DEF: Celularity Sets 2025 Annual Meeting, Seeks Director Re-election, Equity Plan Boost

Celularity Inc. announces its 2025 Annual Meeting of Stockholders to elect Class I directors, ratify its independent auditor, and approve an increase of 3.5 million shares for its 2021 Equity Incentive Plan.

Summary

• The 2025 Annual Meeting of Stockholders will be held on December 19, 2025, at 9:00 a.m. Eastern Time at Celularity's headquarters.
• Stockholders will vote on the election of three Class I directors: Peter Diamandis, M.D., Diane Parks, and Geoffrey Ling, M.D., to serve until the 2028 annual meeting.
• A proposal to ratify the appointment of EisnerAmper LLP as the independent registered public accounting firm for the fiscal year ending December 31, 2025, will be presented.
• Stockholders will also vote on an amendment to the 2021 Equity Incentive Plan to increase the number of shares of common stock reserved and available for awards by 3,500,000 shares, bringing the total to 4,479,204 shares.
• The record date for stockholders entitled to vote at the Annual Meeting is October 30, 2025, with 28,316,485 shares of Class A common stock outstanding.
• The Board of Directors unanimously recommends voting FOR all proposals.

Sentiment

Score: 4

Explanation: The filing outlines necessary corporate governance actions and a critical equity plan amendment. However, significant financial challenges are evident through executive salary reductions, a waived deferred CEO salary, a CFO termination, and breaches of loan covenants requiring extensions and related-party financing. These factors suggest underlying operational and financial pressures, despite the board's positive recommendations for the proposals.

Positives

• The Board of Directors unanimously recommends voting for all proposals, indicating internal alignment and confidence in the proposed actions.
• The proposed increase in the 2021 Equity Incentive Plan aims to attract, motivate, and retain highly qualified talent, aligning executive and employee incentives with stockholder interests.
• The company maintains a Scientific Advisory Board composed of experienced scientific leaders to provide advice and input on research and development programs.
• Robust corporate governance policies are in place, including a written code of business conduct and ethics, a compensation recovery (Clawback) policy, and adopted Governance Principles, all designed to comply with regulatory standards and enhance oversight.
• The company's risk oversight framework, with the audit committee primarily responsible for managing significant risks including cybersecurity, demonstrates a structured approach to corporate protection.

Negatives

• Executive salaries were significantly reduced in 2024, including an 85% voluntary reduction for the CEO, Dr. Robert J. Hariri, and a 15% reduction for other executive leadership team members, indicating financial pressures.
• Dr. Robert J. Hariri waived $1.088 million of his deferred 2023 base salary.
• The employment of former Chief Financial Officer, David Beers, was terminated without cause on June 10, 2025.
• The company breached a minimum liquidity covenant of $3.0 million in Q3 2023 related to a bridge loan with C.V. Starr & Co., Inc., leading to an event of default and reclassification of the loan as a current liability.
• Audit fees decreased significantly from $2,139,760 in 2023 (Deloitte & Touche LLP) to $519,750 in 2024 (EisnerAmper LLP), which could suggest a change in audit scope or financial complexity.
• Several Section 16(a) reports were filed late by directors and officers in 2024, indicating potential compliance oversight issues.

Risks

• Failure to approve the amendment to the 2021 Equity Incentive Plan could result in insufficient shares for continued equity awards, potentially hindering the company's ability to attract and retain key talent in a competitive market.
• The company's breach of a minimum liquidity covenant in Q3 2023 and subsequent reliance on forbearance agreements and maturity extensions for related-party loans highlight ongoing financial strain and liquidity risks.
• Significant reliance on related-party financings (from Dr. Hariri, C.V. Starr & Co., Inc., and Resorts World Inc Pte Ltd) suggests challenges in securing capital from independent third-party sources.
• The CVR Agreement ties future payments to regulatory and commercial milestones for investigational therapeutic programs (e.g., CYNK-001, CYNK-101, PDA-002), which are inherently uncertain and subject to clinical and market risks.
• Cybersecurity and data privacy risks are explicitly identified as areas of board oversight, indicating potential exposure to digital threats that could impact operations and sensitive data.

Future Outlook

The company anticipates that without the proposed amendment to the 2021 Equity Incentive Plan, there will not be sufficient shares available for continued equity awards to employees and non-employee directors over the next few years, which could hinder talent attraction and retention. The company expects to continue evaluating its present and future therapeutic candidates in light of the CVR Agreement terms as they develop and evolve.

Management Comments

• "YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE NOMINEE AND IN FAVOR OF THE OTHER PROPOSAL OUTLINED IN THE ACCOMPANYING PROXY STATEMENT."
• "We do not currently anticipate that any other matters will be raised at the Annual Meeting."
• "Our board of directors believes he is well qualified to serve on the board due to his extensive operational and management experience in the technology industry." (Regarding Peter Diamandis)
• "Our board of directors believes she is well qualified to serve on the board due to her extensive experience as a member of senior management and boards of directors of multiple biopharmaceutical companies as well as her expertise in leading the overall strategy, organization and operations for oncology product commercial launches." (Regarding Diane Parks)
• "Our board of directors believes he is well qualified to serve on the board due to his extensive background in medicine and operational and management experience." (Regarding Geoffrey Ling)
• "Our board of directors believes Mr. LeVien is well qualified to serve on the board due to his extensive background in government and government policy." (Regarding Vincent LeVien)
• "Our board of directors believes that Dr. Hariri's history in building companies in biotechnology, medical devices and therapeutics, as well as his expertise and experience in life sciences, including his work in immune-oncology and cell therapeutics and his educational background, provide him with the qualifications and skills to serve on our board of directors." (Regarding Robert J. Hariri)
• "We recognize the dilutive impact of our equity compensation program on our stockholders and continuously strive to balance this concern with the competition for talent in the competitive business environment and talent market, as well as the current market conditions, in which we operate."
• "We believe our compensation programs should promote the success of our company and align executive incentives with the long-term interests of our stockholders."
• "We believe that although a portion of the compensation provided to our executive officers and other employees is performance-based, our executive compensation program does not encourage excessive or unnecessary risk taking."

Industry Context

The company operates in the competitive biotechnology, medical devices, and therapeutics sectors, with a specific focus on immune-oncology and cell therapeutics. The need for competitive compensation packages, including equity awards, is highlighted as crucial for attracting and retaining key talent in this environment. The mention of investigational therapeutic programs like CYNK-001, CYNK-101, and PDA-002 indicates the company's engagement in advanced cell therapy development, aligning with broader industry trends in regenerative medicine and oncology.

Comparison to Industry Standards

• The company's board composition and committee structures comply with Nasdaq and SEC independence requirements, aligning with industry best practices for corporate governance.
• The compensation recovery (Clawback) policy is designed to comply with Rule 10D-1 of the Exchange Act and Nasdaq Listing Rule 5608, reflecting adherence to regulatory standards.
• The company's insider trading policy expressly prohibits short sales and derivative transactions of its stock by executive officers, directors, and employees, which is a common practice for mitigating compliance risk and perceived misalignment.
• The company's policy on granting equity awards (not in anticipation of material nonpublic information, not during blackout periods) aligns with best practices to avoid the appearance of impropriety.

Management Changes

Corporate Governance

Legal Proceedings

• There are no material legal proceedings to which any of our directors is a party adverse to us or any of our subsidiaries or in which any such person has a material interest adverse to us or such subsidiary.

Related Party Transactions

• **Sponsor Vesting Agreement:** GX Sponsor LLC distributed 708,750 shares and 700,000 warrants to its members. 25% of these shares were subject to transfer restrictions, which were released on January 12, 2024, due to a securities purchase agreement with Dragasac Limited.
• **March 2023 Securities Purchase Agreement:** Dr. Robert J. Hariri (Chairman and CEO) subscribed for $2.0 million of a $9.0 million private placement, receiving Class A common stock and accompanying warrants.
• **August 2023 Loan Agreement:** Dr. Robert J. Hariri contributed $1.0 million to a $3.0 million loan bearing 15% interest, maturing August 21, 2024.
• **October 2023 Promissory Note:** Dr. Robert J. Hariri provided a $0.3 million promissory note with 15.0% interest.
• **C.V. Starr & Co., Inc. Bridge Loan:** C.V. Starr & Co., Inc. (a >5% beneficial owner) provided a $5.0 million bridge loan (net of OID) at 12.0% interest (increased to 13% after March 2024 amendment), initially maturing March 17, 2025, but extended to February 15, 2026. Warrants were also issued and repriced. The company breached a minimum liquidity covenant in Q3 2023.
• **Resorts World Inc Pte Ltd (RWI) Bridge Loans:** RWI (affiliated with Lim Kok Thay, a former director) provided multiple senior secured bridge loans: an initial $6.0 million loan, an amended loan for an additional $6.0 million, and a second amended loan for an additional $15.0 million. These loans bear 12.5% interest (increased by 100 basis points after March 2024 forbearance) and were extended to February 15, 2026. Warrants were issued and repriced. The company breached a minimum liquidity covenant at December 31, 2023.
• **Celgene License, Investment Rights and Contingent Value Rights Agreements:** Celgene (a >5% capital stock holder) holds various licenses, investment rights, and CVRs entitling it to $50 million in regulatory milestones, $125 million in commercial milestones, and mid-teen percentage royalties on net sales for certain therapeutic programs.
• **Consulting Agreement with Dr. Pecora:** Dr. Pecora (former President) received a $10,000 monthly fee for consulting and served as co-chair of the scientific advisory board for a $10,000 monthly fee and a one-time RSU grant. The consulting agreement was early terminated effective January 14, 2023, and Dr. Pecora no longer serves on the advisory board as of August 8, 2024.
• **Advisory Agreement with Robin L. Smith M.D.:** Robin L. Smith, M.D. (a director) received $20,000 per month for advisory fees, an equity grant of 105,000 stock options, and a potential $1.5 million cash bonus upon a trigger event. The agreement expired on August 16, 2023.
• **Employment of Alexandra Hariri:** Alexandra Hariri, daughter of CEO Robert J. Hariri, is employed as Vice President, Corporate Strategy & Business Development, with a base salary of $265,000 per year in 2023 and 2024, and is eligible for bonuses, equity awards, and benefits on similar terms as other employees.

Stakeholder Impact

• **Shareholders:** Will vote on key corporate governance matters and a significant increase in the equity incentive plan, which could lead to dilution. The company's financial challenges and reliance on related-party financing may impact shareholder value.
• **Employees:** The proposed increase in the equity incentive plan is intended to attract, motivate, and retain employees. However, executive salary reductions and the termination of the CFO could affect employee morale and perception of job security.
• **Management:** Executive compensation was reduced in 2024, and the CEO waived a significant deferred salary. The equity incentive plan is crucial for management's long-term incentives and alignment with company performance.
• **Creditors (Related Parties):** Dr. Hariri, C.V. Starr & Co., Inc., and Resorts World Inc Pte Ltd are significant creditors whose loans have been subject to forbearance agreements and maturity extensions, indicating the company's challenges in meeting debt obligations.
• **Customers/Patients:** The CVR agreement highlights the company's focus on investigational therapeutic programs, which, if successful, could lead to new treatments and benefit patients.

Next Steps

• Stockholders to vote on Class I director nominees, ratification of independent auditor, and amendment to the 2021 Equity Incentive Plan at the Annual Meeting on December 19, 2025.
• Final voting results to be published in a Current Report on Form 8-K within four business days after the Annual Meeting.
• The company expects to regularly seek advice and input from its scientific advisory board on research and development programs.
• The company intends to comply with future SEC and Nasdaq requirements as they become applicable.
• The company will continue to evaluate its therapeutic candidates in light of the CVR Agreement terms.
• The company plans to use proceeds from its next registered public offering to pay down related-party debt.

Key Dates

Recommendation

The filing reveals a company navigating significant financial challenges, evidenced by executive salary cuts, a waived CEO deferred salary, a CFO termination, and breaches of loan covenants requiring extensions and related-party financing. While the proposed increase in the equity incentive plan is a positive step for talent retention, the underlying financial pressures and reliance on related-party capital raise concerns. The company's long-term potential in biotechnology remains, but the immediate financial instability and governance issues warrant a cautious "hold" recommendation. Investors should monitor future capital raises, operational improvements, and progress in therapeutic programs closely.

Keywords

Celularity Inc., DEF 14A, Proxy Statement, Annual Meeting, Director Election, Equity Incentive Plan, Stock Options, Restricted Stock Units, Corporate Governance, SEC Filing, Biotechnology, Cellular Therapeutics, Financial Reporting, Executive Compensation, Related Party Transactions, Audit Committee, Nasdaq, Risk Management