Filed Pursuant to Rule 424(b)(3)
Registration No. 333-258600

PROSPECTUS

Up to 22,874,999 Shares of Class A Common Stock Issuable Upon Exercise of Warrants
Up to 129,858,855 Shares of Class A Common Stock
Up to 8,499,999 Warrants to Purchase Class A Common Stock

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This prospectus relates to the issuance by us of an aggregate of up to 22,874,999 shares of our Class A common stock, $0.0001 par value per share (the “Class A Common Stock”), which consists of (i) the issuance by us and resale of up to 8,499,999 shares of Class A Common Stock that are issuable upon the exercise of (A) 7,000,000 warrants issued in a private placement to GX Sponsor LLC (the “Sponsor”), in connection with the GX IPO and (B) 1,499,999 warrants issued to certain members of the Sponsor as repayment for certain working capital loans made to GX (the warrants in (A) and (B) collectively, the “Private Placement Warrants”), and (ii) up to 14,375,000 shares of Class A Common Stock that are issuable upon the exercise of 14,375,000 warrants (the “Public Warrants,” and, together with the Private Placement Warrants, the “Warrants”) issued in the GX IPO. We will receive the proceeds from the exercise of any Warrants for cash.

This prospectus also relates to the offer and sale from time to time by the selling securityholders named in this prospectus or their permitted transferees (the “selling securityholders”) of (i) up to 129,858,855 shares of Class A Common Stock consisting of (a) up to 8,340,000 shares of Class A Common Stock issued in a private placement pursuant to subscription agreements (“Subscription Agreements”) entered into on January 8, 2021 (b) up to 2,000,000 shares of Class A Common Stock issued in a private placement pursuant to a subscription agreement entered into on May 5, 2021 with Palantir Technologies Inc. (“Palantir Technologies”), (c) up to 976,943 shares of Class A Common Stock issued in private placements on July 21, 2021 to certain advisors of Legacy Celularity and GX, (d) up to 7,187,500 shares of Class A Common Stock previously held by the Sponsor following a private placement in connection with the initial public offering of GX, (e) up to 8,499,999 shares of Class A Common Stock issuable upon exercise of the Private Placement Warrants, (f) up to 19,811,204 shares of Class A Common Stock issuable upon exercise of the Converted Legacy Warrants, (g) up to 11,744,882 shares of Class A Common Stock issuable upon exercise of options and awards and (h) up to 71,298,327 shares of Class A Common Stock pursuant to that certain Registration Rights Agreement (the “Registration Rights Agreement”), dated July 16, 2021, between us and certain selling securityholders granting such holders registration rights with respect to such shares, and (ii) up to 8,499,999 Private Placement Warrants. We will not receive any proceeds from the sale of shares of Class A Common Stock or Warrants by the selling securityholders pursuant to this prospectus.

The selling securityholders may offer, sell or distribute all or a portion of the securities hereby registered publicly or through private transactions at prevailing market prices or at negotiated prices. We will not receive any of the proceeds from such sales of the shares of Class A Common Stock or Warrants, except with respect to amounts received by us upon exercise of the Warrants. We will bear all costs, expenses and fees in connection with the registration of these securities, including with regard to compliance with state securities or “blue sky” laws. The selling securityholders will bear all commissions and discounts, if any, attributable to their sale of shares of Class A Common Stock or Warrants. See the section titled “Plan of Distribution.”

The Class A Common Stock and Public Warrants are listed on The Nasdaq Stock Market LLC (“Nasdaq”) under the symbols “CELU” and “CELUW”, respectively. On August 11, 2021, the last reported sales price of Class A Common Stock was $7.60 per share and the last reported sales price of our Public Warrants was $1.3050 per warrant.

We are an “emerging growth company” as defined under U.S. federal securities laws and, as such, have elected to comply with reduced public company reporting requirements. This prospectus complies with the requirements that apply to an issuer that is an emerging growth company. We are incorporated in Delaware.

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Investing in our securities involves a high degree of risk.    You should review carefully the risks and uncertainties described in the section titled “Risk Factors” beginning on page 8 of this prospectus, and under similar headings in any amendments or supplements to this prospectus.

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Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities, or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

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Prospectus dated August 12, 2021

TABLE OF CONTENTS

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You should rely only on the information contained in this prospectus, any supplement to this prospectus or in any free writing prospectus, filed with the Securities and Exchange Commission. Neither we nor the selling securityholders have authorized anyone to provide you with additional information or information different from that contained in this prospectus filed with the Securities and Exchange Commission. We and the selling securityholders take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. The selling securityholders are offering to sell, and seeking offers to buy, our securities only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of our securities. Our business, financial condition, results of operations and prospects may have changed since that date.

For investors outside of the United States: Neither we nor the selling securityholders, have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of our securities and the distribution of this prospectus outside the United States.

To the extent there is a conflict between the information contained in this prospectus, on the one hand, and the information contained in any document incorporated by reference filed with the Securities and Exchange Commission before the date of this prospectus, on the other hand, you should rely on the information in this prospectus. If any statement in a document incorporated by reference is inconsistent with a statement in another document incorporated by reference having a later date, the statement in the document having the later date modifies or supersedes the earlier statement.

ABOUT THIS PROSPECTUS

This prospectus is part of a registration statement on Form S-1 that we filed with the Securities and Exchange Commission (the “SEC”) using the “shelf” registration process. Under this shelf registration process, the selling securityholders may, from time to time, sell the securities offered by them described in this prospectus. We will not receive any proceeds from the sale by such selling securityholders of the securities offered by them described in this prospectus. This prospectus also relates to the issuance by us of the shares of Class A Common Stock issuable upon the exercise of any Warrants. We will not receive any proceeds from the sale of shares of Class A Common Stock issuable upon exercise of the Warrants pursuant to this prospectus, except with respect to amounts received by us upon the exercise of the Warrants for cash.

Neither we nor the selling securityholders have authorized anyone to provide you with any information or to make any representations other than those contained in this prospectus or any applicable prospectus supplement or any free writing prospectuses prepared by or on behalf of us or to which we have referred you. Neither we nor the selling securityholders take responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. Neither we nor the selling securityholders will make an offer to sell these securities in any jurisdiction where the offer or sale is not permitted.

We may also provide a prospectus supplement or post-effective amendment to the registration statement to add information to, or update or change information contained in, this prospectus. You should read both this prospectus and any applicable prospectus supplement or post-effective amendment to the registration statement together with the additional information to which we refer you in the sections of this prospectus titled “Where You Can Find More Information.”

On July 16, 2021, Celularity Inc. (f/k/a GX Acquisition Corp. (“GX”)) consummated the previously announced merger pursuant to that certain Merger Agreement and Plan of Reorganization, dated January 8, 2021 (the “Merger Agreement”), by and among GX, Alpha First Merger Sub, Inc., a Delaware corporation and a direct, wholly owned subsidiary of GX (“First Merger Sub”), Celularity LLC (f/k/a Alpha Second Merger Sub LLC), a Delaware limited liability company and a direct, wholly owned subsidiary of GX (“Second Merger Sub”), and Legacy Celularity.

Pursuant to the terms of the Merger Agreement, a business combination between GX and Legacy Celularity was effected through the (a) merger of First Merger Sub with and into Legacy Celularity with Legacy Celularity surviving as a wholly-owned subsidiary of GX (Legacy Celularity, in its capacity as the surviving corporation of the merger, the “Surviving Corporation”) (the “First Merger”) and (b) immediately following the First Merger and as part of the same overall transaction as the First Merger, the merger of the Surviving Corporation with and into Second Merger Sub, with Second Merger Sub as the surviving entity of the Second Merger, which ultimately resulted in Legacy Celularity becoming a wholly-owned direct subsidiary of GX (the “Second Merger” and, together with the First Merger, the “Mergers” and, collectively with the other transactions described in the Merger Agreement, the “Business Combination”). On the Closing Date, the registrant changed its name from GX Acquisition Corp. to Celularity Inc.

Unless the context indicates otherwise, references in this prospectus to the “Company,” “Celularity,” “we,” “us,” “our” and similar terms refer to Celularity Inc. (f/k/a GX Acquisition Corp.) and its consolidated subsidiaries (including Legacy Celularity). References to “GX” refer to the predecessor company prior to the consummation of the Business Combination.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Some of the statements contained in this prospectus constitute forward-looking statements within the meaning of the federal securities laws. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. These forward-looking statements include statements about future financial and operating results of the Company; benefits of the Business Combination; statements about the plans, strategies and objectives of management for future operations of the Company; statements regarding future performance; and other statements regarding the Business Combination. In some cases, you can identify these forward-looking statements by the use of terminology such as “anticipate,” “believe,” “can,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “forecast,” “intends,” “may,” “might,” “outlook,” “plan,” “possible,” “potential,” “predict,” “project,” “seek,” “should,” “strive,” “target,” “will,” “would” and the negative version of these words or other comparable words or phrases, but the absence of these words does not mean that a statement is not forward-looking.

These forward-looking statements are based on information available as of the date of this prospectus, and current expectations, forecasts and assumptions, and involve a number of risks and uncertainties. Accordingly, forward-looking statements in this prospectus and in any document incorporated herein by reference should not be relied upon as representing the Company’s views as of any subsequent date, and the Company does not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

As a result of a number of known and unknown risks and uncertainties, the Company’s actual results or performance may be materially different from those expressed or implied by these forward-looking statements. Some factors that could cause actual results to differ include:

•        the ability to maintain Celularity’s listing of Class A Common Stock on Nasdaq;

•        competition and the ability of Celularity to grow and manage growth profitably;

•        if the benefits of the Business Combination do not meet the expectations of investors or securities analysts;

•        costs related to the Business Combination;

•        changes in applicable laws or regulations;

•        risks inherent in developing Celularity’s therapeutic candidates, such as substantial delays in clinical trials;

•        risks associated with Celularity’s ongoing and planned clinical trials, such as unexpected data or clinical site activation rates or clinical trial enrollment rates that are lower than expected;

•        Celularity’s therapeutic candidates may cause undesirable side effects or have other properties that could halt their clinical development, prevent their regulatory approval, limit their commercial potential or result in significant negative consequences;

•        difficulties arising from Celularity’s third-party licenses, or supply-chain or manufacturing challenges;

•        Celularity’s ability to obtain adequate financing to fund its planned clinical trials and other expenses;

•        risks from any strategic alliances or licensing arrangements entered into in the future and not being able to realize the benefits of such alliances or licensing arrangements;

•        trends in the industry, changes in the competitive landscape, delays or disruptions due to the COVID-19 pandemic, as well as changes in the legal and regulatory framework for the industry or unexpected litigation or disputes and future expenditures; and

•        the possibility that Celularity may be adversely affected by other economic, business and/or competitive factors.

In addition, statements that “Celularity believes” or “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this prospectus, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and such statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

While forward-looking statements reflect our good faith beliefs, they are not guarantees of future performance. Except to the extent required by applicable law, we are under no obligation (and expressly disclaim any such obligation) to update or revise their forward-looking statements whether as a result of new information, future events, or otherwise. For a further discussion of these and other factors that could cause the our future results, performance or transactions to differ significantly from those expressed in any forward-looking statement, please see the section titled “Risk Factors.” You should not place undue reliance on any forward-looking statements, which are based only on information currently available to us (or to third parties making the forward-looking statements).

FREQUENTLY USED TERMS

“2021 Plan” means the Celularity Inc. 2021 Equity Incentive Plan that was previously approved by GX’s board of directors on July 12, 2021 and approved by GX’s stockholders on July 14, 2021; the 2021 Plan became effective on the Closing Date.

“Business Combination” means the transactions contemplated by the Merger Agreement, including, among other things, the Mergers.

“Closing” means the closing of the Business Combination.

“Closing Date” means July 16, 2021, the date on which the Closing occurred.

“Converted Legacy Warrants” means the warrants to purchase Series B preferred stock of Legacy Celularity that were converted into the right to purchase shares of Class A Common Stock in connection with the Business Combination.

“DGCL” means the General Corporation Law of the State of Delaware.

“ESPP” means the Celularity Inc. 2021 Employee Stock Purchase Plan that was approved by GX’s board of directors on July 12, 2021 and approved by GX’s stockholders on July 14, 2021; the ESPP became effective on the Closing Date.

“First Merger” means the merger of First Merger Sub with and into Legacy Celularity.

“First Merger Sub” means Alpha First Merger Sub, Inc., a Delaware corporation.

“GX” means GX Acquisition Corp., a Delaware corporation.

“GX IPO” means GX’s initial public offering, consummated on May 23, 2019.

“Legacy Celularity” means the entity formerly known as Celularity Inc., a Delaware corporation, which was renamed Celularity Operations, Inc. just prior to the Closing.

“Legacy Celularity Board” means the former board of directors of Legacy Celularity.

“Mergers” means the First Merger and the Second Merger, collectively.

“Merger Agreement” means the Agreement and Plan of Merger and Reorganization, dated as of January 8, 2021 (as it may be amended from time to time), by and among GX, First Merger Sub, Second Merger Sub and Legacy Celularity.

“PIPE” means that certain private placement in the aggregate amount of $83,400,000, consummated immediately prior to the consummation of the Business Combination, pursuant to those certain Subscription Agreements with GX, pursuant to which the subscribers purchased 8,340,000 shares of Class A Common Stock at a purchase price of $10.00 per share.

“PIPE Shares” means an aggregate of 8,340,000 shares of Class A Common Stock issued to the subscribers in the PIPE.

“Private Placement Warrants” means the 8,499,999 warrants consisting of (i) 7,000,000 warrants purchased by the Sponsor in connection with the GX IPO in a private placement transaction occurring simultaneously with the closing of the GX IPO and (ii) 1,499,999 warrants issued to members of the Sponsor in a private placement transaction as repayment for working capital loans made to GX, with each warrant exercisable, at an exercise price of $11.50, for one share of Class A Common Stock.

“Public Warrants” means the 14,375,000 warrants included as a component of the GX units sold in the GX IPO, each of which is exercisable, at an exercise price of $11.50, for one share of Class A Common Stock, in accordance with its terms.

“Second Merger” means the merger of Surviving Corporation with and into Second Merger Sub.

“Second Merger Sub” means Alpha Second Merger Sub, LLC, a Delaware limited liability company.

“Sponsor” means the GX Sponsor LLC.

“Sponsor Shares” means the 7,187,500 shares of Class A Common Stock held by the Sponsor following a private placement in connection with the initial public offering of GX and subsequent share recapitalization.

“Surviving Corporation” means the entity surviving the First Merger as a wholly-owned subsidiary of GX.

“Surviving Entity” means the entity surviving the Second Merger as a wholly owned subsidiary of GX.

“Warrants” means the Private Placement Warrants and the Public Warrants.

RISK FACTORS

Investing in our securities involves a high degree of risk. Before you make a decision to buy our securities, in addition to the risks and uncertainties discussed above under “Special Note Regarding Forward-Looking Statements,” you should carefully consider the risks and uncertainties described below together with all of the other information contained in this prospectus, including our financial statements and related notes appearing at the end of this prospectus and in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” before deciding to invest in our securities. If any of the events or developments described below were to occur, our business, prospects, operating results and financial condition could suffer materially, the trading price of our securities could decline and you could lose all or part of your investment. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also adversely affect our business.

Risks Related to Our Business and Industry

Celularity has incurred net losses in every period since its inception, has no cellular therapeutics approved for commercial sale and anticipates that it will incur substantial net losses in the future.

Celularity is a clinical-stage biopharmaceutical company, has no cellular therapeutics approved for commercial sale, has not generated any revenue from cellular therapeutic sales to date, generates limited revenues from its degenerative disease and biobanking businesses, and will continue to incur significant research and development and other expenses related to its ongoing operations. Investment in biopharmaceutical product development is highly speculative because it entails substantial upfront capital expenditures and significant risk that any potential therapeutic candidate will fail to demonstrate adequate efficacy or an acceptable safety profile, gain regulatory approval and become commercially viable. As a result, Celularity is not profitable and has incurred net losses in each period since its inception. For the year ended December 31, 2019, Celularity reported a net loss of $211.9 million. For the year ended December 31, 2020, Celularity reported a net loss of $208.2 million. As of December 31, 2020, it had an accumulated deficit of $563.6 million.

Celularity expects to incur significant expenditures for the foreseeable future, and Celularity expects these expenditures to increase as Celularity continues its research and development of, and seeks regulatory approvals for, cellular therapeutic candidates based on its four placental-derived allogeneic cell types: CAR-T cells, unmodified NK cells, genetically modified NK cells, and ASCs. Even if Celularity succeeds in commercializing one or more of its therapeutic candidates, Celularity will continue to incur substantial research and development and other expenditures to develop and market additional therapeutic candidates. Celularity may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect its business. The size of its future net losses will depend, in part, on the rate of future growth of its expenses and its ability to generate revenue from its cellular therapeutic candidates. Celularity’s prior losses and expected future losses have had and will continue to have an adverse effect on its stockholders’ equity and working capital.

Celularity’s placental-derived cellular therapy candidates represent a novel approach to cancer, infectious and degenerative disease treatments that creates significant challenges.

Celularity is developing a pipeline of allogeneic cellular therapeutic candidates that are derived from healthy, full-term, human donor placentas, and in certain cases, are genetically modified. Allogeneic cells are intended to be “off-the-shelf” for use in any patient. Advancing these novel therapeutic candidates creates significant challenges, including:

•        manufacturing cellular therapeutic candidates to its and regulatory specifications and in a timely manner to support its clinical trials, and, if approved, commercialization;

•        biosourcing placentas and other materials and supplies for the manufacture of its therapeutic candidates;

•        any variability in placental-derived cells, or a higher-rejection rate, which could ultimately affect its ability to produce therapeutics in a reliable and consistent manner and treat certain patients;

•        educating medical personnel regarding the potential advantages and potential disadvantages such as the side effect profile of its therapeutics, if approved, such as the potential adverse side effects related to graft-versus-host disease (“GvHD”), cytokine release syndrome (“CRS”), neurotoxicity, prolonged cytopenia and neutropenic sepsis;

•        using medicines to manage adverse side effects of Celularity’s therapeutic candidates that may not adequately control the side effects and/or may have a detrimental impact on the efficacy of the treatment;

•        obtaining regulatory approval, as the U.S. Food and Drug Administration (“FDA”), and other regulatory authorities have limited experience with development of allogeneic cell therapies for cancer, infectious and degenerative diseases; and

•        establishing sales and marketing capabilities for its therapeutic portfolio upon obtaining any regulatory approval to gain market acceptance of a novel therapy.

Celularity’s historical operating results indicate substantial doubt exists related to its ability to continue as a going concern.

Celularity has incurred net losses and used significant cash in operating activities since inception. Celularity has an accumulated deficit of approximately $563.6 million and has cash and cash equivalents of $54.3 million as of December 31, 2020. These factors raise substantial doubt about Celularity’s ability to continue as a going concern and satisfying its estimated liquidity needs 12 months from the issuance of the financial statements. If Celularity continues to experience operating losses, and it is not able to generate additional liquidity through a capital raise or other cash infusion, Celularity might need to secure additional sources of funds, which may or may not be available to it. Additionally, a failure to generate additional liquidity could negatively impact Celularity’s ability to operate its business.

The gene-editing technology Celularity uses is relatively new, and if Celularity is unable to use this technology in its intended therapeutic candidates, Celularity’s revenue opportunities will be materially limited.

Celularity uses gene editing techniques to modify certain of the placental-derived cell types. Celularity uses these technologies to either reduce the risk of toxicity or improve the potential for efficacy. These technologies are relatively new, and may not be shown to be effective at achieving the expected effect in clinical studies, or may be associated with safety issues, either in Celularity’s clinical development programs or those of others using these novel technologies. Any issues with the novel gene editing technologies, even if not experienced by Celularity, could negatively affect its development programs. For instance, the genetic modifications may create unintended changes to the DNA such as a non-target site gene-editing, a large deletion, or a DNA translocation, any of which could lead to unwanted side-effects. The gene-editing of its therapeutic candidates may also not be successful in limiting the risk of GvHD or thrombosis or in increasing affinity.

In addition, the gene-editing industry is rapidly developing, and Celularity’s competitors may introduce new technologies that render the technologies that Celularity employs for its therapeutic candidates obsolete or less attractive. New technology could emerge at any point in the development cycle of its therapeutic candidates. As competitors use or develop new technologies, any failures of such technology could adversely impact Celularity’s programs. Celularity also may be placed at a competitive disadvantage, and competitive pressures may force it to implement new technologies at a substantial cost. In addition, Celularity’s competitors may have greater financial, technical and personnel resources that allow them to enjoy technological advantages and may in the future allow them to implement new technologies before Celularity can. Celularity cannot be certain that it will be able to implement technologies on a timely basis or at an acceptable cost. If Celularity is unable to maintain technological advancements consistent with industry standards, its operations and financial condition may be adversely affected.

Celularity’s business could be materially adversely affected by the effects of health pandemics or epidemics, including the current COVID-19 pandemic and future outbreaks of the disease, in regions where it or third parties on which it relies have concentrations of clinical trial sites or other business operations.

Celularity’s business could be materially adversely affected by the effects of health pandemics or epidemics, including the current outbreak of COVID-19 and future outbreaks of the disease. Enrollment in clinical trials of CYCART-19 for acute myeloid leukemia and multiple myeloma, was delayed due to the COVID-19 outbreak and

has only recently resumed. Additionally, Celularity’s ability to collect healthy, full-term donor placentas was limited during the height of the COVID-19 pandemic in New Jersey and the tri-state area as hospital resources were diverted. Although Celularity has reopened its offices and employees have transitioned back to working on site, there is a lack of uniformity of restrictions and requirements among its clinical trial sites, and future shelter-in-place or similar type restrictions could be reimposed, and once again, hospital personnel may not pursue donor consents. Celularity is now also subject to risk of outbreaks at its facilities, and potential exposure to employee claims regarding workplace safety, and unanticipated shutdowns or quarantines could be imposed in the future, which would disrupt its operations. This uncertainty and the evolving nature of policies and restrictions, may negatively impact productivity, disrupt Celularity’s business and further delay clinical programs and timelines, the magnitude of which will depend, in part, on the length and severity of the restrictions and other limitations on Celularity’s ability to conduct its business in the ordinary course, which could negatively impact its business, operating results and financial condition.

The spread of COVID-19, which has caused a broad impact globally, may materially affect Celularity economically. While the potential economic impact brought by, and the duration of, the COVID-19 pandemic, may be difficult to assess or predict, it has resulted in significant disruption of global financial markets. This disruption, if sustained or recurrent, could make it more difficult for Celularity to access capital, which could in the future negatively affect its liquidity. In addition, a recession or market correction resulting from the spread of COVID-19 could materially affect Celularity’s business and the value of its Class A Common Stock.

The global COVID-19 pandemic continues to evolve, and its ultimate impact or that of any similar health pandemic or epidemic is highly uncertain. Celularity does not yet know the full extent of potential delays or impacts on its business, its planned and ongoing clinical trials, the hospitals and healthcare systems or the global economy as a whole. These effects could have a material impact on Celularity’s operations, and it will continue to monitor the COVID-19 situation closely.

Celularity relies on CAR-T viral vectors from Sorrento Therapeutics, Inc. for its CYCART-19 therapeutic candidate and termination of this license, or any future licenses, could result in the loss of significant rights, which would harm its business.

Celularity is dependent on patents, know-how and proprietary technology, both its own and licensed from others. In order to modify the placental-derived T cells to produce its CAR-T cell line, and its CYCART-19 therapeutic candidate, Celularity uses retroviral technology licensed from, and supplied by, Sorrento Therapeutics, Inc. (“Sorrento”). Celularity depends substantially on its license agreement with Sorrento. This license may be terminated by Sorrento for Celularity’s uncured material breach. Any termination of this license could result in the loss of significant rights and could harm Celularity’s ability to commercialize CYCART-19, and any future therapeutic candidates that use the licensed CAR construct. To the extent that obligations under this license agreement are not met, Celularity may lose the benefits of the Sorrento license agreement and the CAR construct it uses for CYCART-19. Further, Celularity would need an additional license from Sorrento or access to other CAR construct technology to research and develop therapeutic candidates directed at targets not covered by its existing agreement with Sorrento. In addition, the Sorrento CAR-T retroviral technology may fail to produce viable therapeutic candidates. If Celularity were to obtain approval of CYCART-19, there is no assurance that Sorrento would be able to supply sufficient viral vectors for commercial-scale manufacturing. If the agreement with Sorrento was terminated or Celularity required other technology, such a license or technology may not be available to it on reasonable terms, or at all, particularly given the limited number of alternative technologies in the market. See the section entitled “Business — Licenses and Collaboration Agreements — Sorrento Therapeutics, Inc.” for more information regarding the license from Sorrento.

Celularity also uses other gene editing technology for the other cellular therapeutics in its pipeline. While certain of these technologies are available from multiple commercial vendors, were any of these vendors to refuse to supply Celularity, it could negatively impact its development of its modified NK cells and ASCs, which depend on genetic modification to achieve the intended clinical benefits. Moreover, some gene editing technology that is currently available without license, could become patented or proprietary to a third party. If Celularity is unable to obtain a license on commercially reasonable terms when needed, it could be forced to redesign its cellular therapeutics and or stop development. Any of these occurrences could have a material adverse effect on Celularity’s business prospects.

Disputes may also arise between Celularity and its current and future licensors regarding intellectual property subject to a license agreement, including those related to:

•        the scope of rights granted under the license agreement and other interpretation-related issues;

•        whether and the extent to which its technology and processes infringe on intellectual property of the licensor that is not subject to the licensing agreement;

•        its right to sublicense patent and other rights to third parties under collaborative development relationships;

•        its diligence obligations with respect to the use of the licensed technology in relation to its development and commercialization of its therapeutic candidates, and what activities satisfy those diligence obligations; and

•        the ownership of inventions and know-how resulting from the joint creation or use of intellectual property by Celularity’s licensors and Celularity and its partners.

If disputes over intellectual property that Celularity has licensed, or may license in the future, prevent or impair its ability to maintain its licensing arrangements on acceptable terms, Celularity may be unable to successfully develop and commercialize the affected therapeutic candidates.

Celularity is generally also subject to all of the same risks with respect to protection of intellectual property that it licenses, as it is for intellectual property that it owns, which are described below. If Celularity or its current and future licensors fail to adequately protect this intellectual property, its ability to commercialize products could suffer.

Celularity’s therapeutic candidates are based on novel technologies, which makes it difficult to predict the time and cost of therapeutic candidate development and obtaining regulatory approval.

Celularity has concentrated its research, development and manufacturing efforts on its placental-derived allogeneic T cell, NK cell and mesenchymal-like stromal cell types, and its future success depends on the successful development of this therapeutic approach. Celularity has developed the Celularity IMPACT platform, which covers biosourcing through manufacturing of cryopacked cells, and continues to invest in optimizing and improving its technologies. There can be no assurance that any development problems it experiences in the future will not cause significant delays or unanticipated costs, or that such development problems can be overcome. Celularity may also experience delays in scaling its manufacturing process when appropriate for commercialization, which may prevent it from completing its clinical studies or commercializing its therapeutics on a timely or profitable basis, if at all. In addition, as Celularity is in the early stages of clinical development, Celularity does not know the doses to be evaluated in pivotal trials or, if approved, commercially. Finding a suitable dose for its cell therapeutic candidates may delay its anticipated clinical development timelines. In addition, Celularity’s expectations with regard to its scalability and costs of manufacturing may vary significantly as it develops its therapeutic candidates and understands these critical factors.

The clinical study requirements of the FDA, European Medicines Agency, and other regulatory agencies and the criteria these regulators use to determine the safety and efficacy of a therapeutic candidate are determined according to the type, complexity, novelty and intended use and market of the potential therapeutics. The regulatory approval process for novel therapeutics candidates such as Celularity’s can be more complex and consequently more expensive and take longer than for other, better known or extensively studied pharmaceutical or other therapeutic candidates. While Celularity expects reduced variability in its allogeneic cell therapeutic candidates compared to autologous products, Celularity does not have significant clinical data supporting any benefit of lower variability and the use of healthy donor full-term placentas, and related screening requirements, may create separate variability challenges. More generally, approvals by any regulatory agency may not be indicative of what any other regulatory agency may require for approval or what such regulatory agencies may require for approval in connection with new therapeutic candidates. Moreover, Celularity’s therapeutic candidates may not perform successfully in clinical trials or may be associated with adverse events that distinguish them from the autologous therapies that have previously been approved. For instance, allogeneic T cell therapeutic candidates may result in GvHD not experienced with autologous T cell products. While Celularity has modified its CAR-T cell candidate to address this concern, CYCART-19 may not

be effective in clinical trials. Even if Celularity collects promising initial clinical data of its therapeutic candidates, longer-term data may reveal new adverse events or responses that are not durable. Unexpected clinical outcomes would significantly impact its business.

Celularity’s business is highly dependent on the success of its lead therapeutic candidates. If Celularity is unable to obtain approval for its lead candidates and effectively commercialize its lead therapeutic candidates for the treatment of patients in approved indications, its business would be significantly harmed.

Celularity’s business and future success depends on its ability to obtain regulatory approval of, and then successfully commercialize, its most advanced therapeutic candidates, including CYCART-19, CYNK-001, CYNK-101 and APPL-001. Because these placental-derived allogeneic cells are among the first allogeneic placental-derived cell therapies to be evaluated in the clinic, the failure of any such therapeutic candidate, or the failure of other allogeneic cell therapies, may impede Celularity’s ability to develop its therapeutic candidates, and significantly influence physicians’ and regulators’ opinions in regards to the viability of its entire pipeline of placental-derived allogeneic cell therapies, particularly if high or uncontrolled rates of GvHD or other adverse events are observed. If significant adverse events are observed with the administration of its therapeutic candidates, or if any of the therapeutic candidates is viewed as less safe or effective than autologous therapies, its ability to develop other placental-derived allogeneic therapies may be significantly harmed.

All of Celularity’s therapeutic candidates, including its lead therapeutic candidates, will require additional clinical and non-clinical development, regulatory review and approval in multiple jurisdictions, substantial investment, scaled commercial manufacturing capacity and significant marketing efforts before Celularity can generate any revenue from sales of its cellular therapeutics. In addition, because Celularity’s therapeutic candidates are all based on a similar process, the Celularity IMPACT platform, if any of the lead therapeutic candidates encounters safety or efficacy problems, manufacturing problems, developmental delays, regulatory issues or other problems, Celularity’s development plans and business for its therapeutics pipeline would be significantly harmed.

Celularity’s therapeutic candidates may cause undesirable side effects or have other properties that could halt their clinical development, prevent their regulatory approval, limit their commercial potential or result in significant negative consequences.

Undesirable or unacceptable side effects caused by Celularity’s therapeutic candidates could cause it or regulatory authorities to interrupt, delay or halt clinical trials and could result in a more restrictive label or the delay or denial of regulatory approval by the FDA or other comparable foreign regulatory authorities. Results of Celularity’s clinical trials could reveal a high and unacceptable severity and prevalence of side effects or unexpected characteristics. Approved autologous cell therapies and those under development have shown frequent rates of CRS and neurotoxicity, and adverse events have resulted in the death of patients. Certain of Celularity’s therapeutic candidates, such as CYCART-19, CYNK-101 and APPL-001 undergo genetic engineering. As these are novel technologies, errors may occur or may not present until used in humans in the clinic, and could cause adverse events. While Celularity believes that placental-derived cells have an inherent safety profile that should limit adverse events, including its use of NK cells and ASCs, there can be no assurance that this is the case as these are novel therapeutics.

As Celularity continues to evolve its placental-derived therapeutic programs, it may need to halt or modify development of certain candidates as a result of adverse events. For example, in designing APPL-001, Celularity made certain modifications and adjustments, including a genetic modification due to an increased risk of thrombosis observed in a Phase 1 clinical trial of a placental-derived cell therapeutic.

In any of Celularity’s ongoing or planned clinical trials, patients may experience severe adverse events related to its allogeneic cell therapeutic candidates, some of which may result in death. If unacceptable toxicities arise in the development of its therapeutic candidates, Celularity could suspend or terminate its trials or the FDA or comparable foreign regulatory authorities could order it to cease clinical trials or deny approval of its therapeutic candidates for any or all targeted indications. The data safety monitoring board may also suspend or terminate a clinical trial at any time on various grounds, including a finding that the research patients are being exposed to an unacceptable health risk, including risks inferred from other unrelated immunotherapy trials. Treatment-related side effects could also affect patient recruitment or the ability of enrolled subjects to complete the trial or result in potential product liability

claims. In addition, these side effects may not be appropriately recognized or managed by the treating medical staff, as toxicities resulting from cell therapy are not normally encountered in the general patient population and by medical personnel. Any of these occurrences may harm Celularity’s business, financial condition and prospects significantly.

Celularity’s clinical trials may fail to demonstrate the safety and efficacy of any of its therapeutic candidates, which would prevent or delay regulatory approval and commercialization.

Before obtaining regulatory approvals for the commercial sale of its cell therapeutic candidates, Celularity must demonstrate through lengthy, complex and expensive preclinical testing and clinical trials that its therapeutic candidates are both safe and effective for use in each target indication. Clinical testing is expensive and can take many years to complete, and its outcome is inherently uncertain. Failure can occur at any time during the clinical trial process. The results of preclinical studies and early clinical trials of Celularity’s therapeutic candidates may not be predictive of the results of later-stage clinical trials, including in any post-approval studies.

There is typically an extremely high rate of attrition from the failure of therapeutic candidates proceeding through clinical trials. Therapeutic candidates in later stages of clinical trials may fail to show the desired safety and efficacy profile despite having progressed through preclinical studies and initial clinical trials. A number of companies in the biopharmaceutical industry have suffered significant setbacks in advanced clinical trials due to lack of efficacy, insufficient durability of efficacy or unacceptable safety issues, notwithstanding promising results in earlier trials. Most therapeutic candidates that commence clinical trials are never approved as therapeutics.

In addition, for ongoing and any future trials that may be completed, Celularity cannot guarantee that the FDA or foreign regulatory authorities will interpret the results as Celularity does, and more trials could be required before Celularity submits its therapeutic candidates for approval. To the extent that the results of the trials are not satisfactory to the FDA or foreign regulatory authorities for support of a marketing application, approval of Celularity’s therapeutic candidates may be significantly delayed, or Celularity may be required to expend significant additional resources, which may not be available to us, to conduct additional trials in support of potential approval of its therapeutic candidates.

Initial, interim and preliminary data from its clinical trials that Celularity announces or publishes from time to time may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data.

From time to time, Celularity may publish initial, interim or preliminary data from its clinical studies. Interim data from clinical trials that Celularity may complete are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data become available. Preliminary data also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary data previously published. As a result, initial, interim and preliminary data should be viewed with caution until the final data are available. Adverse differences between preliminary or interim data and final data could significantly harm Celularity’s business prospects.

Celularity may not be able to file INDs to commence additional clinical trials on the timelines it expects, and even if Celularity is able to, the FDA may not permit it to proceed.

Celularity plans to submit INDs for additional therapeutic candidates in the future, including two planned in 2021 for CYCART-19 and CYNK-101. Celularity cannot be certain that submission of an IND or IND amendment will result in the FDA allowing testing and clinical trials to begin, or that, once begun, issues will not arise that suspend or terminate such clinical trials. The manufacturing of allogeneic cell therapies remains an emerging and evolving field. Accordingly, Celularity expects chemistry, manufacturing and control related topics, including product specification, will be a focus of IND reviews, which may delay the clearance of INDs. Additionally, even if such regulatory authorities agree with the design and implementation of the clinical trials set forth in an IND or clinical trial application, Celularity cannot guarantee that such regulatory authorities will not change their requirements in the future.

Celularity may encounter substantial delays in its clinical trials or may not be able to conduct its trials on the timelines Celularity expects.

Clinical testing is expensive, time consuming and subject to uncertainty. Celularity cannot guarantee that any clinical studies will be conducted as planned or completed on schedule, if at all. Even if its trials begin as planned, issues may arise that could suspend or terminate such clinical trials. A failure of one or more clinical studies can occur at any stage of testing, and its future clinical studies may not be successful. Events that may prevent successful or timely completion of clinical development include:

•        inability to generate sufficient preclinical, toxicology or other in vivo or in vitro data to support the initiation of clinical studies;

•        delays in sufficiently developing, characterizing or controlling a manufacturing process suitable for clinical trials;

•        difficulty sourcing healthy full-term donor placentas of sufficient quality and in sufficient quantity to meet Celularity’s development needs;

•        delays in developing suitable assays for screening patients for eligibility for trials with respect to certain therapeutic candidates;

•        delays in reaching a consensus with regulatory agencies on study design;

•        delays in reaching agreement on acceptable terms with prospective contract research organizations (“CROs”), and clinical study sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and clinical study sites;

•        delays in obtaining required institutional review board (“IRB”) approval at each clinical study site;

•        imposition of a temporary or permanent clinical hold by regulatory agencies for a number of reasons;

•        delays in patient recruitment, and or difficulty collaborating with patient groups and investigators, or other issues involving patient, such as completing participation or return for post-treatment follow-up, or dropping-out;

•        failure by Celularity’s CROs, other third parties or Celularity to adhere to clinical study requirements;

•        failure to perform in accordance with the FDA’s good clinical practice (“GCP”) requirements or applicable regulatory guidelines in other countries;

•        issues with manufacturing of cellular therapeutics, including delays in manufacturing, testing, releasing, validating sufficient stable quantities of its therapeutic candidates for use in clinical studies or the inability to do any of the foregoing;

•        occurrence of adverse events associated with the therapeutic candidate that are viewed to outweigh its potential benefits;

•        changes in regulatory requirements and guidance that require amending or submitting new clinical protocols;

•        changes in the standard of care on which a clinical development plan was based, which may require new or additional trials;

•        the cost of clinical studies of Celularity’s therapeutic candidates being greater than Celularity anticipates;

•        negative or inconclusive results from clinical studies, which may result in Celularity deciding, or regulators requiring it, to conduct additional clinical studies or abandon development programs; and

•        delays or failure to secure supply agreements with suitable raw material suppliers, or any failures by suppliers to meet its quantity or quality requirements for necessary raw materials.

The COVID-19 pandemic, or future pandemics, may also increase the risk of certain of the events described above and delay Celularity’s development timelines. For example, in early 2020, Celularity experienced delays in enrolling its Phase 1 clinical trial of CYNK-001 for AML as a result of the pandemic. Any inability to successfully complete preclinical and clinical development could result in additional costs to Celularity or impair its ability to generate revenue. In addition, if Celularity makes manufacturing or formulation changes to its therapeutic candidates, it may be required to, or it may elect to conduct additional studies to bridge its modified candidates to earlier versions or may need to conduct additional studies on newly discovered candidates. Clinical study delays could also shorten any periods during which Celularity’s therapeutics have patent protection and may allow its competitors to bring cell therapies to market before Celularity does, which could impair its ability to successfully commercialize Celularity’s therapeutic candidates and may harm its business and results of operations.

Monitoring and managing toxicities in patients receiving therapeutic candidates is challenging, which could adversely affect Celularity’s ability to obtain regulatory approval and commercialize its therapeutic candidates.

Celularity expects to contract with academic medical centers and hospitals experienced in the assessment and management of toxicities arising during clinical trials to monitor patients for GvHD (for CYCART-19), in addition to more generally monitoring patients for adverse events who participate in its clinical trials. Even with these procedures in place, these centers and hospitals may have difficulty observing patients and treating toxicities or any other adverse events, which could lead to more severe or prolonged toxicities or even patient deaths. If there are any serious issues with GvHD or any other unanticipated events, it could result in Celularity or the FDA delaying, suspending or terminating one or more of Celularity’s clinical trials, which could jeopardize regulatory approval of its therapeutic candidates. Moreover, to the extent Celularity’s cellular therapies are used outside of hospitals or medical centers, and made more widely available on a commercial basis, it can be even more difficult to observe and manage adverse events. Moreover, medicines used at centers to help manage adverse side effects of Celularity’s therapeutic candidates, such as any GvHD, may not adequately control the side effects and/or may have a detrimental impact on the efficacy of the treatment.

Clinical trials are expensive, time-consuming and difficult to design and implement.

Human clinical trials are expensive and difficult to design and implement, in part because they are subject to rigorous regulatory requirements. Because Celularity’s allogeneic placental-derived cell therapeutic candidates are based on new technologies and will require the creation of inventory of mass-produced, off-the-shelf therapeutics, Celularity expects that they will require extensive research and development and have substantial manufacturing and processing costs. In addition, costs to treat patients with certain cancers or other targeted indications, including treating any potential side effects, could be significant. Accordingly, its clinical trial costs for its cellular therapeutic candidates are likely to be significantly higher than for more conventional therapeutic technologies or drug products.

If Celularity fails to develop additional therapeutic candidates, its commercial opportunity will be limited.

One of Celularity’s core strategies is to pursue clinical development of additional therapeutic candidates beyond its initial four key programs, CYCART-19, CYNK-001, CYNK-101 and APPL-001, and to expand beyond the initial six indications targeted. Developing, obtaining regulatory approval and commercializing additional cell therapeutic candidates will require substantial additional funding and is prone to the risks of failure inherent in medical product development. Celularity cannot provide you any assurance that it will be able to successfully advance any of these additional therapeutic candidates through the development process.

Even if Celularity receives FDA approval to market additional therapeutic candidates, Celularity cannot assure you that any such therapeutic candidates will be successfully commercialized, widely accepted in the marketplace or more effective than other commercially available alternatives. If Celularity is unable to successfully develop and commercialize additional therapeutic candidates, its commercial opportunity will be limited. Moreover, a failure in obtaining regulatory approval of additional therapeutic candidates may have a negative effect on the approval process of any other, or result in losing approval of any approved, therapeutic candidate.

Celularity operates its own manufacturing and storage facility, which requires significant resources; manufacturing or other failures could adversely affect its clinical trials and the commercial viability of its therapeutic candidates and its biobanking and degenerative diseases businesses.

Celularity has a purpose-built facility located in Florham Park, New Jersey, where it handles storage of sourced healthy full-term donor placentas, undertakes bioharvesting, and proliferation and production of cryopackaged cells for infusion, and operates its biobanking and degenerative disease businesses. While Celularity has experience managing the process for its research and existing clinical trial needs, it may not be able to mass-produce off-the-shelf placental-derived allogeneic cellular therapeutics to satisfy demands for any of its therapeutic candidates as it expands into later stage clinical trials, or for commercial production post-approval. While Celularity believes the manufacturing and processing approaches are appropriate to support its current needs and that it has a scalable process, and has secured appropriate supply from various third-parties, including Sorrento, Celularity cannot be sure that its scaled process will result in allogeneic cells that will be safe and effective. Further, Celularity’s manufacturing and storage facility, including for its biobanking and degenerative disease businesses, must comply with current good manufacturing practices (“cGMPs”), which include, if applicable, the FDA’s current good tissue practices (“GTPs”) for the use of human cellular and tissue products. Accordingly, Celularity is subject to ongoing periodic unannounced inspection by the FDA and other governmental agencies to ensure strict compliance with cGMPs, including GTPs as applicable, and other government regulations.

The manufacture of biopharmaceutical products is complex and requires significant expertise, including the development of advanced manufacturing techniques and process controls. Manufacturers of cell therapy products often encounter difficulties in production, particularly in scaling out and validating initial production and ensuring the absence of contamination. These problems include difficulties with production costs and yields, quality control, including stability of the product, quality assurance testing, operator error, shortages of qualified personnel, as well as compliance with strictly enforced federal, state and foreign regulations. The application of new regulatory guidelines or parameters, such as those related to release testing, may also adversely affect Celularity’s ability to manufacture its therapeutic candidates. Furthermore, if contaminants are discovered in its supply of therapeutic candidates or in the manufacturing facilities, such supply may have to be discarded and Celularity’s manufacturing facilities may need to be closed for an extended period of time to investigate and remedy the contamination. Celularity cannot assure you that any stability or other issues relating to the manufacture of its therapeutic candidates will not occur in the future.

Celularity or any other of its vendors may fail to manage the logistics of storing and shipping its raw materials, including donor placentas. Storage failures and shipment delays and problems caused by Celularity, its vendors or other factors not in its control, such as weather, health pandemics or epidemics, could result in the inability to manufacture therapeutics, the loss of usable therapeutics or prevent or delay the delivery of therapeutic candidates to patients and clinical trial sites. Celularity may also experience manufacturing difficulties due to resource constraints or as a result of labor disputes. If Celularity were to encounter any of these difficulties, its ability to provide its therapeutic candidates to patients would be jeopardized.

Celularity currently has no cellular therapeutics marketing sales force. If Celularity is unable to establish marketing and sales capabilities or enter into agreements with third parties to market and sell its therapeutic candidates once approved, Celularity may not be able to generate product revenue.

Celularity currently has no sales, marketing or distribution capabilities and, as a company, has no experience in marketing cellular therapeutics as its current sales force is limited to its degenerative disease and its biobanking businesses. Celularity intends to develop an in-house specialized marketing organization and sales force for its cellular therapeutic candidates, which will require significant capital expenditures, management resources and time. Celularity will have to compete with other pharmaceutical and biotechnology companies to recruit, hire, train and retain marketing and sales personnel. If Celularity is unable or decides not to establish internal sales, marketing and distribution capabilities for its cellular therapeutics once approved, Celularity will pursue collaborative arrangements regarding the sales and marketing of its cellular therapeutics; however, there can be no assurance that Celularity will be able to establish or maintain such collaborative arrangements, or if it is able to do so, that they will have effective sales forces. Any revenue Celularity receives from its cellular therapeutics will depend upon the efforts of such third parties, which may not be successful. Celularity may have little or no control over the marketing and sales efforts of such third parties and its revenue from therapeutic sales may be lower than if Celularity had commercialized its therapeutic candidates directly, as it does for its degenerative disease products and biobanking business. Celularity also faces competition in its search for third parties to assist Celularity with the sales and marketing efforts of its

therapeutic candidates. There can be no assurance that Celularity will be able to develop in-house sales and distribution capabilities or establish or maintain relationships with third-party collaborators to commercialize any therapeutic that receives regulatory approval in the United States or in other markets.

A variety of risks associated with conducting research and clinical trials abroad and marketing its therapeutic candidates internationally could materially adversely affect its business.

Celularity plans to globally develop its therapeutic candidates. Accordingly, Celularity expects that it will be subject to additional risks related to operating in foreign countries, including:

•        differing regulatory requirements in foreign countries;

•        unexpected changes in tariffs, trade barriers, price and exchange controls and other regulatory requirements;

•        differing standards for the conduct of clinical trials;

•        increased difficulties in managing the logistics and transportation of storing and shipping therapeutic candidates produced in the United States and shipping the therapeutic candidate to the patient abroad, which may necessitate local or regional manufacture, including the need to source healthy full-term donor placentas outside the United States;

•        import and export requirements and restrictions, including as they pertain to donor placentas and human tissue collection and manufacture;

•        economic weakness, including inflation, or political instability in particular foreign economies and markets;

•        compliance with tax, employment, immigration and labor laws for employees living or traveling abroad;

•        foreign taxes, including withholding of payroll taxes;

•        foreign currency fluctuations, which could result in increased operating expenses and reduced revenue, and other obligations incident to doing business in another country;

•        difficulties staffing and managing foreign operations;

•        workforce uncertainty in countries where labor unrest is more common than in the United States;

•        differing payor reimbursement regimes, governmental payors or patient self-pay systems, and price controls;

•        potential liability under the Foreign Corrupt Practices Act of 1977 (the “FCPA”) or comparable foreign regulations;

•        challenges enforcing its contractual and intellectual property rights, especially in those foreign countries that do not respect and protect intellectual property rights to the same extent as the United States;

•        production shortages resulting from any events affecting raw material supply, including obtaining sufficient donor placentas, and other issues with manufacturing abroad; and

•        business interruptions resulting from the COVID-19 pandemic or other natural or man-made disasters, including earthquakes, tsunamis, fires or other medical epidemics, or geo-political actions, including war and terrorism.

These and other risks associated with its international operations may materially adversely affect its ability to attain or maintain profitable operations.

Celularity faces significant competition from other biotechnology and pharmaceutical companies, and its operating results will suffer if it fails to compete effectively.

The biopharmaceutical industry is characterized by intense competition and rapid innovation. Celularity’s competitors may be able to develop other compounds or drugs that are able to achieve similar or better results. Celularity’s potential competitors for its cellular therapeutics include major multinational pharmaceutical companies, established biotechnology companies, specialty pharmaceutical companies and universities and other research institutions. Many of its competitors have substantially greater financial, technical and other resources, such as larger research and development staff and experienced marketing and manufacturing organizations and well-established sales forces. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large, established companies. Mergers and acquisitions in the biotechnology and pharmaceutical industries may result in even more resources being concentrated in its competitors. Competition may increase further as a result of advances in the commercial applicability of technologies and greater availability of capital for investment in these industries. Celularity’s competitors, either alone or with collaborative partners, may succeed in developing, acquiring or licensing on an exclusive basis drug or biologic products that are more effective, safer, more easily commercialized or less costly than its therapeutic candidates or may develop proprietary technologies or secure patent protection that Celularity may need for the development of its technologies and products.

Even if Celularity obtains regulatory approval of its therapeutic candidates, the availability and price of its competitors’ products could limit the demand and the price Celularity is able to charge for its therapeutic candidates. Celularity may not be able to implement its business plan if the acceptance of its therapeutic candidates is inhibited by price competition or the reluctance of physicians to switch from existing methods of treatment to Celularity’s therapeutic candidates, or if physicians switch to other new drug or biologic products or choose to reserve Celularity’s therapeutic candidates for use in limited circumstances. For additional information regarding its competition, see the section entitled “Business — Competition”.

Celularity is highly dependent on its key personnel, and if Celularity is not successful in attracting and retaining highly qualified personnel, Celularity may not be able to successfully implement its business strategy.

Celularity’s ability to compete in the highly competitive biotechnology and pharmaceutical industries depends upon its ability to attract and retain highly qualified managerial, scientific and medical personnel. Celularity is highly dependent on its management, scientific and medical personnel, including its Founder and Chief Executive Officer, Robert Hariri, M.D., Ph.D., and its Chief Operating Officer, John Haines. The loss of the services of any of Celularity’s executive officers, other key employees, and other scientific and medical advisors, and its inability to find suitable replacements could result in delays in product development and harm its business. In June 2021, Celularity’s Chief Scientific Officer, Xiaokui Zhang, Ph.D., informed Celularity of her intention to retire on July 31, 2021. Celularity intends to search for a new Chief Scientific Officer, but there is no assurance that Celularity will be able to find an appropriate officer to fill the role quickly or at all. Celularity conducts substantially all of its operations at its facilities in New Jersey. This region is headquarters to many other biopharmaceutical companies and many academic and research institutions. Competition for skilled personnel in Celularity’s market is intense and may limit its ability to hire and retain highly qualified personnel on acceptable terms or at all. Despite efforts to retain valuable employees, members of Celularity’s management, scientific and development teams may terminate their employment on short notice. Although Celularity has employment agreements with its key employees, these employment agreements provide for at-will employment, which means that any of its employees could leave its employment at any time, with or without notice. Celularity does not maintain “key person” insurance policies on the lives of these individuals or the lives of any of its other employees. Celularity’s success also depends on its ability to continue to attract, retain and motivate highly skilled junior, mid-level and senior managers as well as junior, mid-level and senior scientific and medical personnel.

Celularity will need to continue to grow the size of its organization, and it may experience difficulties in managing this growth.

As of August 2, 2021, Celularity had 207 full-time employees. As its development and commercialization plans and strategies develop, and as operates as a public company following the Business Combination, Celularity has expanded its employee base and expects to add managerial, operational, sales, research and development, marketing, financial and other personnel. Current and future growth imposes significant added responsibilities on members of management, including:

•        identifying, recruiting, integrating, maintaining and motivating additional employees;

•        managing its internal development efforts effectively, including the clinical and FDA review process for its therapeutic candidates, while complying with its contractual obligations to contractors and other third parties; and

•        improving its operational, financial and management controls, reporting systems and procedures.

Celularity’s future financial performance and its ability to commercialize its therapeutic candidates will depend, in part, on its ability to effectively manage its growth, and Celularity’s management may also have to divert a disproportionate amount of its attention away from day-to-day activities in order to devote a substantial amount of time to managing these growth activities.

If Celularity is not able to effectively expand its organization by hiring new employees and expanding its groups of consultants and contractors, Celularity may not be able to successfully implement the tasks necessary to further develop, manufacture and commercialize its therapeutic candidates and, accordingly, may not achieve its research, development, manufacturing and commercialization goals.

Celularity may form or seek strategic alliances or enter into additional licensing arrangements in the future, and Celularity may not realize the benefits of such alliances or licensing arrangements.

Celularity may form or seek strategic alliances, create joint ventures or collaborations or enter into additional licensing arrangements with third parties that Celularity believes will complement or augment its development and commercialization efforts with respect to its therapeutic candidates and any future therapeutic candidates that Celularity may develop. Any of these relationships may require it to incur non-recurring and other charges, increase its near and long-term expenditures, issue securities that dilute stockholders or disrupt its management and business. Celularity licensed certain intellectual property back to Celgene Corporation (“Celgene”) in connection with the Anthrogenesis acquisition. Given the broad scope of the license, Celgene could use Celularity’s intellectual property to develop therapeutics that compete with Celularity in the CAR field. Additionally, Celularity has continuing obligations to Celgene under a contingent value rights agreement (the “CVR Agreement”) with Celgene, under which it may be required to make certain payments to Celgene with respect to certain of its therapeutics, including CYNK-001 and CYNK-101. Celularity’s payment obligations to Celgene under the CVR Agreement may limit Celularity’s ability to partner such assets, were it to choose to do so. See the section entitled “Business — Celularity’s Team and Corporate History — Celgene Corporation” for more information regarding the Celgene relationship.

In addition, Celularity faces significant competition in seeking appropriate strategic partners and the negotiation process is time-consuming and complex. Moreover, Celularity may not be successful in its efforts to establish a strategic partnership or other alternative arrangements for its therapeutic candidates because they may be deemed to be at too early of a stage of development for collaborative effort and third parties may not view its therapeutic candidates as having the requisite potential to demonstrate safety and efficacy. Any delays in entering into new strategic partnership agreements related to its therapeutic candidates could delay the development and commercialization of Celularity’s therapeutic candidates in certain geographies for certain indications, which would harm its business prospects, financial condition and results of operations.

Celularity has in the past and in the future will continue to explore entering into new strategic alliances, collaborations, and licensing arrangements with third parties related to non-core areas. Such arrangements are entered into based on information available at the relevant time, and may not lead to long-term collaborations after initial research and development is conducted. Celularity is party to certain agreements, and may in the future enter into new agreements, that contain non-competes or otherwise restrict Celularity’s ability to operate in a particular field.

Further, disputes may arise under Celularity’s current or future strategic alliances, collaborations, or other agreements or arrangements that include grants of intellectual property rights to or from Celularity, or payments related thereto, including disagreements over scope of rights granted, proprietary rights, payment obligations, contract interpretation or the preferred course of research, development or commercialization. As a result of such disagreements, Celularity may be required to pay additional amounts, there may be a reduction or delay in amounts payable to Celularity, or there may be delays in research, development or commercialization activities, or termination of the arrangements, which could adversely impact our business and operations.

If Celularity licenses products or businesses, Celularity may not be able to realize the benefit of such transactions if Celularity is unable to successfully integrate them with its existing operations and company culture. Celularity cannot be certain that, following a strategic transaction or license, Celularity will achieve the results, revenue or specific net income that justifies such transaction.

Celularity may not realize the benefits of acquired assets or other strategic transactions.

Celularity actively evaluates various strategic transactions on an ongoing basis. Celularity may acquire other businesses, products or technologies as well as pursue joint ventures or investments in complementary businesses. The success of its strategic transactions, including its license with Sorrento, and any future strategic transactions depends on the risks and uncertainties involved, including:

•        unanticipated liabilities related to acquired companies or joint ventures;

•        difficulties integrating acquired personnel, technologies and operations into its existing business;

•        retention of key employees;

•        diversion of management time and focus from operating its business to management of strategic alliances or joint ventures or acquisition integration challenges;

•        increases in its expenses and reductions in its cash available for operations and other uses;

•        disruption in its relationships with collaborators or suppliers as a result of such a transaction; and

•        possible write-offs or impairment charges relating to acquired businesses or joint ventures.

If any of these risks or uncertainties occur, Celularity may not realize the anticipated benefit of any acquisition or strategic transaction. Additionally, foreign acquisitions and joint ventures are subject to additional risks, including those related to integration of operations across different cultures and languages, currency risks, potentially adverse tax consequences of overseas operations and the particular economic, political and regulatory risks associated with specific countries. Future acquisitions or dispositions could result in potentially dilutive issuances of its equity securities, the incurrence of debt, contingent liabilities or amortization expenses or write-offs of goodwill, any of which could harm its financial condition.

Celularity will need substantial additional financing to develop its therapeutics and implement its operating plans. If Celularity fails to obtain additional financing, it may be unable to complete the development and commercialization of its therapeutic candidates.

Celularity expects to spend a substantial amount of capital in the development and manufacture of its therapeutic candidates. It will need substantial additional financing to develop its therapeutics and implement its operating plans. In particular, Celularity will require substantial additional financing to enable commercial production of its therapeutics and initiate and complete registration trials for multiple cellular therapeutics. Further, if approved, Celularity will require significant additional amounts in order to launch and commercialize its therapeutic candidates.

As of March 31, 2021, Celularity had $22.9 million in cash and cash equivalents. Celularity will need to raise additional capital to implement its plans. Further, changing circumstances may cause Celularity to consume capital significantly faster than it currently anticipates, and Celularity may need to spend more money than currently expected because of circumstances beyond its control. Celularity may also need to raise a larger amount of capital sooner than it currently anticipates if Celularity chooses to expand more rapidly than it presently plans. In any event, Celularity will require additional capital for the further development and commercialization of its therapeutic candidates, including funding its internal manufacturing capabilities.

Celularity cannot be certain that additional funding will be available on acceptable terms, or at all. Celularity has no committed source of additional capital and if Celularity is unable to raise additional capital in sufficient amounts or on terms acceptable to us, Celularity may have to significantly delay, scale back or discontinue the development or commercialization of its therapeutic candidates or other research and development initiatives. Celularity’s license agreements may also be terminated if it is unable to meet the payment obligations under the agreements, including its license from Sorrento. Celularity could be required to seek collaborators for its therapeutic candidates at an earlier stage than otherwise would be desirable or on terms that are less favorable than might otherwise be available or relinquish or license on unfavorable terms its rights to its therapeutic candidates in markets where Celularity otherwise would seek to pursue development or commercialization itself. Any of the above events could significantly harm Celularity’s business, prospects, financial condition and results of operations and cause the price of our securities to decline.

Celularity’s internal computer systems, or those used by its CROs, collaborators or other contractors or consultants, may fail or suffer security breaches.

Celularity’s internal computer systems and those of its CROs, collaborators, and other contractors or consultants are vulnerable to damage from computer viruses, unauthorized access, cybersecurity threats, and telecommunication and electrical failures. While Celularity has not experienced any such material system failure or security breach to date, if such an event were to occur and cause interruptions in Celularity’s operations, it could result in a material disruption of its development programs and its business operations. For example, the loss of clinical trial data from completed or future clinical trials could result in delays in Celularity’s regulatory approval efforts and significantly increase Celularity’s costs to recover or reproduce the data. To the extent that any disruption or security breach in Celularity’s systems or infrastructure (including provided by third party vendors) were to result in a loss of, or damage to, its data or applications, or inappropriate disclosure of confidential or proprietary information, Celularity could incur liability and the further development and commercialization of its therapeutic candidates could be delayed. In addition, its increased reliance on personnel working from home could increase its cybersecurity risk, create data accessibility concerns, and make it more susceptible to communication disruptions, any of which could adversely impact its business. As an early stage company without significant investments in data security protection, Celularity may not be sufficiently protected against such occurrences, and may not have the resources to allocate to such efforts.

Changes in funding for the FDA and other government agencies could hinder their ability to hire and retain key leadership and other personnel, prevent new therapeutics and services from being developed or commercialized in a timely manner or otherwise prevent those agencies from performing normal functions on which the operation of Celularity’s business may rely, which could negatively impact its business.

The ability of the FDA to review and approve new therapeutics can be affected by a variety of factors, including government budget and funding levels, ability to hire and retain key personnel and accept payment of user fees, statutory, regulatory and policy changes, and business disruptions, such as those caused by the COVID-19 pandemic. Average review times at the agency have fluctuated in recent years as a result. In addition, funding of government agencies on which Celularity’s operations may rely, including those that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable. Disruptions at the FDA and other agencies may also slow the time necessary for new biologics to be reviewed and/or approved by necessary government agencies, which would adversely affect its business. For example, over the last several years, the U.S. government has shut down several times and certain regulatory agencies, such as the FDA has had to furlough critical employees and stop critical activities. If a prolonged government shutdown occurs, it could significantly impact the ability of the FDA to timely review and process Celularity’s regulatory submissions, which could have a material adverse effect on Celularity’s business. Further, future government shutdowns could impact its ability to access the public markets and obtain necessary capital in order to properly capitalize and continue its operations.

Business disruptions could seriously harm Celularity’s future revenue and financial condition and increase its costs and expenses.

In addition to the business disruptions and clinical trial delays caused by the COVID-19 pandemic described above, Celularity’s operations, and those of its CROs and other contractors and consultants, could be subject to other disruptions, including those caused by power shortages, telecommunications failures, water shortages, floods, hurricanes, tornadoes, fires, earthquakes, extreme weather conditions, medical epidemics and other natural or man-made disasters or business interruptions. The occurrence of any of these business disruptions could seriously

harm its operations and financial condition and increase its costs and expenses. Celularity’s ability to manufacture its therapeutic candidates could be disrupted if its operations or those of its suppliers are affected by a man-made or natural disaster or other business interruption. Moreover, because Celularity’s core operations are concentrated at its purpose-built facility in Florham Park, New Jersey, any disruptions at this site, if prolonged, could materially harm its business and prospects.

If Celularity does not obtain and maintain federal and state licenses and registrations required for its current and future operations, Celularity’s ability to generate revenue will be limited.

The health care industry is subject to stringent regulation by a wide range of authorities. Accordingly, Celularity’s business requires it to maintain certain licenses, registrations, permits, authorizations, approvals, certifications, accreditations and other types of federal, state, and local governmental permissions and to comply with various regulations in every jurisdiction in which it operates. For example, Celularity is required to maintain licenses and registrations in several states, and has obtained biologics, tissue bank and blood bank licenses, permits and registrations in states where such licensure is required for Celularity to market and support its products and services. Celularity also maintains an annual registration with the FDA as a tissue bank, and national accreditation by the American Association of Blood Banks. The failure to comply with such licensure requirements can result in enforcement actions, including the revocation or suspension of the licenses, registrations or accreditations, or subject Celularity to plans of correction, monitoring, civil money penalties, civil injunctive action and/or criminal penalties. While Celularity believes that, given its current and proposed business, it is not presently required to obtain additional licenses or registrations to market its products or services, Celularity cannot predict whether additional regulatory approval will be required in the future and, if so, whether such approval will at such time be obtained, whether for the stem cells and/or any other services that Celularity is developing or may attempt to develop. Failure of Celularity to obtain and maintain required federal and state licenses and registration will limit its ability to generate revenue.

Celularity’s relationships with customers, physicians, and third-party payors are subject to numerous laws and regulations. If Celularity or its employees, independent contractors, consultants, commercial partners and vendors violate these laws, Celularity could face substantial penalties.

Celularity operates in a highly-regulated industry, and its relationships with customers, physicians, and third-party payors are subject to numerous laws and regulations. See the section entitled “Business — Government Regulation”. Healthcare providers, physicians and third-party payors in the United States and elsewhere will play a primary role in the recommendation and prescription of any therapeutic candidates for which Celularity obtains marketing approval. Celularity’s current and future arrangements with healthcare providers, third-party payors, customers, and others may expose it to broadly applicable fraud and abuse and other healthcare laws and regulations. These laws may impact, among other things, Celularity’s clinical research and development programs, as well as its proposed and future sales, marketing and education programs for its cellular therapeutics, as well as the sales and marketing of its degenerative disease products and biobanking business. In particular, the promotion, sales and marketing of healthcare items and services is subject to extensive laws and regulations designed to prevent fraud, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive and other business arrangements. Celularity may also be subject to federal, state and foreign laws governing the privacy and security of identifiable patient information.

Because of the breadth of these laws and the narrowness of the statutory exceptions and regulatory safe harbors available, it is possible that some of Celularity’s business activities, or its arrangements with physicians, some of whom may receive stock options as compensation for service on its scientific advisory board, could be subject to challenge under one or more of such laws. If Celularity or its employees, independent contractors, consultants, commercial partners and vendors violate these laws, Celularity may be subject to investigations, enforcement actions and/or significant penalties. Celularity has adopted a code of business conduct and ethics, but it is not always possible to identify and deter employee misconduct or business noncompliance, and the precautions Celularity takes to detect and prevent inappropriate conduct may not be effective in controlling unknown or unmanaged risks or losses or in protecting it from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. Efforts to ensure that its business arrangements will comply with applicable healthcare laws may involve substantial costs. It is possible that governmental and enforcement authorities will conclude that its business practices may not comply with current or future statutes, regulations or case law interpreting applicable fraud and abuse or other healthcare laws and regulations. If any such actions are instituted against it, and Celularity is not successful in defending itself or asserting its rights, those actions could have a significant impact on its business,

including the imposition of significant penalties and corrective measures, any of which could adversely affect its ability to operate its business and its results of operations. In addition, the approval and commercialization of any of Celularity’s therapeutic candidates or its degenerative disease products outside the United States will also likely subject it to an additional overlay of foreign equivalents of the healthcare laws, among other foreign laws.

Data collection is governed by restrictive regulations governing the use, processing, and cross-border transfer of personal information; and Celularity’s use of data relating to personal identifier information and personal health information of U.S. citizens is restricted.

Celularity’s business is broadly regulated by U.S. and foreign regulatory authorities, and Celularity has both regulatory and contractual obligations with respect to such regulatory authorities concerning the handling, maintenance, and protective of data relating to personal identifier information and personal health information of U.S. citizens. Further, the collection and use of personal data in the European Union (“EU”), are governed by the General Data Protection Regulation (“GDPR”). Other jurisdictions, such as California, are adopting additional privacy regulations restricting the use of personal information and providing individuals certain rights with respect to their data or notices regarding use of their data. See the section entitled “Business — Government Regulation”. Failure to comply with the requirements of the GDPR and the applicable national data protection laws of the EU member states or other privacy rules and regulations may result in significant fines and other administrative penalties. Celularity may be required to put in place additional mechanisms to ensure compliance with the new data protection rules. This may be onerous and may interrupt or delay its development activities, and adversely affect its business, financial condition, results of operations and prospects. As its business progresses, these privacy regulations may significantly impact Celularity’s business activities and exemplifies the vulnerability of its business to evolving regulatory environment related to personal data and protected health information.

If product liability lawsuits are brought against it, Celularity may incur substantial liabilities and may be required to limit commercialization of its therapeutic candidates.

Celularity faces an inherent risk of product liability as a result of the clinical testing of its therapeutic candidates and will face an even greater risk if Celularity commercializes any cellular therapeutics, in addition to the risks from the sale of its degenerative disease products. For example, Celularity may be sued if its therapeutic candidates or degenerative disease products cause or are perceived to cause injury or are found to be otherwise unsuitable during clinical testing, manufacturing, marketing or sale. Any such product liability claims may include allegations of defects in manufacturing, defects in design, a failure to warn of dangers inherent in the therapeutic or product, negligence, strict liability or a breach of warranties. Claims could also be asserted under state consumer protection acts. If Celularity cannot successfully defend itself against product liability claims, Celularity may incur substantial liabilities or be required to limit commercialization of its therapeutic candidates. Even successful defense would require significant financial and management resources. Regardless of the merits or eventual outcome, liability claims may result in a number of adverse effects, any of which could materially harm Celularity’s financial condition and results of operations.

Celularity’s inability to obtain sufficient product liability insurance at an acceptable cost to protect against potential product liability claims could prevent or inhibit the commercialization of therapeutics it develops, alone or with corporate collaborators, or negatively impact its degenerative disease business. Celularity’s insurance policies may also have various exclusions, and Celularity may be subject to a product liability claim for which Celularity has no coverage. While Celularity has obtained and expects to obtain clinical trial insurance for its clinical trials, Celularity may have to pay amounts awarded by a court or negotiated in a settlement that exceed Celularity’s coverage limitations or that are not covered by its insurance, and Celularity may not have, or be able to obtain, sufficient capital to pay such amounts. Even if Celularity’s agreements with any future corporate collaborators entitle it to indemnification against losses, such indemnification may not be available or adequate should any claim arise.

Risks Related to Our Reliance on Third Parties

Celularity relies and will continue to rely on third parties to conduct its clinical trials. If these third parties do not successfully carry out their contractual duties or meet expected deadlines, Celularity may not be able to obtain regulatory approval of, or commercialize, its therapeutic candidates.

Celularity depends and will continue to depend upon independent investigators and collaborators, such as universities, medical institutions, CROs and strategic partners to conduct its preclinical and clinical trials. Celularity negotiates budgets and contracts with CROs and study sites, which may result in delays to its development timelines and increased costs. Celularity will rely heavily on these third parties over the course of its clinical trials, and Celularity controls only certain aspects of their activities. Nevertheless, Celularity is responsible for ensuring that each of its studies is conducted in accordance with applicable protocol, legal, regulatory and scientific standards, and its reliance on third parties does not relieve it of its regulatory responsibilities. Celularity and these third parties are required to comply with GCPs, which are regulations and guidelines enforced by the FDA and comparable foreign regulatory authorities for therapeutic candidates in clinical development. Regulatory authorities enforce these GCPs through periodic inspections of trial sponsors, principal investigators and trial sites. If Celularity or any of these third parties fail to comply with applicable GCP regulations, the clinical data generated in its clinical trials may be deemed unreliable and the FDA or comparable foreign regulatory authorities may require it to perform additional clinical trials before approving its marketing applications. Celularity cannot assure you that, upon inspection, such regulatory authorities will determine that any of its clinical trials comply with the GCP regulations. In addition, its clinical trials must be conducted with biologic product produced under cGMPs and will require a large number of test patients. Celularity’s failure or any failure by these third parties to comply with these regulations or to recruit a sufficient number of patients may require it to repeat clinical trials, which would delay the regulatory approval process. Moreover, its business may be implicated if any of these third parties violates federal or state fraud and abuse or false claims laws and regulations or healthcare privacy and security laws.

Any third parties conducting Celularity’s clinical trials are not and will not be its employees and, except for remedies available to Celularity under its agreements with such third parties, Celularity cannot control whether or not they devote sufficient time and resources to its ongoing preclinical, clinical and nonclinical programs. These third parties may also have relationships with other commercial entities, including its competitors, for whom they may also be conducting clinical studies or other drug development activities, which could affect their performance. If these third parties do not successfully carry out their contractual duties or obligations or meet expected deadlines, if they need to be replaced or if the quality or accuracy of the clinical data they obtain is compromised due to the failure to adhere to Celularity’s clinical protocols or regulatory requirements or for other reasons, Celularity’s clinical trials may be extended, delayed or terminated and Celularity may not be able to complete development of, obtain regulatory approval of or successfully commercialize its therapeutic candidates. As a result, Celularity’s financial results and the commercial prospects for its therapeutic candidates would be harmed, its costs could increase and its ability to generate revenue could be delayed.

If any of its relationships with trial sites, or any CRO that Celularity may use in the future, terminates, Celularity may not be able to enter into arrangements with alternative trial sites or CROs or do so on commercially reasonable terms. Switching or adding third parties to conduct Celularity’s clinical trials involves substantial cost and requires extensive management time and focus. In addition, there is a natural transition period when a new third party commences work. As a result, delays occur, which can materially impact Celularity’s ability to meet its desired clinical development timelines.

Celularity relies on donors of healthy human full-term placentas to manufacture its therapeutic candidates, and if Celularity does not obtain an adequate supply of such placentas from qualified donors, development of its placental-derived allogeneic cells may be adversely impacted.

Celularity is reliant on biosourcing healthy donor placentas to manufacture its therapeutic candidates, and on hospital personnel to obtain the necessary donor consent. Healthy donor placentas vary in type and quality, and this variation makes producing standardized therapeutic candidates more difficult and makes the development and commercialization pathway of its therapeutic candidates more uncertain. Celularity has developed a process designed to enhance the quality and consistency of the placental-derived cells used in the manufacture of its three allogeneic cell

types (CAR-T cells, NK cells and mesenchymal-like stromal cells), but its process may fail to identify suitable donors or detect all issues, and Celularity may discover failures with the material after production. Celularity may also have to update its specifications for new risks that may emerge, such as to screen for new viruses.

Celularity has strict specifications for donor material, which include specifications required by regulatory authorities and rely on informed donor consent. If Celularity is unable to identify and obtain donor material that satisfy specifications, agree with regulatory authorities on appropriate specifications, incentivize hospital personnel to solicit consent to donation or address variability in donor placentas, there may be inconsistencies in the therapeutic candidates Celularity produces or Celularity may be unable to initiate or continue ongoing clinical trials on the timelines it expects, or scale up its manufacturing process for later-stage clinical trials or commercialization, which could harm its reputation and adversely impact its business and prospects.

Cell-based therapies rely on the availability of specialty raw materials, which may not be available to Celularity on acceptable terms or at all.

Celularity’s therapeutic candidates require many specialty raw materials, including viral vectors that deliver the CAR sequence from Sorrento, and other raw materials, some of which are manufactured by small companies with limited resources and experience to support a commercial therapeutic, or to deliver raw materials to its specifications. Although Celularity is currently negotiating a supply agreement with Sorrento, it generally does not have dedicated supply contracts with many of its suppliers, and it may not be able to contract with them on acceptable terms, or at all. Many suppliers curtailed their operations during the COVID-19 pandemic and Celularity’s ability to source raw materials has been impacted. Further, some of its suppliers may not be able to scale-up as Celularity moves to later-stage clinical trials or commercialization. Accordingly, Celularity may experience delays in receiving, or fail to secure entirely, key raw materials to support clinical or commercial manufacturing. Certain raw materials also require third-party testing, and some of the testing service companies may not have capacity or be able to conduct the testing that Celularity requests.

Celularity also faces competition for supplies from other cell therapy companies. Such competition may make it difficult for it to secure raw materials or the testing of such materials on commercially reasonable terms or in a timely manner.

Some raw materials are currently available from a single supplier, or a small number of suppliers. Celularity cannot be sure that these suppliers will remain in business or that they will not be purchased by one of its competitors or another company that is not interested in continuing to produce these materials for its intended purpose. In addition, the lead time needed to establish a relationship with a new supplier can be lengthy, and Celularity may experience delays in meeting demand in the event Celularity must switch to a new supplier. The time and effort to qualify a new supplier, including to meet any regulatory requirements for such qualification, could result in additional costs, diversion of resources or reduced manufacturing yields, any of which would negatively impact its operating results. Further, Celularity may be unable to enter into agreements with a new supplier on commercially reasonable terms, which could have a material adverse impact on its business.

If Celularity or its third-party suppliers use hazardous, non-hazardous, biological or other materials in a manner that causes injury or violates applicable law, Celularity may be liable for damages.

Celularity’s research and development and manufacturing activities involve the controlled use of potentially hazardous substances, including chemical and biological materials. Celularity and its suppliers are subject to federal, state and local laws and regulations in the United States governing the use, manufacture, storage, handling and disposal of medical and hazardous materials. Although Celularity believes that its and its suppliers’ procedures for using, handling, storing and disposing of these materials comply with legally prescribed standards, Celularity and its suppliers cannot completely eliminate the risk of contamination or injury resulting from medical or hazardous materials. As a result of any such contamination or injury, Celularity may incur liability or local, city, state or federal authorities may curtail the use of these materials and interrupt its business operations. In the event of an accident, Celularity could be held liable for damages or penalized with fines, and the liability could exceed its resources. Celularity does not have any insurance for liabilities arising from medical or hazardous materials. Compliance with applicable environmental laws and regulations is expensive, and current or future environmental regulations may impair its research, development and production efforts, which could harm its business, prospects, financial condition or results of operations.

Risks Related to Government Regulation

The FDA regulatory approval process is lengthy and time-consuming, and Celularity may experience significant delays in the clinical development and regulatory approval of its therapeutic candidates.

The research, testing, manufacturing, labeling, approval, selling, import, export, marketing, and distribution of drug products, including biologics, are subject to extensive regulation by the FDA and other regulatory authorities in the United States. Celularity is not permitted to market any biological drug product in the United States until Celularity receives approval of a biologics license application (“BLA”) from the FDA. Celularity has not previously submitted a BLA to the FDA, or similar approval filings to comparable foreign authorities. A BLA must include extensive preclinical and clinical data and supporting information to establish the product candidate’s safety and effectiveness for each desired indication. The BLA must also include significant information regarding the chemistry, manufacturing and controls for the product.

Celularity expects the novel nature of its therapeutic candidates to create further challenges in obtaining regulatory approval. For example, the FDA has limited experience with commercial development of allogeneic cell therapies. Celularity may also request regulatory approval of future therapeutic candidates by target, regardless of cancer type or origin, which the FDA may have difficulty accepting if its clinical trials only involved cancers of certain origins. The FDA may also require a panel of experts, referred to as an Advisory Committee, to deliberate on the adequacy of the safety and efficacy data to support licensure. The opinion of the Advisory Committee, although not binding, may have a significant impact on Celularity’s ability to obtain licensure of the therapeutic candidates based on the completed clinical trials, as the FDA often adheres to the Advisory Committee’s recommendations. Accordingly, the regulatory approval pathway for Celularity’s therapeutic candidates may be uncertain, complex, expensive and lengthy, and approval may not be obtained.

Celularity may also experience delays in completing planned clinical trials for a variety of reasons, including if physicians encounter unresolved ethical issues associated with enrolling patients in clinical trials of its therapeutic candidates in lieu of prescribing existing treatments that have established safety and efficacy profiles. Further, a clinical trial may be suspended or terminated by Celularity, the IRBs for the institutions in which such trials are being conducted or by the FDA or other regulatory authorities due to a number of factors. The FDA’s review of Celularity’s data for ongoing clinical trials may, depending on the data, also result in the delay, suspension or termination of one or more of its clinical trials, which would also delay or prevent the initiation of its other planned clinical trials. If Celularity experiences termination of, or delays in the completion of, any clinical trial of its therapeutic candidates, the commercial prospects for its therapeutic candidates will be harmed, and its ability to generate revenue will be delayed. In addition, any delays in completing Celularity’s clinical trials will increase its costs, slow down its development and approval process and jeopardize its ability to commence therapeutic sales and generate revenue. Many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may ultimately lead to the denial of regulatory approval of Celularity’s therapeutic candidates.

To the extent Celularity’s Biovance and Interfyl products do not qualify for regulation as human cells, tissues and cellular and tissue-based products (“HCT/P”), solely under Section 361 of the Public Health Service Act (“PHSA”), this could result in removal of these products from the market.

In November 2017, the FDA released a guidance document entitled “Regulatory Considerations for Human Cells, Tissues, and Cellular and Tissue — Based Products: Minimal Manipulation and Homologous Use — Guidance for Industry and Food and Drug Administration Staff”, which it revised and reissued in July 2020 (the “Guidance”). The document confirmed the FDA’s stance that sheet forms of amniotic tissue are appropriately regulated as solely Section 361 HCT/Ps when manufactured in accordance with 21 CFR Part 1271 and intended for use as a barrier or covering. However, wound healing is not a homologous use of amniotic tissue, and to the extent Celularity makes claims for Biovance and Interfyl, two products in its degenerative disease business, that extend beyond homologous use, Celularity may be subject to FDA enforcement. The Guidance stated that the FDA intends to exercise enforcement discretion under limited conditions with respect to the IND application and pre-market approval requirements for certain HCT/Ps for a period of 36 months from the date of the guidance, which period of enforcement discretion was extended in July 2020 to expire on May 31, 2021. The FDA’s approach is risk-based, and the guidance clarified that high-risk products and uses could be subject to immediate enforcement action. New York has interpreted the Guidance

such that it has restricted the marketing of such products without BLA approval, notwithstanding the current exception in the Guidance, and other states may make similar determination, which would limit the market for such products until a BLA is approved.

Amniotic tissue is generally eligible for regulation solely as a HCT/P under Section 361 of the PHSA depending on whether the specific product at issue and the claims made for it are consistent with the applicable FDA criteria for minimal manipulation and homologous use. HCT/Ps that do not meet these minimal manipulation and homologous use criteria are subject to more extensive regulation as drugs, medical devices, biological products, or combination products. Such HCT/Ps must comply with both the FDA’s requirements for HCT/Ps and the requirements applicable to biologics, devices or drugs, including pre-market clearance or approval from the FDA.

Following the period of enforcement discretion under the Guidance, Celularity may need to either modify its claims or cease selling its Biovance and Interfyl products until the FDA approves a BLA, and then Celularity will only be able to market such products for indications that have been approved in a BLA. The loss of Celularity’s ability to market and sell these products would have an adverse impact on its revenues, business, financial condition and results of operations. In addition, Celularity expects the cost to manufacture its products will increase due to the costs to comply with the requirements that apply to Section 351 biological products, such as current cGMP and ongoing product testing costs. Increased costs relating to regulatory compliance could have an adverse impact on Celularity’s business, financial condition and results of operations.

In addition, the FDA might, at some future point, modify the scope of its enforcement discretion or change its position on which current or future products qualify as Section 361 HCT/Ps. Any regulatory changes could have adverse consequences for Celularity and make it more difficult or expensive for it to conduct its business by requiring pre-market clearance or approval and compliance with additional post-market regulatory requirements with respect to those products. It is also possible that the FDA could require Celularity to recall its Biovance and Interfyl products.

Celularity expects the therapeutic candidates it develops will be regulated as biological products, or biologics, and therefore they may be subject to competition sooner than anticipated.

The Biologics Price Competition and Innovation Act of 2009 (“BPCIA”), was enacted as part of the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively, the “Affordable Care Act”), to establish an abbreviated pathway for the approval of biosimilar and interchangeable biological products. The regulatory pathway establishes legal authority for the FDA to review and approve biosimilar biologics, including the possible designation of a biosimilar as “interchangeable” based on its similarity to an approved biologic. Under the BPCIA, an application for a biosimilar product cannot be approved by the FDA until 12 years after the reference product was approved under a BLA. The law is complex and is still being interpreted and implemented by the FDA. As a result, its ultimate impact, implementation, and meaning are subject to uncertainty. While it is uncertain when such processes intended to implement the BPCIA may be fully adopted by the FDA, any such processes could have a material adverse effect on the future commercial prospects for its biological products.

Celularity believes that any of the therapeutic candidates it develops that is approved in the United States as a biological product under a BLA should qualify for the 12-year period of exclusivity. However, there is a risk that this exclusivity could be shortened due to congressional action or otherwise, or that the FDA will not consider the subject therapeutic candidates to be reference products for competing products, potentially creating the opportunity for generic competition sooner than anticipated. Moreover, the extent to which a biosimilar, once approved, will be substituted for any one of the reference products in a way that is similar to traditional generic substitution for non-biological products is not yet clear, and will depend on a number of marketplace and regulatory factors that are still developing.

The regulatory landscape that will govern Celularity’s therapeutic candidates is uncertain; regulations relating to more established cellular therapy products are still developing, and changes in regulatory requirements could result in delays or discontinuation of development of its therapeutic candidates or unexpected costs in obtaining regulatory approval.

Because Celularity is developing novel cellular therapeutic candidates that are unique biological entities, the regulatory requirements that Celularity will be subject to are not entirely clear. Regulatory requirements governing gene therapy products and cell therapy products have changed frequently and may continue to change in the future. Moreover, there is substantial, and sometimes uncoordinated, overlap in those responsible for regulation of existing

gene therapy products and cell therapy products. Although the FDA decides whether individual therapy protocols may proceed, review process and determinations of other reviewing bodies can impede or delay the initiation of a clinical study, even if the FDA has reviewed the study and approved its initiation. Conversely, the FDA can place an IND application on clinical hold even if such other entities have provided a favorable review. Furthermore, each clinical trial must be reviewed and approved by an independent IRB at or servicing each institution at which a clinical trial will be conducted. In addition, adverse developments in clinical trials of gene or cell therapy products conducted by others may cause the FDA or other regulatory bodies to change the requirements for approval of any of Celularity’s therapeutic candidates. Complex regulatory environments exist in other jurisdictions in which Celularity might consider seeking regulatory approvals for its therapeutic candidates, further complicating the regulatory landscape.

The various committees and advisory groups involved in regulatory review, and new or revised guidelines that they promulgate from time to time may lengthen the regulatory review process, require Celularity to perform additional studies, increase its development costs, lead to changes in regulatory positions and interpretations, delay or prevent approval and commercialization of its therapeutic candidates or lead to significant post-approval limitations or restrictions. Because the regulatory landscape for Celularity’s placental-derived cell therapeutic candidates is new, Celularity may face even more cumbersome and complex regulations than those for more traditional pharmaceutical or biological products. Furthermore, even if Celularity’s therapeutic candidates obtain required regulatory approvals, such approvals may later be withdrawn as a result of changes in regulations or the interpretation of regulations by applicable regulatory agencies. Delay or failure to obtain, or unexpected costs in obtaining, the regulatory approval necessary to bring a potential therapeutic to market could decrease Celularity’s ability to generate sufficient revenue to maintain its business.

The FDA may disagree with its regulatory plan and Celularity may fail to obtain regulatory approval of its cell therapeutic candidates.

If and when Celularity’s Phase 1 and Phase 1/2a clinical trials are completed and, assuming positive data, Celularity expects to advance to potential registrational trials. The general approach for FDA approval of a new biologic or drug is for the sponsor to provide dispositive data from two well-controlled, Phase 3 clinical studies of the relevant biologic or drug in the relevant patient population. Phase 3 clinical studies typically involve hundreds of patients, have significant costs and take years to complete. If the results are sufficiently compelling, Celularity intends to discuss with the FDA submission of a BLA for the relevant product candidate. However, Celularity does not have any agreement or guidance from the FDA that its regulatory development plans will be sufficient for submission of a BLA. For example, the FDA may require that Celularity conducts a comparative trial against an approved therapy including potentially an approved autologous cell therapy, which would significantly delay its development timelines and require substantially more resources. In addition, the FDA may only allow it to evaluate patients that have failed or who are ineligible for autologous therapy, which are extremely difficult patients to treat and patients with advanced and aggressive cancer, and its therapeutic candidates may fail to improve outcomes for such patients.

If the FDA grants Celularity accelerated approval based on Phase 1/2a clinical trial results, if and when such trials occur, as a condition for accelerated approval, the FDA may require Celularity to perform post-marketing studies to verify and describe the predicted effect on irreversible morbidity or mortality or other clinical endpoint, and the drug or biologic may be subject to withdrawal procedures by the FDA, but the FDA may ultimately require a Phase 3 clinical trial prior to approval, particularly because its therapeutic candidates represent a novel treatment. In addition, the standard of care may change with the approval of new therapeutics in the same indications that Celularity is studying. This may result in the FDA or other regulatory agencies requesting additional studies to show that its therapeutic candidate is superior to the new products.

Celularity’s clinical trial results may also not support approval. In addition, its therapeutic candidates could fail to receive regulatory approval for many reasons, including the following:

•        the FDA or comparable foreign regulatory authorities may disagree with the design or implementation of its clinical trials;

•        Celularity may be unable to demonstrate to the satisfaction of the FDA or comparable foreign regulatory authorities that its therapeutic candidates are safe and effective for any of their proposed indications;

•        the results of clinical trials may not meet the level of statistical significance required by the FDA or comparable foreign regulatory authorities for approval, including due to the heterogeneity of patient populations;

•        Celularity may be unable to demonstrate that its therapeutic candidates’ clinical and other benefits outweigh their safety risks;

•        the FDA or comparable foreign regulatory authorities may disagree with its interpretation of data from preclinical studies or clinical trials;

•        the data collected from clinical trials of Celularity’s therapeutic candidates may not be sufficient to the satisfaction of the FDA or comparable foreign regulatory authorities to support the submission of a BLA or other comparable submission in foreign jurisdictions or to obtain regulatory approval in the United States or elsewhere;

•        the FDA or comparable foreign regulatory authorities will review its manufacturing process and inspect its commercial manufacturing facility and may not approve its manufacturing process or facility; and

•        the approval policies or regulations of the FDA or comparable foreign regulatory authorities may significantly change in a manner rendering its clinical data insufficient for approval.

Celularity plans to seek orphan drug designation for some or all of its therapeutic candidates across various indications, but Celularity may be unable to obtain such designations or to maintain the benefits associated with orphan drug designation, including market exclusivity, which may cause its revenue, if any, to be reduced.

Under the Orphan Drug Act, the FDA may grant orphan designation to a drug or biologic intended to treat a rare disease or condition. In the United States, orphan drug designation entitles a party to financial incentives such as opportunities for grant funding towards clinical trial costs, tax advantages, and user-fee waivers. Orphan drug designation does not convey any advantage in, or shorten the duration of, the regulatory review and approval process, but if a product that has orphan drug designation subsequently receives the first FDA approval of that particular product for the disease for which it has such designation, the product is entitled to orphan product exclusivity, which means that the FDA may not approve any other applications, including a BLA, to market the same biologic (meaning, a product with the same principal molecular structural features) for the same indication for seven years, except in limited circumstances. See the section entitled “Business — Government Regulation” for more information regarding orphan drug designation. Even though in April 2021, the FDA granted orphan drug designation to Celularity’s non-genetically modified cryopreserved human placental hematopoietic stem cell-derived natural killer (NK) cell therapy, CYNK-001, for the treatment of patients with malignant gliomas, the FDA can still approve other biologics that do not have the same principal molecular structural features for use in treating the same indication or disease or the same biologic for a different indication or disease during the exclusivity period. Furthermore, the FDA can waive orphan exclusivity if Celularity is unable to manufacture sufficient supply of its therapeutic or if a subsequent applicant demonstrates clinical superiority over its product.

Celularity plans to seek orphan drug designation for some or all of its therapeutic candidates in specific orphan indications in which there is a medically plausible basis for the use of these therapeutics. Even if Celularity obtains orphan drug designation, exclusive marketing rights in the United States may be limited if it seeks approval for an indication broader than the orphan designated indication and may be lost if the FDA later determines that the request for designation was materially defective or if Celularity is unable to assure sufficient quantities of the therapeutic to meet the needs of patients with the rare disease or condition, or if a subsequent applicant demonstrates clinical superiority over its therapeutics, if approved. In addition, although Celularity may seek orphan drug designation for other therapeutic candidates, it may never receive such designations.

Obtaining and maintaining regulatory approval of Celularity’s therapeutic candidates in one jurisdiction does not mean that Celularity will be successful in obtaining regulatory approval of its therapeutic candidates in other jurisdictions.

Obtaining and maintaining regulatory approval of its therapeutic candidates in one jurisdiction does not guarantee that Celularity will be able to obtain or maintain regulatory approval in any other jurisdiction, while a failure or delay in obtaining regulatory approval in one jurisdiction may have a negative effect on the regulatory approval

process in others. For example, even if the FDA grants marketing approval of a therapeutic candidate, comparable regulatory authorities in foreign jurisdictions must also approve the manufacturing, marketing and promotion of the therapeutic candidate in those countries. Approval procedures vary among jurisdictions and can involve requirements and administrative review periods different from, and greater than, those in the United States, including additional preclinical studies or clinical trials as clinical studies conducted in one jurisdiction may not be accepted by regulatory authorities in other jurisdictions. In many jurisdictions outside the United States, a product candidate must be approved for reimbursement before it can be approved for sale in that jurisdiction. In some cases, the price that Celularity intends to charge for its products is also subject to approval.

Celularity may also submit marketing applications in other countries. Regulatory authorities in jurisdictions outside of the United States have requirements for approval of therapeutic candidates with which Celularity must comply prior to marketing in those jurisdictions. Obtaining foreign regulatory approvals and compliance with foreign regulatory requirements could result in significant delays, difficulties and costs for it and could delay or prevent the introduction of its products in certain countries. If Celularity fails to comply with the regulatory requirements in international markets and/or receive applicable marketing approvals, its target market will be reduced and its ability to realize the full market potential of its therapeutic candidates will be harmed.

Even if Celularity receives regulatory approval of its therapeutic candidates, Celularity will be subject to ongoing regulatory obligations and continued regulatory review, which may result in significant additional expense and Celularity may be subject to penalties if Celularity fails to comply with regulatory requirements or experience unanticipated problems with its therapeutic candidates.

Any regulatory approvals that Celularity receives for its therapeutic candidates will require surveillance to monitor the safety and efficacy of the therapeutic candidate. The FDA may also require a risk evaluation and mitigation strategy (“REMS”) in order to approve Celularity’s therapeutic candidates, which could entail requirements for a medication guide, physician communication plans or additional elements to ensure safe use, such as restricted distribution methods, patient registries and other risk minimization tools. In addition, if the FDA or a comparable foreign regulatory authority approves Celularity’s therapeutic candidates, the manufacturing processes, labeling, packaging, distribution, adverse event reporting, storage, advertising, promotion, import, export and recordkeeping for its therapeutic candidates will be subject to extensive and ongoing regulatory requirements. These requirements include submissions of safety and other post-marketing information and reports, registration, as well as continued compliance with cGMPs and current GCPs for any clinical trials that Celularity conducts post-approval. As such, Celularity will be subject to continual review and inspections to assess compliance with cGMP and adherence to commitments made in any BLA, other marketing application and previous responses to inspectional observations. Accordingly, Celularity and others with whom Celularity works must continue to expend time, money and effort in all areas of regulatory compliance, including manufacturing, production and quality control. In addition, the FDA could require Celularity to conduct another study to obtain additional safety or biomarker information. Further, Celularity will be required to comply with FDA promotion and advertising rules, which include, among others, standards for direct-to-consumer advertising, restrictions on promoting products for uses or in patient populations that are not described in the product’s approved uses (known as “off-label use”), limitations on industry-sponsored scientific and educational activities and requirements for promotional activities involving the internet and social media. The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses, and a company that is found to have improperly promoted off-label uses may be subject to significant liability. However, physicians may, in their independent medical judgment, prescribe legally available products for off-label uses. The FDA does not regulate the behavior of physicians in their choice of treatments, but the FDA does restrict manufacturer’s communications on the subject of off-label use of their products.

Later discovery of previously unknown problems with Celularity’s therapeutic candidates, including adverse events of unanticipated severity or frequency, or with its third-party suppliers, or its manufacturing processes, or failure to comply with regulatory requirements, may result in revisions to the approved labeling to add new safety information, imposition of post-market studies or clinical studies to assess new safety risks; or imposition of distribution restrictions or other restrictions under a REMS program. Other potential consequences include, among other things:

•        restrictions on the marketing or manufacturing of Celularity’s therapeutic candidates, withdrawal of the therapeutic from the market or voluntary or mandatory product recalls;

•        fines, warning letters or holds on clinical trials;

•        refusal by the FDA to approve pending applications or supplements to approved applications filed by Celularity or suspension or revocation of license approvals;

•        product seizure or detention, or refusal to permit the import or export of Celularity’s therapeutic candidates; and

•        injunctions or the imposition of civil or criminal penalties.

The FDA’s and other regulatory authorities’ policies may change, and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of Celularity’s therapeutic candidates. Celularity cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative or executive action, either in the United States or abroad. If Celularity is slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if Celularity is not able to maintain regulatory compliance, it may lose any marketing approval that it may have obtained and it may not achieve or sustain profitability.

Negative public opinion and increased regulatory scrutiny of genetic research and therapies involving gene editing or modified cells may damage public perception of Celularity’s therapeutic candidates or adversely affect its ability to conduct its business or obtain regulatory approvals for its therapeutic candidates.

The gene-editing technologies that Celularity uses are novel. Public perception may be influenced by claims that gene editing is unsafe, and products incorporating gene editing may not gain the acceptance of the public or the medical community. In particular, Celularity’s success will depend upon physicians specializing in its targeted diseases prescribing its therapeutic candidates as treatments in lieu of, or in addition to, existing, more familiar, treatments for which greater clinical data may be available. Any increase in negative perceptions of gene editing may result in fewer physicians prescribing Celularity’s treatments or may reduce the willingness of patients to utilize its treatments or participate in clinical trials for its therapeutic candidates. In addition, given the novel nature of gene-editing and cell therapy technologies, governments may place import, export or other restrictions in order to retain control or limit the use of the technologies. Increased negative public opinion or more restrictive government regulations either in the United States or internationally, would have a negative effect on Celularity’s business or financial condition and may delay or impair the development and commercialization of its therapeutic candidates or demand for such therapeutic candidates.

Even if Celularity obtains regulatory approval of its therapeutic candidates, the cell therapies may not gain market acceptance among physicians, patients, hospitals, cancer treatment centers and others in the medical community.

The use of engineered placental-derived cells as a potential treatment is a recent development and may not become broadly accepted by physicians, patients, hospitals, cancer treatment centers and others in the medical community. Celularity may not be able to educate these persons on the benefits of using its therapeutic candidates for many reasons. For example, certain of the therapeutic candidates that Celularity will be developing target a cell surface marker that may be present on cancer cells as well as non-cancerous cells. It is possible that its therapeutic candidates may kill these non-cancerous cells, which may result in unacceptable side effects, including death. Additional factors will influence whether Celularity’s therapeutic candidates are accepted in the market, including:

•        the clinical indications for which its therapeutic candidates are approved;

•        physicians, hospitals, cancer treatment centers and patients considering its therapeutic candidates as a safe and effective treatment;

•        the potential and perceived advantages of its therapeutic candidates over alternative treatments;

•        the prevalence and severity of any side effects;

•        product labeling or product insert requirements of the FDA or other regulatory authorities;

•        limitations or warnings contained in the labeling approved by the FDA;

•        the timing of market introduction of its therapeutic candidates as well as competitive products;

•        the cost of treatment in relation to alternative treatments;

•        the availability of coverage and adequate reimbursement by third-party payors and government authorities;

•        the willingness of patients to pay out-of-pocket in the absence of coverage and adequate reimbursement by third-party payors and government authorities;

•        relative convenience and ease of administration, including as compared to alternative treatments and competitive therapies; and

•        the effectiveness of its sales and marketing efforts.

If Celularity’s therapeutic candidates are approved but fail to achieve market acceptance among physicians, patients, hospitals, cancer treatment centers or others in the medical community, Celularity will not be able to generate significant revenue. Even if Celularity’s cell therapies achieve market acceptance, Celularity may not be able to maintain that market acceptance over time if new products or technologies are introduced that are more favorably received than its therapeutics, are more cost effective or render its therapeutics obsolete.

Coverage and reimbursement may be limited or unavailable in certain market segments for Celularity’s therapeutic candidates, which could make it difficult for Celularity to sell its cell therapies, if approved, profitably.

Successful sales of Celularity’s therapeutic candidates, if approved, depend on the availability of coverage and adequate reimbursement from third-party payors including governmental healthcare programs, such as Medicare and Medicaid, managed care organizations and commercial payors, among others. Significant uncertainty exists as to the coverage and reimbursement status of any therapeutic candidates for which Celularity obtains regulatory approval. In addition, because its therapeutic candidates represent new approaches to the treatment of cancer, infectious and degenerative diseases, Celularity cannot accurately estimate the potential revenue from its therapeutic candidates.

Patients who are provided medical treatment for their conditions generally rely on third-party payors to reimburse all or part of the costs associated with their treatment. Obtaining coverage and adequate reimbursement from third-party payors is critical to new product acceptance.

Third-party payors decide which drugs and treatments they will cover and the amount of reimbursement. Reimbursement by a third-party payor may depend upon a number of factors, including, but not limited to, the third-party payor’s determination that use of a therapeutic is:

•        a covered benefit under its health plan;

•        safe, effective and medically necessary;

•        appropriate for the specific patient;

•        cost-effective; and

•        neither experimental nor investigational.

Obtaining coverage and reimbursement of a therapeutic from a government or other third-party payor is a time-consuming and costly process that could require Celularity to provide to the payor supporting scientific, clinical and cost-effectiveness data for the use of its therapeutics. Even if Celularity obtains coverage for a given therapeutic, if the resulting reimbursement rates are insufficient, hospitals may not approve its therapeutic for use in their facility or third-party payors may require co-payments that patients find unacceptably high. Patients are unlikely to use Celularity’s therapeutic candidates unless coverage is provided, and reimbursement is adequate to cover a significant portion of the cost of Celularity’s therapeutic candidates. Separate reimbursement for the therapeutic itself may or may not be available. Instead, the hospital or administering physician may be reimbursed only for providing the treatment or procedure in which Celularity’s therapeutic is used. Further, from time to time, CMS revises the reimbursement systems used to reimburse health care providers, including the Medicare Physician Fee Schedule and Outpatient Prospective Payment System, which may result in reduced Medicare payments. In some cases, private third-party payers rely on all or portions of Medicare payment systems to determine payment rates. Changes to government healthcare programs that reduce payments under these programs may negatively impact payments from private third-party payors and reduce the willingness of physicians to use Celularity’s therapeutic candidates.

In the United States, no uniform policy of coverage and reimbursement for products exists among third-party payors. Therefore, coverage and reimbursement for products can differ significantly from payor to payor. Further, one payor’s determination to provide coverage for a product does not assure that other payors will also provide coverage for the product. Adequate third-party reimbursement may not be available to enable Celularity to maintain price levels sufficient to realize an appropriate return on its investment in product development.

Celularity intends to seek approval to market its therapeutic candidates in both the United States and in selected foreign jurisdictions. If Celularity obtains approval in one or more foreign jurisdictions for its therapeutic candidates, Celularity will be subject to rules and regulations in those jurisdictions. In some foreign countries, particularly those in Europe, the pricing of biologics is subject to governmental control. In these countries, pricing negotiations with governmental authorities can take considerable time after obtaining marketing approval of a therapeutic candidate. Some of these countries may require the completion of clinical trials that compare the cost-effectiveness of a particular therapeutic candidate to currently available therapies. Other EU member states allow companies to fix their own prices for medicines but monitor and control company profits. The downward pressure on health care costs has become very intense. As a result, increasingly high barriers are being erected to the entry of new products. In addition, in some countries, cross-border imports from low-priced markets exert a commercial pressure on pricing within a country.

The marketability of any therapeutic candidates for which Celularity receives regulatory approval for commercial sale may suffer if government and other third-party payors fail to provide coverage and adequate reimbursement. Celularity expects downward pressure on pharmaceutical pricing to continue. Further, coverage policies and third-party reimbursement rates may change at any time. Even if favorable coverage and reimbursement status is attained for one or more therapeutics for which Celularity receives regulatory approval, less favorable coverage policies and reimbursement rates may be implemented in the future.

The advancement of healthcare reform may negatively impact Celularity’s ability to sell its therapeutic candidates, if approved, profitably.

Third-party payors, whether domestic or foreign, or governmental or commercial, are developing increasingly sophisticated methods of controlling healthcare costs. In both the United States and certain foreign jurisdictions, there have been a number of legislative and regulatory changes to the health care system that could impact Celularity’s ability to sell its therapeutic candidates, if approved, profitably. Further legislation or regulation could be passed that could harm Celularity’s business, financial condition and results of operations. See the section entitled “Business — Government Regulation” for a discussion of these laws and regulations. There have been, and likely will continue to be, legislative and regulatory proposals at the foreign, federal and state levels directed at broadening the availability of healthcare and containing or lowering the cost of healthcare. The implementation of cost containment measures or other healthcare reforms may prevent Celularity from being able to generate revenue, attain profitability, or commercialize its therapeutics. Such reforms could have an adverse effect on anticipated revenue from therapeutic candidates that Celularity may successfully develop and for which Celularity may obtain regulatory approval and may affect its overall financial condition and ability to develop therapeutic candidates.

In addition, there has been increasing legislative and enforcement interest in the United States with respect to specialty drug pricing practices. Specifically, there have been several recent U.S. congressional inquiries and federal and state legislative activity designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient assistance programs, and reform government program reimbursement methodologies for drugs. Individual states in the United States have also become increasingly active in passing legislation and implementing regulations designed to control pharmaceutical product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.

Celularity cannot predict the initiatives that may be adopted in the future. Additionally, the continuing efforts of the government, insurance companies, managed care organizations and other payors of healthcare services to contain or reduce costs of healthcare and/or impose price controls may adversely affect:

•        the demand for Celularity’s therapeutic candidates, if Celularity obtains regulatory approval;

•        Celularity’s ability to set a price that it believes is fair for its therapeutics;

•        Celularity’s ability to generate revenue and achieve or maintain profitability;

•        the level of taxes that Celularity is required to pay; and

•        the availability of capital.

Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors, which may adversely affect Celularity’s future profitability.

Risks Related to Our Intellectual Property

If Celularity’s efforts to protect the proprietary nature of the intellectual property related to its technologies is not adequate, Celularity may not be able to compete effectively in its market.

As is the case with other biopharmaceutical companies, Celularity’s success depends in large part on its ability to obtain and maintain protection of intellectual property. Celularity relies upon a combination of patents, trade secret protection and license agreements to protect the intellectual property related to its technologies. Any disclosure to or misappropriation by third parties of its confidential proprietary information could enable competitors to quickly duplicate or surpass its technological achievements, thus eroding its competitive position in its market. Celularity has filed additional patent applications, and it anticipates additional patent applications will be filed in the future, both in the United States and in other countries, as appropriate. However, Celularity cannot predict:

•        if and when patents will issue;

•        the degree and range of protection any issued patents will afford it against competitors, including whether third parties will find ways to invalidate or otherwise circumvent its patents;

•        whether or not others will obtain patents claiming aspects similar to those covered by its patents and patent applications; or

•        whether Celularity will need to initiate litigation or administrative proceedings, which may be costly whether Celularity wins or loses.

Obtaining and enforcing biopharmaceutical patents is costly, time consuming and complex, and Celularity may not be able to file and prosecute all necessary or desirable patent applications, or maintain, enforce and license any patents that may issue from such patent applications, at a reasonable cost or in a timely manner. It is also possible that Celularity may fail to identify patentable aspects of Celularity’s research and development output before it is too late to obtain patent protection. Celularity may not have the right to control the preparation, filing and prosecution of patent applications licensed from third parties, or to maintain the rights to patents licensed to third parties. Therefore, these patents and applications may not be prosecuted and enforced in a manner consistent with the best interests of Celularity’s business.

Celularity cannot be certain that the claims in its pending patent applications will be considered patentable by the United States Patent and Trademark Office (“USPTO”), or by patent offices in foreign countries, or that the claims in any of its issued patents will be considered valid and enforceable by courts in the United States or foreign countries. The strength of patents in the biotechnology and pharmaceutical field involves complex legal and scientific questions and can be uncertain. The patent applications that Celularity owns or in-licenses may fail to result in issued patents with claims that cover its therapeutic candidates or uses thereof in the United States or in other foreign countries. Even if the patents do successfully issue, third parties may challenge the patentability, validity, enforceability or scope thereof, which may result in such patents being canceled, narrowed, invalidated or held unenforceable. Furthermore, even if they are unchallenged, Celularity’s patents and patent applications may not adequately protect its intellectual property or prevent others from designing their products to avoid being covered by its claims. If the breadth or strength of protection provided by the patents and patent applications Celularity holds with respect to its therapeutic candidates is threatened, it could dissuade companies from collaborating with it to develop, and threaten its ability to commercialize, its therapeutic candidates. Further, if Celularity encounters delays in its clinical trials, the period of time during which Celularity could market its therapeutic candidates under patent protection would be reduced. Further, changes in U.S. patent law could diminish the value of patents in general, thereby impairing Celularity’s ability to protect its products.

Depending on decisions by the U.S. Congress, the federal courts and the USPTO, the laws and regulations governing patents could change in unpredictable ways that would weaken Celularity’s ability to obtain new patents or to enforce its existing patents and patents that Celularity might obtain in the future.

Confidentiality agreements with employees and third parties may not prevent unauthorized disclosure of trade secrets and other proprietary information.

In addition to the protection afforded by patents, Celularity seeks to rely on trade secret protection and confidentiality agreements to protect proprietary know-how that is not patentable, processes for which patents are difficult to enforce and any other elements of its product discovery and development processes that involve proprietary know-how, information or technology that is not covered by patents. Celularity takes steps to protect its intellectual property and proprietary technology by entering into agreements, including confidentiality agreements, non-disclosure agreements and intellectual property assignment agreements, with its employees, consultants, corporate partners and, when needed, advisers. Trade secrets, however, may be difficult to protect.

Monitoring unauthorized disclosure and detection of unauthorized disclosure is difficult, and Celularity does not know whether the steps it has taken to prevent such disclosure are, or will be, adequate. If Celularity were to enforce a claim that a third party had illegally obtained and was using its trade secrets, it would be expensive and time-consuming, and the outcome would be unpredictable.

Although Celularity requires all of its employees to assign their inventions to it, and requires all of its employees and key consultants who have access to its proprietary know-how, information, or technology to enter into confidentiality agreements, Celularity cannot be certain that its trade secrets and other confidential proprietary information will not be disclosed or that competitors will not otherwise gain access to its trade secrets or independently develop substantially equivalent information and techniques. Furthermore, the laws of some foreign countries do not protect proprietary rights to the same extent or in the same manner as the laws of the United States. As a result, Celularity may encounter significant problems in protecting and defending its intellectual property both in the United States and abroad. If Celularity is unable to prevent unauthorized material disclosure of its confidential information or intellectual property to third parties, Celularity will not be able to establish or maintain a competitive advantage in its market, which could materially adversely affect its business, operating results and financial condition.

Celularity may be subject to claims that its employees, consultants or independent contractors have wrongfully used or disclosed confidential information of third parties.

Celularity has received confidential and proprietary information from third parties. In addition, Celularity employs individuals who were previously employed at other biotechnology or pharmaceutical companies. Although Celularity tries to ensure that its employees, consultants, advisors and independent contractors do not use the proprietary information or know-how of others in their work for Celularity, Celularity may be subject to claims that Celularity or its employees, consultants or independent contractors have inadvertently or otherwise used or disclosed intellectual property, including trade secrets or other proprietary or confidential information of these third parties or its employees’ former employers. Litigation may be necessary to defend against these claims. If Celularity fails in defending such claims, in addition to paying monetary damages, Celularity may lose valuable intellectual property rights and face increased competition to business. A loss of key research personnel work product could hamper or prevent Celularity’s ability to commercialize potential technologies and solutions, which could harm Celularity’s business. Even if Celularity is successful in defending against these claims, litigation could result in substantial cost and be a distraction to its management team and employees.

In addition, while it is Celularity’s policy to require Celularity’s employees and contractors who may be involved in the conception or development of intellectual property to execute agreements assigning such intellectual property to Celularity, Celularity may be unsuccessful in executing such an agreement with each party who, in fact, conceives or develops intellectual property that Celularity regards as its own. The assignment of intellectual property rights may not be self-executing, or the assignment agreements may be breached, and Celularity may be forced to bring claims against third parties, or defend claims that they may bring against Celularity, to determine the ownership of what Celularity regards as its intellectual property. Any of the foregoing could harm its business, financial condition, results of operations and prospects.

Third-party claims of intellectual property infringement may prevent or delay Celularity’s product discovery and development efforts and its ability to commercialize its therapeutic candidates.

Celularity’s commercial success depends in part on its avoiding infringement of the patents and proprietary rights of third parties. There is a substantial amount of litigation involving patents and other intellectual property rights in the biotechnology and pharmaceutical industries. Numerous U.S. and foreign issued patents and pending patent applications, which are owned by third parties, exist in the fields in which Celularity is developing its therapeutic candidates. As the biotechnology and pharmaceutical industries expand and more patents are issued, the risk increases that its therapeutic candidates may give rise to claims of infringement of the patent rights of others.

Third parties may assert that Celularity infringes their patents or are otherwise employing their proprietary technology without authorization and may sue. Because patent applications can take many years to issue, there may be currently pending patent applications that may later result in issued patents that Celularity’s therapeutic candidates may be alleged to infringe. In addition, third parties may obtain patents in the future and claim that use of Celularity’s technologies infringes upon these patents. If any third-party patents were held by a court of competent jurisdiction to cover the manufacturing process of Celularity’s therapeutic candidates, constructs or molecules used in or formed during the manufacturing process, or any final therapeutic itself, the holders of any such patents may be able to block Celularity’s ability to commercialize the therapeutic candidate unless Celularity obtains a license under the applicable patents, or until such patents expire or they are finally determined to be held not infringed, unpatentable, invalid or unenforceable. Similarly, if any third-party patent were held by a court of competent jurisdiction to cover aspects of its formulations, processes for manufacture or methods of use, including combination therapy or patient selection methods, the holders of any such patent may be able to block Celularity’s ability to develop and commercialize the product candidate unless Celularity obtains a license or until such patent expires or is finally determined to be held not infringed, unpatentable, invalid or unenforceable. In either case, such a license may not be available on commercially reasonable terms or at all. If Celularity is unable to obtain a necessary license to a third-party patent on commercially reasonable terms, or at all, its ability to commercialize its therapeutic candidates may be impaired or delayed, which could in turn significantly harm its business.

Parties making claims against Celularity may seek and obtain injunctive or other equitable relief, which could effectively block its ability to further develop and commercialize its therapeutic candidates. Defense of these claims, regardless of their merit, would involve substantial litigation expense and would be a substantial diversion of employee resources from Celularity’s business and may impact its reputation. In the event of a successful claim of infringement against Celularity, it may have to pay substantial damages, including treble damages and attorneys’ fees for willful infringement, obtain one or more licenses from third parties, pay royalties or redesign its infringing products, which may be impossible or require substantial time and monetary expenditure. Celularity cannot predict whether any such license would be available at all or whether it would be available on commercially reasonable terms. Furthermore, even in the absence of litigation, Celularity may need to obtain licenses from third parties to advance its research or allow commercialization of its therapeutic candidates. Celularity may fail to obtain any of these licenses at a reasonable cost or on reasonable terms, if at all. In that event, Celularity would be unable to further develop and commercialize its therapeutic candidates, which could harm its business significantly.

Celularity may not be successful in obtaining or maintaining necessary rights to product components and processes for its development pipeline through acquisitions and in-licenses.

Presently, Celularity has rights to the intellectual property, through licenses from third parties and under patent applications that Celularity owns or will own, that Celularity believes will facilitate the development of its therapeutic candidates. In the future, Celularity may identify third party intellectual property and technology that it may need to acquire or license in order to engage in its business, including to develop or commercialize new technologies or services, and the growth of its business may depend in part on its ability to acquire, in-license or use this technology.

Celularity may be unable to acquire or in-license any third-party intellectual property rights from third parties that it identifies. Celularity may fail to obtain any of these licenses at a reasonable cost or on reasonable terms, which would harm its business. Even if Celularity is able to obtain a license, it may be non-exclusive, thereby giving its competitors access to the same technologies licensed to it. In that event, Celularity may be required to expend significant time and resources to develop or license replacement technology. Celularity may need to cease use of the compositions or methods covered by such third-party intellectual property rights to the extent it is unable to maintain its license with any such third-party licensors.

The licensing and acquisition of third-party intellectual property rights is a competitive area, and companies, which may be more established, or have greater resources than Celularity does, may also be pursuing strategies to license or acquire third-party intellectual property rights that Celularity may consider necessary or attractive in order to commercialize its therapeutic candidates. More established companies may have a competitive advantage over Celularity due to their size, cash resources and greater clinical development and commercialization capabilities.

In addition, companies that perceive Celularity to be a competitor may be unwilling to assign or license rights to it. If such licenses are available, Celularity may be required to pay the licensor in return for the use of such licensor’s technology, lump-sum payments, payments based on certain milestones such as sales volumes, or royalties based on sales. In addition, Celularity’s licenses may also place restrictions on its future business opportunities.

In spite of Celularity’s best efforts, its licensors might conclude that Celularity has materially breached its license agreements and might therefore terminate the license agreements, thereby removing Celularity’s ability to develop and commercialize technology covered by these license agreements. If these licenses are terminated, or if the underlying intellectual property fails to provide the intended exclusivity, competitors would have the freedom to seek regulatory approval of, and to market products that use technologies identical to those licensed to Celularity. This could have a material adverse effect on Celularity’s competitive position, business, financial condition, results of operations and prospects. Additionally, termination of these agreements or reduction or elimination of Celularity’s rights under these agreements, or restrictions on Celularity’s ability to freely assign or sublicense its rights under such agreements when it is in the interest of its business to do so, may result in Celularity having to negotiate new or reinstated agreements with less favorable terms, or cause Celularity to lose its rights under these agreements, including Celularity’s rights to important intellectual property or technology or impede, or delay or prohibit the further development or commercialization of one or more technologies that rely on such agreements.

In addition to the above risks, intellectual property rights that may be licensed now or in the future could include sublicenses under intellectual property owned by third parties, in some cases through multiple tiers. The actions of Celularity’s licensors may therefore affect its rights to use sublicensed intellectual property, even if Celularity is in compliance with all of the obligations under its license agreements. Should Celularity’s licensors or any of the upstream licensors fail to comply with their obligations under the agreements pursuant to which they obtain the rights that are sublicensed to Celularity, or should such agreements be terminated or amended, Celularity’s ability to develop and commercialize therapeutic candidates may be materially harmed.

Further, Celularity may not have the right to control the prosecution, maintenance and enforcement of all of Celularity’s licensed and sublicensed intellectual property, and even when Celularity does have such rights, it may require the cooperation of its licensors and upstream licensors, which may not be forthcoming. Celularity’s business could be adversely affected if Celularity or its licensors are unable to prosecute, maintain and enforce licensed and sublicensed intellectual property effectively.

Celularity’s licensors may have relied on third-party consultants or collaborators or on funds from third parties such that Celularity’s licensors are not the sole and exclusive owners of the patents and patent applications in-licensed. If other third parties have ownership rights to patents or patent applications in-licensed by Celularity, they may be able to license such patents to Celularity’s competitors, and Celularity’s competitors could market competing products and technology. This could have a material adverse effect on Celularity’s competitive position, business, financial conditions, results of operations and prospects.

Celularity’s business, financial condition, results of operations and prospects could be materially and adversely affected if it is unable to enter into necessary agreements on acceptable terms or at all, if any necessary licenses are subsequently terminated, if the licensors fail to abide by the terms of the licenses or fail to prevent infringement by third parties, or if the acquired or licensed patents or other rights are found to be invalid or unenforceable. Moreover, Celularity could encounter delays in the introduction of services while it attempts to develop alternatives. Further, defense of any lawsuit or failure to obtain any of these licenses on favorable terms could prevent Celularity from commercializing products, which could harm its business, financial condition, or results of operations and prospects.

Celularity may be involved in lawsuits or other legal proceedings to protect or enforce its patents or the patents of its licensors, which could be expensive, time-consuming and unsuccessful.

Competitors may infringe Celularity’s patents or the patents of its licensors or misappropriate or otherwise violate Celularity’s intellectual property rights or the intellectual property rights of its licensors. In the future, Celularity or its licensors may initiate legal proceedings to enforce or defend Celularity’s intellectual property rights or the intellectual property rights of its licensors, to protect Celularity’s trade secrets or the trade secrets of its licensors, or to determine the validity or scope of intellectual property rights Celularity owns or controls.

To counter infringement or unauthorized use, Celularity may be required to file infringement claims, which can be expensive and time-consuming. Third parties may also initiate legal proceedings against Celularity or its licensor to challenge the validity or scope of intellectual property rights Celularity owns, controls or to which they have rights. In an infringement proceeding, a court may decide that one or more of Celularity’s patents is not valid or is unenforceable or may refuse to stop the other party from using the technology at issue on the grounds that its patents do not cover the technology in question. An adverse result in any litigation or defense proceeding could put one or more of Celularity’s patents at risk of being invalidated, held unenforceable or interpreted narrowly and could put one or more of its pending patent applications at risk of not issuing. Defense of these claims, regardless of their merit, would involve substantial litigation expense and would be a substantial diversion of employee resources from Celularity’s business. Additionally, many of Celularity’s adversaries or adversaries of its licensors in these proceedings may have the ability to dedicate substantially greater resources to prosecuting these legal actions than Celularity can. In the event of a successful claim of infringement against Celularity, it may have to pay substantial damages, including treble damages and attorneys’ fees for willful infringement, obtain one or more licenses from third parties, pay royalties or redesign its infringing products, which may be impossible or require substantial time and monetary expenditure.

Third-party pre-issuance submission of prior art to the USPTO, or opposition, derivation, revocation, reexamination, inter partes review or interference proceedings, or other pre-issuance or post-grant proceedings or other patent office proceedings or litigation in the United States or other jurisdictions provoked by third parties or brought by Celularity or its licensors, may challenge or be necessary to determine the inventorship, priority, patentability or validity of inventions with respect to Celularity or its licensor’s patents or patent applications. An unfavorable outcome could leave Celularity’s technology or therapeutic candidates without patent protection, allow third parties to commercialize Celularity’s technology or therapeutic candidates and compete directly with Celularity, without payment to Celularity, or could require Celularity or its licensors to cease using the related technology or to obtain license rights from the prevailing party in order to be able to manufacture or commercialize Celularity’s therapeutic candidates without infringing third-party patent rights.

Celularity’s business could be harmed if the prevailing party does not offer it a license on commercially reasonable terms. Litigation or other legal proceedings may result in a decision adverse to Celularity’s interests and, even if it is successful, may result in substantial costs and distract its management and other employees. Celularity may not be able to prevent, alone or with its licensors, misappropriation of its trade secrets or confidential information, particularly in countries where the laws may not protect those rights as fully as in the United States.

Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of Celularity’s confidential information could be compromised by disclosure during this type of litigation. In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our common stock. If the breadth or strength of protection provided by Celularity or its licensor’s patents and patent applications is threatened, it could dissuade companies from collaborating with Celularity to license, develop or commercialize therapeutic candidates. Moreover, the uncertainties associated with litigation could have a material adverse effect on Celularity’s ability to raise the funds necessary to continue clinical trials, continue research programs, license necessary technology from third parties, or enter into collaborations.

Obtaining and maintaining Celularity’s patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and its patent protection could be reduced or eliminated for non-compliance with these requirements.

Periodic maintenance fees on any issued patent are due to be paid to the USPTO, and foreign patent agencies in several stages over the lifetime of the patent. The USPTO and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application process. While an inadvertent lapse can in many cases be cured by payment of a late fee or by other means in accordance with the applicable rules, there are situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. Noncompliance events that could result in abandonment or lapse of a patent or patent application include, but are not limited to, failure to respond to official actions within prescribed time limits, non-payment of fees and failure to properly legalize and submit formal documents. In such an event, Celularity’s competitors might be able to enter the market, which would have a material adverse effect on Celularity’s business.

The lives of Celularity’s patents may not be sufficient to effectively protect its products and business.

Patents have a limited lifespan. In the United States, if all maintenance fees are timely paid, the natural expiration of a patent is generally 20 years after its first effective filing date. Although various extensions may be available, the life of a patent, and the protection it affords, is limited. Even if patents covering its therapeutic candidates are obtained, once the patent life has expired for a product, Celularity may be open to competition from biosimilar or generic medications. In addition, although upon issuance in the United States a patent’s life can be increased based on certain delays caused by the USPTO, this increase can be reduced or eliminated based on certain delays caused by the patent applicant during patent prosecution. If Celularity’s technologies require extended development and/or regulatory review, patents protecting Celularity’s technologies might expire before or shortly after Celularity is able to successfully commercialize them. If Celularity does not have sufficient patent life to protect its products, its business and results of operations will be adversely affected.

Celularity or its licensors may be subject to claims challenging the inventorship of its patents and other intellectual property.

Celularity or its licensors may in the future be subject to claims that former employees, collaborators, or other third parties have an interest in its patents or other intellectual property as an inventor or co-inventor. For example, Celularity may have inventorship disputes arise from conflicting obligations of consultants or others who are involved in developing its therapeutic candidates. Litigation may be necessary to defend against these and other claims challenging inventorship. If Celularity or its licensors fail in defending any such claims, in addition to paying monetary damages, Celularity may lose valuable intellectual property rights, such as exclusive ownership of, or right to use, valuable intellectual property. Such an outcome could have a material adverse effect on its business. Even if Celularity or its licensors are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees.

Celularity may not be able to protect its intellectual property rights throughout the world.

Celularity may not be able to protect its intellectual property rights outside the United States. Filing, prosecuting and defending patents on therapeutic candidates in all countries throughout the world would be prohibitively expensive, and its intellectual property rights in some countries outside the United States can be less extensive than those in the United States. In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as federal and state laws in the United States, and even where such protection is nominally available, judicial and governmental enforcement of such intellectual property rights may be lacking. Whether filed in the United States or abroad, Celularity’s patents and patent applications may be challenged or may fail to result in issued patents. Consequently, Celularity may not be able to prevent third parties from practicing its inventions in all countries outside the United States, or from selling or importing products made using its inventions in and into the United States or other jurisdictions. Competitors may use its technologies in jurisdictions where Celularity has not obtained patent protection to develop their own products and further, may export otherwise infringing products to territories where Celularity has patent protection, but enforcement is not as strong as that in the United States. These products may compete with Celularity’s products and its patents or other intellectual property rights may not be effective or sufficient to prevent them from competing. In addition, certain countries have compulsory licensing laws under which a patent owner may

be compelled to grant licenses to other parties. Furthermore, many countries limit the enforceability of patents against other parties, including government agencies or government contractors. In these countries, the patent owner may have limited remedies, which could materially diminish the value of any patents.

Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of many other countries do not favor the enforcement of patents and other intellectual property protection, particularly those relating to biotechnology, which could make it difficult for Celularity to stop the misappropriation or other violations of its intellectual property rights including infringement of its patents in such countries. Proceedings to enforce Celularity’s patent rights in foreign jurisdictions could result in substantial cost and divert Celularity’s efforts and attention from other aspects of its business, could put its patents at risk of being invalidated or interpreted narrowly and its patent applications at risk of not issuing, and could provoke third parties to assert claims against Celularity. Celularity may not prevail in any lawsuits that it initiates, or that are initiated against Celularity, and the damages or other remedies awarded, if any, may not be commercially meaningful. In addition, changes in the law and legal decisions by courts in the United States and foreign countries may affect Celularity’s ability to obtain adequate protection for its technologies and the enforcement of intellectual property. Accordingly, Celularity’s efforts to enforce its intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that Celularity develops or license.

Changes in patent law, including recent patent reform legislation, could increase the uncertainties and costs surrounding the prosecution of Celularity’s patent applications and the enforcement or defense of its issued patents.

Changes in either the patent laws or in interpretations of patent laws in the United States or other countries or regions may diminish the value of Celularity’s intellectual property. Celularity cannot predict the breadth of claims that may be allowed or enforced in Celularity’s patents or in third party patents. Celularity may not develop additional proprietary technologies that are patentable.

Assuming that other requirements for patentability are met, prior to March 16, 2013, in the United States, the first to invent the claimed invention was entitled to the patent, while outside the United States, the first to file a patent application was entitled to the patent. On or after March 16, 2013, under the Leahy-Smith America Invents Act (the “America Invents Act”), enacted in September 16, 2011, the United States transitioned to a first inventor to file system in which, assuming that other requirements for patentability are met, the first inventor to file a patent application will be entitled to the patent on an invention regardless of whether a third party was the first to invent the claimed invention. A third party that files a patent application in the USPTO on or after March 16, 2013, but before Celularity, could therefore be awarded a patent covering an invention of Celularity, even if Celularity had made the invention before it was made by such third party. This will require Celularity to be cognizant of the time from invention to filing of a patent application. Because patent applications in the United States and most other countries are confidential for a period of time after filing or until issuance, Celularity cannot be certain that Celularity or its licensors were the first to either (i) file any patent application related to Celularity’s technology or (ii) invent any of the inventions claimed in Celularity’s or its licensor’s patents or patent applications.

The America Invents Act also includes a number of significant changes that affect the way patent applications will be prosecuted and also may affect patent litigation. These include allowing third party submission of prior art to the USPTO during patent prosecution and additional procedures to attack the validity of a patent by USPTO administered post-grant proceedings, including post-grant review, inter partes review and derivation proceedings. Because of a lower evidentiary standard in USPTO proceedings compared to the evidentiary standard in United States federal courts necessary to invalidate a patent claim, a third party could potentially provide evidence in a USPTO proceeding sufficient for the USPTO to hold a claim invalid even though the same evidence would be insufficient to invalidate the claim if first presented in a district court action. Accordingly, a third party may attempt to use the USPTO procedures to invalidate Celularity’s patent claims that would not have been invalidated if first challenged by the third party as a defendant in a district court action. Therefore, the America Invents Act and its implementation could increase the uncertainties and costs surrounding the prosecution of Celularity’s owned or in-licensed patent applications and the enforcement or defense of Celularity’s owned or in-licensed issued patents, all of which could have a material adverse effect on Celularity’s business, financial condition, results of operations and prospects.

In addition, the patent position of companies in the biotechnology field is particularly uncertain. Various courts, including the United States Supreme Court have rendered decisions that affect the scope of patentability of certain inventions or discoveries relating to biotechnology. These decisions state, among other things, that a patent claim

that recites an abstract idea, natural phenomenon or law of nature (for example, the relationship between particular genetic variants and cancer) are not themselves patentable. Precisely what constitutes a law of nature or abstract idea is uncertain, and it is possible that certain aspects of Celularity’s technology could be considered natural laws. Accordingly, the evolving case law in the United States, and abroad, may adversely affect Celularity and its licensor’s ability to obtain new patents or to enforce existing patents and may facilitate third party challenges to any owned or licensed patents.

Intellectual property rights do not necessarily address all potential threats to Celularity’s competitive advantage.

The degree of future protection afforded by Celularity’s intellectual property rights is uncertain because intellectual property rights have limitations and may not adequately protect Celularity’s business or permit Celularity to maintain any competitive advantage. For example:

•        others may be able to make products that are similar to any therapeutic candidates Celularity may develop or utilize similar technology that are not covered by the claims of the patents that Celularity licenses or may own in the future;

•        Celularity, or its current or future collaborators, might not have been the first to make the inventions covered by the issued patents and pending patent applications that Celularity licenses or may own in the future;

•        Celularity, or its current or future collaborators, might not have been the first to file patent applications covering certain intellectual property of Celularity or its inventions;

•        others may independently develop similar or alternative technologies or duplicate any of Celularity’s technologies without infringing Celularity’s owned or licensed intellectual property rights;

•        it is possible that Celularity’s pending patent applications or those that they may own in the future will not lead to issued patents;

•        issued patents that Celularity holds rights to may be held invalid or unenforceable, including as a result of legal challenges by Celularity’s competitors;

•        Celularity’s competitors might conduct research and development activities in countries where Celularity does not have patent rights and then use the information learned from such activities to develop competitive products for sale in Celularity’s major commercial markets;

•        Celularity cannot ensure that any patents issued to Celularity or its licensors will provide a basis for an exclusive market for its commercially viable therapeutic candidates or will provide Celularity with any competitive advantages;

•        Celularity cannot ensure that its commercial activities or therapeutic candidates will not infringe upon the patents of others;

•        Celularity cannot ensure that it will be able to successfully commercialize its therapeutic candidates on a substantial scale, if approved, before the relevant patents that it owns or licenses expire;

•        Celularity cannot ensure that any of its patents, or any of its pending patent applications, if issued, or those of its licensors, will include claims having a scope sufficient to protect Celularity’s therapeutic candidates;

•        Celularity may not develop additional proprietary technologies that are patentable;

•        the patents or intellectual property rights of others may harm Celularity’s business; and

•        Celularity may choose not to file a patent application in order to maintain certain trade secrets or know-how, and a third party may subsequently file a patent covering such intellectual property.

Should any of these events occur, they could have a material adverse effect on Celularity’s business, financial condition, results of operations and prospects.

Risks Related to an Investment in Our Securities

There may not be an active trading market for Celularity’s securities, which may make it difficult to sell shares of the Class A Common Stock or Warrants.

It is possible that an active trading market for Celularity’s securities will not develop or, if developed, that any market will not be sustained. This would make it difficult for you to sell Celularity’s securities at an attractive price or at all.

The market price of Celularity’s securities may be volatile, which could cause the value of your investment to decline.

The price of Celularity’s securities may fluctuate significantly due to the market’s reaction to the Business Combination and general market and economic conditions. An active trading market for Celularity’s securities may not develop or, if developed, it may not be sustained. In addition, fluctuations in the price of Celularity’s securities could contribute to the loss of all or part of your investment. Even if an active market for Celularity’s securities develops and continues, the trading price of Celularity’s securities could be volatile and subject to wide fluctuations in response to various factors, some of which are beyond Celularity’s control. Any of the factors listed below could have a material adverse effect on your investment in Celularity’s securities and Celularity’s securities may trade at prices significantly below the price you paid for them. In such circumstances, the trading price of Celularity’s securities may not recover and may experience a further decline.

Factors affecting the trading price of our securities may include:

•        the realization of any of the risk factors presented in this prospectus;

•        actual or anticipated fluctuations in Celularity’s quarterly financial results or the quarterly financial results of companies perceived to be similar to Celularity;

•        changes in the market’s expectations about Celularity’s operating results;

•        Celularity’s operating results failing to meet the expectation of securities analysts of investors in a particular period;

•        operating and share price performance of other companies that investors deem comparable to Celularity;

•        the volume of shares of Class A Common Stock available for public sale;

•        future issuances, sales, resales or repurchases or anticipated issuances, sales, resales or repurchases of Celularity’s securities;

•        the commencement, enrollment or results of Celularity’s ongoing and planned clinical trials of its therapeutic candidates or any future clinical trials Celularity may conduct, or changes in the development status of its therapeutic candidates;

•        our decision to initiate a clinical trial, not to initiate a clinical trial or to terminate an existing clinical trial;

•        adverse results or delays in clinical trials;

•        any delay in Celularity’s regulatory filings for its therapeutic candidates and any adverse development or perceived adverse development with respect to the applicable regulatory authority’s review of such filings, including without limitation the FDA’s issuance of a “refusal to file” letter or a request for additional information;

•        Celularity’s failure to commercialize its therapeutic candidates;

•        adverse regulatory decisions, including failure to receive regulatory approval of Celularity’s therapeutic candidates;

•        changes in laws or regulations applicable to Celularity’s therapeutic candidates, including but not limited to clinical trial requirements for approvals;

•        adverse developments concerning manufacturers or suppliers;

•        Celularity’s inability to manufacture or obtain adequate supply for any approved therapeutic or inability to do so at acceptable prices;

•        Celularity’s inability to establish collaborations if needed;

•        additions or departures of key scientific or management personnel;

•        unanticipated serious safety concerns related to cellular therapies;

•        introduction of new therapeutics or services offered by Celularity’s competitors;

•        announcements of significant acquisitions, strategic partnerships, joint ventures or capital commitments by Celularity or its competitors;

•        Celularity’s ability to effectively manage growth;

•        actual or anticipated variations in quarterly operating results;

•        Celularity’s cash position;

•        Celularity’s failure to meet the estimates and projections of the investment community or that Celularity may otherwise provide to the public;

•        publication of research reports about Celularity or its industry, or cellular therapy in particular, or positive or negative recommendations or withdrawal of research coverage by securities analysts;

•        changes in the structure of healthcare payment systems;

•        changes in the market valuations of similar companies;

•        overall performance of the equity markets;

•        speculation in the press or investment community;

•        sales of Class A Common Stock by Celularity or its stockholders in the future;

•        the trading volume of our Class A Common Stock;

•        changes in accounting practices;

•        the ineffectiveness of our internal control over financial reporting;

•        disputes or other developments relating to proprietary rights, including patents, litigation matters and Celularity’s ability to obtain or maintain patent protection for its technologies;

•        significant lawsuits, including patent or stockholder litigation;

•        general political and economic conditions, including health pandemics, such as COVID-19; and

•        other events or factors, many of which are beyond Celularity’s control.

In addition, the stock market in general, and Nasdaq and biopharmaceutical companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies. Broad market and industry factors may negatively affect the market price of our Class A Common Stock, regardless of its actual operating performance. In the past, securities class action litigation has often been instituted against companies following periods of volatility in the market price of a company’s securities. This type of litigation, if instituted, could result in substantial costs and a diversion of management’s attention and resources, which would harm our business, operating results or financial condition.

The unaudited pro forma financial information included herein may not be indicative of what our actual financial position or results of operations would have been.

The unaudited pro forma financial information included herein is presented for illustrative purposes only and is not necessarily indicative of what our actual financial position or results of operations would have been had the Business Combination been completed on the dates indicated.

Celularity’s ability to utilize its net operating loss carryforwards and certain other tax attributes may be limited.

Under legislation enacted in 2017, informally titled the Tax Cuts and Jobs Act (the “Tax Act”) as modified by the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), federal net operating losses (“NOLs”), incurred in tax years beginning after December 31, 2017, may be carried forward indefinitely, but the deductibility of such federal NOLs in tax years beginning after December 31, 2020, is limited to 80% of taxable income. It is uncertain if and to what extent various states will conform to the Tax Act or the CARES Act. In addition, under Sections 382 and 383 of the Code and corresponding provisions of state law, if a corporation undergoes an “ownership change” (generally defined as a greater than 50 percentage point change (by value) in the equity ownership of certain stockholders over a rolling three-year period), the corporation’s ability to use its pre-change NOL carryforwards and other pre-change tax attributes to offset its post-change income and taxes may be limited. Celularity may experience ownership changes in the future as a result of subsequent shifts in its stock ownership. Celularity anticipates incurring significant additional net losses for the foreseeable future, and its ability to utilize NOL carryforwards associated with any such losses to offset future taxable income may be limited to the extent Celularity incurs future ownership changes. In addition, at the state level, there may be periods during which the use of NOL carryforwards is suspended or otherwise limited, which could accelerate or permanently increase state taxes owed. As a result, Celularity may be unable to use all or a material portion of its NOL carryforwards and other tax attributes, which could adversely affect its future cash flows.

There can be no assurance that Celularity will be able to comply with the continued listing standards of Nasdaq.

If Nasdaq delists Celularity’s securities from trading on its exchange for failure to meet the listing standards, Celularity and its stockholders could face significant negative consequences including:

•        Limited availability of market quotations for Celularity’s securities;

•        A determination that the Class A Common Stock is a “penny stock” which will require brokers trading in the Class A Common Stock to adhere to more stringent rules;

•        Possibly resulting in a reduced level of trading activity in the secondary trading market for shares of the Class A Common Stock;

•        A limited amount of analyst coverage; and

•        A decreased ability to issue additional securities or obtain additional financing in the future.

Celularity will incur significant increased expenses and administrative burdens as a public company, which could negatively impact its business, financial condition and results of operations.

Celularity faces increased legal, accounting, administrative and other costs and expenses as a public company that it did not incur as a private company. The Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”), including the requirements of Section 404, as well as rules and regulations subsequently implemented by the SEC, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and the rules and regulations promulgated and to be promulgated thereunder, the PCAOB and the securities exchanges, impose additional reporting and other obligations on public companies. Compliance with public company requirements will increase costs and make certain activities more time-consuming. A number of those requirements will require Celularity to carry out activities it has not done previously. For example, Celularity has created new board committees and adopted new internal controls and disclosure controls and procedures. In addition, expenses associated with SEC reporting requirements will be incurred. Furthermore, if any issues in complying with those requirements are identified (for example, if Celularity identified a material weakness or significant deficiency in the internal control over financial reporting), Celularity could incur additional costs rectifying those issues, and the existence of those issues could harm its reputation or investor perceptions of Celularity. It may also be more expensive to obtain director and officer liability insurance.

Risks associated with Celularity’s status as a public company may make it more difficult to attract and retain qualified persons to serve on its board of directors or as executive officers. The additional reporting and other obligations imposed by these rules and regulations will increase legal and financial compliance costs and the costs of related legal, accounting and administrative activities. These increased costs will require Celularity to divert a significant amount of money that could otherwise be used for its business. Advocacy efforts by stockholders and third parties may also prompt additional changes in governance and reporting requirements, which could further increase costs.

Because we have no current plans to pay cash dividends on our Class A Common Stock for the foreseeable future, you may not receive any return on investment unless you sell your Class A Common Stock for a price greater than that which you paid for it.

We may retain future earnings, if any, for future operations, expansion and debt repayment and have no current plans to pay any cash dividends for the foreseeable future. Any decision to declare and pay dividends as a public company in the future will be made at the discretion of the Celularity board of directors and will depend on, among other things, our results of operations, financial condition, cash requirements, contractual restrictions and other factors that the our board of directors may deem relevant. As a result, you may not receive any return on an investment in our Class A Common Stock unless you sell the Class A Common Stock for a price greater than that which you paid for it. See the section entitled “Market Information for Securities and Dividend Policy”.

Celularity’s failure to timely and effectively implement controls and procedures required by Section 404(a) of the Sarbanes-Oxley Act could have a material adverse effect on its business.

Prior to the Business Combiantion, Celularity was not subject to Section 404 of the Sarbanes-Oxley Act. Following the Business Combination, Celularity’s management team will be required, pursuant to Section 404 of the Sarbanes Oxley Act, to furnish a report by management on, among other things, the effectiveness of Celularity’s internal control over financial reporting. The standards required for a public company under Section 404(a) of the Sarbanes-Oxley Act are significantly more stringent than those required of Celularity when it was a privately-held company. Management may not be able to effectively and timely implement controls and procedures that adequately respond to the increased regulatory compliance and reporting requirements that are applicable to it as a public company.

In particular, Celularity will be required to perform system and process evaluation and testing of its internal control over financial reporting to allow management to report on the effectiveness of its internal control over financial reporting. As a private company, Celularity had not been required to do such an analysis, and its current testing as a private company has revealed a number of deficiencies and material weaknesses in its internal control over financial reporting that it may not be able to remedy by the time it is required to do a Section 404 assessment. These include issues with Celularity’s:

•        limited review controls currently in place and lack of sufficient accounting personnel with proper experience and qualifications to account for complex transactions;

•        accounting for impairment testing of its intangible assets;

•        accounting for the valuation of warrant liabilities;

•        accounting for valuation of contingent consideration; and

•        accounting for income taxes.

Celularity cannot assure you that it will be able to remedy its existing deficiencies and material weaknesses, that it will not identify new deficiencies or material weaknesses in its initial Section 404 assessment, or that even if identified in such initial assessment, such deficiencies or material weaknesses will not occur in the future. Accordingly, material weaknesses may still exist when Celularity reports on the effectiveness of its internal control over financial reporting. In addition, Celularity may face potential claims from the material weakness identified in the GX financial reporting for the year ended December 31, 2020.

Celularity’s independent registered public accounting firm will not be required to attest to the effectiveness of the Celularity’s internal control over financial reporting for so long as Celularity remains a non-accelerated filer as defined in applicable SEC regulations. In connection with the consummation of the Business Combination, Celularity will need to undertake various actions, such as implementing new internal controls and procedures and hiring additional

accounting or internal audit staff. Celularity is only now beginning the costly and challenging process of compiling the system and processing documentation necessary to perform the evaluation of its internal control over financial reporting needed to comply with Section 404, and Celularity may not be able to complete its evaluation, testing and any required remediation in a timely fashion. Moreover, if Celularity is not able to comply with the requirements of Section 404 in a timely manner or if it identifies or its independent registered public accounting firm identifies deficiencies in Celularity’s internal control over financial reporting that are deemed to be material weaknesses, the market price of Celularity’s Class A Common Stock could decline and Celularity could be subject to sanctions or investigations by Nasdaq, the SEC or other regulatory authorities, which would require additional financial and management resources.

Sales of a substantial number of shares of Celularity’s Class A Common Stock in the public market could cause its stock price to fall.

Sales of a substantial number of shares of Celularity’s Class A Common Stock in the public market or the perception that these sales might occur, could depress the market price of the Class A Common Stock and could impair Celularity’s ability to raise capital through the sale of additional equity securities. Celularity is unable to predict the effect that sales may have on the prevailing market price of Class A Common Stock. Sales of significant number of shares of Class A Common Stock may make it more difficult for Celularity to sell equity or equity-related securities in the future at a time and price that it deems reasonable or appropriate, and make it more difficult for you to sell shares of Celularity’s Class A Common Stock. Certain holders of Celularity’s securities are entitled to rights with respect to the registration of the shares of Celularity under the Securities Act. Any sales of securities by these stockholders could have a material adverse effect on the trading price of Celularity’s Class A Common Stock.

Additionally, the PIPE Investors, Palantir Technologies, Ardea and Credit Suisse are not restricted from selling any of their shares of Class A Common Stock they acquired in connection with the Closing, other than by applicable securities laws. As such, sales of a substantial number of shares of Class A Common Stock in the public market could occur at any time. These sales, or the perception in the market that the holders of a large number of shares intend to sell shares, could reduce the market price of Class A Common Stock.

Future sales and issuances of our Class A Common Stock or rights to purchase common stock, including pursuant to our equity plans, could result in additional dilution of the percentage ownership of our stockholders and could cause our stock price to fall.

We expect that significant additional capital may be needed in the future to continue our planned operations, including conducting clinical trials, commercialization efforts, expanded research and development activities and costs associated with operating as a public company. To raise capital, Celularity may sell common stock, convertible securities or other equity securities in one or more transactions at prices and in a manner it determines from time to time. Celularity may also sell its common stock as part of entering into strategic alliances, creating joint ventures or collaborations or entering into additional licensing arrangements with third parties that Celularity believes will complement or augment its development and commercialization efforts. If Celularity sells common stock, convertible securities or other equity securities, investors may be materially diluted by subsequent sales. Such sales may also result in material dilution to existing stockholders, and new investors could gain rights, preferences and privileges senior to the holders of our Class A Common Stock.

Celularity qualifies as an “emerging growth company.” The reduced public company reporting requirements applicable to emerging growth companies may make Celularity’s Class A Common Stock less attractive to investors.

Celularity qualifies as an “emerging growth company” under SEC rules. As an emerging growth company, we will be permitted and plan to rely on exemptions from certain disclosure requirements that are applicable to other public companies that are not emerging growth companies. These provisions include: (1) presenting only two years of audited financial statements, (2) presenting only two years of related selected financial data and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” disclosure, (3) an exemption from compliance with the auditor attestation requirement in the assessment of internal control over financial reporting pursuant to Section 404 of Sarbanes-Oxley, (4) not being required to comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements, (5) reduced disclosure obligations regarding executive compensation arrangements in periodic reports, registration statements, and proxy statements, and (6) exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments

not previously approved. As a result, the information we provide will be different than the information that is available with respect to other public companies that are not emerging growth companies. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock, and the market price of our common stock may be more volatile.

Our management has limited experience in operating a public company.

Our executive officers have limited experience in the management of a publicly traded company subject to significant regulatory oversight and reporting obligations under federal securities laws. Our management team may not successfully or effectively manage our transition to a public company. Their limited experience in dealing with the increasingly complex laws pertaining to public companies could be a significant disadvantage in that it is likely that an increasing amount of their time may be devoted to these activities which will result in less time being devoted to our management and growth. We may not have adequate personnel with the appropriate level of knowledge, experience and training in the accounting policies, practices or internal controls over financial reporting required of public companies in the United States. It is possible that will be required to expand its employee base and hire additional employees to support our operations as a public company, which will increase its operating costs in future periods.

Anti-takeover provisions under Celularity’s charter documents and Delaware law could delay or prevent a change of control, which could limit the market price of its Class A Common Stock and may prevent or frustrate attempts by its stockholders to replace or remove its current management.

Celularity’s Second Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”) and its Amended and Restated Bylaws (the “Amended and Restated Bylaws”) adopted in connection with the completion of the Business Combination contain provisions that could delay or prevent a change of control of Celularity or changes in its board of directors that its stockholders might consider favorable. Some of these provisions include:

•        a board of directors divided into three classes serving staggered three-year terms, such that not all members of the Celularity board of directors will be elected at one time;

•        a prohibition on stockholder action through written consent, which requires that all stockholder actions be taken at a meeting of its stockholders;

•        a requirement that special meetings of stockholders be called only by the chairman of the Celularity board of directors, the chief executive officer, or by a majority of the total number of authorized directors;

•        advance notice requirements for stockholder proposals and nominations for election to the Celularity board of directors;

•        a requirement that no member of the Celularity board of directors may be removed from office by its stockholders except for cause and, in addition to any other vote required by law, upon the approval of not less than two-thirds of all outstanding shares of its voting stock then entitled to vote in the election of directors;

•        a requirement of approval of not less than two-thirds of all outstanding shares of its voting stock to amend any bylaws by stockholder action or to amend specific provisions of its Certificate of Incorporation; and

•        the authority of the Celularity board of directors to issue preferred stock on terms determined by the directors without stockholder approval and which preferred stock may include rights superior to the rights of the holders of common stock.

In addition, Celularity is governed by the provisions of Section 203 of the Delaware General Corporate Law, which may prohibit certain business combinations with stockholders owning 15% or more of its outstanding voting stock. These anti-takeover provisions and other provisions in Celularity’s Certificate of Incorporation and Amended and Restated Bylaws could make it more difficult for stockholders or potential acquirors to obtain control of the Celularity board of directors or initiate actions that are opposed by the then-current board of directors and could also delay or impede a merger, tender offer or proxy contest involving Celularity. These provisions could also discourage proxy contests and make it more difficult for you and other stockholders to elect directors of your choosing or cause Celularity to take other corporate actions you desire. Any delay or prevention of a change of control transaction or changes in the Celularity board of directors could cause the market price of its Class A Common Stock to decline.

Celularity’s Certificate of Incorporation provides that the Court of Chancery of the State of Delaware and the federal district courts of the United States of America will be the exclusive forums for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees.

The Certificate of Incorporation provides that the Court of Chancery of the State of Delaware (or, if and only if the Court of Chancery of the State of Delaware lacks subject matter jurisdiction, any state court located within the State of Delaware or, if and only if all such state courts lack subject matter jurisdiction, the federal district court for the District of Delaware) will be the exclusive forum for the following types of actions or proceedings under Delaware statutory or common law:

•        any derivative claim or cause of action brought on Celularity’s behalf;

•        any claim or cause of action for breach of a fiduciary duty owed by any of Celularity’s current or former directors, officers or other employees to Celularity or its stockholders;

•        any claim or cause of action against Celularity or any of its current or former directors, officers or other employees, arising out of or pursuant to any provision of the DGCL, the Certificate of Incorporation or the Amended and Restated Bylaws;

•        any claim or cause of action seeking to interpret, apply, enforce or determine the validity of the Certificate of Incorporation or the Amended and Restated Bylaws;

•        any claim or cause of action as to which the DGCL confers jurisdiction to the Court of Chancery of the State of Delaware; and

•        any claim or cause of action against Celularity or any of its directors, officers or other employees governed by the internal affairs doctrine, in all cases to the fullest extent permitted by law and subject to the court’s having personal jurisdiction over the indispensable parties named as defendants.

This provision would not apply to suits brought to enforce a duty or liability created by the Exchange Act or any other claim for which the U.S. federal courts have exclusive jurisdiction.

Furthermore, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all such Securities Act actions. Accordingly, both state and federal courts have jurisdiction to entertain such claims. To prevent having to litigate claims in multiple jurisdictions and the threat of inconsistent or contrary rulings by different courts, among other considerations, the Certificate of Incorporation provides that the federal district courts of the United States will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act. While the Delaware courts have determined that such choice of forum provisions are facially valid, a stockholder may nevertheless seek to bring a claim in a venue other than those designated in the exclusive forum provisions. In such instance, we would expect to vigorously assert the validity and enforceability of the exclusive forum provisions of the Certificate of Incorporation. This may require significant additional costs associated with resolving such action in other jurisdictions and there can be no assurance that the provisions will be enforced by a court in those other jurisdictions.

These exclusive forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with Celularity or its directors, officers, or other employees, which may discourage lawsuits against us and our directors, officers and other employees. If a court were to find either exclusive-forum provision in the Certificate of Incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving the dispute in other jurisdictions, which could seriously harm our business.

General Risk Factors

Unstable market and economic conditions may have serious adverse consequences on Celularity’s business, financial condition and stock price.

The global credit and financial markets have experienced extreme volatility and disruptions in the past, most recently as a result of the COVID-19 pandemic. These disruptions can result in severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates

and uncertainty about economic stability. There can be no assurance that further deterioration in credit and financial markets and confidence in economic conditions will not occur. Celularity’s general business strategy may be adversely affected by any such economic downturn, volatile business environment or continued unpredictable and unstable market conditions. If the current equity and credit markets deteriorate, it may make any necessary debt or equity financing more difficult, more costly and more dilutive. Failure to secure any necessary financing in a timely manner and on favorable terms could have a material adverse effect on Celularity’s operations, growth strategy, financial performance and stock price and could require it to delay or abandon clinical development plans. In addition, there is a risk that one or more of Celularity’s current service providers may not survive an economic downturn, which could directly affect Celularity’s ability to attain its operating goals on schedule and on budget.

If securities or industry analysts do not publish research or reports about our business or publish negative reports, the market price of our Class A Common Stock could decline.

The trading market for our Class A Common Stock will be influenced by the research and reports that industry or securities analysts publish about us or our business. If regular publication of research reports ceases, we could lose visibility in the financial markets, which in turn could cause the market price or trading volume of our common stock to decline. Moreover, if one or more of the analysts who cover us downgrade our Class A Common Stock or if reporting results do not meet their expectations, the market price of our securities could decline.

We may be subject to securities litigation, which is expensive and could divert management attention.

The market price of our securities may be volatile and, in the past, companies that have experienced volatility in the market price of their securities have been subject to securities class action litigation. We may be the target of this type of litigation in the future. Securities litigation against us could result in substantial costs and divert management’s attention from other business concerns, which could seriously harm its business.

MARKET AND INDUSTRY DATA

Certain industry data and market data included in this prospectus were obtained from independent third-party surveys, market research, publicly available information, reports of governmental agencies and industry publications and surveys. All of management’s estimates presented herein are based upon management’s review of independent third-party surveys and industry publications prepared by a number of sources and other publicly available information. All of the market data used in this prospectus involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. We believe that the information from these industry publications and surveys included in this prospectus is reliable. The industry in which we operate is subject to a high degree of uncertainty and risk due to a variety of factors, including those described in the section titled “Risk Factors.” These and other factors could cause results to differ materially from those expressed in the estimates made by the independent parties and by us.

USE OF PROCEEDS

All of the shares of Class A Common Stock and Warrants offered by the selling securityholders pursuant to this prospectus will be sold by the selling securityholders for their respective accounts. We will not receive any of the proceeds from these sales.

We will receive up to an aggregate of approximately $263.1 million from the exercise of the Warrants, assuming the exercise in full of all of the Warrants for cash. We expect to use the net proceeds from the exercise of the Warrants for general corporate purposes. We will have broad discretion over the use of proceeds from the exercise of the Warrants. There is no assurance that the holders of the Warrants will elect to exercise any or all of such Warrants. To the extent that the Warrants are exercised on a “cashless basis,” the amount of cash we would receive from the exercise of the Warrants will decrease.

DETERMINATION OF OFFERING PRICE

The offering price of the shares of Class A Common Stock issuable upon exercise of the Warrants offered hereby is determined by reference to the exercise price of the Warrants of $11.50 per share. The Public Warrants are listed on Nasdaq under the symbol “CELUW.”

We cannot currently determine the price or prices at which shares of Class A Common Stock or Warrants may be sold by the selling securityholders under this prospectus.

MARKET INFORMATION FOR SECURITIES AND DIVIDEND POLICY

Market Information

Our Class A Common Stock and Public Warrants are currently listed on Nasdaq under the symbols “CELU” and “CELUW,” respectively. Prior to the consummation of the Business Combination, GX’s Class A Common Stock, units and warrants were listed on Nasdaq under the symbols “GXGXU,” “GXGX” and “GXGXW,” respectively. As of the Closing Date and following the completion of the Business Combination, there were 197 holders of record of the Class A Common Stock and 19 holders of record of our Warrants.

Dividend Policy

We have never declared or paid any dividends on shares of Class A Common Stock. We anticipate that we will retain all of our future earnings, if any, to fund the development and growth of our business. Any future determination to pay dividends on Celularity’s capital stock will be at the discretion of its board of directors. In addition, Celularity’s loan agreements contain restrictions on its ability to pay dividends. It is the present intention of our board of directors to retain all earnings, if any, for use in our business operations and, accordingly, our board of directors does not anticipate declaring any dividends in the foreseeable future. Further, if we incur any indebtedness, our ability to declare dividends may be limited by restrictive covenants we may agree to in connection therewith.

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

Introduction

On July 16, 2021, Legacy Celularity, GX, First Merger Sub and Second Merger Sub, consummated the Business Combination. In connection with the closing of the Business Combination, GX changed its name from GX Acquisition Corp. to Celularity Inc.

The following unaudited pro forma condensed combined balance sheet as of March 31, 2021 and the unaudited pro forma condensed combined statement of operations for the year ended December 31, 2020 and for the three months ended March 31, 2021 present the combination of the financial information of GX and Legacy Celularity after giving effect to the Business Combination, Palantir Technologies Investment and PIPE Financing and related adjustments described in the accompanying notes.

The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2020 and for the three months ended March 31, 2021 gives pro forma effect to the Business Combination, Palantir Technologies Investment and PIPE Financing as if they had occurred on January 1, 2020. The unaudited pro forma condensed combined balance sheet as of March 31, 2021 gives pro forma effect to the Business Combination, Palantir Technologies Investment, and PIPE Financing as if they were completed on March 31, 2021.

The unaudited pro forma condensed combined financial information is based on and should be read in conjunction with the audited annual historical financial statements and unaudited interim historical financial statements of each of GX and Legacy Celularity and the notes thereto, as well as the disclosures contained in the sections entitled “GX’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Celularity’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this prospectus.

The unaudited pro forma condensed combined financial statements have been presented for illustrative purposes only and do not necessarily reflect what Legacy Celularity’s financial condition or results of operations would have been had the Business Combination, Palantir Technologies Investment and PIPE Financing occurred on the dates indicated. Further, the unaudited pro forma condensed combined financial information also may not be useful in predicting the future financial condition and results of operations of Celularity. The actual financial position and results of operations may differ significantly from the pro forma amounts reflected herein due to a variety of factors. The unaudited pro forma adjustments represent management’s estimates based on information available as of the date of these unaudited pro forma condensed combined financial statements and are subject to change as additional information becomes available and analyses are performed.

Description of the Business Combination

On the Closing Date, First Merger Sub merged with and into Legacy Celularity, with Legacy Celularity surviving the First Merger as a wholly owned subsidiary of GX. Immediately following the First Merger, and as part of the same overall transaction as the First Merger, Legacy Celularity merged with and into the Second Merger Sub with Second Merger Sub being the surviving entity of the Second Merger. Upon the consummation of the Business Combination, all holders of Legacy Celularity Capital Stock, Legacy Celularity Warrants, and Legacy Celularity Options received or had the right to receive shares of the Class A Common Stock at a deemed value of approximately $10.20 per share after giving effect to the Exchange Ratio of 0.7686 resulting in 122,487,170 shares of the Class A Common Stock immediately issued and outstanding and 41,534,480 shares to be reserved for the potential future issuance of the Class A Common Stock upon the exercise of the Company’s stock options and upon the exercise of the Warrants, based on the following transactions that occurred on the Closing Date:

•        the conversion of all outstanding shares of Legacy Celularity Preferred Stock into shares of Legacy Celularity Common Stock at the then-effective conversion rate pursuant to the Legacy Celularity Charter;

•        the cancellation of each issued and outstanding share of Legacy Celularity Common Stock (including shares of Legacy Celularity Common Stock resulting from the conversion of shares of Legacy Celularity Preferred Stock described above) and the conversion into the right to receive a number of shares of Class A Common Stock equal to the Exchange Ratio;

•        the cancellation of each share of Legacy Celularity Capital Stock held in treasury without any conversion or payment.

•        the conversion of each outstanding and unexercised Legacy Celularity Warrant into a right to purchase shares of GX Class A Common Stock on the same terms and conditions as were applicable to the Legacy Celularity Warrant immediately prior to the Mergers, except that such Converted Legacy Warrants will be adjusted by the Exchange Ratio; and

•        the conversion of all outstanding and unexercised vested and unvested Legacy Celularity Options into options exercisable for shares of the Class A Common Stock with the same terms except for the number of shares exercisable and the exercise price, each of which will be affected by the Exchange Ratio.

Accounting for the Business Combination

The Business Combination is accounted for as a reverse recapitalization in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Under this method of accounting, GX is treated as the “acquired” company for financial reporting purposes. This determination was primarily based on Legacy Celularity stockholders comprising a relative majority of the voting power of the Company, Legacy Celularity’s operations prior to the acquisition comprising the only ongoing operations of the Company, the majority of Legacy Celularity’s board of directors being appointed by the Company, and Legacy Celularity’s senior management comprising a majority of the senior management of the Company. Accordingly, for accounting purposes, the financial statements of the Company represent a continuation of the financial statements of Legacy Celularity with the Business Combination being treated as the equivalent of Celularity issuing stock for the net assets of GX, accompanied by a recapitalization. The net assets of GX will be stated at historical costs, with no goodwill or other intangible assets recorded.

Other Events in Connection with the Business Combination

GX was required to complete its initial Business Combination by May 23, 2021. On May 14, 2021, at a special meeting of GX stockholders, a vote to extend the time to consummate the initial Business Combination from May 23, 2021 to July 31, 2021 was approved (the “Extension”). In connection with this vote, shareholders exercised their right to redeem 16,169,996 shares of GX Class A Common Stock at a price of approximately $10.15 per share. Approximately $164.1 million was removed from the Trust Account to pay the stockholders, leaving a balance in the Trust Account of approximately $127.7 million. In connection with the Extension, GX agreed to deposit into the Trust Account $0.025 per share for each month of the Extension period, pro-rated for partial months during the Extension period, resulting in a maximum contribution of $0.0565 per share of GX Class A Common Stock that was not redeemed.

On July 14, 2021, at a special meeting of GX stockholders, the Business Combination was approved. In connection with this vote, shareholders exercised their rights to redeem 9,174,705 shares of GX Class A Common Stock at a price of approximately $10.20 per share. Approximately $93.6 million from the Trust Account was used to pay the stockholders, leaving a balance in the Trust Account of approximately $34.0 million.

In connection with the Business Combination, GX issued and sold 8,340,000 shares of its Class A Common Stock at a purchase price of $10.00 per share pursuant to the PIPE Financing and Palantir Technologies purchased 2,000,000 shares of Class A Common Stock at $10.00 per share.

Basis of Pro Forma Presentation

The unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X, Pro Forma Financial Information, as amended by the final rule, Amendments to Financial Disclosures about Acquired and Disposed Businesses, as adopted by the SEC in May 2020 (“Article 11”). The amended Article 11 is effective on January 1, 2021. The unaudited pro forma condensed combined financial information is provided for illustrative purposes only, does not necessarily reflect what the actual consolidated results of operations would have been had the acquisition occurred on the dates assumed and may not be useful in predicting the future consolidated results of operations or financial position. The Company’s results of operations and actual financial position may differ significantly from the pro forma amounts reflected herein due to a variety of factors. The Company will incur additional costs after the Closing in order to satisfy its obligations as an SEC-reporting public company. In addition, the Company has adopted the Celularity Inc. 2021 Equity Incentive Plan and the Celularity Inc. 2021 Employee Stock Purchase Plan. No adjustment to the unaudited pro forma statement of operations has been made for these items as the amounts are not yet known.

Unaudited Pro Forma Condensed Combined Balance Sheet
March 31, 2021
(in thousands)

Unaudited Pro Forma Condensed Combined Balance Sheet — (continued)
March 31, 2021
(in thousands)

Unaudited Pro Forma Condensed Combined
Statement of Operations for the Three Months Ended
March 31, 2021
(in thousands, except share and per share amounts)

Unaudited Pro Forma Condensed Combined
Statement of Operations for the Year Ended
December 31, 2020
(in thousands, except share and per share amounts)

Notes to Unaudited Proforma Condensed Combined Financial Statements
(in thousands except share and per share amounts)

1. Basis of Presentation

The Business Combination is being accounted for as a reverse recapitalization in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Under this method of accounting, GX has been treated as the “acquired” company for financial reporting purposes. This determination was primarily based on Legacy Celularity stockholders comprising a relative majority of the voting power of the Company, Legacy Celularity’s operations prior to the acquisition comprising the only ongoing operations of the Company, the majority of the Company’s board of directors being appointed by Legacy Celularity and Legacy Celularity’s senior management comprising a majority of the senior management of the Company. Accordingly, for accounting purposes, the financial statements of the Company are represented a continuation of the financial statements of Legacy Celularity with the Business Combination being treated as the equivalent of Legacy Celularity issuing stock for the net assets of GX, accompanied by a recapitalization. The net assets of GX will be stated at historical costs, with no goodwill or other intangible assets recorded.

The Company management has made significant estimates and assumptions in its determination of the pro forma adjustments based on information available as of the date of this prospectus. As the unaudited pro forma condensed combined financial information has been prepared based on these preliminary estimates, the final amounts recorded may differ materially from the information presented as additional information becomes available. Management considers this basis of presentation to be reasonable under the circumstances.

2. Adjustments to Unaudited Pro Forma Condensed Combined Financial Information

Balance sheet

A.     Reflects the proceeds of $83,400 from the issuance and sale of 8,340,000 shares of Class A Common Stock at $10.00 per share pursuant to the PIPE Subscription Agreements entered into in connection with the PIPE Financing, net of $3,000 of issuance costs.

B.      Reflects the Palantir Technologies purchase of 2,000,000 shares of Class A Common Stock at $10.00 per share for proceeds of $20,000.

C.     Reflects the liquidation and reclassification of $34,047 of marketable securities held in the GX Trust Account to cash and cash equivalents that becomes available for general corporate use by the Company following the Closing.

D.     Represents the payment of GX’s deferred underwriting fees of $10,813 that becomes payable upon the Closing.

E.      Represents the payment of $4,887 of transaction costs accrued by GX at March 31, 2021.

F.      Reflects the elimination of $6,348 of transaction costs incurred by Legacy Celularity, of which $1,104 were accrued and $5,244 were paid at March 31, 2021. The transaction costs are recorded as a reduction of the net assets of GX received upon the Business Combination and offset against additional paid-in capital.

G.     Represents additional estimated direct and incremental transaction costs of $25,936 incurred by GX and Legacy Celularity and paid upon the Closing of the Business Combination. Of the total incremental transaction costs, $15,631 were paid in cash and $10,305 were paid through the issuance of common stock. The transaction costs are recorded as a reduction of the net assets of GX received upon the Business Combination and offset against additional paid-in capital.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Celularity is a clinical-stage biotechnology company leading the next evolution in cellular medicine by developing off-the-shelf placental-derived allogeneic T cells engineered with a chimeric antigen receptor (“CAR-T”) cells, natural killer (“NK”) cells, and mesenchymal-like adherent stromal cells (“ASCs”), targeting indications across cancer, infectious and degenerative diseases. Celularity believes that by harnessing the placenta’s unique biology and ready availability, it will be able to develop therapeutic solutions that address a significant unmet global need for effective, accessible and affordable therapeutics. Celularity currently has four active clinical trials and plans to submit two additional investigational new drug (“IND”) applications in 2021. The Celularity IMPACT platform capitalizes on the benefits of placenta-derived cells to target multiple diseases, and provides seamless integration, from bio sourcing through manufacturing cryopreserved and packaged allogeneic cells, which Celularity handles at its purpose-built U.S.-based approximately 150,000 square foot facility. Celularity believes the use of placental-derived cells, sourced from full-term healthy donors, has potential inherent advantages, both from an economic and scientific perspective. Relative to adult-derived cells, placental-derived cells have demonstrated greater stemness, which means the ability to expand and persist. Further, their immunological naïveté, meaning having an immune system that has never been exposed to a specific antigen, may allow for potentially less toxicity. Celularity’s placental-derived cells are allogeneic, meaning they are intended for use in any patient, as compared to autologous cells, which are derived from an individual patient for that patient’s sole use. Celularity believes this a key difference that will enable readily available off-the-shelf treatments that can be delivered faster, more reliably, at greater scale and to more patients.

From a single source material, the postpartum human placenta, Celularity derives four allogeneic cell types:

T cells, unmodified NK cells, genetically modified NK cells and ASCs, which have resulted in four key cell therapeutic programs: CyCART-19, CYNK-001, CYNK-101 and APPL-001, focused on six initial indications. CyCART-19 is a placental-derived CAR-T cell therapy, in development for the treatment of B-cell malignancies, initially targeting the CD19 receptor, the construct and related CARs for which are in-licensed from Sorrento Therapeutics, Inc. (“Sorrento”). Celularity plans to file an IND in the fourth quarter of 2021 and commence a Phase 1 clinical trial of CyCART-19 in the first quarter 2022. CYNK-001 is a placental-derived unmodified NK cell in development for the treatment of acute myeloid leukemia (“AML”), a blood cancer, and for glioblastoma multiforme (“GBM”), a solid tumor cancer, as well as COVID-19. CYNK-001 is currently in Phase 1 trial (for AML and other blood cancers) and Phase 1/2a trial (for GBM and COVID-19). Celularity also plans to submit an IND in 2021 for a genetically modified version of a placental-derived NK-cell, CYNK-101. CYNK-101 will be evaluated in combination with a monoclonal antibody (“mAb”), to target HER2+ cancers, such as gastric cancer. APPL-001 is a placenta-derived ASC being developed for the treatment of Crohn’s disease, a degenerative disease. Celularity intends to submit the IND in the first half of 2022 and commence the Phase 1/2a study of APPL-001 for the treatment of Crohn’s disease in 2022.

The Celularity IMPACT manufacturing process is a seamless, fully integrated process that is built to optimize speed and scale from sourcing of human full term healthy postpartum donated placentas through proprietary processing methods, cell selection, product-specific chemistry, manufacturing and controls (“CMC”), advanced cell manufacturing and cryopreservation, the result of which is a suite of allogeneic inventory-ready and on demand placental-derived cell therapy products.

Since inception, Celularity has had significant operating losses. Celularity had a net loss of $81.5 million and $208.2 million for the three months ended March 31, 2021 and year ended December 31, 2020, respectively. Celularity had an accumulated deficit of $645.1 million at March 31, 2021. Celularity’s primary use of cash is to fund operations, which consist primarily of research and development expenses, and to a lesser extent, selling, general and administrative expenses. Cash used to fund operating expenses is impacted by the timing of when it pays these expenses, as reflected in the change in Celularity’s outstanding accounts payable and accrued expenses. Celularity expects to continue to incur net losses for the foreseeable future, and it expects its research and development expenses, selling, general and administrative expenses, and capital expenditures will continue to increase. In particular, Celularity expects its expenses and losses to increase as it continues development of, and seeks regulatory approvals for, its therapeutic candidates, and begins to commercialize any approved therapeutics, as well as hires additional personnel, develops commercial infrastructure for therapeutics, pays fees to outside consultants, lawyers and accountants, and incurs increased costs associated with being a public company such as expenses related to services associated with

maintaining compliance with Nasdaq listing rules and SEC requirements, insurance and investor relations costs. Celularity’s net losses may fluctuate significantly depending on the timing of its clinical trials and its expenditures on other research and development activities.

Based upon Celularity’s current operating plan, Celularity does not believe that its existing cash and cash equivalents as of March 31, 2021 will be sufficient to fund its operating expenses and capital expenditure requirements through the next twelve months. To date, Celularity has not had any cellular therapeutics approved for sale and has not generated any revenues from the sale of its cellular therapeutics. Celularity generates limited revenues from its biobanking and degenerative disease businesses. Celularity does not expect to generate any revenues from cellular therapeutic product sales unless and until it successfully completes development and obtains regulatory approval for one or more of its therapeutic candidates, which Celularity expects will take a number of years. If Celularity obtains regulatory approval for any of its therapeutic candidates, Celularity expects to incur significant commercialization expenses related to therapeutic sales, marketing, manufacturing and distribution as its current commercialization efforts are limited to its biobanking and degenerative disease businesses. As a result, until such time, if ever, as Celularity can generate substantial revenue from therapeutics, Celularity expects to finance its cash needs through equity offerings, debt financings or other capital sources, including potentially collaborations, licenses and other similar arrangements. However, Celularity may be unable to raise additional funds or enter into such other arrangements when needed on favorable terms or at all. Any failure to raise capital as and when needed could have a negative impact on Celularity’s financial condition and on its ability to pursue its business plans and strategies. If Celularity is unable to raise capital, Celularity will need to delay, reduce or terminate planned activities to reduce costs.

Recent Developments — Loan Agreement

Celularity entered into a Loan Agreement, dated as of June 8, 2021 (the “Loan Agreement’), among Celularity, and C.V. Starr & Co., Inc. as the initial lender (“Initial Lender”), pursuant to which the Initial Lender committed to lend up to $10 million, of which $5 million was made available on the closing date of the Loan Agreement. The Loan Agreement contemplates the repayment of the outstanding principal in full on the Maturity Date, which is the earlier of (a) June 8, 2022, (b) the date of the consummation of the Mergers (as defined in the Merger Agreement) and (c) the date the outstanding principal of the loan is declared due and payable pursuant to Section 6.2(A) of the Loan Agreement. The interest on the outstanding principal amount of the loan is payable at a rate equal to (a) 8.0% per annum until, and including, July 31, 2021, and (b) 10.0% per annum commencing on, and including, August 1, 2021. Following the occurrence of an Event of Default (as defined in the Loan Agreement), at the option of the lenders having commitments representing more than 50% of aggregate commitments under the loan, Celularity will be required to pay interest on the outstanding principal amount of the loan from the date of such Event of Default until such Event of Default has been waived by the lenders in writing at a rate per annum equal to 2.0% in excess of the interest rate then applicable to the loan, such interest being payable on demand. Celularity may prepay the loan at any time, with any partial prepayment required to be at least $1,000,000 or a whole multiple of $100,000 in excess thereof. Celularity repaid all amounts outstanding under the Loan Agreement on July 20, 2021.

COVID-19 Pandemic

The COVID-19 pandemic has resulted in increased unemployment, commodity and stock market volatility, and uncertainty about conditions that will prevail in the months ahead. The extent of the ultimate impact of the pandemic on Celularity’s operational and financial performance will depend on various developments, including the duration and spread of the outbreak, and its impact on potential customers, employees, and vendors, all of which cannot be reasonably predicted at this time. Should this emerging macro-economic risk continue for an extended period, there could be an adverse material impact to Celularity’s financial condition, operating results, and timing and amounts of cash flows.

Although Celularity was able to operate continuously throughout 2020, it implemented “work from home” policies as needed following local health recommendations for non-essential employees and employees whose roles are able to be performed remotely. Management of remote workers can present special challenges and productivity may not be as high for remote workers. Because certain elements of Celularity’s operations (such as processing placental tissue, certain biological assays, translational research and storage of cord blood) cannot be performed remotely, it instituted controls and protocols including mandatory temperature checking, symptom assessment forms, incremental

cleaning and sanitization of common surfaces to mitigate risks to employees. Although Celularity has not experienced any material disruption to date, there can be no assurance that its mitigation measures will continue to be effective and that there will not be a disruption to an important element of its business in the future.

Due to a broad decline in economic activity and restrictions on physical access to certain medical facilities, Celularity did experience a decrease in the net revenues of its degenerative disease business due to the pandemic. Selling general and administrative expenses also decreased due to lower commercial expenses in the areas of business impacted by COVID-19 restrictions. As for clinical trials, Celularity did not cancel or postpone enrollment solely due to the risks of COVID-19. However, enrollment in the clinical trial evaluating CYNK-001 for AML experienced some delays in the first half of 2020 as sites assessed their safety protocols and experienced high volumes of COVID-19 patients. Enrollment has continued in the AML trial and remains ongoing. As a result, Celularity had a year-over-year increase in research and development expenses in 2020 notwithstanding the enrollment delays. Celularity also initiated a clinical trial evaluating CYNK-001 in patients with COVID-19, which necessitated additional research and development and project management resources, a portion of which will be reimbursed from Lung Biotechnology PBC. Celularity believes that it would have deployed its human and capital resources to other efforts, such as its CyCART-19 clinical development program, had the COVID-19 pandemic not struck.

The extent to which COVID-19 or any other health epidemic may impact Celularity’s results will depend on future developments, which are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or treat its impact, among others. Accordingly, COVID-19 could have a material adverse effect on Celularity’s business, results of operations, financial condition, and prospects.

Business Segments

Prior to the third quarter of 2020, Celularity managed its operations as one segment. In the third quarter of 2020, Celularity began to manage its operations through an evaluation of three distinct business segments: Cell Therapy, Degenerative Disease, and BioBanking. The reportable segments were determined based on the distinct nature of the activities performed by each segment. Cell Therapy broadly refers to cellular therapies Celularity is researching and developing, which are unproven and in various phases of development. All of the cell therapy programs fall into the Cell Therapy segment. Celularity has no approved cell therapy product and has not generated revenue from the sale of cellular therapies to date. Degenerative Disease produces, sells and licenses products used in surgical and wound care markets, such as Biovance and Interfyl. Celularity sells products in this segment both using its own sales force as well as independent distributors. Celularity is developing additional tissue-based products for the Degenerative Disease segment. BioBanking collects stem cells from umbilical cords and placentas and provides storage of such cells on behalf of individuals for future use. Celularity operates in the biobanking business primarily under the LifebankUSA brand. The prior-period information (revenue and segment contribution) has been revised to conform to the current segment presentation, as operations were not evaluated under this format until the third quarter of 2020. For more information about Celularity’s reportable business segments refer to Note 16, “Segment Reporting” of Celularity’s audited financial statements included elsewhere in this prospectus.

Acquisitions and Divestitures

Celularity’s current operations reflect strategic acquisitions and divestures that it has made since formation. Additional details regarding the following acquisitions can be found in Note 1, “Nature of Business and Basis of Presentation” to Celularity’s annual financial statements for the year ended December 31, 2020 included elsewhere in this prospectus.

Human Longevity

In May 2017, Celularity acquired HLI Cellular Therapeutics, LLC (“HLI CT”) from Human Longevity Inc. (“Human Longevity”). HLI CT operated LifebankUSA, a private umbilical cord blood stem cell and cord tissue bank that offers parents the option to collect, process and cryogenically preserve newborn umbilical cord blood stem cells and cord tissue units. The HLI CT acquisition also provided Celularity with rights to a portfolio of biomaterial assets, including Biovance and Interfyl, as well other assets that it is no longer pursuing. In aggregate, the fair value of the consideration to acquire HLI CT was $28.9 million. The acquisition led to goodwill and intangible assets including in-process research and development (“IPR&D”) and a licensing agreement.

At the time of the HLI CT acquisition, Biovance and Interfyl were subject to an exclusive distribution arrangement with Alliqua Biomedical, Inc. (“Alliqua”). In May 2018, Celularity acquired certain assets from Alliqua, including Alliqua’s biologic wound care business, which included the marketing and distribution rights to Biovance and Interfyl as well as a Class II medical device, the MIST and UltraMIST Therapy Systems. In connection with the Alliqua APA, Celularity paid cash consideration of $29.0 million. The Alliqua acquisition led to goodwill and intangible assets.

In August 2020, Celularity sold the assets comprising its MIST/UltraMIST business to Sanuwave Health, Inc. (“Sanuwave”) and (ii) entered into a five-year licensing agreement with Sanuwave for total consideration of $24.5 million of which $20.0 million was paid at or prior to closing. The remaining $4.5 million of the purchase price was financed through a convertible promissory note due on or before August 6, 2021. The convertible promissory note can be converted into common shares of Sanuwave stock at Celularity’s election any time on or after January 1, 2021.

The five-year licensing arrangement with Sanuwave includes: (i) an exclusive Biovance license for distribution and commercialization in the wound care market and (ii) a non-exclusive license for the distribution and commercialization of Interfyl in the wound care market. Under the licensing agreement, Celularity will receive a quarterly license fee and a defined royalty on each product sale. A credit is provided to Sanuwave for Biovance royalties up to the quarterly license fee.

Anthrogenesis

In August 2017, Celularity acquired Anthrogenesis, a wholly-owned subsidiary of Celgene. The Anthrogenesis acquisition included a portfolio of pre-clinical and clinical stage assets, including key cellular therapeutic assets in that Celularity continues to develop. The Anthrogenesis acquisition gives Celularity access to Anthrogenesis’ proprietary technologies and processes for the recovery of large quantities of high-potential stem cells and cellular therapeutic products derived from postpartum human placentas (each an “Anthrogenesis Product”). As part of the Anthrogenesis acquisition, some of the inventors of the Anthrogenesis Products and other key members of the Anthrogenesis Product development team joined Celularity. In aggregate, the fair value of the consideration to acquire Anthrogenesis was $346.4 million. The acquisition led to goodwill and intangible assets including IPR&D and a licensing agreement and contingent value rights (“CVR”) agreement. See “— Licensing and Collaboration Agreements” below.

CariCord

In October 2018, Celularity acquired CariCord Inc. (“CariCord”), a family cord blood bank established by ClinImmune Labs University of Colorado Cord Blood Bank and the Regents of the University of Colorado, a body corporate, for and on behalf of the University of Colorado School of Medicine. In the aggregate, the fair value of the consideration to acquire CariCord was $9.3 million. The acquisition led to goodwill and intangible assets.

Licensing Agreements

In the ordinary course of business, Celularity licenses in intellectual property and other rights from third parties and has also outlicensed its intellectual property and other rights, including in connection with its acquisitions and divestitures, described above. Additional details regarding the Company’s licensing agreements can be found in Note 14, “License and Distribution Agreements” to Celularity’s annual financial statements for the year ended December 31, 2020 included elsewhere in this prospectus.

Sorrento

In September 2020, Celularity entered into a license and transfer agreement (the “Sorrento Agreement”), with Sorrento Therapeutics, Inc. (“Sorrento”). Henry Ji, Ph.D., a member of Celularity’s board of directors, currently serves as President and Chief Executive Officer of Sorrento. Sorrento is also a significant stockholder of Celularity and invested in the PIPE. Pursuant to the Sorrento Agreement, Celularity obtained a worldwide license, with the right to grant sublicenses with Sorrento’s consent, under certain of Sorrento’s intellectual property rights, including patent rights that would be infringed by the use of certain CD19 CAR constructs, to research, develop, use, reproduce, modify, and create derivative works in the field of placenta-derived cells and/or cord blood-derived cells for the treatment of any disease or disorder, and to make, have made, use, sell, offer for sale, import, export, and distribute products that consist of a combination of certain specified CAR constructs and placenta-derived cells and/or cord blood-derived cells in the field of placenta-derived cells and/or cord blood-derived cells for the treatment of any disease or disorder.

The foregoing license is exclusive with respect to certain specified patent rights and non-exclusive with respect to all other intellectual property rights of Sorrento. The CD19 CAR construct licensed from Sorrento forms the basis of the genetic modification for CyCART-19.

Under the Sorrento Agreement, Celularity has sole responsibility for the development and commercialization of licensed products, subject to certain reserved rights of Sorrento with respect to CD19 CAR-T therapeutics. Additionally, Celularity is obligated to use commercially reasonable efforts to develop and commercialize licensed products.

Under the Sorrento Agreement, Celularity is obligated to pay Sorrento a low double-digit percentage of non-royalty sublicensing income payments received by it in connection with a grant of any sublicense for CD19 CAR-T licensed products. Additionally, Celularity is obligated to pay Sorrento a low single-digit royalty on net sales of CD19 CAR-T licensed products in perpetuity. Celularity is currently in the process of negotiating a supply agreement with Sorrento for the manufacturing and supply of the CD19 CAR construct licensed from Sorrento. See the section entitled “Business — Licensing Agreements — Sorrento Therapeutics, Inc.” for more information regarding the Sorrento Agreement and the proposed supply agreement.

Celgene (now part of Bristol Meyers Squibb)

In August 2017, in connection with the Anthrogenesis acquisition, Celularity, entered into a license agreement (the “Celgene License”), with Celgene, which has since been acquired by Bristol Meyers Squibb. Pursuant to the Celgene License, Celularity granted Celgene a worldwide, royalty-free, fully-paid up, non-exclusive license, without the right to grant sublicenses (other than to its affiliates), under Anthrogenesis’ intellectual property in existence as of the date of the Celgene License or as developed by Celgene in connection with any transition services activities related to the merger for non-commercial pre-clinical research purposes, as well as to develop, manufacture, commercialize and fully exploit products and services that relate to the construction of any CAR, the modification of any T-cell or NK cell to express such a CAR, and/or the use of such CARs or T-cells or NK cells for any purpose, which commercial license is sublicensable. Either party may terminate the Celgene License upon an uncured material breach of the agreement by the other party or insolvency of the other party.

In August 2017, Celularity also issued shares of its Series X Preferred Stock to Celgene as merger consideration and entered into a contingent value rights agreement (the “CVR Agreement”) with Celgene pursuant to which it issued one CVR in respect of each share of Series X Preferred Stock issued to Celgene in connection with the Anthrogenesis acquisition. The CVR Agreement entitles the holders of the CVRs to an aggregate amount, on a per program basis, of $50 million in regulatory milestones and an aggregate $125 million in commercial milestone payments with respect to certain of Celularity’s investigational therapeutic programs, which would include the current CYNK-001 and CYNK-101 pipeline candidates and the legacy PDA-001 and PDA-002 programs (certain placenta-derived adherent cells, proprietary to Anthrogenesis, that are formulated for intravenous delivery, with respect to PDA-001, and subcutaneous or intramuscular delivery, with respect to PDA-002) that are no longer in development. Such payments under the CVR Agreement also expressly cover PNK-007 (which includes certain NK cells proprietary to Anthrogenesis, produced by a process proprietary to Anthrogenesis as of the closing of the Anthrogenesis transaction) and certain PNK-007 cells with a genetic modification (but not including NK cells with a chimeric receptor, including a CAR), along with any derivatives, parts, subparts, or progeny of any of the foregoing, or any therapeutic based or derived (in whole or in part) on certain related development programs as they existed as of the closing of the Anthrogenesis transaction. Accordingly, as Celularity expands its NK cell type franchise into new indications and, as a general matter, because these payments are not payable until a later stage of development, Celularity expects to continue to evaluate its present and future therapeutic candidates as they develop and evolve in light of the specific terms in the CVR Agreement to determine the specific therapeutics on which such amounts will be payable. In addition, with respect to each such program and calendar year, the CVR holders will be entitled to receive a royalty equal to a mid-teen percentage of the annual net sales for such program’s therapeutics from the date of the first commercial sale of such program’s therapeutic in a particular country until the latest to occur of the expiration of the last to expire of any valid patent claim covering such program therapeutic in such country, the expiration of marketing exclusivity with respect to such therapeutic in such country, and August 2027 (i.e., the tenth anniversary of the closing of the acquisition of Anthrogenesis). No payments under the CVR Agreement have been made to date. Celularity estimates the liability associated with the CVR quarterly. Changes to that liability include but are not limited to changes in Celularity clinical programs, assumptions about the commercial value of those programs and the time value of money.

See the section entitled “Business — Celularity’s Team and Corporate History — Celgene Corporation” for more information regarding the Celgene License Agreement and the CVR Agreement.

Components of Operating Results

Net revenues

Net revenues include: (i) sales of Human Cells, Tissues and Cellular and Tissue-Based Products (HCT/P’s), including Biovance®, Biovance 3L, Interfyl® and MIST®/UltraMIST® Therapy System equipment and single-use applicators (collectively, “Product Sales and Rentals”); (ii) the collection, processing and storage of umbilical cord and placental blood and tissue after full-term pregnancies (collectively, “Services”); and, (iii) license fees and royalties received under the license agreement with Sanuwave as well as license fees received under the exclusive distribution arrangement with Alliqua Biomedical, Inc. (“Alliqua”) prior to Celularity’s acquisition of Alliqua’s biologic wound care business in May 2018 (collectively, “License, Royalty and Other”). MIST®/UltraMIST® revenues are only included within 2020 as the business was divested in August 2020.

Cost of goods sold

Cost of goods sold consists of labor, material and overhead costs associated with Celularity’s two existing commercial business segments, BioBanking and Degenerative Disease. BioBanking costs include the cost of storage and transportation kits for newly banked materials as well as tank and facility overhead costs for cord blood and other units in storage. Degenerative Disease costs include costs associated with procuring placentas, qualifying the placental material and processing the placental tissue into a marketable product. Costs in the Degenerative Disease segment include labor and overhead costs associated with the production of the Biovance and Interfyl product lines.

Research and development expense

Celularity’s research and development expenses primarily relate to basic scientific research into placentally derived allogeneic cells, pre-clinical studies to support its current and future clinical programs in cellular medicine, clinical development of its NK cell programs and facilities, depreciation and other direct and allocated expenses incurred as a result of research and development activities. Celularity incurs expenses for third party contract research organizations (“CROs”), that assist in running clinical trials, personnel expenses for research scientists, specialized chemicals and reagents used to conduct biologic research, expense for third party testing and validation and various overhead expenses including rent and facility maintenance expense. Basic research, research collaborations involving partners and research designed to enable successful regulatory submissions is critical to Celularity’s current and future success in cell therapy. Celularity anticipates that its research and development expenditures will increase as it engages in further clinical trials, investigates incremental CAR constructs for its allogeneic T-cell and NK cell platforms and conduct further pre-clinical studies on CYNK-101 in conjunction with various antibody candidates. The amount of increase will depend on numerous factors, including the timing of clinical trials, preliminary evidence of efficacy in clinical trials and the number of indications that Celularity chooses to pursue.

General and administrative expense

General and administrative expense consists primarily of personnel costs including salaries, bonuses, stock compensation and benefits for specialized staff that support Celularity’s core business operations. Executive management, finance, legal, human resources and information technology are key components of general and administrative expense and those expenses are recognized when incurred. Celularity expects that as it engages in more clinical trials and potentially prepares for commercialization of any approved therapies that its general and administrative costs will increase over time. The magnitude and timing of any increase in general and administrative expense will depend on the progress of clinical trials, the release of new products within the degenerative disease portfolio, changes in the regulatory environment or incremental staffing needs to support the growth of the business as well as any incremental expenses associated with being a public company.

Change in fair value of contingent consideration liability

Because the acquisitions of Anthrogenesis from Celgene and HLI Cellular Therapeutics, LLC from Human Longevity Inc. were accounted for as business combinations, Celularity recognized acquisition-related contingent consideration on the balance sheet in accordance with the acquisition method of accounting. See “— Acquisitions and Divestitures” for more information. The fair value of contingent consideration liability is determined based on a probability-weighted income approach derived from revenue estimates and a probability assessment with respect to the likelihood of achieving regulatory and commercial milestone obligations and royalty obligations. The fair value of acquisition related contingent consideration is remeasured each reporting period with changes in fair value recorded in the consolidated statement of operations. Changes in contingent consideration fair value estimates result in an increase or decrease in our contingent consideration obligation and a corresponding charge or reduction to operating results. Key elements of the contingent consideration are regulatory milestone payments, sales milestone payments and royalty payments. Regulatory payments are due on regulatory approval of certain cell types in the United States and the EU. Regulatory milestone payments are one time but are due prior to any potential commercial success of a cell type in a specific indication. Royalty payments are a percentage of net sales. Sales milestone payments are due when certain aggregate sales thresholds have been met. Management must use substantial judgement in evaluating the value of the contingent consideration. Estimates used by management include but are not limited to: (i) the number and type of clinical programs that Celularity is likely to pursue based on the quality of its preclinical data, (ii) the time required to conduct clinical trials, (iii) the odds of regulatory success in those trials, (iv) the potential number of patients treatable for the indications in which Celularity is successful and (v) the pricing of treatments that achieve commercial status. All of these areas involve substantial judgement on the part of management and are inherently uncertain.

Results of Operations

Comparison of Three Months Ended March 31, 2021 to Three Months Ended March 31, 2020

____________

*        N/M = not meaningful.

Net Revenue and Cost of Goods Sold

Net revenue for the three months ended March 31, 2021 was $2.7 million, a decrease of $1.5 million, or 36.8%, compared to the prior year. The decrease was primarily due to a decrease in product sales and rentals resulting from the sale of the MIST/UltraMIST assets in August 2020.

Cost of goods sold for the three months ended March 31, 2021 was flat compared to the prior year, as lower volumes sold in the product sales and rentals segment driven by the sale of the MIST/UltraMIST assets in August 2020 were offset by higher overall costs due to product mix.

Research and Development Expenses

Research and development expenses for the three months ended March 31, 2021 were $17.0 million, an increase of $5.2 million, or 44.4%, compared to the prior year. The increase in research and development expenses was primarily due to higher personnel expenses, higher cell therapy process development and research lab expenses and higher clinical trial costs driven by the Company’s clinical trial evaluating the use of CYNK-001 in COVID-19 patients.

Selling, General and Administrative Expenses

Selling general and administrative expenses for the three months ended March 31, 2021 were $7.6 million, a decrease of $1.8 million, or 19.3%, compared to the prior year, primarily due to lower patent filing costs and lower sales commissions resulting from the Sanuwave transaction.

Change in Fair Value of Contingent Consideration Liability

The fair value of the contingent consideration liability increased $20.7 million compared to December 31, 2020 resulting in losses of $20.7 million and $1.7 million for the three months ended March 31, 2021 and 2020, respectively. The increase in the fair value of the contingent consideration for the three months ended March 31, 2021 resulted from change in market-based assumptions (for more information about changes in the fair value of contingent consideration liability refer to Note 3, “Fair Value of Financial Assets and Liabilities” of Celularity’s financial statements included elsewhere in this prospectus).

Amortization of Acquired Intangible Assets

Amortization expense for the three months ended March 31, 2021 was $0.5 million, which decreased 47.5%, compared to the prior year period, primarily due to de-recognition of intangible assets associated with the sale of the MIST/UltraMIST assets to Sanuwave in August 2020.

Other Income (Expense)