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Medgenics Inc (MEDG)

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Tuesday 06 August, 2013

Medgenics Inc

Medgenics Reports Second Quarter Financial Results

RNS Number : 0674L
Medgenics Inc
06 August 2013
 



 

 

         

 

 

 

Press Release

6 August  2013

 

Medgenics Reports Second Quarter Financial Results

 

Medgenics, Inc. (NYSE MKT: MDGN and AIM: MEDU, MEDG) (the "Company"), the developer of a novel technology for the sustained production and delivery of therapeutic proteins in patients using their own tissue, today reported financial results for the three and six months ended June 30, 2013 and the filing with the U.S. Securities and Exchange Commission (SEC) of the Company's Quarterly Report on Form 10-Q. The Form 10-Q includes unaudited interim consolidated financial statements containing the information presented below, as well as additional information regarding the Company. The Form 10-Q is available at www.sec.gov and at www.medgenics.com.

 

Management Commentary

"The first half of 2013 was an active and productive period during which we made progress in a number of significant areas and positioned the Company to address important near term milestones," stated Andrew L. Pearlman, Ph.D., President and Chief Executive Officer of Medgenics. "We advanced our clinical programs, fortified our patent portfolio, were awarded a grant of approximately $2 million from the Israeli Office of the Chief Scientist (OCS) and raised substantial capital in a public offering to support the forward momentum of our programs.

 

"In April 2013 we reported interim data from our Israeli Phase IIa clinical study of EPODURE to treat anemia in patients with end-stage renal disease who are on dialysis, which showed sustained hemoglobin levels in patients for months without the need for injections of erythropoietin.  We completed a number of key preparations and continue to be on target to initiate our U.S. Phase II study of EPODURE in similar patients.  This will be our first U.S. clinical study for the Biopump technology. We reported the launch and enrollment of the first patient in our Phase I/II proof-of-concept clinical study of INFRADURE in the treatment of hepatitis C in Israel, and look forward to reporting interim data from this study before year-end. We expect to use data from this trial to support the clinical development and regulatory strategy for INFRADURE to treat hepatitis D, an indication for which we have U.S. orphan drug designation.  We are exploring its role in treating hepatitis B as well. 

 

"In addition, we continue to make advances in optimizing our Biopump platform through a number of developments that include enhancements to the protein expression technology and Biopump processing methods, as well as to improvements inpatient administration.  These developments have the potential to further increase production and delivery of protein and to extend the duration of clinical effect," added Dr. Pearlman. 

 

Second Quarter Financial Results

Gross research and development (R&D) expense for the second quarter of 2013 increased to $2.07 million from $1.64 million for same period in 2012. Net R&D expense for the 2013 second quarter was $0.86 million compared with net R&D expense of $1.18 million for the prior year's second quarter.  The decrease in net R&D expense was due to the participation by the OCS of $1.22 million in the three months ended June 30, 2013, compared with $0.46 million in the same period in 2012, somewhat offset by the increase in the gross R&D expense.

 

General and administrative expense for the second quarter of 2013 decreased to $1.59 million compared with $2.77 million for the comparative quarter in 2012, due primarily to lower stock-based compensation expense related to options and restricted shares granted to directors and consultants.

 

Financial expenses for the quarter ended June 30, 2013 were $0.03 million, compared with $2.97 million for the same period in 2012. This decrease was mainly due to the change in valuation of the warrant liability.

 

Financial income for the quarter ended June 30, 2013 was $0.37 million, increasing from $0.02 million for the same period in 2012. This increase was primarily due to the change in valuation of the warrant liability.

 

For the second quarter of 2013 the Company reported a net loss of $2.10 million or $0.11 per share, compared with a net loss of $6.91 million or $0.69 per share for the second quarter of 2012.

 

Six Month Financial Results

Gross R&D expense for the first half of 2013 increased to $4.10 million from $3.23 million for same period in 2012 due to an increase in R&D personnel. Net R&D expense for the first half of 2013 was $2.89 million compared with net R&D expense of $1.75 million for the first half of 2012.  The increase in net R&D expense was due to the participation by the OCS of $1.22 million in the six months ended June 30, 2013 compared with $1.49 million in the same period in 2012, and by the increase in the gross R&D expense as explained above.

 

General and administrative expense for the six months ended June 30, 2013 of $4.13 million was consistent with the prior-year period. 

 

Financial income for the six months ended June 30, 2013 of $1.29 million was due primarily to the change in valuation of the warrant liability.

 

For the six months ended June 30, 2013, the Company reported a net loss of $5.78 million or $0.42 diluted loss per share, compared with a net loss of $9.66 million or $0.98 per share in the comparable 2012 period.

 

The Company ended the second quarter with cash and cash equivalents of $28.98 million, compared with $6.43 million as of December 31, 2012. Medgenics raised gross proceeds of approximately $32 million in a public offering of common stock and warrants during the first quarter of 2013. The Company used $6.18 million in net cash to fund operating activities during the first half of 2013, compared with $4.34 million for the first half of 2012. 

 

About Medgenics

Medgenics is developing and commercializing Biopump™, a proprietary tissue-based platform technology for the sustained production and delivery of therapeutic proteins using the patient's own tissue for the treatment of a range of chronic diseases including anemia, hepatitis, among others.  For more information, please visit www.medgenics.com

 

 

Forward-looking Statements

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and as that term is defined in the Private Securities Litigation Reform Act of 1995, which include all statements other than statements of historical fact, including (without limitation) those regarding the Company's financial position, its development and business strategy, its product candidates and the plans and objectives of management for future operations. The Company intends that such forward-looking statements be subject to the safe harbors created by such laws. Forward-looking statements are sometimes identified by their use of the terms and phrases such as "estimate," "project," "intend," "forecast," "anticipate," "plan," "planning, "expect," "believe," "will," "will likely," "should," "could," "would," "may" or the negative of such terms and other comparable terminology. All such forward-looking statements are based on current expectations and are subject to risks and uncertainties. Should any of these risks or uncertainties materialize, or should any of the Company's assumptions prove incorrect, actual results may differ materially from those included within these forward-looking statements. Accordingly, no undue reliance should be placed on these forward-looking statements, which speak only as of the date made. The Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based. As a result of these factors, the events described in the forward-looking statements contained in this release may not occur.

 

 

For further information, contact

 

Medgenics, Inc.

Dr. Andrew L. Pearlman

[email protected]

Phone: +972 4 902 8900

 

LHA
Anne Marie Fields

[email protected]

Phone: +1 212-838-3777

Abchurch Communications

Joanne Shears

Jamie Hooper

Harriet Rae

[email protected]  

 

Phone: +44 207 398 7718

Nomura Code Securities (NOMAD & Joint Broker)

Jonathan Senior

Giles Balleny

Phone: +44 207 776 1200

 

SVS Securities plc (Joint Broker)

Alex Brearley

 

Phone: +44 207 638 5600

 

 

 

 

-Tables to follow-



 

 

 

 

 

MEDGENICS, INC. AND ITS SUBSIDIARY

 (A Development Stage Company)

CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands



June 30,


December 31,



2013


2012


2012



(Unaudited)



ASSETS














CURRENT ASSETS: 














 Cash and cash equivalents


$    28,979


$    9,040


$    6,431

 Accounts receivable and prepaid expenses


1,818


1,702


539








Total current assets 


30,797


10,742


6,970








LONG-TERM ASSETS:














 Restricted lease deposits


43


57


62

 Severance pay fund


243


264


283

Property and equipment, net


410


407


352



696


728


697

Total long-term assets


















DEFERRED ISSUANCE EXPENSES


-


-


40








Total assets


$    31,493


$    11,470


$    7,707















 

 

 

 

 

The accompanying notes are an integral part of the interim consolidated financial statements.



MEDGENICS, INC. AND ITS SUBSIDIARY

 (A Development Stage Company)

CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands



June 30,


December 31,



2013


2012


2012



(Unaudited)










LIABILITIES AND STOCKHOLDERS' EQUITY














CURRENT LIABILITIES:














Trade payables


$    901


$    917


$    877

Other accounts payable and accrued expenses 


1,425


1,249


1,473








Total current liabilities 


2,326


2,166


2,350








LONG-TERM LIABILITIES:














Accrued severance pay


1,446


1,387


1,492

Liability in respect of warrants 


654


4,107


1,931








Total long-term liabilities


2,100


5,494


3,423








Total liabilities


4,426


7,660


5,773








STOCKHOLDERS' EQUITY: 














Common stock - $ 0.0001 par value;

100,000,000 shares authorized; 18,481,308, 11,746,251 and 12,307,808 shares issued and outstanding at June 30, 2013, June 30, 2012 and December 31, 2012, respectively


2


1


1

Additional paid-in capital 


97,419


62,972


66,509

Deficit accumulated during the development stage


(70,354)


(59,163)


(64,576)








Total stockholders' equity


27,067


3,810


1,934








Total liabilities and stockholders' equity


$    31,493


$    11,470


$    7,707

 

 

 

The accompanying notes are an integral part of the interim consolidated financial statements.

 

 



 

MEDGENICS, INC. AND ITS SUBSIDIARY

 (A Development Stage Company)

CONSOLIDATED STATEMENTS OF OPERATIONS

U.S. dollars in thousands (except share and per share data)



Six months ended

June 30,


Three months ended

June 30,


Period from January 27, 2000 (inception)

through June 30,



2013


2012


2013


2012


2013



Unaudited











Research and development expenses


$   4,104


$    3,231


$    2,073


$    1,639


$   41,733












Less - Participation by the Office of the Chief Scientist


(1,218)


(1,486)


(1,218)


(464)


(8,267)

U.S. Government grant


-


-


-


-


(244)

Participation by third party


-


-


-


-


(1,067)












Research and development expenses, net


2,886


1,745


855


1,175


32,155












General and administrative expenses


4,134


4,133


1,588


2,774


37,729












Other income:











Excess amount of participation in research and development from third party


-


-


-


-


(2,904)












Operating loss


(7,020)


(5,878)


(2,443)


(3,949)


(66,980)












Financial expenses


(39)


(3,773)


(25)


(2,972)


(4,072)

Financial income


1,286


1


371


17


369












Loss before taxes on income


(5,773)


(9,650)


(2,097)


(6,904)


(70,683)












Taxes on income


5


8


2


8


100












Loss


$   (5,778)


$   (9,658)


$ (2,099)


$   (6,912)


$ (70,783)












Basic loss per share


$     (0.34)


$     (0.98)


$ (0.11)


$     (0.69)














Diluted loss per share


$     (0.42)


$     (0.98)


$ (0.11)


$     (0.69)














Weighted average number of Common stock used in computing basic loss per share


16,850,657


9,893,072


18,410,951


10,032,760



Weighted average number of Common stock used in computing diluted loss per share


16,895,741


9,893,072


18,410,951


10,032,760



 

The accompanying notes are an integral part of the interim consolidated financial statements.


MEDGENICS, INC. AND ITS SUBSIDIARY

(A Development Stage Company)

 

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

U.S. dollars in thousands (except share and per share data)



Common stock


Additional

paid-in

capital


Deficit

accumulated

during the

development

stage


 

Total

stockholders'

equity



Shares


Amount


















Balance as of  December 31, 2011


9,722,725


$    1


$    52,501


$    (49,505)


$   2,997












Stock based compensation related to issuance of restricted common stock, January 2012


35,000


(*)


55


-


55

Issuance of Common stock to consultants at $ 4.84 and $ 8.79 per share, March and June 2012


30,000


(*)


204


-


204

Issuance of Common stock and warrants at $ 4.90 per unit, net, June 2012


1,944,734


(*)


8,407


-


8,407

Exercise of  options and warrants, January through June 2012


13,792


(*)


117


-


117

Stock based compensation related to options and warrants  granted to consultants and employees


-


-


1,688


-


1,688

Loss


-


-


-


(9,658)


(9,658)












Balance as of  June 30, 2012 (Unaudited)


11,746,251


$    1


$   62,972


$    (59,163)


$   3,810

 

(*)      Represents an amount lower than $ 1.

 

 

The accompanying notes are an integral part of the interim consolidated financial statements.

 



MEDGENICS, INC. AND ITS SUBSIDIARY

 (A Development Stage Company)

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

U.S. dollars in thousands (except share data)



Common stock


Additional

paid-in

capital


Deficit

accumulated

during the

development

stage


Total

stockholders'

equity



Shares


Amount


















Balance as of  December 31, 2012


12,307,808


$    1


$    66,509


$    (64,576)


$    1,934












Issuance of Common stock and warrants at $ 5.24 per share and $ 0.01 per warrant, net of issuance costs in the amount of $ 3,050


6,070,000


1


28,820


-


28,821

Stock based compensation related to Common stock to consultants at $ 7.25 per share (**)


55,000


(*)


494


-


494

Issuance and vesting of restricted common stock


45,000


(*)


274


-


274

Exercise of  warrants and options


3,500


(*)


13


-


13

Stock based compensation related to options and warrants granted to consultants and employees


-


-


1,309


-


1,309

Loss


-


-


-


(5,778)


(5,778)












Balance as of  June 30, 2013 (unaudited)


18,481,308


$    2


$    97,419

$    (70,354)


$    27,067

 

 

(*) Represents an amount lower than $1.

(**) Includes stock based compensation for an additional 25,000 shares which were not issued as of June 30, 2013.

 

 

 

The accompanying notes are an integral part of the interim consolidated financial statements.

 

 


 

MEDGENICS, INC. AND ITS SUBSIDIARY

 (A Development Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

U.S. dollars in thousands

 

 



Six months ended

June 30,


Period from January 27, 2000 (inception) through

June 30,

 

 



2013


2012


2013

 

 



Unaudited

 

 








 

 

CASH FLOWS FROM OPERATING ACTIVITIES:







 

 








 

 

 Loss


$    (5,778)


$    (9,658)


$    (70,783)

 

 








 

 

Adjustments to reconcile loss to net cash used in operating activities:







 

 








 

 

Depreciation


84


72


1,310

 

 

Loss from disposal of property and equipment


-


-


330

 

 

Stock based compensation to employees and consultants


2,077


1,947


12,262

 

 

Interest and amortization of beneficial conversion feature of convertible note


-


-


759

 

 

Change in fair value of convertible debentures and warrants


(1,277)


3,717


2,701

 

 

Accrued severance pay, net


(6)


54


1,203

 

 

Exchange differences on a restricted lease deposit and on long term loan


1


-


2

 

 

Increase in accounts receivable and prepaid expenses


(1,256)


(580)


(1,835)

 

 

Increase in trade payables


24


15


1,505

 

 

Increase (decrease)  in other accounts payable and accrued expenses


(48)


93


1,972

 

 








 

 

Net cash used in operating activities


(6,179)


(4,340)


(50,574)

 

 








 

 

CASH FLOWS FROM INVESTING ACTIVITIES:







 

 








 

 

Purchase of property and equipment


(142)


(45)


(2,224)

 

 

Proceeds from disposal of property and equipment


-


-


173

 

 

Increase in restricted lease deposit


(5)


(5)


(65)

 

 








 

 

Net cash used in investing activities


$    (147)


$     (50)


$    (2,116)


 








 

 

 

The accompanying notes are an integral part of the interim consolidated financial statements.

 


 

MEDGENICS, INC. AND ITS SUBSIDIARY

 (A Development Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. dollars in thousands

 



Six months ended

June 30,


Period from January 27, 2000 (inception) through

June 30,

 



2013


2012


2013

 



Unaudited

 

CASH FLOWS FROM FINANCING ACTIVITIES:







 








 

Proceeds from issuance of shares and warrants, net


$    28,821


$    8,407


$    71,769

 

Deferred issuance expenses


40


-


-

 

Proceeds from exercise of options and warrants, net


13


28


2,735

 

Repayment of a long-term loan


-


-


(73)

 

Proceeds from long term loan


-


-


70

 

Issuance of a convertible debenture and warrants


-


-


7,168

 








 

Net cash provided by financing activities


28,874


8,435


81,669

 








 

Increase  in cash and cash equivalents


22,548


4,045


28,979

 








 

Balance of cash and cash equivalents at the beginning of the period


6,431


4,995


-

 








 

Balance of cash and cash equivalents at the end of the period


$   28,979


$    9,040


$    28,979

 








 

Supplemental disclosure of cash flow information:







 








 

Cash paid during the period for:







 








 

Interest


$      -


$     -


$        242

 








 

Taxes


$     5


$   31


$        153

 








 

Supplemental disclosure of non-cash flow information:







 








 

Issuance expenses paid with shares


$     -


$     -


$        310

 








 

Issuance of Common stock upon conversion of a convertible debenture


$     -


$     -


$    8,430

 








 

Classification of liability in respect of warrants into equity due to the exercise of warrants


$     -


$   89


$    2,014

 

 

The accompanying notes are an integral part of the interim consolidated financial statements.


 

MEDGENICS, INC. AND ITS SUBSIDIARY

 (A Development Stage Company)

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

 

NOTE 1:-      GENERAL

 

a.       Medgenics, Inc. (the "Company") was incorporated in January 2000 in Delaware. The Company has a wholly-owned subsidiary, Medgenics Medical Israel Ltd. (formerly Biogenics Ltd.) (the "Subsidiary"), which was incorporated in Israel in March 2000. The Company and the Subsidiary are engaged in the research and development of products in the field of biotechnology and associated medical equipment and are thus considered development stage companies as defined in Accounting Standards Codification ("ASC") topic number 915, "Development Stage Entities" ("ASC 915").

 

On December 4, 2007 the Company's Common stock was admitted for trading on the AIM market of the London Stock Exchange.

 

On April 13, 2011 the Company completed an Initial Public Offering ("IPO") of its Common stock on the NYSE MKT (formerly NYSE Amex), raising $ 10,389 in net proceeds.

 

In February 2013, the Company closed an underwritten public offering of 5,600,000 shares of Common stock and Series 2013-A warrants to purchase up to an aggregate of 2,800,000 shares of Common stock. The shares and the warrants were sold together as a fixed combination, each consisting of one share of Common stock and a warrant to purchase one-half of a share of Common stock, at a price to the public of $ 5.25 per fixed combination. In March 2013, the underwriters exercised their option to purchase 470,000 shares of Common stock at $ 5.24 per share and 840,000 warrants to purchase 420,000 shares of Common stock at $ 0.01 per warrant. Gross proceeds were $ 31,871 or approximately $ 28,821 in net proceeds after deducting underwriting discounts and commissions of $ 2,550 and other offering costs of approximately $ 500. 

 

b.       The Company and the Subsidiary are in the development stage. As reflected in the accompanying financial statements, the Company incurred a loss for the six month period ended June 30, 2013 of $ 5,778 and had a negative cash flow from operating activities of $ 6,179 during the six month period ended June 30, 2013. The accumulated deficit as of June 30, 2013 is $ 70,354. The Company and the Subsidiary have not yet generated revenues from product sale. The Company previously generated income from partnering on development programs and expects to pursue its partnering activity. Management's plans also include seeking additional investments and commercial agreements to continue the operations of the Company and the Subsidiary.

 

The Company believes that the net proceeds of the underwritten public offering in February 2013, plus its existing cash and cash equivalents, should be sufficient to meet its operating and capital requirements through 2014.

 

c.       In May 2013, the Subsidiary received approval for an additional Research and Development program from the Office of the Chief Scientist in Israel ("OCS") for the period December 2012 through November 2013.  The approval allows for a grant of up to approximately $2,000 based on research and development expenses, not funded by others, of up to $3,660.  As of June 30, 2013, $1,218 has been recorded as grants receivable.  In July 2013, subsequent to the balance sheet date, $65 has been received.

 

 

NOTE 2:-      SIGNIFICANT ACCOUNTING POLICIES

         

The accompanying unaudited interim financial statements of the Company, have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission ("SEC") and should be read in conjunction with the audited financial statements and notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2012 ("2012 Form 10-K") as filed with the SEC. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements that would substantially duplicate the disclosure contained in the audited financial statements for the most recent fiscal year as reported in the 2012 Form 10-K, have been omitted.

 

 

NOTE 3:-      STOCKHOLDERS' EQUITY

 

a.       General:

 

In March 2013, the Compensation Committee of the Company's Board of Directors approved an amendment to the stock incentive plan increasing the number of shares of Common stock authorized for issuance thereunder to a total of 3,855,802 shares of Common stock, subject to stockholder approval. The Company's stockholders approved the amendment at the Company's annual meeting of stockholders on April 30, 2013.

 

b.       Issuance of stock options, warrants and restricted shares to employees and directors:

 

1.       In January 2013, the Company granted 15,000 options and 7,000 shares of restricted Common stock to each of 5 non-executive Directors of the Company. These shares of Common stock are restricted in that they may not be disposed of and are not entitled to dividends. 50% of these shares were vested the day after the grant and 50% will vest one year from the grant date. All of the options are for a term of 10 years, vest in three equal installments and have an exercise price of $ 7.25. These options and shares of restricted Common stock were granted under the stock incentive plan. The fair value of these options and shares of restricted Common stock at the grant date was $ 4.449 per option and $ 7.50 per share. The Company recorded compensation expenses in the amount of $ 246 in the six months ended June 30, 2013. 

 

2.       In March 2013, the Company granted 10,000 shares of restricted Common stock to an employee. These shares are restricted in that they may not be disposed of and are not entitled to dividends. These restrictions will be removed in relation to 5,000 shares of Common stock on each of March 28, 2014 and March 28, 2015. The shares were issued under the stock incentive plan.  The fair value of these shares of restricted Common stock at the grant date amounted to $ 49, and will be recognized as an expense using the straight line method.

 

A summary of the Company's activity for restricted shares granted to employees and directors is as follows:

 

 

 



 

Restricted shares


Six months ended

June 30, 2013




Number of restricted shares as of  December 31, 2012


60,357




Vested


(35,000)

Granted


45,000




Number of restricted shares as of  June 30, 2013


70,357

 

3.       In March 2013, an employee exercised options to purchase 3,500 shares of Common Stock at $ 3.64 per share or an aggregate exercise price of $ 13.

 

4.       In March 2013, the Company granted to employees of the Company options to purchase 110,000 shares of common stock exercisable at an exercise price of $ 4.85 per share. The options have a 10 year term and vest in four equal annual tranches. The options were granted under the stock incentive plan. The fair value of these options at the grant date was $ 290.

 

5.       In March 2013, the Company announced the appointment of a new member of the Board of Directors effective March 15, 2013.  In connection with the appointment, the new board member was awarded  stock options covering up to 300,000 shares of the Company's common stock, at a per share exercise price of $ 4.99, subject to approval by the NYSE MKT of an additional listing application covering the issuance of the shares underlying such options. On April 12, 2013, prior to approval by the NYSE MKT of the additional listing application, the Compensation Committee of the Company's Board of Directors determined instead to issue such options under the Company's stock incentive plan. 100,000 shares underlying such options vested immediately upon issuance in April 2013 and the remaining underlying shares will vest equally on each of March 15, 2014 and March 15, 2015, subject to continuous service through each vesting date.  The options may only be exercised for cash and will expire on March 15, 2018. The Company recorded related expenses in the amount of $ 322 in the six months ended June 30, 2013.

 

6.       A summary of the Company's activity for options and warrants granted to employees and directors is as follows:



Six months ended

June 30, 2013



Number of

options and warrants


Weighted

average

exercise price


Weighted average remaining contractual terms (years)


Aggregate intrinsic value price



















Outstanding at December 31, 2012


2,656,587


$     6.04














Granted


485,000


$     5.31














Expired/Forfeited


(28,994)


$     5.41














Exercised


(3,500)


$     3.64














Outstanding at June 30, 2013 


3,109,093


$     5.93


$    4.85


$     1,646  










Vested and expected to vest at  June 30, 2013


3,054,379


$     5.92


$     4.82


$     1,637










Exercisable at June  30, 2013 


2,014,806


$     5.46


$    3.86


$     1,481

 

As of June 30, 2013, there was $ 2,829 of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted to employees and directors. That cost is expected to be recognized over a weighted-average period of 1.7 years.

 

The aggregate intrinsic value represents the total intrinsic value (the difference between the Company's Common share fair value as of June 30, 2013 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on June 30, 2013.

 

Calculation of aggregate intrinsic value is based on the share price of the Company's Common stock as of June 30, 2013 ($ 3.80 per share, as reported on the NYSE MKT).

 

c.       Issuance of shares, stock options and warrants to consultants:

 

1.       In January 2013, the Company issued a total of 55,000 shares of Common stock to two consultants. Total compensation, measured as the grant date fair market value of the stock, amounted to $ 494 and was recorded as an operating expense in the Statement of Operations. As part of the agreement with the consultant, the Company has an obligation to issue an additional 25,000 shares for services received during the six month period ended June 30, 2013.

 

2.       In March 2013, the Company approved the grant to two consultants of warrants to purchase a total of 25,000 shares at an exercise price of $ 4.99 per share. The warrants have a five year term and vested immediately upon issuance in April 2013. Total compensation amounted to $ 80 and was recorded as an operating expense in the Statement of Operations.

 

3.       In June 2013, the Company entered into an agreement with a consultant for a period of 24 months.  Under the terms of the agreement, the Company will issue warrants to purchase 100,000 shares at an exercise price at the market price of the issue, with a five year term and will be immediately exercisable upon issuance.  Total compensation of $10 was recorded as an operating expense in the Statement of Operations.

 

4.       A summary of the Company's activity for warrants and options granted to consultants is as follows:

 



Six months ended

June 30, 2013



Number of

options and warrants


Weighted

average

exercise price


Weighted average remaining contractual terms (years)


Aggregate intrinsic value price










Outstanding at December 31, 2012


521,904


$      7.29


 










Granted


25,000


$      4.99














Outstanding at June 30, 2013 


546,904


$      7.17


$    4.34


$     7










Exercisable at June  30, 2013 


466,667


$      7.04


$    3.63


$     7

 

As of June 30, 2013, there was $ 382 of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted to consultants. That cost is expected to be recognized over a weighted-average period of one year.

 

Calculation of aggregate intrinsic value is based on the share price of the Company's Common stock as of June 30, 2013 ($ 3.80 per share, as reported on the NYSE MKT).

 

d.       Compensation expenses:

 

Compensation expense related to shares, warrants and options granted to employees, directors and consultants was recorded in the Statement of Operations in the following line items:

 


Six months ended

June 30,


Three months ended

June 30,


2013


2012


2013


2012









Research and development expenses

$      66


$    98


$    42


$     72

General and administrative expenses

2,011


1,849


580


1,626










$    2,077


$  1,947


$    622


$   1,698

 

e.       Summary of options and warrants:

 

A summary of all the options and warrants outstanding as of June 30, 2013 is presented in the following table:

 



As of June 30, 2013

Options / Warrants


Exercise

Price per

Share ($)



Options and

Warrants

Outstanding



Options and

Warrants

Exercisable



Weighted

Average

Remaining

Contractual

Terms (in years)














 

Options:

















Granted to Employees and Directors



2.49-3.14




499,806




294,556




6.2





3.64-4.99




453,629




105,057




6.0





5.13-7.25



163,967




37,240




8.4





8.19-14.50



1,109,451




695,713




4.6









2,226,853


1,132,566






 

Granted to Consultants
















 




4.20-5.34




53,988




43,801




3.0


 




6.65-8.19




119,916




61,158




7.8


 




14.50



 

 

 

11,292



 

 

 

-




8.6


 






185,196



104,959






 















 

Total Options






2,412,049




1,237,525






 

 

Warrants:
















Granted to Employees and Directors



2.49




882,240




882,240




2.8

 

















 

Granted to Consultants



3.19-4.01




61,370




61,370




2.9

 




4.99




31,635




31,635




4.4

 




5.50




67,230




67,230




0.4

 




9.17-11.16




201,473




201,473




4.0

 








361,708




361,708





















Granted to Investors



















0.0002




35,922




35,922




2.8

 




2.49




22,950




22,950




2.8

 


 4.54-6.00




3,233,521




3,233,521




2.7

 



6.78-8.34



4,678,550




4,678,550





4.4

 








7,970,943



7,970,943






















Total Warrants







9,214,891




9,214,891












 

Total  Option and  Warrants







11,626,940




10,452,416





 

 

NOTE 4:-      FAIR VALUE MEASUREMENTS

 

The Company classified certain warrants with down-round protection issued to the purchasers of convertible debentures in 2010 as a liability at their fair value according to ASC 815-40-15-7I. The liability in respect of these warrants will be remeasured at each reporting period until exercised or expired. Changes in the fair value of these warrants are reported in the statements of operations as financial income or expense.

 

The fair value of these warrants was estimated at June 30, 2013 and December 31, 2012 using the Binomial pricing model with the following assumptions:

 



June 30,

2013


December 31,

2012






Dividend yield


0%


0%

Expected volatility


79.14%


78.1%

Risk-free interest rate


0.43%


0.3%

Contractual life (in years)


2.23


2.7

 

The changes in level 3 liabilities measured at fair value on a recurring basis:



 



Fair value

of liability in respect of warrants




Balance as of December 31, 2011


$    478




Classification of liability in respect of warrants into equity due to the exercise of warrants


(883)

Change in the fair value of liability in respect of warrants


2,336




Balance as of December 31, 2012


1,931




Change in the fair value of liability in respect of warrants


(1,277)




Balance as of June 30, 2013 (unaudited)


$    654

 

NOTE 5:-      LOSS PER SHARE

 

Details in the computation of diluted loss per share:

 



Six months ended June 30,



2013


2012








Weighted average number of shares


Loss


Weighted average number of

shares


Loss



16,850,657


$    5,778 


9,893,072


$  9,658 

For the computation of basic loss














Effect of potential dilutive common shares issuable upon exercise of warrants classified as liability


45,084


$1,722 (**)


- (*)


- (*)










For the computation of diluted loss


16,895,741


$    7,055 


9,893,072


$  9,658 

 

 



Three months ended June 30,



2013


2012








Weighted average number of shares


Loss


Weighted average number of

shares


Loss



18,410,951


$   2,099 


10,032,760


$  6,912

For the computation of basic and diluted loss














 

(*)      Anti-dilutive.

(**)     Financial income resulted from changes in fair value of warrants classified as liability.

 

The total weighted average number of shares related to the outstanding options, warrants and restricted shares excluded from the calculations of diluted loss per share due to their anti-dilutive effect was 10,289,103 and 6,507,183 for the six months ended June 30, 2013 and 2012, respectively.

 

 

 

- - - - -

 


This information is provided by RNS
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