EX-99 3 exhibit_2.htm UNAUDITED FINANCIAL STATEMENTS exhibit_2.htm
Exhibit 2
 
 
 
 
 
BioLineRx Ltd.
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
AS OF JUNE 30, 2014
 
 
 
 
 
 
 
 
 

BioLineRx Ltd.
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
AS OF JUNE 30, 2014
 
TABLE OF CONTENTS
 

 
 
 
 
BioLineRx Ltd.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION
(UNAUDITED)

               
Convenience translation into USD (Note 1b)
  
   
December 31,
    
June 30,
    
June 30,
  
   
2013
    
2014
    
2014
  
   
NIS in thousands
    
In thousands
  
Assets
                  
CURRENT ASSETS
                  
Cash and cash equivalents
     30,888       28,963       8,424  
Short-term bank deposits
     32,345       84,994       24,722  
Prepaid expenses
     896       970       282  
Other receivables
     1,249       1,422       414  
Total current assets
     65,378       116,349       33,842  
                         
NON-CURRENT ASSETS
                        
Restricted deposits
     573       568       165  
Long-term prepaid expenses
     169       162       47  
Property and equipment, net
     2,471       2,333       678  
Intangible assets, net
     878       853       248  
Total non-current assets
     4,091       3,916       1,138  
Total assets
     69,469       120,265       34,980  
                         
Liabilities and equity
                        
CURRENT LIABILITIES
                        
Accounts payable and accruals:
                        
Trade
     7,945       6,397       1,860  
Other
     2,499       3,057       889  
Total current liabilities
     10,444       9,454       2,749  
                         
NON-CURRENT LIABILITIES
                        
Retirement benefit obligations
     152       152       44  
Warrants
     18,187       10,130       2,947  
Total non-current liabilities
     18,339       10,282       2,991  
COMMITMENTS AND CONTINGENT LIABILITIES
                        
Total liabilities
     28,783       19,736       5,740  
                         
EQUITY
                        
Ordinary shares
     2,414       3,411       992  
Share premium
     509,857       588,622       171,210  
Capital reserve
     34,192       35,794       10,411  
Accumulated deficit
     (505,777 )     (527,298 )     (153,373 )
Total equity
     40,686       100,529       29,240  
Total liabilities and equity
     69,469       120,265       34,980  
 
The accompanying notes are an integral part of these condensed financial statements.
 
 
F - 1
 
 
BioLineRx Ltd.
CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE LOSS
(UNAUDITED)
 
               
Convenience translation
into USD
(Note 1b)
  
               
Three months
    
Six months
  
   
Three months ended
June 30,
    
Six months ended
June 30,
    
ended
June 30,
    
ended
June 30,
  
   
2013
    
2014
    
2013
    
2014
    
2014
    
2014
  
   
NIS in thousands
    
USD in thousands
  
RESEARCH AND DEVELOPMENT EXPENSES, NET
     (12,087 )     (9,677 )     (31,530 )     (19,187 )     (2,815 )     (5,581 )
SALES AND MARKETING EXPENSES
     (1,063 )     (987 )     (1,834 )     (2,270 )     (287 )     (660 )
GENERAL AND ADMINISTRATIVE EXPENSES
     (3,604 )     (2,888 )     (7,126 )     (6,351 )     (840 )     (1,847 )
OPERATING LOSS
     (16,754 )     (13,552 )     (40,490 )     (27,808 )     (3,942 )     (8,088 )
NON-OPERATING INCOME, NET
     1,579       962       13,841       6,845       280       1,991  
FINANCIAL INCOME
     1,320       121       1,983       1,067       35       310  
FINANCIAL EXPENSES
     (1,713 )     (1,653 )     (3,742 )     (1,625 )     (480 )     (473 )
COMPREHENSIVE LOSS FOR THE PERIOD
     (15,568 )     (14,122 )     (28,408 )     (21,521 )     (4,107 )     (6,260 )
                                                 
   
           NIS
    
           USD
  
                                                 
LOSS PER ORDINARY SHARE - BASIC AND DILUTED
     (0.069 )     (0.042 )     (0.132 )     (0.071 )     (0.012 )     (0.021 )
                                                 
WEIGHTED AVERAGE NUMBER OF SHARES USED IN CALCULATION OF LOSS PER ORDINARY SHARE
     226,191,857       340,050,724       215,502,443       305,039,680       340,050,724       305,039,680  
 
The accompanying notes are an integral part of these condensed financial statements.
 
 
F - 2
 

BioLineRx Ltd.
CONDENSED INTERIM STATEMENTS OF CHANGES IN EQUITY
(UNAUDITED)
 
   
Ordinary
    
Share
    
Capital
    
Accumulated
        
   
shares
    
premium
    
reserve
    
Deficit
    
Total
  
   
NIS in thousands
  
BALANCE AT JANUARY 1, 2013
     1,837       464,629       33,802       (444,339 )     55,929  
CHANGES FOR SIX MONTHS ENDED JUNE 30, 2013:
                                        
Issuance of share capital , net
     455       33,225       -       -       33,680  
Employee stock options exercised
     *       224       (224 )     -       -  
Warrants exercised
     2       258       -       -       260  
Employee stock options forfeited and expired
     -       574       (574 )     -       -  
Share-based compensation
     -       -       1,626       -       1,626  
Comprehensive loss for the period
     -       -       -       (28,408 )     (28,408 )
BALANCE AT JUNE 30,  2013
     2,294       498,910       34,630       (472,747 )     63,087  
 
   
Ordinary
    
Share
    
Capital
    
Accumulated
        
   
shares
    
premium
    
reserve
    
Deficit
    
Total
  
   
NIS in thousands
  
BALANCE AT JANUARY 1, 2014
     2,414       509,857       34,192       (505,777 )     40,686  
CHANGES FOR SIX MONTHS ENDED JUNE 30, 2014:
                                        
Issuance of share capital , net
     997       78,634       -       -       79,631  
Employee stock options exercised
     *       77       (77 )     -       -  
Employee stock options forfeited and expired
     -       54       (54 )     -       -  
Share-based compensation
     -       -       1,733       -       1,733  
Comprehensive loss for the period
     -       -       -       (21,521 )     (21,521 )
BALANCE AT JUNE 30,  2014
     3,411       588,622       35,794       (527,298 )     100,529  
 
* Represents an amount less than 1,000
 
The accompanying notes are an integral part of these condensed financial statements.
 
 
F - 3
 

BioLineRx Ltd.
CONDENSED INTERIM STATEMENTS OF CHANGES IN EQUITY
(UNAUDITED)

   
Ordinary
    
Share
    
Capital
    
Accumulated
        
   
shares
    
premium
    
reserve
    
deficit
    
Total
  
   
Convenience translation into USD in thousands (Note 1b)
  
BALANCE AT JANUARY 1, 2014
     702       148,300       9,945       (147,113 )     11,834  
CHANGES FOR SIX MONTHS ENDED JUNE 30, 2014:
                                        
Issuance of share capital , net
     290       22,872       -       -       23,162  
Employee stock options exercised
     *       22       (22 )     -       -  
Employee stock options forfeited and expired
     -       16       (16 )     -       -  
Share-based compensation
     -       -       504       -       504  
Comprehensive loss for the period
     -       -       -       (6,260 )     (6,260 )
BALANCE AT JUNE 30,  2014
     992       171,210       10,411       (153,373 )     29,240  
 
* Represents an amount less than 1,000
 
The accompanying notes are an integral part of these condensed financial statements.
 
 
F - 4
 
 
BioLineRx Ltd.
CONDENSED CONSOLIDATED INTERIM CASH FLOW STATEMENTS
(UNAUDITED)

         
Convenience translation
into USD
(Note 1b)
  
   
Six months ended June 30,
    
Six months ended
June 30,
  
   
2013
    
2014
    
2014
  
   
NIS in thousands
    
In thousands
  
                   
CASH FLOWS - OPERATING ACTIVITIES
                  
Comprehensive loss for the period
     (28,408 )     (21,521 )     (6,260 )
Adjustments required to reflect net cash used in operating
activities (see appendix below)
     (13,133 )     (5,414 )     (1,575 )
      Net cash used in operating activities
     (41,541 )     (26,935 )     (7,835 )
                         
CASH FLOWS - INVESTING ACTIVITIES
                        
Investments in short-term deposits
     (75,008 )     (107,211 )     (31,184 )
Maturities of short-term deposits
     52,257       53,732       15,629  
Maturities of restricted deposits
     1,550       -       -  
Additions to property and equipment
     (132 )     (311 )     (90 )
Additions to intangible assets
     (79 )     (10 )     (3 )
Net cash used in investing activities
     (21,412 )     (53,800 )     (15,648 )
                         
CASH FLOWS - FINANCING ACTIVITIES
                        
Repayments of bank loan
     (127 )     -       -  
Issuance of share capital and warrants, net
     46,101       78,590       22,859  
Proceeds from exercise of employee stock options
     *       *       *  
Net cash provided by financing activities
     45,974       78,590       22,859  
                         
DECREASE IN CASH AND CASH EQUIVALENTS
     (16,979 )     (2,145 )     (624 )
CASH AND CASH EQUIVALENTS – BEGINNING
OF PERIOD
     68,339       30,888       8,984  
EXCHANGE DIFFERENCES ON CASH AND CASH EQUIVALENTS
     (1,128 )     220       64  
CASH AND CASH EQUIVALENTS - END OF PERIOD
     50,232       28,963       8,424  

* Less than 1,000
 
The accompanying notes are an integral part of the financial statements.
 
 
F - 5
 

BioLineRx Ltd.
APPENDIX TO CONDENSED CONSOLIDATED INTERIM CASH FLOW STATEMENTS
(UNAUDITED)
 
         
Convenience translation
into USD
(Note 1b)
  
   
Six months ended June 30,
    
Six months ended
June 30,
  
   
2013
    
2014
    
2014
  
   
NIS in thousands
    
In thousands
  
                   
                   
Adjustments required to reflect net cash used in operating activities:
                  
                   
Income and expenses not involving cash flows:
                  
Depreciation and amortization
     578       484       141  
Impairment of intangible assets
     138       -       -  
Long-term prepaid expenses
     34       7       2  
Exchange differences on cash and cash equivalents
     1,128       (220 )     (64 )
Share-based compensation
     1,626       1,733       504  
Warrant issuance costs
     470       -       -  
Gain on adjustment of warrants to fair value
     (14,498 )     (8,057 )     (2,344 )
Commitment fee paid by issuance of share capital
     -       1,041       303  
Interest and exchange differences on short-term deposits
     972       830       241  
Interest and linkage on bank loan
     (10 )     -       -  
Interest and exchange differences on restricted deposits
     17       5       2  
      (9,545 )     (4,177 )     (1,215 )
                         
Changes in operating asset and liability items:
                        
Decrease  (increase) in trade accounts receivable and
other receivables
     1,405       (247 )     (72 )
Decrease in accounts payable and accruals
     (4,993 )     (990 )     (288 )
      (3,588 )     (1,237 )     (360 )
      (13,133 )     (5,414 )     (1,575 )
                         
Supplementary information on interest received in cash
     323       96       28  
 
The accompanying notes are an integral part of the financial statements.
 
 
F - 6
 
 
BioLineRx Ltd.
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
 
NOTE 1 – GENERAL INFORMATION
 
 
a.
General
 
BioLineRx Ltd. (“BioLineRx”), headquartered in Jerusalem, Israel, was incorporated and commenced operations in April 2003.

Since incorporation, BioLineRx has been engaged, both independently and through its consolidated entities (collectively, the “Company”), in the development of therapeutics, from pre-clinical-stage development to advanced clinical trials, for a wide range of medical needs.

In December 2004, BioLineRx registered a limited partnership, BioLine Innovations Jerusalem L.P. (“BIJ LP”), which commenced operations in January 2005. BioLineRx holds a 99% interest in BIJ LP, with the remaining 1% held by a wholly owned subsidiary of BioLineRx, BioLine Innovations Ltd. (“BIJ Ltd.”). BIJ LP was established to operate a biotechnology incubator located in Jerusalem (the “Incubator”) under an agreement with the State of Israel. The agreement with the State of Israel relating to the Incubator terminated on December 31, 2013, and the Company is currently in the process of winding down BIJ LP’s operations. The Company expects to liquidate both BIJ LP and BIJ Ltd. during 2014.

In February 2007, BioLineRx listed its securities on the Tel Aviv Stock Exchange (“TASE”) and they have been traded on the TASE since that time. Since July 2011, BioLineRx’s American Depositary Shares (“ADSs”) are also traded on the NASDAQ Capital Market.

The Company has been engaged in drug development since its incorporation. Although the Company has generated significant revenues from two out-licensing transactions, the Company cannot determine with reasonable certainty when and if the Company will have sustainable profits.
 
 
b.
Convenience translation into US dollars (“dollars” or “USD”)
 
For the convenience of the reader, the reported New Israeli Shekel (“NIS”) amounts as of June 30, 2014 have been translated into dollars, at the representative rate of exchange on June 30, 2014 ($1 = NIS 3.438). The dollar amounts presented in these financial statements should not be construed as representing amounts that are receivable or payable in dollars or convertible into dollars, unless otherwise indicated.
 
 
c.
The condensed consolidated interim financial statements of the Company as of June 30, 2014, and for the three and six months then ended, were approved by the Board of Directors on August 6, 2014, and signed on its behalf by the Chairman of the Board, the Chief Executive Officer and the Chief Financial and Operating Officer.
 
 
F - 7
 
 
BioLineRx Ltd.
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
 
NOTE 2 – BASIS OF PREPARATION

The Company’s condensed consolidated interim financial statements as of June 30, 2014 and for the three and six 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, results of operations, 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, 2013 and for the year then ended and their accompanying notes, which have been prepared in accordance with International Financial Reporting Standards (“IFRS”). The results of operations for the three and six months ended June 30, 2014 are not necessarily indicative of the results that may be expected for the entire fiscal year or for any other interim period.

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, 2013 and for the year then ended.

NOTE 4 – ISSUANCES OF SHARE CAPITAL AND WARRANTS

 
a.
Underwritten public offering of American Depositary Shares
 
In March 2014, the Company completed an underwritten public offering of 9,660,000 ADSs (including 1,260,000 ADSs resulting from exercise of the underwriters’ overallotment option) at a public offering price of $2.50 per ADS. The offering raised a total of $24,150,000, with net proceeds of approximately $22,300,000, after deducting fees and expenses.
 
 
b.
Share purchase agreement with Lincoln Park Capital
 
In September 2012, BioLineRx and Lincoln Park Capital Fund, LLC, an Illinois limited liability company (“LPC”), entered into a $15 million purchase agreement, together with a registration rights agreement, whereby LPC agreed to purchase, from time to time, up to $15 million of BioLineRx’s ADSs, subject to certain limitations, during the 36-month term of the purchase agreement.
 
During the six months ended June 30, 2014, BioLineRx sold a total of 151,164 ADSs to LPC for aggregate gross proceeds of $400,000. In connection with these issuances, a total of 3,779 ADSs was issued to LPC as a commitment fee and a total of $8,000 was paid to Oberon Securities as a finder’s fee.
 
On a cumulative basis, from the effective date of the purchase agreement through the approval date of these financial statements, BioLineRx has sold a total of 3,793,209 ADSs to LPC for aggregate gross proceeds of $9,731,000. In connection with these issuances, a total of 94,832 ADSs was issued to LPC as a commitment fee and a total of $195,000 was paid to Oberon Securities as a finder’s fee.
 
 
F - 8
 
 
BioLineRx Ltd.
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
 
NOTE 4 – ISSUANCES OF SHARE CAPITAL AND WARRANTS (cont.)

 
b.
Share purchase agreement with Lincoln Park Capital (cont.)
 
In May 2014, BioLineRx and LPC entered into a new $20 million, 36-month purchase agreement, and terminated the previous $15 million agreement. The terms of the new purchase agreement are substantially identical to the terms of the previous purchase agreement. Through the approval date of these financial statements, no sales of ADSs to LPC have been made under the new purchase agreement.
 
In consideration for entering into the new $20 million purchase agreement, BioLineRx paid to LPC an initial commitment fee of $300,000, paid via the issuance of 150,000 ADSs, and will pay a further commitment fee of up to $500,000, pro rata, as the facility is used over time, which will be paid in ADSs valued based on the prevailing market prices of BioLineRx’s ADSs at such time. The new purchase agreement may be terminated by BioLineRx at any time, at its sole discretion, without any cost or penalty.
 
In connection with the new purchase Agreement, BioLineRx agreed to pay an initial cash finder’s fee to Oberon Securities of $50,000, and will pay an additional cash finder’s fee equal to 2.0% of the dollar amount of ADSs sold under the new agreement, up to an aggregate additional finder’s fee of $200,000. BioLineRx has no other obligations to Oberon Securities with respect to this or any other potential future agreement.
 
The initial commitment fee payable to LPC and the initial finder’s fee payable to Oberon Securities, in the total aggregate amount of $350,000, were recorded as a non-operating expense in the statement of comprehensive loss for the three months ended June 30, 2014. Future commitment and finders fees payable, if and when the facility is used over time, will be recorded as issuance expenses against share premium on the statement of financial position.

 
c.
Private placement of share capital and warrants to Orbimed
 
In February 2013, the Company completed a direct placement to a leading healthcare investor, OrbiMed Israel Partners Limited Partnership, an affiliate of OrbiMed Advisors LLC. The placement consisted of 2,666,667 ADSs and 1,600,000 warrants to purchase an additional 1,600,000 ADSs, at a unit price of $3.00. The warrants have an exercise price of $3.94 per ADS and are exercisable for a term of five years. The offering raised a total of $8,000,000, with net proceeds of approximately $7,700,000, after deducting fees and expenses.
 
The warrants are exercisable over a period of five years from the date of their issuance. Since the exercise price was not deemed to be fixed, the warrants are not qualified for classification as an equity instrument and have therefore been classified as a non-current derivative financial liability. This liability is initially recognized at its fair value on the date the contract is entered into and subsequently accounted for at fair value at each balance sheet date. The fair value changes are charged to non-operating income and expense in the statement of comprehensive loss.

 
F - 9
 
 
BioLineRx Ltd.
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
 
NOTE 4 – ISSUANCES OF SHARE CAPITAL AND WARRANTS (cont.)

 
c.
Private placement of share capital and warrants to Orbimed (cont.)
 
The amount of the direct placement consideration allocated to the warrants was approximately $3,400,000, as calculated on the basis of the Black-Scholes model, which reflected their fair value as of the issuance date. The portion of total issuance costs allocable to the warrants, in the amount of approximately $130,000, was recorded as non-operating expense on the statement of comprehensive loss. The change in fair value during each reporting period, amounting to approximately $2,350,000 and $930,000 for the six months ended June 30, 2013 and 2014, and approximately $100,000 and $230,000 for the three months ended June 30, 2013 and 2014, respectively, has been included in non-operating income on the statement of comprehensive loss.
 
NOTE 5 – SHAREHOLDERS’ EQUITY

As of June 30, 2014 and December 31, 2013, share capital is composed of ordinary shares, as follows:

   
Number of ordinary shares
  
   
December 31,
    
June 30,
  
   
2013
    
2014
  
             
Authorized share capital
     750,000,000       750,000,000  
                 
Issued and paid-up share capital
     241,487,049       341,150,507  
 
   
In NIS
  
   
December 31,
    
June 30,
  
   
2013
    
2014
  
             
Authorized share capital
     7,500,000       7,500,000  
                 
Issued and paid-up share capital
     2,414,870       3,411,505  

 
F - 10
 
 
BioLineRx Ltd.
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
 
NOTE 6 – NON-OPERATING INCOME, NET

   
Three months ended
June 30,
    
Six months ended
June 30,
  
   
2013
    
2014
    
2013
    
2014
  
   
NIS in thousands
    
NIS in thousands
  
                         
Issuance costs
     (187 )     (1,212 )     (657 )     (1,212 )
Changes in fair value of warrants
     1,766       2,174       14,498       8,057  
      1,579       962       13,841       6,845  

F - 11