Business and Organization	9 Months Ended
Sep. 30, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Business and Organization	Business and Organization Organization Fibrocell Science, Inc. (as used herein, “we,” “us,” “our,” “Fibrocell” or the “Company”) is the parent company of Fibrocell Technologies, Inc. (Fibrocell Tech). Fibrocell Tech is the parent company of Isolagen International, S.A., a company organized under the laws of Switzerland (Isolagen Switzerland). The Company’s international activities are currently immaterial. Business Overview Fibrocell is a cell and gene therapy company focused on improving the lives of people with rare diseases of the skin and connective tissue. The Company is utilizing its proprietary autologous fibroblast technology to develop personalized biologics that target the underlying cause of disease. Fibrocell’s pipeline of localized gene therapy candidates include FCX-007 for the treatment of recessive dystrophic epidermolysis bullosa (RDEB), a life-threatening genetic disorder diagnosed in infancy with no cure or treatment approved by the FDA. Fibrocell is also developing FCX-013 for the treatment of moderate to severe localized scleroderma. Currently, Fibrocell’s research and development operations and focus are on gaining regulatory approvals to commercialize its gene therapy candidates in the United States; however, the Company may seek to expand into international markets in the future. On April 12, 2019, the Company entered into a co-development and license agreement (CCP License Agreement) with Castle Creek Pharmaceuticals, LLC (CCP) with respect to the development and commercialization of the Company’s lead gene therapy candidate, FCX-007, for the treatment of RDEB. On September 12, 2019, the Company, Castle Creek Pharmaceutical Holdings, Inc. (CCP Holdings), an affiliate of CCP, and Castle Creek Merger Corp., a Delaware corporation and wholly-owned subsidiary of CCP Holdings (Merger Sub), entered into an Agreement and Plan of Merger (the Merger Agreement), pursuant to which, and on the terms and conditions set forth in the Merger Agreement, Merger Sub will merge with and into the Company (the Merger). The Company will survive the Merger as a wholly-owned subsidiary of CCP Holdings. A special meeting of the Company’s common stockholders is scheduled to be held on December 10, 2019 to vote on, among other things, a proposal to adopt the Merger Agreement. The Company intends to complete the Merger as soon as reasonably practicable and currently expects to complete the Merger in the fourth quarter of 2019. Collaboration Agreement with Castle Creek Pharmaceuticals On April 12, 2019, the Company entered into the CCP License Agreement with CCP with respect to the development and commercialization of the Company’s lead gene therapy candidate, FCX-007, for the treatment of RDEB. Under the terms of the CCP License Agreement, CCP will receive an exclusive license to commercialize FCX-007 in the United States. CCP will be responsible for the first $20 million in development costs prior to the initial Biologics License Application (BLA) filing with U.S. Food and Drug Administration (FDA) and manufacturing costs undertaken prior to commercial launch of FCX-007. If such spending exceeds $20 million, CCP will be responsible for 70% of the excess costs and Fibrocell will cover 30% of the remaining additional expenses. The Company will maintain responsibility for the development (including pre-launch manufacturing) of FCX-007 through initial BLA approval of FCX-007, and CCP will be responsible for all post-approval development and commercialization activities for FCX-007. The parties have agreed to negotiate the terms of a manufacturing and supply agreement that will set forth the terms under which the Company will supply CCP commercial quantities of FCX-007. A joint development committee consisting of representatives from the Company and CCP will oversee the development of FCX-007 pursuant to an agreed-upon development plan and budget. At the closing of the CCP License Agreement, the Company received an upfront payment of $7.5 million, and will receive an additional $2.5 million for the first patient enrolled in the Phase 3 clinical trial of FCX-007 and $30 million upon BLA approval of FCX-007 and FCX-007 commercial manufacturing readiness. The Company is also eligible to receive up to $75 million in sales milestones, consisting of $25 million upon the achievement of $250 million in cumulative FCX-007 net Note 1. Business and Organization (continued) sales and an additional $50 million upon the achievement of $750 million in cumulative FCX-007 net sales. In addition, CCP will pay the Company a 30% share of the gross profits from FCX-007 sales. The Company will retain sole ownership of the Rare Pediatric Disease Priority Review Voucher, which may be granted upon BLA approval of FCX-007. As part of the Company’s existing exclusive channel collaboration agreement with Intrexon Corporation (Intrexon), the Company will pay Intrexon 50% of all upfront, milestone and profit share payments from CCP. Payments to Intrexon do not include funds received by the Company from CCP in connection with the development and manufacturing costs or payments for supply of FCX-007. Unless earlier terminated, the CCP License Agreement will expire on the later of (a) expiration of the last to expire valid claim of any FCX-007 patent rights in the United States and (b) forty years from the date of initial BLA approval of FCX-007. CCP has the right to terminate the CCP License Agreement at will upon 180 days’ prior written notice. If CCP elects to terminate the CCP License Agreement at will, then, among other things, the license granted to CCP will terminate and all rights will revert in their entirety to the Company. In the event of such a termination, the Company shall upon first commercial sale by the Company, its affiliates or licensees in the territory pay to CCP an amount equal to five percent (5%) of FCX-007 gross profit in respect of sales of FCX-007 in the territory by the Company, its affiliates or licensees in the initial indication and any additional indications developed or commercialized by the parties as of the effective date of termination. CCP may also terminate the CCP License Agreement at any time, upon 180 days’ prior written notice to the Company, in the event (i) CCP determines, in its reasonable discretion, that further development or commercialization of FCX-007 is not commercially viable or (ii) CCP determines that development or commercialization of FCX-007 must be terminated because of safety issues outside of CCP’s reasonable control. If CCP elects to terminate the CCP License Agreement due to either of the specified reasons set forth in the preceding sentence, then, among other things, the license granted to CCP will terminate and all rights will revert in their entirety to the Company. In the event of such a termination, the Company shall upon first commercial sale by the Company, its affiliates or licensees in the territory pay to CCP an amount equal to five percent (5%) of FCX-007 gross profit in respect of sales of FCX-007 in the territory by the Company, its affiliates or licensees in the initial indication and any additional indications developed or commercialized by the parties as of the effective date of termination. Either party may, subject to specified cure periods, terminate the CCP License Agreement in the event of the other party’s uncured material breach, and either party may terminate the CCP License Agreement under specified circumstances relating to the other party’s insolvency. The upfront payment and milestone payments are non-refundable; provided, however, that certain disputed payments may be refunded in accordance with the dispute resolutions procedures set forth in the CCP License Agreement. Based on the Company’s receipt of the upfront payment from CCP and reduction of expenses associated with the development of FCX-007, the Company believes its existing cash will be sufficient to fund operations into the first quarter of 2020. The Company concluded its strategic alternative review process announced last year, as a result of the execution of the CCP License Agreement with CCP. Merger Agreement with Castle Creek Pharmaceutical Holdings On September 12, 2019, the Company, CCP Holdings, and Merger Sub entered into the Merger Agreement, pursuant to which, and on the terms and conditions set forth in the Merger Agreement, Merger Sub will merge with and into the Company. The Company will survive the Merger as a wholly-owned subsidiary of CCP Holdings. A special meeting of the Company’s common stockholders is scheduled to be held on December 10, 2019 to vote on, among other things, a proposal to adopt the Merger Agreement. The Company intends to complete the Merger as soon as reasonably practicable and currently expects to complete the Merger in the fourth quarter of 2019. Note 1. Business and Organization (continued) Subject to the terms and conditions set forth in the Merger Agreement, at the effective time of the Merger (the Effective Time), each share of common stock of the Company issued and outstanding immediately prior to the Effective Time (other than shares held directly by CCP Holdings or Merger Sub and shares owned by Company stockholders who have exercised their appraisal rights under Delaware law) will be converted into the right to receive $3.00 in cash, without interest (the Merger Consideration). In addition, after the Effective Time, each share of the Company's Series A Convertible Preferred Stock (the Preferred Stock) will remain outstanding (until converted by the holders thereof pursuant to the Consent and Termination Agreement, as defined below herein), and will thereafter only represent the right to receive an amount in cash, without interest, equal to (i) the number of shares of common stock underlying each share of Preferred Stock multiplied by (ii) the Merger Consideration. After the Effective Time, each outstanding Company common stock warrant shall be generally entitled to receive (i) upon any subsequent exercise, an amount equal to the Merger Consideration less the exercise price for such warrant, or (ii) if eligible pursuant to the terms of the warrant, upon notification by the holder of such warrant to the Company within 30 days of the Effective Time, an amount equal to the Black-Scholes value of the warrant. Each stock option issued under the Company's equity incentive plans outstanding immediately prior to the Effective Time, whether vested or unvested, will accelerate and be converted into the right to receive in cash an amount equal to the Merger Consideration minus the exercise price of such stock option. The Merger Agreement contains customary representations and warranties of the Company, CCP Holdings and Merger Sub, and customary pre-closing covenants, including covenants requiring the Company (i) to conduct its business in the ordinary course, and (ii) to refrain from taking certain actions without CCP Holdings’ consent. CCP Holdings has obtained financing commitments for the purpose of financing the Merger. In addition, the Merger Agreement requires that the Company refrain from soliciting proposals relating to alternative transactions or, subject to certain exceptions, enter into discussions concerning, or provide information in connection with, alternative transactions. Prior to the approval of the Merger Agreement by the Company's common stockholders, the Company's Board of Directors may not, without first complying with certain conditions set forth in the Merger Agreement and solely in response to a Superior Proposal (as defined in the Merger Agreement), (i) adopt, approve or recommend, or publicly propose to adopt, approve or recommend, any Acquisition Proposal (as defined in the Merger Agreement), (ii) withdraw, change, qualify, withhold or modify, or publicly propose to withdraw, change, qualify, withhold or modify, its recommendation that the Company's common stockholders adopt the Merger Agreement, (iii) fail to include in the proxy statement to be filed in connection with the Merger the Board of Directors' recommendation that the Company's common stockholders adopt the Merger Agreement, (iv) fail to recommend against any tender offer that constitutes an Acquisition Proposal subject to Regulation 14D under the Securities Exchange Act of 1934, as amended, (v) approve, authorize or cause or permit the Company or its subsidiaries to enter into any acquisition agreement or similar agreement relating to any Acquisition Proposal, or (vi) fail to publicly affirm the Company's Board of Directors' recommendation that the Company's common stockholders adopt the Merger Agreement within five business days following receipt of a written request to do so from CCP Holdings (collectively, a Change of Board Recommendation). Pursuant to the terms of the Merger Agreement, the consummation of the Merger is subject to certain other customary closing conditions, including, but not limited to, the approval of the Merger by the Company's common stockholders, the receipt of regulatory clearances (to the extent required), the continued effectiveness of certain of the Company's contracts, accuracy of the representations of the Company and the absence of a material adverse effect with respect to the Company, and that no more than 8% of the holders of the outstanding shares of the Company's common stock have exercised or purported to exercise statutory appraisal rights under Delaware law with respect to such shares of common stock. Subject to the satisfaction of the closing conditions, the parties anticipate that the Merger will be consummated during the fourth quarter of 2019. The Merger Agreement contains certain termination rights for the Company and CCP Holdings. Upon termination of the Merger Agreement under specified circumstances, the Company will be required to pay CCP Holdings a termination fee of $2.0 million. Note 1. Business and Organization (continued) We expect that Fibrocell’s employees will continue as employees of the combined company on completion of the transaction. Until that time, Fibrocell will continue to operate as a separate and independent company. Liquidity and Financial Condition The Company expects to continue to incur losses and will require additional capital to advance its product candidates through development to commercialization. For the nine-month period ended September 30, 2019 the Company recorded net income of approximately $0.9 million and used approximately $7.3 million in cash for operations. As of September 30, 2019, the Company had cash and cash equivalents of approximately $6.8 million, working capital of approximately $15.0 million and an accumulated deficit of approximately $188.2 million. The Company believes that its cash and cash equivalents at September 30, 2019 and amounts paid or payable to the Company under the CCP License Agreement, including reimbursement of FCX-007 development costs and the milestone payment for the first patient enrolled in the Phase 3 clinical trial for FCX-007 will be sufficient to fund operations into the first quarter of 2020. If the closing of the Merger has not been consummated on or before January 31, 2020, and if the Company is able to obtain all required third party consents, CCP Holdings, has agreed, upon written request by the Company, to advance up to $3 million in funds to the Company no later than January 31, 2020, representing certain future payments to be made by CCP pursuant to the terms of the CCP License Agreement. In the event the Company is unable to obtain all necessary third party consents required to effect the payments advance under the CCP License Agreement by January 15, 2020, the Company would be permitted to raise up to $3 million in additional capital through the sale and issuance of equity securities of the Company in an offering that would not sign or close until a date after the Outside Date (as defined in the Merger Agreement) of the Merger, subject to certain conditions agreed to among the parties. However, actual cash requirements could differ from management’s projections due to many factors, including costs associated with the Merger, the cost of clinical activities and outcomes related to our current and planned clinical trials, future correspondence with the FDA, enrollment rates for the Company’s clinical trials and unexpected capital expenditures. Accordingly, the foregoing conditions, taken together, continue to raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Accordingly, the condensed consolidated financial statements have been prepared on a basis that assumes the Company will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business. To meet its capital needs, the Company may need to raise additional capital through debt or equity financings, collaborations, partnerships or other strategic transactions. However, there can be no assurance that the Company will be able to complete any such transaction on acceptable terms or otherwise. The failure of the Company to obtain sufficient funds on acceptable terms when needed could have a material adverse effect on the Company’s business, results of operations and financial condition. On January 23, 2018, the Company received notice (the Notice) from the Nasdaq Stock Market LLC (Nasdaq) that the Company was not in compliance with Nasdaq Listing Rule 5550(a)(2), as the minimum bid price of the Company’s common stock had been below $1.00 per share for 30 consecutive business days. On May 24, 2018, the Company implemented a one-for-five reverse split of the issued and outstanding shares of the Company’s common stock (the Reverse Stock Split), as authorized at the annual meeting of stockholders on May 23, 2018. The Reverse Stock Split became effective on May 24, 2018 at 5:00 pm and the Company’s common stock began trading on Nasdaq on a post-split basis at the open of business on May 25, 2018. As of a result of the Reverse Stock Split, every five shares of the Company’s issued and outstanding common stock were combined into one share of its common stock, except to the extent that the Reverse Stock Split resulted in any of the Company’s stockholders owning a fractional share, which was rounded up to the next highest whole share. In connection with the Reverse Stock Split, there was no change in the nominal par value per share of $0.001. The Reverse Stock Split was effectuated in order to increase the per share trading price of the Company’s common stock to satisfy the $1.00 minimum bid Note 1. Business and Organization (continued) price requirement for continued listing on Nasdaq. On June 11, 2018, the Company received written notice from Nasdaq notifying the Company that the closing bid price of the Company's common stock had been at $1.00 per share or greater for a minimum of ten consecutive business days and accordingly, the Company had regained compliance with Nasdaq Listing Rule 5550(a)(2). All share and per share amounts of common stock, options and warrants in the accompanying financial statements and related notes, have been restated for all periods to give retroactive effect to the Reverse Stock Split. Accordingly, the Condensed Consolidated Statement of Stockholders’ Equity reflects the impact of the Reverse Stock Split by reclassifying from “Common Stock” to “Additional paid-in capital” an amount equal to the par value of the decreased shares resulting from the Reverse Stock Split. Nasdaq has the authority, pursuant to Nasdaq Listing Rule 5550(b)(1), to delist the Company’s common stock if its stockholders’ equity falls below $2.5 million. As of September 30, 2019, the Company’s stockholders’ equity was approximately $10.7 million. If the Company’s stockholders’ equity is hereafter reduced below $2.5 million as a result of operating losses or for other reasons, the Company will fail to meet Nasdaq’s stockholders’ equity requirement. If that occurs, or if the Company is unable to demonstrate to Nasdaq’s satisfaction that it will be able to sustain compliance with this requirement, Nasdaq may delist the Company’s common stock. In addition, even if the Company regains technical compliance with the stockholders’ equity requirement, it will have to continue to meet other objective and subjective listing requirements to continue to be listed on Nasdaq, including the requirement that the Company’s common stock continues to trade above $1.00. The Company is actively monitoring its stockholders’ equity and will consider any and all options available to it to maintain compliance. There can be no assurance, however, that the Company will be able to maintain compliance and meet Nasdaq’s minimum stockholders’ equity requirements.

Business and Organization

Organization

Fibrocell Science, Inc. (as used herein, “we,” “us,” “our,” “Fibrocell” or the “Company”) is the parent company of Fibrocell Technologies, Inc. (Fibrocell Tech). Fibrocell Tech is the parent company of Isolagen International, S.A., a company organized under the laws of Switzerland (Isolagen Switzerland). The Company’s international activities are currently immaterial.

Business Overview

Fibrocell is a cell and gene therapy company focused on improving the lives of people with rare diseases of the skin and connective tissue. The Company is utilizing its proprietary autologous fibroblast technology to develop personalized biologics that target the underlying cause of disease. Fibrocell’s pipeline of localized gene therapy candidates include FCX-007 for the treatment of recessive dystrophic epidermolysis bullosa (RDEB), a life-threatening genetic disorder diagnosed in infancy with no cure or treatment approved by the FDA. Fibrocell is also developing FCX-013 for the treatment of moderate to severe localized scleroderma. Currently, Fibrocell’s research and development operations and focus are on gaining regulatory approvals to commercialize its gene therapy candidates in the United States; however, the Company may seek to expand into international markets in the future.

On April 12, 2019, the Company entered into a co-development and license agreement (CCP License Agreement) with Castle Creek Pharmaceuticals, LLC (CCP) with respect to the development and commercialization of the Company’s lead gene therapy candidate, FCX-007, for the treatment of RDEB.

On September 12, 2019, the Company, Castle Creek Pharmaceutical Holdings, Inc. (CCP Holdings), an affiliate of CCP, and Castle Creek Merger Corp., a Delaware corporation and wholly-owned subsidiary of CCP Holdings (Merger Sub), entered into an Agreement and Plan of Merger (the Merger Agreement), pursuant to which, and on the terms and conditions set forth in the Merger Agreement, Merger Sub will merge with and into the Company (the Merger). The Company will survive the Merger as a wholly-owned subsidiary of CCP Holdings. A special meeting of the Company’s common stockholders is scheduled to be held on December 10, 2019 to vote on, among other things, a proposal to adopt the Merger Agreement. The Company intends to complete the Merger as soon as reasonably practicable and currently expects to complete the Merger in the fourth quarter of 2019.

Collaboration Agreement with Castle Creek Pharmaceuticals

On April 12, 2019, the Company entered into the CCP License Agreement with CCP with respect to the development and commercialization of the Company’s lead gene therapy candidate, FCX-007, for the treatment of RDEB.

Under the terms of the CCP License Agreement, CCP will receive an exclusive license to commercialize FCX-007 in the United States. CCP will be responsible for the first $20 million in development costs prior to the initial Biologics License Application (BLA) filing with U.S. Food and Drug Administration (FDA) and manufacturing costs undertaken prior to commercial launch of FCX-007. If such spending exceeds $20 million, CCP will be responsible for 70% of the excess costs and Fibrocell will cover 30% of the remaining additional expenses. The Company will maintain responsibility for the development (including pre-launch manufacturing) of FCX-007 through initial BLA approval of FCX-007, and CCP will be responsible for all post-approval development and commercialization activities for FCX-007. The parties have agreed to negotiate the terms of a manufacturing and supply agreement that will set forth the terms under which the Company will supply CCP commercial quantities of FCX-007. A joint development committee consisting of representatives from the Company and CCP will oversee the development of FCX-007 pursuant to an agreed-upon development plan and budget.

At the closing of the CCP License Agreement, the Company received an upfront payment of $7.5 million, and will receive an additional $2.5 million for the first patient enrolled in the Phase 3 clinical trial of FCX-007 and $30 million upon BLA approval of FCX-007 and FCX-007 commercial manufacturing readiness. The Company is also eligible to receive up to $75 million in sales milestones, consisting of $25 million upon the achievement of $250 million in cumulative FCX-007 net

Note 1. Business and Organization (continued)

sales and an additional $50 million upon the achievement of $750 million in cumulative FCX-007 net sales. In addition, CCP will pay the Company a 30% share of the gross profits from FCX-007 sales. The Company will retain sole ownership of the Rare Pediatric Disease Priority Review Voucher, which may be granted upon BLA approval of FCX-007.

As part of the Company’s existing exclusive channel collaboration agreement with Intrexon Corporation (Intrexon), the Company will pay Intrexon 50% of all upfront, milestone and profit share payments from CCP. Payments to Intrexon do not include funds received by the Company from CCP in connection with the development and manufacturing costs or payments for supply of FCX-007.

Unless earlier terminated, the CCP License Agreement will expire on the later of (a) expiration of the last to expire valid claim of any FCX-007 patent rights in the United States and (b) forty years from the date of initial BLA approval of FCX-007.

CCP has the right to terminate the CCP License Agreement at will upon 180 days’ prior written notice. If CCP elects to terminate the CCP License Agreement at will, then, among other things, the license granted to CCP will terminate and all rights will revert in their entirety to the Company. In the event of such a termination, the Company shall upon first commercial sale by the Company, its affiliates or licensees in the territory pay to CCP an amount equal to five percent (5%) of FCX-007 gross profit in respect of sales of FCX-007 in the territory by the Company, its affiliates or licensees in the initial indication and any additional indications developed or commercialized by the parties as of the effective date of termination.

CCP may also terminate the CCP License Agreement at any time, upon 180 days’ prior written notice to the Company, in the event (i) CCP determines, in its reasonable discretion, that further development or commercialization of FCX-007 is not commercially viable or (ii) CCP determines that development or commercialization of FCX-007 must be terminated because of safety issues outside of CCP’s reasonable control. If CCP elects to terminate the CCP License Agreement due to either of the specified reasons set forth in the preceding sentence, then, among other things, the license granted to CCP will terminate and all rights will revert in their entirety to the Company. In the event of such a termination, the Company shall upon first commercial sale by the Company, its affiliates or licensees in the territory pay to CCP an amount equal to five percent (5%) of FCX-007 gross profit in respect of sales of FCX-007 in the territory by the Company, its affiliates or licensees in the initial indication and any additional indications developed or commercialized by the parties as of the effective date of termination. Either party may, subject to specified cure periods, terminate the CCP License Agreement in the event of the other party’s uncured material breach, and either party may terminate the CCP License Agreement under specified circumstances relating to the other party’s insolvency. The upfront payment and milestone payments are non-refundable; provided, however, that certain disputed payments may be refunded in accordance with the dispute resolutions procedures set forth in the CCP License Agreement.

Based on the Company’s receipt of the upfront payment from CCP and reduction of expenses associated with the development of FCX-007, the Company believes its existing cash will be sufficient to fund operations into the first quarter of 2020.

The Company concluded its strategic alternative review process announced last year, as a result of the execution of the CCP License Agreement with CCP.

Merger Agreement with Castle Creek Pharmaceutical Holdings

On September 12, 2019, the Company, CCP Holdings, and Merger Sub entered into the Merger Agreement, pursuant to which, and on the terms and conditions set forth in the Merger Agreement, Merger Sub will merge with and into the Company. The Company will survive the Merger as a wholly-owned subsidiary of CCP Holdings. A special meeting of the Company’s common stockholders is scheduled to be held on December 10, 2019 to vote on, among other things, a proposal to adopt the Merger Agreement. The Company intends to complete the Merger as soon as reasonably practicable and currently expects to complete the Merger in the fourth quarter of 2019.

Note 1. Business and Organization (continued)

Subject to the terms and conditions set forth in the Merger Agreement, at the effective time of the Merger (the Effective Time), each share of common stock of the Company issued and outstanding immediately prior to the Effective Time (other than shares held directly by CCP Holdings or Merger Sub and shares owned by Company stockholders who have exercised their appraisal rights under Delaware law) will be converted into the right to receive $3.00 in cash, without interest (the Merger Consideration).

In addition, after the Effective Time, each share of the Company's Series A Convertible Preferred Stock (the Preferred Stock) will remain outstanding (until converted by the holders thereof pursuant to the Consent and Termination Agreement, as defined below herein), and will thereafter only represent the right to receive an amount in cash, without interest, equal to (i) the number of shares of common stock underlying each share of Preferred Stock multiplied by (ii) the Merger Consideration. After the Effective Time, each outstanding Company common stock warrant shall be generally entitled to receive (i) upon any subsequent exercise, an amount equal to the Merger Consideration less the exercise price for such warrant, or (ii) if eligible pursuant to the terms of the warrant, upon notification by the holder of such warrant to the Company within 30 days of the Effective Time, an amount equal to the Black-Scholes value of the warrant. Each stock option issued under the Company's equity incentive plans outstanding immediately prior to the Effective Time, whether vested or unvested, will accelerate and be converted into the right to receive in cash an amount equal to the Merger Consideration minus the exercise price of such stock option.

The Merger Agreement contains customary representations and warranties of the Company, CCP Holdings and Merger Sub, and customary pre-closing covenants, including covenants requiring the Company (i) to conduct its business in the ordinary course, and (ii) to refrain from taking certain actions without CCP Holdings’ consent.

CCP Holdings has obtained financing commitments for the purpose of financing the Merger.

In addition, the Merger Agreement requires that the Company refrain from soliciting proposals relating to alternative transactions or, subject to certain exceptions, enter into discussions concerning, or provide information in connection with, alternative transactions. Prior to the approval of the Merger Agreement by the Company's common stockholders, the Company's Board of Directors may not, without first complying with certain conditions set forth in the Merger Agreement and solely in response to a Superior Proposal (as defined in the Merger Agreement), (i) adopt, approve or recommend, or publicly propose to adopt, approve or recommend, any Acquisition Proposal (as defined in the Merger Agreement), (ii) withdraw, change, qualify, withhold or modify, or publicly propose to withdraw, change, qualify, withhold or modify, its recommendation that the Company's common stockholders adopt the Merger Agreement, (iii) fail to include in the proxy statement to be filed in connection with the Merger the Board of Directors' recommendation that the Company's common stockholders adopt the Merger Agreement, (iv) fail to recommend against any tender offer that constitutes an Acquisition Proposal subject to Regulation 14D under the Securities Exchange Act of 1934, as amended, (v) approve, authorize or cause or permit the Company or its subsidiaries to enter into any acquisition agreement or similar agreement relating to any Acquisition Proposal, or (vi) fail to publicly affirm the Company's Board of Directors' recommendation that the Company's common stockholders adopt the Merger Agreement within five business days following receipt of a written request to do so from CCP Holdings (collectively, a Change of Board Recommendation).

Pursuant to the terms of the Merger Agreement, the consummation of the Merger is subject to certain other customary closing conditions, including, but not limited to, the approval of the Merger by the Company's common stockholders, the receipt of regulatory clearances (to the extent required), the continued effectiveness of certain of the Company's contracts, accuracy of the representations of the Company and the absence of a material adverse effect with respect to the Company, and that no more than 8% of the holders of the outstanding shares of the Company's common stock have exercised or purported to exercise statutory appraisal rights under Delaware law with respect to such shares of common stock. Subject to the satisfaction of the closing conditions, the parties anticipate that the Merger will be consummated during the fourth quarter of 2019.

The Merger Agreement contains certain termination rights for the Company and CCP Holdings. Upon termination of the Merger Agreement under specified circumstances, the Company will be required to pay CCP Holdings a termination fee of $2.0 million.

Note 1. Business and Organization (continued)

We expect that Fibrocell’s employees will continue as employees of the combined company on completion of the transaction. Until that time, Fibrocell will continue to operate as a separate and independent company.

Liquidity and Financial Condition

The Company expects to continue to incur losses and will require additional capital to advance its product candidates through development to commercialization. For the nine-month period ended September 30, 2019 the Company recorded net income of approximately $0.9 million and used approximately $7.3 million in cash for operations. As of September 30, 2019, the Company had cash and cash equivalents of approximately $6.8 million, working capital of approximately $15.0 million and an accumulated deficit of approximately $188.2 million.

The Company believes that its cash and cash equivalents at September 30, 2019 and amounts paid or payable to the Company under the CCP License Agreement, including reimbursement of FCX-007 development costs and the milestone payment for the first patient enrolled in the Phase 3 clinical trial for FCX-007 will be sufficient to fund operations into the first quarter of 2020.

If the closing of the Merger has not been consummated on or before January 31, 2020, and if the Company is able to obtain all required third party consents, CCP Holdings, has agreed, upon written request by the Company, to advance up to $3 million in funds to the Company no later than January 31, 2020, representing certain future payments to be made by CCP pursuant to the terms of the CCP License Agreement. In the event the Company is unable to obtain all necessary third party consents required to effect the payments advance under the CCP License Agreement by January 15, 2020, the Company would be permitted to raise up to $3 million in additional capital through the sale and issuance of equity securities of the Company in an offering that would not sign or close until a date after the Outside Date (as defined in the Merger Agreement) of the Merger, subject to certain conditions agreed to among the parties.

However, actual cash requirements could differ from management’s projections due to many factors, including costs associated with the Merger, the cost of clinical activities and outcomes related to our current and planned clinical trials, future correspondence with the FDA, enrollment rates for the Company’s clinical trials and unexpected capital expenditures. Accordingly, the foregoing conditions, taken together, continue to raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Accordingly, the condensed consolidated financial statements have been prepared on a basis that assumes the Company will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business.

To meet its capital needs, the Company may need to raise additional capital through debt or equity financings, collaborations, partnerships or other strategic transactions. However, there can be no assurance that the Company will be able to complete any such transaction on acceptable terms or otherwise. The failure of the Company to obtain sufficient funds on acceptable terms when needed could have a material adverse effect on the Company’s business, results of operations and financial condition.

On January 23, 2018, the Company received notice (the Notice) from the Nasdaq Stock Market LLC (Nasdaq) that the Company was not in compliance with Nasdaq Listing Rule 5550(a)(2), as the minimum bid price of the Company’s common stock had been below $1.00 per share for 30 consecutive business days. On May 24, 2018, the Company implemented a one-for-five reverse split of the issued and outstanding shares of the Company’s common stock (the Reverse Stock Split), as authorized at the annual meeting of stockholders on May 23, 2018. The Reverse Stock Split became effective on May 24, 2018

at 5:00 pm and the Company’s common stock began trading on Nasdaq on a post-split basis at the open of business on May 25, 2018. As of a result of the Reverse Stock Split, every five shares of the Company’s issued and outstanding common stock were combined into one share of its common stock, except to the extent that the Reverse Stock Split resulted in any of the Company’s stockholders owning a fractional share, which was rounded up to the next highest whole share. In connection with the Reverse Stock Split, there was no change in the nominal par value per share of $0.001. The Reverse Stock Split was effectuated in order to increase the per share trading price of the Company’s common stock to satisfy the $1.00 minimum bid

Note 1. Business and Organization (continued)

price requirement for continued listing on Nasdaq. On June 11, 2018, the Company received written notice from Nasdaq notifying the Company that the closing bid price of the Company's common stock had been at $1.00 per share or greater for a

minimum of ten consecutive business days and accordingly, the Company had regained compliance with Nasdaq Listing Rule 5550(a)(2). All share and per share amounts of common stock, options and warrants in the accompanying financial statements

and related notes, have been restated for all periods to give retroactive effect to the Reverse Stock Split. Accordingly, the Condensed Consolidated Statement of Stockholders’ Equity reflects the impact of the Reverse Stock Split by reclassifying from

“Common Stock” to “Additional paid-in capital” an amount equal to the par value of the decreased shares resulting from the Reverse Stock Split.

Nasdaq has the authority, pursuant to Nasdaq Listing Rule 5550(b)(1), to delist the Company’s common stock if its stockholders’ equity falls below $2.5 million. As of September 30, 2019, the Company’s stockholders’ equity was approximately $10.7 million. If the Company’s stockholders’ equity is hereafter reduced below $2.5 million as a result of operating losses or for other reasons, the Company will fail to meet Nasdaq’s stockholders’ equity requirement. If that occurs, or if the Company is unable to demonstrate to Nasdaq’s satisfaction that it will be able to sustain compliance with this requirement, Nasdaq may delist the Company’s common stock. In addition, even if the Company regains technical compliance with the stockholders’ equity requirement, it will have to continue to meet other objective and subjective listing requirements to continue to be listed on Nasdaq, including the requirement that the Company’s common stock continues to trade above $1.00.

The Company is actively monitoring its stockholders’ equity and will consider any and all options available to it to maintain compliance. There can be no assurance, however, that the Company will be able to maintain compliance and meet Nasdaq’s minimum stockholders’ equity requirements.