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 |
![](https://capedge.com/proxy/20-F/0001178913-23-001021/mdwd_img01.jpg)
(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 0.07 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, 2022 |
i | |
i | |
1 | |
1 | |
1 | |
40 | |
87 | |
87 | |
99 | |
119 | |
123 | |
124 | |
125 | |
134 | |
135 | |
135 | |
136 | |
136 | |
136 | |
136 | |
137 | |
137 | |
137 | |
137 | |
138 | |
138 | |
138 | |
138 | |
138 | |
139 | |
142 |
• | our commercialization, marketing and manufacturing capabilities and strategy and the ability of our marketing team to cover European regional burn centers and units; | |
• | the timing and conduct of our trials of NexoBrid, EscharEx and our other 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 EscharEx and our other pipeline products; | |
• | our expectations regarding future growth, including our ability to develop new products; | |
• | our estimates regarding expenses, future revenues, capital requirements and our need for additional financing; |
• | anticipated funding under our contracts with the U.S. Biomedical Advanced Research and Development Authority; |
• | our ability to maintain adequate protection of our intellectual property; | |
• | our estimates regarding the market opportunity for NexoBrid, EscharEx and our other pipeline products; | |
• | our expectation regarding the duration of our inventory of intermediate drug substances 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 or opinion; | |
| • | 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 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. |
• | 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 authorizations for our products 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 authorization; |
• | 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. |
Future sales of our ordinary shares could reduce the market price of our ordinary shares.
As a foreign private issuer, we are not subject to the provisions of Regulation FD or U.S. proxy rules and are exempt from filing certain Exchange Act reports.
A. | History and Development of the Company |
B. | Business Overview |
There have been hundreds of presentations and several award winning abstracts of NexoBrid in international and national scientific conferences, as well as about 120 peer-reviewed papers, resulting in support of burn specialists and key opinion leaders. Awareness of NexoBrid continues to grow through our marketing efforts in countries where NexoBrid is approved.
• | 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 II Investigator initiated | Dose range Phase II | Prospective Phase II IND/FDA | Phase II IND/FDA | Phase III EMA | Phase IIIb EMA | Phase II EMA | Post approval safety study EMA | Phase III 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 last updated in 2022, 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. |
![](https://capedge.com/proxy/20-F/0001178913-23-001021/image00001.jpg)
![](https://capedge.com/proxy/20-F/0001178913-23-001021/image00010.jpg)
![](https://capedge.com/proxy/20-F/0001178913-23-001021/image6.jpg)
![](https://capedge.com/proxy/20-F/0001178913-23-001021/image7.jpg)
![](https://capedge.com/proxy/20-F/0001178913-23-001021/image8.jpg)
• | Basal cell carcinomas - 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 photo exposed areas, most commonly in the head, and infrequently appear on unexposed areas such as the 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 |
Competition
• | laboratory tests, animal studies and formulation studies all performed in accordance with the applicable EU GLP or GMP regulations; |
• | submission to the relevant authorities of a 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 I (Most typical kind of study: Human Pharmacology); |
• | Phase II (Most typical kind of study: Therapeutic Exploratory); |
• | Phase III (Most typical kind of study: Therapeutic Confirmatory); and |
• | Phase IV (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 I: | 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 II: | 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 III: | 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. |
The Animal Rule
• | 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. A person or entity does not need to have actual knowledge of this statute or specific intent to violate it in order to have committed a violation; | |
• | 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. In addition, the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act; | |
• | HIPAA, imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters; | |
| • | 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 non-physician practitioners such as physician assistants and nurse practitioners, 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. |
Operating Expenses
Years Ended December 31, | ||||||||
2022 | 2021 | |||||||
(in thousands) | ||||||||
Condensed statements of operations data: | ||||||||
Revenues | $ | 26,496 | $ | 23,763 | ||||
Cost of revenues | 13,331 | 14,992 | ||||||
Gross profit | 13,165 | 8,771 | ||||||
Operating expenses: | ||||||||
Research and development | 10,181 | 10,256 | ||||||
Selling and marketing | 3,725 | 3,388 | ||||||
General and administrative | 6,920 | 6,348 | ||||||
684 | - | |||||||
Other expenses | ||||||||
Operating loss | (8,345 | ) | (11,221 | ) | ||||
Financial expenses, net | (11,176 | ) | (2,303 | ) | ||||
Loss before taxes on income | (19,521 | ) | (13,524 | ) | ||||
Tax expenses | (78 | ) | (27 | ) | ||||
Net loss | $ | (19,599 | ) | $ | (13,551 | ) |
Years Ended December 31, | ||||||||
2022 | 2021 | |||||||
(in thousands) | ||||||||
Revenues from sale of products | $ | 5,347 | $ | 9,613 | ||||
Revenues from development services | 12,943 | 12,372 | ||||||
Revenues from license agreements | 8,206 | 1,778 | ||||||
26,496 | 23,763 |
Years Ended December 31, | ||||||||
2022 | 2021 | |||||||
(in thousands) | ||||||||
International (excluding U.S.) | $ | 4,624 | $ | 5,661 | ||||
U.S. | 21,872 | 18,102 | ||||||
26,496 | 23,718 |
Costs and Expenses
Years Ended December 31, | ||||||||
2022 | 2021 | |||||||
(in thousands) | ||||||||
Cost of revenues from sales of products | $ | 3,184 | $ | 4,983 | ||||
Cost of revenues from development services | 9,829 | 9,907 | ||||||
Cost of revenues from license agreements | 318 | 102 | ||||||
13,331 | 14,992 |
Financial income, net | Years Ended December 31, | |||||||
2022 | 2021 | |||||||
(in thousands) | ||||||||
Financial income | $ | 461 | $ | 11 | ||||
Financial expenses | (11,637 | ) | (2,314 | ) | ||||
(11,176 | ) | (2,303 | ) |
Year Ended December 31, | ||||||||
2022 | 2021 | |||||||
Net cash provided by (used in): | ||||||||
Operating activities | $ | (11,885 | ) | $ | (8,916 | ) | ||
Investing activities | (481 | ) | 3,548 | |||||
Financing activities | 35,764 | (1,050 | ) |
• | 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. |
• | further actions taken by central banks in Europe and the U.S. to increase interest rates as a means to slow down inflation, which may worsen credit/financing conditions for our customers who purchase our products; |
• | potential contraction of economic activities and recessionary conditions that could arise as a result of interest rate increases and a decrease in consumer demand; and |
• | the continued depreciated value of the Euro relative to the U.S. dollar, which may have an adverse impact on the U.S.- denominated value of our European-derived revenues for purposes of our financial statements. |
Name | Age | Position | ||
Executive Officers | ||||
Ofer Gonen | 50 | Chief Executive Officer | ||
Boaz Gur-Lavie | 49 | Chief Financial Officer | ||
Ety Klinger Ph.D. | 61 | Chief Research and Development Officer | ||
Robert Snyder | 73 | Chief Medical Officer | ||
Tzvi Palash | 67 | Chief Operations Officer | ||
Yaron Meyer | 44 | Executive Vice President, General Counsel and Corporate Secretary | ||
Directors | ||||
Nachum (Homi) Shamir (3)(5) | 68 | Executive Chairman of the Board of Directors | ||
Stephen T. Willis (1)(2)(4)(5) | 66 | Director | ||
Assaf Segal | 51 | Director | ||
Vickie R. Driver, M.D (4)(5) | 69 | Director | ||
Nissim Mashiach (1)(2)(5) | 62 | Director | ||
Sharon Kochan (1)(2)(5) | 54 | Director | ||
David Fox (3)(5) | 65 | Director | ||
Sharon Malka (4) | 51 | Director |
(1) | Member of our audit committee. |
(2) | Member of our compensation committee. |
(3) | Member of our nominating, governance and sustainability committee. |
(4) | Member of our research and development committee. |
(5) | Independent director under the listing rules of the Nasdaq Stock Market. |
Name and Position | Salary & Social Benefits(1) | Bonus | Share‑Based Payment(2) | Other Compensation(3) | Total | ||||||||||
( thousand U.S. dollars)(4) | |||||||||||||||
Sharon Malka, Director and former CEO(5) | 308 | - | 345 | 316 | 969 | ||||||||||
Ofer Gonen, Chief Executive Officer | 253 | 200 | 365 | 32 | 850 | ||||||||||
Lior Rosenberg, M.D., Chief Medical Technology Officer | 324 | 167 | 90 | 236 | 817 | ||||||||||
Ety Klinger, Chief Research & Development Officer | 298 | 75 | 77 | 20 | 470 | ||||||||||
Boaz Gur-Lavie, Chief Financial Officer | 255 | 60 | 76 | 18 | 409 |
(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, 2022 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, (ii) vacation benefits and (iii) severance payment. |
(4) | Converted (i) from NIS into U.S. dollars at the rate of NIS 3.358 = 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, 2022 as reported by the Bank of Israel in the year ended December 31, 2022. |
(5) | The compensation received by Mr. Malka in respect of the year ended December 31, 2022 consists of compensation that he received as our CEO until June 30, 2022 and cash, equity awards and other compensation that he received in his role as active director commencing in July 2022. |
Number of | Number of | Exercise | Vested | |||||||||||
Name | Options | RSUs | Grant Date | Price - $ | Options/RSU's | Expiration Date | ||||||||
Sharon Malka | 17,371 | 24/12/2013 | 90.23 | 17,371 | 22/12/2023 | |||||||||
7,142 | 23/12/2015 | 67.06 | 7,142 | 20/12/2025 | ||||||||||
19,285 | 31/12/2018 | 36.05 | 19,285 | 28/12/2028 | ||||||||||
5,714 | 24/03/2019 | 34.44 | 4,286 | 21/03/2029 | ||||||||||
11,595 | 23/04/2020 | 12.25 | 5,798 | 21/04/2030 | ||||||||||
6,527 | 04/03/2021 | 37.52 | 3,264 | 02/03/2031 | ||||||||||
28,572 | 07/06/2022 | 14.42 | 21,428 | 04/06/2032 | ||||||||||
6,428 | 31/12/2018 | 0 | 6,428 | 28/12/2028 | ||||||||||
2,857 | 24/03/2019 | 0 | 2,142 | 21/03/2029 | ||||||||||
1,087 | 04/03/2021 | 0 | 544 | 02/03/2031 | ||||||||||
3,571 | 07/06/2022 | 0 | 2,678 | 04/06/2032 |
Audit Committee
• | 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. |
• | overseeing and assisting our board in reviewing and recommending nominees for election of directors; | |
| • | assessing the performance of the members of our board; and |
| • | establishing and maintaining effective corporate governance policies and practices, including, but not limited to, developing and recommending to our board a set of corporate governance guidelines applicable to our business. |
• | overseeing the Company's scientific, technical, research and development strategy, and the implementation thereof; and | |
| • | advising our board of directors and management regarding program prioritization, clinical development strategy, regulatory strategy and interactions, and related matters. |
Internal Auditor
• | 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. |
Fiduciary Duties of Directors and Executive Officers
• | 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 | ||||||||
Nacchum (Homi) Shamir | * | * | ||||||
Ofer Gonen | * | * | ||||||
Assaf Segal | * | * | ||||||
Vickie R. Driver | * | * | ||||||
Nissim Mashiach | * | * | ||||||
Sharon Kochan | * | * | ||||||
David Fox | * | * | ||||||
Stephen T. Wills | * | * | ||||||
Sharon Malka | 96,127 | 1.01 | % | |||||
Boaz Gur-Lavie | * | * | ||||||
Ety Klinger | * | * | ||||||
Yaron Meyer | * | * | ||||||
All executive officers and directors as a group (13 persons)( 1) | 309,285 | 3.30 | % | |||||
Principal Shareholders (who are not Directors or Executive Officers) | ||||||||
Clal Biotechnology Industries Ltd.(2) | 1,497,414 | 15.80 | % | |||||
Point72 Associates, LLC | 821,500 | 8.70 | % |
* | Less than 1%. |
(1) | Shares beneficially owned consist of 1,884,067 ordinary shares held directly or indirectly by such executive officers and directors and 268,394 ordinary shares issuable upon exercise of outstanding options that are currently exercisable or exercisable within 60 days of March 15, 2023. |
(2) | Shares beneficially owned consist of: 1,172,710 ordinary shares held by Clal Life Sciences, LP, whose managing partner is Clal Application Center Ltd., a wholly-owned subsidiary of CBI; (ii) 308,811 ordinary shares held by CBI and (iii) 15,893 ordinary shares issuable upon exercise of outstanding options held directly by CBI that are currently exercisable or exercisable within 60 days of March 15, 2023. As reported on a Schedule 13D/A filed on February 13, 2023 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 |
(3) | As reported on a Schedule 13G filed on February 8, 2023, shares beneficially owned consist of: 821,500 ordinary shares held by Point72 Associates, LLC which are controlled by Point72 Asset Management, L.P. pursuant to an investment management agreement. Point72 Capital Advisors Inc. is the general partner of Point72 Asset Management. Steven Cohen, as manager, controls each of Point72 Asset Management and Point72 Capital Advisors Inc. and their business address is 72 Cummings Point Road, Stamford, CT 06902. |
Changes in Ownership of Major Shareholders
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 (%) | ||||||
2020 | 7.0 | 8.0 | ||||||
2021 | 3.3 | 7.7 | ||||||
2022 | (13.2 | ) | 5.8 |
PART II
2021 | 2022 | |||||||
Audit Fees | $ | 75,000 | $ | — | ||||
Audit‑Related Fees | — | — | ||||||
Tax Fees | — | — | ||||||
Total | $ | 75,000 | $ | — |
2021 | 2022 | |||||||
Audit Fees | $ | 170,000 | $ | 270,000 | ||||
Audit‑Related Fees | — | — | ||||||
Tax Fees | 15,000 | 28,549 | ||||||
Total | $ | 185,000 | $ | 298,549 |
• | 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. |
• | 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 |
4.19 | |
4.20 | |
4.21 | |
4.22 | |
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. |
(16) | Previously furnished to the SEC on June 9, 2022 as Appendix A to the Registrant’s proxy statement for its 2022 annual general meeting of shareholders held on July 19, 2022, 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. |
(17) | Previously filed with the SEC on March 17, 2022 as Exhibit 4.11.7 to the Registrant’s annual report on Form 20‑F for the year ended December 31, 2021 (File No. 001‑36349) and incorporated by reference herein. |
(18) | Previously furnished to the SEC on September 26, 2022 as Exhibit 4.1 to the Registrant’s report of foreign private issuer on Form 6‑K (File No. 001‑36349) and incorporated by reference herein. |
(19) | Previously furnished to the SEC on September 26, 2022 as Exhibit 4.2 to the Registrant’s report of foreign private issuer on Form 6‑K (File No. 001‑36349) and incorporated by reference herein. |
(20) | Previously furnished to the SEC on September 26, 2022 as Exhibit 4.4 to the Registrant’s report of foreign private issuer on Form 6‑K (File No. 001‑36349) and incorporated by reference herein. |
(21) | Previously furnished to the SEC on September 26, 2022 as Exhibit 10.3 to the Registrant’s report of foreign private issuer on Form 6‑K (File No. 001‑36349) and incorporated by reference herein. |
MediWound Ltd. | ||
Date: March 16, 2023 | By: /s/ Boaz Gur-Lavie | |
Boaz Gur-Lavie | ||
Chief Financial Officer |
Page | |
(Firm Name: KPMG (Somekh Chaikin) / PCAOB ID No. 1057) | F-2 – F-5 |
(Firm Name: KOST FORER GABBAY & KASIERER / PCAOB ID No. 1281) | |
F-6 | |
F -7 | |
F-8 | |
F-9 - F-10 | |
F-11 - F-50 |
![]() | Kost Forer Gabbay & Kasierer 144 Menachem Begin Rd. Tel-Aviv 6492102, Israel | Tel: +972-3-6232525 Fax: +972-3-5622555 ey.com |
Description of the matter | As more fully described in Note 16b to the consolidated financial statements, under the Research and Development Lawthe 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 contingent liability involved a high degree of subjectivity as it is based on assumptions about future revenues forecast, 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. For example, we analyzed the reasonableness of significant assumptions used to estimate future revenues based on historical trends, we did look back analyses, we obtained support to evaluate the accuracy of the data used in management's calculation and performed some independent recalculations.
|
/s/ KOST FORER GABBAY & KASIERER | |
Tel-Aviv, Israel | KOST FORER GABBAY & KASIERER |
February 25, 2021 | A Member of Ernst & Young Global |
As of December 31 | |||||||||||
Note | 2022 | 2021 | |||||||||
Cash and cash equivalents | 4 | 33,895 | 11,046 | ||||||||
Trade receivables | 5 | 9,332 | 1,779 | ||||||||
Inventories | 6 | 1,963 | 1,200 | ||||||||
Other receivables | 7, 24 | 650 | 927 | ||||||||
Total current assets | 45,840 | 14,952 | |||||||||
Other receivables | 8 | 364 | 469 | ||||||||
Property, plant and equipment, net | 9 | 2,366 | 2,478 | ||||||||
Right-of-use assets, net | 10 | 1,215 | 1,548 | ||||||||
Intangible assets, net | 11 | 231 | 297 | ||||||||
Total non-current assets | 4,176 | 4,792 | |||||||||
Total assets | 50,016 | 19,744 | |||||||||
Current maturities of long-term liabilities | 2,242 | 2,408 | |||||||||
Trade payables and accrued expenses | 5,656 | 4,693 | |||||||||
Other payables | 12, 24 | 4,159 | 3,620 | ||||||||
Total current liabilities | 12,057 | 10,721 | |||||||||
Deferred revenues | - | 119 | |||||||||
Warrants, net | 18c | 15,606 | - | ||||||||
Liabilities in respect of IIA grants | 13, 16b | 7,445 | 7,885 | ||||||||
Liabilities in respect of TEVA | 16c | 2,788 | 3,922 | ||||||||
Lease liabilities | 10 | 846 | 1,391 | ||||||||
Severance pay liability, net | 15 | 360 | 288 | ||||||||
Total non-current liabilities | 27,045 | 13,605 | |||||||||
Total liabilities | 39,102 | 24,326 | |||||||||
Shareholders' equity: | 18 | ||||||||||
Ordinary shares of NIS 0.01 par value: | |||||||||||
Authorized * : 12,857,143 shares as of December 31, 2022 and 7,142,858 shares as of December 31, 2021; Issued and Outstanding 7,240,020 shares as of December 31, 2022 and 3,896,117 shares as of December 31, 2021 | 143 | 75 | |||||||||
Share premium | 178,882 | 143,869 | |||||||||
Foreign currency translation reserve | (5 | ) | (19 | ) | |||||||
Accumulated deficit | (168,106 | ) | (148,507 | ) | |||||||
Total equity (deficit) | 10,914 | (4,582 | ) | ||||||||
Total liabilities and equity | 50,016 | 19,744 |
MEDIWOUND LTD. AND ITS SUBSIDIARIES
Year Ended December 31 | |||||||||||||
Note | 2022 | 2021 | 2020 | ||||||||||
Revenues from sale of products | 5,347 | 9,613 | 7,445 | ||||||||||
Revenues from development services | 12,943 | 12,372 | 13,935 | ||||||||||
Revenues from license agreements | 8,206 | 1,778 | 383 | ||||||||||
Total revenues | 22a | 26,496 | 23,763 | 21,763 | |||||||||
Cost of revenues from sale of products | 3,184 | 4,983 | 3,151 | ||||||||||
Cost of revenues from development services | 9,829 | 9,907 | 11,067 | ||||||||||
Cost of revenues from license agreements | 318 | 102 | - | ||||||||||
Total cost of revenues | 22b | 13,331 | 14,992 | 14,218 | |||||||||
Gross profit | 13,165 | 8,771 | 7,545 | ||||||||||
Research and development | 22c | 10,181 | 10,256 | 7,698 | |||||||||
Selling and marketing | 22d | 3,725 | 3,388 | 3,228 | |||||||||
General and administrative | 22e | 6,920 | 6,348 | 5,459 | |||||||||
Other expenses | 22f | 684 | - | - | |||||||||
Total operating expenses | 21,510 | 19,992 | 16,385 | ||||||||||
Operating loss | (8,345 | ) | (11,221 | ) | (8,840 | ) | |||||||
Financial income | 461 | 11 | 843 | ||||||||||
Financial expense | (11,637 | ) | (2,314 | ) | (1,279 | ) | |||||||
Financing expenses, net | 22g | (11,176 | ) | (2,303 | ) | (436 | ) | ||||||
Loss before taxes on income | (19,521 | ) | (13,524 | ) | (9,276 | ) | |||||||
Taxes on income | (78 | ) | (27 | ) | - | ||||||||
Loss from continuing operations | (19,599 | ) | (13,551 | ) | (9,276 | ) | |||||||
Profit from discontinued operations | 16c,21 | - | - | 80 | |||||||||
Net loss for the year | (19,599 | ) | (13,551 | ) | (9,196 | ) | |||||||
Other comprehensive income (loss): | |||||||||||||
Foreign currency translation adjustments | 14 | 21 | (23 | ) | |||||||||
Total comprehensive loss | (19,585 | ) | (13,530 | ) | (9,219 | ) | |||||||
Loss per share data | 23,18 | ||||||||||||
Total basic and diluted net loss per share - USD | (3.93 | ) | *(3.48 | ) | *(2.38 | ) | |||||||
Number of shares used in calculating basic loss per share | 4,987,069 | *3,892,068 | *3,882,692 |
MEDIWOUND LTD. AND ITS SUBSIDIARIES
Share capital | Share premium | Foreign currency translation reserve | Accumulated deficit | Total equity (deficit) | ||||||||||||||||
Balance as of January 1, 2022 | 75 | 143,869 | (19 | ) | (148,507 | ) | (4,582 | ) | ||||||||||||
Net loss | - | - | - | (19,599 | ) | (19,599 | ) | |||||||||||||
Other comprehensive income | - | - | 14 | - | 14 | |||||||||||||||
Total comprehensive loss | - | - | 14 | (19,599 | ) | (19,585 | ) | |||||||||||||
Exercise of options | (* | ) | (* | ) | - | - | (* | ) | ||||||||||||
Issuance of ordinary shares, net of issuance expenses (see note 18c) | 40 | 17,389 | - | - | 17,429 | |||||||||||||||
Exercise of pre-funded warrants (see note 18c) | 28 | 15,678 | - | - | 15,706 | |||||||||||||||
Share-based compensation | - | 1,946 | - | - | 1,946 | |||||||||||||||
Balance as of December 31, 2022 | 143 | 178,882 | (5 | ) | (168,106 | ) | 10,914 | |||||||||||||
Balance as of January 1, 2021 | 75 | 142,193 | (40 | ) | (134,956 | ) | 7,272 | |||||||||||||
Net loss | - | - | - | (13,551 | ) | (13,551 | ) | |||||||||||||
Other comprehensive income | - | - | 21 | - | 21 | |||||||||||||||
Total comprehensive loss | - | - | 21 | (13,551 | ) | (13,530 | ) | |||||||||||||
Exercise of options | (* | ) | 3 | - | - | 3 | ||||||||||||||
Share-based compensation | - | 1,673 | - | - | 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 | - | - | - | (9,196 | ) | (9,196 | ) | |||||||||||||
Other comprehensive loss | - | - | (23 | ) | - | (23 | ) | |||||||||||||
Total comprehensive loss | - | - | (23 | ) | (9,196 | ) | (9,219 | ) | ||||||||||||
Exercise of options | (* | ) | (* | ) | -(* | ) | - | (* | ) | |||||||||||
Share-based compensation | - | 1,322 | - | - | 1,322 | |||||||||||||||
Balance as of December 31, 2020 | 75 | 142,193 | (40 | ) | (134,956 | ) | 7,272 |
MEDIWOUND LTD. AND ITS SUBSIDIARIES
Year ended December 31, | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
Cash flows from operating activities: | ||||||||||||
Loss for the year | (19,599 | ) | (13,551 | ) | (9,196 | ) | ||||||
Adjustments to reconcile net loss to net cash used in continuing operating activities: | ||||||||||||
Adjustments to profit and loss items: | ||||||||||||
Profit from discontinued operation | - | - | (80 | ) | ||||||||
Depreciation and amortization | 1,272 | 1,238 | 1,090 | |||||||||
Share-based compensation | 1,946 | 1,673 | 1,322 | |||||||||
Revaluation of warrants accounted at fair value | 8,977 | - | - | |||||||||
Issuance expenses of warrants through profit and loss | 1,911 | - | - | |||||||||
Revaluation of liabilities in respect of IIA grants | (132 | ) | 919 | 828 | ||||||||
Revaluation of liabilities in respect of TEVA | 533 | 590 | (433 | ) | ||||||||
Revaluation of lease liabilities | (109 | ) | 188 | 305 | ||||||||
Increase in severance pay liability, net | 109 | 13 | 33 | |||||||||
Net financing income | (74 | ) | (11 | ) | (297 | ) | ||||||
Un-realized foreign currency loss (gain) | 525 | (137 | ) | (211 | ) | |||||||
14,958 | 4,473 | 2,557 | ||||||||||
Changes in asset and liability items: | ||||||||||||
Decrease (increase) in trade receivables | (7,582 | ) | 929 | 1,386 | ||||||||
Decrease (increase) in inventories | (721 | ) | 257 | 141 | ||||||||
Decrease (increase) in other receivables | 364 | (763 | ) | (13 | ) | |||||||
Increase (decrease) in trade payables and accrued expenses | 414 | 1,723 | (1,096 | ) | ||||||||
Increase (decrease) in other payables and deferred revenues | 281 | (1,984 | ) | (479 | ) | |||||||
(7,244 | ) | 162 | (61 | ) | ||||||||
Net cash used in continuing operating activities | (11,885 | ) | (8,916 | ) | (6,700 | ) | ||||||
Net cash used in discontinued operating activities | - | - | (195 | ) | ||||||||
Net cash used in operating activities | (11,885 | ) | (8,916 | ) | (6,895 | ) |
Year ended December 31, | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
Cash flows from investing activities: | ||||||||||||
Purchase of property and equipment | (555 | ) | (489 | ) | (923 | ) | ||||||
Interest received | 74 | 35 | 274 | |||||||||
Proceeds from short term bank deposits, net | - | 4,002 | 18,034 | |||||||||
Net cash (used in) provided by investing activities | (481 | ) | 3,548 | 17,385 | ||||||||
Cash flows from financing activities: | ||||||||||||
Repayment of leases liabilities | (701 | ) | (693 | ) | (508 | ) | ||||||
Proceeds from exercise of options | (* | ) | 3 | (* | ) | |||||||
Proceeds from exercise of pre-funded warrants | 10 | - | - | |||||||||
Proceeds from issuance of shares and warrants, net | 38,380 | - | - | |||||||||
Repayment of IIA grants, net | (258 | ) | (360 | ) | (121 | ) | ||||||
Repayment of liabilities in respect of TEVA | (1,667 | ) | - | - | ||||||||
Net cash provided by (used in) continuing financing activities | 35,764 | (1,050 | ) | (629 | ) | |||||||
Exchange rate differences on cash and cash equivalent balances | (549 | ) | 88 | 273 | ||||||||
Increase (decrease) in cash and cash equivalents from continuing activities | 22,849 | (6,330 | ) | 10,329 | ||||||||
Decrease in cash and cash equivalents from discontinued activities | - | - | (195 | ) | ||||||||
Balance of cash and cash equivalents at the beginning of the year | 11,046 | 17,376 | 7,242 | |||||||||
Balance of cash and cash equivalents at the end of the year | 33,895 | 11,046 | 17,376 | |||||||||
Supplement disclosure of Non-cash transactions: | ||||||||||||
ROU asset, net recognized with corresponding lease liability | 117 | 155 | 261 |
MEDIWOUND LTD. AND ITS SUBSIDIARIES
Note 1: | General |
a. | Description of the Company and its operations: |
• | The Company sell NexoBrid to burn centers in the European Union, United Kingdom and Israel, primarily through its commercial organizations. |
• | The Company have established local distribution channels in multiple international markets, focusing on Asia Pacific, EMEA, CEE and LATAM, which local distributors are also responsible for obtaining local marketing authorization within the relevant territories. |
• | In the United States, the Company entered into exclusive license and supply agreements with Vericel Corporation (“Vericel”) to commercialize NexoBrid in North America upon FDA approval. |
Notes to the Consolidated Financial Statements
Note 1: | General (Cont.) |
b. | The Company's securities are listed for trading on NASDAQ since March 2014. |
c. | The Company has three wholly owned subsidiaries: MediWound Germany GmbH, acting as Europe (“EU”) marketing authorization holder and EU sales and marketing arm, and MediWound UK Limited and MediWound US, Inc. which are currently inactive companies. |
d. | The Company awarded two contracts with the U.S. Biomedical Advanced Research and Development Authority ("BARDA") valued at up to $200,000 for the advancement of the development, manufacturing and emergency readiness for NexoBrid deployment as well as the procurement of NexoBrid as a medical countermeasure as part of BARDA preparedness for mass casualty events. In February 2022 BARDA has expanded its awarded contract providing supplemental funding of approxemently $9,000 to support the NexoBrid BLA resubmission to the FDA and the continuous expanded access program. |
e. | On February 17, 2022 the Company engaged with the U.S. Department of Defense (DoD), through the Medical Technology Enterprise Consortium (MTEC), for a $1,800 contract for the development of NexoBrid as a non-surgical solution for field-care burn treatment for the U.S. Army. |
a. | Statement of compliance with International Financial Reporting Standards |
Notes to the Consolidated Financial Statements
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: |
• | Fair value estimations of warrants |
Note 3: | Significant Accounting Policies |
a. | Basis of consolidation: |
Notes to the Consolidated Financial Statements
Note 3: | Significant Accounting Policies (Cont.) |
b. | Cash equivalents: |
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. | Property, plant and equipment, net: |
% | ||
Office furniture | 7-10 | |
Manufacturing machinery and lab equipment | 15-33 | |
Computers | 33 | |
Leasehold improvements | See below |
Notes to the Consolidated Financial Statements
Note 3: | Significant Accounting Policies (Cont.) |
f. | Intangible assets, net: |
h. | Leases: |
Notes to the Consolidated Financial Statements
Note 3: | Significant Accounting Policies (Cont.) |
Years | |
Motor vehicles | 3 |
Buildings and equipment | 5-8 |
• | Variable lease payments that depend on an index: |
• | Lease extension and termination options: |
• | Lease modifications: |
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.) |
j. | Research and development expenses: |
Notes to the Consolidated Financial Statements
Note 3: | Significant Accounting Policies (Cont.) |
k. | Impairment of non-financial assets: |
l. | Financial instruments: |
1. | Financial assets: |
- | The Company's business model for managing financial assets; and |
- | The contractual cash flow terms of the financial asset. |
Notes to the Consolidated Financial Statements
Note 3: | Significant Accounting Policies (Cont.) |
2. | Financial liabilities: |
a) | Financial liabilities measured at amortized cost: |
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: |
m. | Warrants: |
n. | Provisions: |
o. | Short-term employee benefits and severance pay liability, net: |
Notes to the Consolidated Financial Statements
Note 3: | Significant Accounting Policies (Cont.) |
p. | Share-based compensation: |
q. | Discontinued operation: |
Notes to the Consolidated Financial Statements
Note 3: | Significant Accounting Policies (Cont.) |
r. | Profit / Loss per share: |
s. | New standards, amendments to standards and interpretations not yet adopted: |
Notes to the Consolidated Financial Statements
Note 4: | Cash and Cash Equivalents |
December 31 | ||||||||
2022 | 2021 | |||||||
Balance in USD | 24,475 | 7,735 | ||||||
Balance in other currencies | 9,420 | 3,311 | ||||||
33,895 | 11,046 |
Note 5: | Trade Receivables |
December 31, | ||||||||
2022 | 2021 | |||||||
Vericel (Note 17b) | 7,500 | - | ||||||
BARDA (Note 17a) | 701 | 1,085 | ||||||
Other trade receivables | 1,133 | 696 | ||||||
Less provision for impairment | (2 | ) | (2 | ) | ||||
9,332 | 1,779 |
Note 6: Inventories
December 31, | ||||||||
2022 | 2021 | |||||||
Raw materials | 913 | 694 | ||||||
Finished goods | 1,050 | 506 | ||||||
1,963 | 1,200 |
Note 7: | Other Receivables- Short Term |
December 31, | ||||||||
2022 | 2021 | |||||||
Government authorities | 193 | 141 | ||||||
Contract asset related to BARDA | - | 347 | ||||||
Prepaid expenses and other | 457 | 439 | ||||||
650 | 927 |
Note 8: | Other Receivables- Long Term |
December 31, | ||||||||
2022 | 2021 | |||||||
Income receivables | 180 | 280 | ||||||
Restricted bank deposits (1) | 184 | 189 | ||||||
364 | 469 |
(1) | Restricted bank deposits which are primarily used as security for the Company’s office leases. |
Notes to the Consolidated Financial Statements
Note 9: Property, Plant And Equipment, Net
Cost | Office furniture | Manufacturing machinery and lab equipment | Computers | Leasehold improvements | Total | |||||||||||||||
Balance as of January 1, 2022 | 257 | 4,764 | 176 | 3,137 | 8,334 | |||||||||||||||
Additions | 37 | 327 | 49 | 142 | 555 | |||||||||||||||
Disposals | - | - | (59 | ) | - | (59 | ) | |||||||||||||
Foreign currency translation | (1 | ) | - | - | - | (1 | ) | |||||||||||||
Balance as of December 31, 2022 | 293 | 5,091 | 166 | 3,279 | 8,829 | |||||||||||||||
Balance as of January 1, 2021 | 332 | 4,775 | 169 | 2,904 | 8,180 | |||||||||||||||
Additions | 18 | 193 | 45 | 233 | 489 | |||||||||||||||
Disposals | (89 | ) | (205 | ) | (36 | ) | - | (330 | ) | |||||||||||
Foreign currency translation | (4 | ) | 1 | (2 | ) | - | (5 | ) | ||||||||||||
Balance as of December 31, 2021 | 257 | 4,764 | 176 | 3,137 | 8,334 | |||||||||||||||
Accumulated Depreciation | ||||||||||||||||||||
Balance as of January 1, 2022 | 133 | 3,370 | 94 | 2,259 | 5,856 | |||||||||||||||
Additions | 25 | 448 | 62 | 132 | 667 | |||||||||||||||
Disposals | - | - | (59 | ) | - | (59 | ) | |||||||||||||
Foreign currency translation | (1 | ) | - | - | - | (1 | ) | |||||||||||||
Balance as of December 31, 2022 | 157 | 3,818 | 97 | 2,391 | 6,463 | |||||||||||||||
Balance as of January 1, 2021 | 204 | 3,092 | 76 | 2,178 | 5,550 | |||||||||||||||
Additions | 22 | 483 | 55 | 81 | 641 | |||||||||||||||
Disposals | (89 | ) | (204 | ) | (35 | ) | - | (328 | ) | |||||||||||
Foreign currency translation | (4 | ) | (1 | ) | (2 | ) | - | (7 | ) | |||||||||||
Balance as of December 31, 2021 | 133 | 3,370 | 94 | 2,259 | 5,856 | |||||||||||||||
Carrying amounts of all fixed asset items |
December 31, 2022 | 136 | 1,273 | 69 | 888 | 2,366 | |||||||||||||||
December 31, 2021 | 124 | 1,394 | 82 | 878 | 2,478 |
Notes to the Consolidated Financial Statements
Note 10: | Leases |
a. | Lease Agreements: |
b. | Amounts recognized in profit or loss and in the statement of cash flows |
Year ended December 31, | ||||||||
2022 | 2021 | |||||||
Interest expense on lease liabilities | 102 | 120 | ||||||
Depreciation expenses relating to short-term leases | 537 | 531 | ||||||
Cash outflow for leases | 701 | 693 |
Notes to the Consolidated Financial Statements
c. | Disclosures in respect of Right- of- Use assets: |
Buildings | Motor vehicles | Total | ||||||||||
Cost | ||||||||||||
Balance as of January 1, 2022 | 2,267 | 654 | 2,921 | |||||||||
New leases | - | 125 | 125 | |||||||||
Adjustments for indexation | 74 | 9 | 83 | |||||||||
Disposals | - | (238 | ) | (238 | ) | |||||||
Balance as of December 31, 2022 | 2,341 | 550 | 2,891 | |||||||||
Accumulated depreciation | ||||||||||||
Balance as of January 1, 2022 | 1,028 | 345 | 1,373 | |||||||||
Depreciation and amortization | 314 | 225 | 539 | |||||||||
Disposals | - | (236 | ) | (236 | ) | |||||||
Balance as of December 31, 2022 | 1,342 | 334 | 1,676 | |||||||||
Depreciated cost | ||||||||||||
Balance as of December 31, 2022 | 999 | 216 | 1,215 |
Buildings | Motor vehicles | Total | ||||||||||
Cost | ||||||||||||
Balance as of January 1, 2021 | 2,225 | 512 | 2,737 | |||||||||
New leases | - | 162 | 162 | |||||||||
Adjustments for indexation | 42 | 7 | 49 | |||||||||
Disposals | - | (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 | - | (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 |
Notes to the Consolidated Financial Statements
Note 10: | Leases (Cont.) |
d. | Disclosures of the Company's lease liabilities : |
Buildings | Motor vehicles | Total | ||||||||||
Balance as of January 1, 2022 | 1,691 | 299 | 1,990 | |||||||||
Repayment of leases liabilities | (477 | ) | (224 | ) | (701 | ) | ||||||
Effect of changes in exchange rates | (182 | ) | (28 | ) | (210 | ) | ||||||
New finance lease obligation recognized | - | 117 | 117 | |||||||||
Adjustments for indexation | 74 | 9 | 83 | |||||||||
Financial expenses | 93 | 8 | 101 | |||||||||
Disposals-Termination of leases | - | (2 | ) | (2 | ) | |||||||
Balance as of December 31, 2022 | 1,199 | 179 | 1,378 | |||||||||
Current maturities of long-term leases | (399 | ) | (133 | ) | (532 | ) | ||||||
Lease liability Balance as of December 31, 2022 | 800 | 46 | 846 |
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 | - | 155 | 155 | |||||||||
Adjustments for indexation | 42 | 7 | 49 | |||||||||
Financial expenses | 118 | 2 | 120 | |||||||||
Disposals-Termination of leases | - | (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 |
Note 11: Intangible Assets, Net
License and Knowhow | ||||||||
2022 | 2021 | |||||||
Cost | ||||||||
Balance as of January 1, | 1,538 | 1,538 | ||||||
Additions | - | - | ||||||
Balance as of December 31, | 1,538 | 1,538 | ||||||
Accumulated Amortization | ||||||||
Balance as of January 1, | 1,241 | 1,175 | ||||||
Additions | 66 | 66 | ||||||
Balance as of December 31, | 1,307 | 1,241 | ||||||
Amortized cost | ||||||||
Balance as of December 31, | 231 | 297 |
Notes to the Consolidated Financial Statements
December 31, | ||||||||
2022 | 2021 | |||||||
Employees and payroll accruals | 2,471 | 1,639 | ||||||
Liability in respect of TEVA (see Note 16c) | 417 | 417 | ||||||
Related parties | 307 | 241 | ||||||
Deferred revenues | 63 | 543 | ||||||
Other | 901 | 780 | ||||||
4,159 | 3,620 |
Note 13: Liabilities in Respect of IIA Grants
December 31 | ||||||||
2022 | 2021 | |||||||
Balance as of January 1, | 8,105 | 7,528 | ||||||
Royalties | (407 | ) | (342 | ) | ||||
Amounts carried to Profit or Loss | (132 | ) | 919 | |||||
Balance as of December 31, | 7,566 | 8,105 | ||||||
Current maturities | (121 | ) | (220 | ) | ||||
Long term liabilities in respect of IIA grants | 7,445 | 7,885 |
Notes to the Consolidated Financial Statements
Note 14: | Financial Instruments |
a. | Risk management: |
1. | Foreign currency risk |
2. | Sensitivity tests relating to changes in market factors: |
December 31 | ||||||||
2022 | 2021 | |||||||
Gain (loss) from change: | ||||||||
5% increase in NIS and EURO exchange rate | $ | 257 | $ | 3 | ||||
5% decrease in NIS and EURO exchange rate | $ | (257 | ) | $ | (3 | ) |
Notes to the Consolidated Financial Statements
Note 14: | Financial Instruments (Cont.) |
3. | Liquidity risk |
December 31, 2022 | ||||||||||||||||
Carrying | 12 months | |||||||||||||||
amount | or less | 1-2 years | 2-8 years | |||||||||||||
Non-derivative financial liabilities | ||||||||||||||||
Current liabilities | ||||||||||||||||
Current maturities of long-term liabilities | 2,814 | 2,814 | - | - | ||||||||||||
Trade payables and accrued expenses | 5,656 | 5,656 | - | - | ||||||||||||
Other payables | 4,159 | 4,159 | - | - | ||||||||||||
Non-current liabilities | ||||||||||||||||
Liabilities in respect of IIA grants | 15,464 | - | 312 | 15,152 | ||||||||||||
Liabilities in respect of TEVA | 4,200 | - | 1,000 | 3,200 | ||||||||||||
Lease liabilities | 902 | - | 508 | 394 |
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 TEVA | 5,867 | - | 1,667 | 4,200 | ||||||||||||
Lease liabilities | 1,522 | - | 589 | 933 |
Notes to the Consolidated Financial Statements
Note 14: | Financial Instruments (Cont.) |
b. | Fair value: |
(1) | Financial instruments measured at fair value for disclosure purposes only. |
(2) | Fair value hierarchy of financial instruments measured at fair value. |
Note 15: | Severance Pay Liabilty, Net |
Notes to the Consolidated Financial Statements
Note 15: | Severance Pay Liabilty, Net (Cont.) |
Note 16: | Liabilities and Commitments |
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. |
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. The total royalties amount paid as of December 31, 2022 is $1,562. (Note 13). |
c. | In December 2020, Teva has agreed to revise the Settlement Agreement from March 2019, which was comprised of past agreement for collaboration in the development, manufacturing and commercialization of solutions for the burn and chronic wound care markets, as well as the Company’s repurchase of shares from Teva. Under the new settlement the Company paid $1,000 in cash and became obligated to pay an amount of $2,000 over three years and an addition amount of $7,200 in quarterly fixed payments starting 2021 as long as there are revenues generated from sales of NexoBrid. |
Notes to the Consolidated Financial Statements
Note 16: | Liabilities and Commitments (Cont.) |
Note 17: | Materials Agreements |
a. | BARDA Contracts |
b. | Vericel Agreement: |
Notes to the Consolidated Financial Statements
Note 17: | Materials Agreememts (Cont.) |
Note 18: | Equity |
a. | Share capital: |
December 31 | ||||||||
2022 | 2021 | |||||||
Authorized number of shares | 12,857,143 | *7,142,858 | ||||||
Issued and outstanding number of shares | 7,240,020 | *3,896,117 |
b. | Movement in share capital: |
1. | During 2020 and 2021 the Company issued additional 4,852 ordinary shares for each year upon vesting of outstanding RSU’s. |
2. | On November 28, 2022, at the Company’s extraordinary general meeting of shareholders, its shareholders approved: |
(a) | An increases of the Company’s authorized share capital from NIS 500,000, consisting of 50,000,000 ordinary shares, per value NIS 0.01 per share to NIS 900,000 consisting of 90,000,000 ordinary shares, per value NIS 0.01 per share. |
(b) | A reverse stock split, in a range of between 1-for-5 and 1-for-10, subject to the discretion of our board of directors to implement it within 12 months. |
Notes to the Consolidated Financial Statements
Note 18: | Equity (Cont.) |
3. | During 2022 the Company issued additional 11,827 ordinary shares upon vesting of outstanding RSU’s. |
c. | Financial transactions: |
1. | On March 7, 2022, the Company completed a public offering in total of 744,048 new ordinary shares which were issued in consideration to offering price of $13.44 per share. The net proceeds were $8,653, after deducting commissions and other offering expenses. In addition, on March 22, 2022 the underwriters exercised their options to purchase an additional 89,012 ordinary shares at the same public offering price. The net consideration to the Company , less underwriting discounts and commissions was at additional of $1,021. |
2. | On September 26, 2022, the Company completed a registered direct (the “RD”) offering in an aggregate amount of $13,257 represent a combine purchase price of $12.25 for issuance of 1,082,223 ordinary shares and 1,082,223 warrants that become exercisable on November 28, 2022, at an exercise price of $13.475 per ordinary share which will expire in four years. |
Notes to the Consolidated Financial Statements
Note 18: | Equity (Cont.) |
3. | Concurrently, on October 6, 2022, the Company entered into a Private Issuance Purchase Equity agreement (the “PIPE”) with several purchasers, in connection with the offering of 1,407,583 unregistered pre-funded warrants to purchase up to 1,407,583 ordinary shares and 1,407,583 warrants to purchase up to 1,407,583 ordinary shares. Pre-Funded warrants become exercisable on November 28, 2022, at an exercise price of $0.007 per ordinary share and the warrants would be also exercisable upon the Authorized Share Increase Date at an exercise price of $13.475 per ordinary share and expire in four years. |
4. | Upon closing of the RD and PIPE Offerings, the Company also issued the placement agent up to 124,491 warrants to purchase up to 124,491 ordinary Shares. The warrants have substantially the same terms as the RD and PIPE Warrants, except that the placement agent’s warrants have an exercise price equal to $15.312 per share (which represents 125% of the offering price per ordinary Share in the offerings). The Fair value of the placement agent’s options was recorded as an issuance expenses through profit and lost and as a deduction from proceed in equity based on the financial treatment of both RD and PIPE offering and in accordance to their part. |
5. | See also Note 25.1 regarding a public offering after the reporting date. |
Notes to the Consolidated Financial Statements
Year ended December 31 | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
Cost of revenues | 184 | 153 | 115 | |||||||||
Research and development | 406 | 333 | 179 | |||||||||
Selling and marketing | 42 | - | 3 | |||||||||
General and administrative | 1,314 | 1,187 | 1,025 | |||||||||
Total share-based compensation | 1,946 | 1,673 | 1,322 |
b. Share-based payment plan for employees and directors:
As of December 31, 2022, 145,131 ordinary shares of the Company were still available for future grant.
Notes to the Consolidated Financial Statements
Note 19: Share‑Based Compensation (Cont.) |
c. Share options activity:
2022 | 2021* | 2020* | ||||||||||||||||||||||
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 | 537,288 | 44.45 | 513,973 | 45.85 | 333,490 | 64.26 | ||||||||||||||||||
Options Granted | 320,775 | 14.25 | 53,970 | 37.52 | 182,054 | 10.01 | ||||||||||||||||||
Options Exercised | (807 | ) | 12.23 | (536 | ) | 20.16 | - | - | ||||||||||||||||
Options Forfeited and/or expired | (92,489 | ) | 55.58 | (30,119 | ) | 56.91 | (1,571 | ) | 50.33 | |||||||||||||||
Outstanding options and at end of year | 764,767 | 30.44 | 537,288 | 44.45 | 513,973 | 45.85 | ||||||||||||||||||
Option's Exercisable at end of year | 373,681 | 46.18 | 333,618 | 58.38 | 278,859 | 69.86 |
*Restated o reflect 1:7 reverse ratio of shares (See note 18b)
The following table summarizes information about share options outstanding:
Options outstanding as of December 31, 2022 | ||||||||||||
Range of exercise prices ($ ) | Number of options | Weighted Average Remaining contractual life | Weighted average exercise price | |||||||||
12.25-14.42 | 470,693 | 7.84 | 13.60 | |||||||||
26.88-37.52 | 145,354 | 6.43 | 35.95 | |||||||||
42.14-67.06 | 68,662 | 2.85 | 63.94 | |||||||||
90.23-96.32 | 80,058 | 0.91 | 90.65 | |||||||||
Total | 764,767 | 6.40 | 30.44 |
| Options outstanding as of December31, 2021* | |||||||||||
Range of exercise prices ($) | Number of options | Weighted Average Remaining contractual life | Weighted average exercise price | |||||||||
| ||||||||||||
12.25-37.52 | 329,638 | 6.19 | 23.03 | |||||||||
42.14-67.06 | 91,750 | 3.68 | 63.07 | |||||||||
90.23-96.32 | 115,900 | 1.92 | 90.51 | |||||||||
Total | 537,288 | 4.84 | 44.45 |
Notes to the Consolidated Financial Statements
Note 19: Share‑Based Compensation (Cont.)
The following table summarizes information about RSU's outstanding:
RSU's 2022 | RSU's 2021* | RSU's 2020* | ||||||||||
Outstanding at beginning of year | 14,581 | 10,655 | 15,506 | |||||||||
Granted | 39,286 | 8,992 | - | |||||||||
Forfeited | (27 | ) | (215 | ) | - | |||||||
Vested | (11,827 | ) | (4,851 | ) | (4,851 | ) | ||||||
Outstanding at the end of the period | 42,013 | 14,581 | 10,655 |
*Restated o reflect 1:7 reverse ratio of shares (See note 18b)
1. | On April 23, 2020, the Company's Board of Directors approved the grant of 182,055 options to purchase ordinary shares under the "2014 Share Incentive Plan", for an exercise price of $ 12.25 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. |
2. | On March 4, 2021, the Company's Board of Directors approved the grant of: (a) 34,013 options to purchase ordinary shares and 5,669 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) 19,958 options to purchase ordinary shares and 3,324 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 $ 37.52 per share. | |
3. | Over the second quarter of 2022, the Company’s Board of Directors approved the grant of 292,203 options to purchase the Company’s ordinary shares, for an exercise price of $ 14.42 per share as well as 39,286 restricted share units (“RSU’s”) to its CEO, officers and employees. The fair value of the options and RSU’s as of the grant date, was estimated at $2,314 and $498 respectively.
The above-mentioned grant includes the grant of 151,786 options to purchase the Company’s ordinary shares and 39,286 restricted share units (“RSU’s”) to the directors and the CEO of the Company which are required to be approved by the Company’s General meeting as well. The fair value of the options and RSU’s, as of the approval date, was estimated at approximately $1,171 and $498, respectively. | |
4. | On July 19, 2022, the Company’s Shareholders General meeting approved the abovementioned grants (Note 3p, Note 19) to the directors and the CEO, the compensation terms of Mr. Ofer Gonen as the Company’s new Chief Executive Officer, which terms will be effective as of July 1, 2022 and the termination terms for the previous CEO. |
Notes to the Consolidated Financial Statements
Note 19: Share‑Based Compensation (Cont.)
5. | On August 18, 2022, the Company’s Shareholders General meeting approved the compensation terms and grant of 28,572 options to the Chairman of the Board of Directors which approved earlier by the board. The fair value of the options as of the grant date, was estimated at $284. |
d. The fair value of the Company's share options granted to employees and directors for the years ended December 31, 2020, 2021 and 2022 was estimated using the binomial option pricing models using the following assumptions:
December 31 | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
Dividend yield (%) | 0 | 0 | 0 | |||||||||
Expected volatility of the share prices (%) | 59-77 | 55-78 | 51-71 | |||||||||
Risk-free interest rate (%) | 2.1-5.2 | 0.1-1.5 | 0.2-0.9 | |||||||||
Early exercise factor (%) | 100-150 | 100-150 | 100-150 | |||||||||
Weighted average share prices (Dollar) | 7.98 | 20.16 | 17.01 |
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 20: | 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. |
b. | Corporate tax rate in Israel: |
c. | Benefits under the Law for the Encouragement of Capital Investments: |
Notes to the Consolidated Financial Statements
Note 20: | 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: |
f. | Net operating carryforward losses for tax purposes and other temporary differences: |
g. | Deferred taxes: |
h. | Current taxes on income: |
i. | Theoretical tax: |
Notes to the Consolidated Financial Statements
Note 21: Discontinued Operation
Note 22: | Supplementary Information to the Statements of Comprehensive Profit or Loss |
a. | Additional information on Revenues: |
Year ended December 31 | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
USA ( see also Note 17a, 17b) | 21,872 | 18,102 | 18,030 | |||||||||
EU and other international markets | 4,624 | 5,661 | 3,733 | |||||||||
26,496 | 23,763 | 21,763 |
b. | Cost of Revenues: |
1. | Cost of Revenues from sale of products |
Year ended December 31 | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
Salary and benefits (including share-based compensation) | 1,828 | 2,047 | 1,532 | |||||||||
Subcontractors | 58 | 190 | 118 | |||||||||
Depreciation and amortization | 426 | 559 | 387 | |||||||||
Cost of materials | 636 | 1,039 | 300 | |||||||||
Other manufacturing expenses | 779 | 906 | 659 | |||||||||
Decrease (increase) in inventory of finished products | (543 | ) | 242 | 155 | ||||||||
3,184 | 4,983 | 3,151 |
Notes to the Consolidated Financial Statements
Note 22: | Supplementary Information to the Statements of Comprehensive Profit or Loss (Cont.)
|
2. | Cost of Revenues from development services |
Year ended December 31 | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
Salary and benefits | 1,691 | 2,003 | 2,320 | |||||||||
Subcontractors | 8,138 | 7,904 | 8,747 | |||||||||
9,829 | 9,907 | 11,067 |
3. | Cost of Revenues from license agreements |
Year ended December 31 | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
Salary and benefits | 38 | 102 | - | |||||||||
Royalties payments | 280 | - | - | |||||||||
318 | 102 | - | ||||||||||
Total Cost of Revenues | 13,331 | 14,992 | 14,218 |
c. | Research and development expenses, net of participations: |
Year ended December 31 | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
Salary and benefits (including share-based compensation)(1) | 4,494 | 2,864 | 2,701 | |||||||||
Subcontractors | 4,054 | 6,323 | 3,208 | |||||||||
Depreciation and amortization | 571 | 396 | 512 | |||||||||
Cost of materials | 572 | 347 | 922 | |||||||||
Other research and development expenses | 490 | 326 | 355 | |||||||||
Total Research and development, net of participations | 10,181 | 10,256 | 7,698 |
(1) | The salary costs for the year ended December 31,2022 includes one time payment of $205 derived from termination agreement with the CMO of the company. |
Notes to the Consolidated Financial Statements
d. | Selling and marketing expenses: |
Year ended December 31 | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
Salary and benefits (including share based compensation) | 1,637 | 1,643 | 1,700 | |||||||||
Marketing and medical support | 1,152 | 627 | 740 | |||||||||
Depreciation and amortization | 49 | 44 | 82 | |||||||||
Shipping and delivery | 385 | 490 | 282 | |||||||||
Registration and marketing license fees | 502 | 584 | 424 | |||||||||
3,725 | 3,388 | 3,228 |
e. | General and administrative expenses: |
Year ended December 31 | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
Salary and benefits (including share‑based compensation) | 3,344 | 2,905 | 2,784 | |||||||||
Professional fees | 2,589 | 2,480 | 2,267 | |||||||||
Depreciation and amortization | 225 | 239 | 108 | |||||||||
Other | 762 | 724 | 300 | |||||||||
6,920 | 6,348 | 5,459 |
f. | Other expenses: |
Notes to the Consolidated Financial Statements
Note 22: | Supplementary Information to the Statements of Comprehensive Profit or Loss (Cont.) |
g. | Financial income and expense: |
Year ended December 31 | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
Financial income: | ||||||||||||
Interest income | 270 | 11 | 297 | |||||||||
Revaluation of liabilities in respect of TEVA | - | - | 433 | |||||||||
Revaluation of liabilities in respect of IIA grants | 132 | - | - | |||||||||
Exchange differences, net | 59 | - | 113 | |||||||||
461 | 11 | 843 | ||||||||||
Financial expense: | ||||||||||||
Interest in respect of IIA grants | - | 903 | 832 | |||||||||
Revaluation of liabilities in respect of IFRS16 | 102 | 120 | 144 | |||||||||
Finance expenses in respect of deferred revenues | 54 | 143 | 247 | |||||||||
Revaluation of liabilities in respect of TEVA | 533 | 590 | - | |||||||||
Exchange differences, net | - | 511 | - | |||||||||
Revaluation of Warrants | 8,977 | - | - | |||||||||
Issuance expenses of warrants through profit and loss | 1,911 | - | - | |||||||||
Other | 60 | 47 | 56 | |||||||||
11,637 | 2,314 | 1,279 | ||||||||||
Financial expenses, net | (11,176 | ) | (2,303 | ) | (436 | ) |
a. | Details of the number of shares and loss used in the computation of loss per share from continuing operations: |
Year ended December 31 | ||||||||||||||||||||||
2022 | 2021* | 2020* | ||||||||||||||||||||
Weighted average number of shares | Loss | Weighted average number of shares | Loss | Weighted average number of shares | Loss | |||||||||||||||||
4,987,069 | (19,599 | ) | 3,892,068 | (13,551 | ) | 3,882,692 | (9,276 | ) |
Notes to the Consolidated Financial Statements
b. | Net profit (loss) per share : |
Year ended December 31 | ||||||||||||
2022 | 2021* | 2020* | ||||||||||
Basic and diluted loss per share: | (3.93 | ) | (3.48 | ) | (2.38 | ) |
* Restated to reflect 1:7 reverse ratio of shares (See note 18b)
Note 24: Balances and Transactions With Related Parties and Key Officers
a. | Related parties consist of: |
• | Clal Biotechnologies Industries Ltd.- Related party. |
• | Directors of the Company. |
1. | Balances of related parties: |
Other Payables | ||||
Related Party: | ||||
As of December 31, 2021 | 144 | |||
As of December 31, 2022 | 177 | |||
Directors: | ||||
As of December 31, 2021 | 96 | |||
As of December 31, 2022 | 130 |
2. | Transactions with related parties: |
Rental fee: | Year ended December 31 | |||||||||||
2022 | 2021 | 2020 | ||||||||||
Related party | 457 | 469 | 446 |
Professional fee *: | Year ended December 31 | |||||||||||
2022 | 2021 | 2020 | ||||||||||
Directors | 484 | 375 | 272 | |||||||||
Related party | 63 | 85 | 54 | |||||||||
547 | 460 | 326 | ||||||||||
Number of Directors | *10 | 8 | 8 |
* | Not included share based compensation detailed in Note 19. |
* | During 2022 two members of the board of directors were replaced. |
Notes to the Consolidated Financial Statements
Note 24: 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, 2022 | 754 | |||
As of December 31, 2021 | 353 |
• | Represents the officer’s gross salary, bonuses and vacation provisions without share based compensation. |
2. | Compensation of Key Officers of the Company: |
Year ended December 31 | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
Short-term employee benefits (*)(**) | 2,880 | 1,788 | 1,993 | |||||||||
Share-based compensation | 797 | 518 | 467 | |||||||||
3,677 | 2,306 | 2,460 | ||||||||||
Number of officers | 7 | 5 | 5 |
1. | On February 7, 2023, the Company completed a registered direct offering. A total of 1,964,286 new ordinary shares were issued in consideration to offering price of $14 per share. The gross proceeds, were $27,500, before deducting commissions and other offering expenses. |
2. | On February 15, 2023, the Company granted to employees, officers, board members, CEO and some consultants 199,100 share options for an exercise price of $13.32 per share and 20,150 RSUs. The share options vest over a period of 1-4 years. The total value was estimated at $1,600. The grant to the directors and CEO is subject to the approval of the next shareholders annual meeting. |