EX-99 3 exhibit_2.htm CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
 
Exhibit 2
 
BioLineRx Ltd.
 
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
AS OF JUNE 30, 2018
 
 
BioLineRx Ltd.
 
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
AS OF JUNE 30, 2018
 
TABLE OF CONTENTS

   
Page
 
F-1
 
F-2
 
F-3
 
F-4 - F-5
 
F-6 - F-8

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

   
December 31,
    
June 30,
  
   
2017
    
2018
  
   
in USD thousands
  
Assets
            
CURRENT ASSETS
            
Cash and cash equivalents
    
5,110
      
5,789
  
Short-term bank deposits
    
44,373
      
35,339
  
Prepaid expenses
    
307
      
1,231
  
Other receivables
    
586
      
438
  
Total current assets
    
50,376
      
42,797
  
                 
NON-CURRENT ASSETS
                
Long-term prepaid expenses
    
61
      
63
  
Long-term investment
    
1,000
      
-
  
Property and equipment, net
    
2,505
      
2,318
  
Intangible assets, net
    
7,023
      
7,035
  
Total non-current assets
    
10,589
      
9,416
  
Total assets
    
60,965
      
52,213
  
                 
Liabilities and equity
                
CURRENT LIABILITIES
                
Current maturities of long-term bank loan
    
93
      
93
  
Accounts payable and accruals:
                
Trade
    
5,516
      
4,128
  
Other
    
1,113
      
1,117
  
Total current liabilities
    
6,722
      
5,338
  
NON-CURRENT LIABILITIES
                
Long-term bank loan, net of current maturities
    
157
      
109
  
Warrants
    
1,205
      
580
  
Total non-current liabilities
    
1,362
      
689
  
COMMITMENTS AND CONTINGENT LIABILITIES
                
Total liabilities
    
8,084
      
6,027
  
                 
EQUITY
                
Ordinary shares
    
2,836
      
2,920
  
Share premium
    
240,682
      
243,883
  
Capital reserve
    
10,337
      
11,343
  
Other comprehensive loss
    
(1,416
)
    
(1,416
)
Accumulated deficit
    
(199,558
)
    
(210,544
)
Total equity
    
52,881
      
46,186
  
Total liabilities and equity
    
60,965
      
52,213
  
 
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
F - 1


BioLineRx Ltd.
 
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE LOSS
(UNAUDITED)

   
Three months ended June 30,
    
Six months ended June 30,
  
   
2017
    
2018
    
2017
    
2018
  
   
in USD thousands
    
in USD thousands
  
RESEARCH AND DEVELOPMENT EXPENSES
    
(4,062
)
    
(4,484
)
    
(7,652
)
    
(9,554
)
SALES AND MARKETING EXPENSES
    
(288
)
    
(360
)
    
(969
)
    
(844
)
GENERAL AND ADMINISTRATIVE EXPENSES
    
(844
)
    
(883
)
    
(1,874
)
    
(1,958
)
OPERATING LOSS
    
(5,194
)
    
(5,727
)
    
(10,495
)
    
(12,356
)
NON-OPERATING INCOME (EXPENSES), NET
    
(4
)
    
663
      
(9
)
    
1,125
  
FINANCIAL INCOME
    
304
      
287
      
761
      
462
  
FINANCIAL EXPENSES
    
(3
)
    
(11
)
    
(9
)
    
(217
)
                                 
NET LOSS AND COMPREHENSIVE LOSS
    
(4,897
)
    
(4,788
)
    
(9,752
)
    
(10,986
)
                                 
   
in USD
    
in USD
  
LOSS PER ORDINARY SHARE - BASIC AND DILUTED
    
(0.05
)
    
(0.05
)
    
(0.13
)
    
(0.10
)
                                 
WEIGHTED AVERAGE NUMBER OF SHARES USED IN CALCULATION OF LOSS PER ORDINARY SHARE
    
94,487,470
      
106,630,704
      
76,571,351
      
106,524,332
  
 
The accompanying notes are an integral part of these condensed consolidated interim financial statements.

F - 2
BioLineRx Ltd.
 
CONDENSED INTERIM STATEMENTS OF CHANGES IN EQUITY
(UNAUDITED)
 
   
Ordinary
    
Share
    
Other Comprehensive
    
Capital
    
Accumulated
        
   
shares
    
premium
    
loss
    
reserve
    
deficit
    
Total
  
   
in USD thousands
  
BALANCE AT JANUARY 1, 2017
    
1,513
      
199,567
      
(1,416
)
    
10,569
      
(175,206
)
    
35,027
  
CHANGES FOR SIX MONTHS ENDED
   JUNE 30, 2017:
                                                
Issuance of share capital, net
    
1,056
      
30,241
      
-
      
-
      
-
      
31,297
  
Employee stock options exercised
    
1
      
320
      
-
      
(321
)
    
-
      
-
  
Employee stock options forfeited and expired
    
-
      
1,240
      
-
      
(1,240
)
    
-
      
-
  
Share-based compensation
    
-
      
-
      
-
      
858
      
-
      
858
  
Comprehensive loss for the period
    
-
      
-
      
-
      
-
      
(9,752
)
    
(9,752
)
BALANCE AT JUNE 30, 2017
    
2,570
      
231,368
      
(1,416
)
    
9,866
      
(184,958
)
    
57,430
  
                                                 
   
Ordinary
    
Share
    
Other
Comprehensive
    
Capital
    
Accumulated
          
   
shares
    
premium
    
loss
    
reserve
    
deficit
    
Total
  
   
in USD thousands
BALANCE AT JANUARY 1, 2018
    
2,836
      
240,682
      
(1,416
)
    
10,337
      
(199,558
)
    
52,881
  
CHANGES FOR SIX MONTHS ENDED
   JUNE 30, 2018:
                                                
Issuance of share capital, net
    
83
      
2,764
      
-
      
-
      
-
      
2,847
  
Employee stock options exercised
    
-
      
399
      
-
      
(399
)
    
-
      
-
  
Employee stock options forfeited and expired
    
1
      
38
      
-
      
(39
)
    
-
      
-
  
Share-based compensation
    
-
      
-
      
-
      
1,444
      
-
      
1,444
  
Comprehensive loss for the period
    
-
      
-
      
-
      
-
      
(10,986
)
    
(10,986
)
BALANCE AT JUNE 30, 2018
    
2,920
      
243,883
      
(1,416
)
    
11,343
      
(210,544
)
    
46,186
  
 
The accompanying notes are an integral part of these condensed consolidated interim financial statements.

F - 3
BioLineRx Ltd.
 
CONDENSED CONSOLIDATED INTERIM CASH FLOW STATEMENTS
(UNAUDITED)

   
Six months ended June 30,
  
   
2017
    
2018
  
   
in USD thousands
  
             
CASH FLOWS - OPERATING ACTIVITIES
            
Comprehensive loss for the period
    
(9,752
)
    
(10,986
)
Adjustments required to reflect net cash used in operating activities (see appendix below)
    
1,746
      
(2,054
)
Net cash used in operating activities
    
(8,006
)
    
(13,040
)
                 
CASH FLOWS - INVESTING ACTIVITIES
                
Investments in short-term deposits
    
(36,422
)
    
(15,000
)
Maturities of short-term deposits
    
24,233
      
24,385
  
Proceeds from realization of long-term investment
    
-
      
1,500
  
Purchase of property and equipment
    
(90
)
    
(76
)
Purchase of intangible assets
    
(3,721
)
    
(37
)
Net cash provided by (used in) investing activities
    
(16,000
)
    
10,772
  
                 
CASH FLOWS - FINANCING ACTIVITIES
                
Issuances of share capital, net
    
28,312
      
2,847
  
Repayments of bank loan
    
(47
)
    
(47
)
Net cash provided by financing activities
    
28,265
      
2,800
  
                 
INCREASE IN CASH AND CASH EQUIVALENTS
    
4,259
      
532
  
CASH AND CASH EQUIVALENTS – BEGINNING
OF PERIOD
    
2,469
      
5,110
  
EXCHANGE DIFFERENCES ON CASH AND CASH EQUIVALENTS
    
218
      
147
  
CASH AND CASH EQUIVALENTS - END OF PERIOD
    
6,946
      
5,789
  
 
The accompanying notes are an integral part of these condensed consolidated interim financial statements.

F - 4
BioLineRx Ltd.
 
APPENDIX TO CONDENSED CONSOLIDATED INTERIM CASH FLOW STATEMENTS
(UNAUDITED)
 
   
Six months ended June 30,
  
   
2017
    
2018
  
   
in USD thousands
  
             
Adjustments required to reflect net cash used in operating activities:
            
             
Income and expenses not involving cash flows:
            
Depreciation and amortization
    
250
      
288
  
Long-term prepaid expenses
    
(1
)
    
(2
)
Exchange differences on cash and cash equivalents
    
(218
)
    
(147
)
Gain on adjustment of warrants to fair value
    
-
      
(625
)
Gain on realization of long-term investment
    
-
      
(500
)
Share-based compensation
    
858
      
1,444
  
Interest and exchange rate differences on short-term deposits
    
(273
)
    
(351
)
Interest and linkage differences on bank loan
    
-
      
(1
)
     
616
      
106
  
                 
Changes in operating asset and liability items:
                
Increase in prepaid expenses and other receivables
    
(623
)
    
(776
)
Increase (decrease) in accounts payable and accruals
    
1,753
      
(1,384
)
     
1,130
      
(2,160
)
     
1,746
      
(2,054
)
                 
Supplementary information on interest received in cash
    
258
      
377
  
                 
Supplementary non-cash investment
    
2,985
      
-
  
 
The accompanying notes are an integral part of these condensed consolidated interim financial statements.

F - 5
BioLineRx Ltd.
 
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
 
NOTE 1   –  GENERAL INFORMATION

a.
General

BioLineRx Ltd. (“BioLineRx”), headquartered in Modi’in, Israel, was incorporated and commenced operations in April 2003. BioLineRx and its subsidiaries (collectively, the “Company”) are engaged in the development of therapeutics, from pre-clinical development to advanced clinical trials, primarily in the fields of oncology and immunology.

In February 2007, BioLineRx listed its ordinary shares 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”) have also been traded on the NASDAQ Capital Market.

In March 2017, the Company acquired Agalimmune Ltd. (“Agalimmune”), a privately-held company incorporated in the United Kingdom, with a focus on the field of immuno-oncology.

The Company has been engaged in drug development since its incorporation. Although the Company has generated significant revenues from a number of out-licensing transactions in the past, the Company cannot determine with reasonable certainty when and if it will have sustainable profits.

b.
Approval of financial statements

The condensed consolidated interim financial statements of the Company as of June 30, 2018, and for the three and six months then ended, were approved by the Board of Directors on August 7, 2018, and signed on its behalf by the Chairman of the Board, the Chief Executive Officer and the Chief Financial Officer.
 
NOTE 2   –  BASIS OF PREPARATION
 
The Company’s condensed consolidated interim financial statements as of June 30, 2018 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 fair statement of financial position, results of operations, and cash flows in conformity with International Financial Reporting Standards (“IFRS”). The condensed consolidated interim financial statements should be read in conjunction with the Company’s annual financial statements as of December 31, 2017 and for the year then ended and their accompanying notes, which have been prepared in accordance with IFRS. The results of operations for the three and six months ended June 30, 2018 are not necessarily indicative of the results that may be expected for the entire fiscal year or for any other interim period.
F - 6
BioLineRx Ltd.
 
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
 
NOTE 3   –  SIGNIFICANT ACCOUNTING POLICIES
 
The accounting policies and calculation methods applied in the preparation of these interim financial statements are consistent with those applied in the preparation of the annual financial statements as of December 31, 2017 and for the year then ended, except as follows: (i) IFRS No. 9, “Financial Instruments,” which was effective from January 1, 2018, did not have a material effect on the Company’s financial statements; (ii) IFRS No. 15, “Revenue from Contracts with Customers,” also effective from January 1, 2018, is not relevant to the Company’s financial statements because the Company does not have any revenues; (iii) IFRS No. 16, “Leases,” which is not yet in effect and which the Company has not adopted early, was disclosed in the 2017 annual financial statements. The Company is currently evaluating the potential effect of this new guidance on its consolidated financial statements.
 
NOTE 4   –  ISSUANCES OF SHARE CAPITAL AND WARRANTS

a.
At-the-market (“ATM”) sales agreement with BTIG

In October 2017, the Company entered into an at-the-market (“ATM”) sales agreement with BTIG, LLC (“BTIG”), pursuant to which the Company may, at its sole discretion, offer and sell through BTIG, acting as sales agent, ADSs having an aggregate offering price of up to $30.0 million throughout the period during which the ATM facility remains in effect. The Company will pay BTIG a commission of 3.0% of the gross proceeds from the sale of ADSs under the facility. From the effective date of the agreement through June 30, 2018, 3,880,210 ADSs were sold under the program for total net proceeds of approximately $3.9 million, leaving an available balance under the facility of approximately $26.0 million as of June 30, 2018.

b.
Direct placement of share capital and warrants to BVF

In July 2017, the Company completed a direct placement to BVF Partners L.P., its largest shareholder, for aggregate gross proceeds of $9.6 million. The placement consisted of 8,495,575 ADSs, Series A warrants to purchase an additional 2,973,451 ADSs and Series B warrants to purchase an additional 2,973,451 ADSs. The Series A warrants have an exercise price of $2.00 per ADS and are exercisable for a term of four years. The Series B warrants have an exercise price of $4.00 per ADS and are also exercisable for a term of four years. Net proceeds from the transaction were approximately $9.5 million, after deducting fees and expenses.

The warrants issued have been classified as a non-current financial liability due to a net settlement provision. 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.

The fair value of the warrants is computed using the Black and Scholes option pricing model. The fair value of the warrants upon issuance was computed based on the then current price of an ADS, a risk-free interest rate of 1.66% and an average standard deviation of 57.8%. The fair value of the warrants as of June 30, 2018 was based on the then current price of an ADS, a risk-free interest rate of 2.63% and an average standard deviation of 53.8%.
 
F - 7
BioLineRx Ltd.
 
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
 
NOTE 5   –  SHAREHOLDERS’ EQUITY
 
 As of December 31, 2017 and June 30, 2018, share capital is composed of ordinary shares, as follows:

   
Number of ordinary shares
  
   
December 31,
    
June 30,
  
   
2017
    
2018
  
             
Authorized share capital
    
250,000,000
      
250,000,000
  
                 
Issued and paid-up share capital
    
105,063,437
      
108,029,516
  
                 
   
In USD and NIS
  
   
December 31,
    
June 30,
  
    2017     2018  
                 
Authorized share capital (in NIS)
    
25,000,000
      
25,000,000
  
                 
Issued and paid-up share capital (in NIS)
    
10,506,344
      
10,802,952
  
                 
Issued and paid-up share capital (in USD)
    
2,836,139
      
2,919,910
  
 
NOTE 6   –  REALIZATION OF INVESTMENT IN JOINT VENTURE (iPharma)
 
In 2016, the Company established a joint venture with I-Bridge Capital, a Chinese venture capital fund focused on developing innovative therapies in China, with each party contributing initial seed capital to the venture of $1.0 million. The joint venture, named iPharma, focused on the development of innovative clinical and pre-clinical therapeutic candidates to serve the Chinese and global healthcare markets. In April 2018, the Company sold its holdings in the joint venture to I-Bridge Capital for cash consideration of $1.5 million. The gain of $0.5 million is included in non-operating income in the statement of comprehensive loss.
 
 
F - 8