Full Press Release Details
CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands, except share and per share data)
| June 30, 2017 | December 31, 2016 | |||||||
| Assets | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | 77,093 | $ | 21,362 | ||||
| Restricted deposit | 97 | 95 | ||||||
| Accounts receivable | 10 | 83 | ||||||
| Inventory | 398 | 105 | ||||||
| Prepaid expenses and other current assets | 704 | 396 | ||||||
| TOTAL CURRENT ASSETS | 78,302 | 22,041 | ||||||
| NON-CURRENT ASSETS | ||||||||
| Property and equipment, net | 707 | 741 | ||||||
| Restricted deposit | 29 | 24 | ||||||
| Other non-current assets | 250 | |||||||
| TOTAL ASSETS | $ | 79,038 | $ | 23,056 | ||||
| Liabilities and shareholders equity | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts payable and accrued expenses | $ | 3,543 | $ | 1,880 | ||||
| Employee related accrued expenses | 1,112 | 687 | ||||||
| Deferred revenues | 311 | |||||||
| Proceeds from exercise of warrants for preferred shares | 570 | |||||||
| TOTAL CURRENT LIABILITIES | 4,966 | 3,137 | ||||||
| NON-CURRENT LIABILITIES | ||||||||
| Warrants for preferred shares | 3,612 | |||||||
| TOTAL LIABILITIES | 4,966 | 6,749 | ||||||
| SHAREHOLDERS EQUITY: | ||||||||
| Ordinary shares, NIS 0.01 par value: 100,000,000 shares and 17,600,000 shares authorized at June 30, 2017 and December 31, 2016, respectively; 13,009,504 and 2,305,743 issued and outstanding at June 30, 2017 and December 31, 2016, respectively. | 35 | 6 | ||||||
| Preferred A and Preferred A-1 shares, NIS 0.01 par value: 14,400,000 shares authorized at December 31, 2016, 5,193,427 shares issued and outstanding at December 31, 2016. | 13 | |||||||
| Additional paid-in capital | 110,867 | 43,502 | ||||||
| Accumulated deficit | (36,830 | ) | (27,214 | ) | ||||
| TOTAL SHAREHOLDERS EQUITY | 74,072 | 16,307 | ||||||
| TOTAL LIABILITIES AND SHAREHOLDERS EQUITY | $ | 79,038 | $ | 23,056 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(U.S. dollars in thousands, except share and per share data)
| Six months ended June 30, | Three months ended June 30 | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| REVENUES | $ | 19 | ||||||||||||||
| COST OF REVENUES | 18 | |||||||||||||||
| GROSS PROFIT | 1 | |||||||||||||||
| OPERATING EXPENSES: | ||||||||||||||||
| RESEARCH AND DEVELOPMENT EXPENSES, NET | 6,315 | 5,042 | 3,651 | 2,351 | ||||||||||||
| GENERAL AND ADMINISTRATIVE EXPENSES | 3,175 | 1,951 | 2,300 | 1,044 | ||||||||||||
| OPERATING LOSS | 9,489 | 6,993 | 5,951 | 3,395 | ||||||||||||
| FINANCE EXPENSES (INCOME), net | 127 | (116 | ) | 248 | (78 | ) | ||||||||||
| NET LOSS | $ | 9,616 | $ | 6,877 | $ | 6,199 | $ | 3,317 | ||||||||
| LOSS PER ORDINARY SHARE BASIC AND DILUTED | $ | 1.81 | $ | 3.51 | $ | 0.70 | $ | 1.70 | ||||||||
| WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES OUTSTANDING USED IN COMPUTATING BASIC AND DILUTED LOSS PER ORDINARY SHARE | 5,755,714 | 2,305,241 | 9,204,405 | 2,305,743 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY
(U.S. dollars in thousands, except share data)
| Ordinary shares | Preferred shares | Additional paid-in capital | Accumulated deficit | |||||||||||||||||||||||||
| Number of shares | Amounts | Number of shares | Amounts | Amounts | Total | |||||||||||||||||||||||
| BALANCE AS OF JANUARY 1, 2017 | 2,305,743 | $ | 6 | 5,193,427 | $ | 13 | $ | 43,502 | $ | (27,214 | ) | $ | 16,307 | |||||||||||||||
| CHANGES DURING THE SIX MONTHS ENDED JUNE 30, 2017 : | ||||||||||||||||||||||||||||
| Exercise of options into ordinary shares | 1,920 | * | 4 | 4 | ||||||||||||||||||||||||
| Share-based compensation | 1,873 | 1,873 | ||||||||||||||||||||||||||
| Exercise of warrants into preferred shares | 364,036 | 1 | 4,731 | 4,732 | ||||||||||||||||||||||||
| Conversion of preferred shares into ordinary shares | 5,557,463 | 14 | (5,557,463 | ) | (14 | ) | ||||||||||||||||||||||
| Issuance of ordinary shares, net of issuance expenses | 5,144,378 | 15 | 60,757 | 60,772 | ||||||||||||||||||||||||
| Net loss | (9,616 | ) | (9,616 | ) | ||||||||||||||||||||||||
| BALANCE AS OF JUNE 30, 2017 | 13,009,504 | $ | 35 | $ | 110,867 | $ | (36,830 | ) | $ | 74,072 | ||||||||||||||||||
| BALANCE AS OF JANUARY 1, 2016 | 2,300,959 | $ | 6 | 5,193,427 | $ | 13 | $ | 41,535 | $ | (25,273 | ) | $ | 16,281 | |||||||||||||||
| CHANGES DURING THE SIX MONTHS ENDED JUNE 30, 2016: | ||||||||||||||||||||||||||||
| Exercise of options into ordinary shares | 4,784 | * | * | * | ||||||||||||||||||||||||
| Share-based compensation | 873 | 873 | ||||||||||||||||||||||||||
| Net loss | (6,877 | ) | (6,877 | ) | ||||||||||||||||||||||||
| BALANCE AS OF JUNE 30, 2016 | 2,305,743 | $ | 6 | 5,193,427 | $ | 13 | $ | 42,408 | $ | (32,150 | ) | $ | 10,277 |
(*) Represents less than one thousand
The accompanying notes are an integral part of these condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY
(U.S. dollars in thousands, except share data)
| Ordinary shares | Preferred shares | Additional paid-in capital | Accumulated deficit | |||||||||||||||||||||||||
| Number of shares | Amounts | Number of shares | Amounts | Amounts | Total | |||||||||||||||||||||||
| BALANCE AS OF APRIL 1, 2017 | 2,307,663 | $ | 6 | 5,193,427 | $ | 13 | $ | 43,803 | $ | (30,631 | ) | $ | 13,191 | |||||||||||||||
| CHANGES DURING THE THREE MONTHS ENDED JUNE 30, 2017: | ||||||||||||||||||||||||||||
| Share-based compensation | 1,576 | 1,576 | ||||||||||||||||||||||||||
| Exercise of warrants into preferred shares | 364,036 | 1 | 4,731 | 4,732 | ||||||||||||||||||||||||
| Conversion of preferred shares into ordinary shares | 5,557,463 | 14 | (5,557,463 | ) | (14 | ) | ||||||||||||||||||||||
| Issuance of ordinary shares, net of issuance expenses | 5,144,378 | 15 | 60,757 | 60,772 | ||||||||||||||||||||||||
| Net loss | (6,199 | ) | (6,199 | ) | ||||||||||||||||||||||||
| BALANCE AS OF JUNE 30, 2017 | 13,009,504 | $ | 35 | $ | 110,867 | $ | (36,830 | ) | $ | 74,072 | ||||||||||||||||||
| BALANCE AS OF APRIL 1, 2016 | 2,305,743 | $ | 6 | 5,193,427 | $ | 13 | $ | 41,975 | $ | (28,833 | ) | $ | 13,161 | |||||||||||||||
| CHANGES DURING THE THREE MONTHS ENDED JUNE 30, 2016: | ||||||||||||||||||||||||||||
| Share-based compensation | 433 | 433 | ||||||||||||||||||||||||||
| Net loss | (3,317 | ) | (3,317 | ) | ||||||||||||||||||||||||
| BALANCE AS OF JUNE 30, 2016 | 2,305,743 | $ | 6 | 5,193,427 | $ | 13 | $ | 42,408 | $ | (32,150 | ) | $ | 10,277 |
(*) Represents less than one thousand
The accompanying notes are an integral part of these condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(U.S. dollars in thousands)
| Six months ended June 30, | Three months ended June 30, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||||||
| Net loss | $ | (9,616 | ) | $ | (6,877 | ) | $ | (6,199 | ) | $ | (3,317 | ) | ||||
| Adjustments required to reconcile net loss to net cash used in operating activities: | ||||||||||||||||
| Depreciation | 132 | 75 | 87 | 38 | ||||||||||||
| Share-based compensation | 1,873 | 873 | 1,576 | 433 | ||||||||||||
| Exchange rates differences | (2 | ) | (1 | ) | ||||||||||||
| Fair value adjustment of warrants for preferred shares | 168 | (114 | ) | 277 | (89 | ) | ||||||||||
| Changes in operating asset and liabilities: | ||||||||||||||||
| Increase in inventory | (293 | ) | (167 | ) | ||||||||||||
| Decrease in accounts receivable | 73 | 12 | ||||||||||||||
| Decrease (increase) in prepaid expenses and other current assets | (308 | ) | 650 | (150 | ) | 365 | ||||||||||
| Increase (decrease) in accounts payable and accrued expenses | 1,031 | (327 | ) | 647 | (460 | ) | ||||||||||
| Deferred revenues | 311 | |||||||||||||||
| Increase in employee related accrued expenses | 425 | 89 | 457 | 30 | ||||||||||||
| Net cash used in operating activities | (6,206 | ) | (5,631 | ) | (3,461 | ) | (3,000 | ) | ||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||||||
| Purchase of property and equipment | (98 | ) | (443 | ) | (20 | ) | (373 | ) | ||||||||
| Change in restricted deposit | (5 | ) | (98 | ) | (1 | ) | (23 | ) | ||||||||
| Net cash used in investing activities | (103 | ) | (541 | ) | (21 | ) | (396 | ) | ||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||||||
| Exercise of options into ordinary shares | 4 | |||||||||||||||
| Issuance of ordinary shares, net of issuance expenses | 61,654 | 61,766 | ||||||||||||||
| Payment of deferred equity offering cost | (510 | ) | (381 | ) | ||||||||||||
| Proceeds from exercise of warrants to preferred shares | 382 | 192 | 382 | 192 | ||||||||||||
| Net cash provided by (used in) financing activities | 62,040 | (318 | ) | 62,148 | (189 | ) | ||||||||||
| INCREASE (DECREASE) IN CASH AND CASH EQUIVALENT S | 55,731 | (6,490 | ) | 58,666 | (3,585 | ) | ||||||||||
| BALANCE OF CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD | 21,362 | 17,975 | 18,427 | 15,070 | ||||||||||||
| BALANCE OF CASH AND CASH EQUIVALENTS AT END OF THE PERIOD | $ | 77,093 | $ | 11,485 | $ | 77,093 | $ | 11,485 | ||||||||
| SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||||||||||||
| Non cash purchase of property and equipment | $ | (146 | ) | |||||||||||||
| Non cash issuance cost | $ | 728 | $ | 1,035 | $ | 415 | $ | 113 | ||||||||
| Exercise of warrants into preferred shares | $ | 4,732 | $ | 4,732 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share data)
NOTE 1 NATURE OF OPERATIONS
NOTE 2 BASIS OF PRESENTATION
The unaudited condensed consolidated interim financial statements of the Company 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 contain all information and notes required by U.S. GAAP for annual financial statements. In the opinion of
management, these unaudited condensed consolidated interim financial statements reflect all adjustments, which include normal recurring adjustments, necessary for a fair statement of the Company s financial position as of June 30, 2017,
the results of operations and cash flows for the six and three month periods ended June 30, 2017 and 2016.
These unaudited condensed
consolidated interim financial statements should be read in conjunction with the audited financial statements for the year ended December 31, 2016 and notes thereto included in the Company s annual financial statements for the year ended
December 31, 2016. The condensed balance sheet data as of December 31, 2016 included in these unaudited condensed consolidated financial statements was derived from the audited financial statements for the year ended December 31,
2016, but does not include all disclosures required by U.S. GAAP.
The results for the six and three months period ended June 30, 2017
are not necessarily indicative of the results to be expected for the year ending December 31, 2017.
NOTE 3 FAIR VALUE MEASUREMENT
Fair value is based on the price that would be received from the sale of an asset or that would be paid to transfer a liability in an orderly
transaction between market participants at the measurement date. In order to increase consistency and comparability in fair value measurements, the guidance establishes a fair value hierarchy that prioritizes observable and unobservable inputs used
to measure fair value into three broad levels, which are described as follows:
Level 1: Quoted prices (unadjusted) in active markets
that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share data)
PRESENTATION (continued)
Level 2: Observable prices that are based on inputs not quoted on active markets, but corroborated by
Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the
lowest priority to Level 3 inputs.
In determining fair value, the Company utilizes valuation techniques that maximize the use of
observable inputs and minimize the use of unobservable inputs to the extent possible and considers counterparty credit risk in its assessment of fair value.
The Company s assets and liabilities that are measured at fair value as of June 30, 2017 and December 31, 2016 are classified in
the tables below in one of the three categories described above:
| June 30, 2017 | December 31, 2016 | |||||||
| Warrants for preferred shares Level 3 | $ | 3,612 |
The fair value of the preferred share warrants as of December 31, 2016 was measured in accordance with the
Hybrid Method. The Company utilized the Hybrid Method to combine the probability of an IPO scenario at such date, which was estimated at 20%, with the probability of a liquidation event at such date, which was estimated at 80%. As of
December 31, 2016, the fair value of the warrants for preferred shares was determined mainly based on estimation of the Company s equity value derived from a discounted cash flow, or DCF, calculation and based on assumptions relating to
the Company s revenue forecast, clinical success probabilities, relevant discount rates between 10.5%-19 % (10.5% for the cash flow expected to be derived from the license agreement with Allergan and
19% for the cash flow expected to be derived from the Company s internal development), and expected volatility at a rate of 73.93%.
The table below sets forth a summary of the changes in the fair value of the warrants for preferred shares classified as Level 3:
| Six months ended June 30, | Three months ended June 30, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Balance at the beginning of the period | $ | 3,612 | $ | 872 | $ | 3,503 | $ | 847 | ||||||||
| Changes in fair value during the period | 168 | (114 | ) | 277 | (89 | ) | ||||||||||
| Exercise of warrants to preferred shares | (3,780 | ) | (3,780 | ) | ||||||||||||
| Balance at end of period | $ | 758 | $ | 758 |
In connection with the completion of the IPO, the Company converted all outstanding warrants into 364,036
Preferred A-1 shares of the Company and subsequently converted all of its preferred shares, including the Preferred A-1 shares, into ordinary shares.
NOTE 4 PROCEEDS FROM EXERCISE OF WARRANTS FOR PREFERRED A-1 SHARES
The Company s warrants outstanding prior to the IPO were exercisable for Series A-1 preferred
shares at an exercise price of $7.81 per share. Prior to the IPO, such warrants were exercisable for 728,312 Preferred A-1 shares.
During 2017 and 2016 the Company notified holders of these warrants that it was ready to accept an exercise notice that was conditioned on the
price per share at which the Company s shares would be sold in an anticipated IPO. Prior to the IPO, the Company received a total amount of $952 as consideration for the conditional cash exercise of these warrants. The cash received was
recorded among current liabilities as proceeds from exercise of warrants for preferred shares. As of June 30, 2017, following the exercise of the warrants, the cash received was re-classified to
additional paid in capital. See also note 5.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share data)
NOTE 5 SHARE CAPITAL
Upon the completion of the IPO, the Company converted all outstanding warrants for Preferred A-1
shares into 364,036 Preferred A-1 shares of the Company. Subsequently, the Company converted all outstanding Preferred A and Preferred A-1 shares into ordinary shares at
a ratio of 1:1. As of June 30, 2017, the Company s share capital was composed entirely of ordinary shares.
| Six months ended June 30, | Three months ended June 30, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Research and development expenses | $ | 1,013 | $ | 454 | $ | 853 | $ | 196 | ||||||||
| General and administrative expenses | 860 | 419 | 723 | 237 | ||||||||||||
| $ | 1,873 | $ | 873 | $ | 1576 | $ | 433 |
In March 2017, the Company s board of directors adopted the
2017 Equity Incentive Plan, which was approved by the shareholders in April 2017. The 2017 Plan provides for the grant of incentive stock options to the Company s employees and for the grant of nonstatutory stock options, stock appreciation
rights, restricted stock awards, restricted stock unit awards, performance stock awards, performance cash awards, and other forms of stock awards to the Company s employees, directors and consultants.
The maximum number of ordinary shares that may initially be issued under the 2017 Plan is 1.4 million. In addition, the number of
ordinary shares reserved for issuance under the 2017 Plan will automatically increase on January 1st of each calendar year, from January 1, 2018 through January 1, 2026, so that the number of such shares reserved for issuance will equal
12% of the total number of ordinary shares outstanding on the last day of the calendar month prior to the date of each automatic increase, or a lesser number of shares determined by our board of directors. The maximum number of ordinary shares that
may be issued upon the exercise of incentive stock options under the 2017 Plan is 5,600,000.
The plan administrator determines the
exercise price for stock options, within the terms and conditions of the 2017 Plan, provided that the exercise price of a stock option generally cannot be less than 100% of the fair market value of our Ordinary Shares on the date of grant. Options
granted under the 2017 Plan vest at the rate specified in the stock option agreement as determined by the plan administrator.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share data)
NOTE 5 SHARE CAPITAL
NOTE 6 RELATED PARTIES- TRANSACTIONS AND BALANCES:
Related parties include the Chairman and members of the Board of Directors and the Chief Executive Officer of the Company.
| Six months ended June 30, | Three months ended June 30, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Expenses: | ||||||||||||||||
| Payroll and related expenses | $ | 848 | $ | 322 | $ | 696 | $ | 162 | ||||||||
| Management fees | 163 | 130 | 118 | 85 | ||||||||||||
| Research grants | 50 | |||||||||||||||
| $1,061 | $452 | $814 | $247 |
| June 30, | ||||||||
| 2017 | 2016 | |||||||
| Accounts payable and accrued expenses | $ | 152 | $ | 39 |
UPI entered into a lease agreement in November 2015, which commenced
in May 2016, for office space in New York, which serves as the headquarters for our U.S. subsidiary. UPI shares the office space equitably with Kite Pharma, Inc., a Delaware corporation that is a co-signatory
to such lease. Arie Belldegrun, M.D., UPL s Chairman, serves as the Chairman and Chief Executive Officer of Kite Pharma.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share data)
NOTE 7 LOSS PER SHARE:
The following table sets forth the calculation of basic and diluted loss per share ( LPS ) for the periods indicated: