Scinai Immunotherapeutics Ltd. American Depositary Shares 2026 Q2 Earnings Call

Yeah. The day before yesterday. Time flies. I think the most important way to look at the first half of 2026 is that Scinai today is materially different company than the one that entered the year. At the beginning of 2026, we had our innovative immunology R&D pipeline and an emerging CDMO business in Jerusalem. During the first half, we significantly expanded the commercial side of the company through the acquisition of former Recipharm operations in Yavne, Israel. That transaction added much more than equipment and infrastructure. It added an experienced operating team, established quality systems, technical knowhow, customer relationships, and additional manufacturing capabilities. So today, Scinai has two complementary value-creating platforms, our immunology R&D activities, and the broader two-site CDMO business operating in Jerusalem and Yavne, Israel. The first half was therefore largely about transforming the operating platform.

The second half is increasingly about demonstrating what we can do with it, converting customer activity into revenue, increasing utilization of the infrastructure we now have, and advancing our R&D programs into capital discipline way.

Thank you, Andrew. There are few numbers I think investors should focus on, but it is important to distinguish between the accounting effects of the Recipharm transaction and the underlying operating performance. Revenue for the first half was approximately $949,000, compared approximately $773,000 in the first half of 2025. At the same time, the expanded CDMO footprint brought a larger fixed, semi-fixed cost base into the company before utilization had fully ramped. As a result, we reported a gross loss of approximately $2.37 million and an operating loss of approximately $4.6 million. The most significant accounting item was the approximately $6.4 million bargain purchase gain associated with the Recipharm transaction. That is a non-cash, non-operating accounting gain based on the preliminary purchase price allocation, what is called PPA. Primarily because of that gain, we reported net income of approximately $1.50 million for the first half, $1.57 million, sorry.

I would not want investor to interpret the reported net income as an operating profitability. The underlying business still generated an operating loss during the period. From liquidity perspective, however, as of June 30, 2026, we had approximately $2.85 million of cash and restricted cash. The financial picture therefore reflects a company that has expanded its operating capabilities materially, while the revenues and utilization of that infrastructure are still in the process of scaling, and I believe you will see that in the coming quarter in the next half.

Thank you. That is an excellent question. The transaction significantly broadened what Scinai can offer to customers. In Jerusalem, our capabilities are focused primarily on biologic development, analytical services, aseptic processing, and clinical cGMP manufacturing. Yavne site adds complementary capabilities in early chemistry development and small-scale cGMP manufacturing of active pharmaceutical ingredients, API, for clinical programs. But I think it is important to emphasize that we did not simply acquire equipment. We acquired an experienced pharmaceutical team, established quality systems, operating procedures, customer relations, and knowhow that would take considerable time and capital to build independently. At this point, management's focus is increasingly on execution, utilization, and commercialization rather than simply integration. The relationship with Recipharm is also strategically important.

The commercial collaboration is intended to facilitate cooperation and potential customer referrals between our early and clinical stage capabilities and Recipharm's broader manufacturing network as programs mature. Just to clarify, Recipharm AB was the international CDMO company that sold us Recipharm Israel facility and business. The objective is to make the combined platform productive, bring in more customer work, execute well, increase utilization, and build longer-term customer relationships.

All right. Committed customer orders is a management KPI. As of August 16, we had approximately $3.1 million of what we define as committed customer orders. These are signed customer purchase orders for specified CDMO services under existing contractual agreements. Usually, they are non-cancelable, and usually, clients pay an upfront payment against it. Approximately $1.6 million of that relates to the Yavne, and approximately $1.5 million to Jerusalem. I want to be precise about what that number means. It is a measure of customer-authorized commercial activity. It should not be interpreted as $3.1 million of future revenue or as a traditional backlog figure, because portions may have already been invoiced or recognized as revenues. And the timing of the remaining revenue recognition depends on execution on our side of the underlying projects and satisfaction of the applicable accounting criteria.

However, as of August 10th, I can tell you that approximately $2.1 million had been already invoiced to customers.