UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
☒ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2017
☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from
Commission file number 001-31392
| PLURISTEM THERAPEUTICS INC. |
| (Exact name of registrant as specified in its charter) |
| Nevada | 98-0351734 | |
| (State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) |
| MATAM Advanced Technology Park, Building No. 5, Haifa, Israel |
| (Address of principal executive offices) |
(Registrant’s telephone number) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| Common Shares, par value $0.00001 | PSTI | Nasdaq Global Market |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registration was required to submit and post such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| Non-accelerated filer | ☒ | Smaller reporting company | ☒ |
| Emerging growth company | ☐ | ||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
State the number of shares outstanding of each of the issuer’s classes of common stockshares as of the latest practicable date: 110,097,08731,529,267common shares of common stock issued and outstanding as of February 1, 2018.
PART I - FINANCIAL INFORMATION
| Item 1. | Financial Statements. |
PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARY
INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
As of December 31, 20172020
(Unaudited
PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARY
INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
As of December 31, 20172020
U.S. DOLLARS IN THOUSANDS
(Unaudited)
INDEX
Page | |
2
INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS |
| December 31, 2017 | June 30, 2017 | |||||||||||
| Note | Unaudited | |||||||||||
| ASSETS | ||||||||||||
| CURRENT ASSETS: | ||||||||||||
| Cash and cash equivalents | $ | 8,581 | $ | 4,707 | ||||||||
| Short-term bank deposits | 15,975 | 6,235 | ||||||||||
| Restricted cash and short-term bank deposits | 566 | 559 | ||||||||||
| Marketable securities | 3 | 10,736 | 15,164 | |||||||||
| Accounts receivable from the Israeli Innovation Authority (“IIA”) | 172 | 1,036 | ||||||||||
| Other current assets | 1,044 | 1,315 | ||||||||||
Total current assets | 37,074 | 29,016 | ||||||||||
| LONG-TERM ASSETS: | ||||||||||||
| Long-term deposits and restricted bank deposits | 403 | 403 | ||||||||||
| Severance pay fund | 856 | 804 | ||||||||||
| Property and equipment, net | 6,367 | 7,277 | ||||||||||
| Other long-term assets | 33 | 34 | ||||||||||
Totallong-term assets | 7,659 | 8,518 | ||||||||||
Total assets | $ | 44,733 | $ | 37,534 | ||||||||
U.S. Dollars in thousands (except share and per share data)
| December 31, 2020 | June 30, 2020 | |||||||||
| Note | Unaudited | |||||||||
| ASSETS | ||||||||||
| CURRENT ASSETS: | ||||||||||
| Cash and cash equivalents | $ | 7,824 | $ | 8,270 | ||||||
| Short-term bank deposits | 35,228 | 37,514 | ||||||||
| Restricted cash | 40 | 555 | ||||||||
| Other current assets | 2,158 | 2,122 | ||||||||
| Total current assets | 45,250 | 48,461 | ||||||||
| LONG-TERM ASSETS: | ||||||||||
| Long-term deposits and restricted bank deposits | 3,152 | 12,653 | ||||||||
| Severance pay fund | 706 | 631 | ||||||||
| Property and equipment, net | 2,089 | 2,516 | ||||||||
| Operating lease right-of-use asset | 1,053 | 1,259 | ||||||||
| Other long-term assets | 13 | 12 | ||||||||
| Total long-term assets | 7,013 | 17,071 | ||||||||
| Total assets | $ | 52,263 | $ | 65,532 | ||||||
The accompanying notes are an integral part of the unaudited interim condensed consolidated financial statements.
PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARY
INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS
U.S. Dollars in thousands (except share and per share data)
| December 31, 2020 | June 30, 2020 | |||||||||
| Note | Unaudited | |||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||
| CURRENT LIABILITIES | ||||||||||
| Trade payables | $ | 2,854 | $ | 1,968 | ||||||
| Accrued expenses | 3,741 | 3,018 | ||||||||
| Operating lease liability, current | 1,132 | 1,020 | ||||||||
| Other accounts payable | 2,269 | 1,981 | ||||||||
| Total current liabilities | 9,996 | 7,987 | ||||||||
| LONG-TERM LIABILITIES | ||||||||||
| Accrued severance pay | 960 | 879 | ||||||||
| Operating lease liability | 159 | 565 | ||||||||
| Total long-term liabilities | 1,119 | 1,444 | ||||||||
| COMMITMENTS AND CONTINGENCIES | 3 | |||||||||
| SHAREHOLDERS’ EQUITY | ||||||||||
| Share capital: | 4 | |||||||||
| Common shares $0.00001 par value per share: | ||||||||||
| Authorized: 60,000,000 shares | ||||||||||
| Issued and outstanding: 25,839,286 shares as of December 31, 2020, 25,492,713 shares as of June 30, 2020 | (*) | (*) | ||||||||
| Additional paid-in capital | 342,347 | 336,257 | ||||||||
| Accumulated deficit | (301,199 | ) | (280,156 | ) | ||||||
| Total shareholders’ equity | 41,148 | 56,101 | ||||||||
| Total liabilities and shareholders’ equity | $ | 52,263 | $ | 65,532 | ||||||
| December 31, 2017 | June 30, 2017 | |||||||||||
| Note | Unaudited | |||||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||
| CURRENT LIABILITIES | ||||||||||||
| Trade payables | $ | 1,808 | $ | 1,966 | ||||||||
| Accrued expenses | 1,714 | 1,465 | ||||||||||
| Other accounts payable | 2,275 | 1,983 | ||||||||||
Total current liabilities | 5,797 | 5,414 | ||||||||||
| LONG-TERM LIABILITIES | ||||||||||||
| Accrued severance pay | 1,078 | 940 | ||||||||||
| Other long-term liabilities | 897 | 929 | ||||||||||
Total long-term liabilities | 1,975 | 1,869 | ||||||||||
| COMMITMENTS AND CONTINGENCIES | 5 | |||||||||||
| STOCKHOLDERS’ EQUITY | 6 | |||||||||||
| Share capital: | ||||||||||||
Common stock $0.00001 par value per share: Authorized: 200,000,000 shares Issued and outstanding: 109,337,556 shares as of December 31, 2017, 96,938,789 shares as of June 30, 2017 | 1 | 1 | ||||||||||
| Additional paid-in capital | 236,767 | 217,822 | ||||||||||
| Accumulated deficit | (205,185 | ) | (189,571 | ) | ||||||||
| Other comprehensive income | 5,378 | 1,999 | ||||||||||
Total stockholders' equity | 36,961 | 30,251 | ||||||||||
Total liabilities and stockholders' equity | $ | 44,733 | $ | 37,534 | ||||||||
The accompanying notes are an integral part of the unaudited interim condensed consolidated financial statements.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) |
Six months ended December 31 | Three months ended December 31, | |||||||||||||||||||
| Note | 2017 | 2016 | 2017 | 2016 | ||||||||||||||||
| Revenues | 2f | $ | 50 | - | $ | 50 | - | |||||||||||||
| Cost of revenues | (2 | ) | - | (2 | ) | - | ||||||||||||||
| Gross profit | 48 | - | 48 | - | ||||||||||||||||
| Operating Expenses: | ||||||||||||||||||||
| Research and development expenses | (11,451 | ) | (11,512 | ) | (6,259 | ) | (5,481 | ) | ||||||||||||
| Less: participation by the IIA and other parties | 1,136 | 1,312 | 621 | 279 | ||||||||||||||||
| Research and development expenses, net | (10,315 | ) | (10,200 | ) | (5,638 | ) | (5,202 | ) | ||||||||||||
| General and administrative expenses, net | (5,683 | ) | (3,010 | ) | (2,920 | ) | (1,446 | ) | ||||||||||||
| Other income | 7 | 43 | - | 43 | - | |||||||||||||||
| Operating loss | (15,907 | ) | (13,210 | ) | (8,467 | ) | (6,648 | ) | ||||||||||||
| Financial income, net | 293 | 276 | 238 | 38 | ||||||||||||||||
| Net loss for the period | $ | (15,614 | ) | $ | (12,934 | ) | $ | (8,229 | ) | $ | (6,610 | ) | ||||||||
| Loss per share: | ||||||||||||||||||||
| Basic and diluted net loss per share | $ | (0.15 | ) | $ | (0.16 | ) | $ | (0.08 | ) | $ | (0.08 | ) | ||||||||
| Weighted average number of shares used in computing basic and diluted net loss per share | 101,224,325 | 80,856,219 | 105,130,191 | 81,038,879 | ||||||||||||||||
U.S. Dollars in thousands (except share and per share data)
| Six months ended December 31 | Three months ended December 31, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| Unaudited | Unaudited | Unaudited | Unaudited | |||||||||||||
| Revenues | $ | - | $ | 23 | $ | - | $ | 23 | ||||||||
| Cost of revenues | - | (1 | ) | - | (1 | ) | ||||||||||
| Gross profit | - | 22 | - | 22 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development expenses | (14,202 | ) | (11,398 | ) | (7,999 | ) | (5,572 | ) | ||||||||
| Less: participation by the Israeli Innovation Authority (IIA), Horizon 2020 and other parties | 287 | 1,376 | 22 | 932 | ||||||||||||
| Research and development expenses, net | (13,915 | ) | (10,022 | ) | (7,977 | ) | (4,640 | ) | ||||||||
| General and administrative expenses, net | (7,896 | ) | (3,563 | ) | (5,097 | ) | (1,750 | ) | ||||||||
| Operating loss | (21,811 | ) | (13,563 | ) | (13,074 | ) | (6,368 | ) | ||||||||
| Financial income (expense), net | 768 | 54 | 520 | (2 | ) | |||||||||||
| Net loss for the period | $ | (21,043 | ) | $ | (13,509 | ) | $ | (12,554 | ) | $ | (6,370 | ) | ||||
| Loss per share: | ||||||||||||||||
| Basic and diluted net loss per share | $ | (0.82 | ) | $ | (0.86 | ) | $ | (0.49 | ) | $ | (0.40 | ) | ||||
| Weighted average number of shares used in computing basic and diluted net loss per share | 25,599,008 | 15,665,641 | 25,662,752 | 15,927,749 | ||||||||||||
The accompanying notes are an integral part of the unaudited interim condensed consolidated financial statements.
INTERIM CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY |
Six months ended December 31, | Three months ended December 31, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Net loss | $ | (15,614 | ) | $ | (12,934 | ) | $ | (8,229 | ) | $ | (6,610 | ) | ||||
| Other comprehensive income (loss), net: | ||||||||||||||||
| Unrealized gain (loss) on available-for-sale marketable securities, net | 4,307 | (999 | ) | 5,440 | (1,585 | ) | ||||||||||
| Reclassification adjustment of available-for-sale marketable securities losses realized in net loss, net | (928 | ) | (20 | ) | (1,006 | ) | (16 | ) | ||||||||
| Other comprehensive income (loss) | 3,379 | (1,019 | ) | 4,434 | (1,601 | ) | ||||||||||
| Total comprehensive loss | $ | (12,235 | ) | $ | (13,953 | ) | $ | (3,795 | ) | $ | (8,211 | ) | ||||
U.S. Dollars in thousands (except share and per share data)
| Common Shares | Additional Paid-in | Accumulated | Total Shareholders’ | |||||||||||||||||
| Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||
| Balance as of July 1, 2019 | 15,082,852 | $ | (*) | $ | 272,825 | $ | (251,004 | ) | $ | 21,821 | ||||||||||
| Share-based compensation to employees, directors and non-employee consultants | 201,155 | (*) | 1,631 | - | 1,631 | |||||||||||||||
| Issuance of common shares under Open Market Sales Agreement, net of issuance costs of $812 (see Note 4a) | 1,644,118 | (*) | 5,967 | - | 5,967 | |||||||||||||||
| Exercise of options by employees and non-employee consultants | 5,000 | (*) | - | - | - | |||||||||||||||
| Round up of shares due to reverse share split effectuated on July 25, 2019 (see Note 4c) | 1,292 | (*) | - | - | - | |||||||||||||||
| Net loss | - | - | - | (13,509 | ) | (13,509 | ) | |||||||||||||
| Balance as of December 31, 2019 (unaudited) | 16,934,417 | $ | (*) | $ | 280,423 | $ | (264,513 | ) | $ | 15,910 | ||||||||||
| (*) | Less than $1 |
The accompanying notes are an integral part of the unaudited interim condensed consolidated financial statements.
PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARY
INTERIM CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
U.S. Dollars in thousands (except share and per share data)
| Common Shares | Additional Paid-in | Accumulated | Total Shareholders’ | |||||||||||||||||
| Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||
| Balance as of October 1, 2019 | 15,619,913 | $ | (*) | $ | 275,670 | $ | (258,143 | ) | $ | 17,527 | ||||||||||
| Share-based compensation to employees, directors and non-employee consultants | 108,286 | (*) | 767 | - | 767 | |||||||||||||||
| Issuance of common shares under Open Market Sales Agreement, net of issuance costs of $614 | 1,204,218 | (*) | 3,986 | - | 3,986 | |||||||||||||||
| Exercise of options by employees and non-employee consultants | 2,000 | (*) | - | - | - | |||||||||||||||
| Net loss | - | - | - | (6,370 | ) | (6,370 | ) | |||||||||||||
| Balance as of December 31, 2019 (unaudited) | 16,934,417 | $ | (*) | $ | 280,423 | $ | (264,513 | ) | $ | 15,910 | ||||||||||
| (*) |
| Common Stock | Additional Paid-in | Accumulated Other Comprehensive | Accumulated | Total Stockholders’ | ||||||||||||||||||||
| Shares | Amount | Capital | Income (Loss) | Deficit | Equity | |||||||||||||||||||
| Balance as of July 1, 2016 | 80,268,999 | $ | 1 | $ | 198,432 | $ | 1,480 | $ | (161,757 | ) | $ | 38,156 | ||||||||||||
| Exercise of options by employees | 6,000 | (* | ) | 4 | - | - | 4 | |||||||||||||||||
Stock-based compensation to employees, directors and non-employee consultants | 1,030,952 | (* | ) | 907 | - | - | 907 | |||||||||||||||||
| Other comprehensive loss, net | - | - | - | (1,019 | ) | - | (1,019 | ) | ||||||||||||||||
| Net loss | - | - | - | - | (12,934 | ) | (12,934 | ) | ||||||||||||||||
Balance as of December 31, 2016 (unaudited) | 81,305,951 | $ | 1 | $ | 199,343 | $ | 461 | $ | (174,691 | ) | $ | 25,114 | ||||||||||||
The accompanying notes are an integral part of the unaudited interim condensed consolidated financial statements.
PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARY
INTERIM CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
| Common Stock | Additional Paid-in | Accumulated Other Comprehensive | Accumulated | Total Stockholders’ | ||||||||||||||||||||
| Shares | Amount | Capital | Income | Deficit | Equity | |||||||||||||||||||
| Balance as of July 1, 2017 | 96,938,789 | $ | 1 | $ | 217,822 | $ | 1,999 | $ | (189,571 | ) | $ | 30,251 | ||||||||||||
| Exercise of options by employees | 5,000 | - | 5 | - | - | 5 | ||||||||||||||||||
Stock-based compensation to employees, directors and non-employee consultants | 1,731,024 | (* | ) | 3,108 | - | - | 3,108 | |||||||||||||||||
Issuance of common stock under At-The Market (“ATM”) Agreement, net of issuance costs of $80 (Note 6a) | 834,040 | (* | ) | 1,026 | - | - | 1,026 | |||||||||||||||||
Issuance of common stock, net of issuance costs of $1,405 (Note 6b) | 9,000,000 | (* | ) | 13,646 | - | - | 13,646 | |||||||||||||||||
Exercise of warrants by investors (Note 6c) | 828,703 | (* | ) | 1,160 | - | - | 1,160 | |||||||||||||||||
| Other comprehensive income, net | - | - | - | 3,379 | - | 3,379 | ||||||||||||||||||
| Net loss | - | - | - | - | (15,614 | ) | (15,614 | ) | ||||||||||||||||
Balance as of December 31, 2017 (unaudited) | 109,337,556 | $ | 1 | $ | 236,767 | $ | 5,378 | $ | (205,185 | ) | $ | 36,961 | ||||||||||||
U.S. Dollars in thousands (except share and per share data)
| Common Shares | Additional Paid-in | Accumulated | Total Shareholders’ | |||||||||||||||||
| Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||
| Balance as of July 1, 2020 | 25,492,713 | $ | (*) | $ | 336,257 | $ | (280,156 | ) | $ | 56,101 | ||||||||||
| Share-based compensation to employees, directors and non-employee consultants | 162,518 | (*) | 4,857 | - | 4,857 | |||||||||||||||
| Issuance of common shares under New ATM Agreement, net of issuance costs of $151 (see Note 4b) | 117,021 | (*) | 869 | - | 869 | |||||||||||||||
| Exercise of warrants (see Note 4d) | 51,999 | (*) | 364 | - | 364 | |||||||||||||||
| Exercise of options by non-employee consultants | 15,035 | (*) | - | - | - | |||||||||||||||
| Net loss | - | - | - | (21,043 | ) | (21,043 | ) | |||||||||||||
| Balance as of December 31, 2020 (unaudited) | 25,839,286 | $ | (*) | $ | 342,347 | $ | (301,199 | ) | $ | 41,148 | ||||||||||
| (*) | Less than $1 |
The accompanying notes are an integral part of the unaudited interim condensed consolidated financial statements.
PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARY
INTERIM CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY |
| Six months ended December 31, | ||||||||
| 2017 | 2016 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | (15,614 | ) | $ | (12,934 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation | 1,023 | 1,110 | ||||||
| Gain from sale of property and equipment, net | - | (4 | ) | |||||
| Accretion of discount, amortization of premium and changes in accrued interest of marketable securities | 12 | (154 | ) | |||||
| Gain from sale of investments of available-for-sale marketable securities | (928 | ) | (20 | ) | ||||
| Other-than-temporary loss of available-for-sale marketable securities | 850 | - | ||||||
| Stock-based compensation to employees, directors and non-employees consultants | 3,108 | 907 | ||||||
| Decrease in accounts receivable from the IIA | 864 | 1,941 | ||||||
| Decrease (increase) in other current and long-term assets | 272 | (105 | ) | |||||
| Increase (decrease) in trade payables | (86 | ) | 160 | |||||
| Increase (decrease) in other accounts payable, accrued expenses and other long-term liabilities | 421 | (588 | ) | |||||
| Increase in interest receivable on short-term deposits | (28 | ) | - | |||||
| Linkage differences and interest on short and long-term deposits and restricted bank deposits | 2 | (1 | ) | |||||
| Accrued severance pay, net | 86 | (11 | ) | |||||
| Net cash used by operating activities | $ | (10,018 | ) | $ | (9,699 | ) | ||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchase of property and equipment | $ | (185 | ) | $ | (273 | ) | ||
| Proceeds from sale of property and equipment | - | 6 | ||||||
| Repayment of (investment in) short-term deposits | (9,721 | ) | 8,542 | |||||
| Proceeds from sale of available-for-sale marketable securities | 9,010 | 3,813 | ||||||
| Proceeds from redemption of available-for-sale marketable securities | 9 | 280 | ||||||
| Investment in available-for-sale marketable securities | (1,146 | ) | (1,562 | ) | ||||
| Net cash provided by (used in) investing activities | $ | (2,033 | ) | $ | 10,806 | |||
U.S. Dollars in thousands (except share and per share data)
| Common Share | Additional Paid-in | Accumulated | Total Shareholders’ | |||||||||||||||||
| Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||
| Balance as of October 1, 2020 | 25,612,811 | $ (*) | $ | 337,593 | $ | (288,645 | ) | $ | 48,948 | |||||||||||
| Share-based compensation to employees, directors and non-employee consultants | 88,777 | (*) | 3,821 | - | 3,821 | |||||||||||||||
| Issuance of common Share under New ATM Agreement, net of issuance costs of $151 (see Note 4b) | 117,021 | (*) | 869 | - | 869 | |||||||||||||||
| Exercise of warrants (see Note 4d) | 9,142 | (*) | 64 | - | 64 | |||||||||||||||
| Exercise of options by employees and non-employee consultants | 11,535 | (*) | - | - | - | |||||||||||||||
| Net loss | - | - | - | (12,554 | ) | (12,554 | ) | |||||||||||||
| Balance as of December 31, 2020 (unaudited) | 25,839,286 | $ (*) | $ | 342,347 | $ | (301,199 | ) | $ | 41,148 | |||||||||||
| (*) | Less than $1 |
The accompanying notes are an integral part of the unaudited interim condensed consolidated financial statements.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
| Six months ended December 31, | ||||||||
| 2017 | 2016 | |||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds related to issuance of common stock, net of issuance costs | $ | 14,672 | $ | - | ||||
| Exercise of warrants and options | 1,165 | 4 | ||||||
| Proceeds with respect to BIRD liability | 88 | - | ||||||
| Net cash provided by financing activities | $ | 15,925 | $ | 4 | ||||
| Increase in cash and cash equivalents | 3,874 | 1,111 | ||||||
| Cash and cash equivalents at the beginning of the period | 4,707 | 6,223 | ||||||
| Cash and cash equivalents at the end of the period | $ | 8,581 | $ | 7,334 | ||||
| (a) Supplemental disclosure of cash flow activities: | ||||||||
| Cash paid during the period for: | ||||||||
| Taxes paid due to non-deductible expenses | $ | 6 | $ | 16 | ||||
| (b) Supplemental disclosure of non-cash activities: | ||||||||
| Purchase of property and equipment on credit | $ | 16 | $ | 36 | ||||
U.S. Dollars in thousands (except share and per share data)
| Six months ended December 31, | ||||||||
| 2020 | 2019 | |||||||
| Unaudited | Unaudited | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | (21,043 | ) | $ | (13,509 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation | 695 | 853 | ||||||
| Share-based compensation to employees, directors and non-employee consultants | 4,857 | 1,631 | ||||||
| Decrease in accounts receivable from the IIA | 142 | 125 | ||||||
| Increase in other current assets and other long-term assets | (179 | ) | (719 | ) | ||||
| Increase (decrease) in trade payables | 825 | (378 | ) | |||||
| Increase (decrease) in other accounts payable, accrued expenses, other current liabilities and other long-term liabilities | 960 | (1,466 | ) | |||||
| Decrease in operating lease right-of-use asset and liability, net and effect of exchange rate differences | (88 | ) | (103 | ) | ||||
| Decrease (increase) in interest receivable on short-term deposits | (130 | ) | 39 | |||||
| Linkage differences and interest on short and long-term deposits and restricted bank deposits | (29 | ) | (7 | ) | ||||
| Accrued severance pay, net | 6 | (8 | ) | |||||
| Net cash used by operating activities | $ | (13,984 | ) | $ | (13,542 | ) | ||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchase of property and equipment | $ | (207 | ) | $ | (128 | ) | ||
| Proceeds from withdrawals of short-term deposits | 2,445 | 10,786 | ||||||
| Proceeds from withdrawals of long-term deposits | 9,533 | 2 | ||||||
| Net cash provided by investing activities | $ | 11,771 | $ | 10,660 | ||||
The accompanying notes are an integral part of the unaudited interim condensed consolidated financial statements.
PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARY
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
U.S. Dollars in thousands (except share and per share data)
| Six months ended December 31, | ||||||||
| 2020 | 2019 | |||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds related to issuance of common shares, net of issuance costs | $ | 920 | $ | 5,967 | ||||
| Proceeds related to exercise of warrants | 364 | - | ||||||
| Net cash provided by financing activities | $ | 1,284 | $ | 5,967 | ||||
| Increase (decrease) in cash and cash equivalents and restricted cash | (929 | ) | 3,085 | |||||
| Cash and cash equivalents and restricted cash at the beginning of the period | 9,229 | 5,186 | ||||||
| Cash and cash equivalents and restricted cash at the end of the period | $ | 8,300 | $ | 8,271 | ||||
| (a) Supplemental disclosure of cash flow activities: | ||||||||
| Cash paid during the period for: | ||||||||
| Taxes paid due to non-deductible expenses | $ | 5 | $ | 5 | ||||
| (b) Supplemental disclosure of non-cash activities: | ||||||||
| Purchase of property and equipment on credit | $ | 93 | $ | 8 | ||||
| Accrued expenses related to issuance of common shares | $ | 51 | $ | - | ||||
The following table provides a reconciliation of cash and cash equivalents, and long-term restricted cash reported within the consolidated balance sheets that sum to the total of such amounts in the consolidated statements of cash flows:
| December 31, | ||||||||
| 2020 | 2019 | |||||||
| (Unaudited) | ||||||||
| Cash and cash equivalents | $ | 7,824 | $ | 7,300 | ||||
| Restricted cash included in Restricted cash and short-term bank deposits | 476 | 971 | ||||||
| Cash, cash equivalents and restricted cash shown in the consolidated statement of cash flows | $ | 8,300 | $ | 8,271 | ||||
The accompanying notes are an integral part of the unaudited interim condensed consolidated financial statements.
PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARY
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
U.S. Dollars in thousands (except share and per share amounts)
NOTE 1: - GENERAL
| a. | Pluristem Therapeutics Inc., a Nevada corporation (“Pluristem Therapeutics”), was incorporated on May 11, 2001. Pluristem Therapeutics |
Pluristem Therapeutics’ common shares of common stock are traded on the NASDAQ CapitalNasdaq Global Market under the symbol “PSTI” and on the Tel-Aviv Stock Exchange under the symbol “PLTR”.
| b. | The Company is a bio-therapeutics company developing placenta-based cell therapy product candidates for the treatment of |
The Company has incurred an accumulated deficit of approximately $301,199 and incurred recurring operating losses and negative cash flows from operating activities since inception. As of December 31, 2020, the Company’s total shareholders’ equity amounted to $41,148. During the six month period ended December 31, 2017,2020, the Company incurred operating losses of $15,907$21,043 and its negative cash flow from operating activities was $10,018. The Company will be required to identify additional liquidity resources in the near term in order to support the commercialization of its products and maintain its research and development and clinical trials activities.
As of December 31, 2017,2020, the Company's cash position (cash and cash equivalents, short-term bank deposits and marketable securities)restricted cash and long-term bank deposits) totaled approximately $35,292.$46,244. The Company is addressingplans to continue to finance its liquidity issuesoperations from, its current resources (including the net proceeds received from its registered direct offering that closed in February 2021 and proceeds from the sales of common shares pursuant to the New ATM Agreement (as defined herein) during January 2021), the proceeds from the loan under the European Investment Bank (the “EIB”) finance contract (the “Finance Contract”) (See Note 1c) once certain milestones are reached, by implementing initiativesentering into licensing or other commercial agreements, from grants to allow the continuationsupport its research and development activities and from sales of its activities. The Company'sequity securities. Management believes that its current resources and these sources for additional funds, together with its existing operating plan, includes various assumptions concerningare sufficient for the level and timingCompany to meet its obligations as they come due at least for a period of cash outflows for operating activities and capital expenditures. The Company's ability to successfully carry out its business plan, which includes a cost-reduction plan should it be unable to raise sufficient additional capital, is primarily dependent upon its ability to (1) obtain sufficient additional capital, (2) enter into license agreements to use or commercializetwelve months from the Company’s products and (3) receive other sourcesdate of funding, including non-diluting sources such as the IIA grants, the European Union's Horizon 2020 program (“Horizon 2020”) grants and other grants.issuance of these unaudited condensed consolidated financial statements. There are no assurances, however, that the Company will be successful in obtainingable to obtain an adequate level of financing neededfinancial resources that are required for the long-term development and commercialization of its products.
| c. |
On June 26, 2013,April 30, 2020, Pluristem entered into an exclusive license and commercialization agreementthe Finance Contract with the EIB, pursuant to which the German Subsidiary can obtain a loan, for a period of 36 months, in the amount of up to €50 million, subject to certain milestones being reached (the “CHA Agreement”“Loan”), payable in three tranches (each, a “Tranche”), with CHA, for conducting clinical trials and commercializationthe first Tranche consisting of Pluristem's PLX-PAD product in South Korea in connection with two indications:€20 million, the treatmentsecond Tranche consisting of Critical Limb Ischemia (“CLI”), and Intermediate Claudication (collectively with CLI, the “Indications”). Under the terms of the CHA Agreement, CHA will receive exclusive rights in South Korea for conducting clinical trials with respect to the Indications€18 million and the Companythird Tranche consisting of €12 million.
The Tranches will continue to retain rights tobe treated independently, each with its proprietary manufacturing technologyown interest rate and cell-related intellectual property.maturity period. The interest rate is 4% in the aggregate (consisting of a 0% fixed interest rate and a 4% deferred interest rate payable upon maturity, respectively) per year for the first Tranche, 4% in the aggregate (consisting of a 1% fixed interest rate and a 3% deferred interest rate payable upon maturity, respectively) for the second Tranche and 3% (consisting of a 1% fixed interest rate and a 2% deferred interest rate payable upon maturity, respectively) for the Third Tranche.
PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARY
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
U.S. Dollars in thousands (except share and per share amounts)
NOTE 1:-GENERAL - GENERAL (CONT.)
In addition to any interest payable on the Loan, the EIB is entitled to receive royalties from future revenues, if any, of Pluristem for a period of seven years starting in 2024, in an amount equal to between 0.2% to 2.3% of the CHA Agreement is a Phase II trial in Intermittent Claudication. South Korea’s Ministry of Food and Drug Safety approved this study in November 2013.
As of December 31, 2017, is approximately $8,440.
NOTE 2:-SIGNIFICANT - SIGNIFICANT ACCOUNTING POLICIES
| a. | Unaudited Interim Financial Information |
The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP"(“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of U.S. Securities and Exchange Commission Regulation S-X. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included (consisting only of normal recurring adjustments except as otherwise discussed).
Operating results for the three and six month periodsperiod ended December 31, 2017,2020 are not necessarily indicative of the results that may be expected for the year ending June 30, 2018.
| b. | Significant Accounting Policies |
The significant accounting policies followed in the preparation of these unaudited interim condensed consolidated financial statements are identical to those applied in the preparation of the latest annual financial statements.
| c. | Use of estimates |
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates, judgments and assumptions that are reasonable based upon information available at the time they are made. These estimates, judgments and assumptions can affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
| d. | Fair value of financial instruments |
The carrying amounts of the Company'sCompany’s financial instruments, including cash and cash equivalents, short-term and restricted bank deposits, accounts receivable and other current assets, trade payable and other accounts payable, accrued expenses and other liabilities, approximate fair value because of their generally short term maturities.
The Company measures its investments in marketable securities and derivative instruments at fair value under ASC 820,Accounting Standards Codification (“ASC”), “Fair Value Measurements and Disclosures” (“ASC 820”). Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering such assumptions, ASC 820 establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:
Level 1
- Quoted prices (unadjusted) in active markets for identical assets or liabilities;Level 2
- Inputs other than Level 1 that are observable for the asset or liability, either directly or indirectly; andLevel 3
- Unobservable inputs for the asset or liability.PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARY
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
U.S. Dollars in thousands (except share and per share amounts)
NOTE 2: - SIGNIFICANT ACCOUNTING POLICIES (CONT.)
The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The Company categorized each of its fair value measurements in one of these three levels of hierarchy (see Note 4).
| e. | Derivative financial instruments |
The Company accounts for derivatives and hedging based on ASC 815, “Derivatives and hedging”
If a derivative meets the definition of a hedge and is so designated, depending on the nature of the hedge, changes in the fair value of the derivative will either be offset against the change in fair value of the hedged assets, liabilities, or firm commitments through earnings (for fair value hedge transactions) or recognized in other comprehensive income (loss) until the hedged item is recognized in earnings (for cash flow hedge transactions).
If a derivative does not meet the definition of a hedge, the changes in the fair value are included in earnings. Cash flows related to such hedges are classified as operating activities.
The Company enters into forward exchange contracts and option contracts in order to limit the exposure to exchange rate fluctuation associated with expenses mainly incurred in
New Israeli Shekels (“The Company measured the fair value of the contracts in accordance with ASC 820. Foreign currency derivative contracts are classified within Level 2 as the valuation inputs are based on quoted prices and market observable data of similar instruments.
As of December 31, 20172020, the fair value of the options contracts were approximately$ 77, presented in “other current assets” (see Note 4).Company had no open hedging transactions. The net lossesincome recognized in “Financial income (expense), net” during the three and six month periods ended December 31, 20172020 and 2016,2019 were )$(74, ($217)$9 and )$(131, ($66),$21 ,($26) and $57 respectively.
| f. | Recently Adopted Accounting |
Accounting Standards Update (“ASCASU”) No. 2018-18 - “Collaborative Arrangements (Topic 808) - Clarifying the Interaction between Topic 808 and Topic 606” (“ASU No. 2018-18”):
In November 2018, the Financial Accounting Standards Board (the “FASB”) issued ASU No. 2018-18, which clarifies the interaction between Topic 808 and Topic 606 "Revenue from Contractsby (1) clarifying that certain transactions between collaborative arrangement participants should be accounted for under Topic 606, (2) adding unit-of-account guidance in Topic 808 to align with Costumers
PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARY
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
U.S. Dollars in thousands (except share and per share amounts)
NOTE 2:-SIGNIFICANT - SIGNIFICANT ACCOUNTING POLICIES (CONT.)
| g. | Recently Issued Accounting Pronouncements |
ASU 2016-02No. 2016-13 - Leases“Financial Instruments - Credit Losses (Topic 842)326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”):
In FebruaryJune 2016, the FASB issued guidanceASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). ASU 2016-13 changes the recognition, measurement, presentationimpairment model for most financial assets and disclosure of leases for both parties to a contract (i.e., lesseescertain other instruments. For trade and lessors). The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classificationother receivables, held-to-maturity debt securities, loans, and other instruments, entities will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease, respectively. A lessee is alsobe required to recorduse a right-of-use asset and a lease liabilitynew forward-looking “expected loss” model that generally will result in the earlier recognition of allowances for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for in a manner similar to the accounting under existing guidance for operating leases today. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales-type leases, direct financing leases and operating leases. Topic 842 supersedes the previous leases standard, ASC 840, “Leases”.losses. The guidance isalso requires increased disclosures. The amendments contained in ASU 2016-13 were originally effective for the interim and annual periodsfiscal years beginning on or after December 15, 2018.2019, including interim periods within those fiscal years for the Company. In November 2019, the FASB issued ASU No. 2019-10, which delayed the effective date of ASU 2016-13 for smaller reporting companies (as defined by the U.S. Securities and Exchange Commission) and other non-U.S. Securities and Exchange Commission reporting entities to fiscal years beginning after December 15, 2022 or July 1, 2023 for the Company, including interim periods within those fiscal periods. Early adoption is permitted. The Company is currently evaluatingassessing the potential effect ofimpact the guidance will have on its consolidated financial statements.
NOTE 3:- MARKETABLE SECURITIES
| December 31, 2017 | June 30, 2017 | |||||||||||||||||||||||||||||||||||||||
Amortized cost | Gross unrealized gain | Gross unrealized loss | Other-than-temporary impairment | Fair value | Amortized cost | Gross unrealized gain | Gross unrealized loss | Other-than-temporary impairment | Fair value | |||||||||||||||||||||||||||||||
Available-for-sale - matures within one year: | ||||||||||||||||||||||||||||||||||||||||
Stock and index linked notes | $ | 6,208 | $ | 5,378 | $ | - | $ | (850 | ) | $ | 10,736 | $ | 11,988 | $ | 2,014 | $ | (47 | ) | $ | (767 | ) | $ | 13,188 | |||||||||||||||||
Government debentures – fixed interest rate | - | - | - | - | - | 157 | 1 | - | - | 158 | ||||||||||||||||||||||||||||||
Corporate debentures – fixed interest rate | - | - | - | - | - | 47 | 1 | - | - | 48 | ||||||||||||||||||||||||||||||
| $ | 6,208 | $ | 5,378 | $ | - | $ | (850 | ) | $ | 10,736 | $ | 12,192 | $ | 2,016 | $ | (47 | ) | $ | (767 | ) | $ | 13,394 | ||||||||||||||||||
Available-for-sale - matures after one year through five years: | ||||||||||||||||||||||||||||||||||||||||
Government debentures – fixed interest rate | - | - | - | - | - | 468 | 23 | - | - | 491 | ||||||||||||||||||||||||||||||
Corporate debentures – fixed interest rate | - | - | - | - | - | 1,255 | 7 | (1 | ) | - | 1,261 | |||||||||||||||||||||||||||||
| $ | - | $ | - | $ | - | $ | - | $ | - | $ | 1,723 | $ | 30 | $ | (1 | ) | $ | - | $ | 1,752 | ||||||||||||||||||||
Available-for-sale - matures after five years through ten years: | ||||||||||||||||||||||||||||||||||||||||
Corporate debentures – fixed interest rate | - | - | - | - | - | 17 | 1 | - | - | 18 | ||||||||||||||||||||||||||||||
| $ | - | $ | - | $ | - | $ | - | $ | - | $ | 17 | $ | 1 | $ | - | $ | - | $ | 18 | |||||||||||||||||||||
Total | $ | 6,208 | $ | 5,378 | $ | - | $ | (850 | ) | $ | 10,736 | $ | 13,932 | $ | 2,047 | $ | (48 | ) | $ | (767 | ) | $ | 15,164 | |||||||||||||||||
| December 31, 2017 (Unaudited) | June 30, 2017 | |||||||||||||||
| Level 1 | Level 2 | Level 1 | Level 2 | |||||||||||||
Marketable securities | $ | 8,440 | $ | 2,296 | $ | 10,523 | $ | 4,641 | ||||||||
Foreign currency derivative instruments | - | 77 | - | 295 | ||||||||||||
Total financial assets | $ | 8,440 | $ | 2,373 | $ | 10,523 | $ | 4,936 | ||||||||
| a. | As of December 31, |
| b. | Under the Law for the Encouragement of Industrial Research and Development, 1984, (the “Research Law”), research and development programs that meet specified criteria and are approved by the IIA are eligible for grants of up to 50% of the project’s expenditures, as determined by the research committee, in exchange for the payment of royalties from the sale of products developed under the program. Regulations under the Research Law generally provide for the payment of royalties to the IIA of 3% on sales of products and services derived from a technology developed using these grants until 100% of the dollar-linked grant is repaid. |
The Company’s obligation to pay these royalties is contingent on its actual sale of such products and services. In the absence of such sales, no payment is required. Outstanding balance of the grants will be subject to interest at a rate equal to the 12 month LIBOR applicable to dollar deposits that is published on the first business day of each calendar year. Following the full repayment of the grant, there is no further liability for royalties.
Through December 31, 2017,2020, total grants obtained from the IIA aggregated to approximately $25,974$27,743 and total royalties paid and accrued amounted to $168.$169. As of December 31, 2017,2020, the Company'sCompany’s contingent liability in respect to royalties to the IIA amounted to $25,806,$27,574, not including LIBOR interest as described above.
| c. | The Company was awarded a marketing grant under the “Smart Money” program of the Israeli Ministry of Economy and Industry. The program’s aim is to assist companies to extend their activities in international markets. The goal market that was chosen was Japan. The Israeli government granted the Company budget resources that are intended to be used to advance the Company’s product candidate towards marketing in Japan and for regulatory activities there. As part of the program, the Company will repay royalties of 5% from the Company’s income in Japan during five years, starting the year in which the Company will not be entitled to reimbursement of expenses under the program and will be spread for a period of up to 5 years or until the amount of the grant is fully paid. |
PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARY
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
U.S. Dollars in thousands (except share and per share amounts)
NOTE 5:3: - COMMITMENTS AND CONTINGENCIES (CONT.)
As of December 31, 2020, total grants obtained under this Smart Money program amounted to approximately $112. As of December 31, 2020, the Company’s contingent liability with respect to royalties for this “Smart Money” program was $112 and no royalties were paid or accrued.
| The Company was awarded an additional “Smart Money” grant of approximately $229 from Israel’s Ministry of Economy and Industry to facilitate certain marketing and business development activities with respect to its advanced cell therapy products in the Chinese market, including Hong Kong. The Israeli government granted the Company budget resources that are intended to be used to advance the Company’s product candidate towards marketing in the China-Hong Kong markets. The Company will also receive close support from Israel’s trade representatives stationed in China, including Hong Kong, along with |
As part of the program, the Company will repay royalties of 5% from the Company’s revenues in the region for a five year period, beginning the year in which the Company will not be entitled to reimbursement of expenses under the program and will be spread for a period of up to 5 years or until the amount of the grant is fully paid.
| e. | In September 2017, the Company signed an agreement with the Tel-Aviv Sourasky Medical Center (Ichilov Hospital) to conduct a Phase I/II trial of PLX-PAD cell therapy for the treatment of Steroid-Refractory Chronic Graft-Versus-Host-Disease (“ |
As part of the agreement with the Tel-Aviv Sourasky Medical Center (Ichilov Hospital), the Company will pay royalties of 1% from its net sales of the PLX-PAD product relating to GvHD, with a maximum aggregate royalty amount of approximately $250.
| f. | The Company was awarded a marketing grant of approximately $52 under the “Shalav” program of the Israeli Ministry of Economy and Industry. The grant is intended to facilitate certain marketing and business development activities with respect to the Company’s advanced cell therapy products in the U.S. market. As part of the program, the Company will repay royalties of 3%, but only with respect to the Company’s revenues in the U.S. market in excess of $250 of its revenues in fiscal year 2018, upon the earlier of the five year period beginning the year in which the Company will not be entitled to reimbursement of expenses under the program and/or until the amount of the grant, which is linked to the Consumer Price Index, is fully paid. |
As of December 31, 2020, total grants obtained under the “Shalav” program amounted to approximately $52. As of December 31, 2020, the Company’s contingent liability with respect to royalties for this “Shalav” program was $52 and no royalties were paid or accrued.
PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARY
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
U.S. Dollars in thousands (except share and per share amounts)
NOTE 6:4: - STOCKHOLDERS'SHAREHOLDERS’ EQUITY
| a. | Pursuant to a shelf registration on Form S-3 declared effective by the Securities and Exchange Commission on June 23, 2017, |
| b. | Pursuant to a shelf registration on Form S-3 declared effective by the SEC on July 23, 2020, in July 2020 the Company entered into a new Open Market Sale Agreement (“New ATM Agreement”) with |
| c. | In July 2019, the |
An additional 1,292 common shares were included in the Company’s issued and outstanding shares as a result of rounding fractional shares into whole shares as a result of the reverse share split.
| During the six month period ended December 31, |
| Six months ended December 31, 2017 (Unaudited) | ||||||||||||||||
| Number | Weighted Average Exercise Price | Weighted Average Remaining Contractual Terms (in years) | Aggregate Intrinsic Value Price | |||||||||||||
Options outstanding at beginning of period | 815,650 | $ | 2.98 | |||||||||||||
Options exercised | (5,000 | ) | $ | 1.04 | ||||||||||||
Options forfeited | (450,150 | ) | $ | 4.86 | ||||||||||||
Options outstanding at end of the period | 360,500 | $ | 0.643 | 0.820 | $ | 266 | ||||||||||
Options exercisable at the end of the period | 360,500 | $ | 0.643 | 0.820 | $ | 266 | ||||||||||
Options vested | 360,500 | $ | 0.643 | 0.820 | $ | 266 | ||||||||||
| Options to non-employees: |
A summary of the options to non-employee consultants under its 2005 and 2016 incentive option plans is as follows:
| Six months ended December 31, 2020 (Unaudited) | ||||||||||||||||
| Number | Weighted Average Exercise Price | Weighted Average Remaining Contractual Terms (in years) | Aggregate Intrinsic Value Price | |||||||||||||
| Options outstanding at beginning of period | 54,871 | $ | 0.00001 | - | - | |||||||||||
| Options granted | - | - | - | - | ||||||||||||
| Options exercised | (15,035 | ) | - | - | - | |||||||||||
| Options forfeited | - | - | - | - | ||||||||||||
| Options outstanding at end of the period | 39,836 | 0.00001 | 7.48 | $ | 282 | |||||||||||
| Options exercisable at the end of the period | 34,836 | 0.00001 | 7.41 | $ | 246 | |||||||||||
| Options unvested | 5,000 | |||||||||||||||
| Options vested and expected to vest | 39,836 | $ | 0.00001 | 7.48 | $ | 282 | ||||||||||
PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARY
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
| Six months ended December 31, 2017 (Unaudited) | ||||||||||||||||
| Number | Weighted Average Exercise Price | Weighted Average Remaining Contractual Terms (in years) | Aggregate Intrinsic Value Price | |||||||||||||
Options outstanding at beginning of period | 177,200 | $ | 0.72 | |||||||||||||
Options granted | 47,400 | $ | 0.00 | |||||||||||||
Options forfeited | (15,000 | ) | $ | 4.38 | ||||||||||||
Options outstanding at end of the period | 209,600 | $ | 0.30 | 5.46 | $ | 275 | ||||||||||
Options exercisable at the end of the period | 173,825 | $ | 0.36 | 4.54 | $ | 209 | ||||||||||
Options vested and expected to vest | 209,600 | $ | 0.30 | 5.46 | $ | 275 | ||||||||||
U.S. Dollars in thousands (except share and per share amounts)
NOTE 4: - SHAREHOLDERS’ EQUITY (CONT.)
Compensation expenses related to options granted to consultants were recorded as follows:
| Six months ended December 31, | Three months ended December 31, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||
Research and development expenses | $ | 6 | $ | 3 | $ | 3 | $ | 3 | ||||||||
General and administrative expenses | $ | 28 | $ | 14 | $ | 13 | $ | 14 | ||||||||
| $ | 34 | $ | 17 | $ | 16 | $ | 17 | |||||||||
| Six months ended December 31, | Three months ended December 31, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||
| Research and development expenses | $ | - | $ | 33 | $ | - | $ | 15 | ||||||||
| General and administrative expenses | $ | 6 | $ | 53 | $ | 3 | $ | 24 | ||||||||
| $ | 6 | $ | 86 | $ | 3 | $ | 39 | |||||||||
| Restricted Shares (“RS”) and restricted |
| RS and RSUs to employees and directors: |
The following table summarizes the activity related to unvested RS and RSUs granted to employees and directors under itsthe Company’s 2005, 2016 and 20162019 incentive option plans for the six month period ended December 31, 20172020 (Unaudited) is as follows:
| Number | ||||
Unvested at the beginning of period | ||||
Granted | ||||
Forfeited | ( 5,649 | ) | ||
Vested | ( 161,268 | ) | ||
Unvested at the end of the period | ||||
Expected to vest after December 31, 2020 | ||||
Compensation expenses related to RS and RSUs granted to employees and directors were recorded as follows:
| Six months ended December 31, | Three months ended December 31, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||
Research and development expenses | $ | 331 | $ | 210 | $ | 187 | $ | 100 | ||||||||
General and administrative expenses | 2,567 | 439 | 1,277 | 177 | ||||||||||||
| $ | 2,898 | $ | 649 | $ | 1,464 | $ | 277 | |||||||||
| Six months ended December 31, | Three months ended December 31, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||
| Research and development expenses | $ | 564 | $ | 414 | $ | 472 | $ | 192 | ||||||||
| General and administrative expenses | 4,168 | 1,049 | 3,346 | 476 | ||||||||||||
| $ | 4,732 | $ | 1,463 | $ | 3,818 | $ | 668 | |||||||||
Unamortized compensation expenses related to RS and RSUs granted to employees and directors to be recognized over an average time of approximately 3.54 years are approximately $7,822.$22,409.
18
PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARY
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
U.S. Dollars in thousands (except share and per share amounts)
NOTE 6:4: - STOCKHOLDERS'SHAREHOLDERS’ EQUITY (CONT.)
| RS and |
| RS and RSUs to consultants: |
The following table summarizes the activity related to unvested RS and RSUs granted to consultants under itsthe Company’s 2005 and 2016 incentive option planplans for the six month period ended December 31, 2017,2020 (Unaudited) is as follows:
| Number | ||||
Unvested at the beginning of period | ||||
Granted | ||||
| ( | ) | |||
Vested | (1,250 | ) | ||
| Unvested at the end of the period | ||||
Compensation expenses related to RS and RSUs granted to consultants were recorded as follows:
| Six months ended December 31, | Three months ended December 31, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||
| Research and development expenses | $ | 68 | $ | 23 | $ | (35 | ) | $ | 11 | |||||||
| General and administrative expenses | 51 | 59 | 35 | 49 | ||||||||||||
| $ | 119 | $ | 82 | $ | 0 | $ | 60 | |||||||||
NOTE 5: - SUBSEQUENT EVENTS
| a. | From January 1, 2021 through February 8, 2021, the Company sold an aggregate of 928,076 common shares for aggregate gross proceeds of $ 7,867 under the New ATM Agreement. |
| b. | On February 2, 2021, the Company entered into a securities purchase agreement with several institutional investors, or the Investors, pursuant to which the Company sold, in a registered direct offering directly to the Investors, 4,761,905 common shares for aggregate gross proceeds of $30,000. |
19
| Six months ended December 31, | Three months ended December 31, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||
Research and development expenses | $ | 3 | $ | 7 | $ | 3 | $ | 3 | ||||||||
General and administrative expenses | 173 | 234 | 122 | 125 | ||||||||||||
| $ | 176 | $ | 241 | $ | 125 | $ | 128 | |||||||||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
Forward-Looking Statements
This quarterly report on Form 10-Q contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other Federal securities laws, and is subject to the safe-harbor created by such Act and laws. Forward-looking statements may include statements regarding our goals, beliefs, strategies, objectives, plans, including product and technology developments, future financial conditions, results or projections or current expectations. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential” or “continue,” the negative of such terms, or other variations thereon or comparable terminology. These statements are merely predictions and therefore inherently subject to known and unknown risks, uncertainties, assumptions and other factors that may cause actual results, performance levels of activity, or our achievements, or industry results to be materially different from those contemplated by the forward-looking statements. Such forward-looking statements appear in this Item 2 – “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and may appear elsewhere in this quarterly reportQuarterly Report on Form 10-Q and include, but are not limited to, statements regarding the following:
| ● | the expected development and potential benefits from our products in treating various medical conditions; |
| our |
| ● | the prospects of entering into additional license agreements, or other forms of cooperation with other companies, research organizations and medical institutions; |
| ● | our pre-clinical and clinical trials plans, including timing of initiation, expansion, enrollment and conclusion of trials; |
| ● | achieving regulatory approvals, including under accelerated paths; |
| ● | receipt of future funding from the Israel Innovation Authority, or |
| ● | the receipt of funds pursuant to our |
| ● | developing capabilities for new clinical indications of placenta expanded, |
| ● | the progress of our |
| our expectation to demonstrate a real-world impact and value from our pipeline, technology platform and commercial-scale manufacturing capacity; |
| ● | our expectations regarding our short- and long-term capital requirements; |
| our outlook for the coming months and future periods, including but not limited to our expectations regarding future revenue and expenses; |
| ● | information with respect to any other plans and strategies for our |
| ● | our expectation regarding the impact of the COVID-19 pandemic, including on our clinical trials and operations. |
Our business and operations are subject to substantial risks, which increase the uncertainty inherent in the forward-looking statements contained in this report.
In addition, historic results of scientific research, clinical and preclinical trials do not guarantee that the conclusions of future research or trials would not suggest different conclusions. Also, historic results referred to in this periodic report would be interpreted differently in light of additional research, clinical and preclinical trials results. Except as required by law, we undertake no obligation to release publicly the result of any revision to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Further information on potential factors that could affect our business is described under the heading “Risk Factors” in Part I, Item 1A, of our Annual Report on Form 10-K for the fiscal year ended June 30, 2016,2020, or the 20162020 Annual Report, as well as Item 1A of this Quarterly Report. Readers are also urged to carefully review and consider the various disclosures we have made in that report.
As used in this quarterly report, the terms “we”, “us”, “our”, the “Company” and “Pluristem” mean Pluristem Therapeutics Inc. and our wholly owned subsidiary,subsidiaries, Pluristem Ltd., and Pluristem GmbH, unless otherwise indicated or as otherwise required by the context.
Overview
We are a leading developer of placenta-based cell therapy product candidates for the treatment of multiple ischemic, inflammatory and hematologic conditions. Our lead indicationsoperations are critical limb ischemia, or CLI, recovery after surgery for femoral neck fracture,focused on the research, development, manufacturing, conducting clinical trials and acute radiation syndrome, or ARS. A pivotal, multinational clinical trial is currently being conducted with our PLX-PAD product candidate in CLI. In addition, pivotal, multinational clinical trial is planned for our PLX-PAD product candidate in femoral neck fractures. The National Institutesbusiness development of Health’s National Institute of Allergycell therapeutics and Infectious Diseases, or NIAID, recently completed a dose selection trial with PLX-R18 in the hematologic component of ARS and a pivotal study is planned under the U.S. Food and Drug Administration, or FDA, animal rule once funding will be secured for this project. Each of these indications is a severe unmet medical need.
PLX cells are derived from a class of placental cells that are harvested from donated placentasplacenta at the time of full term healthy delivery of a baby. PLX cell products require noThe cells are grown using our proprietary three-dimensional expansion technology and can be administered to patients off the-shelf, without blood or tissue matching prior to administration. TheyPLX cells are produced usingbelieved to release a range of therapeutic proteins in response to the patient’s condition such as inflammation, muscle trauma, hematological disorders and radiation damage.
We are currently enrolling patients in a multinational Phase III clinical study for muscle recovery following surgery for hip fracture and two Phase II clinical studies in Acute Respiratory Distress Syndrome, or ARDS, complicated by the COVID-19 coronavirus in the U.S., EU and Israel. We also expect to expand our proprietary three-dimensional expansion technology. COVID-19 program to Mexico following the announcement in December 2020 of our collaboration with Innovare R&D.
In addition, we are focusing on other clinical programs such as a Phase I clinical study for incomplete recovery following bone marrow transplantation in the U.S. and Israel, an Investigator-Led Phase I/II Chronic Graft vs Host Disease Study, or cGvHD, and acute radiation syndrome, or ARS, under the FDA animal rule. We believe that each of these indications is a severe unmet medical need.
Our manufacturing facility complies with the European, Japanese, Israeli, South Korean and the FDA’s current Good Manufacturing Practice, or cGMP, requirements and has been inspected and approved by the European Japanese and Israeli regulatory authoritiesregulators for production of PLX-PAD for late stage trials and marketing. In December 2017, after an audit of our facilities, we weretrials. We have also granted manufacturer/importer authorization and Good Manufacturing PracticecGMP Certification by Israel’s Ministry of Health. If we obtain FDA approvaland other regulatory approvals to market PLX cells, we expect to have in-house production capacity to grow clinical-grade PLX cells in commercial quantities.
Our goal is to make significant progress with our robust clinical pipeline and our anticipated pivotalclinical trials in order to ultimately bring innovative, potent therapies to patients who need new treatment options. We intend to shorten the time to commercialization of our product candidates, by leveraging unique accelerated regulatory pathways that exist in the United States, Europe and Japan to bring innovative products that address life-threatening diseases to the market efficiently. We believe that these accelerated pathways create substantial opportunities for us and for the cell therapy industry as a whole. We are pursuing these accelerated pathways for PLX-PAD in CLI and femoral neck fracture. Our second product candidate, PLX R18, is under development in the United States for ARS via the Animal Rule regulatory pathway, which may result in approval without the prior performance of human efficacy trials. We expect to demonstrate a real-world impact and value from our pipeline, technology platform and commercial-scale manufacturing capacity.
Recent Developments
CLI Phase III Study
In May 2015,December 2020, we announced that the PLX-PAD cell program in CLI had been selected for the Adaptive Pathways pilot project of the European Medicines Agency,independent Data Monitoring Committee, or EMA. During fiscal year 2017, the FDA, and several EU regulatory agencies clearedDMC, issued its recommendation letter following an interim analysis relating to our application to begin theglobal pivotal Phase III trialstudy for the use of PLX-PAD cells in the treatment of CLI for patients who are unsuitable for revascularization. This multinational Phase III trial is being conducted in the United States and Europe.
RESULTS OF OPERATIONS – SIXTHREE AND THREESIX MONTHS ENDED DECEMBER 31, 20172020 COMPARED TO SIXTHREE AND THREESIX MONTHS ENDED DECEMBER 31, 2016.
Revenues
We had no revenues for both the six and three month periods ended December 31, 2017 were $50,000, versus no revenues generated2020, as compared to $23,000, respectively, in the six and three month periodperiods ended December 31, 2016. All revenues2019. Revenues in the period ended December 31, 20172019 were related to the sale of our PLX cells for research use.
Research and Development Expenses, Net
Research and development expense, net (costs less participation and grants by the IIAHorizon 2020 program and other parties)the IIA) for the six monthsmonth period ended December 31, 20172020 increased by 1%39% from $10,200,000$10,022,000 for the six monthsmonth period ended December 31, 20162019 to $10,315,000. This$13,915,000. The increase is mainly attributed to: (1) an increase in clinical trial subcontractor expenses for our ARDS associated with COVID - 19 Phase II clinical trial , (2) an increase in materials purchased as part of our production plan, (3) an increase in payroll expenses related to differences in exchange rates, anpayroll adjustments, increase in the average number of employees and increasesthe strength of the New Israel Shekel, or NIS, against the U.S. dollar, (4) an increase in average salaries,share-based compensation expenses related to the amount of restricted stock units granted and (2)the share price at the time of the grant and (5) a decrease in IIA participation ($3,300,000 was approved in calendar year 2016 comparedby the EU with respect to $1,500,000 that was approved in calendar year 2017).the Horizon 2020 program, as a result of our utilizing the entirety of the grant under such program during the six month period ended December 31, 2019. The increase was partially offset by a decrease in subcontractors’lower depreciation expenses related to clinical studies such as our CLI and IC studies. In addition, it was also offset by participation of $485,000 of the European Union with respect to the Horizon 2020 grants which commenced in calendar year 2017.
Research and development expense, net (costs less participation and grants by the IIAHorizon 2020 program and other parties)the IIA) for the three monthsmonth period ended December 31, 20172020 increased by 8%72% from $5,202,000$4,640,000 for the three monthsmonth period ended December 31, 20162019 to $5,638,000. This$7,977,000. The increase is mainly attributed toto: (1) an increase in clinical trial subcontractor expenses for our ARDS associated with COVID - 19 Phase II clinical trial, (2) an increase in materials consumption andpurchased as part of our production plan, (3) an increase in payroll expenses consistingrelated to payroll adjustments and the strength of the NIS against the U.S. dollar, (4) an increase in the number of employees, increases in average salaries and differences in exchange rates. The increase was partially offset by a decrease in subcontractors’ expenses related to clinical studies such as our CLI and IC studies. In addition, it was also offset by participation of $317,000 of the European Union with respect to the Horizon 2020 grants which commenced in calendar year 2017.
General and (3) an increase in corporate activities expenses.
General and administrative expenses for the three monthssix month period ended December 31, 20172020 increased by 102%122% from $1,446,000$3,563,000 for the three monthssix month period ended December 31, 20162019 to $2,920,000,$7,896,000. The increase is mainly dueattributed to: (1) an increase in stock-basedshare-based compensation expenses related to the amount of restricted stock units granted and the share price at the time of the grant, (2) an increase in payroll expenses, mostly related to the entitlement of Mr. Aberman, our Executive Chairman, to certain adjustment fees pursuant to his amended consulting agreement, payroll adjustments and the strength of the NIS against the U.S. dollar, (3) an increase in Directors & Officers insurance premium expenses and (4) an increase in legal expenses related to the EIB Finance Agreement. The increase was offset by lower travel abroad expenses.
General and administrative expenses for the three month period ended December 31, 2020 increased by 191% from $1,750,000 for the three month period ended December 31, 2019 to $5,097,000. The increase is mainly attributed to: (1) an increase in share-based compensation expenses related to the amount of restricted stock units granted and the share price at the time of the grant, (2) an increase in payroll expenses related to an increase inpayroll adjustments and the numberstrength of employees, increases in average salaries and differences in exchange rates,the NIS against the U.S. dollar and (3) an increase in corporate activitiesDirectors & Officers insurance premium expenses.
Financial Income (Expense), Net
Financial income, net, increased from a net financial income of $38,000$54,000 for the three monthssix month period ended December 31, 20162019 to a net financial income of $238,000$768,000 for the three monthssix month period ended December 31, 2017.2020. This increase is mainly attributable to increased income derived from NIS against U.S. dollar exchange rates since duringon deposits linked to the NIS.
Financial income (expense), net, increased from a net financial expense of )$2,000( for the three monthsmonth period ended December 31, 2017, there was2019 to a decreasenet financial income of 1.8% of the U.S. dollar against the NIS compared to an increase of 2.3% of the U.S. dollar against the NIS during$520,000 for the three monthsmonth period ended December 31, 2016, and from our hedging instruments related to the strength of the U.S. dollar against the NIS.
Net Loss
Net loss for the six and three month periods ended December 31, 20172020 was $15,614,000$21,043,000 and $8,229,000,$12,554,000, respectively, as compared to net loss of $12,934,000$13,509,000 and $6,610,000$6,370,000 for the six and three month periods ended December 31, 2016, respectively.2019. The changesincreases in net loss were mainly due to the increases in research and development and general and administrative expenses, as described above. Net loss per share for the six and three month periods ended December 31, 20172020 was $0.15$0.82 and $0.08,$0.49, respectively, as compared to $0.16$0.86 and $0.08$0.40 for the six and three month periods ended December 31, 2016.
For the six and three month periods ended December 31, 20172020 and December 31, 2016,2019, we had weighted average shares of common stockshares outstanding of 101,224,325, 105,130,19125,599,008, 25,662,752 and 80,856,219, 81,038,879,15,665,641, 15,927,749, respectively, which were used in the computations of net loss per share for the six and three month periods.
The increase in weighted average common shares outstanding reflects the issuance of additional shares mainly related to the issuances of shares from a public offerings we conducted in January and October 2017, issuancesupon settlement of sharesrestricted stock units to employees and consultants, issuances of shares pursuant to our Atnew Open Market IssuanceSale Agreement SM, or the New ATM Agreement, that we entered into with Jefferies LLC, or Jefferies, on July 16, 2020, and the Open Market Sale AgreementSM, or the Sales Agreement, or the ATM Agreement,that we entered into with Jefferies on February 6, 2019, issuances of shares pursuant to a securities purchase agreement with two institutional investors in May 2020, and shares issued as a result of exercisesthe exercise of optionsoutstanding warrants and warrants.
Liquidity and Capital Resources
As of December 31, 2017,2020, our total current assets were $37,074,000$45,250,000 and total current liabilities were $5,797,000.$9,996,000. On December 31, 2017,2020, we had a working capital surplus of $31,277,000, stockholders'$35,254,000, shareholders’ equity of $36,961,000$41,148,000 and an accumulated deficit of $205,185,000.$301,199,000. We finance our operations, and plan to continue doing so, from our existing cash, issuances of our securities, salesuse of the marketable securitiesfunds that we holdmay receive pursuant to the EIB Finance Agreement once we meet the applicable milestones, and funds fromother non-dilutive grants such as grants from the IIA, European Union’s Horizon 2020 program and Israel’s Ministry of Economy, European Union and other research grants.
Our cash and cash equivalents as of December 31, 20172020 amounted to $8,581,000$7,824,000, compared to $7,334,000$7,300,000 as of December 31, 2016,2019, and compared to $4,707,000$8,270,000 as of June 30, 2017.2020. Cash balances changed in the six months ended December 31, 20172020 and 20162019 for the reasons presented below.
Operating activities used cash of $10,018,000$13,984,000 in the six months ended December 31, 2017,2020, compared to $9,699,000$13,542,000 in the six months ended December 31, 2016.2019. Cash used in operating activities in the six months ended December 31, 20172020 and 20162019 consisted primarily of payments of salaries to our employees and payments of fees to our consultants, suppliers, subcontractors, and professional services providers, including the costs of clinical studies, partially offset by grants from the IIA, the EU’s Horizon 2020 program, Israel’s Ministry of Economy and Horizon 2020.
Investing activities usedprovided cash of $2,033,000$11,771,000 in the six months ended December 31, 2017,2020, compared to cash provided of $10,806,000$10,660,000 for the six months ended December 31, 2016.2019. The investing activities in the six monthsmonth period ended December 31, 20172020 consisted primarily of $9,721,000 related to investment inthe withdrawal of $2,445,000 of short term deposits investmentand the withdrawal of $1,146,000 in marketable securities and$9,533,000 of long term deposits, partially offset by payments of $185,000$207,000 related to investment in property and equipment, offset by cash provided from the sale and redemption of marketable securities of $9,019,000.equipment. The investing activities in the six monthsmonth period ended December 31, 20162019 consisted primarily of the withdrawal of $8,542,000$10,786,000 of short term deposits, and $4,093,000 provided from the sale and redemption of marketable securities, offset by investment of $1,562,000 in marketable securities and payments of $273,000$128,000 related to investment in property and equipment.
Financing activities generated cash of $15,925,000$1,284,000 during the six months ended December 31, 2017,2020, compared to $4,000$5,967,000 for the six months ended December 31, 2016.2019. The cash generated in the six months ended December 31, 20172020 from financing activities is related to net proceeds of $13,646,000$364,000 from issuing shares of our common stock in a public offering we conducted in October 2017, net proceeds of $1,160,000 from issuing shares of our common stock from the exercise of warrants and net proceeds of $1,026,000 from issuing shares of our common stock under our ATM Agreement, proceeds of $88,000$920,000 related to grant received fromissuances made under the Israel-United States Binational Industrial Research and Development Foundation and exercises of options by employees.New ATM Agreement. The cash generated in the six months ended December 31, 20162019 from financing activities wasis related to exercisesnet proceeds of options by employees.
In April 2020, we completed a public offering in Israel, pursuantand our subsidiaries, Pluristem Ltd. and Pluristem GmbH, executed the EIB Finance Agreement for funding of up to our existing shelf registration statement€50 million in the United Statesaggregate, payable in three tranches. The proceeds from the EIB Finance Agreement are intended to support our research and development in the EU to further advance our regenerative cell therapy platform, and to bring the products in our pipeline to market, with a shelf registration statement filedspecial focus on clinical development of PLX cells as a treatment for complications associated with COVID-19. The proceeds from the EIB Finance Agreement are expected to be deployed in Israel,three tranches, subject to the achievement of certain clinical, regulatory and scaling up milestones with the first tranche consisting of €20 million. To date, we have not yet received the first tranche of funds from the EIB.
On February 6, 2019, we entered into the Sales Agreement, pursuant to which we raised aggregate gross proceeds of $15,051,000 through the sale of 9,000,000 shares of our common stock at a purchase price of NIS 5.90 (approximately $1.67 per share). The net proceeds, after deducting fees and expenses related to the offering, were $13,646,000.
From January 1, 2021 through February 8, 2021, we sold an aggregate of 928,076 common shares under the New ATM Agreement for aggregate gross proceeds of $7,867,000.
On February 2, 2021, we entered into a net gainsecurities purchase agreement with several institutional investors, or the Investors, pursuant to uswhich we sold, in a registered direct offering, or the Registered Direct Offering, directly to the Investors, 4,761,905 common shares for aggregate gross proceeds of $6,200,000 million.
During the six months ended December 31, 2017,2020, warrants were exercised by investors at an exercise price of $7.00 per share, resulting in the issuance of 51,999 our common shares for net proceeds of approximately $364,000.
During the six months ended December 31, 2020, we received cash of approximately $1,504,000$58,000 from the IIA towards our research and development expenses. According to the IIA grant terms, we are required to pay royalties at a rate of 3% on sales of products and services derived from technology developed using this and other IIA grants until 100% of the dollar-linked grants amount plus interest are repaid. In the absence of such sales, no payment is required. Through December 31, 2017,2020, total grants obtained from the IIA aggregated to approximately $25,974,000$27,743,000 and total royalties paid and accrued amounted to $168,000.
The IIA has supported our activity in the past twelvefourteen years. Our lastmost recent program, for the twelfthfourteenth year, was approved by the IIA in 20172019 and relates to a grant of approximately $1,500,000.$500,000. The grant was used to cover research and development expenses for the period of January 1, 20172019 to December 31, 2017.
In May 2020, we were selected as a member of the CRISPR-IL consortium, a group funded by the IIA. CRISPR-IL brings together the leading experts in life science and computer science from academia, medicine, and industry, to develop AI based end-to-end genome-editing solutions. CRISPR-IL is funded by the IIA with a total budget of approximately $10,000,000 of which, an amount of approximately $480,000 is a direct grant allocated to us, for a period of 18 months, with a potential for extension of an additional 18 months and additional budget from the IIA. CRISPR-IL participants include leading companies, and medical and academic institutions. As of December 31, 2017,2020, we received total grants of approximately $1,566,000$348,000 in cash from the European UnionIIA pursuant to the CRISPR-IL consortium program.
As of December 31, 2020, we received total grants of approximately $5,997,000 in cash from the EU research and development consortium under our CLI program inconsortiums pursuant to the EU’s Horizon 2020.
The currency of our financial portfolio is mainly in U.S. dollars and we use options contracts in order to hedge our exposures to currencies other than the U.S. dollar. For more information, please see Item 7A. - “Quantitative and Qualitative Disclosures about Market Risk” in ourthe 2020 Annual Report on form 10-K for the fiscal year ended June 30, 2017.
We have an effective Form S-3 registration statement (File No. 333-239890), filed under the Securities Act of 1933, as amended, or the Securities Act, with the Securities and Exchange Commission, or the SEC, using a “shelf” registration process. Under this shelf registration process, we may, from time to time, sell our common stock,shares, preferred stockshares and warrants to purchase common stock,shares, and units of two or more of such securities in one or more offerings up to a total dollar amount of $200,000,000.$250,000,000. As of February 6, 2018,8, 2021, other than the $75 million we have been deemedare eligible to havesell pursuant to the New ATM Agreement, and the $30,000,000 we sold $80,000,000in the Registered Direct Offering, no common shares, preferred shares or warrants to purchase common shares were sold pursuant to our existing shelf under our ATM Agreement and $15,051,000 of gross proceeds relating to our public offering of 9,000,000 shares of our common stock.
Outlook
We have accumulated a deficit of $205,185,000$301,199,000 since our inception in May 2001. We do not expect to generate any significant revenues from sales of products in the next twelve months. Our cash needs willmay increase in the foreseeable future. We expect to generate revenues, whichfrom the sale of licenses to use our technology or products, but in the short and medium terms will unlikely exceed our costs of operations, from the sale of licenses to use our technology or products.
We willmay be required to obtain additional liquidity resources in order to support the commercialization of our products and maintain our research and development and clinical trials activities.
We are continually looking for sources of funding, including non-diluting sources such as the EIB Finance Agreement, grants from the IIA, grants, the European Union grantEU’s Horizon 2020 program, Israel’s Ministry of Economy and other research grants, collaboration with other companies and sales of our common stock.
We are addressing our liquidity issues by implementing initiatives to allow the continuation of our activities. Our current operating plan includes various assumptions concerning the level and timing of cash outflows for operating activities and capital expenditures. Our ability to successfully carry out our business plan, which includes a cost-reduction plan should we be unable to raise sufficient additional capital, is primarily dependent upon our ability to (1) obtain sufficient additional capital, (2) entering into license agreements to use or commercialize our products and (3) receive other sources of funding, including non-diluting sources such as the IIA grants, the Horizon 2020 grant and other grants. There are no assurances, however,believe that we will be successful in obtaining an adequate level of financing needed for the long-term development and commercialization of our products.
Off-Balance Sheet Arrangements
We have no off balanceoff-balance sheet arrangements.
| Item 4. | Controls and Procedures. |
Evaluation of Disclosure Controls and Procedures -
We maintain a system of disclosure controls and procedures that are designed for the purposes of ensuring that information required to be disclosed in our SEC reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including ourAs of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our Co-CEOsCEO and our CFO, of the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended. Based on that evaluation, our Co-CEOsCEO and CFO concluded that our disclosure controls and procedures are effective.
Changes in Internal Control Over Financial Reporting
- There has been no change in our internal control over financial reporting during the second quarter of| Item 6. | Exhibits. |
| 10.1* | Form of Director and Officer Indemnification Agreement. | |
| Rule 13a-14(a) Certification of | ||
| 32.1** | Certification of | |
| 101 * | The following materials from our Quarterly Report on Form 10-Q for the quarter ended December 31, |
| * | Filed herewith. |
| ** | Furnished herewith. |
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SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| PLURISTEM THERAPEUTICS INC. | ||
| By: | /s/ Yaky Yanay | |
| Yaky Yanay, Chief Executive Officer and President | ||
| (Principal Executive Officer) | ||
| Date: | February 8, 2021 | |
| By: | /s/ Chen Franco-Yehuda | |
| Chen Franco-Yehuda, Chief Financial Officer | ||
| (Principal Financial Officer and Principal Accounting Officer) | ||
| Date: | February 8, 2021 |
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