ENTERA BIO LTD.
(Registrant)
|
|||
By:
|
/s/Adam Gridley
|
||
Name: Adam Gridley
|
|||
Title: Chief Executive Officer
|
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Page
|
|
CONDENSED CONSOLIDTED FINANCIAL STATEMENTS (Unaudited) - U.S DOLLARS IN
THOUSANDS ($):
|
|
F - 2
|
|
F - 3
|
|
F - 4
|
|
F - 5 - F - 6
|
|
F - 7 - F - 12
|
March 31
|
December 31
|
|||||||
2020
|
2019
|
|||||||
U.S. dollars in thousands
|
||||||||
A s s e t s
|
||||||||
CURRENT ASSETS:
|
||||||||
Cash and cash equivalents
|
13,328
|
15,185
|
||||||
Accounts receivable
|
-
|
278
|
||||||
Other current assets
|
786
|
173
|
||||||
TOTAL CURRENT ASSETS
|
14,114
|
15,636
|
||||||
NON-CURRENT ASSETS:
|
||||||||
Property and equipment
|
214
|
202
|
||||||
Right of use assets
|
250
|
260
|
||||||
Intangible assets
|
605
|
605
|
||||||
TOTAL NON-CURRENT ASSETS
|
1,069
|
1,067
|
||||||
TOTAL ASSETS
|
15,183
|
16,703
|
||||||
Liabilities and shareholders' equity
|
||||||||
CURRENT LIABILITIES:
|
||||||||
Accounts payable:
|
||||||||
Trade
|
431
|
334
|
||||||
Other
|
1,443
|
1,370
|
||||||
Current maturities of lease liabilities
|
152
|
177
|
||||||
Warrants to purchase ordinary shares
|
2,714
|
2,444
|
||||||
Contract liabilities
|
225
|
267
|
||||||
TOTAL CURRENT LIABILITIES
|
4,965
|
4,592
|
||||||
NON-CURRENT LIABILITIES:
|
||||||||
Lease liabilities
|
130
|
122
|
||||||
Severance pay obligations, net
|
73
|
70
|
||||||
TOTAL NON-CURRENT LIABILITIES
|
203
|
192
|
||||||
TOTAL LIABILITIES
|
5,168
|
4,784
|
||||||
COMMITMENTS AND CONTINGENCIES
|
||||||||
SHAREHOLDERS' EQUITY:
|
||||||||
Ordinary Shares, NIS 0.0000769 par value:
|
||||||||
Authorized - as of March 31, 2020 and December 31, 2019, 140,010,000 shares; issued and outstanding: as of March 31, 2020, and December 31, 2019 18,234,191 and 17,864,684
shares, respectively
|
* |
* |
||||||
Accumulated other comprehensive income
|
41
|
41
|
||||||
Other reserves
|
11,598
|
11,398
|
||||||
Additional paid in capital
|
64,206
|
63,392
|
||||||
Accumulated deficit
|
(65,830
|
)
|
(62,912
|
)
|
||||
TOTAL SHAREHOLDERS' EQUITY
|
10,015
|
11,919
|
||||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
|
15,183
|
16,703
|
Three months ended
|
||||||||
March 31
|
||||||||
2020
|
2019
|
|||||||
U.S. dollars in thousands
|
||||||||
REVENUE
|
42
|
-
|
||||||
COST OF REVENUE
|
42
|
-
|
||||||
RESEARCH AND DEVELOPMENT EXPENSES, net
|
1,605
|
2,035
|
||||||
GENERAL AND ADMINISTRATIVE EXPENSES
|
1,290
|
1,056
|
||||||
OPERATING LOSS
|
2,895
|
3,091
|
||||||
FINANCIAL EXPENSES (INCOME):
|
||||||||
Loss (income) from change in fair value of financial liabilities at fair value
|
46
|
(112
|
)
|
|||||
Other financial expenses (income), net
|
(23
|
)
|
16
|
|||||
FINANCIAL EXPENSES (INCOME), net
|
23
|
(96
|
)
|
|||||
NET COMPREHENSIVE LOSS FOR THE PERIOD
|
2,918
|
2,995
|
U.S. dollars
|
||||||||
LOSS PER ORDINARY SHARE -
|
||||||||
Basic and diluted
|
0.16
|
0.26
|
||||||
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING - |
||||||||
Basic and diluted
|
18,048,827
|
11,459,780
|
Number of Ordinary Shares
|
Ordinary Shares-Amount
|
Accumulated other comprehensive income
|
Other reserve
|
Additional paid in capital
|
Accumulated deficit
|
Total
|
||||||||||||||||||||||
U.S dollars in thousands
|
||||||||||||||||||||||||||||
BALANCE AT JANUARY 1, 2019
|
11,459,780
|
*
|
41
|
13,019
|
49,173
|
(52,117
|
)
|
10,116
|
||||||||||||||||||||
CHANGES FOR THREE MONTHS ENDED MARCH 31, 2019:
|
||||||||||||||||||||||||||||
Net loss for the period
|
-
|
-
|
-
|
-
|
-
|
(2,995
|
)
|
(2,995
|
)
|
|||||||||||||||||||
Share-based compensation
|
-
|
-
|
-
|
541
|
-
|
-
|
541
|
|||||||||||||||||||||
BALANCE AT MARCH 31, 2019
|
11,459,780
|
*
|
41
|
13,560
|
49,173
|
(55,112
|
)
|
7,662
|
BALANCE AT JANUARY 1, 2020
|
17,864,684
|
*
|
41
|
11,398
|
63,392
|
(62,912
|
)
|
11,919
|
||||||||||||||||||||
CHANGES FOR THREE MONTHS ENDED MARCH 31, 2020:
|
||||||||||||||||||||||||||||
Net loss for the period
|
-
|
-
|
-
|
-
|
-
|
(2,918
|
)
|
(2,918
|
)
|
|||||||||||||||||||
Exercise of options to ordinary shares
|
31,954
|
*
|
-
|
(35
|
)
|
103
|
-
|
68
|
||||||||||||||||||||
Issuance of shares and warrant due to a private placement, net of issuance costs
|
337,553
|
* |
- |
- |
573 |
- |
573 |
|||||||||||||||||||||
Expiration of options
|
(138
|
)
|
138
|
-
|
||||||||||||||||||||||||
Share-based compensation
|
-
|
-
|
-
|
373
|
-
|
-
|
373
|
|||||||||||||||||||||
BALANCE AT MARCH 31, 2020
|
18,234,191
|
*
|
41
|
11,598
|
64,206
|
(65,830
|
)
|
10,015
|
Three months ended
March 31
|
||||||||
2020
|
2019
|
|||||||
(Unaudited)
|
||||||||
U.S dollars in thousands
|
||||||||
CASH FLOWS USED IN OPERATING ACTIVITIES:
|
||||||||
Net loss for the period
|
(2,918
|
)
|
(2,995
|
)
|
||||
Adjustments required to reflect net cash
|
||||||||
used in operating activities (see appendix A)
|
262
|
1,062
|
||||||
Net cash used in operating activities
|
(2,656
|
)
|
(1,933
|
)
|
||||
CASH FLOWS USED IN INVESTING ACTIVITIES:
|
||||||||
Purchase of property and equipment
|
(29
|
)
|
(33
|
)
|
||||
Net cash used in investing activities
|
(29
|
)
|
(33
|
)
|
||||
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES:
|
||||||||
Proceeds from issuance of ordinary shares and warrants, net of issuance costs
|
797
|
-
|
||||||
Proceeds from exercise of options
|
68
|
-
|
||||||
Principle element of lease payments
|
(37
|
)
|
(23
|
)
|
||||
Net cash provided by (used in) financing activities
|
828
|
(23
|
)
|
|||||
NET DECREASE IN CASH AND CASH EQUIVALENTS
|
(1,857
|
)
|
(1,989
|
)
|
||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR
|
15,185
|
7,506
|
||||||
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD
|
13,328
|
5,517
|
Three months ended March 31
|
||||||||
2020
|
2019
|
|||||||
(Unaudited)
|
||||||||
U.S dollars in thousands
|
||||||||
APPENDIX A:
|
||||||||
Adjustments required to reflect net cash used in operating activities:
|
||||||||
Depreciation
|
50
|
56
|
||||||
Change in fair value of financial liabilities at fair value through profit or loss
|
46
|
(112
|
)
|
|||||
Financial expenses (income)
|
4
|
(2
|
)
|
|||||
Net changes in severance pay obligation
|
3
|
2
|
||||||
Share-based compensation
|
373
|
541
|
||||||
476
|
485
|
|||||||
Changes in working capital:
|
||||||||
Decrease in accounts receivables
|
278
|
725
|
||||||
Increase in other current assets
|
(613
|
)
|
(389
|
)
|
||||
Increase (decrease) in accounts payable and accruals:
|
||||||||
Trade
|
97
|
326
|
||||||
Other
|
73
|
(73
|
)
|
|||||
Decrease in contract liabilities
|
(42
|
)
|
-
|
|||||
(207
|
)
|
589
|
||||||
Cash used for operating activities -
|
||||||||
Interest paid
|
(7
|
)
|
(12
|
)
|
||||
262
|
1,062
|
|||||||
APPENDIX B:
|
||||||||
Supplementary information on investing and financing activities not involving cash flows:
|
||||||||
Right of use assets obtained in exchange for new operating lease liabilities
|
23
|
a. |
General:
|
1) |
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 Entera Bio Inc., a fully owned subsidiary
incorporated in Delaware USA. The Company is a leader in the development and commercialization of orally delivered macromolecule therapeutics for use in areas with significant unmet medical need where adoption of injectable therapies is
limited due to cost, convenience and compliance challenges for patients. The Company’s most advanced product candidates, EB613 for the treatment of osteoporosis and EB612 for the treatment of hypoparathyroidism, are based on its
proprietary technology platform and are both in Phase 2 clinical development. The Company also licenses its technology to biopharmaceutical companies for use with their proprietary compounds and, to date, has completed one such
collaboration with Amgen Inc.
|
2) |
The Company's securities have been listed for trading on the Nasdaq Capital Market since the Company’s initial public offering in July 2018, where a total of 1,400,000 new ordinary shares were issued in consideration of net proceeds
of $9.6 million, after deducting offering expenses.
|
3) |
On December 10, 2018, the Company entered into a research collaboration and license agreement (the “Amgen Agreement”) with Amgen Inc. (“Amgen”) in inflammatory disease and other serious illnesses. Pursuant to the Amgen Agreement, the
Company and Amgen use the Company’s proprietary drug delivery platform to develop oral formulations for one preclinical large molecule program that Amgen has selected. Amgen also has options to select up to two additional programs to
include in the collaboration. Amgen is responsible for the clinical development, regulatory approval, manufacturing and worldwide commercialization of the programs.
|
b. |
Since the Company is engaged in research and development activities, it has not derived significant income from its activities and has incurred accumulated losses in the amount of $65.8 million through March 31, 2020 and negative
cash flows from operating activities. The Company's management is of the opinion that its available funds as of March 31, 2020 will allow the Company to operate under its current plans into the second quarter of 2021, due to delays in
certain activities as a result of the recent coronavirus (COVID-19) outbreak. These factors raise substantial doubt as to the Company's ability to continue as a going concern.
|
c. |
Approval of financial statements
|
Financial liabilities at fair value through profit or loss
|
Financial liabilities at amortized cost |
Total
|
||||||||||
U.S. dollars in thousands
|
||||||||||||
As of March 31,
2020: |
||||||||||||
Trade and other payable
|
-
|
1,874
|
1,874
|
|||||||||
Warrants to purchase
ordinary shares (level 1) (1) |
532
|
-
|
532
|
|||||||||
Warrants to purchase
ordinary shares (level 3) (2) |
2,182
|
-
|
2,182
|
|||||||||
2,714
|
1,874
|
4,588
|
||||||||||
As of December 31,
2019: |
||||||||||||
Trade and other payable
|
-
|
1,704
|
1,704
|
|||||||||
Warrants to purchase
ordinary shares (level 1) |
266
|
-
|
266
|
|||||||||
Warrants to purchase
ordinary shares (level 3) |
2,178
|
-
|
2,178
|
|||||||||
2,444
|
1,704
|
4,148
|
(1) |
Tradable warrants presented above are valuated based on the market price (a level 1 valuation) as of March 31, 2020.
|
(2) |
Warrants to purchase ordinary shares issued in December 2019 and February 2020 presented are valuated based on the Monte-Carlo pricing model (a level 3 valuation) as of March 31, 2020. The main assumptions used are as follows:
|
March 31
|
|
2020
|
|
Price per share
|
$3.08
|
Volatility
|
67%
|
Expected term (years)
|
2.75-3.00
|
Risk free interest rate
|
0.29%
|
Expected dividend
|
0%
|
1. |
Equity:
|
a. |
In January 2020, a consultant exercised 31,954 options into 31,954 ordinary shares for a total consideration of $68,000.
|
b. |
On December 11, 2019 and December 18, 2019, the Company entered into subscription agreements with a select group of accredited investors, including certain board members or its affiliates for the private placement of 5,710,153
ordinary shares for aggregate subscription proceeds to the Company of $13.5 million at $2.37 price per share (the “Private Placement”). In addition, the Company granted 2,855,095 warrants, exercisable over a three-years period from the
date of issuance, to purchase 2,855,095 ordinary shares at a per share exercise price of $2.96.
On December 13, 2019, D.N.A Biomedical Solutions Ltd. (“DNA”), an existing shareholder of the Company, subscribed to the Private Placement (the “DNA Private Placement”) to purchase 337,553 ordinary shares for aggregate consideration
of $800,000. In connection with the transaction, the Company granted DNA warrants, exercisable over a three-year period from the date of issuance, to purchase 168,776 ordinary shares at a per share exercise price of $2.96. This
investment was approved by the shareholders of the Company on February 18, 2020.
The 168,776 warrants issued in connection with the DNA Private Placement together with the 2,855,095 warrants issued in connection with the Private Placement are the “Investors Warrants”
Prior to the exercise of the Investors Warrants the number of ordinary shares issuable upon their exercise and the exercise price are subject to customary adjustments, including in the events of reorganizations or reclassifications of the Company’s capital stock, upon payment of dividends or distributions to the Company’s shareholders, and upon any subsequent issuance of the Company’s share capital at or below a price of $2.37. In addition, the Investors Warrants have a cashless exercise mechanism. Therefore, for accounting purposes, the Investors Warrants were classified as a financial liability. |
2. |
Options Grants
|
a. |
An options grant to purchase 201,600 ordinary shares to certain employees and 7,500 options granted to a service provider, with an exercise price of $2.14 per share. The options vest over 4 years from the date of grant; 25% vest on
the first anniversary of the date of grant and the remaining 75% vest in twelve equal quarterly installments following the first anniversary of the applicable grant date. The fair value of the options as of the date of the grant was
$274,000.
|
b. |
An options grant to purchase 250,000 ordinary shares to certain executive officers of the Company, with an exercise price of $2.14. The options vest over 4 years from the date of grant; 25%vest on the first anniversary of the date of
grant and the remaining 75% vest in twelve equal quarterly installments following the first anniversary of the applicable grant date. The grant is subject to the approval by the shareholders of the Company. The fair value of the option
at March 31, 2020, was $322,000.
|
|
(unaudited)
Three Months Ended March 31, |
Increase (Decrease)
|
||||||||||||||
|
2020
|
2019
|
$
|
%
|
||||||||||||
|
(In thousands, except for percentage information)
|
|||||||||||||||
Revenues
|
$
|
(42
|
)
|
$
|
-
|
$
|
(42
|
)
|
(100
|
)
|
||||||
Cost of revenues
|
42
|
-
|
42
|
100
|
||||||||||||
Operating expenses:
|
|
|||||||||||||||
Research and development expenses, net
|
1,605
|
2,035
|
(430
|
)
|
(21.1
|
)
|
||||||||||
General and administrative expenses
|
1,290
|
1,056
|
234
|
22.2
|
||||||||||||
Operating loss
|
2,895
|
3,091
|
(196
|
)
|
(6.3
|
)
|
||||||||||
Financial expenses (income), net
|
23
|
(96
|
)
|
119
|
(124
|
)
|
||||||||||
Net loss
|
$
|
2,918
|
$
|
2,995
|
$
|
(77
|
)
|
(2.6
|
)
|
|
(unaudited)
three months ended March 31, |
|||||||
|
2020
|
2019
|
||||||
|
(in thousands)
|
|||||||
Cash used in operating activities
|
$
|
(2,656
|
)
|
$
|
(1,933
|
)
|
||
Cash used in investing activities
|
(29
|
)
|
(33
|
)
|
||||
Cash provided by (used in) financing activities
|
828
|
(23
|
)
|
|||||
Net decrease in cash and cash equivalents
|
$
|
(1,857
|
)
|
$
|
(1,989
|
)
|
• |
the costs, timing and outcome of clinical trials for, and data and regulatory review of, EB613, 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;
|
• |
the impact of COVID-19, once known, on our clinical trials, regulatory timelines, business operations and financial stability; and
|
• |
our ability to establish collaborations on favorable terms, if at all.
|
• |
the scope, progress and costs of developing our product candidates such as EB613 for Osteoporosis and EB612 for Hypoparathyroidism, including without limitation any changes to the design of the ongoing Phase 2 clinical trial of EB613
or the need for additional clinical trials or development work based on further analysis of the interim data from the ongoing EB613 Phase 2 clinical trial;
|
• |
the accuracy of our estimates regarding expenses, capital requirements, the sufficiency of our cash resources and the need for additional financing;
|
• |
our ability to raise additional funds on commercially reasonable terms;
|
• |
our ability to develop, advance product candidates into, and successfully complete, clinical studies such as our ongoing Phase 2 clinical trial of EB613 in osteoporosis;
|
• |
our reliance on third parties to conduct our clinical trials and on third-party suppliers to supply or produce our product candidates;
|
• |
our expectations regarding licensing, business transactions and strategic collaborations, including our ongoing collaboration with Amgen;
|
• |
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 ability to continue as a going concern absent access to sources of liquidity;
|
• |
our interpretation of FDA feedback and guidance and how such guidance may impact our clinical development plans, specifically our ability to utilize the 505(b)(2) pathway for the development and potential approval of EB613 and any
other product candidates we may develop;
|
• |
our ability to obtain and maintain regulatory approval for any of our product candidates;
|
• |
our competitive position, especially with respect to Forteo® and other products on the market or in development for the treatment of osteoporosis;
|
• |
our ability to establish and maintain development and commercialization collaborations;
|
• |
any potential commercial launch of current or future product candidates, and the timing, cost or other aspects of such commercialization;
|
• |
our ability to manufacture and supply sufficient amounts of material to support our clinical trials and any potential future commercial requirements;
|
• |
our ability to use and expand our drug delivery technology to additional product candidates;
|
• |
the safety and efficacy of therapeutics marketed by competitors that are targeted toward indications for which we are developing product candidates;
|
• |
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;
|
• |
the possibility that competing products or technologies may make any product candidates we may develop and commercialize or our oral delivery technology obsolete;
|
• |
the pricing and reimbursement of our product candidates, if approved;
|
• |
our ability to develop a sales, marketing and distribution infrastructure, if any;
|
• |
our ability to manage growth;
|
• |
the duration and severity of the recent coronavirus (COVID-19) outbreak, the actions that may be required to contain the Coronavirus or treat its impact, and its impact on our operations and workforce, including our research and
development, preclinical studies and clinical trials; and
|
• |
other risk factors discussed under “Risk Factors" in our Annual report on Form 20-F for the year ended December 31, 2019.
|