Exhibit 99.1

Press release announcing the Company’s financial results for the three months ended June 30, 2020

 

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Exhibit 99.1

Sol-Gel Technologies Reports Second Quarter 2020
Financial Results and Corporate Update

 

 

 

 

NESS ZIONA, Israel, August 6, 2020 – Sol-Gel Technologies, Ltd. (NASDAQ: SLGL), a clinical-stage dermatology company focused on identifying, developing and commercializing branded and generic topical drug products for the treatment of skin diseases, today announced financial results for the second quarter ended June 30, 2020 and provided clinical and regulatory updates on its programs.

 

“The second quarter had major milestones for Sol-Gel, as we submitted our first NDA for Epsolay for the treatment of papulopustular rosacea,” commented Dr. Alon Seri-Levy, Chief Executive Officer of Sol-Gel. “We look forward to the FDA confirming acceptance and granting a PDUFA action date in the near future. Also, this quarter, we expanded our collaboration with Perrigo to include three additional generic product candidates. While generic product revenue was lower compared to previous periods due to reduced sales stemming from COVID-19 related stay-at-home orders, we did see positive trends exiting the second quarter. Our cash resources will enable funding of all planned operational and capital expenditures into the third quarter of 2021, excluding revenue we expect to receive based on the sales of a second generic product starting in the second quarter of 2021.”

 

Dr. Seri-Levy continued, “There was no impact from COVID-19 on the NDA submission for Epsolay, and we remain on track to submit our NDA for Twyneo in the second half of this year, another major milestone for the company. We continue our launch preparation for Epsolay and Twyneo, which includes the planned opening of our US headquarters in New Jersey in the coming months and hiring key positions.”

 

Corporate Highlights and Recent Developments

 

 

 

 

 

 

 

 

 

 

 

Financial Results for the Three Months ended June 30, 2020

 

Revenue in the second quarter of 2020 was $1.1 million. The revenue was mainly due to sales of a generic product from the collaboration arrangement with Perrigo. The decrease in revenue from the previous quarter was mainly attributed to COVID-19 related stay-at-home-orders.

 

Research and development expenses were $6.5 million in the second quarter of 2020 compared to $11.4 million during the same period in 2019. The decrease of $4.9 million was mainly attributed to a decrease of $6.4 million in clinical trial expenses, primarily related to a decrease of clinical trial activity of Epsolay and Twyneo, partially offset by an increase of $1.0 million in manufacturing expenses of Epsolay and Twyneo and an increase of $0.4 million in regulatory expenses, mostly related to preparing for the NDA submissions for Epsolay and Twyneo.

 

General and administrative expenses were $2.2 million in the second quarter of 2020 compared to $1.6 million during the same period in 2019. The increase of $0.6 million was mainly attributed to an increase of $0.4 million in commercialization expenses and an increase of $0.1 million in other expenses.

 

Sol-Gel reported a loss of $7.1 million for the second quarter of 2020 compared to loss of $4.9 million for the same period in 2019.

 

As of June 30, 2020, Sol-Gel had $25.3 million in cash, cash equivalents and deposits and $40.7 million in marketable securities for a total balance of $66.0 million. Based on current assumptions, Sol-Gel expects its existing cash resources will enable funding of operational and capital expenditure requirements into the third quarter of 2021.

 

About Sol-Gel Technologies

 

Sol-Gel is a clinical-stage dermatology company focused on identifying, developing and commercializing branded and generic topical drug products for the treatment of skin diseases. Sol-Gel leverages its proprietary microencapsulation technology platform for the development of Twyneo, under investigation for the treatment of acne vulgaris, and Epsolay, under investigation for the treatment of papulopustular rosacea. The Company’s pipeline also includes SGT-210, an early-stage topical epidermal growth factor receptor inhibitor, erlotinib, under investigation for the treatment of palmoplantar keratoderma, and preclinical assets tapinarof and roflumilast. For additional information, please visit www.sol-gel.com.

 

About Epsolay®

 

Epsolay is an investigational topical cream containing encapsulated benzoyl peroxide, 5%, for the treatment of papulopustular rosacea. Epsolay utilizes a patented technology process to encapsulate benzoyl peroxide within silica-based microcapsules to create a barrier between the medication and the skin. The slow migration of medication from the microcapsules is designed to deliver an effective dose of benzoyl peroxide onto the skin, while reducing the ability of benzoyl peroxide to induce skin irritation, such as erythema, burning and stinging. If approved, Epsolay has the potential to be the first FDA-approved single-active benzoyl peroxide prescription drug product. Epsolay is not approved by the FDA and the safety and efficacy has not been established.

 

 

About Papulopustular Rosacea

 

Papulopustular rosacea is a chronic and recurrent inflammatory skin disorder that affects nearly 5 million Americans. The condition is common, especially in fair-skinned people of Celtic and northern European heritage. Onset is usually after age 30 and typically begins as flushing and subtle redness on the cheeks, nose, chin or forehead. If left untreated, rosacea can slowly worsen over time. As the condition progresses the redness becomes more persistent, blood vessels become visible and pimples often appear. Other symptoms may include burning, stinging, dry skin, plaques and skin thickening.

 

About Twyneo®

 

Twyneo is an investigational, antibiotic-free, fixed-dose combination of encapsulated benzoyl peroxide, 3%, and encapsulated tretinoin, 0.1%, cream for the treatment of acne vulgaris. If approved, it will be the first acne treatment that contains a fixed-dose combination of benzoyl peroxide and tretinoin, which are separately encapsulated in silica using Sol-Gel’s proprietary microencapsulation technology. Tretinoin and benzoyl peroxide are widely prescribed separately as a combination treatment for acne; however, benzoyl peroxide causes degradation of the tretinoin molecule, thereby potentially reducing its effectiveness if used at the same time or combined in the same formulation. The silica-based microcapsule is designed to protect tretinoin from oxidative decomposition by benzoyl peroxide, thereby enhancing the stability of the active drug ingredients. The silica-based shell is also designed to release the ingredients slowly over time to provide a favorable efficacy and safety profile. Twyneo is not approved by the FDA and the safety and efficacy has not been established.

 

About Acne Vulgaris

 

Acne vulgaris is a common multifactorial skin disease that according to the American Academy of Dermatology affects approximately 40 to 50 million people in the United States. The disease occurs most frequently during childhood and adolescence (affecting 80% to 85% of all adolescents) but it may also appear in adults. Acne patients suffer from the appearance of lesions on areas of the body with a large concentration of oil glands, such as the face, chest, neck and back. These lesions can be inflamed (papules, pustules, nodules) or non-inflamed (comedones). Acne can have a profound effect on the quality of life of those suffering from the disease. In addition to carrying a substantial risk of permanent facial scarring, the appearance of lesions may cause psychological strain, social withdrawal and lowered self-esteem.

 

Forward-Looking Statements

 

This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking statements, including, but not limited to, statements regarding the timing of the submission of an NDA for Twyneo and the FDA’s granting of a PDUFA action date for Epsolay, the expectation to receive payments from the product sales of a generic drug starting in the second quarter of 2021, the timing of results of the ongoing Phase 1 clinical trial of SGT-210, the Company’s plans to open US headquarters in Whippany, NJ, the potential development and commercialization of three new generic product candidates,  and the Company’s expectations regarding its liquidity and ability to fund operational and capital expenditure requirements. These forward-looking statements include information about possible or assumed future results of our business, financial condition, results of operations, liquidity, plans and objectives. In some cases, you can identify forward-looking statements by terminology such as “believe,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “expect,” “predict,” “potential,” or the negative of these terms or other similar expressions. Forward-looking statements are based on information we have when those statements are made or our management’s current expectation and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include, but are not limited to, risks relating to the effects of COVID-19 (coronavirus), the timing of a launch of a branded tapinarof product and the launch of a branded topical roflumilast in the U.S., risks related to the timing of the submission of an NDA for Epsolay and an NDA for Twyneo as well as the following factors: (i) the adequacy of our financial and other resources, particularly in light of our history of recurring losses and the uncertainty regarding the adequacy of our liquidity to pursue our complete business objectives; (ii) our ability to complete the development of our product candidates; (iii) our ability to find suitable co-development partners; (iv) our ability to obtain and maintain regulatory approvals for our product candidates in our target markets and the possibility of adverse regulatory or legal actions relating to our product candidates even if regulatory approval is obtained; (v) our ability to commercialize our pharmaceutical product candidates; (vi) our ability to obtain and maintain adequate protection of our intellectual property; (vii) our ability to manufacture our product candidates in commercial quantities, at an adequate quality or at an acceptable cost; (viii) our ability to establish adequate sales, marketing and distribution channels; (ix) acceptance of our product candidates by healthcare professionals and patients; (x) the possibility that we may face third-party claims of intellectual property infringement; (xi) the timing and results of clinical trials that we may conduct or that our competitors and others may conduct relating to our or their products; (xii) intense competition in our industry, with competitors having substantially greater financial, technological, research and development, regulatory and clinical, manufacturing, marketing and sales, distribution and personnel resources than we do; (xiii) potential product liability claims; (xiv) potential adverse federal, state and local government regulation in the United States, Europe or Israel; and (xv) loss or retirement of key executives and research scientists. These and other important factors discussed in the Company's Annual Report on Form 20-F filed with the Securities and Exchange Commission (“SEC”) on March 24 , 2020 and our other reports filed with the SEC could cause actual results to differ materially from those indicated by the forward-looking statements made in this press release. Any such forward-looking statements represent management’s estimates as of the date of this press release. Except as required by law, we undertake no obligation to update publicly any forward-looking statements after the date of this press release to conform these statements.

 

 

SOL-GEL TECHNOLOGIES LTD.

(U.S. dollars in thousands, except share and per share data)

(Unaudited)

 

 (The amounts are stated in U.S. dollars in thousands, except share and per share data)

 

         

For further information, please contact:

 

Sol-Gel Contact:

 

Gilad Mamlok

Chief Financial Officer

+972-8-9313433

Investor Contact:

 

Lee M. Stern

Solebury Trout

+1-646-378-2922

[email protected]

 

Source: Sol-Gel Technologies Ltd.

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CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:
Balance Sheets	F - 2
Statements of Operations	F - 3
Statements of Changes in Shareholders' Equity	F - 4
Statements of Cash Flows	F - 5
Notes to the Financial Statements	F - 6 - F - 10

		December 31,				June 30,
		2019				2020
A s s e t s
CURRENT ASSETS:
Cash and cash equivalents		$	9,412			$	5,444
Bank deposit			-				19,900
Marketable securities			40,966				40,678
Receivables from collaborative arrangements			4,120				1,171
Prepaid expenses and other current assets			1,293				1,494
TOTAL  CURRENT ASSETS			55,791				68,687
NON-CURRENT ASSETS:
Restricted long-term deposits			472				1,284
Property and equipment, net			2,314				2,202
Operating lease right-of-use assets			2,040				1,777
Funds in respect of employee rights upon retirement			684				682
TOTAL  NON-CURRENT ASSETS			5,510				5,945
TOTAL  ASSETS		$	61,301			$	74,632
Liabilities and shareholders' equity
CURRENT LIABILITIES:
Accounts payable		$	1,710			$	1,232
Other accounts payable			4,123				5,154
Current maturities of operating leases			672				525
TOTAL  CURRENT LIABILITIES			6,505				6,911
LONG-TERM LIABILITIES -
Operating leases liabilities			1,373				1,227
Liability for employee rights upon retirement			958				973
TOTAL  LONG-TERM LIABILITIES			2,331				2,200
COMMITMENTS
TOTAL  LIABILITIES			8,836				9,111
SHAREHOLDERS' EQUITY:
Ordinary Shares, NIS 0.1 par value – authorized: 50,000,000 as of December 31, 2019 and June 30, 2020; issued and outstanding: 20,402,800 and 22,996,948 as of December 31, 2019 and June 30, 2020, respectively.			561				635
Additional paid-in capital			203,977				231,139
Accumulated deficit			(152,073	)			(166,253	)
TOTAL SHAREHOLDERS' EQUITY			52,465				65,521
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$	61,301			$	74,632

		Six months ended June 30								Three months ended June 30
		2019				2020				2019				2020
COLLABORATION REVENUES		$	14,151			$	4,598			$	7,793			$	1,133
RESEARCH AND DEVELOPMENT EXPENSES			22,233				14,381				11,440				6,451
GENERAL AND ADMINISTRATIVE EXPENSES			3,332				4,994				1,638				2,233
TOTAL OPERATING LOSS			11,414				14,777				5,285				7,551
FINANCIAL INCOME, net			(760	)			(597	)			(359	)			(481	)
LOSS FOR THE PERIOD		$	10,654			$	14,180			$	4,926			$	7,070
BASIC AND DILUTED LOSS PER ORDINARY SHARE		$	0.56			$	0.64			$	0.26			$	0.31
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING USED IN COMPUTATION OF BASIC AND DILUTED LOSS PER SHARE			18,949,968				22,143,099				18,949,968				22,920,557

		Ordinary shares								Additional paid-in capital				Accumulated deficit				Total
		Number of shares				Amounts				Amounts
BALANCE AS OF JANUARY 1, 2019			18,949,968			$	520			$	190,853			$	(127,464	)		$	63,909
CHANGES DURING THE SIX MONTHS ENDED JUNE 30, 2019:
Loss for the period															(10,654	)			(10,654	)
Share-based compensation											1,487								1,487
BALANCE AT JUNE 30, 2019			18,949,968			$	520			$	192,340			$	(138,118	)		$	54,742
BALANCE AS OF JANUARY 1, 2020			20,402,800				561				203,977				(152,073	)			52,465
CHANGES DURING THE SIX MONTHS ENDED JUNE 30, 2020:
Loss for the period															(14,180	)			(14,180	)
Issuance of shares and warrants through public offering, net of issuance costs			2,091,907				61				21,245								21,306
Issuance of shares and warrants through private placement from the controlling shareholder			454,628				13				4,987								5,000
Vesting of restricted shares units			19,166				*				*								*
Exercise of options			28,447				*				151								151
Share-based compensation											779								779
BALANCE AT JUNE 30, 2020			22,996,948				635				231,139				166,253				65,521

		Six months ended June 30
		2019				2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Loss		$	(10,654	)		$	(14,180	)
Adjustments required to reconcile loss to net cash used in operating activities:
Depreciation			432				470
Changes in accrued liability for employee rights upon retirement, net			46				17
Share-based compensation			1,487				779
Financial expenses (income), net			43				(14	)
Net changes in operating leases			(103	)			(30	)
Changes in fair value of marketable securities			(79	)			76
Changes in operating asset and liabilities:
Accounts receivable			(7,826	)			2,949
Prepaid expenses and other current assets			1,890				(201	)
Accounts payable and other			1,935				553
Long-term receivables			-				-
Net cash used in operating activities			(12,829	)			(9,581	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment			(282	)			(358	)
Investment in marketable securities			(2,551	)			(19,640	)
Proceeds from sale of marketable securities			23,773				19,852
Short-term deposits			1,000				(19,900	)
Long-term deposits			(5	)			(12	)
Net cash provided by (used in) investing activities			21,935				(20,058	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceed from exercise of options			-				151
Proceeds from issuance of shares, net of issuance costs			-				26,306
Net cash provided by financing activities			-				26,457
EFFECT OF EXCHANGE RATE ON CASH AND CASH EQUIVALENTS			(43	)			14
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS			9,063				(3,168	)
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF THE PERIOD			5,675				9,762
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF THE PERIODs		$	14,738			$	6,594
Cash and Cash equivalents			14,388				5,444
Restricted cash			350				1,150
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH SHOWN IN STATEMENT OF CASH FLOWS			14,738				6,594
SUPPLEMENTARY INFORMATION:
Interest received			-				628

b.

Loss per share Basic loss per share is computed on the basis of the net loss for the period divided by the weighted average number of ordinary shares outstanding during the 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 and restricted shares, which are included under the treasury stock method when dilutive. The calculation of diluted loss per share does not include 1,251,378  and 1,244,731 options and restricted shares for the six months ended June 30, 2019 and 2020, respectively, because the effect would be anti-dilutive.

		December 31,				June 30,
		2019				2020
Level 2 securities:
U.S government and agency bonds		$	2,499				-
Canada government bonds			999				-
Other foreign government bonds			3,521				3,523
Corporate bonds*			33,947				37,155
Total		$	40,966			$	40,678

		Marketable securities
		For the year ended				For the Six Months
		December 31, 2019				ended June 30, 2020
Balance at beginning of the period		$	56,662			$	40,966
Additions			38,702				19,640
Sale or maturity			(54,333	)			(19,852	)
Changes in fair value during the period			(65	)			(76	)
Balance at end of the period		$	40,966			$	40,678

		Market value
		June 30,
		2020
Due within one year			39,937
Between 1-2 years			741

a.

In 2007, the Company granted rights to a  third party for use and commercialization of a product for skin protection. Under this agreement, the Company is entitled to royalties during the years 2016 to 2024. Based on current sales, royalties are not material.

b.

In 2016 through 2020, the Company entered into several collaboration agreements with two third parties for the development, manufacturing and commercialization of several product candidates. Under the agreements, the third parties are obligated to conduct regulatory, scientific, clinical and technical activities necessary to develop the product and prepare and file ANDA, with the FDA and gain regulatory approval. The Company participates in the development of the product candidates, including participation in joint steering committees and is obligated for sourcing the active pharmaceutical ingredient (API) during the development phase. Upon FDA approval, the third parties have exclusive rights and are required to use diligent efforts to commercialize these products in territories defined under the agreements, including all required sales, marketing and distributing activities associated with the agreements. The Company is entitled to 50% of the third parties’ gross profits related to the sale of these products, as such term is defined in the agreements.

a.

Related parties include the controlling shareholder and companies under his control, the board of   directors and the executive officers of the Company.

b.

As to the private placement with the controlling shareholder, see note 5.