Gamida Cell (GMDAQ) 6-K 2021 Q3 Gamida Cell Reports Third Quarter 2021 Financial Results

Exhibit 99.2

Gamida Cell ltd. AND ITS SUBSIDIARY

INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2021

U.S. DOLLARS IN THOUSANDS

UNAUDITED

INDEX

	Page
Interim Consolidated Statements of Financial Position	3 – 4
Interim Consolidated Statements of Comprehensive Loss	5
Interim Consolidated Statements of Changes in Equity	6 – 8
Interim Consolidated Statements of Cash Flows	9 – 10
Notes to Interim Consolidated Financial Statements	11 – 21

- - - - - - - - - - - - - -

2

GAMIDA CELL LTD. AND ITS SUBSIDIARY

INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

U.S. dollars in thousands

	September 30,				December 31,
	2021		2020		2020
	Unaudited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	80,613	$	73,311	$	127,170
Marketable securities		40,223		-		-
Prepaid expenses and other current assets		2,785		1,734		2,815
Total current assets		123,621		75,045		129,985
NON-CURRENT ASSETS:
Property, plant and equipment, net		30,023		15,838		18,238
Right-of-use assets		4,918		7,023		6,474
Other assets		6,599		802		786
Total non-current assets		41,540		23,663		25,498
Total assets	$	165,161	$	98,708	$	155,483

The accompanying notes are an integral part of the interim consolidated financial statements.

3

GAMIDA CELL LTD. AND ITS SUBSIDIARY

INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

U.S. dollars in thousands (except share and per share data)

	September 30,						December 31,
	2021			2020			2020
	Unaudited
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Trade payables	$	7,833		$	2,704		$	6,329
Employees and payroll accruals		5,870			3,872			4,705
Current maturities of lease liabilities		1,622			2,345			2,532
Accrued interest		525			-			-
Accrued expenses and other payables		7,810			5,005			7,988
Total current liabilities		23,660			13,926			21,554
NON-CURRENT LIABILITIES:
Liabilities presented at fair value		-			3,252			12,043
Employee benefit liabilities, net		768			773			768
Other long-term liabilities		4,621			5,460			5,378
Liability to Israel Innovation Authority		20,858			14,729			17,003
Convertible senior notes, net		69,298			-			-
Total non-current liabilities		95,545			24,214			35,192
SHAREHOLDERS’ EQUITY:
Share capital -
Ordinary shares of NIS 0.01 par value - Authorized: 100,000,000 shares at September 30, 2021 and 2020 (unaudited) and December 31, 2020; Issued and outstanding: 59,298,846 and 49,556,663 shares at September 30, 2021 and 2020 (unaudited), respectively and 59,000,153 shares at December 31, 2020.		167			138			166
Share premium		381,504			304,944			375,280
Capital reserve		(441	)		(541	)		(441	)
Reserve from financial assets measured at FVOCI		(42	)		-			-
Accumulated deficit		(335, 232)			(243,973	)		(276,268	)
Total shareholders’ equity		45,956			60,568			98,737
Total liabilities and shareholders’ equity	$	165,161		$	98,708		$	155,483

The accompanying notes are an integral part of the interim consolidated financial statements.

November 9, 2021
Date of approval of the	Julian Adams	Shai Lankry
financial statements	Director and Chief Executive Officer	Chief Financial Officer

4

GAMIDA CELL LTD. AND ITS SUBSIDIARY

INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

U.S. dollars in thousands (except share and per share data)

	Nine months ended September 30,						Three months ended September 30,						Year ended   December 31,
	2021			2020			2021			2020			2020
	Unaudited						Unaudited
Operating expenses:
Research and development, net	$	37,213		$	27,652		$	12,396		$	10,454		$	41,385
Commercial activities		15,633			4,413			5,973			1,916			8,748
General and administrative		12,004			8,180			4,774			2,690			12,167
Operating loss		64,850			40,245			23,143			15,060			62,300
Finance expense		6,330			2,367			2,218			1,001			10,640
Finance income		(11,769	)		(2,203	)		(5,727	)		(1,309	)		(236	)
Loss before tax benefit		59,411			40,409			19,634			14,752			72,704
Tax benefit		(447	)		-			-			-			-
Net loss		58,964			40,409			19,634			14,752			72,704
Other comprehensive loss:
Items that will be reclassified subsequently to profit or loss:
Actuarial net gain of defined benefit plans		-			-			-			-			(100	)
Changes in the fair value of marketable securities		42			4			17			-			4
Total comprehensive loss	$	59,006		$	40,413		$	19,651		$	14,752		$	72,608
Net loss per share:
Basic loss per share	$	1.00		$	0.98		$	0.33		$	0.30		$	1.66
Diluted loss per share	$	1.18		$	0.98		$	0.33		$	0.30		$	1.66

The accompanying notes are an integral part of the interim consolidated financial statements.

5

GAMIDA CELL LTD. AND ITS SUBSIDIARY

INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

U.S. dollars in thousands (except share and per share data)

	Ordinary shares				Share		Reserve from financial assets measured at			Capital reserve due to actuarial			Accumulated			Total
	Number		Amount		Premium		FVOCI			losses			deficit			equity
Balance as of January 1, 2021		59,000,153	$	166	$	375,280	$	-		$	(441	)	$	(276,268	)	$	98,737
Net loss		-		-		-		-			-			(58,964	)		(58,964	)
Other comprehensive loss		-		-		-		(42	)		-			-			(42	)
Total comprehensive loss		-		-		-		(42	)		-			(58,964	)		(59,006	)
Exercise of options		298,693		1		565		-			-			-			566
Equity component of convertible senior notes, net of tax and issuance costs		-		-		1,683		-			-			-			1,683
Share-based compensation		-		-		3,976		-			-			-			3,976
Balance as of September 30, 2021 (unaudited)		59,298,846	$	167	$	381,504	$	(42	)	$	(441	)	$	(335,232	)	$	45,956

	Ordinary shares				Share		Reserve from financial assets measured at			Capital reserve due to actuarial			Accumulated			Total
	Number		Amount		Premium		FVOCI			losses			deficit			equity
Balance as of January 1, 2020		33,670,926	$	92	$	238,992	$	4		$	(541	)	$	(203,564	)	$	34,983
Net loss		-		-		-		-			-			(40,409	)		(40,409	)
Other comprehensive loss		-		-		-		(4	)		-			-			(4	)
Total comprehensive loss		-		-		-		(4	)		-			(40,409	)		(40,413	)
Exercise of options		552,403		2		167		-			-			-			169
Issuance of ordinary shares in a secondary offering, net of issuance expenses of $1,000		15,333,334		44		63,816		-			-			-			63,860
Share-based compensation		-		-		1,969		-			-			-			1,969
Balance as of September 30, 2020 (unaudited)		49,556,663	$	138	$	304,944	$	-		$	(541	)	$	(243,973	)	$	60,568

The accompanying notes are an integral part of the interim consolidated financial statements.

6

GAMIDA CELL LTD. AND ITS SUBSIDIARY

INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

U.S. dollars in thousands (except share and per share data)

	Ordinary shares				Share		Reserve from financial assets measured at			Capital reserve due to actuarial			Accumulated			Total
	Number		Amount		premium		FVOCI			losses			deficit			equity
Balance as of July 1, 2021 (unaudited)		59,271,512	$	167	$	379,981	$	(25	)	$	(441	)	$	(315,598	)	$	64,084
Net loss		-		-		-		-			-			(19,634	)		(19,634	)
Other comprehensive loss		-		-		-		(17	)		-			-			(17	)
Total comprehensive loss		-		-		-		(17	)		-			(19,634	)		(19,651	)
Exercise of options		27,334		*)		10		-			-			-			10
Share-based compensation		-		-		1,513		-			-			-			1,513
Balance as of September 30, 2021 (unaudited)		59,298,846	$	167	$	381,504	$	(42	)	$	(441	)	$	(335,232	)	$	45,956

	Ordinary shares				Share		Reserve from financial assets measured at		Capital reserve due to actuarial			Accumulated			Total
	Number		Amount		premium		FVOCI		losses			deficit			equity
Balance as of July 1, 2020 (unaudited)		49,471,817	$	137	$	304,175	$	-	$	(541	)	$	(229,221	)	$	74,550
Net loss		-		-		-		-		-			(14,752	)		(14,752	)
Total comprehensive loss		-		-		-		-		-			(14,752	)		(14,752	)
Exercise of options		84,846		1		21		-		-			-			22
Share-based compensation		-		-		748		-		-			-			748
Balance as of September 30, 2020 (unaudited)		49,556,663	$	138	$	304,944	$	-	$	(541	)	$	(243,973	)	$	60,568

*) represents an amount lower than $1.

The accompanying notes are an integral part of the interim consolidated financial statements.

7

GAMIDA CELL LTD. AND ITS SUBSIDIARY

INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

U.S. dollars in thousands (except share and per share data)

	Ordinary shares				Share		Reserve from financial assets measured at			Capital reserve due to actuarial			Accumulated			Total
	Number		Amount		premium		FVOCI			losses			deficit			equity
Balance as of January 1, 2020		33,670,926	$	92	$	238,992	$	4		$	(541	)	$	(203,564	)	$	34,983
Net loss		-		-		-		-			-			(72,704	)		(72,704	)
Other comprehensive loss		-		-		-		(4	)		100			-			96
Total comprehensive loss		-		-		-		(4	)		100			(72,704	)		(72,608	)
Issuance of ordinary shares in a secondary offering, net of issuance expenses of $10,902		24,677,084		72		132,776		-			-			-			132,848
Exercise of options		652,143		2		648		-			-			-			650
Share-based compensation		-		-		2,864		-			-			-			2,864
Balance as of December 31, 2020		59,000,153	$	166	$	375,280	$	-		$	(441	)	$	(276,268	)	$	98,737

The accompanying notes are an integral part of the interim consolidated financial statements.

8

GAMIDA CELL LTD. AND ITS SUBSIDIARY

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. dollars in thousands

	Nine months ended September 30,						Three months ended September 30,						Year ended December 31
	2021			2020			2021			2020			2020
	Unaudited						Unaudited
Cash flows from operating activities:
Net loss	$	(58,964	)	$	(40,409	)	$	(19,634	)	$	(14,752	)	$	(72,704	)
Adjustments to reconcile net loss to net cash used in operating activities:
Adjustments to the profit or loss items:
Depreciation of property, plant and equipment and right-of-use assets		1,898			1,716			621			610			2,397
Financial (income) expense, net		1,613			(169	)		606			91			483
Share-based compensation		3,976			1,969			1,513			748			2,864
Change in employee benefit liabilities, net		-			-			-			-			94
Amortization of premium on available-for-sale financial assets		-			4			-			-			4
Revaluation of liabilities presented at fair value derivatives		(11,257	)		(1,969	)		(5,447	)		(1,299	)		6,822
Revaluation of liability to IIA		3,170			2,227			1,312			912			4,302
Deferred income taxes		(447	)		-						-			-
		(1,047	)		3,778			(1,395	)		1,062			16,966
Changes in asset and liability items:
Decrease (increase) in prepaid expenses, other current assets, and other assets		1,005			(718	)		937			347			(1,626	)
Increase (decrease) in trade payables		1,504			1,535			2,397			(39	)		5,083
Increase (decrease) in accrued expenses and other payables		(894	)		516			(693	)		1,141			3,454
		1,615			1,333			2,641			1,449			6,911
Cash received during the period for:
Interest received		1,122			359			854			2			361
Interest paid		(128	)		(120	)		(43	)		(40	)		(161	)
		994			239			811			(38	)		200
Net cash used in operating activities		(57,402	)		(35,059	)		(17,577	)		(12,279	)		(48,627	)
Cash flows from investing activities:
Purchase of property, plant and equipment		(9,577	)		(9,792	)		(4,187	)		(2,683	)		(11,804	)
Investment in long-term deposit		(5,803	)		-			(4,803	)		-			-
Purchase of marketable securities		(97,808	)		-			(29,657	)		-			-
Investment in restricted bank deposits		-			-			-			-			(158	)
Proceeds from maturity of marketable securities		56,717			-			38,893			-			-
Proceeds from sale of marketable securities		-			13,551			-			-			13,551
Net cash provided by (used in) investing activities	$	(56,471	)	$	3,759		$	246		$	(2,683	)	$	1,589

The accompanying notes are an integral part of the interim consolidated financial statements.

9

GAMIDA CELL LTD. AND ITS SUBSIDIARY

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. dollars in thousands

	Nine months ended September 30						Three months ended September 30						Year ended December 31,
	2021			2020			2021			2020			2020
	Unaudited						Unaudited
Cash flows from financing activities:
Proceeds from secondary offering, net	-			-			-			-			133,316
Receipt of grants from the IIA		311			200			259			-			399
Proceeds from secondary offering, net		-			63,860			-			-			-
Proceeds from issuance of convertible senior notes, net of issuance costs		70,777			-			-			-			-
Payment of lease liabilities		(1,782	)		(1,539	)		(653	)		(417	)		(1,985	)
Payment of interest of Convertible senior notes		(2,191	)		-			(2,191	)		-			-
Exercise of options		566			169			10			21			650
Payment of issuance costs related to public offering		(468	)		-			-			-			-
Net cash provided by (used in) financing activities		67,213			62,690			(2,575	)		(396	)		132,380
Exchange differences on balances of cash and cash equivalents		103			83			29			31			(10	)
Increase (decrease) in cash and cash equivalents		(46,557	)		31,473			(19,877	)		(15,327	)		85,332
Cash and cash equivalents at beginning of period		127,170			41,838			100,490			88,638			41,838
Cash and cash equivalents at end of period	$	80,613		$	73,311		$	80,613		$	73,311		$	127,170
Supplemental disclosure of non-cash financing activities:
Significant non-cash transactions:
Lease liabilities arising from new right-of-use asset	$	-		$	3,376		$	-		$	-		$	3,409
IIA liability for grants to be received	$	590		$	-		$	590		$	-		$	103
Issuance expenses on credit	$	-		$	-		$	-		$	-		$	468
Purchase of property, plant and equipment on credit	$	1,561		$	-		$	1,561		$	-		$	415
Borrowing costs capitalization	$	1,287		$	-		$	713		$	-		$	-

The accompanying notes are an integral part of the interim consolidated financial statements.

10

GAMIDA CELL LTD. AND ITS SUBSIDIARY

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 1:- GENERAL

  a. Gamida Cell Ltd. (the “Company”), founded in 1998, is an advanced cell therapy company committed to finding cures for patients with blood cancers and serious blood diseases. The Company develops novel curative treatments using stem cells and Natural Killer (NK) cells.

b. The Company has created a novel NAM cell expansion technology platform that is designed to enhance the number and functionality of allogenic donor cells. This proprietary therapeutic platform may enable the development of therapies with the potential to improve treatment outcomes beyond what is possible with current donor-derived therapies.

The lead product candidate, omidubicel, is an advanced cell therapy in development as a potential life-saving treatment option for patients in need of a bone marrow transplant (BMT). In May 2020, the Company reported that omidubicel met its primary endpoint in an international, randomized, multi-center Phase 3 clinical study in 125 patients with high-risk hematologic malignancies undergoing bone marrow transplant and who had no available matched donor. The study evaluated the safety and efficacy of omidubicel compared to standard umbilical cord blood. BMT with a graft derived from bone marrow or peripheral blood cells of a matched donor is currently the standard of care treatment for many of these patients, but there is a significant unmet need for patients who cannot find a fully matched donor.

In October 2020, the Company reported that omidubicel met all three of its secondary endpoints. All three secondary endpoints demonstrated a statistically significant improvement among patients who received omidubicel compared to the comparator group.

Omidubicel is the first bone marrow transplant product to receive Breakthrough Therapy Designation from the U.S. Food and Drug Administration and has received orphan drug designation in the U.S. and in Europe.

In addition to omidubicel, the Company is developing GDA-201, an investigational NK cell-based cancer immunotherapy to be used in combination with standard-of-care therapeutic antibodies. NK cells have potent anti-tumor properties and have the advantage over other oncology cell therapies of not requiring genetic matching, potentially enabling NK cells to serve as a universal donor-based therapy when combined with certain antibodies. GDA-201 is currently in an investigator-sponsored Phase 1/2 study for the treatment of relapsed or refractory non-Hodgkin lymphoma (NHL). In December 2020, the Company reported, updated and expanded results from the Phase 1 clinical study at the Annual Meeting of the American Society of Hematology, or ASH. The data from the first 35 patients demonstrated that GDA-201 was clinically active and generally well tolerated. Among the 19 patients with NHL, 13 complete responses and one partial response were observed, with an overall response rate of 74 percent and a complete response rate of 68 percent.

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GAMIDA CELL LTD. AND ITS SUBSIDIARY

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 1:- GENERAL (Cont.)

c. The Company is devoting substantially all of its efforts toward research and development activities. In the course of such activities, the Company has sustained operating losses and expects such losses to continue in the foreseeable future. The Company’s accumulated deficit as of September 30, 2021 was $335,232 and negative cash flows from operating activities during the nine-month period ended September 30, 2021 was $57,402.

These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The interim consolidated financial statements do not include any adjustments to the carrying amounts and classifications of assets and liabilities that would result if the Company were unable to continue as a going concern.

d. Definitions:

In these financial statements:

The Company	-	Gamida Cell Ltd. and its subsidiary
Subsidiary		Gamida Cell Inc. incorporated in 2000 and intended to focus on sales and marketing upon product approval.
Related parties	-	As defined in IAS 24
Dollar	-	U.S. dollar

NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES

a. The accompanying unaudited interim consolidated financial statements as of September 30, 2021 and for the nine months periods ended September 30, 2021 and 2020 have been prepared in accordance with IAS 34 “Interim Financial Reporting” for interim financial information.

The interim consolidated financial statements do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the Company’s annual consolidated financial statements as of December 31, 2020 and their accompanying disclosures.

The interim consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full year ending December 31, 2021.

b. The accounting policies adopted in the preparation of the interim consolidated financial statements are consistent with those followed in the preparation of the Company’s annual consolidated financial statements for the year ended December 31, 2020.

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GAMIDA CELL LTD. AND ITS SUBSIDIARY

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)

c. Property, plant and equipment:

Property, plant and equipment are measured at cost, including directly attributable costs, less accumulated depreciation, accumulated impairment losses and any related investment grants, excluding day-to-day servicing expenses. Such cost includes the cost of replacing part of the plant and equipment and borrowing costs for long-term construction projects if the recognition criteria are met.

Depreciation is calculated on a straight-line basis over the useful life of the assets at annual rates as follows:

	%
Machinery	10 - 15
Office, furniture and equipment	6 - 33
Leasehold improvements	(*)
Project in process- manufacturing plant	(**)

(*) Leasehold improvements are depreciated on a straight-line basis over the shorter of the lease term (including the extension option held by the Company and intended to be exercised) and the expected life of the improvement.

(**) As of September 30, 2021, the manufacturing plant is under validation process and therefore is not yet ready for production. Depreciation of the manufacturing plant will commence upon completion of the validation process.

The useful life, depreciation method and residual value of an asset are reviewed at least each year-end and any changes are accounted for prospectively as a change in accounting estimate.

An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected from its use or disposal.

d. Borrowing costs

Borrowing costs attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

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GAMIDA CELL LTD. AND ITS SUBSIDIARY

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)

The carrying amount of the manufacturing plant as of September 30, 2021 was $22,517. The amount of borrowing costs capitalized during the nine and three months periods ended September 30, 2021 was $1,287 and $713, respectively.

The rate used to determine the amount of borrowing costs eligible for capitalization was 11.2%, which is the effective interest rate of the Company’s borrowings.

e. Leases:

Set out below are the carrying amounts of the Company’s right-of-use assets and lease liabilities and the movements during the period:

	Right-of-use assets
	Offices and labs			Vehicles			Production Plant			Total			Lease liabilities
As of January 1, 2021	$	2,898		$	74		$	3,502		$	6,474		$	7,910
Depreciation expense		(1,067	)		(125	)		(388	)		(1,580	)		-
Interest expense		-			-			-			-			219
Additions		-			94			-			94			92
Payments		-			-			-			-			(1,913	)
Other		(18	)		(22	)		(30	)		(70	)		(65	)
As of September 30, 2021 (unaudited)	$	1,813		$	21		$	3,084		$	4,918		$	6,243

f. Investment in marketable securities:

Marketable securities are measured upon initial recognition at fair value plus transaction costs that are directly attributable to the acquisition of the financial assets, except for financial assets measured at fair value through profit or loss in respect of which transaction costs are recorded in profit or loss.

The Company classifies and measures debt instruments in the financial statements based on the following criteria:

- The Company’s business model for managing financial assets; and

- The contractual cash flow terms of the financial asset.

The Company measured all of its marketable securities at fair value through other comprehensive income (FVTCOI).

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GAMIDA CELL LTD. AND ITS SUBSIDIARY

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)

Debt instruments are measured at fair value through other comprehensive income when:

The Company’s business model is to hold the financial assets in order to both collect their contractual cash flows and to sell the financial assets, and the contractual terms of the financial assets give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

After initial recognition, the instruments in this category are measured at fair value. Gains or losses from fair value adjustments, excluding interest and exchange rate differences, are recognized in other comprehensive income. The Company evaluates at the end of each reporting period the loss allowance for financial debt instruments.

Marketable securities as of September 30, 2021 include corporate and government debentures with no significant premium or discount. The investment in marketable securities, which are measured at fair value through other comprehensive income is considered a Level 1 measurement.

g. Taxes:

Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date. Deferred tax liabilities are recognized for all taxable temporary differences, except:

- When the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.

- In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint arrangements, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognized for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized, except:

- When the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss

- In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint arrangements, deferred tax assets are recognized only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized.

15

GAMIDA CELL LTD. AND ITS SUBSIDIARY

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are re-assessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss. Deferred tax items are recognized in correlation to the underlying transaction either in OCI or directly in equity.

The Company offsets deferred tax assets and deferred tax liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realize the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

NOTE 3:- SHAREHOLDERS’ EQUITY

a. Ordinary shares:

	Number of shares
	Authorized as of		Issued and outstanding as of
	September 30, 2021		December 31, 2020		September 30, 2021		December 31, 2020
Ordinary Shares of $0.01 per value each:		100,000,000		100,000,000		59,298,846		59,000,153

16

GAMIDA CELL LTD. AND ITS SUBSIDIARY

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 3:- SHAREHOLDERS’ EQUITY (Cont.)

b. Share incentive plans:

Movement during the periods:

	Nine months ended September 30,										Year ended December 31,
	2021					2020					2020
	Unaudited					Unaudited
	Number of options			Weighted average exercise price		Number of options			Weighted average exercise price		Number of options			Weighted average exercise price
				USD					USD					USD
Outstanding at beginning of period		3,892,714			5.15		3,405,188			4.75		3,405,188			4.76
Granted		1,017,001			8.49		1,221,200			3.68		1,492,700			4.91
Expired		(128,234	)		7.24		(71,994	)		8.67		(74,744	)		8.60
Exercised		(298,693	)		1.62		(552,403	)		0.31		(652,143	)		1.00
Forfeited		(100,622	)		7.22		(221,981	)		8.13		(278,287	)		7.94
Share options outstanding at end of period		4,382,166			6.06		3,780,010			5.06		3,892,714			5.15
Share options exercisable at end of period		2,680,002			4.67		2,127,850			4.20		2,161,439			4.45

As of September 30, 2021, there is $5,124 of total unrecognized cost related to non-vested share-based compensation that is expected to be recognized over a period of up to four years.

A summary of the activity in the RSUs granted to employees for the Nine months ended September 30, 2021 is as follows:

	Number of RSUs			Weighted average grant date fair value
Unvested as of December 31, 2020:		-		$	-
Granted		228,584			8.28
Forfeited		(8,550	)		9.51
Unvested as of September 30, 2021:		220,034		$	8.24

17

GAMIDA CELL LTD. AND ITS SUBSIDIARY

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 3:- SHAREHOLDERS’ EQUITY (Cont.)

c. Share incentive plans expenses:

The total compensation cost related to all of the Company’s equity-based awards, recognized during the presented periods was comprised as follows:

	Nine months ended September 30,					Three months ended September 30,				Year ended December 31,
	2021		2020			2021		2020		2020
	Unaudited
Research and development	$	1,197	$	801		$	647	$	285	$	1,185
Commercial activities		1,014		(115	)		217		110		230
General and administrative		1,765		1,283			649		352		1,449
	$	3,976	$	1,969		$	1,513	$	748	$	2,864

The Company estimates the fair value of stock options granted using the Binominal option-pricing model. The option-pricing model requires a number of assumptions, of which the most significant are the expected stock price volatility and the expected option term.

Expected volatility was calculated based upon historical volatilities of similar entities in the related sector index. The expected term of the options granted is derived from output of the option valuation model and represents the period of time that options granted are expected to be outstanding. The risk-free interest rate is based on the yield from U.S. treasury bonds with an equivalent term. The Company has historically not paid dividends and has no foreseeable plans to pay dividends. The following table lists the inputs to the Binomial option pricing model used for the fair value measurement of equity-settled share options for the following periods:

Based on the above inputs, the fair value of the options was determined at $4.07 - $11.01 at the grant dates during 2021 and 2020.

	September 30,		December 31,
	2021	2020	2020
	Unaudited
Expected volatility of the share prices	65%-66%	74%-84%	74%-79%
Risk-free interest rate	1.3%-1.6%	0.6%-1.38%	0.6%-1.38%

18

GAMIDA CELL LTD. AND ITS SUBSIDIARY

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 4:- LIABILITIES PRESENTED AT FAIR VALUE

a. Warrants to purchase Company’s shares:

The Company measured the fair value of the warrants by using the Option Pricing Method utilized in a Black- Scholes simulation model. The option-pricing model requires a number of assumptions, of which the most significant are the expected stock price volatility and the expected time until liquidation. Expected volatility was calculated based upon historical volatilities of similar entities in the related sector index. The expected time until liquidation is the maximum contractual term of the warrants. The risk-free interest rate is based on the yield from U.S. treasury bonds with an equivalent term. The Company has historically not paid dividends and has no foreseeable plans to pay dividends.

	September 30,						December 31,
	2021			2020			2020
	Unaudited
Risk-free interest rate		0.1	%		0.1	%		0.1	%
Expected volatility		63	%		74	%		76	%
Expected life (in years)		0.75			1.75			1.5
Expected dividend yield		0			0			0

b. Changes in the fair value of warrants classified as Level 3 in the fair value hierarchy:

	Fair value of financial derivatives
Balance as of January 1, 2021	$	12,043
Revaluation of financial derivatives		(11,257	)
Balance as of September 30, 2021 (unaudited)	$	786

As of September 30, 2021, the fair value of the warrants at the amount of $786 is presented in accrued expenses and other payables due to maturity in July 2022.

NOTE 5:- CONVERTIBLE SENIOR NOTES, NET

On February 16, 2021, the Subsidiary issued $75 million aggregate principal amount of convertible senior notes (the “Convertible Notes”) due 2026. The Convertible Notes bear regular annual interest of 5.875% that is paid twice a year. The Convertible Notes mature on February 16, 2026, unless earlier repurchased or converted in accordance with their terms.

The Convertible Notes are convertible into Gamida-Cell Ltd. shares at an initial conversion rate of 56.3063 shares per $1,000 principal amount of Convertible Notes (equivalent to an exchange price of $17.76 per share). The Subsidiary may redeem all or a portion of the notes for cash, at its option, at 100% of the principal amount plus accrued and unpaid interest on the notes to be redeemed if the closing price of its ordinary shares has been at least 130% of the exchange price for at least 20 trading days during any 30 consecutive trading day period.

19

GAMIDA CELL LTD. AND ITS SUBSIDIARY

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 5:- CONVERTIBLE SENIOR NOTES, NET (Cont.)

The Convertible Notes are classified as a compound financial instrument in accordance with IAS 32- Financial Instruments – Presentation, and, as such, require separate accounting in the balance sheet of the equity component (the holder’s call option to convert the Convertible Notes to shares) and of the liability component (the contractual arrangement to deliver cash). The fair value of the recognized liability classified as long- term debt was calculated using a fair value of a similar instrument that does not have a conversion feature.

The difference between the nominal value and the fair value of the Convertible Notes was recognized in equity under share premium, net of deferred tax and related issuance costs. In accounting for the issuance costs related to the Convertible Notes, the allocation of the issuance costs incurred between the liability and equity components were based on their relative fair values.

The interest of a similar instrument that does not have a conversion feature at issuance would have been 6.7%. The fair value of the liability component was $68.6 million upon issuance and the fair value of the equity component was $2.1 million, net of issuance costs of $4.2 million, prorated between the liability and equity components.

The net carrying amount of the liability and equity components of the Convertible Notes for the period presented is as follows:

	As of September 30,
	2021
	Unaudited
Liability component:
Principal amount	$	75,000
Unamortized discount		(1,839	)
Unamortized issuance costs		(3,338	)
Net carrying amount (including accrued interest)	$	69,823
Equity component, net of issuance costs of $127 and deferred taxes of $447	$	1,683

20

GAMIDA CELL LTD. AND ITS SUBSIDIARY

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 5:- CONVERTIBLE SENIOR NOTES, NET (Cont.)

Interest expense related to the Convertible Notes was as follows:

	Nine months ended September 30,
	2021
	Unaudited
Contractual interest expense	$	2,728
Amortization of debt discount		231
Amortization of debt issuance costs		420
Total interest expense recognized	$	3,379

NOTE 6:- LOSS PER SHARE

Details of the number of shares and loss used in the computation of loss per share:

	Nine months ended				Three months ended
	September 30, 2021
	Unaudited
	Weighted number of shares		Loss attributed to equity holders of the Company		Weighted number of shares		Loss attributed to equity holders of the Company
For the computation of basic loss		59,219,757		59,006		59,281,243		19,651
Effect of potential dilutive ordinary shares (Warrants)		128,111		11,257		-		-
For the computation of diluted loss		59,347,868		70,263		59,281,243		19,651

- - - - - - - - - - - - - -

21

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