What changed in this filing

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Item 1. Financial Statements

2023-05-05 compared with 2022-11-10 · 56 added, 153 removed, 130 unchanged (62% of the section changed)

1 unchanged sentence

ENTERA BIO LTD.

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2022

UNAUDITED CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS

AS OF MARCH 31, 2023

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:

7 unchanged sentences

dollars in thousands, except share data)

September 30,

CURRENT ASSETS:

14 unchanged sentences

Current maturities of operating lease

Contract liabilities

TOTAL CURRENT LIABILITIES

NON-CURRENT LIABILITIES :

Operating lease liabilities

Liability for employee rights upon retirement

4 unchanged sentences

Ordinary Shares, NIS 0.0000769 par value:

Authorized - as of September 30, 2022 and

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

issued and outstanding:

- as of September

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

Authorized - as of March 31, 2023 and December 31, 2022, 140,010,000 shares;

issued and outstanding - as of March 31, 2023 and December 31, 2022, 28,809,922

Additional paid-in capital

8 unchanged sentences

dollars in thousands, except share and per share data)

Nine Months Ended

September 30,

Three Months Ended

September 30,

COST OF REVENUES

4 unchanged sentences

OPERATING LOSS

FINANCIAL (INCOME) LOSS, NET

FINANCIAL INCOME, NET

LOSS BEFORE INCOME TAX

INCOME TAX BENEFIT (EXPENSES)

INCOME TAX BENEFIT

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

BALANCE AT JANUARY 1, 2022

Exercise of options to ordinary shares

Share-based compensation

BALANCE AT SEPTEMBER 30, 2022

BALANCE AT JULY 1, 2022

Share-based compensation

BALANCE AT SEPTEMBER 30, 2022

BALANCE AT March 31, 2022

BALANCE AT JANUARY 1, 2023

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

Vested restricted share units

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

Share-based compensation

BALANCE AT SEPTEMBER 30, 2021

* Represents an amount less than one thousand US dollars.

BALANCE AT March 31, 2023

* Represents an amount less than one thousand U.S.

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

2 unchanged sentences

dollars in thousands, except share and per share data)

ended September 30,

ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

11 unchanged sentences

CASH FLOWS FROM INVESTING ACTIVITIES:

Funds with respect to employee rights upon retirement

Purchase of property and equipment

Net cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from issuance of shares through ATM programs, net of issuance costs

Exercise of options and warrants into shares

Net cash provided by financing activities

INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH

DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED DEPOSITS

CASH, CASH EQUIVALENTS AND RESTRICTED DEPOSITS AT BEGINNING OF THE PERIOD

3 unchanged sentences

Restricted deposits included in other current assets

Total cash and cash equivalents and restricted cash

SUPPLEMENTARY INFORMATION ON INVESTING AND FINANCING ACTIVITIES NOT INVOLVING CASH FLOWS:

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

SUPPLEMENTARY DISCLOSURE OF CASH FLOW INFORMATION:

Income taxes paid

Total cash and cash equivalents and restricted deposits

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

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 operations on June 1, 2010.

(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.

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.

The Company is a leader in the development and commercialization of orally delivered large molecule therapeutics 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.

The Company’s most advanced product candidates, EB613 for the treatment of osteoporosis and EB612 for the treatment of hypoparathyroidism, are based on its proprietary technology platform and are both in clinical development.

Additionally, the Company intends to license its oral delivery technology to biopharmaceutical companies for use with their proprietary compounds.

Entera established such a collaboration with Amgen Inc.

(“Amgen”) in December 2018, for the use of the Company’s oral delivery platform in the field of inflammatory diseases.

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.

The Company's ordinary shares, NIS 0.0000769 par value per share (“ordinary shares”), have been listed on the Nasdaq Capital Market since July 2018 under the symbol “ENTX”.

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.

Amgen also has options to select up to two additional programs to include in the Amgen Agreement.

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

Amgen is responsible for the clinical development, regulatory approval, manufacturing and worldwide commercialization of the programs.

On May 2, 2023, the Company and Amgen agreed to terminate the Amgen Agreement in accordance with its terms, effective on such date.

The Company granted Amgen an exclusive, worldwide, sublicensable license under certain of its intellectual property relating to its drug delivery technology to develop, manufacture and commercialize the applicable products.

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.

ENTERA BIO LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

dollars in thousands, except share and per share data)

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.

The Company will retain all intellectual property rights to its drug delivery technology, and Amgen will retain 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 an accumulated deficit in the amount of $ 97.7 million as of March 31, 2023 and negative cash flows from operating activities.

The Company's management is of the opinion that its available funds as of March 31, 2023 will allow the Company to operate under its current plans into the third quarter of 2024.

This assumes the use of the Company’s capital to fund its ongoing operations, including R&D and the completion of the Phase 1 study related to the new formulation EB612.

This does not include the capital required to fund the Company's proposed Phase 3 study for EB613 in osteoporosis and comparative study.

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.

Management is in the process of evaluating various financing alternatives in the public or private equity markets, debt financing and strategic collaborations, as the Company will need to finance future research and development activities, general and administrative expenses and working capital through 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.

ENTERA BIO LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

dollars in thousands, except share and per share data)

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 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

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 March 31, 2023, and the consolidated results of operations, statements of changes in shareholders' equity and cash flows for the three-month periods ended March 31, 2023 and 2022.

The consolidated results for the three-month period ended March 31, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023.

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, 2022, as filed with the Company’s Annual Report on Form 10-K filed with the U.S.

Securities and Exchange Commission on March 8, 2022.

The comparative balance sheet at December 31, 2021 has been derived from the audited financial statements at that date but does not include all disclosures required by U.S.

Securities and Exchange Commission (the “SEC”) on March 31, 2023.

The comparative balance sheet at December 31, 2022 has been derived from the audited annual financial statements at that date but does not include all disclosures required by U.S.

GAAP for annual financial statements.

ENTERA BIO LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

dollars in thousands, except share and per share data)

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued):

Loss per share

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.

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

Basic loss per share is computed on the basis of the net loss, adjusted to recognize the effect of a down-round feature when it is triggered, 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 dilutive ordinary shares equivalents outstanding.

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 6,239,921 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.

The calculation of diluted loss per share does not include options and warrants, exercisable into 7,116,583 shares and 6,238,605 shares for the periods ended March 31, 2023 and 2022, respectively, because the effect would have been anti-dilutive.

Newly issued and recently adopted accounting pronouncements:

Recently issued accounting pronouncements adopted

In November 2021, the FASB issued ASU 2021-10 “Government Assistance (Topic 832)”, which requires annual disclosures that increase the transparency of transactions involving government grants, including (1) the types of transactions, (2) the accounting for those transactions, and (3) the effect of those transactions on an entity’s financial statements.

The amendments in this update are effective for financial statements issued for annual periods beginning after December 15, 2021.

The adoption of this guidance did not have material impact on the Company’s consolidated financial statements.

In August 2020, the FASB issued ASU 2020-06 “Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815 – 40).” This guidance simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity.

The amendments to this guidance are effective for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years.

In June 2016, the FASB issued ASU 2016-13 “Financial Instruments—Credit Losses—Measurement of Credit Losses on Financial Instruments.” This guidance replaces the current incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates.

The guidance is effective for Smaller Reporting Companies (as defined by the SEC) for the fiscal year beginning on January 1, 2023, including interim periods within that year.

The adoption of this guidance did not have material impact on the Company’s consolidated financial statements.

NOTE 3 - SHARE-BASED COMPENSATION:

On August 23, 2021, the Company’s Board of Directors approved the following option grants which were approved by the shareholders of the Company on October 4, 2021:

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 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 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.

1 unchanged sentence

dollars in thousands, except share and per share data)

NOTE 3 - SHARE-BASED COMPENSATION (continued):

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 .

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.

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 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.

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):

NOTE 3 - SHARE-BASED COMPENSATION

On January 2, 2023, options to purchase an aggregate of 534,246 ordinary shares were granted to six non-executive board members with an exercise price of $ 0.73 per share which was the share price on the grant day.

The options vest over one year in four equal quarterly installments starting on the date of grant.

This grant was approved by the shareholders of the Company on October 4, 2021.

The fair value of the options at the date of grant was $ 253 .

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 September 30, 2022

Exercise price

$ 1.40 -$ 2.86

Dividend yield

1 unchanged sentence

Risk-free interest rate

1.35 %- 3.36 %

Expected life - in years

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 $ 155.9 ) 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.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

dollars in thousands, except share and per share data)

NOTE 4 - SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION:

Balance sheets:

September 30,

Accrued expenses and other payables:

2 unchanged sentences

Accrued expenses

NOTE 5 - SUBSEQUENT EVENTS

In April 2023, the Company entered into an amendment to its office lease agreement from 2014 to extended the period of the lease agreement for additional five years , expiring on June 30, 2028 , with two options for early termination subject to a notice period.

The monthly lease fee is a total of $ 15 .

On April 24, 2023, the Company’s Board of Directors approved the following option grants:

Options to purchase 851,000 ordinary shares to employees, executive officers and service providers with an exercise price of $ 0.795 per share.

Options to purchase 350,000 ordinary shares to the Company’s Chief Executive Officer with an exercise price of $ 0.795 per share.

This grant is subject to shareholders' approval.

These 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.

Options to purchase 30,000 ordinary shares to a service provider with an exercise price of $ 0.795 per share.

These options vest immediately at the service inception date.

On May 2, 2023, the Company and Amgen agreed to terminate the Amgen Agreement in accordance with its terms, effective on such date.

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