☒ | 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 |
Israel | 00-0000000 |
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) |
Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered | ||
Ordinary shares, par value NIS 0.0000769 per share | ENTX | Nasdaq Capital Market |
Large accelerated filer | ☐ | Accelerated filer | ☐ | ||
Non-accelerated filer | ☒ | Smaller reporting company | ☒ | ||
Emerging growth company | ☐ |
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• | Clinical development involves a lengthy and expensive process with uncertain outcomes. We may incur additional costs and experience delays in developing and commercializing or be unable to develop or commercialize our current and future product candidates; |
• | The regulatory approval processes of the U.S. Food and Drug Administration (“FDA”) and comparable foreign authorities are lengthy, time-consuming and inherently unpredictable, and if we are ultimately unable to obtain regulatory approval for our product candidates, our business will be materially harmed; |
• | Preclinical development is uncertain. Our preclinical programs may experience delays or may never advance to clinical trials, which would adversely affect our ability to obtain regulatory approvals or commercialize these programs on a timely basis or at all; |
• | Positive results from preclinical studies and early-stage clinical trials may not be predictive of future results. Initial positive results in any of our clinical trials may not be indicative of results obtained when the trial is completed or in later stage trials; |
• | The scope, progress and costs of developing our product candidates such as EB613 for Osteoporosis and EB612 or other oral peptides for Hypoparathyroidism may alter over time based on various factors such as regulatory requirements, collaboration agreements, the competitive environment and new data from pre-clinical and clinical studies; |
• | The accuracy of our estimates regarding expenses, capital requirements, the sufficiency of our cash resources and the need for additional financing; |
• | Our ability to continue as a going concern absent access to sources of liquidity; |
• | Our ability to raise additional funds or consummate strategic partnerships to offset additional required capital to pursue our business objectives, which may not be available on acceptable terms or at all. A failure to obtain this additional capital when needed, or failure to consummate strategic partnerships, could delay, limit or reduce our product development, and other operations; |
• | Even if a current or future product candidate receives marketing approval, it may fail to achieve the degree of market acceptance by physicians, patients, third-party payors and others in the medical community necessary for commercial success; |
• | The successful commercialization of our product candidates, if approved, will depend in part on the extent to which governmental authorities and third-party payors establish adequate coverage and reimbursement levels and pricing policies; |
• | Failure to obtain or maintain coverage and adequate reimbursement for our product candidates, if approved, could limit our ability to market those products and decrease our ability to generate revenue; |
• | If we are unable to obtain and maintain patent protection for our product candidates, or if the scope of the patent protection obtained is not sufficiently broad or robust, our competitors could develop and commercialize products similar or identical to ours, and our ability to successfully commercialize our product candidates may be adversely affected; |
• | Because we do not anticipate paying any cash dividends on our capital stock in the foreseeable future, capital appreciation, if any, will be your sole source of gain; |
• | Our reliance on third parties to conduct our clinical trials and on third-party suppliers to supply or produce our product candidates; |
• | Our interpretation of FDA feedback and guidance and how such guidance may impact our clinical development plan; |
• | Our ability to use and expand our drug delivery technology (“N-Tab™”)to additional product candidates; |
• | Our operation as a development stage company with limited operating history and a history of operating losses and our ability to fund our operations going forward; |
• | Our competitive position with respect to other products on the market or in development for the treatment of osteoporosis, hypoparathyroidism, short bowel syndrome, obesity, metabolic conditions and other disease categories we pursue; |
• | Our ability to establish and maintain development and commercialization collaborations; |
• | Our ability to manufacture and supply enough material to support our clinical trials and any potential future commercial requirements; |
• | The size of any market we may target and the adoption of our product candidates, if approved, by physicians and patients; |
• | Our ability to obtain, maintain and protect our intellectual property and operate our business without infringing, misappropriating, or otherwise violating any intellectual property rights of others; |
• | Our ability to retain key personnel and recruit additional qualified personnel; |
• | Our ability to comply with laws and regulations that currently apply or become applicable to our business in Israel, the United States and internationally; |
• | Our ability to manage growth; and |
• | The duration and intensity of the ongoing Israel-Hamas War and its impact on our operations and workforce, including our research and development and clinical trials. |
• | Advancing EB613, Potentially the First Daily Anabolic PTH(1-34) Tablet into Phase 3 for the Treatment of Post-Menopausal Women with Low Bone Mass and Osteoporosis: Our six-month placebo-controlled Phase 2 double-blind, dose-ranging trial of EB613 in 161 patients with low bone mass and osteoporosis met both primary and secondary endpoints and was selected for oral presentation at the American Society of Bone Mineral Research (ASBMR) annual conference in 2021. Based on the outcome of our October 2022 Type C meeting with the FDA, we believe that EB613 may be the first osteoporosis program to be permitted by FDA to pursue a placebo controlled, BMD endpoint registrational Phase 3 study to support a NDA. We view this outcome as testament to the treatment gap and unmet need for a viable alternative to treat the millions of osteoporosis patients who, despite current guidelines and availability of highly efficacious anabolic agents, are unwilling to take daily or monthly injections. We are preparing to initiate a Phase 3 registrational study for EB613 pursuant to the FDA’s qualification of a quantitative BMD endpoint which is expected to occur in 2024. |
• | Advancing the First Daily PTH(1-34) Peptide Replacement Tablet Therapy for the Treatment of Hypoparathyroidism: In 2015, we successfully completed a Phase 2a four-month trial in 19 patients with hypoparathyroidism which demonstrated clinical benefit, including a statistically significant reduction in calcium supplementation, maintenance of calcium levels above the lower target level for Hypoparathyroidism patients (>7.5 mg/dL) throughout the study and statistically significant rapid decline in median serum phosphate levels two hours following the first dose, which was maintained for the duration of the study. The FDA and the European Medicines Agency, or EMA, have granted EB612 orphan drug designation for the treatment of hypoparathyroidism. With respect to our EB612 program, we are currently testing new generations of our N-Tab™ Technology with the naked PTH(1-34) peptide to assess the effectiveness of once or twice a day dosing regimens as well as collaborating with a third party on another peptide in this field. |
• | Establishing Select Global and Regional Development and Commercial Partnerships: Our N-Tab™ Technology platform and intellectual property are designed to generate a pipeline of product candidates across various therapeutic indications. We intend to explore opportunities to diversify and shorten the preclinical and clinical development of these candidates in a capital-efficient manner, including selectively pursuing research and clinical development partnerships with biopharmaceutical companies with specific domain expertise as well as with biopharmaceutical companies with proven commercial footprints to de-risk our late-stage programs. |
• | Identifying and Developing Potentially High Value Oral Peptides in Collaboration with Strategic Partners such as our GLP-2 and Oxyntomodulin Programs: We intend to leverage our N-Tab™ Technology platform by applying it to the development of additional, currently approved injectable peptides and therapeutic proteins with known mechanisms of action and established safety profiles. We believe this will allow us to advance our product candidates more efficiently and predictably through the research and clinical development cycle. For example, in collaboration with OPKO, we are focusing on the development of the first oral OXM, a dual targeted GLP1/glucagon peptide, in tablet form for the treatment of obesity and the first oral GLP-2 peptide tablet as an injection-free alternative for patients suffering from rare malabsorption conditions, such as short bowel syndrome. Both these peptides have well characterized pre-clinical PK/PD and toxicology. |
Limitations of current treatments for hypoparathyroidism
• | preclinical laboratory tests, animal studies and formulation studies all performed in accordance with the FDA’s Good Laboratory Practice regulations; |
• | submission to the FDA of an initial new drug, or IND, application for human clinical testing, which must become effective before human clinical trials may begin; |
• | approval by an independent review board, or IRB, representing each clinical site before each clinical trial may be initiated; |
• | performance of adequate and well-controlled clinical trials to establish the safety and efficacy of the product candidate for each proposed indication for use and conducted in accordance with Good Clinical Practice, or GCP, requirements; |
• | submission of data supporting safety and efficacy as well as detailed information on the manufacture and composition of the product in clinical development and proposed labeling; |
• | preparation and submission to the FDA of a New Drug Application, or an NDA, or Biologics License Application, or BLA; |
• | review of the product by an FDA advisory committee, where appropriate or if applicable; |
• | satisfactory completion of one or more FDA inspections of the manufacturing facility or facilities, including those of third parties, at which the product, or components thereof, are produced to assess compliance with current Good Manufacturing Practice, or cGMP, standards and to assure that the facilities, methods and controls are adequate to preserve the product’s identity, strength, quality and purity; |
• | satisfactory completion of any FDA audits of the non-clinical and clinical trial sites to assure compliance with GCP requirements and the integrity of clinical data in support of the NDA or BLA; |
• | payment of user fees and securing FDA approval of the NDA or BLA for the proposed indication; and |
• | compliance with any post-approval requirements, including risk evaluation and mitigation strategies, or REMS, and any post-approval studies required by the FDA. |
• | Phase 1 clinical trials are initially conducted in a limited population to test the product candidate for safety, including adverse effects, dose tolerance, absorption, metabolism, distribution, excretion and pharmacodynamics in healthy humans. For some products for severe or life-threatening diseases, especially if the product may be too toxic to administer to healthy humans, the initial clinical trials may be conducted in individuals having a specific disease for which use the tested product is indicated. |
• | Phase 2 clinical trials are generally conducted in a limited patient population to identify possible adverse effects and safety risks, evaluate the efficacy of the product candidate for specific targeted indications and determine dose tolerance and optimal dosage. Multiple Phase 2 clinical trials may be conducted by the sponsor to obtain information prior to beginning larger and more costly Phase 3 clinical trials. |
• | Phase 3 clinical trials proceed if the Phase 2 clinical trials demonstrate that a dose range of the product candidate is potentially effective and has an acceptable safety profile. Phase 3 clinical trials are undertaken to further evaluate, in a larger number of patients, dosage, provide substantial evidence of clinical efficacy and further test for safety in an expanded and diverse patient population at multiple, geographically dispersed clinical trial sites. A well-controlled, statistically robust Phase 3 trial may be designed to deliver the data that regulatory authorities will use to decide whether or not to approve, and, if approved, how to appropriately label a drug: such Phase 3 studies are referred to as “pivotal.” |
• | restrictions on the marketing or manufacturing of the product, complete withdrawal of the product from the market or product recalls; |
• | fines, warning letters or holds on post-approval clinical trials; |
• | refusal of the FDA to approve pending NDAs or supplements to approved NDAs, or suspension or revocation of product license approvals; |
• | product seizure or detention, or refusal to permit the import or export of products; or |
• | injunctions or the imposition of civil or criminal penalties. |
• | preclinical laboratory tests, animal studies and formulation studies all performed in accordance with the applicable EU Good Laboratory Practice regulations; |
• | submission to the relevant regulatory agencies in EU member states, or national authorities, of a clinical trial application, or CTA, for each clinical trial, 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 national authorities of a Marketing Authorisation Application, or MAA, which includes the data supporting safety and efficacy as well as detailed information on the manufacture and composition of the product in clinical development and proposed labeling; |
• | satisfactory completion of an inspection by the relevant national authorities of the manufacturing facility or facilities, including those of third parties, at which the product is produced to assess compliance with cGMP; |
• | 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 national authority of the MAA before any commercial marketing, sale or shipment of the product. |
• | A streamlined application procedure via a single entry point, known as the Clinical Trials Information System; |
• | A single set of documents to be prepared and submitted for the application as well as simplified reporting procedures which will spare sponsors from submitting broadly identical information separately to various and different national authorities; |
• | A harmonized procedure for the assessment of applications for clinical trials, which is divided in two parts; |
• | Strictly defined deadlines for the assessment of clinical trial application; and |
• | The involvement of the ethics committees in the assessment procedure in accordance with the national law of the member state concerned but within the overall timelines defined by the Regulation (EU) No 536/2014. |
• | the federal Anti-Kickback Statute prohibits, among other things, the knowing and willful offer, payment, solicitation or receipt of any form of remuneration in return for, or to induce, (i) the referral of a person, (ii) the furnishing or arranging for the furnishing of items or services reimbursable under the Medicare, Medicaid or other governmental programs, or (iii) the purchase, lease or order or arranging or recommending purchasing, leasing or ordering of any item or service reimbursable under the Medicare, Medicaid or other governmental programs. A person or entity does not need to have actual knowledge of the federal Anti-Kickback Statute or specific intent to violate it to have committed a violation; in addition, items or services resulting from a violation of the federal Anti-Kickback Statute may constitute a false or fraudulent claim for purposes of the False Claims Act; |
• | 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; |
• | the Health Insurance Portability and Accountability Act of 1996, or HIPAA, imposes criminal and civil liability for executing a scheme to defraud any health care benefit program or making false statements relating to health care matters. Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it to have committed a violation; |
• | 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 health care benefits, items or services; |
• | HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, which governs the conduct of certain electronic healthcare transactions and protects the security and privacy of protected health information that is stored or transmitted electronically; |
• | the Physician Payments Sunshine Act, created under the Affordable Care Act, and its implementing regulations, which require specified manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to report annually to the Centers for Medicare & Medicaid Services, or CMS, information related to payments or other “transfers of value” made to physicians. All such reported information is publicly available; |
• | analogous state and non-U.S. laws and regulations, such as state anti-kickback and false claims laws which may apply to items or services reimbursed by any payer, including commercial insurers; state laws that require pharmaceutical companies to comply with the industry’s voluntary compliance guidelines and the applicable compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state laws that require pharmaceutical manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; and state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts; and |
• | regulation by the Centers for Medicare and Medicaid Services and enforcement by the U.S. Department of Health and Human Services Office of Inspector General or the U.S. Department of Justice. |
Employees | ||||
Area of Activity: | ||||
Research and Development | 15 | |||
General and Administrative | 2 | |||
Total | 17 |
• | We have incurred significant losses since our inception and anticipate that we will continue to incur substantial losses for the next several years; |
• | Management has performed an analysis of our ability to continue as a going concern and our independent registered public accounting firm has raised substantial doubt as to our ability to continue as a going concern; |
• | All of our product candidates, including EB613 and EB612, are in preclinical or clinical development and we have not yet successfully completed the development of any product candidates; |
• | If serious adverse, undesirable or unacceptable side effects are identified during the development of our product candidates, marketing approval may be delayed or we may need to abandon our development of such product candidates, and if such side effects are identified following regulatory approval, any approved product label may be limited or we may be subject to other significant negative consequences; |
• | The commencement and completion of clinical trials can be delayed or prevented for a number of reasons; |
• | The results of previous clinical trials may not be predictive of future results, our progress in trials for one product candidate may not be indicative of progress in trials for other product candidates, and our trials may not be designed so as to support regulatory approval; |
• | Even if regulatory approvals are obtained for our product candidates, we will be subject to ongoing government regulation. If we fail to comply with applicable current and future laws and government regulations, it could delay or prevent the promotion, marketing or sale of our products; |
• | Healthcare legislative changes may harm our business and future prospects; |
• | We are subject to manufacturing risks that could substantially increase our costs and limit supply of our products; |
• | We are highly dependent upon our ability to raise additional capital or enter into agreements with collaborators to develop, commercialize and market our products; |
• | We may fail to establish, maintain, defend and enforce intellectual property rights with respect to our technology; |
• | The price of our Ordinary Shares may be volatile, and holders of our Ordinary Shares could lose all or part of their investment; |
• | Your rights and responsibilities as our shareholder will be governed by Israeli law, which may differ in some respects from the rights and responsibilities of shareholders of U.S. corporations; and |
• | Security, political and economic instability in the Middle East may harm our business, including the duration and intensity of the ongoing Israel-Hamas War and its impact on our operations and workforce. |
• | the scope, progress, timing, cost and results of research, preclinical development, and clinical trials; |
• | the costs, timing and outcome of seeking and obtaining approvals from the FDA, EMA or other regulatory agencies in relation to registrational strategies and potential NDA or BLA approvals for our product candidates; |
• | the costs associated with manufacturing our product candidates and potentially establishing sales, marketing, and distribution capabilities in the absence of commercial partnerships; |
• | the costs associated with obtaining, maintaining, expanding, defending and enforcing the scope of our intellectual property portfolio, including the amount and timing of any payments we may be required to make in connection with the licensing, filing, defense and enforcement of any patents or other intellectual property rights; |
• | the extent to which we acquire or in-license other products or technologies; |
• | the economic and other terms, timing of and success of any collaboration, licensing, or other arrangements into which we entered or may enter in the future, including the timing of achievement of milestones and receipt of any milestone or royalty payments under these agreements; |
• | our need and ability to hire additional management, scientific, and medical personnel; |
• | the effect of competing products that may limit market penetration of our product candidates; |
• | the amount and timing of revenues, if any, we receive from commercial sales of any product candidates for which we receive marketing approval in the future; and |
• | our need to implement additional internal systems and infrastructure, including financial and reporting systems to support our current operations as a public company. |
• | the completion of future development efforts for EB613, EB612 or other product candidates; |
• | securing additional funding as may be needed to continue the development of EB613 or any other product candidates; |
• | obtaining required regulatory and marketing approvals for the clinical development, manufacturing and commercialization of EB613, EB612 and any other product candidates we may develop; |
• | obtaining adequate reimbursement from third-party payors for any product that may be commercialized, if approved; |
• | managing our spending as costs and expenses increase due to the preparation of regulatory filings, potential regulatory approvals, manufacturing scale-up and potential commercialization; |
• | continuing to build and maintain our intellectual property portfolio; |
• | recruiting and retaining qualified executive management and other personnel; |
• | building and maintaining appropriate research and development, clinical, regulatory, sales, manufacturing, financial reporting, distribution, and marketing capabilities on our own or through third parties; |
• | gaining market acceptance for our product candidates; |
• | developing and maintaining successful strategic relationships and collaborations; |
• | developing a sustainable and scalable manufacturing process for any approved product candidates and maintaining supply and manufacturing relationships with third parties that can support clinical development and market demand for our product candidates, if approved; |
• | establishing sales, marketing, and distribution capabilities in the United States and the EU independently or in collaboration with strategic partners; |
• | obtaining market acceptance for any of our product candidates that receive marketing approval, if any, as viable treatment options; |
• | addressing any competing technological and market developments; |
• | negotiating favorable terms in any collaboration, licensing, or other arrangements into which we may enter; and |
• | attracting, hiring and retaining qualified personnel. |
• | regulatory authorities may require us to take these products off the market; |
• | regulatory authorities may require the addition of labeling statements, specific warnings, a contraindication or field alerts to physicians and pharmacies; |
• | we may be required to change the way the product is administered, conduct additional clinical trials or change the labeling of the product; |
• | we may be subject to limitations on how we may promote the product; |
• | sales of the product may decrease significantly; |
• | we may be subject to litigation or product liability claims; and |
• | our reputation may suffer. |
• | such authorities may disagree with the number, design, size, conduct or implementation of our clinical trials or any of our collaborators’ clinical trials; |
• | we or any of our development partners may be unable to demonstrate to the satisfaction of the FDA or other regulatory authorities that a product candidate is safe and effective for any indication; |
• | the results of clinical trials may not meet the level of statistical significance or clinical significance required by the FDA, EMA or other regulatory agencies for approval; |
• | such authorities may not accept clinical data from trials which are conducted at clinical facilities or in countries where the standard of care is potentially different from that authority’s jurisdiction; |
• | the data collected from non-clinical studies and clinical trials of our product candidates may not be sufficient to support the submission of an application for regulatory approval; |
• | the results of clinical trials may not demonstrate the safety or efficacy required by such authorities for approval; |
• | we or any of our future development partners may be unable to demonstrate that a product candidate’s clinical and other benefits outweigh its safety risks; |
• | such authorities may disagree with our interpretation of data from preclinical studies or clinical trials or the use of results from studies that served as precursors to our current or future product candidates; |
• | such authorities may find deficiencies in our manufacturing processes or facilities or those of third-party manufacturers with which we or any of our future development partners contract for clinical and commercial supplies; |
• | the FDA may require development of a REMS as a condition of approval; and |
• | the approval policies or regulations of such authorities may significantly change in a manner rendering our or any of our future development partners’ clinical data insufficient for approval. |
• | future clinical trial results may show that our oral PTH is not effective, including if our drug delivery technology is not effective, our product candidates are not effective, our clinical trial designs are flawed, or clinical trial investigators or subjects do not comply with trial protocols; |
• | our product candidates may not be well tolerated or may cause negative side effects; |
• | our ability to complete the development and commercialization of our oral PTH for our intended uses may be significantly dependent upon our ability to obtain and maintain experienced and committed collaborators to assist us with obtaining clinical and regulatory approvals for, and the manufacturing, marketing and distribution of, our oral PTH; |
• | even if our oral PTH is shown to be safe and effective for its intended purposes, we may face significant or unforeseen difficulties in obtaining or manufacturing sufficient quantities at reasonable prices, or at all; |
• | even if our oral PTH is successfully developed, commercially produced and receives all necessary regulatory approvals, there is no guarantee that there will be market acceptance; |
• | even if our oral PTH is successfully developed, commercially produced and receives all necessary regulatory approvals for the treatment of Osteoporosis, there is no guarantee that we will successfully develop and commercialize it for other indications, including hypoparathyroidism and delayed union fractures; and |
• | our competitors may develop therapeutics or other treatments that are superior to or less costly than our own with the result that our products, even if they are successfully developed, manufactured and approved, may not generate significant revenues. |
• | difficulties obtaining regulatory approval to commence a clinical trial or complying with conditions imposed by a regulatory authority regarding the scope or term of a clinical trial; |
• | delays in reaching or failing to reach agreement on acceptable terms with prospective contract research organizations, or CROs, contract manufacturing organizations, and trial sites, the terms of which can be subject to extensive negotiation and may vary significantly; |
• | failure of our third-party contractors, such as CROs and contract manufacturing organizations, or our investigators to comply with regulatory requirements or otherwise meet their contractual obligations in a timely manner; |
• | insufficient or inadequate supply or quality of a product candidate or other materials necessary to conduct our clinical trials; |
• | difficulties obtaining institutional review board or ethics committee approval to conduct a clinical trial at a prospective site; |
• | the FDA, EMA or other regulatory authority may require changes to any of our trial designs, our pre-clinical strategy or our manufacturing plans; |
• | various challenges recruiting and enrolling subjects to participate in clinical trials, including size and nature of subject population, proximity of subjects to clinical sites, eligibility criteria for the trial, budgetary limitations, nature of trial protocol, the patient referral practices of physicians, changes in the readiness of subjects to volunteer for a trial, the availability of approved effective treatments for the relevant disease and competition from other clinical trial programs for similar indications; |
• | difficulties in maintaining contact with subjects who withdraw from the trial, resulting in incomplete data; |
• | governmental or regulatory delays and changes in regulatory requirements, policy and guidelines; |
• | the FDA or other regulatory authorities may impose a clinical hold, or we or our investigators, IRBs, or ethics committees may elect to suspend or terminate clinical research or trials; |
• | varying interpretations of data by the FDA and foreign regulatory agencies; and |
• | inaccurate interpretations by us of the FDA’s guidance for the clinical and regulatory path for our product candidates. |
• | failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols; |
• | failing to establish clinical endpoints acceptable to the FDA and other regulatory authorities; |
• | findings of an inspection of the clinical trial operations or trial sites by the FDA or other regulatory authorities; |
• | unforeseen issues, including serious adverse events associated with a product candidate, or lack of effectiveness or any determination that a clinical trial presents unacceptable health risks; |
• | lack of adequate funding to continue the clinical trial due to unforeseen costs or other business decisions; and |
• | upon a breach or pursuant to the terms of any agreement with, or for any other reason by, current or future collaborators that have responsibility for the clinical development of any of our product candidates. |
• | issue warning letters or untitled letters or take similar enforcement actions; |
• | seek an injunction or impose civil or criminal penalties or monetary fines; |
• | suspend or withdraw marketing approval; |
• | suspend any ongoing clinical trials; |
• | refuse to approve pending applications or supplements to applications; |
• | suspend or impose restrictions on operations, including costly new manufacturing requirements; |
• | seize or detain products, refuse to permit the import or export of products, exclude products from federal healthcare programs, or request that we initiate a product recall; or |
• | refuse to allow us to enter into supply contracts, including government contracts. |
• | the federal Anti-Kickback Statute prohibits, among other things, the knowing and willful offer, payment, solicitation or receipt of any form of remuneration in return for, or to induce, (i) the referral of a person, (ii) the furnishing or arranging for the furnishing of items or services reimbursable under the Medicare, Medicaid or other governmental programs, or (iii) the purchase, lease or order or arranging or recommending purchasing, leasing or ordering of any item or service reimbursable under the Medicare, Medicaid or other governmental programs. A person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation. 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; |
• | the federal Physician Self-Referral Law, or “Stark Law”, prohibits, among other things, a physician (defined to include a doctor of medicine or osteopathy, a doctor of dental surgery or dental medicine, a doctor of podiatric medicine, a doctor of optometry, or a chiropractor) from referring Medicare and Medicaid patients to certain types of entities with which the physician or any of the physician’s immediate family members have a financial relationship, unless an exception to the law’s prohibition is met. In addition, the government may assert that a claim including items or services resulting from a violation of the Stark Law constitutes a false or fraudulent claim for purposes of the False Claims Act; |
• | the federal False Claims Act imposes civil penalties, and provides for civil whistleblower or qui tam actions, against individuals or entities for knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government; |
• | HIPAA imposes criminal and civil liability for executing a scheme to defraud any health care benefit program or making false statements relating to health care matters. Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation; |
• | 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 health care benefits, items or services; |
• | the Physician Payments Sunshine Act, created under the ACA, and its implementing regulations, which require specified manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to report annually to CMS information related to payments or other “transfers of value” made to physicians. All such reported information is publicly available; |
• | analogous state and non-U.S. laws and regulations, such as certain state anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers; state laws that require pharmaceutical companies to comply with the industry’s voluntary compliance guidelines and the applicable compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; and state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts; and |
• | regulation by the CMS and enforcement by the HHS Office of Inspector General or the U.S. Department of Justice. |
• | We do not have experience in manufacturing our product candidates at commercial scale. We may not succeed in the scaling up of our final manufacturing process. We may need a larger-scale manufacturing process for our oral PTH than what we have planned, depending on the dose and regimen that will be determined in future studies. Any changes in our manufacturing processes as a result of scaling up may result in the need to obtain additional regulatory approvals. Difficulties in achieving commercial-scale production or the need for additional regulatory approvals as a result of scaling up could delay the development and regulatory approval of our product candidates and ultimately affect our success. Contract manufacturers may not have sufficient expertise to manufacture a dry oral formulation with a large molecule API, in which case we may have to establish our own commercial manufacturing capabilities, which could be expensive and delay launch of product candidates. |
• | The manufacturing process for large molecules is more complex and subject to greater regulation than that of other drugs. The process of manufacturing large molecules, such as our product candidates, is extremely susceptible to product loss due to contamination, equipment failure or improper installation or operation of equipment, vendor or operator error, inconsistency in yields, variability in product characteristics and difficulties in scaling the production process. Even minor deviations from normal manufacturing processes could result in reduced production yields, product defects and other supply disruptions. If microbial, viral or other contaminations are discovered in our product candidates or in the manufacturing facilities in which our product candidates are made, such manufacturing facilities may need to be closed for an extended period of time to investigate and remedy the contamination. |
• | The manufacturing facilities in which our product candidates are made could be adversely affected by equipment failures, labor shortages, natural disasters, power failures, outbreaks of an infectious disease such as the duration and intensity of the ongoing Israel-Hamas War, other geopolitical tensions such as the ongoing conflict between Russia and Ukraine, and numerous other factors. |
• | We and our contract manufacturing organizations, or CMOs, must comply with applicable cGMP regulations and guidelines. We and our CMOs may encounter difficulties in achieving quality control and quality assurance and may experience shortages in qualified personnel. We and our CMOs are subject to inspections by the FDA and comparable agencies in other jurisdictions to confirm compliance with applicable regulatory requirements. Any failure to follow cGMP or other regulatory requirements or delay, interruption or other issues that arise in the manufacture, fill-finish, packaging, or storage of our product candidates as a result of a failure of our facilities or the facilities or operations of third parties to comply with regulatory requirements or pass any regulatory authority inspection could significantly impair our ability to develop and commercialize our product candidates, including leading to significant delays in the availability of drug product for our clinical trials or the termination or hold on a clinical trial, or the delay or prevention of a filing or approval of marketing applications for our product candidates. Significant noncompliance could also result in the imposition of sanctions, including fines, injunctions, civil penalties, failure of regulatory authorities to grant marketing approvals for our product candidates, delays, suspension or withdrawal of approvals, license revocation, seizures or recalls of products, operating restrictions and criminal prosecutions, any of which could damage our reputation. If we are not able to maintain regulatory compliance, we may not be permitted to market our product candidates and/or may be subject to product recalls, seizures, injunctions, or criminal prosecution. |
• | Any adverse developments affecting manufacturing operations for our product candidates, if any are approved, may result in shipment delays, inventory shortages, lot failures, product withdrawals or recalls, or other interruptions in the supply of our products. We may also have to take inventory write-offs and incur other charges and expenses for products that fail to meet specifications, undertake costly remediation efforts or seek more costly manufacturing alternatives. |
• | Our product candidates that have been produced and are stored for later use may degrade, become contaminated or suffer other quality defects, which may cause the affected product candidates to no longer be suitable for their intended use in clinical trials or other development activities. If the defective product candidates cannot be replaced in a timely fashion, we may incur significant delays in our development programs that could adversely affect the value of such product candidates. |
• | limitations or warnings contained in the approved labeling for a product candidate; |
• | changes in the standard of care for the targeted indications for any of our product candidates; |
• | limitations in the approved clinical indications for our product candidates; |
• | demonstrated clinical safety and efficacy compared to other products; |
• | lack of significant adverse side effects; |
• | sales, marketing and distribution support; |
• | availability and extent of coverage and reimbursement from managed care plans and other third-party payors; |
• | timing of market introduction and perceived effectiveness of competitive products; |
• | the degree of cost-effectiveness of our product candidates; |
• | availability of alternative therapies at similar or lower cost, including generic and over-the-counter products; |
• | the extent to which the product candidate is approved for inclusion on formularies of hospitals and third-party payors, including managed care organizations; |
• | whether the product is designated under physician treatment guidelines as a first-line therapy or as a second- or third-line therapy for particular diseases; |
• | adverse publicity about our product candidates or favorable publicity about competitive products; |
• | convenience and ease of administration of our products; and |
• | potential product liability claims. |
• | a covered benefit under its health plan; |
• | safe, effective and medically necessary; |
• | appropriate for the specific patent; |
• | cost-effective; and |
• | neither experimental nor investigational. |
• | decreased demand for any of our product candidates or products we develop; |
• | injury to our reputation and significant negative media attention; |
• | withdrawal of clinical trial participants or cancellation of clinical trials; |
• | costs to defend the related litigation, which may be only partially recoverable even in the event of successful defense; |
• | a diversion of management’s time and our resources; |
• | substantial monetary awards to trial participants or patients; |
• | regulatory investigations, product recalls, withdrawals or labeling, marketing or promotional restrictions; |
• | loss of revenue; and |
• | the inability to commercialize any products we develop. |
• | Collaborators may have significant discretion in determining the efforts and resources that they will apply to these collaborations; |
• | Collaborators may not perform their obligations as expected; |
• | Collaborators may not pursue development and commercialization of any product candidates that achieve regulatory approval or may elect not to continue or renew development or commercialization programs based on clinical trial results, changes in the collaborators’ strategic focus or available funding, or external factors, such as an acquisition, that divert resources or create competing priorities; |
• | Collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a product candidate, repeat or conduct new clinical trials or require a new formulation of a product candidate for clinical testing; |
• | Collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our products or product candidates if the collaborators believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours; |
• | Product candidates discovered in collaboration with us may be viewed by our collaborators as competitive with their own product candidates or products, which may cause collaborators to cease to devote resources to the commercialization of our product candidates; |
• | A collaborator with marketing and distribution rights to one or more of our product candidates that achieve regulatory approval may not commit sufficient resources to the marketing and distribution of such product or products; |
• | Disagreements with collaborators, including disagreements over proprietary rights, contract interpretation or the preferred course of development, might cause delays or termination of the research, development or commercialization of product candidates, might lead to additional responsibilities for us with respect to product candidates, or might result in litigation or arbitration, any of which would be time-consuming and expensive; |
• | Collaborators may not properly obtain, maintain, defend or enforce our intellectual property rights or may use our proprietary information in such a way as to invite litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential litigation or other intellectual property-related proceedings, including proceedings challenging the scope, ownership, validity and enforceability of our intellectual property. |
• | Collaborators may own or co-own intellectual property covering our product candidates or research programs that results from our collaboration with them, and in such cases, we may not have the exclusive right to commercialize such intellectual property or such product candidates or research programs; |
• | Collaborators may infringe, misappropriate or otherwise violate the intellectual property rights of third parties, which may expose us to litigation and potential liability; |
• | Collaborators may fail to comply with applicable laws, rules or regulations when performing services for us, which may expose us to legal proceedings and potential liability; and |
• | Collaborations may be terminated for convenience by the collaborator and, if terminated, we may suffer from negative publicity and we may find it more difficult to attract new collaborators. |
• | The Israel-Hamas War may cause us to fail to meet contractually obligated deadlines with our collaboration partners or otherwise strain our relationships with current collaborators or other business partners. |
• | the possibility of a breach of the manufacturing agreements by the third parties because of factors beyond our control; |
• | the possibility that the supply is inadequate or delayed; |
• | the risk that the third party may enter the field and seek to compete and may no longer be willing to continue supplying; |
• | the possibility of termination or nonrenewal of the agreements by the third parties before we are able to arrange for a qualified replacement third-party manufacturer; and |
• | the possibility that we may not be able to secure a manufacturer or manufacturing capacity in a timely manner and on satisfactory terms in order to meet our manufacturing needs. |
• | our clinical trial results and the timing of the release of such results; |
• | the amount of our cash resources and our ability to obtain additional funding; |
• | the announcement of research activities, business developments, technological innovations or new products, or acquisitions or expansion plans by us or our competitors; |
• | the success or failure of our research and development projects or those of our competitors; |
• | our entering into or terminating strategic relationships; |
• | changes in laws or government regulation; |
• | actual or anticipated fluctuations in our and our competitors’ results of operations and financial condition; |
• | regulatory developments and the decisions of regulatory authorities as to the approval or rejection of new or modified products and plans for clinical development; |
• | the departure of our key personnel; |
• | disputes related to intellectual property and proprietary rights, including patents, litigation matters and our ability to obtain intellectual property protection for our technologies; |
• | our sale, or the sale by our significant shareholders, of Ordinary Shares or other securities in the future; |
• | public concern regarding the safety, efficacy or other aspects of the products or methodologies we are developing; |
• | market conditions in our industry and changes in estimates of the future size and growth rate of our markets; |
• | market acceptance of our products; |
• | the mix of products that we sell and related services that we provide; |
• | the success or failure of our licensees to develop, obtain approval for and commercialize our licensed products, for which we are entitled to contingent payments and royalties; |
• | the publication of the results of preclinical or clinical trials for EB613, EB612 or any other oral peptide product candidates we may develop, including the oral GLP-2 and OXM programs we are developing with OPKO; |
• | the 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; |
• | changes in the amounts that we spend to develop, acquire or license new products, technologies or businesses; |
• | changes in our expenditures to promote our products; |
• | variances in our financial performance from the expectations of market analysts; |
• | the limited trading volume of our Ordinary Shares; and |
• | general economic and market conditions, including factors unrelated to our industry or operating performance, such as the duration and intensity of the ongoing Israel-Hamas War, and other geopolitical tensions. |
• | EDR System (Endpoint Detection & Response) |
• | Two-factor authentication for email (Office 365) and cloud-stored information |
• | We protect our mail system against spam, phishing, spoofing, and malware using a (Mail Relay system). |
ITEM 2. | PROPERTIES. |
ITEM 3. | LEGAL PROCEEDINGS |
ITEM 4. | MINE SAFETY DISCLOSURES. |
ITEM 5. | MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. |
ITEM 6. | [Reserved] |
ITEM 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
• | The subsequent sale or usage occurs; and |
• | The performance obligation to which some or all of the sales-based or usage-based royalty has been allocated has been satisfied (or partially satisfied). |
• | employee-related expenses, including salaries, bonuses and share-based compensation expenses for employees and service providers in the research and development function; |
• | expenses incurred in operating our laboratories including our small-scale manufacturing facility; |
• | expenses incurred under agreements with CROs, and investigative sites that conduct our clinical trials; |
• | expenses related to outsourced and contracted services, such as external laboratories, consulting and advisory services; |
• | supply, development and manufacturing costs relating to clinical trial materials; and |
• | other costs associated with pre-clinical and clinical activities. |
• | the uncertainty of the scope, rate of progress, results and cost of our clinical trials, nonclinical testing and other related activities; |
• | the cost of manufacturing clinical supplies and establishing commercial supplies of our product candidates and any products that we may develop; |
• | the number and characteristics of product candidates that we pursue; |
• | the cost, timing and outcomes of regulatory approvals; |
• | the cost and timing of establishing any sales, marketing, and distribution capabilities; and |
• | the terms and timing of any collaborative, licensing and other arrangements that we may establish, including any milestone and royalty payments thereunder. |
Year Ended December 31, | Increase (Decrease) | |||||||||||||||
2023 | 2022 | $ | % | |||||||||||||
(In thousands, except for percentage information) | ||||||||||||||||
Revenues | $ | - | $ | 134 | $ | (134 | ) | (100 | )% | |||||||
Cost of revenues | $ | - | $ | 101 | (101 | ) | (100 | )% | ||||||||
Operating expenses: | | |||||||||||||||
Research and development expenses | $ | 4,510 | $ | 5,848 | $ | (1,338 | ) | (22.8 | )% | |||||||
General and administrative expenses | $ | 4,430 | $ | 7,253 | $ | (2,823 | ) | (38.9 | )% | |||||||
Other income | $ | (49 | ) | $ | (51 | ) | $ | 2 | (3.9 | )% | ||||||
Operating loss | $ | 8,891 | $ | 13,017 | $ | (4,126 | ) | (31.6 | )% | |||||||
Financial income, net | $ | (31 | ) | $ | (83 | ) | $ | 52 | (62.6 | )% | ||||||
Income tax expenses | $ | 29 | $ | 137 | $ | (108 | ) | (78.8 | )% | |||||||
Net loss | $ | 8,889 | $ | 13,071 | $ | (4,182 | ) | (32.0 | )% |
● | the costs, timing and outcome of clinical trials for, and regulatory review of our five oral peptide programs, including EB613 and EB612 and any other product candidates we may develop; |
● | the costs of development activities for any other product candidates we may pursue; |
● | the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims; and |
● | our ability to establish collaborations on favorable terms, if at all. |
(audited) Year ended December 31, | ||||||||
2023 | 2022 | |||||||
(in thousands) | ||||||||
Net Cash used in operating activities | $ | (7,310 | ) | $ | (12,499 | ) | ||
Net Cash used in investing activities | (17 | ) | (102 | ) | ||||
Net Cash provided by financing activities | 6,036 | 13 | ||||||
Net decrease in cash and cash equivalents | $ | (1,291 | ) | $ | (12,588 | ) |
Payments due by period | ||||||||||||||||||||
Contractual Obligations | Total | Less than 1 year | 1 - 3 years | 3 - 5 years | More than 5 years | |||||||||||||||
(In thousands) | ||||||||||||||||||||
Operating leases for facility | $ | 454 | $ | 184 | $ | 270 | $ | - | $ | - | ||||||||||
Total | $ | 454 | $ | 184 | $ | 270 | $ | - | $ | - |
Year ended December 31, | ||||||||
2023 | 2022 | |||||||
(in thousands) | ||||||||
Cost of revenues | $ | - | $ | 14 | ||||
Research and development | 424 | 708 | ||||||
General and administrative | 1,265 | 1,525 | ||||||
Total | $ | 1,689 | $ | 2,247 |
Item 7A. | Quantitative and Qualitative Disclosures about Market Risk |
Item 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
Page | |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB ID 1309) | 87 |
CONSOLIDATED FINANCIAL STATEMENTS: | |
88 | |
89 | |
90 | |
91 | |
92 |
/s/ Kesselman & Kesselman |
Certified Public Accountants (lsr.) |
A member firm of PricewaterhouseCoopers International Limited |
Tel-Aviv, Israel |
March 8, 2024 |
We have served as the Company’s auditor since 2010. |
CONSOLIDATED BALANCE SHEETS
A s s e t s | December 31 | |||||||
CURRENT ASSETS: | 2023 | 2022 | ||||||
Cash and cash equivalents | 11,019 | 12,309 | ||||||
Accounts receivable | - | 246 | ||||||
Other current assets | 238 | 294 | ||||||
TOTAL CURRENT ASSETS | 11,257 | 12,849 | ||||||
NON-CURRENT ASSETS: | ||||||||
Property and equipment, net | 100 | 139 | ||||||
Operating lease right-of-use assets | 388 | 90 | ||||||
Deferred income taxes | 14 | 43 | ||||||
Funds in respect of employee rights upon retirement | 6 | 6 | ||||||
TOTAL NON-CURRENT ASSETS | 508 | 278 | ||||||
TOTAL ASSETS | 11,765 | 13,127 | ||||||
L i a b i l i t i e s and shareholders' equity | ||||||||
CURRENT LIABILITIES: | ||||||||
Accounts payable | 83 | 17 | ||||||
Accrued expenses and other payables | 874 | 1,233 | ||||||
Current maturities of operating lease | 134 | 91 | ||||||
TOTAL CURRENT LIABILITIES | 1,091 | 1,341 | ||||||
NON-CURRENT LIABILITIES: | ||||||||
Operating lease liabilities | 256 | - | ||||||
Liability for employee rights upon retirement | 32 | 32 | ||||||
TOTAL NON-CURRENT LIABILITIES | 288 | 32 | ||||||
TOTAL LIABILITIES | 1,379 | 1,373 | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||||
SHAREHOLDERS' EQUITY: | ||||||||
Ordinary Shares, NIS 0.0000769 par value: Authorized - as of December 31, 2023 and December 31, 2022, 140,010,000 shares; issued and outstanding as of December 31, 2023, and December 31, 2022, 35,476,341 and 28,809,922 shares, respectively | 1 | * | ||||||
Additional paid-in capital | 114,730 | 107,210 | ||||||
Accumulated other comprehensive income | 41 | 41 | ||||||
Accumulated deficit | (104,386 | ) | (95,497 | ) | ||||
TOTAL SHAREHOLDERS' EQUITY | 10,386 | 11,754 | ||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | 11,765 | 13,127 |
Year ended December 31 | ||||||||
2023 | 2022 | |||||||
REVENUES | - | 134 | ||||||
COST OF REVENUES | - | 101 | ||||||
GROSS PROFIT | - | 33 | ||||||
OPERATING EXPENSES: | ||||||||
Research and development | 4,510 | 5,848 | ||||||
General and administrative | 4,430 | 7,253 | ||||||
Other income | (49 | ) | (51 | ) | ||||
TOTAL OPERATING EXPENSES | 8,891 | 13,050 | ||||||
OPERATING LOSS | 8,891 | 13,017 | ||||||
FINANCIAL INCOME, net | (31 | ) | (83 | ) | ||||
LOSS BEFORE INCOME TAX | 8,860 | 12,934 | ||||||
INCOME TAX EXPENSES | 29 | 137 | ||||||
NET LOSS | 8,889 | 13,071 | ||||||
LOSS PER SHARE BASIC AND DILUTED | 0.31 | 0.45 | ||||||
WEIGHTED-AVERAGE NUMBER OF SHARES OUTSTANDING USED IN COMPUTATION OF BASIC AND DILUTED LOSS PER SHARE | 29,007,794 | 28,808,090 |
(U.S. dollars in thousands, except share and per share data)
Ordinary shares | ||||||||||||||||||||||||
Number of shares issued | Amounts | Additional paid-in capital | Accumulated other Comprehensive income | Accumulated deficit | Total | |||||||||||||||||||
BALANCE AT JANUARY 1, 2022 | 28,804,411 | * | 104,950 | 41 | (82,426 | ) | 22,565 | |||||||||||||||||
Net loss | - | - | - | - | (13,071 | ) | (13,071 | ) | ||||||||||||||||
Exercise of options to ordinary shares | 5,511 | * | 13 | - | - | 13 | ||||||||||||||||||
Share-based compensation | - | - | 2,247 | - | - | 2,247 | ||||||||||||||||||
BALANCE AT DECEMBER 31, 2022 | 28,809,922 | * | 107,210 | 41 | (95,497 | ) | 11,754 | |||||||||||||||||
Net loss | - | - | - | - | (8,889 | ) | (8,889 | ) | ||||||||||||||||
Issuance of ordinary shares, warrants and pre-funded warrants due to a private placement, net of issuance costs | 6,662,389 | 1 | 5,826 | - | - | 5,827 | ||||||||||||||||||
Issuance of shares under the ATM program, net of issuance costs | 4,030 | * | 5 | - | - | 5 | ||||||||||||||||||
Share-based compensation | - | - | 1,689 | - | - | 1,689 | ||||||||||||||||||
BALANCE AT DECEMBER 31, 2023 | 35,476,341 | 1 | 114,730 | 41 | (104,386 | ) | 10,386 |
Year ended December 31 | ||||||||
2023 | 2022 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net loss | (8,889 | ) | (13,071 | ) | ||||
Adjustments required to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation | 56 | 64 | ||||||
Deferred income taxes | 29 | 174 | ||||||
Share-based compensation | 1,689 | 2,247 | ||||||
Finance income, net | (78 | ) | ||||||
Changes in operating asset and liabilities: | ||||||||
Decrease (increase) in accounts receivable | 246 | (63 | ) | |||||
Decrease (increase) in other current assets | 56 | (40 | ) | |||||
Increase (decrease) in accounts payable | 66 | (149 | ) | |||||
Decrease in accrued expenses and other payables | (563 | ) | (1,568 | ) | ||||
Decrease in contract liabilities | - | (15 | ) | |||||
Net cash used in operating activities | (7,310 | ) | (12,499 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Funds with respect to employee rights upon retirement | - | (55 | ) | |||||
Purchase of property and equipment | (17 | ) | (47 | ) | ||||
Net cash used in investing activities | (17 | ) | (102 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Proceeds from issuance of shares through ATM programs, net of issuance costs | 5 | - | ||||||
Issuance of ordinary shares and warrants due to a private placement | 6,611 | - | ||||||
Issuance costs | (580 | ) | ||||||
Exercise of options into shares | - | 13 | ||||||
Net cash provided by financing activities | 6,036 | 13 | ||||||
DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED DEPOSITS | (1,291 | ) | (12,588 | ) | ||||
CASH, CASH EQUIVALENTS AND RESTRICTED DEPOSITS AT BEGINNING OF THE YEAR | 12,376 | 24,964 | ||||||
CASH, CASH EQUIVALENTS AND RESTRICTED DEPOSITS AT END OF THE YEAR | 11,085 | 12,376 | ||||||
Reconciliation in amounts on consolidated balance sheets: | ||||||||
Cash and cash equivalents | 11,019 | 12,309 | ||||||
Restricted deposits included in other current assets | 66 | 67 | ||||||
Total cash and cash equivalents and restricted deposits | 11,085 | 12,376 | ||||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW TRANSACTIONS: | ||||||||
Interest received | 18 | - | ||||||
Income taxes paid in cash during the year | - | 165 | ||||||
SUPPLEMENTARY INFORMATION ON INVESTING AND FINANCING ACTIVITIES NOT INVOLVING CASH FLOWS: | ||||||||
Issuance costs | 470 | - | ||||||
Operating lease right of use assets obtained in exchange for new operating lease liabilities | 449 | - |
a. | Entera Bio Ltd. (collectively with its subsidiary, the "Company) was incorporated on September 30, 2009 and commenced operation on June 1, 2010. On January 8, 2018, the Company incorporated its wholly owned subsidiary, Entera Bio Inc., in Delaware, United States. The Company is focused on developing first-in-class oral tablet formats of peptides or protein replacement therapies. The Company focuses on underserved, chronic medical conditions for which oral administration of a protein therapy has the potential to significantly shift a treatment paradigm. The Company’s most advanced product candidate, EB613, oral PTH (1-34), is being developed as the first oral, osteoanabolic (bone building) once-daily tablet treatment for post-menopausal women with low bone mineral density (“BMD”) and high-risk osteoporosis with no prior fracture. |
b. | The Company's ordinary shares, NIS 0.0000769 par value per share (“ordinary shares”), have been listed on the Nasdaq Capital Market since July 2018 under the symbol “ENTX”. |
c. | Because the Company is engaged in research and development activities, it has not derived significant income from its activities and has incurred an accumulated deficit in the amount of $104.4 million as of December 31, 2023 and negative cash flows from operating activities. The Company's management is of the opinion that its available funds as of December 31, 2023 will allow the Company to operate under its current plans through the second quarter of 2025. This assumes the use of the Company’s capital to fund its ongoing operations, including research and development, the completion of the Phase 1 study related to the new generation platform and the GLP-2/OXM collaborative research the Company is conducting with OPKO Biologics, Inc., a subsidiary of OPKO Health Inc. (“OPKO”). The Company’s current capital resources do not include the capital required to fund the Company's proposed Phase 3 study for EB613 in osteoporosis. These factors raise substantial doubt as to the Company's ability to continue as a going concern. Management is in the process of evaluating various financing alternatives in the public and private equity markets, debt financing and strategic collaborations, as the Company will need to finance future research and development activities, general and administrative expenses and working capital through capital raising. However, there is no certainty about the Company's ability to obtain such funding. These consolidated financial statements do not include any adjustments that may be necessary should the Company be unable to continue as a going concern. |
d. | In October 2023, Hamas terrorists infiltrated Israel’s southern border from the Gaza Strip and conducted a series of attacks on civilian and military targets. Hamas also launched extensive rocket attacks on the Israeli population and industrial centers located along Israel’s border with the Gaza Strip and in other areas within the State of Israel. These attacks resulted in thousands of deaths and injuries, and Hamas additionally kidnapped many Israeli civilians and soldiers. Following the attack, Israel’s security cabinet declared war against Hamas and commenced a military campaign against Hamas. While the Company has a few employees who are in active military service, the ongoing war with Hamas has not, since its inception, materially impacted the Company's business or operations. Furthermore, the Company does not expect any delays to any of its programs as a result of the situation. However, the Company cannot currently predict the intensity or duration of Israel’s war against Hamas, nor can predict how this war will ultimately affect its business and operations or Israel’s economy in general. |
ENTERA BIO LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
a. | Basis of presentation of the financial statements |
b. | Use of estimates in the preparation of financial statements |
c. | Functional currency |
1) | Functional and presentation currency |
2) | Transactions and balances |
d. | Principles of consolidation |
ENTERA BIO LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
e. | Cash and cash equivalents |
f. | Bank deposits |
g. | Restricted cash |
h. | Concentrations of credit risk |
i. | Fair value measurement |
ENTERA BIO LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
j. | Employee severance benefits |
ENTERA BIO LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
k. | Leases |
l. | Property and equipment |
1) | Property and equipment are stated at cost, net of accumulated depreciation and amortization. |
2) | The Company’s property and equipment are depreciated using the straight-line method, which approximates the pattern of usage, over the term of the estimated useful life, as follows: |
Years | ||
Computer equipment | 3-5 | |
Office furniture | 10 | |
Laboratory equipment | 7-10 |
Leasehold improvements are amortized by the straight-line method over the shorter of (i) the expected lease term and (ii) the estimated useful life of the improvements.
ENTERA BIO LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
m. | Impairment of long-lived assets |
n. | Share-based compensation |
ENTERA BIO LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
o. | Research and development expenses |
p. | Revenue recognition |
ENTERA BIO LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
q. | Income taxes |
1) | Deferred taxes Deferred income taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A valuation allowance is recognized to the extent that it is more likely than not that the deferred taxes will not be realized in the foreseeable future. |
2) | Uncertainty in income taxes The Company follows a two-step approach in recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the available evidence indicates that it is more likely than not that the position will be sustained based on technical merits. If this threshold is met, the second step is to measure the tax position as the largest amount that has more than a 50% likelihood of being realized upon ultimate settlement. |
r. | Loss per share |
s. | Legal and other contingencies |
ENTERA BIO LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
t. | Warrants When the Company issues freestanding instruments, it first analyzes the provisions of ASC 480, “Distinguishing Liabilities From Equity” (“ASC 480”) in order to determine whether the instrument should be classified as a liability, with subsequent changes in fair value recognized in the consolidated statements of operations in each period. If the instrument is not within the scope of ASC 480, the Company further analyzes the provisions of ASC 815-10 in order to determine whether the instrument is considered indexed to the entity’s own stock, and qualifies for classification within equity. All warrants issued by the Company have been classified within stockholders’ equity as “Additional paid-in capital”. |
u. | Newly issued and recently adopted accounting pronouncements: |
1) | The Company leases office and research and development space under several agreements. The annual lease consideration is a total of $172 and is linked to the Israeli consumer price index. In April 2023, the Company extended the period of the lease agreement for an additional five years, expiring on June 30, 2028, with two options for early termination by the Company subject to a notice period. The annual lease consideration is a total of $180. The Company recorded the related asset and obligation at the present value of lease payments over the expected terms, discounted using the lessee’s incremental borrowing rate, which was 13.84%. The Company lease agreements do not provide a readily determinable implicit rate. Therefore, the Company estimated the incremental borrowing rate to discount the lease payments based on information available at lease commencement. As of December 31, 2023, the Company provided bank guarantees of approximately $52, in the aggregate, to secure the fulfillment of its obligations under the lease agreements. |
ENTERA BIO LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 - OPERATING LEASES (continued)
2) | The Company has entered into operating lease agreements for vehicles used by its employees. The lease periods are generally for three years, and the payments are linked to the Israeli consumer price index. To secure the terms of the lease agreement, the Company has made certain deposits to the leasing company, representing approximately three months of lease payments. The annual lease consideration is a total of $22. |
Year ended December 31, 2023 | Year ended December 31, 2022 | |||||||
Operating lease cost | 196 | 197 |
Year ended December 31, 2023 | Year ended December 31, 2022 | |||||||
Operating cash flows from operating leases | 196 | 197 |
December 31, 2023 | December 31, 2022 | |||||||
Operating Leases | ||||||||
Operating lease right-of-use assets | 388 | 90 | ||||||
Current lease liabilities | 134 | 91 | ||||||
Non-current lease liabilities | 256 | |||||||
Total lease liabilities | 390 | 91 | ||||||
Weighted-average remaining lease term (in years) | 2.5 | 0.52 | ||||||
Weighted-average discount rate | 14 | % | 16 | % |
2024 | 184 | |||
2025 | 184 | |||
2026 | 86 | |||
Total future minimum lease payments | 454 | |||
Less: interest | (64 | ) | ||
Present value of operating lease liabilities | 390 |
ENTERA BIO LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
a. | Commitment to pay royalties to the government of Israel |
b. | On June 1, 2010, D.N.A. Biomedical Solutions Ltd. ("D.N.A.") and Oramed Ltd., ("Oramed") entered into a joint venture agreement, (the "Joint Venture Agreement") for the establishment of Entera Bio Ltd. According to the Joint Venture Agreement each of D.N.A. and Oramed acquired 50% of the Company's ordinary shares. D.N.A invested $600 in the Company, and Oramed and the Company entered into a Patent License Agreement pursuant to which Oramed licensed to the Company one of Oramed’s patents (the “IPR&D”). |
c. | In September 2023, the Company entered into a research collaboration agreement with OPKO Biologics, Inc., a subsidiary of OPKO. Under the terms of this agreement, OPKO has agreed to supply its proprietary long-acting GLP-2 peptide and certain Oxyntomodulin (OXM) analogs for the development of oral tablet formulations using the Company’s proprietary oral delivery technology. The Company and OPKO have each agreed to be responsible for specific phases of development of the two oral peptides to the point of demonstrated in vivo feasibility. Work under this agreement commenced in the fourth quarter of 2023; therefore there was no material financial impact as of December 31, 2023. |
ENTERA BIO LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1) | Rights of the Company’s ordinary shares |
2) | Changes in share capital: |
a. | In connection with the Company’s initial public offering (“IPO”) in July 2018, the Company issued 1,400,000 IPO warrants to purchase 700,000 ordinary shares, and these warrants were listed for trading on Nasdaq Capital Market (“Nasdaq”) on August 12, 2018. The IPO warrants were immediately exercisable at an initial exercise price of $8.40 per ordinary share for a period of five years, unless earlier repurchased by the Company as described in the warrant agreement. The IPO warrants expired on July 2, 2023, in accordance with their original terms, and Nasdaq removed them from listing. |
b. | On September 2, 2022, the Company entered into a sales agreement with SVB Securities LLC, as sales agent, to implement an ATM program under which the Company may from time to time offer and sell up to 5,000,000 Ordinary Shares (the “SVB ATM Program”). During the year ended December 31, 2023, the Company issued 4,030 ordinary shares pursuant to the SVB ATM Program for net proceeds of $5 at a weighted average price of $1.16 per ordinary share. |
c. | On December 20, 2023, the Company entered into a securities purchase agreement in connection with a private offering (the "2023 PIPE") with certain existing and new investors, including the Company's Chairman of the Board and the Chief Executive Officer (collectively, the "Investors") for the private placement of 7,916,879 units at a purchase price of $0.835 per unit, each unit consisting of (i) one ordinary share and (ii) one warrant to purchase one ordinary share (each an “ Investor Warrant”). The Company received aggregate proceeds of approximately $6.6 million before expenses. Certain Investors elected to receive pre-funded warrants (the “Pre-Funded Warrants”) in lieu of ordinary shares, as such warrants may not be exercised if the aggregate number of ordinary shares beneficially owned by the holder thereof would exceed 4.99% or 9.99%, as applicable, immediately after exercise thereof. The 2023 PIPE closed on December 22, 2023, and the Company issued 6,662,389 ordinary shares, 1,254,490 Pre-Funded Warrants and 7,916,879 Investors Warrants. Each Pre-Funded Warrant has an exercise price of NIS 0.0000769 per ordinary share, is immediately exercisable and may be exercised at any time and has no expiration date and is subject to customary adjustments. |
ENTERA BIO LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. | A cash fee equal to 10% of the total proceeds paid by subscribers introduced by the Broker. |
2. | A cash fee equal to 5% of the total proceeds paid by other subscribers that participated in the private placement. |
3. | Five-year warrants to purchase 487,496 ordinary shares, representing 10% of the ordinary shares issued to subscribers introduced by the Broker, at a per share exercise price of $0.71 (the “Broker Warrants”). |
ENTERA BIO LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1) | Share-based compensation plan |
On January 1, 2024, the Company’s Board of Directors approved an increase of 1,773,817 ordinary shares that may be issued under the Company’s 2018 Plan pursuant of the terms of the 2018 Plan.
ENTERA BIO LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2) | share-based compensation grants to employees and directors: |
a) | The below table summarizes the options grants to employees and directors during the years ended December 31, 2023 and 2022: | |
Period | Grantee | Number of options | Exercise price | Vesting period | Fair value at the grant date | Expiration period |
For the year ended December 31, 2023 | Employees and Executive Officers | 1,201,000 | $0.80 | (1) | $629 | 10 years |
Directors | 534,246 | $ 0.73 | Quarterly over a period of one year | $ 253 | 10 years | |
Directors | 33,638 | $ 0.89 | Quarterly over a period of three years | $ 15 | 10 years | |
Consultant | 30,000 | $ 0.80 | Immediate | $ 17 | 10 years | |
For the year ended December 31, 2022 | Employees and Executive Officers | 1,455,000 | $ 1.40- $2.86 | (1) | $1,462 | 10 years |
Directors | 250,964 | $ 2.815 | Quarterly over a period of one year | $ 455 | 10 years | |
Directors | 752,899 | $ 2.815 | Quarterly over a period of three years | $ 1,365 | 10 years |
b) | Upon the occurrence of a Triggering Event (as defined below) and subject to the approval of the Board of Directors, our CEO will be granted additional options to purchases 200,000 ordinary shares. The exercise price will be determined at the time of the Board of Directors’ approval. |
c) | On July 15, 2022, the Company entered into a mutual separation agreement with the Company’s former Chief Executive Officer, Dr. Jamas. Pursuant to the separation agreement, Dr. Jamas received the following benefits: (i) a one-time lump sum payment of his annual base salary for a period of 13 months, for a total gross amount equal to $412; and (ii) an extension of the exercise period for the vested portion of the options granted on January 4, 2021, based on the award original terms, representing an aggregate of 492,832 ordinary shares, through the end of a two-year period commencing on July 15, 2022. Effective July 15, 2022, upon termination of the employment agreement with Dr. Jamas, the remaining 821,386 unvested options were forfeited and recognized as a reverse of expense of $457 in general and administrative expenses. | |
ENTERA BIO LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 - SHARE-BASED COMPENSATION (continued)
d) | On June 15, 2022, the Company entered into a separation agreement with Dr. Phillip Schwartz, a former executive officer of the Company, under which Dr. Schwartz agreed to continue to provide services to the Company until July 21, 2022 (the “Separation Date”). Pursuant to the terms of the separation agreement, which were approved by the Company’s shareholders on September 7, 2022, Dr. Schwartz received a full acceleration of his unvested options, as of the Separation Date, to purchase 68,750 ordinary shares granted in April 2021 that otherwise would have been forfeited. These options, together with 31,250 already vested options granted in April 2021 and 357,500 already vested options to purchase ordinary shares granted in 2017, will be exercisable for a period of 10 years from their respective initial grant dates. |
The acceleration described above was recognized as a "Type III" modification; therefore, on the shareholder approval date, the Company recognized the incremental costs of unvested options based on the fair value of the options on such date. In addition, the extension of the exercise period for the vested awards was recognized as a "Type I" modification. The total expense amount was $112 thousand, which was classified as additional share-based compensation costs in the research and development expenses.
In addition, the separation agreement provides for the following payments to Dr. Schwartz, all of which would have otherwise been payable in accordance with either Israeli law or pursuant to his existing employment agreement: a one-time cash separation payment in an amount equal to NIS 537,600 (approximately $156) and additional payments of NIS 737,771 (approximately $214) in respect of all other ongoing accrued benefits, subject to any mandatory deductions. The foregoing payments were recognized in the research and development expenses.
e) | The fair value of each option granted is estimated at the date of grant using the Black-Scholes option-pricing model, with the following weighted average assumptions: |
2023 | 2022 | |||||||
Exercise price | $0.73-$0.89 | $1.40-$2.86 | ||||||
Dividend yield | - | - | ||||||
Expected volatility | 74%-76% | 69%-70.2% | ||||||
Risk-free interest rate | 3.58%-4.37% | 1.35%-3.36% | ||||||
Expected life - in years | 5.3-6.11 | 5.5-6.5 |
2023 | 2022 | |||||||||||||||
Number of options | Weighted average exercise price | Number of options | Weighted average exercise price | |||||||||||||
Outstanding at beginning of the year | 5,733,087 | $ | 3.30 | 4,316,859 | $ | 3.63 | ||||||||||
Granted | 1,798,884 | 0.78 | 2,458,863 | 2.29 | ||||||||||||
Exercised | - | - | (5,511 | ) | 2.14 | |||||||||||
Forfeited | (34,313 | ) | 2.27 | (902,009 | ) | 1.41 | ||||||||||
Expired | (392,244 | ) | 4.97 | (135,115 | ) | 3.80 | ||||||||||
Outstanding at end of the year | 7,105,414 | $ | 2.57 | 5,733,087 | $ | 3.30 | ||||||||||
Exercisable at end of the year | 4,208,325 | $ | 3.26 | 3,165,677 | $ | 4.06 |
ENTERA BIO LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 - SHARE-BASED COMPENSATION (continued)
December 31, 2023 | ||||||||||||||||||
Options outstanding | Options exercisable | |||||||||||||||||
Number of | Weighted | Number of | Weighted | |||||||||||||||
options | Average | options | Average | |||||||||||||||
Exercise | outstanding | Remaining | exercisable | Remaining | ||||||||||||||
prices per | at end of | Contractual | at end of | contractual | ||||||||||||||
share (USD) | Year | Life | year | Life | ||||||||||||||
0.73 | 534,244 | 9.01 | 400,684 | 9.01 | ||||||||||||||
0.79 | 1,223,000 | 9.32 | - | - | ||||||||||||||
0.89 | 33,638 | 9.43 | - | - | ||||||||||||||
1.24 | 492,831 | 0.54 | 492,831 | 0.54 | ||||||||||||||
1.40 | 600,000 | 8.54 | 187,500 | 8.54 | ||||||||||||||
2.02 | 500,000 | 8.37 | 187,500 | 8.37 | ||||||||||||||
2.14 | 379,900 | 6.26 | 356,155 | 6.26 | ||||||||||||||
2.53 | 33,638 | 5.89 | 33,638 | 5.89 | ||||||||||||||
2.57 | 187,500 | 8.33 | 68,562 | 8.33 | ||||||||||||||
2.815 | 1,003,863 | 8.01 | 690,155 | 8.01 | ||||||||||||||
2.86 | 135,000 | 8.25 | 52,187 | 8.25 | ||||||||||||||
3.15 | 345,000 | 7.30 | 184,375 | 7.30 | ||||||||||||||
3.61 | 237,368 | 7.27 | 155,306 | 7.27 | ||||||||||||||
3.68 | 147,290 | 3.26 | 147,290 | 3.26 | ||||||||||||||
3.97 | 232,552 | 5.05 | 232,552 | 5.05 | ||||||||||||||
6.31 | 1,019,590 | 3.95 | 1,019,590 | 3.95 | ||||||||||||||
7,105,414 | 4,208,325 |
2023 | 2022 | |||||||
Cost of revenues | - | 14 | ||||||
Research and development expenses | 424 | 708 | ||||||
General and administrative | 1,265 | 1,525 | ||||||
1,689 | 2,247 |
ENTERA BIO LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
A. | Corporate tax rate |
B. | Losses for tax purposes carried forward to future years |
C. | Tax assessments |
D. | Loss (income) before income taxes is composed of the following: |
Year ended December 31 | ||||||||
2023 | 2022 | |||||||
Entera Bio Ltd. | 8,868 | 12,997 | ||||||
Entera Bio Inc. | (8 | ) | (65 | ) | ||||
Total loss before taxes | 8,860 | 12,934 |
E. | Income tax expense: |
Year ended December 31 | ||||||||
Current: | 2023 | 2022 | ||||||
Subsidiary: | - | (37 | ) | |||||
Total current income tax | - | (37 | ) | |||||
Deferred income taxes - subsidiary | 29 | 174 | ||||||
Total deferred income taxes | 29 | 174 | ||||||
Total income tax expense | 29 | 137 |
ENTERA BIO LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7 - INCOME TAX (continued)
F. | Deferred income taxes |
December 31, | ||||||||
Deferred tax assets: | 2023 | 2022 | ||||||
Net operating loss carry forward | 17,427 | 15,428 | ||||||
Research and development | 983 | 1,225 | ||||||
Share-based compensation | 855 | 877 | ||||||
Other | 220 | 158 | ||||||
Net deferred tax assets before valuation allowance | 19,485 | 17,688 | ||||||
Valuation allowance | (19,471 | ) | (17,645 | ) | ||||
Net deferred tax assets | 14 | 43 |
G. | Roll-forward of valuation allowance: |
Balance at January 1, 2022 | 15,025 | |||
Additions | 2,620 | |||
Balance at January 1, 2023 | 17,645 | |||
Additions | 1,826 | |||
Balance at December 31, 2023 | 19,471 |
H. | Reconciliation of theoretical tax expenses to actual expenses |
I. | Uncertain tax positions |
ENTERA BIO LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, | ||||||||
2023 | 2022 | |||||||
Accrued expenses and other payables: | ||||||||
Employees and employees related | 159 | 154 | ||||||
Provision for vacation | 215 | 146 | ||||||
Accrued expenses | 500 | 933 | ||||||
874 | 1,233 |
a. | On January 1, 2024, an aggregate of 758,331 options to purchase ordinary shares were granted to seven non-executive board members with an exercise price of $0.60 per share. The options will vest over one year in four equal quarterly installments starting on January 1, 2024. This grant was approved by the shareholders of the Company on October 4, 2021. |
b. | On February 1, 2024, the Company entered into a consulting agreement. Under the terms of the agreement, the Company agreed to pay a monthly fee of $5 and to issue the consultant 25,000 RSUs. The RSUs vest over five months in five equal monthly installments starting on February 1, 2024. |
c. | On February 15, 2024, the Company entered into an investor relations consulting agreement. Under the terms of the agreement, the Company agreed to issue the consultant 50,000 RSUs. The RSUs vest over five months in five equal monthly installments starting on February 15, 2024. |
ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
ITEM 9A. | CONTROLS AND PROCEDURES |
• | pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and asset dispositions; |
• | provide reasonable assurance that transactions are recorded as necessary to permit the preparation of our financial statements in accordance with generally accepted accounting principles; |
• | provide reasonable assurance that receipts and expenditures are made only in accordance with authorizations of our management and the Board (as appropriate); and |
• | provide reasonable assurance regarding the prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on our financial statements. |
ITEM 9B. | OTHER INFORMATION |
ITEM 9C. | DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS. |
ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE |
Name | Age | Position |
Executive Officers | ||
Miranda Toledano (5) | 47 | Chief Executive Officer and Director |
Dana Yaacov-Garbeli | 40 | Chief Financial Officer |
Dr. Hillel Galitzer | 45 | Chief Operating Officer |
Dr. Arthur Santora | 73 | Chief Medical Officer |
Non-Employee Directors | ||
Gerald Lieberman (1) | 77 | Director, Chairman of the Board of Directors |
Dr. Roger J. Garceau (5) | 70 | Director, Chairman of the Scientific Advisory Committee |
Ron Mayron (1) (2) | 60 | Director, Chairman of the Compensation Committee |
Gerald M. Ostrov (1) (2) (3) | 74 | Director, Chairman of the Audit Committee |
Sean Ellis (1) (3) (4) | 49 | Director |
Haya Taitel (1) (5) | 61 | Director |
Yonatan Malca (1)(2) (3) (4) (5) | 57 | Director, Chairman of the Nominating and Corporate Governance Committee |
• | the Class I directors are Miranda Toledano, Roger Garceau and Ron Mayron; |
• | the Class II directors are Yonatan Malca and Haya Taitel; |
• | the Class III directors are Gerald Lieberman, Gerald M. Ostrov and Mr. Sean Ellis. |
ITEM 11. | EXECUTIVE COMPENSATION |
Name and Principal Position | Year | Salary ($) | Bonus ($) | Option Award(s) ($)(1) | All Other Compensation ($) | Total ($) | ||||||||||||||||
Miranda Toledano (2) | 2023 | 338 | - | 532 | 80 | 950 | ||||||||||||||||
Chief Executive Officer and director | 2022 | 231 | - | 382 | 66 | 679 | ||||||||||||||||
Dr. Hillel Galitzer | 2023 | 245 | - | 163 | 51 | 459 | ||||||||||||||||
Chief Operating Officer | 2022 | 287 | 63 | 234 | 37 | 621 | ||||||||||||||||
Dana Yaacov-Garbeli | 2023 | 193 | - | 118 | - | 311 | ||||||||||||||||
Chief Finance Officer | 2022 | 193 | 32 | 156 | - | 381 |
(1) | Reflects the associated annual expense recorded in our financial statements based on the grant date fair value of the share-based compensation granted in exchange for the directors’ and officers’ services computed in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718, Compensation - Stock Compensation (“ASC Topic 718”). The assumptions used in calculating the amounts are discussed in Note 6 to the Company’s audited financial statements for the year ended December 31, 2023 included in this Annual Report. The fair value amount is recognized as an expense over the course of the vesting period of the options (subject to any applicable accounting adjustments during that period). |
(2) | Ms. Toledano was appointed as our Chief Business Officer, Chief Financial Officer and Head of Corporate Strategy in May 2022. Ms. Toledano was then appointed as our Chief Executive Officer in July 2022. The compensation for from January 2022 and until May 2022 represents her compensation as a non-employee board member. |
Number of Securities Underlying Unexercised Options | Option Expiration | ||||||||
Name | Exercisable | Unexercisable | Date | ||||||
Miranda Toledano | 33,638 | - | 17/1/2029 | ||||||
Chief Executive Officer and director | 35,852 | - | 1/1/2031 | ||||||
62,741 | 44,816(1 | ) | 1/1/2031 | ||||||
187,500 | 312,500(2 | ) | 16/05/2032 | ||||||
187,500 | 412,500(3 | ) | 15/07/2032 | ||||||
- | 350,000(4 | ) | 24/04/2033 | ||||||
Dr. Hillel Galitzer | 164,062 | 10,937(5 | ) | 16/3/2030 | |||||
Chief Operating Officer | 78,125 | 46,875(6 | ) | 21/4/2031 | |||||
26,250 | 33,750(7 | ) | 24/3/2032 | ||||||
- | 210,000(8 | ) | 24/04/2033 | ||||||
Dana Yaacov-Garbeli | 32,812 | 2,188(9 | ) | 25/06/2030 | |||||
Chief Finance Officer | 75,000 | 45,000(10 | ) | 21/04/2031 | |||||
10,938 | 24,062(11 | ) | 31/03/2032 | ||||||
- | 190,000(12 | ) | 24/04/2033 |
(1) | The 44,816 unexercisable options as of December 31, 2023 will vest in five equal quarterly installments beginning on January 1, 2024. |
(2) | The 312,500 unexercisable options as of December 31, 2023 will vest in ten equal quarterly installments beginning on February 16, 2024. |
(3) | The 412,500 unexercisable options as of December 31, 2023 will vest in eleven equal quarterly installments beginning on March 9, 2024. |
(4) | Of the 350,000 unexercisable options as of December 31, 2023, 25% vest on April 24, 2024, the first anniversary of the grant date, and the remaining 75% vesting in 12 equal quarterly installments over the following three years. |
(5) | The 10,937 unexercisable options as of December 31, 2023 will vest on March 16, 2024. |
(6) | The 46,875 unexercisable options as of December 31, 2023 will vest in six equal quarterly installments beginning on January 20, 2024. |
(7) | The 33,750 unexercisable options as of December 31, 2023 will vest in nine equal quarterly installments beginning on March 30, 2024. |
(8) | Of the 210,000 unexercisable options as of December 31, 2023, 25% vest on April 24, 2024, the first anniversary of the grant date, and the remaining 75% will vest in 12 equal quarterly installments over the following three years. |
(9) | The 2,188 unexercisable options as of December 31, 2023 will vest on March 16, 2024. |
(10) | The 45,000 unexercisable options as of December 31, 2023 will vest in six equal quarterly installments beginning on January 20, 2024. |
(11) | The 24,062 unexercisable options as of December 31, 2023 will vest in eleven equal quarterly installments beginning March 8, 2024. |
(12) | Of the 190,000 unexercisable options as of December 31, 2023, 25% vest on April 24, 2024, the first anniversary of the grant date, and the remaining 75% will vest in 12 equal quarterly installments over the following three years. |
Name | Fees Earned or Paid in Cash ($) | Option Awards ($)(1) | All Other Compensation ($) | Total ($) | ||||||||||||
Gerald Lieberman | 40,000 | 90,966 | - | 130,966 | ||||||||||||
Yonatan Malca | 34,000 | 90,966 | - | 127,854 | ||||||||||||
Gerald M. Ostrov | 30,000 | 90,966 | - | 120,966 | ||||||||||||
Sean Ellis | 26,500 | 90,966 | - | 117,466 | ||||||||||||
Dr. Roger J. Garceau | 25,000 | 90,966 | - | 115,966 | ||||||||||||
Ron Mayron | 25,000 | 102,864 | - | 127,966 | ||||||||||||
Haya Taitel | 3,091 | 5,523 | - | 8,613 |
(1) | Reflects the associated annual expense recorded in our financial statements based on the grant date fair value of the share-based compensation granted in exchange for the directors’ and officers’ services computed in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718, Compensation – Stock Compensation (“ASC Topic 718”). The assumptions used in calculating the amounts are discussed in Note 6 of the Company’s audited financial statements for the year ended December 31, 2023 included in this Annual Report. The fair value amount is recognized as an expense over the course of the vesting period of the options (subject to any applicable accounting adjustments during that period). |
Name | Share Options | |||
Gerald Lieberman | 266,088 | |||
Dr. Roger J. Garceau | 588,780 | |||
Yonatan Malca | 266,088 | |||
Ron Mayron | 266,088 | |||
Gerald M. Ostrov | 266,088 | |||
Sean Ellis | 266,088 | |||
Haya Taitel | 33,638 |
ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS |
• | each person or entity known by us to own beneficially 5% or more of our outstanding Ordinary Shares; |
• | each of our directors and executive officers individually; and |
• | all of our executive officers and directors as a group. |
Name | Number and Percentage of Ordinary Shares | |||||||
Number | Percent | |||||||
5% or Greater Shareholders (other than directors and executive officers) | ||||||||
D.N.A Biomedical Solutions Ltd.(1) | 3,732,540 | 10.5 | % | |||||
Gakasa Holdings LLC.(2) | 3,524,275 | 9.9 | % | |||||
Centillion Fund (3) | 2,396,953 | 6.8 | % | |||||
Executive Officers and Directors: | ||||||||
Miranda Toledano(4) | 853,612 | 2.4 | % | |||||
Dr. Roger J. Garceau(5) | 593,914 | 1.7 | % | |||||
Gerald Lieberman(6) | 541,995 | 1.5 | % | |||||
Dr. Hillel Galitzer(7) | 385,356 | 1.0 | % | |||||
Sean Ellis(8) | 368,382 | 1.0 | % | |||||
Gerald M. Ostrov(9) | 276,282 | * | ||||||
Yonatan Malca(10) | 273,514 | * | ||||||
Ron Mayron(11) | 273,282 | * | ||||||
Dana Yaacov-Garbeli(12) | 246,580 | * | ||||||
Dr. Arthur Santora(13) | 381,421 | * | ||||||
Haya Taitel (14) | 53,493 | * | ||||||
All Directors and Executive Officers as a Group (11 persons)(15) | 3,984,266 | 10.26 | % |
(1) | D.N.A Biomedical Solutions Ltd.’s holdings consisted of 3,762,960 Ordinary Shares. D.N.A’s address is at Shimon Hatarsi 43 St., Tel Aviv, Israel. |
(2) | Beneficial ownership includes 3,534,275 ordinary shares. This consists of: (i) 3,534,275 ordinary shares, (ii) 347,604 ordinary shares underlying Pre-Funded Warrants and (iii) 1,197,604 shares underlying Ordinary Share Warrants. The Pre-Funded Warrants and Ordinary Share Warrants beneficially owned by Gakasa Holdings LLC prohibit the exercise thereof if, after giving effect to such exercise, the holder, including any person whose beneficial ownership would be attributable to the holder, would exceed 9.99%. |
(3) | Based on the Schedule 13G/A filed by Centillion Fund Inc. with the SEC on November 18, 2022 regarding its holdings as of August 31, 2022. Centillion Fund Inc’s address is 10 Manoel Street, Castries, Saint Lucia LC04 101 |
(4) | Consists of (i) 110,752 Ordinary Shares and (ii) 23,952 Ordinary Shares underlying warrants to acquire Ordinary Shares (iii) 718,908 Ordinary Shares underlying options to acquire Ordinary Shares |
(5) | Consists of (i) 4,940 Ordinary Shares and (ii) 588,974 Ordinary Shares underlying options to acquire Ordinary Shares. |
(6) | Consists of (i) 251,761 Ordinary Shares and (ii) 23,952 Ordinary Shares underlying warrants to acquire Ordinary Shares (iii) 266,282 Ordinary Shares underlying options to acquire Ordinary Shares |
(7) | Consists of (i) 34,106 Ordinary Shares and (ii) 351,250 Ordinary Shares underlying options to acquire Ordinary Shares. |
(8) | Consists of (i) 102,100 Ordinary Shares and (ii) 266,282 Ordinary Shares underlying options to acquire Ordinary Shares |
(9) | Consists of (i) 10,000 Ordinary Shares and (ii) 266,282 Ordinary Shares underlying options to acquire Ordinary Shares. |
(10) | Consists of (i) 7,232 Ordinary Shares and (ii) 266,282 Ordinary Shares underlying options to acquire Ordinary Shares. |
(11) | Consists of (i) 7,000 Ordinary Shares and (ii) 266,282 Ordinary Shares underlying options to acquire Ordinary Shares. |
(12) | Consists of (i) 56,580 Ordinary Shares and (ii) 190,000 Ordinary Shares underlying options to acquire Ordinary Shares. |
(13) | Consists of 83,750 Ordinary Shares underlying options to acquire Ordinary Shares. |
(14) | Consists of (i) 18,000 ordinary Shares (ii) 35,493 Ordinary Shares underlying options to acquire Ordinary Shares. |
(15) | Consists of (i) 602,471 ordinary Shares (ii) 47,904 Ordinary Shares underlying warrant to acquire Ordinary Shares and (iii) options to acquire 3,299,785 Ordinary Shares. |
Plan Category | Number of securities to be issued upon exercise of outstanding options, RSUs, warrants and rights (#) | Weighted-average exercise price of outstanding options, RSUs, warrants and rights ($) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (#) | |||||||||
(a) | (b) | (c) | ||||||||||
Equity compensation plans approved by security holders | ||||||||||||
2013 Plan | 1,166,880 | $ | 5.98 | - | ||||||||
2018 Plan | 5,938,534 | $ | 1.9 | 638,598 | ||||||||
Equity compensation plans not approved by security holders | - | - | - | |||||||||
Total | 7,105,414 | $ | 2.57 | 638,598 |
ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS, AND DIRECTOR INDEPENDENCE |
• | The amounts involved exceeded or will exceed the lesser of (i) $120,000 and (ii) one percent of the average of the Company’s total assets at year-end for the last two completed fiscal years; and |
• | A director, executive officer, holder of more than 5% of the outstanding share capital of the Company, or any member of such person’s immediate family had or will have a direct or indirect material interest. |
ITEM 14. | PRINCIPAL ACCOUNTING FEES AND SERVICES |
Year Ended December 31, | ||||||||
2023 | 2022 | |||||||
Audit fees (1) | $ | 157,500 | $ | 194,000 | ||||
Tax fees (2) | 6,700 | 7,500 | ||||||
Total fees | $ | 164,200 | $ | 201,500 |
(1) | Includes professional services rendered in connection with the audit of our annual financial statements and the review of our interim financial statements and services related to certain registration statements. |
(2) | Tax consulting services. |
ITEM 15. | EXHIBITS, FINANCIAL STATEMENT SCHEDULES. |
(a) | Documents filed as part of this report: |
(1) | Financial statements See Item 8 for Financial Statements included with this Annual Report. |
(2) | Financial Statement Schedules None. |
(3) | Exhibits: See below. |
Exhibit No. | Description | |
101.INS | Inline XBRL Instance Document | |
101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
104 | Inline XBRL for the cover page of this Annual Report, included in the Exhibit 101 Inline XBRL Document Set. |
ITEM 16. | FORM 10-K SUMMARY |
Date: March 8, 2024 | ENTERA BIO LTD. | ||
By: | /s/ Miranda Toledano | ||
Miranda Toledano | |||
Chief Executive Officer and Director |
Name | Title | Date | ||
/s/ Miranda Toledano | Chief Executive Officer and Director | March 8, 2024 | ||
Miranda Toledano | (Principal Executive Officer) | |||
/s/ Dana Yaacov-Garbeli | Chief Financial Officer | March 8, 2024 | ||
Dana Yaacov-Garbeli | (Principal Financial and Accounting Officer) | |||
/s/ Gerald Lieberman | Director | March 8, 2024 | ||
Gerald Lieberman | ||||
/s/ Roger J. Garceau | Director | March 8, 2024 | ||
Roger J. Garceau | ||||
/s/ Ron Mayron | Director | March 8, 2024 | ||
Ron Mayron | ||||
/s/ Yonatan Malca | Director | March 8, 2024 | ||
Yonatan Malca | ||||
/s/ Sean Ellis | Director | March 8, 2024 | ||
Sean Ellis | ||||
/s/ Gerald M. Ostrov | Director | March 8, 2024 | ||
Gerald M. Ostrov | ||||
/s/ Haya Taitel | Director | March 8, 2024 | ||
Haya Taitel |