Purple Biotech Ltd. — FY2021 Form 20-F
Reporting period: Fiscal year ended December 31, 2021. This is an annual report, not a standalone fourth-quarter filing. Financial statements are prepared under IFRS as issued by the IASB and presented in U.S. dollars.
Business context and reporting period
Purple Biotech is an Israel-based clinical-stage oncology company developing CM24, an antibody targeting CEACAM1, and NT219, a small molecule targeting IRS1/2 and STAT3. Neither candidate is approved or generating product revenue. The company discontinued Consensi, its FDA-approved osteoarthritis and hypertension product, and reports oncology as its sole operating segment. The 2020 and 2019 comparative financial statements were restated to present Consensi as a discontinued operation.
Financial results and liquidity
| Metric | FY2021 | FY2020 |
|---|---|---|
| Research and development expense | $11.827 million | $7.238 million |
| Selling, general and administrative expense | $6.107 million | $6.001 million |
| Operating loss | $17.934 million | $13.239 million |
| Net finance income (expense) | $0.108 million income | $15.462 million expense |
| Loss from continuing operations | $17.826 million | $28.701 million |
| Loss from discontinued operation | $0.642 million | $0.627 million profit |
| Net loss | $18.468 million | $28.074 million |
| Net loss per ADS | $1.05 | $2.45 |
| Net cash used in continuing operating activities | $14.877 million | $13.797 million |
No meaningful gross margin or operating margin is reported for the oncology business because it has no product sales. Consensi generated no revenue in 2021, compared with $1.0 million in 2020. FY2021 operating loss increased 36%, chiefly as R&D spending rose 64% with ongoing trials and clinical drug manufacturing. Net loss declined primarily because 2020 included $15.655 million of warrant fair-value expense; this improvement does not reflect lower operating losses.
At year-end, cash and cash equivalents were $10.890 million, short-term deposits $36.310 million and long-term deposits $0.160 million, totaling $47.360 million. Management said available cash was sufficient for liquidity needs for the next 12 months. Investing activities provided $13.406 million, largely from reduced deposits; financing activities provided $1.512 million, including warrant exercises and ATM proceeds. The company reported no borrowings. Total lease liabilities were approximately $0.749 million; total liabilities were $5.092 million. Accumulated deficit was $95.905 million.
Material changes, outlook and risks
- Pipeline: CM24’s Phase 1b/2 combination study with nivolumab began in 2021; the company expected an expansion study to begin in the first half of 2022. It reported one partial response in a pancreatic cancer patient in the initial dose cohort, with no dose-limiting toxicities among the first three patients. NT219’s Phase 1/2 monotherapy study continued, and its cetuximab combination dose-escalation portion began in December 2021. The company expected to present topline Phase 1 results and ongoing Phase 2 data at medical conferences in 2022. These are preliminary clinical observations, not proof of efficacy.
- Consensi exit: The company terminated its U.S. distribution agreement and its South Korea and China licensing agreements, and discontinued manufacturing and distribution, citing poor commercial prospects and COVID-19-related launch difficulties. Lupin litigation over a proposed generic was settled in October 2021; the settlement generally permits Lupin to enter the market on March 1, 2030, with earlier entry possible in certain circumstances.
- Funding and spending: Management expects R&D to remain its primary expense and to increase as studies advance. It said current liquidity covers the next 12 months, but substantial additional funding may be needed for longer-term development, acquisitions or commercialization. The $50 million Jefferies ATM facility was available; 126,160 ADSs were sold in 2021 for approximately $0.54 million net. Further equity issuance could dilute shareholders.
- Contingencies: TyrNovo had received approximately NIS 5.5 million ($1.77 million) of Israeli Innovation Authority grants. Royalties generally become payable from relevant product revenue; restrictions also apply to transferring funded know-how or manufacturing outside Israel. No royalty liability was recorded because future sales were not reasonably assured. Israeli class-action claims relating to historical disclosures remain pending; management said it considered non-payment more likely and recorded no provision. A university-affiliated claimant also seeks ownership of a TyrNovo patent; the company said the potential outcome and exposure could not be assessed clearly.
- Unusual accounting and audit matters: The company received a $1.5 million Coeptis convertible note in the Consensi termination settlement, measured at $0.187 million fair value at year-end. The $20.482 million of acquired in-process R&D intangible assets was not impaired; valuation depends on development costs, success probabilities, future revenues and discount rate. The auditor identified this valuation as a critical audit matter. The auditor issued an unqualified opinion on the financial statements and concluded internal control over financial reporting was effective.
- Principal risks: Clinical failure, adverse events, regulatory delay, reliance on third-party manufacturers and collaborators, future financing needs, intellectual-property disputes, COVID-19 disruption, Israeli geopolitical conditions, currency exposure and possible U.S. PFIC tax status. The filing provides no formal revenue or earnings guidance and states that future development costs and outcomes are uncertain.
Investor verification points
- Confirm the current cash balance, deposit maturities and expected cash runway against the stated 12-month liquidity assessment.
- Review subsequent clinical disclosures for CM24 and NT219, including enrollment, safety, response durability and planned study timing.
- Check Consensi discontinuation accounting, the Coeptis note’s collectability and fair-value assumptions, and Lupin settlement terms.
- Track the pending Israeli class-action and BIRAD patent-ownership cases, including any change in assessed exposure or required provision.
- Assess dilution from the ATM facility, outstanding warrants, options and restricted stock units, and the effect of IIA restrictions on NT219 partnering or manufacturing.