SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 20-F |
Israel | 2 HaMa’ayan Street Modi’in 7177871, Israel | |
(Jurisdiction of incorporation or organization) | (Address of principal executive offices) |
+972 (8) 642-9100
+972 (8) 642-9101 (facsimile)
phils@biolinerx.com
2 HaMa’ayan Street
Modi’in 7177871, Israel
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Title of each class | Name of each exchange on which registered | |
American Depositary Shares, each representing 15 ordinary shares, par value NIS 0.10 per share | Nasdaq Capital Market | |
Ordinary shares, par value NIS 0.10 per share | Nasdaq Capital Market* | |
(Title of Class)
(Title of Class)
Large accelerated filer ☐ | Accelerated filer ☒ | Non-accelerated filer ☐ | Emerging growth company ☐ |
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
U.S. GAAP ☐ | International Financial Reporting Standards as issued by the International Accounting Standards Board ☒ | Other ☐ |
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• | references to “BioLineRx,” the “Company,” “us,” “we” and “our” refer to BioLineRx Ltd., an Israeli company, and its consolidated subsidiaries; |
• | references to “ordinary shares,” “our shares” and similar expressions refer to the Company’s ordinary shares, NIS 0.10 nominal (par) value per share; |
• | references to “ADS” or “ADSs” refer to the Company’s American Depositary Shares; |
• | references to “dollars,” “U.S. dollars” and “$” are to United States Dollars; |
• | references to “shekels” and “NIS” are to New Israeli Shekels, the Israeli currency; |
• | references to the “Companies Law” are to Israel’s Companies Law, 5759-1999, as amended; and references to the “SEC” are to the U.S. Securities and Exchange Commission. |
• | the initiation, timing, progress and results of our preclinical studies, clinical trials and other therapeutic candidate development efforts; |
• | our ability to advance our therapeutic candidates into clinical trials or to successfully complete our preclinical studies or clinical trials; |
• | our receipt of regulatory approvals for our therapeutic candidates and the timing of other regulatory filings and approvals; |
• | the clinical development, commercialization and market acceptance of our therapeutic candidates; |
• | our ability to establish and maintain corporate collaborations; |
• | our ability to integrate new therapeutic candidates and new personnel; |
• | the interpretation of the properties and characteristics of our therapeutic candidates and of the results obtained with our therapeutic candidates in preclinical studies or clinical trials; |
• | the implementation of our business model and strategic plans for our business and therapeutic candidates; |
• | the scope of protection we are able to establish and maintain for intellectual property rights covering our therapeutic candidates and our ability to operate our business without infringing the intellectual property rights of others; |
• | estimates of our expenses, future revenues, capital requirements and our needs for and ability to access sufficient additional financing; |
• | risks related to changes in healthcare laws, rules and regulations in the United States or elsewhere; |
• | competitive companies, technologies and our industry; |
• | statements as to the impact of the political and security situation in Israel on our business; and |
• | the impact of the COVID-19 pandemic and the Russian invasion of Ukraine, which may exacerbate the magnitude of the factors discussed above. |
• | We are a clinical-stage biopharmaceutical development company with a history of operating losses, expect to incur additional losses in the future and may never be profitable; |
• | We cannot assure investors that our existing cash and investment balances will be sufficient to meet our future capital requirements. |
• | If we or our licensees are unable to obtain U.S. and/or foreign regulatory approval for our therapeutic candidates, we will be unable to commercialize our therapeutic candidates. |
• | Clinical trials involve a lengthy and expensive process with an uncertain outcome, and results of earlier studies and trials may not be predictive of future trial results. |
• | Even if we obtain regulatory approvals, our therapeutic candidates will be subject to ongoing regulatory review and if we fail to comply with continuing U.S. and applicable foreign regulations, we could lose those approvals and our business would be seriously harmed. |
• | We generally depend on out-licensing arrangements for late-stage development, marketing and commercialization of our therapeutic candidates. |
• | If we cannot meet requirements under our in-license agreements, we could lose the rights to our therapeutic candidates, which could have a material adverse effect on our business. |
• | If we do not meet the requirements under our agreement with the Agalimmune selling shareholders, we could lose the rights to the therapeutic candidates in Agalimmune’s pipeline, including, but not limited to, AGI-134. |
• | We seek to partner with third-party collaborators with respect to the development and commercialization of motixafortide, and we may not succeed in establishing and maintaining collaborative relationships, which may significantly limit our ability to develop and commercialize our product candidates successfully, if at all. |
• | We have no experience selling, marketing or distributing products and no internal capability at present to do so. |
• | Our business is subject to risks arising from a widespread outbreak of an illness or any other communicable disease, or any other public health crisis, such as the COVID-19 pandemic, which has impacted and could continue to impact our business. Modifications to our therapeutic candidates, or to any other therapeutic candidates that we may develop in the future, may require new regulatory clearances or approvals or may require us or our licensees, as applicable, to recall or cease marketing these therapeutic candidates until clearances are obtained. |
• | If our competitors develop and market products that are more effective, safer or less expensive than our current or future therapeutic candidates, our prospects will be negatively impacted. |
• | We have no experience selling, marketing or distributing products and no internal capability at present to do so. |
• | Our business could suffer if we are unable to attract and retain key employees. |
• | Even if our therapeutic candidates receive regulatory approval or do not require regulatory approval, they may not become commercially viable products. |
• | Healthcare reforms and related reductions in pharmaceutical pricing, reimbursement and coverage by governmental authorities and third-party payors may adversely affect our business. |
• | If third-party payors do not adequately reimburse customers for any of our therapeutic candidates that are approved for marketing, they might not be purchased or used, and our revenues and profits will not develop or increase. |
• | Our business has a substantial risk of clinical trial and product liability claims. If we are unable to obtain and maintain appropriate levels of insurance, a claim could adversely affect our business. |
• | Significant disruptions of our information technology systems or breaches of our data security could adversely affect our business. |
• | Our access to most of the intellectual property associated with our therapeutic candidates results from in-license agreements with biotechnology companies and a university, the termination of which would prevent us from commercializing the associated therapeutic candidates. |
• | Patent protection for our products is important and uncertain. |
• | If we are unable to protect the confidentiality of our trade secrets or know-how, such proprietary information may be used by others to compete against us. |
• | Legal proceedings or third-party claims of intellectual property infringement may require us to spend substantial time and money and could prevent us from developing or commercializing products. |
• | We may be subject to other patent-related litigation or proceedings that could be costly to defend and uncertain in their outcome. |
• | We are currently operating in a period of economic uncertainty and capital markets disruption, which has been significantly impacted by geopolitical instability due to the ongoing military conflict between Russia and Ukraine. |
• | The market prices of our ordinary shares and ADSs are subject to fluctuation, which could result in substantial losses by our investors. |
• | Future sales of our ordinary shares or ADSs could reduce the market price of our ordinary shares and ADSs. |
• | Raising additional capital by issuing securities may cause dilution to existing shareholders. |
• | We conduct our operations in Israel and therefore our results may be adversely affected by political, economic and military instability in Israel and its region. |
• | Due to a significant portion of our expenses and revenues being denominated in non-dollar currencies, our results of operations may be harmed by currency fluctuations. |
• | We have received Israeli government grants for certain research and development expenditures. The terms of these grants may require us to satisfy specified conditions in order to manufacture products and transfer technologies outside of Israel. We may be required to pay penalties in addition to repayment of the grants. |
• | Provisions of Israeli law may delay, prevent or otherwise impede a merger with, or an acquisition of, our company, which could prevent a change of control, even when the terms of such a transaction are favorable to us and our shareholders. |
• | It may be difficult to enforce a U.S. judgment against us and our officers and directors in Israel or the United States, or to serve process on our officers and directors. |
• | Your rights and responsibilities as a shareholder will be governed by Israeli law, which may differ in some respects from the rights and responsibilities of shareholders of U.S. companies. |
• | a therapeutic candidate or medical device may not prove safe or efficacious; |
• | the results with respect to any therapeutic candidate may not confirm the positive results from earlier preclinical studies or clinical trials; |
• | the results may not meet the level of statistical significance required by the U.S. Food and Drug Administration, or FDA, or other regulatory authorities; and |
• | the results will justify only limited and/or restrictive uses, including the inclusion of warnings and contraindications, which could significantly limit the marketability and profitability of the therapeutic candidate. |
• | delays in securing clinical investigators or trial sites for the clinical trials; |
• | delays in obtaining institutional review board and other regulatory approvals to commence a clinical trial; |
• | slower-than-anticipated patient recruitment and enrollment; |
• | negative or inconclusive results from clinical trials; |
• | unforeseen safety issues; |
• | uncertain dosing issues; |
• | an inability to monitor patients adequately during or after treatment; and |
• | problems with investigator or patient compliance with the trial protocols. |
• | restrictions on such product, manufacturer or manufacturing process; |
• | warning letters from the FDA or other regulatory authorities; |
• | withdrawal of the product from the market; |
• | suspension or withdrawal of regulatory approvals; |
• | refusal to approve pending applications or supplements to approved applications that we or our licensees submit; |
• | voluntary or mandatory recall; |
• | fines; |
• | refusal to permit the import or export of our products; |
• | product seizure or detentions; |
• | injunctions or the imposition of civil or criminal penalties; or |
• | adverse publicity. |
• | we have limited control over the amount and timing of resources that our licensees devote to our therapeutic candidates; |
• | our licensees may experience financial difficulties; |
• | our licensees may fail to secure adequate commercial supplies of our therapeutic candidates upon marketing approval, if at all; |
• | our future revenues depend heavily on the efforts of our licensees; |
• | business combinations or significant changes in a licensee’s business strategy may adversely affect the licensee’s willingness or ability to complete its obligations under any arrangement with us; |
• | a licensee could move forward with a competing therapeutic candidate developed either independently or in collaboration with others, including our competitors; and |
• | out-licensing arrangements are often terminated or allowed to expire, which would delay the development and may increase the development costs of our therapeutic candidates. |
• | a collaboration partner may shift its priorities and resources away from our therapeutic candidates due to a change in business strategies, or a merger, acquisition, sale or downsizing; |
• | a collaboration partner may seek to renegotiate or terminate their relationships with us due to unsatisfactory clinical results, manufacturing issues, a change in business strategy, a change of control or other reasons; |
• | a collaboration partner may cease development in therapeutic areas which are the subject of our strategic collaboration; |
• | a collaboration partner may not devote sufficient capital or resources towards our therapeutic candidates; |
• | a collaboration partner may change the success criteria for a therapeutic candidate thereby delaying or ceasing development of such candidate; |
• | a significant delay in initiation of certain development activities by a collaboration partner will also delay payment of milestones tied to such activities, thereby impacting our ability to fund our own activities; |
• | a collaboration partner could develop a product that competes, either directly or indirectly, with our therapeutic candidate; |
• | a collaboration partner with commercialization obligations may not commit sufficient financial or human resources to the marketing, distribution or sale of a product; |
• | a collaboration partner with manufacturing responsibilities may encounter regulatory, resource or quality issues and be unable to meet demand requirements; |
• | a partner may exercise a contractual right to terminate a strategic alliance; |
• | a dispute may arise between us and a partner concerning the research, development or commercialization of a therapeutic candidate resulting in a delay in milestones, royalty payments or termination of an alliance and possibly resulting in costly litigation or arbitration which may divert management attention and resources; and |
• | a partner may use our products or technology in such a way as to invite litigation from a third party. |
• | our inability to recruit and retain adequate numbers of effective sales and marketing personnel; |
• | the inability of sales personnel to obtain access to or persuade adequate numbers of physicians to prescribe our therapeutic candidates; |
• | the lack of complementary products to be offered by sales personnel, which may put us at a competitive disadvantage relative to companies with more extensive product lines; and |
• | unforeseen costs and expenses associated with creating and sustaining an independent sales and marketing organization. |
• | reliance on the third party for regulatory compliance and quality assurance; |
• | limitations on supply availability resulting from capacity and scheduling constraints of the third parties; |
• | impact on our reputation in the marketplace if manufacturers of our products, once commercialized, fail to meet customer demands; |
• | the possible breach of the manufacturing agreement by the third party because of factors beyond our control; and |
• | the possible termination or nonrenewal of the agreement by the third party, based on its own business priorities, at a time that is costly or inconvenient for us. |
• | difficulty in large-scale manufacturing; |
• | low market acceptance by physicians, healthcare payors, patients and the medical community as a result of lower demonstrated clinical safety or efficacy compared to other products, prevalence and severity of adverse side effects, or other potential disadvantages relative to alternative treatment methods; |
• | insufficient or unfavorable levels of reimbursement from government or third-party payors; |
• | infringement on proprietary rights of others for which we or our licensees have not received licenses; |
• | incompatibility with other therapeutic products; |
• | other potential advantages of alternative treatment methods; |
• | ineffective marketing and distribution support; |
• | significant changes in pricing due to pressure from public opinion, non-governmental organizations or governmental authorities; |
• | lack of cost-effectiveness; or |
• | timing of market introduction of competitive products. |
• | a covered benefit under its health plan; |
• | safe, effective and medically necessary; |
• | appropriate for the specific patient; |
• | cost-effective; and |
• | neither experimental nor investigational. |
• | announcements of technological innovations or new products by us or others; |
• | announcements by us of significant acquisitions, strategic partnerships, in-licensing, out-licensing, joint ventures or capital commitments; |
• | expiration or terminations of licenses, research contracts or other collaboration agreements; |
• | public concern as to the safety of drugs we, our licensees or others develop; |
• | general market conditions; |
• | the volatility of market prices for shares of biotechnology companies generally; |
• | success of research and development projects; |
• | departure of key personnel; |
• | developments concerning intellectual property rights or regulatory approvals; |
• | variations in our and our competitors’ results of operations; |
• | changes in earnings estimates or recommendations by securities analysts, if our ordinary shares or ADSs are covered by analysts; |
• | statements about the Company made in the financial media or by bloggers on the Internet; |
• | statements made about drug pricing and other industry-related issues by government officials; |
• | changes in government regulations or patent decisions; |
• | developments by our licensees; and |
• | general market conditions and other factors, including factors unrelated to our operating performance. |
• | the failure to obtain regulatory approval or achieve commercial success of our therapeutic candidates; |
• | our success in effecting out-licensing arrangements with third parties; |
• | our success in establishing other out-licensing or co-development arrangements; |
• | the success of our licensees in selling products that utilize our technologies; |
• | the results of our preclinical studies and clinical trials for our earlier stage therapeutic candidates, and any decisions to initiate clinical trials if supported by the preclinical results; |
• | the costs, timing and outcome of regulatory review of our therapeutic candidates that progress to clinical trials; |
• | the costs of establishing or acquiring specialty sales, marketing and distribution capabilities, if any of our therapeutic candidates are approved, and we decide to commercialize them ourselves; |
• | the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our issued patents and defending intellectual property-related claims; |
• | the extent to which we acquire or invest in businesses, products or technologies and other strategic relationships; and |
• | the costs of financing unanticipated working capital requirements and responding to competitive pressures. |
• | Revenue sharing payments. These are payments to be made to licensors with respect to revenue we receive from sub-licensing to third parties for further development and commercialization of our drug products. These payments are generally fixed at a percentage of the total revenues we earn from these sublicenses. |
• | Milestone payments. These payments are generally linked to the successful achievement of milestones in the development and approval of drugs, such Phases 1, 2 and 3 of clinical trials and approvals of NDAs. |
• | Royalty payments. To the extent we elect to complete the development, licensing and marketing of a therapeutic candidate, we are generally required to pay our licensors royalties on the sales of the end drug product. These royalty payments are generally based on the net revenue from these sales. In certain instances, the rate of the royalty payments decreases upon the expiration of the drug’s underlying patent and its transition into a generic drug. Certain of our agreements provide that if a licensed drug product is developed and sold through a different corporate entity, the licensors may elect to receive shares in such company instead of a portion of the royalties. |
• | Additional payments. In addition to the above payments, certain of our in-license agreements provide for a one-time or periodic payment that is not linked to milestones. Periodic payments may be paid until the commercialization of the product, either by direct sales or sublicenses to third parties. Other agreements provide for the continuation of these payments even following the commercialization of the licensed drug product. |
• | The motixafortide drug product candidate is covered as a composition of matter by a pending international patent application. Corresponding patents, if granted, will expire in December 2041, not including any applicable patent term extension, which may add an additional term of up to five years on the patent. We also have an exclusive license to a patent family that covers the active ingredient molecule per se. Patents of this family have been granted in the U.S., Europe, Japan and Canada. The patents will expire in August 2023, not including any applicable patent term extension. We have an exclusive license to a patent family that covers motixafortide combined with a PD1 antagonist for the treatment of cancer. A patent of this family has been granted in the U.S., and member patent applications are pending in Europe, Japan, China, Canada, Australia, India, Korea, Mexico, Brazil and Israel. The granted U.S. patent and patents to issue in the future based on pending patent applications in this family will expire in 2036, not including any applicable patent term extension. In addition, we have an exclusive license to nineteen other patent families pending or granted worldwide directed to methods of synthesis of motixafortide and methods of use of motixafortide either alone or in combination with other drugs for the treatment of certain types of cancer and other indications. Furthermore, we have Orphan Drug status for AML, pancreatic cancer and stem cell mobilization, as well as data exclusivity protection afforded to motixafortide as an NCE. |
• | With respect to AGI-134, Agalimmune owns or has an exclusive license to three patent families that cover the AGI-134 compound and its use for treating cancer. The use of AGI-134 for treating solid tumors is covered by patents granted in the U.S., Europe, China, Japan and other countries. The patents will expire in 2035, not including any applicable patent term extensions. The compound AGI-134 is covered by patents granted in the United States, Europe, Japan and other countries. The patents will expire in 2025, not including any applicable patent term extensions. In addition, the future drug product is eligible for obtaining regulatory Biological Product exclusivity (12 years of market exclusivity in the U.S.). |
• | With respect to BL-5010, we have an exclusive license to a patent family directed to a novel applicator uniquely configured for applying the BL-5010 composition to targeted skin tissue safely and effectively. Patents in this family have been granted in the U.S., Europe, Israel, Japan and China. The patents will expire in 2034. |
• | preclinical laboratory tests, animal studies and formulation development; |
• | submission to the FDA of an Investigational New Drug, or IND, application to conduct human clinical testing; |
• | adequate and well controlled clinical trials to determine the safety and efficacy of the drug for each indication as well as to establish the exposure levels; |
• | submission to the FDA of an application for marketing approval; |
• | satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the drug is manufactured; and |
• | FDA review and approval of the drug and drug labeling for marketing. |
• | Consistent rules for conducting clinical trials throughout the EU; |
• | Making information on the authorization, conduct and results of each clinical trial carried out in the EU publicly available; |
• | Harmonized electronic submission and assessment process for clinical trials conducted in multiple member states; |
• | Improved collaboration, information sharing and decision-making between and within member states; |
• | Increased transparency of information on clinical trials; and |
• | Higher standards of safety for all participants in EU clinical trials. |
Project | Status | Expected Near Term Milestones | ||
motixafortide | 1. | Phase 3 registration study in autologous stem cell mobilization (GENESIS) completed; top-line results announced May 2021 showed highly statistically significant evidence across all primary and secondary endpoints favoring motixafortide in combination with G-CSF (p<0.0001). In addition, the combination was found to be safe and well tolerated. Pharmaco-economic studies showed positive results regarding the cost-effectiveness of using motixafortide versus both G-CSF alone and plerixafor in combination with G-CSF. Pre-NDA meeting with FDA in December 2021 resulted in FDA agreeing that our GENESIS study is sufficient to support an NDA submission. | 1. | NDA submission in mid-2022 |
2. | Phase 2a study in pancreatic cancer (COMBAT/KEYNOTE-202) completed; full results showing improvement in all endpoints announced December 2020 | 2. | Evaluation and planning of next clinical development steps, including discussions towards potential collaborations and development of a protocol for a randomized controlled study | |
3. | Phase 2 investigator-initiated study in first-line PDAC patients | 3. | Data from the study is anticipated in mid-2022* | |
4. | Phase 1b study in patients with ARDS secondary to COVID-19 and other respiratory viral infections | 4. | Results of the preliminary analysis are expected in 2022* | |
AGI-134 | Phase 1/2a study, ongoing | Initial proof-of-mechanism of action and efficacy results expected in second half of 2022 |
• | the number of sites included in the clinical trials; |
• | the length of time required to enroll suitable patients; |
• | the number of patients that participate in the clinical trials; |
• | the duration of patient follow-up; |
• | whether the patients require hospitalization or can be treated on an out-patient basis; |
• | the development stage of the therapeutic candidate; and |
• | the efficacy and safety profile of the therapeutic candidate. |
• | 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. |
Three Months Ended | ||||||||||||||||||||||||||||||||
March 31 | June 30 | Sept. 30 | Dec. 31 | March 31 | June 30 | Sept. 30 | Dec. 31 | |||||||||||||||||||||||||
2020 | 2021 | |||||||||||||||||||||||||||||||
(in thousands of U.S. dollars) | ||||||||||||||||||||||||||||||||
Consolidated Statements of Operations | ||||||||||||||||||||||||||||||||
Revenues | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||
Cost of revenues | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||
Research and development expenses | (5,422 | ) | (4,640 | ) | (3,484 | ) | (4,627 | ) | (4,278 | ) | (5,139 | ) | (4,923 | ) | (5,126 | ) | ||||||||||||||||
Sales and marketing expenses | (175 | ) | (182 | ) | (309 | ) | (174 | ) | (154 | ) | (330 | ) | (247 | ) | (272 | ) | ||||||||||||||||
General and administrative expenses | (1,243 | ) | (744 | ) | (856 | ) | (1,071 | ) | (1,017 | ) | (1,044 | ) | (1,047 | ) | (1,200 | ) | ||||||||||||||||
Operating loss | (6,840 | ) | (5,566 | ) | (4,649 | ) | (5,872 | ) | (5,449 | ) | (6,513 | ) | (6,217 | ) | (6,598 | ) | ||||||||||||||||
Non-operating income (expenses), net | 469 | (843 | ) | 294 | (5,621 | ) | (4,561 | ) | (217 | ) | 710 | 2,238 | ||||||||||||||||||||
Financial income | 140 | 35 | 39 | 22 | 117 | 130 | 52 | 260 | ||||||||||||||||||||||||
Financial expenses | (414 | ) | (396 | ) | (302 | ) | (517 | ) | (299 | ) | (242 | ) | (261 | ) | (204 | ) | ||||||||||||||||
Net loss | (6,645 | ) | (6,770 | ) | (4,618 | ) | (11,988 | ) | (10,192 | ) | (6,842 | ) | (5,716 | ) | (4,304 | ) |
• | the progress and costs of our preclinical studies, clinical trials and other research and development activities; |
• | the scope, prioritization and number of our clinical trials and other research and development programs; |
• | the amount of revenues we receive under our collaboration or licensing arrangements; |
• | the costs of the development and expansion of our operational and commercial infrastructure; |
• | the costs and timing of obtaining regulatory approval of our therapeutic candidates; |
• | the ability of our collaborators to achieve development milestones, marketing approval and other events or developments under our collaboration agreements; |
• | the costs of filing, prosecuting, enforcing and defending patent claims and other intellectual property rights; |
• | the costs and timing of securing manufacturing arrangements for clinical or commercial production; |
• | the costs of establishing sales and marketing capabilities or contracting with third parties to provide these capabilities for us; |
• | the costs of acquiring or undertaking development and commercialization efforts for any future product candidates; |
• | the magnitude of our general and administrative expenses; |
• | any cost that we may incur under current and future licensing arrangements relating to our therapeutic candidates; |
• | market conditions; |
• | payments to the IIA; and |
• | the impact of the COVID-19 pandemic and the Russian invasion of Ukraine, which may exacerbate the magnitude of the factors discussed above. |
Total | Less than 1 year | 1-3 years | 4-5 years | More than 5 years | ||||||||||||||||
(in thousands of U.S. dollars) | ||||||||||||||||||||
Car leasing obligations | 213 | 97 | 116 | - | - | |||||||||||||||
Premises leasing obligations | 1,954 | 444 | 844 | 666 | - | |||||||||||||||
Purchase commitments | 8,432 | 6,636 | 1,596 | 200 | - | |||||||||||||||
Total | 10,599 | 7,177 | 2,556 | 866 | - |
Name | Age | Position(s) | ||
Philip A. Serlin, CPA, MBA | 61 | Chief Executive Officer | ||
Mali Zeevi, CPA | 46 | Chief Financial Officer | ||
Ella Sorani, Ph.D. | 54 | Chief Development Officer | ||
Abi Vainstein-Haras, M.D. | 47 | Chief Medical Officer | ||
Aharon Schwartz, Ph.D. (1) | 79 | Chairman of the Board | ||
Michael J. Anghel, Ph.D. (1)(4) | 83 | Director | ||
Nurit Benjamini, MBA (1)(2)(3)(4) | 55 | External Director | ||
B.J. Bormann, Ph.D. (1) | 63 | Director | ||
Raphael Hofstein, Ph.D. (1)(2)(3) | 72 | Director | ||
Avraham Molcho, M.D. (1)(2)(3) | 64 | External Director | ||
Sandra Panem, Ph.D. (1) | 75 | Director |
(1) | Independent director under applicable Nasdaq Capital Market and SEC rules, as affirmatively determined by our Board. |
(2) | A member of our audit committee. |
(3) | A member of our compensation committee. |
(4) | A member of our investment monitoring committee. |
Salaries, fees, commissions and bonuses | Pension, retirement, options and other similar benefits | |||||||
(in thousands of U.S. dollars) | ||||||||
All directors and senior management as a group, consisting of 11 persons | 1,735 | 867 |
Name and Position | Salary | Social Benefits(1) | Bonuses | Value of Options Granted(2) | All Other Compensation(3) | Total | ||||||||||||||||||
(in thousands of U.S. dollars) | ||||||||||||||||||||||||
Philip A. Serlin Chief Executive Officer | 290 | 81 | 251 | 259 | 23 | 904 | ||||||||||||||||||
Mali Zeevi Chief Financial Officer | 186 | 52 | 135 | 67 | 18 | 458 | ||||||||||||||||||
Abi Vainstein-Haras Chief Medical Officer | 204 | 47 | 119 | 69 | 21 | 460 | ||||||||||||||||||
Ella Sorani Chief Development Officer | 212 | 60 | 122 | 66 | 20 | 480 |
(1) | “Social Benefits” include payments to the National Insurance Institute, advanced education funds, managers’ insurance and pension funds, vacation pay and recuperation pay as mandated by Israeli law. |
(2) | Consists of amounts recognized as share-based compensation expense on the Company’s statement of comprehensive loss for the year ended December 31, 2021. |
(3) | “All Other Compensation” includes automobile-related expenses pursuant to the Company’s automobile leasing program, telephone, basic health insurance and holiday presents. |
• | the majority of the shares that are voted at the meeting, including at least a majority of the shares held by non-controlling shareholders or shareholders who do not have a personal interest in the election of the external director (other than a personal interest not deriving from a relationship with a controlling shareholder) who voted at the meeting, excluding abstentions, vote in favor of the election of the external director; or |
• | the total number of shares held by non-controlling, disinterested shareholders (as described in the preceding bullet point) that are voted against the election of the external director does not exceed 2% of the aggregate voting rights in the company. |
• | an employment relationship; |
• | a business or professional relationship even if not maintained on a regular basis (excluding insignificant relationships); |
• | control; and |
• | service as an office holder, excluding service as a director in a private company prior to the first offering of its shares to the public if such director was appointed as a director of the private company in order to serve as an external director following the public offering. |
• | the chairman of the company’s board of directors; |
• | a controlling shareholder or a relative of a controlling shareholder of the company (as each such term is defined in the Companies Law); or |
• | any director employed by the company, by a controlling shareholder of the company or by any other entity controlled by a controlling shareholder of the company, or any director who provides services to the company, to a controlling shareholder of the company or to any other entity controlled by a controlling shareholder of the company on a regular basis (other than as a member of the board of directors), or any other director whose main source of income derives from a controlling shareholder of the company. |
• | he or she meets the qualifications for being appointed as an external director, except for (i) the requirement that the director be an Israeli resident (which does not apply to companies such as ours whose securities have been offered outside of Israel or are listed outside of Israel) and (ii) the requirement for accounting and financial expertise or professional qualifications; and |
• | he or she has not served as a director of the company for a period exceeding nine consecutive years. For this purpose, a break of less than two years in the service shall not be deemed to interrupt the continuation of the service. |
• | oversight of the company’s independent registered public accounting firm and recommending the engagement, compensation or termination of engagement of our independent registered public accounting firm to our Board of Directors in accordance with Israeli law; |
• | recommending the engagement or termination of the office of our internal auditor; and |
• | reviewing and pre-approving the terms of audit and non-audit services provided by our independent auditors. |
• | the chairman of the company’s board of directors; |
• | a controlling shareholder or a relative of a controlling shareholder of the company (as each such term is defined in the Companies Law); or |
• | any director employed by the company, by a controlling shareholder of the company or by any other entity controlled by a controlling shareholder of the company, or any director who provides services to the company on a permanent basis, to a controlling shareholder of the company or to any other entity controlled by a controlling shareholder of the company on a regular basis (other than as a member of the board of directors), or any other director whose main source of income derives from a controlling shareholder of the company. |
• | to make recommendations to the board of directors as to a compensation policy for officers, as well as to recommend once every three years to extend the compensation policy, subject to receipt of the required corporate approvals; |
• | to make recommendations to the board of directors as to any updates to the compensation policy which may be required; |
• | to review the implementation of the compensation policy by the company; |
• | to approve transactions relating to terms of office and employment of certain company office holders, that require the approval of the compensation committee pursuant to the Companies Law; and |
• | to exempt, under certain circumstances, a transaction relating to terms of office and employment from the requirement of approval of the shareholders meeting. |
(i) | the majority of the votes includes at least a majority of all the votes of shareholders who are not controlling shareholders of the company or 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) above does not exceed 2% of all the voting rights in the company. |
• | 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; or |
• | a member of the company’s independent accounting firm. |
• | 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. |
• | 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. |
• | 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), or, alternatively, the total shareholdings of the non-controlling 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 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 regarding 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 from shareholder approval 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. |
• | 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 regarding 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. |
• | at least a majority of the shares held by shareholders who have no personal interest in the transaction 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 vote against the transaction represent no more than 2% of the voting rights in the company. |
• | an amendment to the articles of association; |
• | an increase in the company’s authorized share capital; |
• | a merger; and |
• | the approval of related party transactions and acts of office holders that require shareholder approval. |
• | financial liability imposed on him or her in favor of another person pursuant to a judgment, 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 events and amount or criteria; |
• | reasonable litigation expenses, including attorneys’ fees, incurred by the office holder 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 was imposed, it was imposed with respect to an offense that does not require proof of criminal intent; 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. |
• | a breach of 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; and |
• | a financial liability imposed on the office holder in favor of a third party. |
• | 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 or forfeit levied against the office holder. |
December 31, | ||||||||||||
2019 | 2020 | 2021 | ||||||||||
Management and administration | 10 | 9 | 9 | |||||||||
Research and development | 30 | 27 | 27 | |||||||||
Sales and marketing | 2 | 2 | 2 | |||||||||
Total | 42 | 38 | 38 |
Number of | ||||||||
Ordinary Shares | ||||||||
Beneficially | Percent of | |||||||
Held | Class | |||||||
Directors | ||||||||
Aharon Schwartz(1) | 2,168,333 | * | ||||||
Michael J. Anghel(2) | 413,333 | * | ||||||
Nurit Benjamini(3) | 403,333 | * | ||||||
B.J. Bormann(4) | 413,333 | * | ||||||
Raphael Hofstein(5) | 413,333 | * | ||||||
Avraham Molcho(6) | 403,333 | * | ||||||
Sandra Panem(7) | 413,333 | * | ||||||
Executive officers | ||||||||
Philip A. Serlin(8) | 4,093,647 | * | ||||||
Mali Zeevi(9) | 1,486,427 | * | ||||||
Ella Sorani(10) | 1,290,302 | * | ||||||
Abi Vainstein-Haras(11) | 1,497,502 | * | ||||||
All directors and executive officers as a group (11 persons)(12) | 12,996,209 | 1.56 | % |
(1) | Includes 413,333 ordinary shares issuable upon exercise of outstanding options within 60 days of March 15, 2022. Does not include 46,667 ordinary shares issuable upon exercise of outstanding options that are not exercisable within 60 days of March 15, 2022. |
(2) | Includes 413,333 ordinary shares issuable upon exercise of outstanding options within 60 days of March 15, 2022. Does not include 46,667 ordinary shares issuable upon exercise of outstanding options that are not exercisable within 60 days of March 15, 2022. |
(3) | Includes 403,333 ordinary shares issuable upon exercise of outstanding options within 60 days of March 15, 2022. Does not include 46,667 ordinary shares issuable upon exercise of outstanding options that are not exercisable within 60 days of March 15, 2022. |
(4) | Includes 413,333 ordinary shares issuable upon exercise of outstanding options within 60 days of March 15, 2022. Does not include 46,667 ordinary shares issuable upon exercise of outstanding options that are not exercisable within 60 days of March 15, 2022. |
(5) | Includes 413,333 ordinary shares issuable upon exercise of outstanding options within 60 days of March 15, 2022. Does not include 46,667 ordinary shares issuable upon exercise of outstanding options that are not exercisable within 60 days of March 15, 2022. |
(6) | Includes 403,333 ordinary shares issuable upon exercise of outstanding options within 60 days of March 15, 2022. Does not include 46,667 ordinary shares issuable upon exercise of outstanding options that are not exercisable within 60 days of March 15, 2022. |
(7) | Includes 413,333 ordinary shares issuable upon exercise of outstanding options within 60 days of March 15, 2022. Does not include 46,667 ordinary shares issuable upon exercise of outstanding options that are not exercisable within 60 days of March 15, 2022. |
(8) | Includes 3,921,729 issued ordinary shares upon exercise of outstanding options within 60 days of March 15, 2022. Does not include 4,920,107 ordinary shares issuable upon exercise of outstanding equity instruments that are not exercisable within 60 days of March 15, 2022. |
(9) | Includes 1,249,310 ordinary shares issuable upon exercise of outstanding options within 60 days of March 15, 2022. Does not include 1,138,123 ordinary shares issuable upon exercise of outstanding equity instruments that are not exercisable within 60 days of March 15, 2022. |
(10) | Includes 1,224,152 ordinary shares issuable upon exercise of outstanding options within 60 days of March 15, 2022. Does not include 1,138,123 ordinary shares issuable upon exercise of outstanding equity instruments that are not exercisable within 60 days of March 15, 2022. |
(11) | Includes 1,414,752 ordinary shares issuable upon exercise of outstanding options within 60 days of March 15, 2022. Does not include 1,138,123 ordinary shares issuable upon exercise of outstanding equity instruments that are not exercisable within 60 days of March 15, 2022. |
(12) | Includes 10,683,274 ordinary shares issuable upon exercise of outstanding options within 60 days of March 15, 2022. Does not include 8,661,145 ordinary shares issuable upon exercise of outstanding equity instruments that are not exercisable within 60 days of March 15, 2022. |
• | 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. |
• | 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. |
a. | Disclosure Controls and Procedures |
b. | Management’s Annual Report on Internal Control over Financial Reporting |
c. | Attestation Report of Registered Public Accounting Firm |
d. | Changes in Internal Control over Financial Reporting |
Year Ended December 31, | ||||||||
2020 | 2021 | |||||||
Services Rendered | (in thousands of U.S. dollars) | |||||||
Audit Fees(1) | 110 | 130 | ||||||
Audit-Related Fees(2) | 38 | 25 | ||||||
Tax Fees(3) | 16 | 20 | ||||||
All Other Fees | - | - | ||||||
Total | 164 | 175 |
(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. |
• | Distribution of annual and quarterly reports to shareholders. Under Israeli law, as a public company whose shares are traded on the TASE, we are not required to distribute annual and quarterly 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 the website of the ISA and the TASE. In addition, we make our audited financial statements available to our shareholders at our offices. As a foreign private issuer, we are generally exempt from the SEC’s proxy solicitation rules. |
• | 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. If we qualify as an Eligible Company and opt to follow the exemption provided under the Relief Regulations regarding appointment of external directors and composition of the audit and compensation committees, we will be required at all times to comply with the U.S. rules and regulations governing the appointment of independent directors and composition of the audit and compensation committees applicable to U.S. domestic issuers instead of complying with the Companies Law provisions relating to external directors and composition of the audit and compensation committees. |
• | 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. If we qualify as an Eligible Company and opt to follow the exemption provided under the Relief Regulations regarding appointment of external directors and composition of the audit and compensation committees, we will be required at all times to comply with the U.S. rules and regulations governing the appointment of independent directors and composition of the Audit Committee applicable to U.S. domestic issuers instead of complying with the Companies Law provisions relating to external directors and composition of 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. If we qualify as an Eligible Company and opt to follow the exemption provided under the Relief Regulations regarding appointment of external directors and composition of the audit and compensation committees, we will be required at all times to comply with the U.S. rules and regulations governing the appointment of independent directors and composition of the compensation committee applicable to U.S. domestic issuers instead of complying with the Companies Law provisions relating to external directors and composition of the compensation committee. 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 previously approved 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. |
Exhibit Number | Exhibit Description |
4.16 | ||
101 | The following financial information from BioLineRx Ltd.’s Annual Report on Form 20-F for the fiscal year ended December 31, 2021 formatted in Inline XBRL (Extensible Business Reporting Language): (i) Consolidated Statements of Financial Position at December 31, 2021 and 2020; (ii) Consolidated Statements of Comprehensive Loss for the years ended December 31, 2021, 2020 and 2019; (iii) Statements of Changes in Equity for the years ended December 31, 2021, 2020 and 2019; (iv) Consolidated Cash Flow Statements for the years ended December 31, 2021, 2020 and 2019; and (v) Notes to the Consolidated Financial Statements. |
(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 Annual Report on Form 20-F filed on March 12, 2020. |
(9) | Incorporated by reference to the Registrant’s Annual Report on Form 20-F filed on March 23, 2015. |
(10) | Incorporated by reference to the Registrant’s Annual Report on Form 20-F/A filed on September 22, 2015. |
(11) | Incorporated by reference to the Registrant’s Form 6-K filed on February 7, 2019. |
(12) | Incorporated by reference to the Registrant’s Form 6-K filed on May 28, 2020. |
(13) | Incorporated by reference to the Registrant’s Form 6-K filed on June 3, 2020. |
(14) | Incorporated by reference to the Registrant’s Form 6-K filed on January 22, 2021. |
(15) | Incorporated by reference to the Registrant’s Form 6-K filed on September 3, 2021. |
BIOLINERX LTD. | |||
By: | /s/ Philip A. Serlin | ||
Philip A. Serlin | |||
Chief Executive Officer |
BioLineRx Ltd.
INDEX TO FINANCIAL STATEMENTS:
Page | |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB name: Kesselman & Kesselman C.P.A.s and PCAOB ID No. 1309) | F-2 |
CONSOLIDATED FINANCIAL STATEMENTS: | |
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION | F-4 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS | F-5 |
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY | F-6 |
CONSOLIDATED STATEMENTS OF CASH FLOWS | F-7 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | F-9 |
Report of Independent Registered Public Accounting Firm
We have audited the accompanying consolidated statements of financial position of BioLineRx Ltd. and its subsidiaries (the “Company”) as of December 31, 2021 and 2020, and 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, 2021, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company’s internal control over financial reporting as of December 31, 2021, 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, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021 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, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.
F - 2
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 Assessment
/s/ Kesselman & Kesselman |
Certified Public Accountants (Isr.) |
A member firm of PricewaterhouseCoopers International Ltd. |
Tel Aviv, Israel |
March 15, 2022 |
We have served as the Company’s auditor since 2003.
F - 3
Note | December 31, | |||||||||||
2020 | 2021 | |||||||||||
in USD thousands | ||||||||||||
Assets | ||||||||||||
CURRENT ASSETS | ||||||||||||
Cash and cash equivalents | 5 | 16,831 | 12,990 | |||||||||
Short-term bank deposits | 6 | 5,756 | 44,145 | |||||||||
Prepaid expenses | 152 | 127 | ||||||||||
Other receivables | 16a | 141 | 142 | |||||||||
Total current assets | 22,880 | 57,404 | ||||||||||
NON-CURRENT ASSETS | ||||||||||||
Property and equipment, net | 7 | 1,341 | 952 | |||||||||
Right-of-use assets, net | 9 | 1,355 | 1,331 | |||||||||
Intangible assets, net | 8 | 21,714 | 21,704 | |||||||||
Total non-current assets | 24,410 | 23,987 | ||||||||||
Total assets | 47,290 | 81,391 | ||||||||||
Liabilities and equity | ||||||||||||
CURRENT LIABILITIES | ||||||||||||
Current maturities of long-term loan | 10 | 3,092 | 2,757 | |||||||||
Accounts payable and accruals: | ||||||||||||
Trade | 16b | 5,918 | 5,567 | |||||||||
Other | 16b | 1,440 | 1,227 | |||||||||
Current maturities of lease liabilities | 9 | 191 | 168 | |||||||||
Total current liabilities | 10,641 | 9,719 | ||||||||||
NON-CURRENT LIABILITIES | ||||||||||||
Warrants | 11c | 10,218 | 1,859 | |||||||||
Long-term loan, net of current maturities | 10 | 2,740 | 0 | |||||||||
Lease liabilities | 9 | 1,661 | 1,726 | |||||||||
Total non-current liabilities | 14,619 | 3,585 | ||||||||||
COMMITMENTS AND CONTINGENT LIABILITIES | 14 | 0 | 0 | |||||||||
Total liabilities | 25,260 | 13,304 | ||||||||||
EQUITY | 11 | |||||||||||
Ordinary shares | 9,870 | 21,066 | ||||||||||
Share premium | 279,241 | 339,346 | ||||||||||
Warrants | 0 | 975 | ||||||||||
Capital reserve | 12,322 | 13,157 | ||||||||||
Other comprehensive loss | (1,416 | ) | (1,416 | ) | ||||||||
Accumulated deficit | (277,987 | ) | (305,041 | ) | ||||||||
Total equity | 22,030 | 68,087 | ||||||||||
Total liabilities and equity | 47,290 | 81,391 |
F - 4
Note | Year ended December 31, | |||||||||||||||
2019 | 2020 | 2021 | ||||||||||||||
in USD thousands | ||||||||||||||||
RESEARCH AND DEVELOPMENT EXPENSES | 16c | (23,438 | ) | (18,173 | ) | (19,466 | ) | |||||||||
SALES AND MARKETING EXPENSES | 16d | (857 | ) | (840 | ) | (1,003 | ) | |||||||||
GENERAL AND ADMINISTRATIVE EXPENSES | 16e | (3,816 | ) | (3,914 | ) | (4,308 | ) | |||||||||
OPERATING LOSS | (28,111 | ) | (22,927 | ) | (24,777 | ) | ||||||||||
NON-OPERATING INCOME (EXPENSES), NET | 16f | 4,165 | (5,701 | ) | (1,830 | ) | ||||||||||
FINANCIAL INCOME | 16g | 777 | 236 | 559 | ||||||||||||
FINANCIAL EXPENSES | 16h | (2,277 | ) | (1,629 | ) | (1,006 | ) | |||||||||
LOSS AND COMPREHENSIVE LOSS | (25,446 | ) | (30,021 | ) | (27,054 | ) | ||||||||||
in USD | ||||||||||||||||
LOSS PER ORDINARY SHARE – BASIC AND DILUTED | 13 | (0.17 | ) | (0.12 | ) | (0.04 | ) | |||||||||
WEIGHTED AVERAGE NUMBER OF SHARES USED IN CALCULATION OF LOSS PER ORDINARY SHARE | 13 | 146,407,055 | 252,844,394 | 662,933,695 |
F - 5
| Ordinary shares | Share premium | Warrants | Capital reserve | Other comprehensive | Accumulated deficit | Total | |||||||||||||||||||||
| in USD thousands | |||||||||||||||||||||||||||
BALANCE AT JANUARY 1, 2019 | 3,110 | 250,192 | 0 | 11,955 | (1,416 | ) | (222,520 | ) | 41,321 | |||||||||||||||||||
CHANGES IN 2019: | ||||||||||||||||||||||||||||
Issuance of share capital and warrants, net | 1,580 | 14,165 | 0 | 0 | 0 | 0 | 15,745 | |||||||||||||||||||||
Employee stock options exercised | 2 | 83 | 0 | (84 | ) | 0 | 0 | 1 | ||||||||||||||||||||
Employee stock options forfeited and expired | 0 | 1,498 | 0 | (1,498 | ) | 0 | 0 | 0 | ||||||||||||||||||||
Share-based compensation | 0 | 0 | 0 | 1,759 | 0 | 0 | 1,759 | |||||||||||||||||||||
Comprehensive loss for the year | 0 | 0 | 0 | 0 | 0 | (25,446 | ) | (25,446 | ) | |||||||||||||||||||
BALANCE AT DECEMBER 31, 2019 | 4,692 | 265,938 | 0 | 12,132 | (1,416 | ) | (247,966 | ) | 33,380 | |||||||||||||||||||
CHANGES IN 2020: | ||||||||||||||||||||||||||||
Issuance of share capital and warrants, net | 4,777 | 9,395 | 0 | 0 | 0 | 0 | 14,172 | |||||||||||||||||||||
Warrants exercised | 393 | 2,826 | 0 | 0 | 0 | 0 | 3,219 | |||||||||||||||||||||
Employee stock options exercised | 8 | 228 | 0 | (228 | ) | 0 | 0 | 8 | ||||||||||||||||||||
Employee stock options forfeited and expired | 0 | 854 | 0 | (854 | ) | 0 | 0 | 0 | ||||||||||||||||||||
Share-based compensation | 0 | 0 | 0 | 1,272 | 0 | 0 | 1,272 | |||||||||||||||||||||
Comprehensive loss for the year | 0 | 0 | 0 | 0 | 0 | (30,021 | ) | (30,021 | ) | |||||||||||||||||||
BALANCE AT DECEMBER 31, 2020 | 9,870 | 279,241 | 0 | 12,322 | (1,416 | ) | (277,987 | ) | 22,030 | |||||||||||||||||||
CHANGES IN 2021: | ||||||||||||||||||||||||||||
Issuance of share capital and warrants, net | 8,956 | 40,476 | 975 | 0 | 0 | 0 | 50,407 | |||||||||||||||||||||
Warrants exercised | 2,235 | 18,967 | 0 | 0 | 0 | 0 | 21,202 | |||||||||||||||||||||
Employee stock options exercised | 5 | 41 | 0 | (39 | ) | �� | 0 | 0 | 7 | |||||||||||||||||||
Employee stock options forfeited and expired | 0 | 621 | 0 | (621 | ) | 0 | 0 | 0 | ||||||||||||||||||||
Share-based compensation | 0 | 0 | 0 | 1,495 | 0 | 0 | 1,495 | |||||||||||||||||||||
Comprehensive loss for the year | - | 0 | 0 | 0 | 0 | (27,054 | ) | (27,054 | ) | |||||||||||||||||||
BALANCE AT DECEMBER 31, 2021 | 21,066 | 339,346 | 975 | 13,157 | (1,416 | ) | (305,041 | ) | 68,087 |
F - 6
Year ended December 31, | ||||||||||||
2019 | 2020 | 2021 | ||||||||||
in USD thousands | ||||||||||||
CASH FLOWS - OPERATING ACTIVITIES | ||||||||||||
Loss | (25,446 | ) | (30,021 | ) | (27,054 | ) | ||||||
Adjustments required to reflect net cash used in operating activities (see appendix below) | 2,780 | 6,815 | 3,481 | |||||||||
Net cash used in operating activities | (22,666 | ) | (23,206 | ) | (23,573 | ) | ||||||
CASH FLOWS - INVESTING ACTIVITIES | ||||||||||||
Investments in short-term deposits | (43,545 | ) | (33,500 | ) | (78,000 | ) | ||||||
Maturities of short-term deposits | 48,875 | 50,168 | 39,873 | |||||||||
Purchase of property and equipment | (67 | ) | 0 | (97 | ) | |||||||
Purchase of intangible assets | (6 | ) | 0 | 0 | ||||||||
Net cash provided by (used in) investing activities | 5,257 | 16,668 | (38,224 | ) | ||||||||
CASH FLOWS - FINANCING ACTIVITIES | ||||||||||||
Issuance of share capital and warrants, net of issuance costs | 20,297 | 19,246 | 50,407 | |||||||||
Exercise of warrants | 0 | 1,969 | 10,907 | |||||||||
Employee stock options exercised | 1 | 8 | 7 | |||||||||
Repayments of loans | (889 | ) | (3,133 | ) | (3,376 | ) | ||||||
Repayments of lease liabilities | (215 | ) | (224 | ) | (196 | ) | ||||||
Net cash provided by financing activities | 19,194 | 17,866 | 57,749 | |||||||||
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 1,785 | 11,328 | (4,048 | ) | ||||||||
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR | 3,404 | 5,297 | 16,831 | |||||||||
EXCHANGE DIFFERENCES ON CASH AND CASH EQUIVALENTS | 108 | 206 | 207 | |||||||||
CASH AND CASH EQUIVALENTS - END OF YEAR | 5,297 | 16,831 | 12,990 |
F - 7
Year ended December 31, | ||||||||||||
2019 | 2020 | 2021 | ||||||||||
in USD thousands | ||||||||||||
APPENDIX | ||||||||||||
Adjustments required to reflect net cash used in operating activities: | ||||||||||||
Income and expenses not involving cash flows: | ||||||||||||
Depreciation and amortization | 940 | 934 | 703 | |||||||||
Long-term prepaid expenses | 56 | 0 | 0 | |||||||||
Exchange differences on cash and cash equivalents | (108 | ) | (206 | ) | (207 | ) | ||||||
Fair value adjustments of warrants | (4,634 | ) | 5,142 | 1,936 | ||||||||
Share-based compensation | 1,759 | 1,272 | 1,495 | |||||||||
Interest on short-term deposits | (775 | ) | (232 | ) | (262 | ) | ||||||
Interest on loans | 647 | 474 | 301 | |||||||||
Warrant issuance costs | 417 | 594 | 0 | |||||||||
Exchange differences on lease liabilities | 154 | 125 | 55 | |||||||||
(1,544 | ) | 8,103 | 4,021 | |||||||||
Changes in operating asset and liability items: | ||||||||||||
Decrease in prepaid expenses and other receivables | 1,106 | 428 | 24 | |||||||||
Increase (decrease) in accounts payable and accruals | 3,218 | (1,716 | ) | (564 | ) | |||||||
4,324 | (1,288 | ) | (540 | ) | ||||||||
2,780 | 6,815 | 3,481 | ||||||||||
Supplemental information on interest received in cash | 868 | 381 | 138 | |||||||||
Supplemental information on interest paid in cash (see Notes 9 and 10) | 1,198 | 994 | 682 | |||||||||
Supplemental information on non-cash transactions (see Notes 9 and 11c) | 147 | 1,251 | 10,112 |
F - 8
a. | General |
b. | Approval of consolidated financial statements |
a. | Basis of presentation |
F - 9
BioLineRx Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
a. | Basis of presentation (cont.) |
b. | Principles of consolidation |
c. | Functional and reporting currency |
F - 10
BioLineRx Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
d. | Cash equivalents and short-term bank deposits |
e. | Property and equipment |
% | |
Computers and communications equipment | 20-33 |
Office furniture and equipment | 6-15 |
Laboratory equipment | 15-20 |
f. | Intangible assets |
F - 11
BioLineRx Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (cont.)
g. | Impairment of non-financial assets |
h. | Financial assets |
1) | Classification |
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.
F - 12
BioLineRx Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (cont.)
h. | Financial assets (cont.) |
2) | Recognition and measurement |
3) | Impairment |
i. | Warrants |
F - 13
BioLineRx Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (cont.)
j. | Share capital |
k. | Trade payables |
l. | Deferred taxes |
m. | Borrowings |
F - 14
BioLineRx Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
n. | Revenue from contracts with customers |
• | 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. |
o. | Research and development expenses |
• | technological feasibility exists for completing development of the intangible asset so that it will be available for use or sale. |
• | it is management’s intention to complete development of the intangible asset for use or sale. |
• | the Company has the ability to use or sell the intangible asset. |
• | 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. |
F - 15
BioLineRx Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (cont.)
p. | Employee benefits |
1) | Pension and severance pay obligations |
2) | Vacation and recreation pay |
3) | Share-based payments |
• | 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). |
F - 16
BioLineRx Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (cont.)
q. | Loss per share |
1) | Basic |
2) | Diluted |
r. | Leases |
F - 17
BioLineRx Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (cont.)
r. | Leases (cont.) |
Years | |
Property | 11 |
Motor vehicles | 3 |
s. | New standards and interpretations not yet adopted |
F - 18
BioLineRx Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
a. | Market risk |
1) | Concentration of currency risk |
December 31, 2021 | ||||||||||||||||||||
Income (loss) | Value on | Income (loss) | ||||||||||||||||||
Sensitive instrument | 10% increase | 5% increase | balance sheet | 5% decrease | 10% decrease | |||||||||||||||
in USD thousands | ||||||||||||||||||||
NIS-linked balances: | ||||||||||||||||||||
Cash and cash equivalents | (427 | ) | (224 | ) | 4,699 | 522 | 247 | |||||||||||||
Other receivables | (13 | ) | (7 | ) | 142 | 16 | 7 | |||||||||||||
Trade payables | 40 | 21 | (442 | ) | (49 | ) | (23 | ) | ||||||||||||
Other payables | 102 | 53 | (1,119 | ) | (124 | ) | (59 | ) | ||||||||||||
Total NIS-linked balances | (298 | ) | (157 | ) | 3,280 | 365 | 172 | |||||||||||||
Euro-linked trade payables | (158 | ) | (83 | ) | (1,230 | ) | 193 | 92 | ||||||||||||
Total | (456 | ) | (240 | ) | 2,050 | 558 | 264 |
December 31, 2020 | ||||||||||||||||||||
Income (loss) | Value on | Income (loss) | ||||||||||||||||||
Sensitive instrument | 10% increase | 5% increase | balance sheet | 5% decrease | 10% decrease | |||||||||||||||
in USD thousands | ||||||||||||||||||||
NIS-linked balances: | ||||||||||||||||||||
Cash and cash equivalents | (341 | ) | (179 | ) | 3,755 | 198 | 417 | |||||||||||||
Other receivables | (13 | ) | (7 | ) | 141 | 7 | 16 | |||||||||||||
Trade payables | 47 | 25 | (518 | ) | (27 | ) | (58 | ) | ||||||||||||
Other payables | 117 | 61 | (1,286 | ) | (68 | ) | (143 | ) | ||||||||||||
Total NIS-linked balances | (190 | ) | (100 | ) | 2,092 | 110 | 232 | |||||||||||||
Euro-linked trade payables | (203 | ) | (106 | ) | (2,232 | ) | 248 | 117 | ||||||||||||
Total | (393 | ) | (206 | ) | (140 | ) | 358 | 349 |
F - 19
BioLineRx Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
a. | Market risk (cont.) |
1) | Concentration of currency risk (cont.) |
Exchange rate of NIS per $1 | Exchange rate of Euro per $1 | |||||||
As of December 31: | ||||||||
2019 | 3.456 | 0.891 | ||||||
2020 | 3.215 | 0.815 | ||||||
2021 | 3.110 | 0.884 | ||||||
Percentage increase (decrease) in the exchange rate: | ||||||||
2020 | (7.0 | )% | (8.5 | )% | ||||
2021 | (3.3 | )% | 8.5 | % |
December 31, 2020 | December 31, 2021 | |||||||||||||||||||||||
Dollar | NIS | Other currencies | Dollar | NIS | Other Currencies | |||||||||||||||||||
USD in thousands | USD in thousands | |||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||
Current assets: | ||||||||||||||||||||||||
Cash and cash equivalents | 12,488 | 3,755 | 588 | 7,223 | 4,699 | 1,068 | ||||||||||||||||||
Short term bank deposits | 5,756 | 0 | 0 | 44,145 | 0 | 0 | ||||||||||||||||||
Other receivables | 0 | 141 | 0 | 0 | 142 | 0 | ||||||||||||||||||
18,244 | 3,896 | 588 | 51,368 | 4,841 | 1,068 | |||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||||||
Current maturities of long-term loans | 3,092 | 0 | 0 | 2,757 | 0 | 0 | ||||||||||||||||||
Accounts payable and accruals: | ||||||||||||||||||||||||
Trade | 2,455 | 518 | 2,945 | 2,700 | 442 | 2,425 | ||||||||||||||||||
Other | 154 | 1,286 | 0 | 108 | 1,119 | 0 | ||||||||||||||||||
Non-current liabilities | ||||||||||||||||||||||||
Long-term loans, net of current maturities | 2,740 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
8,441 | 1,804 | 2,945 | 5,565 | 1,561 | 2,425 | |||||||||||||||||||
Net balance | 9,803 | 2,092 | (2,357 | ) | 45,803 | 3,280 | (1,357 | ) |
F - 20
BioLineRx Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
a. | Market risk (cont.) |
2) | Fair value of financial instruments |
3) | Exposure to market risk and management thereof |
4) | Interest rate risk |
b. | Credit risk |
December 31, | ||||||||
2020 | 2021 | |||||||
in USD thousands | ||||||||
Assets: | ||||||||
Cash and cash equivalents | 16,831 | 12,990 | ||||||
Short-term bank deposits | 5,756 | 44,145 | ||||||
Other receivables | 141 | 142 | ||||||
Total | 22,728 | 57,277 |
F - 21
BioLineRx Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
c. | Liquidity risk |
d. | Fair value of financial instruments |
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). |
F - 22
BioLineRx Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
e. | Changes in financial liabilities with cash flows included in financing activities |
Long-term loans | Warrants | Total | ||||||||||
in USD thousands | ||||||||||||
Balance as of January 1, 2020 | 8,491 | 658 | 9,149 | |||||||||
Changes during the year 2020: | ||||||||||||
Cash flows received | 0 | 5,669 | 5,669 | |||||||||
Cash flows paid | (3,133 | ) | 0 | (3,133 | ) | |||||||
Share premium resulting from exercise of warrants | 0 | (1,251 | ) | (1,251 | ) | |||||||
Amounts recognized through profit and loss | 474 | 5,142 | 5,616 | |||||||||
Balance as of December 31, 2020 | 5,832 | 10,218 | 16,050 | |||||||||
Changes during the year 2021: | ||||||||||||
Cash flows paid | (3,376 | ) | 0 | (3,376 | ) | |||||||
Share premium resulting from exercise of warrants | 0 | (10,295 | ) | (10,295 | ) | |||||||
Amounts recognized through profit and loss | 301 | 1,936 | 2,237 | |||||||||
Balance as of December 31, 2021 | 2,757 | 1,859 | 4,616 |
f. | Fair value measurement of warrants using significant unobservable inputs (level 3) |
Warrants | ||||
in USD thousands | ||||
Balance as of January 1, 2019 | 323 | |||
Changes during 2019: | ||||
Issuances | 4,969 | |||
Changes in fair value through profit and loss | (4,634 | ) | ||
Balance as of December 31, 2019 | 658 | |||
Changes during 2020: | ||||
Issuances | 5,669 | |||
Exercises | (1,251 | ) | ||
Changes in fair value through profit and loss | 5,142 | |||
Balance as of December 31, 2020 | 10,218 | |||
Changes during 2021: | ||||
Issuances | 0 | |||
Exercises | (10,295 | ) | ||
Changes in fair value through profit and loss | 1,936 | |||
Balance as of December 31, 2021 | 1,859 |
F - 23
BioLineRx Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, | ||||||||
2020 | 2021 | |||||||
in USD thousands | ||||||||
Cash on hand and in bank | 5,549 | 8,461 | ||||||
Short-term bank deposits | 11,282 | 4,529 | ||||||
16,831 | 12,990 |
F - 24
BioLineRx Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Cost | Accumulated depreciation | |||||||||||||||||||||||||||||||||||||||
Balance at | Additions | Deletions | Balance at | Balance at | Additions | Deletions | Balance at | Net book value | ||||||||||||||||||||||||||||||||
beginning | during | during | end of | beginning | during | during | end of | December 31, | ||||||||||||||||||||||||||||||||
of year | year | year | year | of year | year | year | year | 2020 | 2021 | |||||||||||||||||||||||||||||||
in USD thousands | in USD thousands | in USD thousands | ||||||||||||||||||||||||||||||||||||||
Composition in 2021 | ||||||||||||||||||||||||||||||||||||||||
Office furniture and equipment | 207 | 0 | 0 | 207 | 109 | 15 | 0 | 124 | 98 | 83 | ||||||||||||||||||||||||||||||
Computers and communications equipment | 795 | 68 | 0 | 863 | 609 | 69 | 0 | 678 | 186 | 185 | ||||||||||||||||||||||||||||||
Laboratory equipment | 1,561 | 29 | 0 | 1,590 | 1,351 | 158 | 0 | 1,509 | 210 | 81 | ||||||||||||||||||||||||||||||
Leasehold improvements | 2,028 | 0 | 0 | 2,028 | 1,181 | 244 | 0 | 1,425 | 847 | 603 | ||||||||||||||||||||||||||||||
4,591 | 97 | 0 | 4,688 | 3,250 | 486 | 0 | 3,736 | 1,341 | 952 |
The fair value of intellectual property has been calculated with the assistance of an external appraiser, based on the Company's estimates and assumptions. 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, 2021 and 2020, the fair value of the intangible assets according to the impairment testing exceeds its book value. Therefore, no impairment was recognized.
— | $6.7 million recorded as a result of the acquisition of Agalimmune (see Note 1a). |
— | $15.0 million ($10 million of cash consideration; $5 million of equity consideration) recorded as a result of an amendment to the in-licensing agreement with Biokine Therapeutics Ltd. ("Biokine") that reduced, for that consideration, future payments to be made by the Company on sublicense receipts (as defined in the license agreement) from 40% to 20%. |
These assets are used for the Company's research and development activities and have not yet been amortized.
F - 25
BioLineRx Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Cost | Accumulated depreciation and impairment | |||||||||||||||||||||||||||||||||||||||
Balance at | Additions | Deletions | Balance at | Balance at | Additions | Deletions | Balance at | Net book value | ||||||||||||||||||||||||||||||||
beginning | during | during | end of | beginning | during | during | end of | December 31, | ||||||||||||||||||||||||||||||||
of year | year | year | year | of year | year | year | year | 2020 | 2021 | |||||||||||||||||||||||||||||||
in USD thousands | in USD thousands | in USD thousands | ||||||||||||||||||||||||||||||||||||||
Composition in 2021 | ||||||||||||||||||||||||||||||||||||||||
Intellectual property | 21,792 | 0 | 0 | 21,792 | 96 | 0 | 0 | 96 | 21,696 | 21,696 | ||||||||||||||||||||||||||||||
Computer software | 616 | 0 | 0 | 616 | 598 | 10 | 0 | 608 | 18 | 8 | ||||||||||||||||||||||||||||||
22,408 | 0 | 0 | 22,408 | 694 | 10 | 0 | 704 | 21,714 | 21,704 |
A. | Right-of-use assets | |
Cost | Accumulated depreciation | |||||||||||||||||||||||||||||||||||||||
Balance at | Additions | Deletions | Balance at | Balance at | Additions | Deletions | Balance at | Net book value | ||||||||||||||||||||||||||||||||
beginning | during | during | end of | beginning | during | during | end of | December 31, | ||||||||||||||||||||||||||||||||
of year | year | year | year | of year | year | year | year | 2020 | 2021 | |||||||||||||||||||||||||||||||
in USD thousands | in USD thousands | in USD thousands | ||||||||||||||||||||||||||||||||||||||
Composition in 2021 | ||||||||||||||||||||||||||||||||||||||||
Property | 1,552 | 0 | 0 | 1,552 | 270 | 135 | 0 | 405 | 1,282 | 1,147 | ||||||||||||||||||||||||||||||
Motor vehicles | 396 | 183 | 0 | 579 | 323 | 72 | 0 | 395 | 73 | 184 | ||||||||||||||||||||||||||||||
1,948 | 183 | 0 | 2,131 | 593 | 207 | 0 | 800 | 1,355 | 1,331 |
F - 26
BioLineRx Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
B. | Lease liabilities |
Balance at | Additions | Deletions | Interest expense | Exchange differences | Payments | Balance at | ||||||||||||||||||||||
beginning | during | during | during | during | during | end of | ||||||||||||||||||||||
of year | year | year | year | year | year | year | ||||||||||||||||||||||
in USD thousands | ||||||||||||||||||||||||||||
Composition in 2021 | ||||||||||||||||||||||||||||
Property | 1,733 | 0 | 0 | 228 | 54 | (307 | ) | 1,708 | ||||||||||||||||||||
Motor vehicles | 119 | 183 | 0 | 16 | 1 | (133 | ) | 186 | ||||||||||||||||||||
1,852 | 183 | 0 | 244 | 55 | (440 | ) | 1,894 |
F - 27
BioLineRx Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
C. | Additional disclosures |
1) | The Company leases its premises 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 fee is $26,000. In addition, the Company pays building maintenance charges of $9,400 per month. |
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 $250,000. To secure the terms of the lease agreements, the Company has prepaid approximately two months of lease payments to the leasing companies. |
3) | As of December 31, 2021, minimum future rental payments (taking into consideration the aforementioned extension periods) under the leases were as follows: |
Year | Property | Motor vehicles | Total | |||||||||
in USD thousands | ||||||||||||
2022 | 324 | 97 | 421 | |||||||||
2023 | 324 | 74 | 398 | |||||||||
2024 | 340 | 43 | 383 | |||||||||
2025 | 340 | 0 | 340 | |||||||||
2026-2030 | 1,591 | 0 | 1,591 | |||||||||
2,919 | 214 | 3,133 |
Extension and termination options are included in most of the property and motor vehicle 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 respective lessor.
F - 28
BioLineRx Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
In October 2018, the Company entered into a loan agreement with Kreos Capital V (Expert Fund) L.P. (“Kreos Capital”) in order to finance a $10 million cash payment relating to the agreement with Biokine (see Note 8).
Composition |
December 31, | ||||||||
2020 | 2021 | |||||||
in USD thousands | ||||||||
Total loan balance | 5,832 | 2,757 | ||||||
Less current maturities | (3,092 | ) | (2,757 | ) | ||||
Long-term portion of loan | 2,740 | 0 |
a. | Share capital |
Number of Ordinary Shares | ||||||||
December 31, | ||||||||
2020 | 2021 | |||||||
Authorized share capital | 1,500,000,000 | 1,500,000,000 | ||||||
Issued and paid-up share capital | 349,169,545 | 715,156,008 |
In USD and NIS Amounts | ||||||||
December 31, | ||||||||
2020 | 2021 | |||||||
Authorized share capital (in NIS) | 150,000,000 | 150,000,000 | ||||||
Issued and paid-up share capital (in NIS) | 34,916,955 | 71,515,600 | ||||||
Issued and paid-up share capital (in USD) | 9,869,795 | 21,066,368 |
F - 29
BioLineRx Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
b. | Rights related to shares |
c. | Changes in the Company’s equity |
1) | In October 2018, the Company entered into a loan agreement with Kreos Capital. In connection with the loan, 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 as of December 31, 2021 was $42,000 (December 31, 2020 - $55,000) and was based on the then current price of an ADS, a risk-free interest rate of 1.44%, an average standard deviation of 73.89%, and on the remaining contractual life of the warrants.
The change in fair value for the years ended December 31, 2020 and 2021, of $8,000 and $13,000, respectively, has been recorded as non-operating income on the statement of comprehensive loss. As of December 31, 2021, 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 are exercisable immediately, expire five years from the date of issuance and have 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. |
F - 30
BioLineRx Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 11 – 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. In concurrent private placements, the Company issued to investors in the offerings unregistered warrants to purchase 7,653,145 ADSs. The warrants are exercisable immediately, expire two and half years from the date of issuance and have 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 are exercisable immediately, expire two and half years from the date of issuance and have 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 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 unexercised warrants as of December 31, 2021 was $1,253,000 (December 31, 2020 - $9,194,000) and was based on the then current price of an ADS, a risk-free interest rate of 0.39%, an average standard deviation of 80.8% and on the remaining contractual life of the warrants.
The changes in fair value for the years ended December 31, 2020 and 2021 of $4,776,000 and $2,354,000 have been recorded as non-operating expenses, 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%.
F - 31
BioLineRx Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 11 – 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. From the effective date of the new agreement through the issuance date of this report, 402,327 ADSs were sold under the program for total gross proceeds of approximately $1.1 million. |
e. | Share-based payments |
1) | Share Incentive plan – general |
F - 32
BioLineRx Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 11 – EQUITY (cont.)
e. | Share-based payments (cont.) |
1) | Share Incentive plan – general (cont.) |
2) | Employee share incentive plan: |
Year ended December 31, | ||||||||||||||||||||||||
2019 | 2020 | 2021 | ||||||||||||||||||||||
Number of options | Weighted average exercise price (in NIS) | Number of options | Weighted average exercise price (in NIS) | Number of options | Weighted average exercise price (in NIS) | |||||||||||||||||||
Outstanding at beginning of year | 11,459,697 | 4.2 | 19,358,913 | 2.6 | 35,981,579 | 1.5 | ||||||||||||||||||
Granted | 11,057,600 | 1.3 | 18,689,300 | 0.5 | 6,588,200 | 0.4 | ||||||||||||||||||
Forfeited and expired | (3,084,834 | ) | 3.9 | (1,776,037 | ) | 2.2 | (1,438,642 | ) | 3.0 | |||||||||||||||
Exercised | (73,550 | ) | 0.1 | (290,597 | ) | 0.1 | (174,923 | ) | 0.1 | |||||||||||||||
Outstanding at end of year* | 19,358,913 | 2.6 | 35,981,579 | 1.5 | 40,956,214 | 0.7 | ** | |||||||||||||||||
Exercisable at end of year | 5,353,089 | 5.1 | 11,535,679 | 3.2 | 18,663,353 | 1.7 |
* | As of December 31, 2019, 2020 and 2021, includes 2,225,704, 2,421,799 and 4,084,748 PSUs at an exercise price of 0.10 NIS (par value of ordinary shares), for which performance obligations have not been met. | |
** | See 3 below. |
F - 33
BioLineRx Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
e. | Share-based payments (cont.) |
2) | Employee share incentive plan (cont.): |
As of December 31, | |||||||||||||||||||||||||
2019 | 2020 | 2021 | |||||||||||||||||||||||
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.) | Number of options outstanding | Weighted average remaining contractual life (in yrs.) | |||||||||||||||||||
Up to 2.00 | 11,676,900 | 9.9 | 28,888,767 | 9.3 | 40,276,214 | 8.0 | |||||||||||||||||||
2.01-5.00 | 6,341,033 | 7.3 | 5,866,532 | 6.3 | 630,000 | 5.2 | |||||||||||||||||||
5.01-10.00 | 822,300 | 3.9 | 707,600 | 3.1 | 50,000 | 0.2 | |||||||||||||||||||
10.01-20.00 | 518,680 | 3.2 | 518,680 | 1.9 | 0 | - | |||||||||||||||||||
19,358,913 | 8.6 | 35,981,579 | 8.6 | 40,956,214 | 8.0 |
2019 | 2020 | 2021 | ||||||||||
Expected dividend yield | 0 | % | 0 | % | 0 | % | ||||||
Expected volatility | 61 | % | 63 | % | 67 | % | ||||||
Risk-free interest rate | 3 | % | 1 | % | 1 | % | ||||||
Expected life of options (in years) | 6 | 6 | 6 |
F - 34
BioLineRx Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
e. | Share-based payments (cont.) |
3) | Repricing of employee stock options |
4) | Stock options to consultants |
From inception through December 31, 2018, the Company issued to consultants options for the purchase of 371,523 ordinary shares at a weighted average exercise price of NIS 7.86 per share.
In 2019, the Company issued additional options to consultants for the purchase of 225,000 ordinary shares at a weighted average price of NIS 0.90 per share.
In 2020, the Company did not issue additional options to consultants.
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.
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, 2021, 2,845,000 options to consultants were outstanding with a weighted average exercise price of NIS 1.05 per share and a weighted average contractual life of 8.6 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 2019, 2020 and 2021 was not material.
F - 35
BioLineRx Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
a. | Corporate taxation in Israel |
b. | Tax loss carryforwards |
As of December 31, 2021, the tax loss carryforwards of BioLineRx were approximately $325 million. The tax loss carryforwards have no expiration date.
c. | Tax assessments |
d. | Theoretical taxes |
Year ended December 31, | ||||||||||||||||||||||||
2019 | 2020 | 2021 | ||||||||||||||||||||||
in USD | in USD | in USD | ||||||||||||||||||||||
thousands | thousands | thousands | ||||||||||||||||||||||
Loss before taxes | 23.0 | % | (25,446 | ) | 23.0 | % | (30,021 | ) | 23.0 | % | (27,045 | ) | ||||||||||||
Theoretical tax benefit | (5,853 | ) | (6,905 | ) | (6,220 | ) | ||||||||||||||||||
Disallowed deductions (tax exempt income): | ||||||||||||||||||||||||
Loss (gain) on adjustment of warrants to fair value | (1,054 | ) | 1,280 | 480 | ||||||||||||||||||||
Share-based compensation | 405 | 292 | 343 | |||||||||||||||||||||
Other | 10 | 11 | 11 | |||||||||||||||||||||
Increase in taxes for tax losses and timing differences incurred in the reporting year for which deferred taxes were not created | 6,492 | 5,322 | 5,386 | |||||||||||||||||||||
Taxes on income for the reported year | 0 | 0 | 0 |
F - 36
BioLineRx Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, | ||||||||||||
2019 | 2020 | 2021 | ||||||||||
in USD thousands | ||||||||||||
Loss attributed to ordinary shares | (25,446 | ) | (30,021 | ) | (27,054 | ) | ||||||
in thousands | ||||||||||||
Number of shares used in basic calculation | 146,407 | 252,844 | 662,934 | |||||||||
in USD | ||||||||||||
Basic and diluted loss per ordinary share | (0.17 | ) | (0.12 | ) | (0.04 | ) |
a. | Commitments |
1) | Obligation to pay royalties to the State of Israel |
F - 37
BioLineRx Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
a. | Commitments (cont.) |
2) | Licensing agreements |
F - 38
BioLineRx Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
a. | Commitments (cont.) |
2) | Licensing agreements (cont.) |
F - 39
BioLineRx Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 14 – COMMITMENTS AND CONTINGENT LIABILITIES (cont.)
a. | Commitments (cont.) |
3) | Commitments in respect of Agalimmune and Biokine |
In accordance with the license agreement of BL-8040 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 million in future milestone payments. Subject to certain limitations, if the Company independently sell products related to BL-8040, the Company will pay Biokine a royalty payment of 10% of net sales.
4) | Purchase orders |
b. | Guarantees |
F - 40
BioLineRx Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, | ||||||||||||
2019 | 2020 | 2021 | ||||||||||
in USD thousands | ||||||||||||
Benefits to related parties: | ||||||||||||
Compensation and benefits to senior management, including benefit component of equity instrument grants | 1,934 | 2,391 | 2,302 | |||||||||
Compensation and benefits to directors, including benefit component of equity instrument grants | 280 | 373 | 300 |
Key management compensation
Year ended December 31, | ||||||||||||
2019 | 2020 | 2021 | ||||||||||
in USD thousands | ||||||||||||
Salaries and other short-term employee benefits | 1,415 | 1,656 | 1,883 | |||||||||
Post-employment benefits | 115 | 126 | 136 | |||||||||
Other long-term benefits | 31 | 33 | 35 | |||||||||
Share-based compensation | 653 | 949 | 548 | |||||||||
2,214 | 2,764 | 2,602 |
F - 41
BioLineRx Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
a. | Other receivables |
December 31, | ||||||||
2020 | 2021 | |||||||
in USD thousands | ||||||||
Government institutions | 139 | 140 | ||||||
Other | 2 | 2 | ||||||
141 | 142 |
b. | Accounts payable and accruals |
December 31, | ||||||||
2020 | 2021 | |||||||
in USD thousands | ||||||||
1) Trade: | ||||||||
Accounts payable: | ||||||||
Overseas | 4,795 | 4,504 | ||||||
In Israel | 1,123 | 1,063 | ||||||
5,918 | 5,567 | |||||||
2) Other: | ||||||||
Accrued expenses | 884 | 521 | ||||||
Accrual for vacation and recreation pay | 287 | 397 | ||||||
Payroll and related expenses | 266 | 307 | ||||||
Other | 3 | 2 | ||||||
1,440 | 1,227 |
F - 42
BioLineRx Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
c. | Research and development expenses |
Year ended December 31, | ||||||||||||
2019 | 2020 | 2021 | ||||||||||
in USD thousands | ||||||||||||
Research and development services | 16,029 | 11,696 | 12,088 | |||||||||
Payroll and related expenses | 3,784 | 3,501 | 4,074 | |||||||||
Share based compensation | 1,233 | 623 | 971 | |||||||||
Lab, occupancy and telephone | 782 | 771 | 882 | |||||||||
Professional fees | 464 | 643 | 595 | |||||||||
Depreciation and amortization | 862 | 864 | 660 | |||||||||
Other | 284 | 75 | 196 | |||||||||
23,438 | 18,173 | 19,466 |
d. | Sales and marketing expenses |
Year ended December 31, | ||||||||||||
2019 | 2020 | 2021 | ||||||||||
in USD thousands | ||||||||||||
Marketing | 296 | 585 | 729 | |||||||||
Payroll and related expenses | 503 | 234 | 249 | |||||||||
Overseas travel | 58 | 21 | 25 | |||||||||
857 | 840 | 1,003 |
e. | General and administrative expenses |
Year ended December 31, | ||||||||||||
2019 | 2020 | 2021 | ||||||||||
in USD thousands | ||||||||||||
Payroll and related expenses | 1,416 | 1,369 | 1,408 | |||||||||
Share based compensation | 465 | 729 | 583 | |||||||||
Professional fees | 1,193 | 1,044 | 1,103 | |||||||||
Insurance | 298 | 603 | 1,064 | |||||||||
Depreciation | 78 | 70 | 42 | |||||||||
Other | 366 | 99 | 108 | |||||||||
3,816 | 3,914 | 4,308 |
F - 43
BioLineRx Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 16 – SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION (cont.)
f. | Non-operating income (expenses), net |
Year ended December 31, | ||||||||||||
2019 | 2020 | 2021 | ||||||||||
in USD thousands | ||||||||||||
Issuance costs | (417 | ) | (784 | ) | 0 | |||||||
Changes in fair value of warrants | 4,634 | (5,142 | ) | (1,936 | ) | |||||||
Other | (52 | ) | 225 | 106 | ||||||||
4,165 | (5,701 | ) | (1,830 | ) |
g. | Financial income |
Year ended December 31, | ||||||||||||
2019 | 2020 | 2021 | ||||||||||
in USD thousands | ||||||||||||
Interest income and exchange differences | 777 | 236 | 559 | |||||||||
777 | 236 | 559 |
h. | Financial expenses |
Year ended December 31, | ||||||||||||
2019 | 2020 | 2021 | ||||||||||
in USD thousands | ||||||||||||
Interest expense and exchange differences | 2,253 | 1,607 | 984 | |||||||||
Bank commissions | 24 | 22 | 22 | |||||||||
2,277 | 1,629 | 1,006 |
F - 44