Entera Bio (ENTX) 10-Q5 May 232023 Q1 Quarterly reportFinancial data

Company Profile

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
Document and Entity Information - shares	Mar. 31, 2023	May 01, 2023
Cover [Abstract]
Entity Registrant Name	ENTERA BIO LTD.
Document Type	10-Q
Document Period End Date	Mar. 31, 2023
Entity Central Index Key	0001638097
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Amendment Flag	false
Entity Current Reporting Status	Yes
Entity Common Stock, Shares Outstanding		28,813,952
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q1
Entity Shell Company	false
Entity Small Business	true
Entity Interactive Data Current	Yes
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Incorporation, State or Country Code	L3
Entity Address, Address Line One	Kiryat Hadassah
Entity Address, Address Line Two	Minrav Building – Fifth Floor
Entity Address, City or Town	Jerusalem
Entity Address, Postal Zip Code	9112002
Entity Address, Country	IL
City Area Code	972
Local Phone Number	2-532-7151
Document Quarterly Report	true
Document Transition Report	false
Entity File Number	001-38556
Entity Tax Identification Number	00-0000000
Trading Symbol	ENTX
Security Exchange Name	NASDAQ
Title of 12(b) Security	Ordinary Shares

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands		Mar. 31, 2023	Dec. 31, 2022
CURRENT ASSETS:
Cash and cash equivalents		$ 10,691	$ 12,309
Accounts receivable		29	246
Other current assets		653	294
TOTAL CURRENT ASSETS		11,373	12,849
NON-CURRENT ASSETS:
Property and equipment, net		136	139
Operating lease right-of-use assets		48	90
Deferred income taxes		43	43
Funds in respect of employee rights upon retirement		6	6
TOTAL NON-CURRENT ASSETS		233	278
TOTAL ASSETS		11,606	13,127
CURRENT LIABILITIES:
Accounts payable		150	17
Accrued expenses and other payables		1,296	1,233
Current maturities of operating lease		48	91
TOTAL CURRENT LIABILITIES		1,494	1,341
NON-CURRENT LIABILITIES:
Liability for employee rights upon retirement		32	32
TOTAL NON-CURRENT LIABILITIES		32	32
TOTAL LIABILITIES		1,526	1,373
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Ordinary Shares, NIS 0.0000769 par value: Authorized - as of March 31, 2023 and December 31, 2022, 140,010,000 shares; issued and outstanding - as of March 31, 2023 and December 31, 2022, 28,809,922	[1]
Additional paid-in capital		107,726	107,210
Accumulated other comprehensive income		41	41
Accumulated deficit		(97,687)	(95,497)
TOTAL SHAREHOLDERS' EQUITY		10,080	11,754
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$ 11,606	$ 13,127

[1]Represents an amount less than one thousand US dollars

CONDENSED CONSOLIDATED BALANC_2

CONDENSED CONSOLIDATED BALANCE SHEETS (Parentheticals) - ₪ / shares	Mar. 31, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Ordinary share, par value	₪ 0.0000769	₪ 0.0000769
Ordinary shares, authorized	140,010,000	140,010,000
Ordinary shares, issued	28,809,922	28,809,922
Ordinary shares, outstanding	28,809,922	28,809,922

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Income Statement [Abstract]
REVENUES	$ 0	$ 68
COST OF REVENUES	0	54
GROSS PROFIT	0	14
OPERATING EXPENSES:
Research and development	931	1,690
General and administrative	1,294	2,171
Other income	(13)	(12)
TOTAL OPERATING EXPENSES	2,212	3,849
OPERATING LOSS	2,212	3,835
FINANCIAL INCOME, NET	(22)	(44)
LOSS BEFORE INCOME TAX	2,190	3,791
INCOME TAX BENEFIT	0	(7)
NET LOSS	$ 2,190	$ 3,784
LOSS PER SHARE BASIC	$ 0.08	$ 0.13
LOSS PER SHARE DILUTED	$ 0.08	$ 0.13
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING USED IN COMPUTATION OF BASIC LOSS PER SHARE	28,809,922	28,804,411
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING USED IN COMPUTATION OF DILUTED LOSS PER SHARE	28,809,922	28,804,411

CONDENSED CONSOLIDATED STATEM_2

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) $ in Thousands	Ordinary shares [Member]		Additional paid-in capital [Member]	Accumulated other Comprehensive income [Member]	Accumulated deficit [Member]	Total
Balance at Dec. 31, 2021		[1]	$ 104,950	$ 41	$ (82,426)	$ 22,565
Balance (in shares) at Dec. 31, 2021	28,804,411
CHANGES DURING THE YEAR ENDED
Net loss	$ 0		0	0	(3,784)	(3,784)
Share-based compensation	$ 0		964	0	0	964
Balance (in shares) at Mar. 31, 2022	28,804,411
Balance at Mar. 31, 2022		[1]	105,914	41	(86,210)	19,745
Balance at Dec. 31, 2022		[1]	107,210	41	(95,497)	11,754
Balance (in shares) at Dec. 31, 2022	28,809,922
CHANGES DURING THE YEAR ENDED
Net loss	$ 0		0	0	(2,190)	(2,190)
Share-based compensation	$ 0		516	0	0	516
Balance (in shares) at Mar. 31, 2023	28,809,922
Balance at Mar. 31, 2023		[1]	$ 107,726	$ 41	$ (97,687)	$ 10,080

[1]Represents an amount less than one thousand U.S. dollars.

CONDENSED CONSOLIDATED STATEM_3

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (2,190)	$ (3,784)
Adjustments required to reconcile net loss to net cash used in operating activities:
Depreciation	14	16
Deferred income taxes	0	(33)
Share-based compensation	516	964
Finance income, net	(3)	(39)
Changes in operating asset and liabilities:
Decrease (increase) in accounts receivable	217	(27)
Increase in other current assets	(359)	(1,099)
Increase in accounts payable	133	33
Increase (decrease) in accrued expenses and other payables	63	(808)
Decrease in contract liabilities	0	(15)
Net cash used in operating activities	(1,609)	(4,792)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment	(11)	(23)
Net cash used in investing activities	(11)	(23)
DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED DEPOSITS	(1,620)	(4,815)
CASH, CASH EQUIVALENTS AND RESTRICTED DEPOSITS AT BEGINNING OF THE PERIOD	12,376	24,964
CASH, CASH EQUIVALENTS AND RESTRICTED DEPOSITS AT END OF THE PERIOD	10,756	20,149
Reconciliation in amounts on consolidated balance sheets:
Cash and cash equivalents	10,691	20,109
Restricted deposits included in other current assets	65	40
Total cash and cash equivalents and restricted deposits	$ 10,756	$ 20,149

DESCRIPTION OF BUSINESS

DESCRIPTION OF BUSINESS	3 Months Ended
DESCRIPTION OF BUSINESS	Mar. 31, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
DESCRIPTION OF BUSINESS	NOTE 1 - DESCRIPTION OF BUSINESS a. Entera Bio Ltd. (collectively with its subsidiary, the "Company") was incorporated on September 30, 2009 under the laws of the State of Israel and commenced operation on June 1, 2010. On January 8, 2018, the Company incorporated Entera Bio Inc., a wholly owned subsidiary incorporated in Delaware United States. The Company is a leader in the development and commercialization of orally delivered large molecule therapeutics for use in areas with significant unmet medical need where adoption of injectable therapies is limited due to cost, convenience and compliance challenges for patients. The Company’s most advanced product candidates, EB613 for the treatment of osteoporosis and EB612 for the treatment of hypoparathyroidism, are based on its proprietary technology platform and are both in clinical development. Additionally, the Company intends to license its oral delivery technology to biopharmaceutical companies for use with their proprietary compounds. b. The Company's ordinary shares, NIS 0.0000769 par value per share (“ordinary shares”), have been listed on the Nasdaq Capital Market since July 2018 under the symbol “ENTX”. c. On December 10, 2018, the Company entered into a research collaboration and license agreement with Amgen (the “Amgen Agreement”) for the use of the Company’s oral delivery platform in the field of inflammatory disease and other serious illnesses. Pursuant to the Amgen Agreement, the Company and Amgen had agreed to use the Company’s proprietary drug delivery platform to develop oral formulations for one preclinical large molecule program that Amgen had selected. Amgen is responsible for the clinical development, regulatory approval, manufacturing and worldwide commercialization of the programs. On May 2, 2023, the Company and Amgen agreed to terminate the Amgen Agreement in accordance with its terms, effective on such date. The Company granted Amgen an exclusive, worldwide, sublicensable license under certain of its intellectual property relating to its drug delivery technology to develop, manufacture and commercialize the applicable products. The Company will retain all intellectual property rights to its drug delivery technology, and Amgen will retain all rights to its large molecules and any subsequent improvements, and ownership of certain intellectual property developed through the performance of the agreement is to be determined by U.S. patent law. d. Because the Company is engaged in research and development activities, it has not derived significant income from its activities and has incurred an accumulated deficit in the amount of $97.7million as of March 31, 2023 and negative cash flows from operating activities. The Company's management is of the opinion that its available funds as of March 31, 2023 will allow the Company to operate under its current plans into the third quarter of 2024. This assumes the use of the Company’s capital to fund its ongoing operations, including R&D and the completion of the Phase 1 study related to the new formulation EB612. This does not include the capital required to fund the Company's proposed Phase 3 study for EB613 in osteoporosis and comparative study. These factors raise substantial doubt as to the Company's ability to continue as a going concern. Management is in the process of evaluating various financing alternatives in the public or private equity markets, debt financing and strategic collaborations, as the Company will need to finance future research and development activities, general and administrative expenses and working capital through fund raising. However, there is no certainty about the Company's ability to obtain such funding. The financial statements do not include any adjustments that may be necessary should the Company be unable to continue as a going concern.

SIGNIFICANT ACCOUNTING POLICIES

SIGNIFICANT ACCOUNTING POLICIES	3 Months Ended
SIGNIFICANT ACCOUNTING POLICIES	Mar. 31, 2023
Accounting Policies [Abstract]
SIGNIFICANT ACCOUNTING POLICIES	NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES a. Basis of presentation of the financial statements These unaudited interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP") for interim financial statements. Accordingly, they do not include all of the information and notes required by U.S. GAAP for annual financial statements. In the opinion of management, these unaudited condensed consolidated 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, 2023, and the consolidated results of operations, statements of changes in shareholders' equity and cash flows for the three-month periods ended March 31, 2023 and 2022. The consolidated results for the three-month period ended March 31, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023. These unaudited interim condensed consolidated financial statements should be read in conjunction with the audited financial statements of the Company for the year ended December 31, 2022, as filed with the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 31, 2023. The comparative balance sheet at December 31, 2022 has been derived from the audited annual financial statements at that date but does not include all disclosures required by U.S. GAAP for annual financial statements. b. Loss per share Basic loss per share is computed on the basis of the net loss, adjusted to recognize the effect of a down-round feature when it is triggered, for the period divided by the weighted average number of outstanding ordinary shares during the period. c. Newly issued and recently adopted accounting pronouncements: Recently issued accounting pronouncements adopted 1) In June 2016, the FASB issued ASU 2016-13 “Financial Instruments—Credit Losses—Measurement of Credit Losses on Financial Instruments.” This guidance replaces the current incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The guidance is effective for Smaller Reporting Companies (as defined by the SEC) for the fiscal year beginning on January 1, 2023, including interim periods within that year. The adoption of this guidance did not have material impact on the Company’s consolidated financial statements.

SHARE-BASED COMPENSATION

SHARE-BASED COMPENSATION	3 Months Ended
SHARE-BASED COMPENSATION	Mar. 31, 2023
Share-based Payment Arrangement [Abstract]
SHARE-BASED COMPENSATION	NOTE 3 - SHARE-BASED COMPENSATION On January 2, 2023, options to purchase an aggregate of 534,246 ordinary shares were granted to six non-executive board members with an exercise price of $0.73 per share which was the share price on the grant day. The options vest over one year in four equal quarterly installments starting on the date of grant. This grant was approved by the shareholders of the Company on October 4, 2021. The fair value of the options at the date of grant was $253. The fair value of each option granted is estimated at the date of grant using the Black-Scholes option-pricing model, with the following weighted average assumptions: Three months ended March 31, 2023 Exercise price $ 0.73 Dividend yield - Expected volatility 74 % Risk-free interest rate 3.98 % Expected life - in years 5.3

SUPPLEMENTARY FINANCIAL STATEME

SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION	3 Months Ended
SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION	Mar. 31, 2023
Supplementary Financial Statement Information [Abstract]
SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION	NOTE 4 - SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION: Balance sheets: March 31, December 31, Accrued expenses and other payables: 2023 2022 Employees and employees related 182 154 Provision for vacation 163 146 Accrued expenses 951 933 1,296 1,233

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS	3 Months Ended
SUBSEQUENT EVENTS	Mar. 31, 2023
Subsequent Events [Abstract]
SUBSEQUENT EVENTS	NOTE 5 - SUBSEQUENT EVENTS a. In April 2023, the Company entered into an amendment to its office lease agreement from 2014 to extended the period of the lease agreement for additional five years, expiring on June 30, 2028, with two options for early termination subject to a notice period. The monthly lease fee is a total of $15. b. On April 24, 2023, the Company’s Board of Directors approved the following option grants: i. Options to purchase 851,000 ordinary shares to employees, executive officers and service providers with an exercise price of $0.795 per share. ii. Options to purchase 350,000 ordinary shares to the Company’s Chief Executive Officer with an exercise price of $0.795 per share. This grant is subject to shareholders' approval. These options vest over four years from the date of grant; 25% vest on the first anniversary of the date of grant and the remaining 75% of the option will vest in twelve equal quarterly installments following the first anniversary of the grant date. iii. Options to purchase 30,000 ordinary shares to a service provider with an exercise price of $0.795 per share. These options vest immediately at the service inception date. c. On May 2, 2023, the Company and Amgen agreed to terminate the Amgen Agreement in accordance with its terms, effective on such date.

SIGNIFICANT ACCOUNTING POLICI_2

SIGNIFICANT ACCOUNTING POLICIES (Policies)	3 Months Ended
SIGNIFICANT ACCOUNTING POLICIES (Policies)	Mar. 31, 2023
Accounting Policies [Abstract]
Basis of presentation of the financial statements	a. Basis of presentation of the financial statements These unaudited interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP") for interim financial statements. Accordingly, they do not include all of the information and notes required by U.S. GAAP for annual financial statements. In the opinion of management, these unaudited condensed consolidated 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, 2023, and the consolidated results of operations, statements of changes in shareholders' equity and cash flows for the three-month periods ended March 31, 2023 and 2022. The consolidated results for the three-month period ended March 31, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023. These unaudited interim condensed consolidated financial statements should be read in conjunction with the audited financial statements of the Company for the year ended December 31, 2022, as filed with the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 31, 2023. The comparative balance sheet at December 31, 2022 has been derived from the audited annual financial statements at that date but does not include all disclosures required by U.S. GAAP for annual financial statements.
Loss per share	b. Loss per share Basic loss per share is computed on the basis of the net loss, adjusted to recognize the effect of a down-round feature when it is triggered, for the period divided by the weighted average number of outstanding ordinary shares during the period.
Newly issued and recently adopted accounting pronouncements	c. Newly issued and recently adopted accounting pronouncements: Recently issued accounting pronouncements adopted 1) In June 2016, the FASB issued ASU 2016-13 “Financial Instruments—Credit Losses—Measurement of Credit Losses on Financial Instruments.” This guidance replaces the current incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The guidance is effective for Smaller Reporting Companies (as defined by the SEC) for the fiscal year beginning on January 1, 2023, including interim periods within that year. The adoption of this guidance did not have material impact on the Company’s consolidated financial statements.

SHARE-BASED COMPENSATION (Table

SHARE-BASED COMPENSATION (Tables)	3 Months Ended
SHARE-BASED COMPENSATION (Tables)	Mar. 31, 2023
Share-based Payment Arrangement [Abstract]
Schedule of fair value assumptions of option granted using Black-Scholes option-pricing model	Three months ended March 31, 2023 Exercise price $ 0.73 Dividend yield - Expected volatility 74 % Risk-free interest rate 3.98 % Expected life - in years 5.3

SUPPLEMENTARY FINANCIAL STATE_2

SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION (Table)	3 Months Ended
SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION (Table)	Mar. 31, 2023
Supplementary Financial Statement Information [Abstract]
Schedule of accounts payable and accrued liabilities	March 31, December 31, Accrued expenses and other payables: 2023 2022 Employees and employees related 182 154 Provision for vacation 163 146 Accrued expenses 951 933 1,296 1,233

DESCRIPTION OF BUSINESS (Detail

DESCRIPTION OF BUSINESS (Detail Textuals) $ in Thousands	Mar. 31, 2023 ₪ / shares	Mar. 31, 2023 USD ($)	Dec. 31, 2022 ₪ / shares	Dec. 31, 2022 USD ($)
General [Line Items]
Ordinary share, par value \| ₪ / shares	₪ 0.0000769		₪ 0.0000769
Accumulated deficit \| $		$ (97,687)		$ (95,497)

SIGNIFICANT ACCOUNTING POLICI_3

SIGNIFICANT ACCOUNTING POLICIES (Detail Textuals) - shares	3 Months Ended
SIGNIFICANT ACCOUNTING POLICIES (Detail Textuals) - shares	Mar. 31, 2023	Mar. 31, 2022
Significant Accounting Policies [Line Items]
Number of antidilutive securities excluded from computation of earnings per share	7,116,583	6,238,605

SHARE-BASED COMPENSATION (Detai

SHARE-BASED COMPENSATION (Detail Textuals) - Non-executive board members [Member] $ / shares in Units, $ in Thousands	Jan. 02, 2023 USD ($) $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of options to purchase ordinary shares \| shares	534,246
Exercise price of options granted \| $ / shares	$ 0.73
Vestion period	1 year
Fair value of options at the date of grant \| $	$ 253

SHARE-BASED COMPENSATION (Det_2

SHARE-BASED COMPENSATION (Details)	3 Months Ended
SHARE-BASED COMPENSATION (Details)	Mar. 31, 2023 $ / shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercise price	$ 0.73
Dividend yield	0%
Expected volatility	74%
Risk-free interest rate	3.98%
Expected life - in years	5 years 3 months 18 days

SUPPLEMENTARY FINANCIAL STATE_3

SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Accrued expenses and other payables:
Employees and employees related	$ 182	$ 154
Provision for vacation	163	146
Accrued expenses	951	933
Accrued expenses and other payables, total	$ 1,296	$ 1,233

SUBSEQUENT EVENTS (Detail Textu

SUBSEQUENT EVENTS (Detail Textuals) - Subsequent Events [Member] - USD ($) $ / shares in Units, $ in Thousands		1 Months Ended
	Apr. 24, 2023	Apr. 30, 2023
Subsequent Event [Line Items]
Vestion period	4 years
Employees Executive Officers And Service Providers [Member]
Subsequent Event [Line Items]
Number of options to purchase ordinary shares	851,000
Option to purchase, exercise price	$ 0.795
Chief Executive Officer [Member]
Subsequent Event [Line Items]
Number of options to purchase ordinary shares	350,000
Option to purchase, exercise price	$ 0.795
Service Provider [Member]
Subsequent Event [Line Items]
Number of options to purchase ordinary shares	30,000
Option to purchase, exercise price	$ 0.795
Office Lease Agreement [Member]
Subsequent Event [Line Items]
Agreement term		5 years
Agreement expiration date		June 30, 2028
Agreement termination description		two options for early termination subject to a notice period.
Monthly lease fee		$ 15
First Anniversary [Member]
Subsequent Event [Line Items]
Option to issue vesting percentage	25%
Second Anniversary [Member]
Subsequent Event [Line Items]
Option to issue vesting percentage	75%