BioLineRx Ltd.
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
AS OF SEPTEMBER 30, 2018
BioLineRx Ltd.
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
AS OF SEPTEMBER 30, 2018
TABLE OF CONTENTS
| | | Page |
| | F-1 |
| | F-2 |
| | F-3 |
| | F-4 - F-5 |
| | F-6 - F-9 |
BioLineRx Ltd.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF
FINANCIAL POSITION
(UNAUDITED)
| | | December 31, | | | September 30, | |
| | | 2017 | | | 2018 | |
| | | in USD thousands | |
| Assets | | | | | | |
| CURRENT ASSETS | | | | | | |
| Cash and cash equivalents | | | 5,110 | | | | 4,703 | |
| Short-term bank deposits | | | 44,373 | | | | 30,300 | |
| Prepaid expenses | | | 307 | | | | 1,266 | |
| Other receivables | | | 586 | | | | 835 | |
| Total current assets | | | 50,376 | | | | 37,104 | |
| | | | | | | | | |
| NON-CURRENT ASSETS | | | | | | | | |
| Long-term prepaid expenses | | | 61 | | | | 66 | |
| Long-term investment | | | 1,000 | | | | - | |
| Property and equipment, net | | | 2,505 | | | | 2,197 | |
| Intangible assets, net | | | 7,023 | | | | 7,033 | |
| Total non-current assets | | | 10,589 | | | | 9,296 | |
| Total assets | | | 60,965 | | | | 46,400 | |
| | | | | | | | | |
| Liabilities and equity | | | | | | | | |
| CURRENT LIABILITIES | | | | | | | | |
| Current maturities of long-term bank loan | | | 93 | | | | 93 | |
| Accounts payable and accruals: | | | | | | | | |
| Trade | | | 5,516 | | | | 3,804 | |
| Other | | | 1,113 | | | | 1,028 | |
| Total current liabilities | | | 6,722 | | | | 4,925 | |
| NON-CURRENT LIABILITIES | | | | | | | | |
| Long-term bank loan, net of current maturities | | | 157 | | | | 86 | |
| Warrants | | | 1,205 | | | | 804 | |
| Total non-current liabilities | | | 1,362 | | | | 890 | |
| COMMITMENTS AND CONTINGENT LIABILITIES | | | | | | | | |
| Total liabilities | | | 8,084 | | | | 5,815 | |
| | | | | | | | | |
| EQUITY | | | | | | | | |
| Ordinary shares | | | 2,836 | | | | 2,922 | |
| Share premium | | | 240,682 | | | | 244,058 | |
| Other comprehensive loss | | | 10,337 | | | | 11,889 | |
| Capital reserve | | | (1,416 | ) | | | (1,416 | ) |
| Accumulated deficit | | | (199,558 | ) | | | (216,868 | ) |
| Total equity | | | 52,881 | | | | 40,585 | |
| Total liabilities and equity | | | 60,965 | | | | 46,400 | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
BioLineRx Ltd.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE
LOSS
(UNAUDITED)
| | | Three months ended September 30, | | | Nine months ended September 30, | |
| | | 2017 | | | 2018 | | | 2017 | | | 2018 | |
| | | in USD thousands | | | in USD thousands | |
| RESEARCH AND DEVELOPMENT EXPENSES | | | (5,654 | ) | | | (5,027 | ) | | | (13,306 | ) | | | (14,581 | ) |
| SALES AND MARKETING EXPENSES | | | (249 | ) | | | (293 | ) | | | (1,218 | ) | | | (1,137 | ) |
| GENERAL AND ADMINISTRATIVE EXPENSES | | | (1,154 | ) | | | (892 | ) | | | (3,028 | ) | | | (2,850 | ) |
| OPERATING LOSS | | | (7,057 | ) | | | (6,212 | ) | | | (17,552 | ) | | | (18,568 | ) |
| NON-OPERATING INCOME (EXPENSES), NET | | | (333 | ) | | | (255 | ) | | | (342 | ) | | | 870 | |
| FINANCIAL INCOME | | | 153 | | | | 154 | | | | 914 | | | | 534 | |
| FINANCIAL EXPENSES | | | (6 | ) | | | (11 | ) | | | (15 | ) | | | (146 | ) |
| | | | | | | | | | | | | | | | | |
| NET LOSS AND COMPREHENSIVE LOSS | | | (7,243 | ) | | | (6,324 | ) | | | (16,995 | ) | | | (17,310 | ) |
| | | | | | | | | | | | | | | | | |
| | | in USD | | | in USD | |
| LOSS PER ORDINARY SHARE - BASIC AND DILUTED | | | (0.07 | ) | | | (0.06 | ) | | | (0.20 | ) | | | (0.16 | ) |
| | | | | | | | | | | | | | | | | |
| WEIGHTED AVERAGE NUMBER OF SHARES USED IN CALCULATION OF LOSS PER ORDINARY SHARE | | | 101,874,372 | | | | 107,110,585 | | | | 85,106,723 | | | | 107,040,191 | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
BioLineRx Ltd.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN
EQUITY
(UNAUDITED)
| | | | | | | | | Other comprehensive loss | | | | | | | | | | |
| | | in USD thousands | |
| BALANCE AT JANUARY 1, 2017 | | | 1,513 | | | | 199,567 | | | | (1,416 | ) | | | 10,569 | | | | (175,206 | ) | | | 35,027 | |
| CHANGES FOR NINE MONTHS ENDED SEPTEMBER 30, 2017: | | | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of share capital, net | | | 1,295 | | | | 38,388 | | | | - | | | | - | | | | - | | | | 39,683 | |
| Employee stock options exercised | | | 1 | | | | 326 | | | | - | | | | (326 | ) | | | - | | | | 1 | |
| Employee stock options forfeited and expired | | | - | | | | 1,325 | | | | - | | | | (1,325 | ) | | | - | | | | - | |
| Share-based compensation | | | - | | | | - | | | | - | | | | 1,309 | | | | - | | | | 1,309 | |
| Comprehensive loss for the period | | | | | | | | | | | - | | | | | | | | (16,995 | ) | | | (16,995 | ) |
| BALANCE AT SEPTEMBER 30, 2017 | | | | | | | | | | | (1,416 | ) | | | | | | | (192,201 | ) | | | | |
| | | | | | | | | Other comprehensive loss | | | | | | | | | | |
| | | in USD thousands | |
| BALANCE AT JANUARY 1, 2018 | | | 2,836 | | | | 240,682 | | | | (1,416 | ) | | | 10,337 | | | | (199,558 | ) | | | 52,881 | |
| CHANGES FOR NINE MONTHS ENDED SEPTEMBER 30, 2018: | | | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of share capital, net | | | 85 | | | | 2,803 | | | | - | | | | - | | | | - | | | | 2,888 | |
| Employee stock options exercised | | | 1 | | | | 46 | | | | - | | | | (47 | ) | | | - | | | | - | |
| Employee stock options forfeited and expired | | | - | | | | 527 | | | | - | | | | (527 | ) | | | - | | | | - | |
| Share-based compensation | | | - | | | | - | | | | - | | | | 2,126 | | | | - | | | | 2,126 | |
| Comprehensive loss for the period | | | | | | | | | | | - | | | | | | | | (17,310 | ) | | | (17,310 | ) |
| BALANCE AT SEPTEMBER 30, 2018 | | | | | | | | | | | (1,416 | ) | | | | | | | (216,868 | ) | | | | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| | | Nine months ended September 30, | |
| | | 2017 | | | 2018 | |
| | | in USD thousands | |
| | | | | | | |
| CASH FLOWS - OPERATING ACTIVITIES | | | | | | |
| Comprehensive loss for the period | | | (16,995 | ) | | | (17,310 | ) |
| Adjustments required to reflect net cash used in operating activities (see appendix below) | | | 2,772 | | | | (1,741 | ) |
| Net cash used in operating activities | | | (14,223 | ) | | | (19,051 | ) |
| | | | | | | | | |
| CASH FLOWS - INVESTING ACTIVITIES | | | | | | | | |
| Investments in short-term deposits | | | (48,029 | ) | | | (22,000 | ) |
| Maturities of short-term deposits | | | 33,327 | | | | 36,613 | |
| Long-term investment | | | (1,000 | ) | | | - | |
| Proceeds from realization of long-term investment | | | - | | | | 1,500 | |
| Purchase of property and equipment | | | (109 | ) | | | (76 | ) |
| Purchase of intangible assets | | | (3,721 | ) | | | (40 | ) |
| Net cash provided by (used in) investing activities | | | (19,532 | ) | | | 15,997 | |
| | | | | | | | | |
| CASH FLOWS - FINANCING ACTIVITIES | | | | | | | | |
| Issuance of share capital and warrants, net of issuance costs | | | 37,761 | | | | 2,888 | |
| Repayments of bank loan | | | (70 | ) | | | (70 | ) |
| Net cash provided by financing activities | | | 37,691 | | | | 2,818 | |
| | | | | | | | | |
| INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | | | 3,936 | | | | (236 | ) |
| CASH AND CASH EQUIVALENTS – BEGINNING OF PERIOD | | | 2,469 | | | | 5,110 | |
| EXCHANGE DIFFERENCES ON CASH AND CASH EQUIVALENTS | | | 307 | | | | (171 | ) |
| CASH AND CASH EQUIVALENTS - END OF PERIOD | | | 6,712 | | | | 4,703 | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
BioLineRx Ltd.
CONDENSED CONSOLIDATED INTERIM CASH FLOW STATEMENTS
(UNAUDITED)
| | | Nine months ended September 30, | |
| | | 2017 | | | 2018 | |
| | | in USD thousands | |
| | | | | | | |
| Adjustments required to reflect net cash used in operating activities: | | | | | | |
| | | | | | | |
| Income and expenses not involving cash flows: | | | | | | |
| Depreciation and amortization | | | 381 | | | | 414 | |
| Long-term prepaid expenses | | | (8 | ) | | | (5 | ) |
| Interest and exchange rate differences on short-term deposits | | | (439 | ) | | | (540 | ) |
| Share-based compensation | | | 1,309 | | | | 2,126 | |
| Warrant issuance costs | | | 17 | | | | - | |
| Gain on realization of long-term investment | | | - | | | | (500 | ) |
| Interest and linkage differences on bank loan | | | - | | | | (1 | ) |
| Exchange differences on cash and cash equivalents | | | (307 | ) | | | 171 | |
| Loss (gain) on adjustment of warrants to fair value | | | 316 | | | | (401 | ) |
| | | | 1,269 | | | | 1,264 | |
| | | | | | | | | |
| Changes in operating asset and liability items: | | | | | | | | |
| Increase in prepaid expenses and other receivables | | | (362 | ) | | | (1,208 | ) |
| Increase (decrease) in accounts payable and accruals | | | 1,865 | | | | (1,797 | ) |
| | | | 1,503 | | | | (3,005 | ) |
| | | | 2,772 | | | | (1,741 | ) |
| | | | | | | | | |
| Supplementary information on interest received in cash | | | 378 | | | | 598 | |
| | | | | | | | | |
| Supplementary non-cash investment | | | 2,985 | | | | - | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
NOTE 1 – GENERAL INFORMATION
BioLineRx Ltd. (“BioLineRx”), headquartered in Modi’in, Israel, was incorporated and commenced operations in April 2003. BioLineRx and its subsidiaries (collectively, the “Company”) are engaged in the development of therapeutics, primarily in the fields of oncology and immunology.
In February 2007, BioLineRx listed its ordinary shares on the Tel Aviv Stock Exchange (“TASE”) and they have been traded on the TASE since that time. Since July 2011, BioLineRx’s American Depositary Shares (“ADSs”) have been traded on the NASDAQ Capital Market.
In March 2017, the Company acquired Agalimmune Ltd. (“Agalimmune”), a privately-held company incorporated in the United Kingdom focusing on the field of immuno-oncology.
The Company has been engaged in drug development since its incorporation. Although the Company has generated significant revenues from a number of out-licensing transactions in the past, the Company cannot determine with reasonable certainty when and if it will have sustainable profits.
| b. | Approval of financial statements |
The condensed consolidated interim financial statements of the Company as of September 30, 2018, and for the three and nine months then ended, were approved by the Board of Directors on November 8, 2018, and signed on its behalf by the Chairman of the Board, the Chief Executive Officer and the Chief Financial Officer.
NOTE 2 – BASIS OF PREPARATION
The Company’s condensed consolidated interim financial statements as of September 30, 2018 and for the three and nine months then ended (the “interim financial statements”) have been prepared in accordance with International Accounting Standard No. 34, “Interim Financial Reporting” (“IAS 34”). These interim financial statements, which are unaudited, do not include all disclosures necessary for a fair statement of financial position, results of operations, and cash flows in conformity with International Financial Reporting Standards (“IFRS”). The condensed consolidated interim financial statements should be read in conjunction with the Company’s annual financial statements as of December 31, 2017 and for the year then ended and their accompanying notes, which have been prepared in accordance with IFRS. The results of operations for the three and nine months ended September 30, 2018 are not necessarily indicative of the results that may be expected for the entire fiscal year or for any other interim period.
BioLineRx Ltd.
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES
The accounting policies and calculation methods applied in the preparation of these interim financial statements are consistent with those applied in the preparation of the annual financial statements as of December 31, 2017 and for the year then ended, except as follows: (i) IFRS No. 9, “Financial Instruments,” which was effective from January 1, 2018, did not have a material effect on the Company’s financial statements; (ii) IFRS No. 15, “Revenue from Contracts with Customers,” also effective from January 1, 2018, is not relevant to the Company’s financial statements because the Company does not yet have any revenues; (iii) IFRS No. 16, “Leases,” which is not yet in effect and which the Company has not adopted early, was disclosed in the 2017 annual financial statements. The Company is currently evaluating the potential effect of this new guidance on its consolidated financial statements.
NOTE 4 – ISSUANCES OF SHARE CAPITAL AND WARRANTS
| a. | At-the-market (“ATM”) sales agreement with BTIG |
In October 2017, the Company entered into an at-the-market (“ATM”) sales agreement with BTIG, LLC (“BTIG”), pursuant to which the Company may, at its sole discretion, offer and sell through BTIG, acting as sales agent, ADSs having an aggregate offering price of up to $30.0 million throughout the period during which the ATM facility remains in effect. The Company will pay BTIG a commission of 3.0% of the gross proceeds from the sale of ADSs under the facility. From the effective date of the agreement through September 30, 2018, 3,927,063 ADSs were sold under the program for total net proceeds of approximately $4.0 million, leaving an available balance under the facility of approximately $26.0 million as of September 30, 2018.
| b. | Direct placement of share capital and warrants to BVF |
In July 2017, the Company completed a direct placement to BVF Partners L.P., its largest shareholder, for aggregate gross proceeds of $9.6 million. The placement consisted of 8,495,575 ADSs, Series A warrants to purchase an additional 2,973,451 ADSs and Series B warrants to purchase an additional 2,973,451 ADSs. The Series A warrants have an exercise price of $2.00 per ADS and are exercisable for a term of four years. The Series B warrants have an exercise price of $4.00 per ADS and are also exercisable for a term of four years. Net proceeds from the transaction were approximately $9.5 million, after deducting fees and expenses.
The warrants issued have been classified as a non-current financial liability due to a net settlement provision. This liability is initially recognized at its fair value on the date the contract is entered into and subsequently accounted for at fair value at each balance sheet date. The fair value changes are charged to non-operating income and expense in the statement of comprehensive loss.
The fair value of the warrants is computed using the Black and Scholes option pricing model. The fair value of the warrants upon issuance was computed based on the then current price of an ADS, a risk-free interest rate of 1.66% and an average standard deviation of 57.8%. The fair value of the warrants as of September 30, 2018 was based on the then current price of an ADS, a risk-free interest rate of 2.91% and an average standard deviation of 54.1%.
BioLineRx Ltd.
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 4 – ISSUANCES OF SHARE CAPITAL AND WARRANTS (cont.)
| c. | Underwritten public offering |
In April 2017, the Company completed an underwritten public offering of approximately 33.8 million ADSs at a public offering price of $0.85 per ADS. The offering raised a total of $28.8 million, with net proceeds of approximately $26.2 million, after deducting fees and expenses.
| d. | Share issuance to Agalimmune shareholders |
In March 2017, in connection with the Agalimmune acquisition, the Company issued 2,550,935 ADSs to the shareholders of Agalimmune.
NOTE 5 – SHAREHOLDERS’ EQUITY
As of December 31, 2017, and September 30, 2018, share capital is composed of ordinary shares, as follows:
| | | Number of ordinary shares | |
| | | December 31, | | | September 30, | |
| | | 2017 | | | 2018 | |
| | | | | | | |
| Authorized share capital | | | 250,000,000 | | | | 250,000,000 | |
| | | | | | | | | |
| Issued and paid-up share capital | | | 105,063,437 | | | | 108,083,426 | |
| | | In USD and NIS | |
| | | December 31, | | | September 30, | |
| | | 2017 | | | 2018 | |
| | | | | | | | | |
| Authorized share capital (in NIS) | | | 25,000,000 | | | | 25,000,000 | |
| | | | | | | | | |
| Issued and paid-up share capital (in NIS) | | | 10,506,344 | | | | 10,808,343 | |
| | | | | | | | | |
| Issued and paid-up share capital (in USD) | | | 2,836,139 | | | | 2,922,216 | |
BioLineRx Ltd.
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 6 – REALIZATION OF INVESTMENT IN JOINT VENTURE (iPharma)
In 2016, the Company established a joint venture with I-Bridge Capital, a Chinese venture capital fund focused on developing innovative therapies in China, with each party contributing initial seed capital to the venture of $1.0 million. The joint venture, named iPharma, focused on the development of innovative clinical and pre-clinical therapeutic candidates to serve the Chinese and global healthcare markets. In April 2018, the Company sold its holdings in the joint venture to I-Bridge Capital for cash consideration of $1.5 million. The gain of $0.5 million is included in non-operating income in the statement of comprehensive loss.
NOTE 7 – EVENTS SUBSEQUENT TO THE BALANCE SHEET DATE
On October 2, 2018, the Company amended its license agreement with Biokine Therapeutics Ltd. (“Biokine”), originally dated September 2, 2012, relating to the in-licensing rights to BL-8040. The amendment reduces the payment owed by the Company to Biokine on sublicense receipts (as defined in the license agreement) from 40% to 20% of sublicense receipts in exchange for: (i) a cash payment from the Company to Biokine of $10 million; (ii) the issuance of ADSs with a value of $5 million and (iii) the payment of certain future milestone payments, up to an aggregate of $5 million in total, as specified in the amendment. Additionally, in certain limited instances, if the Company enters into a sublicense (as defined in the license agreement) within a defined period, the Company will pay Biokine an additional 10% of any upfront sublicense receipts received by the Company as a result of such sublicense.
The $10 million payment referred to above was financed in full via the receipt of a $10 million loan from Kreos Capital V (Expert Fund) L.P. (the “Lender”). As security for the loan, the Lender received a first-priority secured interest in all Company assets, including intellectual property. The loan has a 12-month interest-only period followed by a 36-month repayment period. Borrowings under the loan will bear interest at a fixed rate of 9.5% per annum (10.7%, including cash fees). In connection with providing the loan, the Lender received a warrant to purchase 957,549 ADSs at an exercise price of $0.94 per ADS. The warrant is exercisable for a period of ten years from the date of issuance.
