Cellectis(CLLS) - 2022 Q2 - Quarterly Report

Preliminary Note This section provides preliminary information regarding accounting standards and forward-looking statements Accounting Standards and Forward-Looking Statements Unaudited financial statements follow IAS 34 and U.S. dollar presentation, with a disclaimer on forward-looking statements - Financial statements are prepared in accordance with International Accounting Standard 34 (IAS 34) and presented in U.S. dollars[3] - The report contains forward-looking statements subject to numerous risks and uncertainties, including clinical trial outcomes, regulatory approvals, competition, manufacturing issues, and capital market dislocations[4] PART I – FINANCIAL INFORMATION This part presents unaudited interim consolidated financial statements, notes, and management's discussion and analysis Item 1. Financial Statements (Unaudited) This section presents unaudited condensed consolidated financial statements, including position, operations, comprehensive income, cash flow, and equity Condensed Consolidated Statements of Financial Position Total assets and shareholders' equity decreased from December 31, 2021 to June 30, 2022, driven by reduced cash Consolidated Statements of Financial Position (in thousands) | ASSETS / LIABILITIES & EQUITY | Dec 31, 2021 | Jun 30, 2022 | | :---------------------------- | :----------- | :----------- | | Total Assets | 382,076 | 320,883 | | Total Shareholders' Equity| 236,474 | 180,522 | | Total Liabilities | 145,602 | 140,361 | Condensed Consolidated Statements of Operations (Unaudited) - Six-month period Total revenues and other income significantly decreased, leading to increased operating loss despite a substantial net financial gain Consolidated Statements of Operations (Six-month period, in thousands, except per share) | Metric | Jun 30, 2021 | Jun 30, 2022 | | :---------------------------- | :----------- | :----------- | | Total revenues and other income | 42,581 | 6,596 | | Operating income (loss) | (57,387) | (69,324) | | Net Financial gain (loss) | 431 | 15,113 | | Net income (loss) | (56,956) | (54,211) | | Basic net income (loss) per share | (1.17) | (1.12) | Condensed Consolidated Statements of Comprehensive Income (Loss) - Six-month period Total comprehensive loss increased due to a larger currency translation adjustment Consolidated Statements of Comprehensive Income (Loss) (Six-month period, in thousands) | Metric | Jun 30, 2021 | Jun 30, 2022 | | :---------------------------- | :----------- | :----------- |\n| Net income (loss) | (56,956) | (54,211) | | Currency translation adjustment | (6,969) | (11,978) | | Total Comprehensive income (loss) | (63,348) | (64,971) | Condensed Consolidated Statements of Operations (Unaudited) - Three-month period Net loss significantly reduced due to substantial financial gain and lower operating expenses, despite sharp revenue decline Consolidated Statements of Operations (Three-month period, in thousands, except per share) | Metric | Jun 30, 2021 | Jun 30, 2022 | | :---------------------------- | :----------- | :----------- |\n| Total revenues and other income | 14,615 | 2,765 | | Operating income (loss) | (37,481) | (34,077) | | Financial gain (loss) | (4,129) | 14,623 | | Net income (loss) | (41,610) | (19,454) | | Basic net income (loss) per share | (0.88) | (0.42) | Condensed Consolidated Statements of Comprehensive Income (Loss) - Three-month period Total comprehensive loss decreased due to lower net loss, partially offset by negative currency translation adjustment Consolidated Statements of Comprehensive Income (Loss) (Three-month period, in thousands) | Metric | Jun 30, 2021 | Jun 30, 2022 | | :---------------------------- | :----------- | :----------- |\n| Net income (loss) | (41,610) | (19,454) | | Currency translation adjustment | 2,714 | (8,870) | | Total Comprehensive income (loss) | (38,759) | (27,533) | Condensed Consolidated Statements of Cash Flow Cash usage in operating activities increased, investing shifted to cash used, and financing activities decreased significantly Consolidated Statements of Cash Flow (Six-month period, in thousands) | Cash Flow Activity | Jun 30, 2021 | Jun 30, 2022 | | :---------------------------- | :----------- | :----------- |\n| Operating activities | (53,054) | (60,181) | | Investing activities | 9,941 | (2,537) | | Financing activities | 52,630 | 10,307 | | (Decrease) increase in cash and cash equivalents | 9,518 | (52,411) | | Cash and cash equivalents at end of period | 248,226 | 129,440 | Condensed Consolidated Statements of Changes in Shareholders' Equity Total shareholders' equity decreased due to net loss and currency translation adjustments, despite share capital increase Consolidated Statements of Changes in Shareholders' Equity (in thousands) | Metric | Jan 1, 2021 | Jun 30, 2021 | Jan 1, 2022 | Jun 30, 2022 | | :---------------------------- | :---------- | :----------- | :---------- | :----------- |\n| Total Shareholders' Equity | 308,845 | 302,323 | 236,474 | 180,522 | - Calyxt completed a follow-on offering on February 23, 2022, issuing common stock and warrants, generating net proceeds of $10.0 million and impacting equity by $2.7 million[23] - Shareholders approved the absorption of $372.7 million of retained earnings into share premium on June 28, 2022, with no impact on total equity, comprehensive income (loss), assets, or liabilities[23] Notes to the Interim Consolidated Financial Statements This section provides detailed notes to the interim consolidated financial statements, covering company information, accounting principles, and financial details Note 1. The Company Cellectis is a clinical-stage biotech company focused on gene-editing for immuno-oncology and genetic diseases, holding a majority stake in Calyxt - Cellectis is a clinical-stage biotechnology company developing allogeneic Chimeric Antigen Receptor T-cells (UCART) for immuno-oncology and gene-edited hematopoietic stem cells (HSC) for genetic diseases[27][28][29] - As of June 30, 2022, Cellectis S.A. owns 51.3% of Calyxt, Inc., its plant-based synthetic biology subsidiary, which leverages its PlantSpring technology platform[30] - The COVID-19 pandemic has slowed patient enrollment in Cellectis' AMELI-01, BALLI-01, and MELANI-01 clinical trials but did not have a material impact on Calyxt's operations during the first six months of 2022[32][33][34] Note 2. Accounting principles Interim consolidated financial statements are prepared in U.S. dollars under IAS 34, with consistent policies and no significant new standard impact - Interim Consolidated Financial Statements are presented in U.S. dollars and prepared in accordance with IAS 34[37][43] - No significant impact from new or amended accounting standards adopted from January 1, 2022[40] - Cellectis S.A. controls and consolidates Cellectis, Inc., Cellectis Biologics, Inc., and approximately 51.3% of Calyxt's outstanding common stock as of June 30, 2022[51][54] Note 3. Information concerning the Group's Consolidated Operations This note details Group revenues, other income, and operating expenses by segment; revenues and operating expenses significantly decreased Revenues and other income Total revenues and other income significantly decreased due to lower collaboration revenues and Calyxt's business model shift Revenues and Other Income (Six-month period, in thousands) | Metric | Jun 30, 2021 | Jun 30, 2022 | % Change | | :---------------------------- | :----------- | :----------- | :------- |\n| Revenues | 36,777 | 3,045 | -91.7% | | Other income | 5,804 | 3,551 | -38.8% | | Total revenues and other income | 42,581 | 6,596 | -84.5% | - The decrease in revenues is mainly due to the recognition of a $15.0 million upfront payment from Cytovia and a $5.1 million milestone from Allogene in H1 2021, which did not recur in H1 2022. H1 2022 revenues included $1.5 million from Cytovia milestones and $1.0 million from a licensee change of control[60] - Products and services revenues decreased significantly due to the wind-down of Calyxt's soybean product line in late 2021, with H1 2022 revenues solely from Calyxt's palm oil alternative development agreement[62] Operating expenses Total operating expenses decreased due to significant reduction in cost of goods sold from Calyxt's business model change and decreased R&D Operating Expenses (Six-month period, in thousands) | Metric | Jun 30, 2021 | Jun 30, 2022 | % Change | | :----------------------------------- | :----------- | :----------- | :------- |\n| Cost of revenue | (19,899) | (714) | -96.4% | | Research and development expenses | (62,338) | (58,527) | -6.1% | | Selling, general and administrative expenses | (18,219) | (17,695) | -2.9% | | Total operating expenses | (99,968) | (75,920) | -24.1% | - Cost of goods sold decreased by $18.7 million (100%) due to Calyxt's shift from soybean product sales to its PlantSpring Technology and BioFactory model[68] - Research and development expenses decreased by $3.8 million, mainly due to lower purchases, external expenses, and non-cash stock-based compensation, partially offset by increased wages and salaries in the therapeutic segment[204] Reportable segments The Group operates in Therapeutics and Plants segments; CODM uses segment-specific financial indicators for performance and resource allocation - The Group's two operating and reportable segments are Therapeutics (focused on gene-edited UCART and HSC product candidates) and Plants (Calyxt's plant-based synthetic biology solutions)[74] - The CODM, composed of key executives, evaluates segment performance based on revenues, operating expenses, and adjusted net income (loss), but not asset or liability information[73][79] Key Performance Indicators by Reportable Segment (Six-month period, in thousands) | Metric | Plants 2021 | Therapeutics 2021 | Total 2021 | Plants 2022 | Therapeutics 2022 | Total 2022 | | :----------------------------------- | :---------- | :---------------- | :--------- | :---------- | :---------------- | :--------- |\n| External revenues and other income | 18,244 | 24,337 | 42,581 | 73 | 6,523 | 6,596 | | Total operating expenses | (32,063) | (67,905) | (99,968) | (12,856) | (63,064) | (75,920) | | Operating income (loss) before tax | (13,818) | (43,569) | (57,387) | (12,783) | (56,541) | (69,324) | | Net income (loss) attributable to shareholders of Cellectis | (9,233) | (42,554) | (51,787) | (3,531) | (47,328) | (50,858) | Note 4. Impairment tests No impairment indicators were identified for intangible or tangible assets in Therapeutics and Plants CGUs - No impairment indicators were identified for intangible or tangible assets in the Therapeutics and Plants CGUs for the six-month period ended June 30, 2022[86] Note 5. Right-of-use assets Net book value of right-of-use assets decreased due to depreciation and disposals from New York premises sublease Right-of-use Assets (in thousands) | Metric | Jan 1, 2022 | Jun 30, 2022 | | :----------------------------------- | :---------- | :----------- |\n| Net book value | 69,423 | 61,086 | | Additions | 793 | | | Disposal of right-of-use asset | (2,743) | | | Depreciation expense | (4,917) | | | Translation adjustments | (**1,