6-K
PRF Technologies Ltd. (PRFX)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
For the month of May 2023
Commission File Number: 001-39481
PainReform Ltd.
(Translation of registrant’s name into English)
65 Yigal Alon St., Tel Aviv 6744316
Israel
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F ☒ Form 40-F ☐
This Form 6-K is incorporated by reference into the Company’s Registration Statements on Form S-8 (Registration No. 333-257968 and 333-265902) and the Company’s Registration Statements on Form F-3 (Registration No. 333-259318 and 333-254982).
On May 15, 2023, PainReform Ltd. (the “Company”) published its unaudited condensed financial statements, as well as its operating and financial review as of March 31, 2023 and for the three months then ended and issued a press release announcing its financial results for the three months ended March 31, 2023. Attached hereto are the following exhibits:
| 99.1 | Unaudited Condensed Financial Statements as of March 31, 2023 |
|---|---|
| 99.2 | Operating and Financial Review as of March 31, 2023 and for the three months then ended |
| 99.3 | Press Release dated May 15, 2023 |
Exhibit Index
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Date: May 15, 2023 | PAEFORM LTD. |
|---|---|
| By: | |
All values are in Indian Rupees.
Exhibit 99.1
PAINREFORM LTD.
CONDENSED FINANCIAL STATEMENTS
AS OF MARCH 31, 2023
U.S. DOLLARS IN THOUSANDS
UNAUDITED
INDEX
| Page | |
|---|---|
| Condensed Balance Sheets | F-2 |
| Condensed Statements of Comprehensive Loss | F-3 |
| Condensed Statements of Changes in Shareholders’ Equity | F-4 |
| Condensed Statements of Cash Flows | F-5 |
| Notes to Condensed Financial Statements | F-6 - F-11 |
PAINREFORM LTD.
CONDENSED BALANCE SHEETS
U.S. dollars in thousands
| As of<br><br> <br>March 31, | As of<br><br> <br>December 31, | |||||
|---|---|---|---|---|---|---|
| 2023 | 2022 | |||||
| Assets | ||||||
| Current assets: | ||||||
| Cash and cash equivalents | $ | 8,141 | $ | 4,096 | ||
| Short term deposit | - | 6,085 | ||||
| Restricted cash | 10 | 10 | ||||
| Prepaid clinical trial expenses and deferred clinical trial costs | 1,962 | 1,728 | ||||
| Prepaid expenses and other current assets | 264 | 365 | ||||
| Total current assets | 10,377 | 12,284 | ||||
| Property and equipment, net | 42 | 44 | ||||
| Total assets | $ | 10,419 | $ | 12,328 | ||
| Liabilities and shareholders’ equity | ||||||
| Current liabilities: | ||||||
| Trade payables | $ | 313 | $ | 209 | ||
| Employees and related liabilities | 531 | 499 | ||||
| Accrued expenses | 437 | 356 | ||||
| Total current liabilities | 1,281 | 1,064 | ||||
| Non-current liabilities: | ||||||
| Provision for uncertain tax positions | 245 | 243 | ||||
| Total non-current liabilities | 245 | 243 | ||||
| Total liabilities | 1,526 | 1,307 | ||||
| Commitments (Note 6) | ||||||
| Shareholders’ equity: | ||||||
| Ordinary shares, NIS 0.03 par value; Authorized: 26,666,667 shares as of March 31, 2023 and December 31, 2022; Issued and outstanding: 10,721,131 and<br> 10,634,166 shares as of March 31, 2023 and December 31, 2022, respectively. | 94 | 94 | ||||
| Additional paid-in capital | 43,626 | 43,446 | ||||
| Accumulated deficit | (34,827 | ) | (32,519 | ) | ||
| Total shareholders’ equity | 8,893 | 11,021 | ||||
| Total liabilities and shareholders’ equity | $ | 10,419 | $ | 12,328 |
The accompanying notes are an integral part of the unaudited condensed financial statements
F - 2
PAINREFORM LTD.
CONDENSED STATEMENTS OF COMPREHENSIVE LOSS
U.S. dollars in thousands (except share and per share data)
| For the Three Months Ended<br><br> March 31, | |||||||
|---|---|---|---|---|---|---|---|
| Note | 2023 | 2022 | |||||
| Operating expenses: | |||||||
| Research and development expenses | $ | (1,454 | ) | $ | (680 | ) | |
| General and administrative expenses | (962 | ) | (992 | ) | |||
| Operating loss | (2,416 | ) | (1,672 | ) | |||
| Financial income (expenses), net | 7 | 108 | (22 | ) | |||
| Net loss and comprehensive loss | $ | (2,308 | ) | $ | (1,694 | ) | |
| Basic and diluted net loss per share | 5 | $ | (0.22 | ) | $ | (0.16 | ) |
| Weighted average number of shares of Ordinary Shares used in computing basic and diluted net loss per share | 10,721,131 | 10,482,056 |
The accompanying notes are an integral part of the unaudited condensed financial statements
F - 3
PAINREFORM LTD.
CONDESNED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
U.S. dollars in thousands
| Ordinary shares | Additional paid-in<br><br> <br>capital | Accumulated<br><br> <br>deficit | Total<br><br> shareholders’<br><br> <br>equity | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Number | Amount | |||||||||||
| Balance as of January 1, 2022 | 10,482,056 | $ | 94 | $ | 41,715 | $ | (23,727 | ) | $ | 18,082 | ||
| Share-based compensation to employees and directors | - | - | 210 | - | 210 | |||||||
| Share-based compensation to service providers | - | - | 103 | - | 103 | |||||||
| Net loss and comprehensive loss | - | - | - | (1,694 | ) | (1,694 | ) | |||||
| Balance as of March 31, 2022 | 10,482,056 | $ | 94 | $ | 42,028 | $ | (25,421 | ) | $ | 16,701 | ||
| Balance as of January 1, 2023 | 10,634,166 | $ | 94 | $ | 43,446 | $ | (32,519 | ) | $ | 11,021 | ||
| Share-based compensation to employees and directors | - | - | 180 | - | 180 | |||||||
| Share issuance to service providers | 86,965 | * | - | - | * | |||||||
| Net loss and comprehensive loss | - | - | (2,308 | ) | (2,308 | ) | ||||||
| Balance as of March 31, 2023 | 10,721,131 | $ | 94 | $ | 43,626 | $ | (34,827 | ) | $ | 8,893 |
(*) Represents amount less than $1
The accompanying notes are an integral part of the unaudited condensed financial statements
F - 4
PAINREFORM LTD.
CONDENSED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
| For the Three Months Ended<br><br> March 31, | ||||||
|---|---|---|---|---|---|---|
| 2023 | 2022 | |||||
| Cash flows from operating activities | ||||||
| Net loss | $ | (2,308 | ) | $ | (1,694 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||
| Depreciation | 2 | 2 | ||||
| Exchange rate differences on cash, cash equivalents and restricted cash | 3 | (19 | ) | |||
| Share-based compensation to employees and directors | 180 | 210 | ||||
| Share-based compensation to service providers | - | 103 | ||||
| Interest received | 87 | - | ||||
| Change in: | ||||||
| Other current assets | (133 | ) | 240 | |||
| Trade payables | 104 | 198 | ||||
| Other accounts payable | 113 | (186 | ) | |||
| Net cash used in operating activities | (1,952 | ) | (1,108 | ) | ||
| Cash flows from investing activities | ||||||
| Proceeds from short term deposit | 6,000 | - | ||||
| Net cash provided by investing activities | 6,000 | - | ||||
| Cash flows from financing activities | ||||||
| Net cash provided by financing activities | - | - | ||||
| Effect of Exchange rate differences on cash, cash equivalents and restricted cash | (3 | ) | 19 | |||
| Change in cash, cash equivalents and restricted cash | 4,045 | (1,127 | ) | |||
| Cash, cash equivalents and restricted cash at the beginning of the year | 4,106 | 16,571 | ||||
| Cash, cash equivalents and restricted cash at the end of the year | $ | 8,151 | $ | 15,444 |
Supplemental cash flow information:
| As of March 31, | ||||
|---|---|---|---|---|
| 2023 | 2022 | |||
| Cash and cash equivalents | $ | 8,141 | $ | 15,417 |
| Restricted cash | 10 | 27 | ||
| Total cash, cash equivalents and restricted cash | $ | 8,151 | $ | 15,444 |
The accompanying notes are an integral part of the unaudited condensed financial statements
F - 5
PAINREFORM LTD.
NOTES TO CONDENSED UNAUDITED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share and per share data
NOTE 1:- GENERAL
| a. | PainReform Ltd. ("the Company") was incorporated and started business operations in November 2007. The Company is a clinical stage specialty pharmaceutical company focused on<br> the reformulation of established therapeutics. The Company’s proprietary extended-release drug-delivery system is designed to provide an extended period of post-surgical pain relief without the need for repeated dose administration while<br> reducing the potential need for the use of opiates. |
|---|---|
| b. | Liquidity |
| --- | --- |
Since its inception, the Company has devoted substantially all its efforts to research and development, clinical trials, and capital raising activities. The Company is still in its development and clinical stage and has not yet generated revenues.
The Company has incurred significant losses and negative cash flows from operations and incurred losses of $2,308 and $1,694 for the three month periods ended on March 31, 2023 and 2022, respectively. During the three months ended March 31, 2023, and 2022, the Company had negative operating cash outflows of $1,952, and $1,108, respectively. The Company expects to continue to incur losses and negative cash flows from operations until its product reaches profitability. As of March 31, 2023, the Company’s accumulated deficit was $34,827. The Company has funded its operations to date primarily through equity financing and has cash on hand (including restricted cash) of $8,151 as of March 31, 2023.
The Company expects to continue incurring losses, and negative cash flows from operations until its product, PRF-110, reaches commercial profitability. As a result of the initiation of the Company's Phase III clinical trial in March 2023, along with its current cash position, the Company does not have sufficient resources to fund operations until the end of its phase III study, nor to continue as a going concern for at least one year from the issuance date of these financial statements.
Management's plans include continued capital raising through the sale of additional equity securities, debt, or capital inflows from strategic partnerships. There are no assurances, however, that the Company's will successfully obtain the level of financing needed for its operations. If the Company's is unsuccessful in raising capital, it may need to reduce activities, curtail, or abandon some or all of its operations, which could materially harm the Company’s business, financial condition and results of operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. These financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business and do not include any adjustments that might result from the outcome of this uncertainty.
| c. | The Company reports its financial results in U.S. dollars. A portion of research and development and general and administrative expenses of our Israeli operations<br> are incurred in New Israeli Shekel ("NIS"). As a result, the Company is exposed to exchange rate risks that may materially and adversely affect our financial results. If the NIS appreciates against the U.S. dollar, or if the value of the<br> NIS declines against the U.S. dollar, at a time when the rate of inflation in the cost of Israeli goods and services exceeds the rate of decline in the relative value of the NIS, then the U.S. dollar-denominated cost of our operations in<br> Israel would increase and our results of operations could be materially and adversely affected. Inflation in Israel compounds the adverse impact of a devaluation of the NIS against the U.S. dollar by further increasing the amount of our<br> Israeli expenses. Israeli inflation may also (in the future) outweigh the positive effect of any appreciation of the U.S. dollar relative to the NIS. If, and to the extent that, it outpaces or precedes such appreciation. The Israeli rate of inflation did not have a material adverse effect on our financial condition during the<br> three months ended March 31, 2023 and 2022, respectively. Given our general lack of currency hedging arrangements to protect us from fluctuations in the exchange rates of the NIS in relation to the U.S. dollar (and/or from inflation of such<br> non-U.S. currencies), the Company may be exposed to material adverse effects from such movements. the Company cannot predict any future trends in the rate of inflation in Israel or the rate of devaluation (if any) of the U.S. dollar against<br> the NIS |
|---|
F - 6
PAINREFORM LTD.
NOTES TO CONDENSED UNAUDITED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share and per share data
NOTE 1:- GENERAL (Cont.)
| d. | U.S. and global markets are experiencing volatility and disruption following the escalation of geopolitical tensions and the start of the military conflict between Russia and<br> Ukraine. The conflict in Ukraine could lead to market disruptions, including significant volatility in commodity prices, credit and capital markets. Any of the abovementioned factors could affect our business, prospects, financial condition,<br> and operating results. The extent and duration of the military action, sanctions and resulting market disruptions are impossible to predict. |
|---|
NOTE 2:- UNAUDITED CONDENSED FINANCIAL STATEMENTS
The unaudited condensed financial statements included herein have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and, on the same basis as the audited financial statements included in the Company’s Annual Report on Form 20-F for the fiscal year ended December 31, 2022 (the “2022 Form 20-F”).
Certain information and disclosures normally included in annual financial statements have been omitted in this interim period report pursuant to the rules and regulations of the Securities and Exchange Commission. Because the unaudited condensed financial statements do not include all of the information and disclosures required by U.S. GAAP for annual financial statements, they should be read in conjunction with the audited financial statements and notes included in the 2022 Form 20-F.
The year-end balance sheet data were derived from the audited financial statements as of December 31, 2022, but not all disclosures required by generally accepted accounting principles in the United States (“U.S. GAAP”) are included.
In the opinion of management, all adjustments (consisting only of normal recurring accruals) considered necessary for a fair statement of the Company’s financial position as of March 31, 2023 and its results of operations and cash flows for the three months ended March 31, 2023 and 2022 have been included. Operating results for the three months ended March 31, 2023, are not necessarily indicative of the results that may be expected for the year ending December 31, 2023 or any other interim period or for any other future year.
F - 7
PAINREFORM LTD.
NOTES TO CONDENSED UNAUDITED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share and per share data
NOTE 3:- SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies that have been applied in the preparation of the unaudited condensed financial statements are consistent with those that were applied in preparation of the Company’s most recent annual financial statements in connection with its Annual Report on Form 20-F.
NOTE 4:- SHAREHOLDERS’ EQUITY
| a. | Warrants and warrants units |
|---|
The following table summarizes the warrants and warrants units outstanding as of March 31, 2023:
| Type | Issuance Date | Number of warrants | Exercise price | Exercisable through |
|---|---|---|---|---|
| August 2019 warrants | August 22, 2019 | 205,268 | $6.72 (*) | August 22, 2024 |
| December 2019 warrants | December 9, 2019 | 92,321 | $6.72 (*) | December 8, 2024 |
| Warrants 2019 Convertible Notes placement agent | December 9, 2019 | 55,785 | $6.72 (*) | December 8, 2024 |
| Warrants to underwriters | September 3, 2020 | 125,000 | $10.00 | September 1, 2025 |
| Warrants to underwriters | October 5, 2020 | 375,000 | $8.80 | September 3, 2025 |
| IPO warrants | September 3, 2020 | 2,812,170 | $8.80 | September 3, 2025 |
| PIPE warrants | March 11, 2021 | 232,500 | $4.60 | September 10, 2026 |
| Warrants to PIPE placement agent | March 11,2021 | 52,173 | $5.06 | March 8, 2026 |
| TOTAL | 3,950,217 |
(*) Each warrant is exercisable into one IPO unit consisting of one share and one IPO warrant with an exercise price of $8.80.
F - 8
PAINREFORM LTD.
NOTES TO CONDENSED UNAUDITED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share and per share data
NOTE 4:- SHAREHOLDERS’ EQUITY (Cont.)
| b. | Share-based compensation: |
|---|---|
| 1. | The 2008 Plan: |
| --- | --- |
Share options outstanding and exercisable to employees and directors under the 2008 Share Option Plan (the “2008 Plan”) as of March 31, 2023 and December 31, 2022 were as follows:
| Number<br><br> <br>of options | Weighted<br><br> <br>average<br><br> <br>exercise<br><br> <br>price | Weighted<br><br> <br>average<br><br> <br>remaining<br><br> <br>contractual<br><br> <br>life | ||||
|---|---|---|---|---|---|---|
| Options outstanding as of December 31, 2022 | 153,882 | $ | 0.24 | 1.25 | ||
| Options granted | - | - | - | |||
| Options exercised | - | - | - | |||
| Options forfeited | - | - | - | |||
| Options outstanding as of March 31, 2023 | 153,882 | $ | 0.24 | 1.00 | ||
| Options exercisable as of March 31, 2023 | 153,882 | $ | 0.24 | 1.00 | ||
| 2. | The 2019 Plan: | |||||
| --- | --- |
Share options outstanding and exercisable to employees and directors under the 2019 Share Option Plan (the “2019 Plan”) as of March 31, 2023 and December 31, 2022, were as follows:
| Number<br><br> <br>of options | Weighted<br><br> <br>average<br><br> <br>exercise price | Weighted<br><br> <br>average<br><br> <br>remaining<br><br> <br>contractual<br><br> <br>life | ||||
|---|---|---|---|---|---|---|
| Options outstanding as of December 31, 2022 | 1,339,939 | $ | 1.44 | 9.39 | ||
| Options granted | - | - | - | |||
| Options exercised | - | - | - | |||
| Options forfeited | - | - | - | |||
| Options outstanding as of March 31, 2023 | 1,339,939 | $ | 1.44 | 9.14 | ||
| Options exercisable as of March 31, 2023 | 807,350 | $ | 1.52 | 9.02 |
F - 9
| PAINREFORM LTD.<br><br> <br><br><br> <br>NOTES TO CONDENSED UNAUDITED FINANCIAL STATEMENTS<br> <br>* * *<br><br> <br>U.S. dollars in thousands, except share and per share data<br><br> <br><br><br> <br>NOTE 4:- SHAREHOLDERS’ EQUITY (Cont.) | |
|---|---|
| c. | In April 2022, the Company issued 152,110 shares to a consultant pursuant to an agreement signed in August 2020. Since August 2020, until December 31, 2022, the Company has<br> recognized $822 as share-based compensation expense related to the shares issued to the consultant. In May 2022 the company’s Board of Directors approved an additional grant of 86,965 shares, During 2022, the company recognized $67 as<br> share compensation expense. In February 2023, the Company issued 86,965 Ordinary shares par value NIS 0.03, to the consultant in connection with the second grant. |
| --- | --- |
NOTE 5:- LOSS PER SHARE
Basic loss per share is computed on the basis of the net loss for the period divided by the weighted average number of Ordinary Shares and vested Ordinary Shares issuable for little or no further consideration outstanding during the period. Diluted loss per share is based upon the weighted average number of ordinary shares and of potential Ordinary Shares outstanding when dilutive. Potential Ordinary Shares include outstanding stock options, restricted shares and warrants, which are included under the treasury stock method when dilutive.
For the periods ended March 31, 2023, and 2022, all outstanding share options, restricted shares and warrants have been excluded from the calculation of the diluted net loss per share as all such securities are anti-dilutive for all years presented.
NOTE 6:- COMMITMENTS AND CONTINGENCIES
On November 13, 2020, the Company entered into a Master Clinical Research Organization Agreement (the "First Agreement"), and on December 3, 2020, the Company entered into a Master Clinical Trial Agreement (the "Second Agreement") both with Lotus Clinical Research as the Company's clinical research organization for the Company's planned Phase 3 trials of PRF-110, which started to take place in March 2023. During the fourth quarter of 2022 and throughout the first quarter of 2023 the Company and the CRO negotiated the term of the first and the second agreements and mutually agreed to update the total milestone completion payment to $5.6 million and to update the payment for the actual number of evaluable subject to $8.6 million...
As of March 31, 2023, the Company accounted for amounts of net $1,962 as prepaid clinical trial expenses and deferred clinical trial costs after recognizing cumulative costs of $2,311 in clinical trial expenses through March 2023. During the first quarter of 2023, the Company recognized clinical trial expenses of $1,053.
Clinical trial expenses are charged to research and development expense as incurred. The Company accrues for expenses resulting from obligations under contracts with its clinical research organization (CRO). The financial terms of these contracts are subject to negotiations, which vary from contract to contract and may result in payment flows that do not match the periods over which services are provided. The Company’s objective is to reflect the appropriate trial expense in the financial statements by matching the appropriate expenses with the period in which services and efforts are expended. In the event advance payments are made to a CRO, the payments are recorded as prepaid clinical trial expenses and deferred clinical trial costs, which will be recognized as expenses as services are rendered
F - 10
PAINREFORM LTD.
NOTES TO CONDENSED UNAUDITED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share and per share data
NOTE 7:- FINANCIAL INCOME (EXPENSES), NET
| Three Months ended<br><br> March 31, | ||||||
|---|---|---|---|---|---|---|
| 2023 | 2022 | |||||
| Bank fees | (4 | ) | (3 | ) | ||
| Interest income | 109 | - | ||||
| Exchange rate differences | 3 | (19 | ) | |||
| Total financial income (expenses), net | $ | 108 | $ | (22 | ) |
NOTE 8:- FINANCIAL INSTRUMENTS
The carrying amount of cash equivalents, restricted cash, account payables and accrued expenses approximate their fair value due to their short-term characteristics.
F - 11
Exhibit 99.2
OPERATING AND FINANCIAL REVIEW AND PROSPECTS
You should read the following selected financial data and discussion of our operating and financial condition and prospects in conjunction with the financial statements and the notes thereto included elsewhere in this 6-K. Our financial statements are prepared in accordance with U.S. GAAP, and reported in U.S. dollars. We maintain our accounting books and records in U.S. dollars and our functional currency is the U.S. dollar. Certain amounts presented herein may not sum due to rounding. Unless the context requires otherwise, references in this report to “PainReform,” the “Company,” “we,” “us” and “our” refer to PainReform Ltd, an Israeli company. “NIS” means New Israeli Shekel, and “$,” “US$,”“U.S. dollars” and “USD” mean United States dollars.
Forward Looking Statements
The following discussion contains “forward-looking statements,” including statements regarding expectations, beliefs, intentions or strategies for the future. These statements may identify important factors which could cause our actual results to differ materially from those indicated by the forward-looking statements. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. Factors that could cause our actual results to differ materially from those expressed or implied in such forward-looking statements include, but are not limited to:
| ● | our ability to continue as a going concern; |
|---|---|
| ● | our history of losses and needs for additional capital to fund our operations and our ability to obtain additional capital on acceptable terms, or at all; |
| ● | our dependence on the success of our initial product candidate, PRF-110; |
| --- | --- |
| ● | the outcomes of preclinical studies, clinical trials and other research regarding PRF-110 and future product candidates; |
| --- | --- |
| ● | fluctuations in inflation and interest in Israel and the United States; |
| --- | --- |
| ● | our limited experience managing clinical trials; |
| --- | --- |
| ● | our ability to retain key personnel and recruit additional employees; |
| --- | --- |
| ● | our reliance on third parties for the conduct of clinical trials, product manufacturing and development; |
| --- | --- |
| ● | the impact of competition and new technologies; |
| --- | --- |
| ● | our ability to comply with regulatory requirements relating to the development and marketing of our product candidates; |
| --- | --- |
| ● | our ability to establish and maintain strategic partnerships and other corporate collaborations; |
| --- | --- |
| ● | the implementation of our business model and strategic plans for our business and product candidates; |
| --- | --- |
| ● | the scope of protection we are able to establish and maintain for intellectual property rights covering our product candidates and our ability to operate our business without infringing the<br> intellectual property rights of others; |
| --- | --- |
| ● | the overall global economic environment; |
| --- | --- |
| ● | our ability to develop an active trading market for our ordinary shares and whether the market price of our ordinary shares is volatile; |
| --- | --- |
| ● | statements as to the impact of the political and security situation in Israel on our business. |
| --- | --- |
All forward-looking statements attributable to us or persons acting on our behalf speak only as of the date of the 6-K to which this discussion is attached and are expressly qualified in their entirety by the cautionary statements included herein. We undertake no obligations to update or revise forward-looking statements to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events. In evaluating forward-looking statements, you should consider these risks and uncertainties.
Overview
We are a clinical stage specialty pharmaceutical company focused on the reformulation of established therapeutics. Our proprietary extended-release drug-delivery system is designed to provide an extended period of post-surgical pain relief without the need for repeated dose administration while reducing the potential need for the use of opiates.
Our strategy is to incorporate generic drugs with our proprietary extended-release drug-delivery system in order to create extended release drug products and to take advantage of the 505(b)(2) regulatory pathway created by the FDA. The 505(b) (2) new drug application, or NDA, process, provides for FDA approval of a new drug based in part on data that was developed by others, including published literature references and data previously reviewed by the FDA in its approval of a separate application. PRF-110, our first product candidate, is based on the local anesthetic ropivacaine, targeting the post-operative pain relief market. PRF-110 is an oil-based, viscous, clear solution that is deposited directly into the surgical wound bed prior to closure to provide localized and extended post-operative analgesia.
During 2022 we have been preparing for the launch of our first Phase 3 clinical trial of PRF-110, for pain treatment of patients undergoing bunionectomy. In March 2023, we initiated our first Phase 3 clinical trial of PRF-110 in the U.S.
After the successful completion of our first Phase 3 clinical trial of patients undergoing bunionectomy, we plan to initiate a second trial for pain treatment of hernia repair operations.
Since our inception in November 2007, we have devoted substantially all of our efforts to organizing and planning our business, building our management and technical team, developing our proprietary drug delivery system and PRF-110, and raising capital.
We have never generated any revenue and have funded our business primarily through the sale of our ordinary shares and issuance of convertible loans.
We expect to continue to incur significant expenses and increasing losses for the next several years. Our net losses may fluctuate significantly from period to period, depending on the timing of our planned clinical trials and expenditures on our other research and development and commercial development activities. We expect our expenses will increase substantially over time as we:
| ● | continue the ongoing and planned preclinical and clinical development of our drug candidates; |
|---|---|
| ● | build a portfolio of drug candidates through the acquisition or in-license of drugs, drug candidates or technologies; |
| --- | --- |
| ● | initiate preclinical studies and clinical trials for any additional drug candidates that we may pursue in the future; |
| --- | --- |
| ● | seek marketing approvals for our current and future drug candidates that successfully complete clinical trials; |
| --- | --- |
| ● | establish a sales, marketing and distribution infrastructure to commercialize any drug candidate for which we may obtain marketing approval; |
| --- | --- |
| ● | develop, maintain, expand and protect our intellectual property portfolio; |
| --- | --- |
| ● | implement operational, financial and management systems; and |
| --- | --- |
| ● | attract, hire and retain additional administrative, clinical, regulatory and scientific personnel. |
| --- | --- |
2
Financial Operations Overview
Revenue
We have not generated any revenue and do not expect to generate any revenue unless or until we obtain regulatory approval and commercialize one or more of our current or future drug candidates. In the future, we may also seek to generate revenue from a combination of research and development payments, license fees and other upfront or milestone payments.
Research and Development Expenses
Research and development expenses consist primarily of costs incurred for our research activities, which include, among other things:
| ● | employee-related expenses, including salaries, benefits and stock-based compensation expense; |
|---|---|
| ● | fees paid to consultants for services directly related to our drug development and regulatory effort; |
| --- | --- |
| ● | expenses incurred under agreements with contract research organizations, as well as contract manufacturing organizations, and consultants that conduct preclinical studies and clinical<br> trials; |
| --- | --- |
| ● | costs associated with preclinical activities and development activities; and |
| --- | --- |
| ● | costs associated with technology and intellectual property licenses. |
| --- | --- |
Costs incurred in connection with research and development activities are expensed as incurred. Costs for certain development activities, such as clinical trials, are recognized based on an evaluation of the progress to completion of specific tasks using data such as patient enrollment, clinical site activations or other information provided to us by our vendors.
Research and development activities are and will continue to be central to our business model. We expect our research and development expenses to increase for the foreseeable future as we advance our current and future drug candidates through preclinical studies and clinical trials. The process of conducting preclinical studies and clinical trials necessary to obtain regulatory approval is costly and time-consuming. It is difficult to determine with certainty the duration and costs of any preclinical study or clinical trial that we may conduct. The duration, costs and timing of clinical trial programs and development of our current and future drug candidates will depend on a variety of factors that include, but are not limited to, the following:
| ● | number of clinical trials required for approval and any requirement for extension trials; |
|---|---|
| ● | per patient trial costs; |
| --- | --- |
| ● | number of patients that participate in the clinical trials; |
| --- | --- |
| ● | number of sites included in the clinical trials; |
| --- | --- |
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| ● | countries in which the clinical trial is conducted; |
|---|---|
| ● | length of time required to enroll eligible patients; |
| --- | --- |
| ● | potential additional safety monitoring or other studies requested by regulatory agencies; and |
| --- | --- |
| ● | efficacy and safety profile of the drug candidate. |
| --- | --- |
In addition, the probability of success for any of our current or future drug candidates will depend on numerous factors, including competition, manufacturing capability and commercial viability. We will determine which programs to pursue and how much to fund each program in response to the scientific and clinical success of each drug candidate, as well as an assessment of each drug candidate’s commercial potential.
General and Administrative Expenses
General and administrative expenses consist primarily of employee-related expenses, including salaries, benefits and share-based compensation. Other general and administrative expenses include directors’ and officers’ liability insurance premiums, costs associated with being a publicly traded company, fees associated with investor relations, professional fees for consultants, tax and legal services and facility-related costs.
We expect that general and administrative expenses will increase in the future as we expand our operating activities and incur additional costs. In addition, if our current or future drug candidates are approved for sale, we expect that we would incur expenses associated with building our commercial and distribution infrastructure.
Financial Income (Expenses), Net
Financial income (expenses), net, primarily consists of interest income from deposits, change in fair value of derivative warrant liabilities, bank management fees and commissions and exchange rate differences.
Results of Operations
The table below provides our results of operations for the three months ended March 31, 2023 and 2022.
| Three Months Ended<br> March 31, | |||||
|---|---|---|---|---|---|
| 2023 | 2022 | ||||
| (US thousands) | |||||
| Statements of comprehensive loss data: | |||||
| Research and development | ) | (680 | ) | ||
| General and administrative | ) | (992 | ) | ||
| Total operating loss | ) | (1,672 | ) | ||
| Financial income (expenses), net | (22 | ) | |||
| Net loss | ) | (1,694 | ) |
All values are in US Dollars.
Research and development expenses. Research and development expenses were $1.5 million for the three months ended March 31, 2023, compared to $680,000 for the three months ended March 31, 2022, an increase of $0.8 million. The increase in research and development expenses was primarily due to the expenses leading to the commencement of our Phase 3 trial.
General and administrative expenses. General and administrative expenses were $962,000 for the three months ended March 31, 2023 compared to $992,000 for the three months ended March 31, 2022, a decrease of $30,000. The decrease in general and administrative expenses is primarily due to a decrease in directors’ and officers’ liability insurance premiums costs and expenses.
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Financial income (expenses), net. Financial income, net was $108,000 for the three months ended March 31, 2023 compared to financial expenses, net of $22,000 for the three months ended March 31, 2022, an increase in income of $130,000. The increase was primarily due to the receipt of proceeds from deposits.
Net loss. As a result of the foregoing, we incurred a net loss of $2.3 million for the three months ended March 31, 2023 compared to a net loss of $1.7 million for the three months ended March 31, 2022, an increase of $0.6 million. The increase was mainly to an increase in expenses associated with our Phase 3 trial.
Substantial Doubt About Ability to Continue as a Going Concern
Since our inception, we have devoted substantially all of our efforts to research and development, clinical trials, and capital raising activities. We are still in our development and clinical stage and have not yet generated revenues. Developing drugs, conducting clinical trials and commercializing products is expensive and we will need to raise substantial additional funds to achieve our strategic objectives.
We have incurred significant losses and negative cash flows from operations since our inception. For the three months ended March 31, 2023, and 2022 we incurred losses of $2.3 million, and $1.7 million, respectively, and had negative operating cash outflows of $2.0 million, and $1.1 million for the three months ended March 31, 2023 and 2022 respectively. As of March 31, 2023, we had an accumulated deficit of approximately $34.8 million. We have funded our operations to date primarily through equity financing and, as of March 31, 2023, we had cash and cash equivalents (including restricted cash) of approximately $8.1 million and a positive working capital of approximately $9.1 million.
We expect to continue incurring losses, and negative cash flows from operations until our product, PRF-110, reaches commercial profitability. As a result of these expected losses and negative cash flows from operations, along with our current cash position, we believe we only have sufficient resources to fund operations through the end of Q4 2023, and we will be required to raise additional capital in the future to complete our clinical trials. Therefore, there is substantial doubt about our ability to continue as a going concern.
Management's plans include continued commercialization of our products and raising capital through the sale of additional equity securities, debt or capital inflows from strategic partnerships. There are no assurances, however, that we will successfully obtain the level of financing needed for our operations. If we are unsuccessful in commercializing our products or raising capital, we may need to reduce activities, curtail or cease operations.
These factors raise substantial doubt on the Company’s ability to continue to operate as a going concern. The financial statements have been prepared assuming that the Company will continue as a going concern and do not include any adjustments that might result from the outcome of this uncertainty.
To date, we have funded our operations primarily through proceeds from our initial public offering and private placements. As of March 31, 2023, we had an accumulated deficit of approximately $34.8 million, cash and cash equivalents (including restricted cash) of approximately $8.1 million and a positive working capital of approximately $9.1 million.
Developing drugs, conducting clinical trials and commercializing products is expensive and we will need to raise substantial additional funds to achieve our strategic objectives. We expect to continue incurring losses, and negative cash flows from operations until our product, PRF-110, reaches commercial profitability. As a result of the initiation of our Phase 3 clinical trial in March 2023, along with our current cash position, we believe we will not have sufficient resources to fund operations until the end of our Phase 3 study. Therefore, there is substantial doubt about our ability to continue as a going concern.
We expect to continue incurring losses, and negative cash flows from operations until our product, PRF-110, reaches commercial profitability. As a result of these expected losses and negative cash flows from operations, along with our current cash position, we believe we only have sufficient resources to fund operations through the end of Q4 2023, and we will be required to raise additional capital in the future to complete our clinical trials. Therefore, there is substantial doubt about our ability to continue as a going concern.
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Our estimate as to how long we expect our funds to support our operations is based on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we currently expect. Further, changing circumstances, some of which may be beyond our control, could cause us to consume capital significantly faster than we currently anticipate, and we may need to seek additional funds sooner than planned. Our future capital requirements will depend on many factors, including:
| ● | the costs, timing and outcome of manufacturing clinical trial and commercial quantities of PRF-110; |
|---|---|
| ● | the scope, progress, results and costs of our current and future clinical trials of PRF-110 for our current targeted uses; |
| --- | --- |
| ● | the costs, timing and outcome of regulatory review of PRF-110; |
| --- | --- |
| ● | the extent to which we acquire or invest in businesses, products and technologies, including entering into or maintaining licensing or collaboration arrangements for PRF-110 on favorable<br> terms, although we currently have no commitments or agreements to complete any such transactions; |
| --- | --- |
| ● | the costs and timing of future commercialization activities, including drug sales, marketing, manufacturing and distribution, for any of our product candidates for which we receive marketing<br> approval, to the extent that such sales, marketing, manufacturing and distribution are not the responsibility of any collaborator that we may have at such time; |
| --- | --- |
| ● | the amount of revenue, if any, received from commercial sales of PRF-110, should it receive marketing approval; |
| --- | --- |
| ● | the costs of preparing, filing and prosecuting patent applications, maintaining, defending and enforcing our intellectual property rights and defending intellectual property-related claims; |
| --- | --- |
| ● | our ability to establish strategic collaborations, licensing or other arrangements and the financial terms of any such agreements, including the timing and amount of any future milestone,<br> royalty or other payments due under any such agreement; |
| --- | --- |
| ● | our headcount growth and associated costs as we expand our business operations and our research and development activities; |
| --- | --- |
| ● | the costs of operating as a public company; |
| --- | --- |
| ● | maintaining minimum shareholders’ equity requirements under the Nasdaq rules; and |
| --- | --- |
| ● | fluctuations in inflation and interest in Israel and the United States, which may exacerbate the magnitude of the factors discussed above. |
| --- | --- |
We expect our expenses to increase in connection with our planned operations. Until such time, if ever, as we can generate substantial revenues, we expect to finance our cash needs through a combination of equity offerings, debt financings, collaborations, strategic alliances and/or licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest may be diluted, and the terms of these securities could include liquidation or other preferences and anti-dilution protections that could adversely affect your rights as a shareholder. In addition, debt financing, if available, would result in fixed payment obligations and may involve agreements that include restrictive covenants that limit our ability to take specific actions, such as incurring additional debt, making capital expenditures, creating liens, redeeming shares or declaring dividends, that could adversely impact our ability to conduct our business. In addition, securing financing could require a substantial amount of time and attention from our management and may divert a disproportionate amount of their attention away from day-to-day activities, which may adversely affect our management’s ability to oversee the development of our product candidates.
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If we raise additional funds through collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technology, future revenue streams or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds when needed, we may be required to delay, reduce and/or eliminate our product candidate development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.
Cash Flows
The following table summarizes our statement of cash flows for the three months ended March 31, 2023 and 2022.
| Three Months Ended March 31, | |||||
|---|---|---|---|---|---|
| (US thousands) | |||||
| 2023 | 2022 | ||||
| Net cash used in operating activities | ) | (1,108 | ) | ||
| Net cash provided by investing activities | - | ||||
| Net cash provided by financing activities | - | ||||
| Effect of Exchange rate differences on cash, cash equivalents and restricted cash | ) | 19 | |||
| Increase (Decrease) in cash and cash equivalents and restricted cash | (1,127 | ) | |||
| Cash and cash equivalents and restricted cash, at the beginning of the year | 16,571 | ||||
| Cash and cash equivalents and restricted cash, at the end of the year | 15,444 |
All values are in US Dollars.
Net cash used in operating activities
For the three months ended March 31, 2023 and 2022, net cash used in operating activities was approximately $2.0 million and $1.1 million, respectively. The increase was due to an increase in the Company’s research and development expenses resulting from expenses associated with the Company’s Phase 3 trial
Net cash used in investing activities
For the three months ended March 31, 2023 and 2022, net cash provided by investing activities was approximately $6.0 million and zero, respectively. The increase was due to proceeds from deposits.
Net cash provided by financing activities
For the three months ended March 31, 2023 and 2022, we had no cash provided by financing activities.
Trend Information.
We are a development stage company and it is not possible for us to predict with any degree of accuracy the outcome of our research, development or commercialization efforts. As such, it is not possible for us to predict with any degree of accuracy any significant trends, uncertainties, demands, commitments or events that are reasonably likely to have a material effect on our net sales or revenues, income from continuing operations, profitability, liquidity or capital resources, or that would cause financial information to not necessarily be indicative of future operating results or financial condition. However, to the extent possible, certain trends, uncertainties, demands, commitments and events are identified in the preceding subsections.
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Off-Balance Sheet Arrangements.
We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.
Critical Accounting Policies and Judgments and Estimates
Our statements are prepared in accordance with GAAP. Some of the accounting methods and policies used in preparing our financial statements under GAAP are based on complex and subjective assessments by our management or on estimates based on past experience and assumptions deemed realistic and reasonable based on the circumstances concerned. The actual value of our assets, liabilities and shareholders’ equity and of our accumulated deficit could differ from the value derived from these estimates if conditions change and these changes had an impact on the assumptions adopted. See Note 3 to the accompanying financial statements.
| OTHER INFORMATION |
|---|
The continued listing standards of Nasdaq require, among other things, that the minimum bid price of a listed company’s stock be at or above $1.00. If the closing minimum bid price is below $1.00 for a period of more than 30 consecutive trading days, the listed company will fail to comply with Nasdaq’s listing rules and, if it does not regain compliance within the grace period, will be subject to delisting. As previously reported, on August 16, 2022, we received a notice from the Nasdaq Listing Qualifications Department notifying us that for 30 consecutive trading days, the bid price of our ordinary shares had closed below the minimum $1.00 per share requirement. In accordance with Nasdaq’s listing rules, we were afforded a grace period of 180 calendar days, or until February 6, 2023, to regain compliance with the bid price requirement. In order to regain compliance, the bid price of ordinary shares must close at a price of at least $1.00 per share for a minimum of 10 consecutive trading days.
On February 7, 2023, Nasdaq notified us that we were eligible for a second 180 day compliance period. If at anytime before August 7, 2023, the bid price of our ordinary shares closes at or above $1 per share for a minimum of 10 consecutive trading days, we will regain compliance with the listing standards of Nasdaq. If we fail to regain compliance by August 7, 2023, our ordinary shares will be subject to delisting. We cannot provide any guarantee that we will regain compliance during the extension period or be able to maintain compliance with Nasdaq’s listing requirements in the future. Delisting from Nasdaq could adversely affect our ability to raise additional financing through the public or private sale of equity securities, would significantly affect the ability of investors to trade our securities and would negatively affect the value and liquidity of our ordinary shares. Delisting could also have other negative results, including the potential loss of confidence by employees, the loss of institutional investor interest and fewer business development opportunities.
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Exhibit 99.3
PainReform Provides Business Update for the First Quarter of 2023
Reports Progress on Phase 3 Clinical Trial of PRF-110
in Patients Undergoing Bunionectomy Surgery
Tel Aviv, Israel – May 15, 2023 – PainReform Ltd. (Nasdaq: PRFX) ("PainReform" or the "Company"), a clinical-stage specialty pharmaceutical company focused on the reformulation of established therapeutics, today provided a business update for the first quarter ended March 31, 2023.
Ilan Hadar, Chief Executive Officer of Pain Reform, stated, “We have made significant progress advancing the Phase 3 clinical trial to evaluate PRF-110, our lead drug candidate, for post-surgical pain relief following bunionectomy surgery. Importantly, we announced the completion of treatment for the first part of Phase 3 clinical trial of PRF-110, in which 15 patients undergoing bunionectomy surgery were enrolled at two clinical sites in Texas. We reported positive safety data in the first part of our Phase 3 clinical trial with no serious adverse events (SAEs) reported, suggesting a substantial potential advantage to using PRF-110 over opioids. According to the U.S. Congress Joint Economic Committee (JEC), the opioid epidemic cost the United States nearly $1.5 trillion in 2020 and is now the main driver of drug overdose deaths.”
“We remain on track to complete the analysis of the initial pharmacokinetic data on the first 15 patients later this month and then immediately transition to the larger part of our Phase 3 trial. The upcoming second part of the trial will be a double-blind study, randomizing approximately 400 patients at seven clinical sites in the U.S. and measuring pain reduction by PRF-110 over 72 hours compared with placebo and plain ropivacaine.”
“Following the bunionectomy trial, we plan to commence our second Phase 3 trial for post-surgical pain in hernia repair. We believe PRF-110 will significantly extend post-operative analgesia and be significantly safer and less costly to produce than current alternatives. Given the fact that an estimated 99% of current surgeries are treated with opiates and that our proprietary extended-release drug-delivery system has broad potential across a wide range of surgeries, we believe we are well-positioned to become standard of care in the $12 billion post-operative pain relief market.”
Financial Results for the First Quarter Ended March 31, 2023
Research and development expenses were $1.5 million for the three months ended March 31, 2023, compared to $680,000 for the three months ended March 31, 2022, an increase of $0.8 million. The increase in research and development expenses was primarily due to the expenses leading to the commencement of our Phase 3 trial.
General and administrative expenses were $962,000 for the three months ended March 31, 2023 compared to $992,000 for the three months ended March 31, 2022, a decrease of $30,000. The decrease in general and administrative expenses is primarily due to a decrease in directors’ and officers’ liability insurance premiums costs and expenses.
Financial income (expenses), net was $108,000 for the three months ended March 31, 2023 compared to financial expenses, net of $22,000 for the three months ended March 31, 2022, a decrease of $130,000. The decrease was primarily due to an increase from the Company’s deposits.
As a result of the foregoing, we incurred a net loss of $2.3 million for the three months ended March 31, 2023 compared to a net loss of $1.7 million for the three months ended March 31, 2022, an increase of $0.6 million. The increase was mainly to an increase in expenses associated with our Phase 3 trial.
As of March 31, 2023, the Company had cash and cash equivalents of $8.1 million.
About PainReform
PainReform is a clinical-stage specialty pharmaceutical company focused on the reformulation of established therapeutics. PRF-110, the Company's lead product, currently in Phase III clinical trial, is based on the local anesthetic ropivacaine, targeting the post-operative pain relief market. PRF-110 is an oil-based, viscous, clear solution that is deposited directly into the surgical wound bed prior to closure to provide localized and extended post-operative analgesia. The Company's proprietary extended-release drug-delivery system is designed to provide an extended period of post-surgical pain relief without the need for repeated dose administration while reducing the potential need for the use of opiates. For more information, please visit www.painreform.com.
Notice Regarding Forward-Looking Statements
This press release contains forward-looking statements about our expectations, beliefs and intentions. Forward-looking statements can be identified by the use of forward-looking words such as "believe", "expect", "intend", "plan", "may", "should", "could", "might", "seek", "target", "will", "project", "forecast", "continue" or "anticipate" or their negatives or variations of these words or other comparable words or by the fact that these statements do not relate strictly to historical matters. These forward-looking statements are based on assumptions and assessments made in light of management's experience and perception of historical trends, current conditions, expected future developments and other factors believed to be appropriate. Forward-looking statements in this press release are made as of the date of this press release, and we undertake no duty to update or revise any such statements, whether as a result of new information, future events or otherwise. Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties, many of which are outside of our control. Many factors could cause our actual activities or results to differ materially from the activities and results anticipated in forward- looking statements, including, but not limited to, the following: our history of significant losses, our need to raise additional capital and our ability to obtain additional capital on acceptable terms, or at all; our dependence on the success of our initial product candidate, PRF-110; the outcomes of preclinical studies, clinical trials and other research regarding PRF-110 and future product candidates; the impact of the COVID-19 pandemic on our operations; our limited experience managing clinical trials; our ability to retain key personnel and recruit additional employees; our reliance on third parties for the conduct of clinical trials, product manufacturing and development; the impact of competition and new technologies; our ability to comply with regulatory requirements relating to the development and marketing of our product candidates; commercial success and market acceptance of our product candidates; our ability to establish sales and marketing capabilities or enter into agreements with third parties and our reliance on third party distributors and resellers; our ability to establish and maintain strategic partnerships and other corporate collaborations; the implementation of our business model and strategic plans for our business and product candidates; the scope of protection we are able to establish and maintain for intellectual property rights and our ability to operate our business without infringing the intellectual property rights of others; the overall global economic environment; our ability to develop an active trading market for our ordinary shares and whether the market price of our ordinary shares is volatile; and statements as to the impact of the political and security situation in Israel on our business. More detailed information about the risks and uncertainties affecting us is contained under the heading "Risk Factors" included in the Company's most recent Annual Report on Form 20-F and in other filings that we have made and may make with the Securities and Exchange Commission in the future.
Contact:
Crescendo Communications, LLC
Tel: 212-671-1021
Email: prfx@crescendo-ir.com
Ilan Hadar
Chief Executive Officer
PainReform Ltd.
Tel: +972-54-5331725
Email: ihadar@painreform.com