UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

 

FORM 10-Q

 

 

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2019

 

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

FOR THE TRANSITION PERIOD FROM                      TO                     

 

Commission File Number 001-37521

 

 

 

INTEC PHARMA LTD.

(Exact name of Registrant as specified in its Charter)

 

 

 

Israel   Not Applicable

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

     

12 Hartom Street

Har Hotzvim, Jerusalem

  9777512
(Address of principal executive offices)   (Zip Code)

 

Registrant’s telephone number, including area code: +972-2-586-4657

 

 

 

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES ☒ NO ☐

 

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files). YES ☒ NO ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer     Accelerated filer  
Non-accelerated filer     Smaller reporting company  
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. ☒

 

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO ☒

 

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  The Nasdaq Capital Market

 

The number of the Registrant’s ordinary shares outstanding as of May 6, 2019 was 33,297,371.

 

 

 

 

 

TABLE OF CONTENTS

 

    Page
     
  PART I — FINANCIAL INFORMATION  
     
Item 1. Condensed Consolidated Financial Statements (Unaudited) 1
  Condensed Consolidated Balance Sheets 3
  Condensed Consolidated Statements of Operations 4
  Condensed Consolidated Statement of Changes in Shareholders’ Equity 5
  Condensed Consolidated Statements of Cash Flows 6
  Notes to Condensed Consolidated Financial Statements 7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 15
Item 3. Quantitative and Qualitative Disclosures About Market Risk 19
Item 4. Controls and Procedures 19
   
  PART II —  OTHER INFORMATION  
     
Item 1. Legal Proceedings 20
Item 1A. Risk Factors 20
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 20
Item 3. Defaults upon Senior Securities 20
Item 4. Mine Safety Disclosures 20
Item 5. Other Information 20
Item 6. Exhibits 20

 

i

 

 

PART I. FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

 

 

 

 

 

 

INTEC PHARMA LTD.

 

UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

 

AS OF MARCH 31, 2019

 

 

 

 

 

 

1

 

 

INTEC PHARMA LTD.

 

UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

 

TABLE OF CONTENTS

 

  Page
   
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:  
Consolidated Balance Sheets 3
Consolidated Statements of Operations 4
Consolidated Statements of Changes in Shareholders’ Equity 5
Consolidated Statements of Cash Flows 6
Notes to Consolidated Financial Statements 7 - 14

 

 

 

2

 

 

INTEC PHARMA LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

   March 31,   December 31, 
   2019   2018 
 

U.S. dollars
in thousands

 
         
Assets        
CURRENT ASSETS:        
Cash and cash equivalents  $31,497   $39,246 
Investment in marketable securities (Note 3)   757    1,333 
Prepaid expenses and other receivables   2,685    2,986 
TOTAL CURRENT ASSETS   34,939    43,565 
           
NON-CURRENT ASSETS:          
Other assets (Note 4c)   6,792    5,431 
Property and equipment, net   12,487    12,233 
Operating lease right-of-use assets (Note 4a)   2,047    - 
Deferred tax assets   350    281 
TOTAL NON-CURRENT ASSETS   21,676    17,945 
           
TOTAL ASSETS  $56,615   $61,510 
           
Liabilities and shareholders’ equity          
CURRENT LIABILITIES -          
Accounts payable and accruals:          
Trade  $3,487   $2,849 
Other (Note 6)   7,245    4,807 
TOTAL CURRENT LIABILITIES   10,732    7,656 
LONG-TERM LIABILITIES:          
Non-current operating lease liabilities (Note 4a)   1,409    - 
Other liabilities   385    309 
TOTAL LONG-TERM LIABILITIES   1,794    309 
TOTAL LIABILITIES   12,526    7,965 
           
COMMITMENTS AND CONTINGENT LIABILITIES (Note 4)          
           
SHAREHOLDERS’ EQUITY:          
Ordinary shares, with no par value - authorized: 100,000,000 Ordinary Shares as of March 31, 2019 and December 31, 2018; issued and outstanding: 33,297,371 and 33,232,988 Ordinary Shares as of March 31, 2019 and December 31, 2018, respectively   727    727 
Additional paid-in capital   195,842    194,642 
Accumulated deficit   (152,480)   (141,824)
TOTAL SHAREHOLDERS’ EQUITY   44,089    53,545 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY  $56,615   $61,510 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

3

 

 

INTEC PHARMA LTD.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

   Three months ended March 31 
   2019   2018 
  

U.S. dollars

in thousands

 
OPERATING EXPENSES:          
RESEARCH AND DEVELOPMENT EXPENSES, net  $(8,542)  $(8,880)
GENERAL AND ADMINISTRATIVE EXPENSES   (2,190)   (1,910)
OPERATING LOSS   (10,732)   (10,790)
FINANCIAL INCOME, net   110    124 
LOSS BEFORE INCOME TAX   (10,622)   (10,666)
INCOME TAX   (34)   (63)
NET LOSS  $(10,656)  $(10,729)
           
    U.S. dollars 
LOSS PER SHARE BASIC AND DILUTED  $(0.32)  $(0.41)
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING USED IN COMPUTATION OF BASIC AND DILUTED LOSS PER ORDINARY SHARE IN THOUSANDS   33,247    26,076 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

4

 

 

INTEC PHARMA LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited) 

 

   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 IN THE THREE-MONTH PERIOD ENDED MARCH 31, 2018:                         
Share-based compensation (Note 5)   -    -    723    -    723 
Net loss   -    -    -    (10,729)   (10,729)
BALANCE AT MARCH 31, 2018   26,075,770   $727   $157,079   $(109,010)  $48,796 
                          
BALANCE AT JANUARY 1, 2019   33,232,988   $727   $194,642    (141,824)  $53,545 
CHANGES IN THE THREE-MONTH PERIOD ENDED MARCH 31, 2019:                         
Exercise of options   64,383    -    257    -    257 
Share-based compensation (Note 5)   -    -    943    -    943 
Net loss   -    -    -    (10,656)   (10,656)
BALANCE AT MARCH 31, 2019   33,297,371   $727   $195,842   $(152,480)  $44,089 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

5

 

 

INTEC PHARMA LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

  

   Three months ended March 31 
   2019   2018 
   U.S. dollars in thousands 
CASH FLOWS FROM OPERATING ACTIVITIES:        
Net loss  $(10,656)  $(10,729)
Adjustments required to reconcile net loss to net cash used in operating activities:          
Depreciation   218    206 
Exchange differences on cash and cash equivalents   8    (40)
Right of use asset   163      
Lease liability   (98)   - 
Losses on marketable securities   -    73 
Share-based compensation   943    723 
Changes in operating assets and liabilities:          
Decrease (increase) in prepaid expenses and other receivables   340    (98)
Increase in deferred tax assets   (69)   - 
Increase (decrease) in accounts payable and accruals   1,813    (390)
Increase in other liabilities   76    - 
Net cash used in operating activities   (7,262)   (10,255)
CASH FLOWS FROM INVESTING ACTIVITIES:          
Purchase of property and equipment   (10)   (2,022)
Investment in other assets   (1,206)   - 
Proceeds from disposal of marketable securities, net   576    46 
Net cash used in investing activities   (640)   (1,976)
CASH FLOWS FROM FINANCING ACTIVITIES:          
Proceeds from exercise of options   161    - 
Net cash provided by financing activities   161    - 
DECREASE IN CASH AND CASH EQUIVALENTS   (7,741)   (12,231)
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD   39,246    53,393 
EXCHANGE DIFFERENCES ON CASH AND CASH EQUIVALENTS   (8)   40 
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD  $31,497   $41,202 
           
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES:          
Liability with respect to property and equipment (see note 4b)  $462   $- 
Liability with respect to other assets (see note 4c)  $648   $- 
Receivables with respect to exercise of options  $96   $- 
           
SUPPLEMENTARY DISCLOSURE OF CASH FLOW INFORMATION -          
Interest received  $128   $117 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

6

 

 

INTEC PHARMA LTD.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 1 - NATURE OF OPERATIONS AND BASIS OF PRESENTATION:

 

a.Nature of operations

 

1)Intec Pharma Ltd. (“Intec”) is engaged in the development of proprietary technology which enables the gastric retention of certain drugs. The technology is intended to significantly improve the efficiency of the drugs and substantially reduce their side-effects or the effective doses.

 

Intec is a limited liability public company incorporated in Israel.

 

Intec’s ordinary shares are traded on the NASDAQ Capital Market (“NASDAQ”).

 

In September 2017, Intec incorporated a wholly-owned subsidiary in the United States of America in the State of Delaware – Intec Pharma Inc. (the “Subsidiary”). The Subsidiary was incorporated mainly to provide Intec executive and management services, including business development, medical affairs and investor relationship activities outside of Israel.

 

2)Intec together with its Subsidiary (the “Company”) engage in research and development activities and as a group have not yet generated revenues from their operations. Accordingly, there is no assurance that the Company’s operations will generate positive cash flows. As of March 31, 2019, the cumulative losses of the Company were approximately $152.5 million. Management expects that the Company will continue to incur losses from its operations, which will result in negative cash flows from operating activities. The Company’s management estimates that its current cash resources will allow the Company to complete its Phase III clinical trial for AP-CD/LD. However, management estimates that further fund raising will be required in order for the Company to complete the research and development of all of its product candidates including the manufacturing activities of the AP-CD/LD. As a result, there is substantial doubt about the Company’s ability to continue as a going concern within one year after the issuance date of these financial statements.

 

The Company plans to fund its future operations through submissions of applications for grants from private funds, license agreements with third parties and raising capital from the public and/or private investors and/or institutional investors. There is no assurance, however, that the Company will be successful in obtaining the level of financing needed for its operations and the research and development of its product candidates. If the Company is unsuccessful in securing sufficient financing, it may need to make the necessary changes to its operations to reduce the level of expenditures in line with available resources.

 

These financial statements have been prepared assuming that the Company will continue as a going concern and do not include any adjustments that might result from the outcome of this uncertainty.

 

b.Basis of presentation

 

The unaudited interim condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and S-X Article 10 for interim financial statements. Accordingly, they do not contain all information and notes required by US GAAP for annual financial statements. In the opinion of management, these unaudited condensed consolidated interim financial statements reflect all adjustments, which include normal recurring adjustments, necessary for a fair statement of the Company’s consolidated financial position as of March 31, 2019, the consolidated results of operations, changes in equity and cash flows for the three-month periods ended March 31, 2019 and 2018.

 

7

 

 

INTEC PHARMA LTD.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

 

NOTE 1 - NATURE OF OPERATIONS AND BASIS OF PRESENTATION (continued):

 

These unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s annual financial statements for the year ended December 31, 2018, as filed in the 10-K on February 27, 2019. The condensed balance sheet data as of December 31, 2018 included in these unaudited condensed consolidated financial statements was derived from the audited financial statements for the year ended December 31, 2018 but does not include all disclosures required by US GAAP for annual financial statements.

 

The results for the three-month period ended March 31, 2019 are not necessarily indicative of the results expected for the year ending December 31, 2019. 

 

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES:

 

a.Principles of consolidation

 

The consolidated financial statements include the accounts of Intec and its Subsidiary. Intercompany balances and transactions have been eliminated upon consolidation.

 

b.Fair value measurement

 

Fair value is based on the price that would be received from the sale of an asset or that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. In order to increase consistency and comparability in fair value measurements, the guidance establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels, which are described as follows:

 

Level 1:Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.

 

Level 2:Observable prices that are based on inputs not quoted on active markets but corroborated by market data.

 

Level 3:Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.

 

In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible and considers counterparty credit risk in its assessment of fair value.

 

The marketable securities which are measures at fair value are categorized as Level 1.

 

The carrying amount of the cash and cash equivalents, other receivable and accrued expenses and other liabilities approximates their fair value. 

 

8

 

 

INTEC PHARMA LTD.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

 

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued):

 

c.Loss per share

 

Loss per share, basic and diluted, is computed on the basis of the net loss for the three-month period divided by the weighted average number of ordinary shares outstanding during the three-month period. Diluted loss per share is based upon the weighted average number of ordinary shares and of ordinary shares equivalents outstanding when dilutive. Ordinary share equivalents include outstanding stock options which are included under the treasury stock method when dilutive.

 

The following share options were excluded from the calculation of diluted loss per ordinary share because their effect would have been anti-dilutive for the periods presented (share data):

 

  

Three months ended

March 31

 
   2019   2018 
Outstanding stock options   4,302,287    3,293,788 

 

d.Research and development expenses, net

 

Research and development expenses, net for the three-month period ended March 31, 2019 and 2018, include participation in research and development expenses in the amount of approximately $566 thousand and approximately $335 thousand, respectively.

 

e.Newly issued accounting pronouncements

 

1)In February 2016, the FASB established ASC Topic 842, “Leases” (Topic 842), by issuing ASU No. 2016-02, which requires lessees to recognize leases on-balance sheet and disclose key information about leasing arrangements. The new standard establishes a right-of-use (ROU) model that requires a lessee to recognize a ROU asset and lease liability on the balance sheet. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the statement of operations. The Company adopted the new standard on January 1, 2019 using the modified retrospective transition method and has not restated comparative periods. The new standard provides a number of optional practical expedients in transition. The Company has elected the ‘package of practical expedients’, which permits it not to reassess under the new standard its prior conclusions about lease identification, lease classification and initial direct costs for leases entered into prior to adoption of Topic 842.

 

Additionally, the Company did not separate lease and non-lease components for all of its leases. The Company elected the short-term lease recognition exemption for all leases that qualify. This means, for those leases that qualify, the Company will not recognize ROU assets or lease liabilities, and this includes not recognizing ROU assets or lease liabilities for existing short-term leases of those assets in transition. Instead, the Company will continue to recognize the lease payments for those leases in profit or loss on a straight-line basis over the lease term.

 

The most significant effects of adoption relate to (1) the recognition of new ROU assets and lease liabilities on its balance sheet for real estate operating leases; and (2) providing significant new disclosures about its leasing activities.

 

9

 

 

INTEC PHARMA LTD.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

 

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued):

 

Upon adoption, the Company recognized additional operating lease liabilities, of approximately $2.2 million based on the present value of the remaining lease payments under current leasing standards for existing operating leases. The Company also recognized corresponding ROU assets of approximately $2.2 million. Lease terms may include options to extend or terminate the lease when the Company is reasonably certain that the option will be exercised. Lease expense is recognized on a straight-line basis over the lease term. The Company’s leases may include variable payments based on measures that include changes in price index which are expensed as incurred and presented as operating expense on the condensed consolidated statements of operations in the same line item as expense arising from fixed lease payments.

 

The new standard also provides practical expedients for an entity’s ongoing accounting. Beginning in 2019, the Company changed its disclosed lease recognition policies and practices, as well as to other related financial statement disclosures due to the adoption of this standard. See Note 4a.

 

2)In June 2018, the FASB issued ASU 2018-07, “Compensation-Stock Compensation” to improve the usefulness of information provided to users of financial statements while reducing cost and complexity in financial reporting and provide guidance aligning the measurement and classification for share-based payments to nonemployees with the guidance for share-based payments to employees. Under the guidance, the measurement of equity-classified nonemployee awards will be fixed at the grant date. This standard, adopted as of January 1, 2019, had no material impact on the Company’s consolidated financial statements.

 

NOTE 3 - MARKETABLE SECURITIES

 

The Company’s marketable securities are with a minimum of A rating by global rating agencies. These marketable securities are recorded at fair value with changes recorded in the statement of operations as “financial income, net”, as the Company chose to apply the fair value option.

 

As of March 31, 2019 and December 31, 2018, the amount of the marketable securities is approximately $0.8 million and $1.3 million, respectively.

 

The loss, net from changes in marketable securities for the three-month periods ended March 31, 2019 and 2018 amounted to approximately $0 and $73 thousand, respectively.

 

NOTE 4 - COMMITMENTS AND CONTINGENT LIABILITIES:

 

a.Lease Agreements

 

1)The Company is a tenant under a lease agreement in respect of offices and operational spaces in Jerusalem until June 30, 2021. The lease agreement includes an option to extend the lease term until June 30, 2022 (the “Extension Option”). The exercise of the Extension Option may be made in the Company’s sole discretion. Rent payments are denominated in NIS and linked to the Israeli CPI.

 

To secure the Company’s obligations to the lease agreement in Jerusalem, the Company granted a bank guarantee to the lessor, which amounted to approximately $139 thousand as of March 31, 2019.

 

The Company also leases office space in Modi’in and New York City for a short-term period.

 

10

 

 

INTEC PHARMA LTD.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

 

NOTE 4 - COMMITMENTS AND CONTINGENT LIABILITIES (continued):

 

2)The Company has entered into operating lease agreements for vehicles used by its employees. The lease periods are generally for three years and the payments are linked to the Israeli CPI. To secure the terms of the lease agreements, the Company has made certain prepayments to the leasing company, representing approximately three months of lease payments.

 

Lease expense for the three months ended March 31, 2019 was comprised of the following:

 

   Three months ended March 31, 
   2019 
   U.S. dollars in thousands 
Operating lease expense  $190 
Short-term lease expense   25 
Variable lease expense   * 
   $215 

 

* Represents an amount less than $ 1,000

 

Supplemental information related to leases are as follows:

 

   March 31 
   2019 
   U.S. dollars
in thousands
 
Operating lease right-of-use assets  $2,047 
Current Operating lease liabilities   653 
Non-current operating lease liabilities  $1,409 

 

Other information:

 

Operating cash flows from operating leases (cash paid in thousands)  $189 
Weighted Average Remaining Lease Term   

3.08 years

 
Weighted Average Discount Rate   5.36%

 

Maturities of lease liabilities are as follows:

 

  Amount 
Year  U.S. dollars
in thousands
 
2019 (excluding the three months ended March 31, 2019)  $558 
2020   708 
2021   640 
2022   319 
Total lease payments   2,225 
Less imputed interest   (163)
Total  $2,062 

 

11

 

 

INTEC PHARMA LTD.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

 

NOTE 4 - COMMITMENTS AND CONTINGENT LIABILITIES (continued):

 

3)ASC 840 Disclosures-

 

The Company elected the modified retrospective transition method and included the following tables previously disclosed.

 

Future contractual obligations under the abovementioned operating lease agreements (not including the Extension Option) as of December 31, 2018 are as follows:

 

     
Year  Amount 
   U.S. dollars
in thousands
 
2019  $772 
2020   721 
2021   332 
Total  $1,825 

 

b.Automated Production Line

 

In April 2017, the Company engaged with an international manufacturer for ordering a large-scale automated production line for manufacturing Accordion Pills (the “Production Line”). The total cost of the Production Line amounted to approximately €8.0 million. As of March 31, 2019 and December 31, 2018, the Company transferred payments of approximately €7.4 million (approximately $8.6 million). In addition, as of March 31, 2019 and December 31, 2018, the Company recognized a liability in the amount of approximately €553 thousand (approximately $621 thousand) and €148 thousand (approximately $170 thousand), respectively. As of March 31, 2019, the Production Line has been delivered to the commercial site at Lohmann Therapie-Systeme AG (“LTS”) and as of the date of the issuance of these condensed consolidated financial statements the Production Line is in the installation and testing stage. For more details regarding the Manufacturing Services with LTS see note c below.

 

c.Establishment of the Commercial Scale Production Capabilities for AP-CD/LD

 

In December 2018, the Company entered into a Process Development Agreement for Manufacturing Services with LTS for the manufacture of AP-CD/LD (the “Agreement”). Under the Agreement, the Company will bear the costs incurred by LTS to acquire the production equipment for AP-CD/LD (“Equipment”) in the amount of approximately €7.0 million, however such amount will later be reimbursed to the Company by LTS in the form of a reduction in the purchase price of the AP-CD/LD product. As of March 31, 2019, the Company transferred payments of approximately €5.4 million (approximately $6.1 million) in costs of the Equipment, of which approximately €1.1 million (approximately $1.2 million) was paid during the three-month period ended March 31, 2019 and recognized a liability in an additional amount of €577 thousand (approximately $648 thousand) and as of December 31, 2018 recognized a liability of €436 thousand (approximately $499 thousand). The Company has recognized the Equipment as non-current other assets.

 

The Agreement contains several termination rights which are expected to be included in a definitive manufacturing and supply agreement. As of March 31, 2019, the Company recognized a liability that was recorded against research and development expenses, net in the amount of approximately €2.7 million (approximately $3.0 million), for LTS’s facility upgrading costs, of which approximately €2.0 million (approximately $2.2 million) will be paid to LTS only if the Company decides to not continue with the project or commercialization of AP-CD/LD. The liability that was recorded as of December 31, 2018, was approximately €1.65 million (approximately $1.9 million).

 

12

 

 

INTEC PHARMA LTD.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

 

NOTE 5 - SHARE CAPITAL:

 

a.Changes in share capital

 

During the three-month period ended March 31, 2019, options to purchase 64,383 ordinary shares granted to employees were exercised for consideration of approximately $257 thousand.

 

b.Share-based compensation:

 

1)In January 2016, the Company’s board of directors approved a new option plan (the “2015 Plan”). Originally, the maximum number of ordinary shares reserved for issuance under the 2015 Plan was 700,000 ordinary shares for grants to directors, employees and consultants. In July 2016 an increase of 700,000 ordinary shares was approved by the board of directors.

 

In December 2017 and June 2018, an increase of 2,100,000 and 1,000,000 ordinary shares, respectively, was approved by the Company’s shareholders at a general meeting of shareholders.

 

As of March 31, 2019, 418,593 shares remain available for grant under the Plan.

 

In the three months ended March 31, 2019 and 2018, the Company granted options as follows:

 

   Three months ended March 31, 2019
   Number of options granted   Exercise price   Vesting period  Expiration
Employees  940,000   $7.63   3 years  7 years

 

   Three months ended March 31, 2018
   Number of options granted   Exercise price range  Vesting period range  Expiration
Employees   1,075,000   $5.19-$6.67  3 years  7 years

 

The fair value of options granted to employees during the three months ended March 31, 2019, and 2018 was $3.4 million and $2.7 million, respectively.

 

The fair value of options granted to employees on the date of grant was computed using the Black-Scholes model. The underlying data used for computing the fair value of the options are as follows:

 

  

Three months ended

March 31

   2019  2018
Value of ordinary share    $7.46  $5.70-$6.45
Dividend yield  0%  0%
Expected volatility  53.32%  45.87%-46.47%
Risk-free interest rate  2.57%  2.25%-2.66%
Expected term  5 years  5 years

 

13

 

  

INTEC PHARMA LTD.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

  

NOTE 5 - SHARE CAPITAL (continued):

 

2)The following table illustrates the effect of share-based compensation on the statements of operations:

 

   Three months ended March 31 
   2019   2018 
   U.S. dollars in thousands 
Research and development expenses, net  $570   $360 
General and administrative expenses   373    363 
   $943   $723 

 

NOTE 6 -ACCOUNTS PAYBLE AND ACCRUALS - OTHER

 

   March 31,   December 31, 
   2019   2018 
  U.S. dollars in thousands 
Expenses payable  $5,430   $3,400 
Current operating lease liabilities (see Note 4a)   653    - 
Salary and related expenses, including social security and other taxes   624    1,078 
Accrual for vacation days and recreation pay for employees   436    309 
Other   102    20 
   $7,245   $4,807 

 

NOTE 7 - EVENT SUBSEQUENT TO MARCH 31, 2019

 

On April 4, 2019, the Company’s shareholders at a general meeting of shareholders approved, further to a resolution adopted by the Board of Directors on January 22, 2019, a grant of options to the Company’s Chief Executive Officer to purchase an aggregate of 125,000 ordinary shares. Each option shall be exercisable at an exercise price of $7.64 per share. The options vest over a three-year period, with one-third of the options vesting at the end of the first anniversary of the date of grant, and the remaining options vesting in eight equal quarterly installments following the first anniversary of the grant date. The options expire seven years after the date of grant. The value of the benefit in respect of the said options, as calculated on the grant date, is approximately $419 thousand.

 

 

14

 

  

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

The following discussion and analysis provides information that we believe to be relevant to an assessment and understanding of our results of operations and financial condition for the periods described. This discussion should be read together with our condensed consolidated interim financial statements and the notes to the financial statements, which are included in this Quarterly Report on Form 10-Q. This information should also be read in conjunction with the information contained in our Annual Report on Form 10-K for the year ended December 31, 2018, filed with the Securities and Exchange Commission on February 27, 2019, including the consolidated annual financial statements as of December 31, 2018 and their accompanying notes included therein. We have prepared our condensed consolidated interim financial statements in accordance with U.S. GAAP.

 

This Quarterly Report on Form 10-Q of Intec Pharma Ltd. 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 Quarterly Report on Form 10-Q are made as of the date of this Quarterly Report on Form 10-Q, 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 February 27, 2019, and in other filings that we have made and may make with the Securities and Exchange Commission in the future. 

 

All references to “we,” “us,” “our,” “Intec”, “the Company” and “our Company” in this Quarterly Report on Form 10-Q are to Intec Pharma Ltd. and its U.S. subsidiary Intec Pharma Inc., unless the context otherwise requires.

  

Overview

 

We are a clinical stage biopharmaceutical company focused on developing drugs based on our proprietary Accordion Pill platform technology, which we refer to as the Accordion Pill. Our 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. Our product pipeline currently includes several product candidates in various clinical trial stages. Our leading product candidate, AP-CD/LD, is being developed for the indication of treatment of Parkinson’s disease symptoms in advanced Parkinson’s disease patients. We have successfully completed a Phase II clinical trial for AP-CD/LD for the treatment of Parkinson’s disease symptoms in advanced Parkinson’s disease patients and have agreed with the U.S. Food and Drug Administration, or FDA, on the remaining clinical development program for AP-CD/LD for the treatment of Parkinson’s disease symptoms in advanced Parkinson’s disease patients, including the main principles of the single required pivotal Phase III clinical trial in advanced Parkinson’s disease patients.

 

We are currently conducting a pivotal Phase III clinical for AP-CD/LD for the treatment of advanced Parkinson’s disease known as the ACCORDANCE study. In April 2019, we announced that the last patient has completed the final visit in the ACCORDANCE study and we currently expect to release top-line results in the July/August 2019 timeframe. In our correspondence with the FDA, the FDA previously agreed that an acceptable regulatory pathway for AP-CD/LD would be to submit a new drug application, or NDA, pursuant to Section 505(b)(2) of the Federal Food, Drug, and Cosmetic Act, or FDCA which is a streamlined approval pathway that may accelerate the time to commercialize and decrease the costs of FDA approval for AP–CD/LD, as compared to those typically associated with an NCE.

 

In February 2019, we announced that AP-CD/LD met the primary endpoint in a pharmacokinetic, or PK, study comparing the AP-CD/LD 50/500mg dosed three times daily, the most common dose used in our on-going ACCORDANCE study, to 1.5 tablets of CD/LD immediate release (Sinemet™) 25/100 dosed five times per day in Parkinson’s disease patients.

 

We have invested in the commercial scale manufacture of AP-CD/LD, for which we are in partnership with LTS Lohmann Therapie-Systeme AG, or LTS. In December 2018, the large commercial scale production line was delivered to LTS in Andernach, Germany. We are in the process of installing and connecting all the ancillary equipment and expect to begin the validation, bioequivalency and stability studies needed for approval of our commercial production processes in the coming months. After preliminary discussions with the FDA in anticipation of filing for marketing approval of AP-CD/LD, we remain confident we are on track to submit a NDA for approval of AP-CD/LD in mid- to late-2020, assuming positive topline data. 

 

15

 

 

In addition, we have initiated a clinical development program for our Accordion Pill platform with the two primary cannabinoids contained in cannabis sativa, which we refer to as AP-Cannabinoids. We are formulating and testing CBD and THC for the treatment of various pain indications. AP-Cannabinoids are designed to extend the absorption phase of CBD and THC, with the goal of more consistent levels for an improved therapeutic effect, which may address several major drawbacks of current methods of treatment, such as short duration of effect, delayed onset, variability of exposure, variability of the administered dose and adverse events that correlate with peak levels. In March 2017, we initiated a Phase I single-center, single-dose, randomized, three-way crossover clinical trial in Israel to compare the safety, tolerability and PK of AP-THC/CBD with Sativex®, an oral buccal spray containing CBD and THC that is commercially available outside of the United States. Initial results demonstrated that the Accordion Pill platform is well suited to safely deliver CBD and THC with significant improvements in exposure compared with Sativex®. In December 2018, we initiated a PK study of AP-THC and the results of the study demonstrate that the custom designed AP delivery system in the AP-THC PK study did not meet our expectations. We are continuing to advance the AP-Cannabinoids clinical development program and we expect to provide new timelines before the end of the year.

 

In December 2018, we reported that we successfully developed an Accordion Pill for a Novartis proprietary compound that met the required in vitro specifications set forth in a feasibility agreement with Novartis and during the first quarter of 2019 we initiated the human PK study. We believe continued success with this program further validates the platform, confirms our technical abilities to build custom APs and paves the way for additional collaborative agreements.

 

Results of Operations

 

The table below provides our results of operations for the periods indicated.

 

    Three months ended
March 31
 
    2019     2018  
    (dollars in thousands)  
Research and development expenses, net   $ (8,542)     $ (8,880)  
General and administrative expenses     (2,190)       (1,910)  
Operating loss     (10,732)       (10,790)  
Financial income, net      110        124  
Loss before income tax     (10,622)       (10,666)  
Income tax     (34)       (63)  
Net loss   $ (10,656)     $ (10,729)  

 

Three Months Ended March 31, 2019 Compared to Three Months Ended March 31, 2018

 

Research and Development Expenses, Net

 

Our research and development expenses, net, for the three months ended March 31, 2019 amounted to approximately $8.5 million, a decrease of approximately $400,000, or 4%, compared to approximately $8.9 million for the three months ended March 31, 2018. The decrease was primarily due to a decrease in expenses related to our ACCORDANCE study and open label extension study. This decrease was offset by an increase in expenses related to the scale up activities for the commercial scale production capabilities for AP-CD/LD at LTS.

 

General and Administrative Expenses

 

Our general and administrative expenses for the three months ended March 31, 2019 amounted to approximately $2.2 million, an increase of approximately $300,000, or 16%, compared to approximately $1.9 million for the three months ended March 31, 2018. The increase was primarily related to the increase in payroll and related expenses mainly due to an increase in headcount and salary raises and insurance expenses. This increase was offset by a decrease in professional services.

 

Operating Loss

 

As a result of the foregoing, for the three months ended March 31, 2019 our operating loss was approximately $10.7 million, a decrease of approximately $100,000, or 1%, compared to our operating loss for the three months ended March 31, 2018 of approximately $10.8 million. The decrease was mainly due to a decrease in research and development expenses, offset by an increase in general and administrative expenses, as detailed above.

 

Financial Income, Net

 

For the three months ended March 31, 2019, we had financial income from interest on cash and cash equivalents in the amount of approximately $190,000, offset by financial expenses from foreign currency exchange expenses in the amount of approximately $75,000 and bank fees. For the three months ended March 31, 2018, we had financial income from interest on cash equivalents in the amount of approximately $146,000 and foreign currency exchange income in the amount of approximately $57,000 offset by financial expenses from change in fair value of marketable securities in the amount of approximately $73,000 and bank fees.

 

16

 

 

Income tax

 

For the three months ended March 31, 2019 and 2018, we have not generated taxable income in Israel. However, for the three months ended March 31, 2019 and 2018 we incurred tax expenses in our U.S. subsidiary in the amount of approximately $34,000 and $63,000, respectively.

 

Net Loss

 

Based on the foregoing, net loss for the three months ended March 31, 2019 and 2018 was approximately $10.7 million. 

 

Liquidity and Capital Resources

 

Since our inception, we have funded our operations primarily through public and private offerings (in Israel and in the U.S.) of our equity securities, grants from the IIA and other grants from organizations such as the Michael J. Fox Foundation, and payments received under the feasibility and related agreements we have entered into with multinational pharmaceutical companies, pursuant to which we are entitled to full coverage of our development costs with regard to the projects specified in those agreements.

 

As of March 31, 2019, we had cash and cash equivalents and marketable securities of approximately $32.3 million. As of December 31, 2018, we had cash and cash equivalents and marketable securities of approximately $40.6 million.

 

Net cash used in operating activities was approximately $7.3 million for the three months ended March 31, 2019 compared with net cash used in operating activities of approximately $10.3 million for the three months ended March 31, 2018. This decrease resulted primarily from changes in operating asset and liability items of approximately $2.6 million and decrease in expenses paid in cash in the current quarter compared to the three months ended March 31, 2018.

 

We had negative cash flow from investing activities of approximately $640,000 for the three months ended March 31, 2019 compared to negative cash flow from investing activities of approximately $2.0 million for the three months ended March 31, 2018. This decrease resulted primarily from a decrease in purchase of property and equipment in the amount of approximately $2.0 million and proceeds from the disposal of marketable securities in the amount of approximately $500,000. This was offset by an approximate $1.2 million investment in other assets related to the establishment of the commercial scale production capabilities for AP-CD/LD at LTS. For more information, see note 4(c) in our condensed consolidated financial statements for the three months ended March 31, 2019.

 

Net cash provided by financing activities for the three months ended March 31, 2019 was approximately $161,000, which was provided by the proceeds from the exercise of options by employees. In the three months ended March 31, 2018 we had no financing activities.

 

Current Outlook

 

We estimate that our current cash resources will allow us to complete our Phase III clinical trial for AP-CD/LD. We believe however, that further fund raising will be required in order to complete the research and development of all of our product candidates, including the manufacturing activities of the AP-CD/LD. As a result, there is substantial doubt about our ability to continue as a going concern within one year after the date our accompanying consolidated financial statements are issued. We expect to satisfy our future cash needs through submissions of applications for grants from private funds, license agreements with third parties and capital raising from the public, private investors and institutional investors, such as through the public offering of ordinary shares that we completed in April 2018. We may also engage with a partner in order to share the costs associated with the development and manufacturing of our product candidates. For more information, see note 1a(2) in our condensed consolidated financial statements for the three months ended March 31, 2019.

 

On March 1, 2019, we entered into a Sales Agreement with Cowen and Company, LLC (“Cowen”), pursuant to which we may sell from time to time, at our option, up to $75.0 million of our ordinary shares through an “at-the-market” equity offering program under which Cowen will act as sales agent. The issuance and sale of ordinary shares by us under the program will be made pursuant to our effective “shelf” registration statement on Form S-3 (Registration Statement No. 333-230016) filed with the SEC on March 1, 2019, and declared effective on March 28, 2019. No ordinary shares have been sold under the program.

 

Developing drugs, conducting clinical trials, obtaining commercial manufacturing capabilities and commercializing products is expensive and we will need to raise substantial additional funds to achieve our strategic objectives. We will require significant additional financing in the future to fund our operations, including if and when we progress into additional clinical trials of our product candidates, obtain regulatory approval for one or more of our product candidates, obtain commercial manufacturing capabilities and commercialize one or more of our product candidates. Our future capital requirements will depend on many factors, including, but not limited to:

 

the progress and costs of our clinical trials and other research and development activities;

 

17

 

 

the scope, prioritization and number of our clinical trials and other research and development programs;

 

the amount of revenues and contributions we receive under future licensing, collaboration, development and commercialization arrangements with respect to our product candidates;

 

the costs of the development and expansion of our operational infrastructure;

 

the costs and timing of obtaining regulatory approval for one or more of our product candidates;

 

the ability of us, or our collaborators, to achieve development milestones, marketing approval and other events or developments under our potential future licensing agreements;

 

the costs of filing, prosecuting, enforcing and defending patent claims and other intellectual property rights;

 

the costs and timing of securing / manufacturing arrangements for clinical or commercial production;

 

the costs of contracting with third parties to provide sales and marketing capabilities for us or establishing such capabilities ourselves;

 

the costs of acquiring or undertaking development and commercialization efforts for any future products, product candidates or technology;

 

the magnitude of our general and administrative expenses; and

 

any cost that we may incur under future in- and out-licensing arrangements relating to one or more of our product candidates.

 

Until we can generate significant recurring revenues, we expect to satisfy our future cash needs through capital raising or by out-licensing applications of one or more of our product candidates. We cannot be certain that additional funding will be available to us on acceptable terms, if at all. If funds are not available, we may be required to delay, reduce the scope of or eliminate research or development plans for, or commercialization efforts with respect to, one or more of our product candidates and make necessary change to our operations to reduce the level of our expenditures in line with available resources.

 

Off-Balance Sheet Arrangements

 

We have no off-balance sheet arrangements that have had or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

  

Critical Accounting Policies

 

This discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these consolidated financial statements requires us to make estimates that affect the reported amounts of our assets, liabilities and expenses. Significant accounting policies employed by us, including the use of estimates, are presented in the notes to the consolidated financial statements included elsewhere in this Annual Report. We periodically evaluate our estimates, which are based on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Critical accounting policies are those that are most important to the portrayal of our financial condition and results of operations and require our subjective or complex judgments, resulting in the need to make estimates about the effect of matters that are inherently uncertain. If actual performance should differ from historical experience or if the underlying assumptions were to change, our financial condition and results of operations may be materially impacted.

 

Our critical accounting policies and estimates are disclosed in our Annual Report on Form 10-K for the year ended December 31, 2018. With the exception of the change for the accounting of leases as a result of the adoption of ASC Topic 842 on January 1, 2019 there have been no material changes to those policies during the three months ended March 31, 2019.

 

18

 

 

Recently Issued Accounting Pronouncements

 

See Note 2, Significant Accounting Policies, to the condensed consolidated financial statements included in “Item 1- Condensed Consolidated Financial Statements” of this Quarterly Report on Form 10-Q.

 

Item 3.Quantitative and Qualitative Disclosures about Market Risk

 

Not required for smaller reporting companies.

 

Item 4.Disclosure Controls and Procedures

 

We maintain disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can only provide reasonable assurance of achieving the desired control objectives, and in reaching a reasonable level of assurance, management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

 

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of March 31, 2019. Based on that evaluation, our principal executive officer and principal financial officer have concluded that as of March 31, 2019 these disclosure controls and procedures were effective at the reasonable assurance level.

 

Changes in Internal Control over Financial Reporting

 

There was no change in our internal control over financial reporting identified in connection with the evaluation required by Rules 13a-15(d) and 15d-15(d) under the Exchange Act that occurred during the quarter ended March 31, 2019 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. 

 

19

 

 

PART II. OTHER INFORMATION

 

Item 1.Legal Proceedings

 

From time to time, we may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. There are currently no pending material legal proceedings, and we are currently not aware of any legal proceedings or claims against us or our property that we believe will have any significant effect on our business, financial position or operating results. None of our officers or directors is a party against us in any legal proceeding.

 

Item 1A. Risk Factors

 

Not required for smaller reporting companies.

 

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds

 

None.

 

Item 3.Defaults Upon Senior Securities

 

None.

 

Item 4.Mine Safety Disclosures

 

Not applicable.

 

Item 5.Other Information

 

None.

 

Item 6.Exhibits

 

Exhibit No.   Exhibit Description
     
3.1   Articles of Association of Intec Pharma Ltd., as amended (incorporated herein by reference to Exhibit 3.4 of the Company’s Annual Report on Form 10-K filed with the SEC on February 27, 2019)
     
31.1*   Certification of Principal Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a), promulgated under the Securities Exchange Act of 1934, as amended
     
31.2*   Certification of Principal Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a), promulgated under the Securities Exchange Act of 1934, as amended
     
32.1#   Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
     
32.2#   Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
     
101.INS*   XBRL Instance Document
     
101.SCH*   XBRL Taxonomy Extension Schema Document
     
101.CAL*   XBRL Taxonomy Extension Calculation Linkbase Document
     
101.DEF*   XBRL Taxonomy Extension Definition Linkbase Document
     
101.LAB*   XBRL Taxonomy Extension Labels Linkbase Document
     
101.PRE*   XBRL Taxonomy Extension Presentation Linkbase Document

   

* Filed herewith
# Furnished herewith

 

20

 

 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  Intec Pharma Ltd.
     
Date: May 7, 2019 By: /s/ Jeffrey A. Meckler
    Jeffrey A. Meckler
 

Chief Executive Officer and Vice Chairman

(Principal Executive Officer)

     
Date: May 7, 2019 By: /s/ Nir Sassi
    Nir Sassi
   

Chief Financial Officer

(Principal Financial and Accounting Officer)

 

 

21

 

Exhibit 31.1

 

CERTIFICATIONS

I, Jeffrey A. Meckler, certify that:

 

  1. I have reviewed this Quarterly Report on Form 10-Q for the period ended March 31, 2019 of Intec Pharma Ltd. (the “registrant”);

 

  2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

  3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

  4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f)and 15d-15(f)) for the registrant and have:

 

  a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

  b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

  c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

  d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

  5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

 

  a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

  b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: May 7, 2019

 

  /s/ Jeffrey A. Meckler
 

Jeffrey A. Meckler

Chief Executive Officer and Vice Chairman

 

Exhibit 31.2

 

CERTIFICATIONS

I, Nir Sassi, certify that:

 

  1. I have reviewed this Quarterly Report on Form 10-Q for the period ended March 31, 2019 of Intec Pharma Ltd. (the “registrant”);

 

  2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

  3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

  4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f)and 15d-15(f)) for the registrant and have:

 

  a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

  b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

  c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

  d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

  5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

 

  a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

  b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: May 7, 2019

 

  /s/ Nir Sassi
 

Nir Sassi

Chief Financial Officer

 

Exhibit 32.1

 

Intec Pharma Ltd.

Certification Pursuant to

18 U.S.C. Section 1350,

as Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

 

In connection with the Quarterly Report of Intec Pharma Ltd. (the “Company”) on Form 10-Q for the period ended March 31, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jeffrey A. Meckler, Chief Executive Officer and Vice Chairman of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

 

(a) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

(b) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

  /s/ Jeffrey A. Meckler
 

Jeffrey A. Meckler

Chief Executive Officer and Vice Chairman

 

Date: May 7, 2019 

Exhibit 32.2

 

Intec Pharma Ltd.

Certification Pursuant to

18 U.S.C. Section 1350,

as Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

 

In connection with the Quarterly Report of Intec Pharma Ltd. (the “Company”) on Form 10-Q for the period ended March 31, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Nir Sassi, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

 

(a) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

(b) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

  /s/ Nir Sassi
 

Nir Sassi

Chief Financial Officer

 

Date: May 7, 2019