UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

  

FORM 8-K

  

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported)

March 13, 2020

  

INTEC PHARMA LTD.

(Exact name of registrant as specified in its charter)

  

Israel   001-37521   N/A

(State or other jurisdiction

of incorporation)

  (Commission File Number)  

(IRS Employer

Identification No.)

 

12 Hartom St.

Har Hotzvim

   
Jerusalem, Israel   9777512
(Address of principal executive offices)   (Zip Code)
 
+ 972-2-586-4657

(Registrant’s telephone number, including area code)

  

(Former name or former address, if changed since last report)

  

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

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

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
Ordinary Shares, no, par value   NTEC   Nasdaq Capital Market

 

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

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.  ☒

 

 

 

 
Item 2.02 Results of Operation and Financial Condition.

 

On March 13, 2020, Intec Pharma Ltd. (the “Company”) issued a press release announcing the Company’s results of operations for the fourth quarter and fiscal year ended December 31, 2019. The press release is attached hereto as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference herein in its entirety.

 

The information included in this Item 2.02 of Current Report on Form 8-K, including the attached Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and shall not be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date of this Current Report, regardless of any general incorporation language in any such filing, except as expressly set forth by specific reference in such filing.

 

Item 9.01. Financial Statement and Exhibits.

 

(d) Exhibits.

 

Exhibit No.   Description
99.1   Press release, dated March 13, 2020

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: March 13, 2020

  INTEC PHARMA LTD.
   
  By: /s/ Nir Sassi
    Nir Sassi
    Chief Financial Officer

 

 

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Exhibit 99.1

 

 

Intec Pharma Reports Fourth Quarter and Year End 2019 Financial Results and Corporate Update

 

JERUSALEM (March 13, 2020) - Intec Pharma Ltd. (NASDAQ: NTEC) (“Intec” or “the Company”) today announces financial results for the fourth quarter and year ended December 31, 2019 and provides a corporate update.

 

Highlights from the Quarter and Recent Weeks

 

Developed an Accordion Pill (AP) for a Merck & Co. (MSD) proprietary compound that met the in vitro specifications set forth in the companies’ research collaboration and are now in discussions with MSD to determine advancing the program into human pharmacokinetic (PK) studies;

 

Concluded the Feasibility and Option Agreement (FOA) with Novartis Pharmaceuticals, under which Intec Pharma built a custom-designed AP for a Novartis proprietary compound that met the technical and PK clinical specifications set forth but following an internal and revised commercial strategic assessment, Novartis determined not to take the program forward;

 

Novartis agreed to pay Intec Pharma $1.5 million upon conclusion of the program FOA and those funds were transferred to the Company in February 2020;

 

Completed the qualifying production runs for the commercial scale manufacturing of AP Carbidopa/Levodopa (AP-CD/LD) with our manufacturing partner, LTS Lohmann Therapie-Systeme AG (LTS);

 

Secured $10 million in committed financing from Aspire Capital, a long-term institutional investor; and

 

Enhanced the balance sheet with a $6.5 million public offering.

 

Management Commentary

 

“We entered 2020 with a focused agenda for leveraging our Accordion Pill platform in both the near- and long-term, with goals to outlicence our late-stage Parkinson’s disease program, to advance our research collaboration with Merck into human PK studies, to move our cannabinoid program into a second PK study and to expand our pipeline by adding new partnered programs, such as the one we have with Merck. Our team is diligently working toward executing these objectives and we look forward to achieving a number of these in the coming months,” said Jeffrey A. Meckler, Vice Chairman and Chief Executive Officer of Intec.

 

“In tandem with these initiatives, we continue to work with our manufacturing partner, LTS, to advance the commercial scale production of AP-CD/LD, confident that having these critical processes in place enhances our business development efforts. We are pleased to report that LTS has completed the qualification studies for the commercial scale production and have initiated the validation and stability studies of the batches which are expected to serve as the clinical material for the next Phase 3 clinical trial plan. This is particularly beneficial for our partnering discussions for the Parkinson’s disease program.

 

“In addition to advances with commercial manufacturing, we continue to engage in dialogues with potential new partners. Toward that end, our business development and technical operations teams are actively participating in a number of key drug delivery conferences worldwide in the coming months. We expect the enhanced visibility for the AP and its capabilities to increase the interest in the platform among audiences seeking new technologies and improved delivery formulations.

 

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“Importantly, we strengthened our balance sheet believing that a stronger financial position enhances our ability to negotiate with partners and provides us with a longer runway to achieve key objectives. We believe our cash will now take us into the second quarter of 2021, without tapping into our Aspire commitment,” added Mr. Meckler.

 

Financial Highlights for the Fourth Quarter Ended December 31, 2019

 

Research and development expenses, net, for the three-month period ended December 31, 2019 were approximately $1.8 million, a decrease of $8.5 million, or approximately 82.5%, compared with approximately $10.3 million in the three-month period ended December 31, 2018. The decrease was primarily due to a decrease in expenses related to the ACCORDANCE Phase 3 study of AP-CD/LD and the Open Label Extension study, both of which were completed during 2019 and a decrease in expenses related to the scale up activities for the commercial scale production capabilities for AP-CD/LD at LTS.

 

General and administrative expenses for the three-month period ended December 31, 2019 were approximately $1.8 million, a decrease of $300,000, or approximately 14.3%, compared with approximately $2.1 million in the three-month period ended December 31, 2018. The decrease was primarily due to a decrease in professional services and expenses related to investor relations activities. This decrease was offset by an increase in insurance expenses.

 

Impairment of long-lived assets was recorded as the top-line results of the ACCORDANCE trial were considered a triggering event for impairment. For the three-month period ended December 31, 2019, the Company recorded an impairment charge of approximately $3.9 million. This impairment represents the excess carrying value of the long-lived assets compared to its fair value.

 

The Company recorded other income for the three-month period ended December 31, 2019, of $1.5 million on conclusion of the program with Novartis.

 

Net loss for the three-month period ended December 31, 2019 was approximately $6.6 million, a decrease of $6.0 million, or approximately 47.6%, compared with the net loss for the three-month period ended December 31, 2018 of approximately $12.6 million. The decrease was mainly due to the decrease in research and development expenses as detailed above and the other income associated with the conclusion of the Novartis program offset by the impairment of the Company’s long-lived assets.

 

Loss per ordinary share for the fourth quarter ended December 31, 2019 was $0.19 compared with $0.38 for the fourth quarter ended December 31, 2018.

 

Financial Highlights for the Year Ended December 31, 2019

 

Research and development expenses, net, for the year ended December 31, 2019 were approximately $26.7 million, a decrease of $8.7 million, or approximately 24.6%, compared with approximately $35.4 million in the prior year period. The decrease was primarily due to a decrease in expenses related to the ACCORDANCE Phase 3 study of AP-CD/LD and the Open Label Extension study, both of which were completed during 2019.

 

General and administrative expenses for the year ended December 31, 2019 were approximately $8.3 million, an increase of $400,000, or approximately 5.1%, compared with approximately $7.9 million in the year ended December 31, 2018. The increase was primarily related to the increase in insurance expenses. This increase was offset by a decrease in professional services.

 

Impairment of long-lived assets was recorded as the top-line results of the ACCORDANCE trial were considered a triggering event for impairment. For the year ended December 31, 2019, the Company recorded an impairment charge of approximately $13.7 million. This impairment represents the excess carrying value of the long-lived assets compared to its fair value.

 

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The Company recorded other income for the year ended December 31, 2019, of $1.5 million on conclusion of the program with Novartis.

 

Net loss for the fiscal year ended December 31, 2019 was approximately $47.6 million, an increase of $4.1 million, or approximately 9.4%, compared with the net loss for the year ended December 31, 2018 of approximately $43.5 million. The increase was mainly due to the impairment of the Company’s long-lived assets and an increase in general and administrative expenses as detailed above offset by the other income associated with the conclusion of the Novartis program and the decrease in research and development expenses, as detailed above.

 

Loss per ordinary share for the full-year 2019 was $1.41 compared with $1.40 for the full-year 2018.

 

As of December 31, 2019, the Company had cash and cash equivalents and marketable securities of approximately $10.1 million compared with approximately $40.6 million at December 31, 2018.

 

Net cash used in operating activities was approximately $29.0 million for the year ended December 31, 2019 compared with net cash used in operating activities of approximately $39.1 million for the year ended December 31, 2018. This decrease resulted primarily from a decrease in research and development activities in the amount of approximately $8.7 million and changes in operating asset and liability items of approximately $1.2 million.

 

The Company had negative cash flow from investing activities of approximately $3.2 million for the year ended December 31, 2019 compared with negative cash flow from investing activities of approximately $9.3 million for the year ended December 31, 2018. This decrease resulted primarily from a reduction of approximately $2.1 million in investment in other assets related to the establishment of the commercial scale production capabilities for AP-CD/LD at LTS and a decrease in purchase of property and equipment in the amount of approximately $3.8 million. 

 

Net cash provided by financing activities was approximately $2.4 million for the year ended December 31, 2019 compared with net cash provided by financing activities of approximately $35.1 million for the year ended December 31, 2018. The principal source of the cash provided by financing activities during 2019 was the funds received from the Company’s “at-the-market” equity offering program of $2.1 million. The principal source of the cash provided by financing activities during 2018 was the funds received from the Company’s April 2018 underwritten public offering of ordinary shares that resulted in net proceeds of approximately $35.0 million.

 

In January 2020, the Company raised $6.5 million in an underwritten public offering of 16,250,000 ordinary shares (which included pre-funded warrants to purchase ordinary shares in lieu thereof) and warrants to purchase up to 16,250,000 ordinary shares, at a public offering price of $0.40 per ordinary share and warrant. The warrants have an exercise price of $0.40 per share, are immediately exercisable, and will expire five years from the date of issuance.  

 

More detailed information can be found in the Company’s Annual Report, a copy of which has been filed with the Securities and Exchange Commission and posted on the Company’s website at www.intecpharma.com. You may request a copy of the Company’s Form 10-K, at no cost to you, by writing to the Chief Financial Officer of the Company at 12 Hartom Street, Har Hotzvim, Jerusalem 9777512, Israel or by calling the Company at +972 (2) 586 4657.

 

About Intec Pharma Ltd.

 

Intec Pharma is a clinical-stage biopharmaceutical company focused on developing drugs based on its proprietary Accordion Pill platform technology. The Company’s Accordion Pill is an oral drug delivery system that is designed to improve the efficacy and safety of existing drugs and drugs in development by utilizing an efficient gastric retention and specific release mechanism. The Company’s product pipeline includes two product candidates in clinical trial stages: Accordion Pill Carbidopa/Levodopa, or AP-CD/LD, which is in late-stage Phase 3 development for the treatment of Parkinson’s disease symptoms in advanced Parkinson’s disease patients, and AP-cannabinoids, an Accordion Pill to deliver either or both of the primary cannabinoids contained in Cannabis sativa, cannabidiol (CBD) and tetrahydrocannabinol (THC) for various pain indications. In addition, the Company has a research collaboration with Merck & Co.

 

For more information, visit www.intecpharma.com. Intec Pharma routinely posts information that may be important to investors in the Investor Relations section of its website.

 

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Cautionary Note Regarding Forward-Looking Statements

 

This press release contains forward looking statements about our expectations, beliefs and intentions. Forward-looking statements can be identified by the use of forward-looking words such as “believe”, “expect”, “intend”, “plan”, “may”, “should”, “could”, “might”, “seek”, “target”, “will”, “project”, “forecast”, “continue” or “anticipate” 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 are based on assumptions and assessments made in light of management’s experience and perception of historical trends, current conditions, expected future developments and other factors believed to be appropriate. Forward-looking statements in this press release are made as of the date of this press release, and we undertake no duty to update or revise any such statements, whether as a result of new information, future events or otherwise. Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties, many of which are outside of our control. 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 following: our limited operating history and history of operating losses, our ability to continue as a going concern, our ability to obtain additional financing, our ability to successfully operate our business or execute our business plan, the timing and cost of our clinical trials, the completion and receiving favorable results in our clinical trials, our ability to obtain and maintain regulatory approval of our product candidates, our ability to protect and maintain our intellectual property and licensing arrangements, our ability to develop, manufacture and commercialize our product candidates, the risk of product liability claims, the availability of reimbursement, and the influence of extensive and costly government regulation. More detailed information about the risks and uncertainties affecting us is contained under the heading “Risk Factors” included in our most recent Annual Report on Form 10-K filed with the SEC on March 13, 2020, and in other filings that we have made and may make with the Securities and Exchange Commission in the future.

 

Intec Pharma Investor Contact:

Will O’Connor  
Stern IR  
+1 212-362-1200  
will@sternir.com

 

-Tables to Follow-

 

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INTEC PHARMA LTD.

CONSOLIDATED BALANCE SHEETS

 

    December 31  
    2019     2018  
    U.S. dollars
in thousands
 
Assets            
CURRENT ASSETS:                
Cash and cash equivalents   $ 9,292     $ 39,246  
Investment in marketable securities     770       1,333  
Prepaid expenses and other receivables     3,683       2,986  
TOTAL CURRENT ASSETS     13,745       43,565  
                 
NON-CURRENT ASSETS:                
Property and equipment, net     2,575       12,233  
Operating lease right-of-use assets     1,243       -  
Other assets     3,717       5,431  
Deferred tax assets     -       281  
TOTAL NON-CURRENT ASSETS     7,535       17,945  
                 
TOTAL ASSETS   $ 21,280     $ 61,510  
                 
Liabilities and shareholders’ equity                
CURRENT LIABILITIES -                
Accounts payable and accruals:                
Trade   $ 3,507     $ 2,849  
Other     4,835       4,807  
TOTAL CURRENT LIABILITIES     8,342       7,656  
LONG-TERM LIABILITIES -                
Operating lease liabilities     799       -  
Other liabilities     604       309  
TOTAL LONG-TERM LIABILITIES -     1,403       309  
TOTAL LIABILITIES     9,745       7,965  
                 
COMMITMENTS AND CONTINGENT LIABILITIES                
                 
SHAREHOLDERS’ EQUITY:                
Ordinary shares, with no par value - authorized: 100,000,000 as of December 31, 2019 and December 31, 2018, respectively; issued and outstanding: 35,892,209 and 33,232,988 Ordinary Shares as of December 31, 2019 and December 31, 2018, respectively     727       727  
Additional paid-in capital     200,231       194,642  
Accumulated deficit     (189,423 )     (141,824 )
TOTAL SHAREHOLDERS’ EQUITY     11,535       53,545  
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY   $ 21,280     $ 61,510  

 

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INTEC PHARMA LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS

 

    Year ended December 31  
    2019     2018  
    U.S. dollars
in thousands
 
OPERATING EXPENSES:                
RESEARCH AND DEVELOPMENT EXPENSES, net   $ (26,659 )   $ (35,402 )
GENERAL AND ADMINISTRATIVE EXPENSES     (8,287 )     (7,926 )
IMPAIRMENT OF LONG-LIVED ASSETS     (13,663 )     -  
OTHER INCOME     1,500       -  
OPERATING LOSS     (47,109 )     (43,328 )
FINANCIAL INCOME (EXPENSES), net     148       (112 )
LOSS BEFORE INCOME TAX     (46,961 )     (43,440 )
INCOME TAX     (638 )     (103 )
NET LOSS   $ (47,599 )   $ (43,543 )
LOSS PER ORDINARY SHARE - BASIC AND DILUTED   $ (1.41 )   $ (1.40 )
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING USED IN COMPUTATION OF BASIC AND DILUTED LOSS PER ORDINARY SHARE IN THOUSANDS     33,776       31,193  

 

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INTEC PHARMA LTD.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

 

    Ordinary Shares     Additional paid-in capital     Accumulated Deficit     Total  
    Number of shares     Amounts     Amounts  
    U.S. dollars in thousands  
BALANCE AT JANUARY 1, 2018     26,075,770     $ 727     $ 156,356     $ (98,281 )   $ 58,802  
CHANGES DURING 2018:                                        
Issuance of ordinary shares, net of issuance costs     7,150,000       -       35,029       -       35,029  
Exercise of options by employees     7,218       -       30       -       30  
Share-based compensation     -       -       3,227       -       3,227  
Net loss     -       -       -       (43,543 )     (43,543 )
BALANCE AT DECEMBER 31, 2018     33,232,988     $ 727     $ 194,642     $ (141,824 )     53,545  
CHANGES DURING 2019:                                        
Issuance of ordinary shares, net of issuance costs     1,944,512       -       2,086       -       2,086  
Issuance of ordinary shares per equity line agreement     612,520       -       -       -       -  
Exercise of options by employees     102,189       -       282       -       282  
Share-based compensation     -               3,221               3,221  
Net loss     -       -       -       (47,599 )     (47,599 )
BALANCE AT DECEMBER 31, 2019     35,892,209     $ 727     $ 200,231     $ (189,423 )     11,535  

 

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INTEC PHARMA LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

    Year ended December 31  
    2019     2018  
    U.S. dollars
in thousands
 
CASH FLOWS FROM OPERATING ACTIVITIES:                
Net loss   $ (47,599 )   $ (43,543 )
Adjustments required to reconcile net loss to net cash used in operating activities:                
Depreciation     854       859  
Impairment of long-lived assets     13,663       -  
Exchange differences on cash and cash equivalents     67       829  
Change in right of use asset     967       -  
Change in lease liabilities     (713 )     -  
Losses (gains) on marketable securities     (13 )     194  
Share-based compensation     3,221       3,227  
Changes in operating asset and liabilities:                
Increase in prepaid expenses and other receivables     (747 )     (1,861 )
Increase (decrease) in deferred tax assets     281       (281 )
Increase in accounts payable and accruals     679       1,191  
Increase in other liabilities     295       309  
Net cash used in operating activities     (29,045 )     (39,076 )
CASH FLOWS FROM INVESTING ACTIVITIES:                
Purchase of property and equipment     (921 )     (4,667 )
Investment in other assets     (2,865 )     (4,932 )
Proceeds from disposal of marketable securities, net     576       298  
Net cash used in investing activities     (3,210 )     (9,301 )
CASH FLOWS FROM FINANCING ACTIVITIES:                
Proceeds from issuance of ordinary shares, net of issuance costs     2,086       35,029  
Proceeds from exercise of options by employees     282       30  
Net cash provided by financing activities     2,368       35,059  
DECREASE IN CASH AND CASH EQUIVALENTS     (29,887 )     (13,318 )
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR     39,246       53,393  
EXCHANGE DIFFERENCES ON CASH AND CASH EQUIVALENTS     (67 )     (829 )
CASH AND CASH EQUIVALENTS AT END OF THE YEAR   $ 9,292     $ 39,246  
                 
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING ACTIVITIES:                
Liability with respect to property and equipment     -       170  
Liability with respect to other assets     -       499  
                 
SUPPLEMENTARY DISCLOSURE OF CASH FLOW INFORMATION:                
Taxes paid     75       96  
Interest received     327       734  

 

# # #

 

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