SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
☐ | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(Exact name of Registrant as specified in its charter)
(Jurisdiction of incorporation or organization)
Yavne, 8122745 Israel
(Address of principal executive offices)
Executive Vice President, General Counsel and Corporate Secretary
Telephone: +972 (77) 971-4100
E-mail: yaronm@mediwound.com
MediWound Ltd.
42 Hayarkon Street
Yavne, 8122745 Israel
(Name, telephone, e-mail and/or facsimile number and address of company contact person)
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Ordinary shares, par value NIS 0.01 per share | MDWD | Nasdaq Global Market |
Large accelerated filer ☐ | Accelerated filer ☐ | Non-accelerated filer ☒ | Emerging Growth Company ☐ |
U.S. GAAP ☐ | International Financial Reporting Standards as issued by the International Accounting Standards Board ☒ | Other ☐ |
FORM 20-F ANNUAL REPORT FOR THE FISCAL YEAR ENDED DECEMBER 31, 2021 |
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PART II | |
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PART III | |
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• | the timing and conduct of our trials of NexoBrid, EscharEx and our pipeline product candidates, including statements regarding the timing, progress and results of current and future preclinical studies and clinical trials, and our research and development programs; |
• | the clinical utility, potential advantages and timing or likelihood of regulatory filings and approvals of NexoBrid, EscharEx and our pipeline product candidates; |
• | our plans to develop and commercialize NexoBrid, EscharEx and our pipeline product candidates; |
• | our estimates regarding expenses, future revenues, capital requirements and the need for additional financing; |
• | anticipated funding under our contracts with the U.S. Biomedical Advanced Research and Development Authority; |
• | our expectations regarding future growth, including our ability to develop new products; |
• | our commercialization, marketing and manufacturing capabilities and strategy and the ability of our marketing team to cover regional burn centers and units; |
• | our ability to maintain adequate protection of our intellectual property; |
• | our estimates regarding the market opportunity for NexoBrid, EscharEx and our pipeline product candidates; |
• | our expectation regarding the duration of our inventory of intermediate drug substance and products; |
• | the impact of our research and development expenses as we continue developing product candidates; and |
• | the impact of government laws and regulations. |
Item 1. | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS |
Item 2. | OFFER STATISTICS AND EXPECTED TIMETABLE |
Item 3. | KEY INFORMATION |
A. | [Reserved] |
B. | Capitalization and Indebtedness |
C. | Reasons for the Offer and Use of Proceeds |
D. | Risk Factors |
• | regulators may not authorize us to conduct a clinical trial within a country or at a prospective trial site or may require us to change the design of a study; |
• | delays may occur in reaching agreement on acceptable clinical trial terms with regulatory authorities or prospective sites, or obtaining institutional review board or ethics committee approval; |
• | our preclinical tests or clinical trials may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional trials or to abandon strategic projects; |
• | the number of patients required for our clinical trials may be larger than we anticipate, enrollment in our clinical trials may be slower or more difficult than we expect, or patients may not participate in necessary follow-up visits to obtain required data, any of which would result in significant delays in our clinical testing process; |
• | our third-party contractors, such as a research institute, may fail to comply with regulatory requirements or meet their contractual obligations to us; |
• | we may be forced to suspend or terminate our clinical trials if the participants are being exposed, or are thought to be exposed, to unacceptable health risks or if any participant experiences an unexpected serious adverse event; |
• | regulators or institutional review boards may require that we hold, suspend or terminate clinical research for various reasons, including noncompliance with regulatory requirements; |
• | undetected or concealed fraudulent activity by a clinical researcher, if discovered, could preclude the submission of clinical data prepared by that researcher, lead to the suspension or substantive scientific review of one or more of our marketing applications by regulatory agencies, and result in the recall of any approved product distributed pursuant to data determined to be fraudulent; |
• | the cost of our clinical trials may be greater than we anticipate; |
• | an audit of preclinical or clinical studies by regulatory authorities may reveal noncompliance with applicable protocols or regulations, which could lead to disqualification of the results and the need to perform additional studies; |
• | political unrest and wars, such as the developing conflict between Russia and Ukraine, which could delay or disrupt business activity, and if such political unrest escalates or spills over to or otherwise impacts additional regions, it could also heighten many of the other risk factors described in this Annual Report; |
• | delays may occur in obtaining our clinical materials; and |
• | epidemics or pandemics, such as the COVID-19 pandemic that can affect the overall healthcare infrastructure, including the ability to recruit patients, the ability to conduct studies at medical sites and the pace with which governmental agencies, such as the FDA and foreign regulatory authorities, will review and approve regulatory submissions. Additional government-imposed quarantines and requirements to “shelter at home” or other incremental mitigation efforts also may impact our ability to source supplies for our operations or our ability or capacity to manufacture, sell and support the use of NexoBrid, EscharEx and other candidate products in the future. |
• | restrictions on the marketing or manufacturing of the product, withdrawal of the product from the market or voluntary or mandatory product recalls; |
• | fines, warning letters or holds on clinical trials; |
• | harm to our reputation, reduced demand for our products and loss of market acceptance; |
• | refusal by the applicable regulatory authority to approve pending applications or supplements to approved applications filed by us, or suspension or revocation of product license approvals; |
• | product seizure or detention, or refusal to permit the import or export of products; and |
• | injunctions or the imposition of civil or criminal penalties. |
• | the willingness of physicians, burn care teams and hospital administrators to administer our products and the acceptance of our products as part of the medical department routine; |
• | the consent of hospitals to fund/purchase NexoBrid or obtain third-party coverage or reimbursement for our products; |
• | the ability to offer NexoBrid, EscharEx and our pipeline product candidates for sale at an attractive value; |
• | the efficacy and potential advantages of NexoBrid, EscharEx and our pipeline product candidates relative to current standard of care; |
• | the prevalence and severity of any side effects; and |
• | the efficacy, potential advantages and timing of introduction to the market of alternative treatments. |
• | the market acceptance or demand for NexoBrid, EscharEx or any of our pipeline product candidates, if approved; |
• | the ability to set a price that we believe is fair for NexoBrid, EscharEx or any of our pipeline product candidates, if approved; |
• | our ability to generate revenues and achieve or maintain profitability; |
• | the level of taxes that we are required to pay; and |
• | the availability of capital. |
• | an annual, nondeductible fee on any entity that manufactures or imports certain branded prescription drugs and biologic agents, apportioned among these entities according to their market share in certain government healthcare programs; |
• | an increase in the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program to 23.1% and 13.0% of the average manufacturer price for branded and generic drugs, respectively; |
• | addressed a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted or injected; |
• | a new Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 70% point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D; |
• | extension of manufacturers’ Medicaid rebate liability to covered drugs dispensed to individuals who are enrolled in Medicaid managed care organizations; |
• | expansion of eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to additional individuals and by adding new mandatory eligibility categories for certain individuals with income at or below 133% of the Federal Poverty Level, thereby potentially increasing manufacturers’ Medicaid rebate liability; |
• | expansion of the entities eligible for discounts under the Public Health Service pharmaceutical pricing program; |
• | a new requirement to annually report drug samples that manufacturers and distributors provide to physicians; and |
• | a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research. |
• | accelerate our clinical development activities, particularly with respect to our clinical development of EscharEx for the debridement of chronic and other hard-to-heal wounds and our clinical trials for our other pipeline product candidates; |
• | further scale-up the manufacturing process for NexoBrid; |
• | seek regulatory and marketing approvals for NexoBrid and any pipeline product candidate that successfully completes clinical trials; |
• | initiate additional preclinical, clinical or other studies for NexoBrid, EscharEx and our pipeline product candidates, and seek to identify and validate new products; |
• | commercialize NexoBrid and any pipeline product candidates for which we obtain marketing approval; |
• | acquire rights to other product candidates and technologies; |
• | change or add suppliers; |
• | maintain, expand and protect our intellectual property portfolio; |
• | attract and retain skilled personnel; and |
• | experience any delays or encounter issues with any of the above. |
• | delay, scale back or discontinue the development, manufacturing scale-up or commercialization of NexoBrid, EscharEx or our pipeline product candidates; |
• | seek additional corporate partners for NexoBrid, EscharEx or one or more of our pipeline product candidates on terms that are less favorable than might otherwise be available; or |
• | relinquish or license to additional parties, on unfavorable terms, our rights to NexoBrid, EscharEx or our pipeline product candidates that we otherwise would seek to develop or commercialize ourselves. |
• | any such consequence will have a material adverse effect on our business, operating results and prospects and on our ability to develop our pipeline product candidates. |
• | the Federal Acquisition Regulations (“FAR”) and agency-specific regulations supplemental to the FAR, which comprehensively regulate the procurement, formation, administration and performance of government contracts; |
• | business ethics and public integrity obligations, which govern conflicts of interest and the hiring of former government employees, restrict the granting of gratuities and funding of lobbying activities and include other requirements such as the Anti-Kickback Statute and Foreign Corrupt Practices Act; |
• | export and import control laws and regulations; and |
• | laws, regulations and executive orders restricting the use and dissemination of information classified for national security purposes and the exportation of certain products and technical data. |
• | any of our present or future patents or patent claims or other intellectual property rights will not lapse or be invalidated, circumvented, challenged or abandoned; |
• | our intellectual property rights will provide competitive advantages or prevent competitors from making or selling competing products; |
• | our ability to assert our intellectual property rights against potential competitors or to settle current or future disputes will not be limited by our agreements with third parties; |
• | any of our pending or future patent applications will be issued or have the coverage originally sought; |
• | our intellectual property rights will be enforced in jurisdictions where competition may be intense or where legal protection may be weak; or |
• | we will not lose the ability to assert our intellectual property rights against, or to license our technology to, others and collect royalties or other payments. |
• | actual or anticipated variations in our and our competitors’ results of operations and financial condition; |
• | market acceptance of our products; |
• | general economic and market conditions and other factors, including factors unrelated to our operating performance; |
• | the mix of products that we sell and related services that we provide; |
• | changes in earnings estimates or recommendations by securities analysts, if our ordinary shares continue to be covered by analysts; |
• | publication of the results of preclinical or clinical trials for NexoBrid, EscharEx or any of our pipeline product candidates; |
• | failure by us to achieve a publicly announced milestone; |
• | delays between our expenditures to develop and market new or enhanced products and the generation of sales from those products; |
• | development of technological innovations or new competitive products by others; |
• | announcements of technological innovations or new products by us; |
• | regulatory developments and the decisions of regulatory authorities as to the marketing of our current products or the approval or rejection of new or modified products; |
• | developments concerning intellectual property rights, including our involvement in litigation; |
• | changes in our expenditures to develop, acquire or license new products, technologies or businesses; |
• | changes in our expenditures to promote our products; |
• | changes in the structure of healthcare payment systems; |
• | our sale or proposed sale, or the sale by our significant shareholders, of our ordinary shares or other securities in the future; |
• | changes in key personnel; |
• | success or failure of our research and development projects or those of our competitors; and |
• | the trading volume of our ordinary shares. |
A. | History and Development of the Company |
B. | Business Overview |
• | The extent of the surface that the burn occupies is usually referred to as percent of total body surface area (“TBSA”). A burn on an adult’s entire palm would generally amount to 1% TBSA, and the average hospitalized patient has a burn covering approximately 9% TBSA. Burns covering more than 15-20% TBSA usually require hospitalization and may result in dehydration, shock and increased risk of mortality. |
• | The depth of the burn, referred to in terms of “degree” is generally classified into four categories: |
○ | Superficial or first degree burns. Such burns do not penetrate the basal membrane and usually heal naturally. |
○ | Dermal/partial thickness or second degree burns. Such burns are characterized by varying amounts of damaged dermis and can be further subdivided into superficial and deep partial-thickness burns. Superficial partial-thickness burns may heal spontaneously after removal of the covering thin eschar. Conversely, deep partial-thickness burns are often difficult for physicians to accurately diagnose before eschar removal and may progress and transform into full-thickness burns if not debrided in a timely manner, depending on the magnitude of latent tissue death of the surrounding skin. |
○ | Full thickness or third degree burns. Such burns are characterized by death of the entire dermal tissue down to the subcutaneous fat and must be debrided and treated by autografting, which is the process of harvesting skin from healthy donor sites on a patient’s body and transplanting it on the post-debridement, clean wound bed. |
○ | Fourth degree burns. Such burns, which are rare, extend beyond the subcutaneous fat tissue into the underlying structures, such as muscle or bone, and also require debridement and further substantial treatment. |
• | Other factors include the age of the victim, the body part where the burn occurred and any co-morbidities of the patient. For example, some patients may require hospitalization regardless of the TBSA or degree of the burn, such as children, the elderly or victims with burns to the extremities, joints or head/neck area or with co-morbidities such as smoke inhalation, diabetes or obesity. |
• | the prevention of local infection, sepsis (a systemic inflammatory response caused by severe infection) and additional damage to surrounding viable tissue; and |
• | the initiation of the body’s healing process and scar prevention. |
• | Surgical debridement |
○ | Surgical debridement predominantly includes tangential excision, a procedure in which a surgeon amputates the entire dead tissue mass, layer after layer, down to healthy, viable tissue. The excision is extended into healthy intact tissue to make sure that no trace of the eschar remains, resulting in up to an estimated 30-50% of healthy tissue being excised during this procedure. Other methods include dermabrasion, in which a mechanically powered, hand-held rotating abrading cylinder is used to slowly scrape off tissue, and hydro surgery, in which a high-pressure flow of water abrades the tissue. These alternative methods have attempted to limit the trauma associated with tangential excision, but entail spray of contaminated eschar or take a significantly longer time to complete than tangential excision. |
○ | The benefits of surgical eschar removal are that it is usually fast and effective. Disadvantages include the significant trauma of the procedure, associated blood loss, risk of surgery in delicate areas of the body such as hands, added costs, and, most importantly, the loss of viable tissue that necessitates additional surgical procedures for harvesting skin from healthy donor sites and autografting. |
○ | Due to the disadvantages of surgery in extensive burns some surgeons limit their debriding surgery to only a part of the affected area in a single session (15-30% TBSA in most centers), thus delaying full debridement by days. After several days, complications related to eschar contamination may begin and some of the benefits of the earlier debridement may not be realized. On the other hand, when excising burns immediately, all suspected necrotic tissue will be excised, inevitably resulting in over-excision, especially in “indeterminate” burns, as after surgical excision, the remaining skin often no longer has any spontaneous healing potential and will heal only by autografting. |
• | Non-surgical debridement |
○ | Non-surgical debridement includes many different treatment options that do not require direct surgical removal of the skin to remove eschar. With non-surgical debridement, the eschar is naturally, but slowly, removed by contaminant microorganisms, tissue autolysis, or self-decomposition, and the inflammatory process that may lead to serious local and systemic complications. In seeking to facilitate such natural processes, topical medication, anti-microbial agents, enzymes and biological/chemical applications are often applied onto the eschar. |
○ | The benefits of this approach are that it is non-surgical, reduces trauma to the patient and is easier to apply. Disadvantages include numerous dressing changes and mechanical scraping with limited debridement efficacy. This prolongs the eschar removal process, which may lead to death of the tissue surrounding the initial burn wound, causing partial-thickness wounds to transform into full-thickness wounds and forming granulation tissue that may develop into heavy scars. |
Trial 1 | Trial 2 | Trial 3 | Trial 4 | Trial 5 | Trial 6 | Trial 7 | Trial 8 | Trial 9 | |
Study Type | Retrospective Phase 2 Investigator initiated | Dose range Phase 2 | Prospective Phase 2 IND/FDA | Phase 2 IND/FDA | Phase 3 EMA | Phase 3b EMA | Phase 2 EMA | Post approval safety study EMA | Phase 3 IND/FDA |
Design | Data collected from files of patients treated with NexoBrid | Parallel, controlled, observer- blind, randomized, single-center | Parallel, controlled, observer- blind, three-arm, randomized, multi-center | Parallel, controlled, open label, three-arm, randomized, single-center | Parallel, controlled, open label, two-arm, randomized, multi-center | Parallel, controlled, blinded, two-arm, multi-center | Open label, single-arm, multi-center | Observational retrospective data collection | Parallel, controlled, open label, three-arm, randomized, multi-center |
Main Objectives | Safety and efficacy | Comparison of efficacy and safety | Safety and efficacy | Safety | Safety Efficacy | Long-term scar assessment Quality of life | Safety and pharmacokinetics Efficacy | Effectiveness of the risk minimization activities | Safety Efficacy |
Wound Types | Deep partial/full thickness thermal burns | Deep partial /full thickness thermal burns | Deep partial /full thickness thermal burns | Deep partial /full thickness thermal burns | Deep partial/ full thickness thermal burns | Scar formation | Deep partial/full thickness thermal burns | Burns which were treated with NexoBrid in the market | Deep partial/ full thickness thermal burns |
Number of Patients | 154 | 20 | 140 | 30 | 182 | 89 | 36 | 160 | 175 |
Study Length | 1985-2000 | 2002-2005 | 2003-2004 | 2006-2007 | 2006-2009 | 2011 | 2009-2015 | 2017-2019 | 2015-2020 |
Location | Israel | Israel | International | United States | International | International | International | Europe | International |
• | Venous leg ulcers. VLUs develop as a result of vascular insufficiency, or the inability for the vasculature of the leg to return blood back toward the heart properly. Based on our comprehensive market research study on EscharEx that involved more than 200 healthcare professionals in the U.S. and Europe, which was updated in 2019, the VLU overall prevalence is approximately 3.3 million (1% of total U.S. population). Furthermore, the annual incidence of VLUs in the U.S. alone, is approximately 960,000 (accounting for 45% recurrence), of which approximately 690,000 undergo debridement in a given year. These ulcers usually form on the sides of the lower leg, above the ankle and below the calf, and are slow to heal and often recur if preventative steps are not taken. The risk of VLUs can increase as a result of a blood clot forming in the deep veins of the legs, obesity, smoking, lack of physical activity or work that requires many hours of standing. |
• | Diabetic foot ulcers. Diabetes can lead to a reduction in blood flow, which can cause patients to lose sensation in their feet and may prevent them from noticing injuries, sometimes leading to the development of DFUs, which are open sores or ulcers on the feet that may take several weeks to heal, if ever. Based on our comprehensive market research study conducted in 2015 on EscharEx that involved more than 200 healthcare professionals in the U.S. and Europe and, which was updated in 2019, there are estimated 31 million diabetics in 2019 (9.4% of the U.S. population). The annual incidence of DFUs in the United States alone, is approximately 990,000 (accounting for 45% recurrence), of which approximately 820,000 undergo debridement in a given year. |
• | Pressure ulcers. Pressure ulcers form as a result of pressure sores, or bed sores, which are injuries to the skin or the tissue beneath the skin. Constant pressure on an area of skin reduces blood supply to the area and over time can cause the skin to break down and form an open ulcer. These often occur in patients who are hospitalized or confined to a chair or bed, and usually form over bony areas, where there is little cushion between the bone and the skin, such as lower parts of the body. Annually, 2.5 million pressure ulcers are treated in the United States in acute care facilities alone. |
• | Surgical/traumatic wounds. Surgical wounds form as a result of various types of surgical procedures such as investigative or corrective, minor or major, open (traditional) or minimal access surgery, elective or emergency, and incisions (simple cuts) or excision (removal of tissue), among others. Traumatic wounds form as a result of cuts, lacerations or puncture wounds, which have caused damage to the skin and underlying tissue. Severe traumatic wounds may require surgical intervention to close the wound and stabilize the patient. Surgical/traumatic hard-to-heal wounds develop for various reasons, such as local surgical complications, suboptimal closure techniques, presence of foreign materials, exposed bones or tendons and infection. In the United States, millions receive post-surgical wound care annually. |
6 Hydrogel is not a true sham placebo as it is a common and widely used treatment for the debridement of chronic wounds.
• | Basal cell carcinomas - basal cell carcinoma (BCC) starts in the basal cell layer, which is the lower part of the epidermis. If not removed completely, basal cell carcinoma can come back (recur) in the same place on the skin. People who have had basal cell skin cancers are also more likely to get new ones in other places. BCCs are uncontrolled and abnormal growths that arise in the basal cells of the skin and the tumors primarily affect photoexposed areas, most commonly in the head, and infrequently appear on per genital and genitalia regions. The main cause of BCC is chronic ultraviolet (UV) exposure. BCC is the most common form of skin cancer, accounting for 75-80% of all skin cancers |
• | Squamous cell carcinomas - Squamous cell carcinomas (SCC) start in the flat cells in the upper (outer) part of the epidermis |
• | Actinic keratosis - Actinic keratosis (AK), also known as solar keratosis, is a pre-cancerous skin condition caused by too much exposure to the sun. People who have them usually develop more than one. A small percentage of AKs may turn into squamous cell skin cancer. |
• | Bowen disease - Bowen disease (squamous cell carcinoma in situ), is the earliest form of squamous cell skin cancer |
• | laboratory tests, animal studies and formulation studies all performed in accordance with the applicable E.U. GLP or GMP regulations; |
• | submission to the relevant authorities of a clinical trial application (“CTA”), which must be approved before human clinical trials may begin; |
• | performance of adequate and well‑controlled clinical trials to establish the safety and efficacy of the product for each proposed indication; |
• | submission to the relevant competent authorities of a marketing authorization application (“MAA”), which includes the data supporting preclinical and clinical safety and efficacy as well as detailed information on the manufacture and composition and control of the product development and proposed labeling as well as other information; |
• | inspection by the relevant national authorities of the manufacturing facility or facilities and quality systems (including those of third parties) at which the product is produced, to assess compliance with strictly enforced GMP; |
• | potential audits of the non‑clinical and clinical trial sites that generated the data in support of the MAA; and |
• | review and approval by the relevant competent authority of the MAA before any commercial marketing, sale or shipment of the product. |
• | Phase 1 (Most typical kind of study: Human Pharmacology); |
• | Phase 2 (Most typical kind of study: Therapeutic Exploratory); |
• | Phase 3 (Most typical kind of study: Therapeutic Confirmatory); and |
• | Phase 4 (Variety of Studies: Therapeutic Use). |
• | medicines that have been authorized for marketing in the EU with the results of PIP studies included in the product information are eligible for an extension of their supplementary protection certificate extension (if any is in effect at the time of approval) by six months. This is the case even when the studies’ results are negative; |
• | for orphan medicines, such as NexoBrid, the incentive is an additional two years of market exclusivity instead of one; |
• | scientific advice and protocol assistance at the EMA are free of charge for questions relating to the development of medicines for children; and |
• | medicines developed specifically for children that are already authorized, but are not protected by a patent or supplementary protection certificate, can apply for a pediatric use marketing authorization (“PUMA”). If a PUMA is granted, the product will benefit from 10 years of market protection as an incentive. |
• | Mutual recognition procedure. If an authorization has been granted by one-member state, or the Reference Member State, an application may be made for mutual recognition in one or more other member states, or the Concerned Member State(s). |
• | Decentralized procedure. The decentralized procedure may be used to obtain a marketing authorization in several European member states when the applicant does not yet have a marketing authorization in any country. |
• | National procedure. Applicants following the national procedure will be granted a marketing authorization that is valid only in a single member state. Furthermore, this marketing authorization is not based on recognition of another marketing authorization for the same product awarded by an assessment authority of another member state. If marketing authorization in only one-member state is preferred, an application can be filed with the national competent authority of a member state. The national procedure can also serve as the first phase of a mutual recognition procedure. |
• | completion of laboratory tests, animal studies and formulation studies in compliance with the FDA’s GLP and GMP regulations, as applicable; |
• | submission to the FDA of an investigational new drug application (“IND”), which must become effective before clinical trials may begin; |
• | approval by an independent institutional review board (“IRB”) at each clinical site before each trial may be initiated; |
• | performance of adequate and well‑controlled clinical trials in accordance with GCP to establish the safety and efficacy of the product for each indication; |
• | preparation and submission to the FDA of a BLA; |
• | satisfactory completion of an FDA advisory committee review, if applicable; |
• | satisfactory completion of one or more FDA inspections of the manufacturing facility or facilities at which the product, or components thereof, are produced to assess compliance with cGMP requirements, and to assure that the facilities, methods and controls are adequate to preserve the product’s safety, purity and potency, and of selected clinical investigation sites to assess compliance with GCP; and |
• | payment of user fees and FDA review and approval of the BLA to permit commercial marketing of the product for particular indications for use in the United States. |
Phase 1: | The investigational product is initially introduced into healthy human subjects or patients with the target disease or condition and tested for safety, dosage tolerance, absorption, metabolism, distribution, excretion and, if possible, to gain an early indication of its effectiveness and to determine optimal dosage. |
Phase 2: | The investigational product is administered to a limited patient population to identify possible adverse effects and safety risks, to preliminarily evaluate the efficacy of the product for specific targeted diseases and to determine dosage tolerance and optimal dosage. |
Phase 3: | The investigational product is administered to an expanded patient population, generally at geographically dispersed clinical trial sites, in well‑controlled clinical trials to generate enough data to statistically evaluate the efficacy and safety of the product for approval, to establish the overall risk‑benefit profile of the product, and to provide adequate information for the labeling of the product. |
• | increases the minimum level of Medicaid rebates payable by manufacturers of brand‑name drugs from 15.1% to 23.1%; |
• | requires collection of rebates for drugs paid by Medicaid managed care organizations; and |
• | imposes a non‑deductible annual fee on pharmaceutical manufacturers or importers who sell certain “branded prescription drugs” to specified federal government programs. |
• | the federal healthcare Anti‑Kickback Statute prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, order or recommendation of, any good or service for which payment may be made, in whole or in part, under a federal healthcare program such as Medicare and Medicaid; |
• | the federal False Claims Act imposes civil penalties, and provides for civil whistleblower or qui tam actions, against individuals or entities for knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government; |
• | HIPAA, imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters; |
• | HIPAA, as amended by HITECH and its implementing regulations, also imposes obligations, including mandatory contractual terms, on covered entities and their respective business associates with respect to safeguarding the privacy, security and transmission of individually identifiable health information; |
• | the federal false statements statute prohibits knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement in connection with the delivery of or payment for healthcare benefits, items or services; |
• | the federal physician payment transparency requirements under the Affordable Care Act require certain manufacturers of drugs, devices and medical supplies to report to Centers for Medicare & Medicaid Services information related to payments and other transfers of value to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain other healthcare professionals, and teaching hospitals and physician ownership and investment interests; |
• | analogous state and foreign laws and regulations, such as state anti‑kickback and false claims laws, may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non‑governmental third‑party payors, including private insurers; and |
• | similar healthcare laws and regulations in the E.U. and other jurisdictions, including reporting requirements detailing interactions with and payments to healthcare providers and laws governing the privacy and security of personal data, including the General Data Protection Regulation (“GDPR”), which imposes obligations and restrictions on the collection and use of personal data relating to individuals located in the E.U. and EEA (including with regard to health data). |
Years Ended December 31, | ||||||||
2020 | 2021 | |||||||
(in thousands) | ||||||||
condensed statements of operations data: | ||||||||
Revenues | $ | 21,763 | $ | 23,763 | ||||
Cost of revenues | 14,218 | 14,992 | ||||||
Gross profit | 7,545 | 8,771 | ||||||
Operating expenses: | ||||||||
Research and development | 7,698 | 10,256 | ||||||
Selling and marketing | 3,228 | 3,388 | ||||||
General and administrative | 5,459 | 6,348 | ||||||
Operating loss | (8,840 | ) | (11,221 | ) | ||||
Financial expenses, net | (436 | ) | (2,303 | ) | ||||
Loss from continuing operations | (9,276 | ) | (13,524 | ) | ||||
Profit from discontinued operation | 80 | - | ||||||
Tax expenses | - | (27 | ) | |||||
Net loss | $ | (9,196 | ) | $ | (13,551 | ) |
Years Ended December 31, | ||||||||
2020 | 2021 | |||||||
(in thousands) | ||||||||
Revenues from sale of products | $ | 7,445 | $ | 9,613 | ||||
Revenues from development services | 13,935 | 12,372 | ||||||
Revenues from license agreements | 383 | 1,778 | ||||||
21,763 | 23,763 |
Years Ended December 31, | ||||||||
2020 | 2021 | |||||||
(in thousands) | ||||||||
International (excluding U.S.) | $ | 3,733 | $ | 5,649 | ||||
U.S. | 18,030 | 18,069 | ||||||
21,763 | 23,718 |
Years Ended December 31, | ||||||||
2020 | 2021 | |||||||
(in thousands) | ||||||||
Cost of revenues from sales of products | $ | 3,151 | $ | 4,983 | ||||
Cost of revenues from development services | 11,067 | 9,907 | ||||||
Cost of revenues from license agreements | - | 102 | ||||||
14,218 | 14,992 |
Financial income, net | Years Ended December 31, | |||||||
2020 | 2021 | |||||||
(in thousands) | ||||||||
Financial income | $ | 843 | $ | 11 | ||||
Financial expenses | (1,279 | ) | (2,314 | ) | ||||
(436 | ) | (2,303 | ) |
Year Ended December 31, | ||||||||
2020 | 2021 | |||||||
Net cash provided by (used in): | ||||||||
Continuing operating activities | $ | (6,700 | ) | $ | (8,916 | ) | ||
Continuing investing activities | 17,385 | 3,548 | ||||||
Continuing financing activities | (629 | ) | (1,050 | ) | ||||
Discontinued operating activities | (195 | ) | - |
• | amortization of the cost of purchased a patent, rights to use a patent, and know-how, which are used for the development or advancement of the Industrial Enterprise, over an eight-year period, commencing on the year in which such rights were first exercised; |
• | under limited conditions, an election to file consolidated tax returns with related Israeli Industrial Companies controlled by it; and |
• | expenses related to a public offering are deductible in equal amounts over a three years period commencing on the year of the offering. |
Name | Age | Position | ||
Executive Officers | ||||
Sharon Malka | 50 | Chief Executive Officer | ||
Boaz Gur-Lavie | 48 | Chief Financial Officer | ||
Lior Rosenberg, M.D. | 76 | Chief Medical Technology Officer | ||
Ety Klinger Ph.D. | 60 | Chief Research and Development Officer | ||
Yaron Meyer | 43 | Executive Vice President, General Counsel and Corporate Secretary | ||
Directors | ||||
Stephen Wills | 65 | Executive Chairman of the Board of Directors | ||
Ofer Gonen | 49 | Director | ||
Assaf Segal | 50 | Director | ||
Vickie R. Driver, M.D(1)(3) | 68 | Director | ||
Nissim Mashiach(1)(2)(3)(4) | 61 | Director | ||
Sharon Kochan(1)(2)(3)(4) | 53 | Director | ||
Samuel Moed (2)(3) | 59 | Director | ||
David Fox(3) | 64 | Director |
(1) | Member of our audit committee. |
(2) | Member of our compensation committee. |
(3) | Independent director under the listing rules of the Nasdaq Stock Market. |
(4) | External director under the Companies Law. |
Name and Position | Salary & Social Benefits(1) | Bonus | Share‑Based Payment(2) | Other Compensation(3) | Total | |||||||||||||||
( thousand U.S. dollars)(4) | ||||||||||||||||||||
Sharon Malka, Chief Executive Officer | 427 | 65 | 227 | 5 | 724 | |||||||||||||||
Lior Rosenberg, M.D., Chief Medical Technology Officer | 334 | 39 | 81 | 25 | 479 | |||||||||||||||
Ety Klinger, Chief Research & Development Officer | 292 | 32 | 73 | 20 | 417 | |||||||||||||||
Boaz Gur-Lavie, Chief Financial Officer | 256 | 29 | 76 | 24 | 385 | |||||||||||||||
Yaron Meyer, Executive Vice President, General Counsel & Corporate Secretary | 208 | (5) | 27 | 61 | 5 | 301 |
(1) | Represents the officer’s gross salary plus payment of mandatory social benefits made by the company on behalf of such officer. Such benefits may include, to the extent applicable to the executive, payments, contributions and/or allocations for savings funds (e.g., Managers’ Life Insurance Policy), education funds (referred to in Hebrew as “keren hishtalmut”), pension, severance, risk insurances (e.g., life or work disability insurance) and payments for social security. |
(2) | Represents the equity‑based compensation expenses recorded in the company’s consolidated financial statements for the year ended December 31, 2021 based on the options’ grant date fair value in accordance with accounting guidance for equity‑based compensation. |
(3) | Represents the other benefits to such officer, which includes either or both of (i) car expenses, including lease costs, gas and maintenance, provided to the officers, and (ii) vacation benefits. |
(4) | Converted (i) from NIS into U.S. dollars at the rate of NIS3.229 = U.S$1, based on the average representative rate of exchange between the NIS and the U.S. dollar in the year ended December 31, 2021 as reported by the Bank of Israel in the year ended December 31, 2021. |
(5) | Represents only 8 months’ salary due to paternity leave. |
Name | Number of Options | Number of RSUs | Grant Date | Exercise Price | Vested Options/RSU's as of March 15, 2022 | Expiration Date | ||||||||||||
Sharon Malka, Chief Executive Officer | 121,600 | 12/24/2013 | $ | 12.89 | 121,600 | 12/23/2023 | ||||||||||||
50,000 | 12/23/2015 | $ | 9.58 | 50,000 | 12/22/2025 | |||||||||||||
135,000 | 12/31/2018 | $ | 5.15 | 101,250 | 12/30/2028 | |||||||||||||
45,000 | 12/31/2018 | 33,750 | ||||||||||||||||
40,000 | 05/02/2019 | $ | 4.92 | 30,000 | 5/1/2029 | |||||||||||||
20,000 | 05/02/2019 | 15,000 | ||||||||||||||||
81,170 | 06/29/2020 | $ | 1.75 | 20,292 | 6/28/2030 | |||||||||||||
45,692 | 06/15/2021 | $ | 5.36 | - | 6/14/2031 | |||||||||||||
7,615 | 06/15/2021 | - | 6/14/3031 | |||||||||||||||
Lior Rosenberg, Chief Medical Technology Officer | 76,000 | 12/24/2013 | $ | 12.89 | 76,000 | 12/23/2023 | ||||||||||||
25,000 | 12/23/2015 | $ | 9.58 | 25,000 | 12/22/2025 | |||||||||||||
20,000 | 12/31/2018 | $ | 5.15 | 15,000 | 12/30/2028 | |||||||||||||
6,667 | 12/31/2018 | 5,000 | ||||||||||||||||
43,600 | 04/23/2020 | $ | 1.75 | 10,900 | 4/22/2030 | |||||||||||||
27,953 | 03/04/2021 | $ | 5.36 | - | 3/3/2031 | |||||||||||||
4,659 | 03/04/2021 | 1,165 | 3/3/2031 |
• | such majority includes at least a majority of the shares held by all shareholders who are not controlling shareholders and do not have a personal interest in the election of the external director (other than a personal interest not deriving from a relationship with a controlling shareholder) that are voted at the meeting, excluding abstentions, to which we refer as a disinterested majority; or |
• | the total number of shares voted by non‑controlling shareholders and by shareholders who do not have a personal interest in the election of the external director against the election of the external director does not exceed 2% of the aggregate voting rights in the company. |
(i) | his or her service for each such additional term is recommended by one or more shareholders holding at least 1% of the company’s voting rights and is approved at a shareholders meeting by a disinterested majority, where the total number of shares held by non‑controlling, disinterested shareholders voting for such reelection exceeds 2% of the aggregate voting rights in the company, subject to additional restrictions set forth in the Israeli Companies Law with respect to affiliations of external director nominee; or |
(ii) | his or her service for each such additional term is recommended by the board of directors and is approved at a meeting of shareholders by the same majority required for the initial election of an external director (as described above). |
• | an employment relationship; |
• | a business or professional relationship even if not maintained on a regular basis (excluding insignificant relationships); |
• | control; and |
• | service as an office holder, excluding service as a director in a private company prior to the initial public offering of its shares if such director was appointed as a director of the private company in order to serve as an external director following the initial public offering. |
• | he or she meets the qualifications for being appointed as an external director, except for the requirement (i) that the director be an Israeli resident (which does not apply to companies such as ours whose securities have been offered outside of Israel or are listed for trading outside of Israel) and (ii) for accounting and financial expertise or professional qualifications; and |
• | he or she has not served as a director of the company for a period exceeding nine consecutive years. For this purpose, a break of less than two years in the service shall not be deemed to interrupt the continuation of the service. |
• | oversight of our independent registered public accounting firm and recommending the engagement, compensation or termination of engagement of our independent registered public accounting firm to the board of directors in accordance with Israeli law; |
• | recommending the engagement or termination of the person filling the office of our internal auditor; and |
• | recommending the terms of audit and non‑audit services provided by the independent registered public accounting firm for pre‑approval by our board of directors. |
• | determining whether there are deficiencies in the business management practices of our company, including in consultation with our internal auditor or the independent auditor, and making recommendations to the board of directors to improve such practices; |
• | determining whether to approve certain related party transactions (including transactions in which an office holder has a personal interest and whether such transaction is extraordinary or material under the Israeli Companies Law) (see “—Approval of Related Party Transactions Under Israeli Law”); |
• | establishing the approval process (including, potentially, the approval of the audit committee and conducting a competitive procedure supervised by the audit committee) for certain transactions with a controlling shareholder or in which a controlling shareholder has a personal interest; |
• | where the board of directors approves the working plan of the internal auditor, examining such working plan before its submission to the board of directors and proposing amendments thereto; |
• | examining our internal audit controls and internal auditor’s performance, including whether the internal auditor has sufficient resources and tools to fulfill his responsibilities; |
• | examining the scope of our auditor’s work and compensation and submitting a recommendation with respect thereto to our board of directors or shareholders, depending on which of them is considering the appointment of our auditor; and |
• | establishing procedures for the handling of employees’ complaints as to the management of our business and the protection to be provided to such employees. |
• | the knowledge, skills, expertise and accomplishments of the relevant office holder; |
• | the office holder’s roles and responsibilities and prior compensation agreements with him or her; |
• | the relationship between the terms offered and the average compensation of the other employees of the company, including those employed through manpower companies; |
• | the impact of disparities in salary upon work relationships in the company; |
• | the possibility of reducing variable compensation at the discretion of the board of directors; |
• | the possibility of setting a limit on the exercise value of non-cash variable equity-based compensation; and |
• | as to severance compensation, the period of service of the office holder, the terms of his or her compensation during such service period, the company’s performance during that period of service, the person’s contribution towards the company’s achievement of its goals and the maximization of its profits, and the circumstances under which the person is leaving the company. |
• | the link between variable compensation and long-term performance, which variable compensation shall, other than office holder who report to the CEO, be primarily based on measurable criteria; |
• | the relationship between variable and fixed compensation, and the ceiling for the value of variable compensation; |
• | the conditions under which an office holder would be required to repay compensation paid to him or her if it was later shown that the data upon which such compensation was based was inaccurate and was required to be restated in the company’s financial statements; |
• | the minimum holding or vesting period for variable, equity-based compensation; and |
• | maximum limits for severance compensation. |
• | recommending whether a compensation policy should continue in effect, if the then-current policy has a term of greater than three years (approval of either a new compensation policy or the continuation of an existing compensation policy must in any case occur every three years, other than following a company’s initial public offering, in which case such approval must occur within 5 years of the initial public offering); |
• | recommending to the board of directors periodic updates to the compensation policy and assessing implementation of the compensation policy; |
• | approving compensation terms of executive officers, directors and employees that require approval of the compensation committee; |
• | determining whether the compensation terms of a chief executive officer nominee, which were determined pursuant to the compensation policy, will be exempt from approval of the shareholders because such approval would harm the ability to engage with such nominee; and |
• | determining, subject to the approval of the board and under special circumstances, whether to override a determination of the company’s shareholders regarding certain compensation related issues. |
• | the responsibilities set forth in the compensation policy; |
• | reviewing and approving the granting of options and other incentive awards to the extent such authority is delegated by our board of directors; and |
• | reviewing, evaluating and making recommendations regarding the compensation and benefits for our non-employee directors. |
• | a person (or a relative of a person) who holds 5% or more of the company’s outstanding shares or voting rights; |
• | a person (or a relative of a person) who has the power to appoint a director or the general manager of the company (i.e., the chief executive officer); |
• | an office holder (including a director) of the company (or a relative thereof); or |
• | a member of the company’s independent accounting firm, or anyone on its behalf. |
• | information on the advisability of a given action brought for his or her approval or performed by virtue of his or her position; and |
• | all other important information pertaining to any such action. |
• | refrain from any conflict of interest between the performance of his or her duties to the company and his or her other duties or personal affairs; |
• | refrain from any activity that is competitive with the business of the company; |
• | refrain from exploiting any business opportunity of the company to receive a personal gain for himself or herself or others; and |
• | disclose to the company any information or documents relating to the company’s affairs which the office holder received as a result of his or her position as an office holder. |
• | a transaction other than in the ordinary course of business; |
• | a transaction that is not on market terms; or |
• | a transaction that may have a material impact on a company’s profitability, assets or liabilities. |
• | at least a majority of the shares held by all shareholders who do not have a personal interest in the transaction and who are present and voting at the meeting approves the transaction, excluding abstentions; or |
• | the shares voted against the transaction by shareholders who have no personal interest in the transaction and who are present and voting at the meeting do not exceed 2% of the voting rights in the company. |
• | an amendment to the company’s articles of association; |
• | an increase of the company’s authorized share capital; |
• | a merger; or |
• | the approval of related party transactions and acts of office holders that require shareholder approval. |
• | financial liability imposed on him or her in favor of another person pursuant to a judgment, including a settlement or arbitrator’s award approved by a court. However, if an undertaking to indemnify an office holder with respect to such liability is provided in advance, then such an undertaking must be limited to events which, in the opinion of the board of directors, can be foreseen based on the company’s activities when the undertaking to indemnify is given, and to an amount or according to criteria determined by the board of directors as reasonable under the circumstances, and such undertaking shall detail the abovementioned foreseen events and amount or criteria; |
• | reasonable litigation expenses, including attorneys’ fees, incurred by the office holder (1) as a result of an investigation or proceeding instituted against him or her by an authority authorized to conduct such investigation or proceeding, provided that (i) no indictment was filed against such office holder as a result of such investigation or proceeding, and (ii) no financial liability was imposed upon him or her as a substitute for the criminal proceeding as a result of such investigation or proceeding or, if such financial liability was imposed, it was imposed with respect to an offense that does not require proof of criminal intent; and (2) in connection with a monetary sanction; and |
• | reasonable litigation expenses, including attorneys’ fees, incurred by the office holder or imposed by a court in proceedings instituted against him or her by the company, on its behalf, or by a third party, or in connection with criminal proceedings in which the office holder was acquitted, or as a result of a conviction for an offense that does not require proof of criminal intent. |
• | a breach of the duty of loyalty to the company, provided that the office holder acted in good faith and had a reasonable basis to believe that the act would not harm the company; |
• | a breach of duty of care to the company or to a third party, to the extent such a breach arises out of the negligent conduct of the office holder; and |
• | a financial liability imposed on the office holder in favor of a third party. |
• | a breach of the duty of loyalty, except for indemnification and insurance for a breach of the duty of loyalty to the company to the extent that the office holder acted in good faith and had a reasonable basis to believe that the act would not harm the company; |
• | a breach of duty of care committed intentionally or recklessly, excluding a breach arising out of the negligent conduct of the office holder; |
• | an act or omission committed with intent to derive illegal personal benefit; or |
• | a fine or forfeit levied against the office holder. |
D. | Employees |
E. | Share Ownership |
A. | Major Shareholders |
• | each person or entity known by us to own beneficially more than 5% of our outstanding shares; |
• | each of our directors and executive officers individually; and |
• | all of our executive officers and directors as a group. |
Name of Beneficial Owner | Number of Shares Beneficially Held | Percentage of Class | ||||||
Directors and Executive Officers | ||||||||
Stephen T. Wills | * | * | ||||||
Ofer Gonen | * | * | ||||||
Assaf Segal | * | * | ||||||
Vickie R. Driver | * | * | ||||||
Nissim Mashiach | * | * | ||||||
Sharon Kochan | * | * | ||||||
David Fox | * | * | ||||||
Samuel Moed | * | * | ||||||
Sharon Malka | 385,219 | 1.2 | % | |||||
Boaz Gur-Lavie | * | * | ||||||
Lior Rosenberg(1) | 1,983,637 | 6.1 | % | |||||
Ety Klinger | * | * | ||||||
Yaron Meyer | * | * | ||||||
All executive officers and directors as a group (13 persons)( 2) | 3,085,968 | 9.2 | % | |||||
Principal Shareholders (who are not Directors or Executive Officers) | ||||||||
Clal Biotechnology Industries Ltd.(3) | 10,980,805 | 33.8 | % |
* | Less than 1%. |
(1) | Shares beneficially owned consist of: (i) 146,532 ordinary shares held directly by Prof. Rosenberg; (ii) 126,900 ordinary shares issuable upon exercise of outstanding options held directly by Prof. Rosenberg that are currently exercisable or exercisable within 60 days of March 15, 2022; and (iii) 1,710,205 ordinary shares held by L.R. Research and Development Ltd. in trust for the benefit of Prof. Rosenberg. Prof. Rosenberg is the sole shareholder of L.R. Research and Development Ltd. |
(2) | Shares beneficially owned consist of 1,944,856 ordinary shares held directly or indirectly by such executive officers and directors and 1,141,113 ordinary shares issuable upon exercise of outstanding options and RSU’s that are currently exercisable or exercisable within 60 days of March 15, 2022. |
(3) | Shares beneficially owned consist of: (i) 8,208,973 ordinary shares held by Clal Life Sciences, LP, whose managing partner is Clal Application Center Ltd., a wholly-owned subsidiary of CBI; (ii) 2,682,665 ordinary shares held by CBI and (iii) 89,167 ordinary shares issuable upon exercise of outstanding options held directly by CBI that are currently exercisable or exercisable within 60 days of March 15, 2022. As reported on a Schedule 13G/A filed on February 14, 2019 by Access Industries Holdings LLC, Access Industries Holdings LLC indirectly owns 100% of the outstanding shares of Clal Industries Ltd., which owns 47.17% of the outstanding shares of CBI. The address of Clal Industries Ltd. is the Triangular Tower, 3 Azrieli Center, Tel Aviv 67023, Israel and the address of Access Industries Holdings LLC is c/o Access Industries Inc., 40 West 57th Street, New York, New York 10019, United States. |
B. | Related Party Transactions |
C. | Interests of Experts and Counsel |
Item 8. | FINANCIAL INFORMATION |
A. | Consolidated Statements and Other Financial Information |
B. | Significant Changes |
Item 9. | THE OFFER AND LISTING |
A. | Listing Details |
B. | Plan of Distribution |
C. | Markets |
D. | Selling Shareholders |
E. | Dilution |
F. | Expenses of the Issue |
Item 10. | ADDITIONAL INFORMATION |
A. | Share Capital |
B. | Articles of Association |
C. | Material Contracts |
D. | Exchange Controls |
E. | Taxation |
• | banks, financial institutions or insurance companies; |
• | real estate investment trusts, regulated investment companies or grantor trusts; |
• | dealers or traders in securities, commodities or currencies; |
• | tax‑exempt entities or organizations, including an “individual retirement account” or “Roth IRA” as defined in Section 408 or 408A of the Code, respectively; |
• | certain former citizens or long‑term residents of the United States; |
• | persons that received our shares as compensation for the performance of services; |
• | persons that holds our shares as part of a “hedging,” “integrated” or “conversion” transaction or as a position in a “straddle” for U.S. federal income tax purposes; |
• | partnerships (including entities classified as partnerships for U.S. federal income tax purposes) or other pass‑through entities, or holders that will hold our shares through such an entity; |
• | S corporations; |
• | holders that acquired ordinary shares as a result of holding or owning our preferred shares; |
• | U.S. Holders (as defined below) whose “functional currency” is not the U.S. dollar; |
• | persons that are residents of ordinarily resident in or have a permanent establishment in a jurisdiction outside the United States; or |
• | holders that own directly, indirectly or through attribution 10.0% or more of the voting power or value of our shares. |
• | an individual who is a citizen or individual resident of the United States; |
• | a corporation, or other entity taxable as a corporation for U.S. federal income tax purposes, created or organized in or under the laws of the United States, any state thereof, or the District of Columbia; |
• | an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or |
• | a trust that (1) is subject to the primary supervision of a U.S. Court and one or more U.S. persons that have the authority to control all substantial decisions of the trust or (2) has a valid election in effect under applicable Treasury regulations to be treated as a U.S. person. |
• | such gain is effectively connected with your conduct of a trade or business in the United States (or, if required by an applicable income tax treaty, the gain is attributable to a permanent establishment or fixed base that such holder maintains in the United States); or |
• | you are an individual and have been present in the United States for 183 days or more in the taxable year of such sale or exchange and certain other conditions are met. |
• | at least 75% of its gross income is “passive income”; or |
• | at least 50% of the average quarterly value of its total gross assets (which may be determined in part by the market value of our ordinary shares, which is subject to change) is attributable to assets that produce “passive income” or are held for the production of passive income. |
Appreciation (Devaluation) of | ||||||||
Period | Shekel against the U.S. dollar (%) | Euro against the U.S. dollar (%) | ||||||
2019 | 7.8 | (2.0 | ) | |||||
2020 | 7.0 | 8.0 | ||||||
2021 | 3.3 | (6.9 | ) |
2020 | 2021 | |||||||
Audit Fees | $ | 170,000 | $ | 245,000 | ||||
Audit‑Related Fees | 33,500 | — | ||||||
Tax Fees | — | 15,000 | ||||||
Total | $ | 203,500 | $ | 260,000 |
• | Quorum. As permitted under the Israeli Companies Law pursuant to our articles of association, the quorum required for an ordinary meeting of shareholders will consist of at least two shareholders present in person, by proxy or by other voting instrument in accordance with the Israeli Companies Law, who hold at least 25% of the voting power of our shares (and in an adjourned meeting, with some exceptions, at least two shareholders), instead of 33 1/3% of the issued share capital required under the Nasdaq Stock Market listing rules. |
• | Nomination of directors. With the exception of external directors and directors elected by our board of directors due to vacancy, our directors are elected by an annual meeting of our shareholders to hold office until the next annual meeting following one year from his or her election. The nominations for directors, which are presented to our shareholders by our board of directors, are generally made by the entire board of directors itself, in accordance with the provisions of our articles of association and the Israeli Companies Law. Nominations need not be made by a nominating committee of our board of directors consisting solely of independent directors or otherwise, as required under the Nasdaq Stock Market listing rules. |
• | Majority of independent directors. Under the Israeli Companies Law, we are only required to appoint at least two external directors, within the meaning of the Israeli Companies Law, to our board of directors. Currently, four of our directors (of whom two are external directors, within the meaning of the Israeli Companies Law) qualify as independent directors under the rules of the U.S. federal securities laws and the Nasdaq Stock Market listing rules. If at any time we no longer have a controlling shareholder, we will no longer be required to have external directors, provided that we comply with the majority Board independence requirements and the audit and compensation committee composition requirements of the Nasdaq Stock Market. |
• | Shareholder approval. We do not intend to follow Nasdaq Stock Market rules which require shareholder approval in order to enter into any transaction, other than a public offering, involving the sale, issuance or potential issuance by the Company of ordinary shares (or securities convertible into or exercisable for ordinary shares) equal to 20% or more of the outstanding share capital of the Company or 20% or more of the voting power outstanding before the issuance for less than the greater of book or market value of the ordinary shares. We will follow Israeli law with respect to any requirement to obtain shareholder approval in connection with any private placements of equity securities. |
Exhibit No. | Description |
101.INS | Inline XBRL Instance Document |
101.SCH | Inline XBRL Taxonomy Extension Schema Document |
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF | Inline XBRL Taxonomy Definition Linkbase Document |
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document |
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
104 | Cover Page Interactive Data File (the cover page iXBRL tags are embedded within the Inline XBRL document) |
† | Portions of this exhibit have been omitted pursuant to Instruction 4(a) to Exhibits to Form 20-F because they are both (i) not material and (ii) the type that the Registrant treats as private or confidential. |
(1) | Previously filed with the SEC on March 3, 2014 pursuant to the Registrant’s registration statement on Form F‑1 (File No. 333‑193856) and incorporated by reference herein. |
(2) | Previously furnished to the SEC on May 5, 2021 as Appendix B to the Registrant’s proxy statement for its 2021 annual general meeting of shareholders held on June 15, 2021, attached as Exhibit 99.1 to the Registrant’s report of foreign private issuer on Form 6‑K (File No. 001‑36349) and incorporated by reference herein. |
(3) | Previously filed with the SEC on February 10, 2014 pursuant to the Registrant’s registration statement on Form F‑1 (File No. 333‑193856) and incorporated by reference herein. |
(4) | Previously filed with the SEC on February 25, 2020 pursuant to the Registrant’s annual report on Form 20-F for the year ended December 31, 2019 (File No. 001-36349) and incorporated by reference herein. |
(5) | Previously furnished to the SEC on August 14, 2019 as Appendix A to the Registrant’s proxy statement for its extraordinary general meeting of shareholders held on September 23, 2019, attached as Exhibit 99.1 to the Registrant’s report of foreign private issuer on Form 6‑K (File No. 001‑36349) and incorporated by reference herein. |
(6) | Previously filed with the SEC on February 25, 2021 pursuant to the Registrant’s annual report on Form 20-F for the year ended December 31, 2020 (File No. 001-36349) and incorporated by reference herein. |
(7) | Previously filed with the SEC on January 25, 2016 as Exhibit 4.14 to the Registrant’s annual report on Form 20‑F for the year ended December 31, 2015 (File No. 001‑36349) and incorporated by reference herein. |
(8) | Previously filed with the SEC on February 21, 2017 as Exhibit 4.15 to the Registrant’s annual report on Form 20‑F for the year ended December 31, 2016 (File No. 001‑36349) and incorporated by reference herein. |
(9) | Previously filed with the SEC on March 19, 2018 as Exhibit 4.16 to the Registrant’s annual report on Form 20‑F for the year ended December 31, 2017 (File No. 001‑36349) and incorporated by reference herein. |
(10) | Previously filed with the SEC on March 25, 2019 as Exhibit 4.17 to the Registrant’s annual report on Form 20‑F for the year ended December 31, 2018 (File No. 001‑36349) and incorporated by reference herein. |
(11) | Previously filed with the SEC on March 19, 2018 as Exhibit 4.17 to the Registrant’s annual report on Form 20‑F for the year ended December 31, 2017 (File No. 001‑36349) and incorporated by reference herein. |
(12) | Previously filed with the SEC on March 25, 2019 as Exhibit 4.20 to the Registrant’s annual report on Form 20‑F for the year ended December 31, 2018 (File No. 001‑36349) and incorporated by reference herein. |
(13) | Previously filed with the SEC on March 25, 2019 as Exhibit 4.21 to the Registrant’s annual report on Form 20‑F for the year ended December 31, 2018 (File No. 001‑36349) and incorporated by reference herein. |
(14) | Previously filed with the SEC by Vericel Corporation on August 6, 2019 as Exhibit 10.9 to its quarterly report on Form 10-Q for the quarter ended June 30, 2019 (File No. 001‑35280) and incorporated by reference herein. |
(15) | Previously filed with the SEC by Vericel Corporation on August 6, 2019 as Exhibit 10.10 to its quarterly report on Form 10-Q for the quarter ended June 30, 2019 (File No. 001‑35280) and incorporated by reference herein |
MediWound Ltd. | ||
Date: March 17, 2022 | By: /s/ Boaz Gur-Lavie | |
Boaz Gur-Lavie | ||
Chief Financial Officer |
Page | |
F-2 – F-5 | |
(Firm Name: KPMG (Somekh Chaikin) / PCAOB ID No. 1057) | |
(Firm Name: KOST FORER GABBAY & KASIERER / PCAOB ID No. 1281) | |
F-6 | |
F -7 | |
F-8 | |
F-9 - F-10 | |
F-11 - F-49 |
Kost Forer Gabbay & Kasierer 144 Menachem Begin Rd. Tel-Aviv 6492102, Israel | Tel: +972-3-6232525 Fax: +972-3-5622555 ey.com |
Israel Innovation Authority (IIA) grant liability | ||
Description of the matter | As described in Notes 3 and 17b to the consolidated financial statements, the Company’s research and development efforts have been financed in part through grants from the Israeli Innovation Authority (“IIA”). Grants received from the IIA are recognized as a liability if future economic benefits are expected from the research and development activity that will result in royalty-bearing sales. The Company undertook to pay royalties of 3% on the revenues derived from sales of products or services developed in whole or in part using IIA grants, up to the amount of total grants received, plus LIBOR interest. The liability to the IIA is measured at amortized cost using the effective interest method and amounted as of December 31, 2020 to $7,529 thousands. Auditing the Company's IIA liability involved a high degree of subjectivity as it is based on assumptions about future revenue forecasts, such as long-term demand for the Company’s products and licenses and revenue growth rates. These significant assumptions are forward-looking and could be affected by future economic and market conditions. |
How we addressed the matter in our audit | Our substantive audit procedures included, among others, evaluating the significant assumptions and operating data used by management. For example, we compared the significant assumptions and operating data used by management to historical trends, we performed look-back analyses by comparing the Company's historical financial forecasted revenues with the actual results and we agreed future revenues to approved budgets. In addition, we considered the phases of development of the Company's products and the Company’s ability of obtaining regulatory approvals. We also tested the completeness and accuracy of the relevant data used in management's calculation, tested the mathematical accuracy of management’s calculations and performed sensitivity analyses over significant assumptions used by management related to revenue growth rates. |
/s/ KOST FORER GABBAY & KASIERER | |
Tel-Aviv, Israel | KOST FORER GABBAY & KASIERER |
February 25, 2021 | A Member of Ernst & Young Global |
Consolidated Statements of Financial Positions
U.S. dollars in thousands
As of December 31 | |||||||||||
Note | 2021 | 2020 | |||||||||
Cash and cash equivalents | 4 | 11,046 | 17,376 | ||||||||
Restricted deposits | 5 | 0 | 184 | ||||||||
Short-term bank deposits | 5 | 0 | 4,024 | ||||||||
Trade receivables | 6 | 1,779 | 2,767 | ||||||||
Inventories | 7 | 1,200 | 1,380 | ||||||||
Other receivables | 8, 25 | 927 | 462 | ||||||||
Total current assets | 14,952 | 26,193 | |||||||||
Other receivables | 9 | 469 | 0 | ||||||||
Property, plant and equipment, net | 10 | 2,478 | 2,630 | ||||||||
Right-of-use assets, net | 11 | 1,548 | 1,884 | ||||||||
Intangible assets, net | 12 | 297 | 363 | ||||||||
Total non-current assets | 4,792 | 4,877 | |||||||||
Total assets | 19,744 | 31,070 | |||||||||
Current maturities of long-term liabilities | 2,408 | 2,417 | |||||||||
Trade payables and accrued expenses | 4,693 | 2,992 | |||||||||
Other payables | 13, 25 | 3,620 | 2,857 | ||||||||
Total current liabilities | 10,721 | 8,266 | |||||||||
Deferred revenues | 119 | 1,234 | |||||||||
Liabilities in respect of IIA grants | 14, 17b | 7,885 | 7,267 | ||||||||
Liabilities in respect of purchase of shares | 17c | 3,922 | 4,998 | ||||||||
Lease liabilities | 11 | 1,391 | 1,741 | ||||||||
Severance pay liability, net | 16 | 288 | 292 | ||||||||
Total non-current liabilities | 13,605 | 15,532 | |||||||||
Total liabilities | 24,326 | 23,798 | |||||||||
Shareholders' equity: | 19 | ||||||||||
Ordinary shares of NIS 0.01 par value: | |||||||||||
Authorized: 50,000,000 shares as of December 31, 2021 and December 31, 2020; Issued and Outstanding 27,272,818 shares as of December 31, 2021 and 27,236,752 shares as of December 31, 2020 | 75 | 75 | |||||||||
Share premium | 143,869 | 142,193 | |||||||||
Foreign currency translation reserve | (19 | ) | (40 | ) | |||||||
Accumulated deficit | (148,507 | ) | (134,956 | ) | |||||||
Total equity (deficit) | (4,582 | ) | 7,272 | ||||||||
Total liabilities and equity | 19,744 | 31,070 | |||||||||
Consolidated Statements of Profit or Loss and Other Comprehensive Income or Loss
U.S. dollars in thousands (except of share and per share data)
Year Ended December 31 | |||||||||||||||
Note | 2021 | 2020 | 2019 | ||||||||||||
Revenues from sale of products | 9,613 | 7,445 | 3,393 | ||||||||||||
Revenues from development services | 12,372 | 13,935 | 10,678 | ||||||||||||
Revenues from license agreements | 1,778 | 383 | 17,718 | ||||||||||||
Total revenues | 23a | 23,763 | 21,763 | 31,789 | |||||||||||
Cost of revenues | 23b | 14,992 | 14,218 | 11,849 | |||||||||||
Gross profit | 8,771 | 7,545 | 19,940 | ||||||||||||
Research and development, net of participations | 23c | 10,256 | 7,698 | 4,969 | |||||||||||
Selling and marketing | 23d | 3,388 | 3,228 | 4,064 | |||||||||||
General and administrative | 23e | 6,348 | 5,459 | 5,242 | |||||||||||
Other expenses | 23f | 0 | 0 | 1,172 | |||||||||||
Total operating expenses | 19,992 | 16,385 | 15,447 | ||||||||||||
Operating profit (loss) | (11,221 | ) | (8,840 | ) | 4,493 | ||||||||||
Financial income | 23g | 11 | 843 | 556 | |||||||||||
Financial expense | 23g | (2,314 | ) | (1,279 | ) | (2,983 | ) | ||||||||
Financing expenses, net | (2,303 | ) | (436 | ) | (2,427 | ) | |||||||||
Profit (loss) before taxes on income | (13,524 | ) | (9,276 | ) | 2,066 | ||||||||||
Taxes on income | (27 | ) | 0 | 0 | |||||||||||
Profit (loss) from continuing operations | (13,551 | ) | (9,276 | ) | 2,066 | ||||||||||
Profit from discontinued operations | 17c,22 | 0 | 80 | 2,889 | |||||||||||
Net profit (loss) for the year | (13,551 | ) | (9,196 | ) | 4,955 | ||||||||||
Other comprehensive income (loss): | |||||||||||||||
Foreign currency translation adjustments | 21 | (23 | ) | 8 | |||||||||||
Total comprehensive income (loss) | (13,530 | ) | (9,219 | ) | 4,963 | ||||||||||
Earning (loss) per share data | 24 | ||||||||||||||
Basic and diluted net profit (loss) per share from continuing operations | (0.50 | ) | (0.34 | ) | 0.08 | ||||||||||
Basic and diluted net profit per share from discontinued operations | 0 | 0 | 0.10 | ||||||||||||
Total Basic and diluted net profit (loss) per share - USD | (0.50 | ) | (0.34 | ) | 0.18 | ||||||||||
Number of shares used in calculating basic and diluted profit (loss) per share | 27,244,475 | 27,209,878 | 27,178,839 |
Consolidated Statements of Changes in Shareholders’ Equity (Deficit)
U.S. dollars in thousands
| Share capital | Share premium | Foreign currency translation reserve | Accumulated deficit | Total equity (deficit) | |||||||||||||||||
| ||||||||||||||||||||||
Balance as of January 1, 2021 | 75 | 142,193 | (40 | ) | (134,956 | ) | 7,272 | |||||||||||||||
| ||||||||||||||||||||||
Net loss | 0 | 0 | 0 | (13,551 | ) | (13,551 | ) | |||||||||||||||
Other comprehensive income | 0 | 0 | 21 | 0 | 21 | |||||||||||||||||
Total comprehensive loss | 0 | 0 | 21 | (13,551 | ) | (13,530 | ) | |||||||||||||||
Exercise of options | (* | ) | 3 | 0 | 0 | 3 | ||||||||||||||||
Share-based compensation | 0 | 1,673 | 0 | 0 | 1,673 | |||||||||||||||||
| ||||||||||||||||||||||
Balance as of December 31, 2021 | 75 | 143,869 | (19 | ) | (148,507 | ) | (4,582 | ) | ||||||||||||||
| ||||||||||||||||||||||
Balance as of January 1, 2020 | 75 | 140,871 | (17 | ) | (125,760 | ) | 15,169 | |||||||||||||||
| ||||||||||||||||||||||
Net loss | 0 | 0 | 0 | (9,196 | ) | (9,196 | ) | |||||||||||||||
Other comprehensive loss | 0 | 0 | (23 | ) | 0 | (23 | ) | |||||||||||||||
Total comprehensive loss | 0 | 0 | (23 | ) | (9,196 | ) | (9,219 | ) | ||||||||||||||
Exercise of options | (* | ) | (* | ) | 0 | 0 | (* | ) | ||||||||||||||
Share-based compensation | 0 | 1,322 | 0 | 0 | 1,322 | |||||||||||||||||
Balance as of December 31, 2020 | 75 | 142,193 | (40 | ) | (134,956 | ) | 7,272 | |||||||||||||||
| ||||||||||||||||||||||
Balance as of January 1, 2019 | 75 | 139,637 | (25 | ) | (130,715 | ) | 8,972 | |||||||||||||||
| ||||||||||||||||||||||
Net profit | 0 | 0 | 0 | 4,955 | 4,955 | |||||||||||||||||
Other comprehensive income | 0 | 0 | 8 | 0 | 8 | |||||||||||||||||
Total comprehensive income | 0 | 0 | 8 | 4,955 | 4,963 | |||||||||||||||||
Exercise of options | (* | ) | (* | ) | 0 | 0 | (* | ) | ||||||||||||||
Share-based compensation | 0 | 1,234 | 0 | 0 | 1,234 | |||||||||||||||||
Balance as of December 31, 2019 | 75 | 140,871 | (17 | ) | (125,760 | ) | 15,169 |
* Represents an amount lower than $1.
The accompanying notes are an integral part of the consolidated financial statements.
Consolidated Statements of Cash Flows
U.S. dollars in thousands
| Year ended December 31, | |||||||||||
| 2021 | 2020 | 2019 | |||||||||
| ||||||||||||
Cash flows from operating activities: | ||||||||||||
Profit (loss) for the year | (13,551 | ) | (9,196 | ) | 4,955 | |||||||
| ||||||||||||
Adjustments to reconcile net profit (loss) to net cash provided by (used in) continuing operating activities: | ||||||||||||
| ||||||||||||
Adjustments to profit and loss items: | ||||||||||||
Profit from discontinued operation | 0 | (80 | ) | (2,889 | ) | |||||||
Depreciation and amortization | 1,238 | 1,090 | 1,149 | |||||||||
Share-based compensation | 1,673 | 1,322 | 1,234 | |||||||||
Revaluation of liabilities in respect of IIA grants | 919 | 828 | (392 | ) | ||||||||
Revaluation of liabilities in respect of purchase of shares | 590 | (433 | ) | 1,690 | ||||||||
Revaluation of lease liabilities | 188 | 305 | 340 | |||||||||
Increase (decrease) in severance pay liability, net | 13 | 33 | (105 | ) | ||||||||
Net financing income | (11 | ) | (297 | ) | (434 | ) | ||||||
Un-realized foreign currency gain | (137 | ) | (211 | ) | (152 | ) | ||||||
| ||||||||||||
| 4,473 | 2,557 | 441 | |||||||||
Changes in asset and liability items: | ||||||||||||
Decrease (increase) in trade receivables | 929 | 1,386 | (3,553 | ) | ||||||||
Decrease in inventories | 257 | 141 | 67 | |||||||||
Decrease (increase) in other receivables | (763 | ) | (13 | ) | 6,376 | |||||||
Increase (decrease) in trade payables and accrued expenses | 1,723 | (1,096 | ) | 1,355 | ||||||||
Increase (decrease) in other payables and deferred revenues | (1,984 | ) | (479 | ) | 247 | |||||||
| ||||||||||||
| 162 | (61 | ) | 4,492 | ||||||||
| ||||||||||||
Net cash provided by (used in) continuing operating activities | (8,916 | ) | (6,700 | ) | 9,888 | |||||||
| ||||||||||||
Net cash used in discontinued operating activities | 0 | (195 | ) | (1,599 | ) | |||||||
| ||||||||||||
Net cash provided by (used in) operating activities | (8,916 | ) | (6,895 | ) | 8,289 |
The accompanying notes are an integral part of the consolidated financial statements.
MEDIWOUND LTD. AND ITS SUBSIDIARIES
Consolidated Statements of Cash Flows
U.S. dollars in thousands
| Year ended December 31, | |||||||||||
| 2021 | 2020 | 2019 | |||||||||
Cash flows from investing activities: | ||||||||||||
| ||||||||||||
Purchase of property and equipment | (489 | ) | (923 | ) | (792 | ) | ||||||
Interest received | 35 | 274 | 184 | |||||||||
Proceeds from (investments in) short term bank deposits, net | 4,002 | 18,034 | (5,050 | ) | ||||||||
| ||||||||||||
Net cash provided by (used in) continuing investing activities | 3,548 | 17,385 | (5,658 | ) | ||||||||
| ||||||||||||
Net cash used in discontinued investing activities | 0 | 0 | (1,239 | ) | ||||||||
| ||||||||||||
Net cash provided by (used in) investing activities | 3,548 | 17,385 | (6,897 | ) | ||||||||
| ||||||||||||
Cash flows from financing activities: | ||||||||||||
| ||||||||||||
Repayment of leases liabilities | (693 | ) | (508 | ) | (630 | ) | ||||||
Proceeds from exercise of options | 3 | (* | ) | (* | ) | |||||||
Repayment of IIA grants, net | (360 | ) | (121 | ) | (376 | ) | ||||||
| ||||||||||||
Net cash used in continuing financing activities | (1,050 | ) | (629 | ) | (1,006 | ) | ||||||
| ||||||||||||
Exchange rate differences on cash and cash equivalent balances | 88 | 273 | 140 | |||||||||
| ||||||||||||
Increase (decrease) in cash and cash equivalents from continuing activities | (6,330 | ) | 10,329 | 3,364 | ||||||||
Decrease in cash and cash equivalents from discontinued activities | 0 | (195 | ) | (2,838 | ) | |||||||
Balance of cash and cash equivalents at the beginning of the year | 17,376 | 7,242 | 6,716 | |||||||||
| ||||||||||||
Balance of cash and cash equivalents at the end of the year | 11,046 | 17,376 | 7,242 | |||||||||
| ||||||||||||
Supplement disclosure of Non-cash transactions: | ||||||||||||
ROU asset, net recognized with corresponding lease liability | 155 | 261 | 209 | |||||||||
Exercise of RSU’s | 147 | 147 | 97 |
* Represents an amount lower than $1.
The accompanying notes are an integral part of the consolidated financial statements.
MEDIWOUND LTD. AND ITS SUBSIDIARIES
Note 1: | General |
a. | Description of the Company and its operations: |
b. | The Company's securities are listed for trading on NASDAQ since March 2014. In March, 2022, the Company completed a follow-on public offering. A total of 5,208,333 new ordinary shares were issued at a public offering price of $1.92 per share . The gross proceeds before deducting underwriting discounts and commissions and offering expenses, were approximately $10 million. (see also Note 26). |
c. | The Company has three wholly owned subsidiaries: MediWound Germany GmbH, acting as Europe (“EU”) marketing authorization holder and EU sales and marketing arm, MediWound UK Limited and MediWound US, Inc. are currently inactive companies. |
Notes to the Consolidated Financial Statements
Note 1: | General (Cont.) |
d. | On June 29, 2021, the Company received a Complete Response Letter (CRL) from the U.S. Food and Drug Administration (FDA) regarding its Biologics License Application (BLA) seeking approval of NexoBrid for eschar removal (debridement) in adults with deep partial-thickness and/or full-thickness thermal burns. |
e. | The Company addressed the challenges associated with the ongoing COVID-19 pandemic during the year ended 2020 and 2021, while prioritizing the health and safety of its workforce and maintaining operational efficiency and flexibility. |
Notes to the Consolidated Financial Statements
Note 2: Basis of Preparation of the Consolidated Financial Statements
a. | Statement of compliance with International Financial Reporting Standards |
b. | Functional currency, reporting currency and foreign currency: |
1. | Functional currency and reporting currency: |
2. | Transactions, assets and liabilities in foreign currency: |
Notes to the Consolidated Financial Statements
c. | Use of estimates and judgments |
• | Determining the fair value of share based compensation to employees and directors: |
• | Liabilities in respect to IIA grants: |
Note 3: | Significant Accounting Policies |
a. | Basis of consolidation: |
b. | Cash equivalents: |
Notes to the Consolidated Financial Statements
Note 3: | Significant Accounting Policies (Cont.) |
c. | Short-term bank deposits: |
d. | Inventories: |
Raw materials | - | At cost of purchase using the first-in, first-out method. |
Finished goods | - | On the basis of average standard costs (which approximates actual cost on a weighted average basis) including materials, labor and other direct and indirect manufacturing costs based on practical capacity. |
e. | Liability in respect of Israeli Innovation Authority ("IIA"): |
Notes to the Consolidated Financial Statements
Note 3: | Significant Accounting Policies (Cont.) |
f. | Leases: |
Years | |||
Motor vehicles | 3 | ||
Buildings and equipment | 5-8 | ||
• | Variable lease payments that depend on an index: |
• | Lease extension and termination options: |
Notes to the Consolidated Financial Statements
Note 3: | Significant Accounting Policies (Cont.) |
• | Lease modifications: |
g. | Property, plant and equipment, net: |
% | ||
Office furniture | 6-15 | |
Manufacturing machinery and lab equipment | 15-33 | |
Computers | 33 | |
Leasehold improvements | See below |
h. | Intangible assets, net: |
Notes to the Consolidated Financial Statements
Note 3: | Significant Accounting Policies (Cont.) |
i. | Revenues recognition: |
Notes to the Consolidated Financial Statements
Note 3: | Significant Accounting Policies (Cont.) |
Notes to the Consolidated Financial Statements
Note 3: | Significant Accounting Policies (Cont.) |
Notes to the Consolidated Financial Statements
Note 3: | Significant Accounting Policies (Cont.) |
j. | Research and development expenses: |
k. | Funding by BARDA: |
l. | Impairment of non-financial assets: |
Notes to the Consolidated Financial Statements
Note 3: | Significant Accounting Policies (Cont.) |
m. | Financial instruments: |
1. | Financial assets: |
- | The Company's business model for managing financial assets; and |
- | The contractual cash flow terms of the financial asset. |
2. | Financial liabilities: |
a) | Financial liabilities measured at amortized cost: |
Notes to the Consolidated Financial Statements
Note 3: | Significant Accounting Policies (Cont.) |
b) | Financial liabilities measured at fair value through profit or loss: |
3. | Fair value: |
Notes to the Consolidated Financial Statements
Note 3: | Significant Accounting Policies (Cont.) |
4. | Classification of financial instruments by fair value hierarchy: |
Level 1 | - | quoted prices (unadjusted) in active markets for identical assets or liabilities. |
Level 2 | - | inputs other than quoted prices included within level 1 that are observable either directly or indirectly. |
Level 3 | - | inputs that are not based on observable market data (valuation techniques which use inputs that are not based on observable market data). |
5. | Offsetting financial instruments: |
n. | Provisions: |
o. | Short-term employee benefits and severance pay liability, net: |
1. | Short-term employee benefits: |
2. | Post-employment benefits: |
Notes to the Consolidated Financial Statements
Note 3: | Significant Accounting Policies (Cont.) |
p. | Share-based compensation: |
q. | Discontinued operation: |
r. | Profit / Loss per share: |
s. | Reclassification |
Notes to the Consolidated Financial Statements
December 31 | ||||||||
2021 | 2020 | |||||||
Balance in USD | 7,735 | 13,067 | ||||||
Balance in other currencies | 3,311 | 4,309 | ||||||
11,046 | 17,376 |
Note 5: Short-Term Bank Deposits
December 31, | ||||||||
2021 | 2020 | |||||||
USD bank deposits (1) | 0 | 4,024 | ||||||
Restricted bank deposits (2) | 0 | 184 | ||||||
0 | 4,208 |
Note 6: Trade Receivables
December 31 | ||||||||
2021 | 2020 | |||||||
BARDA (see also Note 18a) | 1,085 | 2,189 | ||||||
Other trade receivables | 696 | 578 | ||||||
Less provision for impairment | (2 | ) | 0 | |||||
694 | 578 | |||||||
1,779 | 2,767 |
Note 7: Inventories
December 31, | ||||||||
2021 | 2020 | |||||||
Raw materials | 694 | 631 | ||||||
Finished goods | 506 | 749 | ||||||
1,200 | 1,380 |
December 31, | ||||||||
2021 | 2020 | |||||||
Government authorities | 141 | 73 | ||||||
Contract asset related to BARDA | 347 | 0 | ||||||
Prepaid expenses and other | 439 | 389 | ||||||
927 | 462 |
Notes to the Consolidated Financial Statements
Note 9: | Other Receivables- Long Term |
December 31, | ||||||||
2021 | 2020 | |||||||
Income receivables | 280 | 0 | ||||||
Restricted bank deposits (1) | 189 | 0 | ||||||
469 | 0 |
(1) | Restricted bank deposits which are primarily used as security for the Company’s office leases. |
Note 10: Property, Plant And Equipment, Net
| Office furniture | Manufacturing machinery and lab equipment | Computers | Leasehold improvements | Total | ||||||||||||||||
Cost | |||||||||||||||||||||
Balance as of January 1, 2021 | 332 | 4,775 | 169 | 2,904 | 8,180 | ||||||||||||||||
Additions | 18 | 193 | 45 | 233 | 489 | ||||||||||||||||
Disposals | (89 | ) | (205 | ) | (36 | ) | 0 | (330 | ) | ||||||||||||
Foreign currency translation | (4 | ) | 1 | (2 | ) | 0 | (5 | ) | |||||||||||||
| |||||||||||||||||||||
Balance as of December 31, 2021 | 257 | 4,764 | 176 | 3,137 | 8,334 | ||||||||||||||||
| |||||||||||||||||||||
Balance as of January 1, 2020 | 301 | 4,534 | 124 | 2,315 | 7,274 | ||||||||||||||||
Additions | 20 | 241 | 73 | 445 | 779 | ||||||||||||||||
Disposals | 0 | 0 | (29 | ) | 0 | (29 | ) | ||||||||||||||
Re-classified from RSU assets | 0 | 0 | 0 | 144 | 144 | ||||||||||||||||
Foreign currency translation | 11 | 0 | 1 | 0 | 12 | ||||||||||||||||
| |||||||||||||||||||||
Balance as of December 31, 2020 | 332 | 4,775 | 169 | 2,904 | 8,180 | ||||||||||||||||
| |||||||||||||||||||||
Accumulated Depreciation | |||||||||||||||||||||
| |||||||||||||||||||||
Balance as of January 1, 2021 | 204 | 3,092 | 76 | 2,178 | 5,550 | ||||||||||||||||
Additions | 22 | 483 | 55 | 81 | 641 | ||||||||||||||||
Disposals | (89 | ) | (204 | ) | (35 | ) | 0 | (328 | ) | ||||||||||||
Foreign currency translation | (4 | ) | (1 | ) | (2 | ) | 0 | (7 | ) | ||||||||||||
| |||||||||||||||||||||
Balance as of December 31, 2021 | 133 | 3,370 | 94 | 2,259 | 5,856 | ||||||||||||||||
| |||||||||||||||||||||
Balance as of January 1, 2020 | 175 | 2,606 | 60 | 2,129 | 4,970 | ||||||||||||||||
Additions | 18 | 486 | 44 | 49 | 597 | ||||||||||||||||
Disposals | 0 | 0 | (29 | ) | 0 | (29 | ) | ||||||||||||||
Foreign currency translation | 11 | 0 | 1 | 0 | 12 | ||||||||||||||||
| |||||||||||||||||||||
Balance as of December 31, 2020 | 204 | 3,092 | 76 | 2,178 | 5,550 | ||||||||||||||||
| |||||||||||||||||||||
Carrying amounts of all fixed asset items | |||||||||||||||||||||
December 31, 2021 | 124 | 1,394 | 82 | 878 | 2,478 | ||||||||||||||||
December 31, 2020 | 128 | 1,683 | 93 | 726 | 2,630 |
Notes to the Consolidated Financial Statements
Note 11: | Leases |
a. Lease Agreements:
Year ended December 31, | ||||||||
2021 | 2020 | |||||||
Interest expense on lease liabilities | 120 | 144 | ||||||
Depreciation expenses relating to short-term leases | 531 | 427 | ||||||
Cash outflow for leases (1) | 693 | 652 |
The Company was assisted by external third party valuation expert in determining the appropriate interest rate for discounting its leases based on: credit risk, the weighted average term of the leases and other economic variables. A weighted average incremental borrowing in a range of 1% to 6.7% was used to discount future lease payments in the calculation of the lease liability on the date of initial application of the standard (IFRS 16).
Notes to the Consolidated Financial Statements
Note 11: | Leases (Cont.) |
| Buildings | Motor vehicles | Total | |||||||||
Cost | ||||||||||||
Balance as of January 1, 2021 | 2,225 | 512 | 2,737 | |||||||||
| ||||||||||||
New leases | 0 | 162 | 162 | |||||||||
Adjustments for indexation | 42 | 7 | 49 | |||||||||
Disposals | 0 | (27 | ) | (27 | ) | |||||||
| ||||||||||||
Balance as of December 31, 2021 | 2,267 | 654 | 2,921 | |||||||||
| ||||||||||||
Accumulated depreciation | ||||||||||||
Balance as of January 1, 2021 | 698 | 155 | 853 | |||||||||
Depreciation and amortization | 330 | 201 | 531 | |||||||||
Disposals | 0 | (11 | ) | (11 | ) | |||||||
| ||||||||||||
Balance as of December 31, 2021 | 1,028 | 345 | 1,373 | |||||||||
| ||||||||||||
Depreciated cost | ||||||||||||
Balance as of December 31, 2021 | 1,239 | 309 | 1,548 |
| Buildings | Motor vehicles | Total | |||||||||
Cost | ||||||||||||
Balance as of January 1, 2020 | 2,362 | 442 | 2,804 | |||||||||
New leases | 0 | 305 | 305 | |||||||||
Adjustments for indexation | (17 | ) | (18 | ) | (35 | ) | ||||||
Disposals | (76 | ) | (217 | ) | (293 | ) | ||||||
Termination of leases | (44 | ) | 0 | (44 | ) | |||||||
| ||||||||||||
Balance as of December 31, 2020 | 2,225 | 512 | 2,737 | |||||||||
| ||||||||||||
Accumulated depreciation | ||||||||||||
Balance as of January 1, 2020 | 381 | 194 | 575 | |||||||||
Depreciation and amortization | 249 | 178 | 427 | |||||||||
Capitalized to Leasehold improvements (1) | 144 | 0 | 144 | |||||||||
Disposals | (76 | ) | (217 | ) | (293 | ) | ||||||
| ||||||||||||
Balance as of December 31, 2020 | 698 | 155 | 853 | |||||||||
| ||||||||||||
Depreciated cost | ||||||||||||
Balance as of December 31, 2020 | 1,527 | 357 | 1,884 |
(1) As of the year ended December 31,2020 the cash flow for leases includes $144 which were capitalized to Leasehold improvements.
Notes to the Consolidated Financial Statements
Note 11: | Leases (Cont.) |
d. Disclosures of the Company's lease liabilities :
| Buildings | Motor vehicles | Total | |||||||||
| ||||||||||||
Balance as of January 1, 2021 | 1,953 | 354 | 2,307 | |||||||||
Repayment of leases liabilities | (477 | ) | (216 | ) | (693 | ) | ||||||
Effect of changes in exchange rates | 55 | 13 | 68 | |||||||||
New finance lease obligation recognized | 0 | 155 | 155 | |||||||||
Adjustments for indexation | 42 | 7 | 49 | |||||||||
Interest | 118 | 2 | 120 | |||||||||
Disposals-Termination of leases | 0 | (16 | ) | (16 | ) | |||||||
Balance as of December 31, 2021 | 1,691 | 299 | 1,990 | |||||||||
| ||||||||||||
Current maturities of long-term leases | (403 | ) | (196 | ) | (599 | ) | ||||||
Lease liability Balance as of December 31, 2021 | 1,288 | 103 | 1,391 |
| Buildings | Motor vehicles | Total | |||||||||
| ||||||||||||
Balance as of January 1, 2020 | 2,225 | 225 | 2,450 | |||||||||
Repayment of leases liabilities | (479 | ) | (173 | ) | (652 | ) | ||||||
Effect of changes in exchange rates | 134 | 28 | 162 | |||||||||
New finance lease obligation recognized | 0 | 283 | 283 | |||||||||
Adjustments for indexation | (17 | ) | (18 | ) | (35 | ) | ||||||
Interest | 134 | 10 | 144 | |||||||||
Disposals-Termination of leases | (44 | ) | (1 | ) | (45 | ) | ||||||
Balance as of December 31, 2020 | 1,953 | 354 | 2,307 | |||||||||
| ||||||||||||
Current maturities of long-term leases | (396 | ) | (170 | ) | (566 | ) | ||||||
Lease liability Balance as of December 31, 2020 | 1,557 | 184 | 1,741 |
Notes to the Consolidated Financial Statements
Note 12: Intangible Assets, Net
License and Knowhow | ||||||||
2021 | 2020 | |||||||
Cost | ||||||||
Balance as of January 1, | 1,538 | 1,538 | ||||||
Additions | 0 | 0 | ||||||
Balance as of December 31, | 1,538 | 1,538 | ||||||
Accumulated Amortization | ||||||||
Balance as of January 1, | 1,175 | 1,109 | ||||||
Additions | 66 | 66 | ||||||
Balance as of December 31, | 1,241 | 1,175 | ||||||
Amortized cost | ||||||||
Balance as of December 31, | 297 | 363 |
Intangible assets include exclusive licenses to use patents, know-how and intellectual property for the development, manufacturing and marketing of products related to burn treatments and other products in the field of wound care. These licenses were purchased from third parties and from one of the Company's shareholders. |
December 31 | ||||||||
2021 | 2020 | |||||||
Employees and payroll accruals | 1,639 | 1,910 | ||||||
Liability in respect of purchase of shares (see Note 17c)* | 417 | 0 | ||||||
Related parties | 241 | 225 | ||||||
Deferred revenues | 543 | 462 | ||||||
Other | 780 | 260 | ||||||
3,620 | 2,857 |
• | An amount of $667 was classified from Liability in respect of purchase of shares to current maturities for the year ended 31, December 2020. |
Note 14: Liabilities in Respect of IIA Grants
December 31 | ||||||||
2021 | 2020 | |||||||
Balance as of January 1, | 7,528 | 6,935 | ||||||
Royalties | (342 | ) | (235 | ) | ||||
Amounts carried to Profit or Loss | 919 | 828 | ||||||
Balance as of December 31, | 8,105 | 7,528 | ||||||
Current maturities | (220 | ) | (261 | ) | ||||
Long term liabilities in respect of IIA grants | 7,885 | 7,267 |
Notes to the Consolidated Financial Statements
Note 15: | Financial Instruments |
a. | Risk management: |
1. | Foreign currency risk |
2. | Sensitivity tests relating to changes in market factors: |
December 31 | ||||||||
2021 | 2020 | |||||||
Gain (loss) from change: | ||||||||
5% increase in NIS and EURO exchange rate | $ | 3 | $ | 76 | ||||
5% decrease in NIS and EURO exchange rate | $ | (3 | ) | $ | (76 | ) |
Notes to the Consolidated Financial Statements
Note 15: | Financial Instruments (Cont.) |
3. | Liquidity risk |
December 31, 2021 | ||||||||||||||||
Carrying | 12 months | |||||||||||||||
amount | or less | 1-2 years | 2-8 years | |||||||||||||
Non-derivative financial liabilities | ||||||||||||||||
Current liabilities | ||||||||||||||||
Current maturities of long-term liabilities | 3,024 | 3,024 | ||||||||||||||
Trade payables and accrued expenses | 4,693 | 4,693 | ||||||||||||||
Other payables | 3,620 | 3,620 | ||||||||||||||
Non-current liabilities | ||||||||||||||||
Liabilities in respect of IIA grants | 15,286 | 369 | 14,917 | |||||||||||||
Liabilities in respect of purchase of shares | 5,867 | 1,667 | 4,200 | |||||||||||||
Lease liabilities | 1,522 | 589 | 933 |
Notes to the Consolidated Financial Statements
Note 15: | Financial Instruments (Cont.) |
b. | Fair value: |
Notes to the Consolidated Financial Statements
a. | In 2000, the Company signed an exclusive license agreement (as amended in 2007) with a third party with regard to its patents and intellectual property. Pursuant to the agreement, the Company received an exclusive license to use the third party's patents and intellectual property, for the purpose of developing, manufacturing, marketing, and commercializing products for treatment of burns and other wounds. |
In consideration for this exclusive license, the Company paid an aggregate amount of $ 950 following the achievement of certain development milestones as set forth in the agreement. In addition, the Company undertook to pay royalties of 1.5% to 2.5% from future revenues from sales of products which are based on this patent for a period ranging between 10 to 15 years from the first commercial delivery in a major country, and thereafter the Company will have a fully paid-up royalty-free license for these patents. In addition, royalties will be paid at the rate of 10% - 20% from sub-licensing of such patents and for lump sum amounts paid to the Company by a third party, the Company will pay 2% of the proceeds up to $1,000 and 4% of the proceeds above this amount. Moreover, the Company agreed to pay a one-time lump-sum amount of $ 1,500 when the aggregate revenues based on these patents reach $ 100,000. The amount of royalty payments for the years 2020 and 2021 amounted to $42 and $149 respectively.
b. | Under the Research and Development Law, (the "R&D Law") the Company undertook to pay royalties of 3% on the revenues derived from sales of products or services developed in whole or in part using IIA grants. The maximum aggregate royalties paid cannot exceed 100% of the grants received by the Company, plus annual interest equal to the 12-month LIBOR applicable to dollar deposits, as published on the first business day of each calendar year. (see also Note 14).The total royalties amount paid as of December 31, 2021 is $1,303. |
c. | Beginning in 2007, the Company entered into a number of agreements with Teva Pharmaceutical Industries Limited (“Teva”) related to collaboration in the development, manufacturing and commercialization of solutions for the burn and chronic wound care markets. In consideration for these agreements, Teva made investments in the Company's ordinary shares and agreed to fund certain research and development expenses and manufacturing costs and perform all marketing activities for both NexoBrid, under the 2007 Teva Agreement, and the PolyHeal Product, under the 2010 PolyHeal Agreements (see also Note 22). As of December 31, 2012, all of these agreements were terminated. |
Notes to the Consolidated Financial Statements
Note 17: | Contingent Liabilities and Commitments (Cont.) |
a. BARDA Contracts
In September 2015, the Company was awarded the First BARDA Contract for treatment of thermal burn injuries, which was valued at up to $112,000. In July 2017 and in May 2019, BARDA expanded its commitment by an aggregate supplemental amount of $41,000. In March 2020, BARDA further expanded its commitment by additional $5,500 to support emergency readiness for NexoBrid deployment upon request of use of NexoBrid in mass casualty situations and in February 2022 BARDA has expanded its awarded contract providing supplemental funding of $9,000 to support the NexoBrid BLA resubmission to the FDA and the continuous expanded access program (collectively the "First BARDA Contract").
Under the First BARDA Contract, BARDA provided technical assistance and a total of up to $91,000 in funding for NexoBrid development activities needed to request U.S. marketing approval from the FDA. In January 2020, BARDA committed an additional $16,500 to procure NexoBrid as part of the HHS mission to build national preparedness for public health medical emergencies. The contract further includes a $10,000 option to fund development of other potential NexoBrid indications and an option to procure additional NexoBrid valued at up to $50,000.
In September 2018, the Company were awarded the second BARDA contract (the "Second BARDA Contract"), which is an additional, separate contract to develop NexoBrid for the treatment of Sulfur Mustard injuries as part of BARDA’s preparedness for mass casualty events. The Second BARDA Contract provides approximately $12,000 of funding to support research and development activities up to pivotal studies in animals under the U.S. FDA Animal Rule and contains options for BARDA to provide additional funding of up to $31,000 for additional development activities, animal pivotal studies, and the BLA submission for licensure of NexoBrid for the treatment of Sulfur Mustard injuries.
Notes to the Consolidated Financial Statements
Note 18: Materials Agreements (Cont.)
As of December 31, 2021, the Company has received approximately $69,400 in funding in the aggregate, from BARDA under the two contracts, and an additional of approximately $14,600 for procurement of NexoBrid for U.S. emergency preparedness which were recorded at the net amount of approximately $9,300 following the split of gross profit agreement with Vericel for the initial BARDA procurement.
Under the terms of the license agreement, Vericel has made an upfront payment to MediWound of $17,500 which was recorded as revenues from license agreements in 2019 and agreed to make an additional $7,500 payment contingent upon BLA approval and up to $125,000 in payments contingent upon meeting certain annual sales milestones. Vericel has also agreed to pay MediWound tiered royalties on net sales ranging from high single-digit to teen-digit percentages, a split of gross profit on committed BARDA procurement orders and a teen-digits royalty on any additional future BARDA purchases of NexoBrid. Under the terms of the supply agreement, Vericel will procure NexoBrid from MediWound at a transfer price of cost plus a fixed margin percentage.
As of the financial statements date, the Company did not recognize any revenues from royalties.
Notes to the Consolidated Financial Statements
Note 19: Equity
December 31 | ||||||||
2021 | 2020 | |||||||
Authorized number of shares | 50,000,000 | 50,000,000 | ||||||
Issued and outstanding number of shares | 27,272,818 | 27,236,752 |
b. Rights attached to shares:
c. Movement in share capital:
�� During 2019, the authorized number of shares was increased by 12,755,492 shares which has a nominal value of $40.
• On December 31, 2019, the Company issued additional 23,956 ordinary shares upon vesting of outstanding RSU’s.
• During 2020 and 2021 the Company issued additional 33,958 ordinary shares for each year upon vesting of outstanding RSU’s.
Year ended December 31 | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
Cost of revenues | 153 | 115 | 226 | |||||||||
Research and development | 333 | 179 | 375 | |||||||||
Selling and marketing | 0 | 3 | 40 | |||||||||
General and administrative | 1,187 | 1,025 | 593 | |||||||||
Total share-based compensation | 1,673 | 1,322 | 1,234 |
b. Share-based payment plan for employees and directors:
Notes to the Consolidated Financial Statements
Note 20: Share‑Based Compensation (Cont.) |
As of December 31, 2021, 490,927 ordinary shares of the Company were still available for future grant.
Options granted under the Company's 2003 Israeli Share Option Plan ("Plan") are exercisable in accordance with the terms of the Plan, within 5-10 years from the date of grant, against payment of an exercise price or cashless exercise. The options generally vest over a period of 3-4 years.
c. Share options activity:
2021 | 2020 | 2019 | ||||||||||||||||||||||
Number of options | Weighted Average Exercise price | Number of options | Weighted Average Exercise price | Number of options | Weighted Average Exercise price | |||||||||||||||||||
Outstanding Options at beginning of year | 3,597,811 | 6.55 | 2,334,432 | 9.18 | 2,313,249 | 9.31 | ||||||||||||||||||
Options Granted | 377,790 | 5.36 | 1,274,379 | 1.43 | 95,000 | 4.45 | ||||||||||||||||||
Options Exercised | (3,750 | ) | 2.88 | 0 | 0 | 0 | 0 | |||||||||||||||||
Options Forfeited and/or expired | (210,833 | ) | 8.13 | (11,000 | ) | 7.19 | (73,817 | ) | 5.17 | |||||||||||||||
Outstanding options and at end of year | 3,761,018 | 6.35 | 3,597,811 | 6.55 | 2,334,432 | 9.18 | ||||||||||||||||||
Option's Exercisable at end of year | 2,335,325 | 8.34 | 1,952,014 | 9.98 | 1,753,803 | 4.76 |
Notes to the Consolidated Financial Statements
Note 20: Share‑Based Compensation (Cont.) |
The following table summarizes information about share options outstanding as of December 31, 2021:
Options outstanding as of December 31, 2021 | ||||||||||||
Range of exercise prices ($ ) | Number of options | Weighted Average Remaining contractual life | Weighted average exercise price | |||||||||
1.75-5.36 | 2,307,469 | 6.19 | 3.29 | |||||||||
6.02- 9.58 | 642,249 | 3.68 | 9.01 | |||||||||
12.89 - 13.76 | 811,300 | 1.92 | 12.93 | |||||||||
Total | 3,761,018 | 4.84 | 6.35 |
The following table summarizes information about RSU's outstanding:
RSU's 2021 | RSU's 2020 | RSU's 2019 | ||||||||||
Outstanding at beginning of year | 74,587 | 108,544 | 95,833 | |||||||||
Granted | 62,947 | 0 | 36,667 | |||||||||
Forfeited | (1,505 | ) | 0 | 0 | ||||||||
Vested | (33,958 | ) | (33,958 | ) | (23,956 | ) | ||||||
Outstanding at the end of the period | 102,071 | 74,587 | 108,544 |
1. | On March 24, 2019, the Company granted to its incoming CEO and chairman of the board 60,000 options (40,000 and 20,000 respectively) to purchase ordinary shares, for an exercise price of $ 4.92 per share, and 30,000 RSU's (20,000 and 10,000 respectively), under the "2014 Share Incentive Plan". The options are exercisable in accordance with the terms of the plan and will vest over three-four years. The fair value of the options and RSU's granted, as of the grant date, was estimated at approximately $164 and $158, respectively. On May 2, 2019, the general meeting of the Company approved the abovementioned grants. |
2. | On June 6, 2019, the Company granted to its incoming CFO 40,000 options to purchase ordinary shares, for an exercise price of $ 3.84 per share, and 6,667 RSU's, under the "2014 Share Incentive Plan". The options are exercisable in accordance with the terms of the plan and will vest over four years. The fair value of the options and RSU's granted, as of the grant date, was estimated at approximately $93 and $26, respectively. |
Notes to the Consolidated Financial Statements
Note 20: Share‑Based Compensation (Cont.) |
3. | On April 23, 2020, the Company's Board of Directors approved the grant of 1,274,379 options to purchase ordinary shares under the "2014 Share Incentive Plan", for an exercise price of $ 1.75 per share to its employees, managments and board members of the Company. The fair value of the options granted, as of the grant date, was estimated at approximately $1,819. |
4. | On March 4, 2021, the Company's Board of Directors approved the grant of: (a) 238,090 options to purchase ordinary shares and 39,682 RSU's under the "2014 Share Incentive Plan" to its CEO, officers and board members of the Company at a fair value of $663 and $196, respectively, and (b) 139,700 options to purchase ordinary shares and 23,265 RSU's under the "2014 Share Incentive Plan" to its employees at a fair value of $417 and $116, respectively. The options are exercisable for an exercise price of $ 5.36 per share. |
d. The fair value of the Company's share options granted to employees and directors for the years ended December 31, 2019, 2020 and 2021 was estimated using the binomial option pricing models using the following assumptions:
December 31 | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
Dividend yield (%) | 0 | 0 | 0 | |||||||||
Expected volatility of the share prices (%) | 55-78 | 51-71 | 41-53 | |||||||||
Risk-free interest rate (%) | 0.1-1.5 | 0.2-0.9 | 1.85-2.45 | |||||||||
Early exercise factor (%) | 100-150 | 100-150 | 150 | |||||||||
Weighted average share prices (Dollar) | 2.88 | 2.43 | 4.83 |
Measurement inputs include the share price on the measurement date, the exercise price of the instrument, expected volatility (based on the weighted average volatility of the Company’s shares, over the expected term of the options), expected term of the options (based on general option holder behavior and expected share price), expected dividends, and the risk-free interest rate (based on government debentures).
Note 21: Income Tax
a. The Company operates in two main tax jurisdictions: Israel and Germany. As such, the Company is subject to the applicable tax rates in the jurisdictions in which it conducts its business..
Notes to the Consolidated Financial Statements
Note 21: Income Tax (Cont.)
d. The principal tax rates applicable to the subsidiary whose place of incorporation is outside of Israel is:
e. Final tax assessments:
Notes to the Consolidated Financial Statements
Note 21: Income Tax (Cont.)
i. Theoretical tax:
Note 22: Discontinued Operation
Notes to the Consolidated Financial Statements
Note 23: Supplementary Information to the Statements of Comprehensive Profit or Loss
BARDA contributed 76% of the Company’s total revenues in 2021, 83% in 2020, and 34% in 2019. Verical contributed 55% in 2019. (see also Note 18b).
No other customer contributed 10% or more of the Company’s revenues in 2021, 2020 and 2019.
Revenues in the amount of $383 from distributions agreements were classified from revenues from sale of products for the year ended 31, December 2020.
The revenues reported in the financial statements are based on the location of the customers, as follows:
Year ended December 31 | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
USA ( see also Note 18a, 18b) | 18,102 | 18,030 | 28,504 | |||||||||
EU and other international markets | 5,661 | 3,733 | 3,285 | |||||||||
23,763 | 21,763 | 31,789 |
Year ended December 31 | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
Salary and benefits (including share-based compensation) | 2,201 | 2,139 | 1,916 | |||||||||
Subcontractors | 204 | 153 | 89 | |||||||||
Depreciation and amortization | 603 | 554 | 512 | |||||||||
Cost of materials | 1,091 | 704 | 456 | |||||||||
Other manufacturing expenses | 953 | 840 | 657 | |||||||||
Decrease in inventory of finished products | 242 | 155 | 344 | |||||||||
Allotment of manufacturing costs to R&D | (311 | ) | (1,394 | ) | (1,621 | ) | ||||||
4,983 | 3,151 | 2,353 |
Year ended December 31 | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
Salary and benefits | 2,003 | 2,320 | 1,404 | |||||||||
Subcontractors | 7,904 | 8,747 | 7,412 | |||||||||
9,907 | 11,067 | 8,816 |
Notes to the Consolidated Financial Statements
Note 23: Supplementary Information to the Statements of Comprehensive Profit or Loss (Cont.)
3. Cost of Revenues from license agreements
Year ended December 31 | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
Salary and benefits | 102 | 0 | 0 | |||||||||
Royalties payments | 0 | 0 | 680 | |||||||||
102 | 0 | 680 | ||||||||||
Total Cost of Revenues | 14,992 | 14,218 | 11,849 |
c. Research and development expenses, net of participations:
Year ended December 31 | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
Salary and benefits (including share-based compensation) | 2,811 | 2,094 | 2,965 | |||||||||
Subcontractors | 6,309 | 3,173 | 4,694 | |||||||||
Depreciation and amortization | 352 | 346 | 342 | |||||||||
Cost of materials | 295 | 517 | 311 | |||||||||
Allotment of manufacturing costs | 209 | 1,394 | 1,621 | |||||||||
Other research and development expenses | 280 | 174 | 137 | |||||||||
Research and development, gross | 10,256 | 7,698 | 10,070 | |||||||||
Participations: | ||||||||||||
BARDA funds | 0 | 0 | (3,785 | ) | ||||||||
Revaluation of liabilities in respect of IIA grants | 0 | 0 | (1,316 | ) | ||||||||
10,256 | 7,698 | 4,969 |
Year ended December 31 | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
Salary and benefits (including share based compensation) (1) | 1,643 | 1,700 | 2,028 | |||||||||
Marketing and medical support | 627 | 740 | 1,298 | |||||||||
Depreciation and amortization | 44 | 82 | 49 | |||||||||
Shipping and delivery | 490 | 282 | 200 | |||||||||
Registration and marketing license fees | 584 | 424 | 489 | |||||||||
3,388 | 3,228 | 4,064 |
Notes to the Consolidated Financial Statements
Note 23: Supplementary Information to the Statements of Comprehensive Profit or Loss (Cont.)
e. General and administrative expenses:
Year ended December 31 | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
Salary and benefits (including share-based compensation) | 2,905 | 2,784 | 2,621 | |||||||||
Professional fees | 2,480 | 2,267 | 1,628 | |||||||||
Depreciation and amortization | 239 | 108 | 247 | |||||||||
Other | 724 | 300 | 746 | |||||||||
6,348 | 5,459 | 5,242 |
f. Other expenses:
The other one-time expenses amounted $1,172 for the year ended December 31, 2019, are associated with the review and assessment of the strategic deal with Vericel ( see Note 18b).
Year ended December 31 | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
Financial income: | ||||||||||||
Interest income | 11 | 297 | 434 | |||||||||
Revaluation of liabilities in respect of the purchase of shares | 0 | 433 | 0 | |||||||||
Exchange differences, net | 0 | 113 | 122 | |||||||||
11 | 843 | 556 | ||||||||||
Financial expense: | ||||||||||||
Interest in respect of IIA grants | 903 | 832 | 925 | |||||||||
Revaluation of liabilities in respect of IFRS16 | 120 | 144 | 140 | |||||||||
Finance expenses in respect of deferred revenues | 143 | 247 | 161 | |||||||||
Revaluation of liabilities in respect of the purchase of shares | 590 | 0 | 1,690 | |||||||||
Exchange differences, net | 511 | 0 | 0 | |||||||||
Other | 47 | 56 | 67 | |||||||||
2,314 | 1,279 | 2,983 | ||||||||||
Financial expenses, net | (2,303 | ) | (436 | ) | (2,427 | ) |
Notes to the Consolidated Financial Statements
Year ended December 31 | ||||||||||||||||||||||
2021 | 2020 | 2019 | ||||||||||||||||||||
Weighted average number of shares | Loss | Weighted average number of shares | Loss | Weighted average number of shares | Profit | |||||||||||||||||
27,244,475 | (13,551 | ) | 27,209,878 | (9,276 | ) | 27,178,839 | 2,066 |
Year ended December 31 | ||||||||||||||||||||||
2021 | 2020 | 2019 | ||||||||||||||||||||
Weighted average number of shares | Profit | Weighted average number of shares | Profit | Weighted average number of shares | Profit | |||||||||||||||||
0 | 0 | 27,209,878 | 80 | 27,178,839 | 2,889 |
c. Net profit (loss) per share from continuing and discontinued operations:
Year ended December 31 | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
Basic and Diluted loss per share: | ||||||||||||
Profit (loss) from from continuing operations | (0.50 | ) | (0.34 | ) | 0.08 | |||||||
Profit from discontinued operation | 0 | 0 | 0.10 | |||||||||
Profit (loss) per share | (0.50 | ) | (0.34 | ) | 0.18 |
Note 25: Balances and Transactions With Related Parties and Key Officer
• Clal Biotechnologies Industries Ltd.- Parent Company.
• Directors of the Company.
• CureTech Ltd.-Sister Company.
Notes to the Consolidated Financial Statements
Note 25: Balances and Transactions With Related Parties and Key Officers (Cont.) |
1. Balances of related parties:
Other Payables | ||||
Parent Company (1): | ||||
As of December 31, 2020 | 138 | |||
As of December 31, 2021 | 144 | |||
Directors: | ||||
As of December 31, 2020 | 86 | |||
As of December 31, 2021 | 96 |
Rental fee:
Year ended December 31 | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
Parent Company | 469 | 446 | 415 | |||||||||
Sister Company | 0 | 0 | (59 | ) |
Year ended December 31 | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
Directors | 375 | 272 | 249 | |||||||||
Parent Company | 85 | 54 | 52 | |||||||||
460 | 326 | 301 | ||||||||||
Number of Directors | 8 | 8 | 6 |
• Not included share based compensation detailed in Note 20. |
Notes to the Consolidated Financial Statements
Note 25: Balances and Transactions With Related Parties and Key Officers (Cont.)
b. Key Officers: |
1. | Balances of Key Officers of the Company |
Other Payables | ||||
Key Officers of the Company | ||||
As of December 31, 2021 | 353 |
• | Represents the officer’s gross salary, bonuses and vacation provisions. |
2. Compensation of Key Officers of the Company:
Year ended December 31 | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
Short-term employee benefits (*) | 1,788 | 1,993 | 2,533 | |||||||||
Share-based compensation | 518 | 467 | 565 | |||||||||
2,306 | 2,460 | 3,098 | ||||||||||
Number of officers | 5 | 5 | 7 |
In addition, certain entities affiliated with CBI purchased 1,458,333 of ordinary shares in the obove-mentioned offering at the public offering price.