XTL Biopharmaceuticals Ltd. — FY2022 Form 20-F Summary
Reporting period: Year ended December 31, 2022; this is an annual report, not a standalone Q4 filing. Financial statements are prepared under IFRS in U.S. dollars, in thousands unless otherwise noted. XTL is a pre-revenue biopharmaceutical company focused on developing hCDR1 for autoimmune diseases.
Financial performance and position
| Metric | FY2022 / December 31, 2022 | Prior comparable period |
|---|---|---|
| Product revenue | None; the company reports no product sales | None reported |
| Research and development expense | $30 | $30 in 2021 |
| General and administrative expense | $850 | $1,001 in 2021 |
| Operating loss | $(880) | $(1,031) in 2021 |
| Net loss / income | $(1,348) | $435 income in 2021 |
| Basic loss per share | $(0.002) | $0.001 income per share in 2021 |
| Cash and cash equivalents | $2,094 | $2,969 at December 31, 2021 |
| Working capital | $3,619 | $6,006 at December 31, 2021 |
| Total assets / shareholders’ equity | $4,186 / $3,999 | $6,618 / $5,333 at December 31, 2021 |
| Debt and liabilities | No borrowing facilities or long-term liabilities reported; current accounts payable were $187 | Long-term warrant liability was $1,054 in 2021; all warrants expired during 2022 |
Margins are not meaningful because XTL has no product revenue. Net cash used in operating activities was $901, versus $1,049 in 2021. Investing activities provided $36, while financing activities provided no cash in 2022; 2021 financing inflow was $385 from warrant exercises. Cash declined by $875 year over year.
The 2022 net loss included a $1,531 fair-value loss on XTL’s InterCure investment, partly offset by a $1,054 warrant revaluation gain. The InterCure investment’s reported value fell to $1,627 from $3,158. The company reported no impairment of its $380 hCDR1 intangible asset.
Material changes versus 2021
- Net results shifted from $435 income in 2021 to a $1,348 loss in 2022, primarily reflecting the InterCure fair-value loss and lower warrant revaluation income.
- General and administrative expense decreased by $151, mainly due to lower legal, audit and insurance fees; research and development expense remained $30.
- Cash fell by $875, working capital by $2,387, and total assets by $2,432. The decline in marketable securities was a significant contributor to the asset reduction.
- All outstanding warrants expired in 2022, eliminating the warrant liability carried at the end of 2021. No warrant exercises or other financing proceeds were reported for 2022.
Outlook, risks and unusual items
- Management estimated that available cash would fund activities for at least 12 months from the March 2023 report date, based on existing plans. XTL expects further losses and negative operating cash flows and says additional financing will be needed to conduct clinical trials.
- Clinical development spending is being limited until trial funding or a strategic partner is secured. Planned SLE and Sjögren’s syndrome studies are conditional on financing or collaboration; the company is also seeking additional pipeline assets.
- hCDR1 is described as Phase II-ready. Earlier trials involving more than 400 SLE patients showed a favorable safety profile, but the PRELUDE Phase II trial missed its primary SLEDAI efficacy endpoint. The company cites encouraging secondary BILAG findings and FDA guidance accepting BILAG as a potential primary endpoint for a future study.
- The Yeda hCDR1 license has a material milestone risk: XTL did not commence the required Phase II trial and is seeking a partner. Yeda may terminate on 45 days’ notice for specified unmet milestones; the companies had not agreed on a further amendment. A $127 remaining patent-expense liability was included in accounts payable.
- Patent protection is time-sensitive: the principal hCDR1 patent family expired in 2022, and the formulation patent is due to expire January 14, 2024. A separate Sjögren’s-related patent application was filed in 2018.
- Other significant risks include reliance on third parties for development and manufacturing, limited staffing (no employees and four part-time service providers as of March 2023), potential dilution from future fundraising, low ADS trading volume, Nasdaq listing compliance, currency and geopolitical exposure in Israel, and possible PFIC status for U.S. investors. The company said it may have been a PFIC in 2022.
- The 2020 financial statements were restated in 2021 because warrants had been misclassified as equity rather than liabilities. Management said the related control weakness was remediated; it assessed disclosure controls and internal control over financial reporting as effective at December 31, 2022. The 2022 financial statements received an unqualified IFRS audit opinion, with no critical audit matters identified.
Important facts for investors to verify
- Actual cash runway and financing needs, including whether new capital or a partner will fund clinical development.
- Current status of the Yeda license, milestone negotiations, unpaid patent costs and any risk of termination.
- Updated hCDR1 clinical plan, regulatory path, patent coverage and timing relative to the 2024 formulation patent expiration.
- InterCure investment value, saleability and subsequent changes in fair value; this investment materially affected reported earnings and liquidity.
- Nasdaq continued-listing status, potential dilution from future capital raises, and the company’s PFIC status for each relevant tax year.