Celyad SA Annual Report 2020

FY2020 Annual Report · Celyad SA

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www.celyad.com

2020 ANNUAL REPORT

2020 Annual Report

Table of Contents

ACTIVITY REPORT ........................................................................................................................ 10
1.1 Who we are - Business overview ............................................................................................... 10
1.2
Our Strategy ............................................................................................................................... 12
1.3 What differentiates Celyad Oncology? ....................................................................................... 14
Our Activities and R&D .............................................................................................................. 16
1.4
Lead Programs .......................................................................................................................... 18
1.5
Licensing and Collaboration Agreements................................................................................... 24
1.6
Our Manufacturing Capabilities .................................................................................................. 27
1.7
Our shareholding structure ......................................................................................................... 28
1.8
1.9
Post balance sheet events ......................................................................................................... 28
1.10 Our capital expenditures ............................................................................................................ 29
1.11 Financial review of the year ending December 31, 2020 ........................................................... 29
Analysis of the consolidated income statement ............................................................ 29
Analysis of the consolidated statements of financial position ....................................... 30
Analysis of the consolidated net cash burn rate ........................................................... 33
1.12 Personnel ................................................................................................................................... 33
1.13 Environment ............................................................................................................................... 34
1.14 Going concern ............................................................................................................................ 34
1.15 Risks and uncertainties .............................................................................................................. 34
1.16 Events and circumstances that could have a significant impact on the future ............................ 36

1.11.1.
1.11.2.
1.11.3.

2.1
2.2

2.2.1.
2.2.2.
2.2.3.
2.2.4.
2.2.5.

2.4.1.
2.4.2.
2.4.3.
2.4.4.
2.4.5.
2.4.6.
2.4.7.

CORPORATE GOVERNANCE ....................................................................................................... 37
General ...................................................................................................................................... 37
Board of Directors ...................................................................................................................... 37
Composition of the Board of Directors .......................................................................... 37
Director Independence ................................................................................................. 41
Role of the Board in Risk Oversight ............................................................................. 42
Committees within the Board of Directors .................................................................... 42
Meetings of the Board and the committees .................................................................. 44
Executive Committee ................................................................................................................. 45
Conflict of Interest of Directors and members of the Executive Committee and transactions with
affiliated companies ................................................................................................................... 48
General ........................................................................................................................ 48
Conflicts of interest of Directors.................................................................................... 48
Existing conflicts of interest of members of the Board of Directors ............................... 48
Related Party Transactions .......................................................................................... 53
Transactions with affiliates ........................................................................................... 53
Code of Business Conduct and Ethics ......................................................................... 54
Market abuse regulations ............................................................................................. 54
Corporate Governance Code ..................................................................................................... 54
Proposed New Remuneration Policy ......................................................................................... 55
Introduction................................................................................................................... 55
Remuneration of the Board of Directors ....................................................................... 56
Remuneration of the Executive Committee .................................................................. 58
Deviations from this Policy ........................................................................................... 62
Remuneration report .................................................................................................................. 62
Introduction................................................................................................................... 62
Total Remuneration ...................................................................................................... 63
Share-based Remuneration ......................................................................................... 67
Termination Indemnities ............................................................................................... 75
Use of the possibility to reclaim the variable remuneration .......................................... 75
Deviations from the Remuneration Policy .................................................................... 75
Evolution of the remuneration and the performance of the company and ratio ............ 75

2.6.1.
2.6.2.
2.6.3.
2.6.4.

2.7.1.
2.7.2.
2.7.3.
2.7.4.
2.7.5.
2.7.6.
2.7.7.

2.3
2.4

2.5
2.6

2.7

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2020 Annual Report

2.8

2.7.8.
2.7.9.

Taking into consideration of the vote of the shareholders ............................................ 76
Statutory Auditor ........................................................................................................... 76
Description of the principal risks associated to the activities of the Group ................................. 76
Risk Management ........................................................................................................ 76
Organization and values ............................................................................................... 77
Risks analysis ............................................................................................................... 78
Risks related to the Company’s financial position and capital requirements ................ 78
Risks related to Company’s business activities and industry ....................................... 80
Risks related to clinical development .................................................................... 82
Risks related to legal and regulatory risks ........................................................... 85
Risks related to intellectual property ..................................................................... 85
Post-authorisation risks ........................................................................................... 88
Risks linked to the Company’s reliance on third parties .................................... 89
Risks related to the shares ...................................................................................... 91
Audit activities .............................................................................................................. 92
Controls, supervision and correctives actions .............................................................. 92

2.8.1.
2.8.2.
2.8.3.
2.8.4.
2.8.5.
2.8.6.
2.8.7.
2.8.8.
2.8.9.
2.8.10.
2.8.11.
2.8.12.
2.8.13.

GROUP STRUCTURE, SHAREHOLDING AND SHARE CAPITAL ............................................... 94
3.1
Group structure .......................................................................................................................... 94
Capital increase and issuance of shares ................................................................................... 95
3.2
3.3 Warrants plans ........................................................................................................................... 96
Changes to the share capital ..................................................................................................... 97
3.4
Major Shareholders .................................................................................................................... 97
3.5
Anti-takeover provisions under Belgian laws .............................................................................. 98
3.6
Financial services .................................................................................................................... 100
3.7

4.1
4.2

4.3

CONSOLIDATED FINANCIAL STATEMENTS............................................................................. 101
Responsibility statement .......................................................................................................... 101
Statutory auditor’s report to the general meeting of shareholders of Celyad Oncology SA for the
year ended December 31, 2020 (consolidated financial statements) ....................................... 102
Consolidated financial statements as at December 31, 2020 .................................................. 107
Consolidated statements of financial position............................................................. 107
Consolidated statements of comprehensive loss ....................................................... 108
Consolidated statements of changes in equity ........................................................... 109
Consolidated statements of Cash flows ..................................................................... 110

4.3.1.
4.3.2.
4.3.3.
4.3.4.

5.1
5.2

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ................................................. 111
General information ................................................................................................................. 111
Basis of preparation and significant accounting policies .......................................................... 111
Basis of preparation ................................................................................................... 111
Consolidation.............................................................................................................. 113
Foreign currency translation ....................................................................................... 113
Revenue ..................................................................................................................... 114
Other income .............................................................................................................. 115
Intangible assets ........................................................................................................ 117
Property, plant and equipment ................................................................................... 119
Leases ........................................................................................................................ 119
Impairment of non-financial assets ............................................................................. 120
Cash and cash equivalents ........................................................................................ 121
Financial assets .......................................................................................................... 121
Financial liabilities ...................................................................................................... 123
Provisions ................................................................................................................... 124
Income Taxes ............................................................................................................. 126
Earnings (loss) per share ........................................................................................... 127
Risk Management .................................................................................................................... 127
Critical accounting estimates and judgments ........................................................................... 128

5.2.1.
5.2.2.
5.2.3.
5.2.4.
5.2.5.
5.2.6.
5.2.7.
5.2.8.
5.2.9.
5.2.10.
5.2.11.
5.2.12.
5.2.13.
5.2.14.
5.2.15.

5.3
5.4

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2020 Annual Report

5.5
5.6

5.6.1.
5.6.2.

5.20.1.
5.20.2.

5.19.1.
5.19.2.

Operating segment information ................................................................................................ 130
Intangible assets ...................................................................................................................... 131
Intangible assets details and balance roll forward ...................................................... 131
Impairment testing ...................................................................................................... 133
Property, plant and equipment ................................................................................................. 135
5.7
Non-current trade receivables and other non-current assets ................................................... 136
5.8
Trade receivables and other current assets ............................................................................. 137
5.9
5.10 Short-term investments ............................................................................................................ 137
5.11 Cash and cash equivalents ...................................................................................................... 138
5.12 Subsidiaries fully consolidated ................................................................................................. 138
5.13 Share Capital ........................................................................................................................... 138
5.14 Share-based payments ............................................................................................................ 142
5.15 Post-employment benefits ........................................................................................................ 146
5.16 Advances repayable ................................................................................................................ 148
5.17 Other non-current liabilities ...................................................................................................... 151
5.18 Trade payables and other current liabilities.............................................................................. 152
5.19 Financial liabilities .................................................................................................................... 153
Maturity analysis ......................................................................................................... 153
Changes in liabilities arising from financing activities ................................................. 153
5.20 Financial instruments ............................................................................................................... 155
Financial instruments not reported at fair value on statement of financial position ..... 155
Financial instruments reported at fair value on statement of financial position ........... 155
Income taxes ............................................................................................................................ 157
5.21
5.22 Other reserves ......................................................................................................................... 159
5.23 Revenue ................................................................................................................................... 159
5.24 Research and Development expenses .................................................................................... 159
5.25 General and administrative expenses ...................................................................................... 160
5.26 Depreciation and amortization ................................................................................................. 161
5.27 Employee benefit expenses ..................................................................................................... 161
5.28 Change in fair value of contingent consideration, other income and other expenses .............. 161
5.29 Non-recurring operating income and expenses ....................................................................... 163
Leases ..................................................................................................................................... 163
5.30
5.31 Finance income and expenses ................................................................................................ 164
5.32
Loss per share ......................................................................................................................... 165
5.33 Contingent assets and liabilities ............................................................................................... 165
5.34 Commitments ........................................................................................................................... 165
Celdara ....................................................................................................................... 165
Horizon Discovery Group ........................................................................................... 167
5.35 Related-party transactions ....................................................................................................... 168
Remuneration of key management ............................................................................ 168
Transactions with non-executive directors ................................................................. 168
Transactions with shareholders .................................................................................. 169
5.36 Events after the close of the fiscal year.................................................................................... 169
5.37 Statutory accounts as of December 31, 2020 and 2019 according to Belgian GAAP ............. 170
Balance Sheet ............................................................................................................ 171
Income statement ....................................................................................................... 172
Notes .......................................................................................................................... 172
Summary of valuation rules ........................................................................................ 178

5.37.1.
5.37.2.
5.37.3.
5.37.4.

5.35.1.
5.35.2.
5.35.3.

5.34.1.
5.34.2.

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2020 Annual Report

ANNUAL REPORT 2020

This Annual Report (the “Report”) is dated March 24, 2021 and contains all required information as per the
Belgian Code of the Companies and Associations (the “CCA”).

The affiliates included in this Report are Celyad Oncology SA, Biological Manufacturing Services SA, Celyad
Inc., and CorQuest Medical Inc.

Celyad Oncology SA and its affiliates will be collectively referred to as “the Company”, “the Group”, “Celyad”,
“we” or “us”.

LANGUAGE OF THE ANNUAL REPORT 2020

The Company publishes this Report in French, in accordance with Belgian laws. The Company also provides
an English translation. In case of a difference of interpretation, the French version will prevail.

AVAILABILITY OF THE ANNUAL REPORT 2020

A printed copy of the Report is available free of charge upon request to:

Celyad Oncology SA
Investor Relations
Rue Edouard Belin 2,
B-1435 Mont-Saint-Guibert, Belgium
Tel: +32 10 394100
E-mail: investors@celyad.com

An electronic version of this Report is available on the Company website: http://www.celyad.com/investors/regulated-information

FORWARD LOOKING STATEMENTS

In addition to historical facts or statements of current condition, this report contains forward-looking \ statements, within the meaning of
applicable securities laws, including the Private Securities Litigation Reform Act of 1995. Forward-looking statements may include
statements regarding: the safety and clinical activity of Celyad Oncology’s pipelines and financial condition, results of operation and
business outlook. Forward-looking statements may involve known and unknown risks and uncertainties which might cause actual results,
financial condition, performance or achievements of Celyad Oncology to differ materially from those expressed or implied by such forward-
looking statements. Such risk and uncertainty includes our development of additional shRNA-based allogenic candidates from our CYAD-
200 series towards clinical trial and the duration and severity of the COVID-19 pandemic and government measures implemented in
response thereto. A further list and description of these risks, uncertainties and other risks can be found in Celyad Oncology’s U.S.
Securities and Exchange Commission (SEC) filings and reports, including in its Annual Report on Form 20-F filed with the SEC on March
24, 2021 and subsequent filings and reports by Celyad Oncology. These forward-looking statements speak only as of the date of publication
of this document and Celyad Oncology’s actual results may differ materially from those expressed or implied by these forward-looking
statements. Celyad Oncology expresslydisclaims any obligation to update any such forward-looking statements in this document to reflect
any change in its expectations withregard thereto or any change in events, conditions or circumstances on which any such statement is
based, unless required by law or regulation.

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2020 Annual Report

Shareholder Letter

Dear Shareholder,

As I reflect on the past year, I’m proud of our team’s dedication to advancing the Company’s goals while
facing head-on the challenges associated with the COVID-19 global pandemic. Our team’s commitment has
truly been unparalleled during this time.

Despite these unprecedented times, I firmly believe this was a pivotal year in our Company’s history as we
worked to further unlock the full potential of allogeneic CAR T therapy with learnings that we will take into
2021.

A Focused Strategy Committed to Patients

Our journey continues as we follow our mission to bring new and innovative CAR T therapies to cancer
patients with poor prognosis. This commitment to cancer patients and the advancements across our
development pipeline of next-generation CAR T programs were major drivers behind rebranding the
Company to Celyad Oncology, which we announced in the first half of 2020. We believe this change more
accurately reflects our team’s expertise in developing innovative cell therapies against hard-to-treat cancers.
In addition, our focus and drive speak directly to our position as a leader in the CAR T cell therapy industry.

With several assets in our pipeline entering 2020, we completed a strategic review of our programs and
decided to prioritize the clinical development of our allogeneic CAR T therapies. Importantly, we still firmly
believe that autologous CAR T cell therapies will play an important role in the treatment of cancers, and we
continue to pursue the development of our autologous candidate CYAD-02.

We believe the future of allogeneic CAR T therapies provides greater potential to address broader markets
by tackling challenges in treating solid tumors while also expediting and expanding patient access to novel
treatment options. Also, the strategic shift towards allogeneic candidates allows for the Company to more
efficiently allocate our resources and capital to deliver on important milestones across multiple differentiated
product candidates in 2021.

2020 Highlights – Driving Opportunities into the Clinic

One of my goals as CEO has been to heighten awareness and elevate recognition for our differentiated
approach to developing novel CAR Ts, including use of our proprietary technology platforms. The team has
continued to successfully deliver on this objective by providing a stream of data announcements over the
past few years at major scientific and medical conferences as well as highlighting key developments of our
pipeline through our R&D days.

Looking ahead, we have several key clinical milestones expected throughout 2021 as we continue to ramp
up our non-gene edited allogeneic CAR T programs CYAD-101 and CYAD-211, while we further delve into
CYAD-02’s potential.

Leading CAR T Development in Solid Tumors

We saw great progress with our lead allogeneic program CYAD-101 for the treatment of metastatic colorectal
cancer (mCRC), a devastating disease and historically, a difficult indication for immunotherapies. Colorectal
cancer is the third most diagnosed cancer worldwide and has the fourth highest mortality rate of cancer
deaths. There is a high unmet need for novel therapies for those with mCRC and we are working hard to
address these late-stage patients who have no other options.

In December 2020, we started dosing patients in the expansion cohort of the alloSHRINK trial which
evaluates CYAD-101 following FOLFIRI preconditioning chemotherapy at the recommended dose of one
billion cells per infusion. This clinical program was the first to generate evidence of clinical activity for an

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2020 Annual Report

allogeneic CAR T investigational therapy in any solid tumor indication, a major challenge for the industry. To
date, we’ve seen encouraging data showing an improvement in median overall survival and median
progression free survival, the gold standards for assessing treatments of mCRC, as compared to historical
treatments. We look forward to potentially building upon these positive clinical data for CYAD-101 in patients
with mCRC and expect to announce preliminary data from the expansion cohort during the first half of 2021.

In addition, later this year, in collaboration with MSD, a subsidiary of Merck & Co., we plan to initiate the
Phase 1b KEYNOTE-B79 trial which will evaluate CYAD-101 with MSD’s anti-PD-1 therapy, KEYTRUDA®
(pembrolizumab), in refractory mCRC patients with microsatellite stable (MSS) / mismatch-repair proficient
(pMMR) disease. We believe the mechanism of actions of CYAD-101 and KEYTRUDA may be highly
complementary and could help to drive meaningful clinical benefit in patients.

We also believe there are other opportunities to further assess CYAD-101’s potential clinical activity in
mCRC, as well as with other challenging indications.

shRNA Packs Single Punch for Multiple Knockdowns

Over the past few quarters, we’ve made great progress with our proprietary short hairpin RNA (shRNA)
technology platform, which we moved from concept to clinic in just two years. In November 2020, we dosed
the first patient in the Phase 1 IMMUNICY-1 trial evaluating the safety and efficacy of our first shRNA-based
CAR T candidate CYAD-211, an anti-BCMA allogeneic cell therapy for the treatment of relapsed/refractory
multiple myeloma (r/r MM). We expect this trial to establish that allogeneic CAR T cells using shRNA
technology can generate clinical benefit without inducing graft-versus-host disease (GvHD).

Preclinical data generated to date for CYAD-211 supports its further development. Preclinical data show
anti-tumor activity has been observed with no demonstrable evidence of GvHD. We’ve also demonstrated
the ability to multiplex with the shRNA technology platform, which allows us to knockdown multiple targets
of interest simultaneously.

Preclinical data for the program has been encouraging and we hope to see this translate in the clinic. Initial
proof-of-concept data from the IMMUNICY-1 trial are expected to be announced in the first half of 2021.

Update on Autologous Candidates for r/r AML and MDS

At last year’s American Society of Hematology meeting, we announced initial clinical data from CYAD-02,
our next-generation autologous candidate that incorporates shRNA technology to target the NKG2D ligands
MICA and MICB. CYAD-02 is currently being evaluated for safety and efficacy in the dose escalation Phase
1 CYCLE-1 trial for the treatment of r/r acute myeloid leukemia (AML) and myelodysplastic syndrome (MDS)
patients following preconditioning chemotherapy.

Preliminary clinical data from the ongoing CYCLE-1 study have shown anti-leukemic activity in four of seven
r/r AML/MDS patients evaluable for clinical activity, including an objective marrow complete remission (mCR)
in the first patient enrolled at the highest dose level. Overall, we continue to believe there is a high unmet
need for patients with r/r AML and MDS and we plan to further assess CYAD-02’s differentiated profile and
potentially seek collaborative partnerships that could assist in driving the clinical development of the
autologous candidate.

2021 Vision – A Focus on Allogeneic CAR T Therapies for Oncology

Looking ahead, we plan on building upon our position as a leader in the CAR T industry by strategically
focusing on the development of our next-generation allogeneic cell therapies. Our investigational allogeneic
cell therapies are underpinned by two proprietary technologies, specifically our TIM (TCR Inhibitory
Molecule) and our innovative shRNA technology platform, while leveraging our streamlined All-in-One Vector
approach. Using a non-gene edited approach allows our allogeneic programs to avoid the need for multiple
genetic modifications and enrichment steps, while minimizing costs associated with unnecessary GMP grade
materials.

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2020 Annual Report

Celyad Oncology appreciates the long-lasting support of our shareholders. We are committed to the
research and development of innovative CAR T candidates and are excited to enter an extremely data-rich
calendar year for the Company. For the first half of 2021, we expect to:

• Report preliminary data from the expansion cohort of Phase 1 alloSHRINK trial for CYAD-101 for

mCRC

• Report proof-of-concept data on shRNA technology as an allogeneic platform from the initial dose

•

cohorts of the Phase 1 IMMUNICY-1 trial of CYAD-211 for r/r MM
Initiate the Phase 1b KEYNOTE-B79 trial evaluating CYAD-101 with KEYTRUDA® in mCRC
patients with MSS/pMMR disease

• Announce additional data from the Phase 1 CYCLE-1 trial of CYAD-02 for r/r AML and MDS

On behalf of the entire Celyad Oncology team and board members, I wish you and your loved ones a happy,
healthy and fulfilling 2021!

Regards,

Filippo Petti,

CEO Celyad Oncology

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2020 Annual Report

1. Activity Report

1.1 Who we are - Business overview

We are a clinical-stage biotechnology company focused on the discovery and development of chimeric
antigen receptor T cell (CAR T) therapies for cancer. Our goal is to discover, develop and commercialize
our next-generation CAR T cell therapy product candidates, if approved. We are currently developing a
diversified pipeline of allogeneic and autologous CAR T cell therapy candidates for the treatment of both
hematological malignancies and solid tumors.

Our differentiated pipeline of next generation CAR T candidates is based off the two main approaches in the
field of CAR T: allogeneic, or off-the-shelf, and autologous, or personalized, therapies. Allogeneic CAR T
cells are prepared in advance from healthy donors and are stored frozen until a patient requires treatment.
With the autologous approach, CAR T cells are derived from the patients themselves, first by collection of
the patient’s immune cells through a process called leukapheresis, and then the patient’s cells are
engineered and reintroduced back into the patient via infusion.

Over the past few years, as the CAR T landscape has shifted towards pursuing off-the-shelf approaches,
we have continued to steadily progress our allogeneic CAR T franchise and programs by exploring two
proprietary, non-gene edited technology platforms, T cell receptor inhibitory molecule (TIM) and short hairpin
RNA (shRNA), to target the T cell receptor (TCR) complex. In adoptive cell therapy, the infusion of donor-
derived T cells to cancer patients with a different background than that of the donor may lead to multiple
reactions. These reactions include the donor cells attacking the patient’s healthy tissue, known as Graft-
versus-Host disease (GvHD), as well as the rejection of the therapy by the patient’s immune system known
as Host-versus-Graft (HvG) reaction.

The TCR, a molecule present on the surface of T cells, is principally responsible for GvHD. At the center of
allogeneic CAR T therapy, the goal is to eliminate or blunt the signaling of the TCR through engineering with
a specific technology. By reducing the signaling of the TCR, the engineered allogeneic CAR T cells fail to
recognize the patient’s healthy tissue as foreign, which avoids GvHD.

We believe non-gene edited technologies target the TCR specifically without extensive genetic manipulation.
Through the co-expression of our non-gene edited technologies with a specific CAR of interest, we can
design cell therapy candidates intended to inhibit the function of the TCR while allowing the T cells to target
the cancer. We believe this unique strategy offers a streamlined approach in advancing the allogeneic CAR
T landscape.

Our proprietary non-gene edited technologies, TIM and shRNA, offer a unique strategy and streamlined
approach to allogeneic CAR T development:

•

T cell Inhibitory Molecule (TIM). Our novel TIM peptide interferes with the ability of the TCR to signal
and is designed to prevent GvHD. TIM is a truncated form of the CD3ζ component of the TCR
complex which lacks the critical signaling domains of the wild-type CD3ζ. In our CYAD-100 series
of CAR T candidates, including CYAD-101, TIM is co-expressed with a NKG2D CAR to reduce the
potential of the TCR to induce GvHD. Following the expression of TIM, the peptide acts as a
competitive inhibitor to wild-type CD3ζ and is incorporated into the TCR complex.

• Short hairpin RNA (shRNA). shRNA is a dynamic, innovative technology that allows for the
development of allogeneic CAR Ts through the selection of an optimal shRNA, targeting CD3ζ
which results in durable high-level knockdown of the TCR on T cells to a level equivalent to that
seen if the CD3ζ gene was gene edited with CRISPR/Cas9. In addition, the persistence of
allogeneic T cells without a CAR generated with shRNA was statistically superior to similar cells
generated with CRISPR/Cas9. We have also demonstrated concurrent knockdown of multiple gene
products, or multiplexing,

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2020 Annual Report

Central to our pipeline is a cutting-edge All-in-One vector approach where we focus on using a single vector
to generate CAR T cells to simplify the design and development of our cell therapy candidates. The All-in-
One vector approach encodes multiple components of the CAR T construct simultaneously, including the
CAR, our non-gene edited technologies including TIM and shRNA, cell section marker to assist with the
enrichment of the manufactured cells and potential therapeutic add-ons such as cytokines and antibodies.
This single transduction, plug and play approach to CAR T development has the potential to streamline
process development and manufacturing while broadening the potential applicability of our candidates

All-in-one Vector

Our CAR T Pipeline

The pipeline below presents our allogeneic and autologous product candidates.

AML: Acute myeloid leukemia; BCMA: B-cell maturation antigen; mCRC: Metastatic colorectal cancer; MDS:
Myelodysplastic syndrome; MM: Multiple myeloma; NKG2DL: Natural killer group 2D ligands; r/r: relapse/refractory.

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2020 Annual Report

Our lead product candidates include:

• CYAD-101. CYAD-101 is an investigational, non-gene edited, allogeneic CAR T candidate
engineered to co-express a CAR based on NKG2D, a receptor expressed on natural killer (NK)
cells that binds to eight stress-induced ligands and TIM. CYAD-101 is currently in a Phase 1 clinical
trial, alloSHRINK, for the treatment of patients with advanced metastatic colorectal cancer (mCRC).
In total, 15 patients with relapsed/refractory mCRC who progressed after previous treatment with
oxaliplatin-based or irinotecan-based chemotherapies were treated in the dose-escalation segment
of the Phase 1 alloSHRINK trial evaluating three dose levels of CYAD-101 administered
concurrently with preconditioning chemotherapy. The mean number of prior therapies received by
patients enrolled in the trial was three. To date, treatment with CYAD-101 was observed to be well-
tolerated with no evidence of GvHD. In addition, two patients in the trial achieved a confirmed partial
response (PR) including one patient at the recommended dose of 1x109 CYAD-101 cells per
infusion, which is under further investigation in the expansion segment of the trial. In September
2020, we entered a clinical trial collaboration with Merck & Co, Inc. (Merck) to conduct the Phase
1b KEYNOTE-B79 clinical trial, which will evaluate CYAD-101 following FOLFIRI preconditioning
chemotherapy, with Merck’s anti-PD-1 therapy, KEYTRUDA® (pembrolizumab) in refractory mCRC
patients with microsatellite stable (MSS) / mismatch-repair proficient (pMMR) disease.

• CYAD-211. CYAD-211 is an investigational, shRNA-based allogeneic CAR T candidate for the
treatment of relapsed / refractory multiple myeloma (r/r MM). CYAD-211 is engineered to co-
express a B cell maturation antigen (BCMA) targeting chimeric antigen receptor and a single
shRNA, which interferes with the expression of the CD3ζ component of the TCR complex. In July
2020, we announced the Food & Drug Administration (FDA) clearance of our Investigational New
Drug (IND) application for CYAD-211. In November 2020, we began enrollment in the dose-
escalation Phase 1 IMMUNICY-1 trial, which will evaluate the safety and clinical activity of a single
infusion of CYAD-211 following preconditioning chemotherapy in patients with r/r MM.

• CYAD-02. CYAD-02 is an investigational, autologous CAR T therapy that co-expresses both the
NKG2D CAR and a single shRNA targeting the NKG2D ligands MICA and MICB on the CAR T
cells. In preclinical models, shRNA-mediated knockdown of MICA and MICB expression on NKG2D
CAR T cells has shown enhanced in vitro expansion, as well as enhanced in vivo engraftment and
persistence, of the CAR T cells, as compared to first-generation NKG2D receptor CAR T cells. In
November 2019, we initiated the dose-escalation Phase 1 CYCLE-1 trial, evaluating the safety and
clinical activity of the next-generation, autologous NKG2D receptor-based CAR T candidate CYAD-
02 following preconditioning chemotherapy in patients with relapsed/refractory acute myeloid
leukemia (r/r AML) / MDS. Nine patients have received treatment with CYAD-02 in the Phase 1
trial. To date, CYAD-02 has been generally well-tolerated. Four of seven patients evaluable for
clinical activity demonstrated anti-leukemic activity (at least 50% bone marrow blasts decrease)
with the single patient evaluated at dose level 3 having achieved a marrow complete response
(mCR). Enrollment in the dose level 3 cohort of the CYCLE-1 trial is ongoing.

In addition to our lead clinical product candidates, we have a portfolio of preclinical stage allogeneic product
candidates targeting various indications including B-cell malignancies and solid tumors.

1.2

Our Strategy

Our mission is to eliminate cancer and improve life. We are developing innovative cell therapies against
cancer and are driven by the promise to deliver meaningful treatment options to patients seeking hope.
Overall, our objective is to discover, develop and commercialize our next-generation CAR T cell therapies.

We are guided by our passion, led by our deep expertise in oncology and motivated by the patients we
serve. We believe that our innovative CAR T candidates, if approved, could offer patients with advanced
disease alternative therapeutic options where no other treatments exist. Delivering best-in-class cell

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2020 Annual Report

therapies for patients with unmet medical needs is our top priority. We aim to do this with the following
strategies:

•

Focus on the development of non-gene edited approaches to allogeneic CAR T therapies.
We are pioneering a differentiated approach to the discovery and development of allogeneic CAR
T cell therapy candidates for the treatment of cancer led by a pair of non-gene edited approaches
including our TIM and shRNA technologies. Through the co-expression of either technology with a
specific CAR of interest, we can design donor-derived cell therapy candidates intended to inhibit
the function of the TCR complex while allowing the T cell product candidates to target cancer. Our
unique strategy, coupled with our All-in-One vector approach, allows us to avoid multiple genetic
modifications and costs in the production of our cell therapy candidates, while also benefiting from
the broader potential advantages of allogeneic CAR T therapies including faster delivery, greater
uniformity, better patient accessibility and increased manufacturing scalability as compared to
autologous CAR T therapies.

• Advance our lead allogeneic candidate CYAD-101 for the treatment of advanced mCRC. The
clinical benefit of CAR T therapies has been limited to date for the treatment of solid tumors partially
due to the hostile tumor microenvironment (TME), which surrounds the tumor and is composed of
immune cells, blood vessels and extracellular matrix. Our TIM-based allogeneic CYAD-101 product
candidate is engineered to co-express the chimeric antigen receptor NKG2D, a receptor expressed
on natural killer cells that binds to eight stress-induced ligands that are overexpressed by a broad
range of tumors, including mCRC, as well as cells within the TME such as myeloid-derived
suppressor cells (MDSCs) and regulatory T cells (Tregs). Our depth of experience in developing
autologous NKG2D CAR T candidates across multiple trials uniquely positions us to develop the
allogeneic NKG2D approach. CYAD-101 is the first allogeneic CAR T candidate with clinical
evidence of no GvHD and confirmed objective responses in the treatment of a solid tumor
indication, specifically advanced mCRC. Based on the encouraging data to date for CYAD-101 for
the treatment of advanced mCRC, we are currently enrolling patients in the dose-expansion cohort
of the Phase 1 alloSHRINK trial and expect to report preliminary data from the study during the first
half of 2021.

• Develop our shRNA-based allogeneic candidate CYAD-211 for r/r MM. CYAD-211 is a first-in-
class, allogeneic CAR T candidate engineered to express a single shRNA to interfere with the
expression of the TCR complex, while targeting the clinically validated BCMA found in multiple
myeloma (MM). Enrollment in the Phase 1 IMMUNICY-1 trial evaluating CYAD-211 for the
treatment of r/r MM is ongoing. The trial seeks to determine the recommended dose of CYAD-211
in r/r MM patients for further development as well as to establish proof-of-concept that single
shRNA-mediated knockdown can generate allogeneic CAR T cells in humans without inducing
GvHD. Preliminary data from the trial are expected during the first half of 2021, while additional
data from the full dose-escalation trial are expected during the second half of 2021.

•

Further investigate CYAD-02 for the treatment of r/r AML and MDS. Despite our focus on our
allogeneic franchise, we still firmly believe that autologous CAR T cell therapies will play an
important role in the treatment of cancers, in particular for indications such as r/r AML and MDS
where there remains a major unmet medical need. We continue to explore the potential clinical
benefit of our autologous NKG2D CAR T candidate CYAD-02 for the treatment of r/r AML and MDS
in the Phase 1 CYCLE-1 trial and we anticipate announcing additional clinical data for the program
in 2021. We may also seek to find a potential partner to aid in the further development of this
autologous candidate.

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2020 Annual Report

• Broaden our allogeneic pipeline to explore additional indications and cancer targets. We are
building a diversified portfolio of next-generation CAR T candidates by leveraging our deep
knowledge of NKG2D receptor biology and allogeneic technologies. We believe that our NKG2D
candidates represent an opportunity to treat a wide array of cancer indications, given the broad
overexpression of NKG2D stress ligands on more than 80% of tumors. In addition, our shRNA
technology has the potential to become a platform technology allowing for a modular approach to
designing next-generation CAR T candidates incorporating both novel and clinically validated
targets, while offering the opportunity to knockdown multiple genes of interest simultaneously with
the co-expression of multiple shRNAs. Our current preclinical pipeline includes targeting CD19, a
B cell biomarker, and a next-generation NKG2D candidate.

• Continue to build our proprietary in-house manufacturing expertise and capabilities. We
have developed a Good Manufacturing Process (GMP) for our allogeneic candidates that we
believe is flexible, rapid, and cost-efficient, while allowing us to independently improve and optimize
the production of our cell therapy candidates with the capacity to treat hundreds of patients in our
early-stage clinical programs. Leveraging our differentiated All-in-One vector approach, we can
enrich for our allogeneic CAR T cells using an optimized process through positive selection, leading
to an approach that is autologous-like for allogeneic CAR T. Our in-house manufacturing facility
has been critical in enabling the delivery of our clinical programs. As we move towards an allogeneic
focused strategy, we will continue to develop our manufacturing expertise and capability focusing
on both supporting early phase clinical testing but also concentrating on the challenges of scale-up
and commercial level manufacturing of allogeneic CAR T cell therapies. Our manufacturing facility
remains crucial to our long-term success.

• Drive innovation through strategic collaborations to realize the full potential of our unique
CAR T therapies. We are continually exploring opportunities to build strong partnerships with
strategic organizations and key international academic institutions to maximize the therapeutic
potential of our current and future product candidates as well as our intellectual property. For
example, as announced In September 2020, we will conduct the Phase 1b KEYNOTE-B79 trial to
evaluate CYAD-101 with Merck’s anti-PD-1 therapy KEYTRUDA® (pembrolizumab) in mCRC
patients with MSS / pMMR disease. We expect to initiate the KEYNOTE-B79 trial the first half of
2021. We will continue to explore additional opportunities to create value and develop our platform
technologies and pipeline in pursuit of our mission.

1.3 What differentiates Celyad Oncology?

The level of activity in the CAR T landscape across the globe has exploded over the last few years. The
challenges in this subsection of the oncology industry are significant. Most tumors develop undetected over
decades, fine tuning their capacity to resist treatment, before exploding with clinically relevant disease that
rapidly overcomes standard treatment paradigms. Immune-based therapies, including checkpoint inhibitors,
are now delivering clinically relevant responses in several indications.

Checkpoint inhibitors seek to release T cell activity against the tumor within the patient. However, tumors
are extremely proficient at avoiding T cell recognition – effectively, they become invisible. Unveiling tumors
so they can be detected by the T cell is the underlying premise of the CAR T approach. Consequently, the
success of CAR Ts is reliant upon the target and the means to deliver the engineered T cell in a clinically
reliable and relevant manner.

Encouraging results from clinical trials have continued to fuel the interest in CAR T-cell therapies and our
competitors as of the date of this Annual Report include Adicet Bio, Inc, Adaptimmune Therapeutics plc,
Affimed NV, Allogene Therapeutics Inc., AlloVir, Inc, Atara Biotherapeutics, Inc., Autolus Therapeutics plc,
Bellicum Pharmaceuticals, Inc., bluebird bio, Inc., CARsgen Therapeutics Co. Ltd., Cellectis S.A., Cellular
Biomedicine Group, Celularity, Inc., CRISPR Therapeutics, Inc., Editas Medicines, Inc, Fate Therapeutics,
Inc., Immatics Biotechnologies GmbH, Intellia Therapeutics, Inc., Juno Therapeutics, Inc. (acquired by
Celgene Corporation), Kite Pharma, Inc. (acquired by Gilead Sciences, Inc.), Kuur Therapeutics, Legend
Biotech USA, Inc., Lyell Immunopharma, Inc., Medigene AG, Mustang Bio, Inc., NantKwest, Inc., Nkarta

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2020 Annual Report

Therapeutics, Inc., Novartis AG, Poseida Therapeutics, Inc., Precigen, Inc. Precision Biosciences, Inc., Sana
Biotechnology, Inc., Servier Laboratories Limited, Sorrento Therapeutics, Inc., SQZ Biotech, Inc., TC
BioPharm Ltd., TCR2 Therapeutics, Inc., Tmunity Therapeutics, Inc., and Ziopharm Oncology, Inc.

Within this extremely competitive space, the clinical challenges remain the same and include:

Lack of suitable targets for most tumors. Currently approved CAR T therapies are limited to
hematological malignancies. Finding safe and appropriate tumor specific antigens for solid tumors is difficult
and emphasized by the nearly universal focus on the CD19 target.

Clinical delivery of autologous CAR T product. Autologous CAR T cell therapy involves a time delay
between patient recruitment and cell infusion due to just-in-time manufacturing which may mean that the
patient progresses before the cell product can be generated.

Our expertise in oncology, our proprietary technologies, and our differentiated approach to developing CAR
Ts has allowed us to overcome some of the challenges associated with developing these cell therapies. Our
solutions include:

1. Novel targeting of solid tumors and hematological malignancies through the NKG2D CAR

The NKG2D CAR binds eight ligands known to be over-expressed in a broad range of cancer indications.
We were the first company to investigate this target in the CAR T area and have performed extensive clinical
testing that has observed the tolerability of the approach and early evidence of clinical responses. Additional
sponsors are now just entering the field using NKG2D-based approaches, which highlights our advanced
position with this receptor that we are now exploiting with our novel non-gene edited allogeneic approach in
the CYAD-101 product candidate.

2. CYAD-101: Ahead of the field in the solid tumor space

We are currently enrolling patients in the expansion segment of the Phase 1 alloSHRINK trial of CYAD-101
having shown initial clinical activity in advanced mCRC patients while being generally well-tolerated. To our
knowledge, CYAD-101 is the first candidate to generate clinical data in a solid tumor indication from an
allogeneic CAR T therapy. As of early 2021, there is only one other company known to be currently
evaluating an allogeneic CAR T candidate for the treatment of a solid tumor in Phase 1 clinical development
while others are still at the preclinical stage. Preliminary clinical data of the extension segment of the
alloSHRINK trial are expected during the first half of 2021 and we anticipate the initial results to help better
assess CYAD-101’s profile for the treatment of advanced mCRC.

3. The future is silent: shRNA platform for all CAR Ts

Within two years, we moved our shRNA-based allogeneic approach from concept to the clinic. The rapidity
of progressing an early-stage preclinical asset into clinical testing required a major effort across the full
organization. However, this focus is important given the potential that shRNA technology offers. Our first
allogeneic shRNA-based candidate, CYAD-211, is a BCMA CAR T employing a single shRNA targeting the
CD3ζ component of the TCR complex that generates the allogeneic CAR T cell phenotype.

In November 2020, we enrolled the first patient in the Phase 1 IMMUNICY-1 trial for CYAD-211. The
IMMUNCY-1 trial is key for our company for two main reasons. Firstly, we are evaluating the activity of the
BCMA CAR T in patients with r/r MM. Secondly, evidence in the clinic that the shRNA technology controls
GvHD through shRNA-based allogeneic CAR Ts should provide an important clinical validation of this
approach. shRNA technology will underpin our future CAR T product candidates, which includes multiplexing
shRNA to generate bespoke modified CAR T candidates for specific cancer indications.

Moreover, clinical data will support if we are able to generate allogeneic CAR T cells without using gene-
editing technology. Our differentiation here relates to manufacturing and cost of goods to produce the
allogeneic candidates. Our All-in-One vector strategy expresses all the elements required for the CAR T into

Page 15 | 180

2020 Annual Report

one clinical grade reagent while we also use tried and trusted manufacturing approaches. On the other hand,
gene editing requires multiple clinical grade reagents, difficult quality control due to cutting the cell’s genome,
and expensive bespoke manufacturing solutions.

Taken together, and if we observe clinical validation, the flexibility and pragmatism of the All-in-One vector
shRNA platform may be a clear differentiator from most companies within this therapeutic space.

1.4

Our Activities and R&D

Novel technology targeting the TCR

We are working to advance the field of allogeneic CAR T therapy by exploring two proprietary, non-gene
edited technology platforms to target the TCR complex. In adoptive cell therapy, the infusion of donor-derived
T cells to cancer patients with a different background than that of the donor may lead to multiple reactions.
These reactions include the donor cells attacking the patient’s healthy tissue, known as GvHD, as well as
the rejection of the therapy by the patient’s immune system known as HvG reaction.

Our non-gene edited technologies target the TCR specifically without extensive genetic manipulation.
Through the co-expression of our non-gene edited technologies with a specific CAR of interest, we can
design cell therapy candidates intended to inhibit the function of the TCR while allowing the T cells to target
the cancer. We believe this unique strategy offers a streamlined approach in advancing the allogeneic CAR
T landscape.

Our Proprietary T cell receptor Inhibitory Molecule (TIM) Technology

Our novel TIM technology interferes with the
ability of the TCR to signal and is designed to
prevent GvHD. TIM is a truncated form of the
CD3ζ component of the TCR complex which
lacks the critical signaling domains of the
wild-type CD3ζ. In our CYAD-100 series of
CAR T candidates, including CYAD-101, TIM
is co-expressed with a NKG2D CAR to
reduce the potential of the TCR to induce
GvHD. Following the expression of TIM, the
peptide acts as a competitive inhibitor to wild-
type CD3ζ and is incorporated into the TCR
complex.

Data from the Phase 1 alloSHRINK trial
evaluating CYAD-101 for the treatment of
mCRC demonstrated proof-of-concept that
the non-gene edited TIM technology has the
potential to knockdown signaling of the TCR
complex, with no evidence of GvHD observed
in the first fifteen patients treated with this
first-in-class allogeneic CAR T candidate.

More broadly, we believe the data from the
alloSHRINK trial confirm the potential of non-gene edited approaches for the development of allogeneic CAR
T candidates.

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2020 Annual Report

Our Proprietary Short Hairpin RNA (shRNA) Technology

shRNA is a dynamic, innovative technology that allows for the development of allogeneic CAR Ts through
the modulation of gene expression without the need for gene-editing. We are currently engineering T cells
for specific desired features, including the inhibition of alloreactivity, increased persistence and enhanced
antitumor activity or potentially improved tolerability. We believe that shRNA offers us the ability to design
and develop next-generation, non-gene edited allogeneic CAR T therapies with any CAR across a broad
array of targets.

Preclinical data have shown TCR knockdown using shRNA targeting CD3ζ is as effective as gene-editing
methods such as CRISPR/Cas9 to inhibit TCR expression. Importantly, preclinical proof of principle
experiments demonstrated that expression of a single shRNA hairpin provides prolonged TCR knockdown.

Through the selection of an optimal shRNA, targeting CD3ζ results in durable high-level knockdown of the
TCR on primary T cells to a level equivalent to that seen if the CD3ζ gene was gene edited with
CRISPR/Cas9 (Figure A). Functionally, this correlates with an inability of these cells to respond to a
mitogenic stimulus (aka TCR driven T cell activation; Figure B) and a corresponding absence of toxicity
when these cells are infused into the gold standard in vivo GvHD test model. In addition, the persistence of
allogeneic T cells without a CAR generated with shRNA was statistically superior to allogeneic T cells without
a CAR generated with CRISPR/Cas9 – a potential key differentiator of the shRNA technology (Figure C).

Figure A:

Figure B:

Figure C:

The technology is also complementary to our All-in-One Vector approach,
which allows for the expression of multiple shRNA hairpins in a single
construct within a single transduction step, aka multiplexing.

As seen below, data from preclinical studies in transduced Jurkat cells demonstrate simultaneous
knockdown of the multiple gene products at the mRNA (Figure D) and protein levels (Figure E) in a single
multiplexed vector.

Figure D:

Figure E:

B2M

DGK

CD3ζ

CD52

1.0

0.5

e
g
n
a
h
c
d
o
F

0.0

no shR N A
4x shR N A
1x shR N A

e
g
n
a
h
c
d
o
f

I
F
M

HLA-ABC

CD3

TCR

CD52

1.0

0.5

0.0

no shR N A
1x shR N A
4x shR N A

In addition, the ability to multiplex with shRNA using our All-in-One vector approach provides a means to
generate an optimal therapeutic T cell phenotype with strong control on one of the major raw material costs
since all these elements are maintained within a single vector. This compares favorably to engineering
multiple knockdowns using current gene editing technologies which typically require an increasing number
of clinical grade reagents, in particular multiple vectors.

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2020 Annual Report

We have validated the utility of our shRNA platform with our next-generation autologous NKG2D receptor
CAR T clinical candidate, CYAD-02, which incorporates a single shRNA hairpin targeting the NKG2D ligands
MICA/MICB within the construct. Our first shRNA-based allogeneic CAR T candidate, CYAD-211, entered
clinical development in late 2020. Proof-of-concept data on the ability of the technology to generate
allogeneic CAR T candidates is expected in 2021.

We are also developing a proprietary shRNA platform utilizing a novel framework to optimize and expand
the expression of multiple shRNAs with our All-in-One Vector approach. Our novel framework has the
capability to knockdown or silence up to six genes simultaneously, while providing several key advantages
beyond our first-generation approach. We believe our next-generation shRNA multiplex platform will form
the backbone for future allogeneic CAR T candidates, including several programs which are in the discovery
phase of development.

1.5

Lead Programs

CYAD-101 – Allogeneic NKG2D receptor-based CAR T in mCRC

About metastatic colorectal cancer (mCRC) 1

There is a significant unmet need for new treatments for colorectal cancer, a cancer that affects the colon or
rectum. Colorectal cancer is the third most diagnosed cancer worldwide with approximately 1.2 million
individuals diagnosed globally per year, with 400,000 of those cases in the United States and Europe. This
disease also has the fourth highest cancer mortality rate with roughly 600,000 deaths per year. Treatment
for colorectal cancer typically includes surgery, chemotherapy and antibody therapies such as anti-

angiogenesis treatments.

Metastatic colorectal cancer occurs
when the cancer has spread to other
typical
rendering most
organs,
leaving
ineffective and
treatments
patients with few treatment options.

About CYAD-101

CYAD-101 is an investigational, non-
gene edited allogeneic CAR T
candidate engineered to co-express the
chimeric antigen receptor based on
NKG2D, the novel inhibitory peptide
TIM and a truncation CD19 selection
marker (Figure - CYAD-101 – Vector
Construct
Surface
Expression). The product candidate
leverages
vector
approach with a single transduction,
avoiding multiple genetic modifications and costs associated with additional GMP grade materials. TIM
inhibits CD3ζ and reduces signaling of the TCR complex, which reduces the potential for GvHD.

CYAD-101 – Vector Construct and Cell Surface Expression

our All-In-One

Cell

and

1 Kim, R., 2020, Celyad Oncology Research and Development Day Webinar, Celyad.com

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2020 Annual Report

alloSHRINK Phase 1 Trial Overview

In December 2018, we initiated the Phase 1 alloSHRINK trial. alloSHRINK is an open-label trial assessing
the safety and clinical activity of three consecutive administrations of CYAD-101 every two weeks
administered concurrently with preconditioning chemotherapy in patients with refractory unresectable
mCRC. The dose-escalation segment of the trial evaluated the administrations of CYAD-101 concurrently
with FOLFOX (combination of 5-fluorouracil, leucovorin and oxaliplatin) chemotherapy regimen at three dose
levels (1×108, 3×108, 1×109 cells per infusion).

Phase 1 alloSHRINK clinical trial data

Initial positive data from the alloSHRINK trial were reported both at the Society for Immunotherapy of Cancer
(SITC) 2019 and American Society of Clinical Oncology 2020 conferences. In January 2021, we reported
additional translational data for the alloSHRINK trial at American Society of Clinical Oncology 2021
Gastrointestinal Cancers Symposium.

A total of 15 patients with relapsed/refractory mCRC who progressed after previous treatment with
oxaliplatin-based or irinotecan-based chemotherapies were enrolled in the dose-escalation, alloSHRINK
Phase 1 trial. The number of prior therapies received by patients enrolled in the trial ranged from one to six
with a mean of three.

Data from the trial showed that CYAD-101 following preconditioning chemotherapy was observed to be
generally well-tolerated with no GvHD observed, no dose-limiting toxicities reported, no patient
discontinuation due to treatment and no treatment-related adverse events greater than Grade 3. Results
also showed two patients achieved a partial response (PR) according to RECIST 1.1 criteria, including one
patient with a KRAS-mutation. Nine patients achieved stable disease (SD), with seven patients
demonstrating disease stabilization lasting more than or equal to three months of duration, with a disease
control rate of 73%.

Median progression free survival (mPFS) for this segment of the trial was 3.9 months, and median overall
survival (mOS) was 10.6 months. No correlation was observed between clinical responses and the degree
of human leukocyte antigen (HLA) matching between patients and CYAD-101 donor cells, indicating that
CYAD-101 may be able to be used in a broad patient population regardless of the HLA haplotype.

Page 19 | 180

Data from the alloSHRINK trial also showed a tumor burden decrease was observed in eight out of 15
evaluable patients, including six of nine patients at dose level 3. Clinical activity was observed across all
dose levels. There was no obvious correlation between response, dose-levels nor baseline characteristics.

2020 Annual Report

Of four patients treated at the highest dose level of 1×109 CYAD-101 cells per infusion available for analysis,
three patients who achieved either a confirmed PR or SD also showed hyper-expanded TCR repertoire post-
treatment through the emergence of new T cell clones in the peripheral blood T cell repertoire, while the
patient with progressive disease displayed no evidence of new T cell clones.

Cytokine modulation was also observed after the first and second infusions of CYAD-101 in the patient who
achieved a confirmed PR from the highest dose level.

All 15 patients from the dose-escalation segment of the alloSHRINK trial were dosed from a single cell bank
of CYAD-101 that was generated in advance from two manufacturing runs each using a fraction of an
apheresis from a single healthy donor.

Expansion cohort of the Phase 1 alloSHRINK trial

The expansion cohort of the alloSHRINK trial which will evaluate CYAD-101 following FOLFIRI (combination
of 5-fluorouracil, leucovorin and irinotecan) preconditioning chemotherapy for the treatment of advanced
mCRC began in December 2020. The ongoing segment will evaluate three infusions of CYAD-101 at the
recommended dose of 1×109 cells per infusion. The expansion cohort of the alloSHRINK trial may enroll up
to 34 patients with advanced mCRC. Preliminary data are expected during the first half of 2021.

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2020 Annual Report

Phase 1b KEYNOTE-B79 Trial Overview

In September 2020, we announced a clinical trial collaboration with MSD, a tradename of Merck. The
KEYNOTE-B79 will evaluate CYAD-101 following FOLFIRI (combination of 5-fluorouracil, leucovorin and
irinotecan) preconditioning chemotherapy, with Merck’s anti-PD1 therapy, KEYTRUDA® (pembrolizumab),
in refractory mCRC patients with MSS / pMMR disease.

We believe CYAD-101 and KEYTRUDA may have highly complementary mechanisms of action to offer
potential additional therapeutic benefit to mCRC patients with MSS / pMMR disease. Preclinical data
demonstrated that treatment with NKG2D CAR T cells converted the TME from immunosuppressive to
immunostimulatory and triggered strong tumor-specific host immune response. Anti-PD1 treatment blocks
the co-inhibitory interaction of cancer cells with multiple types of immune cells thereby restoring the immune
response. Based on the complementary modes of action, KEYTRUDA® could potentially enhance the
CYAD-101-sculpted microenvironment.

We expect to start the Phase 1b KEYNOTE-B79 trial in the first half of 2021.

CYAD-211 – shRNA based allogeneic CAR T in r/r MM

About Multiple myeloma (MM) 2

Multiple myeloma is a type of hematological malignancy that affects plasma cells, a white blood cell located
in bone marrow. The disease can cause many issues in the body including low blood counts, bone and
calcium problems, infections, and kidney problems. The American Cancer Society estimates that 34,920
new cases of MM will be diagnosed, and 12,410 deaths are expected to occur in 2021. There are no cures
for multiple myeloma, but treatment options can include chemotherapy, immunotherapy, targeted therapy
and stem cell therapy.

Patients who have r/r MM have either been unresponsive to treatments or have seen their cancer return
after a period of remission. These patients have often failed many previous therapies, including proteosome
inhibitors, immunomodulatory agents (IMiDs) and monoclonal antibodies leaving few remaining options.

About CYAD-211

for

is an

CYAD-211
investigational
shRNA-based allogeneic CAR T
treatment of
the
candidate
relapsed or
refractory multiple
myeloma (r/r MM). CYAD-211 is
engineered to co-express a BCMA
chimeric antigen receptor and a
hairpin which
single
interferes with the expression of the
CD3ζ component of
the TCR
complex (Figure - CYAD-211 –
Vector Construct and Cell Surface
Expression).

shRNA

CYAD-211 – Vector Construct and Cell Surface Expression

In November 2020, we initiated the
1
dose-escalation
IMMUNICY-1 trial evaluating CYAD-
211 for the treatment of r/r MM.
the non-gene

Importantly,

Phase

2 “What Is Multiple Myeloma?: The MMRF.” Themmrf.org, 12 Feb. 2021, themmrf.org/multiple-myeloma/.com

Page 21 | 180

2020 Annual Report

edited shRNA-based CYAD-211 program moved from initial concept to clinical trial in approximately two
years.

CYAD-211 preclinical data

In December 2020, we announced preclinical data from CYAD-211 at the American Society of Hematology
annual meeting. The preclinical studies confirmed that T cells engrafted with a BCMA CAR co-expressing
the CD3ζ targeting shRNA exhibited robust anti-tumor activity in vitro and in vivo with no evidence of toxicity.

In addition, CYAD-211 exhibited no signs of GvHD induction with concurrent robust anti-tumor activity. These
in vivo data were generated in sub-lethally irradiated NSG mice, the gold standard preclinical model of GvHD,
and we believe these studies confirm that the novel CD3ζ-targeting shRNA element used in CYAD-211 to
inhibit alloreactivity is functional. In fact, we have shown that anti-BCMA CAR cells incorporating this CD3ζ-
targeting shRNA element exhibit no signs of TCR activation with anti-tumor activity.

Phase 1 IMMUNICY-1 Trial Overview

IMMUNICY-1 is an open-label Phase 1, dose-escalation trial that will evaluate the safety and clinical activity
of a single infusion of CYAD-211 following preconditioning chemotherapy cyclophosphamide (300 mg/m²)
and fludarabine (30 mg/m²) in patients with relapse or refractory multiple myeloma. The trial will evaluate
multiple dose levels of CYAD-211: 30x106, 100x106 and 300x106 cells per infusion.

The IMMUNICY-1 trial is designed to establish proof-of-principle that a single shRNA-mediated knockdown
of a key TCR complex component can generate fully functional allogeneic CAR T cells without inducing
GvHD. Preliminary data from this trial are expected in the first half of 2021.

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2020 Annual Report

CYAD-02 – Next generation autologous NKG2D CAR T in r/r AML and MDS

About AML/MDS 3

Acute myeloid leukemia (AML) is a blood cancer that occurs when young abnormal white blood cells called
blasts (leukemia cells) begin to fill up the bone marrow, preventing normal blood production. It is one of the
most common types of leukemia in adults but still only accounts for approximately 1% of all cancers. In 2020,
there were about 19,940 new cases of AML in the United States with 11,180 deaths occurring from this
disease.

Myelodysplastic syndromes (MDS) are conditions that can occur when the blood-forming cells in the bone
marrow become abnormal, leading to low numbers of one or more types of blood cells. In about 1 in 3
patients, MDS can progress to AML.

About CYAD-02

CYAD-02 is an investigational CAR T therapy that engineers an All-in-One vector approach in a patient’s T
cells to express both the NKG2D chimeric antigen receptor and shRNA technology to knockdown the
expression of NKG2D ligands MICA and MICB on the CAR T cells.

In preclinical models,
targeting MICA
and
MICB with a single
shRNA lead to decrease
of
ligand expression
(Figure A) on T cells and
vitro
enhanced
(Figure B)
expansion
first-
compared
to a
generation
autologous
NKG2D CAR T product
candidate.

Phase 1 CYCLE-1 Trial Overview

In November 2019, we initiated the Phase 1 dose-escalation CYCLE-1 trial that will evaluate the safety and
clinical activity of a single
following preconditioning chemotherapy with
cyclophosphamide and fludarabine for the treatment of r/r AML patients who have failed at least one prior
therapy and r/r MDS patients who have failed prior treatment with at least four cycles of azacitidine or
decitabine.

infusion of CYAD-02

Phase 1 CYCLE-1 Trial - Initial Data

In December 2020, we reported initial data from the Phase 1 CYCLE-1 trial at the American Society of
Hematology annual meeting. Overall, seven patients were evaluable for clinical activity, two with AML and
five with MDS: three patients at dose level 1, three patients at dose level 2, one patient at dose level 3.

Initial observations of clinical activity for CYAD-02 are encouraging, with anti-leukemic activity, defined as a
decrease of 50% in bone marrow blasts, observed in four out of seven evaluable r/r AML and MDS patients
including one marrow complete response in a very high-risk MDS patient enrolled in dose level 3. In addition

3 “Acute Myeloid Leukemia (AML) in Adults” cancer.org, 12 Feb 2021, https://www.cancer.org/cancer/acute-myeloid-leukemia.html

Page 23 | 180

to the encouraging anti-leukemic activity seen to date from the initial cohorts, we also have seen multiple
patients from the CYCLE-1 trial who have achieved durable disease stabilization over several months
following treatment with CYAD-02. In addition, treatment with CYAD-02 was generally well-tolerated to date.

2020 Annual Report

Enrollment in the Phase 1 trial is ongoing and we anticipate reporting additional safety and clinical activity
data from the trial, as well as potential next steps for the program, during the first half of 2021.

1.6

Licensing and Collaboration Agreements

Celdara

Background

In January 2015, we entered into an agreement with Celdara Medical, LLC, or Celdara in which we
purchased all outstanding membership interests of OnCyte, LLC, or OnCyte. In connection with this
transaction, we entered into an asset purchase agreement to which Celdara sold to OnCyte certain data,
protocols, regulatory documents and intellectual property, including the rights and obligations under two
license agreements between OnCyte and Dartmouth College, or Dartmouth, related to our CAR T
development programs.

In March 2018, we dissolved the affairs of our wholly owned subsidiary OnCyte. As a result of the dissolution
of OnCyte, all the assets and liabilities of OnCyte were fully distributed to us. We will continue to carry out
the business and obligations of OnCyte, including under our license agreement with Dartmouth College.

Amended Asset Purchase Agreement

In August 2017, we entered into an amendment to the asset purchase agreement described above. In
connection with the amendment, the following payments were made to Celdara: (i) an amount in cash equal
to $10.5 million, (ii) newly issued shares of Celyad valued at $12.5 million, (iii) an amount in cash equal to
$6.0 million in full satisfaction of any payments owed to Celdara in connection with a clinical milestone related
to our CAR-T NKR-2 product candidate, (iv) an amount in cash equal to $0.6 million in full satisfaction of any
payments owed to Celdara in connection with our license agreement with Novartis International
Pharmaceutical Ltd., and (v) an amount in cash equal to $0.9 million in full satisfaction of any payments
owed to Celdara in connection with our license agreement with Ono Pharmaceutical Co., Ltd.

Under the amended asset purchase agreement, we are obligated to make certain development-based
milestone payments to Celdara up to $40.0 million, certain development-based milestone payments up to
$36.5 million and certain sales-based milestone payments up to $156.0 million. We are required to make
tiered single-digit royalty payments to Celdara in connection with the sales of CAR-T products, subject to
reduction in countries in which there is no patent coverage for the applicable product or in the event Celyad
is required to secure licenses from third parties to commercialize the applicable product. We are also
required to pay Celdara a percentage of sublicense income, including royalty payments, for each sublicense
ranging from the mid-single digits to the mid-twenties, depending on which of a specified list of clinical and
regulatory milestones the applicable product has achieved at the time the sublicense is executed. We are
required to pay Celdara a single-digit percentage of any research and development funding received by us,
not to exceed $7.5 million for each product group. We can opt out of the development of any product if the

Page 24 | 180

data does not meet the scientific criteria of success. We may also opt out of development of any product for
any other reason upon payment of a termination fee of $2.0 million to Celdara.

2020 Annual Report

Dartmouth College

Amended Dartmouth License

As described above, as a result of our acquisition of all of the outstanding membership interests of OnCyte
and the asset purchase agreement among us, Celdara and OnCyte, OnCyte became our wholly-owned
subsidiary and acquired certain data, protocols, regulatory documents and intellectual property, including
the rights and obligations under two license agreements between OnCyte and Dartmouth. The first of these
two license agreements concerned patent rights related, in part, to methods for treating cancer involving
chimeric NK and NKP30 receptor targeted therapeutics and T cell receptor-deficient T cell compositions in
treating tumor, infection, GVHD, transplant and radiation sickness, or the CAR-T License, and the second
of these two license agreements concerned patent rights related, in part, to anti-B7-H6 antibody, fusion
proteins and methods of using the same, or the B7H6 License.

In August 2017, we and Dartmouth entered into an amendment agreement in order to combine our rights
under B7H6 Agreement with our rights under the CAR-T License, resulting in the termination of the B7H6
License, and in order to make certain other changes to the agreement. In connection with the amendment,
we paid Dartmouth a non-refundable, non-creditable amendment fee in the amount of $2.0 million in 2017.
Under the amended license agreement, Dartmouth granted us an exclusive, worldwide, royalty-bearing
license to certain know-how and patent rights to make, have made, use, offer for sale, sell, import and
commercialize any product or process for human therapeutics, the manufacture, use or sale of which, is
covered by such patent rights or any platform product. Dartmouth reserves the right to use the licensed
patent rights and licensed know-how, in the same field, for education and research purposes only. The patent
rights included in the amended license agreement also include the patents previously covered by the B7H6
License. In consideration for the rights granted to us under the amended license agreement, we are required
to pay to Dartmouth an annual license fee as well as a low single-digit royalty based on annual net sales of
the licensed products by us, with certain minimum net sales obligations beginning April 30, 2024 and
continuing for each year of sales thereafter. Under the amended license agreement, in lieu of royalties
previously payable on sales by sublicensees, Celyad is required to pay Dartmouth a percentage of
sublicense income, including royalty payments, (i) for each product sublicense ranging from the mid-single
digits to low-single digits, depending on which of a specified list of clinical and regulatory milestones the
applicable product has achieved at the time the sublicense is executed and (ii) for each platform sublicense
in the mid-single digits. Additionally, the agreement requires that we exploit the licensed products, and we
have agreed to meet certain developmental and regulatory milestones. Upon successful completion of such
milestones, Celyad is obligated to pay to Dartmouth certain clinical and regulatory milestone payments up
to an aggregate amount of $1.5 million and a commercial milestone payment in the amount of $4.0 million.
We are responsible for all expenses in connection with the preparation, filing, prosecution and maintenance
of the patents covered under the agreement.

After April 30, 2024, Dartmouth may terminate the amended license if Celyad fails to meet the specified
minimum net sales obligations for any year (USD 10 million during first year of sales, USD 40 million during
the second year of sales and USD 100 million during the third year of sales and every year of sales
thereafter), unless Celyad pays to Dartmouth the royalty Celyad would otherwise be obligated to pay had
Celyad met such minimum net sales obligation. Dartmouth may also terminate the license if Celyad fails to
meet a milestone within the specified time period, unless Celyad pays the corresponding milestone payment.

Novartis

On May 1st, 2017, we entered into a non-exclusive license agreement with Novartis International AG, or
Novartis, regarding U.S. patents related to allogeneic CAR-T cells. The agreement includes our intellectual
property rights under U.S. Patent No. 9,181,527. This agreement is related to two undisclosed targets
currently under development by Novartis. Under the terms of the agreement, we received an upfront
payment of $4.0 million and are eligible to receive additional milestone payments in aggregate amounts of

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2020 Annual Report

up to $92.0 million. In addition, we are eligible to receive royalties based on net sales of the licensed target
associated products at percentages in the single digits. We retain all rights to grant further licenses to third
parties for the use of allogeneic CAR-T cells.

Horizon Discovery Group

In April and June 2018, we signed two research and development collaboration and license agreements with
Horizon Discovery Group plc, or Horizon, to evaluate the utility of Horizon’s SMART vector shRNA reagents
to reduce expression of one or more defined targets in connection with the development of our product
candidates. The first agreement was focused on targets related to our autologous CAR-T candidate, CYAD-
02. The second agreement was focused on targets related to our allogenic CAR-T product candidate CYAD-
211 and one pre-clinical allogenic product candidate not yet publicly announced, called CYAD-203.

In December 2018, we exercised our option to convert the second agreement into an exclusive license
agreement, in connection with which we paid Horizon an up-front payment of $1 million. In September 2019,
we exercised our option to convert the first agreement into an exclusive license agreement, in connection
with which we have paid Horizon an up-front payment of $0.1 million and an additional milestone of $0.1
million for the first IND filed by us for CYAD-02. In September 2020, we paid an additional milestone of $0.2
million for the first IND filed by us for CYAD-211.

Under these exclusive license agreements combined, Horizon is eligible to receive additional milestone
payments in development, regulatory and commercial milestone payments, in addition to low single digit
royalties on net sales, subject to customary reductions.

In December 2020, Horizon Discovery was acquired by PerkinElmer, Inc. (Horizon/PKI).

Horizon/PKI recently informed us they believe we are in material breach of these agreements as a result of
certain disclosures we have made in connection with our obligations as a publicly traded company in the
United States and Belgium, although they have not formally delivered to us a notice of material breach or
termination. We believe any such assertion of material breach would be without merit and we would expect
to vigorously defend any such notice of material breach. Any dispute under these agreements would be
subject to arbitration in The Hague under the International Chamber of Commerce Rules. We are currently
in discussions with Horizon about possible amendments to these agreements in connection with which we
would retain freedom to operate under the in-licensed patents.

Of note, we have filed patent applications which, if issued, would cover other aspects of the product
candidates described above as well as products developed by third parties that deploy similar technology
and targets. These patent applications encompass the downregulation of one or more of the targets covered
under the Horizon/PKI agreements, the use of shRNA to downregulate such targets in immune cells and the
combination of shRNAs with a chimeric antigen receptor in immune cells. We are also developing a second
generation shRNA platform that does not incorporate any of the Horizon Discovery/Perkin Elmer, Inc.
technology described above.

Our lead allogeneic CAR T product candidate, CYAD-101, does not incorporate any of the Horizon
Discovery/Perkin Elmer, Inc. technology described above.

Merck

In September 2020, we entered into a clinical trial collaboration agreement and subsequent agreements with
MSD International GmbH, or MSD, a subsidiary of Merck & Co., Inc. The agreements relate to the Phase 1b
KEYNOTE-B79 clinical trial, which will evaluate our investigational non-gene edited allogeneic CAR-T
candidate, CYAD-101, following FOLFIRI preconditioning chemotherapy, with MSD’s anti-PD-1 therapy,
KEYTRUDA® (pembrolizumab). The trial will enroll refractory metastatic colorectal cancer (mCRC) patients
with microsatellite stable (MSS) / mismatch-repair proficient (pMMR) disease, with the initial goal of
determining the safety and tolerability of the combination therapy. The trial is expected to begin enrollment
in the third quarter of 2021.

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2020 Annual Report

Mesoblast

On May 8, 2018, we entered into an exclusive license agreement with Mesoblast, an Australian
biotechnology company, to develop and commercialize our intellectual property rights relating to C-Cathez,
an intra-myocardial injection catheter, related to our former cardiovascular business, for which Mesoblast
has paid to Celyad an upfront fee of 1,000,000 USD. In addition to the upfront fee, Celyad may be eligible
up to 20,000,000 USD in clinical, regulatory and commercial milestone payments payable in cash or, for
certain milestones, in Mesoblast shares. Mesoblast will pay a 2,500,000 USD termination fee in case such
termination occurs prior to the completion of above-mentioned milestones.

Termination of C-Cure and Heart-XS Programs

Until mid-2016, we were focused on the development of a cardiovascular product candidate called C-Cure,
an autologous cell therapy for the treatment of patients with ischemic heart failure. This program was funded
in part through various research programs from the Walloon Region of Belgium. In June 2016, we reported
topline results from a Phase 3 clinical trial for this product candidate. Following the announcement of these
results, we explored strategic options to further develop and commercialize C-Cure, while we focused on
our CAR-T oncology product candidates. In December 2017, we elected to shelve this program, as a result
of which the research data and intellectual property rights associated with this development program were
transferred to the Walloon Region, which partially financed the C-Cure program.

In addition, in December 2017, our Board of Directors decided to pause the development of the Heart-XS
platform.

Pursuant to our decision to shift our focus away from cardiovascular drug candidates, on November 22,
2019, our affiliate, CorQuest Medical Inc., sold its portfolio of Heart-XS patents and related rights to CorQuest
MedTech SRL, for consideration of €1 in addition of the reimbursement of certain maintenance costs of
these patents. CorQuest Medical Inc. also has the right to receive royalties on the future sales and a
percentage on the capital gains in the case of a re-sale or a change of control of Corquest MedTech
SRL.Celyad has not sold and will not sell any of the products sold to CorQuest MedTech SRL.

1.7

Our Manufacturing Capabilities

Our established in-house process development and manufacturing expertise enables us to seamlessly and
efficiently reproduce materials to advance our cell therapy candidates into early-stage clinical trials. We
control our manufacturing through our 11,000 square foot GMP-compliant manufacturing facility, located in
Mont-Saint-Guibert, Belgium. Our facility’s staff have been instrumental in the preparation of multiple IND
and Clinical Trial Applications (CTAs) filings, through the completion of dozens of production runs, as well
as in implementing multiple chemistry, manufacturing, and control (CMC) amendments associated with our
CAR T programs. We have the flexibility to manufacture both our allogeneic and autologous CAR T
candidates within our GMP facility and we are equipped to support the production of all doses to deliver our
clinical development plan. In addition, leveraging our All-in-One vector approach for CAR T production
means that we can use a consistent manufacturing process across all product candidates. We also plan to
expand our manufacturing capabilities through potential partnerships with contract development and
manufacturing organizations.

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2020 Annual Report

1.8

Our shareholding structure

Celyad Oncology SA

(Belgium) – 100%

Biological
Manufacturing
Services SA (Belgium)

Celyad Inc (USA)

CorQuest Medical
Inc (USA)

1.9

Post balance sheet events

On January 8, 2021, the Company has entered into a committed equity purchase agreement (“Purchase
Agreement”) for up to $40 million with Lincoln Park Capital Fund, LLC (“LPC”), a Chicago-based institutional
investor. Over the 24-month term of the Purchase Agreement, the Company will have the right to direct LPC
to purchase up to an aggregate amount of $40 million (before related fees and expenses of $1 million)
American Depositary Shares (“ADSs”), each of which represents one ordinary share of the Company. From
January 8, 2021 until March 24, 2021, the Company has issued 262,812 ADS to LPC for a total value of
€1.3 million.

In December 2020, Horizon Discovery was acquired by PerkinElmer, Inc. (Horizon/PKI). Horizon/PKI
recently informed us they believe we are in material breach of these agreements as a result of certain
disclosures we have made in connection with our obligations as a publicly traded company in the United
States and Belgium, although they have not formally delivered to us a notice of material breach or
termination. We believe any such assertion of material breach would be without merit and we would expect
to vigorously defend any such notice of material breach. Any dispute under these agreements would be
subject to arbitration in The Hague under the International Chamber of Commerce Rules. We are currently
in discussions with Horizon about possible amendments to these agreements in connection with which we
would retain freedom to operate under the in-licensed patents.

Our lead allogeneic CAR T product candidate, CYAD-101, does not incorporate any of the Horizon
Discovery/Perkin Elmer, Inc. technology described above.

There were no other subsequent events that occur between 2020 year-end and the date when the financial
statements have been authorized by the Board for issue.

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2020 Annual Report

1.10 Our capital expenditures

The Company’s actual capital expenditures excluding impact of recognition of right-of-use assets for the
years ended December 31, 2019 and 2020 amounted to €0.6 million and €0.3 million, respectively. These
capital expenditures primarily consisted of the acquisition of laboratory equipment and industrial tools, the
refurbishment of research and development laboratories and leasehold improvements of corporate offices
located in Belgium. The Company expects its capital expenditures to increase in absolute terms in the near
term as the Company continues to advance its research and development programs.

1.11 Financial review of the year ending December 31, 2020

1.11.1. Analysis of the consolidated income statement

The table below sets forth the Group’s consolidated income statement, ending up with a €17.2 million net
loss for the year ended 31 December 2020, and comparative information for the year 2019.

(€'000)

Revenue

Cost of sales

Gross profit

Research and Development expenses

General & Administrative expenses

For the year ended 31 December,

2020

2019

(21 522)

(25 196)

(9 315)

(9 070)

Change in fair value of contingent consideration

9 228

433

Other income

Other expenses

Operating Loss

Financial income

Financial expenses

Loss before taxes

Income taxes

Loss for the period

4 731

5 139

(114)

(191)

(16 987)

(28 879)

217

582

(434)

(343)

(17 204)

(28 640)

(17 204)

(28 632)

Basic and diluted loss per share (in €)

(1.23)

(2.29)

The Company’s license and collaboration agreements have generated no revenue in 2020 and 2019.

The Research and Development expenses include pre-clinical, manufacturing, clinical, quality, intellectual
property and regulatory expenses and other research and development expenses, which are aggregated
and presented as a single line in the Company’s consolidated financial statements.

Bottom-line, the R&D expenses show a year-over-year decrease of €3.7 million. The decrease is mainly
driven by the decrease in preclinical activities, including process development, and clinical development of
the autologous programs, associated with its r/r AML and MDS product candidates (see note 5.24).

The key projects driving the research and development expenses in 2020 included:

•

The clinical studies conducted on our Product Candidates;

The preclinical studies conducted on company’s CAR-T product candidates in allogeneic
settings for solid tumors and the development of the Company’s allogeneic platform, which
evaluates multiple non-gene editing technologies.

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2020 Annual Report

General and administrative expenses were €9.3 million in 2020 as compared to €9.1 million in 2019, an
increase of €0.2 million. This increase primarily relates to higher insurances costs partly compensated by
savings on the travel & living expenses due to COVID-19 pandemic travel restrictions (see note 5.25).

The fair value adjustment (€9.2 million) relating to the contingent consideration and other financial liabilities
as of December 31, 2020, mainly driven by updated assumptions associated with the timing of the potential
commercialization of our autologous AML/MDS CAR T program as compared to year-end 2020. The
decrease of the liability is also driven by the devaluation of the USD foreign exchange rate as of December
31, 2020 (see note 5.28).

The Company’s other income, as described note 5.28, is associated with grants received from the Walloon
Region mainly in the form of recoverable cash advances (RCAs) and R&D tax credit income:

• Grant income (RCAs): additional grant income has been recognized in 2020 on grants in the
form of recoverable cash advances (RCAs) for contracts, numbered 7685, 8087, 8088, 8212,
8436 and 1910028. According to IFRS standards, the Company has recognized grant income
for the period amounting to €2.3 million and a liability component of €1.3 million is accounted
for as a financial liability (see disclosure note 5.16);

• Grant income (Others): additional grant income has been recognized in 2020 on grants
received from the Federal Belgian Institute for Health Insurance Inami (€0.2 million) and from
the regional government (contract numbered 8066 for €0.6 million), not referring to RCAs and
not subject to reimbursement;

•

The remeasurement income on the recoverable cash advances (RCAs) of €0.9 million which
is mainly related to the Group’s decision to update assumptions associated with the timing of
the potential commercialization of our autologous AML/MDS CAR T program as compared to
year-end 2020; and,

• With respect to R&D tax credit, the decrease compared to 2020 is mainly related to a catch-up
effect for €0.7 million which occurred in 2019 and a decrease on the current year income for
€0.2 million due to global decrease on R&D expenses in 2020.

For the year 2020, the decrease of the Company’s other expenses compared to prior year is mainly related
to the RCA remeasurement effect which is favorable in 2020 (see note 5.28).

Therefore, at year-end 2020, the loss from operations amounted to €17.0 million versus €28.9 million in 2019
for the reasons stated above.

Financial results refer mainly to interest on finance leases and foreign exchange differences. Due to the
depreciation of the USD compared to EUR in the previous year, the Company recognized a loss on foreign
exchange differences in 2020 of €0.1 million in comparison to a gain of €0.3 million in 2019 (see note 5.31).

As a result of the foregoing, the net loss for the financial year 2020 amounts to €17.2 million, compared to a
net loss of €28.6 million for the prior year for the reasons stated above.

1.11.2. Analysis of the consolidated statements of financial position

The table below sets forth the Group’s consolidated statements of financial position for the year ended
December 31, 2020, and comparative information as at December 31, 2019.

(€’000)

NON-CURRENT ASSETS

Intangible assets

Property, Plant and Equipment

December 31,

2020

2019

46 379

36 171

4 119

47 000

36 199

5 061

Page 30 | 180

Non-current Trade and Other receivables

Non-current Grant receivables

Other non-current assets

CURRENT ASSETS

Trade and Other Receivables

Current Grant receivables

Other current assets

Short-term investments

Cash and cash equivalents

TOTAL ASSETS

EQUITY

Share Capital

Share premium

Other reserves

Accumulated deficit

NON-CURRENT LIABILITIES

Bank loans

Lease liabilities

Recoverable Cash advances (RCAs)

Contingent consideration payable and other financial liabilities

Post-employment benefits

Other non-current liabilities

CURRENT LIABILITIES

Bank loans

Lease liabilities

Recoverable Cash advances (RCAs)

Trade payables

Other current liabilities

TOTAL EQUITY AND LIABILITIES

2020 Annual Report

2 117

3 679

293

19 705

615

145

1 711

17 234

66 084

30 994

48 513

43 349

30 958

2 432

3 051

257

42 836

558

1 686

1 253

39 338

89 836

45 619

48 513

43 349

28 181

(91 826)

(74 424)

23 256

2 525

4 220

15 526

614

371

32 295

2 967

4 139

24 754

398

11 834

11 922

1 076

371

4 736

5 614

192

1 167

346

6 969

3 248

66 084

89 836

Intangible assets net book value, as described in note 5.6, mainly refers to:

•

The Company’s IPR&D assets related to its oncological programs acquired in 2015 through the
oncyte business combination. Pursuant to IFRS, the Company does not capitalize research and
development expenses until marketing authorization. Accordingly, all clinical, research and
development spend related to the development of the Company’s CAR-T product candidates and
allogeneic platform are accounted for as operating expenses for the year 2020.

The Company’s exclusive agreement for Horizon Discovery’s shrna Platform to develop next-
generation allogenic CAR-T Therapies acquired for $1.0 million end of December 2018. In October
2019, the Company capitalized milestone payments for a total amount of $0.2 million related to the
exercise of the option on the Exclusive Agreement and to the first effective IND filing related to
CYAD-02. In 2020, a milestone of $0.2 million has been paid for the IND filing related to CYAD-
211 product candidate. At the closing date, milestone payments are capitalized for a total amount
of $0.4 million. This patent is amortized over remaining intellectual property protection of 20 years,
filed for the first patent application in 2008.

Property, plant and equipment net book value mainly refers to right-of-use on leased assets in compliance
with IFRS 16 standard (office and facilities, vehicles and equipment). The decrease of €1.0 million in 2020
comparatively to 2019 is explained by €1.6 million of amortization on the period compensated by the addition
of €0.6 million of new assets (see note 5.7).

Non-current trade receivables (€2.1 million as of December 31, 2020) mainly refer to discounted and risk-
adjusted milestone receivables, to be cashed in by the Company in accordance with the terms of the
exclusive license agreement signed by the Company with Mesoblast Ltd. for C-Cathez device development
(see note 5.8).

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2020 Annual Report

Non-current grant receivables relate to a receivable on the amounts to collect from the federal government
as R&D tax credit recognized for the first time at year-end 2017 (€1.2 million), including a one-off catch-up
effect. Since 2018, further R&D tax credit receivables are recorded on an annual base increment. For the
current year, the R&D tax credit has been updated for an amount of €0.6 million, taking into account all
information available at this date (see note 5.8).

At December 31, 2020, the current grant receivables relate to the the cash proceeds to be received,
associated with conventions numbered 8088 (CYAD-02 CYCLE 1) and 8212 (CYAD-101), amount to €0.1
million (see note 5.9), a decrease of €1.6 million from year-end 2019.

The Company’s treasury position 4 amounts to €17.2 million at year-end 2020, which represents a decrease
of €22.1 million compared to the prior year-end. The net cash used on the Company’s operations of €27.7
million has been partly compensated by the €6.8 million of net proceeds from RCAs and other grants (see
note 5.10 & 5.11).

Lease liabilities reach a total amount of €3.6 million as of December 31, 2020, decreasing by €0.5 million
compared to the year-end 2019. The decrease is mainly explained by the repayments of leases during the
year 2020 (see note 5.19.2).

The recoverable cash advances (RCAs) reach a total balance of €4.6 million as of December 31, 2020,
which is flat compared to year-end 2019 (see note 5.16 & 5.19.2).

The contingent consideration payable and other financial liabilities amounts to €15.5 million at year-end
which represents a decrease of €9.2 million compared to December 31, 2019. This decrease is mainly driven
by updated assumptions associated with the timing of the potential commercialization of our autologous
AML/MDS CAR T program after the Group’s decision to discontinue the development of first-generation,
autologous CAR T candidate CYAD-01 and by the depreciation of the USD foreign exchange rate as of
December 31, 2020 (see note 5.20.2).

The other non-current liabilities amounts to €0.4 million which is explained by a provision for onerous
contracts for €0.4 million in order to cover the contractual obligations, mainly on clinical activities follow-up
and studies closing costs, after the Company’s decision to discontinue the development of first-generation,
autologous CAR T candidate CYAD-01 (see note 5.17).

Trade payables amount to €4.7 million at year-end, which represents a decrease of €2.2 million compared
to year-end 2019, which is mainly attributable to monthly effect in the timing of the expenses and the
payments related (see note 5.18).

The other current liabilities amount to €5.6 million at year-end which represents an increase of €2.4 million
compared to prior year-end. This increase is mainly explained by:

• An accrual to cover for a reimbursement of R&D tax credit of €1.0 million related to fiscal years
2013 and 2014. While management plans to appeal the assessment, currently management has
determined that it is probable that reimbursement will be required;

•

The increase of the other current liabilities related to RCAs and other grants by €1.3 million. The
total amount of €1.8 million as of December 31, 2020 is attached to RCA conventions (mainly on
the convention numbered 8436 - CYAD-211 Immunicy) and is explained by the excess of cash
proceeds received from the Walloon Region compared to the eligible expenses covered by these
conventions recognized in 2020;

4 ‘Treasury position’ is an alternative performance measure determined by adding Short-term investments and Cash and cash equivalents
from the statement of financial position prepared in accordance with IFRS. The purpose of this measure by Management is to identify the
level of cash available internally (excluding external sources of financing) within 12 months.

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2020 Annual Report

• A provision for onerous contracts for €0.5 million in order to cover the contractual obligations,
mainly on clinical activities follow-up and studies closing costs, after the Company’s decision to
discontinue the development of first-generation, autologous CAR T candidate CYAD-01;

•

The reversal of a deferred revenue for an amount €0.2 million based on subsidized expenses
incurred in 2020. This deferred revenue booked in 2019 was related to a grant from the Federal
Belgian Institute for Health Insurance Inami proceed in 2019 which was covering eligible expenses
for the years 2019 and 2020; and,

The reimbursement of an excess of cash proceeds received on a grant from European (FP7)
authorities for €0.2 million for which an accrual had been already recorded in previous year
following an audit of eligible expenses related to this convention.

For more details on other current liabilities, refer to note 5.18.

1.11.3. Analysis of the consolidated net cash burn rate 5

The table below summarizes the net cash burn rate of the Company for the year 2020.

(€'000)

For the year ended 31 December,

Net cash used in operations
Net cash (used in)/from investing activities
Net cash (used in)/from financing activities
Effects of exchange rate changes

Change in Cash and cash equivalents
Change in Short-term investments

Net cash burned over the period

2020
(27 665)
157
5 396
8

(22 104)

2019

(28 202)
8 987
18 276
(264)

(1 204)
(9 197)

(22 104)

(10 401)

The net cash burn rate for 2020 is a net cash outflow amounting to €22.1 million, compared to a net cash
outflow of €10.4 million for 2019.

The cash outflow resulting from operating activities amounted to €27.7 million for 2020, which is in line with
the €28.2 million for 2019.

Cash flow from investing activities represented a net cash inflow of €0.2 million for 2020, which represents
a decrease of €8.8 million compared to 2019, largely driven by the fact that the Company had proceeds from
short-term investments of €9.2 million in 2019.

The decrease in cash inflow from financing activities is primarily due to:

• A decrease in the proceeds from capital raise of €16.4 million obtained in 2019 compared to no

proceeds associated with the capital markets in 2020 and;

• A partial offset coming from an increase of the proceeds from government grants received in 2020

for a total amount of €7.3 million (compared to €3.6 million in 2019).

1.12 Personnel

As of December 31, 2020, we employed 82 full-time employees, 4 part-time employees, 6 members of the
Executive Committee (among them 3 are under services agreement), and 2 managers under management

5 ‘Net cash burn rate’ is an alternative performance measure determined by the year-on-year net variance in the Group’s treasury position
as above defined. The purpose of this measure for the Management is to determine the change of the treasury position.

Page 33 | 180

services agreementsemployed 89 full-time employees, 4 part-time employees and 5 senior managers under
management services agreements.

2020 Annual Report

1.13 Environment

All entities of the Group continue to hold the permits required by their activities and are in compliance with
all applicable environmental rules.

1.14 Going concern 6

Management made an assessment of the Company’s ability to continue as a going concern through
preparation of detailed budgets and cash flow forecasts for the years 2021 and 2022. These forecasts reflect
the strategy of the Group and include significant expenses and cash outflows in relation to the development
of selected research programs and pipeline of products candidates. In performing this assessment,
management considered factors that could indicate the presence of material uncertainties that may cast
significant doubt upon the company’s ability to continue as a going concern. Factors considered included:
operating losses, termination of the CYAD-01 program and absence of any firm commitments for additional
financing before the reporting date.

As of December 31, 2020, the Company had cash and cash equivalents of €17.2 million and no short-term
investments. On January 8, 2021, the Company entered into a committed equity purchase agreement
(“Purchase Agreement”) for up to $40 million with Lincoln Park Capital Fund, LLC (“LPC”), a Chicago-based
institutional investor. Over the 24-month term of the Purchase Agreement, the Company will have the right
to direct LPC to purchase up to an aggregate amount of $40 million American Depositary Shares (“ADSs”),
each of which represents one of the ordinary shares of the Company. This equity purchase agreement is
expected to strengthen the Company’s current statement of financial position while also providing the
Company with access to future capital on an as needed basis and to ensure sufficient funding to cover its
operations for the next 12 months from the date the financial statements are issued.

Based on the Company’s current scope of activities, the Company estimates that its cash and cash
equivalents as of December 31, 2020 combined with the $40 million that the Company has access to from
the equity purchase agreement established with Lincoln Park Capital Fund should be sufficient to fund
operations until mid-2022, including data readouts from the Company’s ongoing clinical trials.

After due consideration of the above, the Board of Directors determined that Management has an
appropriate basis to conclude on the business continuity over the next 12 months from balance sheet date,
and hence it is appropriate to prepare the financial statements on a going concern basis.

1.15 Risks and uncertainties

Reference is made to section 2.8 “Description of the principal risks associated to the activities of the Group“.

On March 11, 2020, the World Health Organization declared the novel strain of coronavirus (COVID-19) a
global pandemic and recommended containment and mitigation measures worldwide. As of the date of this
Annual Report, Belgium and the United States, where we operate, has been impacted by temporary
closures. The length or severity of this pandemic cannot be predicted, but the Company anticipates that

6 The uncertainly raised by the COVID-19 pandemic is not impacting going concern. Although there are lot of uncertainties, it does not
impact the Company’s ability to continue operations until mid-2022 considering its treasury position as of December 31, 2020 combined
with the $40 million from Lincoln Park Capital Fund. For additional information on COVID-19 pandemic update, refer to note 5.2.1.

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2020 Annual Report

there may be an additional impact from a prolonged COVID-19 environment on the planned development
activities of the Company.

Further, timely enrollment in clinical trials is reliant on clinical trial sites which may be adversely affected by
global health matters, including, among other things, pandemics. With regards to our clinical programs,
CYAD-02, CYAD-101 and CYAD-211 were slightly impacted by the coronavirus pandemic throughout 2020.
Enrollment in the respective trials for these assets is ongoing without any major disruption, partially due to
the staggered enrollment associated with the dose-escalation trials for CYAD-02 and CYAD-211,
respectively, and the expansion segment of the CYAD-101 trial which began in late 2020. However, certain
clinical sites and institutions have not been able to receive visits from us or our representatives, which has
delayed our data monitoring activities.

The long-term impact of COVID-19 on the Company’s operations will depend on future developments, which
are highly uncertain and cannot be predicted, including a potential second wave of the pandemic, new
information which may emerge concerning the severity of the coronavirus and the actions to contain the
coronavirus or treat its impact, among other things, but potential prolonged closures or other business
disruptions may negatively affect its operations and the operations of its agents, contractors, consultants or
collaborators, which could have a material adverse impact its business, results of operations and financial
condition.

In addition, after enrollment in these trials, if patients contract COVID-19 during participation in our trials or
are subject to isolation or shelter-in-place restrictions, they may drop out of our trials, miss scheduled follow-
up visits or otherwise fail to follow trial protocols. If patients are unable to follow the trial protocols or if our
trial results are otherwise disputed due to the effects of the COVID-19 pandemic or actions taken to mitigate
its spread, the integrity of data from our trials may be compromised or not accepted by the FDA or other
regulatory authorities, which would represent a significant setback for the applicable program.

Some factors from the COVID-19 pandemic that we believe may adversely affect enrollment in our trials
include:

•

The diversion of healthcare resources away from the conduct of clinical trial matters to focus on
pandemic concerns, including the attention of physicians serving as our clinical trial investigators,
hospitals serving as our clinical trial sites and hospital staff supporting the conduct of our clinical
trials;

• Some patients who would otherwise be candidates for enrollment in our clinical trials are at
increased risk of severe effects of the coronavirus, which may lead to the death of some patients
and render others too ill to participate, limiting the available pool of participants for our trials;

•

The fact that there can be no guarantee that any proposed changes to our protocols, if necessary,
would be acceptable to regulators;

Limitations on travel that interrupt key trial activities, such as clinical trial site initiations and
monitoring; and

Interruption in global shipping affecting the transport of clinical trial materials being used in our
trials.

These and other factors arising from the COVID-19 pandemic could worsen in countries that are already
afflicted with the virus or could continue to spread to additional countries, each of which may further
adversely impact our clinical trials. The global outbreak of the COVID-19 pandemic continues to evolve and
the conduct of our trials may continue to be adversely affected, despite efforts to mitigate this impact.

Even if we are able to enroll a sufficient number of patients in our clinical trials, delays in patient enrollment
may result in increased costs or may affect the timing or outcome of our clinical trials, which could prevent
completion of these trials and adversely affect our ability to advance the development of our product
candidates.

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2020 Annual Report

The impact of COVID-19 on our business is uncertain at this time and will depend on future developments,
which are highly uncertain and cannot be predicted, including new information which may emerge
concerning the severity of the coronavirus and the actions to contain the coronavirus or treat its impact,
among other things, but prolonged closures or other business disruptions may negatively affect our
operations and the operations of our agents, contractors, consultants or collaborators, which could have a
material adverse impact our business, results of operations and financial condition.

1.16 Events and circumstances that could have a significant impact on the

future

The Company has not identified significant events and circumstances that could have a significant impact
on the future in addition to the potential impact of risks described in section 7 of chapter 2: "Description of
the principal risks associated to the activities of the Group".

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2020 Annual Report

2. CORPORATE GOVERNANCE

2.1

General

This section summarizes the rules and principles on the basis of which the corporate governance of the
Company has been organized pursuant to the CCA, the Company's articles of association, and the
Company's corporate governance charter (the “Charter”) adopted in accordance with the Belgian Corporate
Code of Governance 2020 (the “CCG”) and updated regularly by the Board of Directors.

The Company does not incorporate the information contained on, or accessible through, its corporate
website into this Report, and you should not consider it a part of this Report.

The Charter is available on the Company’s website (www.celyad.com) under the Investors/Corporate
Governance tab.

The text of the CCG is available on the website of the Commission of Corporate Governance at
https://www.corporategovernancecommittee.be/fr/over-de-code-2020/code-belge-de-gouvernance-
dentreprise-2020.

The Board of Directors intends to comply with the provisions of the CCG but believes that the size and the
current state of development of the Company justifies certain deviations. These deviations are further
detailed in the Section 2.5 hereinafter.

The Charter includes the following main chapters:

• Structure and organization;

• Shareholder structure;

• The Board : terms of reference;

• Chairman of the Board;

• Company Secretary;

• Board committees;

• Executive Committee;

• Rules preventing market abuse;

• Miscellaneous and annexes.

2.2

Board of Directors

2.2.1. Composition of the Board of Directors

As provided by the articles 7:85 et sq. of the CCA, the Company is managed by a Board of Directors acting
as a collegiate body. The Board of Directors' role is to pursue the long-term success of the Company by
providing entrepreneurial leadership and enabling risks to be assessed and managed. The Board of
Directors determines the Company's values and strategy, its risk preference and key policies. The Board of
Directors ensures that the necessary leadership, financial and human resources are in place for the
Company to meet its objectives.

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2020 Annual Report

The Company has opted for a one-tier governance structure. As provided by Article 7:93 of the CCA, the
Board of Directors is the ultimate decision-making body in the Company, except with respect to those areas
that are reserved by the law or by the Company's articles of association to the Shareholders Meeting.

The Company's articles of association state that the number of directors of the Company, who may be natural
persons or legal entities and who need not be shareholders, must be at least three. At least half of the
members of the Board of Directors must be non-executive directors and at least three of them must be
independent directors.

A meeting of the Board of Directors is validly constituted if at least half of its members are present in person
or represented at the meeting. If that quorum is not met, a new board meeting may be convened by any
director to deliberate and decide on the matters on the agenda of the board meeting for which a quorum was
not met, provided that at least two members are present. Meetings of the Board of Directors are convened
by the Chairperson of the Board or the CFO or the Chief Legal Officer, or by at least two directors, whenever
the interest of the Company so requires. In principle, the Board of Directors will meet at least four times per
year.

The Chairperson of the Board of Directors shall have a casting vote on matters submitted to the Board of
Directors in the event of a tied vote.

At the date of this Report, the Board of Directors consists of 9 members, one of which is an executive director
(with daily management authority) and 8 of which are non-executive directors, including four independent
directors. The Board of Directors is composed of 6 men and 3 women.

Name

Mel Management SRL (1)

Filippo Petti

Serge Goblet

Chris Buyse

Position
Chairman
Non-Executive Director
Executive Director

the Board

Non-executive director

RAD Lifesciences BV (2)

Non-executive director

Hilde Windels

Independent director

Margo Roberts (3)

Independent Director

Maria Koehler (4)

Independent Director

Dominic Piscitelli (5)

Independent Director

Term

2021

2024

2022

2024

Board Committee Membership
Chairman of the Nomination and Remuneration
Committee

Member of the Audit Committee

Member of
Nomination and Remuneration Committee

the Audit Committee and

the

Chairman of the Audit Committee and member of
the Nomination and Remuneration Committee

2021

Independent Director

Marina Udier (6)
(1) Represented by Michel Lussier. Mel Management SRL has been appointed on December 4, 2020 as
member of the Board to fulfill the vacant mandate of Michel Lussier who stepped down from the Board at
the same date.
(2) represented by Rudy Dekeyser.
(3) Margo Roberts has stepped down from the Board of Directors on August 6, 2020
(4) Maria Koehler has been appointed as Board member by resolution of the extraordinary shareholders
meeting of March 23, 2020
(5) Dominic Piscitelli has been appointed as Board member by resolution of the shareholders meeting of
May 5, 2020
(6) Marina Udier has been appointed as member of the Board of Directors on December 17, 2020 to fulfill
the vacant mandate of Margo Roberts

The following paragraphs contain brief biographies of each of the directors, or in case of legal entities being
director, their permanent representatives, with an indication of other relevant mandates as member of
administrative, management or supervisory bodies in other companies during the previous five years.

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2020 Annual Report

Michel Lussier serves as Chairman of the Board of Directors. Mr. Lussier has founded MedPole Ltd, the
North American affiliate of MedPole SA, a European incubator for medical technology start-up companies
located in Belgium and serves as the Chief Executive Officer for the group. Since May 2014 and until
September 2020, Mr. Lussier has also served as the Chief Executive Officer of Metronom Health Inc, an
early stage medical device company founded by Fjord Ventures, developing a continuous glucose
monitoring system. Prior to that, from 2002 to 2013, he worked for Volcano Corporation, where he served
several positions, most recently as President, Clinical and Scientific Affairs from 2012 to 2013, and prior to
that from 2007 to 2012, Group President, Advanced Imaging Systems, Global Clinical & Scientific Affairs
and General Management of Europe, Africa and the Middle East. Mr. Lussier obtained a Bachelor of
Sciences degree in Electrical Engineering and Master’s Degree in Biomedical Engineering at the University
of Montreal. He also holds an MBA from INSEAD (European Institute of Business Administration), France.
In addition to serving on the Company’s Board of Directors, he also serves on the boards of several early
stage medical devices companies.

Filippo Petti is Chief Executive Officer and Chief Financial Officer of the Company, and Executive Director.
Prior to joining the Company, Mr. Petti worked in healthcare investment banking both at Wells Fargo
Securities and William Blair & Company until 2017. Prior to his roles in investment banking, Mr. Petti spent
several years in equity research covering U.S. biotechnology companies both at William Blair & Company
and Wedbush Securities. He began his career as a research scientist at OSI Pharmaceuticals, Inc. focused
on drug discovery and translational research, and later transitioning into corporate development with the
company. Mr. Petti holds a Master of Business Administration from Cornell University, a Master of Science
from St. John’s University and a Bachelor of Science from Syracuse University.

Serge Goblet holds a Master Degree in Business and Consular Sciences from ICHEC, Belgium and has
many years of international experience as director in Belgian and foreign companies. Mr. Goblet is the
managing director of TOLEFI SA, a Belgian holding company and holds director mandates in subsidiaries
of TOLEFI.

Chris Buyse brings more than 30 years of international financial expertise and experience in introducing
best financial management practices. He is currently Managing Director of FUND+, a fund that invests in
innovative Belgian Life Sciences companies, Between August 2006 and June 2014, Mr. Buyse served as
the Chief Financial Officer and board member of ThromboGenics NV, a leading biotech company that is
listed on NYSE Euronext Brussels. Before joining ThromboGenics, he was the Chief Financial Officer of the
Belgian biotech company CropDesign, where he coordinated the acquisition by BASF in July 2006. Prior to
joining CropDesign NV he was financial manager of WorldCom/MCI Belux, a European subsidiary of one of
the world’s largest telecommunication companies and he was also the Chief Financial Officer and interim
Chief Executive Officer of Keyware Technologies. Mr. Buyse holds a Master’s Degree in applied economic
sciences from the University of Antwerp and a Master of Business Association from Vlerick School of
Management in Gent. He currently serves, in his own name or as permanent representative of a
management company, as member of the board of directors of the following publicly and privately held
companies: Bio Incubator NV, Pinnacle Investments SA, CreaBuild NV, Sofia BVBA, Pienter-Jan BVBA, Life
Sciences Research Partners VZW, Inventiva SA, The Francqui Foundation and EyeDPharma SA. Mr. Buyse
is also Board observer at Hyloris pharmaceuticals and the Foundation Louis-Jeantet (CH).

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2020 Annual Report

Rudy Dekeyser is partner at LSP, one of Europe’s leading venture capital firms in healthcare. Prior to joining
LSP, Mr. Dekeyser has been co-managing director of VIB (Flanders Institute for Biotechnology), where he
was also responsible for all activities related to the intellectual property portfolio, business development and
the establishment of new companies. He holds non-executive director positions in Sequana Medical NV,
Lumeon Inc and Remynd NV, and held non-executive director positions in Devgen NV, CropDesign NV,
Ablynx NV, Actogenix NV, Flandersbio VZW and Multiplicom NV. He is a co-founder of ASTP (the European
associations of technology transfer managers) and Chairman of EMBLEM (EMBL’s business arm). Mr.
Dekeyser is member of the advisory boards of several foundations investing in life sciences research and
innovation. He obtained a Ph.D. in molecular biology at the University Ghent.

Hilde Windels is the Chief Executive Officer of the privately held diagnostics company Antelope Dx BV and
she is also member of its boards of directors. Ms. Windels brings 20 years of experience in biotech with a
track record of business and corporate strategy, building and structuring organizations, private fundraising,
mergers and acquisitions and public capital markets. Ms. Windels has worked as Chief Financial Officer for
several biotech companies, amongst those Belgium based molecular Dx company Biocartis where she
started as Chief Financial Officer CFO in 2011. She transitioned to the co-Chief Executive Officer role in
2015 and became Chief Executive Officer in 2017. Later that year, she joined MyCartis NV as Chief
Executive Officer and in 2019 she was appointed CEO of Mycartis’ spin-out Antelope Dx. Ms. Windels is
member of the board of directors of Erytech and MdxHealth. She holds a Master’s Degrees in Economics
(Commercial Engineer) from the University of Leuven (Belgium).

Dr. Margo Roberts, Ph.D., has more than three decades of biomedical research experience in both
biotechnology and academia. Dr Roberts is currently Chief Scientist Officer at Lyell Immunotherapy. She
serves also on the board of directors of Unity Biotechnology, a United States public company focused on
developing medicines that slow or reverse age-associated diseases, and on the board of directors of InsTIL
Bio, a United States start-up company focused on developing Timor infiltrating lymphocyte (TIL) - based
therapies for the treatment of cancer. Until July 2018, Dr. Roberts served as Senior Vice President of
Discovery Research at Kite Pharma focusing on the development of next generation therapeutic
approaches, including heading up Kite’s universal allogeneic T-cell programs. Prior that, in 2013, she was
Chief Scientific Officer at Kite Pharma Inc., where she built a talented research organization that played an
instrumental role in the successful development of Yescarta®, and the clinical advancement of additional
CAR/TCR-engineered T-cell therapies. Prior to her tenure at Kite Pharma, Dr. Roberts was Principal
Scientist and Director of Immune and Cell Therapy at Cell Genesys, Inc., where she led the development
and application of CAR technology to T-cells and stem cells, culminating in the very first CAR T-cell trial
initiated in 1994. Dr. Roberts was also an associate professor at the University of Virginia, has authored
over 30 scientific publications, and is the inventor on 13 issued US patents and three published US patent
applications related to CAR technology and tumor vaccine therapies. Dr. Roberts received both her Bachelor
of Science degree with honors and her Ph.D. degree from the University of Leeds in England. Dr. Roberts
has left the Board of Directors in August 2020.

Dr Maria Koehler, MD, Ph.D., is since May 2019 the Chief Medical Officer at oncology biotechnology
company Repare Therapeutics and previously from September 2017 until April 2019 served as the Chief
Medical Officer of a Bicycle Therapeutics plc, a biotechnology company. From March 2009 until September
2017, she was the Vice President of Strategy and Innovation for the Oncology Unit at Pfizer Inc, a
pharmaceutical company. Prior to that, Dr. Koehler held senior positions in oncology research and
development at AstraZeneca plc. And GlaxoSMith Kline. Dr. Koehler has also served as the Clinical Director
of Bone Marrow Transplantation at University Hospital in Pittsburgh and the Director of the Bone Marrow
Transplant Program and Associate Professor at St. Christopher's Hospital in Philadelphia. Dr. Koehler is a
board-certified hematology/oncology physician. Dr. Koehler received her M.D. and Ph.D. from Silesian
School of Medicine in Katowice, Poland.

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2020 Annual Report

Dominic Piscitelli brings more than 20 years of industry experience, including debt and equity financings,
in-licensing
launches
transactions, acquisitions, marketing partnerships and commercial product
(XTANDI® and Tarceva®). Since September 2019 Dominic has served as the Chief Financial Officer of
ORIC Pharmaceuticals, Nasdaq-listed biotechnology company, that completed its initial public offering in
April 2020. Prior to joining ORIC, Mr. Piscitelli was CFO of AnaptysBio, a Nasdaq-listed biotechnology
company, where he helped raise over $500 million in an IPO and follow-on financings. From 2012 until 2017,
Mr. Piscitelli was Vice President of Finance, Strategy and Investor Relations at Medivation and played a key
role in its acquisition by Pfizer. Previously, he served as Senior Director of Collaborations and Operations
Finance at Astellas Pharma. Prior to that, Mr. Piscitelli served in various roles of increasing responsibility
culminating as the Vice President, Treasury & Management Finance at OSI Pharmaceuticals, and played a
significant role in their acquisition by Astellas. Mr. Piscitelli began his career with KPMG and is a certified
public accountant. He earned a bachelor’s degree in accounting and an MBA from Hofstra University (New
York).

Marina Udier, Ph.D., serves as CEO of Nouscom after joining as Chief Operating Officer in 2016 from
Versant Ventures, where she was Operating Principal. Prior to Versant, she held senior development and
commercial roles at Novartis in Basel including work as a Global Commercial Head. Previously, Dr. Udier
worked for McKinsey & Company in the US, working with Healthcare Fortune 500 companies in areas of
marketing, strategy and pricing. She has a Ph.D. in Organic Chemistry from Yale University.

2.2.2. Director Independence

In application of the article 7:87 of the CCA, a director of a listed company is considered as independent if
he does not entertain with the Company or an important shareholder of the Company any relation the nature
of which could put his independence at risk. If the director is a legal entity, the independence must be
assessed both in the case of the legal entity and its permanent representative. In order to verify if a candidate
director fulfils those conditions, the independence criteria of the article 3.5 of the BCG are applied and can
be summarized as follows:

•

The director has not been an executive member of the Board of Directors, or daily manager of
the Company (or an affiliate of the Company, if any), during a term of three years prior to his
or her election and does not possess any stock option of the Company related to that function;

The director has not been a non-executive director for a cumulative period of more than 12
years;

The director has not been a member of the managerial staff of the Company (or an affiliate of
the Company, if any) during a term of three years prior to his or her election and does not
possess any stock option of the Company related to that function;

The director does not receive and has not received any remuneration or other significant
financial advantage from the Company (or an affiliate of the Company, if any), other than the
profit share (“tantièmes”) and remuneration received in his or her capacity as a non-executive
director or as a member of the supervisory body;

The director does not own any corporate rights that represent 10% or more of the share capital
or voting rights of the Company, Further, the director cannot be appointed by a shareholder
who falls under the conditions set forth in this criterion;

The director does not and, during the year preceding his appointment, did not, have a
significant business relationship with the Company (or an affiliate of the Company, if any),
either directly or as a partner, shareholder, member of the Board of Directors or member of the
managerial staff of a company or of a person that maintains such a relationship;

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2020 Annual Report

•

The director is not and has not been at any time during the past three years, a partner or an
employee of its current or former statutory auditor or of a company or person affiliated
therewith;

The director is not an executive director of another company in which an executive director of
the Company is a non-executive director or a member of the supervisory body, and has no
other significant ties with executive directors of the Company through his or her involvement in
other companies or bodies;

The director’s spouse, unmarried legal partner and relatives (via birth or marriage) up to the
second degree do not act as a member of the Board of Directors, member of the management
board (“directiecomité / comité de direction”) (should such corporate body be created) or daily
manager or member of the managerial staff in the Company (or an affiliate of the Company, if
any), and do not meet one of the criteria set out above.

The Board of Directors, assisted by the Chief Legal Officer and upon recommendation of the Remuneration
and Nomination Committee, determines annually if the conditions of independence are fulfilled by the
members of the Board.

2.2.3. Role of the Board in Risk Oversight

The Board of Directors is primarily responsible for the oversight of its risk management activities and has
delegated to the Audit Committee the responsibility to assist the Board of Directors in this task. While the
Board of Directors oversees the overall risk management, the Company’s Management is responsible for
the day-to-day risk management processes. The Board of Directors expects the management to consider
risk and risk management in each business decision, to proactively develop and monitor risk management
strategies and processes for day-to-day activities and to effectively implement risk management strategies
adopted by the Board of Directors. The Company believes this division of responsibilities is the most effective
approach for addressing the risks the Company faces.

2.2.4. Committees within the Board of Directors

2.2.4.1

General

Without prejudice to the role, responsibilities and functioning of the Executive Committee as set out below
under section “Executive Committee”, the Board of Directors may set up specialized committees to analyze
specific issues and advise the Board of Directors on those issues. Such committees are advisory bodies
only and the decision-making remains the collegiate responsibility of the Board of Directors. The Board of
Directors determines the terms of reference of each committee with respect to the organization, procedures,
policies and activities of the committee.

2.2.4.2

Audit Committee

At the date of this Report, the Audit Committee consists of three members: Dominic Piscitelli (Chairman),
Chris Buyse and Hilde Windels.

Chris Buyse does no longer qualify as independent member since he has been director of the Company for
a cumulative period of more than 12 years. Nevertheless, the Board has determined that it is in the best
interests of the Company and its shareholders that Chris Buyse remains a member of the Audit Committee
for an intermediate period to ensure the continuity of the Audit Committee considering the absence of a full-
time CFO, and Mr Buyse’s expertise and knowledge of the Company.

The role of the Audit Committee is to ensure the effectiveness of the internal control and risk management
systems, the internal audit (if any) and its effectiveness and the statutory audit of the annual and consolidated
accounts, and to review and monitor the independence of the external auditor, in particular regarding the
provision of additional services to the Company. The Audit Committee reports regularly to the Board of
Directors on the exercise of its functions. The Audit Committee informs the Board of Directors about all areas

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2020 Annual Report

in which action or improvement is necessary in its opinion and produces recommendations concerning the
necessary steps that need to be taken. The audit review and the reporting on that review cover the Company
and its subsidiaries as a whole. The members of the Audit Committee are entitled to receive all information
which they need to perform their function from the Board of Directors, Executive Committee and employees.
Each member of the Audit Committee shall exercise this right in consultation with the Chairman of the Audit
Committee.

The Audit Committee’s duties and responsibilities include, among other things: the financial reporting, the
review of internal controls and risk management, and managing the internal and external audit process.
Those tasks are further described in the Audit Committee charter as set out in the Charter and in the Article
7:99 §4 of the CCA.

Dominic Piscitelli, Chris Buyse and Hilde Windels have been identified by the Company’s Board of Directors
as having the necessary expertise in accounting and audit matters to serve as experts on the Audit
Committee.

The Audit Committee holds a minimum of four meetings per year.

2.2.4.3

Nomination and Remuneration Committee

As of the date of this Report, the Nomination and Remuneration Committee is composed of three members:
Mel Management SRL represented by Michel Lussier (Chairman), Hilde Windels and Dominic Piscitelli.

The Nomination and Remuneration Committee consists of not less than three directors, or such greater
number as determined by the Board of Directors at any time. All members must be non-executive directors
and at least a majority of its members must be independent in accordance with Article 7:87 of the CCA. The
Company’s Board of Directors has determined that Hilde Windels and Dominic Piscitelli are independent in
accordance with Article 7:87 of the CCA.

The Nomination and Remuneration Committee must have the necessary expertise as regards the
remuneration policy, and this condition is fulfilled if at least one member has had a higher education and has
had at least three years of experience in personnel management or in the field of remunerating directors and
managers. As of the date of this Annual Report, Mel Management SRL represented by Michel Lussier
(Chairman), Hilde Windels and Dominic Piscitelli satisfy this requirement.

The CEO has the right to attend the meetings of the Nomination and Remuneration Committee in an advisory
and non-voting capacity on matters other than those concerning himself. The Nomination and Remuneration
Committee will elect a chairman from amongst its members. The Chairman of the Nomination and
Remuneration Committee is actually Mel Management SRL represented by Michel Lussier.

The role of the Nomination and Remuneration Committee is to assist the Board of Directors in all matters:

• Relating to the selection and recommendation of qualified candidates for membership of the

Board of Directors;

• Relating to the nomination of the CEO;

• Relating to the nomination of the members of the Executive Committee, other than the CEO,

upon proposal by the CEO;

• Relating to the remuneration of independent directors;

• Relating to the remuneration of the CEO;

• Relating to the remuneration of the members of the Executive Committee, other than the CEO,

upon proposal by the CEO;

• On which the Board of Directors or the Chairman of the Board of Directors requests the

Nomination and Remuneration Committee's advice.

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2020 Annual Report

Additionally, with regard to matters relating to remuneration, except for those areas that are reserved by law
to the Board of Directors, the Nomination and Remuneration Committee will at least have the following tasks:

• Preparing the remuneration report (which is to be included in the Board of Director’s corporate

governance statement); and

• Explaining its remuneration report at the Annual General Shareholders Meeting.

It will report to the Board of Directors on the performance of these tasks on a regular basis. These tasks are
further described in the terms of reference of the Nomination and Remuneration Committee as set out in the
Charter. The Nomination and Remuneration Committee will meet at least twice per year, and whenever it
deems it necessary to carry out its duties.

2.2.5. Meetings of the Board and the committees

In 2020, the Board of Directors held 10 meetings by telephone or videoconference:

2020

Board Members

23 Jan

2 Mar

24 Mar

8 & 10 Apr

25 Jun

6 Aug

7 Oct

5 Nov

4 Dec 17 Dec

M. Lussier

Present

N/A

C. Buyse

Present

Absent

Present

Present
(10/4)

Present

R. Dekeyser

Present

N/A

S. Goblet

M. Koehler

F. Petti

D. Piscitelli

M. Roberts

M. Udier

Present

N/A

Present

Absent

Present

N/A

Present

Absent

N/A

Present

H. Windels

Present

Lifesciences

RAD
BV
Mel Management
SRL

N/A

Absent

Present

N/A

Present

In addition, two notarized meetings of the Board of Directors took place on September 3 and December 10,
2020, in relation to a capital increase or the issuance of warrants:

Board members

2020

M. Lussier

C. Buyse

S. Goblet

M. Koehler

F. Petti

D. Piscitelli

M. Udier

3 September

Represented

Present

Represented

N/A

H. Windels

Represented

RAD Lifesciences BV

Mel Management SRL

Represented

10 December

Represented

Present

Represented

Present

Represented

The Nomination and Remuneration Committee held 9 meetings by telephone or videoconference:

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2020 Annual Report

Remuneration
and Nomination
Commitee

2020

21 Jan

31 Jan

12 Feb

18 Feb

24 Feb

21 Apr

7 May

1 Oct

5 Nov

M. Lussier

Present

C. Buyse

Present

R. Dekeyser

Present

F. Petti

Present

The Audit Committee held 4 meetings by telephone or videoconference:

Audit Committee

C. Buyse

R. Dekeyser

H. Windels

D. Piscitelli

F. Petti

24 March

Present

N/A

Invited

6 August

Present

N/A

Present

Invited

2020

23 November

9 December

Present

N/A

Represented

Present

Invited

Present

N/A

Present

Invited

2.3

Executive Committee

The Board of Directors has established an Executive Committee. The terms of service of the Executive
Committee have been determined by the Board of Directors and are set out in the Company’s Charter.

The Executive Committee consists of the “Chief Executive Officer”, or CEO (who is the chairman of the
Executive Committee), the “Chief Financial Officer”, or CFO, currently Filippo Petti ad interim, the “Chief
Scientific Officer”, the “Chief Legal Officer” and the “Vice President Clinical Development and Medical
Affairs”, the “Chief Business Officer”, and the Chief Human Resources Officer.

The Executive Committee discusses and consults with the Board of Directors and advises the Board of
Directors on the day-to-day management of the Company in accordance with the Company's values,
strategy, general policy and budget, as determined by the Board of Directors.

Each member of the Executive Committee has been made individually responsible for certain aspects of the
day-to-day management of the Company and its business (in the case of the CEO, by way of delegation by
the Board of Directors; in the case of the other member of the Executive Committee, by way of delegation
by the CEO). The further tasks for which the Executive Committee is responsible are described in greater
detail in the sections referencing the Executive Committee, as set out in the Company’s Charter.

The members of the Executive Committee are appointed and may be dismissed by the Board of Directors
at any time. The Board of Directors appoints them following the recommendation of the Nomination and
Remuneration Committee, which shall also assist the Board of Directors on the remuneration policy of the
members of the Executive Committee, and their individual remunerations.

The remuneration, duration and conditions of dismissal of Executive Committee members is governed by
the contract entered into between the Company and each member of the Executive Committee with respect
to their function within the Company.

In principle, the Executive Committee meets every month. Additional meetings may be convened at any time
by the Chairman of the Executive Committee or at the request of two of its members. The Executive
Committee will constitute a quorum when all members have been invited and the majority of the members
are present or represented at the meeting. Absent members may grant a power of attorney to another
member of the Executive Committee. Members may attend the meeting physically or by telephone or video

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2020 Annual Report

conference. The absent members must be notified of the discussions in their absence by the Chairman (or
the Company Secretary, if the Executive Committee has appointed a Company Secretary from among its
members).

The members of the Executive Committee must provide the Board of Directors with information in a timely
manner, if possible in writing, on all facts and developments concerning the Company that the Board of
Directors may need in order to function as required and to properly carry out its duties. The CEO (or, in the
event that the CEO is not able to attend the Board of Directors' meeting, the CFO or, in the event that the
CFO is not able to attend the Board of Directors' meeting, another representative of the Executive
Committee) must report at every ordinary meeting of the Board of Directors on the material deliberations of
the previous meeting(s) of the Executive Committee.

The following table sets forth the members of the Executive Committee who have performed during 2020.

Name

Function

Filippo Petti
KNCL SRL, represented by Jean-Pierre Latere (1)

Chief Executive Officer and Chief Financial Officer

Chief Operating Officer

NandaDevi SRL, represented by Philippe Dechamps

Chief Legal Officer and Corporate Secretary

MC Consult SRL, represented by Philippe Nobels

Chief Human Resources Officer

ImXense SRL, represented by Frederic Lehmann
Stephen Rubino (2)

David Gilham

Vice President Clinical Development & Medical Affairs

Chief Business Officer

Chief Scientific Officer

(1) The services agreement with KNCL SRL has been terminated by the Company with effective date as of May 18, 2020
(2) Stephen Rubino was appointed Chief Business Development Officer as of February 1st, 2020

Year of
birth

1976

1975

1970

1966

1964

1958

1965

The following paragraphs contain brief biographies of each of the current members of the Executive
Committee or in case of legal entities being a member of the Executive Committee or key manager, their
permanent representatives.

Filippo Petti, CEO and CFO ad interim – reference is made to section “2.2.1. Composition of the Board of
Directors”.

Philippe Dechamps (representative of NandaDevi SRL), serves as Chief Legal Officer of the Company.
Philippe started his legal career as an associate in Brussels with the law firm Linklaters De Bandt from 1994
to 1998. Until 2003, he then served as an Legal manager at Solvay Group to assist the company in its
turnaround through several M&A operations in Europe, India and Far-East Asia. In 2003, he took over the
position of Legal Director at Guidant, the United States company formerly active in the medical devices
business before its acquisition by Boston Scientific and Abbott Laboratories in 2005. At Abbott, Philippe was
leading the legal affairs of Abbott Vascular International outside of the United States. In 2008, Philippe joined
Delhaize Group to lead the legal and government affairs in Europe and Asia, before becoming Group
General Counsel and Secretary to the Board of Directors in 2015. In this position, he piloted the legal strategy
to merge Delhaize Group with Royal Ahold in July 2016. Since December 2018, Philippe is also member of
the Board of Directors of Petserco SA, the holding company of the Tom&Co group. Philippe holds law
degrees from the Université Catholique de Louvain (UCL) and Vrije Universiteit Brussel (VUB), and a Master
of Law (LL.M) from Harvard Law School.

Philippe Nobels (representative of MC Consult SRL), serves as Vice President of Human Resources of
the Company. He started his career at Price Waterhouse (now PricewaterhouseCoopers) as auditor in 1989.
He also went in rotational assignment in Congo during 2 years on consulting missions for the World Bank.
In 1995, he joined Fourcroy as plant controller. Then, he joined Dow Corning in 1997 where he held different
positions in Finance and Human Resources. He led the HR operations in Europe, became the HR manager
for Dow Corning in Belgium, and HR Business Partner for the sales and marketing functions globally. As a

Page 46 | 180

member of the sales and marketing Leadership teams, he contributed to Dow Corning’s major transformation
initiatives to increase organizational effectiveness, employees’ engagement & performance as well as
Business results. Mr. Nobels holds a Master’s Degree in Economics from the University of Namur.

2020 Annual Report

Frédéric Lehmann (representative of ImXense SRL), serves as Vice President Clinical Development &
Medical Affairs of the Company. Dr. Lehmann is a physician by training, specialized in hematology and
oncology. Dr. Lehmann has extensive experience in oncology drug development spanning early to late
phase, including clinical trial design, translational research, regulatory interactions, and clinical risk
management. He started his academic career at the Ludwig Institute for Cancer Research in Brussels,
followed by a position at the Institute Jules Bordet. He then moved to the European Organization for
Research and Treatment of Cancer (EORTC) as Medical Advisor. Dr. Lehmann began his corporate career
at GlaxoSmithKline, where he led the early worldwide clinical development program for the Company’s
cancer vaccines and went on
for cancer
immunotherapeutics.

the research and development

incubator

lead

David Gilham, serves the Company as Chief Scientific Officer. Dr. Gilham obtained his Ph.D from the
University of Dundee, UK under the supervision of Professor Roland Wolf OBE working on cytochrome
P4502D6 and Parkinson’s disease. In 1996, Dr. Gilham was recruited to work with Professor Robert Hawkins
at the University of Bristol, UK to work on chimeric antigen receptor (CAR) T cells as a part of the Chimeric
Eurocell European Programme lead by Prof Zelig Eshhar. In 1998, the group moved to the Paterson Institute
for Cancer Research, University of Manchester. The group maintained a strong translational focus delivering
several clinical trials of CAR T (including the first such trial to be initiated in the UK) while developing a strong
basic research core activity including the ATTACK European Programme that drew together colleagues
working in T cell therapy across Europe. Along with achieving academic independence and promotion to
Senior Fellow, Dr. Gilham took over the leadership of the laboratory group in 2009. The group moved to the
Institute of Cancer Sciences, University of Manchester based within the Manchester Cancer Research
Centre in 2015 and Dr. Gilham was appointed Reader in 2016. In September 2016, Dr. Gilham moved to
the role of Vice President at Celyad to continue working upon immune based therapies for cancer and
appointed to Chief Scientific Officer in May 2020.

Stephen Rubino, Ph.D., serves the Company as Chief Business Officer. Dr. Rubino brings over 30 years
of pharmaceutical leadership experience to the role of Chief Business Officer, with emphasis in the areas of
business development and licensing, new product development, commercial operations, pharmaceutical
strategy and investor relations. Dr. Rubino currently serves as an independent board member of Sermonix
Pharmaceuticals and Viracta Therapeutics. Dr. Rubino has also served Novartis Pharmaceuticals in a wide
range of roles and therapeutic areas, the last of which was as Global Head of Business Development and
New Product Marketing, responsible for developing and building the product pipeline for Novartis’ Cell &
Gene Therapies Unit. Prior to Novartis, Dr. Rubino worked for Schering–Plough (Merck) where his last role
was head of the Global Solid Tumor Oncology & Autoimmune Business Unit responsible for the licensing
and launch of Remicade, as well as the launch and commercialization of several global oncology brands.
Dr. Rubino received his Ph.D. from Weill Cornell University (New York) and his Master of Business
Association from Baruch University (New York).

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2020 Annual Report

2.4

Conflict of Interest of Directors and members of the Executive Committee
and transactions with affiliated companies

2.4.1. General

Each Director and member of the Executive Committee is encouraged to arrange his or her personal and
business affairs so as to avoid direct and indirect conflicts of interest with the Company. The Company's
Charter contains specific procedures to deal with potential conflicts.

2.4.2. Conflicts of interest of Directors

The Article 7:96 of the CCA provides for a special procedure within the Board of Directors in the event of a
possible personal financial conflict of interest of one or more directors with one or more decisions or
transactions to be adopted by the Board of Directors. In the event of a conflict of interest, the director
concerned must inform his or her fellow directors of his or her conflict of interest before the Board of Directors
deliberates and takes a decision in the matter concerned. Furthermore, the conflicted director may not
participate in the deliberation and voting by the Board of Directors on the matter that gives rise to the potential
conflict of interest. The minutes of the meeting of the Board of Directors must contain the relevant statements
made by the conflicted director, as well as a description by the Board of Directors of the conflicting interests
and the nature of the relevant decision or transaction to be adopted. The minutes must also contain a
justification by the Board of Directors for the decision or transaction adopted, and a description of the
financial consequences thereof for the Company. The relevant minutes must be included in the (statutory)
annual report of the Board of Directors.

The Company must notify the Statutory Auditor of the conflict. The Statutory Auditor must describe in its
statutory annual audit report the financial consequences of the decision or transaction that gave rise to the
potential conflict.

This procedure does not apply to decisions or transactions in the ordinary course of business at customary
market conditions.

2.4.3. Existing conflicts of interest of members of the Board of Directors

Except as reported hereinafter, as far as the Company is aware, none of the Directors have a conflict of
interest within the meaning of Article 7:96 of the CCA which has not been disclosed to the Board of Directors.
Other than potential conflicts arising in respect of compensation-related matters, the Company does not
foresee any other potential conflicts of interest in the near future.

In 2020, certain members of the Board declared a conflict of interest. The following declaration were made
in that respect:

Excerpt from the minutes of the Board meeting of January 23, 2020:

“The Board discussed the allocation of warrants to Board members:

- Michel Lussier (10,000 warrants);

- Hilde Windels (10,000 warrants);

- Margo Roberts (10,000 warrants);

Serge Goblet (10,000 warrants);

- Chris Buyse (10,000 warrants);

- Rudy Dekeyser (10,000 warrants).

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2020 Annual Report

The warrants will be offered under the Warrants Plan 2019. Each warrant will give the right to its owner to
acquire one new share of the Company. The exercise price will be equal to the fair market value of the
Company’s shares at the time of the offer, this value corresponding to the closing price of the share on the
day before the date of the offer.

The article 7:96 of the BCAC provides that “if a director has, directly or indirectly, a conflicting financial
interest in a decision or operation to be decided by the Board of Directors, he has to inform the other directors
before the deliberation of the Board of Directors. His declaration, including the reasons for his conflicting
financial interest, must be recorded in the minutes of the board meeting that will take [...] the decision. The
auditor must also be informed. The concerned directors cannot deliberate nor vote on the concerned
decisions”.

Michel Lussier informed the other directors that he has a conflicting financial interest in the decision
proposed. This declaration will be communicated to the statutory auditor of the Company and inserted in the
annual report 2019 in accordance with the article 7:96 of the BCAC. Michel Lussier left the meeting room
and the Board unanimously approved the allocation of 10,000 warrants to Michel Lussier. Michel Lussier
then came back in the meeting room.

Serge Goblet informed the other directors that he has a conflicting financial interest in the decision proposed.
The Chairman thanked Serge Goblet for his declaration. This declaration will be communicated to the
statutory auditor of the Company and inserted in the annual report 2019 in accordance with the article 7:96
of the BCAC. Serge Goblet left the meeting room and the Board unanimously approved the allocation of
10,000 warrants to Serge Goblet. Serge Goblet then came back in the meeting room.

Chris Buyse informed the other directors that he has a conflicting financial interest in the decision proposed.
The Chairman thanked Chris Buyse for his declaration. This declaration will be communicated to the
statutory auditor of the Company and inserted in the annual report 2019 in accordance with the article 7:96
of the BCAC. Chris Buyse left the meeting room and the Board unanimously approved the allocation of
10,000 warrants to Chris Buyse. Chris Buyse then came back in the meeting room.

Rudy Dekeyser informed the other directors that he has a conflicting financial interest in the decision
proposed. The Chairman thanked Rudy Dekeyser for his declaration. This declaration will be communicated
to the statutory auditor of the Company and inserted in the annual report 2019 in accordance with the article
7:96 of the BCAC. Rudy Dekeyser left the meeting room and the Board unanimously approved the allocation
of 10,000 warrants to Rudy Dekeyser. Rudy Dekeyser then came back in the meeting room.

Hilde Windels informed the other directors that she has a conflicting financial interest in the decision
proposed. The Chairman thanked Hilde Windels for her declaration. This declaration will be communicated
to the statutory auditor of the Company and inserted in the annual report 2019 in accordance with the article
7:96 of the BCAC. Hilde Windels left the meeting room and the Board unanimously approved the allocation
of 10,000 warrants to Hilde Windels. Hilde Windels then came back in the meeting room.

Margo Roberts informed the other directors that she has a conflicting financial interest in the decision
proposed. The Chairman thanked Margo Roberts for her declaration. This declaration will be communicated
to the statutory auditor of the Company and inserted in the annual report 2019 in accordance with the article
7:96 of the BCAC. Margo Roberts left the meeting room and the Board unanimously approved the allocation
of 10,000 warrants to Margo Roberts. Margo Roberts then came back in the meeting room.”

Excerpt from the minutes of the Board meeting of March 2, 2020:

“Article 7:96 of the Belgian Company and Associations Code (BCAC) provides that “If a director has, directly
or indirectly, a conflicting financial interest in a decision or operation to be decided by the board of directors,
he has to inform the other directors before the deliberation of the board of directors. His declaration, including
the reasons for his conflicting financial interest, must be recorded in the minutes of the board meeting that
will take [...] the decision. The auditor must also be informed. (…) In listed companies, the concerned
directors cannot deliberate nor vote on the concerned decisions”.

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2020 Annual Report

Filippo Petti informed the other directors that he is in a position of conflict of interest with respect to the
decision proposed under point 4 of the agenda, dealing with his performance review, the granting of a merit
increase, a bonus and warrants.

The Chairman thanks Filippo Petti for his declaration, it will be mentioned in the management report and
communicated to the Statutory Auditor of the Company in accordance with Article 7:96 of the BCAC.

(…)

Upon recommendation of the Remuneration and Nomination Committee, the Board approved the
performance review, the merit increase, the bonus and the allocation of warrants to the CEO”.

Excerpt from the minutes of the Board meeting of March 24, 2020:

“The Board discussed the allocation of warrants to Board members:

- Michel Lussier (10,000 warrants);

- Hilde Windels (10,000 warrants);

Serge Goblet (10,000 warrants);

- Chris Buyse (10,000 warrants);

- Rudy Dekeyser (10,000 warrants);

Filippo Petti (30,000 warrants);

- Maria Koehler (10,000 warrants).

The warrants will be offered under the 2019 Warrants Plan. Each warrant will give the right to its owner to
acquire one new share of the Company. The exercise price will be equal to the fair market value of the
Company’s shares at the time of the offer, this value corresponding to the closing price of the share on the
day before the date of the offer.

The article 7:96 of the BCAC provides that “if a director has, directly or indirectly, a conflicting financial
interest in a decision or operation to be decided by the board of directors, he has to inform the other directors
before the deliberation of the board of directors. His declaration, including the reasons for his conflicting
financial interest, must be recorded in the minutes of the board meeting that will take [...] the decision. The
auditor must also be informed. The concerned directors cannot deliberate nor vote on the concerned
decisions”.

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2020 Annual Report

to the statutory auditor of the Company and inserted in the annual report 2019 in accordance with the article
7:96 of the BCAC. Hilde Windels left the meeting room and the Board unanimously approved the allocation
of 10,000 warrants to Hilde Windels. Hilde Windels then came back in the meeting room.

Filippo Petti informed the other directors that she has a conflicting financial interest in the decision proposed.
The Chairman thanked Filippo Petti for her declaration. This declaration will be communicated to the
statutory auditor of the Company and inserted in the annual report 2019 in accordance with the article 7:96
of the BCAC. Filippo Petti left the meeting room and the Board unanimously approved the allocation of
30,000 warrants to Filippo Petti. Filippo Petti then came back in the meeting room.

Maria Koehler informed the other directors that she has a conflicting financial interest in the decision
proposed. The Chairman thanked Maria Koehler for her declaration. This declaration will be communicated
to the statutory auditor of the Company and inserted in the annual report 2019 in accordance with the article
7:96 of the BCAC. Maria Koehler left the meeting room and the Board unanimously approved the allocation
of 10,000 warrants to Maria Koehler. Maria Koehler then came back in the meeting room.

The Board of Directors decided also to grant 10,000 warrants to Dominic Piscitelli under the suspensive
condition of his appointment as Board member by the shareholders meeting of May 5, 2020.”

Excerpt from the minutes of the Board meeting of June 25, 2020:

“Based on a recommendation from the Remuneration and Nomination Committee, the Board discussed the
allocation of warrants to Michel Lussier (10,000 warrants).

Excerpt from the minutes of the Board meeting of December 4, 2020:

The article 7:96 of the BCAC (Belgian Company Code of Companies and Associations) provides that “if a
director has, directly or indirectly, a conflicting financial interest in a decision or operation to be decided by
the board of directors, he has to inform the other directors before the deliberation of the board of directors.
His declaration, including the reasons for his conflicting financial interest, must be recorded in the minutes
of the board meeting that will take [...] the decision. The auditor must also be informed. The concerned
directors cannot deliberate nor vote on the concerned decisions”.

Upon recommendation of the Remuneration and Nomination Committee (where Michel Lussier did not take
part to the recommendation):

The Board acknowledged the resignation of Michel Lussier as Board member with effective date
as of December 4, 2020;

The Board expressly waived the condition of presence imposed by the warrants plans of the
Company in favor of Mr. Lussier, meaning that Mr. Lussier will be allowed to exercise all his
warrants during the exercise periods provided by the plans, even if he stopped his professional

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2020 Annual Report

activities in favor of the Company on 4 December 2020, and even if all his warrants have not been
vested;

The Board decided to co-opt Mel Management SRL, Rue de Combreuil, 3, B-7190 Ecaussinnes,
TVA BE 0681.994.330, represented by Michel Lussier, in replacement of Michel Lussier as director
of the Company effective as of December 4, 2020. The appointment of Mel Management SRL will
have to be confirmed by the next shareholders meeting;

The Board decided to appoint Mel Management SRL as Chairman of the Board effective as of
December 4, 2020.

Mr. Lussier comes back to the videoconference.

(…)

The Board discussed the allocation of warrants to Board members:

- Michel Lussier (10,000 warrants);

- Hilde Windels (10,000 warrants);

- Maria Koehler (10,000 warrants);

Serge Goblet (10,000 warrants);

- Dominic Piscitelli (10,000 warrants);

- Chris Buyse (10,000 warrants);

- Rudy Dekeyser (10,000 warrants).

The warrants will be allocated under the Warrants Plan 2020 and are therefore subject to the issuance of
the new warrants as described above. Each warrant will give the right to its owner to acquire one new share
of the Company. The exercise price will be equal to the fair market value of the Company’s shares at the
time of the offer, this value corresponding to the closing price of the share on the day before the date of the
offer.

Michel Lussier informed the other directors that he has a conflicting financial interest in the decision
proposed. This declaration will be communicated to the statutory auditor of the Company and inserted in the
annual report 2020 in accordance with the article 7:96 of the BCAC. Michel Lussier left the videoconference
and the Board unanimously approved the allocation of 10,000 warrants to Michel Lussier. Michel Lussier
then came back to the videoconference.

Serge Goblet informed the other directors that he has a conflicting financial interest in the decision proposed.
This declaration will be communicated to the statutory auditor of the Company and inserted in the annual
report 2020 in accordance with the article 7:96 of the BCAC. Serge Goblet left the videoconference and the
Board unanimously approved the allocation of 10,000 warrants to Serge Goblet. Serge Goblet then came
back to the videoconference.

Chris Buyse informed the other directors that he has a conflicting financial interest in the decision proposed.
This declaration will be communicated to the statutory auditor of the Company and inserted in the annual
report 2020 in accordance with the article 7:96 of the BCAC. Chris Buyse left the videoconference and the
Board unanimously approved the allocation of 10,000 warrants to Chris Buyse. Chris Buyse then came back
to the videoconference.

Rudy Dekeyser informed the other directors that he has a conflicting financial interest in the decision
proposed. This declaration will be communicated to the statutory auditor of the Company and inserted in the
annual report 2020 in accordance with the article 7:96 of the BCAC. Rudy Dekeyser left the videoconference
and the Board unanimously approved the allocation of 10,000 warrants to Rudy Dekeyser. Rudy Dekeyser
then came back to the videoconference.

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2020 Annual Report

Maria Koehler informed the other directors that she has a conflicting financial interest in the decision
proposed. This declaration will be communicated to the statutory auditor of the Company and inserted in the
annual report 2020 in accordance with the article 7:96 of the BCAC. Maria Koehler left the videoconference
and the Board unanimously approved the allocation of 10,000 warrants to Maria Koehler. Maria Koehler then
came back to the videoconference.

Hilde Windels informed the other directors that she has a conflicting financial interest in the decision
proposed. This declaration will be communicated to the statutory auditor of the Company and inserted in the
annual report 2020 in accordance with the article 7:96 of the BCAC. Hilde Windels left the videoconference
and the Board unanimously approved the allocation of 10,000 warrants to Hilde Windels. Hilde Windels then
came back to the videoconference.

Dominic Piscitelli informed the other directors that he has a conflicting financial interest in the decision
proposed. This declaration will be communicated to the statutory auditor of the Company and inserted in the
annual report 2020 in accordance with the article 7:96 of the BCAC. Dominic Piscitelli left the
videoconference and the Board unanimously approved the allocation of 10,000 warrants to Dominic Piscitelli.
Dominic Piscitelli then came back to the videoconference.”

Excerpt from the minutes of the Board meeting of December 17, 2020:

“The Board discussed the allocation of 10,000 warrants to Marina Udier Blagovic.

The warrants will be allocated under the Warrants Plan 2020. Each warrant will give the right to its owner to
acquire one new share of the Company. The exercise price will be equal to the fair market value of the
Company’s shares at the time of the offer, this value corresponding to the closing price of the share on the
day before the date of the offer.

Marina Udier Blagovic informed the other directors that she has a conflicting financial interest in the decision
proposed. This declaration will be communicated to the statutory auditor of the Company and inserted in the
annual report 2020 in accordance with the article 7:96 of the BCAC. Marina Udier Blagovic left the
videoconference and the Board unanimously approved the allocation of 10,000 warrants to Marina Udier
Blagovic. Marina Udier Blagovic then came back to the videoconference.“

2.4.4. Related Party Transactions

To date, no related party transaction involving the Company’s Directors, or the members of the Executive
Committee has been disclosed to the Company.

2.4.5. Transactions with affiliates

The Article 7:97 of the CCA provides for a special procedure that applies to intra-group or related party
transactions with affiliates. The procedure will apply to decisions or transactions between the Company and
affiliates of the Company that are not a subsidiary of the Company. It will also apply to decisions or
transactions between any of the Company’s subsidiaries and such subsidiaries’ affiliates that are not a
subsidiary of the Company.

Prior to any such decision or transaction, the Board of Directors of the Company must appoint a special
committee consisting of three independent directors, assisted by one or more independent experts. This
committee provides the Board of Directors with a written report giving the motives for the decision of the
envisaged operation, addressing at least the following elements: the nature of the decision or the operation,
a description and an estimation of the equity consequences, a description of the eventual other
consequences, the advantages and inconvenient resulting therefrom for the Company, as the case maybe.
The committee puts the proposed decision or operation in the context of the strategy of the Company and

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2020 Annual Report

determines if it causes any prejudice to the Company, if it is compensated by other elements of that strategy,
or if it is manifestly abusive. The remarks of the expert are integrated in the opinion of the committee.

The Board of Directors must then take a decision, taking into account the opinion of the committee. Any
deviation from the committee’s advice must be explained. Directors who have a conflict of interest are not
entitled to participate in the deliberation and vote. The committee’s advice and the decision of the Board of
Directors must be communicated to the Company’s Statutory Auditor, who must render a separate opinion.
The conclusion of the committee, an excerpt from the minutes of the Board of Directors and the opinion by
the Statutory Auditor must be included in the (statutory) annual report of the Board of Directors.

The procedure does not apply to decisions or transactions in the ordinary course of business at customary
market conditions, and transactions or decisions with a value of less than 1% of the consolidated net assets
of the Company.

2.4.6. Code of Business Conduct and Ethics

2018.

In 2015, the Company adopted a Code of Business Conduct and Ethics, or the Code of Conduct, applicable
to all of its employees, members of its Executive Committee and directors. It has been updated on October
5,
at
https://www.celyad.com/en/investors/corporate-governance. The Audit Committee is responsible for
overseeing the Code of Conduct and is required to approve any waivers of the Code of Conduct for
employees, members of its Executive Committee and directors.

the Company’s website

of Conduct

The Code

available

2.4.7. Market abuse regulations

On June 17, 2013, the Board of the Company defined specific rules to prevent the illegal use of inside
information by board members, shareholders, managers and employees or the appearance of such use
(“the Market Abuse Policy”). The Market Abuse Policy is regularly reviewed by the Board of Directors and is
available on the Company’s website.

The Policy applies to all holders of inside information. An insider can be given access to inside information
within the scope of the normal performance of his or her duties. The insider has the strict obligation to treat
this information confidentially and is not allowed to trade financial instruments of the Company to which this
inside information relates.

In accordance with art 25bis §1 of the law of August 2, 2002 and the EU Regulation 596/2014 of April 16,
2014 on market abuse (the “MAR”), the Company has established a list of persons in the Company who,
based on an employment or service agreement, have contracted with the Company and have during the
course of their duties access to inside information directly or indirectly. This list is updated regularly and
remains at the disposal of the FSMA for a period of 5 years.

2.5

Corporate Governance Code

The Company's Board of Directors complies with the principles of the CCG. However, the Company deviates
from the following principles:

• Remuneration in company’s shares (principle 7.6): as per applicable laws, the Company does not
meet the legal requirements to proceed with a shares buy-back and, consequently does not own
treasury shares, and therefore, is not able to grant a portion of non-executive directors’
remuneration in company’s shares;

• No grant of stock options to independent directors (principle 7.6): since the Company is not able to
offer treasury shares, independent directors may be allocated a fixed number of subscription rights
(warrants). This allocation of warrants is not related to any performance criteria. As further detailed
in the Company’s Remuneration Policy, this allocation is aimed at attracting highly skilled non-
executive directors in a highly dynamic and competitive market;

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• Absence of minimum detention of shares (principle 7.9): at the date of this Report, the Company
has not fixed any minimum threshold for the detention of shares by the members of the Executive
Committee. However, the members of the Executive Committee hold subscription rights (warrants)
on the Company’s shares as described in the Remuneration Report;

• No clawback (principle 7.12): at the date of this report, the Company has not adopted any clawback

provision to claim variable remuneration from the Executive Committee members.

The Company has not adopted a diversity policy. The talents market is particularly tense and dynamic in the
biopharmaceutical industry and developing a diversity policy adjusted to this fast-changing environment was
not deemed to be the best instrument to meet the Company’s challenges in human resources. Over the past
years, the Company has successfully achieved a broad degree of diversity from a gender, citizenship,
expertise and educational background perspective at the Company’s Board of Directors, Executive
Committee, Management and staff levels. The Company has attracted talents from various countries which
reflects the Company’s international footprint to support the Company’s strategy.

At the Board of Directors, the Company complies with Belgian laws on gender with at least one third of the
members who are from a different gender. One Board member is Canadian, three are Americans, one is
Americano-Croatian, and four are Belgians.

At the Executive Committee, two members are Americans, one is English, and three are from Belgium. The
Company will pursue its efforts to increase the female presence at the Executive Committee.

The Management team is composed of 18 members, where the Company counts 38,9% (7) of female and
61,9% (11) of male. Those managers or directors have different nationalities (from Belgium, Greece,
Mexico, and the US).

Regarding the employees not included above, the Company records 56% female employees and 44% male
employees.

In accordance with the CCG, the Board of Directors of the Company will review its Charter from time to time
and make such changes as it deems necessary and appropriate. The Charter, together with the Company’s
articles of association, is available on the Company's website (www.celyad.com) and can be obtained free
of charge at the registered office of the Company.

2.6

Proposed New Remuneration Policy

2.6.1.

Introduction

This proposed remuneration policy (the “Policy”) is designed to bring the current remuneration policy in line
with the requirements introduced by the Directive (EU) 2017/828 amending Directive 2007/36/EC as regards
the encouragement of long-term shareholder engagement.

This proposed Policy is established to be competitive in the (employment) markets in which the Company
operates, mainly the United States and Europe. The approach taken by the Company is to apply a
remuneration policy which is overall balanced and allows tailoring individual remuneration packages to
ensure a fair and competitive remuneration for the (job)market in which our key persons operate. The
Company believe this adds to the long-term value creation for all our stakeholders.

As a clinical-stage biotechnology company, the Company aims at achieving a strategy involving discovering,
developing,
(potential) product candidates. Successful
implementation of this strategy requires an intense long-term effort of highly qualified persons. As such, this
Policy is aimed at attracting and retaining highly qualified persons for executive and non-executive positions

testing and eventually commercializing

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on our Board of Directors as well as executive management and to motivate them to contribute to our long-
term goals and strategy.

2.6.2. Remuneration of the Board of Directors

2.6.2.1

Principles

The Policy is aimed at attracting non-executive directors with the most relevant skills, knowledge and
expertise in a highly competitive and quickly evolving industry. The Policy will help the Company attract and
retain a diverse and international team of non-executive directors, striking a balance between scientific,
financial, operational and strategic contributions, promoting an open, fair, sustainable and equitable
company culture, driven by success.

The remuneration of the non-executive Directors is determined by the Shareholders’ Meeting upon proposal
of the Board of Directors based on a recommendation from the Nomination and Remuneration Committee.
The Nomination and Remuneration Committee benchmarks non-executive Directors' compensation against
peer companies to ensure that it remains fair and competitive. The Directors’ remunerations are therefore
market driven.

2.6.2.2

Components

The Policy is based on the following fixed components:

(a) A fixed fee, consisting of a base fee and an additional fee if the non-executive director is the
Chairman of the Board or any of its Committees or if the non-executive Director is a member of a
Board Committee ;

(b) Warrants.

The remuneration of non-executive Directors does not contain any variable part and is not based on any
performance conditions.

As the Company has no distributable reserves, it does not meet the legal requirements to proceed to a
shares buy-back, therefore does not own treasury shares and is then currently unable to grant shares to the
non-executive directors as part of their remuneration. This is a deviation from principle 7.6 of the CCG.

Fixed fee

The fixed fee of non-executive directors consists of:

(a) A fixed annual fee (retainer) of 18,000 EUR (36,000 EUR for the Chairman of the Board), including

the four annual, ordinary Board meetings;

(b) A supplemental fixed fee of 3,000 EUR (5,000 EUR for the Chairman of the Board) for the
participation to extraordinary Board meetings of more than 2 hours, and 1,500 EUR (2,500 for the
Chairman of the Board) for the participation to extraordinary Board meetings of less than 2 hours;

the Board of Directors, increased by 5,000 EUR for the Chairmanship of such Committee;

(d) An extraordinary fee of €3,000 for specific assignments to a non-executive director, on request of

the CEO and with prior approval of the Board of Directors.

The Board fees are paid in quarterly installments at the end of each subsequent calendar quarter.

The Company will also reimburse out-of-pocket expenses (such as, without limitation, travel, meals and
lodging expenses) incurred by directors in direct relation with their Board duties.

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Warrants

In deviation from the principle 7.6 of the CCG, the Board has determined that the grant of warrants to non-
executive or independent directors is in the best interest of the Company to attract and retain highly skilled
directors in a very dynamic and competitive environment. The grant of warrants is a commonly used
remuneration instrument in the sector in which the Company operates, in particular in the United States
where the Company is active. In addition, the Company is not entitled to own treasury shares (see above)
and is currently unable to offer any remuneration in shares. Finally, the grant of warrants provides an
attractive additional remuneration without impacting the Company’s cash. Without this possibility, the
Company would be subject to a considerable disadvantage compared to competitors offering warrants to
their non-executive directors.

The grant of warrants is not linked or subject to any performance conditions and consequently, does not
qualify as variable remuneration.

The warrants are usually issued by decision of the Board of Directors within the framework of the authorized
capital (but can also be issued by decision of the Shareholders’ Meeting). The warrants are then offered to
non-executive directors by decision of the Board of Directors upon recommendation of the Nomination and
Remuneration Committee. Conflict of interest procedure applies to such decision of the Board. Each warrant
gives its holder the right (but not the obligation) to subscribe, under the exercise conditions, during the
exercise periods and against payment of the exercise price, to one Company’s share.

Company’s warrants are granted for a limited term. This term is determined by the Board of Directors, in
compliance with the CCA, with a maximum of ten years. The warrants have a vesting period of minimum
three (3) years and may be exercised to the extent vested. Shares obtained through the exercise of warrants
are freely transferrable.

The exercise price is equal to the fair market value of the Company's shares at the time of the offer. This
value is determined by the Board of Directors and corresponds to either the closing price of the Company's
share on the day before the date of the offer or the average of the thirty (30) calendar days preceding the
date of the offer of the closing price of the Company's Share.

The warrants can be immediately exercised by the beneficiaries in the following situations:

(a) Share capital increase in cash without suspension of the preferential rights of the existing

shareholders;

(b) Takeover bid on the shares of the company as of the announcement of the public offer by the fsma;

(d) Conclusion of a “strategic partnership” with an important industrial actor, active in the life-science

sector, and if the “strategic partnership” is qualified as such by the board of directors.

For further details on the terms and conditions of our warrants plans, we refer to the plans available on our
website and as may be amended from time to time.

2.6.2.3

Contract terms and conditions

The Directors' mandate may be terminated "ad nutum" (at any time) without any form of compensation.
There is no specific agreement between the Company and non-executive directors which waives or restrains
the right of the Company to terminate “ad nutum” (at any time) the mandates of the directors.

The Company intends to sign with its directors an engagement letter consistent with the terms of this Policy
following its approval by the shareholders meeting.

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2.6.3. Remuneration of the Executive Committee

2.6.3.1

Principles

The Company’s remuneration Policy for the members of its Executive Committee is aimed at attracting,
motivating, and retaining top talents in a very competitive and international environment to deliver our
strategic and operational objectives. The Company’s aim is therefore to be competitive against peer
companies in its markets, to incentivize performance and not to discriminate on any manner.

The remuneration Policy is driven by the employees’ and the Company’s performance. The remunerations
are based on market benchmarks.

The remuneration of the members of the Executive Committee is determined by the Board of Directors based
on recommendations made by the Nomination and Remuneration Committee, further to a recommendation
made by the CEO to the Nomination and Remuneration Committee (except where his own remuneration is
concerned).

The Nomination and Remuneration Committee takes into consideration the employment conditions of
employees and ensures that the remuneration of the Executive Committee remains proportionate to the
remuneration of the employees, taking into consideration the degree of responsibility of the Executive
Committee Both the members of Executive Committee and employees’ remunerations are market driven.
For employees, the Company’s remuneration is based on an independent benchmark done by a reputed
international firm. The benchmark includes data points from biotech, medium and large pharmaceutical
companies and is performed on an annual basis.

2.6.3.2

Components

The remuneration Policy is based on the following fixed and variable components:

(a) Base fixed remuneration ;

(b) Variable annual cash remuneration;

(d) Fringe benefits; and

(e) Warrants.

The structure of the remuneration of Executive Committee members consists in an appropriate balance
between fixed and variable remuneration. The nature and magnitude of the variable remuneration is
structured to align the interests of the Executive Committee members with the sustainable value-creation
objectives of the Company. Pension and other fringe benefits complete the remuneration package in line
with market practice. The actual relative weights of the components of the remuneration package depends
on the achievement of the performance criteria, the role and the location of each Executive Committee
member as specified below, and aims at ensuring remuneration packages that are competitive and in line
with market practice.

Base Fixed Remuneration

Each member of the Executive Committee is entitled to a base fixed remuneration designed to fit
responsibilities, relevant experience, and competences, in line with market rates for equivalent positions.

Variable Annual Cash Remuneration

The base amount of the variable remuneration is based on the Company’s performance and the individual
performance of the Executive Committee members measured against the individual and Company’s
objectives.

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For the CEO, the variable remuneration is based on 75% of the Company performance and 25% of individual
performance. For the other members of the Executive Committee, the variable remuneration is based on
50% of Company performance and 50% of individual performance.

The variable compensation represents 30% of the fixed compensation at target for non-US members, 35%
to 40% of the fixed compensation at target for US-based members and 45% of the fixed compensation at
target for the CEO. Those target percentages may be multiplied by a factor from 0% to 200%, depending on
the individual performance.

The Variable Annual Cash Remuneration is therefore subject to an absolute cap of 200% of the fixed
compensation, in line with principle 7.10 of the CCG.

The Company objectives are determined annually by the Board of Directors, ultimately at the start of the
period in which the incentive may be earned.

The individual performance of each member of the Executive Committee is determined by an annual
assessment between the individual and the CEO (or, for the CEO, between the CEO and the Chairman of
the Board). It consists of SMART (Specific, Measurable, Actionable, Realistic, Time driven) and challenging
objectives. Those individual objectives are aligned and consistent with the Company’s strategic objectives.
The performance assessment leads to a score that will define the overall individual performance and is
determined by the Board of Directors upon recommendation of the Nomination and Remuneration
Committee.

The Company’s objectives are aligned with the Mission and the Vison of the Company and contribute to the
Company’s strategy, the enhancing of patients’ well-being and life and shareholders value creation, while
maintaining a solid cash position. The Company’s objectives are based on a combination of various
elements:

• Clinical Product Testing and Development

- Clinical trial activity (operational and medical)

- Regulatory

- Manufacturing

Translational Analysis

• Pre-Clinical Product Development

- Clinical (Protocol Development)

- Regulatory (IND/CTA submission)

- Manufacturing (Clinical Process Development)

- Quality Assessment and Quality Control (CMC)

• R&D Engine

- Pre-clinical Product and Platform Development

Target identification and validation

Intellectual property creation

• External Visibility

- Peer reviewed and corporate publications

Invited presentations

Investors relations/media

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2020 Annual Report

• Company funding, cash runway and the efficient use of financial and non-financial resources against

budget

• External partnership development and collaboration

The Company’s and the individual’s performances are assessed in the first quarter of each calendar year by
the Board of Directors. The variable compensation is paid to the members of the Executive Committee in
the first quarter of the following year upon decision of the Board of Directors.

In deviation from principle 7.12 of the CCG, there is no possibility for the Company to reclaim the variable
remuneration.

Pension

Each member of the Executive Committee who is an employee of the Company is entitled to the participation
to pension plans with defined contributions.

For Belgium-based members of the Executive Committee, defined contributions pensions are paid in a
Group Insurance plan which includes also a health insurance and a life insurance.

US-based members of the Executive Committee participate to an employer-sponsored defined-contribution
pension account defined in subsection 401(k) of the Internal Revenue Code disability insurance and life
insurance.

The members of the Executive Committee who are engaged through services or consulting agreements are
not entitled to a group insurance plan, or to an employer-sponsored defined-contribution pension account
defined in subsection 401(k) of the US Internal Revenue Code, or to a health insurance plan.

Fringe benefits

Each member of the Executive Committee is entitled to several fringe benefits which may include:

(a) A company car;

(b) A lump-sum expense allowance;

relocation allowances, schooling allowances;

(d) The reimbursement of other expenses related to their responsibilities in the company.

On an exceptional basis and depending on the employment market conditions, a sign on bonus may be
granted when a member of the Executive Committee is hired. The sign on bonus is approved by the Board
of Directors based on recommendations made by the Nomination and Remuneration Committee

Warrants

The Company may from time to time offer to the members of the Executive Committee to participate to a
warrants plan at the discretion of the Board of Directors. The warrants are usually issued by decision of the
Board of Directors within the framework of the authorized capital (but could also be issued by decision of the
Shareholders’ Meeting). The warrants are then offered to each member of the Executive Committee by
decision of the Board of Directors upon recommendation of the Nomination and Remuneration Committee.
Each warrant gives its holder the right (but not the obligation) to subscribe, under the exercise conditions,
during the exercise periods and against payment of the exercise price, to one Company’s share.

The number of warrants offered to each of the beneficiaries is freely determined by the Board of Directors,
acting upon the recommendation of the Nomination and Remuneration Committee. The number of warrants

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2020 Annual Report

is based on a benchmarking exercise regularly performed to ensure that the grants are competitive and in
line with market practice.

When the offer of warrants is based on the individual performance of the member of the Executive
Committee, the performance scores range from 1 (underperforming) to 5 (exceeding performance):

(a) If the performance score is 1, the number of warrants is zero;

(b) If the performance score is 2, the number of warrants is multiplied by a factor between 50% to 90%;

(d) If the performance score is 4, the number of warrants is multiplied by a factor between 100% and

125%;

(e) If the performance score is 5, the number of warrants is multiplied by a factor between 125% and

150%.

In principle, the performance score is based on an assessment of the individual performance over one year.
Yet, the vesting period of minimum three (3) years applied on the warrants, whose value is notably impacted
by the performance of the Executive Committee, implies that the Company complies with a long term view
for a major portion of the variable remuneration of the members of the Executive Committee.

Under our incentive plans, warrants are granted for a limited term. This term is determined by the Board of
Directors, in compliance with the provisions of the CCA with a maximum of ten years. The warrants have a
vesting period of minimum three (3) years and may be exercised to the extent vested. Shares obtained
through the exercise of warrants are freely transferrable.

The warrants can be immediately exercised by the beneficiaries in the following situations:

(a) Share capital increase in cash without suspension of the preferential rights of the existing

shareholders;

(b) Takeover bid on the shares of the company as of the announcement of the public offer by the fsma;

(d) Conclusion of a “strategic partnership” with an important industrial actor, active in the life-science

sector, and if the “strategic partnership” is qualified as such by the board of directors.

For further details on the terms and conditions of our warrants plans, we refer to the plans available on our
website and as may be amended from time to time.

In deviation from the principle 7.9 of the CCG, the Company has not fixed any minimum threshold for the
detention of shares by the members of the Executive Committee. However, the members of the Executive
Committee hold subscription rights (warrants) on the Company’s shares as described in above in this
Remuneration Policy, enabling them to hold shares in the Company.

2.6.3.3

Contract terms and conditions

The members of the Executive Committee are engaged based on a services agreement or an employment
contract.

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Labour law applies to the contractual arrangements with the members of the Executive Management
engaged on an employment contract.

When the member of the Executive Committee is engaged on a services agreement, it generally provides
for a notice period of six months and for the possibility to terminate the agreement with cause and without
indemnity.

No specific severance clauses are agreed as a rule, except when duly justified after recommendation of the
Nomination and Remuneration Committee.

There is no specific additional individual plan regarding supplementary pension or early retirement schemes
put in place for the members of the Executive Committee.

2.6.4. Deviations from this Policy

The Board has the authority to temporarily deviate from this Policy in case of exceptional circumstances,
primarily those in which deviation is necessary to serve the long-term interests and sustainability of the
company or to guarantee the viability of the company. Should there be a need to deviate from this
remuneration Policy, the CEO will bring substantiated arguments to the Nomination and Remuneration
Committee for recommendations and approval by the Board of Directors. Any deviations from this policy will
be described in the Remuneration report.

2.7

Remuneration report

2.7.1.

Introduction

In 2020, the remuneration of the Board of Directors was based on a fixed remuneration and a fixed grant of
warrants, whereas the remuneration of the Executive Committee members was based on a base fixed
remuneration, a variable annual cash remuneration, fringe benefits and long-term share-based incentives
(warrants).

The variable remuneration of the Executive Committee members was calculated based on the Company
and the individual’s performance. The Company’s performance was measured against the Company’s
objectives, and the Executive Committee members’ performance, against their individual objectives.

The Company’s objectives have been determined by the Board of Directors at the beginning of the year. For
2020, the Board of Directors has decided to establish the Company’s performance at 95%, reflecting the
level of achievement of the Company’s objectives based on the execution of our clinical programs and the
external recognition of our technology by external partners, taking also into consideration the challenging
sanitary conditions faced in 2020 with the pandemic of COVID-19.

The individual performance of each member of the Executive Committee has been determined by an
individual assessment between the Executive Committee member and the CEO (or, for the CEO, between
the CEO and the Chairman of the Board). The assessment of the Executive Committee member and the
CEO was reviewed by the Nomination and Remuneration Committee which made a recommendation to the
Board of Directors for final decision. The CEO did not participate to any decision regarding his own individual
performance.

The variable compensation represents 30% of the fixed compensation at target for non-US members, 35%
of the fixed compensation at target for US-based members and 45% of the fixed compensation at target for

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2020 Annual Report

the CEO. Those target percentages may be multiplied by a factor from 0% to 200%, depending on the
individual performance.

Therefore, the following formula has been used to calculate the amount of the variable remuneration:

(Annual compensation/fee x % contractual bonus x % company performance x ratio company performance%
) PLUS (Annual compensation/fee x % contractual bonus x % linked with the individual performance x ratio
Individual performance).

In 2020, the Board of Directors, upon recommendation of the Nomination and Remuneration Committee,
has also decided to offer to the members of the Executive Committee the opportunity to participate to a
warrants plan.

Reference is made to the section 2.5 of this Annual Report regarding the deviations from certain principles
of the CCG relative to the remuneration of the Board of Directors and the Executive Committee.

In the wave of the shareholders’ rights reform, the company complied with the new standardized
remuneration report as presented by the EU Commission currently as a draft (Draft Guidelines on the
standardized presentation of the remuneration report under Directive 2007/36/EC, as amended by Directive
(EU) 2017/828, as regards the encouragement of long-term shareholder engagement).

The Company seeks to improve permanently the quality and transparency of its remuneration to the Board
and to the Executive Committee and to take into account the observations of its shareholders or proxies.

The proposed new remuneration policy and this remuneration report provide for a greater degree of
disclosure and transparency on all the components of the remuneration of the Board and the Executive
Committee, and the link between the remuneration and the performance of the Company.

The total remuneration of the Board of Directors, the CEO and the Executive Committee members is detailed
hereinafter.

2.7.2. Total Remuneration

In this Section, the Total Remuneration Tables are structured as follows:

Table 1 - Total Remuneration (1)

1. Fixed Remuneration

2. Variable Remuneration

Name,
Position (2)

Fixed
Fees

Board
Fees

Others
Benefits
(3)

One Year
Variale
(4)

Multi Year Variable
(5)

3. Extraordinary
items
(6)

4. Pension
Expense
(7)

5. Total
remuneration

6. Proportion of
fixed & Variable
Remuneration
(8)

(1) All components of remuneration are reported in gross amounts

(2) If the officer has not been in service for the entire year of the report, the start date and/or the date of the end of his
contract must be informed

(3) This component includes death and disability benefits, medical expenses and other additional benefits

(4) The amount reported is equal to the monetary value of the variable remuneration acquired during the year reported
(2020)

(5) Benefit in kind on granted warrants – according to the Belgian Act of 26 March 1999.

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2020 Annual Report

(6) Extraordinary items paid in 2020: the grants of warrants are reported under this section, considered as extraordinary
fixed items of the remuneration.

(7) The reported amount contains all contributions that were actually paid by the employer during the year to pension
plans.

(8) Relative share of fixed remuneration = [Fixed remuneration + cost of pension] / [Total remuneration]
Relative share of variable remuneration = [Variable remuneration] / [Total remuneration]

2.7.2.1

Total Remuneration of the Board of Directors

Name, Position
(2)

1. Fixed remuneration

2. Variable
remuneration

3. Extraordinary
items awarded

Table1 - Total remuneration (1)

Base
salary

Board fees Other

benefits
(3)

One year
variable
(4)

Multi-
year
variable
(5)

Lussier Michel

€ 70.000

Buyse Chris

€ 70.000

€ 53.750

R.A.D Life
Sciences
(permanent
representative:
Dekeyser Rudy)

Windels Hilde

€ 55.000

Roberts Margo
Out : 6 Aug-20

€ 10.000

Goblet Serge

€ 40.000

Koelher Maria In:
24-Mar-20

€ 27.500

Piscitelli Dominic
In : 05-May-20

€ 33.750

Udier
In : 17-Dec-20

Marina

€ 5.750

4.
Pension
expense
(7)

in 2020 (6)1

a) BIK on fixed
grants warrants

5.
Total
Remuneration

6. Proportion of
fixed and variable
remuneration (8)

b) Warrants
awarded

€ 7.920

10.000 ('1)

€ 5.373

20.000

€ 5.373

10,000 (1)

(2)

10.000

€ 5.373

10.000 ('1)

20.000

10.000 ('1)

(1)

€ 77.920

Fixe

100%

Variable

€ 75.373

Fixe

100%

Variable

€ 59.123

Fixe

100%

Variable

€ 55.000

Fixe

100%

Variable

€ 10.000

Fixe

100%

Variable

€ 45.373

Fixe

100%

Variable

€ 27.500

Fixe

100%

Variable

€ 33.750

Fixe

100%

Variable

€ 5.750

Fixe

100%

Variable

Grand Total

€ 365.750

€ 24.039

€ 389.789

(1) another grant of 10.000 warrants was awarded in December 2020 with acceptance date in January 2021 and will be
disclosed in 2021

(2) 20.000 warrants were awarded during 2020 but declined by the board member in 2020 and 2021

In 2020, each Director, including non-executive Directors, have been offered fixed grants of 10,000 warrants.
The grants were not related to any performance condition. The reasons for the variation in the number of
warrants awarded (disclosed under b) are specified under footnotes (1) and (2). No taxable benefit in kind
is disclosed under (a) for Directors with tax residence outside of Belgium (who are not in scope for the tax
valuation under Belgian law).

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The details on the warrants (including the amount of warrants granted, vested, and exercised, and the
exercise price, can be found in the Share-Based Remuneration section below:

2.7.2.2

Total remuneration of the CEO

1. Fixed remuneration

2. Variable remuneration

Table1 - Total remuneration (1)

Name,
Position
(2)

Base salary

Board
fees

Other
benefits
(3) '(1)

One year
variable
(4)

Petti
Filippo
-
Executive,
CEO

€ 401 826

€ 42 409

€ 168 415

Multi-year
variable on
warrants
granted
during 2020
(5)
a) Benefit in
kind b)
Number of
warrants
c) Target
value at the
offer date

3.
Extraordinary
items (6)

€ 2 418

60 000
€ 381
000

4.
Pension
expense
(7)

5.
Total
Remuneration

6.
Proportion of
fixed and
variable
remuneration
(8)

€ 12 476

€ 627 544

Variable

27%

Fixe

73%

The multi-year variable consists in the grant of warrants. The target value at the offer date may vary,
depending on the share price.

For the proportion between the fixed and the variable remuneration, the amount of the benefit in kind
according to the Belgian Act of 26 March 1999 is taken into consideration.

2.7.2.3

Total Remuneration of the Executive Committee (excl.-CEO)

Table1 - Total remuneration (1)

1. Fixed remuneration

2. Variable remuneration

Name,
Position
(2)

Executive
Committee
(1)

Base salary

Board
fees

Other
benefits (3)
'(2)

One year
variable
(4)

Multi-year variable
on warrants granted
during 2020 (5)

a) Benefit in kind
b) Number of
warrants
c) Target value at the
offer date

3.
Extraordinary
items (6)

4.
Pension
expense
(7)

5. Total
Remuneration

6. Proportion of
fixed and
variable
remuneration
(8)

€ 1.435.199

€ 86.565

€ 393.527

€ 48.357

160.000

€ 1.963.648

Fixe

77%

Variable

23%

€ 970.400

(1) Three Executive Committee members are legal entities engaged through services agreements with the Company and two Executive Committee members are

natural persons.
(2) Other fringe benefits are attributed to natural persons only, such as pension plan, health insurance, company car, representation allowances.

The table above contains aggregate amounts for the 5 members of the Executive Committee.

The multi-year variable consists in the grant of warrants. The target value at the offer date may vary
depending on the share price.

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2020 Annual Report

For the proportion between the fixed and the variable remuneration, the amount of the benefit in kind
according to the Belgian Act of 26 March 1999 is taken into consideration.

2.7.2.4

Performance of Executives in the reported financial year

The performance criteria, their relative weighting and the actual outcome in 2020 can be summarized as
follows.

The amount of the variable remuneration is based on the Company’s performance and the individual
performance of the executive committee members measured against the individual and Company’s
objectives. For the CEO, the variable remuneration is based on 75% of the Company performance and 25%
of individual performance. For the other members of the Executive Committee, the variable remuneration is
based on 50% of Company performance and 50% of individual performance.

Upon recommendation of the Nomination and Remuneration Committee, the Board of Directors has decided
to grant the following variable remuneration and warrants to the CEO and the members of the Executive
Committee:

Name, position

Performance criteria

Relative
weighting of the
performance
criteria

a) Measured performance

b) Actual award outcome (cash
and warrants)

Company

Clinical Programs

50%

a) 75%

shRNA platform

25%

a) 125%

b) N/A

CEO

5 Members of the Executive committee

Business
Development

Company
performance

Individual
Performance

Company
Performance

Individual
performance

b) N/A

25%

a) 100%

b) N/A

75%

a) 95%

b) 119.996€

25%

a) 115%

b) 48.419€ + 30 000 warrants

50%

a) 95%

b) 194.993€

50%

a) 95% in average

b) 192.246€ and 95.000 warrants

Page 66 | 180

2020 Annual Report

2.7.3. Share-based Remuneration

The Share-Based Remuneration Tables are structured as follows:

Table 2 - remuneration in Warrants

The Main conditions of Warrant Plans

Name of
Director,
position

1.
Specification
of plan

2.
Award
date

3.
Vesting
date

4.
End of
retention
period

5.
Exercice
period

6.
Exercice
price

Opening
Balance
7.
Warrants held
at the
beginning of
the year

Information regarding the reported financial year

During the year (*)

Closing Balance

8.
a) Warrants
awarded
b) Price of the
underlying shares
@ date of the offer
date

9.
a) Warrants exercised
b) Price of the underlying
shares @date of
acquisition
c) Pricer @ Exercice price
d) Added value @date of
acquisition

10.
Warrants awarded
and unexercised

2.7.3.1

Board of Directors

In deviation from the principle 7.6 of the CCG, the Board has determined that the grant of warrants to non-
executive or independent directors is in the best interest of the Company to attract and retain highly skilled
directors in a very dynamic and competitive environment. The grant of warrants is a commonly used
remuneration instrument in the sector in which the Company operates, in particular in the United States
where the Company is active. In addition, the Company is not entitled to own treasury shares and is currently
unable to offer any remuneration in shares. Finally, the grant of warrants provides an attractive additional
remuneration without impacting the Company’s cash. Without this possibility, the Company would be subject
to a considerable disadvantage compared to competitors offering warrants to their non-executive directors.

The grant of warrants is not linked or subject to any performance conditions and consequently, does not
qualify as variable remuneration.

Table 2 - Remuneration in warrants

Name of
Director,
position

Michel
Lussier,
Chairman

The main conditions of warrant plans

28/07/2020

28/07/2023 N/A

24/10/2019

24/10/2022

N/A

22/01/2019

22/01/2022 N/A

02/08/2017

02/08/2020

N/A

06/11/2015

06/11/2018 N/A

01/01/24-
31/12/25

01/01/23-
31/12/24

01/01/21-
31/07/22

01/01/19-
05/11/20

WP
2019

WP
2018

WP
2017

WP
2015

€ 8,80

€ 8,16

10.000

€ 22,04

10.000

€ 32,26

10.000

€ 34,65

10.000

Total:

40.000

Information regarding the reported financial year

Opening

During the year (*)

Closing

10.

10.000

40.000

10.000

88.000

10.000

88.000

(*) During the year, no warrants were exercised but 10,000 warrants were forfeited in accordance with the warrant plan 2015

Page 67 | 180

2020 Annual Report

Name of
Director,
position

Chris
Buyse,
Board
Member

Table 2 - Remuneration in warrants

The main conditions of warrant plans

Information regarding the reported financial year

Opening

During the year (*)

Closing

WP
2020

WP
2019

WP
2018

WP
2017

WP
2015

11/12/2020

24/03/2020

11/12/2023 N/A

24/03/2023 N/A

24/10/2019

24/10/2022

N/A

22/01/2019

22/01/2022 N/A

02/08/2017

02/08/2020

N/A

06/11/2015

06/11/2018 N/A

01/01/24-
31/12/27

01/01/24-
31/12/25

01/01/23-
31/12/24

01/01/21-
31/07/22

01/01/19-
05/11/20

€ 6,73

€ 5,97

10.000

€ 8,16

€ 22,04

10.000

€ 32,26

10.000

€ 34,65

10.000

67.300

10.000

59.700

20.000

Total:

40.000

127.000

10.

10.000

50.000

(*) During the year, no warrants were exercised but 10,000 warrants were forfeited in accordance with the warrant plan 2015

Table 2 - Remuneration in warrants

Information regarding the reported financial year

Opening

During the year (*)

Closing

Name of
Director,
position

Rudy De
Keyser,
Board
Member

The main conditions of warrant plans

24/03/2020

24/03/2023 N/A

24/10/2019

24/10/2022

N/A

22/01/2019

22/01/2022 N/A

02/08/2017

02/08/2020

N/A

06/11/2015

06/11/2018 N/A

01/01/24-
31/12/25

01/01/23-
31/12/24

01/01/21-
31/07/22

01/01/19-
05/11/20

WP
2019

WP
2018

WP
2017

WP
2015

€ 5,97

€ 8,16

10.000

€ 22,04

10.000

€ 32,26

10.000

€ 34,65

10.000

Total:

40.000

10.

10.000

40.000

10.000

59.700

10.000

59.700

(*) During the year no warrants were exercised but 10.000 warrants were forfeited in accordance with the warrant plan 2015

Name of
Director,
position

Serge
Goblet,
Board
Member

Table 2 - Remuneration in warrants

The main conditions of warrant plans

Information regarding the reported financial year

Opening

During the year (*)

Closing

WP
2019

WP
2018

24/03/2020

24/03/2023 N/A

24/10/2019

24/10/2022

N/A

22/01/2019

22/01/2022 N/A

01/01/24-
31/12/25

01/01/23-
31/12/24

€ 5,97

€ 8,16

10.000

€ 22,04

10.000

02/08/2017

02/08/2020 N/A

€ 32,26

10.000

59.700

10.

10.000

Page 68 | 180

WP
2017

01/01/21-
31/07/22

Total:

30.000

2020 Annual Report

10.000

59.700

40.000

(*) During the year, no warrants were exercised and no warrants expired in accordance with the warrant plan

Name of
Director,
position

Hilde
Windels,
Board
Member

WP
2019

WP
2018

Table 2 - Remuneration in warrants

The main conditions of warrant plans

Information regarding the reported financial year

Opening

During the year (*)

Closing

10.

24/10/2019

24/10/2022 N/A

26/10/2018

26/10/2021

N/A

01/01/23-
31/12/24

01/01/22-
31/12/23

€ 8,16

10.000

€ 22,04

10.000

Total:

20.000

10.000

20.000

(*) During the year, no warrants were exercised and no warrants expired in accordance with the warrant plan

Table 2 - Remuneration in warrants

Name of
Director,
position

WP
2020

The main conditions of warrant plans

11/12/2020

11/12/2023 N/A

01/01/24-
31/12/27

01/01/24-
31/12/25

€ 6,73

€ 5,97

24/03/2020

WP
2019

Maria
Koehler,
Board
Member
In : Mar-
20

24/03/2023 N/A

Total:

Information regarding the reported financial year

Opening

During the year (*)

Closing

10.000

67.300

10.000

59.700

20.000

127.000

10.

10.000

20.000

(*) During the year, no warrants were exercised and no warrants expired in accordance with the warrant plan

Table 2 - Remuneration in warrants

The main conditions of warrant plans

Information regarding the reported financial year

Opening

During the year (*)

Closing

Name of
Director,
position

WP
2019

20/05/2020

20/05/2023 N/A

01/01/24-
31/12/25

€ 7,93

Dominic
Piscitelli,
Board
Member
In : May-
20

Total:

10.000

79.300

10.000

79.300

10.

10.000

(*) During the year, no warrants were exercised and no warrants expired in accordance with the warrant plan

NB: Filippo Petti is not remunerated as Executive Director

Page 69 | 180

2020 Annual Report

2.7.3.2

Board of Directors – former members

Table 2 - Remuneration in warrants

Information regarding the reported financial year

Opening

During the year (*)

Closing

Name of
Director,
position

Margo
Roberts,
Board
Member
(01/08/18-
06/05/19)

WP
2019

WP
2018

The main conditions of warrant plans

10/02/2020

22/01/2019

10/02/2023 N/A

22/01/2022 N/A

26/10/2018

26/10/2021

N/A

01/01/24-
31/12/25

01/01/23-
31/12/24

01/01/22-
31/12/23

€ 9,84

€ 22,04

10.000

€ 22,04

10.000

Total:

20.000

10.000

98.400

10.000

98.400

10.

10.000

30.000

(*) During the year, no warrants were exercised and no warrants expired in accordance with the warrant plan

Name of
Director,
position

Roychowdhury
Debasish,
Board Member
(21/08/15-
06/05/19)

WP
2018

WP
2017

WP
2015

Table 2 - Remuneration in warrants

The main conditions of warrant plans

Information regarding the reported financial year

Opening

During the year (*)

Closing

10.

22/01/2019

22/01/2022 N/A

20/07/2017

20/07/2020

N/A

06/11/2015

06/11/2018 N/A

01/01/23-
31/12/24

01/01/21-
31/07/22

01/01/19-
05/11/20

€ 22,04

10.000

€ 32,26

10.000

€ 34,65

10.000

Total:

30.000

10.000

20.000

(*) During the year, no warrants were exercised but 10,000 warrants were forfeited in accordance with the warrant plan 2015

Table 2 - Remuneration in warrants

The main conditions of warrant plans

Information regarding the reported financial year

Opening

During the year (*)

Closing

10.

Name of
Director,
position

Hanspeter
Spek,
Board
Member
(05/05/14-
07/05/18)

WP
2017

WP
2015

20/07/2017

20/07/2020

N/A

06/11/2015

06/11/2018 N/A

01/01/21-
31/07/22

01/01/19-
05/11/20

€ 32,26

10.000

€ 34,65

10.000

Total:

20.000

10.000

(*) During the year, no warrants were exercised but 10,000 warrants were forfeited in accordance with the warrant plan 2015

2.7.3.3

Executive Committee

Page 70 | 180

2020 Annual Report

Name of
Director,
position

Petti
Filippo
Executive
Director,
CEO and
CFO

WP
2020

WP
2019

WP
2019
WP
2018
WP
2018
WP
2018

Table 2 - Remuneration in warrants

The main conditions of warrant plans

Information regarding the reported financial year

Opening

During the year (*)

Closing

11/12/2020

11/12/2023

N/A

1/01/24-
31/12/27

€ 6,73

24/03/2020

24/03/2023

N/A

1/01/24-
31/12/25

€ 5,97

30.000

201.900

30.000

179.100

24/10/2019

24/10/2022

N/A

19/09/2019

19/09/2022

N/A

22/01/2019

22/01/2022

N/A

26/10/2018

26/10/2021

N/A

1/01/23-
31/12/24
1/01/23-
31/12/24
1/01/23-
31/12/24
1/01/22-
31/12/23

€ 8,16

30.000

€ 9,36

20.000

€ 18,82

25.000

€ 21,16

20.000

Total:

95.000

60.000

381.000

10.

30.000

20.000

25.000

20.000

155.000

(*) During the year, no warrants were exercised and no warrants expired in accordance with the warrant plan

Table 2 - Remuneration in warrants

Information regarding the reported financial year

Opening

During the year (*)

Closing

Name of
Director,
position

David
Gilham,
Chief
Scientific
Officer

The main conditions of warrant plans

24/03/2020

24/03/2023 N/A

24/10/2019

24/10/2022

N/A

22/01/2019

22/01/2022 N/A

20/07/2017

20/07/2020

N/A

02/11/2016

02/11/2019 N/A

01/01/24-
31/12/25

01/01/23-
31/12/24

01/01/21-
31/07/22

01/01/20-
05/11/25

WP
2019

WP
2018

WP
2017

WP
2015

€ 5,97

€ 8,16

20.000

€ 18,82

25.000

€ 31,34

6.000

€ 15,90

10.000

Total:

61.000

25.000

149.250

25.000

149.250

10.

25.000

20.000

25.000

6.000

10.000

86.000

(*) During the year, no warrants were exercised and no warrants expired in accordance with the warrant plan

Table 2 - Remuneration in warrants

Name of
Director,
position

Stephen
Rubino,
Chief
Business

WP
2020

WP
2019

The main conditions of warrant plans

11/12/2020

24/03/2020

11/12/2023 N/A

24/03/2023 N/A

01/01/24-
31/12/27

01/01/24-
31/12/25

€ 6,73

€ 5,97

Information regarding the reported financial year

Opening

During the year (*)

Closing

20.000

134.600

50.000

298.500

10.

20.000

50.000

Page 71 | 180

Officer In
: Feb-20

Total:

2020 Annual Report

70.000

433.100

70.000

(*) During the year, no warrants were exercised and no warrants expired in accordance with the warrant plan

Table 2 - Remuneration in warrants

Information regarding the reported financial year

Opening

During the year (*)

Closing

Name of
Director,
position

Frederic
Lehman,
VP Clin
Dev &
Medical
Affairs

The main conditions of warrant plans

WP
2019

WP
2018

WP
2017

WP
2015

24/03/2020

24/03/2023 N/A

24/10/2019

24/10/2022

N/A

26/10/2018

26/10/2021 N/A

20/07/2017

20/07/2020

N/A

06/11/2015

06/11/2018 N/A

01/01/24-
31/12/25

01/01/23-
31/12/24

01/01/22-
31/12/23

01/01/21-
31/07/22

01/01/19-
05/11/20

€ 5,97

€ 8,16

20.000

€ 22,04

10.000

€ 36,11

20.000

€ 34,65

20.000

119.400

20.000

Total:

70.000

119.400

10.

20.000

10.000

20.000

70.000

(*) During the year, no warrants were exercised but 20,000 warrants were forfeited in accordance with the warrant plan 2015

Name of
Director,
position

Philippe
Nobels, VP
Human
Resources

Table 2 - Remuneration in warrants

The main conditions of warrant plans

Information regarding the reported financial year

Opening

During the year (*)

Closing

WP
2019

WP
2018

WP
2017

WP
2016

24/03/2020

24/03/2023 N/A

24/10/2019

24/10/2022

N/A

22/01/2019

22/01/2022 N/A

20/07/2017

20/07/2020

N/A

13/12/2016

13/12/2019 N/A

01/01/24-
31/12/25

01/01/23-
31/12/24

01/01/21-
31/07/22

01/01/20-
08/12/21

€ 5,97

€ 8,16

20.000

€ 22,04

10.000

€ 36,11

20.000

€ 17,60

10.000

20.000

119.400

20.000

Total:

60.000

119.400

10.

20.000

10.000

20.000

10.000

80.000

(*) During the year, no warrants were exercised and no warrants expired in accordance with the warrant plan

Table 2 - Remuneration in warrants

The main conditions of warrant plans

Information regarding the reported financial year

Opening

During the year (*)

Closing

WP
2019

24/03/2020

24/03/2023 N/A

01/01/24-
31/12/25

€ 5,97

25.000

149.250

10.

25.000

Name of
Director,
position

Philippe
Dechamps,
Chief

Page 72 | 180

Legal
Officer

WP
2019

WP
2018

WP
2017

WP
2016

24/10/2019

24/10/2022

N/A

22/01/2019

22/01/2022 N/A

20/07/2017

20/07/2020

N/A

13/12/2016

13/12/2019 N/A

01/01/23-
31/12/24

01/01/21-
31/07/22

01/01/20-
08/12/21

€ 8,16

20.000

€ 22,04

10.000

€ 36,11

20.000

€ 17,60

20.000

Total:

70.000

2020 Annual Report

25.000

149.250

20.000

10.000

20.000

95.000

(*) During the year, no warrants were exercised and no warrants expired in accordance with the warrant plan

2.7.3.4

Executive Committee – former members

Table 2 - Remuneration in warrants

The main conditions of warrant plans

Information regarding the reported financial year

Opening

During the year (*)

Closing

10.

Name of
Director,
position

Christian
Homsy,

CEO
Jul-
07>Apr-19

WP
2018

WP
2016

WP
2015

22/01/2019

22/01/2022 N/A

20/07/2017

20/07/2020 N/A

06/11/2015

06/11/2018 N/A

01/01/23-
31/12/24

01/01/21-
31/07/22

01/01/19-
05/11/20

€ 22,04

40.000

€ 36,11

40.000

€ 34,65

40.000

Total:

120.000

(*) During the year, no warrants were exercised but 40,000 warrants were forfeited in accordance with the warrant plan 2015

40.000

80.000

Name of
Director,
position

Patrick
Jeanmart,
CFO
Sep-
07>Aug-18

WP
2017

WP
2015

Table 2 - Remuneration in warrants

The main conditions of warrant plans

Information regarding the reported financial year

Opening

During the year (*)

Closing

10.

20/07/2017

20/07/2020 N/A

06/11/2015

06/11/2018 N/A

01/01/21-
31/07/22

01/01/19-
05/11/20

€ 36,11

20.000

€ 34,65

20.000

Total:

40.000

20.000

(*) During the year, no warrants were exercised but 20,000 warrants were forfeited in accordance with the warrant plan 2015

Page 73 | 180

2020 Annual Report

Name of
Director,
position

Jean-
Pierre
Latere,

COO
Jan-
16>May-
20

WP
2018

WP
2016

WP
2015

Table 2 - Remuneration in warrants

The main conditions of warrant plans

Information regarding the reported financial year

Opening

During the year (*)

Closing

10.

24/10/2019

24/10/2022 N/A

22/01/2019

22/01/2022 N/A

20/07/2017

20/07/2020 N/A

06/11/2015

06/11/2018 N/A

01/01/23-
31/12/24

01/01/21-
31/07/22

01/01/19-
05/11/20

€ 8,16

1.500

€ 22,04

10.000

€ 36,11

3.000

€ 34,65

20.000

Total:

34.500

3.333

2.000

5.333

(*) During the year, no warrants were exercised but 9,167 warrants were forfeited in accordance with the contract termination and 20.000
warrants were forfeited in accordance with the warrant plan 2015

Name of
Director,
position

Georges
Rawadi, VP
Business
Development

WP
2017

WP
2015

WP
2014

Table 2 - Remuneration in warrants

The main conditions of warrant plans

Information regarding the reported financial year

Opening

During the year (*)

Closing

10.

20/07/2017

06/11/2015

20/07/2020 N/A

06/11/2018 N/A

16/09/2014

16/09/2017

N/A

01/01/21-
31/07/22

01/01/19-
05/11/25

01/01/18-
16/09/24

€ 31,34

6.667

€ 34,65

10.000

€ 39,22

7.500

Total:

24.167

6.667

10.000

7.500

24.167

(*) During the year, no warrants were exercised and no warrants expired in accordance with the warrant plan

WP
2018

Name of
Director,
position

Anne
Moore, VP
Corporate
Strategy
Mar-
19>Oct-19

Table 2 - Remuneration in warrants

The main conditions of warrant plans

Information regarding the reported financial year

Opening

During the year (*)

Closing

10.

01/03/2019

01/03/2022 N/A

01/01/23-
31/12/24

€ 18,10

6.667

Total:

6.667

(*) During the year, no warrants were exercised and no warrants expired in accordance with the warrant plan

Page 74 | 180

2020 Annual Report

Table 2 - Remuneration in warrants

The main conditions of warrant plans

Information regarding the reported financial year

Opening

During the year (*)

Closing

10.

Name of
Director,
position

Dieter
Hauwaerts,
VP

WP
2015

WP
2014

06/11/2015

06/11/2018

N/A

08/01/2015

08/01/2018 N/A

01/01/19-
05/11/25

01/01/19-
15/05/24

€ 34,65

3.333

€ 33,49

3.333

Operations

Jan-
15>May-17

Total:

6.666

(*) During the year, no warrants were exercised and no warrants expired in accordance with the warrant plan

2.7.4. Termination Indemnities

3.333

6.666

KNCL SRL was engaged through a services agreement with effective date on December 7, 2015. The
Company has terminated the contract with KNCL SRL with effective date as of May 18, 2020 with the
payment of a 6-month contractual termination indemnity. KNCL SRL has issued an invoice, dated May 18,
2020 of an amount of 133.754€ to the Company.

2.7.5. Use of the possibility to reclaim the variable remuneration

The Company has not provided for the possibility to reclaim the variable remuneration and did not reclaim
any variable remuneration during the reported year.

2.7.6. Deviations from the Remuneration Policy

This Remuneration Report does not deviate from the 2016 remuneration policy, and is consistent with the
principles of the new remuneration policy that will be submitted for approval at the General Shareholders’
Meeting on May 5, 2021 and to be found on the Company’s website.

2.7.7. Evolution of the remuneration and the performance of the company and ratio

2.7.7.1

Comparative information

Annual change

Director's average remuneration

Board Members (in€'000)

Executive Committee (in€'000)

Company’s performance

Loss for the period (in€'000)

Treasury position at year end (in€'000)

Performance KPI's determining the company performance

Clinical Programs

shRNA platform

Business Development

Average remuneration on a full-time equivalent basis of employees

Employees of the company- Celyad Oncology (in€'000)

Employees of the company - Celyad Inc (in€'000)

150

2019

2020

409

412

(28 632)

(17 204)

39 338

17 234

95%

38%

33%

25%

170

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This table includes the 2019 data for comparison with 2020 and will be completed during the next four years
to comply with the requirement on the five years evolution.

In addition to the losses and the treasury position at year end, the table includes the performance criteria
which determined the variable remuneration. These might differ from one year to another, in accordance
with the Remuneration Policy.

The Company’s performance is to the Company’s objectives set up by the Board of Directors at the beginning
of the year. For 2020, the Board of Directors has decided to establish the Company’s performance at 95%,
reflecting the level of achievement of the Company’s objectives based on the execution of our clinical
programs and the external recognition of our technology by external partners, taking also into consideration
the challenging sanitary conditions faced in 2020 with the pandemic of COVID-19.

For the calculation of the average remuneration for the employees, the company has taken into consideration
the fixed and the variable parts of the remuneration as well as the other benefits paid to employees (such
as group insurance, representation allowance, company car, or health insurance).

2.7.7.2

Ratio

The ratio between the lowest salary for the employees and the highest salary of the Executive Committee is
15.

For the calculation of the remuneration, the Company has taken into consideration the fixed gross salary.

2.7.8. Taking into consideration of the vote of the shareholders

The shareholders have approved the 2019 remuneration report at 76,01%.

Regarding the vesting period of the warrants, the Company’s warrants vest gradually during a three-year
period (1/3 per year). The approved warrants plan provides for an accelerated vesting in case for instance
of a change of control or a public offering on the shares of the Company. The Company believes that this
accelerated vesting in a limited number of circumstances is market practice and does not prejudice the
shareholders’ interests.

2.7.9. Statutory Auditor

SRL E&Y Bedrijfsrevisoren – Réviseurs d’entreprises, having its registered office at De Kleetlaan 2, B –
1831 Diegem, Belgium, duly represented by Carlo-Sébastien d’Addario, is the statutory auditor of the
Company.

Carlo-Sébastien d’Addario is a member of the Belgian Institute of Certified Auditors ("Institut des Réviseurs
d'Entreprises ").

The annual remuneration of the auditor for the performance of its three-year mandate for the audit of its
financial statements (including the statutory financial statements) amounts to €200,000 for the year 2020
(excluding VAT).

2.8

Description of the principal risks associated to the activities of the Group

2.8.1. Risk Management

Risk management is embedded in the strategy of the Company and is of crucial importance for achieving
the objectives set by the Board of Directors. The Board is responsible for assessing the risks associated
with the activities of the Company and for evaluating the internal audit systems. The Board relies partially
on the Executive Committee to perform this assessment.

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The internal audit systems play a central role in managing the risks and the activities of the Company. To
safeguard the proper implementation and execution of the strategies defined by the Board, the Company
has set up internal risk management and control systems. The internal audit system is based on the following
pillars:

•

The compliance with and the training on the internal policies of the Company, including but not
limited to the Code of Business Conduct, Standard Operating Procedures, or policies related
to areas such as data protection, information systems, contract lifecycle, conflict of interest,
gifts and gratuities, crisis management;

The values of the Company;

The monitoring of the legal environment with the support of external attorneys;

• Ongoing risk analysis;

• Audit activities performed by Quality Assurance and Finance departments;

• Controls, supervision and corrective actions and measures.

The purpose of these systems is to manage in an effective and efficient manner the significant risks to which
the Company is exposed. They are designed to ensure:

•

The careful monitoring of the effectiveness of the Company’s short term and long-term
strategy;

The Company’s sustainability by a constant evaluation of its performance (operations and
cash).

2.8.2. Organization and values

The Company’s organization and values as well as the legal environment surrounding the activities of the
Company constitute the basis of all the internal audit components. It is determined by a composition of formal
and informal rules on which the functioning of the Company relies.

The organization encompasses the following elements:

• Company’s Mission: “Developing innovative cell therapies against cancer”;

•

The Company’s values: Passion. Respect. Innovation. Determination. Excellence;

The Company’s vision: “Eliminate cancer. Improve life”;

• Employees and consultants: the Company has been able to attract and retain motivated and
dedicated qualified employees. Passion, pro-activity, open-mindness, commitment, trust and
integrity are the essential traits of character of the Company’s team. All the Company’s
employees and consultants are required to manage the Company’s resources with due
diligence, integrity and to act with the necessary common sense;

• A Board of Directors, including the Remuneration and Nomination Committee and the Audit
Committee. See section 5 for further information on the functioning of the Board and its
Committees;

•

Independent non-executive directors: the Company is supported by several independent
directors. Their expertise and experience contribute to the Company’s effective management;

• A Chief Executive Officer, in charge of the day-to-day management, supported by the other

member of the Executive Committee;

• An internal set of procedures: the Company set up a Code of Business Conduct and Ethics

and adopted internal rules and procedures which regulate the activities within the Company;

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2020 Annual Report

•

The external environment: the Company operates in a highly regulated environment (GMP,
GCP, etc.). Compliance with all these external rules and guidelines is of critical importance to
the Company.

The evaluation of the Company’s organization, values and compliance with legal environment is made
regularly for the supervising bodies.

2.8.3. Risks analysis

The Board of Directors determines the Company’s strategy, the risk appetite and the main Company’s
policies. It is the task of the Board of Directors to strive for long-term success by procuring proper risk
assessment. The Executive Committee is responsible for the development of systems that identify, evaluate
and monitor risks.

Risk identification consists in examining the factors that could influence the Company’s strategy and
objectives:

•

Internal factors: those are closely related to the internal organization and could have several
causes (eg, change in the group structure, staff, ERP system);

• External factors: those can be the result of changes in the economic climate, regulations or

competition.

Besides the common risks associated to all industrial companies, the Executive Committee has identified
the following specific risk factors which are described hereafter.

2.8.4. Risks related to the Company’s financial position and capital requirements

The Company may need substantial additional funding, which may not be available on acceptable
terms when needed, if at all.

The Company’s operations have required substantial amounts of cash since inception. The Company
expects to continue to spend substantial amounts to continue the clinical development of its product
candidates, including its ongoing and planned clinical trials for CYAD-02, CYAD-211 and CYAD-101 (the
“Product Candidates”) or any future product candidates, including but limited to CYAD-103, CYAD-221 and
CYAD-231. If approved, the Company will require significant additional amounts in order to launch and
commercialize its Product Candidates.

As of December 31, 2020, the Company had cash and cash equivalents of €17.2 million and no short-term
investments. On January 8, 2021, the Company has entered into a committed equity purchase agreement
(“Purchase Agreement”) for up to $40 million with Lincoln Park Capital Fund, LLC (“LPC”), a Chicago-based
institutional investor. Over the 24-month term of the Purchase Agreement, the Group will have the right to
direct LPC to purchase up to an aggregate amount of $40 million American Depositary Shares (“ADSs”),
each of which represents one of the ordinary shares of the Company. This equity purchase agreement is
expected to strengthen the Group’s current statement of financial position while also providing the Group
with access to future capital on an as needed basis and to ensure sufficient funding to cover its operations
for the next 12 months from the date the financial statements are issued.

However, changing circumstances may cause it to increase its spending significantly faster than it currently
anticipates, and the Company may need to spend more money than currently expected because of
circumstances beyond its control. The Company may require additional capital for the further development

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and commercialization of its Product Candidates and may need to raise additional funds sooner if the
Company chooses to expand more rapidly than it presently anticipates.

The achievement of milestones (R&D, scientific, clinical, regulatory, business) will trigger payment
obligations towards Celdara, Dartmouth and Horizon, which will negatively impact the Company’s profitability
and may require material additional funding. These commitments are detailed in the note 5.34.

The Company contracted over the past year numerous funding agreements with the Walloon Region to
partially finance its research and development programs. Under the terms of the agreements, the Company
would need to obtain the consent of the Walloon Region for any out-licensing agreement or sale to a third
party of any or all of its products, prototypes or installations which may reduce the Company’s ability to
partner or sell part or all of its products. Furthermore, when the research and development programs partially
financed by the Company enter in “exploitation phase”, the Company has to start reimbursing the funding
received. For more information on the potential financial consequences of these exploitation decisions in
terms of potential reimbursements and sales percentage fees to be paid to the Walloon Region, refer to note
5.16. The Company may not be able to reimburse such funding under the terms of the agreements or such
reimbursement may jeopardize the funding of its clinical and scientific activities.

The Company’s ability to raise additional funds will depend on financial, economic and market conditions
and other factors, over which it may have no or limited control, and the Company cannot guarantee that
additional funds will be available to it when necessary on commercially acceptable terms, if at all. If the
necessary funds are not available, the Company may need to seek funds through collaborations and
licensing arrangements, which may require it to reduce or relinquish significant rights to its research
programs and product candidates, to grant licenses on its technologies to partners or third parties or enter
into new collaboration agreements, the terms could be less favorable to the Company than those it might
have obtained in a different context. If adequate funds are not available on commercially acceptable terms
when needed, the Company may be forced to delay, reduce or terminate the development or
commercialization of all or part of its research programs or product candidates or it may be unable to take
advantage of future business opportunities.

The Company has incurred net losses in each period since its inception and anticipate
that the Company will continue to incur net losses in the future.

The Company is not profitable and has incurred losses in each period since its inception. For the years
ended December 31, 2020, 2019 and 2018, the Company incurred a loss for the year of €17.2 million, €28.6
million and €37.4 million, respectively. As of December 31, 2020, the Company had a retained loss of €88.8
million. The Company expects these losses to increase as it continues to incur significant research and
development and other expenses related to its ongoing operations, continues to advance its Product
Candidates through preclinical studies and clinical trials, seek regulatory approvals for its Product
Candidates, scale-up manufacturing capabilities and hire additional personnel to support the development
of its Product Candidates and to enhance its operational, financial and information management systems.

Even if the Company succeeds in commercializing one or more of its Product Candidates, it will continue to
incur losses for the foreseeable future relating to its substantial research and development expenditures to
develop its technologies.

The Company 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.

Its prior losses and expected future losses have had and will continue to have an adverse effect on its
shareholders’ equity and working capital. Further, the net losses the Company incurs may fluctuate
significantly from quarter to quarter and year to year, such that a period to period comparison of its results
of operations may not be a good indication of its future performance.

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2.8.5. Risks related to Company’s business activities and industry

The Company’s Product Candidates are a new approach to cancer treatment that presents
significant challenges.

The Company has concentrated its research and development efforts on cell-based immunotherapy
technology, and its future success is highly dependent on the successful development of cell-based
immunotherapies in general and in particular its approach using the NKG2D receptor, an activating receptor
of NK cells, to target stress ligands. Currently, two of the Company’s clinical Product Candidates use the
NKG2D receptor. The Company cannot be sure that its T-cell immunotherapy technologies will yield
satisfactory products that are safe and effective, scalable or profitable.

Its approach to cancer immunotherapy and cancer treatment generally poses a number of challenges,
including:

• Developing and deploying consistent and reliable processes for engineering a patient’s T cells ex

vivo and infusing the engineered T-cells back into the patient;

• Educating medical personnel regarding the potential side effect profile of each of its Product
Candidates, such as the potential adverse side effects related to cytokine release or neurotoxicity;

• Developing processes for the safe administration of these Product Candidates, including long-term

follow-up for all patients who receive its Product Candidates;

• Developing therapies for types of cancers beyond those addressed by its current Product

Candidates.

Additionally, because its technology involves the genetic modification of patient cells ex vivo using a virus,
the Company is subject to many of the challenges and risks that gene therapies face, including:

• Regulatory requirements governing gene and cell therapy products have changed frequently and

may continue to change in the future;

• Although its viral vectors are not able to replicate, there is a risk with the use of retroviral or lentiviral
vectors that they could lead to new or reactivated pathogenic strains of virus or other infectious
diseases;

•

The FDA recommends a 15-year follow-up observation period for all patients who receive treatment
using certain gene therapies, and the Company may need to adopt such an observation period for
its Product Candidates.

Moreover, public perception of therapy safety issues, including adoption of new therapeutics or novel
approaches to treatment, may adversely influence the willingness of subjects to participate in clinical trials,
or if approved, of physicians to subscribe to the novel treatment. Physicians may not be willing to undergo
training to adopt this novel and personalized therapy, may decide the therapy is too complex to adopt without
appropriate training and may choose not to administer the therapy. Based on these and other factors,
hospitals and payors may decide that the benefits of this new therapy do not or will not outweigh its costs.

Its Product Candidates are biologics, which are complex to manufacture, and the Company
may encounter difficulties in production.

Its Product Candidates are biologics and the process of manufacturing its products is complex, highly-
regulated and subject to multiple risks. The manufacture of its Product Candidates involves complex
processes, including harvesting cells from patients, selecting and expanding certain cell types, engineering
or reprogramming the cells in a certain manner to create CAR T-cells, expanding the cell population to obtain
the desired dose, and ultimately infusing the cells back into a patient’s body. As a result of the complexities,
the cost to manufacture its Product Candidates, is higher than traditional small molecule chemical
compounds, and the manufacturing process is less reliable and is more difficult to reproduce. Even minor

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deviations from normal manufacturing processes could result in reduced production yields, product defects,
and other supply disruptions.

Although the Company is working, or will be working, to develop commercially viable processes for the
manufacture of its Product Candidates, doing so is a difficult and uncertain task, and there are risks
associated with scaling to the level required for later-stage clinical trials and commercialization, including,
among others, cost overruns, potential problems with process scale-out, process reproducibility, stability
issues, lot consistency, and timely availability of reagents or raw materials. The Company may ultimately be
unable to reduce the cost of goods for its Product Candidates to levels that will allow for an attractive return
on investment if and when those Product Candidates are commercialized.

In addition, the manufacturing process that the Company develops for its Product Candidates is subject to
regulatory authorities’ approval process, and the Company will need to make sure that the Company or its
contract manufacturers, or CMO’s, if any, are able to meet all regulatory authorities requirements on an
ongoing basis. If the Company or its CMO’s are unable to reliably produce Product Candidates to
specifications acceptable to the regulatory authorities, the Company may not obtain or maintain the
approvals the Company needs to commercialize such Product Candidates. Even if the Company obtains
regulatory approval for any of its Product Candidates, there is no assurance that either the Company or its
CMO’s will be able to manufacture the approved product to specifications acceptable to the regulatory
authorities, to produce it in sufficient quantities to meet the requirements for the potential launch of the
product, or to meet potential future demand. Any of these challenges could have an adverse effect on its
business, financial condition, results of operations and growth prospects.

The future commercial success of the Company’s Product Candidates will depend on the
degree of market acceptance among physicians, patients, hospitals and others in the
medical community.

The Company’s Product Candidates are at varying stages of development and the Company may never
have a product that is commercially successful.

The Company does not expect to be able to market any of its products for a number of years. Furthermore,
when available on the market physicians may not prescribe the Company's products, which would prevent
the Company from generating significant revenues or becoming profitable. Market acceptance of the
Company's future products by physicians, patients and healthcare payers will depend on a number of factors,
many of which are beyond the Company's control, including, but not limited to:

• Acceptance by physicians, patients and healthcare payers of each product as safe, effective

and cost-effective;

• Relative convenience, ease of use, ease of administration and other perceived advantages

over alternative products;

• Prevalence and severity of adverse events;

• The extent to which products are approved for inclusion and reimbursed on formularies of

hospitals and managed care organizations;

The Company may face significant competition and technological change which could
limit or eliminate the market opportunity for its product candidates.

The market for pharmaceutical products is highly competitive. The Company’s competitors include many
established pharmaceutical, biotechnology, universities and other research or commercial institutions, many
of which have substantially greater financial, research and development resources than the Company. The
fields in which the Company operates are characterized by rapid technological change and innovation. There
can be no assurance that competitors of the Company are not currently developing or will not in the future
develop technologies and products that are equally or more effective and/or are more economical as any
current or future technology or product of the Company. Competing products may gain faster or greater
market acceptance than the Company’s products and medical advances or rapid technological development
by competitors may result in the Company’s product candidates becoming non-competitive or obsolete
before the Company is able to recover its research and development and commercialization expenses. If

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the Company or its product candidates do not compete effectively, it may have a material adverse effect on
the Company’s business.

2.8.6. Risks related to clinical development

The Company may encounter substantial delays in its clinical trials or may fail to
demonstrate safety and efficacy to the satisfaction of applicable regulatory authorities.

Before obtaining regulatory approval or marketing authorization from regulatory authorities for the sale of its
Product Candidates, if at all, the Company must conduct extensive clinical trials to demonstrate the safety
and efficacy of the Product Candidates in humans. Pre-clinical tests and Clinical testing are expensive, time-
consuming and uncertain as to outcome. The Company cannot guarantee that any pre-clinical and clinical
trials will be conducted as planned or completed on schedule, if at all. A failure of one or more clinical trials
can occur at any stage of testing. Events that may prevent successful or timely completion of clinical
development include:

• Delays in obtaining required Investigational Review Board, or IRB, or Ethics Committee

approval at each clinical trial site;

•

Imposition of a clinical hold by regulatory agencies, after an inspection of its clinical trial
operations or trial sites;

• Failure by its CRO’s, other third parties or the Company to adhere to clinical trial requirements;

• Delays in the testing, validation, manufacturing and delivery of its Product Candidates to the

clinical sites;

• Occurrence of serious adverse events associated with the product candidate that are viewed

to outweigh its potential benefits.

Furthermore, the timely completion of clinical trials in accordance with their protocols depends, among other
things, on its ability to enrol a sufficient number of patients who remain in the trial until its conclusion. The
Company may experience difficulties in patient enrolment in its clinical trials for a variety of reasons,
including:

• The patient eligibility criteria defined in the protocol;

•

Its ability to recruit clinical trial investigators with the appropriate competencies and
experience;

• Competing clinical trials for similar therapies;

• The risk that patients enrolled in clinical trials will not complete a clinical trial.

Any inability to successfully complete preclinical and clinical development could result in additional costs to
the Company or impair its ability to generate revenues from product sales, regulatory and commercialization
milestones and royalties. Clinical trial delays could also shorten any periods during which the Company may
have the exclusive right to commercialize its Product Candidates or allow its competitors to bring products
to market before the Company does, which could impair its ability to successfully commercialize its Product
Candidates and may harm its business and results of operations.

Its Product Candidates could potentially cause other adverse events that have not yet been predicted. As
described above, any of these events could prevent the Company from achieving or maintaining market
acceptance of its Product Candidates and impair its ability to commercialize its products if they are ultimately
approved by applicable regulatory authorities.

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In previous clinical trials involving T- cell based immunotherapies, some patients
experienced serious adverse events. The Company’s Product Candidates may
demonstrate a similar effect.

In previous and ongoing clinical trials involving CAR-T cell products by other companies or academic
researchers, many patients experienced side effects such as neurotoxicity and CRS, which have in some
cases resulted in clinical holds in ongoing clinical trials of CAR-T Product Candidates. There have been life
threatening events related to severe neurotoxicity and CRS, requiring intense medical intervention such as
intubation or pressor support, and in several cases, resulted in death. Severe neurotoxicity is a condition
that is currently defined clinically by cerebral edema, confusion, drowsiness, speech impairment, tremors,
seizures, or other central nervous system side effects, when such side effects are serious enough to lead to
intensive care. In some cases, severe neurotoxicity was thought to be associated with the use of certain
lymphodepletion preconditioning regimens used prior to the administration of the CAR-T cell products and
product candidates.

Undesirable side effects caused by its Product Candidates, or other T-cell based immunotherapy product
candidates, could cause the Company 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 its trials could reveal a high and unacceptable severity
and prevalence of side effects or unexpected characteristics. Treatment-related side effects could also affect
patient recruitment or the ability of enrolled patients to complete the trials 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 T-cell based immunotherapies are not normally encountered in the
general patient population and by medical personnel. The Company expects to have to train medical
personnel regarding its T-cell based immunotherapy Product Candidates to understand their side effects for
both its planned clinical trials and upon any commercialization of any T-cell based immunotherapy Product
Candidates. Inadequate training in recognizing or managing the potential side effects of T-cell based
immunotherapy Product Candidates could result in patient deaths. Any of these occurrences could have a
material adverse effect on its business, financial condition and prospects.

The Company’s clinical trials are ongoing and not complete. Initial success in its ongoing
clinical trials may not be indicative of results obtained when these trials is completed.

Trial designs and results from previous or ongoing trials are not necessarily predictive of future clinical trial
results, and initial or interim results may not continue or be confirmed upon completion of the trial.

There are limited data concerning long-term safety and efficacy following treatment with CYAD-02, CYAD-
101 and CYAD-211. Our Product Candidates may fail to show the desired safety and efficacy in later stages
of clinical development despite having successfully advanced through initial clinical trials. There can be no
assurance that any of these trials will ultimately be successful or support further clinical advancement or
regulatory approval of CYAD-02, CYAD-101 and CYAD-211 or other product candidates.

In December 2020, the Company made the strategic decision to discontinue the development of its first-
generation autologous NKG2D CAR T candidate CYAD-01 for the treatment of relapsed / refractory acute
myeloid leukemia (AML) and myelodysplastic syndromes (MDS) based on data from the Phase 1 THINK
and DEPLETHINK trials which did not achieve the necessary internal clinical activity threshold set for the
program.

The Company may be adversely affected by natural disasters and/or global health
pandemics, and its business, financial conditions and results of operations could be
adversely affected.

On March 11, 2020, the World Health Organization declared the novel strain of coronavirus (COVID-19) a
global pandemic and recommended containment and mitigation measures worldwide. As of the date of this
Annual Report, Belgium and the United States, where the Company operates, have been impacted by
temporary closures. The length or severity of this pandemic cannot be predicted, but the Company

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2020 Annual Report

anticipates that there may be an additional impact from a prolonged COVID-19 environment on the planned
development activities of the Company.

Further, timely enrollment in clinical trials is reliant on clinical trial sites which may be adversely affected by
global health matters, including, among other things, pandemics. With regards to the Company’s clinical
programs, CYAD-02, CYAD-101 and CYAD-211 were slightly impacted by the coronavirus pandemic
throughout 2020. Enrollment in the respective trials for these assets is ongoing without any major disruption,
partially due to the staggered enrollment associated with the dose-escalation trials for CYAD-02 and CYAD-
211, respectively, and the expansion segment of the of the CYAD-101 trial which began in late 2020.
However, certain clinical sites and institutions have not been able to receive visits from the Company or its
representatives, which has delayed the Company’s data monitoring activities.

In addition, after enrollment in these trials, if patients contract COVID-19 during participation in the
Company’s trials or are subject to isolation or shelter-in-place restrictions, they may drop out of the trials,
miss scheduled follow-up visits or otherwise fail to follow trial protocols. If patients are unable to follow the
trial protocols or if the Company’s trial results are otherwise disputed due to the effects of the COVID-19
pandemic or actions taken to mitigate its spread, the integrity of data from the trials may be compromised or
not accepted by the FDA or other regulatory authorities, which would represent a significant setback for the
applicable program.

Some factors from the COVID-19 pandemic that the Company believes may adversely affect enrollment in
our trials include:

•

The diversion of healthcare resources away from the conduct of clinical trial matters to focus on
pandemic concerns, including the attention of physicians serving as the Company’s clinical trial
investigators, hospitals serving as the clinical trial sites and hospital staff supporting the conduct of
the clinical trials;

• Some patients who would otherwise be candidates for enrollment in the Company’s clinical trials
are at increased risk of severe effects of the coronavirus, which may lead to the death of some
patients and render others too ill to participate, limiting the available pool of participants for the
trials;

•

The fact that there can be no guarantee that any proposed changes to our protocols, if necessary,
would be acceptable to regulators;

Limitations on travel that interrupt key trial activities, such as clinical trial site initiations and
monitoring; and

Interruption in global shipping affecting the transport of clinical trial materials being used in our
trials.

These and other factors arising from the COVID-19 pandemic could worsen in countries that are already
afflicted with the virus or could continue to spread to additional countries, each of which may further
adversely impact the Company’s clinical trials. The global outbreak of the COVID-19 pandemic continues to
evolve and the conduct of the Company’s trials may continue to be adversely affected, despite efforts to
mitigate this impact.

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could prevent completion of these trials and adversely affect our ability to advance the development of the
Company’s product candidates.

2.8.7. Risks related to legal and regulatory risks

The Company is heavily dependent on the regulatory approval of its Product Candidates
in the United States and Europe.

The Company is a clinical-stage biopharmaceutical company with no products approved by regulatory
authorities or available for commercial sale. The Company may be unable to develop or commercialize a
product, product candidate or research program, or may cease some of its operations, which may have a
material adverse effect on the Company’s business.

The Company has generated limited revenue to date and does not expect to generate any revenue from
product sales for the foreseeable future. The Company’s ability to generate revenues in the near term will
depend on its ability to obtain regulatory approval and successfully commercialize Product Candidates in
the United States, the first country in which the Company intends to seek approval for these candidates. The
Company may experience delays in obtaining regulatory approval in the United States for these Product
Candidates, if it is approved at all, and the price of its ordinary shares and/or ADSs may be negatively
impacted. Even if the Company receives regulatory approval, the timing of the commercial launch of the
Product Candidates in the United States is dependent upon a number of factors, including, but not limited
to, hiring sales and marketing personnel, pricing and reimbursement timelines, the production of sufficient
quantities of commercial drug product and implementation of marketing and distribution infrastructure.

Nearly all aspects of the Company’s activities are subject to substantial regulation. No
assurance can be given that any of the Company’s product candidates will fulfill
regulatory compliance.

The international pharmaceutical and medical technology industry is highly regulated by government bodies
(hereinafter the “Competent Authorities”) that impose substantial requirements covering nearly all aspects
of the Company’s activities notably on research and development, manufacturing, preclinical tests, clinical
trials, labelling, marketing, sales, storage, record keeping, promotion and pricing of its research programs
and product candidates. Compliance with standards laid down by local Competent Authorities is required in
each country where the Company, or any of its partners or licensees, conducts said activities in whole or in
part. The Competent Authorities notably include the European Medicine Agency (“EMA”) in the European
Union and the Food and Drug Administration (“FDA”) in the United States.

There can be no assurance that product candidates of the Company will fulfill the criteria required to obtain
necessary regulatory authorization to access the market. Also, at this time, the Company cannot guarantee
or know the exact nature, precise timing and detailed costs of the efforts that will be necessary to complete
the remainder of the development of its research programs and product candidates.

The specific regulations and laws, as well as the time required to obtain Competent Authorities approvals,
may vary from country to country, but the general regulatory procedures are similar in the European Union
and the United States. At any time Competent Authorities may require discontinuation or holding of clinical
trials or require additional data prior to completing their review or may issue restricted authorization or
authorize products for clinical trials or marketing for narrower indications than requested or require further
data or studies be conducted and submitted for their review. There can be no guarantee that such additional
data or studies, if required, will corroborate earlier data.

2.8.8. Risks related to intellectual property

The Company could be unsuccessful in obtaining or maintaining adequate patent
protection for one or more of its Product Candidates.

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The patent application process is expensive and time-consuming, and the Company and its current or future
licensors and licensees may not be able to apply for or prosecute patents on certain aspects of its Product
Candidates or deliver technologies at a reasonable cost, in a timely fashion, or at all. It is also possible that
the Company or its current licensors, or any future licensors or licensees, will fail to identify patentable
aspects of inventions made in the course of development and commercialization activities before it is too
late to obtain patent protection on them. Therefore, its patents and applications may not be prosecuted and
enforced in a manner consistent with the best interests of its business. It is possible that defects of form in
the preparation or filing of its patents or patent applications may exist, or may arise in the future, such as
with respect to proper priority claims, inventorship, claim scope or patent term adjustments. Under its existing
license agreements with the Trustees of Dartmouth College, the Company has the right, but not the
obligation, to enforce its licensed patents. If its current licensors, or any future licensors or licensees, are not
fully cooperative or disagree with the Company as to the prosecution, maintenance or enforcement of any
patent rights, such patent rights could be compromised and the Company might not be able to prevent third
parties from making, using, and selling competing products. If there are material defects in the form or
preparation of its patents or patent applications, such patents or applications may be invalid and
unenforceable

The Company currently has issued patents and patent applications directed to its Product Candidates and
medical devices, and the Company anticipates that it will file additional patent applications in several
jurisdictions, including several European Union countries and the United States, as appropriate.

The Company cannot be certain, however, that the claims in its pending patent applications will be
considered patentable by patent offices in various countries, or that the claims in any of its issued patents
will be considered valid and enforceable by local courts.

The strength of patents in the biotechnology and pharmaceutical field can be uncertain and evaluating the
scope of such patents involves complex legal and scientific analyses. The patent applications that the
Company owns, or in-licenses may fail to result in issued patents with claims that cover its Product
Candidates or uses thereof in the European Union, in the United States or in other jurisdictions. Even if the
patents do successfully issue, third parties may challenge the validity, enforceability, or scope thereof, which
may result in such patents being narrowed, invalidated, or held unenforceable. Furthermore, even if they are
unchallenged, its 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 patent applications the Company holds with respect to its Product Candidates
is threatened, this could dissuade companies from collaborating with the Company to develop, and could
threaten its ability to commercialize, its Product Candidates. Further, because patent applications in most
countries are confidential for a period of time after filing, the Company cannot be certain that the Company
was the first to file any patent application related to its Product Candidates.

Patents have a limited lifespan. Various extensions may be available; however, the life of a patent, and the
protection it affords, is limited. Further, the extensive period of time between patent filing and regulatory
approval for a product candidate limits the time during which the Company can market a product candidate
under patent protection, which may particularly affect the profitability of its early-stage Product Candidates.
If the Company encounters delays in its clinical trials, the period of time during which the Company could
market its Product Candidates under patent protection would be reduced. Without patent protection for its
Product Candidates, the Company may be open to competition from biosimilar versions of its Product
Candidates.

Filing, prosecuting and defending patents on product candidates in all countries throughout the world would
be prohibitively expensive. In addition, the laws of some foreign countries do not protect intellectual property
rights to the same extent as laws in the European Union or the United States. Consequently, the Company
may not be able to prevent third parties from practicing its inventions in all countries, or from selling or
importing products made using its inventions in and into other jurisdictions.

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The Company’s patents and other intellectual property rights portfolio is relatively young
and may not adequately protect its research programs and product candidates.

The Company’s success will depend in part on the ability of the Company to obtain, maintain and enforce
its patents and other intellectual property rights. The Company’s research programs, and product candidates
are covered by several patent application families, which are either licensed to the Company or owned by
the Company. Out of the numerous patent applications controlled by the Company, eleven national patents
have been granted in the US relating to the field of immuno-oncology. The Company cannot guarantee that
it will be in a position in the future to develop new patentable inventions or that the Company or its licensors
will be able to obtain or maintain these patent rights against challenges to their validity, scope and/or
enforceability. Moreover, the Company may have little or no control over its licensors’ abilities to prevent the
infringement of their patents or the misappropriation of their intellectual property. There can be no assurance
that the technologies used in the Company’s research programs and product candidates are patentable If
the Company or its licensors do not obtain meaningful patents on their technologies or if the patents of the
Company or its licensors are invalidated, third parties may use the technologies without payment to the
Company. A third party’s ability to use unpatented technologies is enhanced by the fact that the published
patent application contains a detailed description of the relevant technology.

The Company cannot guarantee that third parties, contract parties or employees will not claim ownership
rights over the patents or other intellectual property rights owned or held by the Company.

The Company also relies on proprietary know-how to protect its research programs and product candidates.
Know-how is difficult to maintain and protect. The Company uses reasonable efforts to maintain its know-
how, but it cannot assure that its partners, employees, consultants, advisors or other third parties will not
willfully or unintentionally disclose proprietary information to competitors.

As far as the Company is aware, its intellectual property has not been challenged otherwise than by patent
offices in the normal course of examination of its patent applications or misappropriated.

The Company depends on intellectual property licensed from third parties and termination
of any of these licenses could result in the loss of significant rights, which would harm
its business.

The Company is dependent on patents, know-how, and proprietary technology, both its own and licensed
from others. The Company’s licenses technology from the Trustees of Dartmouth College, or Dartmouth
College. Dartmouth College may terminate the Company’s license, if the Company fails to meet a milestone
within the specified time period, unless the Company pays the corresponding milestone payment. Dartmouth
College may terminate either the license in the event the Company defaults or breach any of the provisions
of the applicable license, subject to 30 days’ prior notice and opportunity to cure. In addition, the license
automatically terminates in the event the Company becomes insolvent, make an assignment for the benefit
of creditors or file, or have filed against us, a petition in bankruptcy. Furthermore, Dartmouth College may
terminate the Company’s license, after April 30, 2024, if the Company fails to meet the specified minimum
net sales obligations for any year (USD 10 million during first year of sales, USD 40 million during the second
year of sales and USD 100 million during the third year of sales and every year of sales thereafter), unless
the Company pays to Dartmouth College the royalty the Company would otherwise be obligated to pay had
the Company met such minimum net sales obligation.

The Company also licenses technology from Horizon Discovery Limited, or Horizon Discovery. Horizon
Discovery may terminate the Company’s license in case of insolvency, material breach or force majeure.
Any termination of these licenses or any of the Company’s other licenses could result in the loss of significant
rights and could harm its ability to commercialize its Product Candidates.

Disputes may also arise between the Company and its licensors regarding intellectual property subject to a
license agreement, including those relating to:

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•

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 license agreement;

•

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

The amount and timing of milestone and royalty payments;

• Whether the company is complying with its diligence obligations with respect to the use of the
licensed technology in relation to its development and commercialization of its product
candidates;

•

The allocation of ownership of inventions and know-how resulting from the joint creation or use
of intellectual property by the company and its partners and by its licensors.

If disputes over intellectual property that the Company has licensed prevent or impair its ability to maintain
its current licensing arrangements on acceptable terms, the Company may be unable to successfully develop
and commercialize the affected Product Candidates. The Company is generally also subject to all of the
same risks with respect to protection of intellectual property that the Company licenses as it is for intellectual
property that the Company owns, which are described below. If the Company or its licensors fail to
adequately protect this intellectual property, the Company’s ability to commercialize its products could suffer.

The licenses of the Company may be terminated if it is unable to meet the payment obligations under the
agreements (notably if the Company is unable to obtain additional financing).

The Company may infringe on the patents or intellectual property rights of others and may
face patent litigation, which may be costly and time consuming.

The Company’s success will depend in part on its ability to operate without infringing on or misappropriating
the intellectual property rights of others. The Company cannot guarantee that its activities will not infringe
on the patents or other intellectual property rights owned by others. The Company may expend significant
time and effort and may incur substantial costs in litigation if it is required to defend against patent or other
intellectual property right suits brought against the Company regardless of whether the claims have any
merit. Additionally, the Company cannot predict whether it or its licensors will be successful in any litigation.
If the Company or its licensors are found to infringe on the patents or other intellectual property rights of
others, it may be subject to substantial claims for damages, which could materially impact the Company’s
cash flow and financial position. The Company may also be required to cease development, use or sale of
the relevant research program, product candidate or process or it may be required to obtain a license on the
disputed rights, which may not be available on commercially reasonable terms, if at all.

There can be no assurance that the Company is even aware of third-party rights that may be alleged to be
relevant to any particular product candidate, method, process or technology.

The Company may spend significant time and effort and may incur substantial costs if required to defend
against any infringement claims or to assert its intellectual property rights against third parties. The risk of
such a claim by a third party may be increased by the Company’s public announcement regarding its
research programs and product candidates. The Company may not be successful in defending its rights
against such procedures or claims and may incur as a consequence thereof significant losses, costs or
delays in its intended commercialization plans as a result thereof.

2.8.9. Post-authorisation risks

The Company has not yet finalized its clinical development program for CYAD-02 for the
treatment of patients with relapsed / refractory AML and MDS or for CYAD-101, the
allogeneic NKG2D CAR-T for the treatment of mCRC or CYAD- 211, or allogeneic BCMA

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CAR- T for the treatment of r/r multiple myeloma (MM). Regulators may not agree with its
proposed protocols for these clinical trials, which could result in delays.

The Company is still considering the clinical development program for CYAD-02 in relapsed / refractory AML
and MDS, CYAD-101 for mCRC and CYAD-211 for relapsed / refractory MM. Prior to initiating new clinical
trials for its Product Candidates, the Company is required to submit clinical trial protocols for these trials to
the FDA and comparable foreign regulators in other jurisdictions where the Company plans to undertake
clinical trials. The Company may not reach agreement with these regulators, or there may be a delay in
reaching agreement. These regulators may want to see additional clinical or preclinical data regarding its
Product Candidates before the Company initiates new clinical trials. Any of these decisions could have a
material adverse effect on its expected clinical and regulatory timelines, business, prospects, financial
condition and results of operations.

2.8.10. Risks linked to the Company’s reliance on third parties

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

Engineered-cell therapies require many specialty raw materials, some of which are manufactured by small
companies with limited resources and experience to support a commercial product. The suppliers may be
ill-equipped to support the Company’s needs, especially in non-routine circumstances like an FDA inspection
or medical crisis, such as widespread contamination. The Company also does not have contracts with many
of these suppliers and may not be able to contract with them on acceptable terms or at all. Accordingly, the
Company may experience delays in receiving key raw materials to support clinical or commercial
manufacturing.

In addition, some raw materials are currently available from a single supplier, or a small number of suppliers.
The Company 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.

Two vaccines for COVID-19 were granted Emergency Use Authorization by the FDA in late 2020, and more
are likely to be authorized in the coming months. The resultant demand for vaccines and potential for
manufacturing facilities and materials to be commandeered under the Defense Production Act of 1950, or
equivalent foreign legislation, may make it more difficult to obtain materials or manufacturing slots for the
products needed for the Company’s clinical trials, which could lead to delays in these trials.

If third parties conducting clinical trials do not successfully carry out their contractual
duties, the Company may not be able to obtain regulatory approval for or commercialize
its Product Candidates.

The Company relies on clinical research organizations, or CROs, clinical investigators and clinical trial sites
to ensure its clinical trials are conducted properly and on time. While the Company will have agreements
governing their activities, the Company will have limited influence over their actual performance. The
Company will control only certain aspects of its CRO’s activities. Nevertheless, the Company will be
responsible for ensuring that each of its clinical trials is conducted in accordance with the applicable protocol,
legal, and regulatory requirements and scientific standards, and its reliance on these third parties does not
relieve the Company of its regulatory responsibilities.

The Company and these third parties are required to comply with the GCP’s (from both FDA and EMA) for
conducting, recording and reporting the results of clinical trials to assure that the data and reported results
are credible and accurate and that the rights, integrity and confidentiality of clinical trial participants are
protected. If the Company or its CROs fail to comply with applicable GCP’s, the clinical data generated in its
future clinical trials may be deemed unreliable and the FDA, the EMA, or other foreign regulatory authorities
may require the Company to perform additional clinical trials before approving any marketing applications.
Upon inspection, the FDA or the EMA may determine that its clinical trials did not comply with GCP’s. In

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addition, its future clinical trials will require a sufficient number of test subjects to evaluate the safety and
effectiveness of its Product Candidates. Accordingly, if its CRO’s fail to comply with these regulations or fail
to recruit a sufficient number of patients, the Company may be required to repeat such clinical trials, which
would delay the regulatory approval process.

Its CRO’s are not the Company’s employees, and the Company is therefore unable to directly monitor
whether or not they devote sufficient time and resources to its clinical and preclinical programs. These third
parties may also have relationships with other commercial entities, including its competitors, for whom they
may also be conducting clinical trials or other product development activities that could harm the Company’s
competitive position. If these third parties do not successfully carry out their contractual duties or obligations,
fail to meet expected deadlines, or if the quality or accuracy of the clinical data they obtain is compromised
due to the failure to adhere to the Company’s clinical protocols or regulatory requirements, or for any other
reasons, the Company’s clinical trials may be extended, delayed or terminated, and the Company may not
be able to obtain regulatory approval for, or successfully commercialize, its Product Candidates. If any such
event were to occur, the Company’s financial results and the commercial prospects for its Product
Candidates would be harmed, its costs could increase, and its ability to generate revenues could be delayed.

If any of the Company’s relationships with these third-party CRO’s terminate, the Company may not be able
to enter into arrangements with alternative CRO’s or to do so on commercially reasonable terms. Further,
switching or adding additional CRO’s involves additional costs and requires management time and focus. In
addition, there is a natural transition period when a new CRO commences work. As a result, delays occur,
which could materially impact its ability to meet its desired clinical development timelines. Though the
Company carefully manages its relationships with its CRO’s, there can be no assurance that the Company
will not encounter challenges or delays in the future or that these delays or challenges will not have a material
adverse impact on its business, financial condition and prospects.

The Company relies and will continue to rely on collaborative partners regarding the
development of its research programs and product candidates.

The Company is and expects to continue to be dependent on collaborations with partners relating to the
development and commercialization of its existing and future research programs and product candidates.
The Company had, has and will continue to have discussions on potential partnering opportunities with
various pharmaceutical and medical device companies. If the Company fails to enter into or maintain
collaborative agreements on reasonable terms or at all, the Company's ability to develop its existing or future
research programs and product candidates could be delayed, the commercial potential of its products could
change and its costs of development and commercialization could increase.

The Company's dependence on collaborative partners subjects it to a number of risks, including, but not
limited to, the following:

• The Company may be required to relinquish significant rights, including intellectual property,

marketing and distribution rights;

• The Company relies on the information and data received from third parties regarding its
research programs and product candidates and will not have control of the process conducted
by the third party in gathering and composing such data and information. The Company may
not have formal or appropriate guarantees from its contract parties with respect to the quality
and the completeness of such data;

• A collaborative partner may develop a competing product either by itself or in collaboration

with others, including one or more of the Company's competitors;

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2.8.11. Risks related to the shares

The market price of the shares may fluctuate widely in response to various factors.

A number of factors may significantly affect the market price of the Shares. The main factors are changes in
the operating results of the Company and its competitors, announcements of technological innovations or
results concerning the product candidates, changes in earnings estimates by analysts.

Other factors which could cause the price of the shares to fluctuate or could influence the reputation of the
Company include, amongst other things:

• Developments concerning intellectual property rights, including patents;

• Public information regarding actual or potential results relating to products and product

candidates under development by the company’s competitors;

• Actual or potential results relating to products and product candidates under development by

the company itself;

• Developments concerning intellectual property rights, including patents;

• Regulatory and medicine pricing and reimbursement developments in europe, the united

states and other jurisdictions;

• Any publicity derived from any business affairs, contingencies, litigation or other proceedings,
the company’s assets (including the imposition of any lien), its management, or its significant
shareholders or collaborative partners;

• Divergences in financial results from stock market expectations;

• Changes in the general conditions in the pharmaceutical industry and general economic,
financial market and business conditions in the countries in which the company operates; and

• Any publicity derived from data protection or cybersecurity breaches.

In addition, stock markets have from time to time experienced extreme price and volume volatility which, in
addition to general economic, financial and political conditions, could affect the market price for the Shares
regardless of the operating results or financial condition of the Company.

If securities or industry analysts do not publish research or publish inaccurate research
or unfavorable research about its business, the price of the securities and trading volume
could decline.

The trading market for the securities depends in part on the research and reports that securities or industry
analysts publish about the Company or its business. At the date of this report the Company is followed by
nine analysts (Bryan Garnier, KBC Securities, Kempen, Kepler Cheuvreux, H.C. Wainwright, Jones Trading,
Portzamparc, Wells Fargo and William Blair). If no or few securities or industry analysts cover the Company,
the trading price would be negatively impacted. If one or more of the analysts who covers the Company
downgrades the securities or publishes incorrect or unfavorable research about its business, the price of the
securities would likely decline. If one or more of these analysts eases coverage of the Company or fails to
publish reports on the Company regularly, or downgrades the securities, demand for the securities could
decrease, which could cause the price of the securities or trading volume to decline.

The market price of the Shares could be negatively impacted by actual or anticipated sales
of substantial numbers of Shares.

Sales of a substantial number of Shares in the public markets notably by one of its two major shareholders
(TOLEFI SA [holding 16.16% of the Shares] and Victory Capital Management Inc [holding 5.57% of the
Shares] as of February 28, 2021), or the perception that such sales might occur, might cause the market
price of the Shares to decline. The Company cannot make any prediction as to the effect of any such sales
or perception of potential sales on the market price of the Shares.

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A public market for the Company’s shares may not be sustained.

The Company cannot guarantee the extent to which a liquid market for the Shares will be sustained. In the
absence of such liquid market for the Shares, the price of the Shares could be influenced. The liquidity of
the market for the Shares could be affected by various causes, including the factors identified in the next
risk factor (below) or by a reduced interest of investors in biotechnology sector.

The Company has no present intention to pay dividends on its ordinary shares in the
foreseeable future.

The Company has no present intention to pay dividends in the foreseeable future. Any recommendation by
its Board of Directors to pay dividends will depend on many factors, including its financial condition (including
losses carried-forward), results of operations, legal requirements and other factors. Furthermore, pursuant
to Belgian law, the calculation of amounts available for distribution to shareholders, as dividends or
otherwise, must be determined on the basis of its non-consolidated statutory accounts prepared in
accordance with Belgian accounting rules. In addition, in accordance with Belgian law and its Articles of
Association, the Company must allocate each year an amount of at least 5% of its annual net profit under
its non-consolidated statutory accounts to a legal reserve until the reserve equals 10% of its share capital.
Therefore, the Company is unlikely to pay dividends or other distributions in the foreseeable future. If the
price of the securities or the underlying ordinary shares declines before the Company pays dividends,
investors will incur a loss on their investment, without the likelihood that this loss will be offset in part or at
all by potential future cash dividends.

2.8.12. Audit activities

Internal audit activities are performed by the departments of Finance, for all matters related to accounting
and financial information, and Quality Assurance for all matters related to the operational activities of the
Company.

As of the date of this report, there is not yet a dedicated internal audit function.

In order to properly manage identified risks, the Company has set up the following audit measures:

• Access and security systems at the premises and offices;

• Establishment, under the supervision of the quality assurance department, of a set of

procedures covering all activities of the company;

• Weekly modifications and updates of the existing procedures;

• Development of electronic approval system in the existing erp system;

•

Implementation of extra controls in the existing erp system;

• Development of a monthly financial reporting tool which allow a close monitoring of the

financial information and kpi’s;

• Updated risks and controls matrix are in place for the internal controls processes (entity level,

it, financial operations).

2.8.13. Controls, supervision and correctives actions

Controls are performed by all persons in charge of departments and services. When deviations are identified,
there are reported to, depending of their relative importance, the head of department or the Executive
Committee.

The Executive Committee supervises the implementation of internal audit and risk management, taking into
consideration the recommendations on the Audit Committee.

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The Executive Committee is also in charge of proposing the Audit Committee corrective actions when
identified.

External audit

On May 5, 2020, further to the termination of the mandate of VCBA BDO Bedrijfsrevisoren as statutory
auditor, the shareholders meeting approved the appointment of SRL E&Y Bedrijfsrevisoren – Réviseurs
d’entreprises, having its registered office at De Kleetlaan 2, B – 1831 Diegem, Belgium, duly represented by
Carlo-Sébastien d’Addario, as Statutory Auditor, for a term of 3 years, i.e. until the ordinary general meeting
approving the accounts closed on 31 December 2022. E&Y’s mission includes the auditing of the statutory
annual accounts, the consolidated annual accounts of the Company and its subsidiaries.

The Company is also subject to ad hoc audit performed by the competent authorities to ensure compliance
with GMP, GCP or other regulations.

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3. GROUP STRUCTURE, SHAREHOLDING AND SHARE CAPITAL

3.1

Group structure

The Company conducts its main business through Celyad Oncology SA.

In 2011, the Company incorporated Cardio3 Inc, a fully owned subsidiary, in the U.S. for the purposes of
supporting its clinical and regulatory activities of the Group in the US. Cardio3 Inc became Celyad Inc on
May 12, 2015. The growth of the activities of Celyad Inc. is associated to the development of the US clinical
and regulatory activities of the Company in the US.

On November 5, 2014, the Company acquired CorQuest Medical, Inc., a private U.S. company, for a single
cash payment of €1.5 million and on-going earn-out royalty payments based on sales milestones. CorQuest
Medical, Inc. is developing Heart-XS, a new access route to the left atrium. The development of Heart-XS
and the activities of CorQuest Medical, Inc. have been on hold following the decision of the Company to
abandon the development of its cardio business program (C Cure). On November 22, 2019, CorQuest
Medical Inc. has sold to Corquest MedTech SRL, a company established under Belgian laws, its portfolio of
patents and related rights for a consideration of €1 and the reimbursement of certain maintenance costs of
these patents. CorQuest Medical Inc. has also the right to receive royalties on the future sales and a
percentage on the capital gains in case of re-sale or change of control of Corquest MedTech SRL.

On January 21, 2015, the Company purchased OnCyte, LLC, or OnCyte, a wholly-owned subsidiary of
Celdara Medical, LLC, a privately-held U.S. biotechnology company for an upfront payment of $10.0 million,
of which, $6.0 million was paid in cash and $4.0 million was paid in the form of 93,087 of its ordinary shares.
As a result of this transaction the Company acquired its CAR-T cell Product Candidates and related
technology, including technology licensed from the Trustees of Dartmouth College. OnCyte, LLC was the
company holding the CAR-T Cell portfolio of clinical-stage immuno-oncology assets. In March 2018, the
Company has dissolved OnCyte, and all the assets and liabilities of OnCyte, have been fully distributed to
and assumed by the Company.

On May 1, 2016, the Company acquired Biological Manufacturing Services SA (BMS). BMS owns GMP
laboratories. BMS rent its laboratories to the Company since 2009 and until April 30, 2016. Until the
acquisition, BMS was considered as a related party to the Company.

On June 8, 2020, the Company announced the launch of its corporate rebranding, including changing its
name to Celyad Oncology. The new name highlights the Company’s significant progress with its next-
generation CAR T programs and emphasizes its commitment to cancer patients.

The Company’s ordinary shares are listed on NYSE Euronext Brussels and NYSE Euronext Paris regulated
markets and the Company’s American Depositary Shares (ADSs) are listed on the Nasdaq Global Market,
all under the ticker symbol CYAD.

The Company does not exercise any activities through a branch office.

The consolidation perimeter of the Company is as follows:

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Country
Incorporation
and Place of
Business

Nature
Business

Proportion of
ordinary
shares
directly held
by parent (%)

Proportion of
ordinary
shares held by
the Company
(%)

Proportion of
ordinary
shares held by
non-
controlling
interests (%)

Biopharma

Parent
company
100%

Medical Device

100%

Name

Celyad Oncology SA

Celyad Inc

CorQuest Medical Inc

Biological Manufacturing Services SA BE

Manufacturing

100%

3.2

Capital increase and issuance of shares

On January 1, 2020, the equity of the Company amounted to €48,512,614,57 represented by 13,942,344
shares. In 2020, the Company has not increased its capital. On January 8, 2021, the Company has entered
into a committed equity purchase agreement (“Purchase Agreement”) for up to $40 million with Lincoln Park
Capital Fund, LLC (“LPC”), a Chicago-based institutional investor. Over the 24-month term of the Purchase
Agreement, the Group will have the right to direct LPC to purchase up to an aggregate amount of $40 million
American Depositary Shares (“ADSs”), each of which represents one of the ordinary shares of the Company.
This equity purchase agreement is expected to strengthen the Group’s current statement of financial position
while also providing the Group with access to future capital on an as needed basis.

As of December 31, 2020, the share capital of the Company amounted to €48,512,614,57 and was
represented by 13,942,344 shares. The par value is €3.48 per share.

The Board of Directors has decided to increase the capital of the Company in front of a public notary on
September 3, 2020 7 and on January 8, 2021. The special reports of the Board of Directors and the reports
of the Statutory Auditor are available in the Investors section of the Company’s website.

The evolution of the capital of the Company since its inception on July 24, 2007 is presented in the notes to
the financial statements.

All shares are issued and fully paid up and are of the same class. Each share (i) entitles its holder to one
vote at the Shareholders’ Meetings (except for what is said below regarding shares with double voting rights);
(ii) represents an identical fraction of the capital and has the same rights and obligations and participates
equally in the profit of Celyad; and (iii) gives its holder a preferential subscription right to subscribe to new
shares, convertible bonds or warrants in proportion to the part of the share capital represented by the shares
already held.

The preferential subscription right can be restricted or cancelled by a resolution approved by the
Shareholders’ Meeting, or by the Board of Directors subject to an authorization of the Shareholders’ Meeting,
in accordance with the provisions of the CCA and the Company’s articles of association.

Further to the Initial Public Offering (IPO) made on the Nasdaq on June 19, 2015, some shares of the
Company are represented in the form of American Depositary Shares (ADS). As of December 31, 2020,
there were 1,460,341 ADS outstanding.

7 On September 3, 2020, the Company entered into an Open Market Sale AgreementSM with Jefferies LLC (“Jefferies”) pursuant to which
the Company may from time to time sell, for a period of up to 36 months, through “an at the market offering” (“ATM”), with Jefferies acting
as sales agent, up to $25,000,000 of new American Depositary Shares (“ADSs”), each of which represents one ordinary share of the
Company, assuming sales of 2,522,704 ADSs in the offering at an offering price of $9.91 per ADS, which was the last reported sale price
of the ADSs on the Nasdaq Global Market on September 8, 2020.

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3.3 Warrants plans

The Company has created various incentive plans under which warrants were granted to its employees,
consultants or directors (all warrants are together referred to as “Warrants”). This section provides an
overview of the outstanding warrants as of December 31, 2020.

Upon proposal of the Board of Directors, the extraordinary shareholders’ meeting approved the issuance of,
in the aggregate, warrants giving right to subscribe to shares as follows:

• On September 26, 2008, warrants giving right to 90,000 shares. Of these 90,000 Warrants,
50,000 were accepted by the beneficiaries. None are outstanding as of December 31, 2020;

• On May 5, 2010, warrants giving right to 50,000 shares. Of these 50,000 warrants (15,000 A
warrants, 5,000 B warrants and 30,000 C warrants ), 12,710 A warrants , 5,000 B warrants,
and 21,700 C warrants C were accepted by the beneficiaries. None are outstanding as of
December 31, 2020;

• On October 29, 2010, warrants giving right to 79,500 shares. Out of the 79,500 warrants
offered, 61,050 Warrants were accepted by the beneficiaries and none are outstanding as of
December 31, 2020;

• On January 31, 2013, warrants giving right to 140,000 shares. Out of the 140,000 warrants,
120,000 were granted to certain members of the Executive Committee and a pool of 20,000
warrants was created. The warrants attributed to certain members of the Executive Committee
were fully vested at December 31, 2013 and were all exercised in January 2014 and therefore
converted into ordinary shares. The remaining 20,000 warrants were not granted and
therefore lapsed;

• On May 6, 2013, 11 investor warrants are attached to each Class B Share subscribed in the
capital increase in cash which was decided on the same date, with each investor warrant
giving right to subscribe to one ordinary share – as a result, these warrants give right to a
maximum 2,433,618 ordinary shares. On May 31, 2013, warrants giving right to 2,409,176
ordinary shares were issued and accepted, which have all been exercised as of December
31, 2020;

• On May 6, 2013, warrants giving right to 266,241 ordinary shares. Out of the 266,241 warrants
offered, 253,150 Warrants were accepted by the beneficiaries and 2,500 warrants are
outstanding as of December 31, 2020;

• On June 11, 2013, overallotment warrant giving right to a maximum number of shares equal
to 15% of the new shares issued in the context of the U.S. initial public offering, i.e. 207,225
shares). The overallotment warrant was exercised on July 17, 2013;

• On May 5, 2014, warrants giving right to 100,000 shares; a plan of 100,000 warrants was
approved. Warrants were offered to Company’s newcomers (employees, non-employees and
directors) in several tranches. Out of the warrants offered, 94,400 warrants were accepted by
the beneficiaries and 35,698 warrants are outstanding as of December 31, 2020;

• On November 5, 2015, warrants giving right to 466,000 shares; a plan of 466,000 warrants
was approved. Warrants were offered to Company’s newcomers (employees, non-employees
and directors) in several tranches. Out of the warrants offered, 353,550 warrants were
accepted by the beneficiaries and 79,315 warrants are outstanding as of December 31, 2020;

• On December 8, 2016, warrants giving right to 100,000 shares; a plan of 100,000 warrants
was approved. Warrants were offered to Company’s newcomers (employees, non-employees
and directors) in two tranches. Out of the warrants offered, 45,000 warrants were accepted by
the beneficiaries and 42,500 warrants are outstanding as of December 31, 2020;

• On June 29, 2017, warrants giving right to 520,000 shares; a plan of 520,000 warrants was
approved. Warrants were offered to employees, non-employees and directors in several
tranches. Out of the warrants offered, 334,400 warrants were accepted by the beneficiaries
and 282,251 warrants are outstanding as of December 31, 2020;

• On October 26, 2018, warrants giving rights to 700,000 shares; 700,000.00 warrants have
been issued in the framework of the authorized capital. 426,050 warrants were accepted by
the beneficiaries, out of which 381,600 warrants are still outstanding as of December 31,
2020;

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2020 Annual Report

• On October 25, 2019, warrants giving rights to 939,500 shares; 939,500 warrants have been
issued in the framework of the authorized capital. 602,025 warrants were accepted by the
beneficiaries, out of which 588,142 warrants are still outstanding as of December 31, 2020;

• On December 11, 2020, warrants giving rights to 561,525 shares; 561,525 warrants have
been issued in the framework of the authorized capital. 76,000 warrants were accepted by the
beneficiaries, out of which 76,000 warrants are still outstanding as of December 31, 2020.

As a result, as of December 31, 2020 there are 1,488,006 warrants outstanding which represent respectively
9.64% of the total number of all its issued and outstanding shares and 9.60% of the total voting financial
instruments. For further information and overview of the features of the various warrant plans, refer to
disclosure note 5.14.

3.4

Changes to the share capital

In accordance with the CCA, the Company may increase or decrease its capital by decision of the
Extraordinary General Shareholders’ Meeting taken with a majority of 75% of the votes cast, at a meeting
where at least 50% of the share capital of the Company is present or represented. If the attendance quorum
of 50% is not met, a new Extraordinary General Shareholders’ Meeting must be convened at which the
shareholders may decide on the agenda items, irrespective of the percentage of share capital present or
represented at such meeting. There are in this respect no conditions imposed by the Company’s articles of
association that are more stringent than those required by law.

Within the framework of the powers granted to it under the authorized capital, the Board of Directors may
also increase the Company’s capital as specified in its articles of association.

3.5 Major Shareholders

The information in the table below is based on information known to the Company or ascertained by the
Company from public filings made by the shareholders as of the date of this Annual Report.

On May 23, 2019 the Shareholders’ Meeting decided to voluntarily “opt in” and submit the Company to the
new Belgian Code of Companies and Associations. Furthermore, the Shareholders’ Meeting decided to
activate the possibility offered by Article 7:53 of the code of companies and associations and approved the
grant of double voting right to the registered shares held by a shareholder in a registered form for more than
two years.

As from May 3, 2021, Tolefi SA, a major shareholder of the Company, will be entitled to a double voting right
for its 2,295,701 shares (unless all or a portion of those shares have been divested in the meantime).

NAME OF BENEFICIAL OWNER

SHARES BENEFICIALLY OWNED

5% Shareholders

TOLEFI SA

Victory Capital Management, Inc.

Directors and Members of the Executive Committee
Michel Lussier [1]

Serge Goblet

Directors and Members of the Executive Committee as a group

[1] Of which 145,150 are ordinary shares and 11,400 are ADSs.

Number

2 295 701

790 806

156 550

56 180

212 730

Percentage

16.16%

5.57%

1.10%

0.40%

1.50%

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2020 Annual Report

3.6

Anti-takeover provisions under Belgian laws

Under Belgian law, public takeover bids for all the outstanding voting securities issued by the issuer are
subject to the supervision of the FSMA. If the latter determines that a takeover violates Belgian law, it may
lead to suspension of the exercise of the rights attached to any shares that were acquired in connection with
the envisaged takeover. Pursuant to the Belgian law of April 1, 2007 on public takeovers, a mandatory
takeover bid must be made when, as a result of its own acquisition or the acquisition by persons acting in
concert with it, a person owns, directly or indirectly, more than 30% of the securities with voting rights in a
company with registered office in Belgium whose securities are admitted to trading on a regulated or
recognized market. The acquirer must offer to all other shareholders the opportunity to sell their shares at
the highest of (i) the highest price offered by the acquirer for shares of the issuer during the 12 months
preceding the announcement of the bid or (ii) the weighted average price of the shares on the most liquid
market of the last 30 calendar days prior to the date on which the obligation of the acquirer to offer the
takeover of the shares of other shareholders starts.

As required by the article 34 of the Royal Decree of 14 November 2007, the following elements must be
disclosed which may have an impact in the event of a takeover bid:

a) Celyad’s capital structure, with an indication of the different classes of shares and, for each class
of shares, the rights and obligations attached to it and the percentage of total share capital that it
represents on 31 December 2020

As from the date of this Report, the share capital of the Company amounts to 49,427,200.33 EUR,
represented by 14,205,156 shares of no-par value, fully paid up.

There are no different classes of Celyad shares.

b) Restrictions, either legal or prescribed by the articles of association, on the transfer of securities

The articles of association of the Company do not contain any restriction on the transfer of the
shares.

c) Holders of any securities with special control rights and a description of those rights

There are no such holders except specific shareholders with a double voting rights as described
above.

d) System of control of any employee share scheme where the control rights are not exercised directly

by the employees

There is no such system.

e) Restrictions, either legal or prescribed by the articles of association, on the exercise of voting rights

There are no such restrictions.

f) Agreements between shareholders which are known to Celyad and may result in restrictions on the

transfer of securities and/or the exercise of voting rights

The Company has no knowledge of agreements which may result in restrictions on the transfer of
its securities and/or the exercise of voting rights.

g) Rules governing the appointment and replacement of directors:

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2020 Annual Report

The Chairperson of the Board is in charge of the nomination procedure. The Board is responsible
for proposing members for nomination to the shareholders’ meeting, in each case based on the
recommendation of the Nomination & Remuneration Committee.

For any new appointment to the Board, the skills, knowledge and experience already present and
those needed on the Board will be evaluated and, in the light of that evaluation, a description of the
role and skills, experience and knowledge needed will be prepared (a “profile”).

When dealing with a new appointment, the Chairperson of the Board must ensure that, before
considering the candidate, the Board has received sufficient information such as the candidate’s
curriculum vitae, an assessment of the candidate based on the candidate’s initial interview, a list of
the positions the candidate currently holds, and, if applicable, the necessary information for
assessing the candidate’s independence.

If a legal entity is appointed as a director, it is obliged to appoint, in accordance with the provisions
of the CCA, a natural person as a permanent representative, who may represent the legal entity in
all its dealings with the Company. The legal entity director may not dismiss its permanent
representative without simultaneously appointing a new representative.

Any proposal for the appointment of a director by the shareholders’ meeting should include a
recommendation from the Board based on the advice of the Nomination & Remuneration
Committee. This provision also applies to shareholders’ proposals for appointment. The proposal
must specify the proposed term of the mandate, which must not exceed four years. It must be
accompanied by relevant information on the candidate’s professional qualifications together with a
list of the positions the candidate already holds. The Board will indicate whether the candidate
satisfies the independence criteria.

Outgoing directors will remain in office for as long as the shareholders’ meeting, for whatever
reason, has not filled the vacancy.

Appointments are generally made for a maximum term of four years. Outgoing directors will be
eligible for re-election. However, when an independent director has served on the Board for more
than 12 years, he is in not eligible for a fourth term as independent director of the Company. Before
proposing any director for re-election, the Board should take into account the evaluations made by
the Nomination & Remuneration Committee. The mandates of those directors who are not re-
appointed for a new term will terminate immediately after the shareholders’ meeting which decides
on any re-appointment or appointment.

The directors may be revoked by the shareholders’ meeting at any time. If at any time a vacancy is
created on the Board of Directors, the remaining directors may temporarily appoint a director to the
board to fill the vacancy. Any director so appointed will hold office for the remainder of the term of
appointment of the director that it replaces. The definitive appointment of the replacing director is
added to the agenda of the following shareholders’ meeting.

h) Rules governing the amendment of the articles of association

Pursuant to the CCA, any amendment to the articles of association such as an increase or decrease
in the capital of the Company, and certain other matters such as the approval of the dissolution,
merger or de-merger may only be authorized with the approval of at least 75% of the votes validly
cast at an Extraordinary General Shareholders’ Meeting where at least 50% of the Company’s
share capital is present or represented. If the attendance quorum of 50% is not met, a new
Extraordinary General Shareholders’ Meeting must be convened at which the shareholders may
decide on the agenda items, irrespective of the percentage of share capital present or represented
at such meeting.

i) Powers of the Board of Directors in particular to issue or buy back shares

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2020 Annual Report

The Board of Directors has the most extensive powers in order to perform all acts which are useful
or necessary so as to complete the Company’s corporate purpose.

The Board of Directors has the power to perform all acts which are not expressly assigned by law
or by the articles of association to the shareholders’ meeting.

The Board of Directors has to power to establish an audit committee and other committees, the
powers of which it will determine.

On June 8, 2020, an extraordinary shareholders meeting of the Company granted to the Board of
Directors the power to increase the share capital in accordance with the articles 7:198 et sq. of the
CCA, in one or several times, for a maximum amount of €48,512,614.57 (excluding issue premium),
for a period of 5 years as of the publication of the modification to the articles of association of the
Company. Furthermore, in accordance with article 7:202 of the CCA, the Board of Directors is
empowered to proceed with a share capital increase even after receipt by the Company of a
notification by the FSMA of a takeover bid for the Company’s share, for a period of three years from
June 8, 2020.

When increasing the share capital within the limits of the authorized capital, the Board of Directors
may, in the Company’s interest, restrict or cancel the shareholders’ preferential subscription rights,
even if such restriction or cancellation is made for the benefit of one or more specific persons other
than the employees of the Company or its subsidiaries. The Board of Directors is not allowed to
buy back shares.

Regarding agreements on severance pay, reference is made to the Remuneration Report.

j) Significant agreements to which the Celyad is a party and which take effect, alter or terminate upon
a change of control of Celyad following a takeover bid, and the effects thereof, except where their
nature is such that their disclosure would be seriously prejudicial to Celyad; this exception shall not
apply where Celyad is specifically obliged to disclose such information on the basis of other legal
requirements

There are no such agreements.

k) Agreements between Celyad and its Board members or employees providing for compensation if
the Board members resign or are made redundant without valid reason or if the employment of the
employees ceases because of a takeover bid

There are no such agreements.

3.7

Financial services

Citibank N.A. is acting as depositary bank for the ADS issued by the Company.

Page 100 | 180

2020 Annual Report

4. CONSOLIDATED FINANCIAL STATEMENTS

4.1

Responsibility statement

We hereby certify that:

•

To the best of our knowledge, the consolidated financial statements as of December 31, 2020,
prepared in accordance with the International Financial Reporting Standards as issued by the
International Accounting Standards Board and as adopted by the European Union, and the legal
requirements applicable in Belgium, give a true and fair view of the assets, liabilities, financial
position, comprehensive loss, changes in equity and cash flows of the Company and the
undertakings included in the consolidation taken as a whole; and that

The management report includes a fair review of the development and the performance of the
business and the position of the Company and the undertakings included in the consolidation taken
as a whole, together with a description of the principal risks and uncertainties that they face.

March 24, 2021 on behalf of the Board of Directors,

Michel Lussier

Chairman

Filippo Petti

CEO

Page 101 | 180

4.2

Statutory auditor’s report to the general meeting of shareholders of Celyad
Oncology SA for the year ended December 31, 2020 (consolidated financial
statements)

2020 Annual Report

Page 102 | 180

2020 Annual Report

4.3

Consolidated financial statements as at December 31, 2020

4.3.1. Consolidated statements of financial position

(€’000)

December 31,

Notes

2020

NON-CURRENT ASSETS

Intangible assets

Property, Plant and Equipment

Non-current Trade and Other receivables

Non-current Grant receivables

Other non-current assets

CURRENT ASSETS

Trade and Other Receivables

Current Grant receivables

Other current assets

Short-term investments

Cash and cash equivalents

TOTAL ASSETS

EQUITY

Share Capital

Share premium

Other reserves

Accumulated deficit

NON-CURRENT LIABILITIES

Bank loans

Lease liabilities

Recoverable Cash advances (RCAs)

Contingent consideration payable and other financial liabilities

Post-employment benefits
Other non-current liabilities
CURRENT LIABILITIES

Bank loans

Lease liabilities

Recoverable Cash advances (RCAs)

Trade payables

Other current liabilities

TOTAL EQUITY AND LIABILITIES

5.6

5.7

5.8

5.9

5.10

5.11

5.13

5.22

5.19

5.16

5.20

5.15
5.17

5.19

5.16

5.18

46 379

36 171

4 119

2 117

3 679

293

19 705

615

145

1 711

2019

47 000

36 199

5 061

2 432

3 051

257

42 836

558

1 686

1 253

17 234

39 338

66 084

30 994

48 513

43 349

30 958

(91 826)

23 256

2 525

4 220

15 526

614
371
11 834

1 076

371

4 736

5 614

89 836

45 619

48 513

43 349

28 181

(74 424)

32 295

2 967

4 139

24 754

398
-
11 922

192

1 167

346

6 969

3 248

66 084

89 836

The accompanying disclosure notes form an integral part of these consolidated financial statements.

Page 107 | 180

4.3.2. Consolidated statements of comprehensive loss

2020 Annual Report

(€'000)

Revenue

Cost of sales

Gross profit

Research and Development expenses

General & Administrative expenses

Change in fair value of contingent consideration

Other income

Other expenses

Operating Loss

Financial income

Financial expenses

Loss before taxes

Income taxes

Loss for the period

Basic and diluted loss per share (in €)

5.32

Other comprehensive income/(loss)

Items that will not be reclassified to profit and loss

Remeasurements of post-employment benefit obligations, net of tax

Items that may be subsequently reclassified to profit or loss

Currency translation differences

Other comprehensive income / (loss) for the period, net of tax

Total comprehensive loss for the period

Total comprehensive loss for the period attributable to Equity Holders (1)

For the year ended December 31,

Notes

2020

2019

5.23

5.24

5.25

5.28

5.31

(21 522)

(25 196)

(9 315)

(9 070)

9 228

433

4 731

5 139

(114)

(16 987)

217

(434)

(191)

(28 879)

582

(343)

(17 204)

(28 640)

5.21

(17 204)

(1.23)

(197)

(5)

(202)

(28 632)

(2.29)

(301)

(261)

(562)

(17 406)

(29 194)

[1] For 2020 and 2019, the Group does not have any non-controlling interests and the losses for the year are fully
attributable to owners of the parent.

The accompanying disclosure notes form an integral part of these consolidated financial statements

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2020 Annual Report

4.3.3. Consolidated statements of changes in equity

(€’000)

Share
capital

Share
premium

Other
reserves

Accumulated
deficit

Total
Equity

Balance as of January 1, 2019
Capital increase
Transaction costs associated with capital increases
Share-based payments

Total transactions with owners, recognized
directly in equity
Loss for the period
Reduction of share premium by absorption of losses
Currency Translation differences
Remeasurements of defined benefit obligation

Total comprehensive loss for the period

41 553
6 960
-
-

206 149
11 209
(1 721)
-

25 667
-
-
2 775

(217 778)
-
-
-

55 589
18 169
(1 721)
2 775

6 960

9 488

2 775

19 223

-
-
-
-

-
(172 287)
-
-

(172 287)

-
-
(261)
-

(261)

(28 632)
172 287

(301)

(28 632)
-
(261)
(301)

143 354

(29 194)

Balance as of December 31, 2019

48 513

43 349

28 181

(74 424)

45 619

Balance as of January 1, 2020
Share-based payments

48 513
-

43 349
-

Total transactions with owners, recognized
directly in equity
Loss for the period
Currency Translation differences
Remeasurements of defined benefit obligation

Total comprehensive loss for the period

-
-
-

28 181
2 782

2 782

-
(5)
-

(5)

(74 424)
-

45 619
2 782

2 782

(17 204)
-
(197)

(17 204)
(5)
(197)

(17 402)

(17 406)

Balance as of December 31, 2020

48 513

43 349

30 958

(91 826)

30 994

The accompanying disclosure notes form an integral part of these consolidated financial statements.

Page 109 | 180

4.3.4. Consolidated statements of Cash flows

(€'000)

Cash Flow from operating activities

Loss for the period

Non-cash adjustments

Intangibles - Amortization and impairment

Property, plant & equipment - Depreciation

Loss on disposal of Property, plant and equipment

Gain on sales of Property, plant & equipment

Fair value adjustment on securities

Provision for onerous contract

2020 Annual Report

For the year ended December 31,

Notes

2020

2019

4.3.2

(17 204)

(28 632)

5.6

5.7

5.28

197

1 635

169

1 619

(35)

(182)

5.17, 5.18

858

Change in fair value of contingent consideration payable and other financial liabilities

5.20

(9 228)

(433)

Remeasurement of Recoverable Cash Advances (RCAs)

Grant income (RCAs and others)

Share-based payment expense

Post-employment benefits

Change in working capital

Trade receivables, other (non-)current receivables

Trade payables, other (non-)current liabilities

Net cash used in operations

Cash Flow from investing activities

Acquisition of Property, Plant & Equipment

Acquisitions of Intangible assets

Disposals of Property, Plant & Equipment

Proceeds from net investment in lease

Proceeds from short-term investments

Net cash from/(used in) investing activities

Cash Flow from financing activities

Repayments of bank borrowings

Repayments of leases

Proceeds from issuance of shares and exercise of warrants

Proceeds from RCAs & other grants

Repayment of RCAs & other grants

Net cash from/(used in) financing activities

Net cash and cash equivalents at beginning of the period

Change in Cash and cash equivalents

Effects of exchange rate changes on cash and cash equivalents

Net cash and cash equivalents at the end of the period

5.19

5.28

5.14

5.15

(933)

120

(3 089)

(3 296)

2 782

216

2 775

267

(1 148)

(1 772)

(1 726)

1 162

(27 665)

(28 202)

(150)

(417)

(169)

(205)

5.7

5.6

5.7

5.9

235

241

230

9 379

8 987

5.10

157

5.19

5.13

5.19

(192)

(281)

(1 255)

(1 206)

7 272

16 448

3 571

5.18, 5.19

(429)

(256)

5 396

39 338

18 276

40 542

5.11

(22 112)

(940)

(264)

17 234

39 338

The accompanying disclosure notes form an integral part of these consolidated financial statements.

Page 110 | 180

2020 Annual Report

5. Notes to the consolidated financial statements

5.1

General information

The Company is a clinical-stage biopharmaceutical company focused on the discovery and development of
chimeric antigen receptor T cell (CAR T) therapies for cancer.

Celyad SA was incorporated on July 24, 2007 under the name “Cardio3 BioSciences”. Celyad is a limited
liability company (Société Anonyme) governed by Belgian law with its registered office at Axis Parc, Rue
Edouard Belin 2, B-1435 Mont-Saint-Guibert, Belgium (company number 0891.118.115).

The Company has three fully owned subsidiaries (together, the Group) located in Belgium (Biological
Manufacturing Services SA) and in the United States (Celyad Inc. and Corquest Medical, Inc.).

These consolidated financial statements have been approved for issuance by the Company’s Board of
Directors on March 24, 2021. These statements have been audited by SRL E&Y Bedrijfsrevisoren-Réviseurs
d’Entreprises, the statutory auditor of the Company and independent registered public accounting firm.

The annual report is available to the public free of charge to the above-mentioned address or via the
Company’s website (https://celyad.com/investors/regulated-information/).

5.2

Basis of preparation and significant accounting policies

The consolidated financial statements of the Group for the twelve months ended December 31, 2020 and
2019 (the “year” or “the period”) include Celyad Oncology SA and its subsidiaries. The significant accounting
policies used for preparing these consolidated financial statements are explained below.

5.2.1. Basis of preparation

The consolidated financial statements have been prepared on an historical cost basis, except for:

• Financial instruments – Fair value through profit or loss

• Contingent consideration and other financial liabilities

• Post-employment benefits liability

The policies have been consistently applied to all the years presented, unless otherwise stated.

The consolidated financial statements are presented in euro and all values are presented in thousands
(€000) except when otherwise indicated. Amounts have been rounded off to the nearest thousand and in
certain cases, this may result in minor discrepancies in the totals and sub
totals disclosed in the financial
tables.

‐

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2020 Annual Report

Statement of compliance

The consolidated financial statements of the Group have been prepared in accordance with International
Financial Reporting Standards, International Accounting Standards and Interpretations (collectively, IFRSs)
as issued by the International Accounting Standards Board (IASB) and as endorsed by the European Union.

The preparation of the consolidated financial statements in accordance with IFRS requires the use of certain
critical accounting estimates. It also requires management to exercise its judgment in the process of applying
the Group’s accounting policies. The areas involving a higher degree of judgment or complexity, are areas
where assumptions and estimates are significant to the financial statements. They are disclosed in note 5.4.

Going concern

The Group is pursuing a strategy to develop therapies to treat medical needs in oncology. Management has
prepared detailed budgets and cash flow forecasts for the years 2021 and 2022. These forecasts reflect the
strategy of the Group and include significant expenses and cash outflows in relation to the development of
selected research programs and product candidates, partly compensated by grants funding.

On January 8, 2021, the Company entered into a committed equity purchase agreement (“Purchase
Agreement”) for up to $40 million with Lincoln Park Capital Fund, LLC (“LPC”), a Chicago-based institutional
investor. Over the 24-month term of the Purchase Agreement, the Group will have the right to direct LPC to
purchase up to an aggregate amount of $40 million American Depositary Shares (“ADSs”), each of which
represents one ordinary share of the Company. This equity purchase agreement is expected to strengthen
the Company’s current statement of financial position while also providing the Company with access to future
capital on an as needed basis and to ensure sufficient funding to cover its operations for the next 12 months
from the date the financial statements are issued.

Based on its current scope of activities, the Company estimates that its cash and cash equivalents as of
December 31, 2020 combined with the $40 million from the equity purchase agreement established with
Lincoln Park Capital Fund should be sufficient to fund operations until mid-2022, including data readouts
from the Company’s ongoing clinical trials.

COVID-19 update

On March 11, 2020, the World Health Organization declared the novel strain of coronavirus (COVID-19) a
global pandemic and recommended containment and mitigation measures worldwide. As of the date of our
2020 year-end report, Belgium and United States, where the Group operates, continues to be impacted by
the pandemic. The length or severity of this pandemic cannot be predicted, but the Company anticipates
that there may be an additional impact from a prolonged COVID-19 environment on the planned
development activities of the Company.

To date, COVID-19 has had no impact on the Company’s financial statements and corporate cash flow, and
the Company expects that its existing Cash and cash equivalents and equity purchase commitment of $40
million by Lincoln Park Capital Fund will be sufficient, based on the current scope of activities, to fund
operating expenses and capital expenditure requirements into mid-2022. With regards to our clinical
programs, CYAD-101, CYAD-211 and CYAD-02 were insignificantly impacted by the coronavirus pandemic
throughout 2020 and enrollment in the respective trials for these assets is ongoing without disruption,
partially due to the staggered enrollment associated with both dose-escalation trials for CYAD-211 and
CYAD-02, respectively, and the expansion cohort of CYAD-101 which began in late 2020. However, certain
clinical sites and institutions have not been able to receive visits from us or our representatives, which has
delayed our data monitoring activities.

The long-term impact of COVID-19 on the Company’s operations will depend on future developments, which
are highly uncertain and cannot be predicted, including a potential new wave of the pandemic, new
information which may emerge concerning the severity of the coronavirus and the actions to contain the
coronavirus or treat its impact, among other things, but potential prolonged closures or other business

Page 112 | 180

2020 Annual Report

disruptions may negatively affect its operations and the operations of its agents, contractors, consultants or
collaborators, which could have a material adverse impact its business, results of operations and financial
condition.

Changes to accounting standards and interpretations

The Group has applied the same accounting policies and methods of computation in its 2020 year-end
consolidated financial statements as compared to 2019, except for those that relate to new standards and
interpretations.

None of the new or amended standards and interpretations issued by the IASB and the IFRIC that will apply
for the first time in future annual periods are expected to have a material effect on the Group as either they
are not relevant to the Group’s activities or they require accounting which is consistent with the Group’s
current accounting policies.

5.2.2. Consolidation

Subsidiaries

Subsidiaries are all entities (including structured entities) over which the Group has control. The Group
controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with
the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully
consolidated from the date on which control is transferred to the Group. They are deconsolidated from the
date control ceases.

Inter-company transactions, balances and unrealized gains on transactions between group companies are
eliminated.

Unrealized losses are also eliminated. When necessary, amounts reported by subsidiaries have been
adjusted to conform with the Group’s accounting policies.

Business Combinations

The Group applies the acquisition method to account for business combinations.

The consideration transferred for the acquisition of a subsidiary is measured at the aggregate of the fair
values of the assets transferred, the liabilities incurred or assumed, and the equity interests issued by the
Group at the date of the acquisition. The consideration transferred includes the fair value of any asset or
liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and
contingent liabilities assumed in a business combination are measured initially at their fair values at the
acquisition date.

Acquisition-related costs are expensed as incurred.

Any contingent consideration to be transferred by the Group is recognized at fair value at the acquisition
date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or
liability is recognized in profit or loss, in accordance with IFRS 9 if applicable. Contingent consideration that
is classified as equity is not re-measured, and its subsequent settlement is accounted for within equity.

5.2.3. Foreign currency translation

Functional and presentation currency

Items included in the financial statements of each of the Group’s entities are measured using the currency
of the primary economic environment in which the entity operates (“the functional currency”). The
consolidated financial statements are presented in Euros, which is the Group’s presentation currency.

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Transactions and balances

Foreign currency transactions (mainly USD) are translated into the presentation currency using the
applicable exchange rate on the transaction dates. Monetary assets and liabilities denominated in foreign
currencies are retranslated at the presentation currency spot rate of exchange ruling at the reporting date.

Foreign currency exchange gains and losses arising from settling foreign currency transactions and from the
retranslation of monetary assets and liabilities denominated in foreign currencies at the reporting date are
recognized in the income statement.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using
the exchange rates as of the dates of the initial transactions. Non-monetary items measured at fair value in
a foreign currency are translated using the exchange rates at the date when the fair value is determined.

Group companies

The results and financial position of all group entities that have a functional currency different from the
presentation currency are translated into the presentation currency as follows:

• Assets and liabilities for each statement of financial position presented are translated at the

closing rate at the date of that statement of financial position;

•

Income and expenses for each income statement are translated at average exchange rate
(unless this average is not a reasonable approximation of the cumulative effect of the rates
prevailing on the transaction dates, in which case income and expenses are translated at the
rate on the dates of the transactions); and

• All resulting translation differences are recognized in other comprehensive income.

5.2.4. Revenue

So far, the main revenue generated by the Group relates to the sale of licenses.

Licensing revenue

The Group enters into license and/or collaboration agreements with third-party biopharmaceutical partners.
Revenue under these arrangements may include non-refundable upfront payments, product development
milestone payments, commercial milestone payments and/or sales-based royalties payments.

Upfront payments

License fees representing non-refundable payments received at the time of signature of license agreements
are recognized as revenue upon signature of the license agreements when the Group has no significant
future performance obligations and collectability of the fees is assured.

Milestone payments

Milestone payments represent amounts received from the Group’s customers or collaborators. The receipt
of which is dependent upon the achievement of certain scientific, regulatory, or commercial milestones.
Under IFRS 15, milestone payments generally represent a form of variable consideration as the payments
are likely to be contingent on the occurrence of future events. Milestone payments are estimated and
included in the transaction price based on either the expected value (probability-weighted estimate) or most
likely amount approach. The most likely amount is likely to be most predictive for milestone payments with
a binary outcome (i.e., the Group receives all or none of the milestone payment). Variable consideration is
only recognized as revenue when the related performance obligation is satisfied, and the Group determines
that it is highly probable that there will not be a significant reversal of cumulative revenue recognized in
future periods.

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Royalty revenue

Royalty revenues arise from the Group’s contractual entitlement to receive a percentage of product sales
achieved by co-contracting parties. As the Group’s co-contracting partners currently have no products based
on a Celyad-technology approved for sale, the Group has not received any royalty revenue to date. Royalty
revenues, if earned, will be recognized on an accrual basis in accordance with the terms of the contracts
with the Group’s customers when sales occur and there is reasonable assurance that the receivables from
outstanding royalties will be collected.

5.2.5. Other income

Government Grants

The Group’s grant income reported under ‘Other income’ in the consolidated statement of comprehensive
loss is generated from: (i) recoverable cash advances (RCAs) granted by the Regional government of
Wallonia; (ii) R&D tax credits granted by the Belgian federal government; and (iii) grants received from the
European Commission under the Seventh Framework Program (“FP7”), Federal Belgian Institute for Health
Insurance (Inami) and Regional authorities.

Government grants are recognized at their fair value (calculated based on present value of future repayment
of grants) where there is reasonable assurance that the grant will be received, and the Group will comply
with all attached conditions. Once a government grant is recognized, any related contingent liability (or
contingent asset) is treated in accordance with IAS 37.

Government grants relating to costs are deferred and recognized in the consolidated statement of
comprehensive loss over the period necessary to match them with the costs that they are intended to
compensate.

Based on the nature of transactions, cash inflows received from government grants provide the entity with
financing for the designated activity. They are in substance financing cash inflows consistent with the cash
proceeds from RCAs and other grants and are disclosed in the consolidated statements of cash flows as
“Cash Flow from financing activities”.

The Group’s grant income is recognized in the consolidated statement of comprehensive loss under “Other
income/expense” and as a non-cash adjustment in “cash flows from operating activities” in the consolidated
statements of cash flows.

Recoverable cash advances (RCAs)

The Group receives grants from the Walloon Region in the form of recoverable cash advances (RCAs).

RCAs are dedicated to support specific development programs. All RCA contracts, in essence, consist of
three phases, i.e., the “research phase”, the “decision phase” and the “exploitation phase”. During the
research phase, the Group receives funds from the Region based on statements of expenses. In accordance
with IAS 20.10A and IFRS Interpretations Committee (IC)’s conclusion that contingently repayable cash
received from a government to finance a research and development (R&D) project is a financial liability
under IAS 32, ‘Financial instruments; Presentation’, the RCAs are initially recognized, concomitantly with
the occurrence of subsidized expense, as a financial liability at fair value (calculated based on present value
of future repayment of grants), determined as per IFRS 9/IAS 39.

The benefit (RCA grant component) consisting in the difference between the cash received (RCA proceeds)
and the above-mentioned financial liability’s fair value (RCA liability component) is treated as a government
grant in accordance with IAS 20.

The RCA grant component is recognized in profit or loss on a systematic basis over the periods in which the
entity recognizes the underlying R&D expenses subsidized by the RCA.

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The fair market value adjustments to the RCA liability are recognized in the consolidated statement of
comprehensive loss under “Other income/expense” and as a non-cash adjustment in “cash flows from
operating activities” in the consolidated statements of cash flows.

The RCAs liability contains two components:

•

The fixed part of the reimbursement of 30% is refundable based upon an agreed repayment
schedule. The initial recognition at fair value is performed using the risk-free discount rate at the
date of the convention and the assumption of exploitation until the end of repayment schedule.

The variable part (from 70% and up to 170%) is refundable to the extent of the revenue generated
within exploitation phase. The initial recognition at fair value of the variable part of the component
is based on probability-weighted discounted cash flows estimated using Key assumptions listed in
note 5.6.2.

The RCAs liability component (RCA financial liability) is subsequently measured at amortized cost using the
cumulative catch-up approach under which the carrying amount of the liability is adjusted to the present
value of the future estimated revenue, discounted at the liability’s original effective interest rate. The resulting
adjustment is recognized within profit or loss.

At the end of the research phase, the Group should within a period of six months decide whether or not to
exploit the results of the research phase (decision phase). The exploitation phase may have a duration of
up to 20 years. In the event the Group decides to exploit the results under an RCA, the relevant RCA
becomes contingently refundable, and the fair value of the RCA liability adjusted accordingly, if required. For
more information on the potential financial consequences of these exploitation decisions in terms of potential
reimbursements and sales % fees to be paid to the Walloon Region, refer to note 5.16.

When the Group does not exploit (or ceases to exploit) the results of programs under an RCA, it has to notify
the Region of this decision. This decision is the sole responsibility of the Group. The related liability is then
discharged by the transfer of such results to the Region. Also, when the Group decides to renounce its rights
to patents which may result from the research, title to such patents will be transferred to the Region. In that
case, the RCA liability is extinguished.

R&D Tax credits

Since 2013, the Group applies for R&D tax credits, a tax incentive measure for European SME’s established
by the Belgian federal government. When capitalizing its R&D expenses under the tax reporting framework,
the Group may either i) get a reduction of its taxable income (at current income tax rate applicable); or ii) if
no sufficient taxable income is available, apply for the refund of the unutilized tax credits, calculated on the
R&D expenses amount for the year. Such settlement occurs at the earliest 5 financial years after the tax
credit application filed by the Group.

Considering that R&D tax credits are ultimately paid by the public authorities, the related benefit is treated
as a government grant under IAS 20 and booked into other income, in order to match the R&D expenses
subsidized by the grant.

Other government grants

The Group has received and will continue to apply for grants from European (FP7), Regional authorities and
Federal Belgian Institute for Health Insurance (Inami). These grants are dedicated to partially finance early
stage projects such as fundamental research, applied research, prototype design, etc.

To date, all grants received are not associated with any conditions. As per each grant contract, grants are
paid upon submission by the Group of a statement of eligible expenses. The Group incurs project expenses
first and asks for partial refunding according to the terms of the contracts.

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These government grants are recognized in profit or loss on a systematic basis over the periods in which
the entity recognizes the underlying R&D expenses subsidized.

5.2.6.

Intangible assets

The following categories of intangible assets apply to the current Group operations:

Separately acquired intangible assets

Intangible assets acquired from third parties are recognized at cost, if and only if it is probable that future
economic benefits associated with the asset will flow to the Group, and that the cost can be measured
reliably. Subsequent payments of contingent consideration are capitalized when incurred. Following initial
recognition, intangible assets are carried at cost less any accumulated amortization and accumulated
impairment losses. The useful life of intangible assets is assessed as finite, except for Goodwill and in
process research and development (IPRD) assets (discussed below). They are amortized over the expected
useful economic life and assessed for impairment whenever there is an indication that the intangible asset
may be impaired. The amortization period and the amortization method for an intangible asset with a finite
useful life are reviewed at least at each financial year end. Changes in the expected useful life or the
expected pattern of consumption of future economic benefits embodied in the asset are accounted for by
changing the amortization period or method, as appropriate, and are treated as changes in accounting
estimates and applied prospectively. The amortization expense on intangible assets with finite lives is
recognized in the income statement in the expense category consistent with the function of the intangible
asset.

Patents, Licenses and Trademarks

Licenses for the use of intellectual property are granted for a period corresponding to the intellectual property
of the assets licensed. Amortization is calculated on a straight-line basis over this useful life.

Patents and licenses are amortized over the period corresponding to the intellectual property (IP) protection
and are assessed for impairment whenever there is an indication these assets may be impaired. Indication
of impairment is related to the value of the patent demonstrated by the preclinical and clinical results of the
technology.

Software

Software only concerns acquired computer software licenses. Software is capitalized on the basis of the
costs incurred to acquire and bring to use the specific software. These costs are amortized over their
estimated useful lives of three to five years on a straight-line basis.

Intangible assets acquired in a business combination

Goodwill

Goodwill is an asset representing the future economic benefits arising from other assets acquired in a
business combination that are not individually identified and separately recognized. Goodwill is measured
as a residual at the acquisition date, as the excess of the fair value of the consideration transferred and the
assets and liabilities recognized (in accordance with IFRS 3).

Goodwill has an indefinite useful life and is not amortized but tested for impairment at least annually or more
frequently whenever events or changes in circumstances indicate that goodwill may be impaired, as set forth
in IAS 36 (Impairment of Assets).

Goodwill arising from business combinations is allocated to cash generating units, which are expected to
receive future economic benefits from synergies that are most likely to arise from the acquisition. These cash

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generating units form the basis of any future assessment of impairment of the carrying value of the acquired
goodwill.

In-process research and development costs

The In-process research and development costs (“IPRD”) acquired as part of a business combination are
measured at fair value at the date of acquisition. Subsequent to initial recognition, it is reported at cost and
is subject to annual impairment testing until the date the projects are available for use and from that moment,
the IPRD will be amortized over its remaining useful economic life.

Subsequent R&D expenditure can be capitalized as part of the IPRD only to the extent that IPRD is in
development stage, i.e. when such expenditure meets the recognition criteria of IAS 38. In line with biotech
industry practice, the Group determines that ‘development stage’ under IAS 38 is reached when the product
candidate gets regulatory approval (upon Phase III completion). Therefore, any R&D expenditure incurred
between the acquisition date and the development stage should be treated as part of research phase and
expensed periodically in the income statement.

Internally generated intangible assets

Except qualifying development expenditure (discussed below), internally generated intangible assets are not
capitalized. Expenditure is reflected in the income statement in the year in which the expenditure is incurred.

Research and development costs

Research costs are expensed as incurred. Development expenditures on an individual project are
recognized as an intangible asset when the Group can demonstrate:

(a) The technical feasibility of completing the intangible asset so that it will be available for use or sale.

(b) Its intention to complete the intangible asset and use or sell it.

(d) How the intangible asset will generate probable future economic benefits. Among other things, the
entity can demonstrate the existence of a market for the output of the intangible asset or the
intangible asset itself or, if it is to be used internally, the usefulness of the intangible asset.

(e) The availability of adequate technical, financial and other resources to complete the development

and to use or sell the intangible asset.

(f)

Its ability to measure reliably the expenditure attributable to the intangible asset during its
development.

For the industry in which the Group operates, the life science industry, criteria a) and d) tend to be the most
difficult to achieve. Experience shows that in the Biotechnology sector technical feasibility of completing the
project is met when such project completes successfully Phase III of its development. For medical devices
this is usually met at the moment of CE marking.

Following initial recognition of the development expenditure as an asset, the cost model is applied requiring
the asset to be carried at cost less any accumulated amortization and accumulated impairment losses.

Amortization of the asset begins when development has been completed and the asset is available for use.
It is amortized over the period of expected future benefit. Amortization is recorded in Research &
Development expenses. During the period of development, the asset is tested for impairment annually, or
earlier when an impairment indicator occurs. As of statement of financial position dates, only the
development costs of C-Cathez have been capitalized and are being amortized over a period of 17 years
which corresponds to the period over which the intellectual property is protected.

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5.2.7. Property, plant and equipment

Property, plant and equipment is stated at cost, net of accumulated depreciation and/or accumulated
impairment losses, if any. Repair and maintenance costs are recognized in the income statement as
incurred.

Depreciation is calculated on a straight-line basis over the estimated useful life of the asset as follows:

•

Land and buildings: 15 to 20 years

• Plant and equipment: 5 to 15 years

•

Laboratory equipment: 3 to 5 years

• Office furniture: 3 to 10 years

•

Leasehold improvements: based on remaining duration of office building lease

• Right-of-use assets: over lease term

An item of property, plant and equipment and any significant part initially recognized is derecognized upon
disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising
on derecognition of the asset (calculated as the difference between the net disposal proceeds and the
carrying amount of the asset) is included in the income statement when the asset is derecognized.

The assets’ residual values, useful lives and methods of depreciation are reviewed at each financial year
end, and adjusted prospectively, if applicable.

5.2.8. Leases

The determination of whether an arrangement is, or contains, a lease is based on the substance of the
arrangement at inception date: whether fulfilment of the arrangement is dependent on the use of a specific
asset or assets or the arrangement conveys a right to use the asset.

The Group leases various offices, facilities, cars and IT-equipment.

Leases are recognized as a right-of-use asset and a corresponding liability at the date at which the leased
asset is available for use by the Group. Each lease payment is allocated between the liability and finance
cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic
rate of interest on the remaining balance of the liability for each period. The right-of-use asset is depreciated
over the shorter of the asset's useful life and the lease term on a straight-line basis.

Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities
include the net present value of the following lease payments:

•

Fixed payments (including in-substance fixed payments), less any lease incentives receivable;

• Variable lease payment that are based on an index or a rate;

• Amounts expected to be payable by the lessee under residual value guarantees;

•

The exercise price of a purchase option if the lessee is reasonably certain to exercise that option;
and

• Payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that

option.

The lease term covers the non-cancellable period for which the Group has the right to use an underlying
asset, together with both:

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(a) Periods covered by an option to extend the lease if the Group is reasonably certain to exercise that

option; and

(b) Periods covered by an option to terminate the lease if the Group is reasonably certain not to

exercise that option.

The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be
determined, the lessee’s incremental borrowing rate is used, being the rate that the lessee would have to
pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment with
similar terms and conditions.

Right-of-use assets are measured at cost comprising the following:

•

The amount of the initial measurement of lease liability;

• Any lease payments made at or before the commencement date less any lease incentives received;

• Any initial direct costs; and

• Restoration costs.

Payments associated with short-term leases and leases of low-value assets are recognized on a straight-
line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or
less. Low-value assets primarily comprise IT-equipment.

The Group subleases some office space it leases from a head lessor. In its capacity as intermediate lessor,
the Group assesses whether the sublease is a finance or operating lease in the context of the right-of-use
asset being leased. The sublease is classified as a finance lease if it transfers substantially all the risks and
rewards incidental to ownership of the underlying right-of-use asset. It is classified as an operating lease if
it does not transfer substantially all the risks and rewards incidental to ownership of the underlying right-of-
use asset.

From time to time, the Group may enter into sale and leaseback transactions. When a sale occurs, both the
seller-lessee and the buyer-lessor account for the leaseback in the same manner as any other lease.
Specifically, the seller-lessee recognizes a lease liability and right-of-use asset for the leaseback (subject to
the optional exemptions for short-term leases and leases of low-value assets).

5.2.9.

Impairment of non-financial assets

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If
any indication exists, or when annual impairment testing for an asset is required, the Group estimates the
asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating
unit’s (CGU) fair value less costs to sell and its value in use and is determined for an individual asset, unless
the asset does not generate cash inflows that are largely independent of those from other assets or group
of assets. In assessing value in use, the estimated future cash flows are discounted to their present value
using a pre-tax discount rate that reflects current market assessments of the time value of money and the
risks specific to the asset. In determining fair value less costs to sell, an appropriate valuation model is used
based on the discounted cash-flow model. For intangible assets under development (like IPRD), only the
fair value less costs to sell reference is allowed in the impairment testing process.

Where the carrying amount of an asset or CGU exceeds its recoverable amount, an impairment loss is
immediately recognized as an expense and the asset carrying value is written down to its recoverable
amount.

An assessment is made at each reporting date as to whether there is any indication that previously
recognized impairment losses may no longer exist or may have decreased. If such indication exists, the
Group estimates the asset’s or cash-generating unit’s recoverable amount. A previously recognized
impairment loss is reversed only if there has been a change in the assumptions used to determine the asset’s

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recoverable amount since the last impairment loss was recognized. The reversal is limited so that the
carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that
would have been determined, net of depreciation, had no impairment loss been recognized for the asset in
prior years. Such reversal is recognized in the income statement unless the asset is carried at a revalued
amount, in which case the reversal is treated as a revaluation increase. An impairment loss recognized on
goodwill is however not reversed in a subsequent period.

As of the statement of financial position dates, the Group has two cash-generating units which consist of the
development and commercialization activities on:

• CYAD products candidate series based on CAR-T technology, for the immune-oncology segment;

and

• C-Cathez commercialized medical device, for the cardiology segment.

Indicators of impairment used by the Group are the preclinical and clinical results obtained with the
technology.

5.2.10. Cash and cash equivalents

Cash and cash equivalents in the statement of financial position comprise cash at banks and on hand and
very short-term deposits with an original maturity of three months or less. Cash and cash equivalents are
carried in the statement of financial position at their nominal value.

5.2.11. Financial assets

5.2.11.1

Classification

The Group classifies its financial assets in accordance with IFRS 9 categories for measurement purposes.
The classification depends on the purpose for which the financial assets were acquired. Management
determines the classification of its financial assets at initial recognition.

‘Amortized cost’ measurement category refers to loans and receivables which are non-derivative financial
assets, with fixed or determinable payments that are not quoted in an active market. They are included in
current assets, except for maturities greater than 12 months after the end of the reporting period which are
classified as non-current assets. This measurement category comprises “cash and cash equivalents”, “short-
term investments”, and relevant financial assets within “(non-) current trade and other receivables”, “(non-)
current grant receivables” and “other (non-) current assets”.

5.2.11.2

Initial recognition and measurement

All financial assets are recognized initially at fair value plus or minus, in the case of a financial asset not at
fair value through profit or loss, directly attributable transaction costs.

5.2.11.3

Subsequent measurement

After initial measurement, financial assets are subsequently measured at amortized cost using the effective
interest rate method (EIR), less impairment. Amortized cost is calculated by taking into account any discount
or premium on acquisition and fee or costs that are an integral part of the EIR. The EIR amortization is
included in finance income in the income statement. The losses arising from impairment are recognized in
the income statement.

5.2.11.4

Impairment of financial assets

In relation to the impairment of financial assets, IFRS 9 requires an expected credit loss model. The expected
credit loss model requires the Group to account for expected credit losses and changes in those expected

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credit losses at each reporting date to reflect changes in credit risk since initial recognition of the financial
assets. In other words, it is no longer necessary for a credit event to have occurred before credit losses are
recognized.

Specifically, IFRS 9 requires the Group to recognize a loss allowance for expected credit losses on trade
receivables and contract assets.

In particular, IFRS 9 requires the Group to measure the loss allowance for a financial instrument at an
amount equal to the lifetime expected credit losses (ECL) if the credit risk on that financial instrument has
increased significantly since initial recognition, or if the financial instrument is a purchased or originated
impaired financial asset. However, if the credit risk on a financial instrument has not increased
credit
significantly since initial recognition (except for a purchased or originated credit
impaired financial asset),
the Group is required to measure the loss allowance for that financial instrument at an amount equal to
12
months ECL. IFRS 9 also requires a simplified approach for measuring the loss allowance at an amount
equal to lifetime ECL for trade receivables, contract assets and lease receivables in certain circumstances.

‐

Given the current nature and size of operations of the Group, these requirements mainly apply to the financial
assets reported under ‘non-current trade receivables’. The carrying value of these receivables (resulting
mainly from Mesoblast license agreement commented further in note 5.8) take into account a discount rate
equal to the Group’s partner’s incremental borrowing rate and, accordingly, is already credit risk-adjusted.
The Group considers there is no significant additional credit risk related to this receivable, which would not
have been captured by the discounting effect, both at inception of the receivable and at the reporting date.
As such, no additional ECL allowance has been recognized for this financial asset or any other financial
asset.

5.2.11.5

Financial assets carried at amortized cost

For financial assets carried at amortized cost the Group first assesses individually whether objective
evidence of impairment exists individually for financial assets that are individually significant, or collectively
for financial assets that are not individually significant. If the Group determines that no objective evidence of
impairment exists for an individually assessed financial asset, it includes the asset in a group of financial
assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are
individually assessed for impairment and for which an impairment loss is, or continues to be, recognized are
not included in a collective assessment of impairment.

If there is objective evidence that an impairment loss has incurred, the amount of the loss is measured as
the difference between the asset’s carrying amount and the present value of estimated future cash flows.

The present value of the estimated future cash flows is discounted at the financial assets’ original effective
interest rate. If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the
current effective interest rate.

The carrying amount of the asset is reduced through the use of an allowance account and the amount of the
loss is recognized in the income statement. Interest income continues to be accrued on the reduced carrying
amount and is accrued using the rate of interest used to discount the future cash flows for the purpose of
measuring the impairment loss. The interest income is recorded as part of finance income in the income
statement. Loans together with the associated allowance are written off when there is no realistic prospect
of future recovery. If, in a subsequent year, the amount of the estimated impairment loss increases or
decreases because of an event occurring after the impairment was recognized, the previously recognized
impairment loss is increased or reduced by adjusting the allowance account. If a future write-off is later
recovered, the recovery is credited to the income statement.

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5.2.12. Financial liabilities

5.2.12.1

Classification

The Group’s financial liabilities include “bank loans”, “lease liabilities”, “recoverable cash advances”,
“contingent consideration and other financial liabilities”, “trade payables” and relevant financial liabilities
within “Other (non-) current liabilities”.

The Group classifies and measures its financial liabilities at ‘amortized cost’ using the effective interest
method, except “contingent consideration and other financial liabilities” which are classified and measured
at ‘fair value through profit or loss’.

5.2.12.2

Initial recognition and measurement

All financial liabilities are recognized initially at fair value plus or minus, in the case of a financial liabilities
not at fair value through profit or loss, directly attributable transaction costs.

5.2.12.3

Subsequent measurement

The subsequent measurement of financial liabilities depends on their classification as explained above. In
particular:

Contingent consideration and other financial liabilities

The contingent consideration and other financial liabilities are recognized and measured at fair value at the
acquisition date. After initial recognition, contingent consideration arrangements that are classified as
liabilities are re-measured at fair value with changes in fair value recognized in profit or loss in accordance
with IFRS 3 and IFRS 9. Therefore, contingent payments will not be eligible for capitalization but will simply
reduce the contingent consideration liability.

Details regarding the valuation of the contingent consideration are disclosed in note 5.20.2.

Recoverable cash advances

Recoverable cash advances granted by the Walloon Region are subsequently measured at amortized cost
using the cumulative catch-up approach, as described in section 5.2.5 above.

Trade payables and other payables

After initial recognition, trade payables and other payables are measured at amortized cost using the
effective interest method.

Loans and borrowings

After initial recognition, interest bearing loans and borrowings are subsequently measured at amortized cost
using the effective interest rate method. Gains and losses are recognized in the income statement when the
liabilities are derecognized.

5.2.12.4

Derecognition

A financial liability is derecognized when the obligation under the liability is discharged or cancelled or
expires.

When an existing financial liability is replaced by another from the same lender on substantially different
terms, or the terms of an existing liability are substantially modified, such an exchange or modification is

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treated as a derecognition of the original liability and the recognition of a new liability, and the difference in
the respective carrying amounts is recognized in the income statement.

5.2.13. Provisions

Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a
past event, it is probable that an outflow of resources embodying economic benefits will be required to settle
the obligation and a reliable estimate can be made of the amount of the obligation. Where the Group expects
some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is
recognized as a separate asset but only when the reimbursement is virtually certain. The expense relating
to any provision is presented in the income statement net of any reimbursement. If the effect of the time
value of money is material, provisions are discounted using a current pre-tax rate that reflects, where
appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to
the passage of time is recognized as a finance cost.

5.2.13.1

Employee benefits

Post-employment plan

The Group operates a pension plan which requires defined contributions (DC) to be funded by the Group
externally at a third-party insurance company. Under Belgian law, an employer must guarantee a minimum
rate of return on the Group’s contributions and thus it is treated as defined benefit plan under IAS 19.

At the statement of financial position dates, the minimum rates of return guaranteed by the Group are as
follows, in accordance with the law of 18 December 2015:

• 1.75% for the employer’s contributions paid as from 1 January 2016 (variable rate based on

Governmental bond OLO rates, with a minimum of 1.75% and a maximum of 3.75%);

• 3.25% (fixed rate) for the employer’s contributions paid until 31 December 2015.

The cost of providing benefits is determined using the projected unit credit (PUC) method, with actuarial
valuations being carried out at the end of each annual reporting period, with the assistance of an independent
actuarial firm.

The liability recognized in the statement of financial position in respect of the pension plans is the present
value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets.
The present value of the defined benefit obligation is determined by discounting the estimated future cash
outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which
the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension
obligation.

The current service cost of the defined benefit plan, recognized in the income statement as part of the
operating costs, reflects the increase in the defined benefit obligation resulting from employee service in the
current year, benefit changes, curtailments and settlements.

Past-service costs are recognized immediately in the income statement.

The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit
obligation and the fair value of plan assets. This cost is included in the operating costs in the income
statement.

Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are
charged or credited to other comprehensive income in the period in which they arise.

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Short-term benefits

Short-term employee benefits are those expected to be settled wholly before twelve months after the end of
the annual reporting period during which employee services are rendered, but do not include termination
benefits such as wages, salaries, profit-sharing and bonuses and non-monetary benefits paid to current
employees.

The undiscounted amount of the benefits expected to be paid in respect of services rendered by employees
in an accounting period is recognized in that period. The expected cost of short-term compensated absences
is recognized as the employees render services that increase their entitlement or, in the case of non-
accumulating absences, when the absences occur, and includes any additional amounts the entity expects
to pay as a result of unused entitlements at the end of the period.

Share-based payments

Certain employees, managers and members of the Board of Directors of the Group receive remuneration,
as compensation for services rendered, in the form of share-based payments which are “equity-settled”.

Measurement

The cost of equity-settled share-based payments is measured by reference to the fair value at the date on
which they are granted. The fair value is determined by using an appropriate pricing model, further details
are given in note 5.14.

Recognition

The cost of equity-settled share-based payments is recorded as an expense, together with a corresponding
increase in equity, over the period in which the service conditions are fulfilled. The cumulative expense
recognized for equity-settled transactions at each reporting date until the vesting date reflects the extent to
which the vesting period has expired and the Group’s best estimate of the number of equity instruments that
will ultimately vest.

Modification

Where the terms of an equity-settled transaction award are modified, the minimum expense recognized is
the expense as if the terms had not been modified, if the original terms of the award were met. An additional
expense is recognized for any modification that increases the total fair value of the share-based payment
transaction, or is otherwise beneficial to the employee as measured at the date of modification.

The incremental fair value granted is the difference between the fair value of the modified equity instrument
and the original equity instrument, both estimated as at the date of the modification. If the modification occurs
during the vesting period, the incremental fair value granted is included in the measurement of the amount
recognized for services received over the period from the modification date until the date when the modified
equity instruments vest, in addition to the amount based on the grant date fair value of the original equity
instruments, which is recognized over the remainder of the original vesting period. If the modification occurs
after vesting date, the incremental fair value granted is recognized immediately, or over the vesting period if
the employee is required to complete an additional period of service before becoming unconditionally entitled
to those modified equity instruments.

Forfeiture

An equity-settled award can be forfeited with the departure of a beneficiary before the end of the vesting
period, or cancelled and replaced by a new equity settled award. If a new award is substituted for the
cancelled award, and designated as a replacement award on the date that it is granted, the cancelled and
new awards are treated as if they were a modification of the original award, as described in the previous
paragraph.

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2020 Annual Report

Cancellation

If the cancellation occurs during the vesting period, it is treated as an acceleration of vesting, and the Group
recognizes immediately the amount that would otherwise have been recognized for services received over
the remainder of the vesting period. If the cancellation occurs after the vesting period, no adjustments will
be made to the accounting.

5.2.14. Income Taxes

Tax is recognized in the income statement, except to the extent that it relates to items recognized in other
comprehensive income or directly in equity. In this case, the tax is also recognized in other comprehensive
income or directly in equity, respectively.

Deferred tax

Deferred tax is provided using the liability method on temporary differences at the reporting date between
the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognized for all taxable temporary differences, except:

• Where the deferred tax liability arises from the initial recognition of goodwill or of an asset or
liability in a transaction that is not a business combination and, at the time of the transaction,
affects neither the accounting profit nor taxable profit or loss;

•

In respect of taxable temporary differences associated with investments in subsidiaries,
associates and interests in joint ventures, where the timing of the reversal of the temporary
differences can be controlled and it is probable that the temporary differences will not reverse
in the foreseeable future.

Deferred tax assets are recognized for all deductible temporary differences, carry forward of unused tax
credits and unused tax losses (except if the deferred tax asset arises from the initial recognition of an asset
or liability in a transaction other than a business combination and that, at the time of the transaction affects
neither accounting nor taxable profit or loss), to the extent that it is probable that taxable profit will be
available against which the deductible temporary differences, and the carry forward of unused tax credits
and unused tax losses can be utilized.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that
it is not probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to
be utilized. Unrecognized deferred tax assets are reassessed at each reporting date and are recognized to
the extent that it has become probable that future taxable profits will allow the deferred tax asset to be
recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when
the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or
substantively enacted at the reporting date.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current
tax assets against current income tax liabilities and the deferred taxes relate to income taxes levied by the
same taxation authority or either the same taxable entity or different taxable entities where there is an
intention to settle the balances on a net basis.

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5.2.15. Earnings (loss) per share

The basic net profit/(loss) per share is calculated based on the weighted average number of shares
outstanding during the period.

The diluted net profit/(loss) per share is calculated based on the weighted average number of shares
outstanding including the dilutive effect of potentially dilutive ordinary shares such as warrants and
convertible debts. Potentially dilutive ordinary shares should be included in diluted earnings (loss) per share
when and only when their conversion to ordinary shares would decrease the net profit per share (or increase
net loss per share).

5.3

Risk Management

Financial risk factors

Interest rate risk

The interest rate risk is very limited as the Group has only a limited amount of finance leases and outstanding
bank loans. So far, because of the immateriality of the exposure, the Group did not enter into any interest
hedging arrangements.

Credit risk

The Group has a limited amount of trade receivables due to the fact that sales to third parties are not
significant and thus the Group’s credit risk arises mainly from cash and cash equivalents and deposits with
banks and financial institutions. The Group only works with international reputable commercial banks and
financial institutions.

The maximum credit risk, to which the Group is theoretically exposed as at the statement of financial position
date, is the carrying amount of financial assets. Given the current nature and size of operations of the Group,
the requirement of the Group to measure the loss allowance for a financial instrument at an amount equal
to the lifetime expected credit losses (ECL), mainly apply to the financial assets reported under ‘non-current
trade receivables’. The carrying value of these receivables (resulting mainly from Mesoblast license
agreement commented further in note 5.8) take into account a discount rate equal to the Group’s partner’s
incremental borrowing rate and, accordingly, is already credit risk-adjusted. The Group considers there is
no significant additional credit risk related to this receivable, which would not have been captured by
discounting effect, both at inception of the receivable and at the reporting date. As such, no additional ECL
allowance has been recognized for this financial asset or any other financial asset.

Foreign exchange risk

The Group is exposed to foreign exchange risk as certain collaborations or supply agreements of raw
materials are denominated in USD. Moreover, the Group has also investments in foreign operations, whose
net assets are exposed to foreign currency translation risk (USD). So far, because of the immateriality of the
exposure, the Group did not enter into any currency hedging arrangements.

At December 31, 2020, the foreign exchange risk exposure exists mainly on the cash denominated in USD.

A depreciation of 1% on the USD versus EUR would translate into an unrealized foreign exchange loss of
€4k for the Group at December 31, 2020.

Liquidity risk

The Group monitors its risk to a shortage of funds using a recurring liquidity planning tool.

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2020 Annual Report

The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use
of bank deposit and leases.

Refer to note 5.19 for an analysis of the Group’s non-derivative financial liabilities into relevant maturity
groupings based on the remaining period at the statement of financial position date to the contractual
maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.

Capital management

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going
concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an
adequate structure to limit to costs of capital.

5.4

Critical accounting estimates and judgments 8

The preparation of the Group’s financial statements requires management to make judgments, estimates
and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the
disclosure of contingent liabilities, at the end of the reporting period.

Estimates and judgments are continually evaluated and are based on historical experience and other factors,
including expectations of future events that are believed to be reasonable under the circumstances.
Uncertainty about these assumptions and estimates could result in outcomes that require a material
adjustment to the carrying amount of the asset or liability affected in future periods.

In the process of applying the Group’s accounting policies, management has made judgments and has used
estimates and assumptions concerning the future. The resulting accounting estimates will, by definition,
seldom equal the related actual results. The estimates and assumptions that have a significant risk of
causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year
are addressed below.

Going Concern

When assessing going concern, the Board of Directors considers mainly the following factors:

• The treasury available at the statement of financial position date; and,

• The cash burn projected in accordance with the approved budget for next 12-month period as

from the date of the statement of financial position ;

• The availability of grant funding and outcome of ongoing and future grant applications payback

loan to be received for the next 12-month period; and;

• The financial facilities open to the company for raising new funds by capital increase

operations.

Revenue

The recognition of revenue relating to license and collaboration agreements involves management estimates
and requires judgement as to:

8 The uncertainly raised by the COVID-19 pandemic is not impacting the critical accounting estimates and judgments. For additional
information on COVID-19 pandemic update, refer to note 5.2.1.

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2020 Annual Report

(i)

(ii)

(iii)

(iv)

(v)

(vi)

Classifying the license agreement (right-to-use or right-to-access license) in accordance with
‘Licensing’ Application Guidance set forth in IFRS 15;

Identifying the performance obligations comprised in the contract;

Estimating probability for (pre-)clinical development or commercial milestone achievement;

Determining the agreed variable considerations to be included in the transaction price taking
into account the constraining limit of the “highly probable” criteria;

Allocating the transaction price according to the stand-alone selling price of each of the
performance obligations; and

Estimating the finance component in the transaction price, based on the contract expected
duration and discount rate.

The management makes its judgment taking into account all information available about clinical status of
the underlying projects at the reporting date and the legal analysis of each applicable contracts. Further
details are contained in Note 5.23.

Recoverable Cash Advances received from the Walloon Region

As explained in note 5.2.5, accounting for RCAs requires initial recognition of the fair value of the loan
received to determine the benefit of the below-market rate of interest, which shall be measured as the
difference between the initial carrying value of the loan and the proceeds received. Loans granted to entities
in their early stages of operations, for which there is significant uncertainty about whether any income will
ultimately be generated and for which any income which will be generated will not arise until a number of
years in the future, normally have high interest rates. Judgment is required to determine a rate which may
apply to a loan granted on an open market basis.

In accordance with the RCA agreements, the following two components are assessed when calculating
estimated future cash flows:

• 30% of the initial RCA, which is repayable when the Group exploits the outcome of the

research financed; and

• A remaining amount, which is repayable based on a royalty percentage of future sales

milestones, up to a level of 170% of the initial granted amount.

After initial recognition, RCA liabilities are measured at amortized cost using the cumulative catch up method
requiring management to regularly revise its estimates of payments and to adjust the carrying amount of the
financial liability to reflect actual and revised estimated cash flows.

Measurement and impairment of non- financial assets

With the exception of goodwill and certain intangible assets for which an annual impairment test is required,
the Group is required to conduct impairment tests where there is an indication of impairment of an asset.
Measuring the fair value of a non-financial assets requires judgement and estimates by management. These
estimates could change substantially over time as new facts emerge or new strategies are taken by the
Group. Further details are contained in note 5.6.2.

Business combinations

In respect of acquired businesses by the Group, significant judgement is made to determine whether these
acquisitions are to be considered as an asset deal or as a business combination. Determining whether a
particular set of assets and activities is a business should be based on whether the integrated set is capable
of being conducted and managed as a business by a market participant. Moreover, managerial judgement
is particularly involved in the recognition and fair value measurement of the acquired assets, liabilities,

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2020 Annual Report

contingent liabilities and contingent consideration. In making this assessment management considers the
underlying economic substance of the items concerned in addition to the contractual terms.

Contingent consideration and other financial liabilities

The Group recorded a liability for the estimated fair value of contingent consideration arising from business
combinations. The estimated amounts are the expected payments and timing of such payments, determined
by considering the possible scenarios of forecast sales and other performance criteria, the amount to be
paid under each scenario, and the probability of each scenario, which is then discounted to a net present
value. The estimates could change substantially over time as new facts emerge and each scenario develops.

Deferred Tax Assets

Deferred tax assets for unused tax losses are recognized to the extent that it is probable that taxable profit
will be available against which the losses can be utilized. Significant management judgment is required to
determine the amount of deferred tax assets that can be recognized, based upon the likely timing and level
of future taxable profits together with future tax planning strategies. Further details are contained in note
5.21.

Share-based payment transactions

The Group measures the cost of equity-settled transactions with employees by reference to the fair value of
the equity instruments at the date at which they are granted. Estimating fair value for share-based payment
transactions requires determining the most appropriate valuation model, which is dependent on the terms
and conditions of the grant. This estimate also requires determining the most appropriate inputs to the
valuation model including the expected life of the share option, volatility and dividend yield and making
assumptions about them. The assumptions and models using Black & Scholes valuation approach for
estimating fair value for share-based payment transactions are disclosed in note 5.14.

5.5

Operating segment information

The chief operating decision-maker (CODM), who is responsible for making strategic decisions, allocating
resources and assessing performance of the Group, has been identified as the Board of Directors.

Since the acquisition of the oncological platform in 2015, the Management and the CODM have determined
that there are two operating segments, being:

• The immuno-oncology segment regrouping all assets developed based on the car-t cell

platform;

• The cardiology segment, regrouping the cardiopoiesis platform, the corquest medical, inc.

(corquest) platform and c-cathez.

Although the Group is currently active in Europe and in the US, no geographical financial information is
currently available given the fact that the core operations are currently still in a study phase. No
disaggregated information on product level or geographical level or any other level currently exists and hence
also not considered by the Board of Directors for assessing performance or allocating resources.

The CODM does not review assets by segments, hence no segment information per assets is disclosed. At
reporting date, the main Group’s non-current assets are located in Belgium.

Since mid 2016, the Group is fully focused on the development of its immuno-oncology platform. Therefore,
for the year ended December 31, 2020, most of the R&D expenses were incurred in the immuno-oncology
segment, in line with prior year.

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2020 Annual Report

€ '000

For the year ended December 31, 2020

Revenue recognized at a point in time

Revenue recognized over time

Cardiology

Immuno-oncology

Corporate

Group Total

Total Revenue

Cost of Sales

Gross Profit

Research & Development expenses

(124)

(21 398)

(21 522)

General & Administrative expenses

(9 315)

Change in fair value of contingent consideration

9 228

Net Other income/(loss)

Operating Profit/(Loss)

Net financial income/(loss)

Profit/(Loss) before taxes

Income Taxes

(2)

4 582

4 617

(121)

(7 589)

(9 277)

(16 987)

(33)

(182)

(3)

(217)

(154)

(7 771)

(9 280)

(17 204)

Profit/(Loss) for the year 2020

(154)

(7 771)

(9 280)

(17 204)

€ '000

For the year ended December 31, 2019

Revenue recognized at a point in time

Revenue recognized over time

Cardiology

Immuno-oncology

Corporate

Group Total

Total Revenue

Cost of Sales

Gross Profit

Research & Development expenses

(146)

(25 049)

(25 196)

General & Administrative expenses

(9 070)

Change in fair value of contingent consideration

433

Net Other income/(loss)

Operating Profit/(Loss)

Net financial income/(loss)

Profit/(Loss) before taxes

Income Taxes

4 795

4 948

(78)

(19 821)

(8 979)

(28 879)

212

(183)

211

239

134

(20 005)

(8 769)

(28 640)

Profit/(Loss) for the year 2019

134

(20 005)

(8 761)

(28 632)

5.6

Intangible assets

5.6.1.

Intangible assets details and balance roll forward

The change in intangible assets is broken down as follows, per class of assets:

(€'000)

Goodwill

In-process
research and
development

Development
costs

Patents,
licenses,
trademarks

Software

Total

Capitalized costs

At January 1, 2019

Additions

Currency translation adjustments

Divestiture

883

33 677

1 084

14 214

181

(1 493)

At December 31, 2019

883

33 678

1 084

12 903

Additions

Currency translation adjustments

Divestiture

Transfer

168

164

(30)

179

50 022

227

(1 523)

48 726

169

100

At December 31, 2020

883

33 678

1 084

13 071

279

48 995

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2020 Annual Report

Accumulated amortization

At January 1, 2019

Amortization charge

Divestiture

At December 31, 2019

Amortization charge

Divestiture

Currency translation adjustments

Transfer

(411)

(66)

(477)

(66)

(13 338)

(92)

1 493

(11 938)

(114)

(109)

(12)

(112)

(16)

(13 858)

(170)

1 501

(12 527)

(197)

(100)

At December 31, 2020

(543)

(12 052)

(229)

(12 824)

Net book value

Capitalized costs

Accumulated amortization

883

33 678

1 084

12 903

179

48 726

(477)

(11 938)

(112)

(12 527)

At December 31, 2019

883

33 678

607

965

36 199

Capitalized costs

Accumulated amortization

883

33 678

1 084

13 071

279

48 995

(543)

(12 052)

(229)

(12 824)

At December 31, 2020

883

33 678

540

1 019

36 171

The capitalized development costs relate to the development of C-Cathez. Since May 2012 and the CE
marking of C-Cathez, the development costs of C-Cathez are capitalized and amortized over the estimated
residual intellectual property protection as of the CE marking (i.e. until 2029). No other development costs
have been capitalized up till now. All other programs’ (C-Cure, CYAD-01, CYAD-02, CYAD-101, CYAD-
211…) related development costs have been assessed as not being eligible for capitalization and have
therefore been recognized in the income statement as research and development expenses. Software is
amortized over a period of 3 to 5 years.

Goodwill, IPRD, Patents, Licenses and Trademarks relate to the following items:

• Goodwill and IPRD resulted from the purchase price allocation exercise performed for the
acquisition of Oncyte LLC in 2015. As of December 31, 2020 and 2019, Goodwill and IPRD
are not amortized but tested for impairment.

• A license, granted in August 2007 by Mayo Clinic (for an amount of €9.5 million) upon the
Group’s inception and an extension to the licensed field of use, granted on October 29, 2010
for a total amount of €2.3 million. The license and its extension were amortized straight line
over a period of 20 years, in accordance with the license term. A €6.0 million impairment loss
was recognized on the remaining net book value in the year ended 31 December 2017.

• Patents acquired upon the acquisition of CorQuest Medical Inc. in November 2014. The fair
value of these intellectual rights was then determined to be €1.5 million. These patents were
amortized over 18 years, corresponding to the remaining intellectual property protection filed
for the first patent application in 2012. A €1.2 million impairment loss has been recognized on
the remaining net book value in the year ended December 31, 2017. On November 22, 2019
the Heart-XS (CorQuest patents) patents and related rights have been divested to Corquest
MedTech SRL, a third-party company established under Belgian laws, whose one of the
founders is one of the technology developers, prior to its sale to the Group.

• Exclusive Agreement for Horizon Discovery’s shRNA Platform to develop next-generation
allogenic CAR-T Therapies acquired for $1.0 million at the end of December 2018. In October
2019, the Company capitalized milestone payments for a total amount of $0.2 million related
to the exercise of the option on the Exclusive Agreement and to the first effective IND filing
related to CYAD-02. In November 2020, the Group capitalized the milestone payments for an
amount of $0.2 million related to the first effective IND, filed by the Group, relating to the
product CYAD-211. At December 31, 2020, milestone payments are capitalized for a total
amount of $0.4 million. This patent is amortized over the remaining intellectual property
protection of 20 years, with the the first patent application filed in 2008.

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2020 Annual Report

The Immuno-oncology cash generating unit (CGU) has a net book value of €35.6 million at December 31,
2020. This CGU is composed by:

•

The goodwill and IPRD resulting from the purchase price allocation exercise performed for the
acquisition of Oncyte LLC in 2015, and;

The Horizon Discovery’s shrna platform.

The variance on the total intangible assets as of December 31, 2020, in comparison to December 31, 2019,
resulted primarily from the regular amortization of C-Cathez costs and the Group’s Patents & Licenses.

5.6.2.

Impairment testing

Impairment testing is detailed below.

Immuno- oncology CGU impairment test 9

Goodwill and IPRD exclusively relate to the acquisition of the former entity Oncyte LLC (meanwhile liquidated
into Celyad SA) which was acquired in 2015. Management performs an annual impairment test on goodwill
and on 'indefinite lived assets' that are not amortized in accordance with the accounting policies stated in
notes 5.2.6 and 5.2.9. The impairment test has been performed at the level the immuno-oncology segment
corresponding to the CGU to which the goodwill and the IPRD belong as well as the Horizon Discovery’s
shRNA platform. The recoverable amount associated to this CGU is calculated based fair value less costs
to sell model using Level 3 fair value measurements for which the Group developed unobservable inputs
and requires the use of assumptions. The calculations use cash flow projections based on business plan
ending in 2040 based on probability of success of CYAD-02, CYAD-101 and CYAD-211 product candidates
as well as extrapolations of projected cash flows resulting from the future expected sales associated with
CYAD-02, CYAD-101 and CYAD-211. CGU recoverable value, determined accordingly, exceeds its carrying
amount. Accordingly, no impairment loss was recognized neither on goodwill, on the IPRD nor on the Horizon
Discovery’s shRNA platform intangible assets at December 31,2020.

Management’s key assumptions (assumptions to which the unit’s or group of units’, recoverable amount is
most sensitive) about projected cash flows when determining fair value less costs to sell are as follows:

• Discount rate (WACC)

Management estimated the discount rate (WACC) for year ended December 31, 2020 to be 14.8%
(14.6% in 2019) based on following components: the US Government Treasury bill 20-Y, the
Group’s Beta, the equity Market Risk Premium and the small firm/illiquidity premium. The slight
increase of the WACC is mainly due to increase of the Beta of the Group which is attributed to the
anticipation of data from our clinical programs and the potential advancement of our ongoing CAR
T programs as well as the increase competitive landscape within the immuno-oncology field.
Management corroborates its estimation with industry standards for biotechnological companies,
the WACC used by Equity Research companies following the Group and transactions that have
been sourced by the Group over the past 18 months.

9 The uncertainly raised by the COVID-19 pandemic is not impacting impairment testing. Although there are lot of uncertainties, it does not
impact the Group’s assets valuation as of December 31, 2020. For additional information on COVID-19 pandemic update, refer to note
5.2.1.

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2020 Annual Report

• Projected Revenue

Management estimated the projected revenue based on the following components: total market
and market share, time-to-market, treatment price and terminal value. Management based its
estimation of projected revenue and related components with the Group’s business plan, industry
data for biotechnological companies, evolution of similar R&D programs, comparable prices,
expected patent expiration period. The weight of this assumption is partially alleviated by the
probability of success (PoS) presented hereunder.

• Probabilities of Success (PoS)

Management estimated the PoS based on Clinical Development Success Rates observed by
independent business intelligence consulting companies for hematologic and solid oncological
diseases. Probability of the Group’s product candidates getting on the market used were in line
with prior year and as follows:

PoS

Phase I

Phase I to
Phase II

Phase II to
Phase III

Phase III
to BLA

BLA to
Approval

Cumulative
PoS

CYAD-02

100%

62%

29%

53%

86%

8,1%

CYAD-101

100%

64%

23%

34%

80%

4,0%

CYAD-211

100%

62%

29%

53%

86%

8,1%

The sensitivity analyses are based on a change in an assumption while holding all other assumptions
constant. The following table presents the sensitivity analyses of the recoverable amount of the CGU
associated to the immuno-oncology operations:

Sensitivity analysis

Discount rate (WACC)

e
u
n
e
v
e
R
d
e
t
c
e
j
o
r
P

Impact on
model value

14.6%

15.3%

16.0%

95.0%

97.5%

-14%

-7%

-27%

-21%

100.0%

Model Reference

-14%

-39%

-33%

-27%

Regarding the sensitivity analysis related to PoS based on a change in this assumption while holding all
other assumptions constant, a decrease by -10% or -20% to the bottom-line cumulative PoS would implied
a decrease by -10% or -20% respectively of the recoverable amount of the CGU associated to the
immuno-oncology operations. This sensitivity analyze would imply that the recoverable value of the CGU
exceeds its carrying amount at December 31, 2020.

C-Cure impairment test

Pursuant to 2017 strategic decision to focus all the efforts of the Group on the development of the immuno-
oncology platform and the lack of strategic business development opportunities identified for the C-Cure
(Mayo Licenses), this asset had been fully impaired as of December 31, 2017. CGU’s recoverable amounts
being confirmed to be zero at current year-end, the 100% impairment allowance has been carried forward
at December 31, 2020.

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2020 Annual Report

5.7

Property, plant and equipment

(€’000)

Capitalized costs

At January 1, 2019

Additions

Disposals

Property

Equipment

Furniture

Leasehold

Total

3 947

329

4 195

8 470

2 810

648

167

3 662

(496)

(59)

(172)

(728)

Currency translation adjustments

At December 31, 2019

2 810

4 099

307

4 193

11 409

Additions

Disposals

191

670

926

(932)

(67)

(372)

(1 371)

Currency translation adjustments

(1)

(17)

(18)

Transfer

(271)

171

(100)

At December 31, 2020

3 001

3 563

249

4 032

10 845

Accumulated depreciation:

At January 1, 2019

Depreciation charge

Disposals

(2 751)

(211)

(2 494)

(5 456)

(399)

(711)

(54)

(455)

(1 619)

496

172

728

Currency translation adjustments

(0)

(1)

At December 31, 2019

Depreciation charge

Disposals

(399)

(2 967)

(205)

(2 776)

(6 347)

(428)

(691)

(46)

(470)

(1 635)

760

352

1 150

Currency translation adjustments

Transfer

271

(171)

100

At December 31, 2020

(827)

(2 625)

(214)

(3 061)

(6 727)

Net book value

Capitalized costs

2 810

4 099

307

4 193

11 409

Accumulated depreciation

(399)

(2 967)

(205)

(2 776)

(6 347)

At December 31, 2019

Capitalized costs

2 411

1 132

101

1 417

5 061

3 001

3 563

250

4 032

10 846

Accumulated depreciation

(827)

(2 625)

(214)

(3 061)

(6 727)

At December 31, 2020

2 174

938

970

4 119

Property, Plant and Equipment is mainly composed of right-of-use on leased offices, facilities and equipment
(including vehicles), office furniture, leasehold improvements, and laboratory equipment.

The variance on the total tangible assets as of December 31, 2020 resulted primarily in new leased assets
compensated by yearly depreciation.

The additions for the period amounting €0.9 million are mainly driven by the renewal of leased buildings
relating to the Group’s R&D and manufacturing facilities for €0.2 million and new leased laboratories
equipment for €0.5 million, see disclosure 5.30 Leases.

At December 31, 2019, the variance on the total tangible assets resulted primarily from the capitalization of
leases as a right-of-use on leased buildings (mainly relating to the Group’s headquarter offices as well as
R&D and manufacturing facilities) and equipment (including vehicles) under IFRS 16 Leases as from
January 1, 2019. The total additions for the year ended December 31, 2019 related to the IFRS 16 adoption
reached a total amount of €3.2 million.

Some leases relate to contracts with financial institutions and relate to laboratory and office equipment. All
such leases have a maturity of three years. A key common feature is that they include a bargain option to
purchase the leased asset at the end of the three-year-lease term. The total of future minimum lease
payments at the end of the reporting period, and their present value reported on the statement of financial
position, are similar amounts.

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2020 Annual Report

5.8

Non-current trade receivables and other non-current assets

(€'000)

Non-current trade receivables Mesoblast license agreement

Net investment in Lease

Total Non-current Trade and Other receivables

As at December 31,

2020

2019

1 923

195

2 117

1 955

477

2 432

In May, 2018, the Group entered into an exclusive license agreement with Mesoblast, an Australian
biotechnology company, to develop and commercialize our intellectual property rights relating to C-Cathez,
an intra-myocardial injection catheter. The Group applied the 5-step model foreseen by IFRS 15 to determine
revenue recognition pattern applicable to this contract as of December 31, 2018. Key judgements made in
accordance with IFRS 15 were that the license agreement:



Is a distinct component of the Mesoblast agreement;

 Refers to a ‘right-to-use’ type of license, i.e. The right to use the company’s intellectual property as
it exists at the point in time the license has been granted (May 2018). Revenue allocated to the
transaction price is thus eligible for full revenue recognition for the year 2018 ;



Foresees a transaction price broken down between upfront (€0.8 million settled in shares) and
contingent milestone payments (an additional amount of €2.2 million qualifying for recognition at
December 31, 2018);

Features a financing component (€0.5 million deferred financial income to be deducted from the
above), leading to a net out-licensing revenue reported of €2.4 million);

Further foresees variable consideration of up to $17.5 million related to future regulatory- and
commercial-based milestones, which will not be recognized until it becomes highly probable that a
significant reversal in the amount of cumulative revenue recognized will not occur.

The related receivable is reported for its discounted value (€1.9 million) under ‘Non-current trade
receivables’. There are no corresponding contract liabilities reported at December 31, 2020, as no
performance obligation was outstanding.

The non-current net investment in lease refers to the receivable recorded under IFRS16 Leases accounting
standard as the Group subleases some office spaces it leases from a head lessor.

(€'000)

R&D Tax credit receivable

Total Non-current Grant recevables

Deposits

Total Other non-current assets

As at December 31,

2020

2019

3 679

293

3 051

257

In 2017, the Group recognized for the first time a R&D tax credit (€1.2 million) receivable from the federal
government that included a one-off catch-up effect. Since 2018, further R&D tax credit receivables are
recorded on an annual basis. For the year ended December 31, 2020, the R&D tax credit has been updated
for an amount of €0.6 million, taking into account all information available as of December 31, 2020.

The non-current assets refer to security deposits paid to the lessors of the building leased by the Group and
a deposit to the Social Security administration.

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5.9

Trade receivables and other current assets

(€'000)

Trade receivables

Advance deposits

Net Investment in Lease

Other receivables

Total Trade and Other receivables

Current Grant receivables (RCAs)

Current Grant receivables (Others)

Total Current Grant receivables

Prepaid expenses

VAT receivable

Income and other tax receivables

Total Other current assets

Total Trade receivables, advances and other current assets

2020 Annual Report

As at December 31,

2020

2019

165

220

230

156

149

253

615

145

1 343

342

1 711

2 471

558

693

993

1 686

647

356

251

1 253

3 497

Impairment of receivables is assessed on an individual basis at the end of each accounting year.

At December 31, 2020 and 2019, no receivable was overdue. There were no carrying amounts for trade and
other receivables denominated in foreign currencies, except for the net investment in lease for which carrying
amount is under USD. No impairments were recorded on trade receivables and other current assets (see
note 5.3).

The current net investment in lease refers to the receivable recorded under IFRS16 Leases accounting
standard as the Group subleases some office spaces it leases from a head lessor.

As of December 31, 2020, grant receivables for a total amount of €0.1 million has been recorded due to
Walloon Region recoverable cash advances regarding CYAD-02 (numbered 8088) and new convention
signed in 2020 regarding CYAD-101 (numbered 8212). The decrease of the current grant receivables
between the years 2019 and 2020 is mainly explained by higher cash proceeds from the Walloon Region in
2020 compared to expenses subsidized by these RCAs and other grants recognized in 2020.

The increase in prepaid expenses as of December 31, 2020 compared to December 31, 2019 for €0.7 million
is mainly driven by the increase on prepaid expenses on insurances combined with transaction costs linked
to the LPC and ATM 10 equity facility signed on September 3, 2020 for an amount of €0.5 million subject to
capitalization and to be offset against a future capital raise.

5.10 Short-term investments

Given the level of market interest rates of corporate deposits of short-term maturities, the Group has reduced
the amounts invested in short-term deposits over 2019 and has no investment in short-term deposits as of
December 31, 2020 and 2019.

10 On September 3, 2020, the Company entered into an Open Market Sale AgreementSM with Jefferies LLC (“Jefferies”) pursuant to which
the Company may from time to time sell, for a period of up to 36 months, through “an at the market offering” (“ATM”), with Jefferies acting
as sales agent, up to $25,000,000 of new American Depositary Shares (“ADSs”), each of which represents one ordinary share of the
Company, assuming sales of 2,522,704 ADSs in the offering at an offering price of $9.91 per ADS, which was the last reported sale price
of the ADSs on the Nasdaq Global Market on September 8, 2020.

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2020 Annual Report

5.11 Cash and cash equivalents

(€'000)

Cash at bank and on hand

Total

As at December 31,

2020

2019

17 234

39 338

Cash at banks earn interest at floating rates based on daily bank deposit rates. For the years ended
December 31, 2020 and 2019, the earned bank interests have been insignificant.

5.12 Subsidiaries fully consolidated

The consolidation scope of the Group is as follows, for both current and comparative years presented in
these year-end financial statements:

Name

Country of
Incorporation
and Place of
Business

Nature of
Business

Proportion of
ordinary
shares
directly held
by parent (%)

Proportion of
ordinary
shares held
by the Group
(%)

Proportion of
ordinary
shares held
by non-
controlling
interests (%)

Celyad Oncology SA

Celyad Inc
CorQuest Medical Inc

Biological Manufacturing Services SA

US
US

Biopharma

Biopharma
Medical Device

Manufacturing

Parent
company
100%
100%

100%

100%
100%

100%

0%
0%

Cardio3 Inc was incorporated in 2011 to support clinical and regulatory activities of the Group in the US.
Cardio3 Inc was renamed in Celyad Inc in 2015.

CorQuest Medical Inc was acquired on November 5, 2014. CorQuest Medical Inc. was developing Heart-
XS, a new access route to the left atrium. In November 2019, the patent rights related to Heart-XS were sold
to CorQuest MedTech SRL, a newly constituted Belgian company developing innovative cellular medicines.
The Group does not hold any ordinary shares of CorQuest MedTech SRL.

Biological Manufacturing Services SA (BMS) was acquired in May 2016. BMS owns GMP laboratories. BMS
rent its laboratories to Celyad SA since 2009 and until April 30, 2016. Until the acquisition, BMS had been
treated as a related party to Celyad.

5.13 Share Capital

The number of shares issued is expressed in units.

Total number of issued and outstanding shares

Total share capital (€'000)

As of December 31,

2020

2019

13 942 344

48 513

As of December 31, 2020, the share capital amounts to €48,513k represented by 13,942,344 fully authorized
and subscribed and paid-up shares with a nominal value of €3.48 per share. This number does not include
warrants issued by the Group and granted to certain directors, employees and non-employees of the Group.

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2020 Annual Report

As of December 31, 2020, the authorized capital which has already been used by the board of directors
amounts to €11,621k. The remaining available from the authorized capital amount to €36,892k as of
December 31, 2020.

History of the capital of the Company

The Company was incorporated on July 24, 2007 with a share capital of €62,500 by the issuance of 409,375
class A shares. On August 31, 2007, the Company issued 261,732 class A shares to Mayo Clinic by way of
a contribution in kind of the upfront fee that was due upon execution of the Mayo License for a total amount
of €9,500,000.

Round B Investors participated in a capital increase of the Company by way of a contribution in kind of a
convertible loan (€2,387,049) and a contribution in cash (€4,849,624 of which €1,949,624 was uncalled) on
December 23, 2008; 204,652 class B shares were issued at the occasion of that capital increase. Since
then, the capital is divided in 875,759 shares, of which 671,107 are class A shares and 204,652 are class B
shares.

On October 29, 2010, the Company closed its third financing round resulting in a capital increase totaling
€12,100,809. The capital increase can be detailed as follows:

• Capital increase in cash by certain existing investors for a total amount of €2,609,320.48 by

the issuance of 73,793 class B shares at a price of €35.36 per share;

• Capital increase in cash by certain existing investors for a total amount of €471,240 by the

issuance of 21,000 class B shares at a price of €22.44 per share;

• Capital increase in cash by certain new investors for a total amount of €399,921.60 by the

issuance of 9,048 class B shares at a price of €44.20 per share;

• Exercise of 12,300 warrants (“Warrants A”) granted to the Round C investors with total
proceeds of €276,012 and issuance of 12,300 class B shares. The exercise price was €22.44
per Warrant A;

• Contribution in kind by means of conversion of the loan C for a total amount of €3,255,524.48
(accrued interest included) by the issuance of 92,068 class B shares at a conversion price of
€35.36 per share;

• Contribution in kind by means of conversion of the loan D for a total amount of €2,018,879.20
(accrued interest included) by the issuance of 57,095 class B shares at a conversion price of
€35.36 per share. The loan D is a convertible loan granted by certain investors to the Company
on 14 October 2010 for a nominal amount of €2,010,000.

• Contribution in kind of a payable towards Mayo Foundation for Medical Education and
Research for a total amount of €3,069,911 by the issuance of 69,455 class B shares at a price
of €44.20 per share. The payable towards Mayo Clinic was related to (i) research undertaken
by Mayo Clinic in the years 2009 and 2010, (ii) delivery of certain materials, (iii) expansion of
the Mayo Clinical Technology License Contract by way the Second Amendment dated
October 18, 2010.

On May 5, 2011, pursuant the decision of the Extraordinary General Meeting, the capital was reduced by an
amount of €18,925,474 equivalent to the outstanding net loss as of December 31, 2010.

On May 31, 2013, the Company closed its fourth financing round, the ‘Round D financing’. The convertible
loans E, F, G and H previously recorded as financial debt were converted in shares which led to an increase
in equity for a total amount of €28,645k of which € 5,026k is accounted for as capital and € 6,988k as share
premium. The remainder (€ 16,631k) is accounted for as other reserves on fully settled contribution in kind
convertible loans. Furthermore, a contribution in cash by existing shareholders of the Company led to an
increase in share capital and issue premium by an amount of €7,000k.

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2020 Annual Report

At the Extraordinary Shareholders Meeting of June 11, 2013 all existing classes of shares of the Company
have been converted into ordinary shares. Preferred shares have been converted at a 1 for 1 ratio.

On July 5, 2013, the Company completed its Initial Public Offering. The Company issued 1,381,500 new
shares at €16.65 per shares, corresponding to a total of €23,002k.

On July 15, 2013, the over-allotment option was fully exercised for a total amount of €3,450k corresponding
to 207,225 new shares. The total IPO proceeds amounted to €26,452k and the capital and the share
premium of the Company increased accordingly. The costs relating to the capital increases performed in
2013 amounted to €2.8 million and are presented as a deduction of share premium.

On June 11, 2013, the Extraordinary General Shareholders’ Meeting of Celyad SA authorized the Board of
Directors to increase the share capital of the Company, in one or several times, and under certain conditions
set forth in extenso in the articles of association. This authorization is valid for a period of five years starting
on July 26, 2013 and until July 26, 2018. The Board of Directors may increase the share capital of the
Company within the framework of the authorized capital for an amount of up to €21,413k.

Over the course of 2014, the capital of the Company was increased in June 2014 by way of a capital increase
of €25,000k represented by 568,180 new shares fully subscribed by Medisun International Limited.

In 2014, the capital of the Company was also increased by way of exercise of Company warrants. Over four
different exercise periods, 139,415 warrants were exercised resulting in the issuance of 139,415 new shares.
The capital and the share premium of the Company were therefore increased respectively by €488k and
€500k.

In January 2015, the shares of Oncyte LLC were contributed to the capital of the Company, resulting in a
capital increase of €3,452k and the issuance of 93,087 new shares.

In 2015, the Company conducted two fund raisings. A private placement was closed in March resulting in a
capital increase of €31,745k represented by 713,380 new shares. The Company also completed an IPO on
Nasdaq in June, resulting in a capital increase of €87,965k represented by 1,460,000 new shares.

Also, in 2015, the capital of the Company was also increased by way of exercise of Company warrants. Over
three different exercise periods, 6,749 warrants were exercised resulting in the issuance of 6,749 new
shares. The capital and the share premium of the Company were therefore increased respectively by €23k
and €196k.

Over 2017 the capital of the Company was also increased by way of exercise of Company warrants. Over
four different exercise periods, 225,966 warrants were exercised resulting in the issuance of 225,966 new
shares. The capital of the Company was therefore increased by €625k.

In August 2017, pursuant to the amendment of the agreements with Celdara Medical LLC and Dartmouth
College, the CAR-T technology inventors, the capital of the Company was increased by way of contribution
in kind of a liability owed to Celdara Medical LLC. 328,275 new shares were issued at a price of €32.35
(being Celyad share’s average market price for the 30 days preceding the transaction) and the capital and
the share premium of the Company were therefore increased respectively by €1,141k and €9,479k without
an impact on the cash and cash equivalents, explaining why such transaction is not disclosed in the
consolidated statements of cashflows.

In May 2018, the Company completed a global offering of $54.4 million (€46.1 million), resulting in cash
proceeds for an amount of €43.0 million net of bank fees and transaction costs.

In May 2019, share premium decreased as a result of the absorption of accounting losses for an amount of
€172.3 million, with a counterpart in the financial statements line item ‘Accumulated Deficit’. The absorption
of the accumulated deficit into share premium is a non-cash accounting transaction.

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2020 Annual Report

In September 2019, the Company completed a global offering of $20.0 million (€18.2 million), resulting in
cash proceeds for an amount of €16.4 million net of bank fees and transaction costs.

On January 8, 2021, the Company has entered into a committed equity purchase agreement (“Purchase
Agreement”) for up to $40 million with Lincoln Park Capital Fund, LLC (“LPC”), a Chicago-based institutional
investor. Over the 24-month term of the Purchase Agreement, the Company will have the right to direct LPC
to purchase up to an aggregate amount of $40 million American Depositary Shares (“ADSs”), each of which
represents one ordinary share of the Company (see note 5.36).

As of December 31, 2020, all shares issued have been fully paid.

The following share issuances occurred since the incorporation of the Company: