99.1
|
Unaudited Condensed Financial Statements as of March 31, 2021
|
|
|
99.2
|
Operating and Financial Review as of March 31, 2021 and for the three months then ended
|
99.3
|
Press Release dated May 13, 2021
|
Exhibit No.
|
|
Description
|
Date: May 13, 2021
|
PAINREFORM LTD.
|
|
|
|
|
|
By:
|
/s/ Ilan Hadar
|
|
|
Ilan Hadar
|
|
|
Chief Executive Officer
|
|
Page
|
|
|
F-2
|
|
|
|
F-3
|
|
|
|
F-4
|
|
|
|
F-5
|
|
|
|
F-6 - F-12
|
|
As of
March 31,
|
As of
December 31,
|
||||||
|
2021
|
2020
|
||||||
Assets
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
19,424
|
$
|
15,677
|
||||
Restricted cash
|
13
|
13
|
||||||
Prepaid clinical trial expenses and deferred clinical trial costs
|
1,294
|
1,294
|
||||||
Prepaid expenses and other current assets
|
601
|
807
|
||||||
|
||||||||
Total current assets
|
21,332
|
17,791
|
||||||
|
||||||||
Property and equipment, net
|
22
|
10
|
||||||
|
||||||||
Total assets
|
$
|
21,354
|
$
|
17,801
|
||||
|
||||||||
Liabilities and shareholders’ deficit
|
||||||||
|
||||||||
Current liabilities:
|
||||||||
Trade payables
|
$
|
159
|
$
|
720
|
||||
Other accounts payable and accrued expenses
|
582
|
241
|
||||||
|
||||||||
Total current liabilities
|
741
|
961
|
||||||
|
||||||||
Non-current liabilities:
|
||||||||
Provision for uncertain tax positions
|
213
|
220
|
||||||
Total non-current liabilities
|
213
|
220
|
||||||
|
||||||||
Shareholders’ deficit:
|
||||||||
Ordinary shares, NIS 0.03 par value; Authorized: 16,666,667 shares as of March 31, 2021 and December 31, 2020, respectively; Issued and outstanding: 10,062,383 and 8,758,037 shares as of March 31, 2021 and
December 31, 2020, respectively;
|
90
|
78
|
||||||
Additional paid-in capital
|
38,832
|
33,023
|
||||||
Accumulated deficit
|
(18,522
|
)
|
(16,481
|
)
|
||||
|
||||||||
Total shareholders’ equity (deficit)
|
20,400
|
16,620
|
||||||
|
||||||||
Total liabilities and shareholders’ equity (deficit)
|
$
|
21,354
|
$
|
17,801
|
(*)
|
Less than $1.
|
|
For the Three Months Ended
March 31, |
|||||||
|
2021
|
2020
|
||||||
|
||||||||
Operating expenses:
|
||||||||
Research and development expenses
|
$
|
(1,029
|
)
|
$
|
(24
|
)
|
||
General and administrative expenses
|
(1,010
|
)
|
(108
|
)
|
||||
|
||||||||
Operating loss
|
(2,039
|
)
|
(132
|
)
|
||||
|
||||||||
Financial expense, net
|
(2
|
)
|
(1,164
|
)
|
||||
|
||||||||
Net loss and comprehensive loss
|
$
|
(2,041
|
)
|
$
|
(1,296
|
)
|
||
|
||||||||
Basic and diluted net loss per share
|
$
|
(0.23
|
)
|
$
|
(2.76
|
)
|
||
|
||||||||
Weighted average number of shares of ordinary share used in computing basic and diluted net loss per share
|
9,051,148
|
576,556
|
|
Convertible preferred shares
(Temporary equity) |
Ordinary shares
|
Additional paid-in
capital
|
Accumulated
deficit
|
Total
shareholders’ equity (deficit)
|
|||||||||||||||||||||||
|
Number
|
Amount
|
Number
|
Amount
|
||||||||||||||||||||||||
Balance as of January 1, 2020
|
2,954,267
|
$
|
6,621
|
576,556
|
$
|
5
|
$
|
180
|
$
|
(12,428
|
)
|
$
|
(12,243
|
)
|
||||||||||||||
|
||||||||||||||||||||||||||||
Share-based compensation
|
—
|
—
|
—
|
—
|
16
|
—
|
16
|
|||||||||||||||||||||
|
||||||||||||||||||||||||||||
Operating lease provided by controlling shareholder
|
—
|
—
|
—
|
—
|
8
|
—
|
8
|
|||||||||||||||||||||
Net loss and comprehensive loss
|
—
|
—
|
—
|
—
|
—
|
(1,296
|
)
|
(1,296
|
)
|
|||||||||||||||||||
|
||||||||||||||||||||||||||||
Balance as of March 31, 2020
|
2,954,267
|
$
|
6,621
|
576,556
|
$
|
5
|
$
|
204
|
$
|
(13,724
|
)
|
$
|
(13,515
|
)
|
||||||||||||||
|
||||||||||||||||||||||||||||
Balance as of January 1, 2021
|
-
|
$
|
-
|
8,758,037
|
$
|
78
|
$
|
33,023
|
$
|
(16,481
|
)
|
$
|
16,620
|
|||||||||||||||
Share issuance under Private Investment in Pubic Equity ("PIPE"), net
|
—
|
—
|
1,304,346
|
12
|
3,045
|
—
|
3,057
|
|||||||||||||||||||||
Warrants issued under Private Investment in Pubic Equity, net
|
—
|
—
|
—
|
—
|
2,497
|
—
|
2,497
|
|||||||||||||||||||||
Share-based compensation to employees and directors
|
—
|
—
|
—
|
—
|
164
|
—
|
164
|
|||||||||||||||||||||
Share-based compensation to service providers
|
—
|
—
|
—
|
—
|
103
|
—
|
103
|
|||||||||||||||||||||
|
||||||||||||||||||||||||||||
Net loss and comprehensive loss
|
—
|
—
|
—
|
—
|
—
|
(2,041
|
)
|
(2,041
|
)
|
|||||||||||||||||||
|
||||||||||||||||||||||||||||
Balance as of March 31, 2021
|
—
|
$
|
—
|
10,062,383
|
$
|
90
|
$
|
38,832
|
$
|
(18,522
|
)
|
$
|
20,400
|
(*)
|
Represents amount less than $1
|
|
For the Three Months Ended
March 31, |
|||||||
|
2021
|
2020
|
||||||
Cash flows from operating activities
|
||||||||
|
||||||||
Net loss
|
$
|
(2,041
|
)
|
$
|
(1,296
|
)
|
||
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||
Depreciation
|
1
|
-
|
||||||
Operating lease provided by controlling shareholder
|
-
|
8
|
||||||
Share-based compensation to employees
|
164
|
16
|
||||||
Share-based compensation to service providers
|
103
|
-
|
||||||
Interest expense and amortization of discount on convertible notes
|
-
|
362
|
||||||
Revaluation of derivative warrant liability
|
-
|
802
|
||||||
Change in:
|
||||||||
Other current and non-current assets
|
206
|
(58
|
)
|
|||||
Trade payables
|
(561
|
)
|
23
|
|||||
Other accounts payable
|
334
|
(72
|
)
|
|||||
|
||||||||
Net cash used in operating activities
|
(1,794
|
)
|
(215
|
)
|
||||
|
||||||||
Cash flows from investing activities
|
||||||||
|
||||||||
Purchase of property and equipment
|
(13
|
)
|
-
|
|||||
|
||||||||
Net cash used in investing activities
|
(13
|
)
|
-
|
|||||
|
||||||||
Cash flows from financing activities
|
||||||||
|
||||||||
Proceeds from issuance of ordinary shares under Private Investment in Public Equity, net
|
5,554
|
-
|
||||||
|
||||||||
Net cash provided by financing activities
|
5,554
|
-
|
||||||
|
||||||||
Change in cash, cash equivalents and restricted cash
|
3,747
|
(215
|
)
|
|||||
Cash, cash equivalents and restricted cash at the beginning of the year
|
15,677
|
941
|
||||||
|
||||||||
Cash, cash equivalents and restricted cash at the end of the year
|
$
|
19,424
|
$
|
726
|
(*)
|
Represents amount less than $1
|
NOTE 1:-
|
GENERAL
|
|
a.
|
The Company was incorporated and started business operations in November 2007. The Company is a clinical stage specialty pharmaceutical company focused on the reformulation of established
therapeutics. The Company’s proprietary extended-release drug-delivery system is designed to provide an extended period of post-surgical pain relief without the need for repeated dose administration while reducing the potential need for the
use of opiates.
|
|
b.
|
Since its inception, the Company has devoted substantially all of its efforts to research and development, clinical trials, and capital raising activities. The Company is still in its
development and clinical stage and has not yet generated revenues.
The Company has incurred losses of $2,041 and $1,296 for the periods ended March 31, 2021 and 2020, respectively. As of March 31, 2021, the Company’s accumulated deficit was $18,522. The
Company has funded its operations to date primarily through equity financing.
Additional funding will be required to complete the Company’s research and development and clinical trials, to attain regulatory approvals, to begin the commercialization efforts of the
Company’s product and to achieve a level of sales adequate to support the Company’s cost structure.
On September 3, 2020, the Company closed an IPO of 2,500,000 units at a price of $8.00 per unit for gross proceeds of approximately $20,000 (net proceeds of approximately $17.3 million after
deducting underwriting discounts and commissions and other offering expenses). Refer to Note 1(d).
On March 11, 2021, the Company closed a private placement of 1,304,346 ordinary shares and accompanying warrants to purchase an aggregate of up to 652,173 ordinary shares at a combined
purchase price of $4.60 per share and accompanying warrant resulting in gross proceeds of $6,000.
Based on the Company's current operating plan, the Company believes that its existing capital resources will be sufficient to fund operations for at least one year after the date the
financial statements are issued.
|
NOTE 1:-
|
GENERAL (Cont.)
|
|
c.
|
The Company effected a 1-for-3 reverse split of the Company’s ordinary shares and convertible preferred shares on July 6, 2020. All issued and outstanding ordinary shares and convertible
preferred shares and related per share amounts contained in these financial statements have been retroactively adjusted to reflect this reverse share split for all periods presented.
|
|
d.
|
On September 3, 2020, the Company closed its IPO of 2,500,000 units at a price of $8.00 per unit. Each unit consisted of one ordinary share and one warrant to purchase one ordinary share. The ordinary shares and warrants were
immediately separable from the units and were issued separately. The warrants are exercisable immediately, expire five years from the date of issuance and have an exercise price of $8.80 per share. On October 5, 2020, the underwriters
exercised their over-allotment option and were issued warrants to purchase 375,000 ordinary shares in return for net amount of $3. The Company received gross proceeds of approximately $20,000 (net proceeds of approximately $17.3 million
after deducting underwriting discounts and commissions and other offering expenses).
|
|
e.
|
On March 11, 2021, the Company closed a private placement of 1,304,346 ordinary shares and accompanying warrants to purchase an aggregate of up to 652,173 ordinary shares at a combined purchase price of $4.60 per share and
accompanying warrant resulting in gross proceeds of $6,000.The warrants are exercisable immediately at an exercise price of $4.60 per share and expire five and a half years from the issuance date.
In connection with the private placement, the Company also entered into a registration rights agreement, dated as of March 8, 2021 with the purchasers in the
offering pursuant to which the Company filed a registration statement SEC on April 1, 2021 to register the resale of the ordinary shares and the ordinary shares issuable upon exercise of the warrants, of which such registration
statement was declared effective on April 9, 2021.
The Company paid the placement agents of the private placement a cash placement fee equal to $390 and an expense reimbursement of $40. The Company also issued
to the placement agents warrants to purchase 52,173 ordinary shares, at an exercise price of $5.06 per ordinary share and a term expiring on March 8, 2026.
|
|
f.
|
Public health epidemics or outbreaks could adversely impact the Company’s business. In late 2019, a novel strain of COVID-19, also known as coronavirus, was reported in Wuhan, China. While initially the outbreak was largely
concentrated in China, it rapidly spread across the globe, including in Israel and the United States. The extent to which COVID-19 pandemic impacts the Company’s operations will depend on future developments, which are highly uncertain
and cannot be predicted with confidence, including the duration and severity of the outbreak, and the actions that may be required to contain the coronavirus or treat its impact. In particular, the continued spread of the coronavirus
globally, could adversely impact the Company’s operations and workforce, including other Company’s research and clinical trials and its ability to raise capital, which in turn could have an adverse impact on the Company's business,
financial condition and results of operation.
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES
|
- |
In August 2020, the FASB issued guidance that is expected to reduce complexity and improve comparability of financial reporting associated with accounting for convertible instruments and contracts in an entity’s own equity. This guidance
will be effective for the Company on January 1, 2022 and is not expected to have a material impact on the Company’s financial statements and disclosures.
|
- |
ASC Topic 740, "Income Taxes", was amended to simplify the accounting for income taxes to improve consistency of accounting methods and remove certain exceptions. The amendment is effective for the Company beginning January 1, 2021. The
Company believes the adoption of the amendment is not expected to have a material impact on the Company’s financial statements and disclosures.
|
NOTE 3:-
|
UNAUDITED CONDENSED FINANCIAL STATEMENTS
|
NOTE 4:-
|
LOSS PER SHARE
|
|
Three Months ended
March 31, |
|||||||
|
2021
|
2020
|
||||||
|
||||||||
Numerator:
|
||||||||
Net loss applicable to shareholders of ordinary shares
|
$
|
(2,041
|
)
|
$
|
(1,296
|
)
|
||
Interest accrued on convertible preferred shares
|
-
|
(295
|
)
|
|||||
Total loss attributed to ordinary shares
|
(2,041
|
)
|
(1,591
|
)
|
||||
|
||||||||
Denominator:
|
||||||||
Shares of ordinary share used in computing basic and diluted net loss per share
|
9,051,148
|
576,556
|
||||||
Net loss per share of ordinary share, basic and diluted
|
$
|
(0.23
|
)
|
$
|
(2.76
|
)
|
NOTE 5:-
|
FAIR VALUE MEASUREMENTS
|
Exercise price
|
$
|
6.72
|
||
Expected volatility
|
75
|
%
|
||
Risk free rate
|
0.29
|
%
|
||
Expected life (years)
|
5
|
|||
Dividend yield
|
0
|
%
|
NOTE 5:-
|
FAIR VALUE MEASUREMENTS (Cont.)
|
Balance as of December 31, 2019
|
$
|
447
|
||
|
||||
Changes in fair value
|
802
|
|||
Balance as of March 31, 2020
|
$
|
1,249
|
NOTE 6:-
|
SHAREHOLDERS’ EQUITY (DEFICIT)
|
a. |
Warrants and warrants units
|
Type
|
Issuance Date
|
Number of warrants
|
Exercise price
|
Exercisable through
|
August 2019 warrants
|
August 22, 2019
|
205,268
|
$6.72 (*)
|
August 22, 2024
|
December 2019 warrants
|
December 9, 2019
|
92,321
|
$6.72 (*)
|
December 8, 2024
|
Warrants to bridge financing placement agent
|
December 9, 2019
|
55,785
|
$6.72 (*)
|
December 8, 2024
|
Warrants to underwriters
|
September 3, 2020
|
125,000
|
$10.00
|
September 1, 2025
|
Warrants to underwriters
|
October 5, 2020
|
375,000
|
$8.80
|
September 3, 2025
|
IPO warrants (note 1d)
|
September 3, 2020
|
2,812,170
|
$8.80
|
September 3, 2025
|
PIPE warrants (note 1e)
|
March 11, 2021
|
652,173
|
$4.60
|
September 10, 2026
|
Warrants to PIPE placement agent (note 1e)
|
March 11,2021
|
52,173
|
$5.06
|
March 8, 2026
|
NOTE 6:-
|
SHAREHOLDERS’ EQUITY (DEFICIT) (Cont.)
|
b. |
Share-based compensation:
|
|
Number of options
|
Weighted average exercise price
|
Weighted average remaining contractual life
|
|||||||||
|
||||||||||||
Options outstanding as of December 31, 2020
|
153,882
|
$
|
0.24
|
3.25
|
||||||||
|
||||||||||||
Options outstanding as of March 31, 2021
|
153,882
|
$
|
0.24
|
3.00
|
||||||||
|
||||||||||||
Options exercisable as of March 31, 2021
|
153,882
|
$
|
0.24
|
3.00
|
|
Number of options
|
Weighted average exercise price
|
Weighted average remaining contractual life
|
|||||||||
|
||||||||||||
Options outstanding as of December 31, 2020
|
219,456
|
$
|
2.62
|
8.56
|
||||||||
|
||||||||||||
Options outstanding as of March 31, 2021
|
920,404
|
$
|
3.96
|
9.43
|
||||||||
|
||||||||||||
Options exercisable as of March 31, 2021
|
206,665
|
$
|
2.57
|
8.30
|
NOTE 7:-
|
FINANCIAL EXPENSES, NET
|
Three Months ended
March 31, |
||||||||
|
2021
|
2020
|
||||||
|
||||||||
Interest expense and amortization of discount on convertible notes
|
-
|
362
|
||||||
Bank fees
|
2
|
-
|
||||||
Change in fair value of derivative warrant liability
|
-
|
802
|
||||||
Total financial expenses, net
|
$
|
2
|
$
|
1,164
|
NOTE 8:-
|
CLINICAL TRIALS
|
|
●
|
our history of losses and needs for additional capital to fund our operations and our inability to obtain additional capital on acceptable terms, or at all;
|
|
|
|
|
●
|
our dependence on the success of our initial product candidate, PRF-110;
|
|
|
|
|
●
|
the outcomes of preclinical studies, clinical trials and other research regarding PRF-110 and future product candidates;
|
|
|
|
|
●
|
the impact of the COVID-19 pandemic on our operations;
|
|
|
|
|
●
|
our limited experience managing clinical trials;
|
|
●
|
our ability to retain key personnel and recruit additional employees;
|
|
|
|
|
●
|
our reliance on third parties for the conduct of clinical trials, product manufacturing and development;
|
|
●
|
the impact of competition and new technologies;
|
|
●
|
our ability to comply with regulatory requirements relating to the development and marketing of our product candidates;
|
|
●
|
our ability to establish and maintain strategic partnerships and other corporate collaborations;
|
|
●
|
the implementation of our business model and strategic plans for our business and product candidates;
|
|
●
|
the scope of protection we are able to establish and maintain for intellectual property rights covering our product candidates and our ability to operate our business without infringing the
intellectual property rights of others;
|
|
●
|
the overall global economic environment;
|
|
|
|
|
●
|
our ability to develop an active trading market for our ordinary shares and whether the market price of our ordinary shares is volatile; and
|
|
●
|
statements as to the impact of the political and security situation in Israel on our business.
|
• |
continue the ongoing and planned preclinical and clinical development of our drug candidates;
|
• |
build a portfolio of drug candidates through the acquisition or in-license of drugs, drug candidates or technologies;
|
• |
initiate preclinical studies and clinical trials for any additional drug candidates that we may pursue in the future;
|
• |
seek marketing approvals for our current and future drug candidates that successfully complete clinical trials;
|
• |
establish a sales, marketing and distribution infrastructure to commercialize any drug candidate for which we may obtain marketing approval;
|
• |
develop, maintain, expand and protect our intellectual property portfolio;
|
• |
implement operational, financial and management systems; and
|
• |
attract, hire and retain additional administrative, clinical, regulatory and scientific personnel.
|
●
|
employee-related expenses, including salaries, benefits and stock-based compensation expense;
|
●
|
fees paid to consultants for services directly related to our drug development and regulatory effort;
|
●
|
expenses incurred under contract manufacturing organizations, as well as contract manufacturing organizations and consultants that conduct preclinical studies and clinical trials;
|
●
|
costs associated with development activities;
|
●
|
costs associated with technology and intellectual property licenses; and
|
●
|
milestone payments and other costs under licensing agreements.
|
●
|
number of clinical trials required for approval and any requirement for extension trials;
|
●
|
per patient trial costs;
|
●
|
number of patients that participate in the clinical trials;
|
●
|
number of sites included in the clinical trials;
|
●
|
countries in which the clinical trial is conducted;
|
●
|
length of time required to enroll eligible patients;
|
●
|
potential additional safety monitoring or other studies requested by regulatory agencies; and
|
●
|
efficacy and safety profile of the drug candidate.
|
|
●
|
the scope, progress, results and costs of our current and future clinical trials of PRF-110 for our current targeted uses;
|
|
|
|
|
●
|
the costs, timing and outcome of regulatory review of PRF-110;
|
|
●
|
the extent to which we acquire or invest in businesses, products and technologies, including entering into or maintaining licensing or collaboration arrangements for PRF-110 on favorable
terms, although we currently have no commitments or agreements to complete any such transactions;
|
|
●
|
the costs and timing of future commercialization activities, including drug sales, marketing, manufacturing and distribution, for any of our product candidates for which we receive marketing
approval, to the extent that such sales, marketing, manufacturing and distribution are not the responsibility of any collaborator that we may have at such time;
|
|
●
|
the amount of revenue, if any, received from commercial sales of PRF-110, should it receive marketing approval;
|
|
●
|
the costs of preparing, filing and prosecuting patent applications, maintaining, defending and enforcing our intellectual property rights and defending intellectual property-related claims;
|
|
●
|
our headcount growth and associated costs as we expand our business operations and our research and development activities;
|
|
●
|
the costs of operating as a public company;
|
●
|
maintaining minimum shareholders’ equity requirements under the NYSE American Company Guide; and
|
●
|
the impact of the COVID-19 pandemic.
|
|
Three months
Ended March 31,
2021
|
Three months
Ended March 31,
2020
|
||||||
Net cash used in operating activities
|
$
|
(1,794,000
|
)
|
$
|
(215,000
|
)
|
||
Net cash used in investing activities
|
(13,000
|
)
|
-
|
|||||
Net cash provided by financing activities
|
5,554,000
|
-
|
||||||
Increase (decrease) in cash and cash equivalents and restricted cash
|
3,747,000
|
(215,000
|
)
|
|||||
Cash and cash equivalents and restricted cash, at the beginning of year
|
15,677,000
|
941,000
|
||||||
Cash and cash equivalents and restricted cash, at the end of year
|
$
|
19,424,000
|
$
|
726,000
|
|
●
|
number of clinical trials required for approval and any requirement for extension trials;
|
|
●
|
per patient trial costs;
|
|
●
|
number of patients that participate in the clinical trials;
|
|
●
|
number of sites included in the clinical trials;
|
|
●
|
countries in which the clinical trial is conducted;
|
|
●
|
length of time required to enroll eligible patients;
|
|
●
|
potential additional safety monitoring or other studies requested by regulatory agencies; and
|
|
●
|
efficacy and safety profile of the drug candidate.
|