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Form 10-Q PLURISTEM THERAPEUTICS For: Dec 31

February 8, 2016 4:11 PM EST


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
 
Form 10-Q
 
(Mark One)
 
x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended December 31, 2015
 
o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
 
For the transition period from
 __________ to __________
 
Commission file number  001-31392
 
PLURISTEM THERAPEUTICS INC.
(Exact name of registrant as specified in its charter)

Nevada
98-0351734
(State or other jurisdiction of incorporation or organization)
(IRS Employer Identification No.)

MATAM Advanced Technology Park, Building No. 5, Haifa, Israel  31905
(Address of principal executive offices)

011-972-74-7108607
(Registrant’s telephone number)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     
 
Yes x   No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registration was required to submit and post such files).    
 
Yes x   No o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
 
 
Large accelerated filer o
Non-accelerated filer o
(Do not check if a smaller reporting company)
Accelerated filer x
Smaller reporting company o
 
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
 
Yes o   No x

State the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date: 79,933,902 shares of common stock issued and outstanding as of February 2, 2016.
 
 
 

 
PART I - FINANCIAL INFORMATION
 
Item 1.  Financial Statements.
 
PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARY
 
INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2015

(Unaudited)
 
 

 
 
PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARY
INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2015

 U.S. DOLLARS IN THOUSANDS

(Unaudited)

INDEX

 
 
 

 
PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARY
 
INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS
U.S. Dollars in thousands (except share and per share data)

         
December 31,
2015
   
June 30,
 2015
 
   
Note
   
Unaudited
       
ASSETS
                 
                   
CURRENT ASSETS:
                 
                   
Cash and cash equivalents
        $ 4,948     $ 22,626  
Short-term bank deposits
          16,517       7,167  
Restricted cash and short term bank deposits
          550       1,076  
Marketable securities
  3       21,636       22,250  
Account receivable from the Office of the Chief Scientist
          150       1,691  
Other account receivable
          981       2,058  
Total current assets
          44,782       56,868  
                       
LONG-TERM ASSETS:
                     
                       
Long-term deposits and restricted deposits
          340       361  
Severance pay fund
          749       753  
Property and equipment, net
          10,170       10,173  
                       
Total long-term assets
          11,259       11,287  
                       
Total assets
        $ 56,041     $ 68,155  

The accompanying notes are an integral part of the unaudited interim condensed consolidated financial statements.
 
 
F - 2

 
PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARY
 
INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS
U.S. Dollars in thousands (except share and per share data)

     
December 31,
2015
   
June 30,
2015
 
 
Note
 
Unaudited
       
LIABILITIES AND STOCKHOLDERS’ EQUITY
             
               
CURRENT LIABILITIES
             
               
Trade payables
    $ 1,835     $ 3,268  
Accrued expenses
      1,277       910  
Deferred revenues
      -       379  
Advance payment from United Therapeutics
      -       93  
Other accounts payable
      1,500       1,533  
Total current liabilities
      4,612       6,183  
                   
LONG-TERM LIABILITIES
                 
                   
Deferred revenues
1c
    -       2,468  
Accrued severance pay
      861       859  
Other long-term liabilities
      1,219       502  
Total long-term liabilities
      2,080       3,829  
                   
COMMITMENTS AND CONTINGENCIES
5
               
                   
STOCKHOLDERS’ EQUITY
                 
                   
Share capital:
6
               
    Common stock  $0.00001 par value:
    Authorized: 200,000,000 shares
    Issued and outstanding:  79,736,404 shares as of December 31, 2015, 78,771,905 shares as of June 30, 2015
      1       1  
Additional paid-in capital
      196,929       195,303  
Accumulated deficit
      (148,349 )     (138,511 )
Receivables on account of shares
      -       (790 )
Other comprehensive income
      768       2,140  
Total stockholders' equity
      49,349       58,143  
                   
Total liabilities and stockholders' equity
    $ 56,041     $ 68,155  
 
The accompanying notes are an integral part of the unaudited interim condensed consolidated financial statements.

 
F - 3

 
PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARY
 
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
U.S. Dollars in thousands (except share and per share data)

     
Six months ended
December 31
   
Three months ended
December 31,
 
 
Note
 
2015
   
2014
   
2015
   
2014
 
                           
Revenues
1c
  $ 2,847     $ 190     $ 2,752     $ 95  
Cost of revenues
      (100 )     (7 )     (97 )     (4 )
Gross profit
      2,747       183       2,655       91  
Operating Expenses:
                                 
Research and development expenses
      (10,630 )     (11,121 )     (5,571 )     (5,385 )
Less participation by the Office of the Chief Scientist and other parties
      1,165       2,205       234       506  
Research and development expenses, net
      (9,465 )     (8,916 )     (5,337 )     (4,879 )
General and administrative expenses
      (3,033 )     (3,191 )     (1,546 )     (1,513 )
                                   
Operating loss
      (9,751 )     (11,924 )     (4,228 )     (6,301 )
                                   
Financial income (expense), net
      (87 )     (232 )     266       56  
                                   
Net loss for the period
    $ (9,838 )   $ (12,156 )   $ (3,962 )   $ (6,245 )
                                   
Loss per share:
                                 
Basic and diluted net loss per share
    $ (0.12 )   $ (0.17 )   $ (0.05 )   $ (0.09 )
                                   
Weighted average number of shares used  in computing basic and diluted net loss per share
          79,066,675           69,610,528           79,370,673           70,070,509  
 
The accompanying notes are an integral part of the unaudited interim condensed consolidated financial statements.

 
F - 4

 
PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARY

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED)
U.S. Dollars in thousands
 
   
Six months ended
 December 31,
   
Three months ended
December 31,
 
   
2015
   
2014
   
2015
   
2014
 
Net loss
  $ (9,838 )   $ (12,156 )   $ (3,962 )   $ (6,245 )
Other comprehensive loss, net:
                               
Unrealized  gains (losses) on derivative instruments
    -       (222 )     -       268  
Unrealized gains (losses) on available-for-sale marketable securities, net
    (1,346 )     (3,918 )     425       92  
Reclassification adjustment of derivative instruments gains (losses) realized in net loss, net
    (46 )     156       -       (201 )
Reclassification adjustment of available-for-sale marketable securities gains (losses) realized in net loss, net
    20       626       (99 )     171  
Other comprehensive income (loss)
    (1,372 )     (3,358 )     326       330  
Total comprehensive loss
  $ (11,210 )   $ (15,514 )   $ (3,636 )   $ (5,915 )
 
The accompanying notes are an integral part of the unaudited interim condensed consolidated financial statements.

 
F - 5

 
PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARY

INTERIM CONDENSED STATEMENTS OF CHANGES IN  EQUITY (UNAUDITED)
U.S. Dollars in thousands (except share data)
 
   
Common Stock
   
Additional
Paid-in
   
Receivables on account
   
Accumulated Other Comprehensive
   
Accumulated
   
Total Stockholders’
 
   
Shares
   
Amount
   
Capital
   
of shares
   
Income (Loss)
   
Deficit
   
Equity
 
Balance as of July 1, 2014
    68,601,452     $ (* )   $ 172,998       -     $ 2,959     $ (113,834 )   $ 62,123  
Exercise of options by employees
    3,000       (* )     2       -       -       -       2  
Exercise of warrants by investors and finders
    822,734       (* )     244       -       -       -       244  
Stock-based compensation to employees, directors and non-employee consultants
    767,673       (* )     1,754       -       -       -       1,754  
Issuance of common stock in a private placement (Note 6a)
    200,000       (* )     528               -       -       528  
Stock-based compensation to contractor (Note 6b)
    100,004       (* )     250       (250 )     -       -       -  
Other comprehensive loss, net
    -       -       -       -       (3,358 )     -       (3,358 )
Net loss
    -       -       -       -       -       (12,156 )     (12,156 )
                                                         
Balance as of December 31, 2014 (unaudited)
    70,494,863     $ (* )   $ 175,776     $ (250 )   $ (399 )   $ (125,990 )   $ 49,137  
 
(*)  Less than $1
             
 
The accompanying notes are an integral part of the unaudited interim condensed consolidated financial statements.

 
F - 6

 
PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARY

INTERIM CONDENSED STATEMENTS OF CHANGES IN  EQUITY (UNAUDITED)
U.S. Dollars in thousands (except share data)
 
   
Common Stock
   
Additional
Paid-in
   
Receivables on account
   
Accumulated Other Comprehensive
   
Accumulated
   
Total Stockholders’
 
   
Shares
   
Amount
   
Capital
   
of shares
   
Income (Loss)
   
Deficit
   
Equity
 
Balance as of July 1, 2015
    78,771,905     $ 1     $ 195,303     $ (790 )   $ 2,140     $ (138,511 )   $ 58,143  
Exercise of options by employees and  non-employee consultants
    25,000       (* )     16       -       -       -       16  
Stock-based compensation to employees, directors and non-employee consultants
    939,499       (* )     1,571       -       -       -       1,571  
Proceeds related to issuance of common stock in a private placement (Note 6a)
    -       -       -       790       -       -       790  
Stock-based compensation to contractor (Note 6b)
    -       -       39       -       -       -       39  
Other comprehensive loss, net
    -       -       -       -       (1,372 )     -       (1,372 )
Net loss
    -       -       -       -       -       (9,838 )     (9,838 )
                                                         
Balance as of December 31, 2015 (unaudited)
    79,736,404     $ 1     $ 196,929     $ -     $ 768     $ (148,349 )   $ 49,349  
 
(*)  Less than $1
             
 
The accompanying notes are an integral part of the unaudited interim condensed consolidated financial statements.
 
 
F - 7

 
PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARY

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
U.S. Dollars in thousands
 
   
Six months ended December 31,
 
   
2015
   
2014
 
CASH FLOWS FROM OPERATING ACTIVITIES:
           
             
Net loss
  $ (9,838 )   $ (12,156 )
                 
Adjustments to reconcile net loss to net cash used in operating activities:
               
                 
Depreciation
    1,031       1,002  
Gain from sale of property and equipment, net
    (1     -  
Accretion of discount, amortization of premium and changes in accrued interest of marketable securities
    146       145  
 Gain from sale of investments of available-for-sale marketable securities
    (20
)
    (197 )
Stock-based compensation to employees, directors and non-employees consultants
    1,571       1,754  
Decrease in Office of the Chief Scientist receivables
    1,541       2,105  
Decrease (increase) in other accounts receivable
    1,032       (184 )
Decrease in trade payables
    (953 )     (772 )
Increase (decrease) in other accounts payable, accrued expenses and other long-term liabilities
    1,051       (417 )
Decrease in deferred revenues
    (2,847 )     (190 )
Decrease in advance payment from United Therapeutics
    (93 )     (104 )
 Increase in interest receivable on short-term deposits
    (39     (14 )
Linkage differences and interest on short and long-term deposits
    24       65  
Accrued severance pay, net
    6       (63 )
Net cash used by operating activities
  $ (7,389 )   $ (9,026 )
                 
CASH FLOWS FROM INVESTING ACTIVITIES:
               
                 
Purchase of property and equipment
  $ (1,471 )   $ (552 )
Repayment of (investment in) short-term deposits
    (8,794 )     11,072  
Repayment of long-term deposits
    5       3  
Proceeds from sale of property and equipment
    3       -  
Proceeds from sale of available-for-sale marketable securities
    1,054       2,409  
Proceeds from redemption of available-for-sale marketable securities
    651       301  
Investment in available-for-sale marketable securities
    (2,543 )     (2,513 )
Net cash provided (used) by investing activities
  $ (11,095 )   $ 10,720  
 
The accompanying notes are an integral part of the unaudited interim condensed consolidated financial statements.
 
 
F - 8

 
PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARY

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
U.S. Dollars in thousands
 
   
Six months ended December 31,
 
   
2015
   
2014
 
CASH FLOWS FROM FINANCING ACTIVITIES:
           
             
Proceeds related to issuance of common stock in a private placement
  $ 790     $ 528  
Exercise of options and warrants
    16       246  
                 
Net cash provided by financing activities
  $ 806     $ 774  
                 
Increase (decrease) in cash and cash equivalents
    (17,678 )     2,468  
Cash and cash equivalents at the beginning of the period
    22,626       4,493  
                 
Cash and cash equivalents at the end of the period
  $ 4,948     $ 6,961  
                 
(a) Supplemental disclosure of cash flow activities:
               
Cash paid during the period for:
               
Taxes paid due to non-deductible expenses
  $ 43     $ 17  
                 
(b) Supplemental disclosure of non-cash activities:
           
Purchase of property and equipment on credit
  $ 132     $ 72  
Share consideration to contractor
  $ 39     $ -  
 
The accompanying notes are an integral part of the unaudited interim condensed consolidated financial statements.

 
F - 9

 
PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARY

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
U.S. Dollars in thousands (except share and per share amounts)
 
NOTE 1:-GENERAL
 
 
a.
Pluristem Therapeutics Inc., a Nevada corporation, was incorporated on May 11, 2001. Pluristem Therapeutics Inc. has a wholly owned subsidiary, Pluristem Ltd. (the “Subsidiary”), which is incorporated under the laws of the State of Israel. Pluristem Therapeutics Inc. and the Subsidiary are referred to as “Pluristem” or the “Company”.
 
 
b.
The Company is a bio-therapeutics company developing off-the-shelf allogeneic cell therapy products for the treatment of multiple ischemic and inflammatory conditions. The Company has sustained operating losses and expects such losses to continue in the foreseeable future. The Company's accumulated losses aggregated to $148,349 through December 31, 2015 and the Company incurred a net loss of $9,838 for the six months ended December 31, 2015.
 
The Company plans to continue to finance its operations with sales of equity securities, entering into licensing technology agreements (see Note 1c) and from grants to support its research and development activity. In the longer term, the Company plans to finance its operations from revenues from sales of products.
 
The Company’s shares of common stock are traded on the NASDAQ Capital Market under the symbol “PSTI”, and on the Tel-Aviv Stock Exchange under the symbol “PLTR”.
 
 
c.
License Agreements:
 
United Therapeutics Corporation ("United") Agreement
 
On June 19, 2011, the Company entered into an exclusive license agreement (the “United Agreement”) with United for the use of the Company's PLX cells to develop and commercialize a cell-based product for the treatment of Pulmonary Hypertension (“PAH”).  The United Agreement provided that United would receive exclusive worldwide license rights for the development and commercialization of the Company's PLX cell-based product to treat PAH.  The United Agreement further provided for the following consideration payable to the Company: (i) an upfront payment of $7,000 paid in August 2011, which included a $5,000 non-refundable upfront payment and a $2,000 advance payment on the development; (ii) up to $37,500 upon reaching certain regulatory milestones with respect to the development of a product to treat PAH; (iii) reimbursement of up to $10,000 of certain of the Company's expenses if the Company establishes a GMP manufacturing facility in North America; (iv) reimbursement of certain costs in connection with the development of the product; and (v) following commercialization of the product, royalties at a mid-single digit percent and the purchase of commercial supplies of the developed product from the Company at a specified margin over the Company’s cost.
 
On December 8, 2015, the Company received a notice from United terminating the United Agreement, effective immediately. Pursuant to the United Agreement termination clause, Pluristem will regain full rights to PLX in the field of PAH, as well as all clinical data and regulatory submissions. As the Company has no further obligations towards United, the Company recognized the remaining upfront payment received in August 2011 as revenues during the three month period ended December 31, 2015.
 
CHA Biotech ("CHA") Agreement
 
On June 26, 2013, Pluristem entered into an exclusive license and commercialization agreement (the “CHA Agreement”) with CHA, for conducting clinical trials and commercialization of Pluristem's PLX-PAD product in South Korea in connection with two indications: the treatment of Critical Limb Ischemia, and Intermediate Claudication (the “Indications”). Under the terms of the CHA Agreement, CHA will receive exclusive rights in South Korea for conducting clinical trials with respect to the Indications, and the Company will continue to retain rights to its proprietary manufacturing technology and cell-related intellectual property.

 
 
F - 10

 
PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARY

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
U.S. Dollars in thousands (except share and per share amounts)
 
NOTE 1:-GENERAL (CONT.)
 
The first clinical study as part of the CHA Agreement is a Phase II trial in Intermittent Claudication. South Korea’s Ministry of Food and Drug Safety approved this study in November 2013.
 
Upon the first regulatory approval for a PLX product in South Korea, for the specified indications, Pluristem and CHA will establish an equally owned joint venture. The purpose of the joint venture will be to commercialize PLX cell products in South Korea.
 
Pluristem will be able to use the data generated by CHA to pursue the development of PLX product candidates outside of South Korea.
 
The CHA Agreement contains customary termination provisions, including in the event the parties do not reach an agreement upon development plan for conducting the clinical trials. Upon termination of this CHA Agreement, the license granted thereunder will terminate and all rights included therein will revert to the Company, whereupon the Company will be free to enter into agreements with any other third parties for the granting of a license in or outside South Korea or to deal in any other manner with such rights as it shall see fit at its sole discretion.
 
In addition, and as contemplated by the CHA Agreement, in December 2013, Pluristem and CHA executed the mutual investment pursuant to which Pluristem issued 2,500,000 shares of its common stock in consideration for 1,011,504 shares of CHA, which reflects total consideration to each of Pluristem and CHA of approximately $10,414. The parties also agreed to give an irrevocable proxy to the other party’s management with respect to the voting power of the shares issued.
 
During March 2015, the Company sold a portion of the CHA shares received in December 2013.
 
The remaining investment in CHA shares is presented as “Marketable Securities” and classified as available-for-sale in accordance with ASC 320 – “Investments - Debt and Equity Securities”. The fair value of the remaining investment as of December 31, 2015, is $4,825.
 
 
F - 11

 
PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARY

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
U.S. Dollars in thousands (except share and per share amounts)

NOTE 2:- BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
 
 
a.
Unaudited Interim Financial Information
 
The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of U.S. Securities and Exchange Commission Regulation S-X. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included (consisting only of normal recurring adjustments except as otherwise discussed).
 
For further information, reference is made to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2015.
 
Operating results for the three and six month periods ended December 31, 2015, are not necessarily indicative of the results that may be expected for the year ending June 30, 2016.
 
 
b.
Significant Accounting Policies
 
The significant accounting policies followed in the preparation of these unaudited interim condensed consolidated financial statements are identical to those applied in the preparation of the latest annual financial statements.
 
 
c.
Use of estimates
 
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
 
 
d.
Fair value of financial instruments
 
The carrying amounts of the Company's financial instruments, including cash and cash equivalents, short-term and restricted bank deposits, trade payable and other accounts payable and accrued liabilities, approximate fair value because of their generally short term maturities.
 
The Company measures its investments in marketable securities and derivative instruments at fair value under ASC 820, “Fair Value Measurements and Disclosures” (“ASC 820”). Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering such assumptions, ASC 820 establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:
 
Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities;
 
Level 2 - Inputs other than Level 1 that are observable for the asset or liability, either directly or indirectly; and
 
Level 3 - Unobservable inputs for the asset or liability.
 
The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The Company categorized each of its fair value measurements in one of these three levels of hierarchy.
 
 
F - 12

 
PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARY

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
U.S. Dollars in thousands (except share and per share amounts)
 
NOTE 2:- BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (CON.)
 
 
e.
Derivative financial instruments
 
The Company uses forward contracts and options strategies (“derivative instruments”) primarily to manage exposure to foreign currency. The Company accounts for derivatives and hedging based on ASC 815, “Derivatives and Hedging” (“ASC 815”). ASC 815 requires the Company to recognize all derivative instruments as either assets or liabilities on the balance sheet at fair value. The accounting for changes in the fair value (i.e., gains or losses) of derivative instruments depends on whether it has been designated and qualifies as part of a hedging relationship and further, on the type of hedging relationship. For those derivative instruments that are designated and qualify as hedging instruments, the Company must designate the hedging instrument, based upon the exposure being hedged, as a fair value hedge, cash flow hedge, or a hedge of a net investment in a foreign operation.
 
If the derivative instruments meet the definition of a hedge and are so designated, depending on the nature of the hedge, changes in the fair value of such derivatives will either be offset against the change in fair value of the hedged assets, liabilities, or firm commitments through earnings, or recognized in other comprehensive income until the hedged item is recognized in the statement of operations. The ineffective portion of a derivative’s change in fair value is recognized in the statement of operations.
 
Cash Flow Hedges. The Company entered into forward and option contracts to hedge against the risk of overall changes in future cash flow from payments of payroll and related expenses denominated in New Israeli Shekels (“NIS”). The Company measured the fair value of the contracts in accordance with ASC 820 (classified as level 2). The gain or loss on the effective portion of a cash flow hedge is initially reported as a component of accumulated other comprehensive income and subsequently reclassified into operating expenses in the same period or periods in which the payroll and related expenses are recognized, or reclassified into “Financial expense, net”, if the hedged transaction becomes probable of not occurring. Any gain or loss after a hedge is no longer designated, because it is no longer probable of occurring or it is related to an ineffective portion of a cash flow hedge is recognized in the statement of operations immediately. The net loss realized in statement of operations during the three and six month periods ended December 31, 2015 and  2014, resulting from the cash flow hedge transactions, amounted to approximately $0, $7, and $156, $201, respectively.
 
Other Derivatives. Other derivatives that are non-designated consist primarily of options strategies to minimize the risk associated with the foreign exchange effects of monetary assets and liabilities denominated in NIS. The Company measured the fair value of the contracts in accordance with ASC 820 (classified as level 2). The net gains (losses) recognized in “Financial income (expense), net” during the three and six month periods ended December 31, 2015 and 2014, were $103 , ($181) and $59, ($139),  respectively.
 
 
F - 13

 
PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARY

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
U.S. Dollars in thousands (except share and per share amounts)

NOTE 2:- BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (CON.)
 
 
f.
Accumulated other comprehensive income (loss):
 
The components of accumulated other comprehensive income (loss) were as follows:
 
   
Six months ended December 31, 2015 (Unaudited)
 
   
Unrealized
gains (losses)
on marketable
securities
   
Unrealized
gains (losses)
on cash flow
hedges
   
Total
 
Balance as of July 1, 2015
  $ 2,094     $ 46     $ 2,140  
Other comprehensive loss before reclassifications
    (1,346 )     -       (1,346 )
Amounts reclassified from accumulated other comprehensive loss
    20       (46 )     (26 )
Net current-period other comprehensive income
    (1,326 )     (46 )     (1,372 )
Balance as of December 31, 2015
  $ 768     $ (- )   $ 768  

 
F - 14

 
PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARY

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
U.S. Dollars in thousands (except share and per share amounts)

NOTE 3:- MARKETABLE SECURITIES
 
As of December 31, 2015, all of the Company’s marketable securities were classified as available-for-sale.
 
   
December 31, 2015 (Unaudited)
   
June 30, 2015
 
   
Amortized cost
   
Gross
unrealized
gain
   
Gross
unrealized
loss
   
Fair
Value
   
Amortized cost
   
Gross
unrealized
gain
   
Gross
unrealized
loss
   
Fair
value
 
Available-for-sale - matures within one year:
                                               
Stock and index linked notes
  $ 12,686     $ 1,305     $ (579 )   $ 13,412     $ 12,305     $ 2,083     $ (72 )   $ 14,316  
Government debentures – fixed interest rate
    611       9       (1 )     619       287       1       (10 )     278  
Corporate debentures – fixed interest rate
    1,024       20       (10 )     1,034       939       26       (52 )     913  
    $ 14,321     $ 1,334     $ (590 )   $ 15,065     $ 13,531     $ 2,110     $ (134 )   $ 15,507  
Available-for-sale - matures after one year through five years:
                                                               
Government debentures – fixed interest rate
    1,495       5       (25 )     1,475       2,033       40       (9 )     2,064  
Corporate debentures – fixed interest rate
    4,657       66       (27 )     4,696       4,436       97       (17 )     4,516  
    $ 6,152     $ 71     $ (52 )   $ 6,171     $ 6,469     $ 137     $ (26 )   $ 6,580  
Available-for-sale - matures after five years through ten years:
                                                               
Corporate debentures – fixed interest rate
    395       8       (3 )     400       156       8       (1 )     163  
    $ 395     $ 8     $ (3 )   $ 400     $ 156     $ 8     $ (1 )   $ 163  
    $ 20,868     $ 1,413     $ (645 )   $ 21,636     $ 20,156     $ 2,255     $ (161 )   $ 22,250  

The following table presents gross unrealized losses and fair values for those investments that were in an unrealized loss position as of December 31, 2015 and June 30, 2015, and the length of time that those investments have been in a continuous loss position:
 
   
Less than 12 months
   
12 months or greater
 
   
Fair Value
   
Gross
unrealized loss
   
Fair Value
   
Gross
unrealized loss
 
As of December 31, 2015 (Unaudited)
  $ 10,892     $ (508 )   $ 1,192     $ (137 )
As of June 30, 2015
  $ 2,535     $ (107 )   $ 524     $ (54 )

The Company typically invests in highly-rated securities. When evaluating the investments for other-than-temporary impairment, the Company reviews factors such as the length of time and extent to which fair value has been below cost basis, the financial condition of the issuer and any changes thereto, and the Company's intent to sell, or whether it is more likely than not it will be required to sell, the investment before recovery of the investment's amortized cost basis. Based on the above factors, the Company concluded that unrealized losses on all available-for-sale securities were not other-than-temporary and no credit loss was present for any of its investments. As such, the Company did not recognize any impairment charges on outstanding securities during the six and three month periods ended December 31, 2015.

 
F - 15

 
PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARY

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
U.S. Dollars in thousands (except share and per share amounts)
 
NOTE 4:- FAIR VALUE OF FINANCIAL INSTRUMENTS

   
December 31, 2015 (Unaudited)
   
June 30, 2015
 
   
Level 1
   
Level 2
   
Level 1
   
Level 2
 
Marketable securities
  $ 11,503     $ 10,133     $ 12,650     $ 9,600  
Foreign currency derivative instruments
    -       89       -       322  
Total financial assets
  $ 11,503     $ 10,222     $ 12,650     $ 9,922  
 
 
December 31, 2015 (Unaudited)
 
June 30, 2015
 
 
Balance Sheet location
 
Fair Value
 
Balance Sheet location
 
Fair Value
 
Derivatives designated as a cash flow hedge instruments
    $ -  
Other account receivable
  $ 52  
Derivatives not designated as hedge instruments
Other account receivable
  $ 89  
Other account receivable
  $ 270  
Total
    $ 89       $ 322  
 
 
F - 16

 
PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARY

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
U.S. Dollars in thousands (except share and per share amounts)
 
NOTE 5: - COMMITMENTS AND CONTINGENCIES
 
Commitments and contingencies that changed during the six month period ended December 31, 2015, include the following:
 
 
a.
Decrease of $543 of cash pledged by the Company to secure its hedging transactions, credit line and bank guarantees.
 
 
b.
Under the Law for the Encouragement of Industrial Research and Development, 1984, (the “Research Law”), research and development programs that meet specified criteria and are approved by a governmental committee of the Office of the Chief Scientist of Israel (“OCS”) are eligible for grants of up to 50% of the project’s expenditures, as determined by the research committee, in exchange for the payment of royalties from the sale of products developed under the program. Regulations under the Research Law generally provide for the payment of royalties to the Chief Scientist of 3% to 4% on sales of products and services derived from a technology developed using these grants until 100% of the dollar-linked grant is repaid. The Company’s obligation to pay these royalties is contingent on its actual sale of such products and services. In the absence of such sales, no payment is required. The outstanding balance of the grants will be subject to interest at a rate equal to the 12 month LIBOR applicable to dollar deposits that is published on the first business day of each calendar year. Following the full repayment of the grant, there is no further liability for royalties.
 
Through December 31, 2015, total grants obtained aggregated to approximately $21,183, and total royalties paid and accrued amounted to $166. As of December 31, 2015, the Company's contingent liability in respect to royalties to the OCS amounted $21,017, not including LIBOR interest as described above.
 
NOTE 6: - STOCKHOLDERS' EQUITY
 
 
a.
From October 2014 through May 2015, the Company issued shares of common stock in private placements to an investor. In October 2014, the Company issued 200,000 shares of common stock to an investor for aggregate cash consideration of $528. In February 2015, the Company issued an additional 200,000 shares of common stock to an investor for aggregate cash consideration of $586. In May 2015, the Company issued an additional 300,000 shares of common stock to an investor, for which the consideration in the amount of $790 was received from the investor in September 2015.
 
 
b.
In February 2015, the Company's subsidiary entered into an agreement with a contractor for the construction of its new laboratories facility for a consideration of approximately NIS 3.3 million (approximately $841). Under the terms of the agreement, the Company's subsidiary will pay part of the NIS 3.3 million consideration using 100,004 restricted shares of common stock of the Company, linked to performance milestones with respect to the new laboratories construction and which serve as a guarantee.  These restricted shares shall be released to the contractor only upon the successful completion of the construction. The restricted shares were issued in December 2014.
 
In May 2015, the Company's subsidiary entered into an addendum to the agreement with the contractor for the design and construction of additional office space renovations in the Company's subsidiary’s leased facility for additional consideration of approximately NIS 4 million (approximately $1,032) which is comprised of NIS 3 million (approximately $774) in cash and 90,000 restricted shares which will be issued to the contractor only upon the successful completion of the construction by the contractor.
 
 
F - 17

 
PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARY

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
U.S. Dollars in thousands (except share and per share amounts)

NOTE 6: - STOCKHOLDERS' EQUITY (CONT.)
 
The Company accounts for the abovementioned stock-based payment awards to the contractor in accordance with ASC 505-50, “Equity based payments to non-employees”. As performance by the contractor is not complete if the awards are forfeitable (or not issued) in the event performance not completed, the Company measures the fair value of the awards at each reporting period through the performance completion date (until completion of the construction work).
 
The construction work was initiated in June 2015. On October 30, 2015, the contractor completed the agreed construction milestones. As a result, the Company recognized the fair value of the stock-based payments awards, using the fair value of the Company's shares on October 30, 2015, totaling approximately $302 as stock-based payment to the contractor in "additional paid-in capital" with a corresponding amount included in "property and equipment, net".
 
 
c.
Options, warrants and restricted stock units to employees, directors and consultants:
 
 
1.
Options to employees and directors:
 
The Company accounts for its options to employees and directors under the fair value method in accordance with ASC 718, “Compensation—Stock Compensation”. A summary of the Company’s activity for options granted to employees and directors under its 2005 incentive option plan is as follows:

   
Six months ended December 31, 2015 (Unaudited)
 
   
Number
   
Weighted Average Exercise Price
   
Weighted Average Remaining Contractual Terms (in years)
   
Aggregate Intrinsic Value Price
 
Options outstanding at beginning of period
    1,836,900     $ 3.72              
Options exercised
    (25,000 )   $ 0.62              
Options outstanding at end of the period
    1,811,900     $ 3.77       1.62     $ 451  
Options exercisable at the end of the period
    1,811,900     $ 3.77       1.62     $ 451  
Options vested
    1,811,900     $ 3.77       1.62     $ 451  

 
Intrinsic value of exercisable options (the difference between the Company’s closing stock price on the last trading day in the period and the exercise price, multiplied by the number of in-the-money options) represents the amount that would have been received by the employees and directors option holders had all option holders exercised their options on December 31, 2015. This amount changes based on the fair market value of the Company’s common stock.
 
 
F - 18

 
PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARY

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
U.S. Dollars in thousands (except share and per share amounts)
 
NOTE 6: - STOCKHOLDERS' EQUITY (CONT.)
 
 
c.
Options, warrants and restricted stock units to employees, directors and consultants (cont.):
 
 
2.
Options and warrants to non-employees:

A summary of the activity for options and warrants to non-employees consultants is as follows:

   
Six months ended December 31, 2015 (Unaudited)
 
   
Number
   
Weighted Average Exercise Price
   
Weighted Average Remaining Contractual Terms (in years)
   
Aggregate Intrinsic Value Price
 
Options and warrants outstanding at end of the period
    228,000     $ 5.73       2.36     $ 147  
                                 
Options and warrants exercisable at the end of the period
    227,250     $ 5.75       2.34     $ 145  
                                 
Options and warrants vested and expected to vest
    228,000     $ 5.73       2.36     $ 147  
 
Compensation expenses related to options and warrants granted to consultants were recorded as follows:
 
   
Six months ended December 31,
   
Three months ended December 31,
 
   
2015
   
2014
   
2015
   
2014
 
   
(Unaudited)
   
(Unaudited)
 
Research and development expenses
  $ 1     $ 1     $ -     $ -  
 
 
F - 19

 
PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARY

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
U.S. Dollars in thousands (except share and per share amounts)
 
NOTE 6: - STOCKHOLDERS' EQUITY (CONT.)
 
 
c.
Options, warrants and restricted stock units to employees, directors and consultants (cont.):
 
 
3.
Restricted stock units to employees and directors:
 
The following table summarizes the activity related to unvested restricted stock units granted to employees and directors for the six month period ended December 31, 2015 (Unaudited):
 
   
Number
 
Unvested at the beginning of period
    1,732,383  
Granted
    14,270  
Forfeited
    (45,477 )
Vested
    (776,727 )
Unvested at the end of the period
    924,449  
Expected to vest after  December 31, 2015
    893,867  
 
Compensation expenses related to restricted stock units granted to employees and directors were recorded as follows:
 
   
Six months ended December 31,
   
Three months ended December 31,
 
   
2015
   
2014
   
2015
   
2014
 
   
(Unaudited)
   
(Unaudited)
 
Research and development expenses
  $ 483     $ 495     $ 163     $ 162  
General and administrative expenses
    1,020       1,143       446       441  
    $ 1,503     $ 1,638     $ 609     $ 603  
 
Unamortized compensation expenses related to restricted stock units granted to employees and directors to be recognized over an average time of approximately 1.75 years is $916.
 
 
F - 20

 
PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARY

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
U.S. Dollars in thousands (except share and per share amounts)
 
NOTE 6: - STOCKHOLDERS' EQUITY (CONT.)
 
 
c.
Options, warrants, restricted stock and restricted stock units to employees, directors and consultants (cont.):
 
 
4.
Restricted stock and restricted stock units to consultants:
 
The following table summarizes the activity related to unvested restricted stock and restricted stock units granted to consultants for the six months ended December 31, 2015 (Unaudited):
 
   
Number
 
Unvested at the beginning of period
    28,385  
Granted
    135,387  
Vested
    (162,772 )
Unvested at the end of the period
    1,000  
 
Compensation expenses related to restricted stock and restricted stock units granted to consultants were recorded as follows:
 
   
Six months ended December 31,
   
Three months ended December 31,
 
   
2015
   
2014
   
2015
   
2014
 
   
(Unaudited)
   
(Unaudited)
 
Research and development expenses
  $ 20     $ 77     $ 10     $ 57  
General and administrative expenses
    48       38       45       34  
    $ 68     $ 115     $ 55     $ 91  

 
F - 21

 
 
Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Forward - Looking Statements

This quarterly report on Form 10-Q contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other Federal securities laws, and is subject to the safe-harbor created by such Act and laws.  Forward-looking statements may include statements regarding our goals, beliefs, strategies, objectives, plans, including product and technology developments, future financial conditions, results or projections or current expectations.  In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential” or “continue,” the negative of such terms, or other variations thereon or comparable terminology.  These statements are merely predictions and therefore inherently subject to known and unknown risks, uncertainties, assumptions and other factors that may cause actual results, performance levels of activity, or our achievements, or industry results to be materially different from those contemplated by the forward-looking statements.  Such forward-looking statements appear in this Item 2 – “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and may appear elsewhere in this quarterly report on Form 10-Q and include, but are not limited to, statements regarding the following:

·
the expected development and potential benefits from our products in treating various medical conditions;
 
·
the clinical trials to be conducted according to our license agreement with CHA Biotech Co. Ltd.;
 
·
our plan to execute our strategy independently, using our own personnel, and through relationships with research and clinical institutions or in collaboration with other companies;
 
·
the prospects of entering into additional license agreements, or other forms of cooperation with other companies and medical institutions;
 
·
our pre-clinical and clinical trials plans, including timing of initiation and conclusion of trials;
 
·
achieving regulatory approvals, including under accelerated paths;
 
·
receipt of future funding from the Office of the Chief Scientist of Israel;
 
·
our marketing plans, including timing of marketing our first product, PLX-PAD;
 
·
developing capabilities for new clinical indications of placenta expanded (PLX) cells and new products;
 
·
our expectations regarding our short- and long-term capital requirements;
 
·
our outlook for the coming months and future periods, including but not limited to our expectations regarding future revenue and expenses; and
 
·
information with respect to any other plans and strategies for our business.
 
Our business and operations are subject to substantial risks, which increase the uncertainty inherent in the forward-looking statements contained in this report. In addition, historic results of scientific research, clinical and preclinical trials do not guarantee that the conclusions of future research or trials would not suggest different conclusions. Also, historic results referred to in this periodic report would be interpreted differently in light of additional research, clinical and preclinical trials results. Except as required by law, we undertake no obligation to release publicly the result of any revision to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Further information on potential factors that could affect our business is described under the heading “Risk Factors” in Part I, Item 1A, of our Annual Report on Form 10-K for the fiscal year ended June 30, 2015, or the 2015 Annual Report.  Readers are also urged to carefully review and consider the various disclosures we have made in that report.

As used in this quarterly report, the terms “we”, “us”, “our”, the “Company” and “Pluristem” mean Pluristem Therapeutics Inc. and our wholly owned subsidiary, Pluristem Ltd., unless otherwise indicated or as otherwise required by the context.

 
3

 
Overview
 
We are a bio-therapeutics company developing off-the-shelf allogeneic cell therapy products for the treatment of multiple ischemic and inflammatory conditions, with our lead indications focusing on cardiovascular, orthopedic, pulmonary, hematological, and women’s health diseases. Our patented placenta expanded, or PLX, cells are intended to function as a platform that releases a number of therapeutic proteins in response to various local and systemic inflammatory and ischemic signals that are generated by the patient’s own body. PLX cells are grown using our proprietary three-dimensional, or 3D, micro environment technology which produces a product that requires no tissue matching prior to administration.
 
We were incorporated as a Nevada corporation in 2001. We have a wholly owned subsidiary in Israel called Pluristem Ltd. We operate in one segment and our operations are focused on the research, development, clinical trials and manufacturing of cell therapeutics and related technologies.
 
Our strategy is to develop and produce cell therapy products for the treatment of multiple disorders using several routes of administration, such as intravenous and intramuscular injections. We plan to execute this strategy independently, using our own personnel, and through relationships with research and clinical institutions or in collaboration with other companies. We have built a facility that complies with current Good Manufacturing Practice requirements and we are planning to have in-house production capacity to grow clinical grade PLX cells in commercial quantities.
 
Our focus is to make significant progress in our clinical pipeline and shorten the time to market our first product, PLX-PAD, in Europe and Japan, in parallel to our clinical trials in the United States, South Korea and Israel. We intend to leverage the new regulatory environments in Europe and Japan that now offer unique opportunities for accelerated paths to bring new products to the market. We believe that these new pathways create substantial opportunities for us and for the cell therapy industry as a whole. We will explore these accelerated pathways for several of our current clinical indications, such as critical limb ischemia, or CLI, as well as incomplete hematopoietic recovery following Hematopoietic Cell Transplantation, or HCT, which our second product, PLX-R18, is expected to address. In May 2015, we announced that the PLX cell program in CLI had been selected for the Adaptive Pathways pilot project of the European Medicines Agency. In addition, we reached an agreement with Japan’s Pharmaceuticals and Medical Devices Agency (PMDA) on the design of the final trial needed to apply for conditional approval of PLX-PAD cells in the treatment of CLI. The approval of the protocol for the 75-patient trial was part of a larger agreement on the development of PLX-PAD via Japan’s new accelerated regulatory pathway for regenerative medicine Our intention is to initiate the CLI studies during calendar year 2016 with the aim of obtaining initial approval in calendar year 2018.
 
We plan to continue developing multiple placenta-derived cell therapy products that we anticipate will lead to significant improvement in the lives of patients, and expect to demonstrate the real-world data impact and value of our pipeline, technology platform and commercial-scale manufacturing capacity. We made progress in our Phase II intermittent claudication, or IC, trial, a randomized, double blind, placebo controlled, multinational clinical trial. We expect to complete the enrollment of all 150 patients during the first half of calendar year 2016. We currently have active clinical sites in the United States, Israel, Germany and South Korea.
 
In December 2015, the U.S. Food and Drug Administration, or FDA, granted our PLX-PAD cells Orphan Drug Designation in the treatment of severe preeclampsia. We are currently conducting additional pre-clinical studies to set the pathway towards clinical studies.
 
On December 8, 2015, we received a notice from United Therapeutics Corporation, or United, terminating our exclusive license agreement with United, or the United Agreement, effective immediately. Pursuant to the United Agreement termination clause, we will regain full rights to PLX in the field of PAH, as well as all clinical data and regulatory submissions. In the coming months we will analyze the clinical data and decide how to move forward with the clinical development of the program including seeking other licensing partners.The FDA cleared our Investigational New Drug application to begin a Phase I trial of PLX-R18 cells to treat incomplete hematopoietic recovery following HCT. We plan to initiate the clinical trial in the United States in the first half of calendar year 2016.  We plan to continue working in partnership with the National Institutes of Health in developing PLX-R18 as a potential treatment for Acute Radiation Syndrome, or ARS. In the upcoming months, we plan to make progress towards a pivotal study based on FDA guidance in order to approve PLX-R18 for use in ARS under the Animal Rule regulatory pathway, which does not require human efficacy trials. We also signed a Memorandum of Understanding for a collaboration with Fukushima Medical University, Fukushima Global Medical Science Center. The purpose of the collaboration is to develop our PLX-R18 cells for the treatment of ARS, and for morbidities following radiotherapy in cancer patients.
 
 
4

 
We plan to evaluate in the upcoming months the timing to initiate our advanced orthopedic indications, based on potential partnering interest as well as regulatory approvals for early access to the market.

RESULTS OF OPERATIONS – SIX AND THREE MONTHS ENDED DECEMBER 31, 2015 COMPARED TO SIX AND THREE MONTHS ENDED DECEMBER 31, 2014.

Revenues
 
Revenues for the six and three month periods ended December 31, 2015, and for the six and three month periods ended December 31, 2014, were $2,847,000, $2,752,000 and $190,000, $95,000, respectively. All such revenues are derived from the United Agreement.
 
On December 8, 2015, we received a notice from United terminating the United Agreement, effective immediately. Pursuant to the United Agreement termination clause, we will regain full rights to PLX in the field of PAH, as well as all clinical data and regulatory submissions. As we have no further obligations towards United, we recognized the remaining upfront payment received in August 2011 as revenues during the three month period ended December 31, 2015.

Research and Development Expenses, Net
 
Research and development expense, net (costs less participation and grants by the Office of the Chief Scientist of Israel, or OCS, and other parties) for the six months ended December 31, 2015 increased by 6% from $8,916,000 for the six months ended December 31, 2014 to $9,465,000. This increase is attributed to a decrease in OCS participation, which was lower in calendar year 2015 compared to calendar year 2014 ($4,200,000 was approved in 2014 compared to $2,900,000 that was approved in 2015). The reduced OCS participation was offset by an improved planning of our production process, resulting in a decrease in materials consumption.
 
Research and development expense, net (costs less participation and grants by the OCS and other parties) for the three months ended December 31, 2015 increased by 9% from $4,879,000 for the three months ended December 31, 2014 to $5,337,000. This increase is attributed to a decrease in OCS participation, which was lower in calendar year 2015 compared to calendar year 2014 ($4,200,000 was approved in 2014 compared to $2,900,000 that was approved in 2015) and to higher patent expenses related to extensive validation activity in Europe during the three months ended December 31, 2015.
 
General and Administrative Expenses
 
General and administrative expenses for the six months ended December 31, 2015 decreased by 5% from $3,191,000 for the six months ended December 31, 2014 to $3,033,000, mainly due to a decrease in stock-based compensation expenses related to our directors and officers and attributable to the timing of the grants under the option plan.
 
General and administrative expenses for the three months ended December 31, 2015 increased by 2% from $1,513,000 for the three months ended December 31, 2014 to $1,546,000, mainly due to an increase in corporate activities.
 
Financial Expense, Net
 
Financial expense, net, decreased by 62% from $232,000 for the six months ended December 31, 2014 to $87,000 for the six months ended December 31, 2015. This decrease is mainly attributable to a decrease in our exchange rate expenses related to the strength of the U.S. dollar against the New Israeli Shekel, or NIS, in the six months ended December 31, 2015, compared to the six months ended December 31, 2014. This decrease was offset by lower income related to our marketable securities (such as net gains related to sales of the marketable securities, interest and dividend income).
 
 
5

 
Financial income, net, increased by 375% from $56,000 for the three months ended December 31, 2014 to $266,000 for the three months ended December 31, 2015. The increase in financial income, net, is mainly attributable to lower exchange rate expenses related to the strength of the U.S. dollar against the NIS in the three months ended December 31, 2015, compared to the three months ended December 31, 2014.  The decreased exchange rate expenses were offset by lower income related to our marketable securities (such as net gains related to sales of the marketable securities, interest and dividend income).
 
Net Loss
 
Net loss for the six and three month periods ended December 31, 2015 was $9,838,000 and $3,962,000, respectively, as compared to net loss of $12,156,000 and $6,245,000 for the six and three month periods ended December 31, 2014, respectively. The changes were due to the increased revenues related to the termination of the United Agreement, as described above. Net loss per share for the six and three month periods ended December 31, 2015 was $0.12 and $0.05, respectively, as compared to $0.17 and $0.09 for the six and three month periods ended December 31, 2014.
 
For the six and three month periods ended December 31, 2015 and December 31, 2014, we had weighted average shares of common stock outstanding of 79,066,675, 79,370,673 and 69,610,528, 70,070,509, respectively, which were used in the computations of net loss per share for the six and three-month periods.
 
The increase in weighted average common shares outstanding reflects the issuance of additional shares, mainly the issuances of shares related to the offering we closed in June 2015, issuances of shares to employees and consultants, shares issued under a private placement during fiscal year 2015, and shares issued as a result of exercises of warrants and options.
 
Liquidity and Capital Resources

As of December 31, 2015, our total current assets were $44,782,000 and total current liabilities were $4,612,000. On December 31, 2015, we had a working capital surplus of $40,170,000, stockholders' equity of $49,349,000 and an accumulated deficit of $148,349,000. We finance our operations and plan to continue doing so from our existing cash, issuances of our securities, and sales of the marketable securities we hold, licensing fees and other potential payments under licensing agreements, and funds from grants from the OCS and Israel’s Ministry of Economy and other research grants.
 
Cash and cash equivalents as of December 31, 2015 amounted to $4,948,000 compared to $6,961,000 as of December 31, 2014 and compared to $22,626,000 as of June 30, 2015. Cash balances changed in the six months ended December 31, 2015 and 2014 for the reasons presented below.
 
Operating activities used cash of $7,389,000 in the six months ended December 31, 2015, compared to $9,026,000 in the six months ended December 31, 2014. Cash used in operating activities in the six months ended December 31, 2015 and 2014 consisted primarily of payments of salaries to our employees, and payments of fees to our consultants, suppliers, subcontractors, and professional services providers, including the costs of clinical studies, offset by grants by the OCS and Israel’s Ministry of Economy. During the six months ended December 31, 2015, operating activities were also offset by the participation of MTM – Scientific Industries Center Haifa Ltd., or MTM, in the cost of constructing additional office space, as described below.

Investing activities used cash of $11,095,000 in the six months ended December 31, 2015, compared to cash provided of $10,720,000 for the six months ended December 31, 2014. The investing activities in the six months ended December 31, 2015 consisted primarily of the investment of $8,794,000 in short term deposits, investment of $2,543,000 in marketable securities and investment of $1,471,000 in property and equipment. Our investment activities also provided cash of $1,705,000 from the sale and redemption of marketable securities. The investing activities in the six months ended December 31, 2014 consisted primarily of the withdrawal of $11,072,000 of short term deposits, $2,710,000 provided from the sale and redemption of marketable securities, offset by investment of $2,513,000 in marketable securities and payments of $552,000 related to investment in property and equipment.

Financing activities generated cash of $806,000 during the six months ended December 31, 2015, compared to $774,000 for the six months ended December 31, 2014. The cash generated in the six months ended December 31, 2015 from financing activities is related to proceeds received from shares issued in a private placement in May 2015 as described below, and exercises of warrants and options by shareholders. The cash generated in the six months ended December 31, 2014 from financing activities is attributable to proceeds of $528,000 from a private placement as described below, and exercises of warrants and options by shareholders and employees.

 
6

 
From October 2014 through May 2015, we issued shares of common stock in private placements to an investor. In October 2014, we issued 200,000 shares of common stock to an investor for aggregate cash consideration of $528,000. In February 2015, we issued an additional 200,000 shares of common stock to an investor for aggregate cash consideration of $586,000. In May 2015, we issued an additional 300,000 shares of common stock to an investor for consideration in the amount of $790,000, which was received from the investor during September 2015.
 
In February 2015, we entered into an agreement with a contractor for the construction of our new laboratories facility for consideration of approximately NIS 3.3 million (approximately $841,000). Under the terms of the agreement, we will pay part of the NIS 3.3 million consideration using 100,004 restricted shares of common stock of the Company, linked to performance milestones with respect to the new laboratories construction and which serve as a guarantee.  These restricted shares shall be released to the contractor only upon the successful completion of the construction. The restricted shares were issued in December 2014.
 
In May 2015, we entered into an addendum to the agreement with the contractor for the design and construction of additional office space renovations in our leased facility for additional consideration of approximately NIS 4 million (approximately $1,032,000) which is comprised of NIS 3 million (approximately $774,000) in cash and 90,000 restricted shares which will be issued to the contractor only upon the successful completion of the construction by the contractor.
 
We account for the abovementioned share-based payment awards to the contractor in accordance with ASC 505-50, “Equity based payments to non-employees”. As performance by the contractor is not complete if the awards are forfeitable (or not issued) in the event performance is not completed, we measure the fair value of the awards at each reporting period through the performance completion date (until completion of the construction work).
 
The construction work was initiated in June 2015. On October 30, 2015, the contractor completed the agreed construction milestones. We have issued a total of 190,004 restricted shares to the contractor as of February 2, 2016.  As a result, we recognized the fair value of the share-based payments awards, using the fair value of the Company's shares on October 30, 2015, totaling approximately $302,000 as share-based payment to the contractor in "additional paid-in capital" with a corresponding amount included in "property and equipment, net".
 
In October 2015, MTM, our landlord, participated in the cost of constructing additional office space for us by contributing an amount of NIS 3,683,000 (approximately $944,000) toward the cost of construction.  Such participation was made pursuant to our lease agreement with MTM, and is recognized by rateably deducting from our monthly rent payment over the rent period.
 
During the six months ended December 31, 2015, we received cash of approximately $2,542,000 from the OCS towards our research and development expenses. According to the OCS grant terms, we are required to pay royalties at a rate of 3% - 4% on sales of products and services derived from technology developed using this and other OCS grants until 100% of the dollar-linked grants amount plus interest are repaid. In the absence of such sales, no payment is required. Through December 31, 2015, total grants obtained aggregated to approximately $21,183,000, and total royalties paid and accrued amounted to $166,000.

As of today, the currency of our financial portfolio is mainly in U.S. dollars and we use forward and options contracts in order to hedge our exposures to currencies other than the U.S. dollar. For more information, please see Item 7A. - “Quantitative and Qualitative Disclosures About Market Risk” in our 2015 Annual Report.
 
We have an effective Form S-3 registration statement, filed under the Securities Act of 1933, as amended with the Securities and Exchange Commission, or the SEC, using a “shelf” registration process. Under this shelf registration process, we may, from time to time, sell common stock, preferred stock and warrants to purchase common stock, and units of two or more of such securities in one or more offerings up to a total dollar amount of $200,000,000. As of February 8, 2016, we have sold 6,800,000 shares of our common stock and warrants to purchase up to 4,080,000 shares of common stock in a total amount of $17,000,000 in an offering we closed in June 2015.
 
 
7

 
Outlook

We have accumulated a deficit of $148,349,000 since our inception in May 2001.  We do not expect to generate any revenues from sales of products in the next twelve months.   Our cash needs will increase in the foreseeable future.  We expect to generate revenues, which in the short and medium terms will unlikely exceed our costs of operations, from the sale of licenses to use our technology or products.  Our management believes that we may need to raise additional funds before we have cash flow from operations that can materially decrease our dependence on our existing cash and other liquidity resources. We are continually looking for sources of funding, including non-diluting sources such as the OCS grants and other research grants, sales of our common stock or sales of the marketable securities we hold.

We believe that we have sufficient cash to fund our operations for at least the next 12 months.
 
Off Balance Sheet Arrangements
 
We have no off balance sheet arrangements.
 
Item 4.  Controls and Procedures.
 
Evaluation of Disclosure Controls and Procedures - We maintain a system of disclosure controls and procedures that are designed for the purposes of ensuring that information required to be disclosed in our SEC reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer (CEO) and our Chief Financial Officer (CFO) as appropriate to allow timely decisions regarding required disclosures.
 
As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our CEO and our CFO, of the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended.  Based on that evaluation, our CEO and CFO concluded that our disclosure controls and procedures are effective.
 
Changes in Internal Control Over Financial Reporting - There has been no change in our internal control over financial reporting during the second quarter of Fiscal 2016 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
 
 
8

 
 
PART II - OTHER INFORMATION
 
Item 1A. Risk Factors.
 
Our business faces many risks, a number of which are described under the caption “Risk Factors” in our 2015 Annual Report and below. The risks so described may not be the only risks we face. Additional risks of which we are not yet aware, or that we currently believe are immaterial, may also materially and adversely impact our business operations or financial results. If any of the events or circumstances described in the risk factors contained in our 2015 Annual Report or described below occurs, our business, financial condition or results of operations could be adversely impacted and the trading price of our securities could decline. Investors and prospective investors should consider the risks described in our 2015 Annual Report and below and the information contained under the heading “Forward - Looking Statements” and elsewhere in this Quarterly Report on Form 10-Q before deciding whether to invest in our securities.
 
We may not meet the continued listing standards of The NASDAQ Capital Market, which requires a minimum closing bid price of $1.00 per share, which could result in our delisting and negatively impact the price of our common stock and our ability to access the capital markets.
 
Our common stock is listed on The NASDAQ Capital Market. NASDAQ provides various continued listing requirements that a company must meet in order for its stock to continue trading on the NASDAQ Capital Market. Among these requirements is the requirement that the Company’s stock trades at a minimum bid price of $1.00 per share. Our stock has recently traded below $1.00 per share, including closing bid prices below $1.00 per share. If our stock price closes with a bid price below $1.00 per share for 30 consecutive trading days, we expect to receive a notice from NASDAQ providing us with 180 calendar days to regain compliance with the rule. After this 180 day period is up, if we still do not comply with the minimum $1.00 bid price, we may be eligible for an additional 180 day period to regain compliance. However, if we fail to comply with the minimum stock price of $1.00 per share or any other continued listing standards of NASDAQ, our common stock may be delisted. If that were to occur, our stock would be subject to rules that impose additional sales practice requirements on broker-dealers who sell our securities. The additional burdens imposed upon broker-dealers by these requirements could discourage broker-dealers from effecting transactions in our common stock. This would significantly affect the ability of investors to trade our securities and would significantly negatively affect the value and liquidity of our common stock. These factors could contribute to lower prices and larger spreads in the bid and ask prices for our common stock. Also, if we seek to implement a reverse stock split in order to remain listed on The NASDAQ Capital Market, the announcement and/or implementation of a reverse stock split could significantly negatively affect the price of our common stock.
 
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
 
In December 2015, we issued 137,347 shares of restricted stock to consultants for services rendered.
 
The above issuances were exempt under Section 4(a)(2) of the Securities Act of 1933, as amended, or Regulation S promulgated under the Securities Act of 1933, as amended.
 
Item 6. Exhibits.
   
31.1*
Rule 13a-14(a) Certification of Chief Executive Officer.

31.2*
Rule 13a-14(a) Certification of Chief Financial Officer.

32.1**
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350.
   
32.2**
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350.
   
101 *
The following materials from our Quarterly Report on Form 10-Q for the quarter ended December 31, 2015 formatted in XBRL (eXtensible Business Reporting Language): (i) the Interim Condensed Consolidated Balance Sheets, (ii) the Interim Condensed Consolidated Statements of Operations, (iii) the Interim Condensed Consolidated Statements of Comprehensive Loss, (iv) the Interim Condensed Statements of Changes in Equity, (v) the Interim Condensed Consolidated Statements of Cash Flows, and (vi) the Notes to Interim Condensed Consolidated Financial Statements, tagged as blocks of text and in detail.
 
*Filed herewith.
 
** Furnished herewith.
 
 
9

 
SIGNATURES
 
In accordance with the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
PLURISTEM THERAPEUTICS INC.
 
By: /s/ Zami Aberman
Zami Aberman, Chief Executive Officer
(Principal Executive Officer)
Date:  February 8, 2016
 
By: /s/ Yaky Yanay
Yaky Yanay, Chief Financial Officer, Chief Operating Officer and President
(Principal Financial Officer and Principal Accounting Officer)
Date:  February 8, 2016
 
10



 
 


Exhibit 31.1
 
CERTIFICATION
 
I, Zami Aberman, certify that:
 
1. I have reviewed this quarterly report on Form 10-Q of Pluristem Therapeutics Inc.;
 
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
 
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13(a)-15(f) and 15d-15(f)) of the registrant and have:
 
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
 
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
 
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
 
 
Date:  February 8, 2016
   
/s/ Zami Aberman
——————————————
Zami Aberman
Chief Executive Officer
(Principal Executive Officer)
 


 


Exhibit 31.2
 
CERTIFICATION
 
I, Yaky Yanay, certify that:
 
1. I have reviewed this quarterly report on Form 10-Q of Pluristem Therapeutics Inc.;
 
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
 
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13(a)-15(f) and 15d-15(f)) of the registrant and have:
 
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
 
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
 
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
 
 
Date:  February 8, 2016
   
 
/s/ Yaky Yanay
——————————————
Yaky Yanay
Chief Financial Officer, Chief Operating Officer and President
(Principal Financial Officer)
 


 
 


Exhibit 32.1
 
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
 
In connection with the Quarterly Report (the “Report”) of Pluristem Therapeutics Inc. (the “Company”) on Form 10-Q for the period ended December 31, 2015, as filed with the Securities and Exchange Commission on the date hereof, I, Zami Aberman, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

1.
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:  February 8, 2016
 
 
 
 
By: /s/ Zami Aberman
——————————————
Zami Aberman
Chief Executive Officer
 


 
 


Exhibit 32.2
 
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
 
In connection with the Quarterly Report (the “Report”) of Pluristem Therapeutics Inc. (the “Company”) on Form 10-Q for the period ended December 31, 2015, as filed with the Securities and Exchange Commission on the date hereof, I, Yaky Yanay, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

1.
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 
Date:  February 8, 2016
 
 
By: /s/ Yaky Yanay
——————————————
Yaky Yanay
Chief Financial Officer, Chief Operating Officer and President
 
 



 




 

v3.3.1.900
Document and Entity Information - shares
6 Months Ended
Dec. 31, 2015
Feb. 02, 2016
Document Type 10-Q  
Amendment Flag false  
Document Period End Date Dec. 31, 2015  
Entity Registrant Name PLURISTEM THERAPEUTICS INC  
Entity Central Index Key 0001158780  
Current Fiscal Year End Date --06-30  
Document Fiscal Year Focus 2016  
Document Fiscal Period Focus Q2  
Entity Filer Category Accelerated Filer  
Entity Common Stock, Shares Outstanding   79,933,902
v3.3.1.900
INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Thousands
Dec. 31, 2015
Jun. 30, 2015
CURRENT ASSETS:    
Cash and cash equivalents $ 4,948 $ 22,626
Short-term bank deposits 16,517 7,167
Restricted cash and short term bank deposits 550 1,076
Marketable securities 21,636 22,250
Account receivable from the Office of the Chief Scientist 150 1,691
Other account receivable 981 2,058
Total current assets 44,782 56,868
LONG-TERM ASSETS:    
Long-term deposits and restricted deposits 340 361
Severance pay fund 749 753
Property and equipment, net 10,170 10,173
Total long-term assets 11,259 11,287
Total assets 56,041 68,155
CURRENT LIABILITIES    
Trade payables 1,835 3,268
Accrued expenses $ 1,277 910
Deferred revenues 379
Advance payment from United Therapeutics 93
Other accounts payable $ 1,500 1,533
Total current liabilities $ 4,612 6,183
LONG-TERM LIABILITIES    
Deferred revenues 2,468
Accrued severance pay $ 861 859
Other long-term liabilities 1,219 502
Total long-term liabilities $ 2,080 $ 3,829
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY    
Share capital: Common stock $0.00001 par value: Authorized: 200,000,000 shares Issued and outstanding: 79,736,404 shares as of December 31, 2015, 78,771,905 shares as of June 30, 2015 $ 1 $ 1
Additional paid-in capital 196,929 195,303
Accumulated deficit $ (148,349) (138,511)
Receivables on account of shares (790)
Other comprehensive income $ 768 2,140
Total stockholders' equity 49,349 58,143
Total liabilities and stockholders' equity $ 56,041 $ 68,155
v3.3.1.900
INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (PARENTHETICAL) - $ / shares
Dec. 31, 2015
Jun. 30, 2015
INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS [Abstract]    
Common stock, par value per share $ 0.00001 $ 0.00001
Common stock, shares authorized 200,000,000 200,000,000
Common stock, shares issued 79,736,404 78,771,905
Common stock, shares outstanding 79,736,404 78,771,905
v3.3.1.900
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2015
Dec. 31, 2014
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS [Abstract]        
Revenues $ 2,752 $ 95 $ 2,847 $ 190
Cost of revenues (97) (4) (100) (7)
Gross profit 2,655 91 2,747 183
Operating Expenses:        
Research and development expenses (5,571) (5,385) (10,630) (11,121)
Less participation by the Office of the Chief Scientist and other parties 234 506 1,165 2,205
Research and development expenses, net (5,337) (4,879) (9,465) (8,916)
General and administrative expenses (1,546) (1,513) (3,033) (3,191)
Operating loss (4,228) (6,301) (9,751) (11,924)
Financial income (expense), net 266 56 (87) (232)
Net loss for the period $ (3,962) $ (6,245) $ (9,838) $ (12,156)
Loss per share:        
Basic and diluted net loss per share $ (0.05) $ (0.09) $ (0.12) $ (0.17)
Weighted average number of shares used in computing basic and diluted net loss per share 79,370,673 70,070,509 79,066,675 69,610,528
v3.3.1.900
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2015
Dec. 31, 2014
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS [Abstract]        
Net loss $ (3,962) $ (6,245) $ (9,838) $ (12,156)
Other comprehensive loss, net:        
Unrealized gains (losses) on derivative instruments   268   (222)
Unrealized gains (losses) on available-for-sale marketable securities, net 425 92 (1,346) (3,918)
Reclassification adjustment of derivative instruments gains (losses) realized in net loss, net   (201) (46) 156
Reclassification adjustment of available-for-sale marketable securities gains (losses) realized in net loss, net (99) 171 20 626
Other comprehensive income (loss) 326 330 (1,372) (3,358)
Total comprehensive loss $ (3,636) $ (5,915) $ (11,210) $ (15,514)
v3.3.1.900
INTERIM CONDENSED STATEMENTS OF CHANGES IN EQUITY - USD ($)
$ in Thousands
Total
Common Stock [Member]
Additional Paid-in Capital [Member]
Receivables on account of shares [Member]
Accumulated Other Comprehensive Income (Loss) [Member]
Accumulated Deficit [Member]
Balance at Jun. 30, 2014 $ 62,123 [1] $ 172,998 $ 2,959 $ (113,834)
Balance, shares at Jun. 30, 2014   68,601,452        
Exercise of options by employees and non-employee consultants 2 [1] 2
Exercise of options by employees and non-employee consultants, shares   3,000        
Exercise of warrants by investors and finders 244 [1] 244
Exercise of warrants by investors and finders, shares   822,734        
Stock based compensation to employees, directors and non-employee consultants 1,754 [1] 1,754
Stock based compensation to employees, directors and non-employee consultants, shares   767,673        
Issuance of common stock in a private placement (Note 6a) $ 528 [1] 528  
Issuance of common stock in a private placement, shares (Note 6a)   200,000        
Stock-based compensation to contractor (Note 6b) [1] $ 250 $ (250)
Stock-based compensation to contractor, shares (Note 6b)   100,004        
Other comprehensive loss, net $ (3,358) $ (3,358)
Net loss (12,156) $ (12,156)
Balance at Dec. 31, 2014 49,137 [1] $ 175,776 $ (250) $ (399) (125,990)
Balance, shares at Dec. 31, 2014   70,494,863        
Balance at Jun. 30, 2015 $ 58,143 $ 1 195,303 $ (790) $ 2,140 $ (138,511)
Balance, shares at Jun. 30, 2015 78,771,905 78,771,905        
Exercise of options by employees and non-employee consultants $ 16 [1] 16
Exercise of options by employees and non-employee consultants, shares 25,000 25,000        
Stock based compensation to employees, directors and non-employee consultants $ 1,571 [1] $ 1,571
Stock based compensation to employees, directors and non-employee consultants, shares   939,499        
Proceeds related to issuance of common stock in a private placement (Note 6a) 790 $ 790
Stock-based compensation to contractor (Note 6b) 39 $ 39
Other comprehensive loss, net (1,372) $ (1,372)
Net loss (9,838) $ (9,838)
Balance at Dec. 31, 2015 $ 49,349 $ 1 $ 196,929 $ 768 $ (148,349)
Balance, shares at Dec. 31, 2015 79,736,404 79,736,404        
[1] Less than $1
v3.3.1.900
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
$ in Thousands
6 Months Ended
Dec. 31, 2015
Dec. 31, 2014
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net loss $ (9,838) $ (12,156)
Adjustments to reconcile net loss to net cash used in operating activities:    
Depreciation 1,031 $ 1,002
Gain from sale of property and equipment, net (1)
Accretion of discount, amortization of premium and changes in accrued interest of marketable securities 146 $ 145
Gain from sale of investments of available-for-sale marketable securities (20) (197)
Stock-based compensation to employees, directors and non-employees consultants 1,571 1,754
Decrease in Office of the Chief Scientist receivables 1,541 2,105
Decrease (increase) in other accounts receivable 1,032 (184)
Decrease in trade payables (953) (772)
Increase (decrease) in other accounts payable, accrued expenses and other long-term liabilities 1,051 (417)
Decrease in deferred revenues (2,847) (190)
Decrease in advance payment from United Therapeutics (93) (104)
Increase in interest receivable on short-term deposits (39) (14)
Linkage differences and interest on short and long-term deposits 24 65
Accrued severance pay, net 6 (63)
Net cash used by operating activities (7,389) (9,026)
CASH FLOWS FROM INVESTING ACTIVITIES:    
Purchase of property and equipment (1,471) (552)
Repayment of (investment in) short-term deposits (8,794) 11,072
Repayment of long-term deposits 5 3
Proceeds from sale of property and equipment 3  
Proceeds from sale of available-for-sale marketable securities 1,054 2,409
Proceeds from redemption of available-for-sale marketable securities 651 301
Investment in available-for-sale marketable securities (2,543) (2,513)
Net cash provided (used) by investing activities (11,095) 10,720
CASH FLOWS FROM FINANCING ACTIVITIES:    
Proceeds related to issuance of common stock in a private placement 790 528
Exercise of options and warrants 16 246
Net cash provided by financing activities 806 774
Increase (decrease) in cash and cash equivalents (17,678) 2,468
Cash and cash equivalents at the beginning of the period 22,626 4,493
Cash and cash equivalents at the end of the period 4,948 6,961
Supplemental disclosure of cash flow activities:    
Taxes paid due to non-deductible expenses 43 17
Supplemental disclosure of non-cash activities:    
Purchase of property and equipment on credit 132 $ 72
Share consideration to contractor $ 39
v3.3.1.900
GENERAL
6 Months Ended
Dec. 31, 2015
GENERAL [Abstract]  
GENERAL
NOTE 1:-GENERAL
 
 
a.
Pluristem Therapeutics Inc., a Nevada corporation, was incorporated on May 11, 2001. Pluristem Therapeutics Inc. has a wholly owned subsidiary, Pluristem Ltd. (the “Subsidiary”), which is incorporated under the laws of the State of Israel. Pluristem Therapeutics Inc. and the Subsidiary are referred to as “Pluristem” or the “Company”.
 
 
b.
The Company is a bio-therapeutics company developing off-the-shelf allogeneic cell therapy products for the treatment of multiple ischemic and inflammatory conditions. The Company has sustained operating losses and expects such losses to continue in the foreseeable future. The Company's accumulated losses aggregated to $148,349 through December 31, 2015 and the Company incurred a net loss of $9,838 for the six months ended December 31, 2015.
 
The Company plans to continue to finance its operations with sales of equity securities, entering into licensing technology agreements (see Note 1c) and from grants to support its research and development activity. In the longer term, the Company plans to finance its operations from revenues from sales of products.
 
The Company's shares of common stock are traded on the NASDAQ Capital Market under the symbol “PSTI”, and on the Tel-Aviv Stock Exchange under the symbol “Pltr”.
 
 
c.
License Agreements:
 
United Therapeutics Corporation ("United") Agreement
 
On June 19, 2011, the Company entered into an exclusive license agreement (the “United Agreement”) with United for the use of the Company's PLX cells to develop and commercialize a cell-based product for the treatment of Pulmonary Hypertension (“PAH”).  The United Agreement provided that United would receive exclusive worldwide license rights for the development and commercialization of the Company's PLX cell-based product to treat PAH.  The United Agreement further provided for the following consideration payable to the Company: (i) an upfront payment of $7,000 paid in August 2011, which included a $5,000 non-refundable upfront payment and a $2,000 advance payment on the development; (ii) up to $37,500 upon reaching certain regulatory milestones with respect to the development of a product to treat PAH; (iii) reimbursement of up to $10,000 of certain of the Company's expenses if the Company establishes a GMP manufacturing facility in North America; (iv) reimbursement of certain costs in connection with the development of the product; and (v) following commercialization of the product, royalties at a mid-single digit percent and the purchase of commercial supplies of the developed product from the Company at a specified margin over the Company's cost.
 
On December 8, 2015, the Company received a notice from United terminating the United Agreement, effective immediately. Pursuant to the United Agreement termination clause, Pluristem will regain full rights to PLX in the field of PAH, as well as all clinical data and regulatory submissions. As the Company has no further obligations towards United, the Company recognized the remaining upfront payment received in August 2011 as revenues during the three month period ended December 31, 2015.
 
CHA Biotech ("CHA") Agreement
 
On June 26, 2013, Pluristem entered into an exclusive license and commercialization agreement (the “CHA Agreement”) with CHA, for conducting clinical trials and commercialization of Pluristem's PLX-PAD product in South Korea in connection with two indications: the treatment of Critical Limb Ischemia, and Intermediate Claudication (the “Indications”). Under the terms of the CHA Agreement, CHA will receive exclusive rights in South Korea for conducting clinical trials with respect to the Indications, and the Company will continue to retain rights to its proprietary manufacturing technology and cell-related intellectual property.
 
The first clinical study as part of the CHA Agreement is a Phase II trial in Intermittent Claudication. South Korea's Ministry of Food and Drug Safety approved this study in November 2013.
 
Upon the first regulatory approval for a PLX product in South Korea, for the specified indications, Pluristem and CHA will establish an equally owned joint venture. The purpose of the joint venture will be to commercialize PLX cell products in South Korea.
 
Pluristem will be able to use the data generated by CHA to pursue the development of PLX product candidates outside of South Korea.
 
The CHA Agreement contains customary termination provisions, including in the event the parties do not reach an agreement upon development plan for conducting the clinical trials. Upon termination of this CHA Agreement, the license granted thereunder will terminate and all rights included therein will revert to the Company, whereupon the Company will be free to enter into agreements with any other third parties for the granting of a license in or outside South Korea or to deal in any other manner with such rights as it shall see fit at its sole discretion.
 
In addition, and as contemplated by the CHA Agreement, in December 2013, Pluristem and CHA executed the mutual investment pursuant to which Pluristem issued 2,500,000 shares of its common stock in consideration for 1,011,504 shares of CHA, which reflects total consideration to each of Pluristem and CHA of approximately $10,414. The parties also agreed to give an irrevocable proxy to the other party's management with respect to the voting power of the shares issued.
 
During March 2015, the Company sold a portion of the CHA shares received in December 2013.
 
The remaining investment in CHA shares is presented as “Marketable Securities” and classified as available-for-sale in accordance with ASC 320 – “Investments - Debt and Equity Securities”. The fair value of the remaining investment as of December 31, 2015, is $4,825.
v3.3.1.900
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
6 Months Ended
Dec. 31, 2015
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES [Abstract]  
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
NOTE 2:- BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

 
a.
Unaudited Interim Financial Information
 
The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of U.S. Securities and Exchange Commission Regulation S-X. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included (consisting only of normal recurring adjustments except as otherwise discussed).
 
For further information, reference is made to the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended June 30, 2015.
 
Operating results for the three and six month periods ended December 31, 2015, are not necessarily indicative of the results that may be expected for the year ending June 30, 2016.

 
b.
Significant Accounting Policies
 
The significant accounting policies followed in the preparation of these unaudited interim condensed consolidated financial statements are identical to those applied in the preparation of the latest annual financial statements.

 
c.
Use of estimates
 
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

 
d.
Fair value of financial instruments
 
The carrying amounts of the Company's financial instruments, including cash and cash equivalents, short-term and restricted bank deposits, trade payable and other accounts payable and accrued liabilities, approximate fair value because of their generally short term maturities.
 
The Company measures its investments in marketable securities and derivative instruments at fair value under ASC 820, “Fair Value Measurements and Disclosures” (“ASC 820”). Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering such assumptions, ASC 820 establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:
 
Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities;
 
Level 2 - Inputs other than Level 1 that are observable for the asset or liability, either directly or indirectly; and
 
Level 3 - Unobservable inputs for the asset or liability.
 
The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The Company categorized each of its fair value measurements in one of these three levels of hierarchy.

 
e.
Derivative financial instruments
 
The Company uses forward contracts and options strategies (“derivative instruments”) primarily to manage exposure to foreign currency. The Company accounts for derivatives and hedging based on ASC 815, “Derivatives and Hedging” (“ASC 815”). ASC 815 requires the Company to recognize all derivative instruments as either assets or liabilities on the balance sheet at fair value. The accounting for changes in the fair value (i.e., gains or losses) of derivative instruments depends on whether it has been designated and qualifies as part of a hedging relationship and further, on the type of hedging relationship. For those derivative instruments that are designated and qualify as hedging instruments, the Company must designate the hedging instrument, based upon the exposure being hedged, as a fair value hedge, cash flow hedge, or a hedge of a net investment in a foreign operation.
 
If the derivative instruments meet the definition of a hedge and are so designated, depending on the nature of the hedge, changes in the fair value of such derivatives will either be offset against the change in fair value of the hedged assets, liabilities, or firm commitments through earnings, or recognized in other comprehensive income until the hedged item is recognized in the statement of operations. The ineffective portion of a derivative's change in fair value is recognized in the statement of operations.
 
Cash Flow Hedges. The Company entered into forward and option contracts to hedge against the risk of overall changes in future cash flow from payments of payroll and related expenses denominated in New Israeli Shekels (“NIS”). The Company measured the fair value of the contracts in accordance with ASC 820 (classified as level 2). The gain or loss on the effective portion of a cash flow hedge is initially reported as a component of accumulated other comprehensive income and subsequently reclassified into operating expenses in the same period or periods in which the payroll and related expenses are recognized, or reclassified into “Financial expense, net”, if the hedged transaction becomes probable of not occurring. Any gain or loss after a hedge is no longer designated, because it is no longer probable of occurring or it is related to an ineffective portion of a cash flow hedge is recognized in the statement of operations immediately. The net loss realized in statement of operations during the three and six month periods ended December 31, 2015 and  2014, resulting from the cash flow hedge transactions, amounted to approximately $0, $7, and $156, $201, respectively.
 
Other Derivatives. Other derivatives that are non-designated consist primarily of options strategies to minimize the risk associated with the foreign exchange effects of monetary assets and liabilities denominated in NIS. The Company measured the fair value of the contracts in accordance with ASC 820 (classified as level 2). The net gains (losses) recognized in “Financial income (expense), net” during the three and six month periods ended December 31, 2015 and 2014, were $103 , ($181) and $59, ($139),  respectively.
 
 
f.
Accumulated other comprehensive income (loss):
 
The components of accumulated other comprehensive income (loss) were as follows:
 
Six months ended December 31, 2015 (Unaudited)
 
Unrealized
gains (losses)
on marketable
securities
   
Unrealized
gains (losses)
on cash flow
hedges
   
Total
 
Balance as of July 1, 2015
$ 2,094     $ 46     $ 2,140  
Other comprehensive loss before reclassifications
  (1,346 )     -       (1,346 )
Amounts reclassified from accumulated other comprehensive loss
    20       (46 )     (26 )
Net current-period other comprehensive income
    (1,326 )     (46 )     (1,372 )
Balance as of December 31, 2015
  $ 768     $ (- )   $ 768  

 


v3.3.1.900
MARKETABLE SECURITIES
6 Months Ended
Dec. 31, 2015
MARKETABLE SECURITIES [Abstract]  
MARKETABLE SECURITIES
NOTE 3:- MARKETABLE SECURITIES
 
As of December 31, 2015, all of the Company's marketable securities were classified as available-for-sale.

 
December 31, 2015 (Unaudited)
 
June 30, 2015
 
Amortized cost
 
Gross
unrealized
gain
   
Gross
unrealized
loss
   
Fair
Value
   
Amortized cost
   
Gross
unrealized
gain
   
Gross
unrealized
loss
   
Fair
value
 
Available-for-sale - matures within one year:
                                         
Stock and index linked notes
$ 12,686     $ 1,305     $ (579 )   $ 13,412     $ 12,305     $ 2,083     $ (72 )   $ 14,316  
Government debentures – fixed interest rate
    611       9       (1 )     619       287       1       (10 )     278  
Corporate debentures – fixed interest rate
    1,024       20       (10 )     1,034       939       26       (52 )     913  
    $ 14,321     $ 1,334     $ (590 )   $ 15,065     $ 13,531     $ 2,110     $ (134 )   $ 15,507  
Available-for-sale - matures after one year through five years:
                                                               
Government debentures – fixed interest rate
    1,495       5       (25 )     1,475       2,033       40       (9 )     2,064  
Corporate debentures – fixed interest rate
    4,657       66       (27 )     4,696       4,436       97       (17 )     4,516  
    $ 6,152     $ 71     $ (52 )   $ 6,171     $ 6,469     $ 137     $ (26 )   $ 6,580  
Available-for-sale - matures after five years through ten years:
                                                               
Corporate debentures – fixed interest rate
    395       8       (3 )     400       156       8       (1 )     163  
    $ 395     $ 8     $ (3 )   $ 400     $ 156     $ 8     $ (1 )   $ 163  
    $ 20,868     $ 1,413     $ (645 )   $ 21,636     $ 20,156     $ 2,255     $ (161 )   $ 22,250  



The following table presents gross unrealized losses and fair values for those investments that were in an unrealized loss position as of December 31, 2015 and June 30, 2015, and the length of time that those investments have been in a continuous loss position:
 

Less than 12 months
   
12 months or greater
 
Fair Value
   
Gross
unrealized loss
   
Fair Value
   
Gross
unrealized loss
 
As of December 31, 2015 (Unaudited)
$ 10,892     $ (508 )   $ 1,192     $ (137 )
As of June 30, 2015
$ 2,535     $ (107 )   $ 524     $ (54 )


The Company typically invests in highly-rated securities. When evaluating the investments for other-than-temporary impairment, the Company reviews factors such as the length of time and extent to which fair value has been below cost basis, the financial condition of the issuer and any changes thereto, and the Company's intent to sell, or whether it is more likely than not it will be required to sell, the investment before recovery of the investment's amortized cost basis. Based on the above factors, the Company concluded that unrealized losses on all available-for-sale securities were not other-than-temporary and no credit loss was present for any of its investments. As such, the Company did not recognize any impairment charges on outstanding securities during the six and three month periods ended December 31, 2015.
v3.3.1.900
FAIR VALUE OF FINANCIAL INSTRUMENTS
6 Months Ended
Dec. 31, 2015
FAIR VALUE OF FINANCIAL INSTRUMENTS [Abstract]  
FAIR VALUE OF FINANCIAL INSTRUMENTS
NOTE 4:- FAIR VALUE OF FINANCIAL INSTRUMENTS


December 31, 2015 (Unaudited)
   
June 30, 2015
 
Level 1
   
Level 2
   
Level 1
   
Level 2
 
Marketable securities
$ 11,503     $ 10,133     $ 12,650     $ 9,600  
Foreign currency derivative instruments
  -       89       -       322  
Total financial assets
  $ 11,503     $ 10,222     $ 12,650     $ 9,922  
 
December 31, 2015 (Unaudited)
June 30, 2015
 
Balance Sheet location
Fair Value
 
Balance Sheet location
 
Fair Value
 
Derivatives designated as a cash flow hedge instruments
$ -  
Other account receivable
  $ 52  
Derivatives not designated as hedge instruments
Other account receivable
$ 89  
Other account receivable
  $ 270  
Total
    $ 89       $ 322  

v3.3.1.900
COMMITMENTS AND CONTINGENCIES
6 Months Ended
Dec. 31, 2015
COMMITMENTS AND CONTINGENCIES [Abstract]  
COMMITMENTS AND CONTINGENCIES
NOTE 5: - COMMITMENTS AND CONTINGENCIES
 
Commitments and contingencies that changed during the six month period ended December 31, 2015, include the following:
 
 
a.
Decrease of $543 of cash pledged by the Company to secure its hedging transactions, credit line and bank guarantees.
 
 
b.
Under the Law for the Encouragement of Industrial Research and Development, 1984, (the “Research Law”), research and development programs that meet specified criteria and are approved by a governmental committee of the Office of the Chief Scientist of Israel (“OCS”) are eligible for grants of up to 50% of the project's expenditures, as determined by the research committee, in exchange for the payment of royalties from the sale of products developed under the program. Regulations under the Research Law generally provide for the payment of royalties to the Chief Scientist of 3% to 4% on sales of products and services derived from a technology developed using these grants until 100% of the dollar-linked grant is repaid. The Company's obligation to pay these royalties is contingent on its actual sale of such products and services. In the absence of such sales, no payment is required. The outstanding balance of the grants will be subject to interest at a rate equal to the 12 month LIBOR applicable to dollar deposits that is published on the first business day of each calendar year. Following the full repayment of the grant, there is no further liability for royalties.
 
Through December 31, 2015, total grants obtained aggregated to approximately $21,183, and total royalties paid and accrued amounted to $166. As of December 31, 2015, the Company's contingent liability in respect to royalties to the OCS amounted $21,017, not including LIBOR interest as described above.
v3.3.1.900
STOCKHOLDERS' EQUITY
6 Months Ended
Dec. 31, 2015
STOCKHOLDERS' EQUITY [Abstract]  
STOCKHOLDERS' EQUITY
NOTE 6: - STOCKHOLDERS' EQUITY
 
 
a.
From October 2014 through May 2015, the Company issued shares of common stock in private placements to an investor. In October 2014, the Company issued 200,000 shares of common stock to an investor for aggregate cash consideration of $528. In February 2015, the Company issued an additional 200,000 shares of common stock to an investor for aggregate cash consideration of $586. In May 2015, the Company issued an additional 300,000 shares of common stock to an investor, for which the consideration in the amount of $790 was received from the investor in September 2015.
 
 
b.
In February 2015, the Company's subsidiary entered into an agreement with a contractor for the construction of its new laboratories facility for a consideration of approximately NIS 3.3 million (approximately $841). Under the terms of the agreement, the Company's subsidiary will pay part of the NIS 3.3 million consideration using 100,004 restricted shares of common stock of the Company, linked to performance milestones with respect to the new laboratories construction and which serve as a guarantee.  These restricted shares shall be released to the contractor only upon the successful completion of the construction. The restricted shares were issued in December 2014.
 
In May 2015, the Company's subsidiary entered into an addendum to the agreement with the contractor for the design and construction of additional office space renovations in the Company's subsidiary's leased facility for additional consideration of approximately NIS 4 million (approximately $1,032) which is comprised of NIS 3 million (approximately $774) in cash and 90,000 restricted shares which will be issued to the contractor only upon the successful completion of the construction by the contractor.

The Company accounts for the abovementioned stock-based payment awards to the contractor in accordance with ASC 505-50, “Equity based payments to non-employees”. As performance by the contractor is not complete if the awards are forfeitable (or not issued) in the event performance not completed, the Company measures the fair value of the awards at each reporting period through the performance completion date (until completion of the construction work).
 
The construction work was initiated in June 2015. On October 30, 2015, the contractor completed the agreed construction milestones. As a result, the Company recognized the fair value of the stock-based payments awards, using the fair value of the Company's shares on October 30, 2015, totaling approximately $302 as stock-based payment to the contractor in "additional paid-in capital" with a corresponding amount included in "property and equipment, net".
 
 
c.
Options, warrants and restricted stock units to employees, directors and consultants:
 
 
1.
Options to employees and directors:
 
The Company accounts for its options to employees and directors under the fair value method in accordance with ASC 718, “Compensation—Stock Compensation”. A summary of the Company's activity for options granted to employees and directors under its 2005 incentive option plan is as follows:


Six months ended December 31, 2015 (Unaudited)
 
Number
   
Weighted Average Exercise Price
   
Weighted Average Remaining Contractual Terms (in years)
   
Aggregate Intrinsic Value Price
 
Options outstanding at beginning of period
1,836,900     $ 3.72              
Options exercised
(25,000 )   $ 0.62              
Options outstanding at end of the period
    1,811,900     $ 3.77       1.62     $ 451  
Options exercisable at the end of the period
    1,811,900     $ 3.77       1.62     $ 451  
Options vested
    1,811,900     $ 3.77       1.62     $ 451  


 
Intrinsic value of exercisable options (the difference between the Company's closing stock price on the last trading day in the period and the exercise price, multiplied by the number of in-the-money options) represents the amount that would have been received by the employees and directors option holders had all option holders exercised their options on December 31, 2015. This amount changes based on the fair market value of the Company's common stock.
 
 
c.
Options, warrants and restricted stock units to employees, directors and consultants (cont.):
 
 
2.
Options and warrants to non-employees:

A summary of the activity for options and warrants to non-employees consultants is as follows:


Six months ended December 31, 2015 (Unaudited)
 
Number
   
Weighted Average Exercise Price
   
Weighted Average Remaining Contractual Terms (in years)
   
Aggregate Intrinsic Value Price
 
Options and warrants outstanding at end of the period
228,000     $ 5.73       2.36     $ 147  
                                 
Options and warrants exercisable at the end of the period
    227,250     $ 5.75       2.34     $ 145  
                                 
Options and warrants vested and expected to vest
    228,000     $ 5.73       2.36     $ 147  


 
Compensation expenses related to options and warrants granted to consultants were recorded as follows:

 
Six months ended December 31,
 
Three months ended December 31,
 
2015
 
2014
   
2015
   
2014
 
(Unaudited)
 
(Unaudited)
 
Research and development expenses
$ 1     $ 1     $ -     $ -  

 
 
c.
Options, warrants and restricted stock units to employees, directors and consultants (cont.):
 
 
3.
Restricted stock units to employees and directors:
 
The following table summarizes the activity related to unvested restricted stock units granted to employees and directors for the six month period ended December 31, 2015 (Unaudited):
 

   
Number
 
Unvested at the beginning of period
    1,732,383  
Granted
    14,270  
Forfeited
    (45,477 )
Vested
    (776,727 )
Unvested at the end of the period
    924,449  
Expected to vest after  December 31, 2015
    893,867  
 
Compensation expenses related to restricted stock units granted to employees and directors were recorded as follows:
 
Six months ended December 31,
 
Three months ended December 31,
 
2015
 
2014
   
2015
   
2014
 
(Unaudited)
 
(Unaudited)
 
Research and development expenses
$ 483     $ 495     $ 163     $ 162  
General and administrative expenses
    1,020       1,143       446       441  
    $ 1,503     $ 1,638     $ 609     $ 603  
 

Unamortized compensation expenses related to restricted stock units granted to employees and directors to be recognized over an average time of approximately 1.75 years is $916.
 
 
c.
Options, warrants, restricted stock and restricted stock units to employees, directors and consultants (cont.):
 
 
4.
Restricted stock and restricted stock units to consultants:
 
The following table summarizes the activity related to unvested restricted stock and restricted stock units granted to consultants for the six months ended December 31, 2015 (Unaudited):
 

   
Number
 
Unvested at the beginning of period
    28,385  
Granted
    135,387  
Vested
    (162,772 )
Unvested at the end of the period
    1,000  
 
Compensation expenses related to restricted stock and restricted stock units granted to consultants were recorded as follows:
 

Six months ended December 31,
 
Three months ended December 31,
 
2015
 
2014
   
2015
   
2014
 
(Unaudited)
 
(Unaudited)
 
Research and development expenses
$ 20     $ 77     $ 10     $ 57  
General and administrative expenses
    48       38       45       34  
    $ 68     $ 115     $ 55     $ 91  


v3.3.1.900
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies)
6 Months Ended
Dec. 31, 2015
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES [Abstract]  
Unaudited Interim Financial Information
 
a.
Unaudited Interim Financial Information
 
The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of U.S. Securities and Exchange Commission Regulation S-X. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included (consisting only of normal recurring adjustments except as otherwise discussed).
 
For further information, reference is made to the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended June 30, 2015.
 
Operating results for the three and six month periods ended December 31, 2015, are not necessarily indicative of the results that may be expected for the year ending June 30, 2016.
Significant Accounting Policies
 
b.
Significant Accounting Policies
 
The significant accounting policies followed in the preparation of these unaudited interim condensed consolidated financial statements are identical to those applied in the preparation of the latest annual financial statements.
Use of estimates
 
c.
Use of estimates
 
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
Fair value of financial instruments
 
d.
Fair value of financial instruments
 
The carrying amounts of the Company's financial instruments, including cash and cash equivalents, short-term and restricted bank deposits, trade payable and other accounts payable and accrued liabilities, approximate fair value because of their generally short term maturities.
 
The Company measures its investments in marketable securities and derivative instruments at fair value under ASC 820, “Fair Value Measurements and Disclosures” (“ASC 820”). Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering such assumptions, ASC 820 establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:
 
Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities;
 
Level 2 - Inputs other than Level 1 that are observable for the asset or liability, either directly or indirectly; and
 
Level 3 - Unobservable inputs for the asset or liability.
 
The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The Company categorized each of its fair value measurements in one of these three levels of hierarchy.
Derivative financial instruments
 
e.
Derivative financial instruments
 
The Company uses forward contracts and options strategies (“derivative instruments”) primarily to manage exposure to foreign currency. The Company accounts for derivatives and hedging based on ASC 815, “Derivatives and Hedging” (“ASC 815”). ASC 815 requires the Company to recognize all derivative instruments as either assets or liabilities on the balance sheet at fair value. The accounting for changes in the fair value (i.e., gains or losses) of derivative instruments depends on whether it has been designated and qualifies as part of a hedging relationship and further, on the type of hedging relationship. For those derivative instruments that are designated and qualify as hedging instruments, the Company must designate the hedging instrument, based upon the exposure being hedged, as a fair value hedge, cash flow hedge, or a hedge of a net investment in a foreign operation.
 
If the derivative instruments meet the definition of a hedge and are so designated, depending on the nature of the hedge, changes in the fair value of such derivatives will either be offset against the change in fair value of the hedged assets, liabilities, or firm commitments through earnings, or recognized in other comprehensive income until the hedged item is recognized in the statement of operations. The ineffective portion of a derivative's change in fair value is recognized in the statement of operations.
 
Cash Flow Hedges. The Company entered into forward and option contracts to hedge against the risk of overall changes in future cash flow from payments of payroll and related expenses denominated in New Israeli Shekels (“NIS”). The Company measured the fair value of the contracts in accordance with ASC 820 (classified as level 2). The gain or loss on the effective portion of a cash flow hedge is initially reported as a component of accumulated other comprehensive income and subsequently reclassified into operating expenses in the same period or periods in which the payroll and related expenses are recognized, or reclassified into “Financial expense, net”, if the hedged transaction becomes probable of not occurring. Any gain or loss after a hedge is no longer designated, because it is no longer probable of occurring or it is related to an ineffective portion of a cash flow hedge is recognized in the statement of operations immediately. The net loss realized in statement of operations during the three and six month periods ended December 31, 2015 and  2014, resulting from the cash flow hedge transactions, amounted to approximately $0, $7, and $156, $201, respectively.
 
Other Derivatives. Other derivatives that are non-designated consist primarily of options strategies to minimize the risk associated with the foreign exchange effects of monetary assets and liabilities denominated in NIS. The Company measured the fair value of the contracts in accordance with ASC 820 (classified as level 2). The net gains (losses) recognized in “Financial income (expense), net” during the three and six month periods ended December 31, 2015 and 2014, were $103 , ($181) and $59, ($139),  respectively.
Acumulated other comprehensive income (loss)
 
f.
Accumulated other comprehensive income (loss):
 
The components of accumulated other comprehensive income (loss) were as follows:
 
Six months ended December 31, 2015 (Unaudited)
 
Unrealized
gains (losses)
on marketable
securities
   
Unrealized
gains (losses)
on cash flow
hedges
   
Total
 
Balance as of July 1, 2015
$ 2,094     $ 46     $ 2,140  
Other comprehensive loss before reclassifications
  (1,346 )     -       (1,346 )
Amounts reclassified from accumulated other comprehensive loss
    20       (46 )     (26 )
Net current-period other comprehensive income
    (1,326 )     (46 )     (1,372 )
Balance as of December 31, 2015
  $ 768     $ (- )   $ 768  

 
v3.3.1.900
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Tables)
6 Months Ended
Dec. 31, 2015
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES [Abstract]  
Schedule of Accumulated Other Comprehensive Income (Loss)
Six months ended December 31, 2015 (Unaudited)
 
Unrealized
gains (losses)
on marketable
securities
   
Unrealized
gains (losses)
on cash flow
hedges
   
Total
 
Balance as of July 1, 2015
$ 2,094     $ 46     $ 2,140  
Other comprehensive loss before reclassifications
  (1,346 )     -       (1,346 )
Amounts reclassified from accumulated other comprehensive loss
    20       (46 )     (26 )
Net current-period other comprehensive income
    (1,326 )     (46 )     (1,372 )
Balance as of December 31, 2015
  $ 768     $ (- )   $ 768  
v3.3.1.900
MARKETABLE SECURITIES (Tables)
6 Months Ended
Dec. 31, 2015
MARKETABLE SECURITIES [Abstract]  
Schedule of Available-for-sale Marketable Securities
 
December 31, 2015 (Unaudited)
 
June 30, 2015
 
Amortized cost
 
Gross
unrealized
gain
   
Gross
unrealized
loss
   
Fair
Value
   
Amortized cost
   
Gross
unrealized
gain
   
Gross
unrealized
loss
   
Fair
value
 
Available-for-sale - matures within one year:
                                         
Stock and index linked notes
$ 12,686     $ 1,305     $ (579 )   $ 13,412     $ 12,305     $ 2,083     $ (72 )   $ 14,316  
Government debentures – fixed interest rate
    611       9       (1 )     619       287       1       (10 )     278  
Corporate debentures – fixed interest rate
    1,024       20       (10 )     1,034       939       26       (52 )     913  
    $ 14,321     $ 1,334     $ (590 )   $ 15,065     $ 13,531     $ 2,110     $ (134 )   $ 15,507  
Available-for-sale - matures after one year through five years:
                                                               
Government debentures – fixed interest rate
    1,495       5       (25 )     1,475       2,033       40       (9 )     2,064  
Corporate debentures – fixed interest rate
    4,657       66       (27 )     4,696       4,436       97       (17 )     4,516  
    $ 6,152     $ 71     $ (52 )   $ 6,171     $ 6,469     $ 137     $ (26 )   $ 6,580  
Available-for-sale - matures after five years through ten years:
                                                               
Corporate debentures – fixed interest rate
    395       8       (3 )     400       156       8       (1 )     163  
    $ 395     $ 8     $ (3 )   $ 400     $ 156     $ 8     $ (1 )   $ 163  
    $ 20,868     $ 1,413     $ (645 )   $ 21,636     $ 20,156     $ 2,255     $ (161 )   $ 22,250  
Schedule of Investments in Continuous Unrealized Loss Position
Less than 12 months
   
12 months or greater
 
Fair Value
   
Gross
unrealized loss
   
Fair Value
   
Gross
unrealized loss
 
As of December 31, 2015 (Unaudited)
$ 10,892     $ (508 )   $ 1,192     $ (137 )
As of June 30, 2015
$ 2,535     $ (107 )   $ 524     $ (54 )

v3.3.1.900
FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)
6 Months Ended
Dec. 31, 2015
FAIR VALUE OF FINANCIAL INSTRUMENTS [Abstract]  
Schedule of Fair Value of Financial Instruments
December 31, 2015 (Unaudited)
   
June 30, 2015
 
Level 1
   
Level 2
   
Level 1
   
Level 2
 
Marketable securities
$ 11,503     $ 10,133     $ 12,650     $ 9,600  
Foreign currency derivative instruments
  -       89       -       322  
Total financial assets
  $ 11,503     $ 10,222     $ 12,650     $ 9,922  
Schedule of Derivative Hedging Activity and Balance Sheet Location
December 31, 2015 (Unaudited)
June 30, 2015
 
Balance Sheet location
Fair Value
 
Balance Sheet location
 
Fair Value
 
Derivatives designated as a cash flow hedge instruments
$ -  
Other account receivable
  $ 52  
Derivatives not designated as hedge instruments
Other account receivable
$ 89  
Other account receivable
  $ 270  
Total
    $ 89       $ 322  
v3.3.1.900
STOCKHOLDERS' EQUITY (Tables)
6 Months Ended
Dec. 31, 2015
STOCKHOLDERS' EQUITY [Abstract]  
Schedule of Stock Option Activity

Six months ended December 31, 2015 (Unaudited)
 
Number
   
Weighted Average Exercise Price
   
Weighted Average Remaining Contractual Terms (in years)
   
Aggregate Intrinsic Value Price
 
Options outstanding at beginning of period
1,836,900     $ 3.72              
Options exercised
(25,000 )   $ 0.62              
Options outstanding at end of the period
    1,811,900     $ 3.77       1.62     $ 451  
Options exercisable at the end of the period
    1,811,900     $ 3.77       1.62     $ 451  
Options vested
    1,811,900     $ 3.77       1.62     $ 451  
Schedule of Stock Option and Warrant Activity

Six months ended December 31, 2015 (Unaudited)
 
Number
   
Weighted Average Exercise Price
   
Weighted Average Remaining Contractual Terms (in years)
   
Aggregate Intrinsic Value Price
 
Options and warrants outstanding at end of the period
228,000     $ 5.73       2.36     $ 147  
                                 
Options and warrants exercisable at the end of the period
    227,250     $ 5.75       2.34     $ 145  
                                 
Options and warrants vested and expected to vest
    228,000     $ 5.73       2.36     $ 147  
Options and warrants [Member]  
Stockholders Equity Note [Line Items]  
Schedule of Stock-based Compensation Expenses
 
Six months ended December 31,
 
Three months ended December 31,
 
2015
 
2014
   
2015
   
2014
 
(Unaudited)
 
(Unaudited)
 
Research and development expenses
$ 1     $ 1     $ -     $ -  
Restricted stock units [Member]  
Stockholders Equity Note [Line Items]  
Schedule of Unvested Restricted Stock Units

   
Number
 
Unvested at the beginning of period
    1,732,383  
Granted
    14,270  
Forfeited
    (45,477 )
Vested
    (776,727 )
Unvested at the end of the period
    924,449  
Expected to vest after  December 31, 2015
    893,867  
Schedule of Stock-based Compensation Expenses
Six months ended December 31,
 
Three months ended December 31,
 
2015
 
2014
   
2015
   
2014
 
(Unaudited)
 
(Unaudited)
 
Research and development expenses
$ 483     $ 495     $ 163     $ 162  
General and administrative expenses
    1,020       1,143       446       441  
    $ 1,503     $ 1,638     $ 609     $ 603  
 
Consultant restricted stock units [Member]  
Stockholders Equity Note [Line Items]  
Schedule of Unvested Restricted Stock Units

   
Number
 
Unvested at the beginning of period
    28,385  
Granted
    135,387  
Vested
    (162,772 )
Unvested at the end of the period
    1,000  
Schedule of Stock-based Compensation Expenses

Six months ended December 31,
 
Three months ended December 31,
 
2015
 
2014
   
2015
   
2014
 
(Unaudited)
 
(Unaudited)
 
Research and development expenses
$ 20     $ 77     $ 10     $ 57  
General and administrative expenses
    48       38       45       34  
    $ 68     $ 115     $ 55     $ 91  

v3.3.1.900
GENERAL (Details) - USD ($)
$ in Thousands
1 Months Ended 3 Months Ended 6 Months Ended
Dec. 31, 2013
Aug. 31, 2011
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2015
Dec. 31, 2014
Jun. 30, 2015
GENERAL [Abstract]              
Accumulated deficit     $ 148,349   $ 148,349   $ 138,511
Net loss     3,962 $ 6,245 9,838 $ 12,156  
Upfront payment received   $ 7,000          
Nonrefundable payments received   5,000          
Advance payment on the development   $ 2,000          
Milestone revenue receivable         37,500    
Reimbursement revenue receivable         10,000    
Issuance of common stock under CHA agreement 2,500,000            
CHA shares classified as marketable securities 1,011,504            
Total consideration reflected under the CHA agreement $ 10,414            
Fair value of the remaining investment in CHA shares     $ 4,825   $ 4,825    
v3.3.1.900
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Narrative) (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2015
Dec. 31, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Gain (loss) on other derivatives $ 103 $ 59 $ (181) $ (139)
Forward contracts [Member] | Designated as Hedging Instrument [Member] | Israel, New Shekels [Member]        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Net loss realized on derivatives $ 0 $ 156 $ 7 $ 201
v3.3.1.900
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Comprehensive Income) (Details) - USD ($)
$ in Thousands
6 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Accumulated Other Comprehensive Income (Loss) [Line Items]    
Beginning balance $ 2,140  
Other comprehensive income before reclassifications (1,346)  
Amounts reclassified from accumulated other comprehensive loss (26)  
Net current-period other comprehensive income (loss) (1,372) $ (3,358)
Ending balance 768  
Unrealized gains (losses) on marketable securities [Member]    
Accumulated Other Comprehensive Income (Loss) [Line Items]    
Beginning balance 2,094  
Other comprehensive income before reclassifications (1,346)  
Amounts reclassified from accumulated other comprehensive loss 20  
Net current-period other comprehensive income (loss) (1,326)  
Ending balance 768  
Unrealized gains (losses) on cash flow hedges [Member]    
Accumulated Other Comprehensive Income (Loss) [Line Items]    
Beginning balance $ 46  
Other comprehensive income before reclassifications  
Amounts reclassified from accumulated other comprehensive loss $ (46)  
Net current-period other comprehensive income (loss) $ (46)  
Ending balance  
v3.3.1.900
MARKETABLE SECURITIES (Schedule of Available-for-sale Marketable Securities) (Details) - USD ($)
$ in Thousands
Dec. 31, 2015
Jun. 30, 2015
Schedule of Available-for-sale Securities [Line Items]    
Amortized cost $ 20,868 $ 20,156
Gross unrealized gain 1,413 2,255
Gross unrealized loss (645) (161)
Fair value 21,636 22,250
Within One Year [Member]    
Schedule of Available-for-sale Securities [Line Items]    
Amortized cost 14,321 13,531
Gross unrealized gain 1,334 2,110
Gross unrealized loss (590) (134)
Fair value 15,065 15,507
One to Five Years [Member]    
Schedule of Available-for-sale Securities [Line Items]    
Amortized cost 6,152 6,469
Gross unrealized gain 71 137
Gross unrealized loss (52) (26)
Fair value 6,171 6,580
After Five Years through Ten Years [Member]    
Schedule of Available-for-sale Securities [Line Items]    
Amortized cost 395 156
Gross unrealized gain 8 8
Gross unrealized loss (3) (1)
Fair value 400 163
Stock and Index Linked Notes [Member] | Within One Year [Member]    
Schedule of Available-for-sale Securities [Line Items]    
Amortized cost 12,686 12,305
Gross unrealized gain 1,305 2,083
Gross unrealized loss (579) (72)
Fair value 13,412 14,316
Government Debentures [Member] | Within One Year [Member]    
Schedule of Available-for-sale Securities [Line Items]    
Amortized cost 611 287
Gross unrealized gain 9 1
Gross unrealized loss (1) (10)
Fair value 619 278
Government Debentures [Member] | One to Five Years [Member]    
Schedule of Available-for-sale Securities [Line Items]    
Amortized cost 1,495 2,033
Gross unrealized gain 5 40
Gross unrealized loss (25) (9)
Fair value 1,475 2,064
Corporate Debentures [Member] | Within One Year [Member]    
Schedule of Available-for-sale Securities [Line Items]    
Amortized cost 1,024 939
Gross unrealized gain 20 26
Gross unrealized loss (10) (52)
Fair value 1,034 913
Corporate Debentures [Member] | One to Five Years [Member]    
Schedule of Available-for-sale Securities [Line Items]    
Amortized cost 4,657 4,436
Gross unrealized gain 66 97
Gross unrealized loss (27) (17)
Fair value 4,696 4,516
Corporate Debentures [Member] | After Five Years through Ten Years [Member]    
Schedule of Available-for-sale Securities [Line Items]    
Amortized cost 395 156
Gross unrealized gain 8 8
Gross unrealized loss (3) (1)
Fair value $ 400 $ 163
v3.3.1.900
MARKETABLE SECURITIES (Schedule of Investments in Unrealized Loss) (Details) - USD ($)
$ in Thousands
Dec. 31, 2015
Jun. 30, 2015
MARKETABLE SECURITIES [Abstract]    
Less than 12 months, fair value $ 10,892 $ 2,535
Less than 12 months, gross unrealized loss (508) (107)
12 months or greater, fair value 1,192 524
12 months or greater, gross unrealized loss $ (137) $ (54)
v3.3.1.900
FAIR VALUE OF FINANCIAL INSTRUMENTS (Schedule of Fair Value of Financial Instruments) (Details) - USD ($)
$ in Thousands
Dec. 31, 2015
Jun. 30, 2015
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Marketable securities $ 21,636 $ 22,250
Foreign currency derivative instruments 89 322
Level 1 [Member] | Fair Value, Measurements, Recurring [Member]    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Marketable securities $ 11,503 $ 12,650
Foreign currency derivative instruments
Total financial assets $ 11,503 $ 12,650
Level 2 [Member] | Fair Value, Measurements, Recurring [Member]    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Marketable securities 10,133 9,600
Foreign currency derivative instruments 89 322
Total financial assets $ 10,222 $ 9,922
v3.3.1.900
FAIR VALUE OF FINANCIAL INSTRUMENTS (Schedule of the Fair Value of Hedging Instruments) (Details) - USD ($)
$ in Thousands
Dec. 31, 2015
Jun. 30, 2015
Derivatives Fair Value Line Items    
Derivative fair value asset (liability) $ 89 $ 322
Derivatives designated as hedge instruments [Member] | Other account receivable [Member] | Cash flow [Member]    
Derivatives Fair Value Line Items    
Derivative fair value asset (liability) 52
Derivatives not designated as hedge instruments [Member] | Other account receivable [Member]    
Derivatives Fair Value Line Items    
Derivative fair value asset (liability) $ 89 $ 270
v3.3.1.900
COMMITMENTS AND CONTINGENCIES (Details)
$ in Thousands
6 Months Ended
Dec. 31, 2015
USD ($)
Other Commitments [Line Items]  
Decrease in cash pledged $ (543)
Grants received $ 21,183
Percentage of qualified expenditures eligible for grant 50.00%
Royalty payable based on grants received 100.00%
Accrued and paid royalties $ 166
Contingent liability amount $ 21,017
Minimum [Member]  
Other Commitments [Line Items]  
Royalty rate 3.00%
Maximum [Member]  
Other Commitments [Line Items]  
Royalty rate 4.00%
v3.3.1.900
STOCKHOLDERS' EQUITY (Narrative) (Details)
$ in Thousands, ₪ in Millions
1 Months Ended 6 Months Ended
May. 31, 2015
USD ($)
shares
Feb. 28, 2015
USD ($)
shares
Feb. 28, 2015
ILS (₪)
shares
Oct. 31, 2014
USD ($)
shares
Dec. 31, 2015
USD ($)
shares
Dec. 31, 2015
ILS (₪)
shares
Dec. 31, 2014
USD ($)
Jun. 30, 2015
USD ($)
Jun. 30, 2015
ILS (₪)
Class of Stock [Line Items]                  
Stock-based compensation to contractor, shares to be issued | shares         90,000 90,000      
Proceeds from issuance of stock         $ 790   $ 528    
Issuance of common stock in a private placement $ 790 $ 586   $ 528     $ 528    
Issuance of common stock in a private placement, shares | shares 300,000 200,000 200,000 200,000          
Stock based compensation to contractor         39      
Cash paid to construction contractor         774 ₪ 3.0      
Unrecorded Unconditional Purchase Obligation               $ 1,032 ₪ 4.0
Amount of share-based compensation included in additional paid-in capital and property and equipment         $ 302        
Contractor [Member]                  
Class of Stock [Line Items]                  
Stock-based compensation to contractor, shares | shares   100,004 100,004            
Stock based compensation to contractor   $ 841 ₪ 3.3            
v3.3.1.900
STOCKHOLDERS' EQUITY (Summary of Option Activity) (Details)
$ / shares in Units, $ in Thousands
6 Months Ended
Dec. 31, 2015
USD ($)
$ / shares
shares
Number  
Options outstanding at beginning of period | shares 1,836,900
Options exercised | shares (25,000)
Options outstanding at end of the period | shares 1,811,900
Options exercisable at the end of the period | shares 1,811,900
Options vested | shares 1,811,900
Weighted average exercise price  
Options outstanding at beginning of period | $ / shares $ 3.72
Options exercised | $ / shares 0.62
Options outstanding at end of the period | $ / shares 3.77
Options exercisable at the end of the period | $ / shares 3.77
Options vested | $ / shares $ 3.77
Weighted average remaining contractual term  
Weighted Average Remaining Contractual Terms (in years) 1 year 7 months 13 days
Options exercisable at the end of the period 1 year 7 months 13 days
Options vested 1 year 7 months 13 days
Aggregate intrinsic value price  
Options outstanding at end of the period | $ $ 451
Options exercisable at the end of the period | $ 451
Options vested | $ $ 451
v3.3.1.900
STOCKHOLDERS' EQUITY (Summary of Option and Warrant Activity to Non-employees) (Details)
$ / shares in Units, $ in Thousands
6 Months Ended
Dec. 31, 2015
USD ($)
$ / shares
shares
Number  
Options and warrants outstanding at beginning of period | shares 228,000
Options and warrants exercisable at the end of the period | shares 227,250
Options and warrants vested and expected to vest | shares 228,000
Weighted average exercise price  
Options and warrants outstanding at beginning of period | $ / shares $ 5.73
Options and warrants exercisable at the end of the period | $ / shares 5.75
Options and warrants vested and expected to vest | $ / shares $ 5.73
Weighted average remaining contractual term (in years)  
Options and warrants outstanding at end of the period 2 years 4 months 10 days
Options and warrants exercisable at the end of the period 2 years 4 months 2 days
Options and warrants vested and expected to vest 2 years 4 months 10 days
Aggregate intrinsic value price  
Options and warrants outstanding at end of the period | $ $ 147
Options and warrants exercisable at the end of the period | $ 145
Options and warrants vested and expected to vest | $ $ 147
v3.3.1.900
STOCKHOLDERS' EQUITY (Summary of RSU Activity to Employees and Directors) (Details) - Restricted stock units [Member]
6 Months Ended
Dec. 31, 2015
shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Unvested at the beginning of period 1,732,383
Granted 14,270
Forfeited (45,477)
Vested (776,727)
Unvested at the end of the period 924,449
Expected to vest 893,867
v3.3.1.900
STOCKHOLDERS' EQUITY (Summary of RSU Activity to Consultants) (Details) - Consultants [Member]
6 Months Ended
Dec. 31, 2015
shares
Share-based Goods and Nonemployee Services Transaction [Line Items]  
Unvested at the beginning of period 28,385
Granted 135,387
Vested (162,772)
Unvested at the end of the period 1,000
v3.3.1.900
STOCKHOLDERS' EQUITY (Schedule of Compensation Expense) (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2015
Dec. 31, 2014
Restricted stock units [Member]        
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]        
Compensation expenses $ 609 $ 603 $ 1,503 $ 1,638
Unrecognized compensation expense 916   $ 916  
Unrecognized compensation expense, recognition period     1 year 9 months  
Restricted stock units [Member] | Consultants [Member]        
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]        
Compensation expenses $ 55 $ 91 $ 68 115
Research and development expenses [Member] | Options and warrants [Member]        
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]        
Compensation expenses 1 1
Research and development expenses [Member] | Restricted stock units [Member]        
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]        
Compensation expenses $ 163 $ 162 483 495
Research and development expenses [Member] | Restricted stock units [Member] | Consultants [Member]        
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]        
Compensation expenses 10 57 20 77
General and administrative expenses [Member] | Restricted stock units [Member]        
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]        
Compensation expenses 446 441 1,020 1,143
General and administrative expenses [Member] | Restricted stock units [Member] | Consultants [Member]        
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]        
Compensation expenses $ 45 $ 34 $ 48 $ 38
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