Published:
XTL Biopharmaceuticals Ltd announces Interim Results for the Six Months Ended 30 June 2005
XTL Biopharmaceuticals Ltd
Interim Results for the Six Months Ended 30 June 2005
Rehovot, Israel, 7 September 2005: XTL Biopharmaceuticals Ltd. (LSE: XTL)
("XTLbio" or the "Company")a biopharmaceutical company developing drugs against
hepatitis, today announces interim financial results for the six months ended 30
June 2005.
Highlights:
- Re-focusing plan designed to enable the Company to realize value
from its Research and Development programs and focus its resources
on the development of its lead programs through to clinical proof-
of principle.
- Decrease in the loss for the period by 50% - the loss for the
period was $5 million compared to $10 million during the same
period last year.
- Strengthening the hepatitis C small molecule pipeline and discovery
capabilities - XTLbio signed an in-license and asset purchase
agreement with VivoQuest Inc.
- Transition of HepeX-B development activities from XTLbio to Cubist
was completed.
- FDA granted XTL-6865 "Fast Track" designation for the treatment of
HCV re-infection following a liver transplant.
- Submitted a US investigational new drug application to the FDA in
order to commence a Phase Ia/Ib clinical trial later this year for
XTL-6865, the dual-MAb product.
- Shares listed on two new stock exchanges - Nasdaq and the Tel
Aviv Stock Exchange
Commenting on the results, Michael S. Weiss, Chairman, said: "The Company's
management is taking significant actions to focus its business activities in
areas with the highest potential. The financial results for the first half of
the year reflect the start of this process. Trading on NASDAQ and the Tel-Aviv
Stock Exchanges provides an important milestone for the Company and will help us
attract investors and analysts. The Company will continue to develop its various
clinical products while at the same time, continue to seek to in-license or
acquire additional candidates or complementary technologies."
Contacts:
XTLbio
Jonathan Burgin, Chief Financial Officer Tel: +972 8 930 4440
About XTL Biopharmaceuticals Ltd.
XTL Biopharmaceuticals Ltd. (XTLbio) is a biopharmaceutical company developing
drugs against hepatitis. Established in 1993, XTLbio became a public company in
2000 and its ordinary shares are listed on the Official List of the UK Listing
Authority and are traded on the London Stock Exchange under the symbol XTL, on
the Tel Aviv Stock Exchange, Israel and on NASDAQ under the symbol XTLB.
Cautionary Statement
Some of the statements included in this press release may be forward-looking
statements that involve a number of risks and uncertainties. For those
statements, we claim the protection of the safe harbor for forward-looking
statements contained in the US Private Securities Litigation Reform Act of 1995.
Among the factors that could cause our actual results to differ materially, and
therefore affect interest by investors in our ADR's, are the following: our
ability to successfully complete cost-effective clinical trials for the drug
candidates in our pipelines and other risk factors identified from time to time
in our reports filed with the various regulatory bodies. Any forward-looking
statements set forth in this press release speak only as of the date of this
press release. We do not intend to update any of these forward-looking
statements to reflect events or circumstances that occur after the date hereof.
This press release and prior releases are available at www.xtlbio.com. The
information in our website is not incorporated by reference into this press
release and is included as an inactive textual reference only.
Chairman's Review
We are pleased to report that XTLbio has made progress in the first half of the
year on the back of changes in the Company. In February, the shareholders at an
Extraordinary General Meeting decided on changing the Board of Directors.
Strategy
The new board undertook a review of the business and agreed in March 2005 on a
re-focusing plan designed to enable the Company to realize value from its
Research and Development programs. Integral to the strategy is the board's
initiative to focus its resources on the development of its lead programs
through to clinical proof-of-principle. The plan also provided for cost savings
as is evident from the decrease in the loss for the period of $5 million
compared to $10 million during the same period last year.
XTL-6865 (Product for the Prevention of Re-Infection of HCV and treatment of
chronic HCV disease)
XTL-6865 (formerly known as HepeX-C) is a combination of two fully human
monoclonal antibodies (Ab68 and Ab65) against the hepatitis C virus E2 envelope
protein. A single antibody version of this product was tested in a pilot
clinical program that included both Phase I and Phase II clinical trials. In
April 2005, XTLbio submitted a US investigational new drug application (IND) to
the FDA in order to commence a Phase Ia/Ib clinical trial later this year for
XTL-6865, the dual-MAb product.
The FDA granted XTL-6865 "Fast Track" designation for the treatment of HCV
re-infection following a liver transplant.
Financial Review
As at 30 June 2005, the Company's cash and short term investments were US$16.6
million (31 December 2004: US$22.9 million).
The Company recorded revenue of US$2.6 million compared to US$0.7 million in the
same period last year. Revenue for the period was primarily due to the
reimbursement for development expenses for HepeX-B that was incurred pursuant to
XTLbio's licensing agreement with Cubist and was also due to in-licensing
revenue pursuant to the agreement with Cubist. The Company entered into its
agreement with Cubist in June 2004.
Research and Development costs decreased by US$4.7 million to US$3.5 million
from US$8.2 million for the first half of 2004. The decrease in Research and
Development costs was due primarily to the absence of expenses related to early
stage discovery research activities related to infectious diseases, a decrease
in expenses related to the development and clinical program of HepeX-B, due to
the initiation of the collaboration agreement with Cubist, as well as due to a
decrease in expenses related to the development and clinical program of HepeX-C.
This decrease was partially offset by an increase in expenses associated with
XTLbio's HCV-SM program.
General and administrative expenses increased by US$0.2 million to US$1.6
million in comparison to US$1.4 million in the parallel period last year. The
increase in general and administrative expenses was due primarily to costs
related to our NASDAQ listing and shareholder meetings.
Business development costs decreased by US$0.4 million to US$0.1 million in
contrast to US$0.5 million in the first half of 2004.
Strengthening hepatitis C Small Molecule Pipeline and Discovery Capabilities
As part of the aforementioned plan, XTLbio signed an in-license and asset
purchase agreement with VivoQuest Inc.
VivoQuest's lead program focuses on development of compounds for the treatment
of hepatitis C virus (HCV) infection, and has identified multiple lead
candidates in this disease area that have shown significant activity in
preclinical model systems, which is equal to or greater than the most promising
molecules in clinical development today.
Under the license, XTLbio has the exclusive worldwide rights to VivoQuest's
intellectual property and technology, including its HCV compounds and compound
library. XTLbio will be responsible for the further development and
commercialization of VivoQuest's HCV program.
HepeX-B (Product for the Prevention of Re-Infection of hepatitis B)
HepeX-B was recently studied in a Phase IIb clinical trial in liver transplant
patients. In August 2005, we announced that the dosing portion of the study
ended. In August 2005, we also announced the recent review of the safety data
from all patients enrolled in the study by an Independent Data and Safety
Monitoring Board, or DSMB, and no safety concerns were raised. Cubist plans to
review data from this Phase IIb trial with the FDA as part of a discussion of
design elements of a Phase III clinical trial.
In August 2005, we also announced that the transition of HepeX-B development
activities from XTLbio to Cubist was completed. This transition will enable us
to focus all our current resources on our HCV programs.
Shares listed on NASDAQ and the Tel-Aviv Stock Exchange
Recently we listed our shares on NASDAQ and the Tel-Aviv Stock Exchange in
addition to our trading on the London Stock Exchange since 2000. We believe that
this is a major milestone for the Company and will help us attract new investors
from the US, Israel and around the world. XTLbio is now one of the few companies
whose shares are traded on three stock exchanges which allows for virtually
round the clock trading.
Current Strategy
Under our current strategy, we plan to:
- commence the clinical development of XTL-6865 and our small
molecule development efforts;
- continue our efforts to bring one or more products into clinical
development from our small molecule development programs; and
- seek to in-license or acquire additional candidates or
complementary technologies.
Michael S. Weiss
Chairman
6 September 2005
The Board of Directors of
XTL Biopharmaceuticals Ltd.
Re: Review of condensed consolidated unaudited interim financial
statements for the six months period ended June 30, 2005
At your request, we have reviewed the condensed consolidated interim balance
sheet of XTL Biopharmaceuticals Ltd. (hereafter - the Company) and its
subsidiary at June 30, 2005 and the condensed consolidated statements of
operations, changes in shareholders' equity and cash flows for the six months
period then ended. We have also reviewed the consolidated statements of
operations and cash flows for the period from March 9, 1993 (incorporation date)
to June 30, 2005 (the amounts included therein, which relate to the period
through December 31, 2000, are based on the financial statements for 2000, which
were audited by another accounting firm).
Our review was performed in accordance with auditing standards generally
accepted in Israel and the standards of the Public Company Accounting Oversight
Board (United States), including those prescribed by the Institute of Certified
Public Accountants in Israel. Inter alia, these procedures include: reading of
the financial statements referred to above, reading of minutes of meetings of
shareholders, the board of directors and its committees, and making inquiries of
Company officers responsible for financial and accounting matters.
Since our review was limited in scope and did not constitute an audit in
accordance with auditing standards generally accepted in Israel and in the
United States, we do not express an opinion on the condensed consolidated
interim financial statements.
In performing our review, nothing came to our attention that indicated that
material adjustments should be made to the interim condensed consolidated
financial statements referred to above in order for them to be considered as
having been prepared in accordance with the accounting principles generally
accepted in the United States.
Sincerely yours,
Kesselman & Kesselman
Certified Public Accountants (Israel)
A member of PricewaterhouseCoopers International
Tel Aviv, Israel
September 6, 2005
XTL BIOPHARMACEUTICALS LTD.
(A Development Stage Company)
BALANCE SHEETS
AT JUNE 30, 2005
June 30 December
31,
2005 2004 2004
(Unaudited) (Audited)
$ In thousands
A s s e t s
CURRENT ASSETS:
Cash and cash equivalents 4,967 7,841 12,788
Short-term deposits 11,658 5,026 10,136
Marketable securities 336
Accounts receivable:
Trade 1,667 700 543
Other 318 630 306
--------- --------- ----------
T o t a l current assets 18,610 14,533 23,773
SEVERENCE PAY FUNDS 465 745 830
RESTRICRED LONG-TERM DEPOSITS 108 107 113
PROPERTY AND EQUIPMENT, net 791 904 908
--------- --------- ----------
19,974 16,289 25,624
========= ========= ==========
Liabilities and shareholders'
equity
CURRENT LIABILITIES:
accounts payable and accruals:
Trade 1,020 1,913 1,108
Other 1,660 1,828 2,026
Deferred gain, see note 4 399 164 399
--------- --------- ----------
T o t a l current liabilities 3,079 3,905 3,533
--------- --------- ----------
LIABILITY FOR EMPLOYEE RIGHTS
UPON
RETIREMENT 752 1,294 1,291
DEFERRED GAIN, see note 4 998 572 1,198
--------- --------- ----------
T o t a l long-term 1,750 1,866 2,489
liabilities
--------- --------- ----------
SHAREHOLDERS' EQUITY:
Share capital 846 594 841
Additional paid in capital 105,029 89,314* 104,537*
Deferred share - based * *
compensation
Accumulated other (19)
comprehensive loss
Deficit accumulated during the
development
stage (90,730) (79,371) (85,776)
--------- --------- ----------
T o t a l shareholders' equity 15,145 10,518 19,602
--------- --------- ----------
19,974 16,289 25,624
========= ========= ==========
* Reclassified
Date of approval of the interim financial statements:
September 6, 2005.
Michael Weiss Ido Seltenreich
Chairman of the Director
Board of Directors
The accompanying notes are an integral part of the
condensed financial statements.
XTL BIOPHARMACEUTICALS LTD.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS PERIOD ENDED JUNE 30, 2005
Year Period
ended from
Six months ended Decem- March 9,
ber 31, 1993*
June 30 2004 to
(Audited) June
2005 2004 30,
2005
(Unaudited) (Unaudited)
$ In thousands
---------------------------------
REVENUES
Reimbursed 2,408 700 3,269 5,677
out-of-pockets
expenses
License 200 18 185 385
-------- --------- ---------- ----------
2,608 718 3,454 6,062
COST OF REVENUES
Reimbursed 2,408 700 3,269 5,677
out-of-pockets
expenses
License (with respect 4 32 32
to royalties)
-------- --------- ---------- ----------
2,408 704 3,301 5,709
GROSS MARGIN 200 14 153 353
-------- --------- ---------- ----------
RESEARCH AND
DEVELOPMENT
COSTS 3,549 8,178 11,985 78,582
L E S S - 10,950
PARTICIPATIONS
-------- --------- ---------- ----------
3,549 8,178 11,985 67,632
GENERAL AND
ADMINISTRATIVE
EXPENSES 1,600 1,395 4,134 25,320
BUSINESS DEVELOPMENT 130 548 810 4,416
COSTS
IMPAIRMENT OF ASSET 354
HELD FOR SALE
-------- --------- ----------- ----------
OPERATING LOSS 5,079 10,107 16,776 97,369
FINANCIAL INCOME, net 176 64 352 6,876
-------- --------- --------- ----------
LOSS BEFORE TAXES ON 4,903 10,043 16,424 90,493
INCOME
TAXES ON INCOME 51 25 49 237
-------- ---------- ---------- ----------
NET LOSS FOR THE 4,954 10,068 16,473 90,730
PERIOD
======== ======== ========= ==========
BASIC AND DILUTED PER
SHARE DATA:
Loss per ordinary $(0.03) $(0.09) $(0.12)
share
Weighted average
number of
ordinary
shares used to compute
loss per
ordinary share 168,540,438 112,019,464 134,731,766
====== ========= ========
* Incorporation date see note 1(a).
The accompanying notes are an integral part of the
condensed financial statements.
(Continued) -1
XTL BIOPHARMACEUTICALS LTD.
(A Development Stage Company)
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE SIX MONTHS PERIOD ENDED JUNE 30, 2005
Number Share Additional
of Capital paid-
shares in
capital
$ In thousands
-------------------------------------------
BALANCE AT
JANUARY 1,
2005 (audited) 168,079,196 841 104,537*
CHANGES DURING THE SIX
MONTHS
ENDED JUNE 30, 2005
(unaudited):
Loss
Exercise of
employee and
non employee
stock options 1,104,058 5 409
Employee stock
options
expenses 72
Non employee
stock options
expenses 11
===== ===== ====
BALANCE AT
JUNE 30,
2005(unaudited) 169,183,254 846 105,029*
===== ===== =====
BALANCE AT
JANUARY 1,
2004 (audited) 112,019,464 594 89,303*
CHANGES DURING THE SIX
MONTHS
ENDED JUNE 30, 2004
(unaudited):
Loss
Net unrealized
gain
Comprehensive
loss
Non Employee
stock options
expenses 11
==== ===== =====
BALANCE AT
JUNE 30, 2004
(unaudited) 112,019,464 594 89,314*
==== ===== ====
* Reclassified
Deferred Accu- Deficit Total
Share - mulated accu-
based other mulated
com- com- during
pen- pre- the
sation hen- Deve-
sive lop-
income ment
(loss) stage
$ In thousands
-------------------------------------------
BALANCE AT
JANUARY 1,
2005 (audited) -,-* -,- (85,776) 19,602
CHANGES DURING THE SIX
MONTHS
ENDED JUNE 30, 2005
(unaudited):
Loss (4,954) (4,954)
Exercise of
employee and
non employee
stock options 414
Employee stock
options
expenses 72
Non employee
stock options
expenses 11
==== ===== ===== ====
BALANCE AT
JUNE 30,
2005(unaudited) -,-* -,- (90,730) 15,145
==== ===== ===== ====
BALANCE AT
JANUARY 1,
2004 (audited) * 14 (69,303) 20,608
CHANGES DURING THE SIX
MONTHS
ENDED JUNE 30, 2004
(unaudited):
Loss (10,068) (10,068)
Net unrealized
gain (33) (33)
---------
Comprehensive
loss (10,101)
Non Employee
stock options
expenses 11
===== ===== ==== ====
BALANCE AT
JUNE 30, 2004
(unaudited) * (19) (79,371) 10,518
==== ===== ==== ====
* Reclassified
The accompanying notes are an integral part of the
condensed financial statements.
(Concluded) - 2
XTL BIOPHARMACEUTICALS LTD.
(A Development Stage Company)
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE SIX MONTHS PERIOD ENDED JUNE 30, 2005
Number Share Addi-
of capital tional
shares paid-
in
capital
$ In thousands
------------------------------------------
BALANCE AT
JANUARY 1,
2004 (audited) 112,019,464 594 89,303*
CHANGES DURING THE YEAR
ENDED
DECEMBER 31, 2004
(audited):
Comprehensive loss:
Net loss
Net unrealized
gain
Comprehensive
loss
Non-employee
stock option
expenses 32
Exercise of
employee stock
options 50,000 * * 19
Issuance of shares, net of
$2,426 share issuance
expenses 56,009,732 247 15,183
------- ----- ------
BALANCE AT
DECEMBER 31,
2004 (audited) 168,079,196 841 104,537*
==== === ====
* Reclasified
** represents an amount
less than $ 1,000.
Deferred Accu- De- Total
Share - mulated ficit
based other accu-
com- com- mulated
pen- pre- during
sation hen- the
sive deve-
Income lop-
(loss) ment
stage
$ In thousands
------------------------------------------
BALANCE AT
JANUARY 1,
2004 (audited) * 14 (69,303) 20,608
CHANGES DURING THE YEAR
ENDED
DECEMBER 31, 2004
(audited):
Comprehensive loss:
Net loss (16,473) (16,473)
Net unrealized
gain (14) (14)
---------
Comprehensive
loss (16,487)
Non-employee
stock option
expenses 32
Exercise of
employee stock
options 19
Issuance of shares, net
of
$2,426 share issuance
expenses 15,430
------ ------ ----- -----
BALANCE AT
DECEMBER 31,
2004 (audited) * -,- (85,776) 19,602
==== ==== ==== =====
* Reclasified
** represents an amount
less than $ 1,000.
The accompanying notes are an integral part of the condensed financial
statements.
XTL BIOPHARMACEUTICALS LTD.
(A Development Stage Company)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS PERIOD ENDED JUNE 30, 2005
Period
from
Six months Year March
ended 9,
Dece- 1993(**)
ended June 30 mber to
31, June
2004 30,
2005 2004 (Au- 2005
dited) (Unau-
dited)
(Unaudited)
$ In thousands
------------------------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net loss for the period (4,954) (10,068) (16,473) (90,730)
Adjustments to reconcile
loss
to net cash used in
operating
activities:
Depreciation and 124 177 319 2,711
amortization
Capital loss (gain) on sale
of
property and equipment (4) (1) 1 8
Change in liability for
employee (539) 99 30 812
rights upon retirement
Impairment of asset held 354
for
sale
Loss (gain) from marketable
securities, net (7) 13 (410)
Employee and non employee
stock 83 11 32 515
options expenses
Loss (gain) on amount
funded
in 26 (4) 22
respect of employee
Changes in operating asset
and
liability items:
Decrease (increase) in
accounts receivable:
Trade (1,124) (543) (2,326)
Other (12) (624) 400 388
Increase (decrease) in
deferred (200) 736 1,597 1,397
gain
Increase (decrease) in
accounts (454) 740 133 2,633
payable and accruals -------- -------- --------- -----------
Net cash used in operating
activities* (7,054) (8,937) (14,495) (84,626)
-------- -------- --------- -----------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Short-term deposits, net (1,522) 12,303 7,193 (11,658)
Long-term deposits, net 5 52 46 (108)
Investment in available for
sale (3,363)
securities
Proceeds from sales of
available for 387 722 3,773
sale securities
Severance pay funded 339 (121) (136) (547)
Purchase of property and (38) (31) (180) (4,021)
equipment
Proceeds from sale of
property
and 35 4 5 157
equipment -------- -------- --------- -----------
Net cash provided by (used
in)
investing activities (1,181) 12,594 7,650 (15,767)
-------- -------- --------- -----------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Issuance of share capital -
net of 15,430 104,376
share issuance expenses
Exercise of share warrants
and
employee stock options 414 19 984
Proceeds from long-term 399
debt
Proceeds from short-term 50
debt
Payments relating to (399)
long-term
debt
Payments relating to (50)
short-term debt -------- -------- --------- -----------
Net cash provided by
financing
activities 414 15,449 105,360
-------- -------- --------- -----------
NET INCREASE IN CASH AND
CASH
EQUIVALENTS (7,821) 3,657 8,604 4,967
BALANCE OF CASH AND CASH
EQUIVALENTS
AT BEGINNING OF PERIOD 12,788 4,184 4,184
-------- -------- --------- -----------
BALANCE OF CASH AND CASH
EQUIVALENTS
AT END OF PERIOD 4,967 7,841 12,788 4,967
====== ===== ====== ========
Supplementary information
on
financing activities not
involving cash flows -
conversion of convertible
subordinated debenture into
Shares 1,700
Supplemental disclosures:
Income taxes paid 57 34 107 378
===== ===== ====== =======
Interest paid 350
(*) Including effect of
changes in 23 (73) (1,816)
the exchange rate on cash ===== ===== ====== ========
(**) Incorporation date see note 1(a).
The accompanying notes are an integral part of the
condensed financial statements.
XTL BIOPHARMACEUTICALS LTD.
(A Development Stage Company)
NOTES TO INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
AT JUNE 30, 2005
(Unaudited)
1. General:
a. XTL Biopharmaceutical Ltd. ("the Company") was incorporated under the Israel
Companies Ordinance on March 9, 1993. The Company is a development stage company
in accordance with Financial Accounting Standard 7 ("FAS") "Accounting and
Reporting by Development Stage Enterprises".
The principal activity of the Company is the development of therapeutic pipeline
for the treatment of infectious diseases.
The Company has a wholly-owned subsidiary in the United States - XTL
Biopharmaceuticals Inc. ("Subsidiary"), which was incorporated in 1999 under the
law of the state of Delaware. The subsidiary is primarily engaged in business
development and clinical activities.
b. Through June 30, 2005, the Company has incurred losses in an aggregate amount
of US$ 90,730,000. Such losses have resulted primarily from the Company's
activities as a development stage company. Considering the Company's current
reserves the Company does not foresee any cash limitations to finance its
operations for the coming year.
c. The interim financial statements at June 30, 2005 ("the interim
statements") were drawn up in condensed form, in accordance with accounting
principles generally accepted applicable to interim statements. Thus, the
accounting principles applied in preparation of the interim statements are
consistent with those applied in the preparation of annual financial statements.
Nevertheless, the interim statements do not include all the information and
explanations required for annual financial statements.
d. Certain comparative figures have been reclassified to conform to the
current period presentation.
2. Functional currency
The currency of the primary economic environment in which the operations of the
Company are conducted is the U.S. dollar ("$" or "dollar"). Most of the
Company's research and development expenses are incurred in dollars. Significant
part of the Company's capital expenditures and substantially all of its
financing is in dollars. Thus, the functional currency of the Company is dollar.
Transactions and balances originally denominated in dollars are presented at
their original amounts. Balances in non-dollar currencies are translated into
dollars using historical and current exchange rates for non-monetary and
monetary balances, respectively. For non-dollar transactions and other items
reflected in the statements of operations, the following exchange rates are
used: (i) for transactions - exchange rates at transaction dates or average
rates and (ii) for other items (derived from non-monetary balance sheet items) -
historical exchange rates. The resulting currency transaction gains or losses
are carried to financial income or expenses, as appropriate.
XTL BIOPHARMACEUTICALS LTD.
(A Development Stage Company)
NOTES TO CONDENSED CONSOLIDATED
INTERIM FINANCIAL STATEMENTS (continued)
AT JUNE 30, 2005
(Unaudited)
2. Functional currency (continued):
Following are the changes in the exchange rate of the dollar and in the Israeli
Consumer Price Index ("CPI"):
Six months ended Year ended
June 30 December 31,
2005 2004 2004
% % %
--- --- ---
Rate of change of the
Israeli currency
against the dollar 6.2 2.7 (1.6)
Changes in the Israeli CPI 0.5 1.4 1.2
Exchange rate of one dollar
(at end of period) NIS 4.574 NIS 4.497 NIS 4.308
3. Employee Stock Based Compensation
In December 2004, the Financial Accounting Standards Board ("FASB") issued the
revised Statement of Financial Accounting Standards ("FAS") No. 123, Share-Based
Payment (FAS 123R), which addresses the accounting for share-based payment
transactions in which the Company obtains employee services in exchange for (a)
equity instruments of the Company or (b) liabilities that are based on the fair
value of the Company's equity instruments or that may be settled by the issuance
of such equity instruments. This Statement eliminates the ability to account for
employee share-based payment transactions using APB 25, and requires instead
that such transactions be accounted for using the grant-date fair value based
method. This Statement will be effective as of the beginning of the first
interim or annual reporting period that begins after December 15, 2005 (January
1, 2006 for the Company). Early adoption of FAS 123R is encouraged. Accordingly
the Company decided to adopt this statement on January 1, 2005. This Statement
applies to all awards granted or modified after the Statement's effective date.
In addition, compensation cost for the unvested portion of previously granted
awards that remain outstanding on the Statement's effective date shall be
recognized on or after the effective date, as the related services are rendered,
based on the awards' grant-date fair value as previously calculated for the
pro-forma disclosure under FAS 123.
Prior to January 1, 2005 the Company accounts for its employee stock option
plans using the intrinsic value based method of accounting prescribed by APB 25
and related interpretations.
XTL BIOPHARMACEUTICALS LTD.
(A Development Stage Company)
NOTES TO CONDENSED CONSOLIDATED
INTERIM FINANCIAL STATEMENTS (continued)
AT JUNE 30, 2005
(Unaudited)
3. Employee Stock Based Compensation (continued)
The following table illustrates the effect on loss and loss per share assuming
the Company had applied the fair value recognition provisions of FAS 123 (as
amended by FAS 148) to its stock-based employee compensation for the period
ended December 31, 2004.
Six months Year ended Period from
ended June December March 9, 1993*
30, 2004 31, 2004 to December
31, 2004
--------- ---------- -----------
Loss for the
period, as reported 10,068 16,473 85,776
Deduct: stock based
employee compensation
expense, included
in reported loss
Add: stock based
employee (483)
compensation expense
determined under
fair value
method for all awards 162 239 6,355
-------- ----------- -----------
Loss-pro-forma 10,230 16,712 91,648
======== =========== ===========
Basic and diluted loss
per share:
As reported $0.09 $0.12
======== ===========
Pro-forma $0.09 $0.12
======== ===========
* Incorporation date see note 1(a).
4. License agreement
The Company entered into a licensing agreement with Cubist in June 2004, under
which the Company granted to Cubist an exclusive, worldwide license (with the
right to sub-license) to commercialize HepeX-B and any other product containing
a hMAb or humanized monoclonal antibody or fragment directed at the hepatitis B
virus owned or controlled by the Company.
In August 2005, the Company amended its licensing agreement with Cubist. Under
the terms of the agreement, as amended, Cubist paid the Company an initial up
front nonrefundable payment of U.S.$1 million upon the signing of the agreement,
and a payment of U.S.$1 million (out of which $200,000 was recorded as revenue
in the 6 moths period ended June 30, 2005) as collaboration support paid in 2004
(instead of a total of $2 million to be paid in installments through 2005, as
per the original agreement). Furthermore under the terms of the agreement, as
amended, Cubist shall make a payment in the amount of U.S.$3 million upon
achievement of certain regulatory milestones till 2007 or an amount of U.S.$2
million upon achievement of the same certain regulatory milestones till 2008.
The Company accounts for the payments resulting from the agreement, as follows
(i) the $1 million up-front fee and the installment payments aggregating $1
million are recorded as deferred revenue upon receipt and amortized through 2008
or date regulatory approval obtained, if earlier, and (ii) the milestone
contingent payments will be recorded as revenue upon regulatory approval
milestones obtained.
The agreement expires on the later of the last valid patent claim covering
HepeX-B to expire, or 10 years after the first commercial sale of HepeX-B on a
country by country basis.
5. Recent accounting pronouncement:
FAS 154 Accounting Changes and Error Corrections - a replacement of Accounting
Principles Board Opinion ("APB") No. 20 and FASB Statement No. 3.
In May 2005, the FASB issued FAS No. 154, "Accounting Changes and Error
Corrections". FAS No. 154 is a replacement of Accounting Principles Board
Opinion ("APB") No. 20 and FASB Statement No. 3. FAS No. 154 provides guidance
on the accounting for and reporting of accounting changes and error corrections.
It establishes retrospective application as the required method for reporting a
change in accounting principle. FAS No. 154also requires that a change in
depreciation, amortization, or depletion method for long-lived, non-financial
assets be accounted for as a change in accounting estimate effected by a change
in accounting principle. The Statement carries forward the guidance contained in
APB No. 20 for reporting the correction of an error in previously issued
financial statements and a change in accounting estimate.
FAS No. 154 is effective for accounting changes and corrections of errors made
in fiscal years beginning after December 15, 2005 (January 1, 2006 for the
Company). The Company does not expect this standard to have a material effect on
the Company's financial statements or results of operations.
6. Subsequent events
1. In August 2005, the Company entered into an asset purchase agreement
with VivoQuest (hereafter - VQ) pursuant to which the Company agreed to purchase
from VQ certain assets, including VQ's laboratory equipment, and to assume VQ's
lease of its laboratory space.
In consideration, the Company will pay $450,000 to VQ, which payment will be
satisfied by the issuance of ordinary shares having a fair market value in the
same amount as of the closing date.
In addition, the Company entered into a license agreement with VQ pursuant to
which, upon the closing under the asset purchase agreement, the Company will
acquire exclusive worldwide rights to VQ's intellectual property and technology.
The license covers a proprietary compound library, including VQ's lead HCV
compounds. The terms of the license agreement include an initial upfront license
fee of approximately $941,000 to be paid in ordinary shares at the time of
closing of the asset purchase agreement. The license agreement also provides for
additional milestone payments triggered by certain regulatory and sales targets.
These milestone payments total $34.6 million, $25.0 million of which will be due
upon or following regulatory approval or actual product sales, and are payable
in cash or ordinary shares at the Company's election. In addition, the license
agreement requires that the Company will make royalty payments on product sales.
Pursuant to an interim funding letter, the Company has agreed to provide up to
$400,000 to VQ to cover operating expenses prior to the closing of the
transaction. The closing of the agreements is subject to customary closing
conditions and is expected to occur in September 2005.
2. On August 1, 2005, the shareholders of the Company approved a grant of
2,000,000 options to purchase the Company ordinary shares, nominal value NIS
0.02 each, to a director, and a grant of 9,250,000 options to purchase the
Company ordinary shares, nominal value NIS 0.02 each, to the Chairman. The
options are exercisable for a period of five years from the date of issuance,
and were granted in accordance with the terms and conditions of the Company 2001
Stock Option Plan. The options have an exercise price equal to $0.354 per share.
One third of each grant of options vests upon the Company achieving total market
capitalization milestones of $150 million, $250 million and $350 million,
respectively, provided that they are still directors of the Company at each such
vesting. The Company expects that the grant of these options will result in a
material charge to the Company's general and administrative expenses.
This information is provided by RNS
The company news service from the London Stock Exchange
Distributed by Market Wire
Copyright © 2008, MarketWire
Copyright © 2008, NewsBlaze,
Daily NewsTags: ,Pharmaceuticals and Biotech:Biotech, PharmaceuticalsandBiotech:Drugs, PharmaceuticalsandBiotech:Trials, ,UK,Rehovot, Israel
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