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Anchiano Therapeutics Ltd.
Consolidated Interim Financial Statements
Anchiano Therapeutics Ltd.
Consolidated Interim Financial Statements as of September 30, 2019 (Unaudited)
| Page | ||||
| Condensed Consolidated Interim Financial Statements : | ||||
| Condensed Consolidated Interim Statements of Financial Position | 2 | |||
| Condensed Consolidated Interim Statements of Operations | 3 | |||
| Condensed Consolidated Interim Statements of Operations and Other Comprehensive Loss | 4 | |||
| Condensed Consolidated Interim Statements of Changes in Equity (Deficiency) | 5 | |||
| Condensed Consolidated Interim Statements of Cash Flows | 6 | |||
| Notes to the Condensed Consolidated Interim Financial Statements | 7 |
Consolidated Interim Statements of Financial Position (Unaudited)
| September 30, 2019* | December 31, 2018 | |||||||||
| Note | (Unaudited) | |||||||||
| Assets | ||||||||||
| Cash and cash equivalents | 23,242 | 7,517 | ||||||||
| Receivables | 1,236 | 3,403 | ||||||||
| Total current assets | 24,478 | 10,920 | ||||||||
| Non-current assets | ||||||||||
| Intangible assets | 4E | 3,346 | - | |||||||
| Long-term prepaid expenses | 958 | 1,115 | ||||||||
| Right-of-use assets | 1,566 | - | ||||||||
| Long-term pledged deposits | 129 | 120 | ||||||||
| Asset for employee benefits, net | 10 | 34 | ||||||||
| Fixed assets, net | 370 | 385 | ||||||||
| Total non-current assets | 6,379 | 1,654 | ||||||||
| Total assets | 30,857 | 12,574 | ||||||||
| Liabilities | ||||||||||
| Trade payables | 924 | 396 | ||||||||
| Other payables | 3,751 | 2,021 | ||||||||
| Short-term employee benefits | 962 | 644 | ||||||||
| Short-term lease liabilities | 505 | - | ||||||||
| Derivative instruments | 4A | 9,171 | 6,975 | |||||||
| Total current liabilities | 15,313 | 10,036 | ||||||||
| Non-current liabilities | ||||||||||
| Long-term lease liabilities | 992 | - | ||||||||
| Derivative instruments | 4A | 5,266 | 3,628 | |||||||
| Total non-current liabilities | 6,258 | 3,628 | ||||||||
| Total liabilities | 21,571 | 13,664 | ||||||||
| Contingent liabilities and commitments | ||||||||||
| Equity | ||||||||||
| Share capital | - | - | ||||||||
| Additional paid-in capital | 116,125 | 70,595 | ||||||||
| Currency translation differences reserve | 872 | 872 | ||||||||
| Capital reserve from share-based payments | 4,611 | 3,566 | ||||||||
| Accumulated loss | (112,322 | ) | (76,123 | ) | ||||||
| Total equity (deficiency) | 9,286 | (1,090 | ) | |||||||
| Total liabilities and equity | 30,857 | 12,574 |
| Dennison Veru | Dr. Frank Haluska | Jonathan Burgin | |||
| Interim Chairman | Chief Executive Officer | Chief Operating Officer & Chief Financial Officer |
| * | See Note 3 - Initial application of new standards |
| Date of approval of the financial statements: November 14, 2019 |
The accompanying notes are an integral
part of the consolidated interim financial statements.
Consolidated Interim Statements of Operations (Unaudited)
$ thousands (Other than per share amounts)
| For the nine-month period ended | For the three-month period ended | |||||||||||||||
| September 30, | September 30, | September 30, | September 30, | |||||||||||||
| 2019* | 2018 | 2019* | 2018 | |||||||||||||
| Research and development expenses | 8,963 | 5,722 | 2,233 | 1,372 | ||||||||||||
| General and administrative expenses | 4,811 | 4,346 | 1,664 | 1,133 | ||||||||||||
| Operating loss | 13,774 | 10,068 | 3,897 | 2,505 | ||||||||||||
| Financing income | (331 | ) | (12 | ) | (130 | ) | (12 | ) | ||||||||
| Financing expense | 22,886 | 953 | 12,584 | 72 | ||||||||||||
| Financing expense, net | 22,555 | 941 | 12,454 | 60 | ||||||||||||
| Loss before taxes on income | 36,329 | 11,009 | 16,351 | 2,565 | ||||||||||||
| Income tax | (154 | ) | 461 | (433 | ) | 68 | ||||||||||
| Net loss for the period | 36,175 | 11,470 | 15,918 | 2,633 | ||||||||||||
| Loss per share (in $): | ||||||||||||||||
| Basic and diluted loss* | 1.08 | 0.98 | 0.43 | 0.17 | ||||||||||||
| Number of shares used to compute basic and diluted loss per share (thousands of shares) | 33,551 | 11,666 | 37,099 | 15,574 |
* See Note 3 - Initial application of new
The accompanying notes are an integral part
of the consolidated interim financial statements.
Consolidated Interim Statements of Operations and Other Comprehensive Loss (Unaudited)
| For the nine-month period ended | For the three-month period ended | |||||||||||||||
| September 30, | September 30, | September 30, | September 30, | |||||||||||||
| 2019* | 2018 | 2019* | 2018 | |||||||||||||
| Net loss for the period | 36,175 | 11,470 | 15,918 | 2,633 | ||||||||||||
| Other comprehensive income items that will not be transferred to statement of operations | ||||||||||||||||
| Re-measurement of defined benefit plan Currency translation difference | 24 | (325 | ) | - | 15 | |||||||||||
| Total comprehensive loss for the period | 36,199 | 11,145 | 15,918 | 2,648 |
* See Note 3 - Initial application of new
The accompanying notes are an integral part
of the consolidated interim financial statements.
Consolidated Interim Statements of Changes in Equity (Deficiency) (Unaudited)
| Share capital | Additional paid-in capital | Currency translation differences reserve | Capital reserve from share-based payments | Accumulated loss | Total equity (Deficiency) | |||||||||||||||||||
| For the nine-month period ended September 30, 2019 * | ||||||||||||||||||||||||
| Balance as at January 1, 2019 | - | 70,595 | 872 | 3,566 | (76,123 | ) | (1,090 | ) | ||||||||||||||||
| Issuance of shares, net | - | 26,500 | - | - | - | 26,500 | ||||||||||||||||||
| Price protection rights | - | 19,006 | - | - | - | 19,006 | ||||||||||||||||||
| Expiration of options | - | 24 | - | (24 | ) | - | - | |||||||||||||||||
| Share-based payment | - | - | - | 1,069 | - | 1,069 | ||||||||||||||||||
| Comprehensive loss for the Period | - | - | - | - | (24 | ) | (24 | ) | ||||||||||||||||
| Net loss for the period | - | - | - | - | (36,175 | ) | (36,175 | ) | ||||||||||||||||
| Balance as of September 30, 2019 | - | 116,125 | 872 | 4,611 | (112,322 | ) | 9,286 | |||||||||||||||||
| For the nine-month period ended September 30, 2018 | ||||||||||||||||||||||||
| Balance as of January 1, 2018 | - | 60,043 | 457 | 1,767 | (62,876 | ) | (609 | ) | ||||||||||||||||
| Issuance of shares, net | - | 10,419 | - | - | - | 10,419 | ||||||||||||||||||
| Exercise of options | - | 7 | - | (1 | ) | - | 6 | |||||||||||||||||
| Share-based payment | - | - | - | 1,562 | - | 1,562 | ||||||||||||||||||
| Comprehensive income for the Period | - | - | 325 | - | - | 325 | ||||||||||||||||||
| Net loss for the period | - | - | - | - | (11,470 | ) | (11,470 | ) | ||||||||||||||||
| Balance as of September 30, 2018 | - | 70,469 | 782 | 3,328 | (74,346 | ) | 233 |
* See Note 3 - Initial application of new
The accompanying notes are an integral
part of the consolidated interim financial statements.
Consolidated Interim Statements of Cash Flows (Unaudited)
| For the nine-month period ended | ||||||||
| September 30, | September 30, | |||||||
| 2019* | 2018 | |||||||
| Cash flows from operating activities | ||||||||
| Loss for the period | (36,175 | ) | (11,470 | ) | ||||
| Financing expenses, net | 22,531 | 866 | ||||||
| Depreciation | 70 | 46 | ||||||
| Share-based payments | 1,069 | 1,562 | ||||||
| Taxes on income | (154 | ) | 461 | |||||
| Right-of-use depreciation | 347 | - | ||||||
| Change in receivables | 1,477 | (2,414 | ) | |||||
| Change long-term prepaid expenses | 70 | (803 | ) | |||||
| Change in trade payables | 913 | 706 | ||||||
| Change in other payables | (382 | ) | (314 | ) | ||||
| Change in employee benefits | 318 | 400 | ||||||
| Taxes paid | (605 | ) | (244 | ) | ||||
| Interest paid | (6 | ) | (23 | ) | ||||
| Interest received | 331 | 4 | ||||||
| Net cash used in operating activities | (10,196 | ) | (11,223 | ) | ||||
| Cash flows from investing activities | ||||||||
| purchase of Intangible Assets | (250 | ) | - | |||||
| Change in long pledged deposits | - | (125 | ) | |||||
| Purchase of fixed assets | (96 | ) | (187 | ) | ||||
| Net cash used in investing activities | (346 | ) | (312 | ) | ||||
| Cash flows from financing activities | ||||||||
| Receipt of loan from bank | - | 1,050 | ||||||
| Repayment of loan from bank | - | (1,033 | ) | |||||
| Receipt of loan from controlling shareholder | - | 3,000 | ||||||
| Repayment of loan from controlling shareholder | - | (3,000 | ) | |||||
| Payment for lease liabilities | (367 | ) | - | |||||
| Proceeds from issuance of warrants and derivative instruments | - | 11,989 | ||||||
| Proceeds from issuance of shares | 30,500 | 10,911 | ||||||
| Issuance costs | (3,879 | ) | (1,755 | ) | ||||
| Net cash provided by financing activities | 26,254 | 21,162 | ||||||
| Increase in cash and cash equivalents | 15,712 | 9,627 | ||||||
| Cash and cash equivalents at the beginning of the period | 7,517 | 1,454 | ||||||
| Effect of exchange rate differences on cash and cash equivalents | 13 | (169 | ) | |||||
| Cash and cash equivalents at the end of the period | 23,242 | 10,912 |
* See Note 3 - Initial application of new
The accompanying notes are an integral part
of the consolidated interim financial statements.
Anchiano Therapeutics Ltd.
to the Condensed Consolidated Interim Financial Statements as of September 30, 2019 (Unaudited)
In these financial statements
The condensed consolidated
interim financial statements of the Company as of September 30, 2019 include those of the Company and of the Subsidiaries.
The Anchiano Group is engaged
in research and development of drugs for the treatment of cancer. The Group's products are in the development stage. Therefore,
there is no certainty regarding the Group's ability to complete development of the products, obtain regulatory permits, and
achieve marketing success. The Company has incurred recurring losses from operations. The continuation of the stages of development
related to the Company's planned activities depends on future events, including raising additional capital and achieving
operational profitability. The Company is working to raise the capital needed for its continuing operations, although, as of the
date of the statement of financial position, there is significant doubt as to the Company's ability to continue operating
as a "going concern". As of the signing date of the financial statements, and based on the Group's assessments,
its financial resources are expected to suffice until the fourth quarter of 2020.
These financial statements do
not include any measurement or presentation adjustments for assets and liabilities that would be required if the Group does not
continue operating as a going concern.
Anchiano Therapeutics Ltd.
to the Condensed Consolidated Interim Financial Statements as of September 30, 2019 (Unaudited)
2 - Basis of Financial Statement Presentation
Declaration of Compliance with International Financial Reporting Standards
The condensed consolidated
interim financial statements were prepared by the Group in conformity with IAS 34 Interim Financial Reporting. They do not include
all the information required in full annual financial statements and should be read in conjunction with the consolidated financial
statements for the year ended December 31, 2018, which were prepared in conformity with IFRS as issued by the International Accounting
Standards Board ("IASB").
The condensed consolidated
interim financial statements were approved for publication by the Company's Board of Directors on November 14, 2019.
Change in functional currency
The Company's management
has determined that as a result of a significant increase in the Group's activities in the USA, including the initiation
of a pivotal clinical trial and an initial public offering on the Nasdaq, the Group's functional currency, best representing
the Group's economic activity, shall be the U.S. dollar as of January 1, 2019. The change in functional currency is accounted
for prospectively from the date of change.
The preparation of financial
statements in conformity with IFRS requires management to exercise judgment when making assessments, estimates and assumptions
that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual
results may differ from these estimates.
Except as described below and
that mentioned in Note 3, the significant judgments made by management in applying the Group's accounting policies and the
principal assumptions used in the estimation of uncertainty were the same as those that applied to the annual financial statements
The Company uses critical
estimates to measure the fair value of derivative instruments.
Anchiano Therapeutics Ltd.
to the Condensed Consolidated Interim Financial Statements as of September 30, 2019 (Unaudited)
3 - Significant Accounting Policies
Except as described below, the accounting
policies applied by the Group in these condensed consolidated interim financial statements are the same as those applied by the
Group in its annual financial statements.
Presented hereunder is a description of
the changes in accounting policies applied in these condensed consolidated interim financial statements and their effect:
Initial application of new standards,
amendments to standards and interpretations
As from January 1, 2019, the Group applies
the new standards and amendments to standards described below:
As from January 1, 2019 (hereinafter: "the
date of initial application") the Group applies International Financial Reporting Standard 16, Leases (hereinafter:
"IFRS 16" or "the standard"), which replaced International Accounting Standard 17, Leases (hereinafter:
"IAS 17" or "the previous standard").
The main effect of the standard's
application is reflected in annulment of the existing requirement from lessees to classify leases as operating (off-balance sheet)
or finance leases and the presentation of a unified model for lessees to account for all leases similarly to the accounting treatment
of finance leases in the previous standard. Until the date of application, the Group classified most of the leases in which it
is the lessee as operating leases, since it did not substantially bear all the risks and rewards from the assets. Assets leased
under a finance lease included mainly office buildings and office furniture.
In accordance with IFRS 16, for agreements
in which the Group is the lessee, the Group recognizes a right-of-use asset and a lease liability at the inception of the lease
contract for all the leases in which the Group has a right to control identified assets for a specified period of time, other than