Cellect Biotechnology Ltd. — FY2017 Form 20-F Summary
Entity and period: The supplied filing is Cellect Biotechnology Ltd.’s annual report for the fiscal year ended December 31, 2017, not a Quoin Pharmaceuticals Ltd. filing or a standalone 2017 Q4 report. The filing reports under IFRS, with NIS as its functional and reporting currency; dollar figures are convenience translations.
Business context
Cellect was an early-stage biotechnology company developing ApoGraft, a stem-cell selection technology, and ApoTainer selection kits, initially targeting allogeneic hematopoietic stem-cell transplantation. It had not generated product or licensing revenue and remained in clinical development.
Financial results and position
| Metric | FY2017 | FY2016 |
|---|---|---|
| Revenue | None | None |
| Research and development expense | NIS 11.5m (about $3.3m) | NIS 8.3m (about $2.1m) |
| General and administrative expense | NIS 12.9m (about $3.7m) | NIS 8.0m (about $2.1m) |
| Operating loss | NIS 24.4m (about $7.0m) | NIS 15.9m (about $4.1m) |
| Net/comprehensive loss | NIS 28.2m (about $8.1m) | NIS 15.3m (about $4.0m) |
| Basic and diluted loss per share | NIS 0.252 (about $0.073) | NIS 0.168 |
| Net cash used in operating activities | NIS 17.8m (about $5.1m) | NIS 14.4m (about $3.7m) |
At year-end, cash and cash equivalents were NIS 13.7m ($4.0m), marketable securities NIS 14.0m ($4.0m), and total assets NIS 30.4m ($8.8m). Current liabilities were NIS 4.1m ($1.2m); total liabilities, including NIS 7.4m ($2.1m) of warrant liabilities, were NIS 11.5m ($3.3m). Shareholders’ equity was NIS 18.9m ($5.4m). The filing provides no conventional borrowings at year-end; warrants were recorded as a financial liability. Working capital was reported as NIS 24.5m ($7.1m). No meaningful operating margin is available because the company had no revenue.
Changes versus prior year
- Comprehensive loss increased 84% year over year, driven by higher R&D and administrative costs and a swing from net financial income to expense.
- R&D expense rose 39%, reflecting higher personnel costs, increased activity and share-based compensation. G&A expense rose 61%, including higher share-based compensation, professional services and business-development costs.
- Net finance expense was NIS 3.8m in 2017, compared with NIS 0.6m of net finance income in 2016. The company attributed the change primarily to fair-value movements in warrants.
- Operating cash use increased; financing provided NIS 15.8m, primarily from share and warrant issuance. Year-end cash and cash equivalents increased to NIS 13.7m, while short-term deposits declined to zero and marketable securities increased.
Outlook, risks and unusual items
- Management expected existing cash and cash equivalents to fund current operations through at least the end of Q1 2019, while also stating that substantial additional financing would be needed. The auditor’s report highlighted substantial doubt about the company’s ability to continue as a going concern. No revenue was expected in the near term.
- Plans included continuing the Phase I/II ApoGraft trial, pursuing further human studies and developing ApoTainer prototypes. These were forward-looking plans, not assured milestones. The filing reported that the first three patients had one month of follow-up with no treatment-related adverse events reported at that point.
- Key risks include clinical and regulatory uncertainty, delayed patient recruitment, the need for additional capital and potential dilution, and reliance on a limited supply of FasL. The company reported supply delays for a planned second human trial and was working to establish another supply process.
- The FDA had granted orphan-drug designation for ApoGraft for prevention of acute and chronic GvHD; this does not itself confer marketing approval. Product classification and the approval pathway remained uncertain.
- A January 2018 registered direct offering raised approximately $4.0m gross (about $3.6m net), with additional warrants. It occurred after the reporting date and is not included in FY2017 results.
- The company had received $120,000 in BIRD Foundation grants by year-end. Grant terms include royalties of 5% of relevant gross sales, subject to repayment limits and other conditions; further conditional funding was contemplated.
- Management stated disclosure controls and internal control over financial reporting were effective at year-end. As an emerging growth company, Cellect did not include an auditor attestation on internal controls.
Most important facts to verify
- Confirm the intended issuer and period: this source is Cellect’s FY2017 20-F, not Quoin Pharmaceuticals’ filing or a quarterly report.
- Review the audited statements and going-concern note, including the cash runway assumptions and financing needs.
- Check warrant accounting and fair-value movements, as well as potential dilution from outstanding warrants, options and subsequent financing.
- Verify clinical-trial status, recruitment progress, follow-up duration and the FasL supply plan; early observations do not establish efficacy or long-term safety.
- Confirm the terms and cash impact of the January 2018 offering and the BIRD grant repayment obligations.