Pluri Inc
For the period ended Sep 30, 2024. Filed Nov 12, 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.
Sep 30, 2024 · Filed Nov 12, 2024
Extracted filing text, with the paragraph anchors used by the comparison.
See the whole filing, with its images and exhibitsContents
Notes to Interim Condensed Consolidated Financial Statements (Unaudited)
U.S. Dollars in thousands (except share and per share amounts)
NOTE 1: - GENERAL
| a. | Pluri Inc. (formally known as Pluristem Therapeutics Inc.), a Nevada corporation, was incorporated on May 11, 2001. Pluri Inc.’s common shares trade on the Nasdaq Capital Market and Tel-Aviv Stock Exchange under the symbol “PLUR”. Pluri Inc. has a wholly owned subsidiary, Pluri-Biotech Ltd. (formerly known as Pluristem Ltd.), or the Subsidiary, which is incorporated under the laws of the State of Israel. In January 2020, the Subsidiary established a wholly owned German Subsidiary, Pluristem GmbH, or the German Subsidiary which is incorporated under the laws of Germany. In January 2022, the Subsidiary established a new subsidiary, Ever After Foods Ltd., or Ever After Foods formerly known as Plurinuva Ltd. Ever After Foods is incorporated under the laws of Israel, which followed the execution of the collaboration agreement with Tnuva Food Industries – Agricultural Cooperative in Israel Ltd., through its fully owned subsidiary, Tnuva Food-Tech Incubator (2019), Limited Partnership, or Tnuva. In March 2024, the Subsidiary established a new wholly owned subsidiary, Coffeesai Ltd., or Coffeesai which is incorporated under the laws of Israel, to develop cultivated coffee. Pluri Inc., the Subsidiary, the German Subsidiary, Ever After Foods and Coffeesai are referred to as the “Company” or “Pluri.” The Subsidiary, the German Subsidiary, Coffeesai and Ever After Foods are referred to as the “Subsidiaries.” |
| b. | The Company is a bio-technology company with an advanced cell-based technology platform, which operates in one operating segment. The Company has developed a unique three-dimensional technology platform for cell expansion with an industrial scale in-house Good Manufacturing Practice cell manufacturing facility. Pluri currently uses its technology in the field of regenerative medicine, food technology and agricultural technology and launched a Contract Development and Manufacturing Organization or CDMO business and plans to utilize its technology in industries and verticals that have a need for a mass scale and cost-effective cell expansion platform. Pluri is focused on the research, development and manufacturing of cell-based products and the business development of cell therapeutics and cell-based technologies providing potential solutions for various industries. |
| c. | The Company has incurred an accumulated deficit of approximately $426,354 and incurred recurring operating losses and negative cash flows from operating activities since inception. As of September 30, 2024, the Company’s total shareholders’ equity deficit amounted to $5,283. During the three-month period ended September 30, 2024, the Company incurred losses of $6,036 and its negative cash flow from operating activities was $4,064. As of September 30, 2024, the Company’s cash balances (cash and cash equivalents, short-term bank deposits, restricted cash and restricted bank deposits) totaled $26,677. The Company plans to continue to finance its operations from its current resources, by entering into licensing or other commercial, partnerships and collaboration agreements, by providing CDMO services to clients, from grants and contracts to support its research and development activities and from sales of its equity securities. The Company’s management believes that its current resources together with its existing operating plan, are sufficient for the Company to meet its obligations as they come due at least for a period of twelve months from the date of the issuance of these interim unaudited condensed consolidated financial statements. During 2024, the Company also implemented a cost reduction and efficiency plan. There is no assurance, however, that the Company will be able to obtain an adequate level of financial resources that are required for the long-term development and commercialization of its products. In the case the Company is unable to obtain the required level of financing, operations may need to be scaled down or discontinued. On April 30, 2020, the German Subsidiary entered into a finance contract, or the Finance Contract, with the EIB, pursuant to which the German Subsidiary obtained a loan in an amount of €20 million, or the Loan. The amount received is due on June 1, 2026 and bears an annual interest of 4% to be paid with the principal of the Loan. As of September 30, 2024, the linked principal and interest accrued balance was of $25,365 and is presented among long-term liabilities (see note 4). |
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
U.S. Dollars in thousands (except share and per share amounts)
NOTE 2: - SIGNIFICANT ACCOUNTING POLICIES
| a. | Unaudited Interim Financial Information |
The accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles, or GAAP, for interim financial information and with the instructions to Form 10-Q and Article 10 of U.S. Securities and Exchange Commission Regulation S-X. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair statement have been included (consisting only of normal recurring adjustments). For further information, reference is made to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2024. The year-end balance sheet data was derived from the audited consolidated financial statements as of June 30, 2024, but not all disclosures required by GAAP are included.
Operating results for the three-month period ended September 30, 2024, are not necessarily indicative of the results that may be expected for the year ending June 30, 2025.
| b. | Significant Accounting Policies |
The significant accounting policies followed in the preparation of these interim unaudited condensed consolidated financial statements are identical to those applied in the preparation of the latest annual financial statements.
| c. | Use of estimates |
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates, judgments and assumptions that are reasonable based upon information available at the time they are made. These estimates, judgments and assumptions can affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
U.S. Dollars in thousands (except share and per share amounts)
NOTE 2: - SIGNIFICANT ACCOUNTING POLICIES (CONT.)
| d. | Fair value of financial instruments |
The carrying amounts of the Company’s financial instruments, including cash and cash equivalents, restricted cash, short-term bank deposits and restricted bank deposits and other current assets, trade payable and other accounts payable and accrued expenses, approximate their fair value because of their generally short-term maturities.
The Company measures its derivative instruments at fair value under Accounting Standards Codification, or ASC, “Fair Value Measurements and Disclosures, or ASC 820. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.
As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering such assumptions, ASC 820 establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:
| Level | 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities; |
| Level | 2 - Inputs other than Level 1 that are observable for the asset or liability, either directly or indirectly; and |
| Level | 3 - Unobservable inputs for the asset or liability. |
The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The Company categorized each of its fair value measurements in one of these three levels of hierarchy.
The Company measures its liability pursuant to the Finance Contract based on the aggregate outstanding amount of the combined principal and accrued interest thereunder. As of September 30, 2024, the Company does not reflect its liability for future royalty payments pursuant to the Finance Contract with the EIB since the royalty payments are to be paid as a percentage of the Company’s future consolidated revenues, pro-rated to the amount disbursed, beginning in fiscal year 2024 and until fiscal year 2030. As of September 30, 2024, Pluri had an accrued royalty in the amount of $7(see note 4).
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
U.S. Dollars in thousands (except share and per share amounts)
NOTE 2: - SIGNIFICANT ACCOUNTING POLICIES (CONT.)
| e. | New Accounting Pronouncements |
| i. | Recently adopted accounting pronouncements |
ASU No. 2023-07 - “Segment Reporting (Topic 280): Improvements to reportable segment disclosures”, or ASU 2023-07:
In November 2023, the Financial Accounting Standards Board, or FASB issued ASU 2023-07. 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 are included within each reported measure of segment profit or loss, an amount and description of its composition of other segment items, and interim disclosures of a reportable segment’s profit or loss and assets. The guidance is effective for the fiscal year beginning after December 15, 2023, and interim periods within the fiscal years beginning after December 15, 2024, with early adoption permitted. The amendments should be applied retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements disclosures.
ASU No. 2023-09 - “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”, or ASU 2023-09:
In December 2023, the FASB issued ASU 2023-09. This guidance is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in ASU 2023-09 address investors’ requests for enhanced income tax information primarily through changes to the tax rate reconciliation and regarding income tax paid both in the U.S. and in foreign jurisdictions. ASU 2023-09 is effective for annual periods beginning after December 15, 2024, on a prospective basis. Early adoption and retroactive application are permitted. The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements disclosures.
NOTE 3: - COMMITMENTS AND CONTINGENCIES
| a. | As of September 30, 2024, an amount of $1,018 of cash and deposits was pledged by the Subsidiary to secure its credit line, lease agreement, derivative and hedging and bank guarantees. |
| b. | Under the Law for the Encouragement of Industrial Research and Development, 1984, or the Research Law, research and development programs that meet specified criteria and are approved by the IIA are eligible for grants of up to 50% of the project’s expenditures, as determined by the research committee, in exchange for the payment of royalties from the sale of products developed under the program. Regulations under the Research Law generally provide for the payment of royalties to the IIA of 3% on sales of products and services derived from a technology developed using these grants until 100% of the U.S. dollar-linked grant is repaid. The Company’s obligation to pay these royalties is contingent on its actual sale of such products and services. In the absence of such sales, no payment is required. The outstanding balance of the grants will be subject to interest at a rate equal to the 12 month London Interbank Offered Rate, or LIBOR (from January 1, 2024, to the 12-month secured overnight financing rate, or SOFR) applicable to U.S. dollar deposits that is published on the first business day of each calendar year. Following the full repayment of the grant, there is no further liability for royalties. As of September 30, 2024, the Company’s contingent liability in respect to royalties to the IIA amounted to $27,565, not including LIBOR (from January 1, 2024, SOFR) interest as described above. |
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
U.S. Dollars in thousands (except share and per share amounts)
NOTE 3: - COMMITMENTS AND CONTINGENCIES (CONT.)
| c. | In April 2017, the Company was awarded a Smart Money grant of approximately $229 from Israel’s Ministry of Economy and Industry to facilitate certain marketing and business development activities with respect to its advanced cell therapy products in the Chinese market, including Hong Kong. The Israeli government granted the Company budget resources that are intended to be used to advance the Company’s product candidate towards marketing in the China-Hong Kong markets. The Company will also receive support from Israel’s trade representatives stationed in China, including Hong Kong, along with experts appointed by the Smart Money program. As part of the program, the Company will repay royalties of 5% from the Company’s revenues in the region for a five-year period, beginning the year in which the Company will not be entitled to reimbursement of expenses under the program and will be spread for a period of up to 5 years or until the amount of the grant is fully paid. As of August 4, 2022, the grant from this Smart Money program received was approximately $180 and the program has ended. To date, no royalties were paid or accrued. |
| d. | In September 2017, the Company signed an agreement with the Tel-Aviv Sourasky Medical Center, or Ichilov Hospital, to conduct a Phase I/II trial of PLX-PAD cell therapy for the treatment of Steroid-Refractory Chronic Graft-Versus-Host-Disease, or GVHD. As part of the agreement with Ichilov Hospital, the Company will pay royalties of 1% from its net sales of the PLX-PAD product relating to GVHD, with a maximum aggregate royalty amount of approximately $500. |
| e. | As to potential royalties to the EIB, see note 4. |
NOTE 4: - LOAN FROM THE EIB
On April 30, 2020, the German Subsidiary entered into the Finance Contract with the EIB, pursuant to which the German Subsidiary can obtain a loan in the amount of up to €50 million, subject to certain milestones being reached, receivable in three tranches, with the first tranche consisting of €20 million, second tranche consisting of €18 million and third tranche consisting of €12 million for a period of 36 months from the signing of the Finance Contract.
The tranches were treated independently, each with its own interest rate and maturity period. The annual interest rate is 4% (consisting of a 4% deferred interest rate payable upon maturity); for the first tranche,4% (consisting of a 1% fixed interest rate and a 3% deferred interest rate payable upon maturity) for the second tranche and 3% (consisting of a 1% fixed interest rate and a 2% deferred interest rate payable upon maturity) for the third tranche.
In addition to any interest payable on the loan, the EIB is entitled to receive royalties from future revenues for a period of seven years starting at the beginning of fiscal year 2024 and continuing up to and including its fiscal year 2030 in an amount equal to between 0.2% to 2.3% of the Company’s consolidated revenues, pro-rated to the amount disbursed from the Loan. As of September 30, 2024, Pluri had an accrued royalty in the amount of $7.
During June 2021, Pluri received the first tranche in an amount of €20 million of the Finance Contract. The amount received is due on June 1, 2026, and bears annual interest of 4% to be paid with the principal of the Loan. As of September 30, 2024, the linked principal balance in the amount of $22,385 and the interest accrued in the amount of $2,980 are presented among long-term liabilities. Since the project period ended on December 31, 2022, the Company does not expect to receive additional funds pursuant to the Finance Contract.
The Finance Contract also contains certain limitations such as the use of proceeds received from the EIB, limitations related to disposal of assets, substantive changes in the nature of the Company’s business, changes in holding structure, distributions of future potential dividends and engaging with other banks and financing entities for other loans.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
U.S. Dollars in thousands (except share and per share amounts)
NOTE 5: - SHAREHOLDERS’ EQUITY
| (1) | Reverse share split In March 2024, the Company’s Board of Directors, or the Board, approved a 1-for-8 reverse share split of the Company’s (a) authorized common shares; and (b) issued and outstanding common shares. The reverse share split became effective on April 1, 2024. All common shares, options, warrants and securities convertible or exercisable into common shares, as well as loss per share, have been adjusted to give retroactive effect to this reverse share split for all periods presented. As a result of rounding-up fractional shares into whole shares as a result of the reverse share split, an additional 67,836 common shares were included in the Company’s issued and outstanding shares. |
| (2) | Pursuant to a registration statement on Form S-3 (File No. 333-273347), declared effective by the U.S Securities and Exchange Commission on September 21, 2023, on February 13, 2024 the Company entered into an Open Market Sales Agreement, or Sales Agreement, with A.G.P./Alliance Global Partners, or A.G.P., which provides that upon the terms and subject to the conditions and limitations in the Sales Agreement, the Company may elect, from time to time, to offer and sell common shares having an aggregate offering price of up to $10,000 through A.G.P. acting as sales agent. As of September 30, 2024, 42,729 common shares were sold under the Sales Agreement at an average price of $5.93 per share. |
| (3) | Share options and restricted share units, or RSUs to employees, directors and consultants: |
| a. | Options to non-employee consultants: |
|---|
A summary of the share options granted to non-employee consultants under equity incentive plans, or Plans by Pluri Inc. and its Subsidiary is as follows:
| Number | Weighted average exercise price | Weighted average remaining contractual terms (in years) | Aggregate intrinsic value price | |
|---|---|---|---|---|
| Share options outstanding at the beginning of the period | 17,475 | $5.80 | 4.87 | $42 |
| Share options outstanding at end of the period | 17,475 | $5.80 | 4.62 | $42 |
| Share options exercisable at the end of the period | 8,100 | $7.41 | 4.99 | $27 |
| Share options unvested | 9,375 | $4.40 | 4.30 | $15 |
| Share options vested and expected to vest at the end of the period | 17,475 | $5.80 | 4.62 | $42 |
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
U.S. Dollars in thousands (except share and per share amounts)
Unamortized compensation expenses related to options granted to non-employee consultants by Pluri Inc. and its Subsidiary are approximately $16 to be recognized by the end of March 2027.
| b. | Options to the Chief Executive Officer, or CEO, and Director: |
|---|
A summary of the share options granted to the CEO and directors under the Plans by Pluri Inc. and its Subsidiary is as follows:
| Number | Weighted average exercise price | Weighted average remaining contractual terms (in years) | |
|---|---|---|---|
| Share options outstanding at the beginning of the period | 240,291 | $14.82 | 2.42 |
| Share options outstanding at the end of the period | 240,291 | $14.82 | 2.17 |
| Share options vested and exercisable at the end of the period | 240,291 | $14.82 | 2.17 |
As of September 30, 2024, the aggregate intrinsic value of these options was $0.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
U.S. Dollars in thousands (except share and per share amounts)
| c. | RSUs to employees and directors: |
|---|
The following table summarizes the activity related to unvested RSUs granted to employees and directors under the Plans by Pluri Inc. and its Subsidiary, for the three-month period ended September 30, 2024:
| Number | |
|---|---|
| Unvested at the beginning of the period | 353,134 |
| Granted | 48,653 |
| Forfeited | (10,952) |
| Vested | (92,677) |
| Unvested at the end of the period | 298,158 |
| Expected to vest after the end of the period | 268,867 |
The fair value of all RSUs was determined based on the closing trading price of the Company’s shares known at the grant date. The weighted average grant date fair value of RSUs granted during the three-month period ended September 30, 2024 granted to employees and directors was $5.20 per share.
Unamortized compensation expenses related to RSUs granted to employees and directors by Pluri Inc. and its Subsidiary are approximately $613 to be recognized by the end of September 2027.
| d. | RSUs and restricted shares, or RS to consultants: |
|---|
The following table summarizes the activity related to unvested RSUs and RS granted to non-employee consultants by Pluri Inc. and its Subsidiary for the three-month period ended September 30, 2024:
| Three months ended September 30, | |
|---|---|
| Number | |
| Unvested at the beginning of the period | 4,802 |
| Granted | 7,067 |
| Vested | (6,415) |
| Unvested at the end of the period | 5,454 |
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
U.S. Dollars in thousands (except share and per share amounts)
The fair value of all RSUs was determined based on the closing trading price of the Company’s shares known at the grant date. The weighted average grant date fair value of RSUs granted during the three-month period ended September 30, 2024 granted to non-employee consultants was $5.91 per share.
Unamortized compensation expenses related to RSUs and RS granted consultants by Pluri Inc. and its Subsidiary are approximately $16 to be recognized by the end of June 2025.
Compensation expenses related to RSUs granted by Pluri Inc. and its Subsidiary were recorded as follows:
| Three months ended September 30, | ||
|---|---|---|
| 2024 | 2023 | |
| Research and development expenses | $88 | $31 |
| General and administrative expenses | 411 | 356 |
| $499 | $387 | |
| (3) | Nasdaq Deficiency Letter: On May 28, 2024, the Company, received a deficiency from the Listing Qualifications Department of The Nasdaq Stock Market LLC, or Nasdaq, notifying the Company that it was not in compliance with Nasdaq Listing Rule 5550(b)(1), which requires the Company to maintain a minimum of $2,500 in shareholders’ equity for continued listing on The Nasdaq Capital Market, or the Shareholders’ Equity Requirement, nor was it in compliance with either of the alternative listing standards, market value of listed securities of at least $35,000 or net income of $500 from continuing operations in the most recently completed fiscal year, or in two of the three most recently completed fiscal years. On July 11, 2024, the Company submitted a plan to regain compliance with the Shareholders’ Equity Requirement. Based on such compliance plan, Nasdaq granted the Company an extension of time to regain compliance with the Stockholders’ Equity Requirement until November 24, 2024. On September 26, 2024, the Company received a letter from Nasdaq, determining that the Company has regained compliance with the Shareholders’ Equity Requirement and that the matter is now closed. |
NOTE 6: - OTHER FINANCIAL INCOME (EXPENSES), NET
| Three months ended September 30, | ||
|---|---|---|
| 2024 | 2023 | |
| Foreign currency translation differences, net | $(992) | $60 |
| Interest income on deposits and restricted bank deposits | 321 | 436 |
| Income (loss) from hedging derivatives | 50 | (3) |
| Financial income (expenses), net | (621) | 493 |
| EIB loan interest expenses | (217) | (214) |
| $(838) | $279 | |
NOTE 7: - SUBSEQUENT EVENTS
In October 2024, Ever After Foods signed a facility operating lease agreement with a lessor. The lease period will begin on December 1, 2024 for a term offive years until December 2029. In addition, Ever After Foods has the option to terminate the lease after a period of 36 months and to extend the term of the lease for an additional period offive years until December 2034, or the Extension Option. The average monthly lease payment for the first five years is approximately NIS 50,192 or $14 which are linked to the consumer price index. The monthly lease payments will increase by 5% in the event that Ever After Foods exercises its Extension Option.
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.