Cover
Cover - shares | 3 Months Ended | |
Mar. 31, 2021 | May 13, 2021 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Mar. 31, 2021 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2021 | |
Current Fiscal Year End Date | --12-31 | |
Entity File Number | 001-37521 | |
Entity Registrant Name | INTEC PHARMA LTD. | |
Entity Central Index Key | 0001638381 | |
Entity Incorporation, State or Country Code | L3 | |
Entity Address, Address Line One | 12 Hartom Street | |
Entity Address, Address Line Two | Har Hotzvim | |
Entity Address, City or Town | Jerusalem | |
Entity Address, Country | IL | |
Entity Address, Postal Zip Code | 9777512 | |
City Area Code | +972-2 | |
Local Phone Number | 586-4657 | |
Title of 12(b) Security | Ordinary Shares, no par value | |
Trading Symbol | NTEC | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 4,821,971 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 10,135 | $ 14,671 |
Restricted cash (Note 6) | 1,000 | |
Prepaid expenses and other receivables | 1,024 | 297 |
TOTAL CURRENT ASSETS | 12,159 | 14,968 |
NON-CURRENT ASSETS: | ||
Property and equipment, net | 869 | 1,394 |
Operating lease right-of-use assets | 685 | 817 |
Other assets (Note 3a) | 3,717 | 3,717 |
TOTAL NON-CURRENT ASSETS | 5,271 | 5,928 |
TOTAL ASSETS | 17,430 | 20,896 |
CURRENT LIABILITIES - | ||
Trade | 183 | 368 |
Other (Note 5) | 5,020 | 4,966 |
TOTAL CURRENT LIABILITIES | 5,203 | 5,334 |
LONG-TERM LIABILITIES - | ||
Operating lease liabilities | 178 | 338 |
Other liabilities | 705 | 691 |
TOTAL LONG-TERM LIABILITIES | 883 | 1,029 |
TOTAL LIABILITIES | 6,086 | 6,363 |
COMMITMENTS AND CONTINGENT LIABILITIES (Note 3) | ||
SHAREHOLDERS’ EQUITY: | ||
Ordinary shares, with no par value - authorized: 17,500,000 Ordinary Shares as of March 31, 2021 and December 31, 2020; issued and outstanding: 4,502,578 and 4,321,296 Ordinary Shares as of March 31, 2021 and December 31, 2020, respectively | 727 | 727 |
Additional paid-in capital | 218,397 | 217,357 |
Accumulated deficit | (207,780) | (203,551) |
TOTAL SHAREHOLDERS’ EQUITY | 11,344 | 14,533 |
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ 17,430 | $ 20,896 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2021 | Dec. 31, 2020 |
Statement of Financial Position [Abstract] | ||
Ordinary shares, par value | $ 0 | $ 0 |
Ordinary shares, authorized | 17,500,000 | 17,500,000 |
Ordinary shares, issued | 4,502,578 | 4,321,296 |
Ordinary shares, outstanding | 4,502,578 | 4,321,296 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
OPERATING EXPENSES: | ||
RESEARCH AND DEVELOPMENT EXPENSES | $ (2,157) | $ (2,024) |
GENERAL AND ADMINISTRATIVE EXPENSES | (2,021) | (1,715) |
OPERATING LOSS | (4,178) | (3,739) |
FINANCIAL EXPENSES, net | (31) | (70) |
LOSS BEFORE INCOME TAX | (4,209) | (3,809) |
INCOME TAX | (20) | (61) |
NET LOSS | $ (4,229) | $ (3,870) |
LOSS PER ORDINARY SHARE - BASIC AND DILUTED | $ (0.96) | $ (1.65) |
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING USED IN COMPUTATION OF BASIC AND DILUTED LOSS PER ORDINARY SHARE IN THOUSANDS | 4,419 | 2,346 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Changes in Shareholders' Equity (Unaudited) - USD ($) $ in Thousands | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Total |
Beginning balance, value at Dec. 31, 2019 | $ 727 | $ 200,231 | $ (189,423) | $ 11,535 |
Beginning balance, shares at Dec. 31, 2019 | 1,811,431 | |||
Issuance of ordinary shares, net of issuance costs | 421 | 421 | ||
Issuance of ordinary shares, net of issuance costs, shares | 41,569 | |||
Issuance of ordinary shares and warrants, net of issuance costs | 5,692 | 5,692 | ||
Issuance of ordinary shares and warrants, net of issuance costs, shares | 812,500 | |||
Share-based compensation (Note 4b) | 442 | 442 | ||
Net loss | (3,870) | (3,870) | ||
Ending balance, value at Mar. 31, 2020 | $ 727 | 206,786 | (193,293) | 14,220 |
Ending balance, shares at Mar. 31, 2020 | 2,665,500 | |||
Beginning balance, value at Dec. 31, 2020 | $ 727 | 217,357 | (203,551) | 14,533 |
Beginning balance, shares at Dec. 31, 2020 | 4,321,296 | |||
Waiver of ordinary shares by a shareholder | ||||
Waiver of ordinary shares by a shareholder, shares | (1,218) | |||
Exercise of warrants (Note 4a) | 956 | 956 | ||
Exercise of warrants (Note 4a), shares | 182,500 | |||
Share-based compensation (Note 4b) | 84 | 84 | ||
Net loss | (4,229) | (4,229) | ||
Ending balance, value at Mar. 31, 2021 | $ 727 | $ 218,397 | $ (207,780) | $ 11,344 |
Ending balance, shares at Mar. 31, 2021 | 4,502,578 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (4,229) | $ (3,870) |
Adjustments required to reconcile net loss to net cash used in operating activities: | ||
Depreciation | 526 | 306 |
Exchange differences on cash and cash equivalents and restricted cash | 180 | 135 |
Change in operating right of use asset | 132 | 126 |
Change in operating lease liabilities | (175) | (152) |
Gains on marketable securities | (2) | |
Share-based compensation | 84 | 442 |
Changes in operating assets and liabilities: | ||
Decrease (increase) in prepaid expenses and other receivables | (727) | 1,045 |
Decrease in accounts payable and accruals | (116) | (3,225) |
Increase in other liabilities | 14 | 48 |
Net cash used in operating activities | (4,311) | (5,147) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchase of property and equipment | (1) | (3) |
Proceeds from disposal of marketable securities, net | 772 | |
Net cash provided by (used in) investing activities | (1) | 769 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from issuance of ordinary shares, net of issuance costs | 421 | |
Proceeds from issuance of ordinary shares and warrants, net of issuance costs | 5,692 | |
Exercise of warrants | 956 | |
Net cash provided by financing activities | 956 | 6,113 |
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH | (3,356) | 1,735 |
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF THE PERIOD | 14,671 | 9,292 |
EXCHANGE DIFFERENCES ON CASH AND CASH EQUIVALENTS AND RESTRICTED CASH | (180) | (135) |
TOTAL CASH AND CASH EQUIVALENTS AND RESTRICTED CASH SHOWN AT THE END OF THE PERIOD | 11,135 | 10,892 |
SUPPLEMENTARY DISCLOSURE OF CASH FLOW INFORMATION - | ||
Taxes paid | 10 | |
Interest received | 9 | |
RECONCILIATION OF CASH, CASH EQUIVALENTS, AND RESTRICTED CASH REPORTED IN THE STATEMENT OF FINANCIAL POSITION: | ||
Cash and cash equivalents | 10,135 | 10,892 |
Restricted cash | 1,000 | |
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows | $ 11,135 | $ 10,892 |
NATURE OF OPERATIONS AND BASIS
NATURE OF OPERATIONS AND BASIS OF PRESENTATION | 3 Months Ended |
Mar. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
NATURE OF OPERATIONS AND BASIS OF PRESENTATION | NOTE 1 - NATURE OF OPERATIONS AND BASIS OF PRESENTATION a. Intec Pharma Ltd. (“Intec Israel”) is engaged in the development of proprietary technology which enables the gastric retention of certain drugs. The technology is intended to significantly improve the efficiency of the drugs and substantially reduce their side-effects or the effective doses. Intec Israel is a limited liability public company incorporated in Israel. Intec Israel ordinary shares are traded on the NASDAQ Capital Market (“NASDAQ”). In September 2017, Intec Israel incorporated a wholly-owned subsidiary in the United States of America in the State of Delaware - Intec Pharma Inc. (the “Subsidiary”, together with Intec Israel - “the Company”). The Subsidiary was incorporated mainly to provide Intec Israel executive and management services, including business development, medical affairs and investor relationship activities outside of Israel. b. On March 15, 2021, Intec Israel entered into an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”) with Intec Parent, Inc., a Delaware corporation and a wholly-owned subsidiary of Intec Israel (“Intec Parent”) that was incorporated in March 2021, Dillon Merger Subsidiary, Inc., a Delaware corporation and a wholly-owned subsidiary of Intec Parent (“Merger Sub”) that was incorporated in March 2021, Domestication Merger Sub Ltd., an Israeli company and a wholly-owned subsidiary of Intec Parent (the “Domestication Merger Sub”) that was incorporated in March 2021 and Decoy Biosystems, Inc., a Delaware corporation (“Decoy”). Under the terms of the Merger Agreement, following the merger of the Domestication Merger Sub with and into Intec Israel, with Intec Israel being the surviving entity and a wholly-owned subsidiary of Intec Parent (the “Domestication Merger”), and subject to satisfaction of additional closing conditions, the Merger Sub will merge with and into Decoy, with Decoy being the surviving entity and a wholly-owned subsidiary of Intec Parent (the “Merger”). If the Merger is completed, then the business of Decoy will become the business of Intec Parent. For more details on the Merger Agreement, see note 6. c. The Company engages in research and development activities and has not yet generated revenues from operations. On July 22, 2019, the Company announced top-line results according to which its Phase III clinical trial for AP-CD/LD did not achieve its primary and secondary endpoints. Accordingly, there is no assurance that the Company’s operations will generate positive cash flows. As of March 31, 2021, the cumulative losses of the Company were approximately $ 207.8 million. Management expects that the Company will continue to incur losses from its operations, which will result in negative cash flows from operating activities. The Company believes that it has adequate cash to fund its ongoing activities through the completion of the Merger and into the first quarter of 2022. However, changes may occur that would cause the Company to consume its existing cash prior to that time, including the costs to consummate the Merger. Prior to closing of the Merger, the Company agreed, among other things, that it would use commercially reasonable efforts to enter into one or more agreements providing for the sale, transfer or assignment or that it would otherwise take steps related to the divestment or disposal and satisfaction of liabilities of the Company’s Accordion Pill business, to be effected immediately after the closing (the “Disposition”). It is anticipated that the Disposition will result in one of the following scenarios (i) a sale or disposition by Intec Israel of substantially all the assets of Intec Israel followed by the liquidation of Intec Israel (an “Asset Disposition”), (ii) a sale by Intec Parent of all of the outstanding shares of Intec Israel ordinary shares (a “Share Disposition”) or (iii) a termination of the Intec Israel business as promptly as possible through winding down its operations, satisfying liabilities, and disposing of its remaining assets followed by a liquidation of Intec Israel (a “Business Termination”). INTEC PHARMA LTD. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) NOTE 1 - NATURE OF OPERATIONS AND BASIS OF PRESENTATION Although the Company has entered into the Merger Agreement and intends to consummate the Merger, there is no assurance that it will be able to successfully complete the Merger on a timely basis, or at all. If, for any reason, the Merger is not consummated and the Company is unable to continue to operate its ongoing activities or identify and complete an alternative strategic transaction like the Merger, the Company may be required to dissolve and liquidate its assets. In such case, the Company would be required to pay all of its debts and contractual obligations, and to set aside certain reserves for potential future claims, and there can be no assurances as to the amount or timing of available cash left to distribute to its shareholders after paying its debts and other obligations and setting aside funds for reserves. In addition, the COVID-19 pandemic, that has spread globally, has resulted in significant financial market volatility and uncertainty in the past year. Many countries around the world, including in Israel and the United States, have implemented significant governmental measures to control the spread of the virus, including temporary closure of businesses, severe restrictions on travel and the movement of people, and other material limitations on the conduct of business. The Company has implemented remote working and workplace protocols for its employees in accordance with government requirements. The implementation of measures to prevent the spread of COVID-19 pandemic have resulted in disruptions to the Company’s partnering efforts which depend, in part, on attendance at in-person meetings, industry conferences and other events. It is not possible at this time to estimate the full impact that COVID-19 could have on the Company’s operation, as the impact will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration and severity of the outbreak, and the actions that may be required to contain COVID-19 or treat its impact. As of the date of issuance of these consolidated financial statements, the extent to which the COVID-19 pandemic may materially impact the Company’s financial condition, liquidity, or results of operations is uncertain. As a result of the above, there is substantial doubt about the Company’s ability to continue as a going concern within one year after the issuance date of these financial statements. These financial statements have been prepared assuming that the Company will continue as a going concern and do not include any adjustments that might result from the outcome of this uncertainty. d. On October 30, 2020, the Company implemented a 1-for-20 reverse share split of its outstanding ordinary shares. All share and per share amounts in these unaudited financial statements have been retroactively adjusted to reflect the reverse share split. e. The Company’s effective “shelf” registration statement on Form S-3 is under General Instruction I.B.6 to Form S-3, or the Baby Shelf Rule. The amount of funds the Company can raise through primary public offerings of securities in any 12-month period using its registration statement on Form S-3 is limited to one-third of the aggregate market value of the ordinary shares held by non-affiliates of the Company. f. Basis of presentation The unaudited interim condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and S-X Article 10 for interim financial statements. Accordingly, they do not contain all information and notes required by US GAAP for annual financial statements. In the opinion of management, these unaudited condensed consolidated interim financial statements reflect all adjustments, which include normal recurring adjustments, necessary for a fair statement of the Company’s consolidated financial position as of March 31, 2021, the consolidated results of operations, changes in equity and cash flows for the three-month periods ended March 31, 2021 and 2020. INTEC PHARMA LTD. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) NOTE 1 - NATURE OF OPERATIONS AND BASIS OF PRESENTATION These unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s annual financial statements for the year ended December 31, 2020, as filed in the 10-K on March 16, 2021. The condensed balance sheet data as of December 31, 2020 included in these unaudited condensed consolidated financial statements was derived from the audited financial statements for the year ended December 31, 2020 but does not include all disclosures required by US GAAP for annual financial statements. The results for the three-month period ended March 31, 2021 are not necessarily indicative of the results expected for the year ending December 31, 2021. |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES a. Principles of consolidation The consolidated financial statements include the accounts of Intec Israel and its Subsidiaries. Intercompany balances and transactions have been eliminated upon consolidation. b. Fair value measurement Fair value is based on the price that would be received from the sale of an asset or that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. In order to increase consistency and comparability in fair value measurements, the guidance establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels, which are described as follows: Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs. Level 2: Observable prices that are based on inputs not quoted on active markets but corroborated by market data. Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs. In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible and considers counterparty credit risk in its assessment of fair value. c. Loss per share Loss per share, basic and diluted, is computed on the basis of the net loss for the period divided by the weighted average number of ordinary shares outstanding during the period. Diluted loss per share is based upon the weighted average number of ordinary shares and of ordinary shares equivalents outstanding when dilutive. Ordinary share equivalents include outstanding stock options and warrants which are included under the treasury stock method when dilutive. INTEC PHARMA LTD. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES The following share options and warrants were excluded from the calculation of diluted loss per ordinary share because their effect would have been anti-dilutive for the periods presented (share data): SCHEDULE OF ANTI-DILUTIVE SECURITIES Three months ended March 31 2021 2020 Outstanding stock options 251,992 212,798 Warrants 992,674 514,583 |
COMMITMENTS AND CONTINGENT LIAB
COMMITMENTS AND CONTINGENT LIABILITIES | 3 Months Ended |
Mar. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENT LIABILITIES | NOTE 3 - COMMITMENTS AND CONTINGENT LIABILITIES a. LTS Process Development Agreement In December 2018, the Company entered into a Process Development Agreement for Manufacturing Services with Lohmann Therapie-Systeme AG (“LTS”) for the manufacture of AP-CD/LD (the “Agreement”). Under the Agreement, the Company will bear the costs incurred by LTS to acquire the production equipment for AP-CD/LD (“Equipment”) which amounted to approximately € 6.8 million (approximately $ 7.8 Following an impairment assessment that was performed in 2019, the Company recorded an impairment charge of the Equipment in the amount of approximately $ 4.1 3.7 The Agreement also contains several termination rights, including, among others, in the cases of bankruptcy, breach by either party, change of control of either of the parties, or the sale or licensing by the Company of the Accordion Pill to a third party. As of March 31, 2021, the Company has a liability in the amount of € 2.0 million (approximately $ 2.3 million) for LTS’s facility upgrading costs. This liability will be paid to LTS only if the Company decides not to continue with the project or commercialization of AP-CD/LD. b. Lawsuit In December 2019, two former directors and officers (the “plaintiffs”) filed a statement of claim with the Jerusalem District Labor Court alleging breach of contract related to a purported vesting of certain options issued to the plaintiffs pursuant to the execution of the LTS Agreement and further alleging payments due for unredeemed vacation days. The plaintiffs sought pecuniary damages of NIS 2.4 750 On February 17, 2021, the Company entered into a settlement agreement (the “Settlement Agreement”) with each of the plaintiffs, pursuant to which the Company agreed to pay to each plaintiff NIS 400 125 INTEC PHARMA LTD. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) NOTE 3 - COMMITMENTS AND CONTINGENT LIABILITIES c. Cooperation agreements As part of its operations, the Company entered into feasibility agreements with multinational companies for the development of products that combine the Company’s proprietary Accordion Pill platform technology with certain drugs for the treatment of various indications. These agreements sometimes include a mutual possibility of entering into negotiations for the acquisition of a future license for the commercial use of the products that are being developed by the multinational companies under the feasibility agreements. In addition, the multinational companies agreed to reimburse the Company for its expenses, based on milestones that are detailed in the feasibility agreements. This funding is recognized in the statements of operations as a deduction from research and development expenses, as they are incurred. 1) In March 2021, the Company entered into a feasibility agreement with a pharmaceutical company to develop a custom-designed Accordion Pill for a rare disease indication. 2) In December 2020, the Company entered into cannabinoid research collaboration agreement with GW Research Limited to explore using the Accordion Pill platform for an undisclosed research program. 3) In May 2019, the Company entered into a research collaboration agreement with Merck Sharp & Dohme (“Merck”) for the development of a custom-designed Accordion Pill for one of Merck’s proprietary compounds. Under the agreement, the Company’s activities will be funded by Merck subject to the achievement of agreed milestones. In October 2020, the Company entered into a new research collaboration agreement with Merck for another compound. In May 2021, based on decisions Merck made for its pipeline and resource allocation, Merck terminated the collaboration with the Company. d. AP-CD/LD non-binding term sheet In February 2021, the Company entered into a non-binding term sheet for the sale or license of the AP-CD/LD program to an undisclosed third party and are currently negotiating the terms of a definitive agreement. There is no assurance that this will result in a definitive agreement. |
SHARE CAPITAL
SHARE CAPITAL | 3 Months Ended |
Mar. 31, 2021 | |
Equity [Abstract] | |
SHARE CAPITAL | NOTE 4 - SHARE CAPITAL a. Changes in share capital In February 2021, warrants to purchase 182,500 956 b. Share-based compensation: 1) In January 2016, the Company’s board of directors approved an option plan (the “Plan”). Originally, the maximum number of ordinary shares reserved for issuance under the Plan was 35,000 35,000 In December 2017, June 2018 and December 2020, an increase of 105,000 50,000 50,000 175,000 As of March 31, 2021, 200,145 INTEC PHARMA LTD. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) NOTE 4 - SHARE CAPITAL In the three months ended March 31, 2020, the Company granted options as follows: SCHEDULE OF OPTIONS GRANTED TO EMPLOYEES Three months ended March 31, 2020 Number of options granted Exercise price range Vesting period range Expiration Employees 32,250 $ 8.57 3 7 The fair value of options granted to employees during the three months ended March 31, 2020 was $ 127 The fair value of options granted to employees on the date of grant was computed using the Black-Scholes model. The underlying data used for computing the fair value of the options are as follows: UNDERLYING DATA USED FOR COMPUTING THE FAIR VALUE OF THE OPTIONS Three months ended March 31 2020 Value of ordinary share $ 5.6 Dividend yield 0 % Expected volatility 102.58 % Risk-free interest rate 1.42 % Expected term 5 2) The following table illustrates the effect of share-based compensation on the statements of operations: SCHEDULE OF EFFECT OF SHARE-BASED COMPENSATION Three months ended March 31 2021 2020 U.S. dollars in thousands Research and development expenses, net $ (37 ) $ 184 General and administrative expenses 121 258 $ 84 $ 442 |
ACCOUNTS PAYBLE AND ACCRUALS -
ACCOUNTS PAYBLE AND ACCRUALS - OTHER | 3 Months Ended |
Mar. 31, 2021 | |
Payables and Accruals [Abstract] | |
ACCOUNTS PAYBLE AND ACCRUALS - OTHER | NOTE 5 - ACCOUNTS PAYBLE AND ACCRUALS - OTHER SCHEDULE OF ACCOUNTS PAYABLE AND ACCRUALS - OTHER March 31, December 31, 2021 2020 U.S. dollars in thousands Expenses payable $ 3,217 $ 2,859 Salary and related expenses 876 1,057 Current operating lease liabilities 581 596 Accrual for vacation days and recreation pay for employees 193 180 Other 153 274 Accounts payable and accruals - other $ 5,020 $ 4,966 |
MERGER AGREEMENT
MERGER AGREEMENT | 3 Months Ended |
Mar. 31, 2021 | |
Merger Agreement | |
MERGER AGREEMENT | NOTE 6 - MERGER AGREEMENT : On March 15, 2021, Intec Israel entered into a Merger Agreement with Intec Parent, Merger Sub, Domestication Merger Sub, and Decoy, pursuant to which, following the Domestication Merger, and upon satisfaction of additional closing conditions, the Merger Sub will merge with and into Decoy, with Decoy being the surviving entity and a wholly owned subsidiary of Intec Parent. If the Merger is completed, then the business of Decoy will become the business of Intec Parent. Under the exchange ratio formula in the Merger Agreement, without taking into consideration the effect of the respective levels of cash and liabilities of each of the Company and Decoy, which will result in an adjustment to such exchange ratio, following the closing of the Merger (the “Closing”), the former Decoy securityholders immediately before the Merger are expected to own approximately 75 % of the aggregate number of the outstanding securities of Intec Parent (based on a valuation of $ 30 million), and the securityholders of the Company immediately before the Domestication Merger are expected to own approximately 25 % of the aggregate number of the outstanding securities of Intec Parent (based on a valuation of $ 10 million), calculated on a fully-diluted basis. The actual allocation will be subject to adjustment based on, among other things, the respective net cash balances of Decoy and the consolidated Intec entities (including, in the case of Intec Israel, any proceeds from any disposition of Intec Israel’s Accordion Pill business), subject to certain exceptions. As further described below, the Closing is also conditioned on completion of the Domestication Merger and on a financing by Intec Israel or Intec Parent, which will dilute securityholders of both Intec Israel and Decoy on a pro-rata basis, subject to certain exceptions. The Merger Agreement contains customary representations, warranties and covenants made by each of Intec Israel and Decoy, including covenants relating to (i) the conduct of their respective businesses prior to the Closing, (ii) the preparation and filing of a registration statement on Form S-4 registering the Merger Shares and the shares of Intec Parent Common Stock to be issued in connection with the Domestication Merger (the “Registration Statement”) and the preparation and/or filing, as applicable, of a proxy statement/information statement for the special meeting or approval by written consent, as applicable, of shareholders of each of Intec Israel and Decoy, (iii) holding a meeting or approval by written consent, as applicable, of shareholders of each of Intec Israel and Decoy to obtain their requisite approvals in connection with the Domestication Merger and Merger, as applicable, including, among other approvals, the approval by Intec Israel’s shareholders of the issuance of the Merger Shares, and (iv) subject to certain exceptions, the recommendation of the board of directors of each party to the Merger Agreement to its shareholders that such approvals be given. Consummation of the Merger is subject to certain closing conditions, including, among other things, (i) consummation of the Domestication Merger, (ii) approval of certain matters related to the Merger by the shareholders of Intec Israel and approval of the Merger by the stockholders of Decoy, (iii) the effectiveness of the Registration Statement, (iv) the continued listing of Intec Israel’s ordinary shares on the Nasdaq Capital Market (and following the Domestication Merger, the shares of Intec Parent Common Stock) and the authorization for listing on the Nasdaq Capital Market of the Merger Shares, (v) the receipt of a tax ruling from the Israel Tax Authority with respect to the Domestication Merger, (vi) disposition of Intec Israel’s Accordion Pill business, and (vii) a closing financing by Intec Israel or Intec Parent such that upon Closing of the Merger (taking account of the proceeds to be received with respect to such financing), the combined net cash of Intec Parent shall be not less than $ 30 million and not more than $ 50 million, and which represents an agreed minimum valuation derived from the Exchange Ratio for Intec Parent following the Closing. The Merger Agreement requires Intec Israel to convene a shareholders’ meeting for purposes of obtaining the necessary shareholder approvals required in connection with the Merger. The Merger Agreement contains certain termination rights for both Intec Israel and Decoy, including, but not limited to, the right of Intec Israel and Decoy to terminate the Merger Agreement by mutual written consent or if a court of competent jurisdiction or other Governmental Body (as defined in the Merger Agreement) has issued a final and nonpeelable order, decree or ruling, or has taken any other action, having the effect of permanently restraining, enjoining or otherwise prohibiting the Merger. INTEC PHARMA LTD. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) NOTE 6 - MERGER AGREEMENT As of March 31, 2021, Intec Israel has transferred $ 650 thousand to Decoy for transaction expenses, of which $ 350 300 thousand was recorded as deposit under prepaid expenses and other receivables. Either Intec Israel or Decoy may terminate the Merger Agreement if the Merger is not consummated on or before the date that is 155 days after March 17, 2021. This date may be extended in certain circumstances. In connection with the termination of the Merger Agreement, under specified circumstances, Decoy may be required to pay to Intec Israel a break-up fee of $ 1.0 million, or Intec Israel may be required to pay to Decoy a reverse break-up fee of $ 1.0 million, which was deposited with an escrow agent and therefore recorded as restricted cash as of March 31, 2021, and forfeit an amount of $ 350 thousand that was transferred to Decoy to cover transaction expenses. As set forth in the Merger Agreement and pursuant to an Agreement and Plan of Merger dated as of April 27, 2021 between Intec Israel, Intec Parent and Domestication Merger Sub, prior to the date of the closing date (the “Closing Date”), Intec Israel shall domesticate as a wholly owned subsidiary of a Delaware corporation by merging with and into the Domestication Merger Sub, with Intec Israel surviving the merger and becoming a wholly-owned subsidiary of Intec Parent. In connection with the Domestication Merger, all Intec Israel’s ordinary shares, having no par value per share (the “Intec Israel Shares”), outstanding immediately prior to the Domestication Merger, will convert, on a one-for-one basis, into shares of Intec Parent Common Stock and all options and warrants to purchase Intec Israel Shares outstanding immediately prior to the Domestication Merger will be exchanged for equivalent securities of Intec Parent. In accordance with the terms of the Merger Agreement, the Company agreed that prior to the Closing Date it would use commercially reasonable efforts to enter into one or more agreements providing for the sale, transfer or assignment of the Company’s Accordion Pill business by way of Asset Disposition or Share Disposition or that it would otherwise take steps related to the divestment or disposal of its assets and satisfaction of liabilities of the Accordion Pill business by way of Business Termination, to be affected immediately after the Closing. Following the above, the depreciation of the property and equipment was accelerated in accordance with the Company’s expectation for the Closing Date. As a result, the loss per share for the three-month period ended March 31, 2021, increased by five cents from $ 0.91 0.96 526 thousand. |
EVENTS SUBSEQUENT TO MARCH 31,
EVENTS SUBSEQUENT TO MARCH 31, 2021 | 3 Months Ended |
Mar. 31, 2021 | |
Subsequent Events [Abstract] | |
EVENTS SUBSEQUENT TO MARCH 31, 2021 | NOTE 7 - EVENTS SUBSEQUENT TO MARCH 31, 2021 a. In April 2021, the Company sold to Aspire Capital Fund LLC (“Aspire Capital”) 319,393 ordinary shares for total consideration of approximately $ 1.2 million under the ordinary shares purchase agreement (the “Purchase Agreement”) entered into with Aspire Capital in December 2019. b. On May 16, 2021, the Company entered into a First Amendment to Ordinary Shares Purchase Agreement (“the Amendment”), with Aspire Capital, amending the Purchase Agreement, which provides for among other things, (i) for an updated Exchange Cap, pursuant to which the Company may issue up to an additional 963,912 ordinary shares which constitutes 19.99 % of its ordinary shares outstanding as of the date of entry into the Amendment, unless shareholder approval or an exception pursuant to the rules of the Nasdaq Capital Market is obtained to issue more than 19.99%, and (ii) if shareholder approval is not obtained, such limitation will not apply after the Exchange Cap is reached if at all times thereafter the average purchase price paid for all shares issued under the Purchase Agreement is equal to or greater than $ 3.44 per share. c. In May 2021, four lawsuits were filed against the Company and its board of directors in federal court: Marc St-Hilarie v. Intec Pharma Ltd,, et al., Minh Tran v. Intec Pharma Ltd., et al. Craig Davidson v. Intec Pharma Ltd., et al., Jordan Sanchez Figueroa v. Intec Pharma Ltd., et al. Davidson All four complaints allege that the Company and its board violated federal securities laws by allegedly failing to disclose all material information in connection with the Merger. Since the filing of these lawsuits, Marc St-Hilarie and Minh Tran have filed notices of voluntary dismissal of their claims as moot. It is still too early to assess and predict the probable outcome of these complaints and the Company believes that these lawsuits are without merit and, if any are prosecuted, intends to defend vigorously against them. Any loss or range of loss, if any, cannot be estimated at this time. |
SIGNIFICANT ACCOUNTING POLICI_2
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
Principles of consolidation | a. Principles of consolidation The consolidated financial statements include the accounts of Intec Israel and its Subsidiaries. Intercompany balances and transactions have been eliminated upon consolidation. |
Fair value measurement | b. Fair value measurement Fair value is based on the price that would be received from the sale of an asset or that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. In order to increase consistency and comparability in fair value measurements, the guidance establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels, which are described as follows: Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs. Level 2: Observable prices that are based on inputs not quoted on active markets but corroborated by market data. Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs. In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible and considers counterparty credit risk in its assessment of fair value. |
Loss per share | c. Loss per share Loss per share, basic and diluted, is computed on the basis of the net loss for the period divided by the weighted average number of ordinary shares outstanding during the period. Diluted loss per share is based upon the weighted average number of ordinary shares and of ordinary shares equivalents outstanding when dilutive. Ordinary share equivalents include outstanding stock options and warrants which are included under the treasury stock method when dilutive. INTEC PHARMA LTD. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES The following share options and warrants were excluded from the calculation of diluted loss per ordinary share because their effect would have been anti-dilutive for the periods presented (share data): SCHEDULE OF ANTI-DILUTIVE SECURITIES Three months ended March 31 2021 2020 Outstanding stock options 251,992 212,798 Warrants 992,674 514,583 |
SIGNIFICANT ACCOUNTING POLICI_3
SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
SCHEDULE OF ANTI-DILUTIVE SECURITIES | The following share options and warrants were excluded from the calculation of diluted loss per ordinary share because their effect would have been anti-dilutive for the periods presented (share data): SCHEDULE OF ANTI-DILUTIVE SECURITIES Three months ended March 31 2021 2020 Outstanding stock options 251,992 212,798 Warrants 992,674 514,583 |
SHARE CAPITAL (Tables)
SHARE CAPITAL (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Equity [Abstract] | |
SCHEDULE OF OPTIONS GRANTED TO EMPLOYEES | In the three months ended March 31, 2020, the Company granted options as follows: SCHEDULE OF OPTIONS GRANTED TO EMPLOYEES Three months ended March 31, 2020 Number of options granted Exercise price range Vesting period range Expiration Employees 32,250 $ 8.57 3 7 |
UNDERLYING DATA USED FOR COMPUTING THE FAIR VALUE OF THE OPTIONS | The fair value of options granted to employees on the date of grant was computed using the Black-Scholes model. The underlying data used for computing the fair value of the options are as follows: UNDERLYING DATA USED FOR COMPUTING THE FAIR VALUE OF THE OPTIONS Three months ended March 31 2020 Value of ordinary share $ 5.6 Dividend yield 0 % Expected volatility 102.58 % Risk-free interest rate 1.42 % Expected term 5 |
SCHEDULE OF EFFECT OF SHARE-BASED COMPENSATION | SCHEDULE OF EFFECT OF SHARE-BASED COMPENSATION Three months ended March 31 2021 2020 U.S. dollars in thousands Research and development expenses, net $ (37 ) $ 184 General and administrative expenses 121 258 $ 84 $ 442 |
ACCOUNTS PAYBLE AND ACCRUALS _2
ACCOUNTS PAYBLE AND ACCRUALS - OTHER (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Payables and Accruals [Abstract] | |
SCHEDULE OF ACCOUNTS PAYABLE AND ACCRUALS - OTHER | SCHEDULE OF ACCOUNTS PAYABLE AND ACCRUALS - OTHER March 31, December 31, 2021 2020 U.S. dollars in thousands Expenses payable $ 3,217 $ 2,859 Salary and related expenses 876 1,057 Current operating lease liabilities 581 596 Accrual for vacation days and recreation pay for employees 193 180 Other 153 274 Accounts payable and accruals - other $ 5,020 $ 4,966 |
NATURE OF OPERATIONS AND BASI_2
NATURE OF OPERATIONS AND BASIS OF PRESENTATION (Details Narrative) $ in Millions | Mar. 31, 2021USD ($) |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Accumulated deficit | $ 207.8 |
SCHEDULE OF ANTI-DILUTIVE SECUR
SCHEDULE OF ANTI-DILUTIVE SECURITIES (Details) - shares | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Stock Options [Member] | ||
Anti-dilutive securities | 251,992 | 212,798 |
Warrant [Member] | ||
Anti-dilutive securities | 992,674 | 514,583 |
COMMITMENTS AND CONTINGENT LI_2
COMMITMENTS AND CONTINGENT LIABILITIES (Details Narrative) ₪ in Thousands, $ in Thousands, € in Millions | Feb. 17, 2021USD ($) | Feb. 17, 2021ILS (₪) | Mar. 31, 2021USD ($) | Mar. 31, 2021EUR (€) | Dec. 31, 2020USD ($) | Dec. 31, 2020ILS (₪) | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2018EUR (€) |
LTS Process Development Agreement [Member] | |||||||||
Total cost of the equipment | $ 7,800 | ||||||||
Impairment charge | $ 4,100 | ||||||||
Fair value of equipment | $ 3,700 | ||||||||
The additional amount recognized as liability in respect to facility upgrading costs | $ 2,300 | ||||||||
LTS Process Development Agreement [Member] | Euro Member Countries, Euro | |||||||||
Total cost of the equipment | € | € 6.8 | ||||||||
The additional amount recognized as liability in respect to facility upgrading costs | € | € 2 | ||||||||
Lawsuit [Member] | |||||||||
Plaintiffs pecuniary damages | $ 750 | ||||||||
Settlement amount to each plaintiff | $ 125 | ||||||||
Lawsuit [Member] | Israel, New Shekels | |||||||||
Plaintiffs pecuniary damages | ₪ | ₪ 2,400 | ||||||||
Settlement amount to each plaintiff | ₪ | ₪ 400 |
SHARE CAPITAL (Details Narrativ
SHARE CAPITAL (Details Narrative) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | |||||||
Feb. 28, 2021 | Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | Jul. 31, 2020 | Jun. 30, 2018 | Dec. 31, 2017 | Jul. 31, 2016 | Jan. 31, 2016 | |
Proceeds from exercise of warrants | $ 956 | ||||||||
Plan 2015 [Member] | |||||||||
Number of ordinary shares reserved for issuance under the 2015 plan | 50,000 | 175,000 | 50,000 | 105,000 | 35,000 | 35,000 | |||
Number of shares available for grant | 200,145 | ||||||||
Exercise of Warrants [Member] | |||||||||
Number of warrants issued | 182,500 | ||||||||
Proceeds from exercise of warrants | $ 956 | ||||||||
Fair Value Of Options Granted [Member] | |||||||||
Fair value of options granted | $ 127 |
SCHEDULE OF OPTIONS GRANTED TO
SCHEDULE OF OPTIONS GRANTED TO EMPLOYEES (Details) - Employees [Member] | 3 Months Ended |
Mar. 31, 2021$ / sharesshares | |
Number of options granted | shares | 32,250 |
Exercise price range | $ / shares | $ 8.57 |
Vesting period | 3 years |
Expiration | 7 years |
UNDERLYING DATA USED FOR COMPUT
UNDERLYING DATA USED FOR COMPUTING THE FAIR VALUE OF THE OPTIONS (Details) | 3 Months Ended |
Mar. 31, 2021$ / shares | |
Underlying Data Used For Computing Fair Value Of Options | |
Value of ordinary share | $ 5.6 |
Dividend yield | 0.00% |
Expected volatility | 102.58% |
Risk-free interest rate | 1.42% |
Expected term | 5 years |
SCHEDULE OF EFFECT OF SHARE-BAS
SCHEDULE OF EFFECT OF SHARE-BASED COMPENSATION (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Share-based compensation | $ 84 | $ 442 |
Research and Development Expense [Member] | ||
Share-based compensation | (37) | 184 |
General and Administrative Expense [Member] | ||
Share-based compensation | $ 121 | $ 258 |
SCHEDULE OF ACCOUNTS PAYABLE AN
SCHEDULE OF ACCOUNTS PAYABLE AND ACCRUALS - OTHER (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Payables and Accruals [Abstract] | ||
Expenses payable | $ 3,217 | $ 2,859 |
Salary and related expenses | 876 | 1,057 |
Current operating lease liabilities | 581 | 596 |
Accrual for vacation days and recreation pay for employees | 193 | 180 |
Other | 153 | 274 |
Accounts payable and accruals - other | $ 5,020 | $ 4,966 |
MERGER AGREEMENT (Details Narra
MERGER AGREEMENT (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Mar. 15, 2021 | Mar. 31, 2021 | Mar. 31, 2020 |
Loss per share | $ (0.96) | $ (1.65) | |
Depreciation | $ 526 | $ 306 | |
Merger Agreement [Member] | |||
Share exchange ratio in the merger for the former Decoy security holders, which is subject to adjustment based on, among other things, Decoy's and the Company's net cash balance | 75.00% | ||
Decoy's estimated valuation that is the basis of the share exchange ratio calculation | $ 30,000 | ||
Share exchange ratio in the merger for the security holders of the Company, which is subject to adjustment based on, among other things, Decoy's and the Company's net cash balance | 25.00% | ||
Company's estimated valuation that is the basis of the share exchange ratio calculation | $ 10,000 | ||
The minimum combined net cash of Intec Parent | 30,000 | ||
The maximum combined net cash of Intec Parent | 50,000 | ||
Company's financial transfers to Decoy for transaction expenses | 650 | ||
Company's financial transfers to Decoy for transaction expenses that was recorded as general and administrative expenses | 350 | ||
Company's financial transfers to Decoy for transaction expenses that was recorded as deposit | $ 300 | ||
The break-up fee that the Company or Decoy may be require to pay in connection with the termination of the Merger, under specified circumstances | 1,000 | ||
The Company's deposit in favor of Decoy that may be forfeit in connection with the termination of the Merger, under specified circumstances | $ 350 | ||
Loss per share without taking into account the acceleration of the depreciation of property and equipment | $ 0.91 | ||
Loss per share | $ 0.96 | ||
Depreciation | $ 526 |
EVENTS SUBSEQUENT TO MARCH 31_2
EVENTS SUBSEQUENT TO MARCH 31, 2021 (Details Narrative) $ / shares in Units, Lawsuit in Thousands, $ in Thousands | May 16, 2021Lawsuit$ / sharesshares | Apr. 30, 2021USD ($)shares | Mar. 31, 2021USD ($) | Mar. 31, 2020USD ($) |
Proceeds from Issuance of Common Stock | $ | $ 421 | |||
Subsequent Event [Member] | Lawsuits [Member] | ||||
Loss Contingency, Number of Plaintiffs | Lawsuit | 4 | |||
Subsequent Event [Member] | Purchase Agreement [Member] | Aspire Capital Fund LLC [Member] | ||||
Stock Issued During Period, Shares, New Issues | shares | 319,393 | |||
Proceeds from Issuance of Common Stock | $ | $ 1,200 | |||
Subsequent Event [Member] | Purchase Agreement [Member] | Aspire Capital Fund LLC [Member] | First Amendment [Member] | ||||
The Exchange cap- the maximum number of ordinary shares that the company may issue under the Amendment | shares | 963,912 | |||
Maximum percentage of the company's outstanding ordinary shares that the company may be issue under the Amendment unless shareholder approval or an exception pursuant to the rules of the Nasdaq is obtained to issue more than this percentage | 19.99% | |||
If shareholder approval not obtained and after the Exchange Cap reached, the minimum average purchase price for issuance of shares under the purchase agreement at all times thereafter | $ / shares | $ 3.44 |