Intec Pharma Reports Third Quarter 2020 Financial Results and Provides Corporate Update

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Intec Pharma Ltd. (NASDAQ: NTEC) (“Intec” or “the Company”) today announces financial results for the third quarter ended September 30, 2020 and provides a corporate update.

“We maintain our focus on executing strategic partnerships and collaborations. As such, we were delighted in recent weeks to announce a new research collaboration with Merck. While we are unable to provide the specifics of the agreement, it speaks to Merck’s keen understanding of the Accordion Pill (AP) technology and their continued interest in working with us to realize its potential,” stated Jeffrey A. Meckler, Vice Chairman and Chief Executive Officer of Intec Pharma.

“In addition, we continue to innovate and progress our next generation gastric retentive technologies.  We are working on a variety of new approaches to meet unmet needs such as a once-a-day gastric retentive Accordion Pill.”

“We also look forward to advancing our newly designed AP-THC program into clinical development by year-end as we now have the active pharmaceutical ingredients needed for the clinical material production.”

“Importantly, we strengthened our balance sheet during the third quarter which allows us to move our AP-THC program forward, advance our discussions with potential business parters and to support the initiation of future collaborations, such as the one with Merck,” added Mr. Meckler.

Financial Highlights for Third Quarter Ended September 30, 2020

Research and development expenses, net, for the three-month period ended September 30, 2020 were approximately $2.1 million, a decrease of $6.3 million, or approximately 75%, compared with approximately $8.4 million in the three-month period ended September 30, 2019. Research and development expenses, net, for the nine-month period ended September 30, 2020 were approximately $5.4 million, a decrease of approximately $19.5 million, or approximately 80%, compared with approximately $24.9 million in the nine-month period ended September 30, 2019. The decrease for the three and nine-month periods was primarily due to the completion of the ACCORDANCE study and Open Label Extension study during 2019, a decrease in expenses related to the scale up activities of the commercial scale manufacturing line, a decrease in payroll and related expenses, mostly due to reduction in headcount, and a decrease in share-based compensation.

General and administrative expenses for the three-month period ended September 30, 2020 were approximately $1.5 million, a decrease of $700,000, or approximately 32%, compared with approximately $2.2 million in the three-month period ended September 30, 2019. General and administrative expenses for the nine-month period ended September 30, 2020 amounted to approximately $4.9 million, a decrease of approximately $1.6 million, or approximately 25%, compared to approximately $6.5 million for the nine-month period ended September 30, 2019. The decrease for the three and nine-month periods was primarily related to a decrease in payroll and related expenses, including reduction in headcount, a decrease in share-based compensation and reduction in associated expenses.

Net loss for the three-month period ended September 30, 2020 was approximately $3.7 million, a decrease of $16.7 million, or approximately 82%, compared with the net loss for the three-month period ended September 30, 2019 of approximately $20.4 million. Net loss for the nine-month period ended September 30, 2020 was approximately $10.6 million, a decrease of $30.4 million, or approximately 74%, compared with the net loss for the nine-month period ended September 30, 2019 of approximately $41.0 million. The decrease for the three and nine-month periods was mainly due to a decrease in research and development expenses, net, and general and administrative expenses, as detailed above, and an impairment charge incurred in 2019.

Loss per ordinary share for the three-month period ended September 30, 2020, was $0.95 compared with $12.16 for the three-month period ended September 30, 2019. Loss per ordinary share for the nine-month period ended September 30, 2020, was $3.35 compared with $24.61 for the nine-month period ended September 30, 2019.

As of September 30, 2020, the Company had cash and cash equivalents of approximately $17.1 million. As of December 31, 2019, the Company had cash and cash equivalents and marketable securities of approximately $10.1 million.

Net cash used in operating activities was approximately $8.9 million for the nine-month period ended September 30, 2020 compared with net cash used in operating activities of approximately $23.9 million for the nine-month period ended September 30, 2019. This decrease resulted primarily from a decrease in research and development activities in the amount of approximately $19.4 million, offset by changes in operating asset and liability items of approximately $4.1 million.

The Company had positive cash flow from investing activities of approximately $756,000 for the nine-month period ended September 30, 2020 compared to negative cash flow from investing activities of approximately $2.5 million for the nine-month period ended September 30, 2019. This change resulted primarily from an investment in the establishment of the commercial scale manufacturing line in the amount of approximately $2.3 million in the nine-month period ended September 30, 2019 and an increase in purchase of property and equipment in the amount of approximately $775,000.

Net cash provided by financing activities for the nine-month period ended September 30, 2020 was approximately $15.9 million, which was provided primarily by the proceeds from the Company’s registered direct offering in August 2020 that resulted in net proceeds of approximately $4.6 million, proceeds from the Company’s registered direct offering in May 2020 that resulted in net proceeds of approximately $4.5 million, and proceeds from the Company’s underwritten public offering in February 2020 that resulted in net proceeds of approximately $5.7 million.

In August 2020, the Company raised $4.9 million in a registered direct offering of 356,250 ordinary shares at a purchase price of $7.022 per share. In addition, the Company also sold and issued to the purchasers in the offering pre-funded warrants to purchase 356,250 ordinary shares at a purchase price of $6.822 per share. The pre-funded warrants have an exercise price of $0.20 per share, are immediately exercisable, and may be exercised at any time until all of the pre-funded warrants are exercised in full.

On October 30, 2020, we effected a 1-for-20 reverse share split. All share and per share amounts have been retroactively adjusted to reflect the reverse share split.

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