Exhibit 99.2
SOL-GEL TECHNOLOGIES LTD.
Page | |
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS: | |
F-2 | |
F-3 | |
F-4 - F-5 | |
F-6 | |
F-7 - F-12 |
December 31,
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June 30,
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2021
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2022
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A s s e t s
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CURRENT ASSETS:
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Cash and cash equivalents
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$
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$
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Bank deposits
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Marketable securities
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Receivables from collaborative arrangements
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Prepaid expenses and other current assets
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TOTAL CURRENT ASSETS
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NON-CURRENT ASSETS:
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Long-term receivables from collaborative arrangements
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Restricted long-term deposits and cash
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Property and equipment, net
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Operating lease right-of-use assets
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Funds in respect of employee rights upon retirement
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TOTAL NON-CURRENT ASSETS
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TOTAL ASSETS
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$
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$
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Liabilities and shareholders' equity
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CURRENT LIABILITIES:
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Accounts payable
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$
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$
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Other accounts payable
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Current maturities of operating leases
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TOTAL CURRENT LIABILITIES
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LONG-TERM LIABILITIES
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Operating leases liabilities
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Liability for employee rights upon retirement
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TOTAL LONG-TERM LIABILITIES
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TOTAL LIABILITIES
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$
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$
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SHAREHOLDERS' EQUITY:
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Ordinary Shares, NIS
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Additional paid-in capital
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Accumulated deficit
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(
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)
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(
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)
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TOTAL SHAREHOLDERS' EQUITY
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
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$
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$
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Six months ended
June 30
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Three months ended
June 30
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2021
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2022
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2021
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2022
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COLLABORATION REVENUES
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$
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$
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LICENSE REVENUES
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TOTAL REVENUES
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$
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$
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$
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$
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RESEARCH AND DEVELOPMENT EXPENSES
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GENERAL AND ADMINISTRATIVE EXPENSES
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TOTAL OPERATING LOSS
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FINANCIAL INCOME, net
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(
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)
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(
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)
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(
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(
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LOSS FOR THE PERIOD
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$
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$
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$
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$
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BASIC AND DILUTED LOSS PER ORDINARY SHARE
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$
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$
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$
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$
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WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING USED IN COMPUTATION OF BASIC AND DILUTED LOSS PER SHARE
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Ordinary shares
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Additional
paid-in capital |
Accumulated
deficit
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Total
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Number of
shares |
Amounts
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Amounts
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BALANCE AS OF JANUARY 1, 2021
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(
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)
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CHANGES DURING THE SIX MONTHS ENDED JUNE 30, 2021:
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Loss for the period
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(
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)
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(
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)
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Vesting of restricted shares units
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(
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)
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Exercise of options
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Share-based compensation
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BALANCE AT JUNE 30, 2021
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(
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)
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BALANCE AS OF JANUARY 1, 2022
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(
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)
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CHANGES DURING THE SIX MONTHS ENDED JUNE 30, 2022:
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Loss for the period
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(
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)
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(
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)
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Exercise of options
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Share-based compensation
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BALANCE AT JUNE 30, 2022
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(
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)
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Ordinary shares
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Additional
paid-in capital |
Accumulated
deficit
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Total
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Number of
shares |
Amounts
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Amounts
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BALANCE AS OF APRIL 1, 2021
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(
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)
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CHANGES DURING THE THREE MONTHS ENDED JUNE 30, 2021:
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Loss for the period
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(
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)
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(
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)
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Exercise of options
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Share-based compensation
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BALANCE AT JUNE 30, 2021
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(
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)
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BALANCE AS OF APRIL 1, 2022
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(
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CHANGES DURING THE THREE MONTHS ENDED JUNE 30, 2022:
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Loss for the period
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(
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)
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(
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)
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Exercise of options
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Share-based compensation
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BALANCE AT JUNE 30, 2022
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(
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)
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SOL-GEL TECHNOLOGIES LTD.
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
Six months ended
June 30
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2021
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2022
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CASH FLOWS FROM OPERATING ACTIVITIES:
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Loss for the period
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$
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(
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)
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$
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(
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)
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Adjustments required to reconcile loss to net cash used in operating activities:
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Depreciation
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Changes in accrued liability for employee rights upon retirement, net
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Share-based compensation expenses
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Financial expenses (income), net
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(
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)
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Net changes in operating leases
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(
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(
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)
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Changes in fair value of marketable securities
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(
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)
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Changes in operating asset and liabilities:
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Receivables from collaborative arrangements (including long-term)
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Prepaid expenses and other current assets
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(
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)
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(
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)
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Accounts payable, accrued expenses and other
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(
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(
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Net cash used in operating activities
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(
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)
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(
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)
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CASH FLOWS FROM INVESTING ACTIVITIES:
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Purchase of property and equipment
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(
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)
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(
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Investment in marketable securities
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(
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(
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Proceeds from sales and maturity of marketable securities
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Proceeds from short-term deposits
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Proceeds from long-term deposits
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Net cash provided by (used in) investing activities
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(
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)
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CASH FLOWS FROM FINANCING ACTIVITIES:
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Proceeds from exercise of options
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Net cash provided by financing activities
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EFFECT OF EXCHANGE RATE ON CASH AND CASH EQUIVALENTS
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(
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)
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INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH
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(
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)
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CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF THE PERIOD
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CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF THE PERIODS
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$
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$
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Cash and Cash equivalents
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Restricted cash
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CASH AND CASH EQUIVALENTS AND RESTRICTED CASH SHOWN IN STATEMENT OF CASH FLOWS
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SUPPLEMENTARY INFORMATION:
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Interest received
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SOL-GEL TECHNOLOGIES LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
NOTE 1 – NATURE OF OPERATIONS (continued):
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES:
a.
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Basis of Presentation
The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim financial statements. Accordingly, they do not include all of the information and notes required by U.S. GAAP for annual financial statements. In the opinion of management, these unaudited condensed consolidated financial statements reflect all adjustments, which include normal recurring adjustments, necessary for a fair statement of the Company’s consolidated financial position as of June 30, 2022, the consolidated results of operations for the six month and three month periods ended June 30, 2021 and 2022 and statements of changes in shareholders' equity and cash flows for the six month period ended June 30, 2021 and 2022. |
b.
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Loss per share
Basic loss per share is computed on the basis of the net loss for the period divided by the weighted average number of ordinary shares outstanding during the period. Diluted loss per share is based upon the weighted average number of ordinary shares and of ordinary shares equivalents outstanding when dilutive. Ordinary share equivalents include outstanding stock options, restricted shares and warrants, which are included under the treasury stock method when dilutive. |
SOL-GEL TECHNOLOGIES LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
NOTE 3 – MARKETABLE SECURITIES:
December 31,
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June 30,
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2021
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2022
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Level 2 securities:
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U.S government and agency bonds
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Other foreign government bonds
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Corporate bonds*
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Total
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* Investments in Corporate bonds rated A or higher.
The Company’s debt securities are classified within Level 2 because it uses quoted market prices or alternative pricing sources and models utilizing market observable inputs to determine their fair value.
Marketable securities
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For the year ended
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For the Six Months
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December 31, 2021
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ended June 30, 2022
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Balance at beginning of the period
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$
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$
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Additions
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Sale or maturity
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(
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(
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Changes in fair value during the period
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(
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)
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Balance at end of the period
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$
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$ |
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Market value
|
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June 30,
|
||||
2022
|
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Due within one year
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Between 1-2 years
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The carrying amount of the cash and cash equivalents, bank deposits, restricted cash, restricted long term deposits, receivables from collaborative arrangements, accrued expenses and other liabilities approximates their fair value.
SOL-GEL TECHNOLOGIES LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
NOTE 4 – COLLABORATION AGREEMENTS:
a.
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In 2007, the Company granted rights to a third party for use and commercialization of a product for skin protection. Under this agreement, the Company is entitled to royalties during the years
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b.
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In 2016 through 2020, the Company entered into several collaboration agreements mainly with one Partner for the development, manufacturing and commercialization of several generic product candidates. Under the agreements, the Partner is obligated to conduct regulatory, scientific, clinical and technical activities necessary to develop the product and prepare and file ANDA, with the FDA and gain regulatory approval. The Company participates in the development of the product candidates, including participation in joint steering committees and is obligated for sourcing the active pharmaceutical ingredient (API) during the development phase.
Upon FDA approval, the Partner has exclusive rights and is required to use diligent efforts to commercialize these products in territories defined under the agreements, including all required sales, marketing and distributing activities associated with the agreements. The Company is entitled to a share of the Partner's gross profits related to the sale of the products, as such term is defined in each of the agreements.
These Agreement are considered to be within the scope of ASC 808, as the parties are active participants and exposed to the risks and rewards of the collaborative activity.
The Company recognizes collaboration revenue when the related sales occur.
In November 2021, the Company entered into a new agreement (the "New Agreement") with the Partner, to sell its rights in relation to
Under the terms of the New Agreement, effective as of November 1, 2021, the Company will unconditionally receive $
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NOTE 5 – LICENSE AGREEMENTS:
In June 2021, the Company entered into two exclusive license agreements with Galderma for the commercialization of Twyneo® and Epsolay®, in the United States. According to the agreement, the Company has an option to regain commercialization rights five years following first commercialization. In the third quarter of 2021, the Company received $
SOL-GEL TECHNOLOGIES LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
NOTE 5 – LICENSE AGREEMENTS (continued):
NOTE 6 – SHARE CAPITAL:
i.
|
In March 2022, the Company granted a total of
The options vest over a period of |
ii.
|
In March 2022, the Company granted a total of
The options vest over a period of |
iii.
|
In March 2022, the board of directors approved and recommended the Company shareholders to approve a grant of
The options vest over a period of
|
The fair value of options granted in 2022 was $
2022
|
||||
Value of one ordinary share
|
$
|
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||
Dividend yield
|
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%
|
||
Expected volatility
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%
|
||
Risk-free interest rate
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%
|
||
Expected term
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SOL-GEL TECHNOLOGIES LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
NOTE 6 – SHARE CAPITAL (continued):
Ordinary shares
In July 2021, the Company entered into an ATM sales agreement with Jefferies LLC ("Jefferies"), pursuant to which the Company is entitled, at its sole discretion, to offer and sell through Jefferies, acting as sales agent, Shares having an aggregate offering price of up to $
From the effective date of the agreement through its expiration,
In April 2022, the Company signed a new ATM agreement with Jefferies for total amount of $
NOTE 7 – RELATED PARTIES:
a.Related parties include the controlling shareholder and companies under his control, the board of directors and the executive officers of the Company.
b.As to options granted to executive officers, see note 6.
F - 12