| (i) | the majority of the votes voted in favor includes at least a majority of all the votes of shareholders who are not controlling shareholders of the company and shareholders who do not have a personal interest in the compensation policy, present and voting on the matter(excluding abstentions); or | • | the total of opposing votes from among the shareholders who are not controllingnon-controlling shareholders of the company orand shareholders who do not have a personal interest in the compensation policy and participating in the vote; abstentions shall not be included in the total of the votes of the aforesaid shareholders; or |
| (ii) | the total of opposing votes from among the shareholders described in subsection (i) abovematter does not exceed 2% of all the voting rights in the company.
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For this purpose, under the Companies Law “personal interest” is defined as: (1) a shareholder’s personal interest in the approval of an act or a transaction of the company, including (i) the personal interest of his or her relative (which includes for these purposes any members of his/her (or his/her spouse’s) immediate family or the spouses of any such members of his or her (or his/her spouse’s) immediate family); and (ii) a personal interest of a body corporate in which a shareholder or any of his/her aforementioned relatives serves as a director or the chief executive officer, owns at least 5% of its issued share capital or its voting rights or has the right to appoint a director or chief executive officer, but (2) excluding a personal interest arising solely from the fact of holding shares in the company or in a body corporate.
Nonetheless, even if the shareholders of the company do not approve the compensation policy, the board of directors of a company may still approve the compensation policy, provided that the compensation committee and, thereafter, the board of directors resolved,determine, based on detailed, documented, reasons and after a second reviewfurther discussion of the compensation policy, that the approval of the compensation policy is forin the benefitbest interest of the company. In December 2013, a general meeting of our shareholders approved our first ExecutiveOur current Compensation Policy which had been recommended by our Compensation Committee andwas approved by our Board of Directors. Atat the annual general meeting of our shareholders held in 2022, our shareholders approved our current Compensation Policy.2022. Below is a summary discussion of the main provisions of theour Compensation Policy:
The Compensation Policy includes among(among other issues prescribed by the Companies Law,things) a framework for establishing the terms of office and employment of our office holders, a recoupment policy and guidelines with respect to the structure of the variable pay of our office holders. Compensation is considered performance-based to the extent that a direct link is maintained between compensation and performance and that rewards are consistent with long-term stakeholder value creation. At the company level, we analyze the overall compensation trends of the market in order to make informed decisions about our compensation approach. According to the Compensation Policy, the fixed components of our office holder compensation will be examined at least every two years and compared to the market. Our Boardboard of Directorsdirectors may change the amount of the fixed components for one or more of our office holdersexecutives after receiving a recommendation for such from our Compensation Committee, provided such change is within the limits determined by the Compensation Policy. The change may be made if our Boardboard of Directorsdirectors concludes that such a change would promote our goals, operating plans and objectives and after taking into account the business and legal implications of the proposed change and its impact on our internal labor relations. Any such changes are subject to formal approval by the relevant parties. Our BoardUnder Israeli law, our board of Directors willdirectors has the authority to approve a change in the incentive structure of all executive officers, including but not limited to the chief executive officer, up to an immaterial amount in any one year (immaterial being defined as a change of up to 5% of an officer’s total compensation).amount. The fixed component of compensation remunerates the specific role covered and scope of responsibilities. It alsoresponsibilities and reflects the experience and skills required for each position, as well as the level of excellence demonstrated and the overall quality of the office holder’s contribution to our business. The weighting of fixed compensation within the overall package is designed to reduce the risk of excessively risk-oriented behavior, to discourage initiatives focused on short-term results which might jeopardize our mid and long-term business sustainability and value creation, and to allow us a flexible compensation approach. We offer our employees benefit plans based on common practice in the local labor market of the office holder. As for the variableVariable components of compensation the types and amounts of such components will beare determined with an aim at creating maximum matchingalignment between the Compensation Policy and our operating plan and objectives. Variable components of compensation will beare primarily based on measurable long-term criteria. Nevertheless, we are allowed to basecriteria, except that a non-material partportion of variable compensation may be based on qualitative non-measurable criteria which focus on the office holder’s contribution to the Company. Our variable compensation aims to remunerate for achievements by directly linking pay to performance outcomes in the short and long term. To strengthen the alignment of shareholder interests and the interests of management and employees, performance measurements reflect our actual results overall, as well as that of the individual office holder. To support the aforementioned principles, we provide two types of variable compensation: short-term - annual bonus;bonuses; and long-term - stock option plans.
Annual bonuses will beare based on achievement of the business goals set out in our annual operating plan approved by the board of directors at the beginning of each year. The operating plan encompasses all aspects of our activities and as such sets the business targets for each member of the management team. Consequently, our Compensation Committee and Boardboard of Directorsdirectors should be able to judge the suitability of a bonus payment by deliberating retrospectively at year end and comparing actual performance and target achievements against the forecasted operating plan. The annual bonus mechanism will be directly tied to meeting objectives - both our business objectives and the office holder’s personal objectives. The Boardboard of Directors’directors’ satisfaction with the officer’s performance will also affect the bonus amount. Annual bonus payments are subject to the limitations set out in the Compensation Policy and also subject to the discretion of our Compensation Committee and approval by the Boardboard of Directors.directors. In order to maintain some measure of flexibility, after calculating the compensation amount, the Boardboard of Directorsdirectors may exercise discretion about the final amount of the bonus.bonus but may not increase the recommended bonus amount by more than 25%. Equity-based compensation may be granted in any form permitted under our share incentive plan in effect from time to time and shall be made in accordance with the terms of such share incentive plan. Equity-based compensation to office holders shall be granted from time to time and be individually determined and awarded according to the performance, educational background, prior business experience, qualifications, role and the personal responsibilities of each officer. The vesting period will generally be four years, with the vesting schedule to be determined in accordance with market compensation trends. Our policy is to grant equity-based compensation with exercise prices at market value. Furthermore, in order to create a ceiling for the variable compensation: (1) the aggregate value of annual grants to any one office holder (based on the Black Scholes calculation as of the date of grant) will be no more than the higher of 2% of our market capitalization at the end of the measurement period or $1.5 million; and (2) it is our intention that the maximum outstanding equity awards under its share incentive plan will not exceed 12% of our total fully-diluted share capital. Our Boardboard of Directorsdirectors may, following approval by our Compensation Committee, make provisions with respect to the acceleration of the vesting period of any office holder’s awards, including, without limitation, in connection with a corporate transaction involving a change of control.control (subject to any other approvals required by applicable law). We have also established a defined ratio between the variable and the fixed components of compensation, as well as a maximum amount for all variable components as of the date on which they are paid (or as of the grant date for non-cash variable equity components), and subject to the limitations on variable compensation components which are set out in the Compensation Policy. In all events, the weight of all the variable components (out of the total compensation amount which is to be granted for any yearyear) will not be greater than 80% for each office holder and may vary from one office holder to the other).other. InAccording to the Companies Law, our Compensation Policy provides that in the event of an accounting restatement, we shall be entitled to recover from office holders’ bonus compensation granted, earned or vested based on a pre-accounting restatement of our financial results in the amount of the excess over what would have been paid under the accounting restatement, with a three-year look-back period. However, the compensation recovery will not be triggered in the event of a financial restatement required due to changes in applicable financial reporting standards. In addition, in November 2023 we adopted an Executive Officer Clawback Policy in accordance with the rules of the SEC and Nasdaq.
All compensation arrangements of office holders are to be approved in the manner prescribed by applicable law. Our Compensation Committee will review the Compensation Policy on an annual basis, and monitor its implementation, and recommend to our Boardboard of Directorsdirectors and shareholders to amend the Compensation Policy as it deems necessary from time to time. The term of the Compensation Policy is three years from the date of its adoption, or July 2, 2022. Following such three-year term, the Compensation Policy, including any revisions recommended by our Compensation Committee and approved by our Board of Directors, as applicable, will be brought once again to the shareholders for approval. Nominating Committee
Our Board of Directors does not currently have a nominating committee, having availed BioLineRx of the exemption available to foreign private issuers under the Nasdaq Rules. See “Item 16G. Corporate Governance.”
Investment Monitoring Committee Our Boardboard of Directorsdirectors has established an Investment Monitoring Committee which currently consists of the following fourthree members: Directors Dr. Michael Anghel (Chairperson) and Mr. Rami Dar; a director, Ms. Mali Zeevi, our Chief Financial Officer; and Mr. Raziel Fried, our Treasurer and Budgetary Control Director. The functionrole of the Investment Monitoring Committee includes providing recommendations to our Boardboard of Directorsdirectors regarding investment guidelines and performing an on-going review of the fulfillment of established investment guidelines. The Investment Monitoring Committee convenes for a meetingmeetings in accordance with our needs, but in any event at least twice per year. Internal Auditor Under the Companies Law, the board of directors of an Israeli public company must appoint an internal auditor recommended by the audit committee and nominated by the board of directors. An internal auditor may not be:
a person (or a relative of a person) who holds more than 5% of the company’s shares; a person (or a relative of a person) who has the power to appoint a director or the general manager of the company; an executive officer or director of the company;company (or a relative thereof); or a member of the company’s independent accounting firm.
The role of the internal auditor is to examine, among other things, our compliance with applicable law and orderly business procedures. The audit committee is required to oversee the activities and to assess the performance of the internal auditor as well as to approve the internal auditor’s work plan. Our internal auditor is Tali Yaron Adv. (LLB, LLM), a director at Deloitte Israel. Approval of Related Party Transactions under Israeli Law Fiduciary duties of office holders The Companies Law imposes a duty of care and a duty of loyalty on all office holders of a company. The duty of care of an office holder is based on the duty of care set forth in connection with the tort of negligence under the Israeli Torts Ordinance (New Version) 5728-1968. This duty of care requires an office holder to act with the degree of proficiencycare with which a reasonable office holder in the same position would have acted under the same circumstances.
The duty of care includes a duty to use reasonable means, in light of the circumstances, to obtain:
information on the advisability of a given action brought for his or her approval or performed by virtue of his or her position; and all other important information pertaining to these actions.
The duty of loyalty requires an office holder to act in good faith and for the benefit of the company, and includes the duty to:
refrain from any act involving a conflict of interest between the performance of his or her duties in the company and his or her other duties or personal affairs;
refrain from any activity that is competitive with the business of the company; refrain from exploiting any business opportunity of the company for the purpose of gaining a personal advantage for himself or herself or others; and disclose to the company any information or documents relating to the company’s affairs which the office holder received as a result of his or her position as an office holder.
We may approve an act performed in breach of the duty of loyalty of an office holder provided that the office holder acted in good faith, the act or its approval does not harm the company, and the office holder discloses his or her personal interest, as described below. Disclosure of personal interests of an office holder and approval of acts and transactions The Companies Law requires that an office holder promptly disclose to the company any personal interest that he or she may have and all related material information or documents relating to any existing or proposed transaction by the company. An interested office holder’s disclosure must be made promptlycompany, and in any event no later than the first meeting of the board of directors at which the transaction is considered. An office holder is not, however, obliged to disclose sucha personal interest and related information if the personal interest of the office holder derives solely from the personal interest of his or her relative in a transaction that is not considered as an extraordinary transaction.transaction (as defined in the Companies Law). The term personal interest is defined under the Companies Law to include the personal interest of a person in an action or in the businesstransaction of a company, including the personal interest of such person’s relative or the interest of any corporationentity in which the person or any of his/her relatives serves as a director or the chief executive officer, owns at least 5% of its issued share capital or its voting rights or has the right to appoint a director or the chief executive officer, but excluding a personal interest stemming solely from the factownership of holding shares in such corporation.entity. A personal interest furthermore includes the personal interest of a person for whom the office holder holds a voting proxy orand the personal interest of the office holder with respect to his or her vote on behalf of the shareholder for whom he or she holdsvoting as a proxy, even if suchthe shareholder itselfgranting the proxy has no personal interest in the approval of the matter. An office holder is not, however, obliged to disclose a personal interest if it derives solely from the personal interest of his or her relative in a transaction that is not considered an extraordinary transaction.
Under the Companies Law, an extraordinary transaction which requires approval is defined as any of the following: a transaction other than in the ordinary course of business; a transaction that is not on market terms; or a transaction that may have a material impact on the company’s profitability, assets or liabilities.
Under the Companies Law, once an office holder has complied with the disclosure requirement described above, a company may approve a transaction between the company and the office holder or a third party in which the office holder has a personal interest, or approve an action by the office holder that would otherwise be deemed a breach of duty of loyalty. However, a company may not approve a transaction or action that is adverse to the company’s interest or that is not performed by the office holder in good faith. Under the Companies Law, unless the articles of association of a company provide otherwise, a transaction with an office holder a transactionor with a third party in which the office holder has a personal interest that is not an extraordinary transaction and an action of an office holder that would otherwise be deemed a breach of duty of loyalty that may have a material impact on a company’s profitability, assets or liabilities requires approval by the board of directors. Our Articles of Association do not provide otherwise. If the transaction or action considered is (i) an extraordinary transaction or (ii) an action of an office holder that would otherwise be deemed a breach of duty of loyalty and may have a material impact on a company’s profitability, assets or liabilities, then audit committee approval is required prior to approval by the board of directors. Under the Companies Law, a transaction with an office holder in a public company regarding his or her terms of office and employment should be determined in accordance with the company’s compensation policy. Nonetheless, provisions were established that allow a company may, under special circumstances, to approve the terms of office and employment that are not in lineconsistent with the approved compensation policy. The following are required for the approval of the terms of office or employment of the officers of a public company:
A transaction with an office holder in a public company that is neither a director nor the chief executive officer regarding his or her terms of office and employment requires approval by the (i) compensation committee; and (ii) the board of directors. Approval of terms of office and employment for such officers which do not comply with the compensation policy may nonetheless be approved subject to two cumulative conditions: (i) the compensation committee and thereafter the board of directors, approved the terms after having taken into account the various considerations and mandatory requirements set forth in the Companies Law with respect to office holder compensation, and (ii) the shareholders of the company have approved the terms by means of the following special majority requirements, or the Special Majority Requirements, as set forth in the Companies Law, pursuant to which the shareholder approval must either include at least one-half of the shares held by non-controlling and disinterested shareholders who actively participate in the voting process (without taking abstaining votes into account) | • | Executive officers other than the Chief Executive Officer. A transaction with an office holder in a public company who is neither a director nor the chief executive officer regarding his or her terms of office and employment requires approval by the (i) compensation committee; and (ii) the board of directors. Approval of terms of office and employment for such officers which do not comply with the compensation policy may nonetheless be approved subject to two cumulative conditions: (i) the compensation committee and thereafter the board of directors, approved the terms after having taken into account the various considerations and mandatory requirements set forth in the Companies Law with respect a compensation policy, and (ii) the shareholders of the company have approved the terms by means of the following special majority requirements, or the Special Majority Requirements, as set forth in the Companies Law, pursuant to which the shareholder approval must either include at least a majority of the shares held by non-controlling shareholders and disinterested shareholders who are present and vote on the matter (excluding abstentions), or, alternatively, the total shareholdings of the non-controlling shareholders and disinterested shareholders who vote against the transaction must not represent more than 2% of the voting rights in the company. However, the transaction may still be approved despite shareholder rejection, provided that a company’s compensation committee and board of directors, may, in special circumstances approve a transaction despite shareholder rejection, provided that the compensation committee and thereafter the board of directors have determined to approve the proposal, based on detailed reasoning, after having re-examined the terms of office and employment, and taken the shareholder rejection into consideration. A transaction with the chief executive officer in a public company regarding his or her terms of office and employment requires approval by the (i) compensation committee; (ii) the board of directors; and (iii) the shareholders of the company by the Special Majority Requirements. Approval of terms of office and employment for the chief executive officer which do not comply with the compensation policy may nonetheless be approved subject to two cumulative conditions: (i) the compensation committee and thereafter the board of directors, approved the terms after having taken into account the various considerations and mandatory requirements set forth in the Companies Law with respect to office holder compensation and (ii) the shareholders of the company have approved the terms by means of the Special Majority Requirements, as detailed above. However, a transaction with a chief executive officer that is not approved by shareholders may still be approved despite shareholder rejection, provided that a company’s compensation committee and thereafter the board of directors have determined to approve the proposal, based on detailed reasoning, after having re-examined the terms of office and employment, and taken the shareholder rejection into consideration. In addition, the compensation committee may exempt the transaction from shareholder approval of terms of office and employment with a candidate for the office of chief executive officer where such officer has no relationship with the controlling shareholder or the company, if it has found, based on detailed reasons, that bringing the transaction to the approval of the shareholders meeting shall prevent the employment of such candidate by the company. Such approval may be given only in respect of terms of office and employment which are in accordance with the company’s compensation policy.
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| In July 2022, our shareholders voted against a proposal to grant Mr. Philip Serlin, our Chief Executive Officer, equity compensation that had been determined by our Board of Directors to be reasonable and to comply with the requirements of our Compensation Policy. In August 2022, our Board of Directors, on recommendation of our Compensation Committee, determined to approve the proposal based on the criteria set forth above, i.e., the determination wastransaction based on detailed reasoning, after each having re-examined Mr. Serlin’sre- discussed the terms of office and employment, and taken the shareholder rejection into consideration.
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| • | Chief Executive Officer. A transaction with the chief executive officer in a public company regarding his or her terms of office and employment requires approval by the (i) compensation committee; (ii) the board of directors; and (iii) the shareholders of the company by the Special Majority Requirements. Approval of terms of office and employment for the chief executive officer which do not comply with the compensation policy may nonetheless be approved subject to two cumulative conditions: (i) the compensation committee and thereafter the board of directors, approved the terms after having taken into account the various considerations and mandatory requirements set forth in the Companies Law with respect to a compensation policy and (ii) the shareholders of the company have approved the terms by means of the Special Majority Requirements, as detailed above. However, a company’s compensation committee and board of directors, may, in special circumstances approve a transaction with a chief executive officer (who is not a director) that is not approved by shareholders despite shareholder rejection, provided that the company’s compensation committee and thereafter the board of directors have determined to approve the transaction, based on detailed reasoning, after each having re-discussed the terms of office and employment, and taken the shareholder rejection into consideration. In addition, the compensation committee may exempt from shareholder approval the terms of office and employment of a candidate for the office of chief executive officer where such officer has no relationship with the controlling shareholder or the company, if it has found, based on detailed reasons, that bringing the transaction to the approval of the shareholders meeting shall prevent the employment of such candidate by the shareholders. company. provided that the terms of office and employment are in accordance with the company’s compensation policy. |
A transaction with a director who is not the chief executive officer of a public company regarding his or her terms of office and engagement requires approval by the (i) compensation committee; (ii) the board of directors; and (iii) the shareholders of the company. Approval of terms of office and employment for directors of a company which do not comply with the compensation policy may nonetheless be approved subject to two cumulative conditions: (i) the compensation committee and thereafter the board of directors, approved the terms after having taken into account the various considerations and mandatory requirements set forth in the Companies Law with respect to office holder compensation and (ii) the shareholders of the company have approved the terms by means of the Special Majority Requirements, as detailed above. In addition, pursuant to a relief provided under the Companies Regulations (Relief in Interested Party Transactions), 2000, the compensation committee may exempt the transaction from shareholder approval of the terms of office and engagement with a non-executive director, if the compensation committee and board of directors determined that such terms of office are only for the benefit of the company, or if the compensation terms of the director do not exceed the maximum compensation paid to external directors pursuant to the applicable regulations.71
| • | Directors. A transaction with a director who is not the chief executive officer of a public company regarding his or her terms of office and engagement requires approval by the (i) compensation committee; (ii) the board of directors; and (iii) the shareholders of the company. Approval of terms of office and employment for directors of a company which do not comply with the compensation policy may nonetheless be approved subject to two cumulative conditions: (i) the compensation committee and thereafter the board of directors, approved the terms after having taken into account the various considerations and mandatory requirements set forth in the Companies Law with respect to a compensation policy and (ii) the shareholders of the company have approved the terms by means of the Special Majority Requirements, as detailed above. In addition, pursuant to a relief provided under the Israeli Companies Regulations (Relief in Interested Party Transactions), 2000, the terms of office and engagement of a non-executive director are exempt from shareholder approval if the compensation committee and board of directors determined that (i) such terms of office are only for the benefit of the company, or (ii) the compensation terms of the director do not exceed the maximum compensation paid to external directors pursuant to the applicable regulations. |
A director who has a personal interest in a matter that is considered at a meeting of the board of directors or the audit committee may generally not be present at the meeting or vote on the matter unless a majority of the directors or members of the audit committee have a personal interest in the matter, or, unless the chairman of the audit committee or board of directors (as applicable) determines that he or she should be present to present the transaction that is subject to approval. If a majority of the directors have a personal interest in the matter, such matter also requires approval of the shareholders of the company by the Special Majority Requirements. With respect to compensation of an officer (including chief executive officer) or director who is also a controlling shareholder, see “— Disclosure of personal interests of a controlling shareholder and approval of transactions.” Disclosure of personal interests of a controlling shareholder and approval of transactions Under the Companies Law, the disclosure requirements that apply to an office holder also apply to a controlling shareholder of a public company. See “— Audit Committee” for the general definition of “controlling shareholder” under the Companies Law. In connection with matters governing: (i) extraordinary transactions with a controlling shareholder or in which a controlling shareholder has a personal interest, (ii) certain private placements in which the controlling shareholder has a personal interest, (iii) certain transactions with a controlling shareholder or relative thereof with respect to services provided to or employment by the company, (iv) the terms of employment and compensation of the general manager, and (v) the terms of employment and compensation of office holders of the company when such terms deviate from the compensation policy previously approved by the company’s shareholders, the definition of “controlling shareholder” also includes shareholders that hold 25% or more of the voting rights if no other shareholder owns more than 50% of the voting rights in the company (and the holdings of two or more shareholders which each have a personal interest in such matter will be aggregated for the purposes of determining such threshold). Under the Companies Law, extraordinary transactions with a controlling shareholder or in which a controlling shareholder has a personal interest, including a private placement in which a controlling shareholder has a personal interest, as well as transactions for the provision of services, whether directly or indirectly, by a controlling shareholder or his or her relative, or a company such controlling shareholder controls, require the approval of the audit committee, the board of directors and the shareholders, in that order. Transactions concerning the terms of engagement of a controlling shareholder or a controlling shareholder’s relative, whether as an office holder or an employee, require the approval of the compensation committee, the board of directors and the shareholders, in that order. In addition, theThe shareholder approval of such extraordinary transactions by the shareholders require at least a majority of the shares voted by the shareholders of the company participating and voting in a shareholders’ meeting, provided thatmust meet one of the following requirements is fulfilled:requirements: at least a majority of the shares held by shareholders who have no personal interest in the transaction who are present and are voting at the meeting must be voted in favor of approving the transaction, excluding abstentions; or the shares voted by shareholders who have no personal interest in the transaction who are present and vote against the transaction represent no more than 2% of the voting rights in the company.
If such transaction concerns the terms of office and employment of such controlling shareholder, in his capacity as an office holder or an employee of the company, such terms of office and employment approved by the compensation committee and board of directors shall be in accordance with the compensation policy of the company. Nonetheless, the compensation committee and the board of directors may, in special circumstances, approve terms of office and compensation of a controlling shareholder whichthat do not comply with the company’s compensation policy, provided that the compensation committee and, thereafter, the board of directors approve such terms, based on, among other things, the considerations and mandatory requirements with respect to a compensation policy set forth in the Companies Law. Following such approval by the compensation committee and board of directors, shareholder approval would be required.required by the special majority described above. To the extent that any such transaction with a controlling shareholder is for a period extending beyond three years, approval, in the same manner described above, is required once every three years, unless, with respect to extraordinary transactions with a controlling shareholder or in which a controlling shareholder has a personal interest, the audit committee determines that the duration of the transaction is reasonable given the related circumstances related thereto.related. Approval of Significant Private Placements
Under the Companies Law, a significant private placement of securities requires approval by the board of directors and the shareholders by a simple majority. A private placement is considered a significant private placement if it will cause a person to become a controlling shareholder (within the meaning of the Companies Law) or if all of the following conditions are met: (i) the securities issued amount to 20% or more of the company’s outstanding voting rights before the issuance; (ii) some or all of the consideration is other than cash or listed securities or the transaction is not on market terms; and (iii) the transaction will increase the relative holdings of a shareholder who holds 5% or more of the company’s outstanding share capital or voting rights or that will cause any person to become, as a result of the issuance, a holder of more than 5% of the company’s outstanding share capital or voting rights. However, pursuant to the Relief Regulations, the foregoing shareholder approval requirements shall not apply to a company whose shares are listed on a foreign exchange referenced in the second or third addendum to the Israeli Securities Law, 5728-1968, or the Israeli Securities Law, (which include, among others, the NASDAQ Capital Market), if the law of the foreign jurisdiction sets forth requirements regarding the approval of private placements and the company complies with such requirements as they apply to companies incorporated in such foreign jurisdiction. Duties of shareholders Under the Companies Law, a shareholder has a duty to refrain from abusing its power in the company and to act in good faith and in an acceptable manner in exercising its rights and performing its obligations to the company and other shareholders, and must refrain from abusing its power in the company, including, among other things, voting at general meetings of shareholders on the following matters: an amendment to the articles of association; an increase in the company’s authorized share capital; the approval of related party transactions and acts of office holders that require shareholder approval. approval under the Companies Law.
A shareholder also has a general duty to refrain from discriminating against other shareholders. The remedies generally available upon a breach of contract will also apply to a breach of the above-mentioned duties, and in the event of discrimination against other shareholders, additional remedies are available to the injured shareholder. In addition, anya controlling shareholder, any shareholder that knows that its vote can determine the outcome of a shareholder vote and any shareholder that, under a company’s articles of association, has the power to appoint or prevent the appointment of an office holder, or has another power with respect to a company, is under a duty to act with fairness towards the company. The Companies Law does not describe the substance of this duty of fairness except to state that the remedies generally available upon a breach of contract will also apply in the event of a breach of the duty to act with fairness, taking the shareholder’s position in the company into account.
Exculpation, insurance and indemnification of office holders Under the Companies Law, a company may not exculpate an office holder from liability for a breach of the duty of loyalty. An Israeli company may exculpate an office holder in advance from liability to the company, in whole or in part, for damages caused to the company as a result of a breach of duty of care, but only if a provision authorizing such exculpation is included in its articles of association. Our Articles of Association include such a provision. An Israeli company may not exculpate a director from liability arising out of a prohibited dividend or distribution to shareholders.
An Israeli company may indemnify an office holder in respect of the following liabilities and expenses incurred for acts performed as an office holder, either pursuant to an undertaking given by the company in advance of an event or following an event, provided a provision authorizing such indemnification is contained in its articles of association:
financialmonetary liability imposed on him or her in favor of another person pursuant to a judgment, including a settlement or arbitrator’s award approved by a court. However, if an undertaking to indemnify an office holder with respect to such liability is provided in advance, then such an undertaking must be limited to events which, in the opinion of the board of directors, can be foreseen based on the company’s activities when the undertaking to indemnify is given, and to an amount or according to criteria determined by the board of directors as reasonable under the circumstances, and such undertaking shall detail the abovementioned foreseen events and amount or criteria;
reasonable litigation expenses, including attorneys’ fees, incurred by the office holder (i) as a result of an investigation or proceeding instituted against him or her by an authority authorized to conduct such investigation or proceeding, provided that (1) no indictment was filed against such office holder as a result of such investigation or proceeding; and (2) no financial liability such as a criminal penalty, was imposed upon him or her as a substitute for the criminal proceeding as a result of such investigation or proceeding or, if such financial liability (such as a criminal penalty) was imposed, it was imposed with respect to an offense that does not require proof of criminal intent; intent and (ii) in connection with a monetary sanction; a monetary liability imposed on an office holder in favor of an injured party at an Administrative Procedure (as defined below) pursuant to Section 52(54)(a)(1)(a) of the Israeli Securities Law; expenses incurred by an office holder or certain compensation payments made to an injured party that were instituted against an office holder in connection with an Administrative Procedure under the Israeli Securities Law, including reasonable litigation expenses and reasonable attorneys’ fees; and reasonable litigation expenses, including attorneys’ fees, incurred by the office holder or imposed by a court in proceedings instituted against him or her by the company, on its behalf or by a third party or in connection with criminal proceedings in which the office holder was acquitted or as a result of a conviction for an offense that does not require proof of criminal intent.
An “Administrative Procedure” is defined as a procedure pursuant to chapters H3 (Monetary Sanction by the Israeli Securities Authority), H4 (Administrative Enforcement Procedures of the Administrative Enforcement Committee) or I1 (Arrangement to prevent Procedures or Interruption of procedures subject to conditions) to the Israeli Securities Law, which may result in sanctions, including monetary sanctions and certain restrictions on serving as a director or senior officer of a public company for certain periods of time.time.
An Israeli company may insure an office holder against the following liabilities incurred for acts performed as an office holder if and to the extent provided in the company’s articles of association: a breach of duty of loyalty to the company, provided that the office holder acted in good faith and had a reasonable basis to believe that the act would not prejudice the company; a breach of duty of care to the company or to a third party, including a breach arising out of the negligent (but not intentional or reckless) conduct of the office holder; a financial liability imposed on the office holder in favor of a third party; a monetary liability imposed on the office holder in favor of an injured party in an Administrative Procedure pursuant to Section 52(54)(a)(1)(a) of the Israeli Securities Law; and expenses, including reasonable litigation expenses and reasonable attorneys’ fees, incurred by an office holder in connection with an Administrative Procedure instituted against him or her pursuant to certain provisions of the Israeli Securities Law. An Israeli company may not indemnify, exculpate or insure an office holder against any of the following, and any provision in a company’s articles of association which allows for any of the following is invalid: a breach of duty of loyalty, except for indemnification and insurance for a breach of the duty of loyalty to the company to the extent that the office holder acted in good faith and had a reasonable basis to believe that the act would not prejudice the company; a breach of duty of care to the company or to a third party, including a breach arising out of the negligent (but not grossly negligent) conduct of the office holder;
a financial liability imposed on the office holder in favor of a third party;
a monetary liability imposed on the office holder in favor of an injured party at an Administrative Procedure pursuant to Section 52(54)(a)(1)(a) of the Securities Law; and
| • | expenses incurred by an office holder in connection with an Administrative Procedure instituted against him or her, including reasonable litigation expenses and reasonable attorneys’ fees.
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An Israeli company may not indemnify or insure an office holder against any of the following, and any provision in a company’s articles of association which allows for any of the following is invalid:
a breach of duty of loyalty, except to the extent that the office holder acted in good faith and had a reasonable basis to believe that the act would not prejudice the company;
a breach of duty of care committed intentionally or recklessly, excluding a breach arising out of the negligent conduct of the office holder; an act or omission committed with intent to derive illegal personal benefit; or a fine, monetary sanction or forfeit levied against the office holder.
Under the Companies Law and the regulations promulgated thereunder, exculpation, indemnification and insurance of office holders must be approved by the compensation committee and the board of directors and, mustwith respect to the chief executive officer and a director, also by the shareholders. See “— Approval of Related Party Transactions under Israeli Law.” However, under regulations promulgated under the Companies Law, the insurance of office holders shall not require shareholder approval and may be providedapproved by only the compensation committee, if the engagement terms are determined in accordance with the Company’s Compensation Policy duly adoptedcompany’s compensation policy, that compensation policy was approved by the shareholders.shareholders by the same special majority required to approve a compensation policy, and provided that the insurance policy is on market terms and the insurance policy is not likely to materially impact the company’s profitability, assets or obligations. Our Articles of Association allowpermit us to exculpate, indemnify and insure our office holders for any liability imposed on them as a consequence of an act (including any omission) which was performed by virtue of being an office holder. In November 2011, our shareholders approved (i) the amendment of our Articles of Association to authorize indemnification and insurance in connection with administrative enforcement proceedings, including without limitation, the specific amendments to the Israeli Securities Law and the Companies Law described above and (ii) a new formfullest extent permitted by law. We have entered into agreements with each of indemnification letter for our directors and executive officers soexculpating them, to the fullest extent permitted by law, from liability to us for damages caused to us as a result of a breach of duty of care, and undertaking to reflectindemnify them to the amendmentfullest extent permitted by law. The indemnification for a monetary liability imposed in favor of another person pursuant to a judgment, including a settlement or arbitrator’s award approved by a court, is limited to events determined as foreseeable by the board of directors based on our Articlesactivities, and to an amount determined by the board of Association,directors as reasonable under the circumstances. The maximum indemnification amount for all office holders, cumulatively, for one or more of such events, shall be equal to the higher of (i) 25% of our total shareholders’ equity as reflected in our audited annual financial statements for the year preceding the year in which new form of letter was also approved in October 2011 by our Audit Committeethe event for which the indemnity is sought occurred, and Board of Directors, and in November 2011 by our shareholders.(ii) $5 million. The terms of such agreements are consistent with the provisions of theour Compensation Policy whichthat was approved by our shareholders in July 2022. However, in the opinion of the SEC, indemnification of office holders for liabilities arising under the Securities Act is against public policy and therefore unenforceable. Our office holders are currently covered by a directors’ and officers’ liability insurance policy. The terms of such directors’ and officers’ insurance are consistent with the provisions of theour current Compensation Policy whichthat was approved by our shareholders in July 2022. The Compensation Policy authorizes us to purchase insurance policies (including run-off policies) to cover the liability of directors and office holders that are in office at such time and that shall be in office from time to time, including directors and office holders that may have a controlling interest in the Company. Such insurance policies are authorized within the following limits: the Compensation Committee has determined that the premium for each policy, the maximum deductible and the terms of the policy are consistent with market conditions and not materially affect our profits, property or liabilities. In addition, the Compensation Committee is authorized to increase the coverage purchased and/or the premium paid for such policies by up to 20% in any year, as compared to the previous year, or cumulatively for a number of years, without an additional shareholders’ approval to the extent permitted under the Companies Law. See also “Related Party Transactions — Indemnification Agreements.” As of the date of this Annual Report on Form 20-F, except as disclosed in Item 8.A below, no claims have been filed under our directors’ and officers’ liability insurance policy, there is no pending litigation or proceeding against any of our directors or officers as to which indemnification is being sought, nor are we aware of any pending or threatened litigation that may result in claims for indemnification by any director or officer. For significant ways in which our corporate governance practices differ from those required by the Nasdaq Rules, see “Item 16G. Corporate Governance.”75
D. Employees As of December 31, 2022,2023, we had 4979 employees, 4243 of whom are employed in Israel and 736 of whom in the US.U.S. Of our employees, 1715 hold M.D. or Ph.D. degrees. | | December 31, | | | December 31, | | | | 2020 | | | 2021 | | | 2022 | | | 2021 | | | 2022 | | | 2023 | | | | | | | | | | | | | | | | | | | | | Management and administration | | 9 | | | 9 | | | 12 | | | 9 | | | 12 | | | 12 | | Research and development | | 27 | | | 27 | | | 29 | | | 27 | | | 29 | | | 29 | | Sales and marketing | | | 2 | | | | 2 | | | | 8 | | | Commercialization and business development | | | | 2 | | | | 8 | | | | 38 | | Total | | 38 | | | 38 | | | 49 | | | 38 | | | 49 | | | 79 | |
While none of our employees are party to any collective bargaining agreements, in Israel we are subject to certain labor statutes and national labor court precedent rulings, as well as to certain provisions of the collective bargaining agreements between the Histadrut (General Federation of Labor in Israel) and the Coordination Bureau of Economic Organizations (includingand/or the Industrialists’ Associations)Association which are applicable to our employees by virtue of expansion orders issued in accordance with relevant labor laws by the Israel Ministry of Labor and Welfare, and which apply such agreement provisions to our employees even though they are not directly part of a union that has signed a collective bargaining agreement. The laws and labor court rulings that apply to our employees principally concern the minimum wage laws, procedures for dismissing employees, determination of severance pay, leaves of absence, (such as annual vacation or maternity leave), sick pay and other conditions for employment. The expansion orders which apply to our employees principally concern the requirement for length of the workday and work week, mandatory contributions to a pension fund, annual recreation allowance, travel expenses payment and other conditions of employment. We generally provide our employees with benefits and working conditions beyond the required minimums.
We have never experienced any employment-related work stoppages and believe our relationship with our employees is good. E. Share Ownership The following table sets forth information regarding the beneficial ownership of our outstanding ordinary shares as of March 21, 202315, 2024 of each of our current directors and executive officers individually and as a group. The percentages shown are based on 1,086,589,165 ordinary shares issued and outstanding as of March 15, 2024. Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting power or investment power with respect to securities. All ordinary shares subject to options currently exercisable or exercisable into ordinary shares within 60 days of March 15, 2024, and underlying performance stock units (“PSUs”) that shall vest within 60 days of March 15, 2024, are deemed to be outstanding and beneficially owned by the shareholder holding such options or PSUs for the purpose of computing the number of shares beneficially owned by such shareholder. Such shares are also deemed outstanding for purposes of computing the percentage ownership of the person holding the option or PSU. They are not, however, deemed to be outstanding and beneficially owned for the purpose of computing the percentage ownership of any other shareholder. | | Number of | | | | | | | Ordinary Shares | | | | | | | Beneficially | | | Percent of | | | | Held | | | Class | | | | | | | | | Directors | | | | | | | | | | | | | | Aharon Schwartz(1) | | | 4,425,000 | | | | * | | Michael J. Anghel(2) | | | 720,000 | | | | * | | B.J. Bormann(3) | | | 720,000 | | | | * | | Rami Dar(4) | | | 270,000 | | | | | | Raphael Hofstein(5) | | | 720,000 | | | | * | | Avraham Molcho(6) | | | 720,000 | | | | * | | Sandra Panem(7) | | | 720,000 | | | | * | | | | | | | | | | | Executive officers | | | | | | | | | | | | | | | | | | Philip A. Serlin(8) | | | 7,960,321 | | | | * | | Mali Zeevi(9) | | | 2,421,471 | | | | * | | Ella Sorani(10) | | | 2,171,580 | | | | * | | Tami Rachmilewitz, M.D.(11) | | | - | | | | * | | Holly May (12) | | | - | | | | * | | | | | | | | | | | All directors and executive officers as a group (12 persons)(13) | | | 20,848,372 | | | | 1.6 | % |
| | Number of | | | | | | | Ordinary Shares | | | | | | | Beneficially | | | Percent of | | | | Held | | | Class | | | | | | | | | Directors | | | | | | | | | | | | | | Aharon Schwartz(1) | | | 4,784,970 | | | | * | | B.J. Bormann(2) | | | 1,079,970 | | | | * | | Rami Dar(3) | | | 630,000 | | | | * | | Raphael Hofstein(4) | | | 1,079,970 | | | | * | | Avraham Molcho(5) | | | 1,079,970 | | | | * | | Sandra Panem(6) | | | 1,079,970 | | | | * | | Shaoyu Yan | | | - | | | | | | Gal Cohen | | | - | | | | | | | | | | | | | | | Executive officers | | | | | | | | | | | | | | | | | | Philip A. Serlin(7) | | | 12,120,645 | | | | 1.1 | % | Mali Zeevi(8) | | | 3,348,030 | | | | * | | Ella Sorani(9) | | | 3,195,930 | | | | * | | Holly May (10) | | | 3,567,645 | | | | * | | | | | | | | | | | All directors and executive officers as a group (12 persons)(11) | | | 31,967,100 | | | | 2.9
| % |
* Less than 1.0%.
(1) | Includes 4,425,000 ordinary shares3,705,000 Ordinary Shares and 1,079,970 Ordinary Shares issuable upon exercise of outstanding options currently exercisable or exercisable within 60 days of March 21, 2023.15, 2024. Does not include 810,000 ordinary sharesOrdinary Shares issuable upon exercise of outstanding options that are not exercisable within 60 days of March 21, 2023.15, 2024. |
(2) | Includes 720,000 ordinary shares1,079,970 Ordinary Shares issuable upon exercise of outstanding options currently exercisable or exercisable within 60 days of March 21, 2023.15, 2024. Does not include 810,000 ordinary sharesOrdinary Shares issuable upon exercise of outstanding options that are not exercisable within 60 days of March 21, 2023.15, 2024. |
(3) | Includes 720,000 ordinary shares630,000 Ordinary Shares issuable upon exercise of outstanding options currently exercisable or exercisable within 60 days of March 21, 2023.15, 2024. Does not include 810,000 ordinary sharesOrdinary Shares issuable upon exercise of outstanding options that are not exercisable within 60 days of March 21, 2023.15, 2024. |
(4) | Includes 270,000 ordinary shares1,079,970 Ordinary Shares issuable upon exercise of outstanding options currently exercisable or exercisable within 60 days of March 21, 2023.15, 2024. Does not include 810,000 ordinary sharesOrdinary Shares issuable upon exercise of outstanding options that are not exercisable within 60 days of March 21, 2023.15, 2024. |
(5) | Includes 720,000 ordinary shares1,079,970 Ordinary Shares issuable upon exercise of outstanding options currently exercisable or exercisable within 60 days of March 21, 2023.15, 2024. Does not include 810,000 ordinary sharesOrdinary Shares issuable upon exercise of outstanding options that are not exercisable within 60 days of March 21, 2023.15, 2024. |
(6) | Includes 720,000 ordinary shares1,079,970 Ordinary Shares issuable upon exercise of outstanding options currently exercisable or exercisable within 60 days of March 21, 2023.15, 2024. Does not include 810,000 ordinary sharesOrdinary Shares issuable upon exercise of outstanding options that are not exercisable within 60 days of March 21, 2023.15, 2024. |
(7) | Includes 720,000 ordinary shares171,900 Ordinary Shares and 11,948,745 Ordinary Shares issuable upon exercise of outstanding options and PSUs currently exercisable or exercisable within 60 days of March 21, 2023.15, 2024. Does not include 810,000 ordinary shares11,996,775 Ordinary Shares issuable upon exercise of outstanding options and PSUs that are not exercisable within 60 days of March 21, 2023.15, 2024. |
(8) | Includes 7,960,321 issued ordinary shares328,665 Ordinary Shares and 3,019,365 Ordinary Shares issuable upon exercise of outstanding options and PSUs currently exercisable or exercisable within 60 days of March 21, 2023.15, 2024. Does not include 8,517,853 ordinary shares2,862,840 Ordinary Shares issuable upon exercise of outstanding equity instrumentsoptions and PSUs that are not exercisable within 60 days of March 21, 2023.15, 2024. |
(9) | Includes 2,421,471 ordinary shares66,150 Ordinary Shares and 3,129,780 Ordinary Shares issuable upon exercise of outstanding options and PSUs currently exercisable or exercisable within 60 days of March 21, 2023.15, 2024. Does not include 1,942,713 ordinary shares2,862,840 Ordinary Shares issuable upon exercise of outstanding equity instrumentsoptions and PSUs that are not exercisable within 60 days of March 21, 2023.15, 2024. |
(10) | Includes 2,171,580 ordinary shares3,567,645 Ordinary Shares issuable upon exercise of outstanding options and PSUs currently exercisable or exercisable within 60 days of March 21, 2023.15, 2024. Does not include 2,018,479 ordinary shares7,052,865 Ordinary Shares issuable upon exercise of outstanding equity instrumentsoptions and PSUs that are not exercisable within 60 days of March 21, 2023.15, 2024. |
(11) | See footnotes (1)-(10) for certain information regarding beneficial ownership. |
(11) | Does not include 1,740,000 ordinary shares issuable upon exercise of outstanding equity instruments that are not exercisable within 60 days of March 21, 2023. |
(12) | Does not include 8,566,005 ordinary shares issuable upon exercise of outstanding equity instruments that are not exercisable within 60 days of March 21, 2023. | | | (13) | Includes 20,848,372 ordinary shares issuable upon exercise of outstanding options within 60 days of March 21, 2023. Does not include 28,455,050 ordinary shares issuable upon exercise of outstanding equity instruments that are not exercisable within 60 days of March 21, 2023. |
Change in Control
To our knowledge, (i) we are not directly or indirectly owned or controlled by another corporation, by any foreign government or by any other natural or legal person severally or jointly, except as disclosed in the above table regarding our major shareholders, and (ii) there are no arrangements which would result in our change in control at a subsequent date.
Significant Changes in the Ownership of Major Shareholders
To our knowledge, other than as disclosed in the table above, our other filings with the SEC and this Annual Report, there has been no significant change in the percentage ownership held by any major shareholder since January 1, 2019.
Major Shareholders Voting Rights
Our major shareholders do not have different voting rights.
Record Holders
Bank of New York Mellon, or BNY, is the holder of record for the Company’s American Depositary Receipt program, pursuant to which each ADS represents 15 ordinary shares. As of December 31, 2022, BNY held 815,854,571 ordinary shares representing 88.4% of our issued share capital held at that date. Certain of these ordinary shares were held by brokers or other nominees. As a result, the number of holders of record or registered holders in the United States is not representative of the number of beneficial holders or of the residence of beneficial holders.
Equity Compensation Plan 2003 Amended and Restated Share Incentive Plan In 2003, we adopted the BioLineRx Ltd. 2003 Share Incentive Plan, or the Plan. In August 2013, our board of directors approved certain amendments to the Plan and extended the term of the Plan until November 2023, and the Plan was renamed as the BioLineRx Ltd. 2003 Amended and Restated Share Incentive Plan. In January 2016, our board of directors approved amendments to the Plan in order to permit the granting of restricted share units, or RSUs, and PSUs to eligible grantees. In November 2023, our board of directors approved the extension of the term of the Plan for an additional six-month period, until May 2024. References below to the “Plan” refer to the Plan as amended in August 2013, January 2016 and November 2023. The Plan provides for the granting of options, ordinary shares, restricted stock unitsRSUs and performance stock unitsPSUs to our directors, employees, consultants and service providers, and to the directors, employees, consultants and service providers of our subsidiaries and affiliates. The Plan provides for equity grants to be made at the determination of our Boardboard of Directorsdirectors in accordance with applicable law. As of March 15, 2022, there were 43.7 million2024, options to purchase 119,786,490 ordinary shares issuable upon the exercise ofand an aggregate 32,412,375 PSUs were outstanding equity grants under the Plan. In August 2013, our Board of Directors approved amendments to the Plan to take into account changes in laws and regulations that had occurred since its adoption and to extend the term of the plan until November 2023. In January 2016, our Board of Directors approved amendments to the Plan in order to permit the granting of restricted stock units, or RSUs, and performance stock units, or PSUs, to eligible grantees.
From time to time, our Boardboard of Directorsdirectors has approved an increase in the number of shares reserved for the purpose of equity grants pursuant to the Plan. As of March 21, 2023,15, 2024, 17.7 million ordinary shares were reserved for future issuance under the number of shares so reserved was 72.4 million.
Administration of Our PlanPlan.
OurThe Plan is administered by our Boardboard of Directorsdirectors for the purposes of making equity grants and approving the terms of those grants, including, inexercise price (in the case of options, exercise price, method of payment,options), vesting schedule, acceleration of vesting and the other matters necessary in the administration of these plans.the Plan. Equity grants made under the Plan to eligible employees and office holders who are Israeli residents are made under Section 102 of the IsraelIsraeli Income Tax Ordinance [New Version], 5721-1961, or the Income Tax Ordinance, pursuant to which the securities granted must be allocated or issued to a trustee and be held in trust for two years from the date upon which such grant was made, provided that securities granted prior to January 1, 2006, or the ordinary shares issued upon exercise of options, are subject to being held in trust for two years from the endgrant. Under Section 102 of the year in which the securities are granted. Under Section 102,Income Tax Ordinance, any tax payable by an employee from the grant of securities or the exercise of options or vesting of RSUs or PSUs is deferred until the transfer of the securities (or ordinary shares issued upon the exercise of options)options or the vesting of RSUs or PSUs) by the trustee to the employee or upon the sale of the securities or ordinary shares, as the case may be, and gains may qualify to be taxed as capital gains at a rate equal to 25%, subject to compliance with specified conditions.
Options and RSUs granted under the Plan generally vest over four years, and theyyears. Options generally expire 10 years from the grant date. If we terminate an employeeemployee’s employment or service for cause, all of the employee’sgrantee’s vested and unvested optionsequity awards expire immediately from the time of delivery of the notice of discharge, unless determined otherwise by the Audit Committeecompensation committee or the Boardboard of Directors.directors. Upon termination of employment or service for any other reason including due to death or disability of the employee,other than for cause, vested options may be exercised within three months of the termination date or if termination of employment or service is due to death or disability of the employee, but in no event after the expiration date of the awards, within 12 months following such death or disability, in each case unless otherwise determined by the Compensation Committeecompensation committee or the Boardboard of Directors.directors. Vested options which are not exercised and unvested options, RSUs or PSUs return to the pool of reserved ordinary shares under the Plan for reissuance.future grants. The right to receive ordinary shares pursuant to PSUs granted under the Plan will vest upon the achievement by BioLineRx of certain performance goals to be established by the Boardboard of Directors.directors. In the event of a merger, consolidation, reorganization or similar transaction or our voluntary liquidation or dissolution, all of our unexercised vested equity grants and any unvested equity grants will be automatically terminated. However, in the event of a change of control, or merger, consolidation, reorganization or similar transaction resulting in the acquisition of at least 50% of our voting power, or the sale or transfer of all or substantially all of our outstanding shares assets, the equity grants then outstanding may be assumed or substituted for an appropriate number of shares of each class of shares or other securities and/or assets of the successor company in such transaction (or a parent or subsidiary or another affiliate of such successor company) as were distributed to our shareholders in respect of the transaction. In addition to the foregoing, our Boardboard of Directorsdirectors has approved the inclusion in the option agreements of the Company’s officers of a provision for accelerated vesting of options if both a change of control of the Company occurs and, following such change of control, the officer’s employment is terminated or there is a significant demotion in the officer’s new job or position. To our knowledge the significant changes in the percentage of ownership held by our major shareholders reported in our Annual Reports on Form 20-F during the past three year have been the decrease in 2020 below 5% in the percentage ownership held by BVF Partners L.P. and Senvest Management, LLC.
F. Disclosure of a registrant’s action to recover erroneously awarded compensation.
Not applicable.
111
There was no erroneously awarded compensation that was required to be recovered pursuant to the BioLineRx Ld. Executive Officer Clawback Policy during the fiscal year ended December 31, 2023. ITEM 7.7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS A. Major Shareholders Except as setThe following table sets forth in “Item 6. Directors, Senior Management and Employees—E. Share Ownership,”information with respect to the bestbeneficial ownership of our knowledge, no othershares as of March 15, 2024, by each person who we knowor entity known by us to own beneficially owns 5.0% or more than 5% of the Company’sour ordinary shares. The percentages shown are based on 1,086,589,165 ordinary shares issued and outstanding as of March 21,15, 2024.
| | Number of Ordinary Shares Beneficially Held | | | Percent of Class | | Hong Seng Technology Limited(1) | | | 102,437,055 | | | | 9.4 | % |
(1) | Based on Schedule 13D filed with the SEC on October 26, 2023. According to the Schedule 13D, includes 6,829,137 ADS, representing 102,437,055 ordinary shares held by Hong Seng Technology Limited. Lepu (Hong Kong) Co., Limited holds 66.67% equity interest of Hong Seng Technology Limited. Lepu Holdings Limited holds 99.5% equity interest of Lepu (Hong Kong) Co., Limited. Lepu Medical (Europe) Cooperatief U.A. holds 100% equity interest of Lepu Holdings Limited. Lepu Medical Technology (Beijing) Co., Ltd. holds 99.95% equity interest of Lepu Medical (Europe) Cooperatief U.A. Lepu Medical Technology (Beijing) Co., Ltd. is a company publicly listed on Shenzhen Stock Exchange in the PRC (300003.SZ). |
To our knowledge, other than as disclosed in the table above, our other filings with the SEC and this Annual Report, there has been no significant change in the percentage ownership held by any major shareholder since January 1, 2021. None of our shareholders has different voting rights from other shareholders. We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our company.
Record Holders Bank of New York Mellon, or BNY, is the holder of record for the Company’s American Depositary Receipt program, pursuant to which each ADS represents 15 ordinary shares. As of March 15, 2024, BNY held 993,504,176 ordinary shares representing 91% of our issued share capital held at that date. Certain of these ordinary shares were held by brokers or other nominees. As a result, the number of holders of record or registered holders in the United States is not representative of the number of beneficial holders or of the residence of beneficial holders. B. Related Party Transactions Agreements with Directors and Officers Employment Agreements We have entered into employment agreements with each of our executive officers. See “Item 6. Directors, Senior Management and Employees — Compensation — Compensation of Directors and Senior Management.” Indemnification Agreements Our Articles of Association and Compensation Policy approved by our shareholders permit us to exculpate, indemnify and insure our directors and office holders to the fullest extent permitted by the Companies Law.law. We have entered into agreements with each of our office holders exculpating them, to the fullest extent permitted by law, from liability to us for damages caused to us as a result of a breach of duty of care, and undertaking to indemnify them to the fullest extent permitted by law, including with respect to liabilities resulting from this offering to the extent that these liabilities are not covered by insurance. We have obtained directors’ and officers’ liability insurance for each of our officers and directors. See “Item 6. C — Directors, Senior Management and Employees — Board Practices — Exculpation, insurance and indemnification of office holders.”
GSAP Agreement
On February 9, 2023, we entered into an agreement with GSAP Biomed Ltd., or GSAP, pursuant to which GSAP willundertook to provide ongoing quality assurance support services to us. This agreement was terminated effective January 1, 2024. Rami Dar, one of our directors (who formerly served as an external director, within the external directorsmeaning of our board of directorsthe Companies Law), who also serves as the chairman of our audit committee and as a member of our compensation committee and investment monitoring committee, is a non-executive chairman of Novolog Ltd., which is the parent company of GSAP. Under the agreement,During 2023, we agreed to paypaid GSAP NIS 46,000/month408,000 (approximately $12,667 per month)$110,000) as compensation for the services provided thereunder. Gloria License Agreement and Securities Purchase Agreement On August 27, 2023, we entered into the License Agreement with HST and Gloria, collectively, the Purchaser Party,, pursuant to which we granted HST an exclusive, royalty-bearing, sublicensable license with respect to the intellectual property rights and know-how associated with motixafortide in order to develop and commercialize motixafortide in Asia (other than Israel and certain other countries) and to engage and authorize Gloria to perform services under the License Agreement in such territory. In connection with the License Agreement, on August 27, 2023, we also entered into a securities purchase agreement with HST and Gloria pursuant to which we agreed to sell and issue to HST, in a private placement, an aggregate of 6,829,137 of our ADSs. Aggregate gross proceeds from the sale were approximately $14.6 million. In connection with the closing of the private placement, Dr. Shaoyu Yan, a nominee of HST, was appointed to our board of directors to serve as one of our Class III directors until our annual general meeting of shareholders to be held in 2026. The appointment was made effective in November 2023. In addition, effective as of the annual general meeting to be held in 2026 and for so long as the Purchaser Party is the owner of at least 5% of our issued and outstanding ordinary shares, the Purchaser Party shall have the right, but not the obligation, to nominate one person for election by our shareholders to serve as a member of our board of directors, provided that such nominee provides the requisite certifications required for appointment as a director of a public company under Israeli law. C. Interests of Experts and Counsel Not applicable.
ITEM 8.8. FINANCIAL INFORMATION A. Consolidated Statements and other Financial Information See “Item 18. Financial Statements.” Legal Proceedings On January 5, 2023, a putative securities class action complaint captioned Winston Peete v. BioLineRx Ltd. and Philip A. Serlin (Case no: Case 2:23-cv-00041 was filed in the U.S. District Court for the District of New Jersey by purported shareholder Winston Peete, naming us and our chief executive officer, Mr. Serlin, as defendants. The complaint asserts violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, claiming that the defendants made false and materially misleading statements and failed to disclose material adverse facts pertaining to our financial position with regard to the development of motixafortide and that we would require a loan and a securities offering to commercialize motixafortide. The complaint asserts a putative class period of February 23, 2021 to September 19, 2022, inclusive and seeks certification as a class action and an unspecified amount of damages. On July 5, 2023, plaintiffs filed an amended complaint alleging the same claims and adding the Company’s Chief Financial Officer, Mali Zeevi, as a defendant. On September 5, 2023, defendants filed a motion to dismiss the amended complaint in its entirety. The motion has been fully briefed and is sub judice. In addition, on February 5, 2023, we received a lawsuit and motion to approve the lawsuit as a class action lawsuit pursuant to the Class Action Lawsuits Law 5766-2006 which was filed against us and Mr. Serlin in the Tel Aviv District Court (Economic Division). The motion asserts substantially similar allegations as the U.S. action described above. The motion asserts to define the class as all shareholders who held the company's securities traded on the Tel Aviv Stock Exchange,TASE, on September 19, 2022 and the class period relates to the company's statements between February 23, 2021, and September 19, 2022. The total amount claimed, if the lawsuit is certified as a class action, as set forth in the motion is approximately NIS 113.5 million (approximately $32 million). The outcome of both legal proceedings is uncertain at this point. Based on an initial evaluation of the lawsuits, we believe that they are without merit and intend to vigorously defend ourselves against such actions.
Dividend Distributions We have never declared or paid cash dividends to our shareholders. Currently we do not intend to pay cash dividends. We currently intend to reinvest any future earnings in developing and expanding our business. Any future determination relating to our dividend policy will be at the discretion of our Boardboard of Directorsdirectors and will depend on a number of factors, including future earnings, our financial condition, operating results, contractual restrictions, capital requirements, business prospects, applicable Israeli law and other factors our Boardboard of Directorsdirectors may deem relevant. Israeli law limits the distribution of cash dividends to the greater of retained earnings or earnings generated over the two most recent years (referred to as the “profit test”), in either case provided that we reasonably believe that the dividend will not render us unable to meet our existing and foreseeable obligations when due (referred to as the “solvency test”). Notwithstanding the foregoing, in the event that a company does meet the profit test, dividends may be paid with the approval of a court, provided that the court is convinced that the company meets the solvency test. However, in accordance with the Relief Regulations, as a company whose shares are listed on a foreign exchange referenced in the second or third addendum to the Israeli Securities Law (which include, among others, the NASDAQ Capital Market), our board of directors may resolve to distribute a dividend by way of a share repurchase program if the company does not meet the profit test without seeking the approval of the court, subject to the following: (i) the company meets the solvency test; and (ii) we provide a notice to certain creditors regarding our intention to distribute a dividend by way of a share repurchase program in accordance with the notice requirements set forth in the Relief Regulations and no such creditor submits an objection within 30 days of the notice (otherwise, court approval would be required for such distribution in accordance with the requirements of the Companies Law). For information regarding taxation of dividends, see “Item 10E. Additional Information — Taxation — Israeli Tax Considerations.” B. Significant Changes None. ITEM 9. THE OFFER AND LISTING A. Offer and Listing Details Our ADSs have been trading on Nasdaq under the symbol “BLRX” since July 2011. Our ordinary shares have been trading on the TASE under the symbol “BLRX” since February 2007.
B. Plan of Distribution Not applicable. C. Markets Our ADSs trade on Nasdaq under the symbol “BLRX.” Our ordinary shares trade on the TASE under the symbol “BLRX.” D. Selling Shareholders Not applicable. E. Dilution Not applicable. F. Expenses of the Issue Not applicable. ITEM 10.10. ADDITIONAL INFORMATION A. Share Capital Not applicable. B. Articles of Association A copy of our Articles of Association is attached as Exhibit 2.1 to this Annual Report. Other than as disclosedset forth below, the information called for by this Item is set forth in Exhibit 2.2 to this Annual Report and is incorporated by reference into this Annual Report. See “Item 6. Directors, Senior Management and Employees — C. Board Practices.” Borrowing Powers Pursuant to the Companies Law and our Articles of Association, our board of directors may exercise all powers and take all actions that are not required under law or under our Articles of Association to be exercised or taken by our shareholders, including the power to borrow money for company purposes.
Shareholder Meetings Under the Companies Law, annual general meetings of shareholders are required to be held at least once in every calendar year (within 15 months after the last preceding annual general meeting of shareholders). All general meetings other than the annual meeting of shareholders are referred to in our Articles of Association as extraordinary meetings. The Companies Law provides that an extraordinary general meeting of shareholders may be called by the board of directors as it deems fit. In addition, the board of directors is required to convene an extraordinary general meeting of shareholders upon the written request of (i) two or more directors or 25% of the directors in office, or (ii) one or more shareholders holding, in the aggregate, at least (a) 5% of the issued share capital and 1% of the voting rights; or (b) 5% of the voting rights of the company. However, pursuant to the Relief Regulations, in the case of a company whose shares are listed on a foreign exchange referenced in the second or third addendum to the Israeli Securities Law (which include, among others, the NASDAQ Capital Market, such as us), the board of directors shall convene an extraordinary meeting of shareholders upon the written request of one or more shareholders holding, in the aggregate, at least (a) 10% of the issued share capital and 1% of the voting rights; or (b) 10% of the voting rights of the company, provided that if the law of the foreign jurisdiction, as it applies to companies incorporated in such jurisdiction, permit a shareholder holding less than 10% of the issued share capital or voting rights to request to convene such a shareholder meeting, the Relief Regulations shall not apply. The Companies Law requires that resolutions regarding the following matters must be passed at a general meeting of our shareholders: amendments to our Articles of Association;
appointment, termination or the terms of service of our auditors;
appointment of external directors (if applicable);
approval of certain related party transactions;
increases or reductions of our authorized share capital;
the exercise of our board of directors’ powers by a general meeting, if our board of directors is unable to exercise its powers and the exercise of any of its powers is required for our proper management.
Shareholders entitled to participate and vote at our general meetings are the shareholders of record on a date to be determined by the board of directors, which, according to the Relief Regulations, as a company listed on certain exchanges outside Israel (including the Nasdaq Capital Market), may be between 4 and 60 days prior to the date of the meeting. Under the Companies Law, shareholder meetings generally require prior notice of not less than 21 days or, with respect to certain matters, such as election of directors and affiliated party transactions, not less than 35 days. Only shareholders of record as reflected on our share register at the close of business on the date fixed by the board of directors as the record date determining the then shareholders who will be entitled to vote, shall be entitled to notice of, and to vote, in person or by proxy, at a general meeting and any postponement or adjournment thereof. C. Material Contracts For a discussion of our out-licensing and in-licensing agreements, see “Item 4. Information on the Company.” The following are summary descriptions of certain other material contracts to which we are a party. The descriptions provided below do not purport to be complete and are qualified in their entirety by the complete agreements, which are attached as exhibits to this Annual Report on Form 20-F. Gloria License Agreement and Securities Purchase Agreement On August 27, 2023, we entered into the License Agreement with HST and Gloria, pursuant to which we granted HST an exclusive, royalty-bearing, sublicensable license with respect to the intellectual property rights and know-how associated with motixafortide in order to develop and commercialize motixafortide in the Territory and to engage and authorize Gloria to perform services under the License Agreement in the Territory. Pursuant to the terms of the License Agreement, the Licensee made a $15 million upfront payment in October 2023, upon the closing of the transaction. We are entitled to up to $49 million based on the achievement of certain development and regulatory milestones in China and Japan, and up to $197 million in sales milestones based on defined sales targets of motixafortide in the Territory. Additionally, we are eligible to receive tiered, double-digit royalties (ranging from 10-20%), on aggregate net sales of motixafortide in the Territory payable on a country-by-country basis until the longer of (i) fifteen years from the date of the first sale of motixafortide by Licensee, (ii) the last to expire valid claim of any licensed patents with respect to motixafortide in such country and (iii) the expiration of motixafortide’s orphan drug status in such country. The royalties payable by Licensee to us are to be reduced by 50% following the end of the initial royalty term and to also be reduced upon the occurrence of certain events, including, on a country-by-country basis, the entry of a generic product in such country.
In connection with the License Agreement, on August 27, 2023, we also entered into a securities purchase agreement with HST and Gloria pursuant to which we agreed to sell and issue to HST in a private placement an aggregate of 6,829,137 of our ADSs at a price of $2.136 per ADS. Aggregate gross proceeds from the sale were approximately $14.6 million. The private placement closed in October 2023. In connection with the closing of the private placement, Dr. Shaoyu Yan, a nominee of HST, was appointed by our board of directors to serve as one of our Class III directors until our annual general meeting of shareholders to be held in 2026. The appointment was made effective in November 2023. In addition, effective as of the 2026 annual general meeting and for so long as the Purchaser Party is the owner of at least 5% of our issued and outstanding ordinary shares, the Purchaser Party shall have the right, but not the obligation, to nominate one person for election by our shareholders to serve as a member of our board of directors, provided that such nominee provides the requisite certifications required for appointment as a director of a public company under Israeli law.
The License Agreement includes various development obligations for the Licensee pursuant to an agreed-upon development plan, including the execution of a registrational study in stem-cell mobilization and the execution of a randomized Phase 2b study in first-line pancreatic adenocarcinoma. Loan Agreements with Kreos Capital In October 2018, we entered into a loan agreement with Kreos Capital. The purpose of the loan was to finance the $10 million payment made by the Company to Biokine as part of the consideration for amending the license agreement for motixafortide. See “Item 4. Information on the Company — Business Overview — In-Licensing Agreements — motixafortide.” The loan had a 12-month interest-only period, which concluded in September 2019, followed by a 36-month repayment period beginning in October 2019. Borrowings under the loan bore interest at a fixed rate of 9.5% per annum. As security for the loan, Kreos Capital received a first-priority, secured interest in all Company assets, including intellectual property. In connection with providing the loan, Kreos Capital received a warrant to purchase 63,837 ADSs at an exercise price of $14.10 per ADS. The warrant is exercisable for a period of ten years from the date of issuance. In September 2022, this loan was repaid in full.
In September 2022, we entered into a new loan agreement with Kreos Capital, or the Loan Agreement. Under the Loan Agreement, Kreos Capital will provide us with access to term loans in an aggregate principal amount of up to $40 million in three tranches as follows: (a) a loan in the aggregate principal amount of up to $10 million, available for drawdown upon closing of the Loan Agreement and until April 1, 2023, or Tranche A, (b) a loan in the aggregate principal amount of up to $20 million, available for drawdown upon achievement of certain milestones and until April 1, 2024, or Tranche B, and (c) a loan in the aggregate principal amount of up to $10 million, available for drawdown upon achievement of certain milestones and until October 1, 2024, or Tranche C and together with Tranche A and Tranche B, the Loans. We drew down the initial tranche of $10 million following execution of the agreement in September 2022.
We intend to use the proceeds of the Loans, together with cash on-hand, to facilitate the commercial launch of motixafortide in autologous stem cell mobilization for multiple myeloma patients, as well as for general corporate purposes.
Until July 1, 2023, Tranche A is payable on an interest-only basis, and thereafter in up to 36 equal monthly payments of principal and interest accrued thereon, subject to extension of the interest-only payment period if certain milestones are met, with a corresponding reduction in the principal and interest payment period through July 1, 2026. Until July 1, 2024, Tranche B is payable on an interest-only basis, and thereafter in up to 36 equal monthly payments of principal and interest accrued thereon, subject to extension of the interest-only payment period if certain milestones are met, with a corresponding reduction in the principal and interest payment period through July 1, 2027. Until January 1, 2025, Tranche C is payable on an interest-only basis, and thereafter in up to 30 equal monthly payments of principal and interest accrued thereon, subject to extension of the interest-only payment period if certain milestones are met, with a corresponding reduction in the principal and interest payment period through July 1, 2027.
Interest on each tranche of the Loans accrues at a fixed rate of 9.5% per annum from the drawdown date until repayment in full of the tranche. In addition, the Lender will be entitled to mid-to-high single-digit royalties on motixafortide sales for stem cell mobilization, up to a total maximum aggregate of $13.5 million.
We may prepay all, but not less than all, of the outstanding balance of any of the Loans. In case of prepayment within 12 months of a drawdown, we will pay a sum equal to (i) the principal balance then outstanding, and (ii) an aggregate of all remaining interest payments that would have been paid on the Loans throughout the remainder of the term of the Loan, discounted back at the secured overnight financing rate administered by the Federal Reserve Bank of New York. In case of prepayment within 13-24 months of the effective date of the Loan Agreement, we will pay a sum equal to 102% of principal balance then outstanding. In case of prepayment within 25-36 months of the effective date of the Loan Agreement, we will pay a sum equal to 101% of the principal balance then outstanding. In connection with any prepayment, we will also pay an end of loan payment equal to 5% of the amount of each tranche drawn down upon the final repayment of each such tranche, or the End of Loan Payment, and any other unpaid fees or costs, if any. In addition, if we prepay the Loans in the first 24 months from the first drawdown and, in the event that the combined cash return to Kreos Capital from the drawn down Loans under the Loan Agreement, including prepayment amounts and any revenue based payments, or the Combined Loan Cash Economics, do not reach 1.3 times the aggregate amount of drawn down Loans, or the Minimum Cash Return Amount, we shall pay Kreos Capital an additional cash amount equal to the difference between the Combined Loan Cash Economics paid or payable and the Minimum Cash Return Amount.
The Loans are subject to mandatory accelerated repayment provisions that require repayment of the outstanding principal amount of the Loans, and all accrued and unpaid interest thereon, upon the occurrence of an event of default, subject to certain limitations and cure rights. In addition, in the event of acceleration upon an event of default (a) we will be required to pay the aggregate of the monthly interest payments scheduled to be paid by the Company for the period from the date of acceleration to the expiry of the applicable Loan, in each case discounted from the applicable monthly repayment date to the date of prepayment at the rate of 2% per annum and (b) the End of Loan Payment.
In connection with entering into the Loan Agreement, we agreed to pay the Lender a fee of up to $30,000 plus value-added-tax for legal and other ancillary fees. Pursuant to the Loan Agreement, upon the execution of the agreement, we agreed to pay Kreos Capital a transaction fee equal to $500,000, and, upon the drawdown of each tranche of the Loans, we shall pay Kreos Capital an advance payment of the last month’s payment of principal and interest for such tranche. Additionally, we will be required to pay an End of Loan Payment.
Outstanding borrowings under the Loan Agreement are secured by (a) a first priority fixed charge over certain assets and intellectual property of the Company as well as all shares held by the Company in BioLineRx USA, Inc, or the Fixed Charge, (b) a first priority floating charge over all our assets as of the date of the Loan Agreement or thereafter acquired, other than the assets charged under the Fixed Charge or as otherwise specifically excluded pursuant to the terms of the floating charge, and (c) subject to the provisions of the Fixed Charge, a security interest in our intellectual property.
The Loan Agreement contains customary representations and warranties, indemnification provisions in favor of the Lender, events of default and affirmative and negative covenants, including, among others, covenants that limit or restrict the Company’s ability to, among other things, incur additional indebtedness, merge or consolidate, make acquisitions, pay dividends or other distributions or repurchase equity, and dispose of assets, in each case subject to certain exceptions. In addition, the Company is required to maintain a cash balance of at least $10 million. The Company has also granted Kreos Capital certain information rights.
Collaboration Agreement with GenFleet
In June 2022, we entered into a collaboration agreement with GenFleet, an immuno-oncology focused biopharmaceutical company based in China, to advance motixafortide through a randomized Phase 2b clinical trial in PDAC. Under the terms of the agreement, GenFleet will fully fund, design and execute a randomized Phase 2b clinical trial that will enroll approximately 200 first-line metastatic PDAC patients in China. This randomized controlled study will aim to evaluate the superiority of motixafortide in combination with an anti-PD-1 and chemotherapy compared to chemotherapy alone, the current standard of care and is expected to commence in 2023 (although timelines are ultimately controlled by the independent investigator and are therefore subject to change). As part of the collaboration, we will supply motixafortide, while GenFleet will supply the other study drugs for the trial. Trial oversight will be administered by a Joint Development Committee. GenFleet will be eligible to receive low-to-mid-single digit tiered percentage royalties on future motixafortide sales, if approved.
D. Exchange Controls There are currently no Israeli governmentgovernmental laws, decrees or regulations that restrict or that affect our exportimport or importexport of capital, or the remittance of dividends, interest or other payments to non-resident holders of our securities, including the availability of cash and cash equivalents for use by us and our wholly owned subsidiaries, or the remittance of dividends, interest or other payments to non-resident holders of our securities, except for shareholders who are subjects of countries that are, or have been, in a state of war with Israel or otherwise as set forth under “Item 10E. Additional Information — Taxation.” E. Taxation
The following description is not intended to constitute a complete analysis of all tax consequences relating to the ownership or disposition of our ordinary shares or ADSs, both referred to in this Item 10E as the ordinary shares. You should consult your own tax advisor concerning the tax consequences of your particular situation, as well as any tax consequences that may arise under the laws of any state, local, non-U.S., including Israeli, or other taxing jurisdiction. Israeli Tax Considerations
The following is a summary of the material Israeli tax laws applicable to us. This section also contains a discussion of material Israeli tax consequences concerning the ownership and disposition of our shares. This summary does not discuss all the aspects of Israeli tax law that may be relevant to a particular investor in light of his or her personal investment circumstances or to some types of investors subject to special treatment under Israeli law. Examples of this kind of investor include residents of Israel or traders in securities who are subject to special tax regimes not covered in this discussion. Because certain parts ofTo the extent that this discussion areis based on new tax legislation that has not yet been subject to judicial or administrative interpretation, we cannot assure you that the appropriate tax authorities or the courts will accept the views expressed in this discussion. The discussion below is subject to change, including due to amendments under Israeli law or changes to the applicable judicial or administrative interpretations of Israeli law, which change could affect the tax consequences described below. General Corporate Tax Structure in Israel Israeli companies are generally subject to corporate tax on their taxable income. The regular corporate tax rate in Israel is 23% for the year 2018 and thereafter. Capital gains derived by an Israeli company are now generally subject to tax at the same rate as the corporate tax rate. As of December 31, 2022,2023, the tax loss carryforwards of BioLineRx were approximately $330$304 million. The tax loss carryforwards have no expiration date. Taxation of Israeli Individual Shareholders on Receipt of Dividends. Israeli residents who are individuals are generally subject to Israeli income tax for dividends paid on our ordinary shares (other than a pro-rata distribution of bonus shares or share dividends) at a rate of either 25% or 30%, if the recipient of such dividend is a substantial shareholder (as defined below) at the time of distribution or at any time during the preceding 12-month period. Taxation of Israeli Resident Corporations on Receipt of Dividends. Israeli resident corporations are generally exempt from Israeli corporate tax for dividends paid on our ordinary shares. Taxation of Non-Israeli Shareholders on Receipt of Dividends. Non-residents of Israel (individuals or corporations) are generally subject to Israeli income tax on the receipt of dividends paid on our ordinary shares at the rate of 25% (or 30% if such person is a “substantial shareholder” at the time receiving the dividend or on any date in the 12 months preceding such date), which tax will be withheld at the source, unless a lower rate is provided in the Income Tax Ordinance and/or regulations promulgated thereunder or under a tax treaty between Israel and the shareholder’s country of residence and subject to the receipt in advance of a valid certificate from the Israeli Tax Authorities. Under the U.S.-Israel Tax Treaty (the “Treaty”), Israeli withholding tax on dividends paid to a U.S. resident for treaty purposes may not, in general, exceed 25%. Where the recipient is a U.S. corporation owning 10% or more of the voting stock of the paying corporation during the part of the paying corporation’s taxable year which precedes the date of payment of the dividend and during the whole of its prior taxable year (if any) and the dividend is not paid from the profits of a Benefited Enterprise, the Israeli tax withheld may not exceed 12.5%, subject to certain conditions. A “substantial shareholder” is generally a person who alone, or together with his relative or another person who collaborates with him on a regular basis, holds, directly or indirectly, at least 10% of any of the “means of control” of the corporation. “Means of control” generally include the right to vote, receive profits, nominate a director, a general manager of the company or holders of similar offices in other bodies of persons, receive assets upon liquidation, or instruct someone who holds any of the aforesaid rights regarding the manner in which he or she is to exercise such right(s), and all regardless of the source of such right. A non-resident of Israel who receives dividends from which tax was withheld is generally exempt from the duty to file returns in Israel in respect of such income, provided that: (1) such income was not derived from a business conducted in Israel by the taxpayer (2) the taxpayer has no other taxable sources of income in Israel with respect to which a tax return is required to be filed and (3) the taxpayer is not obliged to pay excess tax. Payers of dividends on our shares, including the Israeli stockbroker effectuating the transaction or the financial institution through which the securities are held, are required, subject to any of the foregoing exemptions, reduced tax rates and the demonstration of a shareholder of his, her or its foreign residency, to withhold taxes upon the distribution of dividends at a rate of 25%, provided that the shares are registered with a nominee company. Taxation of Capital Gains. Israeli law imposes a capital gains tax on the sale or exchange of any capital assets by residents of Israel, as defined for Israeli tax purposes, and on the sale or exchange of assets located in Israel, including shares in Israeli companies, by non-residents of Israel, unless a specific exemption is available pursuant to the Income Tax Ordinance or the regulations thereunder or unless a tax treaty between Israel and the shareholder’s country of residence provides otherwise and subject to the receipt in advance of a valid certificate from the Israeli Tax Authorities. The law distinguishes between real capital gain and inflationary surplus. The inflationary surplus is a portion of the total capital gain that is equivalent to the increase of the relevant asset’s purchase price which is attributable to the increase in the Israeli consumer price index or, in certain circumstances, a foreign currency exchange rate, between the date of purchase and the date of sale. The real capital gain is the excess of the total capital gain over the inflationary surplus. The inflationary surplus is generally exempt from tax. Capital Gains Taxes Applicable to Israeli Resident Shareholders. An individual is subject to a tax at a rate of 25% on real capital gains derived from the sale of shares, as long as the individual is not a substantial shareholder at the time of sale or at any time during the 12-month period preceding the company’s issuance of the shares. An individual who is a substantial shareholder at the time of sale or at any time during the preceding 12-month period is subject to tax at a rate of 30% in respect of real capital gains derived from the sale of shares issued by the company in which he or she is a substantial shareholder. Real capital gains derived by an Israeli company are generally subject to tax at the same rate as the corporate tax rate (currently 23%). Capital Gains Taxes Applicable to Non-Israeli Resident Shareholders. Shareholders that are not Israeli residents are generally exempt from Israeli capital gains tax on any gains derived from the sale, exchange or disposition of our ordinary shares, provided that such shareholders did not acquire their ordinary shares prior to our initial public offering on the TASE and such gains were not derived from a permanent establishment or business activity of such shareholders in Israel. However, non-Israeli corporations will not be entitled to the foregoing exemptions if one or more Israeli residents (a) have a controlling interest of more than 25% in such non-Israeli corporation or (b) are the beneficiaries of or are entitled to 25% or more of the revenues or profits of such non-Israeli corporation, whether directly or indirectly. In addition, under the Treaty, the sale, exchange or disposition of our ordinary shares by a shareholder who is a U.S. resident (for purposes of the Treaty) holding the ordinary shares as a capital asset is exempt from Israeli capital gains tax unless (1) the shareholder holds, directly or indirectly, shares representing 10% or more of our voting capital during any part of the 12-month period preceding such sale, exchange or disposition; (2) the capital gains arising from such sale are attributable to a permanent establishment of the shareholder located in Israel; (3) a shareholder who is an individual is present in Israel for a period or periods aggregating 183 days or more during a taxable year. In either case, the sale, exchange or disposition of ordinary shares would be subject to Israeli tax, to the extent applicable (subject to the receipt in advance of a valid certificate from the Israeli tax authorities); however, under the Treaty, the U.S. resident would be permitted to claim a credit for the tax against the U.S. federal income tax imposed with respect to the sale, exchange or disposition, subject to the limitations in U.S. laws applicable to foreign tax credits. The Treaty does not relate tocover U.S. state or local taxes. Shareholders may be required to demonstrate that they are exempt from tax on their capital gains in order to avoid withholding at source at the time of sale. The purchaser, the Israeli stockbrokers or financial institution through which the shares are held are obliged, subject to the above mentioned exemptions, to withhold tax upon the sale of securities on the amount of the consideration paid upon the sale of the securities (or on the Real Capital Gainreal capital gain realized on the sale, if known), at the rate of 25% in respect of an individual or at a corporate rate in respect of a corporation (23%). Upon the sale of securities traded on a stock exchange, a detailed return, including a computation of the tax due, must be filed and an advance payment must be paid on January 31 and July 31 of every tax year in respect of sales of securities made within the previous six months.months (or within 30 days of the sale if the seller is not otherwise required to file a tax return in Israel). However, if all tax due was withheld at source according to applicable provisions of the Israel Income Tax Ordinance and regulations promulgated thereunder, the aforementioned return need not be filed and no advance payment must be paid. Capital gain is also reportable on the annual income tax returns. Excess Tax. Individuals who are subject to tax in Israel (whether such individual is an Israeli resident or non-Israeli resident) are also subject to an additional tax at a rate of 3% on annual income exceeding NIS 698,280 for 2023 and thereafter,NIS 721,560 for 2024 (which amount is linked to the annual change in the Israeli consumer price index), including, but not limited to, dividends, interest and capital gains. U.S. Federal Income Tax Considerations The following is a general summary of certain material U.S. federal income tax considerations relating to the purchase, ownership and disposition of our ordinary shares and ADSs by U.S. Investors (as defined below) that are initial purchasers of such ordinary shares or ADSs and that hold such ordinary shares or ADSs as capital assets for U.S. federal income tax purposes (generally, property held for investment). This summary is based on the Internal Revenue Code of 1986, as amended, or the Code, the regulations of the U.S. Department of the Treasury issued pursuant to the Code, or the Treasury Regulations, the Treaty, and administrative and judicial interpretations thereof, all as in effect on the date hereof and all of which are subject to change, possibly with retroactive effect, or to different interpretation. No ruling has been sought from the IRS with respect to any U.S. federal income tax consequences described below, and there can be no assurance that the IRS or a court will not take a contrary position. This summary is for general information only and does not address all of the tax considerations that may be relevant to specific U.S. Investors in light of their particular circumstances or to U.S. Investors subject to special treatment under U.S. federal income tax law (such as, without limitation, banks, insurance companies, tax-exempt entities, retirement plans, regulated investment companies, partnerships, dealers in securities, brokers, real estate investment trusts, grantor trusts, persons who acquire our ordinary shares through the exercise or cancellation of employee stock options or otherwise as compensation for their services, certain former citizens or residents of the United States, persons who acquire our ordinary shares or ADSs as part of a straddle, hedge, conversion transaction or other integrated investment, persons that have a “functional currency” other than the Dollar, persons that own (or are deemed to own, indirectly or by attribution) 10% or more of our ordinary shares or ADSs (by vote or value), persons subject to special tax accounting rules under section 451(b), or persons that generally mark their securities to market for U.S. federal income tax purposes). This summary does not address any U.S. state or local or non-U.S. tax considerations, any U.S. federal estate, gift or alternative minimum tax considerations or any additional U.S. federal tax consequences other than U.S. federal income tax consequences. As used in this summary, the term “U.S. Investor” means a beneficial owner of our ordinary shares or ADSs that is, for U.S. federal income tax purposes, (i) an individual citizen or resident of the United States, (ii) a corporation, or other entity taxable as a corporation for U.S. federal income tax purposes, created or organized in or under the laws of the United States, any state thereof, or the District of Columbia, (iii) an estate the income of which is subject to U.S. federal income tax regardless of its source or (iv) a trust with respect to which a court within the United States is able to exercise primary supervision over its administration and one or more U.S. persons have the authority to control all of its substantial decisions, or a trust that has validly elected to be treated as a U.S. person for U.S. federal income tax purposes, whose status as a U.S. person is not overwritten by an applicable tax treaty.
If an entity treated as a partnership for U.S. federal income tax purposes holds our ordinary shares or ADSs, the tax treatment of such entity and each person treated as a partner thereof will generally depend upon the status and activities of the entity and such person. An investor that is treated as a partnership for U.S. federal income tax purposes should consult its own tax advisor regarding the U.S. federal income tax considerations applicable to it and its partners of the purchase, ownership and disposition of its ordinary shares or ADSs. Prospective investors should be aware that this summary does not address the tax consequences to investors who are not U.S. Investors. Prospective investors should consult their own tax advisors as to the particular tax considerations applicable to them relating to the purchase, ownership and disposition of their ordinary shares or ADSs, including the applicability of U.S. federal, state and local tax laws and non-U.S. tax laws. Taxation of U.S. Investors The discussions under “— Distributions,” and under “— Sale, Exchange or Other Disposition of Ordinary Shares or ADSs” below assumes that we will not be treated as a passive foreign investment company, or PFIC, for U.S. federal income tax purposes. However, we have not determined whether we will be a PFIC for the taxable year ending December 31, 2023,2024, and it is possible that we will be a PFIC for the taxable year ending December 31, 20232024 or in any subsequent year. For a discussion of the rules that would apply if we are treated as a PFIC, see the discussion under “— Passive Foreign Investment Company.” Distributions. We have no current plans to pay dividends. To the extent we pay any dividends, a U.S. Investor will be required to include in gross income as a taxable dividend the amount of any distributions made on the ordinary shares or ADSs, including the amount of any Israeli taxes withheld, when actually or constructively received, to the extent that those distributions are paid out of our current or accumulated earnings and profits as determined for U.S. federal income tax purposes. Any distributions in excess of our earnings and profits will be applied against and will reduce the U.S. Investor’s tax basis in its ordinary shares or ADSs and to the extent they exceed that tax basis, will be treated as gain from the sale or exchange of those ordinary shares or ADSs. We do not intend to calculate our earnings and profits under U.S. federal income tax principles. Therefore, a U.S. Investor should expect that a distribution will be treated as a dividend even if that distribution would otherwise be treated as a non-taxable return of capital or as capital gain under the rules described above. If we were to pay dividends to holders of our ordinary shares, we expect to pay such dividends in NIS; however, dividends paid to holders of our ADSs will be paid in dollars. A dividend paid in NIS, including the amount of any Israeli taxes withheld, will be includible in a U.S. Investor’s income as a dollar amount calculated by reference to the exchange rate in effect on the date such dividend is received, regardless of whether the payment is in fact converted into dollars. If the dividend is converted to dollars on the date of receipt, a U.S. Investor generally will not recognize a foreign currency gain or loss. However, if the U.S. Investor converts the NIS into dollars on a later date, the U.S. Investor must include, in computing its income, any gain or loss resulting from any exchange rate fluctuations. The gain or loss will be equal to the difference between (i) the dollar value of the amount included in income when the dividend was received and (ii) the amount received on the conversion of the NIS into dollars. Such gain or loss will generally be ordinary income or loss and United States source for U.S. foreign tax credit purposes. U.S. Investors should consult their own tax advisors regarding the tax consequences to them if we pay dividends in NIS or any other non-U.S. currency. Subject to certain significant conditions and limitations, including potential limitations under the Treaty, any Israeli taxes paid on or withheld from distributions from us and not refundable to a U.S. Investor may be credited against the investor’s U.S. federal income tax liability or, alternatively, may be deducted from the investor’s taxable income. This election is made on a year-by-year basis and applies to all foreign taxes paid by a U.S. Investor or withheld from amounts paid to a U.S. Investor that year. Dividends paid on the ordinary shares or ADSs generally will constitute income from sources outside the United States and be categorized as “passive category income” or, in the case of some U.S. Investors, as “general category income” for U.S. foreign tax credit purposes.
As a result of recent changes to the U.S. foreign tax credit rules, a withholding tax generally will need to satisfy certain additional requirements in orders to be considered a creditable tax for a U.S. investor. We have not determined whether these requirements have been met and, accordingly, no assurance can be given that any withholding tax on dividends paid by us will be creditable. Since the rules governing foreign tax credits are complex, U.S. Investors should consult their own tax advisor regarding the availability of foreign tax credits in their particular circumstances. Dividends paid on the ordinary shares and ADSs will not be eligible for the “dividends-received” deduction generally allowed to corporate U.S. Investors with respect to dividends received from U.S. corporations. Distributions treated as dividends that are received by an individual U.S. Investor from “qualified foreign corporations” generally qualify for a reduced maximum tax rate so long as certain holding period and other requirements are met. A non-U.S. corporation (other than a PFIC for the taxable year in which the dividend is paid or the preceding taxable year) generally will be considered to be a qualified foreign corporation (i) if it is eligible for the benefits of a comprehensive tax treaty with the United States which the Secretary of Treasury of the United States determines is satisfactory for purposes of this provision and which includes an exchange of information program, or (ii) with respect to any dividend it pays on stock which is readily tradable on an established securities market in the United States. Any dividend paid by us in a taxable year in which we are a PFIC (or with respect to which we were a PFIC in the preceding taxable year) will be subject to tax at regular ordinary income rates. As mentioned above, we believe we were not a PFIC for our 20222023 taxable year and have not determined whether we will be a PFIC for our 20232024 taxable year. U.S. Investors should consult their own tax advisors regarding the availability of the lower rate for dividends paid with respect to our ordinary shares and ADSs. The additional 3.8% Medicare tax (described below) may apply to dividends received by certain U.S. Investors who meet certain modified adjusted gross income thresholds. Sale, Exchange or Other Disposition of Ordinary Shares and ADSs. Subject to the discussion under “— Passive Foreign Investment Company” below, a U.S. Investor generally will recognize capital gain or loss upon the sale, exchange or other taxable disposition of ordinary shares or ADSs in an amount equal to the difference between the amount realized on the sale, exchange or other taxable disposition and the U.S. Investor’s adjusted tax basis in such ordinary shares or ADSs. This capital gain or loss will be long-term capital gain or loss if the U.S. Investor’s holding period in the ordinary shares or ADSs exceeds one year. Preferential tax rates for long-term capital gain will apply to individual U.S. Investors. The deductibility of capital losses is subject to limitations. The gain or loss will generally be income or loss from sources within the United States for U.S. foreign tax credit purposes, subject to certain possible exceptions under the Treaty. The additional 3.8% Medicare tax (described below) may apply to gains recognized upon the sale, exchange, or other taxable disposition of our ordinary shares or ADSs by certain U.S. Investors who meet certain modified adjusted gross income thresholds. U.S. Investors should consult their own tax advisors regarding the U.S. federal income tax consequences of receiving currency other than Dollars upon the disposition of ordinary shares or ADSs. Medicare Tax. In addition, certain U.S. persons, including individuals, estates and trusts, will be subject to an additional 3.8% Medicare tax, or net investment income tax, on unearned income. For individuals, the additional Medicare tax applies to the lesser of (i) “net investment income” or (ii) the excess of “modified adjusted gross income” over $200,000 ($250,000 if married and filing jointly or $125,000 if married and filing separately). “Net investment income” generally equals the taxpayer’s gross investment income reduced by the deductions that are allocable to such income. Investment income generally includes passive income such as interest, dividends, annuities, royalties, rents, and capital gains. U.S. Investors are urged to consult their own tax advisors regarding the implications of the additional Medicare tax resulting from their ownership and disposition of ordinary shares or ADSs. Passive Foreign Investment Company In general, a corporation organized outside the United States will be treated as a PFIC for U.S. federal income tax purposes in any taxable year in which either (i) at least 75% of its gross income is “passive income” or (ii) on average at least 50% of its assets by value produce passive income or are held for the production of passive income. Passive income for this purpose generally includes, among other things, certain dividends, interest, royalties, rents and gains from commodities and securities transactions and from the sale or exchange of property that gives rise to passive income. Passive income also includes amounts derived by reason of the temporary investment of funds, including those raised in the public offering. Assets that produce or are held for the production of passive income may include cash, even if held as working capital or raised in a public offering, as well as marketable debt securities and other assets that may produce passive income. In determining whether a non-U.S. corporation is a PFIC, a proportionate share of the income and assets of each corporation in which it owns, directly or indirectly, at least a 25% interest (by value) is taken into account.
Under the tests described above, whether or not we are a PFIC will be determined annually based upon the composition of our income and the composition and valuation of our assets, all of which are subject to change. We believe that we were a PFIC for U.S. federal income tax purposes for taxable years ended prior to December 31, 2009 and for taxable years ended December 31, 2011, 2012 and 2014 through 2019. We believe we were not a PFIC for taxable years ended 2009, 2010, 2013, 2020, 2021, 2022 and 2022,2023, and we have not determined whether we will be a PFIC for the taxable year ending December 31, 2023.2024. Because the PFIC determination is highly fact intensive and made at the end of each taxable year, there can be no assurance that we will not be a PFIC for taxable year ending December 31, 20232024 or in any subsequent year. Upon request, we intend to annually inform U.S. Investors if we and any of our subsidiaries were a PFIC with respect to the preceding year. U.S. Investors should be aware of certain tax consequences of investing directly or indirectly in us if we are a PFIC. A U.S. Investor is subject to different rules depending on whether the U.S. Investor makes an election to treat us as a “qualified electing fund,” known as a QEF election, for the first taxable year that the U.S. Investor holds ordinary shares or ADSs, which is referred to in this disclosure as a “timely QEF election,” makes a “mark-to-market” election with respect to the ordinary shares or ADSs (if such election is available) or makes neither election. QEF Election. A U.S. Investor who makes a timely QEF election, referred to in this disclosure as an “Electing U.S. Investor,” with respect to us must report for U.S. federal income tax purposes his pro rata share of our ordinary earnings and net capital gain, if any, for our taxable year that ends with or within the taxable year of the Electing U.S. Investor. The “net capital gain” of a PFIC is the excess, if any, of the PFIC’s net long-term capital gains over its net short-term capital losses. The amount so included in income generally will be treated as ordinary income to the extent of such Electing U.S. Investor’s allocable share of the PFIC’s ordinary earnings and as long-term capital gain to the extent of such Electing U.S. Investor’s allocable share of the PFIC’s net capital gains. Such Electing U.S. Investor generally will be required to translate such income into Dollars based on the average exchange rate for the PFIC’s taxable year with respect to the PFIC’s functional currency. Such income generally will be treated as income from sources outside the United States for U.S. foreign tax credit purposes. Amounts previously included in income by such Electing U.S. Investor under the QEF rules generally will not be subject to tax when they are distributed to such Electing U.S. Investor. The Electing U.S. Investor’s tax basis in ordinary shares or ADSs generally will increase by any amounts so included under the QEF rules and decrease by any amounts not included in income when distributed. An Electing U.S. Investor will be subject to U.S. federal income tax on such amounts for each taxable year in which we are a PFIC, regardless of whether such amounts are actually distributed to such Electing U.S. Investor. However, an Electing U.S. Investor may, subject to certain limitations, elect to defer payment of current U.S. federal income tax on such amounts, subject to an interest charge. If an Electing U.S. Investor is an individual, any such interest will be treated as non-deductible “personal interest.” Any net operating losses or net capital losses of a PFIC will not pass through to the Electing U.S. Investor and will not offset any ordinary earnings or net capital gain of a PFIC recognized by Electing U.S. Investors in subsequent years. So long as an Electing U.S. Investor’s QEF election with respect to us is in effect with respect to the entire holding period for ordinary shares or ADSs, any gain or loss recognized by such Electing U.S. Investor on the sale, exchange or other disposition of such ordinary shares or ADSs generally will be long-term capital gain or loss if such Electing U.S. Investor has held such ordinary shares or ADSs for more than one year at the time of such sale, exchange or other disposition. Preferential tax rates for long-term capital gain will apply to individual U.S. Investors. The deductibility of capital losses is subject to limitations. A U.S. Investor makes a QEF election by completing the relevant portions of and filing IRS Form 8621 in accordance with the instructions thereto. A QEF election generally may not be revoked without the consent of the IRS. Upon request, we intend to annually furnish U.S. Investors with information needed in order to complete IRS Form 8621 (which form would be required to be filed with the IRS on an annual basis by the U.S. Investor) and to make and maintain a valid QEF election for any year in which we or any of our subsidiaries are a PFIC. A QEF election will not apply to any taxable year during which we are not a PFIC but will remain in effect with respect to any subsequent taxable year in which we become a PFIC. Each U.S. Investor is encouraged to consult its own tax advisor with respect to tax consequences of a QEF election with respect to us. Mark-to-Market Election. Alternatively, if our ordinary shares or ADSs are treated as “marketable stock,” a U.S. Investor would be allowed to make a “mark-to-market” election with respect to our ordinary shares or ADSs, provided the U.S. Investor completes and files IRS Form 8621 in accordance with the relevant instructions and related Treasury Regulations. If that election is made, the U.S. Investor generally would include as ordinary income in each taxable year the excess, if any, of the fair market value of the ordinary shares or ADSs at the end of the taxable year over such investor’s adjusted tax basis in the ordinary shares or ADSs. Thus, the U.S. Investor may recognize taxable income without receiving any cash to pay its tax liability with respect to such income. The U.S. Investor would also be permitted an ordinary loss in respect of the excess, if any, of the U.S. Investor’s adjusted tax basis in the ordinary shares or ADSs over their fair market value at the end of the taxable year, but only to the extent of the net amount previously included in income as a result of the mark-to-market election. A U.S. Investor’s tax basis in the ordinary shares or ADSs would be adjusted to reflect any such income or loss amount. Gain realized on the sale, exchange or other disposition of the ordinary shares or ADSs would be treated as ordinary income, and any loss realized on the sale, exchange or other disposition of the ordinary shares or ADSs would be treated as ordinary loss to the extent that such loss does not exceed the net mark-to-market gains previously included in income by the U.S. Investor, and any loss in excess of such amount will be treated as capital loss. Amounts treated as ordinary income will not be eligible for the favorable tax rates applicable to qualified dividend income or long-term capital gains.
Generally, stock will be considered marketable stock if it is “regularly traded” on a “qualified exchange” within the meaning of applicable Treasury Regulations. A class of stock is regularly traded on an exchange during any calendar year during which such class of stock is traded, other than in de minimis quantities, on at least 15 days during each calendar quarter. To be marketable stock, our ordinary shares or ADSs must be regularly traded on a qualifying exchange (i) in the United States that is registered with the SEC or a national market system established pursuant to the Exchange Act or (ii) outside the United States that is properly regulated and meets certain trading, listing, financial disclosure and other requirements. A mark-to-market election will not apply to our ordinary shares or ADSs held by a U.S. Investor for any taxable year during which we are not a PFIC, but will remain in effect with respect to any subsequent taxable year in which we become a PFIC unless our ordinary shares or ADSs cease to be marketable. A mark-to-market election generally may not be revoked without the consent of the IRS. Such election will not apply to any PFIC subsidiary that we own. Each U.S. Investor is encouraged to consult its own tax advisor with respect to the availability and tax consequences of a mark-to-market election with respect to our ordinary shares or ADSs. Default PFIC Rules. A U.S. Investor who does not make a timely QEF election or a mark-to-market election, referred to in this disclosure as a “Non-Electing U.S. Investor,” will be subject to special rules with respect to (a) any “excess distribution” (generally, the portion of any distributions received by the Non-Electing U.S. Investor on the ordinary shares or ADSs in a taxable year in excess of 125% of the average annual distributions received by the Non-Electing U.S. Investor in the three preceding taxable years, or, if shorter, the Non-Electing U.S. Investor’s holding period for the ordinary shares or ADSs), and (b) any gain realized on the sale or other disposition of such ordinary shares or ADSs. Under these rules:
the excess distribution or gain would be allocated ratably over the Non-Electing U.S. Investor’s holding period for the ordinary shares or ADSs; the amount allocated to the current taxable year and any year prior to us becoming a PFIC would be taxed as ordinary income; and the amount allocated to each of the other taxable years would be subject to tax at the highest rate of tax in effect for the applicable class of taxpayer for that year, and an interest charge for the deemed deferral benefit would be imposed with respect to the resulting tax attributable to each such other taxable year.
If a Non-Electing U.S. Investor who is an individual dies while owning our ordinary shares or ADSs, the Non-Electing U.S. Investor’s successor would be ineligible to receive a step-up in tax basis of the ordinary shares or ADSs. Non-Electing U.S. Investors are encouraged to consult their tax advisors regarding the application of the PFIC rules to their specific situation. A Non-Electing U.S. Investor who wishes to make a QEF election for a subsequent year may be able to make a special “purging election” pursuant to Section 1291(d) of the Code. Pursuant to this election, a Non-Electing U.S. Investor would be treated as selling his or her ordinary shares or ADSs for fair market value on the first day of the taxable year for which the QEF election is made. Any gain on such deemed sale would be subject to tax under the rules for Non-Electing U.S. Investors as discussed above. Non-Electing U.S. Investors are encouraged to consult their tax advisors regarding the availability of a “purging election” as well as other available elections. To the extent a distribution on our ordinary shares or ADSs does not constitute an excess distribution to a Non-Electing U.S. Investor, such Non-Electing U.S. Investor generally will be required to include the amount of such distribution in gross income as a dividend to the extent of our current or accumulated earnings and profits (as determined for U.S. federal income tax purposes) that are not allocated to excess distributions. The tax consequences of such distributions are discussed above under “— Taxation of U.S. Investors — Distributions.” Each U.S. Investor is encouraged to consult its own tax advisor with respect to the appropriate U.S. federal income tax treatment of any distribution on our ordinary shares or ADSs.
If we are treated as a PFIC for any taxable year during the holding period of a Non-Electing U.S. Investor, we will continue to be treated as a PFIC for all succeeding years during which the Non-Electing U.S. Investor is treated as a direct or indirect Non-Electing U.S. Investor even if we are not a PFIC for such years. A U.S. Investor is encouraged to consult its tax advisor with respect to any available elections that may be applicable in such a situation, including the “deemed sale” election of Section 1298(b)(1) of the Code. In addition, U.S. Investors should consult their tax advisors regarding the IRS information reporting and filing obligations that may arise as a result of the ownership of shares in a PFIC, including IRS Form 8621. We may invest in the equity of foreign corporations that are PFICs or may own subsidiaries that own PFICs. U.S. Investors will be subject to the PFIC rules with respect to their indirect ownership interests in such PFICs, such that a disposition of the shares of the PFIC or receipt by us of a distribution from the PFIC generally will be treated as a deemed disposition of such shares or the deemed receipt of such distribution by the U.S. Investor, subject to taxation under the PFIC rules. There can be no assurance that a U.S. Investor will be able to make a QEF election or a mark-to-market election with respect to PFICs in which we invest. Each U.S. Investor is encouraged to consult its own tax advisor with respect to tax consequences of an investment by us in a corporation that is a PFIC. The U.S. federal income tax rules relating to PFICs are complex. U.S. Investors are urged to consult their own tax advisors with respect to the purchase, ownership and disposition of ordinary shares or ADSs, any elections available with respect to such ordinary shares or ADSs and the IRS information reporting obligations with respect to the purchase, ownership and disposition of ordinary shares or ADSs. Certain Reporting Requirements Certain U.S. Investors may be required to file IRS Form 926, Return by U.S. Transferor of Property to a Foreign Corporation and IRS Form 5471, Information Return of U.S. Persons With Respect to Certain Foreign Corporations, reporting transfers of cash or other property to us and information relating to the U.S. Investor and us. Substantial penalties may be imposed upon a U.S. Investor that fails to comply. Certain U.S. Investors owning “specified foreign financial assets” with an aggregate value in excess of $50,000 on the last day of the taxable year or $75,000 at any time during the taxable year (or such higher dollar amount as may be prescribed by applicable IRS guidance) may be required to file IRS Form 8938, Statement of Specified Foreign Financial Assets, with respect to such assets with their tax returns. “Specified foreign financial assets” generally include any financial accounts maintained by foreign financial institutions, as well as any of the following held for investment and not held in accounts maintained by financial institutions: (i) stocks and securities issued by non-U.S. persons, which may include the ordinary shares or ADSs, (ii) financial instruments and contracts held for investment that have non-U.S. issuers or counterparties and (iii) interests in foreign entities. The IRS has issued guidance exempting “specified foreign financial assets” held in a financial account from reporting under this provision (although the financial account itself, if maintained by a foreign financial institution, may remain subject to this reporting requirement). U.S. Investors are urged to consult their tax advisors regarding the application of these requirements to their ownership of the ordinary shares or ADSs. If we are treated as a PFIC, U.S. Investors generally are required to file annual tax returns (including on IRS Form 8621) containing such information as the U.S. Treasury requires (whether or not a mark-to-market election is or has been made). A U.S. Investor that is not otherwise required to file a U.S. tax return must still file IRS Form 8621 in accordance with the instructions for the Form. Failure to file IRS Form 8621 for each applicable taxable year may result in substantial penalties and the statute of limitations on the assessment and collection of U.S. federal income taxes of such U.S. Investor for the related taxable year may not close until three years after the date on which the required information is filed. U.S. Investors should consult their tax advisors regarding the IRS information reporting and filing obligations that may arise as a result of the ownership of shares in a PFIC, including IRS Form 8621. Backup Withholding Tax and Information Reporting Requirements Generally, information reporting requirements will apply to distributions on our ordinary shares or ADSs or proceeds on the disposition of our ordinary shares or ADSs paid within the United States (and, in certain cases, outside the United States) to U.S. Investors other than certain exempt recipients, such as corporations. Furthermore, backup withholding may apply to such amounts if the U.S. Investor fails to (i) provide a correct taxpayer identification number, (ii) report interest and dividends required to be shown on its U.S. federal income tax return, or (iii) make other appropriate certifications in the required manner. U.S. Investors who are required to establish their exempt status generally must provide such certification on IRS Form W-9. Backup withholding is not an additional tax. Amounts withheld as backup withholding from a payment may be credited against a U.S. Investor’s U.S. federal income tax liability and such U.S. Investor may obtain a refund of any excess amounts withheld by timely filing the appropriate claim for refund with the IRS and furnishing any required information in a timely manner.
U.S. Investors should consult their own tax advisors concerning the tax consequences relating to the purchase, ownership and disposition of the ordinary shares or ADSs. F. Dividends and Paying Agents Not applicable. G. Statement by Experts Not applicable. H. Documents on Display We are currently subject to the information and periodic reporting requirements of the Exchange Act, and file periodic reports and other information with the SEC through its electronic data gathering, analysis and retrieval (EDGAR) system. As a foreign private issuer, all documents which were filed after September 24, 2010 on the SEC’s EDGAR system are available for retrieval on the SEC’s website at www.sec.gov. As a foreign private issuer, we are exempt from the rules under the Exchange Act related to the furnishing and content of proxy statements, and our officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition, we are not required under the Exchange Act to file annual, quarterly and current reports and financial statements with the SEC as frequently or as promptly as United States companies whose securities are registered under the Exchange Act. In addition, since our ordinary shares are traded on the TASE, we also file periodic and immediate reports with, and furnish information to, the TASE and the ISA, or the ISA, as required under Chapter Six of the IsraelIsraeli Securities Law 1968 and the regulations enacted pursuant thereof, as applicable to a public company which also trades on Nasdaq. Copies of our filings with the ISA can be retrieved electronically through the MAGNA distribution site of the ISA (www.magna.isa.gov.il) and the TASE website (www.maya.tase.co.il). We maintain a corporate website at www.biolinerx.com. Information contained on, or that can be accessed through, our website does not constitute a part of this Annual Report on Form 20-F. We have included our website address in this Annual Report on Form 20-F solely as an inactive textual reference. I. Subsidiary Information Not applicable.
J. Annual Report to Security Holders Not applicable. ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURE ON MARKET RISK Our consolidated financial statements are prepared in conformity with IFRS, as issued by the IASB. We are exposed to a variety of risks in the ordinary course of our business, including, but not limited to, interest rate risk, foreign exchange risk, liquidity risk and credit risk, as discussed below. We regularly assess each of these risks to minimize any adverse effects on our business as a result of those factors. See Note 3 to our consolidated financial statements, which are included elsewhere in this Annual Report, for further discussion of our exposure to these risks. Risk of Interest Rate Fluctuation Our investments consist primarily of cash, cash equivalents and short-term bank deposits. We may also invest in investment-grade marketable securities with maturities of up to three years, including commercial paper, money market funds, and government/non-government debt securities. The primary objective of our investment activities is to preserve principal while maximizing the income that we receive from our investments without significantly increasing risk and loss. Our investments are exposed to market risk due to fluctuation in interest rates, which may affect our interest income and the fair market value of our investments. We manage this exposure by performing ongoing evaluations of our investments. Due to the short-term maturities of our investments to date, their carrying value has always approximated their fair value. It will be our policy to hold investments to maturity in order to limit our exposure to interest rate fluctuations. Foreign Currency Exchange Risk Our reporting and functional currency is the dollar. However, we pay a significant portion of our expenses in NIS and in euro, and we expect this to continue. If the dollar weakens against the NIS or the euro in the future, there may be a negative impact on our results of operations. The revenues from our current out-licensing and co-development arrangements are payable in dollars and euros. Although we expect our revenues from future licensing arrangements to be denominated primarily in dollars, we are exposed to the currency fluctuation risks relating to the recording of our revenues in currencies other than dollars. For example, if the euro strengthens against the dollar, our reported revenues in dollars may be lower than anticipated. To date, fluctuations in the exchange rates have not materially affected our results of operations or financial condition for the periods under review. From time to time, we have engaged in currency hedging transactions to decrease the risk of financial exposure from fluctuations in the exchange rates of our principal operating currencies, and we may continue to do so in the future. These measures, however, may not adequately protect us from the material adverse effects of such fluctuations. ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES A. Debt Securities Not applicable. B. Warrants and Rights Not applicable. C. Other Securities Not applicable. D. American Depositary Shares Set forth below is a summary of some of the material terms of the deposit agreement among BioLineRx, The Bank of New York Mellon as depositary, or the Depositary, and the owners and holders from time to time of our ADSs. Description of the ADSs Each of our ADSs represents 15 of our ordinary shares deposited with the principal Tel Aviv office of Bank Leumi Le-Israel, as Custodian for the Depositary. Our ADSs trade on Nasdaq. The form of the deposit agreement for the ADS and the form of American Depositary Receipt (ADR) that represents an ADS have been incorporated by reference as exhibits to this Annual Report on Form 20-F. Copies of the deposit agreement are available for inspection at the principal office of The Bank of New York Mellon, located at 101 Barclay Street, New York, New York 10286.
Charges of Depositary We will pay the fees, reasonable expenses and out-of-pocket charges of the Depositary and those of any registrar only in accordance with agreements in writing entered into between us and the Depositary from time to time. The following charges shall be incurred by any party depositing or withdrawing ordinary shares or by any party surrendering ADRs or to whom ADRs are issued (including, without limitation, issuance pursuant to a stock dividend or stock split declared by us or an exchange of stock regarding the ADRs or deposited ordinary shares or a distribution of ADRs pursuant to the terms of the deposit agreement):
taxes and other governmental charges; any applicable transfer or registration fees; certain cable, telex and facsimile transmission charges as provided in the deposit agreement;
any expenses incurred in the conversion of foreign currency; a fee of $5.00 or less per 100 ADSs (or a portion thereof) for the execution and delivery of ADRs and the surrender of ADRs, including if the deposit agreement terminates; a fee of $.05 or less per ADS (or portion thereof) for any cash distribution made pursuant to the deposit agreement; a fee for the distribution of securities pursuant to the deposit agreement; in addition to any fee charged for a cash distribution, a fee of $.05 or less per ADS (or portion thereof) per annum for depositary services; a fee for the distribution of proceeds of rights that the Depositary sells pursuant to the deposit agreement; and any other charges payable by the Depositary, any of the Depositary’s agents, or the agents of the Depositary’s agents in connection with the servicing of ordinary shares or other Deposited Securities. The Depositary may own and deal in our securities and in ADSs. The Depositary collects its fees for delivery and surrender of ADSs directly from investors depositing shares or surrendering ADSs for the purpose of withdrawal or from intermediaries acting for them. The Depositary collects fees for making distributions to investors by deducting those fees from the amounts distributed or by selling a portion of distributable property to pay the fees. The Depositary may collect its annual fee for depositary services by deduction from cash distributions or by directly billing investors or by charging the book-entry system accounts of participants acting for them. The Depositary may collect any of its fees by deduction from any cash distribution payable (or by selling a portion of securities or other property distributable) to ADS holders that are obligated to pay those fees. The Depositary may generally refuse to provide fee-attracting services until its fees for those services are paid. From time to time, the Depositary may make payments to us to reimburse us for costs and expenses generally arising out of establishment and maintenance of the ADS program, waive fees and expenses for services provided to us by the Depositary or share revenue from the fees collected from ADS holders. In performing its duties under the deposit agreement, the Depositary may use brokers, dealers, foreign currency dealers or other service providers that are owned by or affiliated with the Depositary and that may earn or share fees, spreads or commissions. The Depositary may convert currency itself or through any of its affiliates and, in those cases, acts as principal for its own account and not as agent, advisor, broker or fiduciary on behalf of any other person and earns revenue, including, without limitation, transaction spreads, that it will retain for its own account. The revenue is based on, among other things, the difference between the exchange rate assigned to the currency conversion made under the deposit agreement and the rate that the Depositary or its affiliate receives when buying or selling foreign currency for its own account. The Depositary makes no representation that the exchange rate used or obtained in any currency conversion under the deposit agreement will be the most favorable rate that could be obtained at the time or that the method by which that rate will be determined will be the most favorable to ADS holders, subject to the Depositary’s obligations under the deposit agreement. The methodology used to determine exchange rates used in currency conversions is available upon request. Liability of Holders for Taxes, Duties or Other Charges Any tax or other governmental charge with respect to ADSs or any deposited ordinary shares represented by any ADS shall be payable by the holder of such ADS to the Depositary. The Depositary may refuse to effect transfer of such ADS or any withdrawal of deposited ordinary shares represented by such ADS until such payment is made, and may withhold any dividends or other distributions or may sell for the account of the holder any part or all of the deposited ordinary shares represented by such ADS and may apply such dividends or distributions or the proceeds of any such sale in payment of any such tax or other governmental charge and the holder of such ADS shall remain liable for any deficiency. ITEM 13. DEFAULTS, DIVIDENDS ARREARAGES AND DELINQUENCIES Not applicable. ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS Not applicable. ITEM 15.15. CONTROLS AND PROCEDURES a. | Disclosure Controls and Procedures |
We have performed an evaluation of the effectiveness of our disclosure controls and procedures that are designed to ensure that the material financial and non-financial information required to be disclosed to the SEC is recorded, processed, summarized and reported timely. Based on our evaluation, our Chief Executive Officer, or the CEO, and the Chief Financial Officer, or the CFO, have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this report are effective. Notwithstanding the foregoing, there can be no assurance that our disclosure controls and procedures will detect or uncover all failures of persons within the Company to disclose material information otherwise required to be set forth in our reports. b. | Management’s Annual Report on Internal Control over Financial Reporting |
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) promulgated under the Exchange Act. Our internal control system was designed to provide reasonable assurance to our management and board of directors regarding the reliability of financial reporting and the preparation and fair presentation of published financial statements for external purposes in accordance with generally accepted accounting principles. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation and may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may deteriorate. Our management, including the CEO and CFO, conducted an evaluation, pursuant to Rule 13a-15(c) promulgated under the Exchange Act, of the effectiveness, as of the end of the period covered by this Annual Report, of its internal control over financial reporting based on the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013). Based on the results of this evaluation, management concluded that our internal control over financial reporting was effective as of December 31, 2022.2023. c. | Attestation Report of Registered Public Accounting Firm |
Kesselman & Kesselman, a member firm of PricewaterhouseCoopers International Ltd., our independent registered public accounting firm, has issued an attestation report on the effectiveness of our internal control over financial reporting, appearing under “Item 18. Financial Statements” on page F-2. d. | Changes in Internal Control over Financial Reporting |
There were no changes in our internal control over financial reporting that occurred during the year ended December 31, 20222023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 16. [RESERVED] ITEM 16A.16A. AUDIT COMMITTEE FINANCIAL EXPERTS Our Boardboard of Directorsdirectors has determined that Mr. Rami Dar is the audit committee financial expert. Mr. Dar is one of our independent directors for the purposes of the Nasdaq Rules. ITEM 16B.16B. CODE OF ETHICS In July 2011, our Boardboard of Directorsdirectors adopted a Code of Business Conduct and Ethics, or the Code of Conduct, that applies to all our employees, including without limitation our CEO, CFO and controller. Our Code of Conduct may be viewed on our website at www.biolinerx.com. A copy of our Code of Conduct may be obtained, without charge, upon a written request addressed to our investor relations department, 2 HaMa’ayan Street, Modi’in 7177871, Israel (Telephone no. +972-8-642-9100) (e-mail: info@BioLineRx.com). ITEM 16C.16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES Fees Paid to Independent Registered Public Accounting Firm The following table sets forth, for each of the years indicated, the fees billed by Kesselman & Kesselman, a member firm of PricewaterhouseCoopers International Ltd., our independent registered public accounting firm. | | Year Ended December 31, | | | Year Ended December 31, | | | | 2021 | | | 2022 | | | 2022 | | | 2023 | | Services Rendered | | (in thousands of U.S. dollars) | | | (in thousands of U.S. dollars) | | | | | | | | | | | | | | | Audit Fees(1) | | | 130 | | | 130 | | | | 130 | | | 130 | | Audit-Related Fees(2) | | | 25 | | | 4 | | | | 4 | | | 17 | | Tax Fees(3) | | | 20 | | | 18 | | | | 18 | | | 52 | | All Other Fees | | | - | | | | - | | | | - | | | | - | | Total | | | 175 | | | 152 | | | | 152 | | | 199 | |
(1) | Audit fees consist of services that would normally be provided in connection with statutory and regulatory filings or engagements, including services that generally only the independent accountant can reasonably provide. | | | (2) | Audit-related services relate to reports to the IIA and work regarding a public listing or offering. | | | (3) | Tax fees relate to tax compliance, planning and advice. |
Our Audit Committee, in accordance with its charter, reviews and pre-approves all audit services and permitted non-audit services (including the fees and other terms) to be provided by our independent auditors. ITEM 16D.16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES Not applicable. ITEM 16E.16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS Not applicable. ITEM 16F.16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT Not applicable. ITEM 16G.16G. CORPORATE GOVERNANCE Nasdaq Listing Rules and Home Country Practices
The Sarbanes-Oxley Act, as well as related rules subsequently implemented by the SEC, requires foreign private issuers, such as us, to comply with various corporate governance practices. In complying with the Nasdaq Rules, we have elected to follow certain corporate governance practices permitted under the Companies Law and the rules of the TASE in lieu of compliance with certain corporate governance requirements otherwise required by the Nasdaq Rules. In accordance with Israeli law and practice and subject to the exemption set forth in Rule 5615 of the Nasdaq Rules, we have elected to follow the provisions of the Companies Law, rather than the Nasdaq Rules, with respect to the following requirements: | • | Distribution of periodic reports to shareholders. Under Israeli law, a public company whose shares are traded on the TASE, is not required to distribute periodic reports directly to shareholders and the generally accepted business practice in Israel is not to distribute such reports to shareholders but to make such reports publicly available through a public website. We will only mail such reports to shareholders upon request. In addition, we make our audited financial statements available to our shareholders at our offices. |
| • | Quorum. While the Nasdaq Rules require that the quorum for purposes of any meeting of the holders of a listed company’s common voting stock, as specified in the company’s bylaws, be no less than 33 1/3% of the company’s outstanding common voting stock, as permitted under the Companies Law, our Articles of Association provide that a quorum of two or more shareholders holding at least 25% of the voting rights in person or by proxy is required for commencement of business at a general meeting (and, with respect to an adjourned meeting, a quorum consists of any number of shareholders present in person or by proxy). |
| • | Nomination of Directors. We follow Israeli corporate governance practices instead of the requirements of the Nasdaq Rules with regard to the nomination committee and director nomination procedures. Israeli law and practice does not require director nominations to be made by a nominating committee of our board of directors consisting solely of independent directors, as required under the Nasdaq Rules. In accordance with Israeli law and practice, directors are recommended by our board of directors for election by our shareholders (other than directors elected by our board of directors to fill a vacancy), and certain of our shareholders may nominate candidates for election as directors by the general meeting of shareholders in accordance with the Companies Law and our Articles of Association. |
| • | Compensation of Officers. We follow Israeli law and practice with respect to the approval of officer compensation, pursuant to which transactions with office holders regarding their terms of office and employment, and a transaction with a controlling shareholder in a company regarding his or her employment and/or his or her terms of office with the company, generally require the approval of the compensation committee, the board of directors and under certain circumstances (such as if the officer is a director or controlling shareholder) the shareholders, either in accordance with our compensation policy or, in special circumstances in deviation therefrom, taking into account certain considerations set forth in the Companies Law. See “Item 6.C— Directors, Senior Management and Employees — Board Practices — Compensation Committee” for information regarding the Compensation Committee, and “Item 6.C — Directors, Senior Management and Employees — Approval of Related Party Transactions under Israeli Law” for information regarding the approvals required with respect to approval of terms of office and employment of office holders, pursuant to the Companies Law. |
| • | Approval of Related Party Transactions. We follow Israeli law and practice with respect to the approval of interested party acts and transactions, as set forth in sections 268 to 275 of the Companies Law, and the regulations promulgated thereunder, which generally require the approval of the audit committee, the board of directors and, under certain circumstances (such as if the officer holder is a controlling shareholder) the shareholders, as may be applicable, for specified transactions. See “Item 6.C— Directors, Senior Management and Employees —Board Practices — Approval of Related Party Transactions under Israeli Law” for information regarding the approvals required with respect to approval of related party transactions pursuant to the Companies Law. |
| • | Shareholder Approval. We intend to seek shareholder approval for all corporate actions requiring such approval in accordance with the requirements of the Companies Law, which are different or in addition to the requirements for seeking shareholder approval under Nasdaq Listing Rule 5635, rather than seeking approval for corporation actions in accordance with such listing rules. |
| • | Equity Compensation Plans. We do not necessarily seek shareholder approval for the establishment of, and amendments to, stock option or equity compensation plans (as set forth in Nasdaq Listing Rule 5635(c)), as such matters are not subject to shareholder approval under Israeli law and practice. However, any equity-based compensation arrangement with a director or the chief executive officer or the material amendment of such an arrangement must be approved by our Compensation Committee, board of directors and shareholders, in that order. |
Distribution of annual and quarterly reportsExcept as stated above, we currently intend to shareholders. Under Israeli law, as a public company whose shares are tradedcomply with the rules generally applicable to U.S. domestic companies listed on Nasdaq. We may in the TASE, we are not requiredfuture decide to distribute annual and quarterly reports directlyuse the foreign private issuer exemption with respect to shareholders and the generally accepted business practice in Israel is not to distribute such reports to shareholders but to make such reports publicly available through the websitesome or all of the ISA andother Nasdaq corporate governance rules. Following our home country governance practices, as opposed to the TASE. In addition, we make our audited financial statements availablerequirements that would otherwise apply to a company listed on Nasdaq, may provide less protection than is accorded to investors under Nasdaq listing requirements applicable to domestic issuers. For more information, see “Item 3.D — Key Information - Risks Related to our shareholders at our offices. Ordinary Shares and ADSs - As a foreign private issuer, we are generally exempt from the SEC’s proxy solicitation rules.permitted to follow certain home country corporate governance practices instead of applicable SEC and Nasdaq requirements, which may result in less protection than is accorded to investors under rules applicable to domestic issuers.”
Quorum. While the Nasdaq Rules require that the quorum for purposes of any meeting of the holders of a listed company’s common voting stock, as specified in the company’s bylaws, be no less than 33 1/3% of the company’s outstanding common voting stock, under Israeli law, a company is entitled to determine in its articles of association the number of shareholders and percentage of holdings required for a quorum at a shareholders meeting. Our Articles of Association provide that a quorum of two or more shareholders holding at least 25% of the voting rights in person or by proxy is required for commencement of business at a general meeting. However, the quorum set forth in our Articles of Association with respect to an adjourned meeting consists of any number of shareholders present in person or by proxy.
Independent Directors. Our Board of Directors includes two external directors in accordance with the provisions contained in Sections 239-249 of the Companies Law and Rule 10A-3 of the general rules and regulations promulgated under the Securities Act, rather than a majority of independent directors. Israeli law does not require, nor do our independent directors conduct, regularly scheduled meetings at which only they are present. We are required, however, to ensure that all members of our Audit Committee are “independent” under the applicable Nasdaq and SEC criteria for independence (as a foreign private issuer we are not exempt from the SEC independence requirement), and we must also ensure that a majority of the members of our Audit Committee are independent directors as defined in the Companies Law. Furthermore, Israeli law does not require, nor do our independent directors conduct, regularly scheduled meetings at which only they are present, which the Nasdaq Rules otherwise require.
Audit Committee. Our Audit Committee complies with all of the requirements under Israeli law, and is composed of two external directors, which are all of our external directors, and only one other director, who cannot be the chairman of our Board of Directors. Consistent with Israeli law, the independent auditors are elected at a meeting of shareholders instead of being appointed by the Audit Committee.
Nomination of our Directors. With the exception of our external directors and directors elected by our Board of Directors due to vacancy, our directors are elected by a general or extraordinary meeting of our shareholders, to hold office until they are removed from office by the majority of our shareholders at a general or extraordinary meeting of our shareholders. See “Item 6. Directors, Senior Management and Employees — Board Practices — Board of Directors.” The nominations for directors, which are presented to our shareholders, are generally made by our directors, but nominations may be made by one or more of our shareholders as provided under the Companies Law or in an agreement between us and our shareholders. Currently, there is no agreement between us and any shareholder regarding the nomination of directors. In accordance with our Articles of Association, under the Companies Law, any one or more shareholders holding, in the aggregate, either (1) at least 5% of our outstanding shares and at least 1% of our outstanding voting power or (2) at least 5% of our outstanding voting power, may nominate one or more persons for election as directors at a general or special meeting by delivering a written notice of such shareholder’s intent to make such nomination or nominations to our registered office. Each such notice must set forth all of the details and information as required to be provided in the Companies Law.
Compensation Committee and Compensation of Officers. Israeli law, and our Articles of Association, do not require that a compensation committee composed solely of independent members of our Board of Directors determine (or recommend to the board of directors for determination) an executive officer’s compensation, as required under Nasdaq’s listing standards related to compensation committee independence and responsibilities; nor do they require that the Company adopt and file a compensation committee charter. Instead, our Compensation Committee has been established and conducts itself in accordance with provisions governing the composition of and the responsibilities of a compensation committee as set forth in the Companies Law, and is comprised of all of our external directors (who must comprise the majority of the members of the Compensation Committee), and at least one additional director who is entitled to the same compensation payable to our external directors, and who is not the chairman of our Board of Directors or otherwise employed by or a provider of services to, the Company. Additionally, we comply with the requirements set forth under the Companies Law, pursuant to which transactions with office holders regarding their terms of office and employment, and a transaction with a controlling shareholder in a company regarding his or her employment and/or his or her terms of office with the company, may require the approval of the compensation committee, the board of directors and under certain circumstances the shareholders, either in accordance with our compensation policy or, in special circumstances in deviation therefrom, taking into account certain considerations set forth in the Companies Law. See “Item 6. Directors, Senior Management and Employees — Board Practices — Compensation Committee” for information regarding the Compensation Committee, and “Item 6. Directors, Senior Management and Employees — Approval of Related Party Transactions under Israeli Law” for information regarding the special approvals required with respect to approval of terms of office and employment of office holders, pursuant to the Companies Law. The requirements for shareholder approval of any office holder compensation, and the relevant majority or special majority for such approval, are all as set forth in the Companies Law. Thus, we will seek shareholder approval for all corporate actions with respect to office holder compensation requiring such approval under the requirements of the Companies Law, including seeking prior approval of the shareholders for the compensation policy and for certain office holder compensation, rather than seeking approval for such corporate actions in accordance with Nasdaq Listing Rules.
Approval of Related Party Transactions. All related party transactions are approved in accordance with the requirements and procedures for approval of interested party acts and transactions, set forth in sections 268 to 275 of the Companies Law, and the regulations promulgated thereunder, which require the approval of the audit committee, the compensation committee, the board of directors and shareholders, as may be applicable, for specified transactions, rather than approval by the audit committee or other independent body of our Board of Directors as required under the Nasdaq Rules.
Shareholder Approval. We seek shareholder approval for all corporate actions requiring such approval in accordance with the requirements of the Companies Law, which are different or in addition to the requirements for seeking shareholder approval under Nasdaq Listing Rule 5635, rather than seeking approval for corporation actions in accordance with such listing rules.
Equity Compensation Plans. We do not necessarily seek shareholder approval for the establishment of, and amendments to, stock option or equity compensation plans (as set forth in Nasdaq Listing Rule 5635(c)), as such matters are not subject to shareholder approval under Israeli law. Our equity compensation plan is available to our employees, none of whom are currently U.S. employees, and provides features necessary to comply with applicable non-U.S. tax laws.
ITEM 16H. MINE SAFETY DISCLOSURE Not applicable. ITEM 16I.16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not applicable. ITEM 16J. INSIDER TRADING POLICIES Pursuant to applicable SEC transition guidance, the disclosure required by Item 16J will only be applicable to the Company from the fiscal year ending on December 31, 2024. ITEM 16K. CYBERSECURITY Risk management and strategy We have developed and maintain a cybersecurity risk management program that focuses primarily on securing and safeguarding computer systems, networks, cloud services, business applications, and data and that is integrated in our overall risk management strategy and framework. We have implemented protocols to protect against cyber threats and ensure the containment and security of sensitive business data, including ongoing security reviews of critical systems, continuous monitoring of event data, and employee training programs, which processes are aligned with our overall business and operational goals and strategies. Our risk assessment occurs on an ongoing basis and covers identification of risks that could act against the company’s objectives as well as specific risks related to a compromise to the security of data. We engage a third-party to provide operational support for cybersecurity risks. This forms a critical part of our risk management strategy, facilitating effective management and mitigation of risks, and ensuring adherence to applicable regulatory and industry standards. Overall, we believe that we have established a robust framework for confidentiality, integrity, and availability of information, adhering to relevant security standards, practices, and compliance requirements. In addition, we maintain insurance to help protect against risks associated with cybersecurity threats. As of the date of this report, we do not believe that any risks from cybersecurity threats have materially affected, or are reasonably likely to materially affect, us, including our business strategy, results of operations, or financial condition. However, despite our efforts, we cannot eliminate all risks from cybersecurity threats, or provide assurances that we have not experienced an undetected cybersecurity incident. For more information about these risks, please see “Item 3.D. Key Information — Risk Factors – Risks Related to Our Industry – Significant disruptions of our information technology systems or breaches of our data security could adversely affect our business.” in this Annual Report. Our audit committee provides oversight of our cybersecurity program and helps guide our strategy for managing cybersecurity risks in the context of our overall risk management system. Our cybersecurity program is managed by our Chief Financial Officer and our internal IT team who is responsible for leading enterprise-wide cybersecurity strategy, protocols, framework, standards and processes. The Chief Financial Officer reports to our board of directors, as well as our Chief Executive Officer and other members of senior management as appropriate. ITEM 17. FINANCIAL STATEMENTS The Registrant has responded to Item 18 in lieu of responding to this Item. ITEM 18. FINANCIAL STATEMENTS See the financial statements beginning on page F-1. The following financial statements are filed as part of this Annual Report on Form 20-F together with the report of the independent registered public accounting firm. ITEM 19.19. EXHIBITS Exhibit Number | | Exhibit Description | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| The following financial information from BioLineRx Ltd.’s Annual Report on Form 20-F for the fiscal year ended December 31, 20222023 formatted in Inline XBRL (Extensible Business Reporting Language): (i) Consolidated Statements of Financial Position at December 31, 20222023 and 2021;2022; (ii) Consolidated Statements of Comprehensive Loss for the years ended December 31, 2023, 2022 2021 and 2020;2021; (iii) Statements of Changes in Equity for the years ended December 31, 2023, 2022 2021 and 2020;2021; (iv) Consolidated Cash Flow Statements for the years ended December 31, 2023, 2022 2021 and 2020;2021; and (v) Notes to the Consolidated Financial Statements. |
† | Portions of this exhibit have been omitted and filed separately with the Securities and Exchange Commission pursuant to a confidential treatment request. |
(1) | Incorporated by reference to the Registrant’s Annual Report on Form 20-F filed on February 23, 2021. |
(2) | Incorporated by reference to Exhibit 1 of the Registration Statement on Form F-6EF (No. 333-218969) filed by the Bank of New York Mellon on June 26, 2017 with respect to the Registrant’s American Depositary Shares. |
(3) | Incorporated by reference to the Registrant’s Annual Report on Form 20-F filed on March 23, 2017. |
(4) | Incorporated by reference to the Registrant’s Registration Statement on Form 20-F (No. 001-35223) filed on July 1, 2011. |
(5) | Incorporated by reference to the Registrant’s Annual Report on Form 20-F filed on March 10, 2016. |
(6) | Incorporated by reference to the Registrant’s Annual Report on Form 20-F/A filed on May 31, 2016. |
(7) | Incorporated by reference to the Registrant’s Form 6-K filed on October 3, 2018. |
(8) | Incorporated by reference to the Registrant’s Form 6-K filed on May 27, 2022. |
(9) | Incorporated by reference to the Registrant’s Annual Report on Form 20-F filed on March 12, 2020. |
(10) | Incorporated by reference to the Registrant’s Annual Report on Form 20-F filed on March 23, 2015. |
(11) | Incorporated by reference to the Registrant’s Annual Report on Form 20-F/A filed on September 22, 2015. |
(12) | Incorporated by reference to the Registrant’s Form 6-K filed on February 7, 2019. |
(13) | Incorporated by reference to the Registrant’s Form 6-K filed on January 21, 2021. |
(14) | Incorporated by reference to the Registrant’s Form 6-K filed on September 3, 2021. |
(15) | Incorporated by reference to the Registrant’s Form 6-K filed on September 15, 2022. |
(16) | Incorporated by reference to the Registrant’s Form 6-K filed on September 21, 2022. |
(17)
| Incorporated by reference to the Registrant’s Annual Report on Form 20-F filed on March 16, 2022. |
(18) | Incorporated by reference to the Registrant’s Form 6-K filed on August 30, 2023. |
SIGNATURES The Registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf. | BIOLINERX LTD. | | | | | | | By: | /s/ Philip A. Serlin | | | | Philip A. Serlin | | | | Chief Executive Officer | |
Date: March 22, 202326, 2024
BioLineRx Ltd.
INDEX TO FINANCIAL STATEMENTS: | Page
| | Page | | F-2 | CONSOLIDATED FINANCIAL STATEMENTS: | | | F-4F-5
| | F-5F-6
| | F-6F-7
| | F-7F-8
| | F-9F-10
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Report of Independent Registered Public Accounting Firm To the Board of Directors and Shareholders of BioLineRx Ltd. Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated statements of financial position of BioLineRx Ltd.Ltd and its subsidiaries (the “Company”) as of December 31, 2023 and 2022, and 2021, the related consolidated statements of comprehensive loss, changes in equity and cash flows, for each of the three years in the period ended December 31, 2022,2023, including the related notes (collectively referred to as the “consolidatedconsolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2022,2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2022,2023 and 2021,2022 and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022,2023 in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022,2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO. Substantial Doubt about the Company’s Ability to Continue as a Going Concern The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1(b)1(c) to the consolidated financial statements, the Company has suffered recurring losses from operations and has cash outflows from operating activities that indicate that a material uncertainty exists that may cast significant doubt (or raise substantial doubt as contemplated by PCAOB standards) about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1(b)1(c). The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinions The Company's management is responsible for these consolidatedfinancial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management'sManagement’s Annual Report on Internal Control over Financial Reporting appearing under Item 15. Our responsibility is to express opinions on the Company’s consolidatedfinancial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Kesselman & Kesselman, 146 Derech Menachem Begin St. Tel-Aviv 6492103, Israel, P.O Box 7187 Tel-Aviv 6107120, Telephone: +972 -3- 7954555, Fax:+972 -3- 7954556, www.pwc.com/il
Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Intellectual Property Impairment AssessmentRevenue Recognition and Determination of Standalone Selling Price – License Agreement with Hong Seng Technology Limited (“HST”) and Guangzhou Gloria Biosciences Co., Ltd. (“Gloria”)
As describeddiscussed in Notes 4 and 8Note 16 to the consolidated financial statements, the Company's intangible assets relating to its intellectual property was $21.7Company entered into a license agreement (the “License Agreement”) with HST and Gloria during the year ended December 31, 2023. The Company recognized revenue of $4.6 million as(for the year ended December 31, 2023) and contract liabilities of $12.9 million (as of December 31, 2022. Management conducts an impairment test as of December 31 of each year, or more frequently if events or circumstances indicate that2023) related to the carrying valueLicense Agreement. The Company's performance obligations under the License Agreement include: (i) a stem-cell mobilization (“SCM”) license, (ii) support services related to SCM and (iii) a pancreatic adenocarcinoma (“PDAC”) license and support services. The Company determined the estimated standalone selling prices of the intellectual property may be impaired. Potential impairment is identified by comparingSCM license and the recoverable amountPDAC combined performance obligation using price offers for each indication with the assistance of a valuation specialist and determined the estimated standalone selling price of the intellectual property to its carrying value. Value in usesupport services for SCM using cost-plus margin. The Company recognized revenue from the SCM license at point of time and recognized revenue from the SCM support services and the PDAC license and support services over time using the input method based on a ratio between the support hours incurred to the Company is estimated by management using a discounted cash flow model. Management's cash flow projections included significant judgments and assumptions relatingtotal hours expected to be incurred until satisfying the weighted average cost of capital and the amount and timing of projected future cash flows. performance obligation. The principal considerations for our determination that performing procedures relating to the intellectual property impairment assessmentdetermination of the standalone selling price and revenue recognition – estimated hours to complete PDAC license and support services performance obligation is a critical audit matter are thethere was significant judgment and estimation used by management in developing the weighted average cost of capital and the amount and timing of projected future cash flows.management. This in turn led to a high degree ofsignificant auditor judgment, subjectivity, and effort in performing procedures to evaluate these assumptions. In addition, the audit effort involved the use of professionals with specialized skill and knowledge to assist in performing these procedures and evaluating the audit evidence obtained. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management's intangible asset impairment assessment,revenue recognition process including controls over the determination of the cash flow projectionsestimated standalone selling prices and the significant assumptions used. Theseestimated hours to complete the PDAC license and support services performance obligation. The procedures also included, among others, (i) reading the related agreements; (ii) evaluating and testing management’s process for developingdetermining the value estimate;estimated standalone selling prices and the estimated hours to complete the PDAC license and support services performance obligation which included evaluating the appropriatenessreasonableness of the discounted cash flow model; testingvaluation methodology and significant assumptions, including the completeness, accuracy, and relevance of underlying data used in the model; and evaluating the significant assumptionsestimated expected support hours, used by management including the weighted average cost of capital and the amount and timing of projected future cash flows. Evaluating management’s assumptions related to the weighted average cost of capital and the amount and timing of projected future cash flows involved evaluating whether the assumptions used by management were reasonable considering the consistency with external market and industry data.factors that can affect the accuracy of those estimates. Professionals with specialized skill and knowledge were used to assist in the evaluation of management’s valuation model and certain significant assumptions. the Company’s model. /s/ Kesselman & Kesselman | Certified Public Accountants (Isr.) | A member firm of PricewaterhouseCoopers International Ltd. |
Tel Aviv, Israel | March 22, 202326, 2024 |
We have served as the Company’s auditor since 2003. BioLineRx Ltd. CONSOLIDATED STATEMENTS OF FINANCIAL POSITION | | | | | | | | | | | | | | | | | | | | | | | | Assets | | | | | | | | | | CURRENT ASSETS | | | | | | | | | | Cash and cash equivalents | | | 5 | | | | 12,990 | | | | 10,587 | | Short-term bank deposits | | | 6 | | | | 44,145 | | | | 40,495 | | Prepaid expenses | | | | | | | 127 | | | | 198 | | Other receivables | | | 16a | | | | | | | | | | Total current assets | | | | | | | | | | | | | | | | | | | | | | | | | | NON-CURRENT ASSETS | | | | | | | | | | | | | Property and equipment, net | | | 7 | | | | 952 | | | | 726 | | Right-of-use assets, net | | | 9 | | | | 1,331 | | | | 1,772 | | Intangible assets, net | | | 8 | | | | | | | | | | Total non-current assets | | | | | | | | | | | | | Total assets | | | | | | | | | | | | | | | | | | | | | | | | | | Liabilities and equity | | | | | | | | | | | | | CURRENT LIABILITIES | | | | | | | | | | | | | Current maturities of long-term loans | | | 10 | | | | 2,757 | | | | 1,542 | | Accounts payable and accruals: | | | | | | | | | | | | | Trade | | | 16b | | | | 5,567 | | | | 6,966 | | Other | | | 16b | | | | 1,227 | | | | 1,744 | | Current maturities of lease liabilities | | | 9 | | | | | | | | | | Total current liabilities | | | | | | | | | | | | | | | | | | | | | | | | | | NON-CURRENT LIABILITIES | | | | | | | | | | | | | Warrants | | | 11c | | | | 1,859 | | | | 4,509 | | Long-term loans, net of current maturities | | | 10 | | | | - | | | | 8,626 | | Lease liabilities | | | 9 | | | | | | | | | | Total non-current liabilities | | | | | | | | | | | | | | | | | | | | | | | | | | COMMITMENTS AND CONTINGENT LIABILITIES | | | 14 | | | | | | | | | | Total liabilities | | | | | | | | | | | | | | | | | | | | | | | | | | EQUITY | | | 11 | | | | | | | | | | Ordinary shares | | | | | | | 21,066 | | | | 27,100 | | Share premium | | | | | | | 339,346 | | | | 338,976 | | Warrants | | | | | | | 975 | | | | 1,408 | | Capital reserve | | | | | | | 13,157 | | | | 14,765 | | Other comprehensive loss | | | | | | | (1,416 | ) | | | (1,416 | ) | Accumulated deficit | | | | | | | | | | | | | Total equity | | | | | | | | | | | | | Total liabilities and equity | | | | | | | | | | | | |
The accompanying notes are an integral part of the consolidated financial statements.
BioLineRx Ltd.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | RESEARCH AND DEVELOPMENT EXPENSES | | | 16c | | | | (18,173 | ) | | | (19,466 | ) | | | (17,629 | ) | SALES AND MARKETING EXPENSES | | | 16d | | | | (840 | ) | | | (1,003 | ) | | | (6,462 | ) | GENERAL AND ADMINISTRATIVE EXPENSES | | | 16e | | | | | | | | | | | | | | OPERATING LOSS | | | | | | | (22,927 | ) | | | (24,777 | ) | | | (29,157 | ) | NON-OPERATING INCOME (EXPENSES), NET | | | 16f | | | | (5,701 | ) | | | (1,830 | ) | | | 5,670 | | FINANCIAL INCOME | | | 16g | | | | 236 | | | | 559 | | | | 694 | | FINANCIAL EXPENSES | | | 16h | | | | | | | | | | | | | | LOSS AND COMPREHENSIVE LOSS | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | LOSS PER ORDINARY SHARE – BASIC AND DILUTED | | | 13 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | WEIGHTED AVERAGE NUMBER OF SHARES USED IN CALCULATION OF LOSS PER ORDINARY SHARE | | | 13 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | Assets | | | | | | | | | | CURRENT ASSETS | | | | | | | | | | Cash and cash equivalents | | | 5 | | | | 10,587 | | | | 4,255 | | Short-term bank deposits | | | 6 | | | | 40,495 | | | | 38,739 | | Trade receivables | | | | | | | - | | | | 358 | | Prepaid expenses | | | | | | | 198 | | | | 1,048 | | Other receivables | | | 18a | | | | 721 | | | | 830 | | Inventory | | | 7 | | | | | | | | | | Total current assets | | | | | | | | | | | | | | | | | | | | | | | | | | NON-CURRENT ASSETS | | | | | | | | | | | | | Property and equipment, net | | | 8 | | | | 726 | | | | 473 | | Right-of-use assets, net | | | 10 | | | | 1,772 | | | | 1,415 | | Intangible assets, net | | | 9 | | | | | | | | | | Total non-current assets | | | | | | | | | | | | | Total assets | | | | | | | | | | | | | | | | | | | | | | | | | | Liabilities and equity | | | | | | | | | | | | | CURRENT LIABILITIES | | | | | | | | | | | | | Current maturities of long-term loans | | | 11 | | | | 1,542 | | | | 3,145 | | Contract liabilities | | | 16 | | | | - | | | | 12,957 | | Accounts payable and accruals: | | | | | | | | | | | | | Trade | | | 18b | | | | 6,966 | | | | 10,869 | | Other | | | 18b | | | | 1,744 | | | | 3,353 | | Current maturities of lease liabilities | | | 10 | | | | | | | | | | Total current liabilities | | | | | | | | | | | | | | | | | | | | | | | | | | NON-CURRENT LIABILITIES | | | | | | | | | | | | | Warrants | | | 12c | | | | 4,509 | | | | 11,932 | | Long-term loans, net of current maturities | | | 11 | | | | 8,626 | | | | 6,628 | | Lease liabilities | | | 10 | | | | | | | | | | Total non-current liabilities | | | | | | | | | | | | | | | | | | | | | | | | | | COMMITMENTS AND CONTINGENT LIABILITIES | | | 15 | | | | - | | | | - | | Total liabilities | | | | | | | | | | | | | | | | | | | | | | | | | | EQUITY | | | 12 | | | | | | | | | | Ordinary shares | | | | | | | 27,100 | | | | 31,355 | | Share premium | | | | | | | 338,976 | | | | 355,482 | | Warrants | | | | | | | 1,408 | | | | 1,408 | | Capital reserve | | | | | | | 14,765 | | | | 17,000 | | Other comprehensive loss | | | | | | | (1,416 | ) | | | (1,416 | ) | Accumulated deficit | | | | | | | | | | | | | Total equity | | | | | | | | | | | | | Total liabilities and equity | | | | | | | | | | | | |
The accompanying notes are an integral part of the consolidated financial statements. BioLineRx Ltd. CONSOLIDATED STATEMENTS OF CHANGES IN EQUITYCOMPREHENSIVE LOSS | | | | | | | | | | | | | | | | | | | | | | | | in USD thousands | | BALANCE AT JANUARY 1, 2020 | | | 4,692 | | | | 265,938 | | | | - | | | | 12,132 | | | | (1,416 | ) | | | (247,966 | ) | | | 33,380 | | CHANGES IN 2020: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Issuance of share capital and warrants, net | | | 4,777 | | | | 9,395 | | | | - | | | | - | | | | - | | | | - | | | | 14,172 | | Warrants exercised | | | 393 | | | | 2,826 | | | | - | | | | - | | | | - | | | | - | | | | 3,219 | | Employee stock options exercised | | | 8 | | | | 228 | | | | - | | | | (228 | ) | | | - | | | | - | | | | 8 | | Employee stock options expired | | | - | | | | 854 | | | | - | | | | (854 | ) | | | - | | | | - | | | | - | | Share-based compensation | | | - | | | | - | | | | - | | | | 1,272 | | | | - | | | | - | | | | 1,272 | | Comprehensive loss for the year | | | - | | | | - | | | | - | | | | - | | | | - | | | | (30,021 | ) | | | (30,021 | ) | BALANCE AT DECEMBER 31, 2020 | | | 9,870 | | | | 279,241 | | | | - | | | | 12,322 | | | | (1,416 | ) | | | (277,987 | ) | | | 22,030 | | CHANGES IN 2021: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Issuance of share capital and warrants, net | | | 8,956 | | | | 40,476 | | | | 975 | | | | - | | | | - | | | | - | | | | 50,407 | | Warrants exercised | | | 2,235 | | | | 18,967 | | | | - | | | | - | | | | - | | | | - | | | | 21,202 | | Employee stock options exercised | | | 5 | | | | 41 | | | | - | | | | (39 | ) | | | - | | | | - | | | | 7 | | Employee stock options expired | | | - | | | | 621 | | | | - | | | | (621 | ) | | | - | | | | - | | | | - | | Share-based compensation | | | - | | | | - | | | | - | | | | 1,495 | | | | - | | | | - | | | | 1,495 | | Comprehensive loss for the year | | | - | | | | - | | | | - | | | | | | | | - | | | | (27,054 | | | | (27,054 | ) | BALANCE AT DECEMBER 31, 2021 | | | 21,066 | | | | 339,346 | | | | 975 | | | | 13,157 | | | | (1,416 | ) | | | (305,041 | ) | | | 68,087 | | CHANGES IN 2022: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Issuance of share capital and warrants, net | | | 6,029 | | | | (1,007 | ) | | | 433 | | | | - | | | | - | | | | - | | | | 5,455 | | Employee stock options exercised | | | 5 | | | | 14 | | | | - | | | | (14 | ) | | | - | | | | - | | | | 5 | | Employee stock options expired | | | - | | | | 623 | | | | - | | | | (623 | ) | | | - | | | | - | | | | - | | Share-based compensation | | | - | | | | - | | | | - | | | | 2,245 | | | | - | | | | - | | | | 2,245 | | Comprehensive loss for the year | | | - | | | | - | | | | - | | | | | | | | - | | | | (24,951 | ) | | | (24,951 | ) | BALANCE AT DECEMBER 31, 2022 | | | 27,100 | | | | 338,976 | | | | 1,408 | | | | 14,765 | | | | (1,416 | ) | | | (329,992 | ) | | | 50,841 | |
The accompanying notes are an integral part of the consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
| | | | | | | | | | | | | | | | | | CASH FLOWS - OPERATING ACTIVITIES | | | | | | | | | | Loss | | | (30,021 | ) | | | (27,054 | ) | | | (24,951 | ) | Adjustments required to reflect net cash used in operating activities (see appendix below) | | | | | | | | | | | | ) | Net cash used in operating activities | | | | | | | | | | | | | | | | | | | | | | | | | | CASH FLOWS - INVESTING ACTIVITIES | | | | | | | | | | | | | Investments in short-term deposits | | | (33,500 | ) | | | (78,000 | ) | | | (44,000 | ) | Maturities of short-term deposits | | | 50,168 | | | | 39,873 | | | | 48,322 | | Purchase of property and equipment | | | - | | | | (97 | ) | | | (131 | ) | Purchase of intangible assets | | | | | | | | | | | | ) | Net cash provided by (used in) investing activities | | | | | | | | ) | | | | | | | | | | | | | | | | | | CASH FLOWS - FINANCING ACTIVITIES | | | | | | | | | | | | | Issuance of share capital and warrants, net of issuance costs | | | 19,246 | | | | 50,407 | | | | 14,359 | | Exercise of warrants | | | 1,969 | | | | 10,907 | | | | - | | Employee stock options exercised | | | 8 | | | | 7 | | | | 5 | | Proceeds from long-term loan, net of issuance costs | | | - | | | | - | | | | 9,126 | | Repayments of loans | | | (3,133 | ) | | | (3,376 | ) | | | (2,832 | ) | Repayments of lease liabilities | | | | ) | | | | | | | | | Net cash provided by financing activities | | | | | | | | | | | | | | | | | | | | | | | | | | INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | | | 11,328 | | | | (4,048 | ) | | | (1,796 | ) | CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR | | | 5,297 | | | | 16,831 | | | | 12,990 | | EXCHANGE DIFFERENCES ON CASH AND CASH EQUIVALENTS | | | | | | | | | | | | ) | CASH AND CASH EQUIVALENTS - END OF YEAR | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | REVENUES | | | 18c | | | | - | | | | - | | | | 4,800 | | COST OF REVENUES | | | 18d | | | | | | | | | | | | | | GROSS PROFIT | | | | | | | - | | | | - | | | | 1,108 | | RESEARCH AND DEVELOPMENT EXPENSES | | | 18e | | | | (19,466 | ) | | | (17,629 | ) | | | (12,519 | ) | SALES AND MARKETING EXPENSES | | | 18f | | | | (1,003 | ) | | | (6,462 | ) | | | (25,270 | ) | GENERAL AND ADMINISTRATIVE EXPENSES | | | 18g | | | | (4,308 | ) | | | (5,066 | ) | | | (6,310 | ) | IMPAIRMENT OF INTANGIBLE ASSETS | | | 9 | | | | | | | | | | | | | | OPERATING LOSS | | | | | | | (24,777 | ) | | | (29,157 | ) | | | (49,694 | ) | NON-OPERATING INCOME (EXPENSES), NET | | | 18h | | | | (1,830 | ) | | | 5,670 | | | | (10,819 | ) | FINANCIAL INCOME | | | 18i | | | | 559 | | | | 694 | | | | 2,068 | | FINANCIAL EXPENSES | | | 18j | | | | | | | | | | | | | | LOSS AND COMPREHENSIVE LOSS | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | LOSS PER ORDINARY SHARE – BASIC AND DILUTED | | | 14 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | WEIGHTED AVERAGE NUMBER OF SHARES USED IN CALCULATION OF LOSS PER ORDINARY SHARE | | | 14 | | | | | | | | | | | | | |
The accompanying notes are an integral part of the consolidated financial statements. CONSOLIDATED STATEMENTS OF CASH FLOWSCHANGES IN EQUITY
| | | | | | | | | | | | | | | | | | APPENDIX | | | | | | | | | | | | | | | | | | | | Adjustments required to reflect net cash used in operating activities: | | | | | | | | | | Income and expenses not involving cash flows: | | | | | | | | | | Depreciation and amortization | | | 934 | | | | 703 | | | | 654 | | Exchange differences on cash and cash equivalents | | | (206 | ) | | | (207 | ) | | | 607 | | Fair value adjustments of warrants | | | 5,142 | | | | 1,936 | | | | (6,425 | ) | Share-based compensation | | | 1,272 | | | | 1,495 | | | | 2,245 | | Interest and exchange differences on short-term deposits | | | (232 | ) | | | (262 | ) | | | (672 | ) | Interest accrued | | | 474 | | | | 301 | | | | 1,117 | | Warrant issuance costs | | | 594 | | | | - | | | | 171 | | Exchange differences on lease liabilities | | | | | | | | | | | | ) | | | | | | | | | | | | | ) | | | | | | | | | | | | | | Changes in operating asset and liability items: | | | | | | | | | | | | | Decrease (increase) in prepaid expenses and other receivables | | | 428 | | | | 24 | | | | (650 | ) | Increase (decrease) in accounts payable and accruals | | | | | | | | ) | | | | | | | | | | | | | ) | | | | | | | | | | | | | | | | | ) | | | | | | | | | | | | | | Supplemental information on interest received in cash | | | | | | | | | | | | | Supplemental information on interest paid in cash | | | | | | | | | | | | | | | | | | | | | | | | | | Supplemental information on non-cash transactions: | | | | | | | | | | | | | Changes in right-of-use asset and lease liabilities | | | 13 | | | | 183 | | | | 706 | | Warrant issuance costs | | | - | | | | - | | | | 262 | | Purchase of property and equipment | | | - | | | | - | | | | 28 | | Fair value of exercised warrants (portion related to accumulated fair value adjustments) | | | 1,251 | | | | 10,295 | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | | BALANCE AT JANUARY 1, 2021 | | | 9,870 | | | | 279,241 | | | | - | | | | 12,322 | | | | (1,416 | ) | | | (277,987 | ) | | | 22,030 | | CHANGES IN 2021: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Issuance of share capital and warrants, net | | | 8,956 | | | | 40,476 | | | | 975 | | | | - | | | | - | | | | - | | | | 50,407 | | Warrants exercised | | | 2,235 | | | | 18,967 | | | | - | | | | - | | | | - | | | | - | | | | 21,202 | | Employee stock options exercised | | | 5 | | | | 41 | | | | - | | | | (39 | ) | | | - | | | | - | | | | 7 | | Employee stock options expired | | | - | | | | 621 | | | | - | | | | (621 | ) | | | - | | | | - | | | | - | | Share-based compensation | | | - | | | | - | | | | - | | | | 1,495 | | | | - | | | | - | | | | 1,495 | | Comprehensive loss for the year | | | | | | | | | | | | | | | | | | | | | | | | | | | | | BALANCE AT DECEMBER 31, 2021 | | | 21,066 | | | | 339,346 | | | | 975 | | | | 13,157 | | | | (1,416 | ) | | | (305,041 | ) | | | 68,087 | | CHANGES IN 2022: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Issuance of share capital and warrants, net | | | 6,029 | | | | (1,007 | ) | | | 433 | | | | - | | | | - | | | | - | | | | 5,455 | | Employee stock options exercised | | | 5 | | | | 14 | | | | - | | | | (14 | ) | | | - | | | | - | | | | 5 | | Employee stock options expired | | | - | | | | 623 | | | | - | | | | (623 | ) | | | - | | | | - | | | | - | | Share-based compensation | | | - | | | | - | | | | - | | | | 2,245 | | | | - | | | | - | | | | 2,245 | | Comprehensive loss for the year | | | | | | | | | | | | | | | | | | | | | | | | | | | | | BALANCE AT DECEMBER 31, 2022 | | | 27,100 | | | | 338,976 | | | | 1,408 | | | | 14,765 | | | | (1,416 | ) | | | (329,992 | ) | | | 50,841 | | CHANGES IN 2023: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Issuance of share capital, net | | | 3,242 | | | | 10,847 | | | | - | | | | - | | | | - | | | | - | | | | 14,089 | | Warrants exercised | | | 1,000 | | | | 5,559 | | | | - | | | | - | | | | - | | | | - | | | | 6,559 | | Employee stock options exercised | | | 13 | | | | 45 | | | | - | | | | (31 | ) | | | - | | | | - | | | | 27 | | Employee stock options expired | | | - | | | | 55 | | | | - | | | | (55 | ) | | | - | | | | - | | | | - | | Share-based compensation | | | - | | | | - | | | | - | | | | 2,321 | | | | - | | | | - | | | | 2,321 | | Comprehensive loss for the year | | | | | | | | | | | | | | | | | | | | | | | | | | | | | BALANCE AT DECEMBER 31, 2023 | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
The accompanying notes are an integral part of the consolidated financial statements. BioLineRx Ltd. CONSOLIDATED STATEMENTS OF CASH FLOWS | | | | | | | | | | | | | | | | | | CASH FLOWS - OPERATING ACTIVITIES | | | | | | | | | | Loss | | | (27,054 | ) | | | (24,951 | ) | | | (60,614 | ) | Adjustments required to reflect net cash used in operating activities (see appendix below) | | | | | | | | | | | | | Net cash used in operating activities | | | | | | | | | | | | | | | | | | | | | | | | | | CASH FLOWS - INVESTING ACTIVITIES | | | | | | | | | | | | | Investments in short-term deposits | | | (78,000 | ) | | | (44,000 | ) | | | (47,588 | ) | Maturities of short-term deposits | | | 39,873 | | | | 48,322 | | | | 49,329 | | Purchase of property and equipment | | | (97 | ) | | | (131 | ) | | | (116 | ) | Purchase of intangible assets | | | | | | | | | | | | | Net cash provided by (used in) investing activities | | | | | | | | | | | | | | | | | | | | | | | | | | CASH FLOWS - FINANCING ACTIVITIES | | | | | | | | | | | | | Issuance of share capital and warrants, net of issuance costs | | | 50,407 | | | | 14,359 | | | | 14,089 | | Exercise of warrants | | | 10,907 | | | | - | | | | 2,928 | | Employee stock options exercised | | | 7 | | | | 5 | | | | 27 | | Proceeds from long-term loan, net of issuance costs | | | - | | | | 9,126 | | | | - | | Repayments of loans | | | (3,376 | ) | | | (2,832 | ) | | | (1,543 | ) | Repayments of lease liabilities | | | | | | | | | | | | | Net cash provided by financing activities | | | | | | | | | | | | | | | | | | | | | | | | | | DECREASE IN CASH AND CASH EQUIVALENTS | | | (4,048 | ) | | | (1,796 | ) | | | (6,108 | ) | CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR | | | 16,831 | | | | 12,990 | | | | 10,587 | | EXCHANGE DIFFERENCES ON CASH AND CASH EQUIVALENTS | | | | | | | | | | | | | CASH AND CASH EQUIVALENTS - END OF YEAR | | | | | | | | | | | | |
The accompanying notes are an integral part of the consolidated financial statements. CONSOLIDATED STATEMENTS OF CASH FLOWS | | | | | | | | | | | | | | | | | | APPENDIX | | | | | | | | | | | | | | | | | | | | Adjustments required to reflect net cash used in operating activities: | | | | | | | | | | Income and expenses not involving cash flows: | | | | | | | | | | Depreciation and amortization | | | 703 | | | | 654 | | | | 1,384 | | Exchange differences on cash and cash equivalents | | | (207 | ) | | | 607 | | | | 224 | | Fair value adjustments of warrants | | | 1,936 | | | | (6,425 | ) | | | 11,054 | | Share-based compensation | | | 1,495 | | | | 2,245 | | | | 2,321 | | Interest and exchange differences on short-term deposits | | | (262 | ) | | | (672 | ) | | | 15 | | Interest on loans | | | 301 | | | | 1,117 | | | | 1,148 | | Warrant issuance costs | | | - | | | | 171 | | | | - | | Exchange differences on lease liabilities | | | 55 | | | | (224 | ) | | | (42 | ) | Intangible assets impairment | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Changes in operating asset and liability items: | | | | | | | | | | | | | Increase in trade receivables | | | - | | | | - | | | | (358 | ) | Increase in inventory | | | - | | | | - | | | | (1,953 | ) | Decrease (increase) in prepaid expenses and other receivables | | | 24 | | | | (650 | ) | | | (959 | ) | Increase (decrease) in accounts payable and accruals | | | (564 | ) | | | 1,888 | | | | 5,512 | | Increase in contract liabilities | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Supplemental information on interest received in cash | | | | | | | | | | | | | Supplemental information on interest paid in cash | | | | | | | | | | | | | | | | | | | | | | | Supplemental information on non-cash transactions: | | | | | | | | | | Changes in right-of-use asset and lease liabilities | | | | | | | | | | | | | Warrant issuance costs | | | | | | | | | | | | | Purchase of property and equipment | | | | | | | | | | | | | Fair value of exercised warrants (portion related to accumulated fair value adjustments) | | | | | | | | | | | | |
The accompanying notes are an integral part of the consolidated financial statements. BioLineRx Ltd. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 – GENERAL INFORMATION BioLineRx Ltd. (“BioLineRx”), headquartered in Modi’in, Israel, was incorporated and commenced operations in April 2003. BioLineRx and its subsidiaries (collectively, the “Company”) are engaged in the development (primarily in clinical stages) and commercialization of therapeutics, primarily in pre-commercialization and clinical stages, with a focus on the fieldfields of oncology.oncology and hematology. The Company’s American Depositary Shares (“ADSs”) are traded on the NASDAQ Capital Market, and its ordinary shares are traded on the Tel Aviv Stock Exchange (“TASE”). Each ADS represents 15 ordinary shares. In March 2017,The Company has two substantially wholly owned subsidiaries: (i) BioLineRx USA, Inc., incorporated in the Company acquiredU.S., and engaged in commercialization activities associated with the launch of motixafortide for stem-cell mobilization in the U.S.; and (ii) Agalimmune Ltd. (“Agalimmune”), a privately held company incorporated in the United Kingdom, and engaged in clinical development activities with a focus on the field of immuno-oncology. In December 2023, the Company made a decision to terminate the development of AGI-134, the principal asset of Agalimmune Ltd., effective March 15, 2024 (see Note 9).
In April 2022,September 2023, the Company re-activated BioLineRx USA, Inc., a previously inactive subsidiary incorporated in the US, to engage in pre-commercialization and commercialization activities associated with the potential launch of motixafortide for stem-cell mobilization in the US. In this regard, the USU.S. Food and Drug Administration (FDA) has accepted for review and filed the Company’s New Drug Application (NDA) for(“FDA”) approved motixafortide in stem cell mobilization for autologous transplantation for multiple myeloma patients, and the Company has assignedbegun to independently commercialize motixafortide in the NDA a Prescription Drug User Fee Act (PDUFA) target action date of September 9, 2023.U.S. On October 7, 2023, an unprecedented invasion was launched against Israel from the Gaza Strip by terrorists from the Hamas terrorist organization that infiltrated Israel’s southern border and other areas within the country, attacking civilians and military targets while simultaneously launching extensive rocket attacks on the Israeli civilian population. These attacks resulted in extensive deaths, injuries and the kidnapping of civilians and soldiers. In response, the Security Cabinet of the State of Israel declared war against Hamas, with commencement of a military campaign against the terrorist organization, in parallel to its continued rocket and terror attacks. In addition, Hezbollah, an Islamist terrorist group that controls large portions of southern Lebanon, has attacked military and civilian targets in Northern Israel, to which Israel has responded. To date, the State of Israel continues to be at war with Hamas and in an armed conflict with Hezbollah. The Company’s headquarters and principal development operations are located in the State of Israel. In addition, most of its key employees, officers and directors are residents of Israel. The ongoing war with Hamas has not, to date, materially impacted the Company’s business or operations. Furthermore, the Company does not expect any disruption to its programs or operations as a result of this situation. Nevertheless, at this time, it is not possible to predict the intensity or duration of Israel’s war against Hamas, nor how this conflict will ultimately affect the Company’s ongoing business and operations, nor Israel’s economy in general. F-10
BioLineRx Ltd. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 – GENERAL INFORMATION (cont.) The Company has incurred accumulated losses in the amount of $330$391 million through December 31, 2022,2023, and it expects to continue incurring losses and negative cash flows from operations until its product or products reach commercial profitability. As mentioned in Note 3, Company management monitors rolling forecasts of the Company’s liquidity reserves on the basis of anticipated cash flows and maintainsseeks to maintain liquidity balances at levels that are sufficient to meet its needs. Management believes that the Company’s current cash and other resources will be sufficient to fund its projected cash requirements into the first half of 2024. 2025. The execution of an independent commercialization plan for motixafortide in the USU.S. implies an increased level of expenses prior to and following launch of the product. However,product, as is common with FDA approvals of innovative pharmaceutical products, there is significantwell as uncertainty regarding the receipttiming of approval, as well as the timing and scope of any potential approval ultimately received in order to launch commercialization of the product.commercial profitability. Therefore, the Company’s cash flow projections are subject to various risks and uncertainties concerning their fulfilment, and these factors and the riskrisks inherent in the Company’s operations indicate that a material uncertainty exists that may cast significant doubt (or raise substantial doubt as contemplated by PCAOB standards) on the Company’s ability to continue as a going concern. These consolidated 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. As a US SEC registrant, the Company is required to have its financial statements audited in accordance with Public Company Oversight Board (“PCAOB”) standards. References in these IFRS financial statements to matters that may cast significant doubt about the Company’s ability to continue as a going concern also raise substantial doubt as contemplated by the PCAOB standards.
Management’s plans include the independent commercialization of the Company’s product, as aforementioned, and, if and when required, raising capital through the issuance of debt or equity securities, or capital inflows from strategic partnerships. There are no assurances, however, that the Company will be successful in obtaining the level of financing needed for its operations. If the Company is unsuccessful in commercializing its products and/or raising capital, it may need to reduce activities, or curtail or cease operations. | c.d.
| Approval of consolidated financial statements |
The consolidated financial statements of the Company for the year ended December 31, 20222023 were approved by the Board of Directors on March 21, 2023,25, 2024, and signed on its behalf by the Chairman of the Board, the Chief Executive Officer and the Chief Financial Officer. F - 9F-11
BioLineRx Ltd. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 2 – SIGNIFICANTMATERIAL ACCOUNTING POLICIES The Company’s consolidated financial statements as of December 31, 20212022 and 2022,2023, and for each of the three years in the period ended December 31, 2022,2023, have been prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”). The significant materialaccounting policies described below have been applied on a consistent basis for all years presented, unless noted otherwise. The consolidated financial statements have been prepared on the basis of historical cost, subject to adjustment of warrant liabilities to their fair value through profit or loss. The preparation of financial statements in conformity with IFRS requires management to make estimates, judgments and assumptions that may affect the reported amounts of assets, liabilities, equity and expenses, as well as the related disclosures of contingent assets and liabilities, in the process of applying the Company’s accounting policies. Actual results could differ from those estimates. Areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant materialto the consolidated financial statements, are disclosed in Note 4. Actual results may differ materially from estimates and assumptions used by the Company’s management. F-12
BioLineRx Ltd. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 2 – MATERIAL ACCOUNTING POLICIES (cont.) | b. | Principles of consolidation
|
Consolidated entities are all entities over which BioLineRx has control. BioLineRx controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Consolidated entities are fully consolidated from the date on which control of such entities is transferred to BioLineRx and they are de-consolidated from the date that control ceases.
| c. | Functional and reporting currency |
The functional and reporting currency in these financial statements is the U.S. dollar (“dollar”, “USD” or “$”), which is the primary currency of the economic environment in which the Company operates. Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year-end exchange rates are generally recognized in profit or loss. F - 10
BioLineRx Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (cont.)
| d.c.
| Cash equivalents and short-term bank depositsInventory
|
Inventory is measured at the lower cost or net realizable value. The cost of inventories includes purchase costs, packaging and labeling costs, and other costs incurred in bringing the inventories to their present location and condition. Net realizable value is the estimated selling price of the inventories in the ordinary course of business, less the estimated costs necessary to make the sale. Pre-launch inventory is held as an asset when there is a high probability of regulatory approval for the product, see Note 1a. Before that point, a provision is made against the value to its recoverable amount; the provision is then reversed at the point when regulatory approval is received. CashInventory is written down for estimated obsolescence based upon management assumptions about future demand, expiration due date and cash equivalents include cash on hand and short-term bank deposits (up to three months from date of deposit) that are not restricted as to withdrawal or use. Bank deposits with original maturity dates of more than three months and with a current maturity date of less than one year from the balance sheet date are included in short-term bank deposits. The fair value of cash equivalents and short-term bank deposits approximates their carrying value, since they bear interest at rates close to the prevailing market rates.conditions.
| e.d.
| Property and equipment |
Property and equipment are stated at historical cost less depreciation. Historical cost includes expenditures that are directly attributable to acquisition of the items. Assets are depreciated by the straight-line method over the estimated useful lives of the assets, provided that Company management believes the residual values of the assets to be negligible, as follows: | % | Computers and communications equipment | 20-3333
| Office furniture and equipment | 6-156
| Laboratory equipment | 15-2015
|
Asset residual values, methods of depreciation and useful lives are reviewed and adjusted, if appropriate, at each balance sheet date. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. See g. below.
Leasehold improvements are amortized by the straight-line method over the shorter of the lease term or the estimated useful life of the improvements. F-13
BioLineRx Ltd. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 2 – MATERIAL ACCOUNTING POLICIES (cont.) The Company applies the cost method of accounting for initial and subsequent measurements of intangible assets. Under this method of accounting, intangible assets are carried at cost less any accumulated amortization and any accumulated impairment losses. Intellectual property The Company recognizes in its financial statements intellectual property developed by the Company to the extent that the conditions stipulated in paragraph o. below are met. Intellectual property acquired by the Company is initially measured at cost. Intellectual property used by the Company for development purposes and not yet generating revenues is not amortized and is tested annually for impairment. See g. below. Computer software Acquired computer software licenses are capitalized based on the costs incurred to acquire and bring to use the specific software. These costs are amortized over the estimated useful lives of the software (3-5(5 years). F - 11
BioLineRx Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (cont.) f. | g.
| Impairment of non-financial assets |
Impairment of intellectual property is required when the Company decides to terminate or suspend the development of a project based on such intellectual property. In addition, the Company performs impairment reviews on an annual basis, or more frequently if events or changes in circumstances indicate a potential impairment. Property and equipment, as well as computer software, are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized equal to the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and the asset’s value in use to the Company. See Note 9 for information about an impairment loss recorded in 2023 in connection with the decision to terminate the AGI-134 project. The Company accounts for financial assets in accordance with IFRS 9 “Financial Instruments.”
The financial assets of the Company are classified as financial assets at amortized cost. The classification is done on the basis of the Company’s business model for managing the financial assets and the contractual cash flow characteristics of the financial assets.Financial assets at amortized cost
Financial assets at amortized cost are assets held pursuant to a business model whose objective is to hold assets in order to collect contractual cash flows and the contractual terms of the financial assets give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Financial assets at amortized cost are included in current assets, except for those with maturities greater than 12 months after the balance sheet date (in which case they are classified as non-current assets).
The Company’s financial assets at amortized cost are included in other receivables and bank deposits in the consolidated statements of financial position.
F - 12
BioLineRx Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (cont.) | h. | Financial assets Warrants(cont.)
|
| 2) | Recognition and measurement
|
Regular purchases and sales of financial assets are recognized on the settlement date, which is the date on which the asset is delivered to the Company or delivered by the Company. Investments are initially recognized at fair value plus transaction costs, except for trade receivables, which are recognized initially at the amount of consideration that is unconditional unless they contain significant financing components.
Financial assets are derecognized when the rights to receive cash flows from the investments have expired or have been transferred and the Company has transferred substantially all risks and rewards of ownership. Financial assets at amortized cost are measured in subsequent periods at amortized cost using the effective interest method.
The Company recognizes a loss allowance for expected credit losses on financial assets at amortized cost. At each reporting date, the Company assesses whether the credit risk on a financial instrument has increased significantly since initial recognition. If the financial instrument is determined to have low credit risk at the reporting date, the Company assumes that the credit risk on a financial instrument has not increased significantly since initial recognition. The Company had no material credit losses in 2021 and 2022.
Receipts in respect of warrants are classified as equity to the extent that they confer the right to purchase a fixed number of shares for a fixed exercise price. In the event that the exercise price or the numbers of shares to be issued are not deemed to be fixed, the warrants are classified as a non-current derivative financial liability. This liability is initially recognized at its fair value on the date the contract is entered into and subsequently accounted for at fair value at each reporting date. The fair value changes are charged to non-operating income and expense on the statement of comprehensive loss. Issuance costs allocable to warrants classified as a liability are also recorded as non-operating expense on the statement of comprehensive loss. F - 13F-14
BioLineRx Ltd. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 2 – SIGNIFICANTMATERIAL ACCOUNTING POLICIES (cont.) The Company’s ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of new shares are presented in equity as a deduction from the issuance proceeds.
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. These payables are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade payables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method.
Deferred taxes are recognized using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. Deferred income tax assets are recognized only to the extent that it is probable that future taxable income will be available against which the temporary differences can be utilized.
As the Company is currently engaged primarily in development and regulatory activities, no deferred tax assets are included in the financial statements.
Borrowings are initially recognized at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortized cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognized in profit or loss over the period of the borrowings using the effective interest method. With respect to long-term loans (see Note 10)11), a financial liability is recognized for each tranche upon drawdown. Upon initial recognition, the effective interest rate is calculated by estimating the future cash flows, including loan principal repayments, interest and royalties. The royalty feature does not meet the definition of a derivative, is not classified separately, and is not measured separately, since it is an integral part of the loan terms and conditions and cannot be transferred or settled separately from the loan. Determining the weighted effective interest rate requires certain judgments and estimations regarding the timing and amount of the Company’s future revenues. The loans are subsequently measured at amortized cost. Furthermore, revisions to the estimated amounts or timing of future cash flows, if necessary, may result in an adjustment of the amortized cost of the loan to reflect the present value of actual and revised estimated contractual cash flows, discounted using the original effective interest rate. This adjustment will be recognized in profit or loss as financial income or expense. Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months subsequent to the reporting period. F - 14F-15
BioLineRx Ltd. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 2 – SIGNIFICANTMATERIAL ACCOUNTING POLICIES (cont.) | n.i.
| Revenue from contracts with customersRevenues
|
The Company accounts for contract revenue in accordance with IFRS 15, “Revenue from Contracts with Customers.” IFRS 15 introduces a five-step model for recognizing revenue from contracts with customers, as follows: | • | identify the contract with a customer; |
| • | identify the performance obligations in the contract; |
| • | determine the transaction price; |
| • | allocate the transaction price to the performance obligations in the contract; and |
| • | recognize revenue when (or as) the entity satisfies a performance obligation. |
During the years included in these financial statements, the Company did not generate revenues, other than immaterial amounts receivedRevenues from an out-licensing agreement signed in 2014 with Perrigo Company plc., which have been included in non-operating income. selling products
| o. | Research and development expenses
|
Research expenses are charged to profit or loss as incurred.
An intangible asset arising from development (or fromIn September 2023, the development phase of an internal project) is recognized if all ofFDA approved motixafortide in stem cell mobilization for autologous transplantation for multiple myeloma patients, and shortly thereafter, the following conditions are fulfilled: Company began to independently commercialize motixafortide in the U.S.
The Company sells products mainly to wholesale distributors. Gross revenues are recognized at a point in time when control over the product is transferred to the distributors (upon delivery), at the gross selling price. The net revenues reflect gross revenues, reduced by amounts attributable to distributor fees, as well as accruals of chargebacks, rebates and returns. The specific considerations the Company uses in estimating these amounts relating to variable consideration are as follows: | •1.
| technological feasibility exists for completing developmentDistribution fees - The Company pays distribution fees to its three main distributors. The distribution fees are paid based on contractually determined rates from the gross consideration. When the service is received and the products sold to distributors, it is recognized as a reduction of revenues in the intangible asset so that it will be available for use or sale.period the related revenues from the sale of products are recognized.
|
| •2.
| it is management’s intentionRebates and patient discount programs - The Company offers various rebate and patient discount programs, which result in discounted prescriptions to complete developmentqualified patients. The Company estimates the allowance for these rebates, based on the estimated utilization of the intangible asset for use or sale.rebate and discount programs, at the time the revenues are recognized. These estimates are recognized as a reduction of revenues.
|
| •3.
| Product returns - The Company offers customers a right of return as part of the distributor agreements. The Company hasestimates the ability to use or sellamount of product sales that may be returned by its customers and records this estimate as a reduction of revenues at the intangible asset.time of sale, based on estimates of product returns based on its own sales information, its visibility into the inventory remaining in the distribution channel, and product dating. |
| • | it is probable that the intangible asset will generate future economic benefits, including existence of a market for the output of the intangible asset or the intangible asset itself or, if the intangible asset is to be used internally, the usefulness of the intangible asset.
|
| • | adequate technical, financial and other resources are available to complete development of the intangible asset, as well as the use or sale thereof.
|
| • | the Company has the ability to reliably measure the expenditure attributable to the intangible asset during its development.
|
Other development costs that do not meet the foregoing conditions are charged to profit or loss as incurred. Development costs previously expensed are not recognized as an asset in subsequent periods. As of December 31, 2022, the Company has not yet capitalized development expenses.
F - 15F-16
BioLineRx Ltd. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 2 – SIGNIFICANTMATERIAL ACCOUNTING POLICIES (cont.) | p.i.
| Employee benefitsRevenues (cont.)
|
Revenues from licensing agreement | Pension and severance pay obligations
|
Israeli labor lawsAccording to IFRS 15, performance obligations are a promise to provide a distinct good or service or a series of distinct goods or services. Goods and services that are not distinct are bundled with other goods or services in the contract until a bundle of goods or services that is distinct is created. A good or service promised to a customer is distinct if the customer can benefit from the good or service, either on its own or together with other resources that are readily available to the customer, and the Company’s employment agreements requireentity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract.
IFRS 15 defines the ‘Transaction Price’ as the amount of consideration to which the entity expects to be entitled in exchange for transferring the promised goods or services to a customer. In accordance with IFRS 15, the Company to pay retirement benefits to employees terminated or leaving their employment in certain other circumstances. Substantially allidentified a number of the Company’s employees are covered by a defined contribution plan under Section 14 of the Israel Severance Pay Law. In the US, the Company provides defined contribution benefitsperformance obligations (components) in the frameworkcontract – in respect of a 401(k) plan, up to certain pre-defined limits, in accordance with industry standardswhich revenue will be recognized separately for such benefits.each component, See Note 16. The amounts recordedfollowing assumptions were taken into account, as an employee benefit expense in respectpart of pension and severance pay obligations for the years 2020, 2021 and 2022 were $668,000, $744,000 and $792,000 respectively.revenue recognition process: | 2)1)
| Vacation and recreation payDevelopment milestones: Variable payments, contingent on achieving additional milestones, are included in the transaction price based on the most likely amount method. Amounts included in the transaction price are recognized only when it is highly probable that a materialreversal of cumulative revenues will not occur, usually upon achievement of the specific milestone, in accordance with the relevant agreement.
|
2) | Sales-based royalties and sales-based milestones are recognized as the related sale occurs, due to the specific exception of IFRS 15 for sales-based royalties from licensing of intellectual properties. |
For more information, see Note 16. F-17
Labor laws in Israel entitle every employeeBioLineRx Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 2 – MATERIAL ACCOUNTING POLICIES (cont.)j. | Research and development expenses |
Research expenses are charged to vacation and recreation pay, bothprofit or loss as incurred. As of which are computed annually. The entitlement with respect to each employee is based on the employee’s length of service at the Company. The Company recognizes a liability and an expense in respect of vacation and recreation pay based on the individual entitlement of each employee. In the US,December 31, 2023, the Company allows unlimited paid time off. This policy allows employees to take vacation days as needed, and the Company doeshas not recognize a liability in respect of vacation.yet capitalized development expenses. The Company operates an equity-settled, share-based compensation plan, under which it grants equity instruments (options, restricted stock units and performance stock units) of the Company as additional consideration for services from employees and service providers. The fair value of the employee services received in exchange for the grant of the equity instruments is recognized as an expense. The total amount to be expensed is determined by reference to the fair value of the equity instruments granted:granted including any market performance conditions (for example, the Company’s share price). | • | including any market performance conditions (for example, the Company’s share price); and
|
| • | excluding the impact of any service and non-market performance vesting conditions (for example, profitability, sales growth targets and the employee remaining with the entity over a specified time period).
|
Non-market performance and service conditions are included in assumptions about the number of equity instruments that are expected to vest. The total expense is recognized over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. Performance stock unit expenses are recognized only if it is probable that the performance condition will be achieved. When the equity instruments are exercised, the Company issues new shares. The proceeds received, net of any directly attributable transaction costs, are credited to share capital (at par value) and share premium when the equity instruments are exercised.
F - 16
BioLineRx Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (cont.) The basic loss per share is calculated by dividing the loss attributable to the holders of ordinary shares by the weighted average number of ordinary shares outstanding during the year. The diluted loss per share is calculated by adjusting the weighted average number of outstanding ordinary shares, assuming conversion of all dilutive potential shares. The Company’s dilutive potential shares consist of warrants issued to investors, as well as equity instruments granted to employees and service providers. The dilutive potential shares were not taken into account in computing loss per share in 2020, 2021, 2022 and 2022,2023, as their effect would have been anti-dilutive. The calculation of diluted loss per share as of December 31, 2023 does not include 153,154,860 and 431,954,719 of shares underlying options, and shares underlying warrants, respectively, because the effect would be anti-dilutive. F-18
BioLineRx Ltd. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 2 – MATERIAL ACCOUNTING POLICIES (cont.)
The Company’s leases include property and motor vehicle leases. At the inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Company reassesses whether a contract is, or contains, a lease only if the terms and conditions of the contract are changed. At the commencement date, the Company measures the lease liability at the present value of the lease payments that are not paid at that date. Simultaneously, the Company recognizes a right-of-use asset in the amount of the lease liability. Since the interest rate implicit in the lease cannot be readily determined, the Company uses the Company’s incremental borrowing rate. This rate is the rate of interest that the Company would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment. The lease term is the non-cancellable period for which the Company has the right to use an underlying asset, together with both the periods covered by an option to extend the lease, if the Company is reasonably certain to exercise that option, and periods covered by an option to terminate the lease, if the Company is reasonably certain not to exercise that option. F - 17
BioLineRx Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (cont.) After the commencement date, the Company measures the right-of-use asset applying the cost model, less any accumulated depreciation and any accumulated impairment losses and adjusted for any remeasurement of the lease liability. Assets are depreciated by the straight-line method over the estimated useful lives of the right of use assets or the lease period, whichever is shorter, as follows: | Years | Property | 11 | Motor vehicles | 3 |
Interest on the lease liability is recognized in profit or loss in each period during the lease term, in an amount that produces a constant periodic rate of interest on the remaining balance of the lease liability.
F - 18F-19
BioLineRx Ltd. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 2 – SIGNIFICANTMATERIAL ACCOUNTING POLICIES (cont.) | s.n.
| New International Financial Reporting Standards, amendments to standards and interpretations not yet adoptednew interpretations: |
Classification of Liabilities as Current or Non-currentNon-Current (Amendment to IAS 1) The narrow-scope amendments to IAS 1, "Presentation“Presentation of Financial Statements,"” clarify that liabilities are classified as either current or noncurrent, depending on the rights that exist at the end of the reporting period. Classification is unaffected by the entity’s expectations or events after the reporting date (e.g., the receipt of a waiver or a breach of covenant). The amendments also clarify what IAS 1 means when it refers to the ‘settlement’ of a liability. The amendments could affect the classification of liabilities, particularly for entities that previously considered management’s intentions to determine classification and for some liabilities that can be converted into equity. They must be applied retrospectively in accordance with the normal requirements in IAS 8, "Accounting“Accounting Policies, Changes in Accounting Estimates and Errors."” The amendment should be applied retrospectively for annual periods beginning on or after January 1, 2024. Earlier application is permitted. The adoption of the amendment is not expected to have a material impact on the Company’s financial statements as, effective January 1, 2024, the Company’s warrant liabilities will be classified in current liabilities. Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction (Amendment to IAS 12) The amendment requires companies to recognize deferred tax on transactions that, on initial recognition, give rise to equal amounts of taxable and deductible temporary differences, and will require the recognition of additional deferred tax assets and liabilities. The amendment should be applied to transactions that occur on or after the beginning of the earliest comparative period presented. In addition, entities should recognize deferred tax assets (to the extent that it is probable that they can be utilized) and deferred tax liabilities at the beginning of the earliest comparative period for all deductible and taxable temporary differences associated with right-of-use assets and lease liabilities, decommissioning, restoration and similar liabilities, and the corresponding amounts recognized as part of the cost of the related assets. The adoption of the amendment had no material impact on the Company’s financial statements. Significant AccountingMaterial accounting Policies (Amendment to IAS 1)
The IASB has amendedamendments change the requirements in IAS 1 with regard to disclosure of accounting policies. The amendments require entities to disclose their material rather than their significant accounting policies. Accounting policy information is material if, when considered together with other information included in an entity’s financial statements, it can reasonably be expected to influence decisions that the primary users of general-purpose financial statements make on the basis of those financial statements. The amendments provide a definition of “material accounting policy information” and explain howsupporting paragraphs in IAS 1 are also amended to identify whenclarify that accounting policy information that relates to immaterial transactions, other events or conditions is material. They further clarify that immaterial and need not be disclosed. Accounting policy information may be material because of the nature of the related transactions, other events or conditions, even if the amounts are immaterial. However, not all accounting policy information does not needrelating to be disclosed and, if disclosed, should not obscure material accounting information. The amendments apply from January 1, 2023, but may be adopted earlier.transactions, other events or conditions is itself material. ChangesThese financial statements are prepared in Accounting Estimates and Errors (Amendment to IAS 8) Theaccordance with the amendments to IAS 8 clarify how entities should distinguish changes in accounting policies from changes in accounting estimates. Such distinction is important because changes in accounting estimates are applied prospectively only to future transactions and other future events, but changes in accounting policies are generally also applied retrospectively to past transactions and other past events, and also to present events and present transactions.
The Amendments to IAS 8 will be applied retrospectively1 as they were effective for annual periods beginning on or after January 1, 2023. Early adoption is permitted. Initial application of Amendments to IAS 8 is not expected to have material impact on the Company's financial statements.
F - 19F-20
BioLineRx Ltd. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 3 – FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT Based on assessments by Company management, the Company’s exposure to credit risk as of December 31, 2022,2023, is immaterial (see Note 3b). The activities of the Company expose it to market risk, primarily as a result of currency risk. The Company’s Finance Department is responsible for carrying out risk management activities in accordance with policies approved by its Board of Directors. In this regard, the Finance Department identifies, defines and assesses financial risk in close cooperation with other Company departments. The Board of Directors provides written guidelines for overall risk management, as well as written policies dealing with specific areas, such as exchange rate risk, interest rate risk, credit risk, use of financial instruments and investment of excess cash. | 1) | Concentration of currency risk |
The Company’s activities are partly denominated in non-dollar currencies (primarily the New Israeli Shekel, or “NIS,” and the Euro), which exposes the Company to risks resulting from changes in exchange rates. The effect of fluctuations in various exchange rates on the Company’s income and equity is as follows: | | | | | | | | | Value on | | | | | | | | | | | | | | | | | | | | | | | | | NIS-linked balances: | | | | | | | | | | | | | | | | Cash and cash equivalents | | | (416 | ) | | | (218 | ) | | | 4,573 | | | | 241 | | | | 508 | | Other receivables | | | (66 | ) | | | (34 | ) | | | 721 | | | | 38 | | | | 80 | | Trade payables | | | 38 | | | | 20 | | | | (416 | ) | | | (22 | ) | | | (46 | ) | Other payables | | | | | | | | | | | | | | | | | | | | | Total NIS-linked balances | | | | ) | | | | ) | | | | | | | | | | | | | Euro-linked trade payables | | | | | | | | | | | | | | | | | | | | | Total | | | | ) | | | | ) | | | | | | | | | | | | |
| | | | | | | | | | | | Value on | | | | | | | | | Value on | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | NIS-linked balances: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Cash and cash equivalents | | (427 | ) | | (224 | ) | | 4,699 | | | 522 | | | 247 | | | (132 | ) | | (69 | ) | | 1,457 | | | 77 | | | 162 | | Short term deposit | | | (251 | ) | | (131 | ) | | 2,758 | | | 145 | | | 306 | | Other receivables | | (13 | ) | | (7 | ) | | 142 | | | 16 | | | 7 | | | (31 | ) | | (16 | ) | | 344 | | | 18 | | | 38 | | Trade payables | | 40 | | | 21 | | | (442 | ) | | (49 | ) | | (23 | ) | | 243 | | | 127 | | | (2,670 | ) | | (141 | ) | | (297 | ) | Other payables | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total NIS-linked balances | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Euro-linked trade payables | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | Value on | | | | | | | | | | | | | | | | | | | | | | | | | NIS-linked balances: | | | | | | | | | | | | | | | | Cash and cash equivalents | | | (416 | ) | | | (218 | ) | | | 4,573 | | | | 241 | | | | 508 | | Other receivables | | | (66 | ) | | | (34 | ) | | | 721 | | | | 38 | | | | 80 | | Trade payables | | | 38 | | | | 20 | | | | (416 | ) | | | (22 | ) | | | (46 | ) | Other payables | | | | | | | | | | | | | | | | | | | | | Total NIS-linked balances | | | | | | | | | | | | | | | | | | | | | Euro-linked trade payables | | | | | | | | | | | | | | | | | | | | | Total | | | | | | | | | | | | | | | | | | | | |
The Company also maintains cash and cash equivalent balances in other currencies in amounts that are not material. F - 20F-21
BioLineRx Ltd. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 3 – FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (cont.) | 1) | Concentration of currency risk (cont.) | | | |
Set forth below is certain data regarding dollar exchange rates:
| | Exchange rate of NIS per $1 | | | Exchange rate of Euro per $1 | | As of December 31: | | | | | | | 2020 | | | 3.215 | | | | 0.815 | | 2021 | | | 3.110 | | | | 0.884 | | 2022 | | | 3.519 | | | | 0.938 | | | | | | | | | | | Percentage increase (decrease) in the exchange rate: | | | | | | | | | 2021 | | | (3.3 | )% | | | 8.5 | % | 2022 | | | 13.2 | % | | | 6.1 | % |
Set forth below is information on the linkage of monetary items: | | December 31, 2021 | | December 31, 2022 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Current assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Cash and cash equivalents | | 7,223 | | | 4,699 | | | 1,068 | | | 5,685 | | | 4,573 | | | 329 | | | 5,685 | | | 4,573 | | | 329 | | | 2,768 | | | 1,457 | | | 30 | | Short term bank deposits | | 44,145 | | | - | | | - | | | 40,495 | | | - | | | - | | | 40,495 | | | - | | | - | | | 35,981 | | | 2,758 | | | - | | Other receivables | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Current liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Current maturities of long-term loans | | 2,757 | | | - | | | - | | | 1,542 | | | - | | | - | | | 1,542 | | | - | | | - | | | 3,145 | | | - | | | - | | Accounts payable and accruals: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Trade | | 2,700 | | | 442 | | | 2,425 | | | 4,359 | | | 416 | | | 2,191 | | | 4,359 | | | 416 | | | 2,191 | | | 6,663 | | | 2,670 | | | 1,536 | | Other | | 108 | | | 1,119 | | | | | | 487 | | | 1,257 | | | - | | | 487 | | | 1,257 | | | - | | | 1,500 | | | 1,853 | | | - | | Non-current liabilities | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Long-term loans, net of current maturities | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net balance | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
F - 21F-22
BioLineRx Ltd. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 3 – FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (cont.) | 2) | Fair value of financial instruments |
As of December 31, 2022,2023, the financial instruments of the Company consist of non-derivative assets and liabilities (primarily working capital items, deposits, and current and long-term loans), as well as warrants classified as a liability. With regard to non-derivative assets and liabilities, given their nature, the fair value of the financial instruments included in working capital is generally close or identical to their carrying amount. With regard to the warrants classified as a non-current financial liability, see Note 11c.12c. With regard to long-term loans, see Note 10.11. | 3) | Exposure to market risk and management thereof |
In the opinion of Company management, the market risk to which the Company is exposed is primarily related to currency risk exposure, as mentioned above. Additionally, Company management does not consider the interest rate risk mentioned in paragraph 4 below to be material. Company management does not consider interest rate risk to be material, as the Company holds deposits whose fair value and/or cash flows are not materially affected by changes in interest rates. Credit risk is managed at the Company level. These risks relate to cash and cash equivalents, bank deposits trade receivables, and other receivables. The Company’s cash, cash equivalents and short-term bank deposits at December 31, 2021,2022, and 20222023 were deposited with highly rated major Israeli and U.S. banks. In the Company’s opinion, the credit risk associated with these balances is remote. The Company considers its maximum exposure to credit risk to be as follows: | | | | | | | | | | | | | | | | | | | | | | | | | | | Assets: | | | | | | | | | | | | | Cash and cash equivalents | | 12,990 | | | 10,587 | | | 10,587 | | | 4,255 | | Short-term bank deposits | | 44,145 | | | 40,495 | | | 40,495 | | | 38,739 | | Trade receivables | | | - | | | 358 | | Other receivables | | | | | | | | | | | | | | | | | Total | | | | | | | | | | | | | | | | |
F - 22F-23
BioLineRx Ltd. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 3 – FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (cont.) Company management monitors rolling forecasts of the Company’s liquidity reserves on the basis of anticipated cash flows and maintainsseeks to maintain the liquidity balances at a level that is sufficient to meet its needs. Although the Company has succeeded in generating revenues from a number of out-licensing transactions, in the past, and is currently gearing up for the potential launchhas recently launched commercialization of its lead program, motixafortide, in the last quarter of 2023, it cannot determine with reasonable certainty if and when it will become profitable on a current basis. Management believes that the Company’s current cash and other resources will be sufficient to fund its projected cash requirements into the first half of 2024.2025. However, in the event that the Company does not begin to generate sustainable cash flows from its operating activities in the future, the Company will need to carry out significant cost reductions and/or raise additional funding. See also Note 1b1c regarding the material uncertainty that may cast significant doubt about the Company'sCompany’s ability to continue as a going concern. | d. | Fair value of financial instruments |
The different levels of valuation of financial instruments are defined as follows: Level 1 | Quoted prices (unadjusted) in active markets for identical assets or liabilities. | | | Level 2 | Inputs, other than quoted prices included within level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices). | | | Level 3 | Inputs for the asset or liability that are not based on observable market data (unobservable inputs). |
The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible, and also considers counterparty credit risk, in its assessment of fair value. The fair value of the financial instruments included in the working capital of the Company, as well as the long-term loan, is usually identical or close to their carrying value. The fair value of the warrants is based on Level 3 measurements. The fair value of the warrants, calculated based on the Black-Scholes model, was $4,509,000$11,932,000 as of December 31, 2022.2023. For more information on the parameters used to value the warrants, see Note 11c.12c. F - 23F-24
BioLineRx Ltd. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 3 – FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (cont.) | e. | Changes in financial liabilities with cash flows included in financing activities |
| | | | | | | | | | | | | | | | | | | | | | | | | | Balance as of January 1, 2021 | | 5,832 | | | 10,218 | | | 16,050 | | | 5,832 | | | 10,218 | | | 16,050 | | Changes during the year 2021: | | | | | | | | | | | | | | | | | | | Principal and interest payments | | (3,814 | ) | | - | | | (3,376 | ) | | (3,814 | ) | | - | | | (3,814 | ) | Share premium resulting from exercise of warrants | | | | | | | (10,295 | ) | | | (10,295 | ) | | | | | (10,295 | ) | | (10,295 | ) | Amounts recognized through profit and loss | | | 739 | | | | 1,936 | | | | 2,237 | | | | | | | | | | | | | | Balance as of December 31, 2021 | | | | | | | | | | | | | | | | | | | | | | | | | Changes during the year 2022: | | | | | | | | | | | | | | | | | | | Net proceeds of loan | | 9,126 | | | 9,075 | | | 18,201 | | | Net proceeds | | | 9,126 | | | 9,075 | | | 18,201 | | Principal and interest payments | | (3,177 | ) | | - | | | (2,832 | ) | | (3,177 | ) | | - | | | (3,177 | ) | Amounts recognized through profit and loss | | | | | | | | ) | | | | ) | | | | | | | | | | | | | Balance as of December 31, 2022 | | | | | | | | | | | | | | | | | | | | | | | | | Changes during the year 2023: | | | | | | | | | | | Principal payments or received | | | (1,543 | ) | | - | | | (1,543 | ) | Amounts recognized through profit and loss | | | 1,148 | | | 11,054 | | | 12,202 | | Share premium resulting from exercise of warrants | | | | | | | | | | | | | | Balance as of December 31, 2023 | | | | | | | | | | | | | |
| f. | Fair value measurement of warrants using significant unobservable inputs (level 3) |
The following table presents the changes in level 3 instruments for the years ended December 31, 2020, 2021, 2022 and 2022:2023: | | | | | | | | Balance as of January 1, 20202021 | | | 65810,218
| | Changes during 2020:2021: | | | | | IssuancesExercises
| | | 5,669(10,295
| | Exercises
| | | (1,251 | ) | Changes in fair value through profit and loss | | | | | Balance as of December 31, 20202021 | | | | | Changes during 2021:2022: | | | | | Issuances | | | -9,075
| | Exercises
| | | (10,295 | ) | Changes in fair value through profit and loss | | | | | Balance as of December 31, 20212022 | | | | | Changes during 2022:2023: | | | | | IssuancesExercises
| | | 9,075(3,631
| ) | Exercises
| | | -
| | Changes in fair value through profit and loss | | | | ) | Balance as of December 31, 20222023 | | | | |
F - 24F-25
BioLineRx Ltd. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 4 – CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS As part of the financial reporting process, Company management is required to make estimates that affect the value of assets, liabilities, income, expenses and certain disclosures included in the Company’s consolidated financial statements. By their very nature, such accounting estimates are subjective and complex and consequently may differ from actual results. The estimates are continually evaluated and adjusted based on historical experience and other factors, including expectation of future events that are believed to be reasonable under the circumstances. Below are the critical accounting estimates used in the preparation of the financial statements that required Company management to make assumptions involving significant uncertainty. Impairment of indefinite-lived intangible assets As mentioned in Notes 2f and 2g, the Company performs impairment reviews of intangible assets not subject to amortization on an annual basis, or more frequently if events or changes in circumstances indicate a potential impairment. The recoverable amount is determined using discounted cash flow calculations as detailed in Note 8.calculations. The analysis estimates the future cash flows the Company expects to derive from the asset, incorporates expectations about possible variations in the amount or timing of those future cash flows, as well as the uncertainty inherent in the asset, and the risk-adjusted cash flows are then discounted using the Company’s estimated post-tax weighted average cost of capital (“WACC”). The main estimates used in calculating the recoverable amount include the WACC estimation and the amounts and of timing of projected future cash flows. Such amounts and timing are influenced by the expected outcome of development activities, the probability of success and timing in gaining regulatory approval, size of the potential market and the Company’s specific market share, either via direct sales or a potential out-licensing deal. In light of the significant clinical and regulatory progress, the continued investments in the program made by the Company, and following the valuation analysis performed as detailed in Note 8, the Company concluded thatCompany’s decision to terminate AGI-134, the value of its intangible assetsasset was written off in its entirety. Following the approval and subsequent launch of motixafortide towards the end of 2023, the Company began to amortize the intangible asset related to motixafortide and AGI-134 were higher than their carrying value asconcurrently with related recognition of December 31, 2021 and 2022.revenue (see Note 16). Fair value estimations of warrants As described in Notes 3d and 11,12c, the Company completed financing transactions in which it issued ADSs and warrants to purchase additional ADSs. The fair value of the warrants, which are not traded on an active market, is determined by using valuation techniques. These valuation techniques maximize the use of observable market data where it is available and rely as little as possible on entity specific estimates. F - 25F-26
BioLineRx Ltd. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 4 – CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS (cont.) License revenue recognition In determining the amounts to be recognized as revenue relating to the out-licensing transaction with HST and Gloria, the Company was required to use significant judgement in the following matters: | • | The allocation of consideration between the license agreement and the SPA, based on the fair value of the Company’s shares on the date considered as the closing date of the transaction |
| • | The estimated stand-alone, selling-price value between the contract components (i.e., between the main therapeutic areas covered by the contract), as well as the performance obligations relating to each of the components |
| • | The period of time over which revenue should be recognized for each component. The revenue recognition method is the ratio of support hours to the total hours expected to be incurred. |
Recognition and measurement of allowance for rebates, chargebacks and returns The Company makes several key estimations related to gross-to-net (GTN) revenue, which are recognized as revenue reductions and for which unsettled amounts are accrued. The primary measures calculated include rebates, Medicaid and other governmental rebates, chargebacks, and returns. The allowance is calculated based on common practices in the industry and the estimated utilization of rebate and chargeback programs at the time revenue is recognized. The main estimates used in recognizing and measuring this allowance relate to the volume of products sold to distributors but not yet prescribed to patients. The Company periodically evaluates its estimates against actual results and updates them accordingly as necessary. NOTE 5 – CASH AND CASH EQUIVALENTS | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Cash on hand and in bank | | | 8,461 | | | | 3,623 | | Short-term bank deposits | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | Cash on hand and in bank | | | 3,623 | | | | 3,154 | | Short-term bank deposits | | | | | | | | | | | | | | | | | |
The short-term bank deposits included in cash and cash equivalents bear interest at annual rates of between 0.15% and 3.15%4.55%. F-27
BioLineRx Ltd. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 6 – SHORT-TERM BANK DEPOSITS The short-term bank deposits are primarily in dollars and bear interest at annual rates of between 0.53%0.57% and 6.00%6.63%. NOTE 7 – INVENTORY | | | | | | | | | | | | | | | | | | | | | | Raw materials | | | - | | | | 903 | | Work-in-progress | | | - | | | | 471 | | Finished goods | | | | | | | | | | | | | | | | | |
F - 26F-28
BioLineRx Ltd. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 78 – PROPERTY AND EQUIPMENT Set forth below are the composition of property and equipment and the related accumulated depreciation, grouped by major classifications: | | | | | | | | | | | | Balance at | | | Additions | | | Deletions | | | Balance at | | | Balance at | | | Additions | | | Deletions | | | Balance at | | | | | | | beginning | | | during | | | during | | | end of | | | beginning | | | during | | | during | | | end of | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Composition in 2023 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Office furniture and equipment | | | 244 | | | | 8 | | | | - | | | | 252 | | | | 138 | | | | 27 | | | | - | | | | 165 | | | | 106 | | | | 87 | | Computers and communications equipment | | | 961 | | | | 101 | | | | - | | | | 1,062 | | | | 712 | | | | 108 | | | | - | | | | 820 | | | | 249 | | | | 242 | | Laboratory equipment | | | 1,606 | | | | 7 | | | | - | | | | 1,613 | | | | 1,578 | | | | 20 | | | | - | | | | 1,598 | | | | 28 | | | | 15 | | Leasehold improvements | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
F-29
BioLineRx Ltd. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | | | | | | | | | | | | Balance at | | | Additions | | | Deletions | | | Balance at | | | Balance at | | | Additions | | | Deletions | | | Balance at | | | | | | | beginning | | | during | | | during | | | end of | | | beginning | | | during | | | during | | | end of | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Composition in 2022 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Office furniture and equipment | | | 207 | | | | 37 | | | | - | | | | 244 | | | | 124 | | | | 14 | | | | - | | | | 138 | | | | 83 | | | | 106 | | Computers and communications equipment | | | 863 | | | | 98 | | | | - | | | | 961 | | | | 678 | | | | 34 | | | | - | | | | 712 | | | | 185 | | | | 249 | | Laboratory equipment | | | 1,590 | | | | 16 | | | | - | | | | 1,606 | | | | 1,509 | | | | 69 | | | | - | | | | 1,578 | | | | 81 | | | | 28 | | Leasehold improvements | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
NOTE 89 – INTANGIBLE ASSETS The value in use of intellectual property has been calculated with the assistance of an external appraiser, based on assumptions and estimates of the Company. The value in use of the assets was estimated by using the decision-tree approach to valuing research products. This approach incorporates the option of abandonment at each development stage. The traditional Discounted Cash Flows (DCF) model is implemented at the final node of the decision tree. The DCF analysis estimates the future cash flows the Company expects to derive from the asset, and incorporates expectations about possible variations in the amount or timing of those future cash flows, and the uncertainty inherent in the assets. As of December 31, 2022, the value in use of the intangible assets according to the impairment testing exceeded its book value. Therefore, no impairment was recognized.
Intellectual property includesincluded the following intangible assets acquired by the Company: | - | $6.7 million recorded as a result of the acquisition of Agalimmune, primarily related to its main drug candidate, AGI-134 (see Note 1a).In December 2023, the Company made a decision to terminate the development of AGI-134. Accordingly, the intellectual property related to AGI-134 has been written-off in the 2023 financial statements. |
| - | $15.0 million associated with BL-8040 were recorded as a result offollowing an amendment to the in-licensing agreement with Biokine Therapeutics Ltd. ("Biokine") that. This amendment reduced for that consideration, futurethe payments to be madeowed by the Company on sublicense receipts (as defined in the license agreement) from 40% to 20%. This intellectual property is amortized proportionally with the revenues recognized from the licensing transaction with HST and Gloria in Asia (see Note 16), as well as in accordance with the lifespan of the patents in the U.S., following commencement of self-commercialization of motixafortide towards the end of 2023. |
These assets are used for the Company's research and development activities and are not amortized.
F - 27
BioLineRx Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8 – INTANGIBLE ASSETS (cont.)
Set forth below are the composition of intangible assets and the related accumulated depreciation, grouped by major classifications: | | | | | Accumulated depreciation and impairment | | | | | | | | | Accumulated depreciation and impairment | | | | | | | Balance at | | | Additions | | | Deletions | | | Balance at | | | Balance at | | | Additions | | | Deletions | | | Balance at | | | | | | Balance at | | | Additions | | | Disposal | | | Balance at | | | Balance at | | | Additions | | | Impairment | | | Balance at | | | | | | | beginning | | | during | | | during | | | end of | | | beginning | | | during | | | during | | | end of | | | | | | beginning | | | during | | | during | | | end of | | | beginning | | | during | | | during | | | end of | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Composition in 2022 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Composition in 2023 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Intellectual property | | 21,792 | | | - | | | - | | | 21,792 | | | 96 | | | - | | | - | | | 96 | | | 21,696 | | | 21,696 | | | 21,792 | | | - | | | 450 | | | 21,342 | | | 96 | | | - | | | 6,703 | | | 6,799 | | | 21,696 | | | 14,543 | | Computer software | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
F-30
BioLineRx Ltd. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 910 – LEASES | | | | | | | | | | | | Balance at | | | Additions | | | Deletions | | | Balance at | | | Balance at | | | Additions | | | Deletions | | | Balance at | | | | | | | beginning | | | during | | | during | | | end of | | | beginning | | | during | | | during | | | end of | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Composition in 2023 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Property | | | 2,097 | | | | - | | | | - | | | | 2,097 | | | | 582 | | | | 388 | | | | - | | | | 970 | | | | 1,515 | | | | 1,127 | | Motor vehicles | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | Balance at | | | Additions | | | Deletions | | | Interest expense | | | Exchange differences | | | Payments | | | Balance at | | | | Balance at | | | Additions | | | Deletions | | | Balance at | | | Balance at | | | Additions | | | Deletions | | | Balance at | | | | | | beginning | | | during | | | during | | | during | | | during | | | during | | | end of | | | | beginning | | | during | | | during | | | end of | | | beginning | | | during | | | during | | | end of | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Composition in 2022 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Composition in 2023 | | | | | | | | | | | | | | | | | | | | | | | Property | | 1,552 | | | 545 | | | - | | | 2,097 | | | 405 | | | 177 | | | - | | | 582 | | | 1,147 | | | 1,515 | | | 1,920 | | | - | | | - | | | 236 | | | (38 | ) | | (562 | ) | | 1,556 | | Motor vehicles | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
F - 28F-31
BioLineRx Ltd. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 9 – LEASES (cont.)
| | Balance at | | | Additions | | | Deletions | | | Interest expense | | | Exchange differences | | | Payments | | | Balance at | | | | beginning | | | during | | | during | | | during | | | during | | | during | | | end of | | | | | | | | | | | | | | | | | | | | | | | | | | in USD thousands | | Composition in 2022 | | | | | | | | | | | | | | | | | | | | | | Property | | | 1,708 | | | | 545 | | | | - | | | | 223 | | | | (202 | ) | | | (354 | ) | | | 1,920 | | Motor vehicles | | | | | | | | | | | | | | | | | | | | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ) | | | | | | | | |
F - 29
BioLineRx Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 910 – LEASES (cont.) 1) | 1) | The Company leases two premises – its corporate headquarters and development facilities in Modi’in, Israel, and its USU.S. commercial headquarters in Waltham, Massachusetts. |
| | | | | | a. | The Company leases its premises in Israel under a lease agreement entered into in August 2014. Payments under the lease commenced in June 2015, and the initial term of the lease expired in June 2020. The Company exercised its option to extend the lease through June 30, 2025, and has the option to extend the lease for two additional lease periods totaling up to five additional years, each option at a 5% increase to the preceding lease payment amount. The monthly lease payment is approximately $26,000.$25,000. In addition, the Company pays building maintenance charges of approximately $9,000$8,000 per month. |
| | | | | | b. | The Company leases its premises in Boston under a lease agreement entered into and commenced in October 2022. The term of the lease will expire in December 2024. The monthly lease fee is approximately $24,000.approximately $24,000. |
| 2) | The Company has entered into lease agreements in connection with a number of vehicles. The lease periods are generally for three years. The annual lease fees, linked to the CPI, are approximately $122,000.$303,000. To secure the terms of the lease agreements, the Company has prepaid two months of lease payments to the leasing companies. |
| 3) | As of December 31, 2022,2023, minimum future rental payments (taking into consideration the aforementioned extension periods) under the leases are as follows: |
| | | | | | | | | | | | | | 2023 | | | 569 | | | | 122 | | | | 691 | | 2024 | | | 584 | | | | 89 | | | | 673 | | 2025 | | | 301 | | | | 31 | | | | 332 | | 2026 | | | 301 | | | | - | | | | 301 | | 2027-2030 | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | 2024 | | | 575 | | | | 161 | | | | 736 | | 2025 | | | 292 | | | | 113 | | | | 405 | | 2026 | | | 292 | | | | 26 | | | | 317 | | 2027 | | | 306 | | | | - | | | | 306 | | 2028-2030 | | | | | | | | | | | | | | | | | | | | | | | | | |
Extension and termination options are included in most of the property leases. These are used to maximize operational flexibility in terms of managing the assets used in the Company’s operations. The substantial majority of extension and termination options are exercisable solely by the Company and not by the lessors. F - 30F-32
BioLineRx Ltd. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 1011 – LONG-TERM LOANLOANS In October 2018, the Company entered into a $10 million loan agreement with Kreos Capital. This loan was repaid in full in September 2022.
In September 2022, the Company entered into a new $40 million loan agreement with Kreos Capital (via Kreos Capital VII Aggregator SCSp). Pursuant to the new agreement, the first tranche of $10 million was drawn down by the Company upon closing. The remaining $30 million will be made available in two additional tranches subject to the achievement of pre-specified milestones. The tranches are available for drawdown at the Company’s discretion at various time points through October 1, 2024.
Each tranche carries a pre-defined interest-only payment period, followed by a loan principal amortization period of up to 36 months subsequent to the interest-only period. The interest-only periods are subject to possible extension based on certain pre-defined milestones. Borrowings under the financing will bear interest at a fixed annual rate of 9.5% (~11.0%, including associated cash fees). As security for the loan, Kreos Capital received a first-priority secured interest in all Company assets, including intellectual property, and the Company undertook to maintain a minimum cash balance. In addition, Kreos Capital will beis entitled to mid-to-high single-digit royalties on motixafortide sales in the U.S., up to a pre-defined cap.
The loan's current value includes the accrual of effective interest, including estimated future royalties. NOTE 1112 – EQUITY The Company’sCompany’s share capital is composed of ordinary shares, as follows: | | Number of Ordinary Shares | | | | | | | | | | | | | | | | | | | Authorized share capital | | | | | | | | | | | | | | | | | | Issued and paid-up share capital | | | | | | | | |
| | Number of Ordinary Shares | | | | | | | | | | | | | | | | | | | | Authorized share capital | | | | | | | | | | | | | | | | | | Issued and paid-up share capital | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Authorized share capital (in NIS) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Issued and paid-up share capital (in NIS) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Issued and paid-up share capital (in USD) | | | | | | | | | | | | | | | | |
F - 31F-33
BioLineRx Ltd. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 1112 – EQUITY (cont.) | b. | Rights related to shares |
The ordinary shares confer upon their holders voting and dividend rights and the right to receive assets of the Company upon its liquidation. As of December 31, 20212022 and 2022,2023, all outstanding share capital consisted of ordinary shares. | c. | Changes in the Company’s equity |
| 1) | In connection with the loan agreement with Kreos Capital signed in October 2018 (see Note 10), Kreos Capital received warrants to purchase 63,837 ADSs at an exercise price of $14.10 per ADS. The warrants issued have been classified as a non-current financial liability due to a net settlement provision. The warrant is exercisable for a period of ten years from the date of issuance. |
The fair value of the warrants at the date of issuance, computed using the Black-Scholes option pricing model, amounted to $861,000. The fair value of the warrants was immaterial as of December 31, 2022 was $6,0002023 (December 31, 2021 - $42,000)2022 – also immaterial), and was based on the then current price of an ADS, a risk-free interest rate of 3.99%3.84%, an average standard deviation of 79.68%84.7%, and on the remaining contractual life of the warrants. The change in fair value for the years ended December 31, 20212022 and 2022,2023, of $13,000$36,000 and $36,000,$21,000, respectively, has been recorded as non-operating income on the statement of comprehensive loss. As of December 31, 2022,2023, none of these warrants had been exercised. | 2) | In February 2019, the Company completed an underwritten public offering of 1,866,667 of its ADSs and warrants to purchase 1,866,667 ADSs, at a public offering price of $8.25 per ADS and accompanying warrant. The warrants arewere exercisable immediately, were to expire five years from the date of issuance and havehad an exercise price of $11.25 per ADS. The offering raised a total of $15.4 million, with net proceeds of $14.1 million, after deducting fees and expenses. The amount of the offering consideration initially allocated to the warrants was $5.0 million. Total issuance costs initially allocated to the warrants were $0.4 million. |
The warrants have been classified as a non-current financial liability due to a net settlement provision. This liability was initially recognized at its fair value on the date the contract was entered into and is subsequently accounted for at fair value at each balance sheet date. The fair value changes are charged to non-operating income and expense in the statement of comprehensive loss. The fair value of the warrants as of December 31, 20222023 was $1,000immaterial (December 31, 2021 -$564,000), and was based on the then current price of an ADS, a risk-free interest rate of 4.73%, an average standard deviation of 82.14%, and on the remaining contractual life of the warrants.2022 – also immaterial). The changeschange in fair value for the yearsyear ended December 31, 2021 and 2022 of $405,000 and $563,000 respectively, have beenwas recorded as non-operating income on the statement of comprehensive loss. The change in fair value for 2023 was immaterial. As of December 31, 2022,2023, none of these warrants had been exercised.exercised, and they expired in February 2024. F - 32F-34
BioLineRx Ltd. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 1112 – EQUITY (cont.) | c. | Changes in the Company’s equity (cont.) | | | |
| 3) | In May and June 2020, the Company sold in registered direct offerings an aggregate of 7,653,145 ADSs at a price of $1.75 per ADS. The Company also issued to investors in the offerings unregistered warrants to purchase 7,653,145 ADSs. The warrants were exercisable immediately, were to expire two and half years from the date of issuance and had an exercise price of $2.25 per ADS. In addition, the Company granted to the placement agent’s designees, as part of the placement fees, warrants to purchase 382,657 ADSs. These warrants were exercisable immediately, were set to expire two and half years from the date of issuance and had an exercise price of $2.1875 per ADS. The offerings raised a total of $13.4 million, with net proceeds of $12.0 million, after deducting fees and expenses. The amount of the offering consideration initially allocated to the warrants was $5.7 million. Total issuance costs initially allocated to the warrants were $0.6 million. |
The warrants issued were classified as a non-current financial liability due to a net settlement provision. This liability was initially recognized at its fair value on the date the contract was entered into and is subsequently accounted for at fair value at each balance sheet date. The fair value changes were charged to non-operating income and expense in the statement of comprehensive loss. As of December 31, 2021 andPrior to their expiration in November 2022, 5,739,741 of these warrants had beenwere exercised.The fair value of the unexercised warrants as of December 31, 2021 was $1,253,000. In November 2022, the warrants expired.
The changeschange in fair value for the yearsyear ended December 31, 2021 and 2022 of $2,354,000 and$1,253,000 have beenwas recorded as non-operating expenses and non-operating income respectively, on the statement of comprehensive loss. | 4) | In January 2021, the Company completed an underwritten public offering of 14,375,000 of its ADSs at a public offering price of $2.40 per ADS. The offering raised total gross proceeds of $34.5 million, with net proceeds of $31.4 million after deducting fees and expenses. In addition, warrants to purchase 718,750 ADSs were granted to the underwriters. These warrants are exercisable immediately, expire five years from the date of issuance and have an exercise price of $3.00 per ADS. |
The warrants have been classified as shareholders’ equity, with initial recognition at fair value on the date issued. The total issuance costs initially allocated to the warrants were recorded as an offset to share premium. The fair value of the warrants on the issuance date was approximately $1.0 million, which was recorded as issuance costs, and computed using the Black and Scholes option pricing model, based upon the then current price of an ADS, a risk-free interest rate of approximately 0.45% and an average standard deviation of approximately 73.8%.
As of December 31, 2022,2023, none of these warrants had been exercised. F - 33F-35
BioLineRx Ltd. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1112 – EQUITY(cont.) | c. | Changes in the Company’s equity (cont.) |
5) | In September 2022, the Company completed a registered direct offering of 13,636,365 ADSs at a price of $1.10 per ADS. The Company also issued to investors in the offering unregistered warrants to purchase 13,636,365 ADSs. The warrants are exercisable immediately, expire five years from the date of issuance and have an exercise price of $1.15 per ADS. In addition, the Company granted to the placement agent in the offering, as part of the placement fee, warrants to purchase 681,818 ADSs. These warrants are exercisable immediately, expire five years from the date of issuance and have an exercise price of $1.375 per ADS. Gross proceeds from the offering totaled $15.0 million, with net proceeds of $13.5 million, after deducting fees and expenses. The offering consideration allocated to the placement agent warrants amounted to $0.4 million. |
The warrants issued to the investors have been classified as a non-current financial liability due to a net settlement provision. This liability was initially recognized at its fair value on the issuance date and is subsequently accounted for at fair value at each balance sheet date. The fair value changes are charged to non-operating income and expense in the statement of comprehensive loss. The fair value of the warrants is computed using the Black-Scholes option pricing model. The fair value of the warrants upon issuance was computed based on the then-current price of an ADS, a risk-free interest rate of 3.62%, and an average standard deviation of 82.5%. The gross consideration initially allocated to the investor warrants amounted to $9.1 million, with total issuance costs initially allocated to the warrants amounting to $0.8 million. The fair value of the warrants amounted to $4,502,000$11,905,000 as of December 31, 2023 (December 31, 2022 - $4,502,000), and was based on the then current price of an ADS, a risk-free interest rate of 4.1%3.9%, an average standard deviation of 85.5%86.5%, and on the remaining contractual life of the warrants. The changes in fair value fromfor the issuance date throughyears ended December 31, 2022 and 2023 of $4,573,000 and $11,033,000, respectively, have been recorded as non-operating income (expenses) in the statement of comprehensive loss. As of December 31, 2022, none2023, 2,545,455 of these warrants had been exercised.
The placement agent warrants have been classified in shareholders’ equity, with initial recognition at fair value on the date issued, using the same assumptions as the investor warrants. 6) | On August 27, 2023, the Company entered into a securities purchase agreement, pursuant to which the Company agreed to sell in a private placement an aggregate of 6,829,137 ADSs of the Company, at a purchase price of $2.136 per ADS. Aggregate gross proceeds from the sale, which were received by the Company at closing, amounted to $14.6 million, with related issuance costs amounting to approximately $0.9 million. Pursuant to IFRS 15, approximately $12.0 million of gross proceeds and $0.7 million of issuance costs were recognized as equity. (see Note 16). |
F - 34F-36
BioLineRx Ltd. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1112 – EQUITY(cont.) | d. | Share purchase agreements |
| 1) | In September 2020, the Company entered into an ATM sales agreement with H.C. Wainwright & Co., LLC (“HCW”), pursuant to which the Company was entitled, at its sole discretion, to offer and sell through HCW, acting as sales agent, ADSs having an aggregate offering price of up to $25.0 million throughout the period during which the ATM facility remained in effect. The Company agreed to pay HCW a commission of 3.0% of the gross proceeds from the sale of ADSs under the facility. Expenses associated with establishment of the ATM facility with HCW, amounting to $0.2 million, were recorded in 2020 as non-operating expenses. In September 2021, the Company terminated the agreement. During 2021, the Company issued a total of 4,745,368 ADSs under the agreement for total gross proceeds of $18.5 million. From the effective date of the agreement through its termination, 7,381,101 ADSs were sold under the program for total gross proceeds of approximately $24.5 million. |
| 2) | In September 2021, the Company entered into a new $25.0 million ATM sales agreement with HCW under substantially identical terms to the previous agreement. Expenses associated with establishment of the ATM facility with HCW, amounting to $0.1 million, were recorded in non-operating expenses during the period. During 2022,2023, the Company issued a total of 206,3241,501,207 ADSs under the program for total gross proceeds of approximately $0.3$2.9 million. From the effective date of the agreement through the issuance date of this report, 608,6512,109,858 ADSs have been sold under the program for total gross proceeds of approximately $1.4$4.4 million and a total fees of approximately $0.1 million. |
1) | Share Incentive plan – general |
In 2003, the Company adopted the 2003 Share Incentive Plan (the “Plan”). The Plan provides for the granting of stock options and ordinary shares to the Company’s employees, directors, consultants and other service providers. Options are issued at the determination of the Board of Directors in accordance with applicable law. The options are generally exercisable for a ten-year period and the grants generally vest over a four-year period. In 2013, the Company’s Board of Directors approved amendments to the Plan to take into account changes in laws and regulations that had occurred since its adoption and to extend the term of the plan until November 2023. In 2016, the Board of Directors approved amendments to the Plan to allow for the grant of restricted stock units (“RSUs”) and performance stock units (“PSUs”). In 2022, the Board approved certain amendments to the Plan in order to conform the Plan to U.S. tax regulations for the benefit BioLineRx USA, Inc. employees. In November 2023, the Company’s Board of Directors approved to extend the term of the plan until May 2024. PSUs are RSUs that are linked to any one or more performance goals (in addition to, or in lieu of, time-based vesting terms) determined appropriate by the Board of Directors. The specific performance goals, as well as the time period associated with achieving such goals, are approved by the Board and are set forth in the grantee’s grant agreement. To date, each PSU grant has had between three to five performance goals on which vesting is based, each such goal being either a specified Company milestone and or the success of a specific project, with vesting of 20-40% on the achievement of each goal. The tranche of PSUs associated with a given milestone expires 12 months after the target date established for that milestone. As of December 31, 2022, 2,786,6082023, 8,336,970 PSUs were vested in accordance with their original terms. F - 35F-37
BioLineRx Ltd. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 1112 – EQUITY(cont.) | e. | Share-based payments (cont.) |
1) | Share Incentive plan – general (cont.)(cont.) |
As of December 31, 2022,2023, there were 92,601,858153,154,860 ordinary shares issuable upon the exercise of outstanding equity instruments under the Plan. Company Israelis’ employees and directors are granted options under Section 102 of the Israeli Income Tax Ordinance (the “Ordinance”), primarily under the “capital gains” track. Non-employeesIsraeli non-employees of the Company (consultants and other service providers) are granted options under Section 3(i) of the Ordinance. All non-Israeli employees and non-employees of the Company are granted options as non-qualifies. As of December 31, 2022,2023, there were 21.317.7 million remaining authorized but unissued ordinary shares in the pool reserved for future share-based incentive grants. | 2) | Employee share incentive plan: |
The following table contains additional information concerning equity instruments granted to employees and directors under the existing share incentive plans. | | | | | | | | | | | | | | | | | | | Weighted average exercise price (in NIS) | | | | | | Weighted average exercise price (in NIS) | | | | | | Weighted average exercise price (in NIS) | | Outstanding at beginning of year | | | 19,358,913 | | | | 2.6 | | | | 35,981,579 | | | | 1.5 | | | | 40,956,214 | | | | 0.7 | | Granted | | | 18,689,300 | | | | 0.5 | | | | 6,588,200 | | | | 0.4 | | | | 53,696,305 | | | | 0.3 | | Forfeited and expired | | | (1,776,037 | ) | | | 2.2 | | | | (1,438,642 | ) | | | 3.0 | | | | (4,618,062 | ) | | | 0.8 | | Exercised | | | | | | | | | | | | | | | | | | | | | | | | | Outstanding at end of year* | | | | | | | | | | | | | | | | | | | | | | | | | Exercisable at end of year | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | Weighted average exercise price (in NIS) | | | | | | Weighted average exercise price (in NIS) | | | | | | Weighted average exercise price (in NIS) | | Outstanding at beginning of year | | | 35,981,579 | | | | 1.5 | | | | 40,956,214 | | | | 0.7 | | | | 89,871,858 | | | | 0.4 | | Granted | | | 6,588,200 | | | | 0.4 | | | | 53,696,305 | | | | 0.3 | | | | 64,855,380 | | | | 0.2 | | Forfeited and expired | | | (1,438,642 | ) | | | 3.0 | | | | (4,618,062 | ) | | | 0.8 | | | | (3,804,175 | ) | | | 0.7 | | Exercised | | | | | | | | | | | | | | | | | | | | | | | | | Outstanding at end of year* | | | | | | | | | | | | | | | | | | | | | | | | | Exercisable at end of year | | | | | | | | | | | | | | | | | | | | | | | | |
| * | As of December 31, 2020, 2021, 2022 and 2022,2023, includes 2,421,799, 4,084,748, 10,482,277, and 10,482,27712,219,465 PSUs at an exercise price of 0.10 NIS (par value of ordinary shares), for which performance obligations have not been met. | | | |
F - 36F-38
BioLineRx Ltd. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 1112 – EQUITY (cont.) | e. | Share-based payments (cont.) |
| 2) | Employee share incentive plan (cont.): | | | |
The total consideration received from the exercise of equity instruments during 2020, 2021, 2022 and 20222023 was not material. Set forth below is data regarding the range of exercise prices and weighted-average remaining contractual life (in years) for the equity instruments outstanding at the end of each of the years indicated. | | | As of December 31, | | | | | | | | | | Range of exercise prices (in NIS) | | | Number of options outstanding | | | Weighted average remaining contractual life (in yrs.) | | | Number of options outstanding | | | Weighted average remaining contractual life (in yrs.) | | Up to 0.99 | | | | 25,752,128 | | | | 8.8 | | | | 75,663,492 | | | | 9.0 | | 1.00-2.00 | | | | 14,524,086 | | | | 6.6 | | | | 13,668,366 | | | | 5.5 | | 2.01-10.00 | | | | 680,000 | | | | 4.8 | | | | 540,000 | | | | 4.2 | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | Range of exercise prices (in NIS) | | | Number of options outstanding | | | Weighted average remaining contractual life (in yrs.) | | | Number of options outstanding | | | Weighted average remaining contractual life (in yrs.) | | Up to 0.49 | | | | 58,488,372 | | | | 9.2 | | | | 120,593,415 | | | | 8.8 | | | 0.5-0.99 | | | | 17,175,120 | | | | 7.8 | | | | 16,147,110 | | | | 6.9 | | | 1.00-2.00 | | | | 13,668,366 | | | | 5.5 | | | | 13,149,390 | | | | 4.7 | | | 2.01-3.4 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
The fair value of equity instruments granted to employees through December 31, 20222023 has been determined using the Black-Scholes option-pricing model. These values are based on the following assumptions as of the applicable grant dates: | | | | | | | | | | Expected dividend yield | | | 0 | % | | | 0 | % | | | 0 | % | Expected volatility | | | 63 | % | | | 67 | % | | | 67 | % | Risk-free interest rate | | | 1 | % | | | 1 | % | | | 4 | % | Expected life of options (in years) | | | 6 | | | | 6 | | | | 6 | |
| | | | | | | | | | Expected dividend yield | | | 0 | % | | | 0 | % | | | 0 | % | Expected volatility | | | 67 | % | | | 67 | % | | | 69 | % | Risk-free interest rate | | | 1 | % | | | 4 | % | | | 4 | % | Expected life of options (in years) | | | 6 | | | | 6 | | | | 6 | |
The remaining unrecognized deferred compensation expense as of December 31, 20222023 was $4.8$2.7 million. This amount will be expensed over the remaining vesting period of the equity instruments. F - 37F-39
BioLineRx Ltd. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 1112 – EQUITY (cont.) | e. | Share-based payments (cont.) | | | |
| 3) | Stock options to consultants |
From inception through December 31, 2020,2021, the Company issued to consultants options for the purchase of 596,5233,296,523 ordinary shares at a weighted average exercise price of NIS 5.23 per share. In 2021, the Company issued additional options to consultants for the purchase of 2,700,000 ordinary shares at a weighted average price of NIS 0.66 per share.
In 2022 and 2023, the Company did not issue additional options to consultants. The options to consultants generally vest over four years and may be exercised for periods of between five and ten years. As of December 31, 2022, 2,730,0002023, 2,725,035 options to consultants were outstanding with a weighted average exercise price of NIS 1.021.01 per share and a weighted average contractual life of 7.96.9 years. Company management estimates the fair value of the options granted to consultants based on the value of services received over the vesting period of the applicable options. The value of such services (primarily in respect of clinical advisory services) is estimated based on the additional cash compensation the Company would need to pay if such options were not granted. The value of services recorded in each of the years 2020, 2021, 2022 and 20222023 was not material. F - 38F-40
BioLineRx Ltd. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 1213 – TAXES ON INCOME The taxable income of BioLineRx Ltd., not subject to benefits as detailed below, is taxed at the standard Israeli corporate tax rate, which was 23% for all years included in these financial statements. The taxable income of BioLineRx USA, Inc. is subject to a federal tax rate of 21%. As of December 31, 2022,2023, the tax loss carryforwards of BioLineRx Ltd. were approximately $326$304 million. The tax loss carryforwards have no expiration date. The Company has not created deferred tax assets in respect of these tax loss carryforwards. See Note 2, paragraph l.
In accordance with Israeli tax regulations, the tax returns filed by BioLineRx Ltd. through the 2020 tax year are considered final. As described in Note 2, paragraph 1, theThe Company has not recognized any deferred tax assets in the financial statements, as it does not expect to generate taxable income in the foreseeable future. The reported tax on the Company’s income before taxes differs from the theoretical amount that would arise using the weighted average tax rate applicable to income of the consolidated entities as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | in USD | | | | | | in USD | | | | | | in USD | | | | | | in USD | | | | | | in USD | | | | | | in USD | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Loss before taxes | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Theoretical tax benefit | | | | | (6,905 | ) | | | | | (6,220 | ) | | | | | (5,739 | ) | | | | | (6,220 | ) | | | | | (5,739 | ) | | | | | (13,941 | ) | Disallowed deductions (tax exempt income): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Loss (gain) on adjustment of warrants to fair value | | | | | 1,280 | | | | | | 480 | | | | | | (1,478 | ) | | | | | 480 | | | | | | (1,478 | ) | | | | | 2,542 | | Share-based compensation | | | | | 292 | | | | | | 343 | | | | | | 516 | | | | | | 343 | | | | | | 516 | | | | | | 534 | | Impairment of intangible asset | | | | | | - | | | | | | - | | | | | | 1,542 | | Other | | | | | 11 | | | | | | 11 | | | | | | 11 | | | | | | 11 | | | | | | 11 | | | | | | 11 | | Increase in taxes for tax losses and timing differences incurred in the reporting year for which deferred taxes were not created | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Taxes on income for the reported year | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
F - 39F-41
BioLineRx Ltd. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 1314 – LOSS PER SHARE The following table contains the data used in the computation of the basic loss per share: | | Year ended December 31, | | | Year ended December 31, | | | | | | | | | | | | | | | | | | | | | | | | | | | | Loss attributed to ordinary shares | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Number of shares used in basic calculation | | | 252,844 | | | | 662,934 | | | | 773,957 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Basic and diluted loss per ordinary share | | | | | | | | | | | | | | | | | | | | | | | | |
All outstanding options and warrants have been excluded from the calculation of the diluted loss per share for all years presented, since their effect was anti-dilutive. NOTE 1415 – COMMITMENTS AND CONTINGENT LIABILITIES | 1) | Obligation to pay royalties to the State of Israel |
The Company is required to pay royalties to the State of Israel (represented by the Israel Innovation Authority, or IIA), computed on the basis of proceeds from the sale or license of products whose development was supported by grants from the predecessor of the IIA, the Office of the Chief Scientist. This obligation relates solely to financial participation in the development of products by the Company. In accordance with the terms of grants provided by the IIA, the State is entitled to royalties on the sale or license of any product whose development was supported with State participation. These royalties are generally 3% in the first three years from initial repayment, 4% of sales in the three subsequent years and 5% of sales in the seventh year until repayment of 100% of the grants (linked to the dollar) received by the Company, plus annual interest at the LIBOR rate. Starting January 2024, the interest rate will be the 12-month SOFR rate as published on the first trading day of each calendar year. Under certain circumstances, the royalty rate is calculated according to a formula based on the ratio of participation by the IIA in the project to the total project costs incurred by the Company. In connection with the in-licensing of motixafortide from Biokine Therapeutics Ltd. (“Biokine”), and as a condition to IIA consent to the transaction, the Company agreed to abide by any obligations resulting from funds previously received by Biokine from the IIA. The contingent liability to the IIA assumed by the Company relating to this transaction amounts to $3.7 million as of December 31, 2022. The Company has a full right of offset for amounts payable to the IIA from payments due to Biokine in the future.2) | In connection with the in-licensing of motixafortide from Biokine Therapeutics Ltd. (“Biokine”), and as a condition to IIA consent to the transaction, the Company agreed to abide by any obligations resulting from funds previously received by Biokine from the IIA. The contingent liability to the IIA assumed by the Company relating to this transaction amounts to $3.2 million as of December 31, 2023. In this regard, and in connection with the outlicensing transaction in Asia (see Note 16), as well as the commercial launch of motixafortide in the U.S., the royalty rate agreed with the IIA for motixafortide consideration received is 3.9% for sub-license consideration and 4% for direct product sales. The Company has a full right of offset for amounts payable to the IIA from all payments due to Biokine in the future. |
F - 40F-42
BioLineRx Ltd. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 1415 – COMMITMENTS AND CONTINGENT LIABILITIES (cont.) From time to time, the Company enters into in-licensing agreements with academic institutions, research institutions and companies (the “licensors”) in connection with the development of therapeutic compounds. Pursuant to these licensing agreements, the Company generally obtains the rights for one or more therapeutic compounds in pre-clinical and early clinical stages of development, in order to continue development of the compounds through more advanced stages of development and, subsequently, to manufacture, distribute and market the drugs or to out-license the development, manufacturing and commercialization rights to third parties. Such development activities are carried out by either the Company and/or by companies or institutions to which the Company has entered into an out-license agreement, subject to certain restrictions stipulated in the various agreements. The licenses that have been granted to the Company are broad and comprehensive, and generally include various provisions and usage rights as follows: (i) territorial scope of the license (global); (ii) term of the license (unrestricted but not shorter than the life of the patent); and (iii) development of the therapeutic compound (allowing the Company to perform all development activities on its own, or by outsourcing under Company supervision, as well as out-licensing development under the license to other companies, subject to the provisions of the licensing agreements). According to the provisions of the licensing agreements, the intellectual property rights in the development of any licensed technology, through the date the applicable license agreement is effective, remain with the licensor, while the rights in products and/or other deliverables developed by the Company after the license is granted belong to the Company. In cases where the licensor has a claim to an invention that was jointly developed with the Company, the licensor also co-owns the related intellectual property. In any event, the scope of the license also covers these intellectual property rights. In addition, the Company generally undertakes in the licensing agreements to protect registered patents resulting from developments under the various licenses, to promote the registration of patents covering new developments in cooperation with the licensor, and to bear responsibility for all related costs. Pursuant to the various agreements, the Company generally works to register the various patents on a broad basis worldwide, and if the Company decides not to initiate or continue a patent registration proceeding in a given country, the Company is required to notify the applicable licensor to this effect and the licensor is entitled to take action for registration of the patent in such country. F - 41F-43
BioLineRx Ltd. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 1415 – COMMITMENTS AND CONTINGENT LIABILITIES (cont.) | 2) | Licensing agreements (cont.) |
The consideration paid pursuant to the licensing agreements generally includes several components that may be payable over the license period and that relate, inter alia, to the progress made in research and development activities, as well as commercial success, as follows: (a) one-time, up-front payment and/or periodic payments; (b) payments through the early stages of development (i.e., through the end of phase 2); (c) payments upon the achievement of milestones necessary for advancing to phase 3; (d) payments from the end of a successful phase 3 trial through approval of the therapeutic compound; and e) royalties on sales of the final product resulting from development under the license or including any component thereof, generally less than 5% of the Company’s net sales of the product, although in specific instances (for example, with regard to Motixafortide,motixafortide, where the royalty rate on net sales directly commercialized by the Company payable to Biokine is 10%) the royalty rate has been higher or lower than this range. In instances where the Company has out-licensed the product for further development, the Company pays a percentage of the net consideration received from the licensee (“Sublicense Receipts”) to the upstream licensor that generally range from 20% to 29.5% of such consideration, although in specific instances the percentage paid has been higher or lower than this range. These Sublicense Receipts generally take the place of most or all of the milestone and royalty payments set forth in (b) through (e) above.
The license agreements may be cancelled by the licensor only in specific circumstances, generally upon the occurrence of one of the following events: (a) the Company’s failure to meet certain milestones stipulated in the applicable license agreement and appended timetables; (b) default, insolvency, receivership, liquidation, etc. of the Company that is not imposed and/or lifted within the timeframe stipulated in the license agreement; and (c) fundamental breach of the license agreement that is not corrected within the stipulated timeframe. The Company may generally cancel a license agreement with prior notice of 30 to 90 days, due to unsuccessful development or any other cause. The Company has undertaken to indemnify certain licensors, their employees, officers, representatives or anyone acting on their behalf for any damage and/or expense that they may incur in connection with the Company’s use of a license granted to it, all in accordance with the terms stipulated in the applicable license agreements. Some of the license agreements are accompanied by consulting, support and cooperation agreements, pursuant to which the Company is committed to pay the various licensers a fixed monthly amount over the period stipulated in the agreement for their assistance in the continued research and development under the license. F - 42F-44
BioLineRx Ltd. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1415 – COMMITMENTS AND CONTINGENT LIABILITIES (cont.) | 3)4) | Commitments in respect of Agalimmune and Biokine |
The consideration due to Agalimmune shareholders is based on certain development and commercial milestones, including future sales of Agalimmune products. In addition, the selling shareholders of Agalimmune have certain reversionary rights in the event of a breach of the transaction agreement and certain other limited triggering events.In December 2023, the Company determined to terminate development of AGI-134 and provided notice of its intent to terminate the Agalimmune Development Agreement, effective March 15, 2024. The Company is currently awaiting the decision of Agalimmune’s founders regarding their intent to exercise their reversionary option right. In accordance with the license agreement of motixafortide with Biokine (as amended), the Company is required to pay Biokine a payment of 20% of amounts received as consideration in connection with any sublicensing or sale of the licensed technology. Biokine is also eligible to receive up to a total of $5$2.5 million in future milestone payments. Subject to certain limitations, if the Company independently sellsells products related to Motixafortide,motixafortide, the Company will pay Biokine a royalty payment of 10% of net sales. The Company’s outstanding open purchase order commitments as of December 31, 20222023 amounted to $5.9$6.9 million. To secure the Company’s lease obligation on its Israeli premises, the Company has provided a bank guarantee in the amount of $100,000 for the benefit of the lessor, which remains outstanding as of December 31, 2022.2023. F-45
BioLineRx Ltd. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 15 – COMMITMENTS AND CONTINGENT LIABILITIES (cont.) On January 5, 2023, a putative securities class action complaint was filed in the U.S. against the Company and its Chief Executive Officer. The complaint claims that the Company made false and materially misleading statements and failed to disclose material adverse facts pertaining to its financial position with regard to the development of motixafortide and that the Company would require a loan and a securities offering to commercialize motixafortide. The complaint asserts a putative class period of February 23, 2021 to September 19, 2022, inclusive, and seeks certification as a class action and an unspecified amount of damages. On July 5, 2023, an amended complaint was filed, alleging the same claims and adding the Company’s Chief Financial Officer. On September 5, 2023, the Company, its Chief Executive Officer and its Chief Financial Officer filed a motion to dismiss the amended complaint in its entirety. The motion has been fully briefed and is sub judice. The Company also received, on February 5, 2023, a substantially similar lawsuit and motion to approve the lawsuit as a class action in the Tel Aviv District Court. The total amount claimed in Tel Aviv, if the lawsuit is certified as a class action, is approximately NIS 113.5 million (approximately $32 million). The outcome of both legal proceedings is uncertain at this point. Based on an initial evaluation, management of the Company believes that they are without merit and intends to vigorously defend the Company and its Chief Executive Officer against such actions. F - 43F-46
BioLineRx Ltd. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 16 – LICENSE AND SECURITIES PURCHASE AGREEMENTS On August 27, 2023, the Company entered into a license agreement (the “License Agreement”) with Hong Seng Technology Limited (“HST”) and Guangzhou Gloria Biosciences Co., Ltd. (“Gloria” and together with HST, the “Purchaser Parties” or the “Licensee”), pursuant to which the Company granted HST an exclusive, royalty-bearing, sublicensable license to develop and commercialize motixafortide in Asia (other than Israel and certain other countries) (collectively, the “Territory”) and to engage and authorize Gloria to perform services under the License Agreement in the Territory. In addition, the Company granted the Licensee a first offer right with respect to the grant of certain rights in motixafortide outside of the Territory. The License Agreement became effective on October 12, 2023, following fulfillment of all closing conditions. Pursuant to the terms of the License Agreement, the Licensee paid an upfront payment of $15 million, which was received by the Company at closing. The Company is also entitled to up to $49 million based on the achievement of certain development and regulatory milestones in China and Japan, and up to $197 million in sales milestones based on defined sales targets of motixafortide in the Territory. In addition, the Company is eligible to receive tiered double-digit royalties (ranging from 10-20%), on a country-by-country basis, on aggregate net sales of motixafortide in the Territory during the initial royalty term of at least 15 years, with a reduction of the royalties payable following the end of the initial royalty term, as well as upon the occurrence of certain events. In connection with the License Agreement, on August 27, 2023, the Company also entered into a securities purchase agreement (the “Purchase Agreement”) with HST and Gloria, pursuant to which the Company agreed to sell in a private placement an aggregate of 6,829,137 ADSs of the Company, at a purchase price of $2.136 per ADS. Aggregate gross proceeds from the sale, which were received by the Company at closing, amounted to $14.6 million, with related issuance costs amounting to approximately $0.9 million. No warrants were issued in the transaction. In accordance with IFRS 15, both agreements have been treated as a single unit of account, with the consideration combined and subsequently allocated between the Purchase Agreement and the License Agreement. • | TheOf the total consideration received wasamounting to $29.6 million; approximately, $12.0 million were allocated to the Purchase Agreement, and $1417.6 million were allocated to the share purchase agreement, and license agreement respectively.License Agreement |
• | Costs in the amount of $0.7 million directly attributable to the share purchase agreementPurchase Agreement were recognized as a deduction fromreduction in equity in the amount of $0.704 million. |
The Company has identified the following performance obligations in the contract, each to be recognized separately: 3. | PDAC license and related support services |
With regard to PDAC, the Company determined that the license, together with the associated support services, should be combined into a single performance obligation, since the Licensee cannot benefit from the license without the associated support services. The support services are highly specialized for the licensed product in this indication. Licensing rights for other indications and related support were deemed immaterial. F-47
BioLineRx Ltd. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 16 – LICENSE AND SECURITIES PURCHASE AGREEMENTS (cont.) The fixed transaction price has been allocated among the performance obligations based on similar price offers received by the Company, with the assistance of a valuation specialist. The variable consideration related to the performance obligations was not taken into account in the fixed transaction price due to uncertainty. The variable consideration related to certain performance obligations was not taken into account in the fixed transaction price due to uncertainty. Revenue will be recognized in the Company’s financial statements as follows: | a. | Revenue for the SCM license was recognized in Q4 2023, upon the transfer of control over the license to the licensee, in the amount of approximately $2.0 million. |
| b. | Revenue from providing the SCM support services will be recognized using the input method, which is based on costs incurred and labor hours expended, expected to result in straight-line revenue recognition over six months, totaling approximately $0.1 million. |
| c. | Revenue from the PDAC performance obligation will be recognized over time, with the percentage of completion determined based on support hours incurred, and expected to be recognized over twelve monthsthrough the end of 2024, in the total amount of $15.5 million. |
Costs associated directly with the license agreement have been allocated to the performance obligation above and recognized concurrently with the revenue recognition. F-48
BioLineRx Ltd. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 1517 – TRANSACTIONS AND BALANCES WITH RELATED PARTIES Transactions with related parties Expenses: | | | | | | | | | | | | | | | | | | Benefits to related parties: | | | | | | | | | | Compensation and benefits to senior management, including benefit component of equity instrument grants | | | | | | | | | | | | | Compensation and benefits to directors, including benefit component of equity instrument grants | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | Benefits to related parties: | | | | | | | | | | Compensation and benefits to senior management, including benefit component of equity instrument grants | | | | | | | | | | | | | Compensation and benefits to directors, including benefit component of equity instrument grants | | | | | | | | | | | | |
Key management compensation Key management includes directors and executive officers. The compensation paid or payable to key management for services during each of the years indicated is presented below. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Salaries and other short-term employee benefits | | 1,656 | | | 1,883 | | | 2,298 | | | 1,883 | | | 2,298 | | | 2,425 | | Post-employment benefits | | 126 | | | 136 | | | 131 | | | 136 | | | 131 | | | 256 | | Other long-term benefits | | 33 | | | 35 | | | 35 | | | 35 | | | 35 | | | 31 | | Share-based compensation | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
F - 44F-49
BioLineRx Ltd. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 1618 – SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION | | December 31, | | | | | | | | | | | | | Advance payments | | | - | | | | 480 | | | | | 687 | | | | 245 | | Other | | | | | | | | | | | | | | | | | |
| | December 31, | | | | | | | | | | | | | Government institutions | | | 140 | | | | 687 | | Other | | | | | | | | | | | | | | | | | |
| b. | Accounts payable and accruals |
| | | | | | | | | | | | | | | | | | | | | | | | | | | 1) Trade: | | | | | | | | | | | | | Accounts payable: | | | | | | | | | | | | | Overseas | | 4,504 | | | 6,061 | | | 6,061 | | | 7,704 | | In Israel | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2) Other: | | | | | | | | | | | | | Payroll and related expenses | | | 931 | | | 2,184 | | Accrued expenses | | 521 | | | 976 | | | 352 | | | 662 | | Accrual for vacation and recreation pay | | 397 | | | 377 | | | 377 | | | 419 | | Payroll and related expenses | | 307 | | | 307 | | | Other | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
The carrying amounts of accounts payable and accruals approximate their fair value, as the effect of discounting is not material. | | | | | | | | | | | | | | | | | | License revenues (see Note 16) | | | - | | | | - | | | | 4,610 | | Product sales, net | | | | | | | | | | | | | | | | | | | | | | | | | |
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BioLineRx Ltd. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 1618 – SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION (cont.) | | | | | | | | | | | | | | | | | | Cost related to license revenues | | | - | | | | - | | | | 3,230 | | Amortization of intangible asset in respect of license revenues | | | - | | | | - | | | | 450 | | Cost of product sales | | | | | | | | | | | | | | | | | | | | | | | | | |
| e. | Research and development expenses |
| | | | | | | | | | | | | | | | | | Research and development services | | | 11,696 | | | | 12,088 | | | | 9,296 | | Payroll and related expenses | | | 3,501 | | | | 4,074 | | | | 4,495 | | Share based compensation | | | 623 | | | | 971 | | | | 1,198 | | Lab, occupancy and telephone | | | 771 | | | | 882 | | | | 902 | | Professional fees | | | 643 | | | | 595 | | | | 954 | | Depreciation and amortization | | | 864 | | | | 660 | | | | 615 | | Other | | | 75 | | | | 196 | | | | 169 | | | | | 18,173 | | | | 19,466 | | | | 17,629 | |
| | | | | | | | | | | | | | | | | | Research and development services | | | 12,088 | | | | 9,296 | | | | 4,603 | | Payroll and related expenses | | | 4,074 | | | | 4,495 | | | | 4,452 | | Lab, occupancy and telephone | | | 882 | | | | 902 | | | | 969 | | Professional fees | | | 595 | | | | 954 | | | | 935 | | Share-based compensation | | | 971 | | | | 1,198 | | | | 760 | | Depreciation and amortization | | | 660 | | | | 615 | | | | 583 | | Other | | | | | | | | | | | | | | | | | | | | | | | | | |
| d.f. | Sales and marketing expenses |
| | | | | | | | | | | | | | | | | | Marketing | | | 585 | | | | 729 | | | | 5,365 | | Payroll and related expenses | | | 234 | | | | 249 | | | | 1,059 | | Overseas travel | | | | | | | | | | | | | | | | | | | | | | | | | |
| e. | General and administrative expenses
|
| | | | | | | | | | | | | | | | | | Payroll and related expenses | | | 1,369 | | | | 1,408 | | | | 1,706 | | Share based compensation | | | 729 | | | | 583 | | | | 895 | | Professional fees | | | 1,044 | | | | 1,103 | | | | 1,248 | | Insurance | | | 603 | | | | 1,064 | | | | 1,046 | | Depreciation | | | 70 | | | | 42 | | | | 39 | | Other | | | 99 | | | | 108 | | | | 132 | | | | | 3,914 | | | | 4,308 | | | | 5,066 | |
| | | | | | | | | | | | | | | | | | Payroll and related expenses | | | 308 | | | | 947 | | | | 8,868 | | Medical Affairs | | | - | | | | 1,316 | | | | 4,824 | | Marketing | | | 700 | | | | 1,805 | | | | 4,091 | | Office related expenses | | | - | | | | 519 | | | | 1,923 | | Market Access | | | - | | | | 1,023 | | | | 1,606 | | Business Analytics | | | - | | | | 106 | | | | 1,005 | | Travel | | | 25 | | | | 84 | | | | 986 | | Share-based compensation | | | (59 | ) | | | 112 | | | | 751 | | Professional fees | | | - | | | | 521 | | | | 745 | | Depreciation and amortization | | | - | | | | - | | | | 314 | | Other | | | | | | | | | | | | | | | | | | | | | | | | | |
F - 46F-51
BioLineRx Ltd. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 1618 – SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION (cont.) | f.g. | General and administrative expenses |
| | | | | | | | | | | | | | | | | | Payroll and related expenses | | | 1,408 | | | | 1,706 | | | | 2,117 | | Professional fees | | | 1,103 | | | | 1,248 | | | | 2,028 | | Insurance | | | 1,064 | | | | 1,046 | | | | 939 | | Share-based compensation | | | 583 | | | | 895 | | | | 780 | | Depreciation | | | 42 | | | | 39 | | | | 37 | | Other | | | | | | | | | | | | | | | | | | | | | | | | | |
| h. | Non-operating income (expenses), net |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Changes in fair value of warrants | | | (1,936 | ) | | 6,425 | | | (11,054 | ) | Issuance costs | | (784 | ) | | - | | | (762 | ) | | - | | | (762 | ) | | - | | Changes in fair value of warrants | | (5,142 | ) | | (1,936 | ) | | 6,425 | | | Other | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ) | | | | ) | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Interest income | | | 236 | | | | 277 | | | | | | | 277 | | | 694 | | | 2,007 | | Exchange differences, net | | | - | | | | 282 | | | | - | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Interest expense | | 1,470 | | | 984 | | | 1,786 | | | 984 | | | 1,786 | | | 2,144 | | Bank commissions | | | | | | 26 | | | 25 | | Exchange differences, net | | 137 | | | - | | | 346 | | | | - | | | | 346 | | | | - | | Bank commissions | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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