U.S. Department of Defense to Conduct Studies of Pluristem’s PLX-R18 in a New ARS Project for Use Before Radiation Exposure

  • The DOD studies seek to test the effectiveness of PLX-R18 as a novel medical countermeasure for Acute Radiation Syndrome (ARS) prior to and within 24 hours of exposure to high levels of radiation
  • The DOD studies will be conducted in parallel with the ongoing ARS project with the NIH

HAIFA, Israel, Aug. 16, 2017 (GLOBE NEWSWIRE) — Pluristem Therapeutics Inc. (NASDAQ:PSTI) (TASE:PSTI), a leading developer of placenta-based cell therapy products, today announced that a pilot study of the company’s PLX-R18 cell therapy will be initiated by the U.S. Department of Defense’s (DOD) Armed Forces Radiobiology Research Institute (AFRRI), part of the Uniformed Services University of Health Sciences (USU). The study will examine the effectiveness of PLX-R18 as a treatment for Acute Radiation Syndrome (ARS) prior to, and within the first 24 hours of exposure to radiation.

ARS results from exposure to high levels of radiation, such as in the case of a nuclear accident or attack, and can lead to severe health consequences including death. Pluristem recently reported positive data from studies of PLX-R18 cells as a treatment for ARS conducted by the National Institute of Allergy and Infectious Diseases (NIAID) at the National Institutes of Health (NIH), U.S. Department of Health and Human Services (DHHS). Data demonstrated improvement in survival rates and enhancement of blood lineages recovery.

A key difference in the NIAID study and the upcoming DOD study is the timeframe of exposure that is being examined: in the NIAID study, PLX-R18 was administered to subjects 24 hours post exposure, while the new DOD study will be designed to support the needs of the U.S. Armed Forces and examine subjects receiving treatment prior to, or within the first 24 hours of radiation exposure. The DOD studies will be conducted in parallel with the NIH/DHHS studies, allowing broader understanding of the potential therapeutic effects of PLX-R18 as a novel medical countermeasure for ARS.

The study will be conducted in accordance with the FDA Animal Rule pathway, the regulatory pathway followed when human efficacy trials are not feasible, in this case due to the ethics of exposing humans to nuclear radiation. Product approval via this pathway is granted following large animal efficacy studies and human safety data.

“We are pleased to see increased interest from U.S. governmental agencies in our PLX-R18 cell therapy,” noted Zami Aberman, Chairman and Co-CEO of Pluristem. “In view of the therapeutic effects of our product and the current geopolitical situation, governments can potentially shield their citizens from the dire health effects arising from exposure to nuclear radiation, saving many lives in the process, which is our ultimate goal.”

About Pluristem Therapeutics

Pluristem Therapeutics Inc. is a leading developer of placenta-based cell therapy products. The Company has reported robust clinical trial data in multiple indications for its patented PLX (PLacental eXpanded) cells and is entering late-stage trials in several indications. The cell products release a range of therapeutic proteins in response to inflammation, ischemia, hematological disorders, and radiation damage. PLX cell products are grown using the Company’s proprietary three-dimensional expansion technology. They are off-the-shelf, requiring no tissue matching prior to administration.

Pluristem has a strong intellectual property position; Company-owned and operated, GMP-certified manufacturing and research facilities; strategic relationships with major research institutions; and a seasoned management team.

About PLX-R18

PLX-R18 is Pluristem’s second cell therapy product in development. It is designed to treat bone marrow that is unable to produce enough blood cells due to a variety of causes including ARS, certain cancers or cancer treatments, or immune-mediated bone marrow failure. Pluristem received FDA clearance to initiate a U.S. Phase I trial of PLX-R18 in incomplete bone marrow recovery following hematopoietic cell transplantation. Preclinical data from trials conducted by the NIH, Hadassah Medical Center, and other prominent research institutions have shown that PLX-R18 cells secrete a range of specific proteins that trigger the regeneration of bone marrow hematopoietic cells, thereby supporting the recovery of blood cell production. With its capabilities, PLX-R18 could potentially treat a broad range of hematologic indications, which together constitute a substantial global market.

About ARS

Acute Radiation Syndrome occurs following acute exposure to very high levels of radiation, and involves severe, potentially lethal injury to the bone marrow as well as to other organs and systems within the body. High doses of radiation can destroy the bone marrow’s ability to produce white cells, red cells and platelets; without these cells patients are at high risk of death.

Safe Harbor Statement

This press release contains express or implied forward-looking statements within the Private Securities Litigation Reform Act of 1995 and other U.S. Federal securities laws. For example, we are using forward-looking statements when we discuss how the proposed DOD study will be conducted and the various phases of the study, as well as when we discuss that governments can potentially shield their citizens from the dire health effects arising from exposure to nuclear radiation, saving many lives in the process, while using our products. These forward-looking statements and their implications are based on the current expectations of the management of Pluristem only, and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. The following factors, among others, could cause actual results to differ materially from those described in the forward-looking statements: changes in technology and market requirements; we may encounter delays or obstacles in launching and/or successfully completing our clinical trials; our products may not be approved by regulatory agencies, our technology may not be validated as we progress further and our methods may not be accepted by the scientific community; we may be unable to retain or attract key employees whose knowledge is essential to the development of our products; unforeseen scientific difficulties may develop with our process; our products may wind up being more expensive than we anticipate; results in the laboratory may not translate to equally good results in real clinical settings; results of preclinical studies may not correlate with the results of human clinical trials; our patents may not be sufficient; our products may harm recipients; changes in legislation; inability to timely develop and introduce new technologies, products and applications; loss of market share and pressure on pricing resulting from competition, which could cause the actual results or performance of Pluristem to differ materially from those contemplated in such forward-looking statements. Except as otherwise required by law, Pluristem undertakes no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. For a more detailed description of the risks and uncertainties affecting Pluristem, reference is made to Pluristem’s reports filed from time to time with the Securities and Exchange Commission.

Contact:

Karine Kleinhaus, MD, MPH 
Divisional VP, North America 
1-914-512-4109 
karinek@pluristem.com                                     

Efrat Kaduri 
Head of Investor and Public Relations 
972-74-7108600 
efratk@pluristem.com

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Enzymotec Ltd. Reports Second Quarter 2017 Unaudited Financial Results

Record INFAT® Net Revenues of $13.3 Million (Proportionate Consolidation Method)

Generated Strong Cash Flow from Operations of $2.9 Million

Inventory Write-Off of $3.3 Million

MIGDAL HA’EMEQ, Israel, Aug. 16, 2017 (GLOBE NEWSWIRE) — Enzymotec Ltd. (Nasdaq:ENZY), a developer, manufacturer and marketer of innovative bio-active lipid ingredients and medical foods, today reported financial results for the second quarter ended June 30, 2017.

Second Quarter 2017 Financial Highlights

  • Net revenues increased 10.9% and 8.5% to $13.0 million, compared to the second quarter of 2016 and the first quarter of 2017, respectively.
  • Net revenues (utilizing the proportionate consolidation method that is used for segment reporting) increased 30.9% and 14.7% to $19.6 million, compared to the second quarter of 2016 and the first quarter of 2017, respectively.
  • Gross margin decreased to 50.2%, compared to 70.0% and 70.2% in the second quarter of 2016 and the first quarter of 2017, respectively, primarily due to an inventory write-off of $3.3 million.
  • Selling and marketing expenses remained stable at $4.9 million compared to the second quarter of 2016 and increased 6.0% compared to the first quarter of 2017.
  • Adjusted EBITDA* amounted to $(0.8) million, compared to $1.6 million in the second quarter of 2016 and $1.5 million in the first quarter of 2017. Adjusted EBITDA* for this quarter includes a $3.3 million inventory write-off.
  • Net loss amounted to $(2.3) million, or $(0.10) per diluted share, compared to net income of $0.2 million, or $0.01 per diluted share in the second quarter of 2016 and net income of $25,000, or $0.00 per diluted share in the first quarter of 2017. Net income for this quarter includes a $3.3 million inventory write-off.
  • Non-GAAP net loss* amounted to $(1.5) million, or $(0.06) per diluted share, compared to non-GAAP net income* of $0.8 million, or $0.04 per diluted share in the second quarter of 2016 and non-GAAP net income* of $0.8 million, or $0.03 per diluted share in the first quarter of 2017. Non-GAAP net income* for this quarter includes a $3.3 million inventory write-off.

* A reconciliation of non-GAAP financial measures to GAAP financial measures is set forth below.

Recent Business Highlights:                   

  • Strong second quarter revenues driven by record INFAT® revenues of $13.3 million (proportionate consolidation method), representing a 103.5% increase over the corresponding quarter last year and 31.2% sequentially.
  • Results for the second quarter of 2017 were impacted by an inventory write-off of $3.3 million resulting from additional obsolescence.
  • Strong cash flow from operations amounting to $2.9 million in the second quarter of 2017.
  • Appointed Dror Israel as Chief Financial Officer and Michelle Cuccia as Vice President, Marketing and Chief Executive Officer of VAYA. Rob Crim, Chief Executive Officer of VAYA, to step down.

“We are very pleased by the strong revenues this quarter led by INFAT® sales, which demonstrates the strength of the brand as we seek to increase INFAT®’s penetration of the global market through Advanced Lipids. With the Company’s new leadership team, we are working diligently to reinforce our foundation with a renewed growth strategy as a specialty nutrition company for human health. We are pleased to present this strategy with a view to increasing market share, expanding our geographic presence, introducing new specialty products, and conducting selective business development initiatives while leveraging our R&D capabilities and strong balance sheet,” said Erez Israeli, Enzymotec’s President and Chief Executive Officer.

Mr. Israeli continued, “During the second quarter of 2017, we recorded a $3.3 million inventory write-off due to a focus on generating higher returns from our materials, as well as from obsolescence and market trends and conditions. We also recognize the challenges facing VAYA and are working diligently under new leadership to transform VAYA and improve its economies of scale by leveraging the sales force with more products in additional marketing channels and platforms.”

Second Quarter 2017 Results

For the second quarter of 2017, net revenues increased 10.9% to $13.0 million, from $11.7 million in the second quarter of 2016. For the second quarter of 2017, based on the proportionate consolidation method that we use for segment reporting, net revenues increased 30.9% to $19.6 million, from $15.0 million in the second quarter of 2016. The increase was primarily due to an increase of $6.8 million in sales of INFAT®, partially offset by a decrease of $1.1 million in sales of krill products, a decrease of $0.7 million in sales of PS products and a decrease of $0.3 million in sales of VAYA products. We believe the increase of our INFAT® sales was due to a combination of robust customer demand, as well as customer inventory increases as manufacturers prepare new formulas to meet new regulatory requirements in China. The decrease in sales of VAYA products was primarily a result of changing our VAYA Direct vendor which led to an estimated loss of $0.5 million in sales during the second quarter of 2017.

Gross margin for the second quarter of 2017 decreased to 50.2%, compared to 70.0% and 70.2% in the second quarter of 2016 and the first quarter of 2017, respectively. The decrease is primarily due to an inventory write-off of $3.3 million partially offset by increases due to improved product mix. Of this write-off, the majority stemmed from a recent determination that salvaging certain inventory would no longer yield sufficient returns, particularly in light of krill market trends, and the balance of the write-off mainly related to obsolescence, certain damaging events (such as contamination, oxidation, decomposition), quality concerns and regulatory issues, U.S. import constraints, as well as the impact of certain accreditation as standards leading to lower demand for some of our products. Our inventory remains relatively high compared to our manufacturing needs, and is difficult to manage and sensitive to adverse processes or events. In addition, our ability to use it remains subject to other external factors, such as market and regulatory trends (including actions by the Israeli Ministry of Health and U.S. FDA), and import constraints.

Research and development expenses for the second quarter of 2017 increased 19.2% to $2.2 million, from $1.8 million in the second quarter of 2016, primarily due to an increase of $0.2 million in salaries and related expenses, but decreased slightly when compared to the first quarter of 2017.

Selling and marketing expenses for the second quarter of 2017 remained stable at $4.9 million compared to the second quarter of 2016, and increased 6.0% from $4.6 million in the first quarter of 2017. The increase was primarily related to increased cost of operations of the VAYA on-line channel of $0.2 million.

General and administrative expenses for the second quarter of 2017 increased 58.3% to $2.2 million from $1.4 million in the second quarter of 2016, primarily due to an increase of $0.4 million in salaries and related expenses mainly due to the CEO recruitment and overlap period and an increase of $0.2 million in FDA-related costs, as well as $0.2 million in litigation-related expenses in VAYA.

Net loss for the second quarter of 2017 amounted to $(2.3) million, or $(0.10) per diluted share, compared to net income of $0.2 million, or $0.01 per diluted share, in the second quarter of last year. Net income for this quarter includes the $3.3 million inventory write-off.

Non-GAAP net loss for the second quarter of 2017 amounted to $(1.5) million, or $(0.06) per diluted share, from $0.8 million, or $0.04 per diluted share, in the second quarter of 2016. Non-GAAP net income for this quarter includes the $3.3 million inventory write-off. A reconciliation of non-GAAP financial measures to GAAP financial measures is set forth below.

Adjusted EBITDA for the second quarter of 2017 amounted to $(0.8) million compared to $1.6 million in the second quarter of 2016. The decrease was driven by a decrease of $1.1 million in the Adjusted EBITDA of the Nutrition segment (as a result of the inventory write-off and increased operational expenses partially offset by increased revenues) and by a decrease of $1.3 million in the Adjusted EBITDA of the VAYA segment (as a result of increased operating expenses and decreased revenues). Adjusted EBITDA* for this quarter includes the $3.3 million inventory write-off. A reconciliation of non-GAAP financial measures to GAAP financial measures is set forth below.

Set forth below is segment information for the three months ended June 30, 2017 and 2016 (unaudited):

 
    Three Months Ended June 30, 2017
    Nutrition
Segment
VAYA
Segment
Total
Segment
Results of
Operations
Elimination(1) Consolidated
Results of
Operations
    U.S. dollars in thousands
Net revenues   $ 16,542   $ 3,058     $ 19,600   $ (6,583 )   $ 13,017  
Cost of revenues(2)     11,831     883       12,714     (6,279 )     6,435  
Gross profit(2)     4,711     2,175       6,886     (304 )     6,582  
Operating expenses(2)     3,011     5,401       8,412           8,412  
Depreciation and amortization     632     141       773                
Adjusted EBITDA(3)   $ 2,332   $ (3,085 )   $ (753 )              
     
                                       
    Three Months Ended June 30, 2016    
    Nutrition
Segment
  VAYA 
Segment
  Total
Segment
Results of
Operations
  Elimination(1)
  Consolidated
Results of
Operations
   
    U.S. dollars in thousands
Net revenues   $ 11,591   $ 3,379     $ 14,970   $ (3,236 )   $ 11,734  
Cost of revenues(2)     5,959     629       6,588     (3,107 )     3,481  
Gross profit(2)     5,632     2,750       8,382     (129 )     8,253  
Operating expenses(2)     2,753     4,694       7,447           7,447  
Depreciation and amortization     555     107       662                
Adjusted EBITDA(3)   $ 3,434   $ (1,837 )   $ 1,597                

____________________
(1)   Represents the change from proportionate consolidation to the equity method of accounting.
(2)   Includes depreciation and amortization, but excludes share-based compensation expense.
(3)   Adjusted EBITDA is a non-GAAP financial measure. For a definition and a reconciliation of Adjusted EBITDA to our net income, see “Non-GAAP Financial Measures” below.

Six Months Results

For the six months ended June 30, 2017, net revenues decreased 2.7% to $25.0 million, from $25.7 million for the same period last year. For the six months ended June 30, 2017, based on the proportionate consolidation method that we use for segment reporting, net revenues increased 14.2% to $36.7 million, from $32.1 million for the same period last year. The increase was primarily due to an increase of $9.6 million in sales of INFAT® products (proportionate consolidation method), partially offset by a decrease of $3.0 million in sales of krill products, a decrease of $1.1 million in sales of PS products and a decrease of $0.7 million in sales of VAYA products.

Gross margin for the six months ended June 30, 2017, decreased to 59.8%, from 68.3% for the same period last year, primarily due to the inventory write-off of $3.3 million in the second quarter of 2017 partially offset by an improved product mix.

Research and development expenses for the six months ended June 30, 2017, increased 18.3% to $4.4 million, from $3.7 million for the same period last year, primarily due to an increase of $0.3 million in salaries and related expenses and an increase of $0.2 million in expenses related to the VAYA clinical trials.

Selling and marketing expenses for the six months ended June 30, 2017, increased 2.8% to $9.5 million, from $9.2 million for the same period last year.

General and administrative expenses for the six months ended June 30, 2017, increased 26.4% to $4.0 million, from $3.1 million for the same period last year, primarily due to an increase of $0.6 million in salaries and related expenses and an increase of $0.2 million in FDA-related costs as well as $0.2 million in litigation related expenses in VAYA.

Net loss for the six months ended June 30, 2017, amounted to $(2.3) million, or $(0.10) per diluted share, compared to net income of $1.6 million, or $0.07 per diluted share, for the same period last year.

Non-GAAP net loss for the six months ended June 30, 2017, amounted to $(0.7) million, or $(0.03) per diluted share compared to non-GAAP net income of $2.9 million, or $0.12 per diluted share for the same period last year. A reconciliation of non-GAAP financial measures to GAAP financial measures is set forth below.

Adjusted EBITDA for the six months ended June 30, 2017, decreased 83.1% to $0.7 million, from $4.3 million for the same period in the prior year. A reconciliation of non-GAAP financial measures to GAAP financial measures is set forth below.

Set forth below is segment information for the six months ended June 30, 2017 and 2016 (unaudited):

    Six Months Ended June 30, 2017
    Nutrition
Segment
  VAYA
Segment
  Total
Segment
Results of
Operations
  Elimination(1)   Consolidated
Results of
Operations
    U.S. dollars in thousands
     
Net revenues   $ 30,873     $ 5,816       $ 36,689     $ (11,674 )     $ 25,015  
Cost of revenues(2)     19,681       1,437         21,118       (11,145 )       9,973  
Gross profit(2)     11,192       4,379         15,571       (529 )       15,042  
Operating expenses(2)     6,065       10,253         16,318               16,318  
Depreciation and amortization     1,191       288         1,479                  
Adjusted EBITDA(3)   $ 6,318     $ (5,586 )     $ 732                  

    Six Months Ended June 30, 2016
    Nutrition
Segment
  VAYA
Segment
  Total
Segment
Results of
Operations
  Elimination(1)   Consolidated
Results of
Operations
    U.S. dollars in thousands
     
Net revenues   $ 25,613     $ 6,503       $ 32,116     $ (6,416 )     $ 25,700  
Cost of revenues(2)     13,097       1,170         14,267       (6,190 )       8,077  
Gross profit(2)     12,516       5,333         17,849       (226 )       17,623  
Operating expenses(2)     6,045       8,776         14,821               14,821  
Depreciation and amortization     1,122       188         1,310                  
Adjusted EBITDA(3)   $ 7,593     $ (3,255 )     $ 4,338                  

____________________
(1)   Represents the change from proportionate consolidation to the equity method of accounting. 
(2)   Includes depreciation and amortization, but excludes share-based compensation expense.
(3)   Adjusted EBITDA is a non-GAAP financial measure. For a definition and a reconciliation of adjusted EBITDA to our net income, see “Non-GAAP Financial Measures” below.

Joint Venture Accounting

The Company accounts for the results of operation of Advanced Lipids AB (Advanced Lipids), the Company’s 50%-owned joint venture, utilizing the equity method of accounting as required by U.S. GAAP. We recognize two sources of income from the JV arrangement. First, we recognize revenue for the enzymes sold by us to AAK upon the sale of the final INFAT® product by AL to its customers. Accordingly, the revenues recognized from the arrangement are the amounts the Company charges to its joint venture partner, or the Company’s direct costs of production plus an agreed-upon margin defined in the joint venture agreement. For the three-month periods ended June 30, 2017 and 2016, sales of enzymes to the joint venture partner amounted to $6.7 million and $3.3 million, respectively. For the six-month periods ended June 30, 2017 and 2016, sales of enzymes to the joint venture partner amounted to $11.8 million and $7.5 million, respectively. Second, we also record our share of Advanced Lipids profits under the equity method of accounting. The Advanced Lipids profits that are shared between us and AAK are the profits that Advanced Lipids earns for its distribution activity.

For purposes of segment reporting, we account for the arrangement with AAK and the results of operations of Advanced Lipids using the proportionate consolidation method. Under the proportionate consolidation method, we recognize our proportionate share (50%) of the revenues of Advanced Lipids and record our proportionate share (50%) of the overall joint venture’s costs of production and other operating expenses in our income statement. The financial information included in the tables above under the heading “Nutrition segment” includes, inter alia, the results of operations of Advanced Lipids, using the proportionate consolidation method.

Balance Sheet and Liquidity Data

As of June 30, 2017, we had $76.3 million in cash and cash equivalents, short-term bank deposits and short-term and long-term marketable securities (compared to $75.7 million as of December 31, 2016), $25.9 million in other working capital items (compared to $29.5 million as of December 31, 2016) and no debt. The decrease in other working capital is mainly due to the $3.3 million inventory write-off in the second quarter of 2017.

Conference Call Details

Enzymotec will host a conference call today at 8:30 a.m. ET to discuss the financial results for the second quarter of 2017. Listeners in North America may dial +1-877-359-9508 and international listeners may dial +1-224-357-2393 along with confirmation code #54908799 to access the live call. The call will also be broadcast live over the Internet, hosted in the Investors section of Enzymotec’s website at http://edge.media-server.com/m/p/fsb2hqfy and will be archived online within one hour of its completion.

Forward Looking Statements

This press release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended and the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, that are based on our management’s beliefs and assumptions and on information currently available to our management. Forward-looking statements include all statements that are not historical facts and can be identified by terms such as “anticipates,” “believes,” “could,” “seeks,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “will,” “would” or similar expressions that convey uncertainty of future events or outcomes and the negatives of those terms. Forward-looking statements include information concerning our possible or assumed future results of operations, business strategies, financing plans, competitive position, industry environment, potential growth opportunities, potential market opportunities and the effects of competition. Such statements involve a number of known and unknown risks and uncertainties that could cause our future results, performance or achievements to differ significantly from the results, performance or achievements expressed or implied by such forward-looking statements. Some of the important factors that could cause or contribute to such differences include the following: a high proportion of the sales of the INFAT® product is to our customers who then use it in their infant formula products sold to end users in China and therefore our revenues are subject to the effects of Chinese market trends and competition from locally produced products that are not subject to import taxes; we are subject to a degree of customer concentration and our customers do not enter into long-term purchase commitments with us; new Chinese regulations relating to infant formula came into force on October 2016 and others are constantly evaluated, affecting the ability of our customers to market infant nutrition products containing INFAT®, which could adversely affect our revenues and results of operations; we rely on our Swedish joint venture partner to manufacture INFAT®; growth in the Chinese economy has moderated and this slowdown and related volatility could adversely impact demand for our products in China; the demand for products based on omega-3, and, in particular, premium products such as krill oil, has declined in the past and may continue to decline, which, together with a significant increase in capacity by competing manufacturers, may continue to cause intense competition and price pressures; Chinese regulations relating to infant formula are under re-examination, and any regulatory changes affecting the ability of our customers to market infant nutrition products containing INFAT® could adversely affect our business; our inventories include sensitive compounds which may face spoilage or obsolescence; our inventory remains relatively high compared to our manufacturing needs, difficult to manage and sensitive to adverse processes or events and, in addition, our ability to manage it remains subject to other external factors such as market trends, regulatory and import constraints as well as certain damaging events, quality concerns and regulatory issues, U.S. import constraints and certain accreditation needs, all of which may have an adverse effect on our profitability; a significant portion of the sales of our INFAT® product is to a small number of customers and if such customers were to suffer financially or reduce their use of INFAT® our business could be materially adversely affected; variations in the cost of raw materials for the production of our products may have a material adverse effect on our business, financial condition and results of operations; our offering of products as “medical foods” may be challenged by regulatory authorities; the outcome of the Company’s discussions with the FDA relating to the Import Alert; our product development cycle is lengthy and uncertain, and our development or commercialization efforts for our products may be unsuccessful; we are dependent on a single facility that houses the majority of our operations, and disruptions at this facility could negatively affect our business, financial condition and operations; we depend on third parties to obtain raw materials, in particular krill, necessary for the production of our products and if we cannot secure sufficient supply sources at competitive prices or need to utilize a greater percentage of frozen krill than anticipated with current inventory levels, our gross profits from the sale of krill oil will be adversely affected; we anticipate that the markets in which we participate will become more competitive due in part to business combinations among existing competitors, the arrival of new competitors and technological developments; our results are subject to quarterly fluctuations; we may have to pay royalties with respect to sales of our krill oil products in the United States or Australia, and any infringement of intellectual property of others could require us to pay royalties; unfavorable publicity or consumer perception of our products, such as krill oil, the supplements that contain them as ingredients and any similar products distributed by other companies could have a material adverse effect on our reputation, the demand for our products and our ability to generate revenues; we are generally reliant upon third parties for the distribution or commercialization of our products; we may not be able to maintain or increase market acceptance for our products; we are subject to risks relating to the operation and expansion of our production or processing facilities and capabilities; our ability to obtain krill may be affected by conservation regulation or initiatives; disruption to our IT system could adversely affect our reputation and have a material adverse impact on our business and results of operations; we are not able to predict the results of clinical trials, which may prove unsuccessful or be delayed by certain factors; if we are unable to maintain manufacturing efficiency and quality and meet our customers’ needs, our financial performance could be adversely affected; we could be subject to product liability lawsuits, which could result in costly and time-consuming litigation and significant liabilities; our dependence on international sales, which expose us to risks associated with the business environment in those countries; and other factors discussed under the heading “Risk Factors” in our annual report on Form 20-F for the year ended December 31, 2016 filed with the Securities and Exchange Commission on March 16, 2017.

You should not put undue reliance on any forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that future results, levels of activity, performance and events and circumstances reflected in the forward-looking statements will be achieved or will occur. These forward-looking statements are made only as of the date hereof, and the Company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.

About Enzymotec Ltd.

Enzymotec is a leading global supplier of specialty lipid-based products and solutions. The Company develops, manufactures and markets innovative bio-active lipid ingredients, as well as final products, based on sophisticated processes and technologies.

Non-GAAP Financial Measures

Adjusted EBITDA and non-GAAP net income are metrics used by management to measure operating performance. Adjusted EBITDA represents net income excluding (i) financial expenses, net, (ii) taxes on income, (ii) depreciation and amortization, (iv) share-based compensation expense, and (v) other unusual income or expenses, and after giving effect to the change from the equity method of accounting for our joint venture to the proportionate consolidation method. Non-GAAP net income represents net income, excluding (i) share-based compensation expense, and (ii) other unusual income or expenses.

The Company presents Adjusted EBITDA as a supplemental performance measure because it believes it facilitates operating performance comparisons from period to period and company to company by excluding potential differences caused by variations in capital structures (affecting interest expenses, net), changes in foreign exchange rates that impact financial asset and liabilities denominated in currencies other than our functional currency (affecting financial expenses, net), tax positions (such as the impact on periods or companies of changes in effective tax rates) and the age and book depreciation of fixed assets (affecting relative depreciation expense). In addition, both Adjusted EBITDA and non-GAAP net income exclude the non-cash impact of share-based compensation and a number of unusual items that the Company does not believe reflect the underlying performance of our business. Because Adjusted EBITDA and Non-GAAP net income facilitate internal comparisons of operating performance on a more consistent basis, the Company also uses Adjusted EBITDA and non-GAAP net income in measuring our performance relative to that of our competitors. Adjusted EBITDA and non-GAAP net income are not measures of our financial performance under GAAP and should not be considered as substitutes for, but rather as supplements to, net income, operating income or any other performance measures derived in accordance with GAAP or as alternatives to cash flow from operating activities as measures of the Company’s profitability or liquidity.

Adjusted EBITDA and non-GAAP net income have limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of the company’s results as reported under U.S. GAAP as the excluded items may have significant effects on the Company’s operating results and financial condition. When evaluating the Company’s performance, you should consider Adjusted EBITDA alongside other financial performance measures, including cash flow metrics, operating income, net income, and the Company’s other U.S. GAAP results.

The following table presents a reconciliation of Adjusted EBITDA to net income for each of the periods indicated (unaudited):

    Three Months Ended June 30,     Six Months Ended June 30,  
    2017 2016 2017 2016 
  U.S. dollars in thousands
Reconciliation of Adjusted EBITDA to net income
(loss):
       
Adjusted EBITDA $ (753 )   $ 1,597     $ 732     $ 4,338  
Accounting for joint venture   (304 )     (129 )     (529 )     (226 )
Depreciation and amortization   (773 )     (662 )     (1,479 )     (1,310 )
Share-based compensation expenses   (822 )     (648 )     (1,563 )     (1,295 )
Operating income (loss)   (2,652 )     158       (2,839 )     1,507  
Financial income – net   (237 )     (64 )     (390 )     (218 )
Income (loss) before taxes on income   (2,415 )     222       (2,449 )     1,725  
Taxes on income   (112 )     (127 )     (228 )     (253 )
Share in profits of equity investee   222       78       397       149  
GAAP net income (loss) $ (2,305 )   $ 173     $ (2,280 )   $ 1,621  

    Three Months Ended June 30, Six Months Ended June 30,
  2017
2016 2017 2016
  U.S. dollars in thousands
Reconciliation of non-GAAP net income (loss) to
GAAP net income (loss):
       
Non-GAAP net income (loss) $ (1,483 )   $ 821     $ (717 )   $ 2,916  
Share-based compensation expenses   (822 )     (648 )     (1,563 )     (1,295 )
GAAP net income (loss) $ (2,305 )   $ 173     $ (2,280 )   $ 1,621  
     
     
    Three Months Ended June 30, Six Months Ended June 30,
  2017
2016 2017 2016
  U.S. dollars
Reconciliation of non-GAAP diluted earnings (loss)
per share to GAAP diluted earnings (loss) per
share:
       
Non-GAAP diluted earnings (loss) per share $ (0.06 )   $ 0.04     $ (0.03 )   $ 0.12  
Share-based compensation expenses   (0.04 )     (0.03 )     (0.07 )     (0.05 )
GAAP diluted earnings (loss) per share $ (0.10 )   $ 0.01     $ (0.10 )   $ 0.07  

ENZYMOTEC LTD.
CONDENSED CONSOLIDATED UNAUDITED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
       
  Three Months Ended June 30, Six Months Ended June 30,
  2017 2016
2017
2016
    U.S. dollars in thousands                 (except per share data)
NET REVENUES $ 13,017     $ 11,734     $ 25,015     $ 25,700  
COST OF REVENUES *   6,477       3,521       10,052       8,157  
GROSS PROFIT   6,540       8,213       14,963       17,543  
OPERATING EXPENSES:        
Research and development – net *   2,150       1,803       4,381       3,702  
Selling and marketing *   4,865       4,877       9,453       9,194  
General and administrative *   2,177       1,375       3,968       3,140  
Total operating expenses   9,192       8,055       17,802       16,036  
OPERATING INCOME (LOSS)   (2,652 )     158       (2,839 )     1,507  
FINANCIAL INCOME – net   237       64       390       218  
INCOME (LOSS) BEFORE TAXES ON INCOME   (2,415 )     222       (2,449 )     1,725  
TAXES ON INCOME   (112 )     (127 )     (228 )     (253 )
SHARE IN PROFITS OF EQUITY INVESTEE   222       78       397       149  
NET INCOME (LOSS) $ (2,305 )   $ 173     $ (2,280 )   $ 1,621  
OTHER COMPREHENSIVE INCOME (LOSS):        
Currency translation adjustments $ 114     $ (56 )   $ 147     $ 11  
Unrealized gain on marketable securities   102       81       202       237  
Cash flow hedge   (748 )     8       (894 )     (59 )
Total comprehensive income (loss) $ (2,837 )   $ 206     $ (2,825 )   $ 1,810  
EARNINGS (LOSS) PER SHARE:        
Basic $ (0.10 )   $ 0.01     $ (0.10 )   $ 0.07  
Diluted $ (0.10 )   $ 0.01     $ (0.10 )   $ 0.07  
WEIGHTED AVERAGE NUMBER OF ORDINARY
SHARES
:
       
Basic   22,949,802       22,719,323       22,924,658       22,695,313  
Diluted   22,949,802       23,370,631       22,924,658       23,371,992  
* The above items are inclusive of the following
share-based compensation expense:
                             
                               
Cost of revenues $ 42     $ 40     $ 79     $ 80  
Research and development – net   118       99       219       198  
Selling and marketing   260       214       480       427  
General and administrative   402       295       785       590  
  $ 822     $ 648     $ 1,563     $ 1,295  

ENZYMOTEC LTD.
CONDENSED CONSOLIDATED UNAUDITED BALANCE SHEETS
 
  June 30 December 31
  2017
2016
  U.S. dollars in thousands
A  s  s  e  t  s    
CURRENT ASSETS:    
Cash and cash equivalents $ 7,770   $ 7,581
Short-term bank deposits and marketable securities   29,805     34,934
Accounts receivable:    
Trade   11,562     10,038
Other   2,052     2,027
Inventories   23,094     26,331
Total current assets   74,283     80,911
NON-CURRENT ASSETS:    
Investment in equity investee   2,258     1,715
Marketable securities   38,747     33,152
Intangibles, long-term deposits and other   2,545     1,027
Funds in respect of retirement benefits obligation   1,195     1,136
Total non-current assets   44,745     37,030
PROPERTY, PLANT AND EQUIPMENT:    
Cost   43,796     42,673
L e s s – accumulated depreciation and amortization   15,016     13,665
    28,780     29,008
Total assets $ 147,808   $ 146,949

Liabilities and shareholders’ equity    
CURRENT LIABILITIES:    
Accounts payable and accruals:    
Trade $ 4,660     $ 5,126  
Other   6,195       3,803  
Total current liabilities   10,855       8,929  
LONG-TERM LIABILITY –    
Retirement benefits obligation   1,532       1,420  
Total liabilities   12,387       10,349  
SHAREHOLDERS’ EQUITY:    
Ordinary shares   58       58  
Additional paid-in capital   128,660       127,014  
Accumulated other comprehensive loss   (981 )     (436 )
Retained earnings   7,684       9,964  
Total shareholders’ equity   135,421       136,600  
Total liabilities and shareholders’ equity                 $ 147,808     $ 146,949  

ENZYMOTEC LTD.
CONDENSED CONSOLIDATED UNAUDITED STATEMENTS OF CASH FLOWS
 
  Six Months Ended June 30
  2017 2016
  U.S. dollars in thousands
     
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net Income (loss) $ (2,280 )   $ 1,621  
Adjustments required to reflect cash flows from operations:    
Depreciation and amortization   1,479       1,310  
Share in profits of equity investee   (397 )     (149 )
Share-based compensation expense   1,563       1,295  
Change in inventories (including write-off of $3.3 million)   3,237       (4,703 )
Change in accounts receivable and other   (2,397 )     1,759  
Change in accounts payable and accruals   1,808       631  
Change in other non-current assets   69       (21 )
Change in retirement benefits obligation   116       153  
Net cash provided by operating activities   3,198       1,896  
CASH FLOWS FROM INVESTING ACTIVITIES:    
Purchase of property, plant and equipment and intangibles   (2,638 )     (924 )
Investment in bank deposits and marketable securities   (23,217 )     (23,384 )
Changes in long-term deposits   (31 )     20  
Proceeds from sale of marketable securities   22,857       10,771  
Proceeds from disposal of an equity investee     64  
Change in funds in respect of retirement benefits obligation   (63 )     (57 )
Net cash used in investing activities   (3,092 )     (13,510 )
CASH FLOWS FROM FINANCING ACTIVITIES:    
Exercise of options by employees   83       32  
Net cash provided by financing activities   83       32  
NET CHANGE IN CASH AND CASH EQUIVALENTS   189       (11,582 )
BALANCE OF CASH AND CASH EQUIVALENTS    
AT BEGINNING OF PERIOD   7,581       21,987  
BALANCE OF CASH AND CASH EQUIVALENTS    
AT END OF PERIOD $ 7,770     $ 10,405  
 

Company Contact
Enzymotec Ltd.
Oren Bryan
Chief Financial Officer
Phone: +972747177177
ir@enzymotec.com

Investor Relations Contact (U.S.)
The Ruth Group
Tram Bui / Alexander Lobo
Phone: 646-536-7035 / 7037
tbui@theruthgroup.com
alobo@theruthgroup.com

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Avivagen Announces Scale Up of Commercial Roll Out for OxC-beta™ Livestock in the Philippines

OTTAWA, Ontario, Aug. 16, 2017 (GLOBE NEWSWIRE) — Avivagen Inc. (TSXV:VIV) (OTC Pink:CHEXF) (“Avivagen” or the “Corporation”), a corporation with a proven and commercially-ready, patent-protected product intended to replace the antibiotics added to livestock feeds as growth promoters, is pleased to announce that its partner in the Philippines, UNAHCO, has confirmed that it is scaling up, effective immediately, the commercial roll out of Avivagen’s OxC-beta™ for Livestock by purchasing a recurring, three-month supply at a time of OxC-beta™ for Livestock, for specific use in swine. This purchase order is for 1,200kg (400kg per month for three months) and will support UNAHCO’s expansion of its commercial roll out of Avivagen’s product. UNAHCO has indicated its intention to continue making such quarterly purchases from Avivagen.

Kym Anthony, Chairman and Interim CEO stated, “This is an important milestone for Avivagen in that we believe that it represents a Real-world commercial adoption of our product that will drive a consistent revenue stream for Avivagen.  We have worked closely with UNAHCO, one of the largest feed suppliers in the Philippines, and we are delighted with our working relationship and their decision to adopt our proven product in support of their business.”

OxC-beta™ Livestock is a proprietary product shown to be effective and economic in replacing the antibiotics commonly added to livestock feeds.  OxC-beta™ Livestock is currently registered and available for sale in the Philippines, Taiwan and Thailand. The Company intends to accelerate market access and the commercial uptake of its OxC-beta™ Livestock product, an innovative product that has the potential to eliminate the use of antibiotics as growth promoters in livestock feed, a problem that needs an urgent solution and which represents a multi-billion dollar market.

About Avivagen
Avivagen Inc. is a life sciences corporation that has developed a scientifically-proven product for replacing antibiotics in livestock feeds and to otherwise benefit human and animal health. Avivagen is based in partnership facilities of the National Research Council of Canada (NRC) in Ottawa, Ontario and Charlottetown, Prince Edward Island. For more information, visit www.avivagen.com.                

About OxC-beta™ Technology
OxC-beta™ is an intellectual property protected formulation of fully oxidized β-carotene derivatives that has shown some extremely promising benefits for humans and animals alike. According to peer-reviewed, clinical and laboratory studies, OxC-beta™ has been shown to have the unique ability to prime an organism’s innate immune system.

OxC-beta™ Livestock
OxC-beta™ Livestock is a proprietary product shown to be effective and economic in replacing the antibiotics commonly added to livestock feeds.  OxC-beta™ Livestock is currently registered and available for sale in the Philippines, Taiwan and Thailand. The Company intends to accelerate market access and the commercial uptake of its OxC-beta™ Livestock product, an innovative product that has the potential to eliminate the use of antibiotics as growth promoters in livestock feed, a problem that needs an urgent solution and which represents a multi-billion dollar market.

Forward Looking Statements
This news release includes certain forward-looking statements that are based upon the current expectations of management. Forward-looking statements involve risks and uncertainties associated with the business of Avivagen Inc. and the environment in which the business operates. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking, including those identified by the expressions “aim”, “anticipate”, “appear”, “believe”, “consider”, “could”, “estimate”, “expect”, “if”, “intend”, “goal”, ”helps”, “hope”, “likely”, “may”, “plan”, “possibly”, “potentially”, “pursue”, “seem”, “should”, “whether”, “will”, “would” and similar expressions or opinions of management.  Forward—looking statements in this news release include but are not limited to statements about the ability of Avivagen’s products to replace antibiotics; whether UNAHCO will scale up the commercial roll out of OxC-beta for Livestock by purchasing a recurring, three-month supply at a time for use in swine; whether UNAHCO will continue making quarterly purchases from Avivagen; whether UNAHCO’s purchases will drive a consistent revenue stream fo Avivagen; Avivagen’s ability to scale up or obtain regulatory approval or commercial success in new jurisdictions; whether  the recurring purchase orders discussed above will contribute to Avivagen’s revenues or growth; and/or whether Avivagen’s relationship with UNAHCO will continue and/or to expand.

Avivagen is an early-stage commercialization company which faces significant risks and uncertainties in connection with its business and readers should be cautioned that investors may lose the entire value of their investment. Some of these risks and uncertainties include, but are not limited to, the following: Avivagen’s ability to continue as a going concern; whether the Corporation can expand its global regulatory advisor network in order to gain market approval of OxC-beta; Avivagen has only one manufacturer of its products and, if that manufacturer cannot produce its products, Avivagen will not be able to find another manufacturer, if at all; whether the Corporation can obtain market approval in additional geographies, if at all; whether discussions will advance with potential strategic partners, if at all; whether the Corporation will achieve additional partnerships or other commercial agreements with potential strategic partners, if at all;  whether the Corporation will be successful in augmenting communications with stakeholders; whether the Corporation will be successful in recruiting an executive team that will maximize the value of OxC-beta in any markets, if at all; the results of ongoing or future trials of OxC-beta may not be positive or sufficiently positive; even if the results of trials are positive, there is no guarantee that Avivagen’s products will be commercially successful or that requisite registrations or regulatory approvals will be obtained or maintained; the timing and results of trials may be delayed or may not be completed at all; whether Avivagen’s patent applications will be issued, if at all; whether Avivagen will be subject to infringement or other claims; whether Avivagen will achieve any of the goals set out in this press release, if at all; whether Avivagen can obtain further commercial and trial alliances in Asia and elsewhere; whether UNAHCO will terminate existing purchase orders or not deliver future expected purchase orders in the frequency expected by Avivagen or at all and intellectual property rights may not be granted, or, if granted, may prove inadequate to protect Avivagen’s inventions.

Readers should also refer to the risk factors in Avivagen’s management’s discussion and analysis for the year ended October 31, 2016 and other securities law filings from time to time all of which are available at www.SEDAR.com.   Any of the foregoing risk factors could negatively impact Avivagen’s ability to achieve the matters described in the forward-looking statements contained above as described or at all.   Accordingly, readers should not place undue or even any reliance on forward-looking statements.  Except as required by law, Avivagen assumes no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those reflected in the forward-looking statements.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Copyright © 2017 Avivagen Inc. OxC-beta™ is a trademark of Avivagen Inc.

For more information:                       

Avivagen Inc.
Drew Basek
Director of Investor Relations
100 Sussex Drive, Ottawa, Ontario, Canada K1A 0R6
Phone: 416-540-0733
E-mail: d.basek@avivagen.com

Kym Anthony 
Interim Chief Executive Officer
100 Sussex Drive, Ottawa, Ontario, Canada K1A 0R6
Head Office Phone: 613-949-8164
Website: www.avivagen.com

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