Business Context and Reporting Period
Celularity Inc. filed this Form 8-K on July 22, 2021, reporting events occurring primarily on July 16, 2021. On July 16, GX Acquisition Corp. completed its business combination with Legacy Celularity, changed its name to Celularity Inc., and ceased to be a shell company. Celularity became a holding company whose principal assets are its equity interests in Celularity LLC. Class A common stock and warrants began trading on Nasdaq under the symbols CELU and CELUW on July 19, 2021.
Financial and Capitalization Highlights
| Metric | Reported information |
|---|---|
| PIPE financing | 8,340,000 Class A shares sold at $10.00 per share for aggregate proceeds of $83.4 million. |
| Palantir investment | 2,000,000 Class A shares sold to Palantir at $10.00 per share for $20.0 million. |
| Shares outstanding | 122,487,170 Class A shares outstanding immediately after closing. |
| Warrants | 22,874,999 public warrants outstanding, generally exercisable at $11.50 per share; 19,811,207 Legacy Celularity warrants were also outstanding at closing at exercise prices of $7.53 and $6.77 per share. |
| Converted options | Options to purchase 21,723,273 Class A shares were outstanding at closing, subject to applicable vesting conditions. |
| Revenue, profit, cash flow and margins | The filing does not provide current-period revenue, net income, operating cash flow, cash balances, margins or debt balances. It incorporates historical and pro forma financial statements for periods ended March 31, 2021 and December 31, 2020. |
Material Changes Versus the Prior Comparable Period
- The transaction transformed GX from a non-operating shell company into the public holding company for Celularity.
- Legacy Celularity preferred stock was converted into common stock, and Legacy Celularity shares, warrants and options were exchanged or converted into securities of the combined company.
- The company raised $103.4 million through the PIPE financing and Palantir investment, before considering transaction expenses and other adjustments.
- GX stockholders immediately before closing held 16.1% of the outstanding common stock after the transaction.
- Celularity adopted an amended and restated certificate of incorporation, amended and restated bylaws, a new code of business conduct, a 2021 equity incentive plan and a 2021 employee stock purchase plan.
- Marcum LLP was to be dismissed after completing its review of GX's quarter ended June 30, 2021, and Deloitte & Touche LLP was appointed to audit Celularity for the year ending December 31, 2021. Marcum reported no disagreements or reportable events; its prior reports included a going-concern explanatory paragraph.
Guidance, Outlook, Risks and Unusual Items
The filing provides no quantified financial guidance or operating forecast. Management's forward-looking statements concern the potential benefits of the business combination, future operating performance, clinical development and financing plans.
- Key risks include delays, enrollment problems or unexpected results in clinical trials; adverse effects or lack of regulatory approval for therapeutic candidates; manufacturing, supply-chain and third-party licensing issues; and the need to obtain sufficient financing.
- Additional risks include competition, COVID-19-related disruptions, changing laws and regulations, litigation, Nasdaq listing compliance and the possibility that the anticipated benefits of the transaction are not realized.
- Legacy holders are subject to lock-up restrictions generally ending on the earliest of 365 days after closing, specified stock-price performance, or certain change-of-control transactions, subject to exceptions.
- Twenty-five percent of shares distributed by GX Sponsor LLC are subject to vesting based on the stock price and may be forfeited if they do not vest by July 15, 2031.
- The company stated that it has not paid dividends and does not expect to pay cash dividends in the foreseeable future.
- Management stated that Celularity is not currently party to litigation likely to have a material adverse effect on the business.
Investor Verification Points
- Review Exhibit 99.2 and the incorporated historical financial statements for actual cash, operating losses, cash burn, working capital and pro forma capitalization.
- Reconcile the $103.4 million of stated financing proceeds with transaction expenses, redemptions, trust-account proceeds and the company's post-closing cash balance.
- Assess dilution from public warrants, Legacy Celularity warrants, converted options, sponsor securities and other equity-linked instruments.
- Review the clinical pipeline, trial timelines, regulatory status and financing requirements described in the incorporated Proxy Statement/Prospectus.
- Examine the lock-up, sponsor vesting, registration-rights and related-party arrangements for potential effects on future trading supply and governance.
- Confirm the transition from Marcum to Deloitte and review subsequent audited and interim filings for any accounting or going-concern developments.