SciSparc Ltd. — 2021 Form 20-F Summary
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 in U.S. dollars; amounts below are in millions unless noted.
Business context
SciSparc is an Israel-based, clinical-stage pharmaceutical company developing cannabinoid-related therapies. Its principal programs are SCI-110 (Tourette syndrome, Alzheimer’s-related agitation and obstructive sleep apnea), SCI-210 (autism spectrum disorder and status epilepticus), and SCI-160 (pain). The company reported no product-sales revenue and is dependent on external financing. CannAmide, a PEA tablet licensed in Canada as a natural health product, was in early commercialization; the company did not expect it to generate material revenue.
Financial performance and liquidity
| Metric | 2021 | 2020 |
|---|---|---|
| Revenue | None reported | None reported |
| Research and development expense | $1.990 | $0.649 |
| General and administrative expense | $3.778 | $1.902 |
| Operating loss | $5.768 | $3.293 |
| Net loss | $5.789 | $3.535 |
| Net cash used in operating activities | $5.061 | $4.307 |
| Net cash provided by financing activities | $10.060 | $5.359 |
- R&D expense rose 207%, mainly reflecting increased clinical, formulation and regulatory activity. G&A rose 99%, driven principally by professional and directors’ fees and investor-relations costs associated with the Nasdaq relisting.
- Year-end cash was $6.875, restricted deposits $0.045, and other receivables $2.904. Current assets totaled $9.824 versus current liabilities of $1.757; working capital was approximately $8.1. Total equity was $8.141.
- Year-end liabilities included $1.199 trade payables, $0.154 other payables, $0.359 warrant liability and $0.063 lease liabilities. No short-term loan was outstanding at year-end.
- Cash increased $4.929 during the year, principally from $7.699 net proceeds from securities issuance and $2.568 from warrant exercises. Ordinary shares outstanding were 3,091,740 at year-end, after the 140-for-1 reverse split and other share issuances.
- Basic loss per share was reported as $2.83 versus $0.10 in 2020; per-share figures reflect the reverse-split adjustment. Profit margins are not meaningful because the company had no revenue.
Material changes, outlook and risks
- Management stated that year-end cash was expected to fund operations at least through August 1, 2023. The audited financial-statement note separately reports $5.345 cash at April 28, 2022 and says it was expected to provide more than 12 months of liquidity from April 29, 2022. The auditor identified liquidity and capital resources as a critical audit matter. SciSparc expects to need substantial additional funding for development and commercialization.
- Program updates included recruitment of the first participant in the SCI-110 Alzheimer’s agitation Phase IIa trial in December 2021; commencement of an SCI-210 preclinical status-epilepticus study in the second half of 2021; and positive preclinical SCI-160 pain results. A planned SCI-110 Tourette Phase IIb trial was subject to regulatory preparation and remained a key development milestone. The company was seeking partners for further development of SCI-110 in sleep apnea.
- Clinical evidence remains early-stage: the Tourette Phase IIa study was open-label and involved 16 participants; the sleep-apnea Phase IIa study involved 10 participants, with one discontinuing because of dizziness. Earlier results do not establish later-stage efficacy or regulatory approval.
- Key risks include ongoing losses and financing dependence; uncertain clinical and regulatory outcomes; potential patient-enrollment delays, including COVID-19 impacts; reliance on third-party research and manufacturing; cannabinoid-related safety and controlled-substance regulation; competition, patent and licensing risks; and political, economic and military instability in Israel. The FDA had not granted the company’s Tourette orphan-drug designation request and sought further supporting information.
- After year-end, SciSparc agreed to invest $0.7 initially and up to a further $1.0 over two years in MitoCareX, subject to milestones, for up to 50.01% ownership. It also entered a cooperation agreement with Clearmind in March 2022. These are subsequent events, not 2021 operating results.
- On February 15, 2022, the company filed a lawsuit against six former directors alleging fiduciary-duty breaches in connection with a 2018 transaction; claimed damages were NIS 13.114 million (approximately $4.12 million). The filing does not establish the outcome.
- The company was relisted on Nasdaq in December 2021 after a prior delisting for failure to meet shareholders’ equity requirements. It reported effective management disclosure controls and internal control over financial reporting at year-end; the auditor did not provide an ICFR attestation because of the company’s emerging-growth-company exemption.
Important facts for investors to verify
- Review the audited statements and subsequent cash movements, including the difference between year-end cash of $6.875 million and $5.345 million reported at the April 2022 approval date, and assess runway against planned spending.
- Confirm financing needs, potential dilution from outstanding warrants and future securities issuance, and the terms and milestones of the MitoCareX investment.
- Check current regulatory status, enrollment and timelines for SCI-110, SCI-210 and SCI-160; distinguish preclinical or open-label findings from controlled clinical evidence.
- Monitor the former-directors lawsuit, the Tourette orphan-designation process, and any material license, IIA-grant or intellectual-property obligations.
- Assess Nasdaq listing compliance, the limited trading history and liquidity of the ordinary shares, and the risks associated with the company’s Israel operations.