UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
☒ QUARTERLY REPORT UNDER SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September
30, 2023
☐ TRANSITION REPORT UNDER SECTION 13
OR 15(d) OF THE EXCHANGE ACT
For the transition period from __________ to __________
Commission file number 001-31392
PLURI INC. |
(Exact name of registrant as specified in its charter) |
Nevada | | 98-0351734 |
(State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification No.) |
MATAM Advanced Technology Park, Building No. 5, Haifa, Israel | | 3508409 |
(Address of principal executive offices) | | (Zip Code) |
Registrant’s telephone number 011-972-74-7108600
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | | Trading Symbol | | Name of each exchange on which registered |
Common Shares, par value $0.00001 | | PLUR | | The Nasdaq Capital Market |
Securities registered pursuant to Section 12(g) of the Act:
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registration was required to submit files). Yes
☒ No ☐
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company.
See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and
“emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer | ☐ | Accelerated filer | ☐ | Non-accelerated filer | ☒ |
Smaller reporting company | ☒ | Emerging growth company | ☐ | | |
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
State the number of shares outstanding of each
of the issuer’s classes of common shares as of the latest practicable date: 41,480,172 common shares issued and outstanding as
of November 13, 2023.
PLURI INC.
INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
As of September 30,
2023
U.S. DOLLARS IN THOUSANDS
(Unaudited)
INDEX
PLURI INC.
INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
U.S. Dollars in thousands (except share and per share data)
| |
Note | |
September 30,
2023 | | |
June 30,
2023 | |
ASSETS | |
| |
| | |
| |
| |
| |
| | |
| |
CURRENT ASSETS: | |
| |
| | |
| |
| |
| |
| | |
| |
Cash and cash equivalents | |
| |
$ | 5,253 | | |
$ | 5,360 | |
Short-term bank deposits | |
| |
| 28,356 | | |
| 34,811 | |
Restricted cash | |
| |
| 295 | | |
| 269 | |
Prepaid expenses and other current assets | |
| |
| 1,354 | | |
| 969 | |
Total current assets | |
| |
| 35,258 | | |
| 41,409 | |
| |
| |
| | | |
| | |
LONG-TERM ASSETS: | |
| |
| | | |
| | |
| |
| |
| | | |
| | |
Restricted bank deposits | |
| |
| 611 | | |
| 627 | |
Severance pay fund | |
| |
| 426 | | |
| 439 | |
Property and equipment, net | |
| |
| 768 | | |
| 688 | |
Operating lease right-of-use asset | |
| |
| 7,472 | | |
| 7,633 | |
Other long-term assets | |
| |
| 7 | | |
| 1 | |
Total long-term assets | |
| |
| 9,284 | | |
| 9,388 | |
| |
| |
| | | |
| | |
Total assets | |
| |
$ | 44,542 | | |
$ | 50,797 | |
The accompanying notes are an integral part of these unaudited
condensed consolidated financial statements.
PLURI INC.
INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
U.S. Dollars in thousands (except share and per share data)
| |
Note | |
September 30, 2023 | | |
June 30, 2023 | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | |
| |
| | |
| |
| |
| |
| | |
| |
CURRENT LIABILITIES | |
| |
| | |
| |
| |
| |
| | |
| |
Trade payables | |
| |
$ | 973 | | |
$ | 1,812 | |
Accrued expenses | |
| |
| 1,024 | | |
| 1,209 | |
Operating lease liability | |
| |
| 643 | | |
| 627 | |
Accrued vacation and recuperation | |
| |
| 689 | | |
| 873 | |
Other accounts payable | |
| |
| 993 | | |
| 1,100 | |
Total current
liabilities | |
| |
| 4,322 | | |
| 5,621 | |
| |
| |
| | | |
| | |
LONG-TERM LIABILITIES | |
| |
| | | |
| | |
| |
| |
| | | |
| | |
Accrued severance pay | |
| |
| 580 | | |
| 598 | |
Operating lease liability | |
| |
| 5,430 | | |
| 5,748 | |
Loan from the European Investment Bank
(“EIB”) | |
4 | |
| 23,172 | | |
| 23,530 | |
Total long-term
liabilities | |
| |
| 29,182 | | |
| 29,876 | |
| |
| |
| | | |
| | |
COMMITMENTS AND CONTINGENCIES | |
3 | |
| | | |
| | |
| |
| |
| | | |
| | |
SHAREHOLDERS’ EQUITY | |
| |
| | | |
| | |
| |
| |
| | | |
| | |
Share capital: | |
5 | |
| | | |
| | |
Common shares, $0.00001 par value per share: Authorized: 300,000,000 as of September 30, 2023, and June 30, 2023; Issued and outstanding: 41,448,521 and 41,245,495 shares as of September 30, 2023, and June 30, 2023, respectively | |
| |
| * | | |
| * | |
Additional paid-in capital | |
| |
| 413,446 | | |
| 412,939 | |
Accumulated deficit | |
| |
| (404,545 | ) | |
| (399,584 | ) |
Total shareholders’ equity | |
| |
| 8,901 | | |
| 13,355 | |
Non-controlling interests | |
| |
| 2,137 | | |
| 1,945 | |
Total
equity | |
| |
| 11,038 | | |
| 15,300 | |
Total liabilities
and equity | |
| |
$ | 44,542 | | |
$ | 50,797 | |
The accompanying notes are an integral part of these unaudited
condensed consolidated financial statements.
PLURI INC.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (UNAUDITED)
U.S. Dollars in thousands (except share and per share data)
| |
Three months ended September 30, | |
| |
2023 | | |
2022 | |
| |
| | |
| |
Revenues | |
$ | 54 | | |
$ | 87 | |
Operating expenses: | |
| | | |
| | |
Research and development expenses | |
$ | (3,366 | ) | |
$ | (4,503 | ) |
Less: participation by the National Institute of Allergy and Infectious Diseases (“NIAID”), the Israeli Innovation Authority (“IIA”), Horizon Europe and other parties | |
| 373 | | |
| 233 | |
Research and development expenses, net | |
| (2,993 | ) | |
| (4,270 | ) |
General and administrative expenses | |
| (2,438 | ) | |
| (2,740 | ) |
| |
| | | |
| | |
Operating loss | |
| (5,377 | ) | |
| (6,923 | ) |
| |
| | | |
| | |
Interest expenses | |
| (214 | ) | |
| (194 | ) |
Other financial income, net | |
| 493 | | |
| 848 | |
Total financial income, net | |
| 279 | | |
| 654 | |
| |
| | | |
| | |
Net loss | |
$ | (5,098 | ) | |
$ | (6,269 | ) |
Net loss attributed to non-controlling interest | |
$ | (137 | ) | |
$ | (148 | ) |
Net loss attributed to shareholders | |
$ | (4,961 | ) | |
$ | (6,121 | ) |
| |
| | | |
| | |
Loss per share: | |
| | | |
| | |
Basic and diluted net loss per share | |
$ | (0.12 | ) | |
$ | (0.19 | ) |
| |
| | | |
| | |
Weighted average number of shares used in computing basic and diluted net loss per share | |
| 41,331,764 | | |
| 32,562,596 | |
The accompanying notes are an integral part of these unaudited
condensed consolidated financial statements.
PLURI INC.
INTERIM CONDENSED STATEMENTS OF CHANGES IN
SHAREHOLDERS’ EQUITY (UNAUDITED)
U.S. Dollars in thousands (except share and per share data)
| |
Shareholders’ Equity | | |
| | |
| |
| |
Common Shares | | |
Additional
Paid-in | | |
Accumulated | | |
Total
Shareholders’ | | |
Non-
controlling | | |
Total | |
| |
Shares | | |
Amount | | |
Capital | | |
Deficit | | |
Equity | | |
Interests | | |
Equity | |
Balance as of July 1, 2022 | |
| 32,507,491 | | |
$ | (* | ) | |
$ | 401,302 | | |
$ | (371,263 | ) | |
$ | 30,039 | | |
$ | 2,147 | | |
$ | 32,186 | |
Share-based compensation to employees, directors, and non-employee
consultants | |
| 127,171 | | |
| (* | ) | |
| 659 | | |
| - | | |
| 659 | | |
| 325 | | |
| 984 | |
Modification of warrants to non-controlling interests | |
| - | | |
| - | | |
| (385 | ) | |
| - | | |
| (385 | ) | |
| 385 | | |
| - | |
Net loss | |
| - | | |
| - | | |
| - | | |
| (6,121 | ) | |
| (6,121 | ) | |
| (148 | ) | |
| (6,269 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance as of September 30, 2022 | |
| 32,634,662 | | |
$ | (* | ) | |
$ | 401,576 | | |
$ | (377,384 | ) | |
$ | 24,192 | | |
$ | 2,709 | | |
$ | 26,901 | |
PLURI INC.
INTERIM CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(UNAUDITED)
U.S. Dollars in thousands (except share and per share data)
| |
Shareholders’ Equity | | |
| | |
| |
| |
Common Shares | | |
Additional
Paid-in | | |
Accumulated | | |
Total
Shareholders’ | | |
Non- controlling | | |
Total | |
| |
Shares | | |
Amount | | |
Capital | | |
Deficit | | |
Equity | | |
Interests | | |
Equity | |
Balance as of July 1, 2023 | |
| 41,245,495 | | |
$ | (* | ) | |
$ | 412,939 | | |
$ | (399,584 | ) | |
$ | 13,355 | | |
$ | 1,945 | | |
$ | 15,300 | |
Share-based compensation to employees, directors, and non-employee
consultants | |
| 203,026 | | |
| (* | ) | |
| 507 | | |
| - | | |
| 507 | | |
| 329 | | |
| 836 | |
Net loss | |
| - | | |
| - | | |
| - | | |
| (4,961 | ) | |
| (4,961 | ) | |
| (137 | ) | |
| (5,098 | ) |
Balance as of September 30, 2023 | |
| 41,448,521 | | |
$ | (* | ) | |
$ | 413,446 | | |
$ | (404,545 | ) | |
$ | 8,901 | | |
$ | 2,137 | | |
$ | 11,038 | |
The accompanying notes are an integral part of these unaudited
condensed consolidated financial statements.
PLURI INC.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS (UNAUDITED)
U.S. Dollars in thousands (except share and per share data)
| |
Three months ended September
30, | |
| |
2023 | | |
2022 | |
| |
| | |
| |
CASH FLOWS FROM OPERATING ACTIVITIES: | |
| | |
| |
| |
| | |
| |
Net loss | |
$ | (5,098 | ) | |
$ | (6,269 | ) |
| |
| | | |
| | |
Adjustments to reconcile net loss to net cash used in operating
activities: | |
| | | |
| | |
| |
| | | |
| | |
Depreciation | |
| 67 | | |
| 100 | |
Share-based compensation to employees, directors and non-employee consultants | |
| 836 | | |
| 984 | |
Decrease (increase) in prepaid expenses and other current assets and other long-term assets | |
| (391 | ) | |
| 674 | |
Decrease in trade payables | |
| (883 | ) | |
| (450 | ) |
Decrease in other accounts payable and accrued expenses | |
| (476 | ) | |
| (1,344 | ) |
Decrease in operating lease right-of-use asset and liability | |
| (141 | ) | |
| (15 | ) |
Increase in interest receivable on deposits | |
| (180 | ) | |
| (493 | ) |
Effect of exchange rate changes on cash, cash equivalents, deposits and restricted cash | |
| 772 | | |
| 166 | |
Long term interest payable and exchange rate differences relate
to EIB loan | |
| (358 | ) | |
| (957 | ) |
Accrued severance pay, net | |
| (5 | ) | |
| (5 | ) |
Net cash used for operating activities | |
$ | (5,857 | ) | |
$ | (7,609 | ) |
| |
| | | |
| | |
CASH FLOWS FROM INVESTING ACTIVITIES: | |
| | | |
| | |
| |
| | | |
| | |
Purchase of property and equipment | |
$ | (103 | ) | |
$ | (73 | ) |
Proceeds from withdrawal of short-term
deposits, net | |
| 5,905 | | |
| 6,466 | |
Net cash provided by investing activities | |
$ | 5,802 | | |
$ | 6,393 | |
The accompanying notes are an integral part of these unaudited
condensed consolidated financial statements.
PLURI INC.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
U.S. Dollars in thousands (except share and per share data)
| |
Three months ended September
30, | |
| |
2023 | | |
2022 | |
| |
| | |
| |
EFFECT OF EXCHANGE RATE ON CASH, CASH EQUIVALENTS AND RESTRICTED
CASH | |
$ | (42 | ) | |
$ | (166 | ) |
| |
| | | |
| | |
Decrease in cash, cash equivalents and restricted cash | |
| (97 | ) | |
| (1,382 | ) |
Cash, cash equivalents and restricted cash
at the beginning of the period | |
| 6,256 | | |
| 11,413 | |
Cash, cash equivalents and restricted cash
at the end of the period | |
$ | 6,159 | | |
$ | 10,031 | |
| |
| | | |
| | |
Reconciliation of cash, cash equivalents and restricted
cash reported in the consolidated balance sheets: | |
| | | |
| | |
Cash and cash equivalents | |
| 5,253 | | |
| 8,744 | |
Restricted cash | |
| 295 | | |
| 653 | |
Long-term restricted bank deposits | |
| 611 | | |
| 634 | |
Total cash, cash equivalents, restricted cash and restricted
bank deposits | |
$ | 6,159 | | |
$ | 10,031 | |
| |
| | | |
| | |
(a) Supplemental disclosure of non-cash activities: | |
| | | |
| | |
Purchase of property and equipment on credit | |
$ | 118 | | |
$ | 20 | |
Supplemental non-cash information
related to lease liabilities arising from obtaining right-of-use assets | |
$ | 25 | | |
$ | - | |
The accompanying notes are an integral part of these unaudited
condensed consolidated financial statements.
PLURI INC.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (UNAUDITED)
U.S. Dollars in thousands (except share and per share amounts)
NOTE 1: - GENERAL
|
a. |
Pluri Inc. (formally known as Pluristem Therapeutics Inc.), a Nevada
corporation, was incorporated on May 11, 2001. Pluri Inc.’s common shares trade on Nasdaq Capital Market and Tel Aviv Stock Exchange
under the symbol “PLUR”. Pluri Inc. has a wholly owned subsidiary, Pluri-Biotech Ltd. (formerly known as Pluristem Ltd.) (the
“Subsidiary”), which is incorporated under the laws of the State of Israel. In January 2020, the Subsidiary established a
wholly owned subsidiary, Pluristem GmbH (the “German Subsidiary”) which is incorporated under the laws of Germany. In January
2022, the Subsidiary established a new subsidiary, Ever After Foods Ltd. (“Ever After”) formerly known as Plurinuva Ltd. Ever
After is incorporated under the laws of Israel, which followed the execution of the collaboration agreement with Tnuva Food Industries
– Agricultural Cooperative in Israel Ltd., through its fully owned subsidiary, Tnuva Food-Tech Incubator (2019), Limited Partnership
(“Tnuva”). Pluri Inc., the Subsidiary, the German Subsidiary and Ever After are referred to as the “Company” or
“Pluri.” The Subsidiary, the German Subsidiary and Ever After are referred to as the “Subsidiaries.” |
|
b. |
The Company
is a bio-technology company with an advanced cell-based technology platform, which operates in one operating segment. The Company
has developed a unique three-dimensional (“3D”) technology platform for cell expansion with an industrial scale in-house
Good Manufacturing Practice cell manufacturing facility. Pluri currently uses its technology in the field of regenerative medicine
and food tech and plans to utilize it in other industries and verticals that have a need for a mass scale and cost-effective cell
expansion platform such as cellular agriculture and biologics. Pluri is focused on the research, development and manufacturing of
cell-based products and the business development of cell therapeutics and cell-based technologies providing potential solutions for
various industries. |
| c. | The Company has incurred an accumulated deficit of approximately $404,545 and incurred recurring operating losses and negative cash flows from operating activities since inception. As of September 30, 2023, the Company’s total shareholders’ equity amounted to $8,901. During the three-month period ended September 30, 2023, the Company incurred losses of $4,961 and its negative cash flow from operating activities was $5,857. |
As of September 30, 2023, the Company’s
cash position (cash and cash equivalents, short-term bank deposits, restricted cash and restricted bank deposits) totaled $34,515. The
Company plans to continue to finance its operations from its current resources, by entering into licensing or other commercial and collaboration
agreements, from grants to support its research and development activities and from sales of its equity securities. The Company’s
management believes that its current resources together with its existing operating plan, are sufficient for the Company to meet its
obligations as they come due at least for a period of twelve months from the date of the issuance of these consolidated financial statements.
There is no assurance, however, that the Company will be able to obtain the adequate level of financial resources that are required for
the long-term development and commercialization of its products.
PLURI INC.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
U.S. Dollars in thousands (except share and per share amounts)
NOTE 2: - SIGNIFICANT ACCOUNTING POLICIES
| a. | Unaudited Interim Financial Information |
The accompanying interim unaudited
condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”)
for interim financial information and with the instructions to Form 10-Q and Article 10 of U.S. Securities and Exchange Commission
Regulation S-X. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements.
In the opinion of management, all adjustments considered necessary for a fair statement have been included (consisting only of normal
recurring adjustments). For further information, reference is made to the consolidated financial statements and footnotes thereto included
in the Company’s Annual Report on Form 10-K for the year ended June 30, 2023. The year-end balance sheet data was derived
from the audited consolidated financial statements as of June 30, 2023, but not all disclosures required by GAAP are included.
Operating results for the three-month
period ended September 30, 2023, are not necessarily indicative of the results that may be expected for the year ending June 30,
2024.
| b. | Significant Accounting Policies |
The significant accounting policies
followed in the preparation of these interim unaudited condensed consolidated financial statements are identical to those applied in
the preparation of the latest annual financial statements.
The preparation of financial statements
in conformity with generally accepted accounting principles requires management to make estimates, judgments and assumptions that are
reasonable based upon information available at the time they are made. These estimates, judgments and assumptions can affect the amounts
reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
PLURI INC.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
U.S. Dollars in thousands (except share and per share amounts)
NOTE 2: - SIGNIFICANT
ACCOUNTING POLICIES (CONT.)
| d. | Fair value of financial instruments |
The carrying amounts of the Company’s
financial instruments, including cash and cash equivalents, restricted cash, short-term bank deposits and restricted bank deposits and
other current assets, trade payable and other accounts payable and accrued expenses, approximate their fair value because of their generally
short-term maturities.
The Company measures its derivative
instruments at fair value under Accounting Standards Codification (“ASC”), “Fair Value Measurements and Disclosures”
(“ASC 820”). Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer
a liability in an orderly transaction between market participants.
As such, fair value is a market-based
measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. As
a basis for considering such assumptions, ASC 820 establishes a three-tier value hierarchy, which prioritizes the inputs used in the
valuation methodologies in measuring fair value:
| Level | 1 - Quoted
prices (unadjusted) in active markets for identical assets or liabilities; |
| Level | 2 - Inputs
other than Level 1 that are observable for the asset or liability, either directly or indirectly;
and |
| Level | 3 - Unobservable
inputs for the asset or liability. |
The fair value hierarchy also requires
an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The Company
categorized each of its fair value measurements in one of these three levels of hierarchy.
On April 30, 2020, the German Subsidiary
entered into a finance contract (the “Finance Contract”) with the EIB, pursuant to which the German Subsidiary can obtain
a loan in the amount of up to €50 million, subject to certain milestones being reached (the “Loan”), receivable
in three tranches, with the first tranche consisting of €20 million, second of €18 million and third of €12 million
for a period of 36 months from the signing of the Finance Contract.
During June 2021, Pluri received
the first tranche in an amount of €20 million under the Finance Contract. The amount received is due on June 1, 2026, and
bears annual interest of 4% to be paid with the principal of the Loan.
Since the project period ended on
December 31, 2022, the Company does not expect to receive additional funds pursuant to the Finance Contract.
The Company measures its liability
pursuant to the Finance Contract with the EIB based on the aggregate outstanding amount of the combined principal and accrued interest
thereunder. The Company does not reflect its liability for future royalty payments pursuant to the Finance Contract with the EIB since
the royalty payments are to be paid as a percentage of the Company’s future consolidated revenues, pro-rated to the amount disbursed,
beginning in the fiscal year 2024 and continuing up to and including its fiscal year 2030 (see also note 4).
PLURI INC.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
U.S. Dollars in thousands (except share and per share amounts)
NOTE 2: - SIGNIFICANT
ACCOUNTING POLICIES (CONT.)
| e. | New Accounting Pronouncements |
| i. | Recently
adopted accounting pronouncements |
ASU No. 2016-13-“Financial
Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”):
In June 2016, the Financial Accounting Standards Board (the “FASB”)
issued Accounting Standards Update (“ASU”) 2016-13, which changes the impairment model for most financial assets and certain
other instruments. For trade and other receivables, held-to-maturity debt securities, loans, and other instruments, entities are required
to use a new forward-looking “expected loss” model that generally results in the earlier recognition of allowances for losses.
The guidance also requires increased disclosures. The amendments contained in ASU 2016-13 were originally effective for fiscal years beginning
after December 15, 2019, including interim periods within those fiscal years for the Company. In November 2019, the FASB issued
ASU No. 2019-10, which delayed the effective date of ASU 2016-13 for smaller reporting companies (as defined by the U.S. Securities
and Exchange Commission rules (“SRC”)) to fiscal years beginning after December 15, 2022, including interim periods.
The guidance requires a modified
retrospective transition approach through a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption.
The Company meets the definition of an SRC and adopted the new accounting standard effective July 1, 2023. The adoption of this standard
did not have a material impact on the Company's consolidated financial statements.
NOTE 3: - COMMITMENTS AND CONTINGENCIES
| a. | As of September 30, 2023, an amount of $906 of cash and deposits was pledged by the Subsidiary for bank guarantees related to its facility operating lease agreement and to secure its credit line for hedging transactions. |
| b. | Under the Law for the Encouragement of Industrial Research and Development, 1984, (the “Research Law”), research and development programs that meet specified criteria and are approved by the IIA are eligible for grants of up to 50% of the project’s expenditures, as determined by the research committee, in exchange for the payment of royalties from the sale of products developed under the program. Regulations under the Research Law generally provide for the payment of royalties to the IIA of 3% on sales of products and services derived from a technology developed using these grants until 100% of the U.S. dollar-linked grant is repaid. The Company’s obligation to pay these royalties is contingent on its actual sale of such products and services. In the absence of such sales, no payment is required. The outstanding balance of the grants will be subject to interest at a rate equal to the 12-month LIBOR applicable to U.S. dollar deposits that is published on the first business day of each calendar year. Following the full repayment of the grant, there is no further liability for royalties. |
As of September 30, 2023, the Company’s
contingent liability in respect to royalties to the IIA amounted to $27,564, not including LIBOR interest as described above.
PLURI INC.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
U.S. Dollars in thousands (except share and per share amounts)
NOTE 3: - COMMITMENTS AND CONTINGENCIES (CONT.)
| c. | In September 2017, the Company signed an agreement with the Tel-Aviv Sourasky Medical Center (Ichilov Hospital) to conduct a Phase I/II trial of PLX-PAD cell therapy for the treatment of Steroid-Refractory Chronic Graft-Versus-Host-Disease (“cGVHD”). As part of the agreement with Ichilov Hospital, the Company will pay royalties of 1% from its net sales of the PLX-PAD product relating to cGVHD, with a maximum aggregate royalty amount of approximately $500. |
|
d. |
As to
royalties to the EIB, see note 4. |
NOTE 4: - LOAN FROM THE EIB
On April 30, 2020, the German Subsidiary
entered into a Finance Contract with the EIB, pursuant to which the German Subsidiary can obtain a loan in the amount of up to €50
million, subject to certain milestones being reached, receivable in three tranches, with the first tranche consisting of €20 million,
second of €18 million and third of €12 million for a period of 36 months from the signing of the Finance Contract.
The tranches will be treated independently,
each with its own interest rate and maturity period. The annual interest rate is 4% (consisting of a 4% deferred interest rate payable
upon maturity), for the first tranche, 4% (consisting of a 1% fixed interest rate and a 3% deferred interest rate payable upon maturity)
for the second tranche and 3% (consisting of a 1% fixed interest rate and a 2% deferred interest rate payable upon maturity) for the
third tranche.
In addition to any interest payable
on the Loan, the EIB is entitled to receive royalties from future revenues for a period of seven years starting at the beginning of fiscal
year 2024 and continuing up to and including its fiscal year 2030 in an amount equal to between 0.2% to 2.3% of the Company’s consolidated
revenues, pro-rated to the amount disbursed from the Loan. As of September 30, 2023, the accrual liability pertaining to royalties to
EIB is immaterial.
During June 2021, Pluri received the
first tranche in an amount of €20 million of the Finance Contract. The amount received is due on June 1, 2026 and bears annual interest
of 4% to be paid with the principal of the Loan. As of September 30, 2023, the linked principal balance in the amount of $21,198 and
the interest accrued in the amount of $1,974 are presented among long-term liabilities. Since the project period ended on December 31,
2022, the Company does not expect to receive additional funds pursuant to the Finance Contract.
The Finance Contract also contains
certain limitations such as the use of proceeds received from the EIB, limitations related to disposal of assets, substantive changes
in the nature of the Company’s business, changes in holding structure, distributions of future potential dividends and engaging
with other banks and financing entities for other loans.
PLURI INC.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
U.S. Dollars in thousands (except share and per share amounts)
NOTE 5: - SHAREHOLDERS’ EQUITY
On
July 16, 2020, the Company entered into an at-the market agreement (the “ATM Agreement”), with Jefferies LLC (“Jefferies”),
pursuant to which it may issue and sell our common shares having an aggregate offering price of up to $75,000,000 from time to time through
Jefferies. Upon entering into the ATM Agreement, the Company filed a new shelf registration statement on Form S-3, which was declared
effective by the SEC on July 23, 2020. On September 21, 2022, as a result of General Instruction I.B.6 of Form S-3, and in accordance
with the terms of the Sales Agreement, the Company reduced the amount available to be sold under the ATM Agreement to a maximum aggregate
offering price of up to $11,800,000 of our common shares from time to time through Jefferies. On September 7, 2023, the Company provided
a formal notice of termination of the ATM Agreement with Jefferies, which took effect on September 8, 2023. During the three-month period
ended September 30, 2022 and 2023, the Company did not sell any of its common shares under the ATM Agreement.
|
a. |
Options
to consultants: |
A summary of the share options to non-employee
consultants under equity incentive plans of Pluri Inc. is as follows:
| |
Three months ended September 30,
2023 | |
| |
Number | | |
Weighted Average Exercise
Price | | |
Weighted Average Remaining
Contractual Terms (in years) | | |
Aggregate Intrinsic Value
Price | |
Share options outstanding at the beginning
of the period | |
| 64,795 | | |
$ | 0.93 | | |
| 6.24 | | |
$ | 29 | |
Share options outstanding at the
end of the period | |
| 64,795 | | |
$ | 0.93 | | |
| 5.99 | | |
$ | 22 | |
| |
| | | |
| | | |
| | | |
| | |
Share options exercisable at the
end of the period | |
| 62,295 | | |
$ | 0.88 | | |
| 5.90 | | |
$ | 22 | |
Share options unvested | |
| 2,500 | | |
$ | 2.00 | | |
| 8.19 | | |
| - | |
Share options vested and expected
to vest at the end of the period | |
| 64,795 | | |
$ | 0.93 | | |
| 5.99 | | |
$ | 22 | |
Compensation expenses recorded in general
and administrative expenses related to options granted to consultants for the three months ended September 30, 2023 and 2022 were $1
and $12, respectively.
PLURI INC.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
U.S. Dollars in thousands (except share and per share amounts)
NOTE 5: - SHAREHOLDERS’ EQUITY (CONT.)
|
b. |
Options
to the Chief Executive Officer and Director: |
A summary of the share options granted
to the Chief Executive Officer and Director under equity incentive plans of Pluri Inc. is as follows:
| |
Number | | |
Weighted Average Exercise
Price | | |
Weighted Average Remaining
Contractual Terms (in years) | |
Share options outstanding at the beginning of the period | |
| 1,834,821 | | |
$ | 1.90 | | |
| 3.47 | |
Options granted | |
| 100,000 | | |
| 0.76 | | |
| 7.41 | |
Share options outstanding at the end of the period | |
| 1,934,821 | | |
$ | 1.85 | | |
| 3.69 | |
| |
| | | |
| | | |
| | |
Share options exercisable at the end of the period | |
| 1,001,109 | | |
$ | 1.84 | | |
| 2.95 | |
Share options unvested | |
| 933,712 | | |
$ | 1.85 | | |
| 3.69 | |
Share options vested and expected to vest at the end of the period | |
| 1,934,821 | | |
$ | 1.85 | | |
| 3.69 | |
As of September 30, 2023, the aggregate
intrinsic value of these options was $0.
Compensation expenses recorded in general and administrative expenses
related to options granted to the Chief Executive Officer and a director for the three months ended September 30, 2023 were $119. There
were no compensation expenses recorded in general and administrative expenses related to options granted to employees and directors for
the three months ended September 30, 2022.
|
c. |
Restricted Stock Units (“RSUs”) to employees, directors
and consultants: |
|
1. |
RSUs to employees and directors: |
The following table summarizes the
activity related to RSUs granted to employees and directors under equity incentive plans of Pluri Inc. for the three-month periods ended
September 30, 2023 and 2022:
| |
Three
months ended
September 30, | |
| |
2023 | | |
2022 | |
| |
Number | |
Unvested at the beginning of the period | |
| 1,657,592 | | |
| 1,935,014 | |
Forfeited | |
| (1,003,873 | ) | |
| (27,951 | ) |
Vested | |
| (183,025 | ) | |
| (106,546 | ) |
Unvested at the end of the period | |
| 470,694 | | |
| 1,800,517 | |
Expected to vest after the end of the period | |
| 456,779 | | |
| 1,770,417 | |
Compensation expenses related to RSUs
granted to employees and directors were recorded as follows:
| |
Three months ended September
30, | |
| |
2023 | | |
2022 | |
Research and development expenses | |
$ | 31 | | |
$ | 63 | |
General and administrative expenses | |
| 318 | | |
| 546 | |
| |
$ | 349 | | |
$ | 609 | |
Unamortized compensation expenses related
to RSUs granted to employees and directors by Pluri Inc. are approximately $866, to be recognized by the end of June 2026.
PLURI INC.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
U.S. Dollars in thousands (except share and per share amounts)
NOTE 5: - SHAREHOLDERS’ EQUITY (CONT.)
The following table summarizes the
activity related to RSUs granted to consultants under equity incentive plans of Pluri Inc. for the three-month periods ended September
30, 2023 and 2022:
| |
Three months ended September
30, | |
| |
2023 | | |
2022 | |
| |
Number | |
Unvested at the beginning of the period | |
| 20,000 | | |
| 41,249 | |
Vested | |
| (20,000 | ) | |
| (20,625 | ) |
Unvested at the end of the period | |
| - | | |
| 20,624 | |
Compensation expenses related to RSUs
granted to consultants by Pluri Inc. were recorded as follows:
| |
Three months ended September
30, | |
| |
2023 | | |
2022 | |
Research and development expenses | |
$ | - | | |
$ | 38 | |
General and administrative expenses | |
| 38 | | |
| (* | ) |
| |
$ | 38 | | |
$ | 38 | |
NOTE 6: - SUBSEQUENT EVENTS
| a. | On August 31, 2023, and as amended and restated as of October 9, 2023,
Ever After entered into a Simple Agreement for Future Equity (the “SAFE Agreement”) with an investor. Pursuant to the terms
of the SAFE Agreement, Ever After will receive an aggregate amount of $2,500 (the “SAFE Amount”). In the event of a qualified
equity financing, as defined in the SAFE Agreement, the investment made pursuant to the SAFE Agreement will be automatically converted
into the number of shares of Ever After based on the lowest purchase amount multiplied by a discount price of 80%. To date, the SAFE has
not yet closed as the SAFE Amount has not yet been transferred to Ever After as of the date of these financial statements. |
|
b. |
On October
17, 2023, the Company received a letter (the “Letter”), from the Listing Qualifications Department (the “Staff”)
of The Nasdaq Stock Market LLC (“Nasdaq”) approving an extension of an additional 180 calendar days from the date of
the Letter, or until April 15, 2024 (the “Additional Compliance Period”) to regain compliance with Nasdaq’s minimum
bid price requirement, as well as approving the Company’s application to transfer its securities from The Nasdaq Global Market
to The Nasdaq Capital Market, starting at the opening of business on October 19, 2023. |
Item 2. Management’s Discussion and Analysis of Financial
Condition and Results of Operations.
Forward-Looking Statements
This Quarterly Report on
Form 10-Q contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and
other Federal securities laws, and is subject to the safe-harbor created by such Act and laws. Forward-looking statements may include
statements regarding our goals, beliefs, strategies, objectives, plans, including product and technology developments, future financial
conditions, results or projections or current expectations. In some cases, you can identify forward-looking statements by terminology
such as “may,” “will,” “should,” “expect,” “intend,” “plan,”
“anticipate,” “believe,” “estimate,” “predict,” “potential” or “continue,”
the negative of such terms, or other variations thereon or comparable terminology. These statements are merely predictions and therefore
inherently subject to known and unknown risks, uncertainties, assumptions, and
other factors that may cause actual results, performance levels of activity, or our achievements, or industry results to be materially
different from those contemplated by the forward-looking statements. Such forward-looking statements appear in this Item 2 – “Management’s
Discussion and Analysis of Financial Condition and Results of Operations,” and may appear elsewhere in this Quarterly Report on
Form 10-Q and include, but are not limited to, statements regarding the following:
| ● | the
expected development and potential benefits from our products in regenerative medicine, biologics
and food technology, or food tech, as well as potentially in other industries and verticals
that have a need for our mass scale and cost-effective cell expansion platform; |
| ● | the
prospects of entering into additional license agreements, or other forms of cooperation with
other companies, research organizations and medical institutions, including, without limitation
Tnuva (as defined below); |
| ● | our
pre-clinical and clinical study plans, including timing of initiation, expansion, enrollment,
results, and conclusion of trials; |
| ● | achieving
regulatory approvals; |
| ● | receipt
of future funding from the Israel Innovation Authority, or IIA, the European Union’s
Horizon programs, the National Institutes of Health, or NIH, as well as grants from
other independent third parties; |
| ● | developing
capabilities for new clinical indications of placenta expanded, or PLX, cells and new products; |
| ● | our
expectation to demonstrate a real-world impact and value from our pipeline, technology platform
and commercial-scale manufacturing capacity; |
| ● | the
possible impacts of cybersecurity incidents on our business and operations; |
| ● | our
expectations regarding our short- and long-term capital requirements; |
| ● | our
outlook for the coming months and future periods, including but not limited to our expectations
regarding future revenue and expenses; |
| ● | information
with respect to any other plans and strategies for our business; |
| ● | the
Israeli government is pursuing extensive changes to Israel’s judicial system, which
may negatively impact the business environment in Israel with reluctance for investments
or transactions as well as lead to increased currency fluctuations, downgrades in credit
rating and increased interest rates; and |
| ● | general
market, political and economic conditions in the countries in which we operate including
those related to recent unrest and actual or potential armed conflict in Israel and other
parts of the Middle East, such as the recent attack by Hamas and other terrorist organizations
from the Gaza Strip and Israel’s war against them. |
Our business and operations
are subject to substantial risks, which increase the uncertainty inherent in the forward-looking statements contained in this report.
In addition, historic results
of scientific research and development, clinical and preclinical trials do not guarantee that the conclusions of future research and
development or trials would not suggest different conclusions. Also, historic results referred to in this periodic report would be interpreted
differently in light of additional research, development, clinical and preclinical trials results. Except as required by law, we undertake
no obligation to release publicly the result of any revision to these forward-looking statements that may be made to reflect events or
circumstances after the date hereof or to reflect the occurrence of unanticipated events. Further information on potential factors that
could affect our business is described under the heading “Risk Factors” in Part I, Item 1A, of our Annual Report on Form
10-K for the fiscal year ended June 30, 2023, or the 2023 Annual Report, as well as Item 1A of this Quarterly Report. Readers are also
urged to carefully review and consider the various disclosures we have made in that report.
As used in this Quarterly
Report on Form 10-Q, the terms “we”, “us”, “our”, the “Company” and “Pluri”
mean Pluri Inc. and our wholly owned subsidiaries, Pluri Biotech Ltd. and Pluristem GmbH, and our subsidiary Ever After Foods Ltd., or
Ever After, unless otherwise indicated or as otherwise required by the context.
Overview
We are a biotechnology company
with an advanced cell-based technology platform. We have developed a unique three-dimensional, or 3D, technology platform for cell expansion
with an industrial scale in-house Good Manufacturing Practice, or GMP, cell manufacturing facility. We are utilizing our technology in
the field of regenerative medicine and food tech and plan to utilize it in other industries and verticals that have a need for our mass
scale and cost-effective cell expansion platform.
We use our advanced cell-based
technology platform in the field of regenerative medicine to develop placenta-based cell therapy product candidates for the treatment
of inflammatory, muscle injuries and hematologic conditions. Our PLX cells are adherent stromal cells that are expanded using our 3D
platform. Our PLX cells can be administered to patients off-the-shelf, without blood or tissue matching or additional manipulation
prior to administration. PLX cells are believed to release a range of therapeutic proteins in response to the patient’s condition.
Our operations are focused
on the research, development and manufacturing of cells and cell-based products, conducting clinical studies and the business development
of cell therapeutics and cell-based technologies, such as our collaboration with Tnuva Food Industries – Agricultural Cooperative
in Israel Ltd., through its fully owned subsidiary, Tnuva Food-Tech Incubator (2019), Limited Partnership, or Tnuva, to use our technology
to establish a cultivated food platform, as well as a collaboration agreement we signed in 2022 with a leading European manufacturer
of active pharmaceutical ingredients, or APIs, to use our expansion technology, which aims to revolutionize the production of biologics
by enabling a cost-effective, sustainable and cruelty-free ingredient.
In the pharmaceutical area,
we have focused on several indications utilizing our product candidates, including, but not limited to, muscle recovery following surgery
for hip fracture, incomplete recovery following bone marrow transplantation, critical limb ischemia, or CLI, Chronic Graft versus Host
Disease and a potential treatment for Hematopoietic Acute Radiation Syndrome, or H-ARS. Some of these studies have been completed while
others are still ongoing. We believe that each of these indications is a severe unmet medical need.
In July 2023, we announced
that we signed a three year $4.2 million contract with the U.S. National Institute of Allergy and Infectious Diseases, or NIAID, which
is part of the NIH. Under such contract, we will collaborate with the U.S. Department of Defense’s Armed Forces Radiobiology Research
Institute, or AFRRI, and the Uniformed Services University of Health Sciences, or USUHS, in Maryland, U.S.A., to further advance the
development of our PLX-R18 cell therapy as a potential novel treatment for H-ARS, a deadly disease that can result from nuclear disasters
and radiation exposure.
Food Tech
On January 5, 2022, we signed
definitive collaboration agreements with Tnuva through the Subsidiary. Under the definitive collaboration agreements, or the Joint Venture
Agreement, we established a new company, Ever After, with the purpose of developing cultivated meat products of all types and kinds.
Ever After is engaged in the development, manufacturing and commercialization of technology, know-how and products that will be based
on licensed products relating to the field of cultivated meat.
Our joint venture successfully
completed proof of concept in its development of cultivated meat based on our cell-based technology platform. Ever After is also using
PluriMatrix for producing cultivated meat.
RESULTS OF OPERATIONS – THREE MONTHS
ENDED SEPTEMBER 30, 2023 COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 2022.
Revenues
Revenues for the three-month
period ended September 30, 2023 were $54,000 as compared to $87,000 in revenues during the three-month period ended September 30, 2022.
Revenues for the three-month period ended September 30, 2023 were mainly related to services provided in the field of process and product
development. Revenues for the three-month period ended September 30, 2022 were mainly related to our collaboration in the biologic field.
Research and Development Expenses, Net
Research and development, or R&D, expenses, net (costs less participation
by the IIA, Horizon 2020, Horizon Europe and the NIAID) for the three-month period ended September 30, 2023 decreased by 30% from $4,270,000
for the three-month period ended September 30, 2022 to $2,993,000. The decrease is mainly attributed to: (1) a decrease in clinical studies
expenses following the completion of our CLI, COVID-19 and muscle regeneration following hip fracture studies, and (2) a decrease in salaries
and related expenses due to the exchange rate differences related to the strength of the U.S. dollar against the NIS and a reduction in
head count of 10 R&D employees (99 on September 30, 2023, compared to 109 on September 30, 2022), partially offset by (3) increased
participation of the NIAID related to the H-ARS contract which commenced in fiscal year 2024.
General and Administrative Expenses
General and administrative expenses for the three-month period ended
September 30, 2023 decreased by 11% from $2,740,000 for the three-month period ended September 30, 2022 to $2,438,000 mainly due to: (1)
a decrease in salaries and related expenses due to the exchange rate differences relates to the strength of the U.S. dollar against the
NIS (2) the reduction of our CEO’s salary, whereby he waived 50% of his salary and converted it to restricted stock units, or RSUs,
and options, and (3) a decrease in costs relates to our directors and officers insurance policy.
Other Financial Income, net
Other financial income, net, decreased by 42% from $848,000 in financial
income for the three-month period ended September 30, 2022 to $493,000 in financial income for the three-month period ended September
30, 2023. This decrease is mainly attributable to a reduction in income from exchange rate differences related to the EIB loan. This decrease
was partially offset by expenses from exchange rate related to NIS deposits following the strength of the U.S. dollar against the NIS
and from increased income related to interest on deposits, due to an increase in interest rates.
Interest Expenses
Interest expenses increased
by 10% from $194,000 for the three-month period ended September 30, 2022 to interest expenses of $214,000 for the three-month period
ended September 30, 2023. This increase is attributable solely to exchange rate differences of Euro versus the U.S. dollar.
Net Loss
Net loss for the three-month period ended September 30, 2023 was $5,098,000,
as compared to net loss of $6,269,000 for the three-month period ended September 30, 2022. The decrease was due to a decrease in general
and administrative expenses and research and development expenses, as part of our efforts to reduce costs pursuant to an efficiency plan,
in addition to the completion or termination of several clinical studies. Net loss per share attributed to shareholders for the three-month
period ended September 30, 2023 was $0.12, as compared to $0.19 for the three-month period ended September 30, 2022. We had net loss attributed
to our non-controlling interest in Ever After for the three-month period ended September 30, 2023 of $137,000.
For the three-month periods
ended September 30, 2023 and 2022, we had weighted average common shares outstanding of 41,331,764 and 32,562,596, respectively which
were used in the computations of net loss per share for the three-month periods.
The increase in weighted
average common shares outstanding reflects the issuance of additional shares pursuant to a private placement offering we conducted in
December 2022, or the December 2022 Private Placement, and the issuance of additional shares upon the vesting of RSUs issued to directors,
employees and consultants.
Liquidity and Capital Resources
As of September 30, 2023,
our total current assets were $35,258,000 and total current liabilities were $4,322,000. On September 30, 2023, we had a working capital
surplus of $30,936,000, total equity of $11,038,000, out of which $2,137,000 is attributed to the non-controlling interest in Ever After,
and an accumulated deficit of $404,545,000.
Our cash and cash equivalents
as of September 30, 2023 amounted to $5,253,000, compared to $8,744,000 as of September 30, 2022, and compared to $5,360,000 as of June
30, 2023. Cash balances changed in the three months ended September 30, 2023 compared to the three months ended September 2022 for the
reasons presented below.
Net cash used for operating
activities was $5,857,000 in the three months ended September 30, 2023, compared to $7,609,000 in the three months ended September 30,
2022. The decrease is mainly attributed to a decrease in net loss following the completion of clinical trials and the implementation
of our cost reduction and efficiency plan. Cash used in operating activities in the three months ended September 30, 2023 and 2022 consisted
primarily of payments to suppliers, subcontractors, professional services providers and consultants, and payments of salaries to our
employees, partially offset by grants from the IIA, the EU’s Horizon 2020 and Horizon Europe programs, and funds received from
the NIAID contract.
Investing activities provided
cash of $5,802,000 in the three months ended September 30, 2023, compared to cash provided of $6,393,000 for the three months ended September
30, 2022. The investing activities in the three-month period ended September 30, 2023 and September 30, 2022 consisted primarily of the
withdrawal of short-term deposits, net of $5,905,000 and $6,466,000, respectively.
We had no financing activities
in the three months ended September 30, 2023 or 2022.
Between December 13, 2022
and December 27, 2022, we entered into a series of securities purchase agreements with several purchasers for an aggregate of 8,155,900
common shares and warrants, or the Warrants, to purchase up to 8,155,900 common shares. On December 13, 2022, we executed securities
purchase agreements to sell, at a purchase price of $1.03 per share, up to 5,579,883 common shares and Warrants to purchase up to 5,579,833
common shares, with an exercise price of $1.03 per share and a term of three years. On December 14, 2022, we executed securities purchase
agreements to sell, at a purchase price of $1.05 per share, up to 2,068,517 common shares and Warrants to purchase up to 2,068,517 common
shares, with an exercise price of $1.05 per share and a term of three years. On December 15, 2022, we executed securities purchase agreements
to sell, at a purchase price of $1.06 per share, up to 237,500 common shares and Warrants to purchase up to 237,500 common shares, with
an exercise price of $1.06 per share and a term of three years. On December 19, 2022, we executed a securities purchase agreement to
sell, at a purchase price of $1.09 per share, up to 135,000 common shares and Warrants to purchase up to 135,000 common shares, with
an exercise price of $1.09 per share and a term of three years. On December 27, 2022, we executed a securities purchase agreement to
sell, at a purchase price of $1.12 per share, up to 135,000 common shares and Warrants to purchase up to 135,000 common shares, with
an exercise price of $1.12 per share and a term of three years. The Warrants sold in the December 2022 Private Placement will be exercisable
upon the later of six months from their issuance date, or from the date the authorized shares increased. The Company issued 8,155,900
common shares and warrants that relate to the December 2022 Private Placement and received $8,024,000 as of that date net of $445 from
issuance expenses.
On April 27, 2023, our shareholders
approved an amendment to our articles of incorporation of to increase the number of authorized common shares from 60,000,000 shares to
300,000,000 shares and such increase was effectuated on May 1, 2023 when the Company filed its amendment to its articles of incorporation
reflecting such increase. As such, the Warrants became exercisable on May 1, 2023.
On December 14, 2022, Yaky
Yanay, our Chief Executive Officer, agreed to forgo, starting January 1, 2023, $375,000 of his annual cash salary for the next twelve
months in return for equity grants, issuable under our existing equity compensation plans. In that regard, we granted Mr. Yanay (i) 334,821
RSUs, vesting ratably each month, and (ii) options to purchase 334,821 common shares, vesting ratably each month, with a term of 3 years,
at an exercise price of $1.12 per share. In addition, the Board of Directors also agreed to grant Mr. Yanay options to purchase 1,500,000
common shares, with a term of 3 years, with the following terms: (i) options to purchase 500,000 common shares at an exercise price of
$1.56 per share, 50% vesting on June 30, 2023 and 50% vesting on December 31, 2023, (ii) options to purchase 500,000 common shares at
an exercise price of $2.08 per share, 50% vesting on June 30, 2023 and 50% vesting on December 31, 2023, and (iii) options to purchase
500,000 common shares at an exercise price of $2.60 per share, 50% vesting on June 30, 2023 and 50% vesting on December 31, 2023. All
options were granted in January 2023 and will expire three years from the later of the vesting date or the date which the Company increased
its authorized share capital.
On
July 16, 2020, we entered into an at-the market agreement, or the ATM Agreement, with Jefferies LLC, or Jefferies, pursuant to which
we may issue and sell shares of our common shares having an aggregate offering price of up to $75,000,000 from time to time through Jefferies.
Upon entering into the ATM Agreement, we filed a new shelf registration statement on Form S-3, which was declared effective by the SEC
on July 23, 2020. On September 21, 2022, as a result of General Instruction I.B.6 of Form S-3, and in accordance with the terms of the
Sales Agreement, we reduced the amount available to be sold under the ATM Agreement to a maximum aggregate offering price of up to $11,800,000
of our common shares from time to time through Jefferies. On September 7, 2023, we provided a formal notice of termination of the ATM
Agreement with Jefferies, which took effect on September 8, 2023.
During
the three months ended September 30, 2022, and 2023, we did not sell of our any common shares under the ATM Agreement.
Pursuant to a shelf registration on Form S-3 filed on September 12,
2023, which became effective on September 21, 2023, the Company may elect, from time to time, to offer and sell common shares, preferred
stock, warrants and units having an aggregate offering price of up to $200,000,000.
In April 2020, we and
our subsidiaries, Pluri Biotech Ltd. and Pluristem GmbH, executed the EIB Finance Agreement for non–dilutive funding of up to €50
million in the aggregate, payable in three tranches. The proceeds from the EIB Finance Agreement were intended to support our research
and development in the European Union to further advance our regenerative cell therapy platform, and to bring the products in our pipeline
to market. The term of the project was three years commencing on January 1, 2020.
During June 2021, we received
the first tranche in the amount of €20 million pursuant to the EIB Finance Agreement. The amount received is due to be repaid on
June 1, 2026 and bears annual interest of 4% to be paid together with the principal of the loan. As of September 30, 2023, the interest
accrued was in the amount of €1,863,000. In addition to the interest payable, the EIB is also entitled to royalty payments, pro-rated
to the amount disbursed from the EIB loan, on the Company’s consolidated revenues beginning in the fiscal year 2024 up to and including
its fiscal year 2030, in an amount equal to up to 2.3% of the Company’s consolidated revenues below $350 million, 1.2% of the Company’s
consolidated revenues between $350 million and $500 million and 0.2% of the Company’s consolidated revenues exceeding $500 million.
As the project term ended on December 31, 2022, we do not expect to receive additional funds pursuant to the EIB Finance Agreement.
According to the IIA grant
terms, we are required to pay royalties at a rate of 3% on sales of products and services derived from technology developed using this
and other IIA grants until 100% of the dollar-linked grants amount plus interest are repaid. In the absence of such sales, no payment
is required. Through September 30, 2023, total grants obtained from the IIA aggregated to approximately $27,743,000 and total royalties
paid and accrued amounted to $179,000.
In
June 2020, we announced that we were selected as a member of the CRISPR-IL consortium, a group funded by the IIA. CRISPR-IL brings together
the leading experts in life science and computer science from academia, medicine, and industry, to develop Artificial Intelligence, or
AI, based end-to-end genome-editing solutions. These next-generation, multi-species genome editing products for human, plant, and animal
DNA, have applications in the pharma, agriculture, and aquaculture industries. CRISPR-IL is funded by the IIA with a total budget of
approximately $10,000,000 of which, an amount of approximately $480,000 was a direct grant allocated to us, for the initial period of
18 months. During October 2021, we received an approval for an additional grant of approximately $583,000 from the IIA pursuant to the
CRISPR-IL consortium program, for an additional period of eighteen months. During January 2023, we received approval for an extension
of an additional 2 months to finish the program until June 30, 2023. The CRISPR-IL consortium program does not include any obligation
to pay royalties.
Through
September 30, 2023, we received total grants of approximately $774,000 in cash from the IIA pursuant to the CRISPR-IL consortium program;
no amount was received during the three months ended September 30, 2023.
On
September 6, 2022, we announced that a €7.5 million non-dilutive grant from the European Union’s Horizon program was awarded
to Advanced PeRsOnalized Therapies for Osteoarthritis (PROTO), an international collaboration led by Charité Berlin Institute
of Health Center for Regenerative Therapies. The goal of the PROTO project is to utilize our PLX-PAD cells in a Phase I/IIa study for
the treatment of mild to moderate knee osteoarthritis. Final approval of the grant is subject to completion of the consortium agreement.
An amount of approximately Euro 500,000 (approximately $533,745) will be a direct grant that will be allocated to us. Through September
30, 2023, we received a payment of approximately $185,000 in cash, which relates to the PROTO program.
The
Phase I/II study will be carried out by Charité, together with us and other members of the international consortium under the
leadership of Professor Tobias Winkler, Principal Investigator, at the Berlin Institute of Health Center of Regenerative Therapies, Julius
Wolff Institute and Center for Musculoskeletal Surgery.
On
July 11, 2023, we signed a three-year $4,200,000 contract with the NIAID, which is part of the NIH. We will collaborate with the U.S.
Department of Defense’s, or DoD’s, AFRRI and USUHS to further advance the development of our PLX-R18 cell therapy as a potential
novel treatment for H-ARS. H-ARS is a deadly disease that can result from nuclear disasters and radiation exposure. The period of performance
of this contract will be from July 1, 2023 through June 30, 2024, which may be extended for an additional two-year period. As of September
30, 2023, we expect to receive from the NIAID grant approximately $382,000.
The currency of our financial
portfolio is mainly in U.S. dollars and we use options contracts and other financial instruments in order to hedge our exposures to currencies
other than the U.S. dollar. For more information, please see Item 7A. - “Quantitative and Qualitative Disclosures about Market
Risk” in the 2023 Annual Report.
We have an effective Form
S-3 registration statement (File No. 333-273347), filed under the Securities Act of 1933, as amended, with the SEC using a “shelf”
registration process. Under this shelf registration process, we may, from time to time, sell our common shares, preferred stock and warrants
to purchase common shares, and of two or more of such securities, in one or more offerings for an aggregate initial offering price of
$200,000,000. As of November 13, 2023, no securities have been sold pursuant to
our effective Form S-3 registration statement.
Outlook
We have accumulated a deficit of $404,545,000 since our inception in
May 2001. We do not expect to generate any significant revenues from sales of products in the next twelve months. We expect to generate
revenues, from collaborations and sales of licenses to use our technology or products, but in the short and medium terms these will unlikely
exceed our costs of operations.
We may be required to obtain
additional liquidity resources in order to support the commercialization of our products and technology and maintain our research and
development and clinical study activities.
We are continually looking
for sources of funding, including non-diluting sources such as collaboration with other companies via licensing agreements, joint venture
and partnerships, R&D contracts such as our agreement with the NIAID, research grants such as the IIA grants and the European Union
grant, and sales of our common shares.
We believe that we have sufficient
cash to fund our operations for at least the next twelve months.
Item 4. Controls
and Procedures.
Evaluation of Disclosure
Controls and Procedures - We maintain a system of disclosure controls and procedures that are designed for the purposes of ensuring
that information required to be disclosed in our SEC reports is recorded, processed, summarized and reported within the time periods
specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including
our Chief Executive Officer, or CEO, and our Chief Financial Officer, or CFO, as appropriate to allow timely decisions regarding required
disclosures.
As of the end of the period
covered by this report, we carried out an evaluation, under the supervision and with the participation of our CEO and our CFO, of the
effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended.
Based on that evaluation, our CEO and CFO concluded that our disclosure controls and procedures are effective.
Changes in Internal
Control Over Financial Reporting - There has been no change in our internal control over financial reporting during the first
quarter of fiscal year 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial
reporting.
PART II – OTHER
INFORMATION
Item 1A. Risk Factors.
In addition to the other
information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors”
in our 2023 Annual Report, which could materially affect our business, financial condition or future results.
We could fail to maintain the listing of
our common shares on the Nasdaq Global Market, which could harm the liquidity of our shares and our ability to raise capital or complete
a strategic transaction.
On April 19, 2023, we received
a letter, or Notice, from The Nasdaq Stock Market, or Nasdaq, advising us that for 30 consecutive trading days preceding the date of
the Notice, the bid price of our common shares had closed below the $1.00 per share minimum required for continued listing on the Nasdaq
Global Market pursuant to Nasdaq Listing Rule 5450(a)(1), or MBPR. The Notice had no effect on the listing of our common shares at that
time, and our common shares continued to trade on Nasdaq under the symbol “PLUR.”
Under Nasdaq Listing Rule
5810(c)(3)(A), if during the 180 calendar days period following the date of that Notice the closing bid price of our common shares will
close at or above $1.00 for a minimum of ten (10) consecutive business days, we will regain compliance with the MBPR and our common shares
will continue to be eligible for listing on Nasdaq, absent noncompliance with any other requirement for continued listing. The compliance
period, or Compliance Period, to comply with the MBPR has expired on October 16, 2023.
On October 17, 2023, the
Company received a letter, or the Letter, from Nasdaq approving an extension of an additional 180 calendar days from the date of the
Letter, or until April 15, 2024, or the Additional Compliance Period to regain compliance with the MBPR as well as approving our application
to transfer our securities from The Nasdaq Global Market to The Nasdaq Capital Market starting at the opening of business on October
19, 2023. Our common shares will continue to trade under the symbol “PLUR.” The Nasdaq Capital Market is a continuous trading
market that operates in substantially the same manner as The Nasdaq Global Market and listed companies must meet certain financial requirements
and comply with Nasdaq’s corporate governance requirements.
If
at any time during the Additional Compliance Period, the bid price of the common shares closes at or above $1.00 per share for a minimum
of 10 consecutive trading days, Nasdaq will provide us with written confirmation of compliance with the MBPR and the matter will be closed.
If we do not regain compliance within the Additional Compliance Period or do not comply with the terms of the extension, Nasdaq will
provide notice that our securities will be delisted from The Nasdaq Capital Market.
As of the date of this filing,
our common shares are trading below $1.00 per share. If we do not regain compliance with the MBPR by the end of the Compliance Period
(or the Compliance Period as may be extended), our common shares will be subject to delisting. A delisting from Nasdaq would likely result
in a reduction in some or all of the following, each of which could have a material adverse effect on shareholders:
| ● | the
liquidity of our common shares; |
| ● | the
market price of our common shares; |
| ● | the
availability of information concerning the trading prices and volume of our common shares; |
| ● | our
ability to obtain financing or complete a strategic transaction; |
| ● | the
number of institutional and other investors that will consider investing in our common shares;
and |
| ● | the
number of market markers or broker-dealers for our common shares. |
We
intend to monitor the closing bid price of our common shares and may, if appropriate, consider implementing available options to regain
compliance with the MBPR under the Nasdaq Listing Rules, including initiating a reverse stock split.
We conduct our operations in Israel. Conditions
in Israel, including the recent attack by Hamas and other terrorist organizations and Israel’s war against them, may
affect our operations.
Our offices are located in
Haifa, Israel, thus, political, economic, and military conditions in Israel may directly affect our business. On October 7, 2023, Hamas terrorists
infiltrated Israel’s southern border from the Gaza Strip and conducted a series of attacks on civilian and military targets. Hamas also
launched extensive rocket attacks on Israeli population and industrial centers located along Israel’s border with the Gaza Strip
and in other areas within the State of Israel. Following the attack, Israel’s security cabinet declared war against Hamas and
the Israeli military began to call-up reservists for active duty. At the same time, and because of the war declaration against Hamas,
the clash between Israel and Hezbollah in Lebanon has escalated and there is a possibility that it will turn into a greater regional
conflict in the future.
As of today, there is no
material impact on the Company’s operations. According to the recent guidelines of the Israeli government, the Company’s
offices are open and functioning as usual. However, if the war will escalate and expand to the Northern border with Lebanon, and the
Israeli government will impose additional restrictions on movement and travel, our management and employees’ ability to effectively
perform their daily tasks might be temporarily disrupted, which may result in delays in some of our projects.
The Company currently has
the supply of raw materials needed for its regular operations. While there may be some possible delays in supply, those are currently
not anticipated to be material to the Company’s operations. However, if the war continues for a significant amount of time, this
situation may change.
Any hostilities involving
Israel, terrorist activities, political instability or violence in the region, or the interruption or curtailment of trade or transport
between Israel and its trading partners could make it more difficult for us to raise capital, if needed in the future, and adversely
affect our operations and results of operations and the market price of our common shares. In addition, to the extent the IIA no longer
makes grants similar to those we have received in the past, it could adversely affect our financial results.
Our insurance does not cover damage or losses that may occur as a result
of the current war by Israel against Hamas. Although the Israeli government is currently committed to covering the reinstatement value
of direct damages that are caused by terrorist attacks or acts of war, we cannot assure you that this government coverage will be maintained
or, if maintained, will be sufficient to compensate us fully for damages incurred. Any losses or damages incurred by us could have a material
adverse effect on our business, financial condition, and results of operations.
Further, many Israeli citizens
are obligated to perform several days, and in some cases, more, of annual military reserve duty each year until they reach the age of
40 (or older for certain reservists) and, in the event of a military conflict, may be called to active duty. In response to the series
of attacks on civilian and military targets in October 2023, there have been significant call-ups of military reservists. Currently,
only a few of the Company’s employees have been called up to military service, none of whom are in management positions. However,
if the number of reservists in our Company increases and becomes significant, our operations could be disrupted by such call-ups.
It is currently not possible
to predict the duration or severity of the ongoing conflict or its effects on our business, operations and financial condition. The ongoing
conflict is rapidly evolving and developing, and could disrupt our business and operations, and adversely affect our ability to raise
additional funds or sell our securities, among other impacts.
Item 6. |
|
Exhibits. |
|
|
|
3.1 |
|
Composite
Copy of the Company’s Articles of Incorporation as amended on May 1, 2023 (incorporated by reference to Exhibit 3.1 of our
quarterly report on Form 10-Q filed on May 9, 2023). |
|
|
|
3.2 |
|
Amended
and Restated By-laws as amended on September 10, 2020 (incorporated by reference to Exhibit 3.3 of our annual report on Form 10-K
filed on September 10, 2020). |
|
|
|
31.1* |
|
Rule 13a-14(a) Certification of Chief Executive Officer. |
|
|
|
31.2* |
|
Rule 13a-14(a) Certification of Chief Financial Officer. |
|
|
|
32.1** |
|
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350. |
|
|
|
32.2** |
|
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350. |
|
|
|
101* |
|
The following materials
from our Quarterly Report on Form 10-Q for the quarter ended September 30, 2023 formatted in inline XBRL (eXtensible Business
Reporting Language): (i) the Interim Condensed Consolidated Balance Sheets, (ii) the Interim Condensed Consolidated Statements
of Operations, (iii) the Interim Condensed Statements of Changes in Shareholders’ Equity, (iv) the Interim Condensed Consolidated
Statements of Cash Flows, and (vi) the Notes to Interim Condensed Consolidated Financial Statements, tagged as blocks of text
and in detail. |
|
|
|
104* |
|
Cover Page
Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101). |
SIGNATURES
In accordance with the requirements of the Securities
Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
PLURI INC. |
|
|
|
By: |
/s/
Yaky Yanay |
|
|
Yaky Yanay, Chief Executive Officer and President |
|
|
(Principal Executive Officer) |
|
|
|
|
Date: |
November 13, 2023 |
|
|
|
|
By: |
/s/ Chen Franco-Yehuda |
|
|
Chen Franco-Yehuda, Chief Financial Officer |
|
|
(Principal Financial Officer and
Principal Accounting Officer) |
|
|
|
|
Date: |
November 13, 2023 |
|
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In connection with the Quarterly Report on Form
10-Q of Pluri Inc., or the Company, for the period ended September 30, 2023 as filed with the Securities and Exchange Commission on the
date hereof, or the Report, I, Yaky Yanay, Chief Executive Officer and President of the Company, certify, pursuant to 18 U.S.C. ss. 1350,
that, to my knowledge:
In connection with the Quarterly Report on Form
10-Q of Pluri Inc., or the Company, for the period ended September 30, 2023 as filed with the Securities and Exchange Commission on the
date hereof, or the Report, I, Chen Franco-Yehuda, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, that,
to my knowledge: