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information provided in each Item contained in this Exhibit is presented only in connection with the reporting changes described
in the accompanying Current Report on Form 8-K. It does not reflect information, developments, or events occurring after March
9, 2020, the date on which we filed our Form 10-K, and does not update the disclosures therein in any way other than as required
to reflect Masthercell as discontinued operations and the consequential change in reportable segments. Accordingly, this Current
Report on Form 8-K should be read in conjunction with our Form 10-K and subsequent filings with the SEC, including our Quarterly
Reports on Form 10-Q.
7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
following Management's Discussion and Analysis of Financial Condition and Results of Operations is intended to provide information
necessary to understand our audited consolidated financial statements for the fiscal years ended December 31, 2019 and November
30, 2018 and one month ended December 31, 2018 and highlight certain other information which, in the opinion of management, will
enhance a reader's understanding of our financial condition, changes in financial condition and results of operations. In
particular, the discussion is intended to provide an analysis of significant trends and material changes in our financial position
and the operating results of our business during the year ended December 31, 2019, as compared to the fiscal year ended November
30, 2018 and the one month ended December 31, 2018. This discussion should be read in conjunction with our consolidated financial
statements for the fiscal years ended December 31, 2019 and November 30, 2018 and one-month period ended December 31, 2018 and
related notes included elsewhere on this Form 8-K and in our forms on 10-K for the same periods. These historical financial statements
may not be indicative of our future performance. This Management's Discussion and Analysis of Financial Condition and Results
of Operations contains numerous forward-looking statements, all of which are based on our current expectations and could be affected
by the uncertainties and risks described throughout this filing, particularly in "Item 1A. Risk Factors."
are a biotechnology company specializing in the development, manufacturing and provision of cell and gene therapies ("CGTs")
through point-of-care solutions. We have historically operated through two independent business platforms: (i) a point-of-care
cell therapy ("POC") platform and (ii) a Contract Development and Manufacturing Organization ("CDMO")
platform, which provided contract manufacturing and development services for biopharmaceutical companies (the "CDMO Business").
Through the POC platform, our aim is to further the development of CGTs, including Advanced Therapy Medicinal Products ("ATMPs"),
through collaborations and in-licensing with other pre-clinical and clinical-stage biopharmaceutical companies and research and
healthcare institutes to bring such ATMPs to patients. These therapies span a wide range
of treatments including, but not limited to, cell-based immunotherapies, therapeutics for metabolic diseases, neurodegenerative
diseases and tissue regeneration. We out-license these ATMPs, thus far primarily through joint venture ("JV')
agreements, with regional partners including pharmaceutical and biotech companies as well as research institutions and hospitals.
These regional partners have cell therapies in clinical development and are to whom we also provide manufacturing know-how, assay
services, licensing, regulatory assistance, pre-clinical studies, intellectual property services, and co-development services
(collectively "POC Development Services") to support their activity in order to reach patients in a point-of-care
hospital setting. Currently, our POC Development Services constitute the entirety of our revenue from the POC platform. Through
the CDMO platform, we had focused on providing contract manufacturing and development services for biopharmaceutical companies,
the majority of which were via our subsidiary Masthercell Global Inc.
February 2, 2020, we entered into a Stock Purchase Agreement (the "Purchase Agreement") with GPP-II Masthercell LLC
("GPP" and together with the Company, the "Sellers"), Masthercell Global Inc. ("Masthercell")
and Catalent Pharma Solutions, Inc. (the "Buyer"). Pursuant to the terms and conditions of the Purchase Agreement,
on February 10, 2020, the Sellers sold 100% of the outstanding equity interests of Masthercell to Buyer (the "Masthercell
Sale") for an aggregate nominal purchase price of $315 million, subject to customary adjustments. After accounting for GPP's
liquidation preference and equity stake in Masthercell as well as SFPI - FPIM's interest in MaSTherCell S.A., distributions
to Masthercell option holders and transaction costs, we received approximately $126.7 million. As a result, in the first quarter
of 2020, we presented Masthercell as discontinued operations in our condensed consolidated financial statements. Accordingly,
all prior periods have been recast to conform to this presentation. Our audited financial statements for the fiscal years ended
December 31, 2019 and November 30, 2018 and one month ended December 31, 2018 and this Management's Discussion and Analysis
of Financial Condition and Results of Operations reflect the results of Masthercell as of and through December 31, 2019 as discontinued
therapeutic development efforts in our POC business are focused on advancing breakthrough scientific achievements in ATMPs, and
namely autologous therapies, which have a curative potential. We base our development on therapeutic collaborations and in-licensing
with other pre-clinical and clinical-stage biopharma companies as well as direct collaboration with research and healthcare institutes.
We are engaging in therapeutic collaborations and in-licensing with other academic centers and research centers in order to pursue
emerging technologies of other ATMPs in cell and gene therapy in such areas including, but not limited to, cell-based immunotherapies,
therapeutics for metabolic diseases, neurodegenerative diseases and tissue regeneration Each of these customers and collaborations
represents a growth opportunity and future revenue potential as we out-license these ATMPs through regional partners to whom we
also provide regulatory, pre-clinical and training services to support their activity in order to reach patients in a point-of-care
carry out our POC business through three wholly-owned and separate subsidiaries. This corporate structure allows us to simplify
the accounting treatment, minimize taxation and optimize local grant support. The subsidiaries related to this business are Orgenesis
Maryland Inc., in the U.S., Orgenesis Belgium SRL (formerly Orgenesis SPRL), in the European Union and Orgenesis Ltd. in Israel.
the periods covered by this report, we carried out our CDMO business through our subsidiaries Masthercell Global (of which we
owned 62.2%), Atvio Biotech Ltd. ("Atvio"), an Israeli-based CDMO, and CureCell Co. Ltd. ("CureCell"),
a Korea-based CDMO (of which we own 94.12%). Masthercell Global's wholly owned subsidiaries, included MaSTherCell S.A.,
a Belgian-based entity ("MaSTherCell") Cell Therapy Holdings S.A., a Belgian-based entity, and Masthercell U.S., LLC,
a U.S.-based entity.
the periods covered by this report, we operated our POC and CDMO businesses as two separate business segments. The Chief Executive
Officer ("CEO") is the Company's chief operating decision-maker. Management has determined that effective from
the first quarter of 2020, all of the Company's continuing operations are in the point-of-care business via the Company's
CGT Biotech Platform. Therefore, no segment report has been presented.
were incorporated in the state of Nevada on June 5, 2008 under the name Business Outsourcing Services, Inc. Effective August 31,
2011, we completed a merger with our subsidiary, Orgenesis Inc., a Nevada corporation, which was incorporated solely to effect
a change in its name. As a result, we changed our name from "Business Outsourcing Services, Inc." to "Orgenesis
October 11, 2011, we incorporated Orgenesis Ltd. as our wholly-owned subsidiary under the laws of Israel. On February 2, 2012,
Orgenesis Ltd. signed and closed a definitive agreement to license from Tel Hashomer - Medical Research, Infrastructure and Services
Ltd. ("THM"), a private company duly incorporated under the laws of Israel, patents and know-how related to the development
of AIP (Autologous Insulin Producing) cells.
November 6, 2014, we entered into an agreement with the shareholders of MaSTherCell S.A. to acquire MaSTherCell S.A. On March
2, 2015, we closed on the acquisition of MaSTherCell whereby it became a wholly-owned subsidiary of Orgenesis. Through MaSTherCell,
we became engaged in the CDMO business.
June 28, 2018, we, Masthercell Global, Great Point Partners, LLC, a manager of private equity funds focused on growing small to
medium sized heath care companies ("Great Point"), and certain of Great Point's affiliates, entered into a series
of definitive strategic agreements intended to finance, strengthen and expand our CDMO business. In connection therewith, we,
Masthercell Global and GPP-II Masthercell, LLC, a Delaware limited liability company ("GPP-II") and an affiliate of
Great Point, entered into a Stock Purchase Agreement (the "SPA") pursuant to which GPP-II purchased 378,000 shares
of newly designated Series A Preferred Stock of Masthercell Global (the "Masthercell Global Preferred Stock"), representing
37.8% of the issued and outstanding share capital of Masthercell Global, for cash consideration to be paid into Masthercell Global
of up to $25 million, subject to certain adjustments (the "Consideration"). At such time, we held 622,000 shares of
Masthercell Global's Common Stock, representing 62.2% of the issued and outstanding equity share capital of Masthercell
Global. An initial cash payment of $11.8 million of the Consideration was remitted at closing by GPP-II, with a follow up payment
of $6,600,000 made in each of years 2018 and 2019, or an aggregate of $13.2 million (the "Future Payments"), if (a)
Masthercell Global achieved specified EBITDA and revenues targets during each of these years, and (b) the Orgenesis' shareholders
approved certain provisions of the Stockholders' Agreement referred to below on or before December 31, 2019. Both of these
conditions were met and we received both milestone payments.
with the execution of the SPA, we and Masthercell Global entered into a Contribution, Assignment and Assumption Agreement pursuant
to which we contributed to Masthercell Global our assets relating to the CDMO Business (as defined below), including the CDMO
subsidiaries (the "Corporate Reorganization"). In furtherance thereof, Masthercell Global, as our assignee, acquired
all of the issued and outstanding share capital of Atvio, our Israel based CDMO partner since May 2016, and 94.12% of the share
capital of CureCell, our Korea based CDMO partner since March 2016. We exercised the "call option" to which we were
entitled under the joint venture agreements with each of these entities to purchase from the former shareholders their equity
holding. The consideration for the outstanding share equity in each of Atvio and CureCell consisted solely of our common stock.
In respect of the acquisition of Atvio, we issued to the former Atvio shareholders an aggregate of 83,965 shares of our common
stock. In respect of the acquisition of CureCell, we issued to the former CureCell shareholders an aggregate of 202,846 shares
of our common stock subject to a third-party valuation. Together with MaSTherCell S.A., Atvio and CureCell were directly held