Starting in 2023, Celyad Oncology is now entirely focused on its new business strategy with one clear objective: help to overcome the current limitations of CAR-T approaches. It plans to do this via (i) strengthening of its research focus centered around NKG2D, B7-H6 and shRNA platforms; (ii) maximizing the value of its IP estate and (iii) driving innovation through strategic collaborations.
Mont-Saint-Guibert, Belgium – Celyad Oncology (Euronext & Nasdaq: CYAD) (the “Company”), a biotechnology company focused on innovative technologies for chimeric antigen receptor (CAR) T-cell therapies, today announces its financial results for the fiscal year 2022 ended December 31, 2022 and provides a business update.
Michel Lussier, Interim Chief Executive Officer of Celyad Oncology, said: “2022 was a crossroad year for Celyad Oncology, with important changes and turning points. We strongly believe all those changes, together with our prior accomplishments, significantly strengthened our position. Having dealt with the 2022 challenges, Celyad has now positively reinvented itself as a leaner, more agile organization. We believe that Celyad is well prepared and has the relevant unique assets and know how to create significant shareholder value in the next few years.”
Operational highlights
- Since late 2022, the Company has implemented a differentiated and innovative strategy, increasing its R&D efforts in areas of expertise where it believes it can leverage the differentiated nature of its platform technology and continue to bolster its intellectual property (IP) estate; and
- The Company will continue to explore options to tackle the major current limitations of CAR T-cell therapies through development of its dual targeting CARs with NKG2D capabilities, B7-H6 targeting immunotherapies and multiplexing approach of short hairpin RNAs (shRNAs).
Upcoming Anticipated Milestones
- The Company will provide an update on its shRNA multiplexing and dual CAR platforms and business development in the first half of 2023;
- The Company will take part in the World Oncology Cell Therapy Congress in Boston, US (25-26 April 2023), as well as in the Immuno-Oncology summit in London (20-22 June 2023);
- The Company anticipates the arrival of a new CEO in the first half of 2023; and
- We anticipate fundraising in the first half of 2023.
Full Year 2022 Financial Review
As of December 31, 2022, the Company had cash and cash equivalents of €12.4 million ($13.3 million).
The Company projects that its existing cash and cash equivalents should be sufficient to fund operating expenses and capital expenditure requirements into the fourth quarter of 2023.
After due consideration of detailed budgets and estimated cash flow forecasts for the years 2023 and 2024, the Company projects that its existing cash and cash equivalents will not be sufficient to fund its estimated operating and capital expenditures over at least the next 12 months from the date that the financial statements are issued.
The Company is currently evaluating different financing options to obtain the required funding to extend the Company’s cash runway beyond 12 months from the date the financial statements are issued.
Key financial figures for full-year 2022, compared with full-year 2021, are summarized below:
| Selected key financial figures (€ millions) | Full year 2022 | Full year 2021 |
| Revenue | – | – |
| Research and development expenses | (18.9) | (20.8) |
| General and administrative expenses | (10.5) | (9.9) |
| Change in fair value of contingent consideration | 14.7 | 0.8 |
| Impairment of Oncology intangible assets | (35.1) | – |
| Other income/(expenses) | 9.0 | 3.4 |
| Operating loss | (40.9) | (26.4) |
| Loss for the period/year | (40.9) | (26.5) |
| Net cash used in operations | (28.0) | (26.6) |
| Treasury position(1) | 12.4 | 30.0 |
(1) “Treasury position” is an alternative performance measure determined by adding Short-term investments and Cash and cash equivalents from the statement of financial position prepared in accordance with IFRS. The purpose of this measure by Management is to identify the level of cash available internally (excluding external sources of financing) within 12 months.
The Company’s license and collaboration agreements generated no revenue in 2022 and in 2021.
Research and Development (R&D) expenses were €18.9 million in 2022 as compared to €20.8 million in 2021, a year-over-year decrease of €1.8 million. The decrease in the Company’s R&D expenses is primarily driven by the Company’s decision to discontinue some of preclinical and in process development costs after the Company’s decision to adopt and implement a new business strategy over the last few months of 2022, as well as a decrease of the expenses associated with share-based payments (non-cash expenses) related to the warrant plan offered to our employees and directors.
General and Administrative (G&A) expenses were €10.5 million in 2022 as compared to €9.9 million in 2021, an increase of €0.6 million. This increase is primarily related to higher insurances costs and consulting fees partially compensated by the decrease of the expenses associated with the share-based payments (non-cash expenses) related to the warrants plan offered to our employees and directors.
The fair value adjustment (€14.7 million) relating to the contingent consideration and other financial liabilities as of December 31, 2022, is mainly driven by the full reversal of the liability. This liability is a result of business combination accounting (IFRS3) which requires the liability to be recorded unless the possibility of any outflow is remote.
This impairment comes as a result of the Company’s strategic shift in focus away from clinical development and the early stage nature of the implementation of the Celyad 2.0 strategy, which involves shifting from an organization focused on clinical development to one prioritizing R&D discovery and the monetization of its intellectual property (IP) portfolio through partnerships, collaborations and license agreements. To date, no effective sublicence contract nor collaboration contract has been entered into, and as a result there is uncertainty as to the timing and amount of associated short, medium and long term revenues.
Given this uncertainty, and per accounting standards, the Company recognizes a full impairment loss on the remaining value of goodwill, In Process Research and Development, and Horizon Discovery’s shRNA platform, resulting in a non-cash impairment of €35.1 million on a consolidated basis for the financial year ended December 31, 2022.
This accounting conclusion, which reflects the Company’s financial situation as of December 31, 2022, does not affect Management’s commitment to continue in its efforts to pursue the potential monetization of the Company’s IP. If and when such a firm sublicense or collaboration contract occurs and hence increases the probability of revenue, the Management will estimate the reversal of the impairment which will be limited so that the carrying amount of the asset does not exceed its recoverable amount along with the remeasurement of the related contingent liability.
The Company’s other income is principally associated with grants received from the Walloon Region mainly in the form of recoverable cash advances (RCAs) and R&D tax credit income as well as the gain on sale of the CTMU activities:
Net loss for the year ended December 31, 2022 was €40.9 million, or €1.81 per share, compared to a net loss of €26.5 million, or €1.70 per share, for the same period in 2021. As noted above, the increase in net loss between periods was primarily due to the non-cash impairment adjustment on the Oncology intangible assets.
Net cash used in operations for the year ended December 31, 2022, which excludes non-cash effects, amounted to €28.0 million, which is in line with net cash used in operations of €26.6 million for the year ended December 31, 2021.
The net assets of the Company as of December 31, 2022, on a BE-GAAP non-consolidated basis, have fallen below half of the Company’s capital. As a result, in accordance with Article 7:228 of the Belgian Code for Companies and Associations, the Board of Directors plans to submit for a vote, at its May 5, 2023 shareholders’ meeting, its business plan including a proposal to continue the Company’s activities. The Board of Directors will publish a detailed report regarding this proposal on or around April 3, 2023, together with the convocation with proposed resolutions for the shareholders’ meeting.
Annual Report 2022
The Annual Report for the year ended December 31, 2022 will be published on March 23, 2023, and will be available on the Company’s website, www.celyad.com. The Company’s statutory auditor, EY Bedrijfsrevisoren/Réviseurs d’Entreprises BV/SRL (EY), has confirmed that the completed audit has not revealed any material misstatement in the consolidated financial statements. EY also confirmed that the accounting data reported in the press release are consistent, in all material respects, with the consolidated financial statements from which it has been derived.
Conference Call and Webcast Details
A conference call will be held on Friday, March 24th at 1:00 p.m. CET / 8:00 a.m. EDT to review the financial and operating results for full year 2022. Please dial into the call five to ten minutes prior to start time using the appropriate number below and ask to join the “Celyad Oncology SA call”:
- United States / International: +1-877-407-9716 or +1-201-493-6779
- Belgium: +32 (0) 800-73-904 (Fixed) or +32 (0) 800-73-566 (Mobile)
Participants may also access to the live webcast link for instant telephone access to the event. Archived recording will be available in the “Events” section of the Celyad website after the event.
Financial Calendar 2023
| May 5th, 2023 | First Quarter 2023 Business Update |
| May 5th, 2023 | Annual shareholders meeting |
| August 3rd, 2023 | First Half 2023 Interim Results |
| November 9th, 2023 | Third Quarter 2023 Business Update |
The financial calendar is communicated on an indicative basis and may be subject to change.
