Exhibit 99.1
As previously disclosed on February 2, 2020, Orgenesis Inc. ("Orgenesis") entered into a Stock Purchase Agreement (the "Purchase Agreement") with GPP-II Masthercell LLC ("GPP" and together with Orgenesis, the "Sellers"), Masthercell Global Inc. ("Masthercell") and Catalent Pharma Solutions, Inc. (the "Buyer"). Pursuant to the terms and conditions of the Purchase Agreement, Sellers agreed to sell 100% of the outstanding equity interests of Masthercell to Buyer (the "Sale") for an aggregate nominal purchase price of $315 million, subject to customary adjustments. The Company determined that the Masthercell business met the criteria to be classified as a discontinued operation.
On February 10, 2020, the Sale was consummated in accordance with the terms of the Purchase Agreement. After accounting for GPP's liquidation preference and equity stake in Masthercell as well as SFPI - FPIM's interest in MaSTherCell S.A., distributions to Masthercell option holders and transaction costs, Orgenesis received approximately $126.7 million at the closing of the Sale transaction, of which $7.2 million was used for the repayment of intercompany loans and payables. Included in this amount is $1.6 million which was deposited into an escrow account in connection with potential adjustments based on working capital and indebtedness at closing.
Financial Statements and Exhibits- Pro forma financial information
The following unaudited pro forma condensed financial statements giving effect to the Sale are attached hereto:
• Unaudited pro forma condensed balance sheet as of December 31, 2019;
• Unaudited pro forma condensed statement of operations for the year ended December 31, 2019;
• Unaudited pro forma condensed statement of operations for the transition month December 2018;
• Unaudited pro forma condensed statement of operations for the year-ended November 30, 2018.
Unaudited Pro Forma Condensed Balance Sheet
(Dollars in Thousands, except for share amounts)
| Historical | Pro Forma Adjustments | |||||||||||
| As of | As of | As of | ||||||||||
| December 31, | December 31, | December 31, | ||||||||||
| 2019 | 2019 | 2019 | ||||||||||
| Orgenesis | Sale of Masthercell Note 2(c) | Notes 2(a)+(b) | Pro Forma | |||||||||
| Assets | ||||||||||||
| CURRENT ASSETS: | ||||||||||||
| Cash and cash equivalents | $ | 11,388 | $ | (11,281 | ) | $ | 117,913 | $ | 118,020 | |||
| Restricted Cash | 653 | (186 | ) | 1,555 | 2,022 | |||||||
| Accounts receivable, net | 8,485 | (6,654 | ) | - | 1,831 | |||||||
| Intercompany accounts receivables | - | (2,559 | ) | 2,559 | - | |||||||
| Prepaid expenses and other receivables | 1,227 | (845 | ) | - | 382 | |||||||
| Grants receivable | 2,183 | (1,979 | ) | - | 204 | |||||||
| Inventory | 2,043 | (1,907 | ) | - | 136 | |||||||
| Total current assets | $ | 25,979 | $ | (25,411 | ) | $ | 122,027 | $ | 122,595 | |||
| NON-CURRENT ASSETS: | ||||||||||||
| Deposits | 625 | (326 | ) | - | 299 | |||||||
| Loans to related party | 2,623 | - | - | 2,623 | ||||||||
| Other intercompany receivables | - | (2,247 | ) | 2,247 | - | |||||||
| Property, plant and equipment, net | 24,454 | (22,149 | ) | - | 2,305 | |||||||
| Intangible assets, net | 14,206 | (10,858 | ) | - | 3,348 | |||||||
| Operating lease right-of-use assets | 9,585 | (8,860 | ) | - | 725 | |||||||
| Goodwill | 14,941 | (10,129 | ) | - | 4,812 | |||||||
| Intercompany loan receivable | - | (2,501 | ) | 2,501 | - | |||||||
| Other assets | 82 | (47 | ) | - | 35 | |||||||
| Total non-current assets | 66,516 | (57,117 | ) | 4,748 | $ | 14,147 | ||||||
| TOTAL ASSETS | $ | 92,495 | $ | (82,528 | ) | $ | 126,775 | $ | 136,742 | |||
| Liabilities and Equity | ||||||||||||
| CURRENT LIABILITIES: | ||||||||||||
| Accounts payable | $ | 11,305 | $ | (5,840 | ) | $ | 171 | $ | 5,636 | |||
| Accrued expenses and other payables | 1,987 | (372 | ) | 18,791 | 20,406 | |||||||
| Employees and related payables | 3,719 | (2,047 | ) | - | 1,672 | |||||||
| Advance payments on account of grant | 2,750 | (2,227 | ) | - | 523 | |||||||
| Short-term loans and current maturities of long term loans | 763 | (372 | ) | - | 391 | |||||||
| Contract liabilities | 8,626 | (8,301 | ) | - | 325 | |||||||
| Current maturities of finance leases | 291 | (291 | ) | - | - | |||||||
| Current maturities of operating leases | 1,722 | (1,365 | ) | - | 357 | |||||||
| Current maturities of convertible loans | 416 | - | - | 416 | ||||||||
| Total current liabilities | $ | 31,579 | $ | (20,815 | ) | $ | 18,962 | $ | 29,726 | |||
| LONG-TERM LIABILITIES: | ||||||||||||
| Non-current operating leases | 7,524 | (7,069 | ) | - | 455 | |||||||
| Loans payable | 1,230 | (1,230 | ) | - | - | |||||||
| Convertible loans | 12,143 | - | - | 12,143 | ||||||||
| Retirement benefits obligation | 41 | - | - | 41 | ||||||||
| Deferred taxes | 1,926 | (1,868 | ) | - | 58 | |||||||
| Long-term debt and finance leases | 688 | (688 | ) | - | - | |||||||
| Other long-term liabilities | 331 | - | - | 331 | ||||||||
| Total long-term liabilities | 23,883 | (10,855 | ) | - | 13,028 | |||||||
| TOTAL LIABILITIES | $ | 55,462 | $ | (31,670 | ) | $ | 18,962 | $ | 42,754 | |||
| COMMITMENTS REDEEMABLE NON-CONTROLLING INTEREST | 30,955 | (30,955 | ) | - | - | |||||||
| TOTAL EQUITY | 6,078 | (19,903 | ) | 107,813 | 93,988 | |||||||
| TOTAL LIABILITIES AND EQUITY | $ | 92,495 | $ | (82,528 | ) | $ | 126,775 | $ | 136,742 |
Unaudited Pro Forma Statement of Operations
(Dollars in Thousands, except for share amounts)
| Historical | Pro Forma Adjustments | ||||||||
| Year Ended | Year Ended | Year Ended | |||||||
| December 31, | December 31, | December 31, | |||||||
| 2019 | 2019 | 2019 | |||||||
| Orgenesis | Sale of Masthercell Note 2(d) | Pro Forma | |||||||
| REVENUES | $ | 33,256 | $ | (28,929 | ) | $ | 4,327 | ||
| COST OF REVENUES | 18,232 | (17,527 | ) | 705 | |||||
| COST OF RESEARCH AND DEVELOPMENT AND RESEARCH AND DEVELOPMENT SERVICES, net | 12,458 | 852 | 13,310 | ||||||
| AMORTIZATION OF INTANGIBLE ASSETS | 2,061 | (1,631 | ) | 430 | |||||
| SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | 25,337 | (13,959 | ) | 11,378 | |||||
| OTHER INCOME, net | (228 | ) | 207 | (21 | ) | ||||
| OPERATING LOSS | 24,604 | (3,129 | ) | 21,475 | |||||
| FINANCIAL EXPENSES, net | 874 | (31 | ) | 843 | |||||
| LOSS BEFORE INCOME TAXES | 25,478 | (3,160 | ) | 22,318 | |||||
| TAX EXPENSES (INCOME) | 563 | (792 | ) | (229 | ) | ||||
| NET LOSS | $ | 26,041 | $ | (3,952 | ) | $ | 22,089 | ||
| NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTERESTS (INCLUDING REDEEMABLE) | (1,920 | ) | 1,821 | (99 | ) | ||||
| NET LOSS ATTRIBUTABLE TO THE COMPANY | $ | 24,121 | $ | (2,131 | ) | $ | 21,990 | ||
| LOSS PER SHARE: | |||||||||
| Basic | $ | 1.77 | $ | 1.54 | |||||
| Diluted | $ | 1.77 | $ | 1.54 | |||||
| WEIGHTED AVERAGE NUMBER OF SHARES USED IN COMPUTATION OF BASIC AND DILUTED EARNINGS (LOSS) PER SHARE: | |||||||||
| Basic | 15,907,995 | 15,907,995 | |||||||
| Diluted | 15,907,995 | 15,907,995 |
Unaudited Pro Forma Statement of Operations
(Dollars in Thousands, except for share amounts)
| Historical | Pro Forma Adjustments | ||||||||
| One Month Ended | One Month Ended | One Month Ended | |||||||
| December 31, | December 31, | December 31, | |||||||
| 2018 | 2018 | 2018 | |||||||
| Orgenesis | Sale of Masthercell Note 2(e) | Pro Forma | |||||||
| REVENUES | $ | 1,852 | $ | (1,709 | ) | $ | 143 | ||
| COST OF REVENUES | 1,221 | (1,078 | ) | 143 | |||||
| COST OF RESEARCH AND DEVELOPMENT AND RESEARCH AND DEVELOPMENT SERVICES, net | 1,431 | 66 | 1,497 | ||||||
| AMORTIZATION OF INTANGIBLE ASSETS | 179 | (141 | ) | 38 | |||||
| SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | 1,984 | (999 | ) | 985 | |||||
| OPERATING LOSS | 2,963 | (443 | ) | 2,520 | |||||
| FINANCIAL EXPENSES, net | 27 | (17 | ) | 10 | |||||
| LOSS BEFORE INCOME TAXES | 2,990 | (460 | ) | 2,530 | |||||
| TAX (INCOME) EXPENSES | (83 | ) | 124 | 41 | |||||
| NET LOSS | $ | 2,907 | $ | (336 | ) | $ | 2,571 | ||
| NET (INCOME) LOSS ATTRIBUTABLE TO NON-CONTROLLING INTERESTS (INCLUDING REDEEMABLE) | (163 | ) | 152 | (11 | ) | ||||
| NET LOSS ATTRIBUTABLE TO ORGENESIS INC. | $ | 2,744 | $ | (184 | ) | $ | 2,560 | ||
| LOSS PER SHARE: | |||||||||
| Basic | $ | 0.19 | $ | 0.17 | |||||
| Diluted | $ | 0.19 | $ | 0.17 | |||||
| WEIGHTED AVERAGE NUMBER OF SHARES USED IN COMPUTATION OF BASIC AND DILUTED EARNINGS (LOSS) PER SHARE: | |||||||||
| Basic | 15,423,040 | 15,423,040 | |||||||
| Diluted | 15,423,040 | 15,423,040 |
Unaudited Pro Forma Statement of Operations
(Dollars in Thousands, except for share amounts)
| Historical | Pro Forma Adjustments | ||||||||
| Year Ended | Year Ended | Year Ended | |||||||
| November 30, | November 30, | November 30, | |||||||
| 2018 | 2018 | 2018 | |||||||
| Orgenesis | Sale of Masthercell Note 2(f) | Pro Forma | |||||||
| REVENUES | $ | 18,655 | $ | (17,273 | ) | $ | 1,382 | ||
| COST OF REVENUES | 10,824 | (9,403 | ) | 1,421 | |||||
| COST OF RESEARCH AND DEVELOPMENT AND RESEARCH AND DEVELOPMENT SERVICES, net | 6,464 | 1,259 | 7,723 | ||||||
| AMORTIZATION OF INTANGIBLE ASSETS | 1,913 | (1,725 | ) | 188 | |||||
| SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | 16,303 | (6,196 | ) | 10,107 | |||||
| OTHER INCOME, net | (2,930 | ) | (1,600 | ) | (4,530 | ) | |||
| OPERATING LOSS | 13,919 | (392 | ) | 13,527 | |||||
| FINANCIAL EXPENSES, net | 3,117 | (185 | ) | 2,932 | |||||
| SHARE IN NET LOSS OF ASSOCIATED COMPANIES | 731 | - | 731 | ||||||
| LOSS BEFORE INCOME TAXES | 17,767 | (577 | ) | 17,190 | |||||
| TAX EXPENSES | 1,337 | (1,185 | ) | 152 | |||||
| NET LOSS | $ | 19,104 | $ | (1,762 | ) | $ | 17,342 | ||
| NET (INCOME) LOSS ATTRIBUTABLE TO NON-CONTROLLING INTERESTS (INCLUDING REDEEMABLE) | (813 | ) | 771 | (42 | ) | ||||
| NET LOSS ATTRIBUTABLE TO ORGENESIS INC. | $ | 18,291 | $ | (991 | ) | $ | 17,300 | ||
| LOSS PER SHARE: | |||||||||
| Basic | $ | 1.43 | $ | 1.30 | |||||
| Diluted | $ | 1.43 | $ | 1.30 | |||||
| WEIGHTED AVERAGE NUMBER OF SHARES USED IN COMPUTATION OF BASIC AND DILUTED EARNINGS (LOSS) PER SHARE: | |||||||||
| Basic | 13,374,103 | 13,374,103 | |||||||
| Diluted | 13,374,103 | 13,374,103 |
1. Basis of Presentation
The historical financial information has been adjusted to give pro forma effect to events that are (i) directly attributable to the divestiture, (ii) factually supportable and (iii) expected to have a continuing impact on the combined results. The pro forma adjustments are preliminary and based on estimates and have been prepared to illustrate the estimated effect of the divestiture. The pro forma financial information presented is not intended to reflect or be indicative of the Company's consolidated results of operations or financial position had the divestiture occurred as of the dates presented and should not be taken as a representation or projection of the Company's future consolidated results of operations or financial condition. The pro forma adjustments described below were based on management's assumptions and estimates, including assumptions relating to consideration received.
The Company's historical results are derived from its audited balance sheet as of December 31, 2019, audited statements of operations for the year ended December 31, 2019.
2. Notes to Unaudited Pro Forma Adjustments
| (a) | Represents the cash proceeds from closing the Transaction, net of repayment of Orgenesis loans and intercompany balances to Masthercell The net adjustment for cash is as follows (dollars in millions): |
| Total | |||
| Aggregate nominal purchase price from the sale | $ | 315.0 | |
| Less: GPP liquidation preference and equity stake in Masthercell, SFPI - FPIM's interest in MaSTherCell S.A., distributions to Masthercell option holders, and transaction costs | (188.3 | ) | |
| Estimated cash proceeds from the Transaction to the Company | 126.7 | ||
| Less: Payment of intercompany loans and payables | (7.2 | ) | |
| Net cash adjustment (including $1.6M to be released from Escrow) | $ | 119.5 |
(b) | Represents the estimated tax effect of the Transaction assuming a combined statutory tax rate of 29% after utilizing accumulated net operating losses of approximately $29 million |
(c) | Represents the historical balances of Masthercell at December 31, 2019 |
(d) | Represents the historical results of operations of Masthercell for the year ended December 31, 2019 |
(e) | Represents the historical results of operations of Masthercell for the transition month ended December 31, 2018 |
(f) | Represents the historical results of operations of Masthercell for the year ended November 30, 2018 |
