EX-99 3 exhibit_2.htm FINANCIAL STATEMENTS AS OF JUNE 30, 2015 exhibit_2.htm
Exhibit 2
 
BioLineRx Ltd.
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
AS OF JUNE 30, 2015
 
 
 
 
 
BioLineRx Ltd.
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
AS OF JUNE 30, 2015
 
TABLE OF CONTENTS
 

 
 
 


CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION
(UNAUDITED)
 
   
December 31,
    
June 30,
  
   
2014
    
2015
  
   
in USD thousands
  
Assets
            
CURRENT ASSETS
            
Cash and cash equivalents
     5,790       9,404  
Short-term bank deposits
     28,890       45,385  
Prepaid expenses
     221       250  
Other receivables
     257       653  
Total current assets
     35,158       55,692  
                 
NON-CURRENT ASSETS
                
Restricted deposits
     166       -  
Long-term prepaid expenses
     49       57  
Property and equipment, net
     721       2,489  
Intangible assets, net
     117       117  
Total non-current assets
     1,053       2,663  
Total assets
     36,211       58,355  
                 
Liabilities and equity
                
CURRENT LIABILITIES
                
Accounts payable and accruals:
                
Trade
     1,654       2,959  
Other
     1,252       1,193  
Total current liabilities
     2,906       4,152  
NON-CURRENT LIABILITIES
                
Warrants
     1,500       2,387  
Total non-current liabilities
     1,500       2,387  
COMMITMENTS AND CONTINGENT LIABILITIES
                
Total liabilities
     4,406       6,539  
                 
EQUITY
                
Ordinary shares
     1,055       1,448  
Share premium
     167,331       195,583  
Other reserves
     (1,416 )     (1,416 )
Capital reserve
     9,800       10,287  
Accumulated deficit
     (144,965 )     (154,086 )
Total equity
     31,805       51,816  
Total liabilities and equity
     36,211       58,355  
 
The accompanying notes are an integral part of these condensed financial statements.
 
 
1
 
 
CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE LOSS
(UNAUDITED)

   
Three months ended June 30,
    
Six months ended June 30,
  
   
2014
    
2015
    
2014
    
2015
  
   
in USD thousands
    
in USD thousands
  
RESEARCH AND DEVELOPMENT EXPENSES, NET
     (2,792 )     (2,891 )     (5,511 )     (6,102 )
SALES AND MARKETING EXPENSES
     (285 )     (299 )     (652 )     (559 )
GENERAL AND ADMINISTRATIVE EXPENSES
     (834 )     (976 )     (1,824 )     (1,832 )
OPERATING LOSS
     (3,911 )     (4,166 )     (7,987 )     (8,493 )
NON-OPERATING INCOME (EXPENSES), NET
     279       (847 )     1,966       (887 )
FINANCIAL INCOME
     -       205       306       278  
FINANCIAL EXPENSES
     (435 )     (2 )     (467 )     (19 )
NET LOSS
     (4,067 )     (4,810 )     (6,182 )     (9,121 )
OTHER COMPREHENSIVE LOSS:
                                
CURRENCY TRANSLATION DIFFERENCES
     424       -       288       -  
COMPREHENSIVE LOSS
     (3,643 )     (4,810 )     (5,894 )     (9,121 )
                                 
   
in USD
    
in USD
  
LOSS PER ORDINARY SHARE - BASIC AND DILUTED
     (0.12 )     (0.09 )     (0.20 )     (0.19 )
                                 
WEIGHTED AVERAGE NUMBER OF SHARES USED IN CALCULATION OF LOSS PER ORDINARY SHARE
     34,005,072       53,562,019       30,503,968       48,095,879  
 
The accompanying notes are an integral part of these condensed financial statements.
 
 
2
 
 
CONDENSED INTERIM STATEMENTS OF CHANGES IN EQUITY
(UNAUDITED)

   
Ordinary
    
Share
    
Other
    
Capital
    
Accumulated
        
   
shares
    
premium
    
reserves
    
reserve
    
deficit
    
Total
  
   
in USD thousands
  
BALANCE AT JANUARY 1, 2014
     640       134,390       1,418       9,163       (133,889 )     11,722  
CHANGES FOR SIX MONTHS ENDED JUNE 30, 2014:
                                                
Issuance of share capital , net
     287       22,628       -       -       -       22,915  
Employee stock options exercised
     *       22       -       (22 )     -       -  
Employee stock options forfeited and expired
     -       16       -       (16 )     -       -  
Share-based compensation
     -       -       -       498       -       498  
Other comprehensive loss
                     288                       288  
Loss for the period
     -       -       -       -       (6,182 )     (6,182 )
BALANCE AT JUNE 30,  2014
     927       157,056       1,706       9,623       (140,071 )     29,241  
 
   
Ordinary
    
Share
    
Other
    
Capital
    
Accumulated
          
   
shares
    
premium
    
reserves
    
reserve
    
deficit
    
Total
  
   
in USD thousands
  
BALANCE AT JANUARY 1, 2015
     1,055       167,331       (1,416 )     9,800       (144,965 )     31,805  
CHANGES FOR SIX MONTHS ENDED JUNE 30, 2015:
                                                
Issuance of share capital , net
     393       28,252       -       -       -       28,645  
Share-based compensation
     -       -       -       487       -       487  
Comprehensive loss for the period
     -       -       -       -       (9,121 )     (9,121 )
BALANCE AT JUNE 30,  2015
     1,448       195,583       (1,416 )     10,287       (154,086 )     51,816  

* Represents an amount less than thousand

The accompanying notes are an integral part of these condensed financial statements.

 
3
 
 
CONDENSED CONSOLIDATED INTERIM CASH FLOW STATEMENTS
(UNAUDITED)

   
Six months ended June 30,
  
   
2014
    
2015
  
   
in USD thousands
  
             
CASH FLOWS - OPERATING ACTIVITIES
            
Comprehensive loss for the period
     (6,182 )     (9,121 )
Adjustments required to reflect net cash used in operating activities (see appendix below)
     (1,551 )     1,976  
Net cash used in operating activities
     (7,733 )     (7,145 )
                 
CASH FLOWS - INVESTING ACTIVITIES
                
Investments in short-term deposits
     (30,825 )     (39,184 )
Maturities of short-term deposits
     15,446       22,738  
Maturities of restricted deposits
     -       166  
Purchase of property and equipment
     (88 )     (1,586 )
Purchase of intangible assets
     (3 )     (7 )
Net cash used in investing activities
     (15,470 )     (17,873 )
                 
CASH FLOWS - FINANCING ACTIVITIES
                
Issuances of share capital, net
     22,612       28,645  
Net cash provided by financing activities
     22,612       28,645  
                 
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
     (591 )     3,627  
CASH AND CASH EQUIVALENTS – BEGINNING
OF PERIOD
     8,899       5,790  
EXCHANGE DIFFERENCES ON CASH AND CASH EQUIVALENTS
     116       (13 )
CASH AND CASH EQUIVALENTS - END OF PERIOD
     8,424       9,404  
 
The accompanying notes are an integral part of the financial statements.

 
4
 
 
BioLineRx Ltd.
APPENDIX TO CONDENSED CONSOLIDATED INTERIM CASH FLOW STATEMENTS
(UNAUDITED)

   
Six months ended June 30,
  
   
2014
    
2015
  
   
in USD thousands
  
             
Adjustments required to reflect net cash used in operating activities:
            
             
Income and expenses not involving cash flows:
            
Depreciation and amortization
     139       195  
Long-term prepaid expenses
     2       (8 )
Interest on restricted deposits
     1       -  
Interest and exchange rate differences on short-term deposits
     238       (49 )
Share-based compensation
     498       487  
Exchange differences on cash and cash equivalents
     (63 )     13  
Loss (gain) on adjustment of warrants to fair value
     (2,314 )     887  
Commitment fee paid by issuance of share capital
     303       -  
      (1,196 )     1,525  
                 
Changes in operating asset and liability items:
                
Increase in trade accounts receivable and
other receivables
     (71 )     (425 )
Increase (decrease) in accounts payable and accruals
     (284 )     876  
      (355 )     451  
      (1,551 )     1,976  
                 
Supplementary information on investing activities not
    involving cash flows:
                
    Property and equipment acquired on supplier trade credit
     -       512  
                 
Supplementary information on interest received in cash
     28       30  
 
The accompanying notes are an integral part of the financial statements.

 
5
 
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)

NOTE 1 – GENERAL INFORMATION

 
a.
General

BioLineRx Ltd. (“BioLineRx”), headquartered in Modi’in, Israel, was incorporated and commenced operations in April 2003.

Since incorporation, BioLineRx and its consolidated entities (collectively, the “Company”) have been engaged in the development of therapeutics, from pre-clinical-stage development to advanced clinical trials, for a wide range of medical needs.

In December 2004, BioLineRx registered a limited partnership, BioLine Innovations Jerusalem L.P. (“BIJ LP”), which commenced operations in January 2005. BioLineRx held a 99% interest in BIJ LP, with the remaining 1% held by a wholly owned subsidiary of BioLineRx, BioLine Innovations Ltd. (“BIJ Ltd.”). BIJ LP was established to operate a biotechnology incubator located in Jerusalem (the “Incubator”) under an agreement with the State of Israel. The agreement with the State of Israel relating to the Incubator terminated on December 31, 2013, and BIJ LP was liquidated in 2014. The Company expects to liquidate BIJ Ltd. during 2015.

In February 2007, BioLineRx listed its securities on the Tel Aviv Stock Exchange (“TASE”) and they have been traded on the TASE since that time. Since July 2011, BioLineRx’s American Depositary Shares (“ADSs”) have also been traded on the NASDAQ Capital Market.

The Company has been engaged in drug development since its incorporation. Although the Company has generated significant revenues from a number of out-licensing transactions, the Company cannot determine with reasonable certainty when and if it will have sustainable profits.

 
b.
Change in functional and reporting currency

Effective January 1, 2015, the Company changed its functional currency to the U.S. dollar (“dollar”, “USD” or “$”) from the New Israeli Shekel (“NIS”). This change was based on an assessment by Company management that the dollar is the primary currency of the economic environment in which the Company operates. Accordingly, the functional and reporting currency of the Company in these financial statements is the U.S. dollar.

In determining the appropriate functional currency to be used, the Company followed the guidance in International Accounting Standard (IAS) 21, which states that economic factors relating to sales, costs and expenses, financing activities and cash flows, as well as other potential factors, should be considered both individually and collectively. In this regard, a significant element in the Company’s decision to effect the functional currency change resulted from the strategic collaboration agreement that it entered into with Novartis in December 2014, which will be managed solely in dollars. In addition, the Company expects a significant increase in expenses denominated in dollars relating to advanced clinical trials. These changes, as well as the fact that the Company’s principal source of financing is the U.S. capital market, and all of the Company’s budgeting and planning is conducted solely in dollars, led to the decision to make the change in functional currency as of January 1, 2015, as indicated above.
 
 
6
 
BioLineRx Ltd.
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
 
NOTE 1 – GENERAL INFORMATION (cont.)

 
b.
Change in functional and reporting currency (cont.)

In effecting the change in functional currency to the dollar, as of January 1, 2015, all assets and liabilities of the Company were translated using the current rate method, using the dollar exchange rate as of December 31, 2014, and equity was translated using historical exchange rates at the relevant transaction dates. The resulting amounts translated into dollars for non-monetary items have been treated as their historical cost. Translation differences resulting from the change in functional currency have been reported as a component of shareholders' equity.

For presentation purposes, comparative figures in these financial statements have been translated into dollars on the following basis: (i) assets and liabilities have been translated using the exchange rate prevailing at December 31, 2014; (ii) the statement of comprehensive loss has been translated at the average exchange rate for the reporting period; and (iii) the results of translation differences have been recorded as “currency translation differences” within other comprehensive income (loss).

 
c.
Reverse split of ordinary shares

In June 2015, BioLineRx effected a 1:10 reverse split of its ordinary shares. All share and per share amounts in these financial statements have been retroactively adjusted to reflect the reverse split as if it had been effected prior to the earliest financial statement period included herein. Following the reverse split, one ordinary share traded on the TASE is equivalent to one ADS traded on NASDAQ (prior to the split, the ratio of ordinary shares to ADSs was 10:1). In connection with the reverse split, shareholders also approved an increase in BioLineRx’s authorized share capital to 150,000,000 ordinary shares, NIS 0.10 par value each.

 
d.
Approval of financial statements

The condensed consolidated interim financial statements of the Company as of June 30, 2015, and for the three and six months ended June 30, 2015, were approved by the Board of Directors on August 19, 2015, and signed on its behalf by the Chairman of the Board, the Chief Executive Officer and the Chief Financial and Operating Officer.

NOTE 2 – BASIS OF PREPARATION
 
The Company’s condensed consolidated interim financial statements as of June 30, 2015 and for the three and six months then ended (the “interim financial statements”) have been prepared in accordance with International Accounting Standard No. 34, “Interim Financial Reporting” (“IAS 34”). These interim financial statements, which are unaudited, do not include all disclosures necessary for a complete presentation of financial position, results of operations, and cash flows in conformity with generally accepted accounting principles. The condensed consolidated interim financial statements should be read in conjunction with the Company’s annual financial statements as of December 31, 2014 and for the year then ended and their accompanying notes, which have been prepared in accordance with International Financial Reporting Standards (“IFRS”). The results of operations for the three and six months ended June 30, 2015 are not necessarily indicative of the results that may be expected for the entire fiscal year or for any other interim period.

 
7
 
BioLineRx Ltd.
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
 
NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES
 
The accounting policies and calculation methods applied in the preparation of the interim financial statements are consistent with those applied in the preparation of the annual financial statements as of December 31, 2014 and for the year then ended, other than the change in functional and reporting currency, as described above.

NOTE 4 – ISSUANCES OF SHARE CAPITAL

 
a.
Underwritten public offerings of American Depositary Shares

In March 2014, the Company completed an underwritten public offering of 9,660,000 ADSs at a public offering price of $2.50 per ADS. The offering raised a total of $24.2 million, with net proceeds of approximately $22.3 million, after deducting fees and expenses.

In March 2015, the Company completed an underwritten public offering of 14,375,000 ADSs at a public offering price of $2.00 per ADS. The offering raised a total of $28.8 million, with net proceeds of approximately $26.4 million, after deducting fees and expenses.

 
b.
Share purchase agreement with Lincoln Park Capital

In May 2014, BioLineRx and Lincoln Park Capital Fund (“LPC”), entered into a $20 million purchase agreement, together with a registration rights agreement, whereby LPC agreed to purchase, from time to time, up to $20 million of BioLineRx’s ADSs, subject to certain limitations, during the 36-month term of the purchase agreement. During the six months ended June 30, 2015, BioLineRx sold a total of 1,039,903 ADSs to LPC for aggregate gross proceeds of $2,233,000. In connection with these issuances, a total of 25,998 ADSs was issued to LPC as a commitment fee and a total of $45,000 was paid to Oberon Securities as a finder’s fee.

On a cumulative basis, from the effective date of the purchase agreement through the approval date of these financial statements, BioLineRx has sold a total of 1,129,469 ADSs to LPC for aggregate gross proceeds of $2,433,000. In connection with these issuances, a total of 28,237 ADSs was issued to LPC as a commitment fee and a total of $49,000 was paid to Oberon Securities as a finder’s fee.

 
8
 
BioLineRx Ltd.
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
 
NOTE 5 – SHAREHOLDERS’ EQUITY
 
As of June 30, 2015 and December 31, 2014, share capital is composed of ordinary shares, as follows:

   
Number of ordinary shares
  
   
December 31,
    
June 30,
  
   
2014
    
2015
  
             
Authorized share capital
     75,000,000       150,000,000  
                 
Issued and paid-up share capital
     39,115,051       54,555,952  
 
   
In NIS
  
   
December 31,
    
June 30,
  
    2014     2015  
                 
Authorized share capital
     7,500,000       15,000,000  
                 
Issued and paid-up share capital
     3,911,505       5,455,595  

9