Silexion Therapeutics Corp(SLXN) - 2025 Q2 - Quarterly Report

CERTAIN TERMS The company, Silexion Therapeutics Corp, completed a business combination on August 15, 2024, and defines key financial instruments and agreements - The company, Silexion Therapeutics Corp (formerly Biomotion Sciences), is a Cayman Islands exempted company, with its securities trading on Nasdaq following the August 15, 2024 Business Combination where Moringa and Silexion became wholly-owned subsidiaries of New Silexion[8] - Key agreements include the A&R Sponsor Promissory Note for $3,433,000, the ELOC Agreement with White Lion Capital, LLC, and the Marketing Agreement with EarlyBirdCapital, Inc[8] - Financial instruments include ordinary shares ($0.0135 par value), private warrants, public warrants, and general warrants[11] SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS This section highlights the presence of forward-looking statements concerning the company's future financial position, operations, and strategic objectives - The report contains forward-looking statements about the Company's financial position, business strategy, and future operations, identifiable by terms such as 'expect,' 'believe,' and 'anticipate'[10] - Forward-looking statements encompass expectations regarding Nasdaq listing, pre-clinical and clinical studies, regulatory approvals, market opportunity, and future capital requirements[11][14] - Actual results may differ materially due to risks including limited operating history, absence of product sales revenue, the need for substantial additional funding, and the unproven nature of RNAi therapeutics for oncology[12][14] PART I - FINANCIAL INFORMATION This section presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations - Financial statements for comparative periods, such as June 30, 2024, reflect Silexion Therapeutics Ltd. as the accounting acquirer and predecessor entity before the August 15, 2024 Business Combination, and New Silexion subsequently[16] Item 1. Financial Statements This section provides the unaudited condensed consolidated financial statements for Silexion Therapeutics Corp, including balance sheets, statements of operations, statements of changes in equity, and cash flow statements, along with comprehensive notes explaining the accounting policies and specific financial details Condensed Consolidated Balance Sheets (unaudited) This table presents the company's unaudited condensed consolidated balance sheets, detailing assets, liabilities, and shareholders' equity as of June 30, 2025, and December 31, 2024 Condensed Consolidated Balance Sheets (U.S. dollars in thousands) | Metric | June 30, 2025 | December 31, 2024 | Change (2025 vs 2024) | | :-------------------------------- | :-------------- | :---------------- | :-------------------- | | Assets | | | | | Cash and cash equivalents | $3,466 | $1,187 | +$2,279 | | Total Current Assets | $5,237 | $2,250 | +$2,987 | | Total Non-Current Assets | $560 | $613 | -$53 | | TOTAL ASSETS | $5,797 | $2,863 | +$2,934 | | Liabilities | | | | | Total Current Liabilities | $2,150 | $3,523 | -$1,373 | | Total Non-Current Liabilities | $3,527 | $3,329 | +$198 | | TOTAL LIABILITIES | $5,677 | $6,852 | -$1,175 | | Shareholders' Equity (Capital Deficiency) | | | | | Total Shareholders' Equity (Capital Deficiency) | $120 | $(3,989) | +$4,109 | Condensed Consolidated Statements of Operations (unaudited) This table presents the company's unaudited condensed consolidated statements of operations, detailing revenues, expenses, and net loss for the six and three months ended June 30, 2025 and 2024 Condensed Consolidated Statements of Operations (U.S. dollars in thousands) | Metric | Six months ended June 30, 2025 | Six months ended June 30, 2024 | Three months ended June 30, 2025 | Three months ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | :------------------------------- | :------------------------------- | | Research and development | $1,608 | $1,727 | $1,018 | $766 | | General and administrative | $2,326 | $908 | $1,266 | $619 | | TOTAL OPERATING EXPENSES | $3,934 | $2,635 | $2,284 | $1,385 | | OPERATING LOSS | $3,934 | $2,635 | $2,284 | $1,385 | | Financial expenses, net | $301 | $270 | $216 | $102 | | LOSS BEFORE INCOME TAX | $4,235 | $2,905 | $2,500 | $1,487 | | Income tax | $3 | $7 | $3 | $2 | | NET LOSS | $4,238 | $2,912 | $2,503 | $1,489 | | LOSS PER SHARE, BASIC AND DILUTED | $8.21 | $381.09 | $4.32 | $197.80 | | WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES OUTSTANDING | 516,110 | 7,466 | 579,523 | 7,442 | Condensed Consolidated Statements of Changes in Redeemable Convertible Preferred Shares and Shareholders' Equity (Capital Deficiency) (unaudited) This section outlines the changes in the company's redeemable convertible preferred shares and shareholders' equity (or capital deficiency) for the six months ended June 30, 2025 Changes in Shareholders' Equity (Capital Deficiency) (U.S. dollars in thousands) | Metric | Balance at Jan 1, 2025 | Issuance of ordinary shares and warrants | Exercise of warrants | Issuance of ordinary shares and warrants upon inducement | Share-based compensation | Conversion of EarlyBird Promissory Note | Net loss | Balance at June 30, 2025 | | :-------------------------------- | :--------------------- | :------------------------------------- | :------------------- | :------------------------------------------------ | :----------------------- | :------------------------------------ | :------- | :----------------------- | | Ordinary shares | $2 | $3 | $3 | $2 | $* | $* | - | $8 | | Additional paid-in capital | $39,263 | $4,252 | $863 | $2,812 | $58 | $356 | - | $47,604 | | Accumulated deficit | $(43,254) | - | - | - | - | - | $(4,238) | $(47,492) | | TOTAL SHAREHOLDERS' EQUITY (CAPITAL DEFICIENCY) | $(3,989) | $4,255 | $864 | $2,814 | $58 | $356 | $(4,238) | $120 | - Total shareholders' equity improved from a $(3,989) thousand deficiency at January 1, 2025, to a positive $120 thousand at June 30, 2025, primarily due to public offerings, warrant exercises, and inducement transactions[30] Condensed Consolidated Statements of Cash Flows (unaudited) This table presents the company's unaudited condensed consolidated statements of cash flows, categorizing cash activities for the six and three months ended June 30, 2025 and 2024 Condensed Consolidated Statements of Cash Flows (U.S. dollars in thousands) | Cash Flow Activity | Six months ended June 30, 2025 | Six months ended June 30, 2024 | Three months ended June 30, 2025 | Three months ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | :------------------------------- | :------------------------------- | | Net cash used in operating activities | $(4,960) | $(2,817) | $(2,507) | $(1,065) | | Net cash used in investing activities | $(7) | $(6) | $(1) | $0 | | Net cash provided by (used in) financing activities | $7,237 | $* | $(195) | $0 | | INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH | $2,270 | $(2,823) | $(2,703) | $(1,065) | | Balance at beginning of period | $1,270 | $4,645 | $6,233 | $2,831 | | BALANCE AT END OF PERIOD | $3,544 | $1,747 | $3,544 | $1,747 | - Cash and cash equivalents and restricted cash increased by $2,270 thousand for the six months ended June 30, 2025, primarily from $7,237 thousand in financing activities, offsetting $4,960 thousand in operating cash outflows[37][175] Notes to Condensed Consolidated Financial Statements (unaudited) This section provides detailed explanations and disclosures for the unaudited condensed consolidated financial statements, covering accounting policies, specific transactions, and financial instrument valuations NOTE 1 - GENERAL This note provides general information about Silexion Therapeutics Corp, including its formation, Nasdaq listing, and going concern considerations - Silexion Therapeutics Corp (New Silexion) was formed for the Business Combination on August 15, 2024, operating as a publicly-traded holding company for Silexion Therapeutics Ltd., the accounting acquirer[44] - The company's ordinary shares and warrants are listed on the Nasdaq Global Market under the symbols 'SLXN' and 'SLXNW'[44] - The company incurred losses of $4,238 thousand for the six months ended June 30, 2025, and $16,519 thousand for the year ended December 31, 2024, alongside negative operating cash flows of $4,960 thousand for the six months ended June 30, 2025[47] - Management has concluded there is substantial doubt about the Company's ability to continue as a going concern for at least 12 months from the financial statements' issuance date, owing to ongoing losses and negative cash flows[49] NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES This note details the significant accounting policies used in preparing the unaudited interim condensed consolidated financial statements, including fair value measurements and recent accounting pronouncement adoptions - The unaudited interim condensed consolidated financial statements adhere to U.S. GAAP for interim reporting and SEC requirements, omitting some information typically found in annual statements[50] - Fair value measurements are classified into a three-level hierarchy, distinguishing between quoted prices (Level 1), observable prices (Level 2), and unobservable inputs (Level 3), to ensure consistency and comparability[57][58] - The company adopted ASU 2022-03 'Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions' on January 1, 2025, without material impact on its consolidated financial statements[61] NOTE 3 - SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION This note provides detailed breakdowns of research and development expenses, general and administrative expenses, and financial expenses, net, for the reported periods Research and Development Expenses (U.S. dollars in thousands) | Expense Category | Six months ended June 30, 2025 | Six months ended June 30, 2024 | Three months ended June 30, 2025 | Three months ended June 30, 2024 | | :----------------------------- | :----------------------------- | :----------------------------- | :------------------------------- | :------------------------------- | | Payroll and related expenses | $854 | $476 | $485 | $216 | | Share-based compensation | $0 | $38 | $0 | $19 | | Subcontractors and consultants | $598 | $1,128 | $442 | $497 | | Rent and maintenance | $95 | $49 | $55 | $18 | | Other | $61 | $36 | $36 | $16 | | Total R&D Expenses | $1,608 | $1,727 | $1,018 | $766 | General and Administrative Expenses (U.S. dollars in thousands) | Expense Category | Six months ended June 30, 2025 | Six months ended June 30, 2024 | Three months ended June 30, 2025 | Three months ended June 30, 2024 | | :----------------------------- | :----------------------------- | :----------------------------- | :------------------------------- | :------------------------------- | | Payroll and related expenses | $739 | $280 | $407 | $151 | | Share-based compensation | $58 | $26 | $37 | $13 | | Professional services | $1,111 | $448 | $586 | $369 | | Depreciation | $7 | $15 | $3 | $7 | | Rent and maintenance | $85 | $72 | $55 | $46 | | Patent registration | $51 | $25 | $47 | $16 | | Travel expenses | $91 | $16 | $37 | $7 | | Other | $184 | $26 | $94 | $10 | | Total G&A Expenses | $2,326 | $908 | $1,266 | $619 | Financial Expenses, Net (U.S. dollars in thousands) | Expense Category | Six months ended June 30, 2025 | Six months ended June 30, 2024 | Three months ended June 30, 2025 | Three months ended June 30, 2024 | | :--------------------------------------------- | :----------------------------- | :----------------------------- | :------------------------------- | :------------------------------- | | Change in fair value of financial liabilities | $277 | $145 | $198 | $64 | | Interest income, net | $(34) | $(25) | $(43) | $(6) | | Foreign currency exchange loss, net | $55 | $148 | $61 | $42 | | Other | $3 | $2 | $0 | $2 | | Total Financial Expense (Income), Net | $301 | $270 | $216 | $102 | NOTE 4 - WARRANTS TO PURCHASE PREFERRED SHARES This note details the company's warrant transactions, including public offerings, pre-funded warrants, and induced warrant exercises, along with their financial impact - In January 2025, the Company completed a public offering, selling 143,067 ordinary shares and 143,067 ordinary warrants, plus 103,847 pre-funded warrants and 103,847 ordinary warrants, generating approximately $5,000 thousand in gross proceeds[65] - Pre-funded warrants were immediately exercisable at $0.0015 per share, while ordinary warrants were exercisable at $20.25 per share for a five-year term[66] - As of June 30, 2025, 42,683 investor warrants and all 103,847 pre-funded warrants were exercised, yielding $864 thousand in proceeds[70] - An induced warrant exercise on January 29, 2025, resulted in holders exercising 148,102 ordinary warrants at $20.25 per share, generating approximately $3,276 thousand in gross proceeds, and receiving new ordinary warrants[71] NOTE 5 - UNDERWRITERS PROMISSORY NOTE This note describes the repayment and extinguishment of the Underwriters Promissory Note and the EarlyBird Convertible Promissory Note - During January 2025, the Company repaid $158 thousand of the Underwriters Promissory Note principal[74] - On March 13, 2025, the Company agreed with EarlyBird to extinguish the remaining $880 thousand outstanding principal and accrued interest of the Convertible Promissory Note for a $551 thousand cash payment and 18,519 Ordinary Shares[74] NOTE 6 - SHARE-BASED COMPENSATION This note details the company's share-based compensation expenses, available shares for grant, and activity related to stock options and restricted stock units - Share-based compensation expenses amounted to $58 thousand for the six months ended June 30, 2025, a decrease from $64 thousand in the corresponding period of 2024[76] - As of June 30, 2025, 1,778 shares were available for grant under the 2024 Incentive Option Plans, with an additional 84,791 shares approved on July 14, 2025, bringing the total to 86,568 shares[76][77] Summary of Share-Based Compensation Activity (Six months ended June 30, 2025) | Metric | Number of options | Weighted average exercise price (U.S. dollars) | | :-------------------------- | :---------------- | :--------------------------------------------- | | Outstanding at January 1, 2025 | 1,608 | $897.47 | | Granted | 4,680 | $18.90 | | Expired | (20) | $907.57 | | Outstanding at June 30, 2025 | 6,268 | $241.40 | | Exercisable at June 30, 2025 | 1,588 | $897.34 | - In the six months ended June 30, 2025, Silexion granted 3,994 RSUs to directors and service providers, including 3,966 RSUs approved for directors on February 9, 2025[79] NOTE 7 - FAIR VALUE MEASUREMENTS This note outlines the fair value measurements for financial liabilities, specifically private warrants and promissory notes, using Level 3 inputs and valuation models Financial Liabilities Measured at Fair Value (Level 3, U.S. dollars in thousands) | Financial Liabilities | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :-------------- | :---------------- | | Private Warrants to ordinary shares | $* | $2 | | Promissory Notes | $3,190 | $3,965 | - The fair value of Promissory Notes is determined using a discount rate of 11.85%-13.39% (including a credit spread of 6.67%-7.56%) and the Company's forecasts for conversion/repayment timing[80] - Warrants' fair value is calculated using a Black-Scholes-Merton model with Level 3 inputs, incorporating volatility (90.34% in 2025, 74.82% in 2024), term (4.13 years in 2025, 5.13 years in 2024), and a zero dividend yield[82][83] NOTE 8 - NET LOSS PER SHARE This note presents the calculation of basic and diluted net loss per share, along with the weighted-average number of ordinary shares outstanding for the reported periods Net Loss Per Share (U.S. dollars in thousands, except per share data) | Metric | Six months ended June 30, 2025 | Six months ended June 30, 2024 | Three months ended June 30, 2025 | Three months ended June 30, 2024 | | :------------------------------------------------------------------------------------------------ | :----------------------------- | :----------------------------- | :------------------------------- | :------------------------------- | | Net loss attributable to ordinary shareholders | $4,238 | $2,845 | $2,503 | $1,472 | | Weighted-average shares outstanding | 516,110 | 7,466 | 579,523 | 7,442 | | Net loss per share, basic and diluted | $8.21 | $381.09 | $4.32 | $197.80 | - Diluted net loss per share equals basic net loss per share for all periods, as potential ordinary share equivalents would be anti-dilutive if included[86] - Anti-dilutive instruments excluded from diluted EPS calculations include warrants to purchase ordinary shares, share-based compensation, promissory notes, and redeemable convertible preferred shares and their associated warrants[88][89] NOTE 9 - TRANSACTIONS AND BALANCES WITH RELATED PARTIES This note provides a summary of transactions and balances with related parties, including share-based compensation, financial expenses, and promissory notes Transactions with Related Parties (U.S. dollars in thousands) | Transaction Type | Six months ended June 30, 2025 | Six months ended June 30, 2024 | Three months ended June 30, 2025 | Three months ended June 30, 2024 | | :--------------------------------------------- | :----------------------------- | :----------------------------- | :------------------------------- | :------------------------------- | | Share-based compensation (R&D) | $0 | $34 | $0 | $17 | | Share-based compensation (G&A) | $58 | $24 | $37 | $12 | | Financial expenses | $229 | $135 | $197 | $60 | Balances with Related Parties (U.S. dollars in thousands) | Balance Type | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :-------------- | :---------------- | | Private warrants to purchase ordinary shares (Current) | $* | $1 | | Sponsor Promissory Note (Non-Current) | $3,190 | $2,961 | NOTE 10 - SEGMENT INFORMATION This note clarifies that the company operates as a single operating segment focused on R&D of siRNA-based treatments, with performance reviewed on a consolidated basis - The Company operates as a single operating segment, concentrating on the research and development of siRNA-based treatments for pancreatic cancer[90] - The CEO, acting as the Chief Operating Decision Maker (CODM), reviews performance on a consolidated basis, aligning segment loss, assets, and liabilities with the consolidated net loss, assets, and liabilities[90][92] Key Segment Expenses and Financials (U.S. dollars in thousands) | Metric | Six months ended June 30, 2025 | Six months ended June 30, 2024 | Three months ended June 30, 2025 | Three months ended June 30, 2024 | | :---------------------------------------------------- | :----------------------------- | :----------------------------- | :------------------------------- | :------------------------------- | | Clinical trials and other R&D service providers | $598 | $1,131 | $442 | $497 | | R&D payroll and related expenses (excl. share-based) | $854 | $476 | $485 | $216 | | G&A Professional services | $1,111 | $448 | $586 | $369 | | Operating loss | $3,934 | $2,635 | $2,284 | $1,385 | | Net loss | $4,238 | $2,912 | $2,503 | $1,489 | | Segment assets | $5,797 | $2,315 | $5,797 | $2,315 | | Segment liabilities | $5,677 | $2,372 | $5,677 | $2,372 | NOTE 11 - SUBSEQUENT EVENTS This note discloses significant events occurring after the reporting period, including an increase in the equity incentive plan, a reverse share split, and an induced warrant exercise transaction - On July 14, 2025, shareholders approved an increase of 84,791 ordinary shares to the 2024 Equity Incentive Plan, bringing the total to 86,568 shares[96] - On July 28, 2025, the Company executed a 1-for-15 reverse share split to regain compliance with Nasdaq Listing Rule 5550(a)(2) and maintain its Nasdaq Capital Market listing[97][98] - On July 31, 2025, an induced warrant exercise resulted in holders exercising 152,106 existing ordinary warrants for cash at $11.57 per share, generating approximately $1,800 thousand in gross proceeds, and receiving new ordinary warrants to purchase 304,212 shares[99][100][101] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition and results of operations, discussing its business overview, recent corporate actions like reverse share splits and Nasdaq listing efforts, detailed analysis of operating expenses and financial results, liquidity and capital resources, critical accounting policies, and regulatory status - Silexion Therapeutics Corp operates through its subsidiary Silexion, a clinical-stage oncology biotechnology company developing proprietary treatments for KRAS-driven cancers, with its lead product candidate SIL204, a second-generation siRNA[107] - The company has incurred significant operating losses, with net losses of $4.2 million and $2.5 million for the six and three months ended June 30, 2025, respectively, and an accumulated deficit of $47.5 million as of June 30, 2025[112] - The company anticipates continued significant expenses from R&D, clinical trials, potential new pipeline products, and increased costs associated with public company operations[113][114] Overview This section provides a high-level overview of Silexion Therapeutics Corp, its focus on developing treatments for KRAS-driven cancers, its technology, funding sources, and financial performance - Silexion Therapeutics Corp (New Silexion) is a publicly-traded holding company for Silexion, a clinical-stage oncology biotechnology company developing treatments for KRAS-driven cancers, with SIL204 as its lead product candidate[106][107] - The company's technology utilizes small interfering RNA (siRNA) to silence the KRAS oncogene, preventing mutated KRAS protein production, and employs an Integrated Treatment Regimen (direct tumor injection and systemic administration) with standard chemotherapy[107] - Funding sources include private offerings, $5.8 million in Israeli Innovation Authority grants, $2.0 million PIPE financing, a $15.0 million ELOC (with $3.1 million utilized), a $5.0 million gross January 2025 public offering, and induced warrant exercises totaling $3.3 million and $1.8 million gross in January and August 2025, respectively[109][110][111] - Net losses were $4.2 million for the six months ended June 30, 2025, and $2.5 million for the three months ended June 30, 2025, resulting in an accumulated deficit of $47.5 million as of June 30, 2025, with no revenue generated to date[112] Reverse Share Splits This section details the company's implementation of two reverse share splits and their retroactive adjustment across all historical share data in the report - The company implemented two reverse share splits: 1-for-9 on November 27, 2024, and 1-for-15 on July 28, 2025, with market effective dates of November 29, 2024, and July 29, 2025, respectively[115] - All historical share, per share, and related option/warrant data in the report have been retroactively adjusted to reflect these reverse share splits[115] Continued Nasdaq Listing This section discusses the company's efforts to maintain its Nasdaq listing, including addressing delisting notices and implementing a reverse share split to meet compliance requirements - On May 22, 2025, Nasdaq issued a delisting notice due to the company's failure to maintain minimum Market Value of Listed Securities ($50 million) and Market Value of Publicly Held Shares ($15 million)[117] - A Nasdaq hearings panel granted the company's request to remain listed on July 7, 2025, leading to a transfer from the Nasdaq Global Market to the Nasdaq Capital Market[117] - Continued listing is contingent upon demonstrating at least $2.5 million in shareholders' equity by September 19, 2025, and adhering to all Nasdaq listing rules[118][119] - The company executed a 1-for-15 reverse share split on July 28, 2025, to address a bid price deficiency and maintain the minimum number of publicly held shares[118] Components of our Results of Operations This section describes the key components of the company's results of operations, including research and development expenses, general and administrative expenses, and financial expenses, net - Research and development expenses, encompassing payroll, share-based compensation, subcontractor costs, and clinical trial costs, are projected to increase with further SIL204 development and additional hiring[122][123] - General and administrative expenses, covering personnel costs, patent fees, professional services, and travel, are anticipated to rise due to business growth and public company operating costs[124][125] - Financial expenses, net, primarily comprise changes in the fair value of financial liabilities, interest expenses, and foreign currency exchange differences[126] Results of Operations This section analyzes the company's financial performance, detailing changes in operating expenses, financial expenses, and net loss for the six and three-month periods ended June 30, 2025 and 2024 - Net loss increased by 44.8% to $4.2 million for the six months ended June 30, 2025, compared to $2.9 million in 2024, mainly due to higher general and administrative expenses associated with public company status[134] - Net loss increased by 66.7% to $2.5 million for the three months ended June 30, 2025, compared to $1.5 million in 2024, primarily driven by increased general and administrative and research and development expenses[139] Comparison of six-month periods ended June 30, 2025 and 2024 This section compares the company's operating expenses and net loss for the six-month periods ended June 30, 2025, and 2024, highlighting key drivers of change Operating Expenses (Six-month period ended June 30, U.S. dollars in thousands) | Expense Category | 2025 | 2024 | Change ($) | Change (%) | | :------------------------- | :--- | :--- | :--------- | :--------- | | Research and development | $1,608 | $1,727 | $(119) | -6.9% | | General and administrative | $2,326 | $908 | $1,418 | +156.2% | | Total operating expenses | $3,934 | $2,635 | $1,299 | +49.3% | | Operating loss | $3,934 | $2,635 | $1,299 | +49.3% | | Financial expenses, net | $301 | $270 | $31 | +11.5% | | Net loss | $4,238 | $2,912 | $1,326 | +45.5% | - R&D expenses decreased by $0.1 million (5.9%) to $1.6 million, primarily due to a $0.5 million reduction in subcontractors/consultants as the development program shifted from API development to manufacturing, partially offset by a $0.4 million increase in payroll from headcount and salary increases[130] - G&A expenses rose by $1.4 million (155.6%) to $2.3 million, driven by a $0.5 million increase in payroll and a $0.7 million increase in professional services related to public company operations[132] Comparison of three-month periods ended June 30, 2025 and 2024 This section compares the company's operating expenses and net loss for the three-month periods ended June 30, 2025, and 2024, detailing the factors contributing to changes Operating Expenses (Three-month period ended June 30, U.S. dollars in thousands) | Expense Category | 2025 | 2024 | Change ($) | Change (%) | | :------------------------- | :--- | :--- | :--------- | :--------- | | Research and development | $1,018 | $766 | $252 | +32.9% | | General and administrative | $1,266 | $619 | $647 | +104.5% | | Total operating expenses | $2,284 | $1,385 | $899 | +64.9% | | Operating loss | $2,284 | $1,385 | $899 | +64.9% | | Financial expenses, net | $216 | $102 | $114 | +111.8% | | Net loss for the quarter | $2,503 | $1,489 | $1,014 | +68.1% | - R&D expenses increased by $0.2 million (25.0%) to $1.0 million, primarily due to higher payroll and related expenses from additional headcount, salary increases, and bonus accruals post-Business Combination[136] - G&A expenses increased by $0.7 million (116.7%) to $1.3 million, fueled by a $0.3 million increase in payroll and a $0.2 million increase in professional services for public company financing activities[137] - Financial expenses, net, increased by $0.1 million (100.0%) to $0.2 million, mainly due to higher revaluation expenses of financial instruments[138] Liquidity and Capital Resources This section discusses the company's liquidity position, capital resources, funding requirements, and various financing activities undertaken to support operations and development - As of June 30, 2025, cash and cash equivalents totaled $3.5 million, with net losses of $4.2 million and $2.5 million for the six and three months ended June 30, 2025, respectively[140] - Current cash and anticipated cash flow are insufficient for the next 12 months, raising substantial doubt about the company's ability to continue as a going concern without additional capital[142][143] - Primary liquidity sources include private offerings, IIA grants, $2.0 million PIPE financing, $3.1 million utilized ELOC, a $5.0 million gross January 2025 public offering, and induced warrant exercises totaling $3.3 million and $1.8 million gross[141] - Future capital requirements depend on R&D, clinical trials, new product candidates, and public company operating costs; financing will likely involve public/private equity offerings, debt, strategic alliances, and licensing arrangements[179][181][182][187] Public Offering via H.C. Wainwright This section details the company's January 2025 public offering, including the securities sold, gross proceeds, warrant terms, and associated placement agent fees - On January 15 and 17, 2025, the company completed a public offering (HCW Offering) of 143,067 ordinary shares, 103,847 pre-funded warrants, and 246,914 ordinary warrants, raising approximately $5.0 million in gross proceeds[146] - Pre-funded warrants were exercisable at $0.0015 per share, and ordinary warrants at $20.25 per share, both with a five-year term[148] - The company paid H.C. Wainwright a 7.0% cash placement agent fee and a 1.0% management fee, and issued 17,284 placement agent warrants (7.0% of shares/pre-funded warrants sold) with an exercise price of $25.3125[151] - Net proceeds from the HCW Offering were approximately $4.26 million, designated for advancing pre-clinical clinical studies and general corporate purposes[152] Induced Warrant Exercise Transactions This section describes the induced warrant exercise transactions in January and July 2025, detailing the number of warrants exercised, gross proceeds generated, and new warrants issued - On January 29, 2025, and July 31, 2025, induced warrant exercise transactions involved holders exercising 148,102 and 152,106 existing ordinary warrants, respectively, for cash[153] - These exercises generated gross proceeds of approximately $3.3 million (January 2025) and $1.8 million (August 2025), prior to deducting placement agent fees and other offering expenses[153] - In consideration, new ordinary warrants were issued to purchase 148,102 and 304,212 ordinary shares, respectively, alongside placement agent warrants for 10,368 and 10,647 shares, respectively[153][154] - The company engaged H.C. Wainwright as the exclusive placement agent, paying cash fees (7.0% placement, 1.0% management) and issuing placement agent warrants[154] ELOC Financing This section outlines the Equity Line of Credit (ELOC) Agreement with White Lion Capital, LLC, including the credit limit, commitment shares, and aggregate proceeds generated - The ELOC Agreement, effective August 15, 2024, provides an equity line of credit of up to $15.0 million from White Lion Capital, LLC, valid until December 31, 2025[158] - As consideration, the company issued $337,500 worth of ELOC Commitment Shares (2,707 ordinary shares) to the ELOC Investor on September 18, 2024[160] - Through the reporting date, the company has issued 50,915 ordinary shares to the ELOC Investor under the ELOC Agreement, generating aggregate proceeds of approximately $3.1 million[161] Settlement of Amounts Due Under Marketing Agreement with EarlyBird This section details the settlement of amounts due under the Marketing Agreement with EarlyBird, including cash payments, conversion of a promissory note into shares, and the note's retirement - Moringa and EarlyBird agreed to reduce the Marketing Agreement fee to $1.6 million, with $350,000 paid in cash at closing and a $1.25 million EarlyBird Convertible Note issued[162] - Through January 31, 2025, $407,556 was paid on the EarlyBird Convertible Note[162] - On March 13, 2025, a letter agreement resulted in a $400,000 cash payment (plus $15,000 legal expenses), conversion of the remaining $880,202 outstanding principal and interest into 18,519 ordinary shares, and a final cash payment of $135,998[163][164] - The EarlyBird Convertible Note was fully retired on March 18, 2025[164] Issuance of A&R Sponsor Promissory Note This section describes the issuance of the A&R Sponsor Promissory Note, its principal amount, maturity date, and conversion terms into ordinary shares - The A&R Sponsor Promissory Note for $3,433,000 was issued to the Moringa sponsor at the Business Combination closing, superseding all prior promissory notes[165] - The note matures on February 15, 2027, with amounts repayable via conversion into ordinary shares (Note Shares)[165] - Conversion terms permit conversion at the price of subsequent equity financings (up to 30% of shares issued) or at the sponsor's election after 24 months at the 20-day VWAP[165] - As of the reporting date, no amounts under the A&R Sponsor Promissory Note have been converted into ordinary shares[165] Government Grants This section details the royalty-bearing grants received from the Israeli Innovation Authority (IIA) for R&D efforts and the associated royalty payment obligations - The company has received approximately $5.8 million in royalty-bearing grants from the Israeli Innovation Authority (IIA) for R&D efforts as of June 30, 2025[166] - The company is committed to paying royalties to the IIA at a rate of 3.0% to 5.0% on sales of products developed with IIA-funded know-how, up to the total grant amount plus interest[167] - The total royalty amount potentially payable by the company as of June 30, 2025, is approximately $5.8 million ($6.6 million including interest)[171] Cash flows for the six-month periods ended June 30, 2025 and 2024 This section analyzes the company's cash flow activities for the six-month periods ended June 30, 2025, and 2024, detailing changes in operating, investing, and financing cash flows Cash Flows (Six-month period ended June 30, U.S. dollars in thousands) | Cash Flow Activity | 2025 | 2024 | Change ($) | Change (%) | | :-------------------------------- | :--- | :--- | :--------- | :--------- | | Net cash used in operating activities | $(4,960) | $(2,817) | $(2,143) | +76.1% | | Net cash used in investing activities | $(7) | $(6) | $(1) | +16.7% | | Net cash provided by financing activities | $7,237 | $0 | $7,237 | N/A | | Net increase (decrease) in cash and cash equivalents and restricted cash | $2,270 | $(2,823) | $5,093 | N/A | - Net cash used in operating activities increased by $2.2 million (78.6%) to $5.0 million, primarily due to a $1.3 million increase in net loss and a $0.9 million increase in net working capital[174] - Net cash provided by financing activities increased by $7.2 million to $7.2 million, primarily from $5.0 million (net of $0.7 million costs) from the HCW Offering, $0.9 million from warrant exercises, and $3.3 million (net of $0.5 million costs) from the January 2025 warrant inducement transaction, partially offset by $0.7 million in EarlyBird Convertible Note payments[175] Cash flows for the quarters ended June 30, 2025 and 2024 This section analyzes the company's cash flow activities for the three-month periods ended June 30, 2025, and 2024, detailing changes in operating, investing, and financing cash flows Cash Flows (Three-month period ended June 30, U.S. dollars in thousands) | Cash Flow Activity | 2025 | 2024 | Change ($) | Change (%) | | :-------------------------------- | :--- | :--- | :--------- | :--------- | | Net cash used in operating activities | $(2,507) | $(1,065) | $(1,442) | +135.4% | | Net cash used in investing activities | $(1) | $0 | $(1) | N/A | | Net cash used in financing activities | $(195) | $0 | $(195) | N/A | | Net increase (decrease) in cash and cash equivalents and restricted cash | $(2,703) | $(1,065) | $(1,638) | +153.8% | - Net cash used in operating activities increased by $1.4 million (127.3%) to $2.5 million, primarily due to a $1.0 million increase in net loss and a $0.6 million increase in net working capital[177] - Net cash used in financing activities decreased by $0.2 million to $0.2 million, primarily due to cash issuance costs from the public offering paid in the three-month period ended June 30, 2025[178] Funding Requirements This section outlines the company's anticipated funding needs for ongoing and planned activities, particularly R&D and clinical trials, and addresses the going concern uncertainty - The company anticipates substantial financial resources will be allocated to ongoing and planned activities, especially the development of SIL204 and pre-clinical/clinical trials[179] - As of June 30, 2025, existing cash and cash equivalents ($3.5 million) are projected to fund operations only into the first quarter of 2026[182][185] - Management has concluded there is substantial doubt about the company's ability to continue as a going concern for 12 months without additional financing, owing to operating losses and negative cash flows[182][183] - Future funding will likely originate from public/private equity offerings, debt, strategic alliances, and licensing arrangements, potentially causing significant dilution to current shareholders[187][188] Critical Accounting Policies and Estimates This section identifies the company's critical accounting estimates, specifically focusing on the fair value measurement of promissory notes - Critical accounting estimates include the valuation of promissory notes, which are measured at fair value[190][191] - The fair value of promissory notes is determined using a discount rate of 11.85%-13.39% (including a credit spread of 7.56%) and management's forecasts for conversion/redemption timing[191] Recent Accounting Pronouncements This section directs readers to Note 2 of the financial statements for details on recent accounting pronouncements relevant to the company's financial reporting - Refer to Note 2 of the financial statements for details on recent accounting pronouncements applicable to the current and prior year financial statements[192] Smaller Reporting Company Status This section explains the company's status as a "smaller reporting company" and the associated reduced disclosure requirements - The company is a 'smaller reporting company' with a market value of ordinary shares held by non-affiliates less than $700 million and annual revenue less than $100 million[193] - This status permits the presentation of only the two most recent fiscal years of audited financial statements and reduced executive compensation disclosure[193] Emerging Growth Company Status This section describes the company's "emerging growth company" status, its election for an extended transition period for accounting standards, and the conditions for retaining this status - The company is an 'emerging growth company' and has opted for the extended transition period for new or revised financial accounting standards under the JOBS Act[195] - This status may affect the comparability of its financial results with other public companies[195] - The company will retain its emerging growth company status until specific thresholds are met (e.g., market value exceeding $700 million, revenue exceeding $1.235 billion, debt exceeding $1.0 billion) or December 31, 2029[195] Item 3. Quantitative and Qualitative Disclosures about Market Risk As a smaller reporting company, Silexion is exempt from detailed disclosures under this item, noting its funds are in demand-deposit interest-bearing bank accounts and no material impact from interest rate fluctuations is anticipated - As a 'smaller reporting company,' Silexion is exempt from detailed market risk disclosures[196] - Funds are invested in demand-deposit interest-bearing bank accounts, with no material impact from interest rate fluctuations anticipated[196] Item 4. Control and Procedures Management, with the participation of the CEO and CFO, evaluated the effectiveness of the company's disclosure controls and procedures as of June 30, 2025, and concluded they were effective, with no material changes in internal control over financial reporting during the quarter - Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of June 30, 2025[199] - No material changes in internal control over financial reporting occurred during the fiscal quarter ended June 30, 2025[200] PART II - OTHER INFORMATION This section covers other required disclosures, including legal proceedings, risk factors, unregistered sales of equity securities, defaults upon senior securities, mine safety disclosures, and a list of exhibits Item 1. Legal Proceedings The company reported no legal proceedings - The company has no legal proceedings to report[202] Item 1A. Risk Factors This section refers readers to the 'Risk Factors' section of the 2024 Annual Report for factors that could materially affect actual results, noting no material changes to those risk factors as of the date of this Quarterly Report - Refer to 'Part I, Item 1.A Risk Factors' of the 2024 Annual Report for factors that could materially affect actual results[203] - As of the date of this Quarterly Report, no material changes to previously disclosed risk factors have occurred[203] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section incorporates by reference disclosures from 'Management's Discussion and Analysis of Financial Condition and Results of Operations' regarding unregistered sales of equity securities, specifically induced warrant exercise transactions and the settlement of amounts due under the Marketing Agreement with EarlyBird, all made in reliance on Section 4(a)(2) of the Securities Act and/or Rule 506 of Regulation D - Disclosures regarding unregistered sales of equity securities, including induced warrant exercise transactions and settlement with EarlyBird, are incorporated by reference from Item 2 of Part I[204] - These sales were conducted in reliance on Section 4(a)(2) of the Securities Act and/or Rule 506 of Regulation D[204] - No disclosure is required for the use of proceeds from the initial registration statement on Form S-4 related to the Business Combination, as it qualified as a business combination under Rule 145(a)[205] Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities - The company reported no defaults upon senior securities[207] Item 4. Mine Safety Disclosures This item is not applicable to the company - Mine Safety Disclosures are not applicable to the company[208] Item 5. Other Information The company reported no other information - The company reported no other information[209] Item 6. Exhibits This section lists the exhibits filed as part of, or incorporated by reference into, the Quarterly Report on Form 10-Q, including certifications and XBRL documents - The report includes certifications from the Principal Executive Officer and Principal Financial Officer (Exhibits 31.1, 31.2, 32.1, 32.2)[211] - Inline XBRL documents (Instance, Schema, Calculation, Definition, Label, Presentation Linkbase Documents) and the Cover Page Interactive Data File are filed as exhibits[211] SIGNATURES This section contains the signatures of the company's Chairman and Chief Executive Officer and Chief Financial Officer, certifying the report on August 12, 2025 - The report is signed by Ilan Hadar, Chairman and Chief Executive Officer, and Mirit Horenshtein-Hadar, Chief Financial Officer, on August 12, 2025[215]