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FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT
 12 Months Ended
Dec. 31, 2023
Disclosure of detailed information about financial instruments [abstract]  
FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT
NOTE 3 – FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT
 
Based on assessments by Company management, the Company’s exposure to credit risk as of December 31, 2023, is immaterial (see Note 3b). The activities of the Company expose it to market risk, primarily as a result of currency risk.
 
The Company’s Finance Department is responsible for carrying out risk management activities in accordance with policies approved by its Board of Directors. In this regard, the Finance Department identifies, defines and assesses financial risk in close cooperation with other Company departments. The Board of Directors provides written guidelines for overall risk management, as well as written policies dealing with specific areas, such as exchange rate risk, interest rate risk, credit risk, use of financial instruments and investment of excess cash.
 
 
a.
Market risk
 
1)
Concentration of currency risk
 
The Company’s activities are partly denominated in non-dollar currencies (primarily the New Israeli Shekel, or “NIS,” and the Euro), which exposes the Company to risks resulting from changes in exchange rates.
 
The effect of fluctuations in various exchange rates on the Company’s income and equity is as follows:
 
   
December 31, 2023
  
   
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
    
(132
)
    
(69
)
    
1,457
      
77
      
162
  
Short term deposit
    
(251
)
    
(131
)
    
2,758
      
145
      
306
  
Other receivables
    
(31
)
    
(16
)
    
344
      
18
      
38
  
Trade payables
    
243
      
127
      
(2,670
)
    
(141
)
    
(297
)
Other payables
    
169
      
89
      
(1,853
)
    
(98
)
    
(207
)
Total NIS-linked balances
    
(2
)
    
0
      
36
      
1
      
2
  
Euro-linked trade payables
    
(117
)
    
(61
)
    
(1,283
)
    
67
      
142
  
Total
    
(119
)
    
(61
)
    
(1,247
)
    
68
      
144
  
 
   
December 31, 2022
  
   
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
    
(416
)
    
(218
)
    
4,573
      
241
      
508
  
Other receivables
    
(66
)
    
(34
)
    
721
      
38
      
80
  
Trade payables
    
38
      
20
      
(416
)
    
(22
)
    
(46
)
Other payables
    
114
      
60
      
(1,257
)
    
(66
)
    
(140
)
Total NIS-linked balances
    
(330
)
    
(172
)
    
3,621
      
191
      
402
  
Euro-linked trade payables
    
(144
)
    
(76
)
    
(1,590
)
    
84
      
177
  
Total
    
(474
)
    
(248
)
    
2,031
      
275
      
579
  
 
The Company also maintains cash and cash equivalent balances in other currencies in amounts that are not material.
 
Set forth below is information on the linkage of monetary items:
 
   
December 31, 2022
    
December 31, 2023
  
   
Dollar
    
NIS
    
Other currencies
    
Dollar
    
NIS
    
Other Currencies
  
   
USD in thousands
    
USD in thousands
  
Assets:
                                    
Current assets:
                                    
Cash and cash equivalents
    
5,685
      
4,573
      
329
      
2,768
      
1,457
      
30
  
Short term bank deposits
    
40,495
      
-
      
-
      
35,981
      
2,758
      
-
  
Other receivables
    
-
      
721
      
-
      
480
      
350
      
-
  
     
46,180
      
5,294
      
329
      
39,229
      
4,565
      
30
  
Liabilities:
                                                
Current liabilities:
                                                
Current maturities of long-term loans
    
1,542
      
-
      
-
      
3,145
      
-
      
-
  
Accounts payable and accruals:
                                                
Trade
    
4,359
      
416
      
2,191
      
6,663
      
2,670
      
1,536
  
Other
    
487
      
1,257
      
-
      
1,500
      
1,853
      
-
  
Non-current liabilities
                                                
Long-term loans, net of current maturities
    
8,626
      
-
      
-
      
6,628
      
-
      
-
  
     
15,014
      
1,673
      
2,191
      
17,936
      
4,523
      
1,536
  
Net balance
    
31,166
      
3,621
      
(1,862
)
    
21,293
      
42
      
(1,506
)
 
  2)
Fair value of financial instruments
 
As of December 31, 2023, the financial instruments of the Company consist of non-derivative assets and liabilities (primarily working capital items, deposits, and current and long-term loans), as well as warrants classified as a liability.
 
With regard to non-derivative assets and liabilities, given their nature, the fair value of the financial instruments included in working capital is generally close or identical to their carrying amount.
 
With regard to the warrants classified as a non-current financial liability, see Note 12c. With regard to long-term loans, see Note 11.
 
  3)
Exposure to market risk and management thereof
 
In the opinion of Company management, the market risk to which the Company is exposed is primarily related to currency risk exposure, as mentioned above. Additionally, Company management does not consider the interest rate risk mentioned in paragraph 4 below to be material.
 
  4)
Interest rate risk
 
Company management does not consider interest rate risk to be material, as the Company holds deposits whose fair value and/or cash flows are not materially affected by changes in interest rates.
 
 
b.
Credit risk
 
Credit risk is managed at the Company level. These risks relate to cash and cash equivalents, bank deposits trade receivables, and other receivables.
 
The Company’s cash, cash equivalents and short-term bank deposits at December 31, 2022, and 2023 were deposited with highly rated major Israeli and U.S. banks. In the Company’s opinion, the credit risk associated with these balances is remote.
 
The Company considers its maximum exposure to credit risk to be as follows:
 
   
December 31,
  
   
2022
    
2023
  
   
in USD thousands
  
Assets:
            
Cash and cash equivalents
    
10,587
      
4,255
  
Short-term bank deposits
    
40,495
      
38,739
  
Trade receivables
    
-
      
358
  
Other receivables
    
721
      
830
  
Total
    
51,803
      
44,182
  
 
 
c.
Liquidity risk
 
Company management monitors rolling forecasts of the Company’s liquidity reserves on the basis of anticipated cash flows and seeks to maintain the liquidity balances at a level that is sufficient to meet its needs.
 
Although the Company has succeeded in generating revenues from a number of out-licensing transactions, and has recently launched commercialization of its lead program, motixafortide, in the last quarter of 2023, it cannot determine with reasonable certainty if and when it will become profitable on a current basis. Management believes that the Company’s current cash and other resources will be sufficient to fund its projected cash requirements into 2025. However, in the event that the Company does not begin to generate sustainable cash flows from its operating activities in the future, the Company will need to carry out significant cost reductions and/or raise additional funding. See also Note 1c regarding the material uncertainty that may cast significant doubt about the Company’s ability to continue as a going concern.
 
 
d.
Fair value of financial instruments
 
The different levels of valuation of financial instruments are defined as follows:
 
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).
 
The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible, and also considers counterparty credit risk, in its assessment of fair value. The fair value of the financial instruments included in the working capital of the Company, as well as the long-term loan, is usually identical or close to their carrying value. The fair value of the warrants is based on Level 3 measurements.
 
The fair value of the warrants, calculated based on the Black-Scholes model, was $11,932,000 as of December 31, 2023.
 
For more information on the parameters used to value the warrants, see Note 12c.
 
 
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, 2021
    
5,832
      
10,218
      
16,050
  
Changes during the year 2021:
                        
Principal and interest payments
    
(3,814
)
    
-
      
(3,814
)
Share premium resulting from exercise of warrants
            
(10,295
)
    
(10,295
)
Amounts recognized through profit and loss
    
739
      
1,936
      
2,675
  
Balance as of December 31, 2021
    
2,757
      
1,859
      
4,616
  
Changes during the year 2022:
                        
Net proceeds
    
9,126
      
9,075
      
18,201
  
Principal and interest payments
    
(3,177
)
    
-
      
(3,177
)
Amounts recognized through profit and loss
    
1,462
      
(6,425
)
    
(4,963
)
Balance as of December 31, 2022
    
10,168
      
4,509
      
14,677
  
Changes during the year 2023:
                        
Principal payments or received
    
(1,543
)
    
-
      
(1,543
)
Amounts recognized through profit and loss
    
1,148
      
11,054
      
12,202
  
Share premium resulting from exercise of warrants
    
-
      
(3,631
)
    
(3,631
)
Balance as of December 31, 2023
    
9,773
      
11,932
      
21,705
  
 
 
f.
Fair value measurement of warrants using significant unobservable inputs (level 3)
 
The following table presents the changes in level 3 instruments for the years ended December 31, 2021, 2022 and 2023:
 
   
Warrants
  
   
in USD thousands
  
Balance as of January 1, 2021
    
10,218
  
Changes during 2021:
        
Exercises
    
(10,295
)
Changes in fair value through profit and loss
    
1,936
  
Balance as of December 31, 2021
    
1,859
  
Changes during 2022:
        
Issuances
    
9,075
  
Changes in fair value through profit and loss
    
(6,425
)
Balance as of December 31, 2022
    
4,509
  
Changes during 2023:
        
Exercises
    
(3,631
)
Changes in fair value through profit and loss
    
11,054
  
Balance as of December 31, 2023
    
11,932