Celularity Inc. — FY2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023. This is an annual report, not a standalone fourth-quarter filing. The 10-K was signed July 30, 2024. Unless stated otherwise, financial figures below are in U.S. dollars.
Business context
Celularity is a cellular and regenerative medicine company. Its current revenue comes principally from placenta-derived biomaterials, including Biovance products, and biobanking services. Its cellular therapies remain investigational; the company reported no approved cellular therapy products and no cellular therapy product-sales revenue. Operations are reported in Cell Therapy, Degenerative Disease, and BioBanking segments.
Key financial results
| Metric | FY2023 | FY2022 |
|---|---|---|
| Total revenue | $22.8 million | $18.0 million |
| Gross profit | $6.8 million; approximately 29.7% of revenue | Approximately $(1.7) million |
| Operating loss | $192.3 million | $25.6 million |
| Net income (loss) | $(196.3) million | $14.2 million |
| Cash used in operating activities | $38.7 million | $137.9 million |
| Cash and cash equivalents at year-end | $0.2 million | $14.0 million |
- Revenue rose 26.7%. Product sales increased to $13.1 million from $3.7 million, primarily on higher Biovance 3L demand. Services were nearly flat at $5.4 million; license, royalty and other revenue fell 52.0% to $4.2 million.
- Cost of revenue was $16.0 million. Celularity recorded a $5.4 million inventory impairment, including write-downs of work in progress and finished goods.
- Research and development expense declined 61.1% to $30.5 million, and selling, general and administrative expense declined 23.4% to $50.6 million, mainly reflecting workforce reductions and scaled-back clinical activity.
- The net loss included $112.3 million of goodwill impairment and $107.8 million of in-process research and development impairment. These charges followed clinical-program discontinuations and changes in pipeline expectations. A $104.3 million gain from reducing the contingent consideration liability partly offset operating expenses. The 2022 net income included a much larger favorable warrant-liability fair-value change; reported net income therefore was not indicative of recurring operating profitability.
- Year-end current assets were $19.8 million versus current liabilities of $67.3 million. Restricted cash of $9.9 million was not ordinary operating cash. Total assets were $143.9 million and total liabilities were $102.9 million.
- Year-end debt included $17.2 million of Yorkville debt, $18.5 million of C.V. Starr and RWI debt, and other short-term borrowings. Management reported approximately $42.7 million of debt outstanding as of the financial-statement issuance date, all due or due within one year of that date; substantially all was subject to forbearance arrangements.
Material changes, outlook and risks
- Liquidity and going concern: The auditor and management identified substantial doubt about Celularity’s ability to continue as a going concern. At the financial-statement issuance date, the company reported approximately $0.6 million of unrestricted cash and no additional outside capital secured or considered probable to fund operations for the next 12 months. Management said failure to raise capital could require further cuts, asset sales, a sale of the company, or bankruptcy protection.
- Financing after year-end: In January 2024, Celularity completed a $6.0 million private placement and a further RWI secured loan with $15.0 million principal, less a $3.75 million original issue discount. Proceeds were designated in part for Yorkville repayment, critical vendors, Palantir settlement and approved working capital. In March 2024, it entered a Yorkville standby equity purchase agreement of up to $10.0 million and issued a $3.15 million convertible note for $2.99 million cash. The filing stated that the resale registration statement needed to activate the facility had not been filed as of the 10-K date. These financings do not remove the disclosed funding uncertainty.
- Debt and collateral: Senior lenders hold security interests in substantially all company assets; loan agreements include covenants and default remedies. Debt terms, forbearances, interest accruals and required prepayments tied to certain distribution-related revenues are important liquidity considerations.
- Pipeline reprioritization: In 2023, Celularity stopped active investigation of CYNK-001, ended CYCART-19 development for B-cell malignancies, and paused exosome development. It refocused on preclinical/IND-enabling T-cell and NK-cell programs for oncology, autoimmune and aging-related indications, and continues preclinical autoimmune and MLASC work. Management provided no financial guidance or quantified revenue outlook.
- Biomaterials and regulatory exposure: The FDA issued a Form 483 after an August 2023 inspection of the Florham Park facility relating to Interfyl and CentaFlex. CMS claim rejections for Interfyl through a distribution partner remained unresolved; the company reserved $2.35 million against that customer’s receivable. The filing also describes an ongoing U.S. Attorney’s Office Civil Investigative Demand concerning claims for injectable human tissue products, including Interfyl; potential liability was uncertain.
- Development plans: Celularity expects to pursue 510(k) submissions for its tendon wrap in the first half of 2025 and bone void filler in the second half of 2025, subject to development and regulatory review. It also plans a 510(k) pathway for Celularity Placental Matrix, but gives no submission date.
- Other unusual items and contingencies: The Palantir dispute was settled for $3.5 million plus 60,584 shares, and the parties dismissed their claims in June 2024. Celularity is pursuing approximately $2.35 million plus interest from Evolution Biologyx for unpaid product invoices; recovery is uncertain. The company also disclosed material weaknesses in internal control over financial reporting and ineffective disclosure controls, including insufficient qualified resources and deficiencies in risk assessment, control activities, information and communication, and monitoring. Its financial statements received an unqualified audit opinion, but the auditor highlighted the going-concern uncertainty.
- Listing risk: Nasdaq had notified Celularity of noncompliance with timely-filing requirements. The filing reported an extension through August 30, 2024 to regain compliance; delisting could impair liquidity and access to capital. The company had regained minimum-bid-price compliance following a 1-for-10 reverse stock split in February 2024.
Most important facts for investors to verify
- Current unrestricted cash, near-term cash burn, debt balances and maturities, lender forbearance status, and whether further financing has actually closed.
- Whether the Yorkville resale registration became effective and whether the company can access the standby equity facility on workable terms without excessive dilution.
- Nasdaq filing compliance and listing status, including any later notices or extensions.
- Resolution and financial consequences of the FDA Form 483, CMS Interfyl claim denials, and the U.S. Attorney’s Office inquiry.
- Collections on the Evolution receivable and any remaining obligations from the Palantir settlement.
- Progress, funding and regulatory milestones for the refocused cellular pipeline and planned biomaterials 510(k) submissions.
- Whether management’s remediation actions resolve the material weaknesses and whether controls operate effectively over a sufficient period.