XTLbio(XTLB) - 2020 Q4 - Annual Report

Financial Performance - Total comprehensive loss for the year was $782,000, compared to a loss of $1,347,000 in 2019, representing a 42% improvement[25] - Research and development expenses were $38,000 in 2020, slightly increasing from $35,000 in 2019[25] - General and administrative expenses rose to $910,000 in 2020, up from $807,000 in 2019, indicating a 12.7% increase[25] - The company reported a net cash used in operating activities of $850 thousand for the year ended December 31, 2020, indicating a need for significant additional financing to continue operations[95] Cash and Assets - Cash, cash equivalents, and short-term bank deposits decreased to $3,631,000 in 2020 from $4,455,000 in 2019, a decline of 18.5%[26] - Total assets decreased to $6,503,000 in 2020 from $7,212,000 in 2019, reflecting a 9.8% reduction[26] - Total shareholders' equity was $6,249,000 in 2020, down from $6,980,000 in 2019, a decrease of 10.5%[26] - As of December 31, 2020, the company had approximately $3,631 thousand in cash and cash equivalents, with an accumulated deficit of approximately $154,661 thousand[36] - The company estimates that its existing cash and cash equivalents will finance activities for at least 12 months from the report date[36] Future Profitability and Losses - The company has incurred substantial operating losses since inception and expects to continue incurring losses in the future[31] - The company expects to continue incurring losses for the foreseeable future, with no assurance of achieving profitability[34] - The company has not yet commercialized any products or technologies and may never become profitable[31] - The company has not yet commercialized any products and may never achieve profitability[42] Clinical Trials and Regulatory Risks - The company faces risks related to the successful completion of clinical trials for its drug candidates, which could adversely affect its business strategy[32] - Clinical trials are subject to rigorous regulatory requirements, and delays in these trials could adversely affect the company's business strategy[44] - The company faces risks related to obtaining regulatory approvals, which are critical for the commercialization of its products[46] - The company relies on third parties for clinical trials, and any failure of these parties to perform could delay or prevent product development[53] Manufacturing and Development Risks - The company does not currently have the ability to manufacture its drug candidates and relies on third-party manufacturers, which poses risks if they fail to deliver on time or meet quality standards[63] - The company relies on third-party manufacturers for drug candidates and technologies, which may lead to delays or termination of development programs if agreements are not successfully established or maintained[59] - Significant operating and capital expenditures are anticipated for product development, including research, manufacturing, and clinical trials[37] Market and Competitive Risks - Market acceptance of the company's drug candidates is uncertain and depends on factors such as safety, efficacy, and cost-effectiveness compared to existing treatments[60] - The pharmaceutical industry is highly competitive, and the company faces risks if competitors develop more effective or cheaper products[68] Financing and Shareholder Considerations - The company may require additional financing through public or private equity, debt financings, or strategic partnerships to support its development activities[39] - Approximately 31.83% of the company's ordinary shares are beneficially held by two principal stockholders, potentially limiting new investors' influence on corporate decisions[100] - The company must maintain stockholders' equity of at least $2.5 million and a market value of listed securities of $35 million to comply with Nasdaq listing requirements[113] - Future issuances of ADSs could depress the market price of the company's ordinary shares or ADSs, affecting the ability to raise funds[99] Legal and Intellectual Property Risks - Legal actions related to intellectual property infringement could divert management's attention and resources, impacting business operations[91] - The company has licensed all its drug candidates and technologies from third parties, and failure to meet obligations could result in loss of rights to these candidates[85] - The company actively files patent applications but faces uncertainty regarding the enforceability and breadth of these patents, which may affect competitive advantage[87] - Trade secrets are difficult to protect, and the company relies on confidentiality agreements, which may not be sufficient to safeguard proprietary information[90] Operational and External Risks - The company has no employees and relies on part-time service providers, which may affect its ability to attract and retain skilled personnel necessary for drug development[73] - Political, economic, and military conditions in Israel may adversely affect the company's operations, as key facilities and personnel are located there[118] - The company is exposed to risks from inflation and foreign currency fluctuations, particularly as a significant portion of expenses are in New Israeli Shekels (NIS) while cash reserves are held in U.S. dollars[122] - Israeli corporate law may impede potential mergers or acquisitions, requiring lengthy approval processes and specific conditions to be met[123] - Tax considerations under Israeli law may deter potential transactions, as tax-free share exchanges are not recognized to the same extent as in U.S. law[124] - Enforcement of non-competition agreements may be difficult, potentially allowing competitors to benefit from the expertise of former employees[128] - Employees may claim compensation for inventions made during their employment, which could impact future revenue and profitability[129] Dividend and Stock Considerations - The company has never declared or paid any cash dividends on its ordinary stock and does not anticipate doing so in the foreseeable future[109] - The trading volume of the company's ADSs has historically been low, which may hinder shareholders' ability to sell at desirable prices[96] - Delisting could result in the company's ADSs being classified as "penny stocks," leading to reduced trading activity and making it less attractive to institutional investors[116] - The company may face delisting from Nasdaq if it fails to maintain compliance with continued listing standards, which could severely limit liquidity and adversely affect capital raising efforts[114] - The company may be classified as a passive foreign investment company (PFIC), which could impose special federal income tax rules on U.S. holders of its shares[102]