Item 2. Management’s Discussion and Analysis
Item 2. Management’s Discussion and Analysis of Financial
Condition and Results of Operations.
Forward-Looking Statements
This Quarterly Report on Form
10-Q contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other
Federal securities laws, and is subject to the safe-harbor created by such Act and laws. Forward-looking statements may include statements
regarding our goals, beliefs, strategies, objectives, plans, including product and technology developments, future financial conditions,
results or projections or current expectations. In some cases, you can identify forward-looking statements by terminology such as “may,”
“will,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,”
“estimate,” “predict,” “potential” or “continue,” the negative of such terms, or other
variations thereon or comparable terminology. These statements are merely predictions and therefore inherently subject to known and unknown
risks, uncertainties, assumptions and other factors that may cause actual results, performance levels of activity, or our achievements,
or industry results to be materially different from those contemplated by the forward-looking statements. Such forward-looking statements
appear in this Item 2 – “Management’s Discussion and Analysis of Financial Condition and Results of Operations,”
and may appear elsewhere in this Quarterly Report on Form 10-Q and include, but are not limited to, statements regarding the following:
●
the expected development and potential benefits from our products in
regenerative medicine, biologics and food tech, as well as potentially in other industries and verticals that have a need for our
mass scale and cost-effective cell expansion platform;
●
the prospects of entering into additional license agreements, or other
forms of cooperation with other companies, research organizations and medical institutions, including, without limitation Tnuva (as
defined below);
●
our pre-clinical and clinical study plans, including timing of initiation,
expansion, enrollment, results, and conclusion of trials;
●
achieving regulatory approvals;
●
receipt of future funding from the Israel Innovation Authority, or
IIA, the European Union’s Horizon programs, as well as grants from other independent third parties;
●
developing capabilities for new clinical indications of placenta expanded,
or PLX, cells and new products;
●
our expectation to demonstrate a real-world impact and value from our
pipeline, technology platform and commercial-scale manufacturing capacity;
●
the possible impacts of cybersecurity incidents on our business and
operations;
●
our expectations regarding our short- and long-term capital requirements;
●
our outlook for the coming months and future periods, including but
not limited to our expectations regarding future revenue and expenses;
●
information with respect to any other plans and strategies for our
business; and
●
our expectations regarding the impact of the COVID-19 pandemic, including
on our clinical trials and operations.
19
Our business and operations are subject to substantial
risks, which increase the uncertainty inherent in the forward-looking statements contained in this report.
In addition, historic results
of scientific research, clinical and preclinical trials do not guarantee that the conclusions of future research or trials would not
suggest different conclusions. Also, historic results referred to in this periodic report would be interpreted differently in light of
additional research, clinical and preclinical trials results. Except as required by law, we undertake no obligation to release publicly
the result of any revision to these forward-looking statements that may be made to reflect events or circumstances after the date hereof
or to reflect the occurrence of unanticipated events. Further information on potential factors that could affect our business is described
under the heading “Risk Factors” in Part I, Item 1A, of our Annual Report on Form 10-K for the fiscal year ended June 30,
2022, or the 2022 Annual Report, as well as Item 1A of this Quarterly Report. Readers are also urged to carefully review and consider
the various disclosures we have made in that report.
As used in this Quarterly
Report on Form 10-Q, the terms “we”, “us”, “our”, the “Company” and “Pluri”
mean Pluri Inc. and our wholly owned subsidiaries, Pluri Biotech Ltd. and Pluristem GmbH, and our subsidiary Plurinuva Ltd., unless otherwise
indicated or as otherwise required by the context.
Overview
We are a biotechnology company
with an advanced cell-based technology platform. We have developed a unique three-dimensional, or 3D, technology platform for cell expansion
with an industrial scale in-house Good Manufacturing Practice, or GMP, cell manufacturing facility. We are utilizing our technology in
the field of regenerative medicine and food tech and plan to utilize it in other industries and verticals that have a need for our mass
scale and cost-effective cell expansion platform.
We use our advanced cell-based
technology platform in the field of regenerative medicine to develop placenta-based cell therapy product candidates for the treatment
of inflammatory, muscle injuries and hematologic conditions. Our placental expanded, or PLX, cells are adherent stromal cells that are
expanded using our 3D platform. Our PLX cells can be administered to patients off-the-shelf, without blood or tissue matching or
additional manipulation prior to administration. PLX cells are believed to release a range of therapeutic proteins in response to the
patient’s condition.
Our operations are focused
on the research, development and manufacturing of cells and cell-based products, conducting clinical studies and the business development
of cell therapeutics and cell-based technologies, such as our collaboration with Tnuva Food Industries – Agricultural Cooperative
in Israel Ltd., through its fully owned subsidiary, Tnuva Food-Tech Incubator (2019), Limited Partnership, or Tnuva, to use our technology
to establish a cultivated food platform and the recent collaboration agreement we signed with a leading European manufacturer of active
pharmaceutical ingredients, or APIs, to use our expansion technology, which aims to revolutionize the production of biologics by enabling
a cost-effective, sustainable and cruelty-free ingredient.
We expect to demonstrate a
real-world impact and value from our cell-based technology platform, our current PLX pipeline and from other cell-based product candidates
that may be developed based on our platform. Our business model for commercialization and revenue generation includes, but is not limited
to, licensing deals, joint ventures, partnerships, joint development agreements and direct sale of our products.
In the pharmaceutical area,
we completed a Phase III multinational clinical study in muscle recovery following surgery for hip fracture and two Phase II clinical
studies in Acute Respiratory Distress Syndrome, or ARDS, associated with COVID-19 in the United States, Europe and Israel. In addition,
we completed a Phase I clinical study for incomplete recovery following bone marrow transplantation in the United States and Israel,
and our PLX cells are used in an investigator-led Phase I/II Chronic Graft versus Host Disease study in Israel. PLX R-18 product candidate
is also being tested as a potential treatment for Acute Radiation Syndrome under the U.S. Food and Drug Administration animal rule. We
believe that each of these indications is a severe unmet medical need.
20
Food Tech
On February 24, 2022, we announced
the closing of the joint venture pursuant to joint venture agreement, or the Joint Venture Agreement, with Tnuva through the Subsidiary.
Under the Joint Venture Agreement, we established a new company, Plurinuva, with the purpose of developing cultivated meat products of
all types and kinds.
Pursuant to the Joint Venture
Agreement, Tnuva entered into a share purchase agreement, or the SPA, with Plurinuva and the Subsidiary, pursuant to which Plurinuva
issued on the closing date of the SPA, or the Closing Date, 187,500 ordinary shares, representing 15.79% of its share capital, to Tnuva,
as well as a warrant to purchase additional shares of Plurinuva, in consideration of an aggregate of $7.5 million in cash.
The first warrant, or the
First Warrant, issued to Tnuva permits Tnuva to purchase up to 125,000 ordinary shares of Plurinuva at an exercise price of $40.00 per
share and has a term commencing on the Closing Date and ending at the earlier of (i) six months from the Closing Date, (ii) immediately
prior to and subject to the consummation of an initial public offering or acquisition of Plurinuva or (iii) the consummation of a financing
round with a non-affiliated investor. In addition, on the six month anniversary of the Closing Date, and provided that the First Warrant
has not expired, Plurinuva shall issue to Tnuva a second warrant, or the Second Warrant, which will permit Tnuva to purchase up to a
number of ordinary shares of Plurinuva, or the then most senior securities issued by Plurinuva, in consideration for such amount equal
to 200% of the remaining balance of the aggregate purchase price of the First Warrant, provided that Tnuva exercises at least 62,500
ordinary shares at a price per share of $40.00, or $2,500,000 in the aggregate, of the First Warrant. The Second Warrant’s exercise
price per share equals $76.00. The Second Warrant has a term commencing on the six months anniversary of the Closing Date and ending
at the earlier of (i) six months from its issuance, (ii) immediately prior to and subject to the consummation of an initial public offering
or acquisition of Plurinuva or (iii) the consummation of a financing round with a non-affiliated investor. On August 23, 2022, the First
Warrant was extended for an additional 90-day period, so that the exercise period would end on November 22, 2022. On November 22, 2022,
the First Warrant expired unexercised.
In December 2022, we reported
that our joint venture successfully completed proof of concept in its development of cultivated meat based on our cell-based technology
platform.
Technology Collaboration the Biologics
Field
In September 2022, we entered
into a collaboration agreement with a leading European manufacturer of APIs for liver and gastroenterological diseases. As part of our
collaboration, our platform is being utilized to develop and manufacture a unique biologic API used in drugs that treat liver and gastroenterological
diseases. The current source of this API is derived from animals that are sacrificed during the extraction process. The joint goal of
the collaboration is to grow the specific cells needed for this API in our 3D cell expansion bioreactor systems that secrete the biological
molecule without harming animals.
We believe that proof of concept
with this agreement and APIs will open opportunities for us to serve additional API manufacturers in the rapidly growing biologics market.
21
RESULTS OF OPERATIONS – THREE AND SIX
MONTHS ENDED DECEMBER 31, 2022 COMPARED TO THREE AND SIX MONTHS ENDED DECEMBER 31, 2021.
Revenues
Revenues for each of the six-month
and three-month periods ended December 31, 2022 were $89,000 and $2,000, respectively, as compared to no revenues during the six-month
and three-month periods ended December 31, 2021. Revenues for the six-month and three-month periods ended December 31, 2022 were mainly
related to our collaboration in the biologic field.
Research and Development Expenses, Net
Research and development,
or R&D, expense, net (costs less participation and grants by the Horizon 2020 program, the IIA and other parties) for the six-month
period ended December 31, 2022 decreased by 37% from $12,860,000 for the six-month period ended December 31, 2021 to $8,056,000. The
decrease is mainly attributed to: (1) a decrease in clinical studies subcontractor expenses following the completion of our critical
limb ischemia and ARDS associated with COVID-19 studies and the end of enrollment of our muscle regeneration following hip fracture study
in November 2021, (2) a decrease in materials purchases in accordance with our manufacturing needs and plan, (3) a decrease in salaries
and related expenses as part of our cost reduction, specifically a reduction of 29 R&D employees (108 on December 31, 2022, compared
to 137 on December 31, 2021), (4) a decrease in share-based compensation expenses and (5) higher participation by the European Union
with respect to the Horizon 2020 grants, which relate to our critical limb ischemia and muscle regeneration following hip fracture studies.
R&D expense, net (costs
less participation and grants by the Horizon 2020 program, the IIA and other parties) for the three-month period ended December 31, 2022
decreased by 42% from $6,507,000 for the three-month period ended December 31, 2021 to $3,785,000. The decrease is mainly attributed
to: (1) a decrease in clinical studies subcontractor expenses following the completion of our critical limb ischemia and ARDS associated
with COVID-19 studies and the end of enrollment of our muscle regeneration following hip fracture study in November 2021, (2) a decrease
in salaries and related expenses as part of our cost reduction, specifically a reduction of 29 R&D employees (108 on December 31,
2022, compared to 137 on December 31, 2021), (3) a decrease in share-based compensation expenses and (4) higher participation by the
European Union with respect to the Horizon 2020 grants which relates to muscle regeneration following hip fracture program that commenced
during the 2018 calendar year.
General and Administrative Expenses
General and administrative
expenses for the six-month period ended December 31, 2022 decreased by 40% from $9,376,000 for the six-month period ended December 31,
2021 to $5,635,000. The decrease is mainly attributed to a decrease in share-based compensation expenses related to market based vesting
conditioned restricted stock units, or RSUs, granted to our Chief Executive Officer and Chairman which was recorded as an expense
of $7,283,000 between September 11, 2020 and October 30, 2021, employee terminations and RSU expenses amortization over time.
General and administrative
expenses for the three-month period ended December 31, 2022 decreased by 32% from $4,288,000 for the three-month period ended December
31, 2021 to $2,896,000. The decrease is mainly attributed to a decrease in share-based compensation expenses related to market based
vesting conditioned restricted stock units, or RSUs, granted to our Chief Executive Officer and Chairman which was recorded as an
expense of $7,283,000 between September 11, 2020 and October 30, 2021, employee terminations and RSU expenses amortization over time.
Other Financial Income (Expenses), net
Other financial income (expenses)
decreased from $317,000 in financial income for the six-month period ended December 31, 2021 to $515,000 in financial expenses for the
six-month period ended December 31, 2022. This decrease is mainly attributable to expenses relating to exchange rate differences related
to the EIB loan provided to us in June 2021 pursuant to the finance agreement executed with the EIB, or the EIB Finance Agreement, following
the strength of the Euro against the U.S. dollar.
Other financial income (expenses)
decreased from $80,000 in financial income for the three-month period ended December 31, 2021 to $1,363,000 in financial expenses for
the three-month period ended December 31, 2022. This decrease is mainly attributable to expenses from exchange rate differences, related
to the EIB loan provided to us in June 2021 pursuant to the EIB Finance Agreement, following the strength of the Euro against the U.S.
dollar.
Interest Expenses
Interest expenses decreased
from $453,000 for the six-month period ended December 31, 2021 to interest expenses of $406,000 for the six-month period ended December
31, 2022. This decrease is attributable solely to exchange rate differences due to the Euro against the U.S. dollar.
Interest expenses decreased
from $225,000 for the three-month period ended December 31, 2021 to interest expenses of $212,000 for the three-month period ended December
31, 2022. This decrease is attributable solely to exchange rate differences due to the strength of the Euro against the U.S. dollar.
22
Net Loss
Net loss for six-month and
three-month periods ended December 31, 2022 was $14,523,000 and $8,254,000, respectively, as compared to net loss of $22,372,000 and
$10,940,000 for the six-month and three-month periods ended December 31, 2021. The decrease was due to a decrease in general and administrative
expenses and research and development expenses, as a result of our cost reduction plan and the implementation of our new business strategy,
alongside the completion or termination of several clinical studies (in critical limb ischemia, ARDS associated with COVID 19, incomplete
recovery following bone marrow transplantation and completion of enrollment of muscle regeneration following hip fracture). Net loss
per share attributed to shareholders for the six-month and three-month periods ended December 31, 2022 was $0.44 and $0.24, respectively,
as compared to $0.70 and $0.34 for the six-month and three-month periods ended December 31, 2021. We had net loss attributed to our non-controlling
interest in Plurinuva for the six-month and three-month periods ended December 31, 2022 of $285,000 and $137,000, respectively.
For the six-month and three-month
periods ended December 31, 2022 and 2021, we had weighted average common shares outstanding of 32,878,434, 33,194,622, and 32,068,271,
32,136,352, respectively, which were used in the computations of net loss per share for the six and three-month periods.
The increase in weighted average
common shares outstanding reflects the issuance of additional shares pursuant to a private placement offering we conducted in December
2022, or the December 2022 Private Placement, and the issuance of additional shares upon the vesting of RSUs issued to directors, employees
and consultants.
Liquidity and Capital Resources
As of December 31, 2022, our
total current assets were $50,140,000 and total current liabilities were $5,284,000. On December 31, 2022, we had a working capital surplus
of $44,856,000, total equity of $24,966,000, out of which $1,775,000 is attributed to the non-controlling interest in Plurinuva, and
an accumulated deficit of $385,501,000.
Our cash and cash equivalents
as of December 31, 2022 amounted to $8,818,000, compared to $18,715,000 as of December 31, 2021, and compared to $9,772,000 as of June
30, 2022. Cash balances changed in the six months ended December 31, 2022 and 2021 for the reasons presented below.
Net cash used for operating
activities was $13,889,000 in the six months ended December 31, 2022, compared to $18,652,000 in the six months ended December 31, 2021.
The decrease is mainly attributed to a decrease in net loss following the completion of clinical trials and the implementation of our
cost reduction and efficiency plan that we initiated in order to align with the change in our business strategy. Cash used in operating
activities in the six months ended December 31, 2022 and 2021 consisted primarily of payments of fees to our suppliers, subcontractors,
professional services providers and consultants, and payments of salaries to our employees, partially offset by grants from the IIA,
the EU’s Horizon 2020 program, Israel’s Ministry of Economy and other research grants.
Investing activities provided
cash of $7,062,000 in the six months ended December 31, 2022, compared to cash used of $7,075,000 for the six months ended December 31,
2021. The investing activities in the six-month period ended December 31, 2022 consisted primarily of the withdrawal of $7,203,000 of
short-term deposits. The investing activities in the six-month period ended December 31, 2021 consisted primarily of the investment of
$5,539,000 in short-term deposits and proceeds of $12,658,000 from withdrawal of long-term deposits.
The cash provided in the six
months ended December 31, 2022 by financing activities was related to net proceeds of $5,693,000 related to issuances of common shares
and warrants, net of issuance cost that were paid in cash, in the December 2022 Private Placement. No cash was used or provided from
financing activities during the six months ended December 31, 2021.
23
Between December 13, 2022
and December 27, 2022, we entered into a series of securities purchase agreements with several purchasers for an aggregate of 8,155,900
common shares and warrants, or the Warrants, to purchase up to 8,155,900 common shares. On December 13, 2022, we executed securities purchase
agreements to sell, at a purchase price of $1.03 per share, up to 5,579,883 common shares and Warrants to purchase up to 5,579,833 common
shares, with an exercise price of $1.03 per share and a term of three years. On December 14, 2022, we executed securities purchase agreements
to sell, at a purchase price of $1.05 per share, up to 2,068,517 common shares and Warrants to purchase up to 2,068,517 common shares,
with an exercise price of $1.05 per share and a term of three years. On December 15, 2022, we executed securities purchase agreements
to sell, at a purchase price of $1.06 per share, up to 237,500 common shares and Warrants to purchase up to 237,500 common shares, with
an exercise price of $1.06 per share and a term of three years. On December 19, 2022, we executed a securities purchase agreement to sell,
at a purchase price of $1.09 per share, up to 135,000 common shares and Warrants to purchase up to 135,000 common shares, with an exercise
price of $1.09 per share and a term of three years. On December 27, 2022, we executed a securities purchase agreement to sell, at a purchase
price of $1.12 per share, up to 135,000 common shares and Warrants to purchase up to 135,000 common shares, with an exercise price of
$1.12 per share and a term of three years. The Warrants sold in the December 2022 Private Placement will be exercisable upon the later
of six months from their issuance date, or until we increase our authorized shares. As of December 31, 2022, we issued 5,550,121 common
shares and warrants that relates to the December 2022 Private Placement and received $5.8 million as of that date. As of December 2022,
$361,000 were recorded as issuance expenses that relates to the December 2022 Private Placement. As of February 13, 2023, 7,015,900 common
shares and warrants sold in the December 2022 Private Placement were issued for aggregate gross proceeds of $7.3 million.
In addition, the purchasers
in the December 2022 Private Placement agreed to execute proxies permitting our Chief Executive Officer and Chief Financial Officer to
vote the securities purchased in the December 2022 Private Placement in favor of any shareholder vote relating to a future increase of
our authorized shares. Pursuant to the securities purchase agreements executed with the purchasers, we agreed to hold a meeting of shareholders
within 200 days of the execution of the securities purchase agreements for the purpose of increasing our authorized shares.
On December 14, 2022, Yaky
Yanay, our Chief Executive Officer, agreed to forgo, starting January 1, 2023, $375,000 of his annual cash salary for the next twelve
months in return for equity grants, issuable under the our existing equity compensation plans. In that regard, we granted Mr. Yanay (i)
334,821 RSUs, vesting ratably each month, and (ii) options to purchase 334,821 common shares, vesting ratably each month, with a term
of 3 years, at an exercise price of $1.12 per share. In addition, the Board of Directors also agreed to grant Mr. Yanay options to purchase
1,500,000 common shares, with a term of 3 years, with the following terms: (i) options to purchase 500,000 common shares at an exercise
price of $1.56 per share, 50% vesting on June 30, 2023 and 50% vesting on December 31, 2023, (ii) options to purchase 500,000 common shares
at an exercise price of $2.08 per share, 50% vesting on June 30, 2023 and 50% vesting on December 31, 2023, and (iii) options to purchase
500,000 common shares at an exercise price of $2.60 per share, 50% vesting on June 30, 2023 and 50% vesting on December 31, 2023. All
options were granted in January 2023 and will expire three years from the later of the vesting date or the date upon which the Company
increases its authorized share capital.
On July 16, 2020, we entered
into an Open Market Sale Agreement SM , or the ATM Agreement, with Jefferies LLC, or Jefferies, pursuant to which we were able
to issue and sell our common shares having an aggregate offering price of up to $75,000,000 from time to time through Jefferies. Upon
entering into the ATM Agreement, we filed a new shelf registration statement on Form S-3, which was declared effective by the SEC on July
23, 2020.
On September 21, 2022, as a
result of General Instruction I.B.6 of Form S-3, and in accordance with the terms of the Sales Agreement, we reduced the amount available
to be sold under the ATM Agreement to a maximum aggregate offering price of up to $11,800,000 of our common shares from time to time through
Jefferies.
During the six-month period
ended December 31, 2022, we did not sell of our any common shares under the ATM Agreement.
24
In April 2020, we and our
subsidiaries, Pluri Biotech Ltd. and Pluristem GmbH, executed the EIB Finance Agreement for non–dilutive funding of up to €50
million in the aggregate, payable in three tranches. The proceeds from the EIB Finance Agreement were intended to support our research
and development in the European Union to further advance our regenerative cell therapy platform, and to bring the products in our pipeline
to market. The term of the project was three years commencing on January 1, 2020.
During June 2021, we received
the first tranche in the amount of €20 million pursuant to the EIB Finance Agreement. The amount received is due to be repaid on
June 1, 2026 and bears annual interest of 4% to be paid together with the principal of the loan. As of December 31, 2022, the interest
accrued was in the amount of €1,262,000. In addition to the interest payable, the EIB is also entitled to royalty payments, pro-rated
to the amount disbursed from the EIB loan, on the Company’s consolidated revenues beginning in the fiscal year 2024 up to and including
its fiscal year 2030, in an amount equal to up to 2.3% of the Company’s consolidated revenues below $350 million, 1.2% of the Company’s
consolidated revenues between $350 million and $500 million and 0.2% of the Company’s consolidated revenues exceeding $500 million.
As the project term ended on December 31, 2022, we do not expect to receive additional funds pursuant to the EIB Finance Agreement.
According to the IIA grant
terms, we are required to pay royalties at a rate of 3% on sales of products and services derived from technology developed using this
and other IIA grants until 100% of the dollar-linked grants amount plus interest are repaid. In the absence of such sales, no payment
is required. Through December 31, 2022, total grants obtained from the IIA aggregated to approximately $27,743,000 and total royalties
paid and accrued amounted to $169,000.
In
June 2020, we announced that we were selected as a member of the CRISPR-IL consortium, a group funded by the IIA. CRISPR-IL brings together
the leading experts in life science and computer science from academia, medicine, and industry, to develop Artificial Intelligence, or
AI, based end-to-end genome-editing solutions. These next-generation, multi-species genome editing products for human, plant, and animal
DNA, have applications in the pharma, agriculture, and aquaculture industries. CRISPR-IL is funded by the IIA with a total budget of approximately
$10,000,000 of which, an amount of approximately $480,000 was a direct grant allocated to us, for the initial period of 18 months. During
October 2021, we received an approval for an additional grant of approximately $583,000 from the IIA pursuant to the CRISPR-IL consortium
program, for an additional period of eighteen months. The CRISPR-IL consortium program does not include any obligation to pay royalties.
Through
December 31, 2022, we received total grants of approximately $757,000 in cash from the IIA pursuant to the CRISPR-IL consortium program,
out of which an amount of $62,429 was received during the six-months ended December 31, 2022.
As
of December 31, 2022, we received total grants of approximately $6,614,000 in cash from the European Union research and development consortiums
pursuant to the Horizon 2020 program. During December 2022, we received an approval for an additional grant of approximately $735,000
to be used towards our PLX-PAD cell program in muscle recovery following surgery for hip fracture.
On
September 6, 2022, we announced that a €7.5 million non-dilutive grant from the European Union’s Horizon program was awarded
to PROTO (Advanced PeRsOnalized Therapies for Osteoarthritis), an international collaboration led by Charité Berlin Institute
of Health Center for Regenerative Therapies. The goal of the PROTO project is to utilize our PLX-PAD cells in a Phase I/IIa study for
the treatment of mild to moderate knee osteoarthritis. Final approval of the grant is subject to completion of the consortium agreement.
The funds from the grant are expected to be allocated between Pluri and other members of the consortium in accordance with budget and
work packages which will be determined by the consortium. An amount of approximately Euro 500,000 (approximately $533,745) is a direct
grant that will be allocated to us.
25
The
Phase I/II study will be carried out by Charité, together with us and other members of the international consortium under the
leadership of Professor Tobias Winkler, Principal Investigator, at the Berlin Institute of Health Center of Regenerative Therapies, Julius
Wolff Institute and Center for Musculoskeletal Surgery.
The currency of our financial
portfolio is mainly in U.S. dollars and we use options contracts and other financial instruments in order to hedge our exposures to currencies
other than the U.S. dollar. For more information, please see Item 7A. - “Quantitative and Qualitative Disclosures about Market
Risk” in the 2022 Annual Report.
We have an effective Form
S-3 registration statement (File No. 333-239890), filed under the Securities Act of 1933, as amended, with the SEC using a “shelf”
registration process. Under this shelf registration process, we may, from time to time, sell our common shares, preferred shares and
warrants to purchase common shares, and units of two or more of such securities in one or more offerings up to a total dollar amount
of $250,000,000. As of February 13, 2022, other than the $11,800,000 of common shares we are eligible to sell pursuant to the ATM Agreement,
and the $30,000,000 of common shares we sold in a registered direct offering in February 2021, no securities have been sold pursuant
to our effective Form S-3 registration statement.
Outlook
We have accumulated a deficit
of $385,501,000 since our inception in May 2001. We do not expect to generate any significant revenues from sales of products in the next
twelve months. We expect to generate revenues, from the sale of licenses to use our technology or products, but in the short and medium
terms will unlikely exceed our costs of operations.
We may be required to obtain
additional liquidity resources in order to support the commercialization of our products and technology and maintain our research and
development and clinical study activities.
We are continually looking
for sources of funding, including non-diluting sources such as collaboration with other companies via licensing agreements, the IIA grants,
the European Union grant and other research grants, and sales of our common shares.
We believe that we have sufficient
cash to fund our operations for at least the next twelve months.
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