QNRX

Cellect Biotechnology Ltd. Form 6-K Summary

Business Context and Reporting Period

This Form 6-K, filed on August 31, 2016, presents the translated interim financial statements and Board of Directors' report for Cellect Biotechnology Ltd. (formerly Cellect Biomed Ltd.) for the period ended June 30, 2016. The company is a development-stage biotechnology firm focused on a technology platform for the functional selection of stem cells to improve bone marrow transplant success rates. The company is listed on the Tel Aviv Stock Exchange (TASE) and, following a post-period event, on NASDAQ.

Key Financial Metrics (Six Months Ended June 30, 2016)

Note: USD figures are convenience translations based on an exchange rate of 1 USD = 3.846 NIS as of June 30, 2016.

Material Changes vs. Prior Period

• Increased Operating Loss: The net loss for the six months ended June 30, 2016, was NIS 6.97 million, compared to NIS 3.96 million for the same period in 2015. This increase is primarily driven by higher R&D expenses (up from NIS 2.56M to NIS 3.68M) and G&A expenses (up from NIS 1.35M to NIS 3.55M).
• Expense Drivers: R&D increases are attributed to preclinical activities and preparations for a Phase 1/2 clinical trial. G&A increases are due to share-based payments, professional services related to the IPO, and payroll growth.
• Asset Growth: Total assets increased from NIS 13.36 million (Dec 31, 2015) to NIS 14.63 million (June 30, 2016), driven by a private placement and the purchase of laboratory equipment.
• Liquidity: Cash and cash equivalents decreased from NIS 6.80 million (June 30, 2015) to NIS 5.51 million (June 30, 2016), despite financing inflows, due to operating burn and capital expenditures.

Outlook, Management Commentary, and Significant Events

• Initial Public Offering (IPO): On July 28, 2016 (post-balance sheet date), the company completed an IPO on NASDAQ, raising gross proceeds of US$8.4 million (approx. NIS 32 million). The offering included American Depositary Shares (ADS) and warrants.
• Clinical Trial Progress: The company received Institutional Review Board approval from Rambam Hospital in March 2016 to conduct a Phase 1/2 clinical trial in leukemia patients. Preclinical results announced in July 2016 supported the clinical protocol.
• Strategic Partnerships:
  • Accellta: Signed a feasibility study agreement generating NIS 290,000 in other income.
  • Entegris & BIRD Foundation: Awarded a NIS 3.5 million grant (part of a NIS 7 million joint budget) to develop a container for cell selection technology.
• Capital Raising: Prior to the IPO, the company raised NIS 8 million via a private placement in February 2016.
• Risks: The company is in the development stage with no commercial revenue. Future profitability depends on successful clinical trials, regulatory approvals, and continued access to capital. The company expects to incur substantial losses for several years.

Key Facts for Investor Verification

• Post-Period Liquidity: Verify the actual cash position post-IPO (July 2016) to confirm the US$8.4 million gross proceeds were successfully deposited and net of issuance costs.
• Clinical Trial Timeline: Confirm the start date of the Phase 1/2 clinical trial at Rambam Hospital, as this is a critical milestone for the company's technology validation.
• Grant Milestones: Review the specific milestones required to secure the full NIS 3.5 million BIRD Foundation grant, as funding is contingent on successful completion.
• Expense Recognition: Monitor the recognition of the approximately US$0.2 million officer bonus related to the IPO, which is expected to impact Q3 2016 financials.
• Regulatory Status: Track the status of Ministry of Health approval required to commence the clinical trial.