Cellect Biotechnology Ltd. (APOP) - Form 20-F Summary
Business Context and Reporting Period
Company: Cellect Biotechnology Ltd. (formerly Cellect Biomed Ltd.)
Reporting Period: Fiscal year ended December 31, 2016
Filing Date: March 23, 2017
Business Overview: An emerging biotechnology company developing the "Powered by Cellect" platform, which functionally selects stem cells to improve the safety and efficacy of regenerative medicine. The company is currently focused on developing the Apotainer™ selection kit for allogeneic hematopoietic stem cell transplantation (HSCT) to reduce Graft-versus-Host Disease (GvHD).
Listing Status: Ordinary Shares trade on the Tel Aviv Stock Exchange (TASE); American Depositary Shares (ADSs) and warrants commenced trading on the NASDAQ Capital Market on July 29, 2016.
Key Financial Metrics (Year Ended Dec 31, 2016)
| Metric | 2016 (NIS '000s) | 2016 (USD '000s) | 2015 (NIS '000s) | 2015 (USD '000s) |
|---|---|---|---|---|
| Revenue | 0 | 0 | 0 | 0 |
| Net Loss | (15,317) | (3,983) | (10,172) | (2,606) |
| Operating Loss | (15,944) | (4,146) | (10,097) | (2,587) |
| Research & Development Expenses | 8,256 | 2,147 | 5,893 | 1,510 |
| General & Administrative Expenses | 7,968 | 2,072 | 4,204 | 1,077 |
| Cash and Cash Equivalents | 6,279 | 1,633 | 3,913 | 1,003 |
| Short-Term Deposits | 19,660 | 5,113 | 0 | 0 |
| Total Assets | 33,910 | 8,819 | 13,361 | 3,424 |
| Total Liabilities | 5,423 | 1,410 | 2,860 | 733 |
| Shareholders' Equity | 28,487 | 7,409 | 10,501 | 2,691 |
| Accumulated Deficit | (35,719) | (9,290) | (20,402) | (5,229) |
Note: USD figures are convenience translations based on the exchange rate of NIS 3.845 to $1.00 as of December 31, 2016.
Material Changes vs. Prior Period
- Increased Losses: Net loss increased by approximately 51% (NIS 5.1 million) compared to 2015, driven by higher operating expenses.
- Expense Growth:
- R&D Expenses: Increased 40% (NIS 2.4 million) due to preparation for clinical trials, lab costs, and an increase in R&D personnel from 9 to 13.
- G&A Expenses: Increased 89% (NIS 3.7 million) primarily due to payroll, share-based compensation, and professional services (legal, investor relations) following the IPO.
- Capital Raise: The company raised approximately NIS 40 million ($10.4 million) in 2016 through a private placement (March 2016) and an Initial Public Offering (July 2016). Net proceeds from the IPO were approximately $7.6 million.
- Liquidity Position: Cash and cash equivalents increased significantly due to the capital raises and the placement of NIS 19.7 million in short-term deposits.
Guidance, Outlook, and Risks
Outlook and Guidance:
- Revenue: The company has generated no revenue to date and does not expect to generate significant revenue until at least 2018.
- Cash Runway: Management believes existing cash and cash equivalents are sufficient to fund operations through the end of the first quarter of 2018.
- Future Needs: Substantial additional capital will be required to support mass production, clinical trials, and commercialization. The company plans to seek funding through equity or debt financings, strategic partnerships, or licensing arrangements.
Key Risks and Contingencies:
- Going Concern: The independent auditor has issued an explanatory paragraph regarding substantial doubt about the company's ability to continue as a going concern due to recurring losses and negative cash flows.
- Regulatory Uncertainty: The FDA classification of the Apotainer™ kit (medical device vs. drug/biologic) is critical. If classified as a drug, the approval pathway will be more burdensome and costly.
- Clinical Trial Risks: Delays or failures in the ongoing Phase I/II clinical trial (initiated Feb 2017) could prevent commercialization.
- Supply Chain: Reliance on a single source supplier for FasL (the apoptosis-inducing signal) creates supply chain vulnerability.
- Geopolitical Risk: Operations are based in Israel, exposing the company to regional political and military instability.
Investor Verification Checklist
- Cash Runway Validation: Verify if the company has secured additional financing to extend operations beyond Q1 2018, as stated in the filing.
- Clinical Trial Progress: Monitor the status and interim results of the Phase I/II trial for the Apotainer™ kit, with interim results expected in H2 2017.
- Regulatory Classification: Confirm the FDA's determination on whether the product is a medical device (CDRH) or a drug/biologic (CDER/CBER), as this dictates the cost and timeline to market.
- Grant Repayment Terms: Review the terms of the BIRD Foundation grant (up to $0.9 million), which requires repayment linked to revenue or licensing proceeds.
- Delisting Intent: Note the company's intention to delist ordinary shares from the Tel Aviv Stock Exchange (TASE), which may impact liquidity for TASE shareholders.