Orgenesis Inc.

Good day, ladies and gentlemen, and welcome to the Orgenesis First Quarter 2021 Business Update Conference Call. At this time, all participants have been placed on listen-only mode, and the floor will be open for questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, David Wallman of Investor Relations. Sir, the floor is yours.

Thank you. Good morning, everyone, and welcome to the Orgenesis First Quarter 2021 Business Update Conference Call. On the call with us this morning are Verit Kaplan, Chief Executive Officer, and Neil Reitinger, Chief Financial Officer. If you have any questions after the call or would like any additional information about the company, please contact Crescendo Communications at 212-671-1020. This conference call contains forward-looking statements which are made pursuant to the Safe Harbor provisions of Section 27A of the Securities Act of 1933 as amended, and Section 21E of the Securities and Exchange Act of 1934 as amended. These forward-looking statements involve substantial uncertainties and risks and are based upon current expectations, estimates, and projections and reflect our beliefs and assumptions based upon information available to us as of the date of this conference call. We caution listeners that forward-looking statements are predictions based on our current expectations about future events. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, and assumptions that are difficult to predict. Our actual results, performance, or achievements could differ materially from those expressed or implied by the forward-looking statements as a result of a number of factors, including but not limited to the risks and uncertainties discussed under the heading Risk Factors in Item 1A of our annual report on Form 10-K for the fiscal year ended December 31, 2020, and our other filings with the Securities and Exchange Commission. We undertake no obligation to revise or update any forward-looking statement for any reason. I'd now like to turn the call over to Ms. Varad Kaplan. Please go ahead, Varad.

Thank you, David, and thanks to everyone for joining us on our call today. I am pleased to report we achieved 400% growth in revenue for the first quarter of 2021, which reflects the early success of our poor care strategy. I'll talk more about this in a moment. At the same time, we achieved positive operating income and maintained a solid balance sheet with $41.8 million of cash as of March 31, 2021. Let me take a minute to recap on our ProCare strategy. As discussed last quarter, following the sale of MasterCell, we have been hard at work implementing our ProCare platform, which we believe is the key to unlocking the full potential of the cell and gene therapy industry. Currently, cells are manufactured using centralized production, which is standard across the industry. However, this strategy has resulted in high costs for cell and gene therapies, such as the CAR-T therapies, which can range in the hundreds of thousands of dollars per patient. Our goal is to dramatically lower these costs through on-site processing of our therapies, which will support payer uptake and make these therapies more broadly available to patients. We believe this is a crucial step that is necessary for cell therapies to become widely available. Towards this end, our business is built around three key pillars, therapies, technologies, and networking. These pillars align the interests of the therapy developers, the hospitals, and patients in a way that has not been done before. Our method of operation is based on out-licensing of therapies from leading research centers and hospitals, adapting the lab-based processes to customized automation solutions, and integrating the combined process in our arm pools, which is short for Ogenesis Mobile Production Units and Labs. We have developed this approach based on a decade of experience in process development of such therapies and working closely with researchers from leading academic institutes as well as from biotech companies active in this space. To accelerate achieving our goal, we are setting up joint venture partnerships in order to rapidly deploy our point-of-care systems and capabilities around the world. In the U.S., we are working directly with the hospitals. Each one of these partners brings strong technical, regulatory, and local market expertise. Additionally, each of these partners have tremendous skin in the game as they are investing heavily in their side in personnel, regulatory, and clinical expenses, as well as infrastructure in the respective territories. Our reported revenues reflect just the first phase of our relationships with these local joint venture partners. based on long-term contracts we put in place to support the local clinical and regulatory goals. One might think of it as similar to a franchise model. In order to gain access to a particular territory, the partner commits to investing the required efforts to receive marketing authorizations and partners with us for the setup of the point-of-care operations. We provide them with a roadmap to therapies, R&D support, tech transfer, regulatory and clinical services, training, and access to our arm pools. All of the above are prerequisites for enabling supply of therapies at the point of care. They will continue to require this initial support, and though they may find local providers to assist them with all of the above, they benefit from receiving these services from us since we have developed so much internal expertise specifically in the cell and gene therapy field. The second phase of our revenues comes as a therapeutic pipeline advances. And the hospitals working with our local partners require production of cell therapies. As the products are sold to the hospitals and our partnerships are profitable, we will be getting royalty both on the sale of the products and on processing service. Once the initial validation stage is finalized, we expect our partners to expand their activities to additional sites and hospitals. Currently, each of our partners has several validation centers So revenues are limited to our joint activities in those sites, but we believe the incoming revenue is still sustainable. The second stage is the one which we expect rapid acceleration of our revenues, both from services as well as royalties to our genesis. We believe this is a highly scalable model, and rather than investing all the capital ourselves without local market expertise, we believe we have substantially de-risked our model by leveraging outside support from our regional partners. At the heart of our business model, our goal is to provide life-changing treatments to a large number of patients at reduced cost within the point-of-care setting. Initially, we are focusing on autologous cell-based immunotherapies, therapeutics, as well as therapies for metabolic disease, antiviral disease, and tissue regeneration. We have built a robust therapeutic pipeline, which includes more than 30 cell and gene therapies, and we continue to evaluate new therapies. Unlike a traditional biotech with a handful of therapies in the pipeline, we have access to many therapies and technologies, all at different stages of development through our growing partnerships with researchers, commercial entities, and hospitals. As an example, in March we entered into a second phase of collaboration with Hospital Infantil Nino Jesus in Madrid, with exclusive license to commercialize a cellular solid tumor therapy. The benefit we bring to therapy development through our ProCare network is highly valued by hospitals and biotech companies. We are a strategic partner that can enable the clinical development and support processing needs, while at the same time providing access to our entire ProCare distribution networks. We are also investing in new point-of-care technologies that can be integrated into our ampoules. These systems enable us to produce autologous cell and gene therapies along with viral processing capabilities directly at the point of care in a consistent and standardized manner in all locations. There are a number of advantages to these systems, such as a short setup time, they have a small footprint, and they lower the cost of production through automated operation and parallel processing. In addition, we designed them in a scalable and modular format so we can add capacity as the needs of the hospital and our local partners expand. The response from the industry has been very encouraging, especially at the hospital, where these samples allow medical institutions to overcome the historical challenge that have made it difficult to provide these therapies to patients in a timely and efficient manner. We can now do this without the logistical nightmares of dealing with a centralized production facility or the difficulty of building clean rooms in hospitals. We believe the AMPLs are an important step to quickly expand our capacity, and we look forward to increasing both the quantity and locations of our systems. In the meantime, we continue to grow our ProCare network, which now includes partnerships in various countries across North America, Europe, Asia, Latin America, Middle East, and Australia. As an example, we recently began a collaboration with the Bambino Jesu Children's Hospital in Rome to establish a point-of-care self-therapy center at the hospital. On one final note, I'm pleased to report that as announced yesterday, we received an investigational device exemption, or what's known as an IDE approval by the U.S. FDA to conduct the first in human feasibility study of the tissue genesis isolator 2 to treat acute respiratory distress syndrome resulting from COVID-19 infection. This is just one of the great assets we have benefited from the Collegor acquisition. In addition to systems and therapies, the Collegor team itself is a wonderful addition to our existing team, bringing in expertise and know-how that we highly value for many of our therapies. We look forward to providing further updates on the progress of this clinical trial. So to wrap up, I remain as encouraged as ever by the outlook for the business and proud to report we achieved a four-fold increase in revenue over the same period last year. I truly believe this revenue growth, combined with our healthy margins, improved cash flow, and solid balance sheet, all bode extremely well for the future. On that note, I'll now turn the call over to Neil Isinger, our Chief Financial Officer.