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Discussion and Analysis of
Financial Condition and Results of Operations
The following presentation of management's
discussion and analysis of financial condition and results of operations for the six month periods ended June 30, 2018 and 2017
should be read in conjunction with our unaudited consolidated interim financial statements and related notes thereto included elsewhere
in this Report on Form 6-K, as well as in our Annual Report on Form 20-F for the year ended December 31, 2017 filed with the U.S.
Securities and Exchange Commission (the "SEC") on April 30, 2018.
Unless otherwise indicated, all references
to the terms "we", "us", "our", "Therapix", "the Company" and "our
Company" refer to Therapix Biosciences Ltd. and its wholly-owned subsidiaries. References to "ordinary shares",
"ADSs", "warrants" and "share capital" refer to the ordinary shares, ADSs, warrants and share
capital, respectively, of Therapix.
We report financial information under International
Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board and none of the financial
statements were prepared in accordance with generally accepted accounting principles in the United States.
to "U.S. dollars" and "$" are to currency of the United States of America, and references to "NIS"
are to New Israeli Shekels. References to "Ordinary Shares" are to our Ordinary Shares, 0.1 NIS par value.
Unless otherwise indicated, U.S. dollar
translations of NIS amounts presented herein are translated using the rate of NIS 3.65 to $1.00, the exchange rate reported by
the Bank of Israel on June 30, 2018.
Forward-Looking Statements
The following discussion contains "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. Forward-looking
statements are often characterized by the use of forward-looking terminology such as "may," "will," "expect,"
"anticipate," "estimate," "continue," "believe," "should," "intend,"
"project" or other similar words, but are not the only way these statements are identified.
These forward-looking statements may include,
but are not limited to, statements relating to our objectives, plans and strategies, statements that contain projections of results
of operations or of financial condition, expected capital needs and expenses, statements relating to the research, development,
completion and use of our products, and all statements (other than statements of historical facts) that address activities, events
or developments that we intend, expect, project, believe or anticipate will or may occur in the future.
Forward-looking statements are not guarantees
of future performance and are subject to risks and uncertainties. We have based these forward-looking statements on assumptions
and assessments made by our management in light of their experience and their perception of historical trends, current conditions,
expected future developments and other factors they believe to be appropriate and are subject to a number of factors and uncertainties
that could cause actual results to differ materially from those described in the forward-looking statements.
Important factors that could cause actual
results, developments and business decisions to differ materially from those anticipated in these forward-looking statements include,
| our timeline for our product candidate development path, including the anticipated starting and ending dates of our anticipated clinical trials; | ||
| anticipated actions of the U.S. Food and Drug Administration or other regulatory bodies, including approval to conduct clinical trials, the scope of those trials and the prospects for regulatory approval of, or other regulatory action with respect to our product candidates, including the regulatory pathway to be designated to our product candidates; |
| the commercial launch and future sales of our existing product candidates or any other future potential product candidates; | ||
| our expectations regarding the commercial supply of our product candidates; | ||
| our estimates regarding anticipated capital requirements and our needs for financing; | ||
| the patient market size and market adoption of our product candidates by physicians and patients; | ||
| the timing, cost or other aspects of the commercial launch of our product candidates; | ||
| completion and receiving favorable results of our anticipated clinical trials; | ||
| the possibility that the previously announced transaction with FSD Pharma Inc. does not occur when expected or at all | ||
| our expectations regarding when certain patents may be issued and the protection of our intellectual property; and | ||
| our expectations regarding licensing, acquisitions and strategic partnering. |
More detailed information about the risks
and uncertainties affecting us is contained under the heading "Risk Factors" in our Annual Report on Form 20-F for
the year ended December 31, 2017 filed with the SEC on April 30, 2018, which is available on the SEC's website, www.sec.gov
and in our periodic filings with the SEC.
You should not put undue reliance on any
forward-looking statements. Any forward-looking statements in this discussion are made as of the date hereof, and we undertake
no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events
or otherwise, except as required by law.
Therapix is a specialty clinical-stage pharmaceutical
company led by an experienced team of senior executives and scientists. Our focus is creating and enhancing a portfolio of technologies
and assets based on cannabinoid pharmaceuticals. With this focus, the Company is currently engaged in the following drug development
programs based on repurposing an FDA-approved cannabinoid (Dronabinol): THX-110 for the treatment of Tourette syndrome (TS), for
the treatment of Obstructive Sleep Apnea (OSA), and the treatment of Pain; THX-130 for the treatment of Mild Cognitive Impairment
(MCI) and Traumatic Brain Injury (TBI); THX-150 for the treatment of infectious diseases; and THX-160 for the treatment of pain.
To date, we have not generated revenue from
the sale of any products, and we do not expect to generate significant revenue from the sale of any products within the next year
at a minimum. As of June 30, 2018, we had an accumulated deficit of approximately $41.65 million. Our financing activities are described
below under "Finance Expense and Income."
Our current operating expenses consist of
two components-research and development expenses, and general and administrative expenses.
Research and Development Expenses, net
development expenses consist primarily of salaries and related personnel expenses, share-based compensation expenses, consulting
and subcontractor expenses and other related research and development expenses.
discloses the breakdown of research and development expenses:
| Six-month period ended June 30, | ||||||||
| 2018 | 2017 | |||||||
| (unaudited) | (unaudited) | |||||||
| (in thousands of USD)* | ||||||||
| Wages and related expenses | 335 | 140 | ||||||
| Share-based payments | 80 | 24 | ||||||
| Clinical studies | 372 | 256 | ||||||
| Research & preclinical studies | 423 | 158 | ||||||
| Chemistry & formulations | 51 | - | ||||||
| Regulatory and other expenses | 384 | 117 | ||||||
| 1,645 | 695 |
* USD presented using June 30, 2018 NIS/USD exchange rate of
General and Administrative Expenses
General and administrative
expenses consist primarily of salaries, share-based compensation expense, professional service fees for accounting, legal, bookkeeping,
facilities and other general and administrative expenses.
discloses the breakdown of general and administrative expenses:
| Six-month period ended June 30, | ||||||||
| 2018 | 2017 | |||||||
| (unaudited) | (unaudited) | |||||||
| (in thousands of USD)* | ||||||||
| Wages and related expenses | 347 | 343 | ||||||
| Share-based payment | 296 | 111 | ||||||
| Professional and directors fees | 713 | 394 | ||||||
| Investor relations and business expenses | 164 | 388 | ||||||
| Office maintenance, rent and other expenses | 100 | 87 | ||||||
| Regulatory expenses | 35 | 53 | ||||||
| Business development | 484 | - | ||||||
| Total | 2,139 | 1,376 |
* USD presented using June 30, 2018 NIS/USD exchange rate of
Results of Operations
Six-months ended June 30, 2018 compared to the six-months
Results of Operations*
Research and Development Expenses,
Our research and development expenses for
the six months ended June 30, 2018 amounted to $1.65 million, representing an increase of $0.96 million, or 139%, compared to $0.69
million for the six months ended June 30, 2017. The increase was primarily attributable to an increase of $0.38 million in clinical
and preclinical studies and an increase of $0.27 million in regulatory and other expenses, reflecting the initiation of clinical
study and increase in regulatory and other expenses. Research and development expenses for the six months ended June 30, 2018 also
reflect increased research and development operations due to the initiation of clinical trials of cannabinoid projects.
General and Administrative Expenses
Our general and administrative
expenses totaled $2.14 million for the six months ended June 30, 2018, an increase of $0.76 million, or 55%, compared to $1.38
million for the six months ended June 30, 2017. The increase resulted primarily from an increase of $0.32 million in professional
and director fees and an increase of $0.48 million in business development reflecting the growth in our business development activities,
partially offset by $0.22 million from investor relations and business expenses.
As a result of the foregoing, our operating
loss for the six months ended June 30, 2018 was $3.78 million, as compared to an operating loss of $2.07 million for the six months
ended June 30, 2017, an increase of $1.71 million, or 83%.
Finance Expense and Income
and income consist of exchange rate differences, bank fees and other transactional costs.
We recognized financial
income net, for the six months ended June 30, 2018, of $0.52 million, representing a decrease of $0.95 million, as compared to
financial expenses of $0.43 million for the six months ended June 30, 2017. The decrease was primarily due to loan valuation gain.
Total Comprehensive Loss
Our total comprehensive
loss for the six months ended June 30, 2018 was $3.61 million, representing an increase $1.55 million, or 75%, as compared to $2.06