XTLbio(US:XTLB)2020-03-12 19:44Financial Performance - For the year ended December 31, 2019, the total comprehensive loss was $1,347 thousand, compared to a comprehensive income of $2,986 thousand in 2018[23]. - Research and development expenses for 2019 were $35 thousand, a decrease from $38 thousand in 2018[23]. - Cash, cash equivalents, and short-term bank deposits as of December 31, 2019, were $4,455 thousand, down from $5,275 thousand in 2018[25]. - Total assets decreased to $7,212 thousand in 2019 from $8,575 thousand in 2018[25]. - The accumulated deficit as of December 31, 2019, was approximately $153,930 thousand[32]. - The company reported a net cash usage of $908 thousand for the year ended December 31, 2019, indicating a need for significant additional financing[89]. Future Outlook and Financing - The company expects to continue incurring losses in the foreseeable future due to ongoing drug development activities[29]. - The company estimates that its cash and cash equivalents will finance activities for at least 12 months from the report date[32]. - The company plans to raise additional financing to support clinical trials and product development[33]. - The company may need to raise additional capital through equity or debt financing, which could dilute existing shareholders[1]. - Future issuances of ADSs could dilute existing shareholders' equity and depress the market price of the company's shares[93]. Drug Development and Commercialization Risks - The company has not yet commercialized any drug candidates or technologies and cannot ensure future profitability[30]. - The company has not yet commercialized any products or technologies and may never achieve profitability[38]. - The company is currently not seeking regulatory approval for any drug candidates with the FDA or other regulatory authorities[42]. - The company faces risks related to the completion of clinical trials, which may take longer than projected and incur additional costs[40]. - The company relies on third parties for clinical trials and manufacturing, which may lead to delays or failures in obtaining regulatory approval[49][60]. - The company’s product candidate hCDR1 is planned for advanced clinical studies, but must show positive clinical results to proceed[53]. - Market acceptance of the company’s products will depend on perceptions of safety and efficacy by healthcare providers[56]. - The company’s financial results may be materially impaired if clinical trials do not confirm positive early data[54]. - The company faces risks related to third-party manufacturers' compliance with FDA regulations, which could impact product commercialization[62]. - The company is at risk of losing market share if competitors develop more effective or cheaper products, potentially harming revenues[64]. Operational and Strategic Challenges - The company has limited personnel resources, with only one part-time employee and two part-time service providers, which could impair performance[67]. - The company relies on licensed drug candidates and technologies, and failure to meet obligations could result in losing these rights[79]. - The company may face substantial costs and operational risks associated with acquisitions or in-licensing transactions, which could dilute equity[69]. - The company intends to expand insurance coverage for product liability but faces increasing costs and potential inadequacy of coverage[74]. - The company is exposed to product liability risks that could lead to substantial liabilities or limit commercialization of approved products[73]. - The company must actively defend its patent rights, which could involve significant costs and impact its ability to compete effectively[85]. - The expiration of the hCDR1 patent in 2024 poses a risk if the company fails to obtain patent term extensions[5]. - The company may face challenges in establishing strategic partnerships and licensing arrangements, which are crucial for commercialization[55]. Market and Regulatory Environment - The trading volume of the company's ADSs has historically been low, making it difficult for shareholders to sell at favorable prices[90]. - The trading price of the company's ADSs is likely to be highly volatile, influenced by various factors beyond its control, including market fluctuations in the biotechnology sector[92]. - Approximately 31.83% of the company's ordinary shares are held by two principal shareholders, potentially limiting new investors' influence on corporate decisions[94]. - 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[107]. - If the company fails to meet Nasdaq's continued listing standards, its ADSs may be delisted, which could significantly impair liquidity and capital-raising efforts[108]. - The company has never declared or paid cash dividends on its ordinary stock and does not anticipate doing so in the foreseeable future[103]. - The company may be classified as a passive foreign investment company (PFIC), which could impose additional tax liabilities on U.S. shareholders[96]. - The effective trading prices of the company's securities may differ between the Nasdaq and TASE due to different trading currencies and times[95]. - The depositary for the ADSs may not be able to make distributions to ADS holders if it is unlawful or impractical to do so[105]. - The company is permitted to follow home country corporate governance practices, which may provide less protection to investors compared to U.S. domestic issuers[99]. External Factors and Risks - Political, economic, and military conditions in Israel may adversely affect the company's operations and results, particularly due to ongoing hostilities and threats in the region[112]. - The company holds most of its cash and equivalents in U.S. dollars, while a significant portion of expenses is in New Israeli Shekels (NIS), exposing it to currency fluctuation risks[116]. - Israeli law may delay or impede mergers and acquisitions, requiring specific approvals and a minimum holding period for tax deferral on certain transactions[117][118]. - The company is subject to economic boycotts and restrictive laws from several countries, which may negatively impact its operating results and business expansion[115]. - The company’s commercial insurance does not cover losses from security-related events, which could materially affect its business if government coverage is not maintained[114]. - Inflation and currency fluctuations in Israel could harm the company's financial results, particularly if inflation exceeds the rate of devaluation of the NIS against the U.S. dollar[116]. - Enforcement of non-competition agreements may be difficult under Israeli law, potentially allowing competitors to benefit from the expertise of former employees[122]. - Employees may claim compensation for inventions made during their employment, which could impact future revenue and profitability[123]. - Shareholder rights and responsibilities are governed by Israeli law, which may differ from those of U.S. companies, imposing additional obligations on shareholders[124].