SciSparc Ltd. — FY2020 Form 20-F
Reporting period: Fiscal year ended December 31, 2020; this is an annual report, not a standalone Q4 filing. The company reports under IFRS in U.S. dollars; financial statement amounts below are in millions unless stated otherwise. The company was then known as Therapix Biosciences Ltd. and changed its name in January 2021.
Business context
SciSparc is a clinical-stage pharmaceutical company developing cannabinoid-based therapies. Its programs include SCI-110 for Tourette syndrome (TS), obstructive sleep apnea (OSA), and Alzheimer’s disease with agitation; SCI-160 for pain; and SCI-210 for autism spectrum disorder (ASD) and epilepsy. CannAmide, a PEA oral tablet, had a Canadian natural health product license, but the company said it did not expect material revenue from its early commercialization efforts.
Financial results and liquidity
| Metric | FY2020 | FY2019 |
|---|---|---|
| Revenue | None reported | None reported |
| Research and development expense | $0.649 | $1.639 |
| General and administrative expense | $1.902 | $2.469 |
| Other expense | $0.742 | — |
| Operating loss | $3.293 | $4.108 |
| Net loss | $3.535 | $4.686 |
| Net cash used in operating activities | $4.307 | $4.696 |
| Cash provided by financing activities | $5.359 | $2.804 |
At year-end, cash was $1.946 million, with restricted deposits of $0.010 million; current assets were $2.550 million and current liabilities were $1.131 million, giving working capital of approximately $1.42 million. Total assets were $2.561 million, total liabilities $1.131 million, and equity $1.430 million. Current liabilities included a $0.188 million short-term loan and $0.353 million of warrant liabilities. The filing reports an accumulated deficit of $55.188 million. No meaningful revenue or operating margin was reported; profitability metrics are not informative for this pre-commercial company.
The company reported no long-term liabilities at December 31, 2020. Its financial statements note that all financial liabilities were expected to be settled within one year. Management said year-end cash was expected to fund operations at least through March 31, 2022; separately, the notes report $7.78 million in cash as of the March 2021 financial-statement approval date, following subsequent financing.
Changes versus FY2019
- Net loss narrowed by about 25%, and operating loss by about 20%, primarily as R&D and G&A spending declined.
- R&D expense fell 60%; no new clinical studies were initiated in 2020. Management said preparations accelerated in the second half of the year for studies planned for 2021.
- G&A expense fell 23%, including lower business development, wages, and share-based compensation, partly offset by higher professional and directors’ fees, primarily related to directors’ and officers’ insurance.
- Other expense of $0.742 million reflected impairment of the company’s investment in Lara Pharm. Discontinued-operation loss was zero in 2020, compared with $0.207 million in 2019, following the liquidation and dissolution of THR.
- Cash increased to $1.946 million from $0.870 million, chiefly due to equity and warrant financing. Operating cash use remained substantial.
Outlook, developments, and risks
- Funding and financial condition: The company disclosed that it filed for economic rehabilitation in Israel in July 2020, stating it was insolvent under the cash-flow test and unable to pay creditors. A court-approved proposal provided a $1.5 million deposit from Pure Capital and a board replacement. SciSparc also raised approximately $4.2 million gross in November 2020 and $8.15 million gross in March 2021. It remains dependent on external capital; further financing may dilute shareholders or may not be available on acceptable terms.
- Listing and capital structure: ADSs were suspended from Nasdaq in July 2020 for failure to meet shareholder-equity requirements and delisted in September; they moved to OTCQB in December under SPRCY. A 20-for-1 reverse share split and change in ADS ratio took effect in October 2020. The filing identifies limited liquidity and possible relisting uncertainty as investor risks.
- Pipeline: SCI-110’s open-label Phase IIa TS study at Yale reported a 21% average tic-score reduction among 16 participants; the filing describes these results as positive but they are early-stage and from a small, uncontrolled study. In the OSA Phase IIa study, nine of ten enrolled patients completed treatment; the company reported a roughly 54% mean AHI reduction among completers, with one withdrawal due to dizziness. Further development strategy for OSA was under assessment. SCI-160 remained preclinical.
- Post-period plans: The company announced plans for a Phase IIa SCI-110 study in Alzheimer’s agitation, clinical development of SCI-210 for ASD, and a preclinical SCI-210 study for status epilepticus. It also reported starting CannAmide commercial production in February 2021 and a manufacturing-development agreement for softgel products. These are forward-looking plans, not established outcomes.
- Key risks: No product candidate has received marketing approval, the company has never generated product sales, and clinical outcomes and regulatory pathways are uncertain. Other material risks include dependence on third-party manufacturers and research organizations, COVID-19-related disruption, competition, patent and license uncertainty, controlled-substance regulation, and political and economic risks in Israel.
- Contingencies and unusual items: The filing discloses approximately $1.2 million of contingent IIA grant obligations, including interest, subject to royalties and restrictions on transferring grant-funded technology. It also describes an approximately $85,000 demand from a former service provider, which the company disputed and for which it recorded no provision. Management reported no pending claims requiring a provision at year-end.
- Audit and controls: The auditor issued an unqualified IFRS opinion and identified liquidity and capital resources as a critical audit matter. Management concluded disclosure controls and internal control over financial reporting were effective at year-end; the auditor did not provide an internal-control attestation, citing the emerging-growth-company exemption.
Most important facts for investors to verify
- Current cash, operating cash burn, outstanding obligations, and the runway assumptions underlying management’s liquidity statements, including the effect of the March 2021 financing.
- Fully diluted share count and potential dilution from outstanding warrants, pre-funded warrants, and other securities; confirm share and ADS figures after the reverse split and subsequent offerings.
- Whether planned SCI-110 and SCI-210 studies received approvals, began on schedule, and produced adequately controlled, reproducible results.
- Commercial distribution arrangements and actual sales, margins, and regulatory status for CannAmide; the filing says material revenue was not expected.
- Status and potential cost of IIA grant obligations, the disputed service-provider demand, and the Dekel intellectual-property license relationship.
- Any progress toward Nasdaq relisting and whether OTCQB trading provides adequate liquidity for investors.