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This Form 6-K and the text
under the heading “Financial Summary - Second Quarter 2022 vs. Second Quarter 2021” in Exhibit 99.1 are incorporated by reference
into the Company’s Registration Statement on Form S-8 (Registration No. 333-206292 and 333-227441) and the Company’s
Registration Statement on Form F-3 (Registration No. 333-254766).
Notes
to Consolidated Financial Statements
Note
1 - Basis of presentation
Galmed
Pharmaceuticals Ltd. (the “Company”) was incorporated in Israel on July 31, 2013 and commenced operations on February 2,
2014. The Company holds a wholly-owned subsidiary, Galmed International Ltd., which was incorporated in Malta. Galmed International Ltd.
previously held a wholly-owned subsidiary, Galmed Medical Research Ltd., which was incorporated in Israel, and had been an inactive company
since 2015 and was liquidated in February 2019.
The
Company also holds two additional wholly-owned subsidiaries, Galmed Research and Development Ltd and Galtopa Therapeutics Ltd., both
of which are incorporated in Israel.
The
Company is a clinical-stage biopharmaceutical company primarily focused on the development of therapeutics for the treatment of liver
diseases and other fibrotic indications. The Company has an operating history limited to pre-clinical and clinical drug development.
To date, the Company has focused almost exclusively on developing its product candidates, Aramchol and Amilo-5MER. The Company funded
its research and development programs and operations to date primarily through proceeds from private placements and public offerings.
The Company currently has no products approved for marketing and has not generated any revenue from product sales to date. As of June
30, 2022, the Company had cash and cash equivalents of $2.0
million, restricted cash of $0.1
million, and marketable debt securities of $20.4
million.
The
Company has incurred operating losses in each year since inception. The Company’s loss attributable to holders of its ordinary
shares for the six months period ended June 30, 2022 was approximately $9.9 million. As of June 30, 2022, the Company had an accumulated
deficit of $178.1 million. Substantially all of its operating losses resulted from costs incurred in connection with the Company’s
development program and from general and administrative costs associated with its operations.
In May 2022, the Company announced that
the Company will expand into new anti-fibrotic indications to maximize the potential of Aramchol while at the same time discontinuing
the Open Label Part of the Armor Study having reached its objectives. The Company is implementing a cost reduction plan
and is evaluating the continuation of development of Aramchol and Amilo-5MER while it explores its strategic options alternatives
and its structuring to best optimize its resources to enhance shareholder value and achieve its goals.
The Company will need to raise substantial,
additional capital to fund its operations and to develop Aramchol and Amilo-5MER for, and beyond their current development
stage and any future commercialization, as well as any additional indications.
Based on the Company’s current operating
plan, the Company’s management currently estimates that its cash position will support its current research and development
and operations as currently conducted for more than 12 months from the date of issuance of these financial statements.
These
unaudited interim consolidated financial statements have been prepared as of June 30, 2022 and for the three and six months period then
ended. Accordingly, certain information and footnote disclosures normally included in annual financial statements prepared in accordance
with U.S. GAAP have been omitted. These unaudited interim consolidated financial statements should be read in conjunction with the audited
financial statements and the accompanying notes of the Company for the year ended December 31, 2021 that are included in the Company’s
Annual Report on Form 20-F, filed with the Securities and Exchange Commission on May 2, 2022 (the “Annual Report”). The results
of operations presented are not necessarily indicative of the results to be expected for the year ending December 31, 2021.
Note
2 - Summary of significant accounting policies
The
significant accounting policies that have been applied in the preparation of the unaudited consolidated interim financial statements
are identical to those that were applied in preparation of the Company’s interim most recent annual financial statements in connection
with its Annual Report on Form 20-F, with the exception of the following:
In May 2021, the Financial Accountings
Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2021-04, “Earnings Per Share (Topic
260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives
and Hedging—Contracts in Entity’s Own Equity (Subtopic 815- 40): Issuer’s Accounting for Certain Modifications or Exchanges
of Freestanding Equity-Classified Written Call Options” (“ASU 2021-04”). The guidance became effective for the Company
on January 1, 2022. The Company adopted the guidance on January 1, 2022 and has concluded the adoption did not have a material impact
on its unaudited consolidated financial statements.
Note
3 - Stockholders’ Equity
|
1. |
In
February 2022, the Company granted options to purchase 40,000 ordinary shares of the Company to one of its officers. The options
are exercisable at $1.61 per share, have a 10-year term and vest over a period of four years. |
|
|
|
|
2. |
On
June 29, 2022, the Company’s shareholders approved an increase in the Company’s authorized share capital
from NIS 500,000,
divided into 50,000,000 ordinary
shares (par value NIS 0.01
each) to NIS 3,000,000,
divided into 300,000,000 ordinary
shares and corresponding amendment to the Company’s Articles of Association. |
Management’s
Discussion and Analysis of Financial Condition and Results of Operations
All
references to “we,” “us,” “our,” “the Company” and “our Company”, in this
Form 6-K are to Galmed Pharmaceuticals Ltd. and its subsidiaries, unless the context otherwise requires. All references to “shares”
or “ordinary shares” are to our ordinary shares, NIS 0.01 nominal par value per share. All references to “Israel”
are to the State of Israel. “U.S. GAAP” means the generally accepted accounting principles of the United States. Unless otherwise
stated, all of our financial information presented in this Form 6-K has been prepared in accordance with U.S. GAAP. Any discrepancies
in any table between totals and sums of the amounts and percentages listed are due to rounding. Unless otherwise indicated, or the context
otherwise requires, references in this Form 6-K to financial and operational data for a particular year refer to the fiscal year of our
company ended December 31 of that year.
Our
reporting currency and financial currency is the U.S. dollar. In this Form 6-K, “NIS” means New Israeli Shekel, and “$,”
“US$” and “U.S. dollars” mean United States dollars.
Cautionary
Note Regarding Forward-Looking Statements
This
Form 6-K contains forward-looking statements about our expectations, beliefs or intentions regarding, among other things, our product
development efforts, business, financial condition, results of operations, strategies or prospects. In addition, from time to time, we
or our representatives have made or may make forward-looking statements, orally or in writing. Forward-looking statements can be identified
by the use of forward-looking words such as “believe,” “expect,” “intend,” “plan,” “may,”
“should,” “anticipate,” “could,” “might,” “seek,” “target,” “will,”
“project,” “forecast,” “continue” or their negatives or variations of these words or other comparable
words or by the fact that these statements do not relate strictly to historical matters. These forward-looking statements may be included
in, among other things, various filings made by us with the SEC, press releases or oral statements made by or with the approval of one
of our authorized executive officers. Forward-looking statements relate to anticipated or expected events, activities, trends or results
as of the date they are made. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently
subject to risks and uncertainties that could cause our actual results to differ materially from any future results expressed or implied
by the forward-looking statements. Many factors could cause our actual activities or results to differ materially from the activities
and results anticipated in forward-looking statements, including, but not limited to, the factors summarized below:
|
● |
the
timing and cost of our pivotal Phase 3 ARMOR trial, or the ARMOR Study, for our product candidate, Aramchol, or for any other pre-clinical
or clinical trials; |
|
|
|
|
● |
completion
and receiving favorable results of the ARMOR Study for Aramchol or any other pre-clinical or clinical trial; |
|
|
|
|
● |
the
impact of the COVID-19 pandemic on our operations; |
|
|
|
|
● |
regulatory
action with respect to Aramchol or any other product candidate by the U.S. Food and Drug Administration, or the FDA, or the European
Medicines Authority, or EMA, including but not limited to acceptance of an application for marketing authorization, review and approval
of such application, and, if approved, the scope of the approved indication and labeling; |
|
|
|
|
● |
the
commercial launch and future sales of Aramchol and any future product candidates; |
|
● |
our
ability to comply with all applicable post-market regulatory requirements for Aramchol or any other product candidate in the countries
in which we seek to market the product; |
|
|
|
|
● |
our
ability to achieve favorable pricing for Aramchol or any other product candidate; |
|
|
|
|
● |
our
expectations regarding the commercial market for non-alcoholic steato-hepatitis, or NASH, in patients or any other targeted indication; |
|
|
|
|
● |
third-party
payor reimbursement for Aramchol or any other product candidate; |
|
|
|
|
● |
our
estimates regarding anticipated capital requirements and our needs for additional financing; |
|
|
|
|
● |
market
adoption of Aramchol or any other product candidate by physicians and patients; |
|
|
|
|
● |
the
timing, cost or other aspects of the commercial launch of Aramchol or any other product candidate; |
|
|
|
|
● |
our
ability to obtain and maintain adequate protection of our intellectual property; |
|
|
|
|
● |
the
possibility that we may face third-party claims of intellectual property infringement; |
|
|
|
|
● |
our
ability to manufacture our product candidates in commercial quantities, at an adequate quality or at an acceptable cost; |
|
|
|
|
● |
our
ability to establish adequate sales, marketing and distribution channels; |
|
|
|
|
● |
intense
competition in our industry, with competitors having substantially greater financial, technological, research and development, regulatory
and clinical, manufacturing, marketing and sales, distribution and personnel resources than we do; |
|
|
|
|
● |
the
development and approval of the use of Aramchol or any other product candidate for additional indications or in combination therapy;
|
|
|
|
|
● |
our
expectations regarding licensing, acquisitions and strategic operations; |
|
|
|
|
● |
our
ability to maintain the listing of our common stock on The Nasdaq Capital Market; and |
|
|
|
|
● |
our
ability to identify, evaluate and complete any strategic alternative that yields value for our shareholders. |
We
believe these forward-looking statements are reasonable; however, these statements are only current predictions and are subject to known
and unknown risks, uncertainties and other factors that may cause our or our industry’s actual results, levels of activity, performance
or achievements to be materially different from those anticipated by the forward-looking statements. We discuss many of these risks in
our Annual Report on Form 20-F for the year ended December 31, 2021 filed with the SEC on May 2, 2022 and in our Report on Form 6-K filed
with the SEC on May 17, 2022 in greater detail under the heading “Risk Factors” and elsewhere in the Annual Report and this
Form 6-K. Given these uncertainties, you should not rely upon forward-looking statements as predictions of future events.
All
forward-looking statements attributable to us or persons acting on our behalf speak only as of the date hereof and are expressly qualified
in their entirety by the cautionary statements included in this report. We undertake no obligations to update or revise forward-looking
statements to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events. In
evaluating forward-looking statements, you should consider these risks and uncertainties.
Overview
We are a clinical-stage
biopharmaceutical company focused on the development of Aramchol an oral therapy for the treatment of NASH, fibrosis and
other fibrotic indications. We are also collaborating with the Hebrew University in the development of Amilo-5MER, a 5 amino
acid synthetic peptide.
We are in the process of
discontinuing the Open Label Part of the ARMOR Study having reached its objectives while refocusing our research and development
on advancing Aramchol for new anti-fibrotic indications. We have also been implementing a cost reduction plan that includes reduction
in headcount and full-time positions and discontinuing any non-essential research and development activities. We are currently evaluating
the continuation of development of Aramchol and Amilo-5MER and are unable to estimate if and when we will initiate the registrational
part of the ARMOR Study.
We are in the process of
exploring our strategic alternatives and our structuring to best optimize our resources to enhance shareholder value and achieve
our goals. We have not stated a definitive timeline for completion of the evaluation process and there can be no assurance that the
evaluation process will result in our pursuing any strategic alternative, or that a strategic alternative, if any, would be completed
successfully or at all. There can be no assurance that the review will result in any transaction or other strategic change or outcome.
We do not intend to comment further until we determine that further disclosure is appropriate or necessary.
Financial
Overview
To
date, we have funded our operations primarily through proceeds from private placements and public offerings. At June 30, 2022, we had
current assets of $23.1 million, which includes cash and cash equivalents of $2.0 million, marketable debt securities of $20.4 million,
other receivables of $0.6 million and restricted cash of $0.1 million. This compares with current assets of $36.0 million at December
31, 2021, which includes cash and cash equivalents of $2.9 million, marketable debt securities of $31.9 million, other receivables if
$1.1 million and restricted cash of $0.1 million. Although we provide no assurance, we believe that such existing funds will be sufficient
to continue our business and operations as currently conducted for more than 12 months from the date of issuance of this Form 6-K. However,
we will continue to incur operating losses, which may be substantial over the next several years, and we expect that we will need to
obtain additional funds to further develop our research and development programs.
Costs
and Operating Expenses
Our
current costs and operating expenses consist of two components: (i) research and development expenses; and (ii) general and administrative
expenses.
Research
and Development Expenses
Our research and development
expenses consist primarily of outsourced development expenses, salaries and related personnel expenses and fees paid to external service
providers, patent-related legal fees, costs of pre-clinical studies and clinical trials and drug and laboratory supplies. We account
for all research and development expenses as they are incurred. We expect our research and development expense to remain our primary
expense in the near future as we wind down our Open Label Study while refocusing our research and development on advancing Aramchol
for new anti-fibrotic indications. Increases or decreases in research and development expenditures are primarily attributable to
the number and/or duration of the pre-clinical and clinical
studies that we conduct.
As
part of our cost reduction plan we have reduced headcount and full-time positions and discontinued any non-essential research and
development activities and we are currently evaluating the continuation of development of Aramchol and Amilo-5MER while we explore
strategic alternatives. Due to the inherently
unpredictable nature of pre-clinical and clinical development studies and unpredictability of our evaluation of strategic
alternatives, we are unable to estimate with any certainty the costs we will incur in the continued development of Aramchol and
Amilo-5MER. Clinical development timelines, the probability of success and development costs can differ materially from
expectations. We currently expect to decrease our research and development expenses as we evaluate our strategic
alternatives.
The lengthy process of completing
clinical trials and seeking regulatory approval for Aramchol and Amilo-5MER requires the expenditure of substantial resources.
Any failure or delay in completing clinical trials, or in obtaining regulatory approvals, could cause a delay in generating product revenue
and cause our research and development expenses to increase and, in turn, have a material adverse effect on our operations. Because of
the factors set forth above, we are not able to estimate with any certainty when we would recognize any net cash inflows from our projects.
General
and Administrative Expenses
General
and administrative expenses consist primarily of compensation for employees in executive and operational roles, including finance/accounting,
legal and other operating positions in connection with our activities. Our other significant general and administrative expenses include
non-cash stock-based compensation costs and facilities costs (including the rental expense for our offices in Tel Aviv, Israel), professional
fees for outside accounting and legal services, travel costs, investors relations, insurance premiums and depreciation.
We anticipate a reduction
in our general and administrative expenses as a result of our cost reduction plan, that includes reduction of headcount and full-time
positions although this may be offset by increases in professional and advisory fees as we evaluate our strategic alternatives.
Financial
Income, Net
Our
financial income, net consists mainly of interest income from marketable debt securities and foreign currency gains. Our financial expense
consists of fees associated with banking activities and losses from realization of marketable debt securities.
Results
of Operations
The
table below provides our results of operations for the three and six months ended June 30, 2022 as compared to the three and six months
ended June 30, 2021.
| |
Three
months ended June 30, | | |
Six
months ended June 30, | |
| |
2022 | | |
2021 | | |
2022 | | |
2021 | |
| |
(unaudited) | | |
(unaudited) | | |
(unaudited) | | |
(unaudited) | |
| |
(In
thousands, except per share data) | |
Research
and development expenses | |
| 2,580 | | |
| 7,076 | | |
| 7,376 | | |
| 14,416 | |
General
and administrative expenses | |
| 1,150 | | |
| 1,376 | | |
| 2,446 | | |
| 3,128 | |
Total
operating expenses | |
| 3,730 | | |
| 8,412 | | |
| 9,822 | | |
| 17,544 | |
Financial
income, net | |
| 4 | | |
| (16 | ) | |
| 55 | | |
| (243 | ) |
Net
loss | |
| 3,734 | | |
| 8,396 | | |
| 9,877 | | |
| 17,301 | |
Other
comprehensive loss: | |
| 366 | | |
| 34 | | |
| 811 | | |
| 164 | |
Comprehensive
loss | |
| 4,100 | | |
| 8,430 | | |
| 10,688 | | |
| 17,465 | |
Basic
and diluted net loss per share | |
$ | 0.15 | | |
$ | 0.33 | | |
$ | 0.39 | | |
$ | 0.72 | |
Research
and Development Expenses
Our
research and development expenses amounted to approximately $2.6 million and approximately $7.4 million during the three and six months
ended June 30, 2022, respectively, representing a decrease of approximately $4.4 million, or 63%, and approximately $7.0 million, or
49%, respectively, compared to approximately $7.0 million and approximately $14.4 million, respectively, for the comparable period in
2021.
The decrease during the three
months ended June 30, 2022 primarily resulted from a decrease in clinical trial expenses in connection with the discontinuation of
the Open Label Party of the ARMOR Study of approximately $3.5 million. The decrease during the six months ended June 30, 2021 primarily
resulted from a decrease in clinical trial expenses in connection with the discontinuation of the Open Label Part of the ARMOR
Study of approximately $3.9 million as well a decrease in drug development expenses in of approximately $1.7 million.
General
and Administrative Expenses
Our
general and administrative expenses amounted to approximately $1.1 million and approximately $2.4 million during the three and six months
ended June 30, 2022, respectively, representing a decrease of approximately $0.3 million, or 21%, and approximately $0.7 million, or
23%, respectively, to approximately $1.4 million and approximately $3.1 million, respectively, for the comparable period in 2021.
The
decrease in general and administrative expenses for the three months ended June 30, 2022 resulted primarily from a decrease in the professional
services expenses of approximately $0.1 million. The decrease in general and administrative expenses for the six months ended June 30,
2022 resulted primarily from a decrease in salaries and benefits expenses of approximately $0.6 million.
Operating
Loss
As
a result of the foregoing, for the three and six months ended June 30, 2022, our operating loss was approximately $3.7 million and approximately
$9.8 million, respectively, representing a decrease of $4.7 million, or 56%, and a decrease of $7.7 million, or 44%, respectively, as
compared to approximately $8.4 million and approximately $17.5 million, respectively, for the comparable period in 2021.
Net
Loss
As
a result of the foregoing, for the three and six months ended June 30, 2022, our net loss was approximately $3.7 million and approximately
$9.9 million, respectively, representing a decrease of $4.7 million, or 56%, and a decrease of $7.4 million, or 43%, respectively, as
compared to approximately $8.4 million and approximately $17.3 million, respectively, for the comparable period in 2021.
Other Comprehensive Loss
Our
other comprehensive loss amounted to approximately $0.4 million and approximately $0.8 million during the three and six months ended
June 30, 2022, respectively, as compared to approximately $0.04 million and approximately $0.2 million, respectively, for the comparable
period in 2021.
The
loss is comprised from devaluation of 3.6% and 5.5%, respectively of our investment portfolio, performing superior to the broader mark to market losses which were recorded in the financial markets
due to the recent increases in interest rates.
Liquidity
and Capital Resources
To
date, we have funded our operations primarily through proceeds from private placements and public offerings and we have incurred substantial
losses since our inception. As of June 30, 2022, we had an accumulated deficit of approximately $178.1 million and positive working capital
(current assets less current liabilities) of approximately $20.4 million. We expect that operating losses will continue for the foreseeable
future.
As
of June 30, 2022, we had cash and cash equivalents of approximately $2.0 million, restricted cash of approximately $0.1 million, and
marketable debt securities of approximately $20.4 million invested in accordance with our investment policy, totaling approximately $22.5
million, as compared to approximately $2.9 million, $0.1 million and $31.9 million as of December 31, 2021, respectively, totaling approximately
$34.9 million. The decrease is mainly attributable to the $11.4 million negative cash flow from operating activities during the six months
ended June 30, 2022.
We
had negative cash flow from operating activities of approximately $11.4 million for the six months ended June 30, 2022, as compared to
negative cash flow from operating activities of approximately $16.9 million for the six months ended June 30, 2021. The negative cash
flow from operating activities for the six months ended June 30, 2022 is mainly attributable to our net loss of approximately $9.9 million,
as well as a decrease in trade payables of $2.8 million.
We
had positive cash flow from investing activities of approximately $10.5 million for the six months ended June 30, 2022, as compared to
a positive cash flow from investing activities of approximately $0.5 million for the six months ended June 30, 2021. The positive cash
flow from investing activities for the six months ended June 30, 2022 was primarily due to withdrawal from available for sale securities.
We
had no cash flow from financing activities for the six months ended June 30, 2022, as compared to a positive cash flow from financing
activities of approximately $17.4 million for the six months ended June 30, 2020.
On
March 26, 2021, we entered into a Sales Agreement with Cantor Fitzgerald & Co. and Canaccord Genuity LLC, as sales agents, pursuant
to which we may offer and sell ordinary shares “at the market” having an aggregate offering price of up to $50.0 million
from time to time through the sales agents subject to the limits of General Instruction I.B.5 to Form F-3, also known as the baby shelf
rule. Subsequent to the balance sheet date, we sold 114,982 ordinary shares under the ATM program for total net proceeds of approximately
$0.1 million.
Although
we provide no assurance, we believe that our existing funds will be sufficient to continue our business and operations as currently
conducted for more than 12 months from the date of issuance of this Report on Form 6-K. However, additional funding will be
necessary to fund our ARMOR Study, our Amilo-5MER program and ongoing research and development work, to advance our product
candidates through regulatory approval and into commercialization, if approved and the evaluation of our strategic alternatives. We may
obtain additional funding through debt or equity financings, governmental grants or through entering into collaborations, strategic
alliances or license agreements to increase the funds available to support our operating and capital needs. Although we have been
successful in raising capital in the past, there is no assurance that we will be successful in obtaining additional financing on
terms acceptable to us. Specifically, the general downturn in global financial markets has limited our
ability to access capital, which is negatively affecting our liquidity. If funds are not available, we may be required
to further delay, reduce the scope of or eliminate research or development plans for, or commercialization efforts with
respect to Aramchol, Amilo-5MER and/or our other pre-clinical programs. This may raise substantial doubts about our ability to
continue as a going concern.
The
extent of our future capital requirements will depend on many other factors, including:
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the
progress and costs of our pre-clinical studies and other research and development activities; |
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the
impact of the COVID-19 pandemic on our operations; |
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the
scope, prioritization and number of our clinical trials and other research and development programs; |
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the
amount of revenues and contributions we receive under future licensing, development and commercialization arrangements with respect
to Aramchol or any other product candidtate; |
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the
costs of the development and expansion of our operational infrastructure; |
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the
costs and timing of obtaining regulatory approval for Aramchol, Amilo-5MER or any other product candidate; |
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the
ability of us, or our collaborators, to achieve development milestones, marketing approval and other events or developments under
our potential future licensing agreements; |
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the
costs of filing, prosecuting, enforcing and defending patent claims and other intellectual property rights; |
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the
costs and timing of securing manufacturing arrangements for clinical or commercial production; |
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the
costs of contracting with third parties to provide sales and marketing capabilities for us; |
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the
costs of acquiring or undertaking development and commercialization efforts for any future products, product candidates or platforms; |
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the
magnitude of our general and administrative expenses; |
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any
cost that we may incur under future in- and out-licensing arrangements relating to Aramchol, Amilo-5MER or any other product candidate;
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market
conditions; |
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our
ability to maintain the listing of our common stock on The Nasdaq Capital Market; and |
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our
ability to identify, evaluate and complete any strategic alternative that yields value for our shareholders. |
Trend
Information
We
are a development stage company, and it is not possible for us to predict with any degree of accuracy the outcome of our research, development
or commercialization efforts. As such, it is not possible for us to predict with any degree of accuracy any significant trends, uncertainties,
demands, commitments or events that are reasonably likely to have a material effect on our net loss, liquidity or capital resources,
or that would cause financial information to not necessarily be indicative of future operating results or financial condition. However,
to the extent possible, certain trends, uncertainties, demands, commitments and events are in this “Management’s Discussion
and Analysis of Financial Condition and Results of Operations”.
Controls
and Procedures
As
a “foreign private issuer”, we are only required to conduct the evaluations required by Rules 13a-15(b) and 13a-15(d) of
the Exchange Act as of the end of each fiscal year and therefore have elected not to provide disclosure regarding such evaluations at
this time.
Risks
Factors
Any
investment in our business involves a high degree of risk. Before making an investment decision, you should carefully consider the information
we include in this Report on Form 6-K, including our unaudited consolidated financial statements and accompanying notes, and the additional
information in the other reports we file with the Securities and Exchange Commission along with the risks described in our Annual Report
on Form 20-F for the fiscal year ended December 31, 2021 and our Report on Form 6-K filed with the Securities and Exchange Commission
on May 17, 2022. These risks may result in material harm to our business and our financial condition and results of operations.
In this event, the market price of our ordinary shares may decline and you could lose part or all of your investment. We have described
below those risks that reflect substantive changes from, or additions to, the risks described in our Annual Report on Form 20-F for the
fiscal year ended December 31, 2021 and our Report on Form 6-K filed with the Securities and Exchange Commission on May 17, 2022.
If
we fail to comply with the continued listing requirements of the Nasdaq Capital Market, our ordinary shares may be delisted and the price
of our ordinary shares and our ability to access the capital markets could be negatively impacted.
On
June 15, 2022, we were notified by the Nasdaq Stock Market, LLC, or Nasdaq, that we were not in compliance with the minimum bid price
requirements set forth in Nasdaq Listing Rule 5550(a)(2) for continued listing on the Nasdaq Capital Market. Nasdaq Listing Rule 5550(a)(2)
requires listed securities to maintain a minimum bid price of $1.00 per share, and Nasdaq Listing Rule 5810(c)(3)(A) provides that a
failure to meet the minimum bid price requirement exists if the deficiency continues for a period of 30 consecutive business days. The
notification provided that we had 180 calendar days, or until December 12, 2022, to regain compliance with Nasdaq Listing Rule 5550(a)(2).
To regain compliance, the bid price of our ordinary shares must have a closing bid price of at least $1.00 per share for a minimum of
10 consecutive business days. If we do not regain compliance by December 12, 2022, we may then be eligible for an additional time 180
days if we meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for
The Nasdaq Capital Market, with the exception of the bid price requirement, and will need to provide written notice of its intention
to cure the deficiency during the second compliance period. If we do not qualify for the second compliance period or fail to regain compliance
during the second 180-day period, then Nasdaq will notify us of its determination to delist our ordinary shares, at which point we will
have an opportunity to appeal the delisting determination to a Hearings Panel. A delisting of our ordinary shares from Nasdaq could materially
reduce the liquidity of our ordinary shares and result in a corresponding material reduction in the price of our ordinary shares. In
addition, delisting could harm our ability to raise capital through alternative financing sources on terms acceptable to us, or at all,
and may result in the potential loss of confidence by investors, employees and fewer business development opportunities and strategic
alternatives.
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