Cellectis SA (CMVLF) Risk Analysis
Risk Overview Q4, 2021
Risk Change Over Time
No filing history is available.
- Share Price & Shareholder Rights - Risk 1Cellectis S.A. may experience substantial future dilution as a result of future equity offerings by Calyxt.
As of February 23, 2022, Cellectis S.A. owns approximately 56.1% of Calyxt’s 42,718,930 outstanding shares of common stock. On February 23, 2022, Calyxt issued (i) pre-funded warrants (the “Pre-Funded Calyxt Warrants”) to purchase 3,880,000 shares of Calyxt common stock at an exercise price of $0.0001 per share and (ii) common warrants (the “Common Calyxt Warrants” and together with the Pre-Funded Calyxt Warrants, the “Calyxt Warrants”) to purchase 7,760,000 shares of Calyxt common stock at an exercise price of $1.41 per share. Based on Calyxt’s 42,718,930 outstanding common stock as of February 23, 2022, if all Pre-Funded Calyxt Warrants were fully exercised, Cellectis S.A.’s ownership of Calyxt’s outstanding common stock would be reduced to 51.4%, and if all Warrants were fully exercised, Cellectis S.A.’s ownership of Calyxt’s outstanding common stock would be reduced to 44.1% . In order to raise additional capital, Calyxt expects in the future to offer additional shares of Calyxt’s common stock or other securities convertible into or exchangeable for Calyxt’s common stock, including sales of Calyxt’s common stock pursuant to an “at-the-market” offering facility (the “Calyxt ATM Facility”), pursuant to which Calyxt may, from time to time, sell shares of its common stock having an aggregate offering price of up to $50,000,000 through a sales agent, under which approximately $45.4 million of availability remained at January 31, 2022. Any such further issuances by Calyxt would further dilute Cellectis S.A.’s ownership level. Furthermore, if outstanding options are exercised, Cellectis S.A. could experience further dilution. As of December 31, 2021, approximately 11,483,525 shares of Calyxt common stock are either subject to outstanding options, issuable upon vesting of outstanding restricted stock units and performance stock units, or reserved for future issuance under Calyxt’s equity incentive plans. To the extent such equity compensation awards are exercised or otherwise vest, Cellectis’s ownership interest in Calyxt would be further diluted. Certain securities offered and sold by Calyxt in future offerings may be made at prices that are lower than current trading prices and may provide investors in such securities with future rights that are superior to those of existing stockholders, including Cellectis S.A.
- Share Price & Shareholder Rights - Risk 2Certain rights under the Stockholder’s Agreement with Calyxt terminate when Cellectis S.A.’s ownership level falls below 50%.
Pursuant to Cellectis S.A.’s stockholders agreement with Calyxt, Cellectis S.A. has significant contractual rights, which also form part of Calyxt’s certificate of incorporation, for so long as Cellectis S.A. beneficially owns at least 50% (the “Majority-Level Cellectis Rights”) of the then outstanding shares of Calyxt’s common stock, including those described under “ITEM 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions—Transactions with subsidiaries: Calyxt Offerings and Key Arrangements—Stockholders Agreement.” Based on Calyxt’s 42,718,930 outstanding common stock as of February 23, 2022, if all Pre-Funded Calyxt Warrants were fully exercised, Cellectis S.A.’s ownership of Calyxt’s outstanding common stock would be reduced to 51.4%, and if all Warrants were fully exercised, Cellectis S.A.’s ownership of Calyxt’s outstanding common stock would be reduced to 44.1% . Although Cellectis S.A. will continue to retain important rights with respect to Calyxt for so long as it beneficially owns at least 15% of the outstanding shares of Calyxt’s common stock (“Continuing Cellectis Rights”), these Continuing Cellectis Rights are substantially more limited than than the Majority-Level Cellectis Rights. While the Majority-Level Cellectis Rigths require Cellectis S.A. to approve substantially all major decisions made by Calyxt S.A., the Continuing Cellectis Rights include the following more limited rights: • the right to nominate a number of designees for Calyxt’s board of directors representing a majority of the directors, to designate the Chairman of the board of directors and to have at least one designated director serve on each board committee; • information rights with respect to Calyxt; • approval of certain changes to Calyxt’s constitutive documents; • approval of Calyxt’s making of any regular or special dividends; • approval of Calyxt’s commencement of any voluntary bankruptcy proceeding or any consent to any bankruptcy proceeding; • approval of any appointment to or removal from the Calyxt board of directors; and • approval of the consummation of any public or private offering, merger, amalgamation or consolidation of Calyxt, the spinoff of a business of Calyxt, or any sale, conveyance, transfer or other disposition of Calyxt’s assets.
- Accounting & Financial Operations - Risk 3Calyxt has a limited operating history, which makes it difficult to evaluate its current business and prospects and may increase the risk of an investment in Calyxt.
Calyxt is an early-stage synthetic biology company with a limited operating history that to date has been focused primarily on R&D and Calyxt’s previous go-to-market strategies. Calyxt’s limited operating history may make it difficult to evaluate its current business and prospects. Calyxt’s operating results for periods prior to October 2021 reflect results under Calyxt’s prior go-to-market strategies, which involved different areas of focus, different cost structures, and different sources of revenues, which, in combination with its limited operating history, may make it difficult to evaluate its current business and prospects. In implementing Calyxt’s current strategic focus on the development of plant-based synthetic biology products, Calyxt will encounter risks and difficulties frequently experienced by companies in rapidly developing and changing emergent industries, including challenges in developing products, determining appropriate investments of its limited resources, capital raising, and gaining customers for its novel products and innovations. Investment in plant-based synthetic biology product development is a highly speculative endeavor. It entails significant upfront R&D investment to scale Calyxt’s BioFactory production system to sufficient levels to support commercialization, and there is significant risk that Calyxt will not be able to scale Calyxt’s BioFactory to these levels, or at all. To commercialize its products, Calyxt must be successful in using its PCMs to produce target molecules at commercial scale and at a commercially viable cost. If Calyxt cannot achieve commercial scale production levels or commercially viable production economics for enough products to support its business plan, including through establishing and maintaining sufficient commercial scale and volume, it will be unable to achieve a sustainable business. Calyxt’s commercial scale production costs depend on many factors that could have a negative effect on its ability to sell products developed for customers at competitive prices, including, Calyxt’s ability to establish and maintain sufficient commercial scale and volume to attract third party contract manufacturing, referred to as infrastructure partners. There can be no assurance that Calyxt will be able to engage infrastructure partners on acceptable terms, including reasonable costs per unit of production, or at all. If Calyxt is unable to achieve these economies of scale and targeted unit commercial production, its revenues, profitability, and financial condition will be adversely affected.
- Debt & Financing - Risk 4Calyxt’s ability to continue as a going concern will depend on its ability to obtain additional financing which may not be available on acceptable terms or at all. Failure to obtain this necessary capital when needed may force it to delay, limit or terminate its product development efforts or other operations.
As of December 31, 2021, Calyxt had $14.4 million of cash, cash equivalents, and restricted cash. Calyxt’s restricted cash is associated with its equipment financing leases and was $0.6 million as of December 31, 2021, with $0.5 million scheduled to be returned in December 2022. Current liabilities were $4.9 million as of December 31, 2021, and Calyxt used $18.8 million of cash for operating activities for the year then ended. On February 23, 2022 (the February 2022 Offering), Calyxt issued 3,880,000 shares of its common stock, pre-funded warrants to purchase up to 3,880,000 shares of its common stock, and common warrants to purchase up to 7,760,000 shares of its common stock. In the aggregate, Calyxt received net proceeds of $10.0 million, after deducting approximately $0.9 million of underwriting discounts and estimated other offering expenses. Calyxt has incurred losses since its inception and anticipates that it will continue to generate losses for the next several years. Over the longer term and until Calyxt can generate cash flows sufficient to support its operating capital requirements, it expects to finance a portion of future cash needs through (i) cash on hand, (ii) commercialization activities, which may result in various types of revenue streams from (a) future product development agreements and technology licenses, including upfront and milestone payments, annual license fees, and royalties; and (b) product sales from its proprietary BioFactory production system; (iii) government or other third-party funding, which the Company expects to be more readily available if Cellectis were to own less than 50 percent of Calyxt’s common stock, (iv) public or private equity or debt financings, or (v) a combination of the foregoing. However, additional capital may not be available on reasonable terms, if at all. For example, based on Calyxt’s public float, as of the date of the filing of this Annual Report, Calyxt is only permitted to utilize a “shelf” registration statement, including the registration statement under which Calyxt’s Open Market Sale AgreementSM with Jefferies LLC (the “Calyxt ATM Facility”), is operated, subject to Instruction I.B.6 to Form S-3, which is referred to as the “baby shelf” rules. For so long as Calyxt’s public float is less than $75,000,000, it may not sell more than the equivalent of one-third of its public float during any 12 consecutive months pursuant to the baby shelf rules. Although alternative public and private transaction structures are expected to be available, these may require additional time and cost, may impose operational restrictions on Calyxt, and may not be available on attractive terms. Calyxt’s ability to continue as a going concern will depend on its ability to obtain additional public or private equity or debt financing, obtain government or private grants and other similar types of funding, attain further operating efficiencies, reduce or contain expenditures, and, ultimately, to generate revenue. Calyxt’s cash, cash equivalents, and restricted cash as of December 31, 2021, considering its plan to continue to invest in the growth and scaling of its BioFactory production system and AIML capabilities and the $10.0 million of net proceeds from the February 2022 Offering, is sufficient to fund its operations into late 2022. Calyxt’s management has concluded there is substantial doubt regarding its ability to continue as a going concern because it anticipates that it will need to raise additional capital to support this business plan for a period of 12 months or more from the date of this filing. If Calyxt is unable to raise additional capital in a sufficient amount or on acceptable terms, management may be required to implement various cost reduction and other cash-focused measures to manage liquidity and Calyxt may have to significantly delay, scale back, or cease operations, in part or in full. If Calyxt raises additional funds through the issuance of additional debt or equity securities, it could result in dilution to its existing stockholders and increased fixed payment obligations, and these securities may have rights senior to those of Calyxt’s shares of common stock. Any of these events could significantly harm Calyxt’s business, financial condition, and prospects.
- Corporate Activity and Growth - Risk 5If Calyxt cannot enter into new customer partnerships and successfully execute on the underlying product development projects to bring a customer’s plant-based chemistry to commercial scale production and ultimately sell them the product, its business will be adversely affected.
Calyxt’s approach to product development is customer demand-driven and as a result, its success depends on the number, size, and scope of customer collaborations. Calyxt’s ability to win new business depends on many factors, including its reputation in the market, the differentiation of its PlantSpring technology platform and BioFactory production system relative to alternatives, the pricing and efficiency of its offerings relative to alternatives, its financial stability, and its technical capabilities. If Calyxt fails to establish a position of strength in any of these factors, its ability to either sign new customer agreements may suffer and this could adversely affect its prospects. Calyxt engages in conversations about collaborations with potential customers regularly. Calyxt may spend considerable time and money engaging in these conversations and feasibility assessments, including understanding the technical specifications of a particular plant-based chemistry, customer concerns and limitations, and the legal or regulatory landscape of a potential program or offering, which may not result in a commercial agreement. Even if an agreement is reached, the resulting relationship may not be successful for many reasons, including Calyxt’s inability to complete the development of a plant-based chemistry to the customers’ specifications or within the customers’ time frames, or unsuccessful development or commercialization of products or processes by Calyxt’s customers. In such circumstances, Calyxt’s revenues from such an agreement might be meaningfully reduced. Development of new or improved plant-based synthetic biology products that meet customer demand-driven specifications involves risks of failure inherent in the deployment of innovative and complex emerging technologies. Accordingly, if Calyxt or its infrastructure partners experience any significant delays in the development of new products or if new products do not meet customer specifications, Calyxt’s business, operating results, and financial condition would be adversely affected.
- Corporate Activity and Growth - Risk 6Changes to Calyxt’s strategic business focus have placed significant demands on Calyxt’s management and Calyxt’s infrastructure.
Since Calyxt’s initial public offering, the strategic focus of the business has undergone changes. Most recently, in October 2021, Calyxt announced the launch of a strategic initiative which focused it on engineering synthetic biology solutions. The changes to Calyxt’s strategic focus has placed, and may continue to place, significant demands on Calyxt’s management and its operational and financial infrastructure. Managing a significant change in business focus requires significant expenditures and allocation of valuable management resources. If Calyxt fails to achieve the necessary level of efficiency in its organization as it evolves, its business, financial condition and results of operations would be adversely impacted.
Risk Highlights Q4, 2021
Risk Word Cloud
Risk Factors Full Breakdown - Total Risks 102
- Innovation / R&D - Risk 1ChangedAlthough we may seek a regenerative medicine advanced therapy (RMAT) designation, a breakthrough therapy designation and/or priority medicines (PRIME) support for our product candidates, there is no assurance that such designations will be granted or, if granted that they will lead to a faster development or regulatory review or approval process.
We may seek special designations for some or all of our product candidates, including RMAT designation or breakthrough therapy designation from the FDA, or PRIME support from the EMA. A drug is eligible for RMAT designation if, (i) the drug is a regenerative medicine therapy, which is defined as a cell therapy, therapeutic tissue engineering product, human cell and tissue product, or any combination product using such therapies or products, except for those regulated solely under Section 361 of the Public Health Service Act and part 1271 of Title 21, Code of Federal Regulations; (ii) the drug is intended to treat, modify, reverse, or cure a serious or life-threatening disease or condition; and (iii) preliminary clinical evidence indicates that the drug has the potential to address unmet medical needs for such disease or condition. A breakthrough therapy is defined as a product that is intended, alone or in combination with one or more other drugs, to treat a serious or life-threatening disease or condition, and preliminary clinical evidence indicates that the product may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. The EMA’s PRIME scheme focuses on medicines that may offer a major therapeutic advantage over existing treatments, or benefit patients without treatment options. To be accepted for PRIME support, a medicine has to show its potential to benefit patients with unmet medical needs based on early clinical data. Through PRIME, the EMA offers early, proactive and enhanced support to drug developers to optimize the generation of robust data on a therapy’s benefits and risks and enable accelerated assessment of medicinal products applications. For product candidates that obtain an RMAT, breakthrough therapy or are accepted for PRIME support, interaction and communication between the FDA or the EMA, as applicable, and the sponsor of the trial can help to identify the most efficient path for clinical development. However, the granting of such designations and support, is within the discretion of the FDA or the EMA, respectively. Accordingly, even if we believe, after completing early clinical trials, that one of our product candidates meets the criteria for RMAT, breakthrough therapy, or PRIME support, the FDA or EMA, as the case may be, may disagree and instead decide not to grant such designation or support. In any event, the receipt of RMAT, breakthrough therapy or PRIME support for a product candidate may not result in a faster development process, review or approval compared to products considered for approval under conventional regulatory procedures and does not assure ultimate regulatory approval. In addition, even if one or more of our product candidates qualify for RMAT, breakthrough therapy or PRIME support, the FDA or EMA, as the case may be, may later decide that such product candidates no longer meet the conditions for qualification.
- Innovation / R&D - Risk 2AddedIf Calyxt’s technology licensees are delayed or unsuccessful in their development activities associated with their license of the technology, its financial results could be affected.
Calyxt expects to license its technology and its historically developed seed-trait product candidates for traditional agriculture to third parties. If Calyxt’s licensees are delayed, are unsuccessful in their development and commercialization efforts, or if they fail to devote sufficient time and resources to support the marketing and selling efforts of products developed using the licenses of Calyxt’s technology, it may not receive milestone and/or royalty payments as expected, and its financial results could be harmed. Further, if these licensee customers fail to market the licensed seed-trait products or products developed with Calyxt’s licensed technology at prices that will achieve or sustain market acceptance for those products, Calyxt’s future royalty revenues could be further harmed. If a product is commercialized by a licensee, its performance may also be impact by numerous risks, including competition from alternative products, product defects, changes in end-consumer demand, changes in law or regulation, or changes in economic conditions. Moreover, licensees have significant discretion in determining the efforts and resources applied to commercializing products utilizing the plant-based chemistries developed by Calyxt, and they may not commit sufficient resources to successfully advance a product candidate or achieve commercial success. Disputes may arise with licensees that cause the delay or termination of commercial contracts for current or future products or that results in costly litigation or arbitration that diverts management attention and resources.
- Innovation / R&D - Risk 3AddedAny outdoor agriculture product development agreements that Calyxt may enter in the future may be delayed or may be unsuccessful, which could adversely affect its financial results.
Calyxt may opportunistically enter into product development arrangements with third parties for the development and commercialization of certain outdoor agriculture seed traits. For example, in the third quarter of 2021, Calyxt announced that it had entered into a research collaboration with a global food ingredient manufacturer based in Asia to develop an improved soybean capable of producing an oil as a commercial alternative to palm oil. To the extent Calyxt enters into such product development agreements, their success will depend heavily on the efforts and activities of its customer’s commercialization efforts and as a result its ability to achieve milestone payments or generate royalties will not be within its direct control. If an outdoor agriculture product is commercialized by a licensee, its performance may also be impacted by numerous risks, including: • Adverse weather conditions, natural disasters, crop disease, pests and other natural conditions; • Climate change that may cause changes in weather patterns and conditions, including changes in rainfall and storm patterns and intensities, water shortages, changes in sea levels, and changes in temperature levels; • Licensee field trials may be unsuccessful; • Licensee products, and food containing those products, may fail to meet standards established by third-party non-GMO verification organizations; • The unintended presence of Calyxt’s traits in other products or plants may have a negative effect on the licensee’s operations.
- Innovation / R&D - Risk 4AddedCalyxt’s operational and financial success depends on its ability to successfully deliver synthetic biology solutions for an expanded group of end markets, which is subject to a variety of risks and uncertainties.
Since Calyxt’s inception, it has deployed its technology platform toward delivering plant-based innovations and solutions, primarily to the agriculture end market. In October 2021, Calyxt announced a strategic initiative to focus it on engineering plant-based synthetic biology solutions across an expanded group of end markets, including Calyxt’s initial target end-markets—the cosmeceutical, nutraceutical and pharmaceutical markets—as well as other potential end markets, including advanced materials and chemical industries, in addition to the agriculture end market. This expanded and diversified focus places significant demands on Calyxt’s management, requires adaptations to Calyxt’s operational infrastructure, and necessitates incremental capital expenditures. If Calyxt fails to effectively and efficiently manage and implement the strategic initiative, its business, financial condition, and results of operations would be adversely impacted. Calyxt would face similar adverse impacts if it is unable to differentiate its offerings and capabilities from competitors in the synthetic biology industry, who may have a more established position in the synthetic biology industry, greater financial and operational resources than Calyxt, and other competitive advantages over Calyxt, or if Calyxt is otherwise not successful in marketing its offerings and capabilities to new target customers. In addition, to the extent Calyxt faces technological and other challenges, including unanticipated costs or delays in the development of compounds intended to be produced using Calyxt’s BioFactory production system, challenges adapting its technology platform for specific customer-driven plant-based chemistry needs, or the inability to effectively or efficiently scale production, Calyxt’s business, financial condition and results of operations would be adversely impacted. The AIML capabilities that Calyxt is developing for its PlantSpring platform remain in the early stages of development, and their implementation and effectiveness could be adversely affected by flawed algorithms, insufficient datasets, or errors resulting from human intervention. Further, Calyxt’s BioFactory production system and Calyxt’s ability to produce plant-based chemistries remain relatively unproven and may not be successful at scale or at all. The market, including customers and potential investors, may be skeptical of the viability and benefits of Calyxt’s PlantSpring technology platform, its AIML capabilities, and its BioFactory production system because they are based on a novel approach and the adoption of complex and emerging technologies. There can be no assurance that Calyxt’s technology will be understood, approved, or accepted by customers, regulators, and potential investors or that Calyxt will be able to sell its services and products profitably at competitive prices and with features sufficient to establish demand. If potential investors are skeptical of Calyxt’s technology, its ability to raise capital and the value of its common stock may be adversely affected. Moreover, because of the novelty and complexity of Calyxt’s PlantSpring platform and BioFactory production system, achieving broad commercial success may require that Calyxt overcomes potential customer skepticism regarding its capabilities, particularly in light of the historical challenges of scaling production in the field of synthetic biology. If Calyxt does not achieve the technical specifications required by its customers or successfully manage new product development processes, or if development work is not performed according to schedule, then Calyxt’s revenue growth from new pipeline products may be prevented or delayed, and Calyxt’s business and operating results may be harmed. In order for novel products from Calyxt’s PlantSpring technology platform and its BioFactory production system to be successfully commercialized, it will be important for Calyxt to establish relationships not only with customers, but also with their suppliers in order to gain visibility into market trends, feature and specification demands, and manufacturing, regulatory, and distribution challenges. If Calyxt is unable to convince potential customers or their suppliers of the value of its synthetic biology products, Calyxt will not be successful in entering these markets and its business and results of operations will be adversely affected.
- Innovation / R&D - Risk 5Our therapeutic product candidate development programs are in various phases of development and may be unsuccessful.
Our therapeutic product candidates are in various phases of development. At each stage of development, there is typically an extremely high rate of attrition from the failure of product candidates advancing to subsequent stages of development. Because some of our product candidates are in the early stages of discovery or pre-clinical development, there can be no assurance that our research and development activities will result in these product candidates advancing into clinical development. Product candidates in these development phases undergo testing in animal studies, and the results from these animal studies may not be sufficiently compelling to warrant further advancement. Moreover, even if results from animal studies are positive, such results are not necessarily predictive of positive results in clinical studies. Even where product candidates do progress into and through clinical studies, these product candidates may fail to show the desired safety and efficacy in clinical development despite demonstrating positive preliminary clinical data and/or results in animal studies. Because of the early stages of our currently ongoing clinical studies, the safety, specificity and clinical benefits of our clinical-stage product candidates have not yet been demonstrated, and we cannot assure you that the results of any clinical trials will demonstrate the value and efficacy of our platform. The results of clinical studies are subject to a variety of factors, and there can be no assurance that any product candidate will advance to regulatory approval, be approved by applicable regulatory agencies, or be successfully commercialized. Although there are a large number of drugs and biologics in development globally, only a very small percentage obtain regulatory approval, even fewer are approved for commercialization, and only a small number of these achieve widespread physician and consumer acceptance. Accordingly, despite expending significant resources in pursuit of their development, our product candidates may never achieve commercial success, and any time, effort and financial resources we expend on the product candidate development programs that we pursue may adversely affect our ability to develop and commercialize other product candidates.
- Innovation / R&D - Risk 6Initial, interim and preliminary data from our clinical trials that we announce or publish from time to time may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data.
From time to time, we or our strategic licensee partners may publish initial, interim or preliminary data from clinical studies. Interim and preliminary data from clinical trials are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data become available. For instance, while we and our strategic licensees have published preliminary data from on-going clinical studies, because such data is preliminary in nature, has not established statistical significance, and should not be viewed as predictive of the ultimate success of the respective clinical trials. It is possible that such results will not continue or may not be repeated in ongoing or future clinical trials for the same product candidates or in clinical trials for other allogeneic Chimeric Antigen Receptor T-cells (“UCART”) product candidates. Preliminary data also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary data we previously published. As a result, initial, interim and preliminary data should be viewed with caution until the final data are available. Adverse differences between initial, preliminary or interim data and final data could significantly harm our business prospects.
- Innovation / R&D - Risk 7We may encounter substantial delays in our clinical trials, or we may fail to demonstrate safety and efficacy to the satisfaction of applicable regulatory authorities.
Clinical trials are long, expensive and unpredictable processes that can be subject to extensive delays. We cannot guarantee that any clinical trials will be conducted as planned or completed on schedule, if at all. It will take several years to complete the clinical development necessary to obtain adequate data to file for a marketing authorization or to commercialize a product candidate, and failure can occur at any stage. Positive interim or preliminary results of clinical trials do not necessarily predict positive final results, and success in early clinical trials does not ensure that later clinical trials will be successful. Product candidates in later stages of clinical trials may still fail to show the desired safety and efficacy profile despite having successfully progressed through initial clinical trials. A number of pharmaceutical and biopharmaceutical companies have suffered significant setbacks—lack of efficacy, insufficient durability of efficacy or unacceptable safety issues (including a number of patient deaths in CAR-T trials conducted in the United States)—in advanced clinical trials, even after promising results in earlier trials. We cannot be certain that our product candidates will not face similar setbacks. An unfavorable outcome in one or more clinical trials would be a major setback for our product candidates and for us and may require us or our strategic licensees to delay, reduce or re-define the scope of, or eliminate one or more product candidate development programs, any of which could have a material adverse effect on our business, financial condition and prospects. In addition, a number of events, including any of the following, could delay clinical trials, negatively impact the ability to obtain regulatory approval for, and to market and sell, a particular product candidate, or result in suspension or termination of a clinical trial: • conditions imposed by the FDA or any foreign regulatory authority regarding the scope or design of clinical trials; • inability to generate sufficient preclinical, toxicology or other in vivo or in vitro data to support initiation of clinical studies; • delays in obtaining, or the inability to obtain, regulatory agency approval for the conduct of the clinical trials or required approvals from institutional review boards, or IRBs, or other reviewing entities at clinical sites selected for participation in our clinical trials; • the identification of flaws in the design of a clinical trial; • changes in regulatory requirements and guidance that necessitate amendments to clinical trial protocols; • delays in sufficiently developing, characterizing or controlling manufacturing processes suitable for clinical trials; • insufficient supply or deficient quality of the product candidates or other materials necessary to conduct the clinical trials, including as a result of manufacturing issues at our in-house manufacturing facilities; ; • difficulty in sourcing healthy donor material of sufficient quality and in sufficient quantity to meet our development needs; • lower-than-anticipated enrollment and retention rate of subjects in clinical trials for a variety of reasons, including size of patient population, sites selection, nature of trial protocol, the availability of approved effective treatments for the relevant disease and competition from other clinical trial programs for similar indications and competition from approved products; • delays in reaching agreement on acceptable terms with prospective contract research organizations (CROs) and clinical study sites and obtaining required institutional review board (IRB) approval at each clinical study site; • the placing of a clinical hold on our strategic licensees’ clinical trials—for example, clinical holds were placed on our AMELI-01 Study in September 2018 and on our MELANI-01 Study in July 2020 and on all of our strategic licensee Allogene’s AlloCAR T clinical trials in October 2021 and remained in place until the FDA permitted these trials to restart in November 2018, November 2020 and January 2022, respectively; • unfavorable interpretations by FDA or similar foreign regulatory authorities of interim data; • determinations by the FDA or similar foreign regulatory authorities that a clinical trial protocol is deficient in design to meet its stated objectives; • failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols; • serious and unexpected safety issues, including drug-related side effects experienced by patients in clinical trials; • failure of our or our strategic licensees’ third-party contractors to meet their contractual obligations in a timely manner; or • lack of, or failure to, demonstrate efficacy of our products candidate.
- Innovation / R&D - Risk 8Our product candidates are based on a novel technology, which makes it difficult to predict the time and cost of product candidate development and obtaining regulatory approval.
We have concentrated our research, development and manufacturing efforts on our gene-edited CAR T-cell immunotherapy product candidates, and our future success depends on the successful development of this therapeutic approach. We are in the early stages of developing our UCART product candidates’ platform and there can be no assurance that any development problems we experience in the future will not cause significant delays or unanticipated costs, or that such development problems can be overcome. We may also experience delays in developing a sustainable, reproducible and scalable manufacturing process, or effectively implementing such process at our new manufacturing facilities, which may prevent us from completing our clinical studies or commercializing our products on a timely or profitable basis, if at all. Our expectations with regard to the scalability and cost of manufacturing may change significantly as we further progress the development of our product candidates. In addition, the clinical study requirements of the FDA, EMA and other regulatory agencies and the criteria these regulators use to determine the safety and efficacy of a product candidate are determined according to the type, complexity, novelty and intended use and market of the potential products. The regulatory approval process for novel product candidates such as ours can be more complex and consequently more expensive and take longer than for other, better known or extensively studied pharmaceutical or other product candidates. Approvals by the European Commission, on the basis of the opinion issued by the EMA, and FDA for existing autologous CAR T-cell therapies may not be indicative of what these regulators may require for approval of our therapies. More generally, approvals by any regulatory agency may not be indicative of what any other regulatory agency may require for approval or what such regulatory agencies may require for approval in connection with new product candidates.
- Innovation / R&D - Risk 9Difficulty enrolling patients could delay or prevent clinical studies of product candidates.
Identifying and qualifying patients to participate in clinical studies is critical to the success of the relevant product candidate. The timing of clinical studies depends, in part, on the speed of recruitment of patients to participate in testing such product candidates as well as completion of required follow-up periods. We or those evaluating product candidates pursuant to licenses from us may not be able to identify, recruit and enroll a sufficient number of patients or patients with required or desired characteristics to achieve the objectives of the study. If patients are unable or unwilling to participate in such studies, the timeline for recruiting patients, conducting studies and obtaining regulatory approval of potential products may be delayed. These delays could result in increased costs, delays in advancing our product candidates, delays in testing the effectiveness of our technology, failure to meet study endpoints or objectives or termination of the clinical studies altogether. In addition, competition among clinical trials in the same therapeutic areas may reduce the number and types of patients available to participate in our or our strategic licensees’ clinical trials. Because the number of qualified clinical investigators is limited, we expect to conduct some clinical trials at the same sites as our competitors, which may reduce the number of patients available for our clinical trials at such sites. Certain of our competitors may have greater success than us in enrolling patients as a result of a variety of factors. Moreover, because of the novel nature of our product candidates, potential patients and their doctors may be less likely to enroll in our clinical trials relative to clinical trials for more conventional therapies. Patient enrollment is affected by a variety of factors, including: • severity of the disease under investigation; • incidence and prevalence of the disease under investigation; • design of the clinical trial protocol; • size and nature of the patient population; • eligibility criteria for the trial in question; • perceived risks and benefits of the product candidate under trial, including relative to other available therapies; • proximity and availability of clinical trial sites for prospective patients; • availability of competing therapies and clinical trials; • patient referral practices of physicians; • our ability to monitor patients adequately during and after treatment, and • ability of the clinical sites to have sufficient resources and avoid any backlogs. If we or our strategic licensees’ are unable to enroll a sufficient number of patients to conduct clinical studies as planned, it may be necessary to delay, limit or terminate such clinical studies, which could have a material adverse effect on our business and financial condition. Even if we are able to enroll a sufficient number of patients in our clinical trials, delays in patient enrollment may result in increased costs or may affect the timing or outcome of the planned clinical trials, which could prevent completion of these trials and adversely affect our ability to advance the development of the product candidates we develop.
- Innovation / R&D - Risk 10Our product candidates may cause undesirable side effects that could halt their clinical development, delay or prevent their regulatory approval, limit their commercial potential, or result in other significant negative consequences.
Undesirable or unacceptable side effects caused by our product candidates could cause us or regulatory authorities to interrupt, delay, suspend or halt clinical trials, could result in the delay or denial of regulatory approval by the FDA or other comparable foreign regulatory authorities, or could lead to a more restrictive label for our product candidates. Our product candidates have only had limited clinical trial application, and results of our clinical trials could reveal a high and unacceptable incidence and severity of side effects or unexpected characteristics. Approved autologous CAR T therapies and those under development have shown frequent rates of CRS and neurotoxicity, and adverse events have resulted in the death of patients. We expect similar adverse events for allogeneic CAR T product candidates. Our allogeneic CAR T cell product candidates undergo gene engineering by using lentivirus and TALEN nucleases that can cause insertion, deletion, or chromosomal translocation. These changes can cause allogeneic CAR T cells to cause adverse events. In addition, the allogeneic nature of our CAR T cell product candidates may cause unique adverse events related to the differences between the donor material used to manufacture the product candidates and patients, such as GvHD. In the currently ongoing UCART product candidate clinical studies, the most common severe or life-threatening adverse events include CRS, cytopenia and infections. There have also been patient deaths in the UCART19 Studies, the AMELI-01 Study and the MELANI-01 Study, including deaths attributable to UCART immuno-therapy. In the future, patients may experience additional severe adverse events related to UCART product candidates, some of which may result in death. Additionally, as more patients are included in our and our strategic licensee’s clinical trials, previously less common, side effects may also emerge. Additional UCART product candidates that enter clinical development may also cause similar or more severe toxicities, particularly if such product candidates require higher dose levels or are administered to higher risk patient populations. Any undesirable side effects could cause us, our strategic licensees or regulatory authorities to interrupt, delay, halt or terminate clinical trials and could result in a more restrictive label or the delay or denial of regulatory approval by the FDA or other regulatory authorities. Treatment-related side effects could also adversely affect patient recruitment or the ability of enrolled subjects to complete the trial or result in potential product liability claims. In addition, certain side effects of UCART product candidates are not normally encountered in the general patient population or by medical personnel familiar with more conventional therapies. Although we provide training to medical personnel involved in clinical trials for our product candidates, failure of medical personnel to recognize or manage potential side effects of our product candidates could exacerbate adverse outcomes and potentially result in patient deaths. Any of these occurrences could prevent our product candidates from achieving or maintaining market acceptance and could increase the cost of development and commercialization, and may harm our business, financial condition and prospects significantly.
- Innovation / R&D - Risk 11The administration of lymphodepletion agents, including the incorporation of an anti-CD52 monoclonal antibody, prior to administration of UCART product candidates may increase the risk of adverse side effects.
In certain of our clinical trials, we utilize an anti-CD52 monoclonal antibody as part of a lymphodepletion regimen to be infused prior to infusing patients with our product candidates. We believe that using an anti-CD52 antibody in a lymphodepletion regimen may delay rejection of our allogeneic T cells by the patient’s immune system, and therefore improve window of persistence during which such engineered allogeneic T cells can expand and actively target and destroy cancer cells. However, the anti-CD52 antibody may not have the benefits that we anticipate and could result in adverse effects or confounding other adverse effects. For instance, our lymphodepletion regimen, including the use of an anti-CD52 antibody, will cause a transient and sometimes prolonged lymphocyte suppression, which is associated with an increased risk of infection. We currently use alemtuzumab, a monoclonal antibody that binds CD52, as the anti-CD52 antibody for our lymphodepletion regimen. Alemtuzumab is known to have risk of causing certain adverse events. On November 14, 2019, the EMA completed a pharmacovigilance review of alemtuzumab in the context of the treatment of multiple sclerosis (Lemtrada®) following reports of immune-related disorders and cardiovascular disorders, including fatal cases. The EMA has recommended that alemtuzumab only be used to treat relapsing-remitting multiple sclerosis if the disease is highly active despite treatment with at least one disease-modifying therapy, or If the disease is worsening rapidly. Also, the EMA recommended that alemtuzumab should not be used in patients with certain heart, circulation or bleeding disorders or in patients who have autoimmune disorders other than multiple sclerosis. The EMA also recommended that alemtuzumab only be given in a hospital with ready access to intensive care facilities and specialists who can manage serious adverse reactions. Similarly, because of the risk of autoimmunity, infusion reactions, and malignancies, Lemtrada®is available in the United States only through restricted distribution under an FDA-approved and mandated Risk Evaluation and Mitigation Strategy (REMS) Program. We are reviewing EMA’s and FDA’s recommendations with respect to the use of alemtuzumab in our clinical trials, which are currently conducted at specialized centers. If the EMA, FDA or other regulatory agencies further limit the use of alemtuzumab or anti-CD52 antibodies, our clinical programs would be adversely affected. On May 11, 2021, we entered into a partnership agreement and a supply agreement with Sanofi regarding alemtuzumab to be used as part of the lymphodepleting regimen in certain Cellectis sponsored UCART clinical trials. As part of the agreement, Sanofi will supply alemtuzumab to support Cellectis’ clinical studies and the parties agreed to enter into discussions to execute an agreement for the commercial supply of alemtuzumab under pre-agreed financial conditions. We also continue to explore sourcing of alternative anti-CD52 antibodies for use in our clinical trials or for commercial purposes. If we are unable to successfully secure an adequate source of anti-CD52 or to do so in the timeframe we anticipate, or if regulatory authorities do not approve the use of the anti-CD52 in combination with our UCART product candidates, our UCART product candidates may be less effective, which could result in delays in our product development efforts and/or the commercial potential of our product candidates.
- Innovation / R&D - Risk 12If the product candidates we develop do not achieve projected development and commercialization in the announced or expected timeframes, the further development or commercialization of our product candidates may be delayed, and our business may be harmed.
We sometimes estimate, or may in the future estimate, for planning purposes, the timing of the accomplishment of various scientific, clinical, manufacturing, regulatory and other product development objectives. These milestones may include our expectations regarding the commencement or completion of scientific studies, clinical trials, the submission of regulatory filings, the receipt of marketing approval or commercialization objectives. The achievement of many of these milestones may be outside of our control. All of these milestones are based on a variety of assumptions, including assumptions regarding capital resources and constraints, progress of development activities, and the receipt of key regulatory approvals or actions, any of which may cause the timing of achievement of the milestones to vary considerably from our estimates. If we or our strategic licensees fail to achieve announced milestones in the expected timeframes, the commercialization of the product candidates may be delayed, our credibility may be undermined, and our business and results of operations may be harmed.
- Innovation / R&D - Risk 13We plan to seek orphan drug status for some or all of our product candidates, but we may be unable to obtain such designations or to maintain the benefits associated with such status, which may cause our revenue, if any, to be reduced.
We plan to seek orphan drug designation for some or all of our product candidates in specific orphan indications in which there is a medically plausible basis for the use of these products. Under the Orphan Drug Act, the FDA may grant orphan designation to a drug or biologic intended to treat a rare disease or condition, defined as a disease or condition with a patient population of fewer than 200,000 in the United States, or a patient population greater than 200,000 in the United States when there is no reasonable expectation that the cost of developing and making available the drug or biologic in the United States will be recovered from sales in the United States for that drug or biologic. Orphan drug designation must be requested before submitting a BLA. In the United States, orphan drug designation entitles a party to financial incentives such as opportunities for grant funding towards clinical trial costs, tax advantages, and user-fee waivers. After the FDA grants orphan drug designation, the generic identity of the drug and its potential orphan use are disclosed publicly by the FDA. Orphan drug designation does not convey any advantage in, or shorten the duration of, the regulatory review and approval process. Although we intend to seek orphan product designation for some or all of our product candidates, we may never receive such designations. If a product that has orphan drug designation subsequently receives the first FDA approval for a particular active ingredient for the disease for which it has such designation, the FDA may grant orphan product exclusivity, which means that the FDA may not approve any other applications, including a BLA, to market the same biologic for the same indication for seven years, except in limited circumstances such as a showing of clinical superiority of the subsequent product to the product with orphan product exclusivity or if FDA finds that the holder of the orphan drug exclusivity has not shown that it can assure the availability of sufficient quantities of the orphan drug to meet the needs of patients with the disease or condition for which the drug was designated. Even if we obtain orphan drug designation for a product candidate, we may not be the first to obtain marketing approval for any particular orphan indication due to the uncertainties associated with developing pharmaceutical products. Exclusive marketing rights in the United States may be limited if we seek approval for an indication broader than the orphan designated indication and may be lost if the FDA later determines that the request for designation was materially defective, the disease or condition exceeded the population threshold, or if the manufacturer is unable to assure sufficient quantities of the product to meet the needs of patients with the rare disease or condition. Further, even if we obtain orphan drug exclusivity for a product, that exclusivity may not effectively protect the product from competition because different drugs with different active moieties can be approved for the same condition. Even after an orphan drug is approved, the FDA can subsequently approve the same drug with the same active moiety for the same condition if the FDA concludes that the later drug is safer, more effective, or makes a major contribution to patient care. Furthermore, the FDA can waive orphan exclusivity if we are unable to manufacture sufficient supply of our product. Similarly, in EU, a medicinal product may receive orphan designation under Article 3 of Regulation (EC) No 141/2000 (Orphan Regulation). This applies to products that are intended for a life-threatening or chronically debilitating condition and either (a) such condition affects no more than five in 10,000 persons in the EU when the application is made, or (b) the product, without the benefits derived from orphan status, would unlikely generate sufficient return in the EU to justify the necessary investment. Moreover, in order to obtain orphan designation in the EU it is necessary to demonstrate that there exists no satisfactory method of diagnosis, prevention or treatment of such condition authorized for marketing in the EU, or if such a method exists, the product will be of significant benefit to those affected by the condition. Orphan designation is lost if it is established that the product no longer meets the orphan criteria before market authorization is granted. In EU, orphan medicinal products are eligible for financial incentives such as reduction of fees or fee waivers and applicants can benefit from specific regulatory assistance and scientific advice. Products receiving orphan designation in the EU can receive ten years of market exclusivity from the date on which they are granted a market authorization in the EU, during which time no similar medicinal product for the same indication may be placed on the market. The period of market exclusivity is extended by two years for orphan drug products that have also complied with an agreed Pediatric Investigation Plan (Article 37 of the Orphan Regulation). However, the 10-year market exclusivity may be reduced to six years if, at the end of the fifth year, it is established that the product no longer meets the criteria for orphan designation, i.e. the prevalence of the condition has increased above the orphan designation threshold or it is judged that the product is sufficiently profitable so as not to justify maintenance of market exclusivity. Additionally, marketing authorization may be granted to a similar product for the same therapeutic indication at any time if: • the second applicant can establish that its product, although similar to the orphan medicinal product already authorized, is safer, more effective or otherwise clinically superior; • the holder of the marketing authorization of the orphan medicinal product consents to a second orphan medicinal product application; or • the holder of the marketing authorization of the orphan medicinal product cannot supply sufficient quantities of the orphan medicinal product. If we do not obtain, or if – despite having obtained it - we subsequently loose, orphan exclusivity for our products that do not have broad patent protection, our competitors may sell the same drug to treat the same condition and our revenues will be reduced.
See a full breakdown of risk according to category and subcategory. The list starts with the category with the most risk. Click on subcategories to read relevant extracts from the most recent report.