XTL Biopharmaceuticals Announces Financial Results for the Six Months Ended June 30, 2007

Name	Symbol	Market	Type
XTL Biopharmaceuticals Ltd	NASDAQ:XTLB	NASDAQ	Depository Receipt

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	-0.1033	-3.49%	2.86	2.52	3.52	3.05	2.52	2.91	20,295	23:55:33

XTL Biopharmaceuticals (NASDAQ:XTLB)
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VALLEY COTTAGE, New York, August 15 /PRNewswire-FirstCall/ -- XTL Biopharmaceuticals Ltd. (NASDAQ:XTLB)(LSE:XTL)(TASE:XTL), a biopharmaceutical company engaged in the acquisition, development and commercialization of therapeutics for the treatment of unmet medical needs, particularly neuropathic pain and hepatitis C, today announced its financial results for the six months ended June 30, 2007. At June 30, 2007, the Company had cash, cash equivalents and short-term bank deposits of $12.6 million, compared to $25.2 million at December 31, 2006. The decrease of $12.6 million during the first six months of 2007 was attributable primarily to the Company's $7.5 million upfront payment made in connection with the in-licensing of Bicifadine in January 2007, operating expenditures associated with the planned Phase IIb clinical trial of Bicifadine, the development of the DOS hepatitis C pre-clinical program, and operating expenditures associated with the Company's legacy hepatitis C clinical programs that were terminated this year. The loss for the six months ended June 30, 2007 was $14.6 million, or $0.07 per ordinary share, compared to a loss of $7.3 million, or $0.04 per ordinary share, for the six months ended June 30, 2006, representing an increase in net loss of $7.3 million. The increased loss was primarily attributable to the $7.5 million upfront payment in connection with the in-licensing of Bicifadine and additional costs associated with the Bicifadine program, offset by lower costs associated with the Company's legacy hepatitis C clinical programs. The increase in loss was also due to a $0.6 million charge that was recorded relating to stock appreciation rights granted as part of the Bicifadine transaction. For the six months ended June 30, 2007 and 2006, the Company's loss of $14.6 million and $7.3 million, respectively, included $1.0 million and $1.2 million, respectively, of non-cash stock option compensation expense. Ron Bentsur, Chief Executive Officer of XTL, commented, "From a financial standpoint our spend over the first 6 months, excluding the extraordinary payment associated with the in-licensing of Bicifadine, was slightly below plan. We have been planning our Phase IIb study for Bicifadine in diabetic neuropathic pain and are looking forward to starting that study shortly. As a member of the SNRI class, a proven class in neuropathic pain, and as a drug candidate that has demonstrated anti-pain activity in multiple clinical trials, we believe that Bicifadine represents a very compelling later-stage opportunity." Mr. Bentsur added, "We are very excited about the pending commencement of the Phase IIb clinical study for Bicifadine as we strive to increase investor awareness to this undervalued opportunity." About XTL Biopharmaceuticals Ltd. XTL Biopharmaceuticals Ltd. ("XTL") is engaged in the acquisition, development and commercialization of therapeutics for the treatment of neuropathic pain and hepatitis C. XTL is developing Bicifadine, a serotonin and norepinephrine reuptake inhibitor, for the treatment of neuropathic pain. XTL is also developing several novel pre-clinical hepatitis C small molecule inhibitors. XTL also has an active in-licensing and acquisition program designed to identify and acquire additional drug candidates. XTL is publicly traded on the NASDAQ, London, and Tel-Aviv Stock Exchanges (NASDAQ:XTLB) ( LSE: XTL) (TASE:XTL). Cautionary Statement Some of the statements included in this press release, particularly those anticipating future financial performance, clinical and business prospects for our clinical compound for neuropathic pain, Bicifadine, and for our pre-clinical compounds for hepatitis C from our XTL-DOS program, growth and operating strategies and similar matters, may be forward-looking statements that involve a number of risks and uncertainties. For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Among the factors that could cause our actual results to differ materially are the following: our ability to start a clinical trial with Bicifadine in 2007 and our ability to successfully complete cost-effective pre-clinical trials for our DOS program, both of which will directly impact our ability to continue to fund our operations; our ability to meet anticipated development timelines for all of our drug candidates due to recruitment, clinical trial results, manufacturing capabilities or other factors; and other risk factors identified from time to time in our reports filed with the Securities and Exchange Commission and the London Stock Exchange, including our annual report on Form 20-F filed with the Securities and Exchange Commission on March 23, 2007. Any forward-looking statements set forth in this press release speak only as of the date of this press release. We do not intend to update any of these forward-looking statements to reflect events or circumstances that occur after the date hereof. This press release and prior releases are available at http://www.xtlbio.com/. The information in our website is not incorporated by reference into this press release and is included as an inactive textual reference only. XTL BIOPHARMACEUTICALS LTD. (A Development Stage Company) Consolidated Balance Sheets as of June 30, 2007 and 2006 (unaudited), and December 31, 2006 (audited) (in thousands of US dollars, except share amounts) June 30, December 31, 2007 2006 2006 ---------- ---------- ---------- A s s e t s CURRENT ASSETS: Cash and cash equivalents 2,451 32,172 4,400 Short-term bank deposits 10,185 -- 20,845 Trading securities -- -- 102 Property and equipment (held for sale) -- net 35 43 18 Deferred tax asset -- -- 29 Other receivables and prepaid expenses 651 644 702 --------- --------- --------- Total current assets 13,322 32,859 26,096 --------- --------- --------- EMPLOYEE SEVERANCE PAY FUNDS 42 173 98 RESTRICTED LONG-TERM DEPOSITS 53 119 172 PROPERTY AND EQUIPMENT -- net 128 620 490 INTANGIBLE ASSETS -- net 18 32 25 DEFERRED TAX ASSET -- -- 19 --------- --------- --------- T o t a l assets 13,563 33,803 26,900 ========= ========= ========= Liabilities and shareholders' equity CURRENT LIABILITIES: Accounts payable and accrued expenses 3,130 2,705 3,003 Deferred gain 399 399 399 Other current liabilities 565 -- -- --------- --------- --------- Total current liabilities 4,094 3,104 3,402 --------- --------- --------- LIABILITY IN RESPECT OF EMPLOYEE SEVERANCE OBLIGATIONS 188 444 340 DEFERRED GAIN 198 598 398 COMMITMENTS AND CONTINGENCIES --------- --------- --------- Total liabilities 4,480 4,146 4,140 --------- --------- --------- SHAREHOLDERS' EQUITY: Ordinary shares of NIS 0.02 par value (authorized 300,000,000 as of June 30, 2007, June 30, 2006 and December 31, 2006, issued and Outstanding 220,154,349, 220,069,801 and 220,124,349 as of June 30, 2007, June 30, 2006 and December 31, 2006, respectively) 1,072 1,072 1,072 Additional paid in capital 137,583 135,667 136,611 Deficit accumulated during the development stage (129,572) (107,082) (114,923) --------- --------- --------- Total shareholders' equity 9,083 29,657 22,760 --------- --------- --------- Total liabilities and shareholders' equity 13,563 33,803 26,900 ========= ========= ========= Interim Consolidated Statements of Operations for the Six Months Ended June 30, 2007 and 2006 (unaudited) (in thousands of US dollars, except share and per share amounts) Period from Six months ended March 9, 1993(*) June 30, to June 30, 2007 2006 2007 ----------- ----------- ----------- REVENUES: Reimbursed out-of-pocket expenses -- -- 6,012 License 227 227 1,320 ---------- ---------- --------- 227 227 7,332 COST OF REVENUES: Reimbursed out-of-pocket expenses -- -- 6,012 License (with respect to royalties) 27 27 167 ----------- ----------- --------- 27 27 6,179 GROSS MARGIN 200 200 1,153 ----------- ----------- --------- RESEARCH AND DEVELOPMENT COSTS (includes non-cash stock option compensation of $66 and $107, for the six months ended June 30, 2007 and 2006, respectively) 12,118 5,008 105,237 L E S S - PARTICIPATIONS 56 -- 11,006 ----------- ----------- --------- 12,062 5,008 94,231 IN-PROCESS RESEARCH AND DEVELOPMENT COSTS -- -- 1,783 GENERAL AND ADMINISTRATIVE EXPENSES (includes non-cash stock option compensation of $892 and $1,105, for the six months ended June 30, 2007 and 2006, respectively) 2,523 2,532 37,111 BUSINESS DEVELOPMENT COSTS (includes non-cash stock option compensation of $11 and $1, for the six months ended June 30, 2007 and 2006, respectively, and also includes stock appreciation rights compensation of $565 for the six months ended June 30, 2007) 828 168 5,982 ----------- ----------- --------- OPERATING LOSS 15,213 7,508 137,954 FINANCIAL AND OTHER INCOME, net 351 323 8,635 ----------- ----------- --------- LOSS BEFORE INCOME TAXES 14,862 7,185 129,319 INCOME TAXES (213) 106 253 ----------- ----------- --------- LOSS FOR THE PERIOD 14,649 7,291 129,572 ----------- ----------- --------- BASIC AND DILUTED LOSS PER $ 0.07 $ 0.04 ORDINARY SHARE WEIGHTED AVERAGE NUMBER OF SHARES USED IN COMPUTING BASIC AND DILUTED LOSS PER ORDINARY SHARE 220,145,233 183,085,938 ----------- ----------- (*) Incorporation date see note 1. Interim Consolidated Statements of Changes in Shareholders' Equity for the Six Months Ended June 30, 2007 (unaudited) (in thousands of US dollars, except share amounts) Ordinary shares -------------------- Additional Number of paid in shares Amount capital ----------- ------- ------- BALANCE AT DECEMBER 31, 2006 220,124,349 1,072 136,611 CHANGES DURING THE SIX MONTHS ENDED JUNE 30, 2007: Comprehensive loss - loss for the period -- -- -- Non-employee stock option compensation expenses -- -- 5 Employee stock option compensation expenses -- -- 964 Exercise of stock options 30,000 (**) 3 ----------- ------- -------- BALANCE AT JUNE 30, 2007 220,154,349 1,072 137,583 =========== ======= ======== Deficit accumulated during the development stage Total --------- --------- BALANCE AT DECEMBER 31, 2006 (114,923) 22,760 CHANGES DURING THE SIX MONTHS ENDED JUNE 30, 2007: Comprehensive loss - loss for the period (14,649) (14,649) Non-employee stock option compensation expenses -- 5 Employee stock option compensation expenses -- 964 Exercise of stock options -- 3 --------- --------- BALANCE AT JUNE 30, 2007 (129,572) 9,083 ========= ========= (**) Represents an amount less than $1,000. Interim Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2007 and 2006 (unaudited) (in thousands of US dollars) Period from Six months March 9, 1993(*) ended June 30, to June 30, 2007 2006 2007 ---------- ---------- ---------- CASH FLOWS FROM OPERATING ACTIVITIES: Loss for the period (14,649) (7,291) (129,572) Adjustments to reconcile loss to net cash used in operating activities: Depreciation and amortization 69 114 3,141 Linkage difference on restricted long-term (2) (4) (9) deposits Acquisition of in process research and development -- -- 1,783 Gain on disposal of property and equipment (53) (25) (92) Increase (decrease) in liability in respect of employee severance obligations (49) 35 1,187 Impairment charges 95 -- 475 Gain from sales of investment securities -- -- (410) Other income related to exchange of shares -- -- (100) Loss from trading securities 48 -- 46 Stock option based compensation expenses 969 1,213 6,427 Stock appreciation rights compensation expenses 565 -- 565 Gain on amounts funded in respect of employee severance pay funds -- -- (92) Deferred tax asset 48 -- -- Changes in operating assets and liabilities: Decrease (increase) in other receivables and prepaid expenses 5 38 (604) Increase in accounts payable and accrued expenses 132 449 3,049 Increase (decrease) in deferred gain (200) (200) 597 --------- --------- -------- Net cash used in operating activities (13,022) (5,671) (113,609) --------- --------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Decrease (increase) in short-term deposits 10,660 -- (10,185) Decrease (increase) in restricted deposits 121 (5) (44) Investment in investment securities -- -- (3,363) Proceeds from sales of investment securities -- -- 3,773 Proceeds from sales of trading securities 54 -- 54 Employee severance pay funds (6) (12) (915) Purchase of property and equipment (47) (16) (4,089) Proceeds from disposals of property and equipment 288 33 540 Acquisition in respect of license and purchase of assets -- -- (548) --------- --------- -------- Net cash provided by (used in) investing activities 11,070 -- (14,777) --------- --------- -------- Interim Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2007 and 2006 (unaudited)(continued) (in thousands of US dollars) Period from Six months March 9, 1993(*) ended June 30, to June 30, 2007 2006 2007 ---------- ---------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of share capital - net of share issuance expenses -- 24,391 128,734 Exercise of share warrants and stock options 3 92 2,103 Proceeds from long-term debt -- -- 399 Proceeds from short-term debt -- -- 50 Repayment of long-term debt -- -- (399) Repayment of short-term debt -- -- (50) --------- --------- --------- Net cash provided by financing activities 3 24,483 130,837 --------- --------- --------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (1,949) 18,812 2,451 BALANCE OF CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 4,400 13,360 -- --------- --------- --------- BALANCE OF CASH AND CASH EQUIVALENTS AT END OF PERIOD 2,451 32,172 2,451 ======== ========= ========= Supplementary information on investing and financing activities not involving cash flows - Issuance of ordinary shares in respect of license, and purchase of assets -- -- 1,391 Conversion of convertible subordinated Debenture into shares -- -- 1,700 Supplemental disclosures of cash flow information: Income taxes paid 166 63 623 ======== ========= ========= Interest paid -- -- 350 ======== ========= ========= (*) Incorporation date see note 1. XTL Biopharmaceuticals Ltd. (A Development Stage Company) Notes to Interim Consolidated Financial Statements as of June 30, 2007 unaudited) 1. GENERAL XTL Biopharmaceuticals Ltd. (the "Company") was incorporated under the Israel Companies Ordinance on March 9, 1993. The Company is a development stage company in accordance with Statement of Financial Accounting Standards ("SFAS") No. 7 "Accounting and Reporting by Development Stage Enterprises." Through June 30, 2007, the Company has incurred losses in an aggregate amount of US $129.6 million. Such losses have resulted from the Company's activities as a development stage company. It is expected that the Company will be able to finance its operations from its current reserves through 2007. Continuation of the Company's current operations after utilizing its current cash reserves is dependent upon the generation of additional financial resources either through agreements for the commercialization of its product portfolio or through external financing. These matters raise substantial doubt about the Company's ability to continue as a going concern. The Company has not generated any revenues from its planned principal operations and is dependent upon significant financing to provide the working capital necessary to execute its business plan. If the Company determines that it is necessary to seek additional funding, there can be no assurance that the Company will be able to obtain any such funding on terms that are acceptable to it, if at all. 2. STOCK-BASED COMPENSATION The Company accounts for equity instruments issued to employees and directors in accordance with Statement of Financial Accounting Standards ("SFAS") No. 123R "Share - Based Payment" ("SFAS 123R"). SFAS 123R addresses the accounting for share-based payment transactions in which a company obtains employee services in exchange for (a) equity instruments of a company or (b) liabilities that are based on the fair value of a company's equity instruments or that may be settled by the issuance of such equity instruments. SFAS 123R requires instead that such transactions be accounted for using the grant-date fair value based method. The Company accounts for equity instruments issued to third party service providers (non-employees) in accordance with the fair value method prescribed by SFAS 123R, and the provisions of Emerging Issues Task Force Issue ("EITF") No. 96-18, "Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling Goods or Services" ("EITF 96-18"). The Company accounts for the transaction advisory fee in the form of stock appreciation rights in accordance with the provisions of EITF 96-18 and by the provisions of EITF No. 00-19, "Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company's Own Stock" ("EITF 00-19"). 3. RESEARCH AND DEVELOPMENT COSTS Research and development costs are expensed as they are incurred and consist primarily of salaries and related personnel costs, fees paid to consultants and other third-parties for clinical and laboratory development, license and milestone fees, and facilities-related and other expenses relating to the design, development, testing, and enhancement of product candidates. In connection with the purchase of assets, amounts assigned to intangible assets to be used in a particular research and development project that have not reached technological feasibility and have no alternative future use are charged to in-process research and development costs at the purchase date. Contact: Ron Bentsur, Chief Executive Officer Tel: +1-845-267-0707 ext. 225 +972-8-930-4444 DATASOURCE: XTL Biopharmaceuticals Ltd CONTACT: Contact: Ron Bentsur, Chief Executive Officer, Tel: +1-845-267-0707 ext. 225, +972-8-930-4444

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