Entera Bio Ltd
For the period ended Jun 30, 2024. Filed Aug 9, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 9, 2024
Extracted filing text, with the paragraph anchors used by the comparison.
See the whole filing, with its images and exhibitsContents
Notes to Condensed Consolidated Financial Statements (unaudited)
NOTE 1 - DESCRIPTION OF BUSINESS
| a. | Entera Bio Ltd. (collectively with its subsidiary, the “Company”) was incorporated on September 30, 2009 and commenced operations on June 1, 2010. On January 8, 2018, the Company incorporated its wholly owned subsidiary, Entera Bio Inc., in Delaware, United States. The Company is focused on developing first-in-class oral tablet formats of peptides or protein replacement therapies. The Company focuses on underserved, chronic medical conditions for which oral administration of a protein therapy has the potential to significantly shift a treatment paradigm. |
The Company’s most advanced product candidate, EB613, oral PTH (1-34), is being developed as the first oral, osteoanabolic (bone building) once-daily tablet treatment for post-menopausal women with low bone mineral density (“BMD”) and high-risk osteoporosis with no prior fracture. The Company is preparing to initiate a Phase 3 registrational study for EB613 following the FDA’s expected qualification of a quantitative BMD endpoint.
The EB612 program is being developed as the first oral PTH(1-34) tablet peptide replacement therapy for hypoparathyroidism. Additionally, the Company intends to license its N-Tab™ technology to biopharmaceutical companies for use with their proprietary compounds.
| b. | The Company's ordinary shares, NIS 0.0000769 par value per share (“ordinary shares”), are listed on the Nasdaq Capital Market under the symbol “ENTX”. |
| c. | Because the Company is engaged in research and development activities, it has not derived significant income from its activities and has incurred an accumulated deficit since our inception in 2010 in the amount of $108.5 thousand as of June 30, 2024 and negative cash flows from operating activities. The Company's management is of the opinion that its available funds as of June 30, 2024 will allow the Company to operate under its current plans into the third quarter of 2025. This assumes the use of the Company’s capital to fund its ongoing operations, including regulatory expenses and optimization related to the preparation of the EB613 phase 3 study, research and development, the completion of an additional Phase 1 PK study related to the Company’s new generation platform and the GLP-2/OXM collaborative research the Company is conducting with OPKO Biologics, Inc., a subsidiary of OPKO Health Inc. The Company’s current capital resources do not include the capital required to fund the Company's proposed Phase 3 study for EB613 in osteoporosis. These factors raise substantial doubt as to the Company's ability to continue as a going concern. Management continually evaluates various financing alternatives in the public and private equity markets, debt financing and strategic collaborations, as the Company will need to finance future research and development activities, general and administrative expenses and working capital through capital raising. However, there is no certainty that the Company will be able to obtain such funding. These consolidated financial statements do not include any adjustments that may be necessary should the Company be unable to continue as a going concern. |
| d. | In October 2023, Hamas terrorists infiltrated Israel’s southern border from the Gaza Strip and conducted a series of attacks on civilian and military targets. Hamas also launched extensive rocket attacks on the Israeli population and industrial centers located along Israel’s border with the Gaza Strip and in other areas within the State of Israel. These attacks resulted in thousands of deaths and injuries, and Hamas additionally kidnapped many Israeli civilians and soldiers. Following the attack, Israel’s security cabinet declared war against Hamas and commenced a military campaign against Hamas. In addition, in April 2024, Israel experienced a direct attack from Iran, involving hundreds of drones and missiles launched towards various parts of the country, mostly targeting military bases. The Israeli defense systems, aided by international allies, successfully intercepted the majority of these attacks, minimizing physical damage and casualties. Additionally, since October 2023, the Houthis, a military organization based in Yemen, have launched a series of attacks on global shipping routes in the Red Sea, as well as direct attacks on various parts of Israel. Despite the effectiveness of Israel's missile defense systems, such incidents contribute to regional instability and could potentially escalate into broader conflicts with Iran and its proxies in the Middle East, affecting Israel's political and trade relations, especially with neighboring countries and global allies. The situation remains fluid, and the potential for further escalation exists. While the Company has a few employees who are in active military service, the ongoing war with Hamas and the conflict with Iran and its proxies have not, to date, materially impacted the Company’s business or operations. Furthermore, the Company does not expect any delays to any of its programs as a result of such conflicts. While R&D and management are located in Israel, other core activities including clinical, regulatory and our supply chain are not. However, the Company cannot currently predict the intensity or duration of Israel’s war against Hamas and/or the conflict with Iran and its proxies, nor can it predict how such conflicts will ultimately affect the Company’s business and operations or Israel’s economy in general. |
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
| a. | Basis of presentation of the financial statements |
These unaudited interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP") for interim financial statements. Accordingly, they do not include all of the information and notes required by U.S. GAAP for annual financial statements. In the opinion of management, these unaudited condensed consolidated financial statements reflect all adjustments, which include normal recurring adjustments, necessary for a fair statement of the Company’s consolidated financial position as of June 30, 2024, and the consolidated results of operations, statements of changes in shareholders' equity for the three and six-month periods ended June 30, 2024 and 2023 and cash flows for the six-month periods ended June 30, 2024 and 2023. The consolidated results for the three and six-month periods ended June 30, 2024 are not necessarily indicative of the results to be expected for the year ending December 31, 2024. These unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements of the Company as of and for the year ended December 31, 2023, as filed with the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission on March 8, 2024.
| b. | Loss per share |
Basic loss per share is computed on the basis of net loss for the period divided by the weighted average number of outstanding ordinary shares and pre-funded warrants during the period. Diluted loss per share is based upon the weighted average number of ordinary shares and ordinary share equivalents outstanding when dilutive. Ordinary share equivalents include outstanding stock options, warrants and restricted share units (“RSUs”), which are included under the treasury stock method when dilutive. The calculation of diluted loss per share does not include options and warrants exercisable into 16,785,585 shares and 7,360,374 shares for the six months ended June 30, 2024 and 2023, respectively, and 17,068,031 shares and 7,604,195 shares for the three months ended June 30, 2024 and 2023, respectively, because the effect would have been anti-dilutive.
| c. | Newly issued and recently adopted accounting pronouncements: |
Recently issued accounting pronouncements not yet adopted In December 2023, the FASB issued ASU 2023-09 “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”. This guidance is intended to enhance the transparency and decision-usefulness of income tax disclosures. The amendments in ASU 2023-09 address investor requests for enhanced income tax information primarily through changes to disclosure regarding rate reconciliation and income taxes paid both in the United States and in foreign jurisdictions. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024 on a prospective basis. Early adoption is permitted, with the option to apply the standard retrospectively. The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements disclosures. In November 2023, the FASB issued ASU 2023-07 “Segment Reporting: Improvements to Reportable Segment Disclosures”. This guidance expands public entities’ segment disclosures primarily by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable. The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements disclosures.
NOTE 3 - EQUITY AND SHARE-BASED COMPENSATION
| 1. | Changes in Share Capital: |
| a. | During the six months ended June 30, 2024, 89,820 warrants issued in connection with the Company’s December 2023 private placement (the “December 2023 PIPE”) were exercised for 89,820 ordinary shares for a total consideration of $90. |
| b. | On September 2, 2022, the Company entered into a sales agreement with Leerink Partners LLC (formerly known as SVB Securities LLC), as sales agent, to implement an ATM program under which the Company may from time to time offer and sell up to 5,000,000 ordinary shares (the “Leerink ATM Program”). During the three months ended June 30, 2024 the Company issued 236,126 ordinary shares pursuant to the Leerink ATM Program for net proceeds of $601 at a weighted average price of $2.54 per ordinary share. |
| c. | During the three months ended June 30, 2024, a former employee of the Company exercised 447,292 options for 447,292 ordinary shares for total consideration of $555. |
| 2. | Share-based Compensation: |
| a. | On January 1, 2024, an aggregate of 758,331 options to purchase ordinary shares were granted to seven non-executive members of the Board of Directors with an exercise price of $0.60 per share. The options vest in equal quarterly installments over a one-year period that began on January 1, 2024. This grant was approved by the shareholders of the Company on October 4, 2021. The fair value of the options at the date of grant was $295. |
| b. | On February 1, 2024, the Company entered into a consulting agreement with an investor relations consulting firm. Under the terms of the agreement, the Company agreed to pay a monthly fee of $5 and issued to the consultant 25,000 RSUs. The RSUs vest in five equal monthly installments over a five-month period that began on February 1, 2024. As of June 30, 2024, all 25,000 RSUs had vested. The fair value of the RSUs was $22. |
| c. | On February 15, 2024, the Company entered into a consulting agreement with an additional investor relations firm. Under the terms of the agreement, the Company agreed to issue the consultant 50,000 RSUs. The RSUs vest in five equal monthly installments over a five-month period that started on February 15, 2024. As of June 30, 2024, 40,000 RSUs had vested. The fair value of the RSUs was $53. |
| d. | On April 19, 2024, the board of directors approved the following options grants: |
| (i) | options to purchase an aggregate of 768,000 ordinary shares were granted to employees, executive officers and a service provider with an exercise price of $1.99 per share. The fair value of the options at the grant date was $1,098; and |
| (ii) | options to purchase an aggregate of 500,000 ordinary shares were granted to the Company’s Chief Executive Officer with an exercise price of $1.99 per share which was the share price on grant date. This grant was subject to shareholder approval, which was obtained at a meeting of the Company’s shareholders held on July 31, 2024. |
These options vest over three years from the date of grant;33.33% vest on the first anniversary of the date of grant and the remaining 66.67% of the options will vest in eight equal quarterly installments following the first anniversary of the grant date.
| (iii) | options to purchase an aggregate of 90,000 ordinary shares were granted to two advisory board members with an exercise price of $1.99 per share which was the share price on the grant date. These options vested immediately at the grant date. The fair value of the options at the grant date was $124. |
In addition, the board of directors approved the grant of 209,548 RSUs to executive officers (or entities controlled by such executive officers) in lieu of an annual cash bonus, of which 124,121 RSUs that were granted to the CEO and was subject to shareholder approval, which was obtained at a meeting of the Company’s shareholders held on July 31, 2024. The RSUs vest in four equal quarterly installments over a one-year period that started on April 19, 2024. The fair value of the RSUs was $417 using the fair value of the RSU’s on the board approval date.
The fair value of each option granted was estimated at the date of grant using the Black-Scholes option-pricing model, using the following assumptions:
| Six monthsended June 30, 2024 | Six monthsended June 30, 2023 | |
|---|---|---|
| Exercise price | $0.60-$1.99 | $0.73-$0.79 |
| Dividend yield | - | - |
| Expected volatility | 74.28%-84.5% | 74%-76% |
| Risk-free interest rate | 3.93%-4.66% | 3.58%-3.98% |
| Expected life - in years | 5.3-5.87 | 5.3-6.11 |
NOTE 4 - SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION:
Balance sheets:
| June 30, | December 31, | |
|---|---|---|
| Other current assets: | 2024 | 2023 |
| Prepaid expenses | 268 | 34 |
| Advance income tax | 69 | 69 |
| Restricted deposits | 78 | 66 |
| Other | 67 | 69 |
| 482 | 238 |
| June 30, | December 31, | |
|---|---|---|
| Accrued expenses and other payables: | 2024 | 2023 |
| Employees and employees related | 166 | 159 |
| Provision for vacation | 260 | 215 |
| Accrued expenses | 644 | 500 |
| 1,070 | 874 |
NOTE 5 - EVENTS DURING THE PERIOD
In April 2024, the Company entered into a material transfer and research project agreement (the “research services agreement”) with a third party. According to the agreement, the third party will pay the Company a monthly payment for the research services, as well as reimbursement for external expenses based on an agreed budget.
The Company recognize revenues according to ASC 606, "Revenues from Contracts with Customers”.
Revenues attributed to the research services agreement are recognized over the duration of the research services agreement.
The Company concluded that because the research services provided under the research services agreement have no alternative use (because, in nature, these services are unique to each customer) and the Company has the right to receive payment for performance completed to date, at all times during the contract term, revenue is recognized over the time using the input model method which is labor hours expended and time lapsed.
For the three months ended June 30, 2024, the Company recognized total revenues of $57 from this agreement.
ITEM 2
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.