Entera Bio Ltd. - 1638097

Entera Bio Ltd. - 1638097 - 2024

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

ACT OF 1934

For the quarterly period ended June 30, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

ACT OF 1934

For the transition period from ___________to ___________

Commission file number: 001-38556

ENTERA BIO LTD.

(Exact name of Registrant as specified in its charter)

Israel		Not applicable
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

Kiryat Hadassah Minrav Building – Fifth Floor
Jerusalem, Israel		9112002
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: 972-2-532-7151

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class		Trading Symbol		Name of Each Exchange on Which Registered
Ordinary Shares, par value NIS 0.0000769 per share		ENTX		Nasdaq Capital Market

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-Accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)

Yes ☐ No ☒

As of August 5, 2024, the registrant had 36,324,579 ordinary shares, par value NIS 0.0000769 per share (“Ordinary Shares”) outstanding.

Table of Contents

		Page
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS		1
PART I – FINANCIAL INFORMATION		3

Item 1.	Financial Statements	3
	Condensed Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023 (unaudited)	4
	Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2024 and 2023 (unaudited)	5
	Condensed Consolidated Statement of Changes in Shareholders’ Equity for the three and six months ended June 30, 2024 and 2023 (unaudited)	6
	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2024 and 2023 (unaudited)	7
	Notes to Condensed Consolidated Financial Statements (unaudited)	8
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	22
Item 4.	Controls and Procedures	22

PART II – OTHER INFORMATION		22

Item 1.	Legal Proceedings	22
Item 1A.	Risk Factors	22
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	24
Item 3.	Defaults Upon Senior Securities	24
Item 4.	Mine Safety Disclosures	24
Item 5.	Other Information	24
Item 6.	Exhibits	24

SIGNATURES		25

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this “Quarterly Report”) contains “forward-looking statements,” as that term is defined under the Private Securities Litigation Reform Act of 1995 (“PSLRA”), Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Various statements in this Quarterly Report are “forward-looking statements” within the meaning of the PSLRA and other U.S. Federal securities laws. In addition, historic results of scientific research and clinical and preclinical trials do not guarantee that the conclusions of future research or trials would not be different, and historic results referred to in this Quarterly Report may be interpreted differently in light of additional research and clinical and preclinical trial results. Forward-looking statements include all statements that are not historical facts. We have based these forward-looking statements largely on our management’s current expectations and future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. Forward-looking statements involve substantial risks and uncertainties. All statements, other than statements of historical facts, included in this Quarterly Report regarding our strategy, future operations, future financial position, projected costs, prospects, plans and objectives of management are forward-looking statements. These statements are subject to risks and uncertainties and are based on information currently available to our management. Words such as, but not limited to, “anticipate,” “believe,” “contemplates,” “continue,” “could,” “design,” “estimate,” “expect,” “intend,” “likely,” “may,” “ongoing,” “plan,” “potential,” “predict,” “project,” “will,” “would,” “seek,” “should,” “target,” or the negative of these terms and similar expressions or words, identify forward-looking statements. The events and circumstances reflected in our forward-looking statements may not occur and actual results could differ materially from those projected in our forward-looking statements. These factors include those described in “Item 1A-Risk Factors” of this Quarterly Report and in “Item 1A-Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Annual Report”). Meaningful factors which could cause actual results to differ from those expressed in forward-looking statements include, but are not limited to:

•

Clinical development involves a lengthy and expensive process with uncertain outcomes. We may incur additional costs and experience delays in developing and commercializing or be unable to develop or commercialize our current and future product candidates;

•

The regulatory approval processes of the U.S. Food and Drug Administration (“FDA”) and comparable foreign authorities are lengthy, time-consuming and inherently unpredictable, and if we are ultimately unable to obtain regulatory approval for our product candidates, our business will be materially harmed;

•

Preclinical development is uncertain. Our preclinical programs may experience delays or may never advance to clinical trials, which would adversely affect our ability to obtain regulatory approvals or commercialize these programs on a timely basis or at all;

•

Positive results from preclinical studies and early-stage clinical trials may not be predictive of future results. Initial positive results in any of our clinical trials may not be indicative of results obtained when the trial is completed or in later stage trials;

•

The scope, progress and costs of developing our product candidates such as EB613 for Osteoporosis and EB612 or other oral peptides for Hypoparathyroidism may alter over time based on various factors such as regulatory requirements, collaboration agreements, the competitive environment and new data from pre-clinical and clinical studies;

•

The accuracy of our estimates regarding expenses, capital requirements, the sufficiency of our cash resources and the need for additional financing;

•

Our ability to continue as a going concern absent access to sources of liquidity;

•

Our ability to raise additional funds or consummate strategic partnerships to offset additional required capital to pursue our business objectives, which may not be available on acceptable terms or at all. A failure to obtain this additional capital when needed, or failure to consummate strategic partnerships, could delay, limit or reduce our product development, and other operations;

•

Even if a current or future product candidate receives marketing approval, it may fail to achieve the degree of market acceptance by physicians, patients, third-party payors and others in the medical community necessary for commercial success;

•

The successful commercialization of our product candidates, if approved, will depend in part on the extent to which governmental authorities and third-party payors establish adequate coverage and reimbursement levels and pricing policies;

•

Failure to obtain or maintain coverage and adequate reimbursement for our product candidates, if approved, could limit our ability to market those products and decrease our ability to generate revenue;

•

If we are unable to obtain and maintain patent protection for our product candidates, or if the scope of the patent protection obtained is not sufficiently broad or robust, our competitors could develop and commercialize products similar or identical to ours, and our ability to successfully commercialize our product candidates may be adversely affected;

•

Because we do not anticipate paying any cash dividends on our capital stock in the foreseeable future, capital appreciation, if any, will be your sole source of gain;

•

Our reliance on third parties to conduct our clinical trials and on third-party suppliers to supply or produce our product candidates;

•

Our interpretation of FDA feedback and guidance and how such guidance may impact our clinical development plan;

•

Our ability to use and expand our drug delivery technology (“N-Tab™”) to additional product candidates;

•

Our operation as a development stage company with limited operating history and a history of operating losses and our ability to fund our operations going forward;

•

Our competitive position with respect to other products on the market or in development for the treatment of osteoporosis, hypoparathyroidism, short bowel syndrome, obesity, metabolic conditions and other disease categories we pursue;

•

Our ability to establish and maintain development and commercialization collaborations;

•

Our ability to manufacture and supply enough material to support our clinical trials and any potential future commercial requirements;

•

The size of any market we may target and the adoption of our product candidates, if approved, by physicians and patients;

•

Our ability to obtain, maintain and protect our intellectual property and operate our business without infringing, misappropriating, or otherwise violating any intellectual property rights of others;

•

Our ability to retain key personnel and recruit additional qualified personnel;

•

Our ability to comply with laws and regulations that currently apply or become applicable to our business in Israel, the United States and internationally;

•

Our ability to manage growth; and

•

The duration and intensity of the ongoing Israel-Hamas War, as well as the developing conflict with Iran and its proxies in the Middle East, and their impact on our operations and workforce, including our research and development and clinical trials.

All forward-looking statements contained in this Quarterly Report are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. We caution investors not to rely heavily on the forward-looking statements we make. Except as required by applicable law, we are under no duty, and expressly disclaim any obligation, to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. You are advised, however, to consult any further disclosures we make on related subjects in any annual, quarterly or current reports that we file with the Securities and Exchange Commission (“SEC”).

We encourage you to read Part II, Item 1A of this Quarterly Report and Part I, Item 1A of our 2023 Annual Report, each entitled “Risk Factors,” and Part I, Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operation—Liquidity and Capital Resources” of this Quarterly Report for additional discussion of the risks and uncertainties associated with our business. There can be no assurance that the actual results or developments anticipated by us will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, us. Therefore, no assurance can be given that the outcomes stated in such forward-looking statements and estimates will be achieved.

PART I.

ITEM 1. FINANCIAL STATEMENTS

ENTERA BIO LTD.

UNAUDITED CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2024

TABLE OF CONTENTS

	Page
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:
Condensed Consolidated Balance Sheets (unaudited)	4
Condensed Consolidated Statements of Operations (unaudited)	5
Condensed Consolidated Statements of Changes in Shareholders' Equity (unaudited)	6
Condensed Consolidated Statements of Cash Flows (unaudited)	7
Notes to the Consolidated Financial Statements (unaudited)	8

ENTERA BIO LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS

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

(Unaudited)

Assets	June 30,			December 31,
	2024			2023
CURRENT ASSETS:
Cash and cash equivalents		9,056			11,019
Accounts receivable		57			-
Other current assets		482			238
TOTAL CURRENT ASSETS		9,595			11,257

NON-CURRENT ASSETS:
Property and equipment, net		76			100
Operating lease right-of-use assets		344			388
Deferred income taxes		14			14
Funds in respect of employee rights upon retirement		6			6
TOTAL NON-CURRENT ASSETS		440			508
TOTAL ASSETS		10,035			11,765
Liabilities and shareholders' equity
CURRENT LIABILITIES:
Accounts payable		69			83
Accrued expenses and other payables		1,070			874
Current maturities of operating lease		155			134
TOTAL CURRENT LIABILITIES		1,294			1,091
NON-CURRENT LIABILITIES:
Operating lease liabilities		179			256
Liability for employee rights upon retirement		30			32
TOTAL NON-CURRENT LIABILITIES		209			288
TOTAL LIABILITIES		1,503			1,379
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Ordinary Shares, NIS 0.0000769 par value: Authorized - as of June 30, 2024 and December 31, 2023, 140,010,000 shares; issued and outstanding as of June 30, 2024 and December 31, 2023, 36,314,579 and 35,476,341 shares, respectively		1			1
Additional paid-in capital		117,038			114,730
Accumulated other comprehensive income		41			41
Accumulated deficit		(108,548	)		(104,386	)
TOTAL SHAREHOLDERS' EQUITY		8,532			10,386
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		10,035			11,765

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

ENTERA BIO LTD.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

(Unaudited)

	Six Months Ended June 30,						Three Months Ended June 30,
	2024			2023			2024			2023

REVENUES		57			-			57			-
COST OF REVENUES		48			-			48			-
GROSS PROFIT		9			-			9			-
OPERATING EXPENSES:
Research and development		1,821			2,140			1,086			1,209
General and administrative		2,415			2,429			1,088			1,135
Other income		-			(27	)		-			(14	)
TOTAL OPERATING EXPENSES		4,236			4,542			2,174			2,330
OPERATING LOSS		4,227			4,542			2,165			2,330

FINANCIAL INCOME, NET		(65	)		(27	)		(20	)		(5	)
NET LOSS		4,162			4,515			2,145			2,325

LOSS PER SHARE BASIC AND DILUTED		0.11			0.16			0.06			0.08

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING USED IN COMPUTATION OF BASIC AND DILUTED LOSS PER SHARE		36,913,725			28,811,162			37,090,160			28,812,375

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

ENTERA BIO LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

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

(Unaudited)

	Ordinary shares
	Number of shares issued		Amounts		Additional paid-in capital		Accumulated other Comprehensive income		Accumulated deficit			Total
BALANCE AT JANUARY 1, 2024		35,476,341		1		114,730		41		(104,386	)		10,386
Net loss		-		-		-		-		(4,162	)		(4,162	)
Exercise of warrants to Ordinary Shares		89,820		*		90		-		-			90
Exercise of options to Ordinary Shares		447,292		*		555		-		-			555
Issuance of Ordinary Shares under the ATM program, net of issuance costs		236,126		*		601		-		-			601
Vested restricted share units		65,000		*		-		-		-			-
Share-based compensation		-		-		1,062		-		-			1,062
BALANCE AT JUNE 30, 2024		36,314,579		1		117,038		41		(108,548	)		8,532

BALANCE AT APRIL 1, 2024		35,526,281		1		115,224		41		(106,403	)		8,863
Net loss		-		-		-		-		(2,145	)		(2,145	)
Exercise of warrants to Ordinary Shares		59,880		*		60		-		-			60
Exercise of options to Ordinary Shares		447,292		*		555		-		-			555
Issuance of Ordinary Shares under the ATM program, net of issuance costs		236,126		*		601		-		-			601
Vested restricted share units		45,000		*		-		-		-			-
Share-based compensation		-		-		598		-		-			598
BALANCE AT JUNE 30, 2024		36,314,579		1		117,038		41		(108,548	)		8,532

BALANCE AT JANUARY 1, 2023		28,809,922		*		107,210		41		(95,497	)		11,754
Net loss		-		-		-		-		(4,515	)		(4,515	)
Issuance of Ordinary Shares under the ATM program, net of issuance costs		4,030		*		5		-		-			5
Share-based compensation		-		-		988		-		-			988
BALANCE AT JUNE 30, 2023		28,813,952		*		108,203		41		(100,012	)		8,232

BALANCE AT APRIL 1, 2023		28,809,922		*		107,726		41		(97,687	)		10,080
Net loss		-		-		-		-		(2,325	)		(2,325	)
Issuance of Ordinary Shares under the ATM program, net of issuance costs		4,030		*		5		-		-			5
Share-based compensation		-		-		472		-		-			472
BALANCE AT JUNE 30, 2023		28,813,952		*		108,203		41		(100,012	)		8,232

* Represents an amount less than one thousand U.S. dollars.

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

ENTERA BIO LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(U.S. dollars in thousands)

(Unaudited)

	Six months ended June 30,
CASH FLOWS FROM OPERATING ACTIVITIES:	2024			2023
Net loss		(4,162	)		(4,515	)
Adjustments required to reconcile net loss to net cash used in operating activities:
Depreciation		24			29
Share-based compensation		1,062			988
Finance income, net		(14	)		(6	)
Changes in operating asset and liabilities:
Decrease (increase) in accounts receivable		(57	)		217
Increase in other current assets		(232	)		(356	)
Increase (decrease) in accounts payable		(14	)		223
Increase in accrued expenses and other payables		196			252
Net cash used in operating activities		(3,197	)		(3,168	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		-			(12	)
Net cash used in investing activities		-			(12	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of shares under the ATM program, net of issuance costs		601			5
Exercise of options into shares		555			-
Exercise of warrants into shares		90			-
Net cash provided by financing activities		1,246			5

DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED DEPOSITS		(1,951	)		(3,175	)
CASH, CASH EQUIVALENTS AND RESTRICTED DEPOSITS AT BEGINNING OF THE PERIOD		11,085			12,376
CASH, CASH EQUIVALENTS AND RESTRICTED DEPOSITS AT END OF THE PERIOD		9,134			9,201
Reconciliation in amounts on consolidated balance sheets:
Cash and cash equivalents		9,056			9,135
Restricted deposits included in other current assets		78			66
Total cash and cash equivalents and restricted deposits		9,134			9,201
SUPPLEMENTAL DISCLOSURE OF CASH FLOW TRANSACTIONS:
Interest received		66			-
SUPPLEMENTARY INFORMATION ON INVESTING AND FINANCING ACTIVITIES NOT INVOLVING CASH FLOWS:
Operating lease right of use assets obtained in exchange for new operating lease liabilities		33			449

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

ENTERA BIO LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)

(Unaudited)

NOTE 1 - DESCRIPTION OF BUSINESS

Entera Bio Ltd. (collectively with its subsidiary, the “Company”) was incorporated on September 30, 2009 and commenced operations on June 1, 2010. On January 8, 2018, the Company incorporated its wholly owned subsidiary, Entera Bio Inc., in Delaware, United States. The Company is focused on developing first-in-class oral tablet formats of peptides or protein replacement therapies. The Company focuses on underserved, chronic medical conditions for which oral administration of a protein therapy has the potential to significantly shift a treatment paradigm.

The Company’s most advanced product candidate, EB613, oral PTH (1-34), is being developed as the first oral, osteoanabolic (bone building) once-daily tablet treatment for post-menopausal women with low bone mineral density (“BMD”) and high-risk osteoporosis with no prior fracture. The Company is preparing to initiate a Phase 3 registrational study for EB613 following the FDA’s expected qualification of a quantitative BMD endpoint.

The EB612 program is being developed as the first oral PTH(1-34) tablet peptide replacement therapy for hypoparathyroidism. Additionally, the Company intends to license its N-Tab™ technology to biopharmaceutical companies for use with their proprietary compounds.

The Company's ordinary shares, NIS 0.0000769 par value per share (“ordinary shares”), are listed on the Nasdaq Capital Market under the symbol “ENTX”.

Because the Company is engaged in research and development activities, it has not derived significant income from its activities and has incurred an accumulated deficit since our inception in 2010 in the amount of $108.5 thousand as of June 30, 2024 and negative cash flows from operating activities. The Company's management is of the opinion that its available funds as of June 30, 2024 will allow the Company to operate under its current plans into the third quarter of 2025. This assumes the use of the Company’s capital to fund its ongoing operations, including regulatory expenses and optimization related to the preparation of the EB613 phase 3 study, research and development, the completion of an additional Phase 1 PK study related to the Company’s new generation platform and the GLP-2/OXM collaborative research the Company is conducting with OPKO Biologics, Inc., a subsidiary of OPKO Health Inc. The Company’s current capital resources do not include the capital required to fund the Company's proposed Phase 3 study for EB613 in osteoporosis. These factors raise substantial doubt as to the Company's ability to continue as a going concern. Management continually evaluates various financing alternatives in the public and private equity markets, debt financing and strategic collaborations, as the Company will need to finance future research and development activities, general and administrative expenses and working capital through capital raising. However, there is no certainty that the Company will be able to obtain such funding. These consolidated financial statements do not include any adjustments that may be necessary should the Company be unable to continue as a going concern.

In October 2023, Hamas terrorists infiltrated Israel’s southern border from the Gaza Strip and conducted a series of attacks on civilian and military targets. Hamas also launched extensive rocket attacks on the Israeli population and industrial centers located along Israel’s border with the Gaza Strip and in other areas within the State of Israel. These attacks resulted in thousands of deaths and injuries, and Hamas additionally kidnapped many Israeli civilians and soldiers. Following the attack, Israel’s security cabinet declared war against Hamas and commenced a military campaign against Hamas. In addition, in April 2024, Israel experienced a direct attack from Iran, involving hundreds of drones and missiles launched towards various parts of the country, mostly targeting military bases. The Israeli defense systems, aided by international allies, successfully intercepted the majority of these attacks, minimizing physical damage and casualties. Additionally, since October 2023, the Houthis, a military organization based in Yemen, have launched a series of attacks on global shipping routes in the Red Sea, as well as direct attacks on various parts of Israel.

Despite the effectiveness of Israel's missile defense systems, such incidents contribute to regional instability and could potentially escalate into broader conflicts with Iran and its proxies in the Middle East, affecting Israel's political and trade relations, especially with neighboring countries and global allies. The situation remains fluid, and the potential for further escalation exists. While the Company has a few employees who are in active military service, the ongoing war with Hamas and the conflict with Iran and its proxies have not, to date, materially impacted the Company’s business or operations. Furthermore, the Company does not expect any delays to any of its programs as a result of such conflicts. While R&D and management are located in Israel, other core activities including clinical, regulatory and our supply chain are not. However, the Company cannot currently predict the intensity or duration of Israel’s war against Hamas and/or the conflict with Iran and its proxies, nor can it predict how such conflicts will ultimately affect the Company’s business and operations or Israel’s economy in general.

ENTERA

SEC Form 10-Q filed by Entera Bio Ltd.