Annual report pursuant to Section 13 and 15(d)


12 Months Ended
Nov. 30, 2018


a. General

     Orgenesis Inc., a Nevada corporation (the “Company”), is a biotechnology company specializing in the development, manufacturing and provision of services in the cell and gene therapy industry. The Company operates through two platforms:(i) a point-of-care (“POCare”) cell therapy (“PT”) platform and (ii) a Contract Development and Manufacturing Organization (“CDMO”) platform conducted through its subsidiary, Masthercell Global Inc., a Delaware corporation. Through the PT business, the Company’s aim is to further the development of Advanced Therapy Medicinal Products (“ATMPs”) through collaborations and in-licensing with other pre-clinical and clinical-stage biopharmaceutical companies and research and healthcare institutes to bring such ATMPs to patients. The Company out-license these ATMPs through regional partners to whom the Company also provide regulatory, pre-clinical and training services to support their activity in order to reach patients in a point-of-care hospital setting. Through the CDMO platform, the Company is focused on providing contract manufacturing and development services for biopharmaceutical companies.

     Activities in the PT business include a multitude of cell therapies, including autoimmune, oncologic, neurologic and metabolic diseases and other indications. The Company provides services for its joint venture (“JV”) partners, pharmaceutical and biotech companies as well as research institutions and hospitals that have cell therapies in clinical development. Each of these customers and collaborations represents a revenue and growth opportunity upon regulatory approval. Furthermore, the Company’s trans-differentiation technology demonstrates the capacity to induce a shift in the developmental fate of cells from the liver or other tissues and transdifferentiating them into “pancreatic beta cell-like” Autologous Insulin Producing (“AIP”) cells for patients with Type 1 Diabetes, acute pancreatitis and other insulin deficient diseases. This technology, which has yet to be proven in human clinical trials, has shown in pre-clinical animal models that the human derived AIP cells produce insulin in a glucose-sensitive manner. This trans-differentiation technology is licensed by the Orgenesis Ltd (the “Israeli Subsidiary) and is based on the work of Prof. Sarah Ferber, the Company’s Chief Science Officer and a researcher at Tel Hashomer Medical Research Infrastructure and Services Ltd. (“THM”) in Israel. The development plan calls for conducting additional pre-clinical safety and efficacy studies with respect to diabetes and other potential indications prior to initiating human clinical trials.

     The CDMO platform operates through Masthercell Global Inc. (“ Masthercell Global”), which currently consists of the following subsidiaries: MaSTherCell S.A (“MaSTherCell”) in Belgium, Atvio Biotech Ltd. (“Atvio”) in Israel, CureCell Co., Ltd. (“CureCell”) in South Korea and Masthercell U.S. LLC in the United States (collectively, the “ Masthercell Global Subsidiaries”), having unique know-how and expertise for manufacturing in a multitude of cell types. Masthercell Global strives to provide services that are all compliant with GMP requirements, ensuring identity, purity, stability, potency and robustness of cell therapy products for clinical phase I, II, III and through commercialization. (Masthercell U.S. LLC was incorporated in June 2018 and had no activity as of November 30, 2018).

     MaSTherCell Global, through the Masthercell Global Subsidiaries, is engaged in the business of providing manufacturing and development services to third parties related to cell therapy products, and the creation and development of technology, and optimizations in connection with such manufacturing and development services for third parties (the “CDMO Business”).

     The Company operates its CDMO and PT business as two separate business segments.

     These consolidated financial statements include the accounts of Orgenesis Inc. and its subsidiaries, including those of the Masthercell Global Subsidiaries; Orgenesis SPRL (the “Belgian Subsidiary”), a Belgian-based subsidiary which is engaged in development and manufacturing activities together with clinical development studies in Europe; Orgenesis Maryland Inc. (the “U.S. Subsidiary”), a Maryland corporation; and Orgenesis Ltd., an Israeli corporation, (the “Israeli Subsidiary”).

 As used in this report and unless otherwise indicated, the term “Company” refers to Orgenesis Inc. and its subsidiaries (“Subsidiaries”). Unless otherwise specified, all amounts are expressed in United States Dollars.

     Until March 13, 2018, the Company’s common shares were traded on OTC Market Group’s OTCQB, at which point the Company's common stock began to be listed and traded on the Nasdaq Capital Market under the symbol “ORGS”.

b. Change in Fiscal Year End

     On October 22, 2018, the Board of Directors of the Company approved a change in the Company’s fiscal year end from November 30 to December 31 of each year. This change to the calendar year reporting cycle began January 1, 2019. As a result of the change, the Company will have a December 2018 fiscal month transition period, the results of which will be separately reported in the Company’s Quarterly Report on Form 10-Q for the calendar quarter ending March 31, 2019, June 30, 2019, September 30, 2019 and in the Company’s Annual Report on Form 10-K for the calendar year ending December 31, 2019.

c. Liquidity

     As of November 30, 2018, the Company has accumulated losses of approximately $62.4 million. Although the Company is showing positive revenues and gross profit trends in the CDMO platform, the Company expects to incur further losses in the PT business.

     To date, the Company has been funding operations primarily from the proceeds from private placements of the Company’s equity securities and convertible debt and from revenues generated by Masthercell Global, mainly revenues generated from MaSTherCell S.A. in Belgium. From December 1, 2017 through November 30, 2018, the Company received, through MaSTherCell, proceeds of approximately $17.3 million in revenues and accounts receivable from customers, $12.6 million from SFPI and GPP (See also Note 3) and $21.5 million from the private placement to accredited investors of the Company's equity and convertible loans net of finders’ fees, convertible loans and exercise of warrants. In addition, from December 1, 2018 through February 13, 2019, the Company raised $0.25 million from the private placement referred to above of unsubscribed units under such investor’s subscription agreement, $6.6 million from GPP (See Note 3(b)) and proceeds of approximately $4.7 million in accounts receivable from customers of MaSTherCell.

     Based on its current cash resources and commitments, the Company believes it will be able to maintain its current planned development activity and corresponding level of expenditures for at least 12 months from the date of the issuance of the financial statements, although no assurance can be given that it will not need additional funds prior to such time. If there are unexpected increases in general and administrative expenses or research and development expenses, or decreases in MaSTherCell's income, the Company will need to seek additional financing.