Orgenesis' CD19 CAR-T therapy, ORG-101, had a complete response (CR) of 82% in adults and 93% in pediatric patients with the incidence of severe Cytokine Release Syndrome (CRS) of 2% in adult patients and 6% in pediatric patients in a real-world study Data indicate a potentially favorable safety profile with a lower incidence of Cytokine Release Syndrome Encouraged by the positive data, Harley Street Healthcare Group along with its partners intends to commit resources to set up a Global Cancer Initiative wi ...

GERMANTOWN, Md., Aug. 14, 2024 (GLOBE NEWSWIRE) -- Orgenesis Inc. (NASDAQ: ORGS) ("Orgenesis" or the "Company"), a global biotech company working to unlock the full potential of cell and gene therapies (CGT) in order to improve access and outcomes in healthcare, today announced a strategic partnership agreement with Harley Street Healthcare Group (HSHG) – an innovative and forward-looking healthcare provider focused on delivering world-class, proactive, personalized and preventative health & wellness servic ...

Vered Caplan, CEO of Orgenesis, said, "We continue to advance the commercialization of our decentralized platform through Octomera, our strategic CGT processing subsidiary, including our Orgenesis Mobile Processing Units and Labs (OMPULs). OMPULs offer a rapid, standardized industrial cleanroom alternative at or near the point of care, which can be rapidly deployed and scaled at a significantly lower cost than centralized production. Importantly, we recently regained 100% ownership of Octomera in a strategi ...

GERMANTOWN, Md., May 21, 2024 (GLOBE NEWSWIRE) -- Orgenesis Inc. (NASDAQ: ORGS) ("Orgenesis" or the "Company"), a global biotech company working to unlock the full potential of cell and gene therapies (CGT) in order to improve access and outcomes in healthcare, today provided a business update for the first quarter ended March 31, 2024. Vered Caplan, CEO of Orgenesis, said, "We continue to advance the commercialization of our decentralized platform through Octomera, our strategic CGT processing subsidiary, ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended March 31, 2024 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 number: 001-38416 ORGENESIS INC. (Exact name of registrant as specified in its charter) Nevada 98-0583166 (State or ...

PART I [ITEM 1. BUSINESS](index=5&type=section&id=ITEM%201.%20BUSINESS) A global biotech company making Cell and Gene Therapies (CGTs) affordable and accessible via its Point-of-Care platform - Orgenesis Inc is a global biotech company focused on unlocking the potential of Cell and Gene Therapies (CGTs) in an affordable and accessible format, primarily through autologous therapies manufactured using a closed and automated approach at the point of care (POCare)[304](index=304&type=chunk)[307](index=307&type=chunk)[308](index=308&type=chunk) - The company has developed a POCare Platform, a scalable infrastructure of technology and services, including POCare Centers and Orgenesis Mobile Processing Units & Labs (OMPULs), to standardize and decentralize CGT production, aiming to **lower costs and simplify logistics**[350](index=350&type=chunk)[351](index=351&type=chunk)[489](index=489&type=chunk) - The business model involves in-licensing promising therapies, adapting them to a point-of-care setting through regional partnerships, and then out-licensing products for market approval in preferred geographical regions, which **minimizes pre-clinical development costs** and leverages grants[359](index=359&type=chunk)[561](index=561&type=chunk) [POCare Therapies](index=8&type=section&id=POCare%20Therapies) This segment develops a pipeline of advanced, personalized cell therapies for out-licensing in point-of-care settings - The company's pipeline includes investigational therapies and next-generation technologies, predominantly **personalized autologous cell therapies**, for cancer and other unmet clinical needs[368](index=368&type=chunk)[369](index=369&type=chunk) - Key therapeutic fields encompass cell-based immuno-oncology, cell-based drug delivery platforms, regenerative medicine, anti-viral, and autoimmune diseases[369](index=369&type=chunk) - The company collaborates with academic institutions and hospitals to in-license promising therapies, adapt them to a point-of-care approach, and out-license them for market approval in preferred geographical regions, **reducing overall development costs**[357](index=357&type=chunk)[358](index=358&type=chunk)[359](index=359&type=chunk) [POCare Services](index=15&type=section&id=POCare%20Services) This segment provides harmonized services for CGT product supply, including process development and automation - POCare Services include process development, automation adaptation, GMP-compliant incorporation into OMPULs, tech transfers, training, processing and supply of therapies, and CRO services for clinical trials[439](index=439&type=chunk) - The company is expanding its POCare Centers globally (e g, Maryland, Boston, California, Belgium, Greece, Israel, Italy, Spain, Korea) to provide efficient and scalable CGT processing, aiming to **reduce costs and accelerate patient access**[440](index=440&type=chunk)[509](index=509&type=chunk) - In 2023, significant activities included developing GMP processes for CAR-T, TILs, and MSC-based therapies, deploying OMPULs, and collaborating with **UC Davis and Johns Hopkins University** for decentralized production and analytical labs[510](index=510&type=chunk)[511](index=511&type=chunk)[512](index=512&type=chunk) [ITEM 1A. RISK FACTORS](index=31&type=section&id=ITEM%201A.%20RISK%20FACTORS) The company faces substantial going concern risk, an unproven business model, and various operational and regulatory hurdles - The company's management and independent auditors have concluded there is **substantial doubt about its ability to continue as a going concern** due to recurring losses and negative cash flows from operations[33](index=33&type=chunk)[641](index=641&type=chunk)[663](index=663&type=chunk)[664](index=664&type=chunk) - The POCare business has a limited operating history and an **unproven business model**, making its prospects speculative and highly dependent on successful execution of its strategy[32](index=32&type=chunk)[640](index=640&type=chunk)[660](index=660&type=chunk)[662](index=662&type=chunk) - Significant risks include the inherent challenges of novel biopharmaceutical R&D, extensive industry regulation, potential for product liability lawsuits, reliance on third-party collaborations, and the complexity of manufacturing biologics[19](index=19&type=chunk)[21](index=21&type=chunk)[22](index=22&type=chunk)[28](index=28&type=chunk)[36](index=36&type=chunk)[37](index=37&type=chunk)[161](index=161&type=chunk)[186](index=186&type=chunk)[192](index=192&type=chunk)[478](index=478&type=chunk)[480](index=480&type=chunk)[643](index=643&type=chunk)[644](index=644&type=chunk)[645](index=645&type=chunk)[647](index=647&type=chunk)[650](index=650&type=chunk)[651](index=651&type=chunk)[655](index=655&type=chunk)[667](index=667&type=chunk)[668](index=668&type=chunk)[674](index=674&type=chunk) [ITEM 1B. UNRESOLVED STAFF COMMENTS](index=55&type=section&id=ITEM%201B.%20UNRESOLVED%20STAFF%20COMMENTS) The company reports no unresolved comments from the Securities and Exchange Commission staff - The company has **no unresolved staff comments**[74](index=74&type=chunk) [ITEM 1C. CYBERSECURITY](index=55&type=section&id=ITEM%201C.%20CYBERSECURITY) The company maintains a comprehensive cybersecurity program with active board oversight and has had no material incidents - The company's board of directors **actively oversees cybersecurity risk management**, receiving annual updates and prompt information on material incidents[82](index=82&type=chunk)[93](index=93&type=chunk)[94](index=94&type=chunk) - A comprehensive cybersecurity program is in place, including security monitoring, audits, vulnerability assessments, penetration testing, threat modeling, and **regular mandatory training** for employees and contractors[77](index=77&type=chunk)[78](index=78&type=chunk) - The company has **not experienced any material cybersecurity incidents** in the last three fiscal years, and related expenses were immaterial[92](index=92&type=chunk) [ITEM 2. PROPERTIES](index=58&type=section&id=ITEM%202.%20PROPERTIES) The company operates globally through various leased facilities for offices and laboratories without owning any real property - The company **does not own any real property**, operating instead through leased premises globally[102](index=102&type=chunk) - Key leased facilities include the principal office in Germantown, MD, operational production labs in Gwanggyo, Korea, development and production facilities in New Albany, IN (Koligo), and labs/offices in Bar Lev Industrial Park, Israel (Orgenesis Biotech Israel Ltd)[85](index=85&type=chunk)[86](index=86&type=chunk)[87](index=87&type=chunk)[88](index=88&type=chunk) - Additional leased properties support operations in Baltimore, MD (Orgenesis Maryland LLC), Nes Ziona, Israel (Orgenesis Ltd), Leander, TX (Tissue Genesis International LLC), Leiden, Netherlands (Mida Biotech BV), Namur, Belgium (Orgenesis Belgium and Orgenesis Services SRL), and Koropi, Greece (Theracell Laboratories)[97](index=97&type=chunk)[98](index=98&type=chunk)[99](index=99&type=chunk)[100](index=100&type=chunk)[101](index=101&type=chunk)[102](index=102&type=chunk) [ITEM 3. LEGAL PROCEEDINGS](index=58&type=section&id=ITEM%203.%20LEGAL%20PROCEEDINGS) The company is not involved in any material legal proceedings, except as noted elsewhere in the report - The company is **not involved in any pending material legal proceedings**, except as described in Note 22 of Item 8[103](index=103&type=chunk)[104](index=104&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=58&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) Mine safety disclosures are not applicable to the company's operations - Mine safety disclosures are **not applicable**[105](index=105&type=chunk) PART II [ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES](index=58&type=section&id=ITEM%205.%20MARKET%20FOR%20REGISTRANT'S%20COMMON%20EQUITY%2C%20RELATED%20STOCKHOLDER%20MATTERS%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) The company's common stock trades on Nasdaq, and it has never paid cash dividends, retaining earnings for development - The company's common stock is listed on the Nasdaq Capital Market under the symbol **"ORGS"** since March 13, 2018[107](index=107&type=chunk) Common Stock Information (April 12, 2024) | Metric | Value | | :--- | :--- | | Closing Price | $0.49 | | Holders of Record | 346 | | Shares Outstanding | 34,338,782 | - The company has **never paid cash dividends** and does not intend to in the foreseeable future, planning to retain all earnings for business operations and expansion[68](index=68&type=chunk)[109](index=109&type=chunk) - There were **no unregistered sales** of equity securities or issuer purchases of equity securities[110](index=110&type=chunk)[111](index=111&type=chunk) [ITEM 6. [RESERVED]](index=59&type=section&id=ITEM%206.%20%5BRESERVED%5D) This section is intentionally left blank - Item 6 is **reserved**[112](index=112&type=chunk) [ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=59&type=section&id=ITEM%207.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) A significant revenue decrease and increased operating loss in 2023 raise substantial doubt about its going concern status - The company's operations are separated into two segments: **Octomera (POCare Services)** and **Therapies (therapeutic development)**, following the Metalmark Investment in November 2022[117](index=117&type=chunk) Key Financial Results (2023 vs. 2022, in thousands USD) | Metric | 2023 | 2022 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenues | $530 | $36,025 | -98.59% | | Gross Profit (Loss) | $(5,725) | $30,892 | -118.53% | | Operating Loss | $(53,636) | $(10,110) | +430.52% | | Net Loss | $(64,918) | $(12,169) | +433.48% | | Net Cash Used in Operations| $(14,837) | $(24,924) | -40.47% | - Total revenues **decreased by 99% in 2023**, primarily due to customer payment failures and the deconsolidation of Octomera, which accounted for almost all potential revenues[146](index=146&type=chunk) - The company has an **accumulated deficit of $176,622** and negative operating cash flows of $14,837 as of December 31, 2023, raising substantial doubt about its ability to continue as a going concern[221](index=221&type=chunk)[617](index=617&type=chunk) [ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=72&type=section&id=ITEM%207A.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) Disclosures regarding market risk are not applicable to the company - Quantitative and qualitative disclosures about market risk are **not applicable**[250](index=250&type=chunk) [ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA](index=72&type=section&id=ITEM%208.%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA) Financial statements and supplementary data are included starting on page F-1 of this report - The financial statements and supplementary data are included following the 'Index to Financial Statements' on **page F-1** of this Annual Report on Form 10-K[251](index=251&type=chunk) [ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE](index=72&type=section&id=ITEM%209.%20CHANGES%20IN%20AND%20DISAGREEMENTS%20WITH%20ACCOUNTANTS%20ON%20ACCOUNTING%20AND%20FINANCIAL%20DISCLOSURE) The company reports no changes in or disagreements with its accountants on financial disclosure - There have been **no changes in or disagreements with accountants** on accounting and financial disclosure[252](index=252&type=chunk) [ITEM 9A. CONTROLS AND PROCEDURES](index=72&type=section&id=ITEM%209A.%20CONTROLS%20AND%20PROCEDURES) Disclosure controls were deemed ineffective due to a material weakness in internal control over financial reporting - As of December 31, 2023, the company's disclosure controls and procedures were **not effective** due to a material weakness in internal control over financial reporting[263](index=263&type=chunk)[267](index=267&type=chunk) - The material weakness was identified in the accounting for **revenue collectability and estimated credit losses**, which resulted in restatements of unaudited condensed consolidated financial statements for interim periods in 2023[267](index=267&type=chunk) - Management's remediation plan for 2024 includes thorough credit assessment of new customers, analysis of payment history for existing customers, and analysis of expected credit losses[268](index=268&type=chunk) [ITEM 9B. OTHER INFORMATION](index=74&type=section&id=ITEM%209B.%20OTHER%20INFORMATION) The company has no other information to report under this item - **No other information** is reported under this item[271](index=271&type=chunk) [ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS](index=74&type=section&id=ITEM%209C.%20DISCLOSURE%20REGARDING%20FOREIGN%20JURISDICTIONS%20THAT%20PREVENT%20INSPECTIONS) No disclosures are required regarding foreign jurisdictions that prevent inspections - **No disclosures** regarding foreign jurisdictions that prevent inspections[272](index=272&type=chunk) PART III [ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE](index=74&type=section&id=ITEM%2010.%20DIRECTORS%2C%20EXECUTIVE%20OFFICERS%20AND%20CORPORATE%20GOVERNANCE) The company's governance structure includes a six-member board with a majority of independent directors and key committees - The board of directors consists of six members, with a **majority being independent directors** according to Nasdaq listing standards[293](index=293&type=chunk)[294](index=294&type=chunk)[312](index=312&type=chunk) - Key executive officers include **Vered Caplan (CEO and Chairperson)** and **Victor Miller (CFO, Secretary, and Treasurer, appointed Jan 2, 2024)**[275](index=275&type=chunk)[277](index=277&type=chunk)[278](index=278&type=chunk) - The board has established an Audit Committee, Compensation Committee, Nominating and Corporate Governance Committee, and a Research and Development Committee, all comprised of independent directors[314](index=314&type=chunk) [ITEM 11. EXECUTIVE COMPENSATION](index=79&type=section&id=ITEM%2011.%20EXECUTIVE%20COMPENSATION) Details executive and non-employee director compensation for 2023, including salaries, awards, and committee fees Summary Compensation Table (2023 vs. 2022, in USD) | Name and Principal Position | Year | Salary ($) | Option Awards ($) | All Other Compensation ($) | Total ($) | | :--- | :--- | :--- | :--- | :--- | :--- | | Vered Caplan CEO | 2023 | 259,029 | 107,941 | 82,355 | 341,384 | | | 2022 | 243,868 | - | 92,100 | 443,909 | | Elliot Maltz Former CFO | 2023 | 111,667 | 81,883 | - | 193,550 | | Efrat Assa-Kunik Former CDO | 2023 | 129,633 | - | 18,690 | 148,323 | | | 2022 | 162,316 | 19,048 | 44,467 | 225,831 | - Vered Caplan's compensation includes an annual board fee and eligibility for performance remuneration, with a **lump sum payment upon certain termination events**[343](index=343&type=chunk)[344](index=344&type=chunk)[377](index=377&type=chunk)[378](index=378&type=chunk)[379](index=379&type=chunk) Non-Employee Director Compensation (2023, in USD) | Name | Fees Earned or Paid in Cash ($) | Option Awards ($) | Total ($) | | :--- | :--- | :--- | :--- | | Guy Yachin | 100,000 | 6,067 | 106,067 | | Yaron Adler | 60,000 | 4,643 | 64,643 | | Dr. David Sidransky | 105,000 | 6,330 | 111,330 | | Ashish Nanda | 65,000 | 4,907 | 69,907 | | Mario Philips | 50,000 | 4,256 | 54,256 | - The compensation policy for non-employee directors, updated in January 2021, includes **annual cash compensation ($40,000 base, additional for Chairman/lead director and committee roles)** and annual option bonuses[393](index=393&type=chunk)[394](index=394&type=chunk) [ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS](index=86&type=section&id=ITEM%2012.%20SECURITY%20OWNERSHIP%20OF%20CERTAIN%20BENEFICIAL%20OWNERS%20AND%20MANAGEMENT%20AND%20RELATED%20STOCKHOLDER%20MATTERS) Two beneficial owners hold over 5% of common stock, with directors and executives as a group owning 5.82% Security Ownership of Greater than 5% Beneficial Owners (April 15, 2024) | Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent | | :--- | :--- | :--- | | Jacob Safier | 4,988,000 | 14.53% | | Yehuda Nir | 11,297,179 | 24.75% | Security Ownership of Directors and Executive Officers (April 15, 2024) | Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent | | :--- | :--- | :--- | | Vered Caplan | 1,252,757 | 3.55% | | Elliot Maltz | 25,000 | <1% | | Efrat Assa Kunik | 54,167 | <1% | | Guy Yachin | 150,867 | <1% | | Dr. David Sidransky | 153,467 | <1% | | Yaron Adler | 203,721 | <1% | | Ashish Nanda | 98,400 | <1% | | Mario Philips | 60,000 | <1% | | Directors & Executive Officers as a Group (8 persons) | 1,998,379 | 5.82% | Securities Authorized for Issuance Under Existing Equity Compensation Plans (December 31, 2023) | Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Options (a) | Weighted-Average Exercise Price of Outstanding Options and RSUs (b) | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (c) | | :--- | :--- | :--- | :--- | | Equity compensation plans approved by security holders | 2,944,865 | 3.66 | 2,046,646 | | Equity compensation plans not approved by security holders | 491,671 | 4.80 | - | | Total | 3,436,536 | 3.82 | 2,046,646 | [ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE](index=90&type=section&id=ITEM%2013.%20CERTAIN%20RELATIONSHIPS%20AND%20RELATED%20TRANSACTIONS%2C%20AND%20DIRECTOR%20INDEPENDENCE) No material related-party transactions were reported, aside from standard executive and director compensation - As of December 31, 2023, there were **no material related party transactions** exceeding $120,000 or one percent of average total assets, other than executive and director compensation[452](index=452&type=chunk) - Director independence is maintained in accordance with Nasdaq listing standards, as detailed in Item 10[453](index=453&type=chunk) [ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES](index=91&type=section&id=ITEM%2014.%20PRINCIPAL%20ACCOUNTANT%20FEES%20AND%20SERVICES) Total fees billed to the principal accountant, PwC, decreased in 2023, with all services pre-approved by the Audit Committee - **Kesselman & Kesselman (PwC)** served as the independent registered public accounting firm for the years ended December 31, 2023 and 2022[455](index=455&type=chunk) Principal Accountant Fees (in USD) | Services | 2023 | 2022 | | :--- | :--- | :--- | | Audit Fees | $225,000 | $288,705 | | Audit-Related Fees | $42,000 | $6,405 | | Total Fees | $267,000 | $295,110 | - The Audit Committee has a policy to **pre-approve all audit and permissible non-audit services**, categorized into audit, audit-related, tax, and other fees, with a budgeting and reporting process[457](index=457&type=chunk)[458](index=458&type=chunk)[459](index=459&type=chunk)[460](index=460&type=chunk)[461](index=461&type=chunk)[462](index=462&type=chunk) PART IV [ITEM 15. EXHIBIT AND FINANCIAL STATEMENT SCHEDULES](index=92&type=section&id=ITEM%2015.%20EXHIBIT%20AND%20FINANCIAL%20STATEMENT%20SCHEDULES) This section lists all financial statements and exhibits filed with or incorporated by reference into the report - Consolidated financial statements are **incorporated by reference** from Part II, Item 8 of this Annual Report on Form 10-K[466](index=466&type=chunk) - **No financial statement schedules have been filed separately** as they are either not applicable, not required, or the information is already included[467](index=467&type=chunk) - The section includes a detailed list of exhibits, such as organizational documents, various warrant forms, and numerous agreements related to financing, collaborations, and executive employment[468](index=468&type=chunk)[469](index=469&type=chunk)[470](index=470&type=chunk) [ITEM 16. FORM 10-K SUMMARY](index=92&type=section&id=ITEM%2016.%20FORM%2010-K%20SUMMARY) A Form 10-K Summary is not applicable and has been omitted - A Form 10-K Summary is **not applicable**[470](index=470&type=chunk) [SIGNATURES](index=95&type=section&id=SIGNATURES) The report is duly signed by the company's principal executive and financial officers, as well as its directors - The Annual Report on Form 10-K is signed by **Vered Caplan, Chief Executive Officer and Chairperson of the Board of Directors**, and **Victor Miller, Chief Financial Officer, Treasurer, and Secretary**, both dated April 15, 2024[473](index=473&type=chunk)[474](index=474&type=chunk) [ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA](index=96&type=section&id=ITEM%208.%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA) Presents audited financial statements, with the auditor's report noting substantial doubt about the company's going concern status - The independent registered public accounting firm (Kesselman & Kesselman, PwC) issued an **unqualified opinion** on the consolidated financial statements for 2023 and 2022[477](index=477&type=chunk) - The auditor's report explicitly states a **substantial doubt about the company's ability to continue as a going concern** due to recurring losses and negative cash flows from operations[477](index=477&type=chunk)[528](index=528&type=chunk) - A critical audit matter identified was **revenue recognition and accounts receivables – collectability criteria**, due to the high degree of auditor judgment and effort required to evaluate management's assumptions[533](index=533&type=chunk)[534](index=534&type=chunk)[535](index=535&type=chunk) [CONSOLIDATED BALANCE SHEETS](index=99&type=section&id=CONSOLIDATED%20BALANCE%20SHEETS) Total assets decreased significantly in 2023, leading to a total equity deficiency of $(20,983) thousand Consolidated Balance Sheet Summary (in thousands USD) | Metric | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Total Current Assets | $4,076 | $46,318 | | Total Non-Current Assets | $10,476 | $44,610 | | TOTAL ASSETS | $14,552 | $90,928 | | Total Current Liabilities | $16,407 | $15,910 | | Total Long-Term Liabilities | $19,128 | $15,744 | | TOTAL LIABILITIES | $35,535 | $31,654 | | Total Equity (Capital Deficiency) | $(20,983) | $29,071 | - Current assets **decreased by $42,242 thousand** between December 31, 2022, and December 31, 2023, mainly due to the deconsolidation of Octomera, which held the majority of cash, restricted cash, and accounts receivable[214](index=214&type=chunk) - Current liabilities **increased by $497 thousand**, driven by higher accounts payable, tax payable, and grants payable, partially offset by a decline in short-term convertible loans due to maturity date extensions[215](index=215&type=chunk) [CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (INCOME)](index=101&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20COMPREHENSIVE%20LOSS%20(INCOME)) The company reported a net loss of $64,918 thousand in 2023, a substantial increase from the prior year Consolidated Statements of Comprehensive Loss (in thousands USD) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Total Revenues | $530 | $36,025 | | Gross (Loss) Profit | $(5,725) | $30,892 | | Cost of development services and research and development expenses | $10,623 | $21,933 | | Selling, general and administrative expenses (incl. credit losses) | $35,134 | $15,589 | | Operating Loss | $(53,636) | $(10,110) | | Loss from deconsolidation of Octomera | $5,343 | - | | Net Loss | $(64,918) | $(12,169) | | Net Loss attributable to Orgenesis Inc. | $(55,361) | $(14,889) | - Total revenues **decreased by 98.59%** from $36,025 thousand in 2022 to $530 thousand in 2023[547](index=547&type=chunk) - Selling, general and administrative expenses **increased by 125%** to $35,134 thousand in 2023, largely due to $24,367 thousand in credit losses[152](index=152&type=chunk)[153](index=153&type=chunk)[547](index=547&type=chunk) [CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (CAPITAL DEFICIENCY)](index=102&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CHANGES%20IN%20EQUITY%20(CAPITAL%20DEFICIENCY)) The company shifted from a positive equity position to a capital deficiency of $(20,983) thousand in 2023 Consolidated Statements of Changes in Equity (in thousands USD) | Metric | Balance at Jan 1, 2023 | Balance at Dec 31, 2023 | | :--- | :--- | :--- | | Common Stock | $3 | $3 | | Additional Paid-in Capital | $150,355 | $156,837 | | Accumulated Other Comprehensive Income (loss) | $(270) | $65 | | Treasury Shares | $(1,266) | $(1,266) | | Accumulated Deficit | $(121,261) | $(176,622) | | Equity Attributable to Orgenesis Inc. | $27,561 | $(20,983) | | Non-Controlling Interest | $1,510 | - | | Total Equity (Capital Deficiency) | $29,071 | $(20,983) | - The accumulated deficit **increased from $(121,261) thousand** at the beginning of 2023 to **$(176,622) thousand** by year-end[550](index=550&type=chunk) - Changes during 2023 included **$5,283 thousand from issuance of shares and warrants**, $9,406 thousand from deconsolidation of Octomera (in additional paid-in capital), and a comprehensive loss of $(55,410) thousand attributable to Orgenesis Inc[550](index=550&type=chunk) [CONSOLIDATED STATEMENTS OF CASH FLOWS](index=106&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) Net cash used in operations decreased, but overall cash and equivalents declined by $(4,926) thousand in 2023 Consolidated Statements of Cash Flows (in thousands USD) | Cash Flow Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(14,837) | $(24,924) | | Net cash used in investing activities | $(3,707) | $(14,133) | | Net cash provided by financing activities | $13,618 | $39,578 | | Net change in cash and cash equivalents and restricted cash | $(4,926) | $521 | | Cash, cash equivalents and restricted cash at end of year | $1,479 | $6,369 | - Net cash used in operating activities **decreased by 40.47% in 2023**, mainly due to a lower net loss after adjustments, despite the overall increase in net loss[217](index=217&type=chunk)[607](index=607&type=chunk) - Net cash provided by financing activities **decreased by 65.59% in 2023**, with $5,283 thousand from equity investments and $5,735 thousand from convertible loans, and $5,000 thousand from MM[220](index=220&type=chunk)[607](index=607&type=chunk) [NOTES TO CONSOLIDATED FINANCIAL STATEMENTS](index=108&type=section&id=NOTES%20TO%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) Provides detailed disclosures on accounting policies, segment performance, and the company's going concern status - The company's business is focused on Cell and Gene Therapies (CGTs) through its **Octomera (POCare Services)** and **Therapies (therapeutic development)** segments[610](index=610&type=chunk)[611](index=611&type=chunk) - A **substantial doubt exists about the company's ability to continue as a going concern** due to an accumulated deficit of $176,622 thousand and negative operating cash flows, necessitating additional financing[617](index=617&type=chunk)[619](index=619&type=chunk)[620](index=620&type=chunk) - Significant accounting policies include revenue recognition (with four main streams), credit loss measurement (CECL standard adopted Jan 1, 2023), and segment reporting, with ongoing evaluation of estimates and judgments[623](index=623&type=chunk)[720](index=720&type=chunk)[724](index=724&type=chunk)[744](index=744&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION (Exact name of registrant as specified in its charter) Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended September 30, 2023 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 number: 001-38416 ORGENESIS INC. (State or other jurisdi ...

[PART I - FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [ITEM 1. FINANCIAL STATEMENTS (unaudited)](index=4&type=section&id=ITEM%201%20Financial%20Statements%20(unaudited)) This section presents the unaudited condensed consolidated financial statements for the periods ended June 30, 2023 [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20as%20of%20June%2030%2C%202023%20and%20December%2031%2C%202022) The company's total assets and equity decreased significantly as of June 30, 2023, due to a subsidiary deconsolidation **Condensed Consolidated Balance Sheets (in thousands USD)** | Metric | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Total Assets | $54,767 | $90,928 | | Total Liabilities | $30,802 | $31,654 | | Equity Attributable to Orgenesis Inc. | $23,965 | $27,561 | - Current assets decreased by **$37,023 thousand** and current liabilities decreased by **$3,199 thousand** between December 31, 2022, and June 30, 2023, primarily due to the deconsolidation of the Octomera subsidiary[138](index=138&type=chunk) [Condensed Consolidated Statements of Loss and Comprehensive Loss](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Loss%20and%20Comprehensive%20Loss%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202023%20and%202022) Revenues slightly decreased while cost of revenues surged, leading to lower gross profit but a reduced net loss **Three Months Ended June 30 (in thousands USD, except per share)** | Metric | 2023 | 2022 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenues | $6,975 | $7,201 | -3% | | Cost of Revenues | $3,232 | $1,063 | +204% | | Gross Profit | $3,743 | $6,138 | -39% | | Operating Loss | $3,329 | $4,732 | -30% | | Net Loss Attributable to Orgenesis Inc. | $4,127 | $5,427 | -24% | | Basic and Diluted Loss per Share | $0.15 | $0.22 | -32% | **Six Months Ended June 30 (in thousands USD, except per share)** | Metric | 2023 | 2022 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenues | $14,019 | $14,413 | -3% | | Cost of Revenues | $5,954 | $1,777 | +235% | | Gross Profit | $8,065 | $12,636 | -36% | | Operating Loss | $6,534 | $7,968 | -18% | | Net Loss Attributable to Orgenesis Inc. | $8,316 | $9,436 | -12% | | Basic and Diluted Loss per Share | $0.30 | $0.38 | -21% | [Condensed Consolidated Statements of Changes in Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Equity%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202023%20and%202022) Total equity decreased due to comprehensive loss, partially offset by share and warrant issuances **Changes in Equity Attributable to Orgenesis Inc. (in thousands USD)** | Item | January 1, 2023 | June 30, 2023 | | :--- | :--- | :--- | | Equity Attributable to Orgenesis Inc. | $27,561 | $23,965 | **Key Changes (Six Months Ended June 30, 2023)** * Stock-based compensation: $311k * Issuance of shares and warrants (net): $3,341k * Deconsolidation of Non-controlling Interests: $(1,421)k * Comprehensive loss for the period: $(8,073)k [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20Six%20Months%20Ended%20June%2030%2C%202023%20and%202022) Net cash used in operations increased while financing activities remained a key source of cash inflow **Cash Flow Summary (Six Months Ended June 30, in thousands USD)** | Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(13,154) | $(9,206) | | Net cash used in investing activities | $(2,802) | $(4,863) | | Net cash provided by financing activities | $10,796 | $10,906 | | Net change in cash, cash equivalents and restricted cash | $(5,160) | $(3,163) | [Notes to Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed context on business operations, accounting policies, and significant financial events [NOTE 1 – DESCRIPTION OF BUSINESS](index=13&type=section&id=NOTE%201%20%E2%80%93%20DESCRIPTION%20OF%20BUSINESS) The company focuses on POCare CGTs, recently segmented its business, and faces going concern uncertainty - Orgenesis Inc is a global biotech company focused on developing affordable and accessible autologous Cell and Gene Therapies (CGTs) for point-of-care (POCare) manufacturing[30](index=30&type=chunk) - The company separated its operations into two segments: Morgenesis (now Octomera) and Therapies, following an investment by Metalmark Capital Partners in November 2022[31](index=31&type=chunk) - Effective June 30, 2023, Orgenesis deconsolidated Octomera LLC from its financial statements due to changes in board composition, retaining approximately **75% equity interest**[32](index=32&type=chunk) - The company faces **substantial doubt about its ability to continue as a going concern**, with an accumulated deficit of **$130 million** and negative operating cash flows of **$13.2 million** for the six months ended June 30, 2023[34](index=34&type=chunk)[36](index=36&type=chunk) [NOTE 2 - BASIS OF PRESENTATION](index=14&type=section&id=NOTE%202%20-%20BASIS%20OF%20PRESENTATION) Financials are prepared under U.S. GAAP, with recent accounting standard adoptions having no material impact - The unaudited condensed consolidated financial statements are prepared in accordance with U.S. GAAP and are consistent with the annual consolidated financial statements[38](index=38&type=chunk) - The adoption of new accounting pronouncements, ASU 2016-13 (Credit Losses) and ASU 2021-08 (Business Combinations), **did not have a material impact** on the company's consolidated financial statements[40](index=40&type=chunk)[41](index=41&type=chunk) [NOTE 3 – REDEEMABLE NON-CONTROLLING INTEREST AND DECONSOLIDATION](index=15&type=section&id=NOTE%203%20%E2%80%93%20REDEEMABLE%20NON-CONTROLLING%20INTEREST%20AND%20DECONSOLIDATION) The company deconsolidated its Octomera subsidiary, now accounting for its interest via the equity method - Metalmark Capital Partners made additional investments of **$5 million** and **$1 million** in Octomera LLC in May and June 2023, respectively[43](index=43&type=chunk)[44](index=44&type=chunk) - As a result of board composition changes, Orgenesis deconsolidated Octomera LLC on June 30, 2023, recording a **net profit of $411 thousand** from the transaction[45](index=45&type=chunk) - The company now accounts for its approximately **75% interest** in Octomera as an equity method investment, valued at **$31.4 million**[46](index=46&type=chunk) **Deconsolidated Amounts from Balance Sheet (in thousands USD)** | Item | Amount | | :--- | :--- | | Total Assets | $77,633 | | Total Liabilities | $8,879 | | Redeemable Non-Controlling Interest | $36,203 | | Net Assets Deconsolidated | $32,551 | [NOTE 4 – SEGMENT INFORMATION](index=16&type=section&id=NOTE%204%20%E2%80%93%20SEGMENT%20INFORMATION) The company reports results for its Octomera (POCare Services) and Therapies (development) segments - The company operates in two reportable segments: Octomera (POCare Services) and Therapies (therapeutic development)[50](index=50&type=chunk) **Segment Data (Six Months Ended June 30, in thousands USD)** | Metric | Octomera (2023) | Therapies (2023) | Consolidated (2023) | Octomera (2022) | Therapies (2022) | Consolidated (2022) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Revenues | $13,779 | $240 | $14,019 | $14,086 | $3,862 | $14,413 | | Gross profit | $8,695 | $(158) | $8,537 | $12,762 | $3,222 | $12,805 | | Income (loss) before income taxes | $(700) | $(7,414) | $(7,702) | $2,908 | $(12,385) | $(9,477) | [NOTE 5 – EQUITY](index=19&type=section&id=NOTE%205%20%E2%80%93%20EQUITY) The company raised capital through a registered direct offering of common shares and warrants in February 2023 - In February 2023, Orgenesis completed a registered direct offering, issuing 1,947,368 common shares and warrants for 973,684 shares, raising **$3.7 million in gross proceeds**[57](index=57&type=chunk)[58](index=58&type=chunk) - All warrants, with an exercise price of $1.90 per share, were exercised using an alternate cashless exercise option by June 30, 2023[58](index=58&type=chunk)[59](index=59&type=chunk) [NOTE 6 – CONVERTIBLE LOANS](index=20&type=section&id=NOTE%206%20%E2%80%93%20CONVERTIBLE%20LOANS) The company increased its convertible loan balance through new agreements and extended existing loan maturities **Convertible Loans Outstanding (in thousands USD)** | Date | Amount | | :--- | :--- | | June 30, 2023 | $19,085 | | December 31, 2022 | $16,600 | - In January 2023, the company entered into new convertible loan agreements totaling **$5 million**, bearing 8% annual interest and convertible at $2.464 per share, maturing in three years[64](index=64&type=chunk)[65](index=65&type=chunk)[66](index=66&type=chunk) - Koligo Therapeutics Inc, a subsidiary, secured a convertible loan of up to **$5 million** in March 2023, with **$485 thousand** drawn by June 30, 2023, at an 8% annual interest rate, repayable by January 1, 2024[70](index=70&type=chunk)[73](index=73&type=chunk) - In January 2023, **$12 million** in existing convertible loans were extended to January 31, 2026, with interest rates increasing to 10% (for most) and conversion prices reduced to $2.50 (for most)[75](index=75&type=chunk) [NOTE 7 – STOCK-BASED COMPENSATION](index=22&type=section&id=NOTE%207%20%E2%80%93%20STOCK-BASED%20COMPENSATION) The company granted stock options to employees and non-employees during the first half of 2023 **Options Granted (January 1, 2023 to June 30, 2023)** | Recipient | No. of Options Granted | Exercise Price | Fair Value at Grant (in thousands) | Vesting Period | Expiration Period | | :--- | :--- | :--- | :--- | :--- | :--- | | Employees | 53,500 | $1.36 | $46 | Quarterly over 2 years | 10 years | | Non-employees | 8,335 | $1.36 | $9 | Annually over 5 years | 10 years | [NOTE 8 – LOSS PER SHARE](index=23&type=section&id=NOTE%208%20%E2%80%93%20LOSS%20PER%20SHARE) Basic and diluted loss per share decreased, with potential dilutive securities excluded as anti-dilutive **Basic and Diluted Loss per Share (in USD)** | Period | 2023 | 2022 | | :--- | :--- | :--- | | Three Months Ended June 30 | $0.15 | $0.22 | | Six Months Ended June 30 | $0.30 | $0.38 | - All outstanding convertible notes, options, and warrants were **excluded from the calculation of diluted net loss per share** for both periods as their effect was anti-dilutive[81](index=81&type=chunk)[82](index=82&type=chunk) [NOTE 9 – REVENUES](index=24&type=section&id=NOTE%209%20%E2%80%93%20REVENUES) Total revenues saw a slight decline, with a significant shift in composition among revenue streams **Total Revenues (in thousands USD)** | Period | 2023 | 2022 | Change (%) | | :--- | :--- | :--- | :--- | | Three Months Ended June 30 | $6,975 | $7,201 | -3% | | Six Months Ended June 30 | $14,019 | $14,413 | -3% | **Revenue Stream Changes (Six Months Ended June 30, in thousands USD)** | Revenue Stream | 2023 | 2022 | Change (%) | | :--- | :--- | :--- | :--- | | POC development services | $0 | $12,598 | -100% | | Cell development process services and hospital services | $8,488 | $1,399 | +507% | | POC cell processing | $5,531 | $416 | +1229% | - Trade receivables decreased significantly from $36,183 thousand at the beginning of the period to $6 thousand at the end of the period for H1 2023, primarily due to the deconsolidation of Octomera ($44,116 thousand)[85](index=85&type=chunk) [NOTE 10 – OTHER SIGNIFICANT TRANSACTIONS DURING THE SIX MONTHS ENDED JUNE 30, 2023](index=25&type=section&id=NOTE%2010%20%E2%80%93%20OTHER%20SIGNIFICANT%20TRANSACTIONS%20DURING%20THE%20SIX%20MONTHS%20ENDED%20JUNE%2030%2C%202023) The company updated its joint venture agreements, assigning certain rights and obligations to a third party - In January 2023, Orgenesis updated joint venture agreements (JVAs), assigning certain rights and obligations to Texas Advanced Therapies LLC[87](index=87&type=chunk) - Orgenesis retained call options to acquire JV partner shares, royalty rights, and manufacturing/service agreement rights, but is **no longer entitled to additional GAAP profit share** or obligated for further funding[87](index=87&type=chunk) [NOTE 11 – LEGAL PROCEEDINGS](index=25&type=section&id=NOTE%2011%20%E2%80%93%20LEGAL%20PROCEEDINGS) The company is a defendant in a lawsuit seeking royalties and damages, but no provision has been made - Orgenesis Inc and its Israeli subsidiary are defendants in a lawsuit filed in January 2022, seeking **7% royalties on sales** and **24% on sublicense revenues** related to Sheba Medical Center's know-how and technology, plus NIS 10 million[88](index=88&type=chunk) - **No provision has been made** in the financial statements as a material loss is not considered probable[88](index=88&type=chunk) [NOTE 12 – SUBSEQUENT EVENTS](index=26&type=section&id=NOTE%2012%20%E2%80%93%20SUBSEQUENT%20EVENTS) Key events after the reporting period include a CFO change, a new loan, a JV settlement, and licensing deals - Neil Reithinger resigned as CFO, Treasurer, and Secretary, effective September 1, 2023, and Elliot Maltz was appointed as his successor[89](index=89&type=chunk)[90](index=90&type=chunk) - The Israeli Subsidiary received a **$175 thousand loan**, and the company settled a joint venture with Mircod LLC for **$1 million consideration** (half cash, half shares)[90](index=90&type=chunk)[91](index=91&type=chunk) - Orgenesis sub-licensed certain therapies for royalties and milestone payments, and granted/received call/put options related to a sub-licensee's equity interest, valued at **not less than $8 million**[92](index=92&type=chunk) [ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial results, strategic shifts, and liquidity challenges, including a going concern warning - Orgenesis is a global biotech company focused on developing affordable and accessible autologous Cell and Gene Therapies (CGTs) through its POCare Platform and Network[98](index=98&type=chunk)[99](index=99&type=chunk)[100](index=100&type=chunk) - Operations were separated into Octomera (POCare Services) and Therapies (therapeutic development) segments, with **Octomera deconsolidated on June 30, 2023**, while Orgenesis retained approximately **75% equity**[101](index=101&type=chunk)[102](index=102&type=chunk)[103](index=103&type=chunk) - The Therapies segment focuses on in-licensing promising therapies, adapting them to POCare, and out-licensing for market approval, aiming to lower development costs and leverage regional partnerships and grants[107](index=107&type=chunk)[108](index=108&type=chunk)[109](index=109&type=chunk) - The Octomera segment provides POCare Services, including process development, automation adaptation, GMP-compliant production in OMPULs, tech transfers, training, and CRO services, through decentralized hubs[111](index=111&type=chunk)[112](index=112&type=chunk)[113](index=113&type=chunk) - Key developments in H1 2023 include receiving **$5 million in new convertible loans**, raising **$3.7 million gross** from an equity offering, Koligo Therapeutics securing a convertible loan of up to **$5 million**, and updating joint venture agreements[115](index=115&type=chunk)[116](index=116&type=chunk)[117](index=117&type=chunk)[120](index=120&type=chunk) **Financial Performance Highlights (Three Months Ended June 30, in thousands USD)** | Metric | 2023 | 2022 | Change (%) | | :--- | :--- | :--- | :--- | | Revenues | $6,975 | $7,201 | -3% | | Cost of Revenues | $3,232 | $1,063 | +204% | | R&D Expenses | $3,527 | $7,838 | -55% | | SG&A Expenses | $3,337 | $2,803 | +19% | | Financial Expenses, net | $655 | $389 | +68% | **Financial Performance Highlights (Six Months Ended June 30, in thousands USD)** | Metric | 2023 | 2022 | Change (%) | | :--- | :--- | :--- | :--- | | Revenues | $14,019 | $14,413 | -3% | | Cost of Revenues | $5,954 | $1,777 | +235% | | R&D Expenses | $6,808 | $14,489 | -53% | | SG&A Expenses | $7,376 | $5,654 | +30% | | Financial Expenses, net | $1,299 | $602 | +116% | - Working capital decreased significantly from $30,408 thousand at December 31, 2022, to **$(3,416) thousand** at June 30, 2023, primarily due to the deconsolidation of Octomera[137](index=137&type=chunk)[138](index=138&type=chunk) - The company's current and projected cash resources raise **substantial doubt about its ability to continue as a going concern**, necessitating additional capital raises and revenue growth initiatives[145](index=145&type=chunk) [ITEM 3. Quantitative and Qualitative Disclosures About Market Risk](index=38&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section states that disclosures about market risk are not applicable for this quarterly report - This item is not applicable[147](index=147&type=chunk) [ITEM 4. Controls and Procedures](index=38&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of the end of the quarter - Management concluded that **disclosure controls and procedures were effective** as of June 30, 2023, at a reasonable assurance level[149](index=149&type=chunk) - There were **no material changes** in internal control over financial reporting during the quarter ended June 30, 2023[150](index=150&type=chunk) [PART II - OTHER INFORMATION](index=39&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [ITEM 1. Legal Proceedings](index=39&type=section&id=ITEM%201.%20Legal%20Proceedings) This section refers to Note 11 for details on legal proceedings, confirming no other material cases exist - Information regarding legal proceedings is available in Note 11 to the condensed consolidated financial statements[153](index=153&type=chunk) - There are no other material pending legal proceedings[154](index=154&type=chunk) [ITEM 1A. Risk Factors](index=39&type=section&id=ITEM%201A.%20Risk%20Factors) This section confirms no material changes to the risk factors disclosed in the latest Annual Report on Form 10-K - Readers should refer to the "Risk Factors" section of the Annual Report on Form 10-K for the year ended December 31, 2022[155](index=155&type=chunk) - There have been **no material changes** to the risk factors contained in the Annual Report on Form 10-K[155](index=155&type=chunk) [ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=39&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reports no unregistered sales of equity securities during the reporting period - None[156](index=156&type=chunk) [ITEM 3. Defaults Upon Senior Securities](index=39&type=section&id=ITEM%203.%20Defaults%20Upon%20Senior%20Securities) The company reports no defaults upon senior securities during the reporting period - None[157](index=157&type=chunk) [ITEM 4. Mine Safety Disclosures](index=39&type=section&id=ITEM%204.%20Mine%20Safety%20Disclosures) The company states that this item is not applicable to its operations - Not Applicable[158](index=158&type=chunk) [ITEM 5. Other Information](index=39&type=section&id=ITEM%205.%20Other%20Information) The company reports no other information required to be disclosed under this item - None[159](index=159&type=chunk) [ITEM 6. Exhibits](index=40&type=section&id=ITEM%206.%20Exhibits) This section lists the exhibits filed with the report, including material contracts and required certifications - Exhibits include Amendment No 1 and No 2 to the Unit Purchase Agreement and Amendment No 1 to the Second Amended and Restated Limited Liability Company Agreement of Morgenesis LLC (now Octomera LLC)[161](index=161&type=chunk) - Certifications from the Chief Executive Officer and Chief Financial Officer pursuant to Sections 302 and 906 of the Sarbanes Oxley Act of 2002 are filed[161](index=161&type=chunk) - Interactive Data Files (XBRL Instance Document and Taxonomy Extensions) are included[161](index=161&type=chunk) [SIGNATURES](index=41&type=section&id=SIGNATURES) - The report is signed by Vered Caplan, President & Chief Executive Officer, and Neil Reithinger, Chief Financial Officer, Treasurer and Secretary, on August 10, 2023[165](index=165&type=chunk)

[PART I - FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) This section covers the unaudited condensed consolidated financial statements and management's analysis [ITEM 1. FINANCIAL STATEMENTS](index=4&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents the unaudited condensed consolidated financial statements for Orgenesis Inc., including the balance sheets, statements of loss and comprehensive loss, statements of changes in equity, and statements of cash flows for the three months ended March 31, 2023 and 2022, along with accompanying notes [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's financial position at March 31, 2023, and December 31, 2022 Consolidated Balance Sheet Highlights (in thousands) | Metric | March 31, 2023 | December 31, 2022 | | :---------------- | :------------- | :---------------- | | Total Assets | $93,267 | $90,928 | | Total Liabilities | $33,959 | $31,654 | | Total Equity | $29,003 | $29,071 | Current Assets and Liabilities (in thousands) | Metric | March 31, 2023 | December 31, 2022 | Change | | :---------------------- | :------------- | :---------------- | :----- | | Total Current Assets | $49,450 | $46,318 | +$3,132 | | Total Current Liabilities | $13,938 | $15,910 | -$1,972 | [Condensed Consolidated Statements of Loss and Comprehensive Loss](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Loss%20and%20Comprehensive%20Loss) This section details the company's financial performance, including revenues, costs, and net loss for the three months ended March 31, 2023 and 2022 Financial Performance (Three Months Ended March 31, in thousands, except per share) | Metric | 2023 | 2022 | Change (%) | | :-------------------------------------------------- | :--- | :--- | :--------- | | Total revenues | $7,044 | $7,212 | -2.3% | | Cost of revenues | $2,722 | $714 | +281.2% | | Gross profit | $4,322 | $6,498 | -33.5% | | Operating loss | $3,205 | $3,236 | -1.0% | | Net loss | $4,261 | $3,997 | +6.6% | | Net loss attributable to Orgenesis Inc. | $4,189 | $4,009 | +4.5% | | Basic and diluted loss per share | $0.16 | $0.16 | 0.0% | [Condensed Consolidated Statements of Changes in Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Equity) This section outlines changes in the company's equity for the three months ended March 31, 2023 and 2022 Equity Changes (Three Months Ended March 31, in thousands) | Metric | January 1, 2023 | March 31, 2023 | | :-------------------------------- | :-------------- | :------------- | | Additional Paid-in Capital | $150,355 | $154,691 | | Accumulated Deficit | $(121,261) | $(125,450) | | Equity attributable to Orgenesis Inc. | $27,561 | $27,667 | | Total Equity | $29,071 | $29,003 | - Key activities contributing to changes in equity include stock-based compensation to employees and service providers, issuance of shares and warrants, and comprehensive loss for the period[16](index=16&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section summarizes cash inflows and outflows from operating, investing, and financing activities for the three months ended March 31, 2023 and 2022 Cash Flow Summary (Three Months Ended March 31, in thousands) | Cash Flow Activity | 2023 | 2022 | | :----------------------------------- | :--- | :--- | | Net cash used in operating activities | $(7,240) | $(2,792) | | Net cash used in investing activities | $(1,307) | $(1,613) | | Net cash provided by financing activities | $5,910 | $1 | | Net change in cash, cash equivalents and restricted cash | $(2,637) | $(4,404) | | Cash, cash equivalents and restricted cash at end of period | $3,731 | $1,613 | - Financing activities in Q1 2023 included **$3,441 thousand from equity investments** and **$5,485 thousand from convertible loan issuances**, partially offset by **$3,000 thousand in convertible loan repayments**[21](index=21&type=chunk)[111](index=111&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements [NOTE 1 – DESCRIPTION OF BUSINESS](index=11&type=section&id=NOTE%201%20%E2%80%93%20DESCRIPTION%20OF%20BUSINESS) This note describes Orgenesis Inc.'s business, focus on Cell and Gene Therapies, and going concern considerations - Orgenesis Inc. is a global biotech company focused on Cell and Gene Therapies (CGTs), primarily autologous therapies, manufactured using closed and automated systems at the point of care (POCare)[24](index=24&type=chunk)[81](index=81&type=chunk) - The company utilizes a collaborative worldwide POCare Network and a scalable POCare Platform to develop and out-license POCare Therapies and provide POCare Services, aiming to overcome cost and logistical limitations of traditional manufacturing[25](index=25&type=chunk)[26](index=26&type=chunk)[82](index=82&type=chunk) - As of March 31, 2023, the company had an **accumulated deficit of $125 million** and **negative operating cash flows of $7.2 million**, raising substantial doubt about its ability to continue as a going concern for the next 12 months without additional capital[34](index=34&type=chunk)[36](index=36&type=chunk)[113](index=113&type=chunk) [NOTE 2 – BASIS OF PRESENTATION](index=13&type=section&id=NOTE%202%20%E2%80%93%20BASIS%20OF%20PRESENTATION) This note explains the accounting principles and basis used for preparing the financial statements - The unaudited condensed consolidated financial statements are prepared in conformity with U.S. GAAP, consistent with annual statements, and reflect management's estimates and judgments[38](index=38&type=chunk)[39](index=39&type=chunk) - The adoption of ASU 2016-13 (Credit Losses) and ASU 2021-08 (Business Combinations) did not materially impact the consolidated financial statements[40](index=40&type=chunk)[41](index=41&type=chunk) [NOTE 3 – SEGMENT INFORMATION](index=14&type=section&id=NOTE%203%20%E2%80%93%20SEGMENT%20INFORMATION) This note provides financial information disaggregated by the company's operating segments: Morgenesis and Therapies - Operations were separated into two segments: Morgenesis (POCare Services) and Therapies (therapeutic development), following the Metalmark Investment in November 2022[43](index=43&type=chunk)[83](index=83&type=chunk) - The CEO, as chief operating decision maker (CODM), reviews consolidated financial information along with disaggregated revenue and contributed profit data for these two segments[46](index=46&type=chunk) Segment Performance (Three Months Ended March 31, 2023, in thousands) | Metric | Morgenesis | Therapies | Eliminations | Consolidated | | :-------------------------------------------------- | :--------- | :-------- | :----------- | :----------- | | Revenues | $6,914 | $130 | $- | $7,044 | | Gross profit | $4,606 | $(48) | $- | $4,558 | | Income (loss) before income taxes | $162 | $(4,294) | $- | $(4,132) | [NOTE 4 – EQUITY](index=15&type=section&id=NOTE%204%20%E2%80%93%20EQUITY) This note details significant equity transactions, including stock and warrant issuances, during the period - On February 23, 2023, the company issued **1,947,368 shares of common stock** and warrants for **973,684 shares at $1.90 per share**, generating **$3.7 million in gross proceeds**[49](index=49&type=chunk)[50](index=50&type=chunk)[93](index=93&type=chunk) - The warrants are exercisable immediately at **$1.90 per share** and expire in five years, with an alternate cashless exercise option[50](index=50&type=chunk) - Net proceeds from the offering are designated for working capital and general corporate purposes, including therapy-related activities[50](index=50&type=chunk)[93](index=93&type=chunk) [NOTE 5 – CONVERTIBLE LOANS](index=16&type=section&id=NOTE%205%20%E2%80%93%20CONVERTIBLE%20LOANS) This note outlines new and extended convertible loan agreements and their key terms - On January 10, 2023, the company secured **$5 million in new convertible loans** from NewTech Investment Holdings and Ariel Malik, with an **8% annual interest rate** and a conversion price of **$2.464 per share**[52](index=52&type=chunk)[53](index=53&type=chunk)[54](index=54&type=chunk)[91](index=91&type=chunk) - On March 27, 2023, subsidiary Koligo Therapeutics Inc. entered into a convertible loan agreement for up to **$5 million** with Yehuda Nir, at **8% interest**, with a maturity date of January 1, 2024, and a mandatory conversion clause under certain equity financing conditions[59](index=59&type=chunk)[60](index=60&type=chunk)[94](index=94&type=chunk)[95](index=95&type=chunk) - On January 12, 2023, the company extended **$12 million in existing convertible loans** with Yosef Dotan, Aharon Lukach, and Yehuda Nir to January 31, 2026, increasing interest rates to **10%** (for most) and reducing conversion prices to **$2.50 per share**[63](index=63&type=chunk) [NOTE 6 – LOSS PER SHARE](index=18&type=section&id=NOTE%206%20%E2%80%93%20LOSS%20PER%20SHARE) This note presents the calculation of basic and diluted loss per share for the reporting periods Loss Per Share (Three Months Ended March 31) | Metric | 2023 | 2022 | | :----------------------------------- | :--- | :--- | | Net loss attributable to Orgenesis Inc. | $4,189 thousand | $4,009 thousand | | Weighted average common shares outstanding | 26,246,924 | 24,600,954 | | Basic and diluted loss per share | $0.16 | $0.16 | - Diluted loss per share excludes **8,390,035 shares underlying options/warrants** and **6,987,879 shares from convertible loans** for Q1 2023 due to their anti-dilutive effect[67](index=67&type=chunk) [NOTE 7 – REVENUES](index=18&type=section&id=NOTE%207%20%E2%80%93%20REVENUES) This note disaggregates revenue by stream and identifies major customers for the reporting periods Revenue Disaggregation (Three Months Ended March 31, in thousands) | Revenue Stream | 2023 | 2022 | Change | | :------------------------------------------ | :--- | :--- | :----- | | POCare development services | $- | $6,324 | $(6,324) | | Cell process development services and hospital services | $2,308 | $888 | $1,420 | | POCare cell processing | $4,736 | $- | $4,736 | | Total | $7,044 | $7,212 | $(168) | - The decline in POCare development services is a result of the company's revenue model progression, where completed development services lead to new cell processing agreements with customers[101](index=101&type=chunk) - Major customers in Q1 2023 included Customer A (US) contributing **$3,605 thousand**, Customer B (Greece) **$2,022 thousand**, and Customer C (US) **$750 thousand**[70](index=70&type=chunk) [NOTE 8 – OTHER SIGNIFICANT TRANSACTIONS DURING THE PERIOD](index=20&type=section&id=NOTE%208%20%E2%80%93%20OTHER%20SIGNIFICANT%20TRANSACTIONS%20DURING%20THE%20PERIOD) This note describes other material transactions, including updates to joint venture agreements - Orgenesis updated joint venture agreements (JVAs) and assigned certain rights and obligations to Texas Advanced Therapies LLC, transferring its option to require JV entity incorporation and its share in the JV entity[72](index=72&type=chunk)[97](index=97&type=chunk) - The company retained call options to acquire JV partner shares, royalty rights, and the right to conclude manufacturing/service agreements, while eliminating its obligation for additional funding and the right to an additional **15% of JVE's GAAP profit**[72](index=72&type=chunk)[97](index=97&type=chunk) [NOTE 9 – LEGAL PROCEEDINGS](index=20&type=section&id=NOTE%209%20%E2%80%93%20LEGAL%20PROCEEDINGS) This note details ongoing legal proceedings and the company's assessment of their potential impact - A complaint was filed in January 2022 by the State of Israel and Sheba Medical Center seeking **7% royalties on sales** and **24% on sublicense revenues** related to specific know-how and technology, plus **NIS 10 million**[73](index=73&type=chunk)[121](index=121&type=chunk) - Orgenesis believes the allegations are without merit and is vigorously defending against the claims, with no provision made in financial statements as a material loss is not considered probable[73](index=73&type=chunk) [NOTE 10 – SUBSEQUENT EVENTS](index=20&type=section&id=NOTE%2010%20%E2%80%93%20SUBSEQUENT%20EVENTS) This note discloses significant events that occurred after the balance sheet date but before financial statement issuance - On May 5, 2023, MM OS Holdings, L.P. (an affiliate of Metalmark) agreed to invest an additional **$5 million** in Morgenesis for **500,000 Class A Preferred Units**[74](index=74&type=chunk) - This investment aims to support the continued expansion of Orgenesis' POCare Services business[74](index=74&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=21&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section provides management's perspective on the company's financial condition and results of operations for the three months ended March 31, 2023, compared to the prior year. It covers business overview, significant developments, detailed analysis of revenues and expenses, working capital, liquidity, and capital resources outlook, highlighting the company's focus on Cell and Gene Therapies (CGTs) and the challenges related to its going concern status [Forward-Looking Statements](index=21&type=section&id=Forward-Looking%20Statements) This section cautions readers about forward-looking statements and inherent risks and uncertainties - The report contains forward-looking statements based on management's beliefs, estimates, and assumptions, identified by words like "anticipate," "believe," "expect," etc[76](index=76&type=chunk) - These statements are subject to risks, uncertainties, and other factors that could cause actual results to differ materially from current expectations[76](index=76&type=chunk) - The company does not intend to update forward-looking statements to conform to actual results, except as required by applicable law[77](index=77&type=chunk) [Business Overview](index=22&type=section&id=Business%20Overview) This section describes Orgenesis's business model, focus on CGTs, and segment structure - Orgenesis is a global biotech company focused on Cell and Gene Therapies (CGTs), particularly autologous therapies, manufactured at the point of care (POCare) to improve affordability and accessibility[81](index=81&type=chunk) - The company's operations are divided into two segments: Morgenesis (POCare Services) and Therapies (therapeutic development), established after a November 2022 investment[83](index=83&type=chunk) - The company aims to expand its decentralized POCare Centers for efficient and scalable CGT delivery and to develop and out-license POCare advanced therapies by collaborating with academic institutions and hospitals[84](index=84&type=chunk)[88](index=88&type=chunk)[90](index=90&type=chunk) [Significant developments during the quarter ended March 31, 2023](index=23&type=section&id=Significant%20developments%20during%20the%20quarter%20ended%20March%2031%2C%202023) This section highlights key financial and operational events that occurred during the first quarter of 2023 - The company entered into convertible loan agreements totaling **$5 million** with NewTech Investment Holdings and Ariel Malik, with an **8% interest rate** and a **$2.464 conversion price**, used for debt redemption and general corporate purposes[91](index=91&type=chunk)[92](index=92&type=chunk) - A registered direct offering closed on February 27, 2023, raising approximately **$3.7 million (gross)** through the issuance of **1,947,368 common shares and warrants**, with proceeds allocated to working capital and therapy-related activities[93](index=93&type=chunk) - Subsidiary Koligo Therapeutics Inc. secured a convertible loan of up to **$5 million** from Yehuda Nir, bearing **8% interest**, with **$485 thousand drawn** as of March 31, 2023[94](index=94&type=chunk)[96](index=96&type=chunk) - Updated Joint Venture (JV) agreements assigned certain rights to Texas Advanced Therapies LLC, reducing Orgenesis's funding obligations while retaining call options, royalty rights, and manufacturing/service agreement rights[97](index=97&type=chunk) [Results of Operations](index=24&type=section&id=Results%20of%20Operations) This section provides a detailed analysis of the company's revenues and expenses for the reporting periods Financial Performance Summary (Three Months Ended March 31, in thousands) | Metric | 2023 | 2022 | Change (%) | | :-------------------------------------------------- | :--- | :--- | :--------- | | Total revenues | $7,044 | $7,212 | -2.3% | | Cost of revenues | $2,722 | $714 | +281.2% | | Gross profit | $4,322 | $6,498 | -33.5% | | Cost of development services and R&D expenses | $3,281 | $6,651 | -50.7% | | Selling, general and administrative expenses | $4,039 | $2,851 | +41.7% | | Financial expenses, net | $644 | $213 | +202.3% | | Net loss | $4,261 | $3,997 | +6.6% | [Revenues](index=25&type=section&id=Revenues) This section analyzes the company's revenue streams and their changes between periods Revenue Breakdown (Three Months Ended March 31, in thousands) | Revenue Stream | 2023 | 2022 | Change | | :------------------------------------------ | :--- | :--- | :----- | | POCare development services | $- | $6,324 | $(6,324) | | Cell process development services and hospital services | $2,308 | $888 | $1,420 | | POCare cell processing | $4,736 | $- | $4,736 | | Total | $7,044 | $7,212 | $(168) | - The decrease in total revenue reflects a shift from POCare development services to cell processing agreements as performance obligations for prior development contracts were completed[101](index=101&type=chunk) [Cost of revenues](index=25&type=section&id=Cost%20of%20revenues) This section details the costs directly associated with generating the company's revenues Cost of Revenues (Three Months Ended March 31, in thousands) | Expense Category | 2023 | 2022 | Change (%) | | :-------------------------------- | :--- | :--- | :--------- | | Total Cost of revenues | $2,722 | $714 | +281.2% | | Salaries and related expenses | $1,113 | $329 | +238.3% | | Professional fees and consulting services | $807 | $22 | +3568.2% | | Raw materials | $228 | $30 | +660.0% | - The substantial increase was due to higher costs associated with increased process development and cell processing revenues[100](index=100&type=chunk) [Cost of development services and research and development expenses](index=25&type=section&id=Cost%20of%20development%20services%20and%20research%20and%20development%20expenses) This section analyzes expenses related to development services and research and development activities R&D Expenses (Three Months Ended March 31, in thousands) | Expense Category | 2023 | 2022 | Change (%) | | :------------------------------------------ | :--- | :--- | :--------- | | Total Cost of development services and R&D | $3,281 | $6,651 | -50.7% | | Salaries and related expenses | $1,628 | $2,849 | -42.8% | | Professional fees and consulting services | $796 | $1,726 | -53.9% | | Lab expenses | $176 | $582 | -69.8% | - The decrease was primarily attributed to reduced R&D spending in the Morgenesis segment and lower professional fees and other R&D expenses in the Therapies segment[102](index=102&type=chunk) [Selling, General and Administrative Expenses](index=26&type=section&id=Selling%2C%20General%20and%20Administrative%20Expenses) This section details the company's selling, general, and administrative expenses and their drivers SG&A Expenses (Three Months Ended March 31, in thousands) | Expense Category | 2023 | 2022 | Change (%) | | :-------------------------------- | :--- | :--- | :--------- | | Total SG&A expenses | $4,039 | $2,851 | +41.7% | | Salaries and related expenses | $1,173 | $900 | +30.3% | | Accounting and legal fees | $1,550 | $910 | +70.3% | | Professional fees | $361 | $260 | +38.8% | - The increase was driven by expansion in the Morgenesis segment and higher accounting and legal fees related to fundraising activities in Q1 2023[103](index=103&type=chunk) [Financial Expenses, net](index=26&type=section&id=Financial%20Expenses%2C%20net) This section outlines the company's net financial expenses, including interest and foreign exchange impacts Financial Expenses (Three Months Ended March 31, in thousands) | Expense Category | 2023 | 2022 | Change (%) | | :------------------------------------------ | :--- | :--- | :--------- | | Total Financial expenses, net | $644 | $213 | +202.3% | | Interest expense on convertible loans and loans | $495 | $125 | +296.0% | | Foreign exchange loss, net | $148 | $82 | +80.5% | - The increase was mainly due to higher interest rates on convertible loans and increased convertible loan financing[104](index=104&type=chunk) [Working Capital](index=26&type=section&id=Working%20Capital) This section analyzes the company's current assets and liabilities, and overall working capital position Working Capital Position (in thousands) | Metric | March 31, 2023 | December 31, 2022 | Change | | :---------------- | :------------- | :---------------- | :----- | | Current assets | $49,450 | $46,318 | +$3,132 | | Current liabilities | $13,938 | $15,910 | -$1,972 | | Working capital | $35,512 | $30,408 | +$5,104 | - Current assets increased due to higher accounts receivable and prepaid expenses, while current liabilities decreased primarily from the repayment and extension of short-term convertible loans[106](index=106&type=chunk)[107](index=107&type=chunk) [Liquidity and Financial Condition](index=27&type=section&id=Liquidity%20and%20Financial%20Condition) This section assesses the company's cash flows, liquidity, and overall financial health Cash Flow Summary (Three Months Ended March 31, in thousands) | Cash Flow Activity | 2023 | 2022 | | :----------------------------------- | :--- | :--- | | Net loss | $(4,261) | $(3,997) | | Net cash used in operating activities | $(7,240) | $(2,792) | | Net cash used in investing activities | $(1,307) | $(1,613) | | Net cash provided by financing activities | $5,910 | $1 | | Decrease in cash and cash equivalents | $(2,637) | $(4,404) | - The increased cash used in operating activities was mainly due to a higher net loss, increased interest expenses on convertible loans, and a rise in prepaid expenses[109](index=109&type=chunk)[110](index=110&type=chunk) - Financing activities provided significant cash, driven by **$3,441 thousand from equity investments** and **$5,485 thousand from convertible loan issuances**, partially offset by **$3,000 thousand in loan repayments**[111](index=111&type=chunk) [Liquidity & Capital Resources Outlook](index=28&type=section&id=Liquidity%20%26%20Capital%20Resources%20Outlook) This section discusses the company's future funding needs, going concern status, and capital raising plans - Operations are funded by revenue, convertible loans, and securities offerings, but sustainable positive cash flows are not assured[112](index=112&type=chunk) - Management has identified substantial doubt about the company's ability to continue as a going concern for the next 12 months, based on current and projected cash resources and commitments[113](index=113&type=chunk) - Plans include raising additional capital, refinancing or amending existing convertible loans, and exploring ways to increase revenues and reduce expenditures[113](index=113&type=chunk) [Off-Balance Sheet Arrangements](index=28&type=section&id=Off-Balance%20Sheet%20Arrangements) This section confirms the absence of material off-balance sheet arrangements - The company reports no off-balance sheet arrangements that are material to stockholders or likely to affect financial condition, results, or liquidity[114](index=114&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=28&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) This section states that there are no applicable quantitative and qualitative disclosures about market risk for the company - The company has no disclosures regarding quantitative and qualitative market risk[115](index=115&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=28&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management, including the CEO and CFO, evaluated the effectiveness of the company's disclosure controls and procedures as of March 31, 2023, and concluded they were effective at a reasonable assurance level. There have been no material changes in internal control over financial reporting during the quarter - Management concluded that disclosure controls and procedures were effective at the reasonable assurance level as of March 31, 2023[117](index=117&type=chunk) - There were no material changes in internal control over financial reporting during the quarter ended March 31, 2023[118](index=118&type=chunk) [PART II - OTHER INFORMATION](index=29&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This section provides additional information not covered in the financial statements, including legal proceedings and risk factors [ITEM 1. LEGAL PROCEEDINGS](index=29&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) Information regarding legal proceedings is available in Note 9 to the condensed consolidated financial statements. The company is not involved in any other pending material legal proceedings - Details on legal proceedings are provided in Note 9 of the financial statements[121](index=121&type=chunk) - The company is not involved in any other pending material legal proceedings beyond those described[122](index=122&type=chunk) [ITEM 1A. RISK FACTORS](index=29&type=section&id=ITEM%201A.%20RISK%20FACTORS) This section refers readers to the "Risk Factors" section of the company's Annual Report on Form 10-K for the year ended December 31, 2022, for a comprehensive understanding of significant risks. No material changes to these risk factors have occurred since the annual report - Investors should consider risk factors from the Annual Report on Form 10-K for December 31, 2022[123](index=123&type=chunk) - There have been no material changes to the previously disclosed risk factors[123](index=123&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=29&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) This section states that there were no unregistered sales of equity securities or use of proceeds to report - There were no unregistered sales of equity securities or use of proceeds during the period[124](index=124&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=29&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) This section states that there were no defaults upon senior securities to report - There were no defaults upon senior securities during the period[125](index=125&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=29&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This section states that mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable to the company[126](index=126&type=chunk) [ITEM 5. OTHER INFORMATION](index=29&type=section&id=ITEM%205.%20OTHER%20INFORMATION) This section states that there is no other information to report - There is no other information to report[127](index=127&type=chunk) [ITEM 6. EXHIBITS](index=30&type=section&id=ITEM%206.%20EXHIBITS) This section lists the exhibits filed as part of the Form 10-Q, including various warrant forms, convertible loan agreements, extension agreements, a securities purchase agreement, a placement agency agreement, and certifications - The report includes exhibits such as warrant forms, convertible loan agreements, extension agreements, a securities purchase agreement, a placement agency agreement, and certifications (302 and 906)[129](index=129&type=chunk) [SIGNATURES](index=31&type=section&id=SIGNATURES) This section contains the official signatures of the company's executive officers, certifying the report [SIGNATURES](index=31&type=section&id=SIGNATURES) The report is duly signed on behalf of Orgenesis Inc. by Vered Caplan, President & Chief Executive Officer, and Neil Reithinger, Chief Financial Officer, Treasurer and Secretary, on May 10, 2023 - The report was signed by Vered Caplan (President & CEO) and Neil Reithinger (CFO, Treasurer, and Secretary) on May 10, 2023[132](index=132&type=chunk)

FORM 10-K Annual Report [Registrant Information](index=1&type=section&id=Registrant%20Information) ORGENESIS INC. filed its 2022 Annual Report on Form 10-K, with common stock (ORGS) traded on The Nasdaq Capital Market and 27,493,123 shares outstanding as of March 22, 2023 - ORGENESIS INC. filed its Annual Report on Form 10-K for the fiscal year ended **December 31, 2022**[1](index=1&type=chunk) Registrant Details | Indicator | Value | | :---------- | :---- | | Trading Symbol | ORGS | | Exchange | The Nasdaq Capital Market | | Shares Outstanding (as of March 22, 2023) | 27,493,123 | | Market Value of Non-Affiliate Common Stock (June 30, 2022) | $54,809,919 | - The registrant is classified as a **Non-accelerated filer** and a **Smaller reporting company**, and is not a well-known seasoned issuer or an emerging growth company[2](index=2&type=chunk)[3](index=3&type=chunk) [Table of Contents](index=3&type=section&id=TABLE%20OF%20CONTENTS) [PART I](index=3&type=section&id=PART%20I) Part I covers Orgenesis Inc.'s business operations, risk factors, properties, and legal proceedings, detailing core activities and challenges - Part I includes sections on Business, Risk Factors, Unresolved Staff Comments, Properties, Legal Proceedings, and Mine Safety Disclosures[9](index=9&type=chunk) [PART II](index=3&type=section&id=PART%20II) Part II details market information, management's discussion and analysis, market risk disclosures, financial statements, and controls and procedures - Part II covers Market for Registrant's Common Equity, Management's Discussion and Analysis of Financial Condition and Results of Operations, Quantitative and Qualitative Disclosures About Market Risk, Financial Statements and Supplementary Data, Changes in and Disagreements with Accountants on Accounting and Financial Disclosure, Controls and Procedures, and Other Information[9](index=9&type=chunk) [PART III](index=3&type=section&id=PART%20III) Part III provides information on directors, executive officers, corporate governance, executive compensation, security ownership, and principal accountant fees - Part III includes sections on Directors, Executive Officers and Corporate Governance, Executive Compensation, Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters, Certain Relationships and Related Transactions, and Director Independence, and Principal Accountant Fees and Services[9](index=9&type=chunk) [PART IV](index=3&type=section&id=PART%20IV) Part IV lists exhibits and financial statement schedules, concluding the annual report - Part IV contains Exhibits and Financial Statement Schedules and the Form 10-K Summary[9](index=9&type=chunk) [Special Cautionary Note Regarding Forward-Looking Statements](index=5&type=section&id=SPECIAL%20CAUTIONARY%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) [Forward-Looking Statements Disclaimer](index=5&type=section&id=Forward-Looking%20Statements%20Disclaimer) This section cautions that the report contains forward-looking statements subject to risks, with actual results potentially differing materially - Statements in this report are 'forward-looking statements' under the Securities Act of 1933 and the Securities Exchange Act of 1934, based on management's current beliefs, estimates, and assumptions[11](index=11&type=chunk) - Readers are cautioned not to place undue reliance on these statements, as actual results may differ significantly due to various risks and uncertainties[11](index=11&type=chunk) - The company does not intend to update forward-looking statements to conform to actual results, except as required by applicable law[12](index=12&type=chunk) [Key Forward-Looking Statements](index=5&type=section&id=Key%20Forward-Looking%20Statements) The company's forward-looking statements cover revenue generation, R&D, collaborations, operational management, and specific Metalmark Investment risks - Corporate and Financial: * Ability to generate and increase revenue from POCare cell therapy commercialization * Ability to achieve profitability * Ability to manage R&D programs based on novel technologies * Ability to grow the organization through collaborations and strategic alliances * Ability to control key elements of therapeutic product candidate development and commercialization with third parties * Ability to manage potential disruptions from the coronavirus outbreak * Accuracy of estimates regarding expenses, future revenue, capital requirements, profitability, and additional financing needs * Belief that therapeutic related developments have competitive advantages and can compete favorably and profitably in the cell and gene therapy industry[15](index=15&type=chunk)[18](index=18&type=chunk) - Cell & Gene Therapy Business (CGT): * Ability to adequately fund and scale collaboration, license, partnership, and joint venture agreements * Ability to advance therapeutic collaborations through industrial, clinical, regulatory, commercial, and manufacturing stages * Ability to implement POCare strategy for autologous therapies * Expectations regarding obtaining and maintaining intellectual property protection * Ability to commercialize products despite others' IP rights * Ability to obtain funding for clinical trials * Ability to further CGT development projects and fulfill obligations under agreements * Belief that systems and therapies are safe and effective * Risks related to the relationship with Tel Hashomer Medical Research Infrastructure and Services Ltd. (THM) and potential cancellation or challenge of the License Agreement * Outcome of legal proceedings * Dependence on POCare business financial results * Ability to complete development, processing, and rollout of Orgenesis Mobile Processing Units and Labs (OMPULs) and generate sufficient revenue from POCare Services * Ability to grow POCare business and develop additional joint venture relationships for demonstrable revenues[18](index=18&type=chunk) - Metalmark Investment Risks: * Morgenesis may not receive future payments from MM OS Holdings, L.P. (MM) * MM may force the sale of Morgenesis under certain conditions, potentially benefiting MM more than Orgenesis and its shareholders * MM may assume control of Morgenesis' Board of Managers, leading to Orgenesis' inability to control the subsidiary * MM has the right to buy Orgenesis' units in Morgenesis upon certain events, potentially resulting in Orgenesis holding no equity in Morgenesis * Orgenesis may be forced to redeem MM's units in Morgenesis, requiring substantial cash outlay * If MM exchanges Morgenesis units for Orgenesis common stock, significant dilution to existing stockholders could occur (up to **5,106,596 shares**)[18](index=18&type=chunk) [PART I](index=7&type=section&id=PART%20I) [ITEM 1. BUSINESS](index=7&type=section&id=ITEM%201.%20BUSINESS) Orgenesis Inc. is a global biotech company focused on making cell and gene therapies affordable and accessible through its decentralized POCare Platform - Orgenesis is a global biotech company focused on unlocking the potential of cell and gene therapies (CGTs) in an affordable and accessible format, primarily through autologous therapies manufactured at the point of care (POCare)[22](index=22&type=chunk) - The company's POCare Platform is a scalable infrastructure of technology and services designed to standardize and decentralize CGT production, utilizing POCare Centers and Orgenesis Mobile Processing Units & Labs (OMPULs)[27](index=27&type=chunk) - In **November 2022**, Orgenesis separated its operations into two segments: Morgenesis (POCare Services) and Therapies (POCare Therapies), following a significant investment from Metalmark Capital Partners[284](index=284&type=chunk) [Business Overview](index=7&type=section&id=Business%20Overview) Orgenesis is a global biotech company making cell and gene therapies affordable and accessible via its decentralized POCare Platform - Orgenesis is a global biotech company focused on unlocking the potential of cell and gene therapies (CGTs) in an affordable and accessible format, primarily **autologous therapies**[22](index=22&type=chunk) - The company's POCare Platform aims to overcome limitations of traditional centralized manufacturing by enabling closed and automated production near the patient, reducing cost and complex logistics[22](index=22&type=chunk)[24](index=24&type=chunk) - Advanced Therapy Medicinal Products (ATMPs) include: * Somatic cell therapy medicinal products (STMP) * Tissue engineered products (TEP) * Gene therapy medicinal products (GTMP)[24](index=24&type=chunk) [POCare Services](index=8&type=section&id=POCare%20Services) Orgenesis provides POCare Services through a decentralized network, offering process development, automation, GMP compliance, and CRO services - POCare Services include: * Process development, adaptation, and optimization (OMPULization) * Adaptation of automation and closed systems * Incorporation of serviced therapies compliant with GMP in OMPULs * Tech transfers and training of local teams at POCare Centers * Processing and supply of therapies and required supplies under GMP conditions * Contract Research Organization (CRO) services for clinical trials[29](index=29&type=chunk) - The POCare Platform aims to standardize infrastructure using flexible building blocks (POCare Centers and OMPULs) to allow quick expansion and reduce costs associated with traditional cleanroom facilities[36](index=36&type=chunk) - OMPULs can shorten implementation time from **18-24 months to 3-9 months**, offer a more cost-effective environment, and enable local scalability[37](index=37&type=chunk) [POCare Services Operations via Subsidiaries](index=9&type=section&id=POCare%20Services%20Operations%20via%20Subsidiaries) Orgenesis conducts POCare Services through Morgenesis LLC, a subsidiary with a **76.9% ownership stake**, which received a **$30.2 million** investment from Metalmark Capital Partners - Morgenesis LLC was formed in **August 2022** to streamline POCare Services, with Orgenesis owning **76.9%** of the subsidiary[30](index=30&type=chunk) - In **November 2022**, Metalmark Capital Partners invested **$30.2 million** in Morgenesis, acquiring **22.31%** of its equity interests, through **$20 million cash** and conversion of **$10.2 million** in senior secured convertible loans[31](index=31&type=chunk) - Subsidiaries transferred to Morgenesis: * Orgenesis Maryland LLC (North America POCare Services) * Tissue Genesis International LLC (technology and therapy development) * Orgenesis Services SRL (Belgium POCare Network expansion) * Orgenesis Germany GmbH (CRO services) * Orgenesis Korea Co. Ltd. (cell-processing and pre-clinical services in Korea) * Orgenesis Biotech Israel Ltd. (process development and cell-processing services in Israel)[33](index=33&type=chunk) [Integration of Custom Fit Solutions within the POCare Center](index=10&type=section&id=Integration%20of%20Custom%20Fit%20Solutions%20within%20the%20POCare%20Center) The POCare Platform integrates custom solutions within POCare Centers and OMPULs to decentralize ATMP production, minimizing risks and costs - The POCare Platform aims to bring ATMPs from research to patients worldwide by decentralizing processing, minimizing cell transportation, and reducing costs and timelines associated with traditional cleanroom facilities[35](index=35&type=chunk)[36](index=36&type=chunk) - Orgenesis has developed proprietary equipment and OMPULs for validation, clinical trials, manufacturing, and processing of cell and gene therapy products in a safe, reliable, and cost-effective manner at the point of care[37](index=37&type=chunk)[40](index=40&type=chunk) - Established POCare Centers globally, including: * Israel: Process development and QC labs, OMPULs at hospital sites, manufacturing TILs and CAR-T therapies * Greece: Three OMPULs installed, process development lab, servicing two customers * Maryland, USA: Operating process development lab, establishing cleanroom facility with government grant * Spain: OMPUL producing a clinical grade product[44](index=44&type=chunk) [POCare Services Development Facilities](index=12&type=section&id=POCare%20Services%20Development%20Facilities) Orgenesis operates specialized facilities like OBI for process development, the Korean Subsidiary for cell therapies, and Tissue Genesis for Icellator™ technology - Orgenesis Biotech Israel Ltd. (OBI) is a wholly-owned subsidiary specializing in custom process development, upscaling, innovation, and automation procedures for cell therapy industrialization, operating out of a **1,300 square meter facility**[45](index=45&type=chunk) - Tissue Genesis International develops the Icellator™ for isolating stromal and vascular fraction cells (SVF) from adipose tissue and is integrating automation for Cell and Gene Therapy into OMPULs[47](index=47&type=chunk)[48](index=48&type=chunk) - Theracell Laboratories in Greece, now controlled by Orgenesis through Morgenesis, has been designated a 'Priority Investment of Strategic National Importance' by Enterprise Greece, accelerating its development and clinical use of CGT at POCare[33](index=33&type=chunk)[52](index=52&type=chunk) - Notable **2022** POCare Services Activities: * Setup of regional POCare Centers overseeing development and GMP services, OMPUL deployment, and product supply * Expansion of POCare Centers in Maryland, Boston, California, Belgium, Greece, Slovenia, Israel, Italy, Spain, and Korea * Development of GMP processes for CAR-T, TILs, NK, and MSC-based therapies, with production already in OMPULs * Collaboration with UC Davis for GMP grade lentivirus production and decentralized OMPUL model validation * Partnership with Johns Hopkins University for a GMP facility with grant support from Maryland * Expansion of POCare Services to include CRO services[53](index=53&type=chunk)[55](index=55&type=chunk)[56](index=56&type=chunk) [POCare Therapies](index=14&type=section&id=POCare%20Therapies) Orgenesis' POCare Therapies division develops and out-licenses advanced cell and gene therapies, leveraging its global network to expedite development - The global CGT market is rapidly growing, with over **2,000 active clinical trials** and significant acquisitions by large pharma companies, indicating high potential but also high costs and logistical challenges for traditional centralized production[59](index=59&type=chunk)[60](index=60&type=chunk) - Orgenesis' POCare Network offers an alternative drug development pathway, partnering with hospitals and research institutes to in-license promising therapies, adapt them to a point-of-care approach, and out-license for market approval, thereby lowering development costs and expediting the process[64](index=64&type=chunk)[65](index=65&type=chunk)[66](index=66&type=chunk) - Therapies in Development (summarized): * **HiCAR-T**: IND enabling studies for B-ALL, B-cell Lymphoma * **CeCART**: Pre-clinical for Solid Tumors * **T-LOOP**: IND enabling studies for Solid Tumors * **Intra Nasal Delivery of Cell based Immunotherapy**: Pre-Clinical for Drug delivery technology, Glioblastoma * **MSCP**: Pre-clinical for Wound healing and Psoriasis * **EVRD**: Pre-clinical for CKD * **MDVAC**: IND enabling studies for Pancreatic Cancer * **AutoSVF**: Clinical development for Systemic ARDS, vascular disorders * **CellFix**: Clinical use for Cartilage Defects * **KYSLECEL (Autologous Pancreatic Islets)**: Market approval in the US for TP-IAT * **KT-DM-103 and KT-CP-203 (3D-Printed Pancreatic Islets)**: Own development for Type 1 diabetes and chronic pancreatitis * **RanTop, Ranpirnase Topical Formulation**: Clinical Stage for Anti-viral/Immune oncology * **Autovac**: Pre-clinical for Autologous viral vaccine * **Bioxomes**: Pre-clinical for Drug Delivery Technology * **MSPP**: Pre-clinical for Urinary Incontinence[70](index=70&type=chunk) - KYSLECEL, an autologous cell-based product for chronic or acute recurrent pancreatitis patients after total pancreatectomy (TP-IAT), is available in the United States and regulated by the FDA[72](index=72&type=chunk) [Strategic CGT Therapeutics Collaborations](index=18&type=section&id=Strategic%20CGT%20Therapeutics%20Collaborations) Collaborations, partnerships, and license agreements are central to Orgenesis' POCare strategy, spanning technology and therapeutic development globally - Collaborations, partnerships, joint ventures, and license agreements are key components of Orgenesis' POCare strategy[81](index=81&type=chunk) - POCare technology collaborators and partners include: * Ori Biotech * Accellix * Columbia University in the City of New York * Caerus Therapeutics Corporation * UC Davis * The Johns Hopkins University * The Weizman Institute of Science[81](index=81&type=chunk) - The company has collaborations and joint ventures for developing POCare Therapies in North America, Europe, Latin America, Asia, and Australia, involving in-licensing, out-licensing, service contracts, and manufacturing agreements[82](index=82&type=chunk) [Current POCare Therapies Development Facilities](index=18&type=section&id=Current%20POCare%20Therapies%20Development%20Facilities) Orgenesis maintains facilities like Koligo for KYSLECEL production, a Belgian Subsidiary for CGT development, and Mida for IPS-based therapies - Koligo maintains commercial production facilities for KYSLECEL in Indiana and develops new technologies such as bio-degradable 3D structures for cell/tissue delivery[83](index=83&type=chunk) - The Belgian Subsidiary specializes in developing and validating proprietary and licensed advanced cell and gene therapies, including Muscle-derived Mesenchymal Stem Cells therapy for SUI, leveraging its location in the Walloon biotech cluster[84](index=84&type=chunk) - Mida specializes in developing and validating IPS-based therapies and AI, while the Israel subsidiary focuses on R&D and R&D management services[86](index=86&type=chunk)[87](index=87&type=chunk) [Revenue Model, Business Development and Licenses](index=19&type=section&id=Revenue%20Model,%20Business%20Development%20and%20Licenses) Orgenesis' revenue model integrates licensed therapies, automated technology, and a collaborative network, generating revenue from out-licensing, services, and product sales - Orgenesis' POCare Platform revenue model involves in-licensing technology and therapeutic collaborations, followed by out-licensing marketing and manufacturing rights to partners and JVs, typically earning a **10% royalty** on net sales[89](index=89&type=chunk)[90](index=90&type=chunk) - Revenue streams include: * R&D development services provided to out-licensing partners * Hospital supply (sale or lease of products and processing services) * Cell process development services for third-party customers * POCare cell processing services at decentralized centers[91](index=91&type=chunk)[92](index=92&type=chunk)[93](index=93&type=chunk)[94](index=94&type=chunk) Revenue Breakdown (Years Ended December 31, in thousands) | Revenue stream | 2022 ($) | 2021 ($) | | :-------------------------- | :------- | :------- | | POCare development services | 14,894 | 32,192 | | Cell process development services and hospital services | 11,212 | 3,310 | | POCare cell processing | 9,919 | - | | **Total** | **36,025** | **35,502** | [Competition in the Cell Therapy Field](index=20&type=section&id=Competition%20in%20the%20Cell%20Therapy%20Field) The cell therapy industry is intensely competitive, with Orgenesis facing larger, better-resourced competitors who could adopt similar strategies - The biopharmaceutical industry is intensely competitive, with continuous demand for innovation and speed in the evolving cell-based therapies market[96](index=96&type=chunk) - Competitors include major multinational pharmaceutical companies, established biotechnology companies, specialty pharmaceutical companies, universities, and research institutions, many with substantially greater financial and technical resources[96](index=96&type=chunk) - While Orgenesis is not aware of direct competitors pursuing an identical POCare Platform business model, larger, better-capitalized entities could adopt similar strategies and develop them more rapidly[97](index=97&type=chunk) [Intellectual Property](index=20&type=section&id=Intellectual%20Property) Orgenesis protects its technology and products through a portfolio of **36 U.S. patents**, **75 foreign-issued patents**, and numerous pending applications - Orgenesis protects its technology and products through valid and enforceable patents and by maintaining trade secrets[98](index=98&type=chunk) - Intellectual Property Portfolio: * **36** United States patents * **75** foreign-issued patents * **18** pending patent applications in the United States * **71** pending patent applications in foreign jurisdictions (e.g., Australia, Brazil, Canada, China, Europe, India, Israel, Japan, Mexico, New Zealand, North Korea, Panama, Russia, Singapore, South Africa, South Korea) * **11** international Patent Cooperation Treaty (PCT) patent applications[100](index=100&type=chunk) - Patents and applications cover diverse areas including dendritic cell-based vaccines, Ranpirnase compositions, tumor infiltrating lymphocytes (TILs), exosomes/bioxomes, bioreactors for cell culture, chimeric antigen receptors (CARs), and mobile processing laboratories[100](index=100&type=chunk) [Government Regulation](index=22&type=section&id=Government%20Regulation) Orgenesis' operations are subject to extensive and complex government regulations from bodies like the FDA and EMA, with non-compliance leading to severe penalties - Orgenesis must comply with regulatory requirements from local, state, national, and international bodies concerning R&D, testing, manufacturing (GMPs), labeling, distribution, import/export, and facility registration[119](index=119&type=chunk) - U.S. Regulatory Process (FDA): * Pre-clinical tests (GLP) * Investigational New Drug (IND) application * Institutional Review Board (IRB) approval * Clinical trials (GCP) * Current GMP regulations * Biologics License Application (BLA) * FDA review and approval, including manufacturing facility inspection * Potential post-marketing testing and surveillance[126](index=126&type=chunk)[130](index=130&type=chunk) - European Regulatory Process (EMA): * Compliance with current GMP regulations * Clinical Trial Application (CTA) via CTIS * Ethic committee approval * Clinical trials (GCP) * Centralized submission for Marketing Authorization * Review and approval of Marketing Authorization Application[131](index=131&type=chunk) - The FDA has granted **Orphan Drug designation** for Orgenesis' AIP cells for severe hypoglycemia-prone diabetes, providing incentives like **7 years of market exclusivity** and reduced fees[133](index=133&type=chunk) [Human Capital Resources](index=25&type=section&id=Human%20Capital%20Resources) As of **December 31, 2022**, Orgenesis had **167 employees** and is committed to diversity, equity, and inclusion, with **53% women** in its workforce - As of **December 31, 2022**, Orgenesis had **167 employees** and utilized outside consultants for clinical, finance, accounting, and business development services[134](index=134&type=chunk) - The company offers a total rewards package (base salary, cash bonus, equity compensation) to attract and retain highly skilled employees in a competitive biotechnology market[135](index=135&type=chunk) - Orgenesis is committed to diversity, equity, and inclusion, with its total workforce comprising approximately **53% women**, **11% ethnically diverse**, and **50% over the age of 40**[136](index=136&type=chunk) [Health, Wellness and Safety](index=26&type=section&id=Health,%20Wellness%20and%20Safety) Orgenesis prioritizes employee safety and health, implementing clear COVID-19 policies, encouraging remote work, and expanding benefits - Orgenesis prioritizes employee safety and health, particularly in response to the COVID-19 pandemic, by implementing clear policies, encouraging remote work, and providing resources[138](index=138&type=chunk) - COVID-19 response measures included: * Establishing clear and regular COVID-19 policies, safety protocols, and updates * Strongly encouraging office-based employees to work from home * Implementing protocols for actual and suspected COVID-19 cases and potential exposure * Expanding financial, medical, and mental health benefits, including mindfulness sessions[138](index=138&type=chunk)[143](index=143&type=chunk) [Environmental, Social and Governance](index=26&type=section&id=Environmental,%20Social%20and%20Governance) Orgenesis integrates sustainability, with the Board overseeing ESG strategy and employees adhering to a Code of Ethics and Business Conduct - The Board of Directors' Nominating and Governance Committee oversees Environmental, Social and Governance (ESG) strategy and risk management[139](index=139&type=chunk) - Employees are responsible for upholding core values and adhering to the Code of Ethics and Business Conduct, which includes policies on bribery, corruption, conflicts of interest, and a whistleblower program[139](index=139&type=chunk) - Orgenesis is committed to environmental protection by monitoring resource use, improving efficiency, reducing emissions and waste, and using third-party vendors for biohazardous and chemical waste disposal[140](index=140&type=chunk) [Corporate and Available Information](index=26&type=section&id=Corporate%20and%20Available%20Information) Orgenesis provides SEC filings free on its website, with common stock traded on the Nasdaq Capital Market under 'ORGS' - Orgenesis makes its SEC filings (10-K, 10-Q, 8-K) available free of charge on its website (http://www.orgenesis.com)[141](index=141&type=chunk) - The company's common stock is listed and traded on the Nasdaq Capital Market under the symbol '**ORGS**'[142](index=142&type=chunk) [ITEM 1A. RISK FACTORS](index=27&type=section&id=ITEM%201A.%20RISK%20FACTORS) This section outlines significant risks impacting investment in Orgenesis, including business model uncertainty, going concern doubts, unprofitability, and Metalmark Investment risks - Investment in Orgenesis common stock is speculative due to the limited operating history and unproven business model of its POCare business, and the rapidly evolving cell therapy industry[145](index=145&type=chunk)[149](index=149&type=chunk) - Management and independent auditors have concluded there is substantial doubt about the company's ability to continue as a going concern as of **December 31, 2022**, due to recurring losses and negative cash flows[145](index=145&type=chunk)[150](index=150&type=chunk) - The company is not profitable as of **December 31, 2022**, has limited cash flow, and its future success is highly dependent on successful development of novel cell-based therapy technology and effective management of growth[145](index=145&type=chunk)[151](index=151&type=chunk)[152](index=152&type=chunk) [Summary of Risk Factors](index=27&type=section&id=Summary%20of%20Risk%20Factors) Key risks include the speculative nature of the POCare business, going concern doubts, unprofitability, R&D challenges, and Metalmark Investment risks - Key risks include: * Limited operating history and unproven business model of POCare business * Substantial doubt about ability to continue as a going concern * Unprofitability and limited cash flow * Risks inherent in novel cell-based therapy R&D * Challenges in collaborations and strategic alliances * Impact of COVID-19 pandemic * Dependence on intellectual property protection * Risks related to OMPUL development and operation * Product liability lawsuits * Dependence on information technology and cybersecurity risks * Inability to develop in-house sales/commercial distribution or maintain third-party collaborations * Undesirable side effects of product candidates * Complex manufacturing of biologics and scaling difficulties * Reliance on sole/limited source vendors for reagents and equipment * Significant competition * High dependence on key personnel * Extensive industry regulation * Risks related to the Metalmark Investment (future payments, forced sale, control of Morgenesis, dilution)[145](index=145&type=chunk)[146](index=146&type=chunk) [Risks Related to Our Company and POCare Business](index=29&type=section&id=Risks%20Related%20to%20Our%20Company%20and%20POCare%20Business) Orgenesis faces significant risks from its unproven POCare business model, going concern doubts, unprofitability, R&D challenges, and need for capital - Orgenesis' POCare business has a limited operating history and unproven business model, making its prospects speculative and its ability to execute its strategy uncertain[149](index=149&type=chunk) - The company's management and auditors have expressed substantial doubt about its ability to continue as a going concern due to expected operating losses and negative cash flows, necessitating additional capital or increased revenues[150](index=150&type=chunk)[151](index=151&type=chunk) - Risks in novel technology R&D include: * Obtaining regulatory approval from agencies with limited cell therapy experience * Developing consistent and reliable processes for cell engineering and administration * Sourcing clinical and commercial supplies * Developing cost-effective manufacturing and distribution networks * Establishing sales and marketing capabilities * Maintaining post-marketing surveillance[152](index=152&type=chunk)[157](index=157&type=chunk) - The therapeutic efficacy of Ranpirnase and other product candidates is unproven in humans, and successful development and commercialization are not guaranteed[158](index=158&type=chunk) - The company needs to grow its organization significantly, which poses management challenges in recruiting, integrating, and motivating personnel, as well as managing outsourced activities[160](index=160&type=chunk)[161](index=161&type=chunk) - Additional capital may be required to support business growth, and financing may not be available on acceptable terms, potentially leading to dilution for existing stockholders[163](index=163&type=chunk)[165](index=165&type=chunk) - Operations may be adversely affected by ongoing developments in Ukraine and Russia, and currency exchange fluctuations, particularly the euro-to-U.S. dollar rate, can impact financial results[166](index=166&type=chunk)[167](index=167&type=chunk) - Risks in collaborations and strategic alliances: * Collaborators may not perform as expected or commit sufficient resources * Delays in clinical trials or regulatory submissions * Disputes or termination of collaborations * Collaborators developing competing products or failing to maintain intellectual property rights[168](index=168&type=chunk)[170](index=170&type=chunk) - COVID-19 pandemic impacts include: * Delays in supply chain and manufacturing * Disruptions to discovery and preclinical efforts * Changes or shutdowns at clinical trial sites * Limited patient access and enrollment * Changes in regulatory requirements[173](index=173&type=chunk)[176](index=176&type=chunk) [Risks Related to Our OMPULs](index=40&type=section&id=Risks%20Related%20to%20Our%20OMPULs) OMPUL operations face risks from local regulations, facility damage, supply chain issues, skilled labor shortages, and security concerns - OMPUL operations may be restricted by local zoning, environmental, medical waste, or other licensing regulations, potentially limiting their location, size, and use[201](index=201&type=chunk) - Damage or inoperability of OMPUL facilities due to natural or man-made disasters could disrupt testing and R&D, leading to loss of customers or reputational harm[202](index=202&type=chunk)[203](index=203&type=chunk) - Operational risks for OMPULs include: * Changes in price and availability of raw materials * Dependence on skilled human capital and potential shortages * Security concerns in certain locations impacting safety of OMPULs, employees, and patients * Heavy industry regulation, with changes or violations potentially reducing revenue and harming business[205](index=205&type=chunk)[206](index=206&type=chunk)[207](index=207&type=chunk)[208](index=208&type=chunk) [Risks Related to Our Trans-Differentiation Technologies for Diabetes and the THM License Agreement](index=41&type=section&id=Risks%20Related%20to%20Our%20Trans-Differentiation%20Technologies%20for%20Diabetes%20and%20the%20THM%20License%20Agreement) Orgenesis faces risks with its diabetes trans-differentiation technology, including potential THM License Agreement cancellation and an ongoing royalty dispute - THM is entitled to cancel the License Agreement if the Israeli Subsidiary fails to fulfill development plan terms or breaches obligations, with cure periods of **one year or 180 days**, respectively[209](index=209&type=chunk) - An ongoing legal proceeding initiated by THM alleges that Orgenesis and its Israeli Subsidiary owe royalties for using Sheba's know-how and technology in cell therapy, including the point-of-care platform and CDMO activities[209](index=209&type=chunk)[269](index=269&type=chunk) - Challenges in developing and commercializing trans-differentiating technology for diabetes include: * Obtaining regulatory approval from authorities with limited experience in this technology * Developing consistent and reliable processes for engineering and infusing patient's liver cells * Ensuring safe administration and long-term follow-up for patients * Sourcing clinical and commercial supplies * Developing cost-effective manufacturing and distribution networks * Establishing sales and marketing capabilities * Maintaining post-marketing surveillance and risk assessment programs[210](index=210&type=chunk)[212](index=212&type=chunk) [Risks Related to Development and Regulatory Approval of Our Therapies and Product Candidates](index=42&type=section&id=Risks%20Related%20to%20Development%20and%20Regulatory%20Approval%20of%20Our%20Therapies%20and%20Product%20Candidates) Biopharmaceutical development is inherently risky, facing extensive regulations, clinical trial failures, manufacturing complexities, and market acceptance challenges - Biopharmaceutical product development is inherently risky, with no guarantee of successful product candidates or commercial viability, and limited resources may be expended on unsuccessful programs[211](index=211&type=chunk) - Reasons for R&D program failure include: * Inability to identify additional product candidates * Failure in preclinical or clinical testing * Harmful side effects or lack of efficacy * Competitor alternatives * Third-party patent infringement * Unfavorable market changes * Inability to produce in commercial quantities at acceptable cost * Lack of acceptance by patients, medical community, or payers[213](index=213&type=chunk) - Extensive, complex, and costly government regulations (FDA, EMA) significantly impact product development, manufacturing (GMPs), and distribution, with non-compliance leading to severe sanctions and delays[215](index=215&type=chunk)[216](index=216&type=chunk)[217](index=217&type=chunk) - Factors affecting revenue generation and profitability: * Completion of R&D and nonclinical/clinical development * Obtaining regulatory approvals and marketing authorizations * Developing sustainable and scalable manufacturing processes and supply relationships * Launching and commercializing product candidates * Achieving market acceptance * Addressing competing technological and market developments * Protecting intellectual property * Attracting and retaining qualified personnel[220](index=220&type=chunk)[223](index=223&type=chunk) - Clinical trial risks include: * Inability to generate sufficient preclinical data * Delays in regulatory consensus on study design or IRB approval * Imposition of clinical holds * Difficulties in patient recruitment or retention * Failure to comply with GCP requirements * Adverse events outweighing benefits * Changes in regulatory requirements or standard of care * High costs or negative/inconclusive results * Manufacturing, testing, or supply delays[222](index=222&type=chunk)[227](index=227&type=chunk) - Manufacturing of biologics is complex, highly regulated, and susceptible to product loss, contamination, equipment failure, and logistical issues, making process development and scaling challenging and costly[231](index=231&type=chunk)[232](index=232&type=chunk)[234](index=234&type=chunk)[235](index=235&type=chunk)[236](index=236&type=chunk) - Reliance on sole or limited source vendors for reagents, specialized equipment, and other specialty materials poses a risk to manufacturing and supply, potentially causing delays or disruptions[237](index=237&type=chunk)[238](index=238&type=chunk) - Risks associated with international operations: * Differing regulatory requirements, tariffs, trade barriers, and exchange controls * Economic weakness or political instability * Compliance with foreign tax, employment, immigration, and labor laws * Foreign currency fluctuations * Difficulties in staffing and managing foreign operations * Potential liability under foreign anti-corruption laws * Challenges in enforcing intellectual property rights * Production shortages or business interruptions from geopolitical actions or disease outbreaks[240](index=240&type=chunk)[243](index=243&type=chunk) [Risks Related to the Metalmark Investment](index=49&type=section&id=Risks%20Related%20to%20the%20Metalmark%20Investment) The Metalmark Investment in Morgenesis LLC carries risks including uncertain future payments, MM's control rights, potential forced sale, and significant stockholder dilution - Morgenesis may not receive future payments of up to **$20 million** from MM, which are contingent on achieving specific Net Revenue targets for **2022 and 2023**, and Orgenesis stockholder approval of LLC Agreement Terms[247](index=247&type=chunk)[248](index=248&type=chunk)[249](index=249&type=chunk) - MM may force the sale of Morgenesis under certain conditions (e.g., after **two years** or a Material Governance Event), potentially resulting in MM receiving greater value than Orgenesis and its shareholders[250](index=250&type=chunk)[251](index=251&type=chunk) - MM may assume control of Morgenesis' Board of Managers under specific circumstances (e.g., Material Underperformance Event, Material Governance Event, failure to pay redemption price), leading to Orgenesis' inability to control the subsidiary's activities[252](index=252&type=chunk)[253](index=253&type=chunk)[255](index=255&type=chunk) - MM has the right to buy Orgenesis' units in Morgenesis (MM Call Option) upon a Material Governance Event or failure of stockholder approval, potentially resulting in Orgenesis holding no equity in Morgenesis[256](index=256&type=chunk) - Orgenesis may be forced to redeem all of MM's Preferred Units in Morgenesis under certain conditions, requiring substantial cash outlay and adversely affecting its financial position[257](index=257&type=chunk)[258](index=258&type=chunk) - If MM exercises its Stock Exchange Option, Orgenesis could issue up to **5,106,596 shares** of common stock to MM, potentially causing significant dilution to existing stockholders[259](index=259&type=chunk) [Risks Related to our Common Stock](index=52&type=section&id=Risks%20Related%20to%20our%20Common%20Stock) Risks related to Orgenesis' common stock include potential dilution from future share issuances, stock price volatility, and no foreseeable dividend payments - Future issuances of additional shares (up to **145,833,334 authorized**) could result in significant dilution for existing stockholders and potentially a change of control[261](index=261&type=chunk) - The company's stock price and trading volume may be volatile due to factors such as: * Quarterly variations in operating results * Changes in future financial performance expectations * Announcements related to the business * Conditions affecting the biotechnology industry * Success of operating strategy * Performance of comparable companies[262](index=262&type=chunk) - Orgenesis does not intend to pay dividends on its common stock in the foreseeable future, meaning investment gains depend solely on stock price appreciation[265](index=265&type=chunk) [ITEM 1B. UNRESOLVED STAFF COMMENTS](index=53&type=section&id=ITEM%201B.%20UNRESOLVED%20STAFF%20COMMENTS) This section states that there are no unresolved staff comments from the SEC - Not applicable, indicating no unresolved staff comments[266](index=266&type=chunk) [ITEM 2. PROPERTIES](index=53&type=section&id=ITEM%202.%20PROPERTIES) Orgenesis Inc. leases various global facilities for its principal office, laboratories, and production, believing them suitable for its business operations - Orgenesis Inc. does not own real property but leases facilities for its operations[267](index=267&type=chunk) - Leased properties include: * **Orgenesis Inc.**: Principal office in Germantown, MD * **Orgenesis Maryland LLC.**: FastForward laboratory and office in Baltimore, MD * **Orgenesis Korea Co. Ltd**: Operational production laboratory and office in Gwanggyo, South Korea * **Orgenesis Ltd.**: Laboratory and office in Nes Ziona, Israel * **Koligo Therapeutics Inc.**: Production facility and development labs in New Albany, Indiana * **Tissue Genesis International LLC**: Production facility and development labs in Leander, Texas * **Orgenesis Biotech Israel Ltd.**: Laboratories and offices in Bar Lev Industrial Park, Israel * **Mida Biotech BV**: Laboratories and offices in Leiden, The Netherlands * **Orgenesis Belgium and Orgenesis Services SRL**: Laboratories and offices near Namur, Belgium * **Theracell Laboratories**: Laboratory and offices in Koropi, Greece[267](index=267&type=chunk) - The company believes its facilities are in good condition and suitable for its business, with suitable alternative or additional space expected to be available on commercially reasonable terms if needed[268](index=268&type=chunk) [ITEM 3. LEGAL PROCEEDINGS](index=54&type=section&id=ITEM%203.%20LEGAL%20PROCEEDINGS) Orgenesis is involved in a legal dispute with THM in Tel Aviv District Court, seeking **NIS 10 million** and royalties for alleged technology use - A complaint was filed on **January 18, 2022**, in the Tel Aviv District Court against Orgenesis Inc. and its Israeli Subsidiary by Tel Hashomer Medical Research, Infrastructure and Services Ltd. (THM)[269](index=269&type=chunk) - Plaintiffs seek declaratory relief for royalties (**7% of sales, 24% of sublicense revenues**) and **NIS 10 million** in payments, alleging use of THM's know-how and technology in cell therapy and point-of-care platform activities[269](index=269&type=chunk) - Orgenesis believes the allegations are without merit, intends to vigorously defend itself, and has made no provision in financial statements as a material loss is not considered probable[269](index=269&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=54&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This section states that mine safety disclosures are not applicable to Orgenesis Inc. - Not applicable, indicating no mine safety disclosures[271](index=271&type=chunk) [PART II](index=54&type=section&id=PART%20II) [ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES](index=54&type=section&id=ITEM%205.%20MARKET%20FOR%20REGISTRANT%27S%20COMMON%20EQUITY,%20RELATED%20STOCKHOLDER%20MATTERS%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) Orgenesis common stock (ORGS) trades on Nasdaq, with **305 holders** as of March 22, 2023; the company does not anticipate paying dividends - Orgenesis common stock has been listed on the Nasdaq Capital Market under the symbol '**ORGS**' since **March 13, 2018**[273](index=273&type=chunk) - As of **March 22, 2023**, there were **305 holders of record** of the company's common stock, with a closing price of **$1.43**[273](index=273&type=chunk) - The company has never paid cash dividends and does not intend to in the foreseeable future, planning to retain all earnings for business operations and expansion[274](index=274&type=chunk)[265](index=265&type=chunk) - In **October 2023**, the company issued additional warrants to purchase **174,460 shares** of Common Stock to Ricky Neumann and **41,042 additional warrants** to other investors, as part of an amendment to a Securities Purchase Agreement and Registration Rights Agreement[276](index=276&type=chunk) - No shares were repurchased under the **$10 million** Stock Repurchase Plan during the year ended **December 31, 2022**[277](index=277&type=chunk)[278](index=278&type=chunk) [ITEM 6. [RESERVED]](index=55&type=section&id=ITEM%206.%20%5BRESERVED%5D) This item is reserved and contains no information [ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=55&type=section&id=ITEM%207.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section analyzes Orgenesis' financial condition and results for **2022 and 2021**, focusing on its CGT business, POCare Platform, and segment separation - The discussion analyzes financial condition and results of operations for the years ended **December 31, 2022, and 2021**, in conjunction with consolidated financial statements[279](index=279&type=chunk)[280](index=280&type=chunk) - Orgenesis is a global biotech company focused on affordable and accessible cell and gene therapies (CGTs), primarily autologous therapies, through its Point-of-Care (POCare) Platform[281](index=281&type=chunk) - Following the Metalmark Investment in **November 2022**, operations were separated into two segments: Morgenesis (POCare Services) and Therapies (therapeutic development operations)[284](index=284&type=chunk) [Corporate Overview](index=55&type=section&id=Corporate%20Overview) Orgenesis is a global biotech company making CGTs affordable and accessible via its POCare Platform, which includes POCare Services and Therapies segments - Orgenesis is a global biotech company focused on unlocking the potential of CGTs in an affordable and accessible format, primarily through autologous therapies manufactured at the point of care (POCare)[281](index=281&type=chunk) - The company's POCare Platform, operated by Morgenesis, provides a scalable infrastructure of technology and services, including OMPULs, to ensure standardized, GMP-compliant production near the patient[282](index=282&type=chunk)[285](index=285&type=chunk) - POCare Services include: * Process development, adaptation, and optimization (OMPULization) * Adaptation of automation and closed systems * Incorporation of serviced therapies compliant with GMP in OMPULs * Tech transfers and training of local teams for serviced therapies * Processing and supply of therapies and required supplies under GMP conditions * Contract Research Organization (CRO) services for clinical trials[285](index=285&type=chunk)[289](index=289&type=chunk) - The Therapies segment focuses on in-licensing promising therapies from academic institutions, adapting them to a point-of-care approach, and out-licensing for market approval, aiming to lower development costs and expedite the process[286](index=286&type=chunk)[288](index=288&type=chunk)[290](index=290&type=chunk)[291](index=291&type=chunk) [Significant Developments During Fiscal 2022](index=58&type=section&id=Significant%20Developments%20During%20Fiscal%202022) Fiscal **2022** saw significant financing, including a **$2.175 million** private placement, **$9.15 million** in convertible loans, and a **$30.2 million** Metalmark Investment in Morgenesis - Financing Activities (**2022**): * **Equity**: Sold **724,999 shares** of Common Stock and warrants for **146,959 shares** in a private placement, raising **$2.175 million** * **Convertible Loan Agreements**: Entered into three agreements for an aggregate of **$9.15 million** at **6% interest**, issuing warrants for **408,335 shares**. Two loans totaling **$8 million** were later extended to **Q1 2024**, with interest increased to **10%** and conversion price amended to **$2.50 per share**, issuing additional warrants for **1,777,777 shares** * **Loan Repayments**: Repaid four loans totaling **$2.3 million**[292](index=292&type=chunk)[293](index=293&type=chunk)[294](index=294&type=chunk)[295](index=295&type=chunk) - Metalmark Capital Partners invested **$30.2 million** in Morgenesis LLC, acquiring **22.31%** of its equity, comprising **$20 million cash** and conversion of **$10.2 million** in existing convertible loans. Future payments of up to **$20 million** and a **$10 million** Earnout Payment are contingent on Morgenesis' performance[296](index=296&type=chunk)[298](index=298&type=chunk)[299](index=299&type=chunk) - Orgenesis acquired Mida Biotech BV for **$100 thousand**, paid via issuance of company common stock[302](index=302&type=chunk) - Entered into an exclusive, worldwide royalty-bearing license and research agreement with Yeda Research and Development Company Limited for TIL and CAR T-cell immunotherapy platforms[303](index=303&type=chunk) [Results of Operations](index=60&type=section&id=Results%20of%20Operations) Orgenesis reported **$36,025 thousand** in total revenues for **2022**, a **1% increase**, with operating loss decreasing by **48.8%** due to reduced costs Consolidated Statements of Comprehensive Loss (Income) (in thousands) | Indicator | 2022 ($) | 2021 ($) | | :--------------------------------------------------- | :------- | :------- | | Total revenues | 36,025 | 35,502 | | Cost of revenues, development services and R&D expenses | 27,066 | 36,644 | | Amortization of intangible assets | 911 | 948 | | Selling, general and administrative expenses | 15,589 | 14,710 | | Impairment expenses | 1,061 | - | | Operating loss | 8,602 | 16,800 | | Other income | (173) | (2,278) | | Loss from extinguishment in connection with convertible loan | 52 | 1,865 | | Financial expense, net | 1,971 | 1,292 | | Share in income of associated company | 1,508 | 272 | | Loss before income taxes | 11,960 | 17,951 | | Tax expense | 209 | 108 | | Net loss | 12,169 | 18,059 | Revenue by Stream (Years Ended December 31, in thousands) | Revenue stream | 2022 ($) | 2021 ($) | | :------------------------------------------ | :------- | :------- | | POCare development services | 14,894 | 32,192 | | Cell process development services and hospital services | 11,212 | 3,310 | | POCare cell processing | 9,919 | - | | **Total** | **36,025** | **35,502** | - Revenue changes (**2022 vs. 2021**): * **POCare development services**: Declined due to completion of most performance obligations in **2021** * **Cell process development services and hospital services**: Increased due to new agreements with third-party customers * **POCare cell processing**: New revenue stream from signed cell processing agreements[309](index=309&type=chunk) Cost of Revenues, Development Services and R&D Expenses (in thousands) | Expense Category | 2022 ($) | 2021 ($) | | :--------------------------------------- | :------- | :------- | | Salaries and related expenses | 11,206 | 10,977 | | Stock-based compensation | 616 | 729 | | Subcontracting, professional and consulting services | 5,655 | 12,796 | | Lab expenses | 2,685 | 3,513 | | Depreciation expenses, net | 1,017 | 874 | | Other research and development expenses | 6,010 | 7,755 | | Less – grant | (123) | - | | **Total** | **27,066** | **36,644** | - Cost of revenues, development services and R&D expenses decreased by **26%** in **2022**, primarily due to the completion of the majority of development work on OMPULs, leading to a **40% decline** in subcontracting, professional, consulting, lab, and other R&D expenses[311](index=311&type=chunk) Selling, General and Administrative Expenses (in thousands) | Expense Category | 2022 ($) | 2021 ($) | | :--------------------------------- | :------- | :------- | | Salaries and related expenses | 4,008 | 6,277 | | Stock-based compensation | 362 | 945 | | Accounting and legal fees | 5,527 | 3,293 | | Professional fees | 3,080 | 1,107 | | Rent and related expenses | 199 | 249 | | Business development | 474 | 577 | | Depreciation expenses, net | 50 | 42 | | Other general and administrative expenses | 1,889 | 2,220 | | **Total** | **15,589** | **14,710** | - Selling, general and administrative expenses increased by **6%** in **2022**, mainly due to higher accounting and legal fees and professional services related to investment activities (e.g., Metalmark Investment), offset by a decline in salaries (no **$3.6 million bonus** for CEO in **2022**)[312](index=312&type=chunk) - Impairment expenses of **$1,061 thousand** were recorded in **2022** (vs. **$0** in **2021**) due to the write-off of customer relationships and IPR&D intangible assets[313](index=313&type=chunk)[314](index=314&type=chunk) - Financial expenses, net, increased by **53%** to **$1,971 thousand** in **2022**, primarily due to increased interest and related expenses on new and existing convertible loans[315](index=315&type=chunk) - Tax expense increased by **94%** to **$209 thousand** in **2022**, mainly due to increased tax liabilities in the U.S. following changes in Internal Revenue Code Section 174 regarding R&E expenditures[316](index=316&type=chunk) [Liquidity and Capital Resources](index=63&type=section&id=Liquidity%20and%20Capital%20Resources) Orgenesis reported an accumulated deficit of **$121,261 thousand** and negative operating cash flows, raising substantial doubt about its going concern ability Working Capital (in thousands) | Indicator | December 31, 2022 ($) | December 31, 2021 ($) | | :---------------- | :-------------------- | :-------------------- | | Current assets | 46,318 | 25,758 | | Current liabilities | 15,910 | 15,365 | | **Working capital** | **30,408** | **10,393** | - Current assets increased by **$20,560 thousand**, mainly due to increased accounts receivable from higher POCare revenues. Current liabilities increased by **$545 thousand**, primarily from higher accounts payable and accrued expenses, offset by reduced current maturities of convertible loans[317](index=317&type=chunk)[318](index=318&type=chunk) Cash Flow Summary (Years Ended December 31, in thousands) | Cash Flow Activity | 2022 ($) | 2021 ($) | | :------------------------------------------ | :------- | :------- | | Net loss | (12,169) | (18,059) | | Net cash used in operating activities | (24,924) | (26,866) | | Net cash used in investing activities | (14,133) | (12,384) | | Net cash provided by (used in) financing activities | 39,578 | (106) | | Net change in cash and cash equivalents and restricted cash | 521 | (39,356) | - Net cash used in operating activities decreased due to a lower net loss and reduced stock-based compensation, partially offset by increased accounts receivable[320](index=320&type=chunk)[322](index=322&type=chunk) - Net cash used in investing activities increased due to additional loans to associated companies and purchases of property, plants, and equipment for POCare facilities[320](index=320&type=chunk) - Net cash provided by financing activities significantly increased due to proceeds from equity investments (**$2.181 million**), loans (**$19.150 million**), and the Metalmark investment (**$20 million**)[321](index=321&type=chunk)[323](index=323&type=chunk) - Subsequent to year-end, the company extended convertible loan maturities, increased interest rates, amended conversion prices, entered new convertible loan agreements for **$5 million**, and completed a registered direct offering for **$3.7 million**, with proceeds for working capital and therapy activities[324](index=324&type=chunk) [Off-Balance Sheet Arrangements](index=65&type=section&id=Of%20-Balance%20Sheet%20Arrangements) Orgenesis Inc. has no material off-balance sheet arrangements that would significantly impact its financial condition or results of operations - Orgenesis has no material off-balance sheet arrangements that would significantly impact its financial condition or results of operations[325](index=325&type=chunk) [Critical Accounting Policies and Estimates](index=65&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Orgenesis' critical accounting policies involve significant judgment for income taxes, revenue recognition, and estimating standalone selling prices - Critical accounting policies and estimates include: * **Income Taxes**: Deferred income tax assets and liabilities are computed based on differences between financial statement and tax bases, with valuation allowances established when realization is not probable. Uncertain tax positions are evaluated using a 'more likely than not' standard * **Revenue from Contracts with Customers**: Revenue is recognized when control of services is transferred, based on transaction price. The company has three main revenue streams: POCare development services, cell process development services (including hospital supplies), and POCare cell processing * **Significant Judgement and Estimates**: Required for identifying distinct performance obligations, estimating standalone selling prices, and determining revenue recognition timing (over time or at a point in time)[326](index=326&type=chunk)[327](index=327&type=chunk)[328](index=328&type=chunk)[329](index=329&type=chunk)[330](index=330&type=chunk)[331](index=331&type=chunk)[332](index=332&type=chunk)[333](index=333&type=chunk)[334](index=334&type=chunk)[335](index=335&type=chunk)[336](index=336&type=chunk)[337](index=337&type=chunk)[338](index=338&type=chunk)[339](index=339&type=chunk) [ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=67&type=section&id=ITEM%207A.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) This section states that quantitative and qualitative disclosures about market risk are not applicable to Orgenesis Inc. - Not applicable, indicating no quantitative and qualitative disclosures about market risk[340](index=340&type=chunk) [ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA](index=67&type=section&id=ITEM%208.%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA) This item refers to the consolidated financial statements and supplementary data, included elsewhere in the Annual Report on Form 10-K - The financial statements and supplementary data are included following the 'Index to Financial Statements' on page **F-1** of this Annual Report on Form 10-K[341](index=341&type=chunk) [ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE](index=67&type=section&id=ITEM%209.%20CHANGES%20IN%20AND%20DISAGREEMENTS%20WITH%20ACCOUNTANTS%20ON%20ACCOUNTING%20AND%20FINANCIAL%20DISCLOSURE) This section states that there have been no changes in or disagreements with accountants on accounting and financial disclosure - No changes in or disagreements with accountants on accounting and financial disclosure[342](index=342&type=chunk) [ITEM 9A. CONTROLS AND PROCEDURES](index=67&type=section&id=ITEM%209A.%20CONTROLS%20AND%20PROCEDURES) Orgenesis management concluded that disclosure controls and internal control over financial reporting were effective as of **December 31, 2022** - Management, with CEO and CFO participation, concluded that disclosure controls and procedures were effective as of **December 31, 2022**[343](index=343&type=chunk) - Management assessed the effectiveness of internal control over financial reporting using the COSO framework and concluded it was effective as of **December 31, 2022**[344](index=344&type=chunk)[345](index=345&type=chunk)[346](index=346&type=chunk) - No material changes in internal control over financial reporting occurred during the **fourth quarter of 2022**[347](index=347&type=chunk) [ITEM 9B. OTHER INFORMATION](index=68&type=section&id=ITEM%209B.%20OTHER%20INFORMATION) This section states that there is no other information to report - None, indicating no other information to report[348](index=348&type=chunk) [ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS](index=68&type=section&id=ITEM%209C.%20DISCLOSURE%20REGARDING%20FOREIGN%20JURISDICTIONS%20THAT%20PREVENT%20INSPECTIONS) This section states that there is no disclosure regarding foreign jurisdictions that prevent inspections - None, indicating no disclosure regarding foreign jurisdictions that prevent inspections[349](index=349&type=chunk) [PART III](index=68&type=section&id=PART%20III) [ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE](index=68&type=section&id=ITEM%2010.%20DIRECTORS,%20EXECUTIVE%20OFFICERS%20AND%20CORPORATE%20GOVERNANCE) This section provides information on Orgenesis Inc.'s directors and executive officers, including their professional backgrounds and board committee structures Directors and Executive Officers (as of March 22, 2023) | Name | Age | Position | | :--------------- | :-- | :-------------------------------------------- | | Vered Caplan | 54 | Chief Executive Officer and Chairperson of the Board of Directors | | Neil Reithinger | 53 | Chief Financial Officer, Secretary and Treasurer | | Efrat Assa Kunik | 48 | Chief Development Officer | | David Sidransky | 62 | Director | | Guy Yachin | 55 | Director | | Yaron Adler | 52 | Director | | Ashish Nanda | 57 | Director | | Mario Philips | 53 | Director | - The Board of Directors consists of **six members**, with a majority deemed independent according to Nasdaq Stock Market listing standards[370](index=370&type=chunk)[372](index=372&type=chunk)[373](index=373&type=chunk) - Board Committees: * **Audit Committee**: Members are Dr. Sidransky, Mr. Yachin, and Mr. Philips. Dr. Sidransky is designated as an 'audit committee financial expert' * **Compensation Committee**: Members are Dr. Sidransky, Mr. Adler, and Mr. Yachin * **Nominating and Corporate Governance Committee**: Members are Mr. Nanda, Mr. Adler, and Mr. Yachin * **Research and Development Committee**: Members are Mr. Yachin and Dr. Sidransky[374](index=374&type=chunk) - All committees operate under written charters and are comprised of independent direc