UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2019 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File No. 001-38207 CELCUITY INC. (Exact name of registrant as specified in its charter) Delaware No. 82-2863566 (State of incorporation) (IRS Emp ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2019 OR ¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File No. 001-38207 CELCUITY INC. (Exact name of registrant as specified in its charter) Delaware No. 82-2863566 (State of incorporation) (IRS Empl ...

PART I [Business](index=6&type=section&id=Item%201.%20Business) Celcuity develops proprietary CELx diagnostic tests using living tumor cells to improve cancer patient outcomes through pharmaceutical partnerships - Celcuity's core technology, the **CELx diagnostic platform**, analyzes **living tumor cells** to measure dynamic cell signaling activity, which it believes is a more accurate method for diagnosing cancer drivers compared to traditional molecular diagnostics that analyze static genetic mutations in dead cells[20](index=20&type=chunk) - The company's first commercial-ready test, the **CELx HSF Test**, identifies two new sub-types of HER2-negative breast cancer, with internal studies suggesting **15-20%** of these patients may respond to anti-HER2 therapies[21](index=21&type=chunk) - The commercialization strategy centers on partnering with pharmaceutical companies to develop **companion diagnostics (CDx)**, aiming to generate revenue from clinical trial testing, milestone payments, and potential royalties[30](index=30&type=chunk)[31](index=31&type=chunk) - Celcuity is conducting two key prospective clinical trials, FACT 1 with **Genentech** and **NSABP**, and FACT 2 with **Puma Biotechnology**, both using the **CELx HSF Test** to select breast cancer patients for HER2 targeted therapies, with interim results expected in late 2019 to early 2020[24](index=24&type=chunk)[87](index=87&type=chunk) Research and Development Expenses | Indicator | 2018 | 2017 | | :--- | :--- | :--- | | **Research and Development Expenses** | $6.3 million | $5.0 million | [Risk Factors](index=30&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from limited operating history, lack of revenue, reliance on partnerships, regulatory changes for LDTs, and internal control weaknesses - The company has a **limited operating history**, has **never generated revenue**, and its success is heavily dependent on the clinical and commercial success of its first product, the **CELx HSF Test**[148](index=148&type=chunk)[150](index=150&type=chunk) - Celcuity relies on collaborations with third parties like **NSABP**, **Genentech**, and **Puma Biotechnology** to conduct its clinical trials, and their failure to perform could delay or prevent test commercialization[189](index=189&type=chunk)[190](index=190&type=chunk) - The company's tests are currently considered **Laboratory Developed Tests (LDTs)** and are not subject to **FDA regulation**, but a change in FDA policy could incur substantial costs and delays[202](index=202&type=chunk)[203](index=203&type=chunk)[204](index=204&type=chunk) - A **material weakness** in internal control over financial reporting has been identified due to a **lack of segregation of duties**, which could lead to material misstatements not being prevented or detected[241](index=241&type=chunk)[242](index=242&type=chunk)[243](index=243&type=chunk) - The company operates a **single laboratory facility** in Minneapolis, and any damage or operational failure at this site would prevent it from performing tests, harming the business[182](index=182&type=chunk) [Unresolved Staff Comments](index=50&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments - There are **no unresolved staff comments**[264](index=264&type=chunk) [Properties](index=50&type=section&id=Item%202.%20Properties) Celcuity leases approximately 16,000 square feet in Minneapolis for its laboratory and offices, with the lease expiring in April 2021 - The company leases approximately **16,000 square feet** in Minneapolis, Minnesota for its laboratory and offices[264](index=264&type=chunk) - The lease expires in **April 2021** and is renewable annually with extension rights[264](index=264&type=chunk) [Legal Proceedings](index=50&type=section&id=Item%203.%20Legal%20Proceedings) The company is not currently involved in any material legal proceedings - The company is **not currently a party to any material legal proceedings**[265](index=265&type=chunk) [Mine Safety Disclosures](index=50&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - **Not applicable**[266](index=266&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=50&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Celcuity's common stock is listed on Nasdaq under "CELC" since September 2017, with no history or expectation of cash dividends - Common stock is listed on The **Nasdaq Capital Market** under the symbol "**CELC**" since **September 20, 2017**[269](index=269&type=chunk) - As of February 21, 2019, there were approximately **49 holders of record** of the common stock[270](index=270&type=chunk) - The company has **never paid cash dividends** and does not intend to in the foreseeable future[271](index=271&type=chunk) [Selected Financial Data](index=51&type=section&id=Item%206.%20Selected%20Financial%20Data) Selected financial data shows no revenue, increasing net losses, and decreasing total assets for 2018 and 2017 Statement of Operations Data | Statement of Operations Data | 2018 | 2017 | | :--- | :--- | :--- | | Research and development | $6,325,995 | $4,980,427 | | General and administrative | $1,606,543 | $972,518 | | **Total operating expenses** | **$7,932,538** | **$5,952,945** | | Loss from operations | $(7,932,538) | $(5,952,945) | | **Net loss** | **$(7,480,815)** | **$(6,251,730)** | | Net loss per share, basic and diluted | $(0.74) | $(0.84) | Balance Sheet Data | Balance Sheet Data | As of Dec 31, 2018 | As of Dec 31, 2017 | | :--- | :--- | :--- | | Total assets | $26,031,821 | $31,969,510 | | Total liabilities | $682,210 | $578,053 | | Total stockholders' equity | $25,349,611 | $31,391,457 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=53&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses increasing net losses due to higher R&D and G&A expenses, with $24.9 million in cash expected to fund operations for 24 months Operating Expense Comparison | Operating Expense Comparison | 2018 | 2017 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Research and development | $6,325,995 | $4,980,427 | $1,345,569 | 27% | | General and administrative | $1,606,543 | $972,518 | $634,025 | 65% | | **Total operating expenses** | **$7,932,538** | **$5,952,945** | **$1,979,594** | **33%** | - The increase in **R&D expenses** in 2018 was driven by higher compensation costs and increased spending on clinical validation, laboratory studies, and patent costs[307](index=307&type=chunk) - The increase in **G&A expenses** was primarily due to higher professional fees and insurance costs associated with being a public company for a full year[309](index=309&type=chunk) - As of December 31, 2018, the company had approximately **$24.9 million** in cash, cash equivalents, and investments, which management believes is sufficient to finance operations for at least the next **24 months**[296](index=296&type=chunk)[314](index=314&type=chunk)[316](index=316&type=chunk) Cash Flow Summary | Cash Flow Summary | 2018 | 2017 | | :--- | :--- | :--- | | Net cash used in operating activities | $(6,076,269) | $(4,947,982) | | Net cash provided by (used for) investing activities | $19,094,392 | $(28,976,983) | | Net cash provided by financing activities | $236,697 | $30,708,406 | [Quantitative and Qualitative Disclosures About Market Risk](index=60&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exempt from market risk disclosures as a smaller reporting company - The company is **not required** to provide this disclosure as it qualifies as a **smaller reporting company**[334](index=334&type=chunk) [Financial Statements and Supplementary Data](index=61&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents audited financial statements for 2018 and 2017, with an unqualified opinion from Boulay PLLP - The independent auditor, **Boulay PLLP**, issued an **unqualified opinion** on the financial statements for the years ended December 31, 2018 and 2017[338](index=338&type=chunk) - The company converted from a Minnesota LLC to a Delaware corporation named Celcuity Inc. on **September 15, 2017**, ahead of its IPO[361](index=361&type=chunk) - The company completed its IPO on **September 22, 2017**, selling **2,760,000 shares** at **$9.50 per share**, with net proceeds of approximately **$23.3 million**[362](index=362&type=chunk) - A **valuation allowance** has been recorded to fully offset the **net deferred tax asset**, as it is more likely than not that the company will not realize future benefits from these assets[432](index=432&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosures](index=82&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosures) The company reports no changes or disagreements with its accountants on accounting or financial disclosures - **None reported**[439](index=439&type=chunk) [Controls and Procedures](index=82&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded disclosure controls were ineffective due to a material weakness from limited segregation of duties - Management concluded that disclosure controls and procedures were **not effective** as of December 31, 2018[439](index=439&type=chunk) - A **material weakness** in internal control over financial reporting was identified due to **limited segregation of duties** resulting from the company's small size[440](index=440&type=chunk) - As an **emerging growth company**, the company is **exempt** from the requirement to have its registered public accounting firm provide an attestation report on internal control over financial reporting[441](index=441&type=chunk) [Other Information](index=82&type=section&id=Item%209B.%20Other%20Information) The company reports no other information for this item - **None**[443](index=443&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=83&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) This section details the company's directors and executive officers, including co-founders and CFO, with further details in the 2019 proxy statement - **Brian F. Sullivan**, co-founder, serves as **Chairman and CEO**, having previously founded and led SterilMed and Recovery Engineering[446](index=446&type=chunk) - **Dr. Lance G. Laing**, co-founder, serves as **Chief Science Officer and Director**, with over 15 years of experience in drug discovery and technology development and 18 U.S. patents[447](index=447&type=chunk) - **Vicky Hahne** joined as **CFO** in July 2017, bringing over 20 years of financial leadership experience from previous roles[453](index=453&type=chunk) - Additional information required by this item is **incorporated by reference** from the company's 2019 Definitive Proxy Statement[455](index=455&type=chunk) [Executive Compensation](index=85&type=section&id=Item%2011.%20Executive%20Compensation) Executive compensation information is incorporated by reference from the 2019 Definitive Proxy Statement - Information is **incorporated by reference** from the Definitive Proxy Statement[456](index=456&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=85&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Security ownership information is incorporated by reference from the 2019 Definitive Proxy Statement - Information is **incorporated by reference** from the Definitive Proxy Statement[457](index=457&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=85&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Related transactions and director independence information is incorporated by reference from the 2019 Definitive Proxy Statement - Information is **incorporated by reference** from the Definitive Proxy Statement[458](index=458&type=chunk) [Principal Accounting Fees and Services](index=85&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Principal accounting fees and services information is incorporated by reference from the 2019 Definitive Proxy Statement - Information is **incorporated by reference** from the Definitive Proxy Statement[460](index=460&type=chunk) PART IV [Exhibits, Financial Statement Schedules](index=87&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists financial statements, schedules, and exhibits filed with the Form 10-K, including corporate governance and material contracts - Lists the **financial statements** included in the report[463](index=463&type=chunk) - An **index of exhibits** filed with the Form 10-K is provided, including **key agreements** and **required certifications**[466](index=466&type=chunk)[476](index=476&type=chunk) [Form 10-K Summary](index=87&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company reports no summary for this item - **None**[464](index=464&type=chunk)

Celcuity Inc. (NASDAQ:CELC) Q4 2018 Results Earnings Conference Call February 26, 2019 4:30 PM ET Company Participants Brian Sullivan - Chief Executive Officer Vicky Hahne - Chief Financial Officer Conference Call Participants Edward Marks - H.C. Wainwright Per Ostlund - Craig-Hallum Operator Please stand-by. Your program is about to begin. [Operator Instructions] Now I would like to turn the call over to Brian Sullivan, Chief Executive Officer. Brian Sullivan Thank you and good afternoon, everyone. We anno ...