| SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended | 12 Months Ended |
| Sep. 30, 2022 | Jul. 31, 2022 | Dec. 31, 2021 | Oct. 31, 2021 |
| Use of estimates | | | | Estimates The
preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S.
GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying
notes. Estimates are used when accounting for such items as the fair value and recoverability of the carrying value of property and equipment
and intangible assets (patents and licenses), determining the Incremental Borrowing Rate (“IBR”) for calculating Right-Of-Use
(“ROU”) assets and lease liabilities, deferred expenses, deferred revenue, the fair value of options, warrants and related
disclosure of contingent assets and liabilities. The Company bases its estimates on historical experience and on various other assumptions
that it believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying
values of assets and liabilities that are not readily apparent from other sources. On an ongoing basis, the Company reviews its estimates
to ensure that they appropriately reflect changes in the business or as new information becomes available. Actual results may differ
from these estimates. |
| Principles of Consolidation | | Principles
of Consolidation The
consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. All significant intercompany accounts
and transactions have been eliminated. | | Principles
of Consolidation The
consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. All significant intercompany accounts
and transactions have been eliminated. |
| Revenue Recognition | | | | Revenue
Recognition Under
ASC 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the
consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements
that an entity determines are within the scope of ASC 606, the entity performs the following five steps: (i) identify the contract(s)
with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the
transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance
obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration
it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined
to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract, determines those that are
performance obligations and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount
of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. The
Company enters into licensing agreements that are within the scope of ASC 606, under which it may exclusively license rights to research,
develop, manufacture and commercialize its product candidates to third parties. The terms of these arrangements typically include payment
to the Company of one or more of the following: non-refundable, upfront license fees; reimbursement of certain costs; customer option
exercise fees; development, regulatory and commercial milestone payments; and royalties on net sales of licensed products. In
determining the appropriate amount of revenue to be recognized as it fulfills its obligations under its agreements, the Company performs
the following steps: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised
goods or services are performance obligations including whether they are distinct in the context of the contract; (iii) measurement of
the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance
obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation. As part of the accounting
for these arrangements, the Company must use significant judgment to determine: (a) the number of performance obligations based on the
determination under step (ii) above; (b) the transaction price under step (iii) above; and (c) the stand-alone selling price for each
performance obligation identified in the contract for the allocation of transaction price in step (iv) above. The Company uses judgment
to determine whether milestones or other variable consideration, except for royalties, should be included in the transaction price as
described further below. The transaction price is allocated to each performance obligation on a relative stand-alone selling price basis,
for which the Company recognizes revenue as or when the performance obligations under the contract are satisfied. Amounts
received prior to revenue recognition are recorded as deferred revenue. Amounts expected to be recognized as revenue within the 12 months
following the balance sheet date are classified as current portion of deferred revenue in the accompanying consolidated balance
sheets. Amounts not expected to be recognized as revenue within the 12 months following the balance sheet date are classified as deferred
revenue, net of current portion. Exclusive
Licenses. Milestone
Payments. |
| Collaborative Arrangements | | | | Collaborative
Arrangements The
Company analyzes its collaboration arrangements to assess whether such arrangements involve joint operating activities performed by parties
that are both active participants in the activities and exposed to significant risks and rewards dependent on the commercial success
of such activities and therefore within the scope of ASC Topic 808, Collaborative Arrangements |
| Cash and Cash Equivalents | | | | Cash
and Cash Equivalents The
Company considers all highly liquid investments with an original maturity of three months or less from the date of purchase to be cash
equivalents. As of October 31, 2021 and 2020, the Company had cash equivalents of approximately $ 17.2 17.1 |
| Concentrations of Credit Risk | | | | Concentration
of Credit Risk The
Company maintains its cash in bank deposit accounts (checking) that at times exceed federally insured limits. Approximately $ 41.6
million is subject to credit risk at October
31, 2021. The Company has not experienced any losses in such accounts. |
| Deferred Expenses | | | | Deferred
Expenses Deferred
expenses consist of advanced payments made on research and development projects. Expense is recognized in the consolidated statement
of operations as the research and development activity is performed. |
| Property and Equipment, Net | | | | Property
and Equipment Property
and equipment are stated at cost. Additions and improvements that extend the lives of the assets are capitalized, while expenditures
for repairs and maintenance are expensed as incurred. Leasehold improvements are amortized on a straight-line basis over the shorter
of the asset’s estimated useful life or the remaining lease term. Depreciation is calculated on a straight-line basis over the
estimated useful lives of the assets ranging from three ten years When
depreciable assets are retired or sold the cost and related accumulated depreciation are removed from the accounts and any resulting
gain or loss is recognized in operations. |
| Intangible Assets | | | | Intangible
Assets Intangible
assets are recorded at cost and include patents and patent application costs, licenses and software. Intangible assets are amortized
on a straight-line basis over their estimated useful lives ranging from three 20 |
| Impairment of Long-Lived Assets | | | | Impairment
of Long-Lived Assets The
Company periodically assesses the carrying value of intangible and other long-lived assets, and whenever events or changes in circumstances
indicate that the carrying amount of an asset might not be recoverable. The assets are considered to be impaired if the Company determines
that the carrying value may not be recoverable based upon its assessment, which includes consideration of the following events or changes
in circumstances:
● the
asset’s ability to continue to generate income from operations and positive cash flow in future periods;
● loss
of legal ownership or title to the asset(s);
● significant
changes in the Company’s strategic business objectives and utilization of the asset(s); and
● the
impact of significant negative industry or economic trends. If
the assets are considered to be impaired, the impairment recognized is the amount by which the carrying value of the assets exceeds the
fair value of the assets. Fair value is determined by the application of discounted cash flow models to project cash flows from the assets.
In addition, the Company bases estimates of the useful lives and related amortization or depreciation expense on its subjective estimate
of the period the assets will generate revenue or otherwise be used by it. Assets to be disposed of are reported at the lower of the
carrying amount or fair value, less selling costs. The Company also periodically reviews the lives assigned to long-lived assets to ensure
that the initial estimates do not exceed any revised estimated periods from which the Company expects to realize cash flows from its
assets. |
| Leases | | | | Leases At
the inception of an arrangement, the Company determines whether an arrangement is or contains a lease based on the facts and circumstances
present in the arrangement. An arrangement is or contains a lease if the arrangement conveys the right to control the use of an identified
asset for a period of time in exchange for consideration. Most leases with a term greater than one year are recognized on the consolidated
balance sheet as operating lease right-of-use assets and current and long-term operating lease liabilities, as applicable. The Company
has elected not to recognize on the consolidated balance sheet leases with terms of 12 months or less. The Company typically only
includes the initial lease term in its assessment of a lease arrangement. Options to extend a lease are not included in the Company’s
assessment unless there is reasonable certainty that the Company will renew. Operating
lease liabilities and their corresponding right-of-use assets are recorded based on the present value of lease payments over the expected
remaining lease term. Certain adjustments to the right-of-use asset may be required for items such as prepaid or accrued rent. The interest
rate implicit in the Company’s leases is typically not readily determinable. As a result, the Company utilizes its incremental
borrowing rate, which reflects the fixed rate at which the Company could borrow on a collateralized basis the amount of the lease payments
in the same currency, for a similar term, in a similar economic environment. |
| Net Loss per Share | | Net
Income (Loss) per Share Basic
net income or loss per common share is computed by dividing net income or loss available to common stockholders by the weighted average
number of common shares outstanding during the period. Diluted earnings per share give effect to dilutive options, warrants, restricted
stock units and other potential common stock outstanding during the period. In the case of a net loss, the impact of the potential common
stock resulting from warrants, outstanding stock options and convertible debt are not included in the computation of diluted loss per
share, as the effect would be anti-dilutive. In the case of net income, the impact of the potential common stock resulting from these
instruments that have intrinsic value are included in the diluted earnings per share. The table below sets forth the number of potential
shares of common stock that have been excluded from diluted net loss per share: SCHEDULE
OF ANTI -DILUTED SECURITIES EXCLUDED FROM DILUTED NET LOSS PER SHARE
2022 2021
As
of July 31,
2022 2021
Warrants 377,818 377,818
Stock options 11,118 12,892
Total 388,936 390,710 | | Net
Income (Loss) per Share Basic
net income or loss per common share is computed by dividing net income or loss available to common stockholders by the weighted average
number of common shares outstanding during the period. Diluted earnings per share give effect to dilutive options, warrants, restricted
stock units and other potential common stock outstanding during the period. In the case of a net loss, the impact of the potential common
stock resulting from warrants, outstanding stock options and convertible debt are not included in the computation of diluted loss per
share, as the effect would be anti-dilutive. In the case of net income, the impact of the potential common stock resulting from these
instruments that have intrinsic value are included in the diluted earnings per share. The table sets forth the number of potential shares
of common stock that have been excluded from diluted net loss per share (as of October 31, 2020, 327,338 0 SCHEDULE OF ANTI-DILUTIVE SECURITIES EXCLUDED FROM DILUTED NET LOSS PER SHARE
As of October 31,
2021 2020
Warrants 377,818 4,971
Stock options 11,192 12,647
Restricted stock units - 69
Total 389,010 17,687 |
| Research and Development | | | | Research
and Development Expenses Research
and development costs are expensed as incurred and include but are not limited to clinical trial and related manufacturing costs, payroll
and personnel expenses, lab expenses, and related overhead costs. |
| Stock-Based Compensation | | | | Stock
Based Compensation The
Company has an equity plan which allows for the granting of stock options to its employees, directors and consultants for a fixed number
of shares with an exercise price equal to the fair value of the shares at date of grant. The Company measures the cost of services received
in exchange for an award of equity instruments based on the fair value of the award. The fair value of the award is measured on the grant
date and is then recognized over the requisite service period, usually the vesting period, in both research and development expenses
and general and administrative expenses on the consolidated statement of operations, depending on the nature of the services provided
by the employees or consultants. The
process of estimating the fair value of stock-based compensation awards and recognizing stock-based compensation cost over their requisite
service period involves significant assumptions and judgments. The Company estimates the fair value of stock option awards on the date
of grant using the Black Scholes Model for the remaining awards, which requires that the Company makes certain assumptions regarding:
(i) the expected volatility in the market price of its common stock; (ii) dividend yield; (iii) risk-free interest rates; and (iv) the
period of time employees are expected to hold the award prior to exercise (referred to as the expected holding period). As a result,
if the Company revises its assumptions and estimates, stock-based compensation expense could change materially for future grants. The
Company accounts for stock-based compensation using fair value recognition and records forfeitures as they occur. As such, the Company
recognizes stock-based compensation cost only for those stock-based awards that vest over their requisite service period, based on the
vesting provisions of the individual grants. |
| Fair Value of Financial Instruments: | | | | Fair
Value of Financial Instruments The
carrying value of financial instruments, including cash and cash equivalents and accounts payable, approximated fair value as of the
balance sheet date presented, due to their short maturities. |
| Derivative Financial Instruments | | Derivative
Financial Instruments The
Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks. The Company evaluates
all of its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives.
For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair
value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. For share-based
derivative financial instruments, the Company used the Monte Carlo simulation model, the Black Scholes model and a binomial model to
value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including
whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative
liabilities are classified in the consolidated balance sheet as current or non-current based on whether or not net-cash settlement of
the instrument could be required within 12 months after the balance sheet date. | | Derivative
Financial Instruments The
Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks. The Company evaluates
all of its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives.
For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair
value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. For stock-based
derivative financial instruments, the Company used the Monte Carlo simulation model and the Black Scholes model to value the derivative
instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments
should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative liabilities are classified
in the consolidated balance sheet as current or non-current based on whether or not net-cash settlement of the instrument could
be required within 12 months of the balance sheet date. |
| Sequencing Policy | | | | Sequencing Policy The Company adopted a sequencing
policy under ASC 815-40-35, if reclassification of contracts from equity to liabilities is necessary pursuant to ASC 815 due to the Company’s
inability to demonstrate it has sufficient authorized shares. This was due to the Company committing more shares than authorized. Certain
instruments are classified as liabilities, after allocating available authorized shares on the basis of the most recent grant date of
potentially dilutive instruments. Pursuant to ASC 815, issuances of securities granted as compensation in a share-based payment arrangement
are not subject to the sequencing policy. |
| Income Taxes | | | | Income
Taxes The
Company uses the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, “Income Taxes.” |
| Newly Issued Accounting Pronouncements | | Recent
Accounting Standards In
December 2019, the FASB issued ASU 2019-12, Simplification of Income Taxes (Topic 740) Income Taxes (“ASU 2019-12”). ASU
2019-12 simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments
also improve consistent application of and simplify U.S. GAAP for other areas of Topic 740 by clarifying and amending existing guidance.
ASU 2019-12 is effective for public companies for annual periods beginning after December 15, 2020, including interim periods within
those fiscal years. The Company adopted this standard effective November 1, 2021 and it is not material to the financial results of the
Company. In
August 2020, the FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which
simplifies the accounting for certain convertible instruments, amends guidance on derivative scope exceptions for contracts in an entity’s
own equity, and modifies the guidance on diluted earnings per share (“EPS”) calculations as a result of these changes. The
standard will be effective for the Company for fiscal years beginning after December 15, 2023 and can be applied on either a fully retrospective
or modified retrospective basis. Early adoption is permitted for fiscal years beginning after December 15, 2020. The Company adopted
this standard effective November 1, 2021 and it is not material to the financial results of the Company. Management
does not believe that any recently issued, but not yet effective accounting pronouncements, if adopted, would have a material impact
on the accompanying condensed consolidated financial statements. | | Recent
Accounting Standards In
December 2019, the FASB issued ASU 2019-12, Simplification of Income Taxes (Topic 740) Income Taxes (“ASU 2019-12”). ASU
2019-12 simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments
also improve consistent application of and simplify U.S. GAAP for other areas of Topic 740 by clarifying and amending existing guidance.
ASU 2019-12 is effective for public companies for annual periods beginning after December 15, 2020, including interim periods within
those fiscal years. The standard will apply as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting
period in which the guidance is adopted and is not material to the financial results of the Company. In
August 2020, the FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which
simplifies the accounting for certain convertible instruments, amends guidance on derivative scope exceptions for contracts in an entity’s
own equity, and modifies the guidance on diluted earnings per share (“EPS”) calculations as a result of these changes. The
standard will be effective for the Company for fiscal years beginning after December 15, 2023 and can be applied on either a fully retrospective
or modified retrospective basis. Early adoption is permitted for fiscal years beginning after December 15, 2020. We are currently evaluating
the impact of this standard on our consolidated financial statements. Management
does not believe that any recently issued, but not yet effective accounting pronouncements, if adopted, would have a material impact
on the accompanying consolidated financial statements. |
| Basis of Presentation | | Basis
of Presentation/Estimates The
accompanying unaudited interim condensed consolidated financial statements and related notes have been prepared in accordance with accounting
principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and in accordance
with the rules and regulations of the Securities and Exchange Commission (“SEC”) with respect to Form 10-Q and Rule 10-01
of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial
statements and the accompanying unaudited interim condensed consolidated balance sheet as of July 31, 2022 has been derived from the
Company’s October 31, 2021 audited financial statements. In the opinion of management, the unaudited interim condensed consolidated
financial statements furnished include all adjustments (consisting of normal recurring accruals) necessary for a fair statement of the
results for the interim periods presented. Operating
results for interim periods are not necessarily indicative of the results to be expected for the full year. The preparation of financial
statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets,
liabilities, revenues, expenses, and the related disclosures at the date of the financial statements and during the reporting period.
Significant estimates include the timelines associated with revenue recognition on upfront payments received, fair value and recoverability
of the carrying value of property and equipment and intangible assets, fair value of warrant liability, grant date fair value of options,
deferred tax assets and any related valuation allowance and related disclosure of contingent assets and liabilities. On an on-going basis,
the Company evaluates its estimates, based on historical experience and on various other assumptions that it believes to be reasonable
under the circumstances. Actual results could materially differ from these estimates. These
unaudited interim condensed consolidated financial statements should be read in conjunction with the financial statements of the Company
as of and for the fiscal year ended October 31, 2021 and notes thereto contained in this proxy statement/prospectus. | | |
| Cash and Cash Equivalents and Short-term restricted bank deposits | | Restricted
Cash On
January 31, 2022, the Company transferred $ 5,250,000 | | |
| Convertible Preferred Stock | | Convertible
Preferred Stock Preferred
shares subject to mandatory redemption are classified as liability instruments and are measured at fair value. The Company classifies
conditionally redeemable preferred shares, which includes preferred shares that feature redemption rights that are either within the
control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control,
as temporary equity (“mezzanine”) until such time as the conditions are removed or lapse. | | |
| Reverse Stock Split | | Reverse Stock
Split On March
31, 2022, the Company’s stockholders voted to approve an amendment to allow the Company to execute a reverse stock split of common
stock within a range of 1 for 20 to 1 for 80, without reducing the authorized number of shares of the common stock, at the discretion
of the Board of Directors. On June 3, 2022, the Board of Directors approved a 1 for 80 reverse stock split, which became effective on
June 6, 2022. All references in this Report to number of shares, price per share and weighted average number of shares of common stock
outstanding prior to this reverse stock split have been adjusted to reflect the reverse stock split on a retroactive basis, unless otherwise
noted. | | |
| Ayala Pharmaceuticals Inc [Member] | | | | |
| Use of estimates | Use
of estimates The
preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that
affect the amounts reported in the consolidated financial statements and accompanying notes. The Company’s management believes
that the estimates, judgment and assumptions used are reasonable based upon information available at the time they are made. These estimates,
judgments and assumptions can affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities
at the dates of the consolidated financial statements. Actual results could differ from those estimates. | | Use
of Estimates The
preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that
affect the amounts reported in the consolidated financial statements and accompanying notes. The Company’s management believes
that the estimates, judgment and assumptions used are reasonable based upon information available at the time they are made. These estimates,
judgments and assumptions can affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities
at the dates of the consolidated financial statements. Actual results could differ from those estimates. | |
| Principles of Consolidation | | | Principles
of Consolidation The
consolidated financial statements include the accounts of the Company and the Subsidiary. Intercompany balances and transactions have
been eliminated upon consolidation. | |
| Revenue Recognition | | | Revenue
Recognition The
Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers, which applies to all contracts with
customers. Under Topic 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount
that reflects the consideration that the entity expects to receive in exchange for those goods or services. To determine revenue recognition
for arrangements that an entity determines are within the scope of Topic 606, the entity performs the following five steps:
(i) identify
the contract(s) with a customer;
(ii) identify
the performance obligations in the contract;
(iii) determine
the transaction price;
(iv) allocate
the transaction price to the performance obligations in the contract; and
(v) recognize
revenue when (or as) the entity satisfies a performance obligation. At
contract inception, once the contract is determined to be within the scope of Topic 606, the Company assesses the goods or services promised
within the contract and determines those that are performance obligations and assesses whether each promised good or service is distinct. Customer
option to acquire additional goods or services gives rise to a performance obligation in the contract only if the option provides a material
right to the customer that it would not receive without entering into that contract. In
a contract with multiple performance obligations, the Company must develop estimates and assumptions that require judgment to determine
the underlying stand-alone selling price for each performance obligation, which determines how the transaction price is allocated among
the performance obligations. The
Company evaluates each performance obligation to determine if it can be satisfied at a point in time or over time. Revenue
is recognized when control of the promised goods or services is transferred to the customers, in an amount that reflects the consideration
the Company expect to be entitled to receive in exchange for those goods or services. In
December 2018, the Company entered into an Evaluation Option to acquire License Agreement (the “Novartis Agreement”) with
Novartis International Pharmaceutical Limited (“Novartis”) for which the company is paid for its research and development
costs. For additional details regarding the Novartis Agreement, refer to Note 5. The
Company concluded that there is one distinct performance obligation under the Novartis Agreement: Research and development services,
obligation which is satisfied over time. Revenue
associated with the research and development services in the amount of $ 3.5 3.7 The
Company concluded that progress towards completion of the research and development performance obligation related to the Novartis Agreement
is best measured in an amount proportional to the expenses incurred from the total estimated expenses. The Company periodically reviews
and updates its estimates, when appropriate, which may adjust revenue recognized for the period. The transaction price to be recognized
as revenue under the Novartis Agreement consists of the reimbursable research and development costs. | |
| Concentrations of Credit Risk | | | Concentrations
of Credit Risk Financial
instruments that potentially subject the Company to a concentration of credit risk consist primarily of cash and cash equivalents. Bank
deposits are held by accredited financial institutions and these deposits may at times be in excess of insured limits. Money Market funds
are of Prime A and only invested in government issued securities. The Company limits its credit risk associated with cash and cash equivalents
by placing them with financial institutions that it believes are of high-quality credit rating. The Company has not experienced any losses
on its deposits of cash or cash equivalents. Company’s
trade receivables are from one customer as of December 31, 2021, and December 31, 2020. In addition, the potential risk of loss with
any one counterparty resulting from this type of credit risk is monitored on an ongoing basis. The Company grants credit of 45 days to
this one customer. | |
| Property and Equipment, Net | | | Property
and Equipment, Net Property
and equipment are stated at cost, less accumulated depreciation. Depreciation is calculated on a straight-line basis over the estimated
useful lives of the related assets, at the following annual rates: SCHEDULE OF PROPERTY AND EQUIPMENT
Computers and Software 33 %
Lab Equipment 15 %
Office Furniture and Equipment 7 % Leasehold
improvements are amortized on a straight-line basis over the shorter of the assets’ estimated useful life or the remaining term
of the lease. Maintenance
and repair costs are expensed as incurred. | |
| Impairment of Long-Lived Assets | | | Impairment
of Long-Lived Assets The
Company’s long-lived assets are reviewed for impairment in accordance with ASC No. 360, “Property, Plant and Equipment,”
whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If indicators of impairment
exist and the undiscounted future cash flows that the assets are expected to generate are less than the carrying value of the assets,
the Company reduces the carrying amount of the assets through an impairment charge, to their estimated fair values. During the years
ended December 31, 2021, and 2020, no impairment indicators have been identified. | |
| Net Loss per Share | Net
Loss per Share Basic
loss per share is computed by dividing the net loss by the weighted average number of shares of Common Stock outstanding during the period.
Diluted loss per share is computed by dividing the net loss by the weighted average number of shares of Common Stock outstanding together
with the number of additional shares of Common Stock that would have been outstanding if all potentially dilutive shares of Common Stock
had been issued. Diluted net loss per share is the same as basic net loss per share in periods when the effects of potentially dilutive
shares of Common Stock are anti-dilutive. The
calculation of basic and diluted loss per share includes 1,333,333 0.01 The
calculation of basic and diluted loss per share includes 1,333,333 1,091,158 0.01 AYALA
PHARMACEUTICALS, INC. NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE
1—SIGNIFICANT ACCOUNTING POLICIES (continued): The
calculation of diluted loss per share does not include 583,332 1,141,927 The
calculation of diluted loss per share does not include 583,332 913,194 | | Basic
and Diluted Net Loss per Share Basic
loss per share is computed by dividing the net loss by the weighted average number of shares of Common Stock outstanding during the period.
Diluted loss per share is computed by dividing the net loss by the weighted average number of shares of Common Stock outstanding together
with the number of additional shares of Common Stock that would have been outstanding if all potentially dilutive shares of Common Stock
had been issued. Diluted net loss per share is the same as basic net loss per share in periods when the effects of potentially dilutive
shares of Common Stock are anti-dilutive. | |
| Research and Development | | | Research
and Development Research
and development costs are expensed as incurred. Research and development costs include payroll and personnel expenses, consulting costs,
external contract research and development expenses, raw materials, drug product manufacturing costs, and allocated overhead including
depreciation, rent, and utilities. Research and development costs that are paid in advance of performance are classified as a prepaid
expense and amortized over the service period as the services are provided. | |
| Stock-Based Compensation | | | Stock-Based
Compensation The
Company measures its stock-based payment awards made to employees, directors, and non-employee service providers based on estimated fair
values. The fair value of each option award is estimated on the grant date using the Black-Scholes option pricing model. The Company
recognizes compensation expenses based on the accelerated method over the requisite service period. The Company recognizes forfeitures
of awards as they occur. The
Black-Scholes option pricing model requires a number of assumptions, of which the most significant are share price, expected volatility,
expected option term (the time from the grant date until the options are exercised or expire), risk-free rate, and expected divided rate.
Share price is estimated based on third party valuation (see also Note 9). After the IPO, the fair value of each ordinary share was based
on the closing price of the Company’s publicly traded ordinary shares as reported on the date of the grant. | |
| Fair Value of Financial Instruments: | | | Fair
Value of Financial Instruments: The
Company measures and discloses the fair value of financial assets and liabilities in accordance with ASC Topic 820, “Fair Value
Measurement.” Fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. Valuation
techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The
accounting standard establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value
into three broad levels, which are described below: Level
1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value
hierarchy gives the highest priority to Level 1 inputs. Level
2: Observable inputs that are based on inputs not quoted on active markets but corroborated by market data. Level
3: Unobservable inputs are used when little or no market data are available. Restricted
bank deposits, trade receivables, trade payables are stated at their carrying value, which approximates fair value due to the short time
to the expected receipt or payment date. | |
| Income Taxes | | | Income
Taxes The
Company accounts for income taxes in accordance with ASC 740, “Income Taxes”. This standard prescribes the use of the liability
method whereby deferred tax asset and liability account balances are determined based on differences between financial reporting and
tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences
are expected to reverse. The Company provides a valuation allowance, if necessary, to reduce deferred tax assets to their estimated realizable
value, if it is more likely than not that some portion of the entire deferred tax asset will not be realized. The
Company accounts for uncertain tax positions in accordance with the provisions of ASC 740-10, “Income Taxes”. Accounting
guidance addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in
the consolidated financial statements, under which a Company may recognize the tax benefit from an uncertain tax position only if it
is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits
of the position. The
tax benefits recognized in the consolidated financial statements from such a position should be measured based on the largest benefit
that has a greater than fifty | |
| Newly Issued Accounting Pronouncements | Newly
Issued Accounting Pronouncements As
an “emerging growth company,” the Jumpstart Our Business Startups Act (“JOBS Act”) allows the Company to delay
adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to
private companies. The Company has elected to use this extended transition period under the JOBS Act. The adoption dates discussed below
reflects this election. In
February 2016, the FASB issued ASU 2016-02—Leases, requiring the recognition of lease assets and liabilities on the balance sheet.
The standard: (a)
clarifies the definition of a lease; (b) requires a dual approach to lease classification similar to current lease classifications;
and (c) causes lessees to recognize leases on the balance sheet as a lease liability with a corresponding right-of-use asset for
leases with a lease-term of more than 12 months. The standard is effective for the Company for fiscal years beginning after December
15, 2021, and interim periods within fiscal years beginning after December 15, 2022. The Company estimates the change in liabilities
of $ 4.3 4.2 In
June 2016, the FASB issued ASU No. 2016-13 (Topic 326), Financial Instruments—Credit Losses: Measurement of Credit Losses on Financial
Instruments, which replaces the existing incurred loss impairment model with an expected credit loss model and requires a financial asset
measured at amortized cost to be presented at the net amount expected to be collected. The guidance will be effective for the Company
for fiscal years beginning after December 15, 2022. Early adoption is permitted. The Company believes Adoption of the standard will not
have a material impact on the financial statements. In
December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which simplifies
the accounting for income taxes by removing a variety of exceptions within the framework of ASC 740. These exceptions include the exception
to the incremental approach for intra-period tax allocation in the event of a loss from continuing operations and income or a gain from
other items (such as other comprehensive income), and the exception to using general methodology for the interim period tax accounting
for year-to-date losses that exceed anticipated losses. The guidance will be effective for the Company beginning January 1, 2022, and
interim periods in fiscal years beginning January 1, 2023. Early adoption is permitted. The Company believes Adoption of the standard
will not have a material impact on the financial statements. | | Recently
Issued Accounting Pronouncements Not Yet Adopted As
an “emerging growth company,” the Jumpstart Our Business Startups Act (“JOBS Act”) allows the Company to delay
adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to
private companies. The Company has elected to use this extended transition period under the JOBS Act. The adoption dates discussed below
reflects this election. In
February 2016, the FASB issued ASU 2016-02—Leases, requiring the recognition of lease assets and liabilities on the balance sheet.
The standard: (a) clarifies the definition of a lease; (b) requires a dual approach to lease classification similar to current lease
classifications; and (c) causes lessees to recognize leases on the balance sheet as a lease liability with a corresponding right-of-use
asset for leases with a lease-term of more than 12 months. The standard will be effective for the Company for fiscal years beginning
after December 15, 2021. The Company is currently evaluating the impact of adopting this new guidance on its financial statements. In
June 2016, the FASB issued ASU No. 2016-13 (Topic 326), Financial Instruments—Credit Losses: Measurement of Credit Losses on Financial
Instruments, which replaces the existing incurred loss impairment model with an expected credit loss model and requires a financial asset
measured at amortized cost to be presented at the net amount expected to be collected. The guidance will be effective for the Company
for fiscal years beginning after December 15, 2022. Early adoption is permitted. The Company is currently evaluating the effect that
ASU 2016-13 will have on its consolidated financial statements and related disclosures. In
August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging
- Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s
Own Equity (“ASU 2020-06”). The final guidance issued by the FASB for convertible instruments eliminates two of the three
models in ASC 470-20 that require separate accounting for embedded conversion features. Separate accounting is still required in certain
cases. Additionally, among other changes, the guidance eliminates some of the conditions for equity classification in ASC 815-40-25 for
contracts in an entity’s own equity. The guidance also requires entities to use the if-converted method for all convertible instruments
in the diluted earnings per share calculation and include the effect of share settlement for instruments that may be settled in cash
or shares, except for certain liability-classified share-based payment awards. ASU 2020-06 is effective for fiscal years beginning after
December 15, 2023, and interim periods within those fiscal years. The Company is currently evaluating the potential impact of this guidance
on its consolidated financial statements. | |
| Basis of Presentation | Basis
of Presentation The
accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles
generally accepted in the United States (“GAAP”) for interim financial information. Accordingly, they do not include all
the information and notes required by GAAP for annual financial statements. In the opinion of management, all adjustments (of a normal
recurring nature) considered necessary for a fair statement of the results for the interim periods presented have been included. Operating
results for the interim period are not necessarily indicative of the results that may be expected for the full year. These
unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements for the
year ended December 31, 2021, included in the Company’s Annual Report on Form 10-K filed for the year ended December 31,
2021 (the “Annual Report”) with the Securities and Exchange Commission (the “SEC”). The Company’s significant
accounting policies have not changed materially from those included in Note 2 of the Company’s consolidated financial statements
for the year ended December 31, 2021, included in the Company’s Annual Report, unless otherwise stated. | | | |
| Cash and Cash Equivalents and Short-term restricted bank deposits | | | Cash
and Cash Equivalents and Short-term restricted bank deposits The
Company considers all highly liquid certificates of deposits with original maturities of three months or less from the purchase date
to be cash equivalents. Cash equivalents consist primarily of amounts invested in money market accounts in the United States and are
stated at fair value. Short-term restricted bank deposits consist of a bank deposit accounts that serves as collateral for a credit card
agreement and lease agreements at one of the Company’s financial institutions. | |
| Consolidated Financial Statements in U.S. Dollars | | | Consolidated
Financial Statements in U.S. Dollars A
substantial portion of the Company’s financing activities, including equity transactions and cash investments, are incurred in
U.S. dollars. The Company’s management believes that the U.S. dollar is the currency of the primary economic environment in which
the Company operates. Thus, the functional and reporting currency of the Company is the U.S. dollar. A
subsidiary’s functional currency is the currency of the primary economic environment in which the subsidiary operates; normally,
that is the currency of the environment in which a subsidiary primarily generates and expends cash. In making the determination of the
appropriate functional currency for a subsidiary, the Company considers cash flow indicators, local market indicators, financing indicators
and the subsidiary’s relationship with both the parent company and other subsidiaries. For subsidiaries that are primarily a direct
and integral component or extension of the parent entity’s operations, the U.S. dollar is the functional currency. The
Company has determined the functional currency of its foreign subsidiary is the U.S. Dollar. The foreign operation is considered a direct
and integral part or extension of the Company’s operations. The day-to-day operations of the foreign subsidiary are dependent on
the economic environment of the U.S. Dollar. Accordingly,
monetary accounts maintained in currencies other than the U.S. dollar are remeasured into U.S. dollars in accordance with Statement of
the Accounting Standard Codification (“ASC”) No. 830 “Foreign Currency Matters” (“ASC No. 830”).
All transaction gains and losses of the remeasured monetary balance sheet items are reflected in the statements of operations as financial
income or expenses as appropriate. | |
| Accrued Post-Employment Benefit | | | Accrued
Post-Employment Benefit Under
Israeli employment laws, employees of the Company are included under Section 14 of the Severance Compensation Act, 1963 (“Section
14”) for a portion of their salaries. According to Section 14, these employees are entitled to monthly payments made by the Company
on their behalf with insurance companies. Payments
in accordance with Section 14 release the Company from any future severance payments with respect to those employees. The obligation
to make the monthly deposits is expensed as incurred. In addition, the aforementioned deposits are not recorded as an asset in the consolidated
balance sheet, and there is no liability recorded as the Company does not have a future obligation to make any additional payments. Severance
costs amounted to approximately $ 0.3 0.2 The
Company maintains a 401(k) retirement savings plan for its U.S. employees. Each eligible employee may elect to contribute a portion of
the employee’s compensation to the plan. As of December 31, 2021, and 2020, the Company has matched 100 6 | |
| Acquired In-Process Research and Development | | | Acquired
In-Process Research and Development In
an asset acquisition, the initial costs of rights to in-process research and development projects acquired are expensed as R&D in
the consolidated statements of operations unless the in-process research and development has an alternative future use. In a business
combination, the fair value of in-process research and development is capitalized as an indefinite-lived intangible asset, regardless
of whether the in-process research and development asset has an alternative future use. | |
| Clinical Trial Costs | | | Clinical
Trial Costs Clinical
trial costs are a component of research and development expenses. The Company bases its expenses related to Clinical Research Organization
(“CRO”) on the services received, and efforts expanded pursuant to agreements with them. The financial terms of these agreements
are subject to negotiation, vary from contract to contract and may result in uneven payment flows. In instances where payments made to
CROs exceed the level of services provided and result in a prepayment of the research and development expenses. For reoccurring services
fees, the Company calculates the time period over which services will be performed and the level of effort to be expanded in each period.
If the actual timing of the performance of services varies from the calculation, the Company adjusts the accrual or amount of prepaid
expenses accordingly. Non-refundable advance payments for goods and services that will be used in future research and development activities
are expensed when the activity has been performed or when the goods have been received rather than when the payment is made. | |
| Patent Costs | | | Patent
Costs Legal
and related patent costs are expensed as incurred as their realization is uncertain. Costs related to patent registration are classified
as general and administrative expenses, and costs related to acquired patents are classified as research and development expenses in
the accompanying consolidated statements of operations. | |
| Contingent Liabilities | | | Contingent
Liabilities The
Company accounts for its contingent liabilities in accordance with ASC No. 450, “Contingencies”. A provision is recorded
when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. With respect to legal
matters, provisions are reviewed and adjusted to reflect the impact of negotiations, estimated settlements, legal rulings, advice of
legal counsel and other information and events pertaining to a particular matter. As of December 31, 2021, and 2020, the Company is not
a party to any litigation that could have a material adverse effect on the Company’s business, financial position, results of operations
or cash flows. | |
| Expected volatility | | | Expected
volatility As
the Company has a short trading history for its ordinary shares, the expected volatility is derived from the average historical share
volatilities of several unrelated public companies within the Company’s industry that the Company considers to be comparable to
its own business over a period equivalent to the option’s expected term. | |
| Expected Dividend Yield | | | Expected
Dividend Yield The
Company has historically not paid dividends and has no foreseeable plans to pay dividends, therefore the Company uses an expected dividend
yield of 0 | |
| Risk-Free Interest Rate | | | Risk-Free
Interest Rate The
risk-free interest rate is based on the yield from U.S. Treasury zero-coupon bonds with an equivalent expected term. Expected
Term Restricted
shares are value as fair value of shares on date of grant. | |
| Segment Information | | | Segment
Information Financial
information is available for evaluation by the chief operating decision maker, the Company’s Chief Executive Officer, in making
decisions regarding resource allocation and assessing performance. The Company views its operations and manages its business in one operating
segment. Operating segments are defined as components of an enterprise in which separate financial information is evaluated regularly
by the chief operating decision maker in deciding how to allocate resources and assessing performance. | |
| General | General
a) Ayala
Pharmaceuticals, Inc. (the “Company”) was incorporated in November 2017. The
Company is a clinical stage oncology company dedicated to developing and commercializing
small molecule therapeutics for patients suffering from rare and aggressive cancers, primarily
in genetically defined patient populations. The Company’s current portfolio of product
candidates, AL101 and AL102, target the aberrant activation of the Notch pathway with gamma
secretase inhibitors.
b) In
2017, the Company entered into an exclusive worldwide license agreement with respect to AL101
and AL102. See note 4.
c) The
Company’s lead product candidates, AL101 and AL102, have completed preclinical and
Phase 1 studies. AL102 is currently being evaluated in a pivotal Phase 2/3 trial (RINGSIDE)
in patients with Desmoids tumors and is being evaluated in a Phase 1 clinical trial in combination
with Novartis’ BMCA targeting agent, WVT078, in Patients with relapsed/refractory Multiple
Myeloma. AL101 is currently being evaluated in a Phase 2 trial (ACCURACY) in patients with R/M ACC bearing Notch-activating
mutations is ongoing.
d) The
Company has a wholly-owned Israeli subsidiary, Ayala-Oncology Israel Ltd. (the “Subsidiary”),
which was incorporated in November 2017. | | | |
| Certain Transactions | Certain
Transactions On
February 19, 2021, the Company entered into a Securities Purchase Agreement (the “2021 Purchase Agreement”) with the purchasers
named therein (the “Investors”). Pursuant to the 2021 Purchase Agreement, the Company agreed to sell (i) an aggregate of
333,333 0.01 116,666 18.10 4,999,995.00 1,333,333 0.01 466,666 19,986,661.67 In
June 2021, the Company entered into an Open Market Sales Agreement, or the Sales Agreement, with Jefferies LLC, or Jefferies, as sales
agent, pursuant to which the Company may, from time to time, issue and sell Common Stock with an aggregate value of up to $ 200.0 827,094 10.0 305,517 310,417 468 512 AYALA
PHARMACEUTICALS, INC. NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE
1—SIGNIFICANT ACCOUNTING POLICIES (continued): | | | |
| Going Concern | Going
Concern The
Company has incurred recurring losses since inception as a research and development organization and has an accumulated deficit of $ 139.6 26.3 11.5 The
unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern.
Therefore, the unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2022, do not include
any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification
of liabilities that may result from uncertainty related to the Company’s ability to continue as a going concern. | | | |
| Recently issued and adopted pronouncements | Recently
issued and adopted pronouncements In
August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2020-06, Debt—Debt
with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic
815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (ASU 2020-06), which simplifies the accounting
for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on
an entity’s own equity. This guidance also eliminates the treasury stock method to calculate diluted earnings per share for convertible
instruments and requires the use of the if-converted method. ASU 2020-06 is effective for fiscal years beginning after December 15, 2023,
and interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 15, 2020. The Company
elected to early adopt ASU 2020-06 on January 1, 2022. Adoption of the standard did not have a material impact on the financial statements. | | | |
