Entera Bio Ltd. Form 20-F Summary
Business context and reporting period
Entera Bio Ltd. is an Israel-based clinical-stage biopharmaceutical company developing orally delivered large-molecule therapeutics. Its lead candidates are EB613, an oral PTH (1-34) formulation for osteoporosis, and EB612, an oral PTH (1-34) formulation for hypoparathyroidism. The filing covers the fiscal year ended December 31, 2020 and uses IFRS as issued by the IASB, with financial statements presented in U.S. dollars.
The company has no approved products and has not generated product-sales revenue. Revenue is derived primarily from research and development services under its collaboration with Amgen.
Key financial metrics
| Metric | 2020 | 2019 | Change |
|---|---|---|---|
| Revenue | $365,000 | $236,000 | Up 54.6% |
| Cost of revenue | $209,000 | $210,000 | Essentially unchanged |
| Gross profit | $156,000 | $26,000 | Higher |
| Gross margin | 42.7% | 11.0% | Improved |
| Research and development expense | $6.398 million | $7.199 million | Down 11.1% |
| General and administrative expense | $4.891 million | $4.281 million | Up 14.2% |
| Operating loss | $11.133 million | $11.454 million | Improved by $321,000 |
| Net comprehensive loss | $9.983 million | $10.795 million | Improved by $812,000 |
| Basic loss per share | $0.54 | $0.89 | Improved |
| Cash used in operating activities | $10.423 million | $8.919 million | Use increased |
| Cash and cash equivalents at year-end | $8.593 million | $15.185 million | Down $6.592 million |
Financial income of $1.170 million in 2020, compared with $659,000 in 2019, primarily reflected fair-value gains on warrant and other equity-linked liabilities. This non-operating item reduced the reported net loss but did not represent recurring operating revenue.
At December 31, 2020, total assets were $10.262 million, total liabilities were $3.597 million, shareholders’ equity was $6.665 million, and working capital was $5.836 million. The company reported no convertible loans or preferred shares outstanding. Liabilities included $1.432 million of warrant liabilities and $432,000 of lease liabilities.
Material changes versus the prior comparable period
- Revenue increased because of additional Amgen research and development services, while no product revenue was generated.
- Research and development expense declined primarily because of lower professional and consulting costs, lower compensation costs, and timing of manufacturing runs, partly offset by increased EB613 clinical-trial activity.
- General and administrative expense increased because of higher compensation, legal, insurance, and board-related costs, including executive hiring.
- Operating cash consumption increased by $1.504 million despite the lower operating loss, largely because of working-capital changes and lower non-cash share-based compensation.
- The company issued 2.803 million ordinary shares under its ATM program in 2020, generating approximately $3.2 million of net cash proceeds. It also received approximately $800,000 of net proceeds from the final closing of its private placement.
- Outstanding private-placement warrants were repriced to $1.05 per share following ATM issuances, creating potential dilution and warrant-liability fair-value volatility.
- EB613 Phase 2 enrollment was completed in November 2020 with 161 subjects. The FDA reviewed the EB613 IND and allowed the company to proceed with an initial U.S. clinical trial in December 2020.
- The company disclosed a change in leadership: Dr. Spiros Jamas became CEO in January 2021 after the former CEO’s departure in 2020.
Guidance, outlook, commentary, risks and unusual items
- Management estimated that existing cash resources would fund operations into the second quarter of 2022, based on current plans and assumptions. The company stated that additional capital is required to continue operations and advance its pipeline.
- Management and the independent auditor expressed substantial doubt about the company’s ability to continue as a going concern. The financial statements were prepared on a going-concern basis and contain no adjustments for the potential outcome of this uncertainty.
- As of March 16, 2021, cash and cash equivalents were approximately $15.4 million, reflecting subsequent financing activity. The company raised approximately $9.8 million net through additional ATM sales in February and March 2021.
- Management expected final BMD data from the EB613 Phase 2 trial in the second quarter of 2021 and targeted potential initiation of a single Phase 3 trial in 2022, subject to positive Phase 2 results, FDA alignment, COVID-19 effects, and sufficient financing.
- The company expected to select final EB612 formulations in 2021 and, subject to funding, initiate a Phase 2b/3 trial for hypoparathyroidism. EB612 may need to demonstrate clinical superiority or a major contribution to patient care relative to Natpara to obtain approval before the relevant orphan exclusivity period expires.
- COVID-19 delayed EB613 enrollment and increased monitoring costs, while creating risks to clinical-site access, patient participation, supply chains, regulatory timelines, and future data readouts.
- The Amgen agreement provides potential aggregate milestone payments of up to $270 million and tiered royalties in the low- to mid-single digits, but no milestone or royalty revenue had been recognized because the relevant conditions had not occurred.
- The company has no sales, marketing, or commercial manufacturing infrastructure and relies on third-party clinical research organizations and manufacturers.
- Emisphere has notified the company that it believes it is the exclusive owner of certain U.S. and foreign patent rights acquired from Oramed. No legal proceeding had been initiated as of the filing date, but an adverse outcome could impair the company’s intellectual-property position.
- The company is subject to royalties and transfer restrictions related to approximately $0.5 million of Israeli Innovation Authority funding, as well as a 3% royalty obligation to Oramed on applicable net revenues.
Most important facts for an investor to verify
- Whether EB613 Phase 2 BMD and biomarker results support progression to a pivotal Phase 3 trial and whether the FDA accepts the proposed BMD-based 505(b)(2) pathway.
- The company’s actual cash runway, subsequent ATM issuance, financing terms, and the amount of capital required to fund Phase 3 and EB612 development.
- The going-concern disclosure and the company’s ability to secure additional equity, debt, grant, licensing, or collaboration funding without substantial dilution or loss of rights.
- The current status, exercise price, expiration, and potential dilution from the IPO, investor, broker, and other outstanding warrants and options.
- The status of the Amgen collaboration, including program selection, development progress, termination rights, and the likelihood and timing of milestone payments.
- The scope and enforceability of the company’s patent portfolio, including the unresolved ownership notification from Emisphere and obligations under the Oramed Patent Transfer Agreement.
- The effect of COVID-19 and other operational disruptions on clinical-trial enrollment, data quality, manufacturing supply, and regulatory timelines.
- The filing reports 21.058 million ordinary shares issued and outstanding at December 31, 2020 and 23.739 million outstanding as of the period-end cover-date disclosure; investors should reconcile these share counts with subsequent ATM issuances and warrant exercises.