Quarterly Report (10-q)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission File Number: 001-40498

Century Therapeutics, Inc.

(Exact Name of Registrant as Specified in its Charter)


Delaware		84-2040295
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
3675 Market Street Philadelphia, Pennsylvania (Address of principal executive offices)		19104 (Zip Code)

(267) 817-5790

(Registrant’s telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.0001 par value per share	IPSC	The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒
Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 4, 2022, the registrant had 58,974,247 shares of common stock, $0.0001 par value per share, outstanding.

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		Page
PART I.	FINANCIAL INFORMATION	6
Item 1.	Financial Statements:	6
	Consolidated Balance Sheets as of September 30, 2022 (unaudited) and December 31, 2021	6
	Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2022 and 2021 (unaudited)	7
	Consolidated Statements of Changes in Convertible Preferred Stock and Stockholders’ Equity (Deficit) for the three and nine months ended September 30, 2022 and 2021 (unaudited)	8
	Consolidated Statements of Cash Flows for the nine months ended September 30, 2022 and 2021 (unaudited)	10
	Notes to Unaudited Consolidated Financial Statements	11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	35
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	51
Item 4.	Controls and Procedures	51

PART II.	OTHER INFORMATION	52
Item 1.	Legal Proceedings	52
Item 1A.	Risk Factors	52
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	52
Item 3.	Defaults Upon Senior Securities	52
Item 4.	Mine Safety Disclosures	52
Item 5.	Other Information	52
Item 6.	Exhibits	53
Signatures		54

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

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

The forward-looking statements in this Quarterly Report on Form 10-Q include, among other things, statements about:

●

our ability to raise additional capital to fund our operations and continue the development of our current and future product candidates;

●

the preclinical nature of our business and our ability to successfully advance our current and future product candidates through development activities, preclinical studies, and clinical trials;

●

our ability to generate revenue from future product sales and our ability to achieve and maintain profitability;

●

the accuracy of our projections and estimates regarding our expenses, capital requirements, cash utilization, and need for additional financing;

●

the extent to which the COVID 19 pandemic, including the emergence of new variants of COVID-19, and measures taken to contain its spread ultimately impact our business, including development activities, preclinical studies, future clinical trials, supply chain and labor force;

●

our dependence on the success of our product candidates, in particular CNTY-101, CNTY-103, and CNTY-102;

●

the novelty of our approach to immuno-oncology treatment of cancer, utilizing iPSC-derived natural killer cells, or iNK cells, and iPSC-derived T cells, or iT cells, and the challenges we will face due to the novel nature of such technology;

●

the success of competing therapies that are or become available;

●

our reliance on the maintenance of our collaborative relationship with FUJIFILM Cellular Dynamics Inc., or FCDI, for access to key differentiation and reprogramming technology for the manufacturing and development of our product candidates;

●

the initiation, progress, success, cost, and timing of our development activities, preclinical studies and future clinical trials;

●

the timing of our filings for investigational new drug, or IND, applications and the likelihood of, and our ability to obtain and maintain, regulatory clearance of such IND applications for our product candidates;

●

the timing, scope and likelihood of regulatory filings and approvals, including final regulatory approval of our product candidates;

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●

our reliance on FCDI to be the exclusive manufacturer of certain product candidates, and our ability to manufacture our own product candidates in the future, and the timing and costs of such manufacturing activities;

●

our reliance on the maintenance of our collaborative relationship with Bristol-Myers Squibb Company, or Bristol-Myers Squibb, in connection with the furtherance of our collaboration programs;

●

the performance of third parties in connection with the development of our product candidates, including third parties conducting our future clinical trials as well as third-party suppliers and manufacturers;

●

our ability to attract and retain strategic collaborators with development, regulatory, and commercialization expertise;

●

the public opinion and scrutiny of cell-based immuno-oncology therapies for treating cancer and its potential impact on public perception of our company and product candidates;

●

our ability to successfully commercialize our product candidates and develop sales and marketing capabilities, if our product candidates are approved;

●

the size and growth of the potential markets for our product candidates and our ability to serve those markets;

●

regulatory developments and approval pathways in the United States and foreign countries for our product candidates;

●

the potential scope and value of our intellectual property and proprietary rights;

●

our ability, and the ability of our licensors, to obtain, maintain, defend, and enforce intellectual property and proprietary rights protecting our product candidates, and our ability to develop and commercialize our product candidates without infringing, misappropriating, or otherwise violating the intellectual property or proprietary rights of third parties;

●

our ability to recruit and retain key members of management and other clinical and scientific personnel;

●

the volatility of capital markets and other macroeconomic factors, including due to inflationary pressures, geopolitical tensions or the outbreak of hostilities or war; and

●

developments relating to our competitors and our industry; and

●

other risks and uncertainties, including those described under the caption “Risk factors” in our Annual Report on Form 10-K for the year ended December 31, 2021.

We have based these forward-looking statements largely on our current expectations, estimates, forecasts, and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, and financial needs. In light of the significant uncertainties in these forward-looking statements, you should not rely upon forward-looking statements as predictions of future events. Although we believe that we have a reasonable basis for each forward-looking statement contained in this Quarterly Report on Form 10-Q, we cannot guarantee that the future results, levels of activity, performance, or events and circumstances reflected in the forward-looking statements will be achieved or occur at all. You should refer to the section titled “Risk Factors” set forth in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2021 for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be

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material. Except as required by law, we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

You should read this Quarterly Report on Form 10-Q completely and with the understanding that our actual future results may be materially different from what we expect. We intend the forward-looking statements contained in this Quarterly Report on Form 10-Q to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act.

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

CENTURY THERAPEUTICS, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)


	September 30, 2022		December 31, 2021
	(unaudited)
Assets

Current assets
Cash and cash equivalents	$	111,350	$	56,445
Short-term investments		244,509		166,434
Escrow deposits, current		346		502
Prepaid expenses and other current assets		5,436		4,773
Total current assets		361,641		228,154

Property and equipment, net		77,938		57,967
Operating lease right-of-use assets		29,488		11,854
Restricted cash		1,979		1,717
Escrow deposits, non-current		—		220
Long-term investments		39,427		135,914
Security deposits		1,278		1,549
Total assets	$	511,751	$	437,375

Liabilities, convertible preferred stock, and stockholders’ equity

Current liabilities
Accounts payable	$	5,685	$	7,596
Accrued expenses and other liabilities		8,755		6,040
Deposit liability		860		980
Long-term debt, current		4,036		1,039
Deferred revenue, current		7,571		—
Total current liabilities		26,907		15,655

Operating lease liability, long term		36,594		14,559
Deposit liability, non-current		971		2,020
Deferred revenue, non-current		110,938		—
Long-term debt, net		6,136		8,903
Total liabilities		181,546		41,137

Commitments and contingencies (Note 12)
Stockholders' equity:
Preferred stock, $ 0.0001 par value, 10,000,000 shares authorized at September 30, 2022 and December 31, 2021, respectively, and 0 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively		—		—
Common stock, $0.0001 par value, 300,000,000 shares authorized at September 30, 2022 and December 31, 2021, respectively; 58,184,655 and 55,005,523 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively		6		5
Additional paid-in capital		821,219		785,049
Accumulated deficit		(487,416)		(388,166)
Accumulated other comprehensive loss		(3,604)		(650)
Total stockholders’ equity		330,205		396,238
Total liabilities and stockholders’ equity	$	511,751	$	437,375

See accompanying notes to the consolidated financial statements.

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CENTURY THERAPEUTICS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

(In thousands, except share and per share amounts)


	Three Months Ended		Three Months Ended		Nine Months Ended		Nine Months Ended
	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
Collaboration revenue	$	2,224	$	—	$	4,678	$	—

Operating expenses
Research and development		25,898		19,545		71,588		53,852
General and administrative		8,064		6,282		23,615		13,058
In-process research and development		-		-		10,000		—
Total operating expenses		33,962		25,827		105,203		66,910

Loss from operations		(31,738)		(25,827)		(100,525)		(66,910)

Interest expense		(373)		(322)		(1,017)		(954)
Other income, net		1,387		140		2,351		234
Total other income (expense)		1,014		(182)		1,334		(720)
Loss before provision for income taxes		(30,724)		(26,009)		(99,191)		(67,630)
Provision for income taxes		(25)		—		(59)
Net loss	$	(30,749)	$	(26,009)	$	(99,250)	$	(67,630)

Net loss per common share Basic and Diluted		(0.53)		(0.48)		(1.72)		(2.72)
Weighted average common shares outstanding Basic and Diluted		57,973,541		54,472,650		57,573,406		24,838,250
Other comprehensive loss
Net loss	$	(30,749)	$	(26,009)	$	(99,250)	$	(67,630)
Unrealized loss on investments		(165)		(33)		(2,931)		(28)
Foreign currency translation		(5)		(27)		(23)		(32)
Comprehensive loss	$	(30,919)	$	(26,069)	$	(102,204)	$	(67,690)

See accompanying notes to the consolidated financial statements.

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CENTURY THERAPEUTICS, INC.

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

(Unaudited)

(In thousands, except share amounts)



	Series A			Series B			Series C												Accumulated
	Convertible			Convertible			Convertible						Additional						Other		Total
	Preferred Stock			Preferred Stock			Preferred Stock			Common Stock			Paid-in		Subscription		Accumulated		Comprehensive		Stockholders’
	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Capital		Receivable		Deficit		Loss		Equity
Balance, December 31, 2021	—	$	—	—	$	—	—	$	—	55,005,523		5	$	785,049	$	—	$	(388,166)	$	(650)	$	396,238
Issuance of stock to collaboration partner	—		—	—		—	—		—	2,160,760		1		26,812		—		—		—		26,813
Issuance of common stock upon the exercise of stock options	—		—	—		—	—		—	85,396		—		65		—		—		—		65
Vesting of restricted stock	—		—	—		—	—		—	161,159		—		—		—		—		—		—
Vesting of early exercise stock options	—		—	—		—	—		—	173,192		—		673		—		—		—		673
Stock based compensation	—		—	—		—	—		—	—		—		2,380		—		—		—		2,380
Unrealized loss on investments	—		—	—		—	—		—	—		—		—		—		—		(1,986)		(1,986)
Foreign currency translation	—		—	—		—	—		—	—		—		—		—		—		(6)		(6)
Net loss	—		—	—		—	—		—	—		—		—		—		(37,512)		—		(37,512)
Balance, March 31, 2022	—	$	—	—	$	—	—	$	—	57,586,030	$	6	$	814,979	$	—	$	(425,679)	$	(2,642)	$	386,664
Issuance of common stock upon the exercise of stock options	—		—	—		—	—		—	31,381		—		47		—		—		—		47
Vesting of restricted stock	—		—	—		—	—		—	136,425		—		—		—		—		—		—
Vesting of early exercise stock options	—		—	—		—	—		—	104,085		—		250		—		—		—		250
Stock based compensation	—		—	—		—	—		—	—		—		2,771		—		—		—		2,771
Unrealized loss on investments	—		—	—		—	—		—	—		—		—		—		—		(780)		(780)
Foreign currency translation	—		—	—		—	—		—	—		—		—		—		—		(12)		(12)
Net loss	—		—	—		—	—		—	—		—		—		—		(30,988)		—		(30,988)
Balance, June 30, 2022	—	$	—	—	$	—	—	$	—	57,857,921	$	6	$	818,047	$	—	$	(456,667)	$	(3,434)	$	357,952
Issuance of common stock upon the exercise of stock options	—		—	—		—	—		—	86,224		—		138		—		—		—		138
Vesting of restricted stock	—		—	—		—	—		—	136,425		—		—		—		—		—		—
Vesting of early exercise stock options	—		—	—		—	—		—	104,085		—		248		—		—		—		248
Stock based compensation	—		—	—		—	—		—	—		—		2,786		—		—		—		2,786
Unrealized loss on investments	—		—	—		—	—		—	—		—		—		—		—		(165)		(165)
Foreign currency translation	—		—	—		—	—		—	—		—		—		—		—		(5)		(5)
Net loss	—		—	—		—	—		—	—		—		—		—		(30,749)		—		(30,749)
Balance, September 30, 2022	—	$	—	—	$	—	—	$	—	58,184,655	$	6	$	821,219	$	—	$	(487,416)	$	(3,604)	$	330,205

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	Series A			Series B			Series C													Accumulated
	Convertible			Convertible			Convertible							Additional						Other		Total
	Preferred Stock			Preferred Stock			Preferred Stock			Common Stock				Paid-in		Subscription		Accumulated		Comprehensive		Stockholders’
	Shares		Amount	Shares		Amount	Shares	Amount		Shares		Amount		Capital		Receivable		Deficit		Loss		Deficit
Balance, December 31, 2020	35,000,000	$	34,922	26,143,790	$	144,839	—	$	—	7,481,861	$	1	$	217,832	$	(31,900)	$	(292,342)	$	(3)	$	(106,412)
Receipt of subscription receivable	—		—	—		—	—		—	—		—		—		31,900		—		—		31,900
Issuance of Series C preferred stock, net	—		—	—		—	24,721,999		159,628	—		—		—		—		—		—		—
Net assets contributed as result of merger	—		—	—		—	—		—	—		—		1,061		—		—		—		1,061
Issuance of common stock upon the exercise of stock options	—		—	—		—	—		—	40,790		—		47		—		—		—		47
Vesting of restricted stock	—		—	—		—	—		—	150,799		—		—		—		—		—		—
Vesting of early exercise stock options	—		—	—		—	—		—	199,083		—		123		—		—		—		123
Unrealized loss on investments	—		—	—		—	—		—	—		—		—		—		—		(27)		(27)
Foreign currency translation	—		—	—		—	—		—	—		—		—		—		—		4		4
Stock based compensation	—		—	—		—	—		—	—		—		95		—		—		—		95
Net loss	—		—	—		—	—		—	—		—		—		—		(18,348)		—		(18,348)
Balance, March 31, 2021	35,000,000	$	34,922	26,143,790	$	144,839	24,721,999	$	159,628	7,872,533	$	1	$	219,158	$	—	$	(310,690)	$	(26)	$	(91,557)
Issuance of common stock upon initial public offering, net of underwriting discounts and commissions and other issuance cost	—		—	—		—				12,132,500		1		221,184		—		—		—		221,185
Conversion of convertible preferred stock upon initial public offering	(35,000,000)		(34,922)	(26,143,790)		(144,839)	(24,721,999)		(159,628)	34,126,528		3		339,385		—		—		—		339,388
Issuance of common stock upon the exercise of stock options	—		—	—		—	—		—	79,796		—		74		—		—		—		74
Vesting of restricted stock	—		—	—		—	—		—	130,463		—		—		—		—		—		—
Vesting of early exercise stock options	—		—	—		—	—		—	62,271		—		46		—		—				46
Unrealized gain on investments	—		—	—		—	—		—	—		—		—		—		—		32		32
Foreign currency translation	—		—	—		—	—		—	—		—		—		—		—		(9)		(9)
Stock based compensation	—		—	—		—	—		—	—		—		1,711		—		—		—		1,711
Net loss	—		—	—		—	—		—	—		—		—		—		(23,273)		—		(23,273)
Balance, June 30, 2021	—	$	—	—	$	—	—	$	—	54,404,091	$	5	$	781,558	$	—	$	(333,963)	$	(3)	$	447,597
Issuance cost of common stock from initial public offering	—		—	—		—				—		—		217		—		—		—		217
Issuance of common stock upon the exercise of stock options	—		—	—		—	—		—	6,799		—		9		—		—		—		9
Vesting of restricted stock	—		—	—		—	—		—	148,347		—		—		—		—		—		—
Vesting of early exercise stock options	—		—	—		—	—		—	82,143		—		14		—		—				14
Unrealized loss on investments	—		—	—		—	—		—	—

IPSC

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