UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-38716

GAMIDA CELL LTD.

(Exact Name of Registrant as Specified in its Charter)

Israel

Not Applicable

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer

Identification No.)

116 Huntington Avenue
Boston, MA		02116
(Address of principal executive offices)		(Zip Code)

(617) 892-9080

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol		Name of exchange on which registered
Ordinary Shares, par value NIS 0.01 per share		GMDA		The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The registrant had 59,977,188 ordinary shares outstanding as of August 11, 2022.

Gamida Cell Ltd.

Index

Part I—Financial Information	1

Item 1. Financial Statements.	1

Condensed Consolidated Balance Sheets	2

Condensed Consolidated Statements of Operations	4

Condensed Consolidated Statements of Changes in Shareholders’ Equity	5

Condensed Consolidated Statements of Cash Flows	7

Notes to the Unaudited Condensed Consolidated Financial Statements	9

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.	21

Item 3. Quantitative and Qualitative Disclosures About Market Risk.	31

Item 4. Controls and Procedures.	32

Part II—Other Information	33

Item 1. Legal Proceedings.	33

Item 1A. Risk Factors.	33

Risks Related to the Discovery, Development and Clinical Testing of Our Product Candidates	41

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.	91

Item 3. Defaults Upon Senior Securities.	91

Item 4. Mine Safety Disclosures.	91

Item 5. Other Information.	91

Item 6. Exhibits.	91

Trademarks and Trade Names

Unless the context requires otherwise, “Gamida,” “Gamida Cell,” “we,” “us,” “our” or the “Company” mean Gamida Cell Ltd. and its wholly-owned subsidiary, Gamida Cell Inc.

Gamida Cell is a trademark of ours that we use in this quarterly report on Form 10-Q, or Quarterly Report. This Quarterly Report also includes trademarks, tradenames, and service marks that are the property of other organizations. Solely for convenience, our trademarks and tradenames referred to in this Quarterly Report appear without the ® or ™ symbols, but those references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights, or the right of the applicable licensor to our trademark and tradenames. We do not intend our use or display of other companies’ trade names or trademarks to imply a relationship with, or endorsement or sponsorship of us by, any other companies.

Part I—Financial Information

Item 1. Financial Statements.

Gamida Cell ltd. AND ITS SUBSIDIARY

INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2022

U.S. DOLLARS IN THOUSANDS

UNAUDITED

INDEX

	Page

Condensed Consolidated Balance Sheets	2-3

Condensed Consolidated Statements of Operations	4

Condensed Consolidated Statements of Changes in Shareholders’ Equity	5-6

Condensed Consolidated Statements of Cash Flows	7–8

Notes to Condensed Consolidated Financial Statements	9-20

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

GAMIDA CELL LTD. AND ITS SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

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

	June 30,		December 31,
	2022		2021

ASSETS

CURRENT ASSETS:
Cash and cash equivalents	$	37,890	$	55,892
Marketable securities		17,172		40,034
Prepaid expenses and other current assets		2,294		2,688

Total current assets		57,356		98,614

NON-CURRENT ASSETS:
Restricted deposits		3,591		3,961
Property, plant and equipment, net		37,967		35,180
Operating lease right-of-use assets		6,107		7,236
Severance pay fund		1,579		2,148
Other long-term assets		1,421		1,647

Total non-current assets		50,665		50,172

Total assets	$	108,021	$	148,786

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

GAMIDA CELL LTD. AND ITS SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

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

	June 30,			December 31,
	2022			2021

LIABILITIES AND SHARHOLDERS’ EQUITY

CURRENT LIABILITIES:
Trade payables	$	2,738		$	8,272
Employees and payroll accruals		4,978			4,957
Operating lease liabilities		2,517			2,699
Accrued interest of convertible senior notes		1,652			1,640
Accrued expenses and other current liabilities		10,412			7,865

Total current liabilities		22,297			25,433

NON-CURRENT LIABILITIES:
Convertible senior notes, net		71,801			71,417
Accrued severance pay		1,840			2,396
Long-term operating lease liabilities		4,233			5,603

Total non-current liabilities		77,874			79,416

CONTINGENT LIABILITIES AND COMMITMENTS

SHAREHOLDERS’ EQUITY:
Share capital -
Ordinary shares of NIS 0.01 par value - Authorized: 150,000,000 shares at June 30, 2022 (unaudited) and December 31, 2021; Issued 60,059,873 and 59,970,389 at June 30, 2022 (unaudited) and December 31, 2021 respectively; Outstanding: 59,977,188 and 59,970,389 shares at June 30, 2022 (unaudited) and December 31, 2021, respectively		169			169
Treasury ordinary shares of NIS 0.01 par value - 82,685 and 0 shares at June 30, 2022 (unaudited) and December 31, 2021, respectively		*			-
Additional paid-in capital		383,915			381,225
Accumulated deficit		(376,234	)		(337,457	)

Total shareholders’ equity		7,850			43,937

Total liabilities and shareholders’ equity	$	108,021		$	148,786

Represents an amount lower than $1.

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

GAMIDA CELL LTD. AND ITS SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

	Three months ended June 30,				Six months ended June 30,
	2022		2021		2022		2021
	Unaudited

Research and development expenses, net	$	10,563	$	13,350	$	21,868	$	24,710
Commercial expenses		3,193		4,988		7,072		9,219
General and administrative expenses		4,290		3,874		8,429		7,387

Total operating loss		18,046		22,212		37,369		41,316

Financial expenses, net		508		1,345		1,408		1,427

Loss	$	18,554	$	23,557	$	38,777	$	42,743

Net loss per share attributable to ordinary shareholders, basic and diluted		0.31		0.40		0.65		0.72

Weighted average number of shares used in computing net loss per share attributable to ordinary shareholders, basic and diluted		59,546,273		59,253,315		59,510,918		59,188,504

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

GAMIDA CELL LTD. AND ITS SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

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

	Three months ended June 30, 2022
	Ordinary shares					Treasury		Additional paid-in		Accumulated			Total shareholders’
	Number			Amount		shares		capital		deficit			equity

Balance as of March 31, 2022		59,946,298		$	169	$	*	$	382,495	$	(357,680	)	$	24,984

Treasury shares		(7,568	)		-		*		*		-			*
Exercise of options		-			-		-		-		-			-
Issuance of ordinary shares, net of issuance expenses		38,458			-		-		84		-			84
Share-based compensation		-			-		-		1,336		-			1,336
Loss		-			-		-		-		(18,554	)		(18,554	)

Balance as of June 30, 2022		59,977,188		$	169	$	*	$	383,915	$	(376,234	)	$	7,850

	Six months ended June 30, 2022
	Ordinary shares					Treasury		Additional paid-in		Accumulated			Total shareholders’
	Number			Amount		shares		capital		deficit			equity

Balance as of December 31, 2021		59,970,389		$	169	$	-	$	381,225	$	(337,457	)	$	43,937

Grant of restricted shares		3,600			*		-		*		-			*
Treasury shares		(82,685	)		-		*		*		-			*
Exercise of options		47,426			*		-		76		-			76
Issuance of ordinary shares, net of issuance expenses		38,458			-		-		84		-			84
Share-based compensation		-			-		-		2,530		-			2,530
Loss		-			-		-		-		(38,777	)		(38,777	)

Balance as of June 30, 2022		59,977,188		$	169	$	*	$	383,915	$	(376,234	)	$	7,850

GAMIDA CELL LTD. AND ITS SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

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

	Three months ended June 30, 2021
	Ordinary shares					Additional paid-in		Accumulated			Total shareholders’
	Number			Amount		capital		deficit			equity

Balance as of March 31, 2021		59,406,972		$	167	$	377,783	$	(266,850	)	$	111,100

Cancellation of restricted shares		(2,650	)		-		-		-			-
Exercise of options		23,674			-		54		-			54
Share-based compensation		-			-		1,112		-			1,112
Loss		-			-		-		(23,557	)		(23,557	)

Balance as of June 30, 2021		59,427,996		$	167	$	378,949	$	(290,407	)	$	88,709

	Six months ended June 30, 2021
	Ordinary shares				Additional paid-in		Accumulated			Total shareholders’
	Number		Amount		capital		deficit			equity

Balance as of December 31, 2020		59,000,153	$	166	$	376,369	$	(247,664	)	$	128,871

Grant of restricted shares		156,484		*		*		-			*
Exercise of options		271,359		1		555		-			556
Share-based compensation		-		-		2,025		-			2,025
Loss		-		-		-		(42,743	)		(42,743	)

Balance as of June 30, 2021		59,427,996	$	167	$	378,949	$	(290,407	)	$	88,709

Represents an amount lower than $1.

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

GAMIDA CELL LTD. AND ITS SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

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

	Six months ended June 30,
	2022			2021

Cash flows from operating activities:

Loss	$	(38,777	)	$	(42,743	)
Adjustments to reconcile loss to net cash used in operating activities:

Depreciation of property, plant and equipment		224			206
Financing expense (income), net		(273	)		1,694
Share-based compensation		2,530			2,025
Amortization of issuance costs		385			269
Operating lease right-of-use assets		1,226			1,032
Operating lease liabilities		(1,649	)		(1,187	)
Accrued severance pay, net		14			-
Increase in prepaid expenses and other assets		(19	)		(358	)
Decrease in trade payables		(5,535	)		(884	)
Increase (decrease) in accrued expenses and current liabilities		2,285			(622	)

Net cash used in operating activities		(39,589	)		(40,568	)

Cash flows from investing activities:

Purchase of property, plant and equipment		(1,540	)		(6,118	)
Purchase of marketable securities		(3,708	)		(68,151	)
Proceeds from maturity of marketable securities		26,175			17,824
Proceeds (investments) from restricted deposits		500			(1,000	)

Net cash provided by (used in) investing activities	$	21,427		$	(57,445	)

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

GAMIDA CELL LTD. AND ITS SUBSIDIARY

CONDENSED CONSOLIDATED STATEEMENTS OF CASH FLOWS

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

	Six months ended June 30
	2022			2021

Cash flows from financing activities:

Proceeds from exercise of options	$	76		$	556
Proceeds from share issuance, net		84			-
Proceeds from issuance of convertible senior notes, net		-			70,777

Net cash provided by financing activities		160			71,333

Decrease in cash and cash equivalents		(18,002	)		(26,680	)
Cash and cash equivalents at beginning of period		55,892			127,170

Cash and cash equivalents at end of period	$	37,890		$	100,490

Significant non-cash transactions:

Purchase of property, plant and equipment on credit		282			1,563

Supplemental disclosures of cash flow information:
Cash paid for interest	$	(2,203	)	$	-

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

GAMIDA CELL LTD. AND ITS SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 1:- GENERAL

Gamida Cell Ltd. (the “Company”), founded in 1998, is an advanced cell therapy company committed to cures for blood cancers and serious hematologic diseases. The Company harnesses its cell expansion platform to create therapies with the potential to redefine standards of care in areas of serious medical need.

The Company has leveraged its NAM platform, or nicotinamide cell expansion technology platform, to develop a pipeline of product candidates designed to address the limitations of other cell therapies. The Company’s proprietary technology allows for the proliferation and enhancement of donor cells, which allows for maintenance of the cells’ functional therapeutic characteristics, providing a potential treatment alternative for patients.

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 2021, the complete results from the Company’s pivotal Phase 3 clinical study of omidubicel in 125 patients with various hematologic malignancies were published in the peer-reviewed medical journal Blood. The trial achieved its primary endpoint of time to neutrophil engraftment as well as all three of the prespecified secondary endpoints. These secondary endpoints were the proportion of patients who achieved platelet engraftment by day 42, the proportion of patients with grade 2 or grade 3 bacterial or invasive fungal infections in the first 100 days following transplant, and the number of days alive and out of the hospital in the first 100 days following transplant. All three secondary endpoints demonstrated statistical significance in an intent-to-treat analysis.

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

In June 2022, the Company announced completion of the rolling Biologics License Application (BLA) submission to the FDA for omidubicel for the treatment of patients with blood cancers in need of an allogenic hematopoietic stem cell transplant.

In August 2022, the Company announced the FDA had accepted for filing the Company’s BLA for omidubicel for the treatment of patients with blood cancers in need of an allogenic hematopoietic stem cell transplant. The FDA granted Priority Review for the BLA and has set a Prescription Drug User Fee Act (PDUFA) target action date of January 30, 2023.

GAMIDA CELL LTD. AND ITS SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 1:- GENERAL (Cont.)

In addition to omidubicel, the Company is developing GDA-201, an investigational natural killer (“NK”) cell-based cancer immunotherapy that is intended to be used in combination with standard-of-care therapeutic antibodies, as well as other product candidates in the Company’s NK cell pipeline. 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). Data from the 35 patients in the Phase 1/2 study 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% and a complete response rate of 68%.

At the December 2021 Annual Meeting of America Society of Hematology, the Company reported two-year follow-up data from this clinical trial on outcomes and cytokine biomarkers associated with survival. The data demonstrated a median duration of response of 16 months (range 5-36 months), an overall survival at two years of 78% (95% CI, 51%–91%) and a safety profile similar to that reported previously.

On April 26, 2022, the Company announced that the FDA cleared its investigational new drug (IND) application and removed the clinical hold for a cryopreserved formulation of GDA-201. In June the Company announced the activation of the initial clinical sites to screen and enroll patients in the company-sponsored Phase 1/2 study evaluating a cryopreserved formulation of GDA-201, a readily available cell therapy candidate for the treatment of follicular and diffuse large B cell lymphomas.

Basis of presentation of the financial statements:

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X promulgated by the U.S Securities and Exchange Commission (the “SEC”). Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.

The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K as of December 31, 2021 filed with the SEC on March 24, 2022. The interim period results do not necessarily indicate the results that may be expected for any other interim period or for the full fiscal year.

GAMIDA CELL LTD. AND ITS SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 1:- GENERAL (Cont.)

Prior to 2021, the Company prepared its financial statements in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB), as permitted in the United States based on the Company’s qualification as a “foreign private issuer” under the rules and regulations of the SEC. In connection with the loss of the Company’s status as a foreign private issuer effective on January 1, 2022, the Company, as a domestic filer, prepared its consolidated financial statements in accordance with U.S. GAAP.

The Company continues to devote 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 June 30, 2022 was $376,234 and negative cash flows from operating activities during the six-month period ended June 30, 2022 was $39,589. The Company is planning to finance its operations from its existing and future working capital resources and to continue to evaluate additional sources of capital and financing. However, there is no assurance that additional capital and/or financing will be available to the Company, and even if available, whether it will be on terms acceptable to the Company or in amounts required.

These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The unaudited condensed 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.

The Company has a wholly owned U.S. subsidiary, Gamida Cell Inc. (the “Subsidiary”), which was incorporated in 2000, under the laws of the State of Delaware. The Company has one operating segment and reporting unit.

NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES

Use of estimates:

The preparation of condensed financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The Company’s management believes that the estimates, judgment and assumptions used are reasonable based upon information available at the time they are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities at the dates of the consolidated financial statements, and the reported amount of expenses during the reporting periods. Actual results could differ from those estimates.

Convertible senior notes:

The Company accounts for its convertible senior notes in accordance with ASC 470-20 “Debt with Conversion and Other Options”. The Company early adopted ASU 2020-06 using the modified retrospective approach. The convertible senior notes are accounted for as a single liability measured at its amortized cost, as no other embedded features require bifurcation and recognition as derivatives according to ASC 815-40.

GAMIDA CELL LTD. AND ITS SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)

Basic and diluted net loss per share:

The Company computes net loss per share using the two-class method required for participating securities. The two-class method requires income available to ordinary shareholders for the period to be allocated between ordinary shares and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed. The Company considers its restricted shares to be participating securities as the holders of the restricted shares would be entitled to dividends that would be distributed to the holders of ordinary shares, on a pro-rata basis. These participating securities do not contractually require the holders of such shares to participate in the Company’s losses. As such, net loss for the periods presented was not allocated to the Company’s participating securities.

The Company’s basic net loss per share is calculated by dividing net loss attributable to ordinary shareholders by the weighted-average number of shares of ordinary shares outstanding for the period, without consideration of potentially dilutive securities. The diluted net loss per share is calculated by giving effect to all potentially dilutive securities outstanding for the period using the treasury share method or the if-converted method based on the nature of such securities. Diluted net loss per share is the same as basic net loss per share in periods when the effects of potentially dilutive ordinary shares are anti-dilutive.

NOTE 3:- LEASES

The Company entered into operating leases primarily for its production plant, and its laboratories and offices. The leases have remaining lease terms of up to six years, and the Company does not assume renewals in its determination of the lease term unless the renewals are considered as reasonably certain at lease commencement.

The components of operating lease costs were as follows:

	Six months ended June 30,
	2022		2021

Operating lease costs	$	1,417	$	1,170
Short-term lease costs		84		74

Total lease costs	$	1,501	$	1,244

Supplemental balance sheet information related to operating leases is as follows:

	Six months ended June 30, 2022

Weighted average remaining lease term (in years)		3.93
Weighted average discount rate		2.58	%

GAMIDA CELL LTD. AND ITS SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 3:- LEASES (Cont.)

Maturities of lease liabilities were as follows:

	As of June 30, 2022

2022	$	1,344
2023		1,602
2024		1,608
2025		1,206
2026		708
Thereafter		544

Total undiscounted lease payments		7,012
Less: Imputed interest		(262	)

Present value of lease liabilities	$	6,750

NOTE 4:- CONVERTIBLE SENIOR NOTES, NET

On February 16, 2021, the Subsidiary issued convertible senior notes (the “Convertible Notes”) due in 2026, in the aggregate principal amount of $75 million, pursuant to an Indenture between the Company, the Subsidiary, and Wilmington Savings Fund Society, FSB, dated February 16, 2021 (the “Indenture”). The Convertible Notes bear interest payable semiannually in arrears, at a rate of 5.875% per year. The Convertible Notes will mature on February 15, 2026, unless earlier converted, redeemed or repurchased in accordance with their terms.

Subject to the provisions of the Indenture, the holders of the Convertible Notes have the right, prior to the close of business on the second scheduled trading day immediately preceding February 15, 2026, to convert any Convertible Notes or portion thereof that is $1,000 or an integral multiple thereof, into the Company’s ordinary 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 conversion rate is subject to adjustment in specified events.

Upon the occurrence of a fundamental change (as defined in the Indenture), holders of the Convertible Notes may require the Company to repurchase for cash all or a portion of their Convertible Notes, in multiples of $1,000 principal amount, at a repurchase price equal to 100% of the principal amount of the Convertible Notes, plus any accrued and unpaid interest, if any, to, but excluding, interest accrued after the date of such repurchase notice. If certain fundamental changes referred to as make-whole fundamental changes occur, the conversion rate for the Convertible Notes may be increased.

GAMIDA CELL LTD. AND ITS SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 4:- CONVERTIBLE SENIOR NOTES, NET (Cont.)

Subject to the provisions of the Indenture, the Subsidiary may redeem for cash all or a portion of the Convertible Notes for cash, at its option, at a redemption price equal to 100% of the principal amount of the Convertible Notes to be redeemed, plus accrued and unpaid interest on the notes to be redeemed, if the last reported closing price of the Company’s ordinary shares has been at least 130% of the exchange price then in effect for at least 20 trading days during any 30 consecutive trading day period, and in the event of certain tax law changes.

The Convertible Notes are accounted for as a single liability measured at its amortized cost, as no other embedded features require bifurcation and recognition as derivatives according to ASC 815-40.

	As of June 30, 2022

Liability component:
Principal amount	$	75,000
Issuance costs		(4,223	)

Net of issuance costs		70,777
Amortized issuance costs		1,024

Net carrying amount	$	71,801

The total issuance costs of the Convertible Notes amounted to $4,223 and are amortized to interest expenses at an annual effective interest rate of 7.37%, over the term of the Convertible Notes.

NOTE 5:- FAIR VALUE MEASUREMENTS

The following tables present the fair value of money market funds and marketable securities as of June 30, 2022 and December 31, 2021:

	June 30, 2022						December 31, 2021
	Level 1		Level 2		Total		Level 1		Level 2		Total
Cash equivalents:
Money market funds	$	32,682	$	-	$	32,682	$	51,021	$	-	$	51,021

Marketable securities:
Corporate debentures		-		8,230		8,230		-		19,605		19,605
Government debentures		-		8,942		8,942		-		20,429		20,429

Total assets measured at fair value	$	32,682	$	17,172	$	49,854	$	51,021	$	40,034	$	91,055

We classify our cash equivalents and marketable securities within Level 1 or Level 2 because we use quoted market prices or alternative pricing sources and models utilizing market observable inputs to determine their fair value.

GAMIDA CELL LTD. AND ITS SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 6:- CONTINGENT LIABILITIES AND COMMITMENTS

Legal proceedings:

From time to time the Company or its subsidiary may be involved in legal proceedings and/or litigation arising in the ordinary course of business. While the outcome of these matters cannot be predicted with certainty, the Company does not believe it will have a material effect on its consolidated financial position, results of operations, or cash flows.

SEC Form 10-Q filed by Gamida Cell Ltd.