ORGENESIS INC. Forward-Looking Statements
The following discussion should be read in conjunction with the financial
statements and related notes contained elsewhere in this Quarterly Report on
Form 10-Q, as well as our Annual Report on Form 10-K for the fiscal year ended
The full extent to which the COVID-19 pandemic may directly or indirectly impact our business, results of operations and financial condition will depend on future developments that are uncertain, including as a result of new information that may emerge concerning COVID-19 and the actions taken to contain it or treat COVID-19, as well as the economic impact on local, regional, national and international customers and markets. We have made estimates of the impact of COVID-19 within our financial statements, and although there is currently no major impact, there may be changes to those estimates in future periods. Actual results may differ from these estimates.
Although the Company believes that the expectations reflected in the
forward-looking statements are reasonable, the Company cannot guarantee future
results, levels of activity, performance, or achievements. Except as required by
applicable law, including the securities laws of
Our financial statements are prepared in accordance with accounting principles
generally accepted in
Unless otherwise indicated or the context requires otherwise, the words "we,"
"us," "our," the "Company," "our Company" or "Orgenesis" refer to
15 Corporate Overview
CGTs can be centered on autologous (using the patient's own cells) or allogenic (using master banked donor cells) and are part of a class of medicines referred to as advanced therapy medicinal products (ATMPs). We mostly focus on autologous therapies, with processes and systems that are developed for each therapy using a closed and automated processing system approach that is validated for compliant production near the patient at their point of care for the treatment of patients. This approach has the potential to overcome the limitations of traditional commercial manufacturing methods that do not translate well to commercial production of advanced therapies due to their cost prohibitive nature and complex logistics to deliver the treatments to patients (ultimately limiting the number of patients that can have access to, or can afford, these therapies).
To achieve these goals, we have developed a Point of Care Platform comprised of three enabling components: a pipeline of licensed POCare Therapies that are designed to be processed and produced in closed, automated POCare Technology systems and a collaborative POCare Network. Via a combination of science, technology, engineering, and networking, we are working to provide a more efficient and scalable pathway for advanced therapies to reach patients more rapidly at lowered costs. We also draw on extensive medical expertise to identify promising new autologous therapies to leverage within the POCare Platform either via ownership or licensing.
The POCare Network brings together patients, doctors, industry partners, research institutes and hospitals worldwide with a goal of achieving harmonized, regulated clinical development and production of the therapies.
POCare Platform Operations via Subsidiaries
We currently conduct our core business operations ourselves and through our subsidiaries, which are all wholly-owned except as otherwise stated below (collectively, the "Subsidiaries"). The Subsidiaries are as follows:
United States
?
?
in 2020 and is currently focused on developing the POCare network and
therapies.Europe
? Orgenesis Belgium SRL (the "Belgian Subsidiary") is the center of activity in
European clinical trials.
? Orgenesis Switzerland Sarl (the "Swiss Subsidiary"), was incorporated in
Asia
?
regulatory, clinical and pre-clinical services.
?
services in
?
and pre-clinical services in
16 Business Strategy
Our aim is to provide a pathway to bring Advanced Therapy Medicinal Products ("ATMPs") in the cell and gene therapy industry from research to patients worldwide through our POCare Platform. We define point of care as a process of collecting, processing, and administering cells within the patient care environment, namely through academic partnerships in a hospital setting. We believe that this approach is an attractive proposition for personalized medicine because of our strategic partnerships with suppliers that help us to customize closed systems into effective mobile clean room facilities. This will potentially help to minimize or eliminate the need for cell transportation, which is a high-risk and costly aspect of the supply chain.
We aim to build value in various aspects of our company ranging from supply related processes including development and distribution systems, clinical and regulatory services, engineering and devices such as OMPULs discussed below, delivery systems, therapies including immuno-oncology, anti-aging, anti-viral, metabolic, nephrology, dermatology, orthopedic, as well as regenerative technologies.
Over time, we have worked to develop and validate POCare Technologies that can
be combined within mobile production units for advanced therapies. We made
significant investments in the development of several types of
OMPULs are designed for the purpose of validation, development, performance of clinical trials, manufacturing and/or processing of potential or approved cell and gene therapy products in a safe, reliable, and cost-effective manner at the point of care, as well as the manufacturing of such CGTs in a consistent and standardized manner in all locations. The design delivers a potential industrial solution for us to deliver CGTs to most clinical institutions at the point of care.
Revenue Model and Business Development
Our Point of Care ("POCare") Platform is comprised of three enabling components:
a multitude of licensed cell based POCare Therapeutics that are produced in
closed, automated POCare Technology systems and a collaborative POCare Network.
Our therapies include, but are not limited to, autologous, cell-based
immunotherapies, therapeutics for metabolic diseases, anti-viral diseases, and
tissue regeneration. We are establishing and positioning the business to bring
point-of-care therapies to patients in a scalable way working directly with
hospitals and through regional joint venture partners ("JVs") and JVs active in
autologous cell therapy product development, including facilities in various
countries in
We are focused on technology in-licensing and therapeutic collaborations, and we out-license therapies marketing rights and manufacturing rights to partners and / or to the JVs. In many cases, the JVs are responsible for the preparation of clinical trials, local regulatory approvals and regional marketing activities. Such licensing includes exclusive or nonexclusive, sublicensable, royalty bearing rights and license to the Orgenesis Background IP as required solely to manufacture, distribute and market and sell Orgenesis Products within the relevant territories. In consideration of the rights and the licenses so granted, we receive a royalty in the range of ten percent of the net sales generated by the JVs and/or its sublicensees (as applicable) with respect to the Orgenesis Products.
In addition, in many cases, once the JVs become profitable, we are entitled (in
addition to any of its rights as holder of the JVs and prior to any other
distributions of dividends by the JVs to shareholders of the JVs) to certain
royalties pursuant to an Orgenesis License Agreement, to receive from the JVs
royalties at a range of 10 to 15 percent of the JV's audited
17
We currently generate revenues from POCare services and sales which is comprised of:
? R&D services provided to out licensing partners
The Company has signed POCare Master Services Agreements ("MSAs") with our JV partners. In terms of the MSAs, we provide certain broadly defined development services that relate to our licensed therapies designed to develop or enhance the therapy with the objective of preparing it for clinical use. Such services, per therapy, include regulatory services, pre-clinical studies, intellectual property services, development services, and GMP process translation.
? Hospital supply
Hospital services includes the sale or lease of products and the performance of processing services to our POCare hospitals or other medical providers. We either work directly with hospitals or receive payments through our regional JV partnerships.
Results of Operations
Comparison of the Three Months Ended
The following table presents our results of operations for the three months
ended
Three Months Ended
March 31, 2021 March 31, 2020
(in thousands)
Revenues $ 8,232 $ 1,385
Revenues to Related Party 1,157 493
Cost of services and other research and
development expenses 6,127 4,873
Amortization of intangible assets 238 223
Selling, general and administrative expenses 2,968 3,518
Share in net loss of associated companies 15 -
Financial expenses, net 233 329
Other income, net (25 ) (3 )
Loss before income taxes $ 167 $ 7,062
During the three months ended
Expenses
Cost of servicesand other research and development expenses
Three Months Ended
March 31, 2021 March 31, 2020
(in thousands)
Salaries and related expenses $ 2,236 $ 916
Stock-based compensation 158 86
Professional fees and consulting services 2,125 401
Lab expenses 627 619
Depreciation expenses, net 163 132
Other research and development expenses 818 2,804
Less - grant - (85 )
Total $ 6,127 $ 4,873
18
Research and development expenses for the three months ended
The increase is mainly attributable to the continued expansion of our pipeline of licensed CGTs with a harmonized pathway for regulatory approval, the expansion of our POC capacity globally, further investments in automated processing units and processes, further development of owned and licensed advanced therapies to enable commercial production, and additional work with partners to enable efficient closed processing system technologies addressing POCare needs.
Furthermore, additional employees were hired as we expanded our research and development to the evaluation and development of new cell therapies and related technologies.
We also continued investing in the development of several types of OMPULs with the expectation of use and/or distribution through our POCare Network of partners, collaborators, and joint ventures.
Selling, General and Administrative Expenses
Three Months Ended
March 31, 2021 March 31, 2020
(in thousands)
Salaries and related expenses $ 679 $ 502
Stock-based compensation 407 331
Accounting and legal fees 872 1,624
Professional fees 412 437
Rent and related expenses 30 61
Business development 148 250
Depreciation expenses, net 52 25
Other general and administrative expenses 368 288
Total $ 2,968 $ 3,518
Selling, general and administrative expenses for the three months ended
Financial Expenses, net
Three Months Ended
March 31, 2021 March 31, 2020
(in thousands)
Interest expense on convertible loans and loans $ 253 $ 422
Foreign exchange loss, net 56 57
Other income (76 ) (150 )
Total $ 233 $ 329
Financial expenses, net for the three months ended
19
Working Capital
As of
March 31, 2021 December 31, 2020
(in thousands)
Current assets $ 54,713 $ 50,077
Current liabilities 18,930 16,285
Working capital gain $ 35,783 $ 33,792
Current assets increased, primarily due to increased accounts receivable as a result of the increased revenues. The increase in current liabilities was mainly attributable to an increase in accounts payable caused by the expansion of business operations.
Liquidity and Financial Condition
Three Months Ended
March 31, 2021 March 31, 2020
(in thousands)
Net income (loss) $ (165 ) $ 69,450
Net cash used in operating activities (4,547 ) (13,693 )
Net cash provided by (used in) investing activities (539 ) 103,045
Net cash provided by financing activities 1,898 6,357
Increase (decrease) in cash and cash equivalents $ (3,188 ) $ 95,709
During the quarter ended
Net cash used in operating activities for the three months ended
Net cash used in investing activities for the three months ended
Liquidity & Capital Resources Outlook
We believe that our current cash balance as well as revenues from our current operations results will provide sufficient liquidity to fund our operating needs for at least the next 12 months. However, there are factors that can impact our ability to continue to fund our operating needs, including:
? restrictions on our ability to expand sales volume from our CGT Biotech
Platform; and ? the need for us to continue to invest in operating activities to remain
competitive or acquire other businesses and technologies and to complement our
products, expand the breadth of our business, enhance our technical
capabilities or otherwise offer growth opportunities.
If there are further increases in operating costs in general and administrative expenses for facilities expansion, funding for some of our collaborations and joint ventures, research and development, commercial and clinical activity or decreases in revenues from customers, we may decide to seek additional financing.
20
Off-Balance Sheet Arrangements
The Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company's financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.
© Edgar Online, source
