Therapix Biosciences Ltd.
Annual Report │
2015
CONTENTS
Chapter A
Chapter B
Chapter C
Chapter D
Chapter E
Description of the Corporation's Business
The Report of the Board of Directors on the State of the Corporation's Affairs
Annual Financial Statements
Additional Information about the Corporation
Letters of Representation
As of the report date, Therapix Biosciences Ltd. ("the Company") is a "small corporation" in
accordance with the conditions stipulated in Regulation 5c to the Israeli Securities Regulations
(Periodic and Immediate Reports), 1970 ("the Regulations"). According to the decision of the
Company's Board, the Company adopts and applies (to the extent that such application is relevant or
irrelevant to the Company) several exemptions prescribed in the Regulations as follows:
1.
2.
3.
4.
1
2
3
4
Increasing the materiality threshold in connection with the attachment of valuations to 20%1;
Increasing the minimum requirement for attachment of financial statements of material
associates to interim financial statements to 40% (the materiality threshold for attaching annual
financial statements is (remains) 20%2;
Exemption from adopting the provisions of the Second Addendum to the Regulations regarding
(details of the exposure to market risks and their management (the Galai Report))3;
Cancelling the duty to issue a report on internal control and an auditors' report on internal
control thereby allowing the Company to attach only letters of representation that are limited in
scope4.
Regulation 5d(b)(1) to the Regulations. Pursuant to the ISA Staff legal resolution SLB 105-23, as last updated on
July 16, 2014, regarding parameters for testing the materiality of valuations (and the interpretation of this legal
position as last updated on December 27, 2015), "a very material valuation in a small corporation" is defined as a
valuation:
(a) whose subject matter represents at least 20% of the Company's total assets; or
(b) whose effect of the change in value on the net income or comprehensive income, as applicable, represents
at least 20% of total net income or comprehensive income, respectively, and the effect of said change
represents at least 10% of the Corporation's equity.
Regulation 5d(b)(2) to the Regulations.
Regulation 5d(b)(3) to the Regulations.
Regulation 5d(b)(4) to the Regulations.
2
Therapix Biosciences Ltd.
Chapter A - Description of the Corporation's Business
We are hereby pleased to present a description of the operations of Therapix Biosciences Ltd. ("the
Company") and the developments in its business in the reporting period and as of the date of this report in
conformity with the Regulations.
Date: March 22, 2016
Therapix Biosciences Ltd.
3
INDEX
Description of the Corporation's Business
Definitions ......................................................................................................................................................... 6
1. The Corporation's activities and description of its business development ................................................ 8
2. The areas of activity ................................................................................................................................ 11
3. The investments in the Company's capital and transactions in its shares ............................................... 11
4. Dividend distribution .............................................................................................................................. 15
5.
Financial information on the Company's areas of activity ...................................................................... 15
6. The general environment and the effect of outside factors on the Company's operations ...................... 16
7. General information about the areas of activity ...................................................................................... 18
8. Technologies in which the Company has invested or has rights therein ................................................ 21
9. Existing and prospective customers ........................................................................................................ 26
Competition ........................................................................................................................................ 27
10.
Research and development ................................................................................................................. 28
11.
Intangible assets.................................................................................................................................. 30
12.
Fixed assets, real estate and facilities ................................................................................................. 32
13.
Human capital ..................................................................................................................................... 33
14.
15.
Raw materials and suppliers ............................................................................................................... 39
16. Working capital .................................................................................................................................. 39
Financing ............................................................................................................................................ 39
17.
Taxation .............................................................................................................................................. 39
18.
Restrictions and regulations underlying the Company's operations ................................................... 40
19.
Material agreements ........................................................................................................................... 43
20.
Legal proceedings ............................................................................................................................... 60
21.
Business strategy and targets .............................................................................................................. 61
22.
Expected developments in the next year ............................................................................................ 62
23.
Risk factors ......................................................................................................................................... 62
24.
4
Chapter A - Description of the Corporation's Business
Since the Company is engaged in the research and development of medical products and in view of the
uncertainty involving the successful development of any of the Company's various technologies and/or
the ability to quickly enter the relevant market, in the event of unsuccessful development of any of the
Company's technologies and/or failure to obtain the required approvals from the relevant regulatory
authorities for marketing and selling any of the above technologies and/or introducing them in the
relevant market, the Company's investment in the development of any of the above technologies may
be lost. Moreover, as an R&D company, the Company is required to raise capital to create permanent
positive cash flows from the sale of its technologies in order to finance its expenses and is at a risk of
not being able to raise the funds needed for its continued R&D activities. See also Note 1c to the
financial statements.
This chapter includes estimates, forecasts and evaluations whose materialization is uncertain and not
under the control of the Company. In view of the nature of the Company's business activities, there is
a risk underlying the Company's expectations and forecasts regarding its activities. Given the
Company's line of business, it wishes to stress that there is no certainty that the Company will be
successful in developing and/or commercializing and/or achieving significant sales of its various
developed products and might not be able to obtain the financing needed for the continued
development of its various technologies and/or might not obtain certain or any of the approvals for its
products and/or might not be able to market them as scheduled or at all. Moreover, the Company
cannot guarantee whether or to what extent certain results will occur as anticipated and/or projected
by the Company and/or that it will be able to raise capital for continuing to promote its research
and/or development activities of its invested and/or owned technologies. See also Note 1a to the
financial statements.
5
Definitions
For convenience sake, following is a glossary of the main terms used in this chapter:
Anti-CD3 technology
Cannabinoids
- An immunotherapy technology (based on a sublicense from Hadasit, the
Technology Transfer Company of Hadassah Medical Organization)
which is based on the oral or nasal administration of an antibody for
treating autoimmune diseases (CD3). See details of the technology in
paragraph 8 below. See details of the sublicense agreement in paragraph
19 below.
- A class of diverse chemical compounds that act on cannabinoid receptors
in the body (CB1 and CB2). This family is found in the molecules
derived from the cannabis plant (phytocannabinoids), the most known
ones being THC and CBD, and molecules which are naturally produced
in the human and animal body (endocannabinoids) such as AEA and 2-
AG. Dozens of molecules have been identified as part of the cannabinoid
family and participate in a large number of physiological processes and
used to treat a large variety of medical conditions.
Clinical trial
- A trial that is conducted on humans and is designed to test the efficacy or
Dollar
Drug
safety of drugs and medical devices.
- The US Dollar.
- A chemical or biological substance that is designed to improve a patient's
medical condition.
EMEA (European Medicines
- The European authority that controls and regulates pharmaceutical
Agency)
development and registration in Europe.
Endocannabinoids
- Molecules of the cannabinoid family which are naturally produced in the
body of humans and animals such as AEA and 2-AG.
Entourage technology/effect
A technology according to a license agreement signed with Dekel
Pharmaceuticals Ltd. (also referred to as the entourage effect) which is
based on a combination of cannabinoids or cannabinoid analogs with
existing drugs. The technology is designed to improve the treatment of a
variety of medical indications by reducing generally practiced drug
dosages while enhancing the technology's efficacy and safety profile. See
details of the technology in paragraph 8 below. See details of the license
agreement in paragraph 18 below.
FDA (Food and Drug
Administration)
- The authority
in
the United States
that controls and regulates
pharmaceutical development and registration in the US.
GMPs (Good Manufacturing
Practices)
- Part of the quality system that controls manufacturing and reviews the
pharmaceutical, food and medical device industry. GMPs are the
guidelines for manufacturing and testing stages that affect the quality of
the end product. GMPs are designed to assure the quality of the medical
product in order to protect the health of the end consumer.
Immunotherapy
- Treatment method used to achieve the desired effect by activating the
immune system.
Medical device
- A device, instrument, accessory or substance used for medical treatment
or diagnosis of humans that does not act as a drug.
6
NIS
Orimmune
Orphan drug
- New Israeli Shekel.
- Orimmune Bio Ltd. (formerly: Protea Vaccine Technologies Ltd.), a
private subsidiary of the Company incorporated under the laws of the
State of Israel.
- Drug recognized by a certified authority as an orphan drug in accordance
with the directives of the US Orphan Drug Act, the provisions of
European Parliament and Council Regulation (EC) No 141/2000 on
orphan medicinal products or similar legal directives.
OTC (Over-the-Counter)
- Over-the-Counter trading of securities in the United States (OTCQB)
where the Company's ADRs (Level 1) are listed for trade.
PCT (The Patent Cooperation
- International convention that defines an identical process to protect
Treaty)
intellectual property rights in a large number of countries.
Phase I clinical trial
Phase II clinical trial
- Clinical trial of a drug on humans which is mainly designed to test the
safety of the drug. A Phase I clinical trial is sometimes conducted
simultaneously with a Phase II clinical trial.
- Clinical trial of a drug on humans which is mainly designed to serve as
an initial test of the drug's efficacy parameters as well as the drug's
various doses. This trial phase is sometimes divided into two sub-phases:
Phase IIa and Phase IIb. Phase IIa is specifically designed to test the
required dosage and Phase IIb is designed to obtain information
regarding efficacy.
Phase III clinical trial
- Clinical trial of a drug on humans which is mainly designed to test the
efficacy of the drug compared to existing drugs and therapies.
Phytocannabinoids
- Molecules of the cannabinoid family that occur naturally in the cannabis
plant, the most known of which are THC and CBD.
Preclinical trial
- A trial that is not conducted on human subjects.
Synthetic cannabinoids
- Synthesized cannabinoid molecules, of which the most widely used of
which, to the best of the Company's knowledge, is the Dronabinol (the
synthetic analog of the THC phytocannabinoid) that had been approved
for medicinal use by the FDA.
The balance sheet date
- December 31, 2015.
The Chief Scientist
- The Chief Scientist at the Ministry of Economy.
The Companies Law
- The Companies Law, 1999, as will be amended from time to time.
The Company
- Therapix Biosciences Ltd.
The Financial Statement
- The Securities Regulations (Annual Financial Statements), 2010.
Regulations
The financial statements
- The Company's audited annual consolidated financial statements which
The Group
The ISA
are hereby attached to this report.
- The Company and the subsidiary.
- The Israel Securities Authority.
7
The report date
- March 22, 2016.
The reporting period
- The 12-month period ended December 31, 2015.
The Reporting Regulations
- The Securities Regulations (Periodic and Immediate Reports), 1970.
The Securities Law
- The Securities Law, 1968, as will be amended from time to time.
The TASE
- The Tel-Aviv Stock Exchange Ltd.
Ultralow dose technology
- A technology (based on a license agreement signed with Ramot at Tel-
Aviv University Ltd., the Tel-Aviv University's Technology Transfer
Company) for treating mild cognitive impairment (MCI) using an
ultralow dose of cannabinoids. See details of the technology in paragraph
8 below. See details of the license agreement in paragraph 18 below.
The various descriptions of the Company's activities may include data that are based on surveys, studies
and/or essays. The Company is not responsible for the contents of those surveys, studies and/or essays.
Chapter A (the Description of the Corporation's Business) to the periodic report should be read in
conjunction with the other parts of the periodic report, including the notes to the financial statements.
1.
The Corporation's activities and description of its business development
The Company was incorporated in Israel on August 23, 2004 as a private company in compliance with
the Companies Law under the name of NasVax Ltd. On December 26, 2005, the Company's securities
began trading on the TASE. On November 14, 2013, the Company's name was changed to its current
name, Therapix Biosciences Ltd.
In keeping with the Company's business strategy for identifying and investing in promising bio-
pharma technologies, effective from August 2015 and as of the report date, the Company is a specialty
pharmaceutical company which focuses its business strategy on developing drugs based on
cannabinoid molecules for their approval by a certified regulatory authority.
8
Developments in the Company's business strategy
In late March 2014, the Company reported its new business strategy according to which it will focus
on identifying and investing in promising bio-pharma technologies while emphasizing technologies
based on a known biological mechanism5. The Company's intentions were to use its capabilities and
experience in developing immunotherapy technologies in order to help these technologies in achieving
a significant milestone within a relatively short timeframe (a few years) in a manner that will allow
their commercialization and/or the introduction of strategic partners, all while continuing to promote
the Company's existing technologies6.
Starting from August 2015 and as of the report date, the Company concentrates its business activity on
creating and enhancing a portfolio of technologies and assets based on cannabinoid therapeutics.
Therefore, as of the report date, the Company is about to complete the preclinical phase of developing
a formulation based on the entourage technology and is preparing to conduct clinical trials on a
cannabinoid-based medical product with an indication for Tourette syndrome7 (by itself and/or
through collaborating with third parties). The Company is also preparing to begin the formulation of
the ultralow dose technology in the context of the preclinical phase of developing a cannabinoid-based
medical product with an indication for mild cognitive impairment (MCI) (including Alzheimer's)8.
In addition, in connection with the Anti-CD3 technology which is not the focus of the Company's
activities, the Company continues to identify potential business development collaborations, strategic
investments or other transactions and is also looking into terminating this program under mutual
consent9.
5
6
7
8
9
Until March 2014, the Company mainly focused on developing several innovative immunotherapy products and
owns patents in this area. In the context of the Company's planned internal restructuring, throughout 2013 until
early 2014, the Company took steps for the structural segregation of the activities on which it focused until
March 2014 as above in the context of which the Anti-CD3 operation was scheduled to be transferred to
Orimmune as part of AceBright's planned investment. See details of the investment agreement in paragraph 21
below. See also the Company's immediate report of March 17, 2013 (TASE reference: 2013-01-006508). As of
the report date, the technology has not yet been transferred to Orimmune and the Company continues to promote
the Anti-CD3 technology, including the scientific aspect and the business development thereof towards
identifying prospective collaborations or investments in this technology. The Company has also been studying
the agreed termination of this program.
The Company's investment strategy was based on the following parameters: (1) building an investment portfolio
of 2-5 technological companies; (2) providing solutions for major medical needs that are currently unavailable;
(3) choosing portfolio companies whose technology is past the proof of concept stage; (4) choosing portfolio
companies with proven and familiar method of operation; (5) achieving a significant milestone through an
investment of up to US$ 2 million; (6) achieving significant returns; (7) carrying the investment over a limited
number of years based on predetermined milestones (to minimize risks). See the Company's immediate report of
March 30, 2014 (TASE reference: 2014-01-029448) and the Company's presentation to the capital market in the
Company's immediate report of May 8, 2014 (TASE reference: 2014-01-059022).
Tourette syndrome is a neurological disorder with onset in childhood (first diagnosed between ages 3 and 9)
characterized by multiple physical (motor) tics and at least one vocal (phonic) tic. See details in the Company's
immediate report of August 4, 2015 (TASE reference: 2015-01-088677).
See the Company's immediate report of June 28, 2015 (TASE reference: 2015-01-057522).
See more information on the Company's strategic focuses in the Company's immediate report of August 4, 2015
(TASE reference: 2015-01-088677). See a description and information of the Company's operations before the
business strategy restructuring in March 2014 in Chapter A (Description of the Corporation's Business) to the
Company's Periodic Report for 2013 issued on March 27, 2014 (TASE reference: 2014-01-026091) which is the
last annual report prior to the Company's business strategy restructuring ("the previous annual report"). See
also paragraph 22 below for an opposition raised in connection with the patent underlying the technology.
9
The technologies invested or owned by the Company as of the report date
1.1
1.2
1.3
The entourage technology - see details of the technology and the license agreement signed
with Dekel Pharmaceuticals Ltd. ("Dekel") in paragraphs 8 and 20 below.
The ultralow dose technology - see details of the technology and the license agreement signed
with Ramot at Tel-Aviv University Ltd., the Tel-Aviv University's Technology Transfer
Company ("Ramot") in paragraphs 8 and 20 below.
The Anti-CD3 technology - see details of the technology and the sublicense agreement signed
with Hadasit, the Technology Transfer Company of Hadassah Medical Organization, in
paragraphs 8 and 20 below.
The Group's holding structure on the report date10
Therapix Biosciences Ltd.
83.58%
(a)
Orimmune Bio Ltd.
(formerly: Protea
Vaccine
Technologies Ltd.)
(a) The holding rate in Orimmune as of the report date (83.58%) is based on the provisions of an
investment agreement signed in September 2013, as described in paragraph 21.9 below. This
holding rate is expected to increase to 90% following the completion of the transfer of the
operation to Orimmune based on the investment agreement. See more details in paragraph 20
below.
10
The Company also has interests in wholly-owned subsidiaries which are inactive as of the report date (Brain
Bright Ltd. and NasVax Inc.). The Company also holds about 11% of the issued and outstanding share capital of
Lara-Pharm Therapeutics Ltd. ("Lara-Pharm"). It should be noted that that according to the agreement with
Lara-Pharm, the Company's interests in Lara-Pharm's issued and outstanding share capital (26%) will be reduced
if the Company fails to deliver the remaining payments on the predetermined dates pro rata to the amounts that
will be delivered. As stated above, as of the report date, only the first payment (of US$ 250 thousand) has been
made whereas the other due payments (in an aggregate of US$ 550 thousand) have not yet been made to Lara-
Pharm based on the terms of the agreement (which does not represent a violation of the agreement). However,
according to the agreement, Lara-Pharm has the right to reduce (forfeit) the Company's interests in its shares pro
rata to the amounts that will be paid in such a manner that as of the report date, if Lara-Pharm exercises such
right, the Company's interests will be reduced to 11% only. Moreover, Lara-Pharm has a bring-along right to
obligate the Company to sell its entire interests in the event that Lara-Pharm forfeits the Company's shares as
discussed above in order to sell them to a third party. It should be noted that as of the report date, the Company
has not made any follow-up investments in Lara-Pharm as above and the parties are currently holding
negotiations for signing a separation agreement under mutual consent. See information of the terms of the
Company's investment in Lara-Pharm and of the proceedings for the termination of the investment according to
the agreement and the terms of separation in paragraphs 20 and 21 below.
10
2.
The areas of activity
As mentioned above, the Company is a specialty pharmaceutical company which focuses on
developing approved drugs based on cannabinoid molecules. As of the report date, the Company is
developing a cannabinoid-based drug for treating Tourette syndrome based on the entourage effect and
is preparing to develop a cannabinoid-based drug for treating MCI (including Alzheimer's) based on
the ultralow dose technology.
3.
The investments in the Company's capital and transactions in its shares
Following are details of the investments in the Company's capital and other material share transactions
carried out by interested parties in the Company in the two years before the report date:
3.1
Raising capital from the public
On May 8, 2014, the Company issued a shelf offering report11 by way of uniform unit price
auction to the public (each unit consisting of 100 shares, 100 options (series 3) and 100
options (series 4)) and on the same date the Company completed a capital raising of 30,094
units (at the predetermined price of NIS 95 per share). In the offering, the Company raised a
(gross) total of approximately NIS 2.86 million12. The proceeds were designed to promote the
investment in a related company, investigate new projects and expand the portfolio, promote
the Company's existing technologies and finance its operating activities, all based on the
Board's resolutions as they will be from time to time. On May 15, 2014, pursuant to a shelf
offering report, the Company issued 406,269 options (series 4) in a private placement to
resellers as part of their commission13.
3.2
Private placements
3.2.1
According to a private placement agreement of November 2014 and in keeping with
the completion of the investment of an aggregate of NIS 0.65 million by three
separate private investors, on December 21, 2014, the Company issued 1,300,000
Ordinary shares of the Company and 2,600,000 options of the Company to three
private investors at a price of NIS 0.5 per share and an exercise price of NIS 0.5 per
option that vests immediately, whose exercise period was extended to June 19, 2015,
and NIS 0.65 per contingent option allocated according to the investment agreement
which were exercised for their exercise price in a total of approximately NIS 1.5
million14.
11
12
13
14
For details of the Company's shelf offering report, see the Company's immediate report of May 8, 2014 (TASE
reference: 2014-01-059028).
For details of the results of the offering, see the Company's immediate report of May 8, 2014 (TASE reference:
2014-01-059742).
For details, see the Company's immediate report of May 15, 2014 (TASE reference: 2014-01-064788).
For details, see the Company's immediate report of December 21, 2014 (TASE reference: 2014-01-226122) and
an immediate report on the extension of the vesting date of the options that vest immediately of March 15, 2015
(TASE reference: 2015-01-050608). See details of the exercise of the options in an immediate report of May 18,
2015 (TASE references: 2015-01-051154 and 2015-01-051157). See details of the expiration of the options in an
immediate report of May 10, 2015 (TASE reference: 2015-01-016461).
11
3.2.2
3.2.3
3.2.4
3.2.5
According to a private placement agreement of February 2015 and in keeping with
the completion of the investment of an aggregate of NIS 0.25 million by two
separate private investors, on March 15, 2015, the Company issued 500,000
Ordinary shares of the Company and 1,000,000 options of the Company to two
private investors (one of whom participated in the private placement described in
paragraph 3.2.1 above) at a price of NIS 0.5 per share and an exercise price of
NIS 0.65 per option that vests immediately and NIS 1.10 per contingent option
allocated according to the investment agreement, which as of the report date were
not exercised when scheduled and expired15.
In the context of said private placement, the Company also allocated 40,000 options
to another third party (broker) at an exercise price of NIS 0.5 per share, which were
exercised for their exercise price16.
According to a private placement agreement of March 30, 2015, on April 29, 2015,
Jesselson Investments Ltd. (which is as of the report date an interested party in the
Company by virtue of its interests, through Jay's Thera Ltd.) completed its
investment of approximately NIS 2.2 million in the Company's share capital in
return for 4,400,000 Ordinary shares of the Company at a price of NIS 0.5 per
share17.
As part of the license agreement signed with Dekel (as discussed in paragraph 21
below), the Company offered Dekel 3,876,000 options that vest immediately at a
price of NIS 0.5 per option to be exercised by November 19, 2015, which were
exercised for their exercise price in a total of approximately NIS 1.9 million, and
11,926,154 contingent options at a price of NIS 0.65 per option to be exercised by
November 19, 201618, which were partly exercised as od the report date19.
15
16
17
18
19
For details, see the Company's immediate report of March 15, 2015 (TASE references: 2015-01-051154 and
2015-01-051157). See details of the expiration of the options in an immediate report of May 10, 2015 (TASE
reference: 2015-01-016461).
See more details in the Company's (amended) private placement report of February 25, 2015 (TASE reference:
2015-01-038902). See derails of the exercise of the options in an immediate report of December 24, 2015 (TASE
reference: 2015-01-188898).
See more details in the Company's immediate reports of March 30, 2015 (TASE reference: 2015-01-065656),
April 7, 2014 (TASE references: 2015-01-075517 and 2015-01-002034) and April 29, 2015 (TASE reference:
2015-01-008361).
See details in the Company's immediate report of August 19, 2015 (TASE reference: 2015-01-100422).
On October 12, 2015, Dekel sold 789,756 options that vest immediately and 2,369,270 contingent options in an
off-market transaction at a price of NIS 0.1375 per option. Out of the sold options, 188,125 options that vest
immediately and 564,375 contingent options were sold to Jesselson Investments Ltd. ("Jesselson"), an interested
party in the Company, for NIS 0.01375 per option. In addition, on November 18, 2015, Dekel sold 1,514,244
options that vest immediately in an off-market transaction to a subsidiary of Jesselson for NIS 0.03 per option.
All the options allocated to Dekel that vest immediately were exercised into Company shares during the
reporting period. In return for the exercises of all the options that vest immediately and some of the contingent
options in the reporting period, the Company received proceeds in an aggregate of NIS 3.5 million. See more
details in the Company's immediate reports of August 19, 2015 (TASE reference: 2015-01-100422), October 14,
2015 (TASE reference: 2015-01-134517), October 14, 2015 (TASE reference: 2015-01-134523) and November
19, 2015 (TASE reference: 2015-01-158571).
12
3.2.6
On October 11, 2015, the Company closed an investment round in which it signed
investment agreements with several new private investors and an existing interested
party in the Company in connection with private placements of the Company's
Ordinary shares. According to the private placements, the investors each separately
undertook to invest in the Company an aggregate of approximately NIS 3.3 million
in return for the Company's Ordinary shares (at a price of NIS 1.05 per share),
representing about 11.4% of the Company's issued and outstanding share capital
immediately following and subject to the completion of the investment (about 6.7%
on a fully diluted basis)20. The completion of the private placements was subject to
the fulfillment of several suspending conditions within a period of 45 days from the
closing date of the investment round as discussed above, including obtaining the
necessary regulatory approvals (among others, the TASE's approval for listing the
securities offered in the investment round for trade)21. On November 20, 2015, the
Company issued an extraordinary private placement report to all the private
investors22 and on November 25, 2015, the Company allocated the above securities
to the investors, thereby completing the investment round23.
3.2.7
In its ordinary course of business, the Company examines borrowing alternatives for
financing its operating and business activities, among others, as part of the
Company's plans to expand the accessibility of additional (local and/or foreign)
investors to the Company's operations and technologies under development. The
Company occasionally examines its available financing options and alternatives,
including by raising private and/or public capital, all based on the Company's needs
and the decisions of its Board24.
20
21
22
23
24
Simultaneously with closing the private placement agreements, Dekel informed the Company that it had sold (or
it acting to sell) to each of the other individual investors options that vest immediately and contingent options
that were held by Dekel by virtue of the license agreement (as discussed in paragraph 3.2.5 above) at a scope that
(assuming their exercise by the other investors and the exercise of more of Dekel's options by Dekel itself) will
represent another 12.4% of the Company's issued and outstanding share capital (about 9.1% on a fully diluted
basis), representing an additional investment of approximately NIS 2.3 million in the Company's share capital.
It should be emphasized that as of the date of issuing this report, there is no certainty that the suspending
conditions underlying the completion of the investment agreements in the Company will be met and/or will be
net within the predetermined timeframe. For details of the investment round, see the Company's immediate
report of October 13, 2015 (TASE reference: 2015-01-133341).
See the Company's immediate report of November 20, 2015 (TASE reference: 2015-01-159387).
See the Company's immediate report of November 25, 2015 (TASE reference: 2015-01-164421).
In this context it should be noted that on March 22, 2016, the Company's Board authorized the Company's
management to explore additional potential private capital raising under predetermined master principles. It
should be clarified that as of the report date, there is no possibility of verifying whether the Company's
management will be able to execute such capital raising rounds, if at all, or with which factors and under which
terms.
13
3.2.8
The following table presents information of private placements made by the
Company from the beginning of 2014 through the report date (see also allocation of
options to officers, employees and consultants according to the Company's option
plan in paragraph 14 below):
Type of
optionee
Date of
allocation
Type of
security
Quantity
No. of
optionees
Consideration
Consideration
in cash
(NIS'000)
Other
consideration
Private
investors
Private
investors
Private
investor
Interested
party - Dekel
12/2014
2/2015
3/2015
8/2015
Shares
Options
Shares
Options
Shares
Shares
Options that
vest
immediately
Contingent
options
1,300,000
2,600,000
500,000
1,000,000
4,400,000
200,00025
3,876,000
11,926,154
3
2
1
1
650
250
2,200
---
11/2015
Shares
3,159,025
8
3,316
Private
investors and
interested
party
---
---
---
---
---
Part of the
consideration
according to the
license
agreement with
the optionee
(Dekel)
---
3.3
On May 10, 2015, the Company's listed options (series 4) expired26.
3.4
Transactions by interested parties (off-market)
Company value
after the money
derived from the
allocation (if
relevant)
(NIS'000)
8,560
9,210
12,222
---
36,053
3.4.1
On June 7, 2015, Universal Link Ltd. ("Universal") sold 390,000 shares of the
Company in an off-market transaction at a price of NIS 0.65 per share27. On October
19, 2015, Universal sold 300,000 shares of the Company in an off-market transaction
at a price of NIS 0.90 per share and also exercised 310,000 options of the Company
owned by it for a price of NIS 0.9561 per share28. On October 27, 2015, Universal
sold 52,301 additional shares for NIS 0.9561 per share29. On December 10, 2015,
Universal sold 110,000 additional shares for NIS 0.90 per share and also exercised
190,000 options of the Company owned by it for a price of NIS 0.65 per share30.
3.4.2
On September 10, 2015, Dr. Ascher Shmulewitz sold 200,000 shares of the
Company in an off-market transaction for a price of NIS 0.90 per share31.
25
26
27
28
29
30
31
As of the report date, not yet allocated in practice and no TASE approval obtained in their respect. See an
immediate report on the private placement of February 25, 2016 (TASE reference: 2016-01-035353).
See more details in the Company's immediate reports of April 12, 2015 (TASE reference: 2015-01-076618) and
May 10, 2015 (TASE reference: 2015-01-016461).
See more details in the Company's immediate report of July 1, 2015 (TASE reference: 2015-01-062217).
See more details in the Company's immediate report of October 20, 2015 (TASE reference: 2015-01-137961).
See more details in the Company's immediate report of October 28, 2015 (TASE reference: 2015-01-144321).
See more details in the Company's immediate report of December 14, 2015 (TASE reference: 2015-01-178827).
See more details in the Company's immediate report of September 11, 2015 (TASE reference: 2015-01-119403).
14
3.5
Listing the Company's ADRs OTC in the US32
As part of the Company's plan to enhance the accessibility of foreign investors to the
Company's activities and in keeping with its new business strategy, in early October 2014, the
Company completed the process of listing its Level 1 ADRs on the OTCQB in the US. As of
the report date, each ADR is comprised of 20 Ordinary shares of the Company which are
traded OTC in the US under the symbol of THXBY33.
3.6
Capital consolidation
On January 12, 2014, the Company completed a process of capital consolidation of its shares
according to which each 10 Ordinary shares of NIS 0.01 par value of the Company's
authorized and issued share capital were consolidated to a single share of NIS 0.01 par value
of the Company34.
4.
Dividend distribution
Since its establishment, the Company has not distributed any dividends to its shareholders.
5.
Financial information on the Company's areas of activity
See details of the Company's financial results and balance sheets in the financial statements hereby
attached to this report. See explanations of developments in the financial data in connection with the
Company's areas of activity, including adjustments to certain amounts in the financial statements and
their nature in the Report of the Board of Directors in Chapter B to the periodic report.
32
33
34
ADRs (American Depository Receipts) are negotiable certificates (securities) issued by a US bank (which serves
as the depository) representing a specified number of shares (or one share) in a foreign stock that is traded on a
US exchange.
See the Company's immediate reports of May 28, 2014 (TASE reference: 2014-01-075777) and July 20, 2014
(TASE
at
also
See
http://www.otcmarkets.com/stock/THXBY/quote.
See details in the Company's immediate reports of January 1, 2014 (TASE reference: 2014-01-001165), January
2, 2014 (TASE reference: 2014-01-003034) and January 13, 2014 (TASE reference: 2014-01-014011).
2014-01-117225).
reference:
OTCQB's
website
link
the
to
15
6.
The general environment and the effect of outside factors on the Company's operations
The Company's business opportunities and the risks underlying its operations mainly arise from
general, industrial and specific factors that are characteristic of the Company's operations as detailed
in paragraph 23 below. Nevertheless, there are certain macroeconomic factors that are liable to affect
the Company's operations as follows:
6.1
Developments in global markets
6.1.1
The impact of the global and local economies on the Company's business strategy
The developments in global markets are liable to affect the implementation of the
Company's strategy and the development and/or expansion of the scope of
technologies owned by it. During economic slowdowns, the budgets dedicated to
R&D activities in life sciences and innovative technologies are minimized. Financial
crises (such as the global financial crisis in 2008 whose impact is still being felt) are
liable to affect, among others, health system budgets in different regions and the
ability to purchase products, drugs and/or innovative technologies. Moreover, the
future technologies that are planned to be integrated in the Company's activities
might be owned by companies in need of external financial resources which, given
the right circumstances, will offer a business opportunity that corresponds to the
Company's strategy whereas local and global economic downturns are likely to
affect both the Company's ability to finance the purchase of such technologies and/or
the continued development of its own technologies as well as its ability to profit
from such business opportunities. In the event that the required financing is not
obtained, the Company might suffer the loss of such business opportunities and/or
cease its support of the development of existing technologies, which will
significantly impair the Company's return on its investments, its business results, its
equity and the value of its assets and their divestiture as well as its ability to recruit
investors in the different local and foreign markets for the continued investments in
its activities and business.
6.1.2
The effect of the economy on the development of medical products
a)
b)
Recession will lead to reduced demands for purchasing new technologies and
medical products in struggling markets and to a decline in the prices which
buyers will be willing to pay for such technologies and products, all of which
will impair the Company's profits and business results.
Some of the technologies being developed by the Company are subject to
regulatory requirements and approvals for the sale of medical products in the
various markets (US, Europe etc.). The global financial crisis which erupted in
2008 (whose effects are still witnessed today) is likely to continue to adversely
affect the Company's ability to market its products in the different markets
and/or the time to market of these technologies.
c)
Economic crises in emerging markets might affect the Company's ability to
achieve its future business development targets in these countries and/or by
investors in these markets.
16
d)
For the purpose of the continued research and/or development of the
Company's invested and/or owned technologies and/or for the purpose of the
continued investment in additional/innovative technologies based on the
Company's strategy, the Company is required to raise significant amounts of
capital. Any slowdown in global and/or local economy and/or negative trends
in the field of investments in life sciences are liable to have an adverse effect
on the Company's ability to raise significant amounts as stated above under
reasonable and/or any terms.
6.1.3 Merger of operations of companies in the area of activity - in recent years, the global
markets in which the Company operates have been experiencing a process of
mergers of companies operating in this industry. On the one hand, this trend
obligated large companies to identify and purchase products under development that
have high marketing potential and/or companies that develop attractive products and
on the other hand, the trend led to the birth of large business rivals in the industry.
With the advancement of clinical trials, pharmaceutical companies tend to enter into
for manufacturing, marketing and/or
license or collaboration agreements
commercializing their products.
Exchange rate fluctuations - the Company's operations, including costs of raw materials,
preclinical and clinical trials and various regulatory processes, may be conducted outside of
Israel and therefore the Company's financial results may be affected by fluctuations in the
exchange rates of the currencies in the countries in which the Company operates and/or in
which its products under development will be marketed in the future, if at all.
Israeli identity - the sale of the Company's technologies might be affected by Israel's
international status. In some cases, the Israeli identity contributes to sales (in view of the
recognition of Israel's technological advantages) whereas in other cases it may prove to be a
hindrance and might even lead to cancellation of transactions. As of the report date, the
Company is not aware of any event in which the Company's Israeli identity affected the
considerations of potential buyers of products under development and/or potential investors.
The political-security situation - the Middle East has been experiencing strong political
instability in recent years. As of the report date, the Company is unable to estimate the impact
of the recent political and social turmoil on the global economy but it is likely that political
tumults and/or any aggravation in the homeland security situation in Israel will affect the local
financial markets, the prices of commodities and natural resources and the prices of imports
and/or exports as well as affect the Company's value and the value of its quoted assets which
are and/or will be traded in local and/or other exchanges.
OTC trade in the US - the OTC trading of the Company's ADRs (Level 1) in the US is likely
to expose the Company and its technologies to a larger public of investors abroad (including
exposure to new markets and/or additional foreign stock exchanges) but also to greater
liability and responsibility towards those investors.
6.2
6.3
6.4
6.5
17
7.
General information about the areas of activity
The Company's principal areas of activity as of the report date are as follows:
Development of cannabinoid-based and related drugs.
7.1
The structure of the Company's areas of activity and changes therein
See details of the implications of the structure of the Company's areas of activity and the
changes therein arising from certain trends, events and developments in the Company's
macroeconomic environment in paragraph 6 above.
7.2
Specific limitations, legislations, regulations and restrictions applicable to the Company's
activities
See details of restrictions and supervision imposed on the Company's activities in paragraph
20 below.
7.3
Developments in the markets of the Company's areas of activity and changes in the
composition of customers
The Company is of the opinion that the prominent trends and indicators underlying its
technologies as of the report date are as follows:
High growth rate compared to other segments in the pharmaceutical industry;
Massive growth in investments by large manufacturers, financial investors, non-profit
organizations and governments;
Proliferation of licensing, collaboration, merger and acquisition transactions.
The Company estimates that as of the report date, the medical world is in need of new
medications designed for the populations of patients which are addressed by the Company's
technologies.
The medicinal cannabis market
The medicinal cannabis market is an important and evolving segment in global medical
therapy. The growing awareness of the medicinal benefits of the active cannabinoids in the
plant and its use for improving the quality of life of patients with numerous and diverse
indications (oncological patients, chronic pain conditions etc.) as well as the global trends of
regulatory changes relating to the use of the plant and of cannabinoids have all led to a rapid
growth in this market. The recent changes in the perception of medicinal cannabis and the
scientific and medical acknowledgement of its benefits have created a growing need for more
efficient drugs with an improved tolerance profile. The market for medicinal cannabis (and its
medical substitutes) is estimated at approximately US$ 2 billion a year in the US alone35 and is
expected to continue showing a significant growth in the coming years. The main
disadvantages of the use of the plant stem from the lack of uniformity in the dosage of the
cannabinoids in each portion which are liable to materially affect its therapeutic effect and
create side effects. Another disadvantage if the method of administration of the cannabis since
smoking it is not necessarily suitable for all patients. In addition to the use of cannabis for
medical needs, there are several medical products that are based on cannabinoids (botanical or
synthetic).
35
http://www.ibisworld.com/industry/medical-marijuana-growing.html,
http://www.mpp.org/assets/pdfs/library/SeeChange_MedMarijuanaMkts.pdf.
18
These products have specific benefits such as uniform dosage, predefined efficacy and safety
profile and controlled manufacturing processes. The Company focuses on improving these
medical products to make them more efficient and safer and obtain a share of the medicinal
cannabis market for a variety of therapeutic indications.
The Company estimates that the principal risks underlying the medicinal cannabis activity at
this stage are as follows:
(1) The ability to obtain regulatory approvals in a timely manner;
(2) The ability to deal with growing competition in the market and maintain a vanguard
position in terms of technology and medical needs; and
(3) The ability to simultaneously retain the developed IP.
7.4
Critical success factors in the Company's operations and changes therein
There are several critical success factors that affect the Company's operations and success:
a.
b.
c.
d.
e.
f.
g.
h.
i.
Completion of product development and successful completion of clinical trials in
treatment in various indications.
Successful completion of preclinical trials to prove safety and efficacy in animals;
Obtaining regulatory approvals to market its products (see paragraph 20 below);
Contractual arrangements with entities (pharmaceutical manufacturers) that will work
with the company to finance research and development and/or incorporation of the
Company's technologies in their products;
Development of other products based on technologies in the Company's possession;
Obtaining approvals for patent applications to protect intellectual property;
Contractual arrangements in agreements to commercially manufacture the products
under competitive conditions;
Commercial manufacturing capacity for products developed by the company;
Ability to raise sufficient funds and financing for company operations, including
research and development, protection of intellectual property, compliance with
standards and obtaining approvals from the regulatory authorities, including by way of
collaborations, development agreements with major manufactures, grants from the
Chief Scientist, etc.
7.5
Changes in the supply and raw material system
See paragraph 15 below.
19
7.6 Main barriers to entry in the Company's areas of activity and changes therein
The Company's operations are largely based on licenses granted to it for use of intellectual
property on which the products that the Company is developing is based. In addition, the
Company is working to expand the technological base and products.
The following barriers to entry affect the Company's ability to enter its area of activity:
a.
b.
c.
d.
e.
f.
g.
h.
The existence of clinical, technological and business knowledge needed for developing
the technologies in the Company's areas of activity;
The existence of knowledge of and acquaintance with regulatory and licensing
mechanisms needed to comply with the standards of the relevant regulatory authorities
pertaining to the manufacturing and marketing of the Company's products in various
countries in which the Company chooses to market the products, once they reach the
commercial stage;
Familiarity and experience with the required regulatory and approval mechanisms for
clinical trials in order to obtain the approvals on time and within a relatively short
period of time;
The existence of clinical, technological and scientific knowledge needed to plan clinical
trials in a manner that will allow obtaining conclusive results and information to be
obtained to the extent possible while reducing costs and conducting a relatively small
number of clinical trials;
Familiarity with international pharmaceutical manufacturers and access to these
companies that would allow them the possibility of collaborating with regards to the
Company's technologies;
Acquaintance with the companies, investigators and research institutions both in Israel
and around the world needed to identify new, attractive technologies;
The ability to raise significant funds to promote research and development, protect
intellectual property, comply with standards and obtain approvals from the regulatory
authorities;
The knowledge underlying the licenses granted to the Company for its technologies that
are detailed above, which constitutes patent-protected intellectual property and/or in
patent applications.
7.7
Alternative products to the products being developed by the Company and changes therein
As for cannabinoid-based therapy, the existing alternative products consist of using the
cannabis plant for medicinal purposes as well as drugs that contain cannabinoids, as discussed
in paragraph 10 below.
20
8.
Technologies in which the Company has invested or has rights therein
8.1
General
The following table summarizes the main information regarding the Company's principal technologies:
Name of
product in
development
Disease/s for
which the
product is
being
developed
Advantages over existing
therapies
Entourage
effect based
drug
Tourette
syndrome37
To the best of the
Company's knowledge,
there is no designated
medicinal therapy for
Tourette patients. To the
best of the Company's
knowledge, the side
effect profile of existing
market therapies for TS
is characterized by
severe side effects that
strongly affect patients'
lives
Stage of
development
(status) as of
the report
date
The
Company is
completing
the
technology's
preclinical
development
phase and
preparing to
conduct
clinical trials
Company
rights in the
product
Projected milestones
over the next 12
months
Nearest milestone
and milestone due
date
Estimated cost
for completing
nearest
milestone
Size and scale of
annual funds of
product's target
market (in US
dollars)
36
License
agreement,
see
paragraph
20.1 below
- Completion of
formulation
development
- Beginning of
clinical trial and
recruiting
preliminary patients
Approx.
US$ 1 million
The US target
market accounts for
about 1% of all
adolescents (TS is
defined as an
orphan disease
among adults with
less than 200,000
patients with a
severe expression
of the disorder)38
Subject to
finalizing the
preparations as
above and
completion of
formulation
development, the
Company
estimates that a
Phase I clinical
trial and
recruiting
preliminary
patients will
commence in the
second half of
2016
Corporate assessment
regarding projected
market share assuming
marketing approval is
obtained
As of the report date and in
view of the product's
development stage, the
Company is unable to
assess the expected market
share of the product under
development
Corporate
assessment
regarding
start date for
marketing the
medical
product under
development
As of the
report date
and in view
of the
product's
development
stage, the
Company is
unable to
assess when
the marketing
of the product
under
development
will begin
36
37
38
Source of assessment listed in the above table regarding size of potential market for the products under development is publications by entities outside the Company that the Company has
reasonable grounds to believe are reliable (references to these publications are found in the footnotes to the table or in the footnotes to paragraph 7 to the report). For the most part, these
publications assess the market size on later dates in 2013, but include, for the most part, the projected annual growth rate. In order to assess market size in 2013, the Company's calculation
was based on projections from said publications for later years and from which the projected annual growth rate was deducted for 2013 and thereafter.
Tourette syndrome is a neurological disorder with onset in childhood (first diagnosed between ages 3 and 9) characterized by multiple physical (motor) tics and at least one vocal (phonic)
tic. See details in the Company's immediate report of August 4, 2015 (TASE reference: 2015-01-088677).
http://www.fda.gov/RegulatoryInformation/Legislation/SignificantAmendmentstotheFDCAct/OrphanDrugAct/default.htm.
21
Name of
product in
development
Disease/s for
which the
product is
being
developed
Advantages over existing
therapies
Stage of
development
(status) as of
the report
date
Company
rights in the
product
Projected milestones
over the next 12
months
Nearest milestone
and milestone due
date
Estimated cost
for completing
nearest
milestone
Size and scale of
annual funds of
product's target
market (in US
dollars)
Ultralow dose
technology-
based drug
Mild
Cognitive
Impairment
(MCI)39
To the best of the
Company's knowledge,
there is no efficient
medicinal treatment for
this indication (in the
context of development,
the Company will use a
significantly lower dose
of an approved drug to
allow minimizing the
expected side effects of
the drug)
The
Company is
preparing to
begin the
formulation
phase in the
context of
the
preclinical
development
phase
License
agreement,
see
paragraph
20.2 below
- Formulation
development
- Conducting
preclinical trial for
initial proof of
concept
Approx.
US$ 1 million
Completion of
formulation
development of
several variations
for expected
clinical proof of
concept towards
the end of Q4
2016
The main target
markets (including
the US) account for
10% to 20% of
total population
over 65 (more than
30 million MCI
patients in the
major markets)
with a global
monetary scope of
up to US$ 9.5
billion in 201740
Corporate assessment
regarding projected
market share assuming
marketing approval is
obtained
As of the report date and in
view of the product's
development stage, the
Company is unable to
assess the expected market
share of the product under
development
Corporate
assessment
regarding
start date for
marketing the
medical
product under
development
As of the
report date,
no complete
product
clinical
development
plan has been
formulated
and therefore
it is too early
to assess
when the
marketing of
the product
under
development
will begin
39 MCI is a transitional stage between normal cognitive impairment associated with aging and a more severe form of cognitive impairment which represents dementia. It may involve
problems relating to memory, language, thought processing and judgment which all have a greater impact on everyday life than normal cognitive impairment associated with age. See more
information in the Company's immediate report of August 4, 2015 (TASE reference: 2015-01-088677).
40 Mild Cognitive Impairment: An Off-Label Market with Significant Unmet Need and High Prevalence Carries Substantial Opportunity, DecisionBase 2008 report, by Decision Resources;
P.-J. Lin and P.J. Neumann / Alzheimer’s & Dementia 9 (2013) 58–62, BCC Research.
22
Name of
product in
development
Disease/s for
which the
product is
being
developed
Advantages over existing
therapies
Anti-CD3
(antibody)
NASH
Ulcerative
colitis/IBD)
Change to oral
administration (PO) of
the antibody, which
activates a unique
mechanism of the
immune system and
causes the desired
therapeutic effect.
Prevents large-scale
suppression of the
immune system that
occurs when the
antibody is administered
by injection
Stage of
development
(status) as of
the report
date
Phase IIa
clinical trial
ended
successfully
in 201141. As
of the report
date, the
Anti-CD3
technology is
not at the
focus of the
Company's
operations
Phase IIa
clinical trial
began in
201444. As
of the report
date, the
Anti-CD3
technology is
not at the
focus of the
Company's
operations
Company
rights in the
product
Projected milestones
over the next 12
months
Nearest milestone
and milestone due
date
Estimated cost
for completing
nearest
milestone
Size and scale of
annual funds of
product's target
market (in US
dollars)
License
agreement –
see
paragraph
20.8 below
As of the report date,
the Anti-CD3
technology is not at
the focus of the
Company's operations
(*)
---
---42
The target market
for NASH in 2017
is expected to total
US$ 1.3 billion43
Corporate
assessment
regarding
start date for
marketing the
medical
product under
development
---
Corporate assessment
regarding projected
market share assuming
marketing approval is
obtained
---
[(*) It should be
clarified that as of the
report date, the
Company continues to
try to identify
potential business
development
collaborations,
strategic investments
or other transactions
for this technology
and is even examining
the potential agreed
termination of the
program]
The target market in
2022 is expected to
reach approximately
US$ 3.6 billion45
41
42
43
44
45
See the Company's immediate reports of August 22, 2010 (TASE reference: 2010-01-593637), September 12, 2010 (TASE reference: 2010-01-616743), March 21, 2011 (TASE reference:
2011-01-085731), August 7, 2011 (TASE reference: 2011-01-246567) and October 27, 2011 (TASE reference: 2011-01-309405). Regarding the results of the clinical trial, see the
Company's immediate report of October 2, 2012 (TASE reference: 2012-01-246915).
This without taking into account costs of retaining the IP underlying the licensed technology and of ongoing project maintenance which might add up to approximately US$ 0.25 million a
year.
OpportunityAnalyzer: Nonalcoholic Steatohepatitis (NASH) - Opportunity Analysis and Forecasts to 2017 - Event-Driven Update, March 2014, GlobalData.
See the Company's immediate report of May 18, 2014 (TASE reference: 2014-01-065805).
Decision Resources – Ulcerative colitis report, October 2013.
23
For details of the Anti-CD3 clinical trial for the Hepatitis C indication and its results,
see paragraph 8 to Chapter A to the previous annual report.
It should be emphasized that the Anti-CD3 technology's development stage, consisting
of the successful Phase IIa clinical trial of the NASH indication and the beginning of the
clinical trial for the ulcerative colitis indication, addresses the OKTS non-humanized
antibody which originates from mice whose production has been discontinued. The
Company estimates that in order to be able to continue the development of the drug
based on this antibody (against CD3), the Company must continue the development (a
process which was completed) and production of a humanized antibody that will require
conducting Phase I clinical trials.
Forward-looking information warning - the information in the table above includes
projections, assessments and estimates, which represent forward-looking information, as
defined in the Securities Law, whose materialization is not guaranteed and whose
materialization depends, inter alia, on factors that are outside the Company's control,
such as developments in the treatment of diseases that the Company's developments
were designed to treat, competitors' developments, position and involvement of the
Company's business partners and/or license owners on various developments and their
business and strategic decisions with regards to these developments, the Company's
ability to raise financial resources to conduct additional preclinical and clinical trials,
developing appropriate formulations and/or molecules and/or on earlier dates, the
Company's ability to take the developed products to market on time, the Company's
ability to enter contractual arrangements with major business partners, the availability
and willingness of patients to participate in clinical trials, the results of preclinical and/or
clinical trial, the need to conduct additional preclinical and clinical trials on products
being developed by the Company based on the technologies and/or the requirements to
conduct repeated trials and/or the prolongation of existing trials past schedules and
additional special and/or stricter requirements imposed by medical institutions and
centers where the clinical trials are and/or will be conducted, acceptance of the
Company's developments by the medical community, etc. and any other risk factors
applicable to the Company and its operations as detailed in paragraph 24 below.
24
8.2
The entourage effect
Cannabinoids are a diverse group of chemical compounds that operate on specific receptors in
the body (CB1 and CB2). This family includes molecules that are derived from the cannabis
plant (phytocannabinoids) (the most known ones being THC and CBD) and molecules that are
naturally produced in the human and animal body (endocannabinoids) (such as AEA and 2-
AG). Dozens of molecules have been identified as part of the cannabinoid family.
Cannabinoids participate in a large number of physiological processes and are used for
treating a wide range of medical conditions. Cannabinoids have been proven as pain relievers
and anti-inflammatory, prevent nausea and enhance appetite and are therefore widely used
among cancer patients who undergo chemotherapy. Other uses include mental health and
psychological conditions such as posttraumatic stress disorder and anxiety. These compounds
were also found to be effective in treating epilepsy, Parkinson's, cancer and MS. In 1998, Prof.
Raphael Mechoulam, Israel Prize laureate, described the "entourage effect" which explains
how an allegedly inactive compound synergizes with an active cannabinoid. One of the most
studied cannabinoids in entourage effect research is the palmitoylethanolamide (PEA), part of
the endocannabinoid family derived from fatty acids. PEA has extensive pharmacological
benefits such as relieving pain and inflammation. Despite being part of the endocannabinoid
system, PEA does not bind to the CB1 and CB2 receptors. Dekel's entourage effect technology
and knowhow consist of synergizing compounds like PEA with other cannabinoids and drug
families such as opiates and steroids in order to increase the drug's effect thereby allowing the
use of smaller doses and preventing undesired side effects. Several past clinical trials
conducted in this context have demonstrated the synergy between PEA and other painkillers
such as opiates and anti-epileptic drugs that are given for neuropathic pain. When combined
with opiates, PEA significantly mitigates the dependency on morphine and doubles the
number of days of the drug's efficacy without causing dependency. To the best of the
Company's knowledge, Dekel's entourage effect has demonstrated enhanced steroid activity
using PEA, mainly for dermatologic use.
8.3
The ultralow dose technology
Studies conducted in recent years by Prof. Yosef Sarne at the Tel-Aviv University Faculty of
Medicine found that an ultralow dose of THC, the main mind-altering ingredient found in the
Cannabis plant, protects the brain from different degrees of long-term cognitive impairment
which is liable to occur as a result of lack of oxygen supply, seizures or use of drugs. In
previous studies, researchers injected a high dose of THC within a very short period of time -
up to four hours - before or after the damage to the brain. Prof. Sarne's research of preclinical
models demonstrated that an ultralow dose of THC injected to small animals three to seven
days before the injury to the brain can prevent the development of damage. Treatment with an
ultralow dose triggers defense mechanisms in the brain such as enhanced production of nerve
growth factors (NGFs) that protect the brain's nerve cells and retain long-term cognitive
capabilities. The research conducted by Prof. Sarne and his colleagues revealed that ultralow
doses of tetrahydrocannabinol can affect brain cell signals, prevent cell death and encourage
growth factors. In additional studies conducted on the preclinical model in small animals, the
researchers injected an ultralow dose of THC before or after exposure to brain damage
whereas the control group sustained brain damage without administering THC. Tests
performed revealed that animals that received ultralow dose of THC did better in behavioral
tests that measure learning and memory skills. Biochemical tests showed the existence of a
larger amount of substances known to protect brain cells such as NGFs46.
46
https://www.tau.ac.il/research/THC;
http://www.forbes.co.il/news/new.aspx?Pn6VQ=ED&0r9VQ=JDEG.
25
8.4
The Anti-CD3 technology
This technology is based on patents that are jointly owned by Hadasit and Harvard University
Health Services and based on a license obtained by Hadasit to use these patents. The
innovation in the Company's developed therapy based on the license received from Hadasit
lies in the method of administration of the antibody - orally, which is expected to prevent the
widespread immune suppression and allow treating various inflammatory and autoimmune
diseases with the required safety. This technology was tested in clinical trials conducted by the
Company. The technology focuses on development of a unique immunotherapy of
inflammatory and autoimmune diseases with a monoclonal antibody to CD3 that is
administered orally (per os). The antibody affects lymphatic tissue in the lining of the
digestive system by induction of regulatory T-cells that bind to the disease sites and suppress
the activity of other T-cells that attack specific organs in the patient. In the first clinical trial,
treatment successfully complied with the safety criteria and immunological changes were
measured that might indicate the efficacy of the treatment in controlling and inhibiting
inflammatory processes. In preclinical trials in accepted models of the disease, oral
administration of the Anti-CD3 antibodies was shown to prevent progression of the disease in
a range of inflammatory and autoimmune diseases including jaundice related to the immune
system, fatty liver (NASH), Type 1 diabetes, Type 2 diabetes, Multiple Sclerosis (MS) model,
Lupus (SLE), ulcerative colitis (UC), prevention of graft versus host disease, psoriasis and
atherosclerosis. It should be clarified that as of the report date, the Anti-CD3 technology is not
at the center of the Company's operations and the Company continues to attempt to identify
business development collaborations, strategic investments or other transactions and is even
examining the possible agreed termination of the program.
9.
Existing and prospective customers
9.1
9.2
As of the report date, the Company does not have any regular or fixed customers that make
commercial purchases and therefore does not have an order backlog.
As discussed above, as of the report date, the Company has been developing a cannabinoid-
based drug for treating Tourette syndrome based on the entourage effect and is also preparing
to develop a cannabinoid-based drug to treat MCI (including Alzheimer's) based on the
ultralow dose technology47.
47
Also in connection with the Anti-CD3 technology, the Company continues its efforts to identify potential
business development partners, strategic investors or other transactions and even contemplating agreed
termination of the program.
26
10. Competition
The entourage effect and the ultralow dose technologies
As of the report date, the Company has examined several possible indications for the development and
application of its technologies, including in connection with pain and chemotherapy-induced nausea
and vomiting (CINV). As of the report date, following examination, the Company decided to focus on
the entourage effect with an indication for Tourette syndrome as an orphan drug and with an indication
for MCI (age dependent) using the ultralow dose technology. To the best of the Company's
knowledge, there is no designated medicinal treatment for Tourette patients whereas the side effect
profile of existing TS therapies in the relevant market is characterized by severe side effects that
impair the quality of life of the patients. Also, to the best of the Company's knowledge, there is no
efficient medicinal treatment for MCI which is considered the early stage of Alzheimer's. With respect
to Alzheimer's, there are several medicinal treatments for Alzheimer's in common medical practice
such as acetylcholinesterase inhibitors whose efficacy in treating MCI is yet uncertain. In the context
of the Company's development activity, it seeks to use a significantly lower dose of an approved drug,
Dronabinol, to identify a potential solution for MCI and minimize the expected side effects of
alternative medicinal treatment.
In general, it may be argued that the medicinal cannabis market offers therapeutic solutions that are
distinguished according to FDA control and consumption. To the best of the Company's knowledge,
the highest selling FDA controlled and approved synthetic cannabis product is Marinol (and its generic
products) whose US sales are estimated at approximately US$ 350 million a year whereas the more
widely consumed medicinal cannabis reaches total sales of some US$ 2 billion in the US every year
and is expected to grow to approximately US$ 8 billion in the coming years. The benefits of the
entourage effect and ultralow dose technologies lie in the potential improvement/empowerment of an
existing market drug while reducing side effects and creating a medicinal alternative for medical
cannabis (which is currently not recognized as a medical product by the various regulatory authorities
around the world and is not characterized by measurable therapeutic quality contrary to prescription
drugs)48.
The Anti-CD3 technology
To the best of the Company's knowledge, there is currently no development which uses similar
mechanisms to those of the Company's technology which is in competition with the Company's Anti-
CD3 technology (for the NASH indication). To the best of the Company's knowledge, there are
currently no approved drugs for the treatment of NASH. The Company considers the NASH indication
as the leading indication for the Anti-CD3 technology.
It should be clarified that as of the report date, the Anti-CD3 technology is not at the center of the
Company's operations and the Company continues its attempts to recruit potential business
development partners and strategic investors as well as other transactions and is even examining the
potential termination of the program with the parties' consent.
48
To the best of the Company's knowledge and estimate there are currently several pharma companies that develop
non-cannabinoid drugs for treating MCI such as Actinogen Limited, Avraham Pharmaceuticals Ltd., Boehringer
Ingellheim GmbH, CereSpir Incorporated, Eisai Ltd., Eli Lilly and Company, Co., Sage Therapeutics and
Sanofi. The benefit of the Company's development, among others and as opposed to the medicinal developments
of these companies, is that the Company is not developing a new medicinal molecule and therefore the potential
time to market and development costs are significantly more advantageous than developing a drug based on a
new molecule, as above.
27
11. Research and development
11.1
The Company intends to act for the development of the entourage effect based technology
with the Tourette syndrome indication and the development of the ultralow dose technology
with the MCI indication. The Company intends to continue developing these technologies by
itself and/or by introducing partners and/or strategic investors and by granting sublicenses
and/or selling the Company's rights in the technology to third parties.
11.2
The Company also continues to attempt to recruit business development partners, strategic
investors and other transactions for its Anti-CD3 technology and possibly the termination of
the program with the parties' consent.
28
11.3
The following table presents the technologies being developed by the Company as of the report date:
Trial/product
name
Indication of
medical product
Trial type
THX-TP01
Tourette
syndrome
THX-ULD01
MCI
TRX-318
Nonalcoholic
steatohepatitis
(NASH)
Inflammatory
bowel disease
(IBD)
Clinical trials
have not yet
commenced,
preclinical phase
completed
Clinical trials
have not yet
commenced, the
preclinical phase
has been
launched
Clinical
Clinical
Clinical trial
objective (if
applicable)
Clinical trials have
not yet commenced
Trial's
development
stage (if
applicable)
Clinical trials
have not yet
commenced
Clinical trials have
not yet commenced
Clinical trials
have not yet
commenced
Patients with
acute
Tourette
syndrome
Patients over
50 with mild
cognitive
impairment
Target
population
Trial
deadlines
Participating
centers
Estimated
expected
overall cost of
trial
Clinical trials
have not yet
commenced
Clinical trials have
not yet commenced
Up to approx.
US$ 1 million
Accumulated
cost from date of
initiating trial
through the
report date
Clinical trials
have not yet
commenced
Clinical trial
results (if
applicable)
Clinical trials
have not yet
commenced
Clinical trials
have not yet
commenced
Clinical trials
have not yet
commenced
At this stage,
the Company
cannot make
an assessment
Clinical trials
have not yet
commenced
Clinical trials
have not yet
commenced
As of the report date, the development is not at the focus of the Company's operations
29
11.4
In the past, the Company financed its R&D investments in its various technologies from its
own resources, from grants received from the Chief Scientist and from raising capital from
private and public resources in return for the allocation of securities of the Company and/or its
subsidiaries, as discussed below.
11.5 Below is a summary of the grants received by the Company and that were invested in R&D in
the last three years and the balance of grants received (on an accumulated basis) by the
Company as of the report date, classified according to the various projects (NIS in thousands):
Grant
received in
2013
Grant
received in
2014
Grant received
in 2015 and as of
the report date
Project name
Therapix/Anti-CD3
Therapix/Alzheimer's
EU/Orimmune
(formerly: Protea)
Chief Scientist/
Orimmune (formerly:
Protea)
402
84
---
---
---
---
Total grants - Therapix
and Orimmune
(formerly: Protea)
---
---
486
---
12.
Intangible assets
Special stipulations
established by the Chief
Scientist with regards to
grants and/or their
repayment
Payment of royalties of
3%
Payment of royalties of
3%
No repayment of grant
Payment of royalties of
3%
Balance of
grants received
from the Chief
Scientist as of
the report date
Terms of
repayment of the
grants and
timetables
Royalties from
sales
Royalties from
sales
No repayment of
grants
The Company
decided to
terminate the
program
4,134
640
---
1,239
6,013
---
---
---
---
---
In most cases, the life of an approved patent is 20 years from the date of the patent application,
excluding cases in which a patent term extension is granted based on local laws. The patent renewal
dates differ in each country. In certain countries, a maintenance fee is levied on patent applications.
As of the report date, the Company's technologies detailed above consist of the licensed use of the
entourage effect technology for enhancement of the activity of known molecules in combination with
N-acylethanolamines in the context of the technology license agreement signed with Dekel and the
licensed use of ultralow dose of THC for the prevention and/or treatment of MCI in the context of the
technology license agreement signed with Ramot (see details in paragraph 20 below).
As of the report date, the Company also holds a license for the oral use of Anti-CD3 for treating
inflammatory, autoimmune and other diseases relating to immune system disorders in the context of a
technology license agreement signed with Hadasit (see paragraph 20 below).
Following are details of the patents underlying the development of the Company's technologies and
other operations. For information on the license agreements underlying technology rights granted to
the Company, see paragraph 20 below.
30
The entourage effect technology
The Company has rights to use the patents in connection with the entourage effect technology based
on the license agreement signed with Dekel49.
The ultralow dose technology
The Company has rights to use the patents in connection with the ultralow dose technology based on
the license agreement signed with Ramot50.
The Anti-CD3 technology
The Company has development and commercialization rights in this technology in accordance with
the licensing agreement (see paragraph 20 below). The current developments of the Company with
regards to the Anti-CD3 technology primarily rely on the patents and patent applications listed below:
Patent
name and
number
Methods of
modulating
immunity *
Patent description
Company
rights in the
patent
Countries in which they
are approved
Treatment with Anti-CD3
Antibody for autoimmune
diseases, administered orally
(patent for use)
Usage and
commercializati
on license from
Hadasit
US (7883703)
US divisional patent
application (14/535,693)
Europe ** (1687066)
Europe divisional patent
application (2397189) ***
Australia (2004291107)
Canada (2545806)
Japan (5027512)
Hong Kong (1098085)
Projected
expiration
date of
patent
11/2024
*
In October 2010, approval was obtained in the United States for the "methods of modulating
immunity" patent that focuses on the oral administration (per os) of the Anti-CD3 antibody to
treat various inflammatory and autoimmune diseases. The approval that was given includes the
following indications: diabetes, multiple sclerosis, psoriasis, rheumatoid arthritis, SLE, lupus,
graft-versus-host disease, inflammatory bowel disease and uveitis. For more information about
said approval, see the immediate report published by the Company on October 5, 2010 (TASE
reference: 2010-01-636270). See details of a patent opposition proceeding in paragraph 21
below.
**
Includes the following countries in Europe: Switzerland, Germany, Denmark, Spain, France, the
UK, Ireland, Italy, the Netherlands, Poland and Sweden.
***
Includes the following countries in Europe: Germany, France and the UK. Following the
approval of the divisional patent by the European Patent Office (EPO), a notice of opposition
was filed by an anonymous entity before the window of filing oppositions allocated by the EPO
was closed.
49
50
As of the report date, some are in the provisory stage.
As of the report date, some are in the provisory stage.
31
Patent name and
number
Patent
description
Company rights in the
patent
Priority date
Usage and
commercialization
license from Hadasit
January 18,
2008
NasVax rights
April 29,
2010
Patent
application
deadline
January 18,
2009
Countries in which an
application was
submitted
US (14/183,248)
Israel (207030)
April 29, 2011 US (13/635119)
Combination therapy
of beta-glycolipids
and antibodies for the
treatment of immune-
related disorders
Methods and
compositions for
treating and/or
preventing hepatitis
with anti-CD3
immune molecule
therapy
Methods and
Compositions for
treating an orphan
indication
Humanized antibodies
to cluster of
differentiation 3
Combination use of
beta-glycolipids such as
GC (Glucosyl
Ceramide0 with Anti-
CD3 antibody for
immune-related
disorders (patent on use)
Use of the Anti-CD3
molecule to treat or
prevent jaundice,
including viral, and fatty
liver disease (NASH)
(patent on use)
Treatment with Anti-
CD3 antibody for
orphan disease,
administered orally or
nasally (mucous)
Humanized Anti-CD3
antibody
NasVax rights
02/2012
02/2013
NasVax rights
06/2012
03/2013
India
(CHENP/2012/10006)
Brazil (BR 11 2012
027531 3)
Korea (10-2012-
7031085)
PCT (can be submitted
– international)
(PCT/IL2013/050158)
US (14381585)
National Phase (final
filing in select
countries)
China
(2013800431415)
Europe (13730641.1)
US (14/408128)
The BBS technology
Regarding patents relating to the BBS technology, the Company is in the process of returning the
patents to Ramot as part of the agreement for the recovery of the license to Ramot, as described in
paragraph 20 below.
13. Fixed assets, real estate and facilities
Starting from August 2014, the Company is subleasing from an unrelated third party spaces in an
office building in Tel-Aviv which are used as the Company's offices and headquarters. The lease fees
are immaterial to the Company. To secure the Company's obligations under the sublease agreement
the Company provided the lessor a bank guarantee in an immaterial amount. The lease agreement is in
effect until June 30, 2016 (unless it is extended with the parties' consent and under predetermined
terms).
32
14. Human capital
14.1
In 2014 and 2015, the Company's C-suite was replaced as part of a trend that began in 2013.
Starting from March 2014, the Company initiated steps for the restructuring of its Board in
order to improve its operation (including through the subsidiaries). As of the report date, the
Company continues to exercise its efforts to strengthen and stabilize its senior management
while focusing on its business strategy. In 2014 and 2015, several executive officers in the
Company were replaced and as of the report date the Company operates with a small number
of senior officers. In addition, the Company has an auxiliary R&D Committee that advises the
Board on issues of preclinical and clinical trials51.
14.2 As of the report date, senior management consists of five employees (about 3.2 positions in
position terms) including active Chairman, CEO, Finance Director and Secretary, Chief
Strategy Officer and CTO.
14.3
14.4
The Company also has a limited number of permanent employees, consultants and service
providers and does not hire any subcontractors.
The following table presents the headcount of the Company's full-time employees as of
December 31, 2015 and 2014 and as of the report date:
Area of activity
Senior management
Business development
Finances and administration
Research and development
Total
No. of employees/service
providers as of the report
date
2
1
3
2
8
No. of employees/service
providers as of December
31, 2015
2
1
3
1
7
No. of employees/service
providers as of December
31, 2014
2
1
3
1
7
14.5 Organizational structure
Below is a diagram of the Company's organizational structure:
Active Chairman
CEO
Finance
Technological
Development
Research&
Development/Regulation
Accounting and
Administration
Business Development &
Strategy
51
The Company's Board decided to establish an R&D Committee that will advise the Board on preclinical and
clinical trials and will include members from the Company's management and Board. See the Company's
immediate report of June 16, 2015 (TASE reference: 2015-01-097044).
33
14.6
Employment agreements
As of the report date, the Company's entire employees/consultants are employed under
personal employment agreements and/or consulting/service agreements. These agreements
include clauses pertaining to non-disclosure and non-compete and exclusivity and protection
of the Company's IP rights against third parties. The terms of employment consist of paid
vacation, recreation and other social benefits pursuant to applicable law. The employment and
consulting/service agreements are normally signed for an indefinite term whereby each party
may terminate the agreement by providing an advance notice of 30 days, excluding irregular
cases that provide for immediate termination as set forth in the agreements.
14.7 Officers and senior management
The Company's senior officers and key management personnel are also employed under the
terms prescribed in personal contracts (whether employment agreements or consulting/service
agreements). The engagements with senior officers include non-disclosure, non-compete and
IP third party and exclusivity protection clauses. The terms of employment generally include
participation in car expenses, paid vacation and recreation and other social benefits pursuant to
applicable law and related benefits. The employment agreements are normally signed for an
indefinite term whereby each party may terminate the agreement by providing an advance
notice of 30 to 90 days, as applicable, excluding irregular cases that provide for immediate
termination.
See details of the main engagements between the Company and senior officers in the
Company in conformity with Regulation 21 to the Reporting Regulations in Chapter D
(Additional Information about the Corporation) to this report.
As of the report date, the Company believes that it is not dependent on any of its employees
and/or senior officers.
All the Company's directors and senior officers are covered by a directors' and officers'
professional liability insurance policy through an Israeli insurance company. See details in
Regulation 29a to Chapter D (Additional Information about the Corporation) to this report.
In addition, the Company grants standard letters of indemnity and quittance to the officers in
the Company and/or in the subsidiaries, as they will be from time to time, during their service
as officers in related companies, and to officers who are controlling shareholders or their
relatives.
14.8 Officer remuneration policy
Based on the provisions of Amendment No. 20 to the Companies Law, on January 23, 2014,
the Company adopted an officer remuneration policy ("the remuneration policy")52. The
objective of the remuneration policy is to describe and specify the Company's officer
remuneration policy. The remuneration policy serves as a tool for the Company to provide
incentives and rewards to officers.
52
See the Company's immediate report of January 23, 2014 (TASE reference: 2014-01-023434).
34
When signing new employment and/or consulting agreements and/or renewing or revising
existing agreements, the Company aspires to assimilate and implement the remuneration
policy, provided that it retains the right to make certain adjustments as needed and pursuant to
applicable law.
The remuneration components to which the officers are entitled will only be the components
that have been specifically approved by the Company's qualified entities and subject to the
provisions of applicable law. The adoption of the remuneration policy by the Company does
not grant its officers any rights whatsoever. According to the provisions of the remuneration
policy, the Company may adopt an annual target-based remuneration plan according to which,
among others, considerable weight is placed on meeting targets that are derived from the
Company's annual and multiannual work plan and/or from its strategic plan. These targets will
include KPIs that reflect the Company's objectives and strategies in the short, medium and
long term to establish mutual interests between the Company, the shareholders and the officers
and promote the achievement of the Company's objectives and strategies.
The Company's remuneration policy became effective from the date of its approval by the
general meeting on March 24, 2014 and will remain in effect for a period of three years (until
March 24, 2017), unless it is adjusted and/or modified before that, all in keeping with the
provisions of the Companies Law and the regulations published thereunder, as amended from
time to time. The principles of the Company's remuneration policy were made public53.
14.9
The Company's option plan
(a)
In December 2015, the Company's Board decided to adopt a new option plan for the
Company in the context of which unlisted options for the purchase of up to 5,000,000
Ordinary shares of NIS 0.1 par value each of the Company will be allocated to officers,
employees and consultants of the Company (or anyone whose services are deemed
valuable by the Company's Board) ("the new option plan"). The new option plan is a
continuation of the Company's option plan from 2005 which expired in 2015 ("the old
option plan").
(b) As of the report date, the Company granted 4,018,285 options according to the old
option plan, of which 3,385,891 options were granted to officers in the Company, and
also granted 2,320,000 options according to the new option plan, of which 1,900,000
options were granted to officers in the Company.
53
See Appendix A to the Company's (revised) immediate report of February 6, 2014 (TASE reference: 2014-01-
034204 and an immediate report of March 24, 2014 (TASE reference: 2014-01-022311).
35
(c) The following table presents information of options granted under the option plan to
employees, officers and consultants of the Company in the two years preceding the
report date and as of the report date (categorized according to the type of optionee):
Type of optionee
Allocation date
No. of
optionees
Amount of
offered options
Consideration
CEO54
April 23, 201455
Chairman of the
Board
January 27, 201456
Former CEO
May 20, 2015
CEO57
May 20, 2015
Former CEO
June 10, 2015
CEO
February 16, 2016
Chairman of the
Board
February 16, 2016
Directors (including
former directors)
February 16, 2016
February 16, 2016
Officers, employees
and consultants
(other than the CEO
or directors)
1
1
1
1
1
1
1
2
7
266,242
423,037
400,000
140,000
800,000
700,000
250,000
100,000
1,220,000
Options granted at no
consideration (at the
determined exercise price)
Options granted at no
consideration (at the
determined exercise price)
Options granted at no
consideration (at the
determined exercise price)
Options granted at no
consideration (at the
determined exercise price)
Options granted at no
consideration (at the
determined exercise price)
Options granted at no
consideration (at the
determined exercise price)
Options granted at no
consideration (at the
determined exercise price)
Options granted at no
consideration (at the
determined exercise price)
Options granted at no
consideration (at the
determined exercise price)
Corporate value
after the money
derived from the
allocation (if
applicable)
-
-
-
-
-
-
-
-
-
(d)
In accordance with the new option plan, the options to officers and employees,
including directors but excluding controlling shareholders in the Company, will be
allocated in accordance with Section 102 of the Income Tax Ordinance, and the options
to consultants and service providers in the Company will be allocated in accordance
with Section 3(i) of the Income Tax Ordinance.
The options that will be allocated in accordance with the option plan will be held by a
trustee during a capping period as defined in the Income Tax Ordinance. The trustee
will act in compliance with the trust agreement to be signed, inter alia, between the
trustee and the Company.
The Company's Board has the authority to amend the terms of the option plan.
54
55
56
57
Said person did not serve as CEO on the relevant allocation date.
See the Company's immediate report of April 23, 2014 (TASE reference: 2014-01-049038).
See the Company's immediate report of January 27, 2014 (TASE reference: 2014-01-024814).
Said person did not serve as CEO on the relevant allocation date.
36
The options can be exercised in one portion or in several portions over the exercise
period.
Each optionee is entitled to receive the options and/or the shares deriving from the
exercise of the options ("the exercise shares"), provided that on the date of receipt of
the options and/or exercise shares, the optionee is an employee or service provider of
the Company.
The options can be exercised until the earlier of the date set forth in the agreement
between the optionee and the Company or the end of any extended period as stipulated
below ("the exercise period").
Upon termination of the employee's employment by the Company and/or termination of
the contractual arrangement between the service provider and the Company ("the
optionee's contractual arrangement with the Company" and "the date of
termination of the contractual arrangement", as applicable), the options allocated to
that optionee will expire. The optionee will be entitled to exercise the options granted to
it even after the date of termination of the contractual arrangement under the
circumstances prescribed in the option plan.
Adjustments
Subject to the discretion of the Board and the provisions of the new option plan, the
options will be subject to adjustments as specified below:
-
-
Transaction - in the event of a transaction, as defined below in this paragraph, the
options will be assigned to the receiving company or swapped with shares of the
receiving company, in accordance with the consideration that will be given to the
Company's shareholders, including consideration in shares of the receiving
company, consideration in cash or any other form of consideration. In said
circumstances, the exercise price will be adjusted, as set forth by the Company's
Board. The Company will inform the optionees of said transaction at least 10
days prior to the record date of the transaction. If the Company chooses not to act
as specified, and subject to the provisions of the agreements that were signed with
the optionees, the exercise period may be accelerated, the options will be
considered as exercised and each optionee will be entitled to sell the exercise
shares to the Company, which will be required to purchase them at market price,
as defined in the plan. "Transaction" is defined as a merger, acquisition or
restructuring of the Company that will result in the dissolution of the Company or
the sale of all or most of the Company's assets.
Liquidation - in the event of voluntary liquidation of the Company prior to the
end of the exercise period of the options, the Company will inform the optionees
of said liquidation and the optionees will be entitled to exercise the options within
10 days from date of said notice. Options that are not exercised within said 10
days will expire.
37
-
-
-
-
-
Capital consolidation or split - if any change occurs in the Company's issued
capital by way of dividend in shares (bonus shares), stock split, consolidation or
exchange of shares, a change in the Company's capital structure or any other
similar event, the number and type of shares that will derive from the options as
part of the plan and the exercise price of each option will be proportionally
adjusted in order to proportionally maintain the number of exercise shares,
without any change in the cumulative exercise price. In said case, the cumulative
type and number of shares that can be issued as part of the exercise of the options
by virtue of the plan, in relation to the options that have not yet been exercised,
will be similarly adjusted, as will be determined by the Company's Board.
If the Company consolidates the Ordinary shares in its issued share capital to
shares with a larger par value or splits them or subdivides them to shares with a
smaller par value ("the share reorganization"), the number of exercise shares
that will be allocated due to the exercise of the offered options following the
share reorganization date will be increased or decreased respectively. Optionees
may not allocate part of a single exercise share and the share fractions that will
result from the share reorganization will be treated as dictated by the Company's
Board in keeping with the Company's articles of association and applicable law.
Adjustments arising from bonus share distribution - if the Company distributes
bonus shares, the exercise price of the offered options will not be modified and
will also apply to the bonus shares to which the exercise shares would be entitled
had the offered options been exercised before the distribution of the bonus shares
as above. In such event, the optionees will be allocated bonus shares pro rata to
the entire number of exercise shares allocated to them following each exercise of
the offered options by the optionees and the number of exercise shares that the
optionees may exercise will increase or decrease accordingly. Optionees will not
be entitled to allocate part of the bonus shares as discussed above but each bonus
share fraction that results from the allocation and accumulated to whole shares
will be sold on the TASE by a trustee appointed for that purpose by the Company
and the net proceeds (after deducting the selling expenses and mandatory fees and
levies) will be divided among the eligible parties. No single check below NIS 50
will be provided to a registered eligible party. The proceeds will be made
available to the eligible parties at the Company's offices on standard working
days and hours. Eligible parties who fail to collect their proceeds within twelve
(12) months from the date of sale will lose their entitlement; the Company will
refrain from distributing bonus shares if such distribution is liable to lead to the
allocation of exercise shares at a price below their par value.
Adjustments arising from share rights issues - if the Company executes any share
rights issues, no other shares or securities will be added to the exercise shares and
the exercise price of the offered options will not be modified. The Company will
offer the securities to the optionees under the same terms as offered to the
Company's shareholders and the optionees will be viewed as having exercised
them before the record date of the rights issue.
Cash dividends - upon the distribution of cash dividends of any type or kind to
the Company's shareholders, the exercise price of the unexercised options will be
reduced ("the new exercise price") to equal the result of multiplying the exercise
price by the ratio of the ex-dividend base rate to the Company's share's closing
rate on the TASE on the latest trading day before the ex-dividend date (but in any
event not below the par value of the Company's Ordinary share). In addition, it
was clarified that no adjustment will be made in respect of the offered options in
the event of distribution, as this term is defined in the Companies Law, which is
not a cash dividend distribution, not event by adjustment of the exercise price or
number of the exercise shares.
38
14.10 The Company's Scientific Advisory Board
The Company has a Scientific Advisory Board that discusses the scientific issues relating to
the Company, whose members as of the report date include Prof. Howard Weiner and Prof.
Raphael Mechoulam.
14.11 Benefits and nature of employment agreements
See details relating to the Company's officers in Regulation 21 to Chapter D to this report.
15. Raw materials and suppliers
The Company's main suppliers are the owners of the knowledge from which the Company acquires
and/or receives a license to develop, use, market and commercialize its technologies, as described
below.
Each supplier is an exclusive supplier of the relevant technology. Nonetheless, in light of the nature of
the licensing agreements, the Company believes that it does not have an absolute dependency on any
of the said suppliers, since its rights are derived from the usage agreement that, barring a fundamental
breach of contract by the Company, entitles the Company to continue its activity in accordance with
the terms of the licensing agreement. The Company has several agreements with other suppliers that
are used by the Company for outsourcing. These suppliers include companies that specialize in
research and development, conducting animal testing, clinical trials, regulation etc. The Company
believes that working with these suppliers does not pose a real risk, based on the reputation of these
suppliers, experience with working with them and the availability of alternative suppliers.
As for a term sheet signed with Rhodes Technologies, see paragraph 20 below.
16. Working capital
As of December 31, 2015, the Company has excess current assets over current liabilities totaling
approximately NIS 4.5 million (current ratio of 3.2) compared to a deficit of approximately NIS 0.6
million (current ratio of 0.6) last year.
17. Financing
The Company finances its operations with funds from the private and public offerings it carried out
(see, for example, paragraph 3 above) and from grants from the Chief Scientist as specified in
paragraph 11.4 above.
The Company's financial statements include a going concern notice and from time to time, the
Company's Board examines various options for the Company's continued funding, including private
placements and capital raisings (rights issues).
18. Taxation
For information about taxation, see Note 14 to the financial statements.
39
19. Restrictions and regulations underlying the Company's operations
19.1
The Law for the Encouragement of Industrial Research and Development, 1984 ("the R&D
Law")
The R&D Law establishes a series of requirements with which the applicant of the R&D
grants must comply. Although the R&D Law establishes that the parties entitled to benefits in
accordance with the Law will pay the State Treasury royalties from any revenue deriving from
or generated by the product developed in the program, including ancillary services to the
product or that involve it, the Company is not required to pay royalties. In addition, the R&D
Law requires that the product to be developed as a result of the research and development will
be manufactured solely in Israel unless approval is issued by the Ministry of Industry, Trade
and Labor's Research Committee to transfer manufacturing rights of the product to outside of
Israel.
On April 7, 2005, Amendment No. 3 to the R&D Law was published ("the Amendment").
The Amendment allows, inter alia, the transfer or sale of knowledge whose development was
supported by the grants of the Chief Scientist's Office to third parties outside of Israel, in
consideration for a certain part (according to a defined formula) of the consideration from the
transfer or sale of the knowledge, or consideration for receipt of knowledge from third parties
or participation in research and development. In accordance with its provisions, the
Amendment became effective in June 2005 and also applies retroactively to programs
approved before that date, including research and development programs for which the
Company received a letter of approval.
19.2 Regulatory approvals for the stages of development
Approval for marketing medical products is subject to stringent regulations around the world.
The regulatory process in obtaining the necessary approvals is composed of various stages,
each of which requires the Company to comply with certain conditions and criteria. Once the
Company has successfully passed all of the trial phases, it can submit an application for
approval to register the medical product by the relevant regulatory authorities, such as the
FDA in the United States, or EMEA in Europe, or the Ministry of Health in Israel.
The Company will apply for product development approvals from the health authorities in
Israel and in other countries in which it decides to operate, based on the calculations listed
below that are required for continued development and later for commercial marketing of its
products, or will partner with a manufacturer that will obtain said approvals. The work
involved in obtaining approvals and licenses in various countries for the use of the products
development by the Company ("the product") requires an enormous financial investment.
All of the procedures involving the product's clinical trials, tests, manufacturing, labeling,
publication, sales promotion, export and marketing are subject to the supervision of regulatory
authorities in the different countries. The Company believes that the strategy of granting
licenses for using some of the Company's technologies is preferable in that a large percentage
of the later activities (advanced clinical trials, licensing, marketing, etc.) will be carried out by
the partner in receiving the license in the said stages.
40
The development stages required to obtain approval for marketing and manufacturing the
product include, inter alia,
a.
b.
Preclinical trials on laboratory animals;
Development of adequate and controlled manufacturing conditions that are approved by
the various health authorities;
c. Meticulously controlled clinical trials that provide proof of the efficacy and safety of the
product;
d.
e.
f.
g.
Submission of the product's registration file to the regulatory authorities in various
countries;
Review of the product's registration file by the health authorities in various countries;
Obtaining marketing approval;
Studies after the start of marketing, if necessary.
All of the trial and approval procedures are time-consuming and require tremendous effort and
significant financial investment, with no guarantee that any approval will be granted at the end
of a reasonable amount of time or at all.
Preclinical trials include a laboratory review of the product and animal trials. These trials are
designed to test the product's potential efficacy and safety for use. The results of the
preclinical trials, along with the information on product manufacturing methods and analytical
properties (composition, stability of the chemical components, etc.) are submitted to the
authorities and reviewed as part of the review process required to obtain approval to begin
clinical trials in human subjects.
During the clinical trial stage, the investigational product is given to healthy or sick human
beings under the supervision of the doctor – investigator qualified to regulate trials in human
subjects. Every clinical trial must undergo an audit and receive prior approval from an
independent institutional ethics committee in the institution where the trial is being conducted
and from the Ministry of Health if necessary. According to the Helsinki Covenant, the
committee supervising clinical trials considers granting said approval, inter alia, the ethical
foundations related to the trial, product safety for use and exposure to tort suits against the
institution carrying out the trial for the planned trial.
The number of subjects in each of the trials is established in conjunction with the qualified
licensing authorities. In principle, clinical trials are conducted in three phases that can
sometimes overlap. In the first phase, during which the product is first administered to human
subjects, safety is primarily tested (adverse events), the subject's tolerability of the dosage. In
addition, specific biomarkers are tested during blood tests for the preparation's safety.
In the second phase, clinical trials are conducted on a defined population of patients in order to
determine the safety and efficacy of the product used to treat a defined indication, to establish
tolerance to different dosages and the optimal dosage as well as identify adverse events and
health risks. In the third phase, trials are conducted on a larger scale, for additional and
broader proof of the product's efficacy and safety in a large number of subjects and study sites.
41
Once the product has been approved, Phase IV clinical trials are occasionally conducted to
accumulate more information on treatment results in the approved indication, and to examine
the benefit to patients if the product has passed an accelerated licensing stage (approval in an
accelerated process is primarily carried out for life-saving drugs). The applicant for the
approval must complete Phase IV clinical trials if and when they are instructed to do so.
Failure to comply with any of the stipulations in the approval process might result in a
revocation of the product license.
The results of the preclinical and clinical studies, along with the information specified on the
product vehicle and its method of manufacturing, are submitted to the health authorities by the
approval applicant. The health authorities are entitled to delay approval of the license if all of
the required conditions have not been met or if additional trials are needed. In addition, the
health authorities are entitled to condition approval on the conducting of Phase IV trials, in
order to monitor product efficacy and large-scale safe use. There is no guarantee that the
product that is in registration proceedings will receive approval in a reasonable period of time,
if at all. Even if approval is granted, it might be limited and restricted.
As previously mentioned, the Company's products will be subject to existing laws in various
countries in which the products (by the Company or by parties that will be granted licenses to
its technologies) will be marketed, in accordance with the requirements of the health
authorities in each of those countries. Licensing in the various countries must be obtained
uniquely before marketing of the product begins in each country. The licensing procedure
differs in each country.
19.3 Ministry of Health
The Company's operations in Israel are subject to a permit from the Ministry of Health for
conducting trials in human subjects, and to approval from the Helsinki Committee, as
specified below.
19.4
Public Health Regulations (Clinical Trials in Human Subjects, 1980 ("the Regulations") and
Procedure No. 14 of the Pharmaceutical Administration in the Ministry of Health – Clinical
Trials in Human Subjects
The regulations and procedure establish the steps for approval for conducting a clinical trial
and trial on medical equipment. According to the procedure, every clinical trial is subject to
the Regulations, to the provisions of the procedure, to the provisions of the Harmonized
Tripartite Guideline for Good Clinical Practice ICH-GCP (E6) and to the provisions of the
standard for Clinical Investigation of Medical Devices for Human Subjects (AMAR). The
Regulations establish that a clinical trial in a human subject will not be approved until after the
Helsinki Committee (see below) of the hospital that is planning to conduct the trial has
approved the trial and has issued written notice of this to the medical director of the hospital in
which the trial will be conducted and the director of the hospital was convinced that the trial
does not violate the Helsinki Declaration and with Regulations. In certain cases, an opinion is
required from the higher Helsinki Committee for Clinical Trials in Human Subjects in order
for the trial to be approved.
"Helsinki Committee" will not approve a trial unless it has been convinced to its satisfaction
that the following conditions have been met, including: anticipated benefits to the trial
participant and to the group justify the risk and the discomforts involved in participation in the
trial and that the medical and scientific information that exists justifies conducting the
requested clinical trial.
42
20. Material agreements
20.1
License agreement with Dekel58
On January 11, 2015, following negotiations held between the Company59 and Dekel
Pharmaceuticals Ltd.60 ("Dekel", collectively with the Company - "the parties") and after the
approval of the Audit Committee, the Company's Board approved the signing of a binding
term sheet with Dekel which provides the principles of a final and specific agreement for
licensing Dekel's entourage effect technology and IP ("the license agreement" and "Dekel's
technology", respectively) and also includes an option for Dekel to invest in the Company (by
itself and/or through others) ("the approved outline"). The purpose of the license agreement
is to allow the Company to develop Dekel's technology in the context of a final and specific
license agreement and simultaneously raise the capital it needs. The approved outline was
presented for the approval of the general meeting of the Company's shareholders which
approved the terms of the approved outline and the principal terms of the license agreement
(as summarized below) on June 10, 2015. Also, on August 19, 2015, all the suspending
conditions underlying the license agreement were met and it became effective.
Following are the principal terms of the license agreement:
1.
2.
Agreement for licensing Dekel's technology - Dekel grants the Company an irrevocable
global exclusive royalty-bearing license which can be sub-licensed for using Dekel's
entourage effect technology for research and development, manufacturing, sale,
distribution, marketing and commercialization of drugs which are derived from this
technology (including sublicenses).
Suspending conditions underlying the license agreement - the license agreement will
become effective provided that the following conditions are met, at the later ("the
effective date"):
2.1 Receipt of relevant approvals - receipt of the approvals of the parties' relevant
entities, including the approval of the general meeting of the Company's
shareholders61.
2.2 Regulatory approvals - receipt of the relevant regulatory approvals for the
completion of the approved outline, including the TASE's approval (and the ISA's
and OTC's approvals, if needed).
58
59
60
61
See the Company's immediate reports of May 21, 2015 (TASE reference: 2015-01-024585) and August 19, 2015
(TASE reference: 2015-01-100422).
The Company appointed a special committee whose members consisted of the former CEO, an external director
and the former VP of Business Development and Strategy to hold the negotiations with Dekel's representatives.
It should be clarified that Dr. Ascher Shmulewitz, who as of the report date serves as Chairman of the
Company's Board and is an interested party therein, is also a shareholder in Dekel.
To the best of the Company's knowledge, Dekel is a privately-held company incorporated in Israel that is mainly
engaged in the research and development of medical products based on cannabinoid substances (active
ingredients in cannabis and synthesized endocannabinoids) for treating chronic pain and inflammation. In
addition, to the best of the Company's knowledge, Dekel holds the IP rights to a disposable, patent-protected
dose-controlled inhalation device, which can be used in the delivery of steroids and/or cannabinoids
The approval of the general meeting has not yet been obtained as of the report date. In this context it should be
noted that in view of the formulation of the terms of the license agree by the parties, the Company will act to
postpone the general meeting of shareholders which is scheduled for late May 2015 to allow the shareholders the
time to review the terms of the license agreement before its approval. The Company will announce the
postponement of the meeting and the new date in a separate immediate report.
43
2.3
Investment - completing an investment in the Company both by Dekel and by
others in one or several transactions in a cumulative total of at least US$ 350
thousand62.
3.
The license consideration
3.1 Advance - on the effective date, the Company will pay Dekel an amount of
NIS 100 thousand (in the Company's shares at a value of NIS 0.5 per Ordinary
share) as an advance on account of future royalties ("the advance"). The advance
will be returned to the Company by offsetting it from any future royalties based
on the license agreement until the entire advance is offset.
3.2
Immediate option for investment in the Company ("the immediate option") - on
the effective date and for a period of three months therefrom, Dekel will have an
option to invest in the Company's share capital an amount of up to US$ 0.5
million (at a price of NIS 0.5 per Ordinary share).
3.3 Contingent option for investment in the Company ("the contingent option") -
subject to the exercise of the immediate option mentioned above, Dekel will have
another option to invest in the Company's share capital an amount of up to US$ 2
million such that for each immediate option exercised, Dekel will receive four
options for Ordinary shares of the Company (at an exercise price of NIS 0.65 per
option) for a period of 12 months from the expiration of the immediate option63.
3.4 Royalties
3.4.1 Royalties on sales - the Company will pay Dekel direct royalties on net
revenues (at a high single-digit rate) or indirect royalties on sublicenses
(at a median double-digit rate).
3.4.2 Milestone payments - for the grant of the license, the Company will pay
Dekel amounts based on the following milestones:
3.4.2.1 Upon the success of preclinical trials in Dekel's technology -
US$ 25 thousand (at the Company's discretion, in cash and/or in
share capital (at a price of NIS 0.5 per Ordinary share of the
Company) ("cash and/or equity-settled payments"));
3.4.2.2 Upon the success of Phase I/IIa clinical trials in Dekel's
technology - US$ 75 thousand in cash and/or equity-settled
payments;
3.4.2.3 Upon the generation of revenues (in the amount determined in
the approved outline) from the commercialization of products
that are based on Dekel's technology by Dekel and/or a third
party, or FDA/EMA approval of the drug that is based on
Dekel's technology - US$ 75 thousand in cash and/or equity-
settled payments.
62
63
It should be clarified that this condition has been met given the scope of capital raised by the Company in the
past few months in the context of private placements to several private investors.
That is, about 15 months from the effective date.
44
4.
5.
6.
Development obligation - at its expense, the Company will lead, manage and finance
the entourage effect technology's R&D, including in connection with conducting
preclinical trials, GMP-based development and clinical tests with a predetermined
minimum annual investment or based on the approved annual work plan and budget that
will include dates and milestones as will be determined in the future under agreement
between the parties.
The license period and the license's cancellation - the license agreement will remain in
effect as long as it is not cancelled by either of the parties and under the following
circumstances - if it is cancelled by the Company without cause by providing an
advance notice of 60 days; if it is cancelled by both parties due to a material violation of
the license agreement by any of the parties that is not rectified within 120 days or in the
event of one of the parties' insolvency. If in the first year any of the payments owed to
Dekel as described above is not made (including the Company's R&D obligation), the
license will be revoked and Dekel's IP under the license will be recovered to Dekel,
excluding the IP that is generated by the Company's research and development activity
in the technology. If after the first year any of the payments owed to Dekel as described
above is not made (including the Company's R&D obligation), the license will be
revoked and the entire IP developed under the license will be recovered to Dekel,
including the IP that is generated by the Company's research and development activity
in the technology.
Assignment of the immediate option and/or the contingent option to third parties -
Dekel may assign its right (or part thereof) in the immediate option and/or contingent
option to a third party provided that the third party fully secures its investment pursuant
to the option and/or additional option. In the event that following the exercise of the
option in the context of such assignment the assignee will be granted 25% or more of
the Company's entire voting rights, the assignment will require the approval of the
Company's Audit Committee. For the purpose of this paragraph, the percentage of
"voting rights" will be calculated on a cumulative basis along with any assignee's other
holdings in the Company immediately prior to the assignment and collectively with any
other previous assignment as prescribed in this paragraph. In addition, any exercise of
the option and/or the additional option (or part thereof) will be governed by the
provisions of applicable law regarding purchase offers, under the circumstances.
Forward-looking information warning - the Company's information and evaluations
discussed above in connection with the completion of the approved outline and the
signing of a final and binding agreement, the fulfillment of any of the abovementioned
milestones, the integration of Dekel's activity in the Company's activities and its
contribution to the Company, including forecasts, dates, evaluations and/or plans of the
Company in connection therewith all represent forward-looking information, as this
term is defined in the Securities Law, which involves a great degree of uncertainty and is
based, among others, on outside factors (including information received from Dekel) and
numerous variables which are not necessarily under the Company's control and
therefore, the completion of the transaction and the fulfillment of the other suspending
conditions and milestones and/or their expected costs, dates and relevant schedules might
not materialize in practice and/or might not materialize in full and/or might materialize
in a manner that is materially different from that originally evaluated or anticipated.
45
Among the factors that are liable to cause the Company's information and evaluations
not to materialize as expected we should mention the discovery of material scientific data
that will significantly modify the terms and/or viability of the engagement, failure to
reach a final and binding detailed agreement (subject to the approval of the general
meeting of the Company's shareholders), failure to complete the R&D process of the
entourage effect technology (including in the context of preclinical and/or clinical trials
or non-compliance with such preclinical and/or clinical trial targets) and/or demands for
repeating clinical trials on products developed based on the entourage effect technology,
failure to obtain the necessary regulatory approvals from the authorities in a timely
manner and/or at all, or potential disputes with regulatory authorities and the related
consequences, change and/or aggravation of the approval policy of regulatory authorities
with respect to developed products, failure to obtain the additional financing required
for completion of development and/or entering into strategic collaboration agreements
for completing the development of Dekel's products, entry of other competitors for
Dekel's products into the market, change in the structure of the competition in the target
markets of Dekel's products and the realization of any of the risk factors detailed in
paragraph 24 below. It should also be emphasized that there is no certainty that
preclinical and/or clinical trials of products developed on the basis of the entourage
effect technology will yield successful results, which in turn might require making
adjustments to the Company's R&D plans, budgets and timetables and that the
Company is exposed to additional risk factors, as described in paragraph 24 below,
which might significantly affect the Company's evaluations as above either jointly or
severally.
20.2
License agreement regarding Ramot's technology for treating cognitive deficits (including
Alzheimer's)64
On February 14, 2016, the Company and Ramot at Tel-Aviv University Ltd., the Tel-Aviv
University's Technology Transfer Company ("Ramot", collectively with the Company in this
paragraph - "the parties"), signed a binding and final agreement for conducting research and
for the grant of an R&D and commercialization license regarding Ramot's cannabinoid-based65
technology for treating cognitive deficits using ultralow doses of tetrahydrocannabinol
(THC)66 (in this paragraph - "the technology" and "the license agreement" or "the
agreement", respectively).
64
65
66
See the Company's immediate reports of June 28, 2015 (TASE reference: 2015-01-057522) and February 15,
2016 (TASE reference: 2016-01-027988).
Cannabinoids are a class of diverse chemical compounds that act on cannabinoid receptors in the body (CB1 and
CB2). This family is found in the molecules derived from the cannabis plant (phytocannabinoids), the most
known ones being THC and CBD, and molecules which are naturally produced in the human and animal body
(endocannabinoids) such as AEA and 2-AG. Dozens of molecules have been identified as part of the
cannabinoid family and participate in a large number of physiological processes and used to treat a large variety
of medical conditions. See more information in paragraph 8 to Chapter A (Description of the Corporation's
Business) to the Company's annual report for 2014 of March 31, 2015 (TASE reference: 2015-01-069427) ("the
annual report").
The technology is based on the lab research of Prof. Yosef Sarne of the Tel-Aviv University Medicine-Sackler
Faculty who also serves as the project's chief researcher ("the chief researcher").
46
The principal terms of the license agreement are as follows:
1.
The license agreement - Ramot will grant the Company an exclusive international
royalty-bearing license, which can be sublicensed, to use the technology (including the
yields of the research project as defined below) for research, development, manufacture,
use, commercialization, sublicensing, sale and import of products based on the
technology (in this report - "the products").
1.1 The Company will manage and finance (on its own and/or through third parties)
the technology's R&D processes for the development and manufacture of medical
products based on the development stages and milestones determined in the
agreement (which can be modified and updated as stipulated in the agreement).
1.2 The development stages include, among others, the development of the
formulations for the different products and the preparation of proof of concept
clinical trials and early phase clinical trials for the purpose of filing applications
and obtaining regulatory drug and/or product marketing approvals ("the
development plan").
1.3 Failure to meet any of the milestones underlying the products as set forth in the
development plan and/or failure to finance the development plan based on the
terms stipulated in the agreement will allow Ramot to cancel the agreement
(according to the terms set forth therein)67.
IP - the core technology is owned by Ramot and the products of the auxiliary research
project (as defined below) will all be owned by Ramot. Their use will be in accordance
with the provisions of the license agreement. Any other IP designed, created, developed,
produced, registered or incurred not in connection with and/or due to the involvement of
the TAU's staff or Ramot's staff (during their employment in the project) will be
exclusively owned by the Company. Ramot will be responsible for handling and
maintaining the patents in consultation with the Company whereas the Company will
bear the underlying patent expenses based on the method and terms determined in the
agreement. The license agreement includes certain exceptions regarding the Company's
liability to bear expenses and mechanisms to allow such exceptions. The agreement also
provides IP protection mechanisms and regulates the payment of the underlying
expenses.
Royalties - the Company will pay Ramot royalties on sales of the products at a low
single-digit rate68 for a period until the later of 15 years from the date of first
commercial sale (of a certain product in a certain country) or the date of expiration of
the last patent underlying the technology and the research program (in a certain
country).
Additional payments - according to the agreement, the Company has an obligation to
pay additional future non-recurring amounts to Ramot, among others, after meeting
material milestones in connection with the development of the first product (such as
meeting a clinical and/or regulatory milestone)69, for the grant of sublicenses and when
reaching certain product sales targets.
2.
3.
4.
67
68
69
As of the report date, the Company is preparing to begin clinical trials, including filing an IND application to the
FDA. The Company is simultaneously taking steps to obtain FDA approval under Section 505(b)(2).
Subject to deductions, reductions and/or increases under certain circumstances stipulated in the agreement such
as payment of royalties to a third party, filing a patent opposition etc.
The milestones underlying the auxiliary research project include, among others, diagnosis, profiling and control
of the research products, pharmacological and biochemical tests and preclinical trials. The budget approved by
the parties is in the amount of approximately NIS 240 thousand to be paid in installments based on the
milestones underlying the auxiliary research project.
47
5.
6.
Auxiliary research project - the license agreement also consists of an auxiliary research
project in respect of the technology (to be conducted by the chief researcher) in the
TAU whose principal aim is to test the method of operation of preclinical models in a
controlled manned using pharmacological and biochemical parameters for the
administration of ultralow doses of THC for treating MCI which is liable to deteriorate
to Alzheimer's. The Company will bear the costs of the research program70.
Agreement expiration/early termination - the license agreement will expire once the
Company completes all the payments pursuant to the agreement (following which the
license will no longer be exclusive) or if it is terminated early due to one of the
predetermined causes (and based on the predetermined mechanisms), among others due
to failure to meet the milestones set forth in the development plan and/or material
violation of the agreement by any of the parties (which is not rectified within the
predetermined timeframe).
7.
The license agreement also contains other standard provisions that are practiced in this
type of agreement regarding confidentiality, indemnity and insurance, information
rights, supervision and control reporting, assignment rights to licensed parties etc.
Forward-looking information warning - the Company's information and evaluations
discussed above in connection with the R&D plans, the research project, the products
under development and their intended uses, including the success of their development,
the estimated deadlines and costs of the performance and/or completion of the milestones
expected in the coming year and/or at all, the size of the target markets and/or medical
indications and/or relevant regulatory tracks underlying product development, including
the Company's forecasts, deadlines, evaluations and/or plans in connection therewith all
represent forward-looking information, as this term is defined in the Securities Law,
which involves a great degree of uncertainty and is based, among others, on outside
factors and various variables which are not necessarily under the Company's control and
therefore it is possible that the execution of the license agreement and/or the completion
of the development of a medical product thereunder, the compliance with milestones
and/or their expected costs, the dates and deadlines underlying the completion of
development, the assessments of relevant market sizes and/or obtaining regulatory
product marketing approvals will not materialize in practice and/or will not materialize
in full and/or will materialize in a manner that is materially different from that
originally evaluated or anticipated. Among the factors that are liable to cause the
Company's information and evaluations not to materialize as expected we should
mention the failure to complete the development of a medical product (including in the
context of preclinical and/or clinical trials) and/or the requirements to conduct repeated
trials, the failure to obtain the necessary regulatory approvals in a timely manner and/or
at all, disagreements with regulatory authorities regarding the results of clinical trials,
change and/or aggravation of regulatory approval policies for medical products under
development, the failure to obtain the needed additional financing to complete product
development and/or failure to reach strategic collaboration agreements for the
completion of the medical product development (including through the grant of
sublicenses), noncompliance with predetermined preclinical and/or clinical trial targets,
failure to obtain the required financing at the time and scope needed for continued
development, the arrival of new competitors in the market of the medical product under
development, change in the structure of competition in the medical product's target
market and the realization of any of the risk factors described in paragraph 24 below. It
should also be emphasized that there is no guarantee that preclinical and/or clinical
trials will be successful and their failure might require revising R&D programs, budgets
and deadlines which exposes the Company to other risk factors as described in
paragraph 24 below, all of which are liable to materially affect the Company's
evaluations, severally and jointly.
70
Such as beginning of pivotal clinical trial, beginning of Phase II clinical trials, obtaining FDA product approval
and obtaining initial regulatory product marketing approval as stated above.
48
20.3
Term sheet signed with Rhodes Technologies
On December 20, 2015, a nonbinding term sheet was signed between the Company and
Rhodes Technologies, of the Purdue Pharma Group and one of the leading manufacturers of
synthetic THC in the US, in connection with the R&D of a cannabinoid tablet which contains
an ultralow dose of THC for treating mild cognitive impairment ("the term sheet", "Rhodes",
"the raw material" and "the product under development", respectively). According to the
term sheet, the parties will act towards signing a final and binding agreement within four
months from the date of signing the term sheet (or at a later date as agreed between the parties)
("the final agreement") according to which, among others, Rhodes will provide the
Company, at Rhodes' expense, the raw material for the product's R&D activity in return for
exclusiveness in manufacturing the raw material of the finished product and the right to hold
preliminary negotiations for the product's marketing and commercialization in the US. As of
the report date, the parties are still holding negotiations for formulating the outline of their
cooperation under the final agreement (including the expansion of their cooperation for the
product under development). As of the report date, the Company estimates that as long as the
final agreement is not signed before the date established in the term sheet, the parties will
extend the term sheet and/or agree on other measures until the final agreement is designed and
signed. It should be noted that as of the report date there is no certainty that the parties will
indeed sign a final and binding agreement and/or what the terms of such agreement will be.
Forward-looking information warning - the Company's information and evaluations
discussed above in connection with the signing of a final and binding agreement based on
the term sheet and/or the terms of the final agreement and its implications on the
Company, including the Company's forecasts, deadlines, evaluations and/or plans in
connection therewith all represent forward-looking information, as this term is defined
in the Securities Law, which involves a great degree of uncertainty and is based, among
others, on outside factors and various variables which are not necessarily under the
Company's control and therefore it is possible that such information and evaluations will
not materialize in practice and/or will not materialize in full and/or will materialize in a
manner that is materially different from that originally evaluated or anticipated. Among
the factors that are liable to cause the Company's information and evaluations not to
materialize as expected we should mention the failure to complete the negotiations
between the Company and the US corporation and/or failure to reach understandings
regarding the terms of a final and binding agreement to the satisfaction of both parties,
the failure to obtain the necessary regulatory and/or government approvals, the absence
of the necessary funding for conducting and/or completing the product's R&D activity,
the failure of the preclinical and/or clinical trials of the product under development, the
aggravation of regulatory approval policies in the market of the product under
development, disagreements with authorities regarding the required regulatory outline
of the product under development and/or prolongation of the process of obtaining
regulatory approvals and the realization of any of the risk factors described in
paragraph 24 below.
49
20.4 A nonbinding term sheet for strategic collaboration regarding the Anti-CD3 technology signed
with a Chinese corporation
On December 18, 2014, a nonbinding term sheet ("the term sheet") was signed between
Orimmune Bio Ltd., the Company's subsidiary71, and Nanjing BioSciKin Co. ("the Chinese
corporation"), a private Chinese company which to the best of the Company's knowledge acts
as the investment vehicle of Simcere Pharmaceutical Group72, in connection with strategic
collaboration for developing and manufacturing the Company's Anti-CD3 antibody ("the
antibody") and commercializing it in the Chinese market (China, Taiwan, Hong Kong and
Macau) ("the region"). As of the report date, the term sheet expired and no binding agreement
has been signed between the parties. Moreover, there has been no progress in the negotiations
with the Chinese corporation in this context.
71
72
Orimmune Bio Ltd. (formerly: Protea Vaccine Technologies Ltd.) is a subsidiary that is controlled by the
Company ("Orimmune"). As of the report date, the Company holds about 90% of Orimmune's issued and
outstanding share capital (about 90% on a fully diluted basis).
To the best of the Company's knowledge, Simcere is traded on the NYSE.
50
20.5 Agreement for investment in Lara-Pharm Ltd.73
On June 15, 2014, a final investment agreement was signed between the Company and Lara-
Pharm Ltd., an Israeli company which provides pharmaceutical solutions for replacing
medical marijuana and has developed a cannabinoid-based synthetic formulation to be
administered by an inhaler ("the medical product", "Lara", and collectively with the
Company - "the parties", and "the agreement", respectively) according to which, subject to
the fulfillment of several prerequisites74, the Company will transfer to Lara an initial
investment amount of US$ 800 thousand (based on the schedules and dates determined in the
agreement, of which the first installment only in the amount of US$ 250 thousand has been
paid to Lara) against shares that will represent about 26% of Lara's issued and outstanding
share capital (on a fully diluted basis) ("the initial stage")75.. The agreement also stipulates
that the overall amount that the Company will invest in Lara will be US$ 1.5 million
(including the initial investment amount), subject to the fulfillment of certain milestones76 and
according to predetermined timetables. Assuming that Lara successfully meets all the
milestones determined in the agreement and the Company invests the entire investment
amount as above, the Company will hold 49% of Lara's issued and outstanding share capital
(on a fully diluted basis).
73
74
75
76
See the Company's immediate reports of April 2, 2014 (TASE reference: 2014-01-035922), June 16, 2014
(TASE reference: 2014-01-091608) and June 23, 2014 (TASE reference: 2014-01-097152). Lara was engaged in
developing cannabinoid-based prescription drugs as a medical product intended to replace the use of medical
cannabis for various indications. Based on this development, to the best of the Company's knowledge based on
information received from Lara, the first product in the series of products which Lara intended to develop was
synthetic cannabinoid with a unique formulation to be administered using an inhaler and aimed at serving as a
medicinal alternative for medicinal marijuana. The inhaler was designed according to an innovative technology
which meets the medical need for the use of medicinal marijuana in treatment of various diseases and/or medical
conditions by licensing the technology and marketing it as a prescription drug to the large pharma companies.
Lara aspired to develop the inhaler-based product so that it will serve as a viable market alternative for existing
medical solutions which do not provide an adequate response to the medical needs of millions of patients
worldwide. In such cases, the product would have served as a medicinal alternative which operates similarly to
medicinal marijuana but us advantageous to cannabinoid-based drugs administered orally. According to Lara's
technology and development, the active ingredients are more efficiently absorbed in the lungs using the inhaler
than by swallowing them. This improved absorption of active ingredients will potentially allow reducing the
required dose for achieving the sought effects and will most likely minimize the side effects associated with
these ingredients. Lara's R&D activity in connection with the inhaler-based medical product initially focused on
developing the formulation towards beginning preclinical trials. See more details of Lara and its business
operations, market structure, developed products and R&D activity in the Company's immediate report of
August 11, 2014 (TASE reference: 2014-01-131130).
Among others, these prerequisites include the completion of related agreements and the completion of various
operating, monetary and commercial information and data and additional background studies of Lara to the
Company's satisfaction.
It should be noted that according to the agreement, the percentage of the Company's holdings in Lara's shares as
mentioned above (26%) will be reduced pro rata to the amounts that will be transferred if the Company fails to
provide the remaining payments on the predetermined dates. As discussed above, as of the report date, only the
first instalment has been paid and the other installments which are due have not yet been paid to Lara. According
to the provisions of the agreement, Lara has the right to reduce the Company's holding rate in Lara's shares pro
rata to the amounts that will be transferred in a manner that as of the report date, insofar as Lara exercises its
right, the Company will hold about 11% only.
Among others, the milestones include obtaining an expert's approval for the medical product's successful
compliance with biotechnological criteria determined both in the context of a simulator test and in preclinical
trials (animal testing).
51
On August 10, 2014 ("the initial consummation date"), all the prerequisites for completing
the initial stage in the Lara share purchase transaction were met77.
Negotiations for agreed separation
In keeping with the negotiations held between the Company and Lara's management, on
August 13, 2015, the latter informed the Company of the unilateral cancellation of the
agreement, among others, arguing that the Company has no intention of continuing to invest
additional funds in Lara78. It should be clarified that as per the Company's position, it is not
obligated to invest additional funds in Lara unless certain conditions and/or milestones as
predetermined in the investment agreement are met which have not been met as of the report
date (and which the Company has no certainty will be met in the future and/or at all). The
Company objected to the unilateral cancellation of the agreement and continues to act to
protect its material interests in Lara, including defending its legal rights according to
agreement and its investment in Lara, among others by insisting on negotiating a mutual
separation agreement79.
As of the report date, the Company continues to hold shares of Lara80 and retains its material
rights pursuant to the investment agreement. The parties are holding negotiations regarding
their mutual separation. There is no certainty whether, when and/or under which terms such
agreement will be signed81.
77
78
79
80
81
See additional details of Lara and its business affairs, including a description of its market structure, developed
products and R&D stage in the Company's immediate report of August 11, 2014 (TASE reference: 2014-01-
167559). As discussed above, the Company delivered to Lara a sum of approximately US$ 250 thousand of the
initial investment amount whereas the remaining initial investment amount was not delivered on the
predetermined date. According to the agreement, failure to deliver the remaining initial investment amount by
the Company will not represent breach of the agreement although Lara will have the right to reduce (forfeit) the
Company's holdings in its shares pro rata to the amounts that are delivered, as stipulated in the agreement, and in
certain cases Lara will also be able to exercise a tag-along right and force the Company to sell its interests in
Lara in the event of such forfeiture of shares for the purpose of selling Lara's shares to a third party. Also
according to the agreement, upon the fulfillment of the first milestone within the predetermined timeframe from
the initial consummation date (a summary report of compliance with the target of reaching a specific range of
particles of powder using the inhaler through simulator tests and its approval by an expert), Lara will allocate the
Company shares that will confer it a cumulative holding of 39.2% of the shares in Lara (on a fully diluted basis)
in return for US$ 400 thousand. Moreover, upon the fulfillment of the second milestone within a timeframe that
exceeds the predetermined date from the initial consummation date (a summary report of compliance with the
target of reaching a specific range of particles of powder using the inhaler through animal testing and its
approval by an expert), Lara will allocate the Company shares that will confer it a cumulative holding of 49% of
the shares in Lara (on a fully diluted basis) in return for US$ 300 thousand. In this context it should be clarified
that to the best of the Company's knowledge and as of the report date, none of the abovementioned milestones
has been met.
Lara's announcement followed several meetings initiated by the Company with Lara's management in order to
promote Lara's R&D work in the backdrop of what appeared to be a stalemate in the formulation stage of the
product which Lara was supposed to develop.
It should be noted that as of the report date, the Company has invested in Lara a total of approximately US$ 250
thousand.
As of the report date, the Company holds about 48% of Lara's issued and outstanding share capital, although
Lara retains the right according to the agreement to reduce the Company's interests pro rata to the investment
amounts that will be transferred in such a manner that as of the report date, if Lara exercises this right, the
Company will hold only about 11%.
It should be clarified that as per the Company's estimate, even the unilateral cancellation of the agreement
(which, as discussed above, the Company categorically rejects) has no material impact on the Company's
continued operating activities or on its R&D activity underlying cannabinoid-based medical products, among
others, since the Company has different effective alternatives for the continued development of improved
cannabinoid-based products apart from Lara's technology.
52
Forward-looking information warning - the Company's information and evaluations
discussed above in connection with the implications of the notice of cancelation of the
agreement, the ability to retain the Company's material interests according to the
agreement, the availability of other options for the continued development of improved
cannabinoid-based drugs and the Company's ability to continue expanding its
technological portfolio and its R&D activity in its operating segments, including
forecasts, dates, evaluations and/or plans of the Company in connection therewith all
represent forward-looking information, as this term is defined in the Securities Law,
which involves a great degree of uncertainty and is based, among others, on outside
factors and various variables which are not necessarily under the Company's control and
therefore it is possible that the Company's evaluations and expectations as above will not
materialize in practice and/or will not materialize in full and/or will materialize in a
manner that is materially different from that originally evaluated or anticipated. Among
the factors that are liable to cause the Company's information and evaluations not to
materialize as expected we should mention the failure to identify technologies and/or
finalize agreements with other entities for similar enhanced developments, failure to
protect the Company's interests according to the agreement (also by applying to the
appropriate tribunals) and the realization of any of the risk factors described in
paragraph 24 below.
20.6 Agreement for the return of the VaxiSome® technology to the technology owners
Until May 2013, the Company owned an adjuvant technology for the improvement of
preventive vaccinations and enhancement of their efficacy for developing a vaccine adjuvant
(agent that helps increase the immune response and improve antibody production in the human
body) that is delivered either by injection or through the intranasal route. On May 21, 2013,
the Company signed an agreement on the transfer of rights to the technology with Yissum
Research Development Company of the Hebrew University of Jerusalem ("Yissum") and Bio-
Lev Ltd. ("Bio Lev"), the owners of the technology ("the technology owners"), for no
immediate consideration, whereby the Company will be eligible for future payments from the
commercialization of the technology. According to said agreement, subject to obtaining the
approval of the Chief Scientist (on July 11, 2013, the Chief Scientist approved the transfer of
the technology rights), the VaxiSome® technology will be transferred to the technology
owners for no immediate consideration and the Company will be entitled to 25% of future
revenues from commercialization of the technology, less the technology owners' expenses, up
to a total amount of US$ 12.5 million. It was further agreed that if the license is given to
Novartis or to a related company thereto, the rate of payments will be 50% (instead of 25%)
and the ceiling of payments to the Company will be US$ 25 million (instead of US$ 12.5
million). According to the agreement, payments that will need to be delivered to the Chief
Scientist for grants the Company received with regards to the technology will be paid by the
technology owners. The agreement includes a provision according to which the parties release
each other from claims and allegations with regards to the original license agreement signed
between them in March 200582.
82
See the Company's immediate report of May 22, 2013 (TASE reference: 2013-01-067867).
53
20.7
License agreement with Ramot - the BBS technology83
In January 2014, the Company announced that it has received a letter from Ramot at Tel-Aviv
University Ltd., the Tel-Aviv University's technology transfer company ("Ramot"), in which
Ramot announces its intention to terminate the license and research agreement in connection
with the BBS technology (the Alzheimer's drug). The Company's position was (and remains)
that Ramot's announcement is illegitimate and groundless84. The parties negotiated the
disputes between them in order to promote a mutual solution, including on issues that pertain
to the Chief Scientist. In early May 2014 (and then in October 2014), the parties agreed on an
outline whereby the Company will return the license to Ramot and grant Ramot an exclusive
license for the use and commercialization of the assets and knowhow accumulated in the
Company during the license period ("the Company's assets and knowhow") in return for
future royalties (based on the scope, rates and conditions determined in said outline)85 on the
future commercialization of the Company's assets and knowhow ("the agreed outline").
Once the agreed outline becomes effective, the parties agreed that the license agreement will
become null and void as well as any other monetary and/or other liability outstanding between
the parties, including the Company's obligation to finance the registration and/or maintenance
of the patents effective from the date of cancellation and thereafter, and Ramot will bear those
payments from then onwards86. The agreed outline will become effective once the approvals
of the Chief Scientist and the Tmura Fund are obtained87 for the agreed outline and for the
parties' obligations and agreements88, in conformity with the R&D Law and its regulations.
83
84
85
86
87
88
See a condensed description of the license from Ramot in paragraph 18.2 to Chapter A (Description of the
Corporation's Business) to the Company's annual report for 2013.
See the Company's immediate reports of January 13, 2014 (TASE reference: 2014-01-013072) and of January
29, 2014 (TASE reference: 2014-01-026068).
The agreed outline consists, among others, of the payment of royalties by Ramot to the Company based on
Ramot's receipts from the commercialization of the Company's assets and knowhow and limitation of the scope
of royalties to a predetermined cumulative amount (which in any event will not exceed US$ 9.5 million,
depending on the date of commercialization) and at a varying rate (which will be reduced pro rata to the
prolongation of the commercialization date).
For the removal of doubt it should be clarified that the Company's obligation towards a third party (a supplier) in
connection with the payment of future royalties for services rendered by that supplier at the rate agreed upon
between the Company and the supplier remains in effect and will continue to apply even after the license
agreement is cancelled. Furthermore, according to the agreement, Ramot is expected to pay the Company an
immaterial amount of approximately NIS 135 thousand for the return of the license.
Tmura – the Israeli Public Service Venture Fund at the Office of the Chief Scientist regulates issues of royalties
and operates by virtue of the Encouragement of Industrial Research and Development (Rate of Royalties and
Rules for the Payment thereof) Regulations, 1996 ("the Tmura Fund").
An approval in principle has been received from the Chief Scientist for the agreed outline on November 2, 2014
and was signed by the Company on December 3, 2014.
54
In keeping with the Chief Scientist's approval in principle for the agreed outline from early
December 2014, on March 3, 2015, the Chief Scientist approved that the Company is in
compliance with the terms of the approval stipulated by the research committee and
accordingly, the agreed outline between Ramot and the Company became effective. The
Company and Ramot will act in accordance with the agreed outline for transferring the
Company's developments based on the license agreement from the Company to Ramot
(including the transfer of the patents and other necessary issues for completing the transfer of
the license back to Ramot) and the license agreement shall become null and void89.
As of the report date, the parties are continuing to act in keeping with the agreed outline to
transfer the Company's developments according to the license agreement from the Company to
Ramot (including the transfer of the patents and the other issues that will be required for the
completion of the recovery of the license to Ramot). As of the report date, the parties are
acting to complete the agreed outline.
20.8
The license agreement with Hadasit - the Anti-CD3 technology
On March 25, 2010, the Company entered into an exclusive global royalty-bearing license
agreement with Hadasit Medical Research Services & Development Ltd., the Technology
Transfer Company of Hadassah University Hospitals ("Hadasit") for the research,
development and commercialization of the immunotherapy treatment that uses the oral Anti-
CD3 antibody to treat inflammatory, autoimmune and other diseases involving immune
control disorders. In consideration for said rights, the Company undertook to finance the
patent maintenance with regards to the technology, including for past expenses, and to pay,
beginning from the third year of the license, the annual fixed license fees, all in amounts that
are immaterial to the Company.
In addition, according to the agreement, the Company will practice reasonable commercial
diligence in developing and commercializing the products based on the technology. Without
derogating from the aforementioned, according to the agreement, the Company must meet
certain development milestones, including commencing Phase IIa clinical trials of any of the
technology-based products within a period of 12 months from the date of signing, Phase IIb
clinical trials of any of the technology-based products within a period of four years from the
date of signing and additional Phase IIb or Phase III clinical trials of any of the technology-
based products within a period of seven years from the date of signing. In addition, the
Company has undertaken to invest, by itself and/or through sub-licensees, an amount of
US$ 1.5 million in developing technology-based products in the first two years from the date
of signing in order to achieve the above milestones.
It was also determined that the Company will pay royalties from the sale of products that are
based on the technology in varying percentages based on the sold product, to the IP rights and
accordingly to the sum of the net revenues, at a rate between 2.25% and 4.5% of the sum of
the net annual revenues. "Net revenues" are defined in the agreement as sums to be actually
received by the Company, its related entities or holders of sublicenses, from the sale of
products based on the technology, following offset of accepted discounts, reimbursements,
tax, insurance and shipping costs.
89
See the Company's immediate report of March 4, 2015 (TASE reference: 2015-01-044713). It should be noted
that the parties amended the agreed outline in a late amendment of February 2016 according to which the parties'
mutual outstanding debts were offset against each other in amounts that are immaterial to the Company and
Ramot's outstanding debt to the Company according to the license agreement will be paid from Ramot's first
receipts from the commercialization of the joint patent and the Company's developments for third parties
(excluding research funds and reimbursement of the joint patent expenses), if any.
55
20.8.1
20.8.2
20.8.3
The Company may grant sublicenses to partners in the research and development
of the technology and will pay Hadasit 30% of all revenues it will generate from
the grant of the sublicense provided that this amount is not higher than 5% of the
net revenues of the holders of the sublicense or lower than a percentage that ranges
between 0.75% and 2.5% of its net sales (depending on the territory in which the
sales are made). The Company is entitled to withdraw the license at any time
before the launch of the drug, without having any additional obligations imposed
on it. In addition, it is hereby agreed that the Company will sign a consulting
agreement with scientists who spearheaded the development of the technology
according to which they will oversee the project with the Company in return for
consulting fees in a sum that is immaterial to the Company90.
Accordingly, in April 2010, the Company entered into consulting agreements with
Hadasit and with Prof. Howard Weiner for receiving consulting services in
connection with this project according to which they will advise the Company with
regards to the project, oversee and plan the clinical trials, etc. in consideration for
allocation of the Company's stock options.
In August 2010, the Company entered into an agreement with Centocor Ortho
Biotech ("Centocor"), manufacturers of the Anti-CD3 antibodies, according to
which Centocor will supply the Company with the antibodies under preferential
commercial conditions over market prices, for use by the Company for clinical
trials that the Company carried out and whose results were published by the
Company on March 21, 2011 (for trial results, see paragraph 8.3 below). In
consideration, the Company granted Centocor exclusive rights for several months,
beginning on the date on which the Company delivers to Centocor the results of the
aforementioned clinical trial, to negotiate with the Company ahead of the license
agreement and/or partnership agreement with regards to the Anti-CD3 technology.
The results of the trial were delivered to Centocor shortly after their date of
publication by the Company. A similar procedure is expected to be in place with
regards to the results of the HCV trial. On July 9, 2012, the Company reported that
it completed the development of the humanized monoclonal Anti-CD3 antibody
("the antibody"), for which the Company submitted a patent application.
20.8.4
It should be clarified that as of the report date the Company has not yet begun
Phase IIb clinical trials as discussed above and is currently acting in full
transparency and cooperation with Hadasit regarding the project. To the best of the
Company's knowledge, as of the report date, the Anti-CD3 technology is not at the
center of the Company's operations and it continues its attempts to recruit business
development partners or strategic investors and conduct other transactions,
including the examination of the possible termination of the program with the
parties' consent. See details of the patent underlying this license agreement in
paragraph 21 below.
90
For a description of this agreement, see the Company's immediate report of March 28, 2010 (TASE reference:
2010-01-432594).
56
20.9
Engagement in agreements with Acebright
20.9.1
On September 2, 2013, the Company entered into certain investment agreements
and a memorandum of understandings with Acebright with a view to signing a
license agreement, as explained below:
The investment agreements
According to the investment agreements, Acebright will invest an overall sum of
approximately US$ 1 million in the Company and its subsidiaries, in a manner that
a sum of US$ 450 thousand will be invested in the Company against allocation of
10,507,500 Company shares (approximately 8% of the issued capital of the
Company) and a sum of US$ 550 thousand will be invested in the Company's
subsidiaries to which the Company's Anti-CD3 technology and BBS technology
will be transferred, against allocation of 10% of each subsidiary's issued capital91.
In addition, according to the agreement, Acebright will be allocated options for 12
months to purchase up to 26,268,750 additional Company shares against an
additional investment of up to US$ 1,125 thousand in the Company92. In addition,
Acebright will be allocated options for the same period for investment of up to
US$ 1,375 thousand in the Company's subsidiaries, and all at the same exercise
prices as the original investment price in each company.
Completion of recruitment according to the allocation agreements was conditioned
on several suspending conditions, including the TASE's approval of the allocation
of Company shares and options as specified above and approval of the Chief
Scientist.
As of the report date, the funds of the investment were transferred to the Company
and Acebright was allocated shares and options of the Company and of the
subsidiary Orimmune (formerly Protea), as specified in the immediate reports of
December 23, 2013 (TASE reference: 2013-01-104890) and December 25, 2013
(TASE reference: 2013-01-107896).
As of the report date, the Company continues to take steps for the transfer of the
Anti-CD3 technology to the subsidiary (Orimmune), as determined in the
investment agreements, yet the process has not yet been completed.
It should be clarified that as of the report date the Anti-CD3 technology is not at
the center of the Company's operations and the Company continues its attempts to
recruit business development partners or strategic investors and conduct other
transactions, including the examination of the possible termination of the program
with the parties' consent93.
91
92
93
It should be noted that Acebright ultimately invested according to the agreement a total of US$ 750 thousand in
such a manner that the investment according to the agreement did not include the BBS technology. See also the
Company's immediate report of December 23, 2013 (TASE reference: 2013-01-104890).
As of the report date, these options expired. See the Company's immediate report of May 10, 2015 (TASE
reference: 2015-01-016461).
See details of the possible expansion of the collaboration with Prof. Howard Weiner in connection with the
nasally administered Anti-CD3 antibody for treating advanced MS and juvenile diabetes which as of the report
date did not materialize and of a clinical trial regarding the use of the Anti-CD3 antibody in ulcerative colitis
patients sponsored by the Company in paragraph 19.9 to the previous annual report.
57
20.9.2
The memorandum of understandings for license agreement for development and
commercialization ("MOU")
In addition to said investment agreements, on September 2, 2013, the Company
entered into a non-binding MOU with Acebright that specifies the main terms of
the license agreement which the parties plan on entering. According to the MOU,
the Company will grant Acebright an exclusive license for developing a product
and for conducting clinical trials with the Company's Anti-CD3 technology in the
NASH indication only in defined territories in the Far East, including China, Hong
Kong, India, Korea, the Philippines, Thailand and others (not including Japan) and
for the commercialization of said technology in these territories.
In consideration for the license, Acebright will pay the Company royalties at a rate
equivalent to 10% of total net sales of products based on the Company's Anti-CD3
technology made by Acebright in each country in the above territories in the first
three years, and 5% of sales after the said period. The final license agreement will
establish minimum sums for periodic royalties to be paid to the Company.
Development by Acebright will be performed in accordance with a development
plan to be approved by the Company and in compliance with predetermined quality
requirements. Acebright will bear all clinical trial costs and costs involved in
compliance with regulatory requirements in said territories.
The Company will own the intellectual property rights related to the Anti-CD3
technology. Acebright will be granted a license for using the intellectual property
that will be developed based on said technology for other indications as well.
Certain IP rights relating to formulation of the oral administration of Anti-CD3 will
be assigned to Acebright but the Company will be granted exclusive license for
said technology and Acebright will be prevented from granting the license for said
technology to any third party. It should be noted that as of the report date, the
MOU did not materialize into a binding agreement and no active dialog is being
held between the Company and Acebright in connection with the draft agreement
which the Company had delivered to it in the past in this context.
20.10 Private placement agreement of January 2013
According to a private placement agreement the Company signed with Dr. Ascher Shmulewitz
and Mr. Avi Meizler94 (or companies controlled by them) ("the investment agreement" and
"the optionees", respectively), the two will invest in the Company's share capital a cumulative
amount of NIS 4 million in equal parts against the allocation of shares that will confer each of
them (on the date of allocation) about 22.78% of the Company's equity and voting rights. On
February 19, 2013, the Company allocated to Dr. Shmulewitz and Mr. Meizler 25,000,000
Ordinary shares of the Company pursuant to the investment agreement. On April 3, 2013, the
Company allocated to Dr. Shmulewitz and Mr. Meizler another 7,500,000 Ordinary shares of
the Company95.
94
95
Both of whom serve as directors in the Company as of the report date (Dr. Shmulewitz as active Chairman of the
Board).
See details in the Company's immediate reports of February 3, 2013 (TASE reference: 2013-01-028422),
February 11, 2013 (TASE reference: 2013-01-035217) and March 24, 2013 (TASE reference: 2013-01-017665).
58
It should be noted that in the context of the transaction report issued regarding the approval of
the investment agreement it was determined, among others, that although the Company
believed that the approval of the investment agreement and the private placements will not
result in a change in the Company's financial position since to the best of the Company's
knowledge the Company does not have a controlling shareholder then the Company undertook
that as long as there is no change in status as occurred after the private placements were
executed, as discussed in the report on conflicts of interests which is the subject of the
investment agreement, any material transaction which the Company will seek to conduct in
which either of the optionees has a personal interest (excluding decisions regarding
indemnification, directors' fees, insurance etc. which uniformly apply to all directors) will be
studied by the ISA Staff regarding the appropriate approval of the transaction.
20.11 Agreements for the payment of royalties
Below is a list of royalties that the Company is required to pay96:
Identity of the
recipient of royalties
Ramot
Cause for eligibility for
royalties
License for BBS
technology
Means of
payment
Royalties from sales
Antitope
Hadasit
License for BBS-related
technology
Royalties from sales and
sublicenses
License for Anti-CD3
technology
Royalties from sales and
sublicenses
Antitope
License for Anti-CD3-
related technology
Royalties from sales and
sublicenses
Range of the
consideration
1% to 4% of net annual
revenues – for more
information, see above
Approximately 0.5% of net
annual revenues up to
£ 6.375 million
Between 2.25% and 4.5%
of net annual revenues;
30% of the sums to be
received for the
sublicenses – for more
information , see above
Approximately 0.5% of net
annual revenues
96
In addition, the Company is required to pay the former shareholders of Protea certain amounts, subject to
compliance with certain milestones or as a percentage of certain revenues that the Company will generate from
the Protea technology. For more information – see the Company's immediate report regarding the Protea
acquisition transaction of January 19, 2009, whose content was included in this report by way of reference.
59
21. Legal proceedings
21.1
In keeping with the Company's previous reports from early 2014 in connection with Ramot's
notification to the Company97 that it intends to cancel the license granted to the Company for
Ramot's BBS technology ("the Ramot case")98, the Company reported that to the best of its
knowledge, the ISA is holding an administrative inquiry apparently regarding the dates for
reporting the Ramot case to the public and the quality of the disclosure provided by the
Company in connection with the technology's development status in the relevant periods
before Ramot issued said cancellation notice and that the Company has fully cooperated with
the ISA in this context99. As of the report date, the Company has no information of the stage of
the inquiry and/or cannot assess its outcome, if any. See details of the license agreement in
paragraph 20 above and in Note 15a to the financial statements.
21.2 On February 3, 2016, the Company received a notice of opposition ("the notice of
opposition") from the European Patent Office (EPO) in connection with a European divisional
patent application underlying the Anti-CD3 technology ("the patent" and "the technology",
respectively). The patent was included in the group of patents whose rights were licensed to
the Company pursuant to an exclusive international license for Hadasit's technology, as
discussed in paragraph 20 above100. The notice of opposition was filed anonymously.
According to the notice of opposition, the holders of the patent rights may respond to the
opposition by the end of May 2016 (with a possible two-month extension). It should be
clarified that the opposition was raised in connection with the divisional patent only and in
Europe only. Other patents pertaining to the technology and included in the license agreement
(based on which the Company had previously conducted additional R&D activity) are also
registered in other territories, including the US, Europe, Japan, Australia and Canada and their
window of filing oppositions has ended)101. The Company is currently studying the patent
opposition and intends to consult its professional advisors on its options for handling the
opposition process. It should be noted that as of the report date, this technology is not at the
focus of the Company's business operations and the Company has long been attempting to
recruit potential collaborations and/or investments for this technology102. Accordingly, the
Company estimates that the patent opposition in itself (as opposed to the need to protect the
patent rights such as in counter-opposition processes and the related costs) will not have a
material effect on the Company's operations.
97
98
99
100
101
102
Ramot at Tel-Aviv University Ltd., the Tel-Aviv University's technology transfer company.
For details of Ramot's cancellation notification in the Company's immediate reports of January 13, 2014 (TASE
reference: 2014-01-013072) and January 29, 2014 (TASE reference: 2014-01-026068); see details of an
agreement for settling the disputes between the parties in the Ramot case in the Company's immediate reports of
December 3, 2014 (TASE reference: 2014-01-214758 and its amendment 20140-01-214758) and of March 4,
2015 (TASE reference: 2015-01-044713).
See the Company's immediate report of March 15, 2015 (TASE reference: 2015-01-051955).
For details of the patent, see no. 1 in the table of patent applications in paragraph 12 above.
See details of the patents underlying the license agreement in the tables in paragraph 12 above.
For more information see also paragraph 1 above.
60
Forward-looking information warning - the Company's evaluations regarding the
chances of the notice of opposition to the European patent to prevail and the effect of the
opposition process on the Company's operations (including the related costs involving
the defense of patent rights) represent forward-looking information, as this term is
defined in the Securities Law, whose materialization is uncertain. In practice, there is no
guarantee that the European Patent Office will accept the notice of opposition, among
others, following a thorough investigation of the existing evidence in the opposition case
and the decision that the grounds for the opposition are not sufficient for cancelling the
European patent for policy or other considerations.
21.3
For details of the investment agreement with Lara and the separation process, see paragraph
20.5 above.
22. Business strategy and targets
Below is a review of Company targets with regards to its activity in ensuing years:
Product name and indication Development stage as
2016
2017
2018
Capital raisings
Expansion of the Company's
portfolio of cannabinoid
pharmaceutical technologies
(including in connection with
drug delivery systems (DDS)
Upgrading and development
of existing medicinal cannabis
related technologies
Anti-CD3 (antibody for
treating inflammatory and
autoimmune diseases)
of the report date
The Company has a
going concern notice in
its financial statements
The Company holds a
license for two
innovative clinical
application
technologies based on
the use of THC
(entourage effect
technology and
ultralow dose
technology)
The Company holds a
license for two
innovative clinical
application
technologies based on
the use of THC
(entourage effect
technology and
ultralow dose
technology)
As of the report date,
the Anti-CD3
technology is not at the
focus of the
Company's operations
and the Company
pursues its efforts to
recruit business
development partners
or strategic investors or
conduct other
transactions and
possibly terminate the
program with the
parties' consent
Raising capital of at least
US$ 1.5 million
Raising capital of at least
US$ 1 million
Raising capital of at
least US$ 1 million
Expanding at least one
additional synergetic
cannabinoid
pharmaceutical
technology (including
DDS)
Expanding at least one
additional synergetic
cannabinoid
pharmaceutical
technology (including
DDS)
Expanding at least one
additional synergetic
cannabinoid
pharmaceutical
technology (including
DDS)
- Developing
proprietary
formulations
- Developing
proprietary
formulations
- Continuing the
- Continuing the
clinical trial phase
Signing a strategic
collaboration
agreement
clinical trial phase
- Beginning
technological
commercialization
and/or achieving
strategic
collaboration
---
---
- Developing
proprietary
formulations to
prepare for clinical
trials
- Commencing clinical
-
trials of the
entourage effect
technology
Signing a strategic
collaboration
agreement
-
Commercial, research or
technological
collaboration
61
Forward-looking information warning - the information in the table above is forward looking
information, as defined in the Securities Law, whose materialization is not guaranteed and
whose materialization depends, inter alia, on factors outside the Company's control, such as
developments in the vaccine markets and treatments of diseases for which the Company's
development is designed, position of the Company's business partners in the various
developments and their business and strategic decisions with regards to these developments, the
ability to raise funds to carry out other trials and manufacture antibodies; the availability and
willingness of patients to participate in trials, trial expenses, requirements of the medical
institutions where the trials will be carried out, acceptance of the Company's development in the
medical community, etc.
23. Expected developments in the next year
Below is a list of the plans that deviate from the ordinary course of business which the Company
decided to implement in the upcoming year that might materially impact the business status and
operating results:
a.
b.
c.
d.
e.
Identifying new companies and/or technologies that will be synergetic to the Company's
existing technological portfolio.
Launching the clinical trial phase for one of the technologies being developed by the Company.
Recruiting strategic partners for cooperation and/or investment in the Company.
Completing the raising of capital in the context of private placement.
Identifying strategic partners for potential commercial, research or technological collaboration
in connection with the Anti-CD3 project (or terminating the program).
Forward-looking information warning - the Company's expected plans for the coming year
represent forward looking information, as defined in the Securities Law, and constitute merely a
forecast which is liable to considerably change for the worse. Moreover, actual expenses depend
on various factors which involve a high degree of uncertainty such as the results of preclinical
trials, the ability to obtain financing from different factors (government and/or private) and the
ability to obtain the required commercial marketing approvals.
24. Risk factors
Investment in the Company's securities involves risks that characterize an investment in any new
biotechnology and pharmaceutical company. As of the report date, the Company does not have any
sales and there is no guarantee that the Company will be able to complete development of products
that it is currently developing and market the products on a commercial basis.
Below is information on the risk factors that might materially affect the Company's operations and
business results:
24.1 Development of the Company's products
The Company has not yet completed development of any product and there is no guarantee
that the Company will be able to complete development of any of its projects and products and
if and when they will be developed or that they will be effective and safe for use. In addition,
there is no guarantee that the Company will successfully complete development of its products
within the timeframe and/or within the budget it set for itself. A delay in the timetable or a
deviation from the budget might result in the Company incurring additional expenses with
regards to product development and might even prevent completion of their development.
62
In addition, the Company's products that are being development based on the licensed
technologies have yet to be tested in clinical trials. There is therefore no guarantee that the
developments that showed promising results in preclinical trials and/or for which there is
medical scientific validation in professional literature will present similar results in human
subjects as well.
24.2 Demand for the Company's products and product prices
There is no guarantee that the Company's products will have a demand that justifies their
commercial production and marketing. In addition, the Company has no guarantees with
regards to demand for its products, with regards to product pricing it suggests and the cost of
production of said products.
24.3 Uncertainty regarding the receipt of patents
There is no guarantee that the patent registration applications that were submitted by the
Company with regards to the Company's technologies will result in patent registration. In the
event of failure to complete patent registration, the Company's developments will not be
proprietary, which might allow other entities to manufacture the Company's products and
compete with them.
24.4
IP protection
A third party might challenge the measures adopted by the Company to protect its IP. Failure
by the Company to protect its IP might hinder its ability to effectively compete and might
negatively impact its business.
24.5 Company operations based on third party licenses
The Company's development activity is based on licenses from third parties to develop
additional drugs in specific areas related to the Company's operating segments.
24.6
Technological changes
The pharmaceutical market is characterized by steady developments. The results of the
Company's operations depend on its ability to constantly develop new generations of products.
There is no guarantee that the Company's R&D activity will produce results and that it can
conduct research and development at the level required to successfully compete with
competing products.
Once regulation has been completed with regards to the Company's products, the third parties
might develop alternative products in which they introduce a technological modification that
would allow them to bypass the Company's patent-protected rights. In this case, the third
parties might develop competing products to the Company's products and not violate any
patent-protected rights. This would increase competition against Company products and lower
the Company's projected profit.
63
24.7 Changes in regulations, permits and international standardization; regulatory changes and
stricter medicinal cannabis policies
The Company's operations are subject to the relevant standards in the countries in which the
Company plans to operate (including European, American, Israeli and other standards).
Subsequently, the Company might be affected by regulatory developments. Changes in the
regulatory environment with regards to pharmaceutical marketing, including changes and/or
failure to comply by the Company and its manufacturers with the said regulatory provisions,
might result in various restrictions on imposed on the Company's operations, including on the
future grant of approvals for its products. For information about the standards and regulations
that apply to the Company's operations, see paragraph 17 above.
24.8 Delay in obtaining the necessary permits for marketing the Company's products, failure to
obtain permits and resulting expenses
Marketing of the Company's products is subject to regulatory approvals (as also specified in
paragraph 19 above). Obtaining said approvals might be time-consuming, which might delay
marketing of the Company's products and result in additional expenses for the Company with
regards to obtaining permits to market the Company's products on a commercial basis.
Furthermore, there is no guarantee that the Company will receive the necessary approvals to
market its products. Without these approvals, the Company will not be able to market its
products.
24.9
Limited financial resources
As a company that is engaged in research and development of medical products and in view of
the uncertainty that involves the success of development of any of the Company's various
technologies and/or introducing them into the relevant market, in the event of failure of the
development of any of the technologies and/or failure to obtain the required approvals for
marketing and selling any of the Company's technologies from the regulatory authorities
and/or introducing them into the relevant market, the Company's investment in the
development of any of the technologies might be lost. Moreover, as an R&D company, the
Company is required to raise capital to create permanent positive cash flows from the sale of
any of its medical products in order to finance its expenses. The Company records a going
concern notice in its financial statements and there is no guarantee that it will have the
financial resources needed for realizing its strategic targets.
24.10 Failure to sign collaboration agreements with leading pharma companies
Failure by the Company to sign significant collaboration agreements with leading pharma
companies or failure of such agreements to result in commercial engagements with such
pharma companies will on the one hand limit the Company's ability to develop and market its
products and core technologies and on the other hand force the Company to invest far more
resources in developing and marketing its products that will probably not be available to it.
24.11 Lack of additional funding resources to complete the R&D
The limited funding sources available to the Company might not be sufficient to finance the
operating costs and complete the R&D of products under development by the Company. The
Company's financing needs might materially change, due to results of the R&D and clinical
trials, competition, technological developments in the field as well as expenses incurred from
additional requirements from various regulatory authorities.
64
There is no way of guaranteeing that the Company will manage to raise additional funds, if
and when it is required to do so. The lack of suitable funding might result in the suspension of
Company operations.
24.12 Projected lack of profits over the next several years
The Company is currently in the development stage. It has no source of revenue from product
sales, manufacturing or R&D activity. There is no guarantee that it can develop these types of
sources of income, or that the activity will become profitable even if its products are
manufactured on a commercial basis.
24.13 Competition
The Company expects to be exposed to competition due to development of new therapeutic
methods and due to the introduction of new competition into the market.
24.14 Below is a table breaking down the risk factors that might impact the Company's operations
and business results and the Company's assessment of the degree of impact of these risk
factors on its entire operations:
The degree of the impact of the risk
factor on the Company's entire
operations
Moderate
impact
Slight
impact
Tremendous
impact
Specific risks
Development of the Company's products
Demand for the Company's products and their prices
Company operations based on third party license
Changes in regulations, permits and international standardization
Delay in obtaining permits required to market the Company's
products, failure to obtain permits and resulting expenses
Limited financial resources
Failure to sign collaboration agreements with leading pharma
companies
Absence of additional financial resources for completion of
R&D activity
Expected absence of profits in the coming years
Industry risks
Uncertainty regarding patent approval
Protection of intellectual property
Technological changes
Competition
√
√
√
√
√
√
√
√
√
√
√
√
√
F:\W2000\w2000\60633903\OTR\15\THERAPIX-BARNEA-2015-Eng.docx
65
THERAPIX BIOSCIENCES LTD.
CHAPTER B
BOARD OF DIRECTORS' REPORT
ON THE STATE OF THE CORPOTATION'S AFFAIRS
AS OF DECEMBER 31, 2015
1
THERAPIX BIOSCIENCES LTD.
CHAPTER B - BOARD OF DIRECTORS' REPORT ON THE STATE OF THE
CORPOTATION'S AFFAIRS
We are hereby pleased to present the Board of Directors' report on the state of affairs of Therapix
Biosciences Ltd. ("the Company") for 2015 ("the reporting year"), prepared in conformity with the Israeli
Securities Regulations (Periodic and Immediate Reports), 1970 ("the report"). The Board of Directors'
report is attached to the Company's annual financial statements ("the annual financial statements") under the
assumption that the readers have the annual financial statements at their disposal.
a.
The Board's explanations for the Company's financial position, operating results,
equity and cash flows
1.
Material changes in the Company's operations and business and financial statement data in the
fourth quarter of 2015 and in 2015
1.1 Main results for the period of three months ended December 31, 2015 ("Q4 2015")
1.1.1
Net cash used in operating activities in Q4 2015 amounted to approximately
NIS 1.6 million, compared with net cash used in operating activities in the
amount of approximately NIS 1.1 million in the corresponding quarter of 2014.
The change in net cash used in operating activities in Q4 2015 mainly arises
from timing differences relating to making payments between the quarters.
1.1.2
The comprehensive loss in Q4 2015 amounted to approximately NIS 1.9
million, similarly to the corresponding quarter of 2014.
1.2 Main results in 2015
1.2.1
1.2.2
Net cash used in operating activities in 2015 amounted to approximately
NIS 5.2 million, compared with approximately NIS 7.4 million in 2014. The
decrease in net cash used in operating activities in 2015 mainly arises from the
decrease in development and administrative expenses.
The comprehensive loss in 2015 amounted to approximately NIS 10.2 million,
compared with approximately NIS 7.3 million in 2014. The increase in loss in
the reporting year stems from a (non-cash) non-recurring expense of
approximately NIS 3.9 million as a result of the amortization of an intangible
asset recorded in respect of the Dekel transaction and the allocation of options,
this offset by the decrease in operating expenses (without other expenses).
2
2.
The financial position
2.1
Following are explanations for the changes in the Company's financial position
(presented in a table format):
Explanations
The increase mainly arises from the
increase in cash balances received from
the issue of shares and the exercise of
options in 2015 totaling approximately
NIS 10.7 million, offset by cash used in
operating
totaling
activities
approximately NIS 5.2 million.
The decrease
in non-current assets
derives mainly from derecognition of
the investment in the subsidiary, Lara,
in a total of approximately NIS 187
thousand in 2014.
in
the
from
increase
The increase in current liabilities mainly
arises
trade
payables and provisions.
The decrease in non-current liabilities
stems from
the derecognition of a
liability in respect of Government grants
from the OCI in connection with the
Anti-CD3 project due to uncertainty
involving potential
the
foreseeable future.
The increase in equity attributable to
equity holders of the Company results
from the issue of shares and the exercise
of options, offset by the loss for the
period.
The increase in non-controlling interests
arises from the losses of the subsidiary,
Orimmune.
sales
in
Item
Current assets
December 31,
2015
December 31,
2014
NIS in thousands
6,459
760
Non-current assets
42
257
Total assets
Current liabilities
6,501
1,314
1,017
1,994
Non-current liabilities
-
156
Equity (deficit)
5,114
(143)
attributable to equity
holders of the
Company
Non-controlling
interests
(607)
(310)
Total equity (deficit)
4,507
(453)
*
Negative figures are presented in parenthesis.
3
3.
Operating results
The Company is a development stage company which does not generate sales.
3.1
Following are explanations for the changes in the Company's operating results (presented
in a table format):
Item
Research and
development
expenses, net
General and
administrative
expenses
Other expenses
(income), net
2015
2014
NIS in thousands
931
1,800
5,297
5,238
3,734
(115)
Explanations
in
(not
decrease
and
The
research
development expenses arises
from
reduced R&D operations which mainly
consisted of maintaining the Anti-CD3
project
the Company's core
business segment) and the initiation of
cannabinoid projects.
includes salary and related
Mainly
expenses, share-based payment and
professional services.
Other expenses, net in the reporting year
share-based
mainly
payment of approximately NIS 3.9
million for options allocated to Dekel as
part of the license agreement terms.
This amount represents the value of the
options as of August 19, 2015 (the date
of completion of the license agreement)
based on
a valuation performed
according to IFRS 2.
derive
from
Operating loss
Finance expenses, net
9,962
15
6,923
26
Group's share of losses
197
343
of company
accounted for at
equity, net
Net loss
10,174
7,292
*
Negative figures are presented in parenthesis.
Finance expenses, net in the reporting
year mainly derive from the revaluation
of a liability for Chief Scientist grants.
Company's share of
investee, LaraPharm Ltd.
losses of an
4
4.
Liquidity, cash flows and financial resources
Since its inception, the Company financed its activities using the capital raised from the public,
private placements and grants received from the Chief Scientist. The capital was mainly used in
the Company's research and development and operating activities.
The Company's cash flows provided from financing activities in 2015 amounted to
approximately NIS 10.7 million, resulting from the issue of capital and the exercise of options.
The Company's cash flows provided from financing activities in 2014 amounted to
approximately NIS 3.2 million, arising from the issue of shares and the exercise of options.
The liquid financial assets available to the Company as of December 31, 2015 comprise cash
and cash equivalents totaling NIS 6,136 thousand. The majority of the funds are deposited in
NIS and some in dollars.
As of December 31, 2015, the Company has a working capital of approximately NIS 4.5
million, compared with a negative working capital of approximately NIS 0.6 million as of
December 31, 2014.
5.
Remuneration of interested parties and senior officers
In general and pursuant to the ISA Staff's position, the examination of the remuneration in terms
of its conditions, reasonableness and its correlation to the senior officers' and interested parties'
contribution to a company in conformity with the criteria in Regulation 21 to the Securities
Regulations (Periodic and Immediate Reports), 1970 ("the officers", "the Reporting
Regulations" and "Regulation 21", respectively) is performed for each officer separately and is
specifically discussed and approved by the Company's Board based on the data presented to it
which consists, among others, of details and data of the relevant experience of each officer, their
education, base salary, terms of employment and tenure, various bonuses received from the
Company in the reporting year, including grants and rewards in the Company's securities, the
degree of complexity of their position, the nature of their responsibilities, the efforts invested by
them in the period, the Company's profits and financial results, the scope and complexity of the
Company's business and the personal contribution of each officer to the success of the
Company's business. In addition, the Board receives comparative data of the salaries of similar
officers in other public companies with similar business scopes and/or areas of activity to those
of the Company. The Company has examined the employment terms of the officers and found
them to be in compliance with the remuneration policy's principles and provisions.
In March 2014, the Company's shareholders approved the remuneration policy for the
Company's officers in effect for a period of three years ("the remuneration policy").
Based on the above data, the Board held meetings to discuss the tenure and remuneration terms
of the Company's officers and interested parties in keeping with Regulation 21 to the Reporting
Regulations. The Company's Board believes that each officer's remuneration in the reporting
year, as specified in Regulation 21 to Chapter D (Additional Information about the Corporation)
to this report properly reflects the officer's individual contribution to the Company and is
reasonable and fair and in compliance with the remuneration policy's principles and provisions.
In this context it should be noted that the remuneration to the Company's external and
independent directors and the related expenses are provided in accordance with the Israeli
Companies Regulations (Rules of Remuneration and Expenses to External Director), 2000 and
even coincide with the Company's remuneration policy as issued. The other directors, excluding
the Chairman of the Board, are not entitled to remuneration for their service as directors.
In this context see also Note 20 to the financial statements and Regulation 21 to Chapter D
(Additional Information about the Corporation) to this report.
5
b. Corporate governance aspects
6.
Details of directors with accounting and financial expertise
6.1
The Company's Board has stipulated that the minimum number of directors with
accounting and financial expertise in the Company in accordance with Article 92(a)(12)
to the Israeli Companies Law, 1999 ("the Companies Law") will be one ("the minimum
number"). This stipulation was based, among others, on the Company's size, scope of
activity, areas of activity and degree of complexity of its financial reporting framework.
The Company believes that the minimum number is adequate and will allow the
Company's Board to meet its obligations pursuant to applicable law and the Company's
articles of association and fulfill its responsibility for inspecting the Company's financial
position and prepare and approve the financial statements.
6.2 As of the date of the periodic report, the Company is meeting the minimum number as
above. After evaluating the education, experience, qualifications and knowledge of the
members of the Board regarding accounting and financial statement issues, the Board
members who are viewed by the Board as possessing accounting and financial expertise
are Mr. Amit Berger and Mr. Zohar Heiblum.
6.3
See more details of the above directors in Regulation 26 to Chapter D (Additional
Information about the Corporation) to this report.
7.
Details of independent directors
7.1
The Company did not adopt in its articles of association the directive regarding the rate of
independent directors as defined Article 219(e) to the Companies Law.
7.2 As of the date of this periodic report, the Company has three independent directors, of
whom two external directors. As of the date of this report, the independent directors
represent half of the members of the Board.
8.
Details of the Company's internal auditor
8.1 Name of the internal auditor - Mr. Daniel Shapira.
8.2 Date of beginning of tenure - March 29, 2006.
8.3
The Company's internal auditor meets all the requirements of Articles 3(a) and 8 to the
Israeli Internal Audit Law, 1992 ("the Internal Audit Law") as well as the provisions of
Article 146(b) to the Companies Law; the internal auditor is not an interested party in the
Company or a relative of any interested party or officer in the Company and does not
serve as or on behalf of the Company's external auditor; the internal auditor does not hold
any securities of the Company or of a related entity thereto; the internal auditor does not
fill any other position in the Company in addition to the internal audit position and to the
nest of the Company's knowledge does not fill any position outside the Company that
creates or might potentially create a conflict of interests with his position as the
Company's internal auditor; to the best of the Company's knowledge, other than the
employment of the internal auditor and his team, the internal auditor has no other material
business or other relations of any kind or type with the Company or a related entity
thereto.
8.4
The internal auditor serves as a senior officer in the Company pursuant to applicable law.
6
8.5
8.6
8.7
8.8
The internal auditor's appointment: in its meeting of March 2006, the Company's Board
approved the appointment of the internal auditor pursuant to the Internal Audit Law,
based, among others, on the Company's nature, size and scope and complexity of its
financial activity. The internal auditor owns an accounting firm which specializes in
internal audits in a variety of industries. His firm has some 23 years of experience in
internal audits of public companies. The internal auditor holds a BA in Economics and
Accounting and is a CPA. He will act, among others, in keeping with the provisions of
the Companies Law and the Internal Audit Law to sustain the Company's internal audit.
The officer in the Company in charge of supervising the internal auditor is the Chairman
of the Board.
The method and scope of the work performed by the internal auditor and his team and
their remuneration: in 2015, the internal auditor and his team provided the Company
internal audit services at a scope of about 60 hours, a scope which has been deemed to
reflect the level of investment needed from the internal auditor and his team for the
purpose of carrying out the internal audit work in the reporting year.
The audit performance: based on information delivered to the Company's Management by
the internal auditor, the audit is performed according to generally accepted professional
internal audit standards, guidelines and policies, as approved and issued by the IIA and
pursuant to the Internal Audit Law. The Board has relied on the internal auditor's reports
of his compliance with said professional standards which underlie the internal audit.
8.9 Access to information: the internal auditor has constant and direct access to the
Company's documents and IT systems, including financial data, for the purpose of
conducting his work, as described in Article 9 to the Internal Audit Law.
8.10 The internal auditor's reports: the internal auditor's written reports are filed periodically
and discussed by the Company's Audit Committee and Management. In the reporting
year, the internal auditor filed an internal audit report regarding recovery in emergency
situations.
8.11 The Board's evaluation of the internal auditor's work: the Board believes that the nature,
scope and consistency of the internal auditor's work and audit plan are reasonable under
the circumstances and fulfill the Company's internal audit targets.
8.12 Remuneration: in return for the internal auditor's work in the reporting year, the Company
paid the internal auditor fees based on actual labor hours. The Board believes that this
remuneration is reasonable and does not affect the internal auditor's professional
judgment when auditing the Company. The internal auditor did not receive any securities
as part of his employment terms.
9.
Details of the Company's external auditors
9.1 Details of professional fees and labor hours: on February 14, 2016, the general meeting of
the Company's shareholders approved the extension of the appointment of Kost Forer
Gabbay & Kasierer, CPAs (Ernst & Young Israel) as the Company's external auditors in
the reporting year and authorized the management of the company to set up their
professional fees.
7
9.2
The Company's external auditors in 2014 and 2015 are Ernst & Young Israel.
9.3
The following table lists the professional fees paid to the Company's auditors in 2014 and
2015 for audit, audit related, tax and other professional services and the actual work hours
invested in these services:
Total expenses in respect of audit and tax services (NIS)
Total expenses in respect of other services (NIS)
Total audit and tax hours
Total hours in respect of other services
2015
201,500
-
1,185
-
2014
210,000
25,000
1,654
40
10. Details of the financial statement approval process
10.1 The Company's Board is in charge of entity-level controls in the Company and of the
approval of the financial statements.
10.2 The Board members as of the report date are: Dr. Ascher Shmulewitz, Mr. Avraham
Meizler, Mr. Amit Berger, Mr. Zohar Heiblum, Mr. Micha Jesselson and Dr. Yafit Stark.
10.3 See details of the Board members as of the report date in Chapter D (Additional
Information about the Corporation) to this report.
10.4 Based on the provisions of the Companies Regulations (Provisions and Conditions
underlying the Financial Statement Approval Process), 2010 ("the Financial Statement
Approval Regulations"), the Company appointed a Financial Statement Review
Committee (in this section - "the Committee"). As of the report date, the Committee
consists of three members: (1) Mr. Zohar Heiblum, external director and Chairman of the
Committee, (2), Mr. Amit Berger, external director, and (3) Dr. Yafit Stark, independent
director.
10.5 All the members of the Committee have the ability to read and understand financial
statements. Mr. Berger and Mr. Heiblum have accounting and financial expertise. Prior to
their appointment, all the members signed on the declaration that is required in the
Financial Statement Approval Regulations. See details of the members of the Committee
who have accounting and financial expertise, including their qualifications, education,
experience and knowledge based on which the Company considers them as having the
ability to read and understand financial statements in Regulation 26 to Chapter D
(Additional Information about the Corporation) to this report.
10.6 The approval of the financial statements involved two meetings as follows: (1) a meeting
of the Committee, which took place prior to the Board's meeting, and thoroughly
discussed the material issues and formulated its recommendations on the financial
statement approval process to the Board; (2) the Board's meeting which discussed the
recommendations of the Committee and the financial statements and approved them.
8
10.7 The Committee's meeting of March 17, 2016 which discussed and provided
recommendations regarding the approval of the financial statements for the reporting year
was also attended, in addition to all the Committee members, by the Company's external
auditors, officers and other holders of positions in the Company. The draft financial
statements were delivered to the Committee's members to their review a reasonable
timeframe before the meeting. In its meeting, the Committee reviewed, among others, the
small corporation exemptions applied by the Company and their implications, the
evaluations and estimates used in connection with the financial statements for the
reporting year, the integrity and adequacy of disclosures in the financial statements for
the reporting year, the accounting policies adopted and the accounting treatment of the
Company's material affairs, including in connection with subsidiaries and related
companies, the lack of need to attach the financial statements of associates and any
valuations (and their underlying assumptions and estimates) which served as a basis for
data in the financial statements for the reporting year. The Committee also examined
various aspects of control and risk management, both those reflected in the financial
statements for the reporting year and those that affect the reliability of the financial
statements through the detailed presentation of these issues by officers and other holders
of positions in the Company, including the CEO and CFO, and the external auditors
addressed those issues. A discussion was held by the Committee regarding the accounting
policies and the method of presentation and disclosure in the financial statements. The
Committee's recommendation to the Board members to approve the Company's financial
statements was provided on March 17, 2016 with no special recommendations or material
changes.
10.8 In its meeting of March 22, 2016, the Board discussed the Committee's recommendations,
reviewed the Company's financial position, operating results and cash flows and received
information of the Company's activities compared to previous periods. The Board
estimates that the Committee's recommendation which was delivered to the Board three
business days before the Board's meeting was delivered within a reasonable timeframe,
among others given the data in the financial statements, the various issues relating to the
financial statements and the Committee's recommendations thereto. The Company's
Management was asked to deliver the related materials to the meetings of the Committee
and the Board in advance. The Board meeting was attended by all Board members. In this
meeting, the Company's CEO analyzed the Company's business operations and the CFO
reviewed the financial statements, including the balance sheets, operating results, cash
flows and financial position, the scope and balances of available cash and addressed
material events in the reporting period, the going concern notice included in the financial
statements and the auditors' drawing of attention, as used in the financial statements.
Following said discussion and the examination of the Committee's comments, after
making additional adjustments to the financial statements as required in the course of the
meeting, and after having been reassured that the financial statements properly reflect the
Company's business position and operating results, the Board unanimously adopted the
Committee's recommendation and approved the financial statements for the reporting
year.
9
c.
Disclosure of the Company's financial reporting framework
11. Disclosure of events after the reporting date
To the best of the Company's knowledge, there have been no material events after the reporting
date as mentioned in the periodic report and in the annual financial statements. See more details
in Note 22 (events after the reporting date) to the annual financial statements.
12. Critical accounting estimates
As of the report date, there are no critical accounting estimates.
See details of a valuation performed for Dekel's options which has not changed compared to the
reporting date in an appendix to the Company's report for the third quarter of 2015 [TASE
reference: 2015-01-166299].
13.
Significant gaps in estimates and forecasts underlying valuations
As of the report date, there are no significant gaps between the critical assumptions, estimates
and forecasts underlying valuations, including professional opinions (as this term is defined in
the Securities Regulations (Private Placement of Securities in a Listed Company), 2000 or in the
Securities Regulations (Transaction between a Company and the Controlling Shareholder
therein), 2001) which were attached to the Company's reports in the three years that precede the
report date, and their actual realization.
See details of critical accounting estimates used in the annual financial statements in Note 3 to
the annual financial statements.
d. Repurchases
14.
In the reporting period and as of the report date, the Company has no plans to repurchase its
securities nor has it reported any such repurchase plans, based on the definition of the term
"purchase" in Regulation 10(b)(2)(i) to the Regulations.
The Company's Board wishes to thank the Company's employees and managers for their contribution to
promoting the Company.
Dr. Ascher Shmulewitz
Chairman of the Board
Dr. Elran Haber
CEO
Date: March 22, 2016
F:\W2000\w2000\60633903\OTR\15\תילגנא-2015 יתנש ןוירוטקריד חוד.docx
10
THERAPIX BIOSCIENCES LTD.
(Formerly: NasVax Ltd.)
CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2015
INDEX
Auditors' Report
Consolidated Statements of Financial Position
Consolidated Statements of Profit or Loss
Consolidated Statements of Comprehensive Income
Consolidated Statements of Changes in Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
- - - - - - - - - - -
Page
2
3 - 4
5
6
7
8 - 9
10 - 46
Kost Forer Gabbay & Kasierer
2 Pal-Yam Ave.
Haifa 33095, Israel
Tel: 972 (4)8654000
Fax: 972 (4)5633443
ey.com
AUDITORS' REPORT
To the Shareholders of
THERAPIX BIOSCIENCES LTD.
(Formerly: NasVax Ltd.)
We have audited the accompanying consolidated statements of financial position of Therapix
Biosciences Ltd. (formerly: NasVax Ltd.) ("the Company") as of December 31, 2015 and 2014, and the
related consolidated statements of profit or loss, comprehensive income, changes in equity and cash flows for
each of the three years in the period ended December 31, 2015. These financial statements are the
responsibility of the Company's board of directors and management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards in Israel, including
those prescribed by the Auditors' Regulations (Auditor's Mode of Performance), 1973. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by the board of directors and management, as well
as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material
respects, the financial position of the Company and its subsidiaries as of December 31, 2015 and 2014, and
the results of their operations, changes in their equity and cash flows for each of the three years in the period
ended December 31, 2015, in conformity with International Financial Reporting Standards (IFRS) and with
the provisions of the Israeli Securities Regulations (Annual Financial Statements), 2010.
Without qualifying our above opinion, we draw attention to the matter discussed in Note 1c to the
financial statements. For the year ended December 31, 2015, the Company incurred losses totaling
NIS 10,174 thousand and negative cash flows from operating activities totaling NIS 5,162 thousand for the
year then ended. These factors, along with other factors detailed in that Note, raise substantial doubt as to the
Company's ability to continue as a going concern. Management's plans with respect to these matters are
discussed in Note 1c. The financial statements do not include any adjustments to the carrying amounts and
classifications of assets and liabilities that would result if the Company was unable to continue as a going
concern.
Haifa, Israel
March 22, 2016
KOST FORER GABBAY & KASIERER
A Member of Ernst & Young Global
- 2 -
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
THERAPIX BIOSCIENCES LTD.
(Formerly: NasVax Ltd.)
ASSETS
CURRENT ASSETS:
Cash
Restricted cash
Accounts receivable
NON-CURRENT ASSETS:
Investment in company accounted for at equity
Property, plant and equipment
December 31,
2015
2014
Note
NIS in thousands
5
15d
6
8
7
6,136
44
279
6,459
-
42
42
614
44
102
760
187
70
257
6,501
1,017
The accompanying notes are an integral part of the consolidated financial statements.
- 3 -
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
THERAPIX BIOSCIENCES LTD.
(Formerly: NasVax Ltd.)
December 31,
2015
2014
Note
NIS in thousands
9
10
11
16
LIABILITIES AND EQUITY (DEFICIT)
CURRENT LIABILITIES:
Trade payables
Other accounts payable
NON-CURRENT LIABILITIES:
Liabilities for Government grants
EQUITY (DEFICIT) ATTRIBUTABLE TO EQUITY
HOLDERS OF THE COMPANY:
Share capital
Share premium
Share options
Reserve from share-based payment transactions
Capital reserve from financial statements of foreign
operation
Reserve from transactions with non-controlling interests
Accumulated deficit
Non-controlling interests
Total equity (deficit)
1,779
215
1,994
1,182
132
1,314
-
156
3,540
95,772
-
18,309
20
941
(113,468)
5,114
(607)
4,507
6,501
1,841
80,460
4,981
15,215
10
941
(103,591)
(143)
(310)
(453)
1,017
The accompanying notes are an integral part of the consolidated financial statements.
March 22, 2016
Date of approval of the
financial statements
Asher Shmulewitz
Chairman of the Board
Elran Haber
CEO
Guy Goldin
CFO
- 4 -
CONSOLIDATED STATEMENTS PROFIT OR LOSS
THERAPIX BIOSCIENCES LTD.
(Formerly: NasVax Ltd.)
Research and development expenses, net
General and administrative expenses
Note
18a
18b
Year ended December 31,
2014
NIS in thousands (except per share data)
2015
2013
(931)
(1,800)
(4,649)
(5,297)
(5,238)
(3,919)
(6,228)
(7,038)
(8,568)
Other income (expenses), net
18d
(3,734)
115
7,246
Operating loss
Finance income
Finance expenses
(9,962)
(6,923)
(1,322)
18c
18c
20
(35)
401
(427)
1,603
(72)
Group's share of losses of company accounted
for at equity, net
Net income (loss)
Attributable to:
Equity holders of the Company
Non-controlling interests
(197)
(343)
(10,174)
(7,292)
(9,877)
(297)
(7,207)
(85)
(10,174)
(7,292)
-
209
207
2
209
Basic and diluted net earnings (loss) per share
attributable to equity holders of the Company
(in NIS)
19
(0.43)
(0.45)
0.02
The accompanying notes are an integral part of the consolidated financial statements.
- 5 -
CONSOLIDATED STATEMENTS COMPREHENSIVE INCOME
THERAPIX BIOSCIENCES LTD.
(Formerly: NasVax Ltd.)
2015
Year ended December 31,
2014
NIS in thousands
2013
Net income (loss)
(10,174)
(7,292)
209
Amounts that will be reclassified or that are
reclassified to profit or loss when specific
conditions are met:
Adjustments arising from translating financial
statements of foreign operations
Total other comprehensive income
10
10
10
10
Total comprehensive income (loss)
(10,164)
(7,282)
Attributable to:
Equity holders of the Company
Non-controlling interests
(9,867)
(297)
(7,197)
(85)
(10,164)
(7,282)
-
-
209
207
2
209
The accompanying notes are an integral part of the consolidated financial statements.
- 6 -
THERAPIX BIOSCIENCES LTD.
(Formerly: NasVax Ltd.)
Accumulated
deficit
Total
Non-
controlling
interests
Total
equity
(96,591)
(7,409)
-
(7,409)
3,616
-
963
(202)
-
-
4,377
-
-
-
604
-
-
-
-
-
941
-
941
-
-
-
-
-
207
-
-
-
-
(96,384)
(7,207)
-
(7,207)
-
-
4,981
941
(103,591)
-
-
-
-
(661)
(4,320)
-
-
-
-
-
-
-
-
(9,877)
-
(9,877)
-
-
-
-
-
941
(113,468)
207
9,768
338
941
(154)
3,691
(7,207)
10
(7,197)
3,219
144
(143)
(9,877)
10
(9,867)
5,664
5,022
-
4,438
5,114
2
-
-
(227)
-
(225)
(85)
-
(85)
-
-
(310)
(297)
-
(297)
-
-
-
-
(607)
209
9,768
338
741
(154)
3,466
(7,292)
10
(7,282)
3,219
144
(453)
(10,174)
10
(10,164)
5,664
5,022
-
4,438
4,507
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Share
capital
Share
premium
Attributable to equity holders of the Company
Reserve from
share-based
payment
transactions
Capital reserve
from financial
statements of
foreign
operation
Share
options
Reserve from
transactions
with non-
controlling
interests
NIS in thousands
Balance at January 1, 2013
Total comprehensive income
Allocation of shares (3)
Exercise of options into shares
Issue of shares to non-controlling interests
Cost of share-based payment
478
-
904
28
-
-
69,947
15,141
-
7,817
512
-
-
-
84
-
-
(154)
Balance at December 31, 2013
1,410
78,276
15,071
Loss
Other comprehensive income
Total comprehensive loss
Issue of shares and share options (2)
Cost of share-based payment
-
-
-
431
-
-
-
-
2,184
-
-
-
-
-
144
Balance at December 31, 2014
1,841
80,460
15,215
Loss
Other comprehensive income
Total comprehensive loss
Issue of shares (3)
Exercise of options into shares
Expiration of share options
Cost of share-based payment
-
-
-
806
893
-
-
-
-
-
4,858
6,134
4,320
-
-
-
-
-
(1,344)
-
4,438
Balance at December 31, 2015
3,540
95,772
18,309
(1)
(2)
(3)
Less issuance expenses of NIS 775 thousand.
Less issuance expenses of NIS 290 thousand.
Less issuance expenses of NIS 84 thousand.
-
-
-
-
-
-
-
-
10
10
-
-
10
-
10
10
-
-
-
-
20
The accompanying notes are an integral part of the consolidated financial statements.
- 7 -
CONSOLIDATED STATEMENTS OF CASH FLOWS
THERAPIX BIOSCIENCES LTD.
(Formerly: NasVax Ltd.)
2015
Year ended December 31,
2014
NIS in thousands
2013
Cash flows from operating activities:
Net income (loss)
(10,174)
(7,292)
209
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
Adjustments to the profit or loss items:
Depreciation and amortization
Loss (gain) from sale of property, plant and equipment
Change in employee benefit liabilities, net
Cost of share-based payment
Write down of liability to the Chief Scientist
Decrease (increase) in outstanding liability to the Chief
Scientist (including amounts recorded in research and
development expenses)
Finance expenses (income), net
Group's share of losses of company accounted for at equity
Change due to decrease in value of share options
Change in fair value of financial derivatives
Changes in operating asset and liability items:
Decrease (increase) in accounts receivable
Increase (decrease) in trade payable
Increase (decrease) in other accounts payable
Cash received during the year for:
11
19
-
4,438
(191)
-
35
197
-
-
4,509
(177)
597
83
503
146
(116)
-
144
-
28
(5)
343
(396)
350
494
20
(374)
(211)
(565)
170
(40)
(20)
(154)
(7,206)
(1,805)
(20)
-
(47)
-
(9,122)
53
(612)
(91)
(650)
Interest received
-
5
20
Net cash used in operating activities
(5,162)
(7,358)
(9,543)
The accompanying notes are an integral part of the consolidated financial statements.
- 8 -
CONSOLIDATED STATEMENTS OF CASH FLOWS
Cash flows from investing activities:
Proceeds from sale of property, plant and equipment
Movement in restricted cash, net
Purchase of property, plant and equipment
Investment in financial derivatives
Investment in company accounted for at equity
Net cash provided by (used in) investing activities
Cash flows from financing activities:
Issue of share capital and share options (less issuance
expenses)
Issue of shares to non-controlling interests
Exercise of options into shares
Receipt of grants from the Chief Scientist
Net cash provided by financing activities
Increase (decrease) in cash
Cash at the beginning of the year
Cash at the end of the year
THERAPIX BIOSCIENCES LTD.
(Formerly: NasVax Ltd.)
2015
Year ended December 31,
2014
NIS in thousands
2013
2
-
(4)
-
-
(2)
5,664
-
5,022
-
10,686
5,522
614
6,136
220
283
(2)
(350)
(520)
(369)
3,219
-
-
-
3,219
(4,508)
5,122
614
45
-
(4)
-
-
41
10,211
714
338
486
11,749
2,247
2,875
5,122
The accompanying notes are an integral part of the consolidated financial statements.
- 9 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THERAPIX BIOSCIENCES LTD.
(Formerly: NasVax Ltd.)
NOTE 1:- GENERAL
a.
Therapix Biosciences Ltd. (formerly: NasVax Ltd.) was incorporated in Israel and
commenced its operations on August 23, 2004. Until March 2014, the Company acted
mainly in developing several innovative immunotherapy products and it owns patents in
the immunotherapy field.
In August 2015, the Company revised its business strategy according to which it will
focus on developing approved drugs based on cannabinoid molecules.
The Company is a pharmaceutical company specializing in developing approved drugs
based on cannabinoid molecules. The Company is developing a cannabinoid based
medical product for the Tourette syndrome using the entourage technology and is
preparing to develop a cannabinoid based medical product for cognitive impairment
(including the Alzheimer's disease) using the low dose technology.
b.
Definitions:
In these financial statements:
The Company
- Therapix Biosciences Ltd.
The Group
- the Company and its subsidiaries.
Subsidiaries
- companies that are controlled by the Company (as defined
in IFRS 10) and whose accounts are consolidated with
those of the Company: Orimmune Bio Ltd. (formerly:
Protea Vaccine Technologies Ltd.) ("Orimmune ") and
NasVax Inc. (inactive).
Related parties
- as defined in IAS 24.
Interested parties and
- as defined in the Israeli Securities Regulations (Annual
controlling shareholders
Financial Statements), 2010.
Dollar
U.S. dollar.
c.
For the year ended December 31, 2015, the Company incurred losses totaling NIS 10,174
thousand and negative cash flows from operating activities totaling NIS 5,162 thousand
for the year then ended. Also, the Company had accumulated deficit totaling NIS 113,468
thousand and recurring operating losses. As discussed in Note 1a above, the Company's
business strategy is to focus on identifying and investing in promising bio-pharma
technologies in the field of cannabinoid based treatments and, at the same time, to
develop the existing technologies. These activities involve, among others, continuous
development efforts and pertinent regulatory approvals. Also, from the date of
commencement of operation, the Company did not generate cash flows from the sale of
its products to sustain its activities.
- 10 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1:- GENERAL (Cont.)
THERAPIX BIOSCIENCES LTD.
(Formerly: NasVax Ltd.)
Accordingly, the Company's continued operation is dependent on its ability to raise
external funding sources. The Company's management believes that this dependency will
continue until the Company will be able to finance its operation by selling its products or
commercializing the technology it owns.
The balance of cash at the Company's hands may not be sufficient to finance its operating
activities. These factors raise substantial doubt as to the Company's ability to continue as
a "going concern".
The Company's management is focusing on securing the Company's financial stability,
among others, by exploring the alternative of raising capital from private investors by
issuing the Company's securities including from existing shareholders.
The financial statements do not include any adjustments to the carrying amounts and
classifications of assets and liabilities that would result if the Company was unable to
continue as a going concern.
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES
The following accounting policies have been applied consistently in the financial statements for
all periods presented, unless otherwise stated.
a.
Basis of presentation of the financial statements:
These financial statements have been prepared in accordance with International Financial
Reporting Standards (IFRS). Furthermore, the financial statements have been prepared in
conformity with the provisions of the Israeli Securities Regulations (Annual Financial
Statements), 2010.
The Company's financial statements have been prepared on a cost basis.
The Company has elected to present the profit or loss items using the function of expense
method.
b.
The operating cycle:
The operating cycle of the Company is one year.
- 11 -
THERAPIX BIOSCIENCES LTD.
(Formerly: NasVax Ltd.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
c.
Consolidated financial statements:
The consolidated financial statements comprise the financial statements of companies that
are controlled by the Company (subsidiaries). Control is achieved when the Company is
exposed, or has rights, to variable returns from its involvement with the investee and has
the ability to affect those returns through its power over the investee. The consolidation of
the financial statements commences on the date on which control is obtained and ends
when such control ceases.
The financial statements of the Company and of the subsidiaries are prepared as of the
same dates and periods. The accounting policies applied in the financial statements of the
subsidiaries are uniform and consistent with the policies applied in the financial
statements of the Company. Significant intragroup balances and transactions and gains or
losses resulting from intragroup transactions are eliminated in full in the consolidated
financial statements.
Non-controlling interests in subsidiaries represent the equity in subsidiaries not
attributable, directly or indirectly, to a parent. Non-controlling interests are presented in
equity separately from the equity attributable to the equity holders of the Company.
Losses are attributed to non-controlling interests even if they result in a negative balance
of non-controlling interests in the consolidated statement of financial position.
d.
Functional currency and foreign currency:
1.
Functional currency and presentation currency:
The financial statements are presented in NIS since the Company believes that
financial statements in NIS provide more relevant information to the investors and
users of the financial statements who are located in Israel. The Group determines
the functional currency of each Group entity, including companies accounted for at
equity. The functional currency of the Company is the NIS.
2.
Transactions, assets and liabilities in foreign currency:
Transactions denominated in foreign currency (other than the functional currency)
are recorded upon initial recognition at the exchange rate at the date of the
transaction. After initial recognition, monetary assets and liabilities denominated in
foreign currency are translated at each reporting date into the functional currency at
the exchange rate at that date. Exchange rate differences are recognized in profit or
loss. Non-monetary assets and liabilities denominated in foreign currency and
measured at cost are translated at the exchange rate at the date of the transaction.
Non-monetary assets and liabilities denominated in foreign currency and measured
at fair value are translated into the functional currency using the exchange rate
prevailing at the date when the fair value was determined.
- 12 -
THERAPIX BIOSCIENCES LTD.
(Formerly: NasVax Ltd.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
e.
Investments in associates:
Associates are companies in which the Group has significant influence over the financial
and operating policies without having control. The investment in an associate which was
written down during the year was accounted for using the equity method.
f.
Investments accounted for using the equity method:
The Group's investment in associate is accounted for using the equity method.
Losses of an associate in amounts which exceed its equity are recognized by the
Company to the extent of its investment in the associate.
Under the equity method, the investment in the associate is presented at cost with the
addition of post-acquisition changes in the Group's share of net assets, including other
comprehensive income of the associate. Gains and losses resulting from transactions
between the Group and the associate are eliminated to the extent of the interest in the
associate.
Goodwill relating to the acquisition of an associate is presented as part of the investment
in the associate, measured at cost and not systematically amortized. Goodwill is evaluated
for impairment as part of the investment in the associate as a whole.
The financial statements of the Company and of the associate are prepared as of the same
dates and periods. The accounting policies applied in the financial statements of the
associate or the joint venture are uniform and consistent with the policies applied in the
financial statements of the Group.
g.
Financial instruments:
1.
Financial assets:
Financial assets within the scope of IAS 39 are initially recognized at fair value
plus directly attributable transaction costs.
After initial recognition, the accounting treatment of financial assets is based on
their classification as follows:
Receivables:
The Group has receivables that are financial assets (non-derivative) with fixed or
determinable payments that are not quoted in an active market. After initial
recognition, receivables are measured at amortized cost using the effective interest
method taking into account directly attributable transaction costs, if any. Gains and
losses are recognized in the statement of comprehensive income when the
receivables are derecognized or impaired as well as through the systematic
amortization process.
- 13 -
THERAPIX BIOSCIENCES LTD.
(Formerly: NasVax Ltd.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
2.
Financial liabilities:
Financial liabilities are initially recognized at fair value. Loans and other liabilities
measured at amortized cost are presented less direct transaction costs.
After initial recognition, the accounting treatment of financial liabilities is based on
their classification as follows:
a)
Financial liabilities at amortized cost:
After initial recognition, loans and other liabilities are measured based on
their terms at amortized cost less directly attributable transaction costs using
the effective interest method.
b)
Financial liabilities at fair value through profit or loss:
Financial liabilities at fair value through profit or loss include
financial liabilities classified as held for trading and financial liabilities
designated upon initial recognition as at fair value through profit or loss.
Financial liabilities are classified as held for trading if they are
acquired for the purpose of sale in the near term. Gains or losses on
liabilities held for trading are recognized in profit or loss.
3.
Offsetting financial instruments:
Financial assets and financial liabilities are offset and the net amount is presented
in the statement of financial position if there is a legally enforceable right to set off
the recognized amounts and there is an intention either to settle on a net basis or to
realize the asset and settle the liability simultaneously.
The right of set-off must be legally enforceable not only during the ordinary course
of business of the parties to the contract but also in the event of bankruptcy or
insolvency of one of the parties. In order for the right of set-off to be currently
available, it must not be contingent on a future event, there may not be periods
during which the right is not available, or there may not be any events that will
cause the right to expire.
4.
Issue of a unit of securities:
The issue of a unit of securities involves the allocation of the proceeds received
(before issuance expenses) to the securities issued in the unit based on the
following order: financial derivatives and other financial instruments measured at
fair value in each period. Then fair value is determined for financial liabilities that
are measured at amortized cost. The proceeds allocated to equity instruments are
determined to be the residual amount. Issue costs are allocated to each component
pro rata to the amounts determined for each component in the unit.
- 14 -
THERAPIX BIOSCIENCES LTD.
(Formerly: NasVax Ltd.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
5.
Derecognition of financial instruments:
a)
Financial assets:
A financial asset is derecognized when the contractual rights to the cash
flows from the financial asset expire or the Company has transferred its
contractual rights to receive cash flows from the financial asset or assumes
an obligation to pay the cash flows in full without material delay to a third
party and has transferred substantially all the risks and rewards of the asset,
or has neither transferred nor retained substantially all the risks and rewards
of the asset, but has transferred control of the asset.
b)
Financial liabilities:
A financial liability is derecognized when it is extinguished, that is when the
obligation is discharged or cancelled or expires. A financial liability is
extinguished when the debtor (the Group) discharges the liability by paying
in cash, other financial assets, goods or services; or is legally released from
the liability.
6.
Impairment of financial assets:
The Group assesses at each reporting date whether there is any objective evidence
of impairment of a financial asset or group of financial assets as follows:
Financial assets carried at amortized cost:
Objective evidence of impairment exists when one or more events that have
occurred after initial recognition of the asset have a negative impact on the
estimated future cash flows. The amount of the loss recorded in profit or loss is
measured as the difference between the asset's carrying amount and the present
value of estimated future cash flows (excluding future credit losses that have not
yet been incurred) discounted at the financial asset's original effective interest rate.
If the financial asset has a variable interest rate, the discount rate is the current
effective interest rate. In a subsequent period, the amount of the impairment loss is
reversed if the recovery of the asset can be related objectively to an event occurring
after the impairment was recognized. The amount of the reversal, up to the amount
of any previous impairment, is recorded in profit or loss.
- 15 -
THERAPIX BIOSCIENCES LTD.
(Formerly: NasVax Ltd.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
Investment in associate or joint venture:
After application of the equity method, the Company determines whether it is
necessary to recognize any additional impairment loss with respect to the
investment in associates or joint ventures. The Company determines at each
reporting date whether there is objective evidence that the carrying amount of the
investment in the associate or the joint venture is impaired. The test of impairment
is carried out with reference to the entire investment, including the goodwill
attributed to the associate or the joint venture.
h.
Leases:
The criteria for classifying leases as finance or operating leases depend on the substance
of the agreements and are made at the inception of the lease in accordance with the
following principles as set out in IAS 17.
The Group as lessee - operating lease:
Leases in which substantially all the risks and rewards of ownership of the leased asset
are not transferred to the Group are classified as operating leases. Lease payments are
recognized as an expense in profit or loss on a straight-line basis over the lease term.
i.
Property, plant and equipment:
Property, plant and equipment are measured at cost, including direct acquisition costs,
less accumulated depreciation, accumulated impairment losses and any related investment
grants and excluding day-to-day servicing expenses. Cost includes spare parts and
auxiliary equipment that are used by plant and equipment.
Depreciation is calculated on a straight-line basis over the useful life of the assets at
annual rates as follows:
Lab equipment
Computers
Office furniture and equipment
%
15
33
6
Leasehold improvements are depreciated on a straight-line basis over the shorter of the
lease term (including the extension option held by the Group and intended to be
exercised) and the expected life of the improvement.
The useful life, depreciation method and residual value of an asset are reviewed at least
each year-end and any changes are accounted for prospectively as a change in accounting
estimate. As for testing the impairment of property, plant and equipment, see k below.
- 16 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
THERAPIX BIOSCIENCES LTD.
(Formerly: NasVax Ltd.)
Depreciation of an asset ceases at the earlier of the date that the asset is classified as held
for sale and the date that the asset is derecognized.
j.
Research and development expenditures:
Research expenditures are recognized in profit or loss when incurred.
The conditions enabling capitalization of development costs as an asset have not yet been
met and, therefore, all development expenditures are recognized in profit or loss when
incurred.
k.
Impairment of non-financial assets:
The Company evaluates the need to record an impairment of the carrying amount of non-
financial assets (property, plant and equipment) whenever events or changes in
circumstances indicate that the carrying amount is not recoverable. If the carrying amount
of non-financial assets exceeds their recoverable amount, the assets are reduced to their
recoverable amount. The recoverable amount is the higher of fair value less costs of sale
and value in use.
l.
Government grants:
Government grants are recognized when there is reasonable assurance that the grants will
be received and the Company will comply with the attached conditions.
Government grants received from the Office of the Chief Scientist in Israel are
recognized upon receipt as a liability if future economic benefits are expected from the
research project that will result in royalty-bearing sales.
A liability for the loan is first measured at fair value using a discount rate that reflects a
market rate of interest. The difference between the amount of the grant received and the
fair value of the liability is accounted for as a Government grant and recognized as a
reduction of research and development expenses. After initial recognition, the liability is
measured at amortized cost using the effective interest method. Royalty payments are
treated as a reduction of the liability. If no economic benefits are expected from the
research activity, the grant receipts are recognized as a reduction of the related research
and development expenses. In that event, the royalty obligation is treated as a contingent
liability in accordance with IAS 37.
In each reporting date, the Company evaluates whether there is reasonable assurance that
the liability recognized, in whole or in part, will not be repaid (since the Company will
not be required to pay royalties) based on the best estimate of future sales and using the
original effective interest method and, if so, the appropriate amount of the liability is
derecognized against other income.
Amounts paid as royalties are recognized as settlement of the liability.
- 17 -
THERAPIX BIOSCIENCES LTD.
(Formerly: NasVax Ltd.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
m.
Taxes on income:
Current or deferred taxes are recognized in profit or loss, except to the extent that they
relate to items which are recognized in other comprehensive income or equity.
1.
Current taxes:
The current tax liability is measured using the tax rates and tax laws that have been
enacted or substantively enacted by the reporting date as well as adjustments
required in connection with the tax liability in respect of previous years.
2.
Deferred taxes:
Since there is no expectation that the Company will generate taxable income in the
future, no deferred tax assets were recognized in the financial statements in respect
of carryforward tax losses and other temporary differences. In each reporting date,
temporary differences (such as carryforward tax losses) for which deferred tax
assets had not been recognized are reviewed and a respective deferred tax asset is
recognized to the extent that their utilization is probable.
n.
Share-based payment transactions:
The Company's employees and other service providers are entitled to remuneration in the
form of equity-settled share-based payment transactions ("equity-settled transactions").
Equity-settled transactions:
The cost of equity-settled transactions with employees is measured at the fair value of the
equity instruments at grant date. The fair value is determined using an acceptable option
pricing model, see additional information in Note 17. In estimating fair value, the vesting
conditions (consisting of service conditions and performance conditions other than
market conditions) are not taken into account. The only conditions taken into account in
estimating fair value are market conditions and non-vesting conditions.
As for other service providers, the cost of the transactions is measured at the fair value of
the goods or services received as consideration for equity instruments granted.
The cost of equity-settled transactions is recognized in profit or loss together with a
corresponding increase in equity, during the period which the performance or service
conditions are to be satisfied, ending on the date on which the relevant employees become
fully entitled to the award ("the vesting period"). The cumulative expense recognized for
equity-settled transactions at the end of each reporting period until the vesting date
reflects the extent to which the vesting period has expired and the Group's best estimate
of the number of equity instruments that will ultimately vest. No expense is recognized
for awards that do not ultimately vest.
- 18 -
THERAPIX BIOSCIENCES LTD.
(Formerly: NasVax Ltd.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
o.
Employee benefit liabilities:
The Group has several employee benefit plans:
1.
Short-term employee benefits:
Short-term employee benefits are benefits that are expected to be settled wholly
before twelve months after the end of the annual reporting period in which the
employees render the related services. These benefits include salaries, paid annual
leave, paid sick leave, recreation and social security contributions and are
recognized as expenses as the services are rendered. A liability in respect of a cash
bonus or a profit-sharing plan is recognized when the Group has a legal or
constructive obligation to make such payment as a result of past service rendered
by an employee and a reliable estimate of the amount can be made.
2.
Post-employment benefits:
The plans are normally financed by contributions to insurance companies and
classified as defined contribution plans or as defined benefit plans.
The Group has defined contribution plans pursuant to section 14 to the Severance
Pay Law under which the Group pays fixed contributions and will have no legal or
constructive obligation to pay further contributions if the fund does not hold
sufficient amounts to pay all employee benefits relating to employee service in the
current and prior periods. Contributions to the defined contribution plan in respect
of severance or retirement pay are recognized as an expense when contributed
concurrently with performance of the employee's services.
p.
Revenue recognition:
The Group has not yet generated any revenues from the sale of goods or from the
rendering of services.
q.
Finance income and expenses:
Finance income comprises interest income on amounts invested and exchange rate gains.
Interest income is recognized as it accrues using the effective interest method.
Finance expenses comprise changes in the fair value of financial liabilities measured at
fair value through profit or loss and exchange rate losses. Borrowing costs are recognized
in profit or loss using the effective interest method.
- 19 -
THERAPIX BIOSCIENCES LTD.
(Formerly: NasVax Ltd.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
r.
Earnings (loss) per share:
Earnings (loss) per share is calculated by dividing the net income (loss) attributable to
equity holders of the Company by the weighted number of Ordinary shares outstanding
during the period.
Basic loss per share only includes shares that were outstanding during the period.
Potential Ordinary shares are only included in the computation of diluted loss per share
when their conversion increases loss per share from continuing operations.
NOTE 3:- SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS
USED IN THE PREPARATION OF THE FINANCIAL STATEMENTS
In the process of applying the significant accounting policies, the Group has made the following
judgments which have the most significant effect on the amounts recognized in the financial
statements:
a.
Judgments:
-
Classification of leases:
In order to determine whether to classify a lease as a finance lease or an operating
lease, the Company evaluates whether the lease transfers substantially all the risks
and rewards incidental to ownership of the asset. In this respect, the Company
evaluates such criteria as the existence of a bargain purchase option, the lease term
in relation to the economic life of the asset and the present value of the minimum
lease payments in relation to the fair value of the asset.
-
Determining the fair value of share-based payment transactions:
The fair value of share-based payment transactions is determined upon initial
recognition by an acceptable option pricing model. The inputs to the model include
share price and exercise price and assumptions regarding expected volatility,
expected life of share option, expected dividend and risk-free interest rate.
b.
Estimates and assumptions:
The preparation of the financial statements requires management to make estimates and
assumptions that have an effect on the application of the accounting policies and on the
reported amounts of assets, liabilities, revenues and expenses. Changes in accounting
estimates are reported in the period of the change in estimate.
- 20 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THERAPIX BIOSCIENCES LTD.
(Formerly: NasVax Ltd.)
NOTE 3:- SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS
USED IN THE PREPARATION OF THE FINANCIAL STATEMENTS (Cont.)
The key assumptions made in the financial statements concerning uncertainties at the
reporting date and the critical estimates computed by the Group that may result in a
material adjustment to the carrying amounts of assets and liabilities within the next
financial year are discussed below.
-
Grants from the Chief Scientist:
Government grants received from the Chief Scientist at the Ministry of Industry,
Trade and Labor ("the Chief Scientist") are recognized as a liability if future
economic benefits are expected from the research and development activity that
will result in royalty-bearing sales. There is uncertainty regarding the estimated
future cash flows and estimated discount rate used to measure the amount of the
liability.
NOTE 4:- DISCLOSURE OF NEW STANDARDS IN THE PERIOD PRIOR TO THEIR
ADOPTION
a.
Amendments to IAS 7, "Statement of Cash Flows", regarding additional disclosures of
financial liabilities:
In January 2016, the IASB issued amendments to IAS 7, "Statement of Cash Flows",
("the amendments") which require additional disclosures regarding financial liabilities.
The amendments require disclosure of the changes between the opening balance and the
closing balance of financial liabilities, including changes from cash flows from financing
activities, changes arising from obtaining or losing control of subsidiaries, changes in
foreign exchange rates and changes in fair value.
The amendments are to be applied for annual periods beginning on or after January 1,
2017. Comparative information for periods prior to the effective date of the amendments
is not required. Early adoption is permitted.
The Company will include the necessary disclosures in the financial statements when
applicable.
b.
IFRS 16, "Leases":
In January 2016, the IASB issued IFRS 16, "Leases" ("the new Standard"). According to
the new Standard, a lease is a contract, or part of a contract, that conveys the right to use
an asset for a period of time in exchange for consideration.
- 21 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THERAPIX BIOSCIENCES LTD.
(Formerly: NasVax Ltd.)
NOTE 4:- DISCLOSURE OF NEW STANDARDS IN THE PERIOD PRIOR TO THEIR
ADOPTION (Cont.)
According to the new Standard:
Lessees are required to recognize an asset and a corresponding liability in the
statement of financial position in respect of all leases (except in certain cases)
similar to the accounting treatment of finance leases according to the existing IAS
17, "Leases".
Lessees are required to initially recognize a lease liability for the obligation to
make lease payments and a corresponding right-of-use asset. Lessees will also
recognize interest and depreciation expenses separately.
Variable lease payments that are not dependent on changes in the Israeli CPI or
interest rates, but are based on performance or use (such as a percentage of
revenues) are recognized as an expense by the lessees as incurred and recognized
as income by the lessors as earned.
In the event of change in variable lease payments that are CPI-linked, lessees are
required to remeasure the lease liability and the effect of the remeasurement is an
adjustment to the carrying amount of the right-of-use asset.
The new Standard includes two exceptions according to which lessees are
permitted to elect to apply a method similar to the current accounting treatment for
operating leases. These exceptions are leases for which the underlying asset is of
low value and leases with a term of up to one year.
The accounting treatment by lessors remains substantially unchanged, namely
classification of a lease as a finance lease or an operating lease.
The new Standard is to be applied for annual periods beginning on or after January 1,
2019. Early adoption is permitted provided that IFRS 15, "Revenue from Contracts with
Customers", is applied simultaneously.
For leases existing at the date of transition, the new Standard permits lessees to use either
a full retrospective approach, or a modified retrospective approach, with certain transition
relief whereby restatement of comparative data is not required.
The Company believes that the new Standard is not expected to have a material impact on
the financial statements.
- 22 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THERAPIX BIOSCIENCES LTD.
(Formerly: NasVax Ltd.)
NOTE 4:- DISCLOSURE OF NEW STANDARDS IN THE PERIOD PRIOR TO THEIR
ADOPTION (Cont.)
c.
IFRS 9, "Financial Instruments":
In July 2014, the IASB issued the final and complete version of IFRS 9, "Financial
Instruments" ("IFRS 9"), which replaces IAS 39, "Financial Instruments: Recognition and
Measurement". IFRS 9 mainly focuses on the classification and measurement of financial
assets and it applies to all assets in the scope of IAS 39.
According to IFRS 9, all financial assets are measured at fair value upon initial
recognition. In subsequent periods, debt instruments are measured at amortized cost only
if both of the following conditions are met:
-
-
the asset is held within a business model whose objective is to hold assets in
order to collect the contractual cash flows.
the contractual terms of the financial asset give rise on specified dates to cash flows
that are solely payments of principal and interest on the principal amount
outstanding.
Subsequent measurement of all other debt instruments and financial assets should be at
fair value. IFRS 9 establishes a distinction between debt instruments to be measured at
fair value through profit or loss and debt instruments to be measured at fair value through
other comprehensive income.
Financial assets that are equity instruments should be measured in subsequent periods at
fair value and the changes recognized in profit or loss or in other comprehensive income
(loss), in accordance with the election by the Company on an instrument-by-instrument
basis. If equity instruments are held for trading, they should be measured at fair value
through profit or loss.
According to IFRS 9, the provisions of IAS 39 will continue to apply to derecognition
and to financial liabilities for which the fair value option has not been elected.
According to IFRS 9, changes in fair value s of financial liabilities which are attributable
to the change in credit risk should be presented in other comprehensive income. All other
changes in fair value should be presented in profit or loss.
IFRS 9 also prescribes new hedge accounting requirements.
IFRS 9 is to be applied for annual periods beginning on January 1, 2018. Early adoption
is permitted.
The Company is evaluating the possible impact of IFRS 9 but is presently unable to
assess its effect, if any, on the financial statements.
- 23 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THERAPIX BIOSCIENCES LTD.
(Formerly: NasVax Ltd.)
NOTE 5:- CASH
Cash for immediate withdrawal - in NIS
Cash for immediate withdrawal - in foreign currency
NOTE 6:- ACCOUNTS RECEIVABLE
Prepaid expenses
VAT
Other receivables
NOTE 7:- PROPERTY, PLANT AND EQUIPMENT
December 31,
2015
2014
NIS in thousands
4,197
1,939
6,136
593
21
614
December 31,
2015
2014
NIS in thousands
147
132
-
279
27
73
2
102
2015:
Cost:
Balance at January 1, 2015
Additions during the year
Disposals during the year
Balance at December 31, 2015
Accumulated depreciation:
Balance at January 1, 2015
Additions during the year
Disposals during the year
Balance at December 31, 2015
Depreciated cost at December 31,
2015
Computers
Lab
equipment
Office
furniture
and
equipment
Total
NIS in thousands
272
1
(229)
44
262
7
(240)
29
15
66
(19)
47
31
4
(12)
23
24
550
4
(390)
164
480
11
(369)
122
42
212
3
(142)
73
187
-
(117)
70
3
- 24 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7:- PROPERTY, PLANT AND EQUIPMENT (Cont.)
THERAPIX BIOSCIENCES LTD.
(Formerly: NasVax Ltd.)
Computers
Lab
equipment
Office
furniture
and
equipment
Leasehold
improvements
Total
NIS in thousands
2014:
Cost:
Balance at January 1, 2014
Additions during the year
Disposals during the year
Balance at December 31, 2014
Accumulated depreciation:
Balance at January 1, 2014
Additions during the year
Disposals during the year
Balance at December 31, 2014
310
-
(98)
212
246
19
(78)
187
857
-
(585)
272
808
34
(580)
262
Depreciated cost at December 31,
2014
25
10
NOTE 8:-
INVESTMENT IN ASSOCIATE
a.
Movement in investment during the year:
Cost of shares
Post-acquisition losses
Foreign currency translation reserve
Balance at December 31,
b.
Additional information:
161
2
(97)
66
60
8
(37)
31
35
374
-
(374)
-
270
85
(355)
-
-
1,702
2
(1,154)
550
1,384
146
(1,050)
480
70
December 31,
2015
2014
NIS in thousands
520
(540)
20
-
520
(343)
10
187
In furtherance to an investment agreement dated June 15, 2014 (as amended) between the
Company and LaraPharm Ltd. ("Lara") and in furtherance to meetings held between the
Company and Lara, on August 13, 2015, the latter informed the Company on unilateral
cancellation of the agreement, among others, because Lara argues that the Company does
not plan on continuing to invest more money in Lara.
- 25 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8:-
INVESTMENT IN ASSOCIATE (Cont.)
THERAPIX BIOSCIENCES LTD.
(Formerly: NasVax Ltd.)
The Company clarifies that it is not required to invest more money in Lara unless
conditions and/or milestones that had been predetermined in the investment agreement
occur, it opposes the unilateral cancellation of the agreement and it has even officially
informed Lara that. As of the reporting date, the Company continues to hold shares of
Lara and a director acting on its behalf serves on Lara's Board.
NOTE 9:- TRADE PAYABLES
Open accounts
Accrued expenses
NOTE 10:- OTHER ACCOUNTS PAYABLE
Employees and payroll accruals
Accrued vacation
NOTE 11:- LIABILITIES FOR GOVERNMENT GRANTS
December 31,
2015
2014
NIS in thousands
433
1,346
1,779
296
886
1,182
December 31,
2015
2014
NIS in thousands
132
83
215
101
31
132
December 31,
2015
2014
NIS in thousands
Balance at January 1,
Amounts carried to financing in the statement of profit or
loss
Write down of liability to the Chief Scientist
Balance at December 31,
Presented in the consolidated statements of financial
position in:
Non-current liabilities
156
35
(191)
-
-
128
57
(29)
156
156
- 26 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 11:- LIABILITIES FOR GOVERNMENT GRANTS (Cont.)
THERAPIX BIOSCIENCES LTD.
(Formerly: NasVax Ltd.)
The Group received research and development participation grants from the Chief Scientist and,
in return, undertook to pay the Chief Scientist royalties at the rates prescribed by law and the
Regulations for Encouragement of Industrial Research and Development (Rate of Royalties and
Tools for their Implementation), 1996 and the procedures of the Industrial Research and
Development Administration (at a rate of 3% in the first three years and 3.5% from the fourth
year on sales of products resulting from the sponsored research and development as above), all
until the full repayment of the grant. The grant is linked to the dollar and bears interest
according to the Chief Scientist's terms. As of December 31, 2015, the Company does not
anticipate repaying the grant in respect of the Anti-CD3 project and, accordingly, it recorded the
remaining liability in the item other income.
Total grants received from the Chief Scientist through December 31, 2015 amounted to
NIS 15,394 thousand. No royalties have been paid yet.
NOTE 12:- FINANCIAL INSTRUMENTS
a.
Classification of financial assets and financial liabilities:
The financial assets and financial liabilities in the balance sheet are classified by groups
of financial instruments pursuant to IAS 39:
December 31,
2015
2014
NIS in thousands
Financial assets:
Cash and restricted cash
6,180
658
Financial liabilities:
Financial liabilities carried at amortized cost
1,994
1,314
b.
Financial risk factors:
The Group's activities expose it to various financial risks such as market risks (foreign
currency risk and interest risk), credit risk and liquidity risk. The Group's comprehensive
risk management plan focuses on activities that reduce to a minimum any possible
adverse effects on the Group's financial performance.
Risk management is performed by management in accordance with the policies approved
by the Board. The Board establishes written principles for the overall risk management
activities as well as specific policies with respect to certain exposures to risks such as
exchange rate risk, credit risk and the investments of surplus funds.
- 27 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THERAPIX BIOSCIENCES LTD.
(Formerly: NasVax Ltd.)
NOTE 12:- FINANCIAL INSTRUMENTS (Cont.)
1.
Market risks:
Foreign currency risk:
The Group is exposed to exchange rate risk resulting from the exposure to different
currencies, mainly the dollar. Exchange rate risk arises from recognized liabilities
that are denominated in a foreign currency other than the functional currency.
2.
Credit risks:
All cash and cash equivalents are held in three banks in Israel which are considered
financially solid.
3.
Liquidity risk:
The Group monitors the risk of a shortage of funds on a regular basis and acts to
raise funds to satisfy its liabilities.
The table below presents the maturity profile of the Group's financial liabilities
based on contractual undiscounted payments (including interest payments):
December 31, 2015:
Trade payables
Other accounts payable
December 31, 2014:
Trade payables
Other accounts payable
Liability for Government grants
Less than
one year
Over four
years
NIS in thousands
Total
1,779
215
1,994
-
-
-
1,779
215
1,994
Less than
one year
Over four
years
NIS in thousands
Total
1,182
132
-
1,314
-
-
4,254
4,254
1,182
132
4,254
5,568
The carrying amounts of cash, accounts receivable, trade payables, other accounts
payable and the liability to the Chief Scientist approximate their fair value.
- 28 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 13:- EMPLOYEE BENEFIT LIABILITIES
THERAPIX BIOSCIENCES LTD.
(Formerly: NasVax Ltd.)
Employee benefits consist of short-term benefits and post-employment benefits.
Post-employment benefits:
According to the labor laws and Severance Pay Law in Israel, the Company is required to pay
compensation to an employee upon dismissal or retirement or to make current contributions in
defined contribution plans pursuant to section 14 to the Severance Pay Law, as specified below.
The Company's liability is accounted for as a post-employment benefit. The computation of the
Company's employee benefit liability is made in accordance with a valid employment contract
based on the employee's salary and employment term which establish the entitlement to receive
the compensation.
The post-employment benefits are normally financed by contributions classified as defined
benefit plans or as defined contribution plans as detailed below.
Defined contribution plans:
Section 14 to the Severance Pay Law, 1963 applies to a substantial part of the compensation
payments, pursuant to which the fixed contributions paid by the Group into pension funds
and/or policies of insurance companies release the Group from any additional liability to
employees for whom said contributions were made. These contributions and contributions for
compensation represent defined contribution plans.
2015
Year ended December 31,
2014
NIS in thousands
2013
Expenses in respect of defined contribution
plans
69
114
176
NOTE 14:- TAXES ON INCOME
a.
Tax rates applicable to the Company:
The Israeli corporate tax rate was 25% in 2013 and 26.5% in 2015 and 2014.
A company is taxable on its real (non-inflationary) capital gains at the corporate tax rate
in the year of sale.
In August 2013, the "Knesset" (Israeli parliament) issued the Law for Changing National
Priorities (Legislative Amendments for Achieving Budget Targets for 2013 and 2014),
2013 ("the Budget Law"), which consists, among others, of the taxation of revaluation
gains effective from August 1, 2013.
- 29 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 14:- TAXES ON INCOME (Cont.)
THERAPIX BIOSCIENCES LTD.
(Formerly: NasVax Ltd.)
The provisions regarding revaluation gains will become effective only after the
publication of regulations defining what should be considered as "retained earnings not
subject to corporate tax" and regulations that set forth provisions for avoiding double
taxation of foreign assets. As of the date of approval of these financial statements, these
regulations have not been issued.
On January 4, 2016, the "Knesset" plenum approved the second and third readings the
Bill for Amending the Income Tax Ordinance (No. 217) (Reduction of Corporate Tax
Rate), 2015, which consists of the reduction of the corporate tax rate from 26.5% to 25%.
The Company believes that the change in the tax rates should not affect the financial
statements.
b.
Tax assessments:
The assessments of the Company are deemed final through the 2011 tax year.
c.
Carryforward tax losses and other temporary differences:
The Company has carryforward tax losses totaling approximately NIS 70 million as of
December 31, 2015.
No deferred tax asset relating to carryforward losses and to other temporary differences
has been recognized because its utilization in the foreseeable future is not probable.
d.
Theoretical tax:
The gap between the tax and other temporary differences calculated in respect of the pre-
tax loss at the regular corporate tax rate applicable to the Company and the tax amount
recorded in the statement of comprehensive income in all reporting periods (zero) mainly
arises from losses for tax purposes for which no deferred taxes were recognized because
their utilization in the foreseeable future is not probable.
- 30 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THERAPIX BIOSCIENCES LTD.
(Formerly: NasVax Ltd.)
NOTE 15:- CONTINGENT LIABILITIES, COMMITMENTS AND CHARGES
a.
Commitments - BBS technology:
In January 2014, the Company reported that it received a letter from Ramot at Tel-Aviv
University Ltd. ("Ramot"), the Tel-Aviv University's technology transfer company, in
which Ramot announces its intention to terminate the license and research agreement in
connection with the BBS technology (the Alzheimer's drug). The Company's position was
(and still is) that Ramot's announcement is illegitimate and groundless. The parties are
negotiating the disputes between them in order to reach an agreed solution including in
matters related to the Chief Scientist at the Ministry of Economics.
At the beginning of October 2014, the parties reached agreements on an outline according
to which the Company will return the license to Ramot, including the exclusive license to
use and commercialize the assets and knowhow gained at the Company during the period
of the license ("the Company's assets and knowhow") and, in return, if the Company's
assets and knowhow are being commercialized, the Company will receive royalties in the
future (in the scope, percentages and conditions as determined) ("the agreed outline").
After the agreed outline became effective, the parties agree that the license agreement
will become null and void and that any monetary and/or another liability between the
parties will become null and void including the Company's undertaking to bear the costs
of registration and/or maintaining the patents effective from the cancellation date as
above and thereafter in such a manner that Ramot will be responsible for such debts.
In furtherance to the in-principle approval of the Chief Scientist at the Ministry of
Economics to the agreed outline at the beginning of December 2014, the Company and
Ramot will act according to the agreed outline to transfer the Company's developments
under the license agreement from the Company to Ramot (including the transfer of
patents and all necessary to return the license to Ramot) and the license agreement will
become null and void.
On March 15, 2015, the Company reported that to the best of its knowledge the Securities
Authority is conducting an administrative clarification in connection with the Company
reports regarding the BBS technology and the intention to cancel Ramot's license to the
technology. Based on an estimate of the Company's legal counsel, a provision was
recorded in the accounts for any potential monetary sanction.
On June 28, 2015, the Company entered into a memorandum of understanding with
Ramot for the use of Ramot technology in research and licensing the use of low dose of
cannabinoid type THC as a treatment for cognitive impairment including the Alzheimer's
disease.
According to the memorandum of understanding, the agreement will consist of an agreed
research plan which will last 12 month from the date of approval of the agreement and it
will include, among others, granting an exclusive right to develop products based on the
technology. The Company will support the research project according to a research
budget to be approved by the parties. The outcome of the research project, including the
joint intellectual property that will be developed under the research project, will be jointly
owned by the parties.
- 31 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THERAPIX BIOSCIENCES LTD.
(Formerly: NasVax Ltd.)
NOTE 15:- CONTINGENT LIABILITIES, COMMITMENTS AND CHARGES (Cont.)
b.
Commitment - Dekel Pharmaceuticals Ltd.:
On January 11, 2015, the Company's Board approved to enter into a binding term sheet
with Dekel Pharmaceuticals Ltd. (a private company controlled by the Company's
chairman, Mr. Asher Shmulewitz) ("Dekel", together with the Company, "the parties")
which outlines the key elements of signing a final and detailed license agreement
regarding Dekel's technology and IP consisting also of an option of Dekel's equity
investment (by itself and/or others) ("the approved outline" and "the license agreement",
respectively) of US$ 0.5 million at the exercise price of NIS 0.5 per share. Dekel was also
granted the option to make an equity investment of US$ 2 million at the exercise price of
NIS 0.65 for a 15-month period effective from the closing of the license agreement,
provided that the options (or some of the options) at the exercise price of NIS 0.5 per
share have been exercised. The options expire 90 days after the effective date of the
license agreement (unless the options have been exercised). On May 20, 2015, the
Company's Board approved the license agreement and on June 10, 2015, the Company's
general meeting approved the license agreement which sets a combined outline of the
conditions for granting the Company the license to Dekel's technology (the entourage
technology) and the conditions for Dekel's equity investment (by itself and/or others), as
above. Further, the license agreement consists of payments to Dekel based on the
achievement of milestones, royalties amounting to 8% of net sales and 35% of sub-
licenses and, on the date of closing the license agreement, a payment of advance to Dekel
of NIS 100 thousand (payable by 200,000 Ordinary shares of the Company at the price of
NIS 0.5 per share to be offset against future royalties).
On August 19, 2015, the TASE approved the above allocation of options to Dekel as
equity investment in the Company. Yet, as of the date of these financial statements, the
approval of the TASE to the allocation of 200,000 shares associated with the payment of
the advance of NIS 100 thousand under the license agreement has not been obtained and
Dekel and the Company agreed that the receipt of the approval of the TASE to the
allocation of shares as advance, as above, would not constitute a condition to completing
the license agreement. Accordingly, all the preliminary conditions for the entry into force
of the license agreement have been fulfilled and, on August 19, 2015, the license
agreement became effective. It is clarified that Dekel's consent that receiving the approval
of the TASE be a suspending condition for the entry into force of the license agreement
does not include a waiver of issuing 200,000 shares, as above. Accordingly, the advance
of NIS 100 thousand is expected to be repaid by issuing Company's shares, as above, if
the approval of the TASE is obtained or in any other way agreed upon between the
parties.
The fair value of the 3,876,000 options allocated to Dekel at the grant date was estimated
at approximately NIS 3,906 thousand, calculated using the Black & Scholes model based
on the exercise prices indicated above, standard deviation of 83% at the grant date, a price
per share of NIS 0.897 at the grant date, risk-free interest rate of 0.1% a year, life of 0.25
years and non-marketability premium was taken into account.
Accordingly, an expense of NIS 3,906 thousand was recognized in the statement of profit
or loss in the item other expenses.
- 32 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THERAPIX BIOSCIENCES LTD.
(Formerly: NasVax Ltd.)
NOTE 15:- CONTINGENT LIABILITIES, COMMITMENTS AND CHARGES (Cont.)
c.
Operating lease commitments:
The Company signed an agreement with a third party for the lease of offices in Azrieli
towers with area of 100 sq.m. through June 30, 2016 for lease fees of approximately
NIS 18.3 thousand per month, linked to the Israeli CPI.
Future minimum lease payments under the existing lease contracts as of December 31,
2015 total NIS 110 thousand for 2016.
d.
Charges:
To secure the Company's liabilities for the lease of the building, the Company provided a
bank guarantee of NIS 44 thousand in favor of the lessor. To secure the bank guarantee, a
lien was recorded on this amount in the Company's bank account.
NOTE 16:- EQUITY
a.
Composition of share capital:
December 31, 2015
December 31, 2014
Authorized
Issued and
outstanding
Authorized
Issued and
outstanding
Number of shares
Ordinary shares of NIS 0.1 par
value each
100,000,000
35,399,152
100,000,000
18,410,648
Capital consolidation:
On January 1, 2014, a special meeting approved to consolidate the authorized share
capital and the issued and outstanding share capital such that any existing 10 Ordinary
shares of NIS 0.01 par value each in the authorized share capital and the issued and
outstanding share capital of the Company will be consolidated into one Ordinary share of
the Company of NIS 0.1 par value. The number of the share options that exist in the
Company's equity was adjusted accordingly.
- 33 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THERAPIX BIOSCIENCES LTD.
(Formerly: NasVax Ltd.)
NOTE 16:- EQUITY (Cont.)
b.
Movement in share capital:
Issued and outstanding share capital:
Number of
shares
NIS
par value
Balance at January 1, 2014
141,012,488
1,410,125
Consolidation of share capital
Issue of share capital
(126,911,240)
4,309,400
-
430,940
Balance at December 31, 2014
18,410,648
1,841,065
Issue of share capital
16,988,504
1,698,850
Balance at December 31, 2015
35,399,152
3,539,915
c.
Rights attached to shares:
1.
Voting rights at the general meeting, right to dividends, rights upon liquidation of
the Company and right to nominate the directors in the Company.
2.
Quoted on the Tel-Aviv Stock Exchange.
d.
Capital management in the Company:
The Company's capital management objectives are to preserve the Group's ability to
ensure business continuity thereby creating a return for the shareholders, investors and
other interested parties.
The Group is not under any minimal equity requirements nor is it required to attain a
certain level of capital return.
e.
Issue of shares:
1.
On May 8, 2014, the Company raised approximately NIS 2.9 million (gross) in the
issuance of 3,009,400 Ordinary shares, 3,009,400 share options (series 3) and
3,009,400 share options (series 4) of the Company pursuant to a shelf offering
report that the Company published on May 8, 2014 and a shelf prospectus of
August 8, 2012. On May 15, 2014, the Company allocated 406,269 share options
(series 4) to Clal Finance Underwriting Ltd. as part of raising costs.
- 34 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 16:- EQUITY (Cont.)
THERAPIX BIOSCIENCES LTD.
(Formerly: NasVax Ltd.)
2.
3.
4.
5.
On November 19, 2014, the Company entered into a private placement agreement
according to which 1,300,000 Ordinary shares of NIS 0.1 par value each, 1,300,000
fully vested options and 1,300,000 conditional options were offered. The fully
vested options are exercisable at 1 to 1 ratio for the exercise price of NIS 0.5 from
the date of allocation over a period of three months. The conditional options are
exercisable at 1 to 1 ratio subject to the exercise of the fully vested options. The
fair value of the options was estimated at approximately NIS 3 thousand.
The total gross proceeds from the offered securities were NIS 650 thousand (net
proceeds - NIS 631 thousand).
On February 19, 2015, the Company raised NIS 250 thousand in consideration of
500,000 Ordinary shares of NIS 0.1 par value each, 1,000,000 immediate options
and 1,000,000 contingent options. The immediate options may be exercised into
shares on a 1:1 basis in consideration of the exercise price of NIS 0.65 from the
date of allocation during 45 days. The contingent options may be exercised into
shares on a 1:1 basis together with and subject to the exercise of the immediate
options in consideration of the exercise price of NIS 1.10 during 24 months. Also,
40,000 options were allocated to the Company's consultant as the investment
broker. The fair value of the options granted to the consultant was estimated at
NIS 2 thousand.
On April 30, 2015, the immediate and contingent options expired without being
exercised.
On April 29, 2015, the Company raised NIS 2,200 thousand from Jesselson
Investments Ltd. (unrelated to the Company). In consideration of this funding, the
Company issued a total of 4,400,000 Ordinary shares of NIS 0.1 par value each at
the price of NIS 0.5 per share. As a result of the issuance, Jesselson Investments
holds about 18.87% of the Company's shares.
On October 11, 2015, the Company completed a round of financing according to
which it signed investment agreements with several new private investors to make
private placements against 3,159,025 Ordinary shares of the Company and to
which also two existing interested parties of the Company joined. In the framework
of the private placements, the investors (each one independently) undertook to
make an equity investment of an aggregate of approximately NIS 3.3 million
against Ordinary shares of the Company (at the price of NIS 1.05 per share), which
will constitute about 11.4% of the Company's issued and outstanding share capital
immediately after and subject to the completion of the investment (about 6.7% on a
fully diluted basis).
- 35 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 16:- EQUITY (Cont.)
THERAPIX BIOSCIENCES LTD.
(Formerly: NasVax Ltd.)
Simultaneously, with the closing of the private placement agreements, Dekel
informed the Company that it sold (or that that it is acting to sell) to any of the
other investors (independently) immediate options and contingent options that
Dekel holds by virtue of the license agreement in a scope that will constitute
(assuming exercise by other investors and exercise of additional amount of Dekel's
options by Dekel itself) about additional 12.4% of the Company's issued and
outstanding share capital (about 9.1% on a fully diluted basis). Assuming exercise,
the implication is that the additional equity investment is a further amount of
approximately NIS 2.3 million. The completion of the private placements is subject
to the fulfillment of several suspending conditions which must be met within 45
days of the closing of the round of financing, as above, including the receipt of
necessary regulatory approvals. During October 2015, the investors exercised the
options purchased from Dekel. The total proceeds from the exercise of the options
were approximately NIS 1.5 million.
f.
Share options:
1.
2.
3.
4.
5.
6.
7.
On February 1, 2015, the Company's share options (series 2) expired.
On May 10, 2015, 3,415,669 options (series 4) of the Company expired, 1,850,000
options which had been allocated in December 2013 expired and 1,000,000
immediate options expired.
On June 9 and 15, 2015, 1,300,000 options, which had been granted under a private
placement dated November 19, 2014, were exercised into Ordinary shares of
NIS 0.1 par value each at the exercise price of NIS 0.5 per share. The total
proceeds from the exercise of the shares were NIS 650 thousand.
Between October 18 and November 18, 2015, the remaining immediate options of
Dekel and some of the contingent options were exercised (a total of 6,245,270
options). The total proceeds from the exercise of the options were approximately
NIS 2 million.
On October 20, 2015, 310,000 options were exercised into Ordinary shares of
NIS 0.1 par value each at the exercise price of NIS 0.65 per share. The total
proceeds from the exercise of the options were approximately NIS 201 thousand.
On November 1, 2015, 300 options which had been allocated to the Company's
employees in 2009 expired.
On December 6 and 13, 2015, 990,000 options were exercised into Ordinary shares
of NIS 0.1 par value each at the exercise price of NIS 0.65 per share. The total
proceeds from the exercise of the shares were NIS 644 thousand.
- 36 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 16:- EQUITY (Cont.)
THERAPIX BIOSCIENCES LTD.
(Formerly: NasVax Ltd.)
8.
9.
On December 23, 2015, 40,000 options were exercised into Ordinary shares of
NIS 0.1 par value each at the exercise price of NIS 0.5 per share. The total
proceeds from the exercise of the shares were NIS 20 thousand.
On December 31, 2015, 33,333 options were exercised into Ordinary shares of
NIS 0.1 par value each at the exercise price of NIS 0.5 per share. The total
proceeds from the exercise of the shares were NIS 17 thousand.
NOTE 17:- SHARE-BASED PAYMENT TRANSACTIONS
a.
The expense recognized in the financial statements:
The expenses (income) recognized in the Group's financial statements for services
received from employees and consultants are shown in the following table:
2015
Year ended December 31,
2014
NIS in thousands
2013
Equity-settled share-based payment
plans
532
144
(154)
The share-based payment transactions that the Company granted to its employees and
consultants are described below. There have been no modifications or cancellations to
any of the employee benefit plans during 2013 to 2015.
Also, an expense of NIS 3,906 thousand was recognized in respect of the license
agreement with Dekel in the item other expenses. See additional information in Note 15b.
b.
Share-based payment transactions with the Company's employees:
1.
In furtherance to Note 16a, on March 26, 2010, the Company entered into a license
agreement with Hadasit. As part of the payment for the license, Hadasit and Prof.
Howard Weiner were allocated 345,000 unlisted options of the Company (172,500
options each) that are exercisable into 345,000 Ordinary shares of the Company of
NIS 0.1 par value each for an exercise price of NIS 0.1 per share. The options vest
in three equal portions after the fulfillment of each of the following milestones: the
beginning of Phase 2A, the beginning of Phase 2B and the beginning of Phase 3 for
using the Anti-CD3.
The options will expire at the end of 15 years from the grant date. Any options that
are not exercised by the expiration date mentioned above will expire and not confer
any rights whatsoever.
As of the reporting date, the first portion of 115,000 options may be exercised
immediately for an exercise price of NIS 0.1 per share.
- 37 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 17:- SHARE-BASED PAYMENT TRANSACTIONS (Cont.)
THERAPIX BIOSCIENCES LTD.
(Formerly: NasVax Ltd.)
2.
3.
4.
On March 24, 2014, the general meeting of shareholders approved payment of
compensation to the Company's Chairman: (1) for September-December 2013 -
monthly payment of US$ 10 thousand (2) from January 8, 2014 - monthly payment
of NIS 50 thousand (3) allocation of 423,037 unlisted share options of the
Company at exercise price of not less than the share market price in the 30 days
before the allocation plus 10%. The options vest over three years in equal portions
on a quarterly basis. Also, the Company's remuneration policy was approved by the
general meeting. The options were allocated on April 1, 2014. The fair value at the
grant date was estimated at approximately NIS 181 thousand. The compensation
was calculated using the binomial model based on expected share price volatility of
71.44% at the grant date, a price per share of NIS 0.791 at the grant date, exercise
price of NIS 0.789 per share, risk free interest rates of 0.7%-5.74% per year
computed at the grant date and a forfeiture rate of 0%.
On May 4, 2014, in furtherance to the decision of the Company's Board, the
Company allocated to the VP of Strategic and Business Development 266,242
unlisted options that are exercisable into 266,242 Ordinary shares of the Company.
The options vest over a period of four years from the date of allocation in equal
portions on a quarterly basis. The fair value at the grant date was estimated at
approximately NIS 149 thousand. The compensation was calculated using the
binomial model based on expected share price volatility of 72.47% at the grant
date, a price per share of NIS 0.978 at the grant date, exercise price of NIS 0.99 per
share that represents the average share market price in the 30 days before the
allocation plus 10%, risk free interest rates of 3.69% computed at the grant date
and a forfeiture rate of 0%.
On June 10, 2015, the general meeting approved to grant 800,000 options for
immediate exercise by the retiring CEO, Mr. Jan Turek, relating to his consulting
services to the Company as CEO, of which 400,000 options into Ordinary shares
are at the exercise price of NIS 0.5 per option and 400,000 options into Ordinary
shares are at the exercise price of NIS 0.8 per option.
The fair value at the grant date was estimated at approximately NIS 144 thousand,
calculated using the Black & Scholes model based on the exercise prices indicated
above, standard deviation of 68.78% at the grant date, a price per share of
NIS 0.721 at the grant date, risk-free interest rate of 0.11% a year and life of 0.47
years.
Total share-based payment expenses recorded during the period in respect of the
retiring CEO were NIS 144 thousand.
On November 27, 2015, the options which had been granted to Mr. Jan Turek
expired.
- 38 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 17:- SHARE-BASED PAYMENT TRANSACTIONS (Cont.)
THERAPIX BIOSCIENCES LTD.
(Formerly: NasVax Ltd.)
5.
6.
7.
8.
On May 20, 2015, the Company's Board approved to grant 540,000 options to the
CEO and CFO and VP Business and Strategy with vesting terms of three years.
Each option is exercisable at the exercise price of NIS 0.5. The fair value at the
grant date was estimated at approximately NIS 165 thousand, calculated using the
Black & Scholes model based on the exercise price of NIS 0.5 per share, standard
deviation of 74.34% at the grant date, a price per share of NIS 0.403 at the grant
date, risk-free interest rate of 2.11% a year and life of 10 years.
Total share-based payment expenses recorded during the period in respect of this
grant were NIS 72 thousand. At the beginning of October 2015, the employment of
the CEO and CFO of the Company, Mr. Jonathan Berger, was terminated and the
unvested options have been forfeited thereby reducing the expense by NIS 37
thousand so that the net expense recorded in respect of this grant totaled NIS 35
thousand.
On May 20, 2015, the Company's Board decided to grant, subject to the approval
of the general meeting of the Company's shareholders, 250,000 options to the
Company's chairman, Dr. Asher Shmulewitz, with vesting terms of three years.
Each option is exercisable at the exercise price of NIS 0.5. The option grant was
approved by the general meeting on February 14, 2016. The fair value of the
options at the end of the reporting period was estimated at approximately NIS 192
thousand. Total share-based payment expenses recorded during the period in
respect of this grant were approximately NIS 99 thousand.
On May 20, 2015, the Company's Board decided to grant, subject to the approval
of the general meeting of the Company's shareholders, 50,000 options to a former
director and another director each, with vesting terms of three years. Each option is
exercisable at the exercise price of NIS 0.5. The option grant was approved by the
general meeting on February 14, 2016. The fair value of the options at the end of
the reporting period was estimated at approximately NIS 80 thousand. Total share-
based payment expenses recorded during the period in respect of this grant were
approximately NIS 40 thousand.
On February 16, 2016, the Company's Board approved to grant to the Company's
consultant 120,000 options. The options vest over two years in four semi-annual
portions effective November 17, 2015. Each option is exercisable at the exercise
price of NIS 0.995. The fair value of the options at the end of the reporting period
was estimated at approximately NIS 87 thousand. Total share-based payment
expenses recorded during the period in respect of this grant were approximately
NIS 11 thousand.
- 39 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 17:- SHARE-BASED PAYMENT TRANSACTIONS (Cont.)
THERAPIX BIOSCIENCES LTD.
(Formerly: NasVax Ltd.)
9.
On February 16, 2016, the Company's Board approved to grant 300,000 options to
two officers of the Company with vesting terms of three years effective
November 25, 2015. Each option is exercisable at the exercise price of NIS 0.995.
The fair value of the options at the end of the reporting period was estimated at
approximately NIS 219 thousand. Total share-based payment expenses recorded
during the period in respect of this grant were approximately NIS 25 thousand.
10. As for options granted to the Company's CEO, see Note 21e.
c.
Movement during the year:
The following table lists the number of share options, the weighted average exercise
prices of share options and modifications in employee and consultants option plans
during the current year:
2015
2014
Number of
options
Weighted
average
exercise
price
NIS
Number of
options
Weighted
average
exercise
price
NIS
Share options outstanding at beginning
of year
Consolidation of options as a result of
capital consolidation
Share options granted during the year
Share options exercised during the year
Share options forfeited or expired during
the year
1,210,443
-
1,340,000
(33,333)
(1,179,957)
Share options outstanding at end of year
1,337,153
Share options exercisable at end of year
623,890
4.39
-
0.59
0.5
0.63
4.00
3.52
8,019,255
(7,217,329)
689,279
-
0.73
0.73
0.86
-
(280,762)
13.62
1,210,443
377,914
4.39
5.45
d.
e.
f.
The weighted average remaining contractual life of the share options outstanding as of
December 31, 2015 was 7.89 years (December 31, 2014 - 8.64 years).
The weighted average fair value of the share options granted in 2015 was NIS 0.23 (2014
- NIS 0.86).
The range of exercise prices of share options as of December 31, 2015 was NIS 0.1-
NIS 44.58 as on December 31, 2014.
- 40 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THERAPIX BIOSCIENCES LTD.
(Formerly: NasVax Ltd.)
NOTE 18:- ADDITIONAL INFORMATION TO THE ITEMS OF PROFIT OR LOSS
2015
Year ended December 31,
2014
NIS in thousands
2013
a.
Research and development expenses,
net:
Wages and related expenses
Materials
Share-based payment
Consultants and subcontractors
Depreciation
Patents
Other expenses
Grants from the Chief Scientist
b.
General and administrative expenses:
Wages, salaries and related expenses
Share-based payment
Professional services including business
development
Insurance and directors' fees
Depreciation
Office maintenance and rent and other
c.
Finance income (expenses):
Finance income:
Interest income on bank deposits
Change in fair value of share options
Finance income from liability to the
Chief Scientist
Exchange rate differences
183
31
6
441
6
243
21
-
931
1,412
526
2,035
214
6
1,104
5,297
-
-
-
20
20
506
25
8
582
49
284
375
(29)
1,800
1,581
136
2,562
244
100
615
5,238
5
396
-
-
401
1,759
95
66
1,594
131
598
684
(278)
4,649
1,789
(220)
1,247
334
39
730
3,919
20
47
1,527
9
1,603
- 41 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THERAPIX BIOSCIENCES LTD.
(Formerly: NasVax Ltd.)
NOTE 18:- ADDITIONAL INFORMATION TO THE ITEMS OF PROFIT OR LOSS (Cont.)
Finance expenses:
Finance expenses from interest and
commissions
Finance expenses from liability to the
Chief Scientist
Exchange rate differences
Impairment of financial instrument
d.
Other income (expenses):
Share-based payment (see Note 15b)
Write down of liability to the Chief
Scientist (Note 11)
Capital gain from sale of property, plant
and equipment
2015
Year ended December 31,
2014
NIS in thousands
2013
-
35
-
-
35
3,906
(191)
19
3,734
13
56
8
350
427
-
-
115
115
28
-
44
-
72
-
7,206
40
7,246
NOTE 19:- EARNINGS (LOSS) PER SHARE
a.
Details of the number of shares and income (loss) used in the computation of earnings
(loss) per share:
2015
Year ended December 31,
2014
Weighted
number of
shares
In
thousands
Loss
NIS in
thousands
Weighted
number of
shares
In
thousands
Loss
NIS in
thousands
2013
Weighted
number of
shares
In
thousands
Net
income
NIS in
thousands
Number of shares and
income (loss) used in
the computation of
basic and diluted
earnings (loss) per
share
23,853
(10,174)
16,072
(7,292)
10,178
209
- 42 -
THERAPIX BIOSCIENCES LTD.
(Formerly: NasVax Ltd.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 19:- EARNINGS (LOSS) PER SHARE (Cont.)
b.
The computation of diluted earnings (loss) per share did not include the following
convertible securities since their inclusion would decrease the diluted earnings (loss) per
share compared to the basic net earnings (loss) per share (anti-dilutive effect):
1.
2.
3.
3.
Options to employees, officers and consultants.
Marketable share options (series 1).
Non-marketable share options (series 4).
Non-marketable share options to investor.
c.
Earnings per share in 2013 was adjusted retroactively for consolidation of shares that took
effect in 2014 (see Note 16a).
NOTE 20:- OPERATING SEGMENTS
The Company applies the principles of IFRS 8 regarding operating segments. The segment
reporting is based on internal management reports of the Company's management which are
regularly reviewed by the chief operating decision maker to make decisions about resources to
be allocated and assess performance ("the management approach"). According to the principles
of IFRS 8, management determined that the Company has one reportable segment: developing
drugs based on cannabinoid molecules to be approved by an official regulatory authority.
NOTE 21:- TRANSACTIONS AND BALANCES WITH INTERESTED AND RELATED PARTIES
a.
Balances with interested and related parties:
December 31, 2015:
Key
management
personnel
Interested
and other
related
parties
NIS in thousands
21
58
Key
management
personnel
Interested
and other
related
parties
NIS in thousands
120
84
Other accounts payable
December 31, 2014:
Other accounts payable
- 43 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THERAPIX BIOSCIENCES LTD.
(Formerly: NasVax Ltd.)
NOTE 21:- TRANSACTIONS AND BALANCES WITH INTERESTED AND RELATED PARTIES
(Cont.)
b.
Benefits to key management personnel (including directors) who are not employed by the
Company:
Short-term benefits
Share-based payment (see Note 17)
2015
Year ended December 31,
2014
NIS in thousands
2013
1,752
462
2,214
1,321
111
1,462
1,391
(239)
1,152
c.
Benefits to key management personnel who are employed by the Company:
Short-term benefits
Share-based payment (see Note 17)
Number of individuals to whom the
salary and benefits relate:
Interested parties and directors who
are not employed by the Company
Related and interested parties who are
employed by or on behalf of the
Company
2015
Year ended December 31,
2014
NIS in thousands
2013
1,047
82
1,129
7
2
9
844
17
861
12
2
14
2,424
(201)
2,223
10
2
12
d.
Material agreements signed with interested and related parties:
1.
2.
On January 8, 2014, the Company's Board appointed Mr. Asher Shmulewitz as
active Chairman of the Company's Board.
On February 16, 2014, the Company and the CEO, Mr. Ari Aminetzah, reached
understandings regarding the termination of his tenure as the Company's CEO at
the end of March 2014. During April-May 2014 Mr. Aminetzah rendered business
development services to the Company.
- 44 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THERAPIX BIOSCIENCES LTD.
(Formerly: NasVax Ltd.)
NOTE 21:- TRANSACTIONS AND BALANCES WITH INTERESTED AND RELATED PARTIES
(Cont.)
3.
4.
5.
6.
7.
8.
9.
On March 24, 2014, the general meeting of shareholders approved payment of
compensation to the Company's Chairman: (1) for September-December 2013 -
monthly payment of US$ 10 thousand (2) from January 8, 2014 - monthly payment
of NIS 50 thousand (3) allocation of 423,037 unlisted share options of the
Company at exercise price of not less than the share market price in the 30 days
before the allocation plus 10%. The options vest over three years in equal portions
on a quarterly basis. Also, the Company's remuneration policy was approved by the
general meeting. The options were allocated on April 1, 2014.
As for a license agreement with a company owned by the Company's chairman,
Mr. Asher Shmulewitz, see Note 15b.
On April 2, 2015, the Company reported that Jonathan Berger, CPA, was appointed
as the Company's CFO and on that date the Company reported that the Company's
former CFO, Uri Ben-Or, CPA, and the former comptroller, Dov Weinberg, CPA,
are leaving the Company.
On April 5, 2015, the Company reported that the Company's CEO, Mr. Jan Turek,
is leaving the Company effective May 31, 2015. On May 21, 2015, the Company
reported that Jonathan Berger, CPA, was appointed as the Company's CEO in
addition to his role as the Company's CFO. On August 31, 2015, the Company
reported that Jonathan Berger, CPA, terminated his role as the Company's CEO
and CFO effective October 1, 2015.
At the beginning of October 2015, the employment of the CEO and CFO of the
Company, Mr. Jonathan Berger, was terminated.
On November 19, 2015, the Company reported that Guy Goldin, CPA, was
appointed as the Company's CFO effective November 1, 2015.
On November 25, 2015, the Company reported that Dr. Elran Haber was appointed
as the Company's CEO. On February 14, 2016, the general meeting of shareholders
approved his employment contract effective November 1, 2015. According to the
terms of the contract, the CEO is entitled to a monthly salary of NIS 45 thousand,
to an annual bonus of up to 6 monthly salaries subject to a target plan set by the
Board and to receive 700,000 options at the exercise price of NIS 0.995 per share.
The options vest over three years from the date of allocation in equal portions
every quarter. Total expense recorded in respect of these options during the
reporting period was approximately NIS 52 thousand.
- 45 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 22:- EVENTS AFTER THE REPORTING DATE
THERAPIX BIOSCIENCES LTD.
(Formerly: NasVax Ltd.)
a.
b.
c.
On February 2, 2016, the Company reported that 161,875 options which had been granted
to consultants expired.
In furtherance to the stated in Note 17b(6), (7) and (8), on February 16, 2016, the
Company's Board approved to grant 1,050,000 options to the Company's CEO (700,000
options), to the Company's chairman (250,000 options), to a director (50,000 options) and
to a former director (50,000 options). The grant of options was approved by the Board
pursuant to the approval of the general meeting of February 14, 2016. The fair value at
the grant date was estimated at approximately NIS 789 thousand (fair value of options
granted to the CEO, chairman and each director - NIS 510 thousand, NIS 199 thousand
and NIS 40 thousand, respectively), calculated using the Black & Scholes model based on
the exercise price determined for each optionee, standard deviation of 74.07% at the grant
date, a price per share of NIS 0.94 at the grant date, risk-free interest rate of 1.97% a year
and life of 10 years.
On February 16, 2016, the Company's Board approved to grant 1,220,000 options to three
officers (800,000 options), to three employees (300,000 options) and to a consultant
(120,000 options). The options vest over three years except 120,000 options that were
granted to consultant with vesting terms of two years. Each option is exercisable at the
exercise price of NIS 0.995-NIS 1.061. The fair value at the grant date was estimated at
approximately NIS 882 thousand, calculated using the Black & Scholes model based on
the exercise price determined for each optionee, standard deviation of 74.07% at the grant
date, a price per share of NIS 0.94 at the grant date, risk-free interest rate of 1.97% a year
and life of 10 years.
F:\W2000\w2000\60633903\M\15\EC12-THERAPIX.docx
- - - - - - - - - - -
- 46 -
THERAPIX BIOSCIENCES LTD.
FINANCIAL DATA FROM THE CONSOLIDATED FINANCIAL STATEMENTS
ATTRIBUTABLE TO THE COMPANY
AS OF DECEMBER 31, 2015
THERAPIX BIOSCIENCES LTD.
FINANCIAL DATA FROM THE CONSOLIDATED FINANCIAL STATEMENTS
ATTRIBUTABLE TO THE COMPANY
AS OF DECEMBER 31, 2015
INDEX
Special Auditors' Report
Special Report in accordance with Regulation 9c
Financial Data from the Consolidated Statements of Financial Position
Attributable to the Company
Financial Data from the Consolidated Statements of Profit or Loss and
Other Comprehensive Income Attributable to the Company
Financial Data from the Consolidated Statements of Cash Flows
Attributable to the Company
Additional Information
Page
2
3
4
5
6 - 7
8 - 12
Kost Forer Gabbay & Kasierer
2 Pal-Yam Ave.
Haifa 33095, Israel
Tel: 972 (4)8654000
Fax: 972 (4)5633443
ey.com
To
The Shareholders of Therapix Biosciences Ltd. (formerly: NasVax Ltd.)
Dear Sirs/ Mmes.,
Re:
Special auditors' report regarding separate financial information in accordance with
Regulation 9c to the Securities Regulations (Periodic and Immediate Reports), 1970
We have audited the separate financial information presented pursuant to regulation 9c to the
Securities Regulations (Periodic and Immediate Reports), 1970 of Therapix Biosciences Ltd. (formerly:
NasVax Ltd.) ("the Company") as of December 31, 2015 and 2014 and for each of the three years, the last of
which ended December 31, 2015, which was included in the Company's periodic report. The Company's
board of directors and management are responsible for the separate financial information. Our responsibility
is to express an opinion on the separate financial information based on our audits.
We conducted our audits in accordance with generally accepted auditing standards in Israel. Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the
separate financial information is free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the separate financial information. An audit also includes
assessing the accounting principles used and significant estimates made by the board of directors and
management, as well as evaluating the overall separate financial information presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the separate financial information referred to above is prepared, in all material respects,
in conformity with Regulation 9c to the Israeli Securities Regulations (Periodic and Immediate Reports),
1970.
Without qualifying our above opinion, we draw attention to the matter discussed in a to the additional
information to the financial data and separate financial information attributable to the Company itself out of
the Group's consolidated financial statements. For the year ended December 31, 2015, the Company incurred
losses totaling NIS 9,877 thousand and negative cash flows from operating activities totaling NIS 5,163
thousand for the year then ended. These factors raise substantial doubt as to the Company's ability to
continue as a going concern. Management's plans with respect to these matters are discussed in the above
paragraph. The financial data and separate financial information attributable to the Company itself out of the
Group's consolidated financial statements do not include any adjustments to the carrying amounts and
classifications of assets and liabilities that would result if the Company was unable to continue as a going
concern.
Haifa, Israel
March 22, 2016
KOST FORER GABBAY & KASIERER
A Member of Ernst & Young Global
- 2 -
Special Report in accordance with Regulation 9c
Financial Data and Financial Information from the
Consolidated Financial Statements Attributable to the Company
Below is financial data and separate financial information attributable to the Company itself from the
Group's consolidated financial statements as of December 31, 2015, published as part of the periodic reports
("the consolidated financial statements"), presented in accordance with Regulation 9c to the Securities
Regulations (Periodic and Immediate Reports), 1970.
The significant accounting policies applied in presenting this financial information are elaborated in Note 2
to the consolidated financial statements.
Investees - as defined in Note 1 to the consolidated financial statements.
- 3 -
Financial Data from the Consolidated Statements of Financial Position
Attributable to the Company
THERAPIX BIOSCIENCES LTD.
(Formerly: NasVax Ltd.)
ASSETS
CURRENT ASSETS:
Cash
Restricted cash
Accounts receivable
NON-CURRENT ASSETS:
Receivables from subsidiaries
Investment in associate
Property, plant and equipment
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Trade payables
Other accounts payable
NON-CURRENT LIABILITIES:
Government grants
Liabilities less assets attributable to subsidiaries, net
EQUITY ATTRIBUTABLE TO THE COMPANY
December 31,
2015
2014
NIS in thousands
6,115
44
271
6,430
5,525
-
42
5,567
11,997
1,540
215
1,755
-
5,128
5,128
5,114
11,997
594
44
98
736
4,680
187
69
4,936
5,672
973
132
1,105
156
4,554
4,710
(143)
5,672
The accompanying additional information is an integral part of the financial data and separate financial
information.
March 22, 2016
Date of approval of the
financial statements
Guy Goldin
CFO
Elran Haber
CEO
Asher Shmulewitz
Chairman of the Board
- 4 -
Financial Data from the Consolidated Statements of Profit or Loss and
Other Comprehensive Income Attributable to the Company
THERAPIX BIOSCIENCES LTD.
(Formerly: NasVax Ltd.)
Research and development expenses
General and administrative expenses
Other expenses (income), net
Operating loss (income)
Finance income
Finance expenses
Company's share of losses of investees (including
impairment of goodwill), net
Loss (income) attributable to the Company
2015
Year ended December 31,
2014
NIS in thousands
2013
443
5,185
5,628
3,733
9,361
(276)
22
770
9,877
914
4,910
5,824
4,632
3,903
8,535
(109)
(7,240)
5,715
(333)
433
1,392
7,207
(1,295)
(1,831)
67
(262)
(207)
The accompanying additional information is an integral part of the financial data and separate financial
information.
- 5 -
Financial Data from the Consolidated Statements of Cash Flows
Attributable to the Company
THERAPIX BIOSCIENCES LTD.
(Formerly: NasVax Ltd.)
Cash flows from the Company's operating activities:
Income (loss) attributable to the Company
(9,877)
(7,207)
207
2015
Year ended December 31,
2014
NIS in thousands
2013
Adjustments to reconcile income (loss) to net cash used in
the Company's operating activities:
Adjustments to the Company's profit and loss items:
Depreciation and amortization
Loss (gain) from sale of property, plant and equipment
Change in employee benefit liabilities, net
Cost of share-based payment
Change due to decrease in value of share options
Decrease (increase) in outstanding liability to the Chief
Scientist (including amounts recorded in research and
development expenses)
Write down of liability to the Chief Scientist
Finance expenses (income), net
Company's share of losses of investees, net
Change in fair value of financial derivatives
Changes in the Company's asset and liability items:
Decrease (increase) in accounts receivable
Increase (decrease) in trade payable
Increase (decrease) in other accounts payable
Cash received by the Company during the year for:
11
19
-
4,438
-
-
(191)
34
770
-
5,081
(1,017)
567
83
(367)
67
(38)
-
144
(81)
28
-
(5)
1,392
350
1,857
52
(243)
(211)
(402)
160
(34)
(20)
(154)
(30)
(1,805)
(7,206)
(20)
262
-
(8,847)
(143)
(177)
(53)
(373)
Interest received
-
5
20
Net cash used in the Company's operating activities
(5,163)
(5,747)
(8,993)
The accompanying additional information is an integral part of the financial data and separate financial
information.
- 6 -
Financial Data from the Consolidated Statements of Cash Flows
Attributable to the Company
THERAPIX BIOSCIENCES LTD.
(Formerly: NasVax Ltd.)
2015
Year ended December 31,
2014
NIS in thousands
2013
Cash flows from the Company's investing activities:
Proceeds from sale of property, plant and equipment
Purchase of property, plant and equipment
Movement in restricted cash, net
Investment in company accounted for at equity
Net cash provided by (used in) the Company's investing
activities
Cash flows from the Company's financing activities:
Exercise of options into shares
Issue of share capital and share options (less issuance
expenses)
Receipt of grants from the Chief Scientist
2
(4)
-
-
(2)
5,664
5,022
-
Net cash provided by the Company's financing activities
10,686
Increase (decrease) in cash
Cash at the beginning of the year
Cash at the end of the year
5,521
594
6,115
201
(2)
283
(870)
(388)
-
3,219
-
3,219
(2,916)
3,510
594
34
(6)
-
-
28
338
9,879
486
10,703
1,738
1,772
3,510
The accompanying additional information is an integral part of the financial data and separate financial
information.
- 7 -
THERAPIX BIOSCIENCES LTD.
(Formerly: NasVax Ltd.)
Additional Information
a.
General
For the year ended December 31, 2015, the Company had negative cash flows from operating
activities totaling NIS 5,163 thousand and accumulated deficit totaling NIS 113,241 thousand and
recurring operating losses.
The balance of cash at the Company's hands may not be sufficient to finance its operating activities in
the period beyond 12 months after the date of the approval of the financial statements.
These factors raise substantial doubt as to the Group's ability to continue as a "going concern".
The Company is a pharmaceutical company specializing in developing approved drugs based on
cannabinoid molecules. The Company finances its operations by raising capital from private and
institutional sources and by collaborating with leading multinational corporations in the industry. The
Company's management is focusing on securing the Company's financial stability, among others, by
exploring one or more of the above alternatives.
The financial data and separate financial information attributable to the Company itself out of the
Group's consolidated financial statements do not include any adjustments to the carrying amounts and
classifications of assets and liabilities that would result if the Company was unable to continue as a
going concern.
b.
Balance of cash attributable to the Company (excluding amounts in respect of investees):
December 31, 2015:
Cash equivalents
December 31, 2014:
Cash equivalents
Unlinked
Total
NIS in thousands
6,115
6,115
Unlinked
Total
NIS in thousands
594
594
- 8 -
Additional Information
THERAPIX BIOSCIENCES LTD.
(Formerly: NasVax Ltd.)
c.
Disclosure of financial assets attributable to the Company (excluding amounts in respect of
investees):
1.
Details of material investments attributable to the Company by groups of financial assets
pursuant to IAS 39:
Cash and cash equivalents
Restricted cash
December 31,
2015
2014
NIS in thousands
6,115
44
594
44
The expected date of realization of accounts receivable is up to one year. Accounts receivable
and cash are unlinked.
2.
Liquidity risk attributable to the Company:
The table below presents the maturity profile of the Group's financial liabilities based on
contractual undiscounted payments (including interest payments):
December 31, 2015:
Trade payables
Other accounts payable
December 31, 2014:
Trade payables
Other accounts payable
Government grants
Less than
one year
Over four
years
NIS in thousands
Total
1,540
215
1,755
-
-
-
1,540
215
1,755
Less than
one year
Over four
years
NIS in thousands
Total
973
132
-
1,105
-
-
4,254
4,254
973
132
4,254
5,359
- 9 -
Additional Information
THERAPIX BIOSCIENCES LTD.
(Formerly: NasVax Ltd.)
d.
Disclosure of balances of deferred tax assets and liabilities attributable to the Company
(excluding amounts in respect of investees) and disclosure of tax income or expense attributable
to the Company (excluding amounts in respect of investees):
Taxes on income attributable to the Company:
1.
Tax laws applicable to the Company:
As for the tax laws applicable to the Company, see Note 14a to the consolidated financial
statements.
2.
Tax assessments attributable to the Company:
The assessments of the Company are deemed final through the 2011 tax year.
3.
Carryforward tax losses and other temporary differences attributable to the Company:
The Company has tax losses in Israel that can be carried forward indefinitely totaling
approximately NIS 70 million.
No deferred tax assets relating to carryforward business losses and other temporary differences
have been recognized because their utilization in the foreseeable future is not probable.
e. Material loans, balances and commitments with investees:
Balances and transactions with investees:
1.
Balances with investees:
Receivables from subsidiaries
5,525
4,680
December 31,
2015
2014
NIS in thousands
- 10 -
Additional Information
THERAPIX BIOSCIENCES LTD.
(Formerly: NasVax Ltd.)
e. Material loans, balances and commitments with investees: (Cont.)
2.
Transactions with investees:
2015
Year ended December 31,
2014
NIS in thousands
2013
Participation in investees' expenses
785
133
262
3.
Commitments:
a)
On June 27, 2007, the Company founded NasVax Inc., a U.S. subsidiary ("the
subsidiary") whose main activity is to provide business and marketing consulting services
to the parent company. Therapix Biosciences Ltd. (formerly: NasVax Ltd.) and the
subsidiary signed a service agreement which determines the following:
1)
2)
3)
The subsidiary will provide Therapix Biosciences Ltd. (formerly: NasVax Ltd.)
services as specified in the agreement.
The subsidiary has no authority to bind the Company by any contractual
obligations to third parties.
All the rights and assets in the subsidiary or generated by it are exclusively owned
by the Company.
As of the reporting date, the subsidiary has no activity and it has no employees.
b)
Payment for services:
In consideration for the services, Therapix Biosciences Ltd. (formerly: NasVax Ltd.) will
pay its subsidiary for the costs of rendering the services specified in the agreement plus a
5% margin of total costs (cost + 5%).
c)
Shareholders' loan:
NasVax Inc. will pay the Company annual interest of 5.25% on shareholders' loan.
d)
On July 12, 2009, the Company acquired the entire issued share capital of Orimmune Bio
Ltd. (formerly: Protea Vaccine Technologies Ltd.) ("Orimmune "). In September 2013, as
part of the investment agreement, the Company allocated to the Chinese company,
Acebright Holding Limited, 16.4% of the issued and outstanding capital of Orimmune.
- 11 -
Additional Information
THERAPIX BIOSCIENCES LTD.
(Formerly: NasVax Ltd.)
e. Material loans, balances and commitments with investees: (Cont.)
e)
f)
g)
On October 13, 2013, the Company founded Brain Bright Ltd. As of the reporting date,
the subsidiary has no activity and it has no employees.
As for information regarding the investment agreement between the Company and
LaraPharm Ltd., see Note 8b to the consolidated financial statements.
As for information regarding a binding term sheet between the Company and Dekel
Pharmaceuticals Ltd., see Note 15b to the consolidated financial statements.
f.
Events after the reporting date
See Note 22 to the consolidated financial statements.
F:\W2000\w2000\60633903\M\15\E12-THERAPIX-Solo.docx
- - - - - - - - - - - - - -
- 12 -
THERAPIX BIOSCIENCES LTD.
Additional Information about the Corporation
Name of Corporation:
Therapix Bioscience Ltd. ("Therapix" or "the Company")
Corporation number at the
Registrar of Companies:
513581652
Registered address:
5 Azrieli Center, Square Tower, 27th Florr, Tel-Aviv
6702501
Telephone:
Fax:
E-mail:
Website:
03-6167055
03-6167056
info@therapixbio.com
www.therapixbio.com
Reporting year:
2015
Statement of financial position date: December 31, 2015
Date of periodic report:
March 22, 2016
(Regulation 1)
Regulation 8b(i):
Material or Very Material Valuation performed by the Company
During the reporting period, the Company used a material or very material
valuation for determining the fair value of options allocated to Dekel based on the
license agreement.
See details of the valuation, which has not changed compared to the reporting date,
in an appendix to the Company's report for the third quarter of 2015 [TASE
reference: 2015-01-166299].
Regulation 9b:
Report of Effectiveness of Internal Control over Financial Reporting
and Disclosure
The Company does not attach an annual report on the assessment of the Board and
Management of the effectiveness of internal control to the periodic report in
accordance with the "small corporation" exemption prescribed in Regulation 5d(4)
to the Regulations.
1
Regulation 9c:
The Corporation's Separate Financial Information
The Company includes the separate financial information of the Company in
addition to the financial statements since the additional information in the separate
financial information may be material to the Company's consolidated financial
statements.
Regulation 9d:
Report of the Status of Liabilities according to Maturity Dates
The Company's report of the status of its liabilities according to maturity dates is
hereby attached to this report as an integral part thereof. See details in the
Company's immediate report regarding the status of liabilities hereby attached to
this report and the ISA's website at http://www.magna.isa.gov.il.
Regulation 10a:
Condensed Statements of Profit or Loss for 2015 (NIS in thousands)
Three months ended
March 31,
2015
June 30,
2015
September
30, 2015
December
31, 2015
(Unaudited)
NIS in thousands
Year ended
December
31, 2015
(Audited)
230
1,152
19
17
110
1,528
1,505
23
247
1,304
-
(13)
87
1,625
1,610
15
143
1,042
3,907
19
-
5,110
5,099
11
311
1,799
(190)
(8)
-
1,911
1,663
248
931
5,297
3,734
15
197
10,174
9,877
297
Research and development expenses,
net
General and administrative expenses
Other expenses (income), net
Finance expenses (income), net
Group's share of losses of company
accounted for at equity
Net loss
Loss attributable to equity holders
of the Company
Loss attributable to non-controlling
interests
Regulation 10c:
Use of Proceeds from Securities with reference to Proceeds Targets
based on Prospectus
In the reporting year, the Company did not raise capital according to a
prospectus1.
1
On May 8, 2014, the Company completed the issue of Ordinary shares and two series of share options (series 3
and 4) of the Company based on a shelf prospectus of August 8, 2012 and a shelf offering report of May 8, 2014.
The issue proceeds amounted to approximately NIS 2,859 thousand (gross) and were used by the Company to
finance its operating activities, all in keeping with the Board's resolutions as they will be from time to time. In
the reporting year, the Company completed several capital raising rounds through private placements to private
investors which whose proceeds were also used to finance operating activities in keeping with the Board's
resolutions as they will be from time to time while focusing the efforts on raising additional capital as needed for
the Company's operating activities and developing the Company's business based on its business strategy.
2
Regulation 11:
List of Investments in Subsidiaries and Related Companies
As of December 31, 2015:
% of issued share
capital, % of
voting rights and
% of authority to
appoint directors
Adjusted cost on
the purchase date
(NIS'000)
Adjusted
carrying
amount as of
December 31,
2015 (NIS'000)
100%
84%
-
13,720
(1,976)
(3,759)
Subsidiaries
Number and class
of shares
Total overall par
value of shares
Par value of
shares held
NasVax Inc.
100 Ordinary shares Less than NIS 1 Less than NIS 1
113,199 Ordinary
shares
NIS 1,132
NIS 0.01
Orimmune Bio
Ltd. (formerly:
Protea Vaccine
Technologies
Ltd.)
Brain Bright Ltd.
1,000 Ordinary
shares
-
No par value
100%
Lara-Pharm
Therapeutics
Ltd.
10,000,000 Ordinary
shares of NIS 0.01
par value each
100,000
3,358
11%
-
870
-
-
Regulation 12:
Changes of Investments in Subsidiaries and Related Companies during
the Reporting Period
For information about the Company's investment in Lara-Pharm in the amount of
NIS 870 thousand in the course of 2014 and the possible forfeiture of holdings in
the event of failure to make certain investments based on an investment agreement
between the parties, see the Company's immediate report of April 2, 2014 [TASE
reference: 2014-01-035922] and paragraph 19.1 to Chapter A to this report.
Regulation 13:
Income of Subsidiaries and the Company's Income therefrom as of the
Balance Sheet Date
The following table presents the comprehensive income (loss) of each subsidiary or
material related company of the Company in the latest reporting year ended on or
before the statement of financial position date, adjusted to the statement of
financial position date, and a breakdown of the Company's income therefrom (in
NIS in thousands):
Company name (**)
NasVax Inc.
Orimmune Bio Ltd. (formerly: Protea Vaccine
Technologies Ltd.)
Income (loss) for
the period
Dividend
(*)
(265)
(605)
-
-
Income from
management
fees (*)
-
-
Income from
nominal
interest (*)
265
-
(*)
Income from dividends, interest and management fees received or receivable
by the Company from each of its subsidiaries or related companies in the
reporting year and payments for subsequent periods, including payment
dates.
(**) The Company recorded a loss from its share in an immaterial investee (Lara-
Pharm Therapeutics Ltd.) of NIS 197 thousand.
3
Regulation 20:
Trade on the Tel-Aviv Stock Exchange ("the TASE")
[Securities listed for trade in the reporting period]
1.
2.
Public offerings - in the reporting period, the Company did not perform any
public offering of securities.
Private placements - in the reporting period, the Company offered to private
investors and listed to trade the following securities:
2.1 On December 19, 2014, as part of a private placement to several
private investors, the Company issued, 1,300,000 shares and listed
them for trade on the TASE2.
2.2 On March 12, 2015, as part of a private placement to several private
investors, the Company issued, 500,000 shares and listed them for
trade on the TASE3.
2.3 On April 26, 2015, as part of a private placement to a private investor,
the Company issued 4,400,000 shares and listed them for trade on the
TASE4.
2.4 On August 19, 2015, the Company completed a private placement to
Dekel Therapeutics Ltd. in which the Company offered Dekel,
200,000 shares (as a down payment), 3,876,000 options that vest
immediately and 11,926,154 contingent options5. Of said securities, as
of the report date, the shares which used as down payment have not
yet been listed for trade6.
2.5 On November 25, 2015, as part of a private placement to several
private investors, the Company issued 3,159,025 shares and listed
them for trade on the TASE7.
2
3
4
5
6
7
See details in an immediate report of December 21, 2014 [TASE reference: 2014-01-226122].
See details in an immediate report of March 15, 2015 [TASE reference: 2015-01-051157].
See details in an immediate report of April 29, 2015 [TASE reference: 2015-01-008361].
See details in an immediate report of August 19, 2015 [TASE reference: 2015-01-100422].
See details in an immediate report of March 15, 2016 [TASE reference: 2016-01-051157].
See details in an immediate report of November 25, 2015 [TASE reference: 2015-01-164421].
4
3.
Exercise of share options - in the reporting year and as of the report date,
share options of the Company were exercised as follows:
3.1
3.2
3.3
1,300,000 options that vest immediately and 1,300,000 contingent
options which were issued to several private investors (as discussed in
paragraph 2.1 above) were exercised into Ordinary shares of the
Company.
3,876,000 options that vest immediately and 2,369,270 contingent
options, some of which granted to Dekel and some sold to several
private investors by Dekel (as discussed in paragraph 2.4 above) were
exercised into Ordinary shares of the Company.
40,000 options granted to a consultant and 33,333 options granted to
the former CEO and CFO were exercised into Ordinary shares of the
Company.
4.
To the best of the Company's knowledge, in the reporting period, the trade of
the Company's securities was not discontinued (other than predetermined
trading intervals due to the issuance of financial statements or other material
reports).
5
Regulation 21:
Remuneration of Senior Officers
(1)
The following table provides details of the remuneration paid in the reporting year to each of the five highest paid senior officers in
the Company in connection with their service in the Company (NIS in thousands):
Details of remuneration recipients
Name
Dr. Ascher
Shmulewitz
Dr. Elran
Haber
Jan Turek
Jonathan
Berger
Uri Ben-Or
Position
Chairman of the
Board
Company CEO from
November 2015
[former VP Business
Strategy &
Innovation from
March 2014]
Former CEO [from
September 2014 to
May 2015]
CEO and former
CFO [from April
2015 to September
2015]
Former CFO [from
October 2014 to
April 2015]
Scope of
position
60%
100%
5%0
%100
5%0
Effective
stake in the
Corporation
1.89%
Salary
-
Bonus
-
Remuneration for services
(NIS in thousands)
Share-based
payment
**
158
Management
fees
-
Consulting
fees
598
Other remuneration *
(NIS in thousands)
Commission
-
Other
-
Interest
-
Rental
fees
-
Other
-
Total
756
-
-
-
-
595
-
177
-
-
-
-
-
124
144
10
-
-
-
-
-
-
245
-
88
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
719
389
15
187
-
88
*
**
The remuneration amounts are presented in terms of cost to the Company.
The amount stated in the "share-based payment" column represents the expense recorded by the Company pursuant to
IFRS 2 for the grant of options.
(2)
For details of the remuneration paid to interested parties who are not featured in the table in (1) above (whose remuneration was paid
by the Company or by a company controlled by it in connection with services rendered by the interested parties as holders of
positions in the Company or in a company controlled by it, whether in the context of employer-employee relations or not), see
subparagraph (c) below.
6
(3)
Below are details of the employment terms of the Company's senior officers
pursuant to the provisions of the Sixth Addendum to the Israeli Securities
Regulations (Periodic and Immediate Reports), 1970:
(a)
Dr. Ascher Shmulewitz - active Chairman of the Board8
Dr. Ascher Shmulewitz has been serving as active Chairman of the
Board of the Company since January 2014. On February 14, 2016,
following the approval of the general meeting of the Company's
shareholders, an agreement was signed for settling the terms of service
of Dr. Ascher Shmulewitz as active Chairman of the Board of the
Company which consists of the following principles:
Job description: provision of active Chairman of the Board services.
Scope of consulting services: minimum 60% position.
Monthly consulting fees: NIS 50 thousand plus VAT as required by
law against a legal tax invoice.
Early notice: each party will be entitled to terminate the agreement by
providing an advance notice of 90 days (subject to possible earlier
termination under specific circumstances stipulated in the agreement).
Compensation, insurance and/or exemption: Dr. Shmulewitz is
entitled to insurance, compensation and exemption arrangements
based on the standard format and terms practiced in the Company with
respect to directors and officers.
Annual bonus: the Chairman is entitled to an annual bonus of up to six
[6] times the monthly consulting fees, subject to an annual target plan
as determined by the Company's Board and
to meeting the
predetermined targets.
The agreement stipulates additional conditions as customary in thus
type of agreements such as non-compete, IP protection and non-
disclosure provisions.
the approval of
In addition, as part of the Company's general directors' and officers'
remuneration plan, following
the Company's
Remuneration Committee and Board, on February 14, 2016, the
general meeting of the Company's shareholders decided to grant the
Chairman of the Board 250,000 (unregistered) options which are each
exercisable into one Ordinary share for an exercise price of NIS 0.5
per option (subject to adjustments). The options vest equally on a
quarterly basis over a period of three years9.
No remuneration has been paid after the reporting year and prior to the
date of filing this report in connection with Dr. Shmulewitz's service
or employment in the reporting year which has not been recognized in
the financial statements for the reporting year.
8
9
See details of Dr. Ascher Shmulewitz's tenure terms as active Chairmen of the Company's Board in the
Company's (amended) meeting notification report of January 29, 2016 [TASE reference: 2016-01-019615].
See more details in the Company's immediate reports of May 21, 2015 [TASE reference: 2015-01-025020] and
November 26, 2015 [TASE reference: 2015-01-166275].
7
8
(b) Dr. Elran Haber, CEO10
Dr. Elran Haber has served as the Company's CEO since November 1,
2015. He previously served as the Company's VP Business Strategy &
Innovation from March 1, 2014. On February 15, 2016, the
employment agreement settling Dr. Haber's employment as the
Company's CEO was signed, consisting of the following main
provisions11:
Job description: Company CEO.
Scope of position: 100%.
Date of commencement of tenure as CEO: November 1, 201512.
Monthly salary: NIS 45 thousand13.
Social and related benefits: as prescribed by applicable laws (annual
vacation of 20 days, sick leave and recreation pay). He is also entitled
to contributions to an advanced study fund, pension (through an
executive insurance policy and/or pension fund) and occupational
disability insurance under standard terms. The CEO will receive
reimbursement for cellular phone and travel and gas expenses under
standard terms against invoices.
Annual bonus: an annual bonus of up to six monthly salaries, subject
to an annual target plan as determined by the Company's Board and to
meeting the predetermined targets.
Early notice: each party may terminate the agreement by providing an
advance notice of three months (subject to possible earlier termination
under specific circumstances stipulated in the agreement).
Compensation, insurance and/or exemption: the CEO is entitled to
insurance, compensation and exemption arrangements based on the
standard format and terms practiced in the Company with respect to
other officers.
The employment agreement is also subject to the Company's standard
service and employment stipulations for senior officers such as IP
protection, non-compete and non-disclosure provisions.
Share-based payment: following the approval of the Company's
Remuneration Committee and Board, on February 14, 2016, the
general meeting of the Company's shareholders decided to grant the
new CEO 700,000 (unregistered) options which are each exercisable
into one Ordinary share.
10
11
12
13
See details of Dr. Elran Haber's tenure terms as the Company's CEO in the Company's (amended) meeting
notification report of January 29, 2016 [TASE reference: 2016-01-019615].
See updated details of Dr. Elran Haber's tenure terms as the Company's CEO in the Company's (amended)
meeting notification report of January 29, 2016 [TASE reference: 2016-01-019615] and in Regulation 21 below.
See details of Dr. Haber's service as VP Business Strategy & Innovation in Regulation 21 to Chapter D
(Additional Information about the Corporation) to the previous annual report.
Dr. Haber's tenure as CEO is in succession to his tenure as VP in the Company.
It should be clarified that before October 31, 2015, Dr. Haber's monthly salary as VP was NIS 36 thousand.
9
The offered options will be allocated to the optionee based on the new
option plan and are exercisable for an exercise price of NIS 0.995 per
option (subject to adjustments) (the exercise of the offered options
will also be allowed on a cashless basis). The options vest equally on a
quarterly basis over a period of three years and expire according to the
terms of the Company's 2015 option plan and option agreement signed
with the CEO.
No remuneration has been paid after the reporting year and prior to the
date of filing this report in connection with Dr. Haber's employment in
the reporting year which has not been recognized in the financial
statements for the reporting year.
(c)
Directors' remuneration
The Company's acting directors as of the report date, excluding the
external and independent directors, are not entitled to annual
remuneration, participation fees or reimbursement of expenses for
their participation in Board meetings.
Nevertheless, Dr. Ascher Shmulewitz is entitled to remuneration
based on his service and tenure terms in the Company (as discussed in
subparagraph (a) above and Mr. Avraham Meizler has been granted
options for the Company's Ordinary shares.
in
the
reporting period, according
The remuneration paid to external and independent directors in the
the annual
Company
remuneration and the participation fees based on the amounts
prescribed in the Second and Third Addendums to the Companies
Regulations (Rules of Remuneration and Expenses to External
Directors), 2000 amounted to NIS 138 thousand.
to
No remuneration has been paid after the reporting year and prior to the
date of filing this report in connection with their service or
employment in the reporting year which has not been recognized in
the financial statements for the reporting year.
Option plan
For more information of the Company's 2015 option plan and of
options granted to Company directors, officers, employees and
consultants, see paragraph 14.9 to Chapter A to this report.
(d) Approval of the remuneration policy for the Company's officers
On January 23, 2014, the general meeting approved the Company's
remuneration policy pursuant to Article 267a to the Companies Law,
1999, after the remuneration policy and all the issues that required
attention therein had been discussed by the Company's Board based on
the Remuneration Committee's recommendations and approved by it.
10
The remuneration policy is not designed to govern the employment
agreements that had been signed in the Company prior to the policy's
adoption; however, pursuant to applicable law and the ISA's
guidelines, the Board will annually examine the reasonableness of
such employment agreements and the Remuneration Committee will
periodically examine the need to adjust the remuneration policy.
Moreover, the renewal and adjustment of existing agreements with
officers will be governed by the Company's remuneration policy.
The Company's Board meeting of March 22, 2016 decided that the
employment agreements of the Company's acting officers are in
compliance with the Company's remuneration policy.
See more details of the remuneration policy in paragraph 14.8 to
Chapter A to this report.
Regulation 21a:
The Controlling Shareholder in the Corporation
To the best of the Company's knowledge, as of the report date, the Company does
not have an individual or an entity which is defined as a "controlling shareholder"
based on the definition of this term in the Securities Law, 1968.
Notwithstanding the aforementioned, it should be noted that as explained in an
amended report regarding a private placement of the Company's shares issued by
the Company on February 3, 3013 [TASE reference: 2013-01-028422] ("the
offering report"), the Company undertook that as long as there is no material
change in the holding status that will prevail after the private placement to each of
the parties as defined in the offering report14, each material transaction which the
Company wishes to sign in which any of the parties has a personal interest
(excluding decisions regarding indemnification, directors' fees, insurance etc. that
uniformly apply to all directors) will be studied by the ISA Staff for the
transaction's proper approval.
Regulation 22:
Transactions with Controlling Shareholder
To the best of the Company's knowledge, the Company does not have a controlling
shareholder.
Notwithstanding the aforementioned, see details of the Company's engagement in a
consulting service agreement with the Chairman of the Board and of the
remuneration paid to the Company's directors in Regulation 21 above and
Regulation 29 below.
14
This provision mainly refers to Dr. Avi Meizler and Dr. Ascher Shmulewitz who as of the report date serve as
director and Chairman of the Board in the Company, respectively. It should be clarified that according to the
offering report, the optionees were Gilbood Trading S.A., an interested party in the Company, in which, to the
best of the Company's knowledge, the director Dr. Avi Meizler is a controlling shareholder, and Incumed SPV, a
company that was then in the process of registration for trade abroad, in which, to the best of the Company's
knowledge, Dr. Ascher Shmulewitz is a controlling shareholder (in the offering report "the optionees").
11
Regulation 24:
Holdings of Interested Parties and Senior Officers
See details of holdings of interested parties in the Company as of the report date in
an immediate report of February 17, 2016 [TASE reference: 2016-01-029398].
Regulation 24a:
Authorized Share Capital, Issued Share Capital and Convertible
Securities
For data about the Company's authorized and issued share capital and convertible
securities as of the report date, see Note 16 to the financial statements.
Regulation 24b:
Registrar of the Company's Shareholders
To the best of the Company's and its managers' knowledge, the Registrar of the
Company's shareholders as of the report date is as follows:
Registrar of Shareholders
Name of shareholder
Mizrahi Tefahot Registration Company Ltd.
Hadasit Medical Research Services and Development
Ltd.
Dr. Shmuel Kabili
Prof. Yechezkel Barenholz
Total
I.D. No. /
company No.
510422249
51115685-3
01006893-0
8243016
Israeli Address
7 Jabotinsky Street, Ramat Gan
P.O.B 12000 Ein Karem,
Jerusalem
13 Em Kol Hai Street, Gedera
18 Neve Shaanan Street,
Jerusalem
No. of
shares
34,867,902
103,520
163,880
263,850
35,399,152
12
Regulation 26:
The Company's Directors
(1) Director name:
I.D. number:
Birth date:
Domicile for service of judicial
documents:
Citizenship:
Member on Board committees:
External director:
Independent director:
Possesses accounting and financial
Dr. Ascher Shmulewitz, Chairman of the Board
54228374
October 22, 1956
20 Yoav Street, Tel-Aviv
Israeli
R&D and Clinical Trials Committee
No
No
No
expertise or professional competence:
Employee of the Company, a
No
subsidiary, a related company or an
interested party therein:
Date of beginning of tenure as director:
Education:
Main occupations in the last five years:
Serves as director in:
Family relative of another interested
party in the Corporation (if any):
February 21, 2013
MD from Technicon Medical School and PhD in
Engineering from Tel-Aviv University.
Chairman of Medgenesis Partners for 11 years
Medgenesis Partners, Medgenesis Ventures, V-Wave,
Clearfarma Industries, Innosense, Sipnose, Cast, Obiner,
Dekel Pharma
No
Director viewed as possessing
No
accounting and financial expertise for
compliance with the minimum
number established by the Board
pursuant to Article 92(a)(12) to the
Companies Law:
13
(2) Director name:
I.D. number:
Birth date:
Domicile for service of judicial
documents:
Citizenship:
Member on Board committees:
External director:
Expert external director:
Possesses accounting and financial
Avraham Meizler, Director
YA327556
January 1, 1952
Two Pen Center, Suite 200, Philadelphia, PA, USA
Additional domicile in Israel: c/o Zysman, Aharoni,
Gayer & Co, 41-45 Rothschild Blvd., Tel-Aviv
Israeli
No
No
No
No
expertise or professional competence:
Employee of the Company, a
No
subsidiary, a related company or an
interested party therein:
Date of beginning of tenure as director:
Education:
Main occupation in the last five years:
Serves as director in:
Family relative of another interested
party in the Corporation:
Director viewed as possessing
accounting and financial expertise for
compliance with the minimum
number established by the Board
pursuant to Article 92(a)(12) to the
Companies Law:
February 21, 2013
President of Meizler Biopharma S.A., co-founder and
CEO of Advantech Bioscience Pharmaceutical Ltd.
No
No
No
14
(3) Director name:
I.D. number:
Birth date:
Domicile for service of judicial
documents:
Citizenship:
Member on Board committees:
External director:
Possesses accounting and financial
expertise or professional competence:
Zohar Heiblum, External Director
53291043
March 21, 1955
32 Magal Street, Savyon
Israeli
Audit Committee, Financial Statement Review
Committee, Remuneration Committee
Yes
Yes - accounting and financial expertise
Expert external director:
Employee of the Company, a
Yes
No
subsidiary, a related company or an
interested party therein:
Date of beginning of tenure as director: August 26, 2013
Education:
B.Sc. in Engineering, Industry and Management, MA in
Business Administration, Tel-Aviv University
Chairman of the Board of Directors, Z. Roth Industries
Ltd; Managing Partner in Momentum Management;
Deputy CEO and CFO in Celltro Communications Ltd;
Manager in Daniron Consulting and Investments Ltd;
Director at Widemed Ltd.
Widemed Ltd; Daniron Consulting and Investments Ltd.;
Z. Roth Industries Ltd.
No
Main occupation in the last five years:
Serves as director in:
Family relative of another interested
party in the Corporation:
Director viewed as possessing
accounting and financial expertise for
compliance with the minimum
number established by the Board
pursuant to Article 92(a)(12) to the
Companies Law:
Yes
15
(4)
Director name:
I.D. number:
Birth date:
Domicile for service of judicial
documents:
Citizenship:
Member on Board committees:
External director:
Possesses accounting and financial
expertise or professional
competence:
Independent director:
Employee of the Company, a
subsidiary, a related company or an
interested party therein:
Amit Berger, External Director
059100529
September 23, 1964
22 Hadekel Street, Savyon
Israeli
Audit Committee, Financial Statement Review
Committee, Remuneration Committee
Yes
Yes - accounting and financial expertise
Yes
No
Date of beginning of tenure as
August 21, 2014
director:
Education:
Main occupation in the last five years:
Serves as director in:
Family relative of another interested
party in the Corporation:
Director viewed as possessing
accounting and financial expertise
for compliance with the minimum
number established by the Board
pursuant to Article 92(a)(12) to the
Companies Law:
BA in Economics from the Tel-Aviv University, owns a
portfolio management license
Chairman and CEO of Dolphin 1 Investments Ltd.,
Director
Mega-Or Holdings Ltd., E.T. Finances E.E. Investments
Ltd. (Independent Director), Hamashbir 365 Holdings
Ltd. (External Director), Polar Investments Ltd., Ortam
Sahar Engineering Ltd. (Independent Director), N.R.
Spantech Industries Ltd. (External Director), Dolphin 1
Investments Ltd., Berger Capital Markets Ltd., Amit
Berger Holdings Ltd., Amit Berger Investments Ltd.,
Amit Berger Management and Consulting Ltd.
No
Yes
16
(5)
Director name:
I.D. number:
Birth date:
Domicile for service of judicial
documents:
Citizenship:
Member on Board committees:
External director:
Possesses accounting and financial
expertise or professional
competence:
Independent director:
Employee of the Company, a
subsidiary, a related company or an
interested party therein:
Date of beginning of tenure as
director:
Education:
Main occupation in the last five years:
Serves as director in:
Family relative of another interested
party in the Corporation:
Director viewed as possessing
accounting and financial expertise
for compliance with the minimum
number established by the Board
pursuant to Article 92(a)(12) to the
Companies Law:
Micha Jesselson, Director
038087177
November 21, 1985
52 Menachem Begin Rd., Tel-Aviv
Israeli
No
No
No
No
Yes. Jesselson Investments Ltd. (interested party in the
Company by virtue of its indirect holdings through Jay's
Thera Ltd.)
June 10, 2014
Bachelor of Business degree from the Interdisciplinary
Center (IDC), Herzliya
Investment management at Jesselson Investments Ltd.
Psifas Fund in memory of Eliezer Gluberman and Yosef
Goodman
Yes
No
17
(6)
Director name:
I.D. number:
Birth date:
Domicile for service of judicial
documents:
Citizenship:
Member on Board committees:
External director:
Possesses accounting and financial
expertise or professional
competence:
Independent director:
Employee of the Company, a
subsidiary, a related company or an
interested party therein:
Dr. Yafit Stark, Independent Director
51919959
June 24, 1953
Company offices, Square Tower 5, Azrieli Center, Tel-
Aviv 6702501
Israeli
Audit Committee, Financial Statement Review
Committee, Remuneration Committee, R&D and
Clinical Trials Committee
No
No
Yes
No
Date of beginning of tenure as
June 10, 2015
director:
Education:
Main occupation in the last five years:
Serves as director in:
Family relative of another interested
party in the Corporation:
Director viewed as possessing
accounting and financial expertise
for compliance with the minimum
number established by the Board
pursuant to Article 92(a)(12) to the
Companies Law:
PhD degree in Pathology from the Tel-Aviv University
and a Post-Doctorate in Immuno-Histopathology from
Tel-Aviv University and the Weizmann Institute of
Science
Vice President, Chief Clinical Officer and Head of
Innovative R&D Division at Teva Pharmaceutical
Industries Ltd.
PolyPid Ltd., Eximore Ltd.
No
No
18
Regulation 26a:
Senior Officers
Details of acting senior officers in the Company who are not directors as of the
report date:
(1)
Officer name:
I.D. / passport number:
Birth date:
Date of beginning of tenure as officer:
Position filled in the Company, a
subsidiary or an interested party
therein:
Main occupation in the last five years:
Education:
Interested party in the Company or
family relative of another senior
officer or interested party in the
Company:
(2)
Officer name:
I.D. / passport number:
Birth date:
Date of beginning of tenure as officer:
Position filled in the Company, a
subsidiary or an interested party
therein:
Main occupation in the last five years:
Education:
Interested party in the Company or
family relative of another senior
officer or interested party in the
Company:
Dr. Elran Hillel Haber
040092702
May 15, 1980
November 1, 2015 (previously served as VP from March
1, 2014)
CEO
Member of the Company's R&D and Clinical Trials
Committee
VP Business Strategy & Innovation in the Company, VP
Business Strategy &
in ClearPharma
Industries Ltd., director in various companies
Ph.D. in Pharmaceutical Science from the Hebrew
University of Jerusalem; MBA in Finance & Financial
Engineering from the Hebrew University of Jerusalem;
the Hebrew
BA
University of Jerusalem
No
in Pharmaceutical Science from
Innovation
CPA Guy Goldin
029410768
April 23, 1972
November 1, 2015
CFO and Company Secretary
CFO at BSP - Biological Signal Processing Ltd., CFO at
Petro-Group Ltd., Controller at Metis Capital Ltd.
MBA from Tel-Aviv University, BA in Accounting and
Economics from Tel- Aviv University
No
19
(3)
Officer name:
I.D. / passport number:
Birth date:
Date of beginning of tenure as officer:
Position filled in the Company, a
subsidiary or an interested party
therein:
Main occupation in the last five years:
Education:
Interested party in the Company or
family relative of another senior
officer or interested party in the
Company:
(4)
Officer name:
I.D. / passport number:
Birth date:
Date of beginning of tenure as officer:
Position filled in the Company, a
subsidiary or an interested party
therein:
Main occupation in the last five years:
Education:
Interested party in the Company or
family relative of another senior
officer or interested party in the
Company:
Doron Ben-Ami
57690653
May 10, 1952
December 1, 2015
Chief Strategy Officer
Senior Consultant at Harel Consulting, Founder and
CEO of Triticum Ltd., Associate Vice President of the
Eastern Europe and Israel region at Merck & Co., Inc.
MSD, Managing Director of Merck & Co., Inc. MSD
Israel.
Master of Health Systems Administration (M.H.A.) from
Tel-Aviv University, Bachelor of Science degree in
Physical Therapy from Ben-Gurion University of the
Negev
No
Dr. Adi Zuloff-Shani
023823818
July 12, 1968
February 8, 2016
Chief Technology Officer
[Substitute Member of the Company's R&D and Clinical
Trials Committee]
Vice President Development at Macrocure Ltd., Product
Export and Head of New Initiatives at Macrocure Ltd.
PhD in Human Biology and Immunology from the Bar-
Ilan University, BSc in Biology from the Bar- Ilan
University
No
20
(5)
Officer name:
I.D. / passport number:
Birth date:
Date of beginning of tenure as officer:
Position filled in the Company, a
subsidiary or an interested party
therein:
Main occupation in the last five years:
Education:
Interested party in the Company or
family relative of another senior
officer or interested party in the
Company:
Daniel Shapira
052755998
July 21, 1954
March 29, 2006
Internal Auditor
Internal auditor in public companies
Economics and Accounting from the Bar-Ilan University
No
21
Details of former senior officers in the Company who are not directors whose tenure was terminated in the reporting period through the
date of issuance of this report:
Tami Kfir
023579352
March 21, 2013
February 14, 2016
Director
Ahmed Alimi
028300887
June 10, 2015
February 4, 2016
Director
Jan Turek
488764876 US
Uri Ben-Or
027867753
September 22, 2014 October 5, 2014
May 31, 2015
CEO
April 1, 2015
CFO
Jonathan Berger
012196408
April 1, 2015
October 1, 2015
CEO and CFO
Dov Weinberg
51542199
October 1, 2014
April 1, 2015
CFO
Name:
I.D.:
Date of beginning of tenure:
Date of termination of tenure:
Position filled in the
Company, a subsidiary
thereof, a related company
thereof or an interested party
therein:
22
Regulation 26b:
Company Signatories
The Company has no independent signatories, as this term is defined in the
Securities Law and in the ISA's guidelines.
Regulation 27:
The Corporation's Auditors
EY Israel (Kost Forer Gabbay & Kasierer, CPAs) of 2 Pal-Yam Blvd., Haifa
33095, Israel.
To the best of the Company's knowledge, the auditors or their partners are not
interested parties in the Company or family relatives of interested parties or of
officers in the Company.
Regulation 28:
Changes in Memos or in the Articles of Association
In the reporting period there was no change in the Company's articles of
association.
Regulation 29:
Recommendations and Resolutions by the Board of Directors and
Special Meetings
a.
b.
In the reporting period, no resolutions were accepted in the general meeting
against the Board's recommendation.
On March 24, 2014, the general meeting of the Company's shareholders
approved the payment of remuneration to Dr. Ascher Shmulewitz who
serves as active Chairman of the Board for services rendered by him to the
Company and for his service as active Chairman of the Board in the
Company. On February 14, 2016, the general meeting approved the written
terms of the Company's engagement with Dr. Shmulewitz as active
Chairman of the Board (including the grant of a share-based payment award)
under certain conditions that are in contrast to the Company's remuneration
policy. See full details of said resolution of the general meeting in the
Company's (amended) meeting notification report of January 28, 2016
[TASE reference: 2016-01-019615] and a report on the meeting's results of
February 14, 2016 [TASE reference: 2016-01-027946].
c.
See details of the approval of the service and employment terms of the
Company's former CEO in the Company's (amended) meeting notification
report of June 2, 2015 [TASE reference: 2015-01-038442] and a report on
the meeting's results of June 10, 2015 [TASE reference: 2015-01-045570].
23
d.
e.
f.
g.
h.
See details of the Company's Board's approval of the deferral of the date of
exercise of the options granted to several private investors that vest
immediately in the Company's immediate report of March 15, 2015 [TASE
reference: 2015-01-050605]. See details of the grant of options to two
directors in the Company as part of the Company's overall option plan
(under certain conditions that are in contrast to the Company's remuneration
policy) in the Company's (amended) meeting notification report of January
28, 2016 [TASE reference: 2016-01-019615] and a report on the meeting's
results of February 14, 2016 [TASE reference: 2016-01-027946].
See details of the Board's recommendation to the general meeting to appoint
two new directors on the Board in the Company's immediate report of March
15, 2014 [TASE reference: 2015-01-050605].
See details of the Board's approval (and recommendation to the general
meeting) for reappointing acting directors for an additional term (under the
same service, insurance, exemption and compensation terms) in the
Company's (amended) meeting notification report of January 28, 2016
[TASE reference: 2016-01-019615] and a report on the meeting's results of
February 14, 2016 [TASE reference: 2016-01-027946].
See details of the Company's engagement in a license agreement with Dekel
Pharmaceuticals Ltd. whose controlling shareholder
is Dr. Ascher
Shmulewitz, the Chairman of the Company's Board, in the Company's
conflict of interests and (amended) meeting notification reports of June 2,
2015 [TASE reference: 2015-01-038487 and TASE reference: 2015-01-
038442] and a report on the meeting's results of June 10, 2015 [TASE
reference: 2015-01-045570].
See details of the approval of the service and employment terms of the
Company's current CEO (including the grant of a share-based payment
award) under certain conditions that are in contrast to the Company's
remuneration policy in the Company's (amended) meeting notification report
of January 28, 2016 [TASE reference: 2016-01-019615] and a report on the
meeting's results of February 14, 2016 [TASE reference: 2016-01-027946].
24
Regulation 29a:
Decisions made by the Company
a.
See details of letters of indemnification and exemption granted to acting
directors (and other officers of the Company) that are in effect and of the
approval of the Company's engagement in a directors' and officers' liability
insurance policy (including according to a master transaction) in the
Company's immediate reports of September 23, 2014 [TASE reference:
2014-01-163026] and July 13, 2014 [TASE reference: 2014-01-112761], an
(amended) meeting notification report of January 28, 2016 [TASE reference:
2016-01-019615] and a report on the meeting's results of February 14, 2016
[TASE reference: 2016-01-027946].
b.
See also Regulation 29 above.
Therapix Biosciences Ltd.
Date: March 22, 2016
Names of signatories:
Dr. Ascher Shmulewitz
Dr. Elran Haber
CPA Guy Goldin
Position:
Chairman of the Board
CEO
CFO
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25
THERAPIX BIOSCIENCES LTD.
CHAPTER E - OFFICERS' CERTIFICATION
Chief Executive Officer's Certification:
Pursuant to Regulation 5d(4)(b)-(c) and Regulation 9b(d)(1) to the Israeli Securities Regulations (Periodic
and Immediate Reports), 1970
Officer's Certification
Chief Executive Officer's Certification
I, Dr. Elran Haber, hereby certify that:
(1)
I have reviewed the periodic report of Therapix Biosciences Ltd. ("the Company") for 2015 ("the
reports");
(2) To my knowledge, the reports do not contain any misrepresentation of any material facts and do not
omit any representation of any material facts that are needed in order for the representations included
therein, in view of the circumstances under which such representations were included, not to be
misleading with reference to the period of the reports;
(3) To my knowledge, the financial statements and any other financial information included in the reports
reflect properly, in all material respects, the financial position, operating results and cash flows of the
Company as of the dates and for the periods addressed in the reports;
(4)
I have disclosed to the Company's auditor, to the Company's Board of Directors and to the Board's
Audit Committee (which also serves as the Financial Statement Review Committee) any fraud,
whether material or not, that involves the CEO or the direct subordinates thereto or that involves other
employees with a significant role in internal control over financial reporting and disclosure.
There is nothing in the aforesaid to derogate from my responsibility or the responsibility of anyone else,
pursuant to any law.
Date: March 22, 2016
Dr. Elran Haber, CEO
Chief Financial Officer's Certification:
Pursuant to Regulation 5d(4)(b)-(c) and Regulation 9b(d)(2) to the Israeli Securities Regulations (Periodic
and Immediate Reports), 1970
Officer's Certification
Chief Financial Officer's Certification
I, Guy Goldin, hereby certify that:
(1)
I have reviewed the periodic report of Therapix Biosciences Ltd. ("the Company") for 2015 ("the
reports");
(2) To my knowledge, the reports do not contain any misrepresentation of any material facts and do not
omit any representation of any material facts that are needed in order for the representations included
therein, in view of the circumstances under which such representations were included, not to be
misleading with reference to the period of the reports;
(3) To my knowledge, the financial statements and any other financial information included in the reports
reflect properly, in all material respects, the financial position, operating results and cash flows of the
Company as of the dates and for the periods addressed in the reports;
(4)
I have disclosed to the Company's auditor, to the Company's Board of Directors and to the Board's
Audit Committee (which also serves as the Financial Statement Review Committee) any fraud,
whether material or not, that involves the CEO or the direct subordinates thereto or that involves other
employees with a significant role in internal control over financial reporting and disclosure.
There is nothing in the aforesaid to derogate from my responsibility or the responsibility of anyone else,
pursuant to any law.
Date: March 22, 2016
CPA Guy Goldin, CFO
Senior Officer in Charge of Finance
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