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unaudited first quarter consolidated Financial Statements included herein have been prepared in accordance with International Financial Reporting Standards ( IFRS ) as issued by the International Accounting Standards Board
( IASB ). The consolidated financial statements are presented in euros. All references in this interim report to $, US$, U.S.$, U.S. dollars, dollars, and USD mean
U.S. dollars and all references to and euros mean euros, unless otherwise noted.
This interim report,
including Management s Discussion and Analysis of Financial Condition and Results of Operations, contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and Section 27A of
the Securities Act. All statements other than present and historical facts and conditions contained in this interim report, including statements regarding our future results of operations and financial position, business strategy, plans and our
objectives for future operations, are forward-looking statements. When used in this interim report, the words anticipate, believe, can, could, estimate, expect,
intend, is designed to, may, might, plan, potential, predict, objective, should, or the negative of these and similar expressions
identify forward-looking statements. Actual results, performance or events may differ materially from those projected in any forward-looking statement. Factors that may cause actual results to differ from those in any forward-looking statement
include, without limitation, those described under Risk Factors and Special Note Regarding Forward-Looking Statements in our Annual Report on Form 20-F filed with the Securities and
Exchange Commission on March 23, 2017 (the Annual Report ). As a result of these factors, we cannot assure you that the forward-looking statements in this interim report will prove to be accurate. Furthermore, if our forward-looking
statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that
we will achieve our objectives and plans in any specified time frame or at all. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by
As used in this interim report, the terms Cellectis, we, our, us, and
the Company refer to Cellectis S.A. and its subsidiaries, taken as a whole, unless the context otherwise requires.
| PART I FINANCIAL INFORMATION | ||
| Item 1. | Financial Statements (Unaudited) | |
| Item 2. | Management s Discussion & Analysis of Financial Condition and Results of Operations | |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risks | |
| Item 4. | Controls and Procedures | |
| PART II OTHER INFORMATION | ||
| Item 1. | Legal Proceedings | |
| Item 1A. | Risk Factors | |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | |
| Item 3. | Default Upon Senior Securities | |
| Item 4. | Mine Safety Disclosures | |
| Item 5. | Other Information | |
| Item 6. | Exhibits |
PART I FINANCIAL INFORMATION
Item 1. Condensed Financial Statements (Unaudited)
STATEMENTS OF CONSOLIDATED FINANCIAL POSITION
| As of | ||||||||||||
| Notes | December 31, 2016 Audited | March 31, 2017 Unaudited | ||||||||||
| ASSETS | ||||||||||||
| Non-current assets | ||||||||||||
| Intangible assets | 1,274 | 1,332 | ||||||||||
| Property, plant, and equipment | 5 | 16,033 | 16,068 | |||||||||
| Other non-current financial assets | 656 | 886 | ||||||||||
| Total non-current assets | 17,963 | 18,286 | ||||||||||
| Current assets | ||||||||||||
| Inventories | 112 | 106 | ||||||||||
| Trade receivables | 6.1 | 3,441 | 5,035 | |||||||||
| Subsidies receivables | 6.2 | 8,276 | 11,564 | |||||||||
| Other current assets | 6.3 | 8,414 | 11,405 | |||||||||
| Current financial assets | 7.1 | 34,714 | 36,558 | |||||||||
| Cash and cash equivalents | 7.2 | 241,502 | 221,969 | |||||||||
| Total current assets | 296,459 | 286,638 | ||||||||||
| TOTAL ASSETS | 314,422 | 304,924 | ||||||||||
| LIABILITIES | ||||||||||||
| Shareholders equity | ||||||||||||
| Share capital | 11 | 1,767 | 1,767 | |||||||||
| Premiums related to the share capital | 473,306 | 485,991 | ||||||||||
| Treasury share reserve | (307 | ) | (159 | ) | ||||||||
| Currency translation adjustment | 2,501 | 1,422 | ||||||||||
| Retained earnings | (157,695 | ) | (218,505 | ) | ||||||||
| Net income (loss) | (60,776 | ) | (18,567 | ) | ||||||||
| Total shareholders equity - Group Share | 258,795 | 251,948 | ||||||||||
| Non-controlling interests | 1,779 | 1,984 | ||||||||||
| Total shareholders equity | 260,574 | 253,932 | ||||||||||
| Non-current liabilities | ||||||||||||
| Non-current financial liabilities | 8 | 28 | 21 | |||||||||
| Non-current provisions | 14 | 532 | 551 | |||||||||
| Total non-current liabilities | 560 | 572 | ||||||||||
| Current liabilities | ||||||||||||
| Current financial liabilities | 8 | 1,641 | 379 | |||||||||
| Trade payables | 8 | 9,223 | 12,170 | |||||||||
| Deferred revenues and deferred income | 10 | 36,931 | 33,109 | |||||||||
| Current provisions | 14 | 563 | 563 | |||||||||
| Other current liabilities | 9 | 4,930 | 4,199 | |||||||||
| Total current liabilities | 53,288 | 50,420 | ||||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS EQUITY | 314,422 | 304,924 |
The accompanying notes form an integral part of these unaudited condensed Interim Consolidated Financial
UNAUDITED STATEMENTS OF CONSOLIDATED OPERATIONS
For the three-month period ended March 31,
in thousands, except per share amounts
| For the three-month period ended March 31, | ||||||||||||
| Notes | 2016 | 2017 | ||||||||||
| Revenues and other income | ||||||||||||
| Revenues | 3.1 | 6,978 | 6,328 | |||||||||
| Other income | 3.1 | 2,521 | 3,334 | |||||||||
| Total revenues and other income | 9,499 | 9,662 | ||||||||||
| Operating expenses | ||||||||||||
| Royalty expenses | 3.2 | (433 | ) | (574 | ) | |||||||
| Research and development expenses | 3.2 | (18,870 | ) | (18,392 | ) | |||||||
| Selling, general and administrative expenses | 3.2 | (10,529 | ) | (9,143 | ) | |||||||
| Other operating income and expenses | (76 | ) | (99 | ) | ||||||||
| Total operating expenses | (29,908 | ) | (28,208 | ) | ||||||||
| Operating income (loss) | (20,409 | ) | (18,546 | ) | ||||||||
| Financial gain (loss) | (9,055 | ) | (21 | ) | ||||||||
| Net income (loss) | (29,464 | ) | (18,567 | ) | ||||||||
| Attributable to shareholders of Cellectis | (29,464 | ) | (18,567 | ) | ||||||||
| Attributable to non-controlling interests | ||||||||||||
| Basic / Diluted earnings per share attributable to shareholders of Cellectis | 13 | |||||||||||
| Basic earnings per share ( /share) | (0.84 | ) | (0.53 | ) | ||||||||
| Diluted earnings per share ( /share) | (0.84 | ) | (0.53 | ) |
The accompanying notes form an integral part of these unaudited condensed Interim Consolidated Financial
UNAUDITED INTERIM STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME
For the three-month period ended March 31,
| For the three-month period ended March 31, | ||||||||
| 2016 | 2017 | |||||||
| Net income (loss) | (29,464 | ) | (18,567 | ) | ||||
| Currency translation adjustment | (1,931 | ) | (1,103 | ) | ||||
| Other comprehensive income (loss) that will be reclassified subsequently to income or loss | (1,931 | ) | (1,103 | ) | ||||
| Total Comprehensive income (loss) | (31,395 | ) | (19,671 | ) | ||||
| Attributable to shareholders of Cellectis | (31,359 | ) | (19,646 | ) | ||||
| Attributable to non-controlling interests | (36 | ) | (25 | ) |
The accompanying notes form an integral part of these unaudited condensed Interim Consolidated Financial
UNAUDITED INTERIM STATEMENTS OF CONSOLIDATED OPERATIONS
For the three-month period ended March 31,
| For the three-month period ended March 31, | ||||||||||||
| Notes | 2016 | 2017 | ||||||||||
| Cash flows from operating activities | ||||||||||||
| Net loss for the period | (29,464 | ) | (18,567 | ) | ||||||||
| Reconciliation of net loss and of the cash used for operating activities | ||||||||||||
| Adjustments for | ||||||||||||
| Amortization and depreciation | 477 | 594 | ||||||||||
| Net finance expenses (revenue) | 9,055 | 21 | ||||||||||
| Expenses related to share-based payments | 13,414 | 12,788 | ||||||||||
| Provisions | 99 | 17 | ||||||||||
| Interest (paid) / received | 559 | (206 | ) | |||||||||
| Operating cash flows before change in working capital | (5,860 | ) | (5,353 | ) | ||||||||
| Decrease (increase) in inventories | 54 | 6 | ||||||||||
| Decrease (increase) in trade receivables and other current assets | (2,526 | ) | (4,628 | ) | ||||||||
| Decrease (increase) in subsidies receivables | (2,813 | ) | (3,284 | ) | ||||||||
| (Decrease) increase in trade payables and other current liabilities | (3,892 | ) | 1,784 | |||||||||
| (Decrease) increase in deferred income | (4,554 | ) | (3,813 | ) | ||||||||
| Change in working capital | (13,731 | ) | (9,935 | ) | ||||||||
| Net cash flows provided by (used in) operating activities | (19,591 | ) | (15,288 | ) | ||||||||
| Cash flows from investment activities | ||||||||||||
| Acquisition of intangible assets | (260 | ) | (1 | ) | ||||||||
| Acquisition of property, plant and equipment | (6,628 | ) | (513 | ) | ||||||||
| Net change in non-current financial assets | 4 | (148 | ) | |||||||||
| Sale (Acquisition) of current financial assets | (86,078 | ) | (1,982 | ) | ||||||||
| Net cash flows provided by (used in) investing activities | (92,962 | ) | (2,643 | ) | ||||||||
| Cash flows from financing activities | ||||||||||||
| Increase in share capital net of transaction costs | 298 | 126 | ||||||||||
| Decrease in borrowings | (34 | ) | (9 | ) | ||||||||
| Treasury shares | (6 | ) | 148 | |||||||||
| Net cash flows provided by (used in) financing activities | 257 | 265 | ||||||||||
| (Decrease) increase in cash | (112,296 | ) | (17,666 | ) | ||||||||
| Cash and cash equivalents at the beginning of the year | 314,238 | 241,502 | ||||||||||
| Effect of exchange rate changes on cash | (11,550 | ) | (1,868 | ) | ||||||||
| Cash and cash equivalents at the end of the period | 7 | 190,393 | 221,969 |
The accompanying notes form an integral part of these unaudited condensed Interim Consolidated Financial
UNAUDITED STATEMENTS OF CHANGES IN CONSOLIDATED SHAREHOLDERS EQUITY
For the year ended December 31
in thousands, except share data
| Share Capital Ordinary Shares | Equity | |||||||||||||||||||||||||||||||||||||||||||
| Notes | Number of shares | Amount | Premiums | Treasury shares | Currency translation adjustment | Retained earnings (deficit) | Income (Loss) | attributable to shareholders of Cellectis | Non controlling interests | Total Shareholders Equity | ||||||||||||||||||||||||||||||||||
| As of January 1, 2016 | 35,178,614 | 1,759 | 420,682 | (184 | ) | (1,632 | ) | (137,188 | ) | (20,544 | ) | 262,894 | 725 | 263,619 | ||||||||||||||||||||||||||||||
| Net Loss | (29,464 | ) | (29,464 | ) | (29,464 | ) | ||||||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss) | (1,895 | ) | (1,895 | ) | (36 | ) | (1,931 | ) | ||||||||||||||||||||||||||||||||||||
| Total comprehensive income (loss) | (1,895 | ) | (29,464 | ) | (31,359 | ) | (36 | ) | (31,395 | ) | ||||||||||||||||||||||||||||||||||
| Allocation of prior period loss | (20,544 | ) | 20,544 | |||||||||||||||||||||||||||||||||||||||||
| Treasury shares | (6 | ) | (6 | ) | (6 | ) | ||||||||||||||||||||||||||||||||||||||
| Exercise of share warrants and employee warrants | 50,000 | 3 | 296 | 298 | 298 | |||||||||||||||||||||||||||||||||||||||
| Share based compensation | 12 | 13,274 | 13,274 | 140 | 13,414 | |||||||||||||||||||||||||||||||||||||||
| Other movements | 3 | 3 | 3 | |||||||||||||||||||||||||||||||||||||||||
| As of March 31, 2016 | 35,228,614 | 1,761 | 434,252 | (190 | ) | (3,526 | ) | (157,729 | ) | (29,464 | ) | 245,103 | 829 | 245,932 | ||||||||||||||||||||||||||||||
| As of January 1, 2017 | 35,335,060 | 1,767 | 473,306 | (307 | ) | 2,500 | (157,695 | ) | (60,776 | ) | 258,794 | 1,779 | 260,574 | |||||||||||||||||||||||||||||||
| Net Loss | (18,567 | ) | (18,567 | ) | (18,567 | ) | ||||||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss) | (1,078 | ) | (1,078 | ) | (25 | ) | (1,103 | ) | ||||||||||||||||||||||||||||||||||||
| Total comprehensive income (loss) | (1,078 | ) | (18,567 | ) | (19,646 | ) | (25 | ) | (19,671 | ) | ||||||||||||||||||||||||||||||||||
| Allocation of prior period loss | (60,776 | ) | 60,776 | |||||||||||||||||||||||||||||||||||||||||
| Treasury shares | 148 | 148 | 148 | |||||||||||||||||||||||||||||||||||||||||
| Exercise of share warrants and employee warrants | 11 | 126 | 126 | 126 | ||||||||||||||||||||||||||||||||||||||||
| Share based compensation | 12 | 12,559 | 12,559 | 229 | 12,788 | |||||||||||||||||||||||||||||||||||||||
| Other movements | (34 | ) | (34 | ) | (34 | ) | ||||||||||||||||||||||||||||||||||||||
| As of March 31, 2017 | 35,335,060 | 1,767 | 485,991 | (159 | ) | 1,422 | (218,505 | ) | (18,567 | ) | 251,948 | 1,984 | 253,932 |
The accompanying notes form an integral part of these unaudited condensed Interim Consolidated Financial
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Cellectis S.A. (hereinafter Cellectis or we ) is a limited liability company ( soci t anonyme )
registered and domiciled in Paris, France. We are a gene-editing company, employing our core proprietary technologies to develop products in the emerging field of immuno-oncology. Our product candidates, based on gene-edited T-cells that express chimeric antigen receptors, or CARs, seek to harness the power of the immune system to target and eradicate cancers. Our gene-editing technologies allow us to create allogeneic CAR T-cells, meaning they are derived from healthy donors rather than the patients themselves. In addition to our focus on immuno-oncology, we are exploring the use of our gene-editing technologies in other therapeutic
applications, as well as to develop healthier food products for a growing population.
Note 2. Accounting principles
2.1 Basis for preparation
Financial Statements of Cellectis as of and for the three-month period ended March 31, 2017 were approved by our Board of Directors on May 9, 2017.
Our Consolidated Financial Statements are presented in euros, which is also the functional currency of Cellectis S.A., the parent company.
All financial information (unless indicated otherwise) is presented in thousands of euros.
The Interim Consolidated Financial Statements for the three-month period ended March 31, 2017 have been prepared in accordance with IAS 34 Interim
Financial Reporting, as endorsed by the International Accounting Standards Board ( IASB ).
The Interim Consolidated Financial Statements for
the quarter ended March 31, 2017 have been prepared using the same accounting policies and methods as those applied for the year ended December 31, 2016.
IFRS include International Financial Reporting 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 ( IFRIC ).
Application of new or amended standards or new amendments
The following pronouncements and related amendments have been adopted by us from January 1, 2017 but had no significant impact on the Interim Consolidated
Financial Statements:
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. 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.
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
Cellectis began its IFRS 15 implementation project with a diagnostic phase. The different categories of contracts with customers of Cellectis
are currently being finalized on the following issues:
Cellectis will apply IFRS 15 with effect from January 1, 2018.
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).
2.2 Consolidated entities and non-controlling interests
As at December 31, 2016 and for the three-month period ended March 31, 2017, the consolidated group of companies (sometimes referred
to as the Group ) includes Cellectis S.A., Cellectis, Inc. and Calyxt, Inc.
Cellectis, Inc. and Calyxt, Inc. are fully owned
Note 3. Information concerning the Group s Consolidated Operations
3.1 Revenues and other income
Revenues by country of origin and other income
| For the three-month period ended March 31, | ||||||||
| 2016 | 2017 | |||||||
| in thousands | ||||||||
| From France | 6,881 | 6,276 | ||||||
| From USA | 97 | 52 | ||||||
| Revenues | 6,978 | 6,328 | ||||||
| Research tax credit | 2,521 | 3,311 | ||||||
| Subsidies and other | 23 | |||||||
| Other income | 2,521 | 3,334 | ||||||
| Total revenues and other income | 9,499 | 9,662 |
| For the three-month period ended March 31, | ||||||||
| 2016 | 2017 | |||||||
| in thousands | ||||||||
| Release of upfront payments | 4,708 | 3,252 | ||||||
| Other revenues | 1,576 | 2,659 | ||||||
| Collaboration agreements | 6,284 | 5,911 | ||||||
| Licenses | 580 | 406 | ||||||
| Products & services | 114 | 11 | ||||||
| Total revenues | 6,978 | 6,328 |
3.2 Operating expenses
| For the three-month period ended March 31, | ||||||||
| 2016 | 2017 | |||||||
| in thousands | ||||||||
| Royalty expenses | (433 | ) | (574 | ) | ||||
| For the three-month period ended March 31, | ||||||||
| 2016 | 2017 | |||||||
| in thousands | ||||||||
| Research and development expenses | ||||||||
| Wages and salaries | (2,664 | ) | (2,794 | ) | ||||
| Social charges on stock option grants | (1,687 | ) | ||||||
| Non-cash stock based compensation expense | (7,514 | ) | (6,988 | ) | ||||
| Personnel expenses | (11,866 | ) | (9,782 | ) | ||||
| Purchases and external expenses | (6,647 | ) | (8,156 | ) | ||||
| Other | (358 | ) | (454 | ) | ||||
| Total research and development expenses | (18,870 | ) | (18,393 | ) | ||||
| For the three-month period ended March 31, | ||||||||
| 2016 | 2017 | |||||||
| in thousands | ||||||||
| Selling, general and administrative expenses | ||||||||
| Wages and salaries | (918 | ) | (1,398 | ) | ||||
| Social charges on stock option grants | (1,471 | ) | ||||||
| Non-cash stock based compensation expense | (5,900 | ) | (5,800 | ) | ||||
| Personnel expenses | (8,289 | ) | (7,199 | ) | ||||
| Purchases and external expenses | (2,148 | ) | (1,722 | ) | ||||
| Other | (92 | ) | (223 | ) | ||||
| Total selling, general and administrative expenses | (10,529 | ) | (9,143 | ) | ||||
| For the three-month period ended March 31, | ||||||||
| 2016 | 2017 | |||||||
| in thousands | ||||||||
| Personnel expenses | ||||||||
| Wages and salaries | (3,582 | ) | (4,193 | ) | ||||
| Social charges on stock option grants | (3,159 | ) | ||||||
| Non-cash stock based compensation expense | (13,414 | ) | (12,788 | ) | ||||
| Total personnel expenses | (20,155 | ) | (16,981 | ) |
3.3 Reportable segments
Reportable segments are identified as components of an enterprise that have discrete financial information available for evaluation by the
Chief Operating Decision Maker ( CODM ), for purposes of performance assessment and resource allocation.
We view our operations and manage our business in
two operating and reportable segments that are engaged in the following activities:
There are inter-segment transactions between the two reportable segments, including allocation of corporate general and administrative
expenses by Cellectis S.A. to its subsidiaries and allocation of research and development expenses to the reportable segments.
inter-segment transactions are generally priced based on provisions of service agreements signed between our legal entities, according to which services are to be allocated at cost for external expenses, or at cost plus a mark-up of between 4% and 10%, depending on the nature of the service. According to a cash pooling agreement with our subsidiaries, interest is allocated/paid to segments at
12-month Euribor plus 5%.
The net income (loss) includes the impact of the operations between
segments while the intra-segment operations are eliminated.
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 include non-cash stock-based expense) are used by the CODM to measure performance. The CODM does not review any asset or liability information by segment or by region.
Adjusted Net Income (Loss) attributable to shareholders of Cellectis is not a measure calculated
in accordance with IFRS. Because Adjusted Income (Loss) attributable to shareholders of Cellectis excludes Non-cash stock based compensation expense a non-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.
Please note that since 2016, we allocate the share-based
compensation to the share-related entity, considering that the share-based compensation is a compensation linked to the involvement in an entity performance. In practice, all the share-based compensation which are based on Cellectis shares will be
charged in the Therapeutics segment, even if some Calyxt employees are included in a stock-option plan.
Details of key performance indicators by reportable segment