What changed in this filing

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Item 1. Financial Statements

2022-11-10 compared with 2022-08-11 · 97 added, 75 removed, 186 unchanged (48% of the section changed)

1 unchanged sentence

ENTERA BIO LTD.

UNAUDITED CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2022

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2022

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:

3 unchanged sentences

Condensed Consolidated Statements of Cash Flows (unaudited)

Notes to Condensed Consolidated Financial Statements (unaudited)

Notes to the Consolidated Financial Statements (unaudited)

ENTERA BIO LTD.

1 unchanged sentence

dollars in thousands, except share data)

September 30,

CURRENT ASSETS:

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TOTAL NON-CURRENT ASSETS

L i a b i l i t i e s and shareholders' equity

Liabilities and shareholders' equity

CURRENT LIABILITIES:

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Ordinary Shares, NIS 0.0000769 par value:

Authorized - as of June 30, 2022 and December 31, 2021, 140,010,000 shares;

Authorized - as of September 30, 2022 and

December 31, 2021, 140,010,000 shares;

issued and outstanding:

- as of June 30, 2022 and December 31, 2021, 28,809,922 and 28,804,411 shares, respectively

- as of September

30, 2022 and December 31, 2021, 28,809,922 and 28,804,411 shares, respectively

Additional paid-in capital

8 unchanged sentences

dollars in thousands, except share and per share data)

Six Months Ended

Nine Months Ended

September 30,

Three Months Ended

September 30,

COST OF REVENUES

6 unchanged sentences

LOSS BEFORE INCOME TAX

INCOME TAX BENEFIT

INCOME TAX BENEFIT (EXPENSES)

LOSS PER SHARE BASIC AND DILUTED

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING USED IN COMPUTATION OF BASIC AND DILUTED LOSS PER SHARE

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING USED

IN COMPUTATION OF BASIC AND DILUTED LOSS PER SHARE

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

3 unchanged sentences

Ordinary shares

shares issued

Comprehensive

2 unchanged sentences

Share-based compensation

BALANCE AT JUNE 30, 2022

BALANCE AT APRIL 1, 2022

Exercise of options to ordinary shares

BALANCE AT SEPTEMBER 30, 2022

BALANCE AT JULY 1, 2022

Share-based compensation

BALANCE AT JUNE 30, 2022

BALANCE AT SEPTEMBER 30, 2022

BALANCE AT JANUARY 1, 2021

4 unchanged sentences

Vested restricted share units

BALANCE AT JUNE 30, 2021

BALANCE AT APRIL 1, 2021

BALANCE AT SEPTEMBER 30, 2021

BALANCE AT JULY 1, 2021

Issuance of shares due to the ATM program, net of issuance costs

Exercise of options to ordinary shares

Exercise of warrants to ordinary shares

Share-based compensation

BALANCE AT JUNE 30, 2021

BALANCE AT SEPTEMBER 30, 2021

* Represents an amount less than one thousand US dollars.

3 unchanged sentences

dollars in thousands, except share and per share data)

ended June 30,

ended September 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

6 unchanged sentences

Increase in other current assets

Increase (decrease) in accounts payable

Increase in accounts payable

Increase (decrease) in accrued expenses and other payables

2 unchanged sentences

CASH FLOWS FROM INVESTING ACTIVITIES:

Funds with respect to employee rights upon retirement

Purchase of property and equipment

13 unchanged sentences

Operating lease right of use assets obtained in exchange for new operating lease liabilities

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

SUPPLEMENTARY DISCLOSURE OF CASH FLOW INFORMATION:

Income taxes paid

ENTERA BIO LTD .

3 unchanged sentences

Entera Bio Ltd.

(collectively with its subsidiary, the "Company") was incorporated on September 30, 2009 under the laws of the State of Israel and commenced operation on June 1, 2010.

On January 8, 2018 the Company incorporated Entera Bio Inc., a wholly owned subsidiary incorporated in Delaware, United States.The Company is a leader in the development of orally delivered macromolecule therapeutics, including peptides and other therapeutic proteins.

(collectively with its subsidiary, the "Company") was incorporated on September 30, 2009 under the laws of the State of Israel and commenced operations on June 1, 2010.

On January 8, 2018, the Company incorporated Entera Bio Inc., a wholly owned subsidiary incorporated in Delaware, United States.

The Company is a leader in the development of orally delivered macromolecule therapeutics, including peptides and other therapeutic proteins.

The Company applies its platform for use in areas with significant unmet medical need, where adoption of injectable therapies is limited due to cost, convenience and compliance challenges for patients.

4 unchanged sentences

The Company's ordinary shares, NIS 0.0000769 par value per share (“ordinary shares”), have been listed for trading on the Nasdaq Capital Market since the Company’s initial public offering in July 2018, in which total of 1,400,000 ordinary shares and 1,400,000 warrants to purchase up to 700,000 ordinary shares were issued in consideration for net proceeds of $ 9.6 million, after deducting offering expenses.

On December 10, 2018, the Company entered into a research collaboration and license agreement (the “Amgen Agreement”) with Amgen for the use of the Company’s oral delivery platform in the field of inflammatory disease and other serious illnesses.

On December 10, 2018, the Company entered into a research collaboration and license agreement with Amgen (the “Amgen Agreement”) for the use of the Company’s oral delivery platform in the field of inflammatory disease and other serious illnesses.

Pursuant to the Amgen Agreement, the Company and Amgen have agreed to use the Company’s proprietary drug delivery platform to develop oral formulations for one preclinical large molecule program that Amgen has selected.

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The Company has retained all intellectual property rights to its drug delivery technology, and Amgen has retained all rights to its large molecules and any subsequent improvements, and ownership of certain intellectual property developed through the performance of the agreement is to be determined by U.S.

Because the Company is engaged in research and development activities, it has not derived significant income from its activities and has incurred accumulated losses in the amount of $ 89.4 million through June 30, 2022 and negative cash flows from operating activities.

The Company's management is of the opinion that its available funds as of June 30, 2022 will allow the Company to operate under its current plans through the second quarter of 2023.

These factors raise substantial doubt as to the Company's ability to continue as a going concern.

Management is in the process of evaluating various financing alternatives in the public or private equity markets or through the license of the Company's technology 1

ENTERA BIO LTD.

1 unchanged sentence

dollars in thousands, except share and per share data)

NOTE 1 - DESCRIPTION OF BUSINESS (continued):

In March 2020, the World Health Organization declared the outbreak of COVID-19 to be a pandemic.

The COVID-19 pandemic is having widespread, rapidly evolving, and unpredictable impacts on global society, economies, financial markets, and business practices.

During 2021, there was a broad distribution of several vaccinations and medicines to overcome the pandemic.

The Company has adjusted its operations to co-exist with the pandemic and has encouraged its employees to get vaccinated against COVID-19.

Though the Company sees great progress to overcome the COVID-19 pandemic, the COVID-19 pandemic may continue to impact the Company’s business operations, with outbursts of new variants of the COVID-19 from time to time, and there is uncertainty in the nature and degree of its continued effects over time.

NOTE 1 - DESCRIPTION OF BUSINESS:

Because the Company is engaged in research and development activities, it has not derived significant income from its activities and has incurred accumulated losses in the amount of $ 92.5 million through September 30, 2022 and negative cash flows from operating activities.

The Company's management is of the opinion that its available funds as of September 30, 2022 will allow the Company to operate under its current plans through the second quarter of 2023.

This assumes ongoing R&D, the Hypo PK study and continued investments in production, analytics, and clinical research operations to enable initiation of EB613 phase 3 during the second half of 2023.

These factors raise substantial doubt as to the Company's ability to continue as a going concern.

Management is in the process of evaluating various financing alternatives in the public or private equity markets or through the license of the Company's technology to additional external parties through partnerships or research collaborations as the Company will need to finance future research and development activities, general and administrative expenses and working capital through fund raising.

However, there is no certainty about the Company's ability to obtain such funding.

The financial statements do not include any adjustments that may be necessary should the Company be unable to continue as a going concern.

Since the World Health Organization declared the outbreak of COVID-19 a pandemic in March 2020, the Company has adjusted its operations to co-exist with the pandemic and has encouraged its employees to get vaccinated against COVID-19.

Though the effects of the pandemic have generally lessened, its effects may continue to impact the Company’s business operations, include due to new variants of the virus from time to time, and there is uncertainty in the nature and degree of its continued effects over time.

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES:

4 unchanged sentences

GAAP for annual financial statements.

In the opinion of management, these unaudited condensed consolidated financial statements reflect all adjustments, which include normal recurring adjustments, necessary for a fair statement of the Company’s consolidated financial position as of June 30, 2022, the consolidated results of operations, statements of changes in shareholders' equity for the three and six-month periods ended June 30, 2022 and 2021 and cash flows for the six-month periods ended June 30, 2022 and 2021.

The consolidated results for the three and six-month periods ended June 30, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022.

In the opinion of management, these unaudited condensed consolidated financial statements reflect all adjustments, which include normal recurring adjustments, necessary for a fair statement of the Company’s consolidated financial position as of September 30, 2022, the consolidated results of operations, statements of changes in shareholders' equity for the three and nine-month periods ended September 30, 2022 and 2021 and cash flows for the nine-month periods ended September 30, 2022 and 2021.

The consolidated results for the three and nine-month periods ended September 30, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022

These unaudited interim condensed consolidated financial statements should be read in conjunction with the audited financial statements of the Company for the year ended December 31, 2021 as filed with the Company’s Annual Report on Form 10-K filed with the U.S.

8 unchanged sentences

Basic loss per share is computed on the basis of the net loss for the period, divided by the weighted average number of outstanding ordinary shares during the period.

Diluted loss per share is based upon the weighted average number of ordinary shares and of ordinary shares equivalents outstanding when dilutive.

D iluted loss per share is based upon the weighted average number of ordinary shares and of ordinary shares equivalents outstanding when dilutive.

Ordinary share equivalents include outstanding stock options and warrants, which are included under the treasury stock method when dilutive.

The calculation of diluted loss per share does not include options and warrants, exercisable into 6,326,180 shares and 7,804,106 shares for the six months ended June 30, 2022 and 2021, respectively and 6,473,863 shares and 7,718,887 shares for the three months ended June 30, 2022 and 2021, respectively, because the effect would be anti-dilutive.

The calculation of diluted loss per share does not include options and warrants exercisable into 6,239,921 shares and 7,025,691 shares for the nine months ended September 30, 2022 and 2021, respectively, and 6,068,670 shares and 5,492,432 shares for the three months ended September 30, 2022 and 2021, respectively, because the effect would be anti-dilutive.

Newly issued and recently adopted accounting pronouncements:

9 unchanged sentences

Grants of options to purchase ordinary shares with a total fair value 0f $ 195 for each of the seven non-executive board members on January 1, 2022.

The options will vest over 3 years in twelve equal quarterly instalments starting on January 1, 2022 the vesting commencement date.

On January 1, 2022, which is considered the awards grant date, the Company granted 752,899 ordinary shares to non-executive directors with an exercise price of $ 2.815 per share.

The options will vest over three years in twelve equal quarterly instalments starting on January 1, 2022, which was the vesting commencement date.

On January 1, 2022, which is considered the awards grant date, the Company granted options to purchase 752,899 ordinary shares to non-executive directors with an exercise price of $ 2.815 per share.

Grants of options to purchase ordinary shares with a total fair value 0f $ 65 for each of the seven non-executive board members on January 1, 2022.

The options will vest over 1 year in four equal quarterly instalments starting on January 1, 2022 the vesting commencement date.

On January 1, 2022, which is considered the awards grant date, the Company granted 250,964 ordinary shares to non-executive directors with an exercise price of $ 2.815 per share.

The options will vest over one year in four equal quarterly instalments starting on January 1, 2022, which was the vesting commencement date.

On January 1, 2022, which is considered the awards grant date, the Company granted options to purchase 250,964 ordinary shares to non-executive directors with an exercise price of $ 2.815 per share.

ENTERA BIO LTD.

2 unchanged sentences

NOTE 3 - SHARE-BASED COMPENSATION (continued):

On March 31, 2022, the Company’s Board of Directors approved option grants to purchase 115,000 ordinary shares to certain executive officers and 20,000 options granted to a service provider, in each case with an exercise price of $ 2.86 per share.

On March 31, 2022, the Company’s Board of Directors approved the following option grants:

options to purchase 80,000 ordinary shares to an executive officer and a service provider, in each case, with an exercise price of $ 2.86 per share.

The fair value of the options was $ 147 .

options to purchase 55,000 ordinary shares to certain executive officers with an exercise price of $ 2.86 per share.

This grant was subject to shareholders' approval, which was obtained at a meeting of the Company’s shareholders held on September 7, 2022.

The fair value of the options was $ 37 .

The options vest over four years from the date of grant;

25% vest on the first anniversary of the date of grant and the remaining 75% of the option will vest in twelve equal quarterly installments following the first anniversary of the grant date .

The fair value of the options at the date of grant was $ 147 .

Of these options, 55,000 are subject to the approval of the shareholders of the Company and as such, are not included as part of the fair value.

On April 28, 2022, the Company’s Board of Directors approved options grants to purchase 220,000 ordinary shares to employees with an exercise price of $ 2.57 per share.

1 unchanged sentence

25% vest on the first anniversary of the date of grant and the remaining 75% of the option will vest in twelve equal quarterly installments following the first anniversary of the grant date.

The fair value of the options at the date of grant was $ 364 .

On May 11, 2022, the Company’s Board of Directors approved a grant of options to purchase 500,000 ordinary shares to the Company’s Chief Financial Officer, who has since been appointed the Company’s Chief Executive Officer.

The fair value of the options was $ 364 .

On May 11, 2022, the Company’s Board of Directors approved a grant of options to purchase 500,000 ordinary shares to Ms.

Miranda Toledano, who was serving as the Company’s Chief Financial Officer at the time of the grant.

Toledano has since been appointed the Company’s Chief Executive Officer (as described in Note 3(e) below).

This grant was subject to shareholders' approval, which was obtained at a meeting of the Company’s shareholders held on September 7, 2022.

These options have an exercise price of $ 2.00 per share and vest over four years from the date of grant;

25% vest on the first anniversary of the date of grant and the remaining 75% of the option will vest in twelve equal quarterly installments following the first anniversary of the grant date.

These options are subject to the approval of the shareholders of the Company.

The fair value of the options was $ 390 .

On July 15, 2022, the Company’s Board of Directors appointed Ms.

Miranda Toledano as the Company’s Chief Executive Officer and approved a grant of options to purchase 600,000 ordinary shares at an exercise price of $ 1.40 per share, which are in addition to the options described in note 3d above.

This grant was subject to shareholders' approval, which was obtained at a meeting of the Company’s shareholders held on September 7, 2022.

The options vest over four years from the date of grant;

25% vest on the first anniversary of the date of grant and the remaining 75% of the option will vest in twelve equal quarterly installments following the first anniversary of the applicable grant date.

The fair value of the options was $ 524 .

In addition, upon the occurrence of a Triggering Event (as defined below) and subject to the approval of the Board of Directors, Ms.

Toledano will be granted additional options to purchases 200,000 ordinary shares.

The exercise price will be determined at the time of the Board of Directors’ approval.

"Triggering Event" means the earlier of the following events:

(i) the execution by the Company of a binding strategic or partnership agreement with a strategic partner to fund the Company's Phase III FDA Trial;

or (b) raising sufficient funding to complete the Company's Phase III FDA Trial, in each case as such event is approved by the Board of Directors.

ENTERA BIO LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

dollars in thousands, except share and per share data)

NOTE 3 - SHARE-BASED COMPENSATION (continued):

The fair value of each option granted is estimated at the date of grant using the Black-Scholes option-pricing model, with the following weighted average assumptions:

ended June 30,

ended September 30, 2022

Exercise price

5 unchanged sentences

Expected life - in years

On June 15, 2022 the Company signed on a separation agreement with Dr.

Phillip Schwartz, the Company’s former President of R&D, under which he agreed to continue to provide services to the Company until July 21, 2022 (the “Separation Date”).

Pursuant to the terms of the separation agreement and subject to approval of the Company’s shareholders, Dr.

Schwartz is entitled to receive a full acceleration of the options to purchase 100,000 ordinary shares granted in April 2021, such that 68,750 outstanding options to acquire ordinary shares that not already vested will be deemed to have vested as of the Separation date.

These options, together with 357,500 options to purchase ordinary shares, granted in 2017 will remain exercisable, consistent with the original exercise periods.

On June 15, 2022, the Company entered into a separation agreement with Dr.

Phillip Schwartz, the Company’s former President of R&D, under which Dr.

Schwartz agreed to continue to provide services to the Company until July 21, 2022 (the “Separation Date”).

Pursuant to the terms of the separation agreement, which were approved by the Company’s shareholders on September 7, 2022, Dr.

Schwartz received a full acceleration of his unvested options, as of the Separation date, to purchase 68,750 ordinary shares granted in April 2021 that otherwise would have been forfeited.

These options, together with 31,250 already vested options granted in April 2021 and 357,500 already vested options to purchase ordinary shares granted in 2017, will be exercisable for a period of 10 years from their respective initial grant dates.

The acceleration described above was recognized as a "Type III" modification;

therefore, on the shareholder approval date, the Company recognized the incremental costs of unvested options based on the fair value of the options on such date.

In addition, the extension of the exercise period for the vested awards was recognized as a "Type I" modification.

The total expense amount was $ 112 thousand, which was classified as additional share-based compensation costs in the research and development expenses.

In addition, the separation agreement provides for the following payments to Dr.

Schwartz, all of which would have otherwise been payable in accordance with either Israeli law or pursuant to his existing employment agreement:

a one-time cash separation payment in an amount equal to NIS 537,600 (approximately $ 155,900 ) and additional payments of approximately NIS 737,771 (approximately $ 213,952 ) in respect of all other ongoing accrued benefits, subject to any mandatory deductions.

a one-time cash separation payment in an amount equal to NIS 537,600 (approximately $ 155.9 ) and additional payments of NIS 737,771 (approximately $ 214.0 ) in respect of all other ongoing accrued benefits, subject to any mandatory deductions.

The foregoing payments were recognized in the research and development expenses.

On July 15, 2022, the Company entered into a mutual separation agreement with the Company’s former Chief Executive Officer, Dr.

Spiros Jamas.

Pursuant to the separation agreement, Dr.

Jamas received the following benefits:

(i) a one-time lump sum payment of his annual base salary for a period of 13 months, for a total gross amount equal to $ 411.7 ;

and (ii) an extension of the exercise period for the vested portion of the options granted on January 4, 2021, based on the award original terms, representing an aggregate of 492,832 ordinary shares, through the end of a two-year period commencing on July 15, 2022.

Effective July 15, 2022 , upon termination of the employment agreement with Dr.

Jamas, the remaining 821,386 unvested options were forfeited and recognized as a reverse of expense of $ 457 in the general and administrative expenses.

ENTERA BIO LTD.

3 unchanged sentences

Balance sheets:

September 30,

Accrued expenses and other payables:

2 unchanged sentences

Accrued expenses

NOTE 5 - SUBSEQUENT EVENTS:

On July 15, 2022, the Company’s Board of Directors appointed Ms.

Miranda Toledano as the Company’s new CEO and approved a grant of additional (see also note 3d) options to purchase 600,000 ordinary shares at an exercise price of $ 1.40 per share.

The options vest over four years from the date of grant;

In addition, upon the occurrence of a Triggering Event (as defined below), the Board of Directors will grant Ms.

Toledano options to purchase 200,000 ordinary shares.

"Triggering Event" shall mean the earlier of the following events:

(i) the execution by the Company of a binding strategic or partnership agreement with a strategic partner to fund the Company's Phase III FDA Trial;

or (b) raising sufficient funding to complete the Company's Phase III FDA Trial, in each case as such event was approved by the Board of Directors.

The foregoing option grants are subject to the Company’s shareholders' approval.

On July 15, 2022, the Company entered into a mutual separation agreement with Dr.

Spiros Jamas, the Company’s former CEO.

Pursuant to the separation agreement, Dr.

Jamas received the following benefits:

(i) a one-time lump sum payment of his annual base salary for a period of 13 months, for a total gross amount equal to $ 411,666.67 ;

and (ii) an extension of the exercise period for the vested portion of the options granted to Dr.

Jamas on January 4, 2021, representing collectively 492,832 ordinary shares, through the end of a two-year period commencing on July 15, 2022.

Jamas’ remaining unvested options, totaling 821,386 options, were forfeited.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements