Celyad : Interim Financial Report H1.2019

INTERIM FINANCIAL REPORT

H1.2019

REGULATED INFORMATION

This report is prepared in accordance with article 13 of the Belgian Royal Decree of November 14, 2007.

Celyad publishes its Interim Financial Report in French. Celyad has also produced an English translation of this Interim Financial Report for convenience purposes only. In the event of differences of interpretation between the English and the French versions of the Report, the original French version will prevail.

Table of Contents
Forward-looking statements ...................................................................................................................	3
1.	INTERIM MANAGEMENT REPORT ..................................................................................................	4
1.1	Management's discussion and analysis of financial condition and results of operations ......................................	4
1.2	Risks and uncertainties................................................................................................................................................	7

2. UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS - 6 months

	ended June 30, 2019.......................................................................................................................	8
2.1	Interim consolidated statement of financial position ...............................................................................................	8
2.2	Interim consolidated statement of comprehensive income ...................................................................................	9
2.3	Interim consolidated statement of changes in equity ............................................................................................	10
2.4	Interim consolidated statement of cash flows ........................................................................................................	11

2.5 Notes to the unaudited condensed consolidated interim financial statements - 6 months ended June 30,

	2019	............................................................................................................................................................................	12
	2.5.1	General information....................................................................................................................................	12
	2.5.2	Basis of preparation and significant accounting policies .........................................................................	12
	2.5.3	Segment reporting .....................................................................................................................................	14
	2.5.4	Off-Balance Sheet Commitments.............................................................................................................	15
	2.5.5	Capital Expenditures ..................................................................................................................................	15
	2.5.6	Results of operations..................................................................................................................................	15
	2.5.7	Liquidity and capital resources ..................................................................................................................	18
	2.5.8	Intangible assets .........................................................................................................................................	18
	2.5.9	Trade and Other receivables......................................................................................................................	19
	2.5.10	Short-term investments and Cash and Cash equivalents.......................................................................	19
	2.5.11	Capital and share premium ........................................................................................................................	19
	2.5.12	Recoverable Cash Advances......................................................................................................................	20
	2.5.13	Trade payables and other current liabilities..............................................................................................	20
	2.5.14	Financial instruments fair value disclosures .............................................................................................	20
	2.5.15	Leases..........................................................................................................................................................	21
	2.5.16	Related party transactions.........................................................................................................................	22
	2.5.17	Subsequent events.....................................................................................................................................	22
3.	RESPONSIBILITY STATEMENT ....................................................................................................	23
4.	REPORT OF THE STATUTORY AUDITOR......................................................................................	24
Financial Calendar & Celyad contact details............................................................................................	25

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Forward-looking statements

In addition to historical facts or statements of current condition, this report contains forward-looking statements, including statements about the expected timing of future business updates and shareholder meetings and the potential safety and feasibility of CYAD-01 cell therapy, including current and planned preclinical and clinical trials for Celyad's product candidates and the timing of data readouts therefrom; the clinical and commercial potential of these product candidates and the adequacy of Celyad's financial resources; Celyad's intellectual property portfolio, including plans related thereto; Celyad's expectations regarding its strategic collaborations and license agreements with third parties, including Novartis, Celdara Medical, Dartmouth College and Horizon, and the potential impact of such collaborations on Celyad's future financial condition, results of operation and business outlook; and Celyad's expected cash burn, which reflect Celyad's current expectations and projections about future events, and involve certain known and unknown risks, uncertainties and other factors which might cause actual results or events to differ materially from those expressed or implied by such forward-looking statements.

These forward-looking statements are further qualified by important factors and risks, which could cause actual results to differ materially from those in the forward-looking statements, including risks associated with conducting clinical trials; the risk that safety, bioactivity, feasibility and/or efficacy demonstrated in earlier clinical trials or preclinical studies may not be replicated in subsequent trials or studies; our ability to successfully manufacture drug product for Celyad's clinical trials, including drug product with the desired number of T cells under its clinical trial protocols, and Celyad's ability to improve and automate these manufacturing procedures in the future; risks associated with the timely submission and approval of anticipated regulatory filings; the successful initiation and completion of clinical trials, including its clinical trials for CYAD-01; risks associated with the satisfaction of regulatory and other requirements; risks associated with the actions of regulatory bodies and other governmental authorities; risks associated with obtaining, maintaining and protecting intellectual property, Celyad's ability to enforce its patents against infringers and defend its patent portfolio against challenges from third parties; risks associated with competition from others developing products for similar uses; risks associated with Celyad's ability to manage operating expenses; and risks associated with Celyad's ability to obtain additional funding to support its business activities and establish and maintain strategic business alliances and business initiatives.

A further list and description of these risks, uncertainties and other risks can be found in Celyad's U.S. Securities and Exchange Commission (SEC) filings and reports, including the Company's Annual Report on Form 20-F filed with the SEC on April 5, 2019 and subsequent filings and reports by Celyad. Given these uncertainties, the reader is advised not to place any undue reliance on such forward-looking statements. These forward-looking statements speak only as of the date of publication of this document, and Celyad's actual results may differ from those expressed or implied by these forward-looking statements. The Company expressly disclaims any obligation to update any such forward-looking statements in this document to reflect any change in its expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based, unless required by law or regulation.

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1. INTERIM MANAGEMENT REPORT

1.1 Management's discussion and analysis of financial condition and results of operations

This management's discussion and analysis is designed to provide you with a narrative explanation of Celyad SA's (our, Celyad's or the Company's) interim condensed consolidated financial statements. It should be read in conjunction with the unaudited financial information and the notes thereto included in this Interim Financial Report and the audited financial information and the notes thereto included in our 2018 Annual Report available on the Company's website.

All amounts included herein with respect to the six-month periods ended June 30, 2019 and 2018 are derived from our interim condensed consolidated financial statements. The consolidated financial statements for the six months' period ended June 30, 2019 and 2018 are prepared in accordance with the International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and in accordance with the IFRS issued by the IASB as adopted for use in the European Union, and with IAS 34, Interim Financial Reporting.

Except for the historical information contained herein, the matters discussed in this Interim Financial Report may be deemed to be forward-looking statements that involve certain risks and uncertainties. We make such forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. In this Interim Financial Report, words such as "may," "will," "expect," "anticipate," "estimate," "intend," "plan," and similar expressions (as well as other words or expressions referencing future events, conditions or circumstances) are intended to identify forward-looking statements. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and the development of the industry in which we operate may differ materially from the forward-looking statements contained in this Interim Financial Report. In addition, even if our results of operations, financial condition and liquidity, and the development of the industry in which we operate are consistent with the forward-looking statements contained in this Interim Financial Report, they may not be predictive of results or developments in future periods.We caution readers not to place undue reliance on any forward-looking statements made by us, which speak only as of the date they are made.

Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Interim Financial Report, particularly under the "Risk and Uncertainties" and "Forward-looking statements" sections.

This discussion and analysis is dated as of the date of this Interim Financial Report. We disclaim any obligation, except as specifically required by law, to publicly update or revise any such statements to reflect any change in our expectations or in events, conditions or circumstances on which any such statements may be based, or that may affect the likelihood that actual results will differ from those set forth in the forward-looking statements.

Overview

Celyad is a clinical-stage biopharmaceutical company focused on the development of specialized autologous and allogeneic CAR T-cell therapies and utilizes its expertise in cell engineering to target cancer. Our platform based on the engineering of CAR T-cells by the transduction of Natural Killer (NK) receptors onto T lymphocytes to allow recognition of multiple tumor ligands has the potential to generate product candidates to treat a broad range of solid and hematologic tumors. The preclinical research underlying this technology was originally conducted at Dartmouth College by Dr. Charles Sentman and has been published extensively in peer-reviewedpublications.

Among these is the Natural Killer Group 2D (NKG2D) receptor that is leveraged in our lead clinical candidate, CYAD-01, an autologous CAR-T therapy, currently being evaluated in several Phase 1 clinical trials to assess safety and clinical activity for the treatment of relapse/refractory Acute Myeloid Leukemia (r/rAML) and metastatic Colorectal Cancer (mCRC).

CYAD-01 is intended to trigger cell killing through the binding of NKG2D to any of its eight naturally occurring ligands (ie, MIC A/B and ULBP 1-6) that are known to be overexpressed on more than 80% of tumors including AML and CRC.

In addition, preclinical data suggest that CYAD-01 has multiple mechanisms of actions and goes beyond direct cancer cell killing. We believe it inhibits the mechanisms that enable tumors to evade the immune system, activates and recruit anti- tumor immune cells and disrupts the blood supply to the tumor. These mechanisms promote the induction of adaptive immunity, meaning the development of a long-term immune memory against specific tumor ligands of the targeted tumor.

In the context of r/r AML, CYAD-01 is currently being investigated under different conditions in several Phase I clinical trials: THINK trial where CYAD-01 is given without preconditioning chemotherapy, and DEPLETHINK trial evaluating CYAD-01 following preconditioning chemotherapy cyclophosphamide and fludarabine, or CyFlu, which is the preconditioning therapy typically used with other hematological malignancies evaluating CAR-T cell therapies. CYAD-01 has also been evaluated for the treatment of mCRC in the THINK (with or without CyFlu preconditioning chemotherapy) and SHRINK (concurrently administered with FOLFOX) phase 1 trials.

In parallel, Celyad is also developing CYAD-101, an investigational, non-gene edited, allogeneic (donor derived) NKG2D-basedCAR-T therapy, which is currently being evaluated in a Phase 1 trial for the treatment of patients with mCRC (alloSHRINK trial).

For further details on our clinical development strategy, reference is made to our product pipeline described on our website (https://www.celyad.com/en/our-pipeline).

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Second Quarter 2019 and Recent Business Highlights

• In June, the Company announced a strategic update to its autologous relapse/refractory (r/r) acute myeloid leukemia (AML) and myelodysplastic syndromes (MDS) program, including that the U.S. Food and Drug Administration (FDA) accepted the Company's proposal to utilize the OptimAb manufacturing process with CYAD-
• 1. under the current Investigational New Drug (IND) application.
• The OptimAb manufacturing process utilizes a shortened eight-day cell culture and incorporates a selective PI3K inhibitor. This results in a product that is enriched for T cells with a memory-like phenotype while maintaining the high level of manufacturing reliability required to support clinical development. Preclinical data demonstrate that CYAD-01 produced using the OptimAb manufacturing process drives improved anti-tumor activity in an aggressive AML model compared to CYAD-01 produced with the previous mAb manufacturing process.
• Following additional assessment of the r/r AML and MDS program for CYAD-01, Celyad plans to treat the first patient using the recently accepted OptimAb manufacturing process for CYAD-01 in cohort 3 (300 million cells) of the Phase
• 1. DEPLETHINK trial.
• The Company also announced that the FDA accepted the IND application for CYAD-02, a next-generation, autologous NKG2D-basedCAR-T candidate, and permitted it to go into effect. CYAD-02 incorporates short hairpin RNA (shRNA) technology to target the NKG2D ligands MICA and MICB. The single shRNA modulates the expression of both ligands, which translates to encouraging increases in in vitro proliferation, in vivo engraftment and anti-tumor activity in preclinical studies. CYAD-02 also incorporates the OptimAb manufacturing process.

Pipeline Updates

CYAD-01 - Autologous NKG2D-basedCAR-T

The Company's lead asset, CYAD-01 continues to advance in the Phase 1 THINK and DEPLETHINK clinical trials for the treatment of patients with relapsed/refractory (r/r) acute myeloid leukemia (AML) or myelodysplastic syndrome (MDS). In June, Celyad presented preliminary data at the European Hematology Association (EHA) meeting that demonstrated that a denser schedule of infusions of CYAD-01 without preconditioning in Cohort 10 (Schedule Optimization) of the THINK trial was well tolerated and led to better time-averaged engraftment of the CAR-T cells compared to biweekly injections of CYAD-01 without preconditioning. Also at EHA, the Company reported that a single infusion of low dose CYAD-01 (100 million cells) following preconditioning chemotherapy consisting of cyclophosphamide and fludarabine was well-tolerated and led to better time-averaged engraftment of the CAR-T cells compared to the dose-escalation segment of the THINK trial.

In July, the Company also provided an update on CYAD-01 for the treatment of patients with metastatic colorectal cancer (mCRC) at the European Society for Medical Oncology (ESMO) 21st World Congress on Gastrointestinal Cancer (WCGIC) in Barcelona. Professor Dr. Eric Van Cutsem from the University Hospital of Leuven (Universitair Ziekenhuis Leuven, UZ Leuven) presented preliminary data from the ongoing Phase 1 SHRINK trial assessing safety and clinical activity of CYAD-01 infused concurrently with FOLFOX chemotherapy for the treatment of mCRC. Data from the trial showed the regimen to be generally well-tolerated and with initial observations of disease control.

CYAD-101 - Allogeneic NKG2D-basedCAR-T

Celyad's first-in-class,non-gene edited clinical candidate CYAD-101 continues to advance in the alloSHRINK Phase 1 trial. At the 21st ESMO-WCGIC, the Company presented preliminary data from the ongoing alloSHRINK trial assessing safety and clinical activity of CYAD-101 administered concurrently with FOLFOX chemotherapy in patients with relapsed or refractory mCRC. Preliminary data showed no clinical evidence of Graft-versus-Host Disease post-infusion of allogeneic candidate CYAD-101. In addition, the regimen demonstrated encouraging anti-tumor activity with one patient experiencing a partial response and three patients experiencing stable disease at the three-month assessment.

CYAD-200 Series - shRNA-based Allogeneic CAR-Ts

The Company continues to pursue the development of the proprietary non-gene edited allogeneic shRNA SMARTvector platform and progress towards the IND applications for the CYAD-200 series of shRNA-based allogeneic CAR-T candidates, including CYAD-211, the Company's CAR-T therapy targeting B-cell maturation antigen (BCMA) for the treatment of multiple myeloma.

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