Scinai Immunotherapeutics Ltd 6-K, filed Jan 28, 2021
Scinai Immunotherapeutics Ltd. (SCNI)
About this 6-K
Scinai Immunotherapeutics Ltd filed this 6-K on January 28, 2021.
UNITEDSTATES
SECURITIESAND EXCHANGE COMMISSION
Washington,D.C. 20549
FORM6-K
Report of Foreign Private Issuer Pursuant to Rule 13a-16 or 15d-16
Under the Securities Exchange Act of 1934
For the Month of January, 2021
Commission File Number: 001-37353
BIONDVAXPHARMACEUTICALS LTD.
(Translation of registrant’s name into English)
JerusalemBioPark, 2nd Floor
HadassahEin Kerem Campus
Jeusalem,Israel
(Address of principal executive office)
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 ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ____
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ____
Exhibit Index
| ExhibitNo. | Description |
|---|---|
| 99.1 | BiondVax Announces Third Quarter 2020 Financial Results & Business Update |
| 99.2 | Unaudited Condensed Interim Financial Statements of the Company as of September 30, 2020 |
| 99.3 | Operating and Financial Review and Prospects |
| 101.INS | XBRL Instance Document |
| 101.SCH | XBRL Schema File |
| 101.CAL | XBRL Calculation File |
| 101.DEF | XBRL Definition File |
| 101.LAB | XBRL Labels File |
| 101.PRE | XBRL Presentation File |
This Report on Form 6-K is hereby incorporated by reference into the Company’s Registration Statement on Form F-3 (Registration No. 333-240189) and its Registration Statement on Form S-8 (Registration No. 333-239344).
1
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.
| BiondVax Pharmaceuticals Ltd. | ||
|---|---|---|
| Date: January 28, 2021 | By: | /s/<br> Ron Babecoff |
| Ron Babecoff | ||
| Chief Executive Officer |
2
Exhibit 99.1
BiondVax Announces Third Quarter 2020Financial Results & Business Update
Jerusalem, Israel – January 28, 2021 – BiondVax Pharmaceuticals Ltd. (Nasdaq: BVXV), a biopharmaceutical company focused on developing, manufacturing and ultimately commercializing products for the prevention and treatment of infectious diseases and related illnesses, today announced its third quarter financial results for the quarter ended September 30, 2020.
Third Quarter 2020 Financial Summary
Results arein New Israel Shekels (NIS) and convenience translation to $US is provided using the exchange rate of 3.441 (NIS/$US) as at September30, 2020.
Total operating income for the third quarter was NIS 55.6 million (approximately $16.1 million) compared with a total operating loss of NIS 19.0 million for the third quarter of 2019.
| ● | R&D expenses, net of participations,<br>for the third quarter amounted to NIS 12.6 million (approximately $ 3.7 million) compared with NIS 16.1 million for the third quarter<br>of 2019. |
|---|---|
| ● | Net profit for the third quarter was NIS<br>55.3 million (approximately $ 16.1 million) compared to a net loss of NIS 19.4 million for the third quarter of 2019. |
| --- | --- |
As of September 30, 2020, BiondVax had cash and cash equivalents of NIS 24.8 million (approximately $7.2 million) compared to NIS 72.5 million as of December 31, 2019. At the currently anticipated burn rate going forward, BiondVax has sufficient funds to continue operations through the end of Q2 2021.
Recent BusinessUpdates:
| ● | On October 23, 2020, BiondVax announced<br>that the Phase 3 clinical trial of the Company’s M-001 universal flu vaccine candidate failed to meet the trial’s primary<br>and secondary efficacy endpoints. |
|---|---|
| ● | On January 21, 2021, BiondVax announced<br>the appointment of Amir Reichman as its new CEO. Reichman currently serves as Head of Global Vaccines Engineering Core Technologies<br>and Asset Management at GSK Vaccines headquarters in Belgium. |
| --- | --- |
| ● | In light of the Phase 3 clinical trial<br>results, Company’s management estimates that there will be no future revenues from the M-001. Therefore, most likely, there<br>will be no future royalty payments to the Israel Innovation Authority (IIA) & European Investment Bank (EIB). The operating<br>income and net profit noted in these Q3 2020 financial results are attributable primarily to the revaluation of the liabilities<br>to the IIA and EIB on the Company’s balance sheet in accordance with applicable IFRS standards, offset by R&D, Marketing,<br>and G&A expenses. |
| --- | --- |
| ● | BiondVax is currently pursuing collaborations<br>and other opportunities in the infectious disease space, including exploring several alternatives for development of a new product<br>pipeline. |
| --- | --- |
*Tables to follow*
About BiondVax
BiondVax Pharmaceuticals Ltd. (NASDAQ: BVXV) is a biopharmaceutical company focused on developing, manufacturing and ultimately commercializing products for the prevention of infectious diseases and related illnesses. The Company had been developing M-001, a novel flu vaccine candidate that was designed to provide multi-strain and multi-season protection against current and future, seasonal and pandemic influenza. In seven Phase 1/2 and Phase 2 clinical trials designed to test for immunogenicity, the Company was able to demonstrate M-001 was effective in stimulating an immune response to a broad range of flu strains. In October 2020, the Company completed a Phase 3 clinical trial of M-001 which failed to meet the trial’s primary and secondary efficacy endpoints. The company is now pursuing opportunities in the infectious disease space, including exploring several alternatives for development of a pipeline of assets. For more information, please visit www.biondvax.com.
Contact Details
Joshua E. Phillipson | +972 8 930 2529 | j.phillipson@biondvax.com
Forward Looking Statements
This press release contains forward-lookingstatements within the meaning of the Private Litigation Reform Act of 1995. Words such as “expect,” “believe,”“intend,” “plan,” “continue,” “may,” “will,” “anticipate,”and similar expressions are intended to identify forward-looking statements, including statements regarding future business strategiesthat BiondVax may explore. These forward-looking statements reflect the management’s current views with respect to certaincurrent and future events and are subject to various risks, uncertainties and assumptions that could cause the results to differmaterially from those expected by the management of BiondVax Pharmaceuticals Ltd. Risks and uncertainties include, but are notlimited to, that BiondVax does not have sufficient cash to operate its business for the next 12 months, which raises substantialdoubt about its ability to continue as a going concern; the risk that BiondVax may not be able to secure capital on attractiveterms, if at all; the risk that BiondVax is currently exploring new business strategies after its M-001 universal flu vaccine candidatefailed to meet the Phase 3 trial’s primary and secondary efficacy endpoints; the risk that the European Investment Bank mayaccelerate the loans under its finance contract with BiondVax; the risk that BiondVax may not execute a strategic alternative toM-001; risks relating to the COVID-19 (coronavirus) pandemic; BiondVax’s ability to acquire rights to additional productopportunities; BiondVax’s ability to enter into collaborations on terms acceptable to us or at all; receipt, if andwhen provided, of regulatory approval of BiondVax’s manufacturing facility in Jerusalem; the risk that drug development involvesa lengthy and expensive process with uncertain outcomes; and the ability of the Company to maintain, preserve and defend its intellectualproperty and patents granted. More detailed information about the risks and uncertainties affecting the Company is contained underthe heading “Risk Factors” in the Company’s Annual Report on Form 20-F for the year ended December 31, 2019 andother filings filed with the U.S. Securities and Exchange Commission, or SEC, which is available on the SEC’s website, www.sec.gov.The Company undertakes no obligation to revise or update any forward-looking statement for any reason.
2
BALANCE SHEETS
In thousands, except share and per share data
| Convenience | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Translation | ||||||||||||
| December 31, | September 30, | September 30, | ||||||||||
| 2019 | 2019 | 2020 | 2020 | |||||||||
| Audited | Unaudited | Unaudited | ||||||||||
| N I S | U.S. dollars | |||||||||||
| CURRENT ASSETS: | ||||||||||||
| Cash and cash equivalents | 72,467 | 75,247 | 24,774 | 7,200 | ||||||||
| Other receivables | 656 | 1,887 | 2,930 | 851 | ||||||||
| 73,123 | 77,134 | 27,704 | 8,051 | |||||||||
| LONG-TERM ASSETS: | ||||||||||||
| Property, plant and equipment | 34,981 | 34,324 | 39,889 | 11,592 | ||||||||
| Right-of-use assets | 7,136 | 7,371 | 6,433 | 1,870 | ||||||||
| Other long-term assets | 510 | 507 | 891 | 259 | ||||||||
| 42,627 | 42,202 | 47,213 | 13,721 | |||||||||
| - | ||||||||||||
| 115,750 | 119,336 | 74,917 | 21,772 | |||||||||
| CURRENT LIABILITIES: | ||||||||||||
| Trade payables | 17,062 | 1,552 | 8,213 | 2,387 | ||||||||
| Operating lease liabilities | 694 | 697 | 653 | 190 | ||||||||
| Other payables | 1,203 | 820 | 2,289 | 665 | ||||||||
| 18,959 | 3,069 | 11,155 | 3,242 | |||||||||
| LONG-TERM LIABILITIES: | ||||||||||||
| Liability in respect of government grants | 14,812 | 14,454 | - | - | ||||||||
| Operating lease liabilities | 6,809 | 6,898 | 6,268 | 1,821 | ||||||||
| Loan from others | 123,780 | 108,353 | 59,242 | 17,217 | ||||||||
| Warrants | 16,354 | 6,908 | - | - | ||||||||
| Severance pay liability, net | 89 | 87 | 93 | 27 | ||||||||
| 161,844 | 136,700 | 65,603 | 19,065 | |||||||||
| SHAREHOLDERS’ EQUITY: | ||||||||||||
| Ordinary shares of no par value: Authorized: 600,000,000 shares at September 30, 2020 and 2019 (unaudited) and December 31, 2019; Issued and outstanding: 461,451,767, 460,822,640 and 402,351,657 shares at September 30, 2020 and 2019 (unaudited) and December 31, 2019, respectively | *)- | *)- | *)- | *)- | ||||||||
| Share premium | 255,285 | 256,889 | 308,855 | 89,757 | ||||||||
| Accumulated deficit | (320,338 | ) | (277,322 | ) | (310,696 | ) | (90,292 | ) | ||||
| (65,053 | ) | (20,433 | ) | (1,841 | ) | (535 | ) | |||||
| 115,750 | 119,336 | 74,917 | 21,772 | |||||||||
| *) | Represents less than NIS\USD 1. | |||||||||||
| --- | --- |
3
STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
In thousands, except share and per share data
| Convenience <br><br>translation | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Nine months | ||||||||||||||||||
| Year ended | Three months ended | Nine months ended | ended | |||||||||||||||
| December 31, | September 30, | September 30, | September 30, | |||||||||||||||
| 2019 | 2019 | 2020 | 2019 | 2020 | 2020 | |||||||||||||
| Audited | Unaudited | Unaudited | ||||||||||||||||
| N I S | U.S. dollars | |||||||||||||||||
| Operating expenses: | ||||||||||||||||||
| Research and development, net of participations | 68,645 | 16,133 | 12,579 | 37,037 | 43,595 | 12,668 | ||||||||||||
| Marketing, general and administrative | 9,706 | 2,790 | 7,303 | 8,741 | 12,423 | 3,610 | ||||||||||||
| Other income | - | - | 75,485 | - | 75,485 | 21,937 | ||||||||||||
| Total operating income (expenses) | (78,351 | ) | (18,923 | ) | 55,603 | (45,778 | ) | 19,467 | 5,657 | |||||||||
| Operating gain (loss) | (78,351 | ) | (18,923 | ) | 55,603 | (45,778 | ) | 19,467 | 5,657 | |||||||||
| Financial income | 4 | 169 | - | 193 | 5,034 | 1,463 | ||||||||||||
| Financial expense | (30,847 | ) | (601 | ) | (288 | ) | (20,593 | ) | (14,859 | ) | (4,318 | ) | ||||||
| Net income (loss) | (109,194 | ) | (19,355 | ) | 55,315 | (66,178 | ) | 9,642 | 2,802 | |||||||||
| Basic net income (loss) per share (NIS) | (0.33 | ) | (0.05 | ) | 0.12 | (0.23 | ) | 0.02 | 0.006 | |||||||||
| Diluted net income (loss) per share (NIS) | (0.33 | ) | (0.05 | ) | 0.10 | (0.23 | ) | 0.02 | 0.006 | |||||||||
| Weighted average number of shares outstanding used to compute basic income (loss) per share | 326,651,721 | 377,899,911 | 461,046,640 | 290,794,601 | 437,381,202 | 437,393,465 | ||||||||||||
| Weighted average number of shares outstanding used to compute diluted income (loss) per share | 326,651,721 | 377,899,911 | 538,495,403 | 290,794,601 | 497,489,765 | 497,489,765 |
4
Exhibit 99.2
BIONDVAXPHARMACEUTICALS LTD.
CONDENSEDINTERIM FINANCIAL STATEMENTS
ASOF SEPTEMBER 30, 2020
NISIN THOUSANDS
UNAUDITED
INDEX
| Page | |
|---|---|
| Condensed Interim Balance Sheets | F-2 |
| Condensed Interim Statements of Comprehensive Income (Loss) | F-4 |
| Condensed Interim Statements of Changes in Shareholders’ Deficiency | F-5 |
| Condensed Interim Statements of Cash Flows | F-8 |
| Notes to Condensed Interim Financial Statements | F-10 |
-
F-1
BIONDVAXPHARMACEUTICALS LTD.
CONDENSEDINTERIM BALANCE SHEETS
Inthousands, except share and per share data
| Convenience | ||||||||
|---|---|---|---|---|---|---|---|---|
| Translation | ||||||||
| (Note 2c) | ||||||||
| December 31, | September 30, | September30, | ||||||
| 2019 | 2019 | 2020 | 2020 | |||||
| Audited | Unaudited | Unaudited | ||||||
| N I S | U.S. dollars | |||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | 72,467 | 75,247 | 24,774 | 7,200 | ||||
| Other receivables | 656 | 1,887 | 2,930 | 851 | ||||
| 73,123 | 77,134 | 27,704 | 8,051 | |||||
| LONG-TERM ASSETS: | ||||||||
| Property, plant and equipment | 34,981 | 34,324 | 39,889 | 11,592 | ||||
| Right-of-use assets | 7,136 | 7,371 | 6,433 | 1,870 | ||||
| Other long-term assets | 510 | 507 | 891 | 259 | ||||
| 42,627 | 42,202 | 47,213 | 13,721 | |||||
| - | ||||||||
| 115,750 | 119,336 | 74,917 | 21,772 |
The accompanying notes are an integral part of the condensed interim financial statements.
F-2
BIONDVAXPHARMACEUTICALS LTD.
CONDENSEDINTERIM BALANCE SHEETS
Inthousands, except share and per share data
| Convenience | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Translation | ||||||||||||
| (Note 2c) | ||||||||||||
| December 31, | September 30, | September 30, | ||||||||||
| 2019 | 2019 | 2020 | 2020 | |||||||||
| Audited | Unaudited | Unaudited | ||||||||||
| N I S | U.S. dollars | |||||||||||
| CURRENT LIABILITIES: | ||||||||||||
| Trade payables | 17,062 | 1,552 | 8,213 | 2,387 | ||||||||
| Operating lease liabilities | 694 | 697 | 653 | 190 | ||||||||
| Other payables | 1,203 | 820 | 2,289 | 665 | ||||||||
| 18,959 | 3,069 | 11,155 | 3,242 | |||||||||
| LONG-TERM LIABILITIES: | ||||||||||||
| Liability in respect of government grants | 14,812 | 14,454 | - | - | ||||||||
| Operating lease liabilities | 6,809 | 6,898 | 6,268 | 1,821 | ||||||||
| Loan from others | 123,780 | 108,353 | 59,242 | 17,217 | ||||||||
| Warrants | 16,354 | 6,908 | - | - | ||||||||
| Severance pay liability, net | 89 | 87 | 93 | 27 | ||||||||
| 161,844 | 136,700 | 65,603 | 19,065 | |||||||||
| SHAREHOLDERS’ EQUITY: | ||||||||||||
| Ordinary shares of no par value: Authorized: 600,000,000 shares at September 30, 2020 and 2019 (unaudited) and December 31, 2019; Issued and outstanding: 461,451,767, 460,822,640 and 402,351,657 shares at September 30, 2020 and 2019 (unaudited) and December 31, 2019, respectively | - | *) | - | *) | - | *) | - | *) | ||||
| Share premium | 255,285 | 256,889 | 308,855 | 89,757 | ||||||||
| Accumulated deficit | (320,338 | ) | (277,322 | ) | (310,696 | ) | (90,292 | ) | ||||
| (65,053 | ) | (20,433 | ) | (1,841 | ) | (535 | ) | |||||
| 115,750 | 119,336 | 74,917 | 21,772 | |||||||||
| *) | Represents<br>less than NIS\USD 1. | |||||||||||
| --- | --- |
The accompanying notes are an integral part of the condensed interim financial statements.
| , 2021 | |||
|---|---|---|---|
| Date<br> of approval of the | Mark<br> Germain | Ron<br> Babecoff | Uri<br> Ben-Or |
| financial<br> statements | Chairman<br> of the Board | Chief<br> Executive Officer | Chief<br> Financial Officer |
F-3
BIONDVAXPHARMACEUTICALS LTD.
CONDENSEDINTERIM STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Inthousands, except share and per share data
| Convenience translation (Note 2) | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Year ended December 31, | Three months ended<br><br> September 30, | Nine months ended<br> <br>September 30, | Nine months ended September 30, | |||||||||||||||
| 2019 | 2019 | 2020 | 2019 | 2020 | 2020 | |||||||||||||
| Audited | Unaudited | Unaudited | ||||||||||||||||
| N I S | U.S. dollars | |||||||||||||||||
| Operating expenses: | ||||||||||||||||||
| Research and development, net of participations | 68,645 | 16,133 | 12,579 | 37,037 | 43,595 | 12,668 | ||||||||||||
| Marketing, general and administrative | 9,706 | 2,790 | 7,303 | 8,741 | 12,423 | 3,610 | ||||||||||||
| Other income | - | - | 75,485 | - | 75,485 | 21,937 | ||||||||||||
| Total operating income (expenses) | (78,351 | ) | (18,923 | ) | 55,603 | (45,778 | ) | 19,467 | 5,657 | |||||||||
| Operating gain (loss) | (78,351 | ) | (18,923 | ) | 55,603 | (45,778 | ) | 19,467 | 5,657 | |||||||||
| Financial income | 4 | 169 | - | 193 | 5,034 | 1,463 | ||||||||||||
| Financial expense | (30,847 | ) | (601 | ) | (288 | ) | (20,593 | ) | (14,859 | ) | (4,318 | ) | ||||||
| Net income (loss) | (109,194 | ) | (19,355 | ) | 55,315 | (66,178 | ) | 9,642 | 2,802 | |||||||||
| Basic net income (loss) per share (NIS) | (0.33 | ) | (0.05 | ) | 0.12 | (0.23 | ) | 0.02 | 0.006 | |||||||||
| Diluted net income (loss) per share (NIS) | (0.33 | ) | (0.05 | ) | 0.10 | (0.23 | ) | 0.02 | 0.006 | |||||||||
| Weighted average number of shares outstanding used to compute basic income (loss) per share | 326,651,721 | 377,899,911 | 461,046,640 | 290,794,601 | 437,381,202 | 437,393,465 | ||||||||||||
| Weighted average number of shares outstanding used to compute diluted income (loss) per share | 326,651,721 | 377,899,911 | 538,495,403 | 290,794,601 | 497,489,765 | 497,489,765 |
The accompanying notes are an integral part of the condensed interim financial statements.
F-4
BIONDVAXPHARMACEUTICALS LTD.
CONDENSEDINTERIM STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIENCY
Inthousands, except share and per share data
| Share<br> capital | Share<br> premium | Accumulated<br> <br>deficit | Total<br> <br>deficiency | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Unaudited | |||||||||||
| NIS | |||||||||||
| Balance<br> as of January 1, 2020 | - | *) | 255,285 | (320,338 | ) | (65,053 | ) | ||||
| Total comprehensive<br> income | - | - | 9,642 | 9,642 | |||||||
| Exercise of warrants | - | 45,274 | - | 45,274 | |||||||
| Exercise of options | - | 166 | - | 166 | |||||||
| Share-based<br> compensation | - | 8,130 | - | 8,130 | |||||||
| Balance<br> as of September 30, 2020 | - | *) | 308,855 | (310,696 | ) | (1,841 | ) | ||||
| Balance<br> as of September 30, 2020 (convenience translation into U.S. dollars - see Note 2c) | - | *) | 89,757 | (90,292 | ) | (535 | ) | ||||
| Share<br> capital | Share<br> premium | Accumulated<br> <br>deficit | Total<br> <br>deficiency | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Unaudited | |||||||||||
| NIS | |||||||||||
| Balance<br> as of July 1, 2020 | - | *) | 304,089 | (366,011 | ) | (61,922 | ) | ||||
| Total comprehensive<br> income | - | - | 55,315 | 55,315 | |||||||
| Exercise of options | - | 166 | - | 166 | |||||||
| Share-based<br> compensation | - | 4,600 | - | 4,600 | |||||||
| Balance<br> as of September 30, 2020 | - | *) | 308,855 | (310,696 | ) | (1,841 | ) | ||||
| Balance<br> as of September 30, 2020 (convenience translation into U.S. dollars - see Note 2c) | - | *) | 89,757 | (90,292 | ) | (535 | ) | ||||
| *) | Represents<br>less than NIS\USD 1. | ||||||||||
| --- | --- |
The accompanying notes are an integral part of the condensed interim financial statements.
F-5
BIONDVAX PHARMACEUTICALS LTD.
CONDENSEDINTERIM STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIENCY
Inthousands, except share and per share data
| Share capital | Share premium | Accumulated<br> <br>deficit | Total<br> <br>deficiency | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Unaudited | |||||||||||
| NIS | |||||||||||
| Balance as of January 1, 2019 | - | *) | 179,929 | (211,144 | ) | (30,215 | ) | ||||
| Total comprehensive loss | - | - | (66,178 | ) | (66,178 | ) | |||||
| Issuance of Ordinary shares, net of issuance costs | - | *) | 70,390 | - | 70,390 | ||||||
| Exercise of options | - | *) | 1,402 | - | 1,402 | ||||||
| Share-based compensation | 5,168 | - | 5,168 | ||||||||
| Balance as of September 30, 2019 | - | *) | 256,889 | (277,322 | ) | (20,433 | ) | ||||
| Balance as of September 30, 2019 (convenience translation into U.S. dollars - see Note 2c) | - | *) | 74,655 | (80,593 | ) | (5,938 | ) | ||||
| Share capital | Share premium | Accumulated<br> <br>deficit | Total<br> <br>deficiency | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Unaudited | |||||||||||
| NIS | |||||||||||
| Balance as of July 1, 2019 | - | *) | 185,454 | (257,967 | ) | (72,513 | ) | ||||
| Total comprehensive loss | - | - | (19,355 | ) | (19,355 | ) | |||||
| Issuance of Ordinary shares, net of issuance costs | - | *) | 70,390 | - | 70,390 | ||||||
| Share-based compensation | - | 1,045 | - | 1,045 | |||||||
| Balance as of September 30, 2019 | - | *) | 256,889 | (277,322 | ) | (20,433 | ) | ||||
| Balance as of September 30, 2019 (convenience translation into U.S. dollars - see Note 2c) | - | *) | 74,655 | (80,593 | ) | (5,938 | ) | ||||
| *) | Represents<br>less than NIS\USD 1. | ||||||||||
| --- | --- |
The accompanying notes are an integral part of the condensed interim financial statements.
F-6
BIONDVAXPHARMACEUTICALS LTD.
CONDENSEDINTERIM STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIENCY
Inthousands, except share and per share data
| Share capital | Share premium | Accumulated<br> <br>deficit | Total<br> <br>deficiency | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Audited | |||||||||||
| NIS | |||||||||||
| Balance as of January 1, 2019 | - | *) | 179,929 | (211,144 | ) | (31,215 | ) | ||||
| Total comprehensive loss | - | - | (109,194 | ) | (109,194 | ) | |||||
| Issuance of Ordinary shares, net of issuance costs | - | 70,270 | - | 70,270 | |||||||
| Exercise of options | - | 1,402 | - | 1,402 | |||||||
| Share-based compensation | - | 3,684 | - | 3,684 | |||||||
| Balance as of December 31, 2019 | - | *) | 255,285 | (320,338 | ) | (65,053 | ) | ||||
| Balance as of December 31, 2019 (convenience translation into U.S. dollars - see Note 2c) | - | *) | 74,189 | (93,094 | ) | (18,905 | ) | ||||
| *) | Represents<br>less than NIS\USD 1. | ||||||||||
| --- | --- |
The accompanying notes are an integral part of the condensed interim financial statements.
F-7
BIONDVAXPHARMACEUTICALS LTD.
CONDENSEDINTERIM STATEMENTS OF CASH FLOWS
Inthousands, except share and per share data
| Convenience translation<br><br> <br>(Note 2) | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Year ended December 31, | Three months ended September 30, | Nine months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2019 | 2019 | 2020 | 2019 | 2020 | 2020 | |||||||||||||
| Audited | Unaudited | Unaudited | ||||||||||||||||
| N I S | U.S. dollars | |||||||||||||||||
| Cash<br> flows from operating activities: | ||||||||||||||||||
| Net<br> income (loss) | (109,194 | ) | (19,355 | ) | 55,315 | (66,178 | ) | 9,642 | 2,802 | |||||||||
| Adjustments<br> to reconcile net income (loss) to net cash used in operating activities: | ||||||||||||||||||
| Adjustments<br> to profit and loss items: | ||||||||||||||||||
| Depreciation<br> of property, plant and equipment and right-of-use assets | 1,645 | 554 | 626 | 1,079 | 1,830 | 532 | ||||||||||||
| Net<br> financial expenses (income) | 15,902 | 3,207 | 285 | 6,586 | 13,347 | 3,879 | ||||||||||||
| Capital<br> gain | - | - | - | - | (160 | ) | (46 | ) | ||||||||||
| Increase<br>(decrease) in liability with respect to loans from others | 14,083 | (2,618 | ) | (62,799 | ) | 13,993 | (64,538 | ) | (18,756 | ) | ||||||||
| Increase<br> (decrease) in liability with respect to government grants | 169 | (167 | ) | (12,686 | ) | (189 | ) | (14,812 | ) | (4,305 | ) | |||||||
| Share-based<br> compensation | 3,684 | 1,045 | 4,600 | 5,168 | 8,130 | 2,363 | ||||||||||||
| Change<br> in employee benefit liabilities, net | 7 | 1 | 1 | 5 | 4 | 1 | ||||||||||||
| 35,490 | 2,022 | (69,973 | ) | 26,642 | (56,199 | ) | (16,332 | ) | ||||||||||
| Changes<br> in asset and liability items: | ||||||||||||||||||
| Decrease<br> (increase) in other receivables | 309 | (629 | ) | (463 | ) | (922 | ) | (2,274 | ) | (661 | ) | |||||||
| Increase<br> (decrease) in trade payables | (3,661 | ) | (6,425 | ) | 4,143 | (19,171 | ) | (8,849 | ) | (2,572 | ) | |||||||
| Increase<br> in other payables | 127 | (528 | ) | 681 | (256 | ) | 1,086 | 316 | ||||||||||
| (3,225 | ) | (7,582 | ) | 4,361 | (20,349 | ) | (10,037 | ) | (2,917 | ) | ||||||||
| Cash<br> paid and received during the year for: | ||||||||||||||||||
| Interest<br>paid | (131 | ) | (11 | ) | (15 | ) | (121 | ) | (39 | ) | (11 | ) | ||||||
| Interest<br>received | 2 | - | - | 1 | 1 | - | *) | |||||||||||
| (129 | ) | (11 | ) | (15 | ) | (120 | ) | (38 | ) | (11 | ) | |||||||
| Net<br> cash flows used in operating activities | (77,058 | ) | (24,926 | ) | (10,312 | ) | (60,005 | ) | (56,632 | ) | (16,458 | ) |
| *) | Represents<br>an amount lower than NIS\USD 1. |
|---|
The accompanying notes are an integral part of the condensed interim financial statements.
F-8
BIONDVAXPHARMACEUTICALS LTD.
CONDENSED INTERIM STATEMENTS OF CASHFLOWS
Inthousands, except share and per share data
| Convenience translation (Note 2) | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Year ended December 31, | Three months ended <br><br>September 30, | Ninemonths endedSeptember 30, | Nine months <br><br>ended<br><br> September 30, | |||||||||||||||
| 2019 | 2019 | 2020 | 2019 | 2020 | 2020 | |||||||||||||
| Audited | Unaudited | Unaudited | ||||||||||||||||
| N I S | U.S. dollars | |||||||||||||||||
| Cash Flows from Investing Activities: | ||||||||||||||||||
| Purchase of property and equipment | (7,429 | ) | (2,164 | ) | (3,348 | ) | (6,441 | ) | (6,035 | ) | (1,754 | ) | ||||||
| Proceeds from sale of property and equipment | - | - | - | - | 160 | 46 | ||||||||||||
| Increase (decrease) in other long term assets | 230 | 3 | - | 233 | (381 | ) | (111 | ) | ||||||||||
| - | ||||||||||||||||||
| Net cash used in investing activities | (7,199 | ) | (2,161 | ) | (3,348 | ) | (6,208 | ) | (6,256 | ) | (1,819 | ) | ||||||
| Cash Flows from Financing Activities: | ||||||||||||||||||
| Proceeds from loan from others | 15,337 | - | - | - | - | - | ||||||||||||
| Repayment of operating lease liabilities | (581 | ) | (314 | ) | (306 | ) | (943 | ) | (928 | ) | (270 | ) | ||||||
| Proceeds from exercise of warrants to public | 188 | - | - | - | 14,790 | 4,298 | ||||||||||||
| Proceeds from exercise of options | - | - | 166 | - | 166 | 48 | ||||||||||||
| Proceeds from issuance of shares and options | 70,270 | 70,390 | - | 70,578 | - | - | ||||||||||||
| Net cash provided by (used in) financing activities | 85,214 | 70,076 | (140 | ) | 69,635 | 14,028 | 4,076 | |||||||||||
| Exchange differences on balances of cash and cash equivalents | (4,373 | ) | (1,658 | ) | (178 | ) | (4,058 | ) | 1,168 | 341 | ||||||||
| Increase (decrease) in cash and cash equivalents | (3,416 | ) | 41,331 | (13,978 | ) | (636 | ) | (47,692 | ) | (13,860 | ) | |||||||
| Balance of cash and cash equivalents at the beginning of the period | 75,883 | 33,916 | 38,752 | 75,883 | 72,467 | 21,060 | ||||||||||||
| Balance of cash and cash equivalents at the end of the period | 72,467 | 75,247 | 24,774 | 75,247 | 24,775 | 7,200 | ||||||||||||
| Non-cash financing activities | ||||||||||||||||||
| Exercise of warrants to the public | 1,214 | - | - | 1,214 | 30,484 | 8,859 |
The accompanying notes are an integral part of the condensed interim financial statements.
F-9
BIONDVAX PHARMACEUTICALS LTD.
NOTES TO FINANCIAL STATEMENTS
Inthousands, except share and per share data
NOTE 1: GENERAL
| a. | BiondVax Pharmaceuticals Ltd. (“the Company”) is focused<br>on developing, manufacturing and ultimately commercializing products for the prevention and treatment of infectious diseases and<br>related illnesses. The Company was incorporated on July 21, 2003 and started its activity on March 31, 2005. |
|---|
The Company’s shares are traded on the NASDAQ.
| b. | Going concern: |
|---|
These interim financial statements have been prepared on a going concern basis, which contemplates that the Company will continue in operation for the foreseeable future and be able to realize its assets and discharge its liabilities and commitments in the normal course of business. In the nine months ended September 30, 2020, the Company incurred net income of NIS 9,642 ($2,802) and negative cash flows from operating activities of NIS 56,632 ($ 16,458) and it has an accumulated deficit of NIS 310,696 ($ 90,292) as of that date.
Our ability to continue as a going concern and execute on our business plan is dependent upon our ability to raise capital through private or public financings, enter into a commercial agreement or engage in a strategic alternative, among others. We currently intend to finance our activities through any of the above. However, there is no assurance that we will be successful in raising such capital or, in the event of a capital raising, that such capital will be available on terms acceptable to the Company.
Though the Company’s management and Board of Directors are of the opinion that its current financial resources will be sufficient to continue operating the Company through the second quarter of 2021, the Company will not have the sufficient liquidity resources to continue the development of all or certain aspects of future products.
The above circumstances indicate that a material uncertainty exists that may cast significant doubt as to the Company’s ability to continue as a going concern. These financial statements do not reflect adjustments to the carrying values of the Company’s assets and liabilities, revenue and expenses, and the statement of financial position classifications used, that would be necessary if the going concern assumption were not appropriate. Such adjustments could be material.
F-10
BIONDVAX PHARMACEUTICALS LTD.
NOTESTO FINANCIAL STATEMENTS
Inthousands, except share and per share data
NOTE1: GENERAL (Cont.)
| c. | To the report date the Company management commented on the potential impact of the COVID-19 pandemic<br>on the conduct of the Phase 3 trial’s second cohort. During the trial’s first cohort, because the flu season had a<br>weak beginning, it was decided to increase the size of Cohort 2 by about 2,000 participants leading us to include more sites in<br>the second season. This decision served us well as most of the Cohort 2 swab samples were collected by the end of February 2020,<br>prior to the onset of the COVID-19 pandemic in Eastern Europe. Consequently, overall, we collected more swab samples than originally<br>targeted. To date, the COVID-19 pandemic did not meaningfully impact the timing or conduct of the Phase 3 trial and BiondVax’s<br>other ongoing operations. The extent to which the COVID-19 pandemic may impact the Company’s operations will depend on future<br>developments, which are highly uncertain and cannot be predicted with confidence. |
|---|---|
| d. | On October 23, 2020, the Company announced the Phase 3 clinical trial results of the M-001 universal<br>vaccine product. The results did not demonstrate a statistically significant difference between the vaccinated group and the placebo<br>group in reduction of flu illness and severity. Therefore, the study failed to meet both the primary and secondary efficacy endpoints.<br>However, the study’s primary safety endpoint was met. |
| --- | --- |
| e. | As a result of the Phase 3 clinical trial failure, Company’s management estimates that there will<br>be no future revenues from the M-001 product. Therefore, most likely, there will be no future royalty payments to the Israel innovation<br>authority (“IIA”) & European investment bank (“EIB”) (notes 12b, 12d to the annual financial statement). |
|---|
In accordance with the EIB loan agreement, and due to the said above, the Company is required to pay EIB the principal amount of the tranches already loaned by the EIB to the Company, within five years of the date of each tranche of the loan. On September 30, 2020, the Company revalued the loan to a sum of NIS 59,242 ($ 17,217).
As a result, the Company recorded an amount of NIS 62,800 ($ 18,250) as revaluation income of the EIB loan and NIS 12,685 ($ 3,686) for the IIA liability and recorded them under the line item of other income in the statement of other comprehensive loss.
As for the report date, the outstanding principal amount regarding the EIB loan in nominal terms is NIS102,192 ($29,698).
Under the Finance Contract, the EIB may accelerate all loans extended thereunder if an event of default has occurred, which includes, amongst other things, an event of default arising from the occurrence of a material adverse change, defined as any event or change of condition, which in the opinion of the EIB, has a material adverse effect on: the Company’s ability to perform its obligations under the Finance Documents; the Company’s business, operations, property, condition (financial or otherwise) or prospects; or the rights or remedies of the EIB under the Finance Contract, amongst other things. If the EIB determines that an event of default has occurred, it could accelerate the amounts outstanding under the Finance Contract, making those amounts immediately due and payable.
F-11
BIONDVAX PHARMACEUTICALS LTD.
NOTESTO FINANCIAL STATEMENTS
Inthousands, except share and per share data
NOTE1: GENERAL (Cont.)
On January 11, 2021, the Company and EIB entered into an amendment to the Finance Contract, pursuant to which EIB consented to the appointment of Mr. Amir Reichman as chief executive officer of the Company as required under the Finance Contract.
On January 26, 2021, the EIB notified us that they welcome our efforts to secure future equity financing in an amount not less than USD 2 million in order to enable us to pursue new business opportunities, strengthen our balance sheet and invest in growth. Thus, within that context, the EIB wrote in their letter that they will not consider the failure of our pivotal phase 3 trial for M-001 to meet the primary and secondary efficacy endpoints as a trigger for prepayment of a loan extended under the Finance Contract. However, the EIB cautioned us that their letter is not a consent, agreement, amendment or waiver in respect of the terms of the Finance Contract, reserving any other right or remedy the EIB may have now or subsequently. There is no guarantee that the decision by the EIB in their letter will not change at any time and without any notice or that the EIB will not determine that an event of default has occurred under the Finance Contract, which could result in all loans extended under the Finance Contract being accelerated and secured creditor remedies being exercised.
NOTE2:- CONVENIENCE TRANSLATION INTO U.S. DOLLARS
The financial statements as of September 30, 2020 and for the nine months then ended have been translated into dollars using the representative exchange rate as of that date ($ 1 = NIS 3.441). The translation was made solely for the convenience of the reader. The amounts presented in these financial statements should not be construed to represent amounts receivable or payable in dollars or convertible into dollars, unless otherwise indicated in these statements.
NOTE3: SIGNIFICANT ACCOUNTING POLICIES
These financial statements have been prepared in a condensed format as of September 30, 2020, and for the three and nine months then ended (“interim financial statements”). These financial statements should be read in conjunction with the Company’s annual financial statements as of December 31, 2019, and for the year then ended and accompanying notes (“annual financial statements”).
Basis of preparation of the interim financial statements
The interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles for the preparation of financial statements for interim periods, as prescribed in IAS 34.
The significant accounting policies and methods of computation adopted in the preparation of the interim financial statements are consistent with those followed in the preparation of the Company’s annual financial statements.
F-12
BIONDVAX PHARMACEUTICALS LTD.
NOTESTO FINANCIAL STATEMENTS
In thousands, except share and per sharedata
NOTE 4:- FINANCIAL INSTRUMENTS
| a. | Classification of financial liabilities: | |||||||
|---|---|---|---|---|---|---|---|---|
| Convenience | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| translation<br> <br>(Note 2c) | ||||||||
| December 31, | September 30, | September 30, | ||||||
| 2019 | 2019 | 2020 | 2020 | |||||
| N I S | N I S | U.S. dollars | ||||||
| Financial liabilities at amortized costs: | ||||||||
| Trade payables | 17,062 | 1,552 | 8,213 | 2,387 | ||||
| Other payables | 1,203 | 820 | 2,289 | 665 | ||||
| Liability in respect of government grants | 14,812 | 14,454 | - | - | ||||
| Lease liabilities | 7,503 | 7,595 | 6,921 | 2,012 | ||||
| Loan from others | 123,780 | 108,353 | 59,242 | 17,217 | ||||
| 164,360 | 132,774 | 76,665 | 22,281 | |||||
| Financial liabilities at fair value through profit and loss: | ||||||||
| Warrants measured at fair value | 16,354 | 6,908 | - | - | ||||
| Total financial liabilities | 180,714 | 139,682 | 76,665 | 22,281 | ||||
| Total current | 18,959 | 3,069 | 11,155 | 3,243 | ||||
| Total non-current | 161,755 | 136,613 | 65,510 | 19,038 | ||||
| b. | Fair<br>value measurement: | |||||||
| --- | --- |
As of September 30, 2020, there are no financial instruments measured at fair value and classified as Level 1 while loans from others and government grants are classified as Level 2.
As of September 30, 2020, there were no transfers in respect of fair value measurement of any financial instrument between Level 1 and Level 2, and there were no transfers into or out of Level 3 fair value measurements of any financial instrument.
F-13
BIONDVAX PHARMACEUTICALS LTD.
NOTESTO FINANCIAL STATEMENTS
In thousands, except share and per sharedata
**NOTE4: - FINANCIAL INSTRUMENTS (**Cont.)
| c. | Changes<br>in liabilities arising from financing activities: | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Loans from others | Lease liabilities | Total liabilities arising from financing activities | |||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| NIS | |||||||||
| Balance as of January 1, 2020 | 123,780 | 7,503 | 131,283 | ||||||
| Cash flows | - | (582 | ) | (582 | ) | ||||
| Effect of changes in fair value | (64,538 | ) | - | (64,538 | ) | ||||
| Balance as of September 30, 2020 (unaudited) | 59,242 | 6,921 | 66,163 |
| Loans from others | Lease liabilities | Total liabilities arising from financing activities | ||||||
|---|---|---|---|---|---|---|---|---|
| NIS | ||||||||
| Balance as of January 1, 2019 | 94,360 | - | 94,360 | |||||
| Adoption of IFRS 16 | - | 8,084 | 8,084 | |||||
| Cash flows | - | (489 | ) | (489 | ) | |||
| Effect of changes in fair value | 13,993 | - | 13,993 | |||||
| Balance as of September 30, 2019 (unaudited) | 108,353 | 7,595 | 115,948 | |||||
| Loans from others | Lease liabilities | Total liabilities arising from financing activities | ||||||
| --- | --- | --- | --- | --- | --- | --- | --- | |
| NIS | ||||||||
| Balance as of January 1, 2019 | 94,360 | - | 94,360 | |||||
| Adoption of IFRS 16 | - | 8,084 | 8,084 | |||||
| Cash flows | 15,337 | (581 | ) | 14,756 | ||||
| Effect of changes in fair value | 14,083 | - | 14,083 | |||||
| Balance as of December 31, 2019 | 123,780 | 7,503 | 131,283 |
F-14
BIONDVAX PHARMACEUTICALS LTD.
NOTES TO FINANCIAL STATEMENTS
In thousands, except share and per sharedata
NOTE 5: - EQUITY
| a. | On May 15, 2020, 540,639 NASDAQ listed warrants expired. |
|---|---|
| b. | On July 8, 2020 6,000 ADS options were exercised into<br>240,000 Ordinary shares at an exercise price of $7.98 for a total consideration of NIS 166 (approximately $ 48). |
| --- | --- |
| c. | During the nine months ended September 30, 2020, 676,118<br>NASDAQ listed warrants were exercised into 27,044,720 Ordinary shares at an exercise price of $6.25 for a total consideration<br>of NIS 14,790 (approximately $ 4,298) and 611,565 NASDAQ listed warrants to purchase ADSs at an exercise price of $6.25 were exercised<br>on a cashless basis into 24,462,600 Ordinary shares. |
| --- | --- |
NOTE 6: - SHARE-BASEDCOMPENSATION
| a. | On June 11, 2020, the Company’s Board of Directors<br>ratified the grant of options to 23 employees to purchase an aggregate 141,400 ADS (5,656,000 Ordinary shares) at an exercise<br>price of $7.28 – $8.076 per ADS. The options were originally approved pursuant to a delegation of authority granted by the<br>Board of Directors to Company management in April 2018 to grant a pool of options with an exercise price of $7.98 and other terms<br>approved by the Board of Directors at the time of delegation. |
|---|
The total value of the grant was NIS 4,190 ($ 1,218)
On the same day, the Company’s Board of Directors approved a grant to an advisor to purchase 72,000 ADS (2,880,000 Ordinary shares) at an exercise price of $18.06 per ADS in three tranches. The first tranche of 32,400 ADS’s was vested on May 31,2020, the second tranche of 25,200 ADS was vested on September 30, 2020 and the third tranche of 14,400 ADS’s will be vested on December 31, 2020. The options will expire four years from the commencement vesting date of each tranche.
The total value of the grant was NIS 2,783 ($ 809)
| b. | The fair value of the Company’s share options<br>granted to employees, directors and service providers for the nine months ended September 2020 was estimated using the binominal<br>option pricing model using the following assumptions: |
|---|---|
| Dividend yield (%) | - |
| --- | --- |
| Expected volatility of the share prices (%) | 66 |
| Risk-free interest rate (%) | 0.7-0.8 |
| Expected life of share options (years) | 6-7 |
| Share price (NIS) | (1) 7.05-18 |
| c. | On<br>September 2, 2020, the Company granted fully vested 5,000 RSU’s representing 5,000 ADS’s to a board member. The total value<br>of the grant was NIS 196 (approximately $ 57). |
|---|---|
| d. | On<br>September 2, 2020, the Company amended an option agreement with a board member dated as of May 28, 2019. The vesting date accelerated<br>to September 2, 2020. The total value of the option acceleration was NIS 30 (approximately $ 9). |
| --- | --- |
F-15
Exhibit 99.3
OPERATING AND FINANCIAL REVIEW AND PROSPECTS
Comparison ofPeriod to Period Results of Operations
Nine Months Ended September 30, 2020 Comparedto Nine Months Ended September 30, 2019
Results arein New Israel Shekels (NIS) and convenience translation to $US is provided using the exchange rate of 3.441 (NIS/$US) as of September30, 2020.
Research andDevelopment Expenses, net
Our research and development expenses, net for the nine months ended September 30, 2020 amounted to NIS 43.6 million (approximately $12.6 million) compared to NIS 37 million (approximately $10.8 million) for the nine months ended September 30, 2019. The increase in the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019 was primarily due to higher costs associated with the pivotal Phase 3 trial.
Marketing, Generaland Administrative Expenses
Our marketing, general and administrative expenses for the nine months ended September 30, 2020 amounted to NIS 12.4 million (approximately $3.6 million) compared to NIS 8.7 million (approximately $2.5 million) for the nine months ended September 30, 2019. The increase primarily resulted from share-based payment expenses of NIS 6 million (approximately $1.7 million), offset by a decrease in salaries due to a management bonus of NIS 1.2 million (approximately $0.35 million) that was paid during the nine months ended September 30, 2019.
Operating Income
Our operating income for the nine months ended September 30, 2020 amounted to NIS 19.4 million (approximately $5.6 million) compared to an operating loss NIS 45.8 million (approximately $13.3 million) for the nine months ended September 30, 2019. The increase in total operating income primarily resulted from other income of NIS 78.5 million (approximately $21.9 million) due to revaluation of IIA and EIB liabilities on our balance sheet in accordance with IFRS standards following the failure of the pivotal Phase 3 trial, offset by increases in research and development and marketing and general and administrative expenses.
Financial Expense,Net
Our financial expenses, net for the nine months ended September 30, 2020, amounted to NIS 9.8 million (approximately $2.8 million) primarily from financial expenses related to warrants revaluation in the amount of NIS14.5 million (approximately $4.2 million), offset by financial income in respect of the loans from EIB and IIA and currency exchange income in the amount of NIS 5 million (approximately $1.5 million), compared to financial expense in respect of loans from EIB and IIA, currency exchange and warrants revaluation in the amount of NIS 20 million (approximately $5.8 million) during the nine months ended September 30, 2019.
Net Profit (Loss)
As a result of the foregoing, and as we have not yet generated revenues since our inception, our net income for the nine months ended September 30, 2020 was NIS 9.6 million (approximately $2.8 million), compared to our net loss for the nine months ended September 30, 2019 of NIS 66.2 million (approximately $19.2 million). The income in the nine months ended September 30, 2020 compared to the loss for the nine months ended September 30, 2019 primarily resulted from other income, a decrease in financial expenses, net, offset by an increase in research and development expenses, and an increase in marketing, general and administrative expenses, as described above.
Three Months Ended September 30, 2020 Comparedto Three Months Ended September 30, 2019
Results arein New Israel Shekels (NIS) and convenience translation to $US is provided using the exchange rate of 3.44 (NIS/$US) as at September30, 2020.
Research andDevelopment Expenses, net
Our research and development expenses, net for the three months ended September 30, 2020, amounted to NIS 12.6 million (approximately $3.67 million) compared to NIS 16.1 million (approximately $4.7 million) for the three months ended September 30, 2019. The decrease in the three months ended September 30, 2020 compared to the three months ended September 30, 2019 was primarily due to reduced costs associated with the pivotal Phase 3 trial.
Marketing, Generaland Administrative Expenses
Our marketing, general and administrative expenses for the three months ended September 30, 2020 amounted to NIS 7.3 million (approximately $2.12 million) compared to NIS 2.8 million (approximately $0.8 million) for the three months ended September 30, 2019. The increase in the three months ended September 30, 2020 compared to the three months ended September 30, 2019 primarily resulted from share-based payment expenses of NIS 3.5 million (approximately $1 million), and an increase in salaries paid out in 2019 due to a management bonus of NIS 0.7 million (approximately $0.2 million)
Operating Income
Our operating income for the three months ended September 30, 2020 amounted to NIS 55.6 million (approximately $16.2 million) compared to an operating loss of NIS 18.9 million (approximately $5.5 million) for the three months ended September 30, 2019. The operating income primarily resulted from other income in the amount of NIS 78.5 million (approximately $21.9 million) due to revaluation of IIA and EIB liabilities on our balance sheet in accordance with IFRS standards following the failure of the pivotal Phase 3 trial and a decrease in research and development expenses, offset by an increase in marketing, general and administrative expenses.
Financial Expense,Net
Our financial expenses, net for the three months ended September 30, 2020, amounted to NIS 0.3 million (approximately $0.05 million) primarily from currency exchange expenses and from operating lease liabilities.
2
Net Profit (Loss)
Our net profit for the three months ended September 30, 2020 was NIS 55.3 million (approximately $16 million), compared to our net loss for the three months ended September 30, 2019 of NIS 19.3 million (approximately $5.6 million). The net profit in the three months ended September 30, 2020 compared to the loss for the three months ended September 30, 2019 primarily resulted from other income, a decrease in research and development expenses and financial expenses, net, offset by an increase in marketing and general and administrative expenses, as described above.
Liquidity and Capital Resources
Since our inception, we have funded our operations primarily through public and private offerings of our equity securities in Israel and the U.S., grants from the Israeli Innovation Authority, or IIA (formerly known as the Office of the Chief Scientist of the Israeli Ministry of Economy), grants received from the Israeli Ministry of Economy, European grants under the UNISEC consortium and a loan from the European Investment Bank, or EIB. To date, we have not generated any revenues and in October 2020, we announced that our pivotal, phase 3 clinical trial of M-001 as a standalone flu vaccine candidate failed to meet both its primary and secondary efficacy endpoints.
As of September 30, 2020, we had cash and cash equivalents of NIS 24.8 million (approximately $7.2 million) compared to NIS 75.2 million (approximately $21.9 million) as of September 30, 2019. This decrease was attributable to cash used in operations of NIS 56.6 million (approximately $16.4 million), cash used in investing activities of NIS 6.2 million (approximately $1.8 million) and cash provided by financing activities of NIS 14 million (approximately $4 million). As of September 30, 2020, we had an accumulated deficit of NIS 310.7 million (approximately $ 90.3 million).
We believe our current cash balance is not sufficient to cover our operating expenses for the next 12 months. Current conditions indicate that a material uncertainty exists that may cast significant doubt as to our ability to continue as a going concern.
Our existing loan-term liabilities as of September 30, 2020 include an aggregate principal amount of Euro 24 million under the finance contract, or the Finance Contract, with EIB. The EIB loan was made in four tranches, beginning in 2018. The loan is interest free and is repayable, per each tranche, in a single installment five years following the date each tranche was received.
Under the Finance Contract, the EIB may accelerate all loans extended thereunder if an event of default has occurred, which includes, amongst other things, an event of default arising from the occurrence of a material adverse change, defined as any event or change of condition, which in the opinion of the EIB, has a material adverse effect on: our ability to perform our obligations under the Finance Documents; our business, operations, property, condition (financial or otherwise) or prospects; or the rights or remedies of the EIB under the Finance Contract, amongst other things. If the EIB determines that an event of default has occurred, it could accelerate the amounts outstanding under the Finance Contract, making those amounts immediately due and payable.
On January 11, 2021, we entered into an amendment to the Finance Contract with EIB, pursuant to which EIB consented to the appointment of Mr. Amir Reichman as our chief executive officer as required under the Finance Contract.
On January 26, 2021, the EIB notified us that they welcome our efforts to secure future equity financing in an amount not less than USD 2 million in order to enable us to pursue new business opportunities, strengthen our balance sheet and invest in growth. Thus, within that context, the EIB wrote in their letter that they will not consider the failure of our pivotal phase 3 trial for M-001 to meet the primary and secondary efficacy endpoints as a trigger for prepayment of a loan extended under the Finance Contract. However, the EIB cautioned us that their letter is not a consent, agreement, amendment or waiver in respect of the terms of the Finance Contract, reserving any other right or remedy the EIB may have now or subsequently. There is no guarantee that the decision by the EIB in their letter will not change at any time and without any notice or that the EIB will not determine that an event of default has occurred under the Finance Contract, which could result in all loans extended under the Finance Contract being accelerated and secured creditor remedies being exercised.
Our ability to continue as a going concern and execute on our business plan is dependent upon our ability to raise capital through private or public financings, enter into a commercial agreement or engage in a strategic alternative, among others. We currently intend to finance our activities through any of the above. However, there is no assurance that we will be successful in raising such capital or, in the event of a capital raising, that such capital will be available on terms acceptable to us.
Our condensed interim unaudited financial statements as of September 30, 2020 submitted on Form 6-K have been prepared on a going concern basis, which contemplates that we will continue in operation for the foreseeable future and be able to realize our assets and discharge our liabilities and commitments in the normal course of business.
3