Sol-Gel Technologies Reports Second Quarter 2019 Financial Results and Corporate Update

  • Top–line generic product revenue of $7.8 million
  • TWIN Phase 3 trials are fully enrolled and remain on track to report results in 4Q19

NESS ZIONA, Israel, Aug. 13, 2019 (GLOBE NEWSWIRE) — 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, 2019 and provided an update on its clinical development programs.

"With the positive results reported from our Epsolay Phase 3 trials in papulopustular rosacea and top–line results expected later this year from the now fully enrolled pivotal TWIN program in acne, we remain confident of our ability to lead these programs through both the clinical and regulatory pathways to successful commercial launches," commented Dr. Alon Seri–Levy, Chief Executive Officer of Sol–Gel. "Additionally, we continue to generate meaningful revenue from our generic collaborations, which support the funding of our ongoing plans for TWIN and Epsolay as well as our proof–of–concept study for SGT–210 which we expect to initiate in the first quarter of 2020."

Corporate Highlights and Recent Developments

  • In the second quarter, Sol–Gel generated revenue of $7.8 million from its collaborative arrangement with Perrigo.
  • In July 2019, Sol–Gel received Notice of Allowance from the United States Patent and Trademark Office for a patent covering TWIN for the treatment of acne vulgaris. The newly granted patent will extend protection to July 2038, which Sol–Gel believes will prevent the launch of AB–related generic of TWIN during the life of the patent.

Clinical Program Update

  • Epsolay met all primary and secondary endpoints in both Epsolay Phase 3 trials, with statistically significant improvement seen as early as Week 2 compared with vehicle.

  • Enrollment in the two pivotal Phase 3 TWIN trials in acne vulgaris has been completed with top–line results expected in the fourth quarter of 2019, as previously announced.
  • Results from a bioequivalence study for generic 5–fluorouracil cream, 5%, for actinic keratosis, continue to be expected in 2019 followed by a filing in the U.S. of an abbreviated new drug application expected in 2020. This study is part of a collaboration with Douglas Pharmaceuticals.
  • During an investor event held on July 25th, Sol–Gel announced an expansion to its development pipeline to include SGT–210, a topical epidermal growth factor receptor inhibitor, for the potential treatment of palmoplantar keratoderma (PPK) and non–melanoma skin cancer. A proof of concept study of SGT–210 in PPK is expected to begin in the first quarter of 2020.

Financial Results for the Three Months Ended June 30, 2019

Revenue in the second quarter of 2019 was $7.8 million. The revenue was due to sales of a generic product from a collaborative arrangement with Perrigo.

Research and development expenses were $11.4 million in the second quarter of 2019 compared to $5.8 million during the same period in 2018. The increase was primarily due to an increase of $6.2 million in clinical trial expenses related to Epsolay and TWIN partially offset by a decrease of $0.2 million in manufacturing expenses for TWIN and a decrease of $0.4 million in share–based compensation expenses.

General and administrative expenses were $1.6 million in the second quarter of 2019 compared to $1.5 million during the same period in 2018. The increase was primarily due to an increase of $0.2 million in legal expenses and an increase of $0.2 million in payroll expenses, partially offset by a decrease of $0.3 million in share–based compensation expenses.

Sol–Gel reported a loss of $4.9 million for the second quarter of 2019 compared to a loss of $6.9 million for the same period in 2018.

As of June 30, 2019, Sol–Gel had $14.4 million in cash, cash equivalents and deposits and $35.5 million in marketable securities for a total balance of $49.9 million. Based on current assumptions, inclusive of the recent offering, Sol–Gel expects its existing cash resources will enable funding of operational and capital expenditure requirements into the first 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's current product candidate pipeline consists of late–stage branded product candidates that leverage our proprietary, silica–based microencapsulation technology platform, and several generic product candidates across multiple indications. For additional information, please visit www.sol–gel.com.

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, the clinical progress of our product candidates, plans and timing for the release of clinical data, our expectations surrounding the progress of our generic product pipeline, and the sufficiency of our cash resources to meet our 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: (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 and studies 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 21, 2019 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 to changes in our expectations.

SOL–GEL TECHNOLOGIES LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
December 31, June 30,
2018 2019
Assets
CURRENT ASSETS:
Cash and cash equivalents $ 5,325 $ 14,388
Bank deposit 1,000
Marketable securities 56,662 35,519
Accounts receivable 7,826
Prepaid expenses and other current assets 2,987 1,097
TOTAL CURRENT ASSETS 65,974 58,830
NON–CURRENT ASSETS:
Restricted long–term deposits 462 467
Property and equipment, net 2,604 2,454
Operating lease right–of–use assets 952
Funds in respect of employee rights upon retirement 642 675
TOTAL NON–CURRENT ASSETS 3,708 4,548
TOTAL ASSETS $ 69,682 $ 63,378
Liabilities and shareholders' equity
CURRENT LIABILITIES:
Accounts payable $ 2,924 $ 2,767
Other account payable 1,971 4,063
Current maturities of operating leases 526
TOTAL CURRENT LIABILITIES 4,895 7,356
LONG–TERM LIABILITIES
Operating leases liabilities 323
Liability for employee rights upon retirement 878 957
TOTAL LONG–TERM LIABILITIES 878 1,280
COMMITMENTS
TOTAL LIABILITIES 5,773 8,636
SHAREHOLDERS' EQUITY:
Ordinary Shares, NIS 0.1 par value "" authorized: 50,000,000 as of December 31, 2018 and March 31, 2019; issued and outstanding: 18,949,968 as of December 31, 2018 and March 31, 2019 520 520
Additional paid–in capital 190,853 192,340
Accumulated deficit (127,464 ) (138,118 )
TOTAL SHAREHOLDERS' EQUITY 63,909 54,742
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 69,682 $ 63,378

SOL–GEL TECHNOLOGIES LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
Six months ended
June 30
Three months ended
June 30
2018 2019
2018 2019
COLLABORATION REVENUES $ 93 $ 14,151 $ 49 $ 7,793
RESEARCH AND DEVELOPMENT EXPENSES 10,462 22,233 5,817 11,440
GENERAL AND ADMINISTRATIVE EXPENSES 2,660 3,332 1,518 1,638
TOTAL OPERATING LOSS 13,029 11,414 7,286 5,285
FINANCIAL INCOME, NET (409 ) (760 ) (379 ) (359 )
LOSS FOR THE PERIOD $ 12,620 $ 10,654 $ 6,907 $ 4,926
BASIC AND DILUTED LOSS PER ORDINARY SHARE $ 0.75 $ 0.56 $ 0.36 $ 0.26
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING USED IN COMPUTATION OF BASIC AND DILUTED LOSS PER SHARE 16,761,158 18,949,968 18,949,968 18,949,968

For further information, please contact:

Sol–Gel Contact:
Gilad Mamlok
Chief Financial Officer
+972–8–9313433

Investor Contact:
Chiara Russo
Solebury Trout
+1–617–221–9197
crusso@soleburytrout.com

Source: Sol–Gel Technologies Ltd.

Mexican Women Use Sunlight Instead of Firewood or Gas to Cook Meals

Reyna Díaz checks the marinated pork she is cooking in a solar cooker at her home in a poor neighbourhood of Vicente Guerrero, Villa de Zaachila municipality, in the southwestern Mexican state of Oaxaca. The use of solar cookers has made is possible for 200 local women to save on fuel and stop using firewood, providing environmental and health benefits. Credit: Emilio Godoy/IPS

Reyna Díaz checks the marinated pork she is cooking in a solar cooker at her home in a poor neighbourhood of Vicente Guerrero, Villa de Zaachila municipality, in the southwestern Mexican state of Oaxaca. The use of solar cookers has made is possible for 200 local women to save on fuel and stop using firewood, providing environmental and health benefits. Credit: Emilio Godoy/IPS

By Emilio Godoy
VILLA DE ZAACHILA, Mexico, Aug 13 2019 – Reyna Díaz cooks beans, chicken, pork and desserts in her solar cooker, which she sets up in the open courtyard of her home in a poor neighborhood on the outskirts of this town in southwestern Mexico.

“My family likes the way it cooks things. I use it almost every day, it has been a big help to me,” Díaz told IPS as she mixed the ingredients for cochinita pibil, a traditional pork dish marinated with spices and achiote, a natural coloring.

She then placed the pot on the aluminum sheets of the cooker, which reflect the sunlight that heats the receptacle.

Before receiving the solar cooker in March, Díaz, who sells atole, a traditional hot Mexican drink based on corn or wheat dough, and is raising her son and daughter on her own, did not believe it was possible to cook with the sun’s rays.”I learned while working with the local women. It was hard, like breaking stones; people knew nothing about it. Now people are more open, because there is more information about the potential of solar energy. In rural areas, people understand it more.” — Lorena Harp

“I didn’t know it could be done, I wondered if the food would actually be cooked. It’s a wonderful thing,” said this resident of the poor neighbourhood of Vicente Guerrero, in Villa de Zaachila, a municipality of 43,000 people in the state of Oaxaca, some 475 km south of Mexico City.

One thing the inhabitants of Vicente Guerrero have in common is poverty. But although they live in modest houses that in some cases are tin shacks lining unpaved streets and have no sewage system, they do have electricity and drinking water. The women alternate their informal sector jobs with the care of their families.

Diaz used to cook with firewood and liquefied petroleum gas (LPG), which she now uses less so it lasts longer. “I’ve saved a lot,” she said.

Women in this neighborhood were taught how to use the solar cookers and then became
promoters, organising demonstrations in their homes to exchange recipes, taste their dishes and spread the word about the benefits and positive changes that the innovative stoves have brought.

The solar cookers are low-tech devices that use reflective panels to focus sunlight on a pot in the middle.

Their advantages include being an alternative for rural cooking, because they make it possible to cook without electricity or solid or fossil fuels, pasteurising water to make it drinkable, reducing logging and pollution, helping people avoid breathing smoke from woodstoves, and using renewable energy.

The drawbacks are that they do not work on rainy or cloudy days, it takes a long time to cook the food, compared to traditional stoves, and they have to be used outdoors.

In Mexico, a country of 130 million people, some 19 million use solid fuels for cooking, which caused some 15,000 premature deaths in 2016 from the ingestion of harmful particles, according to data from the National Institute of Statistics and Geography (Inegi).

Lorena Harp (L), head of a project that promotes the use of solar cookers in Mexico, shows retired teacher Irma Jiménez how to assemble the device, in the poor neighborhood of Vicente Guerrero, Villa de Zaachila municipality, in the southwestern state of Oaxaca. Credit: Emilio Godoy/IPS

Lorena Harp (L), head of a project that promotes the use of solar cookers in Mexico, shows retired teacher Irma Jiménez how to assemble the device, in the poor neighborhood of Vicente Guerrero, Villa de Zaachila municipality, in the southwestern state of Oaxaca. Credit: Emilio Godoy/IPS

The main fuel consumed by 79 percent of these households is LPG, followed by wood or charcoal (11 percent) and natural gas (seven percent).

In Oaxaca, gas and firewood each account for 49 percent of household consumption.

Of the state’s more than four million inhabitants, 70 percent were living in poverty in 2016 and nearly 27 percent in extreme poverty, according to Inegi. Twenty-six percent lived in substandard, crowded housing and 62 percent lacked access to basic services.

Oaxaca is also one of the three Mexican states with the highest levels of energy poverty, which means households that spend more than 10 percent of their income on energy.

Solar cookers can help combat the deprivation.

They first began to be distributed in Oaxaca in 2004. In 2008, activists created the initiative “Solar energy for mobile food stalls in Mexico”, sponsored by three Swiss institutions: the city of Geneva, the SolarSpar cooperative and the non-governmental organisation GloboSol.

Cocina Solar Mexico, a collective dedicated to the use of solar energy for cooking, was founded in 2009. With the support of the non-governmental Solar Household Energy (SHE), based in Washington, an economical, light-weight prototype was built.

In 2016, SHE launched a pilot project in indigenous communities to assess how widely it would be accepted.

“I learned while working with the local women. It was hard, like breaking stones; people knew nothing about it. Now people are more open, because there is more information about the potential of solar energy. In rural areas, people understand it more,” Lorena Harp, head of the initiative, told IPS.

The four-litre pot, which has a useful life of five to 10 years, costs about $25, of which SHE provides half. The group has distributed about 200 solar cookers in 10 communities.

Harp said it is a gender issue, because “women are empowered, they have gained respect in their families.”

The southwestern Mexican state of Oaxaca fails to take advantage of is great solar power potential. The picture shows a rooftop at a solar panel factory in Oaxaca City, the state capital. Credit: Emilio Godoy/IPS

The southwestern Mexican state of Oaxaca fails to take advantage of is great solar power potential. The picture shows a rooftop at a solar panel factory in Oaxaca City, the state capital. Credit: Emilio Godoy/IPS

Despite its potential, Oaxaca does not take advantage of its high levels of solar radiation. Last June, it was listed among the 10 Mexican states with the lowest levels of distributed (decentralised) generation, less than 500 kilowatts, connected to the national power grid, according to the government’s Energy Regulatory Commission (CRE).

In the first half of the year, Oaxaca had an installed photovoltaic capacity of 6.69 megawatts with 747 interconnection contracts, in a country where distributed generation only involves solar energy.

This Latin American country registered 17,767 contracts for almost 125 megawatts (MW), almost the same volume as in the same period in 2018 -when they totaled 35,661 for 233.56 MW, although there were more permits. Since 2007, CRE has registered 112,660 contracts for 817.85 MW of solar power.

Luís Calderón, president of the Oaxaca Energy Cluster, says things have evolved quickly.

But “there is a lack of precise, reliable information and certainty about the savings achieved with distributed generation, which is generated for self-consumption while the surplus is fed into the grid. In addition, there is no policy in the state,” Calderón, also a member of the National Solar Energy Association, told IPS.

In 2018, Mexico registered a total installed capacity of 70,000 MW, three percent more than the previous year. Gas-fired combined cycle plants contributed 36 percent, conventional thermal 17 percent, hydroelectric 18 percent, coal almost eight percent, wind just under seven percent, and solar only 2.6 percent.

But the government of left-wing President Andrés Manuel López Obrador, who took office in December, is driving the exploitation of fossil fuels and standing in the way of the growth of renewable energies.

It plans to modify the Business Ecocredit initiative, led by the government’s Electric Energy Saving Trust for micro, small and medium enterprises for the acquisition of efficient appliances. The measures include eliminating the 14 percent subsidy and a limit of some 20,000 dollars in financing, but the government has yet to define its future.

In addition, the Oaxaca government’s plan to create two cooperatives for energy for agricultural irrigation does not yet have the 1.75 million dollars needed for two 500-kilowatt solar plants in the municipality of San Pablo Huixtepec to serve 1,200 farmers in 35 irrigation units.

The local women don’t plan to stop using the solar cookers, in a neighbourhood ideal for deploying solar panels and water heaters. “We’re going to keep using it, we’ve seen that it works. We’re going to promote this,” Díaz said, while checking that her stew wasn’g burning.

The SHE assessment found that the solar cookers were widely accepted and have had a positive impact, as nearly half of the local women who use them have reduced by more than 50 percent their use of stoves that cause pollution. Some use the pots up to six times a week, and they have proven to be high quality, durable and affordable. Users also report that the solar cookers have saved them time.

Harp said more partners and government support were needed. “There’s still a long way to go, there are many shortfalls. Something is missing to generate truly widespread use, perhaps a comprehensive policy,” she said.