EX-2 3 exhibit_2.htm CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

Exhibit 2
 
BioLineRx Ltd.
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
AS OF SEPTEMBER 30, 2017
 

 
BioLineRx Ltd.
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
AS OF SEPTEMBER 30, 2017
 
TABLE OF CONTENTS
 
   
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BioLineRx Ltd.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION
(UNAUDITED)

   
December 31,
    
September 30,
  
   
2016
    
2017
  
   
in USD thousands
  
Assets
            
CURRENT ASSETS
            
Cash and cash equivalents
    
2,469
      
6,712
  
Short-term bank deposits
    
33,154
      
48,295
  
Prepaid expenses
    
255
      
282
  
Other receivables
    
223
      
558
  
Total current assets
    
36,101
      
55,847
  
                 
NON-CURRENT ASSETS
                
Long-term prepaid expenses
    
52
      
60
  
Long-term investment
    
-
      
1,000
  
Property and equipment, net
    
2,605
      
2,365
  
Intangible assets, net
    
181
      
6,855
  
Total non-current assets
    
2,838
      
10,280
  
Total assets
    
38,939
      
66,127
  
                 
Liabilities and equity
                
CURRENT LIABILITIES
                
Current maturities of long-term bank loan
    
93
      
93
  
Accounts payable and accruals:
                
Trade
    
2,590
      
4,349
  
Other
    
978
      
1,084
  
Total current liabilities
    
3,661
      
5,526
  
NON-CURRENT LIABILITIES
                
Long-term bank loan, net of current maturities
    
250
      
180
  
Warrants
    
1
      
1,396
  
Total non-current liabilities
    
251
      
1,576
  
COMMITMENTS AND CONTINGENT LIABILITIES
                
Total liabilities
    
3,912
      
7,102
  
                 
EQUITY
                
Ordinary shares
    
1,513
      
2,809
  
Share premium
    
199,567
      
239,606
  
Other comprehensive loss
    
(1,416
)
    
(1,416
)
Capital reserve
    
10,569
      
10,227
  
Accumulated deficit
    
(175,206
)
    
(192,201
)
Total equity
    
35,027
      
59,025
  
Total liabilities and equity
    
38,939
      
66,127
  
 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

1
BioLineRx Ltd.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE LOSS
(UNAUDITED)

   
Three months ended
September 30,
    
Nine months ended
September 30,
  
   
2016
    
2017
    
2016
    
2017
  
   
in USD thousands
    
in USD thousands
  
RESEARCH AND DEVELOPMENT EXPENSES, NET
    
(2,954
)
    
(5,654
)
    
(8,233
)
    
(13,306
)
SALES AND MARKETING EXPENSES
    
(409
)
    
(249
)
    
(928
)
    
(1,218
)
GENERAL AND ADMINISTRATIVE EXPENSES
    
(1,125
)
    
(1,154
)
    
(2,968
)
    
(3,028
)
OPERATING LOSS
    
(4,488
)
    
(7,057
)
    
(12,129
)
    
(17,552
)
NON-OPERATING INCOME (EXPENSES), NET
    
(14
)
    
(333
)
    
182
      
(342
)
FINANCIAL INCOME
    
172
      
153
      
403
      
914
  
FINANCIAL EXPENSES
    
(4
)
    
(6
)
    
(12
)
    
(15
)
                                 
NET LOSS AND COMPREHENSIVE LOSS
    
(4,334
)
    
(7,243
)
    
(11,556
)
    
(16,995
)
                                 
   
in USD
    
in USD
  
LOSS PER ORDINARY SHARE - BASIC AND DILUTED
    
(0.08
)
    
(0.07
)
    
(0.21
)
    
(0.20
)
                                 
WEIGHTED AVERAGE NUMBER OF SHARES USED IN CALCULATION OF LOSS PER ORDINARY SHARE
    
56,426,202
      
101,874,372
      
55,912,486
      
85,106,723
  


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

2
BioLineRx Ltd.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY
(UNAUDITED)

   
Ordinary shares
    
Share premium
    
Other comprehensive loss
    
Capital reserve
    
Accumulated deficit
    
Total
  
   
in USD thousands
  
BALANCE AT JANUARY 1, 2016
    
1,455
      
196,201
      
(1,416
)
    
10,735
      
(159,365
)
    
47,610
  
CHANGES FOR NINE MONTHS ENDED SEPTEMBER 30, 2016:
                                                
Issuance of share capital, net
    
4
      
1,591
      
-
      
-
      
-
      
1,595
  
Employee stock options exercised
    
1
      
128
      
-
      
(128
)
    
-
      
1
  
Employee stock options forfeited and expired
    
-
      
460
      
-
      
(460
)
    
-
      
-
  
Share-based compensation
                            
959
              
959
  
Comprehensive loss for the period
    
-
      
-
      
-
      
-
      
(11,556
)
    
(11,556
)
BALANCE AT SEPTEMBER 30, 2016
    
1,460
      
198,380
      
(1,416
)
    
11,106
      
(170,921
)
    
38,609
  
 
   
Ordinary shares
    
Share premium
    
Other comprehensive loss
    
Capital reserve
    
Accumulated deficit
    
Total
  
   
in USD thousands
  
BALANCE AT JANUARY 1, 2017
    
1,513
      
199,567
      
(1,416
)
    
10,569
      
(175,206
)
    
35,027
  
CHANGES FOR NINE MONTHS ENDED SEPTEMBER 30, 2017:
                                                
Issuance of share capital, net
    
1,295
      
38,388
      
-
      
-
      
-
      
39,683
  
Employee stock options exercised
    
1
      
326
      
-
      
(326
)
    
-
      
1
  
Employee stock options forfeited and expired
    
-
      
1,325
      
-
      
(1,325
)
    
-
      
-
  
Share-based compensation
    
-
      
-
      
-
      
1,309
      
-
      
1,309
  
Comprehensive loss for the period
    
-
      
-
      
-
      
-
      
(16,995
)
    
(16,995
)
BALANCE AT SEPTEMBER 30, 2017
    
2,809
      
239,606
      
(1,416
)
    
10,227
      
(192,201
)
    
59,025
  
 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


3
 
BioLineRx Ltd.
CONDENSED CONSOLIDATED INTERIM CASH FLOW STATEMENTS
(UNAUDITED)

   
Nine months ended
September 30,
  
   
2016
    
2017
  
   
in USD thousands
  
             
CASH FLOWS - OPERATING ACTIVITIES
            
Comprehensive loss for the period
    
(11,556
)
    
(16,995
)
Adjustments required to reflect net cash used in operating activities (see appendix below)
    
1,128
      
2,772
  
Net cash used in operating activities
    
(10,428
)
    
(14,223
)
                 
CASH FLOWS - INVESTING ACTIVITIES
                
Long-term investment
    
-
      
(1,000
)
Investments in short-term deposits
    
(28,978
)
    
(48,029
)
Maturities of short-term deposits
    
36,480
      
33,327
  
Purchase of property and equipment
    
(164
)
    
(109
)
Purchase of intangible assets
    
(24
)
    
(3,721
)
Net cash provided by (used in) investing activities
    
7,314
      
(19,532
)
                 
CASH FLOWS - FINANCING ACTIVITIES
                
Issuance of share capital and warrants, net of issuance costs
    
1,595
      
37,761
  
Repayments of bank loan
    
(72
)
    
(70
)
Proceeds from exercise of employee stock options
    
1
      
-
  
Net cash provided by financing activities
    
1,524
      
37,691
  
                 
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    
(1,590
)
    
3,936
  
CASH AND CASH EQUIVALENTS – BEGINNING OF PERIOD
    
5,544
      
2,469
  
EXCHANGE DIFFERENCES ON CASH AND CASH EQUIVALENTS
    
60
      
307
  
CASH AND CASH EQUIVALENTS - END OF PERIOD
    
4,014
      
6,712
  
 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4
 
BioLineRx Ltd.
APPENDIX TO CONDENSED CONSOLIDATED INTERIM CASH FLOW STATEMENTS
(UNAUDITED)
 
   
Nine months ended
September 30,
  
   
2016
    
2017
  
   
in USD thousands
  
             
Adjustments required to reflect net cash used in operating activities:
            
Income and expenses not involving cash flows:
            
Depreciation and amortization
    
368
      
381
  
Long-term prepaid expenses
    
4
      
(8
)
Interest and exchange rate differences on short-term deposits
    
(277
)
    
(439
)
Share-based compensation
    
959
      
1,309
  
Warrant issuance costs
    
-
      
17
  
Exchange differences on cash and cash equivalents
    
(60
)
    
(307
)
Loss (gain) on adjustment of warrants to fair value
    
(179
)
    
316
  
     
815
      
1,269
  
                 
Changes in operating asset and liability items:
                
Decrease (Increase) in prepaid expenses and other receivables
    
14
      
(362
)
Increase in accounts payable and accruals
    
299
      
1,865
  
     
313
      
1,503
  
     
1,128
      
2,772
  
                 
Supplementary information on interest received in cash
    
310
      
378
  
Supplementary non-cash investment (see Note 4b)
    
-
      
2,985
  
 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
 
5

BioLineRx Ltd.
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. BioLineRx and its subsidiaries (collectively, the “Company”) are engaged in the development of therapeutics, from pre-clinical development to advanced clinical trials, primarily in the fields of oncology and immunology.

In February 2007, BioLineRx listed its ordinary shares 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 been traded on the NASDAQ Capital Market.

In March 2017, the Company acquired Agalimmune Ltd. (“Agalimmune”), a privately-held company incorporated in the United Kingdom focusing on the field of immuno-oncology. See Notes 4b and 6.

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 in the past, the Company cannot determine with reasonable certainty when and if it will have sustainable profits.

b.
Approval of financial statements

The condensed consolidated interim financial statements of the Company as of September 30, 2017, and for the three and nine months then ended, were approved by the Board of Directors on November 21, 2017, and signed on its behalf by the Chairman of the Board, the Chief Executive Officer and the Chief Financial Officer.

NOTE 2 – BASIS OF PREPARATION
 
The Company’s condensed consolidated interim financial statements as of September 30, 2017 and for the three and nine 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 fair statement 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, 2016 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 nine months ended September 30, 2017 are not necessarily indicative of the results that may be expected for the entire fiscal year or for any other interim period.

6
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, 2016 and for the year then ended.

NOTE 4 – ISSUANCES OF SHARE CAPITAL AND WARRANTS

a.
Share purchase agreement with Lincoln Park Capital

In May 2014, BioLineRx and Lincoln Park Capital Fund (“LPC”) entered into a $20 million, 36-month purchase 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 nine months ended September 30, 2017, BioLineRx issued a total of 2,124,952 ADSs to LPC for aggregate gross proceeds of $2,130,000. In connection with these issuances, a total of 53,124 ADSs was issued to LPC as a commitment fee and a total of $43,000 was paid to Oberon Securities as a finder’s fee. The purchase agreement with LPC expired in accordance with its terms on July 1, 2017.

b.
Share issuance to Agalimmune shareholders

In March 2017, in connection with the Agalimmune acquisition, the Company issued 2,550,935 ADSs to the shareholders of Agalimmune. See Note 7.

c.
Underwritten public offering

In April 2017, the Company completed an underwritten public offering of approximately 33.8 million ADSs at a public offering price of $0.85 per ADS. The offering raised a total of $28.8 million, with net proceeds of approximately $26.2 million, after deducting fees and expenses.

7
BioLineRx Ltd.
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
 
NOTE 4 – ISSUANCES OF SHARE CAPITAL AND WARRANTS (cont.)

d.
Direct placement of share capital and warrants to BVF

In July 2017, the Company completed a direct placement to BVF Partners L.P., its largest shareholder, for aggregate gross proceeds of $9.6 million. The placement consisted of 8,495,575 ADSs, Series A warrants to purchase an additional 2,973,451 ADSs and Series B warrants to purchase an additional 2,973,451 ADSs. The Series A warrants have an exercise price of $2.00 per ADS and are exercisable for a term of four years. The Series B warrants have an exercise price of $4.00 per ADS and are also exercisable for a term of four years. Net proceeds from the transaction were approximately $9.5 million, after deducting fees and expenses.

The warrants issued have been classified as a non-current financial liability due to a net settlement provision. This liability is initially recognized at its fair value on the date the contract is entered into and subsequently accounted for at fair value at each balance sheet date. The fair value changes are charged to non-operating income and expense in the statement of comprehensive loss.

The fair value of the warrants is computed using the Black and Scholes option pricing model. The fair value of the warrants upon issuance was computed based on the then current price of an ADS, a risk-free interest rate of 1.66% and an average standard deviation of 57.8%. The fair value of the warrants as of September 30, 2017 was based on the then current price of an ADS, a risk-free interest rate of 1.79% and an average standard deviation of 57.5%.

The amount of the direct placement consideration initially allocated to the warrants was approximately $1.1 million. Total issuance costs allocable to the warrants was not material. The change in fair value from the date of issuance through September 30, 2017, amounting to approximately $0.3 million, has been recorded as non-operating expense on the statement of comprehensive loss.

8
BioLineRx Ltd.
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)

NOTE 5 – SHAREHOLDERS’ EQUITY
 
As of December 31, 2016 and September 30, 2017, share capital is composed of ordinary shares, as follows:

   
Number of ordinary shares
  
   
December 31,
    
September 30,
  
   
2016
    
2017
  
             
Authorized share capital
    
150,000,000
      
250,000,000
  
                 
Issued and paid-up share capital
    
57,033,355
      
104,115,833
  
 
   
In USD and NIS
  
   
December 31,
    
September 30,
  
   
2016
    
2017
  
             
Authorized share capital (in NIS)
    
15,000,000
      
25,000,000
  
                 
Issued and paid-up share capital (in NIS)
    
5,703,336
      
10,411,583
  
                 
Issued and paid-up share capital (in USD)
    
1,513,294
      
2,809,076
  

NOTE 6 – LONG-TERM INVESTMENT
 
The long-term investment represents the Company’s $1.0 million investment, completed in September 2017, in iPharma (H.K.) Limited (“iPharma”), a joint venture with I-Bridge Capital, a Chinese venture capital fund focused on developing innovative therapies in China. iPharma is focusing on the development of innovative clinical and pre-clinical therapeutic candidates to serve the Chinese and global healthcare markets. iPharma expects to raise the funds needed to develop its pipeline primarily from third-party investors.

NOTE 7 – AGALIMMUNE ACQUISITION
 
In March 2017, the Company acquired substantially all the outstanding shares of Agalimmune Ltd. for initial consideration of approximately $6.0 million, of which $3.0 million was in cash and the remainder in the Company’s ADSs. The acquisition expanded the Company’s pipeline to include Agalimmune’s primary asset, AGI-134, a novel immuno-oncology agent for various cancer indications at the near-clinical stage of development. Due in part to the early stage of development of AGI-134 and other elements evaluated by the Company’s management as required by IFRS, the acquisition has been accounted for in the Company’s financial statements as an asset transaction. Total costs associated with bringing the asset into the Company’s pipeline include additional expenses of approximately $0.7 million, resulting in a total increase in intangibles reflected in the Company’s financial statements of approximately $6.7 million as of September 30, 2017.

Additional consideration may be due to Agalimmune shareholders based on certain development and commercial milestones, including future sales of Agalimmune products.
 

9
BioLineRx Ltd.
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
 
NOTE 8 – EVENT SUBSEQUENT TO THE BALANCE SHEET DATE
 
In October 2017, the Company entered into an at-the-market (“ATM”) sales agreement with BTIG, LLC (“BTIG”), pursuant to which the Company may, at its sole discretion, offer and sell through BTIG, acting as sales agent, ADSs having an aggregate offering price of up to $30 million throughout the period during which the ATM facility remains in effect. The Company will pay BTIG a commission of 3.0% of the gross proceeds from the sale of ADSs under the facility. As of the date of these financial statements, the available balance under the facility is $30 million.
 
10