EX-99.2 BYLAWS 3 s110158_ex99-2.htm EXHIBIT 99.2

 

Exhibit 99.2

 

INTEC PHARMA LTD. 

CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

(UNAUDITED) 

March 31, 2018

  

 

 

INTEC PHARMA LTD. 

CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

(UNAUDITED)

March 31, 2018

  

TABLE OF CONTENTS

 

    Page

CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS IN U.S. DOLLARS IN THOUSANDS ($): 

   
Consolidated Statements of Financial Position   2
Consolidated Statements of Comprehensive Loss   3
Consolidated Statements of Changes in Equity   4
Consolidated Statements of Cash Flows   5-6
Notes to the Condensed Consolidated Interim Financial Statements   7-11

 

 

 

 

 

 

 

 

 

INTEC PHARMA LTD.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION

(Unaudited) 

 

   December 31,   March 31, 
  

2017 

  

2018 

 
  

U.S. dollars in thousands 

 
           
A s s e t s          
CURRENT ASSETS:          
Cash and cash equivalents   53,324    41,134 
Financial assets at fair value through profit or loss   1,825    1,706 
Restricted bank deposits   69    68 
Other receivables   1,125    1,223 
TOTAL  CURRENT ASSETS   56,343    44,131 
           
NON-CURRENT ASSETS-          
Property and equipment   8,206    10,022 
TOTAL  ASSETS   64,549    54,153 
           

Liabilities and equity 

          
CURRENT LIABILITIES -          
Accounts payable and accruals:          
Trade   1,854    3,575 
Other   3,893    1,782 
TOTAL CURRENT LIABILITIES   5,747    5,357 
NON-CURRENT LIABILITIES -          
COMMITMENTS AND CONTINGENT LIABILITIES          
TOTAL  LIABILITIES   5,747    5,357 
           

EQUITY: 

          
Ordinary shares   727    727 
Share premium   148,968    148,968 
Currency translation differences   (378)   (378)
Accumulated deficit   (90,515)   (100,521)
TOTAL  EQUITY   58,802    48,796 
TOTAL  LIABILITIES AND EQUITY   64,549    54,153 

 

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

 

 2

 

 

INTEC PHARMA LTD.

CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE LOSS

(Unaudited) 

 

   Three months ended
March 31
 
   2017   2018 
   U.S. dollars in thousands 
RESEARCH AND DEVELOPMENT EXPENSES   (3,917)   (9,215)
LESS - PARTICIPATION IN RESEARCH AND DEVELOPMENT EXPENSES       335 
RESEARCH AND DEVELOPMENT EXPENSES, net   (3,917)   (8,880)
GENERAL AND ADMINISTRATIVE EXPENSES   (1,011)   (1,910)
OTHER GAINS (LOSSES), net   96    (73)
OPERATING LOSS   (4,832)   (10,863)
FINANCIAL INCOME   156    203 
FINANCIAL EXPENSES   (8)   (6)
FINANCIAL INCOME, net   148    197 
LOSS BEFORE TAXES ON INCOME   (4,684)   (10,666)
TAXES ON INCOME       (63)
LOSS AND COMPREHENSIVE LOSS   (4,684)   (10,729)
           
    $ 
BASIC AND DILUTED LOSS PER ORDINARY SHARE   0.40    0.41 

 

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

 

 3

 

 

(Continued) - 1

 

INTEC PHARMA LTD.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY

(Unaudited) 

 

   Ordinary shares                 
   Number of
shares
   Issued and
paid-up
share capital
   Share
premium
   Currency translation differences   Accumulated deficit   Total 
BALANCE AT JANUARY 1, 2018   26,075,770    727    148,968    (378)   (90,515)   58,802 
CHANGES IN THE THREE-MONTH PERIOD ENDED MARCH 31, 2018:                              
Share-based compensation                       723    723 
Comprehensive loss for the period                       (10,729)   (10,729)
BALANCE AT MARCH 31, 2018   26,075,770    727    148,968    (378)   (100,521)   48,796 
                               
BALANCE AT JANUARY 1, 2017   11,448,191    727    84,980    (378)   (62,625)   22,704 
CHANGES IN THE THREE-MONTH PERIOD ENDED MARCH 31, 2017:                              
Share-based compensation                       216    216 
Proceeds of issuance shares, net of issuance costs   2,289,638         9,525              9,525 
Comprehensive loss for the period                       (4,684)   (4,684)
BALANCE AT MARCH 31, 2017   13,737,829    727    94,505    (378)   (67,093)   27,761 

 

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

 

 4

 

 

(Continued) - 1

 

INTEC PHARMA LTD.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS

(Unaudited) 

 

   Three months ended
March 31
 
   2017   2018 
   U.S. dollars  in thousands 
CASH FLOWS FROM OPERATING ACTIVITIES:          
Comprehensive loss   (4,684)   (10,729)
Adjustments to reconcile loss and comprehensive loss to net cash used in operating activities (see appendix A)   488    474 
Net cash used in operating activities   (4,196)   (10,255)
           
CASH FLOWS FROM INVESTING ACTIVITIES:          
Purchase of property and equipment   (332)   (77)
Advances payments for property and equipment       (1,945)
Proceeds from disposal  of financial assets at fair value through profit or loss, net   179    46 
Proceeds from sale of property and equipment   7     
Net cash used in investing activities   (146)   (1,976)
           
CASH FLOWS FROM FINANCING ACTIVITIES -          
Issuance of shares, net of issuance costs   9,525     
           
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS   5,183    (12,231)
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD   16,376    53,324 
EXCHANGE DIFFERENCES ON CASH AND CASH EQUIVALENTS   28    41 
CASH AND CASH EQUIVALENTS - END OF PERIOD   21,587    41,134 

 

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

 5

 

 

(Concluded) - 2

 

INTEC PHARMA LTD.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS

(Unaudited) 

 

  

Three months ended

March 31

 
  

2017

  

2018

 
  

U.S. dollars in thousands

 
APPENDIX A:          
           
Adjustments to reconcile loss and comprehensive loss to net cash used in operating activities:          
           
Income and expenses not involving cash flows:          
Depreciation   198    206 
Changes in the fair value of derivative financial instruments   (69)    
Exchange differences on cash and cash equivalents   (28)   (41)
Exchange differences on restricted deposits   (4)   1 
Losses (gains) on financial assets at fair value through profit or loss   (98)   73 
Loss on sale of property and equipment   2     
Share-based compensation to employees and service providers   216    723 
    217    962 
Changes in operating asset and liability items:          
    Decrease (increase) in other receivables   99    (98)
    Increase (decrease) in accounts payable and accruals   172    (390)
    271    (488)
    488    474 
APPENDIX B:          

Information regarding investment activities not involving cash flows -

          
Liability with respect to property purchase   141     
Supplementary information to the statement of cash flows -          
Interest received   38    117 

 

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

 

 6

 

 

INTEC PHARMA LTD.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(Unaudited) 

 

NOTE 1 - GENERAL: 

 

a.General:

 

1)Intec Pharma Ltd. (“Intec”) 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 is a limited liability public company incorporated and domiciled in Israel. The registered address of its offices is 12 Hartom St., Jerusalem, Israel. 

 

Intec’s ordinary shares are being traded on the Tel-Aviv Stock Exchange Ltd. (“TASE”) and on the Nasdaq Capital Market (“Nasdaq”). 

 

In September 2017, Intec incorporated a wholly-owned subsidiary in the United States of America in the State of Delaware – Intec Pharma Inc. (the “Subsidiary”). The Subsidiary was incorporated mainly to provide Intec executive and management services, including business development, medical affairs and investor relationship activities outside of Israel. 

 

2)Intec together with its Subsidiary (the “Company”) engaged in research and development activities and has not yet generated revenues from its operations. Accordingly, there is no assurance that the Company’s operations will generate positive cash flows. As of March 31, 2018, the cumulative losses of the Company were approximately USD 100.5 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’s management estimates that its cash resources, as of the date of approval of the financial statements, will allow the Company to complete its Phase III clinical trial for AP-CD/LD. However, management estimates that further fund raising will be required in order for the Company to complete the research and development of all of its product candidates including the manufacturing activities of the AP-CD/LD in the foreseeable future. As a result, there is substantial doubt about the Company’s ability to continue as a going concern.

 

The Company plans to fund its future operations through submissions of applications for grants from private funds, license agreements with third parties and raising capital from the public and/or private investors and/or institutional investors. There is no assurance, however, that the Company will be successful in obtaining the level of financing needed for its operations and the research and development of its product candidates. If the Company is unsuccessful in securing sufficient financing, it may need to make the necessary changes to its operations to reduce the level of expenditures in line with available resources. 

 

The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets and the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. 

 

3)On April 13, 2018, the Company completed an underwritten public offering of its ordinary shares on the Nasdaq. The Company raised, together with the exercise of part of the underwriting over-allotment option, a total of approximately $34.9 million (net of underwriting discounts, commissions and other offering expenses in the amount of $2.6 million). For more details see note 9.

 

 7

 

 

INTEC PHARMA LTD.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (continued)

(Unaudited)

 

NOTE 1 – GENERAL (continued):

 

b.Approval of consolidated financial statements

 

These condensed consolidated interim financial statements were approved by the Board of Directors on May 14, 2018. 

 

NOTE 2 - BASIS OF PREPARATION 

 

The Company’s condensed consolidated interim financial statements as of March 31, 2018 and for the three months then ended (the “condensed consolidated interim financial statements”) have been prepared in accordance with International Accounting Standard IAS 34, “Interim Financial Reporting” (“IAS 34”). These condensed interim consolidated financial statements, which are unaudited, do not include all disclosures necessary for a complete statement of financial position, results of operations, and cash flow in conformity with International Financial Reporting Standards (“IFRS”). The condensed consolidated interim financial statements should be read in conjunction with the annual financial statements as of December 31, 2017 and for the year then ended and their accompanying notes, which have been prepared in accordance with IFRS as published by the International Accounting Standards Board (“IASB”). The results of operations for the three months ended March 31, 2018 are not necessarily indicative of the results that may be expected for the entire fiscal year or for any other interim period. 

 

NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES:  

 

a.The accounting policies and calculation methods applied in the preparation of the condensed consolidated interim financial statements are consistent with those applied in the preparation of the annual financial statements as of December 31, 2017 and for the year then ended, except for the adoption of International Financial Reporting Standard No. 9 “Financial Instruments, effective from January 1, 2018, which did not have a material effect on the Company’s financial statements.

 

b.International Financial Reporting Standard No. 16 “Leases”, which is not yet in effect, and the Company did not elect to early adopt, was disclosed in the 2017 annual financial statements.

 

NOTE 4 - CRITICAL ACCOUNTING ESTIMATES 

 

As part of the preparation of the condensed consolidated interim financial statements, Company management is required to make estimates that affect the value of assets, liabilities, income, expenses and certain disclosures included in the Company’s condensed consolidated interim financial statements. By their very nature, such estimates are subjective and complex and consequently may differ from actual results.

 

The critical accounting estimates applied in the preparation of the condensed consolidated interim financial statements are consistent with those applied in the preparation of the annual financial statements as of December 31, 2017. 

 

NOTE 5 - FINANCIAL INSTRUMENTS:

 

a.As of March 31, 2018 and as of December 31, 2017, the Company holds financial assets at fair value through profit and loss in an amount of approximately $1.7 million and $1.8 million, respectively, which are included in Level 1.

 

b.The fair value of restricted bank deposits, other receivables and other payables which constitute financial assets and financial liabilities, approximates their carrying amount.

 

 8

 

 

INTEC PHARMA LTD.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (continued)

(Unaudited) 

 

NOTE 6 - EQUITY: 

 

Share-based payment to employees: 

 

1)The following are the grants of options to employees:

 

Date of grant 

  

Number of
options
granted
 

  

Exercise price
per option
(USD)
 

  

Fair value on
grant date- USD
in thousands
 

  

Expiration date  

January 2018    135,000    5.19    389   January 2025
February 2018    865,000    6.10 - 6.67    2,089   February 2025
March 2018    75,000    6.40 -  6.45    209   March 2025

 

Vesting conditions of all of the above options are service conditions and the options will vest over a three-year period, with one third of the options vesting at the end of the first year from the date of grant, and the remaining vesting in 8 equal quarterly tranches, subsequent to the first year from the grant date. 

 

Each 1 option is exercisable into 1 ordinary share. 

 

The fair value of all of the options was calculated using the Black and Scholes options pricing model, and based on the following assumptions: 

 

Date of grant 

  

Share price on date of grant- in USD 

  

Expected dividend 

 

Expected volatility 

  

Risk free interest* 

  

Expected term 

January 2018    6.05   None   46.32%    2.3%  5 years
February 2018    5.70 - 6.10   None   45.87% - 46.47%    2.5% - 2.7%   5 years
March 2018    6.40 - 6.45   None   46.03%    2.6%   5 years

  

*    The risk-free interest rate was determined on the basis of the yield rates to maturity of unlinked government bonds bearing a fixed interest rate, whose maturity dates correspond to the expected exercise dates of the options. 

 

2)During the three-month period ended March 31, 2018, options to purchase 11,082 ordinary shares granted to employees were forfeited or expired.

 

 9

 

 

INTEC PHARMA LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 

 

NOTE 7 - COMMITMENTS AND CONTINGENT LIABILITIES: 

 

a.In April 2017, the Company engaged with an international manufacturer for ordering a large scale automated production line for manufacturing Accordion Pills in the amount of approximately € 7.5 million. The order covers engineering, manufacture and assembly of the automated production line. As of March 31, 2018, the Company had transferred payments of approximately € 5.25 million (approximately $ 6.2 million) and recognized it as advances for property and equipment.

 

b.In January 2018, the Company entered into a Feasibility and Option agreement with Novartis Pharmaceuticals to explore using the Accordion Pill platform for a proprietary Novartis compound. Under the agreement and the research plan, the Company’s activities will be funded by Novartis subject to the achievement of agreed milestones.

 

c.In March 2018, the Company entered into a Term Sheet for Manufacturing Services with an international manufacturer (the “Manufacturer”) for the manufacture of AP-CD/LD. Under the Term Sheet, the Company will bear the costs incurred by the Manufacturer to acquire the production equipment for AP-CD/LD, however such amount will later be reimbursed to the Company by the Manufacturer in the form of a reduction in the purchase price of the product. The Term Sheet contains several termination rights which are expected to be included in a definitive manufacturing and supply agreement.

 

NOTE 8 - TRANSACTIONS AND BALANCES WITH RELATED PARTIES: 

 

Key management includes members of the Board of Directors and the Chief Executive Officer. 

 

a.        Transactions with related parties:

 

   Three months ended March 31  
   2017   2018 
Key management compensation expenses:  U.S. dollars in thousands 
Salaries and short-term employee benefits   164    218 
Long term employment benefits   11     
Share-based compensation expenses   114    213 
    289    431 

  

b.       Balances with related parties: 

   December 31,
2017
   March 31,
2018
 
  

U.S. dollars in thousands

 
Statement of financial position items -        
current liabilities -  Accounts payable and accruals - other   190    91 

 

 10

 

 

INTEC PHARMA LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

 

NOTE 9 - EVENT SUBSEQUENT TO MARCH 31, 2018

 

On April 13, 2018, the Company completed an underwritten public offering of its ordinary shares on the Nasdaq, pursuant to which the Company issued 6,750,000 ordinary shares with no par value at a price of $5.25 per ordinary share. On May 10, 2018, the underwriters partially exercised their over-allotment option and purchased 400,000 additional ordinary shares. The total net proceeds were approximately $34.9 million, after deducting underwriting discounts, commissions and other offering expenses.

 

 

 

 

 

 

 

 11