Entera Bio : CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED) AS OF MARCH 31, 2021 (Form 6-K)

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(UNAUDITED)

AS OF MARCH 31, 2021

ENTERA BIO LTD.

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(UNAUDITED)

AS OF MARCH 31, 2021

TABLE OF CONTENTS

	Page
CONDENSED CONSOLIDTED FINANCIAL STATEMENTS (Unaudited) - U.S DOLLARS IN THOUSANDS ($):
Condensed consolidated statements of financial position	2
Condensed consolidated statements of comprehensive loss	3
Condensed consolidated statements of changes in shareholders' equity	4
Condensed consolidated statements of cash flows	5 - 6
Notes to the condensed consolidated financial statements	7 - 12

ENTERA BIO LTD.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION

(UNAUDITED)

		March 31			December 31
		2021			2020
		U.S. dollars in thousands
A s s e t s
CURRENT ASSETS:
Cash and cash equivalents			16,381				8,593
Accounts receivable			15				255
Other current assets			1,038				261
TOTAL CURRENT ASSETS			17,434				9,109
NON-CURRENT ASSETS:
Property and equipment			182				192
Right of use assets			306				356
Intangible assets			605				605
TOTAL NON-CURRENT ASSETS			1,093				1,153
TOTAL ASSETS			18,527				10,262
Liabilities and shareholders' equity
CURRENT LIABILITIES:
Accounts payable:
Trade			440				164
Other			1,444				1,330
Current maturities of lease liabilities			182				189
Warrants to purchase ordinary shares			8,535				1,432
Contract liabilities			15				158
TOTAL CURRENT LIABILITIES			10,616				3,273
NON-CURRENT LIABILITIES:
Lease liabilities			220				243
Severance pay obligations, net			78				81
TOTAL NON-CURRENT LIABILITIES			298				324
TOTAL LIABILITIES			10,914				3,597
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Ordinary Shares, NIS 0.0000769 par value:
Authorized - as of March 31, 2021 and December 31, 2020, 140,010,000 shares; issued and outstanding: as of March 31, 2021, and December 31, 2020 23,776,785 and 21,057,922
shares, respectively			*				*
Accumulated other comprehensive income			41				41
Other reserves			9,128				8,924
Additional paid in capital			80,827				70,595
Accumulated deficit			(82,383	)			(72,895	)
TOTAL SHAREHOLDERS' EQUITY			7,613				6,665
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY			18,527				10,262

* Represents an amount less than one thousand US dollars.

The accompanying notes are an integral part of the condensed consolidated financial statements.

2

ENTERA BIO LTD.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE LOSS

(UNAUDITED)

		Three months ended
		March 31
		2021			2020
		U.S. dollars in thousands
REVENUE			157				42
COST OF REVENUE			58				42
RESEARCH AND DEVELOPMENT EXPENSES, net			1,159				1,605
GENERAL AND ADMINISTRATIVE EXPENSES			1,309				1,290
OTHER INCOME			10				-
OPERATING LOSS			2,359				2,895
FINANCIAL EXPENSES (INCOME):
Loss from change in fair value of financial liabilities at fair value			7,103				46
Other financial income, net			(12	)			(23	)
FINANCIAL EXPENSES, NET			7,091				23
LOSS BEFORE TAXES			9,450				2,918
TAXES ON INCOME			38				-
NET COMPREHENSIVE LOSS FOR THE PERIOD			9,488				2,918

		U.S. dollars
LOSS PER ORDINARY SHARE -
Basic and Diluted			0.43				0.16
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING -
Basic and Diluted			21,890,100				18,048,827

The accompanying notes are an integral part of the condensed consolidated financial statements.

3

ENTERA BIOLTD.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED)

		Number of Ordinary Shares			Ordinary Shares-Amount			Accumulated other comprehensive income			Other reserve			Additional paid in capital			Accumulated deficit			Total
					U.S dollars in thousands
BALANCE AT JANUARY 1, 2020
CHANGES FOR THREE MONTHS ENDED MARCH 31, 2020:			17,864,684				*				41				11,398				63,392				(62,912	)			11,919
Net loss for the period			-				-				-				-				-				(2,918	)			(2,918	)
Exercise of options to ordinary shares			31,954				*				-				(35	)			103				-				68
Issuance of shares and warrant due to a private placement, net of issuance costs			337,553				*				-				-				573				-				573
Reclassification due to share-based compensation and warrants expired			-				-				-				(138	)			138				-				-
Share-based compensation			-				-				-				373				-				-				373
BALANCE AT MARCH 31, 2020			18,234,191				*				41				11,598				64,206				(65,830	)			10,015

BALANCE AT JANUARY 1, 2021
CHANGES FOR THREE MONTHS ENDED MARCH 31, 2021:			21,057,922				*				41				8,924				70,595				(72,895	)			6,665
Net loss for the period							-				-				-				-				(9,488	)			(9,488	)
Exercise of warrants to ordinary shares			94,218				*				-				-				24				-				24
Exercise of options to ordinary shares			71,380				*				-				(110	)			337				-				227
Issuance of shares under the ATM program, net of issuance costs			2,546,265				*				-				-				9,858				-				9,858
Vested restricted share units			7,000				*				-				(13	)			13				-				-
Share-based compensation			-				-				-				327				-				-				327
BALANCE AT MARCH 31, 2021			23,776,785				*				41				9,128				80,827				(82,383	)			7,613

The accompanying notes are an integral part of the condensed consolidated financial statements.

4

ENTERA BIOLTD.

CONDENSED CONSOLIDATED INTERIM CASH FLOW STATEMENTS

(UNAUDITED)

		Three months ended March 31
		2021			2020
		(Unaudited)
		U.S dollars in thousands
CASH FLOWS USED IN OPERATING ACTIVITIES:
Net loss for the period			(9,488	)			(2,918	)
Adjustments required to reflect net cash
used in operating activities (see appendix A)			7,212				262
Net cash used in operating activities			(2,276	)			(2,656	)
CASH FLOWS USED IN INVESTING ACTIVITIES:
Purchase of property and equipment			-				(29	)
Net cash used in investing activities			-				(29	)
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES:
Principle element of lease payments			(45	)			(37	)
Issuance of ordinary shares and warrants, net of issuance costs			-				797
Issuance of shares due to the ATM program, net of issuance costs			9,858				-
Proceeds from exercise of options and warrants			251				68
Net cash provided by financing activities			10,064				828
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS			7,788				(1,857	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR			8,593				15,185
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD			16,381				13,328

The accompanying notes are an integral part of the condensed consolidated financial statements.

5

ENTERA BIOLTD.

CONDENSED CONSOLIDATED INTERIM CASH FLOW STATEMENTS

(UNAUDITED)

		Three months ended March 31
		2021			2020
		(Unaudited)
		U.S dollars in thousands
APPENDIX A:
Adjustments required to reflect net cash used in operating activities:
Depreciation			91				50
Change in fair value of financial liabilities at fair value through profit or loss			7,103				46
Financial expenses (income), net			(7	)			4
Net changes in severance pay obligation			(3	)			3
Share-based compensation			327				373
			7,511				476
Changes in working capital:
Decrease in accounts receivables			240				278
Increase in other current assets			(777	)			(613	)
Increase in accounts payable and accruals:
Trade			276				97
Other			114				73
Decrease in contract liabilities			(143	)			(42	)
			(290	)			(207	)
Cash used for operating activities:
Interest paid			(9	)			(7	)
			7,212				262
APPENDIX B:
Supplementary information on investing and financing activities not involving cash flows:
Right of use assets obtained in exchange for new operating lease liabilities			31				23
Cashless exercise of warrants			*				-
Vested restricted shares units			*				-

The accompanying notes are an integral part of the condensed consolidated financial statements.

6

ENTERA BIOLTD.

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1 - GENERAL INFORMATION:

a.

General:

1)

Entera Bio Ltd. (collectively with its subsidiary, the 'Company') was incorporated on September 30, 2009 and commenced operation on June 1, 2010. On January 8, 2018 the Company incorporated Entera Bio Inc., a fully owned subsidiary incorporated in Delaware USA. The Company is a leader in the development and commercialization of orally delivered large molecule therapeutics for use in areas with significant unmet medical need where adoption of injectable therapies is limited due to cost, convenience and compliance challenges for patients. The Company's most advanced product candidates, EB613 for the treatment of osteoporosis and EB612 for the treatment of hypoparathyroidism, are based on its proprietary technology platform and are both in Phase 2 clinical development. The Company also licenses its technology to biopharmaceutical companies for use with their proprietary compounds and, to date, has completed one such collaboration with Amgen Inc.

2)

The Company's securities have been listed for trading on the Nasdaq Capital Market since the Company's initial public offering in July 2018, where a total of 1,400,000 new ordinary shares were issued in consideration of net proceeds of $9.6 million, after deducting offering expenses.

b.

Since the Company is engaged in research and development activities, it has not derived significant income from its activities and has incurred accumulated losses in the amount of $82.4 million through March 31, 2021 and negative cash flows from operating activities. The Company's management is of the opinion that its available funds as of March 31, 2021 will allow the Company to operate under its current plans into the second quarter of 2022. These factors raise substantial doubt as to the Company's ability to continue as a going concern. Management is in the process of evaluating various financing alternatives in the public or private equity markets, government grants or through license of the company's technology to additional external parties through partnerships or research collaborations as the Company will need to finance future research and development activities, general and administrative expenses and working capital through fund raising. However, there is no certainty about the Company's ability to obtain such funding.

7

ENTERA BIOLTD.

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1 - GENERAL INFORMATION (Continued):

The financial information has been prepared on a going concern basis, which assumes the Company will continue to realize its assets and discharge its liabilities in the normal course of business. If the Company does not raise the requisite funds, it will need to curtail or cease operations. These financial statements do not include any adjustments that may be necessary should the Company be unable to continue as a going concern.

c.

Approval of financial statements

These financial statements were approved by the Company's Board of Directors on May 19, 2021.

NOTE 2 - BASIS OF PREPARATION

The Company's condensed consolidated interim financial statements as of March 31, 2021 and for the three months then ended (the 'interim financial statements') have been prepared in accordance with International Accounting Standard No. 34, 'Interim Financial Reporting' ('IAS 34'). These interim financial statements, which are unaudited, do not include all disclosures necessary for a complete presentation of financial position, comprehensive loss, changes in shareholders' equity and cash flows in conformity with generally accepted accounting principles. The condensed consolidated interim financial statements should be read in conjunction with the Company's annual financial statements as of December 31, 2020 and for the year then ended and their accompanying notes, which have been prepared in accordance with International Financial Reporting Standards ('IFRS') as issued by the IASB.

The results of operations for the three months ended March 31, 2021 are not necessarily indicative of the results that may be expected for the entire fiscal year or for any other interim period.

8

ENTERA BIOLTD.

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES

The accounting policies and calculation methods applied in the preparation of the interim financial statements are consistent with those applied in the preparation of the annual financial statements as of December 31, 2020 and for the year then ended.

Loss per ordinary share

Basic and diluted loss per share is computed by dividing the loss for the period by the weighted average number of ordinary shares outstanding for each period.

All outstanding options and warrants have been excluded from the calculation of the diluted loss per share for the three months ended March 31, 2021 and 2020 since their effect was anti-dilutive. The total number of ordinary shares which were excluded from the calculation of diluted loss per share was 7,894,997 and 8,047,941 for the three months ended March 31, 2021 and 2020 respectively.

NOTE 4 - FINANCIAL RISK FACTORS

The Company's activities expose it to a variety of financial risks. The condensed interim financial statements do not include all financial risk information and disclosures required in the annual financial statements; they should be read in conjunction with the Company's annual financial statements as of December 31, 2020.

There have been no changes in the risk management policies since the year end.

NOTE 5 - FAIR VALUE MEASUREMENT

The Company measures fair value and discloses fair value measurements for financial assets. Fair value is based on the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date. In order to increase consistency and comparability in fair value measurements, the guidance establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels, which are described as follows:

Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.

Level 2: Observable prices that are based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.

As of March 31, 2021 and December 31, 2020, the fair value of cash and cash equivalents, accounts receivable, other receivables and accounts payable approximates their carrying value.

9

ENTERA BIO LTD.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 5 - FAIR VALUE MEASUREMENT (Continued):

		Financial liabilities at fair value through profit or loss			Financial liabilities at amortized cost			Total
		U.S. dollars in thousands
As of March 31, 2021:
Trade and other payable			-				1,884				1,884
Warrants to purchase ordinary shares (level 1) (1)			698				-				698
Warrants to purchase ordinary shares (level 3) (2)			7,837				-				7,837
Lease liabilities			-				402				402
			8,535				2,286				10,821
As of December 31, 2020:
Trade and other payable			-				1,494				1,494
Warrants to purchase ordinary shares (level 1)			239				-				239
Warrants to purchase ordinary shares (level 3)			1,193				-				1,193
Lease liabilities			-				432				432
			1,432				1,926				3,358

(1)

Tradable warrants presented above are valuated based on the market price (a level 1 valuation) as of March 31, 2021.

(2)

Warrants to purchase ordinary shares issued in December 2019 and February 2020 presented are valuated based on the Monte-Carlo pricing model (a level 3 valuation) as of March 31, 2021.

The main assumptions used are as follows:

	March 31
	2021
Price per share	3.81
Volatility	97%
Expected term (years)	0.16
Risk free interest rate	0.01-0.03
Expected dividend	-

10

ENTERA BIO LTD.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 6 - SHARE CAPITAL

1.

Equity transactions

a.

In February and March 2021, the Company issued additional 2,546,265 ordinary shares for net proceeds of $9.9 million at a weighted average price of $3.99 per ordinary share through the Company's ATM Program established in July 2020.

b.

During the first quarter of 2021, two warrants holders exercised 174,052 warrants into 81,419 ordinary shares through cashless exercise mechanism in accordance with the subscription agreement signed in December 2019. In addition, another warrants holder exercised 10,549 warrants into 10,549 ordinary shares of the Company for a total consideration of $11 thousand at an exercise price of $1.05.

c.

In March 2021, a service provider exercised 65,693 options into 65,693 ordinary shares of the Company for a total consideration of $204 thousand at an exercise price of $3.10.

d.

In March 2021, a former employee exercised 5,687 options into 5,687 ordinary shares of the Company for a total consideration of $23 thousand at an exercise price of $3.97.

e.

In March 2021, 4,500 tradable warrants were exercised into 2,250 ordinary shares of the Company for a total consideration of $13 thousand at an exercise price of $5.85.

2.

Options Grants

On January 4, 2021 options to purchase 1,314,218 ordinary shares were granted to the Chief Executive officer of the Company, with an exercise price of $1.24. The options vest over 4 years from the date of grant; 25% vest on the first anniversary of the date of grant and the remaining 75% of the option will vest in twelve equal quarterly installments following the first anniversary of the grant date. The grant was subject to the approval by the shareholders of the Company, which approved the grant in March 2021. The fair value of the options at the date of grant was $1,320 thousand.

11

ENTERA BIO LTD.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 7 - SUBSEQUENT EVENTS

a)

On April 7, 2021, the Company's Board of Directors approved the following option grants:

i)

Options grant to purchase 150,000 ordinary shares to the new US-based CFO, with an exercise price of $3.61 per share. The options vest over 4 years from the date of grant; 25% vest on the first anniversary of the date of grant and the remaining 75% of the option will vest in twelve equal quarterly installments following the first anniversary of the grant date.

ii)

Options grants to purchase 220,000 ordinary shares to certain employees and 70,000 options granted to service providers, with an exercise price of $3.61 per share. The options vest over 4 years from the date of grant; 25% vest on the first anniversary of the date of grant and the remaining 75% of the option will vest in twelve equal quarterly installments following the first anniversary of the grant date.

iii)

Options grant to purchase 33,368 ordinary shares to a non-executive director of the Company, with an exercise price of $3.61. The options will vest over 3 years in twelve equal quarterly instalments starting on the vesting commencement date.

b)

On April 21, 2021, options to purchase 345,000 ordinary shares were granted to several executive officers of the Company, with an exercise price of $3.15. The options vest over 4 years from the date of grant; 25% vest on the first anniversary of the date of grant and the remaining 75% of the option will vest in twelve equal quarterly installments following the first anniversary of the grant date. This grant is subject to shareholders approval.

c)

On April 21, 2021, upon satisfaction of the sale price condition pursuant to the subscription agreement signed in December 2019, the Company's Board of Directors decided to accelerate the termination date of the Investors and Broker warrants issued in December 2019 and February 2020. In accordance with the terms of the agreement , as of the notice date and for a period of 30 calendar days (the 'Early Termination Exercise Period'), the holders may exercise their warrants and following such Early Termination Exercise Period, these warrants shall be deemed terminated.

d)

In April and May 2021, several Investor Warrant's holders exercised 142,407 warrants into 142,407 ordinary shares for a total consideration of $150 thousand at an exercise price of $1.05.

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