Filing summary
Entity and period: The supplied filing is Cellect Biotechnology Ltd.’s Form 20-F for the fiscal year ended December 31, 2019, filed April 3, 2020. This differs from the request metadata naming Quoin Pharmaceuticals and “2019 Q4.” The filing reports annual results, not standalone fourth-quarter results. Financial statements are prepared under IFRS; U.S. dollar amounts are convenience translations.
Business context and reporting period
Cellect was an early-stage biotechnology company developing ApoGraft, a functional cell-selection technology, and the planned ApoTainer product for stem-cell processing in allogeneic hematopoietic stem cell transplantation (HSCT). It had no commercial products or revenue. Its lead ApoGraft Phase I/II study in Israel had treated 11 patients as of the report date; the company reported interim safety and engraftment findings but the study was ongoing. A planned U.S. Phase I study had FDA IND approval and was being prepared with Washington University.
Financial and operating metrics
| Metric | FY 2019 | FY 2018 |
|---|---|---|
| Revenue | None | None |
| Research and development expense, net | NIS 12.122 million | NIS 13.513 million |
| General and administrative expense | NIS 10.210 million | NIS 15.734 million |
| Operating loss | NIS 22.332 million | NIS 29.247 million |
| Net/comprehensive loss | NIS 16.808 million (about $4.863 million) | NIS 20.113 million |
| Basic and diluted loss per share | NIS 0.079 (about $0.023) | NIS 0.155 |
| Net cash used in operating activities | NIS 20.337 million | NIS 23.635 million |
| Cash and cash equivalents at year-end | NIS 18.106 million (about $5.239 million) | NIS 17.809 million |
| Total assets / total liabilities | NIS 21.320 million / NIS 6.483 million | NIS 20.638 million / NIS 6.715 million |
Working capital was approximately NIS 14.9 million. The filing reports no interest-bearing borrowings; liabilities included NIS 2.172 million of warrant liabilities and NIS 1.073 million of lease liabilities. No meaningful revenue margins are available because the company had no revenue.
Material changes versus the prior year
- Operating expenses fell 24% to NIS 22.332 million, with R&D down 10% and G&A down 35%. Management attributed reductions mainly to lower staffing and share-based compensation; R&D headcount declined from 19 to 8.
- Net loss narrowed 16%, while operating cash use fell from NIS 23.635 million to NIS 20.337 million.
- Net financial income was NIS 5.524 million in 2019, versus net financial income of NIS 9.134 million in 2018, mainly reflecting fair-value changes in warrants. These non-operating effects materially influenced reported losses.
- Cash and cash equivalents increased modestly, supported by NIS 21.871 million of financing cash flow, primarily from share and warrant issuances. Issued and outstanding ordinary shares increased to 224,087,799 from 130,414,799 at year-end 2018.
Outlook, risks and unusual items
- Funding and going concern: The company had recurring losses, an accumulated deficit of NIS 100.864 million, no operating revenue, and continued dependence on external financing. The independent auditor highlighted substantial doubt about its ability to continue as a going concern. Management said funds were expected to support operations for the next 18 months, but additional capital would be required to reach profitability; availability was not assured.
- Plans and uncertainty: Management expected continued losses and no significant revenue in at least the following year. Priorities included completing recruitment and reporting results from the Israeli trial, initiating the U.S. study, and advancing automation and the ApoTainer prototype. Timing and regulatory pathway remained uncertain; FDA’s preliminary view identified CBER as the relevant center but did not determine whether the product would be regulated as a device or biologic.
- Cost reductions: The company suspended its mesenchymal stem-cell program and reduced staffing and business-development activity to preserve cash. Development and commercialization remained contingent on clinical results, regulatory approvals, manufacturing, and partnerships.
- COVID-19: The filing said the pandemic and government responses had already hampered patient enrollment and clinical-trial conduct, with possible further disruption to trials, supplies, collaborations, and financing.
- Subsequent financing and strategic proposals: In January 2020, the company raised approximately $2.6 million net in a public offering. In March 2020, it disclosed a Canndoc commercial letter of intent involving cannabis products and a separate nonbinding merger proposal; both were subject to definitive agreements and approvals. The proposed merger could result in substantial dilution. These were subsequent events, not FY 2019 operating results.
- Other notable items: IFRS 16 lease accounting was adopted in 2019, adding right-of-use assets and lease liabilities. The company changed its auditor in January 2020; the filing stated the change was not due to a disagreement with the prior auditor. Management assessed disclosure controls and internal control over financial reporting as effective, but the auditor did not attest to internal controls because of the emerging-growth-company exemption.
Most important facts for investors to verify
- Confirm the issuer identity: the document is Cellect Biotechnology Ltd., not Quoin Pharmaceuticals, and covers the full year ended December 31, 2019.
- Reconcile operating cash flow: the audited cash-flow statement reports NIS 20.337 million used in 2019, while a going-concern note states NIS 21.924 million. The filing text does not resolve this discrepancy.
- Assess the going-concern warning, cash runway assumptions, subsequent financing, and the company’s continuing need for additional capital.
- Verify final clinical-trial results, patient recruitment progress, and regulatory classification and approval requirements; interim findings do not establish efficacy or future approval.
- Review dilution from 2019 and subsequent share and warrant issuances, including the proposed Canndoc transaction and merger terms, which were not finalized in this filing.
- Distinguish recurring operating performance from warrant fair-value movements that substantially affected financial income and net loss.