This prospectus supplement
supplements the prospectus, dated June 9, 2020, or the Prospectus, which forms a part of our registration statement on Form F-1
(No. 333-238834). This prospectus supplement is being filed to update and supplement the information in the Prospectus with the
information contained in our Report on Form 6-K filed with the Securities and Exchange Commission on November 16, 2020, or the
Form 6-K. Accordingly, we have attached the Form 6-K to this prospectus supplement.
The Prospectus and
this prospectus supplement relate to the offer and sale from time to time by the selling shareholders named in the prospectus
of up to 11,492,065 of our ordinary shares that are issuable upon the exercise of certain outstanding warrants, or the warrants,
to purchase ordinary shares, or the warrant shares by the selling stockholders identified in the Prospectus.
Our ordinary shares
are listed on the Nasdaq Global Market under the symbol “VBLT”. The closing price of our ordinary shares on November
13, 2020 on the Nasdaq Global Market was $1.18 per share.
This prospectus supplement
should be read in conjunction with the Prospectus, including any amendments or supplements thereto, which is to be delivered with
this prospectus supplement. This prospectus supplement is qualified by reference to the Prospectus, including any amendments or
supplements thereto, except to the extent that the information in this prospectus supplement updates and supersedes the information
contained therein.
This prospectus supplement
is not complete without, and may not be delivered or utilized except in connection with, the Prospectus, including any amendments
or supplements thereto.
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
|
VASCULAR
BIOGENICS LTD.
|
|
|
Date:
November 16, 2020
|
By:
|
/s/
Dror Harats
|
|
Name:
|
Dror
Harats
|
|
Title:
|
Chief
Executive Officer
|
VBL
Therapeutics Reports Third Quarter 2020 Financial Results and Provides Corporate Update
-
Continued progress in OVAL Phase 3 potential-registration study in patients with platinum-resistant
ovarian cancer; high response rates (RR) of over 50% in the total evaluable patient population with approximately 200 patients
enrolled to date
-
Management to host conference call and webcast at 8:30 am Eastern Time Today
TEL
AVIV, Israel, November 16, 2020 - VBL Therapeutics (Nasdaq: VBLT), today reported its financial results for the third quarter
ended September 30, 2020, and provided a corporate update.
“The
clinical development program for VB-111, our unique gene therapy for solid tumors, continues to advance well. Patient enrollment
in the OVAL Phase 3 study in ovarian cancer continues to be ahead of plan, with almost 200 patients enrolled to date. We had two
positive DSMC analyses, indicating that our OVAL trial remains on the right track,” said Dror Harats, M.D., Chief Executive
Officer of VBL Therapeutics. “While it is important to note that the study remains blinded, we are encouraged by the very
high response rate (RR), over 50%, that we continue to see to date. This RR is impressively higher than expected for standard-of-care
treatments, for which RR is typically in the teens. If successful, the OVAL trial has the potential to establish VB-111 as a new
standard of care in a challenging disease setting where patients currently have limited options.”
Third
Quarter and Recent Key Corporate Highlights:
VB-111
●
|
Provided
an update on the ongoing OVAL Phase 3 study investigating VB-111 in patients with platinum-resistant ovarian cancer
|
|
○
|
High
response rate of over 50% continues to be observed in the total evaluable patient population (treatment and control groups
combined) to date, consistent with results from interim analysis reported in March
|
|
○
|
Approximately
50% of study participants enrolled to date.
|
●
|
Initiated
an investigator sponsored Phase 2 study of VB-111 in combination with nivolumab (Opdivo®), an immune checkpoint inhibitor,
for patients with metastatic colorectal cancer.
|
|
○
|
Study
is being conducted under a Cooperative Research and Development Agreement (CRADA) between the National Cancer Institute (NCI)
and VBL.
|
●
|
Investigator
sponsored VB-111 Phase 2 studies, in rGBM, at Dana Farber Cancer Center and other leading neuro-oncology centers is also on
track for initiation.
|
MOSPD2
●
|
Held
a pre-IND meeting with the FDA, reaching alignment on the clinical development of lead candidate VB-601 for immune-inflammatory
indications; on track to submit an IND for a first-in-human study in the second half of 2021.
|
●
|
Anti-MOSPD2
mAbs significantly inhibited migration of monocytes isolated from all MS patients included in the study (n=33) by up to 97%,
regardless of disease severity, gender or active treatment.
|
●
|
Two
patents granted by the European Patent Office (EPO) for anti-MOSPD2 platform technology to treat cancer and inflammatory conditions,
including relapsing-remitting and progressive MS, rheumatoid arthritis, NASH and inflammatory bowel disease.
|
Corporate:
●
|
In
October 2020, Marc Kozin was appointed as Vice Chairman of the Board of Directors. Mr. Kozin will transition to the Chairman
role during 2021.
|
Third
Quarter 2020 Financial Results
Cash
Position. As of September 30, 2020, VBL had cash, cash equivalents, short-term bank deposits and restricted bank deposit totaling
$37.3 million and working capital of $30.8 million. VBL expects that its cash and cash equivalents and short-term bank deposits
will be sufficient to fund operating expenses and capital expenditure requirements into the third quarter of 2022.
Revenue:
Revenues for the third quarter, 2020 were $193 thousand, compared to $79 thousand for the comparable period in 2019.
Research
and Development (R&D) Expenses: R&D expenses were $4.8 million for the three months ended September 30, 2020, compared
to $3.8 million for the three months ended September 30, 2019.
General
and Administrative (G&A) Expenses: G&A expenses were $1.1 million for the three months ended September 30, 2020, compared
to $1.2 million for the three months ended September 30, 2019.
Comprehensive
Loss: VBL reported a net loss of $5.8 million for the three months ended September 30, 2020, compared to a net loss of $4.9
million for the three months ended September 30, 2019.
For
further details on VBL’s financials, please refer to Form 6-k filed with the SEC.
Conference
Call:
Monday,
November 16 @ 8:30 a.m. ET.
As
previously announced, VBL will host a webcast Monday, November 16, 2020, at 8:30 a.m. ET.
From
the US:
|
877-407-9208
|
International:
|
201-493-6784
|
Israel
local Number:
|
1
809 406 247
|
Conference
ID:
|
13711944
|
Webcast:
|
https://edge.media-server.com/mmc/p/5wkkzaat
|
The
live webcast will be available online and may be accessed from the “Events and Presentation” page of the company website.
A replay of the webcast will be available beginning approximately one hour after the conclusion of the call and will remain available
for at least 30 days thereafter.
About
VBL
Vascular
Biogenics Ltd., operating as VBL Therapeutics, is a clinical stage biopharmaceutical company focused on the discovery, development
and commercialization of first-in-class treatments for areas of unmet need in cancer and immune/inflammatory indications. VBL
has developed three platform technologies: a gene-therapy based technology for targeting newly formed blood vessels with focus
on cancer, an antibody-based technology targeting MOSPD2 for anti-inflammatory and immuno-oncology applications, and the Lecinoxoids,
a family of small-molecules for immune-related indications. VBL’s lead oncology product candidate, ofranergene obadenovec
(VB-111), is a first-in-class, targeted anti-cancer gene-therapy agent that is being developed to treat a wide range of solid
tumors. It is conveniently administered as an IV infusion once every 6-8 weeks. It has been observed to be well-tolerated in >300
cancer patients and demonstrated activity signals in a VBL-sponsored “all comers” Phase 1 trial as well as in three
VBL-sponsored tumor-specific Phase 2 studies. Ofranergene obadenovec is currently being studied in a VBL-sponsored Phase 3 potential
registration trial for platinum-resistant ovarian cancer.
The
Impact of COVID-19 on Business Operations and Clinical Trials
The Company has implemented safety measures
designed to comply with applicable guidelines in Israel in response to the COVID-19 pandemic. So far, our key operations
were largely uninterrupted by this pandemic; however, the nature of the pandemic is highly uncertain, and we may encounter
interruptions or delays in the future. According to Israeli regulations, VBL, as a pharmaceutical company producing potential
therapies for cancer patients, is considered an essential facility and is therefore exempt from many labor work restrictions even
under emergency conditions such as the COVID-19 pandemic. Accordingly, our gene therapy pharmaceutical grade manufacturing plant
in Modiin, Israel continues to operate as normal. At this time, all preclinical programs and research activities remain on track,
and the Company does not anticipate any material impact on our regulatory activities. While we believe that the fundamentals
of our business remain strong, the extent to which the outbreak impacts our business, preclinical studies and clinical trials
will depend on future developments, which are highly uncertain and cannot be predicted with confidence.
With
regards to clinical trials, the Company continues to advance the ongoing OVAL study of VB-111 for platinum resistant ovarian cancer
and the study is continuing to recruit patients in the U.S. and Israel. Despite the COVID-19 pandemic, patient enrollment is so
far in line with our projections. As the trial population includes cancer patients with advanced disease and limited alternatives,
we believe it is less susceptible to impact by COVID-19 compared to other non-life-threatening indications. We continue to advance
our plans to extend the OVAL study to additional geographies, particularly in Europe. The study may also expand to Japan, in collaboration
with our Japanese licensee for VB-111, NanoCarrier. The VB-111 investigator-sponsored study in rGBM is open for enrollment and
is expected to start recruitment. Recruitment in the NCI-sponsored study in metastatic colorectal cancer is ongoing.
We
commenced operations in 2000, and our operations to date have been limited to organizing and staffing our company, business planning,
raising capital, developing our VTS and Lecinoxoid platform technologies and developing our product candidates, including conducting
pre-clinical studies and clinical trials of VB-111 and VB-201. To date, we have funded our operations through private sales of
preferred shares, a convertible loan, public offering and grants from the Israeli Office of Chief Scientist, or OCS, which has
later transformed to the Israeli Innovation Authority, or IIA, under the Israel Encouragement of Research and Development in Industry,
or the Research Law. We have no products that have received regulatory approval and accordingly have never generated regular revenue
streams. Since our inception and through September 30, 2020, we had raised an aggregate of $275.1 million to fund our operations,
of which $113.4 million was from sales of our equity securities, $40.5 from our initial public offering, or IPO, $15.0 million
from a November 3, 2015 underwritten offering, approximately $24.0 million from a June 7, 2016 registered direct offering, $17.9
million from a November 16, 2017 underwritten offering, $15.5 million from a June 27, 2018 registered direct offering, $18.1 million
from both a May 11, 2020 and May 13, 2020 registered direct offerings, $28.6 million from IIA grants and $2.1 million from at-the-market
equity facility.
Since
inception, we have incurred significant losses. Our loss for the Period was $17.0 million. For the years ended December 31, 2019
and 2018, our loss was $19.5 million and $20.4 million, respectively. We expect to continue to incur significant expenses and
losses for at least the next several years. As of September 2020, we had an accumulated deficit of $225.1 million. Our losses
may fluctuate significantly from quarter to quarter and year to year, depending on the timing of our clinical trials, the receipt
of payments under any future collaborations we may enter into, and our expenditures on other research and development activities.
As
of September 30, 2020, we had cash and cash equivalents, short-term bank deposits and restricted bank deposits of $37.3 million.
On May 7, 2020 and on May 11, 2020, we entered into definitive agreements with several institutional investors and existing shareholders
for the purchase and sale of 11,492,065 ordinary shares of the Company, at a purchase price of $1.575 per share, the net proceeds
from which were approximately $16.4 million after deducting the placement agent fees and commissions and offering expenses payable
by the Company. To fund further operations, we will need to raise additional capital. We may seek to raise more capital to pursue
additional activities, which may be through a combination of private and public equity offerings, government grants, strategic
collaborations and licensing arrangements. Additional financing may not be available when we specifically need it or may not be
available on terms that are favorable to us. As of September 30, 2020, we had 38 employees. Our operations are located in a single
facility in Modiin, Israel.
Various
statements in this release concerning our future expectations constitute “forward-looking statements” within the meaning
of the Private Securities Litigation Reform Act of 1995. These statements include words such as “may,” “expects,”
“anticipates,” “believes,” and “intends,” and describe opinions about future events. These
forward-looking statements involve known and unknown risks and uncertainties that may cause our actual results, performance or
achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking
statements. Some of these risks are incurred losses; dependence on the success of our lead product candidate, VB-111, its clinical
development, regulatory approval and commercialization; the novelty of our technologies, which makes it difficult to predict the
time and cost of product candidate development and potential regulatory approval; as well as potential delays in our clinical
trials.
These
and other factors are more fully discussed in the “Risk Factors” section of our Annual Report on Form 20-F for the
year ended December 31, 2019. In addition, any forward-looking statements represent our views only as of the date of this release
and should not be relied upon as representing our views as of any subsequent date. We do not assume any obligation to update any
forward-looking statements unless required by law.
Financial
Overview
Revenue
Since inception, we have generated cumulative
revenues of approximately $15.7 million under an exclusive license agreement for the development, commercialization, and supply
of VB-111 in Japan for all indications and an option to license agreement for the development of VB-201 for animal healthcare
worldwide. The generated revenues comprises upfront and milestone payments.
The
cost of revenues associated with these revenues were approximately $1.0 million.
We
do not expect to receive any other revenue from any product candidates that we develop unless and until we obtain regulatory approval
and commercialize our products or enter into collaborative agreements with third parties.
Research
and Development Expenses
Research
and development expenses consist of costs incurred for the development of both of our platform technologies and our product candidates.
Those expenses include:
●
|
employee-related
expenses, including salaries and share-based compensation expenses for employees in research and development functions;
|
|
|
●
|
expenses
incurred in operating our laboratories and small-scale manufacturing facility;
|
|
|
●
|
expenses
incurred under agreements with CROs and investigative sites that conduct our clinical trials;
|
|
|
●
|
expenses
relating to outsourced and contracted services, such as external laboratories, consulting and advisory services;
|
|
|
●
|
supply,
development and manufacturing costs relating to clinical trial materials;
|
|
|
●
|
maintenance
of facilities, depreciation and other expenses, which include direct and allocated expenses for rent and insurance; and
|
|
|
●
|
costs
associated with pre-clinical and clinical activities.
|
Research
expenses are recognized as incurred. An intangible asset arising from the development of our product candidates is recognized
if certain capitalization conditions are met. As of September 30, 2020, we did not have any capitalized development costs.
Costs
for certain development activities are recognized based on an evaluation of the progress to completion of specific tasks using
information and data provided to us by our vendors and clinical sites. Nonrefundable advance payments for goods or services to
be received in future periods for use in research and development activities are deferred and capitalized. The capitalized amounts
are then expensed as the related goods are delivered and the services are performed.
We
have received grants from the IIA as part of the research and development programs for our VTS and Lecinoxoid platform technologies.
The requirements and restrictions for such grants are found in the Research Law. These grants are subject to repayment through
future royalty payments on any products resulting from these research and development programs, including VB-111 and VB-201. The
cumulative total gross amount of grants actually received by us from the IIA, including accrued LIBOR interest as of September
30, 2020 totaled $35.7 million.
Information
on our liabilities and the restrictions that we are subject to under the Research Law in connection with the IIA grants that we
have received is detailed in the Annual Report on Form 20-F as of and for the year ended December 31, 2019.
Under
applicable accounting rules, the grants from the IIA have been accounted for as an off-set against the related research and development
expenses in our financial statements. As a result, our research and development expenses are shown on our financial statements
net of the IIA grants.
General
and Administrative Expenses
General
and administrative expenses consist principally of salaries and related costs for personnel in executive and finance functions
such as salaries, benefits and share-based compensation. Other general and administrative expenses include facility costs not
otherwise included in research and development expenses, communication expenses, and professional fees for legal services, patent
counseling and portfolio maintenance, consulting, auditing and accounting services.
Financial
Expenses (Income), Net
Financial
income is comprised of interest income generated from interest earned on our cash, cash equivalents and short-term bank deposits
and gains and losses due to fluctuations in foreign currency exchange rates, mainly in the appreciation and depreciation of the
NIS exchange rate against the U.S. dollar.
Financial
expenses primarily consist of calculated interest expenses from our lease liabilities and gains and losses due to fluctuations
in foreign currency exchange rates.
Taxes
on Income
We
have not generated taxable income since our inception, and had carry forward tax losses as of December 31, 2019 of $181.1 million.
We anticipate that we will be able to carry forward these tax losses indefinitely to future tax years. Accordingly, we do not
expect to pay taxes in Israel until we have taxable income after the full utilization of our carry forward tax losses.
We recognize deferred tax assets on losses
for tax purposes carried forward to subsequent years if utilization of the related tax benefit against a future taxable income
is expected. We have not recognized deferred taxes on our tax loss carry forward since their utilization is not expected
in the foreseeable future.
Critical
Accounting Policies and Significant Judgments and Estimates
This
management’s discussion and analysis of our financial condition and results of operations is based on our financial statements,
which have been prepared in accordance with IFRS. The preparation of these financial statements requires us to make estimates
and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities
at the date of the financial statements, as well as the reported expenses incurred during the reporting periods. Estimates and
judgments are continually evaluated and are based on historical experience and other factors, including expectations of future
events that are believed to be reasonable under the circumstances.
We
make estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the
related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year are discussed below.
Revenue
With
respect to the License Agreement, the Company used its judgement in the following main issues:
Identifying
the performance obligations in the agreement and determining whether the license provided is distinct - based on the Company’s
analysis, the license is distinct as the licensee is able to benefit from the license on its own at its current stage (inter alia,
due to sublicensing rights, rights and responsibility for development in the territory, etc.).
Allocation
of the transaction price - the Company estimated the standalone selling prices of the services to be provided based on expected
cost plus a margin and used the residual approach to estimate the standalone selling price of the license as the Company has not
yet established a price for the license, and it has not previously been sold on a standalone basis.
Variable
consideration consists of potential future milestone payments. The Company determined that all such variable consideration shall
be allocated to the license (the satisfied performance obligation).
Share-Based
Compensation
With
respect to grants to employees, the value of the labor services received from them in return is measured on the date of grant
based on the fair value of the equity instruments granted to the employees.
The
Company’s management estimates the fair value of the options granted to consultants based on the value of services receivable
over the vesting period of the applicable options.
The
value of the transactions, measured as aforesaid, is expensed over the period during which the right of the employees and non-employees
to exercise or receive the underlying equity instruments vests; commensurate with every periodic recognition of the expense, a
corresponding increase is recorded to additional paid in capital, included under the Company’s equity.
Clinical
trial accruals
Clinical
trial expenses are charged to research and development expense as incurred. We accrue for expenses resulting from obligations
under contracts with clinical research organizations (CROs). The financial terms of these contracts are subject to negotiations,
which vary from contract to contract and may result in payment flows that do not match the periods over which materials or services
are provided. Our objective is to reflect the appropriate trial expense in the financial statements by matching the appropriate
expenses with the period in which services and efforts are expended. As of September 30, 2020, we had clinical accruals in the
amount of approximately $1.1 million.
Lease
In
determining the lease term, we consider all facts and circumstances that create an economic incentive to exercise an extension
option, or not exercise a termination option. Extension options are only included in the lease term if the lease is reasonably
certain to be extended. At initial recognition of lease liability, we used incremental borrowing rate, which is the rate that
the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment
with similar terms and conditions.
Results
of Operations
Comparison
of three and nine month periods ended September 30, 2020 and 2019 :
|
|
Three
Months Ended
September 30,
|
|
|
Increase (decrease)
|
|
|
Nine
Months Ended
September 30,
|
|
|
Increase (decrease)
|
|
|
|
2020
|
|
|
2019
|
|
|
$
|
|
|
%
|
|
|
2020
|
|
|
2019
|
|
|
$
|
|
|
%
|
|
|
|
(in thousands)
|
|
|
(in thousands)
|
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
Revenues
|
|
$
|
193
|
|
|
$
|
79
|
|
|
$
|
114
|
|
|
|
144
|
%
|
|
$
|
717
|
|
|
$
|
436
|
|
|
$
|
281
|
|
|
|
64
|
%
|
Cost of revenues
|
|
|
(75
|
)
|
|
|
(30
|
)
|
|
|
(45
|
)
|
|
|
150
|
%
|
|
|
(188
|
)
|
|
|
(118
|
)
|
|
|
(70
|
)
|
|
|
59
|
%
|
Gross profit
|
|
|
118
|
|
|
|
49
|
|
|
|
69
|
|
|
|
141
|
%
|
|
|
529
|
|
|
|
318
|
|
|
|
211
|
|
|
|
66
|
%
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development, gross
|
|
|
5,559
|
|
|
|
4,289
|
|
|
|
1,270
|
|
|
|
30
|
%
|
|
|
15,784
|
|
|
|
13,156
|
|
|
|
2,628
|
|
|
|
20
|
%
|
Government grants
|
|
|
(754
|
)
|
|
|
(494
|
)
|
|
|
(260
|
)
|
|
|
53
|
%
|
|
|
(1,363
|
)
|
|
|
(2,324
|
)
|
|
|
961
|
|
|
|
(41
|
)%
|
Research and development, net
|
|
|
4,805
|
|
|
|
3,795
|
|
|
|
1,010
|
|
|
|
27
|
%
|
|
|
14,421
|
|
|
|
10,832
|
|
|
|
3,589
|
|
|
|
33
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative
|
|
|
1,106
|
|
|
|
1,232
|
|
|
|
(126
|
)
|
|
|
(10
|
)%
|
|
|
3,348
|
|
|
|
3,669
|
|
|
|
(321
|
)
|
|
|
(9
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss
|
|
|
5,793
|
|
|
|
4,978
|
|
|
|
815
|
|
|
|
16
|
%
|
|
|
17,240
|
|
|
|
14,183
|
|
|
|
3,057
|
|
|
|
22
|
%
|
Financial income, net
|
|
|
(16
|
)
|
|
|
(122
|
)
|
|
|
106
|
|
|
|
(87
|
)%
|
|
|
(272
|
)
|
|
|
(455
|
)
|
|
|
183
|
|
|
|
(40
|
)%
|
Loss
|
|
$
|
5,777
|
|
|
$
|
4,856
|
|
|
$
|
921
|
|
|
|
19
|
%
|
|
$
|
16,968
|
|
|
$
|
13,728
|
|
|
$
|
3,240
|
|
|
|
24
|
%
|
Revenues.
Comparison of three-month periods
ending September 30, 2020 and 2019
Revenues for the three months ended September
30, 2020 were $193 thousand, compared to $79 thousand for the parallel period in 2019, an increase of 144%.
The Cost of revenues for the three months
ended September 30, 2020 were $75 thousand, compared to $30 thousand for the parallel period. The cost of revenues is attributed
to the labor costs and other expenses related to the performance obligations that were delivered during the period.
Comparison of nine-month periods ending
September 30, 2020 and 2019
Revenues
for the period ended September 30, 2020 were $717 thousand, compared to $436 thousand for the parallel period in 2019,
an increase of 64%.
The
Cost of revenues for the period ended September 30, 2020 were $188 thousand, compared to $118 thousand for the parallel period.
The cost of revenues is attributed to the labor costs and other expenses related to the performance obligations that were delivered
during the period.
Research
and development expenses, net.
Comparison of three-month periods ending
September 30, 2020 and 2019
Research and development expenses are shown
net of IIA grants. Research and development expenses, net for the three months ended September 30, 2020 were approximately $4.8
million, compared to approximately $3.8 million in the parallel period, an increase of approximately $1.0 million or 27%. The
increase in research and development expenses, net, in the three month period was mainly related to the increase in the MOSPD2
and Ovarian Phase III activity for approximately $1.3 million, offset by an increase in the IIA grant of $0.3 million.
Comparison of nine-month periods ending
September 30, 2020 and 2019
Research and development expenses, net for
the period ended September 30, 2020 were approximately $14.4 million for the period, compared to approximately $10.8
million in the parallel period, an increase of approximately $3.6 million or 33%. The increase in research and development
expenses, net, in the period was mainly related to the increase in the MOSPD2 activity for approximately $2.5 million and
a decrease in the IIA grant of $0.9 million, offset mainly by payroll related costs for share-based compensation expense of approximately
$0.2 million.
General and administrative expenses.
Comparison of three-month periods ending
September 30, 2020 and 2019
General and administrative expenses for
the three months ended September 30, 2020 were $1.1 million, compared to $1.2 million for the parallel period, a decrease of $0.1
million or 10%.
Comparison of nine-month periods ending
September 30, 2020 and 2019
General and administrative expenses for the
period ended September 30, 2020 were $3.3 million, compared to $3.7 million for the parallel period, a decrease
of $0.4 million or 9%.
This decrease is mainly attributed to share-based
compensation expense and financial advisory costs.
Financial expenses (income), net.
Comparison of three-month periods ending
September 30, 2020 and 2019
Financial income, net for the three months
ended September 30, 2020 were approximately $16 thousand, compared to approximately $122 thousand for the parallel period, a decrease
of $106 thousand or 87%. The decrease was primarily attributable to interest income on short-term deposits offset by favorable
exchange rates.
Comparison of nine-month periods ending
September 30, 2020 and 2019
Financial income, net for the period ended September 30, 2020
were approximately $272 thousand, compared to approximately $455 thousand for the parallel period, a decrease of $183
thousand or 40%. The decrease was primarily attributable to interest income on short-term deposits offset by favorable exchange
rates.
Liquidity
and Capital Resources
Since
inception, we have incurred significant losses. Our loss for the period was $17.0 million. For the years ended December 31, 2019
and 2018, our loss was $19.5 million and $20.4 million, respectively. We expect to continue to incur significant expenses and
losses for at least the next several years. As of September 30, 2020, we had an accumulated deficit of $225.1 million. Our losses
may fluctuate significantly from quarter to quarter and year to year, depending on the timing of our clinical trials, the receipt
of payments under any future collaborations we may enter into, and our expenditures on other research and development activities.
Funding
Requirements
At
September 30, 2020, we had cash, cash equivalents, short-term bank deposits and restricted bank deposit totaling $37.3 million
and working capital of $30.8 million. VBL expects that its cash and cash equivalents and short-term bank deposits will
be sufficient to fund operating expenses and capital expenditure requirements into the third quarter of 2022. We are unable to
estimate the amounts of increased capital outlays and operating expenses associated with completing the development of VB-111
and our other product candidates. Our future capital requirements will depend on many factors, including:
●
|
the
costs, timing and outcome of regulatory review of VB-111 and any other product candidates we may pursue;
|
●
|
the
costs of future development activities, including clinical trials, for VB-111 and any other product candidates we may pursue;
|
●
|
the
costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights
and defending intellectual property-related claims;
|
●
|
the
extent to which we acquire or in-license other products and technologies; and
|
●
|
our
ability to establish any future collaboration arrangements on favorable terms, if at all.
|
Until
such time, if ever, as we can generate substantial product revenue, we expect to finance our cash needs through a combination
of equity offerings, debt financings, collaborations, strategic alliances and licensing arrangements. We do not have any committed
external source of funds.
Cash
Flows
The
following table sets forth the primary sources and uses of cash for each of the periods set forth below:
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|
Nine
Months Ended September 30,
|
|
|
|
2020
|
|
|
2019
|
|
|
|
(in
thousands)
|
|
|
|
(unaudited)
|
|
Cash used
in operating activities
|
|
$
|
(16,182
|
)
|
|
$
|
(9,048
|
)
|
Cash provided by investing
activities
|
|
|
1,882
|
|
|
|
2,447
|
|
Cash
provided by (used in) financing activities
|
|
|
16,360
|
|
|
|
(556
|
)
|
Net
increase (decrease) in cash and cash equivalents
|
|
$
|
2,060
|
|
|
$
|
(7,157
|
)
|
Operating
Activities
Cash
used in operating activities for the Period was $16.2 million and consisted primarily of net loss of $17.0 million arising primarily
from research and development activities in addition to net increase in working capital of $1.6 million, partially offset by a
net aggregate non-cash charges of $2.2 million.
Cash
used in operating activities for the Parallel Period was $9.0 million and consisted primarily of net loss of $13.7 million arising
primarily from research and development activities, partially offset by a net decrease in working capital of $1.6 million and
net aggregate non-cash charges of $2.6 million.
Investing
Activities
Net
cash provided by investing activities was $1.9 million for the Period. This was primarily due to maturation of short-term bank
deposits of $31.0 million, offset by the investment of short-term bank deposits of $29.1 million.
Net
cash provided by investing activities was $2.5 million for the Parallel Period. This was primarily due to maturation of short-term
bank deposits of $39.0 million, offset by the investment of short-term bank deposits of $36.0 million.
Financing
Activities
Net
cash provided by financing activities was $16.4 million for the Period compared to net cash used in financing activities of $0.6
million for the Parallel Period. The increase was mainly due to the issuance of ordinary shares and warrants per the closing of
the May 11, 2020 and May 13, 2020 securities offerings.
Contractual
Obligations and Commitments
During
the nine months ended September 30, 2020, there have been no material changes to our contractual obligations and commitments outside
the ordinary course of business.
Off-Balance
Sheet Arrangements
Since
our inception, we have not engaged in any off-balance sheet arrangements, as defined in the rules and regulations of the SEC,
such as relationships with unconsolidated entities or financial partnerships, which are often referred to as structured finance
or special purpose entities, established for the purpose of facilitating financing transactions that are not required to be reflected
on our statement of financial positions.
Quantitative
and Qualitative Disclosures about Market Risk
We are exposed to market risks in the ordinary
course of our business. Market risk represents the risk of loss that may impact our financial position due to adverse changes
in financial market prices and rates. Our market risk exposure is primarily a result of foreign currency exchange rates. Approximately
30% of our expenses in the nine months ended September 30, 2020 were denominated in New Israeli Shekels. Changes of 5% in the
US$/NIS exchange rate will increase or decrease the operating expenses by up to 1%.
Foreign
Currency Exchange Risk
Fluctuations
in exchange rates, especially the NIS against the U.S. dollar, may affect our results, as some of our assets are linked to NIS,
as are some of our liabilities. In addition, the fluctuation in the NIS exchange rate against the U.S. dollar may impact our results,
as a portion of our operating cost is NIS denominated.
Inflation
Risk
We
do not believe that inflation had a material effect on our business, financial condition or results of operations in the last
two fiscal years. If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset
such higher costs through hedging transactions. Our inability or failure to do so could harm our business, financial condition
and results of operations.
Exhibits
|
|
|
|
|
|
Exhibit
No.
|
|
Description
|
101.INS
XBRL
|
|
Instance
Document
|
101.SCH
XBRL
|
|
Taxonomy
Extension Schema Document
|
101.CAL
XBRL
|
|
Taxonomy
Extension Calculation Linkbase Document
|
101.DEF
XBRL
|
|
Taxonomy
Extension Definition Linkbase Document
|
101.LAB
XBRL
|
|
Taxonomy
Extension Label Linkbase Document
|
101.PRE
XBRL
|
|
Taxonomy
Extension Presentation Linkbase Document
|