Intangible Assets

12 Months Ended

Dec. 31, 2019

Intangible Assets [Abstract]

INTANGIBLE ASSETS

NOTE 9: INTANGIBLE ASSETS

a. On January 7, 2014, the Company signed a licensing agreement with Yeda to develop hCDR1, a Phase II-ready asset for the treatment of Systemic Lupus Erythematosus ("SLE"). The terms of the licensing agreement include, among other things, expense reimbursement for patent expenses payable in six installments, certain milestone payments to Yeda, low single-digit royalties based on net sales, and additional customary royalties to the Office of the Israel innovation authority.

This asset is not ready for usage (the development was abandoned before finishing) and therefore has not been amortized yet.

As of December 31, 2018 all royalties to Yeda were paid except for a remaining liability of $127 thousand, disclosed under other accounts payable.

The Company exclusively licensed two families of patents relating to hCDR1:

One expires on September 22, 2022 and the other expires on January 14, 2024.

The Company reviews the hCDR1 asset for impairment once a year on December 31 or more frequently if events or changes in circumstances indicate that there is impairment.

If the carrying amount exceeds their recoverable amount, the assets are reduced to their recoverable amount.

In order to measure the recoverable amount of the hCDR1 asset, Company management deducted the fair value of its other assets and liabilities from the amount representing its market value as of December 31, 2019. The resulting fair value attributable to the hCDR1 asset was higher than the book value of the hCDR1 asset and therefore no impairment was recorded in the Company's financial statements as of December 31, 2019.

In addition, management assessed the recoverable amount with the assistance of an external independent expert based on value-in-use calculation. The value-in-use calculation use pre-tax cash flow projections covering a ten-year period. Cash flows beyond the ten-year period to be generated from continuing use are extrapolated using estimated growth rates.

The key assumptions used are as follows:

Weighted average cost of capital (WACC) 21%

Royalties rate 6.5%

Phase II & III success likelihood 32%

Sensitivity analysis:

Given a different set of assumptions regarding the cost of adequate capital and the adequate royalties rate, the minimal fair value of the hCDR1 ranges was higher than the asset in the financial statements.

b. Composition and movement:

The composition of intangible assets, net, by major classes, and the movement therein in the three years ended December 31, 2019, 2018 and 2017, are:

	hCDR1		Total
Cost:
Balance at January 1, 2019		380		380
Amortized cost at December 31, 2019		380		380

	hCDR1		Total
Cost:
Balance at January 1, 2018		380		380
Amortized cost at December 31, 2018		380		380

	hCDR1		Total
Cost:
Balance at January 1, 2017		253		253
Additions during the year		127		127
Amortized cost at December 31, 2017		380		380