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CONDENSED CONSOLIDATED FINANCIAL STATEMENTS: | |
F - 2 | |
F - 3 | |
F - 4 - F - 5 | |
F - 6 | |
F - 7 - F - 13 |
December 31, | June 30, | |||||||
2023 | 2024 | |||||||
A s s e t s | ||||||||
CURRENT ASSETS: | ||||||||
Cash and cash equivalents | $ | 7,513 | $ | 11,549 | ||||
Bank deposits | 10,012 | 4,012 | ||||||
Marketable securities | 20,471 | 14,912 | ||||||
Accounts receivables | 377 | 6,059 | ||||||
Prepaid expenses and other current assets | 2,794 | 1,750 | ||||||
TOTAL CURRENT ASSETS | 41,167 | 38,282 | ||||||
NON-CURRENT ASSETS: | ||||||||
Restricted long-term deposits and cash equivalents | 1,284 | 1,273 | ||||||
Property and equipment, net | 434 | 305 | ||||||
Operating lease right-of-use assets | 1,721 | 1,507 | ||||||
Other long-term assets | 55 | 34 | ||||||
Funds in respect of employee rights upon retirement | 626 | 604 | ||||||
TOTAL NON-CURRENT ASSETS | 4,120 | 3,723 | ||||||
TOTAL ASSETS | $ | 45,287 | $ | 42,005 | ||||
Liabilities and shareholders' equity | ||||||||
CURRENT LIABILITIES: | ||||||||
Accounts payable | $ | 154 | $ | 679 | ||||
Other accounts payable | 3,921 | 4,147 | ||||||
Current maturities of operating leases | 447 | 376 | ||||||
TOTAL CURRENT LIABILITIES | 4,522 | 5,202 | ||||||
LONG-TERM LIABILITIES | ||||||||
Operating leases liabilities | 1,206 | 1,018 | ||||||
Liability for employee rights upon retirement | 915 | 883 | ||||||
TOTAL LONG-TERM LIABILITIES | 2,121 | 1,901 | ||||||
TOTAL LIABILITIES | 6,643 | 7,103 | ||||||
SHAREHOLDERS' EQUITY: | ||||||||
Ordinary Shares, NIS 0.1 par value – authorized: 50,000,000 as of December 31, 2023 and June 30, 2024; issued and outstanding: 27,857,620 as of December 31, 2023 and June 30, 2024. | 774 | 774 | ||||||
Additional paid-in capital | 258,173 | 258,799 | ||||||
Accumulated deficit | (220,303 | ) | (224,671 | ) | ||||
TOTAL SHAREHOLDERS' EQUITY | 38,644 | 34,902 | ||||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 45,287 | $ | 42,005 |
Six months ended June 30 | Three months ended June 30 | |||||||||||||||
2023 | 2024 | 2023 | 2024 | |||||||||||||
REVENUE | $ | 894 | $ | 5,899 | $ | 594 | $ | 5,433 | ||||||||
RESEARCH AND DEVELOPMENT EXPENSES | 14,698 | 7,783 | 5,312 | 2,438 | ||||||||||||
GENERAL AND ADMINISTRATIVE EXPENSES | 3,786 | 3,203 | 1,809 | 1,371 | ||||||||||||
OPERATING INCOME (LOSS) | $ | (17,590 | ) | $ | (5,087 | ) | $ | (6,527 | ) | $ | 1,624 | |||||
FINANCIAL INCOME, net | 899 | 719 | 557 | 352 | ||||||||||||
NET INCOME (LOSS) FOR THE PERIOD | $ | (16,691 | ) | $ | (4,368 | ) | $ | (5,970 | ) | $ | 1,976 | |||||
BASIC AND DILUTED EARNINGS (LOSS) PER ORDINARY SHARE | $ | (0.63 | ) | $ | (0.16 | ) | $ | (0.22 | ) | $ | 0.07 | |||||
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING USED IN COMPUTATION OF BASIC AND DILUTED LOSS PER SHARE | 26,306,484 | 27,857,620 | 27,660,326 | 27,857,620 |
Ordinary shares | Additional paid-in capital | Accumulated deficit | Total | |||||||||||||||||
Number of shares | Amounts | Amounts | ||||||||||||||||||
BALANCE AS OF JANUARY 1, 2023 | 23,129,469 | 638 | 234,640 | (193,065 | ) | 42,213 | ||||||||||||||
CHANGES DURING THE SIX MONTHS ENDED JUNE 30, 2023: | ||||||||||||||||||||
Loss for the period | (16,691 | ) | (16,691 | ) | ||||||||||||||||
Issuance of shares and warrants through public offering, net of issuance costs | 2,560,000 | 74 | 11,468 | 11,542 | ||||||||||||||||
Issuance of shares and warrants through private placement from the controlling shareholder | 2,000,000 | 56 | 9,944 | 10,000 | ||||||||||||||||
Exercise of options | 116,485 | 3 | 177 | 180 | ||||||||||||||||
Share-based compensation | 1,052 | 1,052 | ||||||||||||||||||
BALANCE AT JUNE 30, 2023 | 27,805,954 | 771 | 257,281 | (209,756 | ) | 48,296 | ||||||||||||||
BALANCE AS OF JANUARY 1, 2024 | 27,857,620 | 774 | 258,173 | (220,303 | ) | 38,644 | ||||||||||||||
CHANGES DURING THE SIX MONTHS ENDED JUNE 30, 2024: | ||||||||||||||||||||
Loss for the period | - | - | (4,368 | ) | (4,368 | ) | ||||||||||||||
Share-based compensation | - | - | 626 | 626 | ||||||||||||||||
BALANCE AT JUNE 30, 2024 | 27,857,620 | 774 | 258,799 | (224,671 | ) | 34,902 |
Ordinary shares | Additional paid-in capital | Accumulated deficit | Total | |||||||||||||||||
Number of shares | Amounts | Amounts | ||||||||||||||||||
BALANCE AS OF APRIL 1, 2023 | 25,702,237 | 712 | 246,678 | (203,786 | ) | 43,604 | ||||||||||||||
CHANGES DURING THE THREE MONTHS ENDED JUNE 30, 2023: | ||||||||||||||||||||
Loss for the period | (5,970 | ) | (5,970 | ) | ||||||||||||||||
Issuance of shares and warrants through private placement from the controlling shareholder | 2,000,000 | 56 | 9,944 | 10,000 | ||||||||||||||||
Exercise of options | 103,717 | 3 | 161 | 164 | ||||||||||||||||
Share-based compensation | 498 | 498 | ||||||||||||||||||
BALANCE AT JUNE 30, 2023 | 27,805,954 | 771 | 257,281 | (209,756 | ) | 48,296 | ||||||||||||||
BALANCE AS OF APRIL 1, 2024 | 27,857,620 | 774 | 258,524 | (226,647 | ) | 32,651 | ||||||||||||||
CHANGES DURING THE THREE MONTHS ENDED JUNE 30, 2024: | ||||||||||||||||||||
Income for the period | - | - | 1,976 | 1,976 | ||||||||||||||||
Share-based compensation | - | - | 275 | 275 | ||||||||||||||||
BALANCE AT JUNE 30, 2024 | 27,857,620 | 774 | 258,799 | (224,671 | ) | 34,902 |
Six months ended June 30 | ||||||||
2023 | 2024 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Loss for the period | $ | (16,691 | ) | $ | (4,368 | ) | ||
Adjustments required to reconcile loss to net cash used in operating activities: | ||||||||
Depreciation | 185 | 125 | ||||||
Changes in accrued liability for employee rights upon retirement, net | 9 | (10 | ) | |||||
Share-based compensation expenses | 1,052 | 626 | ||||||
Financial expenses (income), net | (1 | ) | (2 | ) | ||||
Net changes in operating leases | (36 | ) | (45 | ) | ||||
Changes in fair value of marketable securities | (66 | ) | (87 | ) | ||||
Changes in operating asset and liabilities: | ||||||||
Receivables from collaborative and licensing arrangements | 5,653 | - | ||||||
Accounts receivables | - | (5,682 | ) | |||||
Prepaid expenses and other current assets | (1,063 | ) | 1,065 | |||||
Accounts payable, accrued expenses and other | 2,623 | 751 | ||||||
Net cash used in operating activities | (8,335 | ) | (7,627 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Purchase of property and equipment | (94 | ) | - | |||||
Proceeds from sale of property and equipment | - | 4 | ||||||
Investment in marketable securities | (17,114 | ) | - | |||||
Proceeds from sales and maturity of marketable securities | 7,995 | 5,646 | ||||||
Short-term deposits | (1,000 | ) | 6,000 | |||||
Long-term deposits | 12 | 821 | ||||||
Net cash provided by (used in) investing activities | (10,201 | ) | 12,471 | |||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Proceeds from exercise of options | 180 | - | ||||||
Proceeds from issuance of shares and warrants through placement from the controlling shareholder | 10,000 | - | ||||||
Proceeds from issuance of shares and warrants through public offering, net of issuance costs | 11,542 | - | ||||||
Net cash provided by financing activities | 21,722 | - | ||||||
EFFECT OF EXCHANGE RATE ON CASH AND CASH EQUIVALENTS | 1 | 2 | ||||||
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AND CASH EQUIVALENTS | 3,187 | 4,846 | ||||||
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD | 13,598 | 7,863 | ||||||
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AND CASH EQUIVALENTS AT END OF THE PERIOD | $ | 16,785 | $ | 12,709 | ||||
Cash and Cash equivalents | 15,618 | 11,549 | ||||||
Restricted cash | 1,167 | 1,160 | ||||||
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH SHOWN IN STATEMENT OF CASH FLOWS | 16,785 | 12,709 | ||||||
SUPPLEMENTARY DISCLOSURE OF NON-CASH ACTIVITIES: | ||||||||
Recognition of new operating lease ROU and liabilities | $ | 190 | - | |||||
SUPPLEMENTARY INFORMATION: | ||||||||
Interest received | $ | 590 | $ | 1,121 |
(U.S. dollars in thousands, except share and per share data)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
a. | Basis of Presentation The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim financial statements. Accordingly, they do not include all of the information and notes required by U.S. GAAP for annual financial statements. In the opinion of management, these unaudited condensed consolidated financial statements reflect all adjustments, which include normal recurring adjustments, necessary for a fair statement of the Company’s consolidated financial position as of June 30, 2024, the consolidated results of operations and the statements of changes in shareholders' equity for the six month periods ended June 30, 2024 and 2023 and the statements of cash flows for the six month period ended June 30, 2024 and 2023. |
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
b. | Recently issued accounting pronouncements, not yet adopted In November 2023, the FASB issued ASU 2023-07 “Segment Reporting: Improvements to Reportable Segment Disclosures”. This guidance expands public entities’ segment disclosures primarily by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets. Public entities with a single reportable segment are required to provide the new disclosures and all the disclosures required under ASC 280. The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The amendments are required to be applied retrospectively to all prior periods presented in an entity’s financial statements. The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements and related disclosures. |
December 31, | June 30, | |||||||
2023 | 2024 | |||||||
Level 2 securities: | ||||||||
U.S government and agency bonds | 2,583 | 1,612 | ||||||
Other foreign government bonds | 1,946 | 1,974 | ||||||
Corporate bonds* | 15,942 | 11,326 | ||||||
Total | 20,471 | 14,912 |
Marketable securities | ||||||||
For the year ended | For the six months | |||||||
December 31, 2023 | ended June 30, 2024 | |||||||
Balance at beginning of the period | $ | 8,678 | $ | 20,471 | ||||
Additions | 23,164 | - | ||||||
Sale or maturity | (11,807 | ) | (5,646 | ) | ||||
Changes in fair value during the period | 436 | 87 | ||||||
Balance at end of the period | $ | 20,471 | $ | 14,912 |
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
Market value | ||||
June 30, | ||||
2024 | ||||
Due within one year | $ | 14,912 |
Six months ended June 30 | Three months ended June 30 | |||||||||||||||
2023 | 2024 | 2023 | 2024 | |||||||||||||
Royalties revenue | $ | 514 | $ | 1,056 | $ | 214 | $ | 612 | ||||||||
Sale of IP and license revenue | 380 | 4,800 | 380 | 4,800 | ||||||||||||
Support services | - | 43 | - | 21 | ||||||||||||
Total revenue | $ | 894 | $ | 5,899 | $ | 594 | $ | 5,433 |
NOTE 5 - COLLABORATION AGREEMENTS:
a. | In 2007, the Company granted rights to a third party for use and commercialization of a product for skin protection. Under this agreement, the Company is entitled to royalties during the years 2016 to 2024. Based on current sales, royalties are not material. |
b. | In 2016 through 2020, the Company entered into several collaboration agreements mainly with one third party (the "Partner") for the development, manufacturing and commercialization of several product candidates (including an agreement assumed by the Company in August 2018, following the transfer of an in-process research and development product candidate from a related party). |
c. | Under the agreements, the Partner is obligated to conduct regulatory, scientific, clinical and technical activities necessary to develop the products and prepare and file an abbreviated new drug application ("ANDA"), with the FDA and gain regulatory approval. The Company participates in the development of the product candidates, including participation in joint steering committees and is obligated for sourcing the active pharmaceutical ingredient (API) during the development phase. Upon FDA approval, the Partner has exclusive rights and is required to use diligent efforts to commercialize these products in territories defined under the agreements, including all required sales, marketing and distributing activities associated with the agreements. The Company is entitled to a share of the Partner's gross profits related to the sale of the products, as such term is defined in each of the agreements. |
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
a. | In June 2021, the Company entered into two exclusive license agreements with Galderma for the commercialization of two of the Company's most advanced investigational drug products (Twyneo® and Epsolay®) in the United States. The Company was entitled to amounts of up to $7.5 million per product in upfront payments and regulatory approval milestone payments assuming 2021 approval of each respective product. The Company is also eligible to receive tiered double-digit royalties ranging from mid-teen to high-teen percentage of net sales as well as up to $9 million in sales milestone payments. According to the agreement, the Company has an option to regain commercialization rights five years following first commercialization. On April 14, 2022, the Company announced that Twyneo® is available for purchase by consumers who obtain a prescription from their physician, See note 1. On June 2, 2022, the Company announced that Epsolay® is available for purchase by consumers who obtain a prescription from their physician, See also note 1. The Company recognized $723 and $466 during the six-month periods ended June 30, 2024 and 2023, respectively, as royalty revenue in respect of the license agreement for both products. |
b. | On June 6, 2023, the Company and Searchlight Pharma Inc. (“Searchlight”), a private Canadian specialty pharmaceutical company, signed on an exclusive license agreements for Twyneo® and Epsolay® for the Canadian market, over a fifteen-year term that is renewable for subsequent five-year periods. Searchlight will be responsible for obtaining and maintaining any regulatory approvals required to market and sell the drugs in Canada, with support from the Company. |
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
c. | On May 15, 2024, the Company and Beimei, a private Chinese company, signed an agreement for the purchase and license by Beimei of certain rights in the intellectual property ("IP") related to Twyneo, for the treatment of acne vulgaris, in the mainland of China, Hong Kong, Macau, Taiwan and Israel. |
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
NOTE 7 - SHARE BASED COMPENSATION:
2024 | ||||
Value of one ordinary share | $ | 1.2 | ||
Dividend yield | 0 | % | ||
Expected volatility | 72 | % | ||
Risk-free interest rate | 4.8 | % | ||
Expected term | 4 years |
a. | Related parties include the controlling shareholder and companies under his control, the board of directors and the executive officers of the Company. |
b. | As to options granted to directors and executive officers, see note 7. |