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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
Under the Securities Exchange Act of 1934
For the Month of September 2024
Commission File Number: 001-37353
SCINAI IMMUNOTHERAPEUTICS LTD.
(Translation of registrant’s name into English)
Jerusalem BioPark, 2nd Floor
Hadassah Ein Kerem Campus
Jerusalem, Israel
(Address of principal executive office)
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 ☒ Form 40-F ☐
Explanatory Note
This Amendment No. 1 to the Report on Form 6-K, originally filed with the Securities and Exchange Commission on August 15, 2024 (“Original 6-K”), is being filed solely for the purposes of furnishing unaudited interim condensed consolidated financial statements as of June 30, 2024, which were inadvertently not included in the Original 6-K, and incorporating certain exhibits into registration statements of the registrant.
A copy of the press release is furnished herewith as Exhibit 99.1, and a copy of the unaudited interim condensed consolidated financial statements as of June 30, 2024 is furnished herein as Exhibit 99.2.
This Report on Form 6-K is hereby incorporated by reference into the registrant’s Registration Statements on Form S-8 (File No. 333-271293 and File No. 333-239344) and Form F-3 (File No. 333-274078 and File No. 333-276767), to be a part thereof from the date on which this report is submitted, to the extent not superseded by documents or reports subsequently filed or furnished.
Exhibit Index
| Exhibit No. | Description | |
| 99.1 | Press release dated August 15, 2024. | |
| 99.2 | Unaudited Interim Condensed Consolidated Financial Statements as of June 30, 2024 | |
| 101.INS | Inline XBRL Instance Document | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document. | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
SIGNATURES
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.
| Scinai Immunotherapeutics Ltd. | ||
| Date: September 9, 2024 | By: | /s/ Amir Reichman |
| Amir Reichman | ||
| Chief Executive Officer | ||
2
Exhibit 99.1
Scinai Publishes Q2 2024 Financial Results and Provides Business Update; Restructures $29 Million Bank Loan to Equity; On Track to Regain Nasdaq Compliance by August 23
JERUSALEM, Aug. 15, 2024 /PRNewswire/ -- Scinai Immunotherapeutics Ltd. (Nasdaq: SCNI) (“Scinai”, or the “Company”), a biopharmaceutical company focused on developing inflammation and immunology (I&I) biological products and on providing CDMO services through its Scinai Bioservices business unit, today published its financial results for the quarter ended June 30, 2024 and provided a business update. The Company will hold a webinar covering its Q2 2024 financial results and business update on August 20th at 11AM EDT/18:00 Israel time. Registration for the webinar can be done using the following LINK.
Business Update & Recent Highlights
Conversion of EIB Loan into Equity and Regaining Nasdaq Compliance
On June 7, 2024, the Company announced that on June 5, 2024, it had received formal notification from the Listing Qualification Department (the “Staff”) of the Nasdaq Stock Market (“Nasdaq”) that the Company remains non-compliant with the requirement in Listing Rule 5550(b)(1) that a company have stockholders’ equity of at least $2.5 million, or any of the alternative requirements under Nasdaq Listing Rule 5550(b) (“Equity Requirement”). Accordingly, on June 18, 2024, the Company presented its plan to regain compliance with the Equity Requirement with the Nasdaq Hearing Panel. The plan presented to the panel included a debt-to-equity loan restructuring deal between the Company and the European Investment Bank (the “EIB”).
On July 3, 2024, the Company announced that the Hearings Panel had determined to grant the Company’s request to continue its listing on The Nasdaq Stock Market, subject to the Company meeting certain conditions, including filing on or before August 14, 2024 a public disclosure demonstrating compliance with the Equity Requirement.
On August 13, 2024, the Company announced that it had signed a Loan Restructuring Agreement, which included an amendment and restatement to the amended Finance Contract with the EIB. The closing of the transaction is subject to delivery of customary closing documents and is expected to close by August 23, 2024. In connection with the transaction, an amount equal to approximately EUR 26.6 million (equal to approximately $29 million), including interest accrued to date, owed by the Company to the EIB under the amended Finance Contract between the parties will be converted into 1,000 preferred shares, no par value per share, of the Company (the “Preferred Shares”) convertible into ADSs. Following such conversion, the total outstanding amount owed by the Company to the EIB will be EUR 250,000 (equal to approximately $273,000). The outstanding amount will have a maturity date of December 31, 2031, will not be prepayable in advance, and no interest accrues or is due and payable on such amount. Under the terms of the agreement, EIB may not convert its Preferred Shares into ADSs for a period of twelve (12) months from the date of issuance of the Preferred Shares. In addition, EIB may not convert its Preferred Shares into ADSs if at the time of conversion the aggregate number of ADSs EIB will receive or would have been entitled to receive within the twelve months prior to such conversion would exceed 4.99% of the ADSs issued and outstanding at the time of such conversion.
On August 14, 2024h the Company received from the Nasdaq Hearing Panel an extension until August 23, 2024 to close the restructuring transaction with the EIB and thereby demonstrate compliance with the Equity Requirement. Following closing of the restructuring transaction with the EIB, the Company intends to issue a press release submitted on Form 6-K stating that as a result of the completed loan restructuring, the Company has stockholders’ equity above $2.5 million as of the date of the filing. .
CDMO business unit
Since Jan 2024, the Company has received CDMO work orders valued at approximately $600K, and the Company is in advanced contract discussions with several other potential clients. The Company maintains confidence in its sales guidance for 2024 of $1.25 million in expected revenues. As the Company CDMO unit is new, and the Company is focused on rapidly growing, acquiring new clients and building its reputation and brand awareness of its CDMO services, the Company expects revenues from the CDMO business to increase materially in the coming years. This is also coupled with growing demand for boutique CDMO services from early-stage biotech companies looking for fast project onset at competitive pricing without compromising on meeting the most stringent scientific and quality standards.
In addition, in 2024 the Company has been pursuing extensive targeted marketing activities, including online advertisements, direct outreach campaigns and participation in major pharmaceutical conferences, such as BIO Europe Spring in Barcelona (March 2024), and the BioMed Israel conference in Tel Aviv, Israel (May 2024), at which the Company marketed its CDMO services and met potential partners for its R&D pipeline and potential investors.
The Company’s CDMO unit is currently focused both on executing drug development projects for its clients and on validating its processes and facilities to be ready for cGMP inspection by the Israeli Ministry of Health.
In June 2024, the Company held its first of its kind, hands on aseptic processing course at its facility in Jerusalem in collaboration with key figures in the industry including Ms. Rachel Shimonovitz, Head of GMP inspectorate of the Israeli Ministry of Health, and ADRES Int’l Biotech, a leading Israeli regulatory and quality consulting services firm. The course attracted many senior role holders from the Israeli biotech industry who came to the Company’s facility for this two-day education and training course.
Pipeline Development
The Company is aggressively advancing the NanoAb preclinical development. At the end of April 2024, the Company concluded an in-vivo proof of concept animal study in collaboration with Prof. Amos Gilhar, a world-renowned dermatologist of the prestigious Technion Israel Institute of Technology.
On July 15, 2024, the Company announced promising results as the statistical analysis of psoriasis markers measured in the study confirmed that the effect of Scinai’s NanoAb was similar to that of the two comparator drugs, supporting the hypothesis that intralesional injection of a nanoAb blocking the IL-17 cytokine can positively impact the inflammatory cytokine cascade, and lead to reduction in psoriatic lesion severity and improvement of the skin’s integrity. By delivering a biological treatment directly into psoriatic lesions, the Company aims to improve disease management for patients suffering from mild to moderate plaque psoriasis by offering the high potency and specificity advantages reserved for biologic drugs while providing a safer and more convenient treatment option compared to existing therapies currently offered to this patient category.
On June 4, 2024, the Company met for a scientific advisory meeting with the Paul Erlich Institute (the PEI) of Germany, the scientific advice of which is considered acceptable guidance for IMPD filing with the European Medicines Agency (EMA) and is also considered the European comparable to a pre-IND meeting with the FDA in the U.S.
Consequently, on July 23, 2024, the Company announced the receipt of positive regulatory feedback from the PEI for its drug development program towards Phase 1/2a clinical trial of its anti-IL-17A/F nanoAb (SCN-1) in Plaque Psoriasis. The minutes of meeting clarified its preclinical toxicology and clinical program for Plaque Psoriasis with intralesional injections for the treatment of patients with mild to moderate Plaque Psoriasis. The PEI requested to see data of efficacy in blocking IL-17F, and this data became available as per the Company’s announcement on July 15, 2024 describing the positive in vivo proof of concept results. The PEI accepted the Company’s position that toxicology studies can be conducted in pigs rather than in Non-Human Primates. The PEI also accepted the Company’s position to compare the SCN-1 to placebo directly in patients with mild to moderate plaque psoriasis while skipping the need for testing in healthy volunteers, resulting in a phase 1/2a clinical trial, which will assess both safety and efficacy in the same trial. Moreover, the PEI agreed to compare SCN-1 to placebo on the same human subject, a strategy that could significantly reduce the number of patients required for the clinical trial. Last, the PEI commented that the manufacturing process looks well developed and that controls and specifications presented are acceptable.
The Phase 1/2a study is expected to include approximately 24 plaque psoriasis patients and is expected to commence in the second half of 2025 with readout in 2026.
Additional NanoAbs for treatment of additional autoimmune diseases, such as asthma, atopic dermatitis and wet AMD, have been discovered and characterized at Max Planck and University Medical Center Göttingen as part of their research collaboration agreement with Scinai. Scinai holds exclusive options for exclusive licenses at pre-agreed financial terms for each of the resulting NanoAbs.
The Company is pursuing strategic partnerships and sublicensing options for both its COVID-19 self-administered inhaled NanoAb, which demonstrated highly promising in vivo results in animals as both a therapeutic and prophylactic treatment, and its anti-IL-17 nanoAb for the treatment of plaque psoriasis and other potential indications.
Q2 2024 Financial Summary
| · | R&D expenses for the six months ended June 30, 2024 amounted to $2,788 thousand, compared to $3,449 thousand for the six months ended June 30, 2023. The decrease was primarily due to a reduction in salaries and reduced use of subcontractors. |
| · | Marketing, general and administrative expenses for the six months ended June 30, 2024 amounted to $1,003 thousands, compared to $2,332 thousands for the six months ended June 30, 2023. The decrease was primarily due to a reduction in salaries, share-based compensation and professional services. |
| · | Financial expenses for the six months ended June 30, 2024 amounted to $526 thousand compared to $1,496 thousand for the six months ended June 30, 2023. |
| · | Net loss for the six months ended June 30, 2024 was $4,481 thousand compared to net loss of $7,277 thousand for the six months ended June 30, 2023. |
As of June 30, 2024, the Company had cash and cash equivalents and short-term deposits of $3,076 thousands compared to $4,870 thousands as of June 30, 2023.
BALANCE SHEETS
U.S. dollars in thousands
| June 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | 3,076 | $ | 4,870 | ||||
| Restricted cash | 138 | 140 | ||||||
| Trade receivables | 119 | - | ||||||
| Prepaid expenses and other receivables | 324 | 437 | ||||||
| Total current assets | 3,657 | 5,447 | ||||||
| NON-CURRENT ASSETS: | ||||||||
| Property, plant and equipment, net | 10,180 | 10,825 | ||||||
| Operating lease right-of-use assets | 1,014 | 1,200 | ||||||
| Total non-current assets | 11,194 | 12,025 | ||||||
| Total assets | $ | 14,851 | $ | 17,472 | ||||
The accompanying notes are an integral part of the financial statements.
BALANCE SHEETS
U.S. dollars in thousands (except share data)
| June 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| LIABILITIES NET OF CAPITAL DEFICIENCY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Trade payables | $ | 658 | $ | 535 | ||||
| Operating lease liabilities | 364 | 396 | ||||||
| Other payables | 650 | 849 | ||||||
| Total current liabilities | 1,672 | 1,780 | ||||||
| NON-CURRENT LIABILITIES: | ||||||||
| Warrants liability | 3 | 96 | ||||||
| Loan from others | 19,820 | 19,368 | ||||||
| Non-current operating lease liabilities | 640 | 797 | ||||||
| Total non-current liabilities | 20,463 | 20,261 | ||||||
| SHAREHOLDERS’ DEFICIT: | ||||||||
| Ordinary shares of no par value: Authorized: 20,000,000,000 shares at June 30, 2024 and at December 31, 2023; Issued and outstanding 3,349,431,584 shares at June 30, 2024 and 1,857,169,984 shares at December 31, 2023 | - | - | ||||||
| Additional paid-in capital | 121,272 | 119,506 | ||||||
| Accumulated deficit | (126,816 | ) | (122,335 | ) | ||||
| Accumulated other comprehensive loss | (1,740 | ) | (1,740 | ) | ||||
| Total shareholders’ deficit | (7,284 | ) | (4,569 | ) | ||||
| Total liabilities and shareholders’ deficit | $ | 14,851 | $ | 17,472 | ||||
The accompanying notes are an integral part of the financial statements.
STATEMENTS OF OPERATIONS
U.S. dollars in thousands (except share data)
| For the six months ended June 30 |
||||||||
| 2024 | 2023 | |||||||
| Revenues | $ | 284 | $ | - | ||||
| Cost of revenues | 448 | - | ||||||
| Gross loss | (164 | ) | - | |||||
| Research and development expenses, net | $ | 2,788 | $ | 3,449 | ||||
| Marketing, general, and administrative expenses | 1,003 | 2,332 | ||||||
| Total operating expenses | 3,791 | 5,781 | ||||||
| Total operating loss | 3,955 | 5,781 | ||||||
| Total Financial Expenses net, | 526 | 1,496 | ||||||
| Net loss | $ | 4,481 | $ | 7,277 | ||||
| Net loss per share attributable to ordinary shareholders, basic and diluted | (0.002 | ) | (0.006 | ) | ||||
| Weighted average number of shares used in computing net loss per share attributable to ordinary shareholders, basic and diluted | 2,288,278,248 | 1,322,019,241 | ||||||
The accompanying notes are an integral part of the financial statements.
STATEMENTS OF COMPREHENSIVE LOSS
U.S. dollars in thousands
| For the six months ended June 30 |
||||||||
| 2024 | 2023 | |||||||
| Net loss | $ | 4,481 | $ | 7,277 | ||||
| Other comprehensive income: | ||||||||
| Foreign currency translation adjustments | - | (267 | ) | |||||
| Total comprehensive loss | 4,481 | $ | 7,010 | |||||
The accompanying notes are an integral part of the financial statements.
STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
U.S. dollars in thousands (except share data)
| Ordinary shares | Additional paid-in |
Accumulated comprehensive |
Accumulated | Total shareholders’ |
||||||||||||||||||||
| Number | Amount | capital | loss | deficit | equity | |||||||||||||||||||
| Balance as of January 1, 2024 | 1,857,169,984 | $ | - | $ | 119,506 | $ | (1, 740 | ) | $ | (122,335 | ) | $ | (4,569 | ) | ||||||||||
| Issuance and exercise of warrants, net of issuance costs of $275(see note 5) | 1,491,240,800 | - | 1,433 | - | - | 1,433 | ||||||||||||||||||
| Vested RSU’s | 1,020,800 | - | - | - | - | - | ||||||||||||||||||
| Share-based compensation | - | - | 333 | - | - | 333 | ||||||||||||||||||
| Net loss | - | - | - | - | (4,481 | ) | (4,481 | ) | ||||||||||||||||
| Balance as of June 30, 2024 | 3,349,431,584 | - | $ | 121,272 | $ | (1, 740 | ) | $ | (126,816 | ) | $ | (7,284 | ) | |||||||||||
| Ordinary shares | Additional paid-in |
Accumulated comprehensive |
Accumulated | Total shareholders’ |
||||||||||||||||||||
| Number | Amount | capital | loss | deficit | equity | |||||||||||||||||||
| Balance as of January 1, 2023 | 989,290,784 | $ | - | $ | 116,082 | $ | (2,007 | ) | $ | (115,835 | ) | $ | (1,760 | ) | ||||||||||
| Exercise of warrants | 464,015,200 | - | 801 | - | - | 801 | ||||||||||||||||||
| Vested RSU’s | 664,800 | - | - | - | - | - | ||||||||||||||||||
| Reclassification of warrants liability to equity | - | - | 398 | - | - | 398 | ||||||||||||||||||
| Share-based compensation | - | - | 459 | - | - | 459 | ||||||||||||||||||
| Other comprehensive income | - | - | - | 267 | - | 267 | ||||||||||||||||||
| Net loss | - | - | - | - | (7,277 | ) | (7,277 | ) | ||||||||||||||||
| Balance as of June 30, 2023 | 1,453,970,784 | - | $ | 117,740 | $ | (1, 740 | ) | $ | (123,112 | ) | $ | (7,112 | ) | |||||||||||
STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
| For the six months ended June 30, |
||||||||
| 2024 | 2023 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (4,481 | ) | $ | (7,277 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation of property, plant and equipment | 652 | 285 | ||||||
| Financial expense related to loan from others | 451 | 4,321 | ||||||
| Revaluation of warrants | (93 | ) | (3,333 | ) | ||||
| Share-based compensation | 333 | 452 | ||||||
| Decrease (increase) in receivables | (119 | ) | - | |||||
| Decrease (increase) in other receivables | 110 | 8 | ||||||
| Changes in operating lease right-of-use assets | 189 | (16 | ) | |||||
| Increase in trade payables | 125 | (31 | ) | |||||
| Changes in operating lease liabilities | (189 | ) | 3 | |||||
| Increase (decrease) in other payables | (199 | ) | (347 | ) | ||||
| Net cash used in operating activities | (3,221 | ) | (5,935 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchase of property, plant and equipment | (8 | ) | (383 | ) | ||||
| Net cash used in investing activities | $ | (8 | ) | $ | (383 | ) | ||
The accompanying notes are an integral part of the financial statements.
STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
| For the six months ended June 30, |
||||||||
| 2024 | 2023 | |||||||
| Cash flows from financing activities: | ||||||||
| Proceed from exercise of warrants, net | $ | 1,433 | - | |||||
| Net cash provided by financing activities | 1,433 | - | ||||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | 121 | (265 | ) | |||||
| Increase (decrease) in cash, cash equivalents and restricted cash | (1,917 | ) | (6,583 | ) | ||||
| Cash, cash equivalents and restricted cash at beginning of year | 5,010 | 14,215 | ||||||
| Cash, cash equivalents and restricted cash at end of year | $ | 3,214 | $ | 7,632 | ||||
| Supplementary disclosure of cash flows activities: | ||||||||
| (1) Cash paid during the year for: | ||||||||
| Interest | $ | 143 | $ | 725 | ||||
| (2) Non-cash transactions: | ||||||||
| Reclassification of warrants liability to equity | - | 398 | ||||||
| Exercise of warrants liability into shares | $ | - | $ | 801 | ||||
| Reconciliation of cash, cash equivalents and restricted cash: | ||||||||
| Cash and cash equivalents | $ | 3,076 | $ | 7,506 | ||||
| Restricted cash | 138 | 126 | ||||||
| Cash, cash equivalents and restricted cash | $ | 3,214 | $ | 7,632 | ||||
The accompanying notes are an integral part of the financial statements.
About Scinai Immunotherapeutics
Scinai Immunotherapeutics Ltd. (Nasdaq: SCNI) is a biopharmaceutical company with two complementary business units, one focused on in-house development of inflammation and immunology (I&I) biological therapeutic products beginning with an innovative, de-risked pipeline of nanosized VHH antibodies (NanoAbs) targeting diseases with large unmet medical needs, and the other a boutique CDMO providing biological drug development, analytical methods development, clinical cGMP manufacturing, and pre-clinical and clinical trial design and execution services for early stage biotech drug development projects.
Company website: www.scinai.com.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Litigation Reform Act of 1995. Words such as “expect,” “believe,” “intend,” “plan,” “continue,” “may,” “will,” “anticipate,” and similar expressions are intended to identify forward-looking statements. All statements, other than statements of historical facts, are forward-looking statements. Examples of such statements include, but are not limited to, the closing of the transaction with EIB, ability of the Company to regain and remain compliant with the continued listing standards of Nasdaq, the potential of Scinai’s NanoAb program, expected revenues of Scinai’s CDMO business and timing of pre-clinical and clinical studies of the Company’s anti-IL NanoAbs for the treatment of plaque psoriasis and their results. These forward-looking statements reflect management’s current views with respect to certain current and future events and are subject to various risks, uncertainties and assumptions that could cause the results to differ materially from those expected by the management of Scinai Immunotherapeutics Ltd. Risks and uncertainties include, but are not limited to; risk associated with the closing of the transaction with EIB; the risk that the Company will otherwise be unable to regain compliance and remain compliant with the continued listing requirements of Nasdaq; lower than anticipated revenues of Scinai’s CDMO business in 2024 and thereafter; failure to sign agreements with other potential clients of the CDMO business; a delay in the commencement and results of pre-clinical and clinical studies, the risk of delay in, Scinai’s inability to conduct, or the unsuccessful results of, its research and development activities, including the contemplated in-vivo studies and a clinical trial; the risk that Scinai will not be successful in expanding its CDMO business or in-license other NanoAbs; the risk that Scinai may not be able to secure additional capital on attractive terms, if at all; the risk that the therapeutic and commercial potential of NanoAbs will not be met or that Scinai will not be successful in bringing the NanoAbs towards commercialization; the risk of a delay in the preclinical and clinical trials data for NanoAbs, if any; the risk that our business strategy may not be successful; Scinai’s ability to acquire rights to additional product opportunities; Scinai’s ability to enter into collaborations on terms acceptable to Scinai or at all; timing of receipt of regulatory approval of Scinai’s manufacturing facility in Jerusalem, if at all or when required; the risk that the manufacturing facility will not be able to be used for a wide variety of applications and other vaccine and treatment technologies; and the risk that drug development involves a lengthy and expensive process with uncertain outcomes. More detailed information about the risks and uncertainties affecting the Company is contained under the heading “Risk Factors” in the Company’s Annual Report on Form 20-F filed with the Securities and Exchange Commission (“SEC”) on May 15, 2024, and the Company’s subsequent filings with the SEC. Scinai undertakes no obligation to revise or update any forward-looking statement for any reason.
Photo: https://mma.prnewswire.com/media/2482084/Scinai_Immunotherapeutics.jpg
Logo: https://mma.prnewswire.com/media/2310190/Scinai_Immunotherapeutics_Logo.jpg
Company Contacts
Investor Relations | +972 8 930 2529 | ir@scinai.com
Business Development | +972 8 930 2529 | bd@scinai.com
12
Exhibit 99.2
SCINAI IMMUNOTHERAPEUTICS LTD.
(Formerly known as BiondVax Pharmaceuticals Ltd.)
CONDENSED FINANCIAL STATEMENTS
June 30, 2024
Unaudited
SCINAI IMMUNOTHERAPEUTICS LTD. (Formerly known as BiondVax Pharmaceuticals Ltd.) – (Unaudited)
BALANCE SHEETS
U.S. dollars in thousands
| June 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | 3,076 | $ | 4,870 | ||||
| Restricted cash | 138 | 140 | ||||||
| Trade receivables | 119 | - | ||||||
| Prepaid expenses and other receivables | 324 | 437 | ||||||
| Total current assets | 3,657 | 5,447 | ||||||
| NON-CURRENT ASSETS: | ||||||||
| Property, plant and equipment, net | 10,180 | 10,825 | ||||||
| Operating lease right-of-use assets | 1,014 | 1,200 | ||||||
| Total non-current assets | 11,194 | 12,025 | ||||||
| Total assets | $ | 14,851 | $ | 17,472 | ||||
The accompanying notes are an integral part of the financial statements.
SCINAI IMMUNOTHERAPEUTICS LTD. (Formerly known as BiondVax Pharmaceuticals Ltd.) – (Unaudited)
BALANCE SHEETS
U.S. dollars in thousands (except share data)
| June 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| LIABILITIES NET OF CAPITAL DEFICIENCY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Trade payables | $ | 658 | $ | 535 | ||||
| Operating lease liabilities | 364 | 396 | ||||||
| Other payables | 650 | 849 | ||||||
| Total current liabilities | 1,672 | 1,780 | ||||||
| NON-CURRENT LIABILITIES: | ||||||||
| Warrants liability | 3 | 96 | ||||||
| Loan from others | 19,820 | 19,368 | ||||||
| Non-current operating lease liabilities | 640 | 797 | ||||||
| Total non-current liabilities | 20,463 | 20,261 | ||||||
| SHAREHOLDERS’ DEFICIT: | ||||||||
| Ordinary shares of no par value: Authorized: 20,000,000,000 shares at June 30, 2024 and at December 31, 2023; Issued and outstanding 3,349,431,584 shares at June 30, 2024 and 1,857,169,984 shares at December 31, 2023 | ||||||||
| Additional paid-in capital | 121,272 | 119,506 | ||||||
| Accumulated deficit | (126,816 | ) | (122,335 | ) | ||||
| Accumulated other comprehensive loss | (1,740 | ) | (1,740 | ) | ||||
| Total shareholders’ deficit | (7,284 | ) | (4,569 | ) | ||||
| Total liabilities and shareholders’ deficit | $ | 14,851 | $ | 17,472 | ||||
The accompanying notes are an integral part of the financial statements.
SCINAI IMMUNOTHERAPEUTICS LTD. (Formerly known as BiondVax Pharmaceuticals Ltd.) – (Unaudited)
STATEMENTS OF OPERATIONS
U.S. dollars in thousands (except share data)
| For the six months ended June 30 |
||||||||
| 2024 | 2023 | |||||||
| Revenues | $ | 284 | $ | - | ||||
| Cost of revenues | 448 | |||||||
| Gross loss | (164 | ) | ||||||
| Research and development expenses, net | $ | 2,788 | $ | 3,449 | ||||
| Marketing, general, and administrative expenses | 1,003 | 2,332 | ||||||
| Total operating expenses | 3,791 | 5,781 | ||||||
| Total operating loss | 3,955 | 5,781 | ||||||
| Total Financial Expenses net, | 526 | 1,496 | ||||||
| Net loss | $ | 4,481 | $ | 7,277 | ||||
| (0.002 | ) | (0.006 | ) | |||||
| 2,288,278,248 | 1,322,019,241 | |||||||
The accompanying notes are an integral part of the financial statements.
SCINAI IMMUNOTHERAPEUTICS LTD. (Formerly known as BiondVax Pharmaceuticals Ltd.) – (Unaudited)
STATEMENTS OF COMPREHENSIVE LOSS
U.S. dollars in thousands
| For the six months ended June 30 |
||||||||
| 2024 | 2023 | |||||||
| Net loss | $ | 4,481 | $ | 7,277 | ||||
| Other comprehensive income: | ||||||||
| Foreign currency translation adjustments | (267 | ) | ||||||
| Total comprehensive loss | 4,481 | $ | 7,010 | |||||
The accompanying notes are an integral part of the financial statements.
SCINAI IMMUNOTHERAPEUTICS LTD. (Formerly known as BiondVax Pharmaceuticals Ltd.) – (Unaudited)
STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
U.S. dollars in thousands (except share data)
| Ordinary shares | Additional paid-in | Accumulated comprehensive | Accumulated | Total shareholders’ |
||||||||||||||||||||
| Number | Amount | capital | loss | deficit | equity | |||||||||||||||||||
| Balance as of January 1, 2024 | 1,857,169,984 | $ | $ | 119,506 | $(1, 740) | $ | (122,335 | ) | $ | (4,569 | ) | |||||||||||||
| Issuance and exercise of warrants, net of issuance costs of $275 (see note 5) | 1,491,240,800 | 1,433 | 1,433 | |||||||||||||||||||||
| Vested RSU’s | 1,020,800 | |||||||||||||||||||||||
| Share-based compensation | - | 333 | 333 | |||||||||||||||||||||
| Net loss | - | (4,481 | ) | (4,481 | ) | |||||||||||||||||||
| Balance as of June 30, 2024 | 3,349,431,584 | $ | 121,272 | $ | (1,740 | ) | $ | (126,816 | ) | $ | (7,284 | ) | ||||||||||||
| Ordinary shares | Additional paid-in | Accumulated comprehensive | Accumulated | Total shareholders’ |
||||||||||||||||||||
| Number | Amount | capital | loss | deficit | equity | |||||||||||||||||||
| Balance as of January 1, 2023 | 989,290,784 | $ | $ | 116,082 | $ | (2,007 | ) | $ | (115,835 | ) | $ | (1,760 | ) | |||||||||||
| Exercise of warrants | 464,015,200 | 801 | 801 | |||||||||||||||||||||
| Vested RSU’s | 664,800 | |||||||||||||||||||||||
| Reclassification of warrants liability to equity | - | 398 | 398 | |||||||||||||||||||||
| Share-based compensation | - | 459 | 459 | |||||||||||||||||||||
| Other comprehensive income | - | 267 | 267 | |||||||||||||||||||||
| Net loss | - | (7,277 | ) | (7,277 | ) | |||||||||||||||||||
| Balance as of June 30, 2023 | 1,453,970,784 | $ | 117,740 | $ | (1,740 | ) | $ | (123,112 | ) | $ | (7,112 | ) | ||||||||||||
SCINAI IMMUNOTHERAPEUTICS LTD. (Formerly known as BiondVax Pharmaceuticals Ltd.) – (Unaudited)
STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
| For the six months ended June 30, |
||||||||
| 2024 | 2023 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (4,481 | ) | $ | (7,277 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation of property, plant and equipment | 652 | 285 | ||||||
| Financial expense related to loan from others | 451 | 4,321 | ||||||
| Revaluation of warrants | (93 | ) | (3,333 | ) | ||||
| Share-based compensation | 333 | 452 | ||||||
| Decrease (increase) in receivables | (119 | ) | ||||||
| Decrease (increase) in other receivables | 110 | 8 | ||||||
| Changes in operating lease right-of-use assets | 189 | (16 | ) | |||||
| Increase in trade payables | 125 | (31 | ) | |||||
| Changes in operating lease liabilities | (189 | ) | 3 | |||||
| Increase (decrease) in other payables | (199 | ) | (347 | ) | ||||
| Net cash used in operating activities | (3,221 | ) | (5,935 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchase of property, plant and equipment | (8 | ) | (383 | ) | ||||
| Net cash used in investing activities | $ | (8 | ) | $ | (383 | ) | ||
The accompanying notes are an integral part of the financial statements.
SCINAI IMMUNOTHERAPEUTICS LTD. (Formerly known as BiondVax Pharmaceuticals Ltd.) – (Unaudited)
STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
| For the six months ended June 30, |
||||||||
| 2024 | 2023 | |||||||
| Cash flows from financing activities: | ||||||||
| Proceed from exercise of warrants, net | $ | 1,433 | - | |||||
| Net cash provided by financing activities | 1,433 | - | ||||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | 121 | (265 | ) | |||||
| Increase (decrease) in cash, cash equivalents and restricted cash | (1,917 | ) | (6,583 | ) | ||||
| Cash, cash equivalents and restricted cash at beginning of year | 5,010 | 14,215 | ||||||
| Cash, cash equivalents and restricted cash at end of year | $ | 3,214 | $ | 7,632 | ||||
| Supplementary disclosure of cash flows activities: | ||||||||
| (1) Cash paid during the year for: | ||||||||
| Interest | $ | 143 | $ | 725 | ||||
| (2) Non-cash transactions: | ||||||||
| Reclassification of warrants liability to equity | 398 | |||||||
| Exercise of warrants liability into shares | $ | $ | 801 | |||||
| Reconciliation of cash, cash equivalents and restricted cash: | ||||||||
| Cash and cash equivalents | $ | 3,076 | $ | 7,506 | ||||
| Restricted cash | 138 | 126 | ||||||
| Cash, cash equivalents and restricted cash | $ | 3,214 | $ | 7,632 | ||||
The accompanying notes are an integral part of the financial statements.
SCINAI IMMUNOTHERAPEUTICS LTD. (Formerly known as BiondVax Pharmaceuticals Ltd.) – (Unaudited)
NOTES TO FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data and unless otherwise indicated)
NOTE 1:- GENERAL
| a. | SCINAI IMMUNOTHERAPEUTICS LTD (formerly known as BiondVax Pharmaceuticals Ltd. (the “Company”), operates focuses on: an innovative R&D and a Contract Development and Manufacturing Organization (“CDMO”) (please see section e). The R&D focuses on: (i) managing and guiding a research contract with the Max Planck Society (“MPG”), the parent organization of the Max Planck Institute for Multidisciplinary Sciences, and the University Medical Center Gottingen (“UMG”), both located in Germany; and (ii) developing licensed drug candidates throughout the pre-clinical and clinical steps required for drug approval. The CDMO focuses on providing drug development services to small biotech companies. The Company was incorporated on July 21, 2003 in Israel and started its activity on March 31, 2005. In June 2007, the Company completed an initial public offering of its ordinary shares on the Tel Aviv Stock Exchange (TASE) and then voluntarily delisted from the TASE in January 2018. In May 2015, the Company completed an initial public offering of American Depositary Shares (“ADS”) on the Nasdaq Capital Market. The Company’s principal executive offices and main laboratories are located in Jerusalem, Israel. |
| b. | On December 22, 2021, the Company signed an exclusive, worldwide, license agreement with MPG and UMG for the development and commercialization of an innovative COVID-19 VHH antibody fragment () therapy and an accompanying research collaboration agreement with MPG and UPG in support of the such COVID-19 nanoAb. The agreements became effective January 1, 2022 and provide for an upfront payment, development and sales milestones and royalties based on sales and sharing of sublicense revenues. |
| c. | On March 23, 2022, the Company signed a broader research collaboration agreement (“RCA”) with MPG and UMG covering the discovery, selection and characterization of additional nanoAbs for several other molecular targets that can leverage the nanoAbs’ unique and strong binding affinity, stability at high temperatures, and potential for more effective and convenient routes of administration. These targets are the basis for validated and currently marketed monoclonal antibodies, including for conditions such as psoriasis, asthma, macular degeneration, and psoriatic arthritis. Pursuant to the RCA, the Company has an exclusive option for exclusive license agreement for the development and commercialization of each of the nanoAbs covered by the agreement with MPG and UMG. |
| d. | On September 6, 2023, the Company announced the change of its corporate name from BiondVax Pharmaceuticals Ltd. to Scinai Immunotherapeutics Ltd. |
| e. | On September 6, 2023, the Company also announced the launch of a new business named Scinai Bioservices to serve as a CDMO, offering a multitude of drug development services to support small biotech companies through drug development as well as GMP manufacturing for clinical trials. In October 2023, the CDMO signed its first contract to provide R&D services to a biotech client and since then has signed a contract with several other clients, and the Company is in advanced contract discussions with additional potential clients. |
| f. | Effective July 1, 2023, the Company changed its functional currency to the U.S. dollar (“dollar”, “USD” or “$”) from the New Israeli Shekel (“NIS”). This change was based on an assessment by Company management that the dollar is the primary currency of the economic environment in which the Company operates, due to the starting of the company new business CDMO, including engaging in related agreements with suppliers and customers and the prospect markets it is intended to reach which operate mainly in USD. Accordingly, the functional and reporting currency of the Company in the year ended December 31, 2023, financial statements is the U.S. dollar. The change in functional currency was accounted for prospectively from such date. | |
| In applying the change in reporting currency, all assets and liabilities of the Company’s operations were translated from their NIS functional currency into U.S. dollars using the exchange rates in effect on the balance sheet date, and shareholders’ equity was translated at the historical rates. Opening shareholders’ equity on August 1, 2018, has been translated at the historic rate on that date and any other movements in shareholders’ equity during the period from August 1, 2018 to December 31, 2022 were translated using the appropriate historical rates at the date of the respective transaction. All other revenues, expenses and cash flows were translated at the average rates during the reporting periods presented. The resulting translation adjustments are reported under comprehensive income as a separate component of shareholders’ equity. |
SCINAI IMMUNOTHERAPEUTICS LTD. (Formerly known as BiondVax Pharmaceuticals Ltd.) – (Unaudited)
NOTES TO FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data and unless otherwise indicated)
NOTE 1:- GENERAL (Cont.)
| g. | As of June 30, 2024, the Company’s cash and cash equivalents totaled $3,076. For the six months ended June 30, 2024, the Company had an operating loss of $3,955 and negative cash flows from operating activities of $3,221. The Company’s current cash and cash equivalents position is not sufficient to fund the Company’s planned operations for at least a year beyond the date of the filing date of the financial statements. Those factors raise substantial doubt about the Company’s ability to continue as a going concern. The ability to continue as a going concern is dependent upon the Company obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they become due. While the Company has successfully raised funds in the past, there is no guarantee that it will be able to do so in the future. The inability to borrow or raise sufficient funds on commercially reasonable terms, would have serious consequences on our financial condition and results of operations. |
The Company’s current operating budget includes various assumptions concerning the level and timing of cash receipts and cash outlays for operating expenses and capital expenditures. The Company is planning to finance its operations from its existing working capital resources and additional sources of capital and financing that are in the advanced planning phase. However, there is no assurance that additional capital and/or financing will be available to the Company, and even if available, whether it will be on terms acceptable to the Company or in amounts required.
The accompanying financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and liabilities and commitments in the normal course of business. The financial statements for the six months ended June 30, 2024, do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from uncertainty related to the Company’s ability to continue as a going concern.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
| a. | Basis of Presentation |
The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial reporting.
Certain information and footnote disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. In our opinion, the information contained herein reflects all adjustments necessary for a fair statement of our results of operations, financial position, cash flows, and shareholders’ equity. All such adjustments are of a normal, recurring nature.
The results of operations for the six months ended June 30, 2024, shown in these financial statements are not necessarily indicative of the results to be expected for the full year ending December 31, 2024. The unaudited condensed financial statements should be read in conjunction with the audited financial statements that were included in Form 20-F for the year ended December 31, 2023.
The carrying value of cash and cash equivalents, account receivables, prepaid and other receivables and accounts payable (included in the condensed balance sheets) approximates their fair value because of their generally short maturities.
There have been no material changes in our significant accounting policies as described in our financial statements for the year ended December 31, 2023.
| b. | New Accounting Pronouncements |
New accounting pronouncements effective in future periods:
Improvements to Reportable Segments Disclosures
In November 2023, the FASB issued ASU 2023-07 “Segment Reporting–Improvements to Reportable Segments Disclosures (Topic 280)” to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The amendments in this ASU (1) require that a public entity disclose, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss; (2) require that a public entity disclose, on an annual and interim basis, an amount for other segment items by reportable segment and a description of its composition; (3) require that a public entity provide all annual disclosures about a reportable segment’s profit or loss and assets currently required by Topic 280 in interim periods; (4) clarify that if the CODM uses more than one measure of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources, a public entity may report one or more of those additional measures; and (5) require that a public entity disclose the title and position of the CODM and an explanation of how the CODM uses the reported measure or measures of segment profit or loss in assessing segment performance and deciding how to allocate resources. The amendments in this ASU are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and should be applied retrospectively to all periods presented. Early adoption is permitted. The Company is currently evaluating the impact of the adoption of these amendments on its financial statements.
SCINAI IMMUNOTHERAPEUTICS LTD. (Formerly known as BiondVax Pharmaceuticals Ltd.) – (Unaudited)
NOTES TO FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data and unless otherwise indicated)
NOTE 2: - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Cont.)
Improvements to Income Tax Disclosures
In December 2023, the FASB issued ASU 2023-09 “Income Taxes (Topic 740)–Improvements to Income Tax Disclosures” to enhance the transparency and decision usefulness of income tax disclosures, primarily related to the rate reconciliation and income taxes paid information. The amendments in this ASU require that public entities, on an annual basis, disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. This ASU also requires that all entities disclose, on an annual basis, (1) the amount of income taxes paid disaggregated by federal, state, and foreign taxes, (2) the amount of income taxes paid disaggregated by individual jurisdictions in which income taxes paid is equal to or greater than five percent of total income taxes paid, (3) income or loss from continuing operations before income tax expense or benefit disaggregated between domestic and foreign, and (4) income tax expense or benefit from continuing operations disaggregated by federal, state, and foreign. The amendments in this ASU are effective for annual periods beginning after December 15, 2025, and should be applied on a prospective basis with the option to apply retrospectively. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. The Company is currently evaluating the impact of the adoption of these amendments on its financial statements.
NOTE 3: - COMMITMENTS
Since 2006, the Company received approximately $6,431 in grants from the Israeli Innovation Authority (IIA). $5,979 of which grants were for research and development of M-001 and $589 of which grants were received to support the new CDMO business, out of which grants for $227 were received during 2024.
In exchange for the grants for research and development of M-001, the Company undertook to pay royalties amounting to 3% to 5% on the revenues derived from sales of products or services developed in whole or in part using these grants. The maximum aggregate royalties paid generally cannot exceed 100% of the grants received by the Company. Until October 25, 2023, the interest was calculated at a rate based on 12-month London Interbank Offered Rate, or LIBOR applicable to US Dollar deposits. However, on October 25, 2023, the IIA published a directive concerning changes in royalties to address the expiration of the LIBOR. Under such directive, regarding IIA grants approved by the IIA prior to January 1, 2024 but which are outstanding thereafter, as of January 1, 2024 the annual interest will be calculated at a rate based on 12-month Secured Overnight Financing Rate, the SOFR, or at an alternative rate published by the Bank of Israel plus 0.71513%; and, for grants approved on or following January 1, 2024 the annual interest will be the higher of (i) the 12 months SOFR interest rate, plus 1%, or (ii) a fixed annual interest rate of 4%. The maximum royalty amounts payable by the Company as of June 30, 2024 is approximately $ 6,431 which represents the total gross amount of grants actually received by the Company from the IIA including accrued interest.
As of June 30, 2024, the Company had not paid any royalties to the IIA.
At the time the grants were received, successful development of the M-001 product was not assured and therefore the Company does not currently expect to make any royalty payments to the IIA.
The Company is also subject to various other restrictions pursuant to the grant, including limitations on transferring IP developed with grant funds. In light of the Company’s new strategy, it does not expect these restrictions to be material to its ongoing operations.
On November 2023, we announced that the IIA had approved a non-dilutive grant covering 66% of the costs of a $975 project aimed to support our new CDMO business. The grant is neither subject to repayment nor tied to royalty payments of any kind. The grant covers approved expenses required for further developing Scinai’s CDMO service for the 12 months from grant.
SCINAI IMMUNOTHERAPEUTICS LTD. (Formerly known as BiondVax Pharmaceuticals Ltd.) – (Unaudited)
NOTES TO FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data and unless otherwise indicated)
NOTE 4: - LOAN FROM OTHERS.
As of June 30, 2024, the outstanding principal amount related to the EIB loan in nominal terms is $ 25,668.
For the six months ended at June 30, 2024 and June 30, 2023 the company recorded $594 and $4,321 under finance expenses.
During the six months ended June 30, 2024, as a result of a capital raising, the company paid to the EIB $143 against the accrued interest related to the loan restructuring agreement from August 2022 that set a partial repayment of the loan for any capital raising.
On August 13, 2024, the Company announced the execution of an amendment to its financing contract with the European Investment Bank (the “EIB”) converting the majority of the EIB’s loan into equity in the form of preferred shares (see note 9).
NOTE 5: - SHAREHOLDERS’ EQUITY
| a. | On January 4, 2024, the Company issued new unregistered warrants to purchase up to 5,213,104 ADSs in consideration for the immediate exercise at a reduced exercise price of $0.65 per ADS of certain outstanding warrants to purchase up to an aggregate of 2,606,552 ADSs issued by the Company in September 2023 and December 2022, The new warrants have an exercise price of $0.65 per ADS and have a term of exercise equal to three years or five and one-half years, as applicable, based on the term of the warrants, from the date of issuance. The Company received gross proceeds of approximately $1,696 and a net sum of approximately $1,433, after deduction of underwriter discount and issuance expenses of $263. |
| b. | On May 6, 2024, the Company issued a press release announcing receipt of a Nasdaq delisting notification regarding the Company’s non-compliance with the minimum $1.00 bid price requirement for continued listing set forth in Nasdaq Listing Rule 5550(a)(2) (the “Minimum Price Rule”) and appeal and the board approval of a ratio change of the ADSs to non-traded ordinary shares (equivalent to a reverse split) designed to regain compliance. On May 24, 2024, the Company issued a press release announcing the receipt of a Nasdaq staff determination letter regarding the Company’s non-compliance with the minimum stockholders’ equity requirement of at least $2,500 for continued under Nasdaq Listing Rule 5550(b)(1) (the “Minimum Shareholders’ Equity Rule”) and a hearing before the Nasdaq Hearing Panel to present a plan for regaining compliance. |
| c. | On May 21, 2024, the ratio between the Company’s ordinary shares and its ADSs was increased from 400 ordinary shares per one ADS to 4,000 ordinary shares per one ADS, a change which was equivalent to a reverse split of 10 for 1. All ordinary shares and ADS amounts have been retrospectively applied to these financial statements, where applicable. |
| d. | On June 7, 2024, the Company announced receipt of notification from Nasdaq that it had regained compliance with the Minimum Price Rule. |
| e. | On June 18, 2024, the Company presented to the Nasdaq Hearing Panel the Company’s plan to regain compliance with the Minimum Shareholders’ Equity Rule. |
NOTE 6:- SHARE-BASED COMPENSATION
| a. | Option plans: |
Options granted under the Company’s 2005 Israeli Share Option Plan (“Plan”) were exercisable in accordance with the terms of the Plan, within 10 years from the date of grant, against payment of an exercise price. The options generally vest over a period of three or four years.
In March 2018, the Company’s Board of Directors approved the adoption of the Company’s 2018 Israeli Share Option Plan (“2018 Plan”) for the grant of options and restricted shares (“RSU”) to employees, directors and service providers. The options are exercisable within 10 years from the date of grant, against payment of the exercise price, in accordance with the terms of the 2018 Plan. The options generally vest over a period of three or four years.
There were no option grants during the six months ended June 30, 2024.
SCINAI IMMUNOTHERAPEUTICS LTD. (Formerly known as BiondVax Pharmaceuticals Ltd.) – (Unaudited)
NOTES TO FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data and unless otherwise indicated)
NOTE 6 - SHARE-BASED COMPENSATION (Cont.)
| b. | The total share-based compensation expense related to all of the Company’s equity-based awards, recognized for the six months ended June 30, 2024, and 2023 is comprised as follows: |
| Six months ended June 30, |
||||||||
| 2024 | 2023 | |||||||
| Research and development expenses | $ | 104 | $ | 57 | ||||
| Marketing, general and administrative expenses | 229 | 395 | ||||||
| Total share-based compensation | $ | 333 | $ | 452 | ||||
During the six months ended June 30, 2024, the Company issued 55,725 RSUs to officers and employees, These RSU’s vest over three years and the fair value of said grant was $290.
As of June 30, 2024, there are $650 of total unrecognized costs related to share-based compensation that is expected to be recognized over a period of up to four years.
The fair value of the granted RSUs was determined based on the stock market price of the Company’s ADS on the day of grant.
NOTE 7 - BASIC AND DILUTED NET LOSS PER SHARE
| a. | Basic net loss per ordinary share is computed by dividing net loss for each reporting period by the weighted-average number of ordinary shares outstanding during each year, prefunded warrants, fully vested restricted stock units and unit stock restricted vested fully. Diluted net loss per ordinary share is computed by dividing net loss for each reporting period by the weighted average number of ordinary shares outstanding during the period, plus dilutive potential ordinary shares considered outstanding during the period, in accordance with ASC No. 260-10 “Earnings Per Share”. |
Details of the number of shares and loss used in the computation of net loss per share:
| For six months ended June 30 | ||||||||||||||||
| 2024 | 2023 | |||||||||||||||
| Weighted number of shares | Net loss attributable to equity holders of the Company | Weighted number of shares | Net loss attributable to equity holders of the Company | |||||||||||||
| 2,288,278,248 | 4,481 | 1,322,019,241 | 7,277 | |||||||||||||
SCINAI IMMUNOTHERAPEUTICS LTD. (Formerly known as BiondVax Pharmaceuticals Ltd.) – (Unaudited)
NOTES TO FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data and unless otherwise indicated)
NOTE 7 - BASIC AND DILUTED NET LOSS PER SHARE (Cont.)
For the six months ended June 30, 2024, the following items have been excluded from the diluted weighted average number of shares outstanding because they are anti-dilutive: 98,171,200 share options, 254,893,245 restricted share units and 2,231,316,096 warrants.
NOTE 8- REVENUES
The Company recognizes revenue from contracts with customers for the development and manufacturing of pharmaceutical products (CDMO services).
Under these contracts, the Company typically provides a combination of the following services:
| ● | Manufacturing services: The Company utilizes its facilities and equipment to produce pharmaceutical products according to customer specifications. The customer typically owns and supplies the active pharmaceutical ingredient (API) and other raw materials. |
| ● | Quality assurance and control: The Company implements quality assurance standards via its quality management system to ensure product compliance with regulatory requirements and provides quality control testing required for such compliance, including sterilization services. |
| ● | Method development: The Company develops or optimizes manufacturing processes and analytical methods that are required to meet customer product specifications. |
The Company recognizes revenues throughout the service period in accordance with the contracts.
NOTE 9 - SUBSEQUENT EVENTS
| a. | Compliance with all Nasdaq Listing Requirements |
On August 29, 2024, the Company announced that it received formal notification from the Listing Qualification Department of the Nasdaq Stock Market that the Company had regained compliance with Nasdaq Listing Rule 5550(b)(1) that requires listed companies to maintain stockholders’ equity of at least $2.5 million and that it was now back in full compliance with all applicable listing requirements.
| b. | Amendment to Financing Contract with the European Investment Bank |
On August 21, 2024, the Company announced the closing of an amendment to its financing contract (“Amendment”) with the European Investment Bank (the “EIB”) as described below converting the majority of the EIB’s loan into equity in the form of preferred shares (the 2024 Restructuring Transaction”). The Amendment provides for the following amended terms of the finance contract with EIB:
| I. | The outstanding principal amount and accrued interest to date (approximately €26 million) has been reduced to a nominal fixed amount (EUR 250,000), which has a maturity of December 31, 2031. No interest will accrue or be due and payable on the new outstanding principal amount. |
| II. | The Company is no longer required to pay to the EIB (i) royalties based on the Company’s commercial sales exceeding EUR 5 million or (ii) a percentage (10%) of the gross proceeds from the Company’s capital raises. |
| III. | The Security Agreement between the parties covers the new outstanding principal amount, and the EIB has a first ranking secured lien up to the new principal amount. |
SCINAI IMMUNOTHERAPEUTICS LTD. (Formerly known as BiondVax Pharmaceuticals Ltd.) – (Unaudited)
NOTES TO FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data and unless otherwise indicated)
NOTE 9 - SUBSEQUENT EVENTS (Cont.)
In consideration for the above, EIB received 1,000 of the Company’s newly created preferred shares (the “Preferred Shares”), as approved by the Company’s shareholders at a meeting of shareholders held on August 12, 2024. The material terms of the Preferred Shares consist of the following:
| a. | The Preferred Shares are convertible (in whole or in part) into an aggregate of 364,000 ADSs representing 19.5% of the fully diluted share capital of the Company as of the signature date, August 12, 2024, with each Preferred Share convertible into 364 ADSs. The number of ADSs that can be acquired upon conversion of the Preferred Shares is also subject to adjustment in the event of any share split, share dividend and similar events involving the ordinary shares. |
| b. | The Preferred Shares have an aggregate stated fixed redemption amount stated in USD ($34 million, with each Preferred Share carry a redemption value equal to USD $34 thousand). |
| c. | In the event a Preferred Share is converted into ordinary shares, the right to receive such payment for such Preferred Share will be extinguished. |
| d. | The Company will pay the holder of the Preferred Shares the stated redemption amount only if the Company elects, in its sole discretion, to make such redemption payment, and provided that such redemption is in compliance with applicable law, or in the event of a formal liquidation of the Company. |
| e. | Following the payment in full of the redemption amount of a Preferred Share, such share will be considered redeemed and canceled. |
| f. | In the event that the distributable proceeds are insufficient for the distribution of the redemption amount in full to each holder of Preferred Shares for each of the unredeemed Preferred Shares, the distributable proceeds will be distributed among the holders of Preferred Shares on a pro rata basis in proportion to the number of unredeemed Preferred Shares held by the holders. |
| g. | The Preferred Shares are entitled to preference in liquidation in the stated redemption value of USD $34 million described above (with each Preferred Share having a preferences in the stated redemption value of described above) (“Preferred Redemption Amount”). |
| h. | The Preferred Shares have no dividend rights. |
| i. | The Preferred Shares are detachable from the remaining EUR 250,000 loan and will survive any loan repayment. |
| j. | The Company has a “right of first of refusal” to buy the Preferred Shares in case the EIB intends to sell, transfer, assign or otherwise dispose of the Preferred Shares (partially or in full). |
| k. | Unless the Company elects to redeem the Preferred Shares, the Company will not take any of the following actions without obtaining the written consent or affirmative vote of the holders of a majority of the Preferred Shares: |
| - | The Company incurring additional Indebtedness (as defined in the Company’s Amended Articles of Association). |
| - | The Company consummating a merger or an acquisition. |
| - | The Company taking any action or step in relation to delisting the ADSs from trading on the Nasdaq. |
| - | The Company’s authorizing the creation of any security having rights, preferences or privileges equal to or greater than those of the Preferred Shares, including the issuance of additional Preferred Shares. |
SCINAI IMMUNOTHERAPEUTICS LTD. (Formerly known as BiondVax Pharmaceuticals Ltd.) – (Unaudited)
NOTES TO FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data and unless otherwise indicated)
NOTE 9 - SUBSEQUENT EVENTS (Cont.)
Based on the above and according to ASC 470-60 requirements, the Company expect that the following accounting treatment will be applied as of the agreement signing date:
| ● | The Preferred Shares will be measured at their fair value as of the closing date of the 2024 Amendment. The Company will recognize an increase in its shareholders’ equity for the fair value of the Preferred Shares issued. The carrying amount of the debt will be reduced by the Preferred Shares’ fair value. |
| ● | The debt’s carrying amount will then be reduced to the total amount of the undiscounted future cash flows of the restructured debt (that is, 250,000 EUR). This additional reduction will be recognized as a debt restructuring gain in the Company’s financial statements. |
| c. | $2 Million Private Equity Commitment Agreement |
On August 20, 2024, the Company announced that it had entered into a $2 million Investment Commitment Agreement with RK Stone Miami LLC, an affiliate of Mr. Daniel Stone, the largest shareholder of the Company. Pursuant to the agreement, the Company may issue and sell ADSs to the investor, from time to time through December 31, 2024 (the “Commitment Period”), for an aggregate purchase price of up to $2 million. Each such sale of ADSs may be initiated (at the Company’s discretion) by the Company providing an advance notice to the Investor of the sale of ADSs in a minimum amount of $200,000 and a maximum amount of $500,000, provided the maximum amounts in any month may not exceed $500,000 and the Company may not provide advance notices for an aggregate amount greater than $1.5 million prior to December 1, 2024. The price of the ADSs to be purchased under any advance will be calculated based on the lower of (i) the volume weighted average price (the “VWAP”) of the daily VWAP of the ADSs for the ten trading days prior to the Company providing the advance notice or (ii) the VWAP of the daily VWAP of the ADSs for the three trading days following the delivery of the advance notice (provided the Company may impose a minimum market price for such three day period, and in the event the market price for such period is less than the minimum market price the Company has the right to rescind the advance notice and not issue the ADSs), in either case subject to a discount of 5%.
Pursuant to the agreement, the Company will pay the Investor a commitment fee, which may be paid in cash or in ADSs at the option of the Company. In the event that during the Commitment Period the Company provides to the investor an advance notice, the amount of the commitment fee will be equal to $100,000, which will be payable by the Company simultaneously with the closing of the first advance. In the event the Company elects to pay such amount in the form of ADSs, the number of the ADSs will be based on the market price determined for such advance. In the event that during the Commitment Period the Company does not provide to the Investor an advance notice, the amount of the commitment fee will be equal to $40,000, which will be payable by the Company promptly following the termination of the Commitment Period. In the event the Company elects to pay such amount in the form of ADSs, the number of the ADSs will be based on the market price determined as of December 31, 2024.
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