As
filed with the Securities and Exchange Commission on February 21, 2023
Registration
No. 333-269218
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
Amendment
No. 1
to
FORM
REGISTRATION
STATEMENT
UNDER
THE
SECURITIES ACT OF 1933
CHEMOMAB
THERAPEUTICS LTD.
(Exact
name of registrant as specified in its charter)
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Israel
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2834
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81-3676773
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(State
or other jurisdiction of
incorporation
or organization) |
(Primary
Standard Industrial
Classification
Code Number) |
(I.R.S.
Employer
Identification
No.) |
Kiryat
Atidim, Building 7
Tel
Aviv, 6158002,
Israel
+972-77-331-0156
(Address,
including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Chemomab
Therapeutics, Inc.
One Kendall Square
Building 1400E
Suite 14-105
Cambridge, MA 02139
(857) 259-4622
One Kendall Square
Building 1400E
Suite 14-105
Cambridge, MA 02139
(857) 259-4622
(Name,
address, including zip code, and telephone number, including area code, of agent for service)
Copies
to:
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Brent
D. Fassett
Jesse
F. Schumaker
Wilson
Sonsini Goodrich & Rosati, P.C.
1881
9th Street, Suite 110
Boulder,
CO 80023
(303)
256-5900
|
David
S. Glatt
Ronen
Bezalel
Jonathan M. Nathan Matthew
Rudolph
Meitar | Law Offices 16 Abba Hillel Rd. Ramat Gan 5250608, Israel +972 (3) 610-3100 |
Ivan
Blumenthal
Mintz,
Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
919 Third Avenue New
York, NY 10022
(212)
935-3000 |
Chaim
Friedland
Ari Fried Gornitzky & Co. Vitania Tel Aviv Tower 20 HaHarash Street Tel Aviv, 6761310, Israel +972-3-710-9191 |
Approximate
date of commencement of proposed sale to the public:
As
soon as practicable after the effective date of this Registration Statement.
If
any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check the following box. ☐
If
this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following
box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If
this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration statement for the same offering. ☐
If
this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration statement for the same offering. ☐
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer
☐
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Accelerated filer
☐
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Non-accelerated
filer
☒ |
Smaller reporting company ☒
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Emerging growth company ☒
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If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐
The
Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance
with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission,
acting pursuant to said Section 8(a), may determine.
The
information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities
and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
Subject
to Completion, dated February 21, 2023
PRELIMINARY
PROSPECTUS
Chemomab Therapeutics Ltd.
Up to 7,614,212 American
Depositary Shares and
Warrants to Purchase 7,614,212 American Depositary
Shares
We are offering up
to 7,614,212 American Depositary Shares (“ADSs”), each representing twenty (20) of our ordinary shares, no par value per share,
together with warrants (“Warrants”) to purchase 7,614,212 ADSs (“Warrant ADSs”). The ADSs and Warrants will be
sold in combination, with each Warrant to purchase one ADS accompanying each ADS. The assumed combined public offering price for each
ADS and accompanying warrant is $1.97, which is the last reported sale price of the ADSs on The Nasdaq Capital Market (“Nasdaq”)
on February 16, 2023.
Each Warrant has an
assumed exercise price of $1.97 per ADS, which is the last reported sale price of the ADSs on Nasdaq on February 16, 2023. Each Warrant
will be immediately exercisable and will have a term of five years. The ADSs and Warrants are immediately separable and will be issued
separately in this offering, but they must be purchased together in this offering.
We are also registering
the Warrant ADSs. We refer to the ADSs, the Warrants, the Warrant ADSs and the ordinary shares underlying the ADSs and the Warrant ADSs
collectively as the “Securities.”
The ADSs are listed
on Nasdaq under the symbol “CMMB.” On February 16, 2023, the last reported sale price of the ADSs on Nasdaq was $1.97
per ADS. There is no established public trading market for the Warrants, and we do not expect a market to develop. We do not intend to
apply for listing of the Warrants on any securities exchange or other nationally recognized trading system. Without an active trading
market, the liquidity of the Warrants will be extremely limited.
We are an “emerging
growth company” and a “smaller reporting company” as defined under U.S. federal securities laws and, as such, we have
elected to comply with certain reduced reporting requirements for this prospectus and may elect to do so in future filings.
Investing
in the ADSs and Warrants involves a high degree of risk. See “Risk Factors” beginning on page 8 of this prospectus to read
about factors you should consider before buying the ADSs and Warrants.
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Per ADS and Warrant |
Total | ||
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Public offering price |
$ |
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$ |
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Underwriting discounts and commissions(1)
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$ |
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$ |
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Proceeds, before expenses, to us(2)
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$ |
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$ |
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See “Underwriting” beginning on page 50 of this prospectus for a description of the compensation payable to the underwriters.
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| (2) |
The amount of proceeds, before expenses, to us does not give effect to the exercise of the Warrants. |
Neither the Securities and Exchange Commission
nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete.
Any representation to the contrary is a criminal offense.
The underwriters expect to deliver the ADSs and accompanying Warrants on or about
, 2023.
Sole Book-Running Manager
Oppenheimer
& Co.
Manager
|
Aegis Capital Corp. |
The date of this prospectus is
, 2023.
TABLE OF CONTENTS
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F-1 |
You should rely only on the information contained in this prospectus.
Neither we nor the underwriters have authorized anyone to provide any information or to make any representations other than those contained
in this prospectus or in any free writing prospectuses prepared by or on behalf of us or to which we have referred you. We and the underwriters
take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. This
prospectus is an offer to sell only the Securities offered hereby, but only under circumstances and in jurisdictions where it is lawful
to do so. The information contained in this prospectus or in any applicable free writing prospectus is current only as of its date, regardless
of its time of delivery or any sale of Securities. Our business, financial condition, results of operations and prospects may have changed
since that date.
For investors outside the United States: We have not, and the underwriters
have not, done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action
for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus
must inform themselves about, and observe any restrictions relating to, the offering of the Securities and the distribution of this prospectus
outside the United States.
We use our trademarks and our logo in this prospectus. This prospectus
also includes trademarks, tradenames and service marks that are the property of other organizations. Solely for convenience, trademarks
and tradenames referred to in this prospectus appear without the ® and ™ symbols, but those references are not intended to
indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or that the applicable owner will
not assert its rights, to these trademarks and tradenames.
ii
PROSPECTUS SUMMARY
This summary highlights, and is qualified in its entirety by,
the more detailed information contained in other parts of this prospectus, including any applicable free writing prospectus and the documents
incorporated by reference herein. This summary does not contain all of the information that may be important to you in making your investment
decision. You should read this entire prospectus carefully, especially the “Risk Factors” section beginning on page 8 and
our financial statements and the related notes incorporated by reference herein, before deciding to invest in our Securities. As used
in this prospectus, unless the context otherwise requires, references to “Chemomab Therapeutics Ltd.”, “Chemomab,”
the “Company,” “us,” “we” and “our” refer to Chemomab Therapeutics Ltd., an Israeli company
and its consolidated subsidiaries; however, with respect to the presentation of financial results for historical periods that preceded
the Merger (as defined below), these terms refer to the financial results of the Company’s wholly owned subsidiary, Chemomab Ltd.
(the “Subsidiary”), which was the accounting acquirer in the Merger. References to the “Merger” refer to the merger
involving Anchiano Therapeutics Ltd., or Anchiano, and the Subsidiary, whereby a wholly owned subsidiary of Anchiano merged with and into
the Subsidiary, with the Subsidiary surviving as a wholly owned subsidiary of Anchiano. Upon consummation of the Merger on March 16, 2021,
Anchiano changed its name to “Chemomab Therapeutics Ltd.” and the business conducted by the Subsidiary became primarily the
business conducted by the Company.
Company Overview
Chemomab is a clinical-stage biotechnology company focused on the
discovery and development of innovative therapeutics for fibrotic and inflammatory diseases with high unmet needs. Based on the unique
and pivotal role of the soluble protein CCL24 in promoting fibrosis and inflammation, Chemomab developed CM-101, a monoclonal antibody
designed to bind and block CCL24 activity. CM-101 has demonstrated the potential to treat multiple severe and life-threatening fibrotic
and inflammatory diseases.
Chemomab has pioneered the therapeutic targeting of CCL24, a chemokine
that promotes various types of cellular processes that regulate inflammatory and fibrotic activities through the CCR3 receptor. The chemokine
is expressed in various types of cells, including immune cells, endothelial cells and epithelial cells. We have developed a novel CCL24
inhibiting product candidate with dual anti-fibrotic and anti-inflammatory activity that modulates the complex interplay of both of these
inflammatory and fibrotic mechanisms, which drive abnormal states of fibrosis and clinical fibrotic diseases. This innovative approach
is being developed for difficult to treat rare diseases, also known as orphan indications or diseases, such as primary sclerosing cholangitis,
or PSC, and systemic sclerosis, or SSc, for which patients have no established disease modifying or standard of care treatment options.
We estimate that there are approximately 77 thousand patients suffering from PSC in the U.S., EU and Japan, representing over a $1 billion
market opportunity, and approximately 170 thousand patients suffering from SSc in those same markets, representing over a $1.5 billion
market opportunity.
CM-101, our lead clinical product candidate, is a first-in-class
humanized monoclonal antibody that attenuates the basic function of the soluble chemokine CCL24, also known as eotaxin-2, as a regulator
of major inflammatory and fibrotic pathways. We have demonstrated that CM-101 interferes with the underlying biology of inflammation and
fibrosis through a novel and differentiated mechanism of action. Based on these findings, we are actively advancing CM-101 in Phase 2
clinical studies directed toward two distinct clinical indications that include patients with liver or skin, and/or lung fibrosis. We
are currently conducting a Phase 2 clinical study in PSC, a rare obstructive and cholestatic liver disease. The study is actively recruiting
patients in the U.S., Europe and Israel and is being expanded by adding clinical sites, an additional high dose arm (20mg/kg) as well
as an open label extension. We had earlier proposed to add both low and high dose arms to the study but the recent encouraging results
reported from our Phase 2 liver fibrosis trial in NASH patients, dosed at 5mg/kg, along the positive Phase 1b data we previously reported
in non-alcoholic fibrotic liver disease (NAFLD) patients dosed at 5mg/kg and 2,5mg/kg, are seen as providing us sufficient data on the
performance of the lower dose to drop it from the current trial, which is focusing on the 10mg/kg and 20g/kg doses. We believe this change
will facilitate timely conduct and completion of the trial. If regulators in the future do not agree that the existing low dose data are
sufficient, we always have the option to add a lower dose group as part of the Phase 3 clinical program.
We are also planning to open a Phase 2 clinical trial in SSc in
the first half of 2023. The trial in SSc, a rare autoimmune rheumatic disease characterized by fibrosis in the skin and lung and other
organs, will focus on establishing biological and clinical proof of concept in this patient population. Although our primary focus is
on these two rare indications, as we noted, an additional Phase 2 clinical study in patients with liver fibrosis due to non-alcoholic
steatohepatitis, or NASH has recently been completed. This trial provided safety and pharmacokinetic (PK) data and is informative
in determining whether the company advances the development of its current subcutaneous formulation of CM-101. Additionally, the trial
measured a number of biomarkers that may be relevant to the potential activity of CM-101 in other fibro-inflammatory conditions. We recently
reported results from this trial, which showed that the trial met its primary endpoint of safety and tolerability, and that CM-101 demonstrated
encouraging activity in secondary endpoints that include a range of liver fibrosis biomarkers and physiologic assessments.
Fibrosis is the abnormal and excessive accumulation of collagen
and extracellular matrix, the non-cellular component in all tissues and organs, which provides structural and biochemical support to surrounding
cells. When present in excessive amounts, collagen and extracellular matrix lead to scarring and thickening of connective tissues, affecting
tissue properties and potentially leading to organ dysfunction and failure. Fibrosis can occur in many different tissues, including lung,
liver, kidney, muscle, skin, and the gastrointestinal tract, resulting in a wide array of progressive fibrotic conditions. Fibrosis and
inflammation are intrinsically linked. While a healthy inflammatory response is necessary for efficient tissue repair; after disease or
injury, an excessive, uncontrolled inflammatory response can lead to tissue fibrosis that in turn can further stimulate inflammatory processes
in a fibro-inflammatory vicious cycle.
Risks Associated with Our Business
Our business is subject to numerous risks and uncertainties that
you should consider before investing in our company. These risks are described more fully in the section titled “Risk Factors”
in this prospectus as well as in our Annual Report on Form 10-K for the year ended December 31, 2021 and our subsequent Quarterly Reports
on Form 10-Q. These risks include, but are not limited to, the following:
| • |
We have incurred significant losses since inception and anticipate that we will continue to incur increasing levels of operating
losses over the next several years and for the foreseeable future. We are unable to predict the extent of any future losses or when
we will become profitable, if at all. Even if we become profitable, we may not be able to sustain or increase our profitability on
a quarterly or annual basis. |
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We have a limited operating history and funding, which may make it difficult to evaluate our prospects and likelihood of success.
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Our business is highly dependent on the success of our lead product candidate, CM-101, and any other product candidates that we advance
into clinical studies. All of our programs will require significant additional clinical development. |
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Our central objective is to design and develop targeted treatments for inflammation and fibrosis with an initial focus on the
antagonism of CCL24 signaling, which is known to regulate fibrotic and inflammatory processes. While several studies are currently underway,
our approach in the area of fibrotic diseases is novel and unproven and may not result in marketable products. |
| • |
The successful completion of clinical studies is a prerequisite to submitting a marketing application to the FDA and similar marketing
applications to comparable foreign regulatory authorities, for each product candidate and, consequently, the ultimate approval and commercial
marketing of any product candidates. We may experience negative or inconclusive results, which may result in us deciding, or regulators
requiring us, to conduct additional clinical studies or trials or abandon some or all of its product development programs, which could
have a material adverse effect on our business. |
| • |
We may encounter difficulties enrolling patients in our clinical studies, including due to the continuing effects of the COVID-19
pandemic, or other public health emergencies and related clinical development activities could be delayed or otherwise adversely affected.
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Our ongoing and future clinical studies may reveal significant adverse events or immunogenicity-related responses and may result
in a safety profile that could delay or prevent regulatory approval or market acceptance of our product candidate. |
| • |
The regulatory approval processes of the FDA and comparable foreign authorities are lengthy, time consuming and inherently unpredictable,
and if we are ultimately unable to obtain regulatory approval for CM-101 or any other product candidates, our business will be substantially
harmed. |
| • |
If we do not achieve our projected development and commercialization goals in the timeframes we announce and expect, the commercialization
of our product candidates may be delayed and our business will be harmed. |
| • |
We face substantial competition, which may result in others discovering, developing or commercializing products before or more successfully
than us. |
| • |
We have been granted Orphan Drug Designation for CM-101 in connection with three indications and may seek Orphan Drug Designation
for other indications or product candidates, and we may be unable to maintain the benefits associated with Orphan Drug Designation, including
the potential for market exclusivity, and may not receive Orphan Drug Designation for other indications or for its other product candidates.
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| • |
We expect to experience significant growth in the number of our employees over time and the scope of our operations, particularly
in the areas of product candidate development, regulatory affairs and sales and marketing. We will therefore need to expand our organization,
and we may experience difficulties in managing this growth, which could disrupt our operations. |
| • |
If we are unable to protect our patents or other proprietary rights, or if we infringe the patents or other proprietary rights of
others, our competitiveness and business prospects may be materially damaged. In addition, changes in patent laws or patent jurisprudence
could diminish the value of patents in general, thereby impairing our ability to protect our product candidates. |
| • |
Risks related to our operations in Israel could materially adversely impact our business, financial condition and results of operations.
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| • |
Our principal executive offices are located in Israel and certain of our product candidates may be manufactured at third-party facilities
located in Europe. In addition, our business strategy includes potentially expanding internationally if any of its product candidates
receives regulatory approval. A variety of risks associated with operating internationally could materially adversely affect our business.
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| • |
Holders of ADSs are not treated as holders of our ordinary shares. |
| • |
Holders of ADSs may not have the same voting rights as the holders of our ordinary shares and may not receive voting materials in
time to be able to exercise their right to vote. |
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Holders of ADSs may be subject to limitations on the transfer of their ADSs and the withdrawal
of the underlying ordinary shares. |
| • |
We are entitled to amend the deposit agreement and to change the rights of ADS holders under the terms of such agreement, or to terminate
the deposit agreement, without the prior consent of the ADS holders. |
| • |
ADSs holders may not be entitled to a jury trial with respect to claims arising under the deposit agreement, which could result in
less favorable outcomes to the plaintiff(s) in any such action. |
| • |
We presently anticipate that we will be classified as a passive foreign investment company, which could result in adverse U.S. federal
income tax consequences to U.S. Holders of our ordinary shares. |
| • |
The Warrants are speculative in nature. |
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There is no established market for the Warrants being offered in this offering. |
| • |
Holders of the Warrants will have no rights as a shareholder until they acquire our ordinary shares. |
| • |
The Warrants offered by this prospectus may not have any value. |
| • |
As our Warrant holders exercise their Warrants into Warrant ADSs and underlying ordinary shares, our shareholders’ ownership
will be diluted. |
Recent Developments
FDA Clearance of our IND Application
for CM-101 in Phase 2 Trial in SSc Patients
On February 21, 2023, we reported U.S. Food and Drug Administration (FDA) clearance
of our Investigational New Drug (IND) Application to evaluate CM-101 in a Phase 2 trial in adults with systemic sclerosis (SSc). The Phase
2 ABATE trial is a multicenter, randomized, double-blind, proof-of-biology study to evaluate the SAfety, ToleraBility, and Activity of
CM-101 in Patients with SysTEmic Sclerosis. It will enroll 45 patients with clinically active dermatologic, vascular or pulmonary SSc.
The study population is expected to be roughly split between patients with diffuse SSc and patients with limited SSc. The primary outcome
measure is safety. Secondary endpoints include multiple serum-based biological markers and a variety of exploratory biological and clinical
outcomes, including the American College of Rheumatology Composite Response Index in Systemic Sclerosis (ACR-CRISS) score and its revisions
(rCRISS). The trial includes a 24-week double blind period during which active treatment patients will receive 10 mg/kg of CM-101 by intravenous
infusion every three weeks, followed by a 24-week open label extension, where all patients will receive a 10 mg/kg dose. The trial includes
multiple clinical assessments of the skin, vasculature and pulmonary function. It is expected to generate additional information about
disease mechanisms, provide data relevant to future patient stratification strategies and inform the selection of appropriate endpoints
for future studies. The trial is expected to begin enrolling patients in the first half of 2023.A top-line data read-out is planned
for the second half of 2024.
Report Top-Line Results from CM-101 Phase 2a Liver Fibrosis Biomarker
Trial in NASH Patients
On January 3, 2023, we reported positive top-line results from
our Phase 2a liver fibrosis biomarker trial of CM-101 in NASH patients. This trial was primarily designed to assess a subcutaneous formulation
of CM-101 and to evaluate the drug’s impact on liver fibrosis biomarkers relevant to both NASH and the fibro-inflammatory conditions
that represent the focus for the company, such as PSC and SSc. The trial met its primary endpoint of safety and tolerability, and CM-101
demonstrated encouraging activity in secondary endpoints that include a range of liver fibrosis biomarkers and physiologic assessments
measured at baseline and at week 20.
The randomized, placebo-controlled trial enrolled 23 NASH patients
with stage F1c, F2 and F3 disease who were randomized to receive either CM-101 or placebo. Patients received a dose of 5-mg/kg of
study drug administered by subcutaneous (SC) injection once every two weeks, for a treatment period of 16 weeks. Key findings of the CM-101
Phase 2a trial included the following.
| • |
CM-101 appeared to be safe and well tolerated when administered subcutaneously. Most reported adverse events observed were mild,
with one unrelated serious adverse event reported. No significant injection site reactions were reported and no anti-drug antibodies were
detected. |
| • |
CM-101 administered subcutaneously demonstrated favorable pharmacokinetics and target engagement profiles as expected, and were similar
to what the company has previously reported. |
| • |
CM-101-treated patients showed greater improvements than the placebo group in a number of liver fibrosis-related biomarkers, including
ProC-3, ProC-4, ProC-18, TIMP-1 and ELF. |
| • |
A majority of CM-101-treated patients showed improvements in multiple liver fibrosis-related biomarkers—almost 60% of CM-101
patients were “multiple responders”, responding in at least three biomarkers at week 20, compared to no patients in the placebo
group. |
| • |
CM-101-treated patients with higher CCL24 levels at baseline showed greater reductions in fibrosis-related biomarkers than patients
with lower levels of CCL24 at baseline. More CM-101-treated patients with higher CCL24 levels also were “multiple responders”,
responding in three or more of the fibrosis-related biomarkers, compared to patients with lower CCL24 levels at baseline. These
findings further add to the growing body of evidence validating the role of CCL24 in the pathophysiology of fibrotic liver disease.
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A higher proportion of patients in the CM-101-treated group showed improvement in a physiologic measure of liver stiffness as compared
to placebo (reduction of at least one grade of fibrosis score as assessed by the non-invasive elastography method known as FibroScan®).
|
| • |
After completion of the study, the unblinded data showed that patients in the CM-101-treated group had higher baseline levels of
fibrosis compared to placebo patients. The impact of this difference on the results, if any, is unknown. |
We believe that the data from this trial provide important
insights in support of the CM-101 development program, including the favorable safety and tolerability of CM-101 in patients with serious
liver disease, confirmation of early signs of biomarker activity that are relevant for a number of fibro-inflammatory disorders, and support
for the tolerability and pharmacokinetic data needed to assess next steps in the development of our SC formulation.
Results Reported for Clinical Study of CM-101
in Patients with COVID-19-Derived Lung Damage
On November 9, 2022, positive clinical data from an investigator-initiated
clinical study assessing CM-101 activity and safety in hospitalized patients with severe lung injury derived from COVID-19 was presented
at the 2022 Union Conference, an international conference on lung health. Some of the mechanisms underlying lung inflammation resulting
from COVID-19 infection are similar to those seen in system sclerosis and other chronic diseases involving lung inflammation and fibrosis.
The objective of the study was to evaluate the drug’s safety and activity in hospitalized COVID-19 patients with severe pneumonia,
including its impact on biomarkers related to lung inflammation that are also relevant in SSc. The
open label, single arm trial enrolled 16 hospitalized adult COVID-19 patients with severe respiratory involvement. All patients were receiving
standard of care therapy. All were treated with a single 10mg/kg intravenous dose of CM-101 on the first day of the study and followed
for 30 days.
Administration of CM-101 to this acutely ill patient population
appeared safe and was well tolerated. CM-101 exposures and target engagement profiles were similar to what our researchers have seen in
previous clinical studies of CM-101. Importantly, rapid reductions in serum biomarkers of lung inflammation, fibrogenesis and neutrophil
activity were observed post-treatment with CM-101. Overall, this study confirmed and extended
the safety and tolerability profile of CM-101 and demonstrated clinically relevant changes in biomarkers associated with lung inflammation
and fibrogenesis, further supporting CM-101’s anti-inflammatory and anti-fibrotic effects. Moreover,
we believe that these results add to the data suggesting that CM-101 has the potential to attenuate lung inflammation and fibrosis, further
strengthening the rationale for treating SSc patients with this drug. These new clinical data also contribute to a growing body of evidence
demonstrating CM-101’s anti-fibrotic and anti-inflammatory effects in varied organs including the lung, liver and skin.
New Executive Appointments
On August 29, 2022, Christina Crater, MD, joined us as our Vice
President of Clinical Development. Dr. Crater has an extensive background in medical affairs and clinical trial design and execution across
a broad range of therapeutic indications, Dr. Crater has served as a medical monitor, safety physician, therapeutic expert and study director
in all phases of clinical development. Her career spans working in-house at pharmaceutical and biotechnology firms, and at major clinical
research organizations (CROs). Previously Dr. Crater was a Senior Clinical Trial Physician at Bristol-Myers Squibb, and she served in
senior clinical development roles with PRA Health Sciences and PAREXEL International. Earlier in her career, Dr. Crater worked as an internal
medicine physician. She received an MD degree from the University of Tennessee and holds a BS degree from Rhodes College.
On November 14, 2022, Matthew Frankel, MD, MBA joined us as our
Chief Medical Officer and Vice President of Drug Development. Dr. Frankel brings a wealth of experience across all aspects of clinical
development and medical affairs, along with a strong track record in helping to bring biologic and small molecule drugs to market for
both rare and chronic diseases. Before joining us. Dr. Frankel served as Vice President, Clinical Development and Medical Affairs, Specialty
Pharma at Boehringer Ingelheim, where he developed new drugs for oncology, immunology, pulmonary, and central nervous system diseases.
Previously Dr. Frankel was Vice President & Head, Immunology and Dermatology Medical Unit at Novartis, where he oversaw medical affairs
and late phase clinical development for Cosentyx®,
Ilaris®, and Zortress®.
At the Sandoz unit of Novartis, Dr. Frankel led the medical affairs organization supporting the biopharmaceutical, biosimilar and generics
businesses for launches including Kerydin®, Glatopa®
and Zarxio®. Earlier in his career, Dr. Frankel held
clinical development leadership roles across geographies and therapeutic diseases at Reata, Fibrogen, Abbott Labs, and Schering Plough.
Dr. Frankel received a BA degree from Vassar College, an MD degree from the University of California School of Medicine, Los Angeles and
an MBA from the J. L. Kellogg Graduate School of Management at Northwestern University. He is board certified in internal medicine.
Dr. Frankel replaced interim Chief Medical Officer David Weiner, MD, who has continued in the role of Strategic Advisor to Chemomab.
On November 21, 2022, Mitchell L. Jones, MD, PhD, joined us as
our Vice President of Corporate Development & Strategy. Dr. Jones brings more than 15 years of leadership experience in biopharmaceutical
research, clinical development, corporate strategy and entrepreneurship, organizational development and team-building, technology transfer
and licensing and acquisitions. Dr. Jones formerly was Vice President Clinical Discovery and Development at Finch Therapeutics, where
he contributed to a successful IPO and helped oversee the clinical development of novel therapeutics for inflammatory bowel disease and
cancer. Previously Dr. Jones was Vice President of Translational and Clinical Development at Biora Therapeutics, formerly Progenity, developing
clinical program strategy and overseeing development of its novel drug delivery technologies. Earlier, Dr. Jones managed the successful
trade sale of the technology platform and assets of Interface Biosciences. Dr. Jones also founded Micropharma, where he served as Head
of R&D, concluded major licensing agreements and managed the company’s half billion-dollar acquisition. Dr. Jones is the author
or co-author of numerous scientific abstracts, proceedings and publications and an inventor on almost 200 filed or granted patents. He
received his MD, PhD, master’s in biomedical engineering and BS degrees from McGill University in Canada.
The Repurchase Arrangement
As previously reported in our Registration Statement on Form
S-4 (File No. 333-252070), filed with the U.S. Securities and Exchange Commission (the “SEC”) on January 13, 2021 and declared
effective by the SEC on February 10, 2021, the Subsidiary filed an application with the Israel Tax Authority for a tax ruling (the “Tax
Ruling”) in connection with the Merger, pursuant to which certain of the Subsidiary’s shareholders were entitled to defer
an immediate Israeli tax liability resulting from the exchange of shares that otherwise would have been deemed a sale. The deferral of
the aforementioned tax liability is set to lapse on March 16, 2023, which is the two-year anniversary of the closing date of the Merger.
Dr. Adi Mor, co-founder of the Subsidiary and both our Chief Scientific Officer and a Class III director, and Professor Kobi George, co-founder
of the Subsidiary (together with Dr. Adi Mor, the “Co-Founders”), will be required to pay a substantial tax liability to the
Israeli Tax Authority upon the expiration date of the deferral period. In order to pay this tax liability, the Co-Founders had to sell
part of their holdings in the Company. In light of the foregoing, Chemomab elected to enter into a share purchase agreement (the “Repurchase
Arrangement”) with the Co-Founders whereby we agreed, subject to the requisite court approval required under Section 303(a) of the
Israeli Companies Law, 5759-1999 (the “Companies Law”), which we received on November 14, 2022, to repurchase up to 582,023
of ADSs owned by the Co-Founders, for consideration not to exceed an aggregate amount of $2,500,000, depending on the market price
of the ADSs at the time of any repurchase. Accordingly, on November 16, 2022, we repurchased the entire amount of 582,023 ADSs from the
Co-Founders at a weighted average price of $2.0848 and for total consideration of approximately $1.2 million.
We do not expect any change in our cash runway as a result of the
Repurchase Arrangement. Our current cash, cash equivalents and short-term bank deposits are expected to last through at least March 31,
2024. Based on our planned use of the net proceeds from this offering and our existing cash, cash equivalents and short-term bank
deposits, this financing will enable us to advance our clinical development programs for PSC and SSc. We are likely to need to secure
additional financing to complete those programs which are projected to have topline readouts in the second half of 2024. We continue to
manage our cash runway and believe additional capital will be available when required.
Corporate Information
We were incorporated on September 22, 2011, under the laws of the
State of Israel. In March 2021, in connection with the Merger, we changed our name from Anchiano Therapeutics Ltd. to Chemomab Therapeutics
Ltd. Our principal executive offices are located at Kiryat Atidim, Building 7, Tel Aviv, Israel 6158002, and our phone number is +972-77-331-0156.
Our website is: www.chemomab.com. The information contained on, or that can be accessed through,
our website is not incorporated by reference into this prospectus and should not be considered to be part of this prospectus. We have
included our website address as an inactive textual reference only.
Implications of Being an Emerging Growth Company and a Smaller
Reporting Company
We are an “emerging growth company” as defined in the
Jumpstart Our Business Startups Act of 2012, as amended, or the JOBS Act. We will remain an emerging growth company until the earliest
to occur of: the last day of the fiscal year in which we have more than $1.235 billion in annual revenue; the date we qualify as a “large
accelerated filer,” with at least $700 million of equity securities held by non-affiliates; the issuance, in any three-year period,
by us of more than $1.0 billion in non-convertible debt securities; and the last day of the fiscal year ending after the fifth anniversary
of our initial public offering. As a result of this status, we have taken advantage of reduced reporting requirements in this prospectus
and may elect to take advantage of other reduced reporting requirements in our future filings with the SEC. In particular, in this prospectus,
we have provided only two years of audited financial statements and have not included all of the executive compensation related information
that would be required if we were not an emerging growth company. In addition, the JOBS Act provides that an emerging growth company can
take advantage of an extended transition period for complying with new or revised accounting standards, delaying the adoption of these
accounting standards until they would apply to private companies. We have elected to use this extended transition period to enable us
to comply with new or revised accounting standards that have different effective dates for public and private companies until the earlier
of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period
provided in the JOBS Act. As a result, our financial statements may not be comparable to companies that comply with the new or revised
accounting standards as of public company effective dates.
To the extent that we continue to qualify as a “smaller reporting
company,” as such term is defined in Rule 12b-2 under the Securities Exchange Act of 1934, after we cease to qualify as an emerging
growth company, we will continue to be permitted to make certain reduced disclosures in our periodic reports and other documents that
we file with the SEC. Specifically, as a smaller reporting company we may choose to present only the two most recent fiscal years of audited
financial statements in our Annual Report on Form 10-K and, similar to emerging growth companies, smaller reporting companies
have reduced disclosure obligations regarding executive compensation. We will continue to be a smaller reporting company if either (i) the
market value of our stock held by non-affiliates is less than $250 million or (ii) our annual revenue is less than
$100 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is
less than $700 million.
THE OFFERING
|
Securities offered by us |
Up to 7,614,212 ADSs, each representing twenty (20) ordinary shares, no par value
per share, and Warrants to purchase up to 7,614,212 ADSs. The ADSs and Warrants are immediately separable and will be issued separately
in this offering, but must be purchased together in this offering. |
|
The ADSs |
The underwriters will deliver American Depositary Shares (ADSs) representing our ordinary
shares. Each ADS represents twenty of our ordinary shares, no par value per share.
As an ADS holder, you will not be treated as one of our shareholders and you will
not have shareholder rights. The depositary, The Bank of New York Mellon, will be the holder of the ordinary shares underlying the ADSs.
You will have the rights of an ADS holder or beneficial owner (as applicable) as provided in the deposit agreement among us, the depositary
and holders and beneficial owners of ADSs from time to time. To better understand the terms of the ADSs, see “Description of Securities
We Are Offering.” We also encourage you to read the deposit agreement, the form of which is filed as an exhibit to the registration
statement of which this prospectus forms a part.
You may turn in the ADSs to the depositary to cancel the ADSs and withdraw the ordinary
shares. The depositary will charge you fees for any cancellation and withdrawal. |
|
|
|
|
Warrants |
Each Warrant will have an assumed exercise price of $1.97 (based
on an assumed public offering price of $1.97 per ADS, the last reported sale price of the ADSs on Nasdaq on February 16, 2023), will be
immediately exercisable and will expire five years from the date of issuance. To better understand the terms of the warrants, you should
carefully read the “Description of the Offered Securities” section of this prospectus. You should also read the form of warrant,
which is filed as an exhibit to the registration statement that includes this prospectus. |
|
ADSs outstanding prior to this offering |
11,049,812 ADSs. |
|
ADSs outstanding after this offering |
18,664,024 ADSs. |
|
Use of proceeds |
We estimate the net proceeds from this offering will be approximately $13.6 million,
after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. We intend to use the net
proceeds from this offering for continued clinical development of our product candidates, research activities, and for other general corporate
purposes. See “Use of Proceeds” on page 12 of this prospectus. |
|
Risk factors |
See “Risk Factors” beginning on page 8 for a discussion of factors you
should carefully consider before deciding to invest in our securities. |
|
ADS depositary |
The Bank of New York Mellon. |
|
Nasdaq Capital Market symbol |
The ADSs are listed on Nasdaq under the symbol “CMMB.” We do not intend to
list the Warrants on any securities exchange or nationally recognized trading system. |
The number of ADSs to be outstanding after this
offering is based on 11,049,812 ADSs outstanding as of December 31, 2022, and does not account for:
|
|
● |
1,759,577 ADSs issuable upon the exercise of
outstanding options to purchase ADSs, at a weighted average exercise price of $6.60 per ADS; |
|
|
|
|
|
|
● |
an aggregate of 643,369 ADSs reserved for future issuance under the Chemomab Ltd. 2015 Share Incentive
Plan (the “2015 Plan”), which was assumed by the Company upon effectiveness of the Merger, and the 2017 Equity-Based Incentive
Plan (the “2017 Plan” and together with the 2015 Plan, the “Share Incentive Plans”), as of December 31, 2022,
as well as any automatic increases in the number of ADSs reserved for future issuance under the 2017 Plan; |
|
|
|
|
|
|
● |
261,929 ADSs issuable upon the exercise of outstanding warrants to purchase ADSs at
a weighted average exercise price of $17.35088 per ADS, which warrants are expected to remain outstanding at the consummation of this
offering; and |
|
|
● |
7,614,212 ADSs issuable upon exercise of the Warrants issued in this offering.
|
Except as otherwise indicated, all information in this prospectus
assumes no exercise of the outstanding options and warrants described above and no exercise of the Warrants issued in this offering.
RISK FACTORS
Investing in our Securities involve
a high degree of risk. You should carefully consider the following risk factors, in addition to the risk factors included in our Annual
Report on Form 10-K for the year ended December 31, 2021 and in subsequent Quarterly Reports on Form 10-Q, as well as all of the other
information contained in this prospectus and the information incorporated by reference in
this prospectus, before deciding to invest in our Securities. Our business, financial condition, results of operations or prospects could
be materially and adversely affected if any of these risks occurs, and as a result, the market price of the ADSs could decline and you
could lose all or part of your investment. Our actual results could differ materially and adversely from those anticipated in any forward-looking
statements in this prospectus as a result of certain factors, including those set forth below. See “Forward-Looking Statements.”
Risks Related to This Offering
You may experience future dilution as a result
of future equity offerings.
In order to raise additional capital, we expect to offer in the
future additional ADSs or other securities convertible into or exchangeable for the ADSs. We cannot assure you that we will be able to
sell ADSs or other securities in any other offering at a price per share that is equal to or greater than the price per ADS paid by investors
in this offering, and investors purchasing shares or other securities in the future could have rights superior to existing shareholders.
The price per ADS at which we sell additional ADSs or other securities convertible into or exchangeable for the ADSs in future transactions
may be higher or lower than the price per ADS in this offering.
We have broad discretion to determine how to
use the funds raised in this offering, and may use them in ways that may not enhance our operating results or the price of the ADSs.
Our management will have broad discretion over the use of proceeds
from this offering, and we could spend the proceeds from this offering in ways the ADS holders may not agree with or that do not yield
a favorable return, if at all. We intend to use the net proceeds from this offering for continued clinical development of our product
candidates, research activities, and for other general corporate purposes. However, our use of these proceeds may differ substantially
from our current plans. If we do not invest or apply the proceeds of this offering in ways that improve our operating results, we may
fail to achieve expected financial results, which could cause the ADS price to decline.
The trading price of the ADSs has been highly
volatile, and purchasers of the ADSs could incur substantial losses.
The trading price of the ADSs has been highly volatile, particularly
over the last year. For example, on January 11, 2022, the closing price of theADSs was $6.98 per ADS and on December 7, 2022, it was $1.90
per ADS. This volatility may affect the price at which you are able to sell ADSs, and the sale of the ADSs in this offering could adversely
affect the price of the ADSs. Our ADS price is likely to continue to be volatile and subject to significant price and volume fluctuations
in response to market and economic factors that are beyond our control. As a result, you may not be able to sell the ADSs at or above
the price at which you purchase them. In addition, while the stock market in general has experienced high volatility, biotechnology companies
in particular have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to operating performance.
Broad market and industry factors may negatively affect the market price of the ADSs, regardless of our actual operating performance.
We have not paid dividends in the past and
do not expect to pay dividends in the future, and, as a result, any return on investment may be limited to the value of the ADSs.
We have never paid dividends and do not anticipate paying dividends
in the foreseeable future. The payment of dividends will depend on our earnings, capital requirements, financial condition, prospects
and other factors our board of directors may deem relevant. If we do not pay dividends, the ADSs may be less valuable because a return
on your investment will only occur if our ADS price appreciates and you sell your ADS thereafter. In addition, the Companies Law imposes
restrictions on our ability to declare and pay dividends. See “Description of Share Capital — Dividend and Liquidation Rights”
for additional information. The payment of dividends may be subject to Israeli withholding taxes. See “Material Tax Considerations
—Israeli Taxation” for additional information.
If we fail to continue to meet all applicable
Nasdaq requirements, Nasdaq may delist the ADSs, which could have an adverse impact on the liquidity and market price of the ADSs.
The ADSs are currently listed on Nasdaq, which has qualitative
and quantitative listing criteria. If we are unable to meet any of the Nasdaq listing requirements in the future, including, for example,
if the closing bid price for the ADSs falls below $1.00 per share for 30 consecutive trading days, Nasdaq could determine to delist the
ADSs, which could adversely affect the market liquidity of the ADSs and the market price of the ADSs could decrease. Such delisting could
also adversely affect our ability to obtain financing for the continuation of our operations and could result in the loss of confidence
by investors, customers and employees.
Holders of ADSs are not treated as holders
of our ordinary shares.
Holders of ADSs are not treated as holders of our ordinary shares,
unless they withdraw the ordinary shares underlying their ADSs in accordance with the deposit agreement and applicable laws and regulations.
The depositary is the holder of the ordinary shares underlying the ADSs. Holders of ADSs therefore do not have any rights as holders of
our ordinary shares, other than the rights that they have pursuant to the deposit agreement.
You may not have the same voting rights as
the holders of our ordinary shares and may not receive voting materials in time to be able to exercise your right to vote.
Except as described in the deposit agreement, holders of the ADSs
will not be able to exercise voting rights attaching to the ordinary shares represented by the ADSs. If we request the depositary to solicit
your voting instructions (and we are not required to do so), the depositary will notify you of a shareholders’ meeting and send
or make voting materials available to you. Those materials will describe the matters to be voted on and explain how ADS holders may instruct
the depositary how to vote. We cannot guarantee that ADS holders will receive the voting materials in time to ensure that they can instruct
the depositary to vote the ordinary shares underlying their ADSs. For instructions to be valid, they must reach the depositary by a date
set by the depositary. The depositary will try, as far as practical, subject to the laws of Israel and the provisions of our articles
of association or similar documents, to vote or to have its agents vote the ordinary shares or other deposited securities as instructed
by ADS holders. If we do not request the depositary to solicit your voting instructions, you can still send voting instructions, and,
in that case, the depositary may try to vote as you instruct, but it is not required to do so.
Otherwise, ADS holders will not be able to exercise their right
to vote, unless they withdraw the ordinary shares underlying the ADSs they hold. However, ADS holders may not know about the meeting far
enough in advance to withdraw those ordinary shares. In any event, the depositary will not exercise any discretion in voting deposited
securities and it will only vote or attempt to vote as instructed. In addition, the depositary and its agents are not responsible for
failing to carry out voting instructions or for the manner of carrying out voting instructions. This means that you may not be able to
exercise your right to vote and there may be nothing you can do if your ordinary shares are not voted as you requested.
Holders of ADSs may be subject to limitations
on the transfer of their ADSs and the withdrawal of the underlying ordinary shares.
ADSs are transferable on the books of the depositary. However,
the depositary may refuse to deliver ADSs or register transfers of ADSs when the transfer books of the depositary or our transfer books
are closed or at any time if the depositary or we think it advisable to do so. These limitations on transfer may have a material adverse
effect on the value of the ADSs.
We are entitled to amend the deposit agreement
and to change the rights of ADS holders under the terms of such agreement, or to terminate the deposit agreement, without the prior consent
of the ADS holders.
We are entitled to amend the deposit agreement and to change the
rights of the ADS holders under the terms of such agreement without the prior consent of the ADS holders. We and the depositary may agree
to amend the deposit agreement in any way we decide is necessary or advantageous to us or to the depositary. Amendments may reflect, among
other things, operational changes in the ADS program, legal developments affecting ADSs or changes in the terms of our business relationship
with the depositary. If an amendment adds or increases fees or charges, except for taxes and other governmental charges or expenses of
the depositary for registration fees, facsimile costs, delivery charges or similar items, or prejudices a substantial right of ADS holders,
it will not become effective for outstanding ADSs until 30 days after the depositary notifies ADS holders of the amendment. At the time
an amendment becomes effective, you are considered, by continuing to hold the ADSs, to agree to the amendment and to be bound by the ADRs
and the deposit agreement as amended. If we make an amendment to the deposit agreement that is disadvantageous to ADS holders or terminate
the deposit agreement, the ADS holders may choose to sell their ADSs or surrender their ADSs and become direct holders of the underlying
ordinary shares, but they will have no right to any compensation whatsoever.
ADSs holders may not be entitled to a jury
trial with respect to claims arising under the deposit agreement, which could result in less favorable outcomes to the plaintiff(s) in
any such action.
The deposit agreement governing the ADSs representing our ordinary
shares provides that, to the fullest extent permitted by law, holders and beneficial owners of ADSs irrevocably waive the right to a jury
trial of any claim they may have against us or the depositary arising out of or relating to the ADSs or the deposit agreement.
If this jury trial waiver provision is not permitted by applicable
law, an action could proceed under the terms of the deposit agreement with a jury trial. If we or the depositary opposed a jury trial
demand based on the waiver, the court would determine whether the waiver was enforceable based on the facts and circumstances of that
case in accordance with the applicable state and federal law. We believe that a contractual pre-dispute jury trial waiver provision is
generally enforceable, including under the laws of the State of New York, which governs the deposit agreement. In determining whether
to enforce a contractual pre-dispute jury trial waiver provision, courts will generally consider whether a party knowingly, intelligently
and voluntarily waived the right to a jury trial. We believe that this is the case with respect to the deposit agreement and the ADSs.
If any holders or beneficial owners of ADSs bring a claim against
us or the depositary in connection with matters arising under the deposit agreement or the ADSs, including claims under federal securities
laws, such holder or beneficial owner may not be entitled to a jury trial with respect to such claims, which may have the effect of limiting
and discouraging lawsuits against us or the depositary. If a lawsuit is brought against us or the depositary under the deposit agreement,
it may be heard only by a judge or justice of the applicable trial court, which would be conducted according to different civil procedures
and may result in different outcomes than a trial by jury would have had, including results that could be less favorable to the plaintiff(s)
in any such action, depending on, among other things, the nature of the claims, the judge or justice hearing such claims, and the venue
of the hearing.
No condition, stipulation or provision of the deposit agreement
or ADSs serves as a waiver by any holder or beneficial owner of ADSs or by us or the depositary of compliance with any substantive provision
of the U.S. federal securities laws and the rules and regulations promulgated thereunder.
We presently anticipate that we will be classified
as a passive foreign investment company, which could result in adverse U.S. federal income tax consequences to U.S. Holders of our ordinary
shares.
We would be classified as a passive foreign investment company,
or PFIC, for any taxable year if, after the application of certain look-through rules, either: (i) 75% or more of our gross income for
such year is “passive income” (as defined in the relevant provisions of the Internal Revenue Code of 1986, as amended, or
the Code), or (ii) 50% or more of the value of our assets (generally determined on the basis of a quarterly average) during such year
is attributable to assets that produce or are held for the production of passive income. Passive income generally includes, among other
things, rents, dividends, interest, royalties, gains from the disposition of passive assets, and gains from commodities and securities
transactions. For purposes of this test, we will be treated as owning a proportionate share of the assets and earning a proportionate
share of the income of any other corporation of which we own, directly or indirectly, at least 25% (by value) of the stock. Based on the
nature, composition and value of our income, operations and assets currently and in the future, we presently anticipate that we will be
a PFIC for United States federal income tax purposes for the current taxable year and in the foreseeable future. See “Certain
Material U.S. Federal Income Tax Consequences — Passive Foreign Investment Company Consequences.”
The Warrants are speculative in nature.
Except as otherwise set forth therein, the Warrants offered in
this offering do not confer any rights of ADS ownership on their holders, such as voting rights, but rather merely represent the right
to acquire ADSs at a fixed price. Specifically with respect to the Warrants, commencing on the date of issuance, holders of the Warrants
may exercise their right to acquire ADSs and pay an assumed exercise price of $1.97 per ADS, which is the assumed offering price of the
ADSs in this offering, prior to five years from the date of issuance, after which date any unexercised Warrants will expire and have no
further value. There can be no assurance that the market price of the ADSs will continue to equal or exceed the exercise price of the
Warrants offered by this prospectus. In the event that our ADS price does not exceed the exercise price of such Warrants during the period
when such Warrants are exercisable, the Warrants may not have any value.
There is no established market for the Warrants being offered in
this offering.
There is no established trading market for the Warrants offered
in this offering. We do not intend to apply for listing of the Warrants on any securities exchange or other nationally recognized trading
system. Without an active market, the liquidity of the Warrants will be limited.
Holders of the Warrants will have no rights as a shareholder until
they acquire our ordinary shares.
Until you acquire the ordinary shares underlying the Warrant ADSs, you will have no
rights with respect to the ordinary shares underlying the Warrant ADSs underlying the Warrants. Upon exercise of your Warrants and subsequent
delivery of the ordinary shares by the Company’s depositary, you will be entitled to exercise the rights of an ordinary shareholder
only as to matters for which the record date occurs after the exercise date.
The Warrants offered by this prospectus may not have any value.
The Warrants offered by this prospectus will be exercisable for five years from the
date of issuance. There can be no assurance that the market price of the ADSs will ever exceed the exercise price of the Warrants. In
the event that our ADS price does not exceed the exercise price of the Warrants during the term of the Warrants, the Warrants may not
have any value.
As our Warrant holders exercise their Warrants into Warrant ADSs
and underlying ordinary shares, our shareholders’ ownership will be diluted.
The exercise of some or all of our Warrants will result in the issuance of ADSs and
ordinary shares that dilute the ownership interests of existing shareholders. Any sales of ADSs or ordinary shares underlying the Warrants
could adversely affect prevailing market prices of the ADSs and ordinary shares.
FORWARD-LOOKING
STATEMENTS
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
AND INDUSTRY DATA
This prospectus and the information incorporated by reference in
this prospectus contain forward-looking statements within the meaning of Section 27A of the Securities Act, and Section 21E of the Exchange
Act of 1934, as amended (the “Exchange Act”) that involve substantial risks and uncertainties. Although our forward-looking
statements reflect the good faith judgment of our management, these statements can only be based on facts and factors currently known
by us. Consequently, these forward-looking statements are inherently subject to risks and uncertainties, and actual results and outcomes
may differ materially from results and outcomes discussed in the forward-looking statements. These forward-looking statements speak only
as of the date of this prospectus and are subject to a number of risks, uncertainties and assumptions described in the section titled
“Risk Factors” and elsewhere in this prospectus.
All statements other than present and historical facts and conditions
contained in this prospectus, and the information incorporated by reference in this prospectus, including statements regarding our future
results of operations and financial positions, business strategy, plans and our objectives for future operations, are forward-looking
statements. The words “anticipate,” “believe,” “continue” “could,” “estimate,”
“expect,” “intend,” “may,” “might,” “ongoing,” “objective,” “plan,”
“potential,” “predict,” “should,” “will” and “would,” or the negative of these
and similar expressions identify forward-looking statements.
We cannot assure you that the forward-looking statements in this
prospectus and the information incorporated by reference in this prospectus will prove to be accurate. Furthermore, if our forward-looking
statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking
statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our
objectives and plans in any specified time frame or at all. We undertake no obligation to publicly update any forward-looking statements,
whether as a result of new information, future events or otherwise, except as required by law.
You should read this prospectus and the information incorporated
by reference in this prospectus completely and with the understanding that our actual future results may be materially different from
what we expect. We qualify all of our forward-looking statements by these cautionary statements.
This prospectus and the information incorporated by reference in
this prospectus may contain market data and industry forecasts that were obtained from industry publications. These data involve a number
of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. While we believe the market position,
market opportunity and market size information included in this prospectus and the information incorporated by reference in this prospectus
is generally reliable, we have not independently verified any third-party information and cannot guarantee its accuracy and completeness.
MARKET, INDUSTRY AND OTHER DATA
This prospectus contains estimates, projections and other information
concerning our industry and our business. We obtained the industry, market and similar data set forth in this prospectus from our internal
estimates and research and from academic and industry research, publications, surveys and studies conducted by third parties. We do not
expressly refer to the sources from which this information is derived. Information that is based on estimates, forecasts, projections,
market research or similar methodologies is inherently subject to uncertainties and actual events or circumstances may differ materially
from events and circumstances that are assumed in this information. While we believe that the data we use from third parties are reliable,
we have not separately verified these data. Further, while we believe our internal research is reliable, such research has not been verified
by any third party. You are cautioned not to give undue weight to any such information, projections and estimates. The sources listed
below are not a part of this prospectus and are not incorporated by reference in this prospectus.
The sources and citations of industry, market and other data, as well as published
studies, contained in this prospectus are listed below:
| 1. |
Ablin, J. N., M. Entin-Meer, V. Aloush, S. Oren, O. Elkayam, J. George, and I. Barshack. 2010. 'Protective effect of eotaxin-2 inhibition
in adjuvant-induced arthritis', Clin Exp Immunol, 161: 276-83. |
| 2. |
Bhattacharyya, S., J. Wei, and J. Varga. 2011. 'Understanding fibrosis in systemic sclerosis: shifting paradigms, emerging opportunities',
Nat Rev Rheumatol, 8: 42-54. |
| 3. |
Bocchino, V., G. Bertorelli, C. P. Bertrand, P. D. Ponath, W. Newman, C. Franco, A. Marruchella, S. Merlini, M. Del Donno, X. Zhuo,
and D. Olivieri. 2002. 'Eotaxin and CCR3 are up-regulated in exacerbations of chronic bronchitis', Allergy, 57: 17-22. |
| 4. |
Henderson, N. C., F. Rieder, and T. A. Wynn. 2020. 'Fibrosis: from mechanisms to medicines', Nature, 587: 555-66. |
| 5. |
Jimenez, S. A., E. Hitraya, and J. Varga. 1996. 'Pathogenesis of scleroderma. Collagen', Rheum Dis Clin North Am, 22: 647-74.
|
| 6. |
Jose, P. J., D. A. Griffiths-Johnson, P. D. Collins, D. T. Walsh, R. Moqbel, N. F. Totty, O. Truong, J. J. Hsuan, and T. J. Williams.
1994. 'Eotaxin: a potent eosinophil chemoattractant cytokine detected in a guinea pig model of allergic airways inflammation', J Exp Med,
179: 881-7. |
| 7. |
Karlsen, T. H., T. Folseraas, D. Thorburn, and M. Vesterhus. 2017. 'Primary sclerosing cholangitis - a comprehensive review', J Hepatol,
67: 1298-323. |
| 8. |
Kitaura, M., T. Nakajima, T. Imai, S. Harada, C. Combadiere, H. L. Tiffany, P. M. Murphy, and O. Yoshie. 1996. 'Molecular cloning
of human eotaxin, an eosinophil-selective CC chemokine, and identification of a specific eosinophil eotaxin receptor, CC chemokine receptor
3', J Biol Chem, 271: 7725-30. |
| 9. |
Kohan, M., I. Puxeddu, R. Reich, F. Levi-Schaffer, and N. Berkman. 2010. 'Eotaxin-2/CCL24 and eotaxin-3/CCL26 exert differential
profibrogenic effects on human lung fibroblasts', Ann Allergy Asthma Immunol, 104: 66-72. |
| 10. |
Mor, A. , Afek, A. , Entin-Meer, M. , Keren, G. and George, J. 2013. 'Anti eotaxin-2 antibodies attenuate the initiation and progression
of experimental atherosclerosis.', World Journal of Cardiovascular Diseases, 3: 339-46. |
| 11. |
Mor, A., M. Segal Salto, A. Katav, N. Barashi, V. Edelshtein, M. Manetti, Y. Levi, J. George, and M. Matucci-Cerinic. 2019. 'Blockade
of CCL24 with a monoclonal antibody ameliorates experimental dermal and pulmonary fibrosis', Ann Rheum Dis, 78: 1260-68. |
| 12. |
Ponath, P. D., S. Qin, D. J. Ringler, I. Clark-Lewis, J. Wang, N. Kassam, H. Smith, X. Shi, J. A. Gonzalo, W. Newman, J. C. Gutierrez-Ramos,
and C. R. Mackay. 1996. 'Cloning of the human eosinophil chemoattractant, eotaxin. Expression, receptor binding, and functional properties
suggest a mechanism for the selective recruitment of eosinophils', J Clin Invest, 97: 604-12. |
| 13. |
Segal-Salto, M., N. Barashi, A. Katav, V. Edelshtein, A. Aharon, S. Hashmueli, J. George, Y. Maor, M. Pinzani, D. Haberman, A. Hall,
S. Friedman, and A. Mor. 2020. 'A blocking monoclonal antibody to CCL24 alleviates liver fibrosis and inflammation in experimental models
of liver damage', JHEP Rep, 2: 100064. |
| 14. |
Wynn, T. A. 2008. 'Cellular and molecular mechanisms of fibrosis', J Pathol, 214: 199-210. |
USE OF PROCEEDS
We estimate that the net proceeds
from this offering will be approximately $13.6 million, assuming a public offering price of $1.97 per ADS and accompanying Warrant, which
was the last reported sale price per share of the ADSs on Nasdaq on February 16, 2023, after deducting estimated underwriting discounts
and commissions and estimated offering expenses payable by us
We currently expect to use the net proceeds from this offering
for continued clinical development of our product candidates, research activities, and for other general corporate purposes. We have
not determined the amount of net proceeds to be used specifically for the foregoing purposes. This expected use of the net proceeds from
this offering represents our intentions based upon our current plans and business conditions. Amounts and timing of our actual expenditures
will depend upon a number of factors, including our sales, marketing and commercialization efforts, regulatory approval and demand for
our product candidates, operating costs, among other factors. Accordingly, our management will have flexibility in applying the net proceeds
from this offering. An investor will not have the opportunity to evaluate the economic, financial or other information on which we base
our decisions on how to use the proceeds.
Pending use of the net proceeds, we intend to invest any proceeds
in a variety of capital preservation instruments, including short-term deposits and interest-bearing instruments.
Based on our planned use of the net proceeds from this offering
and our existing cash, cash equivalents and short-term bank deposits, we estimate that this financing will enable us to advance our clinical
development programs for PSC and SSc. We are likely to need to secure additional financing to complete those programs which are projected
to have topline readouts in the second half of 2024. We continue to manage our cash runway and believe additional capital will be available
when required. We have based this estimate on assumptions that may prove to be incorrect, and we could use our available capital resources
sooner than we currently expect. In any event, we will require additional funding to complete the clinical development of, and commercialize,
our future therapeutic candidates. We may satisfy our future cash needs through the sale of equity securities, debt financings, working
capital lines of credit, corporate collaborations or license agreements, grant funding, interest income earned on invested cash balances
or a combination of one or more of these sources.
CAPITALIZATION
The following table sets forth our cash, cash equivalents and short-term
bank deposits, and our capitalization as of December 31, 2022:
|
|
• |
|
on an actual basis; and |
|
|
• |
|
on an as adjusted basis to give effect to the sale of 7,614,212 ADSs in this offering,
at an assumed public offering price of $1.97 per ADS and accompanying Warrant, and after deducting the estimated underwriting discounts
and commissions and estimated offering expenses payable by us. |
The pro forma as-adjusted information below is illustrative only
and our capitalization following the completion of this offering is subject to various adjustments. See “Underwriting” below
in this prospectus. You should read this table together with “Management’s Discussion and Analysis of Financial Condition
and Results of Operations” included elsewhere in this prospectus for the fiscal year ended December 31, 2022, and our financial
statements and the related notes incorporated by reference into this prospectus.
|
|
|
As of December 31 , 2022 |
| |||||
|
|
|
(in thousands)(unaudited) |
| |||||
|
|
|
Actual |
|
|
As Adjusted |
| ||
|
|
|
|
| |||||
|
Cash and cash equivalents and short-term bank deposits |
|
$ |
39,970 |
|
|
|
53,530 |
|
|
Shareholders’ equity |
|
|
|
|
|
|
|
|
|
Ordinary Shares, no par value - Authorized: 650,000,000 ordinary shares as of December 31, 2022 |
|
|
— |
|
|
|
|
|
|
Issued and outstanding: 232,636,700 ordinary shares issued and outstanding actual; 373,280,480 ordinary
shares issued and outstanding as adjusted |
|
|
|
|
|
|
|
|
|
Additional paid-in capital |
|
|
101,260 |
|
|
|
114,820 |
|
|
Treasury stock at cost |
|
|
(1,218 |
) |
|
|
(1,218) |
|
|
Accumulated deficit |
|
|
(63,819 |
) |
|
|
(63,819) |
|
|
Total shareholders’ equity |
|
$ |
36,223 |
|
|
$ |
49,783 |
|
|
Total liabilities and shareholders’ equity |
|
$ |
43,063 |
|
|
$ |
56,623 |
|
The information above is based on 11,049,812 ADSs outstanding
as of December 31, 2022, and does not account for the following:
|
|
● |
1,759,577 ADSs issuable upon the exercise of outstanding options
to purchase ADSs, at a weighted average exercise price of $6.60 per ADS; |
|
|
● |
an aggregate of 643,369 ADSs reserved for
future issuance under our Share Incentive Plans, as of December 31,2022, as well as any automatic increases in the number of ADSs reserved
for future issuance under the 2017 Plan; |
|
|
● |
261,929 ADSs issuable upon the exercise of outstanding warrants to purchase ADSs at
a weighted average exercise price of $17.35088 per ADS, which warrants are expected to remain outstanding at the consummation of this
offering; and |
|
● |
7,614,212 ADSs issuable upon exercise of the Warrants issued in this offering.
|
Except as otherwise indicated,
all information in this prospectus assumes no exercise of the outstanding options and warrants described above and no exercise of the
Warrants issued in this offering.
DILUTION
If you invest in our Securities in this offering, your ownership interest may be diluted
to the extent of the difference between the public offering price per ADS and accompanying Warrant and the as adjusted net tangible book
value per ADS after this offering. Net tangible book value per ADS is calculated by subtracting our total liabilities from our total tangible
assets, which is total assets, and dividing this amount by the number of ADSs outstanding. Our net tangible book value as of December
31, 2022 was approximately $36.2 million, or $3.28 per ADS.
After giving effect to the sale of 7,614,212 ADSs and accompanying Warrants in this
offering at an assumed public offering price of $1.97 per ADS and accompanying Warrant, and after deducting commissions and other estimated
offering expenses payable by us, our as adjusted net tangible book value as of December 31, 2022 would have been approximately $49.8
million, or $2.67 per ADS. This amount represents an immediate dilution in the net tangible book value of $0.61 per ADS to our existing
shareholders and an immediate increase in net tangible book value of $0.70 per ADS to new investors purchasing ADSs in this offering.
The following table illustrates this per ADS dilution:
|
Assumed offering price per ADS and accompanying Warrant |
$ |
1.97 |
||||||
|
Net tangible book value per ADS as of December 31, 2022 |
$ |
3.28 |
||||||
|
Net dilution in net tangible book value per ADS attributable to existing shareholders |
$ |
(0.61 |
) |
$ |
||||
|
As adjusted net tangible book value per ADS after this offering |
$ |
2.67 |
||||||
|
Net increase in net tangible book value per ADS to new investors in this offering |
$ |
0.70 |
||||||
The table above assumes for illustrative
purposes that an aggregate of 7,614,212 ADSs are sold at a price of $1.97 per ADS and accompanying Warrant and for aggregate gross
proceeds of approximately $15.0 million.
The information above is based on 11,049,812 ADSs outstanding
as of December 31, 2022, and does not account for the following:
|
|
● |
1,759,577 ADSs issuable upon the exercise of outstanding options
to purchase ADSs, at a weighted average exercise price of $6.60 per ADS; |
|
|
● |
an aggregate of 643,369 ADSs reserved for future issuance under our Share Incentive Plans, as of
December 31,2022, as well as any automatic increases in the number of ADSs reserved for future issuance under the 2017 Plan;
|
|
|
● |
261,929 ADSs issuable upon the exercise of outstanding warrants to purchase ADSs at
a weighted average exercise price of $17.35088 per ADS, which warrants are expected to remain outstanding at the consummation of this
offering; and |
|
● |
7,614,212 ADSs issuable upon exercise of the Warrants issued in this offering.
|
To the extent that additional ADSs are issued pursuant to the foregoing, investors purchasing
ADSs in this offering will experience further dilution. In addition, we may offer other securities in other offerings due to market conditions
or strategic considerations. To the extent we issue such securities, you may experience further dilution.
DIVIDEND POLICY
We have never declared nor paid any cash dividends on the ADSs
or our ordinary shares. We currently intend to retain any future earnings and do not expect to pay any dividends in the foreseeable future.
Any future determination to declare cash dividends will be made at the discretion of our Board of Directors, subject to applicable laws,
and will depend on a number of factors, including our financial condition, results of operations, capital requirements, contractual restrictions,
general business conditions, and other factors that our Board of Directors may deem relevant. In addition, the Companies Law imposes restrictions
on our ability to declare and pay dividends. See “Description of Share Capital — Dividend and Liquidation Rights” for
additional information. The payment of dividends may be subject to Israeli withholding taxes. See “Material Tax Considerations —Israeli
Taxation” for additional information.
Management’s Discussion
and Analysis of Financial Condition and Results of Operations
You should read the following discussion and
analysis of our financial condition and results of operations together with our consolidated financial statements. Some of the information
contained in this discussion and analysis, particularly with respect to our plans and strategy for our business and related financing,
includes forward-looking statements that involve risks and uncertainties. You should read “Cautionary Statement Regarding Forward-Looking
Statements” and Item 1A “Risk Factors” of our Annual Report on Form 10-K filed on March 30, 2022 for a discussion
of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking
statements contained in the following discussion and analysis.
Overview
We are a clinical-stage biotechnology company focused on the
discovery and development of innovative therapeutics for fibrotic and inflammatory diseases with high unmet needs. Based on the unique
and pivotal role of the soluble protein CCL24 in promoting fibrosis and inflammation, we developed CM-101, a monoclonal antibody designed
to bind and block CCL24 activity. We believe CM-101 has demonstrated the potential to treat multiple severe and life-threatening fibrotic
and inflammatory diseases.
We have pioneered the therapeutic targeting of CCL24, a chemokine that promotes various
types of cellular processes that regulate inflammatory and fibrotic activities through the CCR3 receptor. The chemokine is expressed in
various types of cells, including immune cells, endothelial cells and epithelial cells. We have developed a novel CCL24 inhibiting product
candidate with dual anti-fibrotic and anti-inflammatory activity that modulates the complex interplay of both of these inflammatory and
fibrotic mechanisms, which drive abnormal states of fibrosis and clinical fibrotic diseases. This innovative approach is being developed
for difficult to treat rare diseases, also known as orphan indications or diseases, such as primary sclerosing cholangitis (PSC) and systemic
sclerosis (SSc) for which patients have no established disease-modifying treatment options. We estimate that there are approximately 77
thousand patients suffering from PSC in the U.S., EU and Japan, representing over a $1 billion market opportunity, and approximately 170
thousand patients suffering from SSc in those same markets, representing over a $1.5 billion market opportunity.
CM-101, our lead clinical product candidate, is a first-in-class humanized monoclonal
antibody that attenuates the basic function of the soluble chemokine CCL24, also known as eotaxin-2, as a regulator of major inflammatory
and fibrotic pathways. We have demonstrated that CM-101 interferes with the underlying biology of inflammation and fibrosis through a
novel and differentiated mechanism of action. Based on these findings, we are actively advancing CM-101 in Phase 2 clinical studies directed
toward two distinct clinical indications that include patients with liver or skin, and/or lung fibrosis. We are currently conducting a
Phase 2 clinical study in PSC, a rare obstructive and cholestatic liver disease. The study is actively recruiting patients in the U.S.,
Europe and Israel and is being expanded by adding clinical sites, an additional high dose arm (20mg/kg) as well as an open label extension.
We had earlier proposed to add both low and high dose arms to the study but the recent encouraging results reported from our Phase 2 liver
fibrosis trial in NASH patients, dosed at 5mg/kg, along with the positive Phase 1b data we previously reported in non-alcoholic fibrotic
liver disease (NAFLD) patients dosed at 5mg/kg and 2.5mg/kg, are seen as providing us sufficient data on the performance of the lower
dose to drop it from the current trial, which is focusing on the 10mg/kg and 20g/kg doses. We believe this change will facilitate timely
conduct and completion of the trial. If regulators in the future do not agree that the existing low dose data is sufficient, we always
have the option to add a lower dose group as part of the Phase 3 clinical program.
We are also planning to open a Phase 2 clinical trial in SSc
in the first half of 2023. The trial in SSc, a rare autoimmune rheumatic disease characterized by fibrosis in the skin and lung and other
organs, will focus on establishing biological and clinical proof of concept in this patient population. Although our primary focus is
on these two rare indications, as we noted, an additional Phase 2 clinical study in patients with liver fibrosis due to non-alcoholic
steatohepatitis (NASH) has recently been completed. This trial provided safety and pharmacokinetic (PK) data and was informative
in determining whether we will advance the development of our current subcutaneous formulation of CM-101. Additionally, the trial measured
a number of biomarkers that may be relevant to the potential activity of CM-101 in other fibro-inflammatory conditions. We recently reported
results from this trial, which showed that the trial met its primary endpoint of safety and tolerability, and that CM-101 demonstrated
encouraging activity in secondary endpoints that include a range of liver fibrosis biomarkers and physiologic assessments.
Components of Operating Results
Revenues
To date, we have not generated any revenue from product sales and
do not expect to generate any revenue from product sales in the near future. If development efforts for our product candidates are successful
and result in our receipt of necessary regulatory approvals, or if our development efforts otherwise lead to any commercialized products
or additional license agreements with third parties, then we may generate revenue in the future from product sales.
Research and Development Expenses, net
Research and development expenses consist primarily of costs incurred
in connection with the development of our product candidates. These expenses include:
| • |
expenses incurred under agreements with clinical research organizations and contract manufacturing organizations, as well as investigative
sites and consultants that conduct our clinical trials, preclinical studies and other scientific development services; |
| • |
manufacturing scale-up expenses and the cost of acquiring and manufacturing preclinical and clinical trial materials; |
| • |
employee-related expenses, including salaries, related benefits, travel and share-based compensation expenses for employees engaged
in research and development functions, as well as external costs, such as fees paid to outside consultants engaged in such activities;
|
| • |
license maintenance fees and milestone fees incurred in connection with various license agreements; |
| • |
costs related to compliance with regulatory requirements; and |
| • |
depreciation and other expenses. |
We recognize external development costs based on an evaluation
of the progress to completion of specific tasks using information provided to us by our service providers.
We do not allocate employee costs or facility expenses, including
depreciation or other indirect costs, to specific programs because these resources are deployed across multiple programs and, as such,
the related costs are not separately classified. We use internal resources primarily to oversee our research, as well as for managing
our preclinical development, process development, manufacturing and clinical development activities. Our employees work across multiple
programs; therefore, we do not track the related expenses by program.
Research and development activities are fundamental to our business.
Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical
development, primarily due to the increased size and duration of later-stage clinical trials. As a result, we expect that our research
and development expenses will increase substantially over the next several years as we continue to advance the development of our product
candidates. We also expect to incur additional expenses related to milestone and royalty payments payable to third parties with whom we
have entered into license agreements.
General and Administrative Expenses
General and administrative expenses consist primarily of salaries
and related benefits, share-based compensation expenses for personnel in executive and administrative functions, insurance and professional
fees for legal, consulting, accounting and audit services.
We anticipate that our general and administrative expenses will
increase in the future due to increased headcount and professional fees to support our continued research activities and development of
our product candidates. We also anticipate that we will continue to incur accounting, audit, legal, regulatory, compliance, director and
officer insurance costs, as well as investor and public relations expenses associated with being a public company. Additionally, once
we believe that regulatory approval of a product candidate appears likely, we will begin to incur a material increase in payroll and related
expenses as a result of preparation for commercial operations, particularly in respect of sales and marketing.
Financing Expenses, Net
Financing expenses, net consist primarily of income or expenses
related to revaluation of foreign currencies and interest income on our bank deposits.
Results of Operations
The following table summarizes our results of operations for the
years ended December 31, 2022 and 2021:
|
Year ended December 31,
|
||||||||
|
2022 |
2021 |
|||||||
|
Operating Expenses: |
(in thousands)
|
|||||||
|
Research and development
|
$ |
16,977 |
$ |
6,334 |
||||
|
General and administrative
|
11,556 |
6,033 |
||||||
|
Total operating expenses
|
28,533 |
12,367 |
||||||
|
Financing (income) expense, net
|
(353 |
) |
111 |
|||||
|
Loss before taxes |
28,180 |
12,478 |
||||||
|
Taxes on income (benefit) |
(534 |
) |
- |
|||||
|
Net loss |
$ |
27,646 |
$ |
12,478 |
||||
Our results of operations have varied in the past and can be expected
to vary in the future due to numerous factors. We believe that period-to-period comparisons of our operating results are not necessarily
meaningful and should not be relied upon as indications of future performance.
Year ended December 31, 2022 Compared
to the Year Ended December 31, 2021
Research and development expenses
Research and development expenses increased by approximately $10.7
million, or 168%, to approximately $17.0 million for the year ended December 31, 2022 compared to approximately $6.3 million for
the year ended December 31, 2021. The increase resulted primarily from an increase in headcount and payments to consultants and subcontractors
for clinical and pre-clinical activities.
General and administrative expenses
General and administrative expenses increased by approximately
$5.6 million, or 92%, to approximately $11.6 million for the year ended December 31, 2022 compared to approximately $6.0 million
for the year ended December 31, 2021. This increase was primarily due to increase in headcount and professional fees and insurance
expense and share-based compensation.
Financing (income) expense, net
Financing expenses, net, increased by approximately $464 thousand,
or 418%, to net income of $353 thousand for the year ended December 31, 2022 compared to a net loss of $111 thousand for the year
ended December 31, 2021. Financing expense, net for the year ended December 31, 2022 was primarily related to foreign currency
exchange rate differences, offset by interest income on deposits. Financing income, net for 2021 was primarily related to interest income
on deposits, offset by foreign currency exchange rate differences.
Taxes on Income
Taxes on income, net, for the year ended December 31, 2022 were
$534 thousand. The tax benefit is related to a tax return of Chemomab Therapeutics Inc., a wholly owned subsidiary of the Company,
derived by carryback of net operating losses. Chemomab Therapeutics Inc. received $351 thousand in December 2022 on account of previous
years and expects to receive the remainder $183 thousand in 2023.
Cash Flows
The following table summarizes our cash flows for the years ended
December 31, 2022 and 2021:
|
Year ended December 31, |
Increase/(decrease)
|
|||||||||||||||
|
2022 |
2021 |
$ |
% |
|||||||||||||
|
(in thousands) |
||||||||||||||||
|
Net cash used in operating activities
|
$ |
(20,370 |
) |
$ |
(12,374 |
) |
$ |
(7,996 |
) |
65 |
% | |||||
|
Net cash provided by (used in) investing activities |
19,533 |
(45,186 |
) |
64,719 |
(143 |
)% | ||||||||||
|
Net cash provided by (used in) financing activities |
(808 |
) |
61,074 |
(61,882 |
) |
(101 |
)% | |||||||||
|
Net increase (decrease) in cash, cash equivalents and restricted
cash |
$ |
(1,645 |
) |
$ |
3,514 |
$ |
(5,159 |
) |
(147 |
)% | ||||||
Operating activities
Net cash used in operating activities for the year ended December
31, 2022 was approximately $20.4 million and included net loss of $27.6 million, partially offset by net cash used by changes in operating
assets and liabilities of approximately $4.0 million and non-cash charges of $3.3 million, which mainly included share-based compensation
expenses.
Net cash used in operating activities for the years ended December 31, 2021 was approximately
$12.4 million and included net loss of $12.5 million, partially offset by net cash provided by changes in operating assets and liabilities
of $1.9 million and non-cash charges of $2.0 million, which mainly included share-based compensation expenses.
Investing activities
Net cash provided by investing activities for the year ended December
31, 2022 was approximately $19.5 million, which was primarily related to investment in short-term deposits offset by purchasing of fixed
assets.
Net cash used in investing activities for the year ended December 31, 2021 was $45.2
million, which was primarily related to purchase of fixed assets and investment in bank deposits.
Financing activities
Net cash used in financing activities for the year ended December 31, 2022 was approximately
$0.8 million, consisting of $0.3 million of proceeds from the sale of ADSs, $0.1 million of proceeds from the exercise of stock options
offset by the repurchase of shares in the amount of $1.2 million.
Net cash provided by financing activities for the year ended December 31, 2021 was $61.1
million, consisting of $58.7 million of proceeds from the sale of ADSs, primarily from the Private Placement (as defined and described
below) and issuances under the Sales Agreement with Cantor, and $2.4 million of cash acquired in the Merger.
Funding Requirements
We expect our expenses to increase substantially as we advance
the clinical trials of our product candidate. In addition, we expect to continue to incur additional costs associated with operating as
a public company.
We believe that our existing cash, cash equivalents and bank deposits
will enable us to fund our operating expenses and capital expenditure requirements at least through March 31, 2024. We have based these
estimates on assumptions that may prove to be wrong, and we could expend our capital resources sooner than we expect. If we receive regulatory
approval for any of our product candidates, we expect to incur significant commercialization expenses related to product manufacturing,
sales, marketing and distribution.
Until such time, if ever, that we generate product revenue sufficient to achieve profitability,
we expect to finance our cash needs through the sales of our securities and through other outside funding sources. Debt financing and
preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific
actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional funds through government
and other third-party funding, collaboration agreements, strategic alliances, licensing arrangements or marketing and distribution arrangements,
then we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or
grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings
when needed, then we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts
or grant rights to develop and market products or product candidates that we would otherwise prefer to develop and market.
Liquidity and Capital Resources
In connection with the Merger, on March 15, 2021, we entered into
Securities Purchase Agreements with certain investors, pursuant to which we agreed to sell approximately $45.5 million of the ADSs in
a private placement transaction (the Private Placement). The Private Placement closed on March 22, 2021, at which time we sold 2,619,270
ADSs together with warrants to purchase up to 261,929 ADSs at an exercise price of $17.35 per ADS. The warrants expire five years from
the date of issuance, and, if exercised in full, will provide proceeds of approximately $4.5 million.
On April 30, 2021, we entered into the Sales Agreement with Cantor
Fitzgerald & Co. (Cantor). Pursuant to the Sales Agreement, we may offer and sell, from time to time, ADSs having an aggregate
offering price of up to $75 million through Cantor (the ATM Facility). Sales of ADSs, if any, under the Sales Agreement will be
issued and sold pursuant to our Registration Statement on Form S-3 which was declared effective on May 17, 2021 and will be made in sales
deemed to be an “at the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act. Pursuant
to the Sales Agreement, Cantor has agreed to act as sales agent on a best efforts basis and use commercially reasonable efforts to sell
on our behalf all of the ADSs we requested to be sold in accordance with the Sales Agreement, consistent with Cantor’s normal trading
and sales practices, on mutually agreed terms.
On April 25, 2022, we filed a prospectus supplement with the SEC
for the issuance and sale of up to $18,125,000 of ADSs in connection with the reactivation of the ATM Facility and pursuant to General
Instruction I.B.6 of Form S-3, which, subject to certain exceptions, limits the amount of securities we are able to offer and sell under
such registration statement during any twelve month period to one-third of our unaffiliated public float.
During the year ended December 31, 2022, we sold 130,505 ADSs at
an average price of USD 2.11 per ADS, through the ATM facility, resulting in gross proceeds of $275,000.
As shown in the accompanying consolidated financial
statements, we have incurred losses and cash flow deficits from operations since inception, resulting in an accumulated deficit at December 31,
2022 of approximately $64 million. We have financed operations to date primarily through public and private placements of equity securities.
We anticipate that we will continue to incur net losses for the foreseeable future. We believe that our existing cash, cash equivalents
and bank deposits will be sufficient to fund our projected cash needs only through March 31, 2024. To meet future capital needs we
would need to raise additional capital through equity or debt financing or other strategic transactions. However, any such financing
may not be available to us on favorable terms or at all. Our failure to obtain sufficient funds on commercially acceptable terms
when needed would have a material adverse effect on our business, results of operations and financial condition.
Current Outlook
We estimate that our current cash resources will allow us to execute
our business plans at least through March 31, 2024.
Developing drugs, conducting preclinical and clinical trials, obtaining
commercial manufacturing capabilities and commercializing products is expensive, and we will need to raise substantial additional funds
to achieve our strategic objectives. We will require significant additional financing in the future to fund our operations, including
if and when we progress into clinical trials of our product candidates, obtain regulatory approval for one or more of our product candidates,
obtain commercial manufacturing capabilities and commercialize one or more of our product candidates. Our future capital requirements
will depend on many factors, including, but not limited to:
| ● |
the progress and costs of our preclinical and clinical trials and other research and development activities; |
| ● |
the scope, prioritization and number of our preclinical and clinical trials and other research and development programs; |
| ● |
the amount of revenues and contributions we receive under future licensing, collaboration, development and commercialization arrangements
with respect to our product candidates; |
| ● |
the costs of development and expansion of our operational infrastructure; |
| ● |
the costs and timing of obtaining regulatory approval for one or more of our product candidates; |
| ● |
our ability, or that of our collaborators, to achieve development milestones, marketing approval and other events or developments
under potential future licensing agreements; |
| ● |
the costs of filing, prosecuting, enforcing and defending patent claims and other intellectual property rights; |
| ● |
the costs and timing of securing manufacturing arrangements for clinical or commercial production; |
| ● |
the costs of contracting with third parties to provide sales and marketing capabilities for us or establishing such capabilities
ourselves; |
| ● |
the costs of acquiring or undertaking development and commercialization efforts for any future products, product candidates or technology;
|
| ● |
the magnitude of our general and administrative expenses; and |
| ● |
any additional costs that we may incur under future in- and out-licensing arrangements relating to one or more of our product candidates.
|
Until we can generate significant recurring revenues, we expect to satisfy our future
cash needs through capital raising or by out-licensing and/or co-developing applications of one or more of our product candidates. We
cannot be certain that additional funding will be available to us on acceptable terms, if at all. If funds are not available, we may be
required to delay, reduce the scope of or eliminate research or development plans for, or commercialization efforts with respect to, one
or more of our product candidates and make the necessary change to our operations to reduce the level of our expenditures in line with
available resources.
We are a development-stage company and it is not possible for us
to predict with any degree of accuracy the outcome of our research and development efforts. As such, it is not possible for us to predict
with any degree of accuracy any significant trends, uncertainties, demands, commitments or events that are reasonably likely to have a
material effect on our net loss, liquidity or capital resources, or that would cause financial information to not necessarily be indicative
of future operating results or financial condition. However, to the extent possible, certain trends, uncertainties, demands, commitments
and events are described in this item.
Critical Accounting Estimates
Our financial statements are prepared in accordance with generally
accepted accounting principles in the United States (GAAP). The preparation of our financial statements and related disclosures in accordance
with GAAP requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, costs and expenses,
and the disclosure of contingent assets and liabilities in our financial statements. We base our estimates on historical experience, known
trends and events and various other factors that we believe are reasonable under the circumstances, the results of which form the basis
for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate
our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions.
While our significant accounting policies are described in more
detail in Note 2 to our consolidated financial statements, we believe that the following accounting estimates are those that include a
higher degree of judgment or complexity and are reasonably likely to have a material impact on our financial condition or results of operations
and are therefore considered critical accounting estimates.
Share-Based Compensation
We apply Accounting Standard Codification (ASC) 718-10, “Share-Based
Payment,” which requires the measurement and recognition of compensation expenses for all share-based payment awards made to employees
and directors, including employee options under our option plans based on estimated fair values.
ASC 718-10 requires that we estimate the fair value of equity-based
payment awards on the date of grant using an option-pricing model. The fair value of the award is recognized as an expense over the requisite
service periods in our statements of comprehensive loss. We recognize share-based award forfeitures as they occur, rather than estimate
by applying a forfeiture rate.
In June 2018, the Financial Accounting Standards Board (FASB) issued
Accounting Standards Update (ASU) 2018-07, “Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based
Payment Accounting”, which simplifies the accounting for nonemployee share-based payment transactions by aligning the measurement
and classification guidance, with certain exceptions, to that for share-based payment awards to employees. The amendments expand the scope
of the accounting standard for share-based payment awards to include share-based payment awards granted to non-employees in exchange for
goods or services used or consumed in an entity’s own operations and supersedes the guidance related to equity-based payments to
non-employees. We adopted these amendments on January 1, 2019.
We recognize compensation expenses for the fair value of non-employee
awards over the requisite service period of each award.
We estimate the fair value of options granted as equity awards using a Black-Scholes
options pricing model. The option-pricing model requires a number of assumptions, of which the most significant are share price, expected
volatility and the expected option term (the time from the grant date until the options are exercised or expire). We determine the fair
value per share of the underlying stock by taking into consideration our most recent sales of stock, as well as additional factors that
we deem relevant. Our board determined the fair value of ordinary shares based on valuations performed using the Option Pricing Method
subject to relevant facts and circumstances. We have historically been a private company and lack company-specific historical and implied
volatility information of our stock. Expected volatility is estimated based on volatility of similar companies in the biotechnology sector.
Historically, we have not paid dividends and have no foreseeable plans to issue dividends. The risk-free interest rate is based on
the yield from governmental zero-coupon bonds with an equivalent term. The expected option term is calculated for options granted to employees
and directors using the “simplified” method. Grants to non-employees are based on the contractual term. Changes in the determination
of each of the inputs can affect the fair value of the options granted and our results of operations.
Quantitative and Qualitative Disclosures about Market Risks
Foreign Currency Exchange Risk
Our functional currency is the U.S. Dollar. We are exposed to foreign exchange rate
risk. We are located in Israel, where part of our general and administrative expenses costs is incurred in New Israeli Shekels. During
each of the years ended December 31, 2022 and 2021, we recognized foreign currency transaction loss of $609 thousand and $176 thousand,
respectively. These foreign currency transaction gains and losses were recorded in financial expenses. We believe that a 10% change in
the exchange rate between the U.S. Dollar and New Israeli Shekel would not have a material impact on our financial position or results
of operations.
As we continue to grow our business, our results of operations and cash flows will be
subject to fluctuations due to changes in foreign currency exchange rates, which could adversely impact our results of operations. To
date, we have not entered into any foreign currency hedging contracts to mitigate our exposure to foreign currency exchange risk.
EXECUTIVE COMPENSATION
Summary Compensation Table
The table and summary below outline the compensation granted to individuals who served
in the role of chief executive officer during the previous fiscal year and our three most highly compensated executive officers with respect
to the year ended December 31, 2022. For purposes of the table and the summary below, “compensation” includes base salary,
bonuses, equity-based compensation, retirement or termination payments, benefits and perquisites such as car, phone and social benefits
and any undertaking to provide such compensation.
|
Name and Principal Position |
Year |
Salary (1) ($) |
Bonus (2) ($) |
Option Awards (3) ($) |
All Other
Compensation (4) ($) |
Total ($) |
||||||||||||||||
|
Dale Pfost |
2021 |
182,557 |
- |
300,000 |
22,868 |
505,425 |
||||||||||||||||
|
Chief Executive Officer and Chairman (5) |
2022 |
600,000 |
300,000 |
1,500,000 |
75,160 |
2,475,160 |
||||||||||||||||
|
|
|
|||||||||||||||||||||
|
Adi Mor |
2021 |
248,547 |
167,000 |
8,000 |
64,453 |
488,000 |
||||||||||||||||
|
Chief Scientific Officer, Director and Previous Chief Executive Officer
(6) |
2022 |
298,470 |
120,000 |
- |
16,926 |
435,396 |
||||||||||||||||
|
|
|
|||||||||||||||||||||
|
Donald Marvin |
2021 |
88,276 |
- |
102,390 |
11,590 |
202,256 |
||||||||||||||||
|
Chief Financial Officer, Executive Vice President and Chief Operating
Officer (7) |
2022 |
460,000 |
207,000 |
660,252 |
60,397 |
1,387,649 |
||||||||||||||||
|
|
|
|||||||||||||||||||||
|
Sigal Fattal |
2021 |
127,050 |
122,000 |
616,000 |
8,952 |
874,002 |
||||||||||||||||
|
Previous Interim Chief Financial Officer (8) |
|
|||||||||||||||||||||
(1) Salary includes gross base salary.
(2) Bonuses disclosed under row “2021” relate to bonuses accrued in 2021
and paid in 2021 and 2022. Bonuses disclosed under “2022” represent target bonuses for 2022 (the information is not final
and based on certain estimates due to the fact that the Company has not yet determined actual bonuses for 2022).
(3) Represents the equity-based compensation expenses recorded in our consolidated
financial statements for the years ended December 31, 2021 and 2022, based on the options’ fair value on the grant date, calculated
in accordance with applicable accounting guidance for equity-based compensation. For a discussion of the assumptions used in reaching
this valuation, see Note 8C to our consolidated financial statements filed with our Annual Report on Form 10-K for the year ended December
31, 2021 incorporated by reference in this prospectus.
(4) Represents payments by us of social benefits on behalf of the officer. Such benefits
may include, to the extent applicable, payments, contributions and/or allocations for risk insurance (e.g., life, or work disability insurance),
payments for social security, vacation, medical insurance and benefits, and other benefits and perquisites consistent with our policies.
(5) Dr. Dale Pfost’s terms of compensation were approved by the Company’s
shareholders on October 25, 2021, which includes an annual base salary of $600,000. Dr. Pfost’s compensation data set forth in the
above table is pro-rated to reflect time served as the Company’s chief executive officer in 2021.
(6) In addition to her current positions of Chief Scientific Officer and a member
of our Board, Dr. Adi Mor previously served as our Chief Executive Officer, and resigned from such role concurrent with the commencement
of Dr. Dale Pfost’s service as our Chief Executive Officer on October 25, 2021.
(7) Mr. Donald Marvin’s employment with the Company commenced on November 4,
2021, which include an annual base salary of $460,000. The compensation data set forth in the above table is pro-rated to reflect time
served as the Company’s Chief Financial Officer, Executive Vice President and Chief Operating Officer in 2021.
(8) Ms. Sigal Fattal previously served as our interim Chief Financial Officer,
and resigned from such role concurrent with the commencement of Mr. Marvin’s service as our Chief Financial Officer on November
8, 2021.
Outstanding Equity Awards at Fiscal Year-End
The table below outlines the options to purchase ADSs held by our named executive officers
outstanding as of December 31, 2022.
|
|
Option awards | ||||||||||||
|
Name |
Number of securities underlying unexercised options (#) exercisable |
Number of securities underlying unexercised options (#) unexercsiable |
Option exercise price ($) |
Option expiration date | |||||||||
|
Dale Pfost, Chief Executive Officer and Chairman of the Board
|
133,977 |
325,376 |
(1) |
10.05 |
October 25, 2031 | ||||||||
|
|
| ||||||||||||
|
Adi Mor, Chief Scientific Officer, Director and Previous Chief Executive
Officer |
131,698 |
- |
1.49 |
March 15, 2028 | |||||||||
|
|
| ||||||||||||
|
Donald Marvin, Chief Financial Officer, Executive Vice President
and Chief Operating Officer |
53,320 |
143,555 |
(2) |
9.77 |
November 8, 2031 | ||||||||
(1) The options granted to Dr. Pfost vest and become exercisable over a period of
four (4) years with one quarter (1/4) of the options vesting on October 25, 2022, the first anniversary of the grant date, and the remainder
in equal amounts over the ensuing 36 monthly periods, subject to Dr. Pfost’s continued service.
(2) The options granted to Mr. Marvin vest and become exercisable over a period of
four (4) years, with one quarter (1/4) of the options vesting on November 8, 2022, the first anniversary of the grant date, and the remainder
in equal amounts over the ensuing 36 monthly periods, subject to Mr. Marvin’s continued service.
Employment Agreements
Employment Agreement with Dr. Dale Pfost, our Chief Executive Officer
On September 1, 2021, the Company’s board of directors
approved the appointment of Dr. Dale Pfost as Chief Executive Officer of the Company, and on October 25, 2021, the shareholders of the
Company approved the terms of employment of Dr. Pfost, pursuant to an Executive Employment Agreement entered into between Dr. Pfost and
Chemomab Therapeutics Inc., the Company’s wholly owned subsidiary. In accordance with terms of Dr. Pfost’s employment agreement,
Dr. Pfost receives: (i) an annual base salary of $600,000 (the “Base Salary”); (ii) an initial target annual cash incentive
bonus of 50% of the Base Salary and an additional potential bonus of 10% of the Base Salary based on Dr. Pfost’s achievement of
certain predetermined goals, which shall be determined at the discretion of the Company’s board of directors; (iii) options to purchase 459,353
ADSs of the Company (the ”Options”), constituting 3.5% of the outstanding and issued ADSs of the Company (on a fully diluted
basis) which will vest over a period of four (4) years with one quarter (1/4) of the Options vesting on the first anniversary of the grant
date and the remainder in equal amounts over the ensuing 36 monthly periods, unless such options have been cancelled in accordance with
the terms and conditions of the 2015 Plan (as defined below); (iv) a one-time signing bonus in an amount of $80,000; (v) a one-time bonus
in an amount of $80,000 upon the establishment of a new office in the United State and Dr. Pfost’s domiciling in the location of
the new office, which will be payable within 15 days of such domiciling; (vi) 25 days of paid time off (“PTO”) per year, capped
at 50 days of accrued PTO; and (vii) certain severance benefits payable in the event that the Company terminates Dr. Pfost’s employment
without Cause (as defined in the employment agreement), provided that the total amount of the cash portion of severance benefits will
not exceed two hundred percent (200%) of Dr. Pfost’s annual base salary at the rate in effect on the date of termination.
Additionally, in the event of termination of Dr. Pfost’s
employment without Cause (as defined therein) as the result of a merger or sale of all or substantially all of the Company’s capital
stock or assets, (i.e. a change in control of the Company), vesting of all unvested Options will accelerate and all unvested Options will
immediately vest and become exercisable. Furthermore, in the event of termination of Dr. Pfost’s employment without Cause, other
than as a result of a merger or sale of all or substantially all of the Company’s capital stock or assets (i.e. a change in control
of the Company) or if Dr. Pfost terminates his employment for Good Reason (as defined in the employment agreement): (a) any time-based
Options then outstanding and due to vest on the twelve (12) month anniversary of Dr. Pfost’s employment commencement date will accelerate
and become exercisable if Dr. Pfost has been employed by the Company at such time for six (6) months or more but less than twelve (12)
months; and (b) all time-based Options then outstanding will accelerate and become exercisable if Dr. Pfost has been employed by the Company
at such time for twelve (12) months or longer.
The foregoing description of Dr. Pfost’s employment agreement
is qualified in its entirety by reference to the full text of the employment agreement, a copy of which is filed as Exhibit 10.9 hereto.
Employment Agreement with Dr. Adi Mor, our Chief Scientific Officer (and
former Chief Executive Officer)
Dr. Adi Mor provides services to the Company pursuant to the terms
of a consulting agreement among Dr. Mor, an Israeli company co-owned by Dr. Mor, and the Subsidiary, dated April 18, 2022 (the “Consulting
Agreement”). Pursuant to the terms of the Consulting Agreement, Dr. Mor is entitled to a gross monthly payment, an annual
performance bonus, subject to her meeting certain performance milestones, as to be determined by our board of directors on an annual basis,
and certain other benefits. Dr. Mor’s current monthly payment and annual performance bonus target were set and approved by
the Company’s shareholders as described below. In addition, Dr. Mor is entitled to other benefits that are provided for by
Israeli law or that are customary for senior executives in Israel, including reimbursement for reasonable expenses incurred in connection
with her services and payment for variable and fixed costs of a car. The Consulting Agreement is terminable by either party upon 60 days
prior written notice, and contains customary provisions regarding noncompetition, confidentiality of information, and assignment of inventions.
As required under Israeli law, the terms of Dr. Mor’s Consulting
Agreement with the Subsidiary were approved by the board of directors and presented to the shareholders for approval. At the annual
meeting of our shareholders that took place on June 7, 2022, our shareholders approved for following terms of employment for Dr. Mor:
(a) an increase to her base gross monthly salary from 67,500 NIS (approximately $21,090) (plus social benefits) to 74,250 NIS (approximately
$23,200), (plus social benefits) which represents an increase of 6,750 NIS (approximately $2,110), effective as of March 7, 2022; (b)
an increase in her 2021 gross annual bonus from $100,000 to $110,250, an increase of approximately 10%; and (c) an increase in her annual
gross target bonus opportunity from $100,000 to 45% of Dr. Mor’s annual gross payment, effective as of January 1, 2022. In
lieu of the monthly salary payment of 74,250 NIS (plus social benefits), as approved by the shareholders, Dr. Mor receives the equivalent
amount in the form of a monthly payment equal to 98,730 NIS under the Consulting Agreement.
The foregoing description of the Consulting Agreement is qualified
in its entirety by reference to the full text of the consulting agreement, a copy of which is filed as Exhibit 10.11 hereto.
Employment Agreement with Mr. Donald Marvin, our Chief Financial Officer, Executive
Vice President and Chief Operating Officer
On November 8, 2021, Chemomab Therapeutics Inc. entered into an
Executive Employment Agreement with Mr. Donald Marvin. In accordance with his employment agreement, Mr. Marvin receives an annual base
salary of $460,000, and is a part of the Company’s bonus program with a yearly bonus potential of 45% of his base annual base salary,
which bonus will be based on the achievement of mutually agreeable objectives to be determined by Mr. Marvin and the Chief Executive Officer
of the Company. Additionally, in accordance with his employment agreement, Mr. Marvin received (i) 1.5% of the outstanding equity of the
Company, which exercise price is based on the average of the ADS market value over the 30 calendar days preceding November 8, 2021, and
vesting over four years, (ii) an additional 0.5% of the outstanding equity of the Company for the achievement of strategic goals as agreed
upon with the Compensation Committee and approved by the Board of Directors, (iii) a $25,000 signing bonus, and (iv) a 12-month initial
severance package, which will increase by one month every two years that Mr. Marvin is employed by the Company, provided however that
such amount does not exceed 18 months.
Additionally, in the event of termination of Mr. Marvin’s
employment without Cause as the result of a merger or sale of all or substantially all of the Company’s capital stock or assets,
(i.e. a change in control of the Company), vesting of all unvested Options will accelerate and all unvested Options will immediately vest
and become exercisable. Furthermore, in the event of termination of Mr. Marvin’s employment without Cause, other than as a result
of a merger or sale of all or substantially all of the Company’s capital stock or assets (i.e. a change in control of the Company)
or if Mr. Marvin terminates his employment for Good Reason (as defined in the employment agreement): (a) any time-based Options then outstanding
and due to vest on the twelve (12) month anniversary of Mr. Marvin’s employment commencement date will accelerate and become exercisable
if Mr. Marvin has been employed by the Company at such time for six (6) months or more but less than twelve (12) months; and (b) all time-based
Options due to vest on or before December 31 of the year in which termination occurs then outstanding will accelerate and become exercisable
if Mr. Marvin has been employed by the Company at such time for twelve (12) months or longer.
The foregoing description of Mr. Marvin’s employment agreement
is qualified in its entirety by reference to the full text of the employment agreement, a copy of which is filed as Exhibit 10.10 hereto.
Director Compensation Table
The table below outlines compensation earned
by our non-executive directors for the fiscal year ended December 31, 2022, including fees earned in cash and options awarded for services
provided as a director:
|
Name |
Fees earned or paid in cash ($) |
Option awards ($) |
Total ($) |
|||||||||
|
Nissim Darvish |
47,000 |
76,000 |
(1) |
123,000 |
||||||||
|
Jill Quigley |
23,000 |
15,000 |
(2) |
38,000 |
||||||||
|
Alan Moses |
43,000 |
76,000 |
(3) |
119,000 |
||||||||
|
Claude Nicaise |
47,000 |
76,000 |
(4) |
123,000 |
||||||||
|
Neil Cohen |
47,000 |
76,000 |
(5) |
123,000 |
||||||||
(1) (i) 11,884 of the options granted to Dr. Darvish vest and become exercisable in
equal monthly installments over a 36 month period commencing on March 16, 2021, and (ii) 6,820 options vest and become exercisable on
March 16, 2023, subject to Dr. Darvish’s continued service. Additional 10,123 options have fully vested.
(2) The options granted to Ms. Quigley vest and become exercisable in equal monthly
installments over a 36 month period commencing on June 16, 2022, subject to Ms. Quigley’s continued service.
(3) (i) 11,884 of the options granted to Dr. Moses vest and become in equal
monthly installments over a 36 month period commencing on March 16, 2021, and (ii) 6,820 of the options granted to Dr. Moses vest and
become exercisable on March 16, 2023, subject to Dr. Moses’ continued service.
(4) (i) 11,884 of the options granted to Dr. Nicaise vest and become in equal monthly
installments over a 36 month period commencing on March 16, 2021, and (ii) 6,820 of the options granted to Dr. Nicaise vest and become
exercisable on March 16, 2023, subject to Dr. Nicaise's continued service.
(5) (i) 11,884 of the options granted to Mr. Cohen vest and become exercisable in
equal monthly installments over a 36 month period commencing on March 16, 2021, (ii) 6,820 options vest and become exercisable on March
16, 2023, and (iii) 688 options vest and become exercisable over a period of three (3) years with one quarter (1/4) of the options vesting
on July 16, 2021, the first anniversary of the grant date, and the remainder in equal amounts over the ensuing 24 monthly periods commencing
on October 16, 2021, subject to Mr. Cohen’s continued service.
Director Compensation
We have adopted a Compensation Policy regarding
the terms of office and employment of its “office holders” (as defined in the Israeli Companies Law, 5759-1999), including
cash compensation, equity-based awards, releases from liability, indemnification and insurance, severance and other benefits. Chemomab
compensates its directors and senior management team in accordance with the recommendation of its compensation committee and, generally,
subject to the approval of our Board and shareholders. That compensation will generally need to be consistent with the terms of our Compensation
Policy, which will require periodic approval, in accordance with the requirements of the Companies Law.
In addition to the Compensation Policy, on
March 15, 2021, our shareholders approved certain actual compensation terms applicable to our current and future directors (the “Director
Compensation Package”), pursuant to which (and among other terms) (i) our non-employee directors are entitled to receive an annual
option grant of up to 0.05% of the Company’s share capital on a fully diluted basis, (ii) the chairman of our Board is entitled
to receive an annual option grant of up to 0.2% of the Company’s share capital on a fully diluted basis and (iii) our non-employee
directors are entitled to receive an annual cash fee of $35,000. The Director Compensation Policy implements terms for actual equity compensation
that will be granted to directors on a regular basis and determines the annual cash fee that may be paid to non-employee directors. In
accordance with the Companies Law, equity grants to our directors that are within the limitations of the Director Compensation Package
require the approval of our compensation committee and Board, but not our shareholders, while any contemplated compensation made in excess
of the Director Compensation Package will require the approval of our shareholders. Furthermore, any such compensation, including the
annual cash fee payable to our non-employee directors, must be limited to the framework of the Director Compensation Package.
Outstanding Equity Awards at Fiscal Year End
The table below outlines options to purchase ADSs held by our non-employee
directors outstanding as of December 31, 2022.
|
|
Option awards | ||||||||||||
|
Name |
Number of ADSs underlying unexercised options (#) exercisable |
Number of ADSs underlying unexercised options (#) unexercsiable |
Option exercise price ($) |
Option expiration date | |||||||||
|
Nissim Darvish |
10,123 |
- |
0.80 |
October 27, 2026 | |||||||||
|
Nissim Darvish |
6,932 |
4,952 |
27.26 |
April 19, 2031 | |||||||||
|
Nissim Darvish |
- |
6,820 |
3.53 |
March 7, 2032 | |||||||||
|
|
| ||||||||||||
|
Alan Moses |
6,932 |
4,952 |
27.26 |
April 19, 2031 | |||||||||
|
Alan Moses |
- |
6,820 |
3.53 |
March 7, 2032 | |||||||||
|
|
| ||||||||||||
|
Claude Nicaise |
6,932 |
4,952 |
27.26 |
April 19, 2031 | |||||||||
|
Claude Nicaise |
- |
6,820 |
3.53 |
March 7, 2032 | |||||||||
|
|
| ||||||||||||
|
Neil Cohen |
515 |
173 |
13.20 |
July 16, 2030 | |||||||||
|
Neil Cohen |
6,932 |
4,952 |
27.26 |
April 19, 2031 | |||||||||
|
Neil Cohen |
- |
6,820 |
3.53 |
March 7, 2032 | |||||||||
|
|
| ||||||||||||
|
Jill Quigley |
2,273 |
11,367 |
3.25 |
June 16, 2032 | |||||||||
Equity Incentive Plans
We maintain (i) the 2011 Share Option Plan (the “2011 Plan”),
(ii) the 2017 Plan and (iii) the 2015 Plan, which was assumed by our company from the Subsidiary upon the effectiveness of the Merger.
At that time, outstanding options under the 2015 Plan became exercisable for such number of ADSs of our company (formerly known as Anchiano
Therapeutics Ltd.) as was determined based on the exchange ratio in the Merger Agreement, with a reciprocal adjustment to exercise price.
As of December 31, 2022, a total of 1,422,153 of ADSs were reserved for issuance under the 2015 Plan, of which 172,276 ADSs had been issued
pursuant to previous exercises options, and 1,173,037 ADSs were issuable under outstanding options. Of such outstanding options,
options to purchase 620,036 ADSs had vested and were exercisable as of that date, with a weighted average exercise price of $5.96 per
ADS.
As of December 31, 2022, a total of 625,581 of ADSs were reserved
for issuance under the 2017 Plan, of which 586,540 ADSs were issuable under outstanding options. Of such outstanding options,
options to purchase 21,377 ADSs had vested and were exercisable as of that date, with a weighted average exercise price of $6.98 per ADS.
No ADSs had been issued pursuant to previous exercises options.
2011 Plan
On December 19, 2011, our board of directors adopted the 2011 Plan
to allocate options to purchase our ordinary shares to our directors, officers, employees and consultants, and those of our affiliated
companies (as such term is defined under the 2011 Plan), or the Grantees. The 2011 Plan is administered by our board of directors or a
committee that was designated by our board of directors for such purpose (the “Administrator”).
Under the 2011 Plan, we may grant options to purchase ordinary
shares (“Options”), under four tracks: (i) Approved 102 capital gains Options through a trustee, which was approved by the
Israeli Tax Authority in accordance with Section 102(a) of the Israeli Income Tax Ordinance (“ITO”), and granted under the
tax track set forth in Section 102(b)(2) of the ITO, or the Approved 102 Capital Gains Options. The holding period under this tax track
is 24 months from the date of allocation of Options to the trustee or such period as may be determined in any amendment of Section 102
of the ITO, or any applicable tax ruling or guidelines; (ii) Approved 102 Earned Income Options through a trustee, granted under the tax
track set forth is Section 102(b)(1) of the ITO, or the Approved 102 Earned Income Options. The holding period under this tax track is
12 months from the date of allocation of Options to the trustee or such period as may be determined in any amendment of Section 102 of
the ITO; (iii) Unapproved 102 Options (the Options will not be allocated through a trustee and will not be subject to a holding period),
or the Unapproved 102 Options; and (iv) 3(i) Options (the Options will not be subject to a holding period). These Options shall be subject
to taxation pursuant to Section 3(i) of the ITO, or Section 3(i).
Options pursuant to the first three tax tracks (under Section 102
of the ITO) can be granted to our employees and directors and the grant of Options under Section 3(i) can be granted to our consultants
and controlling shareholders (a controlling shareholder is defined under the Section 102 of the ITO is a person who holds, directly or
indirectly, alone or together with a “relative,” (i) the right to at least 10% of the company’s issued capital or 10%
of the voting power; (ii) the right to hold at least 10% of the company’s issued capital or 10% of the voting power, or the right
to purchase such rights; (iii) the right to receive at least 10% of the company’s profits; or (iv) the right to appoint a company’s
director). Grantees who are not Israeli residents may be granted options that are subject to the applicable tax laws in their respective
jurisdictions.
We determine, in our sole discretion, under which of the first
three tax tracks above the Options are granted and we notify the Grantee in a grant letter, as to the elected tax track. As mentioned
above, consultants and controlling shareholders can only be granted Section 3(i) Options.
The number of ordinary shares authorized to be issued under the
2011 Plan will be proportionately adjusted for any increase or decrease in the number of ordinary shares issued as a result of a distribution
of bonus shares, change in our capitalization (split, combination, reclassification of the shares or other capital change), or issuance
of rights to purchase ordinary shares or payment of a dividend. We will not allocate fractions of ordinary shares and the number of ordinary
shares shall be rounded up to the closest number of ordinary shares.
Unless otherwise determined by the Administrator, the exercise
price of an Option granted under the 2011 Plan will be the average of the market price of the Company’s ordinary shares during the
22 business days prior to the date on which our board of directors authorized the grant of Options; provided, however, that such exercise
price cannot be lower than the market price at the close of the trading day at which it was granted by our board of directors. The exercise
price will be specified in the grant letter every Grantee received from us in which the Grantee notifies of the decision to grant him/her
Options under the 2011 Plan.
Unless otherwise determined by the Administrator, the Options granted
under the 2011 Plan will become vested and may be exercised in 16 equal portions of 6.25% of the total number of Options, at the end of
each quarter following the day the Options were granted. Unless otherwise determined by our board of directors, the Options may be exercised
for ten years following the date of grant, unless terminated earlier, and as long as the Grantee is employed by the Company (or by an
affiliated company), or provides service to the Company (or an affiliated company).
The Administrator may, in its absolute discretion, accelerate the
time at which Options granted under the 2011 Plan or any portion of which will vest.
Unless otherwise determined by the Administrator, in the event
that the Grantee’s employment was terminated, not for Cause (as defined in the 2011 Plan), the Grantee may exercise that portion
of the Options that had vested as of the date of such termination until the end of the specified term in the grant letter or the 2011
Plan. The portion of the Options that had not vested at such date, will be forfeited and can be re-granted according to the terms of the
2011 Plan.
2015 Plan
In November 2015, the Subsidiary’s board of directors adopted,
and its shareholders subsequently approved, the 2015 Plan. The 2015 Plan provides for the grant of options, restricted shares, restricted
share units and other share-based awards to the Subsidiary’s (following the Merger, the Company’s) and its subsidiaries’
and affiliates’ directors, employees, officers, consultants, advisors, and any other person whose services are considered valuable
to Chemomab or its affiliates. Any such grants are intended to incentivize the foregoing persons to continue as service providers, to
increase their efforts on Chemomab’s behalf or on behalf of its subsidiaries or affiliates, and to promote the success of its business.
The 2015 Plan is administered by Chemomab’s board of directors
or by a committee designated by the board of directors, which determines, subject to Israeli law, the grantees of awards and the terms
of the grant, including, exercise prices, vesting schedules, acceleration of vesting and the other matters necessary in the administration
of the 2015 Plan. The 2015 Plan enables Chemomab to issue awards under various tax regimes, including, without limitation, pursuant to
Section 102 of the Israeli Income Tax Ordinance, or the Ordinance, and under Section 3(i) of the Ordinance and Section 422 of the United
States Internal Revenue Code of 1986, as amended, or the Code.
The 2015 Plan provides that options granted to Chemomab’s
employees, directors and officers who are not controlling shareholders and who are considered Israeli residents are intended to qualify
for special tax treatment under the “capital gain track” provisions of Section 102(b) of the Ordinance. Chemomab’s Israeli
non-employee service providers and controlling shareholders may only be granted options under Section 3(i) of the Ordinance, which does
not provide for similar tax benefits.
Options granted under the 2015 Plan to U.S. residents may qualify
as “incentive stock options” within the meaning of Section 422 of the Code, or may be non-qualified. The exercise price for
“incentive stock options” must not be less than the fair market value on the date on which an option is granted, or 110% of
the fair market value if the option holder holds more than 10% of Chemomab’s share capital.
Options and other awards granted under the 2015 Plan generally
vest over four years commencing on the date of grant, such that 25% vests on the first anniversary of the date of grant and an additional
6.25% vests at the end of each subsequent calendar quarter over the course of the next three years, provided that the participant remains
continuously employed or engaged by Chemomab.
Options, other than certain incentive share options, that are not
exercised within ten years from the grant date expire, unless otherwise determined by Chemomab’s board of directors or its designated
committee, as applicable. Share options that qualify as “incentive stock options” and are granted to a person holding more
than 10% of Chemomab’s voting power will expire within five years from the date of the grant. In the event of the death of a grantee
while employed by or performing service for Chemomab or its subsidiary or within three months after the date of the employee’s termination,
or the termination of a grantee’s employment or services for reasons of disability, the grantee, or in the case of death, his or
her legal successor, may exercise options or other awards that have vested prior to termination within a period of one year from the date
of disability or death. If Chemomab terminates a grantee’s employment or service for cause, all of the grantee’s vested and
unvested options or other awards will expire on the date of termination. If a grantee’s employment or service is terminated for
any other reason, the grantee may generally exercise his or her vested options or other award within three months of the date of termination.
Any expired or unvested options return to the pool and become available for reissuance. From time to time, Chemomab may consider issuing
options with slightly different terms or accelerating, extending or otherwise modifying options in accordance with applicable law and
regulation and the terms of the 2015 Plan.
In the event of a merger or consolidation of Chemomab, or a sale
of all, or substantially all, of Chemomab’s shares or assets or other transaction having a similar effect on Chemomab, then without
the consent of the option holder, Chemomab’s board of directors or its designated committee, as applicable, may, but is not required,
to (i) cause any outstanding award to be assumed or an equivalent award to be substituted by such successor corporation, or (ii) in case
the successor corporation does not assume or substitute the award (a) provide the grantee with the option to exercise the award as to
all or part of the shares or (b) cancel the options and pay in cash an amount determined by the board of directors or the committee as
fair in the circumstances. Notwithstanding the foregoing, Chemomab’s board of directors or its designated committee may upon such
event amend, modify or terminate the terms of any award, including conferring the right to purchase any other security or asset that the
board of directors or the committee shall deem, in good faith, appropriate.
The 2015 plan was assumed by our company from the Subsidiary upon
the effectiveness of the Merger.
2017 Plan
On February 22, 2017, our board of directors adopted the 2017 Plan
to allocate a variety of share-based awards to our directors, officers, employees, consultants, advisors and service providers, and those
of our affiliates (companies that control us, are controlled by us or are under common control with us) (the “Participants”).
The 2017 Plan is currently administered by our board of directors, and may be administered by a committee designated by our board of directors
for such purpose.
Under the 2017 Plan, we may grant options to purchase ordinary
shares or ADSs, restricted shares or ADSs, restricted share units and other awards based on our ordinary shares, all of which are referred
to as Awards. We may grant Awards under the same four tracks as described above with respect to the 2011 Plan, subject to the same conditions
as apply for the 2011 Plan. In addition, we may grant incentive stock options and nonqualified stock options to Participants who are residents
of the United States, and we may grant awards to Participants who are residents of other countries that comply with the laws of those
jurisdictions.
The number of ordinary shares authorized to be issued under the
2017 Plan will be proportionately adjusted for any increase or decrease in the number of ordinary shares issued as a result of a distribution
of bonus shares, change in our capitalization (split, combination, reclassification of the shares or other capital change), issuance of
rights to purchase ordinary shares or payment of a dividend. We will not allocate fractions of ordinary shares and the number of ordinary
shares shall be rounded down to the closest number of ordinary shares.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information, as of February 16, 2023, regarding beneficial
ownership of our ordinary shares represented by ADSs:
|
|
• |
each person who is known by us to own beneficially more than 5% of our ordinary shares; |
|
|
• |
each director; |
|
|
• |
each executive officer; and |
|
|
• |
all of our directors and executive officers collectively. |
The percentages of ordinary shares beneficially owned are reported
on the basis of regulations of the SEC governing the determination of beneficial ownership of securities. Under the rules of the SEC,
a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote
or to direct the voting of the security, or investment power, which includes the power to dispose of or to direct the disposition of the
security.
Unless otherwise noted, the address of each director and current
and former executive officer of Chemomab is Kiryat Atidim, Building 7, Tel Aviv, Israel 6158002.
|
NAME OF BENEFICIAL OWNER |
Total
Beneficial
Ownership (ADSs) |
Percentage of
ADSs Beneficially
Owned† |
||||||
|
5% and Greater Shareholders |
||||||||
|
OrbiMed Israel (1) |
2,270,091 |
20.5 |
% | |||||
|
The Centillion Fund(2) |
661,370 |
6.0 |
% | |||||
|
Rivendell Investments 2017-9(3) |
1,131,563 |
10.2 |
% | |||||
|
Kobi George(4) |
747,445 |
6.7 |
% | |||||
|
Apeiron Group(5) |
770,388 |
6.9 |
% | |||||
|
Directors and Executive Officers |
||||||||
|
Dale Pfost (6) |
165,187 |
1.4 |
% | |||||
|
Donald Marvin (7) |
71,726 |
* |
% | |||||
|
Adi Mor (8) |
747,445 |
6.7 |
% | |||||
|
Neil Cohen (9) |
25,702 |
* |
||||||
|
Nissim Darvish (10) |
26,395 |
* |
||||||
|
Alan Moses (11) |
15,072 |
* |
||||||
|
Claude Nicaise (12) |
15,072 |
* |
||||||
|
Jill Quigley (13) |
3,788 |
* |
||||||
|
Matthew Frankel |
- |
- |
||||||
|
All current executive officers and directors as a group (9 persons) |
1,070,387 |
9.29 |
% | |||||
† Percentage ownership based on 11,049,812 ADSs outstanding as of February 16, 2023
* Less than one percent (1%)
| (1) |
Pursuant to a Schedule 13D/A filed with the SEC by OrbiMed Israel BioFund GP Limited Partnership (“OrbiMed BioFund”)
and OrbiMed Israel GP Ltd. (“OrbiMed GP”, and together with OrbiMed BioFund, “OrbiMed Israel”) on January 5, 2023,
such amount consists of (i) 2,241,274 ADSs and (ii) 28,817 ADSs issuable upon the exercise of warrants to purchase ADSs. OrbiMed GP, a
company that acts as general partner of certain limited partnerships, is the general partner of OrbiMed BioFund, which is the general
partner of OrbiMed Israel Partners Limited Partnership, which is the entity that holds the foregoing securities. The address of OrbiMed
Israel is 89 Medinat HaYehudim St., Build E, 11th Floor, Herzliya 46766 Israel. |
| (2) |
The address of Centillion Fund, Inc. is 10 Manoel Street, Castries, Saint Lucia. |
| (3) |
Represents 1,108,509 ADSs, representing 22,170,180 ordinary shares, held by Rivendell Investments 2017-9 LLC, or Rivendell, as reported
by Rivendell on Schedule 13G filed with the SEC on March 26, 2021, and 23,054 ADSs, representing 461,080 Ordinary Shares, issuable upon
the exercise of warrants. Rivendell is the shareholder of record. Peter Thiel is the beneficial owner of Rivendell and has sole voting
and investment power over the securities held by Rivendell. The address of Rivendell is 1209 Orange Street, Wilmington, Delaware 19801.
|
| (4) |
Consists of (i) 257,247 ADSs owned directly by Dr. George, (ii) 324,775 ADSs owned by
Dr. Adi Mor (Dr. George’s spouse), (iii) 33,725 options to purchase 33,725 ADSs issued directly to Dr. George, issuable upon the
exercise of options, and (iv) 131,698 options to purchase 131,698 ADSs, issued to Dr. Mor, (Dr. George’s spouse), as reported by
Dr. Adi Mor on Schedule 13D/A filed with the SEC on November 17, 2022. |
| (5) |
The Apeiron Group consists of (i) Apeiron SICAV Ltd. - Presight Capital Fund One, of which owns 438,993 ADSs, (ii) Apeiron Presight
Capital Fund II, LP, of which owns 288,170 ADSs and 28,817 ADSs issuable upon the exercise of warrants and (iii) Apeiron Investment Group
Ltd., of which owns 14,408 ADSs issuable upon the exercise of warrants. Each of Fabian Hansen and Christian Angermayer may be deemed to
share voting and investment power with respect to the ADSs held by the Apeiron Group. |
| (6) |
Includes 2,500 ADSs and 162,687 ADSs issuable upon the exercise
of options within 60 days of the date hereof as reported by Dr. Dale Pfost on Form 4 filed with the SEC on March 15, 2022. |
| (7) |
Includes 2,000 ADSs and 69,726 ADSs issuable upon the exercise of options within 60 days of the date hereof
as reported by Mr. Donald Marvin on Form 4 filed with the SEC on June 21, 2022. |
| (8) |
Consists of (i) 324,775 ADSs owned directly by Dr. Mor, (ii) 257,247 ADSs owned by Dr. George, (Dr. Mor’s
spouse), (iii) 131,698 ADSs issued to Dr. Mor, issuable upon the exercise of options within 60 days of the date hereof, and (iv) 33,725
options to purchase 33,725 ADSs issued to Dr. George, (Dr. Mor’s spouse) issuable upon the exercise of options within 60 days of
the date hereof, as reported by Dr. Adi Mor on Schedule 13D/A filed with the SEC on November 17, 2022. |
| (9) |
Includes 10,000 ADSs, and 15,702 ADSs issuable upon the exercise of options within 60 days of the date
hereof, as reported by Mr. Neil Cohen on Form 4 filed with the SEC on November 11, 2022. |
| (10) |
Includes 1,200 ADSs, and 25,195 ADSs issuable upon the exercise of options within 60 days of the date hereof,
as reported by Dr. Nissim Darvish on Form 4 filed with the SEC on March 14, 2022. |
| (11) |
Represents 15,072 ADSs issuable upon the exercise of options within 60 days of the date hereof, as reported
by Dr. Alan Moses on Form 4 filed with the SEC on March 9, 2022. |
| (12) |
Represents 15,072 ADSs issuable upon the exercise of options within 60 days of the date hereof, as
reported by Dr. Claude Nicaise on Form 4 filed with the SEC on March 9, 2022. |
| (13) |
Represents 3,788 ADSs issuable upon the exercise of options within 60 days of the date hereof, as
reported by Ms. Jill Quigley on Form 4 filed with the SEC on June 16, 2022. |
DESCRIPTION OF SHARE
CAPITAL
The following descriptions of our share capital and provisions
of our amended and restated articles of association are summaries and are qualified by reference to our amended and restated articles
of association, a copy of which is filed as Exhibit 3.1 hereto.
Registration Number and Purposes of the Company
We are registered with the Israeli Registrar of Companies. Our
registration number is 51-4672625. Our affairs are governed by our amended and restated articles of association, applicable Israeli
law and the Companies Law. Our purpose as set forth in our amended and restated articles of association is to engage in any lawful act
or activity.
Voting Rights
All ordinary shares have identical voting and other rights in all
respects.
Transfer of Shares
Our fully paid ordinary shares are issued in registered form and
may be freely transferred under our amended and restated articles of association, unless the transfer is restricted or prohibited by another
instrument, applicable law or the rules of Nasdaq. The ownership or voting of our ordinary shares by non-residents of Israel is not
restricted in any way by our amended and restated articles of association or the laws of the State of Israel, except for ownership by
nationals of some countries that are, have been, or will be, in a state of war with Israel.
Election of Directors
Under our amended and restated articles of association, our board
of directors must consist of not less than three (3) but no more than eleven (11) directors. Pursuant to our amended and restated
articles of association, each of our directors will be appointed by a simple majority vote of holders of our ordinary shares, participating
and voting at an annual general meeting of our shareholders, provided that (i) in the event of a contested election, the method of
calculation of the votes and the manner in which the resolutions will be presented to our shareholders at the general meeting shall be
determined by our board of directors in its discretion, and (ii) in the event that our board of directors does not or is unable to
make a determination on such matter, then the directors will be elected by a majority of the voting power represented at the general meeting
in person or by proxy and voting on the election of directors, provided that if the number of such nominees exceeds the number of directors
to be elected, then as among such nominees the election shall be by a plurality of the votes cast. In addition, our directors are divided
into three classes, one class being elected each year at the annual general meeting of our shareholders, and shall serve on our board
of directors until the third annual general meeting following such election or re-election or until they are removed by a vote of 65%
of the total voting power of our shareholders at a general meeting of our shareholders or upon the occurrence of certain events, in accordance
with the Companies Law and our amended and restated articles of association. In addition, our amended and restated articles of association
provide that vacancies on our board of directors may be filled by a vote of a simple majority of directors then in office. Any director
so appointed will hold office until the next annual general meeting of our shareholders for the election of the class of directors in
respect of which the vacancy was created, or in the case of a vacancy due to the number of directors being less than the maximum number
of directors stated in our amended and restated articles of association, until the next annual general meeting of our shareholders for
the election of the class of directors to which such director was assigned by our board of directors.
Dividend and Liquidation Rights
We may declare a dividend to be paid to the holders of our ordinary
shares in proportion to their respective shareholdings. Under the Companies Law, dividend distributions are determined by the board of
directors and do not require the approval of the shareholders of a company unless the company’s articles of association provide
otherwise. Our amended and restated articles of association do not require shareholder approval of a dividend distribution and provide
that dividend distributions may be determined by our board of directors.
Pursuant to the Companies Law, the distribution amount is limited
to the greater of retained earnings or earnings generated over the previous two years, according to our then last reviewed or audited
financial statements (less the amount of previously distributed dividends, if not reduced from the earnings), provided that the end of
the period to which the financial statements relate is not more than six months prior to the date of the distribution. If we do not meet
such criteria, then we may distribute dividends only with court approval. In each case, we are only permitted to distribute a dividend
if our board of directors and, if applicable, the court determines that there is no reasonable concern that payment of the dividend will
prevent us from satisfying our existing and foreseeable obligations as they become due.
In the event of our liquidation, after satisfaction of liabilities
to creditors, our assets will be distributed to the holders of our ordinary shares in proportion to their shareholdings. This right, as
well as the right to receive dividends, may be affected by the grant of preferential dividend or distribution rights to the holders of
a class of shares with preferential rights that may be authorized in the future.
Exchange Controls
There are currently no Israeli currency control restrictions on
remittances of dividends on our ordinary shares, proceeds from the sale of the ordinary shares or interest or other payments to non-residents
of Israel, except for shareholders who are subjects of countries that are, have been, or will be, in a state of war with Israel.
Shareholder Meetings
Under Israeli law, we are required to hold an annual general meeting
of our shareholders once every calendar year and no later than 15 months after the date of the previous annual general meeting. All meetings
other than the annual general meeting of shareholders are referred to in our amended and restated articles of association as special general
meetings. Our board of directors may call special general meetings of our shareholders whenever it sees fit, at such time and place, within
or outside of Israel, as it may determine. In addition, the Companies Law provides that our board of directors is required to convene
a special general meeting of our shareholders upon the written request of (i) any two or more of our directors, (ii) one-quarter
or more of the serving members of our board of directors or (iii) one or more shareholders holding, in the aggregate, either (a) 5%
or more of our outstanding issued shares and 1% or more of our outstanding voting power or (b) 5% or more of our outstanding voting
power.
Under Israeli law, one or more shareholders holding at least 1%
of the voting rights at the general meeting of the shareholders may request that the board of directors include a matter in the agenda
of a general meeting of the shareholders to be convened in the future, provided that it is appropriate to discuss such a matter at the
general meeting. Our amended and restated articles of association contain procedural guidelines and disclosure items with respect to the
submission of shareholder proposals for general meetings.
Subject to the provisions of the Companies Law and the regulations
promulgated thereunder, shareholders entitled to participate and vote at general meetings of shareholders are the shareholders of record
on a date to be decided by the board of directors, which, as a company listed on an exchange outside Israel, may be between four and 40
days prior to the date of the meeting. Furthermore, the Companies Law requires that resolutions regarding the following matters must be
passed at a general meeting of shareholders:
|
|
• |
amendments to our amended and restated articles of association; |
|
|
• |
appointment, terms of service or and termination of service of our auditors;
|
|
|
• |
appointment of directors, including external directors (if applicable); |
|
|
• |
approval of certain related party transactions; |
|
|
• |
increases or reductions of our authorized share capital; |
|
|
• |
a merger; and |
|
|
• |
the exercise of our board of directors’ powers by a general meeting, if our
board of directors is unable to exercise its powers and the exercise of any of its powers is required for our proper management.
|
The Companies Law requires that a notice of any annual general
meeting or special general meeting be provided to shareholders at least 21 days prior to the meeting and if the agenda of the meeting
includes, among other things, the appointment or removal of directors, the approval of transactions with office holders or interested
or related parties, or an approval of a merger, notice must be provided at least 35 days prior to the meeting. Under the Companies Law,
shareholders are not permitted to take action by way of written consent in lieu of a meeting.
Quorum
Pursuant to our amended and restated articles of association, holders
of our ordinary shares have one vote for each ordinary share held on all matters submitted to a vote before the shareholders at a general
meeting of shareholders. The quorum required for our general meetings of shareholders consists of at least two shareholders present in
person or by proxy who hold or represent between them at least 33⅓% of the total outstanding voting rights, provided, however, that
with respect to any general meeting that was convened pursuant to a resolution adopted by the board of directors and which at the time
of such general meeting we qualify as a “foreign private issuer,” the requisite quorum shall consist of two or more shareholders
present in person or by proxy who hold or represent between them at least 25% of the total outstanding voting rights. The requisite quorum
shall be present within half an hour of the time fixed for the commencement of the general meeting. A general meeting adjourned for lack
of a quorum shall be adjourned either to the same day in the next week, at the same time and place, to such day and at such time and place
as indicated in the notice to such meeting, or to such day and at such time and place as the chairperson of the meeting shall determine.
At the reconvened meeting, any number of shareholders present in person or by proxy shall constitute a quorum, unless a meeting was called
pursuant to a request by our shareholders, in which case the quorum required is one or more shareholders, present in person or by proxy
and holding the number of shares required to call the meeting as described above.
Vote Requirements
Our amended and restated articles of association provide that all
resolutions of our shareholders require a simple majority vote, unless otherwise required by the Companies Law or by our amended and restated
articles of association. Under the Companies Law, certain actions require the approval of a special majority, including: (i) an extraordinary
transaction with a controlling shareholder or in which the controlling shareholder has a personal interest, (ii) the terms of employment
or other engagement of a controlling shareholder of the company or a controlling shareholder’s relative (even if such terms are
not extraordinary) and (iii) certain compensation-related matters described above under “Management—Compensation Committee—Compensation
Policy under the Companies Law.” Under our amended and restated articles of association, the alteration of the rights, privileges,
preferences or obligations of any class of our shares (to the extent there are classes other than ordinary shares) requires the approval
of a simple majority of the class so affected (or such other percentage of the relevant class that may be set forth in the governing documents
relevant to such class), in addition to a majority of all classes of shares voting together as a single class at a shareholder meeting.
Under our amended and restated articles of association, the approval
of the holders of at least 65% of the total voting power of our shareholders is generally required to remove any of our directors from
office, to amend the provision requiring the approval of at least 65% of the total voting power of our shareholders to remove any of our
directors from office, or certain other provisions regarding our staggered board, shareholder proposals, the size of our board and plurality
voting in contested elections. Another exception to the simple majority vote requirement is a resolution for the voluntary winding up,
or an approval of a scheme of arrangement or reorganization, of the company pursuant to Section 350 of the Companies Law, which requires
the approval of holders holding at least 75% of the voting rights represented at the meeting and voting on the resolution.
Access to Corporate Records
Under the Companies Law, all shareholders generally have the right
to review minutes of our general meetings, our shareholder register (including with respect to material shareholders), our articles of
association, our financial statements, other documents as provided in the Companies Law and any document we are required by law to file
publicly with the Israeli Registrar of Companies or the Israeli Securities Authority. Any shareholder who specifies the purpose of its
request may request to review any document in our possession that relates to any action or transaction with a related party which requires
shareholder approval under the Companies Law. We may deny a request to review a document if we determine that the request was not made
in good faith, that the document contains a trade secret or a patent or that the document’s disclosure may otherwise impair our
interests.
Acquisitions under Israeli Law
Full Tender Offer
A person wishing to acquire shares of a public Israeli company
who would, as a result, hold over 90% of the target company’s voting rights or the target company’s issued and outstanding
share capital (or of a class thereof), is required by the Companies Law to make a tender offer to all of the company’s shareholders
for the purchase of all of the issued and outstanding shares of the company (or the applicable class). In general, if (a) the shareholders
who do not accept the offer hold less than 5% of the issued and outstanding share capital of the company (or the applicable class) and
the shareholders who accept the offer constitute a majority of the offerees that do not have a personal interest in the acceptance of
the tender offer or (b) the shareholders who did not accept the tender offer hold less than 2% of the issued and outstanding share
capital of the company (or of the applicable class), all of the shares that the acquirer offered to purchase will be transferred to the
acquirer by operation of law. A shareholder who had its shares so transferred may petition an Israeli court within six months from the
date of acceptance of the full tender offer, regardless of whether such shareholder agreed to the offer, to determine whether the tender
offer was for less than fair value and whether the fair value should be paid as determined by the court. However, an offeror may provide
in the offer that a shareholder who accepted the offer will not be entitled to petition the court for appraisal rights as described in
the preceding sentence, as long as the offeror and the company disclosed the information required by law in connection with the full tender
offer. If the full tender offer was not accepted, the acquirer may not acquire shares of the company that will increase its holdings to
more than 90% of the company’s voting rights or the company’s issued and outstanding share capital (or of the applicable class)
from shareholders who accepted the tender offer. Shares purchased in contradiction to the full tender offer rules under the Companies
Law will have no rights and will become dormant shares.
Special Tender Offer
The Companies Law provides that, subject to certain exceptions,
an acquisition of shares of an Israeli public company must be made by means of a special tender offer if, as a result of the acquisition,
the purchaser would become a holder of 25% or more of the voting rights in the company. This requirement does not apply if there is already
another holder of 25% or more of the voting rights in the company. Similarly, the Companies Law provides that an acquisition of shares
of an Israeli public company must be made by means of a special tender offer if, as a result of the acquisition, the purchaser would become
a holder of more than 45% of the voting rights in the company, if there is no other shareholder of the company who holds more than 45%
of the voting rights in the company. These requirements do not apply if (i) the acquisition occurs in the context of a private placement
by the company that received shareholder approval as a private placement whose purpose is to give the purchaser 25% or more of the voting
rights in the company, if there is no person who holds 25% or more of the voting rights in the company or as a private placement whose
purpose is to give the purchaser 45% of the voting rights in the company, if there is no person who holds 45% of the voting rights in
the company, (ii) the acquisition was from a shareholder holding 25% or more of the voting rights in the company and resulted in
the purchaser becoming a holder of 25% or more of the voting rights in the company, or (iii) the acquisition was from a shareholder
holding more than 45% of the voting rights in the company and resulted in the purchaser becoming a holder of more than 45% of the voting
rights in the company. in general, a special tender offer must be extended to all shareholders of a company. A special tender offer may
be consummated only if (i) at least 5% of the voting power attached to the company’s outstanding shares will be acquired by
the offeror and (ii) the number of shares tendered in the offer exceeds the number of shares whose holders objected to the offer
(excluding the purchaser, its controlling shareholders, holders of 25% or more of the voting rights in the company and any person having
a personal interest in the acceptance of the tender offer, or anyone on their behalf, including any such person’s relatives and
entities under their control).
In the event that a special tender offer is made, a company’s
board of directors is required to express its opinion on the advisability of the offer, or may abstain from expressing any opinion if
it is unable to do so, provided that it gives the reasons for its abstention. The board of directors shall also disclose any personal
interest that any of the directors has with respect to the special tender offer or in connection therewith. An office holder in a target
company who, in his or her capacity as an office holder, performs an action the purpose of which is to cause the failure of an existing
or foreseeable special tender offer or to impair the chances of its acceptance, is liable to the potential purchaser and shareholders
for damages, unless such office holder acted in good faith and had reasonable grounds to believe he or she was acting for the benefit
of the company. However, office holders of the target company may negotiate with the potential purchaser in order to improve the terms
of the special tender offer, and may further negotiate with third parties in order to obtain a competing offer.
If a special tender offer is accepted, then shareholders who did
not respond to or that had objected the offer may accept the offer within four days of the last day set for the acceptance of the offer
and they will be considered to have accepted the offer from the first day it was made.
In the event that a special tender offer is accepted, then the
purchaser or any person or entity controlling it or under common control with the purchaser or such controlling person or entity at the
time of the offer may not make a subsequent tender offer for the purchase of shares of the target company and may not enter into a merger
with the target company for a period of one year from the date of the offer, unless the purchaser or such person or entity undertook to
effect such an offer or merger in the initial special tender offer. Shares purchased in contradiction to the special tender offer
rules under the Companies Law will have no rights and will become dormant shares.
Merger
The Companies Law permits merger transactions if approved by each
party’s board of directors and, unless certain conditions described under the Companies Law are met, a simple majority of the outstanding
shares of each party to the merger that are represented and voting on the merger. The board of directors of a merging company is required
pursuant to the Companies Law to discuss and determine whether in its opinion there exists a reasonable concern that as a result of a
proposed merger, the surviving company will not be able to satisfy its obligations towards its creditors, such determination taking into
account the financial condition of the merging companies. If the board of directors determines that such a concern exists, it may not
approve a proposed merger. Following the approval of the board of directors of each of the merging companies, the boards of directors
must jointly prepare a merger proposal for submission to the Israeli Registrar of Companies.
For purposes of the shareholder vote of a merging company whose
shares are held by the other merging company, or by a person or entity holding 25% or more of the voting rights at the general meeting
of shareholders of the other merging company, or by a person or entity holding the right to appoint 25% or more of the directors of the
other merging company, unless a court rules otherwise, the merger will not be deemed approved if a majority of the shares voted on
the matter at the general meeting of shareholders (excluding abstentions) that are held by shareholders other than the other party to
the merger, or by any person or entity who holds 25% or more of the voting rights of the other party or the right to appoint 25% or more
of the directors of the other party, or any one on their behalf including their relatives or corporations controlled by any of them, vote
against the merger. In addition, if the non-surviving entity of the merger has more than one class of shares, the merger must be approved
by each class of shareholders. If the transaction would have been approved but for the separate approval of each class or the exclusion
of the votes of certain shareholders as provided above, a court may still approve the merger upon the request of holders of at least 25%
of the voting rights of a company, if the court holds that the merger is fair and reasonable, taking into account the valuation of the
merging companies and the consideration offered to the shareholders. If a merger is with a company’s controlling shareholder or
if the controlling shareholder has a personal interest in the merger, then the merger is instead subject to the same special majority
approval that governs all extraordinary transactions with controlling shareholders.
Under the Companies Law, each merging company must deliver to its
secured creditors the merger proposal and inform its unsecured creditors of the merger proposal and its content. Upon the request of a
creditor of either party to the proposed merger, the court may delay or prevent the merger if it concludes that there exists a reasonable
concern that, as a result of the merger, the surviving company will be unable to satisfy the obligations of the surviving company, and
may further give instructions to secure the rights of creditors.
In addition, a merger may not be completed unless at least 50 days
have passed from the date that a proposal for approval of the merger is filed with the Israeli Registrar of Companies and 30 days from
the date that shareholder approval of both merging companies is obtained.
Anti-Takeover Measures
The Companies Law allows us to create and issue shares having rights
different from those attached to our ordinary shares, including shares providing certain preferred rights with respect to voting, distributions
or other matters and shares having preemptive rights. As of the date of this prospectus, no preferred shares are authorized under our
amended and restated articles of association. In the future, if we do authorize, create and issue a specific class of preferred shares,
such class of shares, depending on the specific rights that may be attached to it, may have the ability to frustrate or prevent a takeover
or otherwise prevent our shareholders from realizing a potential premium over the market value of their ordinary shares. The authorization
and designation of a class of preferred shares will require an amendment to our amended and restated articles of association, which requires
the prior approval of the holders of a majority of the voting power attached to our issued and outstanding shares at a general meeting
of our shareholders. The convening of the meeting, the shareholders entitled to participate and the vote required to be obtained at such
a meeting will be subject to the requirements set forth in the Companies Law and our amended articles of association, as described above
in “—Shareholder Meetings.” In addition, as disclosed under “—Election of Directors,” we have a classified
board structure, which effectively limits the ability of any investor or potential investor or group of investors or potential investors
to gain immediate control of our board of directors.
Borrowing Powers
Pursuant to the Companies Law and our amended and restated articles
of association, our board of directors may exercise all powers and take all actions that are not required under law or under our amended
and restated articles of association to be exercised or taken by our shareholders, including the power to borrow money for company purposes.
Changes in Capital
Our amended and restated articles of association enable us to increase
or reduce our share capital. Any such changes are subject to Israeli law and must be approved by a resolution duly passed by our shareholders
at a general meeting of shareholders. In addition, transactions that have the effect of reducing capital, such as the declaration and
payment of dividends in the absence of sufficient retained earnings or profits, require the approval of both our board of directors and
an Israeli court.
Exclusive Forum
Our amended and restated articles of association provide that unless
we consent in writing to the selection of an alternative forum, the United States District Court for the Southern District of New York
shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act and/or the
Exchange Act. Our amended and restated articles of association also provide that unless we consent in writing to the selection of an alternative
forum, the competent courts in Tel Aviv, Israel shall be the exclusive forum for any derivative action or proceeding brought on behalf
of the Company, any action asserting a breach of a fiduciary duty owed by any of our directors, officers or other employees to the Company
or our shareholders or any action asserting a claim arising pursuant to any provision of the Companies Law or the Israeli Securities Law.
Transfer Agent and Registrar
The transfer agent and registrar for our ordinary shares and ADSs
is Computershare. Its address is 1290 Avenue of the Americas, 9th Floor, New York, NY 10104, and its telephone number is (212) 805-7100.
Listing
The ADSs are listed on Nasdaq under the symbol “CMMB.”
DESCRIPTION
OF SECURITIES WE ARE OFFERING
ADSs
The Bank of New York Mellon, as depositary, will register and deliver
the ADSs. Each ADS represents twenty (20) ordinary shares (or a right to receive twenty (20) ordinary shares). Each ADS will also represent
any other securities, cash or other property which may be held by the depositary. The depositary’s office at which the ADSs will
be administered and its principal executive office are located at 240 Greenwich Street, New York, New York 10286.
You may hold ADSs either (A) directly (i) by having an
ADR, which is a certificate evidencing a specific number of ADSs, registered in your name or (ii) by having uncertificated ADSs registered
in your name or (B) indirectly by holding a security entitlement in ADSs through your broker or other financial institution that
is a direct or indirect participant in DTC. If you hold ADSs directly, you are a registered ADS holder, also referred to as an ADS holder.
This description assumes you are an ADS holder. If you hold ADSs indirectly, you must rely on the procedures of your broker or other financial
institution to assert the rights of ADS holders described in this section. You should consult with your broker or financial institution
to find out what those procedures are.
Registered holders of uncertificated ADSs will receive statements
from the depositary confirming their holdings.
As an ADS holder, we will not treat you as one of our shareholders
and you will not have shareholder rights. Israeli law governs shareholder rights. The depositary will be the holder of the ordinary shares
underlying the ADSs. As a registered holder of ADSs, you will have ADS holder rights. A deposit agreement among us, the depositary, ADS
holders and all other persons indirectly or beneficially holding ADSs sets out ADS holder rights as well as the rights and obligations
of the depositary. New York law governs the deposit agreement and the ADSs.
The following is a summary of the material provisions of the deposit
agreement. For more complete information, you should read the entire deposit agreement and the form of ADR. For directions on how to obtain
copies of those documents see “Where You Can Find More Information.”
Dividends and Other Distributions
How will you receive dividends and other distributions on the
shares?
The depositary has agreed to pay or distribute to ADS holders the cash dividends or
other distributions it or the custodian receives on ordinary shares or other deposited securities, upon payment or deduction of its fees
and expenses. You will receive these distributions in proportion to the number of ordinary shares the ADSs represent.
Cash. The
depositary will convert any cash dividend or other cash distribution we pay on the ordinary shares into U.S. dollars, if it can do so
on a reasonable basis and can transfer the U.S. dollars to the United States. If that is not possible or if any government approval is
needed and cannot be obtained, the deposit agreement allows the depositary to distribute the foreign currency only to those ADS holders
to whom it is possible to do so. It will hold the foreign currency it cannot convert for the account of our ADS holders who have not been
paid. It will not invest the foreign currency and it will not be liable for any interest.
Before making a distribution, any withholding taxes or other governmental
charges that must be paid will be deducted. See “Taxation and Government Programs.” It will distribute only whole U.S. dollars
and cents and will round fractional cents to the nearest whole cent. If the exchange rates fluctuate during a time when the depositary
cannot convert the foreign currency, you may lose some or all of the value of the distribution.
Shares. The
depositary may distribute additional ADSs representing any ordinary shares we distribute as a dividend or free distribution. The depositary
will only distribute whole ADSs. It will sell ordinary shares which would require it to deliver a fraction of an ADS (or ADSs representing
those ordinary shares) and distribute the net proceeds in the same way as it does with cash. If the depositary does not distribute additional
ADSs, the outstanding ADSs will also represent the new shares. The depositary may sell a portion of the distributed ordinary shares (or
ADSs representing those ordinary shares) sufficient to pay its fees and expenses in connection with that distribution.
Rights to purchase additional shares. If
we offer holders of our securities any rights to subscribe for additional ordinary shares or any other rights, the depositary may (i) exercise
those rights on behalf of ADS holders, (ii) distribute those rights to ADS holders or (iii) sell those rights and distribute
the net proceeds to ADS holders, in each case after deduction or upon payment of its fees and expenses. To the extent the depositary does
not do any of those things, it will allow the rights to lapse. In that case, you will receive no
value for them. The depositary will exercise or distribute rights only if we ask it to and provide satisfactory assurances
to the depositary that it is legal to do so. If the depositary will exercise rights, it will purchase the securities to which the rights
relate and distribute those securities or, in the case of ordinary shares, new ADSs representing the new ordinary shares, to subscribing
ADS holders, but only if ADS holders have paid the exercise price to the depositary. U.S. securities laws may restrict the ability of
the depositary to distribute rights or ADSs or other securities issued on exercise of rights to all or certain ADS holders, and the securities
distributed may be subject to restrictions on transfer.
Other Distributions. The
depositary will send to ADS holders anything else we distribute on deposited securities by any means it thinks is legal, fair and practical.
If it cannot make the distribution in that way, the depositary will have a choice. It may decide to sell what we distributed and distribute
the net proceeds, in the same way as it does with cash. Or, it may decide to hold what we distributed, in which case ADSs will also represent
the newly distributed property. However, the depositary is not required to distribute any securities (other than ADSs) to ADS holders
unless it receives satisfactory evidence from us that it is legal to make that distribution. The depositary may sell a portion of the
distributed securities or property sufficient to pay its fees and expenses in connection with that distribution. U.S. securities laws
may restrict the ability of the depositary to distribute securities to all or certain ADS holders, and the securities distributed may
be subject to restrictions on transfer.
The depositary is not responsible if it decides that it is unlawful
or impractical to make a distribution available to any ADS holders. We have no obligation to register ADSs, ordinary shares, rights or
other securities under the Securities Act. We also have no obligation to take any other action to permit the distribution of ADSs, shares,
rights or anything else to ADS holders. This means that you may not receive the distributions we make on our ordinary shares or any value
for them if it is illegal or impractical for us to make them available to you.
Deposit, Withdrawal and Cancellation
How are ADSs issued?
The depositary will deliver ADSs if you or your broker deposits ordinary shares or evidence
of rights to receive ordinary shares with the custodian. Upon payment of its fees and expenses and of any taxes or charges, such as stamp
taxes or stock transfer taxes or fees, the depositary will register the appropriate number of ADSs in the names you request and will deliver
the ADSs to or upon the order of the person or persons that made the deposit.
How can ADS holders withdraw the deposited securities?
You may surrender your ADSs for the purpose of withdrawal of the ordinary shares at
the depositary’s office. Upon payment of its fees and expenses and of any taxes or charges, such as stamp taxes or stock transfer
taxes or fees, the depositary will deliver the ordinary shares and any other deposited securities underlying the ADSs to the ADS holder
or a person the ADS holder designates at the office of the custodian. Or, at your request, risk and expense, the depositary will deliver
the deposited securities at its office, if feasible. However, the depositary is not required to accept surrender of ADSs to the extent
it would require delivery of a fraction of a deposited share or other securities. The depositary may charge you a fee and its expenses
for instructing the custodian regarding delivery of deposited securities.
How do ADS holders interchange between certificated ADSs and uncertificated
ADSs?
You may surrender your ADR to the depositary for the purpose of
exchanging your ADR for uncertificated ADSs. The depositary will cancel that ADR and will send to the ADS holder a statement confirming
that the ADS holder is the registered holder of uncertificated ADSs. Alternatively, upon receipt by the depositary of a proper instruction
from a registered holder of uncertificated ADSs requesting the exchange of uncertificated ADSs for certificated ADSs, the depositary will
execute and deliver to the ADS holder an ADR evidencing those ADSs.
Voting Rights
How do you vote?
ADS holders may instruct the depositary how to vote the number
of deposited ordinary shares their ADSs represent. If we request the depositary to solicit your voting instructions (and we are not required
to do so), the depositary will notify you of a shareholders’ meeting and send or make voting materials available to you. Those materials
will describe the matters to be voted on and explain how ADS holders may instruct the depositary how to vote. For instructions to be valid,
they must reach the depositary by a date set by the depositary. The depositary will try, as far as practical, subject to the laws of Israel
and the provisions of our articles of association or similar documents, to vote or to have its agents vote the ordinary shares or other
deposited securities as instructed by ADS holders. If we do not request the depositary to solicit your voting instructions, you can still
send voting instructions, and, in that case, the depositary may try to vote as you instruct, but it is not required to do so.
Except by instructing the depositary as described above,
you won’t be able to exercise voting rights unless you surrender the ADSs and withdraw the ordinary shares. However, you may not
know about the meeting enough in advance to withdraw the ordinary shares. In any event, the depositary will not exercise any
discretion in voting deposited securities and it will only vote or attempt to vote as instructed.
We cannot assure you that you will receive the voting materials
in time to ensure that you can instruct the depositary to vote your shares. In addition, the depositary and its agents are not responsible
for failing to carry out voting instructions or for the manner of carrying out voting instructions. This means that you may not be able
to exercise your right to vote and there may be nothing you can do if your ordinary shares are not voted as you requested.
In order to give you a reasonable opportunity to instruct the Depositary
as to the exercise of voting rights relating to Deposited Securities, if we request the Depositary to act, we agree to give the Depositary
notice of any such meeting and details concerning the matters to be voted upon at least 45 days in advance of the meeting date.
Fees and Expenses
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Persons depositing or withdrawing ordinary shares or ADS holders
must pay |
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For |
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$5.00 (or less) per 100 ADSs (or portion of 100 ADSs) |
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Issuance of ADSs, including issuances resulting from a distribution of ordinary shares
or rights or other property
Cancellation of ADSs for the purpose of withdrawal, including if the deposit agreement
terminates |
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$.05 (or less) per ADS |
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Any cash distribution to ADS holders |
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A fee equivalent to the fee that would be payable if securities distributed to you
had been ordinary shares and the ordinary shares had been deposited for issuance of ADSs |
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Distribution of securities distributed to holders of deposited securities (including
rights) that are distributed by the depositary to ADS holders |
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$.05 (or less) per ADS per calendar year |
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Depositary services |
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Persons depositing or withdrawing ordinary shares or ADS holders
must pay |
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For |
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Registration or transfer fees |
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Transfer and registration of ordinary shares on our share register to or from the
name of the depositary or its agent when you deposit or withdraw ordinary shares |
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Expenses of the depositary |
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Cable, telex and facsimile transmissions (when expressly provided in the deposit agreement)
Converting foreign currency to U.S. dollars |
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Taxes and other governmental charges the depositary or the custodian has to pay on
any ADSs or ordinary shares underlying ADSs, such as stock transfer taxes, stamp duty or withholding taxes |
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As necessary |
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Any charges incurred by the depositary or its agents for servicing the deposited securities
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As necessary |
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The depositary collects its fees for delivery and surrender of
ADSs directly from investors depositing ordinary shares or surrendering ADSs for the purpose of withdrawal or from intermediaries acting
for them. The depositary collects fees for making distributions to investors by deducting those fees from the amounts distributed or by
selling a portion of distributable property to pay the fees. The depositary may collect its annual fee for depositary services by deduction
from cash distributions or by directly billing investors or by charging the book-entry system accounts of participants acting for them.
The depositary may collect any of its fees by deduction from any cash distribution payable (or by selling a portion of securities or other
property distributable) to ADS holders that are obligated to pay those fees. The depositary may generally refuse to provide fee-attracting
services until its fees for those services are paid.
From time to time, the depositary may make payments to us to reimburse
us for costs and expenses generally arising out of establishment and maintenance of our ADS program, waive fees and expenses for services
provided to us by the depositary or share revenue from the fees collected from ADS holders. In performing its duties under the deposit
agreement, the depositary may use brokers, dealers, foreign currency or other service providers that are owned by or affiliated with the
depositary and that may earn or share fees, spreads or commissions.
The depositary may convert foreign currency itself or through any
of its affiliates and, in those cases, acts as principal for its own account and not as an agent, fiduciary or broker on behalf of any
other person and earns revenue, including, without limitation, fees and spreads that it will retain for its own account. The revenue is
based on, among other things, the difference between the exchange rate assigned to the currency conversion made under the deposit agreement
and the rate that the depositary or its affiliate receives when buying or selling foreign currency for its own account. The depositary
makes no representation that the exchange rate used or obtained in any currency conversion under the deposit agreement will be the most
favorable rate that could be obtained at the time or that the method by which that rate will be determined will be most favorable to ADS
holders, subject to its obligations under the deposit agreement. The methodology used to determine exchange rates used in currency conversions
is available upon request.
Payment of Taxes
You will be responsible for any taxes or other governmental charges payable on the ADSs
or on the deposited securities represented by any of the ADSs. The depositary may refuse to register any transfer of the ADSs or allow
you to withdraw the deposited securities represented by the ADSs until such taxes or other charges are paid. It may apply payments owed
to you or sell deposited securities represented by the ADSs to pay any taxes owed and you will remain liable for any deficiency. If the
depositary sells deposited securities, it will, if appropriate, reduce the number of ADSs to reflect the sale and pay to ADS holders any
proceeds, or send to ADS holders any property, remaining after it has paid the taxes.
Tender and Exchange Offers; Redemption, Replacement or Cancellation
of Deposited Securities
The depositary will not tender deposited securities in any voluntary tender or exchange
offer unless instructed to do so by an ADS holder surrendering ADSs and subject to any conditions or procedures the depositary may establish.
If deposited securities are redeemed for cash in a transaction that is mandatory for
the depositary as a holder of deposited securities, the depositary will call for surrender of a corresponding number of ADSs and distribute
the net redemption money to the holders of called ADSs upon surrender of those ADSs.
If there is any change in the deposited securities such as a subdivision, combination
or other reclassification, or any merger, consolidation, recapitalization or reorganization affecting the issuer of deposited securities
in which the depositary receives new securities in exchange for or in lieu of the old deposited securities, the depositary will hold those
replacement securities as deposited securities under the deposit agreement. However, if the depositary decides it would not be lawful
and practical to hold the replacement securities because those securities could not be distributed to ADS holders or for any other reason,
the depositary may instead sell the replacement securities and distribute the net proceeds upon surrender of the ADSs.
If there is a replacement of the deposited securities and the depositary will continue
to hold the replacement securities, the depositary may distribute new ADSs representing the new deposited securities or ask you to surrender
your outstanding ADSs in exchange for new ADSs identifying the new deposited securities.
If there are no deposited securities underlying ADSs, including
if the deposited securities are cancelled, or if the deposited securities underlying ADSs have become apparently worthless, the depositary
may call for surrender or of those ADSs or cancel those ADSs upon notice to the ADS holders.
Amendment and Termination
How may the deposit agreement be amended?
We may agree with the depositary to amend the deposit agreement and the ADRs without
your consent for any reason. If an amendment adds or increases fees or charges, except for taxes and other governmental charges or expenses
of the depositary for registration fees, facsimile costs, delivery charges or similar items, or prejudices a substantial right of ADS
holders, it will not become effective for outstanding ADSs until 30 days after the depositary notifies ADS holders of the amendment.
At the time an amendment becomes effective, you are considered, by continuing to hold the ADSs, to agree to the amendment and to be bound
by the ADRs and the deposit agreement as amended.
How may the deposit agreement be terminated?
The depositary will initiate termination of the deposit agreement
if we instruct it to do so. The depositary may initiate termination of the deposit agreement if:
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90 days have passed since the depositary told us it wants to resign but a successor depositary has not been appointed and accepted
its appointment; |
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we delist the ADSs from an exchange on which they were listed and do not list the ADSs
on another exchange within a reasonable time; |
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the depositary has reason to believe that the ADSs have become, or will become, ineligible for registration
on Form F-6 under the Securities Act. |
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we appear to be insolvent or enter insolvency proceedings; |
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all or substantially all the value of the deposited securities has been distributed either in cash or in the form of securities;
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there are no deposited securities underlying the ADSs or the underlying deposited securities
have become apparently worthless; or |
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there has been a replacement of deposited securities. |
If the deposit agreement will terminate, the depositary will notify
ADS holders at least 90 days before the termination date. At any time after the termination date, the depositary may sell the deposited
securities. After that, the depositary will hold the money it received on the sale, as well as any other cash it is holding under the
deposit agreement, unsegregated and without liability for interest, for the pro rata benefit of the ADS holders that have not surrendered
their ADSs. Normally, the depositary will sell as soon as practicable after the termination date.
After the termination date and before the depositary sells, ADS
holders can still surrender their ADSs and receive delivery of deposited securities, except that the depositary may refuse to accept a
surrender for the purpose of withdrawing deposited securities or reverse previously accepted surrenders of that kind if it would interfere
with the selling process. The depositary may refuse to accept a surrender for the purpose of withdrawing sale proceeds until all the deposited
securities have been sold. The depositary will continue to collect distributions on deposited securities, but, after the termination date,
the depositary is not required to register any transfer of ADSs or distribute any dividends or other distributions on deposited securities
to the ADSs holder (until they surrender their ADSs) or give any notices or perform any other duties under the deposit agreement except
as described in this paragraph.
Limitations on Obligations and Liability
Limits on our obligations and the obligations of the depositary;
Limits on liability to holders of ADSs
The deposit agreement expressly limits our obligations and the
obligations of the depositary. It also limits our liability and the liability of the depositary. We and the depositary:
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are only obligated to take the actions specifically set forth in the deposit agreement without negligence or bad faith and the depositary
will not be a fiduciary or have any fiduciary duty to holders of ADSs; |
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are not liable if we are or it is prevented or delayed by law or circumstances beyond our or its control from performing our or its
obligations under the deposit agreement; |
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are not liable if we exercise or it exercises discretion permitted under the deposit agreement; |
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are not liable for the inability of any holder of ADSs to benefit from any distribution on deposited securities that is not made
available to holders of ADSs under the terms of the deposit agreement, or for any special, consequential or punitive damages for any breach
of the terms of the deposit agreement; |
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have no obligation to become involved in a lawsuit or other proceeding related to the
ADSs or the deposit agreement on your behalf or on behalf of any other person; |
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are not liable for the acts or omissions of any securities depository, clearing agency or settlement system; |
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may rely upon any documents we believe or it believes in good faith to be genuine and to have been signed or presented by the proper
person; and |
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the depositary has no duty to make any determinations or provide any information as to our status, or any liability for any tax consequences
that may be incurred by ADS holders as a result of owning or holding ADSs or liable for the inability or failure of an ADS holder to obtain
the benefit of a foreign tax credit reduced rate of withholdings or refund of amounts withheld in respect of tax or any other tax benefit.
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In the deposit agreement, we and the depositary agree to indemnify
each other under certain circumstances.
Requirements for Depositary Actions
Before the depositary will deliver or register a transfer of ADSs,
make a distribution on ADSs, or permit withdrawal of shares, the depositary may require:
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payment of stock transfer or other taxes or other governmental charges and transfer or registration fees charged by third parties
for the transfer of any ordinary shares or other deposited securities; |
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satisfactory proof of the identity and genuineness of any signature or other information it deems necessary; and |
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compliance with regulations it may establish, from time to time, consistent with the deposit agreement, including presentation of
transfer documents. |
The depositary may refuse to deliver ADSs or register transfers
of ADSs when the transfer books of the depositary or our transfer books are closed or at any time if the depositary or we think it advisable
to do so.
Your Right to Receive the Ordinary Shares Underlying the ADSs
ADS holders have the right to cancel their ADSs and withdraw the
underlying ordinary shares at any time except:
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when temporary delays arise because: (i) the depositary has closed its transfer books or we have closed our transfer books;
(ii) the transfer of ordinary shares is blocked to permit voting at a shareholders’ meeting; or (iii) we are paying a
dividend on our shares; |
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when you owe money to pay fees, taxes and similar charges; or |
| • |
when it is necessary to prohibit withdrawals in order to comply with any laws or governmental regulations that apply to ADSs or to
the withdrawal of ordinary shares or other deposited securities. |
This right of withdrawal may not be limited by any other provision
of the deposit agreement.
Direct Registration System
In the deposit agreement, all parties to the deposit agreement acknowledge that the
Direct Registration System, or DRS, and Profile Modification System, or Profile, will apply to the ADSs. DRS is a system administered
by DTC that facilitates interchange between registered holding of uncertificated ADSs and holding of security entitlements in ADSs through
DTC and a DTC participant. Profile is a feature of DRS that allows a DTC participant, claiming to act on behalf of a registered holder
of uncertificated ADSs, to direct the depositary to register a transfer of those ADSs to DTC or its nominee and to deliver those ADSs
to the DTC account of that DTC participant without receipt by the depositary of prior authorization from the ADS holder to register that
transfer.
In connection with and in accordance with the arrangements and
procedures relating to DRS/Profile, the parties to the deposit agreement understand that the depositary will not determine whether the
DTC participant that is claiming to be acting on behalf of an ADS holder in requesting registration of transfer and delivery as described
in the paragraph above has the actual authority to act on behalf of the ADS holder (notwithstanding any requirements under the Uniform
Commercial Code). In the deposit agreement, the parties agree that the depositary’s reliance on and compliance with instructions
received by the depositary through the DRS/Profile system and in accordance with the deposit agreement will not constitute negligence
or bad faith on the part of the depositary.
Shareholder Communications; Inspection of Register of Holders of
ADSs
The depositary will make available for your inspection at its office all communications
that it receives from us as a holder of deposited securities that we make generally available to holders of deposited securities. The
depositary will send you copies of those communications or otherwise make those communications available to you if we ask it to. You have
a right to inspect the register of holders of ADSs, but not for the purpose of contacting those holders about a matter unrelated to our
business or the ADSs.
Jury Trial Waiver
The deposit agreement provides that, to the extent permitted by law, ADS holders waive
the right to a jury trial of any claim they may have against us or the depositary arising out of or relating to our shares, the ADSs or
the deposit agreement, including any claim under the U.S. federal securities laws. If we or the depositary opposed a jury trial demand
based on the waiver, the court would determine whether the waiver was enforceable in the facts and circumstances of that case in accordance
with applicable case law.
Warrants
The following summary of certain terms and provisions of Warrants
that are being offered hereby is not complete and is subject to, and qualified in its entirety by, the provisions of the Warrants, the
form of which is filed as an exhibit to the registration statement of which this prospectus forms a part. Prospective investors should
carefully review the terms and provisions of the form of Warrant for a complete description of the terms and conditions of the Warrants.
Duration
and Exercise Price. Each Warrant offered hereby has an assumed initial exercise price per share equal to $1.97, which is the assumed
offering price of the ADSs in this offering. The Warrants will be immediately exercisable and will have a term of five (5) years.
The exercise price and number of ADSs issuable upon exercise is subject to appropriate adjustment in the event of share dividends, share
splits, recapitalizations or similar events affecting our ordinary shares and the exercise price.
Exercisability.
The Warrants will be exercisable, at the option of each holder, in whole or in part, by delivering to us a duly executed exercise notice
accompanied by payment in full for the number of ADSs purchased upon such exercise (except in the case of a cashless exercise, as discussed
below). A holder (together with its affiliates) may not exercise any portion of the Warrant to the extent that the holder would beneficially
own more than 4.99% (or, at the election of the purchaser, 9.99%) of the outstanding ordinary shares immediately after exercise.
No fractional ADSs will be issued in connection with the exercise of a Warrant. In lieu of fractional ADSs, we will either pay the holder
an amount in cash equal to the fractional amount multiplied by the exercise price or round up to the next whole ADS.
Cashless Exercise.
If, at the time a holder exercises its Warrants, a registration statement registering the issuance of the ADS underlying the Warrants
under the Securities Act is not then effective or available and an exemption from registration under the Securities Act is not available
for the issuance of such shares, then in lieu of making the cash payment otherwise contemplated to be made to us upon such exercise in
payment of the aggregate exercise price, the holder may elect instead to receive upon such exercise (either in whole or in part) the net
number of Warrants determined according to a formula set forth in the Warrants.
Transferability.
Subject to applicable laws, a Warrant may be transferred at the option of the holder upon surrender of the Warrant to us together with
the appropriate instruments of transfer.
Exchange Listing.
We do not intend to list the Warrants on Nasdaq or any other national securities exchange or nationally recognized trading system. The
ADSs issuable upon exercise of the Warrants are currently listed on Nasdaq.
Right as a
Shareholder. Except as otherwise provided in the Warrants or by virtue of such holder’s ownership of ADSs, the holders of
the Warrants do not have the rights or privileges of holders of our ordinary shares, including any voting rights, until they exercise
their Warrants and receive the ordinary shares underlying the Warrant ADSs from our depositary.
Fundamental
Transaction. In the event of a fundamental transaction, as described in the Warrants and generally including any reorganization,
recapitalization or reclassification of our ordinary shares, the sale, transfer or other disposition of all or substantially all of our
properties or assets, our consolidation or merger with or into another person, the acquisition of more than 50% of our outstanding ordinary
shares, or any person or group becoming the beneficial owner of 50% of the voting power represented by our outstanding ordinary shares,
the holders of the Warrants will be entitled to receive upon exercise of the Warrants the kind and amount of securities, cash or other
property that the holders would have received had they exercised the Warrants immediately prior to such fundamental transaction (without
regard to any beneficial ownership limitations, as described above). In addition, in the event of a change of control, as described in
the Warrants, the holders of the Warrants have the right to require us or a successor entity to redeem the Warrants for cash in the amount
of the Black Scholes Value of the unexercised portion of the Warrants on the date of the consummation of the change of control. However,
in the event of a change of control that is not within the Company’s control, including not approved by the Company’s board
of directors, the holders of the Warrants shall only be entitled to receive from the Company or any successor entity, as of the date of
consummation of the change of control, the same type or form of consideration (and in the same proportion), at the Black Scholes Value
of the unexercised portion of the Warrant, that is being offered and paid to the holders of the Company’s ordinary shares in connection
with the change of control, whether that consideration be in the form of cash, stock, or any combination thereof, or whether the holders
of the Company’s ordinary shares are given the choice to receive from among alternative forms of consideration in connection with
the change of control.
MATERIAL TAX CONSIDERATIONS
The following is a brief summary of certain material tax consequences
concerning the ownership and disposition of our securities by purchasers or holders of our securities. Because parts of this discussion
are based on new or existing tax or other legislation that has not been subject to judicial or administrative interpretation, there can
be no assurance that the views expressed herein will be accepted by the tax or other authorities in question. The summary below does not
address all of the tax consequences that may be relevant to all purchasers or holders of our securities in light of each purchaser’s
or holder’s particular circumstances and specific tax treatment. For example, the summary below does not address the tax treatment
of residents of Israel and traders in securities who are subject to special tax regimes. As individual circumstances may differ, holders
of our securities should consult their own tax advisors as to United States, Israeli or other tax consequences of the purchase, ownership
and disposition of our securities. The discussion below is subject to change, including due to amendments under Israeli law or changes
to the applicable judicial or administrative interpretations of Israeli law, which change could affect the accuracy of the tax consequences
described below. This discussion is not intended, nor should it be construed, as legal or professional tax advice and it is not exhaustive
of all possible tax considerations. Each investor should consult his or her own tax or legal advisor.
Israeli Taxation
Taxation of Capital Gains Applicable to Non-Israeli
Shareholders
The Israeli Income Tax Ordinance [New Version], 5721-1961 (the
“Tax Ordinance”) generally imposes a capital gains tax on the sale of capital assets by non-Israeli tax residents if those
assets (i) are located in Israel, (ii) are shares or a right to shares in an Israeli resident corporation, including securities traded
on the Tel Aviv Stock Exchange (the “TASE”), on a recognized stock exchange outside Israel (such as Nasdaq) or on a regulated
market (which includes a system through which securities are traded pursuant to rules prescribed by the competent authority in the relevant
jurisdiction) in or outside Israel, or (iii) represent, directly or indirectly, rights to assets located in Israel, unless a specific
exemption is available or unless a tax treaty between Israel and the shareholder’s country of residence provides otherwise. The
Tax Ordinance distinguishes between real capital gain and inflationary surplus. The inflationary surplus is a portion of the total capital
gain equivalent to the increase of the relevant asset’s tax basis attributable to an increase in the Israeli consumer price index
or, in certain circumstances, a foreign currency exchange rate, between the date of purchase and the date of disposition. Inflationary
surplus is not currently subject to tax in Israel. The real capital gain is the excess of the total capital gain over the inflationary
surplus. The capital gains tax rate applicable to individuals upon the sale of such securities is 25%, or 30% with respect to an individual
who meets the definition of a ‘Substantial Shareholder’ on the date of the sale of the securities or at any time during the
12 month-period preceding such date (or claims a deduction for interest and linkage differences expenses in connection with the purchase
and holding of such shares). A ‘Substantial Shareholder’ is defined as a person who, either alone or together with another
person who collaborates with such person on a permanent basis, holds, directly or indirectly, at least 10% of any of the “means
of control” of a company (including, among other things, the right to receive profits of the company, voting rights, the right to
receive the company’s liquidation proceeds and the right to appoint a director). With respect to corporate investors, the capital
gains tax rate is equal to the corporate tax rate (23% in 2023).
Notwithstanding the foregoing, dealers in securities in Israel
whose gains from selling or otherwise disposing of the shares or ADSs are deemed to be business income are taxed at regular tax rates
applicable to business income (a corporate tax rate for a corporation and a marginal tax rate of up to 47% for an individual in 2023,
excluding excess tax as discussed below) unless contrary provisions in a relevant tax treaty applies.
Generally, a non-Israeli resident (whether an individual or a corporation)
who derives capital gains from the sale of shares or ADSs in an Israeli resident company purchased upon or after the registration of the
shares on the TASE or on a regulated market outside of Israel (such as Nasdaq) may be generally be exempt from Israeli capital gains tax,
provided, among other things, that the capital gain derived from the sale of shares or ADSs was not attributed to a permanent establishment
that the non-Israeli tax resident investor maintains in Israel.
However, non-Israeli resident “body of persons” (as
defined under the Tax Ordinance, which includes corporate entities, partnerships and other entities) will not be entitled to the foregoing
exemption if Israeli residents, whether directly or indirectly: (i) hold more than 25% of any of the means of control in such non-Israeli
entity or (ii) are the beneficiaries of, or are entitled to, 25% or more of the revenues or profits of such non-Israeli entity, whether
directly or indirectly. Such exemption is not applicable to a person whose gains from selling or otherwise disposing of the shares or
ADSs are deemed to be business income. In addition, a sale of shares by a non-Israeli resident may be exempt from Israeli capital gains
tax under the provisions of an applicable tax treaty.
In addition, persons paying consideration for shares or ADSs, including
purchasers of shares or ADSs, Israeli securities dealers effecting a transaction, or a financial institution through which securities
being sold are held, are generally required to withhold Israeli tax at source upon the sale of publicly traded securities at a rate of
25% for individuals and at the corporate tax rate (23% in 2023) for corporations, regardless of whether such holder is liable for or exempt
from Israeli capital gains tax on such sale. Holders may be required to demonstrate that they are exempt from tax on their capital gains
by providing a valid certificate from the Israel Tax Authority allowing for an exemption from withholding tax at source at the time of
sale. Specifically, in transactions involving a sale of all of the shares of an Israeli resident company, in the form of a merger or otherwise,
the Israel Tax Authority may require from securityholders who are not liable for Israeli tax to sign declarations in forms specified by
this authority or obtain a specific exemption from the Israel Tax Authority to confirm their status as a non-Israeli resident for tax
purposes, and, in the absence of such declarations or exemptions, may require the purchaser of the shares to withhold Israeli taxes at
source.
Income Taxes on Dividend Distribution to Non-Israeli
Shareholders
Non-Israeli residents (whether individuals or corporations) are
generally subject to Israeli income tax on the receipt of dividends paid on our ordinary shares at the rate of 25%, unless relief is provided
under the provisions of an applicable tax treaty between Israel and the shareholder’s country of residence (provided that a certificate
from the Israel Tax Authority allowing for a reduced withholding tax rate or a tax exemption is obtained in advance). With respect to
a person who is a Substantial Shareholder (as defined above) at the time of receiving the dividend or on any time during the preceding
12 months, the applicable tax rate is 30%.
In principle, non-Israeli residents (whether individuals or corporations)
are generally subject to Israeli withholding tax on the receipt of dividends paid on publicly traded shares at the rate of 25% and at
the rate of 30% on dividends paid to Substantial Shareholders. However, so long as the shares are registered with a Nominee Company, which
is a company incorporated to be a holder of record and distribution agent of publicly traded or other securities in accordance with the
Israeli Securities Law, 5728-1968, the dividends are generally subject to Israeli withholding tax at a rate of 25% (whether or not the
recipient is a Substantial Shareholder), unless a reduced rate is provided under an applicable tax treaty (provided that a certificate
from the Israel Tax Authority allowing for a reduced withholding tax rate is obtained in advance).
The distribution of dividends to non-Israeli residents (either
individuals or corporations) from income derived from a company’s Approved Enterprises or Benefited Enterprises (as such terms are
defined under the Israeli Law for the Encouragement of Capital Investments, 5719-1959), during the applicable benefits period is subject
to withholding tax at a rate of 15%, and 20% if the dividend is distributed from income attributed to a Preferred Enterprise, a Special
Preferred Enterprise, Preferred Technological Enterprise or Special Preferred Technological Enterprise (as such terms are defined under
the Israeli Law for the Encouragement of Capital Investments, 5719-1959), subject to the receipt in advance of a valid certificate
from the Israel Tax Authority allowing for such reduced tax rates, or such lower rate as may be provided under an applicable tax treaty
(provided that a certificate from the Israel Tax Authority allowing for a reduced withholding tax rate is obtained in advance). We cannot
assure you that we will designate the profits that we may distribute in a way that will reduce shareholders’ tax liability.
A non-resident of Israel who has dividend and/or capital income
derived from or accrued in Israel, from which the full amount of tax was withheld, is generally exempt from the duty to file tax returns
in Israel in respect of such income, provided that: (i) such income was not derived from a business conducted in Israel by the taxpayer;
(ii) the taxpayer has no other taxable sources of income in Israel with respect to which a tax return is required to be filed; and (iii)
the taxpayer is not obligated to pay Excess Tax (as further explained below).
U.S.- Israel Tax Treaty
The Convention between the Government of the State of Israel and
the Government of the United States of America with Respect to Taxes on Income (the “Treaty”) is generally effective as of
January 1, 1995. Under the Treaty, the maximum Israeli withholding tax on dividends paid to a holder of our ordinary shares who is a Treaty
U.S. Resident (as defined below) is generally 25%. However, generally, for dividends not generated by an Approved Enterprise, Benefited
Enterprise or Preferred Enterprises and paid to a U.S. corporation holding 10% or more of the outstanding voting capital throughout the
tax year in which the dividend is distributed as well as during the previous tax year, the maximum rate of Israeli withholding tax is
generally 12.5%, provided that not more than 25% of the gross income of the Israeli resident paying corporation for such preceding year
consists of certain types of dividends and interest. Notwithstanding the foregoing, dividends distributed from income attributed to an
Approved Enterprise are not entitled to such reduction under such tax treaty but are subject to withholding tax at the rate of 15% for
such a U.S. corporate shareholder, provided that the conditions related to the holding of 10% of our voting capital and to our gross income
for the previous year (as set forth in the previous sentence) are met. The aforementioned rates under the Treaty would not apply if the
dividend income is derived through a permanent establishment of the Treaty U.S. Resident in Israel.
Pursuant to the Treaty, the sale, exchange or disposition of our
ordinary shares or ADSs by a person who qualifies as a resident of the United States within the meaning of the Treaty that holds the shares
or ADSs as a capital asset, and who is entitled to claim the benefits afforded to such residents under the Treaty a (“Treaty U.S.
Resident”) generally will not be subject to the Israeli capital gains tax unless, inter alia:
(i) such Treaty U.S. Resident holds, directly or indirectly, shares or ADSs representing 10% or more of the voting power of the
Company during any part of the 12-month period preceding such sale, exchange or disposition subject to certain conditions; (ii) the capital
gain arising from such sale, exchange or disposition can be attributable to a permanent establishment of the holder maintained in Israel,
under certain terms; (iii) such U.S. resident is an individual and was present in Israel for a period or periods aggregating to 183 days
or more during the relevant taxable year; (iv) the capital gains arising from such sale, exchange or disposition is attributed to real
estate located in Israel, or (v) the capital gain arising from such sale, exchange or disposition is attributed to royalties.
As noted above, a sale, exchange or disposition of our ordinary
shares or ADSs by a Treaty U.S. Resident who holds, directly or indirectly, shares representing 10% or more of the voting power of the
Company at any time during such preceding 12-month period would not be exempt under the Treaty from such Israeli tax; however, under the
Treaty, a Treaty U.S. Resident may be permitted to claim a credit for such taxes against U.S. federal income tax imposed on any gain from
such sale, exchange or disposition, under the circumstances and subject to the limitations specified in the Treaty and U.S. domestic law.
Excess Tax
Individuals (whether Israeli or non-Israeli tax residents) who
are subject to tax in Israel are also subject to an additional tax at a rate of 3% on their annual income exceeding NIS 698,280 for 2023,
which amount is linked to the annual change in the Israeli Consumer Price Index, including, but not limited to, dividends, interest and
capital gain.
Certain Material U.S. Federal Income Tax Consequences
General
The following discussion describes the material U.S. federal income
tax consequences relating to the ownership and disposition of our ordinary shares by U.S. Holders (as defined below). This discussion
applies to U.S. Holders that purchase ordinary shares pursuant to this offering and hold such ordinary shares as capital assets within
the meaning of Section 1221 of the Code. This discussion is based on the Code, U.S. Treasury regulations promulgated thereunder and administrative
and judicial interpretations thereof, all as in effect on the date hereof and all of which are subject to change, possibly with retroactive
effect. This discussion does not address all of the U.S. federal income tax consequences that may be relevant to specific U.S. Holders
in light of their particular circumstances or to U.S. Holders subject to special treatment under U.S. federal income tax law (such as
banks, financial institutions, insurance companies, broker-dealers and traders in securities, commodities or currencies, persons that
generally mark their securities to market for U.S. federal income tax purposes, tax-exempt entities, retirement plans, individual retirement
accounts or other tax deferred accounts, regulated investment companies, real estate investment trusts, certain former citizens or residents
of the United States, persons who hold ordinary shares as part of a “straddle,” “hedge,” “conversion transaction,”
“synthetic security” or integrated investment, persons who received their ordinary shares as compensatory payments, persons
that have a “functional currency” other than the U.S. dollar, persons that own or are treated for tax purposes as owning directly,
indirectly or through attribution 10% or more of our shares by vote or value, persons who are subject to special tax accounting under
Section 451(b) of the Code, corporations that accumulate earnings to avoid U.S. federal income tax, partnerships and other pass-through
entities and arrangements that are classified as partnerships for U.S. federal income tax purposes, and investors in such pass-through
entities, holders receiving or holding ordinary shares in connection with the performance of services, and any holders that are not U.S.
Holders). This discussion does not address any U.S. state or local or non-U.S. tax consequences or any U.S. federal estate, gift or alternative
minimum tax consequences.
As used in this discussion, the term “U.S. Holder”
means a beneficial owner of ordinary shares that is, for U.S. federal income tax purposes, (1) an individual who is a citizen or resident
of the United States, (2) a corporation (or entity treated as a corporation for U.S. federal income tax purposes) created or organized
in or under the laws of the United States, any state thereof, or the District of Columbia, (3) an estate the income of which is subject
to U.S. federal income tax regardless of its source or (4) a trust (x) with respect to which a court within the United States is able
to exercise primary supervision over its administration and one or more United States persons have the authority to control all of its
substantial decisions or (y) that has elected under applicable U.S. Treasury regulations to be treated as a domestic trust for U.S. federal
income tax purposes.
If an entity or arrangement treated as a partnership for U.S. federal
income tax purposes holds ordinary shares, the U.S. federal income tax consequences relating to an investment in the ordinary shares will
depend in part upon the status and activities of such entity or arrangement and the particular partner. Any such entity or arrangement
should consult its own tax advisor regarding the U.S. federal income tax consequences applicable to it and its partners of the purchase,
ownership and disposition of ordinary shares.
Persons considering an investment in ordinary
shares should consult their own tax advisors as to the particular tax consequences applicable to them relating to the purchase, ownership
and disposition of ordinary shares, including the applicability of U.S. federal, state and local tax laws and non-U.S. tax laws.
Passive Foreign Investment Company Consequences
In general, a corporation organized outside the United States will
be treated as a PFIC, for any taxable year in which either (1) at least 75% of its gross income is “passive income”, the PFIC
income test, or (2) on average at least 50% of its assets, determined on a quarterly basis, are assets that produce passive income or
are held for the production of passive income, the PFIC asset test. Passive income for this purpose generally includes, among other things,
dividends, interest, royalties, rents, and gains from the sale or exchange of property that gives rise to passive income. Assets that
produce or are held for the production of passive income generally include cash, even if held as working capital or raised in a public
offering, marketable securities, and other assets that may produce passive income. Generally, in determining whether a non-U.S. corporation
is a PFIC, a proportionate share of the income and assets of each corporation in which it owns, directly or indirectly, at least a 25%
interest (by value) is taken into account.
Our status as a PFIC will
depend on the nature and composition of our income and the nature, composition and value of our assets (which may be determined based
on the fair market value of each asset, with the value of goodwill and going concern value being determined in large part by reference
to the market value of the ADSs, which may be volatile). Based upon the value of our assets, including any goodwill and the nature and
composition of our income, we believe that we were classified as a PFIC for the taxable year ended December 31, 2021. Furthermore, we
presently anticipate that we will be classified as a PFIC for the current taxable year ending December 31, 2022 based upon the expected
value of our assets, including goodwill, and the expected nature and composition of our income and assets. Our status as a PFIC is a fact-intensive
determination made on an annual basis after the end of each taxable year. Even if we determine that we are not a PFIC for a taxable year,
there can be no assurance that the IRS will agree with our conclusion and that the IRS would not successfully challenge our position.
Our U.S. counsel expresses no opinion with respect to our PFIC status for any period
Subject to the discussion below relating to the making of a QEF
election or a mark-to-market election by a U.S. Holder, if we are a PFIC in any taxable year during which a U.S. Holder owns ordinary
shares, the U.S. Holder could be liable for additional taxes and interest charges under the “PFIC excess distribution regime”
upon (1) a distribution paid during a taxable year that is greater than 125% of the average annual distributions paid in the three preceding
taxable years, or, if shorter, the U.S. Holder’s holding period for the ordinary shares, and (2) any gain recognized on a sale,
exchange or other disposition, including a pledge, of the ordinary shares, whether or not we continue to be a PFIC. Under the PFIC excess
distribution regime, the tax on such distribution or gain would be determined by allocating the distribution or gain ratably over the
U.S. Holder’s holding period for ordinary shares. The amount allocated to the current taxable year (i.e., the year in which the
distribution occurs or the gain is recognized) and any year prior to the first taxable year in which we are a PFIC will be taxed as ordinary
income earned in the current taxable year. The amount allocated to other taxable years will be taxed at the highest marginal rates in
effect for individuals or corporations, as applicable, to ordinary income for each such taxable year, and an interest charge, generally
applicable to underpayments of tax, will be added to the tax.
If we are a PFIC for any year during which a U.S. Holder holds
ordinary shares, we must generally continue to be treated as a PFIC by that holder for all succeeding years during which the U.S. Holder
holds the ordinary shares, unless we cease to meet the requirements for PFIC status and the U.S. Holder makes a “deemed sale”
election with respect to the ordinary shares. If the election is made, the U.S. Holder will be deemed to sell the ordinary shares it holds
at their fair market value on the last day of the last taxable year in which we qualified as a PFIC, and any gain recognized from such
deemed sale would be taxed under the PFIC excess distribution regime. After the deemed sale election, the U.S. Holder’s ordinary
shares would not be treated as shares of a PFIC unless we subsequently become a PFIC.
If we are a PFIC for any taxable year during which a U.S. Holder
holds ordinary shares and one of our non-U.S. corporate subsidiaries is also a PFIC (i.e., a lower-tier PFIC), such U.S. Holder would
be treated as owning a proportionate amount (by value) of the shares of the lower-tier PFIC and would be taxed under the PFIC excess distribution
regime on distributions by the lower-tier PFIC and on gain from the disposition of shares of the lower-tier PFIC even though such U.S.
Holder would not receive the proceeds of those distributions or dispositions. Each U.S. Holder is advised to consult its tax advisors
regarding the application of the PFIC rules to our non-U.S. subsidiaries.
In general, if we are determined to be a PFIC, a U.S. Holder may
avoid application of the PFIC tax consequences described above in respect to our ordinary shares by making a timely QEF election (if eligible
to do so) to include in income its pro rata share of our net capital gains (as long-term capital gain) and other earnings and profits
(as ordinary income), on a current basis, in each case whether or not distributed, in the taxable year of the U.S. Holder in which or
with which our taxable year ends. A U.S. Holder generally may make a separate election to defer the payment of taxes on undistributed
income inclusions under the QEF rules, but if deferred, any such taxes will be subject to an interest charge. It should be noted that
dividends paid by a PFIC would generally not qualify for the preferred capital gains rates discussed above. The QEF election is made on
a shareholder-by-shareholder basis and, once made, can be revoked only with the consent of the IRS.
A U.S. Holder generally makes a QEF election by attaching a completed
IRS Form 8621 (Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund), including the
information provided in a PFIC annual information statement, to a timely filed U.S. federal income tax return for the tax year to which
the election relates. Retroactive QEF elections generally may be made only by filing a protective statement with such return and if certain
other conditions are met or with the consent of the IRS. U.S. Holders should consult their own tax advisors regarding the availability
and tax consequences of a retroactive QEF election under their particular circumstances.
In order to comply with the requirements of a QEF election, a U.S.
Holder must receive a PFIC annual information statement from us. If we determine we are a PFIC for any taxable year, we will endeavor
to provide to a U.S. Holder such information as the IRS may require, including a PFIC annual information statement, in order to enable
the U.S. Holder to make and maintain a QEF election. However, there is no assurance that we will have timely knowledge of our status as
a PFIC in the future or of the required information to be provided.
If a U.S. Holder has made a QEF election with respect to our Class
A ordinary shares, and the special tax and interest charge rules do not apply to such shares (because of a timely QEF election for our
first taxable year as a PFIC in which the U.S. Holder holds (or is deemed to hold) such shares), any gain recognized on the sale of our
Class A ordinary shares generally will be taxable as capital gain and no interest charge will be imposed under the PFIC rules. As discussed
above, U.S. Holders of a QEF are currently taxed on their pro rata shares of its earnings and profits, whether or not distributed. In
such case, a subsequent distribution of such earnings and profits that were previously included in income generally should not be taxable
as a dividend to such U.S. Holders. The tax basis of a U.S. Holder’s shares in a QEF will be increased by amounts that are included
in income, and decreased by amounts distributed but not taxed as dividends, under the above rules.
Although a determination as to our PFIC status will be made annually,
an initial determination that our company is a PFIC will generally apply for subsequent years to a U.S. Holder who held our ordinary shares
while we were a PFIC, whether or not we meet the test for PFIC status in those subsequent years. A U.S. Holder who makes the QEF election
discussed above for our first taxable year as a PFIC in which the U.S. Holder holds (or is deemed to hold) our ordinary shares, however,
will not be subject to the PFIC tax and interest charge rules discussed above in respect to such shares. In addition, such U.S. Holder
will not be subject to the QEF inclusion regime with respect to our ordinary shares for any taxable year of us that ends within or with
a taxable year of the U.S. Holder and in which we are not a PFIC. On the other hand, if the QEF election is not effective for each of
our taxable years in which we are a PFIC and the U.S. Holder holds our ordinary shares, the PFIC rules discussed above will continue to
apply to such ordinary shares unless the holder makes a “deemed sale” election under the PFIC rules. If the U.S. Holder makes
such a deemed sale election, the U.S. Holder may thereafter make a QEF election. The deemed sale election creates a deemed sale of such
ordinary shares at their fair market value. The gain recognized by the deemed sale election attributable to the pre-QEF election period
will be subject to the special tax and interest charge rules treating the gain as an excess distribution under the general PFIC rules
described above. As a result of the deemed sale election, the U.S. Holder will have a new basis and holding period in the ordinary shares
for purposes of the PFIC rules. U.S. Holders are urged to consult their tax advisors as to the application of the rules governing purging
elections to their particular circumstances.
Alternatively, if we are a PFIC, a U.S. Holder will not be subject
to tax under the PFIC excess distribution regime on distributions or gain recognized on ordinary shares if such U.S. Holder makes a valid
“mark-to-market” election for our ordinary shares. A mark-to-market election is available to a U.S. Holder only for “marketable
stock.” Our ordinary shares will be marketable stock as long as they remain listed on Nasdaq and are regularly traded, other than
in de minimis quantities, on at least 15 days during each calendar quarter. If a mark-to-market election is in effect, a U.S. Holder generally
would take into account, as ordinary income for each taxable year of the U.S. holder, the excess of the fair market value of ordinary
shares held at the end of such taxable year over the adjusted tax basis of such ordinary shares. The U.S. Holder would also take into
account, as an ordinary loss each year, the excess of the adjusted tax basis of such ordinary shares over their fair market value at the
end of the taxable year, but only to the extent of the excess of amounts previously included in income over ordinary losses deducted as
a result of the mark-to-market election. The U.S. Holder’s tax basis in ordinary shares would be adjusted to reflect any income
or loss recognized as a result of the mark-to-market election. Any gain from a sale, exchange or other disposition of ordinary shares
in any taxable year in which we are a PFIC would be treated as ordinary income and any loss from such sale, exchange or other disposition
would be treated first as ordinary loss (to the extent of any net mark-to-market gains previously included in income) and thereafter as
capital loss.
A mark-to-market election will not apply to ordinary shares for
any taxable year during which we are not a PFIC, but will remain in effect with respect to any subsequent taxable year in which we become
a PFIC. Such election will not apply to any non-U.S. subsidiaries that we may organize or acquire in the future. Accordingly, a U.S. Holder
may continue to be subject to tax under the PFIC excess distribution regime with respect to any lower-tier PFICs that we may organize
or acquire in the future notwithstanding the U.S. Holder’s mark-to-market election for the ordinary shares.
Each U.S. person that is an investor of a PFIC is generally required
to file an annual information return on IRS Form 8621 containing such information as the U.S. Treasury Department may require. The failure
to file IRS Form 8621 could result in the imposition of penalties and the extension of the statute of limitations with respect to U.S.
federal income tax.
The U.S. federal income tax rules relating to
PFICs are very complex. Prospective U.S. investors are strongly urged to consult their own tax advisors with respect to the impact of
PFIC status on the purchase, ownership and disposition of ordinary shares, the consequences to them of an investment in a PFIC, any elections
available with respect to the ordinary shares and the IRS information reporting obligations with respect to the purchase, ownership and
disposition of ordinary shares of a PFIC.
Distributions
Subject to the discussion above under “—Passive Foreign
Investment Company Consequences,” a U.S. Holder that receives a distribution with respect to ordinary shares generally will be required
to include the gross amount of such distribution (before reduction for any Israeli withholding taxes withheld therefrom) in gross income
as a dividend when actually or constructively received to the extent of the U.S. Holder’s pro rata share of our current and/or accumulated
earnings and profits (as determined under U.S. federal income tax principles). To the extent a distribution received by a U.S. Holder
is not a dividend because it exceeds the U.S. Holder’s pro rata share of our current and accumulated earnings and profits, it will
be treated first as a tax-free return of capital and reduce (but not below zero) the adjusted tax basis of the U.S. Holder’s ordinary
shares. To the extent the distribution exceeds the adjusted tax basis of the U.S. Holder’s ordinary shares, the remainder will be
taxed as capital gain. Because we may not account for our earnings and profits in accordance with U.S. federal income tax principles,
U.S. Holders should expect all distributions to be reported to them as dividends. Such dividends will not be eligible for the “dividends
received” deduction generally allowed to corporate shareholders with respect to dividends received from U.S. corporations.
Dividends paid to non-corporate U.S. Holders by a “qualified
foreign corporation” are eligible for taxation at a reduced capital gains rate rather than the marginal tax rates generally applicable
to ordinary income provided that certain requirements are met. However, if we are a PFIC for the taxable year in which the dividend is
paid or the preceding taxable year (see discussion above under “—Passive Foreign Investment Company Consequences”),
we will not be treated as a qualified foreign corporation, and therefore the reduced capital gains tax rate described above will not apply.
Each U.S. Holder is advised to consult its tax advisors regarding the availability of the reduced tax rate on dividends with regard to
its particular circumstances.
A non-United States corporation (other than a corporation that
is classified as a PFIC for the taxable year in which the dividend is paid or the preceding taxable year) generally will be considered
to be a qualified foreign corporation (a) if it is eligible for the benefits of a comprehensive tax treaty with the United States which
the Secretary of Treasury of the United States determines is satisfactory for purposes of this provision and which includes an exchange
of information provision, or (b) with respect to any dividend it pays on ordinary shares that are readily tradable on an established securities
market in the United States. We believe that we qualify as a resident of Israel for purposes of, and are eligible for the benefits of,
the Treaty, although there can be no assurance in this regard. Further, the IRS has determined that the Treaty is satisfactory for purposes
of the qualified dividend rules and that it includes an exchange of information provision. Therefore, subject to the discussion above
under “—Passive Foreign Investment Company Consequences,” if the Treaty is applicable, such dividends will generally
be “qualified dividend income” in the hands of individual U.S. Holders, provided that certain conditions are met.
Distributions on ordinary shares that are treated as dividends generally will constitute
income from sources outside the United States for foreign tax credit purposes and generally will constitute passive category income. Subject
to applicable limitations, some of which vary depending upon a U.S. Holder’s particular circumstances, Israeli income taxes withheld
from dividends on the ADSs at a rate not exceeding the rate provided by the Treaty (assuming such U.S. Holder is eligible for the benefits
of the Treaty) will be creditable against the U.S. Holder’s U.S. federal income tax liability. The rules governing foreign tax credits
are complex and U.S. Holders should consult their tax advisers regarding the creditability of foreign taxes in their particular circumstances.
In lieu of claiming a foreign tax credit, U.S. Holders may, at their election, deduct foreign taxes, including any Israeli income tax,
in computing their taxable income, subject to generally applicable limitations under U.S. law. An election to deduct foreign taxes instead
of claiming foreign tax credits applies to all foreign taxes paid or accrued in the taxable year.
Sale, Exchange or Other Disposition of Ordinary Shares
Subject to the discussion above under “—Passive Foreign
Investment Company Consequences,” a U.S. Holder generally will recognize capital gain or loss for U.S. federal income tax purposes
upon the sale, exchange or other disposition of ordinary shares in an amount equal to the difference, if any, between the amount realized
(i.e., the amount of cash plus the fair market value of any property received) on the sale, exchange or other disposition and such U.S.
Holder’s adjusted tax basis in the ordinary shares. Such capital gain or loss generally will be long-term capital gain taxable at
a reduced rate for non-corporate U.S. Holders or long-term capital loss if, on the date of sale, exchange or other disposition, the ordinary
shares were held by the U.S. Holder for more than one year. Any capital gain of a non-corporate U.S. Holder that is not long-term capital
gain is taxed at ordinary income rates. The deductibility of capital losses is subject to limitations. Any gain or loss recognized from
the sale or other disposition of ordinary shares will generally be gain or loss from sources within the United States for U.S. foreign
tax credit purposes.
Disposition of Foreign Currency
U.S. Holders are urged to consult their tax advisors regarding
the tax consequences of receiving, converting or disposing of any non-U.S. currency received as dividends on ordinary shares or on the
sale or retirement of ordinary shares.
Medicare Tax
Certain U.S. Holders that are individuals, estates or trusts and
whose income exceeds certain thresholds generally are subject to a 3.8% tax on all or a portion of their net investment income, which
may include their gross dividend income and net gains from the disposition of ordinary shares. If you are a United States person that
is an individual, estate or trust, you are encouraged to consult your tax advisors regarding the applicability of this tax to your income
and gains in respect of your investment in ordinary shares.
Information Reporting and Backup Withholding
U.S. Holders may be required to file certain U.S. information reporting
returns with the IRS with respect to an investment in ordinary shares, including, among others, IRS Form 8938 (Statement of Specified
Foreign Financial Assets). As described above under “Passive Foreign Investment Company Consequences,” each U.S. Holder who
is a shareholder of a PFIC must file an annual report containing certain information. U.S. Holders paying more than $100,000 for ordinary
shares may be required to file IRS Form 926 (Return by a U.S. Transferor of Property to a Foreign Corporation) reporting this payment.
Substantial penalties may be imposed upon a U.S. Holder that fails to comply with the required information reporting.
Dividends on and proceeds from the sale or other disposition of
ordinary shares may be reported to the IRS unless the U.S. Holder establishes a basis for exemption. Backup withholding (currently at
a rate of 24%) may apply to amounts subject to reporting if the holder (1) fails to provide an accurate United States taxpayer identification
number or otherwise establish a basis for exemption, or (2) is described in certain other categories of persons. However, U.S. Holders
that are corporations generally are excluded from these information reporting and backup withholding tax rules. Backup withholding is
not an additional tax. Any amounts withheld under the backup withholding rules generally will be allowed as a refund or a credit against
a U.S. Holder’s U.S. federal income tax liability if the required information is furnished by the U.S. Holder on a timely basis
to the IRS.
U.S. Holders should consult their own tax advisors regarding the
backup withholding tax and information reporting rules.
EACH PROSPECTIVE INVESTOR IS URGED TO CONSULT ITS OWN TAX ADVISOR
ABOUT THE TAX CONSEQUENCES TO IT OF AN INVESTMENT IN ORDINARY SHARES IN LIGHT OF THE INVESTOR’S OWN CIRCUMSTANCES.
UNDERWRITING
We entered into an underwriting agreement with the underwriters
named below on , 2023. Oppenheimer & Co. Inc. is acting as
the representative of the underwriters. The underwriting agreement provides for the purchase of a specific number of ADSs and accompanying
Warrants. The underwriters’ obligations are several, which means that each underwriter is required to purchase a specified number
of ADSs and accompanying Warrants, but is not responsible for the commitment of any other underwriter to purchase ADSs and accompanying
Warrants. Subject to the terms and conditions of the underwriting agreement, each underwriter has severally agreed to purchase the number
of ADSs and accompanying Warrants set forth opposite its name below:
|
Underwriter |
|
Number of ADSs |
Number of Warrants |
| |
|
Oppenheimer & Co. Inc. |
|
|
| ||
|
Aegis Capital Corporation |
|
|
| ||
|
Total |
|
|
|
The underwriters have agreed to purchase all of the ADSs and accompanying
Warrants offered by this prospectus (other than those covered by the over-allotment option described below), if any are purchased.
The ADSs and accompanying Warrants offered hereby are expected
to be ready for delivery on or about , 2023 against payment in
immediately available funds.
The underwriters are offering the ADSs and accompanying Warrants
subject to various conditions and may reject all or part of any order. The representative of the underwriters has advised us that the
underwriters propose initially to offer the ADSs and accompanying Warrants to the public at the public offering price set forth on the
cover page of this prospectus and to dealers at a price less a concession not in excess of
per ADS and accompanying Warrant to brokers and dealers. After the ADSs are released for sale to the public, the representative may change
the offering price, the concession, and other selling terms at various times.
The following table provides information regarding the amount of
the discounts and commissions to be paid to the underwriters by us, before expenses:
|
|
Total Per ADS and Accompanying Warrant |
|||
|
Public offering price |
$ |
|||
|
Underwriting discounts and commissions(1) |
$ |
|||
|
Proceeds, before expenses, to us |
$ |
|||
(1) We have agreed to pay the underwriters a commission of 6.5% of the gross proceeds of this offering.
We estimate that our total expenses of the offering, excluding the estimated underwriting
discounts and commissions, will be approximately $0.5 million, which includes the fees and expenses for which we have agreed to reimburse
the underwriters, including fees and expenses of their counsel, up to a maximum aggregate amount of $100,000.
We have agreed to indemnify the underwriters against certain liabilities,
including liabilities under the Securities Act.
We have agreed to a 60-day “lock-up,” and our officers
and directors have agreed to a 90-day “lock-up,” with respect to our ordinary shares, ADSs and other of our securities that
we or they beneficially own, including securities that are convertible into ordinary shares or ADSs and securities that are exchangeable
for or exercisable into ordinary shares or ADSs. This means that, subject to certain exceptions, for a period of 60 or 90 days, as
applicable, following the date of this prospectus, we and such persons may not offer, sell, pledge or otherwise dispose of these securities
without the prior written consent of Oppenheimer & Co. Inc.
Rules of the SEC may limit the ability of the underwriters to
bid for or purchase ADSs before the distribution of the ADSs is completed. However, the underwriters may engage in the following activities
in accordance with the rules:
| • |
Stabilizing transactions — The representative may make bids or purchases for the purpose of pegging, fixing or
maintaining the price of the ADSs, so long as stabilizing bids do not exceed a specified maximum. |
| • |
Syndicate covering transactions — The underwriters may sell more ADSs in connection with this offering than the
number of ADSs that they have committed to purchase. This over-allotment creates a short position for the underwriters. This short sales
position may involve either “covered” short sales or “naked” short sales. Covered short sales are short sales
made in an amount not greater than the underwriters’ over-allotment option to purchase additional ADSs, if applicable. The underwriters
may close out any covered short position either by exercising their over-allotment option, if applicable, or by purchasing ADSs in the
open market. To determine how they will close the covered short position, the underwriters will consider, among other things, the price
of ADSs available for purchase in the open market, as compared to the price at which they may purchase ADSs through the over-allotment
option, if applicable. Naked short sales are short sales in excess of the over-allotment option, if applicable. The underwriters must
close out any naked short position by purchasing ADSs in the open market. A naked short position is more likely to be created if the underwriters
are concerned that, in the open market after pricing, there may be downward pressure on the price of the ADSs that could adversely affect
investors who purchase ADSs in this offering. |
| • |
Penalty bids — If the representative purchases ADSs in the open market in a stabilizing transaction or syndicate
covering transaction, it may reclaim a selling concession from the underwriters and selling group members who sold those ADSs as part
of this offering. |
| • |
Passive market making — Market makers in the ADSs who are underwriters or prospective underwriters may make bids
for or purchases of ADSs, subject to limitations, until the time, if ever, at which a stabilizing bid is made. |
Similar to other purchase transactions, the underwriters’
purchases to cover the syndicate short sales or to stabilize the market price of the ADSs may have the effect of raising or maintaining
the market price of the ADSs or preventing or mitigating a decline in the market price of the ADSs. As a result, the price of the ADSs
may be higher than the price that might otherwise exist in the open market. The imposition of a penalty bid might also have an effect
on the price of the ADSs if it discourages resales of the ADSs.
Neither we nor the underwriters make any representation or prediction
as to the effect that the transactions described above may have on the price of the ADSs. These transactions may occur on Nasdaq or otherwise.
If such transactions are commenced, they may be discontinued without notice at any time.
The underwriters and certain of their affiliates are full service
financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial
advisory, investment management, investment research, principal investment, hedging, financing and brokerage activities. Some of the underwriters
and certain of their affiliates may in the future engage in investment banking and other commercial dealings in the ordinary course of
business with us and our affiliates, for which they may in the future receive customary fees, commissions and expenses.
In addition, in the ordinary course of their business activities,
the underwriters and their affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or
related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers.
Such investments and securities activities may involve securities and/or instruments of ours or our affiliates. The underwriters and their
affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities
or financial instruments and may hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.
Electronic Delivery of Prospectus
A prospectus in electronic format may be delivered to potential
investors by one or more of the underwriters participating in this offering. The prospectus in electronic format will be identical to
the paper version of such prospectus. Other than the prospectus in electronic format, the information on any underwriter’s website
and any information contained in any other website maintained by an underwriter is not part of this prospectus or the registration statement
of which this prospectus forms a part.
Notice to Non-U.S. Investors
Belgium
The offering is exclusively conducted under applicable private
placement exemptions and therefore it has not been and will not be notified to, and this document or any other offering material relating
to the securities has not been and will not be approved by, the Belgian Banking, Finance and Insurance Commission (“Commission bancaire,
financière et des assurances/Commissie voor het Bank, Financie en Assurantiewezen”). Any representation to the contrary is
unlawful.
The underwriter has undertaken not to offer sell, resell, transfer
or deliver directly or indirectly, any securities, or to take any steps relating/ancillary thereto, and not to distribute or publish this
document or any other material relating to the securities or to the offering in a manner which would be construed as: (a) a public
offering under the Belgian Royal Decree of 7 July 1999 on the public character of financial transactions; or (b) an offering
of securities to the public under Directive 2003/71/EC which triggers an obligation to publish a prospectus in Belgium. Any action contrary
to these restrictions will cause the recipient and the company to be in violation of the Belgian securities laws.
Canada
This document constitutes an “exempt offering document”
as defined in and for the purposes of applicable Canadian securities laws. No prospectus has been filed with any securities commission
or similar regulatory authority in Canada in connection with the offer and sale of the securities described herein (the “Securities”).
No securities commission or similar regulatory authority in Canada has reviewed or in any way passed upon this document or on the merits
of the Securities and any representation to the contrary is an offence.
Canadian investors are advised that this document has been prepared in reliance on
section 3A.3 of National Instrument 33-105 Underwriting Conflicts (“NI 33-105”). Pursuant to section 3A.3 of NI 33-105, this
document is exempt from the requirement to provide investors with certain conflicts of interest disclosure pertaining to “connected
issuer” and/or “related issuer” relationships as would otherwise be required pursuant to subsection 2.1(1) of NI 33-105.
Resale Restrictions
The offer and sale of the securities in Canada is being made on
a private placement basis only and is exempt from the requirement to prepare and file a prospectus under applicable Canadian securities
laws. Any resale of Securities acquired by a Canadian investor in this offering must be made in accordance with applicable Canadian securities
laws, which may vary depending on the relevant jurisdiction, and which may require resales to be made in accordance with Canadian prospectus
requirements, a statutory exemption from the prospectus requirements, in a transaction exempt from the prospectus requirements or otherwise
under a discretionary exemption from the prospectus requirements granted by the applicable local Canadian securities regulatory authority.
These resale restrictions may under certain circumstances apply to resales of the Securities outside of Canada.
Representations of Purchasers
Each Canadian investor who purchases the Securities will be deemed
to have represented to the issuer and to each dealer from whom a purchase confirmation is received, as applicable, that the investor (i) is
purchasing as principal, or is deemed to be purchasing as principal in accordance with applicable Canadian securities laws, for investment
only and not with a view to resale or redistribution; (ii) is an “accredited investor” as such term is defined in section
1.1 of National Instrument 45-106 Prospectus Exemptions (“NI 45-106”) or, in Ontario, as such term is defined in section 73.3(1)
of the Securities Act (Ontario); and (iii) is a “permitted client” as such term is defined in section 1.1 of National
Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations.
Taxation and Eligibility for Investment
Any discussion of taxation and related matters contained in this
document does not purport to be a comprehensive description of all of the tax considerations that may be relevant to a Canadian investor
when deciding to purchase the Securities and, in particular, does not address any Canadian tax considerations. No representation or warranty
is hereby made as to the tax consequences to a resident, or deemed resident, of Canada of an investment in the Securities or with respect
to the eligibility of the Securities for investment by such investor under relevant Canadian federal and provincial legislation and regulations.
Rights of Action for Damages or Rescission
Securities legislation in certain of the Canadian jurisdictions
provides certain purchasers of securities pursuant to an offering memorandum, including where the distribution involves an “eligible
foreign security” as such term is defined in Ontario Securities Commission Rule 45-501 Ontario
Prospectus and Registration Exemptions and in Multilateral Instrument 45-107 Listing
Representation and Statutory Rights of Action Disclosure Exemptions, as applicable, with a remedy for damages or rescission, or
both, in addition to any other rights they may have at law, where the offering memorandum, or other offering document that constitutes
an offering memorandum, and any amendment thereto, contains a “misrepresentation” as defined under applicable Canadian securities
laws. These remedies, or notice with respect to these remedies, must be exercised or delivered, as the case may be, by the purchaser within
the time limits prescribed under, and are subject to limitations and defenses under, applicable Canadian securities legislation. In addition,
these remedies are in addition to and without derogation from any other right or remedy available at law to the investor.
Language of Documents
Upon receipt of this document, each Canadian investor hereby confirms
that it has expressly requested that all documents evidencing or relating in any way to the sale of the securities described herein (including
for greater certainty any purchase confirmation or any notice) be drawn up in the English language only. Par
la réception de ce document, chaque investisseur canadien confirme par les présentes
qu’il a expressément exigé que tous les documents faisant foi ou se rapportant de quelque manière que ce soit à
la vente des valeurs mobilières décrites aux présentes (incluant, pour plus de certitude, toute confirmation d’achat
ou tout avis) soient rédigés en anglais seulement.
France
Neither this prospectus nor any other offering material relating
to the securities has been submitted to the clearance procedures of the Autorité des marchés financiers in France. The securities
have not been offered or sold and will not be offered or sold, directly or indirectly, to the public in France. Neither this prospectus
nor any other offering material relating to the securities has been or will be: (a) released, issued, distributed or caused to be
released, issued or distributed to the public in France; or (b) used in connection with any offer for subscription or sale of the
securities to the public in France. Such offers, sales and distributions will be made in France only: (i) to qualified investors
(investisseurs qualifiés) and/or to a restricted circle of investors (cercle restreint d’investisseurs), in each case investing
for their own account, all as defined in and in accordance with Articles L.411-2, D.411-1, D.411-2, D.734-1, D.744-1, D.754-1 and D.764-1
of the French Code monétaire et financier; (ii) to investment services providers authorised to engage in portfolio management
on behalf of third parties; or (iii) in a transaction that, in accordance with article L.411-2-II-1° -or-2° -or 3°
of the French Code monétaire et financier and article 211-2 of the General Regulations (Règlement Général) of the
Autorité des marchés financiers, does not constitute a public offer (appel public à l’épargne). Such ADSs may
be resold only in compliance with Articles L.411-1, L.411-2, L.412-1 and L.621-8 through L.621-8-3 of the French Code monétaire et
financier.
Israel
The securities offered hereunder may not be offered or sold to
the public in Israel absent the publication of a prospectus that has been approved by the Israel Securities Authority (the “ISA”).
This document does not constitute a prospectus under the Israeli Securities Law, 5728-1968 (the “Israeli Securities Law”),
and has not been filed with or approved by the ISA and the securities offered hereunder have not been registered for sale in Israel. In
Israel, this document is being distributed only to, and is directed only at, and any offer of the securities hereunder is directed only
at, (i) a limited number of persons in accordance with the Israeli Securities Law and (ii) investors listed in the first addendum to the
Israeli Securities Law (the “Addendum”), consisting primarily of joint investment in trust funds, provident funds, insurance
companies, banks, portfolio managers, investment advisors, members of the Tel Aviv Stock Exchange, underwriters, venture capital funds,
entities with equity in excess of NIS 50 million and “qualified individuals,” each as defined in the Addendum (as it may be
amended from time to time), collectively referred to as qualified investors (in each case, purchasing for their own account or, where
permitted under the Addendum, for the accounts of their clients who are investors listed in the Addendum). Qualified investors are required
to submit written confirmation that they fall within the scope of the Addendum, are aware of the meaning of same and agree to it.
Italy
The offering of the securities offered hereby in Italy has not
been registered with the Commissione Nazionale per la Società e la Borsa (“CONSOB”) pursuant to Italian securities legislation
and, accordingly, the securities offered hereby cannot be offered, sold or delivered in the Republic of Italy (“Italy”) nor
may any copy of this prospectus or any other document relating to the ADSs offered hereby be distributed in Italy other than to professional
investors (operatori qualificati) as defined in Article 31, second paragraph, of CONSOB Regulation No. 11522 of 1 July, 1998
as subsequently amended. Any offer, sale or delivery of the securities offered hereby or distribution of copies of this prospectus or
any other document relating to the securities offered hereby in Italy must be made:
| (a) |
by an investment firm, bank or intermediary permitted to conduct such activities in Italy in accordance with Legislative Decree No.
58 of 24 February 1998 and Legislative Decree No. 385 of 1 September 1993 (the “Banking Act”); |
| (b) |
in compliance with Article 129 of the Banking Act and the implementing guidelines of the Bank of Italy; and |
| (c) |
in compliance with any other applicable laws and regulations and other possible requirements or limitations which may be imposed
by Italian authorities. |
Sweden
This prospectus has not been nor will it be registered with or
approved by Finansinspektionen (the Swedish Financial Supervisory Authority). Accordingly, this prospectus may not be made available,
nor may the securities offered hereunder be marketed and offered for sale in Sweden, other than under circumstances which are deemed not
to require a prospectus under the Financial Instruments Trading Act (1991: 980).
Switzerland
The securities offered pursuant to this prospectus will not be
offered, directly or indirectly, to the public in Switzerland and this prospectus does not constitute a public offering prospectus as
that term is understood pursuant to art. 652a or art. 1156 of the Swiss Federal Code of Obligations. The company has not applied for a
listing of the securities being offered pursuant to this prospectus on the SWX Swiss Exchange or on any other regulated securities market,
and consequently, the information presented in this prospectus does not necessarily comply with the information standards set out in the
relevant listing rules. The securities being offered pursuant to this prospectus have not been registered with the Swiss Federal Banking
Commission as foreign investment funds, and the investor protection afforded to acquirers of investment fund certificates does not extend
to acquirers of securities.
Investors are advised to contact their legal, financial or tax
advisers to obtain an independent assessment of the financial and tax consequences of an investment in securities.
United Kingdom/Germany/Norway/The Netherlands
In relation to each Member State of the European Economic Area
which has implemented the Prospectus Directive (each, a “Relevant Member State”) an offer to the public of any ADSs which
are the subject of the offering contemplated by this prospectus may not be made in that Relevant Member State other than the offers contemplated
in this prospectus in name(s) of Member State(s) where prospectus will be approved or passported for the purposes of a non-exempt offer
once this prospectus has been approved by the competent authority in such Member State and published and passported in accordance with
the Prospectus Directive as implemented in name(s) of relevant Member State(s) except that an offer to the public in that Relevant Member
State of any ADSs may be made at any time under the following exemptions under the Prospectus Directive, if they have been implemented
in that Relevant Member State:
| (a) |
to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose
corporate purpose is solely to invest in securities; |
| (b) |
to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a
total balance sheet of more than €43,000,000 and (3) an annual net turnover of more than €50,000,000, as shown in its
last annual or consolidated accounts; |
| (c) |
by the representative to fewer than 100 natural or legal persons (other than qualified investors as defined in the Prospectus Directive);
or |
| (d) |
in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of ADSs shall
result in a requirement for the publication by the company or any underwriter of a prospectus pursuant to Article 3 of the Prospectus
Directive. |
For the purposes of this provision, the expression an “offer
to the public” in relation to any ADSs in any Relevant Member State means the communication in any form and by any means of sufficient
information on the terms of the offer and any ADSs to be offered so as to enable an investor to decide to purchase any ADSs, as the same
may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State and the expression “Prospectus
Directive” means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State.
Each underwriter has represented, warranted and agreed that:
| (a) |
it has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement
to engage in investment activity (within the meaning of section 21 of the Financial Services and Markets Act 2000 (the FSMA)) received
by it in connection with the issue or sale of any ADSs in circumstances in which section 21(1) of the FSMA does not apply to the company;
and |
| (b) |
it has complied with and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to
the ADSs in, from or otherwise involving the United Kingdom. |
LEGAL MATTERS
Certain legal matters as to United States
law in connection with this offering will be passed upon for us by Wilson Sonsini Goodrich & Rosati, P.C., Boulder, Colorado. The
validity of the securities and other matters of Israeli law will be passed upon for us by Meitar | Law Offices, Ramat Gan, Israel. Certain
matters of Israeli law will be passed upon for the underwriters by Gornitzky & Co., Tel Aviv, Israel. Certain matters of U.S. federal
law will be passed upon for the underwriters by Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., New York, New York.
EXPERTS
The consolidated financial statements of Chemomab Therapeutics Ltd. as of December 31,
2022 and 2021, and for each of the years in the two-year period ended December 31, 2022, have been included herein in reliance upon the
report of Somekh Chaikin, a member firm of KPMG International, independent registered public accounting firm appearing elsewhere
herein, and upon the authority of said firm as experts in accounting and auditing.
ENFORCEMENT
OF CIVIL LIABILITIES
Chemomab is incorporated under the laws of the State of Israel.
Not all of our directors or officers are residents of the United States. Most of our assets and those of our non-U.S. directors
and officers are located outside the United States. Service of process upon us and upon our non-U.S. resident directors and
officers and the Israeli experts named in this prospectus may be difficult to obtain within the United States.
We have irrevocably appointed Chemomab Therapeutics, Inc. as our
agent to receive service of process in any action against us in any U.S. federal or state court arising out of this offering or any purchase
or sale of securities in connection with this offering. The address of our agent is One Kendall Square, Building 1400E, Suite 14-105,
Cambridge, MA 02139.
We have been informed by our legal counsel in Israel, Meitar |
Law Offices, that it may be difficult to assert claims under U.S. securities laws in original actions instituted in Israel or obtain a
judgment based on the civil liability provisions of U.S. federal securities laws. Israeli courts may refuse to hear a claim based on an
alleged violation of U.S. securities laws against us or our non-U.S. officers or directors reasoning that Israeli court is not
the most appropriate forum to hear such a claim. In addition, even if an Israeli court agrees to hear a claim, it may determine that Israeli
law and not U.S. law is applicable to the claim. If U.S. law is found to be applicable, the content of applicable U.S. law must be proved
as a fact by expert witnesses which can be a time-consuming and costly process. Certain matters of procedure may also be governed by Israeli
law. There is little binding case law in Israel addressing the matters described above. Israeli courts might not enforce judgments rendered
outside Israel, which may make it difficult to collect on judgments rendered against us or our non-U.S. officers and directors.
Subject to specified time limitations, legal procedures and certain
exceptions, Israeli courts may enforce a U.S. judgment in a civil matter which is non-appealable, including judgements based
on the civil liability provisions of the Securities Act and the Exchange Act and including a monetary or compensatory judgment in a non-civil matter,
provided that, among other things:
|
|
• |
the judgment was rendered by a court which was, according to the laws of the state
of the court, competent to render the judgment; |
|
|
|
|
|
|
• |
the obligation imposed by the judgment is enforceable according to the rules relating
to the enforceability of judgments in Israel and the substance of the judgment is not contrary to public policy; and |
|
|
|
|
|
|
• |
the judgment is executory in the state in which it was given. |
Even if these conditions are met, an Israeli court may not declare
a foreign civil judgment enforceable if:
|
|
• |
the judgment was given in a state whose laws do not provide for the enforcement of
judgments of Israeli courts (subject to exceptional cases); |
|
|
|
|
|
|
• |
the enforcement of the judgment is likely to prejudice the sovereignty or security
of the State of Israel; |
|
|
|
|
|
|
• |
the judgment was obtained by fraud; |
|
|
|
|
|
|
• |
the opportunity given to the defendant to bring its arguments and evidence before
the court was not reasonable in the opinion of the Israeli court; |
|
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|
|
|
|
• |
the judgment was rendered by a court not competent to render it according to the laws
of private international law as they apply in Israel; |
|
|
|
|
|
|
• |
the judgment is contradictory to another judgment that was given in the same matter
between the same parties and that is still valid; or |
|
|
|
|
|
|
• |
at the time the action was brought in the foreign court, a lawsuit in the same matter
and between the same parties was pending before a court or tribunal in Israel. |
If a foreign judgment is enforced by an Israeli court, it generally
will be payable in Israeli currency, which can then be converted into non-Israeli currency and transferred out of Israel. The
usual practice in an action before an Israeli court to recover an amount in a non-Israeli currency is for the Israeli court
to issue a judgment for the equivalent amount in Israeli currency at the rate of exchange in force on the date of the judgment, but the
judgment debtor may make payment in foreign currency. Pending collection, the amount of the judgment of an Israeli court stated in Israeli
currency ordinarily will be linked to the Israeli consumer price index plus interest at the annual statutory rate set by Israeli regulators
prevailing at the time. Judgment creditors must bear the risk of unfavorable exchange rates.
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational requirements of the Exchange
Act and in accordance therewith file annual, quarterly and current reports, proxy statements and other information with the SEC. The SEC
maintains a website that contains reports, proxy and information statements and other information regarding registrants that file electronically
with the SEC. The address of the SEC’s website is www.sec.gov.
We make available free of charge on or through our website at www.chemomab.com, our
annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished
pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such material with
or otherwise furnish it to the SEC.
This prospectus, which constitutes a part of the registration statement,
does not contain all of the information set forth in the registration statement or the exhibits and schedules filed therewith or the documents
incorporated by reference herein. For further information about us and the ADSs offered hereby, we refer you to the registration statement
and the exhibits and schedules filed thereto and to the documents incorporated by reference herein. Statements contained in this prospectus
regarding the contents of any contract or any other document that is filed as an exhibit to the registration statement or to a document
incorporated by reference herein are not necessarily complete, and each such statement is qualified in all respects by reference to the
full text of such contract or other document filed as an exhibit to the registration statement or a document incorporated by reference
herein. You can obtain a copy of the registration statement, at prescribed rates, from the SEC at the address listed above, or for free
at www.sec.gov. The registration statement and the documents referred to below under “Incorporation by Reference” are also
available on our website, www.chemomab.com.
The information contained on, or accessible through, our website
does not form a part of this prospectus and is not incorporated by reference herein or therein.
INCORPORATION
BY REFERENCE
The SEC’s rules allow us to “incorporate by reference”
information into this prospectus, which means that we can disclose important information to you by referring you to another document filed
separately with the SEC. The information incorporated by reference is deemed to be part of this prospectus, and subsequent information
that we file with the SEC will automatically update and supersede that information. Any statement contained in this prospectus or a previously
filed document incorporated by reference will be deemed to be modified or superseded for purposes of this prospectus to the extent that
a statement contained in this prospectus or a subsequently filed document incorporated by reference modifies or replaces that statement.
This prospectus incorporates by reference the documents set forth
below that have previously been filed with the SEC:
|
|
• |
The Registrant’s Annual Report on Form
10-K for the fiscal year ended December 31, 2021, filed with the SEC on March 30, 2022 (the “Annual Report”); |
|
|
• |
The Company’s Quarterly Reports on Form 10-Q for the quarter ended March
31, 2022, filed with the SEC on May 12, 2022, for the quarter ended June
30, 2022, filed with the SEC on August 12, 2022, and for the quarter ended September
30, 2022, filed with the SEC on November 10, 2022; |
|
|
• |
The Company’s Current Reports on Form 8-K, as filed with the SEC on February
11, 2022, May 12, 2022
(excluding information furnished pursuant to Item 2.02), June
1, 2022, June 8, 2022, June
21, 2022, August 12, 2022
(excluding information furnished pursuant to Item 2.02), November
14, 2022, November 16, 2022,
November 29, 2022, January
3, 2023, January
11, 2023, and February 21, 2023; |
|
|
• |
The description of our share capital, which is set forth in exhibit 4.1 of our Annual
Report, and as may be further updated or amended in any amendment or report filed for such purpose; and |
|
|
|
|
|
|
• |
All other reports filed pursuant to Section 13(a) or 15(d) of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), since the end of the fiscal year covered by the Annual Report. |
All filings filed by us pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act of 1934 after the date of the initial filing of the registration statement of which this prospectus forms a
part and prior to the termination of the offering (excluding information furnished pursuant to Items 2.02 and 7.01 of Form 8-K) shall
also be deemed to be incorporated by reference into this prospectus.
You should rely only on the information incorporated by reference
or provided in this prospectus. We have not authorized anyone else to provide you with different information. Any statement contained
in a document incorporated by reference into this prospectus will be deemed to be modified or superseded for the purposes of this prospectus
to the extent that a later statement contained in this prospectus or in any other document incorporated by reference into this prospectus
modifies or supersedes the earlier statement. Any statement so modified or superseded will not be deemed, except as so modified or superseded,
to constitute a part of this prospectus. You should not assume that the information in this prospectus is accurate as of any date other
than the date of this prospectus or the date of the documents incorporated by reference in this prospectus.
We will provide without charge to each person to whom a copy of
this prospectus is delivered, upon written or oral request, a copy of any or all of the reports or documents that have been incorporated
by reference in this prospectus but not delivered with this prospectus (other than an exhibit to these filings, unless we have specifically
incorporated that exhibit by reference in this prospectus). Any such request should be addressed to us at: Kiryat Atidim, Building 7,
Tel Aviv 6158002, Israel, Attention: Donald Marvin, Chief Financial Officer, or made by phone at +972-77-331-0156. You may also access
the documents incorporated by reference in this prospectus through our website at www.chemomab.com. Except for the specific incorporated
documents listed above, no information available on or through our website shall be deemed to be incorporated in this prospectus or the
registration statement of which it forms a part. You may also access any of the documents incorporated by reference in this prospectus
by visiting www.chemomab.com, or our investor relations website is www.investors.chemomab.com.
The information on either of these websites, however, is not, and should not be deemed to be, a part of this prospectus.
|
Chemomab
Therapeutics Ltd. and
its
subsidiaries
Consolidated Financial
Statements
As
of December 31, 2022 |
Chemomab
Therapeutics Ltd. and its subsidiaries
Contents
Page
| F - 2 | |
|
(PCAOB ID 1057) |
|
|
F
- 3 | |
| F - 4 | |
| F - 5 | |
| F - 6 | |
| F - 7 |
|
Somekh Chaikin KPMG Millennium Tower 17 Ha’arba’a Street, PO Box 609 Tel Aviv 61006, Israel +972 3 684 8000 |
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors,
Chemomab Therapeutics Ltd.:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Chemomab Therapeutics Ltd. (the Company) as of December 31, 2022 and 2021, the related consolidated statements of operations, changes in equity, and cash flows for each of the years in the two-year period ended December 31, 2022, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2022, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Somekh Chaikin
Member Firm of KPMG International
We have served as the Company’s auditor since 2015.
Tel Aviv, Israel
February 20, 2023
© 2023 KPMG Somekh Chaikin, an Israeli partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
F - 2
|
Chemomab Therapeutics Ltd. and its subsidiaries |
|
Consolidated Balance Sheets as of |
|
In USD thousands (except share and per share amounts) |
|
Note |
December 31, 2022 |
December 31, 2021 |
|||||||||
|
Assets |
|||||||||||
|
|
|||||||||||
|
Current assets |
|||||||||||
|
Cash and cash equivalents |
3 |
13,519 |
15,186 |
||||||||
|
Short-term bank deposit |
26,374 |
45,975 |
|||||||||
|
Restricted cash |
77 |
- | |||||||||
|
Other receivables and prepaid expenses |
4 |
1,766 |
1,527 |
||||||||
|
|
|||||||||||
|
Total current assets |
41,736 |
62,688 |
|||||||||
|
|
|||||||||||
|
Non-current assets |
|||||||||||
|
Restricted cash |
- | 55 | |||||||||
|
Long-term prepaid expenses |
733 |
908 |
|||||||||
|
Property and equipment, net |
5 |
367 |
357 |
||||||||
|
Operating lease right-of-use assets |
6 |
227 |
345 |
||||||||
|
|
|||||||||||
|
Total non-current assets |
1,327 |
1,665 |
|||||||||
|
|
|||||||||||
|
Total assets |
43,063 |
64,353 |
|||||||||
|
|
|||||||||||
|
Current liabilities |
|||||||||||
|
Trade payables |
1,688 |
1,336 |
|||||||||
|
Accrued expenses |
3,378 |
555 |
|||||||||
|
Employee and related expenses |
1,560 |
653 |
|||||||||
|
Operating lease liabilities |
6 |
123 |
106 |
||||||||
|
|
|||||||||||
|
Total current liabilities |
6,749 |
2,650 |
|||||||||
|
|
|||||||||||
|
Non-current liabilities |
|||||||||||
|
Non-current operating lease liabilities |
6 |
91 |
237 |
||||||||
|
|
|||||||||||
|
Total non-current liabilities |
91 |
237 |
|||||||||
|
|
|||||||||||
|
Commitments and contingent liabilities |
7 |
||||||||||
|
|
|||||||||||
|
Total liabilities |
6,840 |
2,887 |
|||||||||
|
|
|||||||||||
|
Shareholders' equity |
8 |
||||||||||
|
|
|||||||||||
|
Ordinary Shares no par value - Authorized: 650,000,000 shares as of December 31, 2022 and 2021; |
|||||||||||
|
Issued and outstanding: 232,636,700 Ordinary shares at December 31, 2022 and 228,090,300 Ordinary shares at December 31, 2021 |
- |
- |
|||||||||
|
Treasury share at cost (11,640,460 shares as of December 31, 2022) |
(1,218 |
) |
- | ||||||||
|
Additional paid-in capital |
101,260 |
97,639 |
|||||||||
|
Accumulated deficit |
(63,819 |
) |
(36,173 |
) | |||||||
|
|
|||||||||||
|
Total shareholders’ equity |
36,223 |
61,466 |
|||||||||
|
Total liabilities and shareholders’ equity |
43,063 |
64,353 |
|||||||||
_____________________ _____________________
Chief Executive Officer Chief Financial Officer
Date of approval of the financial statements: February 20, 2023
The accompanying notes are an integral part of the consolidated financial statements.
F - 3
|
Chemomab Therapeutics Ltd. and its subsidiaries |
|
Consolidated Statements of Operations for the year ended |
|
In USD thousands (except share and per share amounts) |
|
Note |
December 31, 2022 |
December 31, 2021 |
|||||||||
|
Operating expenses |
|||||||||||
|
|
|||||||||||
|
Research and development |
9 |
16,977 |
6,334 |
||||||||
|
|
|||||||||||
|
General and administrative |
10 |
11,556 |
6,033 |
||||||||
|
|
|||||||||||
|
Total operating expenses |
28,533 |
12,367 |
|||||||||
|
Financing (income) expenses, net |
(353) |
111 | |||||||||
|
Loss before taxes |
28,180 |
12,478 |
|||||||||
|
Taxes on income (benefit) |
11 |
(534 |
) |
- |
| ||||||
|
|
|||||||||||
|
Net loss for the year |
27,646 |
12,478 |
|||||||||
|
|
|||||||||||
|
Basic and diluted loss per Ordinary Share |
13 |
0.121 |
0.060 |
||||||||
|
|
|||||||||||
|
Weighted average number of Ordinary Shares outstanding, basic, and diluted |
13 |
227,589,288 |
207,468,650 |
||||||||
The accompanying notes are an integral part of the consolidated financial statements.
F - 4
|
Chemomab Therapeutics Ltd. and its subsidiaries |
|
Consolidated Statements of Changes in Equity |
|
In USD thousands (except share amounts) |
|
|
|
|
|
|
|
|
||||||||||||||||||||||
|
Ordinary Shares |
Treasury |
Additional |
Accumulated Deficit |
Total Shareholders' |
||||||||||||||||||||||||
|
Number |
USD |
Number |
USD |
USD |
USD |
USD |
||||||||||||||||||||||
|
Balance as of January 1, 2021 |
9,274,838 |
- |
- |
- |
34,497 |
(23,695 |
) |
10,802 |
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Share-based compensation |
- |
- |
- |
- |
2,019 |
- |
2,019 |
|||||||||||||||||||||
|
Effect of reverse capitalization transaction |
152,299,702 |
- |
- |
- |
2,476 |
- |
2,476 |
|||||||||||||||||||||
|
Issuance of shares and warrants, net of issuance costs |
66,381,520 |
- |
- |
- |
58,637 |
- |
58,637 |
|||||||||||||||||||||
|
Exercise of options |
134,240 |
- |
- |
- |
10 |
- |
10 |
|||||||||||||||||||||
|
Net loss for the year |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(12,478 |
) |
|
(12,478 |
) | ||||||||||||
|
Balance as of December 31, 2021 |
|
228,090,300 |
|
- |
|
- |
|
- |
|
97,639 |
|
(36,173 |
) |
|
61,466 |
|||||||||||||
|
Balance as of January 1, 2022 |
228,090,300 |
- |
- |
- |
97,639 |
(36,173 |
) |
61,466 |
||||||||||||||||||||
|
Share-based compensation |
- |
- |
- |
- |
3,211 |
- |
3,211 |
|||||||||||||||||||||
|
Issuance of shares, net of issuance costs |
2,576,400 |
- |
- |
- |
267 |
- |
267 |
|||||||||||||||||||||
|
Exercise of options |
1,970,000 |
- |
- |
- |
143 |
- |
143 |
|||||||||||||||||||||
|
Treasury share at cost |
- |
- |
(11,640,460 |
) |
(1,218 |
) |
- |
- |
(1,218 |
) | ||||||||||||||||||
|
Net loss for the year |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(27,646 |
) |
|
(27,646 |
) | ||||||||||||
|
Balance as of December 31, 2022 |
|
232,636,700 |
|
- |
|
(11,640,460 |
) |
|
(1,218 |
) |
|
101,260 |
|
(63,819 |
) |
|
36,223 |
|||||||||||
F - 5
|
Chemomab Therapeutics Ltd. and its subsidiaries |
|
Statements of Cash flows for the year ended |
|
In USD thousands |
|
December 31, 2022 |
December 31, 2021 |
|||||||
|
Cash flows from operating activities |
||||||||
|
Net loss for the year |
(27,646 |
) |
(12,478 |
) | ||||
|
|
||||||||
|
Adjustments for operating activities: |
||||||||
|
Depreciation |
58 |
34 |
||||||
|
Share-based compensation |
3,211 |
2,019 |
||||||
|
Change in other receivables and prepaid expenses |
(64 |
) |
(2,058 |
) | ||||
|
Change in trade payables |
352 |
1,175 |
||||||
|
Change in accrued expenses |
2,823 |
|
(1,279 |
) | ||||
|
Change in employees and related expenses |
907 |
215 |
||||||
|
Change in operating leases |
(11 |
) |
(2 |
) | ||||
|
Net cash used in operating activities |
(20,370 |
) |
(12,374 |
) | ||||
|
|
||||||||
|
Cash flows from investing activities |
||||||||
|
Investment in deposits |
19,601 |
(45,951 |
) | |||||
|
Long-term lease deposit |
- |
4 |
||||||
|
Sale of asset held for sale |
- |
1,000 |
||||||
|
Purchase of property and equipment |
(68 |
) |
(239 |
) | ||||
|
Net cash provided by (used in) investing activities |
19,533 |
(45,186 |
) | |||||
|
|
||||||||
|
Cash flows from financing activities |
||||||||
|
Cash acquired in Merger |
- |
2,427 |
||||||
|
Exercise of options |
143 |
10 |
||||||
|
Treasury share at cost |
(1,218 |
) |
- |
|||||
|
Issuance of shares and warrants, net of issuance costs |
267 |
58,637 |
||||||
|
Net cash provided by (used in) financing activities |
(808 |
) |
61,074 |
|||||
|
|
||||||||
|
Change in cash, cash equivalents and restricted cash |
(1,645 |
) |
3,514 |
|
||||
|
|
||||||||
|
Cash, cash equivalents and restricted cash at beginning of the year |
15,241 |
11,727 |
||||||
|
|
||||||||
|
Cash, cash equivalents and restricted cash at end of the year |
13,596 |
15,241 |
||||||
|
|
||||||||
|
Supplementary cash flows information: |
||||||||
|
A. Cash paid and received during the year for: |
||||||||
|
Income taxes received |
351 | - | ||||||
|
Income taxes paid |
(5 | ) | - | |||||
|
Interest received |
972 | 74 | ||||||
|
B. Significant non- cash transaction: |
||||||||
|
Right-of-use asset recognized with corresponding lease liability |
17 |
345 |
||||||
|
Liabilities assumed, net of non-cash assets received in Merger |
- |
49 |
||||||
The accompanying notes are an integral part of the consolidated financial statements.
F - 6
|
Chemomab Therapeutics Ltd. and its subsidiaries |
|
Notes to the Financial Statements as at December 31, 2022 |
| |
|
|
Note 1 - General
1.Chemomab Therapeutics Ltd. (hereinafter - "the Company") is an Israeli-based company incorporated under the laws of the State of Israel in September 2011. The Company’s registered office is located in Kiryat Atidim, Tel Aviv, Israel.
The
Company is a clinical-stage biotech company discovering and developing innovative therapeutics for conditions with high-unmet medical
need that involve inflammation and fibrosis.
The
wholly owned subsidiaries of the Company are: Chemomab Ltd. ("Chemomab"), Chemomab Therapeutics Israel Ltd. and Chemomab Therapeutics
Inc.
2.The Company currently has no products approved for sale. The Company’s operations are funded primarily by its Shareholders. The Company has incurred operating losses in each year since its inception and does not expect to generate significant revenue unless and until it obtains marketing approval for its products. Continuation of the Company’s development programs depend on its future ability to raise sources of financing.
3.Since January 2020, the COVID-19 pandemic has dramatically expanded into a worldwide pandemic, creating macro-economic uncertainty and disruption in the business and financial markets. Many countries around the world, including Israel, had taken measures designated to limit the continued spread of the COVID-19 pandemic, including the closure of workplaces, restricting travel, prohibiting assembling, closing international borders and quarantining populated areas. The Company's clinical trial sites have been affected by the COVID-19 pandemic, and as a result, commencement of the enrollment in our clinical trials of CM-101 in PSC was delayed, and the enrollment rate has been, and is still, affected as well. As a result, The Company expanded its patient recruiting efforts to additional territories. In addition, after enrollment in these trials, patients might still drop out because of possible COVID-19 implications. Based on management’s assessment, the extent to which the lingering effects of the COVID-19 pandemic will further impact the Company's operations will depend on future developments. These developments, which are highly uncertain and cannot be predicted with confidence,including the duration and severity of the impact on patient enrollment following the attenuation of the outbreak The Company is carefully monitoring the impacts arising from the COVID-19 pandemic and will adjust activities accordingly.
4.On December 14, 2020, the Company (formerly known as Anchiano Therapeutics Ltd.) entered into an Agreement and Plan of Merger (the "Merger" and “Merger Agreement”) with Chemomab Ltd., an Israeli limited company, and CMB Acquisition Ltd., an Israeli limited company and a wholly owned subsidiary of the Company (“Merger Sub”). On March 16, 2021, (the “Effective Time”), the Company consummated the Merger pursuant to the Merger Agreement Pursuant to the terms of the Merger Agreement, Merger Sub merged with and into Chemomab Ltd., with Chemomab Ltd. surviving the Merger as the Company's wholly owned subsidiary. In connection with the Merger, on March 16, 2021, the Company changed its name from “Anchiano Therapeutics Ltd.” To “Chemomab Therapeutics Ltd" and the business conducted by Chemomab Ltd. became primarily the business conducted by the Company.
At the Effective Time(a) each Chemomab Ltd. ordinary share outstanding immediately prior to the Effective Time was converted solely into number of American Depository Shares equal to the exchange ratio described in the Merger Agreement, and each outstanding Chemomab Ltd. option was assumed by the Company, based on the same exchange ratio.
F - 7
|
Chemomab Therapeutics Ltd. and its subsidiaries
|
|
Notes to the Financial Statements as at December 31, 2022 |
Note 1 - General (cont’d)
4. (cont'd)
For accounting purposes, Chemomab Ltd. is considered to have acquired the Company based upon the terms of the Merger as well as other factors. The Merger has been accounted for as an asset acquisition (reverse recapitalization transaction) rather than a business combination, as the assets acquired, and the liabilities assumed by Chemomab Ltd. do not meet the definition of a business under U.S. GAAP. The net assets acquired in connection with the Merger were recorded at their estimated acquisition date fair market value as of March 16, 2021, the date of completion of the Merger.
The exchange ratio was calculated by a formula that was determined through arms-length negotiations between the Company and Chemomab Ltd. The combined Company assumed all of the outstanding options of Chemomab Ltd., vested and not vested, under the Chemomab Share Incentive Plan (the “2015 Plan”), with such options representing the right to purchase a number of ADSs equal to approximately 12.86 multiplied by the number of Chemomab Ltd. ordinary shares previously represented by such options.
The following table summarizes the net assets acquired based on their estimated fair values as of March 16, 2021, immediately prior to completion of the Merger (in USD thousands):
|
Cash and cash equivalents |
2,427 |
|||
|
Asset held for sale |
1,000 |
|||
|
Prepaid and other assets |
236 |
|||
|
Accrued liabilities |
(1,187 |
) | ||
|
Net acquired assets |
2,476 |
F - 8
|
Chemomab Therapeutics Ltd. and its subsidiaries
|
|
Notes to the Financial Statements as at December 31, 2022 |
Note 2 - Summary of Significant Accounting Policies
A.Basis of Preparation
The financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S GAAP”).
B.Use of estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
C.Foreign currency
The currency of the primary economic environment in which the operations of the Company are conducted is the U.S. dollar (“dollar” or “$”), thus; the dollar is the functional currency of the Company.
The transactions and balances of the Company denominated in U.S. dollars are presented at their original amounts as the U.S. dollar is the currency of the primary economic environment in which the Company has operated and expects to continue to operate in the foreseeable future.
Monetary assets and liabilities denominated in a non-U.S. dollar currency are translated using the current exchange rate and nonmonetary assets and liabilities and capital accounts denominated in a non-U.S. dollar currency are translated using historical exchange rates.
Statements of operations accounts denominated in a non-U.S. dollar currency are translated using the exchange rates in effect on the transaction dates, except for depreciation, which is translated using historical exchange rate.
D.Cash and cash equivalents
Cash equivalents are short-term highly liquid investments that are readily convertible to cash with original maturities of three months or less at the date acquired.
E.Restricted cash
Restricted cash is primarily invested in highly liquid deposits. These deposits were used to secure office rent payments.
F.Property and equipment
Property and equipment are stated at cost less accumulated depreciation. Maintenance and repair expenses are charged to operation as incurred. Depreciation is calculated on the straight-line method based on the estimated useful lives of the assets and commences once the assets are ready for their intended use.
F - 9
|
Chemomab Therapeutics Ltd. and its subsidiaries
|
|
Notes to the Financial Statements as at December 31, 2022 |
Note 2 - Summary of Significant Accounting Policies (cont’d)
G.Impairment of long-lived assets
The Company’s property and equipment are reviewed for impairment in accordance with ASC 360, “Property and Equipment”, whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less selling costs. During the periods ended December 31, 2022 and 2021, no impairment losses have been recorded.
H.Research and Development
Research and development costs are charged to operations as incurred. Most of the research and development expenses are for subcontractors and wages.
I.Income taxes
The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined on the basis of the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.
The Company recognizes net deferred tax assets to the extent that the Company believes these assets are more likely than not to be realized. In making such a determination, management considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If management determines that the Company would be able to realize its deferred tax assets in the future in excess of their net recorded amount, management would make an adjustment to the deferred tax asset valuation allowance, which would reduce the income taxes expense.
The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50 percent likely of being realized.
J.Fair value of financial instruments
ASC 820, Fair Value Measurements and Disclosures, relating to fair value measurements, defines fair value and established a framework for measuring fair value. The ASC 820 fair value hierarchy distinguishes between market participant assumptions developed based on market data obtained from sources independent of the reporting entity and the reporting entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, essentially an exit price.
F - 10
|
Chemomab Therapeutics Ltd. and its subsidiaries
|
|
Notes to the Financial Statements as at December 31, 2022 |
Note 2 - Summary of Significant Accounting Policies (cont’d)
J.Fair value of financial instruments (cont’d)
In addition, the fair value of assets and liabilities should include consideration of non-performance risk, which for the liabilities described below includes the Company’s own credit risk.
As a basis for considering such assumptions, ASC 820 establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:
Level 1: Quoted prices (unadjusted) in active markets 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.
The carrying amounts of cash and cash equivalents trade payables, other receivables and accrued expenses approximate their fair value due to the short-term maturity of such instruments. The fair value of long-term restricted deposits and restricted cash also approximates their carrying value, since they bear interest at rates close to the prevailing market rates. None of the Company’s non- financial assets or liabilities are recorded at fair value on a non-recurring basis. No transfers between levels have occurred during the periods presented.
K.Share-based compensation
The Company accounts for share-based compensation as an expense in the financial statements based on ASC 718. All awards are equity classified and therefore such costs are measured at the grant date fair value of the award and graded vesting attribution approach to recognize compensation cost over the vesting period. The Company recognizes compensation cost for an award with only service conditions that has a graded vesting schedule on a straight-line basis over the requisite service period for the entire award, provided that the cumulative amount of compensation cost recognized at any date at least equals the portion of the grant-date value of such award that is vested at that date.
The fair value for the Company’s stock options granted to employees, consultants and directors was estimated using Black-Scholes option-pricing model at the grant date, using the inputs detailed in Note 8(C).
The Company has historically not paid dividends and has no foreseeable plans to pay dividends.
L.Government-sponsored research and development
Chemomab records grants received from the office of the Israel Innovation Authority (the “IIA”) as a liability, if it is probable that the Chemomab will have to repay the grants received. If it is not probable that the grants will be repaid, Chemomab records the grants as a reduction to research and development expenses.
F - 11
|
Chemomab Therapeutics Ltd. and its subsidiaries
|
|
Notes to the Financial Statements as at December 31, 2022 |
Note 2 - Summary of Significant Accounting Policies (cont’d)
M.Severance pay
Pursuant to Section 14 of the Severance Compensation Law, 1963 ("Section 14"), all employees of the Company are entitled only to monthly deposits, at a rate of 8.33% of their monthly salary, made on their behalf with insurance companies. Upon release of the policy to the employee, no additional liability exists between the parties regarding the matter of severance pay and no additional payments shall be made by the Company to the employee. This plan has been accounted for as a defined contribution plan. Severance costs amounted to approximately $142 thousand and $116 thousand for the year ended December 31, 2022 and 2021, respectively.
N.Concentrations of credit risk:
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents.
Cash and cash equivalents and short- term deposits are invested in banks. Management believes that the financial institutions that hold the Company’s investments are financially sound and, accordingly, minimal credit risk exists with respect to these investments.
The Company have no off-balance-sheet concentration of credit risk such as foreign exchange contracts, option contracts or other foreign hedging arrangements.
O.Leases
Under
Topic 842, the Company determines if an arrangement is a lease at inception. Right-of-use (ROU) assets and lease liabilities
are recognized at commencement date based on the present value of remaining lease payments over the lease term. For this purpose, the
Company considers only payments that are fixed and determinable at the time of commencement. As most of the Company's leases do not provide
an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining
the present value of lease payments. The Company's incremental borrowing rate is a hypothetical rate based on its understanding of what
its credit rating would be 5%
and 5.2%
in 2022 and 2021, respectively. The Company's lease terms may include options to extend or terminate the lease when it is reasonably certain
that the Company will exercise such options. When determining the probability of exercising such options, the Company considers contract-based,
asset-based, entity-based, and market-based factors. For leases agreements, the Company has elected the practical expedient to account
for the lease and non-lease maintenance components as a single lease component. Therefore, for those leases, the lease payments used to
measure the lease liability include all the fixed consideration in the contract. The Company's lease agreements generally do not contain
any residual value guarantees or restrictive covenants.
For
operating leases, the ROU asset is subsequently measured throughout the lease term at the carrying amount of the lease liability, plus
initial direct costs, plus (minus) any prepaid (accrued) lease payments, less the unamortized balance of lease incentives received. Lease
expense for lease payments is recognized on a straight-line basis over the lease term.
ROU assets for operating leases are periodically reduced by impairment losses. The Company uses the long-lived assets impairment guidance in ASC Subtopic 360-10, Property, Plant, and Equipment – Overall, to determine whether an ROU asset is impaired, and if so, the amount of the impairment loss to recognize. See Note 2(G).
F - 12
|
Chemomab Therapeutics Ltd. and its subsidiaries
|
|
Notes to the Financial Statements as at December 31, 2022 |
Note 2 - Summary of Significant Accounting Policies (cont’d)
P.Principles of consolidation
The consolidated financial statements include the accounts of the Company and its Subsidiaries. Intercompany balances and transactions have been eliminated in consolidation.
Q.Earnings per ordinary share
Basic earnings per ordinary share is calculated using only weighted average ordinary shares outstanding. Diluted earnings per share, if relevant, gives effect to dilutive potential ordinary shares outstanding during the year. Such dilutive shares consist of incremental shares, using the treasury stock method, from the assumed exercise of share options.
Note 3 - Cash and Cash Equivalents
|
December 31, |
December 31, |
|||||||
|
2022 |
2021 |
|||||||
|
USD thousands |
USD thousands |
|||||||
|
In USD |
10,663 |
10,720 |
||||||
|
In NIS |
2,756 |
1,116 |
||||||
|
In other currencies |
100 |
3,350 |
||||||
|
|
||||||||
|
13,519 |
15,186 |
|||||||
Note 4 - Other Receivables and Prepaid Expenses
|
December 31, |
December 31, |
|||||||
|
2022 |
2021 |
|||||||
|
USD thousands |
USD thousands |
|||||||
|
Government institutions |
459 |
179 |
||||||
|
Prepaid expenses |
1,307 |
1,348 |
||||||
|
|
||||||||
|
1,766 |
1,527 |
|||||||
F - 13
|
Chemomab Therapeutics Ltd. and its subsidiaries
|
|
Notes to the Financial Statements as at December 31, 2022 |
Note 5 - Property and Equipment, Net
|
December 31, |
December 31, |
|||||||
|
2022 |
2021 |
|||||||
|
USD thousands |
USD thousands |
|||||||
|
Cost: |
||||||||
|
Computers |
70 |
43 |
||||||
|
Furniture and equipment |
33 |
27 |
||||||
|
Laboratory equipment |
399 |
364 |
||||||
|
Website development |
14 |
14 |
||||||
|
Leasehold improvements |
16 |
16 |
||||||
|
|
532 |
464 |
||||||
|
Less - accumulated depreciation |
(165 |
) |
(107 |
) | ||||
|
|
||||||||
|
|
367 |
357 |
||||||
Note 6 - Leases
On May 10, 2020, Chemomab entered into an office and lab space lease agreement (hereinafter – “The Agreement” .(According to the Agreement, Chemomab rented a space in Atidim Park, Tel-Aviv for a period of three years, through . Chemomab was granted an option to extend the lease term by additional three years.
On October 24, 2021, Chemomab signed an amendment to the Agreement ("The Amendment"). According to the Amendment, On December 12, 2021 Chemomab returned the previous office and lab space to the property owner and rented a larger space in Atidim Park Tel-Aviv, for a term of 3 years, through . In addition, Chemomab was granted an option to extend the lease term by additional three years. The annual rent and management fees are approximately $122 thousand. Pursuant to the Amendment, the bank guarantee issued in 2020 was canceled and a substitute bank guarantee of approximately $77 thousand was issued to the property owner during 2022.
The above operating leases are included in “Operating lease right-of-use assets” on the Company’s Consolidated Balance sheets as of December 31, 2022 and 2021 and represent the Company’s right to use the underlying asset for the lease term. The Company’s obligations to pay lease payments are included in the current liabilities as “Operating lease liabilities” and in the non-current liabilities as “Non-current operating lease liabilities” on the Company’s Consolidated Balance sheets as of December 31, 2022 and 2021. Based on the present value of the lease payments for the remaining lease term of the Company’s existing lease agreement, the Company recognized operating right-of-use assets and operating lease liabilities of approximately $345 thousand on December 12, 2021.
During the years ended December 31, 2022 and 2021, the Company recognized an increase in right of use assets of $17 thousand and $345 thousand, respectively.
As of December 31, 2022, and 2021 operating right-of-use asset was $227 thousand and $345 thousand, respectively. The operating lease liabilities were $214 thousand and $343 thousand, respectively.
F - 14
|
Chemomab Therapeutics Ltd. and its subsidiaries
|
|
Notes to the Financial Statements as at December 31, 2022 |
Note 6 - Leases (cont’d)
As most of the Chemomab’s leases do not provide an implicit rate, Chemomab uses its incremental borrowing rate based on the information available at the commencement date of each lease in determining the present value of lease payments. Chemomab’s incremental borrowing rate is a hypothetical rate based on its estimation of what its credit rating would be the rate was 5% in 2022 and 5.2% in 2021.
Maturities of lease liabilities under noncancellable leases as of December 31, 2022, are as follows: (in thousands):
|
2023 |
126 |
|||
|
2024 |
93 |
|||
|
Total future minimum lease payments |
219 |
|||
|
Less imputed interest: |
(5 |
) | ||
|
Present value of operating lease liabilities |
214 |
Note 7 - Commitments and Contingent Liabilities
A.Exclusive License Agreement (hereinafter- “the License Agreement”)
In December 2011, Chemomab entered into a License Agreement with the Medical Research, Infrastructure, Health Services Fund of the Tel-Aviv Souraski Medical Center (“Fund”), pursuant to which it was granted with an exclusive license to certain inventions (as defined in the License Agreement) including patents, knowhow and products and the right to sublicense to third parties the rights granted, pursuant to and subject to certain terms and limitation fully set in the License Agreement.
Chemomab has agreed to pay the Fund a non-refundable and non-creditable sublicense fees as a percentage of all Attributed Income (as such term defined in the License Agreement), and shall further pay the Fund royalties from sales made by sublicensee;
(i)Royalties in percentage of the Net sales or Service Income (as defined in the License Agreement), subject to certain additional terms set forth therein.
In addition, with respect to each Licensed Product (as defined therein), Chemomab has agreed to pay the Fund the following non-refundable, non-creditable amounts:
(a)$100 thousand upon submission of a New Drug Application (“NDA”), Biological License Application (“BLA”) or equivalent for each Licensed Product to the United States Food and Drug Administration (“FDA”), $100 thousand upon submission of similar application for each Licensed Product to an equivalent foreign regulatory agency in Europe and one hundred thousand dollars upon submission of similar application for each Licensed Product to an equivalent foreign regulatory agency in Asia. Payment in the aggregate shall not be more than $300 thousand per each Licensed Product, provided that for each jurisdiction, payment shall be made only once;
(b)$200 thousand upon the grant of FDA or equivalent agency marketing approval in Europe and/or Asia for each Licensed Product. Payment in the aggregate shall not be more than $600 thousand per each Licensed Product, provided that for each jurisdiction, payment shall be made only once.
As of December 31, 2022 no payments were made to the Fund.
F - 15
|
Chemomab Therapeutics Ltd. and its subsidiaries
|
|
Notes to the Financial Statements as at December 31, 2022 |
Note 7 - Commitments and Contingent Liabilities (cont’d)
A.Exclusive License Agreement (hereinafter- “the License Agreement”) (cont’d)
In addition to the payments described above, upon the occurrence of either (i) closing of a public offering of the ordinary shares of Chemomab; or (ii) a Change of Control Transaction, Chemomab shall pay the Fund a cash payment equal to one percent (1%) of the proceeds raised by Chemomab in its initial public offering, or 1% of the consideration received by Chemomab or its shareholders at the closing of a Change of Control Transaction (after deduction of amounts paid as liquidation preference to the shareholders of Chemomab on account of their investment in Chemomab, if any), but in any event not more than $3,000 thousand.
Chemomab partially financed its research and development expenditures under programs sponsored by the Israel Innovation Authority (“IIA”) for the support of certain research and development activities conducted in Israel.
In return for the IIA’s participation, Chemomab is committed to pay royalties at rate of 3% of sales of the developed product (linked to U.S. dollar), up to 100% of the amount of grants received (100% plus interest at LIBOR). In addition, the IIA may impose certain conditions to transfer technology or development out of Israel.
Chemomab did not receive any grants from the IIA in the years ended December 31, 2022, and 2021.
Since Chemomab ’s incorporation through December 31, 2022 Chemomab received $1,227 thousand from the IIA, which were recognized as a reduction of research and development expenses.
As of December 31, 2022, Chemomab has no commitment for royalties payable.
B.In June 2015, Chemomab entered into a license agreement with subcontractor (“the Subcontractor”), under which the Subcontractor granted to Chemomab certain licenses to use proprietary rights of the subcontractor, materials and know how in the techniques and use of the same, for purposes of research and development of Chemomab 's product CM-101, as well as commercialization thereof. Further to the agreement, the Subcontractor also provides manufacturing services of intermediates and active pharmaceutical ingredients. According to the related manufacturing agreement, the manufacturing of the product is carried out by the Subcontractor in accordance with Chemomab's specifications and timeline. From time to time, Chemomab and the Subcontractor have been signing additional agreements for additional manufacturing and final process lock of the product for clinical use Under the agreement, Chemomab is also obligated to pay the Subcontractor royalties determined as a percentage of net sales of each licensee product.
During 2022 and 2021, Chemomab recorded expenses related to the above agreements in the amounts of $5,222 thousand and $2,590 thousand, respectively. The expenses were recorded under research and development expenses.
F - 16
|
Chemomab Therapeutics Ltd. and its subsidiaries
|
|
Notes to the Financial Statements as at December 31, 2022 |
Note 7 - Commitments and Contingent Liabilities (cont’d)
C.As of December 31, 2022, the bank imposed restriction on a bank deposit in the amount of $77 thousand for the purpose of secure lease payments under an office lease agreement.
D.During 2022, the Israeli tax authority ("ITA”) notified the Company that it had initiated a routine VAT audit to include tax years 2017 through 2022. The ITA raised several claims, mainly in respect with the recoverability of VAT with respect to Merger Agreement related expenses and the classification of the Company as a holding company. On July 2022, the ITA proposed a settlement, which the Company rejected. As a result, the ITA issued assessments in the aggregate amount of $1,046 thousand. The Company filed an appeal against the ITA’s assessments. The Company has recorded an appropriate provision which considers inherent uncertainty of these matters and the judicial process. Therefore, the outcome may differ from the estimated liability recorded by the Company during the period.
Note 8 - Share Capital
A.Right attached to shares
Ordinary shares
All of the issued and outstanding ordinary shares of the Company are duly authorized, validly issued, fully paid and non-assessable. The ordinary shares are not redeemable, and each ordinary share is entitled to one vote. The holders of the ordinary shares have the right to vote and participate in shareholders' meetings, the right to receive profits, and the right to participate in the accumulated earnings when the Company is dissolved.
1.Voting
The holders of ordinary shares are entitled to vote on all matters submitted to shareholders for a vote.
2.Dividends
The holders of the ordinary shares are entitled to receive dividends, when and as declared by the Board of Directors, and out of funds legally available.
Since its inception, the Company has not declared any dividends.
F - 17
|
Chemomab Therapeutics Ltd. and its subsidiaries
|
|
Notes to the Financial Statements as at December 31, 2022 |
Note 8 - Share Capital (cont’d)
B.Financing rounds
1.In connection with the Merger, on March 15, 2021, the Company entered into Securities Purchase Agreements with certain purchasers, pursuant to which the Company agreed to sell approximately $45.5 million of its American Depositary Shares (ADSs) in a private placement transaction, (or "The Private Placement"). The Private Placement closed on March 22, 2021, at which time the Company sold to the purchasers 2,619,270 ADSs together with warrants to purchase up to 261,929 ADSs at an exercise price of $17.35 per ADS. The warrants will expire five years from the date of issuance, and if exercised in full, will provide to the Company proceeds of approximately $4.5 million. 20 Ordinary Shares are equal to 1 American Depositary Share (ADS).
2.On April 30, 2021, the Company entered into an At the Market Offering Agreement (the "ATM Agreement") with Cantor Fitzgerald & Co., ("Cantor"). According to the ATM Agreement, the Company may offer and sell, from time to time, its ADSs having an aggregate offering price of up to $75 million through Cantor or the ATM Agreement. From April 30, 2021, through December 31, 2022, the Company issued 699,806 ADSs at an average price of $22.75 per ADS under the ATM Agreement, resulting in gross proceeds of $15,917 thousand.
3.On April 25, 2022, the Company filed a prospectus supplement with the SEC for the issuance and sale of up to $18,125,000 of its ADSs in connection with the reactivation of the ATM Facility and pursuant to General Instruction I.B.6 of Form S-3, which, subject to certain exceptions, limits the amount of securities the Company is able to offer and sell under such registration statement to one-third of our unaffiliated public float. During the year ended December 31, 2022, the Company issued 130,505 ADSs at an average price of $2.11 per ADS under the ATM Agreement, resulting in gross proceeds of $275 thousand.
4.On September 19, 2022, the Company entered into a share purchase agreement (the “Repurchase Arrangement”) with Dr. Adi Mor, co-founder of Chemomab Ltd., Chief Scientific Officer and a director of the Company and Professor Kobi George, co-founder of Chemomab Ltd. (together with Dr. Adi Mor, the “Co-Founders”), whereby the Company agreed, subject to the requisite court approval required under Section 303(a) of the Israeli Companies Law, 5759-1999 (the “Companies Law”), which the Company received on November 14, 2022, to repurchase up to 582,023 ADSs owned by the Co-Founders, for consideration not to exceed an aggregate amount of $2,500,000, depending on the market price of the ADSs at the time of any repurchase. Accordingly, on November 16, 2022, the company repurchased the entire amount of 582,023 ADSs from the Co-Founders at a weighted average price of $2.0848 and for total consideration of approximately $1,218 thousand.
The Company accounted for the repurchased shares as treasury share in accordance with ASC 505-30, "Treasury Stock".
F - 18
|
Chemomab Therapeutics Ltd. and its subsidiaries
|
|
Notes to the Financial Statements as at December 31, 2022 |
Note 8 - Share Capital (cont’d)
C.Share-based compensation
(1)Share-based compensation plan:
The
Company maintains (i) the 2011 Share Option Plan (the “2011 Plan”), (ii) the 2017 Equity-Based Incentive Plan (the “2017
Plan”) and (iii) the Chemomab 2015 Share Incentive Plan (the “2015 Plan”), which was assumed by the Company from Chemomab
upon the effectiveness of the Merger. At that time, outstanding options under the 2015 Plan became exercisable for such number of ADSs
of the Company as was determined based on the exchange ratio in the Merger Agreement, with a reciprocal adjustment to exercise price.
As of December 31, 2022, a total of 28,443,060 of our Ordinary Shares (equal to 1,422,153 of ADSs) were reserved for issuance under the 2015 Plan, of which 3,445,520 Ordinary Shares (equal to 172,276 ADSs) had been issued pursuant to previous exercises options, and 23,460,740 Ordinary Shares (equal to 1,173,037 ADSs) were issuable under outstanding options. Of such outstanding options, options to purchase 12,400,720 Ordinary Shares (equal to 620,036 ADSs) had vested and were exercisable as of that date, with a weighted average exercise price of $0.30 per Ordinary Share (or $5.96 per ADS). During the year ended December 31, 2022, options to purchase 1,240,120 Ordinary Shares (equal to 62,006 ADS) were canceled.
As of December 31, 2022, a total of 12,511,620 of our Ordinary Shares (equal to 625,581 ADSs) were reserved for issuance under the 2017 Plan, of which 11,730,800 Ordinary Shares (equal to 586,540 ADSs) were issuable under outstanding options. Of such outstanding options, options to purchase 427,540 Ordinary Shares (equal to 21,377 ADSs) had vested and were exercisable as of that date, with a weighted average exercise price of $0.35 per Ordinary Share (or $6.98 per ADS). During the year ended December 31, 2022 no options were canceled.
(2)The expenses that were recognized in the consolidated statements of operations for services received from employees and service providers are as follows:
|
Year ended |
Year ended |
|||||||
|
December 31, |
December 31, |
|||||||
|
2022 |
2021 |
|||||||
|
USD thousands |
USD thousands |
|||||||
|
Research and development |
448 |
137 |
||||||
|
General and administrative |
2,763 |
1,882 |
||||||
|
|
||||||||
|
Total share-based compensation expenses |
3,211 |
2,019 |
||||||
F - 19
|
Chemomab Therapeutics Ltd. and its subsidiaries
|
|
Notes to the Financial Statements as at December 31, 2022 |
Note 8 - Share Capital (cont’d)
(3)The number and weighted average exercise price of options are as follows:
|
Weighted average exercise price |
Number of options |
Weighted average remaining contractual life (in years) |
Weighted average exercise price |
Number of options |
Weighted average remaining contractual life (in years) |
|||||||||||||||||||
|
2022 |
2022 |
2022 |
2021 |
2021 |
2021 |
|||||||||||||||||||
|
Outstanding at January 1 |
0.38 |
27,003,260 |
8.12 |
0.07 |
10,455,580 |
7.8 |
||||||||||||||||||
|
Acquired in Merger |
- |
- |
- |
609,535 |
- | |||||||||||||||||||
|
Exercised |
0.07 |
(1,970,000 |
) |
- |
0.08 |
(134,220 |
) |
- |
||||||||||||||||
|
Forfeited |
0.32 |
(1,240,120 |
) |
- |
1.25 |
(1,712,275 |
) |
- |
||||||||||||||||
|
Granted |
0.16 |
11,398,400 |
7.8 |
0.62 |
17,784,640 |
9.79 |
||||||||||||||||||
|
|
||||||||||||||||||||||||
|
Outstanding at December 31 |
0.33 |
35,191,540 |
7.42 |
0.38 |
27,003,260 |
8.12 |
||||||||||||||||||
(4)Fair value measurement:
The fair value of the options is measured at the grant date using the Black-Scholes Option pricing model and the assumptions used to calculate the fair value of the options are as follows:
|
2022 grants |
|||||
|
Weighted average share price (in U.S. dollar)(a) |
0.16 |
||||
|
Exercise price (in U.S. dollar) |
0.10-0.257 |
||||
|
Expected life of options (in years)(b) |
5.51-6.28 |
||||
|
Expected volatility(c) |
83.69%-84.31% |
||||
|
Risk-free interest rate(d) |
1.75%-4.14% |
||||
|
Dividend yield |
0% |
||||
F - 20
|
Chemomab Therapeutics Ltd. and its subsidiaries
|
|
Notes to the Financial Statements as at December 31, 2022 |
Note 8 - Share Capital (cont’d)
C.Share-based compensation (cont’d)
4. (cont'd)
(a)The weighted average share price is based on the Company’s Ordinary Share valuation as at the grant date.
(b)Expected life for the periods presented was determined according to the simplified method since, at the date of grant, the Company did not have enough history to make an estimate. This method effectively assumes that exercise occurs over the period from vesting until expiration, and therefore the expected term is the midpoint between the service period and the contractual term of the award. The simplified method is applicable to service conditions and for performance conditions that are probable of achievement. If meeting the performance condition is not probable, the Company will use the awards’ contractual term if the service period is implied, or the simplified method, if the service period is explicitly stated.
(c)Expected volatility is based on historical volatility over the most recent period commensurate with the expected term of the option. As the Company has a short trading history for its ordinary shares, when the Company's trading period is shorter than the expected term, the expected volatility is derived from the average historical share volatilities of several unrelated public companies within the Company’s industry that the Company considers to be comparable to its own business over a period equivalent to the option’s expected term.
(d)The risk-free rate for the expected term of the options is based on the Black-Scholes option-pricing model on the yields of U.S. Treasury securities with maturities appropriate for the expected term of employee share option awards.
Note 9 - Research and Development
|
Year ended |
Year ended |
|||||||
|
December 31, |
December 31, |
|||||||
|
2022 |
2021 |
|||||||
|
USD thousands |
USD thousands |
|||||||
|
Consultants and subcontractors |
13,052 |
3,894 |
||||||
|
Salaries and related expenses |
2,867 |
1,789 |
||||||
|
Rent and maintenance |
245 |
114 |
||||||
|
Share-based compensation |
448 |
137 |
||||||
|
Other expenses |
365 |
400 |
||||||
|
16,977 |
6,334 |
|||||||
F - 21
|
Chemomab Therapeutics Ltd. and its subsidiaries
|
|
Notes to the Financial Statements as at December 31, 2022 |
Note 10 - General and Administrative
|
Year ended |
Year ended |
|||||||
|
December 31, |
December 31, |
|||||||
|
2022 |
2021 |
|||||||
|
USD thousands |
USD thousands |
|||||||
|
Salaries and related expenses |
3,435 |
943 |
||||||
|
Professional services |
2,596 |
1,695 |
||||||
|
Share-based compensation |
2,763 |
1,882 |
||||||
|
Fees to Directors |
231 |
244 |
||||||
|
Insurance |
1,084 |
1,024 |
||||||
|
Rent and maintenance |
24 |
29 |
||||||
|
Other expenses |
1,423 |
216 |
||||||
|
11,556 |
6,033 |
|||||||
Note 11 - Income Taxes
A.Tax rates
Ordinary taxable income in Israel is subject to a corporate tax rate of 23%.
The Company’s US subsidiary, Chemomab Therapeutics Inc. ("Chemomab Inc.) is taxed separately under the U.S. tax laws.
Chemomab Inc. is subject to a federal flat tax rate of 21% and state tax as applicable.
Capital gain is subject to capital gain tax according to the corporate tax rate in the year the assets are sold.
B.Tax assessments
As of December 31, 2022, the Company’s tax reports through December 31, 2017 are considered closed to audit inspections by the Israeli Tax Authority (“ITA”) due to statute of limitation rules effective in Israel.
The Company has not yet been assessed by the ITA since inception.
C.Losses for tax purposes carried forward to future years
As of December 31, 2022, the Company and its subsidiaries had approximately $159 million (approximately $143 million as of December 31, 2021) of net operating loss carryforwards which are available to reduce future taxable income with no limitation on the period of use.
On March 27, 2020 and December 27, 2020, the President of the United States signed and enacted into law the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) and the Consolidated Appropriations Act, 2021 (CAA). Among other provisions, the CARES Act and the CAA provide relief to U.S. federal corporate taxpayers through temporary adjustments to net operating loss rules, changes to limitations on interest expense deductibility, and the acceleration of available refunds for minimum tax credit carryforwards. The CARES Act also includes provisions for a carryback of any net operating loss (NOL) arising in a taxable year beginning after December 31, 2017, and before January 1, 2021, to each of the five taxable years preceding the taxable year in which the loss arises (carryback period).
F - 22
|
Chemomab Therapeutics Ltd. and its subsidiaries
|
|
Notes to the Financial Statements as at December 31, 2022 |
Note 11 - Income Taxes (cont’d)
C.Losses for tax purposes carried forward to future years (cont'd)
Chemomab Therapeutics Inc., a wholly owned subsidiary of the Company, filed an application with the US Internal Revenue Service to carryback net operating losses. Chemomab Therapeutics Inc received $351 thousand in December 2022 on account of 2016 and 2017 and expects to receive the remainder $183 thousand in 2023. Accordingly, a tax benefit in the total amount of $534 thousand was recorded in the Company’s statement of operations during 2022.
D.Deferred taxes
In respect of:
|
December 31, |
December 31, |
|||||||
|
2022 |
2021 |
|||||||
|
USD thousands |
USD thousands |
|||||||
|
Net operating loss carry-forwards |
36,550 |
33,396 |
||||||
|
Share-based compensation expense |
1,774 |
1,147 |
||||||
|
Research and development costs |
2,858 |
1,449 |
||||||
|
Other |
13 |
38 |
||||||
|
Gross deferred tax assets |
41,195 |
36,030 |
||||||
|
Less - Valuation allowance |
(41,195 |
) |
(36,030) |
|||||
|
|
||||||||
|
Net deferred tax assets |
- |
- |
||||||
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. A valuation allowance is provided when it is more likely than not that the deferred tax assets will not be realized.
The Company has established a valuation allowance to offset deferred tax assets on December 31, 2022 and 2021 due to the uncertainty of realizing future tax benefits from its net operating loss carryforwards and other deferred tax assets. The net change in the total valuation allowance for the year ended at December 31, 2022 was an increase of approximately $5.2 million.
E.Roll forward of valuation allowance
|
Balance at January 1, 2021 |
$ |
6,200 |
||
|
Currency transaction loss |
2,425 |
|||
|
Tax assets acquired through merger |
24,535 | |||
|
Income tax expense |
2,870 |
|||
|
Balance at December 31, 2021 |
$ |
36,030 |
||
|
Currency transaction Income |
(1,316 |
) | ||
|
Income tax expense |
6,481 |
|||
|
Balance at December 31, 2022 |
$ |
41,195 |
F - 23
|
Chemomab Therapeutics Ltd. and its subsidiaries
|
|
Notes to the Financial Statements as at December 31, 2022 |
Note 11 - Income Taxes (cont’d)
F.Reconciliation of theoretical income tax expense to actual income tax expense
A reconciliation of the Company’s theoretical income tax expense to actual income tax expense is as follows:
|
December 31, |
December 31, |
|||||||
|
2022 |
2021 |
|||||||
|
USD thousands |
USD thousands |
|||||||
|
Loss before income taxes |
(28,180 |
) |
(12,478 |
) | ||||
|
Statutory tax rate |
23 |
% |
23 |
% | ||||
|
Theoretical tax benefit |
(6,481 |
) |
(2,870 |
) | ||||
|
|
||||||||
|
Change in temporary differences for which deferred taxes were not recognized |
(1,696 |
) |
(1,332 |
) | ||||
|
Tax rate differential |
20 |
(101 |
) | |||||
|
Non-deductible expenses |
744 |
239 |
||||||
|
Losses and other items for which a valuation allowance was provided or benefit from loss carryforwards |
6,879 |
4,064 |
||||||
|
Actual income tax expense (Benefit) |
(534 |
) |
- |
|||||
G.Accounting for uncertainty in income taxes
For the year ended December 31, 2022, the Company did not have any unrecognized tax benefits and does not expect that the amount of unrecognized tax benefits will change significantly within the next 12 months. The Company’s accounting policy is to accrue interest and penalties related to unrecognized tax benefits as a component of income tax expense.
Note 12 - Related Parties Balances and Transactions
A.Balances with Related Parties:
The following Related Party payables are included in the consolidated Balance Sheets:
|
December 31, |
December 31, |
|||||||
|
2022 |
2021 |
|||||||
|
USD thousands |
USD thousands |
|||||||
|
Employee and related expenses |
891 |
278 |
||||||
|
Accrued expenses |
58 |
72 |
||||||
|
|
||||||||
|
949 |
350 |
| ||||||
On September 19, 2022, the Company entered into a share purchase agreement with the Company's Co- Founders, see Note 8B(4).
F - 24
|
Chemomab Therapeutics Ltd. and its subsidiaries
|
|
Notes to the Financial Statements as at December 31, 2022 |
Note 12 - Related Parties Balances and Transactions (cont'd)
B.Transactions with Related Parties:
The following transactions with related parties are included in the consolidated Statements of Operations:
|
Year ended |
Year ended |
|||||||
|
December 31, |
December 31, |
|||||||
|
2022 |
2021 |
|||||||
|
USD thousands |
USD thousands |
|||||||
|
Salaries and related expenses |
2,409 |
1,255 |
||||||
|
Share-based payments |
2,466 |
1,775 |
||||||
|
Professional Services |
231 |
244 |
||||||
|
Research and development |
36 |
36 |
||||||
|
|
||||||||
|
5,142 |
3,310 |
|||||||
Note 13 - Net Loss Per Share Attributable to Ordinary Shareholders
Basic net loss per share is computed by dividing the net loss available to common stockholders by the weighted-average number of ordinary shares outstanding. Diluted net loss per share is computed similarly to basic net loss per share except that the denominator is increased to include the number of additional ordinary shares that would have been outstanding if the potential ordinary shares had been issued and if the additional ordinary shares of were dilutive. Diluted net loss per share is the same as basic net loss per share of ordinary share, as the effect of potentially dilutive securities is antidilutive.
The following table sets forth the computation of basic and diluted net loss per share attributable to ordinary shareholders for the periods presented:
|
Year ended |
Year ended |
|||||||
|
December 31 |
December 31 |
|||||||
|
2022 |
2021 |
|||||||
|
In USD thousands, except share and per share data |
||||||||
|
Numerator: |
||||||||
|
Net loss |
27,646 |
12,478 |
||||||
|
|
||||||||
|
Denominator: |
||||||||
|
Weighted-average number of ordinary shares used in computing net loss per share attributable to ordinary shareholders, basic and diluted |
227,589,288 |
207,468,650 |
||||||
|
|
||||||||
|
Net loss per share attributable to ordinary shareholders, basic and diluted |
0.121 |
0.060 |
||||||
F - 25
|
Chemomab Therapeutics Ltd. and its subsidiaries
|
|
Notes to the Financial Statements as at December 31, 2022 |
Note 13 - Net Loss Per Share Attributable to Ordinary Shareholders (cont'd)
The potential number of ordinary shares that were excluded from the computation of diluted net loss per share attributable to ordinary shareholders for the periods presented since including them would have been anti-dilutive are as follows:
|
Year ended |
Year ended |
|||||||
|
December 31 |
December 31 |
|||||||
|
2022 |
2021 |
|||||||
|
Number of shares |
||||||||
|
Outstanding options to purchase ordinary shares |
35,191,540 |
27,003,260 |
||||||
Note 14 - Subsequent Events
On January 13, 2023 the Company filed with the SEC a registration statement on form S-1 for the issuance and sale of up to $20,000,000 of its ADSs.
F - 26
Up
to 7,614,212 American Depositary Shares and
Warrants
to Purchase 7,614,212 American Depositary Shares
PROSPECTUS
Sole
Book-Running Manager
Oppenheimer
& Co.
Manager
|
Aegis
Capital Corp. |
,
2023
Through
and including , 2023 (the 25th day after
the date of this prospectus), all dealers
effecting
transactions in these securities, whether or not participating in this offering, may be required to
deliver
a prospectus. This is in addition to a dealer’s obligation to deliver a prospectus when acting as an
underwriter
and with respect to an unsold allotment or subscription.
PART
II
INFORMATION
NOT REQUIRED IN PROSPECTUS
Item
13. Other Expenses of Issuance and Distribution.
The
following table sets forth the fees and expenses in connection with the issuance and distribution of the securities being registered (excluding
the underwriting discount). Except for the Securities and Exchange Commission registration fee and the FINRA filing fee, all amounts are
estimates.
|
|
Amount
Paid or to be Paid |
|||
|
SEC
registration fee |
$ |
3,306 | ||
|
FINRA
filing fee |
$ |
3,500 | ||
|
Legal
fees and expenses (including underwriters' legal fees) |
$ |
235,000 | ||
|
Accounting
fees and expenses |
$ |
45,710 | ||
|
Printing
expenses |
$ |
15,000 | ||
|
Depositary and
transfer agent fees and expenses |
$ |
152,280 | ||
|
Miscellaneous |
$ |
10,000 | ||
|
Total |
$ |
464,796 | ||
Item
14. Indemnification of Directors and Officers.
Under
the Israeli Companies Law, 5759-1999, or the Companies Law, a company may not exculpate an office holder from liability for a breach of
the duty of loyalty. An Israeli company may exculpate an office holder in advance from liability, in whole or in part, for damages caused
as a result of a breach of duty of care but only if a provision authorizing such exculpation is included in its articles of association.
Our amended and restated articles of association contain such a provision.
An
Israeli company may indemnify an office holder in respect of certain liabilities either in advance of an event or following an event provided
that a provision authorizing such indemnification is inserted in its articles of association. Our amended and restated articles of association
contain such a provision. An undertaking provided in advance by an Israeli company to indemnify an office holder with respect to a financial
liability imposed on him or her in favor of another person pursuant to a judgment, settlement or arbitrator’s award approved by
a court must be limited to events which in the opinion of the Board of Directors can be foreseen based on the company’s activities
when the undertaking to indemnify is given, and to an amount or a criteria determined by the Board of Directors as reasonable under the
circumstances, and such undertaking must detail the abovementioned events and amount or criteria.
In
addition, a company may indemnify an office holder against the following liabilities incurred for acts performed as an office holder:
| • |
reasonable litigation
expenses, including attorneys’ fees, incurred by the office holder as a result of an investigation or proceeding instituted against
him or her by an authority authorized to conduct such investigation or proceeding, provided that (i) no indictment was filed against such
office holder as a result of such investigation or proceeding; and (ii) no financial liability, such as a criminal penalty (as defined
in the Companies Law), was imposed upon him or her as a substitute for the criminal proceeding as a result of such investigation or proceeding
or, if such financial liability was imposed, it was imposed with respect to an offense that does not require proof of criminal intent
or in connection with a monetary sanction; |
| • |
reasonable litigation
expenses, including attorneys’ fees, incurred by the office holder or imposed by a court (i) in proceedings instituted against him
or her by the company, on its behalf or by a third party, or (ii) in connection with criminal proceedings in which the office holder was
acquitted, or (iii) as a result of a conviction for a crime that does not require proof of criminal intent; |
| • |
a financial liability
imposed on him or her in favor of another person pursuant to a judgment, including a settlement or arbitrator’s award approved by
a court. However, if an undertaking to indemnify an office holder with respect to such liability is provided in advance, then such an
undertaking must be limited to events which, in the opinion of the board of directors, can be foreseen based on the company’s activities
when the undertaking to indemnify is given, and to an amount or according to criteria determined by the board of directors as reasonable
under the circumstances, and such undertaking shall detail the abovementioned events and amount or criteria; and |
| • |
expenses, including
reasonable litigation expenses and legal fees, incurred by an office holder in relation to an administrative proceeding instituted against
such office holder, or certain compensation payments made to an injured party imposed on an office holder by an administrative proceeding,
pursuant to certain provisions of the Israeli Securities Law. |
An
Israeli company may insure a director or officer against the following liabilities incurred for acts performed as a director or officer:
| • |
a breach of duty
of care to the company or to a third party, including a breach arising out of the negligent conduct of an office holder; |
| • |
a breach of duty
of loyalty to the company, provided the director or officer acted in good faith and had a reasonable basis to believe that the act would
not prejudice the interests of the company; |
| • |
financial liabilities imposed on the office
holder for the benefit of a third party; |
| • |
financial liabilities
imposed in an administrative proceeding on the office holder in favor of a third party harmed by a breach, pursuant to certain provisions
of the Israeli Securities Law; and |
| • |
expenses, including
reasonable litigation expenses and legal fees, incurred by the office holder as a result of an administrative proceeding instituted against
him or her, pursuant to certain provisions of the Israeli Securities Law. |
An
Israeli company may not, however, indemnify or insure an office holder against any of the following:
| • |
a breach of duty
of loyalty, except to the extent that the office holder acted in good faith and had a reasonable basis to believe that the act would not
prejudice the company; |
| • |
a breach of duty
of care committed intentionally or recklessly, excluding a breach arising out of the negligent conduct of the office holder; |
| • |
an act or omission committed with intent
to derive unlawful personal benefit; or |
| • |
a fine, monetary sanction, penalty or forfeit
levied against the office holder. |
Under
the Companies Law, exculpation, indemnification and insurance of office holders must be approved by our compensation committee, our Board
of Directors and, in certain circumstances, by our shareholders. We have obtained directors’ and officers’ liability insurance
for the benefit of our office holders and intend to continue to maintain such coverage and pay all premiums thereunder to the fullest
extent permitted by the Companies Law. In addition, we have entered into indemnification agreements with each of our directors providing
them with indemnification for liabilities or expenses incurred as a result of acts performed by them in their capacity as our, or our
subsidiaries’, directors and officers. This indemnification is limited both in terms of amount and coverage and it covers certain
amounts regarding administrative proceedings insurable or indemnifiable under the Companies Law and our amended and restated articles
of association. In the opinion of the U.S. Securities and Exchange Commission, however, indemnification of directors and office holders
for liabilities arising under the U.S. Securities Act of 1933, as amended, or the Securities Act, is against public policy and
therefore unenforceable.
Item
15. Recent Sales of Unregistered Securities
The
following is a summary of transactions during the preceding three fiscal years involving sales of our securities that were not registered
under the Securities Act:
In
connection with the Merger, on March 15, 2021, the Company entered into Securities Purchase Agreements with certain purchasers, pursuant
to which the Company agreed to sell approximately USD $45.5 million of its ADSs in a private placement transaction (“The Private
Placement”). The Private Placement closed on March 22, 2021, at which time the Company sold to the purchasers 2,619,270 ADSs together
with warrants to purchase up to 261,929 ADSs at an exercise price of USD $17.35088 per ADS. The warrants will expire five years from the
date of issuance, and if exercised in full, will provide to the Company proceeds of approximately USD $4.5 million.
Item
16. Exhibits and Financial Statement Schedules.
(a)
Exhibits
|
Exhibit
No. |
|
Description |
|
* Filed
herewith | ||
|
** Previously filed | ||
|
+ Indicates
management contract or compensatory plan | ||
|
∞
Portions of this Exhibit (indicated with [***]) have been omitted as the Registrant has determined that (i) the omitted information is
not material and (ii) the omitted information would likely cause competitive harm to the Registrant if publicly disclosed | ||
(b)
Financial Statement Schedules
All financial statement
schedules have been omitted because they are not required or because the required information is given in the financial statements or
notes to those statements.
Item
17. Undertakings.
Insofar as indemnification
for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification
is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification
by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
The undersigned
registrant hereby undertakes:
| 1. |
To file, during any period in which offers
or sales are being made, a post-effective amendment to this registration statement: |
| a. |
To include any prospectus required by Section
10(a)(3) of the Securities Act; |
| b. |
To reflect in the prospectus any facts or
events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which
was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus
filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in
the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration
statement; and |
| c. |
To include any material information with
respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information
in the registration statement. |
provided, however,
that paragraphs (1)(a), (b) and (c) of this section do not apply if the information required to be included in a post-effective amendment
by those paragraphs is contained in reports filed with or furnished to the SEC by the registrant pursuant to section 13 or section 15(d)
of the Exchange Act that are incorporated by reference in the registration statement, or is contained in a form of prospectus filed pursuant
to Rule 424(b) that is part of the registration statement.
| 2. |
That, for the purpose of determining any
liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering
thereof. |
| 3. |
To remove from registration by means of
a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. |
| 4. |
That, for the purpose of determining liability
under the Securities Act to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement
relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule
430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided,
however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document
incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement
will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the
registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such
date of first use. |
| 5. |
That, for the purpose of determining liability
of the registrant under the Securities Act to any purchaser in the initial distribution of the securities, the undersigned registrant
undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless
of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means
of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or
sell such securities to such purchaser. |
Any preliminary
prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;
| a. |
Any free writing prospectus relating to
the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; |
| b. |
The portion of any other free writing prospectus
relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of
the undersigned registrant; and |
| c. |
Any other communication that is an offer
in the offering made by the undersigned registrant to the purchaser. |
SIGNATURES
Pursuant to the
requirements of the Securities Act of 1933, as amended, the registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Tel-Aviv, Israel, on February 21, 2023.
|
|
CHEMOMAB
THERAPEUTICS LTD. | |
|
|
|
|
|
|
By: |
/s/ Dale Pfost |
|
|
|
Dale Pfost |
|
|
|
Chairman of the
Board,
Chief Executive
Officer |
Pursuant to the requirements
of the Securities Act of 1933, as amended, this registration statement has been signed below by the following persons on behalf of the
registrant in the capacities and on the dates indicated.
|
Signature |
|
Title |
|
Date |
|
|
|
|
|
|
|
/s/ Dale
Pfost |
|
Chairman
of the Board and
Chief
Executive Officer |
|
February
21, 2023 |
|
Dale Pfost |
|
(Principal
Executive Officer) |
|
|
|
|
|
|
|
|
|
/s/ Donald
Marvin |
|
Chief
Financial Officer, Executive Vice President and Chief Operating Officer |
|
February
21, 2023 |
|
Donald Marvin |
|
(Principal
Financial and Accounting Officer) |
|
|
|
|
|
|
|
|
|
* |
|
Director |
|
February
21, 2023 |
|
Adi Mor |
|
|
|
|
|
|
|
|
|
|
|
* |
|
Director |
|
February
21, 2023 |
|
Nissim Darvish |
|
|
|
|
|
|
|
|
|
|
|
* |
|
Director |
|
February
21, 2023 |
|
Alan Moses |
|
|
|
|
|
|
|
|
|
|
|
* |
|
Director |
|
February
21, 2023 |
|
Claude Nicaise |
|
|
|
|
|
|
|
|
|
|
|
/s/ Neil Cohen |
|
Director |
|
February
21, 2023 |
|
Neil Cohen |
|
|
|
|
|
|
|
|
|
|
|
* |
|
Director |
|
February
21, 2023 |
|
Jill M. Quigley |
|
|
|
|
|
/s/ Dale
Pfost |
||||
|
Dale Pfost |
||||
|
Attorney in Fact |
AUTHORIZED
REPRESENTATIVE
Pursuant
to the requirements of the Securities Act of 1933, as amended, the undersigned, the duly authorized representative in the United States
of Chemomab Therapeutics Ltd., has signed this registration statement on February 21, 2023.
|
|
CHEMOMAB
THERAPEUTICS, INC. | |
|
|
|
|
|
|
By: |
/s/ Dale Pfost |
|
|
|
Dale Pfost |
|
|
|
President |
II
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