NEW YORK, March 15 /PRNewswire-FirstCall/ -- XTL Biopharmaceuticals
Ltd. (NASDAQ:XTLB)(LSE:XTL)(TASE:XTL), a biopharmaceutical company
engaged in the acquisition, development and commercialization of
therapeutics for the treatment of unmet medical needs, particularly
neuropathic pain and hepatitis C, today announced its financial
results for the year ended December 31, 2006. At December 31, 2006,
the Company had cash, cash equivalents and short-term bank deposits
of $25.2 million, compared to cash and cash equivalents of $13.4
million at December 31, 2005. The year-over-year increase of $11.8
million is attributable primarily to the Company's completion in
May of a private placement of ordinary shares yielding $24.4
million in net proceeds, partially offset by operating expenditures
associated with the development and support of our hepatitis C
clinical product candidates, XTL-2125 and XTL-6865, as well as to
the development of the DOS hepatitis C pre-clinical program. The
loss for the year ended December 31, 2006 was $15.1 million, or
$0.08 per ordinary share, compared to the loss of $14.0 million, or
$0.08 per ordinary share, for the year ended December 31, 2005,
representing an increase in net loss of $1.1 million. The increased
loss was primarily attributable to an increase of $2.9 million in
research and development costs, primarily associated with
expenditures related to the DOS program acquired from VivoQuest in
September 2005, and a $0.4 million increase in business development
costs related to the recent in-licensing of our lead clinical
compound Bicifadine in January 2007. The increase in loss was
partially offset by the absence of $1.8 million in in-process
research and development costs related to the DOS program, and also
due to a $0.7 million increase in financial and other income, due
to the completion of the private placement that closed in May 2006,
as well as due to the general increase in short-term market
interest rates when compared to the comparable period last year.
For the years ended December 31, 2006 and 2005, the Company's loss
of $15.1 million and $14.0 million respectively, included $2.2
million and $2.8 million, respectively, of non-cash stock option
compensation expense. Ron Bentsur, Chief Executive Officer of XTL,
commented, "During the year we were successful in allocating our
resources towards the transformation of XTL into a company focused
on clinical development with a more robust clinical-stage pipeline.
The recent in-licensing of Bicifadine, our lead drug candidate, for
the treatment of neuropathic pain, has immediately repositioned us
as a late-stage development company and we look forward to starting
a clinical trial with Bicifadine in 2007. In addition, we are
nearing completion of the Phase I XTL-2125 clinical trial and we
expect to report clinical data from the study during the second
quarter of 2007. Moreover, we have completed the XTL-6865 Phase I
clinical trial and we expect to report clinical data from this
study shortly." Mr. Bentsur added, "We enter 2007 with a very
well-defined business plan. I believe that the Company now has a
clear pathway to success and that the execution of the three main
prongs of our business strategy, the development of our lead
product, Bicifadine, the development of our HCV product portfolio
and the continued opportunistic build-out of our product portfolio
through in-licensing and acquisitions, will determine the level of
our success." ABOUT XTL BIOPHARMACEUTICALS LTD. XTL
Biopharmaceuticals Ltd. ("XTL") is engaged in the acquisition,
development and commercialization of therapeutics for the treatment
of neuropathic pain and hepatitis C. XTL is developing Bicifadine,
a serotonin and norepinephrine reuptake inhibitor, for the
treatment of neuropathic pain. In addition, XTL is developing
XTL-2125 - a small molecule, non-nucleoside inhibitor of the
hepatitis C virus polymerase. XTL-2125 is currently in a Phase 1
clinical trial in patients with chronic hepatitis C. XTL is also
developing XTL-6865 - a combination of two monoclonal antibodies
against the hepatitis C virus - presently in Phase 1 clinical
trials in patients with chronic hepatitis C. XTL's hepatitis C
pipeline also includes several families of pre-clinical hepatitis C
small molecule inhibitors. XTL also has an active in-licensing and
acquisition program designed to identify and acquire additional
drug candidates. XTL is publicly traded on the NASDAQ, London, and
Tel-Aviv Stock Exchanges (NASDAQ:XTLB)(LSE:XTL)(TASE:XTL). Contact:
Ron Bentsur, Chief Executive Officer Tel: +1-(212)-531-5960
Cautionary Statement Some of the statements included in this press
release, particularly those anticipating future financial
performance, clinical and business prospects for our clinical
compound for neuropathic pain, Bicifadine, and for our clinical
compounds for hepatitis C, XTL-2125 and XTL-6865, growth and
operating strategies and similar matters, may be forward-looking
statements that involve a number of risks and uncertainties. For
those statements, we claim the protection of the safe harbor for
forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995. Among the factors that could cause
our actual results to differ materially are the following: our
ability to start a clinical trial with Bicifadine in 2007; our
ability to meet the forecast reporting deadlines for XTL-2125 and
XTL-6865 clinical trials that we mentioned above; our ability to
successfully complete cost-effective clinical trials for the drug
candidates in our pipeline which would affect our ability to
continue to fund our operations with our available cash reserves,
our ability to meet anticipated development timelines for the drug
candidates in our pipeline due to recruitment, clinical trial
results, manufacturing capabilities or other factors; and other
risk factors identified from time to time in our reports filed with
the Securities and Exchange Commission and the London Stock
Exchange, including our annual report on Form 20-F filed with the
Securities and Exchange Commission on May 25, 2006. Any
forward-looking statements set forth in this press release speak
only as of the date of this press release. We do not intend to
update any of these forward-looking statements to reflect events or
circumstances that occur after the date hereof. This press release
and prior releases are available at http://www.xtlbio.com/. The
information in our website is not incorporated by reference into
this press release and is included as an inactive textual reference
only. XTL BIOPHARMACEUTICALS LTD. (A Development Stage Company)
CONSOLIDATED BALANCE SHEETS (in thousands of US dollars, except
share amounts) December 31 2006 2005 --------- --------- A s s e t
s CURRENT ASSETS: Cash and cash equivalents 4,400 13,360 Short-term
bank deposits 20,845 -- Trading securities 102 -- Property and
equipment (held for sale) -- net 18 -- Deferred tax asset 29 --
Other receivables and prepaid expenses 702 431 --------- ---------
T o t a l current assets 26,096 13,791 --------- --------- EMPLOYEE
SEVERANCE PAY FUNDS 98 449 RESTRICTED LONG-TERM DEPOSITS 172 110
PROPERTY AND EQUIPMENT -- net 490 762 INTANGIBLE ASSETS -- net 25
39 DEFERRED TAX ASSET 19 -- --------- --------- T o t a l assets
26,900 15,151 ========= ========= Liabilities and shareholders'
equity CURRENT LIABILITIES: Accounts payable and accrued expenses
3,003 2,007 Deferred gain 399 399 --------- --------- T o t a l
current liabilities 3,402 2,406 --------- --------- LIABILITY IN
RESPECT OF EMPLOYEE SEVERANCE OBLIGATIONS 340 695 DEFERRED GAIN 398
798 COMMITMENTS AND CONTINGENCIES --------- --------- T o t a l
liabilities 4,140 3,899 --------- --------- SHAREHOLDERS' EQUITY:
Ordinary shares of NIS 0.02 par value (authorized: 300,000,000 as
of December 31, 2006 and 2005; issued and outstanding: 220,124,349
as of December 31, 2006 and 173,180,441 as of December 31, 2005)
1,072 864 Additional paid in capital 136,611 110,179 Deficit
accumulated during the development stage (114,923) (99,791) -------
--------- T o t a l shareholders' equity 22,760 11,252 ---------
--------- T o t a l liabilities and shareholders' equity 26,900
15,151 ========= ========= XTL BIOPHARMACEUTICALS LTD. (A
Development Stage Company) CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands of US dollars, except share and per share amounts)
Period from March 9, 1993* to December 31, Year ended December 31
2006 2006 2005 2004 (unaudited) -------- -------- -------- --------
REVENUES: Reimbursed out-of-pockets expenses -- 2,743 3,269 6,012
License 454 454 185 1,093 --------- --------- --------- ---------
454 3,197 3,454 7,105 COST OF REVENUES: Reimbursed out-of-pockets
expenses -- 2,743 3,269 6,012 License (with respect to royalties)
54 54 32 140 --------- --------- --------- --------- 54 2,797 3,301
6,152 GROSS MARGIN 400 400 153 953 RESEARCH AND DEVELOPMENT COSTS
(includes non-cash stock option compensation of $173, $112 and $30,
in 2006, 2005 and 2004, respectively) 10,229 7,313 11,985 93,119 L
E S S - PARTICIPATIONS -- -- -- 10,950 --------- ---------
--------- --------- 10,229 7,313 11,985 82,169 IN - PROCESS
RESEARCH AND DEVELOPMENT COSTS -- 1,783 -- 1,783 GENERAL AND
ADMINISTRATIVE EXPENSES (includes non-cash stock option
compensation of $1,992, $2,641 and $2, in 2006, 2005 and 2004,
respectively) 5,576 5,457 4,134 34,588 BUSINESS DEVELOPMENT COSTS
(includes non-cash stock option compensation of $15, $10 and $0, in
2006, 2005 and 2004, respectively) 641 227 810 5,154 ---------
--------- --------- --------- OPERATING LOSS 16,046 14,380 16,776
122,741 FINANCIAL AND OTHER INCOME - net 1,141 443 352 8,284
--------- --------- --------- --------- LOSS BEFORE INCOME TAXES
14,905 13,937 16,424 114,457 INCOME TAXES 227 78 49 466 ---------
--------- --------- --------- LOSS FOR THE PERIOD 15,132 14,015
16,473 114,923 ========= ========= ========= ========= BASIC AND
DILUTED LOSS PER ORDINARY SHARE $0.08 $ 0.08 $ 0.12 =========
========= ========= WEIGHTED AVERAGE NUMBER OF SHARES USED IN
COMPUTING BASIC AND DILUTED LOSS PER ORDINARY SHARE 201,737,295
170,123,003 134,731,766 * Incorporation date, see note 1 XTL
BIOPHARMACEUTICALS LTD. (A Development Stage Company) CONSOLIDATED
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (in thousands of US
dollars, except share amounts) Ordinary shares -------------------
Additional Number of paid in shares Amount capital ---------
--------- ----------- BALANCE AT DECEMBER 31, 2005 173,180,441 864
110,179 CHANGES DURING 2006: Comprehensive loss - loss for the
period -- -- -- Non-employee stock option compensation expenses --
-- 7 Employee stock option compensation expenses -- -- 2,173
Exercise of stock options 277,238 1 96 Issuance of share warrants,
net of $681 share issuance expenses -- -- 4,565 Issuance of shares,
net of $2,956 share issuance expenses 46,666,670 207 19,591
--------- --------- --------- BALANCE AT DECEMBER 31, 2006
220,124,349 1,072 136,611 ========= ========= ========= Deficit
Accumulated during the development stage Total -----------
--------- BALANCE AT DECEMBER 31, 2005 (99,791) 11,252 CHANGES
DURING 2006: Comprehensive loss - loss for the period (15,132)
(15,132) Non-employee stock option compensation expenses -- 7
Employee stock option compensation expenses -- 2,173 Exercise of
stock options -- 97 Issuance of share warrants, net of $681 share
issuance expenses -- 4,565 --------- --------- Issuance of shares,
net of $2,956 share issuance expenses -- 19,798 BALANCE AT DECEMBER
31, 2006 (114,923) 22,760 ========= ========= XTL
BIOPHARMACEUTICALS LTD. (A Development Stage Company) CONSOLIDATED
STATEMENTS OF CASH FLOWS (in thousands of US dollars) Period from
March 9, 1993 (a) to December Year ended December 31 31, 2006 2006
2005 2004 (unaudited) --------- --------- --------- --------- CASH
FLOWS FROM OPERATING ACTIVITIES: Loss for the period (15,132)
(14,015) (16,473) (114,923) Adjustments to reconcile loss to net
cash used in operating activities: Depreciation and amortization
243 242 319 3,072 Linkage difference on restricted deposits (10) 3
-- (7) Acquisition of in process research and development -- 1,783
-- 1,783 Loss (gain) on disposal of property and equipment (57) 6 1
(39) Increase (decrease) in liability in respect of employee
severance obligations 8 (159) 30 1,236 Impairment charges -- 26 --
380 Loss (gain) from sales of investment securities -- -- 13 (410)
Other income related to exchange of shares (100) -- -- (100) Gain
from trading securities (2) -- -- (2) Stock option based
compensation expenses 2,180 2,763 32 5,458 Gain on amounts funded
in respect of employee severance pay funds (1) (6) (4) (92)
Deferred tax asset (48) -- -- (48) Changes in operating assets and
liabilities: Decrease (increase) in other receivables and prepaid
expenses (178) 418 (143) (609) Increase (decrease) in accounts
payable and accrued expenses 910 (1,127) 133 2,917 Increase
(decrease) in deferred gain (400) (400) 1,597 797 ---------
--------- --------- --------- Net cash used in operating (12,587)
(10,466) (14,495) (100,587) activities --------- ---------
--------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Decrease
(increase) in short-term bank deposits (20,845) 10,136 7,193
(20,845) Restricted deposits (52) -- 46 (165) Investment in
investment securities -- -- -- (3,363) Proceeds from sales of
investment securities -- -- 722 3,773 Employee severance pay funds
(18) (50) (136) (909) Purchase of property and equipment (21) (38)
(180) (4,042) Proceeds from disposals of property and equipment 103
27 5 252 Acquisition in respect of license and purchase of assets
-- (548) -- (548) --------- --------- --------- --------- Net cash
provided by (used in) investing activities (20,833) 9,527 7,650
(25,847) XTL BIOPHARMACEUTICALS LTD. (A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued) (in thousands of
U.S dollars) Period from March 9, 1993 (a) to December Year ended
December 31 31, 2006 2006 2005 2004 (unaudited) --------- ---------
--------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Issuance
of share capital and warrants - net of share issuance expenses
24,363 -- 15,430 128,734 Exercise of share warrants and stock
options 97 1,511 19 2,100 Proceeds from long-term debt -- -- -- 399
Proceeds from short-term debt -- -- -- 50 Repayment of long-term
debt -- -- -- (399) Repayment of short-term debt -- -- -- (50)
--------- --------- --------- --------- Net cash provided by
financing activities 24,460 1,511 15,449 130,834 ---------
--------- --------- --------- NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (8,960) 572 8,604 4,400 BALANCE OF CASH AND CASH
EQUIVALENTS AT BEGINNING OF PERIOD 13,360 12,788 4,184 -- ---------
--------- --------- --------- BALANCE OF CASH AND CASH EQUIVALENTS
AT END OF PERIOD 4,400 13,360 12,788 4,400 ========= ========
======== ========= Supplementary information on investing and
financing activities not involving cash flows: Issuance of ordinary
shares in respect of license and purchase of assets -- 1,391 --
1,391 Conversion of convertible subordinated debenture into shares
-- -- -- 1,700 Supplemental disclosures of cash flow information:
Income taxes paid 136 49 107 457 ========= ======== ========
========= Interest paid -- -- -- 350 ========= ======== ========
========= (a) Incorporation date, see note 1 XTL BIOPHARMACEUTICALS
LTD. (A Development Stage Company) NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS 1. GENERAL XTL Biopharmaceuticals Ltd. ("the
Company") was incorporated under the Israel Companies Ordinance on
March 9, 1993. The Company is a development stage company in
accordance with Statement of Financial Accounting Standards
("SFAS") No. 7 "Accounting and Reporting by Development Stage
Enterprises." The consolidated financial statements are prepared in
accordance with generally accepted accounting principles in the
United States ("US GAAP"). The preparation of the financial
statements, in conformity with US GAAP, requires management to make
estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosure of contingent assets and
liabilities, at the date of the financial statements, and the
reported expenses during the reporting periods. Actual results may
vary from these estimates. Through December 31, 2006, the Company
has incurred losses in an aggregate amount of US $114.9 million.
Such losses have resulted from the Company's activities as a
development stage company. It is expected that the Company will be
able to finance its operations from its current reserves through
2007. Continuation of the Company's current operations after
utilizing its current cash reserves during 2008 is dependent upon
the generation of additional financial resources either through
agreements for the commercialization of its product portfolio or
through external financing. 2. STOCK-BASED COMPENSATION The Company
adopted SFAS No. 123R "Share - Based Payment" ("SFAS 123R") as of
January 1, 2005, using the modified prospective application
transition method. Under such transition method, the Company's
financial statements for periods prior to the effective date of
SFAS 123R (January 1, 2005) have not been restated. 3. RESEARCH AND
DEVELOPMENT COSTS Research and development costs are expensed as
they are incurred and consist primarily of salaries and related
personnel costs, fees paid to consultants and other third-parties
for clinical and laboratory development, license and milestone
fees, and facilities-related and other expenses relating to the
design, development, testing, and enhancement of product
candidates. In connection with the purchase of assets, amounts
assigned to intangible assets to be used in a particular research
and development project that have not reached technological
feasibility and have no alternative future use are charged to
in-process research and development costs at the purchase date. 4.
REVENUE RECOGNITION The Company recognizes the revenue from its
licensing agreement with Cubist under the provisions of the EITF
00-21 "Revenue Arrangements with Multiple Deliverables" and SAB 104
"Revenue Recognition." Under those pronouncements, companies are
required to allocate revenues from multiple-element arrangements to
the different elements based on sufficient objective and reliable
evidence of fair value. Since the Company does not have the ability
to determine the fair value of each unit of accounting, the
agreement was accounted for as one unit of accounting, after
failing the separation criteria, and the Company recognizes each
payment on the abovementioned agreement ratably over the expected
life of the arrangement. In addition, through 2005, Cubist had
requested that the Company provide development services to be
reimbursed by Cubist. As required by EITF 01-14 "Income Statement
Characterization of Reimbursements Received for "Out-of-Pocket"
Expenses Incurred," amounts paid by the Company, as a principal,
are included in the cost of revenues as reimbursable out-of-pocket
expenses, and the reimbursements the Company receives as a
principal are reported as reimbursed out-of-pocket revenues.
DATASOURCE: XTL Biopharmaceuticals Ltd CONTACT: Contact: Ron
Bentsur, Chief Executive Officer, Tel: +1-(212)-531-5960
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