ITEM 3.

Key Information

 

 

We have derived the following selected financial data, with respect to the five years from 2011 through 2015, from the audited financial statements of Tikcro, which have been prepared in accordance with U.S generally accepted accounting principles.

 

The selected financial data set forth below as of December 31, 2014 and 2015 and for each of the years ended December 31, 2013, 2014 and 2015 are derived from our audited financial statements which are incorporated by reference into this Annual Report.

 

The selected financial data as of December 31, 2011, 2012 and 2013 and for the years ended December 31, 2011 and 2012 are derived from our audited financial statements which are not included in this Annual Report.

 

You should read the selected financial data together with Item 5 “Operating and Financial Review and Prospects” and our financial statements included elsewhere or incorporated by reference in this Annual Report.

 

 

 

* See Item 4 “Information on the Company” for more information on our investment in BioCancell.

 

 

Not applicable.

 

 

Not applicable.

 

D. Risk Factors

 

The following information sets forth risk factors that could cause our actual results to differ materially from those contained in forward-looking statements we have made in this Annual Report and those we may make from time to time. You should carefully consider the risks described below, in addition to the other information contained in this Annual Report, before making an investment decision. Our business, financial condition or results of operations could be harmed by any of these risks. The risks and uncertainties described below are not the only ones we face. Additional risks not presently known to us or other factors not perceived by us to present significant risks to our business at this time also may impair our business operations. We believe that the occurrence of any one or some combination of the following factors could have a material adverse effect on our business, financial condition and results of operations.

 

Risks relating to our business and industry

 

We currently conduct limited business activities pursuing early stage technology projects, mainly in the biotechnology field, which may not be successful.

 

We are dependent on the success of pre-clinical drug candidates, and we do not have any assurance that our drug candidates will successfully conclude pre-clinical and clinical trials through regulatory approval or be successfully commercialized.

 

Our operations have been limited to developing proprietary technology and obtaining pre-clinical data for product candidates in the biotechnology field. These operations provide a limited basis to assess our ability to continue to develop our technology, identify product candidates, develop and commercialize any product candidates and enter into collaborative arrangements with other companies on attractive commercial terms, as well to assess the advisability of investing in our securities. Each of these requirements will require substantial time, effort and financial resources.

 

Risks relating to our antibody program

Our antibody program addressing cancer immune modulators is in discovery and pre-clinical development, and there is no assurance that it will be successful.

Our antibody program is in pre-clinical discovery and in-vitro trial development. We evaluate lead antibody candidates for the targeting of cancer immune modulators. Pre-clinical development is highly speculative and carries a high risk of failure. There is no assurance that we will be successful in this aim. Even if our pre-clinical studies produce positive results, they may not necessarily be predictive of further in-vivo animal studies and of the results of future clinical trials in humans. We can provide no assurances that pre-clinical toxicology and/or pre-clinical activity of our product candidates will support moving any of these product candidates into clinical development. Many companies in the pharmaceutical and biotechnology industries have suffered significant setbacks in advanced in-vivo animal trials and/or in clinical trials after achieving positive results in pre-clinical development, and we cannot be certain that we will not face similar setbacks. These setbacks have been caused by, among other things, pre-clinical findings that prolonged the screening and selection process, pre-clinical findings made while clinical trials were underway or safety or efficacy observations made in clinical trials, including adverse events. Moreover, pre-clinical and clinical data are often susceptible to varying interpretations and analyses, and many companies that believed their product candidates performed satisfactorily in pre-clinical studies and clinical trials nonetheless failed to obtain regulatory approval. Specifically, in-vivo animal trial models used to verify immunological agents pose high complexity since human immune systems vary considerably from small animal immune systems. Therefore, results from trials with small animals and non-human primates may be a weak predictor for clinical results with humans. If we fail to produce positive results in in-vitro, in-vivo animal trials and in clinical trials of lead-candidate antibodies, our business and financial prospects would be materially adversely affected.

Our approach to the discovery and development of our product candidates is unproven, and we do not know whether we will be able to develop any products of commercial value.

 

Our products candidates are emerging technologies and, consequently, there are significant risks that such technologies may ultimately fail to identify commercially viable drugs to treat human patients with cancer or other diseases.

New data from our research and development activities could modify our strategy and result in the need to adjust our projections of timelines and costs.

Because we are focused on novel technologies to develop antibody candidates for cancer immune modulators, our research and development activities involve the ongoing discovery and generation of new data, based on which we determine next steps for a relevant program. We monitor the likelihood of success of our initiatives and we may need to discontinue funding of such activities if they do not prove to be commercially feasible. Moreover, these product candidates may not be effective in treating any disease or may prove to have undesirable or unintended side effects, toxicities or other characteristics that may prevent or limit commercial use.

We rely, and expect to continue to rely, on third parties to conduct parts of our preclinical studies and those third parties may not perform satisfactorily, including failing to meet deadlines for the completion of such trials or complying with applicable regulatory requirements.

We rely on third-party contract research academic centers and organizations to conduct a significant part of our pre-clinical studies, and we expect that our clinical trials for future product candidates will be conducted in a similar manner. Our reliance on these third parties for research and development activities reduces our control over these activities but will not relieve us of our responsibilities to comply with certain regulatory protocols. Our failure to comply with these regulations may require us to repeat clinical trials, which would delay the regulatory approval process, increase our expenses and increase the risk of earlier market launch of competing drugs. Switching or adding additional contract research organizations involves additional cost and requires management time and focus. As a result, delays could occur, which could compromise our ability to meet our desired development timelines.

Clinical drug development is expensive, time consuming and uncertain, and we may ultimately not be able to obtain regulatory approvals for the commercialization of antibody products .

The research, testing, manufacturing, labeling, approval, selling, marketing and distribution of drug products are subject to extensive regulation by the U.S. Food and Drug Administration, or FDA, European Union, and EU Member State legislators and agencies, such as the European Medicines Agency, or EMA, and other non-U.S. regulatory authorities, which enforce regulations that differ from country to country. We will not be permitted to market product candidates in the United States until we receive approval of a biologics license application, or BLA, from the FDA or in any other country until we receive marketing approval from applicable regulatory authorities outside the United States. Our in-development product candidates are in very early stages of development and are subject to the risks of failure inherent in drug development. We have not submitted an application, or received marketing approval, for any product candidates. Obtaining approval of a BLA or other marketing application can be a lengthy, expensive and uncertain process, and delay or failure can occur at any stage of the process .

Our in-development antibody product candidates will face a variety of risks and uncertainties, including the following:

•            future clinical trial results may show that our antibody product is not effective, our clinical trial designs are flawed or clinical trial subjects do not comply with trial protocols;

•             our product candidates may not be well tolerated or may cause negative side effects;

•             our ability to complete the development and commercialization of products may be significantly dependent upon our ability to obtain and maintain experienced and committed collaborators to assist us with obtaining clinical and regulatory approvals for, and the manufacturing, marketing and distribution of, our products;

•             even if a product is shown to be safe and effective for its intended purposes, we may face significant or unforeseen difficulties in obtaining or manufacturing sufficient quantities or at reasonable prices;

•            even if a product is successfully developed, commercially produced and receives all necessary regulatory approvals, there is no guarantee that there will be market acceptance; and

•            our competitors have developed competing antibodies and invest significant efforts to develop therapeutics or other treatments that may be superior to or less costly than our own with the result that our products, even if they are successfully developed, manufactured and approved, may not generate significant revenues .

If we are unsuccessful in dealing with any of these risks, or if we are unable to successfully commercialize antibody products for some other reason, it would likely have a material adverse effect on our business, prospects, financial condition and results of operations.

The commencement and completion of clinical trials can be delayed or prevented for a number of reasons.

 

Drug development is a long, expensive and uncertain process, and delay or failure can occur at any stage of any of our clinical trials. The commencement and completion of clinical trials can be delayed or prevented for a number of reasons, including due to the need to have healthcare regulatory approvals, having agreements with  contract research organizations, contract manufacturing organizations, and trial sites, having regulatory requests for alterations to any of our study designs, pre-clinical strategy or manufacturing plans, challenges for recruiting and enrolling subjects to participate in clinical trials, changes in regulatory requirements, policy and guidelines.

If we do not succeed in conducting and managing our preclinical development activities or clinical trials, or in obtaining regulatory approvals, we might not be able to commercialize product candidates, or might be significantly delayed in doing so, which could have a material adverse effect on our business, prospects, financial condition and results of operations.

Our competitors in the biotechnology and pharmaceutical industries have already FDA approved drugs targeting certain cancer immune modulators, pursue numerous clinical trials with combination therapies, and have superior development and manufacturing capabilities, selling and marketing expertise and financial resources.

A number of antibodies that address cancer immune modulators have obtained FDA approvals and are offered on the market, including the following: (1) Bristol-Myers Squibb’s  ipilimumab, an anti-cytotoxic T-lymphocyte-associated protein 4 (CTLA-4) antibody, was FDA approved in 2011 for the treatment of melanoma, a type of skin cancer, (2) Merck’s pembrolizumab, an anti programmed cell death protein 1 (PD-1) antibody, was FDA approved in 2014 in an accelerated approval process for the treatment of melanoma for use following treatment with ipilimumab, and (3) Bristol-Myers Squibb’s nivolumab, an anti PD-1 antibody, was FDA approved in 2014 for the treatment of unresectable or metastatic melanoma patients who no longer respond to other drugs. In early 2015, the FDA approval for nivolumab was expanded to treat also patients with metastatic squamous non-small cell lung cancer (NSCLC), a common type of lung cancer, with progression on or after platinum-based chemotherapy, and to be used also as an initial treatment for patients with unresectable or metastatic melanoma, and for additional types of cancer indications.

Additional antibodies that target cancer immune modulators which are in advanced clinical development include, without limitation, the following: (1) AstraZeneca Medimmune's anti-CTLA-4, an anti-PD-1 and an anti   programmed cell death 1 ligand 1 (PD-L1) antibodies, (2) Pfizer's and   Merck KGaA's joint pursuit of an anti-PD-L1 antibody, and (3) Roche Genentech's promotion of an anti-PD-L1 antibody.

 
 

Recently, numerous earlier clinical trials for cancer treatment using new antibodies that target the modulation of additional immune targets have commenced. While there is limited clinical experience in its clinical efficacy, the clinical success of PD1 and CTLA-4 antibodies drive this effort and it is expected to increase. In addition, there are approved as well as advanced clinical trials for other agents like T-cell modulators and cancer vaccines that trigger an immune response against cancer cells.  In certain cancer indications, these agents resulted with superior clinical efficacy over antibody treatment and other agents targeting immune modulations.

In addition, there are numerous pre-clinical programs pursued by biotechnology and pharmaceutical   companies and academic centers for the development of antibodies that target the same or other cancer immune modulators as our antibody program.

There is no assurance that our antibody products in development will be able to compete with the above antibodies and other therapeutic agents, alone or in combination with other agents that trigger an immune response, specifically with the products that are expected to have an established market presence and clinical track record for several years prior to our having an FDA approved product addressing immune cancer modulators, even if any of our in-development products ultimately obtains FDA approval.

Accelerated FDA approval protocols used to allow clinical use for cancer immune modulator agents are expected to increase competition in this area.

Since the clinical effects of antibodies directed at cancer immune modulators in certain cancer indications proved to be superior compared to current treatments, the FDA has used accelerated approval protocols for such products. For example, the FDA approvals of both Merck’s and Bristol-Myers Squibb’s PD1 cancer immune antibodies in 2014 and 2015 were granted pursuant to an accelerated and priority review program, which provides for an expedited review of drug candidates that treat serious conditions and, once approved , would significantly improve safety or effectiveness in the treatment of a serious condition. Such approval protocols are expected to increase competition for our antibody development program, with accelerated launches of new agents for the treatment of cancer through the modulation of immune modulations and other comparable technologies.

Manufacturing products resulting from our antibody program may cause delays, increased costs, or loss of revenues.

If we are successful in identifying lead antibody candidates, our antibody program will require substantial development and investment in manufacturing. Since the project is still in preclinical stage, we have not initiated the development process required to manufacture antibody candidates. We intend to utilize consultants and advisors to assist advancing these operations. We intend to rely on contract manufacturing organizations, or CMOs, and contract research organizations, or CROs, to support our antibody programs which would cause us to incur additional costs and risks.

If we fail to comply with our obligations under our intellectual property licenses with third parties, we could lose license rights that are important to our business.

We are currently party to an intellectual property license agreement with Yeda and pursue additional licenses.   Such engagements impose various diligence, milestone payment, royalty, insurance and other obligations. If we fail to comply with our obligations under such licenses, the licensors may have the right to terminate their respective license agreements, in which event we might not be able to pursue the development and eventually to market any product that is covered by the agreement. Termination of a license agreement or reduction or elimination of our licensed rights may result in our having to negotiate a new or reinstated license with less favorable terms, which could harm our business.

Healthcare legislative changes may harm our business and future prospects.

 

Healthcare costs have risen significantly over the past decade. Globally, governments are becoming increasingly aggressive in imposing health care cost-containment measures. Certain proposals, if passed, would impose limitations on prices of pharmaceutical agents. Such limitations will affect prices and the amounts of reimbursement available for these products from governmental agencies or third-party payors. These limitations could in turn reduce the attractiveness to invest in our antibody project and harm our ability to raise funds.

 

Other business risks

 

We fund early stage technology projects, which involves a high risk.

 

We provide funding for early-stage biotechnology projects. Since we invest at an early stage, the risk of loss is high since most early stage projects do not ultimately succeed.  Some of the projects in which we have invested immaterial amounts of funds have already failed.  In 2015, we invested $247,000 in research and development, mainly in our antibody project with Yeda, and the expenses required to advance this project are expected to increase significantly.  There is no assurance that this project will ultimately succeed or that we will be able to recoup our investment in this project or any other project.

 

Our shareholders may be subject to dilution of the value of our shares if we issue newly issued securities, enter into a strategic transaction regarding any of the technology projects or conduct a business combination.

 

In order to pursue the funding of early stage technology projects, we will need a significant amount of cash. Issuance of newly issued securities, entering into a strategic transaction involving any of our technology projects, and a business combination are among the business alternatives considered by us, are likely to involve the issuance of a significant number of additional shares or transferring certain rights in technology projects to a strategic party. Depending upon the amount of funds we raise in any such equity financing or strategic partnership, the value of the assets acquired in such transaction or the funds raised from a strategic partner in return for rights in any of our technology projects, may result in a significant decrease of the per-share value of our ordinary shares.

 

The growth of our business depends on our obtaining additional financing, which may be unavailable to us or available at unfavorable terms.

 

In order to pursue the investment in technology projects, including in our antibody project, we will need to raise significant additional funds through public or private equity or debt financings. We may be unable to obtain additional financing on acceptable terms or at all, which would harm our financial condition and results of operations.

 

Conditions and changes in the national and global economic and political environments may adversely affect our business and financial results.

 

Current global financial conditions have been characterized by increased volatility. Oil and other commodity prices have plunged, and lower growth rate are forecasted for China and other Asian countries, affecting global stability. With significantly lower oil prices, major oil-exporting economies and energy-related global corporations are trimming down their investments and workforce, negatively affecting global demand. In addition, several financial institutions have either gone into bankruptcy or have had to be rescued by governmental authorities. Major financial institutions are currently under scrutiny to lower loan to capital ratio, and they are going through a de-levering of their balance sheets. Accordingly, credit was constricted in recent years, and may likely remain so and even worsen. . In addition, recent concerns regarding the possibility of sovereign debt defaults by commodity-exporting economies, as well as weak European Union member countries, have disrupted financial markets throughout the world, and may lead to weaker global consumer demand. If economic growth further declines, this may have a negative impact on our financial condition and share price, which may impact our ability to obtain financing and other sources of funding in the future on terms favorable to us, if at all. If such increased levels of volatility and market turmoil continue, it may materially adversely affect our results of operations.

 

We may be deemed an “investment company” under the Investment Company Act of 1940.

 

We may be deemed an “investment company” under the Investment Company Act of 1940, unless we qualify for an exemption. If we acquire stakes in operating companies, we may be deemed an investment company if we do not have sufficient control over such companies or qualify for another exemption under the Investment Company Act of 1940. If we are deemed an investment company, we could be found to be in violation of the Investment Company Act of 1940. A violation of that law could make it more difficult for us to register securities and raise funding and subject us to other material adverse consequences.

 

We might lose money from the investment of our cash.

 

We invest the majority of our cash on hand in bank deposits and financial instruments. If the obligor of any of the instruments we hold defaults or undergoes a reorganization in bankruptcy, we may lose all or a portion of our investment. This would harm our financial condition.  For information on the types of our investments as of December 31, 2015, see Item 11 “Quantitative and Qualitative Disclosures about Market Risk - Interest Rate Risk Management”.

 

We are subject to costs and risks associated with complying with extensive corporate governance and disclosure requirements.

 

As a foreign private issuer in Israel subject to U.S. federal securities laws, we are required to comply with laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002, various SEC regulations and the Israeli Companies Law. Section 404 of the Sarbanes-Oxley Act requires management’s annual review and evaluation of our internal control over financial reporting and attestation of the effectiveness of these controls by our management. There is no guarantee that these efforts will result in management assurance that our internal control over financial reporting is adequate in future periods. The additional management attention and costs relating to compliance with the Sarbanes-Oxley Act and other corporate governance requirements could materially and adversely affect our financial results.

 

Risks relating to our presence in Israel

 

Our incorporation in Israel may limit our ability to find a target for a business combination or other transactions outside Israel.

 

We are incorporated and headquartered in Israel. Since the establishment of the State of Israel in 1948, a number of armed conflicts have occurred between Israel and its Arab neighbors, Hamas (an Islamist militia and political group in the Gaza Strip) and Hezbollah (an Islamist militia and political group in Lebanon). Recent political events and continuous unrest in various countries in the Middle East and Northern Africa, including Syria, have shaken and continue to impact the stability of those countries, enabling the development of extremist groups. In addition, Iran has threatened to attack Israel and is believed to be developing nuclear weapons.  Iran is also believed to have a strong influence among extremist groups in the region, such as Hamas in Gaza and Hezbollah in Lebanon. This situation may potentially escalate in the future to violent events which may affect Israel and us. We cannot predict the effect on us of the increase in the degree of terror attacks against Israel, political instability in the region or military action elsewhere in the Middle East.  Furthermore, several countries restrict doing business with Israel and Israeli companies, and additional companies may restrict doing business with Israel and Israeli companies as a result of an increase in hostilities or due to disagreement with Israel’s policies. This may also seriously harm our operating results, financial condition and the ability to expand our business.

 

It may be difficult to enforce a U.S. judgment against us, our officers and directors or to assert U.S. securities law claims in Israel.

 

Service of process upon our directors and officers named herein may be difficult to effect within the United States because some of these people reside outside the United States. Any judgment obtained in the United States against us or these individuals or entities may not be enforceable within the United States.

 

In addition, it may be difficult to assert U.S. securities law claims in original actions instituted in Israel.  Israeli courts may refuse to hear a claim based on a violation of U.S. securities laws because Israel is not the most appropriate forum to bring such a claim.  In addition, even if any Israeli court agrees to hear a claim, it may determine that Israeli law and not U.S. law is applicable to the claim.  If U.S. law is found to be applicable, the content of applicable U.S. law must be proved as a fact, which can be a time-consuming and costly process.  Certain matters of procedure will also be governed by Israeli law.  There is little binding case law in Israel addressing these matters.

 

Subject to specified time limitations and legal procedures, under the rules of private international law currently prevailing in Israel, Israeli courts may enforce a U.S. judgment in a civil matter, including judgments based upon the civil liability provisions of the U.S. securities laws and including a monetary or compensatory judgment in a non-civil matter, provided that the following key conditions are met:

 

·

subject to limited exceptions, the judgment is final and non-appealable;

 

·

the judgment was given by a court competent under the laws of the state of the court and is otherwise enforceable in such state;

 

·

the judgment was rendered by a court competent under the rules of private international law applicable in Israel;

 

·

the laws of the state in which the judgment was given provide for the enforcement of judgments of Israeli courts;

 

·

adequate service of process has been effected and the defendant has had a reasonable opportunity to present his arguments and evidence;

 

·

the judgment and its enforcement are not contrary to the law, public policy, security or sovereignty of the State of Israel;

 

·

the judgment was not obtained by fraud and does not conflict with any other valid judgment in the same matter between the same parties; and

 

·

an action between the same parties in the same matter was not pending in any Israeli court at the time the lawsuit was instituted in the U.S. court.

 

Provisions of Israeli law may delay, prevent or make more difficult a merger or other business combination, which may depress our share price.

 

Provisions of Israeli corporate law may have the effect of delaying, preventing or making more difficult a merger with, or acquisition of, us.  The Israeli Companies Law generally provides that a merger be approved by the board of directors and a majority of the shares present and voting on the proposed merger.  For purposes of the shareholder vote, unless a court rules otherwise, the merger will not be deemed approved if a majority of the shares not held by the other party to the merger (or by any person who holds 25% or more of the shares or the right to appoint 25% or more of the directors of the other party or its general manager) have voted against the merger.  Upon the request of any creditor of a party to the proposed merger, a court may delay or prevent the merger if it concludes that there is a reasonable concern that, as a result of the merger, the surviving company will be unable to satisfy the obligations of the surviving company.  Finally, a merger may not be completed unless at least (i) 50 days have passed since the filing of a merger proposal signed by both parties with the Israeli Registrar of Companies and (ii) 30 days have passed since the merger was approved by the shareholders of each merging company.

 

The Companies Law also provides that an acquisition of shares in a public company must be made by means of a tender offer if as a result of the acquisition the purchaser would become a 25% or greater shareholder of the company, unless there is already another 25% or greater shareholder of the company.  Similarly, an acquisition of shares must be made by means of a tender offer if as a result of the acquisition the purchaser would become a 45% or greater shareholder of the company, unless there is already a 45% or greater shareholder of the company. In any event, if as a result of an acquisition of shares the acquirer will hold more than 90% of a company’s shares, the acquisition must be made by means of a tender offer for all of the shares.

 

Finally, Israel tax law treats some acquisitions, such as stock-for-stock exchanges between an Israeli company and a foreign company, less favorably than U.S. tax laws. For example, Israeli tax law may, under certain circumstances, subject a shareholder who exchanges his ordinary shares for shares in another corporation, to taxation prior to the sale of the shares received in such stock-for-stock swap.

 

The described restrictions could prevent or make more difficult an acquisition of Tikcro, which could depress our share price.

 

 

Holders of our ordinary shares who are U.S. residents face certain potentially adverse U.S federal income tax consequences.

 

As a consequence of our ownership of relatively substantial cash and investment assets, it is likely that we would be classified for U.S. federal income tax purposes as having been a passive foreign investment company, or PFIC, for each year since 2003, although the determination of PFIC status is made separately for each year and our PFIC status could change. Classification as a PFIC could result in a reduction in the after-tax return to U.S. holders of our ordinary shares, which could, in turn, cause a reduction in the value of our ordinary shares.  Classification as a PFIC also triggers the application of certain United States income tax reporting requirements.

 

U.S. residents should carefully read Item 10.E “Taxation – United States Federal Income Tax Consequences” for a more complete discussion of the U.S. federal income tax risks related to owning and disposing of our ordinary shares and the consequences of PFIC status.

 

The trading market for our ordinary shares has low liquidity, which could make it difficult for our shareholders to sell their shares at desired prices and amounts.

 

Our ordinary shares are traded on the OTCQX. The market for shares quoted on the OTCQX is typically less liquid than that for shares listed on national stock exchanges, such as the Nasdaq Stock Market, where we do not meet the listing criteria. This could make it more difficult for our shareholders to sell their shares at desired prices and amounts.

 

The market price of our ordinary shares is subject to fluctuations.

 

The market value of our ordinary shares has fluctuated over time, not necessarily in connection with the performance of our business.  The following factors, among others, may significantly impact the market price of our ordinary shares:

 

•	our company's releases regarding developments in our business;

 

•	industry developments, including business developments of competitors and FDA policy and drug evaluation announcements;

 

•	low trading volume of our ordinary shares;

 

•	political, economic or other developments affecting Israel;

 

•	global economic and other external factors; and

 

•	quarter-to-quarter fluctuations in our financial results.

 

Our major shareholders may be able to control us.

 

Aviv Boim, our CEO, beneficially owns approximately 20.2% of our outstanding ordinary shares (including vested options), Steven N. Bronson beneficially owns approximately 15.2% of our outstanding ordinary shares, Eric Paneth, one of our directors, beneficially owns approximately 11.7% of our outstanding ordinary shares, and Izhak Tamir, our Chairman of the Board, beneficially owns approximately 10.7% of our outstanding ordinary shares.  In addition, Mr. Boim holds unvested options to purchase 1,512,332 ordinary shares exercisable at a price of $1.01 per share, which represent approximately 13.3% of our outstanding ordinary shares on a fully diluted basis. These options are subject to accelerated vesting upon the occurrence of certain events. Currently, none of these holders is a party to a shareholders agreement. However, if these shareholders (or a combination thereof) act together, they effectively may have the power to control the outcome of all matters submitted for the vote of our shareholders, including the election of directors and the approval of significant change in control transactions. The combined equity interest of these holders may have the effect of making certain transactions more difficult and may result in delaying, deferring or preventing a change in control of Tikcro unless approved by one or more of them.

 

Our shareholder bonus rights plan may delay, prevent or make more difficult a hostile acquisition of Tikcro, which could depress our share price.

 

In September 2005, we adopted a shareholder bonus rights plan pursuant to which share purchase bonus rights were distributed to our shareholders. The term of the plan expires on December 31, 2025.  These rights generally will be exercisable and transferable apart from our ordinary shares ten business days after a person or group acquires beneficial ownership of 15% or more of our ordinary shares, or commences a tender or exchange offer upon consummation of which that person or group would hold such a beneficial interest. Once these rights become exercisable and transferable, the holders of rights, other than the person or group triggering their transferability, will be generally entitled to purchase our ordinary shares at a discount from the market price. In addition, the Board may exchange the rights (other than rights owned by the person or group triggering their transferability), in whole or in part, at an exchange ratio of one ordinary share per right (subject to adjustment). While these rights remain outstanding, they may make an acquisition of us more difficult and result in delaying or preventing a change in control of Tikcro. On November 20, 2012, Mr. Steven N. Bronson filed a Statement on Schedule 13D reflecting beneficial ownership of 1,500,094 of our ordinary shares, or 16.9% of our outstanding ordinary shares, thereby crossing the 15% ownership threshold. We have deferred the "Distribution Date" under the bonus rights plan to the close of business on the 30th business day following the termination of a standstill and confidentiality agreement that we entered into with Mr. Bronson, which shall remain in effect until terminated by either party.