We are a biotechnology company focused in the field of regenerative medicine,
and a leading developer of placenta-based cell therapy product candidates for
the treatment of multiple inflammatory, muscle injuries and hematologic
conditions. Our operations are focused on the research, development,
manufacturing, conducting clinical trials and business development of cell
therapeutics and related technologies.
PLX cells are derived from a class of placental cells that are harvested from
donated placenta at the time of full term healthy delivery of a baby. The cells
are grown using our proprietary three-dimensional expansion technology and can
be administered to patients off the-shelf, without blood or tissue matching
prior to administration. PLX cells are believed to release a range of
therapeutic proteins in response to the patient's condition, such as
inflammation, muscle trauma, hematological disorders and radiation damage.
We are conducting several multinational clinical studies which consist of a
Phase III clinical study in muscle recovery following surgery for hip fracture
and two Phase II clinical studies in ARDS associated with COVID-19 in the United
States, Europe and Israel. In addition, we are focusing on other clinical
programs in the hematological field such as a Phase I clinical study for
incomplete recovery following bone marrow transplantation in the United States
and Israel, an investigator-led Phase I/II cGVHD study in Israel, and ARS under
the FDA animal rule. We believe that each of these indications is a severe unmet
Our manufacturing facility complies with the European, Japanese, Israeli, South
Korean and the FDA's cGMP requirements and has been inspected and approved by
the European and Israeli regulators for production of PLX-PAD for late stage
trials. We have also been granted manufacturer/importer authorization and cGMP
Certification by the MOH. If we obtain FDA and other regulatory approvals to
market PLX cells, we expect to have in-house production capacity to grow PLX
cells in commercial quantities.
Our goal is to make significant progress with our clinical pipeline and our
clinical studies in order to ultimately bring innovative, potent therapies to
patients who need new treatment options. We expect to demonstrate a real-world
impact and value from our pipeline, technology platform and commercial-scale
manufacturing capacity. Our business model for commercialization and revenue
generation includes, but is not limited to, licensing deals, joint ventures with
pharmaceutical companies, direct sale of our products, and partnerships.
RESULTS OF OPERATIONS - YEAR ENDED JUNE 30, 2021 COMPARED TO YEAR ENDED JUNE 30,
Revenues for the year ended June 30, 2020 were $23,000 compared to no revenues
for the year ended June 30, 2021. The revenues in the year ended June 30, 2020
were related to the sale of our PLX cells for research use.
Research and Development, Net
Research and development net costs (costs less participation and grants by the
IIA, Horizon 2020 and other parties) increased by 39% from $21,577,000 for the
year ended June 30, 2020 to $30,066,000 for the year ended June 30, 2021. The
increase is mainly attributed to (1) an increase in clinical study subcontractor
expenses which mostly relates to ARDS associated with COVID-19 Phase II clinical
studies, (2) an increase in payroll expenses related to payroll adjustments and
exchange rate adjustment that relates to the strength of the NIS against the
U.S. dollar, (3) increased share-based compensation expenses due to increased
amount of restricted stock units, or RSUs, granted during the year ended June
30, 2021 compared to the amount of RSUs granted during the year ended June 30,
2020, and (4) a decrease in the participation of Horizon 2020 in our clinical
programs. The increased research and development net costs were partially offset
by a decrease in travel abroad expenses due to the COVID-19 pandemic.
General and Administrative
General and administrative expenses increased by 159% from $7,922,000 for the
year ended June 30, 2020 to $20,557,000 for the year ended June 30, 2021. The
increase is mainly attributed to: (1) an increase in share-based compensation
expenses related to the amount of RSUs granted, the fair value of such grants at
the time of the grants and their expected vesting periods, including RSU awards
to our CEO and Executive Chairman (see note 9(3) in our accompanying financial
statements), (2) an increase in payroll expenses, mostly related to the
entitlement of our Executive Chairman to certain adjustment fees pursuant to his
amended consulting agreement, payroll adjustments, accruals for target bonuses
for our CEO and Chief Financial Officer, or CFO, according to their amended
employment agreements during the year ended June 30, 2021, and an exchange rate
adjustment that relates to the strength of the NIS against the U.S. dollar, and
(3) an increase in directors and officers insurance premium expense. The
increase in general and administrative expenses was partially offset by a
decrease in RSU expenses relating to RSUs granted to consultants, lower travel
abroad expenses due to the COVID-19 pandemic and lower expenses related to the
EIB Finance Agreement.
Financial Income, Net
Financial income increased from $324,000 for the year ended June 30, 2020 to
$758,000 for the year ended June 30, 2021. This increase is mainly attributable
to (1) increased income from exchange rate differences related to the strength
of the NIS against the U.S. dollar on deposits linked to NIS, and (2) increased
interest income from bank deposits due to an increase in our deposits. The
increase in financial income was partially offset by an increase in interest
expenses relating to the EIB loan.
Loss For The Year
Loss for the year ended June 30, 2021 amounted to $49,865,000 as compared to a
loss of $29,152,000 for the year ended June 30, 2020. The changes were mainly
due to increases in general and administrative expenses and research and
development expenses, net, for the reasons mentioned above. Loss per share for
the year ended June 30, 2021 was $1.77, as compared to $1.60 loss per share for
the year ended June 30, 2020. The loss per share for the year increased mainly
as a result of an increase in the loss for the year, offset by an increase in
our weighted average number of shares due to the issuance of additional shares
during Fiscal Year 2021.
The increase in weighted average common shares outstanding reflects the
issuances of shares pursuant to a securities purchase agreement with certain
institutional investors in February 2021, issuances of shares pursuant to our
Open Market Sale AgreementSM, or the ATM Agreement, that we entered into with
Jefferies LLC, or Jefferies, on July 16, 2020, and issuances of additional
shares upon settlement of RSUs issued to directors, employees and consultants,
and shares issued as a result of the exercise of outstanding warrants and
Liquidity and Capital Resources
As of June 30, 2021, our total current assets were $67,371,000 and our total
current liabilities were $11,517,000. On June 30, 2021, we had a working capital
surplus of $55,854,000 and an accumulated deficit of $330,021,000.
As of June 30, 2020, our total current assets were $48,461,000 and our total
current liabilities were $7,987,000. On June 30, 2020, we had a working capital
surplus of $40,474,000 and an accumulated deficit of $280,156,000.
Our cash and cash equivalents and restricted cash as of June 30, 2021 amounted
to $31,838,000 which reflects an increase of $22,609,000 from the $9,229,000
reported as of June 30, 2020. Cash balances increased in the year ended June 30,
2021 for the reasons presented below.
Our cash used by operating activities was $30,910,000 during the year ended June
30, 2021 and $26,369,000 during the year ended June 30, 2020. Cash used by
operating activities in the year ended June 30, 2021 primarily consisted of
payments to subcontractors, suppliers, and professional services providers
related to our ongoing clinical studies and payments of salaries to our
employees, offset by participation of the IIA, Horizon 2020 and other grants.
Cash used by operating activities in the year ended June 30, 2020 primarily
consisted of payments to subcontractors, suppliers, and professional services
providers primarily related to our ongoing clinical trials and payments of
salaries to our employees, offset by participation of the IIA, Horizon 2020 and
Cash used for investing activities was $7,265,000 during the year ended June 30,
2021 and $30,458,000 during the year ended June 30, 2020. The investing
activities in the year ended June 30, 2021 consisted primarily of cash used for
investment in long-term deposits of $10,953,000 and payments of $373,000 related
to investments in property and equipment, partially offset by the withdrawal of
$4,061,000 of short-term deposits. The investing activities in the year ended
June 30, 2020 consisted primarily of cash used for investment in short-term
deposits of $17,949,000, investment in long-term deposits of $12,239,000 and
payments of $270,000 related to investments in property and equipment.
Financing activities generated cash in the amount of $61,402,000 during the year
ended June 30, 2021 and $60,870,000 during the year ended June 30, 2020. The
cash generated in the year ended June 30, 2021 from financing activities is
related to: (1) net proceeds of $36,589,000 comprised of funds received from our
registered direct offering which closed in February 2021 and common shares
issuances made under the ATM Agreement, (2) proceeds of $24,449,000 received
from the EIB pursuant to the EIB Finance Agreement, and (3) net proceeds of
$364,000 from the exercise of outstanding warrants. The cash generated in the
year ended June 30, 2020 from financing activities is related to net proceeds of
$43,262,000 from issuing our common shares under our prior Open Market Sales
AgreementSM we executed with Jefferies LLC on February 6, 2019, net proceeds of
$14,901,000 from issuing our common shares in a registered direct offering in
May 2020 and net proceeds of $2,707,000 from issuing our common shares from the
exercise of warrants.
On July 16, 2020, we entered into the ATM Agreement with Jefferies, pursuant to
which we may issue and sell shares of our common shares having an aggregate
offering price of up to $75,000,000 from time to time through Jefferies. Upon
entering into the ATM Agreement, we filed a new shelf registration statement on
Form S-3, which was declared effective by the SEC on July 23, 2020. During the
year ended June 30, 2021, we sold 1,045,097 of our common shares under the ATM
Agreement at an average price of $8.50 per share for aggregate net proceeds of
In the year ended June 30, 2021, warrants to purchase up to 51,999 shares from
our April 2019 firm commitment public offering were exercised by investors at an
exercise price of $7.00 per share, resulting in the issuance of 51,999 common
shares for net proceeds of approximately $364,000.
On February 2, 2021, we entered into a securities purchase agreement with
several institutional investors, or the Investors, pursuant to which we sold, in
a registered direct offering, directly to the Investors, 4,761,905 common
shares, for gross proceeds of $30,000,000. The aggregate net proceeds were
approximately $28,077,000, net of issuance expenses of approximately $1,923,000.
In April 2020, we and our subsidiaries, Pluristem Ltd. and Pluristem GmbH,
executed the EIB Finance Agreement for funding of up to €50 million in the
aggregate, payable in three tranches. The proceeds from the EIB Finance
Agreement are intended to support our research and development in the European
Union to further advance our regenerative cell therapy platform, and to bring
the products in our pipeline to market. The proceeds from the EIB Finance
Agreement are expected to be deployed in three tranches, subject to the
achievement of certain clinical, regulatory and scaling up milestones.
During June 2021, we received the first tranche in the amount of $24,449,000
(€20 million) pursuant to the EIB Finance Agreement. The amount received is due
to be repaid on June 1, 2026 and bears annual interest of 4% to be paid together
with the principal of the loan. As of June 30, 2021, the interest accrued was in
the amount of $78,000 (€65,000).
During the years ended June 30, 2021 and 2020, we received total cash grants of
approximately $239,000 and $1,227,000, respectively, from the European Union
research and development consortiums relating to the Horizon 2020 program.
The IIA has supported our research activity. Our last program was approved by
the IIA in 2019 and relates to a grant of approximately $500,000. The grant was
used to cover research and development expenses for the period January 1, 2019
to December 31, 2019.
According to the IIA grant terms, we are required to pay royalties at a rate of
3% on sales of products and services derived from technology developed using
this and other IIA grants until 100% of the dollar-linked grants amount plus
interest are repaid. In the absence of such sales, no payment is required.
During the year ended June 30, 2021, no royalties were paid to the IIA. The IIA
may impose certain conditions on any arrangement under which the IIA permits the
Company to transfer technology or development out of Israel or outsource
manufacturing out of Israel. While the grant is given to the Company over a
certain period of time (usually a year), the requirements and restrictions under
the Israeli Law for the Encouragement of Industrial Research and Development,
1984 continue and do not have a set expiration period, except for the royalties,
which requirement to pay them expires after payment in full.
In May 2020, we were selected as a member of the CRISPR-IL consortium, a group
funded by the IIA. CRISPR-IL brings together the leading experts in life science
and computer science from academia, medicine, and industry, to develop AI based
end-to-end genome-editing solutions. CRISPR-IL is funded by the IIA with a total
budget of approximately $10,000,000 of which, an amount of approximately
$480,000 is a direct grant allocated to us, for a period of 18 months, with a
potential for extension of an additional 18 months and additional budget from
the IIA. CRISPR-IL participants include leading companies, and medical and
academic institutions. As of June 30, 2021, we received total grants of
approximately $401,000 in cash from the IIA pursuant to the CRISPR-IL consortium
program. The CRISPR-IL consortium program does not require any obligation to pay
In July 2018, we were awarded a marketing grant of approximately $52,000 under
the "Shalav" program of the Israeli Ministry of Economy and Industry. The grant
is intended to facilitate certain marketing and business development activities
with respect to our advanced cell therapy products in the U.S. market.
In July 2017, we were awarded an additional Smart Money grant of approximately
$229,000 from Israel's Ministry of Economy. The Israeli government granted us
budget resources that we intend to use to advance our product candidate towards
marketing in China-Hong Kong markets. We will also receive close support from
Israel's trade representatives stationed in China, including Hong Kong, along
with experts appointed by the Smart Money program.
In August 2016, our CLI program in the European Union was awarded a €7,600,000
(approximately $8,500,000) non-royalty bearing grant. The grant is part of the
European Union's Horizon 2020 program. The Phase III study of PLX-PAD in CLI
will be a collaborative project carried out by an international consortium led
by the Berlin-Brandenburg Center for Regenerative Therapies together with the
Company and with participation of additional third parties. The grant covered a
significant portion of the CLI program costs. An amount of €1,900,000
(approximately $2,100,000) is a direct grant allocated to us, and the Company
also had cost savings resulting from grant amounts allocated to the other
consortium members. In July 2017, the consortium amended the consortium
agreement, pursuant to which the original grant allocation was amended such that
we will receive an additional direct grant of €1,177,000 (approximately
$1,295,000). The additional direct grant was allocated to us from the total
amount of the original grant. As of June 30, 2021, we received €2,615,000
(approximately $2,946,000) and we expect to receive an additional €461,000
In September 2017, our Phase III study of PLX-PAD cell therapy in the treatment
of muscle injury following surgery for hip fracture was awarded a €7,400,000
(approximately $8,300,000) grant, as part of the European Union's Horizon 2020
program. This Phase III study will be a collaborative project carried out by an
international consortium led by Charité, together with us, and with
participation of additional third parties. The grant will cover a significant
portion of the project costs. An amount of € 2,550,000 (approximately
$2,900,000) is a direct grant allocated to us for manufacturing and other costs,
and we also expect to have a direct benefit from cost savings resulting from
grant amounts allocated to the other consortium members. As of June 30, 2021, we
received €2,166,000 (approximately $2,540,000) and we expect to receive an
additional €382,000 (approximately $454,000).
In October 2017, the nTRACK, a collaborative project carried out by an
international consortium led by Leitat was awarded a €6,800,000 (approximately
$7,600,000) non-royalty bearing grant. An amount of €500,000 (approximately
$560,000) is a direct grant allocated to us. We also expect to benefit from cost
savings resulting from grant amounts allocated to the other consortium members.
As of June 30, 2021, we received €414,000 (approximately $473,000) and we expect
to receive an additional €73,000 (approximately $87,000).
We have accumulated a deficit of $330,021,000 since our inception in May 2001.
We do not expect to generate any significant revenues from sales of products in
the next twelve months. Our cash needs may increase in the foreseeable future.
We expect to generate revenues, from the sale of licenses to use our technology
or products, but in the short and medium terms will unlikely exceed our costs of
We may be required to obtain additional liquidity resources in order to support
the commercialization of our products and maintain our research and development
and clinical trials activities.
We are continually looking for sources of funding, including non-diluting
sources such as collaboration with other companies via licensing agreements, the
EIB Finance Agreement, the IIA grants, the European Union grant and other
research grants, and sales of our common shares.
We believe that we have sufficient cash to fund our operations for at least the
next 12 months.
Application of Critical Accounting Policies and Estimates
Our significant accounting policies are more fully described in Note 2 to our
consolidated financial statements appearing in this Annual Report. We believe
that the accounting policies below are critical for one to fully understand and
evaluate our financial condition and results of operations.
The discussion and analysis of our financial condition and results of operations
is based on our financial statements, which we prepared in accordance with U.S.
GAAP. The preparation of these financial statements requires us to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, as well as the reported revenues and expenses during the reporting
periods. On an ongoing basis, we evaluate such estimates and judgments,
including those described in greater detail below. We base our estimates on
historical experience and on various other factors that we believe are
reasonable under the circumstances. Actual results may differ from these
estimates under different assumptions or conditions.
Share-based compensation is considered a critical accounting policy due to the
significant expenses of RSUs which were granted to our employees, directors and
consultants. In Fiscal Year 2021, we recorded share-based compensation expenses
related to options, restricted shares and RSUs in the amount of $13,968,000.
In accordance with ASC 718, "Compensation-Stock Compensation", or ASC 718, RSUs
granted to employees and directors are measured at their fair value on the grant
date. All RSUs granted in fiscal years 2021 and 2020 were granted for no
consideration; therefore their fair value was equal to the share price at the
date of grant unless the RSUs include a market-based condition in which case the
fair value RSUs at the date of grant was calculated using the Monte Carlo model.
The RSUs granted in Fiscal Year 2021 to non-employee consultants were measured
at their fair value on the grant date in accordance with ASU No. 2018-07 -
The value of the portion of the award that is ultimately expected to vest is
recognized as an expense over the requisite service periods in our consolidated
statements of operations. We have graded vesting based on the accelerated method
over the requisite service period of each of the awards. The expected
pre-vesting forfeiture rate affects the number of the shares. Based on our
historical experience, the pre-vesting forfeiture rate per grant is 13% for the
shares granted to employees and 0% for the shares granted to our directors and
officers and non-employee consultants.
Research and Development Expenses, Net
We expect our research and development expenses to remain our primary expense in
the near future as we continue to develop our product candidates. Our research
and development expenses consist primarily of clinical trials expenses,
consultant and subcontractor expenses, payroll and related expenses, lab
material expenses, share-based compensation expenses, rent and maintenance
expenses. The following table provides a breakdown of the related costs for
fiscal years 2020 and 2021 (in thousands of dollars):
Year ended June 30,
Payroll and related expenses $ 10,563 $ 8,478
Materials expenses 2,843 2,821
Clinical trials expenses 10,024 6,021
Depreciation expenses 1,252 1,453
Consultants and subcontractor expenses 2,411 1,351
Rent and maintenance expenses 1,369 1,227
Share-based compensation expenses 1,538 556
Other Research and development expenses 533 1,189
Total expenses 30,533 23,096
Less: Research and development participation grants (467 ) (1,519 )
Research and development expenses, net
$ 30,066 $ 21,577
We invest heavily in research and development. Research and development
expenses, net, were our major operating expenses, representing 59% and 73% of
the total operating expenses for each of our fiscal years 2021 and 2020,
respectively. We expect that in the upcoming years our research and development
expenses, net, will continue to be our major operating expense.
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