SLXN

Silexion Therapeutics Corp (SLXN) - Q2 2024 10-Q Summary

Business Context and Reporting Period

This Form 10-Q covers the quarterly period ended June 30, 2024. The financial statements presented are for Silexion Therapeutics Ltd. (the operating subsidiary), as the registrant (Silexion Therapeutics Corp) was formed solely for the purpose of a business combination with Moringa Acquisition Corp (a SPAC) which closed on August 15, 2024. Silexion is a clinical-stage biotechnology company developing siRNA therapeutics for KRAS-driven cancers, specifically targeting pancreatic cancer with its lead candidate, SIL-204B. The company has no revenue to date and is incurring significant operating losses.

Key Financial Metrics (Six Months Ended June 30, 2024)

Material Changes vs. Prior Period

• Net Loss: Increased by approximately 11.5% to $2.9 million for the six months ended June 30, 2024, compared to $2.6 million in the same period in 2023.
• R&D Expenses: Decreased by 10.5% to $1.7 million, primarily due to reduced spending on subcontractors and payroll.
• G&A Expenses: Increased significantly by 200% to $0.9 million, driven by a $0.4 million increase in professional services (likely related to the SPAC merger process) and higher payroll costs.
• Financial Expenses: Decreased by 25% to $0.27 million, largely due to a reduction in foreign exchange losses, partially offset by an increase in warrant liability revaluation expenses.
• Liquidity: Cash and cash equivalents declined from $4.6 million at the beginning of the period to $1.7 million at period end.

Outlook, Risks, and Subsequent Events

Going Concern: Management has concluded there is substantial doubt about the company's ability to continue as a going concern for at least 12 months from the date of issuance, given the accumulated deficit and negative cash flows. The financial statements do not include adjustments that might be necessary if the company cannot continue operations.

Business Combination: The merger with Moringa Acquisition Corp closed on August 15, 2024. The combined entity now trades on Nasdaq under the symbols SLXN (shares) and SLXNW (warrants).

Capital Resources Post-Closing: Following the merger, the company expects to fund operations through:

• Remaining trust account proceeds (~$334,000).
• PIPE Financing: $2.0 million raised immediately prior to closing.
• ELOC: An equity line of credit for up to $15.0 million with White Lion Capital, LLC.
• Israeli Innovation Authority (IIA) grants (totaling $5.8 million received to date, subject to royalty payments).

Risks: The company faces risks related to the ongoing conflict in Israel, though management believes operations are not materially impacted as trials are conducted outside Israel. There is also significant risk regarding the ability to secure additional funding and the uncertainty of clinical trial outcomes for SIL-204B.

Key Facts for Investor Verification

• Cash Runway: Verify the sufficiency of the $1.7 million cash balance (pre-merger) combined with the $2.0 million PIPE and $15.0 million ELOC to fund operations through 2024 and beyond.
• Merger Accounting: Confirm the reverse recapitalization treatment where Silexion is the accounting acquirer, meaning historical financials reflect Silexion's operations.
• Warrant Liability: Monitor the fair value of warrant liabilities ($345,000 at June 30, 2024), which are subject to volatility and revaluation impacts on net loss.
• IIA Royalties: Understand the obligation to pay 3-5% royalties on future product sales to the Israeli Innovation Authority, up to the amount of grants received plus interest.
• Going Concern Status: Acknowledge that the financial statements were prepared assuming a going concern despite the substantial doubt expressed by management and auditors prior to the merger closing.