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Pharmaceuticals Holdings Ltd.
Financial Statements
Pharmaceuticals Holdings Ltd.
Consolidated Interim Financial Statements as of June 30, 2017 (unaudited)
| Page | |
| Condensed Consolidated Interim Financial Statements as of June 30, 2017 | |
| Condensed Consolidated Interim Statements of Financial Position | F-3 |
| Condensed Consolidated Interim Statements of Operations and Other Comprehensive Income | F-4 |
| Condensed Consolidated Interim Statements of Changes in Equity | F-5 |
| Condensed Consolidated Interim Statements of Cash Flows | F-7 |
| Notes to the Condensed Consolidated Interim Financial Statements | F-8 |
Pharmaceuticals Holdings Ltd.
Condensed Consolidated Interim Statements
of Financial Position as of (unaudited)
| June 30, 2017 | December 31, 2016 | |||||||||
| Note | USD thousand | USD thousand | ||||||||
| Assets | ||||||||||
| Cash and cash equivalents | 527 | 6,758 | ||||||||
| Short term deposits | 7,605 | 7,899 | ||||||||
| Other receivables | 762 | 241 | ||||||||
| Total current assets | 8,894 | 14,898 | ||||||||
| Fixed assets, net | 20 | 16 | ||||||||
| Intangible assets | 4 | 6,172 | - | |||||||
| Total assets | 15,086 | 14,914 | ||||||||
| Liabilities | ||||||||||
| Accounts payable | 370 | 515 | ||||||||
| Other payables | 805 | 758 | ||||||||
| Total current liabilities | 1,175 | 1,273 | ||||||||
| Non - current liabilities | ||||||||||
| Derivative liability | 8 | 1,000 | - | |||||||
| Post-employment benefit liabilities | 440 | 256 | ||||||||
| 1,440 | 256 | |||||||||
| Equity | ||||||||||
| Share capital, no par value | - | - | ||||||||
| Share premium | 32,626 | 30,826 | ||||||||
| Receipts on account of warrants | 7,415 | 7,415 | ||||||||
| Capital reserve for share-based payments | 1,866 | 583 | ||||||||
| Capital reserve from transactions with related parties | 761 | 761 | ||||||||
| Accumulated loss | (32,024 | ) | (26,200 | ) | ||||||
| Equity attributable to owners of the Company | 10,644 | 13,385 | ||||||||
| Non-controlling interests | 1,827 | - | ||||||||
| Total equity | 12,471 | 13,385 | ||||||||
| Total liabilities and equity | 15,086 | 14,914 |
accompanying notes are an integral part of these condensed consolidated interim financial statements.
Pharmaceuticals Holdings Ltd.
Condensed Consolidated Interim Statements of Operations
and Other Comprehensive Income (unaudited)
| For the six months ended June 30 | ||||||||||
| 2017 | 2016 | |||||||||
| Note | USD thousand | USD thousand | ||||||||
| Research and development expenses | 2,516 | 1,964 | ||||||||
| General and administrative expenses | 2,524 | 1,194 | ||||||||
| Other expenses | 8 | 1,029 | - | |||||||
| Operating loss | 6,069 | 3,158 | ||||||||
| Finance expense | 7 | 21 | ||||||||
| Finance income | (63 | ) | (142 | ) | ||||||
| Finance income, net | (56 | ) | (121 | ) | ||||||
| Loss for the period | 6,013 | 3,037 | ||||||||
| Loss attributable to: | ||||||||||
| Owners of the Company | 5,824 | 3,037 | ||||||||
| Non-controlling interests | 189 | - | ||||||||
| 6,013 | 3,037 | |||||||||
| Loss per share | ||||||||||
| Basic and diluted loss per share - USD | 0.04 | 0.04 | ||||||||
| Number of shares used in calculation | 163,781,022 | 78,519,168 |
accompanying notes are an integral part of these condensed consolidated interim financial statements.
Pharmaceuticals Holdings Ltd.
Consolidated Interim Statements of Changes in equity (unaudited)
| Attributable to owners of the Company | ||||||||||||||||||||||||||||||||||||
| Share capital | Share premium | Receipts on account of warrants | Capital reserve for share based payments | Capital reserve from transactions with related parties | Accumulated loss | Total | Non-controlling interests | Total equity | ||||||||||||||||||||||||||||
| USD thousand | ||||||||||||||||||||||||||||||||||||
| For the six months ended June 30, 2017: | ||||||||||||||||||||||||||||||||||||
| Balance as of January 1, 2017 | - | 30,826 | 7,415 | 583 | 761 | (26,200 | ) | 13,385 | - | 13,385 | ||||||||||||||||||||||||||
| Share issuance due to an acquisition of a subsidiary (see note 4) | - | 1,800 | - | - | - | 1,800 | 2,016 | 3,816 | ||||||||||||||||||||||||||||
| Share-based payments | - | - | - | 1,283 | - | - | 1,283 | - | 1,283 | |||||||||||||||||||||||||||
| Loss for the period | - | - | - | - | - | (5,824 | ) | (5,824 | ) | (189 | ) | (6,013 | ) | |||||||||||||||||||||||
| Balance as of June 30, 2017 | - | 32,626 | 7,415 | 1,866 | 761 | (32,024 | ) | 10,644 | 1,827 | 12,471 |
accompanying notes are integral part of these condensed consolidated interim financial statements.
Pharmaceuticals Holdings Ltd.
Condensed Consolidated Interim Statements
of Changes in equity (unaudited)
| Attributable to owners of the Company | ||||||||||||||||||||||||||||
| Share capital | Share premium | Receipts on account of warrants | Capital reserve for share based payments | Capital reserve from transactions with related parties | Accumulated loss | Total | ||||||||||||||||||||||
| USD thousand | ||||||||||||||||||||||||||||
| For the six months ended June 30, 2016: | ||||||||||||||||||||||||||||
| Balance as of January 1, 2016 | - | 22,159 | 27 | 536 | 761 | (14,054 | ) | 9,429 | ||||||||||||||||||||
| Exercise of warrants (Series A) | - | 313 | (1 | ) | - | - | - | 312 | ||||||||||||||||||||
| Share issuance due to a strategic cooperation agreement | - | 500 | - | (250 | ) | - | - | 250 | ||||||||||||||||||||
| Share based payments | - | 80 | - | 38 | - | - | 118 | |||||||||||||||||||||
| Loss for the period | - | - | - | - | - | (3,037 | ) | (3,037 | ) | |||||||||||||||||||
| Balance as of June 30, 2016 | - | 23,052 | 26 | 324 | 761 | (17,091 | ) | 7,072 |
accompanying notes are an integral part of these condensed consolidated interim financial statements.
Pharmaceuticals Holdings Ltd.
Condensed Consolidated Interim Statements
of Cash Flows (unaudited)
| For the six months ended June 30 | ||||||||
| 2017 | 2016 | |||||||
| USD thousand | USD thousand | |||||||
| Cash flows from operating activities: | ||||||||
| Loss for the period | (6,013 | ) | (3,037 | ) | ||||
| Adjustments: | ||||||||
| Depreciation | 2 | 1 | ||||||
| Finance income, net | (56 | ) | (121 | ) | ||||
| Share-based payments | 1,283 | 118 | ||||||
| Expenses in regards with settlement with a minority shareholder of a subsidiary (see note 8) | 1,000 | - | ||||||
| Expenses in regard to a strategic cooperation agreement | - | 250 | ||||||
| (3,784 | ) | (2,789 | ) | |||||
| Changes in assets and liabilities: | ||||||||
| Changes in other receivables | (536 | ) | (403 | ) | ||||
| Changes in accounts payables | (240 | ) | 684 | |||||
| Changes in other payables | (303 | ) | 81 | |||||
| Changes in post employment benefit liabilities | 172 | - | ||||||
| (907 | ) | 362 | ||||||
| Net cash used in operating activities | (4,691 | ) | (2,427 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Acquisition of subsidiary, net of cash acquired (see note 4) | (1,732 | ) | - | |||||
| Decrease (increase) in short term deposits | 357 | (4,500 | ) | |||||
| Acquisition of fixed assets | (3 | ) | (4 | ) | ||||
| Net cash used in investing activities | (1,378 | ) | (4,504 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from warrants exercised | - | 312 | ||||||
| Repayment of short term bank credit | (16 | ) | - | |||||
| Repayment of loans from related parties | (130 | ) | - | |||||
| Interest paid | (8 | ) | (1 | ) | ||||
| Net cash provided by (used in) financing activities | (154 | ) | 311 | |||||
| Net decrease in cash and cash equivalents | (6,223 | ) | (6,620 | ) | ||||
| Cash and cash equivalents at the beginning of the period | 6,758 | 10,558 | ||||||
| Effect of translation adjustments on cash and cash equivalents | (8 | ) | (5 | ) | ||||
| Cash and cash equivalents at the end of the period | 527 | 3,933 |
accompanying notes are an integral part of these condensed consolidated interim financial statements.
Pharmaceuticals Holdings Ltd.
to Condensed Consolidated Interim Financial Statements as of June 30, 2016 (unaudited)
Pharmaceuticals Holdings Ltd. (hereinafter: the "Company") is an Israeli company, that was incorporated in Israel
as a private company in August 1968, and has been listed for trading on the Tel Aviv Stock Exchange since September 1978. In October
2012, the Company disposed of all of its previous operations, and in July, 2013, the Company acquired all of the shares of Kitov
Pharmaceuticals Ltd. (hereinafter: "Kitov") from its shareholders, in exchange for shares of the Company (hereinafter:
Company's securities (American Depository Shares (hereinafter: "ADS") as well as Series A warrants) were
listed for trading on the NASDAQ in November 2015. Each ADS represents 20 ordinary shares with no par value. Each warrant enables
the purchase of 1 ADS.
Company's address is One Azrieli Center, Round Tower, 132 Menachem Begin Road, Tel Aviv 671101, Israel.
January 2017, the Company acquired the majority of shares of TyrNovo Ltd (hereinafter: TyrNovo") (see also note 4).
Company together with Kitov and TyrNovo are referred to, in these financial statements, as the "Group".
of the date of the financial statements, the Group is engaged, through Kitov, in the development of combination drugs that treat
two clinical conditions simultaneously, pain caused by osteoarthritis and hypertension, and
through TyrNovo, in the development of a small molecule that has demonstrated the potential to overcome resistance to multiple
incorporation through June 30, 2017, the Group has incurred losses and negative cash flows from operations mainly attributed to
its development efforts and has an accumulated deficit of USD 32 million. The Company has financed its operations mainly through
private and public financing rounds. In November 2015 and July 2016, the Company raised a total of USD 20.5 million net, and in
July 2017, subsequent to the balance sheet date, the Company raised an additional USD 3.1 million net, (see also note 9). Management
believes its current balance of cash and cash equivalents and short-term deposits will allow the Company to complete its current
development plans. At present, the Company has no revenue and may require additional funding for future plans.
2 - Basis of Preparation
condensed consolidated interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting
and do not include all of the information required for full annual financial statements. They should be read in conjunction
with the financial statements as at and for the year ended December 31, 2016 (hereinafter - "the annual financial
statements"). They do not include all of the information required for a complete set of IFRS financial statements. However,
selected explanatory notes are included to explain events and transactions that are significant to an understanding
of the changes in the Group's financial position and performance since the last annual financial statements.
Pharmaceuticals Holdings Ltd.
to Condensed Consolidated Interim Financial Statements as of June 30, 2016 (unaudited)
2 - Basis of Preparation (Cont'd)
condensed consolidated interim financial statements were authorized for issue by the Group's Board of Directors on August
accounting policies applied by the Group in these condensed consolidated interim financial statements are the same as those applied
by the Group in its audited annual financial statements.
3 - Use of judgements and estimates
preparation of financial statements in conformity with IFRS requires management to make judgments, 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.
Group's management regularly reviews significant unobservable inputs and valuation adjustments, including obtaining valuations
prepared by third parties and assessing the evidence to support the conclusion that these valuations meet the requirements of
IFRS, including the level in the fair value hierarchy in which the valuations should be classified.
valuation issues are reported to the Group Audit Committee.
measuring the fair value of an asset or a liability, the Group uses market observable data as far as possible. Fair values are
categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:
the inputs used to measure the fair value of an asset or a liability might be categorized in different levels of the fair value
hierarchy, then the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the
lowest level input that is significant to the entire measurement.
Group recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during which the change
information about the assumptions made in measuring fair value of share based payments and derivative liability are included in
Note 6 and Note 8, respectively.
accounting policies applied by the Group in these condensed consolidated interim financial statements are the same as those applied
by the Group in its audited annual financial statements.
Pharmaceuticals Holdings Ltd.
to Condensed Consolidated Interim Financial Statements as of June 30, 2016 (unaudited)
4 - Acquisition during the current period
January 13, 2017, the Company completed its acquisition of a controlling interest in TyrNovo, a privately owned Israeli company
from Goldman Hirsh Partners Ltd ("GHP"). TyrNovo, a developer of novel small molecules in the oncology therapeutic
field, presents a new concept in cancer therapy, by developing NT219, a small molecule that has demonstrated the potential to
overcome resistance to multiple anti-cancer drugs.
to the terms of the transaction, including such adjustments to the terms and conditions which were finalized between the parties
subsequent to the closing, the Company issued GHP 11,292,508 of its Ordinary Shares (the "Consideration Shares")
and paid GHP aggregate cash proceeds of approximately USD 2 million (the "Cash Consideration") in exchange for 9,570
Ordinary Shares in TyrNovo, that represent approximately 65% of TyrNovo's shares. In addition, the Company was assigned
a loan in the amount of USD 101,157 which had been made by GHP to TyrNovo, (the "Completed TyrNovo Acquisition"). USD
800,000 of the Cash Consideration was paid to GHP on January 13, 2017. An additional USD 1,032,843 of the Cash Consideration was
paid to GHP in April 2017. The remaining USD 167,157 of the Cash Consideration is being held back by the Company pending the fulfillment
of certain conditions as agreed to between the Company and GHP. The repayment date and other terms of such assigned loan have
not been determined.
All of the Consideration Shares are being held in escrow in order to ensure the fulfillment of certain post-closing undertakings
and to satisfy indemnification claims and other liabilities the Company may become subject to as a result of the Completed TyrNovo
the period from January 13 2017 to June 30, 2017, TyrNovo's contributed losses of USD 328 thousand to the Group's results. Management