AvenCell Therapeutics, Inc.

In July 2021, the Company, Cellex and BXLS established AvenCell, a joint venture and privately held company. In exchange for contributing an exclusive license to the joint venture, the Company entered into a Preferred Stock Purchase Agreement with AvenCell for a 33.33% equity interest in AvenCell at the time of the initial closing. Cellex and BXLS each equally owned the remaining 66.67% at that time.

The Company has significant influence over, but does not control, AvenCell through its noncontrolling representation on AvenCell’s Board of Directors and the Company’s equity interest in AvenCell. The Company has determined that the preferred stock it owns is in-substance common stock. The Company is not the primary beneficiary as it does not have the power to direct the activities of AvenCell that most significantly impact AvenCell’s economic performance. Accordingly, the Company does not consolidate the financial statements of AvenCell and accounts for its investment using the equity method of accounting.

The Company recorded the initial investment in AvenCell of $62.9 million in “Equity method investments” on its consolidated balance sheet. Due to the timing and availability of AvenCell’s financial information, the Company records its share of losses from AvenCell on a quarterly basis on a one-quarter lag. The Company evaluates material events occurring during the quarter lag to determine whether the effects of any such events should be disclosed in the financial statements. The Company’s share of AvenCell’s losses were $14.1 million, $14.3 million and $1.8 million for the years ended December 31, 2023, 2022 and 2021, respectively, and are reflected in its operating results and comprehensive loss. The Company eliminated intra-entity profit of $6.6 million, $11.4 million and $2.9 million for the years ended December 31, 2023, 2022 and 2021, respectively (see Note 9). The carrying value of the Company’s investment in AvenCell was $11.8 million and $32.5 million as of December 31, 2023 and 2022, respectively. In February 2024, AvenCell notified the Company that it is evaluating the valuation of its intangible assets for potential impairment which may result in the reduction of the Company’s equity method investment. AvenCell’s financial statements for the three months ended December 31, 2023, had not been finalized at the time the Company’s financial statements were issued. At December 31, 2023, the maximum exposure to loss is limited to the Company’s equity investment in the joint venture as adjusted for intra-entity profits that have been deferred to date.

SparingVision SAS

In connection with the SparingVision LCA (see Note 9), the Company received 83,316 shares of Series A2 Preferred Stock (“Series A2”). Attached to each share of Series A2, the Company received three warrants for the right to purchase additional Series A2 shares at designated prices that are subject to certain vesting conditions (collectively referred to as the “SparingVision investments”). The Company accounts for the SparingVision investments using the measurement alternative as SparingVision is a private company and there is no readily observable transaction price. The Company recorded the initial investment in SparingVision of $14.8 million in “Investments and other assets” on its consolidated balance sheet. There have been no changes in the valuation of the investment in SparingVision as of December 31, 2023.

Kyverna Therapeutics, Inc.

In connection with the Kyverna LCA (see Note 9), the Company received 3,739,515 shares of Series B Preferred Stock with a fair value of $7.0 million. The Company separately made an additional investment in Kyverna, purchasing 1,602,649 shares of Series B Preferred Stock in exchange for $3.0 million in cash (collectively referred to as the “Kyverna investments”). As of December 31, 2023, the Company accounted for the Kyverna investments using the measurement alternative as Kyverna was a private company with no readily observable transaction price. The Company recorded the initial investment in Kyverna of $10.0 million in “Investments and other assets” on its condensed consolidated balance sheet. There have been no changes in the valuation of the investment in Kyverna as of December 31, 2023. In February 2024, Kyverna announced the completion of its IPO and its common stock began trading on the Nasdaq Global Select Market under the ticker symbol “KYTX”.