Filed Pursuant to Rule 424(b)(3)
Registration
Statement No. 333-238834
PROSPECTUS
SUPPLEMENT NO. 1
(to
Prospectus dated June 9, 2020)
11,492,065
Ordinary Shares
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 August 13, 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 August
25, 2020 on the Nasdaq Global Market was $1.26 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.
Investing
in our securities involves risks. See “Risk Factors ”
beginning on page 8 of the Prospectus.
Neither
the Securities and Exchange Commission in the United States nor any
other regulatory body has approved or disapproved of these
securities or passed upon the adequacy or accuracy of this
prospectus supplement or the accompanying Prospectus. Any
representation to the contrary is a criminal
offense.
Prospectus
Supplement dated August 26, 2020
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
6-K
REPORT
OF FOREIGN PRIVATE ISSUER
Pursuant
to Rule 13a-16 or 15d-16 of the
Securities
Exchange Act of 1934
For
the month of August 2020
Commission
File Number: 001-36581
Vascular
Biogenics Ltd.
(Translation
of registrant’s name into English)
8
HaSatat St
Modi’in
Israel
7178106
(Address
of principal executive offices)
Indicate
by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F.
Form
20-F [X] Form 40-F [ ]
Indicate
by check mark if the registrant is submitting the Form 6-K in paper
as permitted by Regulation S-T Rule 101(b)(1):
[ ]
Indicate
by check mark if the registrant is submitting the Form 6-K in paper
as permitted by Regulation S-T Rule 101(b)(7):
[ ]
Indicate
by check mark whether by furnishing the information contained in
this Form, the registrant is also thereby furnishing the
information to the Commission pursuant to Rule 12g3-2(b) under the
Securities Exchange Act of 1934.
Yes
[ ] No [X]
If
“Yes” is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): 82-
EXPLANATORY NOTE
Attached hereto and incorporated by reference herein is the press
release issued by Vascular Biogenics Ltd (the “Company”) on August
13, 2020, announcing financial results for the second quarter ended
June 30, 2020, unaudited condensed interim financial statements as
of June 30, 2020 and for the six months ended June 30, 2020 and
2019 and operating and financial review for the second quarter
ended June 30, 2020. This Report of Foreign Private Issuer on Form
6-K shall be incorporated by reference into the Company’s
registration statement on Form F-3 (File No. 333-207250 and
333-222138), filed with the Securities and Exchange Commission (the
“SEC”) on October 2, 2015 and December 18, 2017, to the extent not
superseded by information subsequently filed or furnished (to the
extent the Company expressly states that it incorporates such
furnished information by reference) by the Company under the
Securities Act of 1933, as amended, or the Securities Exchange Act
of 1934, as amended.
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: August 13, 2020 |
By: |
/s/ Dror Harats |
| |
Name: |
Dror Harats |
| |
Title: |
Chief Executive
Officer |
VBL Therapeutics Announces Second Quarter 2020 Financial Results
and Provides Corporate Update
| ● |
Positive
data from the first interim analysis in the OVAL Phase 3 Potential
Registration Study of VB-111 in Ovarian Cancer were presented at
ASCO20; response rate in the VB-111 treatment arm was 58% or
higher |
| |
|
| ● |
Successful
pre-planned second interim analysis in OVAL, with a positive Data
Safety Monitoring Committee (DSMC) review looking at overall
survival - the primary endpoint of the trial; study to proceed
without modification |
| |
|
| ● |
MOSPD2
program for inflammation: |
| |
o |
Pre-IND
application for VBL’s VB-601 mAb candidate for immune-inflammatory
indications was submitted to the FDA in June |
| |
|
|
| |
o |
New
data implicating the potential of anti-MOSPD2 antibodies for
treatment of nonalcoholic steatohepatitis (NASH) and colitis
presented at DDW |
| |
|
|
| |
o |
Preclinical
data in RA presented at EULAR 2020 |
| ● |
MOSPD2
program for cancer: |
| |
o |
New
data on bispecific antibodies featured at late breaking abstract
session at AACR |
| ● |
Cash
position secured into the third quarter of 2022 |
| |
|
| ● |
Conference
Call and Webcast at 8:30am Eastern Time Today |
TEL AVIV, ISRAEL, August 13, 2020 — VBL Therapeutics
(Nasdaq: VBLT) today announced financial results for the second
quarter ended June 30, 2020, and provided a corporate update.
“We have made excellent progress advancing our lead candidate
VB-111 during 2020,” said Dror Harats, M.D., Chief Executive
Officer of VBL Therapeutics. “The first interim analysis in our
OVAL Phase 3 pivotal study in ovarian cancer demonstrated the
potential benefit of VB-111 over standard-of-care in a
randomized-controlled study, and the recent positive second interim
analysis indicates that the trial continues to be on the right
track. OVAL has shown strong recruitment despite the COVID-19
pandemic. Also, when the Company blindly reviews response rate data
in all trial participants, that is in the treatment and control
groups combined, we are very encouraged by the high response rate
of over 50% of the total evaluable patients, which has been
maintained. The investigator sponsored studies of VB-111 in GBM and
colorectal cancer are headed for initiation. Our MOSPD2 programs
are gaining momentum, with pre-IND application for our lead
candidate VB-601 for inflammation, and recent scientific
presentations in NASH and colitis at DDW, in rheumatoid arthritis
at EULAR 2020 and in oncology at the AACR meeting.”
Second Quarter and Recent Key Corporate Highlights:
VB-111
| ● |
Efficacy
data from first interim analysis in the OVAL were reported in March
and presented at the ASCO20 Annual Meeting, showing 58% or higher
objective response rate. |
| |
o |
OVAL
independent DSMC reviewed unblinded data and determined that the
study has met the interim pre-specified criterion of an absolute
percentage advantage of 10% or higher in CA-125 response in the
VB-111 treated arm compared to control. The DSMC recommended that
the study proceed without modification. |
| |
|
|
| |
o |
Overall
response rate in the first 60 randomized evaluable patients was
53%. Assuming a balanced randomization, it can be deduced that the
response rate in the treatment arm (VB-111 in addition to weekly
paclitaxel) was 58% or higher. |
| |
|
|
| |
o |
In
patients with post-treatment fever, the response was 69%. Fever is
frequently observed after VB-111 treatment. |
| ● |
Successful
second pre-planned interim analysis, with a positive DSMC review of
OS data, the primary endpoint of the OVAL Phase 3 potential
registration study, was completed on August 11. |
| |
o |
Independent
DSMC reviewed unblinded data of the first 100 patients with
follow-up of at least 3 months and determined that the study should
proceed without modification. |
| ● |
Two
investigator sponsored VB-111 Phase 2 studies, in rGBM, at Dana
Farber Cancer Center and other leading neuro-oncology centers, and
in metastatic colorectal cancer by the NCI, are on track for
initiation. |
MOSPD2
| ● |
Pre-IND
application for VBL’s VB-601 mAb for immune-inflammatory
indications was submitted to the FDA in June. The application is
currently under review by the agency. |
| |
|
| ● |
Announced
new data implicating the potential of its anti-MOSPD2 antibodies
for treatment of nonalcoholic steatohepatitis (NASH) and colitis at
DDW 2020. |
| |
o |
Treatment
with anti-MOSPD2 antibodies was shown to decrease inflammation and
fibrosis in a NASH model and significantly reduce disease activity
in a colitis model. VBL’s study was rated in the top 10% of all
abstracts in this category and was selected as Poster of
Distinction. |
| |
● |
Presented
new data at the European League Against Rheumatism (EULAR)
implicating the potential of proprietary anti-MOSPD2 antibodies for
treatment of rheumatoid arthritis (RA). |
| |
o |
Treatment
with anti-MOSPD2 antibodies significantly inhibited arthritis
progression in the collagen-induced arthritis model (p<0.005).
The treatment reduced >50% of disease severity and blocked
further disease progression. |
| |
o |
Anti-MOSPD2
demonstrated higher activity than anti-TNFa in
the advanced phase of the disease. |
| ● |
Published
a new manuscript demonstrating the potential of MOSPD2 antibodies
in multiple sclerosis (MS). The results add to a growing body of
data demonstrated activity of VBL’s antibodies in models of chronic
inflammatory disease. |
| |
|
| ● |
Presented
new data demonstrating the potential of anti-MOSPD2 immune-mediated
targeting of solid tumors at the Annual American Association for
Cancer Research (AACR) Virtual Annual Meeting II. |
| |
o |
MOSPD2
bi-specific antibody candidates induced T-cell activation and
significantly extended the survival of animals carrying established
metastatic cervical and breast cancer. |
| |
|
|
| |
o |
The
data presented demonstrated that the bi-specific antibody
candidates mediated killing of tumor cells by CD8 T-cells in a
dose-dependent manner and induced T-cell activation
in-vivo. |
VB-201
| ● |
The
world-leading European animal health company partner, that is
evaluating VB-201 for veterinary applications, advised that the
program met a pre-determined milestone. This triggered an
undisclosed cash payment to VBL. |
Corporate:
| ● |
Raised
$18.1 million of gross proceeds in two registered direct
offerings |
| |
|
| ● |
Awarded
a non-dilutive grant of up to 3.175 million New Israeli Shekels
(NIS; approximately $0.9 million) by the Israel Innovation
Authority (IIA). |
Quarter Ended June 30, 2020 Financial Results:
| ● |
Cash
Position: At June 30, 2020, VBL had cash, cash equivalents,
short-term bank deposits and restricted bank deposit totaling $41.3
million and working capital of $36.1 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 second quarter, 2020 were $158 thousand, compared
to $138 thousand for the comparable period in 2019. |
| |
|
| ● |
Research
and Development Expenses: Research and Development expenses,
net, were approximately $4.9 million for the second quarter,
compared to approximately $3.7 million in the comparable period of
2019. |
| |
|
| ● |
General
and Administrative Expenses: General and administrative
expenses for the second quarter were $1.1 million, compared to $1.2
million for the same period of 2019. |
| |
|
| ● |
Comprehensive
Loss: VBL reported a net loss for three-month period ended June
30, 2020 of $5.8 million, or ($0.14) per diluted share, compared to
a net loss of $4.7 million, or ($0.13) per diluted share, in the
same period of 2019. |
For further details on VBL’s financials, please refer to the Form
6-k filed with the SEC.
Conference Call:
Thursday, August 13 @ 8:30amET
| From
the US: |
|
877-407-9208 |
| International: |
|
201-493-6784 |
| Israel
local Number: |
|
1-809-406-247 |
| Conference
ID: |
|
13707066 |
| Webcast: |
|
https://edge.media-server.com/mmc/p/y7tts2sv |
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.
Forward Looking Statements
This press release contains forward-looking statements. All
statements other than statements of historical fact are
forward-looking statements, which are often indicated by terms such
as “anticipate,” “believe,” “could,” “estimate,” “expect,” “goal,”
“intend,” “look forward to,” “may,” “plan,” “potential,” “predict,”
“project,” “should,” “will,” “would” and similar expressions. These
forward-looking statements may include, but are not limited to,
statements regarding our programs, including VB-111, VB-600,
including their clinical development, therapeutic potential, the
impact of the COVID-19 pandemic on VBL’s business, operations,
clinical trials, supply chain, strategy, goals and anticipated
timelines and clinical results. These forward-looking statements
are not promises or guarantees and involve substantial risks and
uncertainties. Among the factors that could cause actual results to
differ materially from those described or projected herein include
market and other conditions, uncertainties associated generally
with research and development, clinical trials and related
regulatory reviews and approvals, the risk that historical clinical
trial results may not be predictive of future trial results, that
our financial resources do not last for as long as anticipated, and
that we may not realize the expected benefits of our intellectual
property protection. In particular, the DSMC recommendation that
the OVAL trial proceed is not assurance that the trial will meet
its primary endpoint of overall survival once completed. A further
list and description of these risks, uncertainties and other risks
can be found in our regulatory filings with the U.S. Securities and
Exchange Commission, including in our annual report on Form 20-F
for the year ended December 31, 2019, and subsequent filings with
the SEC. Existing and prospective investors are cautioned not to
place undue reliance on these forward-looking statements, which
speak only as of the date hereof. VBL Therapeutics undertakes no
obligation to update or revise the information contained in this
press release, whether as a result of new information, future
events or circumstances or otherwise, except as required by
law.
INVESTOR CONTACT:
Michael Rice
LifeSci Advisors
(646) 597-6979
VASCULAR BIOGENICS LTD.
CONDENSED INTERIM STATEMENTS OF FINANCIAL POSITION
(UNAUDITED)
| |
|
June 30,
2020 |
|
|
December 31,
2019 |
|
| |
|
U.S. dollars
in thousands |
|
| Assets |
|
|
|
|
|
|
| CURRENT ASSETS: |
|
|
|
|
|
|
|
|
| Cash
and cash equivalents |
|
$ |
16,702 |
|
|
$ |
9,436 |
|
| Short-term bank
deposits |
|
|
24,045 |
|
|
|
27,100 |
|
| Short-term
restricted bank deposits |
|
|
153 |
|
|
|
- |
|
| Trade
Receivables |
|
|
118 |
|
|
|
- |
|
| Other
current assets |
|
|
1,703 |
|
|
|
1,242 |
|
| TOTAL CURRENT
ASSETS |
|
|
42,721 |
|
|
|
37,778 |
|
| |
|
|
|
|
|
|
|
|
| NON-CURRENT ASSETS: |
|
|
|
|
|
|
|
|
| Restricted bank
deposits |
|
|
358 |
|
|
|
506 |
|
| Property and
equipment, net |
|
|
6,455 |
|
|
|
6,949 |
|
| Right-of-use
assets |
|
|
2,840 |
|
|
|
3,088 |
|
|
Long-term prepaid expenses |
|
|
300 |
|
|
|
300 |
|
| TOTAL
NON-CURRENT ASSETS |
|
|
9,953 |
|
|
|
10,843 |
|
| TOTAL
ASSETS |
|
$ |
52,674 |
|
|
$ |
48,621 |
|
| |
|
|
|
|
|
|
|
|
| Liabilities and equity |
|
|
|
|
|
|
|
|
| CURRENT LIABILITIES- |
|
|
|
|
|
|
|
|
| Accounts payable
and accruals: |
|
|
|
|
|
|
|
|
| Trade |
|
$ |
2,241 |
|
|
$ |
3,330 |
|
| Other |
|
|
3,247 |
|
|
|
4,238 |
|
| Deferred
revenue |
|
|
533 |
|
|
|
386 |
|
| Lease
liabilities |
|
|
641 |
|
|
|
774 |
|
| TOTAL CURRENT
LIABILITIES |
|
|
6,662 |
|
|
|
8,728 |
|
| |
|
|
|
|
|
|
|
|
| NON-CURRENT LIABILITIES- |
|
|
|
|
|
|
|
|
| Severance pay
obligations, net |
|
|
163 |
|
|
|
163 |
|
| Deferred
revenue |
|
|
1,283 |
|
|
|
1,723 |
|
| Other non-current
liability |
|
|
82 |
|
|
|
- |
|
| Lease
liabilities |
|
|
1,946 |
|
|
|
2,167 |
|
| TOTAL
NON-CURRENT LIABILITIES |
|
|
3,474 |
|
|
|
4,053 |
|
| TOTAL
LIABILITIES |
|
|
10,136 |
|
|
|
12,781 |
|
| |
|
|
|
|
|
|
|
|
| SHAREHOLDERS’ EQUITY: |
|
|
|
|
|
|
|
|
|
Ordinary
shares, NIS 0.01 par value; Authorized as of June 30, 2020
and
December
31, 2019, 70,000,000 shares; issued and outstanding as of
June
30,
2020 and December 31, 2019, 47,896,736 and 35,882,928
shares,
respectively
|
|
|
108 |
|
|
|
73 |
|
| Accumulated other
comprehensive income |
|
|
(8 |
) |
|
|
(8 |
) |
| Additional paid in
capital |
|
|
251,331 |
|
|
|
235,974 |
|
| Warrants |
|
|
10,401 |
|
|
|
7,904 |
|
|
Accumulated deficit |
|
|
(219,294 |
) |
|
|
(208,103 |
) |
| TOTAL
SHAREHOLDERS’ EQUITY |
|
|
42,538 |
|
|
|
35,840 |
|
| TOTAL
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
$ |
52,674 |
|
|
$ |
48,621 |
|
The accompanying notes are an integral part of the financial
statements.
VASCULAR BIOGENICS LTD.
CONDENSED INTERIM STATEMENTS OF COMPREHENSIVE LOSS
(UNAUDITED)
| |
|
Three Months
Ended June 30, |
|
|
Six Months
Ended June 30, |
|
| |
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
| |
|
U.S. dollars
in thousands |
|
| REVENUES |
|
$ |
158 |
|
|
$ |
138 |
|
|
$ |
524 |
|
|
$ |
357 |
|
| COST OF REVENUES |
|
|
(60 |
) |
|
|
(50 |
) |
|
|
(113 |
) |
|
|
(88 |
) |
| GROSS
PROFIT |
|
|
98 |
|
|
|
88 |
|
|
|
411 |
|
|
|
269 |
|
| RESEARCH AND DEVELOPMENT EXPENSES,
net |
|
$ |
4,865 |
|
|
$ |
3,729 |
|
|
$ |
9,616 |
|
|
$ |
7,037 |
|
| GENERAL AND
ADMINISTRATIVE EXPENSES |
|
|
1,074 |
|
|
|
1,181 |
|
|
|
2,242 |
|
|
|
2,437 |
|
| OPERATING
LOSS |
|
|
5,841 |
|
|
|
4,822 |
|
|
|
11,447 |
|
|
|
9,205 |
|
| FINANCIAL INCOME |
|
|
(37 |
) |
|
|
(223 |
) |
|
|
(329 |
) |
|
|
(499 |
) |
| FINANCIAL
EXPENSES |
|
|
34 |
|
|
|
91 |
|
|
|
73 |
|
|
|
166 |
|
| FINANCIAL
INCOME, net |
|
|
(3 |
) |
|
|
(132 |
) |
|
|
(256 |
) |
|
|
(333 |
) |
|
COMPREHENSIVE LOSS |
|
$ |
5,838 |
|
|
$ |
4,690 |
|
|
$ |
11,191 |
|
|
$ |
8,872 |
|
| LOSS PER ORDINARY
SHARE |
|
U.S.
dollars |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Basic
and diluted |
|
$ |
0.14 |
|
|
$ |
0.13 |
|
|
$ |
0.28 |
|
|
$ |
0.25 |
|
| |
|
Number of
shares |
|
| WEIGHTED AVERAGE ORDINARY SHARES OUTSTANDING |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
|
|
42,674,526 |
|
|
|
35,881,128 |
|
|
|
39,354,355 |
|
|
|
35,881,128 |
|
The accompanying notes are an integral part of the condensed
financial statements.
VASCULAR BIOGENICS LTD.
CONDENSED INTERIM STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(UNAUDITED)
| |
|
Number of ordinary |
|
|
Ordinary |
|
|
Accumulated other comprehensive |
|
|
Additional paid |
|
|
|
|
|
Accumulated |
|
|
Total
shareholders’ |
|
| |
|
shares |
|
|
shares |
|
|
income |
|
|
in capital |
|
|
Warrants |
|
|
deficit |
|
|
equity |
|
| |
|
|
|
|
|
|
|
U.S.
dollars in thousands |
|
|
|
|
|
|
|
| BALANCE AT JANUARY 1,
2019 |
|
|
35,881,128 |
|
|
$ |
73 |
|
|
$ |
41 |
|
|
$ |
233,721 |
|
|
$ |
7,904 |
|
|
$ |
(188,646 |
) |
|
$ |
53,093 |
|
| CHANGES FOR THE SIX MONTHS ENDED JUNE
30, 2019: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Comprehensive
loss |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(8,872 |
) |
|
|
(8,872 |
) |
|
Share based payments to employees and non-employees services |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,264 |
|
|
|
- |
|
|
|
- |
|
|
|
1,264 |
|
| BALANCE AT JUNE 30, 2019 |
|
|
35,881,128 |
|
|
$ |
73 |
|
|
$ |
41 |
|
|
$ |
234,985 |
|
|
$ |
7,904 |
|
|
$ |
(197,518 |
) |
|
$ |
45,485 |
|
| |
|
Number of
ordinary |
|
|
Ordinary |
|
|
Accumulated
other
comprehensive |
|
|
Additional
paid |
|
|
|
|
|
Accumulated |
|
|
Total
shareholders’ |
|
| |
|
shares |
|
|
shares |
|
|
income |
|
|
in
capital |
|
|
Warrants |
|
|
deficit |
|
|
equity |
|
| |
|
U.S. dollars in
thousands |
|
| BALANCE AT JANUARY 1, 2020 |
|
|
35,882,928 |
|
|
$ |
73 |
|
|
$ |
(8 |
) |
|
$ |
235,974 |
|
|
$ |
7,904 |
|
|
$ |
(208,103 |
) |
|
$ |
35,840 |
|
| CHANGES FOR THE SIX MONTHS ENDED
JUNE 30, 2020: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Comprehensive
loss |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(11,191 |
) |
|
|
(11,191 |
) |
|
Issuance of ordinary shares
and
warrants, net of
issuance costs
|
|
|
12,013,808 |
|
|
|
35 |
|
|
|
- |
|
|
|
12,624 |
|
|
|
4,313 |
|
|
|
- |
|
|
|
16,972 |
|
| Expired
warrants |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,816 |
|
|
|
(1,816 |
) |
|
|
- |
|
|
|
- |
|
| Share
based payments to employees and non- employees services |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
917 |
|
|
|
- |
|
|
|
- |
|
|
|
917 |
|
| BALANCE AT JUNE 30,
2020 |
|
|
47,896,736 |
|
|
$ |
108 |
|
|
$ |
(8 |
) |
|
$ |
251,331 |
|
|
$ |
10,401 |
|
|
$ |
(219,294 |
) |
|
$ |
42,538 |
|
The accompanying notes are an integral part of the financial
statements.
VASCULAR BIOGENICS LTD.
CONDENSED INTERIM CASH FLOW STATEMENTS
(UNAUDITED)
|
|
|
Six Months
Ended June 30, |
|
|
|
|
2020 |
|
|
2019 |
|
| |
|
U.S. dollars in
thousands |
|
| CASH FLOWS FROM OPERATING
ACTIVITIES: |
|
|
|
|
|
|
|
|
|
Net
loss for the period
|
|
$ |
(11,191 |
) |
|
$ |
(8,872 |
) |
| Adjustments
required to reflect net cash used in operating activities (see
Appendix A) |
|
|
(1,575 |
) |
|
|
3,392 |
|
| Interest
received |
|
|
257 |
|
|
|
281 |
|
|
Interest paid |
|
|
(53 |
) |
|
|
(61 |
) |
| Net
cash used in operating activities |
|
|
(12,562 |
) |
|
|
(5,260 |
) |
| CASH FLOWS FROM INVESTING
ACTIVITIES: |
|
|
|
|
|
|
|
|
| Purchase of
property and equipment |
|
|
(20 |
) |
|
|
(53 |
) |
| Investment in
restricted bank deposits |
|
|
(511 |
) |
|
|
- |
|
| Maturity of
restricted bank deposits |
|
|
500 |
|
|
|
- |
|
| Investment in
short-term bank deposits |
|
|
(24,000 |
) |
|
|
(36,500 |
) |
|
Maturity of short-term bank deposits |
|
|
27,027 |
|
|
|
21,000 |
|
| Net
cash generated from (used in) investing activities |
|
|
2,996 |
|
|
|
(15,553 |
) |
| CASH FLOWS FROM FINANCING
ACTIVITIES: |
|
|
|
|
|
|
|
|
| Issuance of
ordinary shares and warrants, net |
|
|
17,110 |
|
|
|
- |
|
|
Principal elements of lease payments |
|
|
(405 |
) |
|
|
(356 |
) |
| Net
cash generated from (used in) financing activities |
|
|
16,705 |
|
|
|
(356 |
) |
| NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS |
|
|
7,139 |
|
|
|
(21,169 |
) |
| CASH AND CASH EQUIVALENTS AT BEGINNING
OF THE PERIOD |
|
|
9,436 |
|
|
|
29,347 |
|
| EXCHANGE GAINS
ON CASH AND CASH EQUIVALENTS |
|
|
127 |
|
|
|
104 |
|
| CASH AND CASH
EQUIVALENTS AT END OF THE PERIOD |
|
$ |
16,702 |
|
|
$ |
8,282 |
|
| APPENDIX A: |
|
|
|
|
|
|
|
|
| Adjustments
required to reflect net cash used in operating activities: |
|
|
|
|
|
|
|
|
| Depreciation |
|
$ |
827 |
|
|
$ |
852 |
|
| Interest
income |
|
|
(223 |
) |
|
|
(500 |
) |
| Interest paid |
|
|
53 |
|
|
|
61 |
|
| Exchange losses
(gains) on cash and cash equivalents |
|
|
(127 |
) |
|
|
(104 |
) |
| Exchange losses
(gains) on lease liability |
|
|
(14 |
) |
|
|
170 |
|
| Net changes in
severance pay obligations |
|
|
- |
|
|
|
5 |
|
| Share based
payments |
|
|
917 |
|
|
|
1,264 |
|
| |
|
|
1,433 |
|
|
|
1,748 |
|
| Changes in working
capital: |
|
|
|
|
|
|
|
|
| Increase in other
current assets |
|
|
(461 |
) |
|
|
(45 |
) |
| Increase in trade
receivables |
|
|
(118 |
) |
|
|
- |
|
| Increase
(decrease) in accounts payable and accruals: |
|
|
|
|
|
|
|
|
| Trade |
|
|
(1,227 |
) |
|
|
905 |
|
| Other (including
non-current liability) |
|
|
(909 |
) |
|
|
1,023 |
|
|
Decrease in deferred revenue |
|
|
(293 |
) |
|
|
(239 |
) |
| |
|
|
(3,008 |
) |
|
|
1,644 |
|
| |
|
$ |
(1,575 |
) |
|
$ |
3,392 |
|
| |
|
|
|
|
|
|
|
|
| APPENDIX B: |
|
|
|
|
|
|
|
|
| Supplementary
information on investing and financing activities not involving
cash flows: |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| Right
of use assets obtained in exchange for new lease liabilities |
|
|
65 |
|
|
|
- |
|
| Issuance
costs not paid |
|
|
138 |
|
|
|
- |
|
The accompanying notes are an integral part of the condensed
financial statements.
VASCULAR BIOGENICS LTD.
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - GENERAL
Vascular Biogenics Ltd. (the “Company” or VBL) was incorporated on
January 27, 2000. The Company is a late-stage clinical
biopharmaceutical company focused on the discovery, development and
commercialization of first-in-class treatments for cancer and
immune/inflammatory indications. VB-111 (ofranergene obadenovec), a
Phase 3 drug candidate, is the lead product candidate in the
Company’s cancer program.
VB-600 series are preclinical stage antibodies targeting MOSPD2 for
inflammatory and oncology indications, which are being
advanced towards IND. VB-601 is the lead mAb candidate for various
inflammatory indications and VB-611 is the lead bi-specific mAb for
various solid tumors.
VB-201, a Phase 2-ready drug candidate, is the Company’s lead
Lecinoxoid-based product candidate for chronic immune-related
indications.
The Company is engaged in an exclusive license agreement with
NanoCarrier Co., Ltd. for the development, commercialization, and
supply of ofranergene obadenovec (“VB-111”) in Japan for all
indications.
In March 2019, the Company entered into an exclusive option license
agreement with an animal health company for the development of
VB-201 for veterinary use, see note 7.
On March 26, 2020, the Company announced positive outcome of the
first interim analysis in the OVAL Phase 3 Ovarian Cancer Pivotal
Study.
Since its inception, the Company has incurred significant losses,
and it expects to continue to incur significant expenses and losses
for at least the next several years. As of June 30, 2020, the
Company had an accumulated deficit of $219.3 million. The Company’s
losses may fluctuate significantly from quarter to quarter and year
to year, depending on the timing of its clinical trials, the
receipt of payments under any future collaboration agreements it
may enter into, and its expenditures on other research and
development activities.
As of June 30, 2020, the Company had cash, cash equivalents,
short-term bank deposits and restricted bank deposits of $41.3
million. The Company may seek to raise more capital to pursue
additional activities. The Company may seek these funds through a
combination of private and public equity offerings, government
grants, strategic collaborations and licensing arrangements.
Additional financing may not be available when the Company needs it
or may not be available on terms that are favorable to the
Company.
NOTE 2 - BASIS OF PREPARATION
The
Company’s condensed interim financial statements as of June 30,
2020 and for the six and three months period then ended (the
“condensed interim financial statements”) have been prepared in
accordance with International Accounting Standard No. 34, “Interim
Financial Reporting” (“IAS 34”). These condensed interim financial
statements, which are unaudited, do not include all disclosures
necessary for a complete presentation of the Company’s financial
position, results of operations, and cash flows, in conformity with
generally accepted accounting principles. In the opinion of
management, all adjustments (of a normal recurring nature)
considered necessary for a fair statement of the results for the
interim periods presented have been included. The results of
operations for the six months ended June 30, 2020 are not
necessarily indicative of the results that may be expected for the
entire fiscal year or for any other interim period.
The
condensed interim financial statements should be read in
conjunction with the Company’s annual financial statements as of
December 31, 2019 and for the year then ended, along with the
accompanying notes, which have been prepared in accordance with
International Financial Reporting Standards (“IFRS”) as issued by
the International Accounting Standards Board (“IASB)”.
NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES
The accounting policies and calculation methods applied in the
preparation of the interim financial statements are consistent with
those applied in the preparation of the annual financial statements
as of December 31, 2019 and for the year then ended.
NOTE
4 - FINANCIAL RISK MANAGEMENT AND FINANCIAL
INSTRUMENTS
The
Company’s activities expose it to a variety of financial risks:
market risk (including currency risk, fair value interest rate
risk, cash flow interest rate risk and price risk), credit risk and
liquidity risk. The interim financial statements do not include all
financial risk management information and disclosures required in
the annual financial statements; therefore, they should be read in
conjunction with the Company’s annual financial statements as of
December 31, 2019. There have been no significant changes in the
risk management policies since the year end.
NOTE
5 - CASH AND CASH EQUIVALENTS, SHORT-TERM BANK DEPOSITS AND
RESTRICTED BANK DEPOSITS
Cash
and cash equivalents, short-term bank deposits and restricted bank
deposits as of June 30, 2020 were $16.7 million, $24.0 million and
$0.5 million.
The
short-term bank deposits as of June 30, 2020 were for terms of
three to six months and carried interest at annual rates of
0.95%-1.49%.
NOTE
6 - SHAREHOLDERS’ EQUITY
|
|
a. |
On
May 7, 2020 and May 11, 2020, the Company entered into securities
purchase agreements with several institutional investors and
existing shareholders to purchase 11,492,065 of the Company's
ordinary shares at a purchase price of $1.575 per share in a
registered direct offering. In a concurrent private placement, the
Company issued to investors and existing shareholders in the
offering unregistered warrants to purchase up to 11,492,065
ordinary shares. Each warrant is exercisable immediately upon
issuance at an exercise price of $1.45 per share, and will remain
exercisable for 18 months following issuance date. The offering
raised a total of $18.1 million, with net proceeds of $16.4
million, after deducting fees and expenses. The closing of the sale
of the ordinary shares and warrants occurred on May 11, 2020 and
May 13, 2020.
The
fair value of the warrants is computed using the Black-Scholes
option-pricing model. The underlying data used for computing the
fair value of the warrants are mainly as follows: ordinary share
price based on the current price of an ordinary share: $1.27-$1.63;
expected volatility based on Company historical trade: 74%-76%;
risk-free interest rate: 0.155%-0.165%; expected dividend: zero;
and expected life to exercise of 1.5 years. The consideration was
allocated between ordinary shares and warrants based on the ratio
of the warrants’ fair value and the ordinary share
price.
On
June 9, 2020, the Company registered the resale of 11,492,065
ordinary shares underlying the warrants. As of June 30, 2020, none
of the warrants were exercised.
|
| |
|
|
| |
b. |
During
the six months ended June 30, 2020, the Company sold an aggregate
of 521,743 ordinary shares under its at-the-market equity facility.
The total consideration amounted to $549 thousand, net of issuance
costs. |
| |
|
|
| |
c. |
On
January 6, 2020, 2,952,381 short-term warrants related to June 25,
2018 registered direct offering with a value of $1.8 million
expired. |
| |
|
|
| |
d. |
In
March 2020, the board of directors ratified the increase of the
free pool available for the issuance under the 2014 ESOP plan to
1,976,441 ordinary shares. |
NOTE
7 - REVENUE
The
revenues recognized for the period comprise revenues from the
exclusive license agreement for the development, commercialization,
and supply of VB-111 in Japan for all indications and from the
option to license agreement for the development of VB-201 for
animal healthcare worldwide. The revenues are recognized according
to IFRS 15 “Revenue from contract with customers.”
Under
IFRS 15, the consideration that the Company would be entitled to
upon the achievement of contractual milestones, which are
contingent upon the occurrence of future events of development
progress, are a form of variable consideration.
OPERATING
AND FINANCIAL REVIEW
The
following discussion and analysis of our financial condition and
results of operations should be read in conjunction with the
Company’s annual financial statements as of and for the year ended
December 31, 2019 (included in our Annual Report of Foreign Private
Issuer on Form 20-F for the year ended December 31, 2019) and their
accompanying notes and the related notes and the other financial
information included elsewhere in this Form 6-K. This discussion
contains forward-looking statements that involve risks,
uncertainties and assumptions. Our actual results may differ
materially from those anticipated in these forward-looking
statements as a result of various factors. Our audited financial
statements as of and for the year ended December 31, 2019 have been
prepared in accordance with IFRS, as issued by the IASB and our
unaudited financial statements for the six months ended on June 30,
2020 (the “Period”) have been prepared in accordance with
International Accounting Standard No. 34, “Interim Financial
Reporting” (“IAS 34”). Unless stated otherwise, comparisons
included herein are made to the six months period ended on June 30,
2019 (the “Parallel Period”).
Overview
We
are 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. We have 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.
Our
main program in oncology is based on our proprietary Vascular
Targeting System, or VTS, platform technology, which we believe
will allow us to develop product candidates for multiple oncology
indications. The VTS technology utilizes genetically targeted
therapy to destroy newly formed, or angiogenic, blood vessels. By
utilizing a viral vector as a delivery mechanism, the VTS platform
can also lead to induction or enhancement of a localized anti-tumor
immune response, thereby turning immunologically ‘cold’ tumors
‘hot’.
Our
lead product candidate, VB-111 (ofranergene obadenovec), is a
gene-based biologic that we are developing for solid tumor
indications, and which we have advanced to programs for recurrent
glioblastoma, or rGBM, an aggressive form of brain cancer, ovarian
cancer and thyroid cancer. We have obtained fast track designation
for VB-111 in the United States for prolongation of survival in
patients with glioblastoma that has recurred following treatment
with standard chemotherapy and radiation. We have also received
orphan drug designation for GBM in both the United States and
Europe. VB-111 has also received an orphan designation for the
treatment of ovarian cancer by the European Commission.
In
March 2020, we announced an encouraging outcome of the planned
interim analysis in the OVAL study, a double-blind controlled Phase
3 potential-registration study in patients with platinum-resistant
ovarian cancer. The OVAL independent Data Safety Monitoring
Committee (DSMC), reviewed unblinded data and assessed CA-125
response, measured according to the GCIG criteria, in the first 60
enrolled subjects evaluable for CA-125 analysis. The DSMC confirmed
that the study met the interim pre-specified efficacy criterion, of
an absolute percentage advantage of 10% or higher CA-125 response
rate for the VB-111 treatment arm, and recommended the study
continue. The overall response rate in the first 60 randomized
evaluable patients was 53%. Assuming a balanced randomization, the
response rate in the treatment arm (VB-111 in addition to weekly
paclitaxel) was 58% or higher. In patients who had post-dosing
fever, which is a marker for VB-111 treatment, the response rate
was 69%.
A
second interim analysis in the OVAL study was conducted on August
11, 2020. The DSMC reviewed unblinded overall survival (OS) data of
the first 100 enrolled subjects with a follow-up of at least 3
months. The committee also looked at response rate and safety
information. The DSMC recommended that the study continue as
planned. The primary endpoint of the OVAL Phase 3 study is OS,
which currently approved therapies for platinum-resistant ovarian
cancer have thus far failed to demonstrate. The next DSMC review in the OVAL study is
expected in the first quarter of 2021. Our study is being
conducted in collaboration with the GOG Foundation, Inc., a leading
organization for research excellence in the field of gynecologic
malignancies.
Final
results from our Phase 1/2 clinical trial of VB-111 for recurrent
platinum-resistant ovarian cancer were reported in June 2019 and
published online on April 2020 (Arend et al., Gynecologic
Oncology 157 (2020) 578–584). Data demonstrated a median OS of
498 days in the VB-111 therapeutic-dose arm, versus 172.5 days in
the low-dose arm (p=0.03). 58% of evaluable patients treated with
the therapeutic dose of VB-111 had a GCIG CA-125 response. VB-111
activity signals were seen despite unfavorable prognostic
characteristics (48% platinum refractory disease and 52% previous
treatment with anti-angiogenics). There was a trend for favorable
survival in patients who had CA-125 decrease >50% in the VB-111
therapeutic-dose arm (808 vs. 351 days; p=0.067) implicating CA-125
as a potentially valuable biomarker for response to VB-111. Post
treatment fever was also associated with a signal for improved
survival (808 vs. 479 days; p=0.27).
In a
Phase 2 study for rGBM, patients who were primed with VB-111
monotherapy that was continued after progression with the addition
of bevacizumab (Avastin®) showed significant survival
(414 vs 223 days; HR 0.48; p=0.043) and progression free survival
(PFS) advantage (90 vs 60 days; HR 0.36; p=0.032) compared to a
cohort of patients that had limited exposure to VB-111 (Brenner
et al., Neuro Oncol. 2019). Radiographic responders
to VB-111 exhibited specific imaging characteristics related to its
mechanism of action. Survival advantage was also seen in comparison
to historic controls, with the percentage of patients living more
than one year doubling from 24% to 57%.
Our
Phase 3 GLOBE study in rGBM compared upfront concomitant
administration of VB-111, without priming, and bevacizumab to
bevacizumab monotherapy. The study, which enrolled a total of 256
patients in the US, Canada and Israel was conducted under a special
protocol assessment, or SPA, agreement with the U.S. Food and Drug
Administration, or FDA, with full endorsement by the Canadian Brain
Tumor Consortium (CBTC). In this modified regimen, the treatment
did not improve OS and PFS outcomes in rGBM. Study results
(Cloughesy et al. Neuro Oncol. 2019) attribute the
contradictory outcomes between the Phase 2 and Phase 3 trials as
being related to the lack of VB-111 monotherapy priming in the
GLOBE study, providing clinical, mechanistic and radiographic
support for this hypothesis.
Notably,
GLOBE data show improved outcomes associated with a post VB-111
fever reaction, similar to outcomes from previous VB-111 studies,
providing support that fever is a potential biomarker for better
survival with VB-111, secondary to the drug’s immunologic mechanism
of action. No new safety concerns associated with VB-111 have been
identified in the study. We do not think that results of the GLOBE
study will necessarily have implications on the prospects for
VB-111 in other regimens or tumor types.
Based
on the understanding that study regimen may be a key factor for
VB-111 efficacy in rGBM, an IND application for an
investigator-sponsored randomized controlled study of VB-111 in
rGBM patients has gone into effect with the FDA. The new study,
sponsored by Dana-Farber Cancer Institute in collaboration with a
group of top neuro-oncology US medical centers, will investigate
neo-adjuvant and adjuvant treatment with VB-111 in rGBM patients
undergoing a second surgery. Launch of the study is dependent on
the COVID-19 pandemic conditions.
In
February 2020, we announced the launch of a Phase 2 clinical trial
of VB-111 in combination with nivolumab, an anti-PD1 immune
checkpoint inhibitor, in the treatment of metastatic colorectal
cancer. This study is being sponsored by the U.S. National Cancer
Institute under a Cooperative Research and Development Agreement or
CRADA. The IND application has gone into effect with the FDA. The
study, which is open label, will investigate if priming with VB-111
can drive immune cells into the tumor and turn the colorectal
tumors from being immunologically “cold” to “hot.” In addition to
safety and tolerability, this study will evaluate efficacy
endpoints including Best Overall Response, as well as immunological
and histologic readouts from tumor biopsies. Enrollment into the
trial is dependent on the COVID-19 pandemic conditions.
In
February 2017, we reported full data from our exploratory Phase 2
study of VB-111 in recurrent, iodine-resistant differentiated
thyroid cancer. The primary endpoint of the trial, defined as
6-month progression-free-survival (PFS-6) of 25%, was met with a
dose response. Forty-seven percent of patients in the
therapeutic-dose cohort reached PFS-6, versus 25% in the
sub-therapeutic cohort, both groups meeting the primary endpoint.
An OS benefit was seen, with a tail of more than 40% at 3.7 years
for the therapeutic-dose cohort. Most patients in the VB-111 study
had tumors that previously had progressed on pazopanib (Votrient®)
or other kinase inhibitors.
We
are also conducting two parallel drug development programs that are
exploring the potential of MOSPD2, a protein which we identified as
a key regulator of cell motility, as a therapeutic target for
inflammatory diseases and cancer.
For
oncology applications, we are developing bi-specific antibodies
aimed to kill tumor cells, based on MOSPD2 as a target whose
expression is induced in multiple tumors. We found that MOSPD2 was
detected in the majority of cancerous organs, including colon,
esophagus, liver and breast. In a peer-review manuscript (Int. J.
Cancer: 144, 125–135 (2019)) as well as in scientific conferences,
we showed that MOSPD2 is required for the migration and invasion of
breast cancer cells in vitro, and that it promotes breast cancer
cell metastasis in vivo. Given the specificity of MOSPD2 expression
and its highly elevated expression in tumors, we believe MOSPD2 can
serve as a novel mechanism for targeting of tumor cells. Based on
these findings, our approach is to utilize MOSPD2 as a target for
attacking the tumor cells in the treatment of late-stage breast
cancer and other tumor types. To this end, we are developing
bi-specific antibodies that aim to induce killing of
MOSPD2-positive tumors cells through binding and activation of
T-cells. We have presented proof-of-concept for this approach at
the AACR conference in April 2018 using a BiTE antibody. In June
2020, at the 2020 American Association of Cancer Research (AACR)
virtual annual meeting, we presented data showing that our
proprietary MOSPD2 bi-specific full-IgG antibody candidates
mediated killing of tumor cells by CD8 T-cells in a dose-dependent
manner, induced T-cell activation in-vivo and extended survival of
animals carrying established metastatic cervical and breast
cancer.
For
inflammatory applications, we are developing classical antibodies
that bind and block MOSPD2 on immune cells. Our data show that
MOSPD2, which is predominantly expressed on the surface of human
monocytes, is essential for their migration. By inhibiting this
protein, we seek to block this migration of monocytes to sites of
inflammation, and accordingly to reduce inflammation and tissue
damage. At the ECTRIMS 2018 meeting, we presented the critical role
of MOSPD2 in the development of multiple sclerosis, and its
potential as a novel target for treatment of inflammation in the
Central Nervous System (CNS) and other organs. Using MOSPD2
knockout mice, our data show that MOSPD2 was critical for the
development of the disease in the experimental autoimmune
encephalomyelitis (EAE) model for Multiple Sclerosis (MS), as
knockout mice essentially do not develop the disease. Furthermore,
we developed proprietary monoclonal antibodies against MOSPD2 that
successfully prevented development of EAE, and were also effective
in treatment of the animals after the neurological symptoms had
already appeared. These data suggest that MOSPD2 is a critical path
in MS, as we published in an editor’s choice peer-review manuscript
in 2020 (Clinical and Experimental Immunology, 201: 105–120). In
February 2019, we presented additional data implicating the
potential of our VB-600 platform of antibodies targeting MOSPD2 for
treatment of Nonalcoholic Steatohepatitis (NASH) and Rheumatoid
Arthritis (RA). In May 2020, we presented data at the Digestive
Disease Week® (DDW) 2020 virtual meeting, demonstrating
that treatment with anti-MOSPD2 antibody profoundly decreased
inflammation and fibrosis in a NASH model and significantly reduced
the disease activity in a colitis model. In June 2020, we presented
data at the European League Against Rheumatism (EULAR) 2020
Congress, demonstrating the potential of anti-MOSPD2 mAbs for
treatment RA with differentiation from anti-TNF treatment.
Collectively, these data point to MOSPD2 as a key pathway through
which the body is recruiting monocytes to specific sites of
inflammation. We believe that antibodies targeting MOSPD2 have
potential for treatment of various inflammatory indications, and
are advancing our lead pre-clinical candidate VB-601 towards IND.
In June 2020 we submitted to the FDA a pre-IND application, which
is currently under review by the agency. We expect to start
toxicology studies in the second half of 2020. A first-in-human
study is expected in 2021.
We
also have been conducting a program targeting anti-inflammatory
diseases, based on the use of our Lecinoxoid platform technology.
Lecinoxoids are a novel class of small molecules we developed that
are structurally and functionally similar to naturally occurring
molecules known to modulate inflammation. The lead product
candidate from this program, VB-201, is a Phase 2-ready molecule
that demonstrated activity in reducing vascular inflammation in a
Phase 2 sub-study in psoriatic patients with cardiovascular risk.
Based on recent pre-clinical studies, we believe that VB-201 and
some second generation molecules such as VB-703 may have potential
applicability for NASH and renal fibrosis. In March 2019, we
announced a strategic exclusive option license agreement with one
of the world-leading European animal health companies for the
development of VB-201 for veterinary use. We retain the VB-201
rights for treatment of humans, worldwide.
In
October 2017, we announced the opening of our new gene therapy
manufacturing plant in Modiin, Israel. This plant can be the
commercial facility for production of VB-111, if approved. The
Modiin facility is the first commercial-scale gene therapy
manufacturing facility in Israel and currently one of the largest
gene-therapy designated manufacturing facilities in the world
(20,000 sq. ft.). In July 2019, the facility was certified by a
European Union (EU) Qualified Person (QP) as being in compliance
with EU Good Manufacturing Practices (GMP).
In
November 2017, we signed an exclusive license agreement with
NanoCarrier Co., Ltd. (TSE Mothers:4571) for the development,
commercialization and supply of VB-111 in Japan. We retain rights
to VB-111 in the rest of the world. Under terms of the agreement,
we have granted NanoCarrier an exclusive license to develop and
commercialize VB-111 in Japan for all indications. We will supply
NanoCarrier with VB-111, and NanoCarrier will be responsible for
all regulatory and other clinical activities necessary for
commercialization in Japan. In exchange, we received an up-front
payment of $15 million, and are entitled to receive greater than
$100 million in development and commercial milestone payments if
certain development and commercial milestones are achieved. We will
also receive tiered royalties on net sales in the
high-teens.
In
March 2019, we executed an exclusive option license agreement with
an animal health company for the development of our proprietary
anti-inflammatory molecule, VB-201, for veterinary use. We retain
VB-201 rights for treatment of humans worldwide. Under the terms of
the agreement, we have granted an exclusive option license to
explore the potential of VB-201 for animal health indications. In
consideration, we received an undisclosed up-front payment, and are
entitled to receive additional development milestone payments. In
April 2020, another milestone event under this agreement was
reached, following which we received an undisclosed payment. Upon
exercising the option to license, we will receive additional
milestones and royalties on net sales.
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. Our key operations were uninterrupted by this pandemic.
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.
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 soon. The
NCI-sponsored study in metastatic colorectal cancer is also open;
recruitment of patients is expected to start in the near future, as
soon as NCI’s COVID-19 precautions allow.
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 June 30,
2020, we had raised an aggregate of $273.7 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, $27.2 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 $11.2 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 June 2020, we had an
accumulated deficit of $219.3 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
June 30, 2020, we had cash and cash equivalents, short-term bank
deposits and restricted bank deposits of $41.3 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 June 30, 2020,
we had 39 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
As of
June 30, 2020, we have generated cumulative revenues of
approximately $15.5 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
$0.9 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 June 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
June 30, 2020 totaled $34.0 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
created 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 June 30, 2020, we had clinical accruals in the
amount of approximately $1.6 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 six month periods ended June 30, 2020 and
2019:
| |
|
Six
Months Ended |
|
|
|
|
|
| |
|
June 30, |
|
|
Increase (decrease) |
|
| |
|
2020 |
|
|
2019 |
|
|
$ |
|
|
% |
|
| |
|
(in
thousands) |
|
| |
|
(unaudited) |
|
| Revenues |
|
$ |
524 |
|
|
$ |
357 |
|
|
|
167 |
|
|
|
47 |
% |
| Cost of revenues |
|
|
(113 |
) |
|
|
(88 |
) |
|
|
(25 |
) |
|
|
28 |
% |
| Gross profit |
|
|
411 |
|
|
|
269 |
|
|
|
142 |
|
|
|
53 |
% |
| Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Research and
development, gross |
|
|
10,225 |
|
|
|
8,867 |
|
|
$ |
1,358 |
|
|
|
15 |
% |
|
Government grants |
|
|
(609 |
) |
|
|
(1,830 |
) |
|
|
1,221 |
|
|
|
(67 |
)% |
| Research and development, net |
|
|
9,616 |
|
|
|
7,037 |
|
|
|
2,579 |
|
|
|
37 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative |
|
|
2,242 |
|
|
|
2,437 |
|
|
|
(195 |
) |
|
|
(8 |
)% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating loss |
|
|
11,447 |
|
|
|
9,205 |
|
|
|
2,242 |
|
|
|
24 |
% |
| Financial
income, net |
|
|
(256 |
) |
|
|
(333 |
) |
|
|
77 |
|
|
|
(23 |
)% |
| Loss |
|
$ |
11,191 |
|
|
$ |
8,872 |
|
|
$ |
2,319 |
|
|
|
26 |
% |
Revenues.
Revenues
for the period ended June 30, 2020 were $524 thousand, compared to
$357 thousand for the Parallel Period in 2019, an increase of
47%.
The
Cost of revenues for the period ended June 30, 2020 were $113
thousand, compared to $88 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.
Research
and development expenses are shown net of IIA grants. Research and
development expenses, net were approximately $9.6 million for the
Period, compared to approximately $7.0 million in the Parallel
Period, an increase of approximately $2.6 million or 37%. The
increase in research and development expenses, net, in the Period
was mainly related to the increase in the MOSPD2 activity for
approximately $1.8 million and a decrease in the IIA grant of $1.2
million, offset mainly by payroll related costs for share-based
compensation expense of approximately $0.3 million.
General
and administrative expenses.
General
and administrative expenses for the Period were $2.2 million,
compared to $2.4 million for the Parallel Period, a decrease of
$0.2 million or 8%.
This
decrease is mainly attributed to payroll related costs for
management and directors share-based compensation expense and
financial advisory costs.
Financial
expenses (income), net.
Financial
income, net for the Period were approximately $256 thousand,
compared to approximately $333 thousand for the Parallel Period, a
decrease of $77 thousand or 23%. 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 $11.2 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 June 30, 2020, we had an
accumulated deficit of $219.3 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
June 30, 2020, we had cash, cash equivalents, short-term bank
deposits and restricted bank deposit totaling $41.3 million and
working capital of $36.1 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:
|
|
|
Six
Months Ended
June 30, |
|
|
|
|
2020 |
|
|
2019 |
|
|
|
|
(in
thousands) |
|
|
|
|
(unaudited) |
|
|
Cash
used in operating activities |
|
$ |
(12,562 |
) |
|
$ |
(5,260 |
) |
| Cash
provided by (used in) investing activities |
|
|
2,996 |
|
|
|
(15,553 |
) |
| Cash
provided by (used in) financing activities |
|
|
16,705 |
|
|
|
(356 |
) |
| Net
increase (decrease) in cash and cash equivalents |
|
$ |
7,139 |
|
|
$ |
(21,169 |
) |
Operating
Activities
Cash
used in operating activities for the Period was $12.6 million and
consisted primarily of net loss of $11.2 million arising primarily
from research and development activities and a net increase in
working capital of $3.0 million, partially offset by a net
aggregate non-cash charges of $1.4 million.
Cash
used in operating activities for the Parallel Period was $5.3
million and consisted primarily of net loss of $8.9 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 $1.7 million.
Investing
Activities
Net
cash provided by investing activities was $3.0 million for the
Period. This was primarily due to maturation of short-term bank
deposits of $27.0 million, offset by the investment of short-term
bank deposits of $24.0 million.
Net
cash used in investing activities was for the Parallel Period $15.6
million. This was primarily due to investment in short-term bank
deposits and the purchases of property and equipment.
Financing
Activities
Net
cash provided by financing activities was $16.7 million for the
Period compared to net cash used in financing activities of $356
thousand for the Parallel Period. The increase was mainly due to
the issuance of ordinary shares and warrants per the closing of the
May 11, 2020 and May 13, 2020 securities offerings.
Contractual
Obligations and Commitments
During
the six months ended June 30, 2020, there have been no material
changes to our contractual obligations and commitments outside the
ordinary course of business.
Off-Balance
Sheet Arrangements
Since
our inception, we have not engaged in any off-balance sheet
arrangements, as defined in the rules and regulations of the SEC,
such as relationships with unconsolidated entities or financial
partnerships, which are often referred to as structured finance or
special purpose entities, established for the purpose of
facilitating financing transactions that are not required to be
reflected on our statement of financial positions.
Quantitative
and Qualitative Disclosures about Market Risk
We
are exposed to market risks in the ordinary course of our business.
Market risk represents the risk of loss that may impact our
financial position due to adverse changes in financial market
prices and rates. Our market risk exposure is primarily a result of
foreign currency exchange rates. Approximately 30% of our expenses
in the six months ended June 30, 2020 were denominated in New
Israeli Shekels. Changes of 5% in the US$/NIS exchange rate will
increase or decrease the operation 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 |
