Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulations S-T Rule 101(b)(1):_____

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulations S-T Rule 101(b)(7):_____

 

For Immediate Release

BioLineRx Reports Third Quarter 2020 Financial Results

and Provides Corporate Update

- Phase 3 GENESIS study in SCM showed statistically significant positive results for

primary endpoint in interim analysis; enrollment halted early; topline data in H1 2021 –

- Interim analysis for Phase 2b BLAST study in consolidation AML did not demonstrate

statistically significant effect in primary endpoint; study will not continue;

Company exploring alternative development options in AML –

- Phase 2a COMBAT/KEYNOTE-202 study in PDAC on track to report full results,

including progression free survival and overall survival data, by year end -

- Management to hold conference call today, November 23, at 10:00 am EST –

TEL AVIV, Israel, November 23, 2020 -- BioLineRx Ltd. (NASDAQ: BLRX) (TASE: BLRX), a late clinical-stage biopharmaceutical company focused on oncology, today reports its financial results for the quarter ended September 30, 2020 and provides a corporate update.

•

Conducted interim analysis for Phase 2b BLAST study in consolidation AML; analysis did not demonstrate statistically significant effect in primary endpoint; DMC recommended not to continue the study.

“The past several months have been very exciting for BioLineRx, highlighted by the very positive result of the interim analysis of our Phase 3 GENESIS study in stem cell mobilization” stated Philip Serlin, Chief Executive Officer of BioLineRx. “A statistically significant benefit in the primary endpoint was observed by combining motixafortide with the standard of care, G-CSF, leading the DMC to recommend that we cease study enrollment at 122 patients, instead of the 177 originally planned. We look forward to publishing final results of the study in the first half of next year, as we continue to advance motixafortide toward registration.

“With regard to the Phase 2b BLAST study in consolidation AML, based on the results of the interim analysis, the DMC recommended not to continue the study. Although we are disappointed by this outcome, particularly following the positive results that we previously observed in our Phase 1/2a study of motixafortide with cytarabine in relapsed/refractory AML, we continue to believe in the relevance of CXCR4 as a viable target in other AML treatment lines, such as rr/AML and induction treatment. We will decide on next steps in AML once we’ve had a chance to review and analyze the unblinded data, including detailed biomarker and subpopulation data, from this study. I would also like to express our gratitude to the University of Halle, as study sponsor, and Dr. Carsten Müller-Tidow, as principal study investigator, as well as the other investigators and the patients who made this important trial possible.

“Finally, in the coming weeks, we plan to announce full results, including progression free survival (PFS) and overall survival (OS) data, on all study patients from the triple combination arm of our Phase 2a COMBAT/KEYNOTE-202 study in second-line PDAC. We previously shared preliminary positive overall response rate and disease control rate data, on approximately half of the patients enrolled in this study arm, at last year’s ESMO IO conference, and we remain optimistic that the combination of motixafortide and KEYTRUDA^®, together with chemotherapy, will prove beneficial to survival as well.

“The significant and growing body of data that we are compiling on motixafortide, including the strikingly positive results of the interim analysis in the GENESIS phase 3 study reported last month, reassure us about the unique characteristics of motixafortide as the best-in-class CXCR4 antagonist, and confirm our belief that this promising compound can potentially serve as the backbone of combination therapies to treat a broad range of solid tumor and hematological cancers,” Mr. Serlin concluded.

Upcoming Expected Milestones

Financial Results for the Quarter Ended September 30, 2020

Research and development expenses for the three months ended September 30, 2020 were $3.5 million, a decrease of $2.1 million compared to $5.6 million for the comparable period in 2019. The decrease resulted primarily from termination of the BATTLE clinical study for motixafortide in 2019 and from lower expenses associated with the AGI-134 study, as well as a decrease in payroll and related expenses due to a Company-wide salary reduction related to the COVID-19 pandemic carried out in the second and third quarters of 2020. Research and development expenses for the nine months ended September 30, 2020 were $13.5 million, a decrease of $1.7 million, compared to $15.2 million for the nine months ended September 30, 2019. The decrease resulted primarily from lower expenses associated with the motixafortide COMBAT clinical trial and the AGI-134 study, as well as a decrease in payroll and related expenses due to a Company-wide salary reduction related to the COVID-19 pandemic mentioned above.

Sales and marketing expenses for three months ended September 30, 2020 were $0.3 million, an increase of $0.1 million compared to $0.2 million for the comparable period in 2019. The increase resulted primarily from consultancy services and market research for motixafortide offset by a decrease in payroll and related expenses related to a reduction in headcount. Sales and marketing expenses for the nine months ended September 30, 2020 were $0.7 million, similar to the comparable period in 2019.

General and administrative expenses for the three months ended September 30, 2020 were $0.9, similar to the comparable period in 2019. General and administrative expenses for the nine months ended September 30, 2020 were $2.8 million, similar to the comparable period in 2019.

The Company's operating loss for the three months ended September 30, 2020 amounted to $4.6 million, compared to an operating loss of $6.6 million for the comparable period in 2019. The Company’s operating loss for the nine months ended September 30, 2020 was $17.1 million, compared to $18.7 million for the comparable period in 2019.

Non-operating income (expenses) for the three- and nine-month periods ended September 30, 2020 and 2019 primarily relate to fair-value adjustments of warrant liabilities on the Company’s balance sheet, offset by warrant offering expenses and issuance expenses of the Company’s ATM program.

Net financial expenses for the three months ended September 30, 2020 amounted to $0.3 million compared to net financial expenses of $0.4 million for the comparable period in 2019. Net financial expenses for both periods primarily relate to interest paid on loans, offset by investment income earned on bank deposits. Net financial expenses for the nine months ended September 30, 2020 amounted to $0.9 million, similar to the comparable period in 2019. Net financial expenses for both periods primarily relate to interest paid on loans, offset by investment income earned on bank deposits.

The Company's net loss for the three months ended September 30, 2020 amounted to $4.6 million, compared with a net loss of $3.9 million for the comparable period in 2019. The Company’s net loss for the nine months ended September 30, 2020 amounted to $18.0 million, compared with a net loss of $15.6 million for the comparable period in 2019.

The Company held $20.8 million in cash, cash equivalents and short-term bank deposits as of September 30, 2020.

Net cash used in operating activities was $17.8 million for the nine months ended September 30, 2020, compared with net cash used in operating activities of $17.2 million for the nine months ended September 30, 2019. The $0.6 million increase in net cash used in operating activities during the nine-month period in 2020 was primarily the result of the decrease in accounts payable and accruals in the 2020 period.

Net cash provided by investing activities was $8.1 million for the nine months ended September 30, 2020, compared to net cash provided by investing activities of $2.1 million for the nine months ended September 30, 2019. The changes in cash flows from investing activities relate primarily to investments in, and maturities of, short-term bank deposits.

Net cash provided by financing activities was $10.9 million for the nine months ended September 30, 2020, compared to net cash provided by financing activities of $16.6 million for the nine months ended September 30, 2019. The cash flows in 2020 primarily reflect the May and June financings and the net proceeds from the Company’s ATM program, offset by repayments of the loan from Kreos Capital. The cash flows in 2019 primarily reflect the underwritten public offering of our ADSs in February 2019, as well as net proceeds from the ATM facility.

Conference Call and Webcast Information

BioLineRx will hold a conference call today, November 23, 2020 at 10:00 a.m. EST. To access the conference call, please dial +1-866-744-5399 from the US or +972-3-918-0664 internationally. The call will also be available via webcast and can be accessed through the Investor Relations page of BioLineRx’s website. Please allow extra time prior to the call to visit the site and download any necessary software to listen to the live broadcast.

A replay of the conference call will be available approximately two hours after completion of the live conference call on the Investor Relations page of BioLineRx’s website. A dial-in replay of the call will be available until November 25, 2020; please dial +1-877-456-0009 from the US or +972-3-925-5929 internationally.

(Tables follow)

About BioLineRx

BioLineRx Ltd. (NASDAQ/TASE: BLRX) is a late clinical-stage biopharmaceutical company focused on oncology. The Company’s business model is to in-license novel compounds, develop them through clinical stages, and then partner with pharmaceutical companies for further clinical development and/or commercialization.

The Company’s lead program, Motixafortide (BL-8040), is a cancer therapy platform currently being evaluated in a Phase 3 study in stem cell mobilization for autologous bone-marrow transplantation, and for which positive data in respect of the study’s primary endpoint was recently announced from an interim analysis, resulting in early cessation of recruitment. Motixafortide is also being evaluated in a Phase 2a study for the treatment of pancreatic cancer in combination with KEYTRUDA^® and chemotherapy under a collaboration agreement with MSD.

BioLineRx is developing a second oncology program, AGI-134, an immunotherapy treatment for multiple solid tumors that is currently being investigated in a Phase 1/2a study.

For additional information on BioLineRx, please visit the Company’s website at www.biolinerx.com, where you can review the Company’s SEC filings, press releases, announcements and events. BioLineRx industry updates are also regularly updated on Facebook, Twitter, and LinkedIn.

Various statements in this release concerning BioLineRx's future expectations constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include words such as "may," "expects," "anticipates," "believes," and "intends," and describe opinions about future events. These forward-looking statements involve known and unknown risks and uncertainties that may cause the actual results, performance or achievements of BioLineRx to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Factors that could cause BioLineRx's actual results to differ materially from those expressed or implied in such forward-looking statements include, but are not limited to: the initiation, timing, progress and results of BioLineRx's preclinical studies, clinical trials and other therapeutic candidate development efforts; BioLineRx's ability to advance its therapeutic candidates into clinical trials or to successfully complete its preclinical studies or clinical trials; BioLineRx's receipt of regulatory approvals for its therapeutic candidates, and the timing of other regulatory filings and approvals; the clinical development, commercialization and market acceptance of BioLineRx's therapeutic candidates; BioLineRx's ability to establish and maintain corporate collaborations; BioLineRx's ability to integrate new therapeutic candidates and new personnel; the interpretation of the properties and characteristics of BioLineRx's therapeutic candidates and of the results obtained with its therapeutic candidates in preclinical studies or clinical trials; the implementation of BioLineRx's business model and strategic plans for its business and therapeutic candidates; the scope of protection BioLineRx is able to establish and maintain for intellectual property rights covering its therapeutic candidates and its ability to operate its business without infringing the intellectual property rights of others; estimates of BioLineRx's expenses, future revenues, capital requirements and its needs for additional financing; risks related to changes in healthcare laws, rules and regulations in the United States or elsewhere; competitive companies, technologies and BioLineRx's industry; risks related to the coronavirus outbreak; and statements as to the impact of the political and security situation in Israel on BioLineRx's business. These and other factors are more fully discussed in the "Risk Factors" section of BioLineRx's most recent annual report on Form 20-F filed with the Securities and Exchange Commission on March 12, 2020. In addition, any forward-looking statements represent BioLineRx's views only as of the date of this release and should not be relied upon as representing its views as of any subsequent date. BioLineRx does not assume any obligation to update any forward-looking statements unless required by law.

BioLineRx Ltd.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION

(UNAUDITED)

BioLineRx Ltd.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE LOSS

(UNAUDITED)

BioLineRx Ltd.

CONDENSED INTERIM STATEMENTS OF CHANGES IN EQUITY

(UNAUDITED)

BioLineRx Ltd.

CONDENSED INTERIM STATEMENTS OF CHANGES IN EQUITY

(UNAUDITED)

 

BioLineRx Ltd.

CONDENSED CONSOLIDATED INTERIM CASH FLOW STATEMENTS

(UNAUDITED)

 

 

BioLineRx Ltd.

APPENDIX TO CONDENSED CONSOLIDATED INTERIM CASH FLOW STATEMENTS

(UNAUDITED)

 

---

Exhibit 2

BioLineRx Ltd.

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(UNAUDITED)

AS OF SEPTEMBER 30, 2020

 

BioLineRx Ltd.

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(UNAUDITED)

AS OF SEPTEMBER 30, 2020

TABLE OF CONTENTS

BioLineRx Ltd.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION

(UNAUDITED)

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

BioLineRx Ltd.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE LOSS

(UNAUDITED)

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

BioLineRx Ltd.

CONDENSED INTERIM STATEMENTS OF CHANGES IN EQUITY

(UNAUDITED)

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

BioLineRx Ltd.

CONDENSED INTERIM STATEMENTS OF CHANGES IN EQUITY

(UNAUDITED)

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

 

BioLineRx Ltd.

CONDENSED CONSOLIDATED INTERIM CASH FLOW STATEMENTS

(UNAUDITED)

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

BioLineRx Ltd.

APPENDIX TO CONDENSED CONSOLIDATED INTERIM CASH FLOW STATEMENTS

(UNAUDITED)

 

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

NOTE 1 –    GENERAL INFORMATION

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, primarily in clinical stages, with a focus on the field of oncology.

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 also 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, with a focus on the field of immuno-oncology.

Although it has generated revenues from out-licensing transactions in the past, the Company has incurred accumulated losses in the amount of $266 million through September 30, 2020, and cannot determine with reasonable certainty when and if it will have sustainable profits. Management believes that the Company’s current cash and other resources will be sufficient to fund its projected cash requirements through the end of 2021. 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 or raise additional funding. Management regularly evaluates various financing alternatives, including funding its clinical development activities via out-licensing or collaborations, and fundraising in the public or private equity markets. However, there is no certainty about the Company’s ability to obtain such funding.

The condensed consolidated interim financial statements of the Company as of September 30, 2020, and for the nine months then ended, were approved by the Board of Directors on November 23, 2020, 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, 2020 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 International Financial Reporting Standards (“IFRS”). The condensed consolidated interim financial statements should be read in conjunction with the Company’s annual financial statements as of December 31, 2019 and for the year then ended and their accompanying notes, which have been prepared in accordance with IFRS. The results of operations for the three and nine months ended September 30, 2020 are not necessarily indicative of the results that may be expected for the entire fiscal year or for any other interim period.

a.

At-the-market (“ATM”) sales agreements

b.

Financings

c.

Stock options

d.

Share capital

		Number of ordinary shares
		December 31,				September 30,
		2019				2020
Authorized share capital			500,000,000				1,500,000,000
Issued and paid-up share capital			171,269,528				296,508,550

		In USD and NIS
		December 31,				September 30,
		2019				2020
Authorized share capital (in NIS)			50,000,000				150,000,000
Issued and paid-up share capital (in NIS)			17,126,953				29,650,855
Issued and paid-up share capital (in USD)			4,691,734				8,280,633

---

Exhibit 3

OPERATING AND FINANCIAL REVIEW

 

You should read the following discussion of our operating and financial condition and prospects in conjunction with the financial statements and the notes thereto included elsewhere in this 6-K, as well as in our Annual Report on Form 20-F filed on March 12, 2020, or the Annual Report.

 

Forward Looking Statements

 

The following discussion contains “forward-looking statements,” including statements regarding expectations, beliefs, intentions or strategies for the future. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. In some cases, you can identify forward-looking statements by terms including “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “will,” “would,” and similar expressions intended to identify forward-looking statements. Forward-looking statements reflect our current views with respect to future events and are based on assumptions, and are subject to risks and uncertainties. You should not put undue reliance on any forward-looking statements. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those listed below as well as those discussed in the Annual Report (particularly those in “Item 3. Key Information – Risk Factors”), our Report on Form 6-K filed on May 20, 2020, or the First Quarter Report, our Report on Form 6-K filed on August 6, 2020, or the Second Quarter Report, and elsewhere in this Report on Form 6-K. Unless we are required to do so under U.S. federal securities laws or other applicable laws, we do not intend to update or revise any forward-looking statements.

 

Factors that could cause our actual results to differ materially from those expressed or implied in such forward-looking statements include, but are not limited to:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk Factors

 

Except as set forth below, there are no material changes to the risk factors previously disclosed in our Annual Report and our Second Quarter Report.

 

Our business is subject to risks arising from a widespread outbreak of an illness or any other communicable disease, or any other public health crisis, such as the COVID-19 pandemic, which has impacted and could continue to impact our business.

 

The novel coronavirus outbreak, or COVID-19, has affected segments of the global economy and may materially affect our operations, including potentially interrupting our supply chain, clinical trial and commercialization activities. COVID-19 originated in Wuhan, China, in December 2019 and was declared a pandemic by the World Health Organization in March 2020. The virus has since spread to multiple countries, including to the United States, Europe and Israel, where we currently have our therapeutic candidates manufactured and conduct our clinical trials. The COVID-19 pandemic has negatively impacted the global economy, disrupted global supply chains and created significant volatility and disruption of financial markets. For example, due to clinical operating issues associated with the COVID-19 pandemic, we previously reported the expectation of a delay of approximately nine months in the phase 1/2a study we are currently conducting for AGI-134, our second lead compound. The uncertainty surrounding the severity and continued spread of the coronavirus may result in a period of prolonged business disruption. COVID-19 may continue to impact our future operations, including potential interruptions to supply chains, clinical trials, commercialization activities and regulatory reviews and approvals. COVID-19 may also affect our employees and employees and operations at suppliers that may result in delays or disruptions in supply. In addition, a recession or market correction resulting from the spread of COVID-19 could materially affect our business and the value of our shares. Additionally, if the COVID-19 pandemic has a significant impact on our business and financial results for an extended period of time, our liquidity and cash resources could be negatively impacted. Capital and credit markets have been disrupted by the crisis and exchanges have experienced increased volatility. As a result, access to additional financing may be challenging and is largely dependent upon evolving market conditions and other factors. We have taken precautionary measures, including, for example, a Company-wide salary reduction related to the COVID-19 pandemic carried out in the second and third quarters of 2020, and may take additional measures, intended to minimize the risk of COVID-19 to our employees and operations. The extent of the impact of COVID-19 on our operational and financial performance, including our ability to execute our business strategies in the expected time frame or at all, will depend on future developments, such as the duration and spread of the COVID-19 pandemic and related restrictions and implications, all of which are uncertain and cannot be predicted.

 

Overview

 

General

 

We are a late clinical-stage biopharmaceutical development company with a strategic focus on oncology. Our current development and commercialization pipeline consists of two clinical-stage therapeutic candidates − motixafortide (BL-8040), a novel peptide for the treatment of solid tumors, acute myeloid leukemia, or AML, and stem cell mobilization, and AGI-134, an immuno-oncology agent in development for solid tumors. In addition, we have an off-strategy, legacy therapeutic product called BL-5010 for the treatment of skin lesions. We have generated our pipeline by systematically identifying, rigorously validating and in-licensing therapeutic candidates that we believe exhibit a high probability of therapeutic and commercial success. To date, except for BL-5010, none of our therapeutic candidates have been approved for marketing or sold commercially. Our strategy includes commercializing our therapeutic candidates through out-licensing arrangements with biotechnology and pharmaceutical companies and evaluating, on a case by case basis, the commercialization of our therapeutic candidates independently.

 

Main Therapeutic Candidates

 

The following is a description of our main programs:

 

 

Solid tumors

 

 

 

 

AML

 

 

 

Stem cell mobilization

 

 

 

 

In August 2020, we announced a decision to perform an interim analysis on approximately 65% of the original study sample size, primarily based on a significantly lower-than-anticipated patient-dropout rate in the study. In October 2020, we announced positive results from the interim analysis. Based on the statistically significant evidence favoring treatment with motixafortide, the study’s independent DMC issued a recommendation to us that patient enrollment may be ceased immediately, without the need to recruit all 177 patients originally planned for the study. In accordance with the DMC’s recommendation, study enrollment was complete at 122 patients. Full results for the study, including secondary and exploratory efficacy endpoints, as well as extended safety data, will be announced after the last patient enrolled reaches 100 days of follow-up post-transplantation, which is expected to occur in the first half of 2021.

 

Other matters

 

 

 

 

 

Funding

 

We have funded our operations primarily through the sale of equity securities (both in public and private offerings), funding received from the Israel Innovation Authority, or IIA, payments received under out-licensing arrangements, and interest earned on investments. We expect to continue to fund our operations over the next several years through our existing cash resources, potential future milestone and royalty payments that we may receive from our existing out-licensing agreement, potential future upfront, milestone or royalty payments that we may receive from out-licensing transactions for our other therapeutic candidates, interest earned on our investments and additional capital to be raised through public or private equity offerings or debt financings. As of September 30, 2020, we held $20.8 million of cash, cash equivalents and short-term bank deposits.

 

Recent Company Developments

 

Motixafortide as therapy for COVID-19-induced inflammatory lung disorders, including acute respiratory distress syndrome (ARDS)

 

Over the last few months, we have been evaluating motixafortide as a potential therapy for COVID-19-induced inflammatory lung disorders, including ARDS. In this regard, substantial data is emerging regarding the involvement of neutrophils, neutrophil extracellular traps (NETs), monocytes and macrophages in the development of ARDS secondary to COVID-19 and other viral infections; as well as the key involvement of CXCR4 as a mediator of those cells in the inflamed pulmonary tissue. Based on the scientific data indicating the importance of blocking the CXCR4/CXCL12 axis during ARDS, we believe that motixafortide may be of potential benefit for patients with ARDS.

 

Following our initial evaluation, in November 2020, we announced initiation of a Phase 1b study in patients with ARDS secondary to COVID-19 and other respiratory viral infections. The study is an investigator-initiated study, led by Wolfson Medical Center, in Israel, to evaluate motixafortide in patients hospitalized with ARDS. The primary endpoint of the study is to assess the safety of motixafortide in these patients; respiratory parameters and inflammatory biomarkers will be assessed as exploratory endpoints. Up to 25 patients will be enrolled in the study, with a preliminary analysis planned after ten patients have completed the initial treatment period. Results of the preliminary analysis are expected in the first half of 2021.

 

Recent financings

 

In May 2020, we sold to certain institutional investors an aggregate of 5,142,859 ADSs in a registered direct offering at $1.75 per ADS, resulting in gross proceeds of approximately $9,000,000. In addition, we issued to the investors unregistered warrants to purchase up to an aggregate of 5,142,859 ADSs in a private placement. The warrants are immediately exercisable and will expire two and one-half years from issuance at an exercise price of $2.25 per ADS, subject to adjustment as set forth therein. We paid an aggregate of $630,000 in placement agent fees plus certain expenses and issued unregistered placement agent warrants to purchase up to an aggregate of 257,143 ADS on substantially the same terms as the warrants except they have an exercise price of $2.1875 per ADS.

 

In June 2020, we sold to certain institutional investors an aggregate of 2,510,286 ADSs in a registered direct offering at $1.75 per ADS, resulting in gross proceeds of approximately $4,400,000. In addition, we issued to the investors unregistered warrants to purchase up to an aggregate of 2,510,286 ADSs in a private placement. The warrants are immediately exercisable and will expire two and one-half years from issuance at an exercise price of $2.25 per ADS, subject to adjustment as set forth therein. We paid an aggregate of $308,000 in placement agent fees plus certain expenses and issued unregistered placement agent warrants to purchase up to an aggregate of 125,514 ADS on substantially the same terms as the warrants except they have an exercise price of $2.1875 per ADS.

 

In September 2020 we entered into an at-the-market offering agreement, or the Offering Agreement, with H.C. Wainwright & Co., LLC, as agent, or H.C. Wainwright, pursuant to which we may offer and sell, from time to time, at our option, up to $25.0 million of our ADSs through an “at-the-market” equity offering program under which H.C. Wainwright will act as sales agent. Pursuant to a prospectus supplement dated September 25, 2020, we sold ADSs having an aggregate offering price of approximately $1.75 million at various times during the months of October and November 2020. Under an amended prospectus supplement dated November 13, 2020, we may sell up to an additional $4.43 million of our ADSs under the Sales Agreement. See discussion under “Liquidity and Capital Resources” for further information.

 

Revenues

 

Our revenues to date have been generated primarily from milestone payments under previously existing out-licensing agreements.

 

We expect our revenues, if any, for the next several years to be derived primarily from future payments under our current out-licensing agreement with Perrigo and other potential collaboration arrangements, including future royalties on product sales.

 

Research and Development

 

Our research and development expenses consist primarily of salaries and related personnel expenses, fees paid to external service providers, up-front and milestone payments under our license agreements, patent-related legal fees, costs of preclinical studies and clinical trials, drug and laboratory supplies and costs for facilities and equipment. We primarily use external service providers to manufacture our product candidates for clinical trials and for the majority of our preclinical and clinical development work. We charge all research and development expenses to operations as they are incurred. We expect our research and development expense to remain our primary expense in the near future as we continue to develop our therapeutic candidates.

 

The following table identifies our current major research and development projects:

 

We expect that a large percentage of our research and development expense in the future will be incurred in support of our current and future preclinical and clinical development projects. Due to the inherently unpredictable nature of preclinical and clinical development processes, we are unable to estimate with any certainty the costs we will incur in the continued development of the therapeutic candidates in our pipeline for potential commercialization. Clinical development timelines, the probability of success and development costs can differ materially from expectations. We expect to continue to test our therapeutic candidates in preclinical studies for toxicology, safety and efficacy, and to conduct additional clinical trials for each therapeutic candidate. If we are not able to enter into an out-licensing arrangement with respect to any therapeutic candidate prior to the commencement of later stage clinical trials, we may fund the trials for the therapeutic candidate ourselves.

 

While we are currently focused on advancing each of our product development projects, our future research and development expenses will depend on the clinical success of each therapeutic candidate, as well as ongoing assessments of each therapeutic candidate’s commercial potential. In addition, we cannot forecast with any degree of certainty which therapeutic candidates may be subject to future out-licensing arrangements, when such out-licensing arrangements will be secured, if at all, and to what degree such arrangements would affect our development plans and capital requirements.

 

As we obtain results from clinical trials, we may elect to discontinue or delay clinical trials for certain therapeutic candidates or projects in order to focus our resources on more promising therapeutic candidates or projects. Completion of clinical trials by us or our licensees may take several years or more, but the length of time generally varies according to the type, complexity, novelty and intended use of a therapeutic candidate.

 

The cost of clinical trials may vary significantly over the life of a project as a result of differences arising during clinical development, including, among others:

 

 

 

 

 

 

 

 

 

We expect our research and development expenses to remain our most significant cost as we continue the advancement of our clinical trials and preclinical product development projects and place significant emphasis on in-licensing new therapeutic candidates. The lengthy process of completing clinical trials and seeking regulatory approval for our therapeutic candidates requires expenditure of substantial resources. Any failure or delay in completing clinical trials, or in obtaining regulatory approvals, could cause a delay in generating product revenue and cause our research and development expenses to increase and, in turn, have a material adverse effect on our operations. Due to the factors set forth above, we are not able to estimate with any certainty when we would recognize any net cash inflows from our projects.

 

Sales and Marketing Expenses

 

Sales and marketing expenses consist primarily of compensation for employees in business development and marketing functions. Other significant sales and marketing costs include costs for marketing and communication materials, professional fees for outside market research and consulting, legal services related to partnering transactions and travel costs.

 

General and Administrative Expenses

 

General and administrative expenses consist primarily of compensation for employees in executive and operational functions, including accounting, finance, legal, investor relations, information technology and human resources. Other significant general and administration costs include facilities costs, professional fees for outside accounting and legal services, travel costs, insurance premiums and depreciation.

 

Non-Operating Expense and Income

 

Non-operating expense and income includes fair-value adjustments of liabilities on account of the warrants issued in equity financings we carried out in July 2017, February 2019, May 2020 and June 2020, as well as from debt financing we received in October 2018. These fair-value adjustments are highly influenced by our share price at each period end (revaluation date). Non-operating expense and income also includes issuance expenses of the ATM and the pro-rata share of issuance expenses from the placements related to the warrants, as well as the capital gain from realization of our investment in iPharma, a joint venture our holdings in which we sold in April 2018. Sales-based royalties and other revenue from the license agreement with Perrigo have also been included as part of non-operating income, as the out-licensed product is not an integral part of our strategy and the amounts are not material.

 

Financial Expense and Income

 

Financial expense and income consists of interest earned on our cash, cash equivalents and short-term bank deposits; interest on loans, bank fees and other transactional costs. In addition, it may also include gains/losses on foreign exchange hedging transactions, which we carry out from time to time to protect against a portion of our NIS-denominated expenses (primarily compensation) in relation to the dollar.

 

Significant Accounting Policies and Estimates

 

We describe our significant accounting policies more fully in Note 2 to our consolidated financial statements for the year ended December 31, 2019.

 

The discussion and analysis of our financial condition and results of operations is based on our financial statements, which we prepare in accordance with IFRS as endorsed by the IASB. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported revenues and expenses during the reporting periods. On an ongoing basis, we evaluate such estimates and judgments. We base our estimates on historical experience and on various assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

 

Results of Operations

 

Revenues

 

We did not record any revenues during each of the three-month and nine-month periods ended September 30, 2020 and 2019.

 

Cost of revenues

 

We did not record any cost of revenues during each of the three-month and nine-month periods ended September 30, 2020 and 2019.

 

Operating Results Comparison between Periods

 

Revenues and cost of revenues

 

See discussion under “Results of Operations - Overview” above.

 

Research and development expenses