shares.
Share ownership is concentrated in the hands of our principal shareholders and management, who will continue to be able to exercise substantial influence on us.
Our executive officers, directors, current 5% or greater shareholders and affiliated entities beneficially own approximately 42.35% of our ordinary shares outstanding (including those underlying our ADSs, but excluding shares that may be acquired upon exercise of stock options or warrants) as of December 31, 2023. As a foreign private issuer, we are exempt from a number of rules under the U.S. securities laws and are permitted to file less information with the SEC than a U.S. company. This may limit the information available to holders of ADSs.
We are a “foreign private issuer,” as defined in the SEC’s rules and regulations and, consequently, we are not subject toresult, these shareholders have significant influence over all of the disclosure requirements applicable to public companies organized within the United States. For example, we are exempt from certain rules under the Exchange Actmatters that regulate disclosure obligations and procedural requirements related to the solicitation of proxies, consents or authorizations applicable to a security registered under the Exchange Act,require approval by our shareholders, including the U.S. proxy rules under Section 14 of the Exchange Act. In addition, our officers and directors are exempt from the reporting and “short-swing” profit recovery provisions of Section 16 of the Exchange Act and related rules with respect to their purchases and sales of our securities. Moreover, while we currently make annual and quarterly filings with the SEC, we are not required to file periodic reports and financial statements with the SEC as frequently or as promptly as U.S. domestic public companies and are not required to file quarterly reports on Form10-Q or current reports on Form8-K under the Exchange Act. Accordingly, there may be less publicly available information concerning our company than there would be if we were a U.S. domestic issuer.
As a foreign private issuer, we follow certain home country practices in relation to corporate governance matters that differ significantly from Nasdaq corporate governance standards. These practices may afford less protection to shareholders than they would enjoy if we complied fully with Nasdaq’s corporate governance standards.
As a foreign private issuer listed on the Nasdaq Global Market, we are subject to corporate governance standards. However, Nasdaq’s rules permit a foreign private issuer like us to follow the corporate governance practices of its home country. Certain corporate governance practices in France, which is our home country, may differ significantly from corporate governance standards of the Nasdaq. For example, neither the corporate laws of France nor ourBy-laws require a majority of our directors to be independent and our independent directors are
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not required to hold regularly scheduled meetings at which only independent directors are present. In addition, home country practice in France does not require us to maintain a nominating and corporate governance committee or to maintain a compensation committee composed entirely of independent directors. Currently, we follow home country practice in certain key respects. Therefore, our shareholders may be afforded less protection than they otherwise would have under corporate governance listing standards applicable to U.S. domestic issuers. A discussion of our corporate governance practices is set forth in the section titled “Management—Corporate Governance Practices.”
We may lose our foreign private issuer status in the future, which could result in significant additional cost and expense.
While we currently qualify as a foreign private issuer, the determination of foreign private issuer status is made annually on the last business day of our most recently completed second fiscal quarter and, accordingly, the next determination will be made with respect to us on June 30, 2018.
In the future, we would lose our foreign private issuer status if we to fail to meet the requirements necessary to maintain our foreign private issuer status as of the relevant determination date. For example, if more than 50% of our securities are held by U.S. residents and more than 50% of our executive officers or members of our board of directors are residents or citizens of the United States, we could lose our foreign private issuer status.
The regulatory and compliance costs to us under U.S. securities laws as a U.S. domestic public company would be significantly more than costs we currently incur as a foreign private issuer. If we lost our foreign private issuer status, we would be required to file periodic reports on Form10-Q and current reports on Form8-K, to file periodic reports and registration statements on U.S. domestic issuer forms with the SEC, which are more detailed and extensive in certain respects than the forms available to a foreign private issuer. We would be required under current SEC rules to prepare our financial statements in accordance with U.S. GAAP, rather than IFRS, in U.S. dollars rather than euros. Such conversion of our financial statements to U.S. GAAP would involve significant time and cost. In addition, we would lose our ability to rely upon exemptions from certain corporate governance requirements of the Nasdaq that are available to foreign private issuers, such as the ones described above, and we would be required to modify certain of our policies to comply with corporate governance practices associated with U.S. domestic issuers. Moreover, we would lose our ability to rely upon exemptions from procedural requirements related to the solicitation of proxies.
It may be difficult to enforce civil liabilities against our company and directors and senior management and the experts named in this Annual Report.
Certain members of our boardelection of directors and senior management and thoseapproval of our subsidiaries, arenon-residentssignificant corporate transactions. Corporate action might be taken even if other shareholders oppose them. This concentration of the United States, and all or a substantial portion of our assets and the assets of such persons are located outside the United States. As a result, it may not be possible to serve process on such persons or us in the United States or to enforce judgments obtained in U.S. courts against them or us based on civil liability provisions of the securities laws of the United States. Additionally, it may be difficult to assert U.S. securities law claims in actions originally instituted outside of the United States. Foreign courts may refuse to hear a U.S. securities law claim because foreign courts may not be the most appropriate forums in which to bring such a claim. Even if a foreign court agrees to hear a claim, it may determine that the law of the jurisdiction in which the foreign court resides, and not U.S. law, is applicable to the claim. Further, if U.S. law is found to be applicable, the content of applicable U.S. law must be proved as a fact, which can be a time-consuming and costly process, and certain matters of procedure would still be governed by the law of the jurisdiction in which the foreign court resides. In particular, there is some doubt as to whether French courts would recognize and enforce certain civil liabilities under U.S. securities laws in original actions or judgments of U.S. courts based upon these civil liability provisions. In addition, awards of punitive damages in actions brought in the United States or elsewhere may be unenforceable in France. An award for monetary damages under the U.S. securities laws would be considered punitive if it does not seek to compensate the claimant for loss or damage suffered but is intended to
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punish the defendant. French law provides that a shareholder, or a group of shareholders, may initiate a legal action to seek indemnification from the directors of a corporation in the corporation’s interest if it fails to bring such legal action itself. If so, any damages awarded by the court are paid to the corporation and any legal fees relating to such action are borne by the relevant shareholder or the group of shareholders.
The enforceability of any judgment in France will depend on the particular facts of the case as well as the laws and treaties in effect at the time. The United States and France do not currently have a treaty providing for recognition and enforcement of judgments (other than arbitration awards) in civil and commercial matters.
Provisions in our collaboration agreement with Servier may prevent or delay a change in control.
Our collaboration agreement with Servier provides that if any third party begins to control us, directly or indirectly, by any means, or in the event that we engage in a change of control transaction, including, but not limited to, the sale of all or substantially all of our assets or all or substantially all of our assets that are material to the performance of our obligations under the collaboration agreement, then Servier has the right tobuy-out our interest in thepre-candidate products, product candidates, and products as described under the collaboration agreement. We refer to this right to acquire such interest as thebuy-out. In the event we fail to agree with Servier on the amount of payment for our interest in thepre-candidate products, product candidates or products within twenty days following Servier’s provision of abuy-out notice, then thebuy-out payment would be determinedby-third party valuators.
Thebuy-out mayownership might also have the effect of delaying or preventing a change inof control transaction involving us, or may reduce the number of companies interested in acquiring us. If Servier were to exercise thebuy-out, it would gain exclusive development and marketing rights to thepre-candidate products, product candidates and products developed under the collaboration agreement. Were this to happen, our successor would not receive milestone payments or royalty payments on net sales of any of the products sold to Servier in connection with thebuy-out. These provisions could have the effect of delaying or preventing a change in control transaction involving Cellectis, or could reduce the number of companies interested in acquiring us.
The rights of shareholders in companies subject to French corporate law differ in material respects from the rights of shareholders of corporations incorporated in the United States.
We are a French company with limited liability. Our corporate affairs are governed by ourBy-laws and by the laws governing companies incorporated in France. The rights of shareholders and the responsibilities of members of our board of directors are in many ways different from the rights and obligations of shareholders in companies governed by the laws of U.S. jurisdictions. For example, in the performance of its duties, our board of directors is required by French law to consider the interests of our company itsthat other shareholders its employees and other stakeholders, rather than solely our shareholders and/or creditors. It is possible that some of these parties will have interests that are different from, or in addition to, the interests of our shareholders. See the sections of this Annual Report titled “Memorandum and Articles of Association” and “Corporate Governance.”may view as beneficial.
ITEM 4. INFORMATION ON THE COMPANY
A. History and Development of the Company
Our legal name is Cellectis SA and our commercial name is Cellectis S.A.Cellectis. We were incorporated as asociété anonyme,, or S.A., under the laws of the French Republic on January 4, 2000 for a period of 99 years. We are registered at the Paris Registre du Commerce et des Sociétés under the number 428 859 052. Our principal executive offices are located at 8, rue de la Croix Jarry, 75013 Paris, France, and our telephone number is +33 1 81 69 16 00. Our agent for service of process in the United States is Cellectis, Inc. located at 430 East 29th29th Street, New York, New York 10016. We also maintain a website at www.cellectis.com. The reference to our website is an inactive textual reference only and the information contained in, or that can be accessed through, our website is not a part of this Annual Report.
On May 31, 2023, Calyxt, Inc. completed its all-stock, reverse merger business combination with Cibus Global. Following the closing of the Merger, effective on June 1, 2023, the combined company operates under the name of Cibus, Inc. (referred to as “Cibus”). Cellectis’ equity interest in Cibus was reduced to 2.9% after the closing of the Merger, which resulted in Cellectis losing control of Cibus. Cibus was deconsolidated on June 1, 2023. Cibus's results are included in the Group's results until May 31, 2023, and continue to be presented as the results of discontinued operations until that date.
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Our actual capital expenditures and additions to tangible and intangible assets for the years ended December 31, 2015, 20162021, 2022 and 20172023 together amounted to $4.4million, $14.6$19.7 million, $3.3 and $2.6$1.1 million respectively. These expenditures primarily consisted of the acquisitions of industrial and laboratory equipment and fittings required to conduct our research programs.programs, the improvements of Cellectis’ sites and investments in connection with the construction of our new manufacturing facilities in Paris and in the United States. We expect our capital expenditures to increase in absolute terms in the near term as we continue to advance our research and development programs and grow our operations. We anticipate our capital expenditure in 20182024 to be financed from our cash and cash equivalents on hand. Primarily, these capital expenditures will be made both in France and in the United States, where our research and development facilities are currently located.
On January 21, 2015, we signed a lease for an administrativeFor information on the SEC’s website and research facility in New York, New Yorkour website, please refer to enhance our presence in the United States. This facility, which includes largestate-of-the-art research laboratories, opened“Item 10.H. Documents on April 8, 2015, and supports the development of ourCAR-T pipeline. In March 2016, we entered into a lease for a 26,928 square-foot space in Montvale, New Jersey, which we intend to discontinue before its scheduled expiration in September 2026.Display”.
In March 2016, Calyxt acquired10-acres in 2 parcels in Roseville, Minnesota, and a headhouse and a greenhouse were built and they have been in operations since September 2016. In the third quarter of 2017, Calyxt entered into a sale and lease-back agreement related to these land and buildings. See Item 4D for further information.Business Overview
We are a clinical stage biotechnological company, employing our core proprietary technologies to developbest-in-class products based on gene-editing, with a portfolio of allogeneic Chimeric Antigen Receptor T-cells, or UCART, product candidates in the field of immuno-oncology. immuno-oncology and gene-edited hematopoietic stem and progenitor cells, or HSPC, product candidates in other therapeutic indications.
Our UCART product candidates, based on gene-editedT-cells that express chimeric antigen receptors, or CARs, seek to harness the power of the immune system to target and eradicate cancer cells. We believe thatCAR-based immunotherapy is one of the most promising areas of cancer research, representing a new paradigm for cancer treatment. We are designing next-generation immunotherapies that are based on gene-edited CART-cells. Our gene-editing technologies allow us to create allogeneic CART-cells, meaning they are derived from healthy donors rather than the patients themselves. We believe that the production of allogeneic CART-cells will allow us to develop cost-effective,off-the-shelf “off-the-shelf” products that are capable of being cryopreserved, stored and distributed worldwide. Our gene-editing expertise also enables us to develop product candidates that feature additionalcertain safety and efficacy attributes, including control
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properties designed to prevent them from attacking healthy tissues, to enable them to tolerate standard oncology treatments, and to equip them to resist mechanisms that inhibit immune-system activity. In addition to
Together with our focus on immuno-oncology, we are exploring the use ofusing, through our .HEAL platform, our gene-editing technologies in other therapeutic applications, as well as to develop healthier food productsHSPC product candidates for genetic diseases. .HEAL is a growing population.new gene-editing platform developed by Cellectis that leverages the power of TALEN technology to allow highly efficient gene inactivation, insertion and correction in hematopoietic stem and progenitor cells.
Cancer is the second-leading cause of death in the United States and accounts for around one in four deaths. Immuno-oncology seeks to harness the power of the body’s immune system to target and kill cancer. A key to this effort is a type of white blood cell known as theT-cell, which plays an important role in identifying and killing cancer cells. Unfortunately, cancer cells often develop mechanisms to evade the immune system. CARs, which are engineered receptors that can be expressed on the surface ofT-cells, provide theT-cells with a specific targeting mechanism, thereby enhancing its ability to seek, identify, interact with and destroy tumor cells bearing a selected antigen. Research and development of CART-cell immunotherapies currently focuses on two approaches: autologous and allogeneic therapies. Autologous CART-cell immunotherapies modify a patient’s ownT-cells to target specific antigens that are located on cancer cells. This type of therapy requires an individualized immunotherapy product for each patient and is currently being tested in clinical trials by several academic institutions, and biotechnology and pharmaceutical companies. In contrast, an allogeneic CART-cell immunotherapy is an approach by which a cancer patient is infused with a mass-produced,off-the-shelf immunotherapy product derived from a healthyT-cell donor. Our initial focus is on developing allogeneic treatments, and we believe that we are the leading company pursuing this approach.
Limitations of Current Autologous Treatments and Key Benefits of our UCART approach
68Many of the CAR T-cell immunotherapy treatments currently under development are created through an autologous approach in which the patient’s own T-cells are engineered to fight cancer cells. Part of our scientific basis for pursuing allogeneic approaches rests in the recognized limitations of autologous approaches, including:
Although some autologous approaches to CAR T-cell have demonstrated encouraging clinical data, we believe our CAR-T approach and manufacturing process has the potential to provide the following benefits:
A key enabler of the allogeneic approach is our gene editing technology, relying on a particular class of proteins derived from transcription activator-like effectors fused to the nuclease domain of a type II restriction endonuclease (TALEN). Gene editing is a type of genetic engineering in which DNA is inserted, deleted, repaired or replaced from a precise location in the genome. The most fundamental challenge of gene editing is the need to specifically and efficiently target a precise DNA sequence within a gene. Our proprietary nuclease-based gene-editing technologies, combined with 18over 20 years of genome engineering experience, allow us to edit any gene with highly precise insertion, deletion, repair and replacement of DNA sequences. Our nucleases, including a particular class of proteins derived from transcription activator-like effectorsTALEN, act like DNA scissors to edit genes at precise target sites and allow us to design allogeneic CART-cells. Our patented PulseAgile electroporation technology allows us to efficiently deliver our clinical grade nucleases into human cells while preserving cell viability, making it particularly well-suited for a large-scale manufacturing process. We believe these technologies will enable our clinical gradeclinical-grade drug therapeutic products to be manufactured, cryopreserved, stored, distributed broadly and infused into patients in anoff-the-shelf approach.
Our candidate products
We are directly developing productsproduct candidates internally and through strategic allianceshave also entered into licensing relationships with PfizerAstraZeneca, Allogene, and Servier. We believe that our alliancesagreements with PfizerAstraZeneca, Allogene and Servier have validated our technology platform, our strong expertise in the allogeneic CART-cells field, in the field of gene editing and the strength of our intellectual property portfolio.
Under the AZ JRCA (as defined below), AZ Ireland has an exclusive right to pursue the development and commercialization of products for a total of 10 selected candidate products.
Under the License Agreement dated March 8, 2019 between Allogene and us (the “Allogene License Agreement”), Allogene has exclusive rights to pursue development and commercialization of products for a total of fifteen selected targets, including BCMA (targeted by the Allogene’s product candidates named “ALLO-715” and “ALLO-605”), FLT3 (targeted by the Allogene’s product candidate named “ALLO-819”), CD70 (targeted by the Allogene’s product candidate named “ALLO-316”), DLL3 (targeted by Allogene’s product candidate named “ALLO-213”) and claudin 18.2 (targeted by Allogene’s product candidate named “ALLO-182”).
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We have also a license agreement with Iovance Biotherapeutics, Inc. ("Iovance"). In addition, under the License, Development and Commercialization Agreement dated March 6, 2019, between Servier and us, and as amended on March 4, 2020 (as so amended, the “Servier License Agreement”), Servier has an exclusive worldwide license to develop and commercialize gene-edited allogeneic CAR T-cell products targeting CD19, including ALLO-501A, in the field of anti-tumor adoptive immunotherapy (Allogene’s product candidate developed pursuant to a sublicense by Servier to Allogene).
The exclusive rights for the development and commercialization of UCART19 in the United States have been sublicensed by Servier to Allogene.
For more information about these licensing relationships, see "Item 4. Information on the Company—B. Business Overview—Our Licensing Relationships."
Historical Overview – Product Candidates Being Developed Pursuant to Licenses
AstraZeneca
Under the AZ JRCA, AZ Ireland has an exclusive right to pursue the development and commercialization of products for a total of 10 selected candidate products.
UCART19
In 2016, Servier commenced two Phase I1 clinical studies for the first version of UCART19, one in adult Acute Lymphoblastic Leukemia (ALL), referred to as the CALM study, and one in pediatric ALL, referred to as the PALL study. The CALM study is commenced in the United Kingdom, the United States, and France, and the PALL study is commenced in the United Kingdom, Belgium and France. We refer in this Annual Report to the CALM and the PALL studies,Studies, collectively as the UCART19 Clinical Studies.
In November 2015, when we exclusively licensed2020, the rightsPhase 1 of the UCART19 Studies were completed. Servier has informed us that no additional patients are planned for enrollment.
ALLO-501 and cemacabtagene ansegedleucel or cema-cel (previously known as ALLO-501A)
In January 2019, Allogene announced, in collaboration with Servier, that the FDA approved the Investigational New Drug (IND) for a Phase 1 clinical study for ALLO-501, in relapsed or refractory Non-Hodgkin Lymphoma (NHL), which is referred to as the “ALPHA Study”. The ALLO-501 candidate product is similar to UCART19 and is licensed to Allogene, pursuant to the sublicense from Servier Servierdiscussed above.
In February 2020, Allogene announced that the FDA had approved the IND for a Phase 1/2 clinical study for ALLO-501A in NHL, which is referred to as the “ALPHA2 Study”. The ALLO-501A candidate product was created to omit the rituximab recognition domains originally added in ALLO-501, allowing for use in a broader patient population, including those NHL patients with recent rituximab exposure.
In February 2021, Allogene announced that the FDA had granted fast track designation to ALLO-501A for r/r LCBL.
In October 2021, Allogene announced that the FDA had placed a hold on all Allogene’s CAR T clinical trials based on a report of a chromosomal abnormality detected post-Allo CAR T administration in a single patient treated with ALLO-501A in the ALPHA2 Study. In January 2022, Allogene announced that the FDA removed the clinical hold on all of its AlloCAR T clinical trials.
In June 2022, Allogene announced that the FDA granted Regenerative Medicine Advance Therapy (RMAT) designation to ALLO-501A in relapsed or refractory diffuse large B cell lymphoma (LBCL).
In October 2022, Allogene announced the initiation of the “potentially” pivotal Phase 2 clinical trial of ALPHA2 trial in patients with relapsed or refractory large B-cell lymphoma. Allogene also announced that it was in the process of initiating the EXPAND trial, which is a separate potentially registration trial for ALLO-647—Allogene’s anti-CD52 monoclonal antibody. Allogene has stated that, assuming favorable outcomes and subject to FDA discussions, Allogene plans to seek FDA approval of ALLO-501A and ALLO-647 on the basis of the ALPHA2 trial and the EXPAND companion trial.
In January 2024, Allogene announced it will focus on the development of its investigational product cemacabtagene ansegedleucel, or cema-cel (previously known as ALLO-501A), as part of a first line treatment plan for newly diagnosed and treated LBCL patients who are likely to relapse and need further therapy (ALPHA3 pivotal Phase 2 clinical trial). As a result, Allogene announced it will deprioritize the currently enrolling third line (3L) LBCL ALPHA2 and EXPAND trials. Furthermore, Allogene announced a new Phase 1b ALPHA2 cohort of up to 40 relapsed/refractory chronic lymphocytic leukemia/small lymphocytic lymphoma (CLL/SLL) patients to be treated with the investigational product cema-cel.
ALLO-316
In December 2020, Allogene announced that the FDA had approved the IND for a Phase 1 clinical study for ALLO-316, in Renal Cell Carcinoma (RCC), which is referred to as the “TRAVERSE Study.” ALLO-316 is a gene-edited allogeneic CAR T-cell product targeting CD70 and is licensed to Allogene pursuant to the Allogene License Agreement.
In October 2021, Allogene announced that the FDA had placed a hold on all Allogene’s AlloCAR T clinical trials based on a report of a chromosomal abnormality detected post-Allo CAR T administration in a single patient treated with ALLO-501A in the ALPHA2 study. In January 2022, Allogene announced that the FDA has removed the clinical hold on all of its AlloCAR T clinical trials.
In March 2022, Allogene announced that the FDA has granted Pfizer the exclusive rightsfast track designation to ALLO-316.
Allogene - Other Programs
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Allogene has additional programs in its pipeline under license, including ALLO-715 and ALLO-605, which target BCMA for the developmenttreatment of MM, ALLO-819, which targets FLT3 for the treatment of acute myeloid leukemia, ALLO-213, which targets DLL3 for the treatment of small cell lung cancer, and ALLO-182, which targets Claudin 18.2 for the commercializationtreatment of UCART19 in the United States. Consequently, Servier’s CALM study in the United States is conducted in collaboration with Pfizer. In addition to early data presented by Serviergastric and Pfizer during a meeting at the National Institutes of Health’s Recombinant DNA Advisory Committee (or “RAC”) held on December 14, 2016, in December 2017, Servier presented intermediate results from the UCART19 Clinical Studies during the American Society for Hematology (ASH) annual conference. Such intermediate results show 83% complete remission rate across the two studies: five out of seven patients achieving minimal residual disease (MRD) negativity in the CALM study at 28th day after the infusion and all five children achieving MRD negativity in the PALL study at the 28th day after the infusion. Additional data will be presented on March 21, 2018 during the European Society for Blood and Marrow Transplantation Annual Meeting.pancreatic cancer.
With respect to Historical Overview – UCART Product Candidates We Are Developing
UCART123 we obtained the unanimous approval of the RAC on December 14, 2016 to start two proposed studies in the United States.
In December 2016, we submitted an Investigational New Drug (IND)IND application for UCART123 with respect to two proposed Phase I1 studies to be conducted, one in Acute Myeloid Leukemia (AML) and one in Blastic Plasmacytoid Dendritic Cell Neoplasm (BPDCN). In February 2017,June 2019, we decided to focus on the AML clinical trial and terminated the BPDCN study. This discontinuation of the BPDCN study was not a consequence of any safety concern.
In June 2019, we submitted a new IND application with respect to a proposed Phase 1 study to be conducted in relapsed/refractory Acute Myeloid Leukemia (r/r AML) with a new version of the UCART123 product candidate. In July 2019, the FDA approved the IND and the first patients were enrolled during 2017. Due to a deathpatient was dosed in the BPDCN study, the FDA placed a clinical hold on both trials in September 2017 which was lifted by the FDA in November 2017, based on revised protocols. The Phase I clinical study in AML is performed by Weill Cornell andJanuary 2020 at MD Anderson Cancer Center and the Phase I clinical study in BPDCN is performed by MD Anderson Cancer Center.(Houston, Texas). We refer in this Annual Report to the AML and the BPDCN studies, collectively,this study as the UCART123 Clinical Studies.Study or AMELI-01 Study.
Additionally,UCART22
In April 2018, we are pursuing proprietarypre-clinical programs (for UCARTCS1, for UCART22, and for other UCART product candidates). Our objective is to file, directly or indirectly, one Investigational New Drug, orsubmitted an IND application (or foreign equivalent), per year fromwith respect to a proposed Phase 1/2 study to be conducted in relapsed or refractory B-cell Acute Lymphoblastic Leukemia (r/r B-ALL). In May 2018, the FDA approved the IND, and the first patient was dosed in November 2019 at MD Anderson Cancer Center (Houston, Texas). We refer in this Annual Report to this study as the UCART22 Study or BALLI-01 Study.
UCARTCS1
In December 2018, we submitted an IND application with respect to a proposed Phase 1 study to be conducted in r/r MM. In January 2019, the FDA approved the IND, and the first patient was dosed in October 2019 at MD Anderson Cancer Center (Houston, Texas). We refer in this Annual Report to this study as the UCARTCS1 Study or MELANI-01 Study.
On July 6, 2020, we announced that the MELANI-01 Study was placed on clinical hold by the FDA,which hold has been lifted by the FDA on November 17, 2020.
In May 2023, we announced our maturing product candidates portfolio.decision to stop enrollment and treatment of patients with UCARTCS1 under the MELANI-01 Study.
Our visionUCART20x22
In June 2022, we submitted an IND application with respect to a proposed Phase 1/2a study to be conducted in relapsed or refractory B-Cell Non-Hodgkin’s Lymphoma (B-NHL). In August 2022, the biopharmaceutical industryFDA approved the IND, and the trial is enrolling patients. We refer in this Annual Report to continue to leveragethis study as the potential of gene editing to deliver revolutionary products that address unmet medical needs. Our initial focus is to apply our leadership in gene-editing technology to develop and commercializebest-in-class allogeneic CART-cell therapeutic products in the area of immuno-oncology.NaThaLi-01 Study.
Calyxt
Until July 2017, we fully owned Calyxt, Inc. On July 25, 2017, Calyxt, closedthrough which our former Plants segment was carried out, was operating as a plant-based synthetic biology company that leveraged its initial public offering on the Nasdaq Global Market, selling an aggregate of 8,050,000 shares of common stock at a price of $8.00 perproprietary technology to engineer plant metabolism to produce innovative, high-value, and sustainable materials and products for use in helping customers meet their sustainability targets and financial goals.
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share (including the full exercise by the underwriters of their over-allotment option). The Company received net proceeds of approximately $58.0 million, after deducting underwriting discounts and commissions and offering expenses. As part of the IPO, we purchased 2,500,000 shares of common stock for a value of $20.0 million, which is included in the net proceeds that Calyxt received. Calyxt used $5.7 million of the proceeds from us to cover a portion of the outstanding obligations owed to Cellectis. As of December 31, 2017,2022 and February 28, 2023, Cellectis ownsowned approximately 79.7%49.1% and 48.6%, respectively, of Calyxt’s common stock. In connection with Calyxt’s initial public offering, weOn January 13, 2023, Calyxt and CalyxtCibus entered into certain agreements that relatedthe Merger Agreement, pursuant to our relationship with Calyxt priorwhich, subject to the IPO or that provideterms and conditions thereof, Calyxt and Cibus would merge in an all-stock transaction. On May 31, 2023, Calyxt, Inc. completed its all-stock, reverse merger business combination with Cibus Global. Following the closing of the Merger, effective on June 1, 2023, the combined company operates under the name of Cibus, Inc. (referred to as “Cibus”). Cellectis’ equity interest in Cibus was reduced to 2.9% as of June 1, 2023, after the closing of the Merger, which resulted in Cellectis losing control of Cibus.
Our Strategy
Our strategy is to leverage the transformative potential of our unique gene-editing technologies and expertise through our cell therapy platform.
The key elements of our strategy are to:
UCART Pipeline
We are developing a series of product candidates for a growing population across the world.
Our Immuno-oncology Pipeline
advanced hematologic cancers. Our lead immuno-oncology product candidates, which we refer to as UCARTs, or universal CARTs,Universal CAR T-cells (UCARTs), are all allogeneic CART-cells engineered to be used for treating any patient with a particular cancer type.as an
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“off-the-shelf” treatment. Each UCART product candidate targetsis designed to target a selected antigen expressed on tumor cells and bears specific engineered attributes, such as inhibition of alloreactivity and compatibility with specific medical regimens that cancer patients may undergo. UCART is the first therapeutic product line that we are developing usingwith our gene-editing platform to address unmet medical needs in oncology. We are focusing our initial internal pipeline in the hematologic malignanciescancer space, targeting diseases with high unmet needs such as acute lymphoblastic leukemia (ALL), acute myeloid leukemia (AML), multiple myeloma (MM)ALL, AML, and different types of lymphomas. In 2017, we commenced UCART123 Clinical Studies. All of our other fully-controlled product candidates are currently in thepre-clinicalproof-of-concept phase, and theNHL.
The following chart highlights some of these product candidates:
With respect to our twoand our licensee's most advancedpre-clinical product candidates we intendin clinical development:
1 cemacabtagene ansegedleucel has been developed under a collaboration agreement between Servier and Allogene based on an exclusive right to filecemacabtagene ansegedleucel in the U.S. The ALPHA3 and ALPHA 2 studies target LBCL and CLL, respectively.
2 Phase 3 may not be required if Phase 2 is registrational.
3 ALLO-715 and ALLO-605 utilize TALEN® gene-editing technology pioneered and owned by Cellectis. Allogene has an INDexclusive license to the Cellectis technology for our UCART22 product candidateallogeneic products directed at the BCMA target. Allogene holds global development and commercial rights for this investigational candidate.
4 ALLO-316 utilizes TALEN® gene-editing technology pioneered and owned by Cellectis. Allogene has an exclusive license to the Cellectis technology for allogeneic products directed at the CD70 target. Allogene holds global development and commercial rights for this investigational candidate.
Definitional key to the above table: ALL. Acute Lymphoblastic Leukemia; AML. Acute Myeloid Leukemia; NHL. Non-Hodgkin's Lymphoma; RCC. Renal Cell Carcinoma; LBCL. Large B-Cell Lymphoma; CLL. Chronic Lymphocytic Leukemia.
Targeted Indications
r/r Acute Lymphoblastic Leukemia (ALL)
ALL is a heterogeneous hematologic disease characterized by the proliferation of immature lymphoid cells in the bone marrow, peripheral blood, and other organs. The proliferation and accumulation of blast cells in the marrow results in suppression of hematopoiesis and, thereafter, anemia, thrombocytopenia, and neutropenia. Extramedullary accumulations of lymphoblasts may occur in various sites, especially the meninges, gonads, thymus, liver, spleen, or lymph nodes. Data from the Surveillance, Epidemiology, and End Results (SEER) database have shown an age-adjusted incidence rate of ALL in the United States of 1.8 per 100,000 individuals per year, with approximately 6,660 new cases and 1,560 deaths estimated in 2022. The median age at diagnosis for ALL is 17 years with 53.9% of patients diagnosed at younger than 20 years of age. In contrast, 28.8% of cases are diagnosed at 45 years or older and only 13.5% of patients are diagnosed at 65 years or older. ALL represents 75% to 80% of acute leukemia among children, making it the most common form of childhood leukemia; by contrast, ALL represents approximately 20% of all leukemia among adults. The cure rates and survival outcomes for patients with ALL have improved dramatically over the past several decades, primarily among children. Improvements are largely owed to advances in the understanding of the molecular genetics and pathogenesis of the disease, the incorporation of risk- adapted therapy, and the advent of new targeted agents. Despite great progress in the development of curative therapies, ALL remains a leading cause of pediatric cancer-related mortality for patients presenting with a relapsed or refractory disease. New therapies are needed to overcome chemotherapy resistance and reduce non-specific treatment associated side effects.
r/r Acute Myeloid Leukemia (AML)
AML is a form of cancer that is characterized by infiltration of the bone marrow, blood, and other tissues by proliferative, clonal, abnormally and/or poorly differentiated cells of the hematopoietic system called blast cells. These cells interfere with normal hematopoiesis, thus contributing to the bone marrow failure which is the most common underlying cause of death. AML is the most common type of acute leukemia in adults with an age-adjusted incidence rate in the United States of 4.1 per 100,000 individuals per year, with approximately 20,050 new cases and 11,540 deaths estimated in 2022. Although it can occur in children and adults, AML is primarily a disease of the elderly. The median age at onset is 68 years and only 15.1% of patients are younger than 45 years of age at diagnosis. While complete response rates can be as high as 80% in patients undergoing initial induction cytotoxic chemotherapy, the majority of AML patients will ultimately be diagnosed with relapsed or refractory disease with a poor prognosis. The outcome in older patients who are unable to receive intensive chemotherapy without unacceptable side effects remains dismal, with a median survival of
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only 5 to 10 months. CD123 is highly expressed on AML leukemic stem cells and blast cells, as well as in other hematologic malignancies, and constitutes an attractive target for AML.
r/r Multiple Myeloma (MM)
MM is a clonal plasma cell malignant neoplasm that is characterized by the proliferation of a single clone of plasma cells producing a monoclonal immunoglobulin. This clone of plasma cells proliferates in the bone marrow and often results in extensive skeletal destruction with osteolytic lesions, osteopenia, and/or pathologic fractures. Additional disease-related complications include hypercalcemia, renal insufficiency, anemia, and infections. MM accounts for approximately 10% of hematologic malignant disorders. The annual incidence, age-adjusted to the US population, is 7.1 per 100,000, resulting in over 34,470 new patients and 12,640 deaths in the United States in 2022. The median age at onset is 69 years, and only 3.1% of patients are younger than 45 years of age at diagnosis. Several drugs have been approved over the first halflast few years for the treatment of 2018MM, substantially expanding the number of treatment regimens available for patients in all stages of the disease. In the last decade, survival of MM patients has markedly improved with a median survival of approximately 7 to 10 years but with major variation depending on host factors, stage of the disease, cytogenetic abnormalities, and response to therapy. However, despite this progress, patients with disease refractory to both immunomodulatory drugs (iMiDs) and proteasome inhibitors have a median overall survival (OS) of only 9 to 13 months.
r/r Non-Hodgkin Lymphoma (NHL)
NHL is a heterogeneous disease resulting from the malignant transformation of lymphocytes with distinctive morphologic, immunophenotypic, genetic, and clinical features. NHL is more common than the other general type of lymphoma, Hodgkin lymphoma (HL). The past several decades have seen a steady increase in incidence rates of NHL, with overall rates in the United States nearly doubling over the period 1975 to 2008. In 2022, there were 80,470 estimated new cases with 20,250 estimated deaths. In 2019, there were an INDestimated 763,401 people living with NHL in the United States. The median age at onset is 67 years, and only 10.0% of patients are younger than 45 years of age at diagnosis. Many different subtypes of non-Hodgkin’s lymphoma exist. The most common NHL subtypes include diffuse large B-cell lymphoma (DLBCL) and follicular lymphoma (FL).
Renal Cell Carcinoma (RCC)
Clear cell renal cell carcinoma (ccRCC) is the most common subtype of renal cancer. Approximately 79,000 new cases across all kidney and renal pelvis cancers are estimated to be diagnosed in the United States and 13,920 deaths were estimated in 2022, . While the median survival for patients with stage IV disease was a little over one year when cytokines were the predominant systemic therapies, analyses from the International Metastatic Renal Cell Carcinoma Database Consortium (IMDC) based upon more than 2,200 patients treated with targeted therapies report a median survival of 28 months in patients who were eligible for clinical trials. Another contemporary trial using targeted therapy reported a median survival of 28 to 29 months in patients treated with sunitinib or pazopanib, mirroring the IMDC results. Analysis using proteomic and immunohistochemistry techniques have demonstrated a high level of CD70 expression in clear cell renal cell carcinoma (ccRCC) cell lines and in more than 80% of human ccRCC tumor samples.
r/r Chronic Lymphocytic Leukemia (CLL)
The American Cancer Society's estimates for leukemia in the United States for 2024 are about 62,770 new cases of leukemia and about 23,670 deaths from leukemia (all kinds), of which about 20,700 new cases of CLL and about 4,440 deaths from CLL. CLL accounts for about one-quarter of the new cases of leukemia. The average person's lifetime risk of getting CLL is about 1 in 175 (0.57%). The risk is slightly higher in men than in women. CLL mainly affects older adults. The average age of people when they are diagnosed is around 70 years. It's rarely seen in people under age 40, and is extremely rare in children..
UCART123 for AML
UCART123 is an allogeneic engineered T-cell product designed for the treatment of hematologic malignancies expressing the alpha chain of the interleukin-3 receptor (IL3RA), or CD123, and is currently being developed for the treatment of AML.
Product Features
UCART123 is designed to become active, proliferate, secrete cytokines and kill CD123 expressing cells. UCART123 bears a CAR targeting the CD123 antigen, providing specificity for CD123 expressing cells. In addition, as with all UCART CS1products, UCART123 lacks the TCR and is intended to be used in 2019. All the above products are engineeredT-cell product candidates that bear CARs that seekan allogeneic context. UCART123 activity could potentially lead to killeradication of CD123-expressing cancer cells expressing targets (e.g., CD123, CS1, and CD22), which are found in other hematologic tumors, such as acute myeloid leukemia, or AML, and multiple myeloma, or MM,through T-cell mediated killing, pro-inflammatory cytokine production as well as CAR T-cell amplification. The current version of UCART123 has, in addition of the suppression of the TRAC gene, the suppression of the CD52 gene in order to potentially induce resistance to an anti-CD52 monoclonal antibody, such a alemtuzumab, as part of the preconditioning.
Clinical Development Status
The AMELI-01 Study is an open-label, Phase 1, single arm, multicenter clinical trial designed to evaluate the safety, expansion, persistence and clinical activities of UCART123 in patients with r/r AML. This trial is a dose-escalation study for UCART123 with 4 separate dose cohorts across different lymphodepletion regimens—lymphodepletion with either fludarabine and cyclophosphamide (FC) or FC with alemtuzumab (FCA). The primary endpoints of the trial are to assess the safety and tolerability of Universal Chimeric Antigen Receptor (UCAR) T-cells targeting CD123 (UCART123) administered to patients with r/r AML; and to determine the maximum tolerated dose (MTD) of UCART123. An optimal dose of UCART123 will be recommended for Phase 2. The clinical study protocol allows for up to 60 patients to enroll in the dose escalation period and 18-37 patients in the dose expansion period of the Phase 1 study.
In March 2020, we filed an amendment to the protocol of the AMELI-01 Study to evaluate the addition of an anti-CD52 antibody to the lymphodepletion regimen compared to the pre-amendment fludarabine (F)-cyclophosphamide lymphodepletion regimen. An anti-CD52 antibody (alemtuzumab, A)-based lymphodepletion regimen is evaluated in separate cohorts of patients, to guide the future development of UCART123 in AML. The optimal lymphodepletion regimen prior to the administration of CAR-T product candidates remains an area of investigation in the field of CAR T-cell therapy. The AMELI-01 Study is currently open for patient recruitment at University of Texas, MD Anderson Cancer Center (Houston, Texas), H. Lee Moffitt Cancer Center & Research Institute Hospital Inc. (Tampa, Florida), Dana Farber/ Partners Cancer Care, Inc (Boston, Massachusetts), Cornell University for and on behalf of its Joan and
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Sanford I. Weill Medical College and the New York and Presbyterian Hospital (New York, New York), Northwestern University (Chicago, Illinois), University of Miami (Miami, Florida), the Regent of the University of California on behalf of its San Francisco Campus (San Francisco, California), The Trustee of University of Pennsylvania (Philadelphia, Pennsylvania), and Roswell Park Cancer Institute Corporation D/B/A Roswell Park Comprehensive Cancer Center (Buffalo, New York).
After a protocol-based pause in patient recruitment following a grade 5 event related to CRS, the protocol treatment strategy was modified and as of the date of this Annual Report, AMELI-01 is enrolling patients in the FCA 2-dose regimen arm. The arm incorporated the use of prophylactic tocilizumab, which is associated with reduced incidence of CRS.
Clinical Findings
In December 2022, we reported preliminary safety and efficacy clinical data from the Phase 1 AMELI-01 Study, at the American Society of Hematology annual meeting. This preliminary clinical data was collected prior to the protocol amendment described above.
The oral presentation reviewed preliminary data from patients who received UCART123 at one of the following dose levels: dose level 1 (DL1) 2.5x105 cells/kg; dose level 2 (DL2) 6.25x105 cells/kg; intermediate dose level 2 (DL2i) 1.5x106 cells/kg; or dose level 3 (DL3) 3.30x106 cells/kg after lymphodepletion with a combination of fludarabine and cyclophosphamide (FC) or after lymphodepletion with a combination of fludarabine, cyclophosphamide and alemtuzumab (FCA).
The preliminary safety data showed that the FCA lymphodepletion regimen resulted in robust lymphodepletion for greater than 28 days in all patients. Seven out of nine patients demonstrated UCART123 expansion, with maximum concentration (Cmax) ranging from 13,177 to 330,530 copies/ μg DNA, an almost nine-fold increase compared with FC lymphodepletion regimen, and a significant increase in area under the curve.
Cytokine release syndrome (CRS) occurred in eight patients in the FC lymphodepletion arm and nine patients in the FCA lymphodepletion arm. In the FC arm, one patient experienced grade 3 immune effector cell-associated neurotoxicity syndrome (ICANS) and two patients experienced grade 4 protocol-defined dose limiting toxicities (DLTs) secondary to CRS. In the FCA arm, two patients experienced Grade 5 DLTs secondary to CRS. Grade 4 toxicities are potentially life threatening and grade 5 toxicities result in death.
With respect to preliminary efficacy data, evidence of UCART123 anti-tumor activity was observed in four patients out of fifteen at DL2 or above with best overall responses in the FCA arm. Two out of eight patients (25%) at DL2 with FCA arm achieved meaningful response. One patient who failed five prior lines of therapy experienced a durable minimal residual disease (MRD) negative complete response (CR) with full count recovery at Day 56 that continued beyond one year as of December 22, 2022, and one patient with stable disease achieved greater than 90% bone marrow blast reduction (60% to 5%) at Day 28.
These preliminary data show that adding alemtuzumab to the FC lymphodepletion regimen was associated with sustained lymphodepletion and significantly higher UCART123 cell expansion, which correlated with improved anti-tumor activity.
As of the date of this Annual Report, the AMELI-01 Study is currently enrolling patients.
UCART22 for B-ALL
UCART22 is an allogeneic engineered T-cell product candidate designed for the treatment of CD22-expressing hematologic malignancies and is currently being developed for the treatment of B-ALL.
Product Features
UCART22 is an allogeneic engineered T-cell product candidate intended for the treatment of CD22-expressing hematologic malignancies. UCART22 is designed to become active, proliferate, secrete cytokines and kill CD22 expressing cells (i.e. either CD22 positive tumor cells or non-malignant CD22-positive B lineage cells). UCART22 bears a CAR targeting the CD22 antigen, providing specificity for CD22 expressing cells. As with all UCART products, UCART22 lacks the TCR and is intended to be used in an allogeneic context. In addition, UCART22 has undergone the suppression of the CD52 gene in order to potentially induce resistance to an anti-CD52 monoclonal antibody, such as alemtuzumab, as part of the preconditioning.
UCART22 activity could potentially lead to eradication of CD22-expressing cancer cells through T-cell mediated killing, pro-inflammatory cytokine production as well as CAR T-cell amplification.
Clinical Development Status
The BALLI-01 Study is an open-label, Phase 1/2, single arm, multicenter clinical trial designed to evaluate the safety, expansion, persistence, and clinical activities of UCART22 in patients with r/r ALL. This trial is a dose-escalation and expansion study for UCART22 with 4 separate dose cohorts currently. The primary endpoints are to assess the safety and tolerability of Universal Chimeric Antigen Receptor (UCAR) T-cells targeting CD22 (UCART22) administered to patients with r/r B-ALL and to determine the MTD and/or Recommended Phase 2 Dose (RP2D) of UCART22 in patients with relapsed or refractory B-cell Acute Lymphoblastic Leukemia (r/r B-ALL). Secondary objectives/endpoints include assessing the efficacy of UCART22 (rate of objective response) in relapsed or refractory B-ALL patients, and minimal residual disease (MRD)+ B-ALL patients; assessment of the duration of response, time to response, progression- free survival, and overall survival, MRD negative rate, and evaluating the pharmacokinetic and pharmacodynamic profile of alemtuzumab. An optimal dose of UCART22 will be recommended for the expansion phase. The clinical study protocol allows for up to 40 patients to enroll in the dose escalation period and 18-53 patients in the dose expansion period of the Phase 1/2 study.
In April 2020 and December 2020, we filed amendments to the protocol of the BALLI-01 Study to open the study to young adults and adolescents and to evaluate the addition of an anti-CD52 antibody (alemtuzumab) to the lymphodepletion regimen with this FCA lymphodepletion regiment compared to the pre-amendment FC lymphodepletion regimen. Alemtuzumab was added to the lymphodepletion regimen to sustain host T-cell and Natural Killer (NK) cell depletion and to promote UCART22 cell expansion and persistence. The anti-CD52 antibody-based lymphodepletion regimen is evaluated in separate cohorts of patients, to guide the future development of UCART22 in ALL. The optimal lymphodepletion regimen prior to the administration of CAR-T product candidates
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remains an area of investigation in the field of CAR T-cell therapy. In December 2021, the BALLI-01 Study was approved in France by the French drug agency, the ANSM.
The BALLI-01 Study is currently open to patient recruitment at Memorial Sloan Kettering Cancer Center (New York, New York), Children’s Hospital of Philadelphia (Philadelphia, Pennsylvania), the University of Chicago (Chicago, Illinois), University of Texas, MD Anderson Cancer Center (Houston, Texas), The Regents of the University of California on behalf of its Los Angeles campus (Los Angeles, California), Dana Farber/Mass General Brigham Cancer Care, Inc. (Boston, Massachusetts), Hôpital Saint-Louis AP-HP (Paris, France), Hôpital Robert Debré AP-HP (Paris, France), CHU de Nantes (Nantes, France), and CHU de Rennes (Rennes, France), Sarah Cannon Research Institute, LLC and TriStar Bone Marrow Transplant, LLC(Nashville, Tennessee), Sarah Cannon Research Institute, LLC and HCA-HealthONE, LLC d/b/a Presbyterian/St. Luke’s Medical Center (Nashville, Tennessee and Denver, Colorado), Sarah Cannon Research Institute, LLC and St. David’s Healthcare Partnership, L.P., LLP d/b/a St. David’s South Austin Medical Center(Nashville, Tennessee and Austin, Texas), Sarah Cannon Research Institute, LLC and Methodist Healthcare System of San Antonio, Ltd., LLP d/b/a Methodist Hospital(Nashville, Tennessee and San Antonio, Texas), Regents of the University of Colorado for and behalf of the University of Colorado Anschutz medical Campus (Denver, Colorado), Hospices Civils de Lyon (Lyon, France).
As of the date of this Annual Report, we are enrolling patients of the BALLI-01 Study and the BALLI-01 Study is being conducted with UCART22 product candidate that has been fully manufactured in-house at our facility in Raleigh, North Carolina.
Clinical Findings
In December 2022, we presented positive preliminary clinical data from the Phase 1 BALLI-01 Study at a Live Webcast during the American Society of Hematology annual meeting. These data were from five patients who received UCART22 at DL3 (5x106 cells/kg) after lymphodepletion with FCA. No dose limiting toxicities were reported and no Grade 2 or higher CRS, ICANS or adverse events of special interest were observed. Evidence of UCART22 anti-tumor activity was observed in 60% (n=3) of the five patients at: (i) a patient experienced a durable minimal residual disease (MRD) negative complete response with incomplete count recovery (CRi) that continued beyond 6 months as of December 2022, (ii) a patient experienced an MRD negative complete response (CR) that continued beyond Day 56 as of December 2022, and (iii) patient experienced a morphologic leukemia-free state (MLFS) that continued beyond Day 84. All three of the responders failed multiple lines of prior therapy including multiagent chemotherapy, CD19- directed autologous CAR T cell therapy, and allogeneic stem cell transplant. Additionally, the patient with the MRD negative CR also failed both prior blinatumomab (a CD19-directed bi-specific antibody) and inotuzumab (a CD22-directed antibody-drug conjugate), while the two additional responders failed venetoclax based regimens.
In December 2023, we presented updated data of the Phase I BALLI-01 clinical trial at the American Society of Hematology Annual Meeting, including the following data:
As of the date of this Annual Report, the BALLI-01 Study is currently enrolling patients.
UCART20x22 for NHL
UCART20x22 is an allogeneic engineered T-cell product candidate targeting CD20 and CD22, both of which are expressed in B-cell malignancies, and is currently being developed for the treatment of relapsed or refractory B-cell NHL.
Product Features
UCART20x22 is a derivative of UCART22, that includes an additional CAR targeting CD20 to increase breadth of antigen targeting. We believe that targeting both CD20 and CD22 is more likely to prevent tumor escape and is an alternative to approved autologous CAR-T products targeting CD19. As all our UCART product candidates, UCART20x22 lacks the TCR and is intended to be used in an allogeneic context. In addition, UCART20x22 has the suppression of CD52 gene in order to potentially induce resistance to an anti-CD52 monoclonal antibody, such as alemtuzumab, as part of the preconditioning.
Pre-clinical Findings
In April 2022, we presented positive preclinical data of UCART20x22 at the American Association for Cancer Research 2022 annual meeting. These data showed that UCART20x22 has a strong activity against tumor cell lines expressing either a single antigen, CD20 or CD22, or both simultaneously. The in vivo pre-clinical models demonstrated that UCART20x22 efficiently eradicates tumors expressing both or either antigen, and sustained presence of UCART20x22 cells was observed in the bone marrow after tumor clearance. in vitro assays against primary cells from non-Hodgkin lymphoma patients with diverse CD22 and CD20 antigen levels demonstrate that UCART20x22 has potent and specific cytotoxic activity.
Clinical Development Status
The NaThaLi-01 Study is currently open to patient recruitment at Dana-Farber/Mass General Brigham Cancer Care, Inc (Boston, Massachusetts), and Sarah Cannon Research Institute, LLC and St. David’s Healthcare Partnership, LP., LLP d/b/a St. David’s South Austin Medical Center (Austin, Texas), Rutgers, The State University (Piscataway, New Jersey), Clinica Universidad de Navarra (Pamplona, Spain), Hospices Civils de Lyon (Lyon, France), CHU Montpellier (Montpellier, France), Hôpital Saint Louis (Paris,
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France), The University of Chicago (Chicago, Illinois), and H.U. Virgen del Rocio and Andalusian Public Foundation for Health Research Management in Seville (Seville, Spain).
In December 2023, we presented preliminary results of the Phase I NaThaLi-01 clinical trial evaluating UCART20x22 in patients with relapsed or refractory non-Hodgkin lymphoma (r/r NHL) at the American Society of Hematology Annual Meeting, including the following data:
As of the date of this Annual Report, the NaThaLi-01 Study is currently enrolling patients.
CLLS52 (alemtuzumab) as anti-CD52 monoclonal antibody
Following the execution of the supply agreement we entered into with Genzyme relating to the supply of alemtuzumab, we are implementing the use of alementuzumab as a Cellectis investigational medicinal product, coded as CLLS52, in the clinical protocols AMELI-01, BALLI-01, and NaThaLi-01 in the United States and in the relevant European Union member states.
Self-owned UCART programs for solid tumors
We are currently applying our UCART platform to develop CAR-T candidates targeting solid tumors. Our self-owned UCART programs for solid tumors is currently in the preclinical phase of development.
UCARTMESO
UCARTMESO is an allogeneic CAR T-cell product candidate targeting Mesothelin.
In November 2021, we presented the first preclinical data on UCARTMESO at the annual meeting of the Society for Immunotherapy of Cancer (SITC). The poster presentation highlighted Mesothelin as an interesting target for CAR-T cell therapy for solid tumors because it is highly and consistently expressed in mesothelioma and pancreatic cancers. It is also over-expressed in subsets of other solid tumors (ovarian cancer, non-small cell lung cancer, gastric cancer, triple-negative breast cancer) while modestly expressed in healthy cells, indicating that targeting mesothelin may result in a safe and effective therapy. UCARTMESO product candidate is composed of allogeneic non-alloreactive T cells edited with TALEN-encoding mRNAs to disrupt TRAC, CD52 and TGFBR2 genes, and transduced ex vivo with a recombinant lentiviral vector to express a second-generation CAR targeting Mesothelin. It is the first TALEN-induced triple knock out (KO) product candidate in the allogeneic CAR-T space. The preclinical data demonstrated potent activity of UCARTMESO in vitro and in vivo against MSLN expressing cell lines, and in vivo activity in pancreatic and pleural mesothelioma mouse models. Due to TGFBR2 KO, UCARTMESO was shown to restore IL2RA upregulation upon in vitro activation, even in media rich in TGFB1, which contributes to the immune suppressive microenvironment in tumors.
UCARTFAP
UCARTFAP is an allogeneic CAR-T cell targeting Cancer Associated Fibroblasts (CAFs) in the tumor microenvironment. CAFs secrete a number of factors amounting to physical and chemical barriers preventing T-cell activity. Reducing the amount of CAFs, will, in turn reduce the immunosuppressive signals emitted from the tumor and hopefully convert “cold” tumors into “hot” tumors that can then be targeted with checkpoint inhibitor therapy. By targeting the cancer-associated fibroblasts, Cellectis aims to erode the physical barrier encasing the tumor microenvironment that prevents T-cell (and CAR T-cell) infiltration into the tumor. The TCR knockout is to prevent GVHD and the beta-2 microglobulin knocked out to provide resistance to the patient’s own T-cells.
UCARTMUC1
UCARMUC1 is an allogeneic CAR T-cell targeting Mucin 1 for triple negative breast cancer and a variety of epithelial cancers. As other solid tumor targets can be plagued by safety concerns due to off-tumor expression, MUC1 is of high interest as its expression in normal epithelium is restricted to apical membranes. Additionally, its heavy glycosylation in normal tissue renders MUC1 undetectable by Cellectis’ MUC1 CAR that only recognizes hypoglycosylated MUC1 present in cancer cells. UCARTMUC1 now incorporates four TALEN knockouts (TCR, B2M, PD-1, and TGFBR2) with two knockins (IL-12 and HLA-E). In lieu of the deleted beta-2 microglobulin gene (part of MHC-1 complex), Cellectis has inserted the HLA-E gene to cloak the cells from immune detection by NK cells, thus increasing CART persistence. In lieu of the PD-1 gene, Cellectis has inserted the IL-12 gene to enhance tumor cell killing and attract other pro-inflammatory cells when induced by the MUC1 CAR binding tumor cells. Preclinical data indicates that UCARTMUC1 shows strong intratumoral expansion translating into promising preclinical anti-tumor activity in vivo.
Programs Under Licensing Agreements
UCART19 for ALL (discontinued)
Product Features
UCART19 is designed to become active, proliferate, secrete cytokines and kill CD19-bearing B-cell malignancies upon contact with such cells, following administration to patients. Activation of UCART19 is driven by contact between its anti-CD19 CAR and the CD19 protein on the surface of tumor cells.
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UCART19 cells bear a CAR targeting the CD19 antigen that drives their capacity to kill CD19-bearing cells. Moreover, as with all UCART product candidates, UCART19 lacks the TCR responsible for recognition of non-self antigens by the T-cells, which allows use of healthy donor T-cells to produce UCART19, with reduced potential for GvHD. In addition, some UCART19 cells lack CD52, a protein expressed on the cell surface that makes T-cells sensitive to alemtuzumab. This feature permits the use of UCART19 in patients recently treated or being treated with the immunosuppressing/lymphodepleting agent alemtuzumab.
Clinical Development Status
In 2016, Servier commenced the UCART19 Studies – a Phase 1 clinical study in pediatric ALL, the PALL study, and a Phase 1 clinical study in adult patients with ALL, the CALM study.
As of the date of this Annual Report, the Phase 1 of the UCART19 Studies have been completed. Servier has reported that no additional patients are planned for enrollment and all patients from both studies will continue the long-term follow-up as planned.
On September 15, 2022, Servier sent to us and Allogene a notice of discontinuation of its involvement in the development of the CD19 Products. See “Risk Factors— Risks Related to Our Reliance on Third Parties—Servier’s discontinuation of its involvement in the development of CD19 Products and related disagreements may have adverse consequences.”
Clinical Findings
In December 2020, Servier published, in the Lancet journal, pooled results of the UCART19 Studies. Between June 2016 and October 2018, seven children and 14 adults were enrolled in the two studies and received UCART19. Cytokine release syndrome, or CRS, was the most common adverse event and was observed in 19 patients (91%); three (14%) of whom had grade 3 or 4 CRS. Other adverse events were grade 1 or 2 neurotoxicity in eight patients (38%), grade 1 acute skin graft-versus-host disease, or GvHD, in two patients (10%), and grade 4 prolonged cytopenia in six patients (32%). Two treatment-related deaths occurred; one caused by neutropenic sepsis in a patient with concurrent CRS and one from pulmonary hemorrhage in a patient with persistent cytopenia. 14 (67%) of 21 patients had a complete response (CR) or complete response with incomplete (Cri) hematological recovery 28 days after infusion.
Patients not receiving alemtuzumab (n=4) showed no UCART19 expansion or antileukemic activity. The median duration of response was 4.1 months with ten (71%) of 14 responders proceeding to a subsequent allogeneic stem-cell transplant. Progression-free survival at 6 months was 27%, and overall survival was 55%.
According to the article, these two studies show, for the first time, the feasibility of using allogeneic, genome-edited CAR T cells to treat patients with aggressive leukemia. UCART19 exhibited in-vivo expansion and antileukemic activity with a manageable safety profile in heavily pretreated pediatric and adult patients with relapsed or refractory B-cell acute lymphoblastic leukemia,leukemia.
ALLO-501 and cema-cel (ALLO-501A), for NHL and CLL
ALLO-501 (which we exclusively license to Servier pursuant to the Servier License Agreement, and which has been sublicensed to Allogene by Servier in the United States) is an allogeneic engineered T-cell product intended for the treatment of CD19-expressing hematologic malignancies. On September 15, 2022, Servier sent to us and Allogene a notice of discontinuation of its involvement in the development of the CD19 Products. See “Risk Factors— Risks Related to Our Reliance on Third Parties—Servier’s discontinuation of its involvement in the development of CD19 Products and related disagreements may have adverse consequences.”
ALLO-501A was created as a second-generation version of ALLO-501, designed to omit the rituximab recognition domains originally added in ALLO-501. Because rituximab is a typical part of the treatment regimen for a patient with NHL, this change is intended to facilitated treatment of a broader patient population.
Development Status
In January 2019, Allogene announced, in collaboration with Servier, that the FDA approved the IND for Phase 1 clinical study for ALLO-501 in relapsed or ALL.refractory NHL (the “ALPHA Study”). The ALPHA Study is an open-label, Phase 1, single arm, multicenter clinical trial evaluating the safety and tolerability of ALLO-501 in adult patients with the most common r/r NHL subtypes, including r/r large B-cell lymphoma, including DLBCL, and r/r follicular lymphoma (FL). The trial is a dose-escalation study for ALLO-501 with three separate dose cohorts. Prior to ALLO-501 treatment, all patients undergo lymphodepletion with a regimen of fludarabine, cyclophosphamide and ALLO-647 (an anti-CD52 monoclonal antibody).
Strategic AlliancesIn February 2020, Allogene announced that the FDA had approved the IND for the ALPHA2 Study. The ALPHA2 Study is an open-label, Phase 1/2, single arm, multicenter clinical trial of ALLO-501A in adult patients with R/R large B-cell lymphoma, including DLBCL, or transformed FL. The Phase 1 portion of the ALPHA2 Study is designed to assess the safety and tolerability at increasing dose levels of ALLO-501A and identify the recommended doses of ALLO-501A and ALLO-647 (an anti-CD52 monoclonal antibody) for use in the Phase 2 portion of the trial. Allogene initiated the ALPHA2 Study in the second quarter of 2020.
In February 2021, Allogene announced that the FDA had granted fast track designation to ALLO-501A for relapsed or refractory diffuse large B cell lymphoma (LCBL).
In June 2022, Allogene announced that the FDA granted Regenerative Medicine Advance Therapy (RMAT) designation to ALLO-501A in relapsed or refractory large B cell lymphoma (LBCL).
In October 2022, Allogene announced the initiation of the Phase 2 clinical trial of ALPHA2 trial in patients with relapsed or refractory LBCL. Allogene also announced that it was in the process of initiating the EXPAND trial, which is a separate potentially registration trial for ALLO-647—Allogene’s anti-CD52 monoclonal antibody that Allogene is developing with the goal of potentially enabling expansion, persistence and improved clinical outcomes of allogeneic CAR T cell product candidates, including ALLO-501A. Allogene has stated that, assuming favorable outcomes and subject to FDA discussions, Allogene plans to seek FDA approval of ALLO-501A and ALLO-647 on the basis of the ALPHA2 trial and the EXPAND companion trial.
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In January 2024, Allogene announced it will focus development of cema-cel (or ALLO-501A), as part of the first line (1L) treatment plan for newly diagnosed and treated LBCL patients who are likely to relapse and need further therapy. Allogene announced it will deprioritize the currently enrolling third line (3L) ALPHA2 and EXPAND trials. Furthermore, Allogene announced a new Phase 1 ALPHA2 cohort of 12 CLL patients treated with the investigational product cema-cel.
Clinical Findings
In December 2021, Allogene, in collaboration with Servier, reported Phase 1 data on ALLO-501 and ALLO-501A r/r NHL at the annual meeting of the American Society of Hematology. As of the October 18, 2021 data cutoff, 50 patients were enrolled in the ALPHA Study, of whom 49 were evaluable for safety and 40 were evaluable for efficacy, and 29 patients were enrolled in the ALPHA2 Study, of whom 28 were evaluable for safety and 25 were evaluable for efficacy. ALLO-501 and ALLO-501A therapy was associated with consistent and manageable safety with no DLTs or GvHD; low rates of Grade 3 ICANs and CRS. No relapses were observed in Large B Cell Lymphoma (LBCL) CAR T naïve patients who achieved a CR at six months. The longest CRs at this time was 18+ months with ALLO-501 and 15+ months with ALLO-501A. Patients received lymphodepletion containing fludarabine, cyclophosphamide and ALLO-647 (an anti-CD52 antibody) followed by escalating doses of ALLO-501 or ALLO-501A. In consolidation, patients with stable disease or better at Day 28 received a chemotherapy-free lymphodepletion (ALLO-647 only) and AlloCAR T cell infusion. The trials explored two consolidation cohorts. Consolidation 1 used the standard cyclophosphamide dosing. Second consolidation explored a higher cyclophosphamide dose. The consolidation regimen was well tolerated with low rate of adverse events, yielded a 44% CR with ongoing CRs at 9 months, and consolidation produced an 88% Overall Response Rate (ORR) and 75% CR rate in Follicular Lymphoma. Key Advantage of allogeneic delivery was established with >97% of patients treated with a median time from enrollment to initiation of treatment of five days for ALLO-501 and two days for ALLO-501A.
In November 2022, Allogene presented an update on clinical data for the Phase 1 ALPHA Studies. Allogene reported that the Phase 1 ALPHA Studies support the ability of a single administration of CAR T cells to generate responses similar to approved autologous CAR T therapies and that the ALPHA Studies demonstrated a manageable safety profile.
Allogene observed that a single infusion of CAR+ cells with aFCA90 lymphodepletion regimen consisting of fludarabine (30 mg/m2/day x 3 days) and cyclophosphamide (300 mg/m2/day x 3 days) (standard flu/cy) plus 90 mg of ALLO-647 (“Single Dose FCA90”) was deemed preferrable to two infusions of CAR+ cells (“Consolidation Regimen”), where ALLO-647 dosing was split into 60 mg and 30 mg prior to the first and second infusion of CAR+ cells. Among 12 patients treated with the Single Dose FCA90 regimen, the overall response rate (“ORR”) was 67% and 58% achieved CRs. Among the eight patients in the Single Dose FCA90 cohort who had the opportunity to be followed for six months or more, four (50%) were in CR at both six and 12 months. According to Allogene there were no observed dose limiting toxicities or graft versus host disease. Among patients treated with single dose FCA regimen, there was no grade 3+ CRS or neurotoxicity. One patient (8%) experiences a grade 3+ infection and two patients (17%) experienced prolonged grade 3+ cytopenia. One grade 5 event occurred.
In June 2023, Allogene presented long-term follow up data from the Phase 1 ALPHA/ALPHA2 trials of ALLO-501/501A in patients with r/r LBCL at the American Society of Clinical Oncology Annual Meeting. The updated analysis of ALPHA/ALPHA2 examined data from 12 CAR T-naïve patients with r/r LBCL who received a single dose of ALLO-501/501A manufactured using the Alloy™ process following a lymphodepletion regimen (FCA90) comprised of fludarabine and cyclophosphamide plus ALLO-647. The median time from enrollment to the start of therapy was three days and all 12 patients were followed through a minimum of six months (data cutoff April 20, 2023). As of the data cutoff, 7 of 12 (58%) patients achieved a CR and five (42%) maintained a CR through Month 6. Of the five patients who were in CR at 6 months, four (80%) remained in CR. The fifth patient had disease progression at 24 months. The median duration of response was 23.1 months with three patients remaining in remission for over 24 months and the longest remaining in remission for over 31 months. A safety analysis of 33 CAR T-naïve LBCL patients receiving Alloy™ process ALLO-501/501A product candidates at any dose and lymphodepletion schedule, including the 12 patients treated with the Phase 2 regimen, was also conducted. Treatment was generally well tolerated with no incidences of Grade 3 or greater cytokine release syndrome, and no cases of immune effector cell-associated neurotoxicity syndrome or graft versus host disease. Cytopenias and infections were manageable and comparable to the experience with autologous CAR T cell therapies in patients with r/r LBCL.
ALLO-316, for RCC
ALLO-316, which we exclusively license to Allogene pursuant to the Allogene License Agreement, is an allogeneic engineered CAR T-cell product targeting CD70.
Development Status
In December 2020, Allogene announced that the FDA had approved the IND for a Phase 1 clinical study for ALLO-316, in RCC, which is referred to as the “TRAVERSE Study”.
In March 2022, Allogene announced that the FDA has granted fast track designation to ALLO-316.
Clinical findings
In November 2022, Allogene presented initial data from TRAVERSE Study and reported that observed anti-tumor activity was largely confined to patients with CD70 expressing tumors. As of the data extract date of November 17, 2022, in the nine patients with tumors known to express CD70, the disease control rate (DCR) was 100% including three patients who achieved a partial response (PR) (two confirmed and one unconfirmed with the longest response lasting until month eight). Cell expansion in patients with CD70 positive disease was robust, and there was a trend toward greater tumor shrinkage in patients with the highest levels of CD70 expression Allogene reported that ALLO-316 demonstrated a generally manageable safety profile with no GvHD. One dose limiting toxicity of liver enzyme elevation occurred in the second dose level. Grade 3+ prolonged cytopenia was observed in three patients (18%). CRS was all low grade with the exception of one case of Grade 3 CRS. Neurotoxicity was low grade, reversible and seen in only three patients (18%). No grade 5 events have occurred.
In April 2023, Allogene presented interim data from its Phase 1 TRAVERSE trial of ALLO-316, in an oral presentation at the American Association for Cancer Research Annual Meeting. As of the March 23, 2023 data cutoff, 19 patients were enrolled in the Phase 1 trial, 10 of whom had RCC confirmed to express CD70. The median time from enrollment to the start of therapy was five days. In the ongoing dose escalation phase of the TRAVERSE trial, patients will receive lymphodepletion followed by ALLO-316 at one of
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four cell dose levels (DL1= 40M cells, DL2= 80M cells, DL3=120M cells, DL4= 240M cells). The data reported to date is primarily from the DL1 and DL2 cohorts. Anti-tumor activity was primarily observed in patients with tumors confirmed to express CD70. Among 18 patients evaluable for efficacy, the DCR was 89%. In the 10 patients whose tumors were known to express CD70, the disease control rate was 100%, which included three patients who achieved partial remission (two confirmed, one unconfirmed). The longest response lasted until month eight. There was a trend toward greater tumor shrinkage in patients with higher levels of CD70 expression. There were 19 patients evaluable for safety. To date, ALLO-316 has demonstrated an adverse event profile generally consistent with autologous CAR T therapies. One dose-limiting toxicity of Grade 3 autoimmune hepatitis occurred in the second dose level. CRS was all low-grade with the exception of one Grade 3. Neurotoxicity, which is now defined more broadly, was generally low grade and reversible with most events being fatigue or headache. There were no cases of ICANS. Infections occurred in eight patients of which four were Grade 3+ including one Grade 5 respiratory failure due to Covid-19 infection deemed unrelated to study treatment. Grade 3+ prolonged cytopenia was observed in three patients (16%). There were no cases of graft-versus-host disease.
Other gene editing programs
Beyond our CAR-T programs, we are leveraging our TALEN gene editing platform to pursue additional development opportunities, both internally and in collaboration with third party companies and academic centers. We aim to enter the clinic with one or more gene editing programs beyond UCARTs in the future.
HEAL, the hematopoietic stem and progenitor cells platform for genetic diseases
We are developing a gene editing platform that leverages the power of TALEN technology, to allow highly efficient gene inactivation, insertion and correction in hematopoietic stem and progenitor cells (HSPCs). We used this platform to develop programs in sickle cell disease (SCD), lysosomal storage disease (LSD) and primary immunodeficiencies.
TalGlobin
TalGlobin is developed with TALEN technology intended to induce a double DNA strand break at the HBB gene causing SCD, and AAV particles containing a DNA repair template designed to correct the faulty HBB gene via endogenous homology directed repair (HDR).
In December 2021, we presented initial pre-clinical data from TalGlobin at the American Society of Hematology Annual Meeting. Initial pre-clinical data from TALGlobin show that TALEN is specific and efficient in correcting the mutated beta-globin gene, the underlying cause of SCD. The data also demonstrate that TALEN-based engineering could be used to correct the beta-globin gene mutation in HbSS patient-derived hematopoietic stem and progenitor cells. The data show up to 70% of HBB allelic correction, with only 9% of HBB biallelic inactivation and a low level of TALEN off-target cleavage. Genetic correction of HBB translates into high level of hemoglobin A expression (up to 47% HbA detected among total hemoglobin) and reversion of the sickling phenotype in differentiated red blood cells. Preclinical data show the capacity of TALGlobin01 edited cells to engraft in vivo using an immunodeficient mouse model. Collectively, the preclinical data demonstrate efficiency and safety of TALEN treatment in SCD patient- derived hematopoietic stem and progenitor cells.
In October 2022, we presented pre-clinical data from TalGlobin at the European Society of Gene and Cell Therapy 29th Congress. Overall, the results showed that non-viral DNA delivery associated with our TALEN gene editing technology reduces the toxicity observed with viral DNA delivery and allows high levels of HBB gene correction in long-term repopulating hematopoietic stem cells.
ArtEx
We have also developed an artificial exon (ArtEx) strategy to introduce a corrected gene copy coding for a relevant LSD enzyme into the intronic region of a gene expressed in myeloid cells. This approach would avoid the potential collateral effect of knocking out the endogenous gene without a correct replacement. This editing strategy opens new avenues for the treatment of LSDs, as it would allow to address the systemic lack of lysosomal enzyme activity, including in the brain, and could be used to produce virtually any defective LSD enzyme. It represents a new platform, in which a single safe and well characterized TALEN could be used to treat different LSDs.
In October 2022, we presented a TALEN-based gene editing approach that reprograms HSPCs to secrete alpha-L-iduronidase (IDUA), an enzyme missing in Mucopolysaccharidosis type I (MPS-I). MPS-I is associated with severe morbidity representing a significant unmet medical need. We established a TALEN-based ex vivo gene editing protocol to insert an IDUA-expression cassette into a specific locus of HSPC. Editing rates in vivo were 6 to 9% sixteen weeks after injection, depending on the tissue analyzed (blood, spleen, bone marrow). Lastly, 8.3% of human cells were edited in the brain compartment.
Our Licensing Relationships
In addition to the development of our own portfolio of product candidates targeting tumor-associated antigens, we have pursuedestablished a relationship with AstraZeneca in addition to pursuing a strategy of forging strong relationships with pharmaceutical alliances. We believe that our strategic alliancesor clinical stage biopharmaceutical companies.
License Agreement with ServierAllogene
In June 2014, we entered into a Research Collaboration and License Agreement (the “Collaboration and License Agreement”) with Pfizer, validated our technology platform, our strong expertiseInc. (“Pfizer”) pursuant to which we agreed to collaborate to conduct discovery and pre-clinical development activities to generate CAR T-cells directed at Pfizer- and Cellectis-selected targets in the allogeneic CART-cellsfield our approach to CART-cell development and the strengthof human oncology. We granted Pfizer an exclusive, worldwide, royalty-bearing, sublicensable license, on a target-by-target basis, under certain of our intellectual property portfolio. Our strategic alliances includeto make, use, sell, import, and otherwise commercialize products directed at the Pfizer-selected targets in the field of human oncology. Pursuant to the Collaboration and License Agreement, Pfizer made an upfront, non-refundable $80.0 million payment to us. Concurrent with this upfront payment, Pfizer also made a €25.8 million equity investment in our company.
On April 3, 2018, Pfizer and potentialAllogene Therapeutic, Inc. (“Allogene”) announced that they entered into an asset contribution agreement, pursuant to which Allogene purchased Pfizer’s portfolio of assets related to allogeneic CAR T-cell therapy (the “Asset
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Contribution Transaction”). Pursuant to the Asset Contribution Transaction, effective as of April 6, 2018, Allogene purchased Pfizer’s portfolio of assets related to allogeneic CAR T-cell Therapy, including the Collaboration and License Agreement.
On March 8, 2019, we and Allogene agreed to terminate the Collaboration and License Agreement and entered into a new license agreement (the “Allogene License Agreement”) to reflect the relationship between us and Allogene following the Asset Contribution Transaction. The Allogene License Agreement establishes the rights and obligations of Cellectis and Allogene with respect to their collaboration program.
Pursuant to the Allogene License Agreement, we granted to Allogene an exclusive, worldwide, royalty-bearing, license, on a target-by-target basis, with sublicensing rights under certain conditions, under certain of our intellectual property, including our TALEN and electroporation technology, to make, use, sell, import, and otherwise exploit and commercialize chimeric antigen receptor (CAR) T cells products directed at a total of 15 selected targets, including BCMA, FLT3, DLL3 and CD70, for human oncologic therapeutic, diagnostic, prophylactic and prognostic purposes. In addition, the Allogene License Agreement accommodates an exclusive global license and collaboration agreement under which Allogene has obtained from Servier exclusive rights to develop and commercialize UCART19 in the United States. Further, Allogene granted us a non-exclusive, worldwide, royalty-free, perpetual and irrevocable license, with sublicensing rights under certain conditions, under certain of Allogene’s intellectual property, to make, use, sell, import and otherwise commercialize CAR T products directed at certain targets.
The Allogene License Agreement provides for development and sales milestone payments to usby Allogene in a per target aggregate amount of up to $3.9 billion$185.0 million, with aggregate potential development and high single digitsales milestone payments across all targets totaling up to $2.8 billion. In connection with (i) the dosing of the first patient in its UNIVERSAL Study for ALLO-715, Allogene made a milestone payment of $5.0 million, (ii) the dosing of the first patient in its IGNITE Study for ALLO-605, Allogene made a milestone payment of $5.0 million, and (iii) the dosing of the first patient in its TRAVERSE Study for ALLO-316, Allogene made a milestone payment of $5.0 million. We are also eligible to receive tiered royalties on future sales.annual worldwide net sales of any products that are commercialized by Allogene that contain or incorporate, are made using or are claimed or covered by, our intellectual property licensed to Allogene under the Allogene License Agreement at rates in the high single-digit percentages.
Unless earlier terminated in accordance with the agreement, our agreement with Allogene will expire on a product-by-product and country-by-country basis, upon the later of (1) the expiration of the last to expire of the licensed patents covering such product; (2) the loss of regulatory exclusivity afforded such product in such country, and (3) the tenth anniversary of the date of the first commercial sale of such product in such country; however, in no event shall the term extend, with respect to a particular licensed product, past the twentieth anniversary of the first commercial sale for such product. In addition, Allogene has the right to terminate the agreement at will upon 60 days’ prior written notice, either in its entirety or on a target-by-target basis. Either party may terminate the agreement, in its entirety or on a target-by-target basis, upon 90 days’ prior written notice in the event of the other party’s uncured material breach. The agreement may also be terminated upon written notice by Allogene at any time in the event that we become bankrupt or insolvent or upon written notice within 60 days of a consummation of a change of control of Cellectis.
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CollaborationLicense, Development and Commercialization Agreement with Servier
In February 2014, we entered into a strategic collaboration agreementResearch, Product Development, Option, License and Commercialization Agreement (the “Prior Servier Agreement”) with Servier to develop and commercialize certain product candidates.Servier. Pursuant to the agreement,Prior Servier Agreement, we were responsible for the research and development up to and including the Phase 1 clinical trial of candidate products directed against five targets, including the UCART19 product candidate. Pursuant to the Prior Servier Agreement, we granted Servier the right to exercise an exclusive option to obtain an exclusive, worldwide license, on a product candidate-by-product candidate basis, with respect to each product candidate selected by Servier and developed under the agreement. Pursuant to the Prior Servier Agreement, Servier made upfront payments of $48.5 million.
On March 6, 2019, we and Servier entered into a new License, Development and Commercialization Agreement (the “March Servier License Agreement”). The March Servier License Agreement superseded and replaced the Prior Servier Agreement in order to modify the targets covered by our license to Servier, to establish the terms of our and Servier’s collaboration and to reflect the status of products in development.
On February 18, 2020, we and Servier entered into a binding term sheet to enter into an amendment to the March Servier License Agreement to grant to Servier an exclusive license limited to CD19 target, but extended to all gene-edited allogeneic CAR T-cell products targeting CD19 and gene edited exclusively by Cellectis’ TALEN. On March 4, 2020, we and Servier entered into the amendment to the March Servier License Agreement contemplated by this term sheet (such March Servier License Agreement as amended on March 4, 2020, the “Servier License Agreement”).
Under the Servier License Agreement, Cellectis grants to Servier, an exclusive worldwide, royalty bearing license with sublicensing rights under certain conditions, under certain of our patents and know-how to develop, manufacture and commercialize gene-edited allogeneic CAR T-cell products targeting CD19 and gene edited exclusively by Cellectis’ TALEN, in the field of anti-tumor adoptive immunotherapy. Servier, directly or through its sublicensees, will be solely responsible for the research, development and commercialization of these products. In addition, Servier confirms it will not pursue the development of five other targets for products using Cellectis technology and consequently Cellectis retains control over them.
In addition to an upfront payment of $8.2 million. In addition,€25 million made by Servier following the strategic alliance, as amended in November 2015,execution of the amendment, the Servier License Agreement provides for aggregate additional payments ofthat we initially estimated could total up to $1,064$410 million (although this amount may be adversely impacted by Servier's discontinuation of its involvement in the development of the CD19 Products), comprising payments upon the exercise of each option granted to Servier and payments upon the occurrence offor certain specified development and commercial milestones. We are also eligible to receive tieredflat low double-digit royalties ranging in the high single-digit percentages based on annual net sales of commercialized products. This agreement covers the development and the potential commercialization of the lead product candidate, UCART19, as well as other product candidates directed at four other targets. Under the terms of the agreement, we will be responsible for the research and development of certain product candidates through the end of their respective Phase I clinical trials. We granted Servier an exclusive option to obtain an exclusive, worldwide license on a productcandidate-by-product candidate basis, with respect to each target selected by Servier and developed under the agreement, to further develop, manufacture and commercialize such product in the field of anti-tumor adoptive immunotherapy. Upon exercising each such option, Servier will assume responsibility for the further clinical development, manufacture and commercialization of the relevant product candidate. In November 2015, we entered into an amendment to our initial collaboration agreement with Servier, which allowed for an early exercise of Servier’s option with respect to UCART19 and other product candidates. Pursuant to this amendment, Servier has exercised its option to acquire the exclusive worldwide rights to further develop and commercialize UCART19. In addition, Pfizer and Servier have entered into an exclusive global license and collaboration agreement, under which Pfizer has obtained exclusive rights to develop and commercialize UCART19 in the United States.
Collaboration with Pfizer
In June 2014, we entered into a global strategic collaboration agreement with Pfizer pursuant to which we will collaborate to conduct discovery andpre-clinical development activities to generate CART-cells directed at targets selected by Pfizer or us in the field of oncology. Pursuant to the agreement, Pfizer made an upfront,non-refundable $80.0 million payment to us, concurrent with Pfizer’s equity investment in our Company. In addition, the strategic alliance provides for up to $2.8 billion in potential clinical and commercial milestone payments. We are also eligible to receive tiered royalties ranging in the high single-digit percentages based on annual net sales of commercialized products. We are also entitled to a low double-digit royalty on certain development milestone payments received by Servier under sublicenses.
For so long as the agreement remains in effect, we are restricted from researching, developing, or commercializing any product directed against a CD19 target that is used for the same purpose as it is used with a product candidate developed under the agreement.
The agreement will expire, unless earlier terminated in accordance with its terms, upon the expiration of the last to expire of the patents covering a product licensed pursuant to the agreement. The parties may terminate the Servier License Agreement at any time by
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mutual consent. At its sole discretion, Servier has the right to terminate the agreement in its entirety or with respect to specific products, upon three months’ prior written notice to us.
In addition, either party may terminate the agreement following the other party’s uncured material breach upon 90 days’ prior written notice to the breaching party, or 30 days’ notice if such breach relates to a payment obligation. The agreement immediately and automatically terminates upon the expiration of Servier’s last license option in the event Servier has not exercised any option to license in accordance with the agreement prior to such expiration. Servier may terminate the agreement at any time for product-related safety reasons. Either party may terminate the agreement in the event of the other party’s bankruptcy or insolvency.
On September 15, 2022, Servier sent to us and Allogene a notice of discontinuation of its involvement in the development of the CD19 Products and purported to provide Allogene with the ability to elect to obtain a license to the CD19 Products outside of the United States. We do not believe that the Servier License Agreement permits Servier to grant such a world-wide sub-license to Allogene. We also believe that Servier has not complied with its performance obligations under the Servier License Agreement, which we believe may involve material breaches of the Servier License Agreement. See “Risk Factors—Risks Related to Our Reliance on Third Parties—Servier’s discontinuation of its involvement in the development of CD19 Products and related disagreements may have adverse consequences.”
Research Collaboration and Exclusive License Agreement with Iovance Biotherapeutics
On December 30, 2019, we entered into a research collaboration and exclusive worldwide license agreement with Iovance. Iovance licensed our TALEN technology in order to develop tumor infiltrating lymphocytes (TIL) that have been genetically edited to create more potent cancer therapeutics. The worldwide exclusive license enables Iovance to use TALEN® technology to address multiple gene targets to modify TIL for therapeutic use in several cancer indications. Financial terms of this license include development, regulatory and sales milestone payments to us, as well as royalty payments based on net sales of TALEN-modified TIL products.
Collaboration and License with Cytovia Therapeutics
On February 12, 2021, we entered into a research collaboration and non-exclusive license agreement with Cytovia Therapeutics, Inc., or Cytovia to develop induced Pluripotent Stem Cell (iPSC) iPSC-derived Natural Killer (NK) and CAR-NK cells edited with our TALEN (the “Cytovia Agreement”).
Pursuant to the Cytovia Agreement, as expanded in November 2021 to include a new CAR target and development in China by Cytovia’ joint venture entity, CytoLynkx Therapeutics, Cellectis is eligible to receive fundingan upfront cash payment or equity stake in Cytovia of $20 million, if certain conditions (the “Cytovia Conditions”) were met by December 31, 2021 as well as aggregate additional payment of up to $805 million of development, regulatory and sales milestones from Cytovia. Cellectis is also eligible to receive single-digit royalty payments on the net sales of the partnered products commercialized by Cytovia. Cellectis also received an option to participate in certain future financing rounds by Cytovia.
The Cytovia Agreement initially provided for an upfront cash payment or equity stake in Cytovia of $20 million (the “Upfront Collaboration Consideration”), if certain conditions were met by December 31, 2021. Because the conditions of an equity stake transaction were not met by December 31, 2021, we recognized a trade receivable corresponding to the expected cash payment as of December 31, 2021. In April 2022, in connection with Cytovia’s entering into a definitive business combination agreement with a publicly traded Special Purpose Acquisition Company (“SPAC”), we entered into an amendment to the Cytovia Agreement, pursuant to which we received a $20 million convertible note in payment of the Upfront Collaboration Consideration. The terms of the note provided for (i) conversion into common stock of the combined company upon completion of the business combination or, (ii) in certain circumstances, our ability to elect to be paid in cash on or before December 31, 2022. In connection with this amendment, Cellectis also received a warrant to purchase additional shares of the combined company representing up to 35% of the shares issued upon conversion of the note at a predetermined exercise price, with the number of shares issuable upon exercise and the exercise subject to certain adjustments (the “SPAC Warrant”).
Because the SPAC business combination was abandoned and the conditions of the note were not met, we and Cytovia entered into an amended and restated note, which became effective as of December 22, 2022. Although the SPAC Warrant remains outstanding, it only applies in connection with Cytovia’s business combination with a SPAC.
The amended and restated note provides for automatic conversion into common stock of Cytovia in the case of certain fundamental transactions pursuant to which Cytovia becomes a public reporting company and for conversion at Cellectis’ option in connection with certain financing transactions, upon a company sale and at final maturity. In each case such conversion is subject to a 9.9% ownership cap, with the balance issuable in the form of pre-funded warrants. Among other changes, the amended and restated note increases the applicable interest rate of the note to 10% per annum, subject to a 10% step up upon the occurrence and continuation of an event of default, provides for the repayment of 50% of the outstanding amount on April 30, 2023 and extends the final maturity date for the repayment of the remaining outstanding amount to June 30, 2023.
On November 30, 2023, considering that the progress made in our negotiations with Cytovia was insufficient and in light of their failures to pay due and payable amounts under the note, we notified Cytovia of the termination of the Cytovia Agreement with immediate effect. Under the terms of the termination letter, Cytovia is no longer authorized to use the licenses and rights granted under the Cytovia Agreement, but remains liable for the outstanding amount of the Cytovia Note and for which Cytovia is currently in default.
Collaboration and Investment Agreements with AstraZeneca
On November 1, 2023, Cellectis and AstraZeneca announced that they entered into a Joint Research and Collaboration Agreement, an Initial Investment Agreement and the Subsequent Investment Agreement, each as discussed below.
Joint Research and Collaboration Agreement.
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On November 1, 2023, we entered into a Joint Research and Collaboration Agreement with AZ Ireland (the “AZ JRCA”). Pursuant to the AZ JRCA, the parties will collaborate to develop up to 10 novel cell and gene therapy candidate products, selected from a larger pool of potential targets identified by AZ Ireland, for human therapeutic, prophylactic, palliative, and analgesic purposes. Each party will be responsible for performing research and development activities based on research plans to be agreed upon throughout the initial five-year collaboration term under the AZ JRCA.
During the period in which research activities are being conducted, Cellectis grants to AZ Ireland and its affiliates a non-exclusive, royalty-free, sublicenseable (under certain conditions) license to certain know-how and patents of Cellectis that are necessary for AZ Ireland to perform its research activities (the “Licensed Technology”).
Cellectis also granted AZ Ireland an exclusive option, on a candidate product by candidate product basis, to receive a worldwide, exclusive, royalty-bearing, sublicenseable (under certain conditions) license under the Licensed Technology to exploit (to make, have made, import, use, sell, or offer for sale) the relevant candidate product (any candidate product for which AZ Ireland exercises this option, a “Licensed Product”). AZ Ireland will have the sole right, at its expense, to develop and commercialize the Licensed Products following the exercise of such option, and Cellectis will provide a knowledge transfer of product, technology, and certain manufacturing information necessary to enable AZ Ireland to do the foregoing.
Prior to AZ Ireland’s exercise of an option with respect to any Licensed Product, Cellectis will have sole responsibility for all manufacturing activities for candidate products, at AZ Ireland’s cost and expense to the extent such costs constitute research costs under the AZ JRCA.
Until the earlier of the fifth anniversary of the effective date or the date upon which ten candidate products have been selected by AZ Ireland, Cellectis and its affiliates may not directly or indirectly exploit any product that is directed to a target identified under the AZ JRCA. Additionally, Cellectis and its affiliates may not, during the term, directly or indirectly exploit any product that is of the same modality as a candidate product or Licensed Product and directed to the same target (excluding specified targets).
In addition to an upfront payment of $25 million made by AZ Ireland to Cellectis, AZ Ireland will reimburse Cellectis for its budgeted research costs associated with thePfizer-selectedtargets identified under the AZ JRCA. Cellectis is also eligible to receive an option exercise fee and development, regulatory and sales-related milestone payments, ranging from approximately $70 million up to $220 million, per each of the 10 candidate products, plus tiered royalties, which may range from mid-single to low-double digits, based on the sale of Licensed Products.
Activities under the AZ JRCA will be implemented through joint research teams with oversight from a joint steering committee, each comprising representatives of Cellectis and AZ Ireland.
Unless earlier terminated in accordance with its terms, the AZ JRCA will expire on a Licensed Product by Licensed Product and country by country basis, upon the later of (i) the expiration of the last to expire of the patent rights covering a Licensed Product, (ii) the expiration of the first to expire regulatory exclusivity period in a given country, and (iii) the expiration of a customary term following the first commercial sale of a Licensed Product in a given country. If AZ Ireland does not exercise any options for four Cellectis-selected targetsLicensed Products, then the AZ JRCA will expire sixty days following the completion of the last research plan. Both parties may also terminate (i) for a material breach by the other party that is not cured within 90 days of the alliance. Pfizer has exclusivebreaching party’s receipt of notice from the non-breaching party of such material breach, and (ii) for the other party’s insolvency or bankruptcy.
The AZ JRCA includes customary provisions in respect of confidentiality obligations, representations and warranties, indemnification, and audit and information rights.
Initial Investment Agreement
AZ Holdings made an initial equity investment of $80 million in Cellectis by subscribing for 16,000,000 ordinary shares, at a price of $5.00 per share (the “Initial Investment”). Following the Initial Investment, AZ Holdings owned approximately 22% of the share capital, and 21% of the voting rights of the Company, Pursuant to the Initial Investment Agreement, for so long as AZ Holdings and its affiliates hold, in aggregate, at least 20% of the share capital and voting rights of the Company. AZ Holdings shall be entitled to subscribe on the same terms as other investors for its pro rata share on a non-diluted basis of any securities issued by the Company, subject to certain customary exceptions such as issuances of securities of the Company pursuant to incentive equity compensation plans.
In addition, under the Initial Investment Agreement, AZ Holdings is entitled to nominate an individual as a non-voting observer (censeur) on the board of directors of the Company and is entitled to certain information rights to pursue developmentallow it to comply with its legal, regulatory and commercializationaccounting obligations and manage its tax affairs.
The Company has agreed to provide AZ Holdings with certain registration rights in connection with the Initial Investment, including agreeing to register the resale of products for a total of fifteen targets of their choice, which have all been selected.
Our Strategy
Our strategy isany shares acquired by AZ Holdings pursuant to leverage the transformative potential of our unique gene-editing technologiesInitial Investment and expertise through our cell engineering platform.
The key elements of our strategy are to:
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The Initial Investment Agreement includes customary representations and warranties of the parties and provides for certain indemnification rights of the Company and AZ Holdings in respect of specified losses.
Subsequent Investment Agreement
In addition to the AZ JRCA and the Initial Investment Agreement, on November 7, 2023, the Company and AZ Holdings entered into the Subsequent Investment Agreement.
Under the Subsequent Investment Agreement, AZ Holdings would make a further equity investment in Cellectis of $140 million by subscribing for two newly created classes of convertible preferred shares of Cellectis: 10,000,000 “class A” convertible preferred
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shares and 18,000,000 “class B” convertible preferred shares, in each case at a price of $5.00 per share (the “Additional Investment”). Until they convert into ordinary shares, the “class A" convertible preferred shares would have single voting rights and would not carry any double voting right at any moment, and the “class B” would carry no voting rights except on any distribution of dividends or reserves. Both class of preferred shares would have a liquidation preference (if any liquidation surplus remains after repayment of Cellectis’ creditors and of par value to all shareholders) and would be convertible into the same number of ordinary shares with the same rights as the outstanding ordinary shares. All the conditions precedents to the closing are met and the closing should occur on the earlier of (i) the third business day following the approval by the Cellectis' board of directors of the Company's annual and consolidated account for the financial year ended on December 31, 2023, and (ii) May 7, 2024 or such other date as may be agreed in writing by the parties. Immediately after the closing of the Additional Investment, it is anticipated that AstraZeneca would own approximately 44.0% of the share capital of the Company and 30% of the voting rights of the Company (based on the number of voting rights outstanding as of the date of this Annual Report) and pursuant to the Subsequent Investment Agreement and the Company's shareholders decision dated December 22, 2023, Mr. Marc Dunoyer and Mr. Tyrell Rivers will, subject to closing of the Additional Investment, serve on the Company's board of directors as members designed by AZ Holdings. Further, certain business decisions are subject to AZ Holdings’ approval, including, in particular, winding up any company of the Cellectis group, issuing securities senior to or pari passu with the convertible preferred shares or any shares without offering AZ Holdings the option to purchase its pro rata share of such securities (subject to customary exceptions, including issuances under employee equity incentive plans), declaring or paying dividends, prepaying indebtedness before due, and disposing of any material assets concerning gene editing tools or manufacturing facilities and selling, assigning, licensing, encumbering or otherwise disposing of certain material IP rights.
The Additional Investment was approved on December 22, 2023, at an extraordinary general meeting of the shareholders of Cellectis.
Immunotherapy: Turning the Immune System into “Smart Drugs”
The immune system has evolved to protect the body from invading pathogens or external harmful materials by identifying these foreign bodies through“non-self” “non-self” antigens, which are molecular signatures that they carry and are foreign to the body. A central function of the immune system is to discriminate between “self,” which is recognized through antigens normally present in the body and borne by cells, proteins, sugars or lipids, and“non-self” “non-self”, which is detected through abnormal or foreign antigens. Cancer cells thrive, in part, because they trick the immune system into treating them as self, even though they express abnormal antigens, and thus immune tolerance occurs when the immune system fails to recognize and attack tumors. Breaking immune tolerance is an important aspect of most immuno-oncology-based therapeutics because it enables the immune system to recognize and treat tumors asnon-self and leadleads to tumor destruction.
The immune system recognizesnon-self danger signals and responds to threats at a cellular level. The immune system may be conceptualized as comprising two arms. The first arm, known as the innate immune system, recognizesnon-specific signals of infection or abnormalities as a first line of defense. The innate immune system is the initial response to an infection, and the response is the same every time regardless of prior exposure to the infectious agent. The second arm, known as the adaptive immune system, is composed of highly specialized cells and provides long-term specific recognition and protection from infectious agents and abnormal processes such as cancer. The adaptive immune response is further subdivided into antibody-based responses and cellular responses, which includeT-cell-based immune responses. The most significant components of the cellular aspect of the adaptive immune response areT-cells, which are specialized cells that generally mature in the thymus.T-cells are involved in sensing and killing infected or abnormal cells, as well as coordinating the activation of other cells and mounting an immune response.
Although the immune system is designed to identify and destroy foreign or abnormal protein-bearing tumor cells, this process is often defective in cancer patients. Additionally, cancer cells employ a number of mechanisms to escape immune detection and attack to suppress the effect of the immune response.
Immunotherapy is a type of treatment that modifies, stimulates, orre-directs certain parts of the immune system to fight diseases, such as cancer. Immunotherapy works by stimulating a patient’s own immune system or by turning its attacks towards harmful targets, such as cancer cells. Immunotherapy can also be pursued by giving patients engineered immune cells, such as CART-cells to target certain cells. Immunotherapy is playing an increasingly large role in treating cancer, chronic infectious diseases, autoimmune diseases and allergic diseases.
T-cells andT-cell Receptors (TCRs)
T-cells are a class of white blood cells that carry a specific TCR at their surface that allows them to recognize and kill other cells that express antigens foreign to the individual. Normal cells express a set of specific
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molecules, called human leukocyte antigen, or HLA, at their surface. HLA is associated with small fragments, or peptides of the proteins expressed inside the cell or processed from the extracellular body fluids. AbnormalFragments of abnormal or foreign proteins (viruses, for example) can attach to HLAs, and be presented at the cell’s surface, and be recognized byT-cells through theseHLA-peptide complexes and identified as foreign antigens. This recognition triggers the activation of theT-cells, which destroy the foreignHLA-peptide complex-bearing cell, secrete specific cytokines attracting other immune-competent cells to their location, and start multiplying to establish a full immune response.
An activatedT-cell can multiply tens of thousands of times, so long as there remains a presence of the foreign antigen in the body. Unlike antibodies that mainly diffuse passively through the body and its circulating fluids,T-cells actively leave blood vessels or lymphoid organs and travel through the tissues of the body where they can attack foreign antigens. Once the antigen is eliminated from the body, theT-cells run out of stimulation and die off, with only a fraction surviving as “memoryT-cells,” which can react promptly should the antigen reappear in the body.
There is a high variability of HLA molecules in the population. Therefore, if a cell is introduced into a person and originally comes from another individual that is notHLA-matched, it will bear, at its surface,HLA-peptide complexes that are recognized as foreign and will be killed by theT-cells of the recipient. This mechanism of graft rejection has been a major limitation to transplanting patients with allogeneic tissues. Reciprocally, ifT-cells are grafted from one individual to another and start recognizing as foreign the normalHLA-peptide complexes at the surface of all tissues of the grafted individual, then they may attack and kill those healthy tissues, leading to Graft-versus-Host disease (GvHD), which can be very severe, and potentially fatal, if left untreated. GvHD has been a major limitation to the use of allogeneicT-cells when treating patients.
Cancerous cells express abnormal antigens and can be killed byT-cells. However, cancer may grow and spread to various organs whenT-cells with cancer-specific receptors are in low numbers, of poor quality, or rendered inactive by suppressive mechanisms employed by tumor tissues.T-cells are a key armament when fighting cancers. They play a particularly significant role if they are
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tailored to target tumors, and potentially even more so if their genes are edited to overcome tumor defenses, to makeT-cells compatible with other anti-cancer drugs that can be combined with them, and to prevent GvHD, which would allow the use of allogeneicT-cells.
Chimeric Antigen Receptor (CARs)(CAR)
CARs are engineered molecules that, when present at the surface ofT-cells, enable them to recognize specific proteins or antigens that are present on the surface of other cells. These receptors are typically used to graft the specificity of an antibody derived from a single cell, or a monoclonal antibody, onto aT-cell and provide it with a specific targeting mechanism to seek, identify, interact with and destroy the tumor cells bearing a selected antigen associated with that tumor also known as tumor-associated antigen, or TAA and tumor-specific antigens, or TSA. The expression of some genes, or combinations of genes, can be associated with certain classes of cancers. It is sometimes possible to identify TAAs that are expressed at various levels by tumor cells from a given cancer type. These TAAs may also be normally expressed by other tissues at different stages of development.
T-cells with CARs are referred to as CART-cells. Whereas naturalT-cell receptors, or TCRs, only recognize antigens bound to an HLA molecule at a cell’s surface, a CAR is able to directly recognize antigens that are present at the targeted cell’s surface. It is believed that uponcell-to-cell contact between a CART-cell and an antigen-bearing targeted cell, antigen recognition by the CAR “activates” the CART-cell, triggering it to multiply, attack and kill its target through the release of “hole-forming” proteins, known as perforins, and “degradation enzymes,” known as granzymes, that enter the targeted cell through the perforin-formed holes and carry out the killing. The activation of aT-cell through a CAR results in a target-associated “kill and amplify” chain reaction that eradicates the tumor.
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CARs are constructed by assembling components, or domains, from different proteins, including:
The following diagram shows the mechanism by which a CART-cell is believed to attack a tumor cell:
Recent immuno-oncology advancements have supported the potential to cure certain cancers by harnessing the body’s immune system to fight cancer cells. For example:
cells (see “Competition” section for more details). Based on these, and other advancements, immuno-oncology has become a new frontier for treatment, and we believe it is one of the most promising areas of development within oncology.
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Limitations of Current Autologous Treatments
Many of the CART-cell immunotherapy treatments currently under development are created through an autologous approach in which the patient’s ownT-cells are engineered to fight cancer cells. Part of our scientific basis for pursuing allogeneic approaches rests in the recognized limitations of autologous approaches, including:
Although some autologous approaches to CART-cell have recently demonstrated encouraging clinical data, we believe our allogeneic approach provides developmental benefits.
Our Gene-Editing Approach to Allogeneic CART-cell Therapy
The most fundamental challenge of genome engineering is the need to target a precise DNA sequence specifically and efficiently target a precise DNA sequence within a complex genome. Our founder and CEO, Dr. André Choulika, was one of the pioneers and first researchers in nuclease-based genome engineering in the early 1990s and has been integral in the development and advancement of gene-editing tools.
Our proprietary gene-editing platform relies on our capacity to custom designDNA-sequence specific cutting enzymes, or nucleases, for any chosen gene we need to modify and our capability to introduce such custom-made nucleases into the living cells we want to engineer. Our platform relies on precisely chosen protein families that can specifically recognize unique DNA sequences and can be tailored to target such sequences in any chosen gene or genetic region.
We are currently developing anOur allogeneic CART-cell therapy approach is based on our technology platform thatwhich combines single or multi-chain CARs, TALEN and PulseAgile, to address the opportunities for improvement discussed above.our electroporation device. Our approach aims to deliver anoff-the-shelf product products with the following benefits:
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TALEN—Proprietary Gene-editing Technology
The flagship nuclease structure we use for gene editing is based on a class of proteins derived from transcription activator-like effectors, or TALE. TALEN products are designed by fusing theDNA-cutting domain of a nuclease to TALE domains, which can be tailored to specifically recognize a unique DNA sequence. These fusion proteins serve as readily targetable “DNA scissors” for genome engineering applications that enable us to perform targeted genome modifications such as sequence insertion, deletion, repair and replacement in living cells.
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The following diagram shows the structure of a TALEN. The DNA binding domain of TALEN is composed of DNA binding units (repeat variabledi-residues or RVDs) that each individually recognize a single base pair, and that are assembled to collectively recognize a DNA sequence. The specificity of this RVD single base pair recognition is mediated by two of the amino-acids in the RVD(repeat variable diresidues or RVDs) within each DNA binding units. RVDs (NN, NI, NG, HD, or HD), the RVDs thatothers) directly interact with the base of the DNA.
We believe the key benefits of TALEN technology are:
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The following diagram shows the mechanismvarious gene editing mechanisms enabled by which TALEN inactivates, or knocks out, a gene:TALEN:
We are able to assemble long arrays of modular domains with predictable specificity for a chosen sequence of DNA unique within a genome.
When a TALEN is present, its TALE domains recognize its target DNA sequence and thereby direct the enzyme to the proper chromosomal location. Once bound to itstheir target DNA sequence, thesequences, DNA cleaving-domaincleaving-domains of the TALEN inducescan induce a DNA break at the targeted location to induce permanent DNA modifications. We believe TALEN stands out among nucleases as exceptionally precise, accurate and efficient to perform gene inactivation.
Other Types of Gene Editing Technologies
We have developed a strong expertise and capacity in meganuclease technologies, which involve enzymes capable of recognizing very large unique DNA sequences. In addition, using the flexibility of the TALE domain, we have developed new classes of custom-designed nucleases, such as compact TALEN and mega-TALE nucleases that combine meganucleases and TALEN technology. Compact-TALEN is built with a single TALE molecule fused to a fragment of a chosen meganuclease that carries limited DNA sequence recognition functionality but fully functionalDNA-cleaving activity. These chimeric proteins are smaller in size than
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classical TALEN, which can facilitate their delivery to cells. In contrast, mega-TALEsmega-TALE use afull-size meganuclease to enhance their DNA sequence recognition capacities, while demonstrating enhanced precision. We also have discovered a new class of nuclease that we named BurrH nucleases, also based on arrays of singleDNA-base recognizing modular domains. Recently, we announced the issuance of two US patents covering certain uses ofRNA-guided endonucleases,
We also capitalized on our expertise with TALEN technology to develop new gene editing approaches, such as Cas9 or Cpf1, for the genetic engineering ofT-cells.base-editing technology.
PulseAgile—Electroporation Technology
In order to perform gene editing, we use our proprietary PulseAgile electroporation technology to introduce nucleases inside the targetT-cell where they can access the cell’s DNA. Electroporation allows messenger RNA, or mRNA, molecules coding for the nuclease to enter into the cell, where it isthey are translated into the nuclease protein that can cut into the cell’s DNA. The mRNA molecules are rapidly degraded by the cell, which means that the nuclease is only expressed for a short time.
PulseAgile electroporation uses a unique electrical field wave-form that, in combination with a proprietary buffer solution, enables molecules, such as nucleases, to enter efficiently into the cell while maintaining a high percentage of viable cells. PulseAgile technology is particularly effective due to the shape of the electrical field that includes high voltage peaks, which are optimized to create transient holes in the cell membrane, followed by lower voltage pulses that help mRNA (for example TALEN-encoding mRNA) migrate into the cells. In addition, PulseAgile is optimized to preserve high cell viability and thus suited for large-scale manufacturing.
Next-Generation Products Based on Multi-chain CAR
Historically, CAR components have been assembled into a linear CAR molecule, known as a “single-chain” CAR. We have developed another architecture, which we call “multi-chain” CAR that is currently based on the structure of the high-affinity IgE receptor, which is normally absent inT-cells. The multi-chain CAR is composed of several membrane-bound proteins that naturally assemble at the cell’s surface and, as described below, have several benefits.
CAR architectures generally utilize a single polypeptide chain, which requires multiple appending of domains to enable a configuration that provides both theT-cell activation andco-stimulation needed for optimalT-cell responses. Typically, the target-binding domain of a CAR consists of a single-chain variable fragment of an antibody comprising variable domains of large polypeptide subunits, or heavy chains, and small polypeptide subunits, or light chains, joined by a short linker peptide. This structure allows the expression of the CAR as a single-chain protein. One limitation of single-chain CAR architecture is the small number of features that it is able to add to a cell. When such protein domains are not located close to the transmembrane structure, they may be less stable or active, which limits the number of domains that can be added.
We have developed a novel multi-subunit CAR architecture that overcomes these structural issues and expands the functional possibilities that can be brought to aT-cell. Our multi-chain CAR is currently based on the architecture of a specific high affinity IgE receptor, that is normally absent fromT-cells. This architecture offers the potential for inclusion of multiple intra-cellular signaling domains, optimally located at their natural distance from the membrane. In other words, our multi-chain CAR offers additional positions close to the cell membrane so that domains can be more flexibly located relative to the cell’s transmembrane structure. This also facilitates the potential implementation of multiple recognition domains, possibly allowing the recognition of not only a single antigen, but also of patterns of multiple antigen expression. This novel multi-subunit architecture would allow the construction of CARs with both improved activity and specificity and thus with an expanded range of applications.
CARs, whether single or multi-chain, are means to redirectT-cell activity toward cells bearing selected antigens. Our platform allows us to design CARs and to optimize their design depending on where and how their target is expressed on the surface of cancer cells.
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The following diagram shows the distinction between single-chain CARs and multi-chain CARs:
Nuclease Technology andT-cells: The Design Process
OurT-cell gene-editing process involves two engineering rounds:
Step 1: Gene Editing to add Genes, such as a CAR
In the first round, geneticGenetic material is added to theT-cell’s genome using a viral vector—a benign modified virus that cannot replicate autonomously but can efficiently deliver such genetic material into a cell with which it is in contact. In particular, we use allow targeted integration. The genetic material added includes a gene-codinggene coding for a CAR, which becomes a new receptor at theT-cell’s surface that allows it to recognize and bind to a target molecule that is present at the surface of other cells. At this stage, we can also add additionalother genes to these cells that confer specific properties. For example, we may add suicide“suicide switch” genes, which code for proteins that can makeT-cells susceptible to certain drugs and enable us to deplete our engineeredT-cells at our discretion by administering a drug to the patient. This system can also be integrated within the CAR itself.
Step 2: Gene Editing to Inactivate Genes, such as the TCRα,PD-1,TCRα and CD52
In the second round, weWe use our PulseAgile electroporation technology to introduce specific TALEN mRNA into theT-cells to inactivate a number of genes that are naturally present in the genome of theseT-cells.
TCRs at the surface ofT-cells allow them to recognize cells that express foreign,non-self, antigens (for example, cells infected by a virus or cells coming from another individual).Non-modified allogeneicT-cells bear
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functional TCRs and, if injected into a patient,
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can potentially recognizenon-self on that patient’s tissues and start to attackattacking them. For this reason, to suppress their alloreactivity, all of our UCART product candidates undergo the inactivation of a gene coding for TCRα, a key component of TCRß, the natural antigen receptor ofT-cells, to suppress their alloreactivity. T-cells. The engineeredT-cells lack functional TCRs and are no longer capable of recognizing foreign antigens. As a result, when injected into a patient, the engineeredT-cell would not recognize the tissues of the host patient as foreign and thus would avoid attacking the patient’s tissues. This could avoid the GvHD that can sometimes be observed when allogeneicTCR-positiveT-cells TCR-positive T-cells are infused into some patients.
The figure below depicts the suppression of alloreactivity inT-cells engineered to lack functional TCRs. The figure summarizes experiments in which we injected mice withT-cells engineered for the inactivation of TCRα while injecting other mice withnon-engineeredT-cells non-engineered T-cells with functional TCRs. We then measured the effects of such injections on mean body weight, which serves as a proxy for the impact of GvHD.
During the manufacturing process, the T cells from a healthy donor are first engineered. The CAR gene is transduced and cell attributes like the TCR alpha gene are knocked out by TALEN. Then, theT-cells of our UCART products are amplified. The desiredTCR-alpha TCR alpha deleted cells are finally purified from the cells that may still bear a TCR, and are finally frozen. We perform a battery of specialized testing techniques and various quality assurance and quality control assays to further validate cellular functional integrity following gene editing.
The lack of a TCR at the surface of our UCART product candidates is a key feature that allows them to be used as allogeneicoff-the-shelf products. Other genes can also be inactivated in this round to confer additional specific attributes to theT-cells. They can be made resistant to, and therefore compatible with, specific medical regimens used during the course of cancer treatments. For example, we inactivate the CD52 gene, which codes for the target of alemtuzumab, a monoclonal antibody sometimes used in CLL patients, that can also be part of the medication given to patient prior to receiving a UCART (a lymphodepletion regimen), and that would otherwise destroy our engineeredT-cells. Likewise, we believe we can inactivate the deoxycytidine kinase (dCK) or glucocorticoid receptor (GR) genes in order to make ourT-cells respectively resistant to purine nucleotide analogs (e.g., fludarabine, clofarabine or cytarabine) or to corticoids that are used for several types of cancer patients.
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The following diagram shows the key stages in our engineering of UCART19:UCARTCS1:
The allogeneic CAR T-cell approach developed by Cellectis aims at increasing accessibility to treatment for patients by using healthy donor cells to manufacture CAR T-cells. The inactivation of the TCRα gene reduces the risk of graft vs. host disease. In addition, the use of a lymphodepletion regimen in patients aims at supporting early engraftment of the candidate product, with the optimal lymphodepletion regimen prior to the administration of CAR-T product candidates remaining an area of investigation in the field of CAR T-cell therapy.
We are investigating the inactivation of the beta2-microglobulin (ß2M) gene to increase persistence of allogeneic cells in this context. ß2M is necessary for presentation of antigens on HLA class I major histocompatibility complex (MHC) to cytotoxic T-cells. Allogeneic TRCαß2M double knock-out CAR T-cells infused into a patient are expected not to be recognized by the patient’s own cytotoxicT-cells and therefore to potentially show prolonged survival after patients’ T-cells recover following lymphodepletion.
We have developed several ß2M-specific TALEN allowing high efficiency of gene inactivation in combination with TRCα-specific TALEN (up to 88% double knock-out). We have shown on human and mouse cell models that ß2M inactivation improves
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allogeneic cell survival in the presence of alloreactive T-cells, and we are pursuing the ß2M inactivation approach for some of our preclinical candidates. We have also developed a single gene editing modification allowing resistance to both alloreactive T-cells and NK cells at the same time, by inserting the HLA-E molecule at the ß2M locus with high efficiency. While ß2M inactivation provides resistance to alloreactive T-cells ß2M knock-out cells can become the target of NK cells (missing- self response). HLA-E acts as a ligand to NK cell inhibitory receptors.
Our engineeredT-cell could also be made insensitive to inhibition signals, which diminishesdiminish immune system activity, that may be present within the tumor microenvironment and that usually blockT-cell attacks. For example, we inactivate thePD-1 programmed cell death 1 (PD-1) gene in our engineeredT-cells so that they would no longer be subject in order to suppress the checkpoint regulator inhibition by tumors expressingPDL-1, PD-1 ligand (PD-L1), a common anti-immune defense mechanism found in cancer.
The following diagram shows the inactivation of thePD-1 gene to suppress checkpoint inhibition in theT-cell:
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Using our ability to add and to inactivate genes, our platform has the flexibilitypotential to deliver smartT-cells designed for specific indications and purposes.
Key Benefits
Next-Generation Products – Armored CARs
While CAR T-cell therapies have led to instances of our UCART Approach
We believe ourcomplete remission in previously untreatable diseases such relapse/refractory ALL, not all patients respond, and even among those that respond, some patients end up relapsing. There is therefore a need to investigate strategies to make CAR T approachT-cells even more effective, such as boosting their activity through overexpression of an immunomodulatory molecule (i.e. a cytokine or a costimulatory receptor). In order to limit toxicity effects due to immunostimulatory molecules being produced uncontrollably and manufacturing process hassystemically, we have developed strategies exploiting cellular endogenous pathways to restrict expression of a gene of interest only when CAR T-cells are activated. This is made possible by inserting genes of interest at a desired position in the potential to provide the following benefits:
Our UCART product candidatesgenome by combining a locus-specific nuclease and a donor template vectorized with an adeno-associated viral (AAV) vector. Since PD-1 and CD25 are intended to enable universal market access driven by an allogeneic approach. Current autologous treatments require dedicated infrastructure, which could limit their availability to only a few select sites. Because our UCART product candidates are designedknown to be frozenupregulated upon T-cell activation, inserting certain cytokine coding sequence under the control of PD-1 or CD25 genetic regulatory elements allows secretion of that certain cytokine only upon activation of the CAR T-cells and availableoff-the-shelf, theyenhances antitumor activity.
This strategy could be shipped globally at any time and administered immediately to patients when needed, including in local clinics.
Our manufacturing process is a benefit to our UCART product candidate line that could contributeextended to the designuse of a reasonably priced product. Our manufacturing process produces UCART product candidates from healthy, selected, screened and tested donorT-cells. Moreover, because our process is powered by our nucleases and our proprietary PulseAgile electroporation systems, we expectvarious genetic loci to be able to inactivateexpress genes in a highly efficient manner that avoids harmingT-cells during processing, which could allow us to manufacture quality UCART productswith therapeutic benefits at high yields. This could enable us to manufacture in bulk, and we expect thatT-cells from one healthy donor, and one manufacturing run of UCART, could be used to create hundreds of doses of product. These efficiencies could allow us to reduce costs to patients and produce competitive gross profit margins.
We aim to engineerT-cells for specific clinical results that enhance safety and provide greater control over cellular activity. For example, our research includes disablingT-cells from attacking a patient’s healthy tissues, designingT-cells to be compatible with standard oncology treatments, enabling our engineeredT-cells to surpass key immune checkpoint regulators that can protect tumors from the immune system, and building into our products a suicide gene that directs the natural clearance of allogeneicT-cells with the addition of a drug.
Our research also aims at allowingT-cells to resist and be compatible with compounds that cancer patients are exposed to, including standard oncology treatments, such as specific monoclonal antibody therapies, corticoids, or other relevant chemotherapies. We are pursuing treatment options that would allow patients to be treated with our engineeredT-cells after or during treatment with traditional approaches that would impairT-cell function or viability.
Our frozen,off-the-shelf UCART product candidates are intended to be produced pursuant to cGMP and are extensively controlled. Like other pharmaceutical products, we expect that their quality will be controlled to ensure consistency over time and from batch to batch. This is a significant difference from autologous approaches currently reported to be in clinical development. In these autologous settings, where the donor ofT-cells is the very patient who will receive theCAR-bearing cells, a specific batch ofT-cells must be made for each patient and in some cases, sufficient T cells may not be available from the patient to create the autologous product.temporal or regional expression pattern.
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UCART Manufacturing: How can we turn a procedure into a large scale,large-scale, widely available drug?
AutologousCAR-T cell approaches are therapeutic procedures conducted for each patient, which involve the engineering ofT-cells by addition of a transgene coding for a chimeric antigen receptor into the patient’s own T cells. Our UCART approach goes one step further in engineering and also in moving the CAR concept from apatient-by-patient therapeutic procedure to anoff-the-shelf widely available pharmaceutical compound.
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The manufacturing process of our allogeneic CART-cell product line, Universal CARTs or UCARTs, yields frozen,off-the-shelf, allogeneic, engineered CART-cells. UCARTs are meant to be readily available CART-cells for a large patient population. The specificity of those allogeneic therapies is thatT-cells from healthy donors are genetically edited with our proprietary technology, TALEN®, to seek and destroy cancer cells. TALEN-basedTALEN- based gene editing is designed to suppressT-cell alloreactivity (and, for certain UCART product candidates, to confer resistance to alemtuzumab)alemtuzumab to theT-cells. T-cells). New properties may also be introduced by inserting genes with potential therapeutic benefits at various loci.
Our UCARTs are designed and manufactured through a common platform that relies on defined unit operations and technologies combined into a single process adapted to each individual UCART. The process is gradually developed from small to larger scales, incorporating elements that are eventually used in GMP conditions. Notwithstanding this central unit operations basedoperations-based model, each product is unique and for each new UCART, a developmental phase is necessary to individually customize each engineering step and to create a robust procedure that can later be implemented in a GMP environment to ensure the production of clinical batches. This work is performed in our research & development environment to evaluate and assess variability in each step of the process in order to define the most reliable experimental conditions.
The following diagram summarizes the generic UCART production process made of distinct unit operations. The engineering steps for transduction and electroporation can take place one before another (and several times), depending on the product.
On October 28, 2015,Towards manufacturing autonomy with two state-of-the-art plants
In order to enhance our manufacturing autonomy, we announced thathave established two manufacturing facilities. First, in Raleigh, North Carolina, USA, we completed a series of three production runs of UCART19 confirminghave developed an approximately 80,000 sq. ft. in-house manufacturing facility, which is dedicated to the transfer of Cellectis’ manufacturing process into clinical grade, GMP conditions. This important milestone showed that UCARTs can be manufactured in GMP conditions and demonstrated the industrial production of UCART19, as well as the capacity of Cellectis’ pipelineclinical and commercial UCART products. The Raleigh facility commenced production of UCART product candidates in 2021. Our product candidates UCART22 and UCART20x22 used respectively in the BALLI-01 and NaThaLi-01 Studies have been manufactured in our Raleigh site. Second, in Paris, France, we have completed construction of an approximately 14,000 sq. ft. in-house manufacturing facility, which is dedicated to be manufacturedthe production of certain critical raw and starting material for clinical investigations. Since then, UCART19supply, with the potential to supply commercial raw and starting materials. The Paris facility commenced production of raw and starting materials in 2020. We expect to continue to use certain third-parties manufacturers to complement Cellectis’ internal manufacturing of clinical supplies has been conducted by CELLforCURE to support the two clinical trials opened with UCART19 in the United Kingdom. On November 15, 2016, we announced that we completed a series of production runs of UCART123 at CELLforCURE, our CMO, to support the UCART123 Clinical Trials for which we filed an IND, the FDA approval of which was announced on February 6, 2017. This year, we also proceeded to the transfer of our manufacturing processes for UCARTCS1 and UCART22 to the same CMO.facilities.
UCART PipelineRaw Materials
We are developing a series of product candidates for advanced hematologic cancers.
Our lead immuno-oncology product candidates, which we refer to as Universal CART-cells (UCARTs), are allogeneic CART-cells engineered to be used as an“off-the-shelf” treatment for any patient with a particular cancer type. Each UCART product candidate targets a selected antigen expressed on tumor cells and bears
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specific engineered attributes, such as inhibition of alloreactivity and compatibility with specific medical regimens that cancer patients may undergo. UCART is the first therapeutic product line that we are developing with our gene-editing platform to address unmet medical needs in oncology. We are focusing our initial internal pipeline in the hematologic cancer space, targeting diseases with high unmet needs such as acute lymphoblastic leukemia (ALL), acute myeloid leukemia (AML), blastic plasmacytoid dendritic cell neoplasm (BPDCN), multiple myeloma (MM) and different types of lymphomas. In December 2016, we filed an IND for our lead product candidate, UCART123 in AML and in BPDCN and in February 2017, we received FDA approval to initiate UCART123 Clinical Studies. All of our other product candidates are currently in the latepre-clinical / early manufacturing phase, and the following chart highlights some of these product candidates:
UCART19 for Acute Lymphoblastic Leukemia
UCART19 is an allogeneic,off-the-shelf product candidate designed to exhibit high efficacy in fighting hematological malignancies bearing theB-lymphocyte antigen CD19, or CD19. In November 2015, Servier acquired the exclusive rights to UCART19 from Cellectis. Servier and Pfizer collaborate on a joint clinical development program for UCART19, and Pfizer has acquired exclusive rights from Servier to develop and commercialize UCART19 in the United States.
Targeted Indications
Acute Lymphoblastic Leukemia (ALL)
ALL is a heterogeneous hematologic disease characterized by the proliferation of immature lymphoid cells in the bone marrow, peripheral blood, and other organs. The proliferation and accumulation of blast cells in the marrow results in suppression of hematopoiesis and, thereafter, anemia, thrombocytopenia, and neutropenia. Extramedullary accumulations of lymphoblasts may occur in various sites, especially the meninges, gonads, thymus, liver, spleen, or lymph nodes. Theage-adjusted incidence rate of ALL in the United States is 1.7 per 100,000 individuals per year, with approximately 5970 new cases and 1440 deaths estimated in 2017. The median age at diagnosis for ALL is 15 years with 56.1% of patients diagnosed at younger than 20 years of age. In contrast, 28% of cases are diagnosed at 45 years or older and only 11.7 % of patients are diagnosed at 65 years or older. ALL represents 75% to 80% of acute leukemia among children, making it the most common form of childhood leukemia; by contrast, ALL represents approximately 20% of all leukemia among adults. The cure rates and survival outcomes for patients with ALL have improved dramatically over the past several decades, primarily among children. Improvements are largely owed to advances in the understanding of the molecular genetics and pathogenesis of the disease, the incorporation of risk-adapted therapy, and the advent of new targeted agents. Data from the Surveillance, Epidemiology, and End Results (SEER) database have shown a 5-year overall survival (OS) of 86% to 89% for children. Adults have the poorest5-year OS rate of 24.1% for patients between the ages of 40 and 59 years and an even lower rate of 17.7% for patients between the ages of 60 and 69 years. Despite great progress in the development of curative therapies, ALL remains a leading cause of pediatric cancer-related mortality for patients
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presenting with a relapsed or refractory disease. New therapies are needed to overcome chemotherapy resistance and reducenon-specific treatment associated side effects.
Product Features
UCART19 is an allogeneicT-cell product intended for the treatment of CD19-expressing hematologic malignancies such as ALL.
UCART19 is designed to become active, proliferate, secrete cytokines and kill CD19-bearingB-cell malignancies upon contact with such cells, following administration to patients. Activation of UCART19 is driven by contact between its anti-CD19 CAR and the CD19 protein on the surface of tumor cells.
UCART19 cells bear a CAR targeting the CD19 antigen that drives their capacity to kill CD19-bearing cells. Moreover, as all UCART product candidates, UCART19 lacks the TCR responsible for recognition ofnon-self antigens by theT-cells, which allows use of healthy donorT-cells to produce UCART19, with reduced potential for GvHD. In addition, some UCART19 cells lack CD52, a protein expressed on the cell surface that makesT-cells sensitive to alemtuzumab. This feature permits the use of UCART19 in patients recently treated or being treated with the immunosuppressing/lymphodepleting agent alemtuzumab.
UCART19 activation could potentially lead to eradication of CD19-expressing cancer cells throughT-cell mediated killing of such cancer cells and potentiallypro-inflammatory immune system production as well as CART-cell amplification.
Clinical Findings
In December 2017, preliminary results from the first twelve patients in the UCART19 Clinical Studies were presented at the 59th American Society of Hematology (ASH) Annual Meeting. Thesefirst-in-human data show 83% complete remission rate across the adult and pediatric patient population. Cytokine release syndrome (CRS) was mild and manageable except in one adult patient treated with UCART19 at the first dose level, who developed CRS Grade 4 and neutropenic sepsis leading to death at day 15. Only two cases of Grade 1 acute graft versus host disease (GvHD) occurred and no severe neurotoxicity was observed.
We are encouraged by these promising preliminary results reported for the UCART19 Clinical Studies.
Development Status
In 2016, Servier commenced the UCART19 Clinical Studies—a Phase I clinical study in pediatric acute lymphoblastic leukemia (ALL), the PALL study, and a Phase I clinical study in adult patients with ALL, the CALM study, each of which was approved by the MHRA.
The PALL Study is commenced in United Kingdom at UCL Great Ormond Hospital (London), in Belgium at Het Kinderziekenhuis Prinses Elisabeth (Gent), and in France at Hôpital Robert-Debré (Paris).
The CALM Study is commenced in United Kingdom at King’s College Hospital NHS Foundation Trust (London), in United States at the Hospital of the University of Pennsylvania (Philadelphia, Pennsylvania) and at University of Texas MD Anderson Cancer Center (Houston, Texas), and in France at Hôpital Saint-Antoine (Paris).
UCART123 for Acute Myeloid Leukemia (AML) and Blastic Plasmacytoid Dendritic Cell Neoplasm (BPDCN)
UCART123 is an allogeneic engineeredT-cell product designed for the treatment of hematologic malignancies expressing the alpha chain of theinterleukin-3 receptor, or CD123, and is currently being developed for the treatment of acute myeloid leukemia (AML) and blastic plasmacytoid dentric cell neoplasm (BPDCN).
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Targeted Indications
Acute Myeloid Leukemia (AML)
Acute myeloid leukemia (AML) is a form of cancer that is characterized by infiltration of the bone marrow, blood, and other tissues by proliferative, clonal, abnormally and/or poorly differentiated cells of the hematopoietic system called blast cells. These cells interfere with normal hematopoiesis, thus contributing to the bone marrow failure which is the most common underlying cause of death. AML is the most common type of acute leukemia in adults with anage-adjusted incidence rate in the United States of 4.2 per 100,000 individuals per year, with approximately 21,380 new cases and 10,590 deaths estimated in 2017. Although it can occur in children and adults, AML is primarily a disease of the elderly. The median age at onset is 68 years and only 16.5% of patients are younger than 45 years of age at diagnosis While complete response rates can be as high as 80% in patients undergoing initial induction cytotoxic chemotherapy, the majority of AML patients will ultimately be diagnosed with relapsed or refractory disease with a poor prognosis. The outcome in older patients who are unable to receive intensive chemotherapy without unacceptable side effects remains dismal, with a median survival of only 5 to 10 months. CD 123 is highly expressed on acute myeloid leukemia (AML) leukemic stem cells and blast cells, as well as in other hematologic malignancies, and constitutes an attractive target for AML.
Blastic Plasmacytoid Dendritic Cell Neoplasm (BPDCN)
Blastic plasmacytoid dendritic cell neoplasm (BPDCN) is a rare and aggressive hematological neoplasm classified among AML in the 2008 World Health Organization (WHO) classification of hematologic malignancies, and reclassified under myeloid neoplasms, acute leukemia in the 2016 WHO classification. BPDCN is a rare myeloid disease characterized by the clonal proliferation of precursors of plasmacytoid dendritic cells. There are no formal studies on the incidence of BPDCN in the general population. The few available data reported indicate that its overall incidence is extremely low, accounting for 0.44% of all hematologic malignancies and 0.7% of cutaneous lymphomas. Moreover, the leukemic form of disease is a rare phenomenon, representing fewer than 1% of cases of acute leukemia. The disease may occur at any age, but most patients are elderly men who present with skin lesions and/or involved lymph nodes, spleen, and bone marrow. Given its rarity and only recent recognition as a distinct clinico-pathological entity, no standardized therapeutic approach has been established for BPDCN and the optimal therapy remains to be defined. Although transient responses are seen to combination chemotherapy regimens used to treat acute leukemia or lymphoma, most patients relapse with drug-resistant disease with a median overall survival rate of 9 to 13 months, irrespective of the initial presentation of the disease.
Product Features
UCART123 is an allogeneicT-cell product candidate intended for the treatment of CD123-expressing hematologic malignancies.
UCART123 is designed to become active, proliferate, secrete cytokines and kill CD123 expressing cells. UCART123 bears a CAR targeting the CD123 antigen, providing specificity for CD123 expressing cells. In addition, as with all UCART products, UCART123 lacks the TCR and is intended to be used in an allogeneic context. UCART123 activity could potentially lead to eradication of CD123-expressing cancer cells throughT-cell mediated killing,pro-inflammatory cytokine production as well as CART-cell amplification.
Pre-clinical Findings
UCART123 has been evaluated both in vitro and in animal studies, with promising results.
In vitro studies demonstrated efficient killing of human CD123-bearing cell lines by UCART123. In addition, UCART123 has also demonstrated efficient killing of human CD123-expressing cells derived from
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AML and BPDCN patients. Animal studies were conducted in mice injected both with UCART123 and human CD123-bearing tumor cells, and have shown anti-tumor activity in an immunodeficient mouse model. In addition, in another animal model, limited toxicity against normal, healthy cells, has been observed.
UCART123 was also tested for its potential to induce GvHD. Mice receiving unmodifiedT-cells from a human donor showed GvHD, while mice receiving the UCART123 cells that lack the TCR showed no sign of GvHD.Pre-clinical and translational activities on UCART123 in AML and BPDCN were performed in collaboration with Weill Cornell and MD Anderson Cancer Center, respectively.
Development Status
On December 14, 2016, Cellectis received unanimous approval from the National Institute of Health’s Recombinant DNA Advisory Committee (“ RAC”) for two proposed Phase I protocols for UCART123. In February 2017, the FDA granted Cellectis an Investigational New Drug (IND) approval to conduct a Phase I clinical study with UCART123 in AML and BPDCN. The initial patients were enrolled during 2017, at Weill Cornell Medical College for AML and at MD Anderson Cancer Center for BPDCN. Due to a death in the BPDCN study, both trials were put on hold in September 2017 but then cleared to resume by the FDA, in November 2017, based on revised protocols.
UCART22 for Acute Lymphoblastic Leukemia (ALL)
UCART22 is an allogeneic engineeredT-cell product candidate designed for the treatment of Acute Lymphoblastic Leukemia (ALL).
See “Item 4.B.—Business Overview—UCART Pipeline—UCART19 for Acute Lymphoblastic Leukemia—Targeted Indications—Acute Lymphoblastic Leukemia” for more information on ALL.
Product Features
UCART22 is an allogeneic engineeredT-cell product candidate intended for the treatment of CD22-expressing hematologic malignancies. UCART22 is designed to become active, proliferate, secrete cytokines and kill CD22 expressing cells (i.e. either CD22 positive tumor cells ornon-malignant CD22 positive B lineage cells). UCART22 bears a CAR targeting the CD22 antigen, providing specificity for CD22 expressing cells. As with all UCART products, UCART22 lacks the TCR and is intended to be used in an allogeneic context. In addition, some UCART22 cells lack CD52, a protein expressed on the cell surface that makesT-cells sensitive to alemtuzumab, a drug often used to treat CLL patients. This feature should allow for improved engraftment of the cells in conjunction with a potential alemtuzumab treatment.
UCART22 activity could potentially lead to eradication of CD22-expressing cancer cells throughT-cell mediated killing,pro-inflammatory cytokine production as well as CART-cell amplification.
Pre-clinical findings
UCART22 has been evaluated bothin vitro and in animal studies, with promising results.
In vitro studies demonstrated efficient killing of human CD22-bearing cell lines by UCART22. In addition, UCART22 has also demonstrated efficient killing of human CD22-expressing cells derived from ALL patients. Animal studies were conducted in mice injected both with UCART22 and human CD22-bearing tumor cells, and have shown anti-tumor activity in an immunodeficient mouse model. Furtherin vitro andin vivo studies are ongoing to further investigate the safety and the activity of UCART22.
Pre-clinical and translational activities on UCART22 in ALL are performed in collaboration with MD Anderson Cancer Center.
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Development Status
UCART22 is at the latepre-clinical / early manufacturing stage of development. The manufacturing process has been transferred to CELLforCURE, our CMO. Manufacturing of clinical grade UCART22 at large scale in accordance with GMP was initiated at the end of 2017.
UCARTCS1 for Multiple Myeloma (MM)
UCARTCS1 is an allogeneic engineeredT-cell product candidate designed for the treatment ofCS1-expressing hematologic malignancies which is being developed in multiple myeloma (MM).
Targeted Indication Multiple Myeloma
Multiple myeloma (MM) is a clonal plasma cell malignant neoplasm that is characterized by the proliferation of a single clone of plasma cells producing a monoclonal immunoglobulin. This clone of plasma cells proliferates in the bone marrow and often results in extensive skeletal destruction with osteolytic lesions, osteopenia, and/or pathologic fractures. Additional disease-related complications include hypercalcemia, renal insufficiency, anemia, and infections. MM accounts for approximately 10% of hematologic malignant disorders. The annual incidence,age-adjusted to the US population, is 6.6 per 100,000, resulting in over 30,000 new patients in the United States each year. The median age at onset is 69 years, and only 3.5 % of patients are younger than 45 years of age at diagnosis. Nine drugs have been approved over the past fifteen years for the treatment of MM, substantially expanding the number of treatment regimens available for patients in all stages of the disease. In the last decade, survival of multiple myeloma (MM) patients has markedly improved with a median survival of approximately 5 to 7 years but with major variation depending on host factors, stage of the disease, cytogenetic abnormalities, and response to therapy. However, despite this progress, patients with disease refractory to both immunomodulatory drugs (IMiDs) and proteasome inhibitors have a median overall survival (OS) of only 9 months.
Product Features
UCARTCS1 is an allogeneicT-cell drug candidate intended for the treatment of CS1 (also as known as SLAMF7)-expressing hematologic malignancies, in particular MM. UCARTCS1 is designed to become active, proliferate, secrete cytokines and kill CS1 expressing cells. As CS1 is expressed on the cell surface of CD8T-cells, CS1 will be inactivated inT-cells prior to transduction with a viral vector encoding ananti-CS1 CAR. The inactivation of CS1 may improve the production and activity of UCARTCS1 by preserving the CD8 T cell population. In addition, as with all UCART products, UCARTCS1 lacks the TCR and is intended to be used in an allogeneic context.
Pre-clinical Findings
In vitro studies demonstrated efficient killing of humanCS1-bearing cell lines by UCARTCS1. In addition, UCARTCS1 has also demonstrated efficient killing of humanCS1-expressing cells derived from MM patients. Furthermore, whilenon-gene-editedT-cells expressing ananti-CS1 CAR display limited cytolytic activity in vitro against MM cell lines and result in a progressive loss of CD8T-cells,CS1-gene-edited CAR cells (UCARTCS1) display significantly increased cytotoxic activity, with the percentage of CD8T-cells remaining unaffected. Experiments in an orthotopic MM mouse model showed that UCARTCS1 was able to mediate anin vivo anti-tumoral activity. Further in vitro and in vivo studies are ongoing to further investigate the safety and the activity of UCARTCS1.
Pre-clinical and translational activities for UCARTCS1 in MM are performed in collaboration with the MD Anderson Cancer Center.
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Development Status
UCARTCS1 is at the latepre-clinical / early manufacturing stage of development.
Manufacturing process transfer has been completed to CELLforCURE, our third-party manufacturing contractor, for clinical supplies of UCARTCS1.
Our Strategic Alliances
We have signed collaboration agreements with Pfizer and Servier, which we believe validate our research and approach toCAR-T. Our strategic alliances include potential milestone payments to us of up to $3.9 billion and royalties on future sales.
Research Collaboration and License Agreement with Pfizer
In June 2014, we entered into a Research Collaboration and License Agreement with Pfizer pursuant to which we collaborate to conduct discovery andpre-clinical development activities to generate CART-cells directed atPfizer- and Cellectis-selected targets in the field of human oncology. We granted Pfizer an exclusive, worldwide, royalty-bearing, sublicensable license, on atarget-by-target basis, under certain of our intellectual property to make, use, sell, import, and otherwise commercialize products directed at thePfizer-selected targets in the field of human oncology.
Under the agreement, we are obligated to use commercially reasonable efforts to develop, for each Cellectis-selected target, at least one product candidate. Pfizer granted us anon-exclusive, worldwide, royalty-free license, with sublicensing rights under certain conditions, under certain of its intellectual property to conduct research, and to make, use, sell, import and otherwise commercialize products directed at Cellectis-selected targets.
Pursuant to the agreement, Pfizer made an upfront,non-refundable $80.0 million payment to us, concurrent with Pfizer’s €25.8 million equity investment in our company. In addition, the strategic alliance provides for payments of up to $185.0 million per product that is directed against aPfizer-selected target, with aggregate potentialpre-clinical, clinical and commercial milestone payments totaling up to $2.8 billion. We are also eligible to receive from Pfizer tiered royalties on annual net sales of any products that are commercialized by Pfizer that contain or incorporate certain of our intellectual property at rates in the high single-digit percentages.
Except as required of us by our collaboration agreement with Servier, until the earlier of (1) the completion or termination of a four-year term or (2) the filing by Cellectis of an IND for certain targets to which we retain rights, we and our affiliates may not grant rights under certain of our intellectual property and intellectual property developed in the course of the collaboration to develop or commercialize CART-cells in the field of human oncology, other than certain specifiednon-commercial collaborations.
Unless earlier terminated in accordance with the agreement, our agreement with Pfizer will expire on aproduct-by-product andcountry-by-country basis, until the later of (1) the expiration of the last to expire of the licensed patents covering such product; (2) the loss of regulatory exclusivity afforded such product in such country, and (3) the tenth anniversary of the date of the first commercial sale of such product in such country; however, in no event shall the term extend, with respect to a particular licensed product, past the twentieth anniversary of the first commercial sale for such product. At any time after the first anniversary of the effective date of the agreement, Pfizer will have the right to terminate the agreement at will upon 60 days’ prior written notice, either in its entirety or on atarget-by-target basis. Either party may terminate the agreement, in its entirety or on atarget-by-target basis, upon 90 days’ prior written notice in the event of the other party’s uncured material breach. The agreement may also be terminated upon written notice by Pfizer at any time in the event that we become bankrupt or insolvent.
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Research, Product Development, Option, License and Commercialization Agreement with Servier
In February 2014, we entered into a Research, Product Development, Option, License and Commercialization Agreement with Servier. Pursuant to this agreement, we are responsible for the research and development up to and including the Phase I clinical trial of candidate products directed against five targets, including the UCART19 product candidate. Pursuant to the agreement, we granted Servier the right to exercise an exclusive option to obtain an exclusive, worldwide license, on a productcandidate-by-product candidate basis, with respect to each product candidate selected by Servier and developed under the agreement. Upon Servier’s exercise of each option, we shall grant Servier an exclusive, worldwide, royalty-bearing, sublicensable license under certain of our patents andknow-how covering the respective product candidate to develop, manufacture and commercialize such product in the field of anti-tumor adoptive immunotherapy, and Servier will assume responsibility for the further clinical development, manufacture and commercialization of such product. During the term of the agreement, we are prohibited from researching, developing, or commercializing any product directed against a target that is used for the same purpose as it is used with a product candidate developed under the agreement.
Pursuant to the agreement, Servier made an upfront payment of $10.0 million and, upon its exercise of each license option provided for in the agreement, Servier will pay us a lump sum license fee.
In November 2015, we entered into an amendment to our initial collaboration agreement with Servier, which allowed for an early exercise of Servier’s option with respect to UCART19 and other product candidates. Pursuant to this amendment, Servier has exercised its option to acquire the exclusive worldwide rights to further develop and commercialize UCART19. In connection with the entry into the amendment to the collaboration agreement, Servier made an upfront payment of $38.5 million, excluding taxes.
As of December 31, 2017, we are eligible to receive from Servier aggregate additional payments of up to $1,064 million, comprising payments upon the exercise of options granted to Servier under the agreement and payments upon the occurrence of certain specified development and commercial milestones. Pursuant to the agreement, we are also eligible to receive tiered royalties ranging in the high single-digit percentages based on annual net sales of commercialized products.
Unless earlier terminated, the agreement will expire upon the expiration of the last to expire of the patents covering a product licensed pursuant to the agreement. Either party may terminate the agreement for the other party’s uncured material breach upon 90 days’ prior written notice to the breaching party, or 30 days’ notice if such breach relates to a payment obligation. The parties may also terminate the agreement by mutual consent. The agreement immediately and automatically terminates upon the expiration of Servier’s last license option in the event Servier has not exercised any option to license in accordance with the agreement prior to such expiration. Servier has the right, at its sole discretion, to terminate the agreement in its entirety or with respect to specific products, upon three months’ prior written notice to us. Servier may also terminate the agreement at any time for product-related safety reasons. Either party may terminate the agreement in the event of the other party’s bankruptcy or insolvency. In the event that Servier does not exercise its option to license a product candidate, we may independently pursue all activities related to such product candidate and/or license such product candidate and the associated intellectual property to a third party. For such purpose, Servier granted us anon-exclusive, sublicensable license under any such Servier-controlled intellectual property for which we will pay tiered royalties on annual net revenues at rates ranging in the low single-digit percentages.
Collaboration with Cornell University and MD Anderson Cancer Center
In 2015, we entered into alliances with Cornell University and the MD Anderson Cancer Center to accelerate the development of our lead candidate products.
Alliance with Cornell University
On June 2, 2015, Cornell University and Cellectis entered into a strategic research alliance to accelerate the development of a targeted immunotherapy for patients with acute myeloid leukemia (AML). Under our alliance
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with Cornell University and Cellectis will conduct research and develop clinical strategies with the objective of implementing and conducting one or more clinical trials at Weill Cornell on UCART123 and potentially other product candidates in AML. Cellectis is responsible for funding the research programs, and Cornell University and Cellectis will work together to develop and implement improvements to the research plan for the programs. The objectives of the collaboration are to demonstrate functionalities and specificity of UCART123 in vitro and in vivo, define thepre-clinical package required for a clinical trial application, prepare the clinical trial protocol and the regulatory and other study-specific documents, and discovery research for the identification of novel targets in AML patients potentially enabling the development of additional CARs for AML.
In connection with the alliance, Cellectis was responsible for generating and manufacturing UCART123 and performing in vitro and in vivopre-clinical activities on tumor cell lines and in animal models. Cornell University was responsible for evaluating UCART123 activity against primary AML samples and in animal models, as well as evaluating toxicity against HSCs in animal models. Cornell University is also working on the development and implementation of correlative studies. In addition, Cornell University and Cellectis collaborate on the preparation of the different versions of the clinical trial protocols. Finally, Cellectis and Cornell University are working on target discovery in the AML area, in order to identify new potential targets for AML and generate new potential candidate products for AML patients.
On April 2017, we enter into a clinical trial agreement with Cornell University acting for and on behalf of its Joan and Sanford I. Weill Medical College and The New York Presbyterian Hospital (collectively referred to as Weill Cornell) under which Weill Cornell performs the UCART123 clinical study for AML.
Alliance with The University of Texas M.D. Anderson Cancer Center
On September 1, 2015, Cellectis and the University of Texas MD Anderson Cancer Center (the MD Anderson Cancer Center) entered into a research and development alliance (the Strategic Alliance Agreement) aimed at bringing novel cellular immunotherapies to patients suffering from different types of liquid tumors, particularly multiple myeloma (MM), acute lymphoblastic leukemia (ALL),T-cell acute lymphoblastic leukemia(T-ALL) and blastic plasmacytoid dendritic cell neoplasm (BPDCN). Under this strategic alliance, the MD Anderson Cancer Center and Cellectis have agreed to collaboratively conduct severalpre-clinical studies on candidate products: UCART123 in BPDCN, UCARTCS1 for multiple myeloma, UCART38 forT-ALL and UCART22 for ALL. Cellectis has agreed to provide funding and other support for these studies. The objective of the studies is to build on complementary expertise from the MD Anderson Cancer Center and Cellectis for the development of the product candidates. The MD Anderson Cancer Center and Cellectis will work together to develop and implement improvements to the research plan for the programs under joint direction of the MD Anderson Cancer Center and Cellectis’ investigators. The objective of the studies is to demonstrate the functionalities and specificity of the UCART candidate products listed above, define thepre-clinical package required for clinical trial applications, prepare a clinical trial protocol and the regulatory documents required for interactions with FDA and the clinical trial applications. Pursuant to the alliance, Cellectis is responsible for generation and manufacturing of the UCART candidate products and some of the in vitro and in vivopre-clinical work. The MD Anderson Cancer Center is responsible for evaluation of the candidate products against primary patient samples and for some activities to be performed in animal models. The alliance also includes the possibility for Cellectis and the MD Anderson Cancer Center to collaborate on one or more early phase clinical studies on the same product candidates.
Pursuant to the Strategic Alliance Agreement, we entered, in March 2017, into a study order with MD Anderson Cancer Center, according to which MD Anderson Cancer Center performs the UCART123 clinical study for BPDCN.
On January 2018, we entered into a new study order with MD Anderson Cancer Center in order to expand the performance of the UCART123 clinical study in AML to MD Anderson Cancer Center.
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Raw Materials
We are dependent on specialized third parties, who are subject to stringent manufacturing requirements and regulations, for the supply of various critical and biological materials—materials – such as cells, chemicals, water, cytokines, vectors, nucleic acids, antibodies—thatantibodies, medium, serum, buffers —that are necessary to produce our product candidates. We source these raw and starting materials through master service agreements and/or on a purchase order basissupply agreements and do not systematically have long-term supply contracts in place. However, we believe that competitive pricing is achieved because there are a number of potential long-term replacements to each of our suppliers. Generally, the prices of the principal biological raw and starting materials that we purchase are stable or fluctuate within a limited range. To the extent that we are exposed to price fluctuations, we generally do not expect, in the near term, to be able to pass on cost increases because of the early development stage of our product candidates.
Applications of Our Technology in Agriculture
Calyxt was incorporated in the State of Delaware in the United States in 2010. Calyxt is a consumer-centric, food- and agriculture-focused company that is combining its leading gene-editing technology and technical expertise However, with an innovative commercial strategy to pioneer a paradigm shift to deliver healthier food ingredients for consumers and agriculturally advantageous traits for farmers. Before its initial public offering, which closed on July 25, 2017, Calyxt was a wholly owned subsidiary of ours. As of December 31, 2017, we owned approximately 79.7% of Calyxt’s outstanding common stock. Calyxt’s common stock is listed on the Nasdaq market under the ticker symbol “CLXT”.
Calyxt’s commercial strategy is centered on two core elements: developing healthier specialty food ingredients to enable the food industry to address evolving consumer trends and developing agriculturally advantageous traits, such as herbicide tolerance, for farmers. Its first product candidate, which is expected to be commercialized by the end of 2018, is a high oleic soybean designed to produce a healthier oil that has increased heat stability with zero trans fats. Among Calyxt’s other product candidates are high fiber wheat and herbicide tolerant wheat. We believe each of these three Calyxt product candidates addresses a multibillion dollar market opportunity. Moreover, while the traits that enable these characteristics may occur naturally and randomly through evolution—or under a controlled environment through traditional agricultural technologies—those processes are imprecise and take many years, if not decades. Calyxt’s technology enables it to cost effectively edit a plant genome with precision and specificity in order to elicit the desired traits and characteristics, resulting in a final product that has no foreign DNA.
Gene Editing in Agricultural Biotechnology
While plant breeders have been crossbreeding varieties and selecting advantageous traits for thousands of years, the modern agriculture industry has relied primarily on two methods of crop improvement: genetic modification, which involves the use of genetic technologies to randomly insert foreign genetic material into a plant’s genome for the development of seeds in which the inserted genes express specific traits, and chemical mutagenesis, in which mutagenesis is induced in plants using agents and chemicals. We believe these traditional approaches can no longer effectively meet societal demands for innovative solutions demanded by the consumer and the farmer. We believe that the proprietary technologies deployed by Calyxt will bridge this divide because it enables Calyxt to precisely and specifically edit a plant genome to elicit a desired trait and characteristic and to do so more quickly and cost effectively than traditional methods.
Market Dynamics
The agriculture industry has historically been burdened by high infrastructure costs in a market that has focused on price and market share resulting in commoditization. A highly segmented supply chain has also resulted in the legacy agriculture companies focusing on increasing margins and market share through increased yields and consolidation, and on passing along maximum value to the growers, thereby keeping pace with the
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growing demand for food globally. Over the past few decades the agriculture industry has seen a consolidation of over 200 seed companies, leaving the industry with only a handful of large, dominant players such as Bayer AG, Monsanto Co., DowDuPont Inc., AgReliant and Syngenta AG. In addition, development at these legacy agriculture companies has been significantly limited by time and cost constraints. Genetic modification, a primary method of these companies to improve crops, involves a lengthy and expensive process to progress a new crop from the discovery stage through commercialization. Innovations have primarily achieved increases in yields and food production volumes through the creation of herbicide tolerance and insect resistance, using genetically modified traits that in many cases contain bacterial DNA. We believe these industry dynamics explain the inability for the agricultural industry to evolve to a consumer- and farmer-focused approach, and thereby effectively meet their demands as societal trends shift and provide new market opportunities.
TALEN Technology Platform in Agricultural Biotechnology
Using proprietary technologies and expertise, Calyxt edits the genome of food crops by using “molecular scissors” to precisely cut DNA in a single plant cell, use the plant’s natural repair machinery to make a desired edit and finally regenerate the single cell into a full plant. Calyxt is able to develop targeted traits—some of which would be nearly impossible to develop using traditional trait-development methods—quicker, more efficiently and more cost effectively than would be possible using traditional trait-development methods. Calyxt’s technology also puts it in a position to assess the probability of success early on in the research and development process, potentially eliminating excess cost associated with traditional trait-development methods and further reducing the risk of the product development process.
Calyxt’s proprietary technologies and intellectual property portfolio enable it to edit DNA in living plant cells by knocking out genes or creating precise gene edits. Calyxt’s scientists are capable of custom designing DNA-sequence specific cutting enzymes for any chosen gene that they need to edit and to introduce such custom-made nucleases into the living plant cells they want to edit. Calyxt takes advantage of deep knowledge about plant gene function to create novel genetic variation that results in traits of value.
A feature that distinguishes Calyxt’s products from those created through genetic modification is that Calyxt’s crop varieties lack foreign DNA. As such, for each of the six product candidates Calyxt has submitted to date, the USDA has confirmed that the products are not regulated articles, which represents regulatory cost savings for the development of these products.
In addition, by utilizing proprietary TALEN gene-editing technologies and leveraging Calyxt’s expertise and innovative supply chain, we believe that Calyxt is able to identify a consumer or farmer need and develop a
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product from “concept to fork” or “concept to field” in approximately three to six years, which would make it possible to effectively respond to evolving consumer preferences and farmer needs.
Calyxt Agricultural Biotechnology Products
Calyxt has an extensive product pipeline, as set forth in the table below, that is intended to address the potential market opportunities Calyxt has identified to date.
Calyxt categorizes the stages ofpre-commercial development from Phase I to Phase III. Prior to entering Phase I, in Discovery, Calyxt identifies genes of interest. In Phase I, Calyxt edits the identified genes of interest, targets edits that it wishes to make, and produces an initial seed that contains the desired edit. Phase II is trait validation, where Calyxt performs small-scale and large-scale tests to confirm phenotype and ingredient functionality. In this phase Calyxt also performs replicated, multi-location field testing, after confirming that the product is not a regulated article by the USDA. In Phase III, Calyxt develops the first commercial-scale pilot production, begins to build out the supply chain and inventory and performs customer testing prior to commercialization.
Calyxt’s current main product candidates are:
High Oleic Soybean (Consumer Trait)
Soybean oil has historically been partially hydrogenated to enhance its oxidative stability in order to increase shelf life and improve frying characteristics. This process, however, creates trans-unsaturated fatty acids, or trans fats, which have been demonstrated to raiselow-density lipoprotein (LDL) cholesterol levels and
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lower high-density lipoprotein (HDL), both of which contribute to cardiovascular disease. The discovery that dietary trans fats increase the risk of several health issues led the FDA to rule in 2003 that manufacturers be required to include trans fat content information on the “Nutrition Facts” label of foods. In 2015, the FDA took a further step and banned the use of partially hydrogenated oils, the primary dietary source of artificial trans fat in processed foods, by all food manufacturers beginning in 2018. After the FDA’s 2003 ruling, commodity soybean oil—which leads to high trans fats in foods—lost approximately 20% market share to other vegetable oils, such as palm oil and canola oil.
Monounsaturated fats, such as oleic acid, have been linked to reducing LDL cholesterol and triglycerides and raising HDL cholesterols. Diets rich in monounsaturated acids are associated with lower fat mass and decreased blood pressure. High levels of oleic acids can be found in olive, canola, sunflower and safflower oils.
Calyxt developed a soybean trait that has produced oils with a fatty acid profile that contains 80% oleic acid, 20% less saturated fatty acids compared to commodity soybean oil and zero transfats. Oil created from Calyxt’s high oleic soybean product candidate has multiple desirable characteristics as an ingredient for the food industry. The high level of oleic acid in Calyxt’s soybean oil enhances oxidative stability more than fivefold when compared to commodity oil. This eliminates the need for partial hydrogenation, and thus no trans fats are produced during oil production. Furthermore, Calyxt’s high oleic soybean oil offers additional potential benefits, including reduced saturated fats, a threefold increase infry-life, and reduced polymerization upon frying at high temperatures. Soybean oil is also neutral in flavor, odorless and colorless, and is therefore highly desired as a food ingredient because it has limited impact on the sensory characteristics of the final food product.
Calyxt’s high oleic soybean product candidate was created using our TALEN gene-editing technology. We designed TALEN to specifically target two fatty acid desaturase genes (designatedFAD2-1AandFAD2-1B). These genes convert oleic acid (a mono-unsaturated fatty acid) to linoleic acid (a polyunsaturated fat). By specifically inactivating both theFAD2-1A andFAD2-1B genes by removing DNA with TALEN, oleic acid accumulates in the seed—increasing from about 20% to 80%. By key measures, including yield, this high oleic soybean variety performs comparably to its unedited counterpart. Further, this improved soybean variety does not contain any foreign DNA. Because the TALEN technology is so precise and can target genes with well-known functions in the plant, Calyxt has not, to date, detected any other changes as a result of the gene-editing process or undesired effects in the product.
Inmid-2015, Calyxt received a letter from the USDA indicating that its high oleic soybean variety is not a regulated article under the Plant Protection Act. This allowed Calyxt to test the performance of its soybean variety in the field. In November 2015, Calyxt announced the completion of the second year of multi-location field trialsour manufacturing facility project in Minnesota and South Dakota. The agronomic and yield performance of its high oleic soybeans is on par with thenon-GMO variety usedParis, we expect to create this product.
Calyxt’s soybean product candidate is in Phase III of the development process, and Calyxt is making preparations to create the capacity to crush on a commercial scale, which will enable product testing by potential food company customers. During the third quarter of 2017, Calyxt completed the harvest of its high oleic soybean and produced more high-quality seeds than needed to meet its commercialization target date. Calyxt is currently completing its commercialization plan and anticipates commercialization by the end of 2018.
In December 2017, Calyxt announced its partnership with Farmers Business Network (FBN) to expand the distribution and grower base of its identity-preserved high oleic soybeans. FBN will distribute its high oleic soybean seeds to growers in its network and register farmers for our Producer Premium Program. This partnership will help develop a dedicated, high-quality grower base and bolster supply chain operations in the upper Midwest.
In addition, Calyxt’s high oleic soybean product candidate can be stacked with other soybean traits.
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High Fiber Wheat (Consumer Trait)
Research has shown that fiber—the indigestible portion of food—may play a large role in maintaining bowel health, lowering cholesterol, stabilizing blood glucose levels and controlling weight gain. In recent years, the awareness of the health benefits of high fiber diets has increased, which has translated to a strong growth in demand for high fiber food products.
Calyxt is developing high fiber wheat traits that could be used to produce white flour with up to three times more dietary fiber than standard white flour. Calyxt anticipates that by altering the proportion of certain slower digested carbohydrates in the wheat grain, it will increase dietary fiber. This would allow consumers to reach their daily value of fiber without changing their existing food preferences. These high fiber wheat product candidates will not contain any foreign DNA.
This product candidate is currently in Phase I of Calyxt’s development process and may launch as early as 2020 – 2021. The gene-edited wheat line has been identified and grown and the fiber levels are under examination in grain derived from greenhouse grown plants.
In addition to Calyxt’s high fiber wheat product candidate, Calyxt is also developing other consumer traits in its wheat pipeline, including a reduced gluten product candidate.
Herbicide Tolerant Wheat (Farmer Trait)
Weed control is one of the greatest challenges farmers face in producing crops. Herbicide tolerance is a plant’s ability to withstand a particular chemical herbicide. Herbicide tolerance traits in crops can provide additional crop protection chemistry alternatives to control weeds and increase crop yields.
Herbicide tolerant traits may offer farmers a vital tool in managing weeds effectively during crop production. The deployment of herbicide tolerant traits in wheat significantly lags other major crops and wheat production is constantly faced with yield-robbing weeds that can result in lower yield and higher dockage costs at the elevator. In the United States, no broad acre GMO herbicide tolerant trait has been developed for wheat, largely due to the complexity of the wheat genome.
Calyxt is pioneering the development of herbicide tolerant traits in wheat without the use of foreign DNA, built using the TALEN gene-editing technology. Calyxt aims to achieve herbicide tolerance by specifically making a subtle repair to prevent herbicides from being able to recognize and block functions of certain plant-encoded proteins, such that the edited plant survives the application of the herbicide. In September 2017, Calyxt successfully advanced its herbicide tolerant wheat program from the Discovery phase into Phase I development.
Powdery Mildew Resistant Wheat (Farmer Trait)
In addition to herbicide tolerance, Calyxt is developing traits that are advantageous to the farmer including a variety of wheat that confers resistance to a fungal pathogen, namely powdery mildew. Powdery mildew resistant wheat advanced to Phase II in 2017 after successfully conducting the first field trial to assess agronomic and trait performance of the powdery mildew resistance trait line. We believe powdery mildew resistance may increase yield and reduce the needbecome independent for the usesupply of costly fungicides.our most critical raw and starting materials.
Improved Oil Composition Canola (Consumer Trait)
Calyxt’s improved oil composition canola is its first canola product candidate. The development of this first canola product expands Calyxt’s improved oils franchise, in line with its mission to create healthier specialty ingredients and become a preferred partner of the food industry. In September 2017, Calyxt successfully advanced its improved oil composition canola program from Discovery stage into Phase I development.
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Other Products in Our Development Pipeline
Calyxt’s extensive product pipeline includes a variety of consumer- and farmer-centric traits for soybean, wheat, canola, alfalfa and potato. As of December 31, 2017, Calyxt had a total of nine product candidates in Phase I or higher across its five crops, which is reflective of its rapidly advancing product pipeline.
Intellectual Property
We seek to protect and enhance proprietary technology, inventions, and improvements that are commercially important to the development of our business by seeking, maintaining, and defending patent rights, whether developed internally or licensed from third parties. We will also seek to rely on regulatory protection afforded through orphan drug designations, data exclusivity, market exclusivity and patent term extensions where available.
To achieve this objective, we maintain a strategic focus on identifying and licensing key patents that provide protection and serve as an optimal platform to enhance our intellectual property and technology base.
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Historical Perspectives
Cellectis was founded in early 2000. In June 2000, Institut Pasteur provided us with exclusive rights to its gene-editing patent portfolio. This patent portfolio includes patents relating to homologous recombination and rare-cutting endonucleases (also named meganucleases), respectively, for genetic engineering in living cells. Our license agreements with Institut Pasteur expired in the first quarter of 2020 with the expiration of the last to expire patents under such agreements.
Since 2002, we have filed a large number of patent applications, many now issued as patents, for custom-made meganucleases, and uses thereof, that specifically target a desired genetic sequence in a genome. In 2014, we entered into a cross-licensing agreement with Precision Biosciences, Inc., or Precision, in settlement of patent litigation and patent proceedings related to this technology. Pursuant to this cross-license, we licensed our patents and patent applications in this area to Precision, and Precision licensed its relevant patents and patent applications to us.
In 2010, we acquired a portfolio of patents and patent applications relating to electroporation methods and devices. In 2011, we entered into an exclusive license agreement with the Regents of the University of Minnesota (UMN) pursuant to which wein-licensed one patent family related to a new generation of customized rare-cutting endonucleases, in connection with which we have registered the trademark TALEN in certain jurisdictions outside of the United States.jurisdictions. This patent portfolio comprises fiveten patents in the United States and onetwo European patent, which is under opposition before the European Patent Office.patents. In addition, in 2014, we entered into a series of agreements with Life Technologies Corporation (now(controlled by Thermo Fisher Scientific Inc.) pursuant to which we received anon-exclusive sublicense under certain patents and patent applications related to the research and therapeutic uses of TALENTALE-nucleases and we granted certain rights to Life Technologies under our TALEN technology. In addition, we entered into a license agreement with Calyxt, pursuant to which Calyxt has been granted certain rights in connection with our gene editing and plant intellectual property portfolio.
Since 2012, we have filed about 5054 new patent applications families related to the CART-cell technology. Included in this patent portfolio are patent applications relating to manufacturing allogeneic immune cells and to CAR design, including multi-subunit CARs and conditional expression CARs. In addition, we have filed a number of patent applications related to new TALEN structures (for example, compact TALEN, methylation TALEN) and alternatives to the TALEN structure (BurrH, CRISPR-Cas9).structure.
In October 2014 and March 2014, we exclusivelyin-licensed two patent portfolios from Ohio State Innovation Foundation and University College London, respectively. The Ohio State Innovation Foundation patent portfolio includes an international patent applicationapplications relating to CARs directed to cancer marker CS1. The University College London patent portfolio includes patent applications relating to a polypeptide expressing the suicide“suicide switch” gene RQR8, and uses thereof.
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Current Intellectual Property Portfolio
As a result of the licensing opportunities described belowabove and our continuing research and development efforts, our intellectual property estate now contains patent applications that cover our products, including claims that cover:
The most relevant issued patents in our portfolio consist of approximately 2766 Cellectis-owned and 4712 in-licensed U.S. patents, 1649 Cellectis-owned and 135 in-licensed European patents, and 47214 Cellectis-owned and 1326 in-licensed patents in other jurisdictions, includingsuch as Australia, Canada, China, Hong Kong, India, Israel, Japan, Korea, Mexico and Singapore.
The most relevant pending patent applications in our portfolio consist of approximately 11531 Cellectis-owned and 202 in-licensed U.S. patent applications, 8041 Cellectis-owned and 191 in-licensed European patent applications, and 436141 Cellectis-owned and 677 in-licensed patent applications pending in other jurisdictions, includingsuch as Australia, Brazil, Canada, China, Hong Kong, India, Israel, Japan, Korea, Mexico and Singapore.
Our most relevant portfolio includes a total of 165372 owned andin-licensed granted patents, and 737223 owned andin-licensed patent applications.
Our UCART product candidates rely for each product candidate upon one or more patent rights protecting various aspects of the technologies, including rights relating to:
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For additional information, see “—Gene-Editing Platform” below.
Similarly, our most advanced agricultural product candidates each rely upon one or more patent rights relating to:
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Individual patent terms extend for varying periods of time, depending upon the date of filing of the patent application, the date of patent issuance, and the legal term of patents in the countries in which they are obtained. In most countries in which we file patent applications, including the United States, the patent term is 20 years from the date of filing of the firstnon-provisional application to which priority is claimed. In certain instances, a patent term can be extended under certain circumstances. For example, in the United States, the term of a patent that covers anFDA-approved drug may be eligible for a patent term restoration of up to five years to effectively compensate for the patent term lost during the FDA regulatory review process, subject to several limitations discussed below under “—Our“ —Our Intellectual Property Strategy.” Also, in the United States, a patent’s term may be lengthened by patent term adjustment, which compensates a patentee for administrative delays by the U.S. Patent and Trademark Office in granting a patent, or may be shortened if a patent is terminally disclaimed over an earlier-filed patent. Our issued patents will expire on dates ranging from 20192024 to 2035.2038. If patents are issued on our pending patent applications, the resulting patents are projected to expire on dates ranging from 20232024 to 2035.2041. However, the actual protection afforded by a patent varies on aproduct-by-product basis, fromcountry-to-country, and depends upon many factors, including the type of patent, the scope of its coverage, the availability of regulatory-related extensions, the availability of legal remedies in a particular country, and the validity and enforceability of the patent.
The patent portfolio for our most advanced product candidates, UCART19, UCART123, UCART22, UCARTCS1 and UCART123,UCART20x22 are summarized below.
Gene Editing Platform
Each of ourOur UCART product candidates reliesrely upon our gene-editing platform andT-cell and CAR technology platforms. The patent portfolio covering these platforms and technologies, includes approximately 30 issued214 patents or pending patent applications. Theseapplications in various countries, comprising 43 in-licensed and 98 Cellectis owned issued patents among which 26 are US granted patents and 13 European granted patents. Certain of these issued patents and pending patent applications, which expire between 20192031 and 2033,2041, cover product claims or process claims relevant to each of our product candidates, including UCART19, UCART123, UCART22, UCARTCS1 and UCART123.UCART20x22.
Our gene-editing platform and each of our UCART product candidates benefits from the protections ofconferred by several patents and patent applications in our patent portfolio. As a result of this broad range of patent protection, very few individual patents in our portfolio are critical to our ability to effectively conduct our product development activities. Although certain patents relating to our electroporation technology will expire in 2019,have expired, other patents and patent applications covering this technology remain in force, or are expected to be granted under patent applications, and additional patents protect the nucleases delivered by our electroporation technology, as well as the methods to modify the cells by use of such nucleases. As a result ofAmong our main patents EP2997141, EP3189073,EP3126390,EP3004349 and EP3116902 are under opposition before the breadth of our patent protection and the integration of patented technologies, compositions and methods of use within our gene-editing,T-cell and CAR technology platforms, we do not expect that the expiration of these patents in 2019, individually or in the aggregate, will have a material effect on our future operations or financial position.European Patent Office.
UCART19
In addition to the patent portfolio relating to our platform and technologies, described above, our patent portfolio relating specifically to UCART19 includes granted patents and pending patent applications from the patent family WO2014184143 (CD19 Specific Chimeric Antigen Receptor and Uses Thereof).
We believe these patents and pending patent applications, which, if issued, would expire in 2034, include claims to cover the composition of matter of UCART19, methods of manufacture of UCART19, and methods to use UCART19 in treatment.
UCART123
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UCART123
In addition to the patent portfolio relating to our platform and technologies, described above, our patent portfolio relating specifically to UCART123 includes granted patents and pending patent applications from the patent family WO2015140268WO2018178377 (CD123 Specific Chimeric Antigen Receptors for Cancer Immunotherapy). We believe these pendingpatent and patent applications, which, if issued, would expire in 2034,2035, include claims to cover the composition of matter of UCART123, methods of manufacture of UCART123, and methods to use UCART123 in cancer treatment.
UCART22
In addition to the patent portfolio relating to our platform and technologies, described above, our patent portfolio relating specifically to UCART22 includes pending patent applications from the families WO2018173878 and WO2028278377. We believe these patent applications, which if issued, would expire in 2038, include claim directed to the composition of matter of UCART22, methods of manufacture of UCART22, and methods to use UCART22 in cancer treatment.
UCART20x22
In addition to the patent portfolio relating to our platform and technologies, described above, our patent portfolio relating specifically to UCART20x22 includes pending patent applications from the family WO2022023529. We believe these patent applications, which if issued, would expire in 2041, include claims directed to the composition of matter of UCART20x22, methods of manufacture of UCART20x22, and methods to use UCART20x22 in cancer treatment.
In each case, some of the issued patents and pending patent applications, if issued, may be eligible for patent term extension and patent term adjustment, thereby extending their terms, as described above.
Material Exclusive Licenses Granted to Cellectis
Licenses from Institut Pasteur
In 2000, we entered into three license agreements with L’Institut Pasteur, or Pasteur, pursuant to which wein-licensed a substantial portion of Pasteur’s gene-editing patent portfolio. The details of the two license agreements that remain in effect are provided below.
In June 2000, we entered into an agreement with Pasteur, later amended in 2003 (collectively, the “Second June 2000 Agreement”), acting on its own behalf and on the Boston Children Hospital’s behalf, pursuant to which it granted to us an exclusive, worldwide, royalty-bearing, sublicenseable license under certain patents andknow-how owned by Pasteur and the Boston Children’s Hospital relating to certain chimeric endonucleases for chromosomal gene editing by homologous recombination in cells to use, manufacture, and sell products and to practice processes covered by such patents. The license granted under the Second June 2000 Agreement isnon-exclusive, however, with respect to the licensed processes applied to human gene therapy. In the event that Pasteur has the possibility to grant exploitation rights for applications to human gene therapy, it must immediately inform us, and we may amend our agreement with Pasteur to obtain such exploitation rights. One of the licensed patents is under third partyex-parte reexamination.
The exclusivity of each of the licenses granted under the Second June 2000 Agreement is further contingent upon our continued diligence in designing, developing, and obtaining the required regulatory authorizations necessary to sell the respective licensed products and processes.
In October 2000, we entered into an agreement with Pasteur, later amended in 2003, 2004, 2005, and 2007 (collectively, the “October Agreement”), pursuant to which we obtained an exclusive, worldwide, royalty-bearing, sublicenseable license under certain patents andknow-how owned by Pasteur relating to a method of homologous recombination to make, use, and sell products and to implement processes covered by such patents. The exclusivity of the license granted under the October Agreement is subject to a license granted to a third party under the licensed patents in the domain of genes that encode for Erythropoietin.
We may only grantsub-licenses under our Pasteur agreements with Pasteur’s prior approval, which is deemed to have been given if Pasteur does not object to a proposedsub-license within a specified period of time from notice of the proposed sublicense and which may only be withheld for serious cause.
Pursuant to the terms of each of the Second June 2000 Agreement, we made cash payments to Pasteur in an aggregate amount of 600,000 French Francs with respect to the entry into the agreement and the reimbursement of license fees. Pursuant to the terms of the October Agreement, we made cash payments to Pasteur in the aggregate amount of 500,000 French Francs with respect to the entry into the agreement and the reimbursement of license fees and 250,000 Euros in connection with the execution of amendments. Under the Second June 2000 Agreement, we are also required to pay Pasteur an ongoing royalty fee equal to alow- tomid-single digit percentage of our net income with respect to licensed products under the respective agreement. With respect to sublicenses granted under the Second June 2000 Agreement, we are also required to pay Pasteur a percentage of
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all payments received under such sublicenses, subject in certain cases to minimum payment amounts based on net revenues of the applicable sublicensee. Under the October Agreement, we are also required to pay Pasteur an ongoing royalty fee equal to alow-single digit percentage of our net income with respect to licensed products under the October Agreement. With respect to sublicenses granted under the October Agreement, we are required to pay Pasteur a tiered percentage of all compensation received by us during the applicable year under the sublicense agreement, subject in certain cases to minimum payment amounts based on net revenues of the applicable sublicensee.
The terms of each of our agreements with Pasteur will expire upon the expiration of thelast-to-expire of the respective patents licensed to us pursuant to the applicable agreement. We expect the last to expire patent under the Second June 2000 Agreement to expire on February 3, 2020 and the last to expire patent under the October Agreement to expire on April 3, 2020. Pasteur and we may each terminate any of our agreements with Pasteur in the event of the other party’s breach of an obligation under the applicable agreement, which remains uncured for 90 days following receipt of notice of such breach from the terminating party. Pasteur may immediately terminate such agreements if we challenge or contest the validity of any of the licensed patents under the respective agreement before a court or patents office. In addition, Pasteur and we may terminate any of the agreements, upon 60 days’ prior notice, in connection with certain insolvency-related judicial proceedings instituted against the other party. Further, we have the right to terminate any of these agreements for any reason immediately upon notice to Pasteur.
License from Regents of the University of Minnesota
In January 2011, we entered into an exclusive license agreement with Regents of the University of Minnesota, or UMN. Pursuant to this agreement, as amended in 2012, 2014, 2015 and 20152022 we and our affiliates were granted an exclusive, worldwide, royalty-bearing, sublicenseablesublicensable license, under certain patents and patent applications owned by UMN, to make, use, sell, import, and otherwise
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dispose of products covered by the licensed patents, for all fields of use. These licensed patents relate to TALEN molecules and their use in gene editing.technology. Pursuant to the agreement, we are required to achieve certain specified research- and sales-related milestones.milestones
Pursuant to the terms of the agreement, we paid UMN an upfront license fee in the amount of $250,000 upon the effective date of the license agreement, and a second upfront payment in the amount of $1,000,000 following execution of the third amendment. In thenon-agricultural field we are also required to pay to UMN low single digit percentage royalties on net sales of licensed products, as well as a percentage of all revenues received by us under sublicenses. Pursuant to the agreement, UMN is entitled to a minimum annual royalties of $30,000 per year. In the agricultural field, no royalties are due on net sales of licensed products, but an annual fee of $150,000 per year is due to UMN and commercial milestones are due upon the occurrence of certain commercial sale milestones. We are also required to pay UMN milestone payments up to a total of $290,000 in the aggregate upon the occurrence of specified events and to pay certain patent-related expenses incurred under the agreement for prosecuting and maintaining the licensed patents. If we undergo a change of control and wish to assign our rights and duties under the agreement, we will be required to pay UMN an additional transfer fee.
The license agreement will expire upon the expiration of the last to expire valid claim of the licensed patents. UMN may terminate the agreement upon advance written notice in the event of our insolvency or bankruptcy, and immediately upon written notice in the event that we challenge the validity or enforceability of any licensed patent in a court or other applicable authority. UMN and we may terminate the agreement by written notice in the event of the other party’s breach that has not been cured within a specified number of days after receiving notice of such breach.
License from Ohio State Innovation Foundation
In October 2014, we entered into an exclusive license agreement with Ohio State Innovation Foundation. Pursuant to this agreement, we were granted an exclusive, worldwide, royalty-bearing, sublicenseable license
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under certain patents and patent applications owned by Ohio State Innovation Foundation to use, make, distribute, sell, lease, loan or import products or process covered by the licensed patents, for any and all activities relating to cancer immunotherapy. The licensed portfolio includes an international patent application relating to CAR directed to cancer marker CS1. Pursuant to the agreement, we must use diligence and commercially reasonable efforts to commercialize licensed products or processes, including achieving certain milestone events by specified deadlines, subject to our ability to extend such deadlines upon payment of certain fees.
Pursuant to the terms of the agreement, we paid Ohio State Innovation Foundation an upfront license fee in the amount of $100,000. We are required to pay an annual license maintenance fee of $20,000 from 2015 onward until our first sale of a licensed product. We are also required to pay to Ohio State Innovation Foundation low single-digit percentage royalties on net sales of licensed products and licensed processes by us and are subject to minimum annual royalties due to Ohio State Innovation Foundation of $100,000. We are also required to pay Ohio State Innovation Foundation a percentage of royalties paid to us by sublicensees. We are also required to pay Ohio State Innovation Foundation milestone payments up to a total of $1,950,000 in the aggregate upon the occurrence of certain development-related events prior to deadlines specified in the agreement.
Unless earlier terminated, the license agreement will expire upon the expiration of the last to expire valid claim of the licensed patents, which we expect will be on May 2, 2034. We may terminate the agreement at our option by giving 90 days’ written notice. Ohio State Innovation Foundation may immediately terminate the agreement, any part of the licensed patent rights or the agreement’s exclusivity if we fail to make required payments under the agreement and such breach continues for sixty days after delivery of written notice from Ohio State Innovation Foundation or if we breach any other provision of the agreement and fail to cure such breach within 60 days after delivery of written notice from Ohio State Innovation Foundation. Ohio State Innovation Foundation may also terminate the agreement if we or our affiliate initiates any proceeding or action challenging the validity, enforceability or scope of any of the patent rights or assists a third party in such a proceeding or action. The agreement automatically terminates if we file for bankruptcy or become bankrupt or insolvent, our board of directors elects to liquidate our assets or dissolve our business, we cease business operations, we make an assignment for the benefit of creditors or if we are otherwise placed in the hands of a receiver, assignee or trustee, whether by our voluntary act or otherwise.
Other Exclusive Licenses Granted to Cellectis
With respect to our plant sciences business, we have filed nine patent applications in connection with new soybean, tobacco and potato traits. These new traits have been obtained mainly by using TALEN, which is protected by the UMN and the Cellectis TALEN patent portfolios.
License Agreements from Regents of the University of Minnesota
In December 2014, Calyxt entered into an exclusive license with the Regents of the University of Minnesota, or UMN, pursuant to which Calyxt was granted an exclusive, worldwide, sublicensable license under a specified patent application owned by UMN relating to the use of the CRISPR-Cas9 technology to make use, and commercialize products covered by the licensed patents in any field of use. Pursuant to the terms of the agreement, Calyxt must use commercially reasonable efforts to commercialize the licensed technology and to manufacture, offer to sell, and sell licensed products as soon as practicable and to maximize sales. Calyxt must also achieve certain sales- and patent-related milestones.
Pursuant to the terms of the agreement, Calyxt paid UMN an upfront license fee payment in the amount of $130,000 in connection with entering into the agreement. Calyxt is also required to pay UMN a tiered annual fee that increases from $20,000 to $225,000 based on the occurrence of certain specified events, including the grant of a sublicense to a third party, as well as patent-related expenses incurred under the agreement in prosecuting and maintaining the licensed patents. Calyxt is also required to pay UMN a percentage of all revenues received by it under sublicenses. If Calyxt undergoes a change of control and wishes to assign all of its rights and duties under the agreement, Calyxt will have to pay UMN a specified transfer fee.
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Unless earlier terminated, the agreement will continue in effect until no licensed patent is active and until no licensed patent application is pending, which we expect will be on March 24, 2034. UMN may terminate the agreement for Calyxt’s uncured breach of the agreement upon 90 days’ prior written notice, or 60 days’ prior written notice if the breach relates to Calyxt’s payment obligations under the agreement. UMN may also terminate the agreement, upon 10 days’ prior written notice, if Calyxt files for bankruptcy or becomes insolvent. UMN may also immediately terminate the agreement if Calyxt or its agents or representatives commences or maintains an action in any court or before any governmental agency asserting or alleging the invalidity or unenforceability of the licensed patent rights. Calyxt may terminate the agreement for UMN’s uncured breach of the agreement upon 90 days’ prior written notice. Calyxt may also terminate the agreement at any time upon 60 days’ prior written notice.
Other Exclusive License Granted to Calyxt
In April 2015, we entered into an exclusive license agreement with Plant Bioscience Limited, or PBL, pursuant to which we were granted an exclusive, worldwide license to use and exploit certain gene-editing technologies related to wheat with endogenous resistance to powdery mildew, and to provide commercial development and technical services to third parties. The technology licensed to us was originally exclusively licensed to PBL by the Institute of Genetics and Developmental Biology, or IGDB, which holds certain rights to which our exclusive license from PBL is subject. Pursuant to the agreement, we are required to use commercially reasonable efforts to achieve certain milestones in a specified development and commercial program, and to exploit the license so as to maximize the sublicensing of the licensed technology and the development and commercial use of the licensed products.
The agreement will expire on the later of the tenth anniversary of the date that sales of the licensed products first occurred or the last expiration of a valid claim of a licensed patent. We may terminate the agreement at any time for any reason by giving PBL written notice. PBL may terminate the agreement upon our material breach of the agreement that has not been cured within a specified number of days after receiving notice of such breach. The agreement will also automatically terminate if we become insolvent or bankrupt.
In December 2017, we entered into an Evaluation License and Option Agreement with PBL to evaluate gene-editing technologies related to wheat with altered grain size and structure. The licensed technology was originally licensed to PBL by IGDB, which holds certain rights to which our evaluation license from PBL is subject. Pursuant to the agreement, we have the ability to evaluate the technologyin-house with the option of acquiring a worldwide exclusive right. The agreement will endure for a period of three years from the effective date.
Our Intellectual Property Strategy
We believe our current layered patent estate, together with our efforts to develop and patent next generation technologies, provides us with substantial intellectual property protection. However, the area of patent and other intellectual property rights in biotechnology is an evolving one with many risks and uncertainties.
Our strategy is also to develop and obtain additional intellectual property covering innovative manufacturing processes and methods for genetically engineeringT-cells expressing new constructs and for genetically engineering plants expressing new traits. To support this effort, we have established expertise and development capabilities focused in the areas ofpre-clinical research and development, manufacturing and manufacturing processscale-up, quality control, quality assurance, regulatory affairs and clinical trial design and implementation. Thus, we expect to file additional patent applications to expand this layer of our intellectual property estate.
The term of individual patents depends upon the legal term of the patents in the countries in which they are obtained. In most countries in which we file, the patent term is 20 years from the date of filing of the first
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non-provisional application to which priority is claimed. In the United States, a patent’s term may be lengthened by patent term adjustment, which compensates a patentee for administrative delays by the U.S. Patent and Trademark Office in granting a patent, or may be shortened if a patent is terminally disclaimed over an earlier-filed patent. The term of a patent that covers anFDA-approved drug may also be eligible for a patent term restoration of up to five years under the Hatch-Waxman Act, which is designed to compensate for the patent term lost during the FDA regulatory review process. The length of the patent term restoration is calculated based on the length of time the drug is under regulatory review. A patent term restoration under the Hatch-Waxman Act cannot extend the remaining term of a patent beyond a total of 14 years from the date of product approval and only one patent applicable to an approved drug may be restored. Moreover, a patent can only be restored once, and thus, if a single patent is applicable to multiple products, it can only be extended based on one product. Similar provisions are available in Europe and certain other foreign jurisdictions to extend the term of a patent that covers an approved drug. When possible, depending upon the length of clinical trials and other factors involved in the filing of a BLA, we expect to apply for patent term extensions for patents covering our product candidates and their methods of use.
Our commercial success may depend in part on our ability to obtain and maintain patent and other proprietary protection for commercially important technology, inventions andknow-how related to our business; defend and enforce our patents; preserve the confidentiality of our trade secrets; and operate without infringing the valid enforceable patents and proprietary rights of third parties. Our ability to stop third parties from making, using, selling, offering to sell or importing our products may depend on the extent to which we have rights under valid and enforceable patents or trade secrets that cover these activities. With respect to both licensed and company-owned intellectual property, we cannot be sure that patents will be granted with respect to any of our pending patent applications or with respect to any patent applications filed by us in the future, nor can we be sure that any of our existing patents or any patents that may be granted to us in the future will be commercially useful in protecting our commercial products and methods of manufacturing the same.
We may rely, in some circumstances, on trade secrets to protect our technology. However, trade secrets can be difficult to protect. We seek to protect our proprietary technology and processes, in part, by entering into confidentiality agreements with our employees, consultants, scientific advisors and contractors. We also seek to preserve the integrity and confidentiality of our data and trade secrets by maintaining physical security of our premises and physical and electronic security of our information technology systems. While we have confidence in these individuals, organizations and systems, agreements or security measures may be breached, and we may not have adequate remedies for any breach. In addition, our trade secrets may otherwise become known or be independently discovered or lawfully reverse-engineered by competitors. To the extent that our consultants, contractors or collaborators use intellectual property owned by others in their work for us, disputes may arise as to the rights in related or resultingknow-how and inventions.
Competition
The biotechnology and pharmaceutical industries put significant resources toward developing novel and proprietary therapies for the treatment of cancer, which often incorporate novel technologies and incorporate valuable intellectual property. We compete with companies in the immunotherapy space, as well as companies developing novel targeted therapies for cancer. In addition, our products will compete with existing standards of care for the diseases that our product candidates target. We anticipate that we will face intense and increasing competition from many different sources, including new and established biotechnology and pharmaceutical companies, academic research institutions, governmental agencies and public and private research institutions.
Our competitors include:
natural killer (NK) cells approaches.
CAR space: Bellicum Pharmaceuticals, Inc., Juno Therapeutics, Inc. (acquired64
The approved autologous CAR-T cell programs are:
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Infirst approved by the FDA in August 2017 Novartis AG has obtained approval fromfor the FDAtreatment of patients up to commercialize the firstCAR-T cell therapy, Kymriah®, for children and young adults25 years of age withB-cell ALL precursor acute lymphoblastic leukemia (ALL) that is refractory or has relapsed at least twice, and has recently been granted US FDA priority review for adults with refractory/relapsed DLBCL, priced at $475,000. In October 2017,in second or later relapse;
Due to the promising therapeutic effect ofT-cell therapies in clinical exploratory trials, we anticipate substantial direct competition from other existing and new competitors developing these therapies. In particular, we expect to compete with therapies with tumor infiltrating lymphocytes, or TILs, that are naturally occurring tumor-reactiveT-cells harvested, propagatedex vivo andre-infused into patients. In February 2024, Iovance announced that the FDA has approved the commercialization of lifileucel (Amtagvi™) for the treatment of adult patients with unresectable or metastatic melanoma previously treated with a PD-1 blocking antibody, and if BRAF V600 mutation positive, a BRAF inhibitor with or without a MEK inhibitor. We also expect to compete with therapies using genetically engineeredT-cells, rendered reactive against tumor-associated antigens prior to their administration to patients. However, we believe that mostWhile a substantial part of our competitors are currently focused on autologous therapies, and we believe that wean increasing number of companies are the most advanced company developing thean allogeneicCAR-T cell approach. In addition,Here, we differentiate ourselves by using our proprietary gene-editing capabilities to add specific features to ourT-cell products, such as cancer drug resistance or resistance to checkpoint inhibition.
Our competitors include:
We also face competition fromnon-cell based treatments offered by companies such as Amgen Inc., AstraZeneca plc, Bristol-Myers Squibb Company, Incyte Corporation, Merck & Co., Inc., Novartis AG and F.Hoffman-La Roche AG. Immunotherapy is further being pursued by several biotech companies as well as bylarge-cap pharmaceuticals. Many of our current or potential competitors, either alone or with their collaboration partners, have significantly greater financial resources and expertise in research and development, manufacturing,pre-clinical testing, conducting clinical trials, and marketing approved products than we do. Mergers and acquisitions in the pharmaceutical, biotechnology and gene therapy industries may result in even more resources being concentrated among a smaller number of our competitors. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. These competitors also compete with us in recruiting and retaining qualified scientific and management personnel and establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs.
Our commercial opportunity could be reduced or eliminated if our competitors develop and commercialize products that are safer, more effective, have fewer or less severe side effects, are more convenient or are less expensive than any products that we may develop. Our competitors also may obtain FDA or other regulatory approval for their products more rapidly than we may obtain approval for ours, which could result in our competitors establishing a strong market position before we are able to enter the market or make our development more complicated. The key competitive factors affecting the success of all of our programs are likely to be their efficacy, safety, and convenience.
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Government Regulation and Product Approval
Government Regulation of Biological Products
We are subject to extensive regulation. We expect our cellOur product candidates, to becell based gene therapies, are regulated as biologics. Governmental authorities, including the FDA and comparable regulatory authorities in other countries, regulate the design, development, production / manufacturing, testing, safety, efficacy, labeling, storage, record-keeping, advertising, promotion and marketing of pharmaceutical products, including biologics.
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Non-compliance with applicable requirements can result in fines and other judicially imposed sanctions, including product seizures, import restrictions, injunctive actions and criminal prosecutions of both companies and individuals. In addition, administrative remedies can involve requests to recall violative products; the refusal of the government to enter into supply contracts; or the refusal to approve pending product approval applications until manufacturing or other alleged deficiencies are brought into compliance. The FDA and similar authorities around the world also have the authority to cause the withdrawal of approval of a marketed product, to impose labeling restrictions or to require that we redo somenon-clinical and/or clinical studies.
The FDA categorizes human cell- or tissue-based products as either minimally manipulated or more than minimally manipulated, and has determined that more than minimally manipulated products require clinical trials to demonstrate product safety and efficacy and the submission of a BLA for marketing authorization.
Our product candidates must be approved by the FDA before they may be legally marketed in the United States and by the appropriate foreign regulatory agencies before they may be legally marketed in foreign countries. Generally, our activities in foreign countries will be subject to regulation that is similar in nature and scope as that imposed in the United States, although there can be important differences. Additionally, some significant aspects of regulation in Europethe EU are addressed in a centralized way, but country-specific regulation remains essential in many respects. The process for obtaining regulatory marketing approvals and the subsequent compliance with appropriate federal, state, local and foreign statutes and regulations require the expenditure of substantial time and financial resources.
Ethical, social and legal concerns about gene therapy, gene modifications, genetic testing and genetic research could result in additional regulations restricting or prohibiting the processes we may use. Federal and state agencies, congressional committees and foreign governments have expressed interest in further regulating biotechnology. More restrictive regulations or claims that our products are unsafe or pose a hazard could prevent us from commercializing any products in one or more jurisdictions. New government requirements may be established that could delay or prevent regulatory approval of our product candidates under development. It is impossible to predict whether legislative changes will be enacted, regulations, policies or guidance changed, or interpretations by agencies or courts changed, or what the impact of such changes, if any, may be.
Set forth below is a description of the process of obtaining U.S. government approval for biological product development. Similar processes apply in other jurisdictions.
U.S. Biological Product Development
In the United States, the FDA regulates biologics under the Federal Food, Drug, and Cosmetic Act, or FDCA, and the Public Health Service Act, or PHSA, and their implementing regulations. Biologics are also subject to other federal, state and local statutes and regulations. The process required by the FDA before biologic product candidates may be marketed in the United States and the subsequent compliance with appropriate federal, state, local and foreign statutes and regulations require the expenditure of substantial time and financial resources. Failure to comply with the applicable U.S. requirements at any time during the product development process, approval process or after approval, may subject an applicant to administrative or judicial sanctions. These sanctions could include, among other actions, the FDA’s refusal to approve pending applications, withdrawal of an approval, a clinical hold, untitled or warning letters, product recall requests or withdrawals from the market, labeling restrictions,non-clinical and/or clinical studies to be performed again, product seizures,
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product destruction, total or partial suspension of production or distribution injunctions, import restrictions, fines, refusals of government contracts, restitution, disgorgement, or civil or criminal penalties for both companies and individuals. Any agency or judicial enforcement action could have a material adverse effect on us.
Our biological product candidates must be approved by the FDA through the Biologics License Application, or BLA, process before they may be legally marketed in the United States. The process required by the FDA before a biologic may be marketed in the United States generally involves the following:
The data required to support a BLA is generated in three distinct development stages:segments: manufacturing,pre-clinical and clinical. The manufacturing development stage generally involves laboratory evaluations of drug chemistry and biology properties, formulation and stability, thestability. The pre-clinical stage generally involves studies to evaluate pharmacology and toxicity in animals, which support subsequent clinical testing. The conduct of the manufacturing andpre-clinical studies must comply with federal regulations, including GMPs and GLPs for the main Toxicology Studies.
Where a trial involving the deliberate transfer of (1) recombinant DNA or (2) DNA or RNA derived from recombinant DNA into one or more human research participants (including recombinant DNA molecules, and/or organisms and viruses containing recombinant DNA molecules) (a gene therapy trial) is conducted at, or sponsored by, institutions receiving NIH funding for recombinant DNA research, a protocol and related documentation is submitted to and the trial is registered with the NIH Office of Biotechnology Activities, or OBA, prior to the submission of an IND to the FDA. This is done pursuant to the NIH Guidelines for Research Involving Recombinant or Synthetic Nucleic Acid Molecules, or NIH Guidelines. Compliance with the NIH Guidelines is mandatory for investigators at institutions receiving NIH funds for research involving recombinant DNA, however many companies and other institutions not otherwise subject to the NIH Guidelines voluntarily follow them. The NIH is responsible for convening the RAC, a federal advisory committee, which discusses protocols that raise novel or particularly important scientific, safety or ethical considerations at one of its quarterly public meetings. The OBA will notify the FDA of the RAC’s decision regarding the necessity for full public review of a gene therapy protocol. RAC proceedings and reports are posted to the OBA web site and may be accessed by the public.
The sponsor must submit the results of thepre-clinical studies, together with manufacturing information, analytical data, any available clinical data or literature and a proposed clinical protocol, to the FDA as part of an
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IND before any clinical testing may proceed. An IND is a request for authorization from the FDA to administer an investigational drug product to humans. The IND must become effective before clinical trials may begin. The IND is automatically approvedeffective 30 days after receipt by the FDA, unless during that time
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the FDA raises concerns or questions regarding the proposed clinical trials. In such a case, the FDA may place the IND on clinical hold and the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin. With gene therapy protocols, if the FDA allows the IND to proceed, and the RAC decides that full public review of the protocol is warranted but did not take place before the IND review is complete, the FDA will request at the completion of its IND review that sponsors delay initiation of the protocol until after completion of the RAC review process. The FDA may also impose clinical holds on a product candidate at any time before or during clinical trials due to safety concerns ornon-compliance. Accordingly, we cannot be sure that submission of an IND will result in the FDA allowing clinical trials to begin, or that, once begun, issues will not arise that could cause the trial to be suspended or terminated.
Before the IND becomes active, the Clinical Protocolclinical protocol will also need to be approved by the relevant Institutional Review Boards, (IRBs)or IRBs, and Institutional Biosafety Committees, (IBCs),or IBCs, which are the cornerstone of institutional oversight of recombinant DNA clinical research.
Clinical trials involve the administration of the investigational product to human subjects under the supervision of qualified investigators, generally physicians not employed by or under the trial sponsor’s control, in accordance with GCPs, which include the requirement that all research subjects provide their informed consent for their participation in any clinical trial. Clinical trials are conducted under protocols detailing, among other things, the objectives of the clinical trial, dosing procedures, subject selection and exclusion criteria, and the parameters to be used to monitor subject safety and assess efficacy. Each protocol, and any subsequent amendments to the protocol, must be submitted to the FDA as part of the IND. Further, each clinical trial must be reviewed and approved by an independent institutional review board, or IRB, at or servicing each institution at which the clinical trial will be conducted. An IRB is charged with protecting the welfare and rights of trial participants and considers such items as whether the risks to individuals participating in the clinical trials are minimized and are reasonable in relation to anticipated benefits. The IRB also approves the informed consent form that must be provided to each clinical trial subject or his or her legal representative and must monitor the clinical trial until completed.
All gene therapy experiments and clinical trials are also subject to review and oversight by an institutional biosafety committee, or IBC, a local institutional committee that reviews and oversees basic and clinical research conducted at that institution. The IBC assesses the safety of the research and identifies any potential risk to public health or the environment.
There are also requirements governing the reporting of ongoing clinical trials and completed clinical trial results to public registries. Sponsors of applicable clinical trials ofFDA-regulated products, including biologics, are required to register and disclose certain clinical trial information, which is publicly available at www.clinicaltrials.gov. Information related to the product, patient population, phase of investigation, study sites and investigators, and other aspects of the clinical trial is then made public as part of the registration. Sponsors are also obligated to discussdisclose the results of their clinical trials after completion. Disclosure of the results of these trials can be delayed until the new product or new indication being studied has been approved.
Human clinical trials are typically conducted in three sequential phases. However, these phases may overlap or be combined:
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Post-approval clinical trials, sometimes referred to as “Phase 4” clinical trials, may be conducted after initial marketing approval. These clinical trials are used to gain additional experience from the treatment of patients in the intended therapeutic indication, particularly for long-term safetyfollow-up. The FDA recommends that sponsors observe subjects for potential gene therapy-related delayed adverse events for a15-year period following exposure to the investigational product, including a minimum of five years of annual examinations followed by ten years of annual queries, either in person or by questionnaire, of study subjects.
During all phases of clinical development, regulatory agencies require extensive monitoring and auditing of all clinical activities, clinical data, and clinical trial investigators. Annual progress reports detailing the results of the clinical trials must be submitted to the FDA. Written IND safety reports must be promptly submitted to the FDA, the NIH, IRB, and the investigators for serious and unexpected adverse events, any findings from other studies, tests in laboratory animals orin vitro testing that suggest a significant risk for human patients, or any clinically important increase in the rate of a serious suspected adverse reaction over that listed in the protocol or investigator brochure. The sponsor must submit an IND safety report within 15 calendar days after the sponsor determines that the information qualifies for reporting. The sponsor also must notify the FDA of any unexpected fatal or life-threateninglife- threatening suspected adverse reaction within seven calendar days after the sponsor’s initial receipt of the information.
Phase I,1, Phase II2 and Phase III3 clinical trials may not be completed successfully within any specified period, if at all. The FDA or the sponsor or its data safety monitoring board may suspend or terminate a clinical trial at any time on various grounds, including a finding that the research patients are being exposed to an unacceptable health risk, including risks inferred from other unrelated immunotherapy trials. Similarly, an IRB can suspend or terminate approval of a clinical trial at its institution if the clinical trial is not being conducted in accordance with the IRB’s requirements or if the biological product has been associated with unexpected serious harm to patients.
Human immunotherapy products and gene therapy products are a new category of therapeutics. Because this is a relatively new and expanding area of novel therapeutic interventions, there can be no assurance as to the length of the trial period, the number of patients the FDA will require to be enrolled in the trials in order to establish the safety, efficacy, purity and potency of immunotherapy products, or that the data generated in these trials will be acceptable to the FDA to support marketing approval.
Concurrently with clinical trials, companies usually complete additional animal studies and must also develop additional information about the biological and physical characteristics of the biological product as well as finalize a process for production and testing the product in commercial quantities in accordance with cGMP requirements. To help reduce the risk of the introduction of
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adventitious agents with use of biological products, the PHSA emphasizes the importance of manufacturing control for products whose attributes cannot be precisely defined. The manufacturing process must be capable of consistently producing quality batches of the product candidate and, among other things, the sponsor must develop and validate methods for testing the identity, strength, quality, potency and purity of the final biological product. Additionally, appropriate packaging must be selected and tested and stability studies must be conducted to demonstrate that the biological product candidate does not undergo unacceptable deterioration over its shelf life.
U.S. Review and Approval Processes for Biological Product Candidates
After the completion of clinical trials,non-clinical and manufacturing activities of a biological product candidate, FDA approval of a BLA must be obtained before commercial marketing of the biological product. The
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BLA must include results of product development, laboratory and animal studies, human trials, information on the manufacture and composition of the product, proposed labeling and other relevant information. The approval processes require substantial time and effort and there can be no assurance that the FDA will accept the BLA for filing and, even if filed, that any approval will be granted on a timely basis, if at all.
Under the Prescription Drug User Fee Act, or PDUFA, as amended, each BLA must be accompanied by a significant user fee. The FDA adjusts the PDUFA user fees on an annual basis. PDUFA also imposes an annual product fee for biological products and an annual establishment fee on facilities used to manufacture prescription biological products. Fee waivers or reductions are available in certain circumstances, including a waiver of the application fee for the first application filed by a small business. Additionally, no user fees are assessed on BLAs for products designated as orphan drugs, unless the product also includes anon-orphan indication.
Within 60 days following submission of the application, the FDA reviews a BLA submitted to determine if it is substantially complete before the agency accepts it for filing. The FDA may refuse to file any BLA that it deems incomplete or not properly reviewable at the time of submission and may request additional information. In this event, the BLA must be resubmitted with the additional information. The resubmitted application also is subject to review before the FDA accepts it for filing. Once the submission is accepted for filing, the FDA begins anin-depth substantive review of the BLA. The FDA reviews the BLA to determine, among other things, whether the proposed product is safe and potent, or effective, for its intended use, and has an acceptable purity profile, and whether the product is being manufactured in accordance with cGMP regulations to assure and preserve the product’s identity, safety, strength, quality, potency and purity. The FDA may refer applications for novel biological products or biological products that present difficult questions of safety or efficacy to an advisory committee, typically a panel that includes clinicians and other experts, for review, evaluation and a recommendation as to whether the application should be approved and under what conditions. The FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully when making decisions. During the biological product approval process, the FDA also will determine whether a Risk Evaluation and Mitigation Strategy, or REMS, is necessary to assure the safe use of the biological product candidate. A REMS may be imposed to ensure safe use of the drug, and could include medication guides, physician communication plans, or elements to assure safe use, such as restricted distribution methods, patient registries and other risk minimization tools. If the FDA concludes a REMS is needed, the sponsor of the BLA must submit a proposed REMS. The FDA will not approve a BLA without a REMS, if required.
Before approving a BLA, the FDA will inspect the facilities at which the product candidate, isthe associated vector and other key raw or starting materials are manufactured. The FDA will not approve the product candidate unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product within required specifications. For cell based immunotherapy products, the FDA also will not approve the product if the manufacturer is not in compliance with the current good tissue practice, or GTP requirements, to the extent applicable. These requirements are set out in FDA regulations and guidance documents and govern the methods used in, and the facilities and controls used for, the manufacture of human cells, tissues, and cellular and tissue based products, or HCT/Ps, which are human cells or tissue intended for use in implantation, transplantation, infusion, or transfer into a human recipient. The primary intent of the GTP requirements is to ensure that cell and tissue based products are manufactured in a manner designed to prevent the introduction, transmission and spread of communicable disease. FDA regulations also require tissue establishments to register and list their HCT/Ps with the FDA and, when applicable, to evaluate donors through screening and testing. Additionally, before approving a BLA, the FDA may inspect one or more clinical sites to assure that the clinical trials were conducted in compliance with IND trial requirements and GCP requirements. To assure cGMP, GTP and GCP compliance, an applicant must incur significant expenditure of time, money and effort in the areas of training, record keeping, production, and quality control.
Notwithstanding the submission of relevant data and information, the FDA may ultimately decide that the BLA does not satisfy its regulatory criteria for approval and deny approval. Data obtained from clinical trials are not always conclusive and the FDA may interpret data differently than we interpret the same data. If the agency
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decides not to approve the BLA in its submitted form, the FDA will issue a complete response letter that describes all of the specific deficiencies in the BLA identified by the FDA. The deficiencies identified may be minor, for example, requiring labeling changes, or major, for example, requiring additional clinical trials. Additionally, the complete response letter may include recommended actions that the applicant might take to place the application in a condition for approval. If a complete response letter is issued, the applicant may either resubmit the BLA, addressing all of the deficiencies identified in the letter, or withdraw the application.
If a product candidate receives regulatory approval, the approval may be significantly limited to specific diseases and dosages or the indications for use may otherwise be limited, which could restrict the commercial value of the product.
Further, the FDA may require that certain contraindications, warnings or precautions be included in the product labeling. The FDA may impose restrictions and conditions on product distribution, prescribing, or dispensing in the form of a REMS, or otherwise limit the scope of any approval. In addition, the FDA may require post marketing clinical trials, sometimes referred to as Phase 4 clinical trials, or additional studies like safety studies, designed to further assess a biological product’s safety and effectiveness, and testing and surveillance programs to monitor the safety of approved products that have been commercialized.
In addition, unless a waiver is granted, under the Pediatric Research Equity Act, or PREA, a BLA or supplement to a BLA must contain data to assess the safety and effectiveness of the product for the claimed indications in all relevant pediatric subpopulations and to support dosing and administration for each pediatric subpopulation for which the product is safe and effective. The Food and Drug Administration Safety and Innovation Act, or FDASIA, requires that a sponsor who is planning to submit a marketing application for a drug or biological product that includes a new active ingredient, new indication, new dosage form, new dosing regimen or new route of administration submit an initial Pediatric Study Plan, or PSP, within sixty days after anend-of-Phase II 2 or an end-of-Phase 1 meeting or as may be agreed between the sponsor and FDA. The initial PSP must include, among other things, an outline of the pediatric study or
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studies that the sponsor plans to conduct, including to the extent practicable study objectives and design, age groups, relevant endpoints and statistical approach, or a justification for not including such detailed information, and any request for a deferral of pediatric assessments or a full or partial waiver of the requirement to provide data from pediatric studies along with supporting information. FDA and the sponsor must reach agreement on the PSP. A sponsor can submit amendments to an agreed-upon initial PSP at any time if changes to the pediatric plan need to be considered based on data collected from nonclinical studies, early phase clinical trials, and/or other clinical development programs. The FDA may grant deferrals for submission of data or full or partial waivers. Unless otherwise required by regulation, PREA does not apply to any product for an indication for which orphan designation has been granted. However, if only one indication for a product has orphan designation, a pediatric assessment may still be required for any applications to market that same product for thenon-orphan indications.
One of the performance goals agreed to by the FDA under the PDUFA is to review 90% of standard BLAs in 10 months and 90% of priority BLAs in six months, whereupon a review decision is to be made. The FDA does not always meet its PDUFA goal dates for standard and priority BLAs and its review goals are subject to change from time to time. The review process and the PDUFA goal date may be extended by three months if the FDA requests or the BLA sponsor otherwise provides additional information or clarification regarding information already provided in the submission within the last three months before the PDUFA goal date.
Orphan Drug Designation
Under the Orphan Drug Act, a sponsor may request and the FDA may grant orphan designation to a drug or biologic intended to treat a rare disease or condition, which is generally a disease or condition that affects fewer than 200,000 individuals in the United States, or if it affects more than 200,000 individuals in the United States and there is no reasonable expectation that the cost of developing and making available in the United States drug or biologic for this type of disease or condition will be recovered from sales in the United States for that product.
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Orphan drug designation must be requested before submitting a BLA. After the FDA grants orphan drug designation, the generic and trade name, if any, of the drug or biologic and the rare disease or condition for which orphan-drug designation was granted are disclosed publicly by the FDA. TheWhile the orphan drug designation affords the holder certain incentives in terms of tax credits, user fee waiver, eligibility for orphan drug exclusivity, and financial incentives, the orphan drug designation does not convey any advantage during, or shorten the duration of, the regulatory review or approval process.
If a product that has orphan drug designation subsequently receives the first FDA approval for the disease or condition for which it has such designation, FDA may grant the product is entitled to orphan product exclusivity, which means that the FDA may not approve any other applications, including a full BLA, to market the same drug or biologic for the same indication for seven years, except in limited circumstances, such as a showing of clinical superiority of the subsequent product to the product with orphan drug exclusivity. Orphan drug exclusivity does not prevent FDA from approving a different drug or biologic for the same disease or condition, or the same drug or biologic for a different disease or condition. Among the other benefits of orphan drug designation are tax credits for certain research and a waiver of the BLA application user fee.
A designated orphan drug may not receive orphan drug exclusivity if it is approved for a use that is broader than the indication for which it received orphan designation. Orphan exclusivity also could block the approval of one of our products for seven years if a competitor obtains approval of the same drug or biologic for the same use as defined by the FDA or if our product candidate is determined to be contained within the competitor’s product for the same indication or disease. In addition, exclusive marketing rights in the United States may be lost if the FDA later determines that the request for designation was materially defective or if the manufacturer is unable to assure sufficient quantities of the product to meet the needs of patients with the rare disease or condition.
The criteria for designating an “orphan medicinal product” in the EU are similar to those in the United States. Such designation can be requested in the case of products that are intended for the diagnosis, prevention or treatment of a life-threatening or chronically debilitating condition and either (a) such condition affects no more than five in 10,000 persons in the EU when the application is made, or (b) the product, without the benefits derived from orphan status, would unlikely generate sufficient return in the EU to justify the necessary investment. Moreover, in order to obtain orphan designation it is necessary to demonstrate that there exists no satisfactory method of diagnosis, prevention or treatment of such condition authorized for marketing in the EU, or if such a method exists, the product will be of significant benefit to those affected by the condition. Orphan designation is lost in the EU if it is established that the product no longer meets the orphan criteria before market authorization is granted.
In the EU, orphan medicinal products are eligible for financial incentives as well as specific regulatory assistance and scientific advice. Products receiving orphan status in the EU can receive ten years of market exclusivity, during which time no similar medicinal product for the same indication may be placed on the market. An orphan product can also obtain an additional two years of market exclusivity in the EU for pediatric studies. No extension to any supplementary protection certificate can be granted on the basis of pediatric studies for orphan indications.
However, the10-year market exclusivity may be reduced to six years in certain circumstances, including for example if, at the end of the fifth year, it is established that the product is sufficiently profitable not to justify maintenance of market exclusivity.
There can be no assurance that we will receive orphan drug designation for any product candidates in the United States, in the EU or in any other market. ThereIf we receive orphan drug designation, there can be no assurance that an Orphanwe will receive orphan drug exclusivity for any product candidate in United States, in the EU or in any other market. Additionally, there can be no assurance that orphan exclusivity from a competitor could not block the approval of one of our products for a certain period of time, in the United States, in the EU or in any other market.
Expedited Development and Review Programs
The FDA has a Fast Track program that is intended to facilitate the development, and expedite or facilitate the process for reviewing new drugs and biological products that meet certain criteria. Specifically, new products are eligible for Fast Track designation if they are intended to treat a serious or life-threateninglife- threatening disease or condition and demonstrate the
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potential to address unmet medical needs for the disease or condition. Fast Track designation applies to the combination of the product and the specific indication for which it is being studied. The sponsor of a new drug or biologic may request the FDA to designate the drug or biologic as a Fast Track product candidate at any time during the clinical development of the product candidate. Unique to aUnder the Fast Track product,program, the FDA may consider the review of sections of the BLA on a rolling basis before the complete application is submitted, if the sponsor provides a schedule for the
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submission of the sections of the BLA, the FDA agrees to accept sections of the BLA and determines that the schedule is acceptable, and the sponsor pays any required user fees upon submission of the first section of the BLA.
Any product candidate for a serious condition, submitted to the FDA for approval, including a product with a Fast Track designation, may also be eligible for other types of FDA programs intended to expedite development and review, such as priority review and accelerated approval. A product candidate is eligible for priority review if it has the potential to treat a serious condition and, if approved, would provide safe and effective therapy where no satisfactory alternative therapy exists or is a significant improvement in the treatment, diagnosis or prevention of a disease compared to marketed products. The FDA will attempt to direct additional resources to the evaluation of an application for a new product candidate designated for priority review in an effort to facilitate the review, and aims to review such applications within six months as opposed to ten months for standard review. Additionally, a product candidate may be eligible for accelerated approval. Product candidates studied for their safety and effectiveness in treating serious or life-threatening illnesses and that provide meaningful therapeutic benefit over existing treatments may receive accelerated approval which means that they may be approved on the basis of adequate and well-controlled clinical trials establishing that the product candidate has an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit, or on the basis of an effect on a clinical endpoint other than irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity, or prevalence of the condition and the availability or lack of alternative treatments. As a condition of approval, the FDA may require that a sponsor of a drug or biological product candidate receiving accelerated approval perform adequate and well-controlled post-marketing clinical trials. In addition, the FDA currently requires as a condition for accelerated approvalpre-approval of promotional materials, which could adversely impact the timing of the commercial launch of the product. Fast Track designation, priority review and accelerated approval do not change the standards for approval but may expedite the development or approval process.
Breakthrough Therapy / Regenerative Medicine Advanced Therapy Designation
Under the provisions of the Food and Drug Administration Safety and Innovation Act, or FDASIA, enacted in 2012, the FDA established a Breakthrough Therapy Designation which is intended to expedite the development and review of products that treat serious or life-threatening conditions. A breakthrough therapy is defined as a drug that is intended, alone or in combination with one or more other drugs, to treat a serious or life-threateninglife- threatening disease or condition, and preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. The designation includes all of the features of Fast Track designation, as well as more intensive FDA interaction and guidance. The Breakthrough Therapy Designation is a distinct status from both accelerated approval and priority review, but these can also be granted to the same product candidate if the relevant criteria are met.
The FDA must take certain actions, such as holding timely meetings and providing advice, intended to expedite the development and review of an application for approval of a breakthrough therapy. All requests for breakthrough therapy designation will be reviewed within 60 days of receipt, and FDA will either grant or deny the request.
In addition, as described in Section 3033 of the 21st Century Cures Act, signed into law in December 2016, a drug is eligible for Regenerative Medicine Advanced Therapy, or RMAT, designation if:
The RMAT designation carries all of benefits of Breakthrough and Fast Track therapy designations, including: intensive interaction with FDA on an efficient drug development program beginning as early as Phase 1, organizational commitment involving senior FDA personnel, and rolling BLA review. RMAT designees are also eligible for accelerated approval and priority review if relevant criteria are met.
Where applicable, we plan to request Fast Track and/or Breakthrough Therapy Designation for our product candidates. Even if we receive one of these designations for our product candidates, the FDA may later decide that our product candidates no longer meet the conditions for qualification. In addition, these designations may not provide us with a material commercial advantage.
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Post-Approval Requirements
Maintaining compliance with applicable federal, state, and local statutes and regulations requires the expenditure of substantial time and financial resources. Rigorous and extensive FDA regulation of biological products continues after approval, particularly with respect to cGMP and pharmacovigilance requirements as well as post marketing commitments. Any products for which we receive FDA approval will be subject to continuing regulation by the FDA, including, among other things, record-keeping requirements, reporting of adverse experiences with the product, providing the FDA with updated safety and efficacy information, product sampling and distribution requirements, and complying with FDA promotion and advertising requirements, which include, among others, standards fordirect-to-consumer advertising, restrictions on promoting products for uses or in patient populations that are not described in the product’s approved uses (known asoff-label use), limitations on industry-sponsored scientific and educational activities, and requirements for promotional activities involving the internet. Although physicians may prescribe legally available products foroff-label use that they deem to be appropriate in their professional medical judgment, manufacturers may not market or promote suchoff-label uses.
Other post-approval requirements applicable to biological products include reporting of cGMP deviations that may affect the identity, potency, purity and overall safety of a distributed product, record-keeping requirements, reporting of adverse effects, reporting updated safety and efficacy information, and complying with electronic record and signature requirements. After a BLA is approved, the product may also be subject to official lot release. In this case, as part of the manufacturing process, the manufacturer is required to perform certain tests on each lot of the product before it is released for distribution. If the product is subject to official release by the FDA, the manufacturer submits samples of each lot of product to the FDA together with a release protocol showing a summary of the history of manufacture of the lot and the results of all of the manufacturer’s tests performed on the lot. The FDA also may perform
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certain confirmatory tests on lots of some products before releasing the lots for distribution by the manufacturer. In addition, the FDA conducts laboratory research related to the regulatory standards on the safety, purity, potency, and effectiveness of biological products.
In addition, we and any third-party manufacturers of our products will be required to comply with applicable requirements in the cGMP regulations, including quality control and quality assurance and maintenance of records and documentation. We rely, and expect to continue to rely, on third parties for the production of clinical and commercial quantities of our products in accordance with cGMP regulations. cGMP regulations require among other things, quality control and quality assurance as well as the corresponding maintenance of records and documentation and the obligation to investigate and correct any deviations from cGMP. Manufacturers and other entities involved in the manufacture and distribution of approved products are required to register their establishments with the FDA and certain state agencies, and are subject to periodic announced and unannounced inspections by the FDA and certain state agencies for compliance with cGMP and other laws. The FDA also may require post-marketing studies, known as Phase 4 studies, and surveillance to monitor the effects of an approved product. Accordingly, manufacturers must continue to expend time, money, and effort in the area of production and quality control to maintain cGMP compliance. Discovery of problems with a product after approval may result in restrictions on a product, manufacturer, or holder of an approved BLA, including, among other things, recall or withdrawal of the product from the market. In addition, changes to the manufacturing process are strictly regulated, and depending on the significance of the change, may require prior FDA approval before being implemented. Other types of changes to the approved product, such as adding new indications and claims, are also subject to further FDA review and approval.
The FDA also may require post-marketing studies, known as Phase 4 studies, and surveillance to monitor the effects of an approved product. Discovery of previously unknown problems with a product or the failure to comply with applicable FDA requirements can have negative consequences, including adverse publicity, judicial or administrative enforcement, warning letters from the FDA, mandated corrective advertising or communications with doctors, and civil or criminal penalties, among others. Newly discovered or developed safety or effectiveness data may require changes to a product’s approved labeling, including the addition of new warnings and contraindications, and also may require the implementation of other risk management measures.
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Also, new government requirements, including those resulting from new legislation, may be established, or the FDA’s policies may change, which could delay or prevent regulatory approval of our products under development.
U.S. Patent Term Restoration and Pediatric Marketing Exclusivity
The Biologics Price Competition and Innovation Act, or BPCIA, amended the PHSA to authorize the FDA to approve similar versions of innovative biologics, commonly known as biosimilars. A competitor seeking approval of a biosimilar must file an application to establish its molecule as highly similar to an approved innovator biologic, among other requirements. The BPCIA, however, bars the FDA from approving biosimilar applications for 12 years after an innovator biological product receives initial marketing approval. This12-year period of data exclusivity may be extended by six months, for a total of 12.5 years, if the FDA requests that the innovator company conduct pediatric clinical investigations of the product.
The first biological product submitted under the abbreviated approval pathway that is determined to beapproved as interchangeable with the reference product has exclusivity against other biologics submitting applications under the abbreviated approval pathway for the lesser of (1) one year after the first commercial marketing, (2) 18 months after approval if there is no legal challenge, (3) 18 months after the resolution in the applicant’s favor of a lawsuit challenging the reference biologic’s patents if an application has been submitted, or (4) 42 months after the application has been approved if a lawsuit is ongoing within the42-month period.
Depending upon the timing, duration and specifics of the FDA approval of the use of our product candidates, some of our U.S. patents, if granted, may be eligible for limited patent term extension under the Drug Price Competition and Patent Term Restoration Act of 1984, commonly referred to as the Hatch-Waxman Act. The Hatch-Waxman Act permits a patent restoration term of up to five years, as compensation for patent term lost during product development and the FDA regulatory review process. However, patent term restoration cannot extend the remaining term of a patent beyond a total of 14 years from the product’s approval date. The patent term restoration period is generallyone-half the time between the effective date of an IND and the submission date of a BLA plus the time between the submission date of a BLA and the approval of that application. Only one patent applicable to an approved product is eligible for the extension and the application for the extension must be submitted prior to the expiration of the patent. The U.S. Patent and Trademark Office, in consultation with the FDA, reviews and approves the application for any patent term extension or restoration. In the future as applicable, we may apply for restoration of patent term for one of our currently owned or licensed patents seeking restored patent life beyond its current expiration date, depending on the expected length of the clinical trials and other factors involved in the filing of the relevant BLA.
PediatricIn addition to the forms of exclusivity previously described, pediatric exclusivity is another type of regulatoryan available market exclusivity in the United States. Pediatric exclusivity, if granted by the FDA, adds six months to existing periods of exclusivity periods and patent terms. Thissix-month exclusivity, which attaches to and runs from the end of other exclusivity protection or patent term, may be granted based on the voluntary completion of a pediatric trial in accordance with anFDA-issued “Written Request” for such a trial.
Other U.S. Healthcare Laws and Compliance Requirements
In the United States, our activities are subject to regulation by various federal, state and local authorities in addition to the FDA, including but not limited to, the Centers for Medicare and Medicaid Services, or CMS, other divisions of the U.S. Department of Health and Human Services (e.g., the Office of Inspector General), the U.S. Department of Justice, or DOJ, and individual U.S. Attorney offices within the DOJ, and state and local governments. For example, sales, marketing and scientific/educational grant programs must comply with the anti-fraud and abuse provisions of the Social Security Act, the false claims laws, the privacy provisions of the Health Insurance Portability and Accountability Act, or HIPAA, and similar state laws, each as amended.
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The federal Anti-Kickback Statute prohibits, among other things, any person or entity, from knowingly and willfully offering, paying, soliciting or receiving any remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to induce or in return for purchasing, leasing, ordering or arranging for the purchase, lease or order of any item or service reimbursable under Medicare, Medicaid or other federal healthcare programs. The term remuneration has been interpreted broadly to include anything of value. The Anti-Kickback Statute has been interpreted to apply to arrangements between pharmaceutical manufacturers on one hand and prescribers, purchasers, and formulary managers on the other. There are a number of statutory exceptions and regulatory safe harbors protecting some common activities from prosecution. The exceptions and safe harbors are drawn narrowly and practices that involve remuneration that may be alleged to be intended to induce prescribing, purchasing or recommending may be subject to scrutiny if they do not qualify for an exception or safe harbor. Failure to meet all of the requirements of a particular applicable statutory exception or regulatory safe harbor does not make the conduct per se illegal under the Anti-Kickback Statute. Instead, the legality of the arrangement will be
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evaluated on acase-by-case basis based on a cumulative review of all of its facts and circumstances. Our practices may not in all cases meet all of the criteria for protection under a statutory exception or regulatory safe harbor.
Additionally, the intent standard under the Anti-Kickback Statute was amended by the ACA to a stricter standard such that a person or entity no longer needs to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation. In addition, the ACA codified case law that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal False Claims Act (discussed below).
The civil monetary penalties statute imposes penalties against any person or entity who, among other things, is determined to have presented or caused to be presented a claim to a federal health program that the person knows or should know is for an item or service that was not provided as claimed or is false or fraudulent.
The federal False Claims Act prohibits, among other things, any person or entity from knowingly presenting, or causing to be presented, a false claim for payment to, or approval by, the federal government or knowingly making, using, or causing to be made or used a false record or statement material to a false or fraudulent claim to the federal government. As a result of a modification made by the Fraud Enforcement and Recovery Act of 2009, a claim includes “any request or demand” for money or property presented to the U.S. government. Recently, several pharmaceutical and other healthcare companies have been prosecuted under these laws for allegedly providing free product to customers with the expectation that the customers would bill federal programs for the product. Other companies have been prosecuted for causing false claims to be submitted because of the companies’ marketing of the product for unapproved, and thusnon-reimbursable, uses.
HIPAA created new federal criminal statutes that prohibit knowingly and willfully executing, or attempting to execute, a scheme to defraud or to obtain, by means of false or fraudulent pretenses, representations or promises, any money or property owned by, or under the control or custody of, any healthcare benefit program, including private third-party payors and knowingly and willfully falsifying, concealing or covering up by trick, scheme or device, a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services.
Also, many states have similar fraud and abuse statutes or regulations that apply to items and services reimbursed under Medicaid and other state programs, or, in several states, apply regardless of the payor.
We may also be subject to data privacy and security regulations by both the federal government and the states in which we conduct our business. HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, or HITECH, and its implementing regulations, imposes requirements relating to the privacy, security and transmission of individually identifiable health information. Among other things, HITECH makes HIPAA’s privacy and security standards directly applicable to business associates independent contractors or agents of covered entities that receive or obtain protected health information in connection with providing a service on behalf of a covered entity. HITECH also created four new tiers of civil monetary
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penalties, amended HIPAA to make civil and criminal penalties directly applicable to business associates, and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek attorneys’ fees and costs associated with pursuing federal civil actions.
In addition, state laws govern the privacy and security of health information in specified circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.
Additionally, the federal Physician Payments Sunshine Act, enacted as part of the ACA, and its implementing regulations, require certain manufacturers of drugs, devices, biological and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report information related to certain payments or other transfers of value made or distributed to physicians and teaching hospitals, or to entities or individuals at the request of, or designated on behalf of, the physicians and teaching hospitals and to report annually certain ownership and investment interests held by physicians and their immediate family members.
In order to distribute products commercially, we will need to comply with federal and state laws and regulations that require the registration of manufacturers and wholesale distributors of drug and biological products in a state, including, in certain states, manufacturers and distributors who ship products into the state even if such manufacturers or distributors have no place of business within the state. Some states also impose requirements on manufacturers and distributors to establish the pedigree of product in the chain of distribution, including some states that require manufacturers and others to adopt new technology capable of tracking and tracing product as it moves through the distribution chain. Several states have enacted legislation requiring pharmaceutical and biotechnology companies to establish marketing compliance programs, file periodic reports with the state, make periodic public disclosures on sales, marketing, pricing, clinical trials and other activities, and/or register their sales representatives, as well as to prohibit pharmacies and other healthcare entities from providing certain physician prescribing data to pharmaceutical and biotechnology companies for use in sales and marketing, and to prohibit certain other sales and marketing practices. All of our activities are also potentially subject to federal and state consumer protection and unfair competition laws.
If our operations are found to be in violation of any of the federal and state healthcare laws described above or any other governmental regulations that apply to us, we may be subject to penalties, including without limitation, civil, criminal and/or administrative penalties, damages, fines, disgorgement, exclusion from participation in government programs, such as Medicare and Medicaid, injunctions, private “qui tam”“qui tam” actions brought by individual whistleblowers in the name of the government, or refusal to allow us to enter into government contracts, contractual damages, reputational harm, administrative burdens, diminished profits and future earnings, and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our results of operations.
Coverage, Pricing and Reimbursement
Sales of our products will depend, in part, on the extent to which our products, if approved, will be covered and reimbursed by third-party payors, such as government health programs, commercial insurance and managed healthcare organizations. These third-party payors are increasingly reducing reimbursements for medical products and services. The process for determining whether a third-party payor will provide coverage for a drug product typically is separate from the process for setting the price of a drug product or for establishing the reimbursement rate that a payor will pay for the drug product once coverage is approved. Third-party payors may limit
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coverage to specific drug products on an approved list, also known as a formulary, which might not include all of the approved drugs for a particular indication.
In order to secure coverage and reimbursement for any product candidate that might be approved for sale, we may need to conduct expensive pharmacoeconomic studies in order to demonstrate the medical necessity and
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cost-effectiveness of the product candidate, in addition to the costs required to obtain FDA or other comparable regulatory approvals. Whether or not we conduct such studies, our product candidates may not be considered medically necessary or cost-effective. A third-party payor’s decision to provide coverage for a drug product does not imply that an adequate reimbursement rate will be approved. Further, one payor’s determination to provide coverage for a product does not assure that other payors will also provide coverage for the product. Even if coverage is obtained from third party payors, reimbursement may not be sufficient to enable us to maintain price levels high enough to realize an appropriate return on our investment in product development.
The containment of healthcare costs has become a priority of federal, state and foreign governments, and the prices of drugs have been a focus in this effort. The U.S. government, state legislatures and foreign governments have shown significant interest in implementing cost-containment programs, including price controls, restrictions on reimbursement and requirements for substitution of generic products. Similar policies and laws have been adopted by many EU Member States. Adoption of price controls and cost-containment measures, and adoption of more restrictive policies in jurisdictions with existing controls and measures, could further limit our net revenue and results. Decreases in third-party reimbursement for our product candidate or a decision by a third-party payor to not cover our product candidate could reduce physician usage of the product candidate and have a material adverse effect on our sales, results of operations and financial condition.
In addition, in some foreign countries, the proposed pricing for a drug must be approved before it may be lawfully marketed. The requirements governing drug pricing vary widely from country to country. For example, the EU provides options for its Member States to restrict the range of medicinal products for which their national health insurance systems provide reimbursement and to control the prices of medicinal products for human use. A Member State may approve a specific price for the medicinal product or it may instead adopt a system of direct or indirect controls on the profitability of the company placing the medicinal product on the market. For example, in France, effective access to the market assumes that our future products will be supportedapproved for use by the hospital (through an agreement for local communities) ora ministerial order) and reimbursed by social security. The price of medications is negotiated with the Economic Committee for Health Products, or CEPS. There can be no assurance that any country that has price controls or reimbursement limitations for pharmaceutical products will allow favorable reimbursement and pricing arrangements for any of our product candidates. Historically, products launched in the EU do not follow price structures of the United States and generally tend to be significantly lower.
Healthcare Reform and Subsequent Legislation
In March 2010, President Obama enactedsigned the ACA, which hascontinues to have the potential to substantially change healthcare financing and delivery by both governmental and private insurers, and significantly impact the pharmaceutical and biotechnology industry. The ACA has and will continue to impact existing government healthcare programs and will result in the development of new programs.
Among the ACA’s provisions of importance to the pharmaceutical and biotechnology industries, in addition to those otherwise described above, are the following:
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We anticipate that, absentThe ACA is intended to further legislative changes, the ACA will result inexert additional downward pressure on coverage and the price that we receive for any approved product in the United States, and could seriously harm our business. Any reduction in reimbursement from Medicare and other government programs may result in a similar reduction in payments from private payors. The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability, or commercialize our product candidates, if approved. In addition, it is possible that there will be further legislation or regulation that could change parts of the ACA that affect public and private healthcare coverage. Those changes could harm our business, financial condition, and results of operations.
Other legislative changes have been proposed and adopted in the United States since the ACA was enacted. On August 2, 2011, the Budget Control Act of 2011 among other things, created measures for spending reductions by Congress. A Joint Select Committee on Deficit Reduction, tasked with recommending a targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021, was unable to reach required goals, thereby triggering the legislation’s automatic reduction to several government programs. This includes aggregate reductions to Medicare payments to providers of 2% per fiscal year, which started in April 2013. On January 2, 2013, President Obama signed into law the American Taxpayer Relief Act of 2012, or the ATRA, which, among other things, also reduced Medicare payments to several providers, including hospitals, imaging centers and cancer treatment centers, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years. Further, in January 2017, President Trump signed an Executive Order directing federal agencies with authorities and responsibilities under the ACA to waive, defer, grant exemptions from, or delay the implementation of any provisions of the ACA that would impose a fiscal or regulatory burden on states, individuals, healthcare providers, health insurers, or manufacturer of pharmaceutical products. Congress may also consider
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subsequent legislation to replace elements of the ACA that are repealed.repealed or to enhance the coverage and operation of the ACA. As a result, the full impact of the ACA, any law repealing and/or replacing elements of it, and the political uncertainty surrounding any repeal or replacement legislation remains unclear.
These initiatives recently culminated in the enactment of the Inflation Reduction Act, or IRA, in August 2022, which, among other things, will allow the U.S. Department of Health and Human Services, or HHS, to negotiate the selling price of certain biologics that CMS reimburses under Medicare Part B and Part D, although this will only apply to high-expenditure single-source biologics that have been approved for at least 11 years. The negotiated prices, which will first become effective in 2026, will be capped at a statutory ceiling price representing a significant discount from average prices to wholesalers and direct purchasers. Also, beginning in October 2023, the law will penalize manufacturers that increase prices of Medicare Part B and Part D drugs at a rate greater than the rate of inflation. In addition, the law eliminates the “donut hole” under Medicare Part D beginning in 2025 by significantly lowering the beneficiary maximum out-of-pocket cost through a newly established manufacturer discount program. The IRA also extends enhanced subsidies for individuals purchasing health insurance coverage in ACA marketplaces through plan year 2025. The IRA permits the Secretary of HHS to implement many of these provisions through guidance, as opposed to regulation, for the initial years. For that and other reasons, it is currently unclear how the IRA will be effectuated, and while the impact of the IRA on the biotechnology industry cannot yet be fully determined, it has the potential to be significant.
Additional Regulation
In addition to the foregoing, state and federal laws regarding environmental protection and hazardous substances, including the Occupational Safety and Health Act, the Resource Conservancy and Recovery Act and the Toxic Substances Control Act, affect our business. These and other laws govern our use, handling and disposal of various biological, chemical and radioactive substances used in, and wastes generated by, our operations. If our operations result in contamination of the environment or expose individuals to hazardous substances, we could be liable for damages and governmental fines. We believe that we are in material compliance with applicable environmental laws and that continued compliance therewith will not have a material adverse effect on our business. We cannot predict, however, how changes in these laws may affect our future operations.
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European Union Drug Development
InSimilarly to the U.S., pharmaceutical product development in the EU our future product candidatestypically involves preclinical laboratory and animal tests, the submission to the applicable regulatory agency of a Clinical Trial Application (CTA), as well as appropriate filings with Ethics Committees, before clinical testing may alsocommence.
Analogously as to the U.S., clinical trials that are deployed to support marketing authorization application are typically conducted in three sequential phases, but the phases may overlap or be subject to extensive regulatory requirements. Ascombined.
On January 31, 2022, Regulation EU No 536/2014 (CTR) became fully applicable in the United States, medicinal products can only be marketed ifEU. The CTR established a marketing authorization fromcentralized application procedure where one of the competent regulatory agencies has been obtained.
Similar to the United States, the various phasesNational Competent Authorities (NCA) ofpre-clinical and clinical research in the European Union are subject to significant regulatory controls. Although the EU Clinical TrialsMember States where the trial is to be deployed takes the lead in reviewing certain aspects of the application, while the other NCAs have a lesser involvement than they had under the previous regime established by Directive 2001/20/EC has sought to harmonize(CTD). The CTD indeed introduced the EU clinical trials regulatory framework, setting out commonfirst set of harmonized rules for the control and authorization ofon clinical trials in the EU but resulted in a patchwork of different national regimes. The CTR was adopted with a view to introducing a more uniform set of the rules across the EU Member States have transposed and appliedfor the provisions of the Directive differently. This has led to significant variations in the Member State regimes. To improve the current system, a new Regulation No. 536/2014 on clinical trials on medicinal product candidates for human use, which will repeal Directive 2001/20/EC, was adopted on April 16, 2014 and published in the European Official Journal on May 27, 2014. The new Regulation aims at harmonizing and streamlining the clinical trials authorization process, simplifying adverse event reporting procedures, improving the supervision of clinical trials,trials. Such authorization still involves NCAs and increasing their transparency. The new Regulation entered into force on June 16, 2014 and was set to apply not earlier than May 28, 2016. Based on announcementsEthics Committees of the European Medicines Agency, it is now expected that the mentioned Regulation will not enter into force before October 2018. Until then the Clinical Trials Directive 2001/20/EC will continue to apply. In addition, the transitional provisions of the new Regulation offer, under certain conditions, the clinical trial sponsors the possibility to choose between the requirements of the Directive and the Regulation for a limited amount of time.
Under the current regime, before a clinical trial can be initiated it must be approved in each of the EU Member States where the trial is to be conductedconducted. However, the relevant procedures have now been streamlined with a view to facilitating a swifter and more seamless authorization and deployment of multi-center trials occurring in more than one EU Member State. More in particular, the CTR allows sponsors to rely on one single submission for CTAs regardless of the number of EU Member States where the trial takes place and based on a single harmonized application.
Furthermore, under the CTR, deadlines for regulatory approvals are shortened with a view to accelerating the authorization process. The CTR also established an EU Portal which is designed to act as a single entry point for submission of data and information relating to clinical trials. The CTD will continue to apply in parallel to the CTR until January 30, 2025 to certain trials only. From January 31, 2025 onwards, only the CTR will apply, and all ongoing clinical trials that are under the regime of the CTD and expected to be ongoing after January 30, 2025 need to be transitioned to the legal framework of the CTR by two distinct setsmeans of bodies: the National Competent Authority, or NCA, and one or more Ethics Committees, or ECs. Clinical Trials Information System (CTIS).
Under the current regime all suspected unexpected serious adverse reactions,CTR, NCAs may order the temporary halt or SUSARs, to the investigational productpermanent discontinuation of a clinical trial at any time or impose other sanctions if they believe that occur during the clinical trial haveis not being conducted in accordance with applicable requirements or presents an unacceptable risk to the clinical trial patients. An Ethics Committee may also require the clinical trial to be reportedhalted, either temporarily or permanently, for failure to comply with the NCA and ECsapplicable requirements, or may impose other conditions.
After completion of the Member State where they occurred as wellrequired clinical testing, as in the European safety database, EudraVigilance.United States, an application for a marketing authorization is prepared and submitted to the EMA (or NCA in case of a purely national authorization procedure).
European Union Drug Review and ApprovalEU Marketing Authorization
In the EU, medicinal products can only be commercialized after obtaining a Marketing Authorization, or MA. The same rules also apply in the EFTAEEA Member States (Norway, Iceland and Liechtenstein). There are two types of marketing authorizations:
Theauthorizations, namely: (i) the Community MA, which is issued by the European Commission through the Centralized Procedure, based on the opinion of the Committee for Medicinal Products for Human Use or CHMP,(CHMP) of the European Medicines Agency, or EMA, and which is valid throughout the entire territory of the EU. EEA; and
(ii) “national MAs,” which are issued by the competent NCAs and only cover their respective national territory.
The Centralized Procedure is mandatory for certain types of products, such as biotechnologynamely: medicinal products derived from certain biotechnology processes, orphan medicinal products, and medicinal products containing a new active substance indicated for the treatment of HIV/AIDS, cancer, neurodegenerative disorders, diabetes, auto-immuneautoimmune diseases and other autoimmune dysfunctions and viral diseases. The Centralized Procedure is also mandatory forso-called Advance Therapy Medicinal Products (or ATMPs). ATMPs, which comprise gene therapy, somatic cell therapy and tissue engineered products. In this regard, on May 28, 2014, the EMA issued a recommendation that Cellectis’ UCART19 be considered a
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gene therapy product under Regulation (EC) No 1394/2007 on ATMPs. The Centralized Procedure is optional for other products containing a new active substance not yet authorized in the EEA, or for products that are deemed to constitute a significant therapeutic, scientific or technical innovation or which are in the interest of public health in the EU. Under the Centralized Procedure, the CHMP serves as the scientific committee that renders opinions about the safety, efficacy and quality of human products on behalf of the EMA. The CHMP is composed of experts nominated by each Member State’s national drug authority, with one of them appointed to act as Rapporteur for theco-ordination of the evaluation with the possible assistance of a further member of the Committee acting as aCo-Rapporteur. The CHMP has 210 days to adopt an opinion as to whether a marketing authorizationMA should be granted. The process usually takes longer as
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additional information is requested, which triggers clock-stopsclock- stops in the procedural timelines. Based on the CHMP’s opinion the European Commission will adopt a decision on the granting of the marketing authorization. In case of ATMPs, the EMA’s Committee for Advanced Therapies, a multidisciplinary committee of expertsCHMP must consult with the CAT on ATMPs, will prepare a draft opinion which will be submittedany scientific assessment necessary to the CHMP before the latter adoptsdraw up its finalscientific opinion.
Under the above-described procedure,procedures, before granting the MA, the EMA makesrelevant authorities make an assessment of the risk-benefit balance of the product on the basis of scientific criteria concerning its quality, safety and efficacy.
EU Adaptive Pathways
The EMA has an adaptive pathways approach which allows for early and progressive patient access to a medicine in cases of high medical need. To achieve this goal, several approaches are envisaged including for example identifying small populations with severe disease where a medicine’s benefit-risk balance could be favorable or making more use of real-world data where appropriate to support clinical trial data. The adaptive pathways concept applies primarily to treatments in areas of high medical need where it is difficult to collect data via traditional routes and where large clinical trials would unnecessarily expose patients who are unlikely to benefit from the medicine. The approach builds on regulatory processes already in place within the existing EU legal framework. These include: scientific advice; compassionate use; the conditional MA; patient registries and other pharmacovigilance tools that allow collection of real-life data and development of a risk-management plan for each medicine.
A conditional MA may be granted prior to the submission of comprehensive clinical data if the benefit of the immediate availability on the market of the product is deemed to outweigh the risk inherent in the fact that additional data are still required. In emergency situations, a MA for such medicinal products may be granted also where comprehensive pre-clinical or pharmaceutical data have not been provided. Under this procedure a MA can be granted as soon as sufficient data becomes available to demonstrate that the drug’s benefits outweigh its risks, with safeguards and controls in place post-authorisation. This procedure can also be combined with a rolling review of data during the development of a promising medicine, to further expedite its evaluation. Conditional MAs are typically subject to obligations that are reviewed annually. These include the obligation to complete ongoing studies, or to conduct new studies, with a view to confirming that the risk-benefit balance is favourable. Conditional MAs are valid for one year, renewable.
EMA PRIME Scheme
The EMA launched its PRIME regulatory initiative to enhance support for the development of therapies that target an unmet medical need. The initiative focuses on drugs that may offer a major therapeutic advantage over existing treatments, or benefit patients with no treatment options. These therapies are considered priority medicines within the EU. Through PRIME, the EMA offers early, proactive and enhanced support to drug developers to optimize the generation of robust data on a therapy’s benefits and risks and enable accelerated assessment of drug applications.
Post-approval Requirements in the EU
Following approval, the EMA, or the NCAs, as applicable, may impose certain post-approval requirements related to a product such obligation to perform post-authorization efficacy studies (PAES) or post-authorization safety studies (PASS) imposed as conditions to the MA, or other Risk Minimization Measures (RMMs), such as educational programs or controlled access programs, which may sometimes vary from one EU Member State to another. Moreover, if a company obtains original approval for a product via an accelerated approval pathway, the company will be typically required to conduct a post-marketing confirmatory trial to verify and describe the clinical benefit in support of full approval. An unsuccessful post-marketing study or failure to complete such a study could result in the withdrawal of the MA for a product.
Moreover, NCAs closely regulate the marketing and promotion of approved products, including standards and regulations for direct-to-consumer advertising (which is prohibited in the EU for prescription products), off-label promotion, industry-sponsored scientific and educational activities and promotional activities involving the Internet. Furthermore, approved products may be marketed only for the approved indications and in accordance with the provisions of the approved label. Changes to some of the conditions established in an approved application, including changes in indications, labeling, or manufacturing processes or facilities, may require a submission to and approval by the European Commission, or by the NCA, as applicable.
In addition, adverse event reporting and submission of periodic reports is required following marketing approval. Either the European Commission, or NCAs, as applicable, may also require post-marketing testing, known as Phase 4 testing, a risk evaluation and mitigation strategy, and surveillance to monitor the effects of an approved product or place conditions on an approval that could restrict the distribution or use of the product. In addition, quality control as well as the manufacture, packaging, and labeling procedures must continue to conform to cGMPs after approval. Drug and biological product manufacturers and certain of their subcontractors are subject to periodic unannounced inspections during which the inspectors audit manufacturing facilities to assess compliance with cGMPs. MAs may be suspended or withdrawn if, for example, the MA holder fails to comply with regulatory standards, if it encounters problems following initial marketing, or if previously unrecognized problems are subsequently discovered. Moreover, stringent rules have been introduced in the EU to fight medicine falsifications and to ensure that the trade in medicines is subject to rigorous controls.
Furthermore, EU harmonized rules prohibit gifts, pecuniary advantages or benefits in kind to Health Care Professionals (HCPs) unless they are inexpensive and relevant to the practice of medicine or pharmacy. Similarly, strict rules apply to hospitality at sales promotion events. Based on these rules, a body of industry guidelines and sometimes national laws in force in individual EU Member States has been introduced to fight improper payments or other transfers of value to HCPs, and in general inducements that may have a broadly promotional character. Historically, pharmaceutical companies have been the target of anti-corruption and similar investigations, as well as of wide media attention, sometimes resulting in significant penalties, image and other costs for such companies.
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Finally, very stringent data privacy requirements apply in the EU. In particular, Regulation (EU) 2016/679 (GDPR) requires that personal data only be collected for specified, explicit and legal purposes, and the data may then only be processed in a manner consistent with those purposes. Personal data collected and processed must be adequate, relevant and not excessive in relation to the purposes for which it is collected and processed, it must be held securely, not transferred outside of the EEA (unless certain steps are taken to ensure an adequate level of protection), and must not be retained for longer than necessary for the purposes for which it was collected. The GDPR also requires companies processing personal data to implement adequate technical measures in order to ensure the most appropriate level of security which may vary depending on different factors such as the categories of processed personal data, the state of the art, the costs of implementation and the nature, scope, context and purposes of processing as well as the risk of varying likelihood and severity for the rights and freedoms of natural persons. In addition, the GDPR requires companies processing personal data to take certain organizational steps to ensure that they have adequate records, policies, security, training and governance frameworks in place to ensure the protection of data subject rights, including as required to respond to complaints and requests from data subjects. For instance, the GDPR requires companies to make detailed disclosures to data subjects, requires disclosure of the legal basis on which personal data is processed, provides for conditions under which a valid consent for processing can be obtained, requires the appointment of a data protection officer where sensitive personal data (e.g., health data) is processed on a large scale, imposes mandatory data breach notification throughout the EEA and imposes additional obligations when contracting with service providers or partners. In addition, to the extent a company processes, controls or otherwise uses “special category” of personal data (including patients’ health or medical information, genetic information and biometric information), more stringent rules apply, further limiting the circumstances and the manner in which a company is legally permitted to process that data.
Data Exclusivity And Market Exclusivity in the EU
In the EU, new products authorized for marketing (i.e., reference products) qualify for eight years of data exclusivity and an additional two years of market exclusivity upon marketing authorization. The data exclusivity period prevents generic applicants from relying on thepre-clinical and clinical trial data contained in the dossier of the reference product when applying for a generic marketing authorization in the EU during a period of eight years from the date on which the reference product was first authorized in the EU. The market exclusivity period prevents a successful generic applicant from commercializing its product in the EU until ten years have elapsed from the initial authorization of the reference product in the EU. Theten-year market exclusivity period can be extended to a maximum of eleven years if, during the first eight years of those ten years, the marketing authorization holder obtains an authorization for one or more new therapeutic indications which, during the scientific evaluation prior to their authorization, are held to bring a significant clinical benefit in comparison with existing therapies.
The EU also provides opportunities for market exclusivity. For example,Moreover, products receiving orphan designation in the EU can receive ten years of market exclusivity, during which time no similar medicinal product for the same indication may be placed on the market. An orphan product can also obtain an additional two years of market exclusivity in the EU for pediatric studies. No extension to any supplementary protection certificate can be granted on the basis of pediatric studies for orphan indications.
The criteria for designating an “orphan medicinal product” in the EU are similar in principle to those in the United States. Under Article 3 of Regulation (EC) 141/2000, a medicinal product may be designated as orphan if (1) it is intended for the diagnosis, prevention or treatment of a life-threateninglife- threatening or chronically debilitating condition; (2) either (a) such condition affects no more than five in 10,000 persons in the EU when the application is made, or (b) the product, without the benefits derived from orphan status, would not generate sufficient return in the EU to justify investment; and (3) there exists no satisfactory method of diagnosis, prevention or treatment of such condition authorized for marketing in the EU, or if such a method exists, the product will be of significant benefit to those affected by the condition, as defined in Regulation (EC) 847/2000. Orphan medicinal products are eligible for financial incentives such as reduction of fees or fee waivers and are, upon grant of a marketing authorization, entitled to ten years of market exclusivity for the approved therapeutic indication.waivers. The application for orphan drug designation must be submitted before the application for marketing authorization.
The applicant will receive a fee reduction for the marketing authorization application if the orphan drug designation has been granted, but not if the designation is still pending at the time the marketing authorization is submitted. Orphan drug designation does not convey any advantage in, or shorten the duration of, the regulatory review and approval process.
The10-year market exclusivity may be reduced to six years if, at the end of the fifth year, it is established that the product no longer meets the criteria for orphan designation, for example, if the product is sufficiently profitable not to justify maintenance of market exclusivity. Additionally, marketing authorization may be granted to a similar product for the same indication at any time if:
EU Supplementary Protection Certificates
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Food Oversight Responsibilities Between USDA and FDA, Including Transgenic or Genetically Modified Organisms
In the UnitedEU, Supplementary Protection Certificates (SCPs) are available to extend a patent term for up to five years to compensate patent protection lost during regulatory review. Although all EU Member States must provide SPCs, SPCs must currently be applied for and granted on a country-by-country basis. On April 27, 2023, the FDAEuropean Commission issued proposals for a new EU regime for a unitary SPC complementing the unitary patent. If adopted, these new rules could introduce a centralized procedure for the grant of national SPCs, as well as a centralized examination procedure for the grant of a new unitary SPC.
Additional Protection for Pediatric Indications in the EU
In the EU, companies developing a new medicinal product must agree to a PIP with the EMA and must conduct pediatric clinical trials in accordance with that PIP, unless a deferral or waiver is granted by the USDA Food Safety Inspection Service,EMA on request by the applicant (e.g., because the relevant disease or FSIS,condition occurs only in adults). The PIP requirement also applies when a MA holder intends to add a new indication, pharmaceutical form or route of administration for a medicinal product that has already been authorized. The MA application for the product must include the results of pediatric clinical trials conducted in accordance with the PIP, unless a waiver applies, or a deferral has been granted, in which case the pediatric clinical trials must be completed at a later date. Once all the studies and measures agreed have been conducted in accordance with the PIP, products are primarily responsibleeligible for overseeing food regulation and safety, although as many as fifteen federal agencies also play a role in U.S. food regulation, including several other agencies within USDA.
FSIS is responsible for ensuring the safety, wholesomeness, and correct packaging and labelingsix month extension of the nation’s commercial supplyprotection under a supplementary protection certificate – or “SPC”—(if any is in effect at the time of meat, poultry, eggapproval) or, in the case of orphan medicinal products, and catfish. The agency’s main authorizing statutes area two year extension of the Poultry Products Inspection Act, Federal Meat Inspection Act, Agricultural Marketing Act, and the Egg Products Inspection Act. To carry out its mission, FSIS deploys almost 8,000 inspection program personnelorphan market exclusivity. This pediatric reward is granted subject to the more than 6,000 establishments around the country to ensure food manufactures are following the proper procedures to reduce the risks of food borne illnesses such asSalmonella, Escherichia coli, Listeria monocytogenes, andCampylobacter.
USDA has regulatory jurisdiction over transgenic crops through the Animal and Plant Health Inspection Service, or APHIS. Under the Plant Protection Act, USDA requires anyone who wishes to import, transport interstate, or plant a “regulated article” to apply for a permit or notify APHISspecific conditions. These conditions include that the introduction will be made. Regulated articles are defined as “any organism which has been altered or produced through genetic engineering [...] which USDA determines is a plant pest or has reason to believe is a plant pest.” The petition process can be a multi-year processapplicant demonstrates having complied with all the measures contained in the PIP, that varies based on a numberthe summary of factors, including APHIS’ familiarityproduct characteristics, and if appropriate the package leaflet, reflects the results of studies conducted in compliance with similar products, the typesuch PIP, and scope of the environmental review conducted, and the number and types of public comments received. APHIS conducts a comprehensive science-based review of the petition to assess, among other things, plant pest risk, environmental considerations pursuant to the National Environmental Policy Act of 1969, or NEPA, and any potential impact on endangered species. If, upon the completion of the review, APHIS grants the petition,that the product is no longer deemed a “regulated article” and the petitioner may commercialize the product, subject to any conditions set forthauthorized in all EU Member States. The rewards for conducting studies in the decision. If APHIS does not determinepediatric population can be granted irrespective of the productfact that the information generated in compliance with the agreed PIP fails to benon-regulated,lead to the productauthorization of a pediatric indication.
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EU Pharmaceutical Reform
On April 26, 2023, the European Commission issued its proposal for a revision of several legislative instruments related to medicinal products, including orphan and pediatric products. Amongst other things, the proposal aims to revise, and potentially reduce, the duration of the data and market exclusivity, revise the marketing authorization procedure, broaden the possible post-authorization conditions, extend the reasons for a refusal of a marketing authorization, introduce more restrictive PIP waivers, increase the possible PIP obligations, etc. The proposed revisions must be adopted by the European Parliament and European Council before they can become law. The proposals may be subject to extensive regulation, including permitting requirements for import, handling, interstate movement,substantially revised before adoption, and release into the environment, and inspections.
Calyxt has submitted petition to APHIS for six of our product candidates to date: high oleic soybeans, high oleic/low linoleic soybeans, cold storable potatoes, reduced browning potatoes, powdery mildew resistant wheat, and improved quality alfalfa. Calyxt has received confirmation from APHIS for all six product candidates that APHIS does not consider such product candidate to be a “regulated article” under the Plant Protection Act. There can bethere is no guarantee of the timing or success in obtaining nonregulated status from APHIS for other crops developed by Calyxt or that the governing regulations will not change. Government regulations, regulatory systems, and the policies that influence them vary widely among jurisdictions and change often.
As part of its National Organic Program, USDA also regulates GMOs, or genetically modified (“GM”) foods, to the extent that food manufacturers can use the “USDA Organic” label on their products. The use of genetic engineering, or GMOs, is prohibited in USDA organic products. According to USDA, this means, for example, that an organic farmer cannot plant GMO seeds, an organic cow cannot eat GMO alfalfa or corn, and an organic soup producer cannot put any GM ingredients into its soup. To label products with the USDA organic seal, farmers and food processors must show they are not using GMOs and that they are protecting their products from contact with GMOs (along with other prohibited substances) from farm to table.will ultimately be adopted.
FDA has jurisdiction to regulate more than 80 percent of the U.S. food supply. It derives its regulatory power from the Federal Food, Drug, and Cosmetic Act (“FDCA”), which has been amended over time by several subsequent laws. FDA’s oversight of food safety and security is primarily carried out by its Center for Food Safety and Applied Nutrition (“CFSAN”). To execute its responsibilities, FDA has a team of 900 investigators and 450 analysts in the foods program who conduct inspections and collect and analyze product samples. FDA typically does not performpre-market inspection for foods. FDA also regulates ingredients, packaging, and
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labeling of foods, including nutrition and health claims and the nutrition facts panel. Foods are typically not subject to premarket review and approval requirements, with limited exceptions.
For its part, FDA regulates foods made with GMOs under its 1992 “Statement of Policy: Foods Derived from New Plant Varieties.” Under this policy, FDA regulates foods derived from GM plant varieties consistent with the framework fornon-GM foods. In most cases, foods derived from GM plant varieties are not subject to premarket review and approval. In some cases, however, such foods will be considered to contain “food additives” that require premarket review and approval. FDA offers a voluntary consultation process to determine whether foods derived from GM plant varieties will be subject to these more stringent regulatory requirements.
FDA does not currently require manufacturers to label foods made with GMOs as such, but permits voluntary labeling pursuant to a guidance document finalized in November 2015. The topic of GMO use and labeling has been of significant public interest; as political forces continue to work, and there can be no guaranty that it will not change in the future. Additionally, three states have passed, and nearly half of U.S. states have considered, mandatory GMO labeling laws to date.
Other Regulatory Matters
French Pharmaceutical Company Status
To date, we do not have the status of pharmaceutical establishment, and therefore, cannot either manufacture the product candidates we develop or directly consider their marketing. Obtaining the pharmaceutical establishment license, either as distributor, operator, importer or as manufacturer, requires the submission of a request file specific to each of the mentioned qualifications with theAgence nationale de sécurité du médicament et des produits de santé (ANSM), which only grants it after review of this file and evaluation, usually after verification that the company has adequate premises, the necessary personnel and an adapted structure with satisfactory procedures for carrying out the proposed pharmaceutical activities.
We currently entrust CMOs and Cellectis Biologics Inc., for which the status pharmaceutical establishment is not yet required, with the manufacturing of clinical batches for certain product candidates. Import and intendcertification into the European Union will continue to continue relying on CMOs for the production of the first commercial batches. We may consider internalizing production once our first product candidate is approved by regulatory authorities.be done via CMOs.
Legal Proceedings
From time to time, we may be involved in various claims and legal proceedings relating to claims arising out of our operations. WeOther than as set forth in "Item 8.A—Financial Information—Consolidated Statements and Other Financial Information—Legal Proceedings", we are not currently a party to any legal proceedings that, in the opinion of our management, are likely to have a material adverse effect on our business. Regardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.
In 2015,Cellectis, or Cellectis S.A. had two, is a société anonyme, or S.A., organized under the laws of the French subsidiaries (Cellectis Bioresearch and Ectycell) and three U.S. subsidiaries (Calyxt, Inc., Cellectis, Inc. and Cellectis Bioresearch Inc.).Non-controlling shareholders held a 24.5% interest in Cellectis Bioresearch, Cellectis Bioresearch Inc. and Ectycell until May 18, 2015.Republic.
The following internal reorganization was completed in 2015:
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Following the reorganization andGroup Structure as of December 31, 2016, the two remaining subsidiaries, Cellectis, Inc. and Calyxt, Inc., were wholly-owned by Cellectis.2023
Until July 25, 2017, Calyxt, Inc. was a wholly-owned subsidiary of Cellectis. On July 25, 2017, Calyxt closed its IPO including the full exercise of the underwriter’s over-allotment option with $64.4 million in gross proceeds. Cellectis purchased $20.0 million of shares in the course of the IPO, which is included in the net proceeds that Calyxt received.
As of December 31, 2017, Cellectis S.A. owns 100% of Cellectis, Inc. and approximately 79.7% of Calyxt’s outstanding shares of common stock.
Subsidiary Name | Jurisdiction of Incorporation | Ownership & Voting Interest Held By Cellectis S.A. |
Cellectis, Inc. | Delaware | 100% (held directly) |
Cellectis Biologics, Inc. | Delaware | 100% (held indirectly through Cellectis, Inc.) |
See “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions—Transactions with subsidiaries
Cellectis S.A. leases a 3,0645,846 square-meter facility in Paris for administrative and research and development activities. The lease commenced on April 1, 2011 and has a10-year initial term expiringthat expires on April 1, 2021.November 30, 2028. This property includes, our approximately 14,000 sq. ft. in-house manufacturing facility, which is dedicated to the production of certain raw and starting material for clinical supply, with the potential to supply commercial raw and starting material.
Cellectis, Inc. leases a 12,052 square-foot24,375 square feet facility in New York, New York for administrative and research and development activities,activities. The lease, which commenced on March 30, 2015, and has a66-month initial term expiringthat expires on September 30, 2020.March 1, 2031 (128 months from July 1st, 2020). In addition, in March 2016, Cellectis Inc. entered intoJune 2022, a lease agreementpartial sublease of Cellectis’ New York commercial facility was signed with Sanavia for a 26,928 square-foottotal square feet of 3,562.
Cellectis Biologics, Inc. leases an 82,783 square feet facility in Montvale, New Jersey. As ofRaleigh, North Carolina. The lease, which commenced in April 2019 has a term that expires on December 31, 2017, Montvale2034. We completed construction of our manufacturing facility at this property in 2021, which is not operational and we intend to discontinue this lease before its scheduled termination in September 2026.
Calyxt Inc. leases a 17,485 square-foot facility in New Brighton, Minnesota, which commenced operations on October 15, 2012. The lease for this facility expires on May 31, 2018.
In March 2016, Calyxt acquired10-acres in 2 parcels in Roseville (MN). A headhouse and a greenhouse were built on the Roseville property and have been in operation since September 2016.
In September 2017, Calyxt consummated a sale-leaseback transaction, including a Lease Agreement dated September 6, 2017, with a third party with respect to Calyxt’s lease of certain real property and improvements located in Roseville, Minnesota, for a term of twenty years, with options to extend the term for up to an additional twenty years. Pursuantdedicated to the purchase agreement, Calyxt received approximately $7 million in connection with the saleproduction of the property. The property will be the new corporate headquarters for Calyxtclinical and the landlord is constructing abuilt-to-suit facility to be composed of a nearly 40,000 square-foot office and lab building, with greenhouses and outdoor research plots. The corporate headquarters are expected to be ready in the spring of 2018.commercial UCART products.
Under the Lease Agreement, Calyxt will initially pay annual base rent of $490,000 until the earlier of (i) the next day after issuance of a temporary certificate of occupancy or other permit to occupy the property by the City of Roseville and (ii) the next day after the certification of substantial completion executed by landlord’s architect or contractor confirming that the work to be done on the property has been substantially completed (such date, the “Initial Term Commencement Date”). On the Initial Term Commencement Date, Calyxt will pay an estimated annual base rent of 8% of the total project cost (“Annual Base Rent”) with scheduled increases in rent of 7.5% on the sixth, eleventh and sixteenth anniversaries of the initial term commencement date as well as on the first day of each Renewal Term (as defined in the Lease Agreement). Based on the initial cost of the project Calyxt will pay an estimated annual base rent of approximately $1,480 thousand.
The Lease Agreement is a net lease and the costs and expenses associated with the property are to be paid for by Calyxt. In consideration of, and as an inducement to, the landlord’s agreement to enter into the Lease Agreement, Cellectis entered into a Lease Guaranty, whereby Cellectis guaranteed all of Calyxt’s obligations under the Lease Agreement. Cellectis’ guarantee of Calyxt’s obligations under the sale-leaseback transaction will terminate at the end of the second consecutive calendar year in which Calyxt’s tangible net worth exceeds $300 million, as determined in accordance with generally accepted accounting principles.
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On November 10, 2017, Calyxt agreed to indemnify Cellectis for any obligations incurred by Cellectis under the Lease Guaranty. This indemnification agreement will become effective at such time as Cellectis owns 50% or less of Calyxt’s outstanding common stock.
ITEM 4A. UNRESOLVED STAFF COMMENTS
Not applicable.
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ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
The following Operating and Financial Review and Prospects should be read in conjunction with our audited consolidated financial statements and related notes included elsewhere in this Annual Report. In addition to historical consolidated financial information, this discussion also contains forward-looking statements, based on current expectations and related to future events and our future financial performance, that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including but not limited to those set forth under “Risk Factors” and elsewhere in this Annual Report.
OverviewThis Annual Report contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act and as defined in the Private Securities Litigation Reform Act of 1995. See “Special Note Regarding Forward-Looking Statements”.
Financial Overview
The following selected statements of consolidated operations data for the years ended December 31, 2021, 2022 and 2023 and the selected statement of consolidated financial position data as of December 31, 2022 and 2023 have been derived from our audited consolidated financial statements included elsewhere in this Annual Report. Our audited consolidated financial statements have been prepared in accordance with International Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board, or IASB.
The audited consolidated financial statements for the years, and as of, December 31, 2021, 2022 and 2023 are presented in U.S. dollars, which differs from the functional currency of Cellectis S.A., which is the Euro.
The following selected consolidated financial data for the periods and as of the dates indicated are qualified by reference to and should be read in conjunction with our consolidated financial statements and related notes beginning on page F-1 of this Annual Report.
Our historical results for any prior period do not necessarily indicate our results to be expected for any future period.
|
| For the year ended December 31, |
| |||||||||||||
| 2021 |
|
| 2022 |
|
|
| 2023 |
| |||||||
| $ in thousands |
| ||||||||||||||
Revenues and other income |
|
| 38,597 |
|
|
|
| 25,725 |
|
|
|
| 9,193 |
| ||
Operating expenses |
|
|
|
|
|
|
|
|
|
|
| |||||
Cost of revenue |
|
| (1,844 | ) |
|
|
| (1,772 | ) |
|
|
| (737 | ) | ||
Research and development expenses |
|
| (117,840 | ) |
|
|
| (97,501 | ) |
|
|
| (87,646 | ) | ||
Selling, general and administrative expenses |
|
| (22,882 | ) |
|
|
| (17,494 | ) |
|
|
| (16,812 | ) | ||
Other operating income and expenses |
|
| 488 |
|
|
|
| 1,377 |
|
|
|
| (1,300 | ) | ||
Operating income (loss) |
|
| (103,481 | ) |
|
|
| (89,666 | ) |
|
|
| (97,302 | ) | ||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Financial gain (loss) |
|
| 6,731 |
|
| - |
|
| (8,935 | ) |
| - |
|
| (19,163 | ) |
|
|
|
|
|
|
|
|
|
|
|
| |||||
Income tax |
|
| - |
|
|
|
| (87 | ) |
|
|
| (371 | ) | ||
Income (loss) from continuing operations |
|
| (96,749 | ) |
|
|
| (98,688 | ) |
|
|
| (116,835 | ) | ||
Income (loss) from discontinued operations |
|
| (28,358 | ) |
|
|
| (15,345 | ) |
|
|
| 8,392 |
| ||
Net income (loss) |
|
| (125,107 | ) |
|
|
| (114,034 | ) |
|
|
| (108,443 | ) | ||
Attributable to shareholders of Cellectis |
|
| (114,197 | ) |
|
|
| (106,139 | ) |
|
|
| (101,059 | ) | ||
Attributable to non-controlling interests |
|
| (10,910 | ) |
|
|
| (7,894 | ) |
|
|
| (7,384 | ) | ||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Earnings per share attributable to shareholders of Cellectis (1) |
|
|
|
|
|
|
|
|
|
|
| |||||
Basic and diluted (2) |
|
| (2.55 | ) |
|
|
| (2.33 | ) |
|
|
| (1.77 | ) | ||
Number of shares used for computing |
|
|
|
|
|
|
|
|
|
|
| |||||
Basic and diluted (1) |
|
| 44,820,279 |
|
|
|
| 45,547,359 |
|
|
|
| 57,012,815 |
| ||
Other operating data |
|
|
|
|
|
|
|
|
|
|
| |||||
Adjusted Net Income (Loss) attributable to shareholders of Cellectis (3) |
|
| (101,700 | ) |
|
|
| (98,069 | ) |
|
|
| (93,973 | ) | ||
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Statement of Consolidated Financial Position Data
| As of December 31, |
| ||||||||||
| 2021 |
| 2022 |
|
| 2023 |
| |||||
| $ in thousands |
| ||||||||||
Current financial assets and Cash and cash equivalents |
|
| 186,135 |
|
|
| 97,697 |
|
|
| 203,815 |
|
Other assets |
|
| 195,941 |
|
|
| 163,519 |
|
|
| 130,456 |
|
Total assets |
|
| 382,076 |
|
|
| 261,216 |
|
|
| 334,270 |
|
Shareholders' equity |
|
| 236,474 |
|
|
| 125,941 |
|
|
| 84,695 |
|
Non current liabilities |
|
| 96,254 |
|
|
| 72,279 |
|
|
| 94,431 |
|
Current liabilities |
|
| 49,348 |
|
|
| 62,996 |
|
|
| 155,144 |
|
Total shareholders' equity and liabilities |
|
| 382,076 |
|
|
| 261,216 |
|
|
| 334,270 |
|
Reconciliation of Adjusted Net Income (Loss) attributable to shareholders of Cellectis to Net Income (Loss) attributable to shareholders of Cellectis
|
| For the year ended December 31, |
| |||||||||
| 2021 |
| 2022 |
|
| 2023 |
| |||||
|
| $ in thousands |
| |||||||||
Net Income (Loss) attributable to shareholders of Cellectis |
|
| (114,197 | ) |
|
| (106,139 | ) |
|
| (101,059 | ) |
Adjustment of non-cash stock-based compensation expense from continued operations: |
|
|
|
|
|
|
|
|
| |||
Research and development expenses |
|
| 9,381 |
|
|
| 4,098 |
|
|
| 3,952 |
|
Selling, general and administrative expenses |
|
| 2,113 |
|
|
| 1,945 |
|
|
| 1,281 |
|
Total non-cash stock-based compensation expense from continued operations |
|
| 11,493 |
|
|
| 6,043 |
|
|
| 5,233 |
|
Adjustment of non-cash stock-based compensation expense from discontinued operations |
|
| 1,625 |
|
|
| 4,132 |
|
|
| 3,859 |
|
Non-cash stock-based compensation expense attributable to non controlling interests |
|
| (621 | ) |
|
| (2,105 | ) |
|
| (2,006 | ) |
Adjusted Net Income (Loss) attributable to shareholders of Cellectis ** |
|
| (101,700 | ) |
|
| (98,069 | ) |
|
| (93,973 | ) |
** Non-IFRS financial measure. See "Note Regarding Use of Non-IFRS Financial Measures" for important information.
Overview
We are a clinical stage biotechnological company, employing our core proprietary technologies to developbest-in-class products based on gene-editing with a portfolio of allogeneic UCART product candidates in the emerging field of immuno-oncology. immuno-oncology, gene-edited hematopoietic stem and progenitor cells (“HSPC”) product candidates in other therapeutic indications.
Our UCART product candidates, based on gene-editedT-cells that express chimeric antigen receptors, or CARs, seek to harness the power of the immune system to target and eradicate cancers. We believe thatCAR-based immunotherapy is one of the most promising areas of cancer research, representing a new paradigm for cancer treatment. We are designing next-generation immunotherapies that are based on gene-edited CART-cells. Our gene-editing technologies allow us to create allogeneic CART-cells, meaning they are derived from healthy donors rather than the patients themselves. We believe that the allogeneic production of CART-cells will allow us to develop cost-effective,“off-the-shelf” “off-the-shelf” products andthat are capable of being stored and distributed worldwide. Our gene-editing expertise also enables us to develop product candidates that feature additional safety and efficacy attributes, including control properties designed to prevent them from attacking healthy tissues, to enable them to tolerate standard oncology treatments, and to equip them to resist mechanisms that inhibit immune-systemimmune- system activity. In addition to
Together with our focus on immuno-oncology, we are exploring the use ofusing, through our .HEAL platform, our gene-editing technologies in other therapeutic applications, as well as to develop healthier food products forHSC product candidates in genetic diseases. .HEAL is a growing population.new gene editing platform developed by Cellectis that leverages the power of TALEN® technology, to allow highly efficient gene inactivation, insertion and correction in HSPCs.
We currently conductAs from June 1, 2023 and the deconsolidation of Calyxt, we view our operations through twoand manage our business segments,in a single operating and reportable segment corresponding to the Therapeutics and Plants.segment. Our Therapeutics segment is mainly focused on the development of products in the field of immuno-oncology.immuno-oncology and monogenic diseases. Our former Plants segment focuses on applying our gene-editing technologiesis presented as assets held for sale as of December 31, 2022 and discontinued operations for the year-end periods ended December 31, 2023 and 2022. All tables referring to develop new generation plant products in the field of agricultural biotechnology through its own efforts or through alliances with other companies in the agricultural market.year-end period ended December 31, 2023 present Calyxt’s results over a five-month period from January 1, 2023 to May 31, 2023.
Since our inception in early 2000, we have devoted substantially all of our financial resources to research and development efforts. Our current research and development focuses primarily on our CART-cell immunotherapy and HSPC product candidates, including conducting the pre-clinical activities, and preparing to conduct clinical studies of our UCART product candidates, providing general and administrative support for these operations and protecting our intellectual property. In addition, by leveraging our plant-engineering platform and the transformative potential of gene editing, we aim to create food products with consumer health benefits, adaptations for climate change or nutritional enhancements that address the needs of a growing population.
We do not have any therapeutics products approved for sale and have not generated any revenues from immunotherapy or agricultural biotechnologytherapeutic product sales.
In February 2014, we entered into an alliance with Servier for the development of UCART19 and other product candidates directed at four additional molecular targets. In November 2015, we entered into an
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amendment to our initial collaboration agreement with Servier, which allowed for an early exercise of Servier’s option with respect to UCART19 and other product candidates. Pursuant to this amendment, Servier has exercised its option to acquire the exclusive worldwide rights to further develop and commercialize UCART19. In addition, Pfizer and Servier have entered into an exclusive global license and collaboration agreement under which Pfizer has obtained from Servier exclusive rights to develop and commercialize UCART19 in the United States. We entered into amendments to our collaboration agreements with each of Servier and Pfizer to facilitate this agreement between Servier and Pfizer. In connection with the entry into the amendment to the collaboration agreement, Servier made an upfront payment of $38.5 million, excluding taxes. As of December 31, 2017, Cellectis was2023, we were eligible to receive up to $1,064 million in potential option exercise fees, development clinical and sales milestones, in addition to royalties on sales and research and development costs reimbursements.
Our alliance with Pfizer, which commenced in June 2014, addresses the development of other CART-cell immunotherapies in the field of oncology. This strategic alliance is potentially worth up to $2.9 billion in payments by Pfizer to us, including an $80 million upfront payment and $2.8 billion in potential clinical and commercial milestone payments. In addition,payments pursuant to (i) the License, Development and Commercialization Agreement dated March 6, 2019 between Servier and Cellectis, as amended on March
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4, 2020 (the “Servier License Agreement”) of up to $410 million and (ii) the License Agreement dated March 8, 2019 between Allogene and Cellectis (the “Allogene License Agreement”) of up to $2.8 billion. Under the Allogene License Agreement, we invoice research and development costs assignedare eligible to receive tiered royalties on annual worldwide net sales of any products that are commercialized by Allogene that contain or incorporate, are made using or are claimed or covered by, our projects in common with Pfizer. Pfizer also purchased 10% of our then-outstanding equity in connection with this collaboration for €25.8 million. We believe that both of these strategic transactions position usintellectual property licensed to competeAllogene under the Allogene License Agreement at rates in the promising fieldhigh single-digit percentages. Under the Servier License Agreement, we are eligible to receive flat low double-digit royalties based on annual net sales of immuno-oncology and add additional clinical and financial resources to our programs.
We have also entered into research and development alliances with each of Cornell University and the MD Anderson Cancer Center. Pursuant to these strategic alliances, we collaborate with these two centers to accelerate the development of our lead product candidates UCART123, UCARTCS1, UCART22 and UCART38 in AML, BPDCN, multiple myeloma,B-cell andT-ALL, respectively. Under these agreements, we fund the research activities performed at Cornell University and the MD Anderson Cancer Center.
Our cash consumption is driven by our internal operational activities,commercialized products as well as our outsourced activities, including the preclinical activities and the manufacturing activities of the requisite raw materials for the manufacturing of UCART123 and UCART22, UCARTCS1, the technology transfer of UCART22 and UCARTCS1 process to CELLforCURE, and the GMP manufacturing of UCART123 and UCART22 at CELLforCURE In addition, we incurred significant annual payment anda low double-digit royalty expenses related to ourin-licensing agreements with different parties including Institut Pasteur, LifeTechnologies and University of Minnesota. In addition, in 2017, we initiated our clinical studies at Weill Cornell and the MD Anderson Cancer Center leading to additional cash burn through payments to the clinical research centers, the Contract Research Organisation involved and the companies involved in the logistics and testing of the clinical sample material.
In addition to our cash generated by operations (including payments under our strategic alliances), we have funded our operations primarily through private and public offerings of our equity securities, grant revenues,on certain development milestone payments received under intellectual property licenses, and reimbursementsby Servier.
As of research tax credits. Our ordinary shares have traded on the Euronext Growth market of Euronext in Paris since February 7, 2007. In March 2015,December 31, 2023, we completed our U.S. initial public offering of 5,500,000 American Depositary Shares on the Nasdaq Global Market for gross proceeds of $228.2 million. On July 25, 2017, Calyxt completed an initial public offering of its common stock on the Nasdaq, selling an aggregate of 8,050,000 shares of common stock at a price of $8.00 per share (including 1,050,000 shares of common stock pursuantwere eligible to the exercise by the underwriters of their option to purchase additional shares). Calyxt received net proceeds of approximately $58.0 million, after deducting underwriting discounts and commissions and offering expenses. As part of the Calyxt IPO, Cellectis purchased 2,500,000 shares of common stock for a value of $20.0 million, which is included in the net proceeds that Calyxt received. In 2015, 2016 and 2017, we received respectively $52.0 million, $27.3 million and $8.1 million inreceive payments pursuant to the PfizerAZ JRCA of an option exercise fee and development, regulatory and sales-related milestone payments, ranging from $70 million up to $220 million, per each of the 10 candidate products covered by the AZ JRCA, plus tiered royalties, which may range from mid-single to low-double digits, based on the sale of Licensed Products.
For the twelve-month period ended December 31, 2023, we mainly derived our Therapeutics revenues from the research collaboration and exclusive license agreement with Iovance, and from other license agreements for the use of our TALEN technology.
On September 15, 2022, Servier collaborations.sent to us and Allogene a notice of discontinuation of its involvement in the development of the CD19 Products. See “Risk Factors— Risks Related to Our Reliance on Third Parties—Servier’s discontinuation of its involvement in the development of CD19 Products and related disagreements may have adverse consequences.”
We are currently sponsoring clinical studies with respect to three proprietary Cellectis UCART product candidates at eight sites for the AMELI-01 Study, at sixteen sites for the BALLI-01 Study, and at nine sites for the NatHaLi-01 Study as follow, each as described above under “Item 4. Information on the Company—B. Business Overview—UCART Pipeline.”
For a discussion of our operating capital requirements and funding sources, please see “Liquidity and Capital Resources” below.
Financial Operations Overview
We have incurred net losses in nearly each year since our inception. Substantially all of our net losses resulted from costs incurred in connection with our development programs and from selling, general and
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administrative expenses associated with our operations. As we continue our intensive research and development programs, we expect to continue to incur significant expenses and may againexpect to incur operating losses infor near-term future periods. We anticipate that such expenses will increase substantially if and as we:
We do not expect to generate material revenues from sales of our therapeutic product candidates unless and until we successfully complete development of, and obtain marketing approval for, one or more of our product candidates, which we expect will take a number of years and is subject to significant uncertainty. Accordingly, we anticipate that we will need to raise additional capital prior to completing clinical development of any of our therapeutic product candidates. Until such time that we can generate substantial revenues from sales of our product candidates, if ever, we expect to finance our operating activities through a combination of milestone payments received pursuant to our strategic alliances,collaboration and license agreements, equity offerings, debt financings, government or other third-party funding and collaborations, and licensing arrangements. However, we may be unable to raise additional funds or enter into such arrangements when needed on favorable terms, or at all, which would have a negative impact on our financial condition and could force us to delay, limit, reduce or terminate our development programs or commercialization efforts or grant to othersother rights to develop or market product candidates that we would otherwise prefer to develop and market ourselves. Failure to receive additional funding could cause us to cease operations, in part or in full.
Our consolidated financial statements for 2015, 20162021, 2022 and 20172023 have been prepared in accordance with International Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board, or IASB.
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Financial Operations Overview
Revenues and Other Income
RevenuesCollaboration agreements and licenses
We currently derive substantially all of our therapeutics revenues from milestone payments pursuant to our collaboration agreements with Pfizer and Servier, patent licensing arrangements and royalties on licensed technologies. OurFor the year ended December 31, 2023, substantially all of our revenue was derived from the research collaboration and exclusive license agreement with Iovance, and from other license agreements provide fornon-refundable upfront payments that we received upon execution the use of our TALEN technology
At the date of the relevant agreement, milestoneAnnual Report, no revenues were recognized under the AZ JRCA.
Upfront payments that we are entitled to receive when the triggering event has occurred,for research and development cost reimbursements thatprograms are deferred as a contract liability and recognized overwhen the periodperformance obligation is satisfied, as the customer receives the benefits of these servicesthe services. When a specific research and royalty payments. development program is put on hold, as agreed by our customer as part of a joint executive committee decision, the revenue recognition continues to be deferred until research and development efforts resume. If the joint decision is to abandon the project, deferred revenue is fully recognized.
The triggering event for a milestone payment may be the receipt of favorable scientific results achieved by us or another party to the arrangement, regulatory approval,approvals, or the marketing of products developed pursuant tounder the agreement. arrangement.
Research and development costs reimbursements are recognized on a time and material basis over the length of the specific research and development project.
Royalties are based on sales of licensed products or technologies. They are recognized in accordance with the terms of the licensing agreement when salesperformance obligation can be determined reliably and there is reasonable assurance that the receivables from outstanding royalties will be collected.
Our ability to generate product revenues and become profitable depends upon our and our collaborators’ ability to successfully develop and commercialize products. If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and be forced to reduce our operations.
Other IncomeSales of products and services
Government Grants
DueRevenues on sales of products are recognized once the control over the delivered products is transferred to the innovative nature of our product candidate development programs, we have benefited from a certain number of sources of assistance from the French government or local public authorities, intended to finance our researchcustomer. Sales include shipping and development efforts or the recruitment of specific personnel. Government grants that offset expenses that we incur for those research programs are recognized as other income in the period in which the expenses that are reimbursable pursuanthandling charges if billed to the grant have been incurred.customer and are reported net of trade promotion and other costs, including estimated allowances for returns, unsalable product and prompt pay discounts. Sales, use, value-added and other excise taxes are not recognized in revenue. Trade promotions are recorded based on estimated participation and performance levels for offered programs at the time of sale. We generally do not allow a right of return.
We also offer research services, which revenue is recognized over time, as the customer receives the benefits of the services.
Other Income
Research Tax Credit
The main research tax credit that we benefit from is theCrédit d’Impôt Recherche,, or CIR, which is granted to companies by the French tax authorities in order to encourage them to conduct technical and scientific research. Companies demonstrating that they have research expenditures that meet the required CIR criteria receive a tax credit that may be used for the payment of their income tax due onfor the fiscal year in which the expenditures were incurred and during the next three fiscal years. If taxes due are not sufficient to cover the full amountAny unused portion of the tax credit at the end of the three-year period, the difference is repaid to us in cashthen refunded by the French tax authorities. We also satisfytreasury (except for specific cases like e.g. if the Company can be qualified as small and medium-sized enterprises (in France the “PME”). Indeed, if a company meets certain criteria that qualify us asin terms of sales, headcount or assets to be considered a small/middle size company, and permit us tosuch company can request immediate paymentrefund of the CIR. remaining tax credit, without application of the three-year period. As from January 2021, Cellectis S.A. no longer meets such criteria.
The expenditures taken into account for the calculation of the CIR only involve research expenses.
The main characteristics of the CIR are the following:
We have concluded that the CIR meets the definition of a government grant as defined in IAS 20,Accounting for Government Grants and Disclosure of Government Assistance,, and that the classification as other income within operating loss in our statement of operations is appropriate.
Research tax credit receivables as of December 31, 2023 include the accrual for a French research tax credit related to 2023 for $5.6 million and to previous periods for $15 million.
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Operating Expenses
81
Our operating expenses consist primarily of royalty expenses,cost of revenue, research and development expenses and selling, general and administrative expenses.
Cost of revenue
Cost of goods sold
Calyxt historically capitalized all grain and seed costs into inventory. Grain and risk management costs, net of the benefit from Calyxt’s seed activity, were capitalized to inventory and relieved to cost of goods sold as the high oleic soybean oil and high oleic soybean meal is sold. Any valuation adjustments to inventory were recognized as incurred. Cost of goods sold also included crush and refining losses that are expensed as incurred since they do not add to the value of the finished products. Since 2022, Calyxt cost of good sold are included in income (loss) from discontinued operations.
Royalty Expensesexpenses
We have entered into several license agreements to obtain access to technology that we use in our product development efforts. Royalty expenses consist ofin-licensing costs, which reflect royalties we pay to use rights granted to us. Depending on the contractual provisions, royalty expenses are either proportional to revenues generated by using the patents or fixed annual royalties or conditioned by milestones.
Research and Development Expenses
We engage in substantial research and development efforts to develop innovative CART-cell immunotherapy and agricultural product candidates.
Research and development expenses consist primarily of:
We classify personnel and other costs related to information technology, human resources, business development, legal, intellectual property and general management in research and development expense based on the time that employees spent contributing to research and development activities versus general and administrative activities.
Our research and development efforts are focused on our existing product candidates:candidates, (i) our UCART123 product candidate which entered into clinical trialsevaluated in the United States inAMELI-01 Study since February 2017, (ii) our UCART22 product candidate evaluated in the BALLI-01 Study since November 2019, (iii) UCART20x22 product candidate evaluated in the NaThaLi-01 Study since August 2022 and UCARTCS1(v) other product candidates which are in the manufacturing phase, and (iii) our other undisclosed targets which are in thepre-clinical development phases. We use our employee and infrastructure resources across multiple research and development programs directed toward developing our cell-based platform and for identifying and developing product candidates. We manage certain activities such aspre-clinical and clinical research and manufacture of product candidates through our partner institutions or other third-party vendors. Due to the number of ongoing projects and our ability to use resources across several projects, we do not record or maintain information regarding the costs incurred for our research and development programs on a program-specific basis.
Our research and development efforts are central to our business and account for a significant portion of our operating expenses. We expect that our research and development costs will increase in the foreseeable future as we continue to implement our new clinical trials, manufacturepre-commercial clinical trial andpre-clinical study materials, expand our research and development and process development efforts, seek regulatory approvals for our product candidates that successfully complete clinical trials, as well as access and develop additional technologies, and hire additional personnel to support our research and development efforts. This is because product candidates in later stages of clinical development generally have higher development costs than those in
129
earlier stages of development, primarily due to the increased size and duration of later-stage clinical trials. Likewise, in our plant products business, we expect our research and development expenses will continue to increase over the next several years as we develop new agricultural product candidates and advance them through field trials toward commercial proof of concept.
We cannot determine with certainty the duration and completion costs of our future clinical trials of our therapeutic product candidates or if, when, or to what extent we will generate revenues from the commercialization and sale of any of oursuch product candidates, or those of our collaborators, that might obtain regulatory approval. We also cannot determine with certainty the duration and completion costs of our future field trials of our agricultural product candidates or if, when, or to what extent we will generate revenues from the commercialization and sale of any of our agricultural product candidates that might obtain regulatory approval. We may never succeed in achieving regulatory approval for any therapeutic product candidates. The duration, costs and timing of clinical trials and development of our product candidates will depend on a variety of factors, including:
Selling, General and Administrative Expenses
82
Selling, general and administrative expenses consist primarily of employee-related expenses for executive, business development, intellectual property, finance, legal and human resourceresources functions. Administrative expenses also include facility-related costs and service fees, other professional services and recruiting fees.
We classify personnel and other costs related to information technology, human resources, business development, legal, intellectual property and general management in research and development expense based on the time that employees spent contributing to research and development activities versus general and administrative activities.
We anticipate that our selling, general and administrative expenses will increase in the future as we increase our headcount to support the expected growth in our research and development activities and the potential commercialization of our product candidates. We also expect to continue to incur significant expenses associated with Cellectis S.A. and Calyxt Inc. being a public company in the United States, including costs related to audit, legal, regulatory andtax-related services associated with maintaining compliance with U.S. exchange listing and SEC requirements, director and officer insurance premiums, and investor relations costs.
Financial Gain (Loss)
Financial gain (loss) mainly consists of interest income related to our savings accounts and bank deposits, exchange gains and losses associated with transactions in foreign currencies and fair value of our financial assets, derivative instruments and derivative instruments.interests associated with lease debts and financial liabilities. Significant transactions in foreign currencies are translated into euros at the exchange rates effective at the transaction dates, while the average rate for the previous month is used fornon-significant transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated
130
into euros using the exchange rate effective at that date. The resulting exchange gains or losses are recorded in the consolidated statements of incomeconsolidated operations as financial income or expense. Financial gain (loss) reflects the net impact of financial income and financial expenses.
Critical Accounting Policies and Estimates
Some of the accounting methods and policies used in preparing our financial statements under IFRS are based on complex and subjective assessments by our management or on estimates based on past experience and assumptions deemed realistic and reasonable based on the circumstances concerned. The actual value of our assets, liabilities and shareholders’ equity and of our losses could differ from the value derived from these estimates if conditions changed and these changes had an impact on the assumptions adopted. We believe that the most significant management judgments and assumptions in the preparation of our financial statements are named below. For further details, see Notes to our consolidated financial statements.
Revenue is recognized when the Company satisfies a performance obligation by transferring a distinct good or service (or a distinct bundle of goods and or/ services) to a customer, i.e. when the customer obtains control of these goods or services. The Company uses judgement to determine the performance obligations and when they are met.
The amount of the research tax credit for which we are eligible depends on internal and external research and development expenditures. The calculation of eligible expenditures requires management to make judgments and estimates as to whether expenditures qualify as eligible research and development expenditures according to the French tax code (code général des impôts) and the relevant official guidelines, as the amount of tax credit granted is based on our claimed amounts of eligible expenditures.
We do not expect the impact of a potential discrepancy between the management calculation and the actual amount collected to have a material impact on our Consolidated Financial Statements.
We account for share-based compensation in accordance with IFRS 2 Share-based payment.
We use judgement to determine the fair value of share-based awards at the grant date. Fair value is estimated using the Black-Scholes valuation model for stock options valuation. The determination of the fair value using an option-pricing model is affected by assumptions and variables including the expected term, expected volatility, risk-free interest rates and expected dividends.
If any of the assumptions change significantly, share-based compensation for future awards may differ materially compared with the awards granted previously
We use judgement to determine the expected outcome and timing of realization of non-market performance obligations related to free shares awards
A potential discrepancy between the Company’s estimate and the actual realization of the non-market performance conditions could have a material impact on our Consolidated Financial Statements.
A provision is recognized if, as a result of a past event, we have a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. The amount recognized as a provision is the best estimate of the expenditure required to settle the present obligation at the reporting date.
A potential discrepancy between the management estimate and the actual settlement of a litigation or commitment could have a material impact on our Consolidated Financial Statements.
Financial assets and certain financial liabilities are measured at fair value through profit or loss in accordance with IFRS 9. Fair value is determined in accordance with IFRS 13.
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Financial assets
For certain Level 2 and Level 3 financial instruments, considering the complexity of the valuation model, we decided to engage independent valuation experts to assist us on the valuation of such instruments based on the information shared by the management. An adapted valuation model is used for each instrument according to its characteristics. The selected valuation models include Black-Scholes models for equity payments and credit risk models for cash payments. Depending on the nature of the instrument, the model is enriched to reflect our management's economic and strategic vision.
Financial liabilities
Financial liabilities measured at fair value through profit or loss include the share subscription warrants granted to EIB. Considering the complexity of the valuation model applicable to this instrument, we decided to engage an independent valuation expert to assist us on its valuation. The fair value of the warrants, including related put and call options, has been estimated using a Longstaff Schwartz approach, based on observable data and enriched with assumptions provided by management.
Day-one profit or loss on fair value measurement
Any difference between the transaction price and the initial fair value of financial assets and liabilities is deferred when the fair value includes any non-observable data. This day-one profit or loss is recognized as a gain or loss to the extent that it arises from a change in a factor (including time) that market participants would take into account when pricing the asset or liability. If the input remains unobservable throughout the asset’s or liability’s lifetime, the day-one profit or loss is recognized in profit and loss on a straight-line basis over the lifetime of the asset or liability.
Preliminary Note Regarding Calyxt
Our former Plants segment was carried out through Calyxt, in which we held 49.1% of all of its outstanding common stock as of December 31, 2022. On January 13, 2023, Calyxt, Calypso Merger Subsidiary, LLC, a wholly-owned subsidiary of Calyxt, Cibus and certain other parties named therein, entered into the Merger Agreement, pursuant to which, subject to the terms and conditions thereof, Calyxt and Cibus merged in an all-stock transaction.
Accordingly, Calyxt met the “held-for-sale” criteria specified in IFRS 5 and qualifies as a discontinued operation in accordance with IFRS 5 for all periods presented.
The closing of the Merger occurred on May 31, 2023, after the market closed, resulting in the Company holding 2.9% of all outstanding common stock of Cibus (as of June 1, 2023). Pursuant to the closing of the Merger, the Group considered it has lost control on Calyxt which is therefore deconsolidated as from June 1, 2023. Calyxt’s results are included in the Group’s results until May 31, 2023, and continue to be presented as the results of discontinued operations until that date. The former Plants segment corresponded to the activity of Calyxt.
As from June 1, 2023 and the deconsolidation of Calyxt, we view our operations and manage our business in a single operating and reportable segment corresponding to the Therapeutics segment. As of May 31, 2023, immediately prior the consummation of the Merger, we owned a 48.0% equity interest in Calyxt. This former segment was only related to assets held for sale until May 31, 2023. This segment is presented as assets held for sale as of December 31, 2022 and discontinued operations for the year-end periods ended December 31, 2023 and 2022. For more information on our reportable segments, see Note 4.5 to our consolidated financial statements. All tables referring to the year-end period ended December 31, 2023 present Calyxt’s results over a five-month period from January 1, 2023 to May 31, 2023.
Operating Results
The following table sets forth our selected consolidated statement of income data:
| For the year ended December 31, | For the year ended December 31, |
| ||||||||||||||||||||||
| 2015 | 2016 | 2017 | 2021 |
| 2022 |
| 2023 |
| ||||||||||||||||
| ($ in thousands) | $ in thousands |
| ||||||||||||||||||||||
Revenues and other income |
|
|
|
|
|
| ||||||||||||||||||
Revenues | 55,864 | 44,808 | 25,188 |
|
| 30,347 |
|
|
| 19,171 |
|
|
| 755 |
| |||||||||
Other income | 6,701 | 11,637 | 8,528 |
|
| 8,250 |
|
|
| 6,553 |
|
|
| 8,438 |
| |||||||||
|
|
| ||||||||||||||||||||||
Total revenues and other income | 62,565 | 56,444 | 33,715 |
|
| 38,597 |
|
|
| 25,725 |
|
|
| 9,193 |
| |||||||||
|
|
| ||||||||||||||||||||||
Operating expenses |
|
|
|
|
|
|
|
| ||||||||||||||||
Royalty expenses | (2,746 | ) | (1,777 | ) | (2,620 | ) | ||||||||||||||||||
Cost of revenue |
|
| (1,844 | ) |
|
| (1,772 | ) |
|
| (737 | ) | ||||||||||||
Research and development expenses | (58,154 | ) | (78,458 | ) | (79,227 | ) |
|
| (117,840 | ) |
|
| (97,501 | ) |
|
| (87,646 | ) | ||||||
Selling, general and administrative expenses | (30,223 | ) | (43,413 | ) | (44,750 | ) |
|
| (22,882 | ) |
|
| (17,494 | ) |
|
| (16,812 | ) | ||||||
Other operating income (expenses) | (2,425 | ) | (99 | ) | 232 |
|
| 488 |
|
|
| 1,377 |
|
|
| (1,300 | ) | |||||||
|
|
| ||||||||||||||||||||||
Total operating expenses |
|
| (142,077 | ) |
|
| (115,390 | ) |
|
| (106,495 | ) | ||||||||||||
Operating income (loss) | (30,984 | ) | (67,302 | ) | (92,650 | ) |
| (103,480 | ) |
|
| (89,666 | ) |
|
| (97,302 | ) | |||||||
|
|
| ||||||||||||||||||||||
Financial income | 10,253 | 7,147 | 7,262 |
| 13,218 |
|
|
| 8,880 |
|
|
| 21,479 |
| ||||||||||
Financial expenses | (1,876 | ) | (7,101 | ) | (18,294 | ) |
| (6,486 | ) |
|
| (17,815 | ) |
|
| (40,642 | ) | |||||||
|
|
| ||||||||||||||||||||||
Financial gain (loss) | 8,378 | 46 | (11,032 | ) | ||||||||||||||||||||
|
|
| ||||||||||||||||||||||
Net Financial gain (loss) |
| 6,731 |
|
|
| (8,935 | ) |
|
| (19,163 | ) | |||||||||||||
Income tax | — | — | — |
| - |
|
|
| (87 | ) |
|
| (371 | ) | ||||||||||
Income (loss) from continuing operations |
| (96,749 | ) |
|
| (98,688 | ) |
|
| (116,835 | ) | |||||||||||||
Income (loss) from discontinued operations |
| (28,358 | ) |
|
| (15,345 | ) |
|
| 8,392 |
| |||||||||||||
Net income (loss) | (22,606 | ) | (67,255 | ) | (103,683 | ) |
| (125,107 | ) |
|
| (114,034 | ) |
|
| (108,443 | ) | |||||||
|
|
| ||||||||||||||||||||||
Attributable to shareholders of Cellectis | (22,796 | ) | (67,255 | ) | (99,368 | ) |
|
| (114,197 | ) |
|
| (106,139 | ) |
|
| (101,059 | ) | ||||||
Attributable tonon-controlling interests | 190 | — | (4,315 | ) |
|
| (10,910 | ) |
|
| (7,894 | ) |
|
| (7,384 | ) | ||||||||
84
131
Years Ended
For the year ended December 31, |
|
| % change |
| ||||||||||||
2021 |
| 2022 |
| 2023 |
|
| 2023 vs 2022 |
| ||||||||
Collaboration agreements |
|
| 29,971 |
|
|
| 18,230 |
|
|
| - |
|
|
| -100.0 | % |
Other revenues |
|
| 376 |
|
|
| 941 |
|
|
| 755 |
|
|
| -19.8 | % |
Revenues |
| 30,347 |
|
|
| 19,171 |
|
|
| 755 |
|
|
| -96.1 | % | |
The decrease in revenue between the years ended December 31, 2015, 20162022 and 20172023 mainly reflects (i) the recognition of a $15.8 million milestone from Servier in connection with the first patient dosed in the Allogene ALPHA2 Study in 2022, (ii) the recognition of two milestones under the collaboration and license with Cytovia for an aggregate of $1.5 million in 2022 and (iii) the recognition of $1.0 million related to the change of control of a licensee pursuant to the terms of its license agreement with Cellectis and the amendment to such license agreement in 2022. Recognition of revenues for the year ended December 31, 2023 is mainly related to research collaboration and exclusive license agreement with Iovance.
Revenues.
| For the year ended December 31, | % change | |||||||||||||||||||
| 2015 | 2016 | 2017 | 2016 vs 2015 | 2017 vs 2016 | ||||||||||||||||
Collaboration agreements | 53,580 | 41,891 | 22,821 | -21.8 | % | -45.5 | % | |||||||||||||
Other revenues | 2,284 | 2,916 | 2,367 | 27.7 | % | -18.8 | % | |||||||||||||
Revenues | 55,864 | 44,808 | 25,188 | -19.8 | % | -43.8 | % | |||||||||||||
The decrease in revenues of $19.6$11.2 million or 43.8%36.8%, between the years ended December 31, 20162021 and 20172022 primarily reflects a decrease of $19.1 million in revenues underrevenue pursuant to our collaboration agreements,agreements. Recognition of which $8.5revenues for the year ended December 31, 2022 mainly reflects (i) the recognition of a $15.8 million representsone-timemilestone revenue received during the second quarter of 2016payment from Servier in connection with the first patient dosed in the Phase 1 clinical trial for UCART19, $6.0 million represents decreasedAllogene ALPHA2 Study, (ii) the recognition of upfront fees already paidtwo milestone payments pursuant to Cellectis’ agreement with Cytovia for an aggregate of $1.5 million and (iii) the recognition of $1.0 million related to the change of control of a licensee pursuant to the terms of a license agreement with Cellectis $1.9and the amendment to such license agreement (extension of its option term), compared to the amounts recognized in the year ended December 31, 2021 of $20.0 million represents decreased researchrelated to a trade receivable obtained as consideration for a license granted to Cytovia and development cost reimbursements (research services and direct costs) and $2.8$10.0 million represents decreased revenue due to 2016one-time payments by Servier for the supply of raw materials and batches of UCART19 products, partially offset by theAllogene milestones.
Other income
For the year ended December 31, |
|
| % change |
| ||||||||||||
2021 |
| 2022 |
| 2023 |
|
| 2023 vs 2022 |
| ||||||||
Research tax credit |
|
| 8,239 |
|
|
| 6,546 |
|
|
| 6,582 |
|
|
| 0.5 | % |
Other income |
|
| 11 |
|
|
| 7 |
|
|
| 1,856 |
|
|
| 26473.2 | % |
Other income |
| 8,250 |
|
|
| 6,553 |
|
|
| 8,438 |
|
|
| 28.8 | % | |
The increase of $0.1 million in other services and products provided to Pfizer, and a $0.5income of $1.9 million decrease in licensing revenues.
The decrease in revenue of $11.1 million, or 19.8%, between the years ended December 31, 20152022 and 20162023 is mainly due (i)related to the decreaserecognition of $11.7a $1.4 million in collaboration revenues dueincome related to revenue of $20.9 million recorded in 2015 in relation to the early exercise by Servier of its option to acquire the exclusive worldwide rights to further develop and commercialize UCART19 partially offset by revenue totaling $13.2 million from an agreement to provide Servier with raw materials and additional batches of UCART19 products and the achievement of two milestones under the grant and refundable advance agreement signed with Bpifrance (“BPI”) to partially support a R&D program related to Cellectis’ UCART 20x22. We received on June 19, 2023 a $0.9 million refundable advance payment from BPI. We received on October 6, 2023, an additional payment of $1.9 million refundable advance payment from BPI. This refundable advance is accounted for as a government loan as defined by IAS 20. Because this loan bears a below market interest rate, we measured the fair value of the loan using a market interest rate and recognize as a grant the difference between the cash received and the estimated fair value of the loan. The fair value of the loan on June 19, 2023 was $0.4 million, resulting in 2016a grant of $0.5 million. The fair value of the loan on October 6, 2023 was $1.0 million, resulting in a grant of $0.9 million.We therefore recognized a $1.4 million grant in profit and (ii)loss for the year ended December 31, 2023, in addition to the increase$0.3 million contractual grant, as the subsidized expenses have been incurred and the contractual conditions for obtaining the subsidy have been met.
The decrease of $0.6$1.7 million in licenses fees.
Other income.
For the year ended December 31, | % change | |||||||||||||||||||
| 2015 | 2016 | 2017 | 2016 vs 2015 | 2017 vs 2016 | ||||||||||||||||
Research tax credit | 5,591 | 10,038 | 8,327 | 79.5 | % | -17.0 | % | |||||||||||||
Other income | 1,110 | 1,599 | 201 | 44.1 | % | -87.4 | % | |||||||||||||
Other income | 6,701 | 11,637 | 8,528 | 73.7 | % | -26.7 | % | |||||||||||||
The decrease in other income of $3.1 million, or 26.7%, between the years ended December 31, 20162021 and 20172022 reflects a decrease of $1.7 million in research tax credit, due to lower research and development purchases and external expenses that are eligible for the tax credit during the year ended December 31, 2022 compared to the same period in 2021.
Cost of revenue
For the year ended December 31, |
|
| % change |
| ||||||||||||
2021 |
| 2022 |
| 2023 |
|
| 2023 vs 2022 |
| ||||||||
Cost of goods sold |
|
| 0 |
|
|
| 0.00 |
|
|
| - |
|
|
| -100.0 | % |
Royalty expenses |
|
| (1,844 | ) |
|
| (1,772 | ) |
|
| (737 | ) |
|
| -58.4 | % |
Cost of revenue |
| (1,844 | ) |
|
| (1,772 | ) |
|
| (737 | ) |
|
| -58.4 | % | |
The decrease in cost of revenues between the years ended December 31, 2022 and 2023 is the direct consequence of the decrease in milestones revenues.
The decrease in cost of revenues between the years ended December 31, 2021 and 2022 is immaterial.
Research and development expenses.
85
For the year ended December 31, |
|
| % change |
| ||||||||||||
2021 |
| 2022 |
| 2023 |
|
| 2023 vs 2022 |
| ||||||||
Personnel expenses |
|
| (49,210 | ) |
|
| (42,610 | ) |
|
| (37,158 | ) |
|
| -12.8 | % |
Purchases, external expenses and other |
|
| (68,630 | ) |
|
| (54,890 | ) |
|
| (50,488 | ) |
|
| -8.0 | % |
Research and development expenses |
| (117,840 | ) |
|
| (97,501 | ) |
|
| (87,646 | ) |
|
| -10.1 | % | |
Between the years ended December 31, 2022 and 2023, research and development expenses decreased by $9.9 million. Personnel expenses decreased by $5.5 million from $42.6 million in 2022 to $37.2 million in 2023 primarily due to 2022 and 2023 departures. Purchases, external expenses and other decreased by $4.4 million (from $54.9 million in 2022 to $50.5 million in 2023) mainly relating to lower consumables purchases and subcontracting expenses due to continuing internalization of our manufacturing and quality activities to support our R&D pipeline.
Between the years ended December 31, 2021 and 2022, research and development expenses decreased by $20.4 million. Personnel expenses decreased by $6.6 million from $49.2 million in 2021 to $42.6 million in 2022 primarily due to a $0.9 million decrease in social charges on stock option due to the stock price diminution in 2022 and departures, as well as a $5.3 million decrease in non-cash stock-based compensation expense mainly related to 2022 departures. Purchases, external expenses and other decreased by $13.7 million (from $68.6 million in 2021 to $54.9 million in 2022) mainly explained by less consumables purchases and subcontracting expenses due to continuing internalization of our manufacturing activities to support our R&D pipeline.
Selling, general and administrative expenses.
For the year ended December 31, |
|
| % change |
| ||||||||||||
2021 |
| 2022 |
| 2023 |
|
| 2023 vs 2022 |
| ||||||||
Personnel expenses |
|
| (9,740 | ) |
|
| (7,674 | ) |
|
| (7,381 | ) |
|
| -3.8 | % |
Purchases, external expenses and other |
|
| (13,142 | ) |
|
| (9,820 | ) |
|
| (9,431 | ) |
|
| -4.0 | % |
Selling, general and administrative expenses |
| (22,882 | ) |
|
| (17,494 | ) |
|
| (16,812 | ) |
|
| -3.9 | % | |
Between the years ended December 31, 2022 and 2023, selling, general and administrative expenses decreased by $0.7 million. Personnel expenses decreased by $0.3 million from $7.7 million in 2022 to $7.4 million in 2023 primarily due to a $0.7 million decrease in non-cash stock-based compensation expense mainly consecutive to the probable non achievement of certain performance obligations . Purchases, external expenses and other decreased by $0.4 million (from $9.8 million in 2022 to $9.4 million in 2023) mainly explained by less subcontracting expenses due to reprioritization of activities.
Between the years ended December 31, 2021 and 2022, selling, general and administrative expenses decreased by $5.4 million. Personnel expenses decreased by $2.1 million from $9.7 million in 2021 to $7.7 million in 2022 primarily due to a $1.6 million decrease in wages and salaries due to departures not replaced, and $0.3 million decrease in social charges on stock option due to the stock price diminution in 2022 and departures, as well as a $0.2 million decrease in non-cash stock-based compensation expense mainly related to 2022 departures. Purchases, external expenses and other decreased by $3.3 million (from $13.1 million in 2021 to $9.8 million in 2022) mainly explained by expenses associated with a new enterprise resource planning (ERP) software that was implemented in 2022.
Other operating income and expenses.
For the year ended December 31, |
|
| % change |
| ||||||||||||
2021 |
| 2022 |
| 2023 |
|
| 2023 vs 2022 |
| ||||||||
Other operating income (expenses) |
| 488 |
|
|
| 1,377 |
|
|
| (1,300 | ) |
|
| -194.4 | % | |
The increase in other operating expenses between the years ended December 31, 2022 and 2023 amounted to $2.7 million and is mainly related to the recognition of costs related to a commercial litigation for $0.5 million and the unfavorable outcome of the litigation with the French administration which led to the reimbursement of $0.7million of research tax credit and the provision for risk of $0.5 million related to 2015 and 2016 research tax credit and the favorable outcome of a claim with the French social tax authorities regarding tax on stock options for $1.0 million that was a one-time item recognized in 2022.
The increase in other operating income between the years ended December 31, 2021 and 2022 amounted to $0.9 million and is mainly related to the favorable outcome of a claim with the French social tax authorities regarding tax on stock options for $1.0 million.
Financial income and expenses
For the year ended December 31, |
|
| % change |
| ||||||||||||
2021 |
| 2022 |
| 2023 |
|
| 2023 vs 2022 |
| ||||||||
Financial income |
| 13,218 |
|
|
| 8,880 |
|
|
| 21,479 |
|
|
| 141.9 | % | |
Financial expenses |
| (6,486 | ) |
|
| (17,815 | ) |
|
| (40,642 | ) |
|
| 128.1 | % | |
Net Financial gain (loss) |
|
| 6,731 |
|
|
| (8,935 | ) |
|
| (19,163 | ) |
|
| 114.5 | % |
86
The increase in financial income of $12.6 million between the year periods ended December 31, 2022 and 2023 is mainly attributable to an increase in gain from our financial investments of $2.5 million and a $0.2 million gain on money market funds fair value measurement, an increase in the foreign exchange gain of $10.1 million (from a $7.5 million gain in 2022 to a $17.6 million gain in 2023, of which $8.0 million are reclassified from other comprehensive income pursuant to Calyxt’s deconsolidation).
The increase in financial expenses of $22.8 million between the years ended December 31, 2022 and 2023 is mainly attributable to the loss in fair value on our retained investment in Cibus since Calyxt's deconsolidation for $5.9 million, the $5.7 million loss in fair value of the derivative instrument on the Subsequent Investment Agreement with AstraZeneca (see following paragraph), a $11.9 million increase in foreign exchange loss (from a $1.5 million loss in 2022 to a $13.4 million loss in 2023), a $2.4 million loss on change in fair value of the EIB warrants, an interest expense on EIB loan of $1.5 million, and a BPI research tax credit prefinancing interest expense of $0.4 million, partially offset by a $4.4 million decrease in the financial loss related to Cytovia's receivable ($7.8 million loss in 2023 compared with a $12.1 million loss in 2022) and a $0.4 million decrease of interest expense on lease liabilities.
Cellectis signed the Subsequent Investment Agreement on November 14, 2023, for an additional equity investment of $140 million by AstraZeneca Holdings, which was subject to certain closing conditions and is expected to close shortly after the date of this Annual Report. For more information, see Item 4. "Information on the Company—B. Business Overview—Our Licensing Relationships.” The Subsequent Investment Agreement is treated as a derivative instrument and shall therefore be recognized according to the principles of IFRS 9 (see Note 2.6 to our consolidated financial statements). The derivative is initially recognized at its fair value and measured subsequently at fair value through profit or loss. The derivative fair value is $48.4 million at initial recognition on November 14, 2023, and is $42.7 million as of December 31, 2023, resulting in a $5.7 million loss in fair value recognized in profit and loss over the period.
The decrease in financial income of $4.3 million between the years ended December 31, 2021 and 2022 was mainly attributable to a decrease of $1.4the foreign exchange gain for $4.3 million (from a $11.9 million gain in 2021 to a $7.5 million gain in 2022). The increase in financial expenses of $11.3 million between the year ended December 31, 2021 and 2022 was mainly attributable to Cytovia’s convertible note change in fair value of $(12.1) million, partially offset by a $0.6 million decrease in foreign exchange loss (from a $2.1 million loss in 2021 to a $1.5 million loss in 2022) and a $0.4 million decrease in lease debt interest expenses.
With respect to the Cytovia convertible note,and its incapacity to pay, we notified Cytovia of the termination of the Cytovia Agreement on November 30, 2023, pursuant to which Cytovia is no longer authorized to use the licenses and rights granted under the Cytovia Agreement, but remains liable for the outstanding amount of the Cytovia convertible note. Considering new developments that occurred since June 30, 2023, including the termination of our negotiations with Cytovia, Cytovia's resources and financing options and our ability to recover the receivable, we reassessed the expected credit losses and recognized a carrying value of Cytovia’s note receivable of $0.0 million as of December 31, 2023. See Notes 4.3 and 12.1 to our consolidated financial statements for our accounting treatment of the Cytovia note.
For more information on these agreements, see “Item 4. Information on the Company—B. Business Overview—Our Licensing Relationships.”
Income (loss) from discontinued operations
For the year ended December 31, |
|
| % change |
| ||||||||||||
2021 |
| 2022 |
| 2023 |
|
| 2023 vs 2022 |
| ||||||||
Income (loss) from discontinued operations |
| (28,358 | ) |
|
| (15,345 | ) |
|
| 8,392 |
|
|
| -154.7 | % | |
Income loss from discontinued operations include Calyxt loss until deconsolidation. All tables referring to the year-end period ended December 31, 2023 present Calyxt’s results over a five-month period from January 1, 2023 to May 31, 2023.
The $23.7 million decrease in net loss from discontinued operations between the year-end period ended December 31, 2022 and 2023 is primarily driven by the profit from Calyxt's deconsolidation of $22.6 million, Calyxt's $8.5 million net loss in the third and fourth quarter of 2022 compared with $0 in the third and fourth quarter of 2023 as Calyxt was deconsolidated, partially offset by a $7.3 million increase in the net loss over the first two quarters between 2022 and 2023. This $7.3 million increase breaks down as follows: (i) an increase of $9.2 million of net financial loss and (ii) a $1.9 million decrease of expenses driven by the decrease of operating expenses partially offset by restructuring and transaction costs,
The $13.0 million decrease of net income loss from discontinued operations between the years ended December 31, 2021 and 2022 is primarily driven by (i) the decrease of $29.5 million of cost of revenue, (ii) the decrease of $4.4 million of R&D expenses (from $11.2 million in research subsidies, resulting from settlements received after termination2021 to $11.4 in 2022) and SG&A expenses (from $15 million in 2021 to $10.4 million in 2022) and (iii) the increase of research programs during$7.9 million of net financial gain partially offset by the last quarter$28.3 million decrease of revenue and other income.
Income tax.
For the year ended December 31, |
|
| % change |
| ||||||||||||
2021 |
| 2022 |
| 2023 |
|
| 2023 vs 2022 |
| ||||||||
Income tax |
| 0 |
|
|
| (87 | ) |
|
| (371 | ) |
|
| 326.0 | % | |
The income tax expense of the year ended December 31, 2016.2023 amounting to $0.4 million corresponds to the cumulated income tax expense of Cellectis Inc. and Cellectis Biologics Inc., both entities filing a consolidated tax return.
The increaseincome tax expense of the year ended December 31, 2022 amounting to $0.1 million corresponds to the cumulated income tax expense of Cellectis Inc. and Cellectis Biologics Inc., both entities filing a consolidated tax return.
87
Net Income / loss.
For the year ended December 31, |
|
| % change |
| ||||||||||||
2021 |
| 2022 |
| 2023 |
|
| 2023 vs 2022 |
| ||||||||
Net income (loss) |
| (125,107 | ) |
|
| (114,034 | ) |
|
| (108,443 | ) |
|
| -4.9 | % | |
Net income includes net income from discontinued operations.
The decrease in other incomenet loss of $4.9$5.6 million or 73.7%, between the years ended December 31, 20152022 and 2016 reflects2023 was mainly due to (i) a decrease of $1.0 million in cost of revenue, (ii) a decrease of $4.8 million in purchases, external expenses and other, (iii) a decrease of $5.3 million in wages, (iv) a $0.8 million decrease in non-cash stock-based compensation expense and (v) a $23.7 million decrease in net loss of discontinued operations, partially offset by (i) a $16.5 million decrease in revenues and other income, (ii) a $2.7 million decrease of net other operating income, (iii) a $0.3 million increase in social charges on stock option grants expenses, (iv) a $0.3 million increase in income tax expense and (v) an increase of $4.4net financial loss of $10.2 million.
The decrease in net loss of $11.1 million in research tax credit, and an increase of $0.5 million in research subsidies, resulting from settlements after termination of research programs.
Royalty expenses.
For the year ended December 31, | % change | |||||||||||||||||||
| 2015 | 2016 | 2017 | 2016 vs 2015 | 2017 vs 2016 | ||||||||||||||||
Royalty expenses | (2,746 | ) | (1,777 | ) | (2,620 | ) | -35.3 | % | 47.5 | % | ||||||||||
132
The increase in royalty expenses of $0.8 million, or 47.5%, between the years ended December 31, 20162021 and 2017 primarily reflects higher payments2022 was mainly due to existing license providers.
The(i) a decrease of $17.0 million in purchases, external expenses and other, (ii) a decrease of $2.0 million in wages (iii) a $5.5 million decrease in royalty expenses of $1.0 million, or 35.3%, between the years ended December 31, 2015 and 2016 primarily reflects lowernon-cash stock-based compensation expense, to existing license providers.
Research and development expenses.
| For the year ended December 31, | % change | |||||||||||||||||||
| 2015 | 2016 | 2017 | 2016 vs 2015 | 2017 vs 2016 | ||||||||||||||||
Personnel expenses | (39,341 | ) | (48,982 | ) | (37,906 | ) | 24.5 | % | -22.6 | % | ||||||||||
Purchases, external expenses and other | (18,814 | ) | (29,476 | ) | (41,321 | ) | 56.7 | % | 40.2 | % | ||||||||||
Research and development expenses | (58,154 | ) | (78,458 | ) | (79,227 | ) | 34.9 | % | 1.0 | % | ||||||||||
During the years ended December 31, 2016 and 2017, research and development expenses increased by $0.8 million or 1.0%. Personnel expenses decreased by $11.1 million from $49.0 million in 2016 to $37.9 million in 2017, notably due to(iv) a $9.4 million decrease innon-cash stock based compensation, a $2.8$1.2 million decrease in social charges on stock option grants partly offset byexpenses, (v) a $1.1$13.0 million increase in wages and salaries. Purchases and external expenses increased by $10.7 million from $27.7 million in 2016 to $38.5 million in 2017, mainly due to increased expenses related to payments to third parties participating in product development, purchases of biological raw materials, expenses related to process development and expenses associated with the use of laboratories and other facilities. Research and development expenses in 2017 include manufacturing costs related to UCART123, UCART CS1 and UCART22 and expenses related to UCART123 clinical trials. Other expenses increased by $1.1 million mainly due to the impairment of assets for $0.8 million related to the vacant Montvale site recorded in 2017. Otherwise, other expenses include continuing leasing and other commitments.
During the years ended December 31, 2015 and 2016, research and development expenses increased by $20.3 million or 34.9%. Personnel expenses increased by $9.6 million from $39.3 million in 2015 to $49.0 million in 2016, notably due to a $1.8 million increase in wages and salaries, and a $12.6 million increase innon-cash stock based compensation expense, partly offset by a $4.8 million decrease in social charges on stock option and free shares grants. Purchases and external expenses increased by $10.8 million from $16.9 million in 2015 to $27.7 million in 2016, mainly due to increased expenses related to UCART123 and other product candidates’ development, including payments to third parties, purchases of biological materials and expenses associated with the use of laboratories and other facilities. Expenses in 2016 also include costs related to preparation of UCART123 clinical trials. Other expenses relate to continuing leasing and other commitments and decreased by $0.1 million.
Selling, general and administrative expenses.
| For the year ended December 31, | % change | |||||||||||||||||||
| 2015 | 2016 | 2017 | 2016 vs 2015 | 2017 vs 2016 | ||||||||||||||||
Personnel expenses | (21,735 | ) | (33,523 | ) | (34,486 | ) | 54.2 | % | 2.9 | % | ||||||||||
Purchases, external expenses and other | (8,489 | ) | (9,890 | ) | (10,264 | ) | 16.5 | % | 3.8 | % | ||||||||||
Selling, general and administrative expenses | (30,223 | ) | (43,413 | ) | (44,750 | ) | 43.6 | % | 3.1 | % | ||||||||||
During the years ended December 31, 2016 and 2017, the increase in selling, general and administrative expenses of $1.3 million, or 3.1%, primarily reflects (i) an increase of $1.0 million in personnel expenses from $33.5 million to $34.5 million, attributable to a $2.0 million increase in wages and salaries, and an increase of $1.2 million ofnon-cash stock-based compensation expense, partly offset by a decrease of $2.2 million of social charges on stock options grants, and (ii) an increase of $0.3 million in purchases and external expenses. Other
133
expenses relate to taxes, various depreciation and amortization and other commitments and increased by $0.1 million, due to higher business taxes and higher provisions.
During the years ended December 31, 2015 and 2016, the increase in selling, general and administrative expenses of $13.2 million, or 43.6%, primarily reflects (i) an increase of $11.8 million in personnel expenses from $21.7 million to $33.5 million, attributable to a $1.0 million increase in wages and salaries, and an increase of $12.6 million ofnon-cash stock-based compensation expense, partly offset by a decrease of $1.8 million of social charges on stock options and free share grants, and (ii) an increase of $2.1 million in purchases and external expenses. Other expenses relate to taxes, various depreciation and amortization and other commitments and decreased by $0.7 million, due to lower business taxes and lower provisions.
Other operating income (expenses).
| For the year ended December 31, | % change | |||||||||||||||||||
| 2015 | 2016 | 2017 | 2016 vs 2015 | 2017 vs 2016 | ||||||||||||||||
Other operating income (expenses) | (2,425 | ) | (99 | ) | 232 | -95.9 | % | -334.2 | % | |||||||||||
The increase in other operating income and expenses between the years ended December 31, 2016 and 2017 amounted to $0.3 million. For the year ended December 31, 2017, other operating income primarily reflects (i) a receivable related to the refund of social charges paid on Cellectis free share grants that expired without being vested for $0.2 million, (ii) reversals of personnel litigation for a total amount of $0.1 million, and is partially offset by other operating expenses for $0.1 million related to social charges paid on former employee compensation.
The decrease in net other operating expenses between the years ended December 31, 2015 and 2016 amounted to $2.3 million, or 95.9%. Other operating expenses for the year ended December 31, 2016 included $0.4 million provisions for personnel and commercial litigations that have been partially offset by other operating income, including (i) aone-off tax reimbursement, (ii) the reversal of lease incentive deferrals and (iii) reversals of reserves for personnel and commercial litigation. During the year ended December 31, 2015, other operating income and expenses included income from (i) the reversal of a subsidy provision, (ii) the reversal of lease incentives deferrals, and (iii) a gain from a settlement with a supplier, while other operating expenses reflected settlements signed in 2015.
Financial income.
For the year ended December 31, | % change | |||||||||||||||||||
| 2015 | 2016 | 2017 | 2016 vs 2015 | 2017 vs 2016 | ||||||||||||||||
Financial income | 10,253 | 7,147 | 7,262 | -30.3 | % | 1.6 | % | |||||||||||||
The increase in financial income of $0.1 million, or 1.6%, between the years ended December 31 2016 and 2017, was mainly attributable to an increase in fair value of financial derivative instruments and current financial assets of $3.2 million and an increase in interest income of $0.5 million partly offset by a decrease in foreign exchange realized and unrealized gain of $3.6 million.
The decrease in financial income of $3.1 million, or 30.3%, between the years ended December 31 2015 and 2016, was mainly attributable to the decrease of $4.3 million of foreign exchange realized and unrealized gain partly offset by an increase in interest income of $0.5 million.
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Financial expenses.
| For the year ended December 31, | % change | |||||||||||||||||||
| 2015 | 2016 | 2017 | 2016 vs 2015 | 2017 vs 2016 | ||||||||||||||||
Financial expenses | (1,876 | ) | (7,101 | ) | (18,294 | ) | 278.6 | % | 157.6 | % | ||||||||||
The increase in financial expenses of $11.2 million, or 157.6%, between the years ended December 31 2016 and 2017, was mainly attributable to $13.5 million increase in foreign exchange realized and unrealized loss, partly offset by a decrease in fair value of financial derivative instruments and other current assets of $2.7 million.
The change in financial expenses of $5.2 million, or 278.6%, between the years ended December 31 2015 and 2016, was mainly attributable to $2.3 million increase in foreign exchange realized and unrealized loss and $2.7 million increase in fair value of financial derivative instruments and current financial assets.
Net Income (loss).
| For the year ended December 31, | % change | |||||||||||||||||||
| 2015 | 2016 | 2017 | 2016 vs 2015 | 2017 vs 2016 | ||||||||||||||||
Net income (loss) | (22,606 | ) | (67,255 | ) | (103,683 | ) | 197.5 | % | 54.2 | % | ||||||||||
The increase in net loss of $36.4 million, or 54.2%, between the year ended December 31, 2016 and 2017 was mainly due to (i) a $22.7 million decrease in revenues and other income, (ii) an $11.1 million decrease in financial gain (loss), (iii) an $11.0 million increase in purchases and external expenses, (iv) a $3.1 million increase in wages, (v) a $1.1 million increase in other selling, general and administrative expenses and research and development expenses and (vi) a $0.8 million increase in royalty expenses,discontinued operations, partially offset by (a) a $8.2 million decrease innon-cash stock-based compensation expense and (b) a $5.5 million decrease in social charges on stock options and free share grants. The remaining difference is mainly due to the decrease in other operating expenses.
The increase in net loss from continuing operations of $44.6 million, or 197.5%, between the year ended December 31, 2015 and 2016 was mainly due to (i) a $25.2 million increase innon-cash stock-based compensation expense, (ii) a $12.9 million increase in purchases and external expenses, (iii) a $2.8 million increase in wages, (iv) a $6.1 million decrease in revenues and other income and (v)(ii) an $8.3 million decrease inincrease of net financial gain (loss), partially offset by $6.6 decrease in social charges on stock options and free share grants. The remaining difference is mainly dueloss of $15.7 million.
Gain/Loss attributable to the decrease in other operating expenses.non-controlling interests.
Gain (loss) attributable tonon-controlling interests.
For the year ended December 31, |
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| % change |
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2021 |
| 2022 |
| 2023 |
|
| 2023 vs 2022 |
| ||||||||
Gain (loss) attributable to non-controlling interests |
| (10,910 | ) |
|
| (7,894 | ) |
|
| (7,384 | ) |
|
| -6.5 | % | |
| For the year ended December 31, | % change | |||||||||||||||||||
| 2015 | 2016 | 2017 | 2016 vs 2015 | 2017 vs 2016 | ||||||||||||||||
Gain (loss) attributable tonon-controlling interests | 190 | — | (4,315 | ) | -100.0 | % | 0.0 | % | ||||||||||||
During the year ended December 31, 2017,2023, we recorded $4.3$7.4 million in loss attributable tonon-controlling interests. The changedecrease in net loss attributable tonon-controlling interests of $0.5 million is a result of 20.3%mainly due to the deconsolidation of Calyxt common shares being ownedon June 1, 2023, partially offset by minority shareholders following its initial public offering.the increase of Calyxt's net loss over the first five months of 2023 compared to the same period in 2022
During the year ended December 31, 2015,2022, we recorded $0.2$7.9 million in gainloss attributable tonon-controlling interests.Non-controlling The decrease in net loss attributable to non-controlling interests for 2015 include 25% of $3 million is a result of a decrease in Calyxt’s net loss partially offset by the incomedecrease of Cellectis Bioresearch and itsCellectis’s ownership interest in Calyxt.
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subsidiaries until our repurchase from “Caisse des Dépôts et Consignations” on May 18, 2015 of its shares, which represented the entirety of thisnon-controlling interest. As such, there is no income (loss) attributable tonon-controlling interests in 2016.
Segment Results
Information related to each of our reportable segments is set out below. Segment revenues and Otherother income, Researchresearch and development expenses, Selling,selling, general and administrative expenses, and Royaltiesroyalties and other operating income and expenses, and Adjustedadjusted net income (loss) attributable to shareholders of Cellectis (which does not includenon-cash stock-based expense) are used by the CODM to measure performance.performance of each segment. The CODM does not review any asset or liability information by segment or by region.
In light of the Merger completed pursuant to the Merger Agreement, Calyxt met the “held-for-sale” criteria specified in IFRS 5 and qualifies as a discontinued operation in accordance with IFRS 5 until loss of control from the Group. Consequently, Calyxt was deconsolidated on June 1, 2023. Calyxt’s results are included in the Group’s results until May 31, 2023, and continue to be presented as the results of discontinued operations until that date.
Adjusted Net Income (Loss) attributable to shareholders of Cellectis is not a measure calculated in accordance with IFRS. Because Adjusted Net Income (Loss) attributable to shareholders of Cellectis excludesNon-cash stock based stock-based compensation expense—anon-cash expense, we believe that this financial measure, when considered together with our IFRS financial statements, can enhance an overall understanding of Cellectis’ financial performance. Moreover, our management views the Company’s operations, and manages its business, based, in part, on this financial measure. See also “Note Regarding Use of Non-IFRS Financial Measures.”
There are inter-segment transactions between the two reportable segments, including the allocation of corporate general and administrative expenses by Cellectis and the allocation of research and development expenses among the reportable segments. With respect to corporate general and administrative expenses, Cellectis provides Calyxt with general sales and administrative functions, accounting and finance functions, investor relations, intellectual property, legal advice, human resources, communication and information technology pursuant to a management agreement. Under the management agreement, Cellectis charges Calyxt in euros at cost plus amark-up ranging between zero to 10%, depending on the nature of the service. Amounts due to Cellectis pursuant to inter-segment transactions bear interest at a rate of12-month Euribor plus 5% per annum.
The intersegment revenues represent the transactions between segments. Intra-segment transactions are eliminated within a segment’s results and intersegment transactions are eliminated in consolidation as well as in key performance indicators by reportable segment.
Years Ended December 31, 2015, 2016 and 2017
The following table summarizes segment revenues and segment operating profit (loss) for the years ended December 31, 2015, 20162021, 2022 and 2017:2023.
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|
| For the year ended December 31, |
| |||||||||
| 2021 |
| 2022 |
|
| 2023 |
| |||||
|
| $ in thousands |
| |||||||||
Net Income (Loss) attributable to shareholders of Cellectis |
|
| (114,197 | ) |
|
| (106,139 | ) |
|
| (101,059 | ) |
Adjustment of non-cash stock-based compensation expense from continued operations: |
|
|
|
|
|
|
|
|
| |||
Research and development expenses |
|
| 9,381 |
|
|
| 4,098 |
|
|
| 3,952 |
|
Selling, general and administrative expenses |
|
| 2,113 |
|
|
| 1,945 |
|
|
| 1,281 |
|
Total non-cash stock-based compensation expense from continued operations |
|
| 11,493 |
|
|
| 6,043 |
|
|
| 5,233 |
|
Adjustment of non-cash stock-based compensation expense from discontinued operations |
|
| 1,625 |
|
|
| 4,132 |
|
|
| 3,859 |
|
Non-cash stock-based compensation expense attributable to non controlling interests |
|
| (621 | ) |
|
| (2,105 | ) |
|
| (2,006 | ) |
Adjusted Net Income (Loss) attributable to shareholders of Cellectis ** |
|
| (101,700 | ) |
|
| (98,069 | ) |
|
| (93,973 | ) |
** Non-IFRS financial measure. See "Note Regarding Use of non-IFRS Financial Measures."
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| For the year ended December 31, 2015 | For the year ended December 31, 2016 | For the year ended December 31, 2017 | ||||||||||||||||||||||||||||||||||
| $ in thousands | Plants | Therapeutics | Total reportable segments | Plants | Therapeutics | Total reportable segments | Plants | Therapeutics | Total reportable segments | |||||||||||||||||||||||||||
Segment revenues and other income (1) | 49 | 65,159 | 65,208 | 716 | 59,458 | 60,173 | 914 | 35,584 | 36,498 | |||||||||||||||||||||||||||
Inter-segment revenues (1) | — | (2,643 | ) | (2,643 | ) | (130 | ) | (3,599 | ) | (3,729 | ) | (167 | ) | (2,615 | ) | (2,782 | ) | |||||||||||||||||||
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| |||||||||||||||||||
External revenues and other income | 49 | 62,516 | 62,565 | 585 | 55,859 | 56,444 | 747 | 32,969 | 33,715 | |||||||||||||||||||||||||||
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Research and development expenses | (2,874 | ) | (55,280 | ) | (58,154 | ) | (4,112 | ) | (74,345 | ) | (78,458 | ) | (6,057 | ) | (73,170 | ) | (79,227 | ) | ||||||||||||||||||
Selling, general and administrative expenses | (1,834 | ) | (28,390 | ) | (30,223 | ) | (4,809 | ) | (38,603 | ) | (43,413 | ) | (13,143 | ) | (31,607 | ) | (44,750 | ) | ||||||||||||||||||
Royalties and other operating income and expenses | (272 | ) | (4,899 | ) | (5,171 | ) | (474 | ) | (1,402 | ) | (1,876 | ) | (384 | ) | (2,005 | ) | (2,389 | ) | ||||||||||||||||||
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Total operating expenses | (4,980 | ) | (88,569 | ) | (93,549 | ) | (9,395 | ) | (114,351 | ) | (123,746 | ) | (19,584 | ) | (106,782 | ) | (126,366 | ) | ||||||||||||||||||
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Operating income (loss) before tax | (4,931 | ) | (26,053 | ) | (30,984 | ) | (8,810 | ) | (58,492 | ) | (67,302 | ) | (18,837 | ) | (73,813 | ) | (92,650 | ) | ||||||||||||||||||
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|
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|
|
| |||||||||||||||||||
Financial gain (loss) | 259 | 8,119 | 8,378 | 87 | (41 | ) | 46 | — | (11,032 | ) | (11,032 | ) | ||||||||||||||||||||||||
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Net income (loss) | (4,672 | ) | (17,934 | ) | (22,606 | ) | (8,722 | ) | (58,533 | ) | (67,255 | ) | (18,837 | ) | (84,846 | ) | (103,683 | ) | ||||||||||||||||||
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Non controlling interests | — | (190 | ) | (190 | ) | — | — | — | 4,315 | — | 4,315 | |||||||||||||||||||||||||
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Net income (loss) attributable to shareholders of Cellectis | (4,672 | ) | (18,124 | ) | (22,796 | ) | (8,722 | ) | (58,533 | ) | (67,255 | ) | (14,522 | ) | (84,846 | ) | (99,368 | ) | ||||||||||||||||||
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Adjustment of share-based compensation | 789 | 32,613 | 33,402 | 1,098 | 57,524 | 58,622 | 5,957 | 42,968 | 48,925 | |||||||||||||||||||||||||||
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Adjusted net income (loss) attributable to shareholders of Cellectis | (3,883 | ) | 14,489 | 10,606 | (7,625 | ) | (1,009 | ) | (8,633 | ) | (8,565 | ) | (41,877 | ) | (50,442 | ) | ||||||||||||||||||||
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Depreciation and amortization | (99 | ) | (1,838 | ) | (1,937 | ) | (345 | ) | (1,866 | ) | (2,211 | ) | (551 | ) | (2,820 | ) | (3,371 | ) | ||||||||||||||||||
Additions to tangible and intangible assets | 526 | 3,886 | 4,413 | 10,410 | 4,164 | 14,573 | 792 | 1,849 | 2,642 | |||||||||||||||||||||||||||
Impairment of tangible assets | — | — | — | — | — | — | — | (798 | ) | (798 | ) | |||||||||||||||||||||||||
2022 vs. 2023
137
Therapeutics segment—2016 vs. 2017
External revenues in our Therapeutics segmentand other income decreased by $22.9$16.5 million, or 41.0%, from $55.9$25.7 million for the year ended December 31, 20162022, to $33.0$9.2 million for the year ended December 31, 2017.2023. The decrease was primarily due to a decrease of $19.1 million in collaboration agreement revenues and lower subsidies revenue and research tax credit, as described in sections “Revenues” and “Other income” under “Results of Operations” for the consolidated operating result analysis.Group.
The decrease in total operating expenses of $7.6$8.9 million or 6.6%, from the year ended December 31, 20162022 to the year ended December 31, 20172023 resulted primarily from (i) lower purchases, external expenses and other of $4.8 million and (ii) lower personnel expenses of $5.7 million mainly attributable to thea decrease of $5.3 million innon-cash stock-based compensation expenses personnel wages and social charges on stock options grants,salaries and is partially offset by thean increase of $2.7 million in purchases and externalother operating expenses for product development.
Segment operatingOperating loss before tax for the Therapeutics segment increaseddecreased by $15.3$7.6 million or 26.2%, from the year ended December 31, 20162022 to the year ended December 31, 2017.2023.
Therapeutics segment—2015Adjusted net loss attributable to shareholders of Cellectis decreased by $4.1 million from year ended December 31, 2022 to year ended December 31, 2023
2021 vs. 20162022
External revenues in our Therapeutics segmentand other income decreased by $6.7$12.9 million, or 10.6%, from $62.5$38.6 million for the year ended December 31, 20152021, to $55.9$25.7 million for the year ended December 31, 2016.2022. The decrease was primarily due to a decrease of $11.7 million in collaboration agreement revenues and higher research tax credit, as described in sections “Revenues” and “Other income” under “Results of Operations” for the consolidated operating result analysis.Group.
The increasedecrease in total operating expenses of $25.8$26.6 million or 29.1%, from the year ended December 31,201531, 2021 to the year ended December 31, 20162022 resulted primarily from higher(i) lower purchases, external expenses and other of $17.0 million and (ii) lower personnel expenses of $8.7 million mainly attributable among other things, to the increasea decrease of $2.0 million in personnel wages and salaries, a decrease of $1.2 million in social charges on stock option grants, and a decrease of $5.5 million in non-cash stock-based compensation expenses as well as theand (iii) an increase of $0.9 million in external expenses for product development.other operating income
Segment operatingOperating loss before tax for the Therapeutics segment increaseddecreased by $32.4$13.7 million or 124.5%s from the year ended December 31, 20152021 to the year ended December 31, 2016.2022.
Plants segment—2016 vs. 2017
External revenues in our Plants segmentAdjusted net loss attributable to shareholders of Cellectis increased by $0.2$7.4 million or 27.6%, from $0.6 million for the year ended December 31, 20162021 to $0.7 million for the year ended December 31, 2017.2022.
The increase in operating expenses of $10.2 million, or 108.4%, from the year ended December 31, 2016 to the year ended December 31, 2017 resulted primarily from a significant increase in Calyxt’s activities, higher professional fees related to the cost of becoming a Nasdaq listed company, as well as an increase innon-cash stock-based compensation expenses.
Segment operating loss before tax for the Plants segment increased by $10.0 million, or 113.8%, from $8.8 million for the year ended December 31, 2016 to $18.8 million for the year ended December 31, 2017.
Plants segment—2015 vs. 2016
External revenues in our Plants segment increased by $0.5 million, from $49 thousand for the year ended December 31, 2015 to $0.6 million for the year ended December 31, 2016.
The increase in operating expenses of $4.4 million, or 88.7%, from the year ended December 31, 2015 to the year ended December 31, 2016 resulted primarily from a significant increase in Calyxt’s activities, as well as an increase innon-cash stock-based compensation expenses.
138
Segment operating loss before tax for the Plants segment increased by $3.9 million, or 78.7%, from $4.9 million for the year ended December 31, 2015 to $8.8 million for the year ended December 31, 2016.
Introduction
We have incurred losses and cumulative negative cash flows from operations since our inception in 2000, and we anticipate that we will continue to incur losses for at least the next several years. We expect that our research and development and selling, general and administrative expenses will continue to increase and, as a result, we will need additional capital to fund our operations, which we may raise through a combination of equity offerings, debt financings, other third-party funding, marketing and distribution arrangements and other collaborations, strategic alliances and licensing arrangements.
We have funded our operations since inception primarily through private and public offerings of our equity securities, grant revenues, payments received under patent licenses, reimbursements of research tax credit claims and payments under our strategic allianceslicensing agreements with PfizerAllogene and Servier.
Our ordinary shares have been traded on the Euronext Growth market of Euronext in Paris since February 7, 2007 and our ADSs have traded on the Nasdaq Global Market in New York since March 30, 2015.
Key Financing Events
89
Liquidity management
As of December 31, 2017,2023, we had cash, cash equivalents, fixed-term deposits classified as current financial assets and cash and cash equivalents of $297.0$151.7 million comprising cash and cash equivalents of $256.4$136.7 million.
Long term restricted cash amounts to $4.7 million and currentis classified in Other non-current financial assets of $40.6 million.assets.
Cash in excess of immediate requirements is invested in accordance with our investment policy, primarily with a view to liquidity and capital preservation. Currently, our cash and cash equivalents are held in bank accounts, money market funds, and fixed bank deposits, in each case primarily in France. The portion of cash and cash equivalentequivalents denominated in U.S. dollars is $118.7 million as of December 31, 2023. Current financial assets denominated in U.S. dollars amounted to $233.9$15.0 million as of December 31, 2017. Current financial assets denominated in U.S. Dollars amounted to $39.7 million as of December 31, 2017.2023.
139
Historical Changes in Cash Flows
The table below summarizes our sources and uses of cash for the years ended December 31, 2015, 20162021, 2022 and 2017:2023.
Cash flows from Calyxt, which is classified as discontinued operations in the financial statements as of December 31, 2023, are included in the figures presented below.
| For the year ended December 31, | ||||||||||||
| 2015 | 2016 | 2017 | ||||||||||
Net cash flows provided by (used in) operating activities | 3,591 | (32,710 | ) | (52,327 | ) | |||||||
Net cash flows provided by (used in) investing activities | (7,728 | ) | (53,137 | ) | 1,784 | |||||||
Net cash flows provided by (used in) financing activities | 220,591 | 485 | 41,266 | |||||||||
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|
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|
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| |||||||
Total | 216,454 | (85,362 | ) | (9,277 | ) | |||||||
|
|
|
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|
| |||||||
Effect of exchange rate changes on cash | (10,743 | ) | (2,181 | ) | 11,089 | |||||||
|
| For the year ended December 31, |
| |||||||||
| 2021 |
| 2022 |
| 2023 |
| ||||||
| $ in thousands |
| ||||||||||
Net cash flows provided by (used in) operating activities |
|
| (104,562 | ) |
|
| (87,444 | ) |
|
| (24,746 | ) |
Net cash flows provided by (used in) investing activities |
|
| 7,279 |
|
|
| (2,761 | ) |
|
| (15,510 | ) |
Net cash flows provided by (used in) financing activities |
|
| 47,525 |
|
|
| 1,145 |
|
|
| 82,865 |
|
Total |
|
| (49,758 | ) |
|
| (89,060 | ) |
|
| 42,608 |
|
Effect of exchange rate changes on cash |
|
| (5,754 | ) |
|
| (3,360 | ) |
|
| 884 |
|
With respect to Calyxt, see Note 3 to our consolidated financial statements for more information on our scope of consolidation and non-consolidated entities, and Note 5 to our consolidated financial statements for more information on discontinued operations.
Year Ended December 31, 20172023
Our net cash flows used in operating activities of $24.7 million are mainly due to cash payments from Cellectis to suppliers of $47.7 million, Cellectis’ wages and social expenses paid of $39.7 million and Calyxt’s operating payments of $3.6 million, offset mainly by the $35.7 million of the proceeds from the Initial Investment Agreement with AstraZeneca reallocated to the AZ JRCA and therefore classified within operating activities, $25.0 million of upfront payment from the Joint Research and Collaboration Agreement with AstraZeneca, $2.0 million of cash-in from licensing revenue of Cellectis, $1.0 million of cash-in on from tax refund related to stock-options and $3.6 million of cash-in from income on financial investments.
Our net cash flows used in investing activities of $15.5 million primarily reflect the contracting of a $15.0 million term deposit classified as a current financial asset, the cash and cash equivalents disposed of following the loss of control over Calyxt of $1.6 million and $1.1 million of investments in R&D equipment and building fittings under construction in France, partially offset by the reimbursement of a security deposit from a supplier in the United States of $0.4 million and the $1.3 million change to our current financial assets denominated in a currency other than the functional currency due to foreign exchange impact.
Our net cash flows provided by financing activities of $82.9 million reflect mainly a $44.9 million inflow from AZ Holdings' $80.0 million Initial Investment after reallocation of $35.7 million to operating activities, the $25.0 million gross proceeds from Cellectis' follow-on offering in February 2023, the $21.2 million cash received from EIB pursuant to the disbursement of the Tranche A net of transaction costs, the $5.7 million received in respect of the 2022 research tax credit pre-financing, the $2.8 million refundable advance received from BPI, $2.5 million of Interim Funding received by Calyxt from Cibus, partially offset by transaction costs related to AZ Holdings' Initial Investment of $0.6 million and to Cellectis' follow-on offering of $1.5 million, the payments of lease debts of $11.8 million and the repayment of the “PGE” loan of $5.0 million.
Year Ended December 31, 2022
Our net cash provided by operating activities is primarily attributable to net income for the period after adjusting for non-cash items of $63.1 million for the Therapeutics segment and $14.9 million for the Plants segment, an increase in tax credit receivable of $5.8 million, an increase in trade receivables of $3.2 million for the Therapeutics segment, a decrease in trade payables and other current liabilities of $4.3 for the Plants segment, partially offset by an increase in trade payables and other current liabilities of $3.2 million for the Therapeutics segment.
Our net cash flows used in investing activities primarily reflects our investments in R&D equipment and building fittings in both the United States and France of $2.4 million, and the remainder attributable to investing activity in the Plants segment for $0.9 million, partially offset by a $0.2 million decrease in deposits for the Therapeutics segment and a $0.4 million decrease in other current financial assets for the Plants segment.
Our net cash provided by financing activities reflects mainly the net proceeds of $10.5 million from Calyxt’s follow-on offering and proceeds under Calyxt’s ATM equity program, after $0.8 million transaction costs and the payment of $5.8 million received in respect of the 2021 research tax credit pre-financing, partially offset by the payments of lease debts for $12.8 million and of the “PGE” loan for $1.3 million, $0.6 million of transaction costs related to the Cellectis ATM program and the follow-on offering of Cellectis, each launched in 2023, as well as $0.4 million of interest paid on the “PGE” loan along with interests and capital paid on a loan with our landlord in New-York. The ”PGE” loan refers to a loan from a bank syndicate formed with HSBC, Société Générale, Banque Palatine and Bpifrance in the form of a state-guaranteed loan (Prêt Garanti par l’Etat) (the “PGE”) for $18.5 million (including interest) of which $14.1 million remains outstanding.
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Year Ended December 31, 2021
The net cash flows used in operating activities are mainly due to Cellectis cash payments of $53.9$65.6 million to suppliers, wages and social expenses of $19.8$49.9 million, and rentCalyxt operating payments net of $3.7receipts of $16.6 million, partially offset by $8.4$8.9 million of tax credit, the collection of two Allogene milestone payments received from Servier and Pfizer pursuant to our collaboration agreements and $8.1for $10.0 million, $2.0 million of research tax credit as well as other variances.licensing revenue at Cellectis, and $5.7 million of taxes and others.
The net cash flows used in investing activities primarily reflects the proceeds from disposal of $7.0 million related to Calyxt’s sale and leaseback agreement, partially offset by our acquisition of $2.6 million of financial current assets at Cellectis and our investments in research and developmentR&D equipment and intangible assetsbuilding fittings in both the United States and France of $2.7 million.$19.7 million, including $5.8 million that relates to Cellectis’ new raw material manufacturing facility and offices in Paris, $12.6 million relates to the new commercial manufacturing facility in Raleigh, North Carolina, $0.2 million relates to our innovation center in New York, and the remainder attributable to investing activity in the Plants segment, offset by $27.0 million of current and non-current financial assets variation.
The net cash flows provided by financing activities reflects mainly reflects the net proceeds of $44.6 million from sales under the Cellectis ATM-program in April 2021, the net proceeds of $3.9 million from sales under the Calyxt IPOATM-program over the past quarter, the collection of $38.1$11.8 million on a consolidated basis, the subscription ofnon-employee warrants for $0.3 million, proceeds from stock option exercises and exercises of 121,492 BSPCE warrants and 31,873 stock options by employees during the period for $2.7 million.
Year Ended December 31, 2016
The net cash flows used in operating activities are mainly due to our cash expenditures related to research and development efforts, including the advancement of UCART123, for which an IND was filed in the United States in 2016, plus several advance payments made for manufacturing activities,is partially offset by the payments received from Servier and Pfizer pursuant to our collaboration agreements. Cash outflowsof lease debts for 2016 also include $7.0$12.5 million as well as $0.3 million of social chargesinterest paid on stock options.the “PGE” loan along with interests paid on a loan with our landlord in New-York.
The net cash flows used in investing reflects our use of $10.0 million for the acquisition of land by Calyxt and the building of its greenhouse, and the acquisition of $37.5 million of current financial assets at Cellectis.
The net cash flows provided by financing activities includes the exercise ofnon-employees warrants in January 2016 for $0.3 million and the subscription ofnon-employees warrants in September 2016 for $0.3 million partially offset by the decrease of financial lease debt for $0.1 million.Operating capital requirements—Cellectis S.A.
Year Ended December 31, 2015
We had net cash flows provided by operating activities of continuing operations of $3.6 million for the year ended December 31, 2015, primarily as a result of payments received from Servier and, to a lesser extent, Pfizer. In December 2015, we received an upfront payment of $40.0 million in connection with the amendment to our
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collaboration agreement with Servier. Our cash expenditures during 2015consumption is driven by our internal operational activities, including manufacturing activity conducted at our in-house manufacturing facilities, as well as our outsourced activities, including the pre-clinical research and development activities, manufacturing and technology transfer expenses payable to CMO providers, costs and expenses associated with our clinical trials, including payments to clinical research centers, CROs involved in the clinical trials, and third-parties providing logistics and testing services. In addition, we incur significant annual payment and royalty expenses related to our researchin-licensing agreements with different parties including LifeTechnologies and development efforts, including the advancementUniversity of UCART19, for which a CTA was filedMinnesota. We also incur substantial expenses related to audit, legal, regulatory and tax related services associated with our public company obligations in the United Kingdom in 2015. Cash outflows for 2015 also include $13.5 million of social charges on free shares and stock options grants.
The net cash flows used in investing activities of continuing operations of $7.8 million for the year ended December 31, 2015 primarily reflects our use of $4.3 million for the acquisition of industrial and laboratory equipment at Cellectis S.A. and Cellectis Inc.,States and our repurchase for $3.9 million of 25% of the minority shares of Cellectis Bioresearch.continued compliance with applicable U.S. exchange listing and SEC requirements.
The net cash flows provided by financing activities of continuing operations of $220.6 million for the year ended December 31, 2015 includes the net proceeds from our U.S. initial public offering on the Nasdaq Global Market in March 2015.
Operating capital requirements
To date, we have not generated any revenues from therapeutic or agricultural product sales. In addition to our cash generated by operations (including payments under our collaboration agreements), we have funded our operations primarily through private and public offerings of our equity securities, grant revenues, payments received under intellectual property licenses, and reimbursements of research tax credits.
We do not know when, or if, we will generate any revenues from therapeutic product sales. We do not expect to generate significant revenues from product sales unless and until we obtain regulatory approval of and commercialize one of our current or future therapeutic product candidates. We anticipate that we will continue to generate losses for the foreseeable future, and we expect the losses to increase as we continue the development of, and seek regulatory approvals for, our product candidates, and begin to commercialize any approved products.
We are subject to all risks incident in the development of new gene therapy products, and we may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business. We are also subject to all risks incident in the development of new agricultural products, and we may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business. We also anticipate substantial expenses related to audit, legal, regulatory andtax-related services associated with our public company obligations in the United States and our continued compliance with applicable U.S. exchange listing and SEC requirements.
We anticipate that we will need additional funding in connection with our continuing operations, including for the further development of our existing product candidates and to pursue other development activities related to additional product candidates.
We believe ourOn November 1, 2023, we entered into (i) the AZ JRCA, (ii) the Initial Investment Agreement with AZ Holdings relating to an initial equity investment of $80 million, and on November 14, 2023, we and AZ Holdings entered into the Subsequent Investment Agreement relating to the additional equity investment of $140 million. In connection with these transactions, Cellectis received the following payments during the fourth quarter of 2023 that were not subject to conditions precedent (i) an upfront payment of $25 million, pursuant to the AZ JRCA, and (ii) a payment of $80 million pursuant to the AZ Initial Investment Agreement. All the conditions precedents to the closing are met and the closing should occur on the earlier of (i) the third business day following the approval by the Cellectis' board of directors of the Company's annual and consolidated account for the financial year ended on December 31, 2023, and (ii) May 7, 2024 or such other date as may be agreed in writing by the parties.
With cash and cash equivalents our cash flow from operations (including paymentsof $136.7 million as of December 31, 2023, and taking into account the €15.0 million under Tranche B of the €40.0 million Finance Contract with EIB received in January 2024, and the $140 million equity investment we expect to receive pursuant to our collaboration agreements)the Subsequent Investment Agreement, the Company believes its cash and government funding of research programscash equivalents will be sufficient to fund its operations into, assuming receipt of such funds, 2026 and therefore for at least twelve months following the consolidated financial statements’ publication.
Our assessment of the period of time through which our financial resources will be adequate to support our operations into 2020. However,is a forward-looking statement and involves risks and uncertainties, and actual results could vary as a result of a number of factors. We have based this estimate on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently expect. Our future funding requirements, both near and long-term, will depend on many factors, including, but not limited to:
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If we cannot expand our operations or otherwise capitalize on our business opportunities because we lack sufficient capital, for the further developmentour business, financial condition and results of our existing product candidates and may also need to raise additional funds sooner to pursue other development activities related to additional product candidates.operations could be materially adversely affected.
Sources of capital
Until we can generate a sufficient amount of revenues from our products, if ever, we expect to finance a portion of future cash needs through public or private equity or debt offerings. Additional capital may not be available on reasonable terms, if at all. If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may have to significantly delay, scale back or discontinue the development or commercialization of one or more of our product candidates. If we raise additional funds through the issuance of additional debt or equity securities, it could result in dilution to our existing shareholders, increased fixed payment obligations and these securities may have rights senior to those of our ordinary shares. If we incur indebtedness, we could become subject to covenants that would restrict our operations and potentially impair our competitiveness, such as limitations on our ability to incur additional debt, limitations on our ability to acquire, sell or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. Any of these events could significantly harm our business, financial condition and prospects.
Our assessment ofEIB Finance Contract
On December 28, 2022, we entered into a Finance Contract with the period of time through which our financial resources will be adequateEIB for up to €40.0 million in loans to support our operations is a forward-looking statement and involves risks and uncertainties, and actual results could vary as a
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result of a number of factors. We have based this estimate on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently expect. Our future funding requirements, both near and long-term, will depend on many factors, including, but not limited to:
The disbursement of each Tranche is conditioned upon certain documentary conditions, including the execution of a warrant agreement with respect to the EIB Warrants (as defined below). Each Tranche is subject to additional specific conditions precedent. The disbursement of Tranche A is subject to, among other conditions, the issuance of the Tranche A Warrants (as defined below), the satisfaction of an arrangement fee obligation, and the satisfaction by a licensee of ours of a specified clinical milestone. The disbursement of Tranche B is subject to, among other conditions, the full drawdown of Tranche A, the issuance of the Tranche B Warrants (as defined below), the satisfaction of an arrangement fee obligation, the receipt by us of a cash injection subsequent to October 31, 2022 of an aggregate amount of at least €20.0 million through the issuance of new ordinary shares or other securities subordinated to the loans from the EIB under the Finance Contract, the receipt by us of an aggregate amount of at least €15.0 million subsequent to October 31, 2022 through upfront and milestone payments in connection with existing or new partnerships, at least two of our clinical trials actively recruiting, and no more than one of our clinical trials being subject to ongoing mandatory holds. The disbursement of Tranche C is subject to, among other conditions, the full drawdown of Tranche B, the issuance of the Tranche C Warrants (as defined below), the satisfaction of an arrangement fee obligation, the receipt by us of a cash injection subsequent to October 31, 2022 of an aggregate amount of at least €25.0 million through the issuance of new ordinary shares or other securities subordinated to the loans from the EIB under the Finance Contract, the receipt by us of an aggregate amount of at least €25.0 million subsequent to October 31, 2022 through upfront and milestone payments in connection with existing or new partnerships, at least two of our clinical trials actively recruiting (with either one in the context of a pivotal study or two in the context of an expansion phase study), and two or more of our clinical trials not being subject to ongoing mandatory holds. Any funds not disbursed within 36 months following the execution of the Finance Contract will be cancelled.
Borrowings under the Finance Contract will mature with respect to each Tranche six years from the respective disbursement date for such Tranche. Interest on each Tranche shall be paid in kind, shall be capitalized annually by increasing the principal amount of the respective Tranche, and shall accrue at a rate equal to (i) 8.0% per annum with respect to Tranche A, (ii) 7.0% per annum with respect to Tranche B, and (iii) 6.0% per annum with respect to Tranche C. Interest on any overdue amounts related to a Tranche shall be payable in cash and shall accrue from the due date through the actual payment of such overdue amount at an annual rate equal to the higher of the rate applicable to a relevant Tranche as noted above plus 2.0% and the one-month EURIBOR rate plus 2.0%.
In connection with the Finance Contract, we also agreed to enter into a warrant agreement with EIB with respect to the issuance of warrants to the EIB in connection with, and as a condition to, the funding of each of Tranche (the “Tranche A Warrants,” Tranche B Warrants” and “Tranche C Warrants,” respectively to each Tranche, and collectively, the “EIB Warrants”). The Finance Contract includes certain preliminary and non-exhaustive terms of the EIB Warrants. The final EIB Warrant terms and conditions will be set forth in a definitive Warrant Agreement to be negotiated with EIB, and the preliminary terms and conditions described in this report are subject in all respects to such final terms and conditions as shall be negotiated in respect of the definitive Warrant Agreement. The number of warrants to be issued to the EIB will be determined as follows: (i) with respect to Tranche A, an aggregate number of warrants equal to 20,000,000 divided by the product of the average price of the ordinary shares for the five trading days prior to issuance (the “5-Day AP”) multiplied by 3.5, up to a maximum number of warrants representing 5% of the outstanding ordinary shares at the time of disbursement of Tranche A; (ii) with respect to Tranche B, (a) if the sum of cash injections through the issuance of new ordinary shares or other securities subordinated to the Finance Contract and upfront and milestone payments in connection with existing or new partnerships between October 31, 2022 and the Tranche B disbursement exceeds €42,500,000, an aggregate number of warrants equal to 15,000,000 divided by the product of the 5-Day AP multiplied by four and (b) otherwise, an aggregate number of warrants equal to 15,000,000 divided by the product of the 5-Day AP multiplied by 3.75; and (iii) with respect to Tranche C, (a) if the sum of cash injections through the issuance of new ordinary shares or other securities subordinated to the Finance Contract and upfront and milestone payments in connection with existing or new partnerships between October 31, 2022 and the Tranche C disbursement exceeds €70,000,000, an aggregate number of warrants equal to 5,000,000 divided by product of the 5-Day AP multiplied by 4.75; and (b) otherwise, an aggregate number of warrants equal to 5,000,000 divided by the product of the 5-Day AP multiplied by 4.25. The EIB Warrants will have an exercise price per share equal to 99% of the weighted average price per share of Cellectis over the last 5 trading
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days prior to the issuance of the EIB Warrants. The warrant agreement shall include anti-dilution protections, which shall not apply in specified circumstances. The EIB Warrants will also include a put option, which shall be subject to a cap at one time the aggregate principal amount disbursed by the EIB pursuant to the Finance Contract at the time of exercise of the put option.
EIB may cancel any undisbursed amount under the Finance Contract upon the occurrence of, or any event or circumstance that would, with notice or the passage of time constitute, any event of default or mandatory prepayment event. In the event of such a cancellation by EIB prior to the expiration of a period of three years after disbursement of a relevant Tranche, we shall be required to pay a cancellation fee representing a low-single digit percentage of the cancelled amount.
Mandatory prepayment events include: (i) any reduction in the total cost of our needR&D Activities such that the €40.0 million amount of the Finance Contract, together with certain other funds from the European Union, exceeds specified percentages of the aggregate cost of our R&D Activities, in which case the prepayment amount shall be the amount by which such limits are exceeded, together with accrued interest and all other accrued and outstanding amounts, (ii) any voluntary prepayment, in whole or in part, by us or its subsidiaries has occurred or is likely to occur of any indebtedness or other repayment obligation granted by a party other than EIB, in which case the prepayment amount shall be proportionate to the prepaid amount of such non-EIB indebtedness, together with accrued interest, (iii) any change of control of us or any change in law or regulation that would materially impair our or the guarantors’ ability to hireperform under the Finance Contract, in which case the prepayment amount shall be the full outstanding amount, together with accrued interest and all other accrued and outstanding amounts, and (iv) any event that renders performance under the Finance Contract unlawful, in which case the prepayment amount shall be the full outstanding amount, together with accrued interest and all other accrued and outstanding amounts, and the remaining undisbursed portion shall be cancelled. In addition, any Tranche may be voluntarily prepaid by us, in whole or in part, upon 30 days’ notice. Except in connection with a prepayment pursuant to clause (iii) or (iv), all prepayments prior to the expiration of a period of three years after disbursement of a relevant Tranche are subject to a prepayment fee representing a low single-digit percentage of the prepayment amount, which steps down at each anniversary of the applicable disbursement date.
The Finance Contract also includes customary events of default, including: payment defaults; defaults arising from the provision of incorrect, incomplete or misleading representations to the EIB; cross defaults resulting in acceleration or cancellation of any other loan or obligation; cross defaults with respect to any other obligation granted by EIB or the European Union; the occurrence of any material adverse change; any EIB Warrants ceasing to be in full force and effect (other than as a result of exercise), and certain bankruptcy and insolvency events of default. Upon the occurrence of an event of default, EIB may demand immediate repayment by us of all or part of the outstanding funds, together with accrued interest, and all other accrued or outstanding amounts under the Finance Contract.
In connection with the Finance Contract, we agreed to certain customary affirmative and negative undertakings. The negative undertakings include: restrictions on dispositions of assets by us and our subsidiaries, restrictions on changes to the general nature of our business, restrictions on us and our subsidiaries engaging in mergers and other restructuring transactions, restrictions on certain ownership changes with respect to subsidiaries, restrictions on us and our subsidiaries engaging in acquisitions or making investments, restrictions on us and our subsidiaries incurring additional personnel;indebtedness or guarantees, restrictions on the making of intercompany loans, restrictions on us and our subsidiaries engaging in certain hedging or derivative transactions, restrictions on us and our subsidiaries making specified restricted payments including dividends and share repurchases, restrictions on us and our subsidiaries becoming creditors in respect of certain indebtedness, and restrictions on the incurrence of security over any of our or our subsidiaries’ assets. In addition, we granted EIB most favored nation rights with respect to any obligation, clause or undertaking, whether positive or negative (including, without limitation, events of default, mandatory prepayment events, a loss-of-rating clause or financial covenants) included in any other financing agreement (excluding underwriting agreements in connection with securities offerings). We also granted certain information and inspection rights to the EIB in connection with the Finance Contract. The Finance Contract contains certain customary representations and warranties by us and is governed by French law.
The Warrant Agreement
On March 30, 2023, the Company and EIB entered into a Subscription Agreement for Warrants to be Issued by Cellectis S.A. (the “Warrant Agreement”), the execution of which was a condition precedent to the Company’s ability to draw amounts under the Finance Contract.
The Warrant Agreement establishes the terms and conditions of the EIB Warrants.
With respect to Tranche A, 2,799,188 Tranche A Warrants were issued, representing 5.0% of the Company’s outstanding share capital as indicated above. With respect to Tranche B, 1,460,053 Tranche B Warrants were issued, representing approximately 2.0% of the Company’s outstanding share capital.
With respect to Tranche C, the number of warrants to be issued will be determined as follows: (a) if the sum of cash injections through the issuance of new ordinary shares or other securities subordinated to the Finance Contract and upfront and milestone payments in connection with existing or new partnerships between October 31, 2022 and the Tranche C disbursement exceeds €70,000,000, an aggregate number of warrants equal to 5,000,000 divided by product of the 5-Day AP multiplied by 4.75; and (b) otherwise, an aggregate number of warrants equal to 5,000,000 divided by the product of the 5-Day AP multiplied by 4.25.
The EIB Warrants will have an exercise price per share equal to €1.92, corresponding to 99% of the weighted average price per share of Cellectis over the last 3 trading days prior to their issuance. Each EIB Warrant will entitle its holder to one ordinary share of the Company in exchange for the exercise price, subject to all applicable adjustments. The EIB Warrants with respect to Tranche C are only issuable if the Company elects to drawdown such Tranche.
The EIB Warrants expire on the twentieth anniversary of their issuance date at which time they will be automatically deemed null and void. Any outstanding EIB Warrants will become exercisable upon the earliest to occur of (i) a change of control event, (ii) the maturity date of Tranche A, (iii) a public take-over bid approved by the Company’s board of directors, (iv) a sale of all or substantially all of the assets of Cellectis and its subsidiaries, (v) a debt repayment event—i.e., any mandatory repayment pursuant to the Finance Contract or any voluntary payment of more than 75% of any Tranche—in respect of one or more Tranches, or (vi) the receipt of a written demand for repayment from EIB in connection with an event of default under the Finance Contract (each an “Exercise Event”).
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Furthermore, in the case of any public take-over bid from a third party or a sale of all outstanding shares of the Company to any person or group of persons acting in concert, in the context of a group of specified Company shareholders acting in concert, the Company shall be entitled to repurchase all, but not less than all, of the EIB Warrants at a price equal to the greater of (a) 0.3 times the amount disbursed under the Finance Contract divided by the aggregate number of EIB Warrants issued (reduced by the number of exercised EIB Warrants) and (b) the fair market value of the EIB Warrants.
The Company has also a right of first refusal to repurchase the EIB Warrants that are offered for sale to a third party under the same terms and conditions of such third party’s offer, provided that such right of first refusal do not apply if the contemplated sale occurs within the scope of a public take-over bid by a third-party.
Subject to the right of first refusal and compliance with applicable securities laws, the EIB Warrants may be transferred following an Exercise Event, to certain affiliates of EIB, or otherwise with the prior written approval of the Company.
The Warrant Agreement provides for customary anti-dilution adjustments in connection with changes to the structure of the Company’s share capital.
In connection with the Warrant Agreement, the Company agreed to certain customary affirmative and negative undertakings. The negative undertakings include: restrictions on certain dispositions of assets by the Company and its subsidiaries and restrictions on the Company and its subsidiaries making specified restricted payments, including loan repayments, dividends and share repurchases.
The Warrant Agreement contains certain customary representations and warranties by the Company and is governed by French law.
Drawdowns under the Finance Contract – Tranches A and B
On March 30, 2023, the Company announced the drawdown of the first tranche under the Finance Contract in the amount of €20 million (“Tranche A”), disbursed by the EIB in April 2023.
The disbursement of Tranche A was subject to, among other conditions, the issuance of the specified number of Tranche A Warrants, and the satisfaction by a licensee of the Company of a specified clinical milestone. On March 28, 2023, the Company issued 2,799,188 Tranche A Warrants to EIB, representing 5.0% of the Company’s outstanding share capital as at their issuance date.
Tranche A will mature six years from the disbursement date and interest on Tranche A shall be paid in kind, shall be capitalized annually by increasing the principal amount of Tranche A, and shall accrue at a rate equal to 8.0% per annum.
The EIB may cancel any undisbursed amount of Tranche A upon the occurrence of, or any event or circumstance that would, with notice or the passage of time constitute, any event of default or mandatory prepayment event. In the event of such a cancellation by the EIB prior to the expiration of a period of three years after disbursement of Tranche A.
On January 16, 2024, Cellectis drew down on the second tranche of €15 million under the Finance Contract, pursuant to which the Company issued 1,460,053 warrants to the EIB in connection with the disbursement of the €15.0 million Tranche B. Each Tranche B Warrant allows the EIB to subscribe for one ordinary share of the Company, at a price of €2.53, corresponding to 99% of the volume-weighted average price of the Company’s ordinary shares over the last 3 trading days preceding the decision of the board of directors of the Company to issue the Tranche B Warrants.
The total number of shares issuable upon exercise of the Tranche B Warrants represented approximately 2.0% of the Company’s outstanding share capital as at their issuance date. Tranche B will mature six years from its disbursement date and will accrue interest at a rate of 7% per annum capitalized annually and payable at maturity. Tranche B was disbursed in January 2024.
Follow-on offering
On February 7, 2023, Cellectis launched of a follow-on offering of $22 million of its ADS for which . Jefferies LLC and Barclays Capital Inc. acted as joint book-running managers for the Global Offering. Pricing occured on February 2, 2023, at $2.50 per ADS . Bpifrance Participations, Baillie Gifford & Co. and Long Focus Capital Management LLC, existing shareholders of the Company, were allocated in the aggregate more than half of the ADS sold in the global offering. On February 7, 2023, Cellectis has announced the exercise by the underwriters, Jefferies LLC and Barclays Capital Inc., of their option (the “Option”) to purchase an additional infrastructure1,107,800 ordinary shares (the “Additional Ordinary Shares”) of the Company to be delivered in the form of an aggregate of 1,107,800 ADSs The total number of ordinary shares issued in the form of ADSs amounted to 9,907,800 with gross proceed of $24.8 million and internal systems, including manufacturing processes for our product candidates;
ATM Program
On January 4, 2023, we entered into an amendment to the costSales Agreement, dated as of establishing sales, marketing and distribution capabilities for any products forMarch 29, 2021, with Jefferies LLC with respect to an equity offering program under which we may offer and sell ADS having an aggregate offering price of up to $60.0 million from time to time following January 4, 2023, through Jefferies as our sales agent. As of the date of this Annual Report, we have not sold any ADS under the amended program subsequent to such date.
Cellectis decided to discontinue the ATM.
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Joint Research Collaboration Agreement and Investment Agreements with AstraZeneca
In addition to an upfront payment of $25 million made by AZ Ireland to Cellectis, under the AZ JRCA, AZ Ireland will reimburse Cellectis for its budgeted research costs associated with targets identified under the AZ JRCA. Cellectis is also eligible to receive an option exercise fee and development, regulatory approval.and sales-related milestone payments, ranging from $70 million up to $220 million, per each of the 10 candidate products, plus tiered royalties, which may range from mid-single to low-double digits, based on the sale of Licensed Products.
AstraZeneca made an initial equity investment of $80 million in Cellectis by subscribing for 16,000,000 ordinary shares, at a price of $5.00 per share (the “Initial Investment”).
Additionally, we entered into the Subsequent Investment Agreement with AZ Holdings under which AZ Holdings would make a further equity investment in Cellectis of $140 million by subscribing for two newly created classes of convertible preferred shares of Cellectis: 10,000,000 “class A” convertible preferred shares and 18,000,000 “class B” convertible preferred shares, in each case at a price of $5.00 per share (the “Additional Investment”). Closing of the Additional Investment is expected to occur shortly after the date of this Annual Report.
State Guaranteed Loan (“PGE”)
We received the PGE loan on July 2020 of $18.5 million (including interest) (or $20.4 million using exchange rate as of December 31, 2023) of which $14.1 million remains outstanding, from a bank syndicate formed with HSBC, Société Générale, Banque Palatine and BPI. Initiated by the French Government to support companies during the COVID-19 crisis, the PGE is a bank loan with a fixed interest rate ranging from 0.31% to 3.35%. After an initial interest-only term of two years, the loan is amortized over up to four years at the option of the Company. The French government guarantees 90% of the borrowed amount. See Note 13 to our consolidated financial statements for more information about the amounts outstanding under the PGE loan.
Cellectis’ Contractual Obligations and Commitments
As of December 31, 2023, Cellectis had the following contractual obligations:
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Lease agreement |
|
| 63,349 |
|
|
| 11,107 |
|
|
| 19,647 |
|
|
| 15,046 |
|
|
| 17,548 |
|
License and collaboration agreements |
|
| 13,480 |
|
|
| 1,400 |
|
|
| 2,800 |
|
|
| 2,800 |
|
|
| 6,480 |
|
Clinical & Research and Development agreements |
|
| 71 |
|
|
| 71 |
|
|
| - |
|
|
| - |
|
|
| - |
|
IT licensing agreements |
|
| 319 |
|
|
| 233 |
|
|
| 86 |
|
|
| - |
|
|
| - |
|
State Guaranteed loan « PGE » |
|
| 14,057 |
|
|
| 5,107 |
|
|
| 8,950 |
|
|
| - |
|
|
| - |
|
EIB loan |
|
| 22,100 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 22,100 |
|
Bpifrance's advance |
|
| 1,910 |
|
|
| - |
|
|
| - |
|
|
| 433 |
|
|
| 1,477 |
|
Total contractual obligations |
|
| 115,286 |
|
|
| 17,918 |
|
|
| 31,483 |
|
|
| 18,279 |
|
|
| 47,606 |
|
Cellectis’ short-term and long-term material requirements are reflected in the table above and mainly relate to:
IfAn analysis as to Cellectis’ ability to meet these requirements is provided under the caption “Operating capital requirements – Cellectis S.A.”, discussed above
Calyxt Lease Guaranty
In September 2017, Calyxt entered into a lease agreement with a third party for its corporate headquarters and laboratory facilities in Roseville, Minnesota, which encompasses approximately 44,000 square feet including office and research and development space. The lease has a term of twenty years with four options to extend its term for five years each subject to there being no default under the lease terms beyond any cure period and Calyxt occupying the property at the time of extension.
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The lease commenced in May 2018. Under the lease, Calyxt pays an annual base rent of eight percent of the total project cost with scheduled increases in rent of 7.5 percent on the sixth, eleventh, and sixteenth anniversaries of the start of the lease commencement as well as on the first day of each renewal term.
Concurrent with entering the lease, Cellectis guaranteed the lease agreement for Calyxt’s headquarters. However, Calyxt previously agreed to indemnify Cellectis for any obligations under this guaranty, effective upon Cellectis’ ownership falling to 50 percent or less of Calyxt’s outstanding common stock. Accordingly, Calyxt’s indemnification obligation was triggered in October 2022.
In connection with the Merger Agreement, we cannot expandexecuted a voting agreement with Cibus to vote in favor of and approve all the transactions contemplated by the Merger Agreement, subject to the terms and conditions thereof. Pursuant to the voting agreement, at such time that the annual revenues of Calyxt Inc. equals $25.0 million or more for two consecutive 12-month periods after the closing of the Merger, Cibus will use commercially reasonable efforts to terminate our operationsguaranty of Calyxt’s lease agreement with respect to its headquarters, which we provided in favor of the landlord of that property. As of December 31, 2023, our lease guaranty represents a liability in the amount of $22.9 million over the remaining 14 years lease period. Cibus, however, will not be required to replace us as guarantor or otherwise capitalize onpay any fees in connection with termination of the guaranty. Until the parties are able to terminate our business opportunities because we lack sufficient capital,lease guaranty, Cibus. may not renew or extend Cibus’s lease or enter into any amendment that would increase our business, financial conditionliability under the lease guaranty. Further, Cibus, from and resultsafter the closing of operations could be materially adversely affected.the Merger, agrees to indemnify us and our affiliates in connection with the Cibus lease and our guaranty thereof.
Our research and development teams utilize our deep expertise to contribute to the growth of our business. As of December 31, 2017,2023, we had 97169 employees engaged in research and development activities. In the years ended December 31, 2015, 20162021, 2022 and 20172023 we spent $58.2$117.8 million, $78.5$97.5 million and $79.2$87.6 million respectively, on research and development. For a discussion of our research and development activities, see “Item 4.B—Business Overview” and “Item 5.A—Operating Results.”
For a discussion of trends, see “Item 4.B—Business Overview,” “Item 5.A—Operating Results” and “Item 5.B—Liquidity and Capital Resources.” Other than as disclosed in these sections, we are not aware of any trends, uncertainties, demands, commitments or events since December 31, 20152023 that are reasonably likely to have a material adverse effect on our revenues, income, profitability, liquidity or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future operating results or financial condition.
Not applicable.
We entered into (i) financial derivative instruments agreements to minimize impacts from exchange rate fluctuations and (ii) seed and grain production agreements with settlement value based on commodity market future pricing. Otherwise, we do not have anyoff-balance sheet arrangements as defined under SEC rules.
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The following table discloses aggregate information about material contractual obligations and periods in which payments were due as of December 31, 2017. Future events could cause actual payments to differ from these estimates.
| As of December 31, 2017 | Total | Less than 1 year | 1 - 3 years | 3 - 5 years | More than 5 years | |||||||||||||||
| $ in thousands | ||||||||||||||||||||
Sale and lease-back agreement | 30,114 | 1,076 | 2,689 | 2,676 | 23,673 | |||||||||||||||
Facility lease agreements | 13,416 | 3,110 | 5,939 | 1,670 | 2,697 | |||||||||||||||
License agreements | 18,413 | 1,238 | 2,476 | 2,476 | 12,223 | |||||||||||||||
Manufacturing agreements | 7,679 | 7,679 | — | — | — | |||||||||||||||
Other agreements | 1,702 | 1,702 | — | — | — | |||||||||||||||
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|
|
|
|
|
|
|
|
| |||||||||||
Total contractual obligations | 71,324 | 14,805 | 11,104 | 6,821 | 38,593 | |||||||||||||||
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|
|
|
|
|
|
|
|
| |||||||||||
The commitment amounts in the table above are associated with contracts that are enforceable and legally binding and that specify all significant terms, including fixed or minimum services to be used, fixed, minimum or variable price provisions, and the approximate timing of the actions under the contracts. The table does not include obligations under agreements that we can cancel without a significant penalty. We have collaboration agreements whereby we are obligated to pay royalties and milestones based on future events that are uncertain and therefore they are not included in the table above.
We also provided Letters of Credit to the landlords of our facility in New York and Calyxt’s facility in New Brighton.
For further detail regarding license and manufacturing agreement, please see Note 18 – Commitments of our consolidated financial statements.
This Annual Report contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act and as defined in the Private Securities Litigation Reform Act of 1995. See “Special Note Regarding Forward-Looking Statements.”
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ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
The following table sets forth information regarding our executive officers and directors as of March 13, 2018. Unless otherwise stated, the address for our executive officers and directors is 8, rue de la Croix Jarry, 75013 Paris, France.date of this Annual Report:
Name | Age | Position(s) | ||||||
Executive Officers: | ||||||||
André Choulika, Ph.D. | 59 | Director, Chief Executive Officer and Co-Founder | ||||||
Mark Frattini, MD | 58 | Chief Medical Officer | ||||||
Steven Doares, Ph.D. | 64 | Senior Vice President of US Manufacturing | ||||||
Philippe Duchateau, Ph.D. | 61 | Chief Scientific Officer | ||||||
Kyung Nam-Wortman | 54 | Chief Human Resources Officer | ||||||
Stephan Reynier | 54 | Chief Regulatory & Pharmaceutical Compliance Officer | ||||||
David Sourdive, Ph.D. | 57 | Director, Deputy Chief Executive Officer, Executive Vice President, CMC and Manufacturing | ||||||
Arthur Stril | 35 | Chief Business Officer | ||||||
Marie-Bleuenn Terrier | 42 | General Counsel | ||||||
Bing Wang, Ph.D. | 48 | Chief Financial Officer | ||||||
Non-Employee Directors: | ||||||||
Jean-Pierre Garnier, Ph.D. | 76 | Chairman of the Board | ||||||
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Executive Officers
André Choulika, Ph.D., is one of the founders of Cellectis and served as Chief Executive Officer since the company’sCompany’s inception in 1999. He isserved as Chairman of our board of directors from 2011 to November 2020 and Chairman of the Boardboard of Directors since 2011 and Presidentdirectors of Calyxt from August 2010 to July 2020. He is CEO and Chairman of Cellectis, Inc. since August 2010.December 2014 and Cellectis Biologics, Inc. since January 2019. From 1997 to 1999, Dr. Choulika worked as a post-doctoral fellow in the Division of Molecular Medicine at Boston Children’s Hospital, where he was one of the inventors of nuclease-based genome editing technologies and a pioneer in the analysis and use of meganucleases to modify complex genomes. After receiving his Ph.D. in molecular virology from the University of Paris VI (Pierre et Marie Curie), he completed a research fellowship in the Harvard Medical School Department of Genetics. His management training is from the HEC (Challenge +). Based onSince June 2019, Dr. Choulika’s deep knowledgeChoulika served at the board of directors of Institut Pasteur. André Choulika was awarded Chevalier of the company and scientific experience, we believe Dr. Choulika has the appropriate set of skills to serve as our chief executive officer and a member of our board of directors.Légion d’Honneur in France.
Julia BerrettaSteven Doares, Ph.D., joined Cellectis in 2010 in the scientific alliance and business development department. She has served as VP Business Development and Strategic Planning since 2014. Prior to joining Cellectis, she worked as a researcher at the CNRS inGif-sur-Yvette. Julia Berretta received her Ph.D. in molecular biology from the Université Paris XI, and holds a specialized Master’s Degree in innovation management from Neoma Business School.
Elsy Boglioli joined Cellectis in December 2017. Commencing in 2018, she serves as Chief Operating Officer. Prior to assuming the COO role, she served as Executive Vice President, Strategy and Corporate
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Development. Prior to joining Cellectis, she worked at Boston Consulting Group (BCG) where she served as Partner and Managing Director, and leader of BCG’s biotech-focused business in Europe. At BCG, she was also a member of the global biopharma leadership team and global strategy practice management team and served as regional head of the strategy practice for Europe. Ms. Boglioli graduated from Ecole Polytechnique in Paris, France and holds a master’s degree in economy and management from Pompeu Fabra University in Barcelona, Spain.
Stéphane Depil, M.D., Ph.D., joined Cellectis in December 2017. He servesJuly 2020 as Senior Vice President, Research & DevelopmentUS Manufacturing and Chief Medical Officer. In addition to his role at Cellectis, Stéphane Depil is an onco-hematologist at Léon Bérard Cancer Center and an adjunct Professor at University Claude Bernard Lyon 1, France. Prof. Depil is a Board-certified physician in hematology and has over 15 years of experience in oncology clinical development, both in hospital / university and pharmaceutical companies. He obtained a PhD in immunology at Institut de Biologie de Lille after working on a project concerning cancer vaccination. Prior to joining the Léon Bérard Cancer Center & Cancer Research Center of Lyon, France, as Medical DirectorSite Head of the Cancer Immunotherapy Program, he served as Chief Executive Officer at Netris Pharma, where he wasRaleigh, North Carolina manufacturing facility. Dr. Doares is responsible for the managementdeployment of an oncology startupCellectis’ manufacturing facility in Raleigh, for clinical and preclinical developmentcommercial supplies of afirst-in-class monoclonal antibody in Phase I.the Cellectis’ current immuno-oncology UCART product candidates. Prior to Netris, Stéphane Depiljoining Cellectis, Dr. Doares worked at ServierBiogen, Inc. from 2010 to 2020, most recently serving as Vice President, Global Manufacturing Sciences, responsible for 8 yearstechnology transfer into cGMP manufacturing of processes from clinical through commercialization stages for Biogen’s therapeutic product portfolio, both internally and externally. Dr. Doares holds a Ph.D. in a varietyBiochemistry from the University of roles, including Director of Oncology Research and Development, where he managed 20 programs: 5 in the clinic, 7 at late preclinical stages, and 8 at early preclinical stages. He also directly supervised the evaluation of over 100 licensing opportunities.Georgia.
Philippe Duchateau, Ph.D., joined Cellectis in 2001 to pioneer the field of genome engineering and has served as Chief Scientific Officer since 2012. After receiving his PhDPh.D. in 1993 in biochemistry and molecular biology at the Institut Pasteur (Lille, France), he completed a research fellowship from 1993 to 2001 at the University of California, San Francisco (United States) within the Cardiovascular Research Institute. He isco-inventor of numerous patents in the field of nucleases and genome engineering andco-authors co-author on more than 50 scientific publications andco-editor of one book entitled “Site-directed Insertion of Transgenes.” As head of Cellectis’s Research department since 2004, he helped to the development of the key Cellectis Technologies.technologies.
Eric DutangMark Frattini, M.D., Ph.D., joined usCellectis in August 2020. He serves as Deputy Chief FinancialMedical Officer since September 2022. Prior to that date, Dr. Frattini served as Senior Vice President of Clinical Sciences since August 2022. Prior joining Cellectis, Dr. Frattini was Executive Medical Director, Program Lead, Global Research and Development at Celgene. Before joining Celgene, Dr. Frattini spent over 16 years as a physician-scientist specialized in May 2015hematology malignancies at Memorial Sloan-Kettering Cancer Center and Columbia University where he was appointed Chief Financial Officer in 2016. Eric began his career as financial auditor with KPMG, first in Paris for five years and then in New York for two years. He worked for listed companies in France and the United States such as Vivendi, Veolia Environnement or Cablevision. He then became a member of the transactionsadult leukemia service and advisory teams in Paristhe Experimental Therapeutics Center at both institutions. From 2013 to 2018, Dr. Frattini served as the Director of Research for seven years where he carried out acquisitions / disposals for listed companies and private equity funds. After servingHematology Malignancies at KPMG, he worked on international business developments for French public listed groups, including Air Liquide and Thales. EricColumbia University. Dr. Frattini holds a MasterM.D. and Ph.D. in Biochemistry and Molecular Biology from the University of FinanceChicago and received his Internal Medicine residency and Medical Oncology fellowship training at Johns Hopkins Hospital.
Kyung Nam-Wortman, joined Cellectis in November 2020 as Executive MBAVice President, Chief Human Resources Officer. Before joining Cellectis, Ms. Nam-Wortman was Senior Vice President, Head of Human Resources, Head of Information Technology, Facilities and Internal Communications at Achillion (recently acquired by Alexion in January 2020) since October 2014. Prior to her tenure at Achillion, Ms. Nam-Wortman was Vice President and Head of Global Talent and Organization Capability at Zoetis, where she supported the spin-off of Pfizer’s animal health business unit through its IPO and was responsible for the stand up of Zoetis’ global talent management function to support the company’s growth worldwide. She also held various human resource leadership roles for Pfizer’s business units, divisions, and functions with regional and global accountabilities. In addition to her experience in biotech/biopharma, Ms. Nam-Wortman has 14 years of experience in the consulting industry focused on strategic and organization change management from HEC Paris (France)Delta Consulting Group and IBM. She received her bachelor’s degree in marketing from New York University Stern School of Business and MS in human resources management /Babson Massachusetts (USA). organization development from the New School of Social Research.
Stephan Reynier, MSc, joined Cellectis in April 2011. He serves as Chief Regulatory and Pharmaceutical Compliance Officer after holding the position of Head of Programs at Ectycell, a former subsidiary of Cellectis, from April 2011 to 2014 with the mission of managing and coordinating internal and external collaborative programs. As Chief Regulatory and Compliance Officer, Mr. Reynier is in charge of ensuring a speedy and successful development of the UCART product family by establishing close interactions with regulatory agencies such as EMA and FDA, while securing compliance to applicable regulations, regulatory guidelines and quality assurance standards.Officer. Mr. Reynier has extensive experience, from his previous positions as Senior Director at Voisin Consulting Life Sciences and European Associate Director Medical Affairs at Gilead Sciences, in the design and implementation of regulatory strategies for the development
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of drugs and biologics, with a strong focus on cell and gene therapy. Mr Reynier graduated as Agro-Engineer in France and received a Master of Science in Chemical Engineering from the University of Toronto, Canada.
David Sourdive, Ph.D., is aco-founder of Cellectis and has heldholds the position of Executive Vice President, Technical Operations since 2017. Prior to that date, Dr. Sourdive served as Executive Vice President, Corporate
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Development since 2008. Dr. Sourdive has also been a member of our board of directors since 2000. From 2009 to 2012, he served as President of Ectycell SAS, and since 2012, he has served on its supervisory committee. Since February 2014, Dr. Sourdive has also served on the board of directors of Mediterranean Institute for Life Sciences.Sciences (MEDILS). Since September 2019, he serves on the board of directors of Exeliom S.A.S., since February 2021, he serves on the board of directors of Cell-Easy S.A.S, from June 2023 he has served on the board of directors of hema.to GmbH, and from October 2023, he serves at the board of directors of Aqemia SAS. From 2021 to December 2023, he served on the board of directors of Mablink S.A.S. From December 2018 to December 2021, he served on the board of directors of Enobraq SAS. From October 2017 to May 2020, Dr. Sourdive served on the Board of Omics SAS. From June 2015 to December 2019, he has served on the board of directors of Eukarÿs SAS, and since 2017 Dr. Sourdive serves on the Board of Omics SAS. He previously served on the boards of directors of Cellectis AB, Medicen Paris Region and Seine Saint Denis Avenir. From 1998 to 2000, he directed the biotechnologies laboratory of the Centre d’Etudes du Bouchet for the French Ministry of Defense. From 1997 to 1998, Dr. Sourdive worked at one of the leading laboratories in viral immunology at Emory University in Atlanta, Georgia. His work there was focused on immunologicalT-cell memory. Dr. Sourdive graduated from the École Polytechnique and received his PhD in molecular virology at the Institut Pasteur. He also has management training from the HEC (Challenge +). We believe Dr. Sourdive’s extensive experience
Arthur Stril joined Cellectis in businessJuly 2018 as Vice President, Corporate Development, and the biotechnology industry qualifies him to servewas appointed Chief Business Officer in 2020. Mr. Stril serves on ourthe board of directors.directors of Primera Therapeutics, Inc. since May 2023, serving as a director designated by Cellectis Mr. Stril began his career at the European Commission’s Directorate-General for Competition, controlling global pharmaceutical mergers. He later became Head of the Hospital Financing Unit at the French Ministry of Health. Mr. Stril graduated from the École Normale Supérieure, Paris & Cambridge University, and holds a diploma in Immunotherapy from the Université Paris-Descartes. Mr. Stril is also a member of the French Corps des Mines.
Marie-Bleuenn Terrier joined Cellectis as Legal Counsel in 2008, and was appointed General Counsel in 2013. Prior to joining Cellectis, she worked as Legal Counsel for Pfizer from 2004 to 2006, and for Boehringer-Ingelheim from 2006 to 2008. Marie-Bleuenn Terrier has also servedserves as Secretary of our board of directors since 2015. From July 2020 to September 2022, Mrs. Terrier served as president of Standing Ovation S.A.S. She holds a Master’s degree in Law from the Panthéon La Sorbonne University in Paris.
Federico TripodiBing Wang, Ph.D. joined Cellectis in February 2022 as Chief Financial Officer. Before joining Cellectis, from March 2016 to December 2021, Mr. Wang was appointed CEOChief Executive Officer and director of Calyxt in May 2016. HeRefuge Biotechnologies, Inc., a private cell immuno-oncology biotechnology company co-founded by him. Mr. Wang holds a Masterapproximatively 12% of Business Administration degree from Washington University’s Olin Business School, as well as an agronomic engineering degree from Buenos Aires University, and has gathered extensive experience in agricultural R&D and product development during his nearlytwo-decade career in the agricultural biotechnology and seeds industry.share capital of Refuge Biotechnologies. Prior to joining Calyxt, he worked as General Manager for Monsanto Company’s Sugarcane Division in Brazil for three years. He held other roles for Monsanto in Saint Louis, Mo., spanning Corporate Strategy (2011-2013),Omega-3 Program Lead (2009-2011), Oilseeds Global Quality Management Lead (2008-2009) and multiple other roles that involved managing multidisciplinary research teams in the technology organization between 2001 and 2008. During his tenure at Monsanto,Refuge Biotechnologies, Inc., Mr. Tripodi led or participated with early discovery and late commercialization phase product launches across the Americas, which included biotechnology consumer traits (improved composition soybean oils) and farmer traits (high yield, drought tolerance, insect protection and herbicide tolerance). Mr. Tripodi started his career in Argentina in 1998 in field research of biotechnology traits and chemistry formulations until he moved to Saint Louis in 2001. Mr. Tripodi also has experience as aWang was director of a startuphealthcare investment banking at Barclays Capital, Inc. and served on the board of director of KPB Biosciences from August 2017 to October 2018. Since April 2019, he served on the advisory board of the Healthcare and Pharmaceutical Management Program at Columbia Business School. Mr. Wang holds a Bachelor of Science in Applied Physics from Columbia University and Ph.D. in Electrical Engineering from Princeton University, and a MBA from Columbia Business School.
Non-employee Directors
Jean-Pierre Garnier, M.D., has served as a member and Chairman of our board of directors since November 2020. Since 2019, he served as director of the board of directors of Carrier Global Corp., a public company. From 2015 to 2022, Dr. Garnier has served as director of the board of directors of Radius Therapuetic, and from 2018 to 2022, he served as Chairman of the board of directors of Carmat, a public company based in France. From 2018 to 2020, Dr. Garnier was Chairman of Idorsia, a public bio-technology company based in Switzerland and listed on the Swiss Stock Exchange (SIX), which was spun off of Actelion LTD with a billion-dollar investment from Johnson & Johnson (J&J). Previous to his tenure at Idorsia, he was Chairman of Actelion Ltd., a Swiss pharmaceuticals and bio-technology company, sold for $30 billion to Johnson & Johnson. From 2008 to 2010, Dr. Garnier served as Chief Executive Officer of Pierre Fabre, from 2000 to 2008 he served as Chief Executive Officer and Executive Member of the board of directors of GlaxoSmithKline plc, and in 2000, he was Chief Executive Officer of SmithKline Beecham plc. Dr. Garnier has served as board member of Renault S.A., from 2008 to 2016, United Technologies Corporation from 1997 to 2019, and Max Planck Institute from 2013 to 2019. Dr. Garnier holds an MS in pharmaceutical science and anot-for profit. Ph.D. in pharmacology from the Louis Pasteur University of Strasbourg, France. He subsequently earned his MBA at Stanford University, California, as a Fulbright Scholar. He was recently promoted from Chevalier to Officier de la Légion d’Honneur of France.
Laurent Arthaud has served serves as a member of our board of directors since October 28, 2011. Mr. Arthaud has beenis the Managing Director of Life Sciences and Ecotechnologies for Bpifrance Investissement (formerly CDC Enterprises, a subsidiary of Caisse des Dépôts) since 2012. He currently serves on the boards of directors of Kurma Life Sciences Partners, TxCell, AdociaSparingvision, a public company based in France, Aledia, Ribogenics, Inc., Enyo Pharma and Sparinvision. From 2006Argobio. Mr. Arthaud served at the board of directors of Calyxt from 2020 to 2016, heMay 2023, serving as a director designated by Cellectis. He previously served at the Calyxt’s board of directors from July 2017 to May 2019. He served on the board of directors of Emertee Gestion.TxCell from 2012 to 2018, on the board of directors of Adocia from 2009 to 2022. From 2006 to 2012, Mr. Arthaud held the position of Deputy CEO at CDC Entreprises. Since 2009 Mr. Arthaud has also directed InnoBio, an investment fund managed by Bpifrance Investissement as part of the FSI France Investissement program. From 1999 to 2004 he served as Vice President of Aventis Capital, an investment subsidiary of the pharmaceuticals group Aventis, and as President of Pharmavent Partners from 2004 to 2006. Mr. Arthaud is a graduate of the École Polytechnique and the École Nationale de Statistique et d’Administration Économique. We believe Mr. Arthaud’s extensive investment experience in the biotechnology industry qualifies him to serve as a member on our board of directors.
Pierre Bastid has served serves as a member of Cellectis’ board of directors since 2011. Mr. Bastid has 25 years of experience in turning around, developing and running technology businesses in Asia, Europe and the United States. In addition to Cellectis, Mr. Bastid is currently serving on the board of directors of Pharnext (a biotechnology company), Hougou Finance S.A. and Hougou Développement S.A. (his own investment company), ZAKA S.A. and GRID (his own Paris and New York-based real estate companies), Shango S.A. (his own private equity company), EVOK (his own hotel group), Nepteam S.A.S. (a shipbuilding company), Louise342-344Carmat S.A., Hebioso S.A., La Chartreuse B S.C., Batuque Hotelaria e Turismo S.A.DCTV Center New-York, and Casino Royal S.A.
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Mr. Bastid also advisesof a numberseries of his owned investment and private equity firms. Mr. Bastid is a trusteecompanies and was Chairman of the Juilliard School of Music and othernon-profit organizations based in the United States. We believe Mr. Bastid’s extensive business experience qualifies himZ Nautic SAS from November 2019 to serve as a member on our board of directors.January 2020.
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Rainer Boehm has served serves as a member of Cellectis’ board of directors since 2017. In addition, Mr. Boehm is the founder and owner of Rainer Boehm GmbH and is currently serving on the board of directors ofBioCopy AG since February 2020, Berlin Cure AG since January 2022, and Omega Therapeutics since September 2022. From July 2018 to 2022, Mr. Boehm served on the board of directors of Nordic Nanoverctor SA from July 2018 to April 2022, and of Humanigen Inc from February 2018 to February 2024. Mr. Boehm spent 29 years at Novartis, working locally, regionally and globally in various Senior Managementsenior management roles, after building his career in Marketing & Sales and Medical Affairs. HeAt Novartis, he led all emerging markets regions as well as the United States and Canada, either for Oncology or the Pharmaceuticals division. His most recent assignments were Chief Commercial and Medical Affairs Officer globally for Novartis Pharma from 2010 to 2017, as well as ad interim CEOChief Executive Officer and Division Head Pharma. Rainer launched and oversaw the commercialization of many brands during his career, amongst them Femara, Zometa and Glivec, as well as Cosentyx and Entresto. His broad interests include leadership development, coaching and mentoring, access to medicines and new business models including solutions to leverage digital medicines and real world evidence. Rainer has a medical degree from the University of Ulm in Germany, and a Master of Business Administration from Schiller University in France. We believe Mr. Boehm’s extensive business and medical experience in pharmaceutical industry qualifies him to serve as a member on our board of directors.
Alain Godard has served as a member of Cellectis’ board of directors since 2007. He is a graduate of the Ecole Nationale Supérieure Agronomique de Toulouse and began his agronomy career in 1967 in Africa as a researcher at theInstitut de Recherche pour les Huiles et Oléagineux. He joined the French chemical groupRhône-Poulenc in 1975 where he held various management positions in France and abroad before becoming CEO of the agrochemical subsidiary in 1991. In 1999 he was directly involved in the merger ofRhône-Poulenc and Hoechst to create Aventis and was appointed CEO of the Aventis CropScience subsidiary with a significant involvement in seeds and agricultural biotechnology. He left Aventis in 2002 to create a consulting company, SARL Godard & Co.Donald A. Bergstrom, specialized in agriculture and biotechnology, where he has served as Chief Executive Officer since 2009. Until 2016, Mr. Godard also served on the board of directors of Fermentalg S.A. We believe Mr. Godard’s leadership and management expertise in the plant biotechnology field qualifies him to serve as a member of our board of directors.
Hervé Hoppenothas served as a member of Cellectis’ board of directors since 2017. HeM.D., Ph.D., serves as President and Chief Executive Officer of Incyte Corporation since 2014, and was appointed Chairman of the Board of Directors in 2015. Incyte is one of the fastest growing biopharmaceutical companies in the U.S. Prior to joining Incyte, Mr. Hoppenot was the President of Novartis Oncology, which included $11 billion in global sales, the largest oncology pipeline in the industry and 8000 employees in 50 countries. Prior to joining Novartis in 2003, Mr. Hoppenot started his career in 1983 with Rhone Poulenc, later known as Aventis, where he served in several senior roles of increasing responsibility, including Vice President of Oncology and Head of the US Oncology business unit. We believe Mr. Hoppenot’s business experience in the biotechnology industry qualifies him to serve as a member of our board of directors.
Jean-Marie Messier has served as a member of our board of directors since May 18, 2015. He isco-founderJune 2022, after having served as observer of our board of directors since November 2021. Dr. Bergstrom, currently serves as Executive Vice President, Head of Research and headDevelopment at Relay Therapeutics, Inc., a public clinical-stage precision medicines company. Prior to his tenure at Relay Therapeutics, from January 2014 to March 2018, Dr. Bergstrom was Chief Medical Officer at Mersana Therapeutics, where he led the advancement of Messier Maris & Associés, an international investment banking firm. Mr. Messier hastwo products based on Mersana’s proprietary antibody-drug conjugate platform through non-clinical development and into Phase 1 clinical trials. Prior to Mersana, he was Global Head of Translational and Experimental Medicine at Sanofi Oncology. At Sanofi, Dr. Bergstrom held roles of increasing responsibility at Merck Research Laboratories, culminating in his role as Oncology Franchise Lead, Experimental Medicine. Since April 2021, Dr. Bergstrom served on the board of directors of Rentabiliweb Group since May 2011. After graduatingat Fusion Pharmaceuticals, a public biotechnologies company. Dr. Bergstrom holds an M.D. from the French university, Ecole Polytechnique, Mr. Messier attendedUniversity of Washington, Seattle, and a Ph.D. from the Ecole Nationale d’Administration, which trains civil servants.Fred Hutchinson Cancer Research Center, where he also completed his post-doctoral training. He became Managing Partnerwas a resident in clinical pathology at Lazard Frères in 1988, a position he held for six years. Prior to this, he was responsible for the French Government’s Privatization plan. As such, he privatized companies among which Alcatel, Lagardère, Saint Gobain, Suez and Société Générale, now all partUniversity of the top twenty French corporations. Mr. Messier served as President of Vivendi Universal from 1994 to 2002. During these years, he founded the mobile firm Cegetel and turned Vivendi into a conglomerate focused on two core activities: utilities (water, power and transport) and communications (pay TV, telecoms and internet), selling off assets in other areas. Mr. Messier has been managing his own “boutique” since 2003, Messier Maris & Associés, an investment bank headquartered in Paris and New York representing more than 50 professionals.Washington.
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Annick Schwebig, M.D., has servedAxel-Sven Malkomes serves as a member of our board of directors since October 28, 2011. In 2000, she founded the French subsidiaryJune 2022. Mr. Malkomes currently serves as chief financial officer of Actelion, of which she is a Senior Advisor. She formerly served as the General Manager of Actelion from 2000 to 2015. Actelion is a biopharmaceuticals company specializing in innovative treatments to serve unmet medical needs. She is also a director of Inventiva Pharma,Cardior Pharmaceuticals GmbH, a biopharmaceutical company based in Germany. Prior to joining Cardior Pharmaceuticals GmbH, Mr. Malkomes was Chief Financial Officer and Inserm-Transfert SA, the private subsidiaryChief Business Officer at Medigene AG until March 31, 2022. Prior to his tenure at Medigene, he served as Vice Chairman and Managing Director of the French National Institute of Health and Medical Research. A graduate of the University of Paris medical school, Dr. Schwebig worked as a senior manager at the biopharmaceuticals company Bristol-Myers SquibbLife Sciences Practice for 17 years from 1983 to 2000. We believe Dr. Schwebig’s extensive experienceBarclays PLC, in the biopharmaceutical industry qualifies her to serveEurope.
Cécile Chartierserves as a member onof our board of directors.directors since June 2023. Dr Chartier serves as Chief Scientific Officer at NextVivo, Inc. since November 2022, a position she also held from July through December 2021.Dr Chartier also serves at the Scientific Board of Advisors of CTRL Therapeutics. Prior to her tenure at NextVivo, Dr. Chartier was Vice President of Research at Iovance Biotherapeutics Inc. from 2017 to 2021 where she led the development of next generation of tumor-infiltrating lymphocytes (TIL) therapies through research to early-stage clinical trials. Prior to her time at Iovance Biotherapeutics, Inc., she spent 12 years at OncoMed Pharmaceuticals, where she served as Senior Director of Target Validation and led multiple antibody therapeutics project teams through Research and Development to IND filing. She also worked at Shering (US Berlex) and Transgene (France), where she focused on gene therapy. Dr. Chartier also founded CHartier consulting in 2022. Dr Chartier obtained her Ph.D. in molecular biology from the Université Louis Pasteur in Strasbourg, France and completed post-doctoral training at Harvard Medical School.
Board Diversity
The table below provides certain information regarding the diversity of our board of directors as of the date of this Annual Report.
Board Diversity Matrix
Country of Principal Executive Offices: | France | |
Foreign Private Issuer | Yes | |
Disclosure Prohibited under Home Country Law | No | |
Total Number of Directors and Board Observers | 9 |
| Female |
| Male |
| Non- Binary |
| Did Not Disclose Gender |
Part I: Gender Identity |
|
|
|
|
|
|
|
Directors | 1 |
| 8 |
| 0 |
| 0 |
Part II: Demographic Background |
|
|
|
|
|
|
|
Underrepresented Individual in Home Country Jurisdiction |
|
|
|
| 0 |
|
|
LGBTQ+ |
|
|
|
| 0 |
|
|
Did Not Disclose Demographic Background |
|
|
|
| 0 |
|
|
Family Relationships
ThereWhile there are no family relationships among any of our executive officers or directors.directors, Dr. Choulika and Ms. Terrier are domestic partners.
Compensation of Directors and Executive Officers
The aggregate cash compensation paid and benefits in kind granted by us to our current executive officers and directors, for the year ended December 31, 2017,2023, was $3.6$5.6 million. For the year ended December 31, 2017, 715,0002023, 260,000 stock options with an exercise price of €22.57€1.80 per ordinary share, and 1,239,821 stock options with an exercise price of €3.17 per ordinary share were issued to directors and executive officers as compensation under the 20172022 Stock Option Plan. The total amount set aside or accrued to provide pension, retirement or similar benefits was $35,285$0.6 million for the year ended December 31, 2017.2023.
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Directors | Compensation (Gross Salary+Bonus)* | Board fees* | Out-of- pocket expenses* | Equity awards granted in 2023 |
A. Choulika | 874,938 | — | 1,659 | 250,000 SO |
D. Sourdive | 557,755 | — | 83 | 100,000 SO |
J.P. Garnier | — | 97,344 | 16,634 | 89,821 SO |
L. Arthaud | — | — | — | — |
P. Bastid | — | 97,344 | — | — |
R. Boehm | — | 99,597 | — | — |
D. Bergstrom | — | 102,751 | — | — |
H. Hoppenot | — | 51,376 | — | — |
A. Schwebig | — | 48,672 | — | — |
A-S Malkomes | — | 102,752 | — | — |
C. Chartier | — | 47,770 | — | — |
* The conversion rate used is the average rate of the period
Service Agreements
Mr. Godard, a former member of our board of directors, entered into a service agreement with us and provided consultancy services in the area of global development strategy. Westrategy, especially inre the field of agricultural biotechnology activities. Compensation paid €34 thousand (or $38 thousand) in compensation for those services in fiscalthe years ended December 31, 2021 amounted to $71 thousand respectively. The service agreement was not renewed in 2022, no compensation was paid for those services in the year 2017.ended December 31, 2022 and 2023. As of December 31, 2023, there were no service agreements between the Company or any of its subsidiaries and any director providing for benefits upon termination of employment.
Change of Control Benefits
We seek to balance the potential costs of change of control provisions with the costs that would arise from fear of job loss and other distractions that may result from potential, rumored or actual changes of control.
As a result, after careful evaluation of the implications and economics of a change of control plan, on September 4, 2014, our board of directors adopted a change of control plan. Asplan, which was amended by our board of directors on December 11, 2014 applicable to certain of our executive officers and several of our senior employees, as implemented by change of control agreements or amendments to an existing agreement. On March 4, 2020 and November 5, 2020, our board of directors decided to extend the benefits of the change of control plan provides benefits foradopted in 2014 to also cover any members of the Cellectis executive committee not already covered by the plan adopted in 2014. On September 15, 2022, our executive officers and several other senior employeesboard of our company.
Pursuant todirectors amended the change of control plan applicable to all our executive officers including future executive officers.
Accordingly, as of the date of this Annual Report, the change of control plan applies with respect to each member of the executive committee of Cellectis: Dr. Choulika (Chief Executive Officer, and Director), Dr. Mark Frattini (Chief Medical Officer), Dr. Steve Doares (Senior Vice President, US Manufacturing and Site Head), Dr. Phillippe Duchateau (Chief Scientific Officer), Ms. Kyung Nam-Wortman (Executive Vice President, Chief Human Resources Officer), Mr. Stephan Reynier (Chief Regulatory and Compliance Officer), Dr. David Sourdive (Executive Vice President CMC and Manufacturing, and Director), Mr. Arthur Stril (Chief Business Officer), Dr. Bing Wang (Chief Financial Officer), and Ms. Marie-Bleuenn Terrier (General Counsel). The change of control plan also applies to Ms. Delphine Jay (Human Resources Director), and Dr. Laurent Poirot (Senior Vice President Immunology).
Pursuant to the amended change of control plan applicable to our executive officers, a severance package shall be paid if, within the36-month 24-month period following a change of control of our company,Cellectis S.A., one of the following events occurs:triggering event occurs, in each case without the agreement of such executive officer:
ThePursuant to the change of control plan applicable to certain of our senior managers (i.e. Mrs Delphine Jay and Dr. Laurent Poirot), a severance package shall be paid if, within the 36-month period following a change of control of Cellectis S.A., the following triggering event occurs, without the agreement of such employee: termination (including by non-renewal) of such person’s employment other than for gross misconduct (faute lourde).
Under the change of control plan, the severance package shall be equal to 24 months of compensation increased by an amount equal to the maximum targetannual performance bonus to which the employeessenior managers or executivesexecutive officers concerned may be entitled for the year of their departure (or for Dr. Choulika only, two times such target bonus), or, in the absence of such a target bonus, 1.5 times the last annual bonus paid to them during the 12 months prior to their departure. The US executive officers are also eligible for 12 months medical benefits.
The severance package shall be in addition to any legal and conventional severance payments owed to the employees or executives concerned.concerned under applicable law.
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A “change of control” is defined by reference to ArticleL.233-3 of the French Commercial Code, which provides that one or more persons acting alone or in concert are considered to control a company if (1) they have direct or indirect ownership of a majority of the voting rights or a proportion of the voting rights allowing de facto control of the decisions made by the shareholders, provided that such control is presumed if said persons hold more than 40% of the voting rights and no shareholder holds a greater proportion of the voting rights;thereof; or (2) they have the power to appoint or dismiss a majority of the board of directorsdirectors.
Limitations on Liability and Indemnification Matters
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Under French law, provisions ofBy-laws that limit the liability of directors and officers are prohibited. However, French law allowssociétés anonymes to contract for and maintain liability insurance against civil liabilities incurred by any of their directors and officers involved in a third-party action, provided that they acted in good faith and within their capacities as directors or officers of the company. Criminal liability cannot be indemnified under French law, whether directly by the company or through liability insurance.
We expect to maintain customary liability insurance coverage for our directors and executive officers, including insurance against liability under the Securities Act. With certain exceptions and subject to limitations on indemnification under French law, these agreementsthis insurance coverage will provide for indemnification for damages and expenses including, among other things, attorneys’ fees, judgments, fines and settlement amounts incurred by any of these individuals in any action or proceeding arising out of his or her actions in that capacity. We believe that this insurance and these agreements arecoverage is necessary to attract qualified directors and executive officers.
These contractual indemnification agreementsThis insurance coverage may discourage shareholders from bringing a lawsuit against our directors and executive officers for breach of their fiduciary duty. These provisionsIt also may have the effect of reducing the likelihood of derivative litigation against directors and executive officers, even though such an action, if successful, might otherwise benefit us and our shareholders. Furthermore, a shareholder’s investment may be adversely affected to the extent we pay the costs of settlement and damage awards against directors and officers pursuant to thesethis insurance agreements.coverage.
Certain of ournon-employee directors may, through their relationships with their employers or partnerships, be insured against certain liabilities in their capacity as members of our board of directors.
Equity Incentives
We believe that our ability to grant equity awards is a valuable and necessary compensation tool that allows us to attract and retain the best available personnel for positions of substantial responsibility, provides additional incentives to employees and promotes the success of our business. In accordance with French corporate law and tax considerations, we have granted several different equity incentive instruments to our directors, executive officers, employees and other service providers. These are:
Our board of directors’ authority to grant these equity incentive instruments and the aggregate number of shares authorized to be granted under these instruments must be approved by atwo-thirds majority of the shares held byvotes cast of our shareholders present, represented or voting by mail at the relevant extraordinary shareholders’ meeting. Such extraordinary general meeting shall determine the aggregate amount of equity incentive
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instruments to be granted and the period during which such authorization may be used by our board of directors, which cannot exceed 18 months fornon-employee warrants and employee warrants and 38 months for stock option and restricted (free) shares, in each case beginning from the date of the applicable shareholders’ approval.
The authority of our board of directors to grant equity incentives may be extended or increased only by extraordinary shareholders’ meetings. As a result, we typically request that our shareholders authorize new pools of equity incentive instruments at every annual shareholders’ meeting.meeting and cancel the unallocated portions of the previous pools.
Employee warrants andnon-employee warrants are usually granted under similar terms. They expire ten years after the date of grant if not exercised earlier according to their vesting schedule (see below). In general, employee warrants (BSPCE) andnon-employee warrants (BSA) no longer continue to vest following termination of the employment, office or service of the holder and all vested shares must be exercised within post-termination exercise periods set forth in the applicable equity award grant documents. In the event of certain changes in our share capital structure, such as a consolidation or share split or dividend, French law and applicable equity award grant documentation provide for appropriate adjustments of the numbers of shares issuable and/or the exercise price of the outstanding warrants or share options.
EmployeeNon-Employee Warrants (BSPCE)(BSA)
Employee warrants were granted only to employees of Cellectis who are French tax residents, since these employee warrants carry favorable tax and social security treatment for French tax residents. Employee warrants may also be granted to corporate officers of the company having an employee tax status (chairman, general manager or deputy general manager). Similar to stock options, they entitle a holder to exercise the warrant for the underlying vested shares at an exercise price per share determined by our board of directors equal to the higher of (1) the fair market value of an ordinary share on the date of grant and (2) if the company has carried out a capital increase within six months prior to the attribution of employee warrants, the issue price of such capital increase.
Employee warrants may only be issued by growth companies meeting certain criteria, which we no longer meet. Most significantly, the issuer must have been registered for less than 15 years and 25% of the issuer’s share capital must have been continuously held since the company’s formation by natural persons or by holding companies, of which 75% of such holding company’s share capital is held by natural persons. The calculation of such threshold does not include venture capital mutual investment fund (fonds commun de placement à risques), specialized professional funds (fonds professionnels spécialisés), private equity funds (fonds professionnels de capital investissement), local investment funds (fonds d’investissement de proximité) and innovation-focused mutual funds (fonds commun de placement dans l’innovation).
We are no longer eligible to issue employee warrants since we no longer satisfy the legal conditions necessary to issue such employee warrants.
Our outstanding employee warrants were generally granted (1) either subject to a three-year vesting schedule under whichone-third (1/3) of the employee warrants vest upon the first anniversary of grant andone-third (1/3) at the expiration of each year thereafter, subject to continued service, or (2) subject to a five-year vesting schedule under which 40% of the employee warrants vest upon the second anniversary of grant and 20% at the expiration of each year thereafter, subject to continued service. In each case, any warrant which is not exercised before the tenth anniversary of the date of grant will automatically lapse. Some of our employee warrants provide that in the event of a change in control, as defined in the relevant grant documents, unvested warrants will automatically vest in full.
The term of each employee warrant is 10 years from the date of grant or, in the case of death or disability of the beneficiary during suchten-year period, 6 or 9 months respectively from the death or disability of the beneficiary. An employee warrant shall remain exercisable for three months following a beneficiary’s termination of continuous status with the company.
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Employee warrants are not transferable and may not be sold, pledged, assigned, hypothecated, transferred or disposed of in any manner other than by will or by laws of descent or distribution and may be exercised, during the lifetime of the warrant holder, only by the warrant holder.
As of December 31, 2017, 21,569 employee warrants exercisable for an aggregate of 22,403 ordinary shares at a weighted average exercise price of €7.81 per share, were outstanding.
Non-Employee Warrants (BSA)
Non-employee warrants are granted by our board of directors to third-party service providers, consultants and non-employee directors who are not eligible for employee warrants.of the Company. In addition to any exercise price payable by a holder upon the exercise of anynon-employee warrant,non-employee warrants need to be subscribed for at fair market value and in any case at a price at least equal to five percent (5%) of the volume weighted average price for a company share weighted by volume on the market or markets on which the company shares are listed during the five (5) trading days prior to the date of the grant of saidnon-employee warrant by the board of directors (rounded up to the next euro cent, if necessary).
Pursuant to delegations granted at our annual shareholders’ meeting, our board of directors determines the recipients, dates of grant and exercise price ofnon-employee warrants, the number ofnon-employee warrants to be granted and the terms and conditions thereof, including their vesting schedule. The term of eachnon-employee warrant is generally 10 years from the date of grant.
Ournon-employee warrants are generally granted subject to a three-year vesting, subject to continued service.
As of December 31, 2017, 1,079,4002023, 3,118,063 non-employee warrants exercisable for an aggregate of 1,079,4003,118,063 ordinary shares at a weighted average exercise price of €27.62€4.61 per share, were outstanding, alloutstanding. As of whichDecember 31, 2023, 228,875 of the 3,118,963 warrants are held by certain of our directors and some of our consultants and exercisable, atand 2,779,188 he 3,118,963 warrants are held by the date hereof.EIB.
Free Shares
Under our 2012, 2013, 2014, 2015, 2018, Second 2018, 2021, 2022 and 20152023 Free Share Plans, or collectively the Free Shares Plans, we have granted free shares to certain of our employees and officers. Our current plan, the 20152023 Free Share Plan, was adopted by
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our board of directors on May 18, 2015.August 3, 2023 according to the authorization granted by the combined ordinary and extraordinary shareholders’ general meeting dated June 27, 2023.
Free shares may be granted to any individual employed by us or by any affiliated company. Free shares may also be granted to our Chairman, and our Chief Executive Officer. However, no free share may be granted to a beneficiary holding more than 10% of our share capital or to a beneficiary who would hold more than 10% of our share capital as a result of such grant.
Our board of directors has the authority to administer the 2012, 2013, 2014 and 2015 Free Share Plans.
Pursuant to the shareholders authorization dated June 27, 2023, the maximum aggregate number of ordinary shares, which may be issued is 2,779,188, provided that our board of directors may decide of new grant of free shares only under our current 2023 Free Share Plan and within the overall limit on the amount of issuance made to grant free shares and upon exercise of stock options, which is 2,779,188. As of the date of this Annual Report, 448,262 ordinary shares remain available for issuance under the 2023 Free Share Plan and 2023 Stock Option Plan.
Subject to the terms of thesethe Free Share Plans, our board of directors determines the recipients, the dates of grant, the number of free shares to be granted and the terms and conditions of the free shares, including the length of their vesting period (starting on the grant date, during which the beneficiary holds a right to acquire shares for free but has not yet acquired any shares) and holding period (starting when the shares are issued and definitively acquired but may not be transferred by the recipient) within the limits determined by the shareholders. Our
For the 2012, 2013, 2014 and 2015 Free Shares Plans, our shareholders have determined that the vesting period must be at least two years from the date of grant and the holding period must be two years from the end of the vesting period, with no holding period applicable to beneficiaries for whom the vesting period was four years or longer.
For the Second 2018 Free Share Plan, our shareholders have determined that the vesting period must be at least one year from the date of grant and the holding period must be one year from the end of the vesting period, with no holding period applicable to beneficiaries for whom the vesting period was two years or longer.
For the 2021, 2022 and 2023 Free Share Plans, our shareholders have determined that the vesting period must be at least three years from the date of grant with no holding period applicable, and that the vesting of free shares granted to our corporate officer and members of our executive committee are subject to performance conditions.
The board of directors has the authority to modify awards outstanding under our Free Share Plans, subject to the consent of the beneficiary for any modification adverse to such beneficiary. For example, the board has the authority to release a beneficiary from the continued service condition during the vesting period after the termination of the employment.
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The free shares granted under the Free Share Plans will be definitively acquired at the end of the vesting period as set by our board of directors subject to continued service during the vesting period, except if the board releases a given beneficiary from this condition upon termination of his/her employment contract. At the end of the vesting period, the beneficiary will be the owner of the shares. However, the shares may not be sold, transferred or pledged during the holding period. In the event of disability before the end of the vesting period, the free shares shall be definitively acquired by the beneficiary on the date of disability. In the event the beneficiary dies during the vesting period, the free shares shall be definitively acquired at the date of the request of allocation made by his or her beneficiaries in the framework of the inheritance provided that such request is made within six months from the date of death.
Stock Options
Under our 2015, 2016, 2017, 2018, 2021, 2022 and 2023 Stock Options Plans, or collectively the Stock Options Plans, we have granted in 2015 under the 2015 Free Share Plan will be acquired on May 18, 2019 for theNon-French residents, subjectstock options to the continued servicecertain of our employees, officers and chairman of the beneficiaries.
board of directors. Our current plan, the 2022 Stock Options
On March 24, 2015,Option Plan, was adopted by our board of directors adopted our 2015on September 15, 2022 according to the authorization granted by the combined ordinary and extraordinary shareholders’ general meeting dated June 27, 2023.
The Stock Option Plan, which will expire on April 16, 2018 and on October 28, 2016, our board of directors adopted our 2016 Stock Option Plan which will expire on July 18, 2019. The 2015 Stock Option Plan, the 2016 Stock Option Plan as amended and the 2017 Stock Option Plan (collectively, the “Stock Option Plans”)Options Plans follow the same rules. Stock Options issued pursuant to the Stock Option Plans provide the holder with the right to purchase a specified number of ordinary shares from the Company at a fixed exercise price payable at the time the Stock Option is exercised, as determined by our board of directors. The Stock Option Plans generally provides that the exercise price for any Stock Option willshall be noat least equal to the highest closing price of a share of the Company on Euronext Growth or Nasdaq prior to the date of grant, without in any event be less than ninety-fiveninety- five percent (95%) of the average selling prices of a share at close of trading on said market quoted during the twenty trading days immediately preceding the day of theour board of directors decision to allocategrant the options. The
Pursuant to the shareholders authorization dated June 27, 2023, the maximum aggregate number of ordinary shares, which may be subject tois 2,779,188, provided that our board of directors may decide of new grant of stock options issued is 7,354,930 ordinary sharesonly under the 2015 Stock Option Plan, is 3,217,861 ordinary shares under the 2016our current 2023 Stock Option Plan, and within the overall limit on the amount of issuance made to grant free shares and upon exercise of stock options, which is 3,541,547 ordinary shares under the 2017 Stock Option Plan.2,779,188. Incentive Stock Optionsstock options andNon-qualified non-qualified stock options may be granted under the Stock Option Plans.
Plans, except for the 2021, 2022 and 2023 Stock Options under which only non-qualified stock options are available. As of the date of this Annual Report 411,120 ordinary shares remain available for issuance under the 2023 Stock Option Plan and 2023 Free Share Plan.
For the 2021, 2022 and 2023 Stock Options Plans, our shareholders have determined that the vesting period must be at least three years from the date of grant, and that the vesting of stock options granted to our corporate officer and members of our executive committee are subject to performance conditions.
Stock options may be granted to any individual employed by us or by any affiliated company. Stock Optionsoptions may also be granted to the chairman of our Chairman,board of directors, our general managerchief executive officer and to our deputy general managers. Incentive Stock Optionschief executive officers. No stock options may be granted to ownersa beneficiary holding more that 10% of shares possessing 10% or more of the total voting power in the Company will be subject to limitations on their exercise price and term.our share capital.
Our board of directors has the authority to administer and interpret the Stock Option Plans. Subject to the terms of the Stock Option Plans, our board of directors determines the recipients, the dates of grant, the exercise price of the stock options, the number of stock options to be granted and the terms and conditions of the stock options, including the length of their vesting period. Our board of
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directors is not required to grant stock options with vesting and exercise terms that are the same for every participant. The term of each stock option granted under the Stock Option Plans will generally be 10ten years from the date of grant. Further, Stock Optionsstock options will generally terminate on the earlier of when the beneficiary ceases to be an employee or the Company or upon certain transactions involving the Company. Under the 2015, 2016, 2018, and 2021 Stock Options Plans, in the event of a voluntary retirement of the beneficiary, the beneficiary will continue to benefit from the stock options which may be exercised according to the vesting schedule decided by the board of directors during the grant of the corresponding stock options until their expiration date.
The board of directors has the authority to modify awards outstanding under our Stock Option Plans, subject to the written consent of the beneficiary for any modification adverse to such beneficiary. For example, the board has the authority to extend a post-termination exercise period.
Stock Options granted under the Stock Option plansPlans generally may not be sold, transferred or pledged in any manner other than by will or by the laws of descent or distribution. In the event of disability, unless otherwise resolved by our board of directors, the beneficiary’s right to exercise the vested portion of his or her option generally terminates six months after the last day of such beneficiary’s service, but in any event no later than the expiration of the maximum term of the applicable stock options. In the event the beneficiary dies during the
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vesting period, then, unless otherwise resolved by our board of directors, the beneficiary’s estate or any recipient by inheritance or bequest may exercise any vested portion within the six months following the date of death, but in any event no later than the expiration of the maximum term of the applicable stock options.
As ofDuring the date of this Annual Report:
year ended December 31, 2023:
Asare under a vesting period of the date of this Annual Report, a maximum of 3,541,547three years;
Calyxt, Inc.
In December 2014,to our subsidiary Calyxtofficers is over three years and is subject to performance conditions;
In September 2015, our subsidiary Calyxt granted options representing a 0.4% interest to a group of its employees and two of our directors and executive officers.
In April 2016, our subsidiary Calyxt granted options representing a 6.1% interest to a group of its employees and ten of our directors, executive officers, employees and consultants.
In June 2017, our subsidiary Calyxt granted options and restricted stock unit representing a 12.9% interest to a group of its employees and twenty of our directors, executive officers, employees and consultants.
Board Composition
Under French law and ourBy-laws, our board of directors must be composed of between three and eighteen members. Within this limit, the number of directors is determined by our shareholders. Directors are elected,re-elected and may be removed at a shareholders’ general meeting with a simple majority voteof the votes cast of our shareholders. Pursuant to ourBy-laws, our directors are elected for three-year terms. In accordance with French law, ourBy-laws also provide that our directors may be removed with or without cause by the affirmative vote of the holdersvotes cast of at least a majority of the votes of the shareholders present, represented by a proxy or voting by mail at the relevant ordinary shareholders’ meeting, and that any vacancy on our board of directors resulting from the death or resignation of a director, provided there are at least three directors remaining, may be filled by vote
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of a majority of our directors then in office provided that there has been no shareholders meeting since such death or resignation. Directors chosen or appointed to fill a vacancy shall be elected by the board for the remaining duration of the current term of the replaced director. The appointment must then be ratified at the next shareholders’ general meeting. In the event the board would be composed of less than three directors as a result of a vacancy, the remaining directors shall immediately convene a shareholders’ general meeting to elect one or several new directors so there are at least three directors serving on the board, in accordance with French law.
We currently have nine directors. The following table sets forth the names of our directors, the years of their initial appointment as directors and the expiration dates of their current term.
Name (1) | Current Position | Year of Initial Appointment | Term Expiration Year | |||||||||||||||
Name |
| Current Position |
| Year of Initial Appointment |
| Term Year | ||||||||||||
Jean-Pierre Garnier, M.D. |
| Chairman and Director |
| 2020 |
| 2026 | ||||||||||||
André Choulika, Ph.D. | Chairman | 2000 | 2018 |
| Director and CEO |
| 1999 |
| 2024 | |||||||||
David Sourdive, Ph.D. | Director | 2000 | 2018 |
| Director and Deputy CEO |
| 2000 |
| 2024 | |||||||||
Alain Godard | Director | 2007 | 2018 | |||||||||||||||
Pierre Bastid | Director | 2011 | 2020 |
| Director |
| 2011 |
| 2026 | |||||||||
Laurent Arthaud | Director | 2011 | 2020 |
| Director |
| 2011 |
| 2026 | |||||||||
Annick Schwebig, M.D. | Director | 2011 | 2020 | |||||||||||||||
Jean-Marie Messier | Director | 2015 | 2018 | |||||||||||||||
Hervé Hoppenot | Director | 2017 | 2020 | |||||||||||||||
Cécile Chartier |
| Director |
| 2023 |
| 2026 | ||||||||||||
Axel-Sven Malkomes |
| Director |
| 2022 |
| 2025 | ||||||||||||
Rainer Boehm | Director | 2017 | 2020 |
| Director |
| 2017 |
| 2026 | |||||||||
Donald A. Bergstrom |
| Director |
| 2022 |
| 2025 | ||||||||||||
In addition, French law required companies having at least 50 employees for a period of 12 months over the last three years set up aComité d’Entreprise, or Works’ Council, andDélégués du personnel, or staff delegates, both being composed of representatives elected from among the employees. In conjunction with the French law then applicable to companies of 200 employees and less, we chose to have only one employee representative body, theDélégation Unique du Personnel. OurDélégation Unique du Personnel has been elected for a four year period, and our currentDélégation Unique du Personnel was formed on June 19, 2015. Among these representatives, two are entitled to attend all meetings of the board of directors and shareholders, in an observer capacity.
Pursuant to new French regulations, which entered into effect on January 1, 2018, any company having more than 1050 employees must, on or before January 1st, 2020, implement aComité Social et Économique or Social and Economic Committee, which replaces and regroups the former various employee representative bodies, including theDélégation Unique du Personnel. initially in place at Cellectis. We currently intend to complyproceeded with the re-election, for a two-year term, of this obligation before the end of 2018.Social and Economic Committee on September 14, 2022.
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Director Independence
As a foreign private issuer, under the listing requirements and rules of Nasdaq, we are not required to have independent directors on our board of directors, except with respect to our audit and finance committee, for which the Nasdaq listing requirements permit specifiedphase-in schedules.committee.
Our board of directors has determined that, applying the applicable rules and regulations of the SEC and the Nasdaq listing standards, all of our directors, except Drs. Choulika and Sourdive and Mr. Arthaud, qualify as “independent directors.”directors”. In making such determination, our board of directors considered the relationships that eachnon-employee director has with us and all other facts and circumstances our board of directors deemed relevant in determining the director’s independence, including the number of ordinary shares beneficially owned by the director and his or her affiliated entities.
Role of the Board in Risk Oversight
Our board of directors is primarily responsible for the oversight of our risk management activities and has delegated to the audit and finance committee the responsibility to assist our board of directors in this task. While
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our board of directors oversees our risk management, our management is responsible forday-to-day risk management processes. We believe this division of responsibilities is the most effective approach for addressing the risks we face. Our board of directors expects our management to consider risk and risk management in each business decision, to proactively develop and monitor risk management strategies and processes forday-to-day activities and to effectively implement risk management strategies adopted by the board.
Corporate Governance Practices
As a Frenchsociété anonyme,, we are subject to various corporate governance requirements under French law. In addition, as a foreign private issuer listed on the Nasdaq Global Market, we will beare subject to the Nasdaq corporate governance listing standards. However, the Nasdaq Global Market’s listing standards provide that foreign private issuers, as defined in the rules promulgated under the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act"), are permitted, pursuant to Nasdaq Listing Rule 5615(a)(3), to follow home country corporate governance practices in lieu of the Nasdaq rules,Listing Rules, with certain exceptions. Certain corporate governance practices in France may differ significantly from Nasdaq’s corporate governance listing standards. For example, neither the corporate laws of France nor ourBy-laws require that (i) a majority of our directors be independent, (ii) our compensation committee include only independent directors, or (iii) our independent directors hold regularly scheduled meetings at which only independent directors are present. Other than as set forth below, we currently intend to comply with the Nasdaq corporate governance listing standards of Nasdaq to the extent possible under French law. However, we may choose to change such practices to follow home country practice in the future.
Although we are a foreign private issuer, we are required to comply with Rule10A-3 of under the Exchange Act, relating to audit committee composition and responsibilities. Rule10A-3 provides that the audit committee must have direct responsibility for the nomination, compensation and choice of our auditors, as well as control over the performance of their duties, management of complaints made, and selection of consultants. Under Rule10A-3, if the laws of a foreign private issuer’s home country require that any such matter be approved by the board of directors or the shareholders of the Company, the audit committee’s responsibilities or powers with respect to such matter may instead be advisory. Under French law, the audit committee may only have an advisory role and appointment of our statutory auditors, in particular, must be decided by our shareholders at our annual meeting.
In addition, in accordance with French law, committees of our board of directors will only have an advisory role and can only make recommendations to our board of directors. As a result, decisions will be made by our board of directors taking into account nonbinding recommendations of the relevant board committee.
Nasdaq rulesListing Rules require that a listed company specify that the quorum for any meeting of the holders of share capital be at least 331/3%331/3% of the outstanding shares of the company’s common voting stock. We follow our French home country practice, rather than complying with this Nasdaq rule.Listing Rule. Consistent with French Law, ourBy-laws provide that when first convened, general meetings of shareholders may validly convene only if the shareholders present or represented hold at least (1) 20% of the voting shares in the case of an ordinary general meeting or of an extraordinary general meeting where shareholders are voting on a capital increase by capitalization of reserves, profits or share premium, or (2) 25% of the voting shares in the case of any other extraordinary general meeting. If such quorum required by French law is not met, the meeting is adjourned. There is no quorum requirement under French law when an ordinary general meeting or an extraordinary general meeting where shareholders are voting on a capital increase by capitalization of reserves, profits or share premium is reconvened, but the reconvened meeting may consider only questions that were on the agenda of the adjourned meeting. When any other extraordinary general meeting is reconvened, the required quorum under French law is 20% of the shares entitled to vote. The reconvened meeting may consider only questions that were on the agenda of the adjourned meeting. If a quorum is not met at a reconvened meeting requiring a quorum, then the meeting may be adjourned for a maximum of two months.
Further,
Finally, we follow French law with respect to shareholder approval requirements in lieu of the various shareholder approval requirements of Nasdaq Listing Rule 5635, which requires a Nasdaq listed company to obtain shareholder approval prior to certain issuances of securities, including: (a) issuances in connection with the acquisition of the stock or assets of another company if upon issuance the issued shares will equal 20% or more of the number of shares or voting power outstanding prior to the issuance, or if certain specified persons have a 5% or greater interest in the assets or company to be acquired (Nasdaq Listing Rule 5635(a)); (b) issuances or potential issuances that will result in a change of control of us (Nasdaq Listing Rule 5635(b)); (c) issuances in connection with equity compensation arrangements (Nasdaq Listing Rule 5635(c)); and (d) 20% or greater issuances in transactions other than public offerings, as defined in the Nasdaq rules require that listed companies have(Nasdaq Listing Rule 5635(d)). Under French law, our shareholders may approve issuances of equity, as a nominations committee comprised solelygeneral matter, through the adoption of independent directors. Wedelegation of authority resolutions at the Company’s shareholders’ meeting pursuant to which shareholders may delegate their authority to the board of directors to increase the Company’s share capital within specified parameters set by the shareholders, which may include a time limitation to carry out the share capital increase, the cancellation of their preferential subscription rights to the benefit of named persons or a category of persons, specified price limitations and/or specific or aggregate limitations on the size of the share capital increase. Due to differences between French law and corporate governance practices and Nasdaq Listing Rule 5635, we follow our French home country practice, rather than complying with this Nasdaq rule.Listing Rule.
Finally, Nasdaq rules require shareholder approval when a plan or other equity compensation arrangement is established or materially amended. While the Company may, from time to time, obtain shareholder approval of an equity compensation arrangement in order to obtain advantageous tax treatment or otherwise, as a general matter, we intend to follow our French home country practice, which does not require shareholder approval of such plans or arrangements, rather than complying with this Nasdaq rule.
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Board Committees
TheOur board of directors has established an audit and finance committee, and a compensation committee and an environmental and social committee, each of which operates pursuant to a separate charter adopted by our board of directors. The board of directors has also established a scientific committee. The composition and functioning of
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all of our committees will comply with all applicable requirements of the French Commercial Code, the Exchange Act, the Nasdaq, Global Market, and the rules and regulations of the SEC.
In accordance with French law, committees of our board of directors will only have an advisory role and can only make recommendations to our board of directors. As a result, decisions will be made by our board of directors taking into accountnon-binding recommendations of the relevant board committee.
Audit and Finance Committee.Committee. Our audit and finance committee reviews our internal accounting procedures, consults with and reviews the services provided by our independent registered public accountants and assists our board of directors in its oversight of our corporate accounting and financial reporting. Currently, our audit and finance committee is comprised of three members of the board of directors: Messrs. Malkomes, Bastid, Arthaud, and Messier.Bergstrom.
The duties specifically assigned to the audit and finance committee by our board of directors include, but are not limited to:
with regard to our financial statements:
with regard to internal controls:
with regard to external controls:
•
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|
with regard to risks:
Compensation Committee. Our compensation committee assists our board of directors in reviewing the compensation of our executive officers and directors and makes recommendations in respect thereof. Currently, our compensation committee is comprised of two members of the board of directors: Mr. GodardBoehm and Dr. Schwebig.Ms. Chartier. The principal duties and responsibilities of our compensation committee include, but are not limited to:
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Environmental and Social Committee. Our environmental and social committee assists our board in reviewing the environmental and social matters within the Company. Currently, our environmental and social committee, which is included in the Audit and Finance Committee, is comprised of three members of the board of directors: Mr. Malkomes, Mr. Bastid and Don Bergstrom. The principal duties and responsibilities of our environmental and social committee include but are not limited to:
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Code of Business Conduct and Ethics
We have adopted a Code of Business Conduct and Ethics, or the Code of Conduct, that is applicable to all of our employees, executive officers and directors. The Code of Conduct is available on our website atwww.cellectis.com. www.cellectis.com. Our board of directors will be responsible for overseeing the Code of Conduct and will be required to approve any waivers of the Code of Conduct for employees, executive officers and directors. We expect that any amendments to the Code of Conduct, or any waivers of its requirements, will be disclosed on our website.
As of December 31, 2017,2023, we had 135221 employees, 131216 of whom arewere full-time, 4757 of whom hold M.D, Ph.D. or M.D.Pharm.D. degrees, 96169 of whom were engaged in research and development activities and 3952 of whom wereare engaged in business development, commercial, legal, finance, information systems, facilities, human resources or administrative support. As of December 31, 2017, 842023, 137 of our employees were located in France and 5184 of our employees were located in the United States. None of our employees is subject to a collective bargaining agreement. We consider our relationship with our employees to be good.
For information regarding the share ownership of our directors and executive officers, see “Item 6.B—Compensation” and “Item 7.A—Major Shareholders.”
F. Disclosure of Actions to Recover Erroneously Awarded Compensation
Because no annual period presented in this Annual Report on Form 20-F is being restated, we are not required to check the box on the cover page hereof regarding the correction of an error to previously issued financial statements. The Company did not award any incentive-based compensation based on any financial measure affected by the above-mentioned accounting errors
The following table sets forth information with respect to the beneficial ownership of our ordinary shares as of February 28, 201814, 2024 for:
Beneficial ownership is determined in accordance with the rules of the SEC. These rules generally attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to those securities and include ordinary shares that can be acquired within 60 days of February 28, 2018.15, 2024. The percentage ownership information shown in the table is based upon 35,960,06271,751,201 ordinary shares outstanding as of December 31, 2017.February 15, 2024.
Except as otherwise indicated, all of the shares reflected in the table are ordinary shares and all persons listed below have sole voting and investment power with respect to the shares beneficially owned by them, subject to applicable community property laws. The information is not necessarily indicative of beneficial ownership for any other purpose.
In computing the number of ordinary shares beneficially owned by a person and the percentage ownership of that person, we deemed outstanding ordinary shares subject to options and warrants held by that person that are immediately exercisable or exercisable
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within 60 days of February 28, 2018.15, 2024. We did not deem these shares outstanding, however, for the purpose of computing the percentage ownership of any other person. Beneficial ownership representing less than 1% is denoted with an asterisk (*). The information in the table below is based on information known to us or ascertained by us from public filings made by the shareholders in France. Except
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as otherwise indicated in the table below, addresses of the directors, executive officers and named beneficial owners are in care of Cellectis, 8, rue de la Croix Jarry, 75013 Paris, France.
Name of Beneficial Owner | Ordinary Shares Beneficially Owned |
| Ordinary Shares Beneficially Owned | |||||||||
| Number | Percentage |
| Number |
| Percentage | |||||||
5% Shareholders: |
| |||||||||||
AstraZeneca (1) |
| 16,000,000 |
| 22.24% | ||||||||
Bpifrance Participations | 2,879,500 | 8.01 | % |
| 6,913,153 |
| 9.61% | |||||
Pfizer, Inc. (1) | 2,817,455 | 7.84 | % | |||||||||
FMR LLC (2) | 3,592,818 | 10.05 | % | |||||||||
Long Focus Capital Management LLC (3) |
| 4,615,293 |
| 6.41% | ||||||||
Directors and Executive Officers: |
|
|
|
| ||||||||
André Choulika, Ph.D. (4) |
| 2,361,168 |
| 3.28% | ||||||||
David Sourdive, Ph.D. (5) |
| 1,897,930 |
| 2.64% | ||||||||
Philippe Duchateau, Ph.D. (6) |
| 786,296 |
| 1.09% | ||||||||
Marie-Bleuenn Terrier (7) |
| 768,211 |
| 1.07% | ||||||||
Stephan Reynier (8) |
| 413,686 |
| * | ||||||||
Mark Frattini (9) |
| 122,700 |
| * | ||||||||
Steven Doares (10) |
| 110,956 |
| * | ||||||||
Kyung Nam-Wortman (11) |
| 99,426 |
| * | ||||||||
Arthur Stril (12) |
| 99,230 |
| * | ||||||||
Bing Wang, PhD(13) |
| 77,000 |
| * | ||||||||
Pierre Bastid (14) |
| 2,019,753 |
| 2.81% | ||||||||
Laurent Arthaud |
| — |
| * | ||||||||
Rainer Boehm (15) |
| 40,000 |
| * | ||||||||
Jean-Pierre Garnier (16) |
| 64,369 |
| * | ||||||||
Donald A. Bergstrom |
| — |
| * | ||||||||
Axel-Sven Malkomes |
| — |
| * | ||||||||
Cécile Chartier |
| — |
| * | ||||||||
All directors and executive officers as a group (17 persons) |
| 8,860,725 |
| 12.31% | ||||||||
Name of Beneficial Owner | Ordinary Shares Beneficially Owned | |||||||
| Number | Percentage | |||||||
Directors and Executive Officers: | ||||||||
André Choulika, Ph.D (3) | 1,431,732 | 3.98 | % | |||||
David Sourdive, Ph.D. (4) | 1,368,535 | 3.81 | % | |||||
Philippe Duchateau, Ph.D. (5) | 354,973 | * | ||||||
Eric Dutang (6) | 143,950 | * | ||||||
Julia Berretta (7) | 217,165 | * | ||||||
Marie-Bleuenn Terrier (8) | 292,609 | * | ||||||
Stephan Reynier (9) | 124,493 | * | ||||||
Elsy Boglioli | 0 | * | ||||||
Stéphane Depil | 0 | * | ||||||
Federico Tripodi | 0 | * | ||||||
Alain Godard (10) | 144,999 | * | ||||||
Pierre Bastid (11) | 3,422,394 | 9.52 | % | |||||
Laurent Arthaud | 0 | * | ||||||
Annick Schwebig, M.D. (12) | 51,997 | * | ||||||
Jean-Marie Messier (13) | 110,117 | * | ||||||
Hervé Hoppenot | 0 | * | ||||||
Rainer Boehm | 0 | * | ||||||
All directors and executive officers as a group (17 persons) | 7,664,904 | 21.32 | % | |||||
|
159* Represents beneficial ownership of less than one per cent.
(1)
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Voting Rights
A double voting right is attached to each registered share which is held in the name of the same shareholder for at least two years. Any of our principal shareholders since January 1, 2014 are as a result ofwho have held our ordinary shares in registered form for at least two years have this double voting rights. Until they convert into ordinary shares, the transactions described in our prospectus dated March 26, 2015, filed with the SEC
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pursuant to Rule 424(b), under the heading “Related Party Transactions—Transactions with Our Principal Shareholders, Directors"class A" convertible preferred shares would have single voting rights and Executive Officers”would not carry any double voting right at any moment, and the dilution resulting from our public offering.
None"class B" would carry no voting rights except on any distribution of dividends or reserves. Other than as stated above, none of our principal shareholders has voting rights different than our other shareholders.
As of February 28, 2018, assuming that all of our ordinary shares represented by ADSs are held by residents ofShareholders in the United States
As of June 30, 2023 and December 31, 2023, we estimate that approximately 40.2%22.4% and 27.9%, respectively, of our outstanding ordinary shares were held in the United States by 64 holders of record.States.
Since January 1, 2015,2023, we have engaged in the following transactions with our directors, executive officers and holders of more than 5% of our outstanding voting securities and their affiliates, which we refer to as our related-parties.
Transactions with Our Principal Shareholders, Directors and Executive Officers
Alliance agreement
Pfizer purchased 10% of our then-outstanding ordinary shares on July 31, 2014. The revenues booked for Pfizer in the years ended December 31, 2015, 2016 and 2017 amount to $10.2 million, $25.3 million and $19.7 million respectively. As of December 31, 2017, there no outstanding receivables and Pfizer had a 7.84% ownership in Cellectis.
Conditional advances and subsidies
Bpifrance,BPI, which is a shareholder of Cellectis, participated in a bank syndicate that granted to Cellectis the PGE loan. Since January 1, 2023, we have made payments of $1.6 million in principal and $0.2 million in interest pursuant to the PGE loan. For more information, see “Item 5.B—Liquidity and Capital Resources.”
We entered into a transfer of receivables agreement with BPI, to provide to Cellectis financing of 80% of the tax receivables due to Cellectis in connection with the research tax credit (Crédit Impôts Recherche). Pursuant to this agreement and according to market standards, BPI advanced 5,456,000 € over the period from June 15, 2022 to June 15, 2023, with a commitment fee to be charged to Cellectis of 0.40%. The agreement was amended to extend the period to June, 15, 2024.
We entered into a transfer of receivables agreement with BPI , to provide to Cellectis financing of 80% of the tax receivables due to Cellectis in connection with the research tax credit (Crédit Impôts Recherche). Pursuant to this agreement and according to market standards, Bpifrance advances 5,284,000 € over the period from July 15, 2023 to July 15, 2024, with a commitment fee to be charged to Cellectis of 0.40%.
BPI, has granted us conditional advancessigned a grant and subsidies. There was no outstanding conditional advancesrefundable advance to partially support a R&D program related to Cellectis UCART 20x22 for up to €6.4 million subject to specific conditions. In 2023, Cellectis received $3.1 million pursuant to this advance.
As part of the AZ JRCA with AZ Ireland, twenty five genetic targets have been exclusively reserved for AZ Ireland, from which up to 10 candidate products could be explored for development. AZ Ireland will have an option for a worldwide exclusive license on the candidate products, to be exercised before IND filing. Pursuant to the AZ JRCA, Cellectis’ research costs under the collaboration will be funded by AZ Ireland and subsidies since December 31, 2016.Cellectis has received an upfront payment of $25 million in November 2023. For more information, see “Item 4. Information on the Company—B. Business Overview—Our Licensing Relationships.”
Agreements with Our Directors and Executive Officers
Director and Executive Officer Compensation
See “Item 6.B—Compensation of Directors and Executive Officers” for information regarding compensation of directors and executive officers and service agreement with Director.
Equity Awards
Since January 1, 2017,2023, we have granted equity awards to certain of our directors and executive officers:
See “Item. 7A—Major Shareholders” for information regarding equity awards to certain of our executive officers.
Indemnification Agreements
See “Item. 6B—Limitations on Liability and Indemnification Matters.”
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, we have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
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Transactions with subsidiaries: Calyxt IPO and Key Arrangements
On July 25, 2017, Calyxt completed an initial public offering on the Nasdaq Global Market, selling an aggregate of 8,050,000 shares of common stock at a price of $8.00 per share (including the full exercise by the underwriters of their over-allotment option). The Company received net proceeds of approximately $58.0 million, after deducting underwriting discounts and commissions and offering expenses. As part of the IPO, Cellectis purchased 2,500,000 shares of common stock for a value of $20.0 million, which is included in the net proceeds that Calyxt received. Calyxt used $5.7 million of the proceeds from us to cover a portion of the outstanding obligations owed to Cellectis. Following the initial public offering, as of February 28, 2018, Cellectis owns approximately 79.3% of Calyxt’s common stock.
In connection with Calyxt’s IPO, we and Calyxt entered into certain agreements that relate to our relationship with Calyxt prior to the IPO or that provide a framework for our ongoing relationship with Calyxt. The summaries of the most significant provisions of these agreements. These summaries are qualified in their entirety by reference to the full text of such agreements.
Management Services Agreement
We are party to a management services agreement dated January 1, 2016 and amended July 25, 2017 that we entered into with Calyxt and Cellectis, Inc., a Delaware corporation and our wholly owned subsidiary (“Cellectis, Inc.”), pursuant to which we and Cellectis, Inc. provide certain services to Calyxt, including certain general management, finance, investor relations, communication, legal, intellectual property, human resources and information technology services. In consideration for such services, Calyxt pays to us and Cellectis, Inc. certain fees, consisting of reimbursement of all costs and expenses reasonably incurred by us in connection with the provision of such services, payment of amark-up corresponding to a percentage of certain of the costs and expenses, which range from zero to 10%, and reimbursement of costs and expenses of services that are subcontracted by us on Calyxt’s behalf.
The management services agreement is automatically renewed for one year periods starting on January 1st of each year. Either party has the right to terminate the agreement at the anniversary date of the agreement by giving three months prior notice. We also entered into an amendment to the agreement in connection with IPO to provide that the agreement may otherwise be terminated by us or by Calyxt in connection with certain material breaches by the other party upon prior written notice subject to limited cure periods, the sale of all or substantially all of the assets of either party, certain bankruptcy events or certain judgments.
During fiscal year 2016, Calyxt made payments to us for services provided under the management services agreement of $1.8 million, which excludes directre-invoicing and royalties paid to us.
Stockholders Agreement
On July 25, 2017 we entered into a stockholders agreement with Calyxt, which we refer to as the stockholders agreement. Pursuant to our stockholders agreement with Calyxt, we have certain contractual rights for so long as we beneficially own at least 50% of the then outstanding shares of Calyxt’s common stock, including:
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In addition, we have the following rights for so long as we beneficially own at least 15% of the then outstanding shares of Calyxt’s common stock, including:
In addition, for so long as we beneficially own at least 15% of the then outstanding shares of Calyxt’s common stock, (i) we will be entitled to certain information rights, including the right to consult with and advise senior management, to receive quarterly and annual financial statements and to review Calyxt’s books and records and (ii) Calyxt will also be required to cooperate with us in connection with certain sales and pledges of Calyxt’s shares or grants of security interests in respect thereof, including in connection with margin loans.
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The stockholders agreement will also provide us with certain registration rights, including certain demand and piggyback registration rights. The registration rights will remain in effect with respect to any shares covered by the Stockholders Agreement until (i) all of our Calyxt shares have been sold pursuant to an effective registration statement under the Securities Act; (ii) all of our Calyxt shares have been sold to the public pursuant to Rule 144 under the Securities Act; or (iii) we own less than 10% of the then outstanding shares of Calyxt’s common stock.
Separation Agreement
On July 25, 2017, we entered into a separation agreement with Calyxt, which sets forth certain agreements between us and Calyxt that will govern the relationship between us and Calyxt following this offering, including with respect to the following matters:
The separation agreement will terminate upon the earlier of (i) mutual written consent of us and Calyxt and (ii) the date on which we and our affiliates cease to hold at least 15% of the then outstanding shares of Calyxt’s common stock.
License Agreement with Calyxt
We are party to a license agreement with Calyxt pursuant to which Calyxt has been granted an exclusive, worldwide license (subject to existing licenses granted by us to third parties) to use, commercialize and exploit certain intellectual property in the field of researching, developing and commercializing agricultural and food products, including traits, seeds, and feed and food ingredients (excluding any application in connection with animals and animal cells), except that such license will benon-exclusive in such field for any activities relating to researching, developing or commercializing certain modified or mutatedI-CreI homing endonucleases. Calyxt has also been granted anon-exclusive license to use the TALEN trademark in connection with its exploitation of licensed products under the agreement. Any improvements Calyxt makes to the licensed intellectual property will be owned by Calyxt but licensed back to us on an exclusive basis for any use outside of Calyxt’s exclusive agricultural field of use.
In consideration for the license from us, Calyxt is required to pay to us, on aproduct-by-product andcountry-by-country basis, a royalty of 3% of net sales of any products that are covered by the patents licensed from us. In addition, Calyxt will be required to pay us 30% of revenue Calyxt receives for sublicensing its rights under the agreement to third parties. Calyxt’s payment obligations to us will expire upon the expiration of thelast-to-expire valid claim of the patents licensed to Calyxt by us.
Under our license agreement with Calyxt, and as between the parties, we have the first right to control the prosecution, maintenance, defense and enforcement of the licensed intellectual property and Calyxt will have the right to step in and assume such control with respect to the patents owned by us and exclusively licensed to Calyxt under the agreement if we elect to not prosecute, maintain, defend or enforce such patents. In certain circumstances, if we elect to abandon any patents owned by us and exclusively licensed to Calyxt under the agreement, Calyxt will have the right to assume ownership of such patents. In addition, some of the intellectual
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property that will be licensed to Calyxt by us consists of an exclusive sublicense, subject to existing sublicenses granted by us to third parties, of intellectual property originally licensed to us by the University of Minnesota to exploit such intellectual property in Calyxt’s exclusive agricultural field of use. Therefore, as to such sublicensed intellectual property, Calyxt’s license from us will be subject to the terms and conditions of the license agreement between the University of Minnesota and us, and to the extent Calyxt’s activities under such sublicense violate any terms and conditions of the license agreement between us and the University of Minnesota, Calyxt will be responsible for any damages that we may incur. In addition, Calyxt is required to reimburse us for any and all payments made by us to the University of Minnesota pursuant to the license agreement between the University of Minnesota and us to the extent that any such payments are required to be made as a result of Calyxt’s applicable activities. Under the license agreement between us and the University of Minnesota, the University of Minnesota has the first right to control the prosecution and maintenance of the licensed intellectual property.
Calyxt’s license agreement with us is perpetual. However it may be terminated upon the mutual written agreement of both parties, either party’s uncured material breach of the agreement, or upon certain bankruptcy and insolvency related events.
Related-Party Transactions Policy
We have adopted a related-party transaction policy that sets forth our procedures for the identification, review, consideration and approval or ratification of related-party transactions. The policy became effective immediately upon the completion of our initial public
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offering. For purposes of our policy only, a related-party transaction is a transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships, in which we and any related parties are, were or will be participants, which are not (1) in the ordinary course of business, (2) at arms’ length and (3) in which the amount involved exceeds $120,000. Transactions involving compensation for services provided to us as an employee or director are not covered by this policy. For purposes of this policy, a related party is any executive officer, director (or nominee for director) or beneficial owner of more than five percent (5%) of any class of our voting securities, including any of their respective immediate family members and any entity owned or controlled by such persons.
Under the policy, related-party transactions must be reported to us by all related parties. If a transaction has been identified as a related-party transaction, our management must present information regarding therelated-party transaction to our board of directors for review, consideration and approval. Certain transactions may be presented to the Audit and Finance Committee, which will determine whether the transaction is arelated-party transaction, in which case the related-party transaction will be submitted to our board of directors. The presentation will include a description of, among other things, the material facts, the interests in the transaction, direct and indirect, of the related parties, the benefits to us of the transaction and whether the transaction is on terms that are comparable to the terms available to or from, as the case may be, an unrelated third-party or to or from employees generally. In addition, under our Code of Business Conduct and Ethics, our employees and directors have an affirmative responsibility to disclose any transaction or relationship that reasonably could be expected to give rise to a conflict of interest. In considering related-party transactions, our board of directors, or to the extent permitted by applicable law an independent committee of our board of directors, will take into account the relevant available facts and circumstances including, but not limited to:
The policy requires that, in determining whether to approve, ratify or reject a related-party transaction, our board of directors, or if permitted by applicable law an independent committee of our board of directors, must
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consider, in light of known circumstances, whether the transaction is in, or is not inconsistent with, our best interests and those of our shareholders, as our board of directors, or if permitted by applicable law an independent committee of our board of directors, determines in the good faith exercise of its discretion.
Not applicable.
ITEM 8. FINANCIAL INFORMATION
Our consolidated financial statements are appended at the end of this Annual Report starting at pageF-1, and form a part hereof.
Legal Proceedings
From time to time, we may be involved in various claims and legal proceedings relating to claims arising out of our operations. We arehave initiated an arbitration proceeding through the Centre de Médiation et d'Arbitrage de Paris, which, if the arbitral tribunal does not currently a partyrule in our favor, may have negative impact on our business. For more information, see "Risk Factors - Risks Related to any legal proceedings that,Our Reliance on Third Parties - Servier's discontinuation of its involvement in the opiniondevelopment of our management, are likely toCD19 Products and related disagreements may have a material adverse effect on our business or our cash flows. consequences".Regardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.
Dividend Distribution
Approval of Dividends.Dividends. Pursuant to French law, our board of directors may propose a dividend and/or reserve distribution for approval by the shareholders at the annual ordinary general meeting related to the statutory financial statements of Cellectis S.A.
Upon recommendation of our board of directors, our shareholders may decide to allocate all or part of any distributable profits to special or general reserves, to carry them forward to the next fiscal year as retained earnings or to allocate them to the shareholders as dividends. However, dividends may not be distributed when as a result of such distribution, our net assets are or would become lower than the amount of the share capital plus the amount of the legal reserves which, under French law, may not be distributed to shareholders (the amount of our share capital plus the amount of our legal and other reserves which may not be distributed was equal to $2.3$4.1 million on December 31, 2017)2023). Moreover, the statutoryCellectis accumulated deficit is $159.5$112.9 million as of December 31, 2017.2023 which only corresponds to 2023 net result. During the annual shareholders meeting of June 27, 2023, the shareholders, in accordance with French Law, approved the absorption of $134.1 million of retained earnings into share premium. This transaction has no impact on the total equity, comprehensive income (loss), assets (including cash) nor liabilities.
Our board of directors may distribute interim dividends after the end of the fiscal year but before the approval of the financial statements for the relevant fiscal year when the interim balance sheet, established during such year and certified by an auditor, reflects that we have earned distributable profits since the close of the last financial year, after recognizing the necessary depreciation and provisions and after deducting prior losses, if any, and the sums to be allocated to reserves, as required by law or theBy-laws, and including any retained earnings. The amount of such interim dividends may not exceed the amount of the profit so defined.
Distribution of Dividends. Dividends are distributed to shareholders proportionally to their shareholding interests. In the case of interim dividends, distributions are made to shareholders on the date set by our board of directors during the meeting in which the distribution of interim dividends is approved. The actual dividend payment date is decided by the shareholders at an ordinary general shareholders’ meeting or by our board of directors in the absence of such a decision by the shareholders. Shareholders that own shares on the actual payment date are entitled to the dividend.
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Dividends may be paid in cash or, if the shareholders’ meeting so decides, in kind, provided that all the shareholders receive a whole number of assets of the same nature paid in lieu of cash. OurBy-laws provide that, subject to a decision of the shareholders’ meeting taken by ordinary resolution, each shareholder may be given the choice to receive his dividend in cash or in shares.
Calyxt deconsolidation
On November 23, 2022, Calyxt received a non-binding letter of intent from Cibus Global regarding a potential reverse merger with Calyxt (with Calyxt absorbing Cibus Global). With Calyxt as the surviving entity, current equity holders of Cibus Global would receive shares of Calyxt common stock issued for the purpose of the transaction. On January 13, 2023, Calyxt, Calypso Merger Subsidiary, LLC, a wholly-owned subsidiary of Calyxt, Cibus Global and certain other parties, entered into the Merger Agreement with respect to this Merger. Upon completion of the proposed Merger, Cellectis S.A. was expected to own approximately 2.4% of the equity interests of the merged combined company, resulting in a loss of control by Cellectis over Calyxt.
166In this context, since November 23, 2022, and for so long as Cellectis retained control over Calyxt, the assets and liabilities of Calyxt are presented in the financial statements as non-current assets and liabilities held for sale for all periods presented, in accordance with IFRS 5. The statements of consolidated operations, statements of consolidated comprehensive income and statements of consolidated cash flows reflect the presentation of Calyxt as a discontinued operation for all period presented, with a restatement of the 2022 statements.
On May 31, 2023 immediately prior to the consummation of the Merger, Cellectis S.A.’s ownership interest in Calyxt amounted to 48.0%. Cellectis’ voting rights continued to give Cellectis the power to direct relevant activities of Calyxt and therefore Calyxt continued to be consolidated through the May 31, 2023 consummation of the Merger. On May 31, 2023, Calyxt consummated the Merger, and effective on June 1, 2023, the combined company operates under the name of Cibus, Inc.
Among other things, as part of the Merger, each share of Calyxt’s common stock existing and outstanding immediately prior to the Merger remained outstanding as a share of Class A Common Stock, without any conversion or exchange thereof, and Calyxt issued approximately 16,527,484 shares of Class A Common Stock to unitholders of Cibus Global based on an exchange ratio set forth in the Merger Agreement. Cellectis’ equity interest in Cibus was reduced to 2.9% after the closing of the Merger, which resulted in Cellectis losing control of Cibus. Consequently, Calyxt was deconsolidated on June 1, 2023. Calyxt’s results are included in the Group’s results until May 31, 2023, and continue to be presented as the results of discontinued operations until that date.
Collaboration and Investment Agreements with AstraZeneca
Joint Research and Collaboration Agreement
On November 1, 2023, we and AZ Ireland entered into the AZ JRCA. Pursuant to the AZ JRCA, the parties will collaborate to develop up to 10 novel cell and gene therapy candidate products, selected from a larger pool of potential targets identified by AZ Ireland, for human therapeutic, prophylactic, palliative, and analgesic purposes. Each party will be responsible for performing research and development activities based on research plans to be agreed upon throughout the initial five-year collaboration term under the AZ JRCA. Cellectis granted AZ Ireland an exclusive option, on a candidate product by candidate product basis, to receive a worldwide, exclusive, royalty bearing, sublicenseable (under certain conditions) license under the Licensed Technology to exploit the relevant product candidate.
Initial Investment Agreement
AZ Holdings made an initial equity investment of $80 million in Cellectis by subscribing for 16,000,000 ordinary shares, at a price of $5,00 per share.
Subsequent Investment Agreement
On November 14, 2023, AZ Holdings and Cellectis entered into the Subsequent Investment Agreement, under which AZ Holdings would make a further investment in Cellectis of $140 million by subscribing for two newly created classes of convertible preferred shares of Cellectis : 10,000,000 "class A" convertible preferred shares and 18,000,000 "class B" convertible preferred shares. Until they convert into ordinary shares, the "class A" convertible preferred shares would have single voting rights and would not carry any double voting right at any moment, and the "class B" convertible preferred shares would carry no voting rights except on any distribution of dividends or reserves.
For more information, see “Item 4. Information on the Company—B. Business Overview—Our Licensing Relationships- Collaboration and Investmnet Agreements with AstraZeneca.”
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None.
ITEM 9. THE OFFER AND LISTING
Our ADS have been listed on Nasdaq Global Market under the symbol “CLLS” since March 24, 2015. Prior to that date, there was no public trading market for ADSs. Our ordinary shares have been trading on Euronext Growth market of Euronext Paris under the symbol “ALCLS” since February 7, 2007. Prior to that date, there was no public trading market for ADSs or our ordinary shares. Our initial public offering in March 2015 was priced at $41.50 per ADS on March 24, 2015. The following tables set forth for the periods indicated the reported high and low sale prices per ADS on Nasdaq in U.S. dollars and per ordinary share on Euronext Growth in euros.
Nasdaq
Period | High | Low | ||||||
Annual | ||||||||
2015 (beginning March 24, 2015) | $ | 47.66 | $ | 23.67 | ||||
2016 | $ | 33.64 | $ | 16.40 | ||||
2017 | $ | 35.01 | $ | 17.52 | ||||
2018 (through March 12, 2018) | $ | 34.17 | $ | 27.78 | ||||
Quarterly | ||||||||
First Quarter 2016 | $ | 30.16 | $ | 18.77 | ||||
Second Quarter 2016 | $ | 33.64 | $ | 25.34 | ||||
Third Quarter 2016 | $ | 28.35 | $ | 24.07 | ||||
Fourth Quarter 2016 | $ | 23.24 | $ | 16.40 | ||||
First Quarter 2017 | $ | 24.37 | $ | 17.52 | ||||
Second Quarter 2017 | $ | 25.92 | $ | 21.96 | ||||
Third Quarter 2017 | $ | 32.18 | $ | 21.65 | ||||
Fourth Quarter 2017 | $ | 35.01 | $ | 23.33 | ||||
First Quarter 2018 (through March 12, 2018) | $ | 34.17 | $ | 27.78 | ||||
Monthly | ||||||||
September 2017 | $ | 32.18 | $ | 24.96 | ||||
October 2017 | $ | 35.01 | $ | 27.51 | ||||
November 2017 | $ | 29.18 | $ | 23.33 | ||||
December 2017 | $ | 29.15 | $ | 23.70 | ||||
January 2018 | $ | 34.17 | $ | 27.78 | ||||
February 2018 | $ | 32.65 | $ | 28.53 | ||||
March 2018 (through March 12, 2018) | $ | 34.07 | $ | 31.57 | ||||
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Alternext
Period | High | Low | ||||||
Annual | ||||||||
2013 | € | 7.70 | € | 2.19 | ||||
2014 | € | 14.00 | € | 2.40 | ||||
2015 | € | 40.90 | € | 13.26 | ||||
2016 | € | 29.71 | € | 14.99 | ||||
2017 | € | 29.61 | € | 16.33 | ||||
2018 (through March 12, 2018) | € | 27.42 | € | 23.12 | ||||
Quarterly | ||||||||
First Quarter 2016 | € | 27.74 | € | 22.01 | ||||
Second Quarter 2016 | € | 29.71 | € | 22.67 | ||||
Third Quarter 2016 | € | 25.18 | € | 21.97 | ||||
Fourth Quarter 2016 | € | 20.81 | € | 14.99 | ||||
First Quarter 2017 | € | 22.49 | € | 16.33 | ||||
Second Quarter 2017 | € | 24.02 | € | 19.96 | ||||
Third Quarter 2017 | € | 26.84 | € | 18.23 | ||||
Fourth Quarter 2017 | € | 29.61 | € | 19.55 | ||||
First Quarter 2018 (through March 12, 2018) | € | 27.42 | € | 23.12 | ||||
Monthly | ||||||||
September 2017 | € | 26.84 | € | 20.84 | ||||
October 2017 | € | 29.61 | € | 22.88 | ||||
November 2017 | € | 26.90 | € | 19.55 | ||||
December 2017 | € | 24.01 | € | 20.09 | ||||
January 2018 | € | 27.14 | € | 23.12 | ||||
February 2018 | € | 26.80 | € | 23.34 | ||||
March 2018 (through March 12, 2018) | € | 27.42 | € | 25.30 | ||||
Not applicable.
The ADS have been listed on Nasdaq Global Market under the symbol “CLLS” since March 24, 2015 and our ordinary shares have been listed on the Euronext Growth market of Euronext in Paris under the symbol “ALCLS” since February 7, 2007.
Not applicable.
Not applicable.
Not applicable.
ITEM 10. ADDITIONAL INFORMATION
Not applicable.
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Key Provisions of OurBy-laws and French Law
The description below reflects the terms of ourBy-laws, and summarizes the material rights of holders of our ordinary shares under French law. Please note that this is only a summary and is not intended to be exhaustive. For further information, please refer to the full version of ourBy-laws which was filed on January 9, 2018. In the event that our Bylaws are modified in connection with the creation of a specific category of preferred shares, the rights of holders of such preferred shares under ourBy-laws and French law will be described in the applicable prospectus supplement.is included as an exhibit to this Annual Report.
Corporate Purpose
Our corporate purpose, which is set forth in Article 3 of our Bylaws,By-laws, in France and abroad includes:
Directors
Quorum and Voting.Voting. The board of directors may only deliberate if at least half of the directors attend the applicable meeting in the manner provided for in ourBy-laws. In particular, French law and the charter of the board of directors allow directors to attend meetings of the board of directors in person or, to the extent permitted by applicable law, by videoconference or other telecommunications arrangements. The board of directors may also take by written consultation certain decisions restrictively listed by French law.
In addition, ourBy-Laws By-laws allow a director to grant another director a proxy to represent him or her at a meeting of the board of directors, but no director can hold more than one proxy at any meeting. Decisions of the board of directors are adopted by the majority of the voting rights held by the directors present or represented, it being specified that in case of a vote-split, the Chairman of the board of directors shall have a decidingcasting vote.
Directors’ Voting Powers on Proposal, Arrangement or Contract in which any Director is Materially Interested.Interested. Under French law, any agreement entered into (directly or through an intermediary) between us and any director that is not entered into (1) in the ordinary course of business and (2) under standard terms and conditions is subject to the prior authorization of the board of directors, excluding the vote of the interested director.
The foregoing requirements also apply to agreements between us and another company, provided that the company is not one of our wholly-owned subsidiaries, if one of our directors is the owner or a general partner, manager, director, general manager or member of the executive or supervisory board of the other company, as well as to agreements in which one of our directors has an indirect interest.
Decisions Subject to the Prior Approval of the Board of Directors. OurBy-laws provide that none of the decisions listed below (whether they relate to us or to any of our subsidiaries) shall be made without the prior approval of our board acting, upon first notice, by a majority of its members in office and, upon second notice, by a majority of its members present or represented by proxy:
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Directors’ Compensation.Compensation. The aggregate amount of attendance fees (jetonscompensation (formerly named “jetons de présencesence”) of the board of directors is determined at the shareholders’ annual ordinary general meeting. The board of directors then divides all or part (at the board’s
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discretion) of this aggregate amount among some or all of its members by a simple majority vote.of the votes cast. In addition, the board of directors may grant exceptional compensation ((“rémunérations exceptionnellesexceptionnelles”) to individual directorsa director on acase-by-case basis for special and temporary assignments. The board of directors may also authorize the reimbursement of reasonable travel and accommodation expenses, as well as other expenses incurred by directors in the corporate interest.
Board of Directors’ Borrowing Powers.Powers. There are currently no limits imposed by ourBy-laws on the amounts of loans or borrowings that the board of directors may approve.
Directors’ Age Limits.Limits. The number of directors who are more than seventy (70)seventy-five (75) years old may not exceed one third of the directors in office. The Chairman of the Board cannot be more than eighty (80) years old.
Term of Director Office.Office. OurBy-laws provide that members of our board of directors are elected for a tenure of three years.
Employee Director Limits. Limits. The number of directors who are also party to employment contracts with the Company may not exceed one third of the directors in office.
Directors’ Share Ownership Requirements. Requirements. None.
Rights, Preferences and Restrictions Attaching to Ordinary Shares
Dividends. We may only distribute dividends out of our “distributable profits,” plus any amounts held in our reserves that the shareholders decide to make available for distribution, other than those reserves that are specifically required to be maintained by law. “Distributable profits” consist of our unconsolidated net profit in each fiscal year, as increased or reduced by any profit or loss carried forward from prior years, less any contributions to the reserve accounts pursuant to French law (see below under “—Legal Reserve”).
Legal Reserve. Pursuant to French law, we must allocate at least 5% of our unconsolidated net profit for each year to our legal reserve fund before dividends may be paid with respect to that year. Such allocation is compulsory until the amount in the legal reserve is equal to 10%For a discussion of the aggregate par value of our issued and outstanding share capital. This restrictioninformation required by Item 10.B. 2 through 10, please refer to Exhibit 2.3 to this Annual Report, which is incorporated by reference herein.
Listing
Our ADSs have been listed on the payment of dividends also applies to our French subsidiaries on an unconsolidated basis.
Approval of Dividends. Pursuant to French law, our board of directors may propose a dividend and/or reserve distribution for approval byNasdaq Global Market under the shareholders at the annual ordinary general meeting.
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Upon recommendation of our board of directors, our shareholders may decide to allocate all or part of any distributable profits to special or general reserves, to carry them forward to the next fiscal year as retained earnings or to allocate them to the shareholders as dividends. However, dividends may not be distributed when as a result of such distribution our net assets are or would become lower than the amount of the share capital plus the amount of the legal reserves which, under French law, may not be distributed to shareholders.
Our board of directors may distribute interim dividends after the end of the fiscal year but before the approval of the financial statements for the relevant fiscal year when the interim balance sheet, established during such yearsymbol “CLLS” and examined by an auditor, reflects that we have earned distributable profits since the close of the last financial year, after recognizing the necessary depreciation and provisions and after deducting prior losses, if any, and the sums to be allocated to reserves, as required by law or theBy-laws, and including any retained earnings. The amount of such interim dividends may not exceed the amount of the profit so defined.
Distribution of Dividends. Dividends are distributed to shareholders proportionally to their shareholding interests. In the case of interim dividends, distributions are made to shareholders on the date set by our board of directors during the meeting in which the distribution of interim dividends is approved. The actual dividend payment date is decided by the shareholders at an ordinary general shareholders’ meeting or by our board of directors in the absence of such a decision by the shareholders. Shareholders that own shares on the actual payment date are entitled to the dividend.
Dividends may be paid in cash or, if the shareholders’ meeting so decides, in kind, provided that all the shareholders receive a whole number of assets of the same nature paid in lieu of cash. OurBy-laws provide that, subject to a decision of the shareholders’ meeting taken by ordinary resolution, each shareholder may be given the choice to receive his dividend in cash or in shares.
Timing of Payment. Pursuant to French law, dividends must be paid within a maximum period of nine months following the end of the relevant fiscal year. An extension of such timeframe may be granted by court order. Dividends that are not claimed within a period of five years after the payment date will be deemed to expire and revert to the French state.
Voting Rights. Each of our ordinary shares entitles its holder to vote and be represented in the shareholders’ meetings in accordance with the provisions of French law and of ourBy-laws. The ownership of a share implies the acceptance of ourBy-laws and any decision of our shareholders.
In general, each shareholder is entitled to one vote per share at any general shareholders’ meeting. However, ourBy-Laws provide that all shares held in registered form (actions nominatives) for more than two years will be granted double voting rights.
Under French law, treasury shares or shares held by entities controlled by us are not entitled to voting rights and are not taken into account for purposes of quorum calculation.
Rights to Share in Our Profit. Under French law, each ordinary share entitles its holder to a portion of the corporate profits and assets proportional to the amount of share capital represented thereby.
Rights to Share in the Surplus in the Event of Liquidation. If we are liquidated, any assets remaining after payment of our debts, liquidation expenses and all of our remaining obligations will first be used to repay in full the par value of our outstanding shares. Any surplus will then be distributed among shareholders proportionally to their shareholding in our company.
Repurchase and Redemption of Shares. Under French law, we may acquire our own shares. Such acquisition may be challengedhave been listed on the groundEuronext Growth market of market abuse regulations. However, Regulation 596/2014 of April 16, 2014 (MAR) provides for safe harbor exemptions when the acquisition is made (i) under abuy-back program to be
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authorized by the shareholdersEuronext in accordance with the provisions of Article L.225-209 of the French Commercial Code and with the General Regulations of theAutorité des marchés financiers or AMF and (ii) for one of the following purposes which shall be provided for in thebuy-back program:
All other purposes, and especially sharebuy-backs made for external growth operations in pursuance of Article L.225-209 of the French Commercial Code, while not forbidden, must be pursued in strict compliance of market manipulation and insider dealing rules.
Under the Market Abuse Regulation 596/2014 of August 16, 2014 (MAR) and in accordance with the General Regulations of the AMF, a corporation shall report to the competent authority of the trading value on which the shares have been admitted to trading or are traded, no later than by the end of the seventh daily market session following the date of the execution of the transaction, all the transactions relating to thebuy-back program, in a detailed form and in an aggregated form.
The decision to repurchase shares in order to decrease our share capital shall not be driven by losses and a purchase offer shall be made to all shareholders on a pro rata basis, with the approval of the shareholders at the extraordinary general meeting deciding the capital reduction; in this case, the shares repurchased must be cancelled within one month from their repurchase date.
When shares are repurchased in order to provide shares for distribution to employees or managers under a profit-sharing, free share or share option plan, the shares repurchased must be distributed within 12 months from their repurchase failing which they must be cancelled.
In any case, no such repurchase of shares may result in us holding, directly or through a person acting on our behalf, more than 10% of our issued share capital. Shares repurchased by us continue to be deemed “issued” under French law but are not entitled to dividends or voting rights so long as we hold them directly or indirectly, and we may not exercise the preemptive rights attached to them.
Sinking Fund Provisions. OurBy-laws do not provide for any sinking fund provisions.
Liability to Further Capital Calls. Shareholders are liable for corporate liabilities only up to the par value of the shares they hold; they are not liable to further capital calls.
Requirements for Holdings Exceeding Certain Percentages. There are no such requirements, except as describedParis under the section of this Annual Report titled “—Form, Holdingsymbol ALCLS”.
Transfer Agent and Transfer of Shares—Ownership of SharesRegistrar
The transfer agent and registrar for our ADSs byNon-French Persons.”
Actions Necessary to Modify Shareholders’ Rights
Shareholders’ rights may be modified as allowed by French law. Only the extraordinary shareholders’ meeting is authorized to amend anyCitibank, N.A. The transfer agent and all provisions ofregistrar for ourBy-laws. It may not, however, increase any of the shareholders’ commitments without the prior approval of each shareholder.
Special Voting Rights of Warrant Holders
Under French law, the holders of warrants of the same class (i.e., warrants that were issued at the same time and with the same rights), including founders’ warrants, are entitled to vote as a separate class at a general
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meeting of that class of warrant holders under certain circumstances, principally in connection with any proposed modification of the terms and conditions of the class of warrants or any proposed issuance of preferred shares or any modification of the rights of any outstanding class or series of preferred shares.
Rules for Admission to and Calling Annual Shareholders’ Meetings and Extraordinary Shareholders’ Meetings
Access to, Participation in and Voting Rights at Shareholders’ Meetings. The right to participate in a shareholders’ meeting is granted to all the shareholders, regardless of the number of shares they hold, whose shares are fully paid up and for whom a right to attend shareholders’ meetings has been established by registration of their shares in the names or names of the authorized intermediary acting on their behalf on the second business day prior to the shareholders’ meeting at midnight (Paris time), either in the registered shares accounts held by the Company or in the bearer shares accounts held by the authorized intermediary.
Each shareholder may attend the meetings and vote (1) in person, or (2) by granting a proxy to his or her spouse, his or her partner with whom he or she has entered into a civil union, or another shareholder, for physical persons, or any person that they may choose, for legal entities, or (3) by sending a proxy to us without indication of the beneficiary (in which case such proxy shall be cast in favor of the resolutions supported by the board of directors), or (4) by correspondence, or (5) by videoconference or another means of telecommunication organized by the board of directors and allowing identification of the relevant shareholder in accordance with applicable laws.
Shareholders may, in accordance with legal and regulatory requirements, send their vote or proxy, either by hard copy or via telecommunications means. Such vote or proxy must be received (1) at least three days prior to the meeting, in the case of hard copies, (2) by 3:00 p.m. (Paris time) on the day before the meeting, in the case of, electronic votes by email, (3) by the date of the meeting, in the case of a proxy granted to a designated person, and (4) by 3:00 p.m. (Paris time) on the day before the meeting, in the case of proxies without a designated attorney and therefore granted to the chairman of the meeting.
Shareholders sending their vote within the applicable time limit, using the form provided to them by us for this purpose, are deemed present or represented at the shareholders’ meeting for purposes of quorum and majority calculation.
The voting by correspondence form addressed by a shareholder is only valid for a single meeting or for successive meetings convened with the same agenda. To better understand the voting rights of the ADSs, you should carefully read the section of the accompanying prospectus “Description of American Depositary Shares”.
Notice of Annual Shareholders’ Meetings. Shareholders’ meetings are convened by our board of directors, or, failing that, by our statutory auditors, or by a court appointed agent or liquidator in certain circumstances, or by the majority shareholder in capital or voting rights following a public tender offer or exchange offer or the transfer of a controlling block on the date decided by the board of directors or the relevant person. Meetings are held at our registered offices or at any other location indicated in the convening notice. A meeting notice (avis de réunion) is published in the French Journal of Mandatory Statutory Notices (BALO) at least 35 days prior to the date of the shareholders’ meeting.
Additionally, a convening notice (avis de convocation) is published at least fifteen days prior to the date of the meeting in a legal gazette of the department in which the registered office of the company is located and in the French Journal of Mandatory Statutory Notices (BALO). Further, shareholders having held registered shares (actions nominatives) for at least one month at the time of the convening notice must be convened individually, by regular letter (or by registered letter if requested by the relevant shareholder) sent to their last known address.
When the shareholders’ meeting cannot deliberate due to the lack of the required quorum, the second meeting must be called at least ten days in advance in the same manner as used for the first notice.
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All notices to the shareholders must further specify the conditions under which the shareholders may vote by correspondence.
Agenda and Conduct of Annual Shareholders’ Meetings. The agenda of the shareholders’ meeting shall appear in the notice to convene the meeting. The shareholders’ meeting may only deliberate on the items on the agenda except for the removal of directors and the appointment of their successors, which may be put to vote by any shareholder during any shareholders’ meeting. One or more shareholders representing the percentage of share capital required by French law (currently 5%), and acting in accordance with legal requirements and within applicable time limits, may request the inclusion of items or proposed resolutions on the agenda.
Shareholders’ meetings shall be chaired by the Chairman of the board of directors or, in his or her absence, by a director appointed for this purpose by the board of directors; failing which, the meeting itself shall elect a Chairman. Vote counting shall be performed by the two members of the meeting who are present and accept such duties, who represent, either on their own behalf or as proxies, the greatest number of votes.
Ordinary Shareholders’ Meeting. Ordinary shareholders’ meetings are those meetings called to make any and all decisions that do not result in a modification of ourBy-laws. An ordinary shareholders’ meeting shall be convened at least once a year within six months of the end of each fiscal year in order to approve the annual and consolidated accounts for the relevant fiscal year or, in case of postponement, within the period established by court order. Upon first notice, the meeting may validly deliberate only if the shareholders present or represented by proxy or voting by mail represent at leastone-fifth of the shares entitled to vote. Upon second notice, no quorum is required. Decisions are made by a majority of the votes held by the shareholders present, represented by proxy, or voting by mail. Abstentions will have the same effect as a “no” vote.
Extraordinary Shareholders’ Meeting. Only an extraordinary shareholders’ meeting is authorized to amend our Bylaws. It may not, however, increase shareholders’ commitments without the approval of each shareholder. Subject to the legal provisions governing share capital increases from reserves, profits or share premiums, the resolutions of the extraordinary meeting will be valid only if the shareholders present, represented by proxy or voting by mail represent at leastone-fourth of all shares entitled to vote upon first notice, orone-fifth upon second notice. If the latter quorum is not reached, the second meeting may be postponed to a date no later than two months after the date for which it was initially called. Decisions are made by atwo-thirds majority vote of the shareholders present, represented by proxy, or voting by mail. Abstentions will have the same effect as a “no” vote.
In addition to the right to obtain certain information regarding us at any time, any shareholder may, from the date on which a shareholders’ meeting is convened until the fourth business day preceding the date of the shareholders’ meeting, submit written questions relating to the agenda for the meeting to our board of directors. Our board of directors is required to respond to these questions during the meeting.
Provisions Having the Effect of Delaying, Deferring or Preventing a Change in Control of the Company
Provisions contained in ourBy-laws and the corporate laws of France, the country in which we are incorporated, could make it more difficult for a third-party to acquire us, even if doing so might be beneficial to our shareholders. In addition, provisions of French law and ourBy-laws impose various procedural and other requirements which could make it more difficult for shareholders to effect certain corporate actions. These provisions include the following:
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Declaration of Crossing of Ownership Thresholds
Subject to requirements of French law, ourBy-laws do not require any specified disclosure by shareholders that cross ownership thresholds with respect to our share capital, except as described under the section of this Annual Report titled “—Form, Holding and Transfer of Shares—Ownership of Shares and ADSs byNon-French Persons.”
The absence of specific requirement in ourBy-laws is without prejudice to the following disclosures which are applicable to us according to French legal and regulatory provisions, it being provided that the following is a summary which is therefore not intended to be a complete description of applicable rules under French law:
Changes in Share Capital
Increases in Share Capital. Pursuant to French law, our share capital may be increased only with shareholders’ approval at an extraordinary general shareholders’ meeting following the recommendation of our board of directors. The shareholders may delegate to our board of directors either the authority (délégation de compétence) or the power (délégation de pouvoir) to carry out any increase in share capital in accordance with applicable laws.
Increases in our share capital may be effected by:
Increases in share capital by issuing additional securities may be effected through one or a combination of the following:
Decisions to increase the share capital through the capitalization of reserves, profits and/or share premium require shareholders’ approval at an extraordinary general shareholders’ meeting, acting under the quorum and majority requirements applicable to ordinary shareholders’ meetings. Increases in share capital effected by an increase in the par value of shares require unanimous approval of the shareholders, unless effected by capitalization of reserves, profits or share premium. All other capital increases require shareholders’ approval at an extraordinary general shareholders’ meeting acting under the regular quorum and majority requirements for such meetings.
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Reduction in Share Capital. Pursuant to French law, any reduction in our share capital requires shareholders’ approval at an extraordinary general shareholders’ meeting following the recommendation of our board of directors. The share capital may be reduced either by decreasing the par value of the outstanding shares or by reducing the number of outstanding shares. The number of outstanding shares may be reduced by the repurchase and cancellation of shares. Holders of each class of shares must be treated equally unless each affected shareholder agrees otherwise.
Preferential Subscription Right. According to French law, if we issue additional shares or securities giving right, immediately or in the future, to new shares for cash, current shareholders will have preferential subscription rights to these securities on a pro rata basis. Preferential subscription rights entitle the individual or entity that holds them to subscribe proportionally to the number of shares held by them to the issuance of any securities increasing, or that may result in an increase of, our share capital by means of a cash payment or aset-off of cash debts. The preferential subscription rights may be transferred and/or sold during the subscription period relating to a particular offering.
The preferential subscription rights with respect to any particular offering may be waived at an extraordinary general meeting by a two thirds vote of our shareholders or individually by each shareholder. Our board of directors and our independent auditors are required by French law to present reports to the shareholders’ meeting that specifically address any proposal to waive the preferential subscription rights.
Further, to the extent permitted under French law, we may seek, during an extraordinary general shareholders’ meeting, the approval of the shareholders to waive their preferential subscription rights in order to authorize the board of directors to issue additional shares and/or other securities convertible or exchangeable into shares.
Form, Holding and Transfer of Shares
Form of Shares. Pursuant to ourBy-laws, shares may be held in registered or bearer form, at each shareholder’s discretion.
Further, in accordance with applicable legal and regulatory provisions, we may request at any time from the authorized intermediary responsible for holding our shares the name or, in the case of a legal entity, the corporate name, nationality and address of holders of securities, giving immediate or future access to voting rights at our shareholders’ meetings, the number of securities they own and, where applicable, the restrictions attaching to such securities.
Holding of Shares. In accordance with French law concerning the “dematerialization” of securities, the ownership rights of shareholders are represented by book entries instead of share certificates. Shares are registered in individual accounts opened by us or any authorized intermediary, in the name of each shareholder and kept according to applicable legal and
regulatory provisions.
Ownership of Shares and ADSs byNon-French Persons. Neither the French Commercial Code nor ourBy-laws presently impose any restrictions on the right ofnon-French residents ornon-French shareholders to own and vote shares.
However,non-French residents must file a declaration for statistical purposes with the Bank of France (Banque de France) within twenty working days following the date of certain direct foreign investments in us, including any purchase of our ADSs. In particular, such filings are required in connection with investments exceeding €15,000,000 that lead to the acquisition of at least 10% of our Company’s share capital or voting rights or cross such 10% threshold. Violation of this filing requirement may be sanctioned by five years of imprisonment and a fine of up to twice the amount of the relevant investment. This amount may be increased fivefold if the violation is made by a legal entity.
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Moreover, certain foreign investments in companies incorporated under French laws are subject to the prior authorization from the French Minister of the Economy, where all or part of the target’s business and activity relate to a strategic sector, such as energy, transportation, public health, telecommunications, etc.
Assignment and Transfer of Shares. Shares are freely negotiable, subject to applicable legal and regulatory provisions (including, in particular, the prohibition on insider trading).
We entered into an underwriting agreement among Merrill Lynch, Pierce, Fenner & Smith Incorporated and Jefferies LLC, as representatives of the underwriters, on March 24, 2015, with respect to the ADSs sold in our initial public offering. We have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act, and to contribute to payments the underwriters may be required to make in respect of such liabilities. For additional information on our material contracts, please see Itemrefer to Items 4, 6 and Item 67.B. of this Annual Report.
Under current French foreign exchange control regulations there are no limitations on the amount of cash payments that we may remit to residents of foreign countries.countries (subject to the absence of any specific decision taken by the government otherwise). Laws and regulations concerning foreign exchange controls do, however, require that all payments or transfers of funds made by a French resident to anon-resident such as dividend payments be handled by an accredited intermediary. All registered banks and substantially all credit institutions in France are accredited intermediaries. In addition, there is a reporting obligation to a customs officer for transfer of cash in banknotes and coins of €10,000 or more carried in, or out of, the European Union.
Material U.S. Federal Income Tax Considerations
The following is a discussion of the material U.S. federal income tax consequences of owning and disposing of ADSs. This summary does not address any aspect of U.S. federalnon-income tax laws, such as U.S. federal estate and gift tax laws, or state, local ornon-U.S. tax laws, and does not purport to be a comprehensive description of all of the U.S. tax considerations that may be relevant to particular holders.holders, such as the effects of section 451(b) of the Internal Revenue Code of 1986, as amended (the “Code”).
The discussion applies to you only if you hold the ADSs as capital assets for U.S. federal income tax purposes (generally, for investment). This section does not apply to you if you are a member of a special class of holders subject to special tax rules, including:
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This section is based on the Internal Revenue Code, of 1986, as amended, or (the Code), existing and proposed income tax regulations issued under the Code, legislative history, and judicial and administrative interpretations thereof, all as of the date of this Annual Report. All of the foregoing are subject to change at any time, and any change could be retroactive and could affect the accuracy of this discussion. In addition, the application and interpretation of certain aspects of the passive foreign investment company, or PFIC rules, referred to below, require the issuance of regulations which in many instances have not been promulgated and which may have retroactive effect. There can be no assurance that any of these regulations will be enacted or promulgated, and if so, the form they will take or the effect that they may have on this discussion. This discussion is not binding on the U.S. Internal Revenue Service, or IRS, or the courts. No ruling has been or will be sought from the IRS with respect to the positions and issues discussed herein, and there can be no assurance that the IRS or a court will not take a different position concerning the U.S. federal income tax consequences of an investment in the ADSs or that any such position would not be sustained.
INVESTORSYOU SHOULD CONSULT THEIRYOUR OWN TAX ADVISORS CONCERNING THE U.S. FEDERAL, STATE, LOCAL AND NON-U.S. TAX CONSEQUENCES OF OWNING AND DISPOSING OF THE ADSs IN THEIRYOUR PARTICULAR SITUATIONS INCLUDING ANY CONSEQUENCES UNDER THE RECENTLY ENACTED LEGISLATION KNOWN AS THE TAX CUTS AND JOBS ACT.SITUATION.
You are a “U.S. holder” if you are a beneficial owner of ADSs and you are:or are treated for U.S. federal income tax purpose as:
In addition, this discussion is limited to U.S. holders who are not resident in France for purposes of the Income Tax Treatyincome tax treaty between the United States and France.
If a partnership (including for this purpose any entity treated as a partnership for U.S. federal income tax purposes) is a beneficial owner of the ADSs, the U.S. tax treatment of a partner in the partnership generally will depend on the status of the partner and the activities of the partnership. A holder of the ADSs that is a partnership and partners in such a partnership should consult their own tax advisors concerning the U.S. federal income tax consequences of owning and disposing of ADSs.
A“non-U.S. “non-U.S. holder” is a beneficial owner of ADSs that is neither a U.S. holder nor a partnership for U.S. federal income tax purposes.
Generally, holders of ADSs should be treated for U.S. federal income tax purposes as holding the ordinary shares represented by the ADSs.
Accordingly, no gain or loss will be recognized upon an exchange of ordinary
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shares for ADSs or an exchange of ADSs for ordinary shares. The U.S.
Treasury has expressed concerns that intermediaries in the chain of ownership between the holder of an ADS and the issuer of the security underlying the ADS may be taking actions that are inconsistent with the claiming of foreign tax credits for U.S. holders of ADSs. Accordingly, the credibility of foreign taxes, if any, as described below, could be affected by actions taken by intermediaries in the chain of ownership between the holder of an ADS and the company.
PFIC Considerations
The Code provides special rules regarding certain distributions received by U.S. persons with respect to, and sales, exchanges and other dispositions, including pledges, of, shares of stock (including ordinary shares represented by ADSs) in a PFIC. Anon-U.S. corporation will be treated as a PFIC for any taxable year in which either: (1) at least 75 percent% of its gross income is “passive income” or (2) at least 50 percent% of its gross assets during the taxable year (based on the average of the fair market values of the assets determined at the end of each quarterly period) are “passive assets,” which generally means that they produce passive income or are held for the production of passive income. Passive income for this purpose generally includes, among other things, dividends, interest, rents, royalties, gains from commodities and securities transactions, and gains from assets that produce passive income. In determining whether a foreign corporation is a PFIC, a pro rata portion of the income and assets of each corporation in which it owns, directly or indirectly, at least a 25% interest (by value) is taken into account.
While we may have been a PFIC for previous taxable years and althoughAlthough the matter is not free from doubt, we do not believe that we were a PFIC for U.S. federal income tax purposes for the 2017 taxable year andended December 31, 2023. No assurances may be given at this time do not anticipate becoming aas to our PFIC status for the currenttaxable year ended December 31, 2024 or future taxable years. However, our PFIC status must be determined annually and therefore is subject to change. Because this determination is made annually at the end of each taxable year and is dependent upon a number of factors, some of which are beyond our control, including the amount and nature of our income, as well as on the market valuation of our assets (which may be determined in large part by reference to the market value of the ADSs and our ordinary shares, which may fluctuate substantially) and our spending schedule for our cash balances, and because certain aspects of the PFIC rules are not entirely certain, there can be no assurance that we are orwere not a PFIC, that we are not or will not become a PFIC or that the IRS will agree with our conclusionany position we take regarding our PFIC status. If we are not a PFIC during any taxable year in which you hold ADSs, then the remainder of the discussion under “Taxation—Material U.S. Federal Income Tax Considerations,” outside of this “PFIC“— PFIC Considerations” portion may be relevant to you. U.S. holders should consult their tax advisors as to the applicability of the PFIC rules.
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A U.S. holder that holds ADSs during any taxable year in which we qualify as a PFIC is subject to special tax rules with respect to (a) any gain realized on the sale, exchange or other disposition of the ADSs and (b) any “excess distribution” by the corporation to the holder, unless the holder elects to treat the PFIC as a “qualified electing fund,” or QEF, or makes a“mark-to-market” “mark-to-market” election, each as discussed below. An “excess distribution” is that portion of a distribution with respect to ADSs that exceeds 125% of the annual average of such distributions over the preceding three-year period or, if shorter, the U.S. holder’s holding period for its ADSs. Excess distributions and gains on the sale, exchange or other disposition of ADSs of a corporation which was a PFIC at any time during the U.S. holder’s holding period are allocated ratably to each day of the U.S. holder’s holding period. Amounts allocated to the taxable year in which the disposition occurs and amounts allocated to any period in the shareholder’s holding period before the first day of the first taxable year that the corporation was a PFIC will be taxed as ordinary income (rather than capital gain) earned in the taxable year of the disposition. Amounts allocated to each of the other taxable years in the U.S. holder’s holding period are not included in gross income for the year of the disposition, but are subject to the highest ordinary income tax rates in effect for individuals or corporations, as applicable, for each such year and the interest charge generally applicable to income tax deficiencies will be imposed on the resulting tax attributable to each year. The tax liability for amounts allocated to years before the year of disposition or “excess distribution” cannot be offset by any net operating losses for such years, and gains (but not losses) realized on the sale of the ADSs cannot be treated as capital, even if a U.S. holder held such ADSs as capital assets.
If we are a PFIC for any taxable year during which a U.S. holder holds ADSs, then we generally will continue to be treated as a PFIC with respect to the holder for all succeeding years during which such holder
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holds ADSs, even if we no longer satisfy either the passive income or passive asset tests described above, unless the U.S. holder terminates this deemed PFIC status by making a “deemed sale” election. If such election is made, a U.S. holder will be deemed to have sold the ADSs at their fair market value on the last day of the last taxable year for which we were a PFIC, and any gain from such deemed sale would be subject to the excess distribution rules as described above. After the deemed sale election, the ADSs with respect to which the deemed sale election was made will not be treated as shares in a PFIC unless we subsequently become a PFIC.
If we are or become a PFIC, the excess distribution rules may be avoided if a U.S. holder makes a QEF election effective beginning with the first taxable year in the holder’s holding period in which we are treated as a PFIC with respect to such holder. A U.S. holder that makes a QEF election with respect to a PFIC is required to include in income its pro rata share of the PFIC’s ordinary earnings and net capital gain as ordinary income and capital gain, respectively, subject to a separate election to defer payment of taxes, which deferral is subject to an interest charge. If a foreign corporation ceases to be a PFIC, the U.S. holder’s QEF election would no longer require an annual income inclusion. However, cessation of a foreign corporation’s status as a PFIC will not terminate a QEF election and if the corporation becomes a PFIC again, an annual income inclusion may be required.
In general, a U.S. holder makes a QEF election by attaching a completed IRS Form 8621 to a timely filed (taking into account any extensions) U.S. federal income tax return for the year beginning with which the QEF election is to be effective. In certain circumstances, a U.S. holder may be able to make a retroactive QEF election. A QEF election can be revoked only with the consent of the IRS. In order for a U.S. holder to make a valid QEF election, the non-U.S. corporation must annually provide or make available to the holder certain information. For any taxable year in which we are a PFIC, we will determine whether we will provide to U.S. holders the information required to make a valid QEF election. There can be no assurance that we will make such information available for any taxable year in which we are or may be a PFIC.
As an alternative to making a QEF election, a U.S. holder may make a“mark-to-market” “mark-to-market” election with respect to its ADSs if the ADSs meet certain minimum trading requirements, as described below. If a U.S. holder makes a validmark-to-market election for the first taxable year in which such holder holds (or is deemed to hold) ADSs in a corporation and for which such corporation is determined to be a PFIC, such holder generally will not be subject to the PFIC rules described above in respect of its ADSs. Instead, a U.S. holder that makes amark-to-market election will be required to include in income each year an amount equal to the excess, if any, of the fair market value of the ADSs that the holder owns as of the close of the taxable year over the holder’s adjusted tax basis in the ADSs. The U.S. holder will be entitled to a deduction for the excess, if any, of the holder’s adjusted tax basis in the ADSs over the fair market value of the ADSs as of the close of the taxable year; provided, however, that the deduction will be limited to the extent of any netmark-to-market gains with respect to the ADSs included by the U.S. holder under the election for prior taxable years. The U.S. holder’s basis in the ADSs will be adjusted to reflect the amounts included or deducted pursuant to the election. Amounts included in income pursuant to amark-to-market election, as well as gain on the sale, exchange or other disposition of the ADSs, will be treated as ordinary income. The deductible portion of anymark-to-market loss, as well as loss on a sale, exchange or other disposition of ADSs to the extent that the amount of such loss does not exceed netmark-to-market gains previously included in income, will be treated as ordinary loss. If a U.S. holder makes a validmark-to-market election, any distributions made by us in a year in which we are a PFIC would generally be subject to the rules discussed below under “—Taxation of Dividends,” except the lower rate applicable to qualified dividend income would not apply. If we are not a PFIC when a U.S. holder has amark-to-market election in effect, gain or loss realized by a U.S. holder on the sale of our ADSs will be a capital gain or loss and taxed in the manner described below under “—Taxation of Sale, Exchange or other Disposition of ADSs.”
Themark-to-market election applies to the taxable year for which the election is made and all subsequent taxable years, unless the ADSs cease to meet applicable trading requirements (described below) or the IRS consents to its revocation. The excess distribution rules generally do not apply to a U.S. holder for taxable years for which amark-to-market election is in effect. If we are a PFIC for any year in which the U.S. holder owns ADSs but before amark-to-market election is made, the interest charge rules described above will apply to any
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mark-to-market gain recognized in the year the election is made. Generally, if a foreign corporation ceases to be a PFIC, the U.S. holder’smark-to-market election would no longer require the income inclusion described above. However, cessation of a foreign corporation’s status as a PFIC will not terminate amark-to-market election and if the corporation becomes a PFIC again,mark-to-market income inclusions may be required.
Amark-to-mark election is available only if the ADSs are considered “marketable” for these purposes. ADSs will be marketable if they are regularly traded on a national securities exchange that is registered with the SEC (such as the Nasdaq Global Market) or on anon-U.S. exchange or market that the IRS determines has rules sufficient to ensure that the market price represents a legitimate and sound fair market value. For these purposes, ADSs will be considered regularly traded during any calendar year during which more than a de minimis quantity of the ADSs is traded on at least 15 days during each calendar quarter. Any trades that have as their principal purpose meeting this requirement will be disregarded. Each U.S. holder should ask its own tax advisor whether amark-to-market election is available or desirable.
If we are a PFIC for any year in which a U.S. holder holds ADSs, such U.S. holder must generally file an IRS Form 8621 annually. A U.S. holder must also provide such other information as may be required by the U.S. Treasury Department if the U.S. holder (1)
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receives certain direct or indirect distributions from a PFIC, (2) recognizes gain on a direct or indirect disposition of ADSs, or (3) makes certain elections (including a QEF election or amark-to-market election) reportable on IRS Form 8621.
Under attribution rules, if we are a PFIC, U.S. holders of our ADSs will be deemed to own their proportionate shares of our subsidiaries that are PFICs, if any. In such case, assumingLike the determination of whether we are a PFIC, the determination of whether any of our subsidiaries is a PFIC is made annually at the end of each taxable year Assuming a U.S. holder does not receive from sucha PFIC subsidiary the information that the U.S. holder needs to make a QEF election with respect to such a subsidiary, a U.S. holder generally will be deemed to own a portion of the shares of such lower-tier PFIC and may incur liability for a deferred tax and interest charge if we receive a distribution from, or dispose of all or part of our interest in, or the U.S. holder otherwise is deemed to have disposed of an interest in, the lower-tier PFIC, even though the U.S. holder has not received the proceeds of those distributions or dispositions directly. However, as discussed under “Item 4.C—Organization Structure”, as of December 31, 2017, weWe currently do not have any non-U.S. corporations as subsidiary. Accordingly, for the 2017 taxable year, none of our subsidiaries would have constituted lower-tier PFICs if we were a PFIC.that could be PFIC subsidiaries.
U.S. holders are urged to consult their tax advisors as to our status as a PFIC, and, if we are treated as a PFIC, as to the effect on them of, and the reporting requirements with respect to, the PFIC rules and the desirability of making, and the availability of, either a QEF election or amark-to-market election with respect to our ADSs.
Taxation of Dividends
U.S. Holders.Holders. Subject to the PFIC rules described above under “—PFIC Considerations,” if you are a U.S. holder, you must include in your gross income the gross amount of any distributions of cash or property (other than certainpro rata distributions of ADSs) with respect to ADSs, to the extent the distribution is paid out of our current or accumulated earnings and profits, as determined for U.S. federal income tax purposes. A U.S. holder must include the dividend as ordinary income at the time of actual or constructive receipt. The amount of any dividend income paid in Euro will be the U.S. dollar amount calculated by reference to the exchange rate in effect on the date of receipt, regardless of whether the payment is in fact converted into U.S. dollars. If the dividend is converted into U.S. dollars on the date of receipt, a U.S. holder should not be required to recognize foreign currency gain or loss in respect of the dividend income. A U.S. holder may have foreign currency gain or loss if the dividend is converted into U.S. dollars after the date of receipt. Distributions in excess of current and accumulated earnings and profits, as determined for U.S. federal income tax purposes, will be treated as anon-taxable return of capital to the extent of your basis in the ADSs and thereafter as capital gain from the sale or exchange of such ADSs. Notwithstanding the foregoing, we do not intend to maintain calculations of our earnings and profits as determined for U.S. federal income tax purposes. Consequently, distributions generally will be reported as dividend income for U.S. information reporting purposes. The dividend will not be eligible for the dividends-received deduction generally allowed to U.S. corporations in respect of dividends received from other U.S. corporations.
Subject to the PFIC rules described above under “—PFIC Considerations,” dividends paid by anon-U.S. corporation generally will be taxed at the preferential tax rates applicable to long-term capital gain of
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non-corporate taxpayers if (a) suchnon-U.S. corporation is eligible for the benefits of certain U.S. treaties or the dividend is paid by suchnon-U.S. corporation with respect to stock that is readily tradable on an established securities market in the United States, (b) the U.S. holder receiving such dividend is an individual, estate, or trust, (c) such dividend is paid on shares that have been held by such U.S. holder for at least 61 days during the121-day period beginning 60 days before the“ex-dividend “ex-dividend date,” and (d) we are not a PFIC in the year of the dividend or the immediately preceding year. If the requirements of the immediately preceding paragraphsentence are not satisfied, a dividend paid by anon-U.S. corporation to a U.S. holder, including a U.S. holder that is an individual, estate, or trust, generally will be taxed at ordinary income tax rates (and not at the preferential tax rates applicable to long-term capital gains). As discussed above under “PFIC Considerations,” while we may have been a PFIC for previous taxable years and although the matter is not free from doubt (and while we can give no assurances as to our PFIC status for the taxable year ending December 31, 2024 or future taxable years), we do not believe that we were a PFIC for U.S. federal income tax purposes for the 2017 taxable year and we do not anticipate becoming a PFIC for the current or future taxable years.ending December 31, 2023. The dividend rules are complex, and each U.S. holder should consult its own tax advisor regarding the dividend rules.
The amount of dividend will include any amounts withheld by the Company in respect of French taxes. Subject to applicable limitations, some of which vary depending upon the U.S. holder’s circumstances and subject to the discussion above regarding concerns expressed by the U.S. Treasury and the Final FTC Treasury Regulations (as defined below), French income taxes withheld from dividends on ADSs at a rate not exceeding the rate provided by the Treaty will be creditable against the U.S. holder’s U.S. federal income tax liability. Treasury Regulations issued on December 28, 2021, which apply to foreign taxes paid or accrued in taxable years beginning on or after December 28, 2021, or the Final FTC Treasury Regulations, impose additional requirements for foreign taxes to be eligible for credit. However, the IRS has indicated that taxpayers may defer the application of many of the additional requirements until further notice. U.S. holders should consult their tax advisors regarding the availability of foreign tax credits for any amounts withheld with respect to dividends on ADSs or ordinary shares, including under the Final FTC Treasury Regulations.
Dividends received generally will be income fromnon-U.S. sources, which may be relevant in calculating your U.S. foreign tax credit limitation. Suchnon-U.S. source income generally will be “passive category income,” or in certain cases “general category income”, or “foreign branch income,” which is treated separately from other types of income for purposes of computing the foreign tax credit allowable to you. The rules with respect to the foreign tax credit are complex and involve the application of rules that depend upon a U.S. holder’s particular circumstances. You should consult your own tax advisor to determine the foreign tax credit implications of owning the ADSs.
Non-U.S. Holders. Holders. If you are anon-U.S. holder, dividends paid to you generally will not be subject to U.S. income tax unless the dividends are “effectively connected” with your conduct of a trade or business within the United States, and the dividends are attributable to a permanent establishment (or in the case of an individual, a fixed place of business) that you maintain in the United States if that is required by an applicable income tax treaty as a condition for subjecting you to U.S. taxation on a net income basis. In such cases you generally will be taxed in the same manner as a U.S. holder (other than with respect to the Medicare Tax described below). If you are a corporatenon-U.S. holder, “effectively connected” dividends may, under certain circumstances, be subject to an additional “branch profits tax” at a 30% rate or a lower rate if you are eligible for the benefits of an income tax treaty that provides for a lower rate.
Taxation of Sale, Exchange or other Disposition of ADSs
U.S. Holders.Holders. Subject to the PFIC rules described above under “—PFIC Considerations,” if you are a U.S. holder and you sell, exchange or otherwise dispose of your ADSs, you generally will recognize capital gain or loss for U.S. federal income tax purposes equal to the difference between the value of the amount realized and your tax basis in your ADSs. Gain or loss recognized on such a sale, exchange or other disposition of ADSs generally will be long-term capital gain if the U.S. holder hasyou have held the ADSs for more than one year. Long-term capital gains of U.S. holders who are individuals (as well as certain trusts and estates) are generally taxed at preferential rates. The gain or loss will generally be income or loss from sources within the United States for foreign tax credit limitation purposes,
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unless it is attributable to an office or other fixed place of business outside the United States and certain other conditions are met. Your ability to deduct capital losses is subject to limitations. As discussed above under “—PFIC Considerations,” while we may have been a PFIC for previous taxable years and although the matter is not free from doubt (and while we can give no assurances as to our PFIC status for taxable year ending December 31, 2024 or future taxable years), we do not believe that we were a PFIC for U.S. federal income tax purposes for the 2017 taxable year and do not anticipate becoming a PFIC for the current or future taxable years.ended December 31, 2023.
Non-U.S. Holders. Holders. If you are anon-U.S. holder, you will not be subject to U.S. federal income tax on gain recognized on the sale, exchange or other disposition of your ADSs unless:
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In the first case, thenon-U.S. holder will be taxed in the same manner as a U.S. holder (other than with respect to the Medicare Tax described below). In the second case, thenon-U.S. holder will be subject to U.S. federal income tax at a rate of 30% on the amount by which suchnon-U.S. holder’s U.S.—source capital gains exceed suchnon-U.S.—source holder’s U.S. -source capital losses.
If you are a corporatenon-U.S. holder, “effectively connected” gains that you recognize may also, under certain circumstances, be subject to an additional “branch profits tax” at a 30% rate or at a lower rate if you are eligible for the benefits of an income tax treaty that provides for a lower rate.
Medicare Tax
Certain U.S. holders who are individuals, estates or trusts are required to pay a 3.8% Medicare surtax on all or part of that holder’s “net investment income”, which includes, among other items, dividends on, and capital gains from the sale or other taxable disposition of, the ADSs, subject to certain limitations and exceptions. U.S. holders should consult their own tax advisors regarding the effect, if any, of this surtax on their ownership and disposition of the ADSs.
Information with Respect to Foreign Financial Assets
U.S. holders that are individuals (and, to the extent provided in regulations, certain entities) that own “specified foreign financial assets,” including possibly the ADSs, with an aggregate value in excess of $50,000 are generally required to file IRS Form 8938 with information regarding such assets. Depending on the circumstances, higher threshold amounts may apply. Specified foreign financial assets include any financial accounts maintained by foreign financial institutions, as well as any of the following, but only if they are not held in accounts maintained by financial institutions: (i) stocks and securities issued bynon-U.S. persons, (ii) financial instruments and contracts held for investment that havenon-U.S. issuers or counterparties and (iii) interests innon-U.S. entities. If a U.S. holder is subject to this information reporting regime, the failure to timely file IRS Form 8938 may subject the U.S. holder to penalties. In addition to these requirements, U.S. holders may be required to annually file FinCEN Report 114, (ReportReport of Foreign Bank and Financial Accounts)Accounts with the U.S. Department of Treasury. U.S. holders are thus encouraged to consult their U.S. tax advisors with respect to these and other reporting requirements that may apply to their acquisition of the ADSs.
Backup Withholding and Information Reporting
In general, information reporting requirements will apply to distributions made on our ADSs within the United States to anon-corporate U.S. holder and to the proceeds from the sale, exchange, redemption or other disposition of ADSs by anon-corporate U.S. holder to or through a U.S. office of a broker. Payments made (and sales or other dispositions effected at an office) outside the U.S. will be subject to information reporting in limited circumstances.
In addition, U.S. holders may be subject to backup withholding with respect to dividends on and proceeds from the sale, exchange or other disposition of the ADSs. A paying agent within the United States will be required to withhold at the applicable statutory rate, currently 24%, in respect of any payments of dividends on, and the proceeds from the disposition of, ADSs within the United States to a U.S. federal income tax may apply to such amountsholder (other than U.S. holders that are exempt from backup withholding and properly certify their exemption) if the U.S. holder fails to provide an accuratefurnish its correct taxpayer identification number (oror otherwise establishes, in the manner provided by law, an exemption fromfails to comply with applicable backup withholding) or to report dividendswithholding requirements. U.S. holders who are required to establish their exempt status generally must provide a properly completed IRS Form W-9.
Backup withholding is not an additional tax. Amounts withheld as backup withholding may be shown on thecredited against a U.S. holder’s U.S. federal income tax returns.
Backup withholding is not an additional income tax, and the amountliability. A U.S. holder generally may obtain a refund of any amounts withheld under the backup withholding from a payment to a U.S. holder will be allowed as credit against the U.S. holder’s U.S. federal income tax liability provided thatrules by filing the appropriate returnsclaim for refund with the IRS in a timely manner and furnishing any required information. U.S. holders are filed.advised to consult with their own tax advisors regarding the application of the United States information reporting rules to their particular circumstances.
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Anon-U.S. holder generally may eliminate the requirement for information reporting and backup withholding by providing a properly completed and duly executed certification of its foreignnon-U.S. status to the payor, under penalties of perjury, on IRS FormW-8BEN, W-8BEN-E orW-8BEN-E, other appropriate W-8, as applicable. You should consult your own tax advisor as to the qualifications for exemption from backup withholding and the procedures for obtaining the exemption.
The foregoing does not purport to be a complete analysis of the potential tax considerations relating to the ownership and disposition of the ADSs. InvestorsProspective investors should consult their own tax advisors as to the particular tax considerations applicable to them relating to the ownership and disposition of the ADSs, including the applicability of the U.S. federal, state and local tax laws ornon-tax laws, foreign tax laws, and any changes in applicable tax including the Tax Cuts and Jobs Act, laws, and any pending or proposed legislation or regulations.
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Material French Income Tax Considerations
The following describes the material French income tax consequences to U.S. Holders (as defined below) of purchasing, owning and disposing of the ordinary shares or ADSs and, unless otherwise noted, this discussion is the opinion of Jones Day, our French tax counsel, insofar as it relates to matters of French tax law and legal conclusions with respect to those matters.
This discussion does not purport to be a complete analysis or listing of all potential tax effects of the acquisition, ownership or disposition of our securities to any particular investor, and does not discuss tax considerations that arise from rules of general application or that are generally assumed to be known by investors. All of the following is subject to change. Such changes could apply retroactively and could affect the consequences described below.
In 2011, France introduced a comprehensive set of new tax rules applicable to French assets that are held by or in foreign trusts. These rules, among other things, provide for the inclusion of trust assets in the settlor’s net assets for purpose of applying the French wealth tax, for the application of French gift and death duties to French assets held in trust, for a specific tax on capital on the French assets of foreign trusts not already subject to the French wealth tax and for a number of French tax reporting and disclosure obligations. The following discussion does not address the French tax consequences applicable to securities (including ADSs) held in trusts. If securities are held in trust, the grantor, trustee and beneficiary are urged to consult their own tax advisor regarding the specific tax consequences of acquiring, owning and disposing of securities.
The description of the French income tax and wealth tax consequences set forth below is based on the Convention between the Government of the United States of America and the Government of the French Republic for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital of August 31, 1994 which came into force on December 30, 1995 (as amended by any subsequent protocols, including the protocol of January 13, 2009), and the tax guidelines issued by the French tax authorities in force as of the date of this Annual Report, or the Treaty.
For the purposes of this discussion, the term “U.S. Holder” means a beneficial owner of securities that is (1) an individual who is a U.S. citizen or resident for U.S. federal income tax purposes, (2) a U.S. domestic corporation or certain other entities created or organized in or under the laws of the United States or any state thereof, including the District of Columbia, or (3) otherwise subject to U.S. federal income taxation on a net income basis in respect of securities.
If a partnership holds securities, the tax treatment of a partner generally will depend upon the status of the partner and the activities of the partnership. If a U.S. Holder is a partner in a partnership that holds securities, such holder is urged to consult its own tax advisor regarding the specific tax consequences of acquiring, owning and disposing of securities.
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This discussion applies only to investors that hold our securities as capital assets that have the U.S. dollar as their functional currency, that are entitled to Treaty benefits under the “Limitation on Benefits” provision contained in the Treaty, and whose ownership of the securities is not effectively connected to a permanent establishment or a fixed base in France. Certain U.S. Holders (including, but not limited to, U.S. expatriates, partnerships or other entities classified as partnerships for U.S. federal income tax purposes, banks, insurance companies, regulated investment companies,tax-exempt organizations, financial institutions, persons subject to the alternative minimum tax, persons who acquired the securities pursuant to the exercise of employee share options or otherwise as compensation, persons that own (directly, indirectly or by attribution) 5% or more of our voting stock or 5% or more of our outstanding share capital, dealers in securities or currencies, brokers, mutual funds, individual retirement or other tax-deferred accounts, persons that elect to mark their securities to market for U.S. federal income tax purposes and persons holding securities as a position in a synthetic security, straddle or conversion transaction) may be subject to special rules not discussed below.
U.S. Holders are urged to consult their own tax advisors regarding the tax consequences of the purchase, ownership and disposition of securities in light of their particular circumstances, especially with regard to the “Limitations on Benefits” provision.
Estate and Gift Taxes and Transfer Taxes
In general, a transfer of securities by gift or by reason of death of a U.S. Holder that would otherwise be subject to French gift or inheritance tax, respectively, will not be subject to such French tax by reason of the Convention between the Government of the United States of America and the Government of the French Republic for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Estates, Inheritances and Gifts, dated November 24, 1978, unless the donor or the transferor is domiciled in France at the time of making the gift or at the time of his or her death, or the securities were used in, or held for use in, the conduct of a business through a permanent establishment or a fixed base in France.
Financial Transactions Tax
Pursuant to Article 235 ter ZD of the French Tax Code (Code(Code général des impôts)ts), or the FTC, purchases of certain securities issued by a French company, including ordinary shares and ADSs, which are listed on a regulated market of the EU or an exchange market formally acknowledged by the AMF (in each case within the meaning of the French Monetary and Financial Code, or the FMFC) are subject in France to a 0.3% tax on financial transactions, or the TFT, provided inter alia that the issuer’s market capitalization exceeds €1.0€1 billion as of December 1 of the year preceding the taxation year.
A list of relevant French companies whose market capitalization exceeds €1.0 billion as of December 1 of the year preceding the taxation year within the meaning of Article 235 ter ZD of the FTC used to be published annually by the French Ministry of Economy. It is now published by the French tax authorities, and could be amended at any time. Pursuant to RegulationsBOI-ANNX-000467-20171221 BOI-ANNX-000467-20/12/2023 issued on December 21, 2017,20, 2023, Cellectis is currently not included in such list. Please note that such list may be updated from time to time, or may not be published anymore in the future.
As a result, neither the ADSs nor the ordinary shares are currently within the scope of the TFT.
Purchases of CellectisCellectis’s securities may however become subject to the TFT if CellectisCellectis’s market capitalization exceeds €1.0 billion ($1.2 billion at December 31, 2017 closing rate).billion.
Registration Duties
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In the case where the TFT is not applicable, (1) transfers of shares issued by a French company which are listed on a regulated or organized market within the meaning of the FMFC are subject to uncapped registration
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duties at the rate of 0.1% if the transfer is evidenced by a written statement (acte)(acte) executed either in France or outside France, whereas (2) transfers of shares issued by a French company which are not listed on a regulated or organized market within the meaning of the FMFC are subject to uncapped registration duties at the rate of 0.1% notwithstanding the existence of a written statement (acte)(acte).
As ordinary shares of Cellectis are listed on Euronext Growth market of Euronext in Paris, which is an organized market within the meaning of the FMFC, their transfer should be subject to uncapped registration duties at the rate of 0.1% subject to the existence of a written agreement (acte)(acte).
Although there is neither case law nor official guidelines published by the French tax authorities are silent on this point, transfers of ADSs should remain outside of the scope of the aforementioned 0.1% registration duties. U.S. Holders are urged to consult their own tax advisor about the possible application of the registration duty upon the transfer of ADSs.
Wealth Tax
The French wealth tax (impô(impôt de solidarité sur la fortune)fortune) has been repealed by the finance bill for 2018 (loi(loi de finances pour 2018)2018) dated December 30, 2017. It used to apply only to individuals and did not generally apply to securities held by a U.S. Holder who is a resident as defined pursuant to the provisions of the Treaty, provided that such U.S. Holder diddoes not own directly or indirectly more than 25% of the issuer’s financial rights and that the securities did not form part of the business property of a permanent establishment or fixed base in France. Itrights.
As from January 1, 2018, it has been replaced by a new real estate wealth tax (impô(impôt sur la fortune immobilière) as from January 1, 2018. The scope of such new tax is narrowedre) which applies only to individuals owning French real estate assets (and certain assets deemed to be real estate assets) or rights, directly or indirectly through one or more legal entities and whose net taxable assets amount to at least €1,300,000. Cellectis’ securities owned by a U.S. Holder should not fall within the scope of the new1,300,000 euros.
French real estate wealth tax provided thatmay only apply to a U.S. individual to the extent such U.S. Holder does not ownindividual holds, directly or indirectly, financial rights into a shareholding exceedingcompany the assets of which comprise French real estate assets that are not allocated to its operational activity. Such financial rights may be taxable for the fraction of their value representing the French real estate assets that are not allocated to an operational activity. In any case, pursuant to Article 965, 2° of the FTC, shares of an operating company holding French real estate assets in which the relevant individual holds, directly and indirectly, less than 10% of the financial rights andshare capital or voting rights of Cellectis.are exempt from real estate wealth tax.
Taxation of Dividends
Dividends paid by a French corporation tonon-residents of France are generally subject to French withholding tax at a rate of 30%25%. Such withholding tax may be reduced to 12.8% for dividends paid to non-resident individuals. Dividends paid by a French corporation in anon-cooperative State or territory, as defined in Article238-0 A of the FTC, other than those mentioned in 2° of 2 bis of the same Article 238-0 A of the FTC, will generally be subject to French withholding tax at a rate of 75%. The list of non-cooperative State or territory is published by decree and is in principle updated annually. However, eligible U.S. Holders entitled to Treaty benefits under the “Limitation on Benefits” provision contained in the Treaty who are U.S. residents, as defined pursuant to the provisions of the Treaty, will not be subject to this 12.8%, 30%25% or 75% withholding tax rate, but may be subject to the withholding tax at a reduced rate (as described below).
Under the Treaty, the rate of French withholding tax on dividends paid to an eligible U.S. Holder who is a U.S. resident as defined pursuant to the provisions of the Treaty and whose ownership of the ordinary shares or the ADSs is not effectively connected with a permanent establishment or fixed base that such U.S. Holder has in France, is generally reduced to 15%, or to 5% if such U.S. Holder is a corporation and owns directly or indirectly at least 10% of the share capital of the issuer; such U.S. Holder may claim a refund from the French tax authorities of the amount withheld in excess of the Treaty rates of 15% or 5%, if any.
For U.S. Holders that are not individuals but are U.S. residents, as defined pursuant to the provisions of the Treaty, the requirements for eligibility for Treaty benefits, including the reduced 5% or 15% withholding tax rates contained in the “Limitation on Benefits” provision of the Treaty, are complicated, and certain technical changes were made to these requirements by the protocol of January 13, 2009. U.S. Holders are advised to consult their own tax advisorsadvisers regarding their eligibility for Treaty benefits in light of their own particular circumstances.
In the event that dividends are paid by Cellectis, dividends paid to an eligible U.S. Holder may immediately be subject to the reduced rates of 5% or 15% provided that such holder establishes before the date of payment
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that it is a U.S. resident under the Treaty by completing and providing the depositary with a treaty form (Form 5000). Otherwise, dividends paid to a U.S. Holder that is a legal person or another legal entity and has not filed the Form 5000 before the dividend payment date will be subject to French withholding tax at the rate of 30%25%, or 75% for any U.S. holderHolder if paid in anon-cooperative State or territory (as defined in Article238-0 A of the FTC) other than those mentioned in 2° of 2 bis of the same Article 238-0 A of the FTC (unless the Company proves that neither the purpose nor the effect of paying the dividend in that stateState or territory are that of allowing, with the intent of tax evasion or avoidance, their location in such a stateState or territory), and then reduced at a later date to 5% or 15%, provided that such holder duly completes and provides the French tax authorities with the treaty forms Form 5000 and Form 5001 before December 31(due to recent case law regarding status of the second calendar year following the year during which the dividend is paid.limitation for filing a withholding tax claim; U.S. Holders are advised to consult their own tax advisors in this respect).
Certain qualifying pension funds and certain othertax-exempt entities are subject to the same general filing requirements as other U.S. Holders except that they may have to supply additional documentation evidencing their entitlement to these benefits.
Form 5000 and Form 5001, together with appropriate instructions, will be provided by the depositary to all U.S. Holders registered with the depositary. The depositary will arrange for the filing with the French tax authorities of all such forms properly completed and executed by U.S. Holders of ordinary shares or ADSs and returned to the depositary in sufficient time so that they may be filed with the French tax authorities before the distribution in order to obtain immediately a reduced withholding tax rate.
Since the withholding tax rate applicable under French domestic law to U.S. holders who are individuals does not exceed the cap provided in the Treaty (i.e., 15%), the 12.8% rate shall apply, without any reduction provided under the Treaty. (except in the particular situation when the dividends are paid to such U.S. holders out of France in a non-cooperative State or territory as defined in Article 238-0 A of the FTC other than those mentioned in 2° of 2 bis of the same Article 238-0 A of the FTC and are subject to the 75% withholding tax in France).
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In addition, please note that pursuant to Article 235 quater of the FTC (introduced by the French finance bill No. 2019-1479 for 2020) and under certain conditions (in particular, in addition to certain reporting obligations, the interest held in the distributing company must not enable the beneficiary to participate effectively in the management or control of that company and the beneficiary company is located in a country that has signed an administrative assistance agreement with France to combat tax evasion and avoidance, as well as an administrative assistance agreement on tax collection, and that is not a non-cooperative country), a corporate U.S. Holder which is in a tax loss position or which tax result is nil due to offset of tax losses (French Administrative Supreme Court, October 18, 2022, n°466329) for the fiscal year during which the dividend is received may be entitled to a deferral regime, and obtain a withholding tax refund. The tax deferral ends in respect of the first financial year during which this U.S. Holder is in a profit making position, as well as in the cases set out in Article 235 quater of the FTC. The refund must be claimed within the same period applicable to claim related to taxes other than local taxes. Also, pursuant to Article 235 quinquies of the FTC and under certain conditions, a corporate U.S. Holder may be entitled to a refund of a fraction of the withholding tax, up to the difference between the withholding tax paid (on a gross basis) and the withholding tax based on the dividend net of the expenses incurred for the acquisition and conservation directly related to the income, provided (i) that these expenses would have been tax deductible had the U.S. Holder been established in France, and (ii) that the tax rules in the United States do not allow the U.S. Holder to offset the withholding tax.
Given the special features of the ADSs, U.S. Holders are urged to consult their own tax advisor about the possible application to ADSs of such provisions in light of their own circumstances.
Tax on Sale or Other Disposition
As a matter of principle, under French tax law, a U.S. Holder should not be subject to any French tax on any capital gain from the sale, exchange, repurchase or redemption by us of ordinary shares or ADSs, provided that all of the following apply to such holder:
In general, undercase an applicable double tax treaty between France and the Treaty,U.S. Holder country of residence contains more favorable provisions, a U.S. Holder may not be subject to any French income tax or capital gains tax in case of sale or disposal of any ordinary shares or ADSs of Cellectis even if one or more of the above mentioned statements are not applicable.
Particularly, a U.S. Holder who is a U.S. tax resident for purposes of the Treaty and is entitled to Treaty benefit will not be subject to French tax on any such capital gain, from the redemption (other than redemption proceeds characterized as dividends under French domestic tax law or administrative guidelines), sale or exchange of ordinary shares or ADSs unless the ordinary shares or the ADSs form part of the business property of a permanent establishment or fixed base that the U.S. Holder has in France.
U.S. Holders who own ordinary shares or ADSs through U.S. partnerships that are not residents for Treaty purposes are advised to consult their own tax advisors regarding their French tax treatment and their eligibility for Treaty benefits in light of their own particular circumstances.
A U.S. Holder that is not a U.S. resident for Treaty purposes or is not entitled to Treaty benefit (and in both cases is not resident, established or incorporated in a non-cooperative State or territory as defined in Article 238-0 A of the FTC) and has held more than 25% of our dividend rights, known as “droits aux bénéfices sociaux” at any time during the preceding five years, either directly or indirectly, and, as relates to individuals, alone or with relatives will be subject to a levy in France at the rate of 25%, if such U.S. Holder is a legal person, or 12.8%, if such U.S. Holder is an individual.
Special rules apply to U.S. Holders who are residents of more than one country.
Not applicable.
Not applicable.
We are subject to the information reporting requirements of the Exchange Act applicable to foreign private issuers and under those requirements file reports with the SEC.U.S. Securities Exchange Commission (the "SEC"). Those reports may be inspected without charge at the locations described below. As a foreign private issuer, we are exempt from the rules under the Exchange Act related to the furnishing and content of proxy statements, and our officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition, we are not required under the Exchange Act to file periodic reports and financial statements with the SEC as frequently or as promptly as United States companies whose securities are registered under the Exchange Act. Nevertheless, we file with the U.S. Securities and Exchange CommissionSEC an Annual Report containing financial statements that have been examined and reported on, with and opinion expressed by an independent registered public accounting firm, and we submit quarterly interim consolidated financial data to the SEC under cover of the SEC’s Form6-K.
We maintain a corporate website at www.cellectis.com. We intend to post our Annual Report on our website promptly following it being filed with the SEC. Information contained on, or that can be accessed through, our website does not constitute a part of this Annual Report. We have included our website address in this Annual Report solely as an inactive textual reference.
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You may also review a copy of this Annual Report, including exhibits and any schedule filed herewith, and obtain copies of such materials at prescribed rates, at the Securities and Exchange Commission’s Public Reference Room in Room 1580, 100 F Street, NE,
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Washington, D.C. 20549-0102. You may obtain information on the operation of the Public Reference Room by calling the Securities and Exchange CommissionSEC at1-800-SEC-0330. The Securities and Exchange CommissionSEC maintains a website (http://www.sec.gov) that contains reports, proxy and information statements and other information regarding registrants, such as Cellectis, that file electronically with the Securities and Exchange Commission.SEC.
With respect to references made in this Annual Report to any contract or other document of Cellectis, such references are not necessarily complete and you should refer to the exhibits attached or incorporated by reference to this Annual Report for copies of the actual contract or document.
Not applicable
To the extent we furnish an annual report to security holders, we will promptly submit an English version of this annual report to U.S. security holders under the cover of Form 6-K.
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Foreign Currency Exchange Risk
We derive a significant portion of our revenues, including payments under our collaboration agreement with Pfizer,Allogene, in U.S. dollars. Since the beginning of fiscal year 2015, we have been significantly expanding our activities in the United States, but there continues to be a currency mismatch in our cash flows since most of our expenses remain denominated primarily in Euros. If the average value of the U.S. Dollar had been 10%2.6% higher relative to the euro during 2017, our collaboration revenues would have increased by €2.0 million.2023. Our exposure to currencies other than the U.S. dollar is negligible.
Our financial condition and results of operations are measured and recorded in the relevant local base currency and then translated into Euros for inclusion in our Consolidated Financial Statements. We translate balance sheet amounts at the exchange rates in effect on the date of the balance sheet, while income and cash flow items are translated at the average rate of exchange in effect for the relevant period. Our exposure to currencies other than the U.S. dollar is negligible.
For the year ended December 31, 2017,2023, our revenues denominated in U.S. dollars are mainly related to the PfizerIovance collaboration agreement and revenues from our Plants segment.agreements. Our cash and cash equivalents and marketable securities denominated in U.S dollars amounted to $194.2$118.6 million as of December 31, 2017.2023. Current financial assets denominated in U.S. dollars amounted to $39.7$72.0 million as of December 31, 2017.2023. For more information, see “Item 5.A—Operating Results.”
During the year ended December 31, 2017, we subscribed to zero premium accumulators ($5.0 million nominal value). The net foreign exchange result of continuing operations for the fiscal year 20162023 is a gain of €0.6$2.4 million. We cannot rule out the possibility that a significant increase in our business, particularly in the United States, may result in greater exposure to exchange rate risk. We would then consider adopting an appropriate policy for hedging against these risks.
Interest Rate Risk
We seek to engage in prudent management of our cash and cash equivalents, mainly cash on hand and common financial instruments (typically short- andmid-term deposits). Furthermore, the interest rate risk related to cash, cash equivalents and common financial instruments is not significant based on the quality of the financial institutions with which we work.
Inflation Risk
We do not believe that inflation has had a material effect on our business, financial condition or results of operations. If our costs were to become subject to significant inflationary pressures, we may not be able to fully
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offset such higher costs through price increases. Our inability or failure to do so could harm our business, financial condition and results of operations.
Liquidity risk
As of December 31, 2023, our financial debt primarily consists of lease debts for $51.5 million, a loan from a bank syndicate formed with HSBC, Société Générale, Banque Palatine and Bpifrance in the form of the PGE for $18.5 million (including interest) of which $14.1 million remains as outstanding debt, the 2021 and 2022 Research Tax Credit financing with BPI for $11.9 million, and a liability related to the EIB loan of €20 million .
See Note 10.3 to our consolidated financial statements for more information on these and other market risks.
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
Not applicable.
Not applicable.
Not applicable.
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Citibank, N.A., as depositary for our ADSs, registers and delivers ADSs. Each ADS represents one ordinary share (or a right to receiveone-half of one ordinary share) deposited with Citibank International Limited,Europe PLC, located at EGSP 186, 1 North Wall Quay, Dublin 1 Ireland or any successor, as custodian for the depositary. Each ADS will also represent any other securities, cash or other property which may be held by the depositary in respect of the depositary facility. The depositary’s corporate trust office at which the ADSs will be administered is located at 388 Greenwich Street, New York, New York 10013.
A deposit agreement among us, the depositary and the ADS holders sets out the ADS holder rights as well as the rights and obligations of the depositary. New York law governs the deposit agreement and the ADSs. A copy of the Agreement is incorporated by reference as an exhibit to this Annual Report.
Fees and Charges
As an ADS holder, you will be required to pay the following fees under the terms of the depositary agreement:
Service | Fees | ||
• Issuance of ADSs upon deposit of shares (excluding issuance as a result of distributions of shares) | Up to U.S. 5¢ per ADS issued | ||
• Cancellation of ADSs | Up to U.S. 5¢ per ADS canceled | ||
• Distribution of cash dividends or other cash distributions (i.e., sale of rights and other entitlements) | Up to U.S. 5¢ per ADS held | ||
Service | Fees | ||
• Distribution of ADSs pursuant to (1) stock dividends or other free stock distributions, or (2) exercise of rights to purchase additional ADSs | Up to U.S. 5¢ per ADS held | ||
• Distribution of securities other than ADSs or rights to purchase additional ADSs (i.e.,spin-off shares) | Up to U.S. 5¢ per ADS held | ||
• ADS Services | Up to U.S. 5¢ per ADS held on the applicable record date(s) established by the depositary | ||
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As an ADS holder you will also be responsible to pay certain fees and expenses incurred by the depositary and certain taxes and governmental charges such as:
ADS fees and charges payable upon (1) deposit of ordinary shares against issuance of ADSs and (2) surrender of ADSs for cancellation and withdrawal of ordinary shares are charged to the person to whom the ADSs are delivered (in the case of ADS issuances) and to the person who delivers the ADS, for cancellation (in the case of ADS cancellations). In the case of ADSs issued by the depositary into DTC or presented to the depositary via DTC, the ADS issuance and cancellation fees and charges may be deducted from distributions made through DTC, and may be charged to the DTC participant(s) receiving the ADSs or the DTC participant(s) surrendering the ADSs for cancellation, as the case may be, on behalf of the beneficial owner(s) and will be charged by the DTC participant(s) to the account(s) of the applicable beneficial owner(s) in accordance with the procedures and practices of the DTC participant(s) as in effect at the time. ADS fees and charges in respect of distributions and the ADS service fee are charged to the holders as of the applicable ADS record date. In the case of distributions of cash, the amount of the applicable ADS fees and charges is deducted from the funds being distributed. In the case of (1) distributions other than cash and (2) the ADS service fee, holders as of the ADS record date will be invoiced for the amount of the ADS fees and charges and such ADS fees and charges may be deducted from distributions made to holders of ADSs. For ADSs held through DTC, the ADS fees and charges for distributions other than cash and the ADS service fee may be deducted from distributions made through DTC, and may be charged to the DTC participants in accordance with the procedures and practices prescribed by DTC and the DTC participants in turn charge the amount of such ADS fees and charges to the beneficial owners for whom they hold ADSs.
In the event of refusal to pay the depositary fees, the depositary may, under the terms of the deposit agreement, refuse the requested service until payment is received or may set off the amount of the depositary fees from any distribution to be made to the ADS holder. Certain ADS fees and charges (such as the ADS service fee) may become payable shortly after the closing of the ADS offering.
Note that the fees and charges you may be required to pay may vary over time and may be changed by us and by the depositary. You will receive prior notice of such changes. The depositary may reimburse us for certain expenses incurred by us in respect of the ADR program, by making available a portion of the ADS fees charged in respect of the ADR program or otherwise, upon such terms and conditions as we and the depositary agree from time to time.
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Depositary Payments for 20172023
From time to time, the Depositary may make payments to us to reimburse and/or share revenue from the fees collected from ADS holders, or waive fees and expenses for services provided, generally relating to costs and expenses arising out of establishment and maintenance of the ADS program. In performing its duties under the deposit agreement, the Depositary may use brokers, dealers or other service providers that are affiliates of the Depositary and that may earn or share fees or commissions.
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For the year ended December 31, 2017,2023, Citibank, N.A., as Depositary, had made reimbursements to the Company of $0.1 million.$392 thousand.
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PART II
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES.
Not applicable.
Initial Public OfferingITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS.
In March 2015, we sold 5,500,000 ADSs, each representing one ordinary share, nominal value €0.05, in our initial public offering at a price of $41.50 per ADS, for aggregate gross proceeds of approximately $228.3 million. We incurred aggregate underwriting discounts of approximately $16.0 million and expenses of approximately $2.7 million, resulting in net proceeds to us of approximately $209.6 million. No payments were made directly or indirectly to any director, officer, general partner of ours or to their associates, persons owning ten percent or more of any class of our equity securities, or to any of our affiliates. The offering commenced on March 24, 2015 and did not terminate before all of the securities registered in the registration statement were sold. The effective date of the registration statement, FileNo. 333-202205, for our initial public offering was March 24, 2015. Merrill Lynch, Pierce, Fenner & Smith Incorporated, Jefferies LLC, Piper Jaffray & Co., Oppenheimer & Co. Inc. and Trout Capital LLC acted as underwriters of the initial public offering.Not applicable.
A portion of the net proceeds from our initial public offering was used for general corporate purposes in connection with the development of our current proprietary immuno-oncology product candidates, for further research and development regarding cell attributes and to develop our manufacturing processes and cell engineering technologies, to pursue new human therapeutics outside of oncology and to advance our agricultural biotechnology business. The balance is held in cash and cash equivalents and current financial assets and is intended to also be used for general corporate purposes. None of the net proceeds of our initial public offering were paid directly or indirectly to any director, officer, general partner of ours or to their associates, persons owning ten percent or more of any class of our equity securities, or to any of our affiliates.
ITEM 15. CONTROLS AND PROCEDURES.
Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of December 31, 2023, our disclosure controls and procedures were not effective because of the existence of a material weakness in internal control over financial reporting.
Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule13a-15(f).
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
Management, under the supervision and with the participation of the Chief Executive Officer and the Chief Financial Officer, has assessed the effectiveness of internal control over financial reporting as of December 31, 2017.2023. Management’s assessment was based on the framework in “Internal Control – Integrated Framework” (2013 framework), or 2013 framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission, (COSO).or COSO.
Based on that assessment, management concluded that, as of December 31, 2017,2023, the Company’s internal control over financial reporting was not effective because of the existence of a material weakness in internal control over financial reporting, related to a lack of formality of accounting processes and controls over significant non-routine transactions and a design and operating deficiency associated with a lack of sufficient qualified resources with sufficient technical knowledge to identify and timely resolve complex accounting matters. This material weakness arose primarily as a result of an incorrect accounting treatment for the AstraZeneca arrangement and the deconsolidation of Calyxt at the closing date of the merger with Cibus, which have been corrected and appropriately reflected in the financial statements as of and for the year ended December 31, 2023.
Notwithstanding this material weakness and management’s assessment that internal control over financial reporting was not effective as of December 31, 2023, our management, including our Chief Executive Officer and our Chief Financial Officer, believe that the consolidated financial statements contained in this Annual Report on Form 20-F present fairly, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with IFRS.
The Company’s failure to design and maintain effective controls to adequately review and analyze the accounting for complex and non-recurring transactions resulted in certain adjustments to the Company’s consolidated financial statements from prior quarters, as presented in this Annual Report. This did not result in a restatement of prior periods.
Remediation
In response to the material weakness described above, the Company’s management has begun, and will continue, to implement measures designed to ensure that the control deficiencies contributing to the material weakness are remediated, such that the controls are designed, implemented, and operating effectively.
The remediation actions include:
We believe that these actions will remediate the material weakness. The weakness will not be considered remediated, however, until the applicable controls operate for a sufficient period and management has concluded, through testing, that these controls are operating effectively. We expect that the remediation of this material weakness will be completed prior to the end of fiscal year 2024.
As the Company continues to implement its remediation actions, it may determine to take additional measures to address control deficiencies or determine to modify certain of the remediation measures described above. We cannot assure that the measures we have taken to date and may take in the future, will be sufficient to remediate the control deficiencies that led to our material weakness in internal control over financial reporting and the preparation of its financial statements for external purposes, in accordance with generally accepted accounting principles.or that we will prevent or avoid potential future material weaknesses.
192
Due to its inherent limitations, internal control over financial reporting may not prevent or detect misstatements, and can only provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
124
The effectiveness of the Company’s internal control over financial reporting has been audited by Ernst & Young et Autres, independent registered public accounting firm, as stated in their report on the Company’s internal control over financial reporting as of December 31, 2017,2023, which is included herein. See paragraph (c) of the present Item 15, below.
ITEM 16. RESERVED
Not applicable.
Not applicable.
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
Our board of directors has determined that Mr. Axel-Sven Malkomes, Mr. Pierre Bastid, Mr. Laurent Arthaud, and Mr. Jean-Marie MessierDonald Bergstrom are audit and finance committee financial experts as defined by the Securities and Exchange CommissionSEC rules and have the requisite financial sophistication under the applicable rules and regulations of the Nasdaq StockGlobal Market. Mr. Axel-Sven Malkomes, Mr. Pierre Bastid, Mr. Laurent Arthaud, and Mr. Jean-Marie MessierDonald Bergstrom are independent as such term is defined in Rule10A-3 under the Exchange Act and under the listing standards of the Nasdaq StockGlobal Market.
ITEM 16B. CODE OF ETHICS
We have adopted a Code of Business Conduct and Ethics, or the Code of Conduct that is applicable to all of our employees, executive officers and directors. Following the completion of our initial public offering, the Code of Conduct became available on our website atwww.cellectis.com. www.cellectis.com. Our board of directors is responsible for overseeing the Code of Conduct and is required to approve any waivers of the Code of Conduct for employees, executive officers and directors. We expect that any amendments to the Code of Conduct, or any waivers of its requirements, will be disclosed on our website.
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
193
Ernst & Young et Autres, or Ernst & Young LLP, has served as our independent registered public accounting firm for 20162022 and 2017.2023. Our accountants billed the following fees to us for professional services in each of those fiscal years:
| Year Ended December 31, | Year Ended |
| |||||||||||||
| 2016 | 2017 | December 31, |
| ||||||||||||
| ($, in thousands) | 2022 |
|
| 2023 |
| ||||||||||
Audit Fees | 779 | 1.751 | * | ||||||||||||
| ($, in thousands) |
| |||||||||||||
Audit Fees * | 995 |
|
| 825 |
| ||||||||||
Audit-Related Fees | 42 | — | — |
| — |
| |||||||||
Tax Fees | — | — | — |
| — |
| |||||||||
Other Fees | — | — | |||||||||||||
Other Fees * |
| 241 |
|
|
| 198 |
| ||||||||
Total | 821 | 1.751 |
| 1,235 |
|
|
| 1,022 |
| ||||||
(*) $539 thousand$1,235 thousands and $853 thousands respectively for Cellectisthe years ended December 31, 2022 and $1.212 thousand for Calyxt (of which $898 thousand related to the Nasdaq IPO)2023.
“Audit Fees” are the aggregate fees billed for the audit of our annual financial statements. This category also includes services that generally the independent accountant provides, such as consents and assistance with and review of documents filed with the SEC.
“Audit-Related Fees” are the aggregate fees billed for assurance and related services that are reasonably related to the performance of the audit and are not reported under Audit Fees.
“Tax Fees” are the aggregate fees billed for professional services rendered by the principal accountant for tax compliance, tax advice and tax planning related services.
“Other Fees” relate to services provided with respect to our registration statement for our initial public offering.Cellectis' ATM programs and offerings.
There were no “Audit Related Fees,” “Tax Fees” either billed or paid during 20162022 or 2017.2023.
Audit andNon-Audit ServicesPre-Approval Policy
The audit and finance committee has responsibility for appointing, setting compensation of and overseeing the work of the independent registered public accounting firm. In recognition of this responsibility, the audit and finance committee has adopted a policy governing thepre-approval of all audit and permittednon-audit services performed by our independent registered public accounting firm to ensure that the provision of such services does not impair the independent registered public accounting firm’s independence from us and our management. Unless a type of service to be provided by our independent registered public accounting firm has received generalpre-approval from the audit and finance committee, it requires specificpre-approval by the audit and finance committee. The payment for any proposed services in excess ofpre-approved cost levels requires specificpre-approval pre- approval by the audit and finance committee. All audit andnon-audit services rendered by our independent registered public accounting firm in 20162023 werepre-approved by the audit and finance committee.
Pursuant to itspre-approval policy, the audit and finance committee may delegate its authority topre-approve services to the chairperson of the audit and finance committee. The decisions of the chairperson to grantpre-approvals must be presented to the full audit and finance committee at its next scheduled meeting. The audit and finance committee may not delegate its responsibilities topre-approve services to the management.
The audit and finance committee has considered thenon-audit services provided by Ernst & Young as described above and believes that they are compatible with maintaining Ernst & Young’s independence as our independent registered public accounting firm.
125
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
194
Not applicable.
ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
Not applicable.
Not applicable.ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
The terms of office of Ernst & Young et Autres, independent registered public accounting firm of the Company since 2012, will expire at the end of the Annual Shareholders’ Meeting to be held in 2024 convened to approve the financial statements for the year 2023. Ernst & Young et Autres’ terms of office cannot be legally extended as it reached the maximum legal duration.
The selection procedure of the auditors to be appointed by the Annual Shareholders’ Meeting in 2024 was overseen by the audit and finance committee, following which a recommendation to the board of directors was issued.
The board of directors, at its meeting of January 25, 2024 approved the audit and finance committee’s recommendation and decided to propose the appointment of KPMG SA as independent registered public accounting firm. Consequently, the board of directors will propose to the Annual Shareholders’ Meeting to be held in 2024 to appoint KPMG SA as new independent registered public accounting firm for a 6-year term, i.e. until the Annual Shareholders’ Meeting to be held in 2030, which will be convened to approve the financial statements for the year 2029.
The reports of Ernst & Young et Autres on the consolidated financial statements for each of the years ended December 31, 2023 and 2022 did not contain an adverse opinion or a disclaimer of opinion and was not qualified or modified as to uncertainty, audit scope or accounting principles. During each of the years ended December 31, 2023 and 2022:
During the Company’s two most recent fiscal years, and any subsequent interim period prior to engaging KPMG SA, which must be approved by an affirmative vote of shareholders at the next Annual Shareholders’ Meeting), neither the Company, nor anyone on its behalf, has consulted KPMG SA regarding:
The Company has furnished Ernst & Young et Autres with a copy of the statements made under this Item 16F and requested that Ernst & Young et Autres furnish a letter addressed to the SEC stating whether or not it agrees with the above statements and, if not, stating the respects in which it does not agree. A copy of Ernst & Young et Autres' letter, dated April 29, 2024, is filed as Exhibit 15.2 to this Annual Report.
ITEM 16G. CORPORATE GOVERNANCE
As a Frenchsociété anonyme,, we are subject to various corporate governance requirements under French law. In addition, as a foreign private issuer listed on the Nasdaq Global Market, we will beare subject to the Nasdaq corporate governance listing standards. However, the Nasdaq Global Market’s listing standards provide that foreign private issuers as defined in the rules promulgated under the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”), are permitted pursuant to Nasdaq Listing Rule 5615(a)(3) to follow home country corporate governance practices in lieu of the Nasdaq rules,Listing Rules, with certain exceptions. Certain corporate governance practices in France may differ significantly from Nasdaq’s corporate governance listing standards. For example, neither the corporate laws of France nor ourBy-laws require that (i) a majority of our directors be independent, (ii) our compensation committee include only independent directors, or (iii) our independent directors hold regularly scheduled meetings at which only independent directors are present. Other than as set forth below, we currently intend to comply with theapplicable Nasdaq corporate governance listing standards of Nasdaq to the extent possible under French law. However, we may choose to change such practices to follow home country practice in the future.
Although we are a foreign private issuer, we are required to comply with Rule10A-3 of under the Exchange Act, relating to audit committee composition and responsibilities. Rule10A-3 provides that the audit committee must have direct responsibility for the nomination, compensation and choice of our auditors, as well as control over the performance of their duties, management of complaints made, and selection of consultants. Under Rule10A-3, if the laws of a foreign private issuer’s home country require that any such matter be approved by the board of directors or the shareholders of the Company, the audit committee’s responsibilities or powers with respect to such matter may instead be advisory. Under French law, the audit committee may only have an advisory role and appointment of our statutory auditors, in particular, must be decided by our shareholders at our annual meeting.
126
In addition, Nasdaq rulesListing Rules require that a listed company specify that the quorum for any meeting of the holders of share capital be at least 331/3% 1⁄3% of the outstanding shares of the company’s common voting stock. We intend to follow our French home country practice, rather than complying with this Nasdaq rule.Listing Rule. Consistent with French Law, ourBy-laws provide that when first convened, general meetings of shareholders may validly convene only if the shareholders present or represented hold at least (1) 20% of the voting shares in the case of an ordinary general meeting or of an extraordinary general meeting where shareholders are voting on a capital increase by capitalization of reserves, profits or share premium, or (2) 25% of the voting shares in the case of any other extraordinary general meeting. If such quorum required by French law is not met, the meeting is adjourned. There is no quorum requirement under French law when an ordinary general meeting or an extraordinary general meeting where shareholders are voting on a capital increase by capitalization of reserves, profits or share premium is reconvened, but the reconvened meeting may consider only questions that were on the agenda of the adjourned meeting. When any other extraordinary general meeting is reconvened, the required quorum under French law is 20% of the shares entitled to vote. The reconvened meeting may consider only questions that were on the agenda of the adjourned meeting. If a quorum is not met at a reconvened meeting requiring a quorum, then the meeting may be adjourned for a maximum of two months. See the section
Finally, we follow French law with respect to shareholder approval requirements in lieu of the prospectus filedvarious shareholder approval requirements of Nasdaq Listing Rule 5635, which requires a Nasdaq listed company to obtain shareholder approval prior to certain issuances of securities, including: (a) issuances in connection with the Commission on March 26, 2015 titled “Descriptionacquisition of Share Capital—Key Provisionsthe stock or assets of OurBy-laws and French Law Affecting Our Ordinary Shares.”
195
Further, Nasdaq rules require that listed companiesanother company if upon issuance the issued shares will equal 20% or more of the number of shares or voting power outstanding prior to the issuance, or if certain specified persons have a nominations committee comprised solely5% or greater interest in the assets or company to be acquired (Nasdaq Listing Rules 5635(a)); (b) issuances or potential issuances that will result in a change of independent directors. We intendcontrol of us (Nasdaq Listing Rule 5635(b)); (c) issuances in connection with equity compensation arrangements (Nasdaq Listing Rule 5635(c)); and (d) 20% or greater issuances in transactions other than public offerings, as defined in the Nasdaq Listing Rules (Nasdaq Listing Rule 5635(d)). Under French law, our shareholders may approve issuances of equity, as a general matter, through the adoption of delegation of authority resolutions at the Company’s shareholders’ meeting pursuant to which shareholders may delegate their authority to the Executive Board to increase the Company’s share capital within specified parameters set by the shareholders, which may include a time limitation to carry out the share capital increase, the cancellation of their preferential subscription rights to the benefit of named persons or a category of persons, specified price limitations and/or specific or aggregate limitations on the size of the share capital increase. Due to differences between French law and corporate governance practices and Nasdaq Listing Rule 5635, we follow our French home country practice, as described under “—Board Composition,” rather than complying with this Nasdaq rule.Listing Rule.
Board Committees
The board of directors has established an audit and finance committee and a compensation committee, each of which operates pursuant to a separate charter adopted by our board of directors. The board of directors has also established a scientific committee. The composition and functioning of all of our committees will comply with all applicable requirements of the French Commercial Code, the Exchange Act, the Nasdaq Global Market, and the rules and regulations of the SEC.
In accordance with French law, committees of our board of directors will only have an advisory role and can only make recommendations to our board of directors. As a result, decisions will be made by our board of directors taking into accountnon-binding nonbinding recommendations of the relevant board committee.
AuditITEM 16H. MINE SAFETY DISCLOSURE
Not applicable.
ITEM 16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
ITEM 16J. INSIDER TRADING POLICIES
Pursuant to applicable SEC transition guidance, the disclosure required by Item 16J will be applicable to the Company starting the fiscal year ending December 31, 2024.
ITEM 16K. CYBERSECURITY
We recognize the importance of assessing, identifying, and Finance Committee.managing material risks associated with cybersecurity threats. These risks include, among other things, operational risks; intellectual property theft; fraud; extortion; harm to employees or customers; violation of privacy or security laws and other litigation and legal risk; and reputational risks. Our cybersecurity policies, standards, processes, and practices are based on recognized frameworks established by the National Institute of Standards and Technology, the International Organization for Standardization and other applicable industry standards. However, this does not mean that our policies, standards, processes, or practices meet any particular technical standards, specifications, or requirements, but only that we use these frameworks as a guide to help us identify, assess, and manage cybersecurity risks relevant to our business.
Our cybersecurity policies, standards, and practices are integrated into our overall risk management system and processes as part of our IT security policy and IT security incident response plan.
Cybersecurity Risk Management and Strategy
Our cybersecurity risk management strategy focuses on several areas:
127
We conduct periodic assessments and testing of our policies, standards, processes, and practices in a manner intended to address cybersecurity threats and events. The results of such assessments, audits, and reviews are evaluated by management and reported to our audit and finance committee and our board of directors, and we adjust our cybersecurity policies, standards, processes, and practices as necessary based on information provided by these assessments, audits, and reviews. Risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, have not materially affected and are not reasonably likely to materially affect our company, including our business strategy, results of operations, or financial condition. See “Risk Factors—Risks Related to Operational Compliance and Risk Management—Our internal computer systems, or those of our third-party contractors or consultants, may fail or suffer security breaches, which could result in a material disruption of our product development programs or loss of personal data.”
Governance
Cybersecurity is an important part of our risk management processes and an area of increasing focus for our board of directors and management. Our audit and finance committee reviews our internal accounting procedures, consults with and reviewsis responsible for the services provided by our independent registered public accountants and assists our board of directors in its oversight of our corporate accounting and financial reporting. Currently, ourrisks from cybersecurity threats. At least annually, the audit and finance committee is comprisedreceives an overview from management of threeour cybersecurity threat risk management and strategy processes covering topics such as data security posture, results from third-party assessments, progress towards pre-determined risk-mitigation-related goals, our incident response plan, and material cybersecurity threat risks or incidents and developments, as well as the steps management has taken to respond to such risks. Members of the audit and finance committee are also encouraged to regularly engage in ad hoc conversations with management on cybersecurity-related news events and discuss any updates to our cybersecurity risk management and strategy programs. Our cybersecurity risk management and strategy processes, which are discussed in greater detail above, are led by a team of senior level management, including our Chief Executive Officer, Chief Financial Officer, General Counsel, and Chief Information Officer. These members of management are informed about and monitor the boardprevention, mitigation, detection, and remediation of directors: Messrs. Bastid, Arthaudcybersecurity incidents through their management of, and Messier.
The duties specifically assignedparticipation in, the cybersecurity risk management and strategy processes described above, including the operation of our incident response plan. As discussed above, these members of management report to the audit and finance committee by our board of directors include, but are not limited to:
196
128
Compensation Committee. Our compensation committee assists our board of directors in reviewing the compensation of our executive officers and directors and makes recommendations in respect thereof. Currently, our compensation committee is comprised of two members of the board of directors: Mr. Godard and Dr. Schwebig. The principal duties and responsibilities of our compensation committee include, but are not limited to:
197
Not applicable.
PART III
ITEM 17. FINANCIAL STATEMENTS
See pagesF-1 through F-54F-67 of this Annual Report.
ITEM 18. FINANCIAL STATEMENTS
Not applicable.
ITEM 19. EXHIBITS
Exhibit Index
The following exhibits are filed as part of this Annual Report:
Exhibit |
| Description of Exhibit |
| Schedule/ Form |
| File Number |
| Exhibit |
| File Date |
1.1 |
|
| 20-F |
|
|
|
|
| Filed herewith | |
|
|
|
|
|
|
|
|
|
|
|
2.1# |
|
| F-1 |
| 333-202205 |
| 4.1 |
| March 10, 2015 | |
|
|
|
|
|
|
|
|
|
|
|
2.2# |
| Form of American Depositary Receipt (included in Exhibit 2.1) |
| F-1 |
| 333-202205 |
| Included in 4.1 |
| March 10, 2015 |
|
|
|
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|
|
|
|
|
|
2.3 |
| Description of Securities registered under Section 12 of the Exchange Act |
|
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| Filed herewith |
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4.1#* |
|
| F-1 |
| 333-202205 |
| 10.6 |
| March 12, 2015 | |
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|
4.1.1#* |
| First Amendment to the Exclusive Patent License Agreement between Regents of the University of Minnesota and Cellectis S.A., dated |
| F-1 |
| 333-202205 |
| 10.6.1 |
| March 12, 2015 |
|
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4.1.2#* |
|
| F-1 |
| 333-202205 |
| 10.6.2 |
| March 12, 2015 | |
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4.1.3#* |
|
| 20-F |
| 001-36891 |
| 4.6.3 |
| March 13, 2018 | |
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4.1.4#** |
|
| 20-F |
| 001-36891 |
| 4.1.4 |
| March 14, 2023 | |
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4.2# |
|
| 20-F |
| 001-36891 |
| 4.7 |
| March 12, 2019 | |
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4.3 |
|
| 20-F |
| 001-36891 |
| 4.3 |
| March 14, 2023 | |
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4.4†# |
|
| F-1 |
| 333-202205 |
| 10.13 |
| March 10, 2015 | |
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4.5†# |
|
| F-1 |
| 333-202205 |
| 10.14 |
| March 10, 2015 | |
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4.6†# |
|
| F-1 |
| 333-202205 |
| 10.15 |
| March 10, 2015 | |
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4.7†# |
|
| 20-F |
| 001-36891 |
| 4.16 |
| March 10, 2015 | |
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4.8†# |
|
| 20-F |
| 001-36891 |
| 4.17 |
| March 10, 2015 | |
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4.9†# |
|
| S-8 |
| 333-214884 |
| 99.1 |
| December 2, 2016 | |
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4.10†# |
|
| S-8 |
| 333-222482 |
| 99.1 |
| January 9, 2018 | |
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4.11†# |
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| S-8 POS |
| 333-222482 |
| 99.3 |
| April 13, 2018 | |
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4.12†# |
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| S-8 |
| 333-227717 |
| 99.1 |
| October 5, 2018 | |
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4.13†# |
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| S-8 |
| 333-227717 |
| 99.2 |
| October 5, 2018 | |
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4.14†# |
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| S-8 POS |
| 333-227717 |
| 99.3 |
| March 4, 2021 | |
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4.15†# |
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| S-8 |
| 333-258514 |
| 99.1 |
| August 5, 2021 | |
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4.16†# |
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| S-8 |
| 333-258514 |
| 99.2 |
| August 5, 2021 | |
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4.17†# |
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| S-8 |
| 333-267760 |
| 99.1 |
| October 6, 2022 | |
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4.18†# |
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| S-8 |
| 333-267760 |
| 99.2 |
| October 6, 2022 | |
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129
4.19†# | S-8 | 333-273777 | 99.1 | August 7, 2023 | |||||||||||||
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4.20†# | S-8 | 333-273777 | 99.2 | August 7, 2023 | |||||||||||||
4.21#** | License Agreement between Allogene Therapeutics, Inc. and Cellectis S.A. dated March 7, 2019 | 20-F/A | 001-36891 | 4.25 | April 25, 2019 | ||||||||||||
4.22#** |
| 20-F/A | 001-36891 | 4.26 | April 25, 2019 | ||||||||||||
4.23#** | 20-F | 001-36891 | 4.26.1 | March 5, 2020 | |||||||||||||
4.24 | [Reserved.] | ||||||||||||||||
4.25 | [Reserved.] | ||||||||||||||||
4.26 | [Reserved.] | ||||||||||||||||
4.27 | [Reserved.] | ||||||||||||||||
4.28# | 6-K | 001-36891 | 1.1 | March 29, 2021 | |||||||||||||
4.28.1# | 6-K | 001-36891 | 1.2 | ||||||||||||||
January 4, 2023
198
|
|
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| |||||
4.29#** | ||||||||||
20-F | 001-36891 | 4.26 | March | |||||||
4.30#** | ||||||||||
6-K | 001-36891 | 99.1 | November 9, 2023 | |||||||
4.31#** | 6-K | 001-36891 | 99.2 | |||||||
November | ||||||||||
9, 2023
199
|
|
|
|
|
| |||||
4.32#** | 6-K | 001-36891 | 99.3 | November 9, 2023 | ||||||
4.33#** | Filed herewith | |||||||||
8.1 | ||||||||||
Filed | ||||||||||
herewith
200
|
|
|
|
|
| |||||
12.1 | ||||||||||
Filed | ||||||||||
12.2 | Filed | |||||||||
13.1 | Filed | |||||||||
13.2 | Certification by the Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | Filed | ||||||||
15.1 | Filed | |||||||||
15.2 | Filed herewith | |||||||||
130
97.1 | Filed herewith | |||||||||
101 | The following materials from Cellectis S.A.’s Report on Form 20.F formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) the Interim Statements of Consolidated Financial Position, (ii) the Unaudited Statements of Consolidated Operations, (iii) the Interim Statements of Consolidated Comprehensive Income (Loss), (iv) the Interim Statements of Consolidated Cash Flows, (v) the Statements of Changes in Consolidated Shareholders’ Equity, and (vi) Notes to the Interim Consolidated Financial Statements. | |||||||||
104.1 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
201† Indicates a management contract or any compensatory plan, contract or arrangement.
# Indicates a document previously filed with the Commission.
* Portions of this exhibit (indicated by asterisks) have been omitted pursuant to a request for confidential treatment.
** Portions of this exhibit (indicated by asterisks) have been omitted because they are not material and would likely cause competitive harm if disclosed.
131
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Financial Statements for the Years Ended December 31, 2015, 20162021, 2022 and 2017:2023:
Auditor Firm Id: 1704 | Auditor Name: Ernst & Young et Autres | Auditor Location: Courbevoie, France |
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of Cellectis S.A.
Opinion on the Consolidated Financial Statements
We have audited the accompanying statements of consolidated financial position of Cellectis S.A. (the Company) as of December 31, 20172023 and 2016, and2022, the related statements of consolidated operations, consolidated comprehensive loss,income (loss), consolidated cash flows and changes in consolidated shareholders’ equity for each of the three years in the period ended December 31, 2017,2023, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company at December 31, 20172023 and 2016,2022, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2017,2023, in conformityaccordance with International Financial Reporting Standards as issued by the International Accounting Standards Board and in conformityaccordance with International Financial Reporting Standards as endorsed by the European Union.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2017,2023, based on criteria established in the Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March 13, 2018April 29, 2024, expressed an unqualifiedadverse opinion thereon.
Change in Accounting Principle
As discussed in the note 2.2 of the consolidated financial statements, the Company has changed the presentation currency of the consolidated financial statements from the euro to the U.S. dollar.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Accounting for joint research and collaboration agreement and initial and subsequent investment agreements | ||
Description of the Matter | As discussed in Notes 2.6, 4.3, 12.1, 15 and 16.1 to the consolidated financial statements, on November 1, 2023, the Company signed the Joint Research and Collaboration Agreement (JRCA) with AstraZeneca Ireland and, on November 1, 2023 and November 14, 2023, signed the Initial and Subsequent Investment Agreements with AstraZeneca Holdings, respectively. The Company received an upfront payment of $25 million under the terms of the JRCA and $80 million under the terms of the Initial Investment Agreement (IIA). Additionally, under the terms of the Subsequent Investment Agreements (SIA), AstraZeneca Holdings is expected to make an equity investment in the Company of $140 million, subject to the fulfilment of certain closing conditions. The Company concluded that the JRCA, IIA and SIA required evaluation on a combined basis and, in addition to the $25 million upfront payment received under the terms of the JRCA, allocated $35.7 million of the proceeds from the IIA and the fair value of the derivative associated with the SIA of $48.4 million to the JRCA. Total consideration allocated to the JRCA of $84.1 million was reflected as deferred revenue as of December 31, 2023, and no revenue was recognized under the JRCA for the year ended December 31, 2023. The Company valued the derivative instrument associated with the SIA at fair value of $48.4 million at the inception of the arrangement. The fair value of the derivative as of December 31, 2023 totaled $42.7 million, with the change in fair value of $5.7 million recognized as financial expense in the statements of consolidated operations. Auditing the Company’s accounting for the JRCA, IIA and SIA was complex due to the significant judgment required to determine the portion of the total combined consideration associated with these arrangements that is allocable to the JRCA as deferred revenue. In particular, significant judgment was required in determining the appropriate accounting standard applicable in determining the portion of the IIA and SIA that were applicable to the revenue generating |
F-2
components of the overall relationship. Additionally, auditing the Company’s estimate of fair value of the derivative instrument associated with the SIA was complex due to the significant judgment required to estimate the probability of transaction completion. | ||
How We Addressed the Matter in Our Audit | Our audit procedures on the Company’s accounting analysis included, among others, evaluating the application of authoritative accounting standards in determining total consideration allocable to the revenue generating component of the relationship, the valuation methodology, and the assumptions utilized in the valuation of the derivative instrument associated with the SIA. We inspected the JRCA, IIA and SIA agreements to evaluate applicable terms and conditions and confirmed key provisions with the counterparty. We inquired of operational and accounting personnel, executive management and in-house legal counsel to corroborate our understanding of the terms of the agreements that impact the nature and timing of goods and services transferred to the customer and the valuation of the derivative instrument. We assessed, with the assistance of our valuation specialists, the reasonableness of the underlying estimates and evidence supporting the Company’s assumptions, including the probability of transaction completion, by testing the completeness, accuracy, and relevance of underlying data used in the model and assessing whether these assumptions were consistent with historical trends and evidence obtained, including in other areas of the audit, such as internal company communications and presentations and external communications. We performed sensitivity analyses of significant assumptions to evaluate the changes in fair value of the derivative from changes in these assumptions. We also assessed the adequacy of the Company’s related disclosures in the consolidated financial statements. |
/s/ Ernst & Young et Autres
Ernst & Young et Autres has served as the Company’s auditor since 2012.
Paris-La Défense, March 13, 2018
Lille, France
F-2
April 29, 2024
F-3
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMSFIRM
To the Shareholders and the Board of Directors and Shareholders of Cellectis S.A.
Opinion on Internal Control over Financial Reporting
We have audited Cellectis S.A.’s (the “Company”) internal control over financial reporting as of December 31, 2017,2023, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework)framework) (the COSO criteria). In our opinion, because of the effect of the material weakness described below on the achievement of the objectives of the control criteria, Cellectis S.A. (and subsidiaries) (the Company) has not maintained in all material respects, effective internal control over financial reporting as of December 31, 2017,2023, based on the COSO criteria.
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. The following material weakness has been identified and included in management’s assessment. The Company lacks formality of accounting processes and controls over significant non-routine transactions and sufficient qualified resources with sufficient technical knowledge to identify and timely resolve complex accounting matters, which led to the correction of identified accounting misstatements.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the statements of consolidated financial position of the Company as of December 31, 20172023 and 2016,2022, and the related statements of consolidated operations, consolidated comprehensive loss,income (loss), consolidated cash flows and changes in consolidated shareholders’ equity for each of the three years in the period ended December 31, 20172023, and the related notes,notes. This material weakness was considered in determining the nature, timing and extent of audit tests applied in our audit of the 2023 consolidated financial statements, and this report does not affect our report dated March 13, 2018April 29, 2024, which expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Report of Management on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies andor procedures may deteriorate.
/s/ Ernst & Young et Autres
Paris-La Défense, March 13, 2018
Lille, France
F-3April 29, 2024
F-4
Cellectis S.A.
STATEMENTS OF CONSOLIDATED FINANCIAL POSITION
$ in thousands
| As of |
| As of |
| ||||||||||||||||||
| Notes | December 31, 2016 | December 31, 2017 | Notes |
| December 31, 2022 |
|
| December 31, 2023 |
| ||||||||||||
ASSETS |
|
|
|
|
| ||||||||||||||||
Non-current assets |
|
|
|
|
|
| |||||||||||||||
Intangible assets | 5 | 1,343 | 1,431 | 7 |
|
| 718 |
|
|
| 671 |
| |||||||||
Property, plant, and equipment | 6 | 16,900 | 7,226 | ||||||||||||||||||
Othernon-current financial assets | 691 | 1,004 | |||||||||||||||||||
|
| ||||||||||||||||||||
Property, plant and equipment | 9 |
|
| 63,621 |
|
|
| 54,681 |
| ||||||||||||
Right-of-use assets | 8 |
|
| 44,275 |
|
|
| 38,060 |
| ||||||||||||
Non-current financial assets | 10 |
|
| 8,791 |
|
|
| 7,853 |
| ||||||||||||
Totalnon-current assets | 18,935 | 9,661 |
|
|
| 117,406 |
|
|
| 101,265 |
| ||||||||||
Current assets |
|
|
|
|
|
| |||||||||||||||
Inventories | 8 | 118 | 250 | ||||||||||||||||||
Trade receivables | 9.1 | 3,627 | 2,753 | 11.1 |
|
| 772 |
|
|
| 569 |
| |||||||||
Subsidies receivables | 9.2 | 8,723 | 9,524 | 11.2 |
|
| 14,496 |
|
|
| 20,900 |
| |||||||||
Other current assets | 9.3 | 8,870 | 13,713 | 11.3 |
|
| 9,078 |
|
|
| 7,722 |
| |||||||||
Current financial assets | 10.1 | 36,592 | 40,602 | 12.1 |
|
| 7,907 |
|
|
| 67,107 |
| |||||||||
Cash and cash equivalents | 10.2 | 254,568 | 256,380 | 12.2 |
|
| 89,789 |
|
|
| 136,708 |
| |||||||||
|
| ||||||||||||||||||||
Total current assets | 312,498 | 323,221 |
|
|
| 122,043 |
|
|
| 233,005 |
| ||||||||||
|
| ||||||||||||||||||||
Total assets held for sale | 5 |
|
| 21,768 |
|
|
| - |
| ||||||||||||
TOTAL ASSETS | 331,432 | 332,882 |
|
|
| 261,216 |
|
|
| 334,270 |
| ||||||||||
|
|
|
|
|
|
|
| ||||||||||||||
LIABILITIES |
|
|
|
|
| ||||||||||||||||
Shareholders’ equity |
|
|
|
|
|
| |||||||||||||||
Share capital | 14.1 | 2,332 | 2,367 | 16 |
|
| 2,955 |
|
|
| 4,365 |
| |||||||||
Premiums related to the share capital | 14.1 | 568,185 | 614,037 | 16 |
|
| 583,122 |
|
|
| 522,785 |
| |||||||||
Treasury share reserve | 14.4 | (416 | ) | (297 | ) | ||||||||||||||||
Currency translation adjustment | (22,174 | ) | 1,978 |
|
|
| (28,605 | ) |
|
| (36,690 | ) | |||||||||
Retained earnings (deficit) | (207,875 | ) | (251,927 | ) | |||||||||||||||||
Retained earnings |
|
|
| (333,365 | ) |
|
| (304,707 | ) | ||||||||||||
Net income (loss) | (67,255 | ) | (99,368 | ) |
|
|
| (106,139 | ) |
|
| (101,059 | ) | ||||||||
|
| ||||||||||||||||||||
Total shareholders’ equity—Group Share | 272,795 | 266,791 | |||||||||||||||||||
Total shareholders’ equity - Group Share |
|
|
| 117,968 |
|
|
| 84,695 |
| ||||||||||||
Non-controlling interests | 14.3 | 1,876 | 19,113 |
|
|
| 7,973 |
|
|
| - |
| |||||||||
|
| ||||||||||||||||||||
Total shareholders’ equity | 274,671 | 285,904 |
|
|
| 125,941 |
|
|
| 84,695 |
| ||||||||||
Non-current liabilities |
|
|
|
|
|
| |||||||||||||||
Non-current financial liabilities | 11 | 30 | 13 | 13 |
|
| 20,531 |
|
|
| 49,125 |
| |||||||||
Non-current lease debts | 12 |
|
| 49,358 |
|
|
| 42,948 |
| ||||||||||||
Non-current provisions | 17 | 560 | 3,430 | 19 |
|
| 2,390 |
|
|
| 2,200 |
| |||||||||
|
| ||||||||||||||||||||
Deferred tax liabilities | 4.4 |
|
|
|
| 158 |
| ||||||||||||||
Totalnon-current liabilities | 590 | 3,443 |
|
| 72,279 |
|
|
| 94,431 |
| |||||||||||
|
| ||||||||||||||||||||
Current liabilities |
|
|
|
|
| ||||||||||||||||
Current financial liabilities | 11 | 1,730 | 21 | 13 |
|
| 5,088 |
|
|
| 5,289 |
| |||||||||
Current lease debts | 13 |
|
| 7,872 |
|
|
| 8,502 |
| ||||||||||||
Trade payables | 9,722 | 9,460 | 13 |
|
| 21,456 |
|
|
| 19,069 |
| ||||||||||
Deferred revenues and deferred income | 13 | 38,929 | 26,056 | ||||||||||||||||||
Deferred income and contract liabilities | 15 |
|
| 59 |
|
|
| 110,325 |
| ||||||||||||
Current provisions | 17 | 594 | 1,427 | 19 |
|
| 477 |
|
|
| 1,740 |
| |||||||||
Other current liabilities | 12 | 5,196 | 6,570 | 14 |
|
| 13,179 |
|
|
| 10,219 |
| |||||||||
|
| ||||||||||||||||||||
Total current liabilities | 56,171 | 43,534 |
|
| 48,131 |
|
|
| 155,144 |
| |||||||||||
|
| ||||||||||||||||||||
Total liabilities related to asset held for sale | 5 |
|
| 14,864 |
|
|
| - |
| ||||||||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | 331,432 | 332,882 |
|
| 261,216 |
|
|
| 334,270 |
| |||||||||||
|
| ||||||||||||||||||||
The accompanying notes form an integral part of these Consolidated Financial Statements
F-4F-5
Cellectis S.A.
STATEMENTS OF CONSOLIDATED OPERATIONS
For the year ended December 31
$ in thousands, except per share amounts
| For the year ended December 31, |
| |||||||||||||||||||||||||||
| For the year ended December 31, | Notes |
| 2021 |
|
| 2022 |
|
| 2023 |
| |||||||||||||||||||
| Notes | 2015 | 2016 | 2017 |
|
|
|
|
|
|
|
| ||||||||||||||||||
Revenues and other income |
|
|
|
|
|
|
| ||||||||||||||||||||||
Revenues | 3.1 | 55,864 | 44,808 | 25,188 | 4.1 |
|
| 30,347 |
|
|
| 19,171 |
|
|
| 755 |
| ||||||||||||
Other income | 3.1 | 6,701 | 11,637 | 8,528 | 4.1 |
|
| 8,250 |
|
|
| 6,553 |
|
|
| 8,438 |
| ||||||||||||
|
|
| |||||||||||||||||||||||||||
Total revenues and other income | 62,565 | 56,444 | 33,715 |
|
|
| 38,597 |
|
|
| 25,725 |
|
|
| 9,193 |
| |||||||||||||
|
|
| |||||||||||||||||||||||||||
Operating expenses |
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Royalty expenses | 3.2 | (2,746 | ) | (1,777 | ) | (2,620 | ) | ||||||||||||||||||||||
Cost of revenue | 4.2 |
|
| (1,844 | ) |
|
| (1,772 | ) |
|
| (737 | ) | ||||||||||||||||
Research and development expenses | 3.2 | (58,154 | ) | (78,458 | ) | (79,227 | ) | 4.2 |
|
| (117,840 | ) |
|
| (97,501 | ) |
|
| (87,646 | ) | |||||||||
Selling, general and administrative expenses | 3.2 | (30,223 | ) | (43,413 | ) | (44,750 | ) | 4.2 |
|
| (22,882 | ) |
|
| (17,494 | ) |
|
| (16,812 | ) | |||||||||
Other operating income and expenses | (2,425 | ) | (99 | ) | 232 | ||||||||||||||||||||||||
|
|
| |||||||||||||||||||||||||||
Other operating income (expenses) |
|
|
| 488 |
|
|
| 1,377 |
|
|
| (1,300 | ) | ||||||||||||||||
Total operating expenses | (93,549 | ) | (123,746 | ) | (126,366 | ) |
|
|
| (142,077 | ) |
|
| (115,390 | ) |
|
| (106,495 | ) | ||||||||||
|
|
| |||||||||||||||||||||||||||
Operating income (loss) | (30,984 | ) | (67,302 | ) | (92,650 | ) |
|
|
| (103,481 | ) |
|
| (89,666 | ) |
|
| (97,302 | ) | ||||||||||
|
|
| |||||||||||||||||||||||||||
Financial income | 3.4 | 10,253 | 7,147 | 7,262 | 4.3 |
|
| 13,218 |
|
|
| 8,880 |
|
|
| 21,479 |
| ||||||||||||
Financial expenses | 3.4 | (1,876 | ) | (7,101 | ) | (18,294 | ) | 4.3 |
|
| (6,486 | ) |
|
| (17,815 | ) |
|
| (40,642 | ) | |||||||||
|
|
| |||||||||||||||||||||||||||
Financial gain (loss) | 8,378 | 46 | (11,032 | ) | |||||||||||||||||||||||||
|
|
| |||||||||||||||||||||||||||
Net Financial gain (loss) |
|
|
| 6,731 |
|
|
| (8,935 | ) |
|
| (19,163 | ) | ||||||||||||||||
Income tax | 3.5 | — | — | — | 4.4 |
|
| - |
|
|
| (87 | ) |
|
| (371 | ) | ||||||||||||
|
|
| |||||||||||||||||||||||||||
Income (loss) from continuing operations |
|
|
| (96,749 | ) |
|
| (98,688 | ) |
|
| (116,835 | ) | ||||||||||||||||
Income (loss) from discontinued operations |
|
|
| (28,358 | ) |
|
| (15,345 | ) |
|
| 8,392 |
| ||||||||||||||||
Net income (loss) | (22,606 | ) | (67,255 | ) | (103,683 | ) |
|
|
| (125,107 | ) |
|
| (114,034 | ) |
|
| (108,443 | ) | ||||||||||
|
|
| |||||||||||||||||||||||||||
Attributable to shareholders of Cellectis | (22,796 | ) | (67,255 | ) | (99,368 | ) |
|
|
| (114,197 | ) |
|
| (106,139 | ) |
|
| (101,059 | ) | ||||||||||
Attributable tonon-controlling interests | 190 | — | (4,315 | ) |
|
|
| (10,910 | ) |
|
| (7,894 | ) |
|
| (7,384 | ) | ||||||||||||
Basic / Diluted net income (loss) per share attributable to shareholders of Cellectis | 16 | 18 |
|
|
|
|
|
|
|
| |||||||||||||||||||
Basic net income (loss) per share ($ /share) | (0.67 | ) | (1.91 | ) | (2.78 | ) | |||||||||||||||||||||||
Diluted net income (loss) per share ($ /share) | (0.67 | ) | (1.91 | ) | (2.78 | ) | |||||||||||||||||||||||
Basic and diluted net income (loss) attributable to shareholders of Cellectis, per share ($ /share) |
|
| (2.55 | ) |
|
| (2.33 | ) |
|
| (1.77 | ) | |||||||||||||||||
Basic and diluted net income (loss) attributable to shareholders of Cellectis from discontinued operations, per share ($ /share) |
|
| (0.39 | ) |
|
| (0.16 | ) |
|
| 0.28 |
| |||||||||||||||||
Number of shares used for computing |
|
|
|
|
|
|
|
| |||||||||||||||||||||
Basic and diluted |
|
| 44,820,279 |
|
|
| 45,547,359 |
|
|
| 57,012,815 |
| |||||||||||||||||
When we have adjusted net loss, we use the weighted average number of outstanding shares, basic to compute the diluted adjusted net income (loss) attributable to shareholders of Cellectis ($/share). When we have adjusted net income, we use the weighted average number of outstanding shares, diluted to compute the diluted adjusted net income (loss) attributable to shareholders of Cellectis ($/share).
The accompanying notes form an integral part of these Consolidated Financial Statements
F-5F-6
STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME (LOSS)
For the year ended December 31
$ in thousands
| For the year ended December 31, |
| |||||||||||||||||||||||
| For the year ended December 31, |
| 2021 |
|
| 2022 |
|
| 2023 |
| ||||||||||||||||
| 2015 | 2016 | 2017 |
|
|
|
|
|
|
|
| |||||||||||||||
Net income (loss) | (22,606 | ) | (67,255 | ) | (103,683 | ) |
|
| (125,107 | ) |
|
| (114,034 | ) |
|
| (108,443 | ) | |||||||
|
|
| |||||||||||||||||||||||
Actuarial gains and losses | (15 | ) | (30 | ) | (515 | ) |
|
| 240 |
|
|
| 1,983 |
|
|
| 597 |
| |||||||
|
|
| |||||||||||||||||||||||
Other comprehensive income (loss) that will not be reclassified subsequently to income or loss | (15 | ) | (30 | ) | (515 | ) | |||||||||||||||||||
|
|
| |||||||||||||||||||||||
Other comprehensive income (loss) that will not be reclassified subsequently to income or loss from continued operations |
|
| 240 |
|
|
| 1,983 |
|
|
| 597 |
| |||||||||||||
Currency translation adjustment | (6,769 | ) | (4,333 | ) | 23,745 |
|
| (21,458 | ) |
|
| (16,770 | ) |
|
| 2,919 |
| ||||||||
|
|
| |||||||||||||||||||||||
Other comprehensive income (loss) that will be reclassified subsequently to income or loss | (6,769 | ) | (4,333 | ) | 23,745 | ||||||||||||||||||||
|
|
| |||||||||||||||||||||||
Other comprehensive income (loss) that will be reclassified subsequently to income or loss from continuing operations |
|
| (21,458 | ) |
|
| (16,770 | ) |
|
| 2,919 |
| |||||||||||||
Other comprehensive income (loss) from discontinued operations |
|
| 6,220 |
|
|
| 5,831 |
|
|
| (1,522 | ) | |||||||||||||
Total Comprehensive income (loss) | (29,391 | ) | (71,618 | ) | (80,453 | ) |
|
| (140,106 | ) |
|
| (122,989 | ) |
|
| (106,449 | ) | |||||||
|
|
| |||||||||||||||||||||||
Attributable to shareholders of Cellectis | (29,640 | ) | (71,607 | ) | (75,731 | ) |
|
| (127,890 | ) |
|
| (114,739 | ) |
|
| (100,535 | ) | |||||||
Attributable tonon-controlling interests | 249 | (12 | ) | (4,723 | ) |
|
| (12,216 | ) |
|
| (8,250 | ) |
|
| (5,914 | ) | ||||||||
The accompanying notes form an integral part of these Consolidated Financial Statements
F-6F-7
Cellectis S.A.
STATEMENTS OF CONSOLIDATED CASH FLOWS
For the year ended DecemberDecember: 31
$ in thousands
| For the year ended December 31, | ||||||||||||||||
| Notes | 2015 | 2016 | 2017 | |||||||||||||
Cash flows from operating activities | ||||||||||||||||
Net loss for the period | (22,606 | ) | (67,255 | ) | (103,683 | ) | ||||||||||
|
|
|
|
|
| |||||||||||
Reconciliation of net loss and of the cash provided by (used in) operating activities | ||||||||||||||||
Adjustments for | ||||||||||||||||
Amortization and depreciation | 1,937 | 2,211 | 3,371 | |||||||||||||
Net loss (income) on disposals | (11 | ) | 65 | 40 | ||||||||||||
Net financial loss (gain) | (8,378 | ) | (46 | ) | 11,032 | |||||||||||
Expenses related to share-based payments | 33,402 | 58,622 | 50,418 | |||||||||||||
Provisions | (279 | ) | (365 | ) | 2,908 | |||||||||||
Other non cash items | — | (1,432 | ) | 2 | ||||||||||||
Interest (paid) / received | 1,070 | 1,694 | 1,371 | |||||||||||||
|
|
|
|
|
| |||||||||||
Operating cash flows before change in working capital | 5,135 | (6,507 | ) | (34,540 | ) | |||||||||||
|
|
|
|
|
| |||||||||||
Decrease (increase) in inventories | (25 | ) | 50 | (109 | ) | |||||||||||
Decrease (increase) in trade receivables and other current assets | 1,268 | (997 | ) | (549 | ) | |||||||||||
Decrease (increase) in subsidies receivables | (679 | ) | (1,122 | ) | 305 | |||||||||||
(Decrease) increase in trade payables and other current liabilities | 2,961 | (4,384 | ) | (335 | ) | |||||||||||
(Decrease) increase in deferred income | (5,070 | ) | (19,750 | ) | (17,099 | ) | ||||||||||
|
|
|
|
|
| |||||||||||
Change in working capital | (1,544 | ) | (26,203 | ) | (17,787 | ) | ||||||||||
|
|
|
|
|
| |||||||||||
Net cash flows provided by (used in) operating activities | 3,591 | (32,710 | ) | (52,327 | ) | |||||||||||
|
|
|
|
|
| |||||||||||
Cash flows from investment activities | ||||||||||||||||
Proceeds from disposal of property, plant and equipment | 111 | 24 | 7,164 | |||||||||||||
Sale (Acquisition) of subsidiaries net of cash disposed of | (3,162 | ) | — | — | ||||||||||||
Acquisition of intangible assets | (97 | ) | (337 | ) | (273 | ) | ||||||||||
Acquisition of property, plant and equipment | (4,316 | ) | (13,696 | ) | (2,383 | ) | ||||||||||
Net change innon-current financial assets | (264 | ) | 175 | (125 | ) | |||||||||||
Sale (Acquisition) of current financial assets | — | (39,302 | ) | (2,598 | ) | |||||||||||
|
|
|
|
|
| |||||||||||
Net cash flows provided by (used in) investing activities | (7,728 | ) | (53,137 | ) | 1,784 | |||||||||||
|
|
|
|
|
| |||||||||||
Cash flows from financing activities | ||||||||||||||||
Increase in share capital net of transaction costs | 221,142 | 713 | 2,930 | |||||||||||||
Shares of Calyxt issued to third parties | — | — | 38,257 | |||||||||||||
Decrease in borrowings | (625 | ) | (91 | ) | (41 | ) | ||||||||||
Treasury shares | 75 | (137 | ) | 120 | ||||||||||||
|
|
|
|
|
| |||||||||||
Net cash flows provided by financing activities | 220,591 | 485 | 41,266 | |||||||||||||
|
|
|
|
|
| |||||||||||
(Decrease) increase in cash | 216,454 | (85,362 | ) | (9,277 | ) | |||||||||||
|
|
|
|
|
| |||||||||||
Cash and cash equivalents at the beginning of the year | 136,400 | 342,111 | 254,568 | |||||||||||||
Effect of exchange rate changes on cash | (10,743 | ) | (2,181 | ) | 11,089 | |||||||||||
|
|
|
|
|
| |||||||||||
Cash and cash equivalents at the end of the period | 7 | 342,111 | 254,568 | 256,380 | ||||||||||||
|
|
|
|
|
| |||||||||||
We present our consolidated statements of cash flows using the indirect method.method:
|
| For the year ended December 31, |
| ||||||||||
Notes |
| 2021 |
|
| 2022 |
| 2023 |
| |||||
Cash flows from operating activities |
|
|
|
|
|
|
|
|
|
| |||
Net income (loss) for the period |
|
|
| (125,107 | ) |
|
| (114,034 | ) |
|
| (108,443 | ) |
Net loss for the period from discontinued operations |
|
|
| (28,358 | ) |
|
| (15,345 | ) |
|
| 8,392 |
|
Net (loss) income for the period from continuing operations |
|
|
| (96,749 | ) |
|
| (98,688 | ) |
|
| (116,835 | ) |
Adjustment to reconcile net income (loss) to cash provided by (used in) operating activities |
|
|
|
|
|
|
|
|
|
| |||
Adjustments for |
|
|
|
|
|
|
|
|
|
| |||
Intercompany transactions between continuing and discontinued operations (1) |
|
|
| 203 |
|
|
| 152 |
|
|
|
| |
Amortization and depreciation |
|
|
| 14,156 |
|
|
| 18,435 |
|
|
| 18,523 |
|
Net loss (income) on disposals |
|
|
| 2 |
|
|
| 1,612 |
|
|
| 0 |
|
Net financial loss (gain) |
|
|
| (6,731 | ) |
|
| 8,935 |
|
|
| 19,163 |
|
Income tax |
|
|
| - |
|
|
| 87 |
|
|
| 371 |
|
Expenses related to share-based payments |
|
|
| 11,493 |
|
|
| 6,043 |
|
|
| 5,233 |
|
Provisions |
|
|
| 421 |
|
|
| 270 |
|
|
| 1,352 |
|
Other non-cash items |
|
|
| - |
|
|
| (460 | ) |
|
| (1,402 | ) |
Realized foreign exchange gain (loss) |
|
|
| 719 |
|
|
| (664 | ) |
|
| 8 |
|
Interest (paid) / received (2) |
|
|
| 969 |
|
|
| 1,158 |
|
|
| 3,627 |
|
Operating cash flows before change in working capital |
|
|
| (75,518 | ) |
|
| (63,120 | ) |
|
| (69,961 | ) |
Decrease (increase) in inventories |
|
|
| 215 |
|
|
| - |
|
|
| - |
|
Decrease (increase) in trade receivables and other current assets |
|
|
| (13,091 | ) |
|
| (3,187 | ) |
|
| 2,252 |
|
Decrease (increase) in subsidies receivables |
|
|
| 654 |
|
|
| (5,806 | ) |
|
| (6,238 | ) |
(Decrease) increase in trade payables and other current liabilities |
|
|
| 177 |
|
|
| 3,247 |
|
|
| (6,305 | ) |
(Decrease) increase in deferred revenues and contract liabilities |
|
|
| (252 | ) |
|
| 23 |
|
|
| 59,149 |
|
Change in working capital |
|
|
| (12,297 | ) |
|
| (5,723 | ) |
|
| 48,859 |
|
Net cash flows provided by (used in) operating activities of continuing operations |
|
|
| (87,815 | ) |
|
| (68,843 | ) |
|
| (21,103 | ) |
Net cash flows provided by (used in) operating activities of discontinued operations |
|
|
| (16,746 | ) |
|
| (18,601 | ) |
|
| (3,644 | ) |
Net cash flows provided by (used in) operating activities |
|
|
| (104,562 | ) |
|
| (87,444 | ) |
|
| (24,746 | ) |
|
|
|
|
|
|
|
|
|
|
| |||
Cash flows from investment activities |
|
|
|
|
|
|
|
|
|
| |||
Acquisition of intangible assets |
|
|
| (13 | ) |
|
| (10 | ) |
|
| - |
|
Calyxt’s cash and cash equivalents disposed of (3) |
|
|
| - |
|
|
| - |
|
|
| (1,642 | ) |
Acquisition of property, plant and equipment | 8 |
|
| (18,543 | ) |
|
| (2,431 | ) |
|
| (1,073 | ) |
Net change in non-current financial assets | 9 |
|
| (143 | ) |
|
| 126 |
|
|
| 489 |
|
Sale (Acquisition) of current financial assets | 7 |
|
| 15,000 |
|
|
| - |
|
|
| (13,363 | ) |
Net cash flows provided by (used in) investing activities of continuing operations |
|
|
| (3,699 | ) |
|
| (2,315 | ) |
|
| (15,589 | ) |
Net cash flows provided by (used in) investing activities of discontinued operations |
|
|
| 10,979 |
|
|
| (446 | ) |
|
| 79 |
|
Cash flows provided by (used in) investment activities |
|
|
| 7,279 |
|
|
| (2,761 | ) |
|
| (15,510 | ) |
|
|
|
| - |
|
|
|
|
|
|
| ||
Cash flows from financing activities |
|
|
|
|
|
|
|
|
|
| |||
Proceeds from the exercise of Cellectis stock options | 15 |
|
| 11,601 |
|
|
| - |
|
|
| - |
|
Increase in share capital of Cellectis after deduction of transaction costs (4) | 15 |
|
| 44,638 |
|
|
| (569 | ) |
|
| 67,936 |
|
Increase in borrowings | 12 |
|
| - |
|
|
| 5,750 |
|
|
| 29,671 |
|
Decrease in borrowings | 12 |
|
| - |
|
|
| (1,343 | ) |
|
| (5,107 | ) |
Interest paid on financial debt |
|
|
| (368 | ) |
|
| (332 | ) |
|
| (333 | ) |
Payments on lease debts | 12 |
|
| (10,641 | ) |
|
| (11,011 | ) |
|
| (11,084 | ) |
Net cash flows provided by financing activities of continuing operations |
|
|
| 45,230 |
|
|
| (7,505 | ) |
|
| 81,084 |
|
Net cash flows provided by (used in) financing activities of discontinued operations |
|
|
| 2,294 |
|
|
| 8,650 |
|
|
| 1,781 |
|
Net cash flows provided by (used in) financing activities |
|
|
| 47,525 |
|
|
| 1,145 |
|
|
| 82,865 |
|
(Decrease) increase in cash and cash equivalents |
|
|
| (49,758 | ) |
|
| (89,060 | ) |
|
| 42,608 |
|
|
|
|
| - |
|
|
| - |
|
|
|
| |
Cash and cash equivalents at the beginning of the year |
|
|
| 241,148 |
|
|
| 185,636 |
|
|
| 93,216 |
|
Effect of exchange rate changes on cash |
|
|
| (5,754 | ) |
|
| (3,360 | ) |
|
| 884 |
|
Cash from discontinued operations |
|
|
| 13,823 |
|
|
| 3,427 |
|
|
| - |
|
Cash from continuing operations |
|
|
| 171,813 |
|
|
| 89,789 |
|
|
| 136,708 |
|
Cash and cash equivalents at the end of the period | 11 |
|
| 185,636 |
|
|
| 93,216 |
|
|
| 136,708 |
|
F-8
The accompanying notes form an integral part of these Consolidated Financial Statements
F-7F-9
Cellectis S.A.
For the year ended December 31
$ in thousands, except share datadate
| Share Capital Ordinary Shares | Equity |
| Share Capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Equity |
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notes | Number of shares | Amount | Premiums related to share capital | Treasury shares reserve | Currency translation adjustment | Retained earnings (deficit) | Income (Loss) | attributable to shareholders of Cellectis | Non controlling interests | Total Shareholders’ Equity | Notes | Number of shares |
|
| Amount |
|
| Premiums related to share capital |
|
| Currency translation adjustment |
|
| Retained earnings (deficit) |
|
|
| Income |
|
|
| attributable to shareholders of Cellectis |
|
|
| Non controlling interests |
|
|
| Total |
| |||||||||||||||||||||||||||||||||||||||||||||||
As of January 1, 2015 | 29,446,721 | 2,014 | 263,100 | (354 | ) | (11,024 | ) | (179,962 | ) | 27 | 73,801 | (1,529 | ) | 72,272 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
As of January 1, 2021 |
|
| 42,780,186 |
|
|
| 2,785 |
|
|
| 872,134 |
|
|
| (4,089 | ) |
|
| (505,961 | ) |
|
|
| (81,074 | ) |
|
|
| 283,795 |
|
|
|
| 25,051 |
|
|
|
| 308,846 |
| ||||||||||||||||||||||||||||||||||||||||||||||||
Net Loss | — | — | — | — | — | — | (22,796 | ) | (22,796 | ) | 190 | (22,606 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
|
| (114,197 | ) |
|
|
| (114,197 | ) |
|
|
| (10,910 | ) |
|
|
| (125,107 | ) | |||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) | — | — | — | — | (6,829 | ) | (15 | ) | — | (6,844 | ) | 59 | (6,785 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (13,932 | ) |
|
| 240 |
|
|
|
| - |
|
|
|
| (13,693 | ) |
|
|
| (1,306 | ) |
|
|
| (14,999 | ) | ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total comprehensive income (loss) | — | — | — | — | (6,829 | ) | (15 | ) | (22,796 | ) | (29,640 | ) | 249 | (29,391 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (13,932 | ) |
|
| 240 |
|
|
|
| (114,197 | ) |
|
|
| (127,890 | ) |
|
|
| (12,216 | ) |
|
|
| (140,106 | ) | |||||||||||||||||||||||||||||||||
Allocation of prior period loss | — | — | — | — | — | 27 | (27 | ) | — | — | — |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (81,074 | ) |
|
|
| 81,074 |
|
|
|
| - |
|
|
|
| - |
|
|
|
| - |
| |||||||||||||||||||||||||||||||||||||
Capital Increase | 14.1 | 5,500,000 | 297 | 209,899 | — | — | (6 | ) | — | 210,189 | — | 210,189 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchase ofnon-controlling interests | 14.3 | — | — | — | — | — | (5,164 | ) | — | (5,164 | ) | 1,280 | (3,884 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Treasury shares | 14.4 | — | — | — | 75 | — | — | — | 75 | — | 75 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Exercise of share warrants and employee warrants | 14.2 | 231,893 | 13 | 4,325 | — | — | — | — | 4,338 | — | 4,338 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Exercise of stock options and capital increase Calyxt |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 2,699 |
|
|
|
| - |
|
|
|
| 2,699 |
|
|
|
| 1,668 |
|
|
|
| 4,367 |
| ||||||||||||||||||||||||||||||||||||||||||||||||
Capital Increase Cellectis (ATM) |
|
| 2,415,630 |
|
|
| 143 |
|
|
| 46,811 |
|
|
| - |
|
|
| - |
|
|
|
| - |
|
|
|
| 46,954 |
|
|
|
| - |
|
|
|
| 46,954 |
| ||||||||||||||||||||||||||||||||||||||||||||||||
Transaction costs |
|
| - |
|
|
| - |
|
|
| (2,316 | ) |
|
| - |
|
|
| - |
|
|
|
| - |
|
|
|
| (2,316 | ) |
|
|
| - |
|
|
|
| (2,316 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
Transaction with subsidiaries | 15 |
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (58 | ) |
|
|
| - |
|
|
|
| (58 | ) |
|
|
| 58 |
|
|
|
| - |
| ||||||||||||||||||||||||||||||||||||||||||||||||
Exercise of share warrants, employee warrants, stock-options and free-shares vesting Cellectis |
|
| 288,494 |
|
|
| 17 |
|
|
| 5,597 |
|
|
| - |
|
|
| (2 | ) |
|
|
| - |
|
|
|
| 5,612 |
|
|
|
| - |
|
|
|
| 5,612 |
| ||||||||||||||||||||||||||||||||||||||||||||||||
Non-cash stock-based compensation expense | 15 | — | — | 32,614 | — | — | — | — | 32,614 | 789 | 33,403 |
|
| - |
|
|
| - |
|
|
| 12,497 |
|
|
| - |
|
|
| - |
|
|
|
| - |
|
|
|
| 12,497 |
|
|
|
| 621 |
|
|
|
| 13,118 |
| |||||||||||||||||||||||||||||||||||||
Other movements |
|
| - |
|
|
| - |
|
|
| (27 | ) |
|
| - |
|
|
| 27 |
|
|
|
| - |
|
|
|
| - |
|
|
|
| - |
|
|
|
| - |
| ||||||||||||||||||||||||||||||||||||||||||||||||
As of December 31, 2021 |
|
| 45,484,310 |
|
|
| 2,945 |
|
|
| 934,696 |
|
|
| (18,021 | ) |
|
| (584,129 | ) |
|
|
| (114,197 | ) |
|
|
| 221,293 |
|
|
|
| 15,181 |
|
|
|
| 236,474 |
| ||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||
As of December 31, 2015 | 35,178,614 | 2,323 | 509,938 | (279 | ) | (17,853 | ) | (185,120 | ) | (22,796 | ) | 286,212 | 789 | 287,002 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
As of January 1, 2016 | 35,178,614 | 2,323 | 509,938 | (279 | ) | (17,853 | ) | (185,120 | ) | (22,796 | ) | 286,212 | 789 | 287,002 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
As of January 1, 2022 |
|
| 45,484,310 |
|
|
| 2,945 |
|
|
| 934,696 |
|
|
| (18,021 | ) |
|
| (584,129 | ) |
|
|
| (114,197 | ) |
|
|
| 221,293 |
|
|
|
| 15,181 |
|
|
|
| 236,474 |
| ||||||||||||||||||||||||||||||||||||||||||||||||
Net Loss | — | — | — | — | — | — | (67,255 | ) | (67,255 | ) | — | (67,255 | ) |
|
|
|
|
|
|
|
|
|
|
|
| - |
| (106,139 | ) |
| - |
| (106,139 | ) |
| - |
| (7,894 | ) |
| - |
| (114,034 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) | — | — | — | — | (4,321 | ) | (30 | ) | — | (4,352 | ) | (12 | ) | (4,363 | ) |
|
|
|
|
|
|
|
|
|
|
| (10,583 | ) |
|
| 1,983 |
|
| - |
|
|
|
| - |
|
| (8,600 | ) |
| - |
|
| (355 | ) |
| - |
|
| (8,955 | ) | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total comprehensive income (loss) | — | — | — | — | (4,321 | ) | (30 | ) | (67,255 | ) | (71,607 | ) | (12 | ) | (71,618 | ) |
|
|
|
|
|
|
|
| (10,583 | ) |
|
| 1,983 |
|
|
|
| (106,139 | ) |
|
|
| (114,739 | ) |
|
|
| (8,250 | ) |
|
|
| (122,989 | ) | ||||||||||||||||||||||||||||||||||||||
Allocation of prior period loss | — | — | — | — | — | (22,796 | ) | 22,796 | — | — | — |
|
|
|
|
|
|
|
|
|
| (114,197 | ) |
|
|
| 114,197 |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||
Treasury shares | — | — | — | (137 | ) | — | — | — | (137 | ) | — | (137 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Exercise of share warrants and employee warrants | 156,446 | 9 | 723 | — | — | (6 | ) | — | 726 | — | 726 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of Calyxt's common stock and exercise of Calyxt's pre-funded warrants |
|
|
|
|
|
|
|
|
|
| 1,341 |
| - |
|
|
|
| - |
| 1,341 |
| - |
| 1,392 |
| - |
| 2,733 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Capital Increase of Calyxt |
|
|
|
|
|
|
|
|
|
| 162 |
| - |
|
|
|
| - |
| 162 |
| - |
| 168 |
| - |
| 329 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transaction costs related to Calyxt's capital increase |
|
|
|
|
|
|
|
|
|
| (104 | ) |
| - |
|
|
|
| - |
| (104 | ) |
| - |
| (108 | ) |
| - |
| (212 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transaction costs related to Cellectis' capital increase |
|
|
|
|
|
| (570 | ) |
|
|
|
|
|
| - |
|
|
|
| - |
| (570 | ) |
| - |
|
|
|
|
|
| (570 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transaction with subsidiaries |
|
|
|
|
|
|
|
|
|
| 2,515 |
|
|
|
|
|
|
|
| 2,515 |
|
|
|
| (2,515 | ) |
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Exercise of share warrants, employee warrants, stock-options and free-shares vesting Cellectis |
|
| 191,658 |
|
|
| 10 |
|
|
|
|
|
|
| (10 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-cash stock-based compensation expense | 12 | — | — | 57,524 | — | — | — | — | 57,524 | 1,098 | 58,622 | 15 |
|
|
|
|
| 8,071 |
|
|
|
|
|
|
|
|
|
|
|
|
| 8,071 |
| - |
| 2,105 |
|
|
|
| 10,175 |
| ||||||||||||||||||||||||||||||||||||||||||||||
Other movements | — | — | — | — | — | 77 | — | 77 | — | 77 |
|
|
|
|
|
|
|
| (359,076 | ) |
|
|
|
|
| 359,076 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||
As of December 31, 2022 |
|
| 45,675,968 |
|
|
| 2,955 |
|
|
| 583,122 |
|
|
| (28,605 | ) |
|
| (333,365 | ) |
|
|
| (106,139 | ) |
|
|
| 117,968 |
| #REF! |
|
| 7,973 |
|
|
|
| 125,941 |
| ||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||
As of December 31, 2016 | 35,335,060 | 2,332 | 568,185 | (416 | ) | (22,174 | ) | (207,875 | ) | (67,255 | ) | 272,795 | 1,876 | 274,671 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
As of January 1, 2023 |
|
| 45,675,968 |
|
|
| 2,955 |
|
|
| 583,122 |
|
|
| (28,605 | ) |
|
| (333,365 | ) |
|
|
| (106,139 | ) |
|
|
| 117,968 |
|
|
|
| 7,973 |
|
|
|
| 125,941 |
| ||||||||||||||||||||||||||||||||||||||||||||||||
Net Loss |
|
|
|
|
|
|
|
|
|
|
| - |
|
|
| - |
|
|
|
| (101,059 | ) |
|
|
| (101,059 | ) |
|
|
| (7,384 | ) |
|
|
| (108,443 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) |
|
|
|
|
|
|
|
|
|
|
| (73 | ) |
|
| 597 |
|
|
|
| - |
|
|
|
| 524 |
|
|
|
| 1,470 |
|
|
|
| 1,994 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||
Total comprehensive income (loss) |
|
|
|
|
|
|
|
|
|
|
| (73 | ) |
|
| 597 |
|
|
|
| (101,059 | ) |
|
|
| (100,535 | ) |
|
|
| (5,914 | ) |
|
|
| (106,449 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Allocation of prior period loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (106,139 | ) |
|
|
| 106,139 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Capital increase of Cellectis (1) |
|
| 25,907,800 |
|
|
| 1,401 |
|
|
| 68,584 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 69,985 |
|
|
|
|
|
|
|
| 69,985 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||
Transaction costs related to Cellectis’ capital increase (2) |
|
|
|
|
|
|
|
| (2,049 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
| (2,049 | ) |
|
|
|
|
|
|
| (2,049 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operation between shareholders (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 343 |
|
|
|
|
|
|
|
| 343 |
|
|
|
| (343 | ) |
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Exercise of share warrants, employee warrants, stock-options and free-shares vesting Cellectis | 13 |
| 167,433 |
|
|
| 9 |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 9 |
|
|
|
| - |
|
|
|
| 9 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||
Loss of control over Calyxt (4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (3,625 | ) |
|
|
| (3,625 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
OCI Reclassification pursuant to Calyxt's deconsolidation (5) |
|
|
|
|
|
|
|
|
|
|
| (8,012 | ) |
|
| (10 | ) |
|
|
|
|
|
|
| (8,022 | ) |
|
|
|
|
|
|
| (8,022 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-cash stock-based compensation expense | 15 |
|
|
|
|
|
|
| 7,086 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 7,086 |
|
|
|
| 2,006 |
|
|
|
| 9,092 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||
Other movements (6) |
|
|
|
|
|
|
|
| (133,958 | ) |
|
|
|
|
| 133,868 |
|
|
|
|
|
|
|
| (90 | ) |
|
|
| (97 | ) |
|
|
| (187 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
As of December 31, 2023 |
|
| 71,751,201 |
|
|
| 4,365 |
|
|
| 522,785 |
|
|
| (36,690 | ) |
|
| (304,707 | ) |
|
|
| (101,059 | ) |
|
|
| 84,695 |
|
|
|
| 0 |
|
|
|
| 84,695 |
| ||||||||||||||||||||||||||||||||||||||||||||||||
F-8During the year ended December 31, 2023, 16,000,000 shares were issued on November 6, 2023 in connection with the AstraZeneca Initial Investment Agreement (the "IIA") of $80.0 million at a price of $5 per share. Following settlement and delivery of the new shares, AstraZeneca owns approximately 22% of the share capital, and 21% of the voting rights of the Company, has the right to nominate a non-voting observer on the board of directors of Cellectis, and has the right to participate pro rata in Cellectis’s future share offerings. A portion of the Initial Investment Agreement proceeds equal to $35.7 million was reallocated to the transaction price of the Joint Research and Collaboration Agreement ("AZ JRCA") with AstraZeneca collaboration agreement and recorded as deferred revenue. The amount is reflected as a deduction from the share premium. The remaining consideration received, after reallocation of the AZ JRCA and foreign exchange impact as of December 31, 2023, representing $44.9 million is reflected in share capital for $0.9 million and share premium for $44.0 million. Further details on the interdependence between the AZ JRCA and SIA are provided in Note 2.6 to the financial statements "Accounting treatment of significant transactions of the period".
F-10
| Share Capital Ordinary Shares | Equity | |||||||||||||||||||||||||||||||||||||||||||
| Notes | Number of shares | Amount | Premiums related to share capital | Treasury shares reserve | Currency translation adjustment | Retained earnings (deficit) | Income (Loss) | attributable to shareholders of Cellectis | Non controlling interests | Total Shareholders’ Equity | ||||||||||||||||||||||||||||||||||
As of January 1, 2017 | 35,335,060 | 2,332 | 568,185 | (416 | ) | (22,174 | ) | (207,875 | ) | (67,255 | ) | 272,795 | 1,876 | 274,671 | ||||||||||||||||||||||||||||||
Net Loss | — | — | — | — | — | — | (99,368 | ) | (99,368 | ) | (4,315 | ) | (103,683 | ) | ||||||||||||||||||||||||||||||
Other comprehensive income (loss) | — | — | — | — | 24,152 | (515 | ) | — | 23,637 | (408 | ) | 23,230 | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||
Total comprehensive income (loss) | — | — | — | — | 24,152 | (515 | ) | (99,368 | ) | (75,731 | ) | (4,723 | ) | (80,453 | ) | |||||||||||||||||||||||||||||
Allocation of prior period loss | — | — | — | — | — | (67,255 | ) | 67,255 | — | — | — | |||||||||||||||||||||||||||||||||
Capital Increase | 466,950 | 26 | — | — | — | (26 | ) | — | — | — | — | |||||||||||||||||||||||||||||||||
Transaction with subsidiaries (1) | — | — | — | — | — | 23,747 | — | 23,747 | 14,510 | 38,257 | ||||||||||||||||||||||||||||||||||
Treasury shares | — | — | — | 120 | — | — | — | 120 | — | 120 | ||||||||||||||||||||||||||||||||||
Exercise of share warrants and employee warrants | 11 | 158,052 | 9 | 2,921 | — | — | — | — | 2,930 | — | 2,930 | |||||||||||||||||||||||||||||||||
Non-cash stock-based compensation expense | 12 | — | — | 42,968 | — | — | — | — | 42,968 | 7,450 | 50,418 | |||||||||||||||||||||||||||||||||
Other movements | — | — | (37 | ) | — | — | (1 | ) | — | (38 | ) | — | (38 | ) | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||
As of December 31, 2017 | 35,960,062 | 2,367 | 614,037 | (297 | ) | 1,978 | (251,927 | ) | (99,368 | ) | 266,791 | 19,113 | 285,904 | |||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||
The accompanying notes form an integral part of these Consolidated Financial Statements
(1) Net proceeds to Calyxt from the Calyxt IPO of $58.0 million after deduction of $3.1 million of underwriting discounts and commissions and $3.3 million of other offering expenses. Equity of Calyxt attributable tonon-controlling interests of 20.3% was $11.8 million and equity of Calyxt attributable to Cellectis of 79.73% is $26.4 million (after consideration of Cellectis’ investment in shares of Calyxt issued as part of the Calyxt IPO for a purchase price of $20 million).
F-9F-11
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 201731, 2023
Note 1. The Company
Cellectis S.A. (hereinafter “Cellectis” or “we”) is a limited liability company (“société anonyme”) registered and domiciled in Paris, France.
We are a clinical-stage biopharmaceuticalclinical stage biotechnological company, focusedemploying our core proprietary technologies to develop products based on developinggene-editing with a new generationportfolio of cancer immunotherapies. allogeneic Chimeric Antigen Receptor T-cells (“UCART”) product candidates in the field of immuno-oncology and gene-edited hematopoietic stem and progenitor cells (“HSPC”) product candidates in other therapeutic indications.
Our UCART product candidates, based on gene-editedT-cells that express chimeric antigen receptors, or CARs,Chimeric Antigen Receptors (“CARs”), seek to harness the power of the immune system to target and eradicate cancers. We believe that CAR-based immunotherapy is one of the most promising areas of cancer research, representing a new paradigm for cancer treatment. We are designing next-generation immunotherapies that are based on gene-edited CAR T-cells. Our gene-editing technologies allow us to create allogeneic CART-cells, meaning they are derived from healthy donors rather than the patients themselves. In additionWe believe that the allogeneic production of CAR T-cells will allow us to develop cost-effective, “off-the-shelf” products that are capable of being stored and distributed worldwide. Our gene-editing expertise also enables us to develop product candidates that feature additional safety and efficacy attributes, including control properties designed to prevent them from attacking healthy tissues, to enable them to tolerate standard oncology treatments, and to equip them to resist mechanisms that inhibit immune-system activity.
Together with our focus on immuno-oncology, we are exploring the use ofusing, through our HEAL platform, our gene-editing technologies to develop HSPC product candidates in other therapeutic applications, as well as through our subsidiary,genetic diseases.
Cellectis S.A., Cellectis, Inc., Cellectis Biologics, Inc. (and Calyxt, Inc. until May 31, 2023), as a consolidated group of companies, are also referred to develop healthier food products foras the “Group.”
On May 31, 2023, Calyxt, Inc. completed its all-stock, reverse merger business combination with Cibus Global. Among other things, as part of the Merger, each share of Calyxt’s common stock, par value $0.0001 per share, existing and outstanding immediately prior to the Merger remained outstanding as a growing population.share of Class A common stock, par value $0.0001 per share (“Class A Common Stock”), without any conversion or exchange thereof, and Calyxt issued approximately 16,527,484 shares of Class A Common Stock to unitholders of Cibus Global based on an exchange ratio set forth in the agreement and plan of merger (the “Merger Agreement”). Following the closing of the Merger, effective on June 1, 2023, the combined company operates under the name of Cibus, Inc. (“Cibus”). Cellectis’ equity interest in Calyxt was reduced to 2.9% after the closing of the Merger, which resulted in Cellectis losing control of Calyxt. Calyxt is therefore no longer consolidated since June 1, 2023.
Note 2. Accounting principles
2.1 Basis forof preparation
The Consolidated Financial Statements of Cellectis as of and for the year ended December 31, 20172023 were approved by our Board of Directors on March 12, 2018.April 29, 2024.
Our Consolidated Financial Statements are presented in thousand U.S. dollars. See Note 2.2.
The Consolidated Financial Statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). and in conformity with IFRS as endorsed by the European Union.
The Consolidated Financial Statements have been prepared using the historical cost measurement basis except for certain assets and liabilities that are measured at fair value in accordance with IFRS.
IFRS include International Financial Reporting Standards (“Standards(“IFRS”), International Accounting Standards (“the IAS”), as well as the interpretations issued by the Standards Interpretation Committee (“the SIC”), and the International Financial Reporting Interpretations Committee (“Committee(“IFRIC”). The significant accounting methods used to prepare the Consolidated Financial Statements are described below.
Application of new or amended standards or new amendments
The following pronouncements and related amendments have been adopted by us from January 1, 20172023 but had no significant impact on the Consolidated Financial Statements:
F-12
Standards, interpretations and amendments issued but not yet effective
The following pronouncements and related amendments are applicable for first quarter accounting periods beginning after January 1, 2018.2024, as specified below. We do not anticipate that the adoption of these pronouncements and amendments will have a material impact on our results of operations, financial position or cash flows.
F-10
IFRS 15 Revenue from Contracts with Customers establishes a comprehensive framework for determining whether, how much and when revenue is recognized. It replaces existing revenue recognition guidance, including IAS 18 Revenue. IFRS 15 is effective for annual reporting periods beginning on or after January 1, 2018, with early adoption permitted.Going concern
Cellectis began its IFRS 15 implementation project with a diagnostic phase. The different categories of contracts with customers of Cellectis, which have been reviewed, are:
Cellectis will apply IFRS 15 with effect from January 1, 2018 using the retrospective method. It will lead to a deferral of collaboration revenue (especially milestone payments) from fiscal years of 2014 and 2015 with a negative opening equity adjustment of $1.8 million for fiscal year 2016. Except for this opening equity impact, IFRS 15 will not have any impact in the financial statements for fiscal years 2016 and 2017.
In January 2016, the IASB issued IFRS 16 (“Leases”), which is effective for annual periods beginning on or after January 1, 2019. This new standard aligns the accounting treatment of operating leases with that already applied to finance leases (i.e. recognition in the balance sheet of future lease payments and the associated rights of use). Cellectis is assessing the potential impact on itsThe consolidated financial statements resulting fromwere prepared on a going concern basis.
With cash and cash equivalents of $136.7 million as of December 31, 2023, and taking into account the application€15.0 million under Tranche B of IFRS 16. The commitments relatedthe €40.0 million Finance Contract with EIB received in January 2024, and the $140 million equity investment we expect to receive pursuant to the facility leasesSubsequent Investment Agreement, the Company believes its cash and salescash equivalents will be sufficient to fund its operations into, assuming receipt of such funds, 2026 and lease back are disclosed in note 18. Atherefore for at least twelve months following the consolidated financial statements’ publication.
Our assessment of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement and involves uncertainties, and actual results could vary as a result of a number of these contracts might be requiredfactors. We have based this estimate on assumptions that may prove to be recorded on the statement of financial position(“right-of-use” assetwrong, and the related financial obligation) under IFRS16.we could use our available capital resources sooner than we currently expect or chose to revise our strategy to extend our cash runway.
2.2 Change in the presentation currencyCurrency of the financial statements
The Consolidated Financial Statements are presented in U.S. dollars, which differs from the functional currency of Cellectis, S.A., which is the Euro. We decided to change the reporting currency from Euro to U.S. dollars in the third quarter of 2017, using the retrospective method. We believe that this change will enhance comparability with peers, which primarily present their financial statements in U.S. dollars.euro.
The effects of the change in presentation currency on the comparative consolidated financial statements are as follows:
F-11
| As of December 31, 2014 | Consolidated financial statement as reported (€ in thousand) | Consolidated financial statement as reported converted (a) ($ in thousand) | Adjustments (b) | Consolidated financial statement ($ in thousand) | ||||||||||||
Totalnon-current assets | 5,613 | 6,815 | — | 6,815 | ||||||||||||
Total current assets | 132,001 | 160,262 | — | 160,262 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
TOTAL ASSETS | 137,614 | 167,077 | — | 167,077 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Shareholders’ equity | ||||||||||||||||
Share capital | 1,472 | 1,788 | 226 | 2,014 | ||||||||||||
Premiums, Retained earnings (deficit) and Net income (loss) | 60,327 | 73,243 | 9,922 | 83,165 | ||||||||||||
Treasury share reserve | (251 | ) | (305 | ) | (49 | ) | (354 | ) | ||||||||
Currency translation adjustment | (762 | ) | (925 | ) | (10,099 | ) | (11,024 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total shareholders’ equity—Group Share | 60,786 | 73,801 | — | 73,801 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Non-controlling interests | (1,259 | ) | (1,529 | ) | — | (1,529 | ) | |||||||||
Total shareholders’ equity | 59,527 | 72,272 | — | 72,272 | ||||||||||||
Totalnon-current liabilities | 3,222 | 3,911 | — | 3,911 | ||||||||||||
Total current liabilities | 74,865 | 90,894 | — | 90,894 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | 137,614 | 167,077 | — | 167,077 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
F-12
| As of December 31, 2015 | Consolidated financial statement as reported (€ in thousand) | Consolidated financial statement as reported converted (a) ($ in thousand) | Adjustments (b) | Consolidated financial statement ($ in thousand) | ||||||||||||
Totalnon-current assets | 6,844 | 7,451 | — | 7,451 | ||||||||||||
Total current assets | 334,218 | 363,863 | — | 363,863 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
TOTAL ASSETS | 341,062 | 371,314 | — | 371,314 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Shareholders’ equity | ||||||||||||||||
Capital | 1,759 | 1,915 | 408 | 2,323 | ||||||||||||
Premiums, Retained earnings (deficit) and Net income (loss) | 262,950 | 286,274 | 15,748 | 302,021 | ||||||||||||
Treasury share reserve | (184 | ) | (200 | ) | (80 | ) | (279 | ) | ||||||||
Currency translation adjustment | (1,632 | ) | (1,776 | ) | (16,077 | ) | (17,853 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total shareholders’ equity—Group Share | 262,894 | 286,213 | — | 286,213 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Non-controlling interests | 725 | 789 | — | 789 | ||||||||||||
Total shareholders’ equity | 263,619 | 287,002 | — | 287,002 | ||||||||||||
Totalnon-current liabilities | 503 | 548 | — | 548 | ||||||||||||
Total current liabilities | 76,940 | 83,765 | — | 83,765 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | 341,062 | 371,314 | — | 371,314 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| As of December 31, 2016 | Consolidated financial statement as reported (€ in thousand) | Consolidated financial statement as reported converted (a) ($ in thousand) | Adjustments (b) | Consolidated financial statement ($ in thousand) | ||||||||||||
Totalnon-current assets | 17,963 | 18,935 | — | 18,935 | ||||||||||||
Total current assets | 296,459 | 312,498 | — | 312,498 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
TOTAL ASSETS | 314,422 | 331,432 | — | 331,432 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Shareholders’ equity | ||||||||||||||||
Capital | 1,767 | 1,862 | 470 | 2,332 | ||||||||||||
Premiums, Retained earnings (deficit) and Net income (loss) | 254,834 | 268,622 | 24,433 | 293,055 | ||||||||||||
Treasury share reserve | (307 | ) | (324 | ) | (92 | ) | (416 | ) | ||||||||
Currency translation adjustment | 2,501 | 2,636 | (24,810 | ) | (22,174 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Total shareholders’ equity—Group Share | 258,795 | 272,795 | — | 272,795 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Non-controlling interests | 1,779 | 1,876 | — | 1,876 | ||||||||||||
Total shareholders’ equity | 260,574 | 274,671 | — | 274,671 | ||||||||||||
Totalnon-current liabilities | 560 | 590 | — | 590 | ||||||||||||
Total current liabilities | 53,288 | 56,171 | — | 56,171 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | 314,422 | 331,432 | — | 331,432 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
F-13
| For the full year ended December 31, 2014 | Consolidated financial statement as reported (€ in thousand) | Consolidated financial statement as reported converted (a) ($ in thousand) | Adjustments | Consolidated financial statement ($ in thousand) | ||||||||||||
Total revenues and other income | 26,453 | 35,152 | — | 35,152 | ||||||||||||
Total operating expenses | (31,698 | ) | (42,122 | ) | — | (42,122 | ) | |||||||||
Operating income (loss) | (5,245 | ) | (6,970 | ) | — | (6,970 | ) | |||||||||
Financial gain (loss) | 7,095 | 9,428 | — | 9,428 | ||||||||||||
Income tax | — | — | — | — | ||||||||||||
Income (loss) from continuing operations | 1,850 | 2,458 | — | 2,458 | ||||||||||||
Loss from discontinued operations | (2,822 | ) | (3,750 | ) | — | (3,750 | ) | |||||||||
Net income (loss) | (972 | ) | (1,292 | ) | — | (1,292 | ) | |||||||||
|
|
|
|
|
|
|
| |||||||||
| For the full year ended December 31, 2015 | Consolidated financial statement as reported (€ in thousand) | Consolidated financial statement as reported converted (a) ($ in thousand) | Adjustments | Consolidated financial statement ($ in thousand) | ||||||||||||
Total revenues and other income | 56,385 | 62,565 | — | 62,565 | ||||||||||||
Total operating expenses | (84,309 | ) | (93,549 | ) | — | (93,549 | ) | |||||||||
Operating income (loss) | (27,924 | ) | (30,984 | ) | — | (30,984 | ) | |||||||||
Financial gain (loss) | 7,550 | 8,378 | — | 8,378 | ||||||||||||
Income tax | — | — | — | — | ||||||||||||
Income (loss) from continuing operations | (20,373 | ) | (22,606 | ) | — | (22,606 | ) | |||||||||
Loss from discontinued operations | — | — | — | — | ||||||||||||
Net income (loss) | (20,373 | ) | (22,606 | ) | — | (22,606 | ) | |||||||||
|
|
|
|
|
|
|
| |||||||||
| For the full year ended December 31, 2016 | Consolidated financial statement as reported (€ in thousand) | Consolidated financial statement as reported converted (a) ($ in thousand) | Adjustments | Consolidated financial statement ($ in thousand) | ||||||||||||
Total revenues and other income | 51,007 | 56,444 | — | 56,444 | ||||||||||||
Total operating expenses | (111,824 | ) | (123,746 | ) | — | (123,746 | ) | |||||||||
Operating income (loss) | (60,818 | ) | (67,302 | ) | — | (67,302 | ) | |||||||||
Financial gain (loss) | 42 | 46 | — | 46 | ||||||||||||
Income tax | — | — | — | — | ||||||||||||
Income (loss) from continuing operations | (60,776 | ) | (67,255 | ) | — | (67,255 | ) | |||||||||
Loss from discontinued operations | — | — | — | — | ||||||||||||
Net income (loss) | (60,776 | ) | (67,255 | ) | — | (67,255 | ) | |||||||||
|
|
|
|
|
|
|
| |||||||||
F-14
By convention and for practicability purpose, the differences have been recalculated on a cumulative basis from January 1, 2014 instead of the date of adoption of IFRS.
The amounts shown in the income statements and in the cash flow statements in dollars correspond to the amounts reported in euros converted at the average for the applicable annual period of the ECB’s daily reference exchange rate for dollar / euro exchanges (as published by Banque de France).
All financial information (unless indicated otherwise) is presented in thousands of U.S. dollars.
The statements of financial position of consolidated entities having a functional currency different from the U.S. dollar are translated into U.S. dollars at the closing exchange rate (spot exchange rate at the statement of financial position date) and the statements of operations, statements of comprehensive income (loss) and statements of cash flowsflow of such consolidated entities are translated at the average period to date exchange rate. The resulting translation adjustments are included in equity under the caption “Accumulated other comprehensive income (loss)”“Currency Translation Adjustments” in the Consolidated Statements of Changes in Shareholders’ Equity.
2.3 Consolidated entities and non-controlling interests
2.3 Basis of consolidation
Accounting policy
We control all the legal entities included in the consolidation. An investor controls an investee when the investor is exposed to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Control requires power, exposure to variability of returns and a linkage between the two.
To have power, the investor needs to have existing rights that give it the current ability to direct the relevant activities that significantly affect the investee’s returns.
In order to ascertain control, potential voting rights which are substantial are taken into consideration.
Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary.
All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full consolidation.
Consolidated entitiesThe Group ensures that it has control over its consolidated subsidiaries. If the Group loses control of a subsidiary and does not exercise significant influence, the subsidiary is deconsolidated as of the date control is lost.
ForAt the year ended December 31, 2017,date when control is lost, the consolidated groupGroup derecognizes the assets and liabilities of companies (sometimes referred to as the “Group”) includes Cellectis S.A., Cellectis, Inc.subsidiary and Calyxt, Inc.
As of December 31, 2017, Cellectis S.A. owns 100%any non-controlling interests in the former subsidiary at their carrying amounts, and recognizes the fair value of Cellectis, Inc. and approximately 79.7% of Calyxt’s outstanding shares of common stock.
Until July 25, 2017, Cellectis S.A. fully owned Calyxt, Inc. On July 25, 2017, Calyxt closed its IPO with $64.4 million in gross proceeds to Calyxtany consideration received from the saletransaction that resulted in the loss of 8.050.000 sharescontrol and the fair value of any investment retained in the former subsidiary. The Group recognises any resulting difference as a gain or loss in profit or loss attributable to the parent. The Groupe also reclassifies to profit or loss, or transfer directly to retained earnings if required by other IFRSs, the amounts recognised in other comprehensive income in relation to the subsidiary. This reclassification is made at $8 perparent company level.
Investments in associates
Associates are entities in which the Group has significant influence in respect of financial and operating policy decisions, but not control. Significant influence is assessed through voting rights.
F-13
Investments in associates are accounted for under the equity method and are initially recognized at cost.
The consolidated financial statements include the Group’s share including the full exercise of the underwriter’s over-allotment option and Cellectis’ purchasetotal comprehensive income of $20.0 millionassociates from the date when significant influence is obtained until the date it ceases.
If the Group’s share of shares inlosses exceeds its equity interest, the IPO. Calyxt’s sharescarrying amount of common stock are traded on NASDAQinvestments consolidated under the symbol “CLXT”.
Our 2016 Consolidated Financial Statements includeequity method is reduced to zero and the operationsGroup ceases to recognize its share of Cellectis S.A., Cellectis, Inc. and Calyxt, Inc. The two subsidiaries were fully owned by Cellectis S.A. duringfuture losses unless the year ended December 31, 2016.
F-15Group has a legal or constructive obligation to bear a portion of future losses or to make payments on behalf of the associate.
Our 2015 Consolidated Financial Statements include the operations of Cellectis S.A.; our two French subsidiaries, Cellectis Bioresearch and Ectycell; our three U.S. subsidiaries, Calyxt, Inc., Cellectis, Inc. and Cellectis Bioresearch Inc.Non-controlling shareholders held a 24.5% interest in Cellectis Bioresearch, Cellectis Bioresearch Inc. and Ectycell until May 18, 2015.
The following internal reorganization was completed in 2015:
Non-controlling interests
Non-controlling shareholders hold a 20.3% interest in Calyxt Inc. as of December 31, 2017. Thesenon-controlling interests were generated during the initial public offering of Calyxt Inc., on July 25, 2017.
From May 18, 2015 to July 24, 2017, there was nonon-controlling shareholder (see Note 14.3).
Non-controlling shareholders held a 24.5% interest in Cellectis Bioresearch, Cellectis Bioresearch Inc. and Ectycell until May 18, 2015.
2.4 Foreign currencycurrencies
Foreign currency transactions and balances
Significant transactionsTransactions in foreign currencies are translated intoinitially recorded by the Group’s entities at their respective functional currenciescurrency spot rate at the exchange rates effective atdate the transaction dates, otherwisefirst qualifies for recognition. The revaluation is done automatically by the average rate of the previous month is used fornon-significant transactions. accounting system.
Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency using the exchange rate effective at the period end date. Differences arising on settlement or translation of monetary items are recognized as financial income or expenses in profit or loss
The resultingNon-monetary items that are measured in a foreign currency are translated using the exchange gainsrates at the date of the initial transaction. Non- monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. Differences arising on translation of non-monetary items are recognized respectively in profit or losses are recordedloss when the change in fair value of the consolidated statementsitem is recognized in profit or loss and in OCI when the change in fair value of operationsthe item is recognized in financial gain (loss).OCI.
Foreign currency translation
TheOn consolidation the assets and liabilities of foreign operations having a functional currency different from the euro are translated into euros at the period end exchange rate. The income and expenses of foreign operations are translated into euros using the average exchange rate for the reporting period.
Gains and losses arising from currency translation are recognized in other comprehensive loss. When a foreign operation is partly or fully divested, the associated share of gains and losses recognized in the currency translation reserve is transferred to the consolidated statements of operations.
Consolidated financial statements are then converted into U.S. dollars using the method described in Note 2.2.
The difference in effect of exchange rate changes on cash and cash equivalents between the statements of consolidated operations and consolidated cash flows is mainly explained by the following elements:
F-16
2.5 Use of judgment, estimates and assumptions
The preparation of these consolidated financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, including the disclosure of contingent liabilities. Actual amounts may differ from those estimates.
The Group’s exposure to risks and uncertainties is disclosed in Note 7.3:9.3: Financial instruments risk management and policies.
Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the period end date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Group based its assumptions and estimates on parameters available when the consolidated financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Group. Such changes are reflected in the assumptions when they occur.
F-14
2.6 Accounting treatment of significant transactions of the period
We present below the accounting treatment applied in the Consolidated Financial Statements of Cellectis as of and for the year ended December 31, 2023 concerning the collaboration and investment agreements entered into with AstraZeneca. The purpose of this section is to bring together information on these transactions and their accounting treatment in the Group's financial statements. It is supplemented by information on the specific financial statement items impacted by these transactions in the notes to the financial statements dedicated to these items hereafter.
On November 1, 2023, Cellectis and AstraZeneca announced that they entered into a Joint Research and Collaboration Agreement (the “AZ JRCA”) and an Initial Investment Agreement ("IIA").
Pursuant to the AZ JRCA, the parties will collaborate to develop up to 10 novel cell and gene therapy candidate products, selected from a larger pool of potential targets identified by AZ Ireland, for human therapeutic, prophylactic, palliative, and analgesic purposes. Each party will be responsible for performing research and development activities based on research plans to be agreed upon throughout the initial five-year collaboration term under the AZ JRCA.
Pursuant to the IIA, AZ Holdings made an initial equity investment of $80 million in Cellectis by subscribing to 16,000,000 ordinary shares at a price of $5.00 per share (the “Initial Investment”). Following the Initial Investment, AZ Holdings owned approximately 22% of the share capital and 21% of the voting rights of the Company.
Following this first equity investment of AstraZeneca, Cellectis signed on November 14, 2023, a Subsequent Investment Agreement (the "SIA") for an additional equity investment of $140 million by AstraZeneca that is subject to the fulfilment of the closing conditions described hereafter. The additional investment will be made by way of subscription of 10,000,000 “class A” convertible preferred shares and 18,000,000 “class B” convertible preferred shares, in each case at a price of $5.00 per share. Both classes of preferred shares would benefit from a liquidation preference and would be convertible into ordinary shares with the same rights as the outstanding ordinary shares on a one for one basis.
Analysis of the Joint Research Collaboration Agreement
In addition to an upfront payment of $25 million made by AZ Ireland to Cellectis under the AZ JRCA, AZ Ireland will reimburse Cellectis for its budgeted research costs associated with targets identified under the AZ JRCA. Cellectis is also eligible to receive an option exercise fee and development, regulatory and sales-related milestone payments, ranging from $70 million up to $220 million, per each of the 10 candidate products, plus tiered royalties, which may range from mid-single to low-double digits, based on the sale of Licensed Products (as defined in the JRCA).
As part of our analysis of the AZ JRCA under IFRS 15 requirements, we concluded that the $25 million upfront payment is to be included in the transaction price at contract inception and allocated to each research activity performance obligations in proportion to their stand-alone selling price. As at December 31, 2023, no Research Plan (as defined in the AZ JRCA), which provides a framework for research activities, had started, and therefore we have not recognized any revenue related to research activity performance obligation. As a result, the entire $25 million upfront payment received in November 2023 is recorded within deferred income and contract liabilities at December 31, 2023.
Interdependence of the Initial Investment Agreement and the Subsequent Investment Agreement with the AZ JRCA
The IIA and the AZ JRCA were both signed on November 1, 2023, and the SIA was subsequently signed on November 14, 2023. The IIA, SIA and AZ JRCA were negotiated concurrently, and the execution of the IIA was a condition to the signing of the AZ JRCA. In addition, for both the IIA and the SIA, the price per share pursuant to such agreements was set at a level significantly higher than the quoted price for the Company’s ordinary shares at their respective signing dates.
Considering all these factors, we concluded that in accordance with IFRS standards, the IIA, SIA and AZ JRCA are accounted for as a single transaction as they were not negotiated based upon independently based market conditions.
Therefore, in accordance with applicable accounting standards, we allocated a portion of the proceeds received from AstraZeneca under the IIA and the initial fair value of the derivative recognized for the SIA to the AZ JRCA as additional consideration for the services to be rendered under the AZ JRCA, which is recorded as deferred revenue.
To estimate the portion of the share purchase price that exceeds fair value, we first assessed the fair value of both investment agreements at the date of initial recognition (i.e., on November 1, 2023 for the IIA and on November 14, 2023 for the SIA) and allocated to the AZ JRCA a portion of the share purchase proceeds equal to the difference between this initial fair value determination and the transaction price. As the proceeds from the SIA were zero at inception on November 14, 2023, the initial fair value of the SIA is allocated in full to the AZ JRCA.
The fair value of the IIA at the initial recognition date was determined on the basis of Cellectis' share price at the date of signature, as follows:
As of November 1, 2023 | ||||
Number of shares issued | 16,000,000 | |||
Spot share price (in €) | 2.63 | |||
Spot foreign exchange rate | 1.05 | |||
Fair value of shares in $ thousands | 44,272 | |||
Proceeds received in $ thousands | 80,000 | |||
Proceeds reallocated to the JRCA in $ thousands | 35,728 | |||
The valuation method and parameters used to estimate the fair value of the SIA at initial recognition date is detailed in the section "Accounting treatment of the Subsequent Investment Agreement" below. The initial fair value of the SIA was $48.4 million.
In accordance with applicable IFRS standards, we allocated $35.7 million of the proceeds received from the sale of ordinary shares pursuant to the IIA to the AZ JRCA and $48.4 million, representing the fair value of the derivative pursuant to the SIA to the AZ JRCA.
As the additional consideration is fixed from the inception of the IIA and SIA, it is reflected in the AZ JRCA transaction price from inception and recorded as deferred revenue totaling $84.1 million. The corresponding income will be recognized as revenue in
F-15
profit and loss, in accordance with the characteristics of AZ JRCA performance obligations, when satisfied. For the year ended December 31, 2023, no corresponding performance obligations have been satisfied.
Accounting treatment of the Subsequent Investment Agreement
At signing date of the SIA, the closing of this additional equity investment was subject to:
As these preferred shares include no contractual obligation to deliver cash or another financial asset or to exchange financial assets or financial liabilities under conditions that are potentially unfavorable to the issuer, they meet the definition of equity instruments as per IAS 32.16,
This contract meets all derivatives criteria since its value changes depending on the listed price of Cellectis' ordinary shares, it requires no initial investment as the rights and obligations will be performed on the closing date and it is to be settled at a future date that is expected to occur by March 31, 2024. This contract does not meet the “fixed for fixed” condition set in IAS 32.16 and 22 since it will be settled by the exchange of a fixed amount in a currency that is not the functional currency of the Company for a fixed number of equity instruments.
Based on these factors, the SIA is a derivative and shall therefore be recognized according to the principles of IFRS 9, under which the derivative instrument is recognized at its fair value with any subsequent change of fair value recognized in profit and loss.
On the closing date of the SIA (i.e. upon completion of the additional investment), the cash received will be recognized on the balance sheet, the derivative will be derecognized, and any difference between the cash received and the fair value of the derivative at closing date will be recognized against share premium and share capital.
Valuation of the derivative
On November 14, 2023, the execution of the SIA does constitute a commitment by AstraZeneca and does not constitute a firm commitment by Cellectis to deliver the shares as completion of the transaction is still subject to conditions precedent, including the approval by the Cellectis shareholders' general meeting. The general meeting called to vote on this transaction was held on December 22, 2023, and approval was approved.
Based on this fact pattern, we value the SIA at initial recognition as a put option held by Cellectis with a maturity on the date of the general meeting. From the date of approval at Cellectis' general meeting, we value the SIA as a forward sale of new shares, with a maturity on the expected date of completion of the investment. The absence of dividends and the short residual maturity of the forward sale make the two types of instruments economically similar and this distinction has limited impact on the valuation.
The fair value of the derivative is estimated as follows:
Given the absence of significant movements in the share price on and after November 14, 2023, we consider that the market was already anticipating this investment on November 14, 2023, and consequently that valuations should not be adjusted for dilutive effects.
As the valuation is based on both observable and unobservable inputs (mainly the probability of investment completion and the expected life of the derivative), this is a level 3 instrument under the IFRS 13 fair value hierarchy.
At initial recognition on November 14, 2023, and as of December 31, 2023, assumptions used and estimated fair value are as follows:
|
| As of November 14, 2023 |
|
| As of December 31, 2023 |
| ||
Number of shares to be issued |
|
| 28,000,000 |
|
|
| 28,000,000 |
|
Subscription price (in $) |
|
| 5.00 |
|
|
| 5.00 |
|
Expected life of derivative (in years) |
| 0.11 |
|
| 0.25 |
| ||
Spot share price (in €) |
|
| 2.33 |
|
|
| 2.76 |
|
Forward foreign exchange rate at maturity |
|
| 1.09 |
|
|
| 1.10 |
|
Risk-free rate at maturity |
|
| 5.7 | % |
|
| 5.5 | % |
Volatility |
|
| 119.6 | % |
| n.a. |
| |
Probability of transaction completion |
|
| 72.0 | % |
|
| 81.0 | % |
Fair value in $ thousands |
|
| 48,365 |
|
|
| 42,694 |
|
F-16
We performed fair value sensitivity tests on assumptions that are sensitive and require management's judgment (i.e. the probability of investment completion and the expected life of the derivative). The results of these tests are presented below.
Sensitivity of the derivative fair value to the probability of transaction completion
Fair value in $ thousands |
| As of November 14, 2023 |
|
| As of December 31, 2023 |
| ||
Probability of transaction completion -2% |
|
| 47,022 |
|
|
| 41,640 |
|
Expected probability of transaction completion estimated by management |
|
| 48,365 |
|
|
| 42,694 |
|
Probability of transaction completion +2% |
|
| 49,709 |
|
|
| 43,748 |
|
Sensitivity of the derivative fair value to the expected life of the derivative
Fair value in $ thousands | As of December 31, 2023 | |||
Expected life of derivative +1 month | 42,197 | |||
Expected life of derivative estimated by management | 42,694 | |||
Expected life of derivative -1 month | 43,194 | |||
The sensitivity of the fair value to the expected life of the derivative at the initial recognition date is not presented, as the estimated term of the derivative at that date corresponds to the date of the Cellectis shareholders' meeting called to authorize the transaction, which is already a fixed and known date.
At initial recognition, the fair-value measurement of the derivative is $48.4 million. The fair value of this instrument has been remeasured on December 31, 2023 and amounts to $42.7 million. The difference in fair value measurement of 5.7 million has been recognized in financial expense.
Note 3. Scope of consolidation and non-consolidated entities
Consolidated entities
As of December 31, 2023, Cellectis S.A. owns 100% of Cellectis, Inc., which owns 100% of Cellectis Biologics, Inc.
For the twelve-month period ended December 31, 2023 the consolidated group of companies includes Cellectis S.A., Cellectis, Inc. and Cellectis Biologics, Inc and Calyxt, Inc. through May 31, 2023, the date of Calyxt's deconsolidation. See Non-consolidated entities below.
For the twelve-month period ended December 31, 2022 the consolidated group of companies included Cellectis S.A., Cellectis, Inc., Cellectis Biologics, Inc and Calyxt, Inc.
Investments in associates
On December 29, 2022, we entered into a Collaboration Agreement with Primera Therapeutics, Inc. (“Primera”) (the “Primera Collaboration Agreement”). Under the Primera Collaboration Agreement, Primera and Cellectis will be co-developing a mitochondrial DNA engineering toolbox for therapies to treat mitochondrial diseases.
Pursuant to this collaboration, Cellectis is contributing gene editing research, technology, manufacturing and clinical development experience and expertise. The Primera Collaboration Agreement also grants Primera a right to exercise an exclusive worldwide option to obtain a license from Cellectis on up to five product candidates developed under the Primera Collaboration Agreement. Upon Primera exercising the option, Cellectis would be eligible to receive milestone payments and royalty payments on the net sales of the products developed under the Primera Collaboration Agreement.
Pursuant to the Primera Collaboration Agreement, on May 17, 2023, Cellectis and Primera entered into a Subscription Agreement and a Shareholders Agreement under which Cellectis received 234,570 shares of common stock of Primera, representing a 19.0% ownership interest and 19% of the voting rights in Primera at that date, and a right to designate a director to Primera’s board of directors.
Consequently, we consider that, since May 17, 2023, we have significant influence over Primera as defined by IAS 28 because, in addition to voting rights, Cellectis receives and actively holds a seat on Primera’s board of directors and Cellectis provides Primera with access to essential technical information. Therefore, our investment in Primera is accounted for using the equity method starting on May 17, 2023.
On initial recognition, the investment in an associate is recognized at cost. We consider that the best estimate of the fair value of the consideration given to Primera is the fair market value of Primera’s shares received by Cellectis. The fair value of the investment is immaterial.
As of December 31, 2023, following Primera’s share capital increase that occurred after May 17, 2023, we hold 17.0% of Primera’s shares and voting rights and consider that we continue to exercise significant influence over Primera. After taking into account Primera’s net loss between May 17, 2023 and December 31, 2023 and applying our ownership rate, the value of our investment is nil. We have no legal or contractual obligation to bear losses in excess of our share.
In view of the immaterial value of our investment in Primera at inception and as of December 31, 2023, we do not present the investment in associates on a separate line in our consolidated statements of financial position or our consolidated statements of operations. Our share of Primera’s loss as of December 31, 2023, has been recognized in other operating expenses.
F-17
Non-consolidated entities
Calyxt was consolidated until May 31, 2023.
On November 23, 2022, Calyxt received a non-binding letter of intent from Cibus Global regarding a potential reverse merger with Calyxt (with Calyxt absorbing Cibus Global). With Calyxt as the surviving entity, current equityholders of Cibus Global received shares of Calyxt common stock issued for the purpose of the transaction. On January 13, 2023, Calyxt, Calypso Merger Subsidiary, LLC, a wholly-owned subsidiary of Calyxt, Cibus Global and certain other parties, entered into the Merger Agreement with respect to this Merger.
Effective November 23, 2022, assets and liabilities of Calyxt qualified for non-current assets and liabilities held for sale for all periods presented, in accordance with IFRS 5 and the statements of consolidated operations, statements of consolidated comprehensive income and statements of consolidated cash flows were adjusted to reflect the presentation of Calyxt as a discontinued operation for all period presented.
On May 31, 2023 immediately prior to the consummation of the Merger, Cellectis S.A.’s ownership interest in Calyxt amounted to 48.0%. Cellectis’ voting rights continued to give Cellectis the power to direct relevant activities of Calyxt and therefore Calyxt continued to be consolidated through the May 31, 2023. On May 31, 2023, Calyxt consummated the Merger, and effective on June 1, 2023, the combined company operates under the name of Cibus, Inc.
Among other things, as part of the Merger, each share of Calyxt’s common stock existing and outstanding immediately prior to the Merger remained outstanding as a share of Class A Common Stock, without any conversion or exchange thereof, and Calyxt issued approximately 16,527,484 shares of Class A Common Stock to unitholders of Cibus Global based on an exchange ratio set forth in the Merger Agreement. Cellectis’ equity interest in Cibus was reduced to 2.9% after the closing of the Merger, which resulted in Cellectis losing control of Cibus.
Consequently, effective June 1, 2023, Calyxt was deconsolidated. Calyxt’s results are included in the Group’s results until May 31, 2023, and continue to be presented as discontinued operations until that date.
On the date of deconsolidation, we derecognized Calyxt’s assets, liabilities and related non-controlling interests in Calyxt. We recognized the investment retained in Calyxt at its fair value and recorded a profit from deconsolidation representing the remaining net impact of the above entries. The profit from deconsolidation is included in the results of discontinued operations in accordance with IFRS 5.
We also reclassified to profit or loss the amounts recognized in other comprehensive income related to Calyxt that should be reclassified according to relevant IFRSs. This reclassification is made at parent entity level and has no impact on the profit from deconsolidation presented below.
On the date of loss of control, the profit from Calyxt’s deconsolidation is as follows:
As of May 31, | ||||||
2023 | ||||||
Assets held for sale | (19,714 | ) | ||||
Liabilities related to assets held for sale | 23,592 | |||||
Non-controlling interests | 3,625 | |||||
Net assets, liabilities and equity derecognized | 7,503 | |||||
Consideration received in cash | - | |||||
Fair value of the retained investment | 15,097 | |||||
Consideration received | 15,097 | |||||
Profit from deconsolidation | 22,600 | |||||
Pursuant to the deconsolidation of Calyxt, our investment in Calyxt is classified as a current financial asset and measured at fair value as of December 31, 2023, as further described in Section 12.1. Changes in fair value subsequent to deconsolidation are recognized in the income statement under financial gain or loss.
Adjustments to the unaudited condensed consolidated financial statements previously reported regarding Calyxt (unaudited)
We have identified material misstatements to the unaudited condensed financial statements for the three- and six-month periods ended June 30, 2023 and the nine-month periods ended September 30, 2023 (reported respectively in Forms 6-K filed on August 7, 2023 - subsequently amended on September 5, 2023-, and on November 6, 2023).
The misstatements relate to the recognition of certain transaction costs related to the Merger.
Specifically, these costs relate to success-fees payable to an external advisor. These costs were initially considered as relating to the period after deconsolidation, and as such were not included in the Group's operating results. However, under IFRS, and in particular IAS 37, the conditions for recognizing a liability for these costs were met before the effective date of the merger (i.e. before deconsolidation), and as such should have been included in the Group's results.
The adjustments also concern the amount of share-based payment expense related to Calyxt to be included in the Group's operating results. Certain equity awards granted by Calyxt to employees and non-employee directors contained vesting acceleration clauses triggered by the occurrence of certain events such as a merger. As a result of the Merger closing, these clauses effectively triggered a vesting acceleration of certain equity awards. In accordance with IFRS, and in particular IFRS 2, the share-based payment expense to be recognized must be estimated at each closing date on the basis of the number of instruments expected to vest and the vesting period estimated by management. Considering the terms of the grant agreements and the probability of the events giving rise to the application of the acceleration clauses already existing prior to the effective Merger date, the share-based payment expense for the period prior to the effective Merger date, i.e. prior to the deconsolidation date, was initially underestimated and therefore an additional share-based payment expense should have been included in Cellectis group's results.
F-18
For the six-month period ended June 30, 2023 and the nine-month period ended September 30, 2023, the adjustments to the reported condensed consolidated financial statements are identical and amount to $2.2 million (unaudited) in share-based payment expense, $0.1 million (unaudited) in payroll tax due to the additional share-based payment expense, and $1,5 million (unaudited) in success-fees payable to an external advisor. These adjustments relate to the period from January 1, 2023 to May 31, 2023 during which Calyxt was consolidated. Due to the recognition of these additional expenses, the loss from discontinued operations and profit from deconsolidation recognized in the six-month period ended June 30, 2023 and the nine-month period ended September 30, 2023, is also adjusted by a $0.8 million (unaudited) decrease. The profit from deconsolidation, which was originally presented as financial income in the results from continuing operations in the reported condensed consolidated financial statements for the six-month period ended June 30, 2023 and the nine-month period ended September 30, 2023, has been reclassified to income (loss) from discontinued operations in the corrected condensed consolidated financial statements for these periods, in order to comply with IFRS 5, as reflected in the tables below.
For the three-month period ended June 30, 2023, the adjustments amount to $1.5 million (unaudited) in share-based payment expense, $0.1 million (unaudited) in payroll tax due to the additional share-based payment expense, $1,5 million (unaudited) in success-fees payable to an external advisor and a $0.8 million (unaudited) decrease of the profit from deconsolidation, which has been reclassified to income (loss) from discontinued operations in the corrected condensed consolidated financial statements for this period.
The effect of these adjustments on Cellectis' consolidated statements of financial position, consolidated statements of operations, statements of consolidated comprehensive income and consolidated statements of changes in shareholders equity for each period concerned is presented below. We do not present consolidated cash flows statements for the six-month period ended June 30, 2023 and the nine-month period ended September 30, 2023 as the adjustments have no effect on the net cash flows from operating, investment or financing activities. There are no material adjustments relating to three-month period ended March 31, 2023, three-month period ended September 30, 2023 or to periods prior to 2023.
F-19
For the three and six-month periods ended June 30, 2023 (unaudited)
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Unaudited)
As of June 30, 2023 |
|
| Adjustments |
| As of June 30, 2023 |
| |||||
$ in thousands |
| ||||||||||
ASSETS |
|
|
|
|
|
|
|
| |||
Total non-current assets |
| 114,389 |
|
|
|
|
|
| 114,389 |
| |
Total current assets |
| 113,285 |
|
|
|
|
|
| 113,285 |
| |
Total assets held for sale |
|
|
|
|
|
|
|
| |||
TOTAL ASSETS |
| 227,674 |
|
|
|
|
|
| 227,674 |
| |
|
|
|
|
|
|
|
|
| |||
LIABILITIES |
|
|
|
|
|
|
|
| |||
Shareholders’ equity |
|
|
|
|
|
|
|
| |||
Share capital |
| 3,491 |
|
|
|
|
|
| 3,491 |
| |
Premiums related to the share capital |
| 476,224 |
|
|
| 1,066 |
|
|
| 477,291 |
|
Currency translation adjustment |
| (37,050 | ) |
|
|
|
|
| (37,050 | ) | |
Retained earnings |
| (305,392 | ) |
|
|
|
|
| (305,392 | ) | |
Net income (loss) |
| (40,715 | ) |
|
| (1,066 | ) |
|
| (41,781 | ) |
Total shareholders’ equity - Group Share |
| 96,558 |
|
|
|
|
|
| 96,558 |
| |
Non-controlling interests |
|
|
|
|
|
|
|
| |||
Total shareholders’ equity |
| 96,558 |
|
|
|
|
|
| 96,558 |
| |
Total non-current liabilities |
| 89,068 |
|
|
|
|
|
| 89,068 |
| |
Total current liabilities |
| 42,047 |
|
|
|
|
|
| 42,047 |
| |
Total liabilities related to asset held for sale |
|
|
|
|
|
|
|
| |||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
| 227,674 |
|
|
|
|
|
| 227,674 |
| |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
For the six-month period ended June 30, 2023 |
|
| Adjustments |
| For the six-month period ended June 30, 2023 |
| |||||
$ in thousands |
| ||||||||||
Total revenues and other income |
| 5,560 |
|
|
|
|
|
| 5,560 |
| |
Total operating expenses |
| (52,612 | ) |
|
|
|
|
| (52,612 | ) | |
Financial income |
| 33,041 |
|
|
| (21,827 | ) |
|
| 11,214 |
|
Financial expenses |
| (21,461 | ) |
|
|
|
|
| (21,461 | ) | |
Net Financial gain (loss) |
| 11,580 |
|
|
| (21,827 | ) |
|
| (10,247 | ) |
Income tax |
| (258 | ) |
|
|
|
|
| (258 | ) | |
Income (loss) from continuing operations |
| (35,731 | ) |
|
| (21,827 | ) |
|
| (57,557 | ) |
Income (loss) from discontinued operations |
| (10,377 | ) |
|
| 18,769 |
|
|
| 8,392 |
|
Net income (loss) |
| (46,108 | ) |
|
| (3,058 | ) |
|
| (49,165 | ) |
Attributable to shareholders of Cellectis |
| (40,715 | ) |
|
| (1,066 | ) |
|
| (41,781 | ) |
Attributable to non-controlling interests |
| (5,393 | ) |
|
| (1,991 | ) |
|
| (7,384 | ) |
Basic / Diluted net income (loss) per share attributable to shareholders of Cellectis |
|
|
|
|
|
|
|
| |||
Basic and diluted net income (loss) attributable to shareholders of Cellectis per share ($ /share) |
| (0.76 | ) |
|
| (0.02 | ) |
|
| (0.78 | ) |
Basic and diluted net income (loss) attributable to shareholders of Cellectis per share ($ /share) from discontinued operations |
| (0.09 | ) |
|
| 0.39 |
|
|
| 0.29 |
|
INTERIM STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME (LOSS) (Unaudited)
| For the six-month period ended June 30, 2023 |
|
| Adjustments |
| For the six-month period ended June 30, 2023 |
| ||||
$ in thousands |
| ||||||||||
Net income (loss) |
| (46,108 | ) |
|
| (3,058 | ) |
|
| (49,165 | ) |
Other comprehensive income (loss) that will not be reclassified subsequently to income or loss from continued operations |
| (42 | ) |
|
|
|
|
| (42 | ) | |
Currency translation adjustment |
| 2,272 |
|
|
| (14 | ) |
|
| 2,258 |
|
Other comprehensive income (loss) that will be reclassified subsequently to income or loss from continuing operations |
| 2,272 |
|
|
| (14 | ) |
|
| 2,258 |
|
Other comprehensive income (loss) from discontinued operations |
| (1,233 | ) |
|
| 14 |
|
|
| (1,219 | ) |
Total Comprehensive income (loss) |
| (45,111 | ) |
|
| (3,058 | ) |
|
| (48,168 | ) |
Attributable to shareholders of Cellectis |
| (41,172 | ) |
|
| (1,080 | ) |
|
| (42,252 | ) |
Attributable to non-controlling interests |
| (3,939 | ) |
|
| (1,978 | ) |
|
| (5,916 | ) |
F-20
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
For the three-month period ended June 30, 2023 |
|
| Adjustments |
| For the three-month period ended June 30, 2023 |
| |||||
$ in thousands |
| ||||||||||
Total revenues and other income |
| 2,001 |
|
|
|
|
|
| 2,001 |
| |
Total operating expenses |
| (25,660 | ) |
|
|
|
|
| (25,660 | ) | |
Financial income |
| 32,266 |
|
|
| (21,827 | ) |
|
| 10,440 |
|
Financial expenses |
| (16,284 | ) |
|
|
|
|
| (16,284 | ) | |
Net Financial gain (loss) |
| 15,982 |
|
|
| (21,827 | ) |
|
| (5,845 | ) |
Income tax |
| (258 | ) |
|
|
|
|
| (258 | ) | |
Income (loss) from continuing operations |
| (7,935 | ) |
|
| (21,827 | ) |
|
| (29,762 | ) |
Income (loss) from discontinued operations |
| (5,647 | ) |
|
| 19,482 |
|
|
| 13,834 |
|
Net income (loss) |
| (13,583 | ) |
|
| (2,345 | ) |
|
| (15,928 | ) |
Attributable to shareholders of Cellectis |
| (10,648 | ) |
|
| (723 | ) |
|
| (11,371 | ) |
Attributable to non-controlling interests |
| (2,935 | ) |
|
| (1,622 | ) |
|
| (4,557 | ) |
Basic / Diluted net income (loss) per share attributable to shareholders of Cellectis |
|
|
|
|
|
|
|
| |||
Basic and diluted net income (loss) attributable to shareholders of Cellectis per share ($ /share) |
| (0.19 | ) |
|
| (0.01 | ) |
|
| (0.20 | ) |
Basic and diluted net income (loss) attributable to shareholders of Cellectis per share ($ /share) from discontinued operations |
| (0.05 | ) |
|
| 0.38 |
|
|
| 0.33 |
|
INTERIM STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME (LOSS) (Unaudited)
| For the three-month period ended June 30, 2023 |
|
| Adjustments |
| For the three-month period ended June 30, 2023 |
| ||||
$ in thousands |
| ||||||||||
Net income (loss) |
| (13,583 | ) |
|
| (2,345 | ) |
|
| (15,928 | ) |
Other comprehensive income (loss) that will not be reclassified subsequently to income or loss from continued operations |
| (21 | ) |
|
|
|
|
| (21 | ) | |
Currency translation adjustment |
| 4,751 |
|
|
| (13 | ) |
|
| 4,736 |
|
Other comprehensive income (loss) that will be reclassified subsequently to income or loss from continuing operations |
| 4,751 |
|
|
| (13 | ) |
|
| 4,736 |
|
Other comprehensive income (loss) from discontinued operations |
| (4,906 | ) |
|
| 13 |
|
|
| (4,892 | ) |
Total Comprehensive income (loss) |
| (13,760 | ) |
|
| (2,345 | ) |
|
| (16,105 | ) |
Attributable to shareholders of Cellectis |
| (11,139 | ) |
|
| (736 | ) |
|
| (11,876 | ) |
Attributable to non-controlling interests |
| (2,620 | ) |
|
| (1,609 | ) |
|
| (4,229 | ) |
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Unaudited)
| Share Capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Equity |
|
|
|
| |||||||||||||||
Number of shares |
|
| Amount |
|
| Premiums related to share capital |
|
| Currency translation adjustment |
|
| Retained earnings (deficit) |
|
| Income |
|
| attributable to shareholders of Cellectis |
|
| Non controlling interests |
|
| Total |
| ||||||||||
As of January 1, 2023 |
| 45,675,968 |
|
|
| 2,955 |
|
|
| 583,122 |
|
|
| (28,605 | ) |
|
| (333,365 | ) |
|
| (106,139 | ) |
|
| 117,968 |
|
|
| 7,973 |
|
|
| 125,941 |
|
Net Loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (40,715 | ) |
|
| (40,715 | ) |
|
| (5,393 | ) |
|
| (46,108 | ) | |||||
Other comprehensive income (loss) |
|
|
|
|
|
|
|
|
|
| (415 | ) |
|
| (42 | ) |
|
| - |
|
|
| (458 | ) |
|
| 1,454 |
|
|
| 997 |
| |||
Total comprehensive income (loss) |
|
|
|
|
|
|
|
|
|
| (415 | ) |
|
| (42 | ) |
|
| (40,715 | ) |
|
| (41,172 | ) |
|
| (3,939 | ) |
|
| (45,111 | ) | |||
Allocation of prior period loss |
|
|
|
|
|
|
|
|
|
|
|
|
| (106,139 | ) |
|
| 106,139 |
|
|
| - |
|
|
|
|
|
| - |
| |||||
Capital increase of Cellectis |
| 9,907,800 |
|
|
| 536 |
|
|
| 24,482 |
|
|
|
|
|
|
|
|
|
|
|
| 25,017 |
|
|
|
|
|
| 25,017 |
| ||||
Transaction costs related to Cellectis’ capital increase |
|
|
|
|
|
|
| (1,455 | ) |
|
|
|
|
| - |
|
|
|
|
|
| (1,455 | ) |
|
|
|
|
| (1,455 | ) | |||||
Operation between shareholders |
|
|
|
|
|
|
|
|
|
|
|
|
| 342 |
|
|
|
|
|
| 342 |
|
|
| (342 | ) |
|
| - |
| |||||
Loss of control over Calyxt |
|
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
| (4,440 | ) |
|
| (4,440 | ) | |||||
OCI Reclassification pursuant to Calyxt's deconsolidation |
|
|
|
|
|
|
|
|
|
| (8,030 | ) |
|
| (12 | ) |
|
|
|
|
| (8,042 | ) |
|
| - |
|
|
| (8,042 | ) | ||||
Non-cash stock-based compensation expense |
|
|
|
|
|
|
| 4,053 |
|
|
|
|
|
| - |
|
|
|
|
|
| 4,053 |
|
|
| 852 |
|
|
| 4,905 |
| ||||
Other movements |
|
|
|
|
|
|
| (133,976 | ) |
|
|
|
|
| 133,824 |
|
|
|
|
|
| (152 | ) |
|
| (105 | ) |
|
| (257 | ) | ||||
As of June 30, 2023 |
| 55,583,768 |
|
|
| 3,491 |
|
|
| 476,224 |
|
|
| (37,050 | ) |
|
| (305,392 | ) |
|
| (40,715 | ) |
|
| 96,558 |
|
|
| 0 |
|
|
| 96,558 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
As of January 1, 2023 |
| 45,675,968 |
|
|
| 2,955 |
|
|
| 583,122 |
|
|
| (28,605 | ) |
|
| (333,365 | ) |
|
| (106,139 | ) |
|
| 117,968 |
|
|
| 7,973 |
|
|
| 125,941 |
|
Net Loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (41,781 | ) |
|
| (41,781 | ) |
|
| (7,384 | ) |
|
| (49,165 | ) | |||||
Other comprehensive income (loss) |
|
|
|
|
|
|
|
|
|
| (439 | ) |
|
| (32 | ) |
|
| - |
|
|
| (471 | ) |
|
| 1,468 |
|
|
| 997 |
| |||
Total comprehensive income (loss) |
|
|
|
|
|
|
|
|
|
| (439 | ) |
|
| (32 | ) |
|
| (41,781 | ) |
|
| (42,252 | ) |
|
| (5,916 | ) |
|
| (48,168 | ) | |||
Allocation of prior period loss |
|
|
|
|
|
|
|
|
|
|
|
|
| (106,139 | ) |
|
| 106,139 |
|
|
| - |
|
|
|
|
|
| - |
| |||||
Capital increase of Cellectis |
| 9,907,800 |
|
|
| 536 |
|
|
| 24,482 |
|
|
|
|
|
|
|
|
|
|
|
| 25,017 |
|
|
|
|
|
| 25,017 |
| ||||
Transaction costs related to Cellectis’ capital increase |
|
|
|
|
|
|
| (1,455 | ) |
|
|
|
|
| - |
|
|
|
|
|
| (1,455 | ) |
|
|
|
|
| (1,455 | ) | |||||
Operation between shareholders |
|
|
|
|
|
|
|
|
|
|
|
|
| 342 |
|
|
|
|
|
| 342 |
|
|
| (342 | ) |
|
| - |
| |||||
Loss of control over Calyxt |
|
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
| (3,625 | ) |
|
| (3,625 | ) | |||||
OCI Reclassification pursuant to Calyxt's deconsolidation |
|
|
|
|
|
|
|
|
|
| (8,007 | ) |
|
| (12 | ) |
|
|
|
|
| (8,019 | ) |
|
| - |
|
|
| (8,019 | ) | ||||
Non-cash stock-based compensation expense |
|
|
|
|
|
|
| 5,119 |
|
|
|
|
|
| - |
|
|
|
|
|
| 5,119 |
|
|
| 2,006 |
|
|
| 7,125 |
| ||||
Other movements |
|
|
|
|
|
|
| (133,976 | ) |
|
|
|
|
| 133,814 |
|
|
|
|
|
| (163 | ) |
|
| (95 | ) |
|
| (257 | ) | ||||
As of June 30, 2023 |
| 55,583,768 |
|
|
| 3,491 |
|
|
| 477,291 |
|
|
| (37,050 | ) |
|
| (305,392 | ) |
|
| (41,781 | ) |
|
| 96,558 |
|
|
| 0 |
|
|
| 96,558 |
|
F-21
For the nine-month periods ended September 30, 2023
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Unaudited)
As of September 30, 2023 |
|
| Adjustments |
| As of September 30, 2023 |
| |||||
$ in thousands |
| ||||||||||
ASSETS |
|
|
|
|
|
|
|
| |||
Total non-current assets |
| 113,205 |
|
|
|
|
|
| 113,205 |
| |
Total current assets |
| 96,494 |
|
|
|
|
|
| 96,494 |
| |
Total assets held for sale |
|
|
|
|
|
|
|
| |||
TOTAL ASSETS |
| 209,700 |
|
|
|
|
|
| 209,700 |
| |
|
|
|
|
|
|
|
|
| |||
LIABILITIES |
|
|
|
|
|
|
|
| |||
Shareholders’ equity |
|
|
|
|
|
|
|
| |||
Share capital |
| 3,492 |
|
|
|
|
|
| 3,492 |
| |
Premiums related to the share capital |
| 473,325 |
|
|
| 1,066 |
|
|
| 474,391 |
|
Currency translation adjustment |
| (37,505 | ) |
|
|
|
|
| (37,505 | ) | |
Retained earnings |
| (304,994 | ) |
|
|
|
|
| (304,994 | ) | |
Net income (loss) |
| (58,197 | ) |
|
| (1,066 | ) |
|
| (59,264 | ) |
Total shareholders’ equity - Group Share |
| 76,123 |
|
|
|
|
|
| 76,123 |
| |
Non-controlling interests |
|
|
|
|
|
|
|
| |||
Total shareholders’ equity |
| 76,123 |
|
|
|
|
|
| 76,123 |
| |
Total non-current liabilities |
| 89,625 |
|
|
|
|
|
| 89,625 |
| |
Total current liabilities |
| 43,953 |
|
|
|
|
|
| 43,953 |
| |
Total liabilities related to asset held for sale |
|
|
|
|
|
|
|
| |||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
| 209,700 |
|
|
|
|
|
| 209,700 |
| |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
For the nine-month period ended September 30, 2023 |
|
| Adjustments |
| For the nine-month period ended September 30, 2023 |
| |||||
$ in thousands |
| ||||||||||
Total revenues and other income |
| 7,203 |
|
|
|
|
|
| 7,203 |
| |
Total operating expenses |
| (74,926 | ) |
|
|
|
|
| (74,926 | ) | |
Operating income (loss) |
| (67,723 | ) |
|
|
|
|
| (67,723 | ) | |
Financial income |
| 37,960 |
|
|
| (21,827 | ) |
|
| 16,133 |
|
Financial expenses |
| (23,085 | ) |
|
|
|
|
| (23,085 | ) | |
Net Financial gain (loss) |
| 14,875 |
|
|
| (21,827 | ) |
|
| (6,952 | ) |
Income tax |
| (365 | ) |
|
|
|
|
| (365 | ) | |
Income (loss) from continuing operations |
| (53,213 | ) |
|
| (21,827 | ) |
|
| (75,040 | ) |
Income (loss) from discontinued operations |
| (10,377 | ) |
|
| 18,769 |
|
|
| 8,392 |
|
Net income (loss) |
| (63,590 | ) |
|
| (3,058 | ) |
|
| (66,648 | ) |
Attributable to shareholders of Cellectis |
| (58,197 | ) |
|
| (1,066 | ) |
|
| (59,264 | ) |
Attributable to non-controlling interests |
| (5,393 | ) |
|
| (1,991 | ) |
|
| (7,384 | ) |
Basic / Diluted net income (loss) per share attributable to shareholders of Cellectis |
|
|
|
|
|
|
|
| |||
Basic and diluted net income (loss) attributable to shareholders of Cellectis per share ($ /share) |
| (1.07 | ) |
|
| (0.02 | ) |
|
| (1.09 | ) |
Basic and diluted net income (loss) attributable to shareholders of Cellectis per share ($ /share) from discontinued operations |
| (0.09 | ) |
|
| 0.38 |
|
|
| 0.29 |
|
INTERIM STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME (LOSS) (Unaudited)
| For the nine-month period ended September 30, 2023 |
|
| Adjustments |
| For the nine-month period ended September 30, 2023 |
| ||||
$ in thousands |
| ||||||||||
Net income (loss) |
| (63,590 | ) |
|
| (3,058 | ) |
|
| (66,648 | ) |
Other comprehensive income (loss) that will not be reclassified subsequently to income or loss from continued operations |
| 55 |
|
|
|
|
|
| 55 |
| |
Currency translation adjustment |
| 1,620 |
|
|
| (18 | ) |
|
| 1,602 |
|
Other comprehensive income (loss) that will be reclassified subsequently to income or loss from continuing operations |
| 1,620 |
|
|
| (18 | ) |
|
| 1,602 |
|
Other comprehensive income (loss) from discontinued operations |
| (1,012 | ) |
|
| 18 |
|
|
| (994 | ) |
Total Comprehensive income (loss) |
| (62,927 | ) |
|
| (3,058 | ) |
|
| (65,985 | ) |
Attributable to shareholders of Cellectis |
| (59,002 | ) |
|
| (1,084 | ) |
|
| (60,086 | ) |
Attributable to non-controlling interests |
| (3,925 | ) |
|
| (1,974 | ) |
|
| (5,899 | ) |
F-22
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Unaudited)
| Share Capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Equity |
|
|
|
| |||||||||||||||
Number of shares |
|
| Amount |
|
| Premiums related to share capital |
|
| Currency translation adjustment |
|
| Retained earnings (deficit) |
|
| Income |
|
| attributable to shareholders of Cellectis |
|
| Non controlling interests |
|
| Total |
| ||||||||||
As of January 1, 2023 |
| 45,675,968 |
|
|
| 2,955 |
|
|
| 583,122 |
|
|
| (28,605 | ) |
|
| (333,365 | ) |
|
| (106,139 | ) |
|
| 117,968 |
|
|
| 7,973 |
|
|
| 125,941 |
|
Net Loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (58,197 | ) |
|
| (58,197 | ) |
|
| (5,393 | ) |
|
| (63,590 | ) | |||||
Other comprehensive income (loss) |
|
|
|
|
|
|
|
|
|
| (859 | ) |
|
| 55 |
|
|
|
|
|
| (805 | ) |
|
| 1,468 |
|
|
| 663 |
| ||||
Total comprehensive income (loss) |
|
|
|
|
|
|
|
|
|
| (859 | ) |
|
| 55 |
|
|
| (58,197 | ) |
|
| (59,002 | ) |
|
| (3,925 | ) |
|
| (62,927 | ) | |||
Allocation of prior period loss |
|
|
|
|
|
|
|
|
|
|
|
|
| (106,139 | ) |
|
| 106,139 |
|
|
|
|
|
|
|
|
|
| |||||||
Capital increase of Cellectis |
| 9,907,800 |
|
|
| 537 |
|
|
| 24,536 |
|
|
|
|
|
|
|
|
|
|
|
| 25,073 |
|
|
|
|
|
| 25,073 |
| ||||
Transaction costs related to Cellectis’ capital increase |
|
|
|
|
|
|
| (1,459 | ) |
|
|
|
|
|
|
|
|
|
|
| (1,459 | ) |
|
|
|
|
| (1,459 | ) | ||||||
Operation between shareholders |
|
|
|
|
|
|
|
|
|
|
|
|
| 343 |
|
|
|
|
|
| 343 |
|
|
| (343 | ) |
|
|
| ||||||
Loss of control over Calyxt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (4,440 | ) |
|
| (4,440 | ) | |||||||
OCI Reclassification pursuant to Calyxt's deconsolidation |
|
|
|
|
|
|
|
|
|
| (8,041 | ) |
|
| (19 | ) |
|
|
|
|
| (8,060 | ) |
|
|
|
|
| (8,060 | ) | |||||
Non-cash stock-based compensation expense |
|
|
|
|
|
|
| 1,400 |
|
|
|
|
|
|
|
|
|
|
|
| 1,400 |
|
|
| 852 |
|
|
| 2,252 |
| |||||
Other movements |
|
|
|
|
|
|
| (134,273 | ) |
|
|
|
|
| 134,131 |
|
|
|
|
|
| (142 | ) |
|
| (117 | ) |
|
| (259 | ) | ||||
As of September 30, 2023 |
| 55,583,768 |
|
|
| 3,492 |
|
|
| 473,325 |
|
|
| (37,505 | ) |
|
| (304,994 | ) |
|
| (58,197 | ) |
|
| 76,121 |
|
|
| (0 | ) |
|
| 76,123 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
As of January 1, 2023 |
| 45,675,968 |
|
|
| 2,955 |
|
|
| 583,122 |
|
|
| (28,605 | ) |
|
| (333,365 | ) |
|
| (106,139 | ) |
|
| 117,968 |
|
|
| 7,973 |
|
|
| 125,941 |
|
Net Loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (59,264 | ) |
|
| (59,264 | ) |
|
| (7,384 | ) |
|
| (66,648 | ) | |||||
Other comprehensive income (loss) |
|
|
|
|
|
|
|
|
|
| (877 | ) |
|
| 55 |
|
|
| - |
|
|
| (822 | ) |
|
| 1,485 |
|
|
| 663 |
| |||
Total comprehensive income (loss) |
|
|
|
|
|
|
|
|
|
| (877 | ) |
|
| 55 |
|
|
| (59,264 | ) |
|
| (60,086 | ) |
|
| (5,899 | ) |
|
| (65,985 | ) | |||
Allocation of prior period loss |
|
|
|
|
|
|
|
|
|
|
|
|
| (106,139 | ) |
|
| 106,139 |
|
|
|
|
|
|
|
|
|
| |||||||
Capital increase of Cellectis |
| 9,907,800 |
|
|
| 537 |
|
|
| 24,536 |
|
|
|
|
|
|
|
|
|
|
|
| 25,073 |
|
|
|
|
|
| 25,073 |
| ||||
Transaction costs related to Cellectis’ capital increase |
|
|
|
|
|
|
| (1,459 | ) |
|
|
|
|
|
|
|
|
|
|
| (1,459 | ) |
|
|
|
|
| (1,459 | ) | ||||||
Operation between shareholders |
|
|
|
|
|
|
|
|
|
|
|
|
| 343 |
|
|
|
|
|
| 343 |
|
|
| (343 | ) |
|
|
| ||||||
Loss of control over Calyxt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (3,625 | ) |
|
| (3,625 | ) | |||||||
OCI Reclassification pursuant to Calyxt's deconsolidation |
|
|
|
|
|
|
|
|
|
| (8,024 | ) |
|
| (12 | ) |
|
|
|
|
| (8,036 | ) |
|
| - |
|
|
| (8,036 | ) | ||||
Non-cash stock-based compensation expense |
|
|
|
|
|
|
| 2,466 |
|
|
|
|
|
| - |
|
|
|
|
|
| 2,466 |
|
|
| 2,006 |
|
|
| 4,472 |
| ||||
Other movements |
|
|
|
|
|
|
| (134,273 | ) |
|
|
|
|
| 134,125 |
|
|
|
|
|
| (148 | ) |
|
| (111 | ) |
|
| (259 | ) | ||||
As of September 30, 2023 |
| 55,583,768 |
|
|
| 3,492 |
|
|
| 474,391 |
|
|
| (37,505 | ) |
|
| (304,994 | ) |
|
| (59,264 | ) |
|
| 76,121 |
|
|
| 0 |
|
|
| 76,123 |
|
Non-controlling interests
Non-controlling shareholders held a 50.9% interest in Calyxt as of December 31, 2022 and a 52.0% interest in Calyxt as of May 31, 2023. These non-controlling interests were generated during the initial public offering of Calyxt, subsequent follow-on offerings and Calyxt’s at-the-market (ATM) offering program, as well as through vesting and exercises of equity awards.
Effective June 1, 2023, there are no longer non-controlling interests as the Group holds a 100% interest in all consolidated entities.
Note 3.4. Information concerning the Group’s Consolidated Operations
3.14.1 Revenues and other income
Accounting policies
Collaboration agreements and licenses
Under IFRS 15, “Revenue from contracts with customers”, revenue is recognized when Cellectis satisfies a performance obligation by transferring a distinct good or service (or a distinct bundle of goods and/or services) to a customer, i.e. when the customer obtains control of these goods or services.
We enterhave entered into certain research and development collaboration agreements that may consist ofnon-refundable upfront payments, payments for the salelicensing of rights to technology, milestoneresearch and development programs, research and development cost reimbursements and royalties. We have analyzed the agreements to identify the separate performance obligations.
These collaboration agreements may generate cash flows through non-refundable upfront payments royaltiesrelated to the licensing of rights to technology and research and development cost reimbursements. In addition, we license our technology to third parties, which may be part of theprograms, milestone payments research and development collaboration agreements.
Non-refundable upfront payments are deferredcost reimbursements and recognized as revenue over the periodroyalties. Licensing of the collaboration agreement. Sales ofrights to technology pursuant tonon-cancelable,non-refundablefixed-fee non-refundable fixed and upfront fee arrangements are recognized when such technology is delivered to theco-contracting co- contracting party and our exclusive rights to access the technology have stopped.
Up-front payments for research and development programs are deferred as a contract liability and recognized when the performance obligation is satisfied, as the customer receives the benefits of the services. When a specific research and development program is put on hold, as agreed by our customer as part of a joint executive committee decision, the revenue recognition continues to be deferred until research and development efforts resume. If the joint decision is to abandon the project, deferred revenue is fully recognized.
Research and development costs reimbursements are recognized on a time and material basis over the length of the specific research and development project.
Milestone payments represent amounts received from our collaborators,variable consideration, the receipt of which is dependent upon the achievement of certain scientific, regulatory, or commercial milestones. Such payments are considered variable consideration. We recognize milestone payments when it is highly probable that any revenue recognized will not be subsequently reversed. This includes consideration of whether the performance obligation is achieved and may be when the triggering event has occurred, depending on the nature of the triggering event, there are no further contingencies or services to be provided with respect to that event, and theco-contracting party has no right to
F-23
require refund of payment. The triggering event may be scientific results achieved by us or another party to the arrangement, regulatory approvals, or the marketing of products developed under the arrangement.
Royalty revenues arise from our contractual entitlement to receive a percentage of product sales achieved byco-contracting parties. parties under our license arrangements. As we have no products approved for sale, we have not received any royalty revenue from commercial sales to date. Royalty revenues, if earned, will be recognized on an accrual basis in accordance withat the termslater of when (1) the collaboration agreement when sales can be determined reliablysubsequent sale or usage occurs; and there is reasonable assurance that(2) the receivables from outstandingperformance obligation to which the sales-based or usage-based royalties will be collected.relates has been satisfied.
F-17
ResearchIn addition, we license our technology to other third parties and development costs reimbursements are recognized with respect to the policy described in section “Sales of products and services” below.
Revenues from technology licensesrevenues are recognized ratably over the period of the license agreements.
Sales of products and services
Revenues on sales of products and services are recognized when significant risks and rewards of ownership have beenat the point in time once the control over the delivered products is transferred to the customer. customer, which is based on shipping terms. Sales include shipping and handling charges if billed to the customer and are reported net of trade promotion and other costs, including estimated allowances for returns, unsalable product and prompt pay discounts. Sales, use, value-added and other excise taxes are not recognized in revenue.
Our sales of product are related to our electroporation solution sent to one of our partners for the use of a specific machine.
We also offer research services, which arerevenue is recognized over time, as revenues when the services are rendered, either on a time and materials basis, or ratably overcustomer receives the contract period for fixed payment arrangements.benefits of the services.
Research Tax Credit
The main Research Tax Credit thatfrom which we benefit is theCrédit d’Impôt Recherche, or “CIR”, which is granted to entities by the French tax authorities in order to encourage them to conduct technical and scientific research. Entities that demonstrate that their research expenditures meet the required CIR criteria receive a tax credit. As a general principle, such R&D tax credit that maycan be used foroffset against the payment of theircorporate income tax (“CIT”) due foron the fiscalprofits of the financial year induring which the expenditures wereexpenses have been incurred as well as inand the nextfollowing three years. If taxes due are not sufficient to cover the full amount of tax credit at the endyears; any unused portion of the three-year period, the differencecredit is repaid in cash to the entitythen refunded by the authorities. IfFrench treasury (except for specific cases like e.g. if the Company can be qualified as small and medium-sized enterprises in France (the “PME”)). Indeed, if a company meets certain criteria in terms of sales, headcount or assets to be considered a small/middle size company, such company can request immediate paymentrefund of the Research Tax Credit can be requested.remaining tax credit, without application of the three-year period. As from January 2022, Cellectis S.A. and its French subsidiaries, when they existed, meetno longer meets such criteria.
We apply for CIR for research expenditures incurred in each fiscal year and recognize the amount claimed in the line item “Other income” in the same fiscal year. Research tax credit is subject to audit of tax authorities. When tax authorities’ payment related to CIR is late, default interests are applied and are recognized in “other income”.
Details of revenues and other income
Revenues by country of origin and other income
| For the year ended December 31, |
| For the year ended December 31, |
| |||||||||||||||||||||
| 2015 | 2016 | 2017 | 2021 |
|
| 2022 |
|
| 2023 |
| ||||||||||||||
| $ in thousands | $ in thousands |
| ||||||||||||||||||||||
From France | 55,816 | 44,409 | 24,680 |
|
| 30,347 |
|
|
| 19,171 |
|
|
| 755 |
| |||||||||
From USA | 49 | 399 | 508 |
|
| - |
|
|
| - |
|
|
| - |
| |||||||||
|
|
| ||||||||||||||||||||||
Revenues | 55,864 | 44,808 | 25,188 |
| 30,347 |
|
|
| 19,171 |
|
|
| 755 |
| ||||||||||
|
|
| ||||||||||||||||||||||
Research tax credit | 5,591 | 10,038 | 8,327 |
| 8,239 |
|
|
| 6,546 |
|
|
| 6,582 |
| ||||||||||
Subsidies and other | 1,110 | 1,599 | 201 |
|
| 11 |
|
|
| 7 |
|
|
| 1,856 |
| |||||||||
|
|
| ||||||||||||||||||||||
Other income | 6,701 | 11,637 | 8,528 |
| 8,250 |
|
|
| 6,553 |
|
|
| 8,438 |
| ||||||||||
|
|
| ||||||||||||||||||||||
Total revenues and other income | 62,565 | 56,444 | 33,715 |
| 38,597 |
|
|
| 25,725 |
|
|
| 9,193 |
| ||||||||||
|
|
| ||||||||||||||||||||||
Revenues by nature
|
| For the year ended December 31, |
| |||||||||
|
| 2021 |
|
| 2022 |
|
| 2023 |
| |||
|
| $ in thousands |
| |||||||||
Other revenues from collaboration agreements |
|
| 29,971 |
|
|
| 18,230 |
|
|
| - |
|
Collaboration agreements |
|
| 29,971 |
|
|
| 18,230 |
|
|
| - |
|
Licenses |
|
| 250 |
|
|
| 686 |
|
|
| 605 |
|
Products & services |
|
| 125 |
|
|
| 255 |
|
|
| 150 |
|
Total revenues |
|
| 30,347 |
|
|
| 19,171 |
|
|
| 755 |
|
The decrease of revenues from France between the year ended December 31, 2022 and 2023 mainly reflects (i) the recognition of a $15.8 million milestone from Servier in connection with the first patient dosed in the Allogene ALPHA2 Study in 2022, (ii) the recognition of two milestones in connection with Target B2M and Target TGFERII under Cellectis’ agreement with Cytovia for an aggregate of $1.5 million in 2022 and (iii) the recognition of $1.0 million related to the change of control of a licensee pursuant to the terms of its license agreement with Cellectis and the amendment to such license agreement (extension of its option term) in 2022, while recognition of revenues for the year ended December 31, 2023 is mainly related to Iovance research collaboration and exclusive license agreement.
The increase in other income of $1.9 million between the year ended December 31, 2022 and 2023 reflects the recognition of a $1.7 million income related to the first two milestones of the grant and refundable advance agreement signed with Bpifrance (“BPI”) to partially support a R&D program related to Cellectis’ UCART 20x22. Pursuant to the grant and refundable advance agreement with BPI, we received $0.9 million as a first installment of the refundable advance on June 19, 2023 and $1.9 million as a second installment
F-24
of the refundable advance on October 6, 2023. The refundable advance from BPI can be analyzed as a government loan as defined by IAS 20. Because this loan bears a lower-than-market interest rate, we measure for each installment the fair value of the loan using a market interest rate and recognize the difference with the cash received as a grant. Based on a market rate of 16.1% for the first installment and 15.2% for the second installment, determined using the credit spread observed for loans contracted by Cellectis over a comparable term, we measured the fair value of the loan at $1.4 million, resulting in a grant of $1.4 million. During the year, we also received $0.3 million corresponding to the first two instalments of the grant portion of the agreement. As the subsidized expenses have been incurred and the contractual conditions for obtaining the subsidy have been met, the fair-valued grant of $1.4 million and the $0.3 million of contractual grant have been recognized in Other income for a total $1.7 million.
For the year ended December 31, 2021, other revenues from collaboration agreements include the recognition point in time of $20.0 million of upfront amounts related to the grant of a right-of-use license as part of the agreement signed between Cellectis and Cytovia Therapeutics Inc. on February 12, 2021 and the recognition of two milestones related to Cellectis’ agreement with Allogene Therapeutics Inc. for $10.0 million. The agreement with Cytovia provides for several types of financial compensation to Cellectis, including cash compensation of $20 million, as well as cash milestones payments, cash upfront payment upon delivery of products and single-digit royalties. However, on November 30, 2023, we notified Cytovia of the termination of the Cytovia Agreement with immediate effect and we therefore do not expect to receive any further revenue or financial compensation under the Cytovia Agreement.
For the years ended December 31, 2017, 20162023, 2022 and 2015, the revenue from France was generated by Cellectis S.A.2021, revenues related to licenses includes royalties received under our various license agreements.
For the years ended December 31, 2017, 20162023, 2022 and 2015, the revenue from USA was generated by Calyxt Inc.
F-18
Revenues by nature
| For the year ended December 31, | ||||||||||||
| 2015 | 2016 | 2017 | ||||||||||
| $ in thousands | ||||||||||||
Recognition of previously deferred upfront payments | 23,864 | 20,856 | 14,875 | |||||||||
Other revenues | 29,716 | 21,035 | 7,945 | |||||||||
|
|
|
|
|
| |||||||
Collaboration agreements | 53,580 | 41,891 | 22,821 | |||||||||
|
|
|
|
|
| |||||||
Licenses | 2,236 | 2,771 | 2,270 | |||||||||
Products & services | 48 | 145 | 97 | |||||||||
|
|
|
|
|
| |||||||
Total revenues | 55,864 | 44,808 | 25,188 | |||||||||
|
|
|
|
|
| |||||||
Revenues are primarily generated by therapeutics activities, which is mainly attributable to our entering into two major collaboration agreements signed with Pfizer Inc. and Les Laboratoires Servier during 2014. The revenues of plants activities are generated by technology licenses and amounted to $49 thousand, $0.6 million and $0.5 million for years ended December 31, 2015, 2016 and 2017, respectively.
Entity-wide disclosures:
In 2017, two clients represent2021, one client represents more than 10% of the total revenue:revenue respectively Client A with 11% and57%, Client A with 82%, Client A with 45%, Client B with 69%35% and Client C with 18%.
In 2016, two clients represent more than 10%
On October 2023, Cellectis officially entered into a litigation procedure with a third party with the validation of an Arbitral Tribunal by the Paris Mediation and Arbitration Center. Cellectis' management, concurrent with its legal counsels, consider there is no possible contingent liability nor probable contingent asset at the date of the total revenue: Client A with 37% and Client B with 57%.report.
In 2015, three clients represent more than 10% of the total revenue: Client A with 49% and Client B with 47%.
3.24.2 Operating expenses
Accounting policies
Royalty expenses correspondscorrespond to costs from license agreements that we entered into to obtain access to technology that we use in our product development efforts. Depending on the contractual provisions, expenses are based either on a percentage of revenue generated by using the patents orbased on fixed annual royalties.royalties or conditioned by milestones.
Research and development expenses include employee-related costs, laboratory consumables, materials supplies and facility costs, as well as fees paid tonon-employees and entities to conduct research and development activities on our behalf. They also include expenses associated with obtaining patents. The costs associated with manufacturing of product candidates are recorded depending on the use of the material. If products are not intended to be used in clinical studies, we recognize the expense when the product is delivered. If they are intended to be used for clinical studies, the expense is recognized when the certificate of compliance is obtained.
Selling, general and administrative expenses consist primarily of employee-related expenses for executive, business development, intellectual property, finance, legal and human resource functions. Administrative expenses also include facility-related costs and service fees, other professional services, recruiting fees and expenses associated with maintaining patents.
We classify a portion of personnel and other costs related to information technology, human resources, business development, legal, intellectual property and general management in research and development expenses based on the time that each employee or person spent contributing to research and development activities versus sales, general and administrative activities.
F-19F-25
Details of operating expenses by nature
| For the year ended December 31, | For the year ended December 31, |
| ||||||||||||||||||
Cost of revenue |
| 2022 |
|
| 2023 |
| ||||||||||||||
| 2015 | 2016 | �� | 2017 |
|
|
|
|
| ||||||||||||
| $ in thousands | ||||||||||||||||||||
Cost of goods sold |
|
| 0 |
|
|
| - |
| ||||||||||||
Royalty expenses | (2,746 | ) | (1,777 | ) | (2,620 | ) |
|
| (1,772 | ) |
|
| (737 | ) | ||||||
Cost of revenue |
|
| (1,772 | ) |
|
| (737 | ) | ||||||||||||
|
|
|
|
| ||||||||||||||||
| For the year ended December 31, | For the year ended December 31, |
| ||||||||||||||||||
| Research and development expenses | 2015 | 2016 | 2017 |
| 2022 |
|
| 2023 |
| |||||||||||
|
|
|
|
| ||||||||||||||||
| $ in thousands | ||||||||||||||||||||
Wages and salaries | (10,151 | ) | (11,924 | ) | (12,986 | ) |
|
| (38,523 | ) |
|
| (32,936 | ) | ||||||
Social charges on free shares and stock option grants | (8,626 | ) | (3,851 | ) | (1,088 | ) | ||||||||||||||
Non-cash stock based compensation expense | (20,563 | ) | (33,207 | ) | (23,832 | ) | ||||||||||||||
|
|
| ||||||||||||||||||
Social charges on stock option grants |
|
| 10 |
|
|
| (270 | ) | ||||||||||||
Non-cash stock-based compensation expense |
|
| (4,098 | ) |
|
| (3,952 | ) | ||||||||||||
Personnel expenses | (39,341 | ) | (48,982 | ) | (37,906 | ) |
|
| (42,610 | ) |
|
| (37,158 | ) | ||||||
|
|
| ||||||||||||||||||
Purchases and external expenses | (16,920 | ) | (27,720 | ) | (38,458 | ) |
|
| (37,736 | ) |
|
| (32,996 | ) | ||||||
Other | (1,893 | ) | (1,756 | ) | (2,863 | ) |
|
| (17,154 | ) |
|
| (17,492 | ) | ||||||
|
|
| ||||||||||||||||||
Total research and development expenses | (58,154 | ) | (78,458 | ) | (79,227 | ) |
|
| (97,501 | ) |
|
| (87,646 | ) | ||||||
|
|
| ||||||||||||||||||
|
|
|
|
| ||||||||||||||||
| For the year ended December 31, | For the year ended December 31, |
| ||||||||||||||||||
| Selling, general and administrative expenses | 2015 | 2016 | 2017 |
| 2022 |
|
| 2023 |
| |||||||||||
| $ in thousands |
|
|
|
|
| |||||||||||||||
Wages and salaries | (3,959 | ) | (4,978 | ) | (7,019 | ) |
|
| (5,686 | ) |
|
| (5,994 | ) | ||||||
Social charges on free shares and stock option grants | (4,937 | ) | (3,130 | ) | (881 | ) | ||||||||||||||
Non-cash stock based compensation expense | (12,839 | ) | (25,415 | ) | (26,586 | ) | ||||||||||||||
Social charges on stock option grants |
|
| (43 | ) |
|
| (106 | ) | ||||||||||||
Non-cash stock-based compensation expense |
|
| (1,945 | ) |
|
| (1,281 | ) | ||||||||||||
Personnel expenses |
|
| (7,674 | ) |
|
| (7,381 | ) | ||||||||||||
Purchases and external expenses |
|
| (6,712 | ) |
|
| (6,682 | ) | ||||||||||||
Other |
|
| (3,108 | ) |
|
| (2,749 | ) | ||||||||||||
Total selling, general and administrative expenses |
|
| (17,494 | ) |
|
| (16,812 | ) | ||||||||||||
|
|
|
|
|
| |||||||||||||||
|
|
|
|
|
| |||||||||||||||
|
|
| For the year ended December 31, |
| ||||||||||||||||
Personnel expenses | (21,735 | ) | (33,523 | ) | (34,486 | ) |
| 2022 |
|
| 2023 |
| ||||||||
|
|
|
|
|
|
|
| |||||||||||||
Purchases and external expenses | (6,765 | ) | (8,854 | ) | (9,138 | ) | ||||||||||||||
Other | (1,723 | ) | (1,035 | ) | (1,126 | ) | ||||||||||||||
Wages and salaries |
|
| (44,209 | ) |
|
| (38,930 | ) | ||||||||||||
Social charges on stock option grants |
|
| (33 | ) |
|
| (376 | ) | ||||||||||||
Non-cash stock-based compensation expense |
|
| (6,043 | ) |
|
| (5,233 | ) | ||||||||||||
Total personnel expenses |
|
| (50,285 | ) |
|
| (44,539 | ) | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total selling, general and administrative expenses | (30,223 | ) | (43,413 | ) | (44,750 | ) | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
| For the year ended December 31, |
| ||||||||||||||||||
|
| 2022 |
|
| 2023 |
| ||||||||||||||
|
|
|
|
|
| |||||||||||||||
Other operating income (expenses) |
|
| 1,377 |
|
|
| (1,300 | ) | ||||||||||||
| For the year ended December 31, | ||||||||||||
Personnel expenses | 2015 | 2016 | 2017 | |||||||||
|
|
|
|
|
| |||||||
| $ in thousands | ||||||||||||
Wages and salaries | (14,110 | ) | (16,902 | ) | (20,005 | ) | ||||||
Social charges on free shares and stock option grants | (13,564 | ) | (6,981 | ) | (1,969 | ) | ||||||
Non-cash stock based compensation expense | (33,402 | ) | (58,622 | ) | (50,418 | ) | ||||||
|
|
|
|
|
| |||||||
Total personnel expenses | (61,076 | ) | (82,505 | ) | (72,392 | ) | ||||||
|
|
|
|
|
| |||||||
3.3
The decrease in total operating expenses of 8.9 million from the year ended December 31, 2023 to the year ended December 31, 2022 resulted primarily from (i) a decrease of $4.8 million in purchases, external expenses and other, due to continuing internalization of manufacturing and quality control activities, (ii) a decrease of $5.3 million in wages due to headcount reduction, (iii) a decrease of $0.8 million in non-cash stock based compensation expense related to the non-achievement of performance targets on one plan and, (iv) a decrease of $1.0 million in cost of revenues due to the diminution of milestones recognized over the period, partially offset by a (i) an increase of other operating expenses of $2.7 million due to the recognition of costs related to a commercial litigation for $0.5 million and the unfavorable outcome of the litigation with the French administration which led to the reimbursement of $0.7m of research tax credit and the provision for risk of $0.5 million related to 2015 and 2016 research tax credit and the favorable outcome of a claim with the French social tax authorities regarding tax on stock options for $1.0 million that was a one-off recognized in 2022 (ii) a $0.3 million increase in social charges on stock option grants expenses due to additional departures in 2022.
4.3 Financial income and expenses
Accounting policies
Financial income and financial expense include, in particular, the following:
F-20F-26
Details of financial income and expenses
| For the year ended December 31, | ||||||||||||
| 2015 | 2016 | 2017 | ||||||||||
| $ in thousands | ||||||||||||
Interest income | 1,094 | 1,630 | 1,974 | |||||||||
Foreign exchange gain | 9,094 | 4,832 | 1,185 | |||||||||
Other financial income | 65 | 689 | 4,102 | |||||||||
|
|
|
|
|
| |||||||
Total financialincome | 10,253 | 7,147 | 7,262 | |||||||||
|
|
|
|
|
| |||||||
Interest expenses | (1 | ) | — | — | ||||||||
Interest expenses for finance lease | (23 | ) | (7 | ) | (4 | ) | ||||||
Foreign exchange loss | (1,846 | ) | (4,201 | ) | (17,734 | ) | ||||||
Other financial expenses | (6 | ) | (2,895 | ) | (556 | ) | ||||||
|
|
|
|
|
| |||||||
Total financial expenses | (1,876 | ) | (7,101 | ) | (18,294 | ) | ||||||
|
|
|
|
|
| |||||||
Total | 8,378 | 46 | (11,032 | ) | ||||||||
|
|
|
|
|
| |||||||
|
| For the year ended December 31, |
| |||||||||
Financial income and expenses | 2021 |
| 2022 |
| 2023 |
| ||||||
|
|
|
|
|
|
| ||||||
Income from cash, cash equivalents and financial assets |
|
| 719 |
|
|
| 1,120 |
|
|
| 3,614 |
|
Foreign exchange gains |
|
| 11,860 |
|
|
| 7,541 |
|
|
| 17,618 |
|
Gain on fair value measurement |
|
|
|
|
|
|
|
| 245 |
| ||
Other financial income |
|
| 638 |
|
|
| 219 |
|
|
| 2 |
|
Financial income |
| 13,218 |
|
|
| 8,880 |
|
|
| 21,479 |
| |
Interest on financial liabilities |
|
| (368 | ) |
|
| (371 | ) |
|
| (2,246 | ) |
Foreign exchange losses |
|
| (2,119 | ) |
|
| (1,481 | ) |
|
| (13,402 | ) |
Loss on fair value measurement |
|
|
|
|
|
|
| (20,813 | ) | |||
Interest on lease liabilities |
|
| (3,803 | ) |
|
| (3,416 | ) |
|
| (3,061 | ) |
Other financial expenses |
|
| (197 | ) |
|
| (12,546 | ) |
|
| (1,121 | ) |
Financial expenses |
| (6,486 | ) |
|
| (17,815 | ) |
|
| (40,642 | ) | |
Net financial gain (loss) |
| 6,731 |
|
|
| (8,935 | ) |
|
| (19,163 | ) | |
The increase in financial income of $12,6 million between the year period ended December 31, 2022 and 2023 is mainly attributable to an increase in gain from our financial investments of $2.5 million and a $0.2 million gain on money market funds fair value measurement, an increase in the foreign exchange gain of $10.1 million (from a $7.5 million gain in 2022 to a $17.6 million gain in 2023, of which $8.0 million are reclassified from other comprehensive income pursuant to Calyxt’s deconsolidation).
The increase in financial expenses of $22.8 million between the years ended December 31, 2022 and 2023 is mainly attributable to the loss in fair value on our retained investment in Cibus since Calyxt's deconsolidation for $5.9 million, the $5.7 million loss in fair value of the derivative instrument on the Subsequent Investment Agreement with AstraZeneca (see following paragraph), a $11.9 million increase in foreign exchange loss (from a $1.5 million loss in 2022 to a $13.4 million loss in 2023), a $2.4 million loss on change in fair value of the EIB warrants, an interest expense on EIB loan of $1.5 million, and a BPI research tax credit prefinancing interest expense of $0.4 million, partially offset by a $4.4 million decrease in the financial loss related to Cytovia's receivable ($7.8 million loss in 2023 compared with a $12.1 million loss in 2022) and a $0.4 million decrease of interest expense on lease liabilities.
Cellectis signed the Subsequent Investment Agreement on November 14, 2023, for an additional equity investment of $140 million by AstraZeneca Holdings. The Subsequent Investment Agreement contains as a derivative instrument that has been recognized according to the principles of IFRS 9 (see Note 2.6 to our consolidated financial statements). The derivative is initially recognized at its fair value and measured subsequently at fair value through profit or loss. The derivative fair value is $48.4 million at initial recognition on November 14, 2023, and is $42.7 million as of December 31, 2023, resulting in a $5.7 million loss in fair value recognized in profit and loss over the period.
The decrease in financial income of $4.3 million between the year period ended December 31, 2021 and expenses between 2016 and 2017 of $11.1 million2022 was mainly attributable to a decrease of the foreign exchange gain for $4.3 million (from a $11.9 million gain in 2021 to a $7.5 million gain in 2022). The increase in netfinancial expenses of $11.3 million between the year ended December 31, 2021 and 2022 was mainly attributable to Cytovia’s convertible note change in fair value of $(12.1) million, partially offset by a $0.6 million decrease in foreign exchange loss ($17.2 million), partly offset by the increase of foreign exchange derivatives fair value adjustment ($5.8 million), the increase(from a $2.1 million loss in 2021 to a $1.5 million loss in 2022) and a $0.4 million decrease in lease debt interest income ($0.3 million) and other immaterial variances.expenses.
3.4
4.4 Income tax
Accounting policies
Income tax (expense or income) comprises current tax expense (income) and deferred tax expense (income).
Deferred taxes are recognized for all the temporary differences arising from the difference between the tax basis and the accounting basis of assets and liabilities. Tax losses that can be carried forward or backward may also be recognized as deferred tax assets. Tax rates that have been enacted as of the closing date are utilized to determine deferred tax. Deferred tax assets are recognized only to the extent that it is likely that future profits will be sufficient to recover them. We have not recordedDeferred tax assets and deferred tax assets or liabilities are offset in the statements of financial position.position to the extent criteria of IAS 12.74 are met.
F-27
Tax proof
|
| For the year ended December 31, |
| |||||||||
| 2021 |
|
| 2022 |
| 2023 |
| |||||
| $ in thousands |
| ||||||||||
Income (loss) before taxes from continuing operations |
| (96,749 | ) |
|
| (98,601 | ) |
|
| (116,464 | ) | |
Theoretical group tax rate (1) |
|
| 24.38 | % |
|
| 25.16 | % |
|
| 25.12 | % |
Theoretical tax benefit (expense) |
|
| 23,584 |
|
|
| 24,804 |
|
|
| 29,259 |
|
Increase/decrease in tax benefit arising from: |
|
|
|
|
|
|
|
|
| |||
Permanent differences |
|
| (1,228 | ) |
|
| (162 | ) |
|
| 736 |
|
Research tax credit |
| 4,284 |
|
|
| 4,852 |
|
|
| 1,645 |
| |
Share-based compensation & other IFRS adjustments |
|
| (3,596 | ) |
|
| (987 | ) |
|
| (1,134 | ) |
Non recognition of deferred tax assets related to tax losses and temporary differences |
| (22,997 | ) |
|
| (28,557 | ) |
|
| (30,876 | ) | |
Other differences (2) |
| (47 | ) |
|
| (38 | ) |
|
| - |
| |
Effective tax expense |
|
| - |
|
|
| (87 | ) |
|
| (371 | ) |
Effective tax rate |
|
| 0.00 | % |
|
| 0.09 | % |
|
| 0.32 | % |
| For the year ended December 31, | ||||||||||||
| 2015 | 2016 | 2017 | ||||||||||
| $ in thousands | ||||||||||||
Income (loss) before taxes from continuing operations | (22,606 | ) | (67,255 | ) | (103,683 | ) | ||||||
Theoretical group tax rate | 34.43 | % | 34.43 | % | 34.43 | % | ||||||
|
|
|
|
|
| |||||||
Theoretical tax benefit (expense) | 7,783 | 23,156 | 35,698 | |||||||||
|
|
|
|
|
| |||||||
Increase/decrease in tax benefit arising from: | ||||||||||||
Permanent differences | 6,426 | 124 | 293 | |||||||||
Research tax credit | 1,926 | 3,082 | 2,926 | |||||||||
Share-based compensation & other IFRS adjustments | (11,500 | ) | (20,184 | ) | (8,297 | ) | ||||||
Non recognition of deferred tax assets related to tax losses and temporary differences | (4,627 | ) | (6,158 | ) | (30,713 | ) | ||||||
Other differences | (9 | ) | (20 | ) | 92 | |||||||
|
|
|
|
|
| |||||||
Effective tax expense | — | — | — | |||||||||
|
|
|
|
|
| |||||||
Effective tax rate | 0.00 | % | 0.00 | % | 0.00 | % | ||||||
F-21
(1)
On December 22, 2017Group’s theoretical tax rate corresponds to the Presidentaverage of the United States signed legislation commonly known as the Tax Cuts and Jobs Act (“the Act”) into law. We outline the impact the Act has on our US subsidiaries’ tax obligations and its deferred tax assets and liabilities. Since their inception, our US subsidiaries have had losses and they expect to continue to have losses in the future. As a result, our US subsidiaries to date have not had taxable income. The deferred income tax assets and liabilities are recognized forrates of each country in which the differences between the financial statement and income tax reporting basis of assets and liabilities based on currently enacted rates and laws. Historically, our US subsidiaries used the applicable Federal statutory rate of 34% to estimate the benefit of the deferred tax asset. As of December 31, 2017, they use a lower rate of 21% passed in the Act.
We provide for a valuation allowance when it is more likely than not that our U.S. subsidiaries will not realize a portion of the deferred tax assets. Historically we have established a full valuation allowance for deferred tax assets due to the uncertainty that enough taxable income will be generated in the taxing jurisdiction to utilize the assets. Therefore, we have not reflected any benefit of such deferred tax assets in the accompanying financial statements. Going forward, with the lower tax rate enacted in the Act, the ability to utilize the deferred tax asset becomes even less probable. We do not expect changes to the rules regarding net operating losses under the Act to have a material impact on our financial statementsGroup operates, i.e. for the year ended December 31, 2017, as all net deferred tax assets are fully reserved.
Deferred tax assets and liabilities
| As of December 31, | ||||||||||||
| 2015 | 2016 | 2017 | ||||||||||
| $ in thousands | ||||||||||||
Credits and net operating loss carryforwards | 37,719 | 41,985 | 51,640 | |||||||||
Pension commitments | 164 | 193 | 548 | |||||||||
Leases | (126 | ) | (54 | ) | (12 | ) | ||||||
Impairment of assets | 16 | 14 | 10 | |||||||||
Other | 284 | 894 | 604 | |||||||||
Valuation allowance on deferred tax assets | (38,057 | ) | (43,032 | ) | (52,790 | ) | ||||||
|
|
|
|
|
| |||||||
| Total | — | — | — | |||||||||
|
|
|
|
|
| |||||||
|
| For the year ended December 31, |
| |||||||||
|
| 2021 |
|
| 2022 |
| 2023 |
| ||||
| $ in thousands |
| ||||||||||
Credits and net operating loss carryforwards |
|
| 157,823 |
|
|
| 124,263 |
|
|
| 155,673 |
|
Capitalization of R&D expenses under SEC 174 rule |
|
| - |
|
|
| 2,792 |
|
|
| 4,092 |
|
Pension commitments |
|
| 1,018 |
|
|
| 597 |
|
|
| 550 |
|
Leases liabilities |
|
| 17,660 |
|
|
| 12,698 |
|
|
| 11,478 |
|
Revaluations of financial assets |
|
| - |
|
|
| - |
|
|
| 15,830 |
|
Deferred tax assets from other deductible differences |
|
| 1,728 |
|
|
| 1,452 |
|
|
| 772 |
|
Non-recognition of deferred tax assets |
|
| (155,982 | ) |
|
| (128,448 | ) |
|
| (177,001 | ) |
Deferred tax assets |
|
| 22,247 |
|
|
| 13,354 |
|
|
| 11,392 |
|
|
|
|
|
|
|
|
|
| - |
| ||
Accelerated depreciation of assets for tax purposes |
|
|
|
|
| (1,286 | ) |
|
| (740 | ) | |
Right-of-use assets and other leases-related effects |
|
| (16,547 | ) |
|
| (11,923 | ) |
|
| (10,401 | ) |
Deferred tax liabilities from other taxable differences |
|
| (5,700 | ) |
|
| (145 | ) |
|
| (410 | ) |
Deferred tax liabilities |
|
| (22,247 | ) |
|
| (13,354 | ) |
|
| (11,550 | ) |
|
|
|
|
|
|
|
|
| - |
| ||
Net deferred tax assets/(liabilities) |
|
| - |
|
|
| - |
|
|
| (158 | ) |
|
|
|
|
|
|
|
|
|
| |||
|
| For the year ended December 31, |
| |||||||||
Reflected in the statement of financial position as follows: |
| 2021 |
|
| 2022 |
| 2023 |
| ||||
|
| $ in thousands |
| |||||||||
Deferred tax assets |
| - |
|
|
| - |
|
|
| - |
| |
Deferred tax liabilities |
| - |
|
|
| - |
|
|
| (158 | ) | |
Net deferred tax assets/(liabilities) |
|
| - |
|
|
| - |
|
|
| (158 | ) |
We have cumulative tax loss carryforwards for the French entity of the Group totaling $36.1$590 million as of December 31, 2017. They amounted to $30.12023, $453 million as of December 31, 20162022 and $29.7$387 million as of December 31, 2015.2021. Such carryforwards can be offset against future taxable profit within a limit of $1.0€1.0 million per year, plus 50%50% of the tax profit exceeding this limit. Remaining unused losses will continue to be carried forward indefinitely.
The cumulative tax loss carry forwardscarryforwards for the U.S. entities of the Group, excluding Calyxt for all the periods, totaled $15.5$29.8 million as of December 31, 2017, $11.92023, $38.6 million as of December 31, 20162022 and $8.0$57.7 million as of December 31, 2015.2021. As of December 31, 2023, Cellectis, Inc. and Cellectis Biologics Inc. have $29.8 million of state operating loss carryforwards and no federal operating loss carryforwards. In addition to tax loss carry forwardscarryforwards, Cellectis, Inc. and Cellectis Biologics Inc. have federal R&D tax credits amounting to $6.2 million as of December 31, 2023, that can be offset against federal income tax liability. Such R&D tax credits expire from 2035 to 2042 and their use is subject to general business credit were generated before January 1, 2018, they will expire 20 years after they are generated.limitation.
3.54.5 Reportable segments
Accounting policies
Reportable segments are identified as components of the Group that have discrete financial information available for evaluation by the Chief Operating Decision Maker (“CODM”), for purposes of performance assessment and resource allocation.
F-22
For the year-end period ended December 31, 2023, Cellectis’ CODM is composed of:
F-28
We viewUntil May 31, 2023, we viewed our operations and managemanaged our business in two operating and reportable segments that are engaged in the following activities:
• Therapeutics: This segment is focused on the development of (i) gene-edited allogeneic Chimeric Antigen Receptor T-cells product candidates (UCART) in the field of immuno-oncology (UCART) and (ii) gene-edited hematopoetic stem and progenitor cells (HSPC) product candidates in other therapeutic indications. These approaches are based on our core proprietary technologies. All these activities are supported |
There are inter-segment transactions between the two reportable segments, including allocation of corporate general and administrative expenses by Cellectis S.A., Cellectis, Inc. and allocationCellectis Biologics, Inc. The operations of Cellectis S.A., the parent company, are presented entirely in the Therapeutics segment which also comprises research and development, expensesmanagement and support functions.
As from June 1, 2023 and the deconsolidation of Calyxt, we view our operations and manage our business in a single operating and reportable segments.segment corresponding to the Therapeutics segment.
Note 5. Discontinued operations
WithAccounting policies
Non-current assets held for sale and disposal groups
In accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations, non-current assets (including property, plant and equipment and intangible assets) and disposal groups (a group of assets to be disposed of) are classified as held for sale if their carrying amount will be recovered principally through a sale transaction and when the following conditions are met: i) management is committed to a plan to sell; ii) the asset or disposal group is available for immediate sale; iii) an active program to locate a buyer is initiated; iv) the sale is highly probably, within 12 months of classification as held for sale; v) the asset or disposal group is being actively marketed for sale at a sales price reasonable in relation to its fair value; and vi) actions required to complete the plan indicate that it is unlikely that plan will be significantly changed or withdrawn.
Non-current assets and disposal groups classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell, as appropriate.
Depreciation and amortization on these assets cease when they meet the criteria to be classified as non-current assets held for sale.
Non-current assets and related liabilities classified as held for sale are presented separately and are considered as current items in the statement of consolidated financial position.
Discontinued operations
The Group classifies as discontinued operations a component of the Group that either has been disposed of, or is classified as held for sale, and i) represents a separate major line of business or geographical area of operations; ii) is part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations; or iii) is a subsidiary acquired exclusively with a view to resell.
The components of profit or loss after taxes from discontinued operations and the post-tax gain or loss recognized on the measurement to fair value less costs to sell or on the disposal of the assets or disposal groups constituting the discontinued operation would be presented as a single line item in the statement of consolidated comprehensive income.
Cash flows generated by the assets or disposal groups constituting the discontinued operation are presented as a single line item within each of the categories of cash flows in the statement of consolidated cash flows.
Details of discontinued operations and disposal groups
On November 23, 2022, Calyxt received a non-binding letter of intent from Cibus Global regarding a potential reverse merger with Calyxt (with Calyxt absorbing Cibus Global). On January 13, 2023, Calyxt, Calypso Merger Subsidiary, LLC, a wholly-owned subsidiary of Calyxt, Cibus Global and certain other parties, entered into the Merger Agreement with respect to corporate generalthe Merger. In connection with the Merger Agreement, Cellectis executed a voting agreement with Cibus Global to vote in favor of and administrative expenses,approve all the transactions contemplated by the Merger Agreement, subject to the terms and conditions thereof.
On May 31, 2023, Calyxt consummated the Merger, and effective on June 1, 2023, the combined company operates under the name Cibus, Inc. Consequently, Cellectis S.A. provides Calyxt, Inc. with general sales and administrative functions, accounting and finance functions, investor relations, intellectual property, legal advice, human resources, communication and information technology pursuant toowned 2.9% of the equity interests of the merged combined company, resulting in a management agreement. Underloss of
F-29
control by the management agreement,Group over Calyxt. Cellectis S.A. charges Calyxt, Inc. in euros at cost plus amark-up ranging between zeroowned 479,264 shares out of Calyxt’s total outstanding shares of 997,745 shares immediately prior to 10%, dependingthe Merger (in each case, after giving effect to Calyxt’s 1-for-10 reverse stock split, which became effective on the natureApril 24, 2023, and Calyxt’s 1-for-5 reverse stock split, which became effective on May 31, 2023). Among other things, as part of the service. Amounts due to Cellectis S.A. pursuant to inter-segment transactions bear interest at a rateMerger, each share of the12-month Euribor plus 5% per annum.
The intersegment revenues represent the transactions between segments. Intra-segment transactions are eliminated within a segment’s resultsCalyxt’s common stock existing and intersegment transactions are eliminated in consolidation as well as in key performance indicators by reportable segment.
Information related to each reportable segment is set out below. Segment revenues and other income, Research and development expenses, Selling, general and administrative expenses, and Royalties and other operating income and expenses, and Adjusted net income (loss) attributable to shareholders of Cellectis (which does not includenon-cash stock-based compensation expense) are used by the CODM for purposes of making decisions about allocating resourcesoutstanding immediately prior to the segmentsMerger remained outstanding as a share of Class A Common Stock, without any conversion or exchange thereof, and assessing their performance. Calyxt issued approximately 16,527,484 shares of Class A Common Stock to unitholders of Cibus Global based on an exchange ratio set forth in the Merger Agreement.
The CODM does not review any asset or liability informationGroup considers that Calyxt met the definition of a group of assets held for sale as the criteria defined by segment or by region.
F-23
Adjusted Net Income (Loss) attributable to shareholdersIFRS 5 were met on November 23, 2022 and until the loss of Cellectis S.A. is not a measure calculated in accordance with IFRS. Because Adjusted Net Income (Loss) attributable to shareholders of Cellectis excludesNon-cash stock based compensation expense—anon-cash expense, our management believes that this financial measure, when considered together with our IFRScontrol and deconsolidation on May 31, 2023. In the present financial statements, can enhance an overall understanding of Cellectis’ financial performance. Moreover, our management views the Company’s operations,Calyxt is therefore classified as a disposal group held for sale in December 31, 2022 and manages its business, based, in part, on this financial measure.
The net income (loss) includes the impact of the operations between segments while the intra-segment operations are eliminated.
Details of key performance indicators by reportable segment
| For the year ended December 31, 2015 | For the year ended December 31, 2016 | For the year ended December 31, 2017 | ||||||||||||||||||||||||||||||||||
| $ in thousands | Plants | Therapeutics | Total reportable segments | Plants | Therapeutics | Total reportable segments | Plants | Therapeutics | Total reportable segments | |||||||||||||||||||||||||||
Segment revenues and other income (1) | 49 | 65,159 | 65,208 | 716 | 59,458 | 60,173 | 914 | 35,584 | 36,498 | |||||||||||||||||||||||||||
Inter-segment revenues (1) | — | (2,643 | ) | (2,643 | ) | (130 | ) | (3,599 | ) | (3,729 | ) | (167 | ) | (2,615 | ) | (2,782 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
External revenues and other income | 49 | 62,516 | 62,565 | 585 | 55,859 | 56,444 | 747 | 32,969 | 33,715 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Research and development expenses | (2,874 | ) | (55,280 | ) | (58,154 | ) | (4,112 | ) | (74,345 | ) | (78,458 | ) | (6,057 | ) | (73,170 | ) | (79,227 | ) | ||||||||||||||||||
Selling, general and administrative expenses | (1,834 | ) | (28,390 | ) | (30,223 | ) | (4,809 | ) | (38,603 | ) | (43,413 | ) | (13,143 | ) | (31,607 | ) | (44,750 | ) | ||||||||||||||||||
Royalties and other operating income and expenses | (272 | ) | (4,899 | ) | (5,171 | ) | (474 | ) | (1,402 | ) | (1,876 | ) | (384 | ) | (2,005 | ) | (2,389 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Total operating expenses | (4,980 | ) | (88,569 | ) | (93,549 | ) | (9,395 | ) | (114,351 | ) | (123,746 | ) | (19,584 | ) | (106,782 | ) | (126,366 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Operating income (loss) before tax | (4,931 | ) | (26,053 | ) | (30,984 | ) | (8,810 | ) | (58,492 | ) | (67,302 | ) | (18,837 | ) | (73,813 | ) | (92,650 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Financial gain (loss) | 259 | 8,119 | 8,378 | 87 | (41 | ) | 46 | — | (11,033 | ) | (11,032 | ) | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Net income (loss) | (4,672 | ) | (17,934 | ) | (22,606 | ) | (8,722 | ) | (58,533 | ) | (67,255 | ) | (18,837 | ) | (84,846 | ) | (103,683 | ) | ||||||||||||||||||
|
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|
|
|
|
|
|
|
|
|
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|
|
|
|
| |||||||||||||||||||
Non controlling interests | — | (190 | ) | (190 | ) | — | — | — | 4,315 | — | 4,315 | |||||||||||||||||||||||||
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Net income (loss) attributable to shareholders of Cellectis | (4,672 | ) | (18,124 | ) | (22,796 | ) | (8,722 | ) | (58,533 | ) | (67,255 | ) | (14,522 | ) | (84,846 | ) | (99,368 | ) | ||||||||||||||||||
|
|
|
|
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|
|
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|
|
|
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|
|
|
|
| |||||||||||||||||||
Adjustment of share-based compensation attributable to shareholders of Cellectis | 789 | 32,613 | 33,402 | 1,098 | 57,524 | 58,622 | 5,957 | 42,968 | 48,925 | |||||||||||||||||||||||||||
|
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|
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|
|
|
|
|
|
|
|
| |||||||||||||||||||
Adjusted net income (loss) attributable to shareholders of Cellectis | (3,883 | ) | 14,489 | 10,606 | (7,625 | ) | (1,009 | ) | (8,633 | ) | (8,565 | ) | (41,877 | ) | (50,442 | ) | ||||||||||||||||||||
|
|
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|
|
|
|
|
|
|
|
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|
|
|
|
|
| |||||||||||||||||||
Depreciation and amortization | (99 | ) | (1,838 | ) | (1,937 | ) | (345 | ) | (1,866 | ) | (2,211 | ) | (551 | ) | (2,820 | ) | (3,371 | ) | ||||||||||||||||||
Additions to tangible and intangible assets | 526 | 3,886 | 4,413 | 10,410 | 4,164 | 14,573 | 792 | 1,849 | 2,642 | |||||||||||||||||||||||||||
Impairment of tangible assets | — | — | — | — | — | — | — | (798 | ) | (798 | ) | |||||||||||||||||||||||||
F-24
Reconciliation of Plant result of operations
Since Calyxt, Inc., the agricultural biotechnology subsidiary of Cellectis, is a U.S. entity, its financial statements have been prepared in accordance with U.S. GAAP. However, the Plant segment operations, as previously described, have been prepared in accordance with IFRS. The tables below present a reconciliation of the main figures of results of operations for our Plant segment with Calyxt stand-alone financial statements.
Reconciliation of Plant Segment result of operationsdiscontinued operation for the yearyears ended December 2023, 2022 and 2021 and for the five-month period ended May 31, 2023. All tables referring to the year-end period ended December 31, 20172023 present Calyxt’s results over a five-month period from January 1, 2023 to May 31, 2023, the date of deconsolidation.
As prescribed by IFRS 5, Calyxt’s assets and liabilities are measured at the lower of their carrying amount and their fair value less costs to sell from November 23, 2022 and until derecognition on June 1, 2023. No gain or loss was recognized pursuant to this measurement.
| $ in thousands | For the full year ended December 31, 2017 | |||||||||||||||||||||||||||
| Cellectis Consolidated financial statements Reportable segments note (IFRS) | Calyxt equity award plan IFRS/US GAAP difference : Non cash stock-based compensation (1) | Cellectis and Calyxt equity award IFRS/US GAAP difference : Non cash stock-based compensation (1) | Intersegment transactions (2) | Reclassifications (3) | Other (4) | Calyxt Stand alone financial statements (US GAAP) | ||||||||||||||||||||||
External revenues and other income | 747 | — | — | 167 | (405 | ) | (1 | ) | 508 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Research and development expenses | (6,057 | ) | 1,134 | (6,086 | ) | — | (563 | ) | 16 | (11,556 | ) | |||||||||||||||||
Selling, general and administrative expenses | (13,143 | ) | 6,316 | (6,006 | ) | (2,501 | ) | 436 | 157 | (14,741 | ) | |||||||||||||||||
Royalties and other operating income and expenses | (384 | ) | — | — | (114 | ) | 504 | (7 | ) | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total operating expenses | (19,584 | ) | 7,450 | (12,092 | ) | (2,615 | ) | 378 | 166 | (26,297 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Operating income (loss) before tax | (18,837 | ) | 7,450 | (12,092 | ) | (2,448 | ) | (27 | ) | 165 | (25,789 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Financial gain (loss) | — | — | — | (1 | ) | 27 | (218 | ) | (191 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Net income (loss) | (18,837 | ) | 7,450 | (12,092 | ) | (2,449 | ) | — | (53 | ) | (25,980 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
The results of Calyxt are as follows :
F-25
| For the year ended December 31, |
| ||||||||||
| 2021 |
| 2022 |
|
| 2023 ** |
| |||||
|
|
|
|
|
|
|
| |||||
Revenues and other income |
|
| 28,475 |
|
|
| 157 |
|
|
| 43 |
|
Operating expenses |
|
| (55,671 | ) |
|
| (21,342 | ) |
|
| (10,944 | ) |
Operating income (loss) |
|
| (27,196 | ) |
|
| (21,186 | ) |
|
| (10,901 | ) |
Net Financial gain (loss) |
|
| (1,162 | ) |
|
| 5,840 |
|
|
| (3,307 | ) |
Profit from deconsolidation |
|
|
|
|
|
|
|
| 22,600 |
| ||
Net income (loss) from discontinued operations and gain on deconsolidation |
|
| (28,358 | ) |
|
| (15,345 | ) |
|
| 8,392 |
|
Reconciliation of Plant Segment result of operations** Figures for the yearyear-end period ended December 31, 20162023 include Calyxt’s results over a five-month period from January 1, 2023 to May 31, 2023 and the gain on deconsolidation
| $ in thousands | For the year ended December 31, 2016 | |||||||||||||||||||||||||||
| Cellectis Consolidated financial statements Reportable segments note (IFRS) | Calyxt equity award plan IFRS/US GAAP difference : Non cash stock-based compensation | Cellectis equity award IFRS/US GAAP difference : Non cash stock-based compensation | Intersegment transactions (2) | Reclassifications (3) | Other (4) | Calyxt Stand alone financial statements (US GAAP) | ||||||||||||||||||||||
External revenues and other income | 585 | — | — | 131 | (317 | ) | — | 399 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Research and development expenses | (4,112 | ) | 477 | (928 | ) | — | (1,058 | ) | (17 | ) | (5,638 | ) | ||||||||||||||||
Selling, general and administrative expenses | (4,809 | ) | 621 | (20 | ) | (3,443 | ) | 945 | 37 | (6,670 | ) | |||||||||||||||||
Royalties and other operating income and expenses | (474 | ) | — | — | (155 | ) | 430 | (1 | ) | (200 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total operating expenses | (9,395 | ) | 1,098 | (948 | ) | (3,598 | ) | 317 | 19 | (12,508 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Operating income (loss) before tax | (8,810 | ) | 1,098 | (948 | ) | (3,468 | ) | — | 19 | (12,109 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Financial gain (loss) | 87 | — | — | (64 | ) | — | (1 | ) | 23 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Net income (loss) | (8,722 | ) | 1,098 | (948 | ) | (3,532 | ) | — | 18 | (12,086 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
The earning per share attributable to Calyxt is as follows :17
F-26
|
| For the year ended December 31, |
| |||||||||
|
| 2021 |
| 2022 |
|
| 2023 ** |
| ||||
|
|
|
|
|
|
|
|
|
| |||
Basic and diluted net income (loss) attributable to shareholders of Cellectis per share ($ /share) from discontinued operations |
|
| (0.39 | ) |
|
| (0.16 | ) |
|
| 0.28 |
|
Reconciliation of Plant Segment result of operations** Figures for the yearyear-end period ended December 31, 20152023 include Calyxt’s results over a five-month period from January 1, 2023 to May 31, 2023 and the gain on deconsolidation
The net cash flows incurred by Calyxt are as follows:
| $ in thousands | For the year ended December 31, 2015 | |||||||||||||||||||||||||||
| Cellectis Consolidated financial statements Reportable segments note (IFRS) | Calyxt equity award plan IFRS/US GAAP difference : Non cash stock-based compensation | Cellectis equity award IFRS/US GAAP difference : Non cash stock-based compensation | Intersegment transactions (2) | Reclassifications (3) | Other (4) | Calyxt Stand alone financial statements (US GAAP) | ||||||||||||||||||||||
External revenues and other income | 49 | — | — | 72 | (72 | ) | 1,223 | 1,272 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Research and development expenses | (2,874 | ) | 384 | (583 | ) | — | 8 | 298 | (2,766 | ) | ||||||||||||||||||
Selling, general and administrative expenses | (1,834 | ) | 405 | (109 | ) | (2,568 | ) | 535 | — | (3,569 | ) | |||||||||||||||||
Royalties and other operating income and expenses | (272 | ) | — | — | (75 | ) | (403 | ) | (1 | ) | (751 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total operating expenses | (4,980 | ) | 789 | (692 | ) | (2,643 | ) | 141 | 297 | (7,086 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Operating income (loss) before tax | (4,931 | ) | 789 | (692 | ) | (2,571 | ) | 69 | 1,521 | (5,814 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Financial gain (loss) | 259 | — | — | (261 | ) | (69 | ) | (4 | ) | (75 | ) | |||||||||||||||||
|
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|
| |||||||||||||||
Net income (loss) | (4,672 | ) | 789 | (692 | ) | (2,832 | ) | — | 1,517 | (5,889 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
| For the year ended December 31, |
| ||||||||||
| 2021 |
| 2022 |
|
| 2023 ** |
| |||||
|
|
|
|
|
|
|
|
|
| |||
Net cash flows provided by (used in) operating activities of discontinued operations |
|
| (16,746 | ) |
|
| (18,601 | ) |
|
| (3,644 | ) |
Net cash flows provided by (used in) investing activities of discontinued operations |
|
| 10,979 |
|
|
| (446 | ) |
|
| 79 |
|
Net cash flows provided by (used in) financing activities of discontinued operations |
|
| 2,294 |
|
|
| 8,650 |
|
|
| 1,781 |
|
(Decrease) increase in cash and cash equivalents |
|
| (3,473 | ) |
|
| (10,396 | ) |
|
| (1,784 | ) |
F-27** Figures for the year-end period ended December 31, 2023 include Calyxt’s results over a five-month period from January 1, 2023 to May 31, 2023 and the gain on deconsolidation
The major classes of assets and liabilities of Calyxt classified as held for sale are as follows:
F-30
|
|
|
| As of December 31, |
|
| As of May 31, |
|
| As of December 31, |
| |||
|
|
|
| 2022 |
| 2023 |
|
| 2023 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
| |||
Intangible assets |
|
|
|
| 697 |
|
|
| 697 |
|
|
| - |
|
Property, plant, and equipment |
|
|
|
| 4,110 |
|
|
| 4,118 |
|
|
| - |
|
Right-of-use assets |
|
|
|
| 13,263 |
|
|
| 13,139 |
|
|
| - |
|
Other non-current assets |
|
|
|
| - |
|
|
| - |
|
|
| - |
|
Other current assets |
|
|
|
| 272 |
|
|
| 119 |
|
|
| - |
|
Cash and cash equivalents |
|
|
|
| 3,427 |
|
|
| 1,642 |
|
|
| - |
|
Total assets held for sale |
|
|
|
| 21,768 |
|
|
| 19,714 |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Non-current lease debts |
|
|
|
| 13,387 |
|
|
| 13,140 |
|
|
| - |
|
Other non-current liabilities |
|
|
|
| - |
|
|
| - |
|
|
| - |
|
Current financial liabilities |
|
|
|
| 267 |
|
|
| 5,647 |
|
|
| - |
|
Current lease debts |
|
|
|
| 463 |
|
|
| 406 |
|
|
| - |
|
Trade payables |
|
|
|
| 747 |
|
|
| 4,097 |
|
|
| - |
|
Other current liabilities |
|
|
|
| - |
|
|
| 301 |
|
|
| - |
|
Total liabilities related to assets held for sale |
|
|
|
| 14,864 |
|
|
| 23,592 |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Net assets held for sale |
|
|
|
| 6,903 |
|
|
| (3,878 | ) |
|
| - |
|
Note 4.6. Impairment tests
Accounting policy
Amortizable intangible assets, and depreciable tangible assets and right-of-use are tested for impairment when there is an indicator of impairment. Goodwill is tested for impairment at least once a year. Impairment tests involve comparing the carrying amount of cash-generating units with their recoverable amount. The recoverable amount of an asset is the higher of (i) its fair value less costs to sell and (ii) its value in use. If the recoverable amount of any asset is below its carrying amount, an impairment loss is recognized to reduce the carrying amount to the recoverable amount.
Our cash-generating units (“CGUs”) correspond to the operating/reportable segments: Therapeutics and Plants.
Results of impairment test
No indicator of impairment has been identified for any amortizable intangible assets, depreciable tangible assets or tangibleright-of-use assets in either of the CGUs for the years ended December 31, 20152023 or 2016. In 2017, as we have2022.
As a result of management's decision not to use the willingness to discontinue the leasefull capacity of the facilitymanufacturing space in Montvale, New Jersey (USA), weour Raleigh leased facilities in the near future, an impairment test was conducted on the portion of the right-of-use asset allocable to the unused space, in accordance with IAS 36 requirements. In view of the recoverable amount of the asset based on its estimated fair value less costs of disposal, this impairment test resulted in an impairment expense of $0.5m recognized against the right-of-use asset for the year ended December 31, 2023, recorded a $0.8 million tangible assets impairment.as depreciation expense of the period.
Note 5.7. Intangible assets
Accounting policy
Capitalization of development expenses
In accordance with IAS 38Intangible Assets,, development expenses are recorded as intangible assets only if all the following criteria are met:
F-28
Other intangible assets
The other intangible assets we acquired with definite useful lives are recognized at cost less accumulated amortization and impairment. Amortization expense is recorded on a straight-line basis over the estimated useful lives of the intangible assets, in the line Research and Development expenses or Selling, general and administrative expenses of the Consolidated Statement of Consolidated Operations, depending on the use of the related asset.
The estimated useful lives are as follows:
F-31
Cloud computing arrangements
On April 27, 2021, the IFRS Interpretations Committee (IC) issued a decision regarding the appropriate accounting treatment under IFRS Standards for fees paid to cloud services providers and related implementation costs which intends to clarify the accounting classification of these costs. Such costs, depending on their nature, may be either recognized as an intangible asset or recorded in operating expenses as incurred. The application of the IFRIC decision is considered as a change in accounting policy. Under IAS 8, the retrospective approach should be applied. However, the Company assessed the impact on its financial statements and decided not to restate its financial statements for 2020, given that the impact of the IFRIC decision application was not material.
For 2021, the application of the decision led to recording an impact of $2.0 million in operating expenses in the consolidated statement of operations, corresponding to the impact of the Company’s new ERP implementation costs incurred over the period.
For 2022, the application of the decision led to recording an impact of $1.0 million in operating expenses in the consolidated statement of operations, corresponding to the impact of the Company’s new ERP implementation costs incurred over the period.
For 2023, the Company did not incur ERP implementation costs.
Details of intangible assets
| Software and Patents | Assets under construction | Total | ||||||||||
Net book value as of January 1, 2015 | 1,246 | — | 1,246 | |||||||||
|
|
|
|
|
| |||||||
Change in scope | — | — | — | |||||||||
Additions to intangible assets | 97 | — | 97 | |||||||||
Depreciation expense | (174 | ) | — | (174 | ) | |||||||
Translation adjustments | (127 | ) | — | (127 | ) | |||||||
|
|
|
|
|
| |||||||
Net book value as of December 31, 2015 | 1,041 | — | 1,041 | |||||||||
|
|
|
|
|
| |||||||
Gross value at end of period | 2,194 | — | 2,194 | |||||||||
Accumulated depreciation and impairment at end of period | (1,153 | ) | — | (1,153 | ) | |||||||
Net book value as of January 1, 2016 | 1,041 | — | 1,041 | |||||||||
|
|
|
|
|
| |||||||
Additions to intangible assets | 212 | 439 | 652 | |||||||||
Disposal of intangible assets | (74 | ) | — | (74 | ) | |||||||
Depreciation expense | (226 | ) | — | (226 | ) | |||||||
Translation adjustments | (28 | ) | (21 | ) | (49 | ) | ||||||
|
|
|
|
|
| |||||||
Net book value as of December 31, 2016 | 924 | 419 | 1,343 | |||||||||
|
|
|
|
|
| |||||||
Gross value at end of period | 2,256 | 419 | 2,675 | |||||||||
Accumulated depreciation and impairment at end of period | (1,332 | ) | — | (1,332 | ) | |||||||
Net book value as of January 1, 2017 | 924 | 419 | 1,343 | |||||||||
|
|
|
|
|
| |||||||
Additions to intangible assets | 6 | 135 | 141 | |||||||||
Depreciation expense | (231 | ) | — | (231 | ) | |||||||
Translation adjustments | 112 | 66 | 178 | |||||||||
|
|
|
|
|
| |||||||
Net book value as of December 31, 2017 | 811 | 619 | 1,431 | |||||||||
|
|
|
|
|
| |||||||
Gross value at end of period | 2,571 | 517 | 3,190 | |||||||||
Accumulated depreciation and impairment at end of period | (1,759 | ) | — | (1,759 | ) | |||||||
|
| Software and Patents |
|
| Assets under construction |
| Total |
| ||||
|
| $ in thousands |
| |||||||||
Net book value as of January 1, 2021 |
|
| 889 |
|
|
| 695 |
|
|
| 1,584 |
|
Additions |
|
| - |
|
|
| 956 |
|
|
| 956 |
|
Disposal |
|
| (310 | ) |
|
| - |
|
|
| (310 | ) |
Reclassification |
|
| 956 |
|
|
| (956 | ) |
|
| - |
|
Depreciation & impairment expense |
|
| (304 | ) |
|
| - |
|
|
| (304 | ) |
Translation adjustments |
|
| (19 | ) |
|
| (54 | ) |
|
| (72 | ) |
Net book value as of December 31, 2021 |
|
| 1,212 |
|
|
| 641 |
|
|
| 1,854 |
|
Gross value at end of period |
|
| 3,437 |
|
|
| 641 |
|
|
| 4,078 |
|
Accumulated depreciation and impairment at end of period |
|
| (2,225 | ) |
|
| - |
|
|
| (2,225 | ) |
|
|
|
|
|
|
|
|
|
| |||
Net book value as of January 1, 2022 |
|
| 1,212 |
|
|
| 641 |
|
|
| 1,854 |
|
Additions |
|
| 8 |
|
|
| - |
|
|
| 8 |
|
Reclassification |
|
| 92 |
|
|
| - |
|
|
| 92 |
|
Depreciation & impairment expense |
|
| (492 | ) |
|
| - |
|
|
| (492 | ) |
Translation adjustments |
|
| (10 | ) |
|
| (37 | ) |
|
| (47 | ) |
Reclassification to assets held for sale |
|
| (697 | ) |
|
| - |
|
|
| (697 | ) |
Net book value as of January 1, December 31, 2022 |
|
| 114 |
|
|
| 604 |
|
|
| 718 |
|
Gross value at end of period |
|
| 2,357 |
|
|
| 604 |
|
|
| 2,961 |
|
Accumulated depreciation and impairment at end of period |
|
| (2,192 | ) |
|
| - |
|
|
| (2,192 | ) |
|
|
|
|
|
|
|
|
|
| |||
Net book value as of January 1, 2023 |
|
| 114 |
|
|
| 604 |
|
|
| 718 |
|
Additions |
|
| - |
|
|
| - |
|
|
| - |
|
Disposal |
|
| - |
|
|
| - |
|
|
| - |
|
Depreciation & impairment expense |
|
| (69 | ) |
|
| - |
|
|
| (69 | ) |
Translation adjustments |
|
| 1 |
|
|
| 22 |
|
|
| 22 |
|
Net book value as of January 1, December 31, 2023 |
|
| 46 |
|
|
| 626 |
|
|
| 671 |
|
Gross value at end of period |
|
| 2,352 |
|
|
| 626 |
|
|
| 2,978 |
|
Accumulated depreciation and impairment at end of period |
|
| (2,306 | ) |
|
| - |
|
|
| (2,306 | ) |
Intangible assets mainly consist of electroporation technology patents acquired in 2011. Assets under construction primarily relates to the development of these patents. The 2016 and 20172021 additions in intangible assets under construction corresponds to software expenditures.
Amounts reclassified corresponds to assets under construction put into service.
F-32
Note 8 Right-of-use assets
Accounting policy
Lease contracts recognition
Lease contracts, as defined by IFRS 16 “Leases”, are recorded in the internal developmentstatement of existing technology.consolidated financial position, which leads to the recognition of:
Measurement of the right-of use asset
At the commencement date, the right-of-use asset is measured at cost and comprises:
Following the initial recognition, the right-of-use asset must be depreciated over the useful life of the underlying assets as lease term for the rental component.
F-29Measurement of the lease liability
At the commencement date, the lease liability is recognized for an amount equal to the present value of the lease payments over the lease term.
Amounts involved in the measurement of the lease liability are:
The lease liability is subsequently measured based on a process similar to the amortized cost method using the discount rate:
The interest cost for the period as well as variable payments, not taken into account in the initial measurement of the lease liability and incurred over the relevant period are recognized as costs.
In addition, the lease liability may be remeasured in the following situations:
Main contracts applicable
Based on its analysis, the Group has identified lease contracts according to the standard concerning office buildings, laboratories, production facilities and storage facilities.
For purposes of IFRS 16, the lease term reflects the Group’s reasonable expectation of the period during which the underlying asset will be used.
The discount rate used to calculate the lease debt is determined, for each portfolio of assets, according to the incremental borrowing rate at the contract date.
The incremental borrowing rate is the rate of interest that a lessee would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment.
The rental charges relating to short terms and low value lease remains classified as leases expenses in operating expenses and are immaterial.
F-33
Details of Right-of-use assets
The breakdown of right-of-use assets is as follows:
|
| Building lease |
| Office and laboratory equipment |
|
| Total |
| ||||
|
| $ in thousands |
| |||||||||
Net book value as of January 1, 2021 |
|
| 62,424 |
|
|
| 11,421 |
|
|
| 73,845 |
|
Additions |
|
| (139 | ) |
|
| 6,336 |
|
|
| 6,197 |
|
Depreciation & impairment expense |
|
| (5,721 | ) |
|
| (3,300 | ) |
|
| (9,021 | ) |
Translation adjustments |
|
| (1,367 | ) |
|
| (231 | ) |
|
| (1,598 | ) |
Net book value as of December 31, 2021 |
|
| 55,197 |
|
|
| 14,226 |
|
|
| 69,423 |
|
Gross value at end of period |
|
| 69,782 |
|
|
| 19,696 |
|
|
| 89,478 |
|
Accumulated depreciation and impairment at end of period |
|
| (14,586 | ) |
|
| (5,470 | ) |
|
| (20,056 | ) |
|
|
|
|
|
|
|
|
|
| |||
Net book value as of January 1, 2022 |
|
| 55,197 |
|
|
| 14,226 |
|
|
| 69,423 |
|
Additions |
|
| 396 |
|
|
| 310 |
|
|
| 706 |
|
Disposal |
|
| (2,988 | ) |
|
| (459 | ) |
|
| (3,447 | ) |
Depreciation & impairment expense |
|
| (4,766 | ) |
|
| (3,280 | ) |
|
| (8,046 | ) |
Translation adjustments |
|
| (915 | ) |
|
| (183 | ) |
|
| (1,099 | ) |
Reclassification to assets held for sale |
|
| (13,257 | ) |
|
| (6 | ) |
|
| (13,263 | ) |
Net book value as of December 31, 2022 |
|
| 33,666 |
|
|
| 10,608 |
|
|
| 44,275 |
|
Gross value at end of period |
|
| 49,421 |
|
|
| 17,742 |
|
|
| 67,163 |
|
Accumulated depreciation and impairment at end of period |
|
| (15,755 | ) |
|
| (7,133 | ) |
|
| (22,889 | ) |
|
|
|
|
|
|
|
|
|
| |||
Net book value as of January 1, 2023 |
|
| 33,666 |
|
|
| 10,608 |
|
|
| 44,275 |
|
Additions |
|
| 1,678 |
|
|
| 98 |
|
|
| 1,776 |
|
Disposal |
|
| (102 | ) |
|
| - |
|
|
| (102 | ) |
Depreciation & impairment expense |
|
| (5,081 | ) |
|
| (3,318 | ) |
|
| (8,399 | ) |
Translation adjustments |
|
| 442 |
|
|
| 69 |
|
|
| 510 |
|
Net book value as of December 31, 2023 |
|
| 30,602 |
|
|
| 7,457 |
|
|
| 38,060 |
|
Gross value at end of period |
|
| 51,863 |
|
|
| 18,022 |
|
|
| 69,885 |
|
Accumulated depreciation at end of period |
|
| (21,261 | ) |
|
| (10,565 | ) |
|
| (31,825 | ) |
Entity-wide disclosures:
In 2023, approximately $14 million of our right-of-use assets related to France, while approximately $24 million related to the United States.
In 2022, approximately $15 million of our right-of-use assets related to France, while approximately $29 million related to the United States.
In 2021, approximately $18 million of our right-of-use assets relate to France, while approximately $51 million relate to the United States.
Note 6.9. Property, plant and equipment
Accounting policy
Property, plant and equipment are recognized at acquisition cost less accumulated depreciation and any impairment losses. Acquisition costs include expenditures that are directly attributable to the acquisition of the asset and costs to ready it for use.
Depreciation is expensed on a straight-line basis over the estimated useful lives of the assets. If components of property, plant and equipment have different useful lives, they are accounted for separately.
The estimated useful lives are as follows:
• | Buildings and other outside improvements |
| |
• | Leasehold improvements |
| |
• | Office furniture | 10 years | |
• | Laboratory equipment |
| |
• | Office equipment | 5 years | |
• | IT equipment | 3 years |
Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted, if appropriate.
Any gain or loss on disposal of an item of property, plants and equipment is determined by comparing the proceeds from disposal with the carrying amount of the item. The net amount is recognized in the statement of consolidated operations under the line item “Other operating income and expenses.”
PaymentsF-34
Before IFRS 16 adoption as of January 1, 2019, payments made under operating leases arewere expensed on a straight-line basis over the term of the lease. Lease incentives received arewere recognized as an integral part of the total lease expense, over the term of the lease.
If, according to the terms of a lease, it appearsappeared that substantially all the risks and rewards incidental to ownership arewere transferred from the lessor to the lessee, the associated leased assets arewere initially recognized as an asset at the lower of their fair value and the present value of the minimum lease payments and subsequently depreciated or impaired, as necessary. Finance lease assets were transferred to Right-of-use assets upon adoption. The associated financial obligations arewere reported in the line item“non-current “non-current financial debt” and “current financial debt.” Such amounts were reclassified to lease debts on the date of adoption.
Details of property, plant and equipment
| Lands and Buildings | Technical equipment | Fixtures, fittings and other equipment | Assets under construction | Total | ||||||||||||||||
| $ in thousands | ||||||||||||||||||||
Net book value as of January 1, 2015 | 1,416 | 1,703 | 50 | — | 3,169 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Additions to tangible assets | 1,477 | 2,488 | 331 | 186 | 4,481 | |||||||||||||||
Disposal of tangible assets | — | 118 | — | — | 118 | |||||||||||||||
Depreciation expense | (681 | ) | (1,023 | ) | (58 | ) | — | (1,761 | ) | |||||||||||
Reclassification | — | (19 | ) | 20 | — | 1 | ||||||||||||||
Translation adjustments | (139 | ) | (370 | ) | (3 | ) | (4 | ) | (517 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net book value as of December 31, 2015 | 2,072 | 2,897 | 340 | 182 | 5,490 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
|
| Lands and Buildings |
| Technical equipment |
|
| Fixtures, fittings and other equipment |
| Assets under construction |
| Total |
| ||||||||
|
| $ in thousands |
| |||||||||||||||||
Net book value as of January 1, 2021 |
|
| 16,765 |
|
|
| 4,436 |
|
|
| 3,171 |
|
|
| 47,301 |
|
|
| 71,673 |
|
Additions |
|
| 2,956 |
|
|
| 5,352 |
|
|
| 1,339 |
|
|
| 6,035 |
|
|
| 15,682 |
|
Disposal |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (2 | ) |
|
| (2 | ) |
Reclassification |
|
| (1,694 | ) |
|
| 52,577 |
|
|
| (612 | ) |
|
| (50,208 | ) |
|
| 63 |
|
Depreciation & impairment expense |
|
| (2,442 | ) |
|
| (4,065 | ) |
|
| (767 | ) |
|
| - |
|
|
| (7,275 | ) |
Translation adjustments |
|
| (852 | ) |
|
| (228 | ) |
|
| (75 | ) |
|
| (141 | ) |
|
| (1,296 | ) |
Net book value as of December 31, 2021 |
|
| 14,733 |
|
|
| 58,072 |
|
|
| 3,056 |
|
|
| 2,985 |
|
|
| 78,846 |
|
Gross value at end of period |
|
| 22,426 |
|
|
| 75,511 |
|
|
| 5,043 |
|
|
| 2,985 |
|
|
| 105,965 |
|
Accumulated depreciation and impairment at end of period |
|
| (7,693 | ) |
|
| (17,440 | ) |
|
| (1,987 | ) |
|
| (0 | ) |
|
| (27,119 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net book value as of January 1, 2022 |
|
| 14,733 |
|
|
| 58,072 |
|
|
| 3,056 |
|
|
| 2,985 |
|
|
| 78,846 |
|
Additions |
|
| 56 |
|
|
| 311 |
|
|
| 364 |
|
|
| 2,113 |
|
|
| 2,844 |
|
Disposal |
|
| (3 | ) |
|
| (193 | ) |
|
| (453 | ) |
|
| (1,057 | ) |
|
| (1,706 | ) |
Reclassification |
|
| (1,359 | ) |
|
| 4,211 |
|
|
| 28 |
|
|
| (2,973 | ) |
|
| (93 | ) |
Depreciation & impairment expense |
|
| (1,944 | ) |
|
| (8,516 | ) |
|
| (711 | ) |
|
| 0 |
|
|
| (11,171 | ) |
Translation adjustments |
|
| (646 | ) |
|
| (220 | ) |
|
| (7 | ) |
|
| (116 | ) |
|
| (989 | ) |
Reclassification to assets held for sale |
|
| (1,517 | ) |
|
| (2,593 | ) |
|
| - |
|
|
| - |
|
|
| (4,110 | ) |
Net book value as of December 31, 2022 |
|
| 9,321 |
|
|
| 51,072 |
|
|
| 2,277 |
|
|
| 952 |
|
|
| 63,621 |
|
Gross value at end of period |
|
| 17,742 |
|
|
| 72,847 |
|
|
| 4,914 |
|
|
| 952 |
|
|
| 96,454 |
|
Accumulated depreciation and impairment at end of period |
|
| (8,421 | ) |
|
| (21,775 | ) |
|
| (2,637 | ) |
|
| - |
|
|
| (32,832 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net book value as of January 1, 2023 |
|
| 9,321 |
|
|
| 51,072 |
|
|
| 2,277 |
|
|
| 952 |
|
|
| 63,621 |
|
Additions |
|
| - |
|
|
| 60 |
|
|
| 19 |
|
|
| 993 |
|
|
| 1,071 |
|
Disposal |
|
| (173 | ) |
|
| (153 | ) |
|
| (1 | ) |
|
| (64 | ) |
|
| (391 | ) |
Reclassification |
|
| 332 |
|
|
| 258 |
|
|
| 3 |
|
|
| (593 | ) |
|
| - |
|
Depreciation & impairment expense |
|
| (1,911 | ) |
|
| (7,191 | ) |
|
| (963 | ) |
|
| - |
|
|
| (10,064 | ) |
Translation adjustments |
|
| 298 |
|
|
| 85 |
|
|
| 20 |
|
|
| 40 |
|
|
| 443 |
|
Net book value as of December 31, 2023 |
|
| 7,868 |
|
|
| 44,131 |
|
|
| 1,354 |
|
|
| 1,328 |
|
|
| 54,681 |
|
Gross value at end of period |
|
| 18,544 |
|
|
| 73,483 |
|
|
| 4,973 |
|
|
| 1,271 |
|
|
| 98,270 |
|
Accumulated depreciation and impairment at end of period |
|
| (10,676 | ) |
|
| (29,351 | ) |
|
| (3,619 | ) |
|
| 57 |
|
|
| (43,589 | ) |
F-30
| Lands and Buildings | Technical equipment | Fixtures, fittings and other equipment | Assets under construction | Total | ||||||||||||||||
| $ in thousands | ||||||||||||||||||||
Gross value at end of period | 4,065 | 11,686 | 836 | 182 | 16,769 | |||||||||||||||
Accumulated depreciation and impairment at end of period | (1,993 | ) | (8,790 | ) | (496 | ) | — | (11,280 | ) | |||||||||||
Net book value as of January 1, 2016 | 2,072 | 2,897 | 340 | 182 | 5,490 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Additions to tangible assets | 11,164 | 1,076 | 562 | 902 | 13,704 | |||||||||||||||
Disposal of tangible assets | — | (3 | ) | (1 | ) | (183 | ) | (186 | ) | |||||||||||
Depreciation expense | (741 | ) | (1,077 | ) | (167 | ) | — | (1,986 | ) | |||||||||||
Reclassification | — | 3 | (3 | ) | — | — | ||||||||||||||
Translation adjustments | (59 | ) | (38 | ) | (23 | ) | (4 | ) | (122 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net book value as of December 31, 2016 | 12,436 | 2,858 | 707 | 898 | 16,900 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Gross value at end of period | 15,085 | 10,634 | 1,104 | 898 | 27,721 | |||||||||||||||
Accumulated depreciation and impairment at end of period | (2,649 | ) | (7,775 | ) | (397 | ) | — | (10,821 | ) | |||||||||||
Net book value as of January 1, 2017 | 12,436 | 2,858 | 707 | 898 | 16,900 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Additions to tangible assets | 718 | 701 | 203 | 878 | 2,501 | |||||||||||||||
Disposal of tangible assets | (9,243 | ) | (103 | ) | 2 | (109 | ) | (9,453 | ) | |||||||||||
Reclassification | 14 | 47 | 18 | (79 | ) | — | ||||||||||||||
Depreciation expense | (972 | ) | (1,126 | ) | (245 | ) | (798 | ) | (3,140 | ) | ||||||||||
Translation adjustments | 206 | 127 | 68 | 18 | 418 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net book value as of December 31, 2017 | 3,159 | 2,505 | 753 | 809 | 7,226 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Gross value at end of period | 6,936 | 12,114 | 1,447 | 1,606 | 22,103 | |||||||||||||||
Accumulated depreciation and impairment at end of period | (3,777 | ) | (9,609 | ) | (693 | ) | (798 | ) | (14,877 | ) | ||||||||||
No assets have been pledged as security for financial liabilities. There is no restriction on title of property, plant and equipment, except for assets recognized under finance lease agreements.
In 2017, Calyxt entered into a transaction whereby it sold a certain land and building (with a total net book value of $9.2 million), which was considered a sale under applicable accounting guidance and then entered into an operating lease for this property. Assets under construction primarily relates to Calyxt’s additional building for $0.5 million andFor the rest relates to Therapeutics activity. We also continueyear ended December 31, 2023, we continued our investments in research and development equipment in both the United States of America and France.
Assets under construction as of December 31, 2023 primarily relates to Cellectis’ raw and starting materials manufacturing facility and offices in Paris ($1.0 million). The additionassets put into service in tangible assets reflects improvements2023 in technical equipment mainly concern Paris Buildings for $0.6 million.
Entity-wide disclosures:
In 2023, approximately $12 million of Calyxt and Cellectis sites for $0.7our PP&E related to France, while approximately $43 million and other equipment for $0.7 million.related to the United States.
DetailsIn 2022, approximately $14 million of finance leaseour PP&E related to France, while approximately $50 million related to the United States.
| As of December 31, | ||||||||
| 2016 | 2017 | |||||||
| $ in thousands | ||||||||
Gross value | 4,171 | 4,448 | ||||||
Accumulated depreciation | (3,946 | ) | (4,366 | ) | ||||
|
|
|
| |||||
Net | 225 | 82 | ||||||
|
|
|
| |||||
The finance leasesIn 2021, approximately $17 million of our PP&E relate mainly to laboratory equipment and IT equipment.
F-31France, while approximately $62 million relate to the United States.
Note 7.10. Financial assets and liabilities
7.110.1 Accounting principles
Financial assets
Non-currentUnder IFRS 9, Cellectis holds either:
Current or;
F-35
Trade and other receivables are initially recorded at fair value, which is the nominal value of invoices unless payment terms require a material adjustment for the time value discounting effect at market interest rates. Trade receivables are subsequently measured at amortized cost. A valuation allowanceprovision for expected credit losses for trade and other receivables is recognized if their recoverable amount is less than their carrying amount. Cellectis trade and other receivables are impaired according to the expected loss model.
Receivables are classified as current assets, except for those with a maturity exceeding 12 months after the reporting date.
Government grants to Cellectis related to research and development expenses for research programs are recognized as subsidies receivables in the period in which the expenses subject to the subsidy have been incurred, provided there is a reasonable assurance that we will comply with conditions attached to the subsidy and that the subsidy will be received.
Financial liabilities
Financial liabilities include trade and other payables, finance leases, State Guaranteed loans « PGE », EIB loan and conditional advances.warrants and a tenant improvement loan related to our headquarters in New-York.
We initially recognize financial liabilities on the transaction date, which is the date that we become a party to the contractual provisions of the instrument.
We derecognize financial liabilities when our contractual obligations are discharged, canceled or expire. In the event of a substantive renegotiation of our contractual obligations, we examine whether the derecognition of the original financial liability and the recognition of a new financial liability is necessary, based on the derecognition criteria set out in IFRS 9. Renegotiations that result in a derecognition of the original liability include those that introduce significant new features into the instrument or a significant extension of the term of the instrument.
Financial liabilities other than dervivative are valued at amortized cost. The amount of interest recognized in financial expenses is calculated by applying the financial liability’s effective interest rate to its carrying amount. Any difference between the expense calculated using the effective interest rate and the actual interest payment impacts the value at which the financial liability is recognized. Derivative liabilities are initially recognized and subsequently measured at fair value, with any resultant gains or losses recognised in profit or loss.
Liabilities for short term employee benefits are included in financial liabilities. They are recognized for the amount expected to be paid under short-term cash bonus or profit-sharing plans if we have a present legal or constructive obligation to pay the amount as a result of past service provided by the employee, and the obligation can be estimated reliably.
F-32
7.210.2 Detail of financial assets and liabilities
The following table shows the carrying amounts and fair values of financial assets and financial liabilities.
| Accounting category | Book value on the statement of financial position | Fair Value |
| Accounting category |
|
| Book value on the statement of financial position |
|
| Fair Value Hierarchy |
| |||||||||||||||||||||||||||||
2016 | Fair value through profit and loss | Amortized cost | ||||||||||||||||||||||||||||||||||||||
As of December 31, 2022 |
| Fair value through profit and loss |
|
| Amortized cost |
|
|
|
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
| ||||||||||||||||||||||
| $ in thousands |
| $ in thousands |
| |||||||||||||||||||||||||||||||||||||
Financial assets |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||
Non-current financial assets | — | 691 | 691 | 691 |
|
| 4,716 |
|
|
| 4,075 |
|
|
| 8,791 |
|
|
| 4,716 |
|
|
|
|
|
|
| ||||||||||||||
Trade receivables | — | 3,627 | 3,627 | 3,627 |
|
| - |
|
|
| 772 |
|
|
| 772 |
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Subsidies receivables | — | 8,723 | 8,723 | 8,723 |
|
| - |
|
|
| 14,496 |
|
|
| 14,496 |
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Current financial assets | 36,592 | — | 36,592 | 36,592 |
|
| 7,907 |
|
|
| - |
|
|
| 7,907 |
|
|
|
|
|
|
|
|
| 7,907 |
| ||||||||||||||
Cash and cash equivalents | 254,568 | — | 254,568 | 254,568 |
|
| 89,789 |
|
|
| - |
|
|
| 89,789 |
|
|
| 89,789 |
|
|
|
|
|
|
| ||||||||||||||
|
|
|
| |||||||||||||||||||||||||||||||||||||
Total financial assets | 291,159 | 13,042 | 304,201 | 304,201 |
|
| 102,413 |
|
|
| 19,343 |
|
|
| 121,756 |
|
|
| 94,506 |
|
|
| - |
|
|
| 7,907 |
| ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Financial liabilities |
|
| - |
|
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Non-current lease debts |
|
| - |
|
|
| 49,358 |
|
|
| 49,358 |
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Non-current financial liabilities | — | 30 | 30 | 30 |
|
| - |
|
|
| 20,531 |
|
|
| 20,531 |
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Current lease debts |
|
| - |
|
|
| 7,872 |
|
|
| 7,872 |
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Current financial liabilities | 1,692 | 38 | 1,730 | 1,730 |
|
| - |
|
|
| 5,088 |
|
|
| 5,088 |
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Trade payables | — | 9,722 | 9,722 | 9,722 |
|
| - |
|
|
| 21,456 |
|
|
| 21,456 |
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Other current liabilities | — | 5,196 | 5,196 | 5,196 |
|
| - |
|
|
| 13,179 |
|
|
| 13,179 |
|
|
|
|
|
|
|
|
|
| |||||||||||||||
|
|
|
| |||||||||||||||||||||||||||||||||||||
Total financial liabilities | 1,692 | 14,986 | 16,678 | 16,678 |
|
| - |
|
|
| 117,484 |
|
|
| 117,484 |
|
|
| - |
|
|
| - |
|
|
| - |
| ||||||||||||
|
|
|
| |||||||||||||||||||||||||||||||||||||
| Accounting category | Book value on the statement of financial position | Fair Value | ||||||||||||||||||||||||||||||||||||||
2017 | Fair value through profit and loss | Amortized cost | ||||||||||||||||||||||||||||||||||||||
| $ in thousands | ||||||||||||||||||||||||||||||||||||||||
Financial assets | ||||||||||||||||||||||||||||||||||||||||
Non-current financial assets | — | 1,004 | 1,004 | 1,004 | ||||||||||||||||||||||||||||||||||||
Trade receivables | — | 2,753 | 2,753 | 2,753 | ||||||||||||||||||||||||||||||||||||
Subsidies receivables | — | 9,524 | 9,524 | 9,524 | ||||||||||||||||||||||||||||||||||||
Current financial assets | 40,602 | — | 40,602 | 40,602 | ||||||||||||||||||||||||||||||||||||
Cash and cash equivalents | 256,380 | — | 256,380 | 256,380 | ||||||||||||||||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||||||||||||||
Total financial assets | 296,982 | 13,281 | 310,263 | 310,263 | ||||||||||||||||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||||||||||||||
Financial liabilities | ||||||||||||||||||||||||||||||||||||||||
Non-current financial liabilities | — | 13 | 13 | 13 | ||||||||||||||||||||||||||||||||||||
Current financial liabilities | — | 21 | 21 | 21 | ||||||||||||||||||||||||||||||||||||
Trade payables | — | 9,460 | 9,460 | 9,460 | ||||||||||||||||||||||||||||||||||||
Other current liabilities | — | 6,570 | 6,570 | 6,570 | ||||||||||||||||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||||||||||||||
Total financial liabilities | — | 16,064 | 16,064 | 16,064 | ||||||||||||||||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||||||||||||||
7.3.
F-36
|
| Accounting category |
|
| Book value on the statement of financial position |
|
| Fair Value Hierarchy |
| |||||||||||||||
As of December 31, 2023 |
| Fair value through profit and loss |
|
| Amortized cost |
|
|
|
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
| ||||||
|
| $ in thousands |
| |||||||||||||||||||||
Financial assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Non-current financial assets |
|
| 4,656 |
|
|
| 3,197 |
|
|
| 7,853 |
|
|
| 4,656 |
|
|
|
|
|
|
| ||
Trade receivables |
|
| - |
|
|
| 569 |
|
|
| 569 |
|
|
|
|
|
|
|
|
|
| |||
Subsidies receivables |
|
| - |
|
|
| 20,900 |
|
|
| 20,900 |
|
|
|
|
|
|
|
|
|
| |||
Current financial assets |
|
| 67,107 |
|
|
| 0 |
|
|
| 67,107 |
|
|
| 24,413 |
|
|
|
|
|
| 42,694 |
| |
Cash and cash equivalents |
|
| 136,708 |
|
|
| - |
|
|
| 136,708 |
|
|
| 136,708 |
|
|
|
|
|
|
| ||
Total financial assets |
|
| 208,471 |
|
|
| 24,666 |
|
|
| 233,136 |
|
|
| 165,777 |
|
|
| - |
|
|
| 42,694 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Financial liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Non-current lease debts |
|
| - |
|
|
| 42,948 |
|
|
| 42,948 |
|
|
|
|
|
|
|
|
|
| |||
Non-current derivative instruments (EIB warrants) |
|
| 7,797 |
|
|
| - |
|
|
| 7,797 |
|
|
|
|
|
|
|
|
| 7,797 |
| ||
Other non-current financial liabilities |
|
| - |
|
|
| 41,327 |
|
|
| 41,327 |
|
|
|
|
|
|
|
|
|
| |||
Current lease debts |
|
| - |
|
|
| 8,502 |
|
|
| 8,502 |
|
|
|
|
|
|
|
|
|
| |||
Current financial liabilities |
|
| - |
|
|
| 5,289 |
|
|
| 5,289 |
|
|
|
|
|
|
|
|
|
| |||
Trade payables |
|
| - |
|
|
| 19,069 |
|
|
| 19,069 |
|
|
|
|
|
|
|
|
|
| |||
Other current liabilities |
|
| - |
|
|
| 10,219 |
|
|
| 10,219 |
|
|
|
|
|
|
|
|
|
| |||
Total financial liabilities |
|
| 7,797 |
|
|
| 127,354 |
|
|
| 135,151 |
|
|
| - |
|
|
| - |
|
|
| 7,797 |
|
Entity-wide disclosures:
In 2023, approximately $0.8 million of our non-current financial assets related to France, while approximately $7.1 million related to the United States.
In 2022, approximately $0.7 million of our non-current financial assets related to France, while approximately $8.1 million related to the United States.
In 2021, approximately $1 million of our non-current financial assets relate to France, while approximately $6 million relate to the United States.
10.3. Financial risks management
We have exposure to the following risks arising from financial instruments:
Foreign exchange risk
A portion of our revenue is generated in currencies other than euro. Although our strategy is to favor the euro as our transaction currency when signing contracts, some agreements have been signed in US dollars (primarily our agreement(our agreements with Pfizer)Allogene Therapeutics, Inc., AstraZeneca).
F-33
As of December 31, 2016, 64%2023, 87% of our cash and cash equivalents were denominated in US dollars and 69% of our current financial assets and cash and cash equivalents were denominated in US dollars. As of December 31, 2017, 75%2022, 59% of our cash and cash equivalents were denominated in US dollars and 79%dollars. As of December 31, 2021, 57% of our current financial assets and cash and cash equivalents were denominated in US dollars.
As of December 31, 2016,2022 and 2023, we held the followingdid not hold derivative financial instruments denominated in US dollars:to hedge foreign currency exchange risks.
Liquidity risk
2016 | Notional | Fair Value | Maturity | |||||||||
| $ in thousands | ||||||||||||
USD forward sale contracts | 44,914 | (1,776 | ) | 2017 to 2018 | ||||||||
USD forward purchase contracts | — | — | — | |||||||||
|
| |||||||||||
Total derivative financial instruments | (1,776 | ) | ||||||||||
|
| |||||||||||
of which : | ||||||||||||
Derivative financial assets | — | |||||||||||
Derivative financial liabilities | (1,776 | ) | ||||||||||
As of December 31, 2017, we held the following derivative financial instruments, denominated in US dollars:
2017 | Notional | Fair Value | Maturity | |||||||||
| $ in thousands | ||||||||||||
USD forward sale contracts | 18,775 | 558 | 2018 | |||||||||
USD forward purchase contracts | — | — | — | |||||||||
|
| |||||||||||
Total derivative financial instruments | 558 | |||||||||||
|
| |||||||||||
of which : | ||||||||||||
Derivative financial assets | 558 | |||||||||||
Derivative financial liabilities | — | |||||||||||
We do not apply hedge accounting to these instruments.
Liquidity risk
Our2023, our financial debt primarily consists of finance lease liabilities ($34 thousand asdebts for $51.5 million, a loan from a bank syndicate formed with HSBC, Société Générale, Banque Palatine and Bpifrance in the form of December 31, 2017)a state-guaranteed loan (Prêt Garanti par l’Etat) (the“PGE”) for 18.5 million euros of which $14.1 million remaining debt, the 2021 and 2022 Research Tax Credit financing with BPI for $11.9 million, and a liability related to the EIB loan of $20 million .
We have incurred losses and cumulative negative cash flows from operations since our inception in 2000, and we anticipate that we will continue to incur losses for at least the next several years. As
With cash and cash equivalents of $136.7 million as of December 31, 2017,2023, taking into account the €15.0 million under Tranche B of the €40.0 million Finance Contract with EIB received in January 2024, and the $140 million equity investment we held $256.4 million inexpect to receive pursuant to the Subsequent Investment Agreement, the Company believes its cash and cash equivalents.equivalents will be sufficient to fund its operations into, assuming receipt of such funds, 2026 and therefore for at least twelve months following the consolidated financial statements’ publication.
Interest rate risk
As of December 31, 2015, we were only liable for governmental conditional advances with either no interest or interest at a fixed, generally below market rate. Consequently, we were not significantly exposed to fluctuations in interest rates for our liabilities. These governmental conditional advances were settled during the year 2016.
We seek to engage in prudent management of our cash and cash equivalents, mainly cash on hand and common financial instruments (typically short- andmid-term deposits). Furthermore, the interest rate risk related to cash, cash equivalents and common financial instruments is not significant based on the quality of the financial institutions with which we work.
Our main interest-bearing financial debts, the "PGE" loans and our loans under the Finance Contract with EIB, are at fixed rates and do not expose us to interest rate risks.
F-37
Share price risk
F-34
Credit risk
Credit risk is the risk of our financial loss if a customer or counterparty to a financial instrument defaultsdefault on its contract commitments. We are exposed to credit risk due to our trade receivables, subsidies receivables and cash equivalents.
Our policy is to manage our risk by dealing with third parties with good credit standards.
Note 8. Inventories
Accounting policy
Inventories are measured at the lower of cost and net realizable value. Cost is determined using the first in first out cost method.
Description of inventories
As of December 31, 2017 and 2016, they consist of $250 thousand and $118 thousand, respectively, in raw materials and laboratory consumables (representing pharmaceutical and chemical products). No provision for impairment has been recorded as of December 31, 2016 and 2017.
Note 9.11. Trade receivables and other current assets
Accounting policies for trade receivables and other current assets are described in Note 7.1.9.1.
9.111.1 Trade receivables
| As of December 31, | As of December 31, |
| As of December 31, |
| As of December 31, |
| ||||||||||
| 2016 | 2017 | 2022 |
| 2023 |
| |||||||||||
| $ in thousands | $ in thousands |
| ||||||||||||||
Trade receivables | 3,914 | 3,079 |
| 772 |
|
|
| 569 |
| |||||||
Valuation allowance | (287 | ) | (326 | ) | ||||||||||||
|
| |||||||||||||||
Allowance for expected credit losses |
|
| - |
|
|
| - |
| ||||||||
Total net value of trade receivables | 3,627 | 2,753 |
| 772 |
|
| 569 |
| ||||||||
|
| |||||||||||||||
All trade receivables have payment terms of less than one year. The change indecrease of trade receivables between December 31, 20162022 and December 31, 20172023 is mainly duerelated to lowerthe payment of a $0.5 million receivable related to the extension of the option term of a license agreement partially offset by $0.3 million receivables on collaboration contracts.related to our license agreement with two of our partners.
9.211.2 Subsidies receivables
| As of December 31, | As of December 31, |
| As of December 31, |
| As of December 31, |
| ||||||||||
| 2016 | 2017 | 2022 |
| 2023 |
| |||||||||||
| $ in thousands | $ in thousands |
| ||||||||||||||
Research tax credit | 8,389 | 9,039 |
|
| 14,496 |
|
|
| 20,900 |
| ||||||
Other subsidies | 1,500 | 1,812 |
|
| - |
|
|
| - |
| ||||||
Valuation allowance for other subsidies | (1,166 | ) | (1,326 | ) | ||||||||||||
|
| |||||||||||||||
Total | 8,723 | 9,524 | ||||||||||||||
|
| |||||||||||||||
Total subsidies receivables |
| 14,496 |
|
| 20,900 |
| ||||||||||
Research tax credit receivables as of December 31, 20162023 include the accrual for a French research tax credit related to 20162023 for $7.6$5.6 million and to previous periods for $15 million.
During December 2018, the remaining amount relatesFrench Tax Authority initiated an audit related to refundablethe 2014, 2015, 2016 and 2017 French research tax creditscredits. In January 2022, a legal court confirmed that Cellectis was entitled to receive the amounts related to 2017 and 2018 tax credits. $0.8 million were collected in February 2022. On March 15, 2022, the United States.French tax authorities appealed this decision to the Paris Administrative Court of Appeal and requested that the decision be reversed. On May 18, 2022, the Company filed its observations in defense. A decision was taken on December 13, 2023, following a hearing held on November 29, 2023, whereby the Paris Administrative Court of Appeal overturned the Paris Administrative Court's decision of February 3, 2022 and ordered the reimbursement of $0.7 million.
Research tax credit receivables as of December 31, 20172022 include the accrual for a French research tax credit related to 20172022 for $8.2$6.7 million and the remaining amount mainly relates to refundable tax credits in the United States.previous periods for $7.2 million.
F-35
The valuation allowance for other subsidies corresponds to a grant, which was fully reserved in 2014.
9.311.3 Other current assets
| As of December 31, | As of December 31, |
| As of December 31, |
| As of December 31, |
| ||||||||||
| 2016 | 2017 | 2022 |
| 2023 |
| |||||||||||
| $ in thousands | $ in thousands |
| ||||||||||||||
VAT receivables | 1,605 | 1,543 |
|
| 1,140 |
|
|
| 1,414 |
| ||||||
Income tax receivable |
|
|
|
|
| 192 |
| |||||||||
Prepaid expenses and other prepayments | 6,615 | 8,304 |
| 6,233 |
|
|
| 5,716 |
| |||||||
Tax and social receivables | 285 | 873 |
|
| 1,166 |
|
|
| 55 |
| ||||||
Deferred expenses and other current assets | 363 | 2,993 |
|
| 538 |
|
|
| 345 |
| ||||||
|
| |||||||||||||||
Total | 8,870 | 13,713 | ||||||||||||||
|
| |||||||||||||||
Total other current assets |
| 9,078 |
|
| 7,722 |
| ||||||||||
Prepaid expenses and other prepayments primarily include advances to oursub-contractors on research and development activities. They mainly relate to advance payments to suppliers of biological raw materials and to third parties participating in product manufacturing.
During 2017,the years ended December 31, 2023 and December 31, 2022, we prepaid certain manufacturing and clinical costs related to our product candidates UCART123, UCARTCS1UCART22 and UCART22UCART20x22 of which the delivery of products or services is expected in the coming months.
As of December 31, 2017, deferred expensesmonths and other current assets include (i) a deferred expense of $2.1 millionalso costs related to the saleinsurance and lease-back transaction entered into by Calyxt, (ii) other deferred expenses for $0.6 million, (iii) other current assets for $0.3 million.rents.
Tax and social receivables as of December 31, 2017 include $0.6 million of tax receivables and $0.3 million of social charges on personnel expenses.
F-38
Note 10.12. Current financial assets and Cash and cash equivalents
| As of December 31, 2016 | Carrying amount | Unrealized Gains/(Losses) | Estimated fair value | ||||||||||||||||||||
As of December 31, 2022 | Carrying amount |
| Unrealized Gains/(Losses) |
| Estimated fair value |
| |||||||||||||||||
|
| $ in thousands |
|
|
| ||||||||||||||||||
| $ in thousands |
|
|
|
|
|
|
|
| |||||||||||||||
Current financial assets | 36,592 | — | 36,592 |
| 7,907 |
|
|
| - |
|
|
| 7,907 |
| |||||||||
Cash and cash equivalents | 254,567 | — | 254,567 |
| 89,789 |
|
|
| - |
|
|
| 89,789 |
| |||||||||
|
|
| |||||||||||||||||||||
Current financial assets and cash and cash equivalents | 291,159 | — | 291,159 |
| 97,697 |
|
|
| - |
|
|
| 97,697 |
| |||||||||
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
As of December 31, 2023 | Carrying amount |
| Unrealized Gains/(Losses) |
| Estimated fair value |
| |||||||||||||||||
|
| $ in thousands |
|
|
| ||||||||||||||||||
| As of December 31, 2017 | Carrying amount | Unrealized Gains/(Losses) | Estimated fair value | ||||||||||||||||||||
| $ in thousands |
|
|
|
|
|
|
|
| |||||||||||||||
Current financial assets | 40,602 | — | 40,602 |
| 67,107 |
|
|
| - |
|
|
| 67,107 |
| |||||||||
Cash and cash equivalents | 256,380 | — | 256,380 |
| 136,708 |
|
|
| - |
|
|
| 136,708 |
| |||||||||
|
|
| |||||||||||||||||||||
Current financial assets and cash and cash equivalents | 296,982 | — | 296,982 |
| 203,815 |
|
|
| - |
|
|
| 203,815 |
| |||||||||
|
|
| |||||||||||||||||||||
F-36
10.112.1 Current financial assets
Accounting policies
CurrentAs of December 31, 2023, our current financial assets are composed of a $15.0 million deposit with a term of more than 3 months that aredoes not meet IAS 7 requirements to qualify as cash equivalents, a $42.7 million financial derivative related to the SIA with AZ and a $9.4 million corresponding to our investment in Cibus at its fair value. There is no short-term restricted cash included in the current financial assets.
As of December 31, 2022, current financial assets corresponded to Cytovia’s convertible note, measured at its fair value of $7.9 million. There was no short-term restricted cash included in the current financial assets, the only short-term restricted cash being deposits to secure a Calyxt furniture and equipment sale-leaseback for $0.2 million which were included in the assets held for sale.
Cytovia convertible note
On February 12, 2021, we entered into a research collaboration and non-exclusive license agreement with Cytovia as amended from time to time (the “Cytovia Agreement”) to develop induced Pluripotent Stem Cell (iPSC) iPSC-derived Natural Killer (NK) and CAR-NK cells edited with our TALEN.
Upon initial execution of the Cytovia Agreement, the Company recorded a note receivable and related license revenue of $20 million in respect of the Upfront Collaboration Consideration. Because the Cytovia Conditions were not met by December 31, 2021, the note receivable was converted to an accounts receivable as of December 31, 2021. In April 2022, in connection with Cytovia’s entering into a definitive business combination agreement with a publicly traded Special Purpose Acquisition Company (“SPAC”), we entered into an amendment to the Cytovia Agreement, pursuant to which we received a $20 million convertible note for consideration of the Upfront Collaboration Consideration. The terms of the convertible note provided for (i) conversion into common stock of the combined company upon completion of the business combination or, (ii) in certain circumstances, our ability to elect to be paid in cash on or before December 31, 2022. Because the SPAC business combination was abandoned and the conditions of the convertible note were not met, we and Cytovia entered into an amended and restated note which became effective as of December 22, 2022.
The amended and restated convertible note provides for automatic conversion into common stock of Cytovia in the case of certain fundamental transactions pursuant to which Cytovia becomes a public reporting company and for conversion at Cellectis’ option in connection with certain financing transactions, upon a company sale and at final maturity. In each case such conversion is subject to a 9.9% ownership cap, with the balance issuable in the form of pre-funded warrants. Among other changes, the amended and restated convertible note increases the applicable interest rate of the convertible note to 10% per annum, subject to a 10% step up upon the occurrence and continuation of an event of default, provides for the repayment of 50% of the outstanding amount on April 30, 2023 and extends the final maturity date for the repayment of the remaining outstanding amount to June 30, 2023. On April 30, 2023, we signed a further amendment to agree that 100% of the convertible note would be due at final maturity on June 30, 2023.
At the maturity date on June 30, 2023, we did not elect to convert the convertible note into shares of Cytovia’s then-outstanding most senior series of preferred stock and therefore the outstanding amount of the note automatically became due and payable in full in cash by Cytovia for $22.4 million, which includes the $20.0 million principal and $2.4 million of accumulated interest generated since the convertible note was issued in April 2022. Cytovia failed to pay this amount, which remains due and payable and Cytovia’s receivable in respect of the note continues to accrue interest during the continuation of this default, subject to the 10% interest step up.
The convertible note was classified as a financial asset measured at fair value through profit or loss until June 30, 2023. The fact that Cytovia is in accordancedefault substantially changes the cash flows associated with IAS 39 includethis asset, mainly as the following:convertible note is now only repayable in cash (and no longer subject to conversion into shares of Cytovia). We consider that the criteria for derecognition of this financial asset are met on June 30, 2023, and we therefore derecognized this asset to recognize a new asset, based on such new characteristics.
IFRS 13 (Fair Value Measurement) requires counterparty and own credit risk to be taken into account when measuring the estimated fair value of financial instruments. This risk isthe asset the expected credit losses over the life of the asset. The estimated fair value of the asset as of June 30, 2023 was $1.1 million.
F-39
The expected credit losses have been estimated using both historical and forward-looking estimations, including (i) our ongoing negotiations with Cytovia on the restructuring of the Cytovia Agreement, and (ii) our assessment of Cytovia’s credit worthiness based on our historical experience with Cytovia and the current financing market for biotechnology companies, and in particular, for companies working on pluripotent stem cells. On the basis of observable, publicly-available statistical data.this information, we have prepared recovery scenarios for which the expected loss in each scenario has been weighted by the probability of the scenario occurring.
DetailsOn November 30, 2023, considering that the progress made in our negotiations with Cytovia was insufficient and in light of current financial assetstheir failure to pay due and payable amounts under the note, we notified Cytovia of the termination of the Cytovia Agreement. Under the terms of the termination letter, Cytovia is no longer authorized to use the licenses and rights granted under the Cytovia Agreement, but remains liable for the outstanding amount of the note and for which Cytovia is currently in default.
Current financial assets are measured at fair value through profit or lossConsidering new developments that occurred since June 30, 2023, including the termination of the Agreement, the end of our negotiations with Cytovia, Cytovia's resources and are classified as follows withinfinancing options and our ability to recover the fair value hierarchy:
Instruments classified under level 2 are measured with reference to observable valuation inputs; they consist inzero-premium accumulator. Their nominal value amount to $0.6The impact on the statement of operations for the year-ended December 31, 2023 is a net loss of $7.9 million, composed of the impact of the derecognition of the initial asset and the recognition of the new one on June 30, 2023 for $6.8 million, and theirthe impact of the subsequent write-off of the asset for $1.1 million. We recognized this loss through profit and loss, within financial expenses.
AstraZeneca subsequent investment
The accounting treatment of the AstraZeneca SIA is detailed in Note 2.6 to the financial statements “Accounting treatment of significant transactions of the period”.
At initial recognition, the SIA gives rise to the recognition of a financial derivative measured at its fair-value of $48.4 million. The fair value amount to $0.6 million as of this instrument has been remeasured on December 31, 2017.2023 and amounts to $42.7 million. The difference in fair value measurement has been recognized in financial expense for $5.7 million.
10.2
12.2 Cash and cash equivalents
Accounting policy
Cash and cash equivalents are held for the purpose of meeting short-term cash commitments rather than for the purpose of investment or for other purposes. They are readily convertible into a known amount of cash and are subject to an insignificant risk of changes in value. Cash and cash equivalents include cash, bank accounts, money market funds and fixed bank deposits that meet the definition of a cash equivalent. Cash equivalents are fair valued at the end of each reporting period.
Details of cash and cash equivalents
| As of December 31, | As of December 31, | As of December 31, |
| As of December 31, |
| ||||||||||
| 2016 | 2017 | 2022 |
| 2023 |
| ||||||||||
| $ in thousands | $ in thousands |
| |||||||||||||
Cash and bank accounts | 222,089 | 219,368 |
| 65,012 |
|
|
| 81,708 |
| ||||||
Money market funds | 12,451 | 13,026 |
| 13,578 |
|
|
| - |
| ||||||
Fixed bank deposits | 20,028 | 23,986 |
| 11,200 |
|
|
| 55,000 |
| ||||||
|
| ||||||||||||||
Total cash and cash equivalents | 254,568 | 256,380 |
| 89,789 |
|
|
| 136,708 |
| ||||||
|
| ||||||||||||||
Money market funds earn interest and are refundable overnight. Fixed bank deposits have fixed original terms that are less than three months or are readily convertible to a known amount of cash.
F-37cash and are subject to an insignificant risk of changes in value.
F-40
Note 11.13. Financial liabilities
11.1 13.1 Detail of financial liabilities
|
| As of December 31, 2022 |
|
| As of December 31, 2023 |
| ||
|
|
|
|
|
| |||
|
| $ in thousands |
| |||||
Conditional advances |
|
| - |
|
|
| 1,448 |
|
Lease debts |
|
| 49,358 |
|
|
| 42,948 |
|
State Guaranteed loan « PGE » |
|
| 13,569 |
|
|
| 8,950 |
|
EIB loan |
|
| - |
|
|
| 18,046 |
|
EIB warrants |
|
| - |
|
|
| 7,797 |
|
Other non-current financial liabilities |
|
| 6,962 |
|
|
| 12,884 |
|
Total non-current financial liabilities and non-current lease debts |
|
| 69,889 |
|
|
| 92,073 |
|
Lease debts |
|
| 7,872 |
|
|
| 8,502 |
|
State Guaranteed loan « PGE » |
|
| 4,972 |
|
|
| 5,162 |
|
Other current financial liabilities |
|
| 116 |
|
|
| 126 |
|
Total current financial liabilities and current lease debts |
|
| 12,960 |
|
|
| 13,790 |
|
Trade payables |
|
| 21,456 |
|
|
| 19,069 |
|
Other current liabilities |
|
| 13,179 |
|
|
| 10,219 |
|
Total Financial liabilities |
|
| 117,484 |
|
|
| 135,151 |
|
Other non-current financial liabilities
| As of December 31, | As of December 31, | |||||||
| 2016 | 2017 | |||||||
| $ in thousands | ||||||||
Finance leases | 30 | 13 | ||||||
|
|
|
| |||||
Totalnon-current financial liabilities | 30 | 13 | ||||||
|
|
|
| |||||
Finance leases | 38 | 21 | ||||||
Derivative instruments | 1,692 | — | ||||||
|
|
|
| |||||
Total current financial liabilities | 1,730 | 21 | ||||||
|
|
|
| |||||
Trade payables | 9,722 | 9,460 | ||||||
Other current liabilities | 5,197 | 6,570 | ||||||
|
|
|
| |||||
Total Financial liabilities | 16,678 | 16,064 | ||||||
|
|
|
| |||||
Derivative instruments consist
As of December 31, 2023 the other non-current financial liabilities are composed of a $1.1 million loan to finance leasehold improvements in our premises in New York, a Research Tax Credit financing from BPI received in June 2022 of €5.5 million representing a non-current financial liability of $6.1 million and a new Research Tax Credit financing from BPI received in August 2023 of €5.3 million, representing a non-current financial liability of $5.9 million. As of December 31, 2022, the other non-current financial liabilities were of the same nature and amount, with the exception of the August 2023 Research Tax Credit financing.
State Guaranteed loan
State Guaranteed Loan (“Prêt Garanti par l’Etat”, or “PGE”) corresponds to Cellectis’ obtention of an €18.5 million (or $20.4 million using exchange rate as of December 31, 2023) loan from a bank syndicate formed with HSBC, Société Générale, Banque Palatine and Bpifrance. Initiated by the French Government to support companies during the COVID-19 crisis, the PGE is a bank loan with a fixed interest rate ranging from 0.31% to 3.35%. After an initial interest-only term of two years, the loan is amortized over up to four years at the option of the Company. The French government guarantees 90% of the borrowed amount. As of December 31, 2023, the current liability related to the PGE amounted to $5.2 million and the non-current liability amounts to $9.0 million.
Conditional advances
On March 8, 2023, we signed a grant and refundable advance agreement with BPI to partially support one of our R&D programs which corresponds to UCART 20x22 and related CMC activities. Pursuant to this agreement, we received $0.9 million as a first installment of the refundable advance on June 19, 2023 and $1.9 million as a second installment on October 6, 2023.
Repayment of this advance is due over a period of 3 years starting on March 31, 2028. The amount to be repaid is equal to the principal adjusted upwards by a discounting effect at an annual rate of 3.04%, in accordance with the European Commission’s principle for State aid. The amount of this discounting adjustment is expected to be $0.6 million and the total amount to be repaid $3.4 million.
The refundable advance from BPI is accounted for a government loan as defined by IAS 20. Because this loan bears a lower-than-market interest rate, we measure for each installment the fair value of zero premium collar instrumentsthe loan using a market interest rate and accumulators that are classified under level 2 inrecognize the difference from the cash received as a grant. Based on a market rate of 16.1% for the first installment and 15.2% for the second installment, determined using the credit spread observed for loans contracted by Cellectis over a comparable term, we measured the fair value hierarchy (note 7.3. Financial risks management).of the loan at $1.4 million. The difference between this $1.4 million fair value and the $2.8 million received in cash is recognized as a grant for $1.4 million. The loan is subsequently measured at amortized cost.
11.2 European Investment Bank (“EIB”) loan
On December 28, 2022, we entered into a finance contract (the “Finance Contract”) with the EIB for up to €40.0 million in loans to support our research and development activities to advance our pipeline of gene-edited allogeneic cell therapy candidate products for oncology indications (the “R&D Activities”). The Finance Contract provides for funding in three tranches, as follows: (i) an initial tranche of €20.0 million (“Tranche A”); (ii) a second tranche of €15.0 million (“Tranche B”); and (iii) a third tranche of €5.0 million (“Tranche C,” and each of Tranche A, Tranche B, and Tranche C, a “Tranche”), each issuable only in full. Each of our material subsidiaries guarantees our obligations under the Finance Contract. On March 30, 2023, the Company and EIB entered into a Subscription Agreement for Warrants to be Issued by Cellectis S.A. (the “Warrant Agreement”), as required by the Finance Contract.
On March 28, 2023, the Company issued 2,779,188 Tranche A Warrants to EIB, in accordance with the terms of the 11th resolution of the shareholders’ meeting held on June 28, 2022 and articles L. 228-91 and seq. of the French Commercial Code, representing 5.0% of the Company’s outstanding share capital as at their issuance date. The exercise price of the Tranche A Warrants is equal to €1.92, corresponding to 99% of the volume-weighted average price per share of the Company’s ordinary shares over the last 3 trading days preceding their issuance. Tranche A will mature six years from its disbursement date. Interest on Tranche A shall be paid in kind, shall be capitalized annually by increasing the principal amount of Tranche A, and shall accrue at a rate equal to 8% per annum. The EIB proceeded to the payment of the €20 million on April 17, 2023.
F-41
On April 4, 2023, Cellectis announced the drawdown of the €20 million Tranche A. The disbursement of Tranche A was subject to, among other conditions, (i) the issuance of a specified number of warrants to the benefit of EIB (the “Tranche A Warrants”) and (ii) the completion of certain clinical development milestone by a Cellectis’ licensee, and, as of April 4, 2023, each of (i) and (ii) had been satisfied.
Each EIB Warrant will entitle EIB to one ordinary share of the Company in exchange for the exercise price (subject to applicable adjustments and anti-dilution provisions). The EIB Warrants have an exercise price per share equal to 99% of the weighted average price per share of the Company over the last three trading days prior to their issuance. The EIB Warrants with respect to Tranche B and Tranche C are only issuable if the Company elects to drawdown such tranches.
The EIB Warrants expire on the twentieth anniversary of their issuance date, at which time such unexercised EIB Warrants will be automatically deemed null and void. Any outstanding EIB Warrant will become exercisable following the earliest to occur of (i) a change of control event, (ii) the maturity date of Tranche A, (iii) a public take-over bid approved by the Company’s board of directors, (iv) a sale of all or substantially all of certain assets of Cellectis and its subsidiaries, (v) a debt repayment event (i.e. any mandatory repayment pursuant to the Finance Contract or any voluntary payment more than 75% of any Tranche) in respect of one or more Tranches, , or (vi) the receipt of a written demand for repayment from EIB in connection with an event of default under the Finance Agreement (each an “Exercise Event”).
Following any Exercise Event and until expiration of the applicable EIB Warrants, EIB may exercise a put option by which EIB may require the Company to repurchase all or part of the then-exercisable but not yet exercised EIB Warrants. The exercise of such put option would be at the fair market value of the EIB Warrants, subject to a cap equal to the aggregate principal amount disbursed by EIB pursuant to the Finance Contract at the time of the put option, reduced by certain repaid amounts, at the time of exercise of the put option.
Furthermore, in the case of any public take-over bid from a third party or a sale of all outstanding shares of the Company to any person or group of persons acting in concert, the Company shall, subject to certain conditions including the sale by certain shareholders of all of their shares and other securities, be entitled to repurchase all, but not less than all, of the EIB Warrants, at a price equal to the greater of (a) 0.3 times the amount disbursed by the EIB under the Finance Contract divided by the aggregate number of EIB Warrants issued (reduced by the number of exercised EIB Warrants), and (b) the fair market value of the EIB Warrants.
The Company has a right of first refusal to repurchase the EIB Warrants that are offered for sale to a third party under the same terms and conditions of such third party’s offer, provided that such right of first refusal does not apply if the contemplated sale occurs within the scope of a public take-over bid by a third party.
The Finance Contract and the Warrant Agreement are separate contracts as their maturities differ and as the warrants are transferable (subject to certain conditions). Therefore, the warrants are accounted for separately from the loan.
The €20.0 million Tranche A loan is classified as a financial liability measured at amortized cost. At initial recognition, i.e. on April 17, 2023, the fair value of this loan included $0.3 million of transaction costs disbursed in cash and the $5.2 million fair value of the warrants (see below Derivative Instruments) as the warrants were analyzed as being as part of the consideration given to EIB for the purpose of obtaining the loan. The initial fair value of the loan is $16.2 million. The loan is subsequently measured at amortized cost, the effective interest rate of the loan being 13.4%.
Derivative Instruments – EIB Warrants
The Tranche A Warrants issued in favor of the EIB in relation to the Tranche A disbursement in the form of 2,779,188 Bons de Souscription d’Actions (“BSA”) are derivative instruments.
Because of the terms and conditions of the EIB’s put option, we consider that the put option and the Tranche A Warrants are to be treated as a single compound derivative.
Because of the terms and conditions of the Company’s call option, we consider it highly unlikely that the Company will exercise the call option. Accordingly, the call option has been valued at zero as of December 31, 2023.
The “fixed for fixed” rule of IAS 32, which states that derivatives shall be classified as equity if they can only be settled by the delivery of a fixed number of shares in exchange for a fixed amount of cash or another financial asset, is not met because under specific circumstances Cellectis may be required to repurchase the warrants at their fair market value (subject to a cap).
As they are not equity instruments, the Tranche A Warrants and attached put option are to be classified as a financial liability and will be measured at fair value through profit and loss.
The fair value of the Tranche A Warrants and put option has been estimated using a Longstaff Schwartz approach. Considering its unobservable parameters, this financial instrument is considered as a level 3 derivative.
This approach is most appropriate to estimate the value of American options (which may be exercised any time from an exercise event until maturity) with complex exercise terms (EIB can exercise the Tranche A warrants on the basis of Cellectis’ spot share price or exercise the put option on the basis of the average price of the shares over 90 days).
The Longstaff Schwartz approach is also based on the value of the underlying share price at the valuation date, the observed volatility of the company’s historical share price and the contractual life of the instruments.
F-42
The assumptions and results of the warrants valuation are detailed in the following tables:
Warrants Tranche A | |
Grant date * | 4/17/2023 |
Expiration date | 4/17/2043 |
Number of options granted | 2,779,188 |
Share entitlement per option | 1 |
Exercise price (in euros per option) | 1.92 |
Valuation method | Longstaff Schwartz |
* The grant date retained is the collection date of the Tranche A as this is the issuance date defined in the contract.
| Warrants Tranche A |
| |||||
| As of April 17, 2023 |
|
| As of December 31, 2023 |
| ||
Number of warrants granted | 2,779,188 |
|
|
| 2,779,188 |
| |
Share price (in euros) | 1.87 |
|
|
| 2.76 |
| |
Average life of options (in years) | 20 |
|
| 19.55 |
| ||
Expected volatility | 81.3% |
|
|
| 67.6 | % | |
Put option cap (in € thousands) | 7.196 |
|
| 8.256 |
| ||
Discount rate | 2.85% |
|
|
| 2.5 | % | |
Expected dividends |
| 0 | % |
|
| 0 | % |
Fair value per options (in euros per share) | 1.73 |
|
|
| 2.54 |
| |
Fair value in $ thousands |
| 5,280 |
|
|
| 7,797 |
|
The change in fair value of Tranche A warrants of $2.5 million between initial recognition and December 31, 2023 was recognized in financial income.
We conducted sensitivity analysis on the expected volatility of 5% as a standard practice. As shown in the tables below, the sensitivity of the fair value to the expected volatility is not significant:
As of April 17, 2023 | Fair value in $ thousands | ||
Expected volatility -5% | 5,261 | ||
Expected volatility | 5,280 | ||
Expected volatility +5% | 5,286 | ||
As of December 31, 2023 | Fair value in $ thousands | ||
Expected volatility -5% | 7,690 | ||
Expected volatility | 7,797 | ||
Expected volatility +5% | 7,871 | ||
13.2 Due dates of the financial liabilities
| Balance as of December 31, 2017 | Gross Amount | Less than One Year | One to Five Years | More than Five Years | ||||||||||||||||||||||||||||
Balance as of December 31, 2023 | Book value |
| Less than One Year |
| One to Five Years |
|
| More than Five Years |
| |||||||||||||||||||||||
| $ in thousands | $ in thousands |
| ||||||||||||||||||||||||||||||
Finance leases | 34 | 21 | 13 | — | ||||||||||||||||||||||||||||
Derivative instruments | — | — | — | — | ||||||||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||||||
Lease debts |
|
| 51,450 |
|
|
| 8,502 |
|
|
| 28,369 |
|
|
| 14,579 |
| ||||||||||||||||
Financial liabilities | 34 | 21 | 13 | — |
|
| 54,413 |
|
|
| 5,289 |
|
|
| 21,862 |
|
|
| 27,263 |
| ||||||||||||
|
|
|
| |||||||||||||||||||||||||||||
Financial liabilities |
|
| 105,863 |
|
|
| 13,790 |
|
|
| 50,230 |
|
|
| 41,842 |
| ||||||||||||||||
Trade payables | 9,460 | 9,460 | — | — |
|
| 19,069 |
|
|
| 19,069 |
|
|
| - |
|
|
| - |
| ||||||||||||
Other current liabilities | 6,570 | 6,570 | — |
|
| 10,219 |
|
|
| 10,219 |
|
|
| - |
|
|
| - |
| |||||||||||||
|
|
|
| |||||||||||||||||||||||||||||
Total financial liabilities | 16,064 | 16,051 | 13 | — |
|
| 135,151 |
|
|
| 43,078 |
|
|
| 50,230 |
|
|
| 41,842 |
| ||||||||||||
|
|
|
| |||||||||||||||||||||||||||||
Balance as of December 31, 2022 | Book value |
| Less than One Year |
| One to Five Years |
|
| More than Five Years |
| |||||||
| $ in thousands |
| ||||||||||||||
Lease debts |
|
| 57,230 |
|
|
| 7,872 |
|
|
| 26,412 |
|
|
| 22,946 |
|
Financial liabilities |
|
| 25,619 |
|
|
| 5,088 |
|
|
| 19,947 |
|
|
| 584 |
|
Financial liabilities |
|
| 82,849 |
|
|
| 12,960 |
|
|
| 46,359 |
|
|
| 23,530 |
|
Trade payables |
|
| 21,456 |
|
|
| 21,456 |
|
|
| - |
|
|
| - |
|
Other current liabilities |
|
| 13,179 |
|
|
| 13,179 |
|
|
| - |
|
|
| - |
|
Total financial liabilities |
|
| 117,484 |
|
|
| 47,595 |
|
|
| - |
|
|
| - |
|
Note 12.14. Other current liabilities
| As of December 31, | As of December 31, |
| As of December 31, 2022 |
|
| As of December 31, 2023 |
| |||||||||
| 2016 | 2017 |
|
|
|
|
| ||||||||||
| $ in thousands |
| $ in thousands |
| |||||||||||||
VAT Payables | 192 | 9 |
|
| 3,058 |
|
|
| - |
| ||||||
Accruals for personnel related expenses | 4,140 | 5,982 |
|
| 9,421 |
|
|
| 9,368 |
| ||||||
Other | 864 | 579 |
|
| 700 |
|
| 852 |
| |||||||
|
| |||||||||||||||
Total | 5,196 | 6,570 | ||||||||||||||
|
| |||||||||||||||
Total other current liabilities |
|
| 13,179 |
|
| 10,219 |
| |||||||||
F-43
Accruals for personnel are related to annual bonuses, vacationsPTO accruals and social expenses on stock options. The increase in accruals for personnel related expenses
Other current liabilities decreased by $3.0 million between December 31, 20162023 and December 31, 2017,2022, the decrease is mainly driven by higher annual bonusrelated to the payment in 2023 of Plant segment personnel for $0.8 million, social charges on stock options grant recorded in 2017 for $0.6 million, foreign exchange impactthe VAT payables due to the collected VAT on the opening balance for $0.6 million, partially offset by other immaterial variances for $0.2 million..Servier milestone invoice in December 2022.
Note 15. Deferred income and contract liabilities
Details of deferred income and contract liabilities
|
| As of December 31, 2022 |
|
| As of December 31, 2023 |
| ||
|
|
|
|
| ||||
$ in thousands |
| |||||||
Deferred revenues and contract liabilities |
|
| 59 |
|
|
| 110,325 |
|
Total deferred income and contract liabilities |
| 59 |
|
|
| 110,325 |
| |
As of December 31, 20162023, the deferred income and 2017, “Other”contract liabilities primarily include subsidies liabilities for $0.5a $25.0 million upfront payment received in November 2023 under the AZ JRCA and $0.3$84.1 million respectively. reallocated from the IIA and the SIA.
The decreaseaccounting treatment of the AZ JRCA, the IIA and the SIA is detailed in “Other” is dueNote 2.6 to the reimbursementfinancial statements “Accounting treatment of a subsidy of $0.3 million, that was received in excess during previous years.
F-38
Note 13. Deferred revenues and deferred income
Accounting policies
As disclosed in Note 3,non-refundable upfront payments are deferred and recognized as revenue over the periodsignificant transactions of the collaboration agreement.period”.
Details of deferred revenues and deferred income
Note 16. Capital
| As of December 31, | As of December 31, | |||||||
| 2016 | 2017 | |||||||
| $ in thousands | ||||||||
Deferred revenues | 38,768 | 26,056 | ||||||
Lease incentive | 161 | — | ||||||
|
|
|
| |||||
Total Deferred revenue and deferred income | 38,929 | 26,056 | ||||||
|
|
|
| |||||
Deferred revenues
Since 2014, most of the deferred revenues corresponds to upfront payments for the collaboration agreements with Les Laboratoires Servier and Pfizer Inc.
Lease incentive
In November 2011, when we entered into an operating lease agreement for our headquarters in Paris (BioPark), we received a lease incentive of €1.1 million from the lessor, which is deferred and amortized over the6-year lease term (until October 2017). This amount is booked as a reduction in operating lease expenses.
Note 14. Capital
14.116.1 Share capital issued
Accounting policy
Share capital comprises ordinaryIn general, each shareholder is entitled to one vote per share at any general shareholders’ meeting. However, our By-Laws provide that all shares and shares withheld in registered form (actions nominatives) for more than two years will be granted double voting rights classified in equity.rights. Costs directly attributable to the issue of ordinary shares or share options are recognized as a reduction in equity. Repurchased own shares are classified as treasury shares and deducted from equity.
Nature of the Transactions | Share Capital | Share premium | Number of shares | Nominal value | ||||||||||||
| $ in thousands | in $ | |||||||||||||||
Balance as of January 1, 2015 | 2,014 | 263,100 | 29,446,721 | 0.05 | ||||||||||||
Capital increase by issuance of common shares (IPO Nasdaq) | 297 | 209,899 | 5,500,000 | — | ||||||||||||
Capital increase by issuance of ordinary shares (BSA, BSPCE, SO and free shares) | 13 | 4,325 | 231,893 | — | ||||||||||||
Non-cash stock based compensation expense | — | 32,614 | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Balance as of December 31, 2015 | 2,323 | 509,938 | 35,178,614 | 0.05 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Capital increase by issuance of ordinary shares (BSA, BSPCE, and free shares) | 9 | 723 | 156,446 | — | ||||||||||||
Non-cash stock based compensation expense | — | 57,524 | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Balance as of December 31, 2016 | 2,332 | 568,185 | 35,335,060 | 0.05 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Capital increase by issuance of ordinary shares (BSA, BSPCE, SO and free shares) | 35 | 2,921 | 625,002 | — | ||||||||||||
Share based compensation | — | 42,968 | — | — | ||||||||||||
Other movements | — | (37 | ) | — | — | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Balance as of December 31, 2017 | 2,367 | 614,037 | 35,960,062 | 0.05 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Nature of the Transactions |
| Share Capital |
|
| Share premium |
|
| Number of shares |
|
| Nominal value | |||
|
| $ in thousands (except number of shares) |
|
| in $ | |||||||||
Balance as of January 1, 2021 |
|
| 2,785 |
|
|
| 872,134 |
|
|
| 42,780,186 |
|
| 0.05 |
Capital increase (ATM) |
|
| 143 |
|
|
| 46,811 |
|
|
| 2,415,630 |
|
|
|
Exercise of share warrants, employee warrants and stock options |
|
| 17 |
|
|
| 5,597 |
|
|
| 288,494 |
|
|
|
Non-cash stock-based compensation expense |
|
| - |
|
|
| 12,497 |
|
|
| - |
|
|
|
Transaction costs |
|
| - |
|
|
| (2,316 | ) |
|
| - |
|
|
|
Other movements |
|
| - |
|
|
| (27 | ) |
|
| - |
|
|
|
Balance as of December 31, 2021 |
|
| 2,945 |
|
|
| 934,696 |
|
|
| 45,484,310 |
|
| 0.05 |
|
|
|
|
|
|
|
|
|
|
|
| |||
Balance as of January 1, 2022 |
|
| 2,945 |
|
|
| 934,696 |
|
|
| 45,484,310 |
|
| 0.05 |
Transaction costs related to capital increase |
|
|
|
|
| (570 | ) |
|
|
|
|
| ||
Exercise of share warrants, employee warrants, stock-options and free-shares vesting |
|
| 10 |
|
|
|
|
|
| 191,658 |
|
|
| |
Non-cash stock-based compensation expense |
|
|
|
|
| 8,071 |
|
|
| - |
|
|
| |
Other movements |
|
|
|
|
| (359,076 | ) |
|
| - |
|
|
| |
Balance as of December 31, 2022 |
|
| 2,955 |
|
|
| 583,122 |
|
|
| 45,675,968 |
|
| 0.05 |
|
|
|
|
|
|
|
|
|
|
|
| |||
Balance as of January 1, 2023 |
|
| 2,955 |
|
|
| 583,122 |
|
|
| 45,675,968 |
|
| 0.05 |
Capital increase |
|
| 1,401 |
|
|
| 68,584 |
|
|
| 25,907,800 |
|
|
|
Transaction costs related to capital increase |
|
|
|
|
| (2,049 | ) |
|
|
|
|
| ||
Exercise of share warrants, employee warrants, stock-options and free-shares vesting |
|
| 9 |
|
|
|
|
|
| 167,433 |
|
|
| |
Non-cash stock-based compensation expense |
|
| - |
|
|
| 7,086 |
|
|
| - |
|
|
|
Other movements |
|
| - |
|
|
| (133,958 | ) |
|
| - |
|
|
|
Balance as of December 31, 2023 |
|
| 4,365 |
|
|
| 522,785 |
|
|
| 71,751,201 |
|
| 0.05 |
F-39
Capital evolution in 20172023
F-44
Capital evolution in 2022
Capital evolution in 2021
Capital evolution in 2016
Capital evolution in 2015
BSA 2011:
On October 28, 2011, using the delegation of authority granted by the General Assembly held the same day, we issued 12,195,113 warrants (Bon de Souscription d’Actions or “BSA”) to the existing shareholders with a ratio of one BSA for one share. October 28, 2014 was the closing date for the exercise of the “BSA 2011.” Pursuant to the terms of the plan, we issued 1,470,836 ordinary shares for gross proceeds of $16.4$16.4 million.
Voting rights:
After a shareholder continuously holds ordinary shares for two years, each ordinary share held by such shareholder is entitled to two votes.
Otherwise, our ordinary shares are not entitled to any preferential voting right or restriction.
14.216.2 Share warrants andnon-employee warrants
Share warrants andnon-employee warrants consist of Bon de Souscription d’Action (“BSAs”) which are granted to our board members and consultants.
F-40
Holders of vested stock options and warrants are entitled to subscribe to a capital increase of Cellectis at predetermined exercise price.
| Date | Type | Number of warrants/shares oustanding as of 01/01/2017 | Number of warrants/shares granted | Number of warrants/shares vested/exercised | Number of warrants/shares voided | Number of warrants/shares oustanding as of 12/31/2017 | Maximum of shares to | Number of warrants/shares exercisable as of 12/31/2017 | ||||||||||||||||||||||
07/20/2007 | BSPCE C | 126,292 | — | 126,179 | 113 | — | — | — | ||||||||||||||||||||||
02/28/2008 | BSPCE D | 1,867 | — | — | — | 1,867 | 1,939 | 1,867 | ||||||||||||||||||||||
07/27/2010 | BSPCE E | 19,702 | — | — | — | 19,702 | 20,464 | 19,702 | ||||||||||||||||||||||
03/19/2013 | Free shares | 2,000 | — | 2,000 | — | — | — | — | ||||||||||||||||||||||
01/08/2015 | Free shares | 50,000 | — | 50,000 | — | — | — | — | ||||||||||||||||||||||
03/12/2014 | Free shares | 440,550 | — | 414,950 | 10,000 | 15,600 | 15,600 | — | ||||||||||||||||||||||
03/24/2015 | Stock Options | 1,763,840 | — | — | 14,785 | 1,749,055 | 1,749,055 | 1,206,528 | ||||||||||||||||||||||
03/27/2015 | BSA | 180,000 | — | — | — | 180,000 | 180,000 | 120,000 | ||||||||||||||||||||||
05/18/2015 | BSA | 50,000 | — | — | — | 50,000 | 50,000 | 33,333 | ||||||||||||||||||||||
09/08/2015 | BSA | 274,200 | — | — | — | 274,200 | 274,200 | 182,800 | ||||||||||||||||||||||
09/08/2015 | Stock Options | 1,868,800 | — | — | 66,800 | 1,802,000 | 1,802,000 | 1,061,625 | ||||||||||||||||||||||
03/14/2016 | BSA | 187,200 | — | — | — | 187,200 | 187,200 | 62,400 | ||||||||||||||||||||||
03/14/2016 | Stock Options | 2,030,587 | — | 17,544 | 67,095 | 1,945,948 | 1,945,948 | 799,849 | ||||||||||||||||||||||
10/28/2016 | BSA | 188,000 | — | — | 40,000 | 148,000 | 148,000 | 49,333 | ||||||||||||||||||||||
10/28/2016 | Stock Options | 2,773,028 | — | 14,329 | 143,098 | 2,615,601 | 2,615,601 | 754,770 | ||||||||||||||||||||||
11/10/2017 | BSA | — | 240,000 | — | — | 240,000 | 240,000 | — | ||||||||||||||||||||||
11/10/2017 | Stock Options | — | 1,220,000 | — | — | 1,220,000 | 1,220,000 | — | ||||||||||||||||||||||
Total | 9,956,066 | 1,460,000 | 625,002 | 341,891 | 10,449,173 | 10,450,007 | 4,292,208 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
F-45
Date | Type | Number of warrants/shares outstanding as of 01/01/2023 |
| Number of warrants/shares granted |
| Number of warrants/shares vested/exercised |
| Number of warrants/shares voided |
| Number of warrants/shares outstanding as of 12/31/2023 |
| Maximum of shares to be issued |
| Number of warrants/shares exercisable as of 12/31/2023 |
| Strike price per share in euros |
| ||||||||
03/24/2015 | Stock Options |
| 1,351,904 |
|
|
|
|
|
| 15,078 |
|
| 1,336,826 |
|
| 1,336,826 |
|
| 1,336,826 |
|
| 38.45 |
| ||
03/27/2015 | BSA |
| 130,000 |
|
|
|
|
|
| 80,000 |
|
| 50,000 |
|
| 50,000 |
|
| 50,000 |
|
| 38.45 |
| ||
05/18/2015 | BSA |
| 50,000 |
|
|
|
|
|
| 50,000 |
|
| - |
|
| - |
|
| - |
|
| 29.58 |
| ||
09/08/2015 | BSA |
| 224,200 |
|
|
|
|
|
| 150,000 |
|
| 74,200 |
|
| 74,200 |
|
| 74,200 |
|
| 28.01 |
| ||
09/08/2015 | Stock Options |
| 1,317,300 |
|
|
|
|
|
| 16,300 |
|
| 1,301,000 |
|
| 1,301,000 |
|
| 1,301,000 |
|
| 27.55 |
| ||
03/14/2016 | BSA |
| 147,025 |
|
|
|
|
|
| 80,350 |
|
| 66,675 |
|
| 66,675 |
|
| 66,675 |
|
| 27.37 |
| ||
03/14/2016 | Stock Options |
| 1,264,867 |
|
|
|
|
|
| 3,531 |
|
| 1,261,336 |
|
| 1,261,336 |
|
| 1,261,336 |
|
| 22.44 |
| ||
10/28/2016 | BSA |
| 145,000 |
|
|
|
|
|
| 77,000 |
|
| 68,000 |
|
| 68,000 |
|
| 68,000 |
|
| 18.68 |
| ||
10/28/2016 | Stock Options |
| 1,444,702 |
|
|
|
|
|
| 4,056 |
|
| 1,440,646 |
|
| 1,440,646 |
|
| 1,440,646 |
|
| 17.90 |
| ||
10/11/2017 | BSA |
| 200,000 |
|
|
|
|
|
| 120,000 |
|
| 80,000 |
|
| 80,000 |
|
| 80,000 |
|
| 24.34 |
| ||
10/11/2017 | Stock Options |
| 665,000 |
|
|
|
|
|
|
|
| 665,000 |
|
| 665,000 |
|
| 665,000 |
|
| 22.57 |
| |||
10/08/2018 | Stock Options |
| 5,000 |
|
|
|
|
|
|
|
| 5,000 |
|
| 5,000 |
|
| 5,000 |
|
| 24.80 |
| |||
04/24/2019 | Stock Options |
| 926,291 |
|
|
|
|
|
| 7,000 |
|
| 919,291 |
|
| 919,291 |
|
| 919,291 |
|
| 18.25 |
| ||
11/06/2019 | Stock Options |
| 30,000 |
|
|
|
|
|
|
|
| 30,000 |
|
| 30,000 |
|
| 30,000 |
|
| 11.06 |
| |||
07/20/2020 | Stock Options |
| 17,000 |
|
|
|
|
|
|
|
| 17,000 |
|
| 17,000 |
|
| 13,812 |
|
| 15.12 |
| |||
08/05/2020 | Stock Options |
| 134,000 |
|
|
|
|
|
| 5,000 |
|
| 129,000 |
|
| 129,000 |
|
| 104,811 |
|
| 14.62 |
| ||
09/11/2020 | Stock Options |
| 45,000 |
|
|
|
|
|
|
|
| 45,000 |
|
| 45,000 |
|
| 36,562 |
|
| 14.36 |
| |||
10/14/2020 | Free shares |
| 188,418 |
|
|
|
| 167,433 |
|
| 20,985 |
|
| - |
|
| - |
|
| - |
|
| 22.45 |
| |
11/05/2020 | Stock Options |
| 20,500 |
|
|
|
|
|
|
|
| 20,500 |
|
| 20,500 |
|
| 15,375 |
|
| 14.62 |
| |||
03/04/2021 | Stock Options |
| 701,848 |
|
|
|
|
|
| 17,501 |
|
| 684,347 |
|
| 684,347 |
|
| 470,568 |
|
| 19.44 |
| ||
03/05/2021 | Free shares |
| 16,500 |
|
|
|
|
|
|
|
| 16,500 |
|
| 16,500 |
|
| - |
|
| 14.44 |
| |||
03/05/2021 | Free shares |
| 230,567 |
|
|
|
|
|
| 12,865 |
|
| 217,702 |
|
| 217,702 |
|
| - |
|
| 12.69 |
| ||
04/13/2021 | Stock Options |
| 27,465 |
|
|
|
|
|
|
|
| 27,465 |
|
| 27,465 |
|
| 18,596 |
|
| 16.07 |
| |||
05/12/2021 | Free shares |
| 2,000 |
|
|
|
|
|
|
|
| 2,000 |
|
| 2,000 |
|
| - |
|
| 12.70 |
| |||
05/12/2021 | Stock Options |
| 3,500 |
|
|
|
|
|
|
|
| 3,500 |
|
| 3,500 |
|
| 2,187 |
|
| 14.36 |
| |||
05/28/2021 | Free shares |
| 141,325 |
|
|
|
|
|
| 1,300 |
|
| 140,025 |
|
| 140,025 |
|
| - |
|
| 12.38 |
| ||
05/28/2021 | Stock Options |
| 25,000 |
|
|
|
|
|
|
|
| 25,000 |
|
| 25,000 |
|
| 15,625 |
|
| 12.69 |
| |||
09/30/2021 | Free shares |
| 5,525 |
|
|
|
|
|
| 2,100 |
|
| 3,425 |
|
| 3,425 |
|
| - |
|
| 11.22 |
| ||
09/30/2021 | Stock Options |
| 14,800 |
|
|
|
|
|
| 7,850 |
|
| 6,950 |
|
| 6,950 |
|
| 3,909 |
|
| 11.51 |
| ||
10/13/2021 | Free shares |
| 4,500 |
|
|
|
|
|
|
|
| 4,500 |
|
| 4,500 |
|
| - |
|
| 8.29 |
| |||
10/13/2021 | Stock Options |
| 9,000 |
|
|
|
|
|
|
|
| 9,000 |
|
| 9,000 |
|
| 4,500 |
|
| 10.29 |
| |||
11/25/2021 | Free shares |
| 2,100 |
|
|
|
|
|
|
|
| 2,100 |
|
| 2,100 |
|
| - |
|
| 7.84 |
| |||
11/25/2021 | Stock Options |
| 4,500 |
|
|
|
|
|
|
|
| 4,500 |
|
| 4,500 |
|
| 2,250 |
|
| 8.81 |
| |||
03/03/2022 | Free shares |
| 243,259 |
|
|
|
|
|
| 6,197 |
|
| 237,062 |
|
| 237,062 |
|
|
|
| 2.74 |
| |||
03/03/2022 | Stock Options |
| 666,542 |
|
|
|
|
|
|
|
| 666,542 |
|
| 666,542 |
|
| 228,270 |
|
| 4.41 |
| |||
03/29/2022 | Free shares |
| 1,900 |
|
|
|
|
|
|
|
| 1,900 |
|
| 1,900 |
|
|
|
| 4.09 |
| ||||
03/29/2022 | Stock Options |
| 3,400 |
|
|
|
|
|
|
|
| 3,400 |
|
| 3,400 |
|
| 1,487 |
|
| 3.96 |
| |||
05/24/2022 | Free shares |
| 40,059 |
|
|
|
|
|
| 1,950 |
|
| 38,109 |
|
| 38,109 |
|
|
|
| 3.27 |
| |||
05/24/2022 | Stock Options |
| 37,580 |
|
|
|
|
|
|
|
| 37,580 |
|
| 37,580 |
|
| 12,516 |
|
| 3.48 |
| |||
11/08/2022 | Free shares |
| 30,000 |
|
|
|
|
|
|
|
| 30,000 |
|
| 30,000 |
|
|
|
| 2.37 |
| ||||
11/08/2022 | Stock Options |
| 70,000 |
|
|
|
|
|
|
|
| 70,000 |
|
| 70,000 |
|
| 23,100 |
|
| 2.34 |
| |||
12/19/2022 | Free shares |
| 2,960 |
|
|
|
|
|
|
|
| 2,960 |
|
| 2,960 |
|
|
|
| 1.91 |
| ||||
12/19/2022 | Stock Options |
| 2,065 |
|
|
|
|
|
| - |
|
| 2,065 |
|
| 2,065 |
|
| 516 |
|
| 2.09 |
| ||
01/24/2023 | Free shares |
| - |
|
| 340,750 |
|
|
|
| 21,645 |
|
| 319,105 |
|
| 319,105 |
|
|
|
| 3.09 |
| ||
01/24/2023 | Stock Options |
| - |
|
| 1,417,321 |
|
|
|
|
|
| 1,417,321 |
|
| 1,417,321 |
|
|
|
| 3.17 |
| |||
03/22/2023 | Free shares |
| - |
|
| 2,150 |
|
|
|
| - |
|
| 2,150 |
|
| 2,150 |
|
|
|
| 1.87 |
| ||
03/22/2023 | Stock Options |
| - |
|
| 4,300 |
|
|
|
|
|
| 4,300 |
|
| 4,300 |
|
|
|
| 1.91 |
| |||
05/04/2023 | Stock Options |
| - |
|
| 358,100 |
|
|
|
| 700 |
|
| 357,400 |
|
| 357,400 |
|
|
|
| 1.80 |
| ||
06/26/2023 | Stock Options |
| - |
|
| 55,690 |
|
|
|
| 2,500 |
|
| 53,190 |
|
| 53,190 |
|
|
|
| 1.74 |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
| Total |
| 10,592,602 |
|
| 2,178,311 |
|
| 167,433 |
|
| 703,908 |
|
| 11,899,572 |
|
| 11,899,572 |
|
| 8,252,058 |
|
|
| |
16.3 Non-controlling interests
Non-controlling shareholders held a 50.9% interest in Calyxt Inc. representing as of December 31, 20172022 and a 12.9%52.0% interest of that subsidiary if fully exercised to a small group of its employees, directors and executive officers. The compensation expense for 2017 amounted to $6.7 million (see Note 15).
14.3Non-controlling interests
On December 19, 2013, Cellectis S.A. contributed its 75% investment in Ectycell S.A.S. to Cellectis Bioresearch S.A.S., and Caisse des Dépôts et Consignations contributed $4.8 million to Cellectis Bioresearch S.A.S. As a result, Ectycell S.A.S. becamewe derecognized non-controlling interests in Calyxt. Since June 1, 2023, there are no longer non-controlling interests as the Group holds a wholly-owned subsidiary of Cellectis Bioresearch S.A.S., of which,100% interest in turn, Cellectis owns 75.5% and Caisse des Dépôts et Consignations owns 24.5%. This transaction was accounted for as an equity transaction between us and thenon-controlling interest, resulting in the transfer of a 24.5% of theall fully consolidated equity of Cellectis Bioresearch to anon-controlling interest for an amount of $4.6 million.entities.
On May 18, 2015, Cellectis S.A. repurchased the Cellectis Bioresearch S.AS. shares held by Caisse des Dépôts et Consignations for $4.0 million. Thereafter, nonon-controlling interest has been recorded.
On July 25, 2017, Calyxt closed its IPO with $64.4 million in gross proceeds to Calyxt from the sale of 8.050.000 shares at $8 per share, including the full exercise of the underwriter’s over-allotment option and Cellectis’ purchase of $20.0 million of shares in the IPO. As of December 31, 2017,non-controlling interests represent 20.3% of Calyxt shares.
F-41