(Mark One)
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☒
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended December 31, 2017
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or
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from to
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Israel
(State or other jurisdiction of
incorporation or organization)
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Not Applicable
(I.R.S. Employer
Identification Number)
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Title of Each Class:
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Name of Each Exchange on Which Registered:
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Ordinary shares, par value NIS 0.16 per share
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NASDAQ Global Market
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Large accelerated filer ☐
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Accelerated filer
☒
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Non-accelerated filer ☐ (Do not check if a smaller reporting company)
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Smaller reporting company ☐
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Emerging growth company
☒
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Page No.
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2
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47
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47
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49
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50
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59
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F-1
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61
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61
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61
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62
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62
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68
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76
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79
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79
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80
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80
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80 | ||
82
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- |
U.S. Food and Drug Administration, or FDA, approval of, or other regulatory action in the U.S. and elsewhere with respect to, our product candidates;
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- |
the commercial launch of current or future product candidates;
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our ability to achieve favorable pricing for our product candidates;
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our expectations regarding the commercial supply of our product candidates;
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third-party payor reimbursement for our product candidates;
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our estimates regarding anticipated expenses, capital requirements and needs for additional financing;
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the patient market size of any diseases and market adoption of our products by physicians and patients;
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the timing, cost or other aspects of the commercialization of our product candidates;
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the completion of, and receiving favorable results of, clinical trials for our product candidates;
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application for and issuance of patents to us by the United States Patent and Trademark Office, or U.S. PTO, and other governmental patent agencies;
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development and approval of the use of our product candidates for additional indications; and
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our expectations regarding licensing, business transactions and strategic operations.
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Product Candidate
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Preclinical
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Phase II
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Phase III
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Planned Milestones
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FMX101 (4%) for Moderate-Severe Acne
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Study 04 / 05 top-line results announced
Long-term safety study completed
3rd Phase III initiated August 2017
Top-line results – Q3 / Q4 2018
NDA filing – H2 2018
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FMX103 (1.5%) for Moderate-Severe Rosacea
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Phase II completed
Phase III initiated June 2017
Top-line results – end of Q3 or beginning of Q4 2018
NDA filing – 2019
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· |
the reduction in inflammatory and non-inflammatory lesions (as well as the total counts of facial lesions) over the course of the 12-week treatment period;
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· |
improvement in the investigator’s global assessment, or IGA, based on the uniform graded scale adopted for the trial, ranging from “clear” skin with no inflammatory or non-inflammatory lesions to “severe acne”, as well as safety and tolerability.
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· |
non-dermal adverse events were comparable in type and frequency with those reported during the double-blinded portion of Studies 04 and 05, with the most frequently reported treatment-emergent adverse event being nasopharyngitis, or common cold. Three patients discontinued the study for non-dermal adverse events, two of them for abdominal pain and one for back pain;
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· |
application-site adverse events occurred in less than 2% of patients during the additional 40 weeks of open-label treatment. Four patients discontinued the study for an application-site adverse event – two patients for worsening of acne, one for contact dermatitis and one for localized facial edema. In the assessment of facial dermal tolerability at week 52, more than 95% of patients had “none” or “mild” signs and symptoms such as erythema, dryness, hyperpigmentation, peeling, and itching, and no severe local tolerability scores were recorded;
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subject satisfaction with FMX101 treatment remained high when re-assessed at week 52, which was consistent with scores obtained at the end of the double-blind phase of Studies 04 and 05 at week 12.
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At week 52, 37.7% of patients from Study 04 had an Investigator’s Global Assessment (IGA) score of 0 (clear) or 1 (almost clear) and 50.3% of subjects from Study 05 had an IGA score of 0 or 1.
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At week 52, patients from Study 04 had a 64.3% reduction in inflammatory lesions and patients from Study 05 had a 78% reduction in inflammatory lesions.
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At week 52, patients from Study 04 had a 52.5% reduction in non-inflammatory lesions and patients from Study 05 had a 59.6% reduction in non-inflammatory lesions.
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The severity of rash on the FDX104 treatment side of the face was overall better than in the vehicle-treated side when analyzed in the ITT population (N=24 patients);
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the mean maximal rash severity in the ITT population was 1.33 and 1.71 in the FDX104-treated and placebo-treated sides respectively; and
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9 of the 24 patients in the trial (37.5%) developed severe (grade 3) rash during the study on the vehicle-treated side, while only 4 of the 24 patients in the study (16.7%) developed severe rash on the FDX104-treated side.
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· |
completion of laboratory tests, animal studies and formulation studies in compliance with the FDA’s good laboratory practice, or GLP, or other applicable regulations;
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· |
submission to the FDA of an application for an investigational new drug, or IND designation, which must become effective before human clinical trials may begin;
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approval by an independent institutional review board, or IRB, at each clinical site before each trial may be initiated;
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performance of adequate and well-controlled human clinical trials in accordance with good clinical practice, or GCP, to establish the safety and efficacy of the proposed drug for its intended use;
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preparation and submission to the FDA of an NDA or supplemental NDA;
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· |
satisfactory completion of an FDA advisory committee review, if applicable;
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· |
satisfactory completion of one or more FDA inspections of the manufacturing facility or facilities at which the product or components thereof are produced, to assess compliance with current good manufacturing processes, or cGMP, and to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity; and
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payment of user fees and FDA review and approval of the NDA.
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Phase I: The drug is initially introduced into healthy human subjects or patients with the target disease or condition and tested for safety, dosage tolerance, absorption, metabolism, distribution, excretion and, if possible, to gain an early indication of its effectiveness and to determine optimal dosage.
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Phase II: The drug is administered to a limited patient population to identify possible short-term adverse effects and safety risks, to preliminarily evaluate the efficacy of the product for specific targeted diseases and to determine dosage tolerance and optimal dosage.
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Phase III: The drug is administered to an expanded patient population, generally at geographically dispersed clinical trial sites, in well-controlled clinical trials to generate enough data to statistically evaluate the efficacy and safety of the product for approval, to establish the overall risk-benefit profile of the product, and to provide adequate information for the labeling of the product.
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· |
the federal healthcare Anti-Kickback Statute prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, order or recommendation of, any good or service for which payment may be made, in whole or in part, under a federal healthcare program such as Medicare;
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the federal False Claims Act imposes civil penalties, and provides for civil whistleblower or qui tam actions, against individuals or entities for knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government;
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the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters;
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HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act and its implementing regulations, also imposes obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information;
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the federal false statements statute prohibits knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement in connection with the delivery of or payment for healthcare benefits, items or services;
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the federal transparency requirements under the Health Care Reform Law require manufacturers of drugs, devices and medical supplies to report to the Department of Health and Human Services information related to payments and other transfers of value to physicians and teaching hospitals and physician ownership and investment interests; and
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analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payers, including private insurers.
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the FDA’s and foreign regulatory agencies’ acceptance of our parameters for regulatory approval relating to FMX101, FMX103 and our other product candidates, including our proposed indications, primary endpoint assessments, primary endpoint measurements and regulatory pathways;
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the FDA’s and foreign regulatory agencies’ acceptance of the number, design, size, conduct and implementation of our clinical trials, our trial protocols and the interpretation of data from preclinical studies or clinical trials;
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the FDA’s and foreign regulatory agencies’ acceptance of the sufficiency of the data we collected from our preclinical studies and early clinical trials of FMX101 and FMX103 to support the submission of an NDA or similar foreign regulatory application without requiring additional preclinical or clinical trials;
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the FDA’s and foreign regulatory agencies’ willingness to schedule an advisory committee meeting in a timely manner to evaluate and decide on the approval of our NDA or similar foreign regulatory application;
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the recommendation of the FDA and foreign regulatory agencies’ advisory committee to approve our application without limiting the approved labeling, specifications, distribution or use of the products, or imposing other restrictions;
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the FDA’s and foreign regulatory agencies’ willingness to grant separate approvals for adults and children, where we may have successful clinical trial results for children but not for adults, or vice versa;
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the FDA’s and foreign regulatory agencies’ satisfaction with the safety and efficacy of FMX101 and FMX103 or our other product candidates;
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the prevalence and severity of adverse events associated with FMX101, FMX103 and our other product candidates;
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the timely and satisfactory performance by third party contractors of their obligations in relation to our clinical trials, including any future Phase III clinical trials for FMX101 and FMX103;
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our success in educating dermatologists, pediatricians and patients about the benefits, administration and use of FMX101, FMX103 and our other product candidates, if approved;
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our ability to raise additional capital on acceptable terms in order to achieve our goals;
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the availability, perceived advantages, relative cost, safety and efficacy of alternative and competing treatments;
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the effectiveness of our marketing, sales and distribution strategy and operations, as well as that of our current and future licensees;
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our ability to develop, validate and maintain a commercially viable manufacturing process that is compliant with current good manufacturing practices, or cGMP;
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our ability to obtain, protect and enforce our intellectual property rights with respect to FMX101 or our other product candidates;
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our ability to bring an action timely for patent infringement arising out of the filing of ANDAs by generic companies seeking approval to market generic versions of our products before the expiry of our patents; and
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our ability to avoid third party claims of patent infringement or intellectual property violations.
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obtain regulatory approval to commence a trial;
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reach agreement on acceptable terms with prospective CROs and clinical trial sites, the terms of which may be subject to extensive negotiation and vary significantly among different CROs and trial sites;
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obtain institutional review board, or IRB, approval at each site;
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enlist suitable patients to participate in a trial;
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have patients complete a trial or return for post-treatment follow-up;
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ensure clinical sites observe trial protocol or continue to participate in a trial;
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address any patient safety concerns that arise during the course of a trial;
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address any conflicts with new or existing laws or regulations;
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add a sufficient number of clinical trial sites; or
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manufacture sufficient quantities of the product candidate for use in clinical trials.
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the FDA or foreign regulatory authorities may suspend or withdraw their approval of the product;
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the FDA or foreign regulatory authorities may require the addition of labeling statements, such as warnings or contraindications or distribution and use restrictions;
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the FDA or foreign regulatory authorities may require us to issue specific communications to healthcare professionals, such as letters alerting them to new safety information about our product, changes in dosage or other important information;
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the FDA or foreign regulatory authorities may issue negative publicity regarding the affected product, including safety communications;
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we may be limited with respect to the safety-related claims that we can make in our marketing or promotional materials;
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we may be required to change the way the product is administered, conduct additional preclinical studies or clinical trials or restrict or cease the distribution or use of the product; and
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we could be sued and held liable for harm caused to patients.
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suspend or impose restrictions on operations, including costly new manufacturing requirements;
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refuse to approve pending applications or supplements to applications;
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suspend any ongoing clinical trials;
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suspend or withdraw marketing approval;
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seek an injunction or impose civil or criminal penalties or monetary fines;
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seize or detain products;
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ban or restrict imports and exports;
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issue warning letters or untitled letters;
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suspend or impose restrictions on operations, including costly new manufacturing requirements; or
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refuse to approve pending applications or supplements to applications.
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the clinical indications for which the product is approved;
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the safety and efficacy of our product as compared to existing therapies for those indications;
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the prevalence and severity of adverse side effects;
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patient satisfaction with the results and administration of our product and overall treatment experience, including relative convenience, ease of use and avoidance of, or reduction in, adverse side effects;
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patient demand for the treatment of moderate-to-severe acne and rosacea or other indications;
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overcoming biases of physicians and patients towards topical treatments for moderate-to-severe acne, rosacea or other indications and their willingness to adopt new therapies for these indications;
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the cost of treatment in relation to alternative treatments, the extent to which these costs are reimbursed by third party payors, and patients’ willingness to pay for our products;
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proper training and administration of our products by dermatologists, pediatricians and medical staff;
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the revenues and profitability that our products will offer physicians as compared to alternative therapies; and
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the effectiveness of our sales and marketing efforts, especially the success of any targeted marketing efforts directed toward dermatologists, pediatricians, other physicians, clinics and any direct-to-consumer marketing efforts we may initiate.
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the research methodology used may not be successful in identifying potential product candidates;
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competitors may develop alternatives that render our product candidates obsolete or less attractive;
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product candidates we develop may nevertheless be covered by third parties’ patents or other proprietary rights;
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a product candidate may in a subsequent trial be shown to have harmful side effects or other characteristics that indicate it is unlikely to be effective or otherwise does not meet applicable regulatory criteria;
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a product candidate may not be capable of being produced in commercial quantities at an acceptable cost, or at all;
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a product candidate may not be accepted as safe and effective by patients, the medical community or third party payors, if applicable;
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intellectual property rights, such as patents, which are necessary to protect our interests in a product candidate, may be difficult to obtain or unobtainable;
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intellectual property rights, such as patents, may fail to provide adequate protection, may be challenged and one or more claims may be revoked or the patent may be held to be invalid; and
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intellectual property rights of third parties may potentially block our entry into certain markets, or make such entry economically impracticable.
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a covered benefit under its health plan;
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safe, effective and medically necessary;
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appropriate for the specific patient;
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cost-effective; and
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neither experimental nor investigational.
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changes to manufacturing methods;
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recall, replacement, or discontinuance of one or more of our products; and
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additional recordkeeping.
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the results of the clinical trials of our products candidates;
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the timing of, and the costs involved in, obtaining regulatory approvals for our product candidates;
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the number and characteristics of any additional product candidates we develop or acquire;
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the scope, progress, results and costs of researching and developing our product candidates, and conducting preclinical and clinical trials;
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the cost of commercialization activities if any of our product candidates are approved for sale, including marketing, sales and distribution costs;
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the cost of manufacturing our product candidates and any products we successfully commercialize and maintaining our related facilities;
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our ability to establish and maintain strategic collaborations, licensing or other arrangements and the terms of and timing of such arrangements;
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the degree and rate of market acceptance of any future approved products;
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the emergence, approval, availability, perceived advantages, relative cost, relative safety and relative efficacy of alternative and competing products or treatments;
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any product liability or other lawsuits related to our products;
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the expenses needed to attract and retain skilled personnel;
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the costs associated with being a public company;
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the costs associated with evaluation of our product candidates;
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· |
the costs associated with evaluation of third party intellectual property;
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the costs associated with obtaining and maintaining licenses;
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· |
the costs associated with obtaining, protecting and enforcing intellectual property, such as costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing patent claims, litigation costs including the costs of litigation for patent infringement arising out of ANDA submissions by generic companies to manufacture and sell generic products and the outcome of such litigation; and
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the timing, receipt and amount of sales of, or royalties on, future approved products, if any.
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delay, limit, reduce or terminate preclinical studies, clinical trials or other development activities for FMX101, FMX103 or any of our other product candidates;
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delay, limit, reduce or terminate our research and development activities; or
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delay, limit, reduce or terminate our establishment of manufacturing, sales and marketing or distribution capabilities or other activities that may be necessary to commercialize FMX101, FMX103 or any of our other product candidates.
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manage our clinical trials effectively;
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· |
identify, recruit, retain, incentivize and integrate additional employees;
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manage our internal development efforts effectively while carrying out our contractual obligations to third parties; and
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continue to improve our operational, financial and management controls, reporting systems and procedures.
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· |
decreased demand for FMX101, FMX103 or any of our other product candidates or products we develop;
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injury to our reputation and significant negative media attention;
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withdrawal of clinical trial participants or cancellation of clinical trials;
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· |
costs to defend the related litigation, which may be only partially recoverable even in the event of successful defense;
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a diversion of management’s time and our resources;
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· |
substantial monetary awards to trial participants or patients;
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· |
regulatory investigations, product recalls, withdrawals or labeling, marketing or promotional restrictions;
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· |
loss of revenues; and
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· |
the inability to commercialize any products we develop.
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· |
actual or anticipated variations in our and our competitors’ results of operations and financial condition;
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· |
market acceptance of our products;
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· |
the mix of products that we sell and related services that we provide;
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· |
the success or failure of our licensees to develop, obtain approval for and commercialize our licensed products, for which we are entitled to contingent payments and royalties;
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· |
changes in earnings estimates or recommendations by securities analysts, if our ordinary shares are covered by analysts;
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· |
development of technological innovations or new competitive products by others;
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· |
announcements of technological innovations or new products by us;
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· |
publication of the results of preclinical or clinical trials for FMX101, FMX103 or our other product candidates;
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· |
failure by us to achieve a publicly announced milestone;
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· |
delays between our expenditures to develop and market new or enhanced products and the generation of sales from those products;
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· |
The filing of ANDAs by generic companies seeking approval to market generic versions of our products and of our licensee’s products;
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· |
developments concerning intellectual property rights, including our involvement in litigation brought by or against us, including patent infringement proceedings before national and state courts, and patent opposition and review proceedings before national patent offices;
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· |
regulatory developments and the decisions of regulatory authorities as to the approval or rejection of new or modified products;
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· |
changes in the amounts that we spend to develop, acquire or license new products, technologies or businesses;
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· |
changes in our expenditures to promote our products;
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· |
our sale or proposed sale, or the sale by our significant shareholders, of our ordinary shares or other securities in the future;
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· |
changes in key personnel;
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· |
success or failure of our research and development projects or those of our competitors;
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· |
the trading volume of our ordinary shares; and
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· |
general economic and market conditions and other factors, including factors unrelated to our operating performance.
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· |
we are required to report on forms that are applicable to U.S. companies, such as Forms 10-K, 10-Q and 8-K, rather than the forms formerly used us, such as Forms 20-F and 6-K;
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· |
we are required to include substantially more information in proxy statements than previously provided;
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we can no longer make use of the shelf registration statement on Form F-3 that was declared effective on March 14, 2017, and will need to file a new registration statement on the relevant form applicable to domestic issuers should we wish to engage in capital raising activities;
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if we engage in capital raising activities, there is a higher likelihood that investors may require us to file resale registration statements with the SEC as a condition to any such financing; and
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we may be required to modify certain of our policies to comply with accepted governance practices associated with U.S. domestic issuers.
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· |
we are no longer exempt from certain of the provisions of U.S. securities laws such as (i) Regulation FD, which restricts the selective disclosure of material information, (ii) exemptions for filing beneficial ownership reports under Section 16(a) of the Exchange Act for executive officers, directors and 10% shareholders (Forms 3, 4, and 5), and (iii) the Section 16(b) short swing profit rules;
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· |
we are no longer permitted to disclose compensation information for our executive officers on an aggregate rather than an individual basis, although such exemption may still be available to us as long as we remain an “emerging growth company”; and
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we have lost the ability to rely upon exemptions from NASDAQ corporate governance requirements that are available to foreign private issuers.
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2017
|
High
|
Low
|
||||||
First quarter
|
11.27
|
4.40
|
||||||
Second quarter
|
5.11
|
4.03
|
||||||
Third quarter
|
5.99
|
4.34
|
||||||
Fourth quarter
|
7.00
|
5.17
|
||||||
2016
|
High
|
Low
|
||||||
First quarter
|
8.45
|
5.48
|
||||||
Second quarter
|
7.67
|
5.70
|
||||||
Third quarter
|
10.40
|
6.16
|
||||||
Fourth quarter
|
11.26
|
7.12
|
Plan category
|
Number of securities to be issued upon exercise of warrants and rights
|
Weighted-average exercise price of outstanding warrants and rights
|
Number of securities remaining available for future issuance under equity compensation plans
(1)
|
|||||||||
Equity compensation plans approved by security holders
|
-
|
-
|
-
|
|||||||||
Equity compensation plans not approved by security holders
|
4,230,101
|
$
|
5.65
|
(2)
|
2,076,088
|
|||||||
Total
|
4,230,101
|
$
|
5.65
|
2,076,088
|
(1) |
Excluding securities reflected in column titled “Number of securities to be issued upon exercise of warrants and rights”.
|
(2) |
including restricted share units with an exercise price of $0.
|
December 31,
2014*
|
December 31,
2015
|
December 31,
2016
|
December 31,
2017
|
|||||||||||||
Foamix Pharmaceuticals Ltd.
|
100.00
|
115.69
|
158.35
|
85.73
|
||||||||||||
NASDAQ Composite Index
|
100.00
|
105.73
|
113.66
|
145.76
|
||||||||||||
NASDAQ Biotechnology Index
|
100.00
|
111.42
|
87.26
|
105.64
|
Year ended December 31,
|
||||||||||||||||||||
2017
|
2016
|
2015
|
2014
|
2013
|
||||||||||||||||
(in thousands of U.S. dollars, except loss per share)
|
||||||||||||||||||||
Statements of operations data
:
|
||||||||||||||||||||
Revenues
|
$
|
3,669
|
$
|
5,527
|
$
|
849
|
$
|
5,414
|
$
|
1,404
|
||||||||||
Cost of revenues
(1)
|
13
|
59
|
70
|
527
|
453
|
|||||||||||||||
Gross profit
|
3,656
|
5,468
|
779
|
4,887
|
951
|
|||||||||||||||
Operating expenses:
|
||||||||||||||||||||
Research and development
(1)
|
57,779
|
25,897
|
10,680
|
3,557
|
1,086
|
|||||||||||||||
Selling, general and administrative
(1)
|
11,491
|
9,221
|
7,029
|
2,964
|
1,221
|
|||||||||||||||
Total operating expenses
|
69,270
|
35,118
|
17,709
|
6,521
|
2,307
|
|||||||||||||||
Operating loss
|
65,614
|
29,650
|
16,930
|
1,634
|
1,356
|
|||||||||||||||
Net Loss
|
$
|
65,715
|
$
|
29,336
|
$
|
16,517
|
$
|
11,484
|
$
|
2,431
|
||||||||||
Loss per share basic and diluted
|
1.76
|
0.91
|
0.58
|
0.79
|
0.22
|
Year ended December 31,
|
||||||||||||||||||||
2017
|
2016
|
2015
|
2014
|
2013
|
||||||||||||||||
(in thousands of U.S. dollars)
|
||||||||||||||||||||
Cost of revenues
|
$
|
2
|
$
|
3
|
$
|
2
|
$
|
15
|
$
|
16
|
||||||||||
Research and development
|
1,711
|
1,135
|
588
|
80
|
59
|
|||||||||||||||
Selling, general and administrative
|
2,453
|
1,774
|
1,187
|
102
|
430
|
|||||||||||||||
Total share-based compensation
|
$
|
4,166
|
$
|
2,912
|
$
|
1,777
|
$
|
197
|
$
|
505
|
As of December 31,
|
||||||||||||||||||||
2017
|
2016
|
2015
|
2014
|
2013
|
||||||||||||||||
(in thousands of U.S. dollars, other than number of shares)
|
||||||||||||||||||||
Balance sheet data
:
|
||||||||||||||||||||
Cash and investments
(1)
|
$
|
76,412
|
$
|
130,988
|
$
|
103,779
|
$
|
49,966
|
$
|
2,308
|
||||||||||
Working capital
(2)
|
59,276
|
111,730
|
53,091
|
48,757
|
1,144
|
|||||||||||||||
Total assets
|
80,254
|
135,635
|
105,245
|
51,277
|
3,086
|
|||||||||||||||
Total long-term liabilities
|
1,425
|
379
|
385
|
381
|
4,917
|
|||||||||||||||
Total shareholders’ equity (capital deficiency)
|
68,601
|
129,985
|
100,802
|
48,762
|
(3,582
|
)
|
||||||||||||||
Capital shares
|
$
|
1,576
|
$
|
1,561
|
$
|
1,284
|
$
|
954
|
$
|
471
|
||||||||||
Number of ordinary shares
|
37,498,128
|
37,167,791
|
30,639,134
|
22,443,934
|
11,408,490
|
(1) |
Cash and investments includes cash and cash-equivalents, restricted cash, bank deposits, marketable securities and restricted marketable securities.
|
· |
the scope, rate of progress and expense of our research and development activities;
|
· |
preclinical results;
|
· |
clinical trial results;
|
· |
the terms and timing of regulatory approvals;
|
· |
our ability to file, prosecute, obtain, maintain, defend and enforce patents and other intellectual property rights and the expense of filing, prosecuting, obtaining, maintaining, defending and enforcing patents and other intellectual property rights;
|
· |
the ability to market, commercialize and achieve market acceptance for FMX101 or any other product candidate that we may develop in the future; and
|
· |
our ability to identify, evaluate, acquire or in-license intellectual property, if needed, to facilitate the commercialization of our products and technologies.
|
· |
employee-related expenses, including salaries, benefits and related expenses, including share based compensation expenses;
|
· |
expenses incurred under agreements with third parties, including subcontractors, suppliers and consultants that conduct regulatory activities, clinical trials and preclinical studies;
|
· |
expenses incurred to acquire, develop and manufacture clinical trial materials;
|
· |
facilities, depreciation and other expenses, which include direct and allocated expenses for rent and maintenance of facilities, insurance, and other operating costs; and
|
· |
costs associated with preclinical and clinical activities and regulatory operations.
|
· |
employee-related expenses, including salaries, benefits and related expenses, including share based compensation expenses;
|
· |
costs associated with market research and business development activities in preparation for future marketing and sales, including activities intended to select the most promising product candidates for further development and commercialization;
|
· |
legal and professional fees for auditors and other consulting expenses not related to research and development activities or to market research or business development activities;
|
· |
cost of offices, communication and office expenses;
|
· |
information technology expenses;
|
· |
depreciation of tangible fixed assets related to our general and administrative activities or to our market research and business development activities; and
|
· |
costs associated with filing, prosecuting, obtaining and maintaining patents and other intellectual property.
|
Year ended December 31,
|
||||||||
2017
|
2016
|
|||||||
(in thousands of U.S. dollars)
|
||||||||
Interest on bank deposits
|
$
|
(532
|
)
|
$
|
(536
|
)
|
||
Gain from marketable securities, net
|
(602
|
)
|
(401
|
)
|
||||
Non-cash foreign exchange profit, net
|
-
|
(24
|
)
|
|||||
Total income
|
(1,134
|
)
|
(961
|
)
|
||||
Less:
|
||||||||
Other expenses
|
14
|
17
|
||||||
Finance expenses on BIRD loan
|
-
|
243
|
||||||
Non-cash foreign exchange loss, net
|
57
|
-
|
||||||
Total expenses
|
71
|
260
|
||||||
Finance income, net
|
$
|
(1,063
|
)
|
$
|
(701
|
)
|
Year ended December 31,
|
||||||||
2016
|
2015
|
|||||||
(in thousands of U.S. dollars)
|
||||||||
Other expenses
|
$
|
17
|
$
|
23
|
||||
Finance expenses on BIRD loan
|
243
|
*
|
||||||
Total expenses
|
260
|
23
|
||||||
Less:
|
||||||||
Interest on bank deposits
|
(536
|
)
|
(289
|
)
|
||||
Gain from marketable securities, net
|
(401
|
)
|
(180
|
)
|
||||
Non-cash foreign exchange profit, net
|
(24
|
)
|
(6
|
)
|
||||
Total income
|
(961
|
)
|
(475
|
)
|
||||
Finance income, net
|
$
|
(701
|
)
|
$
|
(452
|
)
|
Year ended December 31,
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
(in thousands of U.S. dollars)
|
||||||||||||
Net cash (used in) / provided by:
|
||||||||||||
Operating activities
|
$
|
(53,177
|
)
|
$
|
(27,370
|
)
|
$
|
(12,498
|
)
|
|||
Investing activities
|
37,755
|
(15,018
|
)
|
(78,516
|
)
|
|||||||
Financing activities
|
$
|
140
|
$
|
55,031
|
$
|
66,801
|
Proceeds from our public offerings
(1)
|
Proceeds from issuance of ordinary shares
|
Payments from licensees
|
Total
|
|||||||||||||
(in thousands of U.S. dollars)
|
||||||||||||||||
Year ended December 31, 2017
|
$
|
-
|
$
|
161
|
$
|
5,978
|
$
|
6,139
|
||||||||
Year ended December 31, 2016
|
$
|
54,132
|
$
|
1,407
|
$
|
2,575
|
$
|
58,114
|
||||||||
Year ended December 31, 2015
|
$
|
64,202
|
$
|
2,629
|
$
|
1,063
|
$
|
67,894
|
· |
the progress, timing and completion of preclinical testing and clinical trials for FMX101, FMX103 or any future pipeline product;
|
· |
selling, marketing and patent-related activities undertaken in connection with the anticipated commercialization of FMX101 and any other product candidates and costs involved in the development of an effective sales and marketing organization;
|
· |
the time and costs involved in obtaining regulatory approval for FMX101 and our other pipeline products and any delays we may encounter as a result of evolving regulatory requirements or adverse results with respect to any of these products;
|
· |
the number of potential new products we identify and decide to develop;
|
· |
the costs involved in filing and prosecuting patent applications and obtaining, maintaining and enforcing patents or defending against claims or infringements raised by third parties, and license royalties or other amounts we may be required to pay to obtain rights to third party intellectual property rights; and
|
· |
the amount of revenues, if any, we may derive either directly or in the form of royalty payments from future sales of FMX101 and any other pipeline product that is commercialized.
|
Payments due by period
|
||||||||||||||||||||||||
Total
|
Less than 1 year
|
1-3 years
|
3-5 years
|
More than 5 years
|
Other
|
|||||||||||||||||||
(in thousands of U.S. dollars)
|
||||||||||||||||||||||||
Operating lease obligations
(1)
|
$
|
2,322
|
$
|
865
|
$
|
1,457
|
-
|
-
|
||||||||||||||||
Liability for employee severance benefits
(2)
|
$
|
437
|
-
|
-
|
-
|
-
|
$
|
437
|
||||||||||||||||
Total
|
$
|
2,759
|
$
|
865
|
$
|
1,457
|
-
|
-
|
$
|
437
|
(1) |
Operating lease obligations consist of lease of our facilities and lease of vehicles.
|
(2) |
The liability is considered long term, however we cannot estimate the exact period in which they will be paid.
|
Shekel against the U.S. dollar
|
|
2016
|
1.5%
|
2017
|
11.6%
|
Page
|
|
F-2
|
|
F-3
|
|
F-5
|
|
F-6
|
|
F-7
|
|
F-8
|
|
F-10
|
Tel-Aviv, Israel
|
/s/ Kesselman & Kesselman
|
February 27, 2018
|
Certified Public Accountants (Isr.)
|
A member firm of PricewaterhouseCoopers International Limited
|
December 31
|
||||||||
2017
|
2016
|
|||||||
Liabilities and shareholders’ equity
|
||||||||
CURRENT LIABILITIES:
|
||||||||
Current maturities of bank borrowing (Note 8b)
|
$
|
-
|
$
|
20
|
||||
Accounts payable and accruals:
|
||||||||
Trade
|
6,436
|
2,267
|
||||||
Deferred revenues
|
62
|
-
|
||||||
Other (Note 11b)
|
3,730
|
2,984
|
||||||
TOTAL CURRENT LIABILITIES
|
10,228
|
5,271
|
||||||
LONG-TERM LIABILITIES
:
|
||||||||
Liability for employee severance benefits (Note 6)
|
437
|
379
|
||||||
Other liabilities
|
988
|
-
|
||||||
TOTAL LONG-TERM LIABILITIES
|
1,425
|
379
|
||||||
TOTAL LIABILITIES
|
11,653
|
5,650
|
||||||
COMMITMENTS
(Note 7)
|
||||||||
SHAREHOLDERS' EQUITY:
|
||||||||
Ordinary Shares, NIS
0.16 par value - authorized: 90,000,000 and 50,000,000 Ordinary Shares as of December 31, 2017 and December 31, 2016, respectively; issued and outstanding: 37,498,128 and 37,167,791 Ordinary Shares as of December 31, 2017 and December 31, 2016, respectively
|
1,576
|
1,561
|
||||||
Additional paid-in capital
|
208,364
|
204,052
|
||||||
Accumulated deficit
|
(141,281
|
)
|
(75,566
|
)
|
||||
Accumulated other comprehensive loss
|
(58
|
)
|
(62
|
)
|
||||
TOTAL SHAREHOLDERS' EQUITY
|
68,601
|
129,985
|
||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
|
$
|
80,254
|
$
|
135,635
|
Year ended December 31
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
REVENUES
(Note 11c)
|
$
|
3,669
|
$
|
5,527
|
$
|
849
|
||||||
COST OF REVENUES
|
13
|
59
|
70
|
|||||||||
GROSS PROFIT
|
3,656
|
5,468
|
779
|
|||||||||
OPERATING EXPENSES:
|
||||||||||||
Research and development
|
57,779
|
25,897
|
10,680
|
|||||||||
Selling, general and administrative
|
11,491
|
9,221
|
7,029
|
|||||||||
TOTAL OPERATING EXPENSES
|
69,270
|
35,118
|
17,709
|
|||||||||
OPERATING LOSS
|
65,614
|
29,650
|
16,930
|
|||||||||
FINANCE INCOME,
net (Note 11d)
|
(1,063
|
)
|
(701
|
)
|
(452
|
)
|
||||||
LOSS BEFORE INCOME TAX
|
64,551
|
28,949
|
16,478
|
|||||||||
INCOME TAX
(Note 10)
|
1,164
|
387
|
39
|
|||||||||
NET LOSS FOR THE YEAR
|
$
|
65,715
|
$
|
29,336
|
$
|
16,517
|
||||||
LOSS PER SHARE BASIC AND DILUTED
|
$
|
1.76
|
$
|
0.91
|
$
|
0.58
|
||||||
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING USED IN COMPUTATION OF BASIC AND DILUTED LOSS PER SHARE IN THOUSANDS
|
37,376
|
32,263
|
28,229
|
Year ended December 31
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
NET LOSS
|
||||||||||||
OTHER COMPREHENSIVE LOSS (INCOME):
|
$
|
65,715
|
$
|
29
,
336
|
$
|
16,517
|
||||||
Net unrealized losses (gains) from marketable securities
|
5
|
(65
|
)
|
103
|
||||||||
Gains (losses) on marketable securities reclassified into net loss
|
-
|
4
|
(57
|
)
|
||||||||
Net unrealized losses (gains) on derivative financial instruments
|
(146
|
)
|
(20
|
)
|
5
|
|||||||
Gains on derivative financial instruments reclassified into net loss
|
137
|
13
|
-
|
|||||||||
TOTAL OTHER COMPREHENSIVE LOSS (INCOME)
|
(4
|
)
|
(68
|
)
|
51
|
|||||||
TOTAL COMPREHENSIVE LOSS
|
$
|
65,711
|
$
|
29,268
|
$
|
16,568
|
Ordinary
shares
|
Additional paid-in
capital
|
Accumulated deficit
|
Accumulated
other comprehensive loss
|
Total
|
||||||||||||||||||||
Number of shares
|
Amounts
|
Amounts
|
||||||||||||||||||||||
BALANCE AT JANUARY 1, 2015
|
22,443,934
|
954
|
77,600
|
(29,713
|
)
|
(79
|
)
|
48,762
|
||||||||||||||||
CHANGES DURING 2015:
|
||||||||||||||||||||||||
Comprehensive loss
|
-
|
-
|
-
|
(16,517
|
)
|
(51
|
)
|
(16,568
|
)
|
|||||||||||||||
Issuance of Ordinary Shares through a public offering, net of $4.8 million issuance costs (Note 9b)
|
7,419,353
|
298
|
63,904
|
-
|
-
|
64,202
|
||||||||||||||||||
Exercise of warrants (Note 9c)
|
546,322
|
23
|
2,262
|
-
|
-
|
2,285
|
||||||||||||||||||
Exercise of options and restricted share units (Note 9d)
|
229,525
|
9
|
335
|
-
|
-
|
344
|
||||||||||||||||||
Share-based compensation (Note 9d)
|
-
|
-
|
1,777
|
-
|
-
|
1,777
|
||||||||||||||||||
BALANCE AT DECEMBER 31, 2015
|
30,639,134
|
1,284
|
145,878
|
(46,230
|
)
|
(130
|
)
|
100,802
|
||||||||||||||||
CHANGES DURING 2016:
|
||||||||||||||||||||||||
Comprehensive income (loss)
|
-
|
-
|
-
|
(29,336
|
)
|
68
|
(29,268
|
)
|
||||||||||||||||
Issuance of Ordinary Shares through a public offering, net of $
3.9
million issuance costs (Note 9b)
|
6,111,959
|
260
|
53,872
|
-
|
-
|
54,132
|
||||||||||||||||||
Exercise of warrants (Note 9c)
|
257,137
|
10
|
1,285
|
-
|
-
|
1,295
|
||||||||||||||||||
Exercise of options and restricted share units (Note 9d)
|
159,561
|
7
|
105
|
-
|
-
|
112
|
||||||||||||||||||
Share-based compensation (Note 9d)
|
-
|
-
|
2,912
|
2,912
|
||||||||||||||||||||
BALANCE AT DECEMBER 31, 2016
|
37,167,791
|
1,561
|
204,052
|
(75,566
|
)
|
(62
|
)
|
129,985
|
||||||||||||||||
CHANGES DURING 2017:
|
||||||||||||||||||||||||
Comprehensive income (loss)
|
-
|
-
|
-
|
(65,715
|
)
|
4
|
(65,711
|
)
|
||||||||||||||||
Exercise of warrants (Note 9c)
|
191,793
|
8
|
(8
|
)
|
-
|
-
|
-
|
|||||||||||||||||
Exercise of options and restricted share units (Note 9d)
|
138,544
|
7
|
154
|
-
|
-
|
161
|
||||||||||||||||||
Share-based compensation (Note 9d)
|
-
|
-
|
4,166
|
-
|
-
|
4,166
|
||||||||||||||||||
BALANCE AT DECEMBER 31, 2017
|
37,498,128
|
$
|
1,576
|
$
|
208,364
|
$
|
(141,281
|
)
|
$
|
(58
|
)
|
$
|
68,601
|
Year ended December 31
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||||||
Net Loss
|
$
|
(65,715
|
)
|
$
|
(29,336
|
)
|
$
|
(16,517
|
)
|
|||
Adjustments required to reconcile net loss to net cash used in
operating activities:
|
||||||||||||
Depreciation and amortization
|
221
|
143
|
87
|
|||||||||
Loss from sale and disposal of fixed assets
|
134
|
16
|
15
|
|||||||||
Changes in marketable securities and bank deposits, net
|
97
|
91
|
57
|
|||||||||
Changes in accrued liability for employee severance benefits,
net of retirement fund profit
|
57
|
14
|
35
|
|||||||||
Share-based compensation
|
4,166
|
2,912
|
1,777
|
|||||||||
Non-cash finance income, net
|
(47
|
)
|
(1
|
)
|
(8
|
)
|
||||||
Changes in operating asset and liabilities:
|
||||||||||||
Decrease (increase) in trade and other receivable
|
1,915
|
(2,889
|
)
|
140
|
||||||||
Decrease (increase) in other non-current assets
|
4
|
-
|
(1
|
)
|
||||||||
Increase in accounts payable and accruals
|
5,003
|
1,680
|
1,917
|
|||||||||
Increase in other liabilities
|
988
|
|||||||||||
Net cash used in operating activities
|
(53,177
|
)
|
(27,370
|
)
|
(12,498
|
)
|
||||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||||||
Purchase of fixed assets
|
(1,518
|
)
|
(424
|
)
|
(500
|
)
|
||||||
Proceeds from sale of fixed assets
|
33
|
-
|
-
|
|||||||||
Investment in bank deposits
|
(17,000
|
)
|
(23,000
|
)
|
(28,000
|
)
|
||||||
Investment in marketable securities
|
(22,839
|
)
|
(31,700
|
)
|
(72,518
|
)
|
||||||
Proceeds from sale and maturity of marketable securities and
bank deposits |
79,079
|
40,106
|
22,502
|
|||||||||
Net cash provided by (used in) investing activities
|
37,755
|
(15,018
|
)
|
(78,516
|
)
|
|||||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||||||
Proceeds from issuance of ordinary shares through public offerings, net of issuance costs
|
-
|
54,132
|
64,202
|
|||||||||
Proceeds from exercise of warrants
|
-
|
1,295
|
2,285
|
|||||||||
Proceeds from exercise of options
|
161
|
112
|
344
|
|||||||||
Payments in respect of BIRD
loan
|
-
|
(476
|
)
|
-
|
||||||||
Payments in respect of bank borrowings
|
(21
|
)
|
(32
|
)
|
(30
|
)
|
||||||
Net cash provided by financing activities
|
140
|
55,031
|
66,801
|
|||||||||
INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH
|
(15,282
|
)
|
12,643
|
(24,213
|
)
|
|||||||
EFFECT OF EXCHANGE RATE ON CASH, CASH EQUIVALENTS AND RESTRICTED CASH
|
48
|
2
|
*-
|
|||||||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF THE YEAR
|
31,440
|
18,795
|
43,008
|
|||||||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF THE YEAR
|
$
|
16,206
|
$
|
31,440
|
$
|
18,795
|
||||||
Cash and cash equivalents
|
$
|
15,956
|
$
|
31,190
|
$
|
18,795
|
||||||
Restricted cash
|
250
|
250
|
-
|
|||||||||
TOTAL CASH, CASH EQUIVALENTS AND RESTRICTED CASH SHOWN IN STATEMENT OF CASH FLOWS
|
$
|
16,206
|
$
|
31,440
|
$
|
18,795
|
Year ended December 31
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
SUPPLEMENTARY INFORMATION ON INVESTING AND
FINANCING ACTIVITIES NOT INVOLVING CASH FLOWS:
|
||||||||||||
Cashless exercise of warrants
|
8
|
-
|
4
|
|||||||||
Exercise of restricted share units
|
3
|
4
|
-
|
|||||||||
Property and equipment purchases included in accounts payable and accruals
|
1
|
27
|
-
|
|||||||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
|
||||||||||||
Cash paid for taxes
|
478
|
163
|
16
|
|||||||||
Interest received
|
1,209
|
1,015
|
921
|
|||||||||
Interest paid
|
*-
|
239
|
*-
|
a. |
Basis of presentation
|
b. |
Use of estimates in the preparation of financial statements
|
c. |
Functional currency
|
d. |
Principles of consolidation
|
e. |
Cash and cash equivalents
|
f.
|
Bank deposits
|
g. |
Marketable securities
|
h. |
Derivatives
|
i. |
Property and equipment:
|
1) |
Property and equipment are stated at cost, net of accumulated depreciation and amortization.
|
2) |
The Company’s property and equipment are depreciated by the straight-line method on the basis of their estimated useful life.
Annual rates of depreciation are as follows: |
j. |
Impairment of long-lived assets
|
k. |
Allowance for doubtful accounts
|
l. |
Contingencies
|
m. |
Share-based compensation
|
n. |
Revenue recognition
|
· |
Each element does not have value on a stand-alone basis.
|
· |
In order to develop the combined formulation in the licensed product, the use of the Company’s propriety technology is required. Therefore, the Company is the only party capable of performing the level and type of development services required under the agreement.
|
· |
Development payments, including upfront payments, cost reimbursements and payments contingent only upon passage of time (together - “Development Service Payments”).
|
· |
Payments contingent solely upon performance or achievement of clinical results by the Company’s licensees (“Contingent Payments”).
|
· |
Royalties, calculated as a percentage of sales of the developed products made by the Company's licensees.
|
o. |
Research and development costs
|
p. |
Clinical trial accruals
|
q. |
Income taxes:
|
1) |
Deferred taxes
|
2) |
Uncertainty in income tax
|
r. |
Loss per share
|
Year ended December 31
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
Outstanding share options and RSUs
|
4
,
230
,
101
|
2,698,875
|
2,124,951
|
|||||||||
Warrants
|
1,394
,
558
|
1,807,800
|
2,064,937
|
s. |
Fair value measurement
|
Level 1: |
Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.
|
Level 2: | Observable prices that are based on inputs not quoted on active markets, but corroborated by market data or active market data of similar or identical assets or liabilities. |
Level 3: |
Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.
|
t. |
Concentration of credit risks
|
u. |
Comprehensive loss
|
v. |
Newly issued and recently adopted accounting pronouncements:
|
1) |
In March 2016, the FASB issued ASU No. 2016-09, Compensation – Stock Compensation (Topic 718). ASU No. 2016-09 identifies areas for simplification involving several aspects of accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, an option to recognize gross stock compensation expense with actual forfeitures recognized as they occur, as well as certain classifications on the statement of cash flows. The Company adopted this standard as of January 1, 2017, and elected the option to recognize gross stock compensation expense with actual forfeitures recognized as they occur.
|
2) |
In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows Topic 230: Classification of Certain Cash Receipts and Cash Payments. ASU No. 2016-15 issued guidance to clarify how certain cash receipts and cash payments should be presented in the statement of cash flows. This standard, adopted as of January 1, 2017, had no material impact on the Company’s consolidated financial statements.
|
3) |
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which will supersede existing revenue recognition guidance under U.S. GAAP. The core principle of ASU 2014-09 is that a company should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. ASU 2014-09 defines a five-step process that requires companies to exercise more judgment and make more estimates than under the current guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price, and allocating the transaction price to each separate performance obligation.
ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2017, including interim periods within those periods.
|
4) |
In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments—Overall (Subtopic 825-10), which addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. This guidance is effective for interim and annual periods beginning after December 15, 2017. The amended guidance requires changes in the fair value of equity investments to be recognized through net income, rather than other comprehensive income. Adoption of the standard will be applied through a cumulative one-time adjustment to retained earnings. For the Company’s equity investments without readily determinable fair values, the Company expects to elect the measurement alternative to record those investments at cost, less impairment, and adjusted by observable price changes on a prospective basis. The impact of the standard on the consolidated statements of operations will depend on the relative changes in market price of the equity investments, although the impact is currently expected to be immaterial.
|
5) |
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which supersedes the existing guidance for lease accounting, Leases (Topic 840). ASU 2016-02 requires lessees to recognize leases on their balance sheets, and leaves lessor accounting largely unchanged. The amendments in this ASU are effective for interim and annual periods beginning after December 15, 2018. Early application is permitted for all entities. ASU 2016-02 requires a modified retrospective approach for all leases existing at, or entered into after, the date of initial application, with an option to elect to use certain transition relief. The Company is currently evaluating the impact of this new standard on its consolidated financial statements, although the impact is currently expected to be immaterial.
|
6) |
In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments. This ASU significantly changes how entities will measure credit losses for most financial assets and certain other instruments that aren’t measured at fair value through net income. The standard will replace today’s “incurred loss” approach with an “expected loss” model. The new model, referred to as the current expected credit loss (“CECL”) model, will apply to: (1) financial assets subject to credit losses and measured at amortized cost, and (2) certain off-balance sheet credit exposures. This includes, but is not limited to, loans, leases, held-to-maturity securities, loan commitments, and financial guarantees. The CECL model does not apply to available-for-sale (“AFS”) debt securities. For AFS debt securities with unrealized losses, entities will measure credit losses in a manner similar to what they do today, except that the losses will be recognized as allowances rather than reductions in the amortized cost of the securities. As a result, entities will recognize improvements to estimated credit losses immediately in earnings rather than as interest income over time, as they do today. The ASU also simplifies the accounting model for purchased credit-impaired debt securities and loans. ASU 2016-13 also expands the disclosure requirements regarding an entity’s assumptions, models, and methods for estimating the allowance for loan and lease losses. In addition, entities will need to disclose the amortized cost balance for each class of financial asset by credit quality indicator, disaggregated by the year of origination. ASU No. 2016-13 is effective for interim and annual reporting periods beginning after December 15, 2019; early adoption is permitted for interim and annual reporting periods beginning after December 15, 2018. Entities will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective (i.e., modified retrospective approach). The Company is currently evaluating the impact of the adoption of this guidance on its consolidated financial statements.
|
7) |
In March 2017, the FASB issued ASU No. 2017-08, Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities. This new standard amends the amortization period for certain purchased callable debt securities held at a premium by shortening the amortization period for the premium to the earliest call date. The new standard will be effective for interim and annual reporting periods beginning after December 15, 2018. The Company anticipates that the adoption of the new standard will not have a material effect on its consolidated financial statements.
|
8) |
In May 2017, the FASB issued ASU No. 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting. ASU 2017-09 was issued to provide clarity and reduce both 1) diversity in practice and 2) cost and complexity when applying the guidance in Topic 718 to a change in the terms or conditions of a share-based payment award. ASU 2017-09 provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting under Topic 718. The amendments in ASU 2017-09 are effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period. The amendments in ASU 2017-09 should be applied prospectively to an award modified on or after the adoption date.
|
9) |
In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging - Targeted Improvements to Accounting for Hedging Activities. This new standard aims to better align a company’s financial reporting for hedging activities with the economic objectives of those activities. The updated standard will be effective for interim and annual reporting periods beginning after December 15, 2018 and must be applied using a modified retrospective approach; however, early adoption of the ASU is permitted. The Company is currently evaluating the impact of the adoption of this guidance on its consolidated financial statements.
|
December 31, 2017
|
||||||||||||
Level 1
|
Level 2
|
Total
|
||||||||||
Marketable securities
|
$
|
987
|
$
|
39,776
|
$
|
40,763
|
||||||
Currency options designated as hedging instruments (current asset)
|
-
|
$
|
11
|
$
|
11
|
December 31, 2016
|
||||||||||||
Level 1
|
Level 2
|
Total
|
||||||||||
Marketable securities
|
$
|
957
|
$
|
60,24
0
|
$
|
61,197
|
||||||
Currency options designated as hedging instruments (current asset)
|
-
|
$
|
2
|
$
|
2
|
December 31
|
||||||||
2017
|
2016
|
|||||||
Israeli mutual funds
|
$
|
987
|
$
|
957
|
||||
Certificates of deposit
|
17,206
|
33,350
|
||||||
Government and agency bonds
|
22,570
|
26,890
|
||||||
Total
|
$
|
40,763
|
$
|
61,197
|
December 31, 2017
|
||||||||||||||||
Fair
value |
Cost or Amortized cost
|
Gross unrealized
holding loss |
Gross unrealized
holding gains |
|||||||||||||
Israeli mutual funds
|
$
|
987
|
$
|
952
|
$
|
-
|
$
|
35
|
||||||||
Certificates of deposit
|
17,206
|
17,243
|
38
|
1
|
||||||||||||
Government and agency bonds
|
22,570
|
22,638
|
68
|
-
|
||||||||||||
Total
|
$
|
40,763
|
$
|
40,833
|
$
|
106
|
$
|
36
|
December 31, 2016
|
||||||||||||||||
Fair
value |
Cost or Amortized cost
|
Gross unrealized
holding loss |
Gross unrealized
holding gains |
|||||||||||||
Israeli mutual funds
|
$
|
957
|
$
|
952
|
$
|
-
|
$
|
5
|
||||||||
Certificates of deposit
|
33,350
|
33,408
|
68
|
10
|
||||||||||||
Government and agency bonds
|
26,890
|
26,901
|
13
|
2
|
||||||||||||
Total
|
$
|
61,197
|
$
|
61,261
|
$
|
81
|
$
|
17
|
Market value
|
||||||||
December 31
|
||||||||
2017
|
2016
|
|||||||
Due within one year
|
$
|
31,244
|
$
|
42,708
|
||||
1 to 2 years
|
8,380
|
14,513
|
||||||
2 to 3 years
|
152
|
3,019
|
||||||
Total
|
$
|
39,776
|
$
|
60,240
|
December 31
|
||||||||
2017
|
2016
|
|||||||
Cost:
|
||||||||
Leasehold improvements
|
$
|
902
|
$
|
229
|
||||
Computers and software
|
299
|
187
|
||||||
Laboratory equipment
|
1,257
|
896
|
||||||
Furniture
|
288
|
96
|
||||||
Vehicles
|
106
|
198
|
||||||
2,852
|
1,606
|
|||||||
Less:
|
||||||||
Accumulated depreciation and amortization
|
810
|
668
|
||||||
Property and Equipment, net
|
$
|
2,042
|
$
|
938
|
Year Ended December 31
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
Rental expenses
|
$
|
645
|
$
|
358
|
$
|
352
|
||||||
Vehicles lease expenses
|
$
|
22
|
$
|
-
|
$
|
-
|
2018
|
$
|
865
|
||
2019
|
756
|
|||
2020 and thereafter
|
701
|
|||
Total
|
$
|
2,322
|
a. |
Loan from the BIRD
foundation
|
b. |
Bank Borrowings
|
a. |
Rights of the Company’s ordinary shares
|
b. |
Public offerings
|
c. |
Warrants
|
d. |
Share-based compensation
|
Year ended December 31, 2017
|
|||||||||||||
Award amount
|
Exercise price range
|
Vesting period
|
Expiration
|
||||||||||
Employees:
|
|||||||||||||
Options
|
1,162,558
|
$5.22- $10.31
|
4 years
|
10 years
|
|||||||||
RSU
|
350,694
|
-
|
4 years
|
-
|
|||||||||
Directors:
|
|||||||||||||
Options
|
189,709
|
$4.69- $4.76
|
4 years
|
10 years
|
|||||||||
RSU
|
19,397
|
-
|
4 years
|
-
|
Year ended December 31, 2016
|
|||||||||||||
Award amount
|
Exercise price range
|
Vesting period
|
Expiration
|
||||||||||
Employees:
|
|||||||||||||
Options
|
715,310
|
$6.04- $8.54
|
4 years
|
10 years
|
|||||||||
RSU
|
25,000
|
-
|
4 years
|
-
|
|||||||||
Directors:
|
|||||||||||||
Options
|
24,000
|
$7.09
|
3 years
|
10 years
|
|||||||||
Consultants:
|
|||||||||||||
Options
|
4,800
|
$6.34
|
4 years
|
10 years
|
Year ended December 31, 2015
|
|||||||||||||
Award amount
|
Exercise price range
|
Vesting period
|
Expiration
|
||||||||||
Employees:
|
|||||||||||||
Options
|
852,501
|
$6.77- $10.88
|
4 years
|
10 years
|
|||||||||
RSU
|
216,050
|
-
|
4 years
|
-
|
|||||||||
Directors:
|
|||||||||||||
Options
|
27,000
|
$10.80-$11.87
|
3 years
|
10 years
|
|||||||||
Consultants:
|
|||||||||||||
Options
|
4,000
|
$10.88
|
4 years
|
10 years
|
|||||||||
RSU
|
83,800
|
-
|
4 years
|
-
|
Year ended December 31
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
Value of ordinary share
|
$4.44-$10.12
|
$5.9-$8.35
|
$6.96-$11.3
|
|||||||||
Dividend yield
|
0
|
%
|
0
|
%
|
0
|
%
|
||||||
Expected volatility
|
58.41%-61.7
|
%
|
60.3%-63.2
|
%
|
60.1%-64.9
|
%
|
||||||
Risk-free interest rate
|
1.97%-2.16
|
%
|
1.25%-1.86
|
%
|
1.38%-1.98
|
%
|
||||||
Expected term
|
6 years
|
6 years
|
6 years
|
December 31
|
||||||||
2016
|
2015
|
|||||||
Value of ordinary share
|
$11.1
|
$8.11
|
||||||
Dividend yield
|
0
|
%
|
0
|
%
|
||||
Expected volatility
|
64.8
|
%
|
69.4
|
%
|
||||
Risk-free interest rate
|
2.38
|
%
|
2.27
|
%
|
||||
Expected term
|
9 years
|
10 years
|
Employees and directors
|
Consultants and service providers
|
|||||||||||||||
Number of options
|
USD
(1)
|
Number of options
|
USD
(1)
|
|||||||||||||
Outstanding at January 1, 2015
|
904,250
|
$
|
3.28
|
266,875
|
$
|
2.10
|
||||||||||
Granted
|
879,501
|
7.72
|
4,000
|
10.88
|
||||||||||||
Exercised
|
(29,525
|
)
|
1.92
|
(150,000
|
)
|
1.92
|
||||||||||
Re-designated
(2)
|
(27,000
|
)
|
5.88
|
27,000
|
5.88
|
|||||||||||
Outstanding at December 31, 2015
|
1,727,226
|
$
|
5.41
|
147,875
|
$
|
3.24
|
||||||||||
Granted
|
739,310
|
6.55
|
4,800
|
6.34
|
||||||||||||
Forfeited
|
(20,000
|
)
|
6.66
|
(15,625
|
)
|
7.98
|
||||||||||
Exercised
|
(69,444
|
)
|
1.64
|
-
|
-
|
|||||||||||
Outstanding at December 31, 2016
|
2,377,092
|
$
|
5.87
|
137,050
|
$
|
2.81
|
||||||||||
Granted
|
1,352,267
|
7.47
|
-
|
-
|
||||||||||||
Forfeited
|
(39,213
|
)
|
7.93
|
(8,800
|
)
|
8.40
|
||||||||||
Exercised
|
(61,881
|
)
|
2.63
|
-
|
-
|
|||||||||||
Re-designated
(3)
|
(252,210
|
)
|
7.71
|
252,210
|
|
7.71
|
||||||||||
Outstanding at December 31, 2017
|
3,376,055
|
$
|
6.41
|
380,460
|
$
|
5.93
|
(1) |
Weighted average price per share
|
(2) |
Pursuant to change in status of grantee from ‘director’ to ‘consultant’ during the reporting period.
|
(3) |
Pursuant to change in status of grantees from ‘employee’ and ‘Director’ to ‘consultant’ during the reporting period.
|
Employees and directors
|
Consultants and service providers
|
|||||||
Number of RSUs
|
||||||||
Outstanding at January 1, 2016
|
186,800
|
63,050
|
||||||
Awarded
|
25,000
|
-
|
||||||
Vested
|
(69,117
|
)
|
(21,000
|
)
|
||||
Outstanding at December 31, 2016
|
142,683
|
42,050
|
||||||
Awarded
|
370,091
|
-
|
||||||
Forfeited
|
(4,025
|
)
|
(550
|
)
|
||||
Vested
|
(43,038
|
)
|
(33,625
|
)
|
||||
Re-designated
(1)
|
(78,120
|
)
|
78,120
|
|||||
Outstanding at December 31, 2017
|
387,591
|
85,995
|
(1) |
Pursuant to change in status of grantees from ‘employee’ and ‘Director’ to ‘consultant’ during the reporting period.
|
December 31, 2017
|
||||||||||||||||
Options outstanding
|
Options exercisable
|
|||||||||||||||
Number of
|
Weighted
|
Number of
|
Weighted
|
|||||||||||||
options
|
average
|
options
|
Average
|
|||||||||||||
Exercise
|
outstanding
|
remaining
|
exercisable
|
Remaining
|
||||||||||||
prices per
|
at end of
|
contractual
|
at end of
|
contractual
|
||||||||||||
share (USD)
|
year
|
life
|
year
|
Life
|
||||||||||||
0.048-1.312
|
268,125
|
1.90
|
268,125
|
1.90
|
||||||||||||
1.92
|
258,587
|
4.08
|
252,650
|
4.03
|
||||||||||||
4.687-4.761
|
189,709
|
9.53
|
-
|
-
|
||||||||||||
5.216-5.879
|
810,175
|
8.75
|
253,600
|
6.98
|
||||||||||||
6.04-6.77
|
766,010
|
8.02
|
364,154
|
7.83
|
||||||||||||
7.093-8.545
|
757,126
|
7.82
|
365,032
|
7.66
|
||||||||||||
10.217-11.868
|
706,783
|
8.85
|
80,719
|
7.59
|
||||||||||||
3,756,515
|
1,584,280
|
Year ended December 31
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
Cost of revenues
|
$
|
2
|
$
|
3
|
$
|
2
|
||||||
Research and development expenses
|
1,711
|
1,135
|
588
|
|||||||||
Selling, general and administrative
|
2,453
|
1,774
|
1,187
|
|||||||||
$
|
4,166
|
$
|
2,912
|
$
|
1,777
|
a. |
Tax rates:
|
1) |
Income from Israel was taxed at the corporate tax rate of 26.5% in 2015, 25% in 2016, and 24% in 2017. Capital gains are subject to capital gain tax, which equals to 25%.
|
2) |
Income of the subsidiary is taxed according to the federal tax laws in the US and the relevant state laws. The relevant U.S. statutory tax rates for 2017, 2016 and 2015 were 35%, 35% and 30%, respectively. The relevant state tax rate for 2017, 2016 and 2015 was 9%.
|
b. |
Tax
assessments
|
c. |
Tax benefits under the Law for Encouragement of Industry (Taxation), 1969
|
d. |
Losses for tax purposes carried forward to future years
|
e. |
Subsidiary tax liability
|
f. |
Deferred income taxes:
|
December 31,
|
||||||||
2017
|
2016
|
|||||||
In respect of:
|
||||||||
Net operating loss carry forward
|
$
|
20,385
|
$
|
11,512
|
||||
Research and development
|
9
,
856
|
4,147
|
||||||
Other
|
608
|
332
|
||||||
Less - valuation allowance
|
(30
,
849
|
)
|
(15
,
991
|
)
|
||||
Net deferred tax assets
|
$
|
-
|
$
|
-
|
Year ended December 31
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
Loss before income taxes
|
$
|
64,551
|
$
|
28,949
|
$
|
16,478
|
||||||
Theoretical tax benefit on the above amount
|
(15,492
|
)
|
(7,237
|
)
|
(4,367
|
)
|
||||||
Decrease (increase) in tax refund resulting from:
|
||||||||||||
Reduction and different corporate tax rates
|
711
|
1,965
|
-
|
|||||||||
Non-deductible expenses and other permanent differences, mainly share based compensation expenses and issuance costs
|
80
|
(491
|
)
|
(585
|
)
|
|||||||
Uncertain tax position
|
988
|
-
|
-
|
|||||||||
Net change in valuation allowance
|
14,858
|
5,777
|
3,973
|
|||||||||
Other
|
19
|
373
|
1,018
|
|||||||||
Actual tax expense
|
$
|
1,164
|
$
|
387
|
$
|
39
|
g. |
ASC No. 740, Income Taxes, requires significant judgment in determining what constitutes an individual tax position as well as assessing the outcome of each tax position. Changes in judgment as to recognition or measurement of tax positions can materially affect the estimate of the effective tax rate and consequently, affect the operating results of the Company.
|
Year ended
December 31,
|
||||
2017
|
||||
Balance at January 1, 2017
|
$
|
-
|
||
Increase in uncertain tax positions for the current year
|
988
|
|||
Balance at December 31, 2017
|
$
|
988
|
h. |
Ro
ll
forward of valuation allowance:
|
Balance at January 1, 2015
|
$
|
6,241
|
||
Additions
|
3,973
|
|||
Balance at December 31, 2015
|
$
|
10,214
|
||
Additions
|
5,777
|
|||
Balance at December 31, 2016
|
$
|
15
,
991
|
||
Additions
|
14,858
|
|||
Balance at December 31, 2017
|
$
|
30,849
|
December 31
|
||||||||
2017
|
2016
|
|||||||
a. |
Account receivable -
other:
|
Institutions
|
$
|
91
|
$
|
174
|
||||
Prepaid expenses
|
588
|
246
|
||||||
Other
|
93
|
18
|
||||||
$
|
772
|
$
|
438
|
b. |
Accounts payable and accruals -
other:
|
Accrued expenses
|
$
|
1,622
|
$
|
709
|
||||
Payroll and related institutions
|
872
|
581
|
||||||
Bonus accrual
|
1,166
|
1,661
|
||||||
Other
|
70
|
33
|
||||||
$
|
3,730
|
$
|
2,984
|
c. |
Revenues
|
Year ended December 31
|
||||||||||||
2017 |
2016
|
2015
|
||||||||||
Development Service Payments
|
$
|
140
|
$
|
63
|
$
|
596
|
||||||
Contingent Payments
|
-
|
2,500
|
-
|
|||||||||
Royalties
|
3,529
|
2,964
|
253
|
|||||||||
Total revenues
|
$
|
3,669
|
$
|
5,527
|
$
|
849
|
d. |
Finance income,
net
:
|
Year ended December 31
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
Finance expenses:
|
||||||||||||
Finance expenses on BIRD loan
|
-
|
243
|
*
|
|||||||||
Foreign exchange losses, net
|
57
|
-
|
-
|
|||||||||
Other expenses
|
14
|
17
|
23
|
|||||||||
Total finance expenses
|
71
|
260
|
23
|
|||||||||
Finance income:
|
||||||||||||
Gains from securities, net
|
(602
|
)
|
(401
|
)
|
(180
|
)
|
||||||
Interest on bank deposits
|
(532
|
)
|
(536
|
)
|
(289
|
)
|
||||||
Foreign exchange gains, net
|
-
|
(24
|
)
|
(6
|
)
|
|||||||
Total finance income
|
(1,134
|
)
|
(961
|
)
|
(475
|
)
|
||||||
$
|
(1,063
|
)
|
$
|
(701
|
)
|
$
|
(452
|
)
|
a. |
Net revenues by geographic area were as follows:
|
Year ended December 31
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
Germany
|
$
|
3,529
|
$
|
5,464
|
$
|
253
|
||||||
United States
|
140
|
14
|
587
|
|||||||||
France
|
-
|
49
|
9
|
|||||||||
Total revenues
|
$
|
3,669
|
$
|
5,527
|
$
|
849
|
b. |
Revenues from principal customers
- revenues from single customers that exceed 10% of total revenues in the relevant year:
|
Year ended December 31
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
Customer A
|
$
|
-
|
$
|
-
|
$
|
86
|
||||||
Customer B
|
$
|
-
|
$
|
14
|
$
|
366
|
||||||
Customer C
|
$
|
3,529
|
$
|
5,464
|
$
|
253
|
||||||
Customer D
|
$
|
-
|
$
|
-
|
$
|
135
|
2017
|
2016
|
|||||||||||||||||||||||||||||||
First
Quarter
|
Second
Quarter
|
Third
Quarter
|
Fourth
Quarter
|
First
Quarter
|
Second
Quarter
|
Third
Quarter
|
Fourth
Quarter
|
|||||||||||||||||||||||||
(in thousands of U.S. dollars,
other than loss per share)
|
||||||||||||||||||||||||||||||||
Revenues
|
$
|
927
|
$
|
798
|
$
|
901
|
$
|
1,043
|
$
|
745
|
$
|
752
|
$
|
2,544
|
$
|
1,486
|
||||||||||||||||
Cost of revenues
|
-
|
-
|
11
|
2
|
31
|
12
|
8
|
8
|
||||||||||||||||||||||||
Gross profit
|
927
|
798
|
890
|
1,041
|
714
|
740
|
2,536
|
1,478
|
||||||||||||||||||||||||
Operating loss
|
14,570
|
16,593
|
17,828
|
16,623
|
4,562
|
8,122
|
5,946
|
11,020
|
||||||||||||||||||||||||
Loss per share basic and diluted
|
$
|
0.39
|
$
|
0.44
|
$
|
0.47
|
$
|
0.46
|
$
|
0.15
|
$
|
0.27
|
$
|
0.19
|
$
|
0.29
|
Name
|
Age
|
Position
|
||
Executive Officers
|
||||
David Domzalski
|
51
|
Chief Executive Officer
|
||
Ilan Hadar, M.B.A.
|
48
|
Chief Financial Officer, Country Manager (Israel)
|
||
Iain A. Stuart, Ph.D.
|
44
|
Senior Vice President, Research and Development
|
||
Yohan Hazot
|
34
|
Vice President, Pharmaceutical Development
|
||
David Schuz
|
63
|
Vice President, Intellectual Property
|
||
Mitchell Shirvan, Ph.D., M.B.A.
|
64
|
Vice President, Innovation & Discovery
|
||
Alvin Howard
|
63
|
Vice President, Regulatory Affairs
|
||
Russell Elliott, D.Phil.
|
51
|
Vice President Drug Development
|
||
Bonnie Pappacena
|
57
|
Vice President, Quality
|
||
Non-Executive Directors
|
||||
Stanley Hirsch, D.Phil.
|
60
|
Director, Chairman of the Board of Directors
|
||
Rex Bright
|
77
|
Director, Chairman of the Compensation Committee
|
||
Darrell Rigel, M.D.
|
67
|
Director
|
||
Stanley Stern
|
60
|
Director, Chairman of the Audit Committee
|
||
Anna Kazanchyan, Ph.D.
|
49
|
Director
|
||
Aharon Schwartz, Ph.D.
|
75
|
Director
|
||
Dalia Megiddo, Ph.D., M.B.A.
|
66
|
Director
|
||
Dov Tamarkin, Ph.D
|
62
|
Director
|
Name and Principal Position
|
Year
|
Salary ($)
|
Bonus ($)
|
Option Awards ($)
(3)
|
Non-
Equity
Incentive Plan Compensation ($)
|
All Other Compen-sation ($)
|
Total ($)
(4)
|
|||||||||||||||||||
David Domzalski, CEO
|
2017
|
416,980
|
165,000
|
2,204,155
|
-
|
10,800
|
(5)
|
2,796,935
|
||||||||||||||||||
2016
|
370,125
|
166,888
|
211,579
|
66,420
|
-
|
815,012
|
||||||||||||||||||||
Ilan Hadar, CFO
|
2017
|
342,253
|
119,978
|
1,212,809
|
-
|
121,815
|
(6)
|
1,796,854
|
||||||||||||||||||
2016
|
239,546
|
103,365
|
207,709
|
71,064
|
81,458
|
(6)
|
703,143
|
|||||||||||||||||||
Yohan Hazot, Vice President, Pharmaceutical Development
|
2017
|
217,797
|
57,687
|
496,304
|
-
|
72,453
|
(7)
|
844,241
|
||||||||||||||||||
2016
|
164,558
|
82,185
|
192,959
|
-
|
61
,854
|
(7)
|
501
,556
|
|||||||||||||||||||
Dov Tamarkin, former CEO
(1)
|
2017
|
210,600
|
86,625
|
-
|
-
|
1,092,084
|
(8)
|
1,389,309
|
||||||||||||||||||
2016
|
385,000
|
209,597
|
321,599
|
184,515
|
206,873
|
(8)
|
1,307,584
|
|||||||||||||||||||
Meir Eini, former Chief Innovation Officer
(2)
|
2017
|
181,500
|
61,875
|
335,874
|
-
|
918,008
|
(9)
|
1,497,257
|
||||||||||||||||||
2016
|
300,000
|
142,801
|
339,918
|
51,823
|
158,133
|
(9)
|
992,676
|
(1) |
Dr. Dov Tamarkin
ceased being our CEO
on
July 1, 2017 and ceased being our employee, at which point he became our chief scientific advisor and continued to serve
as
our director, until his
resignation
on January 1, 2018
.
|
(2) |
Mr. Meir Eini
ceased being our
chief innovation officer on June 29, 2017,
following which
date
he
continued to serve as an advisor to the company and an observer to the board until January 28, 2018.
|
(3) |
The value in this column represents the aggregate grant date fair value of our stock option awards computed in accordance with FASB ASC Topic 718. For a discussion of valuation assumptions used in the calculation of these amounts, see Note
9
to our audited financial statements, included in Item 8—Financial Statements and Supplemental Financial Information.”
|
(4) |
Salary and other compensation of Israeli executive officers for the years 2017 and 2016 are based on average US$/NIS representative exchange rates of NIS 3.60 and NIS 3.84 per dollar for 2017 and 2016, respectively. Bonuses for the years 2017 and 2016 are based on US$/NIS representative exchange rates of NIS 3.47 and NIS 3.85 per dollar as of December 31, 2017 and 2016, respectively.
|
(5) |
Solely includes employer contribution to Mr. Domzalski’s 401K plan.
|
(6) |
In 2017, the bulk of Mr. Hadar’s other compensation consisted of $23,979 of automobile expenses, $50,976 deposits to severance funds, $10,153 of gross-up of related tax, $10,027 of social security payments and deposits of $25,669 to an education fund. In 2016, the bulk of such compensation consisted of $16,476 of automobile expenses, $35,342 of deposits to severance funds, $9,414 of social security payments
,
and deposits of $17,698 to an education fund.
|
(7) |
In 2017, the bulk of Mr. Hazot’s other compensation consisted of $12,668 of automobile expenses, $32,299 of deposits to severance funds, $10,027 of social security payments and deposits of $16,335 to an education fund. In 2016, the bulk of such compensation consisted of $11,873 of automobile expenses, $24,181 of deposits to severance funds, $9,463 of social security payments
,
and deposits of $12,238 to an education fund.
|
(8) |
In 2017, the bulk of Dr. Tamarkin’s other compensation consisted of $973,177 of retirement compensation, $17,835 of automobile expenses, $33,862 of deposits to severance funds, $
17,835
of gross-up of related tax and deposits of $16,043 to an education fund. In 2016, the bulk of such compensation consisted of $33,432 of automobile expenses, $63,475 of deposits to severance funds, $9,398 of social security payments, $
33,432
of gross-up of related tax
,
and deposits of $30,073 to an education fund.
|
(9) |
In 2017, the bulk of Mr. Eini’s other compensation consisted of $
820,315
of retirement compensation, $
12,668
of automobile expenses, $
29,024
of deposits to severance funds, $
12,668
of gross-up of related tax and deposits of $
13,751
to an education fund. In 2016, the bulk of such compensation consisted of $23,746 of automobile expenses, $54,407 of deposits to severance funds, $9,398 of social security payments
, $23,746 of gross-up of related tax,
and deposits of $25,
777 to
an education fund.
|
Option Awards
|
Stock Awards
|
|||||||||||||||||||||||||
Name
|
Grant Date
|
Number of Shares Under-lying Unexer-cised Op-tions (#) Exercisa-ble
|
Number of Shares Underlying Unexer-cised Options (#) Un-exercisable
|
Option Exercise Price ($)
|
Option Expiration Date
|
Number of Shares or Units of Shares That Have Not Vested (#)
|
Market Value of Shares or Units of Shares That Have Not Vested ($)
|
|||||||||||||||||||
David Domzalski
|
06/09/14
(1)
|
14,063
|
4,688
|
7.98
|
06/09/24
|
-
|
-
|
|||||||||||||||||||
05/26/15
(2)
|
-
|
-
|
-
|
- |
12,500
|
75,125
|
||||||||||||||||||||
11/10/15
(3)
|
118,405
|
118,405
|
7.14
|
11/10/25
|
-
|
-
|
||||||||||||||||||||
03/01/16
(4)
|
26,250
|
33,750
|
6.04
|
03/01/26
|
1,406
|
8,452
|
||||||||||||||||||||
01/01/17
(5)
|
-
|
71,369
|
10.22
|
01/01/27
|
23,790
|
142,978
|
||||||||||||||||||||
08/08/17
(6)
|
-
|
327,720
|
5.76
|
08/08/27
|
81,930
|
492,399
|
||||||||||||||||||||
Ilan Hadar
|
03/31/14
(7)
|
4,375
|
1,094
|
1.92
|
03/31/24
|
-
|
-
|
|||||||||||||||||||
11/19/14
(8)
|
19,300
|
4,825
|
5.46
|
11/19/24
|
-
|
-
|
||||||||||||||||||||
01/15/15
(9)
|
12,375
|
5,625
|
6.77
|
01/12/25
|
-
|
-
|
||||||||||||||||||||
06/28/15
(10)
|
-
|
-
|
-
|
- |
2,813
|
16,903
|
||||||||||||||||||||
11/10/15
(11)
|
101,002
|
101,002
|
7.13
|
11/10/25
|
-
|
-
|
||||||||||||||||||||
03/01/16
(12)
|
26,250
|
33,750
|
6.34
|
03/01/26
|
1,406
|
8,452
|
||||||||||||||||||||
01/01/17
(13)
|
-
|
60,389
|
10.31
|
01/01/27
|
20,130
|
120,981
|
||||||||||||||||||||
08/08/17
(14)
|
-
|
196,205
|
5.22
|
08/08/27
|
49,051
|
294,797
|
||||||||||||||||||||
Yohan Hazot
|
02/02/10
(15)
|
6,125
|
-
|
1.92
|
02/01/20
|
-
|
-
|
|||||||||||||||||||
03/31/14
(16)
|
5,938
|
313
|
1.92
|
03/31/24
|
-
|
|||||||||||||||||||||
01/15/15
(17)
|
12,375
|
5,625
|
6.77
|
01/12/25
|
-
|
-
|
||||||||||||||||||||
06/28/15
(18)
|
-
|
-
|
-
|
- |
2,813
|
16,903
|
||||||||||||||||||||
11/10/15
(19)
|
21,397
|
21,397
|
7.13
|
11/10/25
|
-
|
-
|
||||||||||||||||||||
03/01/16
(20)
|
26,250
|
33,750
|
6.34
|
03/01/26
|
-
|
-
|
||||||||||||||||||||
01/01/17
(21)
|
-
|
54,899
|
10.31
|
01/01/27
|
18,300
|
109,983
|
||||||||||||||||||||
Dov Tamarkin
|
12/29/14
(22)
|
24,000
|
-
|
5.88
|
12/29/24
|
-
|
-
|
|||||||||||||||||||
01/15/15
(23)
|
33,750
|
11,250
|
6.77
|
12/28/24
|
-
|
-
|
||||||||||||||||||||
06/28/15
(24)
|
-
|
-
|
-
|
- |
5,625
|
33,806
|
||||||||||||||||||||
03/01/16
(25)
|
43,750
|
56,250
|
6.34
|
03/01/26
|
-
|
-
|
||||||||||||||||||||
Meir Eini
|
12/29/14
(26)
|
48,000
|
-
|
5.88
|
12/29/24
|
-
|
-
|
|||||||||||||||||||
01/15/15
(27)
|
27,000
|
9,000
|
6.77
|
12/28/24
|
-
|
-
|
||||||||||||||||||||
06/28/15
(28)
|
-
|
-
|
-
|
- |
5,625
|
33,806
|
||||||||||||||||||||
11/15/16
(29)
|
-
|
-
|
-
|
- |
20,000
|
120,200
|
||||||||||||||||||||
08/09/16
(30)
|
10,938
|
24,063
|
7.09
|
08/09/26
|
-
|
-
|
||||||||||||||||||||
01/01/17
(31)
|
-
|
60,389
|
10.31
|
01/01/27
|
20,130
|
120,981
|
(1) |
The options vest over a period of four years from June 9, 2014, 25% on each anniversary of such date, ending June 9, 2018;
|
(2) |
The RSUs vest on November 19, 2018;
|
(3) |
The options vest over a period of four years from November 10, 2015, 25% on the first anniversary of such date and 6.25% every three months thereafter, ending November 10, 2019;
|
(4) |
The options vest over a period of four years from March 1, 2016, 25% on the first anniversary of such date and 6.25% every three months thereafter, ending March 1, 2020. The RSUs vest in equal installments every three months over the vesting period beginning December 1, 2017 and ending March 1, 2020;
|
(5) |
The options vest over a period of four years from January 1, 2017, 25% on the first anniversary of such date and 6.25% every three months thereafter, ending January 1, 2021;
|
(6) |
The options and RSUs vest over a period of four years from August 8, 2017, 25% on the first anniversary of such date and 6.25% every three months thereafter, ending August 8, 2021;
|
(7) |
The options vest over a period of four years from March 31, 2014, 20% on such date and 5% every three months thereafter, ending March 31, 2018;
|
(8) |
The options vest over a period of four years from November 19, 2014, 20% on such date and 5% every three months thereafter, ending November 19, 2018;
|
(9) |
The options vest over a period of four years from January 15, 2015, 25% on the first anniversary of such date and 6.25% every three months thereafter, ending January 15, 2019;
|
(10) |
The RSUs vest in equal installments every three months over the vesting period beginning October 15, 2017 and ending January 15, 2019;
|
(11) |
The options vest over a period of four years from November 10, 2015, 25% on the first anniversary of such date and 6.25% every three months thereafter, ending November 10, 2019;
|
(12) |
The options vest over a period of four years from March 1, 2016, 25% on the first anniversary of such date and 6.25% every three months thereafter, ending March 1, 2020. The RSUs vest in equal installments every three months over the vesting period beginning December 1, 2017 and ending March 1, 2020;
|
(13) |
The options and RSUs vest over a period of four years from January 1, 2017, 25% on the first anniversary of such date and 6.25% every three months thereafter, ending January 1, 2021;
|
(14) |
The options and RSUs vest over a period of four years from August 8, 2017, 25% on the first anniversary of such date and 6.25% every three months thereafter, ending August 8, 2021;
|
(15) |
The options vested over a period of four years from February 2, 2010, 20% on such date and 5% every three months thereafter, ending February 2, 2014;
|
(16) |
The options vest over a period of four years from March 31, 2014, 20% on such date and 5% every three months thereafter, and ending March 31, 2018;
|
(17) |
The options vest over a period of four years from January 15, 2015, 25% on the first anniversary of such date and 6.25% every three months thereafter, ending January 15, 2019;
|
(18) |
The RSUs vest in equal installments every three months over the vesting period beginning October 15, 2017 ending January 15, 2019;
|
(19) |
The options vest over a period of four years from November 10, 2015, 25% on the first anniversary of such date and 6.25% every three months thereafter, ending November 10, 2019;
|
(20) |
The options vest over a period of four years from March 1, 2016, 25% on the first anniversary of such date and 6.25% every three months thereafter, ending March 1, 2020;
|
(21) |
The options and RSUs vest over a period of four years from January 1, 2017, 25% on the first anniversary of such date and 6.25% every three months thereafter, ending January 1, 2021;
|
(22) |
The options vested over a period of three years from December 29, 2014, 33.3% on each anniversary of such date, ending December 29, 2017;
|
(23) |
The options vest over a period of four years from December 29, 2014, 25% on the first anniversary of such date and 6.25% every three months thereafter, and ending December 29, 2018;
|
(24) |
the RSUs vest in equal installments every three months over the vesting period beginning October 15, 2017 and ending January 15, 2019;
|
(25) |
The options vest over a period of four years from March 1, 2016, 25% on the first anniversary of such date and 6.25% every three months thereafter, ending March 1, 2020;
|
(26) |
The options vested over a period of three years from December 29, 2014, 33.3% on each anniversary of such date, ending December 29, 2017;
|
(27) |
The options vest over a period of four years from December 29, 2014, 25% on the first anniversary of such date and 6.25% every three months thereafter, ending December 29, 2018;
|
(28) |
The RSUs vest in equal installments every three months over the vesting period beginning January 15, 2018 and ending January 15, 2019;
|
(29) |
The RSUs vest on November 15, 2018;
|
(30) |
The options vest over a period of four years from August 9, 2016, 25% on the first anniversary of such date and 6.25% every three months thereafter, and ending August 9, 2020;
|
(31) |
The options and RSUs vest over a period of four years from January 1, 2017, 25% on the first anniversary of such date and 6.25% every three months thereafter, ending January 1, 2021;
|
· |
a fixed annual payment of $33,000;
|
· |
a per-meeting payment of $1,000 for each board or committee meeting attended in person by the director, a $600 per-meeting payment for meetings held by teleconference or other means of communication, and $500 per each written resolution;
|
· |
reimbursement of business expenses and travel and accommodation expenses incurred in the performance of duties as a member of the board in accordance with the company’s travel and expense policy; and
|
· |
a grant of a combination of options and RSUs having an aggregate grant date value of $75,000, granted under the 2015 Plan, as defined below. As required by the 2015 Plan, the options were granted at an exercise price equal to the average market price of our ordinary shares during the 30 days preceding the grant date, and both options and RSUs were subjected to a 4-year vesting period with 25% of the options and RSUs vesting upon the first anniversary of the grant date and 6.25% vesting every 3 months thereafter, in each case provided that the respective director is still serving as a director of the company at such time.
|
Name
|
Fees Earned or Paid in Cash ($)
|
Share Awards
($)
(4)
|
Option Awards
($)
(4)
|
Total ($)
|
||||||||||||
Stanley Hirsch
|
150,000
|
37,503
|
287,448
|
474,951
|
||||||||||||
Rex Bright
|
44,700
|
-
|
75,002
|
119,702
|
||||||||||||
Darrell Rigel
|
44,700
|
-
|
75,002
|
119,702
|
||||||||||||
Stanley Stern
|
44,700
|
-
|
75,002
|
119,702
|
||||||||||||
Anna Kazanchyan
|
41,500
|
75,000
|
-
|
116,500
|
||||||||||||
Aharon Schwartz
|
39,100
|
-
|
75,000
|
114,100
|
||||||||||||
Dalia Megiddo
|
39,700
|
-
|
75,000
|
114,700
|
||||||||||||
Dov Tamarkin
(1)
|
18,100
|
-
|
-
|
18,100
|
||||||||||||
Meir Eini
(2)
|
16,500
|
-
|
-
|
16,500
|
||||||||||||
Chaim Chizic
(3)
|
34,000
|
-
|
-
|
34,000
|
(1) |
Dov Tamarkin served as a director throughout the year 2017 and resigned from the board on January 1, 2018, at which time he was replaced by Dov Domzalski, the incumbent CEO. The amounts listed in this table refer only to Dr. Tamarkin’s compensation as a director. Compensation paid to Dr. Tamarkin as an executive officer is included in the executive compensation table above.
|
(2) |
Meir Eini served as an observer throughout the year 2017 and until his resignation on January 28, 2018. The amounts listed in this table refer only to Mr. Eini’s compensation as an observer. Compensation paid to Mr. Eini as an executive officer or advisor is included in the executive compensation table above.
|
(3) |
Chaim Chizic served as an observer throughout the year 2017 and until his resignation on January 24, 2018.
|
(4) |
The value in this column represents the aggregate grant date fair value of our stock option awards computed in accordance with FASB ASC Topic 718. For a discussion of valuation assumptions used in the calculation of these amounts, see Note 9 to our audited financial statements, included in Item 8—Financial Statements and Supplemental Financial Information.”
|
Plan Category
|
Number of Shares to be Issued Upon Exercise of Outstanding Options, Warrants and Rights
|
Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights
|
Number of Shares Remaining Available For Future Issuance Under Equity Compensation Plans
(1)
|
|||||||||
Equity compensation plans approved by shareholders
|
-
|
-
|
-
|
|||||||||
Equity compensation plans not approved by shareholders
|
4,230,101
|
$
|
5.65
|
(2)
|
2,076,088
|
|||||||
Total
|
4,230,101
|
$
|
5.65
|
2,076,088
|
(1) |
excluding the shares reflected in the column titled “Number of Shares to be Issued Upon Exercise of Outstanding Options, Warrants and Rights”.
|
(2) |
including restricted share units with an exercise price of $0.
|
Name of Beneficial Owner
|
Number of Shares Beneficially Owned
|
Percentage of Shares Beneficially Owned
|
||||||
5% Shareholders (Other than Directors and Executive Officers)
:
|
||||||||
Great Point Partners, LLC
(1)
|
4,781,708
|
12.8
|
%
|
|||||
Baker Bros. Advisors (GP) LLC
(2)
|
2,466,702
|
6.6
|
%
|
|||||
Directors and Executive Officers
:
|
||||||||
Dov Tamarkin
(3)
|
2,647,941
|
7.0
|
%
|
|||||
Meir Eini
(4)
|
2,861,510
|
7.7
|
%
|
|||||
Stanley Hirsch
(5)
|
222,172
|
*
|
||||||
Rex Bright
(6)
|
27,000
|
*
|
||||||
Darrell Rigel
(7)
|
27,000
|
*
|
||||||
Stanley Stern
(8)
|
27,000
|
*
|
||||||
Anna Kazanchyan
(9)
|
10,000
|
*
|
||||||
Aharon Schwartz
(10)
|
16,000
|
*
|
||||||
Dalia Megiddo
(11)
|
8,000
|
*
|
||||||
Chaim Chizic
(12)
|
1,215,309
|
3.2
|
%
|
|||||
David Domzalski
(13)
|
222,010
|
*
|
||||||
Ilan Hadar
(14)
|
211,232
|
*
|
||||||
Yohan Hazot
(15)
|
104,996
|
*
|
||||||
David Schuz
(16)
|
118,278
|
*
|
||||||
Mitchell Shirvan
(17)
|
84,893
|
*
|
||||||
Alvin Howard
(18)
|
76,679
|
*
|
||||||
Russell Elliott
(19)
|
18,060
|
*
|
||||||
Iain A. Stuart
(20)
|
10,000
|
*
|
||||||
Bonnie Pappacena
|
-
|
-
|
||||||
All Directors and Executive Officers as a Group (19 Persons)
:
|
7,908,080
|
20.2
|
%
|
(1) |
Based on information contained in Schedule 13G filed with the SEC on February 14, 2018, jointly by Great Point Partners LLC, a limited liability company organized under the laws of the State of Delaware (“Great Point”), Dr. Jeffery R. Jay, M.D., a U.S. citizen (“Dr. Jay”), and Mr. David Kroin, a U.S. citizen (“Mr. Kroin”, and collectively with Dr. Jay and Great Point, in this footnote, the “Reporting Persons”). Pursuant to that Schedule 13G (i) Biomedical Value Fund, L.P. (“BVF”) is the record owner of 1,317,181 ordinary shares (the “BVF Shares”). Great Point is the investment manager of BVF. Each of Dr. Jay, as senior managing member of Great Point, and Mr. Kroin, as special managing member of Great Point, has voting and investment power with respect to the BVF Shares, (ii) Biomedical Offshore Value Fund, Ltd. (“BOVF”) is the record owner of 1,883,662 ordinary shares (the “BOVF Shares”). Great Point is the investment manager of BOVF, and each of Dr. Jay, as senior managing member of Great Point, and Mr. Kroin, as special managing member of Great Point, has voting and investment power with respect to the BOVF Shares, (iii) GEF-SMA, LP (“GEF-SMA”) is the record owner of 1,404,687 ordinary shares (the “GEF-SMA Shares”). Great Point is the investment manager of GEF-SMA and each of Dr. Jay, as senior managing member of Great Point, and Mr. Kroin, as special managing member of Great Point, has voting and investment power with respect to the GEF-SMA Shares, and (iv) Class D Series of GEF-PS, L.P. (“GEF-PS”) is the record owner of 176,178 ordinary shares (the “GEF-PS Shares”). Great Point is the investment manager of GEF-PS and each of Dr. Jay, as senior managing member of Great Point, and Mr. Kroin, as special managing member of Great Point, has voting and investment power with respect to the GEF-PS Shares. Notwithstanding the above, Great Point, Dr. Jay and Mr. Kroin disclaim beneficial ownership of the BVF Shares, the BOVF Shares, the GEF-SMA Shares and the GEF-PS Shares, except to the extent of their respective pecuniary interests. The business address of each of the Reporting Persons is 165 Mason Street, 3rd Floor, Greenwich, CT 06830.
|
(2) |
Based on information contained in Schedule 13G filed with the SEC on February 14, 2017 jointly by Baker Bros. Advisors LP, a limited partnership organized under the laws of the State of Delaware (the “Adviser”), Baker Bros Advisors (GP) LLC, a limited liability company organized under the laws of the State of Delaware (the “Adviser GP”), Felix J. Baker, a U.S. citizen and Julian C. Baker, a U.S. citizen (in this footnote, collectively with the Adviser and the Adviser GP, the “Reporting Persons”). Pursuant to that Schedule 13G, 206,624 ordinary shares are held directly by 667 L.P. and 2,260,078 ordinary shares are held by Baker Brothers Life Sciences, L.P. (collectively, the “Funds”). Pursuant to an amended and restated management agreements among the Adviser, the Funds and their respective general partners, the Funds’ respective general partners relinquished to the Adviser all discretion and authority with respect to the investment and voting power of the securities held by the Funds, and the Adviser has complete and unlimited discretion and authority with respect to the Funds' investments and voting power over investments. The business address of each of the Reporting Persons is c/o Baker Bros. Advisors LP, 667 Madison Avenue, 21st Floor, New York, NY 10065.
|
(3) |
Tamarkin Medical Innovation Ltd., an Israeli company controlled by Dr. Dov Tamarkin, our co-founder, former Chief Executive Officer and former director. Consists of (i) 2,523,489 ordinary shares; (ii) 11,795 ordinary shares, held directly by Dr. Tamarkin (iii) 2,094 ordinary shares issuable upon exercise of outstanding warrants at a price of $5.04 per share (iv) 24,000 ordinary shares, held directly by Dr. Tamarkin, issuable upon exercise of outstanding options at a price of $5.88 per share; (v) 36,563 ordinary shares, held directly by Dr. Tamarkin, issuable upon exercise of outstanding options at a price of $6.77 per share and (vi) 50,000 ordinary shares, held directly by Dr. Tamarkin, issuable upon exercise of outstanding options at a price of $6.34 per share. The address of Tamarkin Medical Innovation Ltd. is 537 Har Hila St., Modiin-Maccabim-Reut 7179901, Israel.
|
(4) |
Meir Eini Holdings Ltd., an Israeli company controlled by Meir Eini, our co-founder, former Chief Innovation Officer and former observer to the board. Consists of (i) 2,717,781 ordinary shares; (ii) 17,396 ordinary shares, held directly by Mr. Eini (iii) 20,860 ordinary shares issuable upon exercise of outstanding warrants at a price of $5.04 per share (iv) 48,000 ordinary shares, held directly by Mr. Eini, issuable upon exercise of outstanding options at a price of $5.88 per share; (v) 29,250 ordinary shares, held directly by Mr. Eini, issuable upon exercise of outstanding options at a price of $6.77 per share; (vi) 13,125 ordinary shares, held directly by Mr. Eini, issuable upon exercise of outstanding options at a price of $7.09 per share, and (vii) 15,098 ordinary shares, held directly by Mr. Eini, issuable upon exercise of outstanding options at a price of $10.31 per share. The address of Meir Eini Holdings Ltd. is 2 Hashaked St., Ness-Ziona 7408711, Israel.
|
(5) |
Consists of (i) 6,448 ordinary shares; (ii) 6,224 ordinary shares issuable upon exercise of outstanding warrants at a price of $5.04 per share; (iii) 182,500 ordinary shares issuable to ZEAS Technology and Science Management Ltd., a company beneficially owned by Stanley Hirsch, upon exercise of outstanding options at a price of $0.62 per share, and (iv) 27,000 ordinary shares issuable upon vesting of outstanding options at a price of $5.88 per share.
|
(6) |
Consists of 27,000 ordinary shares issuable upon exercise of outstanding options at a price of $5.88 per share.
|
(7) |
Consists of 27,000 ordinary shares issuable upon exercise of outstanding options at a price of $5.88 per share.
|
(8) |
Consists of 27,000 ordinary shares issuable upon exercise of outstanding options at a price of $5.88 per share.
|
(9) |
Consists of (i) 8,000 ordinary shares issuable upon exercise of outstanding options at a price of $5.88 per share, and (ii) 2,000 ordinary shares issuable upon exercise of outstanding options at a price of $10.80 per share.
|
(10) |
Consists of 16,000 ordinary shares issuable upon exercise of outstanding options at a price of $11.87 per share.
|
(11) |
Consists of 8,000 ordinary shares issuable upon exercise of outstanding options at a price of $7.09 per share.
|
(12) |
Consists of (i) 558,459 ordinary shares; (ii) 266,412 ordinary shares issuable upon exercise of outstanding warrants at a price of $5.04 per share; (iii) 300,938 ordinary shares held by Rosa Alba Commerce & Investments Ltd., a company beneficially owned by Mr. Chizic; (iv) 62,500 ordinary shares issuable upon vesting of outstanding options at a price of $1.92 per share, and (v) 27,000 ordinary shares issuable upon vesting of outstanding options at a price of $5.88 per share. The company’s disclosure is based on the latest information available to it, as Mr. Chizic did not respond to the company’s recent queries in the matter. To the company’s knowledge, the shares and options listed in sub-clauses (i) and (ii) above are held by Mr. Chizic and his wife in equal parts.
|
(13) |
Consists of (i) 26,743 ordinary shares; (ii) 14,062 ordinary shares issuable upon exercise of outstanding options at a price of $7.98 per share; (iii) 17,842 ordinary shares issuable upon exercise of outstanding options at a price of $10.22 per share; (iv) 30,000 ordinary shares issuable upon exercise of outstanding options at a price of $6.04 per share; (v) 133,206 ordinary shares issuable upon exercise of outstanding options at a price of $7.14 per share, and (vi) 157 ordinary shares issuable upon vesting of outstanding RSUs.
|
(14) |
Consists of (i) 12,871 ordinary shares; (ii) 5,469 ordinary shares issuable upon exercise of outstanding options at a price of $1.92 per share; (iii) 20,506 ordinary shares issuable upon exercise of outstanding options at a price of $5.46 per share; (iv) 13,500 ordinary shares issuable upon exercise of outstanding options at a price of $6.77 per share; (v) 15,097 ordinary shares issuable upon exercise of outstanding options at a price of $10.31 per share; (vi) 30,000 ordinary shares issuable upon exercise of outstanding options at a price of $6.34 per share; (vii) 113,627 ordinary shares issuable upon exercise of outstanding options at a price of $7.13 per share, and (viii) 162 ordinary shares issuable upon vesting of outstanding RSUs.
|
(15) |
Consists of (i) 11,321 ordinary shares (ii) 12,375 ordinary shares issuable upon exercise of outstanding options at a price of $1.92 per share; (iii) 30,000 ordinary shares issuable upon exercise of outstanding options at a price of $6.34 per share; (iv) 13,500 ordinary shares issuable upon exercise of outstanding options at a price of $6.77 per share; (v) 24,071 ordinary shares issuable upon exercise of outstanding options at a price of $7.13 per share, and (vi) 13,725 ordinary shares issuable upon exercise of outstanding options at a price of $10.31 per share, and (vi) 4 ordinary shares issuable upon vesting of outstanding RSUs.
|
(16) |
Consists of (i) 9,491 ordinary shares; (ii) 65,750 ordinary shares issuable upon exercise of outstanding options at a price of $1.92 per share; (iii) 15,000 ordinary shares issuable upon exercise of outstanding options at a price of $6.34 per share; (iv) 13,500 ordinary shares issuable upon exercise of outstanding options at a price of $6.77 per share; (v) 6,298 ordinary shares issuable upon exercise of outstanding options at a price of $7.13 per share, and (vi) 8,235 ordinary shares issuable upon exercise of outstanding options at a price of $10.31 per share, and (vi) 4 ordinary shares issuable upon vesting of outstanding RSUs.
|
(17) |
Consists of (i) 9,495 ordinary shares; (ii) 7,656 ordinary shares issuable upon exercise of outstanding options at a price of $1.92 per share; (iii) 20,506 ordinary shares issuable upon exercise of outstanding options at a price of $5.46 per share; (iv) 15,000 ordinary shares issuable upon exercise of outstanding options at a price of $6.34 per share; (v) 13,500 ordinary shares issuable upon exercise of outstanding options at a price of $6.77 per share; (vi) 10,500 ordinary shares issuable upon exercise of outstanding options at a price of $7.13 per share, and (vii) 8,235 ordinary shares issuable upon exercise of outstanding options at a price of $10.31 per share.
|
(18) |
Consists of (i) 19,754 ordinary shares; (ii) 15,000 ordinary shares issuable upon exercise of outstanding options at a price of $6.04 per share; (iii) 25,688 ordinary shares issuable upon exercise of outstanding options at a price of $7.14 per share; (iv) 9,375 ordinary shares issuable upon exercise of outstanding options at a price of $7.98 per share, and (v) 6,862 ordinary shares issuable upon exercise of outstanding options at a price of $10.22 per share.
|
(19) |
Consists of (i) 817 ordinary shares; (ii) 13,125 ordinary shares issuable upon exercise of outstanding options at a price of $6.46 per share, and (iii) 4,118 ordinary shares issuable upon exercise of outstanding options at a price of $10.22 per share.
|
(20) |
Consists of 10,000 ordinary shares issuable upon exercise of outstanding options at a price of $8.54 per share.
|
Fiscal year ended
|
||||||||
(in thousands of U.S. dollars)
|
||||||||
2016
|
2017
|
|||||||
Audit Fees
(1)
|
182
|
136
|
||||||
Audit-related Fees
|
-
|
-
|
||||||
Tax Fees
|
-
|
-
|
||||||
All Other Fees
|
-
|
-
|
||||||
Total Fees
|
182
|
136
|
(1) |
Includes professional services rendered in connection with the audit of our annual financial statements, the review of our interim financial statements, fees for the 2016 follow-on offerings and shelf registration statements.
|
Incorporation by Reference
|
||||||||||||
Exhibit Number
|
Description Of Document
|
Form
|
SEC File No.
|
Exhibit
|
Filing Date
|
Filed Herewith
|
||||||
S-8
|
333-222155
|
4.1
|
December 19, 2017
|
|||||||||
F-1/A
|
333-198123
|
10.1
|
September 3, 2014
|
|||||||||
F-3
|
333-207546
|
10.2
|
October 21, 2015
|
|||||||||
F-3/A
|
333-207546
|
10.3
|
September 12, 2016
|
|||||||||
F-1/A
|
333-198123
|
10.3
|
September 3, 2014
|
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6-K/A
|
001-36621
|
99.1
|
May 20, 2015
|
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FOAMIX PHARMACEUTICALS LTD.
|
||
By:
|
/s/ David Domzalski
|
|
David Domzalski
Chief Executive Officer
|
Signature and Name
|
Title
|
Date
|
/s/ David Domzalski
|
Chief Executive Officer (principal executive officer)
|
March 1
, 2018
|
David Domzalski
|
||
/s/ Ilan Hadar
|
Chief Financial Officer (principal financial accounting and officer)
|
March 1
, 2018
|
Ilan Hadar
|
||
/s/ Stanley Hirsch
|
Chairman of the Board of Directors
|
March 1
, 2018
|
Stanley Hirsch
|
||
/s/ Dalia Megiddo
|
Director
|
March 1
, 2018
|
Dalia Megiddo
|
||
/s/ Rex Bright
|
Director
|
March 1
, 2018
|
Rex Bright
|
||
/s/ Darrell Rigel
|
Director
|
March 1
, 2018
|
Darrell Rigel
|
||
/s/ Stanley Stern
|
Director
|
March 1
, 2018
|
Stanley Stern
|
||
/s/ Anna Kazanchyan
|
Director
|
March 1
, 2018
|
Anna Kazanchyan
|
||
/s/ Aharon Schwartz
|
Director
|
March 1
, 2018
|
Aharon Schwartz
|
WHEREAS |
The Executive has been an employee of the Company since its incorporation in 2003; and
|
WHEREAS |
The Company and the Executive have executed an employment agreement on January 2, 2003 (the "
Original Agreement
"
)
, which agreement was superseded by an employment agreement dated August 22, 2014 (the "
Employment Agreement
"); and
|
WHEREAS |
The Executive and the Company have agreed to terminate the Executive's employment with the Company, in accordance with the terms of the Employment Agreement and with the provisions of the Company's compensation policy, as approved by the Company's shareholders on June 22, 2015 (the "
Compensation Policy
"); and
|
WHEREAS |
The Executive and the Company wish to set forth herein all terms and conditions applicable to the termination of the Executive's employment in the Company, according to the Employment Agreement and the Compensation Policy.
|
1. |
Termination of Employment
|
1.1. |
The Executive's employment with the Company will terminate and the Employment Agreement shall stand terminated (except as specified in Section 1.2.3 below and except for Exhibit B of the Employment Agreement - Company’s Proprietary Information, Confidentiality and Non-Competition Agreement (the "
PI&C Agreement
"), which shall remain in effect indefinitely) as of the Effective Date.
|
1.2. |
Following the Effective Date:
|
1.2.1. |
The Executive shall neither be required to perform his duties as the Chief Executive Officer (CEO) of the Company, nor present itself and/or act as an executive officer of the Company.
|
1.2.2. |
However, the Executive shall cooperate with the Company and use his best efforts to assist the transition of his office to the person or persons who will assume his responsibilities, as shall be coordinated from time to time between the Chairman of the Company's Board of Directors (the "
Board
") and the Executive.
|
1.2.3. |
Notwithstanding the provisions of Section 1.1 above (and in accordance with the provisions of the Employment Agreement and the Compensation Policy), the Executive shall be entitled to all payments and benefits due to him under the provisions of Sections 5 (Salary), 6 (Insurance and Social Benefits), and 7 (Additional Benefits) of the Employment Agreement for the six-month period commencing as of the Effective Date (the "
Notice Period
"). Such payments and benefits shall be paid to the Executive, unless agreed otherwise between the Executive and the Company, within 5 days from the Effective Date.
|
1.2.4. |
The Company shall provide to the Executive any documentation which is customarily provided upon termination of employment (e.g. termination letter, release letters to the Executive's pension funds/managers' insurance schemes, etc.).
|
1.2.5. |
Subject to all legally-required approvals (including, without limitation the approvals of the Compensation Committee, the Board and the shareholders' meeting, as applicable) the Company shall pay to the Executive a bonus for his performance in the year 2017, based on the guidelines and principles of the Compensation Policy and on the recommendations of the Compensation Committee and the Board.
|
1.2.6. |
Commencing on the Effective Date, and as long as the Executive shall serve as a director or as an observer in the Board, the Executive shall be entitled to the Board participation, meeting fees and long term incentives payable by the Company to Non-Executive Directors.
|
2. |
The Severance Period
|
2.1. |
Within 10 days of the commencement of the twelve-month period commencing upon the lapse of the Notice Period (hereinafter: the "
Severance Period
"), the Company shall pay the Executive an amount equal to 12 (twelve) times the Salary (as such term is defined in the Employment Agreement). Executive may retain Company's cellphone, and PC, etc. during the Severance Period.
|
2.2. |
For the avoidance of doubt, and without derogating from the provisions of Sections 1.3 and 2.2 above, it is hereby agreed that the Executive shall not be entitled to any other rights and/or benefits under the Employment Agreement during and/or in connection with the Severance Period.
|
3. |
Consulting Services
|
3.1. |
Throughout the Notice Period and the Severance Period the Executive shall act as the Company's Chief Scientific Advisor and shall provide to the Board (and/or to a sub-committee of the Board as may be resolved by the Board from time to time) scientific advisory services, as shall be requested by the Company Board from time to time (the "
Services
"). Such Services may include, among other things, consulting with regard to research and development, collaboration with third parties, partnering with academic institutes etc. The scope, duration and timing of the Services shall be coordinated between the Board and the Executive (it being acknowledged that the Executive is not expected to provide the Services on a full-time and/or daily basis).
|
3.2. |
In order to facilitate the provision of the Services, the Company shall provide the Executive, throughout the Notice Period and the Severance Period, an office and secretarial services (on an as-needed basis and as shall be coordinated between the Company's CEO and/or Israel country head and the Executive), and shall set a budget, including travel, insurance, registration and participation fees and other reasonable expense, with regard to the Executive's participation in up to 6 (six) conferences per annum, as shall be approved by the Chairman of the Board from time to time. The Chairman of the Board may also approve the retention of consultants and/or other service providers who shall assist the Executive in the performance of the Services.
|
3.3. |
The Executive shall provide the Services as an independent contractor and shall neither be deemed, nor present himself, as an employee, executive officer and/or agent of the Company.
|
3.4. |
The Executive shall refer to the Chairman of the Board and/or to the CEO of the Company any business and/or development opportunity related to the Company's business (as currently conducted and as shall be conducted throughout the Notice Period and the Severance Period) and/or any query and/or contact made by any actual or potential shareholder of the Company and/or by analysts, investments bankers, etc., which shall come to his knowledge.
|
3.5. |
The Executive shall not be entitled to any additional compensation in connection with the provision of the Services.
|
3.6. |
The Board may review the provision of the Services from time to time, and may, upon discussion with the Executive and in view of issues such as conflicts of interest, performance, etc. limit and/or adjust the scope of the Services, as required.
|
4. |
Equity-Based Compensation
|
4.1 |
Any and all equity-based compensation (i.e. options to purchase the Company's ordinary shares of NIS 0.16 par value each and Restricted Share Units granted under the Company's 2015 Israeli Share Incentive Plan and the Company's 2009 Israeli Share Option Plan) previously granted to the Executive shall continue to vest (according to the respective terms of each grant) during the Notice Period and afterwards, as long as the Executive provides the Services to the Company.
|
4.2 |
Subject to the approval of the shareholders' meeting, and in furtherance of the Board decision of February 21, 2017, the Company shall:
|
4.2.1 |
Award the Executive 137,428 options under the Company’s 2015 Israeli Share Incentive Plan; and
|
4.2.2 |
Award the Executive 45,750 Restricted Share Units under the Company’s 2015 Israeli Share Incentive Plan
|
5. |
Freedom of Occupation
|
6. |
Waiver and Release
|
7. |
Miscellaneous
|
7.1. |
The preamble to this Agreement constitutes an integral part hereof. Headings are included for reference purposes only and are not to be used in interpreting this Agreement.
|
7.2. |
The laws of the State of Israel shall apply to this Agreement and the sole and exclusive jurisdiction in any matter arising out of or in connection with this Agreement shall be the Tel-Aviv Regional Labor Court.
|
7.3. |
The provisions of this Agreement are in lieu of the provisions of any collective bargaining agreement, and therefore, no collective bargaining agreement shall apply with respect to the relationships between the parties hereto (subject to applicable mandatory provisions of law).
|
7.4. |
The Company shall withhold, or charge Executive with all taxes and other compulsory payments as required under all applicable laws with respect to all payments, benefits and other compensation payable to Executive in connection with this Agreement.
|
7.5. |
The Company shall be entitled to offset from any payments to which Executive shall be entitled hereunder, any amounts which the Company shall be entitled to receive from Executive at such time.
|
7.6. |
No failure, delay of forbearance of either party in exercising any power or right hereunder shall in any way restrict or diminish such party's rights and powers under this Agreement, or operate as a waiver of any breach or nonperformance by either party of any terms of conditions hereof.
|
7.7. |
In the event it shall be determined under any applicable law that a certain provision set forth in this Agreement is invalid or unenforceable, such determination shall not affect the remaining provisions of this Agreement unless the business purpose of this Agreement is substantially frustrated thereby.
|
7.8. |
This Agreement constitutes the entire understanding and agreement between the parties hereto, supersedes any and all prior discussions, agreements (including without limitation, the Original Agreement and the Employment Agreement) and correspondence with regard to all subject matters hereof, and may not be amended, modified or supplemented in any respect, except by a subsequent writing executed by both parties hereto.
|
7.9. |
This Agreement does not affect Executive's rights and obligations as a shareholder and/or director of the Company.
|
7.10. |
Executive acknowledges and confirms that, subject to any applicable disclosure duties (whether under any applicable law and/or NASDAQ rules and/or otherwise) all terms of this Agreement are personal and confidential, and undertakes to keep such terms in confidence and refrain from disclosing such terms to any third party.
|
The Company:
Foamix Pharmaceuticals Ltd.
By:
/s/ David Domzalski
David Domzalski
CEO
|
/s/ Ilan Hadar
Ilan Hadar
Country Manager
|
The Executive:
Dov Tamarkin
/s/ Dov Tamarkin
Signature
|
WHEREAS |
The Executive has been an employee of the Company since its incorporation in 2003; and
|
WHEREAS |
The Company and the Executive have executed an employment agreement on January 2, 2003 (the "
Original Agreement
"
)
, which agreement was superseded by an employment agreement dated August 22, 2014 (the "
Employment Agreement
"); and
|
WHEREAS |
The Executive and the Company have agreed to terminate the Executive's employment with the Company, in accordance with the terms of the Employment Agreement and with the provisions of the Company's compensation policy, as approved by the Company's shareholders on June 22, 2015 (the "
Compensation Policy
"); and
|
WHEREAS |
The Executive and the Company wish to set forth herein all terms and conditions applicable to the termination of the Executive's employment in the Company, according to the Employment Agreement and the Compensation Policy.
|
1. |
Termination of Employment
|
1.1. |
The Executive's employment with the Company will terminate and the Employment Agreement shall stand terminated (except as specified in Section 1.2.3 below and except for Exhibit B of the Employment Agreement - Company’s Proprietary Information, Confidentiality and Non-Competition Agreement (the "
PI&C Agreement
"), which shall remain in effect indefinitely) as of the Effective Date.
|
1.2. |
Following the Effective Date:
|
1.2.1. |
The Executive shall neither be required to perform his duties as the Chief Innovation Officer (CIO) of the Company, nor present itself and/or act as an executive officer of the Company.
|
1.2.2. |
However, the Executive shall cooperate with the Company and use his best efforts to assist the transition of his office to the person or persons who will assume his responsibilities, as shall be coordinated from time to time between the Chairman of the Company's Board of Directors (the "
Board
") and the Executive.
|
1.2.3. |
Notwithstanding the provisions of Section 1.1 above (and in accordance with the provisions of the Employment Agreement and the Compensation Policy), the Executive shall be entitled to all payments and benefits due to him under the provisions of Sections 5 (Salary), 6 (Insurance and Social Benefits), and 7 (Additional Benefits) of the Employment Agreement for the six-month period commencing as of the Effective Date (the "
Notice Period
"). Such payments and benefits shall be paid to the Executive, unless agreed otherwise between the Executive and the Company, within 5 days from the Effective Date.
|
1.2.4. |
The Company shall provide to the Executive any documentation which is customarily provided upon termination of employment (e.g. termination letter, release letters to the Executive's pension funds/managers' insurance schemes, etc.).
|
1.2.5. |
Subject to all legally-required approvals (including, without limitation the approvals of the Compensation Committee and the Board) the Company shall pay to the Executive a bonus for his performance in the year 2017, based on the guidelines and principles of the Compensation Policy and on the recommendations of the Compensation Committee and the Board.
|
1.2.6. |
Commencing as of the Effective Date, the Executive shall be invited to all meetings of the Company's Board of Directors (the "
Board
") as an observer and shall be entitled to the Board participation and meeting fees payable by the Company to Non-Executive Directors. The Board shall also grant to the Executive long term incentives equivalent to those granted to Non-Executive directors during such period. Unless agreed otherwise, Executive's observer position shall be maintained at least as long as the majority of the Board members as of the Effective Date remain in office in such capacity (and may be terminated, following such change in the composition of the Board, by a Board resolution).
|
2. |
The Severance Period
|
2.1. |
Within 10 days of the commencement of the twelve-month period commencing upon the lapse of the Notice Period (hereinafter: the "
Severance Period
"), the Company shall pay the Executive an amount equal to 12 (twelve) times the Salary (as such term is defined in the Employment Agreement). Executive may retain Company's cellphone, and PC, etc. during the Severance Period.
|
2.2. |
For the avoidance of doubt, and without derogating from the provisions of Sections 1.3 and 2.2 above, it is hereby agreed that the Executive shall not be entitled to any other rights and/or benefits under the Employment Agreement during and/or in connection with the Severance Period.
|
3. |
Consulting Services
|
3.1. |
Throughout the Notice Period and the Severance Period the Executive shall provide to the Company's Head of Innovation (and/or to any other officer designated by the Board and/or by the Chairman of the Board ) innovation advisory services, as shall be requested by the Company from time to time (the "
Services
"). Such Services may include, among other things, consulting with regard to the identification and evaluation of new projects, assistance in negotiations with academic institutes and investigators, operational aspects of research and development activities, etc. The scope, duration and timing of the Services shall be coordinated between the Company and the Executive (it being acknowledged that the Executive is not expected to provide the Services on a full-time and/or daily basis).
|
3.2. |
In order to facilitate the provision of the Services, the Company shall provide the Executive, throughout the Notice Period and the Severance Period, an office and secretarial services (on an as-needed basis and as shall be coordinated between the Company's CEO and/or Israel country head and the Executive), and shall set a budget, including travel, insurance, registration and participation fees and other reasonable expense, with regard to the Executive's participation in up to 6 (six) conferences per annum, as shall be approved by the Chairman of the Board from time to time. The Chairman of the Board may also approve the retention of consultants and/or other service providers who shall assist the Executive in the performance of the Services.
|
3.3. |
The Executive shall provide the Services as an independent contractor and shall neither be deemed, nor present himself, as an employee, executive officer and/or agent of the Company.
|
3.4. |
The Executive shall refer to the Chairman of the Board and/or to the CEO and/or to the Head of Innovation any business and/or development opportunity related to the Company's business (as currently conducted and as shall be conducted throughout the Notice Period and the Severance Period) and/or any query and/or contact made by any actual or potential shareholder of the Company and/or by analysts, investments bankers, etc., which shall come to his knowledge.
|
3.5. |
The Executive shall not be entitled to any additional compensation in connection with the provision of the Services.
|
3.6. |
The Board may review the provision of the Services from time to time, and may, upon discussion with the Executive and in view of issues such as conflicts of interest, performance, etc. limit and/or adjust the scope of the Services, as required.
|
4. |
Equity-Based Compensation
|
4.1 |
Any and all equity-based compensation (i.e. options to purchase the Company's ordinary shares of NIS 0.16 par value each and Restricted Share Units granted under the Company's 2015 Israeli Share Incentive Plan and the Company's 2009 Israeli Share Option Plan) previously granted to the Executive shall continue to vest (according to the respective terms of each grant) during the Notice Period and afterwards, as long as the Executive provides the Services to the Company.
|
5. |
Freedom of Occupation
|
6. |
Waiver and Release
|
7. |
Miscellaneous
|
7.1. |
The preamble to this Agreement constitutes an integral part hereof. Headings are included for reference purposes only and are not to be used in interpreting this Agreement.
|
7.2. |
The laws of the State of Israel shall apply to this Agreement and the sole and exclusive jurisdiction in any matter arising out of or in connection with this Agreement shall be the Tel-Aviv Regional Labor Court.
|
7.3. |
The provisions of this Agreement are in lieu of the provisions of any collective bargaining agreement, and therefore, no collective bargaining agreement shall apply with respect to the relationships between the parties hereto (subject to applicable mandatory provisions of law).
|
7.4. |
The Company shall withhold, or charge Executive with all taxes and other compulsory payments as required under all applicable laws with respect to all payments, benefits and other compensation payable to Executive in connection with this Agreement.
|
7.5. |
The Company shall be entitled to offset from any payments to which Executive shall be entitled hereunder, any amounts which the Company shall be entitled to receive from Executive at such time.
|
7.6. |
No failure, delay of forbearance of either party in exercising any power or right hereunder shall in any way restrict or diminish such party's rights and powers under this Agreement, or operate as a waiver of any breach or nonperformance by either party of any terms of conditions hereof.
|
7.7. |
In the event it shall be determined under any applicable law that a certain provision set forth in this Agreement is invalid or unenforceable, such determination shall not affect the remaining provisions of this Agreement unless the business purpose of this Agreement is substantially frustrated thereby.
|
7.8. |
This Agreement constitutes the entire understanding and agreement between the parties hereto, supersedes any and all prior discussions, agreements (including without limitation, the Original Agreement and the Employment Agreement) and correspondence with regard to all subject matters hereof, and may not be amended, modified or supplemented in any respect, except by a subsequent writing executed by both parties hereto.
|
7.9. |
This Agreement does not affect Executive's rights and obligations as a shareholder and/or director of the Company.
|
7.10. |
Executive acknowledges and confirms that, subject to any applicable disclosure duties (whether under any applicable law and/or NASDAQ rules and/or otherwise) all terms of this Agreement are personal and confidential, and undertakes to keep such terms in confidence and refrain from disclosing such terms to any third party.
|
The Company:
Foamix Pharmaceuticals Ltd.
By:
/s/ David Domzalski
David Domzalski
CEO
|
/s/ Ilan Hadar
Ilan Hadar
Country Manager
|
The Executive:
Meir Eini
/s/
Meir Eini
Signature
|
1.
|
DEFINITIONS.
|
1
|
2.
|
LEASE OF THE LEASED PREMISES.
|
1
|
3.
|
RENT.
|
1
|
4.
|
TERM.
|
2
|
5.
|
PREPARATION OF THE LEASED PREMISES.
|
2
|
6.
|
OPTIONS.
|
2
|
7.
|
USE AND OCCUPANCY.
|
3
|
8.
|
UTILITIES, SERVICES, MAINTENANCE AND REPAIRS.
|
5
|
9.
|
ALLOCATION OF THE EXPENSE OF UTILITIES, SERVICES, MAINTENANCE, REPAIRS AND TAXES.
|
6
|
10.
|
COMPUTATION AND PAYMENT OF ALLOCATED EXPENSES OF UTILITIES, SERVICES, MAINTENANCE, REPAIRS, TAXES AND CAPITAL EXPENDITURES.
|
6
|
11.
|
LEASEHOLD IMPROVEMENTS, FIXTURES AND TRADE FIXTURES.
|
12
|
12.
|
ALTERATIONS, IMPROVEMENTS AND OTHER MODIFICATIONS BY THE TENANT.
|
12
|
13.
|
LANDLORD’S RIGHTS OF ENTRY AND ACCESS.
|
14
|
14.
|
LIABILITIES AND INSURANCE OBLIGATIONS.
|
15
|
15.
|
CASUALTY DAMAGE TO BUILDING OR LEASED PREMISES.
|
17
|
16.
|
CONDEMNATION.
|
18
|
17.
|
ASSIGNMENT OR SUBLETTING BY TENANT.
|
18
|
18.
|
SIGNS, DISPLAYS AND ADVERTISING.
|
20
|
19.
|
QUIET ENJOYMENT.
|
21
|
20.
|
RELOCATION.
|
21
|
21.
|
SURRENDER.
|
21
|
22.
|
EVENTS OF DEFAULT.
|
22
|
23.
|
RIGHTS AND REMEDIES.
|
23
|
24.
|
TERMINATION OF THE TERM.
|
26
|
25.
|
MORTGAGE AND UNDERLYING LEASE PRIORITY.
|
27
|
26.
|
TRANSFER BY LANDLORD.
|
27
|
27.
|
INDEMNIFICATION.
|
28
|
28.
|
PARTIES’ LIABILITY.
|
29
|
29.
|
SECURITY DEPOSIT.
|
30
|
30.
|
REPRESENTATIONS.
|
31
|
31.
|
RESERVATION IN FAVOR OF TENANT.
|
31
|
32.
|
TENANT’S CERTIFICATES AND MORTGAGEE NOTICE REQUIREMENTS.
|
32
|
33.
|
WAIVER OF JURY TRIAL AND ARBITRATION.
|
34
|
34.
|
SEVERABILITY.
|
34
|
35.
|
NOTICES.
|
34
|
36.
|
CAPTIONS.
|
34
|
37.
|
COUNTERPARTS.
|
34
|
38.
|
APPLICABLE LAW.
|
35
|
39.
|
EXCLUSIVE BENEFIT.
|
35
|
40.
|
SUCCESSORS.
|
35
|
41.
|
AMENDMENTS.
|
35
|
42.
|
WAIVER.
|
35
|
43.
|
COURSE OF PERFORMANCE.
|
35
|
Months
|
Annual Rate
|
Monthly Installments
|
1 thru 16
|
$128,100.00
|
$10,675.00
|
6.1.1 |
At the time of the exercise of the Option to Renew and at the time of said renewal, the Tenant shall not be in default in accordance with the terms and provisions of this Agreement, and shall occupy and be in operation at the entire
Leased Premises pursuant to this Agreement.
|
6.1.2 |
Notice of the exercise of the Option to Renew shall be sent to the Landlord in writing at least six (6) months before the expiration of the Initial Term.
|
6.1.3 |
The Renewal Term shall be for a period of three (3) years to commence at the expiration of the Initial Term, and all of the terms and conditions of this Agreement, other than the annual amount of Basic Rent, shall apply during the Renewal Term.
|
6.1.4 |
Subject to the last sentence of this paragraph, the amount of annual Basic Rent to be paid during the Renewal Term shall equal the Market Rental Rate of the Leased Premises if the same were available for lease to the public. If the parties are unable to agree on the Market Rental Rate of the Leased Premises, the parties shall each appoint one appraiser who shall in turn appoint a third independent appraiser and the determination of said three appraisers shall be binding on the parties. In no event, however, shall the annual Basic Rent payable by Tenant during the Renewal Term be less than the annual Basic Rent paid by Tenant during the immediately preceding twelve months.
|
6.2.1. |
any Option to Renew which the Tenant has theretofore properly exercised with respect to a Renewal Term that has not yet actually commenced shall be rescinded, if the Landlord so elects by notice to the Tenant, to the same extent as if it had not been exercised at all; and
|
6.2.2. |
any Option to Renew or any other type of option or optional right exercisable by the Tenant not theretofore timely and otherwise properly exercised by the Tenant shall thereupon expire.
|
7.2.1. |
the Tenant shall not do, or permit or suffer the doing of, anything which might have the effect of creating an increased risk of, or damage from, fire, explosion or other casualty;
|
7.2.2. |
the Tenant shall not do, or permit or suffer the doing of, anything which would have the effect of (a) increasing any premium for any liability, property, casualty or excess coverage insurance policy otherwise payable by the Landlord or any tenant of Other Leased Premises or (b) making any such types or amounts of insurance coverage unavailable or less available to the Landlord or any tenant of Other Leased Premises;
|
7.2.3. |
to the extent they are not inconsistent with this Agreement, the Tenant and the Tenant’s employees, other agents and Guests shall comply with the Building Rules and Regulations attached hereto as Exhibit D, and with any changes made therein by the Landlord if, with respect to any such changes, the Landlord shall have given notice of the particular changes to the Tenant and such changes shall not materially adversely affect the conduct of the Tenant’s business in the Leased Premises;
|
7.2.4. |
the Tenant and the Tenant’s employees, other agents and Guests shall not create, permit or continue any Nuisance in or around the Leased Premises, the Other Leased Premises, the Building, the Common Facilities and the Property;
|
7.2.5. |
The Tenant and the Tenant’s employees, other agents and Guests shall not permit the Leased Premises to be regularly occupied by more than one individual per 200 square feet of usable floor space of the Leased Premises;
|
7.2.6. |
the Tenant and the Tenant’s employees, other agents and Guests shall comply with all Federal, state and local statutes, ordinances, rules, regulations and orders as they pertain to the Tenant’s use and occupancy of the Leased Premises, to the conduct of the Tenant’s business and to the use of the Common Facilities, except that this subsection shall not require the Tenant to make any structural changes that may be required thereby that are generally applicable to the Building as a whole;
|
7.2.7. |
the Tenant and the Tenant’s employees, other agents and Guests shall comply with the requirements of the Board of Fire Underwriters (or successor organization) and of any insurance carriers providing liability, property, casualty or excess insurance coverage regarding the Property, the Building, the Common Facilities or any portions thereof, and any other improvements on the Property, except that this subsection shall not require the Tenant to make any structural changes that may be required thereby that are generally applicable to the Building as a whole;
|
7.2.8. |
the Tenant and the Tenant’s employees, other agents and Guests shall not bring or discharge any material or substance (solid, liquid or gaseous) which is a Hazardous Substance, or conduct any activity, in or on the Property, the Building, the Common Facilities or the Leased Premises that shall have been identified:
|
(i) |
by the scientific community, or
|
(ii) |
by any Federal, state or local statute (including, without limiting the generality of the foregoing, the Spill Compensation and Control Act (58 N.J.S.A. §10-23.11 et seq.); the Industrial Site Recovery Act (“ISRA”)(13 N.J.S.A. §1 K-6 et seq.); the Resource Conservation and Recovery Act of 1976 (42 U.S.C. §6901 et seq.) as amended; the Comprehensive Environmental Response Compensation and Liability Act of 1980 (42 U.S.C. §9601 et seq.); the Federal Water Pollution Control Act/Clean Water Act (33 U.S.C. §1251 et seq.); the Clean Water Act (33 U.S.C. §1251 et seq.); the Clean Air Act (42 U.S.C. §7401 et seq.); the Toxic Substances Control Act (15 U.S.C. §2601 et seq.); the Hazardous Materials Transportation Act (49 U.S.C. §5101 et seq.) the Safe Drinking Water Act (42 U.S.C. §300f through §300j) as amended; the Global Warming Response Act, 26 N.J.S.A. §2C-37 et seq.; the Regional Greenhouse Gas Initiative Act, 26 N.J.S.A. §2C-45 et seq., and the regulations adopted and publications promulgated pursuant to said laws; and in any revisions or successor codes as toxic or hazardous to health or to the environment (“Environmental Laws”) As used herein, “Hazardous Substance” means any material or substance which is toxic, ignitable, reactive, or corrosive; or which is defined as “hazardous waste”, “extremely hazardous waste”, “extraordinary hazardous substance” or a “hazardous substance” by Environmental Laws; or which is an asbestos, polychlorinated biphenyl or a petroleum product; or which is regulated by Environmental Laws;
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7.2.9. |
the Tenant and the Tenant’s employees, other agents and Guests shall not draw electricity in the Leased Premises in excess of the rated capacity of the electrical conductors and safety devices including, without limiting the generality of the foregoing, circuit breakers and fuses, by which electricity is distributed to and throughout the Leased Premises and, without the prior written consent of the Landlord in each instance, shall not connect any fixtures, appliances or equipment to the electrical distribution system serving the Building and the Leased Premises other than typical professional office equipment such as minicomputers, microcomputers, typewriters, copiers, telephone systems, coffee machines and table top microwave ovens, none of which, considered individually and in the aggregate, overall and per fused or circuit breaker protected circuit, shall exceed the above limits;
|
7.2.10. |
on a timely basis the Tenant shall pay directly and promptly to the respective taxing authorities any taxes (other than Taxes) charged, assessed or levied exclusively on the Leased Premises or arising exclusively from the Tenant’s use and occupancy of the Leased Premises; and
|
7.2.11. |
the Tenant shall not initiate any appeal or contest of any assessment or collection of Taxes for any period without, in each instance, the prior written consent of the Landlord which, without being deemed unreasonable, the Landlord may withhold if the Building was not 90% occupied by paying tenants throughout that period or if the Tenant is not joined by tenants of Other Leased Premises that leased throughout that period, and that are then leasing, at least 80% of all Other Leased Premises, determined by their gross rentable floor space.
|
8.1.1. |
such maintenance and repair of the Building (except the Leased Premises and Other Leased Premises); the Common Facilities; and the heating, ventilation and air conditioning systems (but not including supplemental cooling, whether supplemental cooling units are found in the Leased Premises or not), any plumbing systems and the electrical systems in the Building, the Common Facilities, the Leased Premises and Other Leased Premises as is customarily provided for first class office buildings in the immediate area;
|
8.1.2. |
maintenance and repair of the Leased Premises, except for refinishing walls and wall treatments, base, ceilings, floor treatments and doors in general from time to time or for gouges, spots, marks, damage or defacement caused by anyone other than the Landlord, its employees and other agents, and except for the Tenant’s furniture, furnishings, equipment and other property;
|
8.1.3. |
such garbage removal from the Building and the Common Facilities and such janitorial services for the Building, the Leased Premises and Other Leased Premises as is customarily provided for first class office buildings in the immediate area;
|
8.1.4. |
the electricity required for the operation of the Building, the Property and the Common Facilities during Regular Business Hours and, on a reduced service basis, during other than Regular Business Hours, and, at all times, the electricity required for the Leased Premises;
|
8.1.5. |
such heat, ventilation and air conditioning (but not including supplemental cooling, whether supplemental cooling units are found in the Leased Premises or not) for the Building, the Leased Premises and Other Leased Premises as is customarily provided for first class office buildings in the immediate area for the comfortable use of the Building during Regular Business Hours. (Customary cooling shall be determined without reference to the existence of such supplemental cooling units.);
|
8.1.6. |
water (including heated water) to the Building and, if the appropriate plumbing has been installed therein, to the Leased Premises;
|
8.1.7. |
sewage disposal for the Building;
|
8.1.8. |
passenger elevator service for the Building;
|
8.1.9. |
snow clearance from, and sweeping of, Parking Facilities and private access roads which are part of the Property or the Common Facilities; and
|
8.1.10. |
the maintenance of landscaping which is part of the Property or the Common Facilities.
|
9.3.1. |
the Tenant’s Share of: Operational Expenses and Taxes incurred during each such period of 12 months (or shorter period), up to the amounts of Base Year Operational Expenses and Base Year Taxes, respectively (or proportional amount thereof for periods shorter than 12 months), shall be borne by the Landlord; and
|
9.3.2. |
the Tenant’s Share of: the amounts by which Operational Expenses and Taxes incurred during each such period of 12 months (or shorter period) exceed Base Year Operational Expenses and Base Year Taxes, respectively (or proportional amount thereof for periods shorter than 12 months) shall be allocated to, and borne by, the Tenant as more specifically set forth in section 10 of this Agreement.
|
10. |
Computation and Payment of Allocated Expenses of Utilities, Services, Maintenance, Repairs, Taxes and Capital Expenditures.
|
10.1.1. |
commencing with the first day after the end of the No Pass Through Period, and on the first day of each month thereafter during the Term, one-twelfth of the Tenant’s Share of the amount by which Taxes for the then current calendar year exceeds Base Year Taxes, computed in accordance with subsection 10.5 of this Agreement. When Landlord knows of facts which cause a revision of the estimate, it may serve a revised estimate and, for the balance of the current calendar year, the estimated payments shall be made accordingly;
|
10.1.2. |
within 20 days of the Landlord’s giving notice to the Tenant after the close of each calendar year closing during the Term, commencing with the first calendar year closing after the close of the No Pass Through Period, and after the end of the Term, the Tenant’s Share of the difference between the Landlord’s previously projected amount of Taxes for such period and the actual amount of Taxes for such period, in either case in excess of Base Year Taxes, computed in accordance with subsection 10.6 of this Agreement (unless such difference is a negative amount, in which case the Landlord shall credit such difference against any amounts next due from the Tenant under subsections 10.1.1 and 10.5 of this Agreement);
|
10.1.3. |
commencing with the first day after the end of the No Pass Through Period, and on the first day of each month thereafter during the Term, one-twelfth of the Tenant’s Share of the amount by which Operational Expenses for the then current calendar year exceed Base Year Operational Expenses, computed in accordance with subsection 10.7 of this Agreement. When Landlord knows of facts which cause a revision of the estimate, it may serve a revised estimate and, for the balance of the current calendar year, the estimated payments shall be made accordingly;
|
10.1.4. |
within 20 days of the Landlord’s giving notice to the Tenant after the close of each calendar year closing during the Term, commencing with the first calendar year closing after the close of the No Pass Through Period, and after the end of the Term, the Tenant’s Share of the difference between the Landlord’s previously projected amount of Operational Expenses for such period and the actual amount of Operational Expenses for such period, in either case in excess of Base Year Operational Expenses, computed in accordance with subsection 10.8 of this Agreement (unless such difference is a negative amount, in which case the Landlord shall credit such difference against any amounts next due from the Tenant under subsections 10.1.3 and 10.7 of this Agreement);
|
10.1.5. |
commencing with the first day of the first month after the Landlord gives any notice contemplated by subsection 10.9 of this Agreement to the Tenant and continuing on the first day of each month thereafter until the earlier of (a) the end of the Term or (b) the last month of the useful life set forth in the respective notice, one-twelfth of the Tenant’s Share of any Annual Amortized Capital Expenditure, computed in accordance with subsection 10.9 of this Agreement;
|
10.1.6. |
on the first day of each month during the Term, the monthly Tenant Electric Charges, set forth in section 9.1 of this Agreement as the same may be revised in accordance with subsection 10.10 of this Agreement; and
|
10.1.7. |
promptly as and when billed therefore by the Landlord, the amount of any expense which would otherwise fall within the definition of Operational Expenses, but which is specifically paid or incurred by the Landlord for operation and maintenance of the Building, the Common Facilities or the Property outside Regular Business Hours at the specific request of the Tenant or the amount of any expenditure incurred for maintenance or repair of damage to the Building, the Common Facilities, the Property, the Leased Premises or the Other Leased Premises caused directly or indirectly, in whole or in part, by the active or passive negligence or intentional act of the Tenant or any of its employees, other agents or Guests.
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10.2.1. |
Utilities Expenses;
|
10.2.2. |
the expense of providing the services, maintenance and repairs contemplated by subsection 8.1 of this Agreement, whether furnished by the Landlord’s employees or by independent contractors or other agents;
|
10.2.3. |
wages, salaries, fees and other compensation and payments and payroll taxes and contributions to any social security, unemployment insurance, welfare, pension or similar fund and payments for other fringe benefits required by law or union agreement (or, if the employees or any of them are not represented by a union, then payments for benefits comparable to those generally required by union agreement in first class office buildings in the immediate area which are unionized) made to or on behalf of any employees of Landlord performing services rendered in connection with the operation and maintenance of the Building, the Common Facilities and the Property, including, without limiting the generality of the foregoing, elevator operators, elevator starters, window cleaners, porters, janitors, maids, miscellaneous handymen, watchmen, persons engaged in patrolling and protecting the Building, the Common Facilities and the Property, carpenters, engineers, firemen, mechanics, electricians, plumbers, other tradesmen, other persons engaged in the operation and maintenance of the Building, Common Facilities and Property, Building superintendent and assistants, Building manager, and clerical and administrative personnel;
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10.2.4. |
the uniforms of all employees and the cleaning, pressing and repair thereof;
|
10.2.5. |
premiums and other charges incurred by Landlord with respect to all insurance relating to the Building, the Common Facilities and the Property and the operation and maintenance thereof, including, without limitation: property and casualty, fire and extended coverage insurance, including windstorm, flood, hail, explosion, other casualty, riot, rioting attending a strike, civil commotion, aircraft, vehicle and smoke insurance; public liability insurance; elevator, boiler and machinery insurance; excess liability coverage insurance; use and occupancy insurance; workers’ compensation and health, accident, disability and group life insurance for all employees; casualty rent insurance and such other insurance with such limits as may, from time to time, be customary for office buildings or which Landlord may be required to secure by mortgage lenders;
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10.2.6. |
sales and excise taxes and the like upon any Operational Expenses and Capital Expenditures;
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10.2.7. |
management fees of any independent managing agent for the Property, the Building or the Common Facilities; and if there shall be no independent managing agent, or if the managing agent shall be a person affiliated with the Landlord, the management fees that would customarily be charged for the management of the Property, the Building and the Common Facilities by an independent, first class managing agent in the immediate area;
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10.2.8. |
the cost of replacements for tools, supplies and equipment used in the operation, service, maintenance, improvement, inspection, repair and alteration of the Building, the Common Facilities and the Property;
|
10.2.9. |
the cost of repainting or otherwise redecorating any part of the Building or the Common Facilities;
|
10.2.10. |
decorations for the lobbies and other Common Facilities in the Building;
|
10.2.11. |
the cost of licenses, permits and similar fees and charges related to operation, repair and maintenance of the Building, the Property and the Common Facilities; and
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10.2.12. |
any and all other expenditures of the Landlord in connection with the operation, alteration, repair or maintenance of the Property, the Common Facilities or the Building as a first-class office building and facilities in the immediate area which are properly treated as an expense fully deductible as incurred in accordance with generally applied real estate accounting practice. In determining Base Year Operational Expenses, Landlord may adjust any line item which, when compared to the same line item for the year prior to the Base Year, has increased at a rate which is more than double the increase in the Index at the end of the year prior to the Base Year compared to the Index at the end of the Base Year. In such event, the actual expense incurred for the line item in the Base Year shall be adjusted to equal the amount incurred for the same line item for the year prior to the Base Year multiplied by the sum of one plus the percentage increase in the Index for the one year period.
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10.3.1. |
all costs and expenses incurred by the Landlord in connection with retro-fitting the entire Building or the Common Facilities, or any portion thereof, to comply with any change in Federal, state or local statute, rule, regulation, order or requirement which change takes effect after the original completion of the Building;
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10.3.2. |
all costs and expenses incurred by the Landlord to replace and improve the Property, the Building or the Common Facilities or portions thereof for the purpose of continued operation of the Property, the Building and the Common Facilities as a first class office complex in the immediate area; and
|
10.3.3. |
all costs and expenses incurred by the Landlord in connection with the installation of any energy, labor or other cost saving device or system on the Property or in the Building or the Common Facilities.
|
10.4.1. |
principal or interest on any mortgage indebtedness on the Property, the Building or any portion thereof;
|
10.4.2. |
any capital expenditure, or amortized portion thereof, other than those included in the definition of Capital Expenditures set forth in subsection 10.3 above;
|
10.4.3. |
expenditures for any leasehold improvement which is made in connection with the preparation of any portion of the Building for occupancy by a new tenant or which is not made generally to or for the benefit of the Leased Premises and all Other Leased Premises or generally to the Building or the Common Facilities;
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10.4.4. |
to the extent the Landlord actually receives proceeds of property and casualty insurance policies on the Building, other improvements on the Property or the Common Facilities, expenditures for repairs or replacements occasioned by fire or other casualty to the Building or the Common Facilities;
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10.4.5. |
expenditures for repairs, replacements or rebuilding occasioned by any of the events contemplated by section 16 of this Agreement;
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10.4.6. |
expenditures for costs, including advertising and leasing commissions, incurred in connection with efforts to lease portions of the Building and to procure new tenants for the Building;
|
10.4.7. |
expenditures for the salaries and benefits of the executive officers, if any, of the Landlord; and
|
10.4.8. |
depreciation (as that term is used in the accounting sense in the context of generally applied real estate accounting practice) of the Building, the Common Facilities and any other improvement on the Property.
|
10.5.1. |
Taxes billed, or if a bill has not then been received for the entire period, the Landlord’s projection of Taxes to be billed, for the then current calendar year;
|
10.5.2. |
the amount of Base Year Taxes;
|
10.5.3. |
the amount, if any, by which item 10.5.1 above exceeds item 10.5.2 above; and
|
10.5.4. |
the Tenant’s Share of item 10.5.3 above.
|
10.6.1. |
the actual amount of Taxes for the preceding calendar year in excess of Base Year Taxes (or proportional amount thereof for shorter periods during the Term);
|
10.6.2. |
the Landlord’s previously projected amount of Taxes for the preceding calendar year in excess of Base Year Taxes (or proportional amount thereof for shorter periods during the Term);
|
10.6.3. |
the difference obtained by subtracting item 10.6.2 above from item 10.6.1 above; and
|
10.6.4. |
the Tenant’s Share of item 10.6.3 above.
|
10.7.1. |
the Landlord’s projection of annual Operational Expenses for the current period (if any portion thereof is during the Term);
|
10.7.2. |
the amount of the Base Year Operational Expenses;
|
10.7.3. |
the amount, if any, by which item 10.7.1 above exceeds item 10.7.2 above; and
|
10.7.4. |
the Tenant’s Share of item 10.7.3 above.
|
10.8.1. |
the actual amount of Operational Expenses for the preceding calendar year in excess of Base Year Operational Expenses (or proportional amount thereof for shorter periods during the Term);
|
10.8.2. |
the Landlord’s previously projected amount of Operational Expenses for the preceding calendar year in excess of Base Year Operational Expenses (or proportional amount thereof for shorter periods during the Term);
|
10.8.3. |
the difference obtained by subtracting item 10.8.2 above from item 10.8.1 above; and
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10.8.4. |
the Tenant’s Share of item 10.8.3 above.
|
10.9.1. |
a description of the Capital Expenditure and the subject thereof;
|
10.9.2. |
the date the subject of the respective Capital Expenditure was first placed into service and the period of useful life selected by the Landlord in connection with the determination of the Annual Amortized Capital Expenditure;
|
10.9.3. |
the amount of the Annual Amortized Capital Expenditure; and
|
10.9.4. |
the Tenant’s Share of item 10.9.3 above.
|
12.2.1. |
furnished to the Landlord detailed, New Jersey architect-certified construction drawings, construction specifications and, if they pertain in any way to the heating, ventilation and air conditioning, electric, sprinkler, horn/strobes or other systems of the Building, related engineering design work and specifications regarding, the proposed alterations, improvements or other modifications;
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12.2.2. |
not received a notice from the Landlord objecting thereto in any respect within 30 days of the furnishing thereof (which shall not be deemed the Landlord’s affirmative consent for any purpose);
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12.2.3. |
obtained any necessary or appropriate building permits or other approvals from the Municipality and, if such permits or other approvals are conditional, satisfied all conditions to the satisfaction of the Municipality; and
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12.2.4. |
met, and continued to meet, all the following conditions with regard to any contractors selected by the Tenant and any subcontractors, including materialmen, in turn selected by any of them:
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12.2.4.1. |
the Tenant shall have sole responsibility for payment of, and shall pay, such contractors;
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12.2.4.2. |
the Tenant shall have sole responsibility for coordinating, and shall coordinate, the work to be supplied or performed by such contractors, both among themselves and with any contractors selected by the Landlord;
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12.2.4.3. |
the Tenant shall not permit or suffer the filing of any notice of construction lien claim or other lien or prospective lien by any such contractor or subcontractor with respect to the Property, the Common Facilities, the Building or any other improvements on the Property; and if any of the foregoing should be filed by any such contractor or subcontractor, the Tenant shall forthwith obtain and file the complete discharge and release thereof or provide such payment bond(s) from a reputable, financially sound institutional surety as will, in the opinions of the Landlord, the holders of any mortgage indebtedness on, or other interest in, the Property, the Building, the Common Facilities or any other improvements on the Property, or any portions thereof, and their respective title insurers, be adequate to assure the complete discharge and release thereof;
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12.2.4.4. |
prior to any such contractor’s entering upon the Property, the Building or the Leased Premises or commencing work the Tenant shall have delivered to the Landlord (a) all the Tenant’s certificates of insurance set forth in section 14 of this Agreement, conforming in all respects to the requirements of section 14 of this Agreement, except that the effective dates of all such insurance policies shall be prior to any such contractor’s entering upon the Property, the Building or the Leased Premises or commencing work (if any work is scheduled to begin before the Commencement Date) and (b) similar certificates of insurance from each of the Tenant’s contractors providing for coverage in equivalent amounts, together with their respective certificates of workers’ compensation insurance, employer’s liability insurance and products-completed operations insurance, the latter providing coverage in at least the amount required for the Tenant’s comprehensive general public liability and excess insurance;
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12.2.4.5. |
each such contractor shall be a party to collective bargaining agreements with those unions that are certified as the collective bargaining agents of all bargaining units of such contractor, of which all such contractor’s workpersons shall be members in good standing;
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12.2.4.6. |
each such contractor shall perform its work in a good and workpersonlike manner and shall not interfere with or hinder (i) the Landlord or any other contractor in any manner, (ii) any building operations or systems, or (iii) any tenant of Other Leased Premises;
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12.2.4.7. |
there shall be no labor dispute of any nature whatsoever involving any such contractor or any workpersons of such contractor or the unions of which they are members with anyone; and if such a labor dispute exists or comes into existence the Tenant shall forthwith, at the Tenant’s sole cost and expense, remove all such contractors and their workpersons from the Building, the Common Facilities and the Property;
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12.2.4.8. |
in each case, the electrical contractor, the HVAC contractor, the plumbing contractor and the security contractor engaged by the Tenant must be the same contractor which is engaged by the Landlord to perform work in the Building; and
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12.2.4.9. |
the Tenant shall have the sole responsibility for the security, cleanliness and safety of the Leased Premises and all contractors’ materials, equipment and work, regardless of whether their work is in progress or completed.
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12.2.4.10. |
Landlord’s approval of any or all of the construction drawings and specifications shall not constitute an opinion or agreement by Landlord as to the sufficiency or accuracy of such construction drawings and specifications or that such construction drawings and specifications comply with Law; nor shall such approval impose any present or future liability on Landlord or waive any of Landlord’s rights under this Agreement.
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14.1.1. |
commercial general liability insurance (including “broad form and contractual liability” coverage) and excess (“umbrella”) insurance which, without limiting the generality of the foregoing, considered together shall insure against such risks as bodily injury, death and property damage, with a combined single limit of not less than $3,000,000.00 for each occurrence; and
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14.1.2. |
“all-risks” property insurance covering the Leased Premises in an amount sufficient, as determined by the Landlord from time to time, to cover the replacement costs for all Tenant’s alterations, improvements, fixtures and personal property located in or on the Leased Premises.
|
14.2.1. |
as to which this Agreement requires either party to maintain insurance, or
|
14.2.2. |
as to which either party is effectively insured and for which risks the other party may be liable,
|
14.2.3. |
the party required to maintain such insurance and the party effectively insured shall use its best efforts to obtain a clause, if available from the respective insurer, in each such insurance policy expressly waiving any right of recovery, by reason of subrogation to such party’s rights or otherwise, the respective insurer might otherwise have or obtain against the other party, so long as such a clause can be obtained in the respective insurance policy without additional premium cost. If such a clause can be obtained in the respective insurance policy, but only at additional premium cost, such party shall, by notice to the other party, promptly advise the other party of such fact and the amount of the additional premium cost. If the other party desires the inclusion of such a clause in the notifying party’s respective insurance policy, the other party shall, within 10 days of receipt of the notifying party’s notice, by notice advise the notifying party of its desire and enclose therewith its check in the full amount of the additional premium cost; otherwise the notifying party need not obtain such a clause in the respective insurance.
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14.3.1. |
that the waiver set forth in this subsection 14.3 does not cause or result in any cancellation of, or diminution in, the insurance coverage otherwise available under any applicable insurance policy;
|
14.3.2. |
of the proceeds of any applicable insurance policy (without adjustment for any deductible amount set forth therein) actually received by such party for such respective loss or damages; and
|
14.3.3. |
the substance of the clause contemplated by subsection 14.2 of this Agreement is actually and effectively set forth in the respective insurance policy.
|
14.6.1. |
no act or omission of the Tenant, its employees, other agents or Guests shall result in a loss of insurance coverage otherwise available under such policy to any person required to be named as an additional insured in accordance with subsection 14.1 of this Agreement; and
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14.6.2. |
the insurance coverage afforded by such policy shall not be diminished, cancelled, permitted to expire or otherwise terminated for any reason except upon 30 days’ prior written notice from the insurer to every person required to be named as an additional insured in accordance with subsection 14.1 of this Agreement.
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15.1.1. |
If, in Landlord’s opinion, the restoration described above will take more than 180 days then Landlord may elect to cancel this Agreement effective as of the date of casualty. Notice of the Landlord’s election shall be served upon the Tenant within the 30 business day period described above.
|
15.1.2. |
If, in Landlord’s opinion, the restoration described above will take 180 days or less, then Landlord shall not cancel this Agreement and must restore the Building and the Leased Premises as aforesaid. In either of such events, the Landlord shall cause restoration to proceed diligently and expediently to the extent the Landlord has received proceeds of any property, casualty or liability insurance on the damaged portions (or would have received such proceeds had it obtained such coverage).
|
15.2.1. |
such time as the Leased Premises are again fully usable and be reduced during such period by the amount which bears the same proportion to the Rent otherwise payable during such period as the gross rentable floor space of the Leased Premises which are rendered unusable bears to the gross rentable floor space of the Leased Premises. The restoration of the improvements constructed or installed prior to the Term or during the Term in excess of the original allowance for the same shall be the Tenant’s responsibility. Tenant shall make reasonable, good faith efforts to integrate the restoration which is its responsibility with the work which is being performed by Landlord. To the extent that is not feasible, Tenant shall be allowed an additional, reasonable interval to complete its work, not to exceed sixty days and Rent shall abate during the interval required for such restoration. The Landlord shall cooperate with Tenant to integrate the restoration of such improvements during the reconstruction period; or
|
15.2.2. |
this Agreement is canceled pursuant to the provisions of subsections 15.1.
|
17.1.1. |
assign, or purport to assign, this Agreement or any of the Tenant’s rights hereunder;
|
17.1.2. |
sublet, or purport to sublet, the Leased Premises or any portion thereof;
|
17.1.3. |
license, or purport to license, the use or occupancy of the Leased Premises or any portion thereof;
|
17.1.4. |
otherwise transfer, or attempt to transfer any interest including, without limiting the generality of the foregoing, a mortgage, pledge or security interest, in this Agreement, the Leased Premises or the right to the use and occupancy of the Leased Premises; or
|
17.1.5. |
indirectly accomplish, or permit or suffer the accomplishment of, any of the foregoing by merger or consolidation with another entity, by acquisition or disposition of assets or liabilities outside the ordinary course of the Tenant’s business or by acquisition or disposition, by the Tenant’s equity owners or subordinated creditors, of any of their respective interests in the Tenant.
|
17.2.1. |
the full name, address and telephone number of the proposed assignee or sublessee;
|
17.2.2. |
a description of the type(s) of business in which the proposed assignee or sublessee is engaged and proposes to engage;
|
17.2.3. |
a description of the precise use to which the proposed assignee or sublessee intends to put the Leased Premises or portion thereof;
|
17.2.4. |
the proposed assignee’s or subtenant’s most recent quarterly and annual financial statements prepared in accordance with generally accepted accounting principles and any other evidence of financial position and responsibility that the Tenant or proposed assignee or sublessee may desire to submit;
|
17.2.5. |
by diagram and measurement of the actual square feet of floor space, the precise portion of the Leased Premises proposed to be subject to the assignment of this Agreement or to be sublet;
|
17.2.6. |
a complete, accurate and detailed description of the terms of the proposed assignment or sublease including, without limiting the generality of the foregoing, all consideration paid or given, or proposed to be paid or to be given, by the proposed assignee, sublessee or other person to the Tenant and the respective times of payment or delivery; and
|
17.2.7. |
any other information reasonably requested by the Landlord.
|
17.3.1. |
grant consent on the terms and conditions set forth in subsection 17.4 of this Agreement and such other reasonable terms and conditions set forth in the Landlord’s notice;
|
17.3.2. |
refuse to grant consent for any of the reasons set forth in subsection 17.5 of this Agreement or for any other reasonable reason set forth in the Landlord’s notice; or
|
17.3.3. |
elect to terminate the Term as of (a) the end of the third full month after the Tenant has given notice of the Tenant’s desire to assign or sublet or (b) the proposed effective date of the proposed assignment or sublease.
|
17.4.1. |
any proposed assignee or sublessee shall, by document executed and delivered forthwith to the Landlord, agree to be bound by all the obligations of the Tenant set forth in this Agreement;
|
17.4.2. |
the Tenant shall remain liable under this Agreement, jointly and severally with any proposed assignee or sublessee, for the timely performance of all obligations of the Tenant set forth in this Agreement;
|
17.4.3. |
the Tenant shall forthwith deliver to the Landlord manually executed copies of all documents regarding the proposed assignment or sublease and a written, accurate and complete description, manually executed both by the Tenant and the proposed assignee or sublessee, of any other agreement, arrangement or understanding between them regarding the same;
|
17.4.4. |
with respect to any consideration or other thing of value received or to be received by the Tenant in connection with any such assignment or sublease (other than those payable in equal monthly installments each month during the proposed term of any such assignment or sublease), the Tenant shall pay to the Landlord one-half of any such amount and one-half of the fair market value of any other thing of value within 10 days of receipt of same;
|
17.4.5. |
with respect to any amount payable to the Tenant in equal monthly installments each month during the proposed term of any such assignment or sublease in connection with such assignment or sublease, which amount is in excess of the amount which bears the same ratio to the monthly installment of Rent due from the Tenant as the usable floor space of the Leased Premises subject to the assignment or sublease bears to the usable floor space of the entire Leased Premises, the Tenant shall pay one-half of such excess to the Landlord together with the Tenant’s monthly installment of Rent;
|
17.4.6. |
the proposed use of the Leased Premises is the same as that permitted under subsection 7.1 of this Agreement; and
|
17.4.7. |
Tenant shall reimburse Landlord for the reasonable expenses incurred in connection with the review of the proposed assignment or sublease and the documentation related thereto.
|
17.5.1. |
the Landlord desires to take one of the other actions enumerated in subsection 17.3 of this Agreement;
|
17.5.2. |
there is already another assignee, sublessee or licensee of all or a portion of the Leased Premises;
|
17.5.3. |
the proposed sublessee or assignee, or any of their affiliates, is an existing tenant in the Building; or
|
17.5.4. |
the proposed sublease is for a term of less than one year;
|
17.5.5. |
the proposed sublease is for a term which would expire after the Term;
|
17.5.6. |
less than one year remains in the Term as of the proposed effective date of the proposed assignment or sublease;
|
17.5.7. |
the general reputation, financial position or ability or type of business of, or the anticipated use of the Leased Premises by, the proposed assignee or proposed sublessee is unsatisfactory to the Landlord or is inconsistent with those of tenants of Other Leased Premises or inconsistent with any commitment made by the Landlord to any such other tenant;
|
17.5.8. |
the proposed consideration to be paid to the Tenant during any period of 12 months is less than the amount of the Market Rental Rate divided by the gross rentable floor space of the Leased Premises and multiplied by that portion of the gross rentable floor space of the Leased Premises proposed to be subject to the proposed assignment or sublease;
|
17.5.9. |
the gross rentable floor space of the portion of the Leased Premises proposed to be sublet is less than one-third of the gross rentable floor space of the Leased Premises; or
|
17.5.10. |
Tenant has advertised or listed the space for subleasing or assignment at a rate which is less than the rate being quoted by Landlord for other available space in the Building.
|
21.2.1 |
Retain any or all wiring, cables and similar installations appurtenant thereto installed by Tenant in the risers, ceilings, plenums and electrical closets of the Building (the “Wiring”);
|
21.2.2 |
Remove any or all such Wiring and restore the Leased Premises and the Building to the condition existing prior to the installation of the Wiring (“Wire Restoration Work”). Landlord shall perform such Wire Restoration Work at Tenant’s sole cost and expense; or
|
21.2.3 |
Require Tenant to perform the Wire Restoration Work at Tenant’s sole cost and expense. In such event, Tenant shall submit the contract for the Wire Restoration Work to Landlord for Landlord’s prior approval.
|
21.4.1. |
Tenant shall be the sole owner of such Wiring, that Tenant shall have good right to surrender such Wiring, and that such Wiring shall be free of all liens and encumbrances; and
|
21.4.2 |
All Wiring shall be left in good condition, working order, properly labeled and terminated at each end and in each telecommunications/electrical closet and junction box, and in safe condition.
|
21.5.1. |
Landlord elects to retain the Wiring pursuant to subsection 21.2.1 of this Agreement;
|
21.5.2. |
Landlord elects to perform the Wiring Restoration Work pursuant to subsection 21.2.2 of this Agreement and the Wiring Restoration Work is complete and Tenant has fully reimbursed Landlord for all costs related thereto; or
|
21.5.2. |
Landlord elects to require the Tenant to perform the Wiring Restoration Work pursuant to subsection 21.2.3 of this Agreement and the Wiring Restoration Work is complete and Tenant has paid for all costs related thereto;
|
21.5.3. |
In the event Tenant fails or refuses to pay all costs of the Wiring Restoration Work within ten (10) business
days of Tenant’s receipt of Landlord’s notice requesting Tenant’s reimbursement for or payment of such costs, Landlord may apply all or any portion of Tenant’s Security Deposit toward the payment of such unpaid costs relative to the Wiring Restoration Work.
|
21.5.4. |
The retention or application of such Security Deposit by Landlord pursuant to this section 21 does not constitute a limitation on or waiver of Landlord’s right to pursue any other or further remedies at law or in equity.
|
22.6.1. |
the Tenant’s becoming a “debtor,” as that term is defined in section 101 of the Bankruptcy Code;
|
22.6.2. |
any time when either the value of the Tenant’s liabilities exceed the value of the Tenant’s assets or the Tenant is unable to pay its obligations as and when they respectively become due in the ordinary course of business;
|
22.6.3. |
the appointment of a receiver or trustee of the Tenant’s property or affairs; or
|
22.6.4. |
the Tenant’s making an assignment for the benefit of, or an arrangement with or among, creditors or filing a petition in insolvency or for reorganization or for the appointment of a receiver;
|
23.1.1. |
to elect to terminate the Term by giving notice of such election, and the effective date thereof, to the Tenant and to receive Termination Damages;
|
23.1.2. |
to elect to re-enter and re-take possession of the Leased Premises, without thereby terminating the Term, by giving notice of such election, and the effective date thereof, to the Tenant and to receive Re-Leasing Damages;
|
23.1.3. |
if the Tenant remains in possession of the Leased Premises after the Tenant’s obligation to surrender the Leased Premises shall have arisen, to remove the Tenant and the Tenant’s and any others’ possessions from the Leased Premises by any of the following means without any liability to the Tenant therefore, any such liability to the Tenant therefore which might otherwise arise being hereby waived by the Tenant: legal proceedings (summary or otherwise), writ of dispossession and any other means and to receive Holdover Damages and, except in the circumstances contemplated by section 20 of this Agreement, to receive all expenses incurred in removing the Tenant and the Tenant’s and any others’ possessions from the Leased Premises, and of storing such possessions if the Landlord so elects;
|
23.1.4. |
to be awarded specific performance, temporary restraints and preliminary and permanent injunctive relief regarding Events of Default where the Landlord’s rights and remedies at law may be inadequate, without the necessity of proving actual damages or the inadequacy of the rights and remedies at law;
|
23.1.5. |
to receive all expenses incurred in securing, preserving, maintaining and operating the Leased Premises during any period of vacancy, in making repairs to the Leased Premises, in preparing the Leased Premises for re-leasing and in re-leasing the Leased Premises including, without limiting the generality of the foregoing, any brokerage commissions;
|
23.1.6. |
to receive all legal expenses, including without limiting the generality of the foregoing, attorneys’ fees incurred in connection with pursuing any of the Landlord’s rights and remedies, including indemnification rights and remedies;
|
23.1.7. |
if the Landlord, in its sole discretion, elects to perform any obligation of the Tenant under this Agreement (other than the obligation to pay Rent) which the Tenant has not timely performed, to receive all expenses incurred in so doing;
|
23.1.8. |
to elect to pursue any legal or equitable right and remedy available to the Landlord under this Agreement or otherwise; and
|
23.1.9. |
to elect any combination, or any sequential combination of any of the rights and remedies set forth in subsection 23.1 of this Agreement.
|
23.2.1. |
all accrued but unpaid Rent;
|
23.2.2. |
the present value (calculated using the most recently available (at the time of calculation) published weekly average yield on United States Treasury securities having maturities comparable to the balance of the then remaining Term) of the sum of all payments of Rent remaining due (at the time of calculation) until the date the Term would have expired (had there been no election to terminate it earlier) and it shall be assumed for purposes of such calculations that (i) the amount of future Additional Rent due per year under this Agreement will be equal to the average Additional Rent per month due during the 12 full calendar months immediately preceding the date of any such calculation, increasing annually at a rate of eight percent compounded, (ii) if any calculation is made before the first anniversary of the end of the No Pass Through Period, the average Additional Rent due for any month after the end of the No Pass Through Period will be equal to nine percent of the sum of the Base Year Operational Expenses, Base Year Taxes and Tenant Electric Charges (considered on an annual basis), (iii) if any calculation is made before the beginning of the Base Year, the sum of Base Year Taxes and Base Year Operational Expenses shall be assumed to be $7.50 per gross rentable square foot and (iv) if any calculation is made before the end of the Base Year, Base Year Taxes and Base Year Operational Expenses may be extrapolated based on the year to date experience of the Landlord);
|
23.2.3. |
the Landlord’s reasonably estimated cost of demolishing any leasehold improvements to the Leased Premises;
|
23.2.4. |
the total amount of free rent waived in connection with the making of this Agreement; and
|
23.2.5. |
that amount, which as of the occurrence of the Event of Default, bears the same ratio to the costs, if any, incurred by the Landlord (and not paid by the Tenant) in building out the Leased Premises in accordance with section 5 of this Agreement as the number of months remaining in the Term (immediately before the occurrence of the Event of Default) bears to the number of months in the entire Term (immediately before the occurrence of the Event of Default).
|
23.5.1. |
any notices for delivery of possession thereof, of termination, of demand for removal therefrom, of the cause therefore, to cease, to quit and all other notices that might otherwise be required pursuant to 2A N.J.S.A. 18-53 et seq.;
|
23.5.2. |
any right the Tenant might otherwise have to cause a termination of the action or proceeding by paying to the Landlord or into court or otherwise any Rent in arrears;
|
23.5.3. |
any right the Tenant might otherwise have to a period of waiting between issuance of any warrant in execution of any judgment for possession obtained by the Landlord and the execution thereof;
|
23.5.4. |
any right the Tenant might otherwise have to transfer or remove such proceeding from the court (or the particular division or part of the court) or other forum in which it shall have been instituted by the Landlord to another court, division or part;
|
23.5.5. |
any right the Tenant might otherwise have to redeem the Tenant’s former leasehold interest between the entry of any judgment and the execution of any warrant issued in connection therewith by paying to the Landlord or into Court or otherwise any Rent in arrears; and
|
23.5.6. |
any right the Tenant might otherwise have to appeal any judgment awarding possession of the Leased Premises to the Landlord.
|
24.1.1. |
expiration of the Term;
|
24.1.2. |
in connection with a transaction contemplated by section 16 of this Agreement, the later of (a) the vesting of the acquiring party’s right to possession or (b) the Tenant’s vacating the Leased Premises;
|
24.1.3. |
under the circumstances contemplated by subsection 15.1 of this Agreement, upon the Tenant’s giving prompt notice of the failure of the Landlord to give, on a timely basis, the notice contemplated by subsection 15.1.2 of this Agreement and that the Tenant desires termination of the Term (which termination shall be effective as of the date of the subject casualty with respect to those portions of the Leased Premises rendered untenantable and as of the date of the Tenant’s giving notice with respect to those portions of the Leased Premises which were not rendered untenantable);
|
24.1.4. |
under the circumstances contemplated by subsection 15.1 of this Agreement, upon the expiration of 45 additional days (without the Landlord’s completion of restoration in the interim) after the Tenant shall have given prompt notice that the Landlord has not restored the Leased Premises on a timely basis and that the Tenant desires termination of the Term (which termination shall be effective as of the date of the subject casualty with respect to those portions of the Leased Premises rendered untenantable and as of the date of the Tenant’s giving notice with respect to those portions of the Leased Premises which were not rendered untenantable);
|
24.1.5. |
the effective date of any election by the Landlord under subsection 17.3.3 of this Agreement in response to the Tenant’s notice of the Tenant’s desire to assign this Agreement or to sublet all or a portion of the Leased Premises; or
|
24.1.6. |
the effective date of any election by the Landlord to terminate the Term under subsection 23.1.1 of this Agreement.
|
26.5.1. |
upon the expiration or earlier termination of the term of any such ground lease before the termination of the Term under this Agreement, the Tenant shall attorn to, and become the Tenant of, the lessor under any such ground lease and recognize such lessor as the Landlord under this Agreement for the balance of the Term; and
|
26.5.2. |
such expiration or earlier termination of the term of any such ground lease shall have no effect on the Term under this Agreement.
|
27.1.1. |
any matter, cause or thing arising out of the use, occupancy, control or management of the Leased Premises or any portion thereof which is not caused directly, exclusively and entirely by the Landlord’s active gross negligence or intentional act without the intervention of any other cause or contributing factor whatsoever;
|
27.1.2. |
any negligence or intentional act on the part of the Tenant or any of its employees, other agents or Guests;
|
27.1.3. |
any accident, injury or damage to any person or property occurring in or about the Leased Premises which is not caused directly, exclusively and entirely by the Landlord’s active gross negligence or intentional act without the intervention of any other cause or contributing factor whatsoever;
|
27.1.4. |
any representation made by the Tenant in this Agreement shall have been inaccurate or incomplete in any material respect either on the date it was made or the date as of which it was made;
|
27.1.5. |
the imposition of any mechanic’s, materialman’s or other lien on the Property, the Common Facilities, the Building, the Leased Premises or any portion of any of the foregoing, or the filing of any notice of intention to obtain any such lien, in connection with any alteration, improvement or other modification of the Leased Premises made or authorized by the Tenant (which indemnification obligation shall be deemed to include the Tenant’s obligations set forth in subsection 12.2.4.3 of this Agreement); or
|
27.1.6. |
any failure on the part of the Tenant to perform or comply with any obligation of the Tenant set forth in this Agreement.
|
28.1.1. |
the inability of the Landlord to provide any utility or service to be provided by the Landlord, as described in section 8 of this Agreement which is due to causes beyond the Landlord’s control, or to necessary or advisable improvements, maintenance, repairs or emergency, so long as the Landlord uses reasonable efforts and diligence under the circumstances to restore the interrupted service or utility;
|
28.1.2. |
any improvement, modification, alteration or other change made to the Property, the Building or the Common Facilities by the Landlord consistently with the Landlord’s obligations set forth in subsection 13.2 of this Agreement; and
|
28.1.3. |
any change in any Federal, state or local law or ordinance.
|
32.1.1. |
whether this Agreement is then in full force and effect;
|
32.1.2. |
whether this Agreement has not been amended, modified, superseded, canceled, repudiated or revoked;
|
32.1.3. |
whether the Landlord has satisfactorily completed all construction work, if any, required of the Landlord or contractors selected and retained by the Landlord in connection with readying the Leased Premises for occupancy by the Tenant in accordance with section 5 of this Agreement;
|
32.1.4. |
whether the Tenant is then in actual possession of the Leased Premises;
|
32.1.5. |
whether the Tenant then has no defenses or counterclaims under this Agreement or otherwise against the Landlord or with respect to the Leased Premises;
|
32.1.6. |
whether Landlord is not then in breach of this Agreement in any respect;
|
32.1.7. |
whether the Tenant then has knowledge of any assignment of this Agreement, the pledging or granting of any security interest in this Agreement or in Rent due and to become due under this Agreement;
|
32.1.8. |
whether Rent is not then accruing under this Agreement in accordance with its terms;
|
32.1.9. |
whether any Rent is not then in arrears;
|
32.1.10. |
whether Rent due or to become due under this Agreement has not been prepaid by more than one month;
|
32.1.11. |
if the response to any of the foregoing matters is in the negative, a specification of all the precise reasons that necessitated the negative response in each instance; and
|
32.1.12. |
any other matter reasonably requested by the Landlord or any of its mortgagees, ground lessors or lessees or transferees or prospective mortgagees, ground lessors or lessees or transferees, including, without limiting the generality of the foregoing, such information as the Landlord may request for purposes of assuring compliance with ISRA, as it may be amended, and any other applicable Federal, state or local statute, ordinance, rule, regulation or order concerned with environmental matters.
|
32.2.1. |
its written consent to any requested modifications of this Agreement provided that, in each such instance, the requested modification does not increase the Rent otherwise due or, in the reasonable judgment of the Tenant, otherwise materially increase the obligations of the Tenant under this Agreement or materially adversely affect the Tenant’s leasehold interest created hereby or the Tenant’s use and enjoyment of the Leased Premises (except in the circumstances contemplated by section 16 of this Agreement); and
|
32.2.2. |
summary financial information regarding its financial position as of the close of its most recently completed fiscal year and its most recently completed interim fiscal period and regarding its results of operations for the periods then ended and comparable year earlier periods, certified by Tenant’s chief financial officer to be a complete, accurate and fair presentation of the summary financial information purporting to be set forth therein.
|
|
LANDLORD:
S/K 520 ASSOCIATES
By: S/K 520 Corp.
By:
/s/ Jonathan Kushner
Jonathan Kushner, Vice President
TENANT:
FOAMIX PHARMACEUTICALS INC.
By:
/s/ David Damzalski
David Damzalski, Chief Executive Officer
|
(1) |
along said southerly sideline of U.S. Highway 22 South 60 degrees 05’ 00” E 350.00 feet; thence
|
(2) |
making a new property line through lands of George Halama S 04 degrees 07’ 37” W 777.68 feet; thence
|
(3) |
making another new property line through lands of said George Halama, and along properties now or formerly of David A. and Eunice Jenkins, Joseph and Victoria Datchko, Mary and Thomas M. Richards, and Alfred and Mamie Mancini S 88 degrees 15’ 28” E 1034.99 feet to a point on the westerly sideline of Country Club Road; thence
|
(4) |
along said westerly sideline S 08 degrees 19’ 58” E 25.39 feet; thence
|
(5) |
along the property lines now or formerly of the Raritan Valley Country Club and of the St. Bernard’s Cemetery N 88 degrees 15’ 28” W 1223.40 feet; thence
|
(6) |
along the property line of said St. Bernard’s Church N 03 degrees 42’ 11” W 971.65 feet to the said southerly sideline of U.S. Highway 22, and the point and place of
BEGINNING.
|
1. |
“Additional Rent” means all amounts, other than Basic Rent and any Security Deposit, required to be paid by the Tenant to the Landlord in accordance with this Agreement.
|
2. |
“Agreement” means this Lease and Lease Agreement (including exhibits), as it may have been amended.
|
3. |
“Annual Amortized Capital Expenditure” means the payment amount determined as an annuity in arrears using the cost incurred by the Landlord for any Capital Expenditure as the present value, a number of periods equal to the number of years of its useful life (not exceeding 10 years) selected by the Landlord in accordance with generally applied real estate accounting practice and the Base Rate in effect when the respective improvement is first placed into service plus two additional percentage points as the annual rate of interest.
|
4. |
“Base Rate” means the prime commercial lending rate per year as announced from time to time by Bank of America at its principal office.
|
5. |
“Base Year” means the full calendar year 2017 with respect to Operational Expenses and Taxes.
|
6. |
“Base Year Operational Expenses” means Operational Expenses incurred by the Landlord during the Base Year as defined in subsection 10.2 of this Agreement.
|
7. |
“Base Year Taxes” means the product of the final assessed value, as the same may subsequently be adjusted in any appeal of the tax assessor’s valuation, of the Property, the Building and any other improvements on the Property in the Base Year and the Municipality’s lowest tax rate for office buildings and the property on which they stand in effect during the Base Year.
|
8. |
“Basic Rent” is defined in subsection 3.2 of this Agreement.
|
9. |
“Broker” is defined in subsection 30.2 of this Agreement.
|
10. |
“Building” means the office building erected on the Property which is commonly known as 520 Route 22, Bridgewater, New Jersey, as it may, in the Landlord’s sole discretion, be increased, decreased, modified, altered or otherwise changed from time to time before, during or after the Term. As the Building is presently constructed it is agreed to contain 60,797 gross rentable square feet of floor space.
|
11. |
“Capital Expenditure” is defined in subsection 10.3 of this Agreement.
|
12. |
“Commencement Date” is defined in section 4 of this Agreement.
|
13. |
“Common Facilities” means the areas, facilities and improvements provided by the Landlord in the Building (except the Leased Premises and the Other Leased Premises) and on or about the Property, including, without limiting the generality of the foregoing, the Parking Facilities and access roads thereto, for non-exclusive use by the Tenant in accordance with subsection 2.2 of this Agreement, as they may, in the Landlord’s sole discretion, be increased, decreased, modified, altered or otherwise changed from time to time before, during or after the Term, and subject to rights which may be granted to the major tenant to utilize the lobby as a common reception area.
|
14. |
“Common Walls” means those walls which separate the Leased Premises from Other Leased Premises.
|
15. |
“Election Right” is defined in subsection 21.2 of this Agreement.
|
16. |
“Electric Charges” means all the supplying utility’s charges for, or in connection with, furnishing electricity including charges determined by actual usage, any seasonal adjustments, demand charges, energy charges, energy adjustment charges and any other charges, howsoever denominated, of the supplying utility, including sales and excise taxes and the like.
|
17. |
“Environmental Laws” is defined in subsection 7.2.8 (ii) of this Agreement.
|
18. |
“Event of Default” is defined in section 22 of this Agreement.
|
19. |
“Expiring Term” means, when used in the context of any Option to Renew, the Term as it is then scheduled to expire (immediately prior to exercise of the next available Option to Renew).
|
20. |
“FRD” is defined in subsection 32.4 of this Agreement.
|
21. |
The Tenant’s “Guests” shall mean the Tenant’s licensees, invitees and all others in, on or about the Leased Premises, the Building, the Common Facilities or the Property, either at the Tenant’s express or implied request or invitation or for the purpose of soliciting or visiting the Tenant.
|
22. |
“Hazardous Substance” is defined in subsection 7.2.8 (ii) of this Agreement.
|
23. |
A “History of Recurring Events of Default” means the occurrence of two or more Events of Default (whether or not cured by the Tenant) in any period of 12 months.
|
24. |
“Holdover Damages” is defined in subsection 23.4 of this Agreement.
|
25. |
“Index” means the “all items” index figure for the New York Northeastern New Jersey average of the Consumer Price Index for all urban wage earners and clerical workers which uses a base period of 1982-84=100, published by the United States Department of Labor, so long as it continues to be published. If the Index is not published for a period of three consecutive months, or if its base period is changed, the term “Index” shall mean that index, as nearly equivalent in purpose, function and coverage as practicable to the original Index, which the Landlord shall have designated by notice to the Tenant.
|
26. |
“Initial Term” means the period so designated in subsection 4.1 of this Agreement.
|
27. |
“Initial Year” means the first 12 full calendar months of the Initial Term.
|
28. |
“ISRA” is defined in subsection 7.2.8(ii) of this Agreement.
|
29. |
“Landlord” means the person so designated at the beginning of this Agreement and those successors to the Landlord’s interest in the Property and/or the Landlord’s rights and obligations under this Agreement contemplated by section 26 of this Agreement.
|
30. |
“Leased Premises” means that portion of the interior of the Building (as viewed from the interior of the Leased Premises) bounded by the interior sides of the unfinished floor and the finished ceiling on the floor (as the floors have been designated by the Landlord) of the Building, the centers of all Common Walls and the exterior sides of all walls other than Common Walls, the outline of which floor space is designated on the diagram set forth in Exhibit A attached hereto, which portion contains 10,000 square feet of gross rentable floor space.
|
31. |
“Legal Holidays” means New Year’s Day, Presidents’ Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
|
32. |
“LSRP” is defined in subsection 32.5 of this Agreement.
|
33. |
“Market Rental Rate” means, at the time of reference, the gross rentable floor space of the Leased Premises multiplied by the greater of: (a) that annual rate of Basic Rent per square foot of gross rentable floor space which is then being quoted by the Landlord for comparable Other Leased Premises (or would then be quoted if comparable Other Leased Premises were then available) or (b) that annual rate of Basic Rent per square foot of gross rentable floor space in effect during the Expiring Term.
|
34. |
“Municipality” means Bridgewater, New Jersey, or any successor municipality with jurisdiction over the Property.
|
35. |
“NJDEP” is defined in subsection 32.4 of this Agreement.
|
36. |
“No Pass Through Period” means, in the context of Operational Expenses and Taxes, the period beginning on the Commencement Date and ending on the day prior to the first anniversary of the Commencement Date.
|
37. |
“Nuisance” means any condition or occurrence which unreasonably or materially interferes with the authorized use and enjoyment of the Other Leased Premises and the Common Facilities by any tenant of Other Leased Premises or by any person authorized to use any Other Leased Premises or Common Facilities.
|
38. |
“Operational Expenses” is defined in subsection 10.2 of this Agreement.
|
39. |
“Option to Renew” is defined in subsection 6.1 of this Agreement.
|
40. |
“Other Leased Premises” means all premises within the Building, with the exception of the Leased Premises, that are, or are available to be, leased to tenants or prospective tenants, respectively.
|
41. |
“Parking Facilities” means the parking area adjacent to the Building, which parking area is provided as Common Facilities.
|
42. |
“Person” includes an individual, a corporation, a partnership, a trust, an estate, an unincorporated group of persons and any group of persons.
|
43. |
“Post-Term Rent” is defined in subsection 32.5 of this Agreement.
|
44. |
“Property” means the parcel of land, as it may, in the Landlord’s sole discretion, be increased, decreased, modified, altered or otherwise changed from time to time before, during or after the Term, on which the Building is erected. As the Property is presently constituted, it is more particularly described in Exhibit B attached hereto.
|
45. |
“Regular Business Hours” means 8:00 A.M. to 6:00 P.M., Monday through Friday, except on Legal Holidays.
|
46. |
“Re-Leasing Damages” is defined in subsection 23.3 of this Agreement or in subsection 23.7 of this Agreement, as the case may be.
|
47. |
“Renewal Term” means, at the time of reference, any portion of the Term, other than the Initial Term, as to which the Tenant has properly exercised an Option to Renew which Option to Renew has not been rescinded in accordance with subsection 6.2 of this Agreement.
|
48. |
“Rent” means Basic Rent and Additional Rent.
|
49. |
“Security Deposit” is designated in section 29 of this Agreement.
|
50. |
“SRR Act” is defined in subsection 32.4 of this Agreement.
|
51. |
“Taxes” means, in any calendar year, the aggregate amount of real property taxes, assessments and sewer rents, rates and charges, state and local taxes, transit taxes and every other governmental charge, whether general or special, ordinary or extraordinary (except corporate franchise taxes and taxes imposed on, or computed as a function of, net income or net profits from all sources and except taxes charged, assessed or levied exclusively on the Leased Premises or arising exclusively from the Tenant’s occupancy of the Leased Premises) charged, assessed or levied by any taxing authority with respect to the Property, the Building, the Common Facilities and any other improvements on the Property, less any refunds or rebates (net of expenses incurred in obtaining any such refunds or rebates) of Taxes actually received by the Landlord during such calendar year with respect to any period during the Term for the benefit of the Tenant, tenants of Other Leased Premises and the Landlord. If during the Term there shall be a change in the means or methods of taxing real property generally in effect at the beginning of the Term and another type of tax or method of taxation should be substituted in whole or in part for, or in lieu of, Taxes, the amounts calculated under such other types of tax or by such other methods of taxation shall also be deemed to be Taxes. Until such time as the actual amount of Taxes for any calendar year becomes known, the amount thereof shall be the Landlord’s estimate of Taxes for that calendar year.
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52. |
“Tenant” means the person so designated at the beginning of this Agreement.
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53. |
“Tenant Electric Charges” means (a) during Regular Business Hours, Electric Charges attributable to the Tenant’s use of electricity in the Leased Premises for purposes other than heating, ventilation and air conditioning provided to the Leased Premises by the Landlord in accordance with subsection 8.1.5 of this Agreement and (b) during other than Regular Business Hours, a charge at the rate of $75.00 per hour or partial hour of use plus Electric Charges attributable to the Tenant’s use of electricity in the Leased Premises for all purposes including, without limiting the generality of the foregoing, heating, ventilation and air conditioning. The hourly charge shall be subject to adjustment in accordance with the provisions of subsection 10.10 of this Agreement.
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54. |
“Tenant’s Share” of any amount means 16.5%.
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55. |
“Term” means the Initial Term plus, at the time of reference, any Renewal Term.
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56. |
“Termination Damages” is defined in subsection 23.2 of this Agreement.
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57. |
“Utilities Expenses” means Electric Charges (other than Tenant Electric Charges) and all charges for any other fuel that may be used in providing heat and in providing electricity and services powered by electricity that the Landlord provides in accordance with section 8 of this Agreement to the Building, the Leased Premises, Other Leased Premises, the Common Facilities and the Property, including sales and excise taxes and the like.
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58. |
“Wire Restoration Work” is defined in subsection 21.2.2 of this Agreement.
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59. |
“Wiring” is defined in subsection 21.2.1 of this Agreement.
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60. |
“Work Letter” means Exhibit C attached hereto which generally describes those improvements the Landlord will provide or install in the Leased Premises without installation charge to the Tenant in connection with the preparation of the Leased Premises contemplated by section 5 of this Agreement.
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Tel-Aviv, Israel
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/s/ Kesselman & Kesselman
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March 1
, 2018
|
Certified Public Accountants (Isr.)
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A member firm of PricewaterhouseCoopers International Limited
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Date:
March 1
,2018
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By:
|
/s/ David Domzalski
|
|
David Domzalski
Chief Executive Officer
|
Date:
March 1
,2018
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By:
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/s/ Ilan Hadar
|
|
Ilan Hadar
Chief Financial Officer and
Country Manager
|
Date:
March 1
, 2018
|
By:
|
/s/ David Domzalski
|
|
David Domzalski
Chief Executive Officer
|
Date:
March 1
, 2018
|
By:
|
/s/ Ilan Hadar
|
|
Ilan Hadar
Chief Financial Officer and
Country Manager
|