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As filed with the Securities and Exchange Commission on June 6, 2014

Registration no. 333-          

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Form F-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

VASCULAR BIOGENICS LTD.

(Exact Name of Registrant as Specified in Its Charter)

 

 

N/A

(Translation of Registrant’s Name into English)

 

 

 

Israel   2834   Not applicable

(State or Other Jurisdiction of

Incorporation or Organization)

 

(Primary Standard Industrial

Classification Code Number)

 

(I.R.S. Employer

Identification Number)

Vascular Biogenics Ltd.

6 Jonathan Netanyahu St.

Or Yehuda

Israel 60376

972-3-634-6450

(Address, Including ZIP Code, and Telephone Number,

Including Area Code, of Registrant’s Principal Executive Offices)

 

 

CT Corporation System

111 8 th Avenue

New York, New York 10011

(212) 894-8800

(Name, Address, Including ZIP Code, and Telephone Number,

Including Area Code, of Agent for Service)

 

 

Copies to:

 

Mitchell S. Bloom, Esq.

Lawrence S. Wittenberg, Esq.

Goodwin Procter LLP

Exchange Place

53 State Street

Boston, MA 02109

(617) 570-1000

 

Yuval Horn, Adv.

Keren Kanir, Adv.

Horn & Co, Law Offices

Amot Investments Tower

2 Weizmann St., 24 th Floor

Tel Aviv, Israel 6423902

972-3-637-8200

 

Brent B. Siler

Darren K. DeStefano

Cooley LLP

11951 Freedom Drive

Reston, VA 20190

(703) 456-8000

 

Chaim Friedland, Adv.

Ari Fried, Adv.

Gornitzky & Co.

Zion House, 45 Rothschild Blvd.

Tel Aviv, Israel 6578403

972-3-710-9191

Approximate date of commencement of proposed offering to the public: As soon as practicable after this Registration Statement becomes effective.

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.   ¨

CALCULATION OF REGISTRATION FEE

 

 

Title of Each Class of

Securities To be Registered

 

Proposed

Maximum

Offering Price (1)

 

Amount of

Registration Fee

Ordinary shares, par value NIS 0.01 per share

  $75,000,000   $9,660

 

 

 

(1) Estimated pursuant to Rule 457(o) under the Securities Act of 1933, as amended. Includes offering price of additional shares that the underwriters have the option to acquire.

 

 

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 Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 

 

 


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The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

 

Subject to Completion Dated June 6, 2014

 

LOGO

Vascular Biogenics Ltd.

                 Ordinary Shares

This is the initial public offering of Vascular Biogenics Ltd. We are offering                ordinary shares. We anticipate that the initial public offering price will be between $        and $        per share. We have applied for listing of our ordinary shares on The NASDAQ Global Market under the symbol “VBLX.”

We are an “emerging growth company” as that term is used in the Jumpstart Our Business Startups Act of 2012 and have elected to adopt certain reduced public company reporting requirements.

Investing in the ordinary shares involves risks. See “ Risk Factors ” beginning on page 12.

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.

 

     Per Share      Total  

Public offering price

   $                            $                        

Underwriting discounts and commissions (1)

   $         $     

Proceeds, before expenses, to Vascular Biogenics Ltd.

   $         $     

 

(1) See “Underwriting” for a description of the compensation payable to the underwriters.

We have granted the underwriters the option to purchase up to an additional                 ordinary shares.

The underwriters expect to deliver the ordinary shares to purchasers on                     , 2014.

 

Deutsche Bank Securities    Wells Fargo Securities

 

 

 

JMP Securities    Oppenheimer & Co.

The date of this prospectus is                    , 2014.


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The terms “shekels,” “Israeli shekels” and “NIS” refer to New Israeli Shekels, the lawful currency of the State of Israel, the terms “dollar,” “US$” or “$” refer to U.S. dollars, the lawful currency of the United States, and the terms “Euros” or “€” refer to Euros, the lawful currency of the Eurozone. Unless derived from our financial statements or otherwise indicated, U.S. dollar translations of NIS amounts and Euro amounts presented in this prospectus are translated using the rate of NIS 3.47 to US$1.00 or €0.727 to US$1.00, the exchange rates as of December 31, 2013.

No action is being taken in any jurisdiction outside the United States to permit a public offering of our ordinary shares or possession or distribution of this prospectus in any such jurisdiction. Persons who come into possession of this prospectus in jurisdictions outside the United States are required to inform themselves about and to observe any restrictions as to this offering and the distribution of this prospectus applicable to those jurisdictions.

This document has been prepared on the basis that any offer of shares in any relevant European Economic Area member state or in Israel will be made pursuant to an exemption under European prospectus law or Israeli securities law, as applicable, from the requirement to publish a prospectus for offers of shares and does not constitute an offer or solicitation to anyone to purchase shares in any jurisdiction in which such offer or solicitation is not authorized nor to any person to whom it is unlawful to make such an offer or solicitation.


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PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our ordinary shares. You should read this entire prospectus carefully, especially the “Risk Factors” section of this prospectus and our financial statements and related notes appearing elsewhere in this prospectus, before making an investment decision.

Overview

We are a clinical-stage biopharmaceutical company committed to the discovery, development and commercialization of first-in-class treatments for cancer and immune-inflammatory diseases. Our clinical pipeline is based on two distinct, proprietary platform technologies that leverage the body’s natural physiologic and genetic regulatory elements. To date, we have developed two programs based on these platforms—an oncology program and an anti-inflammatory program. Our lead product candidate from our oncology program, VB-111, is a gene-based biologic that we are initially developing for recurrent glioblastoma, or rGBM, an aggressive form of brain cancer. We have obtained fast track designation for VB-111 in the United States for prolongation of survival in patients with glioblastoma that has recurred following treatment with standard chemotherapy and radiation. We have also received orphan drug designation in both the United States and Europe. We intend to begin a Phase 3 pivotal trial for VB-111 in rGBM by the end of the first quarter of 2015. Our lead product candidate from our anti-inflammatory program, VB-201, is an oral small molecule we are currently evaluating in Phase 2 clinical trials for psoriasis and for ulcerative colitis. We have completed enrollment of both of these Phase 2 clinical trials and we expect final results from these trials in the first quarter of 2015.

Our oncology program is based on our proprietary Vascular Targeting System, or VTS, platform technology, which utilizes genetically targeted therapy to destroy newly formed, or angiogenic, blood vessels. We believe this technology will allow us to develop product candidates for multiple oncology indications. Our anti-inflammatory program is based on the use of our Lecinoxoid platform technology. Lecinoxoids are a novel class of small molecules we developed that are structurally and functionally similar to naturally occurring molecules known to modulate inflammation. We believe our two distinct platform technologies provide us with an opportunity to develop a diversified portfolio of product candidates targeting both orphan indications and large markets.

 

 

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The following table summarizes our product candidate pipeline from each of our two platform technologies:

LOGO

Our VTS Platform Technology

Our innovative, proprietary VTS platform technology enables systemic administration of gene therapy to either destroy or promote angiogenic blood vessels. VTS is both tissue- and condition-specific, allowing for targeted and limited gene expression in endothelial cells, the thin layer of cells that lines the interior surface of blood vessels undergoing angiogenesis.

Our VTS platform technology comprises three components, a viral vector, a promoter and a transgene:

 

  1. Viral vector—a modified virus that is used as a delivery vehicle to distribute the promoter and the transgene throughout the body.

 

  2. Promoter—our proprietary, genetically modified promoter, called PPE-1-3X, that specifically targets the endothelial cells of angiogenic blood vessels. When present in these cells, the promoter initiates the expression of the transgene.

 

  3. Transgene—a genetic sequence designed to yield a specific biological effect, the expression of which is directed by PPE-1-3X. The particular transgene will vary depending on the therapeutic objectives of the product candidate.

Once the gene therapy has reached the angiogenic blood vessels, our PPE-1-3X promoter activates transgene expression to produce a desired protein in the endothelial cells of those vessels. For oncology applications, the transgene selected is designed to destroy angiogenic blood vessels that feed solid tumors. For other potential applications, such as the treatment of ischemia, a different transgene can be selected that is designed to promote the development of angiogenic blood vessels instead of their destruction.

 

 

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VB-111

We are developing VB-111, the lead oncology product candidate from our VTS platform technology, for solid tumor indications, with current clinical trials in rGBM, thyroid cancer and ovarian cancer.

Glioblastoma is a brain cancer that affects approximately 10,000 newly diagnosed people each year in the United States. It is a devastating, rapidly progressing tumor, with a median time from diagnosis to the patient’s death of 12 to 15 months. In recurrent glioblastoma, treatment consists of both symptomatic and palliative therapies. However, with currently available therapies, glioblastoma typically remains fatal within a very short period of time.

We are conducting an open-label Phase 2 clinical trial in rGBM, which we originally initiated as an adaptive Phase 1/2 trial. The trial is intended to evaluate the safety and efficacy of VB-111, both by itself and in combination with Avastin (bevacizumab), an anti-angiogenesis agent approved by the U.S. Food and Drug Administration, or the FDA, for use in rGBM. In interim analyses of data from this trial, we have observed dose-dependent attenuation of tumor growth and an increase in median overall survival, which is the time interval from initiation of treatment until the patient’s death. The FDA has granted VB-111 fast track designation for prolongation of survival in patients with glioblastoma that has recurred following treatment with temozolomide, a chemotherapy agent commonly used to treat newly diagnosed glioblastoma, and radiation. We are currently discussing a special protocol assessment, or SPA, with the FDA pursuant to which we intend to begin a Phase 3 pivotal trial of VB-111 in rGBM by the end of the first quarter of 2015. We are in the process of recruiting sites and investigators for the Phase 3 trial, which is not contingent upon the conclusion of the ongoing Phase 2 trial in rGBM. We expect data from this Phase 3 trial to be available in the second half of 2017.

Additionally, based on observations from early clinical trials, we have advanced VB-111 into tumor specific, repeat-dose trials. In thyroid cancer, we are conducting an open-label Phase 2 clinical trial to evaluate safety and efficacy of VB-111. In ovarian cancer, clinical trials of bevacizumab, which, like VB-111, is an anti-angiogenic agent, demonstrated some improvement in progression free survival in women with high-risk advanced ovarian cancer. Therefore, we are conducting an additional Phase 1/2 clinical trial in ovarian cancer, which combines VB-111 therapy with paclitaxel, a common chemotherapeutic agent used to treat ovarian cancer, to evaluate safety and efficacy in this indication.

According to the National Cancer Institute, there are an estimated 535,000 people currently living with thyroid cancer in the United States, with an estimated 60,000 new cases of thyroid cancer each year and an estimated 1,850 annual deaths as a result of the disease. Ovarian cancer was diagnosed in approximately 22,000 American women in 2013, according to the National Cancer Institute.

As of May 31, 2014, we had studied VB-111 in over 150 patients and have observed it to be well-tolerated. We have been granted composition of matter patents that we believe, together with orphan drug designations in both the United States and Europe, will provide exclusivity for VB-111, if approved for marketing, until at least 2027.

 

 

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Our Lecinoxoid Platform Technology

Our proprietary Lecinoxoid platform technology comprises a family of orally administered small molecules designed to modulate the body’s inflammatory response. Lecinoxoids are compounds that are structurally and functionally similar to naturally occurring molecules, known as oxidized phospholipids, which possess immune modulating anti-inflammatory properties, modified to enhance stability and activity. We believe that Lecinoxoids hold significant promise in their ability to treat a broad range of chronic immune-based inflammatory diseases.

The inflammatory response is a complex physiologic process balancing both pro- and anti-inflammatory components that interact intimately with the body’s immune system. Oxidized phospholipids are instrumental in the interplay of these components that maintain equilibrium. When the inflammatory response is not adequately balanced, excess inflammation results and may cause both acute and chronic disease states.

Our proprietary Lecinoxoid platform technology seeks to harness the ability of oxidized phospholipids to regulate and attenuate key immune-inflammatory signaling. We believe that our approach—identifying naturally occurring anti-inflammatory compounds and modifying them to enhance stability and activity—may lead to more physiologically balanced responses than other available anti-inflammatory therapies.

VB-201

Our lead anti-inflammatory product candidate from our Lecinoxoid platform technology, VB-201, focuses on modifying the immune-mediated native inflammatory response. We are currently studying VB-201 in Phase 2 clinical trials for psoriasis and for ulcerative colitis.

Psoriasis is the most prevalent autoimmune disease in the United States, affecting as many as 7.5 million people, and an estimated 125 million people worldwide, according to the National Psoriasis Foundation. However, current medications have either limited efficacy, high levels of toxicity or high cost.

We have recently completed an exploratory double-blind, placebo-controlled Phase 2 trial designed to evaluate safety and establish dosage of VB-201 in patients with psoriasis. In this trial, VB-201 was well-tolerated and met secondary efficacy endpoints, showing statistically significant improvements in multiple measures of disease severity. While the trial did not meet its primary efficacy endpoint, we believe this may have been due to the short treatment duration and low dosing levels of the trial. This trial also included a sub-study of psoriasis patients with cardiovascular risk factors measuring the effects of VB-201 on arterial inflammation related to atherosclerosis, or hardening of the arteries. The primary endpoint in this sub-study was the change from baseline in the level of vessel inflammation. This endpoint was met, with a statistically significant reduction in vessel inflammation in patients treated with an 80 mg dose of VB-201.

We are currently conducting a randomized, double-blind Phase 2 clinical trial to evaluate the efficacy and safety of VB-201 in patients with moderate to severe psoriasis. We have completed enrollment of this trial, which is being conducted at 29 sites, and for which we enrolled 194 patients. We expect results from this trial in the first quarter of 2015.

 

 

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In addition, we are studying VB-201 in ulcerative colitis. Ulcerative colitis is a serious chronic form of inflammatory bowel disease. According to the Crohn’s and Colitis Foundation of America, ulcerative colitis may affect as many as 700,000 Americans. Our ongoing Phase 2 trial of VB-201 in ulcerative colitis is a randomized, double-blind, placebo-controlled trial with 24 weeks of daily oral administration of VB-201. Each patient will have a final safety evaluation four weeks after stopping treatment with VB-201. We have completed enrollment of this trial, which is being conducted at 14 sites, and for which we enrolled 112 patients. We expect data from this trial in the first quarter of 2015.

As of May 31, 2014, we had studied VB-201 in over 600 patients and have observed it to be well-tolerated. VB-201 is covered by an issued U.S. composition of matter patent until at least 2027.

Our Strategy

Our goal is to become a leading biopharmaceutical company focused on discovering, developing and commercializing innovative therapeutics that leverage our proprietary VTS and Lecinoxoid platform technologies for oncology, anti-inflammatory and other indications. We intend to achieve this goal by pursuing the following strategies:

 

   

Pursue regulatory approval for our lead oncology compound, VB-111 for rGBM

We intend to commence a Phase 3 pivotal trial of VB-111 for rGBM by the end of the first quarter of 2015. We intend to conduct the trial under an SPA we are currently discussing with the FDA, and estimate that we will complete the trial by the end of 2016, with data expected in the second half of 2017, with the timing of the data dependent on overall survival of the patients in the trial. If we receive positive data from the trial, we expect to promptly submit a Biologics License Application, or BLA, to the FDA seeking approval of VB-111 for the treatment of rGBM in the United States.

 

   

Advance development of VB-201 for psoriasis and ulcerative colitis

We will continue to advance the development of our lead anti-inflammatory product candidate, VB-201. We are currently conducting Phase 2 clinical trials of VB-201 for psoriasis and for ulcerative colitis. We expect final results from each of these trials in the first quarter of 2015. If the results are positive, we expect to commence Phase 3 clinical trials for both indications either on our own or in collaboration with a third party.

 

   

Expand indications for VB-111 and VB-201

We believe VB-111 has the potential for applications in other solid tumors in addition to rGBM. We are therefore conducting clinical trials in both thyroid and ovarian cancer. We may also pursue expansion of the treatment indication of VB-111 in glioblastoma beyond recurrent cases to include newly diagnosed cases if clinical data support such expansion.

We also believe there are other potential applications for VB-201 to treat inflammatory diseases beyond psoriasis and ulcerative colitis. We intend to explore applications in auto-immune inflammatory diseases such as Crohn’s disease, atherosclerosis, multiple sclerosis and rheumatoid arthritis.

 

 

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Leverage our two distinct platform technologies to develop therapeutics targeting a broad range of diseases

In addition to expanding the indications for our current lead compounds, we intend to explore the development of other compounds derived from our VTS and Lecinoxoid platform technologies. For example, we intend to continue our development of a compound generated through our VTS platform technology that we have initially targeted at ischemia-related indications. In addition, we intend to advance other Lecinoxoid derivatives that demonstrate pre-clinical evidence of activity in various inflammatory and inflammatory-derived conditions such as fibrosis.

 

   

Selectively enter into licensing and collaboration arrangements to supplement our internal development capabilities

As we advance our pipeline of compounds, we will evaluate opportunities to selectively form collaborative alliances to expand our capabilities and product offerings into other therapeutic areas and potentially accelerate the development and commercialization of our products. We engage in conversations with third parties to evaluate such potential collaborations on an ongoing basis.

 

   

Expand our manufacturing capacity to support clinical trials and commercialization of VB-111

We currently manufacture clinical quantities of VB-111 at our facility in Israel and through a third party in the United States. We intend to construct a large-scale manufacturing facility that will enable us to manufacture commercial quantities of VB-111, if it receives regulatory approval, and potentially other product candidates.

Our current chief executive officer, Dror Harats, M.D., and our current chief scientific officer, Jacob George, M.D., founded our company in 2000 based on more than 15 years of prior research in atherosclerosis, vascular biology and lipid metabolism. We have assembled an experienced team with extensive drug development capabilities.

Risks That We Face

You should carefully consider the risks described under the “Risk Factors” section beginning on page 12. Some of these risks are:

 

   

we have incurred significant losses since our inception and anticipate that we will continue to incur significant losses for the foreseeable future;

 

   

our recurring operating losses have raised substantial doubt regarding our ability to continue as a going concern;

 

   

we currently depend heavily on the success of our lead products, VB-111 and VB-201. If we fail to successfully develop, obtain regulatory approval for and commercialize VB-111 for rGBM and VB-201 for psoriasis and for ulcerative colitis, independently or in cooperation with a third-party collaborator, or if we experience significant delays in doing so, it would compromise our ability to generate revenue and become profitable;

 

   

our product candidates are based on novel technologies, which makes it difficult to predict the time and cost of product candidate development and potential regulatory approval;

 

   

we may encounter substantial delays in our clinical trials or we may fail to demonstrate safety and efficacy to the satisfaction of applicable regulatory authorities;

 

 

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we expect to rely on third parties to conduct some or all aspects of our product manufacturing, protocol development, research and pre-clinical and clinical testing, and these third parties may not perform satisfactorily;

 

   

the commercial success of any current or future product candidate, if approved, will depend upon the degree of market acceptance by physicians, patients, third-party payors and others in the medical community; and

 

   

we expect to be classified as a passive foreign investment company for U.S. income tax purposes, and our U.S. shareholders may suffer adverse tax consequences as a result.

These and other risks described in this prospectus could materially and adversely impact our business, financial condition, operating results and cash flow, which could cause the trading price of our ordinary shares to decline and could result in a loss of your investment.

Our Corporate Information

The legal name of our company is Vascular Biogenics Ltd. and we conduct business under the name VBL Therapeutics. We were incorporated in Israel on January 27, 2000 as a company limited by shares under the name Medicard Ltd. In January 2003, we changed our name to Vascular Biogenics Ltd. Our registered and principal office is located at 6 Jonathan Netanyahu St., Or Yehuda, Israel 60376. Our service agent in the United States is located at c/o CT Corporation System, 111 8th Avenue, New York, New York 10011 and our telephone number is 972-3-6346450. Throughout this prospectus, we refer to various trademarks, service marks and trade names that we use in our business. The “Vascular Biogenics” design logo, “VBL Therapeutics,” “Vascular Targeting System,” “VTS,” “Lecinoxoids,” “VB-111,” “VB-201,” and other trademarks or service marks of Vascular Biogenics Ltd. appearing in this prospectus are the property of Vascular Biogenics Ltd. We have several other registered trademarks, service marks and pending applications relating to our products. Although we have omitted the “ ® ” and “™” trademark designations for such marks in this prospectus, all rights to such trademarks are nevertheless reserved. Other trademarks and service marks appearing in this prospectus are the property of their respective holders.

Our website address is www.vblrx.com. Information contained on, or accessible through, our website is not a part of this prospectus, and the inclusion of our website address in this prospectus is an inactive textual reference.

 

 

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The Offering

 

Issuer

Vascular Biogenics Ltd.

 

Ordinary shares offered

                ordinary shares

 

Ordinary shares to be outstanding immediately after this offering

                ordinary shares

 

Underwriters’ option to purchase additional shares

                ordinary shares

 

Offering price

$        per ordinary share

 

Proposed NASDAQ Global Market symbol

“VBLX”

 

Use of proceeds

We estimate that we will receive net proceeds from this offering of approximately $        million, or approximately $        million if the underwriters exercise their option to purchase additional ordinary shares in full, based upon an assumed initial public offering price of $        per ordinary share, the midpoint of the estimated price range set forth on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

 

  We expect to use the net proceeds from this offering to fund the clinical development of VB-111 and VB-201, the pre-clinical and early clinical development of follow-on Lecinoxoid product candidates, the construction of our VB-111 manufacturing facility and for working capital and general corporate purposes, including funding the costs of operating as a public company. See “Use of Proceeds” for additional information.

 

Tax considerations

Because we have no current revenue-producing operations, we expect to be treated as a passive foreign investment company, or PFIC, for our current taxable year and possibly thereafter. If we are characterized as a PFIC, our U.S. shareholders may suffer adverse tax consequences. See “Taxation—Certain Material U.S. Federal Income Tax Considerations—Passive Foreign Investment Company Considerations.”

 

 

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Risk factors

See “Risk Factors” and other information included in this prospectus for a discussion of risks you should carefully consider before investing in our ordinary shares.

The number of ordinary shares to be outstanding after this offering is based on 2,890,243 ordinary shares outstanding on an as-converted basis as of December 31, 2013 and excludes:

 

   

364,959 ordinary shares issuable upon the exercise of share options and warrants outstanding as of December 31, 2013 at a weighted average exercise price of $11.13 per share;

 

   

89,606 additional ordinary shares reserved for future issuance of share options and other share-based awards under our existing equity incentive plans, of which 83,313 ordinary shares underlie options to be granted immediately following the closing of this offering; and

 

   

             shares reserved for future issuance under our Employee Share Ownership and Option Plan (2014), or the 2014 Plan, as well as shares originally reserved under our Employee Share Ownership and Option Plan (2000) and Employee Share Ownership and Option Plan (2011), but which may become available for awards under the 2014 Plan, which plan will become effective in connection with this offering and contains provisions that will automatically increase its share reserve each year, as more fully described in “Management—Share Incentive Plans.”

Except as otherwise indicated, the information in this prospectus:

 

   

gives effect to the sale of 91,798 Series E preferred shares in our Series E financing that closed on May 15, 2014;

 

   

gives effect to the conversion of our convertible loan into an aggregate of 240,496 Series E preferred shares on May 15, 2014;

 

   

gives effect to the conversion of all of our outstanding preferred shares, including those issued in the Series E financing and upon conversion of our convertible loan, into an aggregate of 2,569,972 ordinary shares, which will occur immediately prior to the closing of this offering;

 

   

gives effect to the issuance of 76,217 ordinary shares immediately prior to the closing of this offering pursuant to anti-dilution rights;

 

   

assumes no exercise or grant of options or warrants after December 31, 2013;

 

   

gives effect to a       -for-       share split of our ordinary shares by way of an issuance of          bonus shares for each ordinary share prior to the completion of this offering; and

 

   

assumes no exercise by the underwriters of their option to acquire up to an additional                 ordinary shares in this offering.

 

 

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Summary Financial Data

The following tables summarize certain financial data for our business. You should read the following summary financial data in conjunction with “Selected Financial Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and related notes included elsewhere in this prospectus.

We derived the statement of comprehensive loss data for the years ended December 31, 2012 and 2013 and the statement of financial position data as of December 31, 2013 from our audited financial statements included elsewhere in this prospectus. Our historical results are not necessarily indicative of the results that should be expected in any future period. Our financial statements have been prepared in accordance with International Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board.

 

     Year ended December 31,  
     2012     2013  
     (in thousands, except per-
share data)
 

Statement of comprehensive loss data:

    

Research and development expenses, net

   $ 10,572     $ 13,508   

General and administrative expenses

     1,897       2,452  
  

 

 

   

 

 

 

Operating loss

     12,469       15,960  
  

 

 

   

 

 

 

Financial income

     (295     (240

Financial expenses:

    

Loss from change in fair value of convertible loan

     -        1,638   

Other financial expenses

     51       12  
  

 

 

   

 

 

 

Financial expenses (income), net

     (244     1,410   
  

 

 

   

 

 

 

Loss

   $ 12,225     $ 17,370  
  

 

 

   

 

 

 

Loss per ordinary share, basic and diluted (1)

   $ 50.09     $ 71.17   
  

 

 

   

 

 

 

Weighted average ordinary shares outstanding, basic and diluted (1)

     244,054        244,054   
  

 

 

   

 

 

 

Pro forma loss per share attributable to ordinary shareholders, basic and diluted (unaudited) (1)

     $ 5.87   
    

 

 

 

Pro forma weighted average ordinary shares outstanding, basic and diluted (unaudited) (1)

       2,678,197   
    

 

 

 

 

(1) See Note 13 to our financial statements for further details on the calculation of basic and diluted loss per ordinary share and the calculation of basic and diluted pro forma loss per share attributable to ordinary shareholders.

 

 

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The following table presents our statement of financial position data:

 

   

on an actual basis;

 

   

on a pro forma basis to give effect to (i) the sale of 91,798 Series E preferred shares in our Series E financing that closed on May 15, 2014 for $4.9 million, (ii) the conversion of our convertible loan into 240,496 additional Series E preferred shares in connection with such financing, (iii) the conversion of all of our outstanding preferred shares, including those issued in the Series E financing and upon conversion of our convertible loan, into 2,569,972 ordinary shares immediately prior to the closing of this offering, (iv) the issuance of 76,217 ordinary shares immediately prior to the closing of this offering pursuant to certain anti-dilution rights set forth in our articles of association, and (v) the adoption of our amended and restated articles of association prior to the closing of this offering; and

 

   

on a pro forma as adjusted basis to give further effect to our issuance and sale of                  ordinary shares in this offering at an assumed initial public offering price of $         per ordinary share, the midpoint of the estimated price range set forth on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

 

     December 31, 2013  
    

Actual

   

Pro forma

    Pro forma as
adjusted
 
     (in thousands)  

Statement of financial position data :

      

Cash and cash equivalents and short-term bank deposits

   $ 10,871     $ 15,809 (1)     $            

Total assets

     11,827       16,725 (1)    

Total liabilities

     35,410        4,371     

Total equity (capital deficiency)

     (23,583     12,394     

 

(1) Does not reflect cash expenditures since December 31, 2013.

The pro forma and pro forma as adjusted information above is illustrative only, and our financial position following the completion of this offering will depend on the actual initial public offering price and other terms of our initial public offering determined at pricing. A $1.00 increase (decrease) in the assumed initial public offering price of $         per ordinary share, the midpoint of the estimated price range set forth on the cover page of this prospectus, would increase (decrease) the pro forma as adjusted total amount of each of cash and cash equivalents and short-term bank deposits, additional paid in capital, total equity (capital deficiency) and total capitalization by $         million, assuming that the number of shares offered by us, as set forth on the cover of this prospectus, remains the same, and after deducting the estimated underwriting discounts and commissions and estimated offering costs payable by us. Similarly, each increase (decrease) of one million shares in the number of ordinary shares offered by us would increase (decrease) those same amounts by $         million, assuming the assumed initial public offering price remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

 

 

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RISK FACTORS

An investment in our ordinary shares involves a high degree of risk. You should carefully consider the following information about these risks, together with the other information appearing elsewhere in this prospectus, including our financial statements and related notes thereto, before deciding to invest in our ordinary shares. The occurrence of any of the following risks could have a material adverse effect on our business, financial condition, results of operations and future growth prospects. In these circumstances, the market price of our ordinary shares could decline, and you may lose all or part of your investment.

Risks Related to Our Financial Condition and Capital Requirements

We have incurred significant losses since our inception and anticipate that we will continue to incur significant losses for the foreseeable future.

We are a clinical-stage biotechnology company, and we have not yet generated any revenue. We have incurred losses in each year since our inception in 2000, including net losses of $12.2 million and $17.4 million for the years ended December 31, 2012 and 2013, respectively. As of December 31, 2013, we had an accumulated deficit of $109.8 million.

We have devoted most of our financial resources to research and development, including our clinical and pre-clinical development activities. To date, we have financed our operations primarily through the sale of equity securities and convertible debt and, to a lesser extent, through grants from governmental agencies. The amount of our future net losses will depend, in part, on the rate of our future expenditures and our ability to obtain funding through equity or debt financings, strategic collaborations or additional grants. We have not completed pivotal clinical trials for any product candidate and it will be several years, if ever, before we have a product candidate ready for commercialization. Even if we obtain regulatory approval to market a product candidate, our future revenues will depend upon the size of any markets in which our product candidates have received approval, and our ability to achieve sufficient market acceptance, reimbursement from third-party payors and adequate market share for our product candidates in those markets.

We expect to continue to incur significant expenses and increasing operating losses for the foreseeable future. We anticipate that our expenses will increase substantially if and as we:

 

   

continue our research and pre-clinical and clinical development of our product candidates;

 

   

expand the scope of our current clinical trials for our product candidates;

 

   

initiate additional pre-clinical, clinical or other studies for our product candidates;

 

   

seek regulatory and marketing approvals for any of our product candidates that successfully complete clinical trials;

 

   

further develop the manufacturing process for our product candidates;

 

   

establish a manufacturing facility for our product candidates in Israel as a second source facility and as part of our efforts to comply with the Law for Encouragement of Industrial Research and Development—1984, and the rules and regulations promulgated thereunder, or the Research Law, and any related grant approval letter;

 

   

change or add additional manufacturers or suppliers;

 

   

establish a sales, marketing and distribution infrastructure to commercialize any products for which we may obtain marketing approval;

 

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seek to identify and validate additional product candidates;

 

   

acquire or in-license other product candidates and technologies;

 

   

make milestone or other payments under any in-license or other intellectual property related agreements, including our agreement with Tel Hashomer—Medical Research, Infrastructure and Services Ltd. and our license from Crucell Holland B.V., or Crucell, and any other licensing arrangements we may enter into the future;

 

   

maintain, protect and expand our intellectual property portfolio;

 

   

attract and retain skilled personnel;

 

   

create additional infrastructure to support our operations as a public company; and

 

   

experience any delays or encounter issues with any of the above.

The net losses we incur may fluctuate significantly from quarter to quarter and year to year, such that a period-to-period comparison of our results of operations may not be a good indication of our future performance. In any particular quarter or quarters, our operating results could be below the expectations of securities analysts or investors, which could cause our share price to decline.

Our recurring operating losses have raised substantial doubt regarding our ability to continue as a going concern.

We have not commercialized any products or generated any revenue since our inception. We have incurred operating losses in each year since our inception. Our recurring operating losses raise substantial doubt about our ability to continue as a going concern. As a result, for the year ended December 31, 2013, our independent registered public accounting firm has issued its report on our financial statements and has expressed substantial doubt about our ability to continue as a going concern. We have no current source of revenue to sustain our present activities, and we do not expect to generate revenue until, and unless, the FDA or other regulatory authorities approve and we successfully commercialize our product candidates, including VB-111 and VB-201. Accordingly, our ability to continue as a going concern will require us to obtain additional financing to fund our operations, such as the proceeds from this offering. The perception that we might be unable to continue as a going concern may make it more difficult for us to obtain financing for the continuation of our operations and could result in the loss of confidence by investors, suppliers and employees.

We have never generated any revenue from product sales and may never be profitable.

Our ability to generate revenue and achieve profitability depends on our ability, alone or with strategic collaboration partners, to successfully complete the development of, obtain the regulatory approvals of, and commercialize our product candidates. We do not anticipate generating revenues from product sales for the foreseeable future, if ever. Our ability to generate future revenues from product sales depends heavily on our success in:

 

   

completing research and pre-clinical and clinical development of our product candidates;

 

   

seeking and obtaining regulatory and marketing approvals for product candidates for which we complete clinical trials;

 

   

developing a sustainable, scalable, reproducible, and transferable manufacturing process for our product candidates;

 

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establishing and maintaining supply and manufacturing relationships with third parties that can provide products and services adequate, in amount and quality, to support clinical development and the market demand for our product candidates, if approved;

 

   

launching and commercializing any product candidates for which we obtain regulatory and marketing approval, either by collaborating with a partner or, if launched independently, by establishing a sales, marketing and distribution infrastructure;

 

   

obtaining market acceptance of any product candidates that receive regulatory approval as viable treatment options;

 

   

addressing any competing technological and market developments;

 

   

implementing additional internal systems and infrastructure, as needed;

 

   

identifying and validating new product candidates;

 

   

negotiating favorable terms in any collaboration, licensing or other arrangements into which we may enter;

 

   

maintaining, protecting and expanding our portfolio of intellectual property rights, including patents, trade secrets and know-how; and

 

   

attracting, hiring and retaining qualified personnel.

Even if one or more of our product candidates is approved for commercial sale, we anticipate incurring significant costs associated with commercializing any approved product candidate. Our expenses could increase beyond expectations if we are required by the FDA, the European Medicines Agency, or the EMA, or other regulatory agencies, domestic or foreign, to perform clinical and other studies in addition to those that we currently anticipate. Even if we are able to generate revenues from the sale of any approved products, we may not become profitable and may need to obtain additional funding to continue operations.

Even if this offering is successful, we will need to raise additional funding, which may not be available on acceptable terms, or at all. Failure to obtain this necessary capital when needed may force us to delay, limit or terminate our product development efforts or other operations.

We are currently advancing VB-111 for rGBM, thyroid cancer and ovarian cancer, and VB-201 for psoriasis and ulcerative colitis. We intend to advance these current clinical product candidates through clinical development and other product candidates through pre-clinical and clinical development. Developing pharmaceutical products is expensive, and we expect our research and development expenses to increase substantially in connection with our ongoing activities, particularly as we advance our product candidates in clinical trials.

As of May 31, 2014, our cash and cash equivalents and short-term bank deposits were $10.9 million. We estimate that the net proceeds from this offering will be approximately $        million, assuming an initial public offering price of $        per share, the midpoint of the price range set forth on the cover of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. We estimate that these net proceeds, together with our existing cash, cash equivalents and short-term bank deposits, will be sufficient to fund our operations for at least the next             months. However, our operating plan may change as a result of many factors currently unknown to us, and we may need to seek additional funds sooner than planned, through public or private equity or debt financings, government or other third-party funding, marketing and distribution arrangements and other collaborations, strategic alliances and licensing arrangements or a combination of these approaches. In any event, we will require additional capital to obtain

 

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regulatory approval for our product candidates, and to commercialize any that receive regulatory approval. Raising funds in the current economic environment may present additional challenges. Even if we believe we have sufficient funds for our current or future operating plans, we may seek additional capital if market conditions are favorable or if we have specific strategic considerations.

Any additional fundraising efforts may divert our management from their day-to-day activities, which may compromise our ability to develop and commercialize our product candidates. In addition, we cannot guarantee that future financing will be available in sufficient amounts or on terms acceptable to us, if at all. Moreover, the terms of any financing may adversely affect the holdings or the rights of our shareholders, and the issuance of additional securities, whether equity or debt, by us, or the possibility of such issuance, may cause the market price of our ordinary shares to decline. The sale of additional equity or convertible securities would dilute all of our shareholders. The incurrence of indebtedness would result in increased fixed payment obligations and we may be required to agree to certain restrictive covenants, such as limitations on our ability to incur additional debt, limitations on our ability to acquire, sell or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. We could also be required to seek funds through arrangements with collaborative partners or otherwise at an earlier stage than otherwise would be desirable and we may be required to relinquish rights to some of our technologies or product candidates or otherwise agree to terms unfavorable to us.

If we are unable to obtain funding on a timely basis, we may be required to significantly curtail, delay or discontinue one or more of our research or development programs or the commercialization of any product candidates, and we may be unable to expand our operations or otherwise capitalize on our business opportunities, as desired.

We have received and may continue to receive Israeli governmental grants to assist in the funding of our research and development activities. If we lose our funding from these research and development grants, we may encounter difficulties in the funding of future research and development projects and implementing technological improvements, which would harm our operating results.

Through May 31, 2014 we had received an aggregate of $15.5 million in the form of grants from the Israeli Office of the Chief Scientist, or OCS. The requirements and restrictions for such grants are found in the Research Law. Under the Research Law, royalties of 3% to 3.5% on the revenues derived from sales of products or services developed in whole or in part using these OCS grants are payable to the Israeli government. We developed both of our platform technologies, at least in part, with funds from these grants, and accordingly we would be obligated to pay these royalties on sales of any of our product candidates that achieve regulatory approval. The maximum aggregate royalties paid generally cannot exceed 100% of the grants made to us, plus annual interest equal to the 12-month LIBOR applicable to dollar deposits, as published on the first business day of each calendar year. As of December 31, 2013, the balance of the principal and interest in respect of our commitments for future payments to the OCS totaled approximately $17.1 million. As of December 31, 2013, we had not paid any royalties to the OCS. As part of funding our current and planned product development activities, we plan to submit follow-up grant applications totaling between $1.5 million and $3.0 million for 2014 and 2015.

These grants have funded some of our personnel, development activities with subcontractors and other research and development costs and expenses. However, if these awards are not funded in their entirety or if new grants are not awarded in the future, due to, for

 

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example, OCS budget constraints or governmental policy decisions, our ability to fund future research and development and implement technological improvements would be impaired, which would negatively impact our ability to develop our product candidates. For example, in August 2012, the OCS rejected our Lecinoxoid project application due to budgetary constraints and their view of the status of our Lecinoxoid program at that time.

The Israeli government grants we have received for research and development expenditures restrict our ability to manufacture products and transfer technologies outside of Israel and require us to satisfy specified conditions. If we fail to satisfy these conditions, we may be required to refund grants previously received together with interest and penalties.

Our research and development efforts have been financed, in part, through the grants that we have received from the OCS. We, therefore, must comply with the requirements of the Research Law.

Under the Research Law, we are prohibited from manufacturing products developed using these grants outside of the State of Israel without special approvals. We may not receive the required approvals for any proposed transfer of manufacturing activities. Even if we do receive approval to manufacture products developed with government grants outside of Israel, the royalty rate may be increased and we may be required to pay up to 300% of the grant amounts plus interest, depending on the manufacturing volume that is performed outside of Israel. This restriction may impair our ability to outsource manufacturing or engage in our own manufacturing operations for those products or technologies. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Financial Overview—Research and Development Expenses” for additional information.

Additionally, under the Research Law, we are prohibited from transferring, including by way of license, the OCS-financed technologies and related intellectual property rights and know-how outside of the State of Israel, except under limited circumstances and only with the approval of the OCS Research Committee. We may not receive the required approvals for any proposed transfer and, even if received, we may be required to pay the OCS a portion of the consideration that we receive upon any sale of such technology to a non-Israeli entity up to 600% of the grant amounts plus interest. The scope of the support received, the royalties that we have already paid to the OCS, the amount of time that has elapsed between the date on which the know-how or the related intellectual property rights were transferred and the date on which the OCS grants were received and the sale price and the form of transaction will be taken into account in order to calculate the amount of the payment to the OCS. Approval of the transfer of technology to residents of the State of Israel is required, and may be granted in specific circumstances only if the recipient abides by the provisions of applicable laws, including the restrictions on the transfer of know-how and the obligation to pay royalties. No assurance can be made that approval to any such transfer, if requested, will be granted.

These restrictions may impair our ability to sell our technology assets or to perform or outsource manufacturing outside of Israel, engage in change of control transactions or otherwise transfer our know-how outside of Israel and may require us to obtain the approval of the OCS for certain actions and transactions and pay additional royalties and other amounts to the OCS. In addition, any change of control and any change of ownership of our ordinary shares that would make a non-Israeli citizen or resident an “interested party,” as defined in the Research Law, requires prior written notice to the OCS, and our failure to comply with this requirement could result in criminal liability.

These restrictions will continue to apply even after we have repaid the full amount of royalties on the grants. For the years ended December 31, 2012 and December 31, 2013, we

 

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recorded grants totaling $2.4 million and $0.6 million from the OCS, respectively. The grants represented 18% and 4%, respectively, of our gross research and development expenditures for the years ended December 31, 2012 and December 31, 2013. If we fail to satisfy the conditions of the Research Law, we may be required to refund certain grants previously received together with interest and penalties, and may become subject to criminal charges.

Risks Related to the Discovery and Development of Our Product Candidates

We currently depend heavily on the future success of our lead product candidates, VB-111 and VB-201. Any failure to successfully develop, obtain regulatory approval for and commercialize VB-111 for rGBM, and VB-201 for psoriasis and for ulcerative colitis, independently or in cooperation with a third party collaborator, or the experience of significant delays in doing so, would compromise our ability to generate revenue and become profitable.

We have invested a significant portion of our efforts and financial resources in the development of VB-111 for rGBM, for which we are completing our Phase 2 clinical trial and intend to commence a Phase 3 pivotal trial, and VB-201 for psoriasis and ulcerative colitis for which we are currently in Phase 2 clinical trials. Our ability to generate product revenue from our product candidates depends heavily on the successful development and commercialization of our products, which, in turn, depends on several factors, including the following:

 

   

our ability to continue and support two distinct and separate platform technologies and programs;

 

   

successfully completing our ongoing and future trials of VB-111 for rGBM and of VB-201 for psoriasis and ulcerative colitis;

 

   

demonstrating that VB-111 for rGBM and VB-201 for psoriasis and ulcerative colitis are safe and effective at a sufficient level of statistical or clinical significance and otherwise obtaining marketing approvals from regulatory authorities;

 

   

establishing successful manufacturing arrangements with third-party manufacturers that are compliant with current good manufacturing practices, or cGMP, and which will ensure the development of a large scale manufacturing process and adequate facilities or being able to conduct such manufacturing ourselves;

 

   

establishing a facility as a second source for the manufacture of commercial quantities of VB-111, if approved;

 

   

establishing successful sales and marketing arrangements for VB-111 and VB-201, if approved;

 

   

maintaining an acceptable safety and efficacy profile for each of VB-111 and VB-201;

 

   

the availability of coverage and reimbursement to patients from healthcare payors for VB-111 and VB-201, if approved; and

 

   

other risks described in these “Risk Factors.”

Our product candidates are based on novel technologies, which makes it difficult to predict the time and cost of product candidate development and potential regulatory approval.

We have concentrated our product research and development efforts on our two distinct platform technologies, and our future success depends on the successful development of these technologies. We could experience development problems in the future related to our technologies, which could cause significant delays or unanticipated costs, and we may not be able to solve such development problems. We may also experience delays in developing a sustainable, reproducible and scalable manufacturing process or transferring that process to

 

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commercial partners, if we decide to do so, which may prevent us from completing our clinical trials or commercializing our products on a timely or profitable basis, if at all.

In addition, the clinical trial requirements of the FDA, the EMA and other regulatory agencies and the criteria these regulators use to determine the safety and efficacy of a product candidate vary substantially according to the type, complexity, novelty and intended use and market of the potential products. The regulatory approval process for novel product candidates such as ours can be more expensive and take longer than for other, better known or extensively studied pharmaceutical or other product candidates. Approvals by the FDA may not be indicative of what the EMA or other regulatory agencies may require for approval, and vice versa.

Regulatory requirements governing pharmaceutical products have changed frequently and may continue to change in the future. Also, before a clinical trial can begin at an institution funded by the U.S. National Institutes of Health, or the NIH, that institution’s institutional review board, or IRB, and its Institutional Biosafety Committee will have to review the proposed clinical trial to assess the safety of the trial. In addition, adverse developments in clinical trials of pharmaceutical products conducted by others may cause the FDA or other regulatory bodies to change the requirements for approval of any of our product candidates.

These regulatory agencies and review committees and the new requirements and guidelines they promulgate may lengthen the regulatory review process, require us to perform additional studies, increase our development costs, lead to changes in regulatory positions and interpretations, delay or prevent approval and commercialization of these treatment candidates or lead to significant post-approval limitations or restrictions. As we advance our product candidates, we will be required to consult with these regulatory groups, and comply with applicable requirements and guidelines. If we fail to do so, we may be required to delay or discontinue development of our product candidates. Delay or failure to obtain, or unexpected costs in obtaining, the regulatory approval necessary to bring a potential product candidate to market could impair our ability to generate product revenue and to become profitable.

We may find it difficult to enroll patients in our clinical trials, and patients could discontinue their participation in our clinical trials, which could delay or prevent clinical trials of our product candidates.

Identifying and qualifying patients to participate in clinical trials of our product candidates is critical to our success. The timing of our clinical trials depends on the speed at which we can recruit patients to participate in testing our product candidates. We have experienced delays in some of our clinical trials, and we may experience similar delays in the future. If patients are unwilling to participate in our clinical trials because of negative publicity from adverse events in the biotechnology or pharmaceutical industries or for other reasons, including competitive clinical trials for similar patient populations, the timeline for recruiting patients, conducting trials and obtaining regulatory approval of potential products may be delayed. These delays could result in increased costs, delays in advancing our product development, delays in testing the effectiveness of our technology or termination of the clinical trials altogether.

We may not be able to identify, recruit and enroll a sufficient number of patients, or those with required or desired characteristics to achieve diversity in a trial, to complete our clinical trials in a timely manner. Patient enrollment is affected by factors including:

 

   

severity of the disease under investigation;

 

   

design of the trial protocol;

 

   

size of the patient population;

 

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eligibility criteria for the trial in question;

 

   

perceived risks and benefits of the product candidate under study;

 

   

proximity and availability of clinical trial sites for prospective patients;

 

   

availability of competing therapies and clinical trials;

 

   

efforts to facilitate timely enrollment in clinical trials;

 

   

patient referral practices of physicians; and

 

   

ability to monitor patients adequately during and after treatment.

In particular, VB-111 for rGBM is intended for a rare disorder with limited patient pools from which to draw for clinical trials. The eligibility criteria of our clinical trials will further limit the pool of available trial participants. Additionally, the process of finding and diagnosing patients may prove costly.

We plan to seek initial marketing approval in Europe in addition to the United States. We may not be able to initiate or continue clinical trials if we cannot enroll a sufficient number of eligible patients to participate in the clinical trials required by the EMA or other foreign regulatory agencies. Our ability to successfully initiate, enroll and complete a clinical trial in any foreign country is subject to numerous risks unique to conducting business in foreign countries, including:

 

   

difficulty in establishing or managing relationships with contract research organizations, or CROs, and physicians;

 

   

different standards for the conduct of clinical trials;

 

   

our inability to locate qualified local consultants, physicians and partners; and

 

   

the potential burden of complying with a variety of foreign laws, medical standards and regulatory requirements, including the regulation of pharmaceutical and biotechnology products and treatment.

If we have difficulty enrolling a sufficient number of patients to conduct our clinical trials as planned, we may need to delay, limit or terminate ongoing or planned clinical trials.

In addition, patients enrolled in our clinical trials may discontinue their participation at any time during the trial as a result of a number of factors, including withdrawing their consent or experiencing adverse clinical events, which may or may not be judged related to our product candidates under evaluation. The discontinuation of patients in any one of our trials may cause us to delay or abandon our clinical trial, or cause the results from that trial not to be positive or sufficient to support a filing for regulatory approval of the applicable product candidate.

We may encounter substantial delays in our clinical trials or we may fail to demonstrate safety and efficacy to the satisfaction of applicable regulatory authorities.

We are currently in Phase 2 clinical trials for VB-111 for rGBM and VB-201 for psoriasis and ulcerative colitis. Before obtaining marketing approval from regulatory authorities for the sale of our product candidates, we must conduct extensive clinical trials to demonstrate the safety and efficacy of the product candidates in humans. Clinical testing is expensive, time-consuming and uncertain as to outcome. We cannot guarantee that any clinical trials will be conducted as planned or completed on schedule, if at all. A failure of one or more clinical trials can occur at any stage of testing. Events that may prevent successful or timely completion of clinical development include:

 

   

delays in reaching a consensus with regulatory agencies on trial design;

 

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delays in reaching agreement on acceptable terms with prospective CROs and clinical trial sites;

 

   

delays in obtaining required IRB approval at each clinical trial site;

 

   

delays in recruiting suitable patients to participate in our clinical trials including in particular for those trials for rare diseases such as rGBM;

 

   

imposition of a clinical hold by regulatory agencies, including after an inspection of our clinical trial operations or trial sites;

 

   

failure by our CROs, other third parties or us to adhere to clinical trial requirements;

 

   

failure to perform in accordance with the FDA’s good clinical practices, or GCP, or applicable regulatory requirements in other countries;

 

   

delays in the testing, validation, manufacturing and delivery of our product candidates to the clinical sites;

 

   

delays in having patients complete participation in a trial or return for post-treatment follow-up;

 

   

clinical trial sites or patients dropping out of a trial;

 

   

occurrence of serious adverse events associated with the product candidate that are viewed to outweigh its potential benefits; or

 

   

changes in regulatory requirements and guidance that require amending or submitting new clinical trial protocols.

Any inability to successfully complete pre-clinical and clinical development could result in additional costs to us or impair our ability to generate revenue from product sales. In addition, if we make manufacturing or formulation changes to our product candidates, we may need to conduct additional studies to bridge our modified product candidates to earlier versions. Clinical trial delays could also shorten any periods during which we may have the exclusive right to commercialize our product candidates or allow our competitors to bring products to market before we do, which could impair our ability to successfully commercialize our product candidates.

If the results of our clinical trials are inconclusive or if there are safety concerns or adverse events associated with our product candidates, we may:

 

   

fail to obtain, or be delayed in obtaining, marketing approval for our product candidates;

 

   

obtain approval for indications or patient populations that are not as broad as intended or desired;

 

   

obtain approval with labeling that includes significant use or distribution restrictions or safety warnings;

 

   

need to change the way the product is administered;

 

   

be required to perform additional clinical trials to support approval or be subject to additional post-marketing testing requirements;

 

   

have regulatory authorities withdraw their approval of the product or impose restrictions on its distribution in the form of a risk evaluation and mitigation strategy, or REMS, or modified REMS;

 

   

be subject to the addition of labeling statements, such as warnings or contraindications;

 

   

be sued; or

 

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experience damage to our reputation.

Any of these events could prevent us from achieving or maintaining market acceptance of our product candidates and impair our ability to commercialize our product candidates.

Side effects may occur following treatment with our product candidates, which could make it more difficult for our product candidates to receive regulatory approval.

Treatment with our product candidates may cause side effects or adverse events. In addition, since our product candidates are in some cases administered in combination with other therapies, patients or clinical trial participants may experience side effects or other adverse events that are unrelated to our product candidate, but may still impact the success of our clinical trials. Additionally, our product candidates could potentially cause other adverse events that have not yet been predicted. The inclusion of critically ill patients in our clinical trials may result in deaths or other adverse medical events due to other therapies or medications that such patients may be using or the severity of the medical condition treated. The experience of side effects and adverse events in our clinical trials could make it more difficult to achieve regulatory approval of our product candidates or, if approved, could negatively impact the market acceptance of such products.

Success in early clinical trials may not be indicative of results obtained in later trials.

There is a high failure rate for drugs and biologics proceeding through clinical trials. A number of companies in the pharmaceutical and biotechnology industries have suffered significant setbacks in later stage clinical trials even after achieving promising results in earlier stage clinical trials. Data obtained from pre-clinical and clinical activities are subject to varying interpretations, which may delay, limit or prevent regulatory approval. In addition, regulatory delays or rejections may be encountered as a result of many factors, including changes in regulatory policy during the period of product development.

The FDA may not agree to consider a single Phase 3 trial to be a pivotal trial sufficient for the approval of VB-111 for rGBM. Moreover, even if we reach agreement with the FDA on an SPA relating to our proposed pivotal Phase 3 clinical trial of VB-111 for rGBM, this agreement does not guarantee any particular outcome with respect to regulatory review of the pivotal trial or with respect to regulatory approval of VB-111.

The FDA normally requires two pivotal clinical trials to approve a biologic or drug product. The FDA typically does not consider a single clinical trial to be adequate to serve as a pivotal trial unless it is, among other things, well-controlled and demonstrates a clinically meaningful effect on mortality, irreversible morbidity, or prevention of a disease with potentially serious outcome, and a confirmatory trial would be practically or ethically impossible. We intend to seek an SPA from the FDA for a single pivotal trial for VB-111 for rGBM. However, there can be no guarantee that we and the FDA will agree to the terms of an SPA that would permit us to conduct a single pivotal trial. Even if we reach agreement with the FDA on an SPA and even if we believe that the data from the pivotal Phase 3 clinical trial are supportive, an SPA is not a guarantee of approval, and we cannot be certain that the design of, or data collected from, the pivotal Phase 3 clinical trial will be adequate to demonstrate the safety, purity and potency of VB-111 for the potential treatment of rGBM, or will otherwise be sufficient to support FDA or any foreign regulatory approvals.

Further, an SPA is not binding on the FDA if public health concerns unrecognized at the time the SPA is entered into become evident, other new scientific concerns regarding product

 

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safety or efficacy arise, or if we fail to comply with the agreed upon trial protocol. In addition, an SPA may be changed on written agreement of both parties, and the FDA retains significant latitude and discretion in interpreting the terms of an SPA and the data and results of clinical trials conducted under an SPA. Therefore, even if we agree to the terms of an SPA with the FDA, significant uncertainty would remain regarding the clinical development of, and regulatory approval process for, VB-111 for rGBM, and it is possible that we might never receive any regulatory approvals for VB-111.

The results from our clinical trials may not be sufficiently robust to support the submission for marketing approval for our product candidates. Before we submit our product candidates for marketing approval, the FDA and the EMA may require us to conduct additional clinical trials, or evaluate subjects for an additional follow-up period.

It is possible that, even if we achieve favorable results in our clinical trials, the FDA may require us to conduct additional clinical trials, possibly involving a larger sample size or a different clinical trial design, particularly if the FDA does not find the results from our completed clinical trials to be sufficiently persuasive to support a Biologics License Application, or BLA, or a New Drug Application, or NDA. For example, because the dose we used in our Phase 2 trial was limited by our production capacity, the dose of VB-111 that we intend to use in our Phase 3 pivotal trial may not be the maximum efficacious dose. If the FDA requires data on higher doses of VB-111, this will likely delay development or prevent approval of VB-111 for rGBM. The FDA may also require that we conduct a longer follow-up period of subjects treated with our product candidates prior to accepting our BLA or NDA.

It is possible that the FDA or the EMA may not consider the results of our clinical trials to be sufficient for approval of our product candidates for their target indications. For example, our current Phase 2 clinical trials of VB-201 are being conducted solely in the European Union and Israel, and the population studied in the clinical programs may not be sufficiently broad or representative to predict safety or efficacy in the full population for which we eventually may conduct Phase 3 development, including in the United States. If the FDA or the EMA requires additional studies for this or other reasons, we would incur increased costs and delays in the marketing approval process, which may require us to expend more resources than we have available. In addition, it is possible that the FDA and the EMA may have divergent opinions on the elements necessary for a successful BLA or NDA and Marketing Authorization Application, which is the equivalent of a BLA, respectively, which may cause us to alter our development, regulatory or commercialization strategies.

Even if we complete the necessary pre-clinical studies and clinical trials, we cannot predict when or if we will obtain regulatory approval to commercialize a product candidate or the approval may be for a more narrow indication than we expect.

We cannot commercialize a product until the appropriate regulatory authorities have reviewed and approved the product candidate. Even if our product candidates demonstrate safety and efficacy in clinical trials, the regulatory agencies may not complete their review processes in a timely manner, or we may not be able to obtain regulatory approval. Additional delays may result if an FDA Advisory Committee or other regulatory authority recommends non-approval or restrictions on approval. In addition, we may experience delays or rejections based upon additional government regulation from future legislation or administrative action, or changes in regulatory agency policy during the period of product development, clinical trials and the review process. Regulatory agencies also may approve a treatment candidate for fewer or more limited indications than requested or may grant approval subject to the performance of post-marketing

 

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studies. In addition, regulatory agencies may not approve the labeling claims that are necessary or desirable for the successful commercialization of our treatment candidates.

A fast track designation by the FDA may not actually lead to a faster development or regulatory review or approval process.

If a drug is intended for the treatment of a serious or life-threatening disease or condition and the drug demonstrates the potential to address unmet medical needs for this disease or condition, the drug sponsor may apply for FDA fast track designation. If fast track designation is obtained, the FDA may initiate review of sections of a new drug application, or NDA, before the application is complete. This “rolling review” is available if the applicant provides, and the FDA approves, a schedule for submission of the individual sections of the application.

We have received fast track designation from the FDA for VB-111 for prolongation of survival in patients with glioblastoma that has recurred following treatment with temozolomide, a chemotherapeutic agent commonly used to treat newly diagnosed glioblastoma, and radiation. We may seek fast track designation for other product candidates and other indications. Even though we have received fast track designation, we may not experience a faster development process, review or approval compared to conventional FDA procedures. The FDA may withdraw fast track designation if it believes that the designation is no longer supported by data from our clinical development program. Our fast track designation does not guarantee that we will qualify for or be able to take advantage of the expedited review procedures or that we will ultimately obtain regulatory approval of VB-111.

Even though we have obtained orphan drug designation for VB-111 for treatment of malignant glioma in the United States and glioma in Europe, we may not be able to obtain orphan drug exclusivity for this drug or for any of our other product candidates.

Regulatory authorities in some jurisdictions, including the United States and Europe, may designate drugs for relatively small patient populations as orphan drugs. Under the Orphan Drug Act, the FDA may designate a product as an orphan drug if it is a drug intended to treat a rare disease or condition, which is generally defined as a patient population of fewer than 200,000 individuals annually in the United States. For VB-111, we have obtained orphan drug designation from the FDA for the treatment of malignant glioma and the EMA for the treatment of glioma, and we may seek orphan drug designation for other drug candidates.

Generally, if a product with an orphan drug designation subsequently receives the first marketing approval for the indication for which it has such designation, the product is entitled to a period of marketing exclusivity, which precludes the EMA or the FDA from approving another marketing application for the same drug for the same use or indication for that time period. The applicable period is seven years in the United States and ten years in Europe. The European exclusivity period can be reduced to six years if a drug no longer meets the criteria for orphan drug designation or if the drug is sufficiently profitable so that market exclusivity is no longer justified. Orphan drug exclusivity may be lost if the FDA or EMA determines that the request for designation was materially defective or if the manufacturer is unable to assure sufficient quantity of the drug to meet the needs of patients with the rare disease or condition.

Even if we obtain orphan drug exclusivity for a product, that exclusivity may not effectively protect the product from competition because different drugs can be approved for the same condition. Even after an orphan drug is approved, the FDA can subsequently approve the same drug for the same condition if the FDA concludes that the later drug is clinically superior in that it is shown to be safer, more effective or makes a major contribution to patient care.

 

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Even if we obtain regulatory approval for a product candidate, our products will remain subject to regulatory scrutiny.

Even if we obtain regulatory approval in a jurisdiction, the regulatory authority may still impose significant restrictions on the indicated uses or marketing of our product candidates, or impose ongoing requirements for potentially costly post-approval studies or post-market surveillance. For example, the holder of an approved BLA is obligated to monitor and report adverse events and any failure of a product to meet the specifications in the BLA. The holder of an approved BLA must also submit new or supplemental applications and obtain FDA approval for certain changes to the approved product, product labeling or manufacturing process. Advertising and promotional materials must comply with FDA rules and are subject to FDA review, in addition to other potentially applicable federal and state laws.

In addition, product manufacturers and their facilities are subject to payment of user fees and continual review and periodic inspections by the FDA and other regulatory authorities for compliance with cGMP, and adherence to commitments made in the BLA or NDA as the case may be. If we or a regulatory agency discover previously unknown problems with a product such as adverse events of unanticipated severity or frequency, or problems with the facility where the product is manufactured, a regulatory agency may impose restrictions relative to that product or the manufacturing facility, including requiring recall or withdrawal of the product from the market or suspension of manufacturing.

If we fail to comply with applicable regulatory requirements following approval of any of our product candidates, a regulatory agency may:

 

   

issue a warning letter asserting that we are in violation of the law;

 

   

seek an injunction or impose civil or criminal penalties or monetary fines;

 

   

suspend or withdraw regulatory approval;

 

   

suspend any ongoing clinical trials;

 

   

refuse to approve a pending BLA or NDA or supplements to a BLA or NDA submitted by us for other indications or new drug products;

 

   

seize our product; or

 

   

refuse to allow us to enter into supply contracts, including government contracts.

Any government investigation of alleged violations of law could require us to expend significant time and resources in response and could generate negative publicity. The occurrence of any event or penalty described above may inhibit our ability to commercialize our product candidates and generate revenues.

We have only limited experience in regulatory affairs and intend to rely on consultants and other third parties for regulatory matters, which may affect our ability or the time we require to obtain necessary regulatory approvals.

We have limited experience in filing and prosecuting the applications necessary to gain regulatory approvals for drug and biologics candidates. Moreover, the product candidates that are likely to result from our development programs are based on new technologies that have not been extensively tested in humans. The regulatory requirements governing these types of product candidates may be less well defined or more rigorous than for conventional products. As a result, we may experience a longer regulatory process in connection with obtaining regulatory approvals of any products that we develop. We intend to rely on independent

 

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consultants for purposes of our regulatory compliance and product development and approvals in the United States and elsewhere. Any failure by our consultants to properly advise us regarding, or properly perform tasks related to, regulatory compliance requirements could compromise our ability to develop and seek regulatory approval of our product candidates.

In addition to the level of commercial success of our product candidates, if approved, our future prospects are also dependent on our ability to successfully develop a pipeline of additional product candidates, and we may not be successful in our efforts in using our platform technologies to identify or discover additional product candidates.

The success of our business depends primarily upon our ability to identify, develop and commercialize products based on our two platform technologies. Although we have two product candidates currently in clinical development, our research programs may fail to identify other potential product candidates for clinical development for a number of reasons. Our research methodology may be unsuccessful in identifying potential product candidates or our potential product candidates may be shown to have harmful side effects or may have other characteristics that may make the products unmarketable or unlikely to receive marketing approval.

If any of these events occur, we may be forced to abandon our development efforts for a program or programs. Research programs to identify new product candidates require substantial technical, financial and human resources. We may focus our efforts and resources on potential programs or product candidates that ultimately prove to be unsuccessful.

Risks Related to Our Reliance on Third Parties

We expect to rely on third parties to conduct some or all aspects of our product manufacturing, protocol development, research and pre-clinical and clinical testing, and these third parties may not perform satisfactorily.

We do not expect to independently conduct all aspects of our product manufacturing, protocol development, research and pre-clinical and clinical testing. We currently rely, and expect to continue to rely, on third parties with respect to these items.

Any of these third parties may terminate their engagements with us at any time. If we need to enter into alternative arrangements, it could delay our product development activities. Our reliance on these third parties for research and development activities will reduce our control over these activities but will not relieve us of our responsibility to ensure compliance with all required regulations and study protocols. For example, for product candidates that we develop and commercialize on our own, we will remain responsible for ensuring that each of our Investigational New Drug, or IND, enabling studies and clinical trials are conducted in accordance with the study plan and protocols.

If these third parties do not successfully carry out their contractual duties, meet expected deadlines or conduct our studies in accordance with regulatory requirements or our stated study plans and protocols, we will not be able to complete, or may be delayed in completing, the pre-clinical studies and clinical trials required to support future IND submissions and approval of our product candidates.

Reliance on third-party manufacturers entails risks to which we would not be subject if we manufactured the product candidates ourselves, including:

 

   

the inability to negotiate manufacturing agreements with third parties under commercially reasonable terms;

 

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reduced control as a result of using third-party manufacturers for all aspects of manufacturing activities;

 

   

termination or nonrenewal of manufacturing agreements with third parties in a manner or at a time that is costly or damaging to us; and

 

   

disruptions to the operations of our third-party manufacturers or suppliers caused by conditions unrelated to our business or operations, including the bankruptcy of the manufacturer or supplier.

Any of these events could lead to clinical trial delays or failure to obtain regulatory approval, or impact our ability to successfully commercialize future products. Some of these events could be the basis for FDA action, including injunction, recall, seizure or total or partial suspension of production.

We and our contract manufacturers are subject to significant regulation with respect to manufacturing our product candidates. The manufacturing facilities on which we rely may not continue to meet regulatory requirements and have limited capacity.

We currently have relationships with a limited number of suppliers for the manufacturing of our product candidates. Each supplier may require licenses to manufacture components of our product candidates or to utilize certain processes for the manufacture of our product candidates. If such components or licenses are not owned by the supplier or in the public domain, we may be unable to transfer or sublicense the intellectual property rights we may have with respect to such activities.

All entities involved in the preparation of therapeutics for clinical trials or commercial sale, including our existing contract manufacturers for our product candidates, are subject to extensive regulation. Components of a finished therapeutic product approved for commercial sale or used in late-stage clinical trials must be manufactured in accordance with cGMP. These regulations govern manufacturing processes and procedures (including record keeping) and the implementation and operation of systems to control and assure the quality of investigational products and products approved for sale. Poor control of production processes can lead to the introduction of contaminants, or to inadvertent changes in the properties or stability of our product candidates that may not be detectable in final product testing. We or our contract manufacturers must supply all necessary documentation in support of a BLA or NDA, as applicable, on a timely basis and must adhere to the FDA’s good laboratory practices, or GLP, and cGMP regulations enforced by the FDA through its facilities inspection program. Our contract manufacturer for VB-111 has not produced a commercially approved product based on viral vectors and therefore has not yet obtained the requisite FDA approvals to do so. Our facilities and controls and the facilities and controls of some or all of our third-party contractors must pass a pre-approval inspection for compliance with the applicable regulations as a condition of regulatory approval of our product candidates or any of our other potential products. In addition, the regulatory authorities may, at any time, audit or inspect a manufacturing facility involved with the preparation of our product candidates or our other potential products or the associated controls for compliance with the regulations applicable to the activities being conducted. If these facilities do not pass a pre-approval plant inspection, FDA approval of the products will not be granted.

The regulatory authorities also may, at any time following approval of a product for sale, audit our manufacturing facilities or those of our third-party contractors. If any such inspection or audit identifies a failure to comply with applicable regulations or our product specifications or if a violation of applicable regulations, including a failure to comply with the product

 

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specifications, occurs independent of such an inspection or audit, we or the relevant regulatory authority may require remedial measures that may be costly and/or time-consuming for us or a third party to implement and that may include the temporary or permanent suspension of a clinical trial or commercial sales or the temporary or permanent closure of a facility.

If we or any of our third-party manufacturers fail to maintain regulatory compliance, the FDA can impose regulatory sanctions including, among other things, refusal to approve a pending application for a new drug product or biologic product, or revocation of a pre-existing approval.

Additionally, if supply from one approved manufacturer is interrupted, there could be a significant disruption in commercial supply. An alternative manufacturer would need to be qualified through a BLA or NDA supplement which could result in further delay. The regulatory agencies may also require additional studies if a new manufacturer is relied upon for commercial production. Switching manufacturers may involve substantial costs and is likely to result in a delay in our desired clinical and commercial timelines.

These factors could cause the delay of clinical trials, regulatory submissions, required approvals or commercialization of our product candidates, cause us to incur higher costs and prevent us from commercializing our products successfully. Furthermore, if our suppliers fail to meet contractual requirements, and we are unable to secure one or more replacement suppliers capable of production at a substantially equivalent cost, our clinical trials may be delayed or we could lose potential revenue.

We expect to rely on third parties to conduct, supervise and monitor our clinical trials, and if these third parties perform in an unsatisfactory manner, it may harm our business.

We expect to rely on CROs and clinical trial sites to ensure our clinical trials are conducted properly and on time. While we will have agreements governing their activities, we will have limited influence over their actual performance. We will control only some aspects of our CROs’ activities. Nevertheless, we will be responsible for ensuring that each of our clinical trials is conducted in accordance with the applicable protocol, legal, regulatory and scientific requirements and standards, and our reliance on the CROs does not relieve us of our regulatory responsibilities.

We and our CROs are required to comply with the FDA’s GCPs for conducting, recording and reporting the results of IND-enabling studies and clinical trials to assure that the data and reported results are credible and accurate and that the rights, integrity and confidentiality of clinical trial participants are protected. The FDA enforces these GCPs through periodic inspections of study sponsors, principal investigators and clinical trial sites. If we or our CROs fail to comply with applicable GCPs, the clinical data generated in our future clinical trials may be deemed unreliable and the FDA may require us to perform additional clinical trials before approving any marketing applications. Upon inspection, the FDA may determine that our clinical trials did not comply with GCPs. In addition, our future clinical trials will require a sufficient number of test subjects to evaluate the safety and effectiveness of our product candidates. Recruitment may be challenging in the event of rare diseases and may require the performance of trials in a significant number of sites which may be harder to monitor. Accordingly, if our CROs fail to comply with these regulations or fail to recruit a sufficient number of patients, we may be required to repeat such clinical trials, which would delay the regulatory approval process.

Our CROs are not our employees, and we are therefore unable to directly monitor whether or not they devote sufficient time and resources to our clinical and nonclinical programs. These

 

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CROs may also have relationships with other commercial entities, including parties developing potentially competitive products, for whom they may also be conducting clinical trials or other drug development activities that could harm our competitive position. If our CROs do not successfully carry out their contractual duties or obligations, fail to meet expected deadlines, or if the quality or accuracy of the clinical data they obtain is compromised due to the failure to adhere to our clinical protocols or regulatory requirements, or for any other reason, our clinical trials may be extended, delayed or terminated, and we may not be able to obtain regulatory approval for, or successfully commercialize our product candidates. As a result, the commercial prospects for our product candidates would be harmed, our costs could increase, and our ability to generate revenues could be delayed.

We also expect to rely on other third parties to store and distribute our product candidates for any clinical trials that we may conduct. Any performance failure on the part of our distributors could delay clinical development or marketing approval of our product candidates or commercialization of our products, if approved, producing additional losses and depriving us of potential product revenue.

Our reliance on third parties requires us to share our trade secrets, which increases the possibility that a competitor will discover them or that our trade secrets will be misappropriated or disclosed.

Because we rely on third parties to manufacture our product candidates, and because we collaborate with various organizations and academic institutions on the advancement of our technology, we must, at times, share trade secrets with them. We seek to protect our proprietary technology in part by entering into confidentiality agreements and, if applicable, material transfer agreements, collaborative research agreements, consulting agreements or other similar agreements with our collaborators, advisors, employees and consultants prior to beginning research or disclosing proprietary information. These agreements typically limit the rights of the third parties to use or disclose our confidential information, such as trade secrets. Despite these contractual provisions, the need to share trade secrets and other confidential information increases the risk that such trade secrets become known by potential competitors, are inadvertently incorporated into the technology of others, or are disclosed or used in violation of these agreements. Given that our proprietary position is based, in part, on our know-how and trade secrets, discovery by a third party of our trade secrets or other unauthorized use or disclosure would impair our intellectual property rights and protections in our product candidates.

In addition, these agreements typically restrict the ability of our collaborators, advisors, employees and consultants to publish data potentially relating to our trade secrets. Our academic collaborators typically have rights to publish data, provided that we are notified in advance and may delay publication for a specified time in order to secure our intellectual property rights arising from the collaboration. In other cases, publication rights are controlled exclusively by us, although in some cases we may share these rights with other parties. Despite our efforts to protect our trade secrets, our competitors may discover our trade secrets, either through breach of these agreements, independent development or publication of information including our trade secrets in cases where we do not have proprietary or otherwise protected rights at the time of publication.

 

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Our development of VB-111 for the treatment of rGBM relies upon the continued availability of bevacizumab for the treatment of rGBM, and any interruption in availability or supply of bevacizumab, or negative results concerning the use of bevacizumab in rGBM or otherwise, may delay our planned Phase 3 clinical trial or, if approved, adversely affect commercial utilization of VB-111.

Our planned Phase 3 trial of VB-111 for the treatment of rGBM is designed for use of VB-111 in combination with bevacizumab. Any shortage in supply of bevacizumab or any change in its availability for use in patients with rGBM would delay enrollment or completion of our planned Phase 3 trial, or if approved, adversely affect commercial utilization of VB-111. We have no control over the availability of bevacizumab, which is a sole source product and which may encounter manufacturing or other problems that adversely affect its availability. While bevacizumab is standard of care treatment for rGBM in the United States, cost and other factors have adversely impacted its availability elsewhere, and may similarly adversely impact the availability of VB-111 to be investigated or used in combination with bevacizumab. Clinical trials of bevacizumab in rGBM have achieved mixed results, and any negative future clinical results for bevacizumab in rGBM may undermine the reliability of our current Phase 3 trial design and require that we revise our development program and conduct additional trials, or prevent us from obtaining approval for VB-111 for use in combination with bevacizumab.

Risks Related to Commercialization of Our Product Candidates

We intend to rely on third-party manufacturers to produce commercial quantities of any of our product candidates that receives regulatory approval, but we have not entered into binding agreements with any such manufacturers to support commercialization. Additionally, these manufacturers do not have experience producing our product candidates at commercial levels and may not achieve the necessary regulatory approvals or produce our product candidates at the quality, quantities, locations and timing needed to support commercialization.

We have not yet secured manufacturing capabilities for commercial quantities of our product candidates or established facilities in the desired locations to support commercialization of our product candidates. Although we intend to rely on third-party manufacturers for commercialization, we have only entered into agreements with such manufacturers to assist in the scaling up of the manufacturing process of VB-111 and to support our clinical trials for VB-201. We may be unable to negotiate binding agreements with the manufacturers to support our commercialization activities on commercially reasonable terms, which agreements will further be required to comply with the restrictions imposed under the Research Law.

We may encounter technical or scientific issues related to manufacturing or development that we may be unable to resolve in a timely manner or with available funds. Although we currently have process development and small-scale manufacturing capabilities for VB-111 internally and for VB-201 through third parties, we do not have the capacity to manufacture our product candidates on a commercial scale. In addition, our product candidates are novel, and no manufacturer currently has the experience or ability to produce our product candidates at commercial levels. If we are unable to engage manufacturing partners to produce our product candidates on a larger scale on reasonable terms, our commercialization efforts will be harmed.

Even if we timely develop a manufacturing process and successfully transfer it to the third-party manufacturers of our product candidates, if such third-party manufacturers are unable to produce the necessary quantities of our product candidates, or in compliance with cGMP or with pertinent regulatory requirements, and within our planned time frame and cost parameters, the development and sales of our product candidates, if approved, may be impaired.

 

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In addition, any significant disruption in our supplier relationships could harm our business. We source key materials from third parties, either directly through agreements with suppliers or indirectly through our manufacturers who have agreements with suppliers. There are a small number of suppliers for certain key materials that are used to manufacture our product candidates. Such suppliers may not sell these key materials to our manufacturers at the times we need them or on commercially reasonable terms. We do not have any control over the process or timing of the acquisition of these key materials by our manufacturers. Moreover, we currently do not have any agreements for the commercial production of these key materials.

If we are unable to establish sales and marketing capabilities or enter into agreements with third parties to market and sell any of our product candidates that obtain regulatory approval, we may be unable to generate any revenue.

We have no experience selling and marketing our product candidates or any other products. To successfully commercialize any products that may result from our development programs and obtain regulatory approval, we will need to develop these capabilities, either on our own or with others. We may seek to enter into collaborations with other entities to utilize their marketing and distribution capabilities, but we may be unable to do so on favorable terms, if at all. If any future collaborative partners do not commit sufficient resources to commercialize our future products, if any, and we are unable to develop the necessary marketing capabilities on our own, we will be unable to generate sufficient product revenue to sustain our business. We will be competing with many companies that currently have extensive and well-funded marketing and sales operations. Without an internal team or the support of a third party to perform marketing and sales functions, we may be unable to compete successfully against these more established companies or successfully commercialize any of our product candidates.

We face intense competition and rapid technological change and the possibility that our competitors may develop therapies that are more advanced or effective than ours, which could impair our ability to successfully commercialize our product candidates.

We are engaged in pharmaceutical development, which is a rapidly changing field. We have competitors both in the United States and internationally, including major multinational pharmaceutical companies, biotechnology companies and universities and other research institutions.

Many of our potential competitors have substantially greater financial, technical and other resources, such as larger research and development staff and experienced marketing and manufacturing organizations. Competition may increase further as a result of advances in the commercial applicability of technologies and greater availability of capital for investment in these industries. Our potential competitors may succeed in developing, acquiring or licensing on an exclusive basis, products that are more effective or less costly than any product candidate that we may develop, or achieve earlier patent protection, regulatory approval, product commercialization and market penetration than us. Additionally, technologies developed by others may render our potential product candidates uneconomical or obsolete, and we may not be successful in marketing our product candidates against competitors.

In particular, VB-111 may face competition from currently approved drugs and drug candidates under development by others to treat rGBM. In May 2009, the FDA granted accelerated approval to Avastin (bevacizumab), which is an angiogenesis inhibitor, to treat patients with rGBM at progression after standard first-line therapy. In addition to bevacizumab, a number of companies are conducting late-stage clinical trials to test targeted drugs focused on angiogenesis inhibition for the treatment of ovarian cancer, including, among others, Amgen’s trebananib, Boehringer Ingelheim’s nintedanib and GlaxoSmithKline’s Votrient.

 

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Even if we are successful in achieving regulatory approval to commercialize a product candidate faster than our competitors, we may face competition from biosimilars. In the United States, the Biologics Price Competition and Innovation Act of 2009 created an abbreviated approval pathway for biological products that are demonstrated to be “highly similar,” or biosimilar, to or “interchangeable” with an FDA-approved biological product. This pathway could allow competitors to reference data from biological products already approved after 12 years from the time of approval. In Europe, the European Commission has granted marketing authorizations for several biosimilars pursuant to a set of general and product class-specific guidelines for biosimilar approvals issued over the past few years. In Europe, a competitor may reference data from biological products already approved, but will not be able to market a biosimilar until ten years after the time of approval. This 10-year period will be extended to 11 years if, during the first eight of those 10 years, the marketing authorization holder obtains an approval for one or more new therapeutic indications that bring significant clinical benefits compared with existing therapies. In addition, companies may be developing biosimilars in other countries that could compete with our products. If competitors are able to obtain marketing approval for biosimilars referencing our products, our products may become subject to competition from such biosimilars, with the attendant competitive pressure and consequences. Expiration or successful challenge of our applicable patent rights could also trigger competition from other products, assuming any relevant exclusivity period has expired.

In addition, although VB-111 has been granted orphan drug status by the FDA and EMA for a specified indication, there are limitations to the exclusivity. In the United States, the exclusivity period for orphan drugs is seven years, while pediatric exclusivity adds six months to any existing patents or exclusivity periods. In Europe, orphan drugs may be able to obtain 10 years of marketing exclusivity and up to an additional two years on the basis of qualifying pediatric studies. However, orphan exclusivity may be reduced to six years if the drug no longer satisfies the original designation criteria. Additionally, a marketing authorization holder may lose its orphan exclusivity if it consents to a second orphan drug application or cannot supply enough drug. Orphan drug exclusivity also can be lost when a second applicant demonstrates its drug is “clinically superior” to the original orphan drug.

Finally, as a result of the expiration or successful challenge of our patent rights, we could face more litigation with respect to the validity or scope of patents relating to other parties’ products. The availability of other parties’ products could limit the demand, and the price we are able to charge, for any products that we may develop and commercialize.

Since some of our product candidates are aimed for rare diseases, loss of exclusivity or competition as described above may be very significant in light of the limited size of the relevant market.

The commercial success of any current or future product candidate, if approved, will depend upon the degree of market acceptance by physicians, patients, third-party payors and others in the medical community.

Even if we obtain the requisite regulatory approvals, the commercial success of our product candidates will depend in part on the medical community, patients, and third-party payors accepting our product candidates as medically useful, cost-effective, and safe. Any product that we bring to the market may not gain market acceptance by physicians, patients, third-party payors and others in the medical community. If these products do not achieve an adequate level of acceptance, we may not generate significant product revenue and may not become profitable. The degree of market acceptance of these product candidates, if approved for commercial sale, will depend on a number of factors, including:

 

   

the potential efficacy and potential advantages over alternative treatments;

 

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the prevalence and severity of any side effects, including any limitations or warnings contained in a product’s approved labeling;

 

   

the prevalence and severity of any side effects resulting from the procedure by which our product candidates are administered;

 

   

relative convenience and ease of administration;

 

   

the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies;

 

   

the strength of marketing and distribution support and timing of market introduction of competitive products;

 

   

publicity concerning our products or competing products and treatments; and

 

   

sufficient third-party insurance coverage or reimbursement.

Even if a potential product displays a favorable efficacy and safety profile in pre-clinical studies and clinical trials, market acceptance of the product will not be known until after it is launched. Our efforts to educate the medical community and third-party payors on the benefits of the product candidates may require significant resources and may never be successful. Such efforts to educate the marketplace may require more resources than are required by conventional technologies.

A variety of risks associated with international operations could hurt our business.

If any of our product candidates are approved for commercialization, it is our current intention to market them on a worldwide basis, either alone or in collaboration with others. In addition, we conduct development activities in various jurisdictions throughout the world. We expect that we will be subject to additional risks related to engaging in international operations, including:

 

   

different regulatory requirements for approval of drugs and biologics in foreign countries;

 

   

reduced protection for intellectual property rights;

 

   

unexpected changes in tariffs, trade barriers and regulatory requirements;

 

   

economic weakness, including inflation, or political instability in particular foreign economies and markets;

 

   

compliance with tax, employment, immigration and labor laws for employees living or traveling abroad;

 

   

foreign currency fluctuations, which could result in increased operating expenses and reduced revenue, and other obligations incident to doing business in another country;

 

   

workforce uncertainty in countries where labor unrest is more common than in the United States and Israel;

 

   

production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad; and

 

   

business interruptions resulting from geopolitical actions, including war and terrorism, or natural disasters including earthquakes, typhoons, floods and fires.

 

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The insurance coverage and reimbursement status of newly approved products is uncertain. Failure to obtain or maintain adequate coverage and reimbursement for any of our product candidates that are approved could limit our ability to market those products and compromise our ability to generate revenue.

The availability of reimbursement by governmental and private payors is essential for most patients to be able to afford expensive treatments. Sales of our product candidates will depend substantially, both domestically and abroad, on the extent to which the costs of our product candidates will be paid by health maintenance, managed care, pharmacy benefit and similar healthcare management organizations, or reimbursed by government health administration authorities, private health coverage insurers and other third-party payors. If reimbursement is not available, or is available only to limited levels, we may not be able to successfully commercialize our product candidates. Even if coverage is provided, the approved reimbursement amount may not be high enough to allow us to establish or maintain pricing sufficient to realize a sufficient return on our investment.

There is significant uncertainty related to the insurance coverage and reimbursement of newly approved products. In the United States, the principal decisions about reimbursement for new medicines are typically made by the Centers for Medicare & Medicaid Services, or CMS, an agency within the U.S. Department of Health and Human Services, as CMS decides whether and to what extent a new medicine will be covered and reimbursed under Medicare. Private payors tend to follow CMS to a substantial degree. It is difficult to predict what CMS will decide with respect to reimbursement for fundamentally novel products such as ours, as there is no body of established practices and precedents for these new products. Reimbursement agencies in Europe may be more conservative than CMS. For example, a number of cancer drugs have been approved for reimbursement in the United States and have not been approved for reimbursement in certain European countries.

The intended use of a drug product by a physician can also affect pricing. For example, CMS could initiate a National Coverage Determination administrative procedure, by which the agency determines which uses of a therapeutic product would and would not be reimbursable under Medicare. This determination process can be lengthy, thereby creating a long period during which the future reimbursement for a particular product may be uncertain.

Outside the United States, international operations are generally subject to extensive governmental price controls and other market regulations, and we believe the increasing emphasis on cost-containment initiatives in Europe, Canada, and other countries is likely to put pressure on the pricing and usage of any of our product candidates that are approved for marketing. In many countries, the prices of medical products are subject to varying price control mechanisms as part of national health systems. In general, the prices of medicines under such systems are substantially lower than in the United States. Other countries allow companies to fix their own prices for medicines, but monitor and control company profits. Additional foreign price controls or other changes in pricing regulation could restrict the amount that we are able to charge for our product candidates. Accordingly, in markets outside the United States, the reimbursement for our products may be reduced compared with the United States and may be insufficient to generate commercially reasonable revenue and profits.

Moreover, increasing efforts by governmental and third-party payors, in the United States and abroad, to cap or reduce healthcare costs, resulting in legislation and reforms such as the Patient Protection and Affordable Care Act of 2010, may cause such organizations to limit both coverage and level of reimbursement for new products approved and, as a result, they may not cover or provide adequate payment for our product candidates. We expect to experience pricing

 

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pressures in connection with the sale of any of our product candidates, due to the trend toward managed healthcare, the increasing influence of health maintenance organizations and additional legislative changes. The downward pressure on healthcare costs in general, particularly prescription drugs and surgical procedures and other treatments, has become very intense. As a result, increasingly high barriers are being erected to the entry of new products.

The prescription for or promotion of off-label uses of our products by physicians could adversely affect our business.

Any regulatory approval of our products is limited to those specific diseases and indications for which our products have been deemed safe and effective by the FDA or similar authorities in other jurisdictions. In addition, any new indication for an approved product also requires regulatory approval. If we produce an approved therapeutic product, we will rely on physicians to prescribe and administer it as we have directed and for the indications described on the labeling. It is not, however, uncommon for physicians to prescribe medication for unapproved, or “off-label,” uses or in a manner that is inconsistent with the manufacturer’s directions. To the extent such off-label uses and departures from our administration directions become pervasive and produce results such as reduced efficacy or other adverse effects, the reputation of our products in the marketplace may suffer. In addition, off-label uses may cause a decline in our revenue or potential revenue, to the extent that there is a difference between the prices of our product for different indications.

Furthermore, while physicians may choose to prescribe our drugs for off-label uses, our ability to promote the products is limited to those indications that are specifically approved by the FDA or other regulators. Although regulatory authorities generally do not regulate the behavior of physicians, they do restrict communications by companies with respect to off-label use. If our promotional activities fail to comply with these regulations or guidelines, we may be subject to warnings from, or enforcement action by, these authorities. In addition, failure to follow FDA rules and guidelines relating to promotion and advertising can result in the FDA’s refusal to approve a product, the suspension or withdrawal of an approved product from the market, product recalls, fines, disgorgement of money, operating restrictions, injunctions or criminal prosecution.

Due to the small target patient populations for some of our product candidates, we face uncertainty related to pricing and reimbursement for these product candidates.

Some of our target patient populations for our initial product candidates are relatively small, as a result of which the pricing and reimbursement of our product candidates, if approved, must be adequate to support commercial infrastructure. If we are unable to obtain adequate levels of reimbursement, our ability to successfully market and sell our product candidates will be adversely affected. Inadequate reimbursement for such services may lead to physician resistance and adversely affect our ability to market or sell our products.

Risks Related to Our Business Operations

Our future success depends on our ability to retain key employees, consultants and advisors and to attract, retain and motivate qualified personnel.

We are highly dependent on principal members of our executive team listed under “Management” in this prospectus, including Prof. Dror Harats, our chief executive officer, the loss of whose services may adversely impact the achievement of our objectives. While we have entered into employment agreements with each of our executive officers, any of them could

 

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leave our employment at any time, as all of our employees are “at will” employees. Recruiting and retaining other qualified employees, consultants and advisors for our business, including scientific and technical personnel, will also be critical to our success. There is currently a shortage of skilled executives in our industry, which is likely to continue. As a result, competition for skilled personnel is intense and the turnover rate can be high. We may not be able to attract and retain personnel on acceptable terms given the competition among numerous pharmaceutical and biotechnology companies for individuals with similar skill sets. In addition, failure to succeed in pre-clinical studies or clinical trials may make it more challenging to recruit and retain qualified personnel. The inability to recruit or loss of the services of any executive, key employee, consultant or advisor may impede the progress of our research, development and commercialization objectives.

Our collaborations with outside scientists and consultants may be subject to restriction and change.

We work with medical experts, chemists, biologists and other scientists at academic and other institutions, and consultants who assist us in our research, development and regulatory efforts, including the members of our scientific advisory board. In addition, these scientists and consultants have provided, and we expect that they will continue to provide, valuable advice regarding our programs and regulatory approval processes. These scientists and consultants are not our employees and may have other commitments that would limit their future availability to us. If a conflict of interest arises between their work for us and their work for another entity, we may lose their services. In addition, we are limited in our ability to prevent them from establishing competing businesses or developing competing products. For example, if a key scientist acting as a principal investigator in any of our clinical trials identifies a potential product or compound that is more scientifically interesting to his or her professional interests, his or her availability to remain involved in our clinical trials could be restricted or eliminated.

We will need to expand our organization and we may experience difficulties in managing this growth, which could disrupt our operations.

As of May 31, 2014, we had 32 employees. As we mature and undertake the activities required to advance our product candidates into later stage clinical development and to operate as a public company, we expect to expand our full-time employee base and to hire more consultants and contractors. Our management may need to divert a disproportionate amount of its attention away from our day-to-day activities and devote a substantial amount of time to managing these growth activities. We may not be able to effectively manage the expansion of our operations, which may result in weaknesses in our infrastructure, operational mistakes, loss of business opportunities, loss of employees and reduced productivity among remaining employees. Our expected growth could require significant capital expenditures and may divert financial resources from other projects, such as the development of additional product candidates. If our management is unable to effectively manage our growth, our expenses may increase more than expected, our ability to generate or grow revenue could be compromised, and we may not be able to implement our business strategy. Our future financial performance and our ability to commercialize product candidates and compete effectively will depend, in part, on our ability to effectively manage any future growth.

Our employees, principal investigators, consultants and commercial partners may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements and insider trading.

We are exposed to the risk of fraud or other misconduct by our employees, principal investigators, consultants and commercial partners. Misconduct by these parties could include

 

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intentional failures to comply with the regulations of the FDA and non-U.S. regulators, provide accurate information to the FDA and non-U.S. regulators, comply with healthcare fraud and abuse laws and regulations in the United States and abroad, report financial information or data accurately or disclose unauthorized activities to us. In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, misconduct, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements. Such misconduct could also involve the improper use of information obtained in the course of clinical trials, which could result in regulatory sanctions and cause serious harm to our reputation. We have adopted a code of conduct applicable to all of our employees, but it is not always possible to identify and deter employee misconduct, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to comply with these laws or regulations. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of significant fines or other sanctions.

We face potential product liability, and, if successful claims are brought against us, we may incur substantial liability and costs. If the use of our product candidates harms patients, or is perceived to harm patients even when such harm is unrelated to our product candidates, our regulatory approvals could be revoked or otherwise negatively impacted and we could be subject to costly and damaging product liability claims.

The use of our product candidates in clinical trials and the sale of any products for which we obtain marketing approval exposes us to the risk of product liability claims. Product liability claims might be brought against us by consumers, healthcare providers, pharmaceutical companies or others selling or otherwise coming into contact with our product candidates. There is a risk that our product candidates may induce adverse events. If we cannot successfully defend against product liability claims, we could incur substantial liability and costs. In addition, regardless of merit or eventual outcome, product liability claims may result in:

 

   

impairment of our business reputation;

 

   

withdrawal of clinical trial participants;

 

   

costs due to related litigation;

 

   

distraction of management’s attention from our primary business;

 

   

substantial monetary awards to patients or other claimants;

 

   

the inability to commercialize our product candidates;

 

   

decreased demand for our product candidates, if approved for commercial sale; and

 

   

impairment of our ability to obtain product liability insurance coverage.

We carry combined public and products liability (including human clinical trials extension) insurance of $5.0 million per occurrence and $5.0 million aggregate limit. We believe our product liability insurance coverage is sufficient in light of our current clinical programs; however, we may not be able to maintain insurance coverage at a reasonable cost or in sufficient amounts to protect us against losses due to liability. If we obtain marketing approval for any product candidates, we intend to expand our insurance coverage to include the sale of commercial products, but we may not be able to obtain product liability insurance on

 

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commercially reasonable terms or in adequate amounts. On occasion, large judgments have been awarded in class action lawsuits based on drugs or medical treatments that had unanticipated adverse effects. A successful product liability claim or series of claims brought against us could cause our share price to decline and, if judgments exceed our insurance coverage, could materially and adversely affect our financial position.

Patients with the diseases targeted by some of our product candidates are often already in severe and advanced stages of disease and have both known and unknown significant pre-existing and potentially life-threatening health risks. During the course of treatment, patients may suffer adverse events, including death, for reasons that may be related to our product candidates. Such events could subject us to costly litigation, require us to pay substantial amounts of money to injured patients, delay, negatively impact or end our opportunity to receive or maintain regulatory approval to market our products, or require us to suspend or abandon our commercialization efforts. Even in a circumstance in which we do not believe that an adverse event is related to our product candidate, the investigation into the circumstance may be time-consuming or inconclusive. These investigations may harm our reputation, delay our regulatory approval process, limit the type of regulatory approvals our product candidates receive or maintain, and compromise the market acceptance of any of our product candidates that receive regulatory approval. As a result of these factors, a product liability claim, even if successfully defended, could hurt our business and impair our ability to generate revenue.

If our existing manufacturing facility is damaged or destroyed, or production at this facility is otherwise interrupted, our business and prospects would be negatively affected.

We currently have a single, small-scale manufacturing facility in Israel. If our existing manufacturing facility, or the equipment in it, is damaged or destroyed, we likely would not be able to quickly or inexpensively replace our manufacturing capacity and possibly would not be able to replace it at all. Any new facility needed to replace our existing manufacturing facility would need to comply with the necessary regulatory requirements, and be tailored to our manufacturing requirements and processes. We would need FDA approval before using any product candidates manufactured at a new facility in clinical trials or selling any products that are ultimately approved. Such an event could delay our clinical trials or, if any of our product candidates are approved by the FDA, reduce or eliminate our product sales.

If we fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or incur costs that could have a material adverse effect on the success of our business.

We are subject to numerous environmental, health and safety laws and regulations, including those governing laboratory procedures and the handling, use, storage, treatment and disposal of hazardous materials and wastes. Our operations involve the use of hazardous and flammable materials, including chemicals and biological materials. Our operations also produce hazardous waste products. We generally contract with third parties for the disposal of these materials and wastes. We cannot eliminate the risk of contamination or injury from these materials. In the event of contamination or injury resulting from our use of hazardous materials, we could be held liable for any resulting damages, and any liability could exceed our resources. We also could incur significant costs associated with civil or criminal fines and penalties.

Although we maintain workers’ compensation insurance to cover us for costs and expenses we may incur due to injuries to our employees resulting from the use of hazardous materials or other work-related injuries, this insurance may not provide adequate coverage against potential liabilities. In addition, we may incur substantial costs in order to comply with current or future

 

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environmental, health and safety laws and regulations. These current or future laws and regulations may impair our research, development or production efforts. Failure to comply with these laws and regulations also may result in substantial fines, penalties or other sanctions.

If our shipping capabilities become unavailable due to an accident, an act of terrorism, a labor strike or other similar event, our supply, production and distribution processes could be disrupted.

Some of our raw materials for the manufacturing of VB-111, and VB-111 itself, must be transported at a temperature controlled cold chain at temperatures varying between -4 degrees Celsius to -70 degrees Celsius (25 to -94 degrees Fahrenheit) to ensure their quality and vitality. Not all shipping or distribution channels are equipped to transport at these temperatures. If any of our shipping or distribution channels become inaccessible because of a serious accident, an act of terrorism, a labor strike or other similar event, we may experience disruptions in our continued supply of raw materials, delays in our production process or a reduction in our ability to distribute our therapeutics to our customers.

We may use our financial and human resources to pursue a particular research program or product candidate and fail to capitalize on programs or product candidates that may be more profitable or for which there is a greater likelihood of success.

Because we have limited resources, we may forego or delay pursuit of opportunities with certain programs or product candidates or for indications that later prove to have greater commercial potential. Our resource allocation decisions may cause us to fail to capitalize on viable commercial products or profitable market opportunities. Our spending on current and future research and development programs for product candidates may not yield any commercially viable products. If we do not accurately evaluate the commercial potential or target market for a particular product candidate, we may relinquish valuable rights to that product candidate through strategic collaboration, licensing or other royalty arrangements in cases in which it would have been more advantageous for us to retain sole development and commercialization rights to such product candidate, or we may allocate internal resources to a product candidate in a therapeutic area in which it would have been more advantageous to enter into a collaboration arrangement.

We will incur significant increased costs as a result of operating as a public company, and our management will be required to devote substantial time to new compliance initiatives.

As a public company, we will incur significant legal, accounting and other expenses that we did not incur as a private company. In addition, the Sarbanes-Oxley Act, as well as rules subsequently implemented by the Securities and Exchange Commission, or SEC, and The Nasdaq Global Market have imposed various requirements on public companies. Recent legislation permits smaller “emerging growth companies” to implement many of these requirements over a longer period and up to five years from the pricing of this offering. We intend to take advantage of this new legislation but cannot guarantee that we will not be required to implement these requirements sooner than budgeted or planned and thereby incur unexpected expenses. Shareholder activism, the current political environment and the current high level of government intervention and regulatory reform may lead to substantial new regulations and disclosure obligations, which may lead to additional compliance costs and impact the manner in which we operate our business in ways we cannot currently anticipate. Our management and other personnel will need to devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. For example, we expect these rules

 

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and regulations to make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be required to incur substantial costs to maintain our current levels of such coverage. While compliance with these additional requirements will result in increased costs to us, we cannot accurately predict or estimate at this time the amount of additional costs we may incur as a public company under both U.S. and Israeli laws.

We are subject to foreign currency exchange risk, and fluctuations between the U.S. dollar and the NIS, the Euro and other non-U.S. currencies may negatively affect our earnings and results of operations.

We operate in a number of different currencies. While the dollar is our functional and reporting currency and investments in our share capital have been denominated in dollars, our financial results may be adversely affected by fluctuations in currency exchange rates as a significant portion of our operating expenses, including our salary-related and manufacturing expenses are denominated in the NIS, and a significant portion of our clinical trials and manufacturing expenses are denominated in euros.

We are exposed to the risks that the NIS may appreciate relative to the dollar, or, if the NIS instead devalues relative to the dollar, that the inflation rate in Israel may exceed such rate of devaluation of the NIS, or that the timing of such devaluation may lag behind inflation in Israel. In any such event, the dollar cost of our operations in Israel would increase and our dollar-denominated results of operations would be adversely affected. We cannot predict any future trends in the rate of inflation in Israel or the rate of devaluation (if any) of the NIS against the dollar. For example, the average exchange rate of the dollar against the NIS increased in 2012 and decreased in 2013. Market volatility and currency fluctuations may limit our ability to cost-effectively hedge against our foreign currency exposure and, in addition, our ability to hedge our exposure to currency fluctuations in certain emerging markets may be limited. Hedging strategies may not eliminate our exposure to foreign exchange rate fluctuations and may involve costs and risks of their own, such as devotion of management time, external costs to implement the strategies and potential accounting implications. Foreign currency fluctuations, independent of the performance of our underlying business, could lead to materially adverse results or could lead to positive results that are not repeated in future periods.

Risks Related to Our Intellectual Property

We depend on our license agreement with Crucell and if we cannot meet requirements under such license agreement, we could lose the rights to our products, which could have a material adverse effect on our business.

VB-111 incorporates an adenoviral vector as the delivery vehicle based on our rights under a license agreement with Crucell. If we fail to meet our obligations under this license agreement, including various diligence, milestone payment, royalty and other obligations, Crucell has the right to terminate our license, and upon the effective date of such termination, our right to use the licensed technology would terminate. We may enter into additional agreements in the future with Crucell that may impose similar obligations on us. While we would expect to exercise all rights and remedies available to us, including attempting to cure any breach by us, and otherwise seek to preserve our rights under the patents and other technology licensed to us, we may not be able to do so in a timely manner, at an acceptable cost or at all. Any uncured, material breach under the license agreement could result in our loss of rights and may lead to a complete termination of our product development and any commercialization efforts for the applicable product candidates since there are currently no significant similar alternatives on the market.

 

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If we are unable to obtain or protect intellectual property rights related to our product candidates, we may not be able to obtain exclusivity for our product candidates or prevent others from developing similar competitive products.

We rely upon a combination of patents, trade secret protection and confidentiality agreements to protect the intellectual property related to our product candidates. The strength of patents in the biotechnology and pharmaceutical field involves complex legal and scientific questions and can be uncertain. The patent applications that we own or in-license may fail to result in issued patents with claims that cover our product candidates in the United States or in other foreign countries. There is no assurance that all of the potentially relevant prior art relating to our patents and patent applications has been found, which can invalidate a patent or prevent a patent from issuing from a pending patent application. Even if patents do successfully issue and even if such patents cover our product candidates, third parties may challenge their validity, enforceability or scope, which may result in the patent claims being narrowed or invalidated. Furthermore, even if they are unchallenged, our patents and patent applications may not adequately protect our intellectual property, provide exclusivity for our product candidates or prevent others from designing around our claims. Any of these outcomes could impair our ability to prevent competition from third parties.

If the patent applications we hold or have in-licensed with respect to our programs or product candidates fail to issue, if the breadth or strength of our patent protection is threatened, or if our patent portfolio fails to provide meaningful exclusivity for our product candidates, it could dissuade companies from collaborating with us to develop product candidates and threaten our ability to commercialize future products. Several patent applications covering our product candidates have been filed recently. We cannot offer any assurances about which, if any, applications will issue as patents, the breadth of any such issued patent claims or whether any issued claims will be found invalid and unenforceable or will be threatened by third parties. Any successful opposition to these patents or any other patents owned by or licensed to us could deprive us of rights necessary for the successful commercialization of any product candidates that we may develop. Further, if we encounter delays in regulatory approvals, the period of time during which we could market a product candidate under patent protection could be reduced. Since patent applications in the United States and most other countries are confidential for a period of time after filing, and some remain so until issued, we cannot be certain that we or our licensors were the first to file any patent application related to a product candidate. Furthermore, if third parties have filed such patent applications, an interference proceeding in the United States can be initiated by a third party to determine who was the first to invent any of the subject matter covered by the patent claims of our applications. In addition, patents have a limited lifespan. In the United States, the natural expiration of a patent is generally 20 years after it is filed. Various extensions may be available, but the life of a patent, and the protection it affords, is limited. Even if patents covering our product candidates are obtained, once the patent life has expired for a product, we may be open to competition from generic medications. This risk is material in light of the length of the development process of our products and lifespan of our current patent portfolio.

In addition to the protection afforded by patents, we rely on trade secret protection and confidentiality agreements to protect proprietary know-how that is not patentable or that we elect not to patent, processes for which patents are difficult to enforce and any other elements of our product candidate discovery and development processes that involve proprietary know-how, information or technology that is not covered by patents. However, trade secrets can be difficult to protect. We seek to protect our proprietary technology and processes, in part, by entering into confidentiality agreements with our employees, consultants, scientific advisors and contractors. We also seek to preserve the integrity and confidentiality of our data and trade secrets by maintaining physical security of our premises and physical and electronic security of

 

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our information technology systems. Security measures may be breached, and we may not have adequate remedies for any breach. In addition, our trade secrets may otherwise become known or be independently discovered by competitors. Although we expect all of our employees and consultants to assign their inventions to us, and all of our employees, consultants, advisors and any third parties who have access to our proprietary know-how, information or technology to enter into confidentiality agreements, we cannot provide any assurances that all such agreements have been duly executed or that our trade secrets and other confidential proprietary information will not be disclosed or that competitors will not otherwise gain access to our trade secrets or independently develop substantially equivalent information and techniques. Misappropriation or unauthorized disclosure of our trade secrets could impair our competitive position and may have a material adverse effect on our business. Additionally, if the steps taken to maintain our trade secrets are deemed inadequate, we may have insufficient recourse against third parties for misappropriating the trade secret. In addition, others may independently discover our trade secrets and proprietary information. For example, the FDA, as part of its Transparency Initiative, is currently considering whether to make additional information publicly available on a routine basis, including information that we may consider to be trade secrets or other proprietary information, and it is not clear at the present time how the FDA’s disclosure policies may change in the future, if at all.

Further, the laws of some foreign countries do not protect proprietary rights to the same extent or in the same manner as the laws of the United States. As a result, we may encounter significant problems in protecting and defending our intellectual property both in the United States and abroad. If we are unable to prevent material disclosure of the non-patented intellectual property related to our technologies to third parties, and there is no guarantee that we will have any such enforceable trade secret protection, we may not be able to establish or maintain a competitive advantage in our market.

Third-party claims of intellectual property infringement may prevent or delay our development and commercialization efforts.

Our commercial success depends in part on our avoiding infringement of the patents and proprietary rights of third parties. There is a substantial amount of litigation, both within and outside the United States, involving patent and other intellectual property rights in the biotechnology and pharmaceutical industries, including patent infringement lawsuits, interferences, oppositions and inter partes review proceedings before the U.S. Patent and Trademark Office, or U.S. PTO, and corresponding foreign patent offices. Numerous U.S. and foreign issued patents and pending patent applications, which are owned by third parties, exist in the fields in which we are pursuing development candidates. As the biotechnology and pharmaceutical industries expand and more patents are issued, the risk increases that our product candidates may be subject to claims of infringement of the patent rights of third parties.

Third parties may assert that we are employing their proprietary technology without authorization. There may be third-party patents or patent applications with claims to materials, formulations, methods of manufacture or methods for treatment related to the use or manufacture of our product candidates. Because patent applications can take many years to issue, there may be currently pending patent applications which may later result in issued patents that our product candidates may be accused of infringing. In addition, third parties may obtain patents in the future and claim that use of our technologies infringes upon these patents. If any third-party patents were held by a court of competent jurisdiction to cover the manufacturing process of any of our product candidates, any molecules formed during the manufacturing process or any final product itself, the holders of any such patents may be able to block our ability to commercialize such product candidate unless we obtained a license under the applicable patents, or until such

 

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patents expire. Similarly, if any third-party patents were held by a court of competent jurisdiction to cover aspects of our formulations, processes for manufacture or methods of use, the holders of any such patents may be able to block our ability to develop and commercialize the applicable product candidate unless we obtained a license or until such patent expires. In either case, such a license may not be available on commercially reasonable terms or at all.

Parties making claims against us may obtain injunctive or other equitable relief, which could effectively block our ability to further develop and commercialize one or more of our product candidates. Defense of these claims, regardless of their merit, would involve substantial litigation expense and would be a substantial diversion of employee resources from our business. In the event of a successful claim of infringement against us, we may have to pay substantial damages, including treble damages and attorneys’ fees for willful infringement, pay royalties, redesign our infringing products or obtain one or more licenses from third parties, which may be impossible or require substantial time and monetary expenditure.

We may not be successful in obtaining or maintaining necessary rights to pharmaceutical product components and processes for our development pipeline through acquisitions and in-licenses.

Presently we have rights to the intellectual property, through licenses from Crucell and under patents that we own, to develop our product candidates. Because our programs may involve additional product candidates that may require the use of proprietary rights held by third parties, the growth of our business may depend in part on our ability to acquire, in-license or use these proprietary rights. In addition, our product candidates may require specific formulations to work effectively and efficiently and these rights may be held by others. We may be unable to acquire or in-license any compositions, methods of use, processes or other third-party intellectual property rights from third parties that we identify. The licensing and acquisition of third-party intellectual property rights is a competitive area, and a number of more established companies are also pursuing strategies to license or acquire third-party intellectual property rights that we may consider attractive. These established companies may have a competitive advantage over us due to their size, cash resources and greater clinical development and commercialization capabilities. In addition, companies that perceive us to be a competitor may be unwilling to assign or license rights to us. We also may be unable to license or acquire third-party intellectual property rights on terms that would allow us to make an appropriate return on our investment.

We may enter into license agreements with third parties, and if we fail to comply with our obligations in such agreements under which we license intellectual property rights from third parties or otherwise experience disruptions to our business relationships with our licensors, we could lose license rights that are important to our business.

We may need to obtain licenses from third parties to advance our research or allow commercialization of our product candidates, and we have done so from time to time. We may fail to obtain any of these licenses at a reasonable cost or on reasonable terms, if at all. In that event, we may be required to expend significant time and resources to develop or license replacement technology. If we are unable to do so, we may be unable to develop or commercialize the affected product candidates.

In many cases, patent prosecution of our in-licensed technology is controlled solely by the licensor. If our licensors fail to obtain and maintain patent or other protection for the proprietary intellectual property we license from them, we could lose our rights to the intellectual property or our exclusivity with respect to those rights, and our competitors could market competing

 

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products using the intellectual property. In some cases, we control the prosecution of patents resulting from licensed technology. In the event we breach any of our obligations related to such prosecution, we may incur significant liability to our licensing partners. Licensing of intellectual property is of critical importance to our business and involves complex legal, business and scientific issues and is complicated by the rapid pace of scientific discovery in our industry. Disputes may arise regarding intellectual property subject to a licensing agreement, including:

 

   

the scope of rights granted under the license agreement and other interpretation-related issues;

 

   

the extent to which our technology and processes infringe on intellectual property of the licensor that is not subject to the licensing agreement;

 

   

the sublicensing of patent and other rights under any collaboration relationships we might enter into in the future;

 

   

our diligence obligations under the license agreement and what activities satisfy those diligence obligations;

 

   

the ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and us and our partners; and

 

   

the priority of invention of patented technology.

If disputes over intellectual property that we have licensed prevent or impair our ability to maintain our current licensing arrangements on acceptable terms, we may be unable to successfully develop and commercialize the affected product candidates.

We may be involved in lawsuits to protect or enforce our patents or the patents of our licensors, which could be expensive, time-consuming and unsuccessful.

Competitors may infringe our patents or the patents of our licensors. To counter infringement or unauthorized use, we may be required to file infringement claims, which can be expensive and time-consuming. In addition, in an infringement proceeding, a court may decide that a patent of ours or our licensors is not valid, is unenforceable or is not infringed, or may refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover the technology in question. An adverse result in any litigation or defense proceedings could put one or more of our patents at risk of being invalidated or interpreted narrowly and could put our patent applications at risk of not issuing.

Interference proceedings provoked by third parties or brought by us may be necessary to determine the priority of inventions with respect to our patents or patent applications or those of our licensors. An unfavorable outcome could require us to cease using the related technology or to attempt to license rights to it from the prevailing party. Our business could be harmed if the prevailing party does not offer us a license on commercially reasonable terms. Our defense of litigation or interference proceedings may fail and, even if successful, may result in substantial costs and distract our management and other employees. We may not be able to prevent, alone or with our licensors, misappropriation of our intellectual property rights, particularly in countries where the laws may not protect those rights as fully as in the United States.

Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. There could also be public announcements of the results of hearings, motions or other interim proceedings or

 

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developments. If securities analysts or investors perceive these results to be negative, it could have a material adverse effect on the trading price of our ordinary shares.

Recent patent reform legislation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents.

On September 16, 2011, the Leahy-Smith America Invents Act, or the Leahy-Smith Act, was signed into law. The Leahy-Smith Act includes a number of significant changes to U.S. patent law, including provisions that affect the way patent applications will be prosecuted and may also affect patent litigation. The U.S. PTO is currently developing regulations and procedures to govern administration of the Leahy-Smith Act, and many of the substantive changes to patent law associated with the Leahy-Smith Act, and in particular, the first to file provisions, were enacted March 16, 2013. However, it is not clear what, if any, impact the Leahy-Smith Act will have on the operation of our business. However, the Leahy-Smith Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents.

We may be subject to claims that our employees, consultants or independent contractors have wrongfully used or disclosed confidential information of third parties or that our employees have wrongfully used or disclosed alleged trade secrets of their former employers.

Certain of our key employees and personnel are or were previously employed at universities, medical institutions or other biotechnology or pharmaceutical companies, including our competitors or potential competitors. Although we try to ensure that our employees, consultants and independent contractors do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that we or our employees, consultants or independent contractors have inadvertently or otherwise used or disclosed intellectual property, including trade secrets or other proprietary information, of any of our employee’s former employer or other third parties. Litigation may be necessary to defend against these claims. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees. Furthermore, universities or medical institutions who employ some of our key employees and personnel in parallel to their engagement by us may claim that intellectual property developed by such person is owned by the respective academic or medical institution under the respective institution intellectual property policy or applicable law.

We may become subject to claims for remuneration or royalties for assigned service invention rights by our employees, which could result in litigation and adversely affect our business.

A significant portion of our intellectual property has been developed by our employees in the course of their employment for us. Under the Israeli Patent Law, 5727-1967, or the Patent Law, inventions conceived by an employee during the term and as part of the scope of his or her employment with a company are regarded as “service inventions,” which belong to the employer, absent a specific agreement between the employee and employer giving the employee service invention rights. The Patent Law also provides that if there is no such agreement between an employer and an employee, the Israeli Compensation and Royalties Committee, or the Committee, a body constituted under the Patent Law, shall determine whether the employee is entitled to remuneration for his inventions. Recent decisions by the Committee (which have been upheld by the Israeli Supreme Court on appeal) have created uncertainty in this area, as it held that employees may be entitled to remuneration for their

 

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service inventions despite having specifically waived any such rights. Further, the Committee has not yet determined the method for calculating this remuneration nor the criteria or circumstances under which an employee’s waiver of his right to remuneration will be disregarded. We generally enter into assignment-of-invention agreements with our employees pursuant to which such individuals assign to us all rights to any inventions created in the scope of their employment or engagement with us. Although our employees have agreed to assign to us service invention rights, we may face claims demanding remuneration in consideration for assigned inventions. As a consequence of such claims, we could be required to pay additional remuneration or royalties to our current or former employees, or be forced to litigate such claims, which could negatively affect our business.

We may be subject to claims challenging the inventorship or ownership of our patents and other intellectual property.

We may be subject to claims that former employees, collaborators or other third parties have an ownership interest in our patents or other intellectual property. We may have to in the future, ownership disputes arising, for example, from conflicting obligations of consultants or others who are involved in developing our product candidates. Litigation may be necessary to defend against these and other claims challenging inventorship or ownership. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights, such as exclusive ownership of, or right to use, valuable intellectual property. Such an outcome could have a material adverse effect on our business. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees.

Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.

Periodic maintenance fees, renewal fees, annuity fees and various other governmental fees on patents and applications will be due to be paid to the U.S. PTO and various governmental patent agencies outside of the United States in several stages over the lifetime of the patents and applications. The U.S. PTO and various non-U.S. governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application process. There are situations in which non-compliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction.

Issued patents covering our product candidates could be found invalid or unenforceable if challenged in court.

If we or one of our licensing partners initiated legal proceedings against a third party to enforce a patent covering one of our product candidates, the defendant may contend that the patent covering our product candidate is invalid, unenforceable or fails to cover the product candidate or the infringing product. In patent litigation in the United States, defendants commonly allege that asserted patent claims are invalid and unenforceable. Grounds for a validity challenge could be an alleged failure to meet one or more of several statutory requirements, including lack of novelty, obviousness, lack of written description, indefiniteness and non-enablement. Grounds for an unenforceability assertion could be an allegation that someone connected with prosecution of the patent withheld relevant information from the U.S. PTO, or made a misleading statement, during prosecution. Third parties may also raise similar

 

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claims before administrative bodies in the United States or abroad, even outside the context of litigation. Such mechanisms include re-examination, post grant review, and equivalent proceedings in foreign jurisdictions, such as opposition proceedings. Such proceedings could result in revocation, amendments to our patent claims or statements being made on the record such that our claims may no longer be construed to cover our product candidates. The outcome following legal assertions of invalidity and unenforceability is unpredictable. With respect to the validity question, for example, we cannot be certain that there is no invalidating prior art, of which we and the patent examiner were unaware during prosecution. If a defendant were to prevail on a legal assertion of invalidity, unenforceability or non infringement, we would lose at least part, and perhaps all, of the patent protection on our product candidates. Even if resolved in our favor, litigation or other legal proceedings relating to intellectual property claims may cause us to incur significant expenses, and could distract our technical and management personnel from their normal responsibilities. In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments, and if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the market price of our ordinary shares. Such litigation or proceedings could substantially increase our operating losses and reduce the resources available for development activities or any future sales, marketing or distribution activities.

Changes in U.S. patent law could diminish the value of patents in general, thereby impairing our ability to protect our products.

As is the case with other biotechnology companies, our success is heavily dependent on intellectual property, particularly patents. Obtaining and enforcing patents in the biotechnology industry involve both technological and legal complexity, and is therefore is costly, time-consuming and inherently uncertain. In addition, the United States has recently enacted and is currently implementing wide-ranging patent reform legislation. Recent U.S. Supreme Court rulings have narrowed the scope of patent protection available in certain circumstances and weakened the rights of patent owners in some situations. In addition to increasing uncertainty with regard to our ability to obtain patents in the future, this combination of events has created uncertainty with respect to the value of patents, once obtained. Depending on decisions by the U.S. Congress, the federal courts, and the U.S. PTO, the laws and regulations governing patents could change in unpredictable ways that would weaken our ability to obtain new patents or to enforce our existing patents and patents that we might obtain in the future.

We have not yet registered trademarks for a commercial trade name for our product candidates and failure to secure such registrations could adversely affect our business.

We have not yet registered trademarks for a commercial trade name for our product candidates. During trademark registration proceedings, we may receive rejections. Although we would be given an opportunity to respond to those rejections, we may be unable to overcome such rejections. In addition, in the U.S. PTO and in comparable agencies in many foreign jurisdictions, third parties are given an opportunity to oppose pending trademark applications and to seek to cancel registered trademarks. Opposition or cancellation proceedings may be filed against our trademarks, and our trademarks may not survive such proceedings. Moreover, any name we propose to use with our product candidates in the United States must be approved by the FDA, regardless of whether we have registered it, or applied to register it, as a trademark. The FDA typically conducts a review of proposed product names, including an evaluation of potential for confusion with other product names. If the FDA objects to any of our proposed proprietary product names, we may be required to expend significant additional resources in an effort to identify a suitable substitute name that would qualify under applicable trademark laws, not infringe the existing rights of third parties and be acceptable to the FDA.

 

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We may not be able to protect our intellectual property rights throughout the world.

Filing, prosecuting and defending patents on product candidates in all countries throughout the world would be prohibitively expensive, and our intellectual property rights in some countries outside the United States can be less extensive than those in the United States. In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as federal and state laws in the United States. Consequently, we may not be able to prevent third parties from practicing our inventions in all countries outside the United States, or from selling or importing products made using our inventions in and into the United States or other jurisdictions. Potential competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and further, may export otherwise infringing products to territories where we have patent protection, but enforcement is not as strong as that in the United States. These products may compete with our product candidates, if approved, and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.

Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents, trade secrets and other intellectual property protection, particularly those relating to biotechnology products, which could make it difficult for us to stop the infringement of our patents or marketing of competing products in violation of our proprietary rights generally. Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly and our patent applications at risk of not issuing and could provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license.

Under applicable employment laws, we may not be able to enforce covenants not to compete.

We generally enter into non-competition agreements with our employees. These agreements prohibit our employees, if they cease working for us, from competing directly with us or working for our competitors or clients for a limited period. We may be unable to enforce these agreements under the laws of the jurisdictions in which our employees work and it may be difficult for us to restrict our competitors from benefitting from the expertise our former employees or consultants developed while working for us. For example, Israeli labor courts have required employers seeking to enforce non-compete undertakings of a former employee to demonstrate that the competitive activities of the former employee will harm one of a limited number of material interests of the employer which have been recognized by the courts, such as the protection of a company’s trade secrets or other intellectual property.

Risks Related to This Offering and Ownership of Our Ordinary Shares

The market price of our ordinary shares may be highly volatile, and you may not be able to resell your shares at or above the initial public offering price.

Prior to this offering, there has not been a public market for our ordinary shares. An active trading market for our ordinary shares may not develop following this offering. You may not be able to sell your shares quickly or at the market price if trading in our ordinary shares is not

 

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active. The initial public offering price for the shares will be determined by negotiations between us and the representative of the underwriters and may not be indicative of prices that will prevail in the trading market.

The market price of our ordinary shares is likely to be volatile. Our share price could be subject to wide fluctuations in response to a variety of factors, including the following:

 

   

adverse results or delays in pre-clinical studies or clinical trials;

 

   

reports of adverse events in other similar products or clinical trials of such products;

 

   

inability to obtain additional funding;

 

   

any delay in filing an IND or BLA for any of our product candidates and any adverse development or perceived adverse development with respect to the FDA’s review of that IND or BLA;

 

   

failure to develop successfully and commercialize our product candidates for the proposed indications and future product candidates for other indications or new candidates;

 

   

failure to maintain our licensing arrangements or enter into strategic collaborations;

 

   

failure by us or our licensors and strategic collaboration partners to prosecute, maintain or enforce our intellectual property rights;

 

   

changes in laws or regulations applicable to future products;

 

   

inability to scale up our manufacturing capabilities (including in Israel), inability to obtain adequate product supply for our product candidates or the inability to do so at acceptable prices;

 

   

adverse regulatory decisions, including by the OCS under the Research Law;

 

   

introduction of new products, services or technologies by our competitors;

 

   

failure to meet or exceed financial projections we may provide to the public;

 

   

failure to meet or exceed the financial expectations of the investment community;

 

   

the perception of the pharmaceutical industry by the public, legislatures, regulators and the investment community;

 

   

announcements of significant acquisitions, strategic partnerships, joint ventures or capital commitments by us or our competitors;

 

   

disputes or other developments relating to proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our technologies;

 

   

additions or departures of key scientific or management personnel;

 

   

significant lawsuits, including patent or shareholder litigation;

 

   

changes in the market valuations of similar companies;

 

   

sales of our ordinary shares by us or our shareholders in the future; and

 

   

trading volume of our ordinary shares.

In addition, companies trading in the stock market in general, and biopharmaceutical companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies. Broad market and industry factors may negatively affect the market price of our ordinary shares, regardless of our actual operating performance.

 

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Our principal shareholders and management own a significant percentage of our shares and will be able to exert significant control over matters subject to shareholder approval.

As of May 31, 2014, our executive officers, directors, five percent shareholders and their affiliates beneficially owned approximately 80.6% of our voting shares and, upon closing of this offering, that same group will beneficially own approximately     % of our outstanding voting shares. Therefore, even after this offering, these shareholders will have the ability to control us through their ownership positions. These shareholders may be able to determine all matters requiring shareholder approval. For example, these shareholders, if they were to act together, may be able to control elections of directors, amendments of our organizational documents, or approval of any merger, sale of assets, or other major corporate transaction. This may prevent or discourage unsolicited acquisition proposals or offers for our ordinary shares that you may believe are in your best interest as one of our shareholders.

We are an “emerging growth company” and a “foreign private issuer,” and we cannot be certain if the reduced reporting requirements applicable to emerging growth companies and foreign private issuers will make our ordinary shares less attractive to investors.

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. For as long as we continue to be an emerging growth company, we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in this prospectus and our periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We could be an emerging growth company for up to five years, although circumstances could cause us to lose that status earlier, including if the market value of our ordinary shares held by non-affiliates exceeds $700.0 million as of any June 30 before that time or if we have total annual gross revenue of $1.0 billion or more during any fiscal year before that time, in which cases we would no longer be an emerging growth company as of the following December 31 or, if we issue more than $1.0 billion in non-convertible debt during any three-year period before that time, we would cease to be an emerging growth company immediately.

Furthermore, as a foreign private issuer, we are not subject to the same requirements that are imposed upon U.S. domestic issuers by the SEC. Under the Securities Exchange Act of 1934, or the Exchange Act, we will be subject to reporting obligations that, in certain respects, are less detailed and less frequent than those of U.S. domestic reporting companies. For example, we will not be required to issue quarterly reports, proxy statements that comply with the requirements applicable to U.S. domestic reporting companies, or individual executive compensation information that is as detailed as that required of U.S. domestic reporting companies. We will also have four months after the end of each fiscal year to file our annual reports with the SEC and will not be required to file current reports as frequently or promptly as U.S. domestic reporting companies. Furthermore, our officers, directors and principal shareholders will be exempt from the requirements to report transactions in our equity securities and from the short-swing profit liability provisions contained in Section 16 of the Exchange Act. These exemptions and leniencies will reduce the frequency and scope of information and protections to which you may otherwise have been eligible in relation to a U.S. domestic reporting companies. See “Management—Corporate Governance Practices” for more information.

 

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We cannot predict if investors will find our ordinary shares less attractive because we may rely on these reduced requirements. If some investors find our ordinary shares less attractive as a result, there may be a less active trading market for our ordinary shares and our share price may be more volatile.

Under the JOBS Act, emerging growth companies can also delay adopting new or revised accounting standards until such time as those standards apply to private companies. We are electing to not take advantage of the extended transition period afforded by the JOBS Act for the implementation of new or revised accounting standards, and as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that our decision to not take advantage of the extended transition period for complying with new or revised accounting standards is irrevocable.

If you purchase our ordinary shares in this offering, you will incur immediate and substantial dilution in the pro forma book value of your shares.

Investors purchasing ordinary shares in this offering will pay a price per share that substantially exceeds the pro forma book value per share of our tangible assets after subtracting our liabilities. As a result, investors purchasing ordinary shares in this offering will incur immediate dilution of $        per share, based on an assumed initial public offering price of $        per share, the midpoint of the price range set forth on the cover of this prospectus, and our pro forma net tangible book value as of December 31, 2013. Further, based on these assumptions, investors purchasing ordinary shares in this offering will contribute approximately     % of the total amount invested by shareholders since our inception, but will own only approximately    % of the ordinary shares outstanding.

This dilution is due to the substantially lower price paid by our investors who purchased shares prior to this offering as compared to the price offered to the public in this offering, and the exercise of share options granted to our employees. In addition, as of December 31, 2013, options and warrants to purchase 364,959 ordinary shares at a weighted average exercise price of $11.13 per share were outstanding. The exercise of any of these options would result in additional dilution. As a result of the dilution to investors purchasing shares in this offering, investors may receive significantly less than the purchase price paid in this offering, if anything, in the event of our liquidation.

Sales of a substantial number of our ordinary shares in the public market could cause our share price to fall.

If our existing shareholders sell, indicate an intention to sell or the market perceives that they intend to sell, substantial amounts of our ordinary shares in the public market after this offering, the market price of our ordinary shares could decline significantly. Based upon the number of our ordinary shares, on an as-converted basis, outstanding as of December 31, 2013, upon the closing of this offering, we will have outstanding a total of                ordinary shares, assuming no exercise of the underwriters’ option to purchase additional shares. Of these shares, as of the date of this prospectus, approximately        million ordinary shares, plus any shares sold upon exercise of the underwriters’ option to purchase additional shares, will be freely tradable, without restriction, in the public market immediately following this offering, assuming that current shareholders do not purchase shares in this offering. Substantially all of the remaining shares will be available for sale in the public market beginning 180 days from the date of this prospectus following the expiration of lock-up agreements between our executive officers, directors, shareholders and option holders and the underwriters. Deutsche Bank

 

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Securities Inc. and Wells Fargo Securities, LLC may, however, in their discretion, permit our officers, directors and other shareholders who are subject to these lock-up agreements to sell shares prior to the expiration of the lock-up agreements.

After the lock-up agreements expire, based upon the number of ordinary shares, on an as-converted basis, outstanding as of December 31, 2013, up to an additional                ordinary shares will be eligible for sale in the public market,                 of which shares are held by directors, executive officers and other affiliates and will be subject to Rule 144 under the Securities Act of 1933, as amended, or the Securities Act.

In addition, as of December 31, 2013, 530,782 ordinary shares that are either subject to outstanding options, reserved for future issuance under our equity incentive plans or subject to outstanding warrants will become eligible for sale in the public market to the extent permitted by the provisions of various vesting schedules, the lock-up agreements and Rule 144 and Rule 701 under the Securities Act. If these additional ordinary shares are sold, or if it is perceived that they will be sold, in the public market, the market price of our ordinary shares could decline.

After this offering, the holders of 2,569,972 ordinary shares will be entitled to rights with respect to the registration of their shares under the Securities Act, subject to the lock-up agreements described above. Registration of these shares under the Securities Act would result in the shares becoming freely tradable without restriction under the Securities Act, except for shares purchased by affiliates. Any sales of securities by these shareholders could have a material adverse effect on the market price of our ordinary shares.

Future sales and issuances of our ordinary shares or rights to purchase ordinary shares, including pursuant to our equity incentive plans, could result in additional dilution of the percentage ownership of our shareholders and could cause our share price to fall.

Additional capital will be needed in the future to continue our planned operations. To the extent we raise additional capital by issuing equity securities, our shareholders may experience substantial dilution. We may sell ordinary shares, convertible securities or other equity securities in one or more transactions at prices and in a manner we determine from time to time. If we sell ordinary shares, convertible securities or other equity securities in more than one transaction, investors may be materially diluted by subsequent sales. These sales may also result in material dilution to our existing shareholders, and new investors could gain rights superior to our existing shareholders.

Pursuant to our Employee Share Ownership and Option Plan (2014) that we intend to adopt prior to the closing of this offering, or the 2014 Plan, our management is authorized to grant share options and other equity-based awards to our employees, directors and consultants. Currently, we plan to register the increased number of shares available for issuance under the 2014 Plan each year. If our board of directors elects to increase the number of shares available for future grant by the maximum amount each year, our shareholders may experience additional dilution, which could cause our share price to fall.

We could be subject to securities class action litigation.

In the past, securities class action litigation has often been brought against a company following a decline in the market price of its securities. This risk is especially relevant for us because pharmaceutical companies have experienced significant share price volatility in recent years. If we face such litigation, it could result in substantial costs and a diversion of management’s attention and resources, which could harm our business.

 

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We have broad discretion in the use of the net proceeds from this offering and may not use them effectively.

Our management will have broad discretion in the application of the net proceeds from this offering, including for any of the purposes described in the section entitled “Use of Proceeds,” and you will not have the opportunity as part of your investment decision to assess whether the net proceeds are being used appropriately. Because of the number and variability of factors that will determine our use of the net proceeds from this offering, their ultimate use may vary substantially from their currently intended use. The failure by our management to apply these funds effectively could harm our business. Pending their use, we may invest the net proceeds from this offering in investment-grade, interest-bearing securities. These investments may not yield a favorable return to our shareholders.

We do not intend to pay dividends on our ordinary shares, so any returns will be limited to the value of our shares.

We have never declared or paid any cash dividends on our share capital. We currently anticipate that we will retain future earnings for the development, operation and expansion of our business and do not anticipate declaring or paying any cash dividends for the foreseeable future. Any return to shareholders will therefore be limited to the appreciation of their shares. In addition, Israeli law limits our ability to declare and pay dividends, and may subject our dividends to Israeli withholding taxes. Furthermore, our payment of dividends (out of tax-exempt income) may retroactively subject us to certain Israeli corporate income taxes, to which we would not otherwise be subject.

If equity research analysts do not publish research reports about our business or if they issue unfavorable commentary or downgrade our ordinary shares, the price of our ordinary shares could decline.

The trading market for our ordinary shares will rely in part on the research and reports that equity research analysts publish about us and our business. The price of our ordinary shares could decline if we do not obtain research analyst coverage, or one or more securities analysts downgrade our ordinary shares or if those analysts issue other unfavorable commentary or cease publishing reports about us or our business.

Risks Related to Our Incorporation and Operations in Israel

We are a “foreign private issuer” and intend to follow certain home country corporate governance practices, and our shareholders may not have the same protections afforded to shareholders of companies that are subject to all NASDAQ corporate governance requirements.

As a foreign private issuer, we will be permitted, and intend, to follow certain home country corporate governance practices instead of those otherwise required under the NASDAQ Stock Market for domestic U.S. issuers. For instance, we intend to follow home country practice in Israel with regard to the quorum requirement for shareholder meetings. As permitted under the Israeli Companies Law, 5759-1999, or the Companies Law, our articles of association to be effective upon the closing of this offering will provide that the quorum for any meeting of shareholders shall be the presence of at least two shareholders present in person, by proxy or by a voting instrument, who hold at least 25% of the voting power of our shares instead of the 33 1/3% of the issued share capital requirement. We may in the future elect to follow home country practices in Israel (and consequently avoid the requirements that would otherwise apply to a U.S. company listed on The NASDAQ Global Market) with regard to other matters, as well,

 

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such as the formation of compensation, nominating and governance committees, separate executive sessions of independent directors and non-management directors and the requirement to obtain shareholder approval for certain dilutive events (such as for the establishment or amendment of certain equity-based compensation plans, issuances that will result in a change of control of the company, certain transactions other than a public offering involving issuances of a 20% or more interest in the company and certain acquisitions of the stock or assets of another company). Following our home country governance practices as opposed to the requirements that would otherwise apply to a U.S. company listed on The NASDAQ Global Market may provide less protection to you than what is accorded to investors under the NASDAQ Stock Market rules applicable to domestic U.S. issuers. See “Management—Corporate Governance Practices” for more information.

We would lose our foreign private issuer status if a majority of our directors or executive officers are U.S. citizens or residents and we fail to meet additional requirements necessary to avoid loss of foreign private issuer status. Although we have elected to comply with certain U.S. regulatory provisions, our loss of foreign private issuer status would make such provisions mandatory. The regulatory and compliance costs to us under U.S. securities laws as a U.S. domestic reporting company may be significantly higher. If we are not a foreign private issuer, we will be required to file periodic reports and registration statements on U.S. domestic reporting company forms with the SEC, which are more detailed and extensive than the forms available to a foreign private issuer. We may also be required to modify certain of our policies to comply with accepted governance practices associated with U.S. domestic reporting companies. Such conversion and modifications will involve additional costs. In addition, we may lose our ability to rely upon exemptions from certain corporate governance requirements on U.S. stock exchanges that are available to foreign private issuers.

Potential political, economic and military instability in the State of Israel, where the majority of our senior management and our research and development facilities are located, may adversely affect our results of operations.

We are incorporated under Israeli law and our offices and operations are located in the State of Israel. In addition, our key employees, officers and all but two of our directors are residents of Israel. Accordingly, political, economic and military conditions in Israel directly affect our business. Since the State of Israel was established in 1948, a number of armed conflicts have occurred between Israel and its neighboring countries. Any hostilities involving Israel or the interruption or curtailment of trade between Israel and its present trading partners, or a significant downturn in the economic or financial condition of Israel, could affect adversely our operations. Since October 2000, there have been increasing occurrences of terrorist violence. Ongoing and revived hostilities or other Israeli political or economic factors could harm our operations, product development and results of operations.

Although Israel has entered into various agreements with Egypt, Jordan and the Palestinian Authority, there has been an increase in unrest and terrorist activity, which began in October 2000 and has continued with varying levels of severity. The establishment in 2006 of a government in the Palestinian Authority by representatives of the Hamas militant group has created additional unrest and uncertainty in the region. In 2006, a conflict between Israel and the Hezbollah in Lebanon resulted in thousands of rockets being fired from Lebanon up to 50 miles into Israel. Starting in December 2008, for approximately three weeks, Israel engaged in an armed conflict with Hamas in the Gaza Strip, which involved missile strikes against civilian targets in various parts of Israel and negatively affected business conditions in Israel. In November 2012, for approximately one week, Israel experienced a similar armed conflict, resulting in hundreds of rockets being fired from the Gaza Strip and disrupting most day-to-day

 

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civilian activity in southern Israel. Our insurance policies do not cover us for the damages incurred in connection with these conflicts or for any resulting disruption in our operations. The Israeli government, as a matter of law, provides coverage for the reinstatement value of direct damages that are caused by terrorist attacks or acts of war; however, the government may cease providing such coverage or the coverage might not be enough to cover potential damages. In the event that hostilities disrupt the ongoing operation of our facilities or the airports and seaports on which we depend to import and export our supplies and products, our operations may be materially adversely affected.

In addition, since the end of 2010, numerous acts of protest and civil unrest have taken place in several countries in the Middle East and North Africa, many of which involved significant violence. The civil unrest in Egypt, which borders Israel, resulted in the resignation of its president Hosni Mubarak, and to significant changes to the country’s government. In Syria, also bordering Israel, a civil war is continuing to take place. The ultimate effect of these developments on the political and security situation in the Middle East and on Israel’s position within the region is not clear at this time. Such instability may lead to deterioration in the political and trade relationships that exist between the State of Israel and certain other countries.

Popular uprisings in various countries in the Middle East and North Africa are affecting the political stability of those countries. Such instability may lead to deterioration in the political and trade relationships that exist between the State of Israel and these countries. Several countries, principally in the Middle East, still restrict doing business with Israel and Israeli companies, and additional countries may impose restrictions on doing business with Israel and Israeli companies if hostilities in Israel or political instability in the region continues or increases. Any hostilities involving Israel or the interruption or curtailment of trade between Israel and its present trading partners, or significant downturns in the economic or financial condition of Israel, could adversely affect our operations and product development and adversely affect our share price. Similarly, Israeli companies are limited in conducting business with entities from several countries. For instance, in 2008, the Israeli legislature passed a law forbidding any investments in entities that transact business with Iran.

Our operations may be disrupted by the obligations of personnel to perform military service.

As of May 31, 2014, we had 32 employees, all of whom were based in Israel. Some of our employees may be called upon to perform up to 36 days (and in some cases more) of annual military reserve duty until they reach the age of 40 (and in some cases, up to 45 or older) and, in emergency circumstances, could be called to immediate and unlimited active duty. In the event of severe unrest or other conflict, individuals could be required to serve in the military for extended periods of time. Since September 2000, in response to increased tension and hostilities, there have been occasional call-ups of military reservists, including in connection with the 2006 conflict in Lebanon, and the December 2008 and November 2012 conflicts with Hamas, and it is possible that there will be additional call-ups in the future. Our operations could be disrupted by the absence of a significant number of our employees related to military service or the absence for extended periods of one or more of our key employees for military service. Such disruption could materially adversely affect our business and results of operations. Additionally, the absence of a significant number of the employees of our Israeli suppliers and contractors related to military service or the absence for extended periods of one or more of their key employees for military service may disrupt their operations.

 

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The tax benefits that are available to us if and when we generate taxable income require us to meet various conditions and may be prevented or reduced in the future, which could increase our costs and taxes.

If and when we generate taxable income, we would be eligible for certain tax benefits provided to “Benefited Enterprises” under the Israeli Law for the Encouragement of Capital Investments, 1959, as amended, or the Investment Law. In order to remain eligible for the tax benefits for “Benefited Enterprises” we must continue to meet certain conditions stipulated in the Investment Law and its regulations, as amended. In addition, we informed the Israeli Tax Authority of our choice of 2012 as a “Benefited Enterprise” election year, all under the Investment Law. The benefits available to us under this tax regulation are subject to the fulfillment of conditions stipulated in the regulation. Further, in the future these tax benefits may be reduced or discontinued. If these tax benefits are reduced, cancelled or discontinued, our Israeli taxable income would be subject to regular Israeli corporate tax rates. The standard corporate tax rate for Israeli companies is 26.5% for 2014 and thereafter. Additionally, if we increase our activities outside of Israel through acquisitions, for example, our expanded activities might not be eligible for inclusion in future Israeli tax benefit programs. See “Taxation and Government Programs—Israeli Tax Considerations and Government Programs—Law for the Encouragement of Capital Investments, 5719-1959.”

It may be difficult to enforce a U.S. judgment against us, our officers and directors and the Israeli experts named in this prospectus in Israel or the United States, or to assert U.S. securities laws claims in Israel or serve process on our officers and directors and these experts.

We were incorporated in Israel, and our corporate headquarters and substantially all of our operations are located in Israel. All of our executive officers and all but two of our directors, and the Israeli experts named in this prospectus, are located in Israel. The majority of our assets and the assets of these persons are located outside the United States. Therefore, it may be difficult for an investor, or any other person or entity, to enforce a U.S. court judgment based upon the civil liability provisions of the U.S. federal securities laws against us or any of these persons in a U.S. or Israeli court, or to effect service of process upon these persons in the United States. Additionally, it may be difficult for an investor, or any other person or entity, to assert U.S. securities law claims in original actions instituted in Israel. Israeli courts may refuse to hear a claim based on an alleged violation of U.S. securities laws against us or our officers and directors on the grounds that Israel is not the most appropriate forum in which to bring such a claim. 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, which can be a time-consuming and costly process. Certain matters of procedure will also be governed by Israeli law. There is little binding case law in Israel addressing the matters described above. See “Enforceability of Civil Liabilities.”

Your rights and responsibilities as our shareholder will be governed by Israeli law, which may differ in some respects from the rights and responsibilities of shareholders of U.S. corporations.

Since we are incorporated under Israeli law, the rights and responsibilities of our shareholders are governed by our articles of association and Israeli law. These rights and responsibilities differ in some material respects from the rights and responsibilities of shareholders of U.S. corporations. In particular, a shareholder of an Israeli company has a duty to act in good faith and in a customary manner in exercising its rights and performing its obligations towards the company and other shareholders and to refrain from abusing its power in the company, including, among other things, in voting at the general meeting of shareholders on

 

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certain matters, such as an amendment to the company’s articles of association, an increase of the company’s authorized share capital, a merger of the company and approval of related party transactions that require shareholder approval. A shareholder also has a general duty to refrain from discriminating against other shareholders. In addition, a controlling shareholder or a shareholder who knows that it possesses the power to determine the outcome of a shareholder vote or to appoint or prevent the appointment of an officer of the company has a duty to act in fairness towards the company with regard to such vote or appointment. However, Israeli law does not define the substance of this duty of fairness. There is limited case law available to assist us in understanding the nature of this duty or the implications of these provisions. These provisions may be interpreted to impose additional obligations and liabilities on our shareholders that are not typically imposed on shareholders of U.S. corporations. See “Management—Approval of Related Party Transactions Under Israeli Law—Shareholders’ Duties.”

Provisions of Israeli law and our amended and restated articles of association, could make it more difficult for a third party to acquire us or increase the cost of acquiring us, even if doing so would benefit our shareholders.

Israeli law regulates mergers, requires tender offers for acquisitions of shares above specified thresholds, requires special approvals for transactions involving directors, officers or significant shareholders and regulates other matters that may be relevant to such types of transactions. For example, a tender offer for all of a company’s issued and outstanding shares can only be completed if the acquirer receives positive responses from the holders of at least 95% of the issued share capital. Completion of the tender offer also requires approval of a majority of the offerees that do not have a personal interest in the tender offer, unless at least 98% of the company’s outstanding shares are tendered. Furthermore, the shareholders, including those who indicated their acceptance of the tender offer (unless the acquirer stipulated in its tender offer that a shareholder that accepts the offer may not seek appraisal rights), may, at any time within six months following the completion of the tender offer, petition an Israeli court to alter the consideration for the acquisition. See “Description of Share Capital — Acquisitions under Israeli Law” for additional information.

Further, Israeli tax considerations may make potential transactions undesirable to us or to some of our shareholders whose country of residence does not have a tax treaty with Israel granting tax relief to such shareholders from Israeli tax. For example, Israeli tax law does not recognize tax-free share exchanges to the same extent as U.S. tax law. With respect to mergers, Israeli tax law allows for tax deferral in certain circumstances but makes the deferral contingent on the fulfillment of a number of conditions, including, in some cases, a holding period of two years from the date of the transaction during which sales and dispositions of shares of the participating companies are subject to certain restrictions. Moreover, with respect to certain share swap transactions, the tax deferral is limited in time, and when such time expires, the tax becomes payable even if no disposition of the shares has occurred.

Certain U.S. shareholders may be subject to adverse tax consequences if we are characterized as “Controlled Foreign Corporation.”

Each “Ten Percent Shareholder” in a non-U.S. corporation that is classified as a “controlled foreign corporation,” or a CFC, for U.S. federal income tax purposes generally is required to include in income for U.S. federal tax purposes such Ten Percent Shareholder’s pro rata share of the CFC’s “Subpart F income” and investment of earnings in U.S. property, even if the CFC has made no distributions to its shareholders. A non-U.S. corporation generally will be classified as a CFC for U.S. federal income tax purposes if Ten Percent Shareholders own, directly or indirectly, more than 50% of either the total combined voting power of all classes of stock of such

 

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corporation entitled to vote or of the total value of the stock of such corporation. A “Ten Percent Shareholder” is a U.S. person (as defined by the U.S. Internal Revenue Code of 1986, as amended), who owns or is considered to own 10% or more of the total combined voting power of all classes of stock entitled to vote of such corporation. The determination of CFC status is complex and includes attribution rules, the application of which is not entirely certain.

We do not believe that we were a CFC for the taxable year ended December 31, 2013 or that we are currently a CFC. It is possible, however, that following this offering, a shareholder treated as a U.S. person for U.S. federal income tax purposes will acquire, directly or indirectly, enough shares to be treated as a Ten Percent Shareholder after application of the constructive ownership rules and, together with any other Ten Percent Shareholders of our company, cause us to be treated as a CFC for U.S. federal income tax purposes. We believe that immediately following this offering certain of our shareholders are Ten Percent Shareholders for U.S. federal income tax purposes. Holders should consult their own tax advisors with respect to the potential adverse U.S. federal income tax consequences of becoming a Ten Percent Shareholder in a CFC.

We expect to be classified as a passive foreign investment company, and our U.S. shareholders may suffer adverse tax consequences as a result.

Generally, if, for any taxable year, at least 75% of our gross income is passive income, or at least 50% of the value of our assets is attributable to assets that produce passive income or are held for the production of passive income, including cash, we would be characterized as a passive foreign investment company, or PFIC, for U.S. federal income tax purposes. For purposes of these tests, passive income includes dividends, interest, and gains from the sale or exchange of investment property and rents and royalties other than rents and royalties which are received from unrelated parties in connection with the active conduct of a trade or business. If we are characterized as a PFIC, our U.S. shareholders may suffer adverse tax consequences, including having gains realized on the sale of our ordinary shares treated as ordinary income, rather than capital gain, the loss of the preferential rate applicable to dividends received on our ordinary shares by individuals who are U.S. holders, and having interest charges apply to distributions by us and the proceeds of share sales. See “Taxation—Certain Material U.S. Federal Income Tax Considerations—Passive Foreign Investment Company Considerations.”

Our status as a PFIC may also depend, in part, on how quickly we utilize the cash proceeds from this offering in our business. Since PFIC status depends on the composition of our income and the composition and value of our assets (which, assuming we are not a CFC for the year being tested, may be determined in large part by reference to the market value of our ordinary shares, which may be volatile) from time to time, there can be no assurance that we will not be considered a PFIC for any taxable year. However, because we had no revenue-producing operations, we believe that we were a PFIC for our 2013 taxable year. Unless and until we generate sufficient revenue from active licensing and other non-passive sources and otherwise satisfy the asset test above, we expect to be treated as a PFIC.

 

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FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements that involve risks and uncertainties. Words such as “project,” “believe,” “anticipate,” “plan,” “expect,” “estimate,” “intend,” “should,” “would,” “could,” “will,” “may,” “potential,” “continue,” or the negative of these terms, and similar expressions intended to identify future events or outcomes indicate such forward-looking statements. Not all forward-looking statements contain these identifying words. Forward-looking statements in this prospectus may include statements about:

 

   

the initiation, timing, progress and results of our pre-clinical and clinical trials, and our research and development programs;

 

   

our expectations about the availability of data from our clinical trials;

 

   

our ability to advance product candidates into, and successfully complete, clinical trials;

 

   

our plans for future trials;

 

   

our ability to manufacture our product candidates in sufficient quantities for clinical trials;

 

   

the timing or likelihood of regulatory filings and approvals;

 

   

the commercialization of our product candidates, if approved;

 

   

potential advantages of our product candidates;

 

   

the pricing and reimbursement of our product candidates, if approved;

 

   

our ability to develop and commercialize additional product candidates based on our platform technologies;

 

   

our business strategy;

 

   

the implementation of our business model, strategic plans for our business, product candidates and technology;

 

   

the scope and duration of protection we are able to establish and maintain for intellectual property rights covering our product candidates and technology;

 

   

estimates of our expenses, future revenues, capital requirements and our needs for additional financing;

 

   

our ability to establish and maintain collaborations and the benefits of such collaborations;

 

   

our ability to maintain our level of grant funding or obtain additional grant funding;

 

   

developments relating to our competitors and our industry; and

 

   

other risks and uncertainties, including those listed under the caption “Risk Factors.”

Forward-looking statements speak only as of the date of this prospectus. You should not rely upon forward-looking statements as predictions of future events. The forward-looking statements included in this prospectus are subject to risks, uncertainties and assumptions. Our actual results of operations may differ materially from those stated in or implied by such forward-looking statements as a result of a variety of factors, including those described under “Risk Factors” and elsewhere in this prospectus. As a result of these factors, we cannot assure you that the forward-looking statements 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

 

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will achieve our objectives and plans in any specified time frame or at all. Except as required by law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

You should read this prospectus and the documents that we reference in this prospectus and have filed as exhibits to the registration statement, of which this prospectus is a part,

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 includes statistical and other industry and market data that we obtained from industry publications and research, surveys and studies conducted by third parties. Industry publications and third-party research, surveys and studies generally indicate that their information has been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information.

 

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USE OF PROCEEDS

We estimate that the net proceeds we will receive from our issuance and sale of                  ordinary shares will be approximately $         million, or approximately $         million if the underwriters exercise their option to purchase additional ordinary shares in full, based upon an assumed initial public offering price of $        per ordinary share, the midpoint of the estimated price range set forth on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

A $1.00 increase (decrease) in the assumed initial public offering price of $        per ordinary share, the midpoint of the estimated price range set forth on the cover page of this prospectus, would increase (decrease) the net proceeds to us from this offering by approximately $        million, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. Similarly, each increase (decrease) of one million shares in the number of ordinary shares offered by us would increase (decrease) the net proceeds to us from this offering by approximately $        million, assuming the assumed initial public offering price remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

The principal reasons for this offering are to increase our capitalization and financial flexibility, increase our visibility in the marketplace and create a public market for our ordinary shares. We expect to use the net proceeds from this offering as follows:

 

   

approximately $         million to fund clinical development costs of VB-111;

 

   

approximately $         million to fund development costs of VB-201;

 

   

approximately $         million for pre-clinical and early clinical development of follow-on Lecinoxoid product candidates;

 

   

approximately $         million for costs associated with the construction of our VB-111 manufacturing facility;

 

   

approximately $         million, representing 1% of the net proceeds of this offering, to satisfy a payment obligation triggered upon our initial public offering pursuant to an agreement with Tel Hashomer—Medical Research, Infrastructure and Services Ltd.; and

 

   

the remainder for working capital and general corporate purposes, including funding the costs of operating as a public company.

Based on our planned use of the net proceeds from this offering and our existing cash and cash equivalents and short-term investments, we estimate that such funds will be sufficient to enable us to submit a BLA for VB-111 in rGBM, to complete our Phase 2 clinical trial for VB-111 in thyroid cancer, to complete our Phase 1/2 clinical trial for VB-111 in ovarian cancer, to complete our Phase 2 clinical trials for VB-201 in psoriasis and ulcerative colitis, and to complete Phase 1 clinical trials for at least one of our other Lecinoxoid product candidates.

As of the date of this prospectus, we cannot specify with certainty all of the particular uses for the net proceeds from this offering. The amounts and timing of our actual expenditures may vary significantly from our expectations depending upon numerous factors, including the progress of our research and development efforts, the progress of our clinical trials, our operating costs and capital expenditures and the other factors described under “Risk Factors” in this prospectus. Accordingly, we will retain the discretion to allocate the net proceeds of this offering, and we reserve the right to change the allocation of the net proceeds among the uses described above.

 

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Pending these uses, we intend to invest the net proceeds from the offering in investment-grade, interest-bearing instruments, securities or certificates of deposit.

DIVIDEND POLICY

We do not have any present plan to pay dividends on our ordinary shares. We currently anticipate that we will retain all of our future earnings, if any, for use in the operation of our business. Additionally, our ability to pay dividends on our ordinary shares is limited by restrictions under the terms of the agreements governing our indebtedness and under Israeli law. See “Description of Share Capital—Dividend and Liquidation Rights” for an explanation concerning the payment of dividends under Israeli law.

 

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CAPITALIZATION

The following table sets forth our cash and cash equivalents and short-term bank deposits and capitalization as of December 31, 2013:

 

   

on an actual basis;

 

   

on a pro forma basis to give effect to (i) the sale of 91,798 Series E preferred shares in our Series E financing that closed on May 15, 2014 for $4.9 million, (ii) the conversion of our convertible loan into 240,496 additional Series E preferred shares in connection with such financing, (iii) the conversion of all of our outstanding preferred shares, including those issued in the Series E financing and upon conversion of our convertible loan, into 2,569,972 ordinary shares immediately prior to the closing of this offering, (iv) the issuance of 76,217 ordinary shares immediately prior to the closing of this offering pursuant to certain anti-dilution rights set forth in our articles of association, and (v) the adoption of our amended and restated articles of association prior to the closing of this offering; and

 

   

on a pro forma as adjusted basis to give further effect to our issuance and sale of                  ordinary shares in this offering at an assumed initial public offering price of $         per ordinary share, the midpoint of the estimated price range set forth on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

The pro forma and pro forma as adjusted information below is illustrative only, and our capitalization following the completion of this offering will depend on the actual initial public offering price and other terms of our initial public offering determined at pricing. You should read this table together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and related notes included elsewhere in this prospectus.

 

     December 31, 2013
    

Actual

   

Pro Forma

   

Pro Forma As
Adjusted

     (in thousands, except share and per share data)

Cash and cash equivalents and short-term bank deposits

   $ 10,871      $ 15,809 (1)    
  

 

 

   

 

 

   

Convertible loan

   $ 31,039      $ —       
  

 

 

   

 

 

   

Equity (capital deficiency):

      

Ordinary shares, NIS 0.01 par value per share; 2,044,005 shares authorized, actual;                  shares authorized pro forma and pro forma as adjusted; 244,054 shares issued and outstanding, actual; 2,890,243 shares issued and outstanding, pro forma;                  shares issued and outstanding, pro forma as adjusted

     1        9     

Preferred shares, NIS 0.01 par value per share; 2,955,995 shares authorized, actual; 2,237,678 shares issued and outstanding, actual; no shares authorized issued or outstanding, pro forma and pro forma as adjusted

     7        —       

Other comprehensive income

     29        29     

Additional paid-in capital

     86,133        122,109     

Accumulated deficit

     (109,753     (109,753  
  

 

 

   

 

 

   

Total equity (capital deficiency)

     (23,583     12,394     
  

 

 

   

 

 

   

Total capitalization

   $ 7,456      $ 12,394     
  

 

 

   

 

 

   
(1) Does not reflect cash expenditures since December 31, 2013.

 

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A $1.00 increase (decrease) in the assumed initial public offering price of $         per ordinary share, the midpoint of the estimated price range set forth on the cover page of this prospectus, would increase (decrease) the pro forma as adjusted total amount of each of cash and cash equivalents and short-term bank deposits, additional paid in capital, total equity (capital deficiency) and total capitalization by $         million, assuming that the number of shares offered by us, as set forth on the cover of this prospectus, remains the same, and after deducting the estimated underwriting discounts and commissions and estimated offering costs payable by us. Similarly, each increase (decrease) of one million shares in the number of ordinary shares offered by us would increase (decrease) those same amounts by $         million, assuming the assumed initial public offering price remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

The number of shares shown as outstanding in the table above is based on 2,890,243 ordinary shares outstanding on an as-converted basis as of December 31, 2013 and excludes:

 

   

364,959 ordinary shares issuable upon the exercise of share options and warrants outstanding as of December 31, 2013 at a weighted average exercise price of $11.13 per share;

 

   

89,606 additional ordinary shares reserved for future issuance of share options and other share-based awards under our existing equity incentive plans, of which 83,313 ordinary shares underlie options to be granted immediately following the closing of this offering; and

 

   

             shares reserved for future issuance under our Employee Share Ownership and Option Plan (2014), or the 2014 Plan, as well as shares originally reserved under our Employee Share Ownership and Option Plan (2000) and Employee Share Ownership and Option Plan (2011), but which may become available for awards under the 2014 Plan, which plan will become effective in connection with this offering and contains provisions that will automatically increase its share reserve each year, as more fully described in “Management—Share Incentive Plans.”

 

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DILUTION

If you invest in our ordinary shares in this offering, your interest will be diluted to the extent of the difference between the initial public offering price per share of our ordinary shares and the pro forma as adjusted net tangible book value per share of our ordinary shares immediately after this offering. Net tangible book value per share is determined by dividing our total tangible assets less total liabilities by the number of outstanding shares of our ordinary shares.

As of December 31, 2013, our net tangible book value (deficit) was $(23.6) million, or $(9.50) per share. On a pro forma basis, after giving effect to the sale of Series E preferred shares in our Series E financing, the conversion of our convertible loan into preferred shares, and the conversion of all of our outstanding preferred shares, including those issued in our Series E financing and upon conversion of the convertible loan, into ordinary shares, which will occur immediately prior to the closing of this offering, our pro forma net tangible book value would have been $12.4 million, or $4.29 per share.

After giving further effect to our issuance and sale of                  ordinary shares in this offering at an assumed initial public offering price of $         per ordinary share, the midpoint of the estimated price range set forth on the cover of this prospectus, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us, our pro forma as adjusted net tangible book value as of December 31, 2013 would have been $         million, or $         per share. This amount represents an immediate increase in pro forma as adjusted net tangible book value of $         per share to our existing shareholders and an immediate dilution in pro forma as adjusted net tangible book value of $         per share to new investors purchasing ordinary shares in this offering. We determine dilution by subtracting the pro forma as adjusted net tangible book value per share after this offering from the amount of cash that a new investor paid for an ordinary share. The following table illustrates this dilution on a per share basis:

 

Assumed initial public offering price per share

      $            
     

 

 

 

Net tangible book value (deficit) per share as of December 31, 2013

   $        

Increase in net tangible book value per share attributable to the Series E financing and the conversion of our convertible loan and our outstanding preferred shares

     

Pro forma net tangible book value (deficit) per share before this offering

     
  

 

 

    

Increase in pro forma as adjusted net tangible book value per share attributable to new investors purchasing shares in this offering

     
  

 

 

    

Pro forma as adjusted net tangible book value per share after this offering

     
     

 

 

 

Dilution in pro forma as adjusted net tangible book value per share to new investors in this offering

      $            
     

 

 

 

A $1.00 increase (decrease) in the assumed initial public offering price of $         per ordinary share, the midpoint of the estimated price range set forth on the cover of this prospectus, would increase (decrease) the pro forma as adjusted net tangible book value per share after this offering by $         per share and increase (decrease) the dilution to new investors by $         per share, in each case assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. Each increase (decrease) of one million shares in the number of shares offered by us would increase (decrease) our pro forma as adjusted net tangible book value per share after this offering, and increase (decrease) the dilution to investors participating in the offering, by approximately $         per share, assuming in each case that the assumed initial public offering price remains the same.

 

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If the underwriters exercise their option to purchase additional shares in full, the pro forma as adjusted net tangible book value will increase to $         per share, representing an immediate increase in pro forma net tangible book value to existing shareholders of $         per share and an immediate dilution in pro forma net tangible book value of $         per share to new investors.

The following table summarizes, as of December 31, 2013, on the pro forma as adjusted basis as described above, the number of our ordinary shares, the total consideration and the average price per share paid to us by existing shareholders and to be paid by new investors acquiring our ordinary shares in this offering at an assumed initial public offering price of $         per share, the midpoint of the estimated price range set forth on the cover page of this prospectus, before deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

 

     Shares Acquired     Total Consideration    

Average
Price per
Share

 
    

Number

  

Percent

   

Amount

    

Percent

   

Existing shareholders

               $                           %   $                

New investors

            
  

 

  

 

 

   

 

 

    

 

 

   

Total

        100 %   $                      100 %  
  

 

  

 

 

   

 

 

    

 

 

   

The number of shares shown as outstanding in the table and the discussion above is based on 2,890,243 ordinary shares outstanding on an as-converted basis as of December 31, 2013 and excludes:

 

   

364,959 ordinary shares issuable upon the exercise of share options outstanding as of December 31, 2013 at a weighted average exercise price of $11.13 per share;

 

   

89,606 additional ordinary shares reserved for future issuance of share options and other share-based awards under our existing equity incentive plans, of which 83,313 ordinary shares underlie options to be granted immediately following the closing of this offering; and

 

   

             shares reserved for future issuance under our Employee Share Ownership and Option Plan (2014), or the 2014 Plan, as well as shares originally reserved under our Employee Share Ownership and Option Plan (2000) and Employee Share Ownership and Option Plan (2011), but which may become available for awards under the 2014 Plan, which plan will become effective in connection with this offering and contains provisions that will automatically increase its share reserve each year, as more fully described in “Management—Share Incentive Plans.”

To the extent that options or warrants are exercised, new options or other share-based awards are issued under our equity incentive plans, or we issue additional ordinary shares in the future, there will be further dilution to investors participating in this offering. In addition, we may choose to raise additional capital because of market conditions or strategic considerations, even if we believe that we have sufficient funds for our current or future operating plans. If we raise additional capital through the sale of equity or convertible debt securities, the issuance of these securities could result in further dilution to our shareholders.

 

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SELECTED FINANCIAL DATA

You should read the following selected financial data in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the financial statements, related notes and other financial information included elsewhere in this prospectus.

The statement of comprehensive loss data for the years ended December 31, 2012 and 2013 and the statement of financial position data as of December 31, 2012 and 2013 are derived from our audited financial statements included elsewhere in this prospectus. Our historical results are not necessarily indicative of the results that should be expected in the future. Our financial statements have been prepared in accordance with International Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board.

 

     Year ended December 31,  
     2012     2013  
     (in thousands except per
share data)
 

Statement of comprehensive loss data:

    

Research and development expenses, net

   $ 10,572      $ 13,508   

General and administrative expenses

     1,897        2,452   
  

 

 

   

 

 

 

Operating loss

     12,469        15,960   
  

 

 

   

 

 

 

Financial income

     (295     (240

Financial expenses:

    

Loss from change in fair value of convertible loan

     -        1,638   

Other financial expenses

     51        12   
  

 

 

   

 

 

 

Financial expenses (income), net

     (244     1,410   
  

 

 

   

 

 

 

Loss

   $ 12,225      $ 17,370   
  

 

 

   

 

 

 

Loss per ordinary share, basic and diluted (1)

   $ 50.09      $ 71.17   
  

 

 

   

 

 

 

Weighted average ordinary shares outstanding, basic and diluted (1)

     244,054        244,054   
  

 

 

   

 

 

 

Pro forma loss per share attributable to ordinary shareholders, basic and diluted (unaudited) (1)

     $ 5.87   
    

 

 

 

Pro forma weighted average ordinary shares outstanding, basic and diluted (unaudited) (1)

       2,678,197   
    

 

 

 

 

(1) See Note 13 to our financial statements for further details on the calculation of basic and diluted loss per ordinary share and the calculation of basic and diluted pro forma loss per share attributable to ordinary shareholders.

 

     December 31,  
     2012      2013  
     (in thousands)  

Statement of financial position data:

     

Cash and cash equivalents and short-term bank deposits

   $ 13,959      $ 10,871  

Total assets

    
15,224
 
     11,827  

Total liabilities

     2,552         35,410  

Total equity (capital deficiency)

     12,672        (23,583

 

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read together with our financial statements and the related notes and the other financial information included elsewhere in this prospectus. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed below and elsewhere in this prospectus, particularly those under “Risk Factors.”

Our audited financial statements as of December 31, 2012 and 2013 and for each of the two years ended on those dates have been prepared in accordance with IFRS, as issued by the International Accounting Standards Board.

Overview

We are a clinical-stage biopharmaceutical company committed to the discovery, development and commercialization of first-in-class treatments for cancer and immune-inflammatory diseases. Our clinical pipeline is based on two distinct, proprietary platform technologies that leverage the body’s natural physiologic and genetic regulatory elements. To date, we have developed two programs based on these platforms—an oncology program and an anti-inflammatory program. Our lead product candidate from our oncology program, VB-111, is a gene-based biologic that we are initially developing for recurrent glioblastoma, or rGBM, an aggressive form of brain cancer. We have obtained fast track designation for VB-111 in the United States for prolongation of survival in patients with glioblastoma that has recurred following a treatment with standard chemotherapy and radiation; we have also received orphan drug designation in both the United States and Europe. We intend to begin a Phase 3 pivotal trial for VB-111 in rGBM by the end of the first quarter of 2015. Our lead product candidate from our anti-inflammatory program, VB-201, is an oral small molecule we are currently evaluating in Phase 2 clinical trials for psoriasis and for ulcerative colitis. We have completed enrollment of both of these Phase 2 clinical trials and we expect final results from these trials in the first quarter of 2015.

Our oncology program is based on our proprietary Vascular Targeting System, or VTS, platform technology, which utilizes genetically targeted therapy to destroy newly formed, or angiogenic, blood vessels. We believe this technology will allow us to develop product candidates for multiple oncology indications. Our anti-inflammatory program is based on the use of our Lecinoxoid platform technology. Lecinoxoids are a novel class of small molecules we developed that are structurally and functionally similar to naturally occurring molecules known to modulate inflammation. We believe our two distinct platform technologies provide us with an opportunity to develop a diversified portfolio of product candidates targeting both orphan indications and large markets.

We commenced operations in 2000, and our operations to date have been limited to organizing and staffing our company, business planning, raising capital, developing our VTS and Lecinoxoid platform technologies and developing our product candidates, including conducting pre-clinical studies and clinical trials of VB-111 and VB-201. To date, we have funded our operations through private sales of preferred shares, a convertible loan and grants from the Israeli Office of Chief Scientist, or OCS, under the Research Law. We have no products that have received regulatory approval and accordingly have never generated revenue. Since our inception and through May 31, 2014, we had raised an aggregate of $128.9 million to fund our operations, of which $113.4 million was from sales of our equity securities and $15.5 million from OCS grants.

 

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Since inception, we have incurred significant losses. For the years ended December 31, 2012 and 2013, our loss was $12.2 million and $17.4 million, respectively. We expect to continue to incur significant expenses and losses for at least the next several years. As of December 31, 2013, we had an accumulated deficit of $109.8 million. Our losses may fluctuate significantly from quarter to quarter and year to year, depending on the timing of our clinical trials, the receipt of payments under any future collaborations we may enter into, and our expenditures on other research and development activities.

As of May 31, 2014, we had cash, cash equivalents and short-term bank deposits of $10.9 million. To fund further operations, we will need to raise capital in addition to the net proceeds of this offering. We may seek these funds through a combination of private and public equity offerings, debt financings, government grants, strategic collaborations and licensing arrangements. Additional financing may not be available when we need it or may not be available on terms that are favorable to us.

As of May 31, 2014, we had 32 employees. Our operations are located in a single facility in Or Yehuda, Israel.

Financial Overview

Revenue

To date, we have not generated any revenue. We do not expect to receive any revenue from any product candidates that we develop unless and until we obtain regulatory approval and commercialize our products or enter into collaborative agreements with third parties.

Research and Development Expenses

Research and development expenses consist of costs incurred for the development of both of our platform technologies and our product candidates. Those expenses include:

 

   

employee-related expenses, including salaries and share-based compensation expenses for employees in research and development functions;

 

   

expenses incurred in operating our laboratories and small-scale manufacturing facility;

 

   

expenses incurred under agreements with CROs and investigative sites that conduct our clinical trials;

 

   

expenses relating to outsourced and contracted services, such as external laboratories, consulting and advisory services;

 

   

supply, development and manufacturing costs relating to clinical trial materials;

 

   

maintenance of facilities, depreciation and other expenses, which include direct and allocated expenses for rent and insurance; and

 

   

costs associated with pre-clinical and clinical activities and regulatory compliance.

Research and development activities are the primary focus of 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. We expect that our research and development expenses will increase in absolute dollars in future periods as we continue to invest in research and development activities related to the development of our platform technologies and product candidates.

 

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Research expenses are recognized as incurred. An intangible asset arising from the development of our product candidates is recognized if certain capitalization conditions are met. As of December 31, 2012 and 2013, we did not have any capitalized development costs.

Costs for certain development activities are recognized based on an evaluation of the progress to completion of specific tasks using information and data provided to us by our vendors and clinical sites. Nonrefundable advance payments for goods or services to be received in future periods for use in research and development activities are deferred and capitalized. The capitalized amounts are then expensed as the related goods are delivered and the services are performed.

We have received grants from the OCS as part of the research and development programs for our VTS and Lecinoxoid platform technologies. The requirements and restrictions for such grants are found in the Research Law. These grants are subject to repayment through future royalty payments on any products resulting from these research and development programs, including VB-111 and VB-201. Under the Research Law, royalties of 3% to 3.5% on the revenues derived from sales of products or services developed in whole or in part using these OCS grants are payable to the Israeli government. The maximum aggregate royalties paid generally cannot exceed 100% of the grants made to us, plus annual interest generally equal to the 12-month LIBOR applicable to dollar deposits, as published on the first business day of each calendar year. The total gross amount of grants actually received by us from the OCS, including accrued LIBOR interest as of December 31, 2013, totaled $17.1 million. As of December 31, 2013, we had not paid any royalties to the OCS.

In addition to paying any royalty due, we must abide by other restrictions associated with receiving such grants under the Research Law that continue to apply following repayment to the OCS. These restrictions may impair our ability to outsource manufacturing, engage in change of control transactions or otherwise transfer our know-how outside of Israel, and may require us to obtain the approval of the OCS for certain actions and transactions and pay additional royalties and other amounts to the OCS. In addition, any change of control and any change of ownership of our ordinary shares that would make a non-Israeli citizen or resident an “interested party,” as defined in the Research Law, requires prior written notice to the OCS. If we fail to comply with the Research Law, we may be subject to criminal charges.

Under applicable accounting rules, the grants from the OCS have been accounted for as an off-set against the related research and development expenses in our financial statements. As a result, our research and development expenses are shown on our financial statements net of the OCS grants.

General and Administrative Expenses

General and administrative expenses consist principally of salaries and related costs for personnel in executive and finance functions, such as salaries, benefits and share-based compensation. Other general and administrative expenses include facility costs not otherwise included in research and development expenses, communication expenses, and professional fees for legal services, patent counseling and portfolio maintenance, consulting, auditing and accounting services.

We anticipate that our general and administrative expenses will increase following the completion of this offering due to many factors, the most significant of which include increased expenses related to legal and accounting services associated with maintaining compliance with NASDAQ listing rules and SEC requirements as a result of becoming a publicly traded company,

 

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such as increased legal and accounting services, stock registration and printing fees, addition of new headcount to support compliance and communication needs, and increased insurance premiums.

Financial Expenses (Income), Net

Financial income is comprised of interest income generated from interest earned on our cash, cash equivalents and short-term bank deposits.

Since July 2013, as a result of our convertible loan, financial expenses primarily consist of gains and losses resulting from the re-measurement of our convertible loan liability. We continued to record adjustments to the estimated fair value of the convertible loan liability until it was converted into our Series E preferred shares, after which we no longer record any related periodic fair value adjustments.

Taxes on Income

We have not generated taxable income since our inception, and had carry forward tax losses as of December 31, 2013 of $102 million. We anticipate that we will be able to carry forward these tax losses indefinitely to future tax years. Accordingly, we do not expect to pay taxes in Israel until we have taxable income after the full utilization of our carry forward tax losses.

We recognize deferred tax assets on losses for tax purposes carried forward to subsequent years if utilization of the related tax benefit against a future taxable income is expected. We have not created deferred taxes on our tax loss carry forward since their utilization is not expected in the foreseeable future.

Critical Accounting Policies and Significant Judgments and Estimates

This management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with IFRS. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported expenses incurred during the reporting periods. Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

We make estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

Share-Based Compensation

We operate a number of equity-settled, share-based compensation plans for employees (as defined in IFRS 2 “Share-Based Payments”), directors and service providers. As part of the plans, we grant employees, directors and service providers, from time to time and at our discretion, options to purchase our ordinary shares. The fair value of the services received in exchange for the grant of the options is recognized as an expense in our statements of comprehensive loss and is carried to additional paid-in capital in our statements of financial position. The total amount is recognized as an expense ratably over the vesting period of the options, which is the period during which all vesting conditions are expected to be met.

 

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We estimate the fair value of our share-based awards to employees, directors and service providers using the Black-Scholes option pricing model, which requires the input of highly subjective assumptions, including (a) the expected volatility of our shares, (b) the expected term of the award, (c) the risk-free interest rate, and (d) expected dividends. Due to the lack of a public market for the trading of our shares and a lack of company-specific historical and implied volatility data, we have based our estimate of expected volatility on the historic volatility of a group of similar companies that are publicly traded. We will continue to apply this process until a sufficient amount of historical information regarding the volatility of our own share price becomes available.

We are also required to estimate forfeitures at the time of grant, and revise those estimates in subsequent periods if actual forfeitures differ from the estimates. Vesting conditions are included in assumptions about the number of options that are expected to vest. At the end of each reporting period, we revise our estimates of the number of options that are expected to vest based on the nonmarket vesting conditions. We recognize the impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to additional paid in capital.

The following table summarizes the weighted average assumptions we have used in our Black-Scholes calculations for the years ended December 31, 2012 and December 31, 2013:

 

     Year ended
December 31,
 
    

2012

    

2013

 

Employee share options:

     

Risk-free interest rate

     1.76      2.62

Expected dividend yield

     0      0

Expected volatility

     68.6      69.0

Expected term (years)

     9         9   

The following table summarizes the allocation of our share compensation expense:

 

     Year ended
December 31,
 
    

2012

      

2013

 
     (in thousands)  

Research and development

   $ 246        $ 122  

General and administrative

     219          372  
  

 

 

      

 

 

 

Total

   $ 465        $ 494  
  

 

 

      

 

 

 

Option Pricing

As there has historically been no public market for our ordinary shares, in establishing the exercise prices of share options, our board of directors typically determined the fair value of our ordinary shares based on valuation estimates performed by management. With respect to options granted during 2011, 2012 and 2013, our board of directors established the terms of these awards in 2011, and it based the exercise prices of such options on its contemporaneous estimate of the fair value of our ordinary shares of $14.92 per share as of the date the terms of the awards were established. In March 2014, in connection with the preparation of our financial statements for the years ended December 31, 2012 and December 31, 2013, we retrospectively determined the fair values of our ordinary shares as of the respective dates that these options were granted for purposes of determining share-based compensation expense. The fair value

 

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per ordinary share as of September 30, 2013 declined from December 17, 2012 due to the dilutive effect of the issuance of the convertible loan, despite the fact that the total value of the company increased.

The following table presents the grant dates and related exercise prices of share options granted to our employees, consultants and members of our board of directors for the years ended December 31, 2012 and December 31, 2013, along with the corresponding exercise price for each grant and the fair value per share utilized to calculate share-based compensation expense.

 

Grant Date

  

Number of Shares
Underlying
Options Granted

    

Exercise Price
per Ordinary
Share

    

Fair Value per
Ordinary
Share on

Grant Date

    

Per Share Weighted
Average Fair Value
of Options

 

December 17, 2012

     30,400       $ 14.92       $ 19.42       $ 14.68   

September 30, 2013

     30,850         14.92         18.68         11.39   

Based upon the assumed initial public offering price of $         per share, which is the midpoint of the price range set forth on the cover of this prospectus, the aggregate intrinsic value of share options outstanding as of December 31, 2013 was $         million, of which $         million related to vested share options and $         million related to unvested share options and the aggregate intrinsic value of restricted shares outstanding as of December 31, 2013 was $0. In addition, immediately following closing of this offering, we intend to grant to Prof. Dror Harats, our chief executive officer, share options to purchase 83,313 ordinary shares at a nominal exercise price, which options will be fully vested and exercisable upon grant. Based upon the assumed initial public offering price of $         per share, we expect to record a one-time non-cash compensation expense of approximately $         million as a result of these options upon closing of this offering.

The valuation approach we elected to use to determine the fair value of our ordinary shares is the income approach. The income approach is based on the premise that the value of a security or asset equals the present value of the future earning capacity available for distribution to investors in the security or asset. We chose this approach based on the relatively early stage of our development consistent with guidance of the American Institute of Certified Public Accountants Practice Aid, Valuation of Privately-Held-Company Equity Securities Issued as Compensation .

A commonly used methodology under the income approach is a discounted cash flow analysis. A discounted cash flow analysis involves forecasting the appropriate cash flow stream over an appropriate period of time and discounting it back to a present value at an appropriate discount rate. The discount rate considers the time value of money, inflation and the risk inherent in ownership of the asset or security interest being valued.

Once we determined the present value of our share capital, we allocated the value to the different classes of our share capital using the probability-weighted expected return method, or PWERM, based in part on the preference of each class. The PWERM is a scenario-based analysis based on potential future liquidity events, with an allocation of probabilities applied to each scenario, and discounted to present value. The three potential liquidity scenarios we used for this analysis were remaining as a private company, an initial public offering of our common shares and an acquisition of our company.

 

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The following table summarizes the significant assumptions utilized for each of the valuation scenarios used to determine the fair value of our ordinary shares during the periods indicated below.

 

     Liquidity Scenario—grant of
December 2012
 
    

Private

    

Future IPO

   

M&A

 

Probability weighting

                    100

Liquidity date

                    12/31/15   

Volatility

                    69

Risk-free interest rate

                    0.36

Discount for lack of marketability

                    24

Probability-weighted expected return methodology

                  $ 19.42   
     Liquidity Scenario—grant of
September 2013
 
    

Private

    

Future IPO

   

M&A

 

Probability weighting

             45     55

Liquidity date

             6/30/14        9/30/16   

Volatility

             76.65     68

Risk-free interest rate

                    0.63

Discount for lack of marketability

             14.63     24

Probability-weighted expected return methodology

           $ 18.28      $ 19.02   

Following this offering, the fair value of our ordinary shares will be determined based on the closing price of our ordinary shares on The NASDAQ Global Market.

Convertible Loan

The convertible loan contained an embedded derivative (the conversion option). We designated the entire loan, including the conversion option as a liability at fair value through profit or loss, which means that we recognize increases or decreases in the fair value of this liability from period to period in our statement of comprehensive loss. The convertible loan agreement was entered into with shareholders and related parties, and its value is higher than the consideration we received. We prepared a valuation of the fair value of the convertible loan. The valuation included estimations of volatility, the risk free interest rate and the value of the shares into which the loan is convertible, using the binomial model. The difference, as of July 1, 2013, between the fair value and the principal amount of the convertible loan was charged to additional paid-in capital within equity. The change in the fair value from July 1, 2013 to December 31, 2013 was charged to the statement of comprehensive loss. For more detail, see Note 8 to our financial statements.

 

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Results of Operations

Comparison of Years Ended December 31, 2012 and 2013

 

     Year ended
December 31,
    Increase (Decrease)  
     2012     2013    

      $      

     %  
     (in thousands)  

Expenses:

         

Research and development, gross

   $ 12,942      $ 14,107      $ 1,165         9

Government grants

   $ (2,370   $ (599   $ 1,771         75   
  

 

 

   

 

 

   

 

 

    

Research and development, net

   $ 10,572      $ 13,508      $ 2,936         28   

General and administrative

     1,897        2,452        555         29   
  

 

 

   

 

 

   

 

 

    

Operating loss

     12,469        15,960        3,491         28   

Financial expense (income), net

     (244     1,410        1,654         nm   
  

 

 

   

 

 

   

 

 

    

Loss

   $ 12,225      $ 17,370      $ 5,145         42   
  

 

 

   

 

 

   

 

 

    

 

nm = not meaningful

Research and development expenses, net .    Research and development expenses are shown net of OCS grants. Research and development expenses for the year ended December 31, 2013 were $13.5 million, compared to $10.6 million for the year ended December 31, 2012, an increase of $2.9 million, or 28%. The increase in research and development expense was primarily due to a $1.8 million reduction in the amount of OCS grants received in 2013, which totaled $0.6 million, as compared to $2.4 million received in 2012, because the OCS did not approve our Lecinoxoid project application for the period from May 2012 to April 2013, due to budgetary restraints and their view of the status of our Lecinoxoid program at that time. In August 2013, we applied for a grant for further development of the Lecinoxoid project for the period from August 2013 to July 2014, which was approved and is currently in progress. Additionally, there was an increase of $1.4 million in expenses for subcontractors and consultants, mainly due to a $0.9 million increase in our clinical trials and a $0.4 million increase in process scale-up costs for VB-111 in 2013 as compared to 2012; and an increase of $0.8 million in payroll and related expenses as the result of the recording of a $0.5 million bonus expense and $0.3 million of unfavorable currency exchange rates; all partially offset by lower expenses for legal services relating to intellectual property.

General and administrative expenses.     General and administrative expenses for the year ended December 31, 2013 were $2.5 million, compared to $1.9 million for the year ended December 31, 2012, an increase of $0.6 million, or 29%. The increase in general and administrative expense was primarily attributable to an increase of $0.4 million in expenses relating to higher employment costs in the form of bonuses and share-based compensation.

Financial expense (income), net.     Financial expense, net for the year ended December 31, 2013 was $1.4 million, compared to financial income, net of $0.2 million for the year ended December 31, 2012, an increase of $1.7 million, primarily attributable to the change in the fair value of the convertible loan since its closing on July 1, 2013 to the year end.

Liquidity and Capital Resources

Since our inception and through May 31, 2014, we have raised a total of $113.4 million from sales of our equity securities and $15.5 million from OCS grants. Our primary uses of cash have been to fund working capital requirements and research and development, and we expect these will continue to represent our primary uses of cash. We expect our cash, cash equivalents and

 

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short-term bank deposits, as of May 31, 2014, to be sufficient to fund our operations for approximately nine to ten months. Our ability to continue as a going concern will depend, in large part, on our ability to generate positive cash flow from operations and obtain additional financing, both of which are uncertain.

In its report accompanying our audited financial statements for the year ended December 31, 2013, included elsewhere in this prospectus, our independent registered accounting firm included an explanatory paragraph stating that our recurring losses from operations and lack of sufficient working capital raise substantial doubt as to our ability to continue as a going concern. A “going concern” opinion means, in general, that our independent registered public accounting firm has substantial doubt about our ability to continue our operations without an additional infusion of capital from external sources, such as the proceeds from this offering. In addition, having a going concern qualification may make it less likely that investors or commercial banks will be willing to finance our operations. If we are unable to achieve these goals, our business would be in jeopardy and we might not be able to continue operations and might have to liquidate our assets. In that case, investors might receive less than the value at which those assets are carried on our financial statements, and it is likely that investors in this offering would lose all or a part of their investment.

Funding Requirements

Our product candidates are still in clinical development. We expect to incur significant expenses and increasing operating losses for the foreseeable future. We anticipate that our expenses will increase substantially as we:

 

   

continue to conduct clinical trials for our lead product candidates, VB-111 and VB-201;

 

   

continue our research and development efforts using our two platform technologies;

 

   

seek regulatory approval for our product candidates;

 

   

build a commercial manufacturing facility for our products in Israel; and

 

   

operate as a public company.

At December 31, 2013, we had cash, cash equivalents and short-term bank deposits totaling $10.9 million and working capital of $7.1 million. On May 15, 2014, we received an additional $4.9 million of gross proceeds upon the closing of our Series E financing. We expect that the net proceeds from this offering, together with our existing cash and cash equivalents and short-term bank deposits, will enable us to fund our operating expenses and capital expenditures requirements for at least          months and will be sufficient to enable us to submit a BLA for VB-111 in rGBM, to complete our Phase 2 clinical trial for VB-111 in thyroid cancer, to complete our Phase 1/2 clinical trial for VB-111 in ovarian cancer, to complete our Phase 2 clinical trials for VB-201 in psoriasis and ulcerative colitis, and to complete Phase 1 clinical trials for at least one of our other Lecinoxoid product candidates. We anticipate that completing the Phase 3 clinical trial for VB-111 in rGBM and Phase 2 clinical trials for VB-201 in psoriasis and ulcerative colitis will involve direct costs of approximately $28.0 to $30.0 million, excluding indirect costs. We have based these estimates on assumptions that may prove to be wrong, and we may use our available capital resources sooner than we currently expect. Because of the numerous risks and uncertainties associated with the development of VB-111 and VB-201, and the extent to which we may enter into collaborations with third parties for development of these or other product candidates, we are unable to estimate the amounts of increased capital outlays and operating

 

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expenses associated with completing the development of VB-111, VB-201 and our other product candidates. Our future capital requirements will depend on many factors, including:

 

   

the costs, timing and outcome of regulatory review of VB-111, VB-201 and any other product candidates we may pursue;

 

   

the costs of future development activities, including clinical trials, for VB-111, VB-201 and any other product candidates we may pursue;

 

   

the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims;

 

   

the extent to which we acquire or in-license other products and technologies; and

 

   

our ability to establish any future collaboration arrangements on favorable terms, if at all.

Until such time, if ever, as we can generate substantial product revenue, we expect to finance our cash needs through a combination of equity offerings, debt financings, collaborations, strategic alliances and licensing arrangements. We do not have any committed external source of funds. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our shareholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a holder of our ordinary shares. Debt 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 collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams or research programs 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, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market VB-111, VB-201 and any other product candidates that we would otherwise prefer to develop and market ourselves.

Cash Flows

The following table sets forth the primary sources and uses of cash for each of the periods set forth below:

 

     Year ended
December 31,
 
    

     2012     

   

     2013     

 
     (in thousands)  

Cash used in operating activities

   $ (13,008   $ (13,129

Cash provided by investing activities

     6,541        6,478   

Cash provided by financing activities

            10,000   
  

 

 

   

 

 

 

Net (decrease) increase in cash and cash equivalents

   $ (6,467   $ 3,349   
  

 

 

   

 

 

 

Operating Activities

Cash used in operating activities for the year ended December 31, 2013 was $13.1 million and consisted primarily of net loss of $17.4 million arising primarily from research and development activities, partially offset by net aggregate non-cash charges of $2.2 million and a net reduction of working capital of $2.0 million.

 

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Cash used in operating activities for the year ended December 31, 2012 was $13.0 million and consisted primarily of net loss of $12.2 million in addition to a $1.6 million increase of working capital, partially offset by net aggregate noncash charges of $0.3 million and interest received of $0.4 million.

Investing Activities

Net cash provided by investing activities was $6.5 million for each of the years ended December 31, 2012 and 2013. This was primarily due to maturation of short-term bank deposits.

Financing Activities

Cash provided by financing activities for the year ended December 31, 2013 was the result of the receipt of $10.0 million from the convertible loan.

No cash was generated by financing activities for the year ended December 31, 2012.

Contractual Obligations and Commitments

The following tables summarize our contractual obligations and commitments as of December 31, 2013 that will affect our future liquidity:

 

     Total     

Less
than

1 year

     1-3
Years
     3-5
Years
    

More
than

5 Years

 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
     (in thousands)  

Purchase obligations to CROs

   $ 4,100       $ 3,000       $ 1,100       $       $   

Licenses

     394         138         256                   

Operating Leases

     650         350         300                   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 5,144       $ 3,488       $ 1,656       $       $   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

We also have obligations to make future payments to third parties that become due and payable on the achievement of certain development, regulatory and commercial milestones, such as the start of a clinical trial, filing of an NDA, approval by the FDA or product launch, or royalties upon sale of products. We have not included these commitments on our statement of financial position or in the table above because the achievement and timing of these milestones is not fixed and determinable. These potential future commitments include:

 

   

Agreement with Tel Hashomer .    On February 3, 2013, we entered into an agreement with Tel Hashomer—Medical Research, Infrastructure and Services Ltd., or Tel Hashomer, a private company whose purpose is to promote the welfare of the Sheba Medical Center, or the Hospital, and Prof. Dror Harats, our chief executive officer. The agreement with Tel Hashomer resolved claims of the Hospital regarding the ownership of certain inventions and patent rights owned by us and developed in part by Prof. Harats and other inventors who were engaged by us and by the Hospital in parallel. The agreement provided us with a waiver of rights by the Hospital and Tel Hashomer in connection with intellectual property developed by these inventors prior to the date of the agreement. In consideration for the waiver, we undertook to pay 1% of any net sales of any product covered by the intellectual property covered under the agreement, which includes all of our current product candidates, and 2% of any consideration that we receive for granting a license or similar rights to this intellectual property. Such amounts will be recorded as part of our cost of revenues. In addition, upon the occurrence of an exit event such as a merger, sale of all shares or assets or the closing of an initial public offering, such as this

 

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offering, we are required to pay to Tel Hashomer 1% of the proceeds received by us or our shareholders as the case may be. Payment obligations under the agreement are capped by the amount of NIS 100 million ($29 million), excluding amounts previously paid as royalties on account of any net sales. Such amounts will be recorded in our statement of comprehensive loss as research and development expenses.

 

   

Agreement with Crucell.     On April 15, 2011, we entered into a Commercial License Agreement with Crucell Holland B.V., or Crucell, for incorporating the adenovirus 5 in VB-111 and other drug candidates for cancer for consideration including the following potential future payments:

 

   

an annual license fee of 100,000 ($137,000), continuing until the termination of the agreement, which will occur upon (i) the later of the expiration date of the last related patent or 10 years from the first commercial sale of VB-111 or (ii) the termination of the agreement by us, which is permitted, upon three months’ written advance notice to Crucell;

 

   

a milestone payment of 400,000 ($550,000) upon receipt of the first regulatory approval for the marketing of the first indication for each product covered under the agreement; and

 

   

tiered unlimited and uncapped royalties of 2.0% to 0.5% on net sales of VB-111.

 

   

Participation by the OCS.     We receive grants from the OCS, as part of the oncology and anti-inflammatory research and development programs. The requirements and restrictions for such grants are set forth in the Research Law. These grants are subject to repayment through future royalty payments on sales of any products resulting from these research and development programs, including VB-111 and VB-201. Under the Research Law, we are obligated to pay royalties of 3% to 3.5%. The maximum aggregate royalties paid generally cannot exceed 100% of the grants made to us, plus annual interest generally equal to the 12-month LIBOR applicable to dollar deposits, as published on the first business day of each calendar year. The total gross amount of grants actually received by us from the OCS, as of December 31, 2013, totaled approximately $14.6 million and the balance of the principal and interest in respect of our commitments for future payments to the OCS totaled approximately $17.1 million. As of December 31, 2013, we had not paid any royalties to the OCS.

On July 1, 2013, we closed a convertible loan agreement with some of our shareholders and related parties. This agreement provided for the infusion of an aggregate amount of $10 million in the form of a convertible loan to bridge our cash needs until a financing was achieved. The convertible loan was denominated in U.S. dollars. On May 15, 2014, in connection with the closing of our Series E financing, the loan automatically converted into 240,496 Series E preferred shares at a discount to the price paid by the Series E investors averaging 22.7%.

Off-Balance Sheet Arrangements

Since our inception, we have not engaged in any off-balance sheet arrangements, as defined in the rules and regulations of the SEC, such as relationships with unconsolidated entities or financial partnerships, which are often referred to as structured finance or special purpose entities, established for the purpose of facilitating financing transactions that are not required to be reflected on our statement of financial positions.

 

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Quantitative and Qualitative Disclosures about Market Risk

We are exposed to market risks in the ordinary course of our business. Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily a result of foreign currency exchange rates. Approximately 40% of our expenses are denominated in New Israeli Shekels and 10% in Euros. Changes of 5% and 10% in the US$/NIS or the US$/Euro exchange rate will increase or decrease the operation expenses by up to 2% and 4.5%, respectively.

Foreign Currency Exchange Risk

Fluctuations in exchange rates, especially the NIS against the U.S. dollar, may affect our results, as some of our assets are linked to NIS, as are some of our liabilities. In addition, the fluctuation in the NIS exchange rate against the U.S. dollar may impact our results, as a portion of our operating cost is NIS denominated.

The following table presents information about the changes in the exchange rates of the NIS against the U.S. dollar at year end:

 

Period

  

   

 

Year ended December 31, 2012

     2.4%   

Year ended December 31, 2013

     7.5%   

Inflation Risk

We do not believe that inflation had a material effect on our business, financial condition or results of operations in the last two fiscal years. If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through hedging transactions. Our inability or failure to do so could harm our business, financial condition and results of operations.

Recently Issued and Adopted Accounting Pronouncements

IFRS 9 “Financial Instruments” is the first standard issued as part of a wider project to replace IAS 39. IFRS 9 retains but simplifies the mixed measurement model and establishes two primary measurement categories for financial assets: amortized cost and fair value. The basis of classification depends on the entity’s business model and the contractual cash flow characteristics of the financial assets and hedge accounting continues to apply. The 2013 amendments to IFRS 9 have removed the previous mandatory effective date of January 1, 2015, but the standard is available for immediate application. We have not yet assessed the full impact of the standard.

JOBS Act

On April 5, 2012, the JOBS Act was signed into law. The JOBS Act contains provisions that, among other things, reduce certain reporting requirements for an “emerging growth company.” As an “emerging growth company,” we are electing to not take advantage of the extended transition period afforded by the JOBS Act for the implementation of new or revised accounting standards, and as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that our decision to not take advantage of the extended transition period for complying with new or revised accounting standards is irrevocable. In addition, we are in the process of evaluating the benefits of relying on the other exemptions and reduced reporting requirements provided by the JOBS Act.

 

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BUSINESS

Overview

We are a clinical-stage biopharmaceutical company committed to the discovery, development and commercialization of first-in-class treatments for cancer and immune-inflammatory diseases. Our clinical pipeline is based on two distinct, proprietary platform technologies that leverage the body’s natural physiologic and genetic regulatory elements. To date, we have developed two programs based on these platforms—an oncology program and an anti-inflammatory program. Our lead product candidate from our oncology program, VB-111, is a gene-based biologic that we are initially developing for recurrent glioblastoma, or rGBM, an aggressive form of brain cancer. We have obtained fast track designation for VB-111 in the United States for prolongation of survival in patients with glioblastoma that has recurred following treatment with standard chemotherapy and radiation. We have also received orphan drug designation in both the United States and Europe. We intend to begin a Phase 3 pivotal trial for VB-111 in rGBM by the end of the first quarter of 2015. Our lead product candidate from our anti-inflammatory program, VB-201, is an oral small molecule we are currently evaluating in Phase 2 clinical trials for psoriasis and for ulcerative colitis. We have completed enrollment of both of these Phase 2 clinical trials and we expect final results from these trials in the first quarter of 2015.

Our oncology program is based on our proprietary Vascular Targeting System, or VTS, platform technology, which utilizes genetically targeted therapy to destroy newly formed, or angiogenic, blood vessels, and which we believe will allow us to develop product candidates for multiple oncology indications. Our anti-inflammatory program is based on the use of our Lecinoxoid platform technology. Lecinoxoids are a novel class of small molecules we developed that are structurally and functionally similar to naturally occurring molecules known to modulate inflammation. We believe our two distinct platform technologies provide us with an opportunity to develop a diversified portfolio of product candidates targeting both large markets and orphan indications.

We are developing our lead oncology product candidate, VB-111, for solid tumor indications, with current clinical programs in rGBM, thyroid cancer and ovarian cancer. In interim analyses of data from our ongoing open-label Phase 2 clinical trial of VB-111 in rGBM, we observed dose-dependent attenuation of tumor growth and an increase in median overall survival, which is the time interval from initiation of treatment to the patient’s death. The U.S. Food and Drug Administration, or FDA, has granted VB-111 fast track designation for prolongation of survival in patients with glioblastoma that has recurred following treatment with temozolomide, a chemotherapeutic agent commonly used to treat newly diagnosed glioblastoma, and radiation. We are currently discussing a special protocol assessment, or SPA, with the FDA pursuant to which we intend to begin a Phase 3 pivotal trial of VB-111 in rGBM by the end of the first quarter of 2015. In addition, we are conducting a Phase 2 clinical trial of VB-111 in thyroid cancer and a Phase 1/2 clinical trial in ovarian cancer in combination with paclitaxel, a chemotherapeutic agent commonly used to treat ovarian cancer. As of May 31, 2014, we had studied VB-111 in over 150 patients and have observed it to be well-tolerated. We have been granted composition of matter patents that, together with orphan drug designations in both the United States and Europe, we believe will provide exclusivity for VB-111, if approved for marketing, until at least 2027.

Our lead anti-inflammatory product candidate, VB-201, focuses on modifying the body’s immune-mediated native inflammatory response. We are currently evaluating VB-201 in patients with psoriasis and those with ulcerative colitis. We have recently completed an exploratory double-blind, placebo-controlled Phase 2 trial designed to evaluate safety and establish dosage of VB-201 in patients with psoriasis. In this trial, VB-201 was well-tolerated and

 

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met secondary efficacy endpoints, showing statistically significant improvements in multiple measures of disease severity. While the trial did not meet its primary efficacy endpoint, we believe this may have been due to the short treatment duration and low dosing levels of the trial. We are now conducting a multi-center, randomized, double-blind Phase 2 clinical trial to evaluate the safety and efficacy of VB-201 in patients with moderate to severe psoriasis. We are also conducting a Phase 2 trial of VB-201 in ulcerative colitis as a randomized, double-blind, placebo-controlled trial with 24 weeks of daily oral administration of VB-201. As of May 31, 2014, we had studied VB-201 in over 600 patients and have observed it to be well-tolerated. VB-201 is covered by an issued U.S. composition of matter patent until at least 2027.

We plan to leverage our VTS and Lecinoxoid platforms to develop additional therapeutics. For example, we are conducting pre-clinical studies of additional potential product candidates based on our VTS platform technology. We have also identified additional Lecinoxoid derivatives that may have increased efficacy or specificity compared to VB-201 and which we believe may have potential for additional inflammatory indications.

Our current chief executive officer, Dror Harats, M.D., and our current chief scientific officer, Jacob George, M.D. founded our company in 2000 based on more than 15 years of prior research in atherosclerosis, vascular biology and lipid metabolism. We have assembled a highly experienced team with extensive drug development capabilities.

Our Strategy

Our goal is to become a leading biopharmaceutical company focused on discovering, developing and commercializing innovative therapeutics that leverage our proprietary VTS and Lecinoxoid platform technologies for oncology, anti-inflammatory and other indications. We intend to achieve this goal by pursuing the following strategies:

 

   

Pursue regulatory approval for our lead oncology compound, VB-111, for rGBM

We intend to commence a Phase 3 pivotal trial of VB-111 for rGBM by the end of the first quarter of 2015. We intend to conduct the trial under an SPA, which we are currently discussing with the FDA, and estimate that we will complete the trial by the end of 2016, with data expected in the second half of 2017, with the timing of the data dependent on overall survival of the patients in the trial. If we receive positive data from the trial, we expect to promptly submit a Biologics License Application, or BLA, to the FDA seeking approval of VB-111 for the treatment of rGBM in the United States.

 

   

Advance development of VB-201 for psoriasis and ulcerative colitis

We will continue to advance the development of our lead anti-inflammatory product candidate, VB-201. We are currently conducting Phase 2 clinical trials of VB-201 for psoriasis and for ulcerative colitis. We expect final results from each of these trials in the first quarter of 2015. If the results are positive, we plan to commence Phase 3 clinical trials for both indications either independently or in collaboration with a third party.

 

   

Expand indications for VB-111 and VB-201

We believe VB-111 has the potential for applications in other solid tumors in addition to rGBM. We are therefore conducting clinical trials in both thyroid and ovarian cancer. We may also pursue expansion of the treatment indication of VB-111 in glioblastoma beyond recurrent cases to include newly diagnosed cases if clinical data support such expansion.

We also believe there are other potential applications for VB-201 to treat inflammatory diseases beyond psoriasis and ulcerative colitis. We intend to explore applications in auto-immune inflammatory diseases such as Crohn’s disease, atherosclerosis, multiple sclerosis and rheumatoid arthritis.

 

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Leverage our two distinct platform technologies to develop therapeutics targeting a broad range of diseases

In addition to expanding the indications for our current lead compounds, we intend to explore the development of other compounds derived from our VTS and Lecinoxoid platform technologies. For example, we intend to continue our development of a compound generated through our VTS platform technology that we have initially targeted at ischemia-related indications. In addition, we intend to advance other Lecinoxoid derivatives that may demonstrate pre-clinical evidence of activity in various inflammatory and inflammatory-derived conditions such as fibrosis.

 

   

Selectively enter into licensing and collaboration arrangements to supplement our internal development capabilities

As we advance our pipeline of compounds, we will evaluate opportunities to selectively form collaborative alliances to expand our capabilities and product offerings into other therapeutic areas and potentially accelerate the development and commercialization of our products. We engage in conversations with third parties to evaluate such potential collaborations on an ongoing basis.

 

   

Expand our manufacturing capacity to support clinical trials and commercialization of VB-111

We currently manufacture clinical quantities of VB-111 at our facility in Israel and through a third party in the United States. We intend to construct a large-scale manufacturing facility that would enable us to manufacture commercial quantities of VB-111, if it receives regulatory approval, and potentially other product candidates.

Our Product Candidates and Technology

Our VTS and Lecinoxoid platform technologies have enabled us to advance multiple and diverse product candidates in pre-clinical and clinical development. The following table summarizes our product candidate pipeline from each of our two platform technologies:

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Our VTS Platform

Overview

Our innovative, proprietary VTS platform technology enables systemic administration of gene therapy to either destroy or promote angiogenic blood vessels. VTS is both tissue- and condition-specific, allowing for targeted and limited gene expression in endothelial cells, the thin layer of cells that lines the interior surface of blood vessels undergoing angiogenesis.

Our VTS platform technology comprises three components, a viral vector, a promoter and a transgene:

 

  1. Viral vector—a modified virus that is used as a delivery vehicle to distribute the promoter and the transgene throughout the body.

 

  2. Promoter—our proprietary, genetically modified promoter, called PPE-1-3X, that specifically targets the endothelial cells of angiogenic blood vessels. When present in these cells, the promoter initiates the expression of the transgene.

 

  3. Transgene— a genetic sequence designed to yield a specific biologic effect, the expression of which is directed by PPE-1-3X. The particular transgene will vary depending on the therapeutic objectives of the product candidate.

Once the gene therapy has reached the angiogenic blood vessels, the PPE-1-3X promoter activates expression of the transgene to produce a desired protein in the endothelial cells of those vessels. For oncology applications, the transgene selected is designed to destroy angiogenic blood vessels that feed solid tumors. For other potential applications, such as the treatment of ischemia, a different transgene can be selected that is designed to promote the development of angiogenic blood vessels instead of their destruction.

VB-111

We designed VB-111 to address oncology indications, specifically solid tumors, by selectively targeting the blood vessels required for tumor growth and encouraging the programmed cell-death process, or apoptosis, of cells in those blood vessels. VB-111 is administered intravenously. PPE-1-3X is activated specifically in angiogenic endothelial cells and regulates a transgene consisting of a combination of two gene sequences known as Fas and TNFR1. When expressed, the transgene produces a unique pro-apoptotic protein, the Fas-TNFR1 chimera, that interacts with a native inflammatory molecule, Tumor Necrosis Factor, or TNF- a , and results in the destruction of newly formed or immature blood vessels. When activated by PPE-1-3X, specifically in angiogenic endothelial cells, this combination enables VB-111 to reduce tumor growth in a highly targeted manner. In addition, our pre-clinical studies suggest that there may be a local immune inflammatory response to the presence of the viral vector and the Fas-TNFR1 chimera that may contribute to the efficacy of VB-111.

 

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VB-111’s mechanism of action is illustrated below:

 

LOGO

VB-111’s mechanism of action is independent of tumor-specific mutations, which we believe makes it less susceptible to resistance and, therefore, potentially applicable for a broader patient population than current therapies. We have conducted pre-clinical studies in animal models of lung cancer, colon cancer, thyroid cancer, rGBM and melanoma. Based on those studies, and clinical results to date, we believe that VB-111 has anti-angiogenic activity that may hold clinical promise and may be suitable for treatment of rGBM. We also decided to focus on rGBM as our first indication because we expect the rapid kinetics of this disease will enable us to accumulate clinical data in a short time and, therefore, may facilitate development of VB-111 for this and other indications.

VB-111 Clinical Programs

We initially studied VB-111 in a Phase 1 “all comers” trial involving patients with multiple types of advanced metastatic cancer. In that trial, VB-111 was well-tolerated and showed a dose-dependent extension in median overall survival across a range of tumor types. Based on these results, we decided to proceed with the development of VB-111 for the lead indication of rGBM, as well as to investigate VB-111 as a monotherapy for the treatment of thyroid cancer and, in combination with chemotherapy, for ovarian cancer. We have an open IND for VB-111 with the Office of Cellular, Tissue, and Gene Therapeutics within FDA’s Center for Biologics Evaluation and Research.

VB-111 for rGBM

Glioblastoma—Background

According to a study published in the New England Journal of Medicine in 2008, glioblastoma affects approximately 10,000 newly diagnosed people each year in the United States. It is a devastating, rapidly progressing tumor, with a median time from diagnosis to the patient’s death of 12 to 15 months. Glioblastoma primarily affects young adults.

 

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In newly diagnosed glioblastoma, the standard of care consists of triple therapy—surgery, radiation and chemotherapy. Glioblastoma is difficult to treat due to several complicating factors. For example, in some cases, the location of the tumor makes it ineligible for surgery. In other cases, available therapies are limited due to neuro-toxicity, drug resistance, and difficulty in crossing the blood–brain barrier to act on the tumor. Even with triple therapy, virtually all patients suffer recurrence, typically within six to seven months of diagnosis, and median survival from time of recurrence is six months.

When glioblastoma recurs, current first-line treatment consists of both symptomatic and palliative therapies. Symptomatic therapy for rGBM focuses on relieving symptoms and improving neurologic function. The primary symptomatic therapies are anticonvulsants and corticosteroids. Palliative treatment usually is conducted to improve quality of life and to achieve a longer survival time. It includes surgery, if possible, as the first stage, and then radiation therapy and chemotherapy in an effort to suppress and slow disease progression. In addition, in May 2009, the FDA granted accelerated approval to bevacizumab, which is an angiogenesis inhibitor, to treat patients with rGBM at progression after standard first-line therapy. Nevertheless, with currently available therapies, glioblastoma typically remains fatal within a very short period of time.

VB-111 was granted orphan designation for treatment of malignant glioma by the FDA, and for treatment of glioma in Europe. Glioblastoma is a subset of glioma.

Phase 2 Single-Arm Open-Label Multicenter Trial of VB-111 in Patients with rGBM

We are conducting an open-label Phase 2 trial in rGBM, which we originally initiated as an adaptive Phase 1/2 trial. The trial is intended to evaluate the safety and efficacy of VB-111, both by itself and in combination with bevacizumab. In this trial, patients are initially dosed with VB-111 alone. After disease progression on VB-111 alone, they receive a combination of VB-111 and bevacizumab. Disease progression is defined as a worsening of the patient’s cancer with an increase of at least 25% in the overall mass of measurable tumors, the appearance of new tumors, the worsening of non-measurable tumors since beginning of treatment, a need for an increased dose of corticosteroids or clinical deterioration. As of May 31, 2014, 62 patients had been treated with VB-111, 19 of whom received the combination of VB-111 with bevacizumab after progression on VB-111 alone.

We are conducting this trial in the United States and Israel as a dose-escalating trial to assess the safety, tolerability and efficacy of single or multiple doses of VB-111 in patients with rGBM.

The primary efficacy endpoint of this trial is overall survival. Secondary efficacy endpoints are (1) progression free survival, which is the time interval from the initiation of treatment to the time the patient’s disease worsens or the patient dies, (2) event free survival, which is the time interval from the initiation of treatment to the time the patient’s disease worsens, the patient dies or the patient discontinues the trial due to toxicity, and (3) tumor response, which is the proportion of patients who have regression in the tumor size or stabilization of tumor growth according to standard imaging-based criteria known as the Revised Assessment in Neuro-Oncology, or RANO, criteria. Safety is assessed by monitoring adverse events and changes in vital signs through physical exams, electrocardiograms and analysis of laboratory results.

 

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Patients were treated in four dose-escalating cohorts, ranging from 1x10 12 to 1x10 13 viral particles, or VPs, with the highest dose, 1x10 13 VPs, being considered the therapeutic dose, and amounts below this level being considered low doses. Dose-limiting toxicity was monitored at each dose level before introducing a higher dose.

For each cohort, the first patient was treated and monitored for a minimum of 28 days. If no dose-limiting toxicity was observed, another two patients were treated in that cohort. Once all three patients were observed for a minimum of 28 days without dose-limiting toxicity, the trial proceeded with continued dosing, if appropriate.

Enrollment has been completed in this trial across four cohorts, including a total of 62 patients. Cohorts 1 and 2 enrolled three patients each at each of three escalating low doses, and no dose-limiting toxicities were observed. Cohort 3 enrolled 13 patients at a low dose, followed by Cohort 4, which enrolled 43 patients at multiple bi-monthly dosing with the therapeutic dose. Those Cohort 4 patients who suffer disease progression after receiving VB-111 alone will be enrolled in the extension phase of the trial and will receive a combination dose of VB-111 with bevacizumab. Cohort 4 has enrolled 43 patients and will include up to 29 combination therapy patients. As of May 31, 2014, 19 patients who progressed on VB-111 alone continued on to receive a combination of VB-111 with bevacizumab. There have been no dose-limiting toxicity concerns with the combination therapy. The graphic below illustrates the design of the trial.

 

LOGO

Safety Profile

To date, we have observed no signs of significant safety issues in this trial. The most frequent individual adverse events have been flu-like symptoms, including fever and chills. These symptoms occurred on the day of treatment at approximately six hours after infusion, were transient, mostly resolved on the same day and were controlled with anti-fever medications.

As of May 31, 2014, 24 serious adverse events, or SAEs, had occurred among the 56 patients dosed. However, 18 of these were considered unrelated to VB-111. Four patients had a total of six SAEs considered possibly related to VB-111 and one of these events occurred in a patient who had received combination therapy. The possible treatment-related SAEs included two cases of thrombosis, fever accompanied by worsening weakness, confusion post dosing and swelling around the tumor causing weakness, all of which resolved.

 

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Interim Efficacy Assessment

In April 2013, we conducted an interim efficacy analysis of data from 28 patients in the trial, comparing 12 patients who received the therapeutic dose to 16 patients who received lower doses. We also compared them to outcomes reported in the published literature for patients receiving standard of care therapy in the United States at the time, which was bevacizumab. A key finding of this interim efficacy analysis was a statistically significant prolongation of time to tumor progression in patients receiving therapeutic doses of VB-111 compared to those receiving lower doses. We also observed objective tumor responses, which are defined as a reduction of 50% or greater in tumor dimensions according to the RANO criteria, in a larger proportion of the patients receiving the therapeutic dose than in patients receiving the lower doses. Additionally, the interim analysis showed statistically significant attenuation of tumor growth rate between the two groups, with greater stability over time in the size of the tumors in the therapeutic dose group compared to the lower dose group. The median overall survival for the patients who received the therapeutic dose was 12 months, which exceeded the reported median overall survival of patients receiving bevacizumab therapy by approximately three months.

In determining whether trial results are statistically significant, we measure “p-value,” which is a commonly accepted statistical measure that represents the probability that the difference that is observed between two treatment arms is due to random chance and is not actually related to the treatments being compared. It is commonly accepted that a p-value below 0.05, meaning there is less than a one-in-20 chance the difference is random, is considered to be statistically significant.

Tumor Growth Attenuation

The diagram below shows the change from baseline in the size of the tumor, measured with magnetic resonance imaging, or MRI, for patients who received at least one therapeutic dose of VB-111, compared to those receiving only lower doses. Each line in these charts represents the rate of tumor growth in one patient over time. Most patients who received a lower dose of VB-111 had a relatively rapid enlargement of tumors, whereas those receiving at least one therapeutic dose had relative stability in the size of tumors over time.

In order to detect a dose response, we conducted an analysis to compare the tumor growth rate between the low-dose and therapeutic-dose groups. The percent change from baseline of the size of the target tumor was calculated at each time point for each patient. As shown in the diagram below, the comparison yielded a statistically significant difference between tumor growth rates in the low dose compared to therapeutic dose groups, with a p-value of 0.0062.

 

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Tumor Assessment—Percent Change from Baseline of 16 Patients who Received Low Dose of VB-111

Compared to 12 Patients who Received Therapeutic Dose of VB-111

 

LOGO

Updated Interim Assessment of Tumor Growth Attenuation

A new interim analysis of tumor growth was recently completed, comparing the 16 patients treated with a low dose to 24 patients treated with a high dose, of which some were then treated with a combination of VB-111 and Avastin. The comparison yielded a statistically significant difference between tumor growth rates in the low dose group compared to the therapeutic dose group, with a p-value of 0.0068.

Progression Free Survival

Progression free survival at six months was 25%, or three out of the 12 patients, in the therapeutic dose group compared to 0% of 16 patients in the low dose groups, with a p-value of 0.067. Median time to progression, or the time from initiation of therapy to disease progression, in the therapeutic dose group was 87 days, compared to 55 days among those receiving a lower dose, with a statistically significant p-value of 0.0096.

Overall Survival

Overall survival is considered the most meaningful efficacy endpoint for patients with rGBM. The 12 patients who received the therapeutic dose of VB-111 had a median overall survival of 12 months, which compares favorably with outcomes of the most favorable data reported in standard of care with bevacizumab for rGBM, which is approximately nine months. The outcomes of the high-dose VB-111 cohort also compared favorably with the 16 patients who received a lower dose of VB-111, which had median overall survival of approximately nine months.

Updated Interim Analysis of Overall Survival

By the end of 2013, 30 patients had been treated with the therapeutic dose of VB-111, including the original 12 patients who were included in the interim analysis described above. In November 2013, we performed an updated interim analysis of overall survival for 27 of these patients as well as the 16 lower dose patients. Like the first interim analysis, this updated analysis showed an increase in median overall survival to 12 months among patients receiving a therapeutic dose of VB-111, as compared to those receiving lower doses, as shown in the following graph:

 

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Overall Survival of rGBM Patients who Received Low Doses of VB-111 Compared to Patients who Received Therapeutic Dose

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Phase 1 “All Comers” Trial

We conducted our Phase 1 “all comers” clinical trial of VB-111 in the United States as an open-label, dose-escalating trial to assess the safety and pharmacokinetics and pharmacodynamics of VB-111 in 56 patients with advanced metastatic cancer. Pharmacokinetics refers to the process by which a drug is distributed and metabolized in the body and pharmacodynamics refers to the biochemical and physiological effects of a drug on the body. The trial was performed at multiple centers and was initiated as a single dose trial. Following prolonged stability, a partial response, or both, in several patients after treatment with a single dose, in order to further investigate the safety of repeat administrations of VB-111 at potentially efficacious doses, we enrolled patients into two additional dose cohorts who received multiple therapeutic doses of VB-111 in the two specific tumor types.

The primary objectives for this trial were to evaluate safety and to find the maximum tolerated dose or maximum feasible dose of VB-111. Secondary objectives of the trial were to assess the pharmacokinetic and pharmacodynamic profile of VB-111 and to document any clinical responses and evaluate any changes in biological indicators of angiogenesis that may have occurred in response to VB-111 treatment.

Patients were treated in seven dose-escalating single dose cohorts, ranging from low doses in Cohorts 1 through 6 to the therapeutic dose in Cohort 7, with dose-limiting toxicity monitoring at each dose level before introducing a higher dose. We closed recruitment for this trial in May 2013. However, there remain two active patients who continue to receive treatment. The most frequent tumor types were colorectal adenocarcinoma, renal cell carcinoma, carcinoid/neuroendocrine, non-small cell lung cancer, thyroid cancer, melanoma and sarcoma. All patients had tumors at an advanced stage and most had previously received multiple lines of tumor therapy. We observed statistically significant improved overall survival in the VB-111 therapeutic dose cohort as compared to other cohorts, with a p-value of 0.001, as shown in the graph below. In addition, there was a trend of improvement in the progression free survival rate in response to VB-111, with median time to progression of 31, 55 and 121 days, respectively, in Cohorts 1 through 5, Cohort 6 and Cohort 7.

 

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Overall Survival in Single-Dose “All Comers” Trial

LOGO

No signs of significant safety issues or treatment-related SAEs have occurred in any of the nine total cohorts and, therefore, the therapeutic dose level was not considered the maximum tolerated dose.

Development Plan for Phase 3 Clinical Trial of VB-111 for rGBM

In July 2013, we held an end-of-Phase 2 meeting with the FDA. We are now discussing an SPA with the FDA to establish the protocol for a Phase 3 pivotal trial of VB-111 for rGBM, which we intend to be a randomized, controlled, double-arm, open-label multi-center trial of VB-111, the primary endpoint of which we intend to be an increase in overall survival. We are in the process of recruiting sites and investigators for the Phase 3 trial, which is not contingent upon the conclusion of the ongoing Phase 2 trial in rGBM, and we expect that the trial will involve approximately 250 patients. We intend to commence the Phase 3 pivotal trial by the end of the first quarter of 2015, and expect data to be available in the second half of 2017. However, since an endpoint of the trial is likely to be overall survival, the end of the trial will not occur until the death of a specified number of patients, which may be sooner or later than we currently expect.

The FDA granted fast track designation for the investigation of VB-111 for prolongation of survival in patients with glioblastoma that has recurred following treatment with temozolomide and radiation. The graphic below illustrates the anticipated design of this trial.

 

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Anticipated Design of Phase 3 Pivotal Trial for VB-111 in rGBM

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VB-111 for Other Indications

Based on the results in the Phase 1 “all comers” clinical trial, we have advanced VB-111 into tumor specific, repeat-dose trials including an open-label Phase 2 clinical trial in thyroid cancer. We are conducting an additional, Phase 1/2 clinical trial in ovarian cancer, which combines VB-111 therapy with paclitaxel, a common chemotherapeutic agent used to treat ovarian cancer.

VB-111 for Thyroid Cancer

Thyroid cancer occurs in the thyroid gland, a hormone-producing organ at the base of the neck that regulates heart rate, blood pressure, body temperature and weight. According to the National Cancer Institute, there are an estimated 535,000 people currently living with thyroid cancer in the United States, with an estimated 60,000 new cases each year and an estimated 1,850 annual deaths as a result of the disease.

The type of treatment depends on the cancer cell type, tumor size and severity of the disease. First-line treatment is surgical removal of the thyroid gland, by thyroidectomy, with or without lymph node removal, and is recommended for most patients. Treatment with radioactive iodine after surgery to destroy any remaining thyroid tissue may be recommended for more advanced disease. If radioactive iodine is ineffective, other treatments are prescribed, such as radiation, percutaneous ethanol injection therapy and systemic chemotherapy.

VB-111 for Thyroid Cancer—Rationale

Our Phase 1 “all comers” trial described above included two patients with thyroid cancer, both of whom responded to VB-111 treatment. Responses included reduction in the tumor size in one patient, and in both patients a reduction in the blood levels of hormones secreted by these tumors, which correlates to the tumor size. These preliminary observations suggested that VB-111 may hold promise for treatment of thyroid cancer.

Phase 2 Clinical Trial of VB-111 in Thyroid Cancer

We are conducting a Phase 2 clinical trial in the United States as an open-label, dose-escalating trial to assess the safety and efficacy of single or multiple doses of VB-111 in patients with advanced, recently progressive differentiated thyroid cancer that is unresponsive to radioactive iodine.

 

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This trial was initiated as a single dose trial, treating patients with a low dose of VB-111. Following prolonged stability, a partial response, or both, in several patients after treatment with a single dose, the trial protocol was amended to treat patients with multiple therapeutic doses of VB-111 until disease progression.

The primary objectives of this trial are (1) to evaluate the safety of single and multiple doses of VB-111 in patients with advanced differentiated thyroid cancer and (2) to evaluate the response to treatment with VB-111 in patients with advanced differentiated thyroid cancer. Additional exploratory objectives of this trial are to assess the pharmacokinetic and pharmacodynamic profile of VB-111 and to undertake exploratory evaluation of changes in biological indicators of cancer in response to VB-111 treatment.

The primary efficacy endpoints of this trial are (1) the proportion of patients who have achieved an objective response, which can be either a partial or complete response, to VB-111 up to six months after the initial dose, and (2) the proportion of patients with progression free survival at six months. Secondary efficacy endpoints include (1) the proportion of patients with stable disease, (2) objective response at six months after the initial dose of VB-111, (3) when clinically relevant, changes in thyroglobulin levels in response to treatment and (4) overall survival.

We expect this open-label trial will enroll approximately 20 patients who receive VB-111 every two months until disease progression. As of March 1, 2014, 17 patients had been enrolled. Preliminary results of this trial are expected in the second half of 2014 and full results are expected in the first half of 2016. We may consider a controlled Phase 2 trial, depending on initial efficacy results.

VB-111 for Ovarian Cancer

In 2013, ovarian cancer was diagnosed in approximately 22,000 American women, according to the National Cancer Institute, and it is the leading cause of death for cancers of the female reproduction system, according to the U.S. Centers for Disease Control. The disease is often not diagnosed until it is advanced because it is difficult to detect at earlier stages. Treatment typically includes surgery and chemotherapy.

When initially diagnosed, the most prescribed chemotherapy drugs are carboplatin, cisplatin and paclitaxel. Ovarian cancer is usually treated with more than one medication or therapy, or combination therapy, to both promote efficacy and reduce toxicity.

In addition to Avastin, a number of companies are conducting clinical trials to test targeted drugs focused on angiogenesis inhibition for the treatment of ovarian cancer, including, among others, Amgen’s trebananib, Boehringer Ingelheim’s nintedanib and GlaxoSmithKline’s Votrient, but none have yet been approved in the United States or Europe.

VB-111 for Ovarian Cancer—Rationale

Clinical trials testing bevacizumab have demonstrated some improvement in progression free survival in women with high-risk advanced ovarian cancer, suggesting that anti-angiogenic therapy may be beneficial. To assess whether VB-111 could play a role in different combination regimens, by inducing either additive or synergistic affects, we conducted pre-clinical studies of VB-111 in combination with other anti-angiogenic drugs and different chemotherapies. In one study, the addition of VB-111 to paclitaxel chemotherapy increased anti-tumor activity, without increasing toxicity, which suggests that VB-111 may have an additive or synergistic effect when used in a combination therapy with paclitaxel.

 

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Phase 1/2 Clinical Trial of VB-111 in Ovarian Cancer

We are conducting this Phase 1/2 clinical trial, which was investigator-initiated, as an open-label, dose-escalating trial to assess the safety and efficacy of bi-monthly doses of VB-111 in combination with weekly paclitaxel in patients with recurrent epithelial ovarian cancer.

Patients are treated in three dose-escalating cohorts, with dose-limiting toxicity monitoring at each dose level before introducing a higher dose.

The primary objectives of this trial are (1) to define toxicities of a limited number of doses, spanning anticipated effective doses, of VB-111 in combination with weekly paclitaxel and (2) to explore efficacy in an expanded cohort of the highest dose of VB-111 that is well tolerated, in combination with weekly paclitaxel.

The secondary objective of this trial is to explore predictive markers of toxicity and response. The preliminary results of this trial are expected by the second half of 2015. As of May 31, 2014, ten patients had been dosed in this trial in three cohorts with escalating doses, up to the highest anticipated therapeutic dose of VB-111, every two months, together with weekly therapeutic doses of paclitaxel. There have been no dose limiting toxicities observed, and the trial is now proceeding to the expansion cohort of up to 29 patients. The data and safety monitoring board overseeing the trial has reviewed the safety data from the trial and to date has expressed no safety concerns.

Our Lecinoxoid Platform

Overview

Our proprietary Lecinoxoid platform is a family of orally administered small molecules designed to modulate the body’s inflammatory response. Lecinoxoids are structurally and functionally similar to naturally occurring molecules, known as oxidized phospholipids, which possess immune modulating anti-inflammatory properties, modified to enhance stability and activity. We believe that Lecinoxoids hold significant promise in their ability to treat a broad range of chronic immune-based inflammatory diseases.

The inflammatory response is a complex physiologic process balancing both pro- and anti-inflammatory components that interact intimately with the body’s immune system. Oxidized phospholipids are instrumental in the interplay of these components that maintain equilibrium. When the inflammatory response is not adequately balanced, excess inflammation results and may cause both acute and chronic disease states.

Our proprietary Lecinoxoid platform seeks to harness the ability of oxidized phospholipids to regulate and attenuate key immune-inflammatory signaling. We believe that our approach—identifying naturally occurring anti-inflammatory compounds and modifying them to enhance stability and activity—may lead to more physiologically balanced responses than other available anti-inflammatory therapies.

 

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Lecinoxoid Mechanism of Action

Lecinoxoids mimic the structure of oxidized phospholipid molecules and are synthetically manipulated to increase their stability and ability to target specific receptors. Lecinoxoids have the potential to act through two specific mechanisms:

 

  1. The inhibition of cellular signaling cascades associated with the innate immune system, known as toll-like receptor, or TLR, signaling. TLRs are a family of receptors essential for the activation of the innate immune response. The interaction between TLRs and their agonists initiates a cascade of signals that culminate in the secretion of pro-inflammatory cytokines. As illustrated below, Lecinoxoids are able to bind to two specific membrane TLR receptor complexes, the TLR-2 and TLR-4 complexes, and inhibit the subsequent inflammatory cascade associated with those TLR complexes.

 

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  2. The inhibition of the migration of monocytes toward chemoattractants present in areas of inflammation. Monocytes are a type of innate immune cell. Inhibiting their migration reduces the number of immune cells at the site of inflammation and may subsequently reduce the inflammatory process.

VB-201

Our lead Lecinoxoid-based compound, VB-201, has been designed as an oral agent for the control of chronic inflammatory disorders. Initially, we are developing it for psoriasis and ulcerative colitis. However, we believe it has potential in other immune-inflammatory disorders, such as rheumatoid arthritis, Crohn’s disease, atherosclerosis and multiple sclerosis.

Based on our pre-clinical studies and our Phase 2 clinical trial, we believe that VB-201 potentially has multiple advantages over other treatments for inflammation if it is proven to be safe and effective. It is orally available and has been generally well-tolerated, making it suitable for long-term maintenance therapy. It is highly selective and has not shown an increased risk of infections or tumors associated with generalized immune suppression. In addition, it may inhibit the inflammatory process in atherosclerosis, thus conferring a cardio-protective effect to address the elevated cardiovascular risk among chronic inflammation patients.

 

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VB-201 Clinical Programs

We have investigated VB-201 in five Phase 1 clinical trials involving a total of 147 healthy volunteers and two exploratory Phase 2 trials in which it was administered to over 300 patients with moderate to severe psoriasis or high levels of hsCRP, an inflammatory marker. The Phase 1 clinical trials and the Phase 2 trial in psoriasis patients were conducted pursuant to our two U.S. INDs. The Phase 2 trial in patients with high levels of hsCRP was conducted in the United Kingdom pursuant to a clinical trial authorization there. We are currently conducting two additional Phase 2 trials with VB-201 assessing VB-201’s efficacy in treating psoriasis and ulcerative colitis. Both of these trials are being conducted in Europe and Israel pursuant to authorizations from regulatory agencies there. Enrollment is complete, with an aggregate of 306 patients enrolled in the trials.

VB-201 for Psoriasis—Background and Rationale

Psoriasis is a chronic immune system disorder that appears on the skin when the immune system sends out faulty signals that speed the growth cycle of skin cells. Psoriasis can occur on any part of the body and generally appears as patches of raised, red skin covered by a flaky, white buildup of dead skin cells, called scale. It affects both genders equally and may appear at any age, although it is most common between the ages of 15 and 35. People with psoriasis have an increased risk of developing other serious diseases, such as psoriatic arthritis, heart disease, diabetes and cancer.

Psoriasis is the most prevalent autoimmune disease in the United States, affecting as many as 7.5 million people, and an estimated 125 million people worldwide, according to the National Psoriasis Foundation. A range of treatments is currently available for psoriasis, including topical treatment, phototherapy and medication. However, current medications have either limited efficacy, high levels of toxicity or high cost. In addition, most people experience a recurrence of psoriasis when treatment is discontinued. As a result, an estimated 52.3% of patients with psoriasis are dissatisfied with their treatment, according to a survey conducted by the National Psoriasis Foundation.

Clinical Development of VB-201 for Psoriasis

Overview

Based on the results of our Phase 1 clinical trials of VB-201, in which we observed VB-201 to be well-tolerated, we advanced VB-201 into Phase 2 clinical trials for psoriasis. We have recently completed an exploratory double-blind, placebo-controlled Phase 2 trial evaluating safety and establishing dosage of VB-201 in patients with psoriasis. This trial also included a sub-study of psoriasis patients with cardiovascular risk factors measuring the effects of VB-201 on arterial inflammation related to atherosclerosis, or hardening of the arteries. According to a 2004 study by the American Heart Association, more than 25 million people in the United States have at least one clinical manifestation of atherosclerosis. As part of this sub-study, we also studied the effects of VB-201 on biomarkers of inflammation in psoriasis patients on high-dose statin therapy.

We also are currently conducting a Phase 2 clinical trial of VB-201 in patients with moderate to severe psoriasis, for which we have completed enrollment, enrolling 194 patients at 14 sites. This is a multi-center, randomized, double-blind trial to evaluate the efficacy and safety of oral VB-201 in patients with moderate to severe plaque psoriasis. We expect to complete this trial in the first quarter of 2015.

 

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VB-201 Phase 2 Clinical Trial in Psoriasis

Our Phase 2 clinical trial of VB-201 was a double-blind, placebo controlled trial, with VB-201-treated patients receiving doses of 20 mg/day or 80 mg/day. This trial used three common techniques to measure the degree and severity of psoriasis. The first, called the psoriasis area severity index, or PASI, combines the measurement of redness, thickness and scaling with a measurement of the percentage of the patient’s body affected. The second, known as physician global assessment, or PGA, summarizes the overall quality of the plaques based on plaque elevation and thickness, redness and scaling. The third measurement technique, known as the patient psoriasis global assessment, or PtGA, scores the clinical severity of psoriasis from the patient’s individual perspective, relative to the worst the disease has ever been for the patient.

We did not observe any significant safety problems in this Phase 2 trial and VB-201 was well-tolerated. Results from this trial also facilitated our efforts to set the dose, patient selection and duration of our ongoing Phase 2 trial.

The trial showed statistically significant improvements in PGA and PtGA in the patients treated with VB-201 compared to those receiving placebo. There was also a statistically significant improvement in PASI reduction among patients with higher drug plasma levels of VB-201 compared to those with lower VB-201 levels, which together suggested an exposure-related response. Adverse events observed in the VB-201 treatment groups were not statistically significantly different compared to the placebo group. At a dose of up to 80 mg/day, the highest dose used in the trial, VB-201 appeared to be safe and well-tolerated.

The primary endpoint of the trial, which was the proportion of patients who achieved at least 75% improvement in PASI from baseline at week 12, was not met. The therapeutic effect of VB-201 did not reach a plateau in the 12 week period of the administration of the drug. We believe a greater level of PASI reduction might have been reached with a higher dose and longer administration of the drug, as in the currently ongoing Phase 2 trial.

In the arterial inflammation sub-study, the inflammation of blood vessels related to atherosclerosis was measured using a PET-CT scan, which detects the increased metabolic rate in the inflamed vessel walls with active atherosclerotic plaques. The primary endpoint was the change from baseline in the level of inflammation, as measured by an inflammation index at the most diseased vessel location in the carotid arteries and aortic arch in the neck and chest, respectively. The primary endpoint was met, with a statistically significant reduction from baseline in vessel inflammation in the patients treated with 80 mg/day of VB-201. There was also a statistically significant reduction in vessel inflammation in patients with higher drug plasma levels of VB-201 compared to patients with lower plasma levels of VB-201, suggesting an exposure-related response.

At both the 20 mg/day and 80 mg/day doses, VB-201 appeared to be safe and well-tolerated. While the primary efficacy endpoint of the trial was not met, the trial met several of the secondary endpoints, including improvement in the PGA, PtGA and PASI.

For the PGA endpoint, there was a statistically significant reduction in the proportion of patients rated as “severe” PGA (Grade 4 on a 0-4 scale) at 12 weeks both in the VB-201 20 mg/day group (4.8% severe) compared to the placebo group (24.1% severe) with a p-value of 0.003, and in the VB-201 80 mg/day group (6.8% severe) compared to the placebo group (24.1% severe), with a p-value of 0.043.

 

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For the PtGA endpoint, there was a statistically significant reduction in the proportion of patients rating themselves as “moderate or worse” PtGA (Grades 3 to 5 on a 0 to 5 scale) at week 12 in the VB-201 80 mg/day group (61%) compared to the placebo group (81%), with a p-value of 0.025. These results are illustrated in the following graph.

Patient Global Assessment at Week 12 in VB-201-Treated Groups Compared to Placebo Group

 

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Dosing level

For the PASI endpoint, there was a statistically significant exposure-dependent response, with higher plasma levels of VB-201 being associated with a larger decrease in PASI score than lower plasma levels of VB-201, with a p-value of 0.04.

Additionally, we observed a numerically greater reduction in the total PASI score from baseline in patients treated with VB-201 compared to placebo, which increased as the dose of VB-201 increased; however this did not reach statistical significance. In a pre-specified subgroup analysis of patients with baseline PASI scores in the middle one-third of the range, there was a statistically significant greater reduction from baseline in the total PASI score among patients treated with VB-201 compared to placebo, with a clear inverse correlation between dose and total PASI score. Importantly, neither group reached a plateau at three months, suggesting that a longer treatment duration may increase efficacy. These results are illustrated in the following graphs.

 

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Although the primary efficacy endpoint of the trial was not met, we believe these statistically significant results in the secondary endpoints, together with the statistically significant exposure-related response in PASI, are signals suggestive of efficacy of VB-201 in psoriatic patients.

 

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Therefore, we initiated our ongoing a phase 2 trial using higher VB-201 doses and longer exposure in psoriasis patients with moderate to severe disease as described below.

Sub-Study of Psoriasis Patients with Cardiovascular Risk Factors

Rationale

The association between psoriasis and occlusive cardiovascular events has been well established. Multiple studies have reported that patients with psoriasis are at a higher risk of myocardial infarction, or MI, and stroke. Vascular inflammation has been reported to be increased in patients with moderate to severe psoriasis using PET-CT imaging technologies.

Psoriasis is also associated with a specific type of inflammatory arthritis, and markers of inflammation such as C-reactive protein have been shown to be elevated in patients with psoriasis. Therefore, psoriasis could be viewed as a systemic inflammatory disease that increases vascular inflammation potentially leading to MI and stroke. This association suggests that systemic treatments for psoriasis might either increase or decrease the risks of MI and stroke.

Clinical Findings

We conducted a sub-study of 47 psoriasis patients with cardiovascular risk factors. In this sub-study, 83% of these patients were found to have evidence of inflammation in the vascular wall related to atherosclerosis, based on a PET-CT scan.

The primary endpoint in this sub-study was the change from baseline at week 12 in the level of inflammation, as measured by an inflammation index at the most diseased vessel location in the carotid arteries and aortic arch in the neck and chest, respectively. The primary endpoint was met, with a statistically significant reduction of 12.7% in vessel inflammation in the 80 mg/day treatment group, with a p-value of 0.04. This compared to a 4.0% reduction from baseline in the placebo group, a 7.3% reduction in the 20 mg/day VB-201 treatment group and a 9.8% reduction in the combined VB-201 treatment groups. These results are illustrated in the following graph.

Reduction in Vascular Inflammation from Baseline in Psoriasis Patients with Cardiovascular Risk Factors

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Reductions in vessel inflammation also occurred in 12 of the patients in the VB-201 treatment groups in this sub-study who were taking concomitant statins as part of their pre-study medications, which were continued during the trial. An 18.5% mean reduction in vessel inflammation from baseline occurred in these patients. We believe this may suggest that VB-201 may be additive to the effect of statins in decreasing vessel inflammation.

The results obtained in the sub-study are comparable to those seen in a third party trial of patients with moderate to severe psoriasis treated for 16 weeks with adalimumab (marketed as Humira, a widely used injectable anti-inflammatory biologic), which reduced vascular inflammation by 12% in the most diseased vessel of the ascending aorta and carotid arteries. The results of the adalimumab trial were published side-by-side with our sub-study results in 2012 by the American Heart Association.

Ongoing Phase 2 Clinical Trial in Psoriasis

In November 2012, we commenced a Phase 2 clinical trial of VB-201 in patients with moderate to severe plaque psoriasis. This is a double blind, parallel group, randomized trial with patients participating in the trial for approximately 32 weeks: up to four weeks for screening and establishment of baseline, followed by 16 weeks of blinded treatment with daily dose administration of VB-201 at 80 mg or 160 mg (80 mg twice a day) or of placebo, followed by eight additional weeks of active treatment when patients initially receiving placebo receive daily doses of 160 mg of VB-201, followed by four weeks of follow up. Dosing was determined based on data from a prior clinical trial suggesting that VB-201 was well tolerated at doses of 80 mg twice a day.

This trial is being conducted in Europe and Israel. We have completed enrollment of a total of 194 patients with moderate to severe psoriasis in this trial. The trial’s primary endpoint is the proportion of patients in the 160 mg/day treatment group who achieve at least 50% improvement in the PASI score at week 16, compared to the proportion of patients in the placebo group who have the same measurement. In a second stage, the same endpoint will be assessed at 24 weeks of therapy. Secondary endpoints include changes in PGA and PtGA scores. We expect data from the trial to be available in the first quarter of 2015.

VB-201 for Ulcerative Colitis

Overview

Ulcerative colitis is a serious chronic form of inflammatory bowel disease. The typical symptom of active disease is constant diarrhea, often mixed with blood, due to inflammation that causes the colon to empty frequently. According to the Crohn’s and Colitis Foundation of America, ulcerative colitis may affect as many as 700,000 Americans.

Current treatments for ulcerative colitis include anti-inflammatory drugs, immunosuppressive medications and biological therapy targeting specific components of the immune response. In severe circumstances, surgery may be the most appropriate solution. Due to their possible risk, immunosuppressive medications and biological agents are given only if patients cannot achieve remission with anti-inflammatory drugs.

Recent epidemiological data show ulcerative colitis incidence and prevalence are increasing in many parts of the world. Current therapeutic strategies for treating ulcerative colitis have only been moderately successful. Despite major recent advances in ulcerative colitis therapeutic resources, less than half of all patients achieve long-term remission, many require colectomy and the disease still has a major impact on patients’ lives. While these outcomes could be partly improved by optimizing current therapeutic strategies, we believe they highlight the need to

 

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develop new therapies. Given these facts, along with the severe side effects and the high price of the biologics, we believe there is a need for an oral and safe molecule in the ulcerative colitis market.

Rationale for VB-201 in Inflammatory Bowel Diseases

Inflammatory bowel disease, including ulcerative colitis, is a multifactorial disorder of the intestine. It is thought to result from several interacting factors, including genetic susceptibility, intestinal bacterial milieu and the patient’s native immune system. These factors lead to a disordered inflammatory response and may result in severe damage to the gastrointestinal tract. The key inflammatory elements include macrophages activated via TLR-2 and TLR-4 cell surface receptor signaling.

Since VB-201 has shown evidence of being an inhibitor of TLR-2 and TLR-4 signaling, we conducted studies of VB-201 in several different pre-clinical colitis models, where it demonstrated activity against inflammatory processes affecting the gut tissue. In these models, clinical, gross pathology and inflammation scores were also improved in treated animals.

VB-201 Phase 2 Trial in Ulcerative Colitis

Our ongoing Phase 2 trial of VB-201 in ulcerative colitis is a randomized, double-blind, placebo-controlled trial with 24 weeks of daily oral administration of VB-201, taken at 80 mg for two weeks followed by 160 mg (80 mg twice a day) for ten weeks, or a placebo. Following the initial twelve-week period, there is a twelve-week extension phase in which patients who received a placebo are switched to 160 mg of VB-201 and others continue the same therapy.

Each patient will have a final safety evaluation four weeks after stopping treatment with VB-201. We have completed enrollment of a total of 112 evaluable patients in this trial. This trial is being conducted in Poland, Bulgaria and Hungary. The primary efficacy endpoint for this trial is disease remission. We expect data from this trial to be available in the first quarter of 2015.

Phase 1 Clinical Trials for VB-201

VB-201 was orally administered to 147 healthy volunteers in five Phase 1 trials. The safety and pharmacokinetic profiles of VB-201 were studied.

The overall incidence of adverse events in these trials showed no statistically significant difference between the VB-201 patients receiving up to 80 mg/day and the placebo group. However, there were five incidences of nausea (four moderate and one mild) and four incidences of moderate vomiting observed in the VB-201 patients receiving 160 mg taken once daily. All of these adverse events were considered as possibly or probably related to VB-201 and all resolved without treatment. The participants were instructed, after two days of dosing, to take the drug with breakfast. Only one participant continued to have nausea. Based on these findings, the data and safety monitoring board overseeing this trial decided to terminate dosing the 160 mg/day once daily group after four days. After that, VB-201 patients were treated with 80 mg/day for 28 consecutive days with VB-201 administered following breakfast.

No substantial changes were detected in immune cell response, serum antibodies and cytokine levels. Overall, no impairment in tested immunological related parameters from single dose VB-201 treated patients were observed compared to the placebo group.

Overall, in these Phase 1 trials, VB-201 at doses of up to 80 mg taken once daily for 28 days had a comparable safety profile to placebo.

 

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Follow-on Lecinoxoid Product Candidates

We are actively engaged in the development of new Lecinoxoid product candidates. Some of our molecules are at a preliminary stage of in vitro testing, while other candidates have been advanced to pre-clinical models and are currently being studied for efficacy and safety. Our pre-clinical results indicate that several molecules that we are developing may offer higher potency or mechanistic selectivity compared to VB-201. We may explore clinical development of next generation Lecinoxoids in the future as follow-on molecules after VB-201, or for other immune-inflammatory indications.

Government Regulation

As a pharmaceutical and biological product company that wishes to obtain marketing approval in the United States, we are subject to extensive regulation by the FDA, and other federal, state, and local regulatory agencies. The Federal Food, Drug, and Cosmetic Act, or the FDC Act, the Public Health Service Act, or PHS Act, and their implementing regulations set forth, among other things, requirements for the research, testing, development, manufacture, quality control, safety, effectiveness, approval, labeling, storage, record keeping, reporting, distribution, import, export, advertising and promotion of our products. A failure to comply explicitly with any requirements during the product development, approval, or post-approval periods, may lead to administrative or judicial sanctions. These sanctions could include the imposition by the FDA or an institutional review board, or IRB, of a suspension on clinical trials, refusal to approve pending marketing applications or supplements, withdrawal of approval, warning letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, civil penalties or criminal prosecution.

Although the discussion below focuses on regulation in the United States, we anticipate seeking approval for the marketing of our products in other countries. Generally, our activities in other countries will be subject to regulation that is similar in nature and scope as that imposed in the United States, although there can be important differences. Additionally, some significant aspects of regulation in Europe are addressed in a centralized way through the European Medicines Agency, or EMA, but country-specific regulation remains essential in many respects.

We must obtain approval by comparable regulatory authorities of foreign countries outside of the European Union and the United States before we can commence clinical trials or marketing of our products in those countries. The approval process varies from country to country and the time may be longer or shorter than that required for FDA or EMA approval. In addition, the requirements governing the conduct of clinical trials, product licensing, pricing and reimbursement vary greatly from country to country. In all cases, clinical trials must be conducted in accordance with the FDA’s regulations, commonly referred to as good clinical practices, or GCPs, and the applicable regulatory requirements and the ethical principles that have their origin in the Declaration of Helsinki.

Government regulation may delay or prevent testing or marketing of our products and impose costly procedures upon our activities. The testing and approval process, and the subsequent compliance with appropriate statutes and regulations, requires substantial time, effort, and financial resources, and we cannot be certain that the FDA or any other regulatory agency will grant approvals for our products or any future products on a timely basis, if at all. The FDA’s or any other regulatory agency’s policies may change and additional governmental regulations may be enacted that could prevent or delay regulatory approval of our products or any future products or approval of new indications or label changes. We cannot predict the likelihood, nature or extent of adverse governmental regulation that might arise from future legislative, judicial, or administrative action, either in the United States or abroad.

 

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Marketing Approval

In the United States, the FDA regulates gene products like VB-111 as a biologic and small molecules like VB-201 as a drug under the FDC Act, the PHS Act and related regulations. Biologics and drugs are subject to federal, state and local statutes and regulations.

The steps required before a new biologic or drug may be marketed in the United States generally include:

 

   

nonclinical pharmacology and toxicology laboratory and animal tests according to good laboratory practices, or GLPs, and applicable requirements for the humane use of laboratory animals;

 

   

submission of an investigational new drug, or IND, application which must become effective before clinical trials may begin;

 

   

adequate and well-controlled human clinical trials according to GCPs and any additional requirements for the protection of human research subjects and their health information to establish the safety and efficacy of the investigational product for each targeted indication;

 

   

submission of a new drug application, or NDA, or a biologics license application, or BLA, to the FDA;

 

   

FDA’s pre-approval inspection of manufacturing facilities to assess compliance with current good manufacturing practices, or cGMPs, and, if applicable, the FDA’s good tissue practices, or GTPs, for the use of human cellular and tissue products to prevent the introduction, transmission, or spread of communicable diseases;

 

   

FDA’s audit of clinical trial sites that generated data in support of the NDA or BLA; and

 

   

FDA approval of an NDA or BLA, which must occur before a product can be marketed or sold.

Product Development Process

Before testing any biologic or drug in humans, the product enters the nonclinical, or pre-clinical, testing stage. Nonclinical tests include laboratory evaluations of product chemistry, toxicity, and formulation, as well as animal studies to assess the potential safety and activity of the product. The conduct of nonclinical tests must comply with federal regulations and requirements including GLPs.

The product sponsor then submits the results of the nonclinical testing, together with manufacturing information, analytical data, any available clinical data or literature, and a proposed clinical protocol, to the FDA in an IND, which is a request for authorization from the FDA to administer an investigational product to humans. Some nonclinical testing may continue even after the IND application is submitted. IND authorization is required before interstate shipping and administration of any new product to humans that is not the subject of an approved NDA or BLA. The IND automatically becomes effective 30 days after receipt by the FDA unless the FDA, within the 30-day time period, raises concerns or questions about the conduct of the clinical trial and places the clinical trial on a clinical hold. In such case, the IND sponsor must resolve any outstanding concerns with the FDA before the clinical trial may begin. Further, an IRB for each site proposing to conduct the clinical trial must review and approve the plan for any clinical trial before it commences at that site. Clinical trials involve the administration of the investigational product to patients under the supervision of qualified investigators following GCPs, requirements meant to protect the rights and health of patients and to define the roles of clinical trial sponsors, investigators, and monitors. Clinical trials are conducted under protocols that detail, among other

 

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things, the objectives of the clinical trial, dosing procedures, subject selection and exclusion criteria, the parameters to be used in monitoring safety, including stopping rules that assure a clinical trial will be stopped if certain adverse events should occur, and the efficacy criteria to be evaluated. Each protocol involving testing on U.S. patients and subsequent protocol amendments must be submitted to the FDA as part of the IND. The informed written consent of each participating subject is required and the form and content of the informed consent must be approved by each IRB.

The clinical investigation of an investigational product is generally divided into three phases. Although the phases are usually conducted sequentially, they may overlap or be combined. The three phases of an investigation are as follows:

 

   

Phase 1 includes the initial introduction of an investigational product into humans. Phase 1 clinical trials may be conducted in patients with the target disease or condition or on healthy volunteers. These studies are designed to evaluate the safety, metabolism, pharmacokinetics and pharmacologic actions of the investigational product in humans, the side effects associated with increasing doses, and if possible, to gain early evidence on effectiveness. During Phase 1 clinical trials, sufficient information about the investigational product’s pharmacokinetics and pharmacological effects may be obtained to permit the design of Phase 2 clinical trials. The total number of participants included in Phase 1 clinical trials varies, but is generally in the range of 20 to 80.

 

   

Phase 2 includes the controlled clinical trials conducted to evaluate the effectiveness of the investigational product for a particular indication(s) in patients with the disease or condition under study, to determine dosage tolerance and optimal dosage, and to identify possible adverse side effects and safety risks associated with the product. Phase 2 clinical trials are typically well-controlled, closely monitored, and conducted in a limited patient population, usually involving no more than several hundred participants.

 

   

Phase 3 clinical trials are controlled clinical trials conducted in an expanded patient population at geographically dispersed clinical trial sites. They are performed after preliminary evidence suggesting effectiveness of the investigational product has been obtained, and are intended to further evaluate dosage, clinical effectiveness and safety, to establish the overall benefit-risk relationship of the product, and to provide an adequate basis for product approval. Phase 3 clinical trials usually involve several hundred to several thousand participants. In most cases, the FDA requires two adequate and well controlled Phase 3 clinical trials to demonstrate the efficacy of the product. A single Phase 3 trial with other confirmatory evidence may be sufficient in rare instances where the trial is a large multicenter trial demonstrating internal consistency and a statistically very persuasive finding of a clinically meaningful effect on mortality, irreversible morbidity or prevention of a disease with a potentially serious outcome and confirmation of the result in a second trial would be practically or ethically impossible.

Where a gene therapy study, such as for VB-111, is conducted at, or sponsored by, institutions receiving funding for recombinant DNA research from the U.S. National Institutes of Health, or NIH, prior to the submission of an IND to the FDA, a protocol and related documentation is submitted to and the study is registered with the NIH Office of Biotechnology Activities, or OBA, pursuant to the NIH Guidelines for Research Involving Recombinant DNA Molecules, or NIH Guidelines. Compliance with the NIH Guidelines is mandatory for investigators at institutions receiving NIH funds for research involving recombinant DNA, however many companies and other institutions not otherwise subject to the NIH Guidelines voluntarily follow them. The NIH is responsible for convening the RAC, a federal advisory committee, that discusses protocols that raise novel or particularly important scientific, safety or

 

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ethical considerations at one of its quarterly public meetings. The OBA will notify the FDA of the RAC’s decision regarding the necessity for full public review of a gene therapy protocol. RAC proceedings and reports are posted to the OBA web site and may be accessed by the public.

Annual progress reports detailing the results of the clinical trials must be submitted to the FDA. Written IND safety reports must be promptly submitted to the FDA and the investigators for serious and unexpected adverse events; any findings from other studies, tests in laboratory animals or in vitro testing that suggest a significant risk for human subjects; or any clinically important increase in the rate of a serious suspected adverse reaction over that listed in the protocol or investigator brochure. The sponsor must submit an IND safety report within 15 calendar days after the sponsor determines that the information qualifies for reporting. The sponsor also must notify the FDA of any unexpected fatal or life-threatening suspected adverse reaction within seven calendar days after the sponsor’s initial receipt of the information.

The decision to terminate a clinical trial of an investigational biologic or drug product may be made by the FDA or other regulatory authority, an IRB or institutional ethics committee, or by a company for various reasons. The FDA may place a clinical hold and order the temporary, or permanent, discontinuation of a clinical trial at any time, or impose other sanctions, if it believes that the clinical trial either is not being conducted in accordance with FDA requirements or presents an unacceptable risk to the clinical trial patients. If the FDA imposes a clinical hold, trials may not recommence without FDA and IRB authorization and then only under terms authorized by the FDA and IRB. In some cases, clinical trials are overseen by an independent group of qualified experts organized by the trial sponsor, or the clinical monitoring board or Data Safety Monitoring Board. This group provides authorization for whether or not a trial may move forward at designated check points. These decisions are based on the limited access to data from the ongoing trial. The suspension or termination of a clinical trial can occur during any phase of clinical trials if it is determined that the participants or patients are being exposed to an unacceptable health risk. In addition, there are requirements for the registration of ongoing clinical trials of drugs and biologics on public registries and the disclosure of certain information pertaining to the trials as well as clinical trial results after completion.

As part of the clinical process pertaining to VB-111, we will apply for a special protocol assessment or SPA from the FDA for our Phase 3 clinical trial protocol. A sponsor may be able to request a SPA, the purpose of which is to reach agreement with the FDA on the Phase 3 clinical trial protocol design and analysis that will form the primary basis of an efficacy claim. An SPA request must be made before the proposed trial begins, and all open issues must be resolved before the trial begins. If a written agreement is reached, it will be documented and made part of the record. The agreement will be binding on the FDA and may not be changed by the sponsor or the FDA after the Phase 3 trial begins except with the written agreement of the sponsor and the FDA or if the FDA determines that a substantial scientific issue essential to determining the safety or efficacy of the product candidate was identified after the testing began. An SPA is not binding if new circumstances arise, and there is no guarantee that a study will ultimately be adequate to support an approval even if the study is subject to an SPA. Having an SPA does not guarantee that a product will receive FDA approval.

Assuming successful completion of all required testing in accordance with all applicable regulatory requirements, detailed investigational product information is submitted to the FDA in the form of an NDA for a drug or a BLA for a biologic to request marketing approval for the product in specified indications.

 

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Biologics License Application Approval Process

In order to obtain approval to market a biologic, such as our VB-111, in the United States, a BLA must be submitted to the FDA that provides data from nonclinical studies and clinical trials and manufacturing information establishing to the FDA’s satisfaction the safety, purity, and potency or efficacy of the investigational product for the proposed indication. Like an NDA, the BLA must be accompanied by a substantial user fee payment unless a waiver or exemption applies.

The FDA will initially review the BLA for completeness before it accepts it for filing. Under the FDA’s procedures, the agency has 60 days from its receipt of a BLA to determine whether the application will be accepted for filing based on the agency’s threshold determination that the application is sufficiently complete to permit substantive review. After the BLA submission is accepted for filing, the FDA reviews the BLA to determine, among other things, whether the proposed product is safe, pure and potent, which includes determining whether it is effective for its intended use, and whether the product is being manufactured in accordance with cGMP, to assure and preserve the product’s identity, safety, strength, quality, potency and purity, and in accordance with biological product standards. The FDA will inspect the facilities at which the product is manufactured to ensure the manufacturing processes and facilities are in compliance with cGMP requirements and are adequate to assure consistent production of the product within required specifications. For a human cellular or tissue product, the FDA also will not approve the product if the manufacturer is not in compliance with the GTPs. These are FDA regulations that govern the methods used in, and the facilities and controls used for, the manufacture of human cells, tissues, and cellular and tissue based products, or HCT/Ps, which are human cells or tissue intended for implantation, transplant, infusion, or transfer into a human recipient. The primary intent of the GTP requirements is to ensure that cell and tissue based products are manufactured in a manner designed to prevent the introduction, transmission, and spread of communicable disease. Additionally, before approving a BLA, the FDA may inspect one or more clinical sites to assure compliance with GCP.

If the FDA determines the application, manufacturing process or manufacturing facilities are not acceptable, it typically will outline the deficiencies and often will request additional testing or information, or corrective action for a manufacturing facility. This may significantly delay further review of the application. If the FDA finds that a clinical site did not conduct the clinical trial in accordance with GCP, the FDA may determine the data generated by the clinical site should be excluded from the primary efficacy analyses provided in the BLA. Additionally, notwithstanding the submission of any requested additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval.

Similar to an NDA, the FDA may refer applications for novel products or products that present difficult questions of safety or efficacy to an advisory committee. The FDA also may determine a risk evaluation and mitigation study, or REMS, is necessary to assure the safe use of the biologic, in which case the BLA sponsor must submit a proposed REMS.

After the FDA completes its initial review of a BLA, it will either license, or approve, the product, or issue a complete response letter to communicate that it will not approve the BLA in its current form and to inform the sponsor of changes that the sponsor must make or additional clinical, nonclinical or manufacturing data that must be received before the FDA can approve the application, with no implication regarding the ultimate approvability of the application. If a complete response letter is issued, the sponsor may either resubmit the BLA, addressing all of the deficiencies identified in the letter, or withdraw the application.

The testing and approval process for a both a drug and biologic requires substantial time, effort and financial resources and this process may take several years to complete. Data

 

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obtained from clinical trials are not always conclusive and may be susceptible to varying interpretations, which could delay, limit or prevent regulatory approval. The FDA may not grant approval on a timely basis, or at all. We may encounter difficulties or unanticipated costs in our efforts to secure necessary governmental approvals, which could delay or preclude us from marketing our products.

New Drug Application Approval Process

In order to obtain approval to market a drug, such as VB-201, in the United States, a marketing application must be submitted to the FDA that provides data establishing the safety and efficacy of the drug product for the proposed indication. The application must include all relevant data available from pertinent nonclinical trials and clinical trials, including negative or ambiguous results as well as positive findings, together with detailed information relating to the product’s chemistry, manufacturing, controls and proposed labeling, among other things. Data can come from company-sponsored clinical trials intended to test the safety and efficacy of a product, or from a number of alternative sources, including studies initiated by investigators. To support marketing approval, the data submitted must be sufficient in quality and quantity to establish the safety and efficacy of the investigational drug product to the satisfaction of the FDA.

In most cases, the NDA must be accompanied by a substantial user fee, currently $2,169,000, pursuant to the Prescription Drug User Fee Act, or PDUFA. PDFUA also imposes an annual product fee, currently $104,060, and an annual establishment fee, currently $554,600, on facilities used to manufacture drugs. Fee waivers or reductions are available in certain circumstances, including a waiver of the application fee for the first application filed by a small business. Additionally, no user fees are assessed on NDAs for products designated as orphan drugs, unless the product also includes a non-orphan indication. The FDA adjusts user fees on an annual basis.

The FDA will initially review the NDA for completeness before it accepts the NDA for filing. The FDA has 60 days from its receipt of an NDA to determine whether the application will be accepted for filing based on the agency’s threshold determination that it is sufficiently complete to permit substantive review. After the NDA submission is accepted for filing, the FDA begins an in-depth review. The FDA has agreed to certain performance goals in the review of NDAs, including reviewing 90% of standard NDAs in ten months from filing. The FDA does not always meet its performance goal dates and its review goals are subject to change from time to time. The FDA can extend its review by three months to consider certain late-submitted information or information intended to clarify information already provided in the submission. The FDA reviews the NDA to determine, among other things, whether the proposed product is safe and effective for its intended use, and whether the product is being manufactured in accordance with cGMPs. The FDA may refer applications for novel drug products which present difficult questions of safety or efficacy to an advisory committee, typically a panel that includes clinicians and other experts, for review, evaluation and a recommendation as to whether the application should be approved and under what conditions. The FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully when making decisions.

Before approving an NDA, the FDA will inspect the facilities at which the product is manufactured. The FDA will not approve the product unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product within required specifications. Additionally, before approving an NDA, the FDA will typically inspect one or more clinical sites to assure compliance with GCP. After the FDA evaluates the NDA and the manufacturing

 

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facilities, it issues either an approval letter or a complete response letter. A complete response letter generally outlines the deficiencies in the submission and may require substantial additional testing or information in order for the FDA to reconsider the application. If, or when, those deficiencies have been addressed to the FDA’s satisfaction in a resubmission of the NDA, the FDA will issue an approval letter. The FDA has committed to reviewing such resubmissions in two or six months depending on the type of information included. Notwithstanding the submission of any requested additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval.

An approval letter authorizes commercial marketing of the drug with specific prescribing information for specific indications. As a condition of NDA approval, the FDA may require a REMS, to help ensure that the benefits of the drug outweigh the potential risks. REMS can include medication guides, communication plans for healthcare professionals, and elements to assure safe use, or ETASU. ETASU can include, but are not limited to, special training or certification for prescribing or dispensing, dispensing only under certain circumstances, special monitoring, and the use of patient registries. The requirement for a REMS can materially affect the potential market and profitability of the drug. Once adopted, REMS are subject to periodic assessment and modification. Moreover, product approval may require substantial post-approval testing and surveillance to monitor the drug’s safety or efficacy. Once granted, product approvals may be withdrawn if compliance with regulatory standards is not maintained or problems are identified following initial marketing.

Changes to some of the conditions established in an approved application, including changes in indications, labeling, or manufacturing processes or facilities, require submission and FDA approval of a new NDA or NDA supplement before the change can be implemented. An NDA supplement for a new indication typically requires clinical data similar to that in the original application, and the FDA uses the same procedures and actions in reviewing NDA supplements as it does in reviewing NDAs.

Orphan Drug Designation

The FDA has granted orphan drug designation to VB-111 for treatment of malignant glioma. Similarly, VB-111 for treatment of glioma was granted an orphan drug designation by the EMA. In the United States, orphan drug designation is granted pursuant to the Orphan Drug Act, which provides incentives for the development of products intended to treat rare diseases or conditions, which generally are diseases or conditions that affect fewer than 200,000 individuals in the United States. If a sponsor demonstrates that a biologic is intended to treat a rare disease or condition, the FDA will grant orphan designation for that product. Orphan designation must be requested before submitting a BLA. The benefits of orphan drug designation include research and development tax credits and exemption from FDA user fees. Orphan drug designation, however, does not convey any advantage in, or shorten the duration of, the regulatory review and approval process. After the FDA grants orphan designation, the identity of the applicant, as well the name of the therapeutic agent and its designated orphan use, are disclosed publicly by the FDA.

Generally, if a product with orphan designation is approved for an orphan indication, it receives orphan drug exclusivity, which for seven years prohibits the FDA from approving another product with the same active ingredient for the same use. Additionally, if a biologic designated as an orphan product receives marketing approval for an indication broader than what is designated, it may not be entitled to orphan drug exclusivity. Orphan exclusivity will not bar approval of another product under certain circumstances, including if a subsequent product

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approved product on the basis of greater efficacy or safety, or providing a major contribution to patient care, or if the company with orphan drug exclusivity is not able to meet market demand. Further, the FDA may approve more than one product for the same orphan indication or disease as long as the products contain different active ingredients. As a result, the FDA can still approve other drugs that have a different active ingredient for use in treating the same indication or disease, which could create a more competitive market for us.

Expedited Development and Review Programs

The FDA has a fast track program that is intended to expedite or facilitate the process for reviewing new drugs and biological products that meet certain criteria. Specifically, new drugs and biological products are eligible for fast track designation if they are intended to treat a serious or life-threatening condition and demonstrate the potential to address unmet medical needs for the condition. Fast track designation applies to the combination of the product and the specific indication for which it is being studied. The sponsor of a new biologic or drug may request the FDA to designate the biologic or drug as a fast track product at any time during the clinical development of the product. Unique to a fast track product, the FDA may consider for review sections of the marketing application on a rolling basis before the complete application is submitted, if the sponsor provides a schedule for the submission of the sections of the application, the FDA agrees to accept sections of the application and determines that the schedule is acceptable, and the sponsor pays any required user fees upon submission of the first section of the application. The FDA has granted fast track designation for the investigation of VB-111 for prolongation of survival in patients with glioblastoma that has recurred following treatment with temozolomide and radiation.

Any product submitted to the FDA for marketing, including under a fast track program, may be eligible for other types of FDA programs intended to expedite development and review, such as priority review and accelerated approval. Any product is eligible for priority review if it has the potential to provide safe and effective therapy where no satisfactory alternative therapy exists or a significant improvement in the treatment, diagnosis or prevention of a disease compared to marketed products. The FDA will attempt to direct additional resources to the evaluation of an application for a new biological or drug product designated for priority review in an effort to facilitate the review. Additionally, a product may be eligible for accelerated approval. Biological or drug products studied for their safety and effectiveness in treating serious or life-threatening illnesses and that provide meaningful therapeutic benefit over existing treatments may receive accelerated approval, which means that they may be approved on the basis of adequate and well-controlled clinical trials establishing that the product has an effect on a surrogate endpoint that is reasonably likely to predict a clinical benefit, or on the basis of an effect on a clinical endpoint other than survival or irreversible morbidity. As a condition of approval, the FDA may require that a sponsor of a biological or drug product receiving accelerated approval perform adequate and well-controlled post-marketing clinical trials. In addition, the FDA currently requires as a condition for accelerated approval pre-approval of promotional materials, which could adversely impact the timing of the commercial launch of the product. Fast track designation, priority review and accelerated approval do not change the standards for approval but may expedite the development or approval process.

FDA Additional Requirements

The FDA may require, or companies may pursue, additional clinical trials after a product is approved. These so-called Phase 4 clinical trials may be made a condition to be satisfied for continuing drug and biologic approval. The results of Phase 4 clinical trials can confirm the

efficacy of a product candidate and can provide important safety information. In addition, the

 

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FDA has express statutory authority to require sponsors to conduct post-market studies to specifically address safety issues identified by the agency.

Even if a product candidate receives regulatory approval, the approval may be limited to specific disease states, patient populations and dosages, or might contain significant limitations on use in the form of warnings, precautions or contraindications, or in the form of onerous risk management plans, restrictions on distribution, or post-marketing study requirements. Further, even after regulatory approval is obtained, later discovery of previously unknown problems with a product may result in restrictions on the product or even complete withdrawal of the product from the market. In addition, we cannot predict what adverse governmental regulations may arise from future United States or foreign governmental action.

FDA Post-Approval Requirements

Any products manufactured or distributed by us or on our behalf pursuant to FDA approvals are subject to continuing regulation by the FDA, including requirements for record-keeping, reporting of adverse experiences with the biologic or drug, and submitting biological product deviation reports to notify the FDA of unanticipated changes in distributed products. Manufacturers are required to register their facilities with the FDA and certain state agencies, and are subject to periodic unannounced inspections by the FDA and certain state agencies for compliance with cGMP requirements, which impose certain quality processes, manufacturing controls and documentation requirements upon us and our third-party manufacturers in order to ensure that the product is safe, has the identity and strength, and meets the quality, purity and potency characteristics that it purports to have. Certain states also impose requirements on manufacturers and distributors to establish the pedigree of product in the chain of distribution, including some states that require manufacturers and others to adopt new technology capable of tracking and tracing product as it moves through the distribution chain. In addition, in November 2013, the Drug Quality and Security Act became law and establishes requirements to facilitate the tracing of prescription drug products through the pharmaceutical supply distribution chain. This law includes a number of new requirements that will be implemented over time and will require us to devote additional resources to satisfy these requirements. We cannot be certain that we or our present or future suppliers will be able to comply with the cGMP and other FDA regulatory requirements. If our present or future suppliers are not able to comply with these requirements, the FDA may halt our clinical trials, refuse to approve any BLA, NDA or other application, force us to recall a product from distribution, shut down manufacturing operations or withdraw approval of the applicable BLA or NDA. Noncompliance with cGMP or other requirements can result in issuance of warning or untitled letters, civil and criminal penalties, seizures, and injunctive action.

The FDA and other federal and state agencies closely regulate the labeling, marketing and promotion of drugs and biologics. While doctors are free to prescribe any product approved by the FDA for any use, a company can only make claims relating to safety and efficacy of a product that are consistent with FDA approval, and the company is allowed to market a product only for the particular use and treatment approved by the FDA. In addition, any claims we make for our products in advertising or promotion must be appropriately balanced with important safety information and otherwise be adequately substantiated. Failure to comply with these requirements can result in adverse publicity, warning or untitled letters, corrective advertising, injunctions, potential civil and criminal penalties, criminal prosecution, and agreements with governmental agencies that materially restrict the manner in which a company promotes or distributes products. Government regulators, including the Department of Justice and the Office of the Inspector General of the Department of Health and Human Services, as well as state authorities, recently have increased their scrutiny of the promotion and marketing of drugs and biologics.

 

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Pediatric Research Equity Act

Under the Pediatric Research Equity Act, or PREA, as amended, an NDA or BLA or supplement must contain data to assess the safety and efficacy of the product for the claimed indications in all relevant pediatric subpopulations and to support dosing and administration for each pediatric subpopulation for which the product is safe and effective. Manufacturers must submit a pediatric study plan to the IND not later than 60 days after the end-of-phase 2 meeting with the FDA; if there is no such meeting, before the initiation of any phase 3 studies or a combined phase 2 and phase 3 study; or if no such study will be conducted, no later than 210 days before a marketing application or supplement is submitted. The intent of PREA is to compel sponsors whose products have pediatric applicability to study those products in pediatric populations, rather than ignoring pediatric indications for adult indications that could be more economically desirable. The FDA may grant deferrals for submission of data or full or partial waivers. By its terms, PREA does not apply to any product for an indication for which orphan designation has been granted, unless the FDA issues regulations stating otherwise. Because the FDA has not issued any such regulations, submission of a pediatric assessment is not required for an application to market a product for an orphan-designated indication.

Patent Term Restoration and Marketing Exclusivity

Depending upon the timing, duration and specifics of FDA marketing approval of our product candidates, some of our U.S. patents may be eligible for limited patent term extension under the Hatch-Waxman Amendments. The Hatch-Waxman Amendments permit a patent restoration term of up to five years as compensation for patent term lost during product development and the FDA regulatory review process. However, patent term restoration cannot extend the remaining term of a patent beyond a total of 14 years from the product’s approval date. The patent term restoration period is generally one-half the time between the effective date of an IND and the submission date of an NDA or BLA plus the time between the submission date of an NDA or BLA and the approval of that application. Only one patent applicable to an approved drug is eligible for the extension and the application for the extension must be submitted prior to the expiration of the patent and within sixty days of approval of the drug. The U.S. Patent and Trademark Office, in consultation with the FDA, reviews and approves the application for any patent term extension or restoration. In the future, we intend to apply for restorations of patent term for some of our currently owned or licensed patents to add patent life beyond their current expiration dates, depending on the expected length of the clinical trials and other factors involved in the filing of the relevant NDA or BLA.

Market exclusivity provisions under the FDC Act can also delay the submission or the approval of certain applications. The FDC Act provides a five-year period of non-patent marketing exclusivity within the United States to the first applicant to gain approval of an NDA for a new chemical entity, or NCE. A drug is an NCE if the FDA has not previously approved any other new drug containing the same active pharmaceutical ingredient, or API, or active moiety, which is the molecule or ion responsible for the action of the drug substance. During the exclusivity period, the FDA may not accept for review an abbreviated new drug application, or ANDA, or a Section 505(b)(2) NDA submitted by another company for another version of such drug where the applicant does not own or have a legal right of reference to all the data required for approval. However, the FDC Act will not prevent the submission or approval of another full Section 505(b)(1) NDA, but such an NDA applicant would be required to conduct its own preclinical and adequate, well-controlled clinical trials to demonstrate safety and effectiveness. Further, a Section 505(b)(2) application may be submitted after four years if it contains a certification that the listed patent is unenforceable, invalid, or will not be infringed by the manufacture, sale or use of the new product, also known as a Paragraph IV certification. The

 

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FDC Act also provides three years of marketing exclusivity for an NDA, Section 505(b)(2) NDA or supplement to an existing NDA if new clinical investigations, other than bioavailability studies, that were conducted or sponsored by the applicant are deemed by the FDA to be essential to the approval of the application. Such clinical trials may, for example, support new indications, dosages, routes of administration or strengths of an existing drug, or for a new use. This exclusivity, which is sometimes referred to as clinical investigation exclusivity, prevents the FDA from approving an application under Section 505(b)(2) for the same conditions of use associated with the new clinical investigations before the expiration of three years from the date of approval. Such three-year exclusivity, however, would not prevent the approval of another application if the applicant submits a Section 505(b)(1) NDA and has conducted its own adequate, well-controlled clinical trials demonstrating safety and efficacy, nor would it prevent approval of a generic product or Section 505(b)(2) product that did not incorporate the exclusivity-protected changes of the approved drug product.

The Biologics Price Competition and Innovation Act of 2009, which was included within the Patient Protection and Affordable Care Act, created an abbreviated approval pathway for biological products shown to be similar to, or interchangeable with, an FDA-licensed reference biological product, and grants a reference biologic twelve years of exclusivity from the time of first licensure. Biosimilarity, which requires that there be no clinically meaningful differences between the biological product and the reference product in terms of safety, purity, and potency, can be shown through analytical studies, animal studies, and a clinical study or studies. Interchangeability requires that a product is biosimilar to the reference product and the product must demonstrate that it can be expected to produce the same clinical results as the reference product and, for products administered multiple times, the biologic and the reference biologic may be switched after one has been previously administered without increasing safety risks or risks of diminished efficacy relative to exclusive use of the reference biologic. However, complexities associated with the larger, and often more complex, structure of biological products, as well as the process by which such products are manufactured, pose significant hurdles to implementation that are still being worked out by the FDA.

Pediatric exclusivity is another type of exclusivity in the United States. Pediatric exclusivity, if granted, provides an additional six months of exclusivity to be attached to any existing exclusivity, e.g., three or five year exclusivity, or patent protection for a drug. This six month exclusivity, which runs from the end of other exclusivity protection or patent delay, may be granted based on the voluntary completion of a pediatric trial in accordance with an FDA-issued “Written Request” for such a trial.

Government Regulation Outside of the United States

In addition to regulations in the United States, we will be subject to a variety of regulations in other jurisdictions governing, among other things, clinical trials and any commercial sales and distribution of our products.

Whether or not we obtain FDA approval for a product, we must obtain the requisite approvals from regulatory authorities in foreign countries prior to the commencement of clinical trials or marketing of the product in those countries. Certain countries outside of the United States have a similar process that requires the submission of a clinical trial application much like the IND prior to the commencement of human clinical trials. In the European Union, for example, a request for a clinical trial authorization, or CTA, must be submitted to each country’s national health authority and an independent ethics committee, much like the FDA and the IRB, respectively. Once the CTA is approved in accordance with a country’s requirements, clinical trial development may proceed.

 

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The requirements and process governing the conduct of clinical trials, product approval or licensing, pricing and reimbursement vary from country to country. In all cases, the clinical trials are conducted in accordance with GCP and the applicable regulatory requirements and the ethical principles that have their origin in the Declaration of Helsinki.

To obtain regulatory approval of an investigational biological product under European Union regulatory systems, we must submit a marketing authorization application. The application required in the European Union is similar to a BLA or NDA in the United States, with the exception of, among other things, country-specific document requirements. The European Union also provides opportunities for market exclusivity. For example, in the European Union, upon receiving marketing authorization, new chemical entities generally receive eight years of data exclusivity and an additional two years of market exclusivity. If granted, data exclusivity prevents regulatory authorities in the European Union from referencing the innovator’s data to assess a generic application. During the additional two-year period of market exclusivity, a generic marketing authorization can be submitted, and the innovator’s data may be referenced, but no generic product can be marketed until the expiration of the market exclusivity. The innovator may obtain an additional one year of market exclusivity if the innovator obtains an additional authorization during the initial eight year period for one or more new indications that demonstrate significant clinical benefit over existing therapies. However, there is no guarantee that a product will be considered by the European Union’s regulatory authorities to be a new chemical entity, and products may not qualify for data exclusivity. Similar exclusivity periods are available for new biologics.

Orphan drugs in the European Union are eligible for 10-year market exclusivity. This 10-year market exclusivity may be reduced to six years if, at the end of the fifth year, it is established that the product no longer meets the criteria for orphan designation, for example, if the product is sufficiently profitable not to justify maintenance of market exclusivity. Additionally, marketing authorization may be granted to a similar product for the same indication at any time if:

 

   

the second applicant can establish that its product, although similar, is safer, more effective or otherwise clinically superior;

 

   

the applicant consents to a second orphan medicinal product application; or

 

   

the applicant cannot supply enough orphan medicinal product.

If we fail to comply with applicable foreign regulatory requirements, we may be subject to, among other things, fines, suspension or withdrawal of regulatory approvals, product recalls, seizure of products, operating restrictions and criminal prosecution.

Intellectual Property

Our success depends, at least in part, on our ability to protect our proprietary technology and intellectual property, and to operate without infringing or violating the proprietary rights of others. We rely on a combination of patent, trademark, trade secret and copyright laws, know-how, intellectual property licenses and other contractual rights, including confidentiality and invention assignment agreements to protect our intellectual property rights.

Patents

As of March 14, 2014, we had 108 granted patents and 81 applications pending worldwide for our oncology program and VTS platform technology and 86 granted patents and 86 patent applications pending worldwide for our anti-inflammatory program and Lecinoxoid family of compounds.

 

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Our granted patents covering VB-111, our lead compound from our oncology program, include claims directed to composition of matter and methods of treatment, as well as combination products and therapies, such as treatment with VB-111 and chemotherapy. In addition, we hold granted patents directed to components of our proprietary PPE-1-3X promoter and pending patent applications directed to our proprietary PPE-1-3X promoter. Furthermore, we have filed patent applications with claims directed to next generation product candidates generated from our VTS platform technology, covering production, alternate concentration dosage forms, clinical regimens and methods. Our existing granted patents provide protection for VB-111 through 2023, before any potential patent term extensions.

For the Lecinoxoid platform technology, our granted patents include claims directed to VB-201, substantially pure VB-201, dosage forms comprising VB-201, methods of making VB-201 and methods of treatment using VB-201, as well as claims directed to dosage forms and methods of treatment covering combination products, such as VB-201 and statins. Our primary granted patent covering substantially pure VB-201 expires in 2027, before any potential patent term extensions. Our pending patent applications include claims directed to formulations, alternative dosing regimens and next generation product candidates.

Our issued patents and those that may issue in the future could be narrowed or found to be invalid or unenforceable. Any of these outcomes could limit our ability to stop competitors from marketing related products or reduce the length of term of patent protection that we may have for our products. In addition, we cannot be certain that we were the first to invent the inventions claimed in our owned patents or patent applications. Further, our competitors may circumvent our patent protection by independently developing similar technologies that are not protected by our issued patent claims such that our patents may not provide us with any meaningful competitive advantages against these competitors. Furthermore, extensive time is required for development, testing and regulatory review of a potential product before the product can be marketed. If we are unable to obtain patent term extension for part or all of the regulatory review period, then the amount of patent term remaining on earlier issued patents may be limited to a short period following regulatory approval.

Trademarks

We rely on trade names, trademarks and service marks to protect our name brands. Our registered trademarks in several countries include the following: “VTS,” “VASCULAR TARGETING SYSTEMS,” “VBL,” “VASCULAR BIOGENICS” and “VASCULAR THERAPEUTICS.”

Trade Secrets and Confidential Information

In addition to patented technology, we rely on our unpatented proprietary technology, trade secrets, processes and know-how. We rely on, among other things, confidentiality and invention assignment agreements to protect our proprietary know-how and other intellectual property that may not be patentable, or that we believe is best protected by means that do not require public disclosure. For example, we require our employees to execute confidentiality agreements in connection with their employment relationships with us, and to disclose and assign to us inventions conceived in connection with their services to us. However, there can be no assurance that these agreements will be enforceable or that they will provide us with adequate protection.

We may be unable to obtain, maintain and protect the intellectual property rights necessary to conduct our business, and may be subject to claims that we infringe or otherwise violate the intellectual property rights of others, which could materially harm our business. For a more comprehensive summary of the risks related to our intellectual property, see “Risk Factors.”

 

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Sales and Marketing

We have not yet established sales, marketing or product distribution operations because our lead candidates are still in early clinical development.

Manufacturing

We generally perform process development for our drug substance candidates and manufacture quantities of our drug candidates necessary to conduct pre-clinical studies and clinical trials of our drug candidates. We rely on third-party manufacturers to produce bulk drug substance required for our clinical trials and expect to continue to rely on third parties to manufacture clinical trial drug supplies for the foreseeable future. We also contract with additional third parties for the formulating, labeling, packaging, storage and distribution of the final drug products.

VB-111

We manufacture the active pharmaceutical ingredient and the formulated drug product of VB-111 for the clinical development at our small-scale cGMP-compliant production facility in Israel and pursuant to an arrangement with a third party in the United States.

We intend to establish a facility to manufacture VB-111 in Israel, which would serve as a second manufacturing site for the supply of VB-111 and enable us to comply with the restrictions of the Research Law and our undertaking to the OCS that an essential portion of our VB-111 production, and in any event not less than the majority of VB-111 production, will remain in Israel.

VB-201

We have process development and small-scale manufacturing capabilities for Lecinoxoids for research and pre-clinical purposes at our production facility in Israel. Currently, VB-201 is manufactured for clinical trials through an arrangement with third parties in Europe.

Arrangements Involving Third Parties

Sheba Medical Center, Ramat Gan, Israel

On February 3, 2013, we entered into an agreement with Tel Hashomer, a private company whose purpose is to promote the welfare of the Sheba Medical Center, or the Hospital, and Prof. Dror Harats, our chief executive officer. The agreement with Tel Hashomer resolved claims of the Hospital regarding the ownership of certain inventions and patent rights owned by us since they were developed in part by Prof. Dror Harats and other inventors during the time in which they were engaged by us and by the Hospital in parallel. The agreement provided us with a waiver of rights by the Hospital and Tel Hashomer in connection with intellectual property developed by those inventors prior to the date of the agreement, including continuations in part, in exchange for a royalty payment and certain other consideration to Tel Hashomer. Any intellectual property developed following January 2013 by our employees who are also engaged by the Hospital, currently consisting of Prof. Harats and three other professionals, is not covered by the agreement. Prof. Harats and the three other professionals also engaged by the Hospital are no longer involved in research activity of our company.

Crucell Holland B.V. Agreements

In March 2005, we entered into a Research License Agreement with Crucell Holland B.V., or Crucell. Under the Research License Agreement, we were granted non-exclusive rights under

 

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certain patent and know how to use the adenovirus 5 in our development of gene therapeutics based on adenoviral vectors, and an option to a non-exclusive, worldwide commercial license to manufacture, use and sell products comprising or deriving from the granted patent.

On April 15, 2011, we executed a Commercial License Agreement pursuant to the option granted under the Research License Agreement for incorporating the adenovirus 5 in VB-111 and other drug candidates for cancer. Under the Commercial License Agreement, we are obligated to pay an annual fee, milestone payments and royalties.

Employees

As of May 31, 2014, we employed 32 employees, including 26 in research and development, and 6 in general and administrative positions, and of which 16 employees have either MDs or PhDs. All of our employees are located in Israel. We believe our employee relations are good.

Israeli labor laws govern the length of the workday, minimum wages for employees, procedures for hiring and dismissing employees, determination of severance pay, annual leave, sick days, advance notice of termination of employment, equal opportunity and anti-discrimination laws and other conditions of employment. Subject to specified exceptions, Israeli law generally requires severance pay upon the retirement, death or dismissal of an employee, and requires us and our employees to make payments to the National Insurance Institute, which is similar to the U.S. Social Security Administration. Our employees have defined benefit pension plans that comply with the applicable Israeli legal requirements.

None of our employees currently work under any collective bargaining agreements.

Facilities

Our corporate headquarters and research facilities are located in Or Yehuda, Israel, where we lease an aggregate of approximately 9,000 square feet of office and laboratory space, pursuant to lease agreements that expire in October 2014, subject to a renewal option. This facility additionally houses our clinical development, clinical operations, regulatory and management functions.

We believe that our existing facilities are adequate for our near-term needs. When our leases expire, we may exercise our renewal option or look for additional or alternate space for our operations. We believe that suitable additional or alternative space would be available if required in the future on commercially reasonable terms.

Legal Proceedings

We are not a party to any legal proceedings.

 

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MANAGEMENT

Executive Officers and Directors

The following table sets forth certain information relating to our executive officers and directors, including their ages as of May 31, 2014. Unless otherwise stated, the address for our directors and executive officers is c/o Vascular Biogenics Ltd., 6 Jonathan Netanyahu St. Or Yehuda, Israel.

 

Name

   Age     

Position

Executive Officers and Director

     

Dror Harats

     57       Chief Executive Officer and Director

Amos Ron

     59       Chief Financial Officer

Erez Feige

     40       Vice President, Business Operations

Jacob George

     49       Chief Scientific Officer

Yael Cohen

     51       Vice President, Clinical Development

Eyal Breitbart

     47       Vice President, Research and Operations

Naamit Sher

     60       Vice President, Drug Development

Ayelet Horn

     43       General Counsel and Company Secretary

Non-Executive Directors

     

Bennett M. Shapiro

     74       Chairman and Director

Ruth Arnon

     81       Director

Jide J. Zeitlin

     50       Director

Jecheskiel Gonczarowski

     68       Director

Dan J. Gelvan

     50       Director

Ruth Alon

     62       Director

 

(1) Member of the compensation committee.

 

(2) Member of the audit committee.

 

(3) Member of the nominating and corporate governance committee.

 

(4) Independent director under the rules of the NASDAQ Stock Market.

Executive Officers

Prof. Dror Harats founded our company in 2000 and has served as our chief executive officer since our inception. He has been a member of our board of directors since January 2001. Prof. Harats is the director of the Bert W. Strassburger Lipid Center at the Chaim Sheba Medical Center at Tel Hashomer and chairman of its Institute Review Board. Prof. Harats received his M.D. from Hadassah Medical School at the Hebrew University of Jerusalem, Israel, following which he conducted post-doctoral work at the University of California, San Francisco. Prof. Harats is also a Professor of Medicine in the Departments of Internal Medicine and Biochemistry at the Sackler Faculty of Medicine of Tel-Aviv University, Israel. Prof. Harats has also served as a visiting scientist at Syntax Discovery Research. We believe Prof. Harats is qualified to serve on our board of directors because of his extensive technical and industry experience, as well as his knowledge of our company.

Amos Ron has served as our chief financial officer since May 2011. Prior to joining our company, from July 2008 to April 2011, Mr. Ron was the chief financial officer of Atlantium Technologies Ltd., a privately held start-up in the field of clean-tech. Prior to that, Mr. Ron served as the chief financial officer and chief operating officer of Medical Compression Systems, and prior to that, Mr. Ron served as the chief financial officer of Interpharm Laboratories Group, a wholly owned subsidiary of Serono S.A. Mr. Ron holds an M.Sc. (Honors) in Chemical Technology Management from the Hebrew University of Jerusalem, a B.Sc. in Business Administration, Empire State College (SUNY) (Jerusalem Branch) and a B.Sc. in Chemistry from the Hebrew University of Jerusalem.

 

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Dr. Erez Feige has served as our vice president of business operations since January 2014. Prior to that, from 2012 to 2014, Dr. Feige served as our director of business development and, from 2006 to 2012, Dr. Feige served as our head of biochemistry. Dr. Feige holds a B.Sc. and a Ph.D. from Bar-Ilan University, Israel and completed a post-doctoral fellowship at the Dana-Farber Cancer Institute and Harvard Medical School.

Prof. Jacob George has served as our chief scientific officer since our inception in 2000 and, together with Prof. Harats, is a co-inventor of our Lecinoxoid platform technology. Prof. George also serves on the board of directors of, as well as an advisor to, Chemomab Ltd. Prof. George received his M.D. from the Technion School of Medicine, Israel. Prof. George is the chief of cardiology in the Kaplan Medical Center, Israel, and a full professor of cardiology at the Hebrew University of Jerusalem, Israel.

Dr. Yael Cohen has served as our vice president of clinical development since 2008. Prior to joining our company, Dr. Cohen served in various positions in Gamida Cell Ltd., Merck & Co. and Merck Research Labs, from 2000 to 2008. Dr. Cohen holds an M.D. from the Sackler Medical School at Tel Aviv University, Israel, and completed her residency in internal medicine at the Chaim Sheba Medical Center at Tel Hashomer, Israel, and a fellowship in hematology at the Rabin Medical Center, Petach Tikva, Israel. Dr. Cohen is a senior physician at the Hematology Department at the Sourasky Medical Center, Tel Aviv, Israel.

Dr. Eyal Breitbart has served as our vice president, research and operations since January 2014. Prior to that, from 2006 to 2013, Dr. Breitbart served as our vice president, research. Dr. Breitbart holds a B.Sc., M.Sc. and Ph.D. from Bar-Ilan University, Israel, and completed a post-doctoral fellowship at Tufts University School of Medicine.

Dr. Naamit Sher has served as our vice president of drug development and regulatory affairs since 2006. Prior to joining our company, from 2005 to 2006, Dr. Sher was head of QC laboratories, operations division at Teva Pharmaceutical Industries Ltd. From 1992 to 2005, Dr. Sher acted as quality control/quality assurance director at InterPharm, a subsidiary of Ares-Serono. Dr. Sher holds a B.Sc., M.Sc. and Ph.D. from the Hebrew University of Jerusalem, Israel. She completed post-doctoral fellowships at each of the Hebrew University, Jerusalem, Israel, and Rutgers University.

Adv. Ayelet Horn has served as our general counsel since our inception in 2000, and has served as our company secretary since 2007. Adv. Horn holds an LL.B from Tel-Aviv University, Israel, and an M.B.A. from Herriot Watt University, Edinburgh, Scotland.

Non-Executive Directors

Bennett M. Shapiro, M.D. has served on our board of directors since September 2004 and has served as Chairman since 2007. In addition to serving on our board of directors, Dr. Shapiro has served as a senior partner at Puretech Ventures, an innovation enterprise, since 2004, and as chairman since 2009, and is a consultant in the field of biotechnology. From 1990 to 2003, Dr. Shapiro served as executive vice president, Merck Research Laboratories. Prior to that, from 1970 to 1990, Dr. Shapiro was a professor of the Department of Biochemistry at the University of Washington and served as chairman from 1985 to 1990. Prior to joining the University of Washington, from 1965 to 1970 Dr. Shapiro served as a research associate, then section head, in the Laboratory of Biochemistry of the National Heart Institute of the U.S. National Institutes of Health. Dr. Shapiro also currently serves as an external director on the board of directors of Momenta Pharmaceuticals, various private companies and the Drugs for Neglected Diseases Initiative, an independent, non-profit development partnership. Dr. Shapiro previously served

 

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on the board of directors of Celera Corporation prior to its acquisition by Quest Diagnostics Inc. Dr. Shapiro received his B.S. in chemistry from Dickinson College and his M.D. from Jefferson Medical College. Dr. Shapiro has been a Guggenheim Fellow, a fellow of the Japan Society for the Promotion of Science and a visiting professor at the University of Nice. We believe Dr. Shapiro is qualified to serve on our board of directors because of his extensive technical and industry background, and his experience serving on boards of directors of companies in our industry, including public companies.

Prof. Ruth Arnon has served on our board of directors since August 2007. Prof. Arnon is an immunologist with the Weizmann Institute of Science in Israel. Prof. Arnon joined the staff of the Weizmann Institute in 1960, and served as vice president of the Institute from 1988 to 1997. Prof. Arnon is a member of the Israel Academy of Sciences, and since 2004, has served as its vice president. Prof. Arnon is also an elected member of the European Molecular Biology Organization. She has served as president of the European Federation of Immunological Societies, and as secretary-general of the International Union of Immunological Societies. Her awards and honors include the Robert Koch Prize in Medical Sciences, Spain’s Jimenez Diaz Memorial Award, France’s Legion of Honor, the Hadassah World Organization’s Women of Distinction Award, the Wolf Prize for Medicine, the Rothschild Prize for Biology, and the Israel Prize. Prof. Arnon earned her M.Sc. in Chemistry from the Hebrew University, Jerusalem, Israel, and her Ph.D. from the Hebrew University. We believe Prof. Arnon is qualified to serve on our board of directors because of her extensive technical and industry background.

Jide J. Zeitlin has served on our board of directors since March 2008. Mr. Zeitlin is the founder and, since 2006, has served as the president of The Keffi Group Ltd., an investment firm. Mr. Zeitlin formerly served as an employee of The Goldman Sachs Group, Inc. from 1987 until December 2005 and as a partner from 1996 until 2005, where his career included a number of senior management positions including serving in the firm’s executive office. Mr. Zeitlin is Chairman Emeritus of the Board of Trustees at Amherst College and is a member of the Boards of the Harvard Business School Board of Dean’s Advisors, Teach for America, Nigeria Sovereign Investment Authority, Montefiore Medical Center, Playwrights Horizons, Common Ground Community, Doris Duke Charitable Foundation and Saint Ann’s School. He also serves on the board of directors of Affiliated Managers Group, Inc. and is the lead director of Coach, Inc. Mr. Zeitlin holds a B.A. in Economics and English from Amherst College and an M.B.A. from Harvard University. We believe Mr. Zeitlin is qualified to serve on our board of directors because of his broad business and investment background and service on boards of directors.

Jecheskiel Gonczarowski has served on our board of directors since March 2001. Since 2010, Mr. Gonczarowski has served as the chairman and chief executive officer of D.S.N.I. Investments Ltd., an Israeli based private family office, managing various local and international investments. Prior to that, Mr. Gonczarowski founded and co-managed Getter Group Ltd, a publicly traded company in Israel specializing in exclusive representation of leading international suppliers and brands, from 1982 to 2010. Mr. Gonczarowski also served on the board of directors of Rotshtein Realestate Ltd., a publicly traded company in Israel performing private and public construction in Israel. Mr. Gonczarowski studied economics, mathematics and business administration at the Hebrew University of Jerusalem, Israel. We believe Mr. Gonczarowski is qualified to serve on our board of directors because of his broad business background and experience with public companies.

Dr. Dan J. Gelvan has served on our board of directors since July 2005. Since 2005, Dr. Gelvan has served as the managing director-life sciences, Aurum Ventures M.K.I Ltd. Before joining Aurum Ventures, Dr. Gelvan was the chief executive and president of GammaCan International, Inc., a development-stage pharmaceutical company, from 2004 to 2005. From 2004

 

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to 2008, Dr. Gelvan served as a member of the Israel National Committee on Biotechnology and, from 1997 to 2004, Dr. Gelvan served as the chief executive officer and president of Zetiq Technologies. From 1995 to 1997, Dr. Gelvan held a senior position in Clal (Israel) Ltd., an investment firm. Dr. Gelvan holds a B.A. and an M.A. in Economics from the Hebrew University of Jerusalem, Israel and a Ph.D. in Business Economics from Roskilde University in Denmark. We believe Dr. Gelvan is qualified to serve on our board of directors because of his business and industry background.

Ruth Alon has served on our board of directors since March 2010. Since 1997, Ms. Alon has served as a general partner in Pitango Venture Capital. Prior to her tenure at Pitango, Ms. Alon held senior positions with Montgomery Securities from 1981 to 1987 and Kidder Peabody & Co. from 1987 to 1993, and managed her own independent consulting business in San Francisco in the medical devices industry from 1995 to 1996. Ms. Alon is the chairperson of Israel Life Science Industry, a not-for-profit organization representing the mutual goals of approximately 700 Israeli life science companies. Ms. Alon has a B.A. in Economics from the Hebrew University of Jerusalem, Israel, an M.B.A. from Boston University, and an M.S. from the Columbia University School of Physicians and Surgeons. We believe Ms. Alon is qualified to serve on our board of directors because of her extensive business and industry background, as well as her experience as a seasoned investor.

Arrangements Concerning Election of Directors; Family Relationships

Our current board of directors consists of seven directors. Pursuant to our articles of association in effect prior to this offering, certain of our shareholders have rights to appoint members of our board of directors. See “Management—Board of Directors.”

All rights to appoint directors will terminate upon the closing of this offering, although currently serving directors that were appointed prior to this offering will continue to serve pursuant to their appointment until the first annual meeting of shareholders held after this offering.

We are not a party to, and are not aware of, any voting agreements among our shareholders. In addition, there are no family relationships among our executive officers and directors.

Advisory Boards

We established several advisory boards with specific expertise in the following fields: psoriasis, inflammatory bowel disease (also covering ulcerative colitis), atherosclerosis and inflammation, multiple sclerosis, rheumatoid arthritis and oncology. In addition we have an advisory board comprised of industry experts with significant experience in the pharmaceutical industry.

Industry Experts

Ian Wilding, Ph.D.

Bonnie Goldman

James S. MacDonald, Ph.D.

John G. Aunins, Ph.D.

Psoriasis

Alexa Kimball, M.D.

Gerald Kruger, M.D.

 

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Inflammatory Bowel Disease and Rheumatoid Arthritis

William Sandborn, M.D.

Michael E. Weinblatt, M.D.

Atherosclerosis and Inflammation

Joseph L. Witztum, M.D.

Paul M. Ridker, M.D., MPH, FACC

John J.P. Kastelein, M.D.

Marc Penn, M.D., Ph.D., FACC

Zahi Fayad, Ph.D.

Oncology

Ernest Borden, Ph.D.

Deborah Blumenthal, M.D.

Richard Penson, M.D., MRCP

Patrick Wen, M.D.

Keith Bible, M.D.

Tim Cloughesy, M.D.

Nicholas Butowski, M.D.

Andrew Brenner, M.D.

Corporate Governance Practices

Under the Companies Law, companies incorporated under the laws of the State of Israel, whose shares are publicly traded, including companies whose shares are listed on the NASDAQ Stock Market, or NASDAQ, are considered public companies under Israeli law and are required to comply with various corporate governance requirements under Israeli law relating to such matters as external directors, the audit committee and an internal auditor. This is the case even if our shares are not listed on the Tel Aviv Stock Exchange. These requirements are in addition to the corporate governance requirements imposed by NASDAQ rules also referred to as the NASDAQ listing requirements, and other applicable provisions of U.S. securities laws to which we will become subject (as a foreign private issuer) upon the closing of this offering and the listing of our ordinary shares on The NASDAQ Global Market. Under the NASDAQ listing requirements, a foreign private issuer, such as us, may generally follow its home country rules of corporate governance in lieu of the comparable requirements of NASDAQ, except for certain matters including (among others) the composition and responsibilities of the audit committee and the independence of its members within the meaning of the rules and regulations of the Securities and Exchange Commission.

We intend to rely on this “home country practice exemption” with respect to the quorum requirements. As permitted under the Companies Law pursuant to our amended and restated articles of association to be effective upon the closing of this offering, the quorum required for an ordinary meeting of shareholders will consist of at least two shareholders present in person, by proxy or by other voting instrument in accordance with the Companies Law, who hold at least 25% of the voting power of our shares (and in an adjourned meeting, with some exceptions, any number of shareholders), instead of 33 1/3% of the issued share capital required under the NASDAQ listing requirements.

Except as stated above, we intend to comply with the rules generally applicable to U.S. domestic companies listed on NASDAQ, subject to certain exemptions the JOBS Act provides to emerging growth companies. We may in the future decide to use other foreign private issuer exemptions with respect to some or all of the other NASDAQ listing requirements. Following

 

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our home country governance practices, as opposed to the requirements that would otherwise apply to a company listed on NASDAQ, may provide less protection than is accorded to investors under NASDAQ listing requirements applicable to domestic issuers. For more information, see “Risk Factors – We are an ‘emerging growth company’ and a ‘foreign private issuer,’ and we cannot be certain if the reduced reporting requirements applicable to emerging growth companies and foreign private issuers will make our ordinary shares less attractive to investors” and “Risk Factors – We are a ‘foreign private issuer’ and intend to follow certain home country corporate governance practices, and our shareholders may not have the same protections afforded to shareholders of companies that are subject to all NASDAQ corporate governance requirements.”

Board of Directors

Under the Israeli Companies Law, 5759-1999, or the Companies Law, the management of our business is vested in our board of directors. Our board of directors may exercise all powers and may take all actions that are not specifically granted to our shareholders or to management. Our executive officers are responsible for our day-to-day management and have individual responsibilities established by our board of directors. Our chief executive officer is appointed by, and serves at the discretion of, our board of directors, subject to the employment agreement that we have entered into with him. All other executive officers are also appointed by our board of directors, and are subject to the terms of any applicable employment agreements that we may enter into with them.

Under our amended and restated articles of association to be effective upon the closing of this offering, our board of directors must consist of at least three and not more than nine directors, including at least two external directors. Our board of directors will consist of nine directors, including two external directors. The external directors are nominated by our board of directors and are subject to election at a meeting of our shareholders to be held no later than three months following the closing of this offering. Other than external directors, for whom special election requirements apply under the Companies Law, as detailed below, and our amended and restated articles of association provide that directors (other than external directors) are elected annually at the general meeting of our shareholders by a vote of the holders of a majority of the voting power present and voting, in person or by proxy, at that meeting. We have only one class of directors.

Prior to this offering, our directors were elected in accordance with the terms of our articles of association then in effect:

 

   

Dr. Shapiro was appointed as an industry expert by a majority of the other directors, which included representatives of our major shareholders.

 

   

Prof. Harats was entitled to be a board member for so long as Prof. Harats is either (i) the chief executive officer of our company; or (ii) a holder of 3% or more of our issued and outstanding share capital;

 

   

Mr. Gonczarowski was appointed by J.J.D. Holdings G.P., A.J.J.G. Technology Investments 2003 and Inspe Aktiengesellschaft on behalf of the holders of the Series A preferred shares;

 

   

Dr. Gelvan was appointed by Aurum Ventures M.K.I. Ltd.;

 

   

Ms. Alon was appointed by persons affiliated with Pitango Venture Capital;

 

   

Mr. Zeitlin was appointed by the Keffi Group VI LLC on behalf of the holders of the Series D preferred shares; and

 

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Prof. Ruth Arnon was appointed by a majority of the other directors, which included representatives of our major shareholders.

Upon the adoption of our amended and restated articles of association to be effective upon the closing of this offering, the rights set forth in the current articles will be terminated and no additional agreements will exist with respect to the nomination of our board members.

Upon the closing of this offering, we will comply with NASDAQ rules that a majority of our directors are independent. Our board of directors has determined that with the exception of Prof. Harats, all of our directors are independent under such rules. The definition of “independent director” under NASDAQ rules and “external director” under the Companies Law overlap to a significant degree such that we would generally expect the two directors serving as external directors to satisfy the requirements to be independent under NASDAQ rules. However, it is possible for a director to qualify as an “external director” under the Companies Law without qualifying as an “independent director” under NASDAQ rules, or vice-versa. The definition of external director under the Companies Law includes a set of statutory criteria that must be satisfied, including criteria whose aim is to ensure that there is no factor that would impair the ability of the external director to exercise independent judgment. The definition of independent director under NASDAQ rules specifies similar, if slightly less stringent, requirements in addition to the requirement that the board of directors consider any factor which would impair the ability of the independent director to exercise independent judgment. In addition, external directors serve for a period of three years pursuant to the requirements of the Companies Law. However, external directors must be elected by a special majority of shareholders while independent directors may be elected by an ordinary majority. See “—External Directors” for a description of the requirements under the Companies Law for a director to serve as an external director.

In accordance with the exemption available to foreign private issuers under NASDAQ rules, we do not intend to follow the requirements of NASDAQ rules with regard to the process of nominating directors, and instead, will follow Israeli law and practice, in accordance with which our board of directors (or a committee thereof) is authorized to recommend to our shareholders director nominees for election. See “—Corporate Governance Practices” for more information.

Under the Companies Law and our amended and restated articles of association, nominees for directors may also be proposed by any shareholder holding at least 1% of our outstanding voting power. However, any such shareholder may propose a nominee only if a written notice of such shareholder’s intent to propose a nominee has been given to our company secretary (or, if we have no such company secretary, our chief executive officer). Any such notice must include certain information, including, among other things, a description of all arrangements between the nominating shareholder and the proposed director nominee(s) and any other person pursuant to which the nomination(s) are to be made by the nominating shareholder, the consent of the proposed director nominee(s) to serve as our director(s) if elected and a declaration signed by the nominee(s) declaring that there is no limitation under the Companies Law preventing their election, and that all of the information that is required under the Companies Law to be provided to us in connection with such election has been provided.

In addition, our amended and restated articles of association allow our board of directors to appoint directors to fill vacancies on our board of directors, for a term of office equal to the remaining period of the term of office of the director(s) whose office(s) have been vacated. External directors are elected for an initial term of three years and may be elected for additional three-year terms under the circumstances described below. External directors may be removed from office only under the limited circumstances set forth in the Companies Law. See “—External Directors.”

 

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Under the Companies Law, our board of directors must determine the minimum number of directors who are required to have accounting and financial expertise. See “—External Directors” below. In determining the number of directors required to have such expertise, our board of directors must consider, among other things, the type and size of the company and the scope and complexity of its operations. Our board of directors has determined that the minimum number of directors who are required to have accounting and financial expertise is one.

External Directors

Under the Companies Law, we are required to have at least two directors who qualify as external directors. The appointment as external directors shall be made by a resolution of the general meeting of our shareholders no later than three months following the completion of this offering, and we intend to hold a shareholders meeting within three months of the completion of this offering to seek approval for the appointment of the two qualifying candidates as external directors.

The Companies Law provides that external directors must be elected by a majority vote of the shares present and voting at a shareholders meeting, provided that either:

 

   

such majority includes at least a majority of the shares held by all shareholders who are not controlling shareholders and do not have a personal interest in the election of the external director (other than a personal interest not deriving from a relationship with a controlling shareholder) that are voted at the meeting, excluding abstentions, to which we refer as a disinterested majority; or

 

   

the total number of shares voted against the election of the external director by non-controlling shareholders and by shareholders who do not have a personal interest in the election of the external director (other than a personal interest not deriving from a relationship with a controlling shareholder does not exceed 2% of the aggregate voting rights in the company).

The term “controlling shareholder” is defined in the Companies Law as a shareholder with the ability to direct the activities of the company, other than by virtue of being an office holder. A shareholder is presumed to be a controlling shareholder if the shareholder holds 50% or more of the voting rights in a company or has the right to appoint the majority of the directors of the company or its general manager. With respect to certain matters, a controlling shareholder is deemed to include any shareholder that holds 25% or more of the voting rights in a public company if no other shareholder holds more than 50% of the voting rights in the company, but excludes a shareholder whose power derives solely from his or her position as a director of the company or from any other position with the company.

The initial term of an external director is three years. Thereafter, an external director may be reelected to serve in that capacity for additional three year terms, provided that either (i) his or her service for each such additional term is recommended by one or more shareholders holding at least 1% of the company’s voting rights and is approved at a shareholders meeting by a disinterested majority, where the total number of shares held by non-controlling, disinterested shareholders voting for such reelection exceeds 2% of the aggregate voting rights in the company, provided that the nominating shareholder, the external director and certain of their related parties meet additional independence requirements; or (ii) his or her service for each such additional term is recommended by the board of directors and is approved at a shareholders meeting by the same majority required for the initial election of an external director (as described above).

 

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The term of office for external directors for companies traded on certain foreign stock exchanges, including The NASDAQ Global Market, may be further extended, indefinitely, in increments of additional three-year terms, in each case provided that, in addition to reelection in such manner described above, (i) the audit committee and subsequently the board of directors of the company confirm that, in light of the external director’s expertise and special contribution to the work of the board of directors and its committees, the reelection for such additional period is beneficial to the company, and provided that (ii) the external director is reelected subject to the same shareholder vote requirements as if elected for the first time (as described above). Prior to the approval of the reelection of the external director at a general shareholders meeting, the company’s shareholders must be informed of the term previously served by him or her and of the reasons why the board of directors and audit committee recommended the extension of his or her term.

External directors may be removed from office by a special general meeting of shareholders called by the board of directors, which approves such dismissal by the same shareholder vote percentage required for their election or by a court, in each case, only under limited circumstances, including ceasing to meet the statutory qualifications for appointment, or violating their duty of loyalty to the company. If an external directorship becomes vacant and there are fewer than two external directors on the board of directors at the time, then the board of directors is required under the Companies Law to call a shareholders meeting as soon as possible to appoint a replacement external director.

Each committee of the board of directors that exercises the powers of the board of directors must include at least one external director, except that the audit committee and the compensation committee must include all external directors then serving on the board of directors. Under the Companies Law, external directors of a company are prohibited from receiving, directly or indirectly, any compensation for their services as external directors, other than for their services as external directors pursuant to the Companies Law and the regulations promulgated thereunder. Compensation of an external director is determined prior to his or her appointment and may not be changed during his or her term subject to certain exceptions.

The Companies Law provides that a person is not qualified to serve as an external director if (i) the person is a relative of a controlling shareholder of the company, or (ii) if that person or his or her relative, partner, employer, another person to whom he or she was directly or indirectly subject, or any entity under the person’s control, has or had, during the two years preceding the date of appointment as an external director: (a) any affiliation or other disqualifying relationship with the company, with any person or entity controlling the company or a relative of such person, or with any entity controlled by or under common control with the company; or (b) in the case of a company with no shareholder holding 25% or more of its voting rights, had at the date of appointment as external director, any affiliation or other disqualifying relationship with a person then serving as chairman of the board or chief executive officer, a holder of 5% or more of the issued share capital or voting power in the company or the most senior financial officer.

The term “relative” is defined under the Companies Law as a spouse, sibling, parent, grandparent or descendant; spouse’s sibling, parent or descendant; and the spouse of each of the foregoing persons. Under the Companies Law, the term “affiliation” and the similar types of prohibited relationships include (subject to certain exceptions):

 

   

an employment relationship;

 

   

a business or professional relationship even if not maintained on a regular basis (excluding insignificant relationships);

 

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control; and

 

   

service as an office holder, excluding service as a director in a private company prior to the initial public offering of its shares if such director were appointed as a director of the private company in order to serve as an external director following the initial public offering.

The term office holder is defined under the Companies Law as the general manager, chief executive officer, chief business manager, deputy general manager, vice general manager, any other person assuming the responsibilities of any of these positions regardless of that person’s title, a director, or a manager directly subordinate to the general manager.

In addition, no person may serve as an external director if that person’s position or professional or other activities create, or may create, a conflict of interest with that person’s responsibilities as a director or otherwise interfere with that person’s ability to serve as an external director or if the person is an employee of the Israel Securities Authority or of an Israeli stock exchange. A person may furthermore not continue to serve as an external director if he or she received direct or indirect compensation from the company including amounts paid pursuant to indemnification or exculpation contracts or commitments and insurance coverage for his or her service as an external director, other than as permitted by the Companies Law and the regulations promulgated thereunder.

Following the termination of an external director’s service on a board of directors, such former external director and his or her spouse and children may not be provided with a direct or indirect benefit by the company, its controlling shareholder or any entity under its controlling shareholder’s control. This includes engagement as an office holder or director of the company or a company controlled by its controlling shareholder or employment by, or provision of services to, any such company for consideration, either directly or indirectly, including through a corporation controlled by the former external director. This restriction extends for a period of two years with regard to the former external director and his or her spouse or child, and for one year with respect to other relatives of the former external director.

If, at the time at which an external director is appointed, all members of the board of directors, who are not controlling shareholders or relatives of controlling shareholders of the company are of the same gender, the external director to be appointed must be of the other gender. A director of one company may not be appointed as an external director of another company if a director of the other company is acting as an external director of the first company at such time.

According to regulations promulgated under the Companies Law, a person may be appointed as an external director only if he or she has professional qualifications or if he or she has accounting and financial expertise (each, as defined below). In addition, at least one of the external directors must be determined by our board of directors to have accounting and financial expertise. However, if at least one of our other directors (i) meets the independence requirements under the Exchange Act, (ii) meets the standards of the NASDAQ listing rules for membership on the audit committee, and (iii) has accounting and financial expertise as defined under Israeli law, then neither of our external directors is required to possess accounting and financial expertise as long as each possesses the requisite professional qualifications.

A director with accounting and financial expertise is a director who, due to his or her education, experience and skills, possesses an expertise in, and an understanding of, financial and accounting matters and financial statements, such that he or she is able to understand the financial statements of the company and initiate a discussion about the presentation of financial

 

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data. A director is deemed to have professional qualifications if he or she has: (i) an academic degree in economics, business management, accounting, law or public administration, (ii) an academic degree or has completed other higher education, in the primary field of business of the company or a field which is relevant to his or her position in the company, or (iii) at least five years of experience serving in one of the following capacities, or at least five years cumulative experience serving in two or more of the following capacities: (a) a senior business management position in a company with a significant volume of business, (b) a senior position in a company’s primary field of business, or (c) a senior position in public administration or service. The board of directors is charged with determining whether a director possesses financial and accounting expertise or professional qualifications.

Our board of directors has determined that              has accounting and financial expertise and possesses professional qualifications as required under the Companies Law.

Role of Board in Risk Oversight Process

Risk assessment and oversight are an integral part of our governance and management processes. Our board of directors encourages management to promote a culture that incorporates risk management into our corporate strategy and day-to-day business operations. Management discusses strategic and operational risks at regular management meetings, and conducts specific strategic planning and review sessions during the year that include a focused discussion and analysis of the risks facing us. Throughout the year, senior management reviews these risks with the board of directors at regular board meetings as part of management presentations that focus on particular business functions, operations or strategies, and presents the steps taken by management to mitigate or eliminate such risks.

Leadership Structure of the Board

In accordance with the Companies Law and our amended and restated articles of association, our board of directors is required to appoint one of its members to serve as chairman of the board of directors. Our board of directors has appointed Dr. Shapiro to serve as chairman of the board of directors.

Committees of the Board of Directors

Upon the closing of this offering, we will have an audit committee, a compensation committee and a nominating and corporate governance committee. We have adopted a charter for each of these committees.

Audit Committee

Under the Companies Law, we will be required to appoint an audit committee following the closing of this offering. The audit committee must be comprised of at least three directors, including all of the external directors, one of whom must serve as chairman of the committee. The audit committee may not include the chairman of the board, any director employed by or otherwise providing services on a regular basis to the company, to a controlling shareholder or to any entity controlled by a controlling shareholder, any director who derives most of his or her income from a controlling shareholder, nor a controlling shareholder or a relative thereof.

In addition, under the Companies Law, the audit committee of a publicly traded company must consist of a majority of unaffiliated directors. In general, an “unaffiliated director” under

 

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the Companies Law is defined as either an external director or as a director who meets the following criteria:

 

   

he or she meets the qualifications for being appointed as an external director, except for the requirement (i) that the director be an Israeli resident (which does not apply to companies such as ours whose securities have been offered outside of Israel or are listed outside of Israel) and (ii) for accounting and financial expertise or professional qualifications; and

 

   

he or she has not served as a director of the company for a period exceeding nine consecutive years. For this purpose, a break of less than two years in the service shall not be deemed to interrupt the continuation of the service.

Under the NASDAQ listing requirements, we are required to maintain an audit committee consisting of at least three independent directors, all of whom are financially literate and at least one of whom has accounting or related financial management expertise. Upon the consummation of this offering, our audit committee will consist of Dr. Gelvan, Dr. Shapiro and Mr. Zeitlin, and will be chaired by Dr. Gelvan. Dr. Gelvan is an audit committee financial expert as defined by the Securities and Exchange Commission rules and all of the members of our audit committee have the requisite financial literacy as defined by the NASDAQ Stock Market rules. Dr. Gelvan is “independent” as such term is defined in Rule 10A-3(b)(1) under the Exchange Act and under the listing standards of NASDAQ. Upon election by our shareholders of our external directors following this offering as prescribed by the Companies Law, our audit committee will be reconstituted to include our two external directors, one of whom will be the chairperson of the committee, and Dr. Gelvan.

Our board of directors has adopted an audit committee charter to be effective upon the listing of our shares on The NASDAQ Global Market setting forth the responsibilities of the audit committee consistent with the rules of the Securities and Exchange Commission and NASDAQ rules as well as the requirements for such committee under the Companies Law, including the following:

 

   

oversight of our independent registered public accounting firm and recommending the engagement, compensation or termination of engagement of our independent registered public accounting firm to the board of directors in accordance with Israeli law;

 

   

recommending the engagement or termination of the person filling the office of our internal auditor; and

 

   

recommending the terms of audit and non-audit services provided by the independent registered public accounting firm for pre-approval by our board of directors.

Our audit committee provides assistance to our board of directors in fulfilling its legal and fiduciary obligations in matters involving our accounting, auditing, financial reporting, internal control and legal compliance functions by pre-approving the services performed by our independent accountants and reviewing their reports regarding our accounting practices and systems of internal control over financial reporting. Our audit committee also oversees the audit efforts of our independent accountants and takes those actions that it deems necessary to satisfy itself that the accountants are independent of management.

Under the Companies Law, our audit committee is responsible for:

 

   

determining whether there are deficiencies in our business management practices, including in consultation with our internal auditor or the independent auditor, and making recommendations to the board of directors to improve such practices;

 

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determining whether to approve certain related party transactions (including transactions in which an office holder has a personal interest) and whether such transaction is extraordinary or material under the Companies Law (see “—Approval of Related Party Transactions Under Israeli Law”);

 

   

where the board of directors approves the work plan of the internal auditor, to examine such work plan before its submission to the board and propose amendments thereto;

 

   

establishing the approval process for certain transactions with a controlling shareholder or in which a controlling shareholder has a personal interest;

 

   

examining our internal controls and internal auditor’s performance, including whether the internal auditor has sufficient resources and tools to dispose of its responsibilities;

 

   

examining the scope of our auditor’s work and compensation and submitting a recommendation with respect thereto to our board of directors or shareholders, depending on which of them is considering the appointment of our auditor; and

 

   

establishing procedures for the handling of employees’ complaints as to deficiencies in the management of our business and the protection to be provided to such employees.

Our audit committee may not approve any actions requiring its approval (see “—Approval of Related Party Transactions Under Israeli Law”), unless at the time of approval a majority of the committee’s members are present, which majority consists of unaffiliated directors including at least one external director.

Compensation Committee

Following the listing of our ordinary shares on The NASDAQ Global Market, our compensation committee will consist of Mr. Zeitlin, Dr. Arnon, Dr. Gelvan and Dr. Shapiro. Mr. Zeitlin will serve as the chairman of the compensation committee. Upon election by our shareholders of our external directors following this offering as prescribed by the Companies Law, our compensation committee will be reconstituted to include our two external directors, one of whom will be the chairperson of the committee, and Mr. Zeitlin.

We chose to rely upon the exemption available to foreign private issuers under the listing requirements of the NASDAQ Stock Market with respect to the determination of the compensation of our chief executive officer and other executive officers, and, in lieu of forming a compensation committee consisting entirely of independent directors (or the determination of such compensation solely by the independent members of our board of directors), we have a compensation committee in compliance with the Israeli Companies Law. See “—Corporate Governance Practices.” However, all of the current members of our compensation committee are independent.

Under the Companies Law, the board of directors of a public company must appoint a compensation committee. The compensation committee must be comprised of at least three directors, including all of the external directors, which shall be a majority of the members of the compensation committee and one of whom must serve as chairman of the committee. However, subject to certain exceptions, Israeli companies whose securities are traded on stock exchanges such as NASDAQ, and who do not have a controlling shareholder, do not have to meet this majority requirement; provided, however, that the compensation committee meets other Companies Law composition requirements, as well as the requirements of the jurisdiction where the company’s securities are traded. We do not have a controlling shareholder and therefore our external directors will not comprise the majority of the members appointed to our compensation committee.

 

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Each compensation committee member who is not an external director must be a director whose compensation does not exceed an amount that may be paid to an external director. The compensation committee is subject to the same Companies Law restrictions as the audit committee as to who may not be a member of the committee.

The duties of the compensation committee include the recommendation to the company’s board of directors of a policy regarding the terms of engagement of office holders, to which we refer as a compensation policy. That policy must be adopted by the company’s board of directors, after considering the recommendations of the compensation committee, and will need to be brought for approval by the company’s shareholders, which approval requires what we refer to as a Special Majority. A Special Majority approval requires shareholder approval by a majority vote of the shares present and voting at a meeting of shareholders called for such purpose, provided that either: (a) such majority includes at least a majority of the shares held by all shareholders who are not controlling shareholders and do not have a personal interest in such compensation arrangement; or (b) the total number of shares of non-controlling shareholders and shareholders who do not have a personal interest in the compensation arrangement and who vote against the arrangement does not exceed 2% of the company’s aggregate voting rights. We will be required to adopt a compensation policy within nine months following the listing of our ordinary shares on The NASDAQ Global Market.

Our compensation policy must serve as the basis for decisions concerning the financial terms of employment or engagement of office holders, including exculpation, insurance, indemnification or any monetary payment or obligation of payment in respect of employment or engagement. The compensation policy must relate to certain factors, including advancement of the company’s objectives, the company’s business plan and its long term strategy, and creation of appropriate incentives for office holders. It must also consider, among other things, the company’s risk management, size and nature of its operations. The compensation policy must furthermore consider the following additional factors:

 

   

the knowledge, skills, expertise, and accomplishments of the relevant office holder;

 

   

the office holder’s roles and responsibilities and prior compensation agreements with him or her;

 

   

the relationship between the terms offered and the average compensation of the other employees of the company, including those employed through manpower companies;

 

   

the impact of disparities in salary upon work relationships in the company;

 

   

the possibility of reducing variable compensation at the discretion of the board of directors;

 

   

the possibility of setting a limit on the exercise value of non-cash variable equity-based compensation; and

 

   

as to severance compensation, the period of service of the office holder, the terms of his or her compensation during such service period, the company’s performance during that period of service, the person’s contributions towards the company’s achievement of its goals and the maximization of its profits, and the circumstances under which the person is leaving the company.

The compensation policy must also include the following principles:

 

   

the link between variable compensation and long term performance and measurable criteria;

 

   

the relationship between variable and fixed compensation, and the ceiling for the value of variable compensation;

 

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the conditions under which an office holder would be required to repay compensation paid to him or her if it was later shown that the data upon which such compensation was based was inaccurate and was required to be restated in the company’s financial statements;

 

   

the minimum holding or vesting period for variable, equity-based compensation; and

 

   

maximum limits for severance compensation.

The compensation committee is responsible for (a) recommending the compensation policy to a company’s board of directors for its approval (and subsequent approval by its shareholders) and (b) duties related to the compensation policy and to the compensation of a company’s office holders as well as functions previously fulfilled by a company’s audit committee with respect to matters related to approval of the terms of engagement of office holders, including:

 

   

recommending whether a compensation policy should continue in effect, if the then-current policy has a term of greater than three years (approval of either a new compensation policy or the continuation of an existing compensation policy must in any case occur every three years);

 

   

recommending to the board of directors periodic updates to the compensation policy;

 

   

assessing implementation of the compensation policy; and

 

   

determining whether the compensation terms of the chief executive officer of the company need not be brought to approval of the shareholders.

Our board of directors has adopted a compensation committee charter setting forth the responsibilities of the committee, which include:

 

   

the responsibilities set forth in the compensation policy;

 

   

reviewing and approving the granting of options and other incentive awards to the extent such authority is delegated by our board of directors; and

 

   

reviewing, evaluating and making recommendations regarding the compensation and benefits for our non-employee directors.

Nominating and Corporate Governance Committee

Following the listing of our ordinary shares on The NASDAQ Global Market, our nominating and corporate governance committee will consist of Dr. Shapiro, Mr. Gonczarowski, Ms. Alon and Dr. Arnon, and will be chaired by Dr. Shapiro. Each of the members of our nominating and corporate governance committee are independent under the listing requirements of The NASDAQ Global Market.

Our board of directors has adopted a nominating and governance committee charter to be effective upon the listing of our shares on The NASDAQ Global Market that will set forth the responsibilities of the nominating and governance committee which include:

 

   

overseeing and assisting our board in reviewing and recommending nominees for election as directors;

 

   

assessing the performance of the members of our board; and

 

   

establishing and maintaining effective corporate governance policies and practices, including, but not limited to, developing and recommending to our board a set of corporate governance guidelines applicable to our company.

 

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Internal Auditor

Under the Companies Law, the board of directors of a public company must appoint an internal auditor based on the recommendation of the audit committee. The role of the internal auditor is to examine, among other things, our compliance with applicable law and orderly business procedures. The audit committee is required to oversee the activities and to assess the performance of the internal auditor as well as to review the internal auditor’s work plan. We intend to appoint an internal auditor following the closing of this offering.

An internal auditor may not be:

 

   

a person (or a relative of a person) who holds more than 5% of the company’s outstanding shares or voting rights;

 

   

a person (or a relative of a person) who has the power to appoint a director or the general manager of the company;

 

   

an office holder or director of the company; or

 

   

a member of the company’s independent accounting firm, or anyone on its behalf.

Approval of Related Party Transactions Under Israeli Law

Fiduciary Duties of Directors and Executive Officers

The Companies Law codifies the fiduciary duties that office holders owe to a company. Each person listed in the table under “Management—Executive Officers and Directors” is an office holder under the Companies Law.

An office holder’s fiduciary duties consist of a duty of care and a duty of loyalty. The duty of care requires an office holder to act with the level of care with which a reasonable office holder in the same position would have acted under the same circumstances. The duty of loyalty requires that an office holder act in good faith and in the best interests of the company.

The duty of care includes a duty to use reasonable means to obtain:

 

   

information on the advisability of a given action brought for his or her approval or performed by virtue of his or her position; and

 

   

all other important information pertaining to these actions.

The duty of loyalty includes a duty to:

 

   

refrain from any conflict of interest between the performance of his or her duties to the company and his or her other duties or personal affairs;

 

   

refrain from any activity that is competitive with the company;

 

   

refrain from exploiting any business opportunity of the company to receive a personal gain for himself or herself or others; and

 

   

disclose to the company any information or documents relating to the company’s affairs which the office holder received as a result of his or her position as an office holder.

Disclosure of Personal Interests of an Office Holder and Approval of Certain Transactions

The Companies Law requires that an office holder promptly disclose to the company any personal interest that he or she may be aware of and all related material information or

 

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documents concerning any existing or proposed transaction by the company. An interested office holder’s disclosure must be made promptly and in any event no later than the first meeting of the board of directors at which the transaction is considered. An office holder is not obliged to disclose a personal interest if it derives solely from the personal interest of his or her relative in a transaction that is not considered as an extraordinary transaction.

A “personal interest” is defined under the Companies Law to include a personal interest of any person in an act or transaction of a company, including the personal interest of such person’s relative or of a corporate body in which such person or a relative of such person is a 5% or greater shareholder, director or general manager or in which he or she has the right to appoint at least one director or the general manager, but excluding a personal interest stemming from one’s ownership of shares in the company.

A personal interest furthermore includes the personal interest of a person for whom the office holder holds a voting proxy or the personal interest of the office holder with respect to his or her vote on behalf of a person for whom he or she holds a proxy even if such shareholder has no personal interest in the matter. An office holder is not, however, obliged to disclose a personal interest if it derives solely from the personal interest of his or her relative in a transaction that is not considered an extraordinary transaction.

Under the Companies Law, an extraordinary transaction is defined as any of the following:

 

   

a transaction other than in the ordinary course of business;

 

   

a transaction that is not on market terms; or

 

   

a transaction that may have a material impact on the company’s profitability, assets or liabilities.

If it is determined that an office holder has a personal interest in a transaction, approval by the board of directors is required for the transaction, unless the company’s articles of association provide for a different method of approval. Further, so long as an office holder has disclosed his or her personal interest in a transaction, the board of directors may approve an action by the office holder that would otherwise be deemed a breach of duty of loyalty. However, a company may not approve a transaction or action that is adverse to the company’s interest or that is not performed by the office holder in good faith. An extraordinary transaction in which an office holder has a personal interest requires approval first by the company’s audit committee and subsequently by the board of directors. The compensation of, or an undertaking to indemnify or insure, an office holder who is not a director requires approval first by the company’s compensation committee, then by the company’s board of directors, and, if such compensation arrangement or an undertaking to indemnify or insure is inconsistent with the company’s stated compensation policy or if the office holder is the chief executive officer (apart from a number of specific exceptions), then such arrangement is subject to a Special Majority approval. Arrangements regarding the compensation, indemnification or insurance of a director require the approval of the compensation committee, board of directors and shareholders by ordinary majority, in that order, and under certain circumstances, a Special Majority approval. If shareholders of a company do not approve the compensation terms of office holders, other than directors, but including the chief executive officer, the compensation committee and board of directors may override the shareholders’ decision, subject to certain conditions.

Generally, a person who has a personal interest in a matter which is considered at a meeting of the board of directors or the audit committee may not be present at such a meeting or vote on that matter unless the chairman of the relevant committee or board of directors (as applicable)

 

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determines that he or she should be present in order to present the transaction that is subject to approval. If a majority of the members of the audit committee or the board of directors (as applicable) has a personal interest in the approval of a transaction, then all directors may participate in discussions of the audit committee or the board of directors (as applicable) on such transaction and the voting on approval thereof, but shareholder approval is also required for such transaction.

Disclosure of Personal Interests of Controlling Shareholders and Approval of Certain Transactions

Pursuant to Israeli law, the disclosure requirements regarding personal interests that apply to directors and executive officers also apply to a controlling shareholder of a public company. See “—External Directors” for a definition of controlling shareholder. In the context of a transaction involving a shareholder of the company, a controlling shareholder also includes a shareholder who holds 25% or more of the voting rights in the company if no other shareholder holds more than 50% of the voting rights in the company. For this purpose, the holdings of all shareholders who have a personal interest in the same transaction will be aggregated. The approval of the audit committee, the board of directors and a Special Majority, in that order, is required for (a) extraordinary transactions with a controlling shareholder or in which a controlling shareholder has a personal interest, (b) the engagement with a controlling shareholder or his or her relative, directly or indirectly, for the provision of services to the company, (c) the terms of engagement and compensation of a controlling shareholder or his or her relative who is not an office holder or (d) the employment of a controlling shareholder or his or her relative by the company, other than as an office holder.

To the extent that any such transaction with a controlling shareholder is for a period extending beyond three years, approval is required once every three years, unless, with respect to certain transactions, the audit committee determines that the duration of the transaction is reasonable given the circumstances related thereto.

Arrangements regarding the compensation, indemnification or insurance of a controlling shareholder in his or her capacity as an office holder require the approval of the compensation committee, board of directors and shareholders by a Special Majority and the terms thereof may not be inconsistent with the company’s stated compensation policy.

Pursuant to regulations promulgated under the Companies Law, certain transactions with a controlling shareholder or his or her relative, or with directors, that would otherwise require approval of a company’s shareholders may be exempt from shareholder approval upon certain determinations of the audit committee and board of directors. Under these regulations, a shareholder holding at least 1% of the issued share capital of the company may require, within 14 days of the publication of such determinations, that despite such determinations by the audit committee and the board of directors, such transaction will require shareholder approval under the same majority requirements that would otherwise apply to such transactions.

Shareholders’ Duties

Under the Companies Law, a shareholder has a duty to act in good faith and in a customary manner toward the company and other shareholders and to refrain from abusing his or her power in the company, including, among other things, in voting at general meetings of shareholders and class meetings of shareholders with respect the following matters:

 

   

an amendment of the articles of association or memorandum of association of the company;

 

   

an increase in the company’s authorized share capital;

 

   

a merger; or

 

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the approval of related party transactions and acts of office holders that require shareholder approval.

A shareholder also has a general duty to refrain from discriminating against other shareholders. In addition, certain shareholders have a duty of fairness toward the company. These shareholders include any controlling shareholder, any shareholder who knows that he or she has the power to determine the outcome of a shareholder vote and any shareholder who has the power to appoint or to prevent the appointment of an office holder of the company or other power. The Companies Law does not define the substance of the duty of fairness, except to state that the remedies generally available upon a breach of contract will also apply in the event of a breach of the duty to act with fairness.

Exculpation, Insurance and Indemnification of Directors and Officers

Under 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 to the company, in whole or in part, for damages caused to the company 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 to be effective upon the closing of this offering include such a provision. A company may not exculpate a director from liability arising out of a prohibited dividend or distribution to shareholders.

Under the Companies Law, an Israeli company may indemnify an office holder in respect of the following liabilities and expenses incurred for acts performed as an office holder, either in advance of an event or following an event, provided a provision authorizing such indemnification is contained in its articles of association:

 

   

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 must detail the abovementioned foreseen events and amount or criteria;

 

   

reasonable litigation expenses, including attorneys’ fees, incurred by the office holder (1) 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 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; and (2) in connection with a monetary sanction; and

 

   

reasonable litigation expenses, including attorneys’ fees, incurred by the office holder or imposed by a court in proceedings instituted against him or her by the company, on its behalf or by a third party or in connection with criminal proceedings in which the office holder was acquitted or as a result of a conviction for an offense that does not require proof of criminal intent.

 

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Under the Companies Law, a company may insure an office holder against the following liabilities incurred for acts performed as an office holder if and to the extent provided in the company’s articles of association:

 

   

a breach of duty of care to the company or to a third party, including a breach arising out of the negligent conduct of the office holder;

 

   

a breach of the duty of loyalty to the company, 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; and

 

   

a financial liability imposed on the office holder in favor of a third party.

Under the Companies Law, a company may not indemnify or insure an office holder against any of the following:

 

   

a breach of duty of loyalty, except for indemnification and insurance for a breach of the duty of loyalty to the company and 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 illegal personal benefit; or

 

   

a fine or forfeit levied against the office holder.

Under the Companies Law, exculpation, indemnification and insurance of office holders in a public company must be approved by the compensation committee and the board of directors and, with respect to certain office holders or under certain circumstances, by the shareholders.

Our amended and restated articles of association to be effective upon the closing of this offering will allow us to exculpate, indemnify and insure our office holders to the fullest extent permitted or to be permitted by the Companies Law. As of the date of this offering, no claims for directors’ and officers’ liability insurance have been filed under this policy and we are not aware of any pending or threatened litigation or proceeding involving any of our directors or officers in which indemnification is sought.

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, prior to the closing of this offering, we intend to enter into agreements with each of our office holders undertaking to indemnify them to the fullest extent permitted by the Companies Law and our amended and restated articles of association to be effective upon the closing of this offering, including with respect to liabilities resulting from this offering to the extent that these liabilities are not covered by insurance.

In the opinion of the Securities and Exchange Commission, indemnification of directors and office holders for liabilities arising under the Securities Act of 1933, as amended, or the Securities Act, however, is against public policy and therefore unenforceable.

There is no pending litigation or proceeding against any of our directors or officers as to which indemnification is being sought, nor are we aware of any pending or threatened litigation that may result in claims for indemnification by any director or officer.

 

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Code of Business Conduct and Ethics

We intend to adopt a Code of Business Conduct and Ethics applicable to all of our directors and employees, including our chief executive officer, chief financial officer, controller or principal accounting officer, or other persons performing similar functions, which is a “code of ethics” as defined in Item 16B of Form 20-F promulgated by the Securities and Exchange Commission. Upon the effectiveness of the registration statement of which this prospectus forms a part, the full text of the Code of Business Conduct and Ethics will be posted on our website at www.vblrx.com. Information contained on, or that can be accessed through, our website does not constitute a part of this prospectus and is not incorporated by reference herein. If we make any amendment to the Code of Business Conduct and Ethics or grant any waivers, including any implicit waiver, from a provision of the code of ethics, we will disclose the nature of such amendment or waiver on our website to the extent required by the rules and regulations of the Securities and Exchange Commission. Under Item 16B of the SEC’s Form 20-F, if a waiver or amendment of the Code of Business Conduct and Ethics applies to our principal executive officer, principal financial officer, principal accounting officer or controller and relates to standards promoting any of the values described in Item 16B(b) of such Form 20-F, we will disclose such waiver or amendment on our website in accordance with the requirements of Instruction 4 to such Item 16B.

Compensation of Executive Officers and Directors

The aggregate compensation paid by us to our current directors and executive officers, including share based compensation, for the year ended December 31, 2013, was $2.8 million. This amount includes any amounts set aside or accrued to provide pension, severance, retirement, annual leave and recuperation or similar benefits or expenses. It does not include any business travel, relocation, professional and business association dues and expenses reimbursed to office holders, and other benefits commonly reimbursed or paid by companies in Israel. The above also includes the provision for bonuses for the years ended December 31, 2012 and 2013 in the amount of $0.6 million and the estimated fair value of share based compensation (options to buy ordinary shares) in the amount of $0.4 million. In addition, as of December 31, 2013, options to purchase 191,281 ordinary shares granted to our directors and executive officers were outstanding under the Employee Share Ownership and Option Plan adopted in 2000, or the 2000 Plan, at a weighted average exercise price of $9.76 per share, and options to purchase 98,013 ordinary shares granted to our directors and executive officers were outstanding under the Employee Share Ownership and Option Plan adopted in 2011, or the 2011 Plan, at an exercise price of $14.92 per share. In addition, immediately following the closing of this offering, we intend to grant to Prof. Harats share options to purchase 83,313 ordinary shares at a nominal exercise price, which options will be fully vested and exercisable upon grant.

Employment and Services Agreements with Executive Officers and Directors

We have entered into written employment agreements with each of Dror Harats, Erez Feige, Jacob George, Amos Ron, Yael Cohen, Eyal Breitbart and Naamit Sher. All such agreements contain provisions regarding non-competition, confidentiality of information and assignment of inventions. The non-competition provisions apply for a period of 24 months following termination of the respective officer’s employment. In addition, we are required to provide notice of between three and six months prior to terminating the employment of such executive officers other than in the case of a termination for cause. Other than with respect to Prof. Harats, these agreements do not provide for benefits upon the termination of these executives’ respective employment with us, other than payment of salary and benefits during the required notice period for termination of these agreements, which varies under these individual agreements. Prof. Harats’s agreement

provides for six months of severance in the event Prof. Harats’s employment is terminated by us

 

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without cause or terminated by Prof. Harats for good reason. Pursuant to his employment agreement, “Cause” means Prof. Harats’s conviction of any felony related to our business, a serious breach of trust by Prof. Harats, including theft, embezzlement of our funds, self dealing, prohibited disclosure of confidential or proprietary information and Prof. Harats’s engagement in any prohibited business competitive to our own, Prof. Harats’s disregard of lawful instructions of our board of directors with respect to his duties to us following notice, or Prof. Harats’s willful failure to perform any of his fundamental functions or duties. Pursuant to his employment agreement, “Good reason” means a material reduction in Prof. Harats’s status, title, position or responsibilities, a reduction in Prof. Harats’s salary which is not part of a general reduction in salary applicable to all of our employees, a failure by us to continue any material compensation or benefit plan, program or practice in which Prof. Harats is participating, or a material breach by us of any provision of Prof. Harats’s employment agreement.

In addition, we have entered into compensation agreements with certain of our directors. The amounts payable pursuant to these arrangements have been approved by our board of directors and shareholders.

Our directors do not receive compensation for their service as our directors or otherwise, unless such compensation is approved by our compensation committee, then by the board of directors followed by the shareholders. The compensation of our directors may be fixed, as an all-inclusive payment or as payment for participation in meetings, or as a combination thereof. In addition, such compensation may include: (i) in the case of a director who is also an officer, a salary or other compensation in respect of his or her work as an officer, as may be agreed upon by the director and us; and (ii) reimbursement of expenses, including travel expenses, expended in connection with his or her duties as a member of the board of directors.

Share Incentive Plans

The 2000 Plan, the 2011 Plan and the Employee Share Ownership and Option Plan (2014) that we intend to adopt prior to the closing of this offering, or the 2014 Plan, allow us to grant options to purchase our ordinary shares to our directors, officers, employees, consultants, advisers and service providers. The option plans are intended to enhance our ability to attract and retain desirable individuals by increasing their ownership interests in us. We no longer intend to grant options under the 2000 Plan and, following the adoption of our 2014 Plan, we intend to no longer grant options under the 2011 Plan; however, expired options under the 2000 Plan or the 2011 Plan will increase the pool reserved for allocation under the 2014 Plan. As of December 31, 2013, we had reserved up to 451,356 ordinary shares under the option plans. As of December 31, 2013, options to purchase an aggregate of 353,909 ordinary shares were outstanding, 7,841 had been exercised and 974 had been transferred to the beneficiary holders.

The plans are designed to reflect the provisions of the Israeli Income Tax Ordinance [New Version]—1961, as amended, mainly Sections 102 and 3(i), or the Ordinance, which affords certain tax advantages to Israeli employees, officers and directors that are granted options in accordance with its terms.

Section 102 of the Ordinance allows employees, directors and officers, who are not controlling shareholders and who are Israeli residents, to receive favorable tax treatment for compensation in the form of shares or options. Section 102 of the Ordinance includes two alternatives for tax treatment involving the issuance of options or shares to a trustee for the benefit of the grantees and also includes an additional alternative for the issuance of options or shares directly to the grantee. Section 102(b)(2) of the Ordinance, which provides the most favorable tax treatment for grantees, permits the issuance to a trustee under the “capital gains track.” In order to comply with the terms of the capital gains track, all options granted under a specific plan and subject to the provisions of Section 102 of the Ordinance, as well as the shares issued upon exercise of such options and other shares received following any realization of

 

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rights with respect to such options, such as share dividends and share splits, must be registered in the name of a trustee selected by the board of directors and held in trust for the benefit of the relevant employee, director or officer. The trustee may not release these options or shares to the relevant grantee before the second anniversary of the registration of the options in the name of the trustee. However, under this track, we are not allowed to deduct an expense with respect to the issuance of the options or shares. Section 3(i) does not provide for a similar tax benefits.

The plans may be administered by our board of directors either directly or upon the recommendation of a committee appointed by our board of directors.

The compensation committee recommends to the board of directors, and the board of directors determines or approves the eligible individuals who receive options under the plans, the number of ordinary shares covered by those options, the terms under which such options may be exercised, and other terms and conditions of the options, all in accordance with the provisions of the plans. Option holders may not transfer their options except in the event of death or if the compensation committee determines otherwise. Our compensation committee or board of directors may at any time amend or terminate each of the plans; however, any amendment or termination may not adversely affect any options or shares granted under such plan prior to such action.

The option exercise price is determined by the compensation committee and specified in each option award agreement. In general, the option exercise price is the fair market value of the shares on the date of grant as determined in good faith by our board of directors.

Employee Share Ownership and Option Plan (2014)

Immediately prior to the completion of this offering, we intend to adopt and obtain shareholder approval for our 2014 Plan and the U.S. Appendix thereto. The 2014 Plan provides for the grant of options, restricted shares, restricted share units and other share-based awards to our directors, employees, officers, consultants, advisors and service providers, among others and to any other person whose services are considered valuable to us. Following the approval of the 2014 Plan by the Israeli tax authorities, we will only grant options or other equity incentive awards under the 2014 Plan, although previously-granted options and awards will continue to be governed by our 2000 Plan and 2011 Plan. The initial reserved pool under the 2014 Plan is              ordinary shares, subject to adjustments as set forth in the 2014 Plan, including an automatic annual increase on January 1 of each year such that the number of shares issuable under the 2014 Plan will equal 4% of our issued and outstanding share capital on a fully diluted basis on each such January 1.

The 2014 Plan will be administered by our board of directors or by a committee designated by the board of directors, which shall determine, 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 2014 Plan. The 2014 Plan will enable us to issue awards under various tax regimes including, without limitation, pursuant to Sections 102 and 3(i) of the Ordinance, and under Section 422 of the Code. Options granted under the 2014 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 our share capital.

We currently intend to grant awards under the 2014 Plan only to our employees, directors and officers who are not controlling shareholders and are considered Israeli residents, under the capital gains track of Section 102(b)2 of the Ordinance.

 

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Awards under the 2014 Plan may be granted until         , 2034, 20 years from the date on which the 2014 Plan was approved by our board of directors, provided that awards granted to any U.S. participants may be granted until                 , 2024, 10 years from the date on which the 2014 Plan was approved by our board of directors.

We expect that options granted under the 2014 Plan will generally vest over four years commencing on the date of grant such that 25% vest on the first anniversary of the date of grant and an additional 6.25% vest at the end of each subsequent three-month period thereafter for 36 months. Options, other than certain incentive share options, that are not exercised within 20 years from the grant date expire, unless otherwise determined by our board of directors or its designated committee, as applicable. Share options that qualify as “incentive stock options” granted to a person holding more than 10% of our voting power under the U.S. appendix to the 2014 Plan will expire within five years from the date of the grant and any other options granted under the U.S. appendix to the 2014 Plan will expire within 10 years from the date of grant. Except as otherwise determined by the board of directors or as set forth in an individual’s award agreement, in the event of termination of employment or services for reasons of disability or death, or retirement, the grantee, or in the case of death, his or her legal successor, may exercise options that have vested prior to termination within a period of one year from the date of disability or death, or within 180 days following retirement. If we terminate a grantee’s employment or service for cause, all of the grantee’s vested and unvested options will expire on the date of termination. If a grantee’s employment or service is terminated for any other reason, the grantee may exercise his or her vested options within 90 days of the date of termination. Any expired or unvested options return to the pool for reissuance.

In the event of a merger or consolidation of our company, or a sale of all, or substantially all, of our shares or assets or other transaction having a similar effect on us, then without the consent of the option holder, our board of directors may determine, at its absolute discretion, whether outstanding awards held by or for the benefit of any grantee and which have not yet vested, is to be assumed or substituted and whether acceleration of such awards will be available.

Employee Share Ownership and Option Plan (2011)

In April 2011, we adopted the 2011 Plan. The term of the 2011 Plan is twenty years. Each option granted under the 2011 Plan entitles the grantee to purchase our ordinary shares. The options granted under the 2011 Plan generally vest during a four-year period following the date of the grant in 13 installments: 25% of the options vest one year following the grant date, and additional 1/16 of the options vest at the end of each subsequent quarter over the course of the following three years. The options expire twenty years after the date of grant if not exercised earlier.

In the case of certain changes in our share capital structure, such as a consolidation or share split or dividend, appropriate adjustments will be made to the numbers of shares and exercise prices under outstanding options. Unless otherwise determined by the board of directors, upon the consummation of certain kinds of transactions, such as a liquidation, a merger, reorganization or sale of all or substantially all of our assets, any unexercised outstanding options shall expire, provided that in case of merger or consolidation or the sale, transfer or exchange of all or substantially all our assets or shares, the surviving corporation does not assume the options or substitute them with appropriate options in the surviving corporation.

In general, when an option holder’s employment or service with us terminates, his or her option will no longer continue to vest following termination, and the holder may exercise any

 

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vested options for a period of 90 days following termination without cause. If an option holder’s employment with us terminates due to disability (as determined by the board of directors) or if the termination of employment results from his or her death then the option holder or his or her estate (as applicable) has twelve months to exercise the option. If an option holder retires from our company, then, with the approval of the board of directors, the option holder or his or her estate (as applicable) has six months to exercise the option. If termination of employment results from cause, his or her outstanding options will expire upon termination. No option may be exercised after its scheduled expiration date.

Employee Share Ownership and Option Plan (2000)

In February 2000, we adopted the 2000 Plan, which was amended and restated in 2003 due to changes in applicable tax law. The original term of the 2000 Plan was ten years. In 2013, the terms of outstanding options were extended by 10 years.

Each option granted under the 2000 Plan entitles the grantee to purchase one of our ordinary shares. The options granted under the 2000 Plan generally vest during a four-year period following the date of the grant in three installments: 50% of the options vest two years following the grant date, 25% of the options vest three years following the grant date and the remaining 25% of the options vest four years following the grant date. The options under the plan expire ten years after the date of grant if not exercised earlier.

In the case of certain changes in our share capital structure, such as a consolidation or share split or dividend, appropriate adjustments will be made to the numbers of shares and exercise prices under outstanding options. In the event of certain transactions, such as an acquisition, or a merger or reorganization or a sale of all or substantially all of our assets, there shall be an acceleration of exercise of unvested options, immediate or otherwise, which depends on, among other things, the nature of such transaction, and provided that in case of merger or consolidation the surviving corporation does not assume the options or substitute them with appropriate options in the surviving corporation.

In general, when an option holder’s employment or service with us terminates, his or her option will no longer continue to vest following termination, and the holder may exercise any vested options for a period of 90 days following termination without cause. If an option holder’s employment with us terminates due to disability (as determined by the board of directors) or if the termination of employment results from his or her death or due to retirement after age 60, then with the approval of the board of directors, the option holder or his or her estate (as applicable) has twelve months to exercise the option; however, the option may not be exercised after its scheduled expiration date. If termination of employment results from cause, his or her outstanding options will expire upon termination.

 

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RELATED PARTY TRANSACTIONS

The following is a description of the material terms of those transactions with related parties to which we are party since January 1, 2011.

We have adopted a written policy, effective upon the completion of this offering, which provides that the approval of the audit committee is required to effect specified actions and transactions with our directors, executive officers and controlling shareholders, or in which such persons have an interest. See “Management—Approval of Related Party Transactions Under Israeli Law.” The term “controlling shareholder” means a shareholder with the ability to direct the activities of our company, other than by virtue of being an executive officer or director. A shareholder is presumed to be a controlling shareholder if the shareholder holds 50% or more of the voting rights in a company or has the right to appoint the majority of the directors of the company or its general manager. For the purpose of approving transactions with controlling shareholders, the term also includes any shareholder that holds 25% or more of the voting rights of a company if the company has no shareholder that owns more than 50% of its voting rights. The transactions described below were entered into prior to the adoption of this policy.

Issuances of Securities

Series D Financing

We issued and sold an aggregate of 1,247,369 Series D preferred shares under certain share purchase agreements between March 2008 and January 2011, all of which will be converted into ordinary shares immediately prior to this offering, for an aggregate purchase price of approximately $62.9 million, which we refer to as our Series D financing. The table below sets forth the number of the Series D preferred shares purchased by our executive officers, directors and entities that, as of the date of this prospectus, beneficially own more than 5% of our outstanding ordinary shares (assuming the conversion of all of outstanding preferred shares) and the number of ordinary shares resulting from the conversion of such preferred shares immediately prior to the closing of this offering:

 

Shareholders

  

Shares of
Series D
Preferred

    

Number of Ordinary
Shares Resulting
from the Conversion
of Series D
Preferred Shares

 

Keffi Group VI LLC

     594,530         594,530   

Aurum Ventures M.K.I. Ltd

     277,448         277,448   

A.J.J.G. Technology Investments (2003) Ltd.

     26,943         26,943   

Mr. Jecheskiel Gonczarowski

     103,612         103,612   

Inspe Aktiengesellschaft

     4,185         4,185   

Pitango Venture Capital Fund IV L.P.

     119,089         119,089   

Pitango Venture Capital Principals Fund IV L.P.

     2,572         2,572   

Mr. Gonczarowski, who is affiliated with J.J.D. Holdings, Mr. Zeitlin, who is affiliated with The Keffi Group V LLC and The Keffi Group VI LLC, Dr. Gelvan, who manages the life science holdings of Aurum Ventures M.K.I. Ltd., and Ms. Alon, who is affiliated with Pitango Venture Capital Fund IV LP and Pitango Venture Capital Principals Fund IV LP, are each members of our board of directors. See “Principal Shareholders” for a description of the affiliations between our directors and each of the other shareholders that participated in our Series D financing.

Convertible Loan

On April 30, 2013, we entered into an agreement for a convertible loan with several of our shareholders and related parties. The convertible loan agreement closed on July 1, 2013.

 

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Pursuant to the agreement, the lenders agreed to provide an aggregate loan amount of $10.0 million, which was converted into an aggregate of 240,496 Series E preferred shares upon the closing of our Series E financing on May 15, 2014. See “—Series E Financing.” The table below sets forth the convertible loan amount borrowed from our executives, directors and entities that, as of the date of this prospectus, beneficially own more than 5% of our outstanding ordinary shares (assuming the conversion of all our outstanding preferred shares):

 

Participating Lender

  

Amount provided by a
Participating Lender

 

The Keffi Group VI LLC

   $ 3,685,863   

Aurum Ventures M.K.I. Ltd.

     3,601,220   

Mr. Jecheskiel Gonczarowski

     1,907,933   

Bennett M. Shapiro and Fredericka F. Shapiro, JTWROS

     250,000   

Dr. Bennett M. Shapiro, Mr. Gonczarowski, who is affiliated with J.J.D Holdings, Mr. Zeitlin, who is affiliated with The Keffi Group V LLC and The Keffi Group VI LLC, and Dr. Gelvan, who manages the life science holdings of Aurum Ventures M.K.I. Ltd., are each members of our board of directors. See “Principal Shareholders” for a description of the affiliations between our directors and each of the other shareholders that participated in our convertible loan financing.

Series E Financing

In May 2014, we issued and sold an aggregate of 332,294 Series E preferred shares under a subscription agreement, all of which will be converted into ordinary shares immediately prior to the closing of this offering, consisting of 91,798 Series E preferred shares purchased for an aggregate purchase price of approximately $4.9 million, and 240,496 Series E preferred shares issued upon conversion of the convertible loan described above which we refer to as our Series E financing. The table below sets forth the number of the Series E preferred shares issued to our executive officers, directors and entities that, as of the date of this prospectus, beneficially own more than 5% of our outstanding ordinary shares (assuming the conversion of all of outstanding preferred shares) through purchase of shares in the Series E financing or through conversion of the convertible loan, and the number of ordinary shares resulting from the conversion of such preferred shares immediately prior to the closing of this offering:

 

Shareholders

   Shares of
Series E
Preferred

Purchased
     Shares of
Series E  Preferred

Resulting from
Conversion of Loan
     Number of Ordinary
Shares Resulting
from the Conversion
of Series  E
Preferred Shares
 

Mr. Jecheskiel Gonczarowski

     40,414         46,015         86,429   

Inspe Aktiengesellschaft

     4,445                 4,445   

Aurum Ventures M.K.I Ltd.

             86,851         86,851   

Pitango Venture Capital Fund IV L.P.

     11,827                 11,827   

Pitango Venture Capital Principals Fund IV L.P.

     255                 255   

The Keffi Group VI LLC

             88,893         88,893   

Bennett M. Shapiro and Fredericka F. Shapiro, JTWROS

             5,809         5,809   

Dr. Bennett M. Shapiro, Mr. Gonczarowski, who is affiliated with J.J.D. Holdings, Mr. Zeitlin, who is affiliated with The Keffi Group V LLC and The Keffi Group VI LLC, Dr. Gelvan, who manages the life science holdings of Aurum Ventures M.K.I. Ltd., and Ms. Ruth Alon, who is affiliated with Pitango Venture Capital Fund IV LP and Pitango Venture Capital Principals Fund IV

 

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LP, are each members of our board of directors. See “Principal Shareholders” for a description of the affiliations between our directors and each of the other shareholders that participated in our Series E financing.

Rights of Appointment

Our current board of directors consists of seven directors. Pursuant to our articles of association in effect prior to this offering, certain of our shareholders had rights to appoint members of our board of directors. See “Management—Board of Directors.” All rights to appoint directors will terminate upon the closing of this offering, although currently-serving directors that were appointed prior to this offering will continue to serve pursuant to their appointment until the first annual meeting of shareholders held after this offering. We are not a party to, and are not aware of, any voting agreements among our shareholders.

Registration Rights

We are party to an investor rights agreement, pursuant to which certain of our shareholders are entitled to registration rights. Following the consummation of this offering, 2,750,466 of our ordinary shares will benefit from these registration rights. For more information regarding the registration rights granted under this agreement, see “Description of Share Capital—Registration Rights.”

Agreements with Directors and Officers

Indemnification Agreements

Prior to the completion of this offering, subject to shareholder approval, we intend to enter into new indemnification agreements with each of our current executive officers exculpating them from a breach of their duty of care to us to the fullest extent permitted by law, subject to limited exceptions, and undertaking to indemnify them to the fullest extent permitted by Israeli law, subject to limited exceptions, including with respect to liabilities resulting from this offering to the extent such liabilities are not covered by insurance. See “Management—Approval of Related Party Transactions Under Israeli Law—Exculpation, Insurance and Indemnification of Directors and Officers.”

Employment and Services Agreements

We have entered into employment or services agreements with our executive officers and certain of our directors. See “Management—Employment and Services Agreements with Executive Officers and Directors.”

Options

Since our inception, we have granted options to purchase our ordinary shares to certain of our officers. We describe our option plans under “Management—Share Option Plans.”

 

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Agreement with Prof. Jacob George

On January 24, 2010, we entered into an agreement, as amended on August 1, 2012, with Prof. Jacob George, our chief scientific officer, under which we waived any right in and to certain technology developed by Prof. George through research conducted at the Sourasky Medical Center relating to monoclonal antibodies targeting Eotaxin and Eotaxin receptors as therapeutic agent. The agreement further provides that in the event that Prof. George receives from Sourasky Medical Center any consideration in connection with, or as a result of, the exploitation of the intellectual property developed during his engagement therewith, then Prof. George is obligated to transfer to us 50% of such consideration.

 

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PRINCIPAL SHAREHOLDERS

The following table sets forth information with respect to the beneficial ownership of our shares as of May 31, 2014 by:

 

   

each of our directors and executive officers;

 

   

each person or entity known by us to beneficially own more than 5% of our outstanding shares; and

 

   

all of our directors, director nominees and executive officers as a group.

Our major shareholders do not have voting rights that are different from our shareholders in general.

Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission. These rules generally attribute beneficial ownership of securities to persons who possess sole or shared voting or investment power with respect to those securities, and include shares subject to options that are exercisable within 60 days after May 31, 2014. Such shares are also deemed outstanding for purposes of computing the percentage ownership of the person holding the option, but not the percentage ownership of any other person. As of May 31, 2014, there were eight holders of record of our ordinary shares in the United States, representing 25.3% of our outstanding share capital.

Unless otherwise indicated below, to our knowledge, all persons named in the table have sole voting and investment power with respect to their shares, except to the extent that authority is shared by spouses under community property laws. All percentages in this table assume no exercise by the underwriters of their option to purchase up to an additional                  shares from us. None of our shareholders has informed us that he, she or it is affiliated with a registered broker-dealer or is in the business of underwriting securities. None of our shareholders has different voting rights from other shareholders.

 

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Unless otherwise indicated, the address of each beneficial owner is c/o Vascular Biogenics Ltd., 6 Jonathan Netanyahu St., Or Yehuda, Israel 60376.

 

    

Shares Beneficially
Owned

     Percentage of Shares
Beneficially Owned
           

Prior to the
Offering

   

After the
Offering

5% Shareholders

       

The Keffi Group VI LLC (1)

     683,423         24.0  

Aurum Ventures M.K.I. Ltd (2)

     667,728         23.5     

Persons affiliated with Pitango Ventures (3)

     331,547         11.7     

Persons affiliated with J.J.D. Holdings (4)

     225,221         7.9     

Executive Officers and Directors

       

Dr. Bennett M. Shapiro (5)

     44,384         1.5     

Prof. Dror Harats (6)

     340,619         10.9     

Dr. Erez Feige (7)

     6,882         *     

Prof. Jacob George (8)

     56,408         2.0     

Mr. Jecheskiel Gonczarowski (9)

     415,261         14.6     

Dr. Dan J. Gelvan

            

Mr. Jide J. Zeitlin (1)

     683,423         24.0     

Prof. Ruth Arnon

            

Ms. Ruth Alon (10)

            

Mr. Amos Ron (11)

     9,058         *     

Dr. Yael Cohen (12)

     7,768         *     

Dr. Eyal Breitbart (13)

     10,770         *     

Dr. Naamit Sher (14)

     7,768         *     

Adv. Ayelet Horn (15)

     16,098         *     

All executive officers and directors as a group (14 Persons) (16)

     1,598,439         49.6     

 

* Less than 1%

 

(1) These shares may be deemed to be beneficially owned by Jide Zeitlin, our director and president of The Keffi Group VI LLC. The address of The Keffi Group VI LLC is 500 Fifth Avenue, New York, New York 10110.

 

(2) Consists of 667,728 shares held by Aurum Ventures M.K.I. Ltd. Voting and investment power over such shares are vested with Mr. Morris Kahn, who controls Aurum Ventures M.K.I. Ltd. As such, Mr. Kahn may be deemed to have beneficial ownership over our shares held by Aurum Ventures M.K.I. Ltd. The address of Aurum Ventures M.K.I. Ltd. is 16 Abba Hillel Silver Rd., Ramat Gan, 5250608, Israel.

 

(3) Consists of 324,539 shares held by Pitango Venture Capital Fund IV L.P. and 7,008 shares held by Pitango Venture Capital Principals Fund IV L.P. (collectively, the “Pitango Funds”). The Pitango Funds are managed by their sole general partner, Pitango V.C. Fund IV, L.P., the sole general partner of which is Pitango G.P. Capital Holdings Ltd., an Israeli company owned indirectly (through personal holding entities) by each of the following individuals: Rami Kalish, Chemi J. Peres, Aaron Mankovski, Isaac Hillel, Rami Beracha and Zeev Binman, none of whom has sole voting or investment power of our shares and each of whom has shared voting and investment power of such shares. Ms. Alon is a General Partner of Pitango Ventures IV L.P., but does not have sole or shared voting or investment power over the shares held by the Pitango Funds. The address of the Pitango Funds is 11 HaMenofim Street, Building B, Herzliya, Israel 46725.

 

(4) Consists of 54,787 shares held by J.J.D. Holdings G.P., 136,308 shares held by A.J.J.G. Technology Investments 2003, and 34,126 shares held by Inspe ktiengesellschaft (collectively, the “J.J.D. Funds”). These shares may be deemed to be beneficially owned by Jecheskiel Gonczarowski, our director and the chairman of the J.J.D. Funds.

 

(5) Consists of (a) 5,431 outstanding shares held by Puretech Ventures LLC, which may be deemed to be beneficially owned by Bennett M. Shapiro, our chairman and a senior partner and chairman of Puretech Ventures LLC; (b) 5,809 outstanding shares held by Bennett M. Shapiro and Fredericka F. Shapiro, JTWROS; and (c) options to purchase 33,144 shares exercisable within 60 days of May 31, 2014 held by Bennett M. Shapiro.

 

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(6) Consists of (a) 68,244 outstanding shares held by or for Prof. Harats; (b) options to purchase 105,749 shares exercisable within 60 days of May 31, 2014; (c) options to purchase 83,313 shares to be granted and exercisable immediately following the closing of this offering; (d) warrants exercisable for 7,096 shares within 60 days of May 31, 2014; and (e) 76,217 shares issuable upon closing of this offering pursuant to certain anti-dilution rights set forth in our articles of association.

 

(7) Consists of options to purchase 6,882 shares exercisable within 60 days of May 31, 2014.

 

(8) Includes options to purchase 20,468 shares exercisable within 60 days of May 31, 2014.

 

(9) Consists of (a) 225,221 shares held by the J.J.D. Funds, which may be deemed to be beneficially owned by Jecheskiel Gonczarowski, our director and the chairman of the J.J.D. Funds and (b) 190,040 outstanding shares held by Jecheskiel Gonczarowski.

 

(10) Ms. Alon is a General Partner of Pitango Ventures IV L.P., but does not have sole or shared voting or investment power over the shares held by the Pitango Funds.

 

(11) Consists of options to purchase 9,058 shares exercisable within 60 days of May 31, 2014.

 

(12) Consists of options to purchase 7,768 shares exercisable within 60 days of May 31, 2014.

 

(13) Consists of options to purchase 10,770 shares exercisable within 60 days of May 31, 2014.

 

(14) Consists of options to purchase 7,768 shares exercisable within 60 days of May 31, 2014.

 

(15) Consists of (a) options to purchase 9,013 shares exercisable within 60 days of May 31, 2014 held by Ayelet Horn; (b) a warrant exercisable for 3,954 shares within 60 days of May 31, 2014 held by SR Horn Assets Ltd., a company jointly owned by Ayelet Horn and Yuval Horn; and (c) 3,131 outstanding shares held by Yuval Horn. Ayelet Horn may be deemed to beneficially own the shares held by Yuval Horn by virtue of her marital relationship with Yuval Horn.

 

(16) Consists of (a) options to purchase 210,620 shares exercisable within 60 days of May 31, 2014; (b) options to purchase 83,313 shares granted and exercisable immediately following the closing of this offering; (c) warrants exercisable for 11,050 shares within 60 days of May 31, 2014; (d) 1,217,239 outstanding shares; and (e) 76,217 shares issuable upon closing of this offering pursuant to certain anti-dilution rights set forth in our articles of association.

 

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DESCRIPTION OF SHARE CAPITAL

The following description of our share capital and provisions of our amended and restated articles of association to be effective upon the closing of this offering are summaries and do not purport to be complete.

General

Upon the closing of this offering, our authorized share capital will consist solely of                      ordinary shares, par value NIS 0.01 per share, of which                  shares will be issued and outstanding (assuming that the underwriters do not exercise their option to purchase additional ordinary shares).

All of our outstanding ordinary shares will be validly issued, fully paid and non-assessable. Our ordinary shares are not redeemable and do not have any preemptive rights.

Share History

The following is a summary of the history of our share capital for the last three years.

 

   

Since January 1, 2011, we have issued and sold 34,363 ordinary shares pursuant to the exercise of share options.

 

   

In January 2011, we issued 76,240 shares of our Series D preferred shares at $50.46 per share to 11 investors.

 

   

In May 2014, we issued an aggregate of 332,294 Series E preferred shares to 21 investors, consisting of 91,798 Series E preferred shares at a purchase price of $53.80 per share and 240,496 Series E preferred shares issued upon conversion of our convertible loan that we received on July 1, 2013.

Registration Number and Purposes of the Company

Our registration number with the Israeli Registrar of Companies is 51-289976-6. Our purpose as set forth in our amended and restated articles of association is to engage in any lawful activity.

Voting Rights and Conversion

All ordinary shares will 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 a stock exchange on which the shares are listed for trade. 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, or have been, in a state of war with Israel.

Election of Directors

Our ordinary shares do not have cumulative voting rights for the election of directors. As a result, the holders of a majority of the voting power represented at a shareholders meeting have the power to elect all of our directors, subject to the special approval requirements for external directors described under “Management—External Directors.”

 

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Under our amended and restated articles of association, our board of directors must consist of not less than three, not including two external directors, but no more than nine directors, including two external directors, as required by the Companies Law. Pursuant to our amended and restated articles of association, other than the external directors, for whom special election requirements apply under the Companies Law, the vote required to appoint a director is a simple majority vote of holders of our voting shares, participating and voting at the relevant meeting. Each director will serve until his or her successor is duly elected and qualified or until his or her earlier death, resignation or removal by a vote of the majority voting power of our shareholders at a general meeting of our shareholders or until his or her office expires by operation of law, in accordance with the Companies Law. In addition, our amended and restated articles of association allow our board of directors to appoint directors to fill vacancies on the board of directors to serve for a term of office equal to the remaining period of the term of office of the directors(s) whose office(s) have been vacated. External directors are elected for an initial term of three years, may be elected for additional terms of three years each under certain circumstances, and may be removed from office pursuant to the terms of the Companies Law. See “Management—External 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, provided that the date of the financial statements is not more than six months prior to the date of the distribution, or we may otherwise only distribute dividends that do not meet such criteria only with court approval. In each case, we are only permitted to distribute a dividend if our board of directors and the court, if applicable, 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 shares or interest or other payments to non-residents of Israel, except for shareholders who are subjects of countries that are, or have been, in a state of war with Israel.

Shareholder Meetings

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shareholders are referred to in our amended and restated articles of association as extraordinary general meetings. Our board of directors may call extraordinary general meetings 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 an extraordinary general meeting upon the written request of (i) any two of our directors or one-quarter of the members of our board of directors or (ii) one or more shareholders holding, in the aggregate, either (a) 5% or more of our outstanding issued shares and 1% of our outstanding voting power or (b) 5% or more of our outstanding voting power. One or more shareholders, holding 1% or more of the outstanding voting power, may ask the board to add an item to the agenda of a prospective meeting, if the proposal merits discussion at the general meeting.

Subject to the provisions of the Companies Law and the regulations promulgated thereunder, shareholders entitled to participate and vote at general meetings are the shareholders of record on a date to be decided by the board of directors, which 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 our shareholders:

 

   

amendments to our articles of association;

 

   

appointment or termination of our auditors;

 

   

appointment of external directors;

 

   

approval of certain related party transactions;

 

   

increases or reductions of our authorized share capital;

 

   

a merger; and

 

   

the exercise of our board of director’s 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 and our amended and restated articles of association require that a notice of any annual general meeting or extraordinary general meeting be provided to shareholders at least 21 days prior to the meeting and if the agenda of the meeting includes 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 and our amended and restated articles of association, shareholders are not permitted to take action via written consent in lieu of a meeting.

Voting Rights

Quorum Requirements

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. As a foreign private issuer, the quorum required for our general meetings of shareholders consists of at least two shareholders present in person, by proxy or written ballot who hold or represent between them at least 25% of the total outstanding voting rights. A meeting adjourned for lack of a quorum is generally adjourned to the same day in the following week at the same time and place or to a later time or date if so

 

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specified in the notice of the meeting. At the reconvened meeting, any two or more shareholders present in person or by proxy shall constitute a lawful quorum. See “Management—Corporate Governance Practices” for more information.

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, each of (i) the approval of an extraordinary transaction with a controlling shareholder and (ii) the terms of employment or other engagement of the controlling shareholder of the company or such controlling shareholder’s relative (even if not extraordinary) requires, the approval described above under “Management—Approval of Related Party Transactions Under Israeli Law—Disclosure of Personal Interests of Controlling Shareholders and Approval of Certain Transactions.” Under our amended and restated articles of association, the alteration of the rights, privileges, preferences or obligations of any class of our shares requires a simple majority vote 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 the ordinary majority vote of all classes of shares voting together as a single class at a shareholder meeting. An 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 of 75% of the voting rights represented at the meeting, in person, by proxy or by voting deed and voting on the resolution.

Access to Corporate Records

Under the Companies Law, shareholders are provided access to: minutes of our general meetings; our shareholders register and principal shareholders register, articles of association and financial statements; and any document that we are required by law to file publicly with the Israeli Companies Registrar or the Israel Securities Authority. In addition, shareholders may request to be provided with any document related to an action or transaction requiring shareholder approval under the related party transaction provisions of the Companies Law. We may deny this request if we believe it has not been made in good faith or if such denial is necessary to protect our interest or protect a trade secret or patent.

Modification of Class Rights

Under the Companies Law and our amended and restated articles of association, the rights attached to any class of share, such as voting, liquidation and dividend rights, may be amended by adoption of a resolution by the holders of a majority of the shares of that class present at a separate class meeting, or otherwise in accordance with the rights attached to such class of shares, as set forth in our amended and restated articles of association.

Registration Rights

Our investor rights agreement entitles our preferred shareholders to certain registration rights following the closing of this offering. In accordance with this agreement, and subject to conditions described below, the following executives, directors and entities, which as of the date of this prospectus beneficially own more than 5% of our ordinary shares, assuming the conversion of all of outstanding preferred shares into ordinary shares, are entitled to registration rights: Jecheskiel Gonczarowski, The Keffi Group VI LLC, persons and entities affiliated with Aurum Ventures, Pitango Ventures and persons and entities affiliated with J.J.D. Holdings.

 

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Form F-1 Demand Rights .    Upon the request of the holders of more than 50% of the shares held by our former preferred shareholders given more than 180 days after the effective date of the registration statement related to this offering, we are required to file a registration statement on Form F-1 in respect of the ordinary shares held by our former preferred shareholders. Following a request to effect such a registration, we are required to give notice of the request to the other holders of registrable securities and offer them an opportunity to include their shares in the registration statement. We are not required to effect more than two registrations on Form F-1 in the aggregate and not more than one registration in any 12 month period and we are only required to do so if the aggregate proceeds from any such registration are estimated in good faith to be in excess of $6.0 million.

Form F-3 Demand Rights .    After we become eligible under applicable securities laws to file a registration statement on Form F-3, which will not be until at least 12 months after the date of this prospectus, upon the request of the holders of more than 20% of the shares held by our former preferred shareholders, we are required to file a registration statement on Form F-3 in respect of the ordinary shares held by our former preferred shareholders. Following a request to effect such a registration, we are required to give notice of the request to the other holders of registrable securities and offer them an opportunity to include their shares in the registration statement. We are not required to effect a registration on Form F-3 more than twice in any 12 month period and are only required to do so if the aggregate proceeds from any such registration are estimated in good faith to be in excess of $2.0 million.

Piggyback Registration Rights .    Following this offering, shareholders holding registrable securities will also have the right to request that we include their registrable securities in any registration statement filed by us in the future for the purposes of a public offering for cash, subject to specified exceptions.

Cutback .    In the event that the managing underwriter advises the registering shareholders that marketing factors require a limitation on the number of shares that can be included in a registered offering, the shares will be included in the registration statement in an agreed order of preference among the holders of registration rights. The same preference also applies in the case of a piggyback registration, but we have first preference and the number of shares of shareholders that are included may not be less than 30% of the total number of shares included in the offering.

Termination .    All registration rights granted to holders of registrable securities terminate on the fifth anniversary of the closing of this offering and, with respect to any of our holders of registrable securities that holds less than 1% of our outstanding shares, when the shares held by such shareholder can be sold within a 90 day period under Rule 144.

Expenses .    We will pay all expenses in carrying out the foregoing registrations other than selling shareholders’ underwriting discounts and transfer taxes.

Acquisitions under Israeli Law

Full Tender Offer

A person wishing to acquire shares of an Israeli public company and who would as a result hold over 90% of the target company’s issued and outstanding share capital 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. A person wishing to acquire shares of a public Israeli company and who would as a result hold over 90% of the issued and outstanding share capital of a certain class of shares is required to make a tender offer to all of

 

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the shareholders who hold shares of the relevant class for the purchase of all of the issued and outstanding shares of that class. If the shareholders who do not accept the offer hold less than 5% of the issued and outstanding share capital of the company or of the applicable class, and more than half of the shareholders who do not have a personal interest in the offer accept the offer, all of the shares that the acquirer offered to purchase will be transferred to the acquirer by operation of law. However, a tender offer will also be accepted if the shareholders who do not accept the offer hold less than 2% of the issued and outstanding share capital of the company or of the applicable class of shares.

Upon a successful completion of such a full tender offer, any shareholder that was an offeree in such tender offer, whether such shareholder accepted the tender offer or not, may, within six months from the date of acceptance of the tender offer, petition an Israeli court to determine whether the tender offer was for less than fair value and that the fair value should be paid as determined by the court. However, under certain conditions, the offeror may include in the terms of the tender offer that an offeree who accepted the offer will not be entitled to petition the Israeli court as described above.

If (a) the shareholders who did not respond or accept the tender offer hold at least 5% of the issued and outstanding share capital of the company or of the applicable class or the shareholders who accept the offer constitute less than 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 2% or more of the issued and outstanding share capital of the company (or of the applicable class), the acquirer may not acquire shares of the company that will increase its holdings to more than 90% of the company’s issued and outstanding share capital or of the applicable class from shareholders who accepted the tender offer.

Special Tender Offer

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 25% or more of the voting rights in the company. This requirement does not apply if there is already another holder of at least 25% of the voting rights in the company. Similarly, the Companies Law provides that an acquisition of shares in a 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, provided that there is no other shareholder of the company who holds more than 45% of the voting rights in the company, subject to certain exceptions.

A special tender offer must be extended to all shareholders of a company but the offeror is not required to purchase shares representing more than 5% of the voting power attached to the company’s outstanding shares, regardless of how many shares are tendered by shareholders. A special tender offer may be consummated only if (i) outstanding shares representing at least 5% of the voting power of the company 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, controlling shareholders, holders of 25% or more of the voting rights in the company or any person having a personal interest in the acceptance of the tender offer). If 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 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.

 

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Merger

The Companies Law permits merger transactions if approved by each party’s board of directors and, unless certain requirements described under the Companies Law are met, by a majority vote of each party’s shareholders, and, in the case of the target company, a majority vote of each class of its shares, voted on the proposed merger at a shareholders meeting.

For purposes of the shareholder vote, unless a court rules otherwise, the merger will not be deemed approved if a majority of the votes of shares represented at the shareholders meeting that are held by parties other than the other party to the merger, or by any person (or group of persons acting in concert) who holds (or hold, as the case may be) 25% or more of the voting rights or the right to appoint 25% or more of the directors of the other party, vote against the merger. If, however, the merger involves a merger with a company’s own 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 (as described under “Management—Approval of Related Party Transactions Under Israeli Law—Disclosure of Personal Interests of Controlling Shareholders and Approval of Certain Transactions”).

If the transaction would have been approved by the shareholders of a merging company 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 value of the parties to the merger and the consideration offered to the shareholders of the target company.

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 merging entities, and may further give instructions to secure the rights of creditors.

In addition, a merger may not be consummated unless at least 50 days have passed from the date on which a proposal for approval of the merger was filed by each party with the Israeli Registrar of Companies and at least 30 days have passed from the date on which the merger was approved by the shareholders of each party.

Anti-Takeover Measures under Israeli Law

The Companies Law allow 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 closing of this offering, no preferred shares will be 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 attaching to our issued and outstanding shares at a general meeting. The convening of the meeting, the shareholders entitled to participate and the majority vote required to be obtained at such a meeting will be subject to the requirements set forth in the Companies Law as described above in “—Voting Rights.”

 

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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 the provisions of the Companies Law and must be approved by a resolution duly passed by our shareholders at a general meeting by voting on such change in the capital. 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.

Warrants

As of May 31, 2014, warrants to purchase 11,050 ordinary shares were issued and outstanding at a weighted average exercise price of $3.98 per ordinary share. The expiration dates of these warrants range from May 26, 2016 to December 1, 2021.

Transfer Agent and Registrar

Upon the listing of our ordinary shares for trading on The NASDAQ Global Market our transfer agent in the United States will be             .

Listing

We have applied for the listing of our ordinary shares on The NASDAQ Global Market under the symbol “VBLX.”

 

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SHARES ELIGIBLE FOR FUTURE SALE

Upon closing of this offering, we will have outstanding                  ordinary shares. All of the ordinary shares issued in this offering will be freely transferable by persons other than our “affiliates” without restriction or further registration under the Securities Act. Sales of substantial numbers of our ordinary shares in the public market could adversely affect prevailing market prices of our ordinary shares. Prior to this offering, there has been no public market for our shares, and while our ordinary shares have been approved to be quoted on The NASDAQ Global Market, we cannot assure you that a regular trading market will develop in the ordinary shares. All of the ordinary shares held by our existing shareholders upon closing of this offering will be available for sale in the public market after the expiration or waiver of the lock-up arrangements described below.

Rule 144

In general, under Rule 144 of the Securities Act (as in effect on the date of this prospectus), beginning 90 days after the date of this prospectus, an “affiliate” who has beneficially owned our shares for a period of at least six months is entitled to sell upon expiration or waiver of the lock-up arrangements described below within any three-month period a number of shares that does not exceed the greater of either 1% of the then outstanding shares, or approximately                  immediately after this offering, or the average weekly trading volume of our shares on The NASDAQ Global Market during the four calendar weeks preceding the filing with the SEC of a notice on Form 144 with respect to such sale. Such sales under Rule 144 of the Securities Act are also subject to prescribed requirements relating to the manner of sale, notice and availability of current public information about us.

Under Rule 144, a person who is not deemed to have been an affiliate of ours at any time during the 90 days preceding a sale, and who has beneficially owned the shares proposed to be sold for at least six months, including the holding period of any prior holder other than an affiliate, is entitled to sell such shares without restriction, provided we have been in compliance with our reporting requirements under the Exchange Act for the six months following satisfaction of the six-month holding period. To the extent that our affiliates sell their shares, other than pursuant to Rule 144 or a registration statement, the purchaser’s holding period for the purpose of effecting a sale under Rule 144 commences on the date of transfer from the affiliate.

Rule 701

In general, under Rule 701 of the Securities Act as in effect on the date of this prospectus, each of our employees, consultants or advisors who acquires our ordinary shares from us in connection with a compensatory share plan or other written agreement executed prior to the closing of this offering is eligible to resell such ordinary shares in reliance on Rule 144, but without compliance with some of the restrictions, including the holding period, contained in Rule 144.

Regulation S

Regulation S provides generally that sales made in offshore transactions are not subject to the registration or prospectus-delivery requirements of the Securities Act.

Lock-up Arrangements

For a description of the lock-up arrangements that we and our shareholders have entered into in connection with this offering, see “Underwriting.”

 

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Form S-8 Registration Statements

Following the completion of this offering, we intend to file one or more registration statements on Form S-8 under the Securities Act to register up to                  ordinary shares, in the aggregate, issued or reserved for issuance under our equity plans. The registration statement on Form S-8 will become effective automatically upon filing. Ordinary shares issued upon exercise of a share option and registered pursuant to the Form S-8 registration statement will, subject to vesting provisions and Rule 144 volume limitations applicable to our affiliates, be available for sale in the open market immediately unless they are subject to the 180-day lock-up or, if subject to the lock-up, immediately after the 180-day lock-up period expires.

As of May 31, 2014, a total of 451,356 options to purchase ordinary shares were reserved under our equity plans. Out of the reserved options under our plans, 324,546 options were granted and outstanding, 37,204 options have been exercised for ordinary shares and 89,606 options were reserved under our plans but not granted. Of such 89,606 reserved options, we intend to grant options to purchase 83,313 ordinary shares immediately following the closing of this offering. Upon the closing of this offering all of our ordinary shares issuable under these options are subject to the lock-up agreements with the underwriters.

Registration Rights

After the offering, the holders of 2,569,972 ordinary shares will be entitled to registration rights. For more information on these registration rights, see “Description of Share Capital—Registration Rights.”

 

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TAXATION

The following description is not intended to constitute a complete analysis of all tax consequences relating to the acquisition, ownership and disposition of our ordinary shares. You should consult your own tax advisor concerning the tax consequences of your particular situation, as well as any tax consequences that may arise under the laws of any state, local, foreign or other taxing jurisdiction.

Israeli Tax Considerations and Government Programs

The following is a brief summary of the material Israeli tax laws applicable to us, and certain Israeli Government programs that may benefit us. This section also contains a discussion of material Israeli tax consequences concerning the ownership and disposition of our ordinary shares purchased by investors in this offering. This summary does not discuss all the aspects of Israeli tax law that may be relevant to a particular investor in light of his or her personal investment circumstances or to some types of investors subject to special treatment under Israeli law. Examples of such investors include residents of Israel or traders in securities who are subject to special tax regimes not covered in this discussion. Because parts of this discussion are based on new tax legislation that has not yet been subject to judicial or administrative interpretation, we cannot assure you that the appropriate tax authorities or the courts will accept the views expressed in this discussion. 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 tax consequences described below.

General Corporate Tax Structure in Israel

Israeli companies are generally subject to corporate tax, currently at the rate of 26.5% of a company’s taxable income. However, the effective tax rate payable by a company that derives income from an Approved Enterprise, a Benefited Enterprise or a Preferred Enterprise (as discussed below) may be considerably less. Capital gains derived by an Israeli company are subject to tax at the prevailing corporate tax rate.

Law for the Encouragement of Industry (Taxes), 5729-1969

The Law for the Encouragement of Industry (Taxes), 5729-1969, generally referred to as the Industry Encouragement Law, provides several tax benefits for “Industrial Companies.”

The Industry Encouragement Law defines an “Industrial Company” as a company resident in Israel, of which 90% or more of its income in any tax year, other than income from defense loans, is derived from an “Industrial Enterprise” owned by it. An “Industrial Enterprise” is defined as an enterprise whose principal activity in a given tax year is industrial production.

The following corporate tax benefits, among others, are available to Industrial Companies:

 

   

amortization over an eight-year period of the cost of patents and rights to use patents and know-how which were purchased in good faith and are used for the development or advancement of the Industrial Enterprise;

 

   

under certain conditions, an election to file consolidated tax returns with related Israeli Industrial Companies; and

 

   

expenses related to a public offering are deductible in equal amounts over three years.

 

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As we have not generated income yet, there is no assurance that we qualify as an Industrial Company or that the benefits described above will be available to us in the future.

Law for the Encouragement of Capital Investments, 5719-1959

The Law for the Encouragement of Capital Investments, 5719-1959, generally referred to as the Investment Law, provides certain incentives for capital investments in productive assets, such as production facilities, by “Industrial Enterprises” (as defined under the Investment Law).

The Investment Law was significantly amended effective April 1, 2005 (the “2005 Amendment”), and further amended as of January 1, 2011 (the “2011 Amendment”). Pursuant to the 2005 Amendment, tax benefits granted in accordance with the provisions of the Investment Law prior to its revision by the 2005 Amendment remain in force but any benefits granted subsequently are subject to the provisions of the 2005 Amendment. Similarly, the 2011 Amendment introduced new benefits to replace those granted in accordance with the provisions of the Investment Law in effect prior to the 2011 Amendment. However, companies entitled to benefits under the Investment Law as in effect prior to January 1, 2011 were entitled to choose to continue to enjoy such benefits, provided that certain conditions are met, or elect instead, irrevocably, to forego such benefits and have the benefits of the 2011 Amendment apply. We have examined the possible effect, if any, of these provisions of the 2011 Amendment on our financial statements and have decided, at this time, not to opt to apply the new benefits under the 2011 Amendment.

Tax Benefits Prior to the 2005 Amendment

An investment program that is implemented in accordance with the provisions of the Investment Law prior to the 2005 Amendment, referred to as an “Approved Enterprise,” is entitled to certain benefits. A company that wished to receive benefits as an Approved Enterprise must have received approval from the Investment Center of the Israeli Ministry of the Economy (formerly the Ministry of Industry, Trade and Labor), or the Investment Center. Each certificate of approval for an Approved Enterprise relates to a specific investment program in the Approved Enterprise, delineated both by the financial scope of the investment and by the physical characteristics of the facility or the asset.

In general, an Approved Enterprise is entitled to receive a grant from the Government of Israel or an alternative package of tax benefits, known as the alternative benefits track. The tax benefits from any certificate of approval relate only to taxable income attributable to the specific Approved Enterprise. Income derived from activity that is not integral to the activity of the Approved Enterprise does not enjoy tax benefits.

In addition, a company that has an Approved Enterprise program is eligible for further tax benefits if it qualifies as a Foreign Investors’ Company (“FIC”), which is a company with a level of foreign investment, as defined in the Investment Law, of more than 25%. The level of foreign investment is measured as the percentage of rights in the company (in terms of shares, rights to profits, voting and appointment of directors), and of combined share capital and loans, that are owned, directly or indirectly, by persons who are not residents of Israel. The determination as to whether a company qualifies as an FIC is made on an annual basis.

If a company elects the alternative benefits track and distributes a dividend out of income derived by its Approved Enterprise during the tax exemption period it will be subject to corporate tax in respect of the amount of the dividend (grossed-up to reflect the pre-tax income that it would have had to earn in order to distribute the dividend) at the corporate tax rate which

 

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would have been applicable without the tax exemption under the alternative benefits track. In addition, dividends paid out of income attributed to an Approved Enterprise are generally subject to withholding tax at source at the rate of 15% or such lower rate as may be provided in an applicable tax treaty.

The Investment Law also provides that an Approved Enterprise is entitled to accelerated depreciation on its property and equipment that are included in an Approved Enterprise program during the first five years in which the equipment is used.

The benefits available to an Approved Enterprise are subject to the fulfillment of conditions stipulated in the Investment Law and its regulations and the criteria in the specific certificate of approval. If a company does not meet these conditions, it would be required to repay the amount of tax benefits, as adjusted by the Israeli consumer price index, and interest.

We do not have Approved Enterprise programs.

Tax Benefits Subsequent to the 2005 Amendment

The 2005 Amendment applies to new investment programs commencing after 2004, but does not apply to investment programs approved prior to April 1, 2005. The 2005 Amendment provides that terms and benefits included in any certificate of approval that was granted before the 2005 Amendment became effective (April 1, 2005) will remain subject to the provisions of the Investment Law as in effect on the date of such approval.

The 2005 Amendment provides that a certificate of approval from the Investment Center will only be necessary for receiving cash grants. As a result, it was no longer necessary for a company to obtain an Approved Enterprise certificate of approval in order to receive the tax benefits previously available under the alternative benefits track. Rather, a company may claim the tax benefits offered by the alternative benefits track directly in its tax returns, provided that it meets the criteria for tax benefits set forth in the amendment. In order to receive the tax benefits, the 2005 Amendment states that a company must make an investment which meets all of the conditions, including a minimum qualifying investment in certain productive assets as specified in the Investment Law. Such investment allows a company to receive “Benefited Enterprise” status, and may be made over a period of no more than three years culminating with the end of the Benefited Enterprise election year.

The extent of the tax benefits available under the 2005 Amendment to qualifying income of a Benefited Enterprise depends on, among other things, the geographic location in Israel of the Benefited Enterprise. The location will also determine the period for which tax benefits are available. Such tax benefits include an exemption from corporate tax on undistributed income generated by the Benefited Enterprise for a period of between two to ten years, depending on the geographic location of the Benefited Enterprise in Israel, and a reduced corporate tax rate of between 10% to 25% for the remainder of the benefits period, depending on the level of foreign investment in the company in each year. The benefits period is limited to 12 or 14 years from the beginning of the Benefited Enterprise election year, depending on the location of the Benefited Enterprise. We informed the Israeli Tax Authority of our choice of 2012 as a Benefited Enterprise election year. A company qualifying for tax benefits under the 2005 Amendment which pays a dividend out of income derived by its Benefited Enterprise during the tax exemption period will be subject to corporate tax in respect of the amount of the dividend (grossed-up to reflect the pre-tax income that it would have had to earn in order to distribute the dividend) at the corporate tax rate which would have otherwise been applicable. Dividends paid

 

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out of income attributed to a Benefited Enterprise are generally subject to withholding tax at source at the rate of 15% or such lower rate as may be provided in an applicable tax treaty.

The benefits available to a Benefited Enterprise are subject to the fulfillment of conditions stipulated in the Investment Law and its regulations. If a company does not meet these conditions, in a given tax year during the benefits period, it would generally not be eligible for tax benefits during such tax year; however, the company’s eligibility for tax benefits in prior and future years should not be impacted.

We currently have one Benefited Enterprise program under the Investments Law, which, we believe, may entitle us to certain tax benefits. The tax benefit period for this program has not yet commenced but is expected to end no later than the end of tax year 2023 or tax year 2025. During the benefits period, which shall commence with the year we will first earn taxable income relating to such enterprise, subject to the 12 or 14 year limitation described above, and shall run for a period of up to 10 years (assuming FIC status), a corporate tax exemption is expected to apply with respect to the taxable income from our Benefited Enterprise program (once generated) generated during the first two years of the benefits period (so long as it remains undistributed) and reduced corporate tax rates are expected to apply to such taxable income generated in the remaining years of the benefits period.

There is no assurance that our future taxable income will qualify as Benefited Enterprise income or that the benefits described above will be available to us in the future.

Tax Benefits Under the 2011 Amendment

The 2011 Amendment canceled the availability of the benefits granted to companies under the Investment Law prior to 2011 and, instead, introduced new benefits for income generated by a “Preferred Company” through its “Preferred Enterprise” (as such terms are defined in the Investment Law) as of January 1, 2011. The definition of a Preferred Company includes a company incorporated in Israel that is not wholly-owned by a governmental entity, and that has, among other things, Preferred Enterprise status and is controlled and managed from Israel. Pursuant to the 2011 Amendment, in 2014 and thereafter a Preferred Company is entitled to a reduced corporate tax rate of 16% with respect to its income derived by its Preferred Enterprise unless the Preferred Enterprise is located in development zone A, in which case the rate will be 9%. It should be noted, that the classification of income generated from the provision of usage rights in know-how or software that were developed in the Preferred Enterprise, as well as royalty income received with respect to such usage, as Preferred Enterprise income is subject to the issuance of a pre-ruling from the Israel Tax Authority stipulating that such income is associated with the productive activity of the Preferred Enterprise in Israel.

Dividends paid out of income attributed to a Preferred Enterprise are generally subject to withholding tax at source at the rate of 20% or such lower rate as may be provided in an applicable tax treaty. However, if such dividends are paid to an Israeli company, no tax is required to be withheld (although, if such dividends are subsequently distributed to individuals or a non-Israeli company, withholding tax at a rate of 20% or such lower rate as may be provided in an applicable tax treaty will apply).

The 2011 Amendment also provided transitional provisions to address companies that may be eligible for tax benefits under the Approved Enterprise or Benefited Enterprise regimes. These transitional provisions provide, among other things, that unless an irrevocable request is made to apply the provisions of the Investment Law as amended in 2011 with respect to income

 

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to be derived as of January 1, 2011: (1) the terms and benefits included in any certificate of approval that was granted to an Approved Enterprise which chose to receive grants before the 2011 Amendment became effective will remain subject to the provisions of the Investment Law as in effect on the date of such approval, and subject to certain other conditions, (2) terms and benefits included in any certificate of approval that was granted to an Approved Enterprise which had participated in an alternative benefits track before the 2011 Amendment became effective will remain subject to the provisions of the Investment Law as in effect on the date of such approval, provided that certain conditions are met, and (3) a Benefited Enterprise can elect to continue to benefit from the benefits provided to it before the 2011 Amendment came into effect, provided that certain conditions are met.

We have examined the potential Israeli tax implications associated with the adoption and implementation of the provisions of the 2011 Amendment and have decided, at this time, not to apply the new benefits under the 2011 Amendment. There is no assurance that our future taxable income will qualify as Preferred Enterprise income or that the benefits described above will be available to us in the future.

The termination or substantial reduction of any of the benefits available under the Investment Law could materially increase our tax liabilities.

Taxation of Our Shareholders

Capital Gains Taxes Applicable to Non-Israeli Resident Shareholders

A non-Israeli resident who derives capital gains from the sale of shares in an Israeli resident company that were purchased after the Company was listed for trading on a stock exchange outside of Israel will be exempt from Israeli tax so long as such capital gains were not attributable to a permanent establishment that the non-resident maintains in Israel.

However, non-Israeli resident corporations will not be entitled to the foregoing exemption if the Israeli residents: (i) have a controlling interest, directly or indirectly, alone, together with another (i.e., together with a relative, or together with someone who is not a relative but with whom, according to an agreement, there is regular cooperation in material matters of the company, directly or indirectly), or together with another Israeli resident, of more than 25% in one or more of the means of control in such non-Israeli resident corporation, or (ii) Israeli residents are the beneficiaries of, or are entitled to, 25% or more of the revenues or profits of such non-Israeli resident corporation, whether directly or indirectly.

Additionally, a sale of securities by a non-Israeli resident may be exempt from Israeli capital gains tax under the provisions of an applicable tax treaty. For example, under the United States-Israel Tax Treaty, the disposition of shares by a shareholder who (1) is a U.S. resident (for purposes of the treaty), (2) holds the shares as a capital asset, and (3) is entitled to claim the benefits afforded to such person by the treaty, is generally exempt from Israeli capital gains tax. Such exemption will not apply if: (1) the capital gain arising from the disposition can be attributed to a permanent establishment in Israel, (2) the shareholder holds, directly or indirectly, shares representing 10% or more of the voting power of the company during any part of the 12-month period preceding the disposition, subject to certain conditions, or (3) such U.S. resident is an individual and was present in Israel for 183 days or more during the relevant taxable year. In such case, the sale, exchange or disposition of our ordinary shares would be subject to Israeli tax, to the extent applicable; however, under the United States-Israel Tax Treaty, the taxpayer would be permitted to claim a credit for such taxes against the U.S. federal income tax imposed with respect to such sale, exchange or disposition, subject to the

 

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limitations under U.S. law applicable to foreign tax credits. The United States-Israel Tax Treaty does not relate to U.S. state or local taxes.

In some instances where our shareholders may be liable for Israeli tax on the sale of their ordinary shares, the payment of the consideration may be subject to the withholding of Israeli tax at source. Shareholders may be required to demonstrate that they are exempt from tax on their capital gains in order to avoid withholding at source at the time of sale.

Taxation of Non-Israeli Shareholders on Receipt of Dividends

Non-Israeli residents are generally subject to Israeli withholding tax on the receipt of dividends paid on our ordinary shares at the rate of 25%, unless relief is provided in a treaty between Israel and the shareholder’s country of residence, subject to receipt of a valid certificate from the Israeli Tax Authority allowing for such reduced rate. With respect to a person who is a “substantial shareholder” at the time of receiving the dividend or at any time during the preceding twelve months, the applicable withholding tax rate is 30%. Furthermore, an additional 2% tax might be applicable to individual shareholders if certain conditions are met. A “substantial shareholder” is generally a person who alone or together with such person’s relative or 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 the corporation. “Means of control” generally include the right to vote, receive profits, nominate a director or an executive officer, receive assets upon liquidation, or order someone who holds any of the aforesaid rights how to act, regardless of the source of such right. Notwithstanding the above, dividends paid to a non-Israeli resident “substantial shareholder” on publicly traded shares, like our ordinary shares, which are held via a “nominee company” (as defined under the Securities Law, 1968), are generally subject to Israeli withholding tax at a rate of 25%, unless a different rate is provided under an applicable tax treaty, provided that a certificate from the Israeli Tax Authority allowing for a reduced withholding tax rate is obtained in advance. Under the United States-Israel Tax Treaty, the maximum rate of tax withheld at source in Israel on dividends paid to a holder of our ordinary shares who is a U.S. resident (for purposes of the United States-Israel Tax Treaty) is 25%. Unless a reduced tax rate is provided under an applicable tax treaty, a distribution of dividends to non-Israeli residents is subject to withholding tax at source at a rate of 15% if the dividend is distributed from income attributed to an Approved Enterprise or a Benefited Enterprise, while a 20% rate applies if the dividend is distributed from income attributed to a Preferred Enterprise. We cannot assure you that in the event we declare a dividend we will designate the income out of which the dividend is paid in a manner that will reduce shareholders’ tax liability.

If the dividend is attributable partly to income derived from an Approved Enterprise, Benefited Enterprise or Preferred Enterprise, and partly to other sources of income, the withholding rate will be a blended rate reflecting the relative portions of the two types of income. U.S. residents who are subject to Israeli withholding tax on a dividend may be entitled to a credit or deduction for Untied States federal income tax purposes in the amount of the taxes withheld, subject to detailed rules contained in U.S. tax legislation.

Estate and Gift Tax

Israeli law presently does not impose estate or gift taxes.

 

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Certain Material U.S. Federal Income Tax Considerations

The following is a description of the material U.S. federal income tax considerations relating to the acquisition, ownership and disposition of our ordinary shares by a U.S. Holder (as defined below). This description addresses only the U.S. federal income tax considerations to U.S. Holders that are initial purchasers of our ordinary shares pursuant to the offering and that will hold such ordinary shares as capital assets. This description does not address tax considerations applicable to U.S. Holders that may be subject to special tax rules, including, without limitation:

 

   

banks, financial institutions or insurance companies;

 

   

real estate investment trusts, regulated investment companies or grantor trusts;

 

   

brokers, dealers or traders in securities, commodities or currencies;

 

   

tax exempt entities or organizations, including an “individual retirement account” or “Roth IRA” as defined in Section 408 or 408A of the Code (as defined below), respectively;

 

   

certain former citizens or long term residents of the United States;

 

   

persons that received our shares as compensation for the performance of services;

 

   

persons that will hold our shares as part of a “hedging,” “integrated” or “conversion” transaction or as a position in a “straddle” for U.S. federal income tax purposes;

 

   

partnerships (including entities classified as partnerships for U.S. federal income tax purposes) or other pass-through entities, or holders that will hold our shares through such an entity;

 

   

S corporations;

 

   

persons that acquire ordinary shares as a result of holding or owning our preferred shares;

 

   

persons whose “functional currency” is not the U.S. dollar; or

 

   

persons that own directly, indirectly or through attribution 10% or more of the voting power or value of our shares.

Moreover, this description does not address the U.S. federal estate, gift, or alternative minimum tax considerations, or any U.S. state, local or non-U.S. tax considerations of the acquisition, ownership and disposition of our ordinary shares.

This description is based on the U.S. Internal Revenue Code of 1986, as amended, or the Code, existing, proposed and temporary U.S. Treasury Regulations promulgated thereunder and administrative and judicial interpretations thereof, in each case as in effect and available on the date hereof. All the foregoing is subject to change, which change could apply retroactively, and to differing interpretations, all of which could affect the tax considerations described below. There can be no assurances that the U.S. Internal Revenue Service, or the IRS, will not take a different position concerning the tax consequences of the acquisition, ownership and disposition of our ordinary shares or that such a position would not be sustained. Holders should consult their own tax advisers concerning the U.S. federal, state, local and foreign tax consequences of acquiring, owning and disposing of our ordinary shares in their particular circumstances.

For purposes of this description, the term “U.S. Holder” means a beneficial owner of our ordinary shares that, for U.S. federal income tax purposes, is (i) a citizen or resident of the United States, (ii) a corporation (or entity treated as a corporation for U.S. federal income tax

 

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purposes) created or organized in or under the laws of the United States, any state thereof, or the District of Columbia, (iii) an estate the income of which is subject to U.S. federal income tax regardless of its source, or (iv) a trust with respect to which a court within the United States is able to exercise primary supervision over its administration and one or more U.S. persons have the authority to control all of its substantial decisions.

If a partnership (or any other entity treated as a partnership for U.S. federal income tax purposes) holds our ordinary shares, the U.S. federal income tax consequences relating to an investment in our ordinary shares will depend in part upon the status of the partner and the activities of the partnership. Such a partner or partnership should consult its tax advisor regarding the U.S. federal income tax considerations of acquiring, owning and disposing of our ordinary shares in its particular circumstances.

As indicated below, this discussion is subject to U.S. federal income tax rules applicable to a “passive foreign investment company,” or a PFIC.

Persons considering an investment in our ordinary shares should consult their own tax advisors as to the particular tax consequences applicable to them relating to the acquisition, ownership and disposition of our ordinary shares, including the applicability of U.S. federal, state and local tax laws and non-U.S. tax laws.

Distributions

Subject to the discussion under “—Passive Foreign Investment Company Considerations,” below, if you are a U.S. Holder, the gross amount of any distribution made to you with respect to our ordinary shares before reduction for any Israeli taxes withheld therefrom, other than certain distributions, if any, of our ordinary shares distributed pro rata to all our shareholders, generally will be includible in your income as dividend income to the extent such distribution is paid out of our current or accumulated earnings and profits as determined under U.S. federal income tax principles. To the extent that the amount of any distribution by us exceeds our current and accumulated earnings and profits as determined under U.S. federal income tax principles, it will generally be treated first as a return of your adjusted tax basis in our ordinary shares and thereafter as either long-term or short-term capital gain depending upon whether the U.S. Holder has held our ordinary shares for more than one year as of the time such distribution is received. We do not expect to maintain calculations of our earnings and profits under U.S. federal income tax principles. Therefore, U.S. Holders should expect that the entire amount of any distribution generally will be reported as dividend income. Non-corporate U.S. Holders may qualify for the preferential rates of taxation with respect to dividends on ordinary shares applicable to long-term capital gains (i.e., gains from the sale of capital assets held for more than one year) applicable to qualified dividend income (as discussed below). The Company, which is incorporated under the laws of the State of Israel, believes that it qualifies as a resident of Israel for purposes of, and is eligible for the benefits of, the Convention between the Government of the United States of America and the Government of the State of Israel with Respect to Taxes on Income, signed on November 20, 1975, as amended and currently in force, or the U.S.-Israel Tax Treaty, although there can be no assurance in this regard. Further, the IRS has determined that the U.S.-Israel Tax Treaty is satisfactory for purposes of the qualified dividend rules and that it includes an exchange-of-information program. Therefore, subject to the discussion under “—Passive Foreign Investment Company Considerations,” below, if the U.S.-Israel Tax 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, including holding period and the absence of certain risk reduction transaction requirements are met. The dividends will not be eligible for the dividends received deduction generally allowed to corporate U.S. Holders.

 

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U.S. Holders generally may claim the amount of Israel withholding tax withheld either as a deduction from gross income or as a credit against U.S. federal income tax liability. However, the foreign tax credit is subject to numerous complex limitations that must be determined and applied on an individual basis. Generally, the credit cannot exceed the proportionate share of a U.S. Holder’s U.S. federal income tax liability that such U.S. Holder’s “foreign source” taxable income bears to such U.S. Holder’s worldwide taxable income. In applying this limitation, a U.S. Holder’s various items of income and deduction must be classified, under complex rules, as either “foreign source” or “U.S. source.” In addition, this limitation is calculated separately with respect to specific categories of income. The amount of a distribution with respect to the ordinary shares that is treated as a “dividend” may be lower for U.S. federal income tax purposes than it is for Israeli income tax purposes, potentially resulting in a reduced foreign tax credit for the U.S. Holder. Each U.S. Holder should consult its own tax advisors regarding the foreign tax credit rules.

In general, the amount of a distribution paid to a U.S. Holder in a foreign currency will be the dollar value of the foreign currency calculated by reference to the spot exchange rate on the day the U.S. Holder receives the distribution, regardless of whether the foreign currency is converted into U.S. dollars at that time. Any foreign currency gain or loss a U.S. Holder realizes on a subsequent conversion of foreign currency into U.S. dollars will be U.S. source ordinary income or loss. If dividends received in foreign currency are converted into U.S. dollars on the day they are received, a U.S. Holder generally should not be required to recognize foreign currency gain or loss in respect of the dividend.

Sale, Exchange or Other Taxable Disposition of Our Ordinary Shares

Subject to the discussion below under “—Passive Foreign Investment Company Considerations,” if you are a U.S. Holder, you generally will recognize gain or loss on the sale, exchange or other taxable disposition of our ordinary shares equal to the difference between the amount realized on such sale, exchange or other taxable disposition and your adjusted tax basis in our ordinary shares, and such gain or loss will be capital gain or loss. The adjusted tax basis in an ordinary share generally will be equal to the cost of such ordinary share. If you are a non-corporate U.S. Holder, capital gain from the sale, exchange or other taxable disposition of ordinary shares is generally eligible for a preferential rate of taxation applicable to capital gains, if your holding period determined at the time of such sale, exchange or other taxable disposition for such ordinary shares exceeds one year (i.e., such gain is long-term capital gain). The deductibility of capital losses for U.S. federal income tax purposes is subject to limitations under the Code. Any such gain or loss that a U.S. Holder recognizes generally will be treated as U.S. source income or loss for foreign tax credit limitation purposes.

For a cash basis taxpayer, units of foreign currency paid or received are translated into U.S. dollars at the spot rate on the settlement date of the purchase or sale. In that case, no foreign currency exchange gain or loss will result from currency fluctuations between the trade date and the settlement date of such a purchase or sale. An accrual basis taxpayer, however, may elect the same treatment required of cash basis taxpayers with respect to purchases and sales of our ordinary shares that are traded on an established securities market, provided the election is applied consistently from year to year. Such election may not be changed without the consent of the IRS. For an accrual basis taxpayer who does not make such election, units of foreign currency paid or received are translated into U.S. dollars at the spot rate on the trade date of the purchase or sale. Such an accrual basis taxpayer may recognize exchange gain or loss based on currency fluctuations between the trade date and the settlement date. Any foreign currency gain or loss a U.S. Holder realizes will be U.S. source ordinary income or loss.

 

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Passive Foreign Investment Company Considerations

If we are classified as a PFIC in any taxable year, a U.S. Holder would be subject to special rules generally intended to reduce or eliminate any benefits from the deferral of U.S. federal income tax that a U.S. Holder could derive from investing in a non-U.S. company that does not distribute all of its earnings on a current basis.

A non-U.S. corporation is classified as a PFIC for U.S. federal income tax purposes in any taxable year in which, after applying certain look-through rules with respect to the income and assets of subsidiaries, either (i) at least 75% of its gross income is “passive income” or (ii) at least 50% of the average quarterly value of its total gross assets (which, assuming we are not a CFC for the year being tested, would be measured by fair market value of the assets, and for which purpose the total value of our assets may be determined in part by the market value of our ordinary shares, which is subject to change) is attributable to assets that produce “passive income” or are held for the production of passive income.

Passive income for this purpose generally includes dividends, interest, royalties, rents, gains from commodities and securities transactions, the excess of gains over losses from the disposition of assets which produce passive income, and includes amounts derived by reason of the temporary investment of funds raised in offerings of our ordinary shares. If a non-U.S. corporation owns directly or indirectly at least 25% by value of the stock of another corporation, the non-U.S. corporation is treated for purposes of the PFIC tests as owning its proportionate share of the assets of the other corporation and as receiving directly its proportionate share of the other corporation’s income. If we are classified as a PFIC in any year with respect to which a U.S. Holder owns our ordinary shares, we will continue to be treated as a PFIC with respect to such U.S. Holder in all succeeding years during which the U.S. Holder owns our ordinary shares, regardless of whether we continue to meet the tests described above.

We must determine our PFIC status annually based on tests which are factual in nature, and our status will depend on our income, assets and activities each year. In addition, our status as a PFIC may depend on how quickly we use the cash proceeds from this offering in our business.

However, because we had no revenue-producing operations, we believe that we were a PFIC for our 2013 taxable year. Unless and until we generate sufficient revenue from active licensing and other non-passive sources and otherwise satisfy the asset test above, we expect to be treated as a PFIC for our current taxable year and thereafter.

If we are a PFIC, and you are a U.S. Holder, then unless you make one of the elections described below, a special tax regime will apply to both (a) any “excess distribution” by us to you (generally, your ratable portion of distributions in any year which are greater than 125% of the average annual distribution received by you in the shorter of the three preceding years or your holding period for our ordinary shares) and (b) any gain realized on the sale or other disposition of the ordinary shares. Under this regime, any excess distribution and realized gain will be treated as ordinary income and will be subject to tax as if (a) the excess distribution or gain had been realized ratably over your holding period, (b) the amount deemed realized in each year had been subject to tax in each year of that holding period at the highest marginal rate for such year (other than income allocated to the current period or any taxable period before we became a PFIC, which would be subject to tax at the U.S. Holder’s regular ordinary income rate for the current year and would not be subject to the interest charge discussed below), and (c) the interest charge generally applicable to underpayments of tax had been imposed on the taxes deemed to have been payable in those years. In addition, dividend distributions made to you will not qualify for the lower rates of taxation applicable to long-term capital gains discussed above under “Distributions.”

 

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Certain elections exist that may alleviate some of the adverse consequences of PFIC status and would result in an alternative treatment (such as mark-to-market treatment) of our ordinary shares. If a U.S. Holder makes the mark-to-market election, the U.S. Holder generally will recognize as ordinary income any excess of the fair market value of the ordinary shares at the end of each taxable year over their adjusted tax basis, and will recognize an ordinary loss in respect of any excess of the adjusted tax basis of the ordinary shares over their fair market value at the end of the taxable year (but only to the extent of the net amount of income previously included as a result of the mark-to-market election). If a U.S. Holder makes the election, the U.S. Holder’s tax basis in the ordinary shares will be adjusted to reflect these income or loss amounts. Any gain recognized on the sale or other disposition of ordinary shares in a year when we are a PFIC will be treated as ordinary income and any loss will be treated as an ordinary loss (but only to the extent of the net amount of income previously included as a result of the mark-to-market election). The mark-to-market election is available only if we are a PFIC and our ordinary shares are “regularly traded” on a “qualified exchange.” Our ordinary shares will be treated as “regularly traded” in any calendar year in which more than a de minimis quantity of the ordinary shares are traded on a qualified exchange on at least 15 days during each calendar quarter (subject to the rule that trades that have as one of their principle purposes the meeting of the trading requirement as disregarded). The NASDAQ Global Market is a qualified exchange for this purpose and, consequently, if the ordinary shares are regularly traded, the mark-to-market election will be available to a U.S. Holder.

We do not currently intend to provide the information necessary for U.S. Holders to make qualified electing fund elections. U.S. Holders should consult their tax advisors to determine whether any of these elections would be available and if so, what the consequences of the alternative treatments would be in their particular circumstances.

If we are determined to be a PFIC, the general tax treatment for U.S. Holders described in this section would apply to indirect distributions and gains deemed to be realized by U.S. Holders in respect of any of our subsidiaries that also may be determined to be PFICs.

If a U.S. Holder owns ordinary shares during any year in which we are a PFIC and the U.S. Holder recognizes gain on a disposition of our ordinary shares or receives distributions with respect to our ordinary shares, the U.S. Holder generally will be required to file an IRS Form 8621 (Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund) with respect to the company, generally with the U.S. Holder’s federal income tax return for that year. If our company were a PFIC for a given taxable year, then you should consult your tax advisor concerning your annual filing requirements.

The U.S. federal income tax rules relating to PFICs are complex. Prospective U.S. investors are urged to consult their own tax advisers with respect to the acquisition, ownership and disposition of our ordinary shares, the consequences to them of an investment in a PFIC, any elections available with respect to our ordinary shares and the IRS information reporting obligations with respect to the acquisition, ownership and disposition of our ordinary shares.

Medicare Tax

Certain U.S. Holders that are individuals, estates or trusts are subject to a 3.8% tax on all or a portion of their “net investment income,” which may include all or a portion of their dividend income and net gains from the disposition of ordinary shares. Each U.S. Holder that is an individual, estate or trust is urged to consult its tax advisors regarding the applicability of the Medicare tax to its income and gains in respect of its investment in our ordinary shares.

 

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Certain Reporting Requirements With Respect to Payments of Offer Price

U.S. Holders paying more than U.S. $100,000 for our ordinary shares generally may be required to file IRS Form 926 reporting the payment of the Offer Price for our ordinary shares to us. Substantial penalties may be imposed upon a U.S. Holder that fails to comply. Each U.S. Holder should consult its own tax advisor as to the possible obligation to file IRS Form 926.

Backup Withholding Tax and Information Reporting Requirements

U.S. backup withholding tax and information reporting requirements may apply to certain payments to certain shareholders. Information reporting generally will apply to payments of dividends on, and to proceeds from the sale or redemption of, our ordinary shares made within the United States, or by a U.S. payor or U.S. middleman, to a holder of our ordinary shares, other than an exempt recipient (including a payee that is not a U.S. person that provides an appropriate certification and certain other persons). A payor will be required to withhold backup withholding tax from any payments of dividends on, or the proceeds from the sale or redemption of, ordinary shares within the United States, or by a U.S. payor or U.S. middleman, to a holder, other than an exempt recipient, if such holder fails to furnish its correct taxpayer identification number or otherwise fails to comply with, or establish an exemption from, such backup withholding tax requirements. Any amounts withheld under the backup withholding rules will be allowed as a credit against the beneficial owner’s U.S. federal income tax liability, if any, and any excess amounts withheld under the backup withholding rules may be refunded, provided that the required information is timely furnished to the IRS.

Foreign Asset Reporting

Certain U.S. Holders who are individuals are required to report information relating to an interest in our ordinary shares, subject to certain exceptions (including an exception for shares held in accounts maintained by U.S. financial institutions) by filing IRS Form 8938 (Statement of Specified Foreign Financial Assets) with their federal income tax return. U.S. Holders are urged to consult their tax advisors regarding their information reporting obligations, if any, with respect to their ownership and disposition of our ordinary shares.

THE DISCUSSION ABOVE IS A GENERAL SUMMARY. IT DOES NOT COVER ALL TAX MATTERS THAT MAY BE OF IMPORTANCE TO A PROSPECTIVE INVESTOR. 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.

 

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UNDERWRITING

Under the terms and subject to the conditions contained in an underwriting agreement dated             , 2014, we have agreed to sell to the underwriters named below, for whom Deutsche Bank Securities Inc. and Wells Fargo Securities, LLC are acting as joint bookrunning managers of the offering and as representatives of the underwriters, the following respective numbers of ordinary shares:

 

Underwriter

  

Number of
Ordinary Shares

Deutsche Bank Securities Inc.

  

Wells Fargo Securities, LLC

  

JMP Securities LLC

  

Oppenheimer & Co. Inc.

  
  

 

Total

  
  

 

The address of Deutsche Bank Securities Inc. is 60 Wall Street, 2nd Floor, New York, New York 10005. The address of Wells Fargo Securities, LLC is 375 Park Avenue, 4th Floor, New York, New York 10152.

Subject to certain conditions, the underwriting agreement provides that the underwriters are obligated to purchase all the ordinary shares in the offering if any are purchased, other than those ordinary shares covered by the option to purchase additional shares described below. The underwriting agreement also provides that if an underwriter defaults, the purchase commitments of non-defaulting underwriters may be increased or the offering may be terminated.

We have granted to the underwriters a 30-day option to purchase on a pro rata basis up to                     additional ordinary shares at the initial public offering price less the estimated underwriting discounts and commissions. The option may be exercised only to cover sales by the underwriters of a greater number of shares than the total number set forth in the table above.

The underwriters propose to offer the ordinary shares initially at the public offering price on the cover page of this prospectus and to selling group members at that price less a selling concession of $         per ordinary share. After the initial public offering the representatives may change the public offering price and concession and discount to broker/dealers.

Prior to this offering, there has been no public market for our shares. Consequently, the initial public offering price for the shares will be determined by negotiations between us and the representatives. Among the factors considered in determining the initial public offering price will be our results of operations, our current financial condition, our future prospects, our markets, the economic conditions in and future prospects for the industry in which we compete, our management and currently prevailing general conditions in the equity securities markets, including current market valuations of publicly traded companies considered comparable to our company. We cannot assure you, however, that the price at which the shares will sell in the public market after this offering will not be lower than the initial public offering price or that an active trading market in our shares will develop and continue after this offering.

 

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We have agreed to pay underwriting discounts and commissions of     % of the gross proceeds of the offering. The following table summarizes the underwriting discounts and commissions we will pay:

 

    

Without
Exercise

    

With
Exercise

 

Per Share

   $                   $               

Total

   $        $    

The underwriters have informed us that they do not expect sales to accounts over which the underwriters have discretionary authority to exceed 5% of the ordinary shares being offered.

We estimate that the total expenses of this offering, including registration, filing and listing fees, printing fees and legal and accounting expenses, but excluding the underwriting discounts and commissions, will be approximately $         million, which includes no more than $         that we have agreed to reimburse the underwriters for certain expenses incurred by them in connection with this offering.

We have agreed that we will not offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, or file with the Securities and Exchange Commission a registration statement under the Securities Act relating to, any of our ordinary shares or securities convertible into or exchangeable or exercisable for any of our ordinary shares, or publicly disclose the intention to make any offer, sale, pledge, disposition or filing, without the prior written consent of Deutsche Bank Securities Inc. and Wells Fargo Securities, LLC for a period of 180 days after the date of this prospectus, subject to specified limited exceptions.

Our officers and directors and all of our share and option holders have agreed, subject to specified limited exceptions, that they will not offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, any of our ordinary shares or securities convertible into or exchangeable or exercisable for any of our ordinary shares, enter into a transaction that would have the same effect, or enter into any swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of our ordinary shares, whether any of these transactions are to be settled by delivery of our ordinary shares or other securities, in cash or otherwise, or publicly disclose the intention to make any offer, sale, pledge or disposition, or to enter into any transaction, swap, hedge or other arrangement, without, in each case, the prior written consent of Deutsche Bank Securities Inc. and Wells Fargo Securities, LLC for a period of 180 days after the date of this prospectus.

We have agreed to indemnify the underwriters against liabilities under the Securities Act, or contribute to payments that the underwriters may be required to make in that respect.

We have applied to list the ordinary shares on The NASDAQ Global Market under the trading symbol “VBLX.”

In connection with the offering the underwriters may engage in stabilizing transactions, purchases to cover positions created by short sales, syndicate covering transactions and penalty bids in accordance with Regulation M under the Exchange Act.

 

   

Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified maximum.

 

   

Short sales involve sales by the underwriters of shares in excess of the number of shares the underwriters are obligated to purchase, which creates a syndicate short position. The

 

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short position may be either a covered short position or a naked short position. In a covered short position, the number of shares over-allotted by the underwriters is not greater than the number of shares for which the underwriters’ option described above may be exercised. In a naked short position, the number of shares involved is greater than the number of shares for which the underwriters’ option described above may be exercised. The underwriters may close out any covered short position by exercising their option to purchase or by purchasing shares in the open market, or both.

 

   

Syndicate covering transactions involve purchases of the ordinary shares in the open market after the distribution has been completed in order to cover syndicate short positions. In determining the source of shares to close out the short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase shares through their option to purchase. If the underwriters sell more shares than could be covered by their option to purchase, creating a naked short position, the position can only be closed out by buying shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there could be downward pressure on the price of the shares in the open market after pricing that could adversely affect investors who purchase in the offering.

 

   

Penalty bids permit the representatives to reclaim a selling concession from a syndicate member when the ordinary shares originally sold by the syndicate member are purchased in a stabilizing or syndicate covering transaction to cover syndicate short positions.

These stabilizing transactions, syndicate covering transactions and penalty bids may have the effect of raising or maintaining the market price of our ordinary shares or preventing or retarding a decline in the market price of the ordinary shares. As a result, the price of our ordinary shares may be higher than the price that might otherwise exist in the open market. These transactions may be effected on The NASDAQ Global Market or otherwise and, if commenced, may be discontinued at any time.

A prospectus in electronic format may be made available on the web sites maintained by one or more of the underwriters, or selling group members, if any, participating in this offering and one or more of the underwriters participating in this offering may distribute prospectuses electronically. The representatives may agree to allocate a number of ordinary shares to underwriters and selling group members for sale to their online brokerage account holders. Internet distributions will be allocated by the underwriters and selling group members that will make internet distributions on the same basis as other allocations.

The underwriters are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, principal investment, hedging, financing and brokerage activities. The underwriters and their respective affiliates may, from time to time, engage in transactions with and perform services for us in the ordinary course of their business for which they may receive customary fees and reimbursement of expenses. In the ordinary course of their various business activities, the underwriters and their respective affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (which may include bank loans and/or credit default swaps) for their own account and for the accounts of their customers and may at any time hold long and short positions in such securities and instruments. 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,

 

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or recommend to clients that they acquire, long and/or short positions in such securities and instruments.

Selling Restrictions

Notice to Prospective Investors in Australia

No placement document, prospectus, product disclosure statement or other disclosure document has been lodged with the Australian Securities and Investments Commission (“ASIC”), in relation to the offering. This prospectus does not constitute a prospectus, product disclosure statement or other disclosure document under the Corporations Act 2001 (the “Corporations Act”), and does not purport to include the information required for a prospectus, product disclosure statement or other disclosure document under the Corporations Act.

Any offer in Australia of the shares may only be made to persons (the “Exempt Investors”) who are “sophisticated investors” (within the meaning of section 708(8) of the Corporations Act), “professional investors” (within the meaning of section 708(11) of the Corporations Act) or otherwise pursuant to one or more exemptions contained in section 708 of the Corporations Act so that it is lawful to offer the shares without disclosure to investors under Chapter 6D of the Corporations Act.

The shares applied for by Exempt Investors in Australia must not be offered for sale in Australia in the period of 12 months after the date of allotment under the offering, except in circumstances where disclosure to investors under Chapter 6D of the Corporations Act would not be required pursuant to an exemption under section 708 of the Corporations Act or otherwise or where the offer is pursuant to a disclosure document which complies with Chapter 6D of the Corporations Act. Any person acquiring shares must observe such Australian on-sale restrictions.

This prospectus contains general information only and does not take account of the investment objectives, financial situation or particular needs of any particular person. It does not contain any securities recommendations or financial product advice. Before making an investment decision, investors need to consider whether the information in this prospectus is appropriate to their needs, objectives and circumstances, and, if necessary, seek expert advice on those matters.

Notice to Prospective Investors in Canada

The distribution of the shares in Canada is being made only in the provinces of Ontario and Quebec on a private placement basis such that the shares may be sold only to purchasers resident in those provinces purchasing as principal that are both “accredited investors” as defined in National Instrument 45-106 Prospectus and Registration Exemptions and “permitted clients” as defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations.  Any resale of the shares must be made in accordance with an exemption from the prospectus requirements and in compliance with the registration requirements of applicable securities laws.

Notice to Prospective Investors in the European Economic Area

In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a “Relevant Member State”), from and including the date on which the European Union Prospectus Directive (the “EU Prospectus Directive”) was implemented in that Relevant Member State (the “Relevant Implementation Date”) an offer of securities described in this prospectus may not be made to the public in that Relevant Member

 

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State prior to the publication of a prospectus in relation to the shares which has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, all in accordance with the EU Prospectus Directive, except that, with effect from and including the Relevant Implementation Date, an offer of securities described in this prospectus may be made to the public in that Relevant Member State at any time:

 

   

to any legal entity which is a qualified investor as defined under the EU Prospectus Directive;

 

   

to fewer than 100 or, if the Relevant Member State has implemented the relevant provision of the 2010 PD Amending Directive, 150 natural or legal persons (other than qualified investors as defined in the EU Prospectus Directive); or

 

   

in any other circumstances falling within Article 3(2) of the EU Prospectus Directive, provided that no such offer of securities described in this prospectus shall result in a requirement for the publication by us of a prospectus pursuant to Article 3 of the EU Prospectus Directive.

For the purposes of this provision, the expression an “offer of securities to the public” in relation to any securities 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 the securities to be offered so as to enable an investor to decide to purchase or subscribe for the securities, as the same may be varied in that Member State by any measure implementing the EU Prospectus Directive in that Member State. The expression “EU Prospectus Directive” means Directive 2003/71/EC (and any amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State) and includes any relevant implementing measure in each Relevant Member State, and the expression “2010 PD Amending Directive” means Directive 2010/73/EU.

Notice to Prospective Investors in Hong Kong

The shares may not be offered or sold by means of any document other than (i) in circumstances that do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap.32, Laws of Hong Kong), or (ii) to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap.571, Laws of Hong Kong) and any rules made thereunder, or (iii) in other circumstances that do not result in the document being a “prospectus” within the meaning of the Companies Ordinance (Cap.32, Laws of Hong Kong), and no advertisement, invitation or document relating to the shares may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), that is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted under the laws of Hong Kong) other than with respect to shares that are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder.

Notice to Prospective Investors in Israel

This document does not constitute a prospectus under the Israeli Securities Law, 5728-1968, and has not been filed with or approved by the Israel Securities Authority. In the State of Israel, this prospectus is being distributed only to, and is directed only at, and any offer of the ordinary shares and is directed only at investors listed in the first addendum, or the Addendum, to the Israeli Securities Law, consisting primarily of joint investment in trust funds, provident funds, insurance companies, banks, portfolio managers, investment advisors, members of the Tel Aviv

 

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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 will be required to submit written confirmation that they fall within the scope of the Addendum.

Notice to Prospective Investors in Japan

The securities have not been and will not be registered under the Financial Instruments and Exchange Law of Japan (the Financial Instruments and Exchange Law) and each Underwriter has agreed that it will not offer or sell any securities, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan), or to others for re-offering or resale, directly or indirectly, in Japan or to a resident of Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Financial Instruments and Exchange Law and any other applicable laws, regulations and ministerial guidelines of Japan.

Notice to Prospective Investors in Qatar

In the State of Qatar, the offer of ordinary shares is made on an exclusive basis to the specifically intended recipient thereof, upon that person’s request and initiative, for personal use only and will not be provided, offered, sold or delivered, at any time, directly or indirectly in the State of Qatar to any other person. This offer shall in no way be construed as a general public offer for the sale of securities to the public or an attempt to do business as a bank, an investment company or otherwise in the State of Qatar. This prospectus supplement, the accompanying prospectus and the ordinary shares have not been registered with, approved or licensed by the Qatar Central Bank or the Qatar Financial Markets Authority or any other regulator in the State of Qatar and may not be publicly distributed. The information contained in this prospectus supplement and the accompanying prospectus is for the recipient only and may not be shared with any third party in Qatar. They are not for general circulation in the State of Qatar, and any distribution or reproduction of this prospectus supplement or the accompanying prospectus by the recipient to third parties in Qatar is not permitted and shall be at the liability of such recipient.

Notice to Prospective Investors in Saudi Arabia

This document (this prospectus supplement and accompanying prospectus) may not be distributed in the Kingdom of Saudi Arabia except to such persons as are permitted under the Offers of Securities Regulations issued by the Capital Market Authority.

The Capital Market Authority does not make any representation as to the accuracy or completeness of this document, and expressly disclaims any liability whatsoever for any loss arising from, or incurred in reliance upon, any part of this document. Prospective purchasers of the securities offered hereby should conduct their own due diligence on the accuracy of the information relating to the securities. If you do not understand the contents of this document, you should consult an authorized financial adviser.

Notice to Prospective Investors in Singapore

This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with

 

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the offer or sale, or invitation for subscription or purchase, of the shares may not be circulated or distributed, nor may the shares be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore, or the SFA, (ii) to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

Where the shares are subscribed or purchased under Section 275 by a relevant person that is: (a) a corporation (which is not an accredited investor) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or (b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and where each beneficiary of which is an accredited investor, shares, debentures and units of shares and debentures of that corporation or the beneficiaries’ rights and interest in that corporation or trust shall not be transferable for six months after that corporation or that trust has acquired the shares under Section 275 except: (1) to an institutional investor under Section 274 of the SFA or to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA; (2) where no consideration is given for the transfer; or (3) by operation of law.

Notice to Prospective Investors in Switzerland

This document, as well as any other material relating to the shares of our ordinary shares, which are the subject of the offering contemplated by this prospectus, does not constitute an issue prospectus pursuant to Article 652a of the Swiss Code of Obligations. The shares will not be listed on the SIX Swiss Exchange and, therefore, the documents relating to the shares, including, but not limited to, this document, do not claim to comply with the disclosure standards of the listing rules of the SIX Swiss Exchange and corresponding prospectus schemes annexed to the listing rules of the SIX Swiss Exchange.

The shares are being offered in Switzerland by way of a private placement, i.e., to a small number of selected investors only, without any public offer and only to investors who do not purchase the shares with the intention to distribute them to the public. The investors will be individually approached by us from time to time.

Notice to Prospective Investors in the United Arab Emirates

UAE. The offering contemplated hereunder has not been approved or licensed by the Central Bank of the United Arab Emirates (“UAE”), the Securities and Commodities Authority of the UAE and/or any other relevant licensing authority in the UAE including any licensing authority incorporated under the laws and regulations of any of the free zones established and operating in the territory of the UAE, in particular the Dubai Financial Services Authority (“DFSA”), a regulatory authority of the Dubai International Financial Centre (“DIFC”). This offering does not constitute a public offer of shares in the UAE, DIFC and/or any other free zone in accordance with the Commercial Companies Law, Federal Law No. 8 of 1984 (as amended), DFSA Offered Securities Rules and NASDAQ Dubai Listing Rules, or otherwise. The ordinary shares may not be offered to the public in the UAE and/or any of the free zones. The ordinary shares may be offered and issued only to a limited number of investors in the UAE or any of its free zones who qualify as sophisticated investors under the relevant laws and regulations of the UAE or the free zone concerned.

Dubai International Financial Centre. This document relates to an Exempt Offer in accordance with the Offered Securities Rules of the Dubai Financial Services Authority. This

 

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document is intended for distribution only to Persons of a type specified in those rules. It must not be delivered to, or relied on by, any other Person. The Dubai Financial Services Authority has no responsibility for reviewing or verifying any documents in connection with Exempt Offers. The Dubai Financial Services Authority has not approved this document nor taken steps to verify the information set out in it, and has no responsibility for it. The ordinary shares to which this document relates may be illiquid and/or subject to restrictions on their resale. Prospective purchasers of the ordinary shares offered should conduct their own due diligence on the shares. If you do not understand the contents of this document you should consult an authorized financial adviser.

Notice to Prospective Investors in the United Kingdom

This document is only being distributed to and is only directed at (i) persons who are outside the United Kingdom or (ii) to investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”) or (iii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as “relevant persons”). The securities are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such securities will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents.

 

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EXPENSES RELATED TO THIS OFFERING

The following table sets forth the costs and expenses, other than underwriting discounts and commissions, payable by us in connection with the offer and sale of ordinary shares in this offering. All amounts listed below are estimates except the SEC registration fee, NASDAQ listing fee and the Financial Industry Regulatory Authority, Inc., or FINRA, filing fee.

 

Itemized expense

  

Amount

 

SEC registration fee

   $ 9,660   

FINRA filing fee

     11,750   

NASDAQ Global Market listing fee

     *   

Printing and engraving expenses

     *   

Transfer agent and registrar fees

     *   

Legal fees and expenses

     *   

Accounting fees and expenses

     *   

Miscellaneous

     *   
  

 

 

 

Total

   $ *   
  

 

 

 

 

* To be provided by amendment

 

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ENFORCEMENT OF CIVIL LIABILITIES

We are incorporated under the laws of the State of Israel. Service of process upon us and upon our directors and officers and the Israeli experts named in this registration statement, substantially all of whom reside outside of the United States, may be difficult to obtain within the United States. Furthermore, because substantially all of our assets and substantially all of our directors and officers are located outside of the United States, any judgment obtained in the United States against us or any of our directors and officers may not be collectible within the United States.

We have been informed by our legal counsel in Israel, Horn & Co, Law Offices, that it may be difficult to assert U.S. securities law claims in original actions instituted in Israel. Israeli courts may refuse to hear a claim based on an alleged violation of U.S. securities laws reasoning that Israel is not the most appropriate forum to bring 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 which can be a time-consuming and costly process. Certain matters of procedure will also be governed by Israeli law.

Subject to specified time limitations and legal procedures, Israeli courts may enforce a U.S. judgment in a civil matter which, subject to certain exceptions, is non-appealable, including a judgment based upon 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 obtained after due process before a court of competent jurisdiction, according to the laws of the state in which the judgment was given and the rules of private international law currently prevailing in Israel;

 

   

the prevailing law of the foreign state in which the judgment was rendered allows for the enforcement of judgments of Israeli courts;

 

   

adequate service of process has been effected and the defendant has had a reasonable opportunity to be heard and to present his or her evidence;

 

   

the judgment is not contrary to public policy of Israel, and the enforcement of the civil liabilities set forth in the judgment is not likely to impair the security or sovereignty of Israel;

 

   

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

 

   

an action between the same parties in the same matter is not pending in any Israeli court at the time the lawsuit is instituted in the foreign court; and

 

   

the judgment is enforceable according to the laws of Israel and according to the law of the foreign state in which the relief was granted.

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 regulations prevailing at the time. Judgment creditors must bear the risk of unfavorable exchange rates.

 

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LEGAL MATTERS

The validity of the ordinary shares being offered by this prospectus and other legal matters concerning this offering relating to Israeli law will be passed upon for us by Horn & Co, Law Offices, Tel Aviv, Israel. On the date of this prospectus, the partners and associates of Horn & Co, Law Offices, own beneficially, directly or indirectly, in the aggregate, less than 1% of the securities of our company. Certain legal matters in connection with this offering relating to U.S. law will be passed upon for us by Goodwin Procter LLP, Boston, Massachusetts. Certain legal matters in connection with this offering will be passed upon for the underwriters by Gornitzky & Co., Tel Aviv, Israel, with respect to Israeli law, and by Cooley LLP, Reston, Virginia, with respect to U.S. law.

EXPERTS

The financial statements as of December 31, 2012 and 2013, and for each of the two years in the period ended December 31, 2013, included in this prospectus have been so included in reliance on the report (which contains an explanatory paragraph relating to our ability to continue as a going concern, as described in note 1 to the financial statements) of Kesselman & Kesselman, a member firm of PricewaterhouseCoopers International Limited, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting. The offices of Kesselman & Kesselman are located at Trade Tower, 25 Hamered Street, Tel-Aviv 68125, Israel.

WHERE YOU CAN FIND ADDITIONAL INFORMATION

We have filed with the SEC a registration statement on Form F-1 under the Securities Act, including relevant exhibits and schedules, with respect to the ordinary shares to be sold in this offering. This prospectus, which constitutes a part of the registration statement, does not contain all of the information contained in the registration statement. You should read the registration statement and its exhibits for further information with respect to us and our shares. Some of these exhibits consist of documents or contracts that are described in this prospectus in summary form. You should read the entire document or contract for the complete terms. You may read and copy the registration statement and its exhibits at the SEC’s Public Reference Room at 100 F Street N.E., Room 1580, Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an Internet website at www.sec.gov, from which you can electronically access the registration statement and its exhibits.

After this offering, we will be subject to the reporting requirements of the Securities Exchange Act of 1934 applicable to foreign private issuers. Because we are a foreign private issuer, the SEC’s rules do not require us to deliver proxy statements or to file quarterly reports on Form 10-Q, among other things. However, we plan to produce quarterly financial reports and furnish them to the SEC not later than 45 days after the end of each of the first three quarters of our fiscal year and to file our annual report on Form 20-F not later than 90 days after the end of our fiscal year. In addition, our “insiders” are not subject to the SEC’s rules that prohibit short-swing trading.

We also maintain a website at http://www.vblrx.com. Information contained in, or accessible through, our website is not a part of this prospectus, and the inclusion of our website address in this prospectus is an inactive textual reference.

 

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INDEX TO FINANCIAL STATEMENTS

 

     Page  

Report of independent registered public accounting firm

     F-2   

Statements of financial position

     F-3   

Statements of comprehensive loss

     F-4   

Statements of changes in equity (capital deficiency)

     F-5   

Statements of cash flows

     F-6   

Notes to the financial statements

     F-7   

 

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LOGO

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders of

VASCULAR BIOGENICS LTD.

We have audited the accompanying statements of financial position of Vascular Biogenics Ltd. (the “Company”) as of December 31, 2012 and 2013 and the related statements of comprehensive loss, changes in equity (capital deficiency) and cash flows for the years then ended. These financial statements are the responsibility of the Company’s board of directors and management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the Company’s board of directors and management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2012 and 2013 and the results of its operations, changes in equity (capital deficiency) and cash flows for the years then ended, in conformity with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”).

As discussed in Note 1a to the financial statements, the Company has recurring losses for the period from inception through December 31, 2013 and presently the Company does not have sufficient cash and other resources to meet its development plans in the following twelve months. These factors raise substantial doubt as to the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1a. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern and do not include any adjustments that might result from the outcome of this uncertainty.

 

Tel-Aviv, Israel

  Kesselman & Kesselman

March 24, 2014

  Certified Public Accountants (lsr.)
  A member firm of PricewaterhouseCoopers International Limited

 

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Kesselman & Kesselman, Trade Tower, 25 Hamered Street, Tel-Aviv 6812508, Israel,

 

P.O Box 50005 Tel-Aviv 6150001 Telephone: +972 -3- 7954555, Fax:+972 -3- 7954556, www.pwc.com/il


Table of Contents

VASCULAR BIOGENICS LTD.

STATEMENTS OF FINANCIAL POSITION

 

          December 31,     Pro forma
Shareholders’
Equity
 
      

Note

   2012     2013     2013  
                      (unaudited)  
          U.S. dollars in thousands  

Assets

         

Current assets:

         

Cash and cash equivalents

   5a    $ 5,936     $ 9,377    

Short-term bank deposits

   5b      8,023       1,494    

Other current assets

   12a      663       507    
     

 

 

   

 

 

   

Total current assets

        14,622       11,378    
     

 

 

   

 

 

   

Non-current assets:

         

Property and equipment

   6      573       436    

Long-term prepaid expenses

        29       13    
     

 

 

   

 

 

   

Total non-current assets

        602       449    
     

 

 

   

 

 

   

Total assets

      $ 15,224     $ 11,827    
     

 

 

   

 

 

   

Liabilities and equity (capital deficiency)

         

Current liabilities:

         

Accounts payable:

         

Trade

      $ 1,309     $ 1,348    

Other

   12b      1,115       2,897    
     

 

 

   

 

 

   

Total current liabilities

        2,424       4,245    
     

 

 

   

 

 

   

Non-current liabilities:

         

Convertible loan

   8             31,039          

Severance pay obligations, net

   7      128       126    
     

 

 

   

 

 

   

Total non-current liabilities

        128        31,165     
     

 

 

   

 

 

   

Total liabilities

        2,552       35,410    
     

 

 

   

 

 

   

Commitments

   9       

Equity (capital deficiency):

   10       

Ordinary Shares, NIS 0.01 par value:

         

Authorized—as of December 31, 2012 and 2013, 2,369,005 and 2,044,005 shares, respectively; issued and outstanding—as of December 31, 2012 and 2013, 244,054 shares

        1        1      $ 9   

Preferred Shares, NIS 0.01 par value:

         

Authorized—as of December 31, 2012 and 2013, 2,630,995 and 2,955,995 shares, respectively; issued and outstanding—as of December 31, 2012 and 2013, 2,237,678 shares

        7        7          

Other comprehensive income

        7        29        29   

Additional paid in capital

        105,040       86,133       122,109   

Accumulated deficit

        (92,383     (109,753     (109,753
     

 

 

   

 

 

   

 

 

 

Total equity (capital deficiency)

        12,672       (23,583   $ 12,394   
     

 

 

   

 

 

   

 

 

 

Total liabilities and equity (capital deficiency)

      $ 15,224     $ 11,827    
     

 

 

   

 

 

   

The accompanying notes are an integral part of the financial statements.

 

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VASCULAR BIOGENICS LTD.

STATEMENTS OF COMPREHENSIVE LOSS

 

            Year ended December 31,  
      

Note

    

        2012        

   

        2013        

 
           

U.S. dollars in thousands

 

Research and development expenses, net

     12c       $ 10,572     $ 13,508   

General and administrative expenses

     12d         1,897       2,452  
     

 

 

   

 

 

 

Operating loss

        12,469       15,960  
     

 

 

   

 

 

 

Financial income

     14         (295     (240

Financial expenses:

       

Loss from change in fair value of convertible loan

     8,14                1,638   

Other financial expenses

     14         51       12  
     

 

 

   

 

 

 

Financial expenses (income), net

        (244     1,410   
     

 

 

   

 

 

 

Loss

        12,225       17,370  

Other comprehensive income:

       

Items that will not be reclassified to profit or loss :
Re-measurements of post-employment benefit obligation

        (7     (22
     

 

 

   

 

 

 

Comprehensive loss

      $ 12,218     $ 17,348  
     

 

 

   

 

 

 
           

U.S. dollars

 

Loss per Ordinary Share:

       

Basic and diluted

     13       $ 50.09     $ 71.17   
     

 

 

   

 

 

 

Weighted average Ordinary Shares outstanding:

       

Basic and diluted

        244,054        244,054   
     

 

 

   

 

 

 

Pro forma loss per share (unaudited):

       

Basic and diluted

        $ 5.87   
       

 

 

 

Weighted average number of Ordinary Shares used in computing pro forma loss per share (unaudited):

       

Basic and diluted

          2,678,197   
       

 

 

 

The accompanying notes are an integral part of the financial statements.

 

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VASCULAR BIOGENICS LTD.

STATEMENTS OF CHANGES IN EQUITY (CAPITAL DEFICIENCY)

 

    Number of shares     Ordinary
Shares
    Preferred
Shares
    Other
comprehensive
income
    Additional
paid in
capital
    Accumulated
deficit
    Total  
   

Ordinary

   

Preferred

    U.S. dollars in thousands  

Balance at January 1, 2012

    244,054       2,237,678     $ 1      $ 7      $      $ 104,575      $ (80,158   $ 24,425  

Changes during the year ended December 31, 2012:

               

Comprehensive loss

                                7               (12,225     (12,218

Share based payments-value of employees and non-employees services

                                       465               465  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance at December 31, 2012

    244,054       2,237,678       1        7        7        105,040        (92,383     12,672  

Changes during the year ended December 31, 2013:

               

Comprehensive loss

                                22               (17,370     (17,348

Excess of fair value of convertible loan, at date of inception, over the amount received

                                       (19,401            (19,401

Share based payments—value of employees and non-employees services

                                       494               494  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance at December 31, 2013

    244,054       2,237,678     $ 1      $ 7      $ 29      $ 86,133      $ (109,753   $ (23,583
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

The accompanying notes are an integral part of the financial statements

 

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VASCULAR BIOGENICS LTD.

STATEMENTS OF CASH FLOWS

 

    

Year ended December 31,

 
    

      2012      

   

      2013      

 
     U.S. dollars in thousands  

Cash flows from operating activities:

    

Loss for the year

   $ (12,225   $ (17,370

Adjustments required to reflect net cash used in operating activities (see Appendix A)

     (1,225     4,194  

Interest received

     442       47  
  

 

 

   

 

 

 

Net cash used in operating activities

     (13,008     (13,129
  

 

 

   

 

 

 

Cash flows from investing activities:

    

Purchase of property and equipment

     (155     (32

Short-term deposits, net

     6,696       6,510  
  

 

 

   

 

 

 

Net cash generated from investing activities

     6,541       6,478  
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Convertible loan

            10,000  
  

 

 

   

 

 

 

Net cash generated from financing activities

            10,000  
  

 

 

   

 

 

 

Net Increase (decrease) in cash and cash equivalents

     (6,467     3,349  

Cash and cash equivalents at beginning of the year

     12,309       5,936  

Exchange gains on cash and cash equivalents

     94       92   
  

 

 

   

 

 

 

Cash and cash equivalents at end of the year

   $ 5,936     $ 9,377  
  

 

 

   

 

 

 

Appendix A:

    

Adjustments required to reflect net cash used in operating activities:

    

Depreciation

   $ 197     $ 169  

Interest income

     (252     (28

Loss from change in fair value of convertible loan

            1,638   

Exchange gains on cash and cash equivalents

     (94     (92

Net changes in severance pay

     14       20   

Share based payments

     465       494  
  

 

 

   

 

 

 
     330       2,201   
  

 

 

   

 

 

 

Changes in working capital:

    

Decrease (increase) in other current assets

     (358     156  

Decrease in long term prepaid expenses

     8       16  

Increase (decrease) accounts payable:

    

Trade

     81       39  

Other

     (1,286     1,782  
  

 

 

   

 

 

 
     (1,555     1,993  
  

 

 

   

 

 

 
   $ (1,225   $ 4,194  
  

 

 

   

 

 

 

The accompanying notes are an integral part of the financial statements.

 

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VASCULAR BIOGENICS LTD.

NOTES TO THE FINANCIAL STATEMENTS

Note 1—General Information

 

  a. General

Vascular Biogenics Ltd. (the “Company”) was incorporated on January 27, 2000 as a company limited by shares under the name Medicard Ltd. In January 2003, the Company changed its name to Vascular Biogenics Ltd. The Company is a clinical-stage biopharmaceutical company committed to the discovery, development and commercialization of first-in-class treatments for cancer and immune-inflammatory diseases. Since its inception, the Company has been engaged in research and development activities.

The financial information has been prepared on a going concern basis, which assumes the Company will continue to realize its assets and discharge its liabilities in the normal course of business. Since the Company is engaged in research and development activities, it has not yet derived income from its activity and has incurred through December 31, 2013 accumulated losses in the amount of $109 million.

The Company’s management is of the opinion that its available funds as of December 31, 2013 will not allow the Company to execute its development plans in the upcoming year. Management is in the process of evaluating various financing alternatives in the public or private equity markets, as the Company will need to finance future research and development activities and general and administrative expenses through fund raising. The Company’s continuation as a going concern is dependent on its ability to obtain additional financing as may be required until it becomes profitable. However, there is no certainty about the Company’s ability to obtain such funding.

These factors raise substantial doubt as to the Company’s ability to continue as a going concern.

These financial statements do not include any adjustments that may be necessary should the Company be unable to continue as a going concern.

 

  b. Approval of financial statements

These financial statements were approved by the Board of Directors on March 24, 2014.

Note 2—Summary of Significant Accounting Policies

 

  a. Basis of preparation of the financial statements

The financial statements of the Company as of December 31, 2012 and 2013 and for each of the two years ended on those dates have been prepared in accordance with International Financial Reporting Standards, (“IFRS”), as issued by the International Accounting Standards Board (“IASB”).

The significant accounting policies described below have been applied consistently in relation to all the periods presented, unless otherwise stated.

The financial statements have been prepared under the historical cost convention, subject to adjustments in respect of revaluation of financial assets and financial liabilities at fair value through profit or loss.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the

 

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VASCULAR BIOGENICS LTD.

NOTES TO THE FINANCIAL STATEMENTS (Continued)

Note 2—Summary of Significant Accounting Policies (Continued)

 

process of applying the Company’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in note 3.

Actual results could differ from those estimates and assumptions.

 

  b. Functional and presentation currency

 

  1) Functional and presentation currency

Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The financial statements are presented in U.S. dollar ($), which is the Company’s functional and presentation currency.

 

  2) Transaction and balances

Foreign currency transactions are translated into the functional currency using exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the income statement.

All foreign exchange gains and losses are presented in the statements of comprehensive loss within financial income or expenses.

 

  3) Exchange rates and linkage basis

Set forth below are data regarding the exchange rates of certain currencies in relation to the U.S. dollar:

 

     Exchange
rate of one

Euro
    Exchange
rate of one

NIS*
 

At end of year:

    

2012

     1.318        0.268   

2013

     1.377        0.288   

Increase during the year:

    

2012

     2.0     2.4

2013

     4.5     7.5

 

  * NIS—New Israeli Shekel

 

  c. Cash and cash equivalents

Cash and cash equivalents include cash on hand and short-term bank deposits (with original maturities of three months or less) that are not restricted as to withdrawal or use, and are therefore considered to be cash equivalents.

 

  d. Property and equipment

 

  1) All property and equipment (including leasehold improvements) are stated at historical cost less accumulated depreciation and impairment. Historical cost includes expenditures that are directly attributable to the acquisition of the items.

Repairs and maintenance are charged to the income statement during the period in which they are incurred.

 

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VASCULAR BIOGENICS LTD.

NOTES TO THE FINANCIAL STATEMENTS (Continued)

Note 2—Summary of Significant Accounting Policies (Continued)

 

  2) The assets are depreciated using the straight-line method to allocate their cost over their estimated useful lives.

Annual rates of depreciation are as follows:

 

     %  

Laboratory equipment

     9-15   

Computers

     25-33   

Office furniture and equipment

     7   

An asset’s carrying amount is written down immediately to its recoverable amount if the carrying amount is greater than its estimated recoverable amount.

Leasehold improvements in buildings under operating leases are depreciated using the straight-line method over the shorter of the term of the lease or the estimated useful life of the improvements.

 

  3) Gains and losses on disposals are determined by comparing proceeds with the associated carrying amount. These are included in the statement of comprehensive loss.

 

  e. Impairment of non-financial assets

Assets that are subject to depreciation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset fair value less costs to dispose and its value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units).

Non-financial assets that suffered from impairment are reviewed for possible reversal of the impairment at each reporting date.

Through December 31, 2013, no impairment has been identified.

 

  f. Financial assets

 

  1) Classification

The Company classifies its financial assets as “Loans and Receivables.” The classification depends on the purpose for which each financial asset was acquired. The Company’s management determines the classification of financial assets at initial recognition.

Receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. The Company’s receivables include “other accounts receivable,” “cash and cash equivalents,” and “short-term bank deposits.”

 

  2) Recognition and measurement

Ordinary purchases and sales of financial assets are carried at the settlement date, the date on which the asset is delivered to or by the Company.

Financial assets are derecognized when the rights to receive cash flows from the assets have expired or have been transferred and the Company has transferred substantially all risks and rewards of ownership of the assets.

 

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VASCULAR BIOGENICS LTD.

NOTES TO THE FINANCIAL STATEMENTS (Continued)

Note 2—Summary of Significant Accounting Policies (Continued)

 

  3) Impairment of financial assets

The Company assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. The amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The asset’s carrying amount is reduced and the amount of the loss is recognized in the statement of comprehensive loss.

As of December 31, 2013, the Company has not recognized impairment.

 

  g. Financial Liabilities

 

  1) Financial liabilities at fair value through profit or loss

This category includes the Company’s convertible loan, which was designated by management to be recorded at fair value through profit or loss (see note 8). The loan is convertible into a variable number of Preferred Shares.

Gains or losses arising from changes in the fair value of financial liabilities at fair value through profit or loss are presented in the statement of comprehensive loss under “financial income or expenses.”

 

  2) Other financial liabilities

Other financial liabilities are initially measured at fair value, net of transaction costs. In subsequent periods, the other financial liabilities are presented at amortized cost. Any difference between the consideration (net of transaction costs) and the redemption value is accreted to profit or loss over the term of the liability, using the effective interest method.

Financial liabilities are classified as current liabilities, unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the end of the reporting period, in which case they are classified as noncurrent liabilities.

 

  h. Share capital

Ordinary and Preferred Shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are included in equity as a deduction from the proceeds.

The Company’s Preferred Shares are convertible into Ordinary Shares upon the consummation of a qualified Initial Public Offering (“IPO”) (see also note 10). The conversion rate for the Preferred Shares is calculated by reference to the original issue price of the relevant Preferred Shares, adjusted for any share splits, share distributions and certain anti-dilution protections.

The anti-dilution protection is under the control of the Company and accordingly the Preferred Shares are classified as equity.

 

  i. Deferred income tax

Deferred taxes are recognized using the liability method on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial

 

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VASCULAR BIOGENICS LTD.

NOTES TO THE FINANCIAL STATEMENTS (Continued)

Note 2—Summary of Significant Accounting Policies (Continued)

 

statements. However, deferred income taxes are not recognized if they arise from the initial recognition of an asset or liability which is not part of a business combination, which at the time of the transaction no effect on the profit or the loss—whether for accounting purposes or for tax reporting purposes.

Deferred income tax assets are recognized only to the extent that it is probable that future taxable income will be available against which the temporary differences can be utilized. Deferred income tax is determined using tax rates and laws that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.

In the absence of expectation of taxable income in the future, no deferred tax assets have been recorded in the financial statements.

 

  j. Employee benefits

 

  1) Post employment benefit obligation

Israeli labor laws and the Company’s agreements require the Company to pay retirement benefits to employees terminated or leaving their employment in certain other circumstances. Most of the Company’s employees are covered by a defined contribution plan under Section 14 of the Israel Severance Pay Law from the beginning of employment.

With respect to the remaining employees, which are covered by a defined contribution plan under Section 14 of the Israel Severance Pay Law only from January 1, 2010, the Company records a liability in its statement of financial position for defined benefit plans that represents the present value of the defined benefit obligation as of the statement of financial position date, net of the fair value of plan assets.

The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of Israeli Government bonds that are denominated in the currency in which the benefits will be paid (NIS) and that have terms to maturity approximating the terms of the related liability, since the Company’s management is of the opinion that Israel does not have a deep market for high-quality corporate bonds.

Remeasurement gains and losses arising from adjustments to reflect actual experience and changes in actuarial assumptions are charged or credited to equity in other comprehensive loss in the period in which they arise.

An Amendment to IAS 19—“Employee Benefits”—became effective on January 1, 2013. The amendment replaces interest costs and expected returns on plan assets with a net interest amount that is calculated by applying the discount rate to the net defined benefit liability (assets). Due to the implementation of the amendment, the Company recorded in 2012 and 2013, $7 thousand and $22 thousand, respectively, in other comprehensive loss.

 

  2) Vacation and recreation pay

Under Israeli law, each employee is entitled to vacation days and recreation pay, both computed on an annual basis. The entitlement is based on the length of the

 

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VASCULAR BIOGENICS LTD.

NOTES TO THE FINANCIAL STATEMENTS (Continued)

Note 2—Summary of Significant Accounting Policies (Continued)

 

employment period. The Company recognizes a liability and an expense for vacation and recreation pay, based on the entitlement of each employee.

 

  k. Share-based payments

The Company operates a number of equity-settled, share-based compensation plans to employees (as defined in IFRS 2 “Share-Based Payments”), directors and service providers. As part of the plans, the Company grants employees and service providers, from time to time and at its discretion, options to purchase Company shares. The fair value of the employee and service provider services received in exchange for the grant of the options is recognized as an expense in profit or loss and is carried to accumulated deficit under equity. The total amount recognized as an expense over the vesting period of the options (the period during which all vesting conditions are expected to be met) was determined as follows:

 

  1) Share based payments to employees and directors by reference to the fair value of the options granted at date of grant.

 

  2) Share based payments to service providers by reference to the fair value of the service provided.

Vesting conditions are included in assumptions about the number of options that are expected to vest. The total expense is recognized over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied.

At the end of each reporting period, the Company revises its estimates of the number of options that are expected to vest based on the vesting conditions. The Company recognizes the impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to additional paid-in capital.

When options are exercised, the Company issues new shares, with proceeds less directly attributable transaction costs recognized as share capital (par value) and additional paid-in capital.

 

  l. Provisions

Provisions are recognized when the Company has a present legal or constructive obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation. Provisions are measured by discounting the future cash outflow at a pretax interest rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The carrying amount of the provision is adjusted in each reporting period in order to reflect the passage of time and the changes in the carrying amounts are carried to the statement of comprehensive loss.

 

  m. Research and development expenses

Research expenses are charged to profit or loss as incurred. An intangible asset arising from development of the Company’s products is recognized if all of the following conditions are met:

 

   

It is technically feasible to complete the intangible asset so that it will be available for use;

 

   

Management intends to complete the intangible asset and use it or sell it;

 

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VASCULAR BIOGENICS LTD.

NOTES TO THE FINANCIAL STATEMENTS (Continued)

Note 2—Summary of Significant Accounting Policies (Continued)

 

   

There is an ability to use or sell the intangible asset;

 

   

It can be demonstrated how the intangible asset will generate probable future economic benefits; and

 

   

Adequate technical, financial and other resources to complete the development and to use or sell the intangible asset are available; and costs associated with the intangible asset during development can be measured reliably.

Other development costs that do not meet the above criteria are recognized as expenses as incurred. Development costs previously recognized as an expense are not recognized as an asset in a subsequent period.

As of December 31, 2012 and 2013, the Company has not yet capitalized any development costs.

 

  n . Government grants

Government grants, which are received from the Israeli Office of Chief Scientist (the “OCS”) by way of participation in research and development that is conducted by the Company, fall within the scope of “forgivable loans,” as set forth in International Accounting Standard 20 “Accounting for Government Grants and Disclosure of Government Assistance” (“IAS 20”).

As approved by the OCS, the grants are received in installments as the program progresses. The Company recognizes each forgivable loan on a systematic basis at the same time the Company records, as an expense, the related research and development costs for which the grant is received, provided that there is reasonable assurance that (a) the Company complies with the conditions attached to the grant, and (b) it is probable that the grant will be received (usually upon receipt of approval notice). The amount of the forgivable loan is recognized based on the participation rate approved by the OCS; thus, a forgivable loan is recognized as a receivable when approved research and development costs have been incurred before grant funds are received.

Since at the time of grant approval there is reasonable assurance that the Company will comply with the forgivable loan conditions attached to the grant, and it is not probable that the related research and development will generate revenue, grant income is recorded against the related research and development expenses in the statement of comprehensive loss. If in subsequent periods it becomes probable that royalties will be owed to the OCS, then a liability is recorded at that time.

 

  o. Operating lease

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the income statement on a straight-line basis over the period of the lease.

 

  p. Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments. The Company operates in one operating segment.

 

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Table of Contents

VASCULAR BIOGENICS LTD.

NOTES TO THE FINANCIAL STATEMENTS (Continued)

Note 2—Summary of Significant Accounting Policies (Continued)

 

  q. Fair value measurement

On January 1, 2013, IFRS 13 came into effect. IFRS 13 aims to improve consistency and reduce complexity by providing a precise definition of ‘fair value’ and a single source of fair value measurement and disclosure requirements for use across IFRS. The requirements do not extend the use of fair value accounting, but provide guidance on how it should be applied where its use is already required or permitted by other standards within IFRS. IFRS 13 is applied prospectively as from January 1, 2013. The adoption of IFRS 13 did not have an effect on the Company’s financial statements.

 

  r. Loss per Ordinary Share

Basic earnings (loss) per share are calculated by dividing the loss attributable to equity holders of the Company by the weighted average number of Ordinary Shares issued and outstanding during the year.

The diluted earnings (loss) per share is calculated by adjusting the weighted average number of outstanding Ordinary Shares, assuming conversion of all dilutive potential shares. The Company’s dilutive potential shares consist of Preferred Shares and options granted to employees and service providers. The dilutive potential shares were not taken into account in computing loss per share in 2012 and 2013, as their effect would not have been dilutive.

 

  s. Unaudited pro forma shareholders’ equity information

Upon the completion of the Company’s initial public offering, all outstanding Preferred Shares will automatically convert into Ordinary Shares. The unaudited pro forma shareholders’ equity information gives effect to the conversion of the Preferred Shares, including the Preferred Shares issued upon conversion of the Convertible Loan, as of December 31, 2013, as well as the sale of 91,798 Series E Preferred Shares in consideration of $4.9 million as detailed in Note 16.

 

  t. New standards, amendments to standards or interpretations

The following new standards, amendments to standards or interpretations have been issued, but are not effective for the financial year beginning 1 January 2013, and have not been early adopted:

IFRS 9 Financial instruments , is the first standard issued as part of a wider project to replace IAS 39. IFRS 9 retains but simplifies the mixed measurement model and establishes two primary measurement categories for financial assets: amortized cost and fair value. The basis of classification depends on the entity’s business model and the contractual cash flow characteristics of the financial asset. The guidance in IAS 39 on impairment of financial assets and hedge accounting continues to apply. The 2013 amendments to IFRS 9 have removed the previous mandatory effective date of January 1, 2015, but the standard is available for immediate application. The Company has not yet assessed the full impact of the standard.

Note 3—Critical Accounting Estimates and Judgements

Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

 

F-14


Table of Contents

VASCULAR BIOGENICS LTD.

NOTES TO THE FINANCIAL STATEMENTS (Continued)

Note 3—Critical Accounting Estimates and Judgements (Continued)

 

The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:

Share-based payments

With respect to grants to employees, the value of the labor services received from them in return is measured on the date of grant, based on the fair value of the equity instruments granted to the employees. In order to measure the fair value of the labor service received, the Company first measured the share value by using the income approach method which is an analysis that involves forecasting the appropriate cash flow stream over an appropriate period and then discounting it back to a present value at an appropriate discount rate. This discount rate should consider the time value of money, inflation, and the risk inherent in ownership of the asset or security interest being valued. Once the share value was estimated, the Company used the Black-Scholes model to value the equity instrument. Since the Company is not publicly traded, it looked for comparable companies in the healthcare sector to set the volatility assumption and estimated the equity instrument’s life.

The Company’s management estimates the fair value of the options granted to consultants based on the value of services receivable over the vesting period of the applicable options.

The value of the transactions, measured as aforesaid, is expensed over the period during which the right of the employees and non-employees to exercise or receive the underlying equity instruments vests; commensurate with every periodic recognition of the expense, a corresponding increase is recorded to additional paid-in capital, included under the Company’s equity (see also note 10).

The fair value of convertible loan

To determine the fair value of the convertible loan, the Company uses its judgment to select a variety of methods and make assumptions that are mainly based on market conditions existing at the end of each reporting period. The estimated fair value of these loans might have changed had Company’s management used different estimates and assumptions.

Note 4—Financial Risk Management

 

  a. Financial risk management

 

  1) Financial risk factors

The Company’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk and price risk), credit and interest risks and liquidity risk. The Company’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Company’s financial performance.

 

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Table of Contents

VASCULAR BIOGENICS LTD.

NOTES TO THE FINANCIAL STATEMENTS (Continued)

Note 4—Financial Risk Management (Continued)

 

Risk management is performed by the Chief Financial Officer of the Company, who identifies and evaluates financial risks in close cooperation with the Company’s Chief Executive Officer.

The Company’s finance department is responsible for carrying out risk management activities in accordance with policies approved by its Board of Directors. The Board of Directors provides guidelines for overall risk management, as well as policies dealing with specific areas, such as exchange rate risk, interest rate risk, credit risk, use of financial instruments, and investment of excess cash. In order to minimize exposure to market risk and credit risk, the Company invested the majority of its cash balances in highly-rated bank deposits.

The Company does not use financial instruments for hedging activity.

 

  2) Credit and interest risk

Credit and interest risk arises from cash and cash equivalents and deposits with banks. A substantial portion of the liquid instruments of the Company are invested in short-term deposits in a leading Israeli bank. The Company estimates that since the liquid instruments are mainly invested for the short-term and with a highly-rated institution, the credit and interest risk associated with these balances is immaterial.

 

  3) Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding through an adequate amount of committed credit facilities.

Management monitors rolling forecasts of the Company’s liquidity reserve (comprising cash and cash equivalents and deposits). This is generally carried out based on the expected cash flows in accordance with practice and limits set by the management of the Company.

The Company is in a research stage and has not yet generated revenues. It is therefore exposed to liquidity risk, taking into consideration the forecasts of cash flows required to finance its investments and other activities. (See also note 1a).

 

  4) Market risk—Foreign exchange risk

The Company might be exposed to foreign exchange risk as a result of making payments to employees or service providers and investment of some liquidity in currencies other than the U.S. dollar (the functional currency of the Company). The Company manages the foreign exchange risk by aligning the currencies for holding liquidity with the currencies of expected expenses, based on the expected cash flows of the Company. Had the dollar been stronger by 5% against the NIS, assuming all other variables remained constant, the Company would have recognized an additional expense of $21 thousand and $82 thousand in profit or loss for the years ended December 31, 2012 and 2013, respectively.

 

  5) Interest rate risk

The Company has no significant interest bearing liabilities except for the convertible loan. The Company’s interest rate risk arises from interest bearing cash deposits and other short term investments, and therefore the income and operating cash flows are

 

F-16


Table of Contents

VASCULAR BIOGENICS LTD.

NOTES TO THE FINANCIAL STATEMENTS (Continued)

Note 4—Financial Risk Management (Continued)

 

dependent on changes in market interest rates. NIS cash deposits bear variable interest rate and the cash deposits in other currencies bear fixed interest rate.

 

  b. Capital risk management

The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to provide returns for shareholders and to maintain an optimal capital structure to reduce the cost of capital. It should be noted that the Company is in the research and development stage and has not yet generated revenues. (See also note 1a).

 

  c. Fair value of financial instruments

The different levels of valuation of financial instruments are defined as follows:

 

Level 1    Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2    Inputs, other than quoted prices included within level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices).
Level 3    Inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The fair value of financial instruments traded in active markets is based on quoted market prices at the dates of the statements of financial position.

A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis. These instruments are included in level 1.

The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. These valuation techniques maximize the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.

As of December 31, 2012 and 2013, the fair value of financial instruments (cash and cash equivalents, short term bank deposits, accounts receivable and accounts payable) are assumed to approximate their carrying value.

 

F-17


Table of Contents

VASCULAR BIOGENICS LTD.

NOTES TO THE FINANCIAL STATEMENTS (Continued)

Note 4—Financial Risk Management (Continued)

 

  d. Classification of financial instruments by groups

 

     Loans and
receivables
     Total  
     U.S. dollars in thousands  

As of December 31, 2012

     

Cash and cash equivalents

   $ 5,936       $ 5,936   

Bank deposits

     8,023         8,023   

Other current assets (except for prepaid expenses)

     583         583   
  

 

 

    

 

 

 
   $ 14,542       $ 14,542   
  

 

 

    

 

 

 

As of December 31, 2013

     

Cash and cash equivalents

   $ 9,377       $ 9,377   

Bank deposits

     1,494         1,494   

Other current assets (except for prepaid expenses)

     380         380   
  

 

 

    

 

 

 
   $ 11,251       $ 11,251   
  

 

 

    

 

 

 

 

     Financial
liabilities at fair
value through
profit or loss
     Financial
liabilities at
amortized cost
     Total  
     U.S. dollars in thousands  

As of December 31, 2012

        

Trade and other payable

   $       $ 2,424       $ 2,424   
  

 

 

    

 

 

    

 

 

 

As of December 31, 2013

        

Trade and other payable

   $       $ 4,245       $ 4,245   

Convertible loan (see note 8)

     31,039                 31,039   
  

 

 

    

 

 

    

 

 

 
   $ 31,039       $ 4,245       $ 35,284   
  

 

 

    

 

 

    

 

 

 

 

  e. Composition of monetary balances

The composition of financial instruments by currency:

As of December 31, 2012:

 

     Dollars      NIS      Pound
sterling
     Euro      Total  
     U.S. dollars in thousands  

Assets:

              

Cash and cash equivalents

   $ 2,361       $ 1,446       $ 377       $ 1,752       $ 5,936   

Short term bank deposits

     8,023                                 8,023   

Other current assets

             583                         583   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
     10,384         2,029         377         1,752         14,542   

Liabilities—

              

accounts payable and accrued expenses

     598         1,489         192         145         2,424   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net assets (liabilities)

   $ 9,786       $ 540       $ 185       $ 1,607       $ 12,118   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

F-18


Table of Contents

VASCULAR BIOGENICS LTD.

NOTES TO THE FINANCIAL STATEMENTS (Continued)

Note 4—Financial Risk Management (Continued)

 

As of December 31, 2013:

 

     Dollars     NIS      Pound
Sterling
    Euro      Total  
     U.S. dollars in thousands  

Assets:

            

Cash and cash equivalents

   $ 7,035     $ 833       $ 13     $ 1,496       $ 9,377  

Short-term bank deposits

            839                655         1,494  

Other current assets (except for prepaid expenses)

     8       372                        380  
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 
     7,043       2,044         13       2,151         11,251  
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Liabilities:

            

Accounts payable and accrued expenses

     1,396       1,613        172       1,064         4,245   

Convertible loan

     31,039                              31,039  
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 
     32,435       1,613        172       1,064         35,284  
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Net assets (liabilities)

   $ (25,392   $ 431       $ (159   $ 1,087       $ (24,033
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Note 5—Cash and Cash Equivalents and Bank Deposits

 

  a. Cash and cash equivalents

 

     December 31,  
     2012      2013  
    

U.S. dollars

in thousands

 

Cash in bank

   $ 1,218       $ 2,382   

Short-term bank deposits (up to three months)

     4,718         6,995   
  

 

 

    

 

 

 
   $ 5,936       $ 9,377   
  

 

 

    

 

 

 

 

  b. Short-term bank deposits

The bank deposits are for terms of three months to one year and bear interest at annual rates of 0.27%—1.077%.

 

F-19


Table of Contents

VASCULAR BIOGENICS LTD.

NOTES TO THE FINANCIAL STATEMENTS (Continued)

Note 6—Property and Equipment

Composition of assets, grouped by major classifications, and changes therein is as follows:

 

    Cost     Accumulated depreciation        
      Balance at
beginning
of year
    Additions
during
the year
    Balance
at end
of year
    Balance at
beginning
of year
    Additions
during
the year
    Balance
at end
of year
    Net book
value
 
    U.S. dollars in thousands  

Year ended December 31, 2012:

         

Laboratory equipment

  $ 1,573      $ 35      $ 1,608      $ 1,129      $ 136      $ 1,265      $ 343   

Computers

    285        14        299        202        37        239        60   

Office furniture and equipment

    65               65        38        4        42        23   

Leasehold improvements

    495        106        601        434        20        454        147   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  $ 2,418      $ 155      $ 2,573      $ 1,803      $ 197      $ 2,000      $ 573   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Year ended December 31, 2013:

  

       

Laboratory equipment

  $ 1,608      $ 13      $ 1,621      $ 1,265      $ 111      $ 1,376      $ 245   

Computers

    299        19        318        239        35        274        44   

Office furniture and equipment

    65               65        42        4        46        19   

Leasehold improvements

    601               601        454        19        473        128   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  $ 2,573      $ 32      $ 2,605      $ 2,000      $ 169      $ 2,169      $ 436   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Note 7—Severance Pay Obligations, net

 

  a. The Company has both defined benefit and defined contribution plans.

The Company has no obligation relating to the defined contribution plans. The obligation under the defined benefit plans is covered partly by regular deposits with severance pay funds and by purchase of insurance policies.

 

  b. The Company’s obligation to make pension payments is covered by regular deposits with defined contribution plans. The amounts deposited are not reflected in the statements of financial position.

 

  c. The amounts recognized in the statements of financial position were as follows:

 

     Year ended
December 31,
 
     2012      2013  
    

U.S. dollars

in thousands

 

Severance pay obligations

   $ 534       $ 459   

Fair value of plan assets

     406         333   
  

 

 

    

 

 

 

Liability in the statements of financial position

   $ 128       $ 126   
  

 

 

    

 

 

 

Amounts credited to other comprehensive income for the years ended December 31, 2012 and 2013 were $7 thousand and $22 thousand, respectively .

 

F-20


Table of Contents

VASCULAR BIOGENICS LTD.

NOTES TO THE FINANCIAL STATEMENTS (Continued)

Note 7—Severance Pay Obligations, net (Continued)

 

The principal actuarial assumptions used for December 31, 2012 and 2013 were as follows:

 

Discount rate

     3.7

Future salary increases

     4.5

 

  d. The amounts recorded as an employee benefit expense in respect of defined contribution plans for the years ended December 31, 2012 and 2013 were $259 thousand and $270 thousand, respectively.

Note 8—Convertible Loan

On July 1, 2013, the Company closed a Convertible Bridge Loan Agreement (“CLA”) with some of its shareholders and related parties. The CLA provided for the infusion of an aggregate amount of $10 million in the form of a convertible bridge loan (the “Convertible Loan”), to bridge for the Company’s cash needs until a financing opportunity is achieved. The Convertible Loan is denominated in U.S. dollars and bears an annual interest rate of 10%. The principal shall automatically convert upon the earlier of: (i) a financing round for investment in preferred convertible shares of the Company superior to the Preferred D Shares in liquidation preference, in which case the conversion will automatically be into the new round Preferred Shares at an average discount of 22.7%, (ii) immediately prior to an IPO, in which case the conversion will automatically be into 256,394 Preferred D-1 shares or (iii) on April 30, 2014, in which case the conversion will automatically be into 256,394 Preferred D-1 Shares. The lenders have the right to demand repayment of the principal amount plus interest only on the occurrence of the earlier of the following events: (i) an event of acceleration as defined in the CLA, (ii) any of the distribution events described in the Articles of Association or (iii) the consummation by the Company of a transaction generating proceeds to the Company of at least $20 million.

This Convertible Loan was entered into with shareholders and related parties of the Company, it contains an embedded derivative (the conversion option), and was not issued at fair value. The Company designated the entire loan as well as the conversion option as a liability at fair value through profit or loss.

The Company prepared a valuation of the fair value of the Convertible Loan (a Level 3 valuation). The Company utilized the Binomial Model based on the following parameters:

 

Parameters

   July 1, 2013     December 31, 2013  

Volatility

     36     40

Risk-free interest rate

     0.11     0.001

Value of one Preferred D-1 Share

   $ 114.68      $ 121.07   

The fair value of the Convertible Loan on July 1, 2013 was $29.4 million. The main factors affecting the value of the Preferred D-1 Share (on which the fair value of the Convertible Loan is based) are the following:

 

  1. The preference amount that the holders of Preferred D-1 Shares are entitled to in a liquidation or distribution event is $50.46 per share. At the date of purchase, the price utilized was discounted to a weighted average price of $39 per share.

 

F-21


Table of Contents

VASCULAR BIOGENICS LTD.

NOTES TO THE FINANCIAL STATEMENTS (Continued)

Note 8—Convertible Loan (Continued)

 

  2. In distribution events where the valuation of the Company is more than $100 million, the preference amount of the Preferred D-1 Shares will be $100.92 per share.

 

  3. In liquidation events involving conversion into Ordinary Shares (such as an IPO) the conversion rate of the Preferred D-1 Shares into Ordinary Shares is $25.23 per share (i.e., each Preferred D-1 Share shall be converted into two Ordinary Shares), or lower if there is a dilutive event/issuance for a lower price per share.

The difference, as of July 1, 2013, between the fair value and the principal amount of the convertible loan, $19.4 million, was charged to additional paid-in capital within equity. The change in the fair value from July 1, 2013 to December 31, 2013, amounting to $1.6 million, was charged to financial expenses in the statement of comprehensive loss.

As the fair value is calculated based on Level 3 inputs, a change in one of the inputs could change the fair value significantly.

Note 9—Commitments

 

  a. In October 2012, the Company signed a lease agreement for the building it uses in consideration of $203 thousand per year. The lease was to expire on September 30, 2013 and the Company had the option to extend it twice for additional one year periods. The Company exercised the option for the first year.

The Company entered into operating lease agreements for vehicles it uses. The leases will expire in 2016. The projected annual lease payments in the future years, at rates in effect as of December 31, 2013, approximate $156 thousand.

 

  b. The Company is committed to pay royalties to the Government of Israel on proceeds from sales of products in the research and development of which the Government participates by way of grants. At time the grants were received, successful development of the related project was not assumed. In the case of failure of the project that was partly financed by the Government of Israel, the Company is not obligated to pay any such royalties. Under the terms of Company’s funding from the Israeli Government, royalties of 3%-3.5% are payable on sales of products developed from projects so funded up to 100% of the amount of the grant received by the Company (dollar linked) with the addition of an annual interest based on Libor. As of December 31, 2013, the total royalty amount payable by the Company, before the additional Libor interest, is approximately $14.6 million ($17.1 million including interest).

 

  c. In September 2012 and December 2013, the Company entered into agreements, according to which it will receive project management services from two Contact Research Organizations (“CROs”) for the execution of a clinical trial in the field of anti-inflammatory small molecules, in consideration for up to 2.8 million. Through December 31, 2013, expenses in the total amount of 1.6 million ($2.2 million) were incurred.

 

  d. In November 2012, the Company signed an agreement according to which it will receive project management services from a CRO for the execution of another clinical trial in the field of anti-inflammatory small molecules in consideration for up to 2.4 million. Through December 31, 2013, expenses in the total amount of 1.2 million ($1.8 million) were incurred.

 

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Table of Contents

VASCULAR BIOGENICS LTD.

NOTES TO THE FINANCIAL STATEMENTS (Continued)

Note 9—Commitments (Continued)

 

  e. In February 2013, the Company entered into an agreement with Tel Hashomer—Medical Research, Infrastructure and Services Ltd. (“Tel Hashomer”). The agreement with Tel Hashomer provides that the Company will pay 1% of any net sales of any product covered by the intellectual property covered under the agreement and 2% of any consideration received by the Company for granting a license or similar rights to such intellectual property. Such amounts will be recorded as part of the Company’s cost of revenues. In addition, upon the occurrence of an exit event such as a merger, sale of all shares or assets or the closing of an initial public offering such as the IPO, the Company is required to pay to Tel Hashomer 1% of the proceeds received by the Company or its shareholders as the case may be. Payment obligations under the agreement are capped by the amount of NIS100 million ($29 million), excluding amounts previously paid as royalties on account of any net sales. Amounts payable upon occurrence of an exit event is not considered to be probable until actual occurrence. Upon occurrence of such event, as such event does not represent a substantive milestone with regard to the Company’s intellectual property, the amount to be paid is recorded in the Statement of Comprehensive Loss under research and development costs.

 

  f. In April 2011, the Company executed a Commercial License Agreement with Crucell Holland B.V. (“Crucell”), for incorporating the adenovirus 5 in VB-111 and other drug candidates for cancer for consideration including the following potential future payments:

 

   

an annual license fee of 100 thousand ($137 thousand), continuing until the termination of the agreement, which will occur upon (i) the later of the expiration date of the last related patent or 10 years from the first commercial sale of VB-111 or (ii) the termination of the agreement by the Company, which is permitted, upon three months’ written advance notice to Crucell;

 

   

a milestone payment of 400 thousand ($550 thousand) upon receipt of the first regulatory approval for the marketing of the first indication for each product covered under the agreement; and

 

   

royalties of 0.5%-2.0% on net sales.

There are no limits or caps on the amount of potential royalties. Pursuant to the agreement, the Company has the right to terminate the agreement by giving Crucell three months’ written notice.

 

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Table of Contents

VASCULAR BIOGENICS LTD.

NOTES TO THE FINANCIAL STATEMENTS (Continued)

Note 10—Share Capital

 

  a. Composed of shares of NIS 0.01 par value, as follows:

 

     Number of shares  
     December 31,  
     2012      2013  

Authorized:

     

Ordinary Shares

     2,369,005        2,044,005   

Preferred A Shares

     132,586        132,586   

Preferred B Shares

     570,217        570,217   

Preferred C Shares

     342,778        342,778   

Preferred D Shares

     1,585,414        1,585,414   

Preferred D-1 Shares (1)

             325,000   
  

 

 

    

 

 

 
     5,000,000        5,000,000   
  

 

 

    

 

 

 

Issued:

     

Ordinary Shares (2)

     244,054        244,054  

Preferred A Shares

     132,586        132,586  

Preferred B Shares

     570,217        570,217  

Preferred C Shares

     287,506        287,506  

Preferred D Shares

     1,247,369        1,247,369  
  

 

 

    

 

 

 
     2,481,732        2,481,732  
  

 

 

    

 

 

 

 

(1) Will be issued upon conversion of the convertible loan, as described in note 8.

 

(2) The Ordinary Shares confer upon their holders the following rights: (i) the right to vote in any general meeting of the Company; (ii) the right to receive dividends; and (iii) the right to receive upon liquidation of the Company a sum equal to the nominal value of the share, and if a surplus remains, to receive such surplus, subject to the right conferred by the Preferred Shares of the Company. Certain Ordinary Shares, held by the Company’s Chief Executive Officer, have attached anti-dilution rights, which accumulated during 2001 to 2007, in the Company’s articles of association. These rights provide for an additional 76,217 shares for their nominal value.

 

  b. Preferred Share rights

The holders of the Preferred Shares have various rights and preferences as follows:

Voting rights

The Preferred Shares confer on their holders all rights accruing to holders of Ordinary Shares in the Company. Every holder of Preferred Shares shall have one vote for each Ordinary Share into which the Preferred Shares held could be converted.

Liquidation and dividends

Upon a liquidation event (as defined in the articles of association of the Company) or if the Company distributes dividends, any assets and funds of the Company available for distribution shall be distributed pursuant to a descending order of preference to (i) the holders of Preferred D-1 Shares until the holders of each such series of Preferred Shares have received an amount equal to their original issue price, in addition to annual interest of LIBOR plus 1%; (ii) the holders of Preferred D Shares until the holders of each such series of Preferred Shares have received an amount equal to their original issue price, in addition to annual interest of LIBOR plus 1%; (iii) the holders of Preferred B and Preferred C Shares until the holders of each such series of Preferred Shares have received an amount equal to their original issue price, in addition to annual interest of LIBOR plus 1%;

 

F-24


Table of Contents

VASCULAR BIOGENICS LTD.

NOTES TO THE FINANCIAL STATEMENTS (Continued)

Note 10—Share Capital (Continued)

Liquidation and dividends (Continued)

 

(iv) the holders of Preferred A Shares until such holders have received an amount equal to their original issue price, in addition to an annual interest of LIBOR plus 1% (together: the “redemption value”); and (v) after payment in full of the redemption value, the entire remaining assets, if any, shall be distributed ratably to the holders of the Ordinary Shares and Preferred Shares (on a converted basis) in proportion to their respective percentage holdings of all the issued share capital of the Company.

If the amount to be distributed per share to the Preferred A Shares, Preferred B Shares, Preferred C Shares, Preferred D Shares and Preferred D-1 Shares is greater than US$73.923, $108.759, $120.342, $151.38 and $201.84, respectively, then the holders of such series shall be entitled to receive the greater of (i) such amount (without further participation in any excess distribution), and (ii) the amount that would be payable to them if such series were to participate pro rata with the other shares of the Company.

Conversion rights

The Preferred Shares are convertible at the option of their holders at any time after their issuance. The Preferred Shares conversion ratio is 1:1 on their original issuance date, except that each Preferred D-1 Share shall initially be convertible into two Ordinary Shares as further described below.

The Preferred A Shares and Preferred B Shares will automatically be converted into Ordinary Shares in accordance with the then applicable conversion ratio immediately upon (i) the closing of the Company’s IPO in case of the Preferred A Shares, and a closing of an IPO netting at least $25 million to the Company in case of the Preferred B Shares at a price per share which is at least $108.759, (ii) written consent of a majority of the outstanding Preferred A Shares or a majority of the outstanding Preferred B shares, as applicable, or (iii) such time as 75% of the Preferred A Shares or 75% of the Preferred B Shares, as applicable, have been converted to Ordinary Shares. The Preferred C Shares will automatically be converted into Ordinary Shares in accordance with the then applicable conversion ratio immediately upon (i) the closing of an IPO netting at least $30 million to the Company at a price per share which is at least $120.341, or (ii) written consent of a majority of the outstanding Preferred C Shares. The Preferred D Shares will automatically be converted into Ordinary Shares in accordance with the then applicable conversion ratio immediately upon (i) the closing of an IPO netting at least $30 million to the Company, at a price per share which is at least $151.38 (adjusted for share combinations or subdivisions or other recapitalizations of the Company’s shares) plus interest at a rate of LIBOR + 1%, accruing from March 13, 2008, or (ii) written consent of a majority of the outstanding Preferred D Shares. The Preferred D-1 Shares will automatically be converted into Ordinary Shares in accordance with the then applicable conversion ratio immediately upon (i) the closing of an IPO netting at least $30 million to the Company, at a price per share which is at least $201.84 (adjusted for share combinations or subdivisions or other recapitalizations of the Company’s shares) plus interest at a rate of LIBOR + 1% accruing from the date of issue by the Company of such Preferred D-1 Shares, or (ii) written consent of a majority of the outstanding Preferred D-1 Shares.

 

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Table of Contents

VASCULAR BIOGENICS LTD.

NOTES TO THE FINANCIAL STATEMENTS (Continued)

Note 10—Share Capital (Continued)

Conversion rights (Continued)

 

The Preferred Shares also confer on their holders certain anti-dilution rights that adjust the conversion ratio in the event that the Company issues new shares at the price lower than the price original issue to the respective preferred shareholders. Each Preferred Share can be converted into a number of Ordinary Shares as is determined by dividing their original issue price by the conversion price (which initially equals the original issue price), which shall be reduced, for no additional consideration, to be equal to such lower price of new shares.

Notwithstanding the calculation of the conversion price, the conversion price of the Preferred D-1 Shares shall initially be equal to half of the original issue price for the Preferred D-1 Share and shall be subject to adjustment only to the extent that the adjustment results in a price lower than half of the original issue price for the Preferred D-1 Shares. For the avoidance of doubt, the Preferred D-1 Shares original issue price shall be equal to $50.46 notwithstanding any reduction of the purchase price per share of a Preferred D-1 Share resulting from any discount thereon pursuant to the CLA dated April 30, 2013.

 

  c. On March 13, 2008, July 29, 2010 and January 4, 2011 the Company signed Share Purchase Agreements with a new investor and some of its existing shareholders. According to the Agreements, the Company issued 1,247,369 Preferred D Shares, in consideration for $50.46 per Preferred D Share. The aggregate investment amount of approximately $62.7 million was received during 2008, 2010 and 2011 (net of share issue expenses of approximately $208 thousand).

 

  d. Share based compensation plans

In February 2000, the Company’s board of directors approved an option plan (the “Plan”) as amended through 2008. Under the Plan, the Company reserved up to 316,356 Ordinary Shares of NIS 0.01 par value of the Company for allocation to employees and non-employees. Each option is exercisable to acquire one Ordinary Share.

In April 2011, the Company’s board of directors approved a new option plan (the “New Plan”). Under the New Plan, the Company reserved up to 170,435 Ordinary Shares (of which 35,435 Ordinary Shares shall be taken from the unallocated pool reserved under the Plan) for allocation to employees and non-employees.

The Ordinary Shares to be issued upon exercise of the options confer the same rights as the other Ordinary Shares of the Company, immediately upon allotment. Any option granted under the Plan that is not exercised within ten years from the date upon which it becomes exercisable, will expire. Any option which was granted under the New Plan, and was not exercised within twenty years from the date when it becomes exercisable, will expire. In April 2013, the Company shareholders approved the extension of the exercise period of options granted to employees and officers during 2003-2005 by additional ten years. As a result of such extension, the Company recorded during 2013 additional expense of $115 thousand.

Option exercise prices and vesting periods shall be as determined by the board of directors of the Company on the date of the grant.

 

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Table of Contents

VASCULAR BIOGENICS LTD.

NOTES TO THE FINANCIAL STATEMENTS (Continued)

Note 10—Share Capital (Continued)

 

The options granted to employees through December 31, 2002 are subject to the terms stipulated by section 102 of the Israeli Income Tax Ordinance (the “Ordinance”). Among other things, the Ordinance provides that the Company will be allowed to claim as an expense for tax purposes the amounts credited to the employees as a benefit upon sale of the shares allotted under the plans at a price exceeding the exercise price, when the related tax is payable by the employee.

The options granted to employees after December 31, 2002, are subject to the terms stipulated by section 102(b)(2) of the Ordinance. According to these provisions, the Company will not be allowed to claim as an expense for tax purposes the amounts credited to the employees as a capital gain benefit in respect of the options granted.

Options granted to related parties or non-employees of the Company are governed by Section 3(i) of the Ordinance. The Company will be allowed to claim as an expense for tax purposes the amounts equal to the expenses it recorded in the financial statements in the year in which the related parties or non-employees exercised the options into shares.

Options granted in 2012:

 

     Number of options granted
according to option plan

of the Company (1)
               

Date of grant

   Other than
    directors    
     To
directors
     Total      Exercise
price per
Ordinary
Share ($)
     The fair value of
options on date
of grant (in

thousands) (2)
 

December 2012

     *25,400         5,000         30,400       $ 14.92       $ 446   
  

 

 

    

 

 

    

 

 

       

 

 

 
     25,400         5,000         30,400          $ 446   
  

 

 

    

 

 

    

 

 

       

 

 

 

 

  * 10,000 options were allocated to an officer who also serves as a director.

 

  1) The options will vest as follows: over 4 years from the date of grant; 1/16 of the options shall vest at the end of each quarter in the course of the 4 years.

 

  2) The fair value of the options on the date of grant was computed using the Black-Scholes model. The underlying data used for computing the fair value of the options are mainly as follows: Ordinary Share price, based on a valuation prepared by the Company : $19.42; expected volatility based on comparable companies in the healthcare sector: 68.6%; risk-free interest rate: 1.76% (the risk-free interest rate is determined based on rates of return on maturity of unlinked treasury bonds with time to maturity that equals the average life of the options); expected dividend: zero; and expected life to exercise: 9 years.

 

F-27


Table of Contents

VASCULAR BIOGENICS LTD.

NOTES TO THE FINANCIAL STATEMENTS (Continued)

Note 10—Share Capital (Continued)

 

Options granted in 2013:

 

     Number of options granted                
     according to option plan of the
Company (1)
               

Date of grant

   Other than
    directors    
     To
  directors  
     Total      Exercise
price per
Ordinary
Share  ($)
     The fair value of
options on date
of grant (in
thousands) (2)
 

September 2013

     *25,850         5,000         30,850         14.92       $ 459   
  

 

 

    

 

 

    

 

 

       

 

 

 
     25,850         5,000         30,850          $ 459   
  

 

 

    

 

 

    

 

 

       

 

 

 

 

  * 10,000 options were allocated to an officer who also serves as a director.

 

  1) The options will vest as follows:

 

  a. 27,850 options over 4 years from the date of grant; 1/16 of the options at the end of each quarter in the course of the 4 years.

 

  b. 3,000 options over 1 year from the date of grant; 1/2 of the options vested on the date of grant and 1/2 will vest within a year from date of grant.

 

  2) The fair value of the options on the date of grant was computed using the Black-Scholes model. The underlying data used for computing the fair value of the options are mainly as follows: Ordinary Share price, based on a valuation prepared by the Company with the assistance of an external independent expert: $18.68; expected volatility based on comparable companies in the healthcare sector: 69.0%; risk-free interest rate: 2.62% (the risk-free interest rate is determined based on rates of return on maturity of unlinked treasury bonds with time to maturity that equals the average life of the options); expected dividend: zero; and expected life to exercise: 9 years.

 

  e. Changes in the number of options and weighted average exercise prices are as follows:

 

     Year ended December 31,  
     2012      2013  
     Number of
options
     Weighted
average
exercise
price
     Number of
options
     Weighted
average
exercise
price
 

Outstanding at beginning of year

     326,045       $ 10.20         342,947       $ 10.83   

Granted

     30,400         14.92         30,850         14.92   

Forfeited

     13,498         4.70         8,838         12.56   
  

 

 

       

 

 

    

Outstanding at end of year

     342,947         10.83         364,959         11.13   
  

 

 

       

 

 

    

Exercisable at end of year

     267,413         9.62         289,966         10.11   
  

 

 

       

 

 

    

 

  f. The following is information about exercise price and remaining contractual life of outstanding options at year-end:

 

December 31, 2012

          December 31, 2013  

Number of
options
outstanding
at end of
year

   Exercise price      Weighted
average of
remaining
contractual
life
         

Number of

options
outstanding

at end of

year

   Exercise price      Weighted
average of
remaining
contractual
life
 
8,186    $ 0.0025         10.3          8,186    $ 0.0025         9.3   
65,927    $ 5.44         8.2          63,927    $ 5.44         7.4   
175,314    $ 11.10         5.1          174,814    $ 11.10         4.1   
93,520    $ 14.92         19.2          118,032    $ 14.92         18.6   

 

           

 

     
342,947             364,959      

 

           

 

     

 

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Table of Contents

VASCULAR BIOGENICS LTD.

NOTES TO THE FINANCIAL STATEMENTS (Continued)

Note 10—Share Capital (Continued)

 

  g. Expenses for share based compensation recognized in profit or loss were as follows:

 

     Year ended
December 31,
 
       2012      2013  
    

U.S. dollars

in thousands

 

Research and development expenses

   $ 246      $ 122  

Administrative and general expenses

     219        372  
  

 

 

    

 

 

 
   $ 465      $ 494  
  

 

 

    

 

 

 

The remaining unrecognized compensation expenses as of December 31, 2013 are $592 thousand; this amount will be expensed in full by December 2017.

Note 11—Taxes on Income

The Company is taxed according to Israeli tax laws:

 

  a. Measurement of results for tax purposes

The Company measures its results for tax purposes in nominal terms in NIS based on financial reporting under Israeli accounting principles, while (as detailed in note 2) the functional currency of the Company is the dollar and the Company’s financial statements are measured in dollars and in accordance with IFRS. Therefore, there are differences between the Company’s taxable income (loss) and income (loss) reflected in these financial statements.

 

  b. Tax rates

The income of the Company, other than income from Benefitted Enterprises (see c below), is subject to the normal corporate tax rate. The corporate tax rate for 2013 and 2012 was 25%.

On August 5, 2013, the Law for Change of National Priorities (Legislative Amendments for Achieving the Budgetary Goals for 2013-2014), 2013 was published in the official gazette, which enacts, among other things, raising the corporate tax rate to 26.5% beginning in 2014 and thereafter.

 

  c. Tax benefits under the Law for the Encouragement of Capital Investments, 1959 (the “Investment Law”)

Under the Investment Law, including Amendment No. 60 to the Investment Law that was published in April 2005, by virtue of the Benefited Enterprise program for certain of its production facilities; the Company may be entitled to various tax benefits.

The main benefit arising from such status is the reduction in tax rates on income derived from a Benefited Enterprise. The extent of such benefits depends on the location of the enterprise. Since the Company’s facilities are not located in “national development zone A”, income derived from Benefited Enterprises will be tax exempt for a period of two years and then have a reduced tax rate for a period of up to an additional eight years.

The period of tax benefits, as described above, is limited to 12 years from the beginning of the Benefited Enterprise election year (2012). As of December 31, 2013, the period of benefits has not yet commenced.

 

F-29


Table of Contents

VASCULAR BIOGENICS LTD.

NOTES TO THE FINANCIAL STATEMENTS (Continued)

Note 11—Taxes on Income (Continued)

 

In the event of distribution of cash dividends from income which was tax exempt as above, the amount distributed will be subject to the tax rate it was exempted from.

The Company is entitled to claim accelerated depreciation in respect of equipment used by the approved enterprises during five tax years.

Entitlement to the above benefits is conditioned upon the Company fulfilling the conditions stipulated by the Investment Law and regulations published thereunder.

In the event of failure to comply with these conditions, the benefits may be canceled and the Company may be required to refund the amount of the benefits, in whole or in part, with the addition of linkage differences to the Israeli consumer price index and interest.

The Investment Law was amended as part of the Economic Policy Law for the years 2011—2012 (the “Amendment”), which became effective on January 1, 2011.

The Amendment sets alternative benefit tracks to the ones currently in place under the provisions of the Investment Law, including a reduced corporate tax rate. Tax rate for “Preferred Enterprise” income of companies not located in national development zone A, is 16% for fiscal year 2014 and thereafter.

The benefits are granted to companies that qualify under criteria set forth in the Investment Law; for the most part, those criteria are similar to the criteria that have existed in the Investment Law prior to its amendment and the benefit period is unlimited in time. However, in accordance with the Amendment, the classification of licensing income as Preferred income is subject to the issuance of a pre-ruling by the Israel Tax Authority.

Under the transitional provisions of the Investment Law, a company is allowed to continue to enjoy the tax benefits available under the Investment Law prior to its amendment until the end of the period of benefits, as defined in the Investment Law.

In each year during the period of benefits of its Benefitted Enterprise, the Company will be able to opt for application of the Amendment, thereby making available to itself the tax rate described above. The Company’s election to apply the Amendment is irrevocable.

As of December 31, 2013, the Company’s management decided not to adopt the application of the Amendment.

There is no assurance that future taxable income of the Company will qualify as Benefited or Preferred income or that the benefits described above will be available to the Company in the future.

 

  d. Losses for tax purposes carried forward to future years

The balance of carry forward losses as of December 31, 2013 is $102 million.

Under Israeli tax laws, carryforward tax losses have no expiration date.

Deferred tax assets on losses for tax purposes carried forward to subsequent years are recognized if utilization of the related tax benefit against a future taxable income is expected.

The Company has not created deferred taxes on its carry forward losses since their utilization is not expected in the foreseeable future.

 

F-30


Table of Contents

VASCULAR BIOGENICS LTD.

NOTES TO THE FINANCIAL STATEMENTS (Continued)

Note 11—Taxes on Income (Continued)

 

  e. Tax assessments

The Company has tax assessments that are considered to be final through tax year 2009.

Note 12—Supplementary Financial Information

 

       December 31,  
       2012     2013  
    

U.S. dollars

in thousands

 

a. Other current assets:

    

Institutions

   $ 195      $ 123   

Prepaid expenses

     80        127   

Government grants receivable

     385        256   

Employees

     3        1   
  

 

 

   

 

 

 
   $ 663      $ 507   
  

 

 

   

 

 

 

b. Accounts payable— other:

    

Expenses payable

   $ 737      $ 2,543   

Employees and employees institutions

     203        213   

Provision for vacation

     142        141   

Sundry

     33          
  

 

 

   

 

 

 
   $ 1,115      $ 2,897   
  

 

 

   

 

 

 
     Year ended December 31,  
            2012               2013       
    

U.S. dollars

in thousands

 
    

c.      Research and development expenses, net:

         

Payroll and related expenses

   $ 2,630      $ 3,366   

Subcontractors and consultation

     6,092        7,527   

Materials

     1,127        569   

Patent expenses

     2,111        1,606   

Depreciation

     185        126   

Office rent and maintenance

     393        440   

Other

     404        473   
  

 

 

   

 

 

 
     12,942        14,107   

Government grants (see note 9b)

     (2,370     (599
  

 

 

   

 

 

 
   $ 10,572      $ 13,508   
  

 

 

   

 

 

 

d.     Administrative and general expenses

    

Payroll and related expenses

   $ 960      $ 1,305   

Management and professional fees

     585        847   

Foreign travel

     138        141   

Depreciation

     12        43   

Other

     202        116   
  

 

 

   

 

 

 
   $ 1,897      $ 2,452   
  

 

 

   

 

 

 

 

F-31


Table of Contents

VASCULAR BIOGENICS LTD.

NOTES TO THE FINANCIAL STATEMENTS (Continued)

 

Note 13—Loss per Share

a. Basic and diluted loss per share

Basic

Basic loss per share is calculated by dividing the result attributable to equity holders of the Company by the weighted average number of Ordinary Shares in issue during the year.

Diluted

All Ordinary Shares underlying Preferred Shares and outstanding options have been excluded from the calculation of the diluted loss per share for the years ended December 31, 2012 and 2013 since their effect was anti-dilutive. The total number of Ordinary Shares related to outstanding Preferred Shares and options excluded from the calculations of diluted loss per share were 2,656,842 and 2,678,854 for the years ended December 31, 2012 and 2013, respectively.

 

     Year ended December 31,  
     2012      2013  
    

U.S. dollars in thousands,

except per share data

 

Basic and diluted

     

Loss attributable to equity holders of the Company

   $ 12,225       $ 17,370   
  

 

 

    

 

 

 

Weighted average number of Ordinary Shares in issue

     244,054         244,054   
  

 

 

    

 

 

 

Loss per Ordinary Share

   $ 50.09       $ 71.17   
  

 

 

    

 

 

 

b. Basic and diluted pro forma Loss per Share (unaudited)

The following unaudited calculation of basic and diluted loss per share gives effect to the automatic conversion of the Convertible Loan and all outstanding Preferred Shares of the Company (using the if-converted method) into Ordinary Shares as though the conversion had occurred as of the beginning of the period or the original date of issuance, if later, and the issuance of 76,217 Ordinary Shares immediately prior to the closing of an IPO pursuant to certain anti-dilution rights set in the Company’s articles of association.

 

F-32


Table of Contents

VASCULAR BIOGENICS LTD.

NOTES TO THE FINANCIAL STATEMENTS (Continued)

 

Note 13—Loss per Share (Continued)

Pro forma basic and diluted loss per share (unaudited):

 

     Year ended December 31,
2013
 
     U.S. dollars in thousands,
except per share data
 

Loss attributable to equity holders of the Company

   $ 17,370   

Deduct –

  

Loss from change in fair value of convertible loan

     (1,638
  

 

 

 

Adjusted loss (unaudited)

   $ 15,732   
  

 

 

 

Weighted average number of shares used in the computation of basic and diluted loss per share

     244,054   

Add -

  

pro forma adjustment to reflect assumed conversion of Convertible Loan

     120,248   

pro forma adjustment to reflect assumed conversion of Preferred Shares

     2,237,678   

pro forma adjustment to reflect assumed issuance of Ordinary Shares pursuant to certain anti-dilution rights

     76,217   
  

 

 

 

Weighted average number of shares used in the computation of pro forma basic and diluted loss per share (unaudited)

     2,678,197   
  

 

 

 

Pro forma basic and diluted loss per share (unaudited)

   $ 5.87   
  

 

 

 

 

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Table of Contents

VASCULAR BIOGENICS LTD.

NOTES TO THE FINANCIAL STATEMENTS (Continued)

Note 14—Financial Income, net

 

    Year ended December 31,  
    2012     2013  
   

U.S. dollars

in thousands

 

Financial income

   

Interest from deposits

  $ 236      $ 27   

Exchange differences

    59        213   
 

 

 

   

 

 

 
    295        240   
 

 

 

   

 

 

 

Financial expenses

   

Loss from change in fair value of convertible loan

           1,638   

Other financial expenses:

   

Bank fees

    14        12   

Other

    37          
 

 

 

   

 

 

 
    51        12   
 

 

 

   

 

 

 

Total financial expenses

    51        1,650   
 

 

 

   

 

 

 

Financial expenses (income) , net

  $ (244   $ 1,410   
 

 

 

   

 

 

 

Note 15—Related Parties—Transactions and Balances

 

  a. Transactions with related parties

Key management personnel include members of the Board of Directors, the Chief Executive Officer and all Vice Presidents of the Company and companies controlled by them .

 

     Year ended December 31,  
     2012      2013  
     U.S. dollars in thousands  

1) Expenses:

     

Administrative and general expenses

   $ 7       $ 4   
  

 

 

    

 

 

 

Financial expenses:

     

Loss from change in fair value of convertible loan

   $       $ 1,638   
  

 

 

    

 

 

 

2) Key management compensation:

     

Labor cost and related expenses

   $ 1,749       $ 2,376   

Share-based payments

     315         301   

Others

     283         277   
  

 

 

    

 

 

 
   $ 2,347       $ 2,954   
  

 

 

    

 

 

 

 

F-34


Table of Contents

VASCULAR BIOGENICS LTD.

NOTES TO THE FINANCIAL STATEMENTS (Continued)

  b. Balances with related parties

 

     December 31,  
     2012      2013  
    

U.S. dollars

in thousands

 

Related parties and shareholders:

     

Convertible loan

   $       $ 31,039   
  

 

 

    

 

 

 

Key management:

     

Payables and accrued expenses

   $ 52       $ 713   
  

 

 

    

 

 

 

Severance pay obligations

   $ 124       $ 71   
  

 

 

    

 

 

 

Provision for vacation

   $ 83       $ 80   
  

 

 

    

 

 

 

Note 16—Subsequent Events (unaudited)

 

  a. In March 2014, the holders of all then outstanding Preferred Shares waived their preferential conversion rights with respect to the currently contemplated public offering.

 

  b. On April 30, 2014, the Company signed an agreement with the majority of the lenders of the Convertible Loan (see also note 8) for the deferral of the date of automatic conversion of the loan into Preferred D-1 Shares from April 30, 2014 to May 16, 2014.

 

  c. On May 15, 2014, the Company closed a round of financing, selling an aggregate of 91,798 Preferred E Shares in consideration of $4,938 thousand.

The Preferred E Shares entitle the holder thereof to the same rights as the other preferred shares (other than in liquidation preference) and are convertible into Ordinary Shares immediately upon: (i) the closing of an IPO generating net proceeds of at least $30 million to the Company, at a price per share which reflects a Company value of at least $175 million, or (ii) written consent of a majority of the outstanding Preferred E Shares.

Upon the closing of the round, the Convertible Loan was converted into 240,496 Preferred E Shares.

 

  d. In January 2014 and May 2014, two former employees exercised options to purchase an aggregate of 29,363 Ordinary Shares. The total cash exercise price received by the Company in those transactions was $266 thousand.

 

  e. On April 23, 2014, the shareholders of the Company approved a grant to Prof. Dror Harats of an option to purchase 83,313 Ordinary Shares of the Company under the Company’s Employee Share Ownership and Option Plan (2011). The grant will become effective and is contingent upon the closing of the initial public offering of the shares of the Company on The NASDAQ Global Market. The option will not be subject to vesting but will be subject to the two-year escrow prescribed by law, and the exercise price per Ordinary Share will be the nominal value thereof.

 

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You should rely only on the information contained in this prospectus. We have not authorized anyone to provide information different from that contained in this prospectus. We are offering to sell, and seeking offers to buy, ordinary shares only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of our ordinary shares.

TABLE OF CONTENTS

 

Prospectus Summary

     1   

Risk Factors

     12   

Forward-Looking Statements

     58   

Use of Proceeds

     60   

Dividend Policy

     61   

Capitalization

     62   

Dilution

     64   

Selected Financial Data

     66   

Management’s Discussion and Analysis of Financial Condition and Results of Operations

     67   

Business

     80   

Management

     116   

Related Party Transactions

     141   

Principal Shareholders

     145   

Description of Share Capital

     148   

Shares Eligible for Future Sale

     156   

Taxation

     158   

Underwriting

     170   

Expenses Related to this Offering

     178   

Enforcement of Civil Liabilities

     179   

Legal Matters

     180   

Experts

     180   

Where You Can Find More Information

     180   

Index to Financial Statements

     F-1   

Until                  , 2014 (25 days after the date of this prospectus), all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as an underwriter and with respect to unsold allotments or subscriptions.

LOGO

 

Vascular Biogenics Ltd.

 

            Ordinary Shares

 

 

 

 

 

 

 

 

 

 

 

 

Deutsche Bank Securities

 

Wells Fargo Securities

 

 

JMP Securities

 

Oppenheimer & Co.

 

 

 

 

 

 

 

 

Prospectus

 

                    , 2014


Table of Contents

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 6. Indemnification of Officer Holders (Including Directors).

Under the Israeli Companies Law 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 to the company, in whole or in part, for damages caused to the company as a result of a breach of duty of care, but only if a provision authorizing such exculpation is included in the company’s articles of association. Our articles of association to be effective immediately prior to the closing of this offering include such a provision. The company may not exculpate in advance a director from liability arising out of a prohibited dividend or distribution to shareholders.

Under the Companies Law, a company may indemnify an office holder for the following liabilities, payments and expenses incurred for acts performed by him or her as an office holder, either pursuant to an undertaking given by the company in advance of the act or following the act, provided its articles of association authorize such indemnification:

 

   

a monetary 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. Such undertaking shall detail the foreseen events and amount or criteria mentioned above;

 

   

reasonable litigation expenses, including reasonable attorneys’ fees, incurred by the office holder (1) 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 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 (mens rea); and (2) in connection with a monetary sanction; and

 

   

reasonable litigation expenses, including attorneys’ fees, incurred by the office holder or imposed by a court in proceedings instituted against him or her by the company, on its behalf, or by a third party, or in connection with criminal proceedings in which the office holder was acquitted, or as a result of a conviction for an offense that does not require proof of criminal intent (mens rea).

In addition, under the Companies Law, a company may insure an office holder against the following liabilities incurred for acts performed by him or her as an office holder, if and to the extent provided in the company’s articles of association:

 

   

a breach of a duty of loyalty to the company, provided that the office holder acted in good faith and had a reasonable basis to believe that the act would not harm the company;

 

   

a breach of duty of care to the company or to a third party, to the extent such a breach arises out of the negligent conduct of the office holder; and

 

   

a monetary liability imposed on the office holder in favor of a third party.

 

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Under the Companies Law, a company may not indemnify, exculpate or insure an office holder against any of the following:

 

   

a breach of the duty of loyalty, except for indemnification and insurance for a breach of the duty of loyalty to the company to the extent that the office holder acted in good faith and had a reasonable basis to believe that the act would not harm the company;

 

   

a breach of the 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 illegal personal benefit; or

 

   

a fine or penalty levied against the office holder.

Under the Companies Law, for the approval of exculpation, indemnification and insurance of office holders who are executive officers, directors and controlling shareholders, see the section of the prospectus that forms a part of this Registration Statement entitled “Management—Approval of Related Party Transactions Under Israeli Law.”

Our amended and restated articles of association to be effective immediately prior the closing of this offering permit us to exculpate, indemnify and insure our office holders to the fullest extent permitted under the Companies Law (other than indemnification for litigation expenses in connection with a monetary sanction).

We have entered into indemnification and exculpation agreements with each of our current office holders exculpating them from a breach of their duty of care to us to the fullest extent permitted by the Companies Law and undertaking to indemnify them to the fullest extent permitted by the Companies Law.

We are not aware of any pending or threatened litigation or proceeding involving any of our office holders as to which indemnification is being sought, nor are we aware of any pending or threatened litigation that may result in claims for indemnification by any office holder.

The proposed form of Underwriting Agreement filed as Exhibit 1.1 to this Registration Statement provides for indemnification of our office holders by the underwriters against certain liabilities.

Item 7. Recent Sales of Unregistered Securities.

Since January 1, 2011:

 

   

We have granted options to purchase an aggregate of 118,030 ordinary shares to our directors, officers, employees and service providers, in each case having an exercise price of $14.92 per share.

 

   

We have issued and sold 34,363 ordinary shares pursuant to the exercise of options held by our directors, officers and employees, having a weighted average exercise price per share of $7.74.

 

   

In January 2011, we issued 76,240 Series D preferred shares at $50.46 per share to 11 investors.

 

   

On April 30, 2013, we issued a convertible loan in the aggregate principal amount of approximately $10.0 million to 10 investors.

 

   

In May 2014, we issued an aggregate of 332,294 Series E preferred shares to 21 investors, consisting of 91,798 Series E preferred shares at a purchase price of $53.80 per share and 240,496 Series E preferred shares issued upon conversion of our convertible loan that we received on July 1, 2013.

 

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The sales and issuances of the above securities were deemed to be exempt from registration under the Securities Act in reliance upon (i) Section 4(2) of the Securities Act, including Regulation S promulgated thereunder, as transactions by an issuer not involving any public offering or involving offers and sales of securities outside the United States (ii) Section 3(a)(9) of the Securities Act, as exchanges of our securities with our existing security holders and no commission or remuneration was paid or given directly or indirectly for soliciting such exchanges, or (iii) Rule 701, as issuances under our equity incentive plans.

Item 8. Exhibits and Financial Statement Schedules.

 

   

The Exhibit Index is hereby incorporated herein by reference.

 

   

Financial Statement Schedules.

All schedules have been omitted because they are not required, are not applicable or the information is otherwise set forth in the Financial Statements and related notes thereto.

Item 9. 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 provisions described in Item 6 hereof, 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:

 

   

To provide the underwriters specified in the Underwriting Agreement, at the closing, certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

 

   

That for purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4), or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

 

   

That for the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus 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.

 

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form F-1 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, on June 6, 2014.

 

VASCULAR BIOGENICS LTD.
By:   /s/    Dror Harats

Name: Dror Harats

Title: Chief Executive Officer

We, the undersigned members of the supervisory board and the management board of the Registrant hereby severally constitute and appoint Dror Harats and Amos Ron, and each of them, his/her true and lawful attorneys-in-fact and agents, with full power of substitution and re-substitution for him/her and in his/her name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and any subsequent registration statements pursuant to Rule 462 of the United States Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the U.S. Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he/she might or could do in person, hereby ratifying and confirming all that each of said attorney-in-fact or his/her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

 

Signatures

  

Title

 

Date

/s/    Dror Harats        

Dror Harats

  

Chief Executive Officer and Director

(Principal Executive Officer)

  June 6, 2014

/s/    Bennett M. Shapiro        

Bennett M. Shapiro

  

Non-Executive Director

  June 6, 2014

/s/    Ruth Arnon        

Ruth Arnon

  

Non-Executive Director

  June 6, 2014

/s/    Jide J. Zeitlin        

Jide J. Zeitlin

  

Non-Executive Director

  June 6, 2014

/s/    Jecheskiel Gonczarowski        

Jecheskiel Gonczarowski

  

Non-Executive Director

  June 6, 2014

/s/    Dan J. Gelvan        

Dan J. Gelvan

  

Non-Executive Director

  June 6, 2014

 

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Table of Contents

/s/    Ruth Alon        

Ruth Alon

  

Non-Executive Director

  June 6, 2014

/s/    Amos Ron        

Amos Ron

  

Chief Financial Officer

(Principal Financial Officer and Principal Accounting Officer)

  June 6, 2014

 

  Authorized Representative in the United States

/s/    Donald J. Puglisi

  June 6, 2014

Name: Donald J. Puglisi

 

Title: Authorized Representative in the United States

 

 

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Table of Contents

EXHIBIT INDEX

 

Exhibit

No.

 

Description

  1.1*   Form of Underwriting Agreement.
  3.1   Articles of Association of the Registrant as in effect prior to this offering.
  3.2*   Amended and Restated Articles of Association of the Registrant to be effective upon the closing of this offering.
  4.1   Amended and Restated Investors’ Rights Agreement, dated as of March 13, 2008, by and among the Registrant and the other parties thereto, as amended.
  4.2*   Specimen share certificate.
  4.3   Warrant to purchase ordinary shares, dated March 26, 2007, issued to Baratz, Horn & Co., and Warrant Transfer Deed, dated August 31, 2009.
  4.4   Warrant to purchase ordinary shares, dated April 1, 2001, issued to Dror Harats, as amended.
  4.5   Warrant to purchase ordinary shares, dated May 14, 2001, issued to Dror Harats, as amended.
  4.6   Warrant to purchase ordinary shares, dated December 28, 2001, issued to Dror Harats, as amended.
  5.1*   Form of Opinion of Horn & Co, Law Offices, Israeli legal counsel of the Registrant.
10.1!  

Employee Ownership and Share Option Plan (2011) of the Registrant, and form of agreement thereunder.

10.2*!  

Form of Indemnification Agreement to be entered into between the Registrant and its officers and directors.

10.3+   Commercial License Agreement, dated April 15, 2011, between the Registrant and Crucell Holland B.V.
10.4+   Agreement, dated February 3, 2013, between the Registrant and Tel Hashomer—Medical Research, Infrastructure and Services Ltd.
10.5   Manufacturing Services Agreement, dated January 5, 2012, between the Registrant and Lonza Houston, Inc.
10.6   Master Services Agreement, dated May 14, 2008, between the Registrant and Genzyme Pharmaceuticals.
10.7+   Technical Agreement on the Manufacture of Capsules, dated May 19, 2008, between the Registrant and Encap Drug Delivery and standard terms and conditions of purchase order.
10.8+   Technical Agreement on the Manufacture of Capsules, dated August 3, 2012, between the Registrant and Encap Drug Delivery and standard terms and conditions of purchase order.
10.9+   Material Transfer and Confidentiality Agreement, dated October 3, 2005, among the Registrant, Crucell Holland B.V. and BioReliance Ltd.
10.10+   General Services Agreement, dated September 2012, between the Registrant and BioClinica, Inc., and Addendum dated November 19, 2012 and August 29, 2013.


Table of Contents

Exhibit

No.

 

Description

10.11+   Clinical Trial Agreement, dated September 9, 2012, between the Registrant and SCIderm GmbH.
10.12+   Services Agreement, dated November 8, 2012, between the Registrant and KCR S.A.
10.13+   Services Agreement, dated December 16, 2013, between the Registrant and KCR S.A.
10.14#   Lease Agreement, dated January 2013, between the Registrant and Matzlawi Building Company Ltd.
10.15   Material Transfer and Confidentiality Agreement, effective February 6, 2012 between the Registrant, Crucell Holland B.V. and Lonza Houston, Inc.
10.16   Agreement between the Registrant and Prof. Jacob George, dated January 24, 2010, as amended on August 1, 2012.
10.17*!   Employee Ownership and Share Option Plan (2014) of the Registrant, and form of agreement thereunder.
21.1   Subsidiaries of the Registrant.
23.1   Consent of Kesselman & Kesselman, a member firm of PricewaterhouseCoopers International Limited, Independent Registered Public Accounting Firm.
23.2*   Form of Consent of Horn & Co, Law Offices (included in Exhibit 5.1).
24.1   Powers of Attorney (included on signature page).

 

* To be filed by amendment.

 

! Management contract or plan.

 

+ Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request.

 

# English summary of original Hebrew document.

Exhibit 3.1

ARTICLES OF ASSOCIATION

OF

VASCULAR BIOGENICS LTD.

Adopted as of April 29, 2013


THE COMPANIES LAW 5759-1999

ARTICLES OF ASSOCIATION OF

VASCULAR BIOGENICS LTD.

A COMPANY LIMITED BY SHARES

PRELIMINARY

 

1. Reserved.

 

2. In these Articles, unless the context otherwise requires:

 

(a)    THE COMPANY    means Vascular Biogenics Ltd.
(b)    THE OFFICE    means the registered office of the Company for the time being.
(c)    THE COMPANIES
LAW
   means the Companies Law 5759-1999 or any law which shall amend or replace it, as shall be in force from time to time.
(d)    THE AURUM
GROUP
   means Aurum Ventures M.K.I Ltd., Mr. Benjamin Kahn and their Permitted Transferees.
(e)    THE REGISTER    means the register of Shareholders to be kept in accordance with the Companies Law, or, if the Company shall have any branch register(s) any such branch register(s) as the case may be.
(f)    SHAREHOLDER    means any person registered in the Register as the owner of shares of the Company.
(g)    SHAREHOLDERS
RESOLUTION
   Means a resolution adopted by a simple majority of the voting rights of the Company represented, personally or by proxy, and voting with respect thereto, unless a different majority is required in respect to such matter pursuant to the Companies Law or these Articles at the time the resolution is voted on, in which case a “Shareholders Resolution” shall mean a resolution adopted by such required majority
(h)    PITANGO    means Pitango Venture Capital Fund IV L.P., Pitango Venture Capital Principals Fund IV L.P, their affiliated funds, partners or management entities, and their transferees.


Subject to the provisions of this Article, in these Articles, unless the context otherwise requires, words and expressions used herein which are defined in the Memorandum of Association of the Company shall have the meanings therein defined, expressions used herein which are defined in the Companies Law, or any modification thereof in force at the date at which these Articles become binding upon the Company, shall have the meaning so defined; and words importing the singular shall include the plural and vice versa, and words importing the masculine gender shall include the feminine and words importing persons shall include bodies corporate. All shares in the Company held or acquired by a shareholder and its Permitted Transferees (as defined below) shall be aggregated together for the purpose of determining rights under these Articles, other than with respect to Articles 36.9 and 46 hereunder.

These Articles may be amended by Shareholders Resolution, subject to the requirements set forth herein for special majorities or consents. Notwithstanding the provisions hereof, the amendment of any Article requiring a special majority of votes or consent by any party in order to take any action, shall require the vote or consent of such special majority or such party, as applicable.

SHARE CAPITAL

 

3. The share capital of the Company is Fifty Thousand (50,000) New Israeli Shekels (“ NIS ”), consisting of Two Million Forty Four Thousand and Five (2,044,005) Ordinary Shares, par value NIS 0.01 each (the “ Ordinary Shares ”), One Hundred Thirty Two Thousand Five Hundred and Eighty Six (132,586) Series A Preferred Shares, par value NIS 0.01 per share (the “ Preferred A Shares ”), Five Hundred and Seventy Thousand Two Hundred and Seventeen (570,217) Series B Preferred Shares, par value NIS 0.01 per share (the “ Preferred B Shares ”), Three Hundred and Forty Two Thousand Seven Hundred and Seventy Eight (342,778) Series C Preferred Shares, par value NIS 0.01 per share (the “ Preferred C Shares ”), One Million Five Hundred Eighty Five Thousand Four Hundred and Fourteen (1,585,414) Series D Preferred Shares, par value NIS 0.01 per share (the “ Preferred D Shares ”), and Three Hundred and Twenty Five Thousand (325,000) Series D-1 Preferred Shares, par value NIS 0.01 per share (the “ Preferred D-1 Shares ” and together with the Preferred A Shares, Preferred B Shares, Preferred C Shares and Preferred D Shares, the “ Preferred Shares ”).

 

4. The Company is a private company and accordingly:

 

  (i) The number of Shareholders for the time being of the Company (exclusive of persons who are in the employment of the Company and of persons who having been formerly in the employment of the Company were, while in such employment, and have continued after such employment to be, Shareholders of the Company) is not to exceed fifty (50), but where two (2) or more persons hold one (1) or more share(s) in the Company jointly, they shall, for the purposes of this Article, be treated as a single Shareholder;

 

  (ii) Any invitation to the public to subscribe for any shares or debentures or debenture stock of the Company is hereby prohibited; and

 

3


  (iii) The right to transfer shares shall be restricted as hereinafter provided.

 

  (iv) The liability of the Shareholders of the Company for the indebtedness of the Company shall be limited as follows:

 

  (a) If the shares of the Company have a nominal value, the liability of each Shareholder for the indebtedness of the Company is limited to payment of the nominal value of the shares of that Shareholder.

 

  (b) If at any time the Company shall issue shares with no nominal value, the liability of the Shareholders shall be limited to payment of the amount that the Shareholders should have paid to the Company in the respect of each share according to the conditions of issue.

SHARES

5.

 

  5.1 The Ordinary Shares shall have equal rights including voting rights and rights to receive dividends. Subject to the rights conferred by the Preferred Shares, the Ordinary Shares shall confer upon the registered owners thereof the right to receive, upon the winding up of the Company, a sum equal to their nominal value, and if a surplus remains, to receive such surplus in proportion to the nominal value of the shares held by them respectively and in respect of which such distribution is being made and to receive a portion of the Company’s profits, when distributed, in proportion to the nominal value of the shares held by them respectively and in respect of which such distribution is being made.

 

  5.2 The Preferred Shares confer on the holders thereof all rights accruing to holders of Ordinary Shares in the Company (except as otherwise explicitly provided in these Articles) and, in addition, confer the following rights:

 

  (a) Every holder of Preferred Shares shall have one vote for each Ordinary Share into which the Preferred Shares held by it of record could be converted (as provided in this Article 5.2).

 

(b)    (i)      Each Preferred Share shall, at the option of the holder thereof, at any time after the date of issuance of such share be converted for no additional consideration into such number of fully paid and non assessable Ordinary Shares as is determined by dividing the “ Original Issue Price ” (as defined in Article 5.2(b)(ix)) by the “ Conversion Price ” (which shall initially be equal to the Original Issue Price, and shall be subject to adjustment under Article 5.2 (d), (e) and (f), and Article 5.3) at the time in effect for such Preferred Share. Notwithstanding the calculation of the Conversion Price set forth above, the Conversion Price of the Preferred D-1 Shares shall initially be equal to half of the Original Issue Price for the Preferred D-1 Share and shall be subject to

 

4


       adjustment only to the extent that the adjustment result in a price lower than half of the Original Issue Price for the Preferred D-1 Share. In the event that the aggregate nominal value of all such Ordinary Shares shall exceed the consideration paid to the Company with respect to such Preferred Share and the Company does not have sufficient premiums from other resources to capitalize in that respect, then, the holder of such Preferred Shares, in its sole discretion, will do one of the following: (i) convert the Preferred Share into such number of Ordinary Shares obtained by dividing the Original Issue Price by the par value of the Preferred Share, or (ii) pay to the Company its pro rata portion of such excess nominal value.
   (ii)      The Preferred A Shares shall, immediately upon (i) the closing of the Company’s offer of its securities to the public under the U.S. Securities Act of 1933, as amended, the Israeli Securities Law, 1968, or similar securities laws of another jurisdiction (the “ IPO ”), (ii) written consent of a majority of the outstanding Preferred A Shares or (iii) such time as 75% of the Preferred A Shares have been converted to Ordinary Shares, automatically be converted into and become such number of Ordinary Shares as is equal to the number of shares to be calculated using the same conversion mechanism used in section 5.2b(i) above.
   (iii)      The Preferred B Shares shall, immediately upon (i) the closing of an IPO netting at least US$25 million to the Company, at a price per share which is at least $108.759 (adjusted for share combinations or subdivisions or other recapitalizations of the Company’s shares) plus interest at a rate of LIBOR + 1% p.a. accruing from December 15, 2004, (ii) written consent of a majority of the outstanding Preferred B Shares or (iii) such time as 75% of the Preferred B Shares have been converted to Ordinary Shares, automatically be converted into and become such number of Ordinary Shares as is equal to the number of shares to be calculated using the same conversion mechanism used in section 5.2b(i) above.
   (iv)      The Preferred C Shares shall, immediately upon (i) the closing of an IPO netting at least US$30 million to the Company, at a price per share which is at least $120.341 (adjusted for share combinations or subdivisions or other recapitalizations of the Company’s shares) plus interest at a rate of LIBOR + 1% p.a. accruing from December 31, 2006, (ii) written consent of a majority of the outstanding Preferred C Shares, automatically be converted into and become such number of Ordinary Shares as is equal to the number of shares to be calculated using the same conversion mechanism used in section 5.2 b (i) above.

 

5


   (v)      The Preferred D Shares shall, immediately upon (i) the closing of an IPO netting at least US$30 million to the Company, at a price per share which is at least $151.38 (adjusted for share combinations or subdivisions or other recapitalizations of the Company’s shares) plus interest at a rate of LIBOR + 1% p.a. accruing from March 13, 2008, (ii) written consent of a majority of the outstanding Preferred D Shares, automatically be converted into and become such number of Ordinary Shares as is equal to the number of shares to be calculated using the same conversion mechanism used in section 5.2 b (i) above.
   (vi)      The Preferred D-1 Shares shall, immediately upon (i) the closing of an IPO netting at least US$30 million to the Company, at a price per share which is at least $201.84 (adjusted for share combinations or subdivisions or other recapitalizations of the Company’s shares) plus interest at a rate of LIBOR + 1% p.a. accruing from the date of issue by the Company of such Preferred D-1 Shares, (ii) written consent of a majority of the outstanding Preferred D-1 Shares, automatically be converted into and become such number of Ordinary Shares as is equal to the number of shares to be calculated using the same conversion mechanism used in section 5.2b(i) above.
   (vii)      The Ordinary Shares issued upon conversion of the Preferred Shares shall be fully paid and non-assessable to the same extent that the Preferred Shares with respect to which they were issued were fully paid and non-assessable.
   (viii)      Such acts of conversion and issuance as aforesaid are sometimes hereinafter collectively referred to as a “ Conversion ”. Whenever these Articles determine distributions or other rights on an “as converted basis” or “assuming all Preferred Shares have been converted into Ordinary Shares” or the like, such determinations shall include all Ordinary Shares that would result from a Conversion in accordance with sub-article 5.2(b)(i).
   (ix)      For the purposes of these Articles of Association, the “Original Issue Price” of the Preferred A Shares shall be equal to $24.641, of the Preferred B Shares shall be equal to US$36.253, of the Preferred C Shares shall be equal to $40.114, of the Preferred D Shares shall be equal to $50.46 and of the Preferred D-1 Shares shall be equal to $50.46. The Original Issue Price shall be at all times subject to any recapitalization, stock splits, stock dividends and the like. To avoid doubt it is clarified that the Preferred D-1 Shares Original Issue Price shall be equal to $50.46 notwithstanding any reduction of the purchase price per share of a Preferred D-1 Share resulting from any discount thereon pursuant to the CBLA as such term is defined in section 5.3.1 below.

 

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(c)    (i)      A Conversion of Preferred Shares pursuant to the election of the holder thereof, shall be made by the surrender of the certificate or certificates therefor, duly endorsed, at the office of the Company, and the giving of written notice by mail, postage prepaid, to the Company at its principal corporate office, of the election to Convert the same and stating therein the name or names of any nominee for such holder in which the certificate or certificates for Ordinary Shares are to be issued. Such Conversion shall be deemed to have been made immediately prior to the close of business on the date of such surrender of the certificate representing the Preferred Shares to be converted, and, subject to the transfer restrictions contained in these Articles, the person or persons entitled to receive the Ordinary Shares issuable upon such Conversion shall be treated for all purposes as the record holder or holders of such Ordinary Shares as of such date. In the event that the certificate(s) representing the Preferred Shares to be converted as aforesaid are not delivered to the Company, then the Company shall not be obligated to issue any certificate(s) representing the Ordinary Shares issued upon such conversion, unless the holder of such Preferred Shares notifies the Company in writing that such certificate(s) have been lost, stolen or destroyed and executes an agreement satisfactory to the Company to indemnify the Company from any loss incurred by it in connection with such certificates.
   (ii)      A conversion of Preferred Shares pursuant to one of the events described in Articles 5.2 (b)(ii), 5.2 (b)(iii), 5.2 (b)(iv), 5.2(b)(v) or 5.2(b)(vi), as the case may be, shall be deemed to have taken place automatically regardless of whether the certificates representing such shares have been tendered to the Company, but, from and after such Conversion, any such certificates not tendered to the Company shall be deemed to evidence solely the Ordinary Shares received upon such Conversion and the right to receive a certificate for such Ordinary Shares.
   (iii)      The Company shall, as soon as practicable after the Conversion and tender of the certificate for the Preferred Shares converted, issue and deliver at such office to such holder of Preferred Shares or to the nominee or nominees of such holder, a certificate or certificates for the number of Ordinary Shares to which such holder shall be entitled as aforesaid.
(d)   If the Company recapitalizes, subdivides or combines any class of its shares, the Company shall make a corresponding change with respect to all of its other classes of shares as at the earlier of the record date or

 

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  effective date of such initiating change and the Conversion Price of the Preferred A Shares, Preferred B Shares, Preferred C Shares, Preferred D Shares and Preferred D-1 Shares shall be adjusted accordingly.
(e)   If the Company at any time declares a dividend, with respect to its Ordinary Shares only, payable in additional shares of Ordinary Shares or other securities or rights convertible into, or entitling the holder thereof to receive directly or indirectly, additional Ordinary Shares, or a distribution payable in securities of other entities, evidences of indebtedness issued by the Company or other entities, assets (excluding cash dividends) or other options or rights, then, in each such case, the holders of the Preferred Shares shall be entitled to receive such distribution, in respect of their holdings on an as-converted basis as of the record date for such distribution.
(f)   If at any time or from time to time there shall be a recapitalization of the Ordinary Shares (other than a subdivision, combination or merger or sale of assets transaction provided for elsewhere in this Article), provision shall be made so that the holders of the Preferred Shares shall thereafter be entitled to receive upon Conversion of the Preferred Shares the number of Ordinary Shares or other securities or property of the Company or otherwise, to which a holder of Ordinary Shares deliverable upon Conversion of the Preferred Shares would have been entitled immediately prior to such recapitalization. In any such case, appropriate adjustments shall be made in the application of the provisions of this Article 5.2 with respect to the rights of the holders of the Preferred Shares after the recapitalization to the end that the provisions of this Article 5.2 (including adjustments of the Conversion Price then in effect and in the number of shares issuable upon Conversion of the Preferred Shares) shall be applicable after that event as nearly equivalent as may be practicable.
(g)   The Company will not, by amendment of these Articles or through any reorganization, recapitalization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder in this Article 5.2 or 5.3 by this Company, but will at all times in good faith assist in the carrying out of all the provisions of this Article 5.2 and 5.3 and in taking of all such actions as may be necessary or appropriate in order to protect the Conversion rights of the holders of the Preferred Shares against impairment.
(h)   No fractional shares shall be issued upon Conversion of the Preferred Shares, and the number of Ordinary Shares to be issued shall be rounded to the nearest whole share.
(i)   Upon the occurrence of each adjustment or readjustment of the number of Ordinary Shares issuances upon a Conversion pursuant to this Article 5.2

 

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  and 5.3, the Company, at its expense, shall promptly compute such adjustment or readjustment in accordance with the terms hereof and prepare and furnish to each holder of Preferred Shares so affected a certificate setting forth each adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Company shall furnish or cause to be furnished to such holder a like certificate setting forth (A) such adjustment or readjustment, (B) the Conversion Price, as the case may be, at the time in effect; and (C) the number of shares of Ordinary Shares and the amount, if any, of other property which at the time would be received upon the Conversion of a Preferred Share.
(j)   In the event of any taking by the Company of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend (including a cash dividend) or other distribution, any right to subscribe for, purchase or otherwise acquire any shares of any class or any other securities or property, or to receive any other right, the Company shall mail to each holder of Preferred Shares, at least twenty (20) days prior to the date specified therein, a notice specifying the date on which any such record is to be taken for the purpose of such dividend, distribution or right, and the amount and character of such dividend, distribution or right.
(k)   The Company shall at all times reserve and keep available out of its authorized but unissued share capital, solely for the purpose of effecting the Conversion of the Preferred Shares, such number of its Ordinary Shares as shall from time to time be sufficient to effect the Conversion of all issued and outstanding Preferred Shares; and if at any time the number of authorized but unissued Ordinary Shares (together with the number of issued and outstanding Preferred Shares) shall not be sufficient to effect the Conversion of all then outstanding Preferred Shares, in addition to such other remedies as shall be available to the holders of such Preferred Shares, the Company will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued Ordinary Share capital to such number of shares as shall be sufficient for such purposes.

 

  5.3 Anti Dilution

 

  5.3.1

Prior to the closing of (i) an initial public offering of the Company’s ordinary shares netting at least US$30 million to the Company, at a price per share which is at least $201.84 (adjusted for share combinations or subdivisions or other recapitalizations of the Company’s shares) plus interest at a rate of LIBOR + 1% p.a. accruing from April 30 2013, or (ii) an initial public offering of the Company’s Ordinary Shares which does not comply with the thresholds of (i) above but in connection therewith all Preferred Shares of the Company

 

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  have been converted into Ordinary Shares pursuant to the provisions of Article 5.2 (the “ QIPO ”) the respective Conversion Price of the Preferred A Shares, Preferred B Shares, Preferred C Shares, Preferred D Shares and Preferred D-1 Shares, shall be adjusted from time to time as follows:

In the event that the Company issues New Shares (as defined below) at a price per share which is lower than the respective Conversion Price of such Preferred Shares then in effect (after adjustments for any recapitalization, stock splits, stock dividends and the like), then the Conversion Price applicable to such Preferred Shares, in effect immediately prior to the issuance of New Shares shall be reduced, for no additional consideration other than as set forth in Article 5.2(b)(i), to be equal to such lower price of the New Shares.

No adjustment of such Conversion Price pursuant to this subsection shall be made if it has the effect of increasing the Conversion Price above the Conversion Price in effect immediately prior to such adjustment.

In the case of the issuance of shares or other securities for a consideration in whole or in part other than cash, the price per share shall be deemed to be the fair market value thereof as determined by the majority of the Board of Directors.

For purposes of this Article 5.3, “ New Shares ” shall mean any (i) shares of the capital of the Company, (ii) options or warrants to purchase or rights to subscribe for shares of the Company (collectively “ Options ”), (iii) securities by their terms convertible into or exchangeable for shares of the Company (“ Convertible Securities ”), and (iv) options to purchase Convertible Securities; other than (a) securities issued as incentive to employees and consultants of the Company approved by the Board of Directors, other than for investment purposes, (b) share issuances pursuant to exercise of options or warrants issued by the Company, (c) Ordinary Shares issued by way of share dividend, or bonus shares, (d) Securities issued in connection with any share split, recapitalization, reclassification, or similar event by the Company, (e) shares issued upon conversion of Preferred Shares into Ordinary Shares or upon grant of anti dilution protection under the provisions of these Articles, (f) Securities issued to a strategic partner who is active in the Company’ s line of business, has substantial annual revenues and enters into a collaboration agreement with the Company to provide services in the Company’s line of business and is determined by the Board of Directors to be a strategic partner, (g) Securities issued in connection with the acquisition of another corporation, business entity or line of business of another business entity by the Company by merger, consolidation,

 

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purchase of all or substantially all of the assets, or other reorganization as a result of which the Company owns not less than fifty percent (50%) of the voting power of such corporation provided that i) such transaction has been approved in advance by the Board of Directors with the approval of at least one Preferred Director and in writing by the holders of 60% of the Preferred Shares and ii) the primary purpose of this transaction is not to raise capital; and (h) with respect to the Convertible Bridge Loan Agreement dated April 30, 2013 (“CBLA”) and any rights, shares and securities issued thereunder or upon the conversion of any of the foregoing, anti dilution price adjustment will be determined only based upon the relevant price per share of the securities into which the funds provided under the CBLA are converted and any reduction of such purchase price per share in any such conversion resulting from any discount thereon pursuant to the CBLA shall be ignored for the purpose of determining the anti dilution protection under this Article 5.3.

 

  5.3.2 The Ordinary Shares held by Prof. Dror Harats will be entitled to anti-dilution protection following each issuance of New Shares (as such term is defined in Article 5.3) at any time from January 1, 2003 until September 30, 2005. The anti dilution protection shall be effected by way of issuance of an additional number of Ordinary Shares equal to 10% of the New Shares (the “ Anti Dilution Shares ”) in consideration of their nominal value. Following September 30, 2005 and until the later of (i) December 31, 2006 and (ii) the last sale of Series C Preferred Shares under the Series C Subscription Agreement, the percentage of shares to be purchased under this right shall decrease to 7% of the New Shares (which for the purposes hereof shall not include any Preferred C Shares issued upon exercise of the Preferred C Warrants). The Anti Dilution Shares may be purchased by Prof. Harats immediately prior to the consummation of any of the following events: (i) any liquidation, dissolution or winding up of the Company, (ii) any merger, sale of all or substantially of the assets of the Company, (iii) the issuance or transfer of at least the majority of the shares of the Company, or (iv) an IPO, or during the week prior to the record date for determining the identity of the Shareholders entitled to receive dividends or other distribution from the Company. The Company will at all times reserve, or increase its registered share capital as may be required, and keep available for issuance and delivery such Anti Dilution Shares, as from time to time shall be issuable pursuant to this right. Upon any issuance of New Shares, the Company, at its expense, shall promptly calculate the number of Anti Dilution Shares in accordance with the terms hereof and prepare and furnish to Prof. Harats a certificate setting forth the number of Anti Dilution Shares he is entitled to purchase under the terms hereof following such issuance.

 

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  5.4 The Company shall not create shares with rights senior to or in parity with the rights of the Preferred Shares, unless determined otherwise by a vote of the Shareholders (which shall include the consent of at least 60% of the outstanding Preferred Shares or the written consent of at least 60% of the outstanding Preferred Shares).

 

  5.5 As long as the holders of Preferred Shares hold in the aggregate more than 10% of the Company’s issued and outstanding share capital, the Company will not adopt any of the following resolutions or actions without the prior written consent of the holders of at least 60% of the Preferred Shares, voting as a single class (and with respect to matters in which any specific holder of Preferred Shares (rather than a class of Preferred Shares) would have a disproportionate benefit to other holders of Preferred Shares, other than a benefit arising from its holding of shares of the Company, the consent threshold will exclude such “interested” Preferred holders with respect to such matters (provided that with respect to actions or resolutions brought before the Board of Directors of the Company, the affirmative vote or other consent or approval of 60% of the Preferred Directors then in office (currently at least three out of the four Preferred Directors) will be considered, for the purpose of this Article, the consent of such holders):

 

  5.5.1 Authorize or effect the sale of all or substantially all of the Company’s material assets;

 

  5.5.2 Engage in any material line of business other than the business currently undertaken by the Company or any other material change in the Company’s business;

 

  5.5.3 Declare, set aside any dividend or other distribution in respect of any shares of the Company;

 

  5.5.4 Terminate the employment of Prof. Dror Harats by the Company.

 

  5.5.5 Approve and authorize Interested Parties Transactions (as defined in the Companies Law);

 

  5.5.6 Approve and authorize (i) The dissolution or liquidation of the Company; (ii) the appointment of a receiver or liquidator with respect to all or substantially all of the Company’s assets; (iii) the sale of all or substantially all of the shares of the Company; or (iv) the merger or consolidation of the Company with or into another entity, in each of the cases in this Article 5.5.6 - which yields per each share held by the shareholders less than $151.38 (adjusted for share combinations or subsidiaries or other recapitalizations of the Company’s Shares) plus interest at a rate of LIBOR + 1% p.a. accruing from March 13, 2008;

 

  5.5.7 Approve and authorize the execution by the Company of a licensing agreement, pursuant to which the Company grants a third party rights in all, or a material part, of its intellectual property;

 

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  5.5.8 any borrowed funds by the Company in excess of $100,000;

 

  5.5.9 the pledging or otherwise allowing the encumbrance of assets of the Company with a value in excess of $100,000, other than in the ordinary course of business; and

 

  5.5.10 increasing the number of authorized Preferred D Shares or Preferred D-1 Shares for issuance.

 

  5.5.11 Issuance of Preferred D1 Shares other than issuance in the event of conversion of the funds provided to the Company under the CBLA and provided that such issuance is made according to the terms of the CBLA.

 

  5.6 In addition to the provisions set forth in Section 5.5 above, the Company will not: (i) Alter the provisions of its incorporating documents in a manner which might have an adverse effect on the rights and privileges attached to the Preferred A Shares without obtaining the prior written consent of the holders of at least two thirds of the Preferred A Shares, voting as a single class, (ii) Alter the provisions of its incorporating documents in a manner which might have an adverse effect on the rights and privileges attached to the Preferred B Shares without obtaining the prior written consent of the holders of at least two thirds of the Preferred B Shares, voting as a single class; (iii) Alter the provisions of its incorporating documents in a manner which might have an adverse effect on the rights and privileges attached to the Preferred C Shares without obtaining the prior written consent of the holders of the majority of the Preferred C Shares, voting as a single class; (iv) Alter the provisions of its incorporating documents in a manner which might have an adverse effect on the rights and privileges attached to the Preferred D Shares without obtaining the prior written consent of the holders of at least a majority of 60% of the Preferred D Shares, voting as a single class provided that any material adverse change to the rights, privileges, advantages, restrictions or provisions of the Preferred D Shares (such as, without limitation, adversely changing rights such as the liquidation preference, anti dilution or other rights of such class or amending any thresholds relating specifically to such class) shall require a majority of 65% of the Preferred D Shares, voting as a single class; and (v) Alter the provisions of its incorporating documents in a manner which might have an adverse effect on the rights and privileges attached to the Preferred D-1 Shares without obtaining the prior written consent of the holders of at least a majority of 60% of the Preferred D-1 Shares, voting as a single class provided that any material adverse change to the rights, privileges, advantages, restrictions or provisions of the Preferred D-1 Shares (such as, without limitation, adversely changing rights such as the initial Conversion Price, liquidation preference, anti dilution or other rights of such class or amending any thresholds relating specifically to such class) shall require a majority of 65% of the Preferred D-1 Shares, voting as a single class.

 

  5.7 All Preferred D-1 Shares not issued up until May 31, 2014 shall be automatically converted into Deferred Shares. Each Deferred Share shall confer upon its holder the sole right to receive the nominal value of such share upon liquidation or dissolution of the Company, pari passu with the holders of Ordinary Shares, and no other rights whatsoever.

 

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6. If at any time the share capital is divided into different classes of shares, the Company may, unless otherwise provided by the terms of issue of the shares of that class and subject to the provisions of Article 2 above, modify, convert, broaden, add or otherwise alter the rights, privileges, advantages, restrictions and provisions related or unrelated at that time to the shares of that class with the consent in writing of the holders of three-fourths (  3 4 ) of the shares of such class, or (i) with respect to the Preferred A Shares - a majority of 2/3, or (ii) with respect to the Preferred B Shares - a majority of 2/3, or (iii) with respect to the Preferred C Shares - a majority of the issued shares of that class, or (iv) with respect to the Preferred D Shares - a majority of 60% of the issued shares of that class provided that any material adverse change to the rights, privileges, advantages, restrictions or provisions of the Preferred D Shares (such as, without limitation, adversely changing rights such as the liquidation preference, anti dilution or other rights of such class or amending any thresholds relating specifically to such class) shall require a majority of 65% of the Preferred D Shares, or (v) with respect to the Preferred D-1 Shares - a majority of 60% of the issued shares of that class provided that any material adverse change to the rights, privileges, advantages, restrictions or provisions of the Preferred D-1 Shares (such as, without limitation, adversely changing rights such as the initial Conversion Price, liquidation preference, anti dilution or other rights of such class or amending any thresholds relating specifically to such class) shall require a majority of 65% of the Preferred D-1 Shares, or with respect to each of the above with the sanction of a resolution passed with the aforesaid majorities at a separate general meeting of the holders of the shares of that class.

The provisions of these Articles relating to general meetings and to the convening thereof and to notices in respect thereof and to resolutions to be passed thereat shall mutatis mutandis apply to every separate general meeting as mentioned above, provided always that, unless otherwise provided by the terms of issue of the shares of that class, the requisite quorum at the initial (but not an adjourned) separate general meeting shall be at least 2 (two) Shareholders of such class, present in person or by proxy and holding between them a majority of the issued shares of that class.

The mere enlargement of an existing class of shares, or the issuance or allotment of additional shares thereof, or the creation or issuance of additional shares of that class as a result of conversion of shares from another class shall not be deemed to modify or alter the rights attached to the previously issued shares of such class. In addition, but subject to Article 5.4 above, (i) the creation of a new class of shares or the issuance of shares thereof; or (ii) a waiver or a change, in whole or in part, to a right, preference or privilege of a class of shares (such as liquidation rights, registration rights, pre-emptive rights, etc, whether set forth in these Articles or in any agreement), whether applied on a one-time or permanent basis and whether applied in connection with a current or a future event, which waiver or change is applied in the same manner to all classes of shares which hold

 

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such right (as opposed to a change which relates solely to a specific class of shares only), regardless of whether the economic effect of such change affects classes of shares differently, shall not be deemed to be a change to the rights attached to any one class of shares. In addition, any waiver or change to the rights attached to a class of shares shall not be deemed to be a direct change to the rights attached to another class of shares, if such other class of shares was not entitled to the relevant rights prior to such waiver or change.

In addition, in the event that the Company agrees to grant to future investors in the Company rights preferential to those granted hereunder or otherwise to the holders of Preferred or Ordinary Shares (such as, for illustration purposes only, preferential liquidation preference rights), or rights that do not substantially affect the rights of the holders of Ordinary Shares (such as, for illustration purposes, increase of the number of the directors), whether set forth in these Articles of Association or in any agreements, or rights to share proportionally in rights granted to the Preferred Shares (or shareholders of the Company generally, if applicable) (such as pre-emptive rights, restrictive rights, co-sale rights etc.), then by a Shareholders resolution with the consent of 60% of the Preferred Shares, such changes shall be binding upon all shareholders of the Company without the need for specific class consent or vote.

 

7. Subject to the rights of the holders of the Preferred Shares in these Articles (including Article 5.4 above), the shares shall be under the control of the Board of Directors of the Company, which may issue or allot them or give any person the option to acquire them or otherwise dispose of them for cash or other consideration to such persons, on such terms and conditions, and either at a premium or at par, or, subject to the provisions of the Companies Law, at a discount and at such times as the Board of Directors may deem fit, and with full authority to serve on any person a call on any shares either at par or at a premium, or, subject as aforesaid, at a discount, during such time and for such consideration as the Board of Directors may deem fit.

 

8. If by the conditions of allotment of any share, the whole or any part of the price thereof shall be payable by installments, every such installment shall, when due, be paid to the Company by the registered holder of the share for the time being or from time to time or by its administrators.

 

9. The Board of Directors may make arrangements on the issue of shares for a difference between the holders of such shares in the amount of calls and/or the time of payment thereof.

 

10. The Company may, subject to and in accordance with the provisions of the Companies Law, purchase or undertake to purchase, or provide finance and/or assistance or undertake to provide finance and/or assistance, directly or indirectly, with respect to the purchase of, its shares or securities which may be converted into shares of the Company or which confer rights upon the holders thereof to purchase shares of the Company.

 

11.

Save as herein otherwise provided, the Company shall be entitled to treat the registered holder of any share as the absolute owner thereof, and, accordingly, shall not, except as

 

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  ordered by a court of competent jurisdiction, or as by law or statute required, be bound to recognize any equitable or other claim to or interest in such share on the part of any other person. No person shall be recognized by the Company as holding any share upon any trust, and the Company shall not be bound by or required to recognize any equitable, contingent, future or partial interest in any shares or any right whatsoever in respect of any shares other than an absolute right to the entirety thereof in the registered holder.

SHARE CERTIFICATES

 

12. The certificates of title to shares (hereinafter: “ Share Certificates ”) shall be issued under the seal or the rubber stamp of the Company and shall bear the signatures of two Directors, or one Director and the Secretary of the Company.

 

13. Every Shareholder shall be entitled to one Share Certificate for all the shares registered in his name, and if the Board of Directors so approves (upon payment of the amount which may from time to time be fixed by the Board of Directors), to several Share Certificates each for one or more such shares. Every Share Certificate shall specify the denoting numbers of the shares in respect of which it is issued and the amount paid-up thereon.

 

14. The certificate of shares registered in the names of two or more persons shall be delivered to the person first named on the Register in respect of such co-ownership.

 

15. If a Share Certificate is defaced, lost or destroyed, it may be renewed on payment of such fee, if any, and on such terms as to evidence and indemnity, as the Board of Directors thinks fit.

CALLS

 

16. The Board of Directors may from time to time make such calls as it deems fit upon the Shareholders in respect of all moneys unpaid on the shares held by them respectively, and by the conditions of allotment thereof not made payable at fixed times, and each Shareholder shall pay the amount of every call so made on it to the persons and at the time and place appointed by the Board of Directors. A call may be made payable by installments, and shall be deemed to have been made when the resolution of the Board of Directors authorizing such call was passed.

 

17. Fourteen (14) days’ notice of any call shall be given, specifying the time and place of payment, and to whom such call shall be paid, provided that before the time for payment of such call the Board of Directors may, by notice in writing to the Shareholders, revoke the same or extend the time for payment thereof.

 

18. The joint holders of a share shall be jointly and severally liable to pay all calls in respect thereof.

 

19. If by the terms of issue of any share or otherwise any amount is made payable at any fixed time or by installments at fixed times, whether on account of the amount of the share or by the way of premium, every such amount or installment shall be payable as if it were a call duly made by the Board of Directors of which due notice had been given, and all the provisions herein contained in respect of such calls shall apply to such amount or to such installment.

 

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20. If the amount of any call or installment is not paid on or before the due date for payment thereof, then the person who is for the time being the owner of the share on which the call was made or the installment became due, shall pay interest on the said amount at the maximum rate permissible under law for the time being, or at such lesser rate as may be fixed by the Board of Directors from time to time, as from the date of payment until the same is actually paid. The Board of Directors shall, however, be at liberty to waive the payment of interest, wholly or in part. No Shareholder shall be entitled to receive any dividend or to exercise any privileges as a Shareholder until he shall have paid all calls for the time being due and payable on every share held by it whether alone or jointly with any other person together with interest and expenses (if any).

 

21. If the Board of Directors deems fit, it may receive from any Shareholder willing to advance the same, any amounts due on account of all or any of his shares which have not yet been called or in respect of which the date of payment has not yet fallen due, and, unless otherwise agreed with such Shareholder, the Board of Directors may pay it interest on all or any of the amounts so advanced, up to the date when same would, if not paid in advance, have fallen due, at such rate of interest as may be agreed upon between the Board of Directors and such Shareholder, and the Board of Directors may at any time repay any amount so advanced by giving such Shareholder seven days’ prior notice in writing.

 

22. The Board of Directors may determine differences between Shareholders in relation to the amount of any call and to the date of payment.

FORFEITURE AND LIEN

 

23. If any Shareholder fails to pay any call or installment on or before the day appointed for payment of the same, the Board of Directors may at any time thereafter, as long as the said call or installment remains unpaid, resolve to forfeit all or any of the shares in the event the Shareholder does not pay the same, as provided below, together with any interest that may have accrued and all expenses that may have been incurred by reason of such non-payment.

 

24. Notice of any such resolution shall be served on the Shareholder. The notice shall name a day (being not less than fourteen days from the date of the notice) and a place or places on and at which such call or installment and such interest and expenses as aforesaid are to be paid. The notice shall also state that in the event of non-payment at or before the time and at the place appointed, the shares in respect of which the call was made or installment is payable will be ipso facto forfeited, save shares that have been fully paid for.

 

25. Any forfeiture as aforesaid shall include all dividends declared in respect of the forfeited shares and not actually paid before the forfeiture.

 

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26. Any share so forfeited shall be the property of the Company, and the Board of Directors may, subject to the provisions hereof and the provisions of the Companies Law, sell, re-allot and otherwise dispose of the same as it may deem fit.

 

27. The Board of Directors may at any time, before any share so forfeited shall have been sold, re-allotted or otherwise disposed of, annul the forfeiture on such conditions as it deems fit. No such annulment shall stop the Board of Directors from re-exercising its powers of forfeiture pursuant to these Articles.

 

28. Any Shareholder whose shares have been forfeited shall cease to be a Shareholder in respect of the forfeited shares, but shall, notwithstanding, be liable to pay, and shall forthwith pay, to the Company, all calls, installments, interest and expenses owing upon or in respect of such shares at the time of forfeiture, together with interest thereon from the time of forfeiture, until payment, at the maximum rate of interest permissible under law for the time being, and the Board of Directors may enforce the payment of such moneys, or any part thereof, if it so thinks fit, but shall not be under any obligation to do so.

 

29. The provisions of these Articles relating to forfeiture shall apply to any case of non-payment of a known sum which, according to the terms of issue or allotment of the share, is payable at any fixed time, whether on account of the amount of the share or by way of premium, as if such a sum were payable under a call duly made, notified and delivered.

 

30. Except to the extent that the same may be waived or subordinated in writing, the Company shall have a first and paramount lien upon all the shares registered in the name of each Shareholder (without regard to any equitable or other claim or interest in such shares on the part of any other person), and upon the proceeds of the sale thereof, for his debts, liabilities and obligations to the Company arising from any amount payable by such shareholder in respect of any unpaid or partly paid share, whether or not such debt, liability or obligation has matured. Such lien shall extend to all dividends from time to time declared or paid in respect of such share. Unless otherwise decided, the registration by the Company of a transfer of shares shall be deemed to be a waiver on the part of the Company of the lien (if any) on such shares, immediately prior to such transfer.

 

31. For the purpose of enforcing such lien, the Board of Directors may sell the shares subject thereto in such manner as it deems fit; but no sale shall be made until the period for the fulfillment or discharge of the debts, liabilities and engagements as aforesaid shall have arrived, and until notice in writing of the Company’s intention to sell shall have been served on such Shareholder, his executors or administrators, and the payment, fulfillment or discharge of such debts, liabilities or engagements is not made during the seven days after such notice.

 

32. The net proceeds of any such sale, after payment of the costs thereof, shall be applied in or towards satisfaction of the debts, liabilities or engagements of such Shareholder (including debts, liabilities and engagements which have not yet fallen due for payment or satisfaction) and the remainder (if any) shall be paid to the Shareholder, his executors, administrators or assigns.

 

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33. Upon any sale after forfeiture or for enforcing a lien in exercise of the powers hereinbefore given, the Board of Directors may appoint some person to execute an instrument of transfer of the shares sold and cause the purchaser’s name to be entered in the Register in respect of the shares sold, and the purchaser shall not be bound to see to the regularity of the proceedings, or to the application of the purchase money, and after his name has been entered in the Register in respect of such shares, the validity of the sale shall not be impeached by any person, and the remedy of any person aggrieved by the sale, if grounds for any remedy exist in accordance with law, shall be in damages only and against the Company exclusively.

 

34. TRANSFER AND TRANSMISSION OF SHARES

Any transfer of shares requires the written consent of the Board of Directors and no transfer shall have any legal effect without the consent of the Board of Directors. The Board of Directors may withhold its consent from any transfer of shares in the Company if such transfer is to a competitor or a potential competitor (as reasonably determined by the Board) of the Company or if there are specific reasonable reasons, to be set forth in writing, why such transfer will adversely affect the Company. Notwithstanding the above, it shall not be necessary to obtain the Board of Directors’ consent for the transfer of shares from any Shareholder to (i) his spouse or one of his children (including adopted children), parent, sibling, lineal antecedent; (ii) an entity or person, as the case may be, controlled by, controlling or under common control, with such Shareholder (provided that if such entity does not remains so controlled or controlling such shares shall be transferred back to the original Shareholder or to another such entity); (iii) as to any shareholder which is a partnership, in addition to clause (ii) above, such shareholder may assign and transfer to any of such Shareholder’s partners and to affiliated partnerships managed by the same management company or the same managing general partner as such shareholder or by an entity which controls, is controlled by, or is under common control with, such Shareholder, management company or managing general partner; (iv) as to any entity forming part of the Aurum Group to another entity that is part of the Aurum Group; and (v) as to any entity forming part of the Pitango group to another entity that is part of the Pitango group (each of the above, a “ Permitted Transferee ”).

 

35. A transfer of shares in accordance with the provisions of an agreement signed by all Shareholders of the Company shall not require the consent of the Board of Directors, and the Board of Directors shall not have the authority to prevent the transfer of shares in accordance with an agreement between all the Shareholders.

 

36. Right of First Refusal .

 

  36.1 In the event that any Shareholder of the Company (the “ Selling Shareholder ”) desires to transfer any or all of its shares to any party other than to a Permitted Transferee (the “ Offered Shares ”), it shall first give written notice thereof (“ Notice of Sale ”) to all holders of Ordinary Shares holding more than 2% of the outstanding and issued shares of the Company and to all holders of Preferred Shares (collectively the “ Option Holders ”).

 

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  36.2 The Notice of Sale shall state the number of Offered Shares, whether the Offered Shares will, upon the sale, be free of all liens charges and encumbrances, that a bona fide offer has been received from a third party, the identity of the third party, and the price and terms of payment for the Offered Shares. Upon receipt of the Notice of Sale, the Option Holders shall have the right to exercise the option (the “ Option ”) as specified under Articles 36.3 and 36.4. The Notice of Sale shall also include a copy of any written proposal, term sheet or letter of intent or other agreement relating to the proposed transfer.

 

  36.3 For a period of 20 days after receipt of the Notice of Sale, the Option Holders collectively may elect to purchase all (but not part) of the Offered Shares (those Option Holders which exercise the Option are referred to as the “ Buying Shareholders ”). The Option shall be exercised by delivery of a notice by one or more of the Buying Shareholders to the Selling Shareholder within the aforesaid 20-day period stating that the Buying Shareholder intends to acquire its pro rata share of the Offered Shares, according to the shareholding ratio between the Option Holders as of the date immediately prior to sending such notice.

 

  36.4 If the Selling Shareholder receives notices from all Option Holders that they wish to exercise the Option, then the Buying Shareholders shall acquire the Offered Shares pro rata , according to the shareholding ratio between the Option Holders as of the date immediately prior to sending their notices. If the Selling Shareholder receives notices from Buying Shareholders to buy some, but not all, of the Offered Shares, the Selling Shareholder shall notify each Buying Shareholder in writing, within 10 days following the expiration of the 20-day period referred to in Article 36.3, of the number of excess Offered Shares for which offers to purchase have not been provided, and the Buying Shareholders shall have a right of over-allotment to purchase any Offered Shares not so requested, by written notice received by the Selling Shareholder within 15 days following the aforementioned 10-day period, stating how many additional Offered Shares each Buying Shareholder intends to acquire of the Offered Shares remaining as a result of the failure of all Option Holders to offer to buy their pro rata share (the “ Remaining Offered Shares ”). In any such event, (i) the Buying Shareholders shall each acquire that percentage of the Offered Shares (excluding the Remaining Offered Shares) which corresponds to its percentage ownership of the shares held by the Buying Shareholders as of the date immediately prior to sending their notices and (ii) the Buying Shareholders shall acquire the Remaining Offered Shares pro rata according to the number of additional Offered Shares that each Buying Shareholder offered to acquire in its notice. The purchase of the Offered Shares shall be on the same terms and conditions as stated in the Notice of Sale.

 

  36.5

If, following the 15-day period referred to in Section 36.4 above, the notices of the Buying Shareholders indicate that the Buying Shareholders have not elected to purchase all of the Offered Shares, then the Selling Shareholder shall be free, within 90 days following such 15-day period, to sell all (but not part) of the Offered shares at a price which is not lower and on terms no more favorable to the

 

20


  purchaser than those contained in the Notice of Sale. If there is no sale within such 90-day period, the Selling Shareholder shall not sell or transfer the Offered Shares, or any other shares acquired before or after the date hereof, without again complying with the provisions of this Article.

 

  36.6 In the event that there is a situation in which fractional shares will need to be transferred, the number of shares will be rounded up so that only full shares will be transferred.

 

  36.7 For purposes of determining the holdings and pro rata share of holders of outstanding Preferred Shares, such Preferred Shares shall be treated as if converted into Ordinary Shares.

 

  36.8 The provisions of this Article 36 shall terminate on the QIPO. The provisions of this Article 36 shall not apply to a transfer of shares under Article 48 or in accordance with Section 341 of the Companies Law.

 

  36.9 Should the performance of this Article 36 be considered a “public offering” under applicable Israeli or US securities laws, entitlement to the rights therein shall be limited to the maximum number of shareholders allowed under such laws so that the exercise of such rights will not be considered a “public offering”, whereby eligible shareholders with the smallest numbers of Ordinary Shares (on an as converted basis) will be excluded from such entitlement to the extent required.

 

  36.10 Any transfer of shares by any Co-Sale Holder pursuant to the exercise of its co-sale rights under Article 47 below shall not give the Option Holders additional rights of first refusal or any other participation rights and shall be deemed to have been part of the Offered Shares and included in the Option to the extent that the number of the shares being transferred has not changed as a result of the exercise of co-sale rights. To the extent such number has changed, the provisions hereof shall apply to the transaction again, ab initio , and the transferor shall give a new Notice of Sale hereunder.

 

37. No transfer of shares shall be approved by the Board of Directors unless a proper instrument of transfer has been submitted to the Company together with the Share Certificate for the transferred shares (if such has been issued) and with any other evidence the Board of Directors may require in order to prove to its satisfaction the rights of the transferor in the transferred shares. The instrument of transfer shall be signed by the transferor and the transferee, shall be duly stamped, if required by law, and the transferor shall be considered the owner of the shares until the transferee is registered in the Register in respect of the shares transferred to it.

The instrument of transfer of any share shall be in writing in the following form or as near thereto as possible, or in a usual or accepted form that shall be approved by the Board of Directors:

“I                      of                      (the “ Transferor ”) in consideration of the sum of                      paid to me by                      of                      (the

 

21


Transferee ”) hereby transfer to the Transferee                      shares of NIS 0.01 each, of Vascular Biogenics Ltd., to be held by the Transferee, the executors and administrators of his estate, his custodian and his legal personal representative, under the same conditions under which I myself held them immediately prior to signing this instrument of transfer, and I, the Transferee, hereby agree to accept the above mentioned shares in accordance with the above mentioned conditions.

In witness thereof we hereby affix our signatures this      day of              ,              .

 

 

   

 

Transferor     The Transferee

 

   

 

Witness to the signature

of the Transferor

   

Witness to the signature

of the Transferee”

 

38. Instruments of transfer that are registered shall remain in the Company’s possession; however, instruments of transfer which the Board of Directors refuses to register shall be returned, on demand, to whomever delivered them along with the Share Certificate (if delivered).

 

39. The Board of Directors may suspend the registration of transfers during the fourteen days immediately preceding the ordinary general meeting in each year.

 

40. The executors and administrators of a deceased sole holder of a share, or, if there are no executors or administrators, the persons beneficially entitled as heirs of a deceased sole holder, shall be the only persons recognized by the Company as having any title to the share. In case of a share registered in the names of two or more holders, the Company shall recognize the survivor or survivors as the only persons having any title to or benefit in the share. Nothing herein contained shall release the estate of a deceased joint holder from any liability in respect of any share jointly held by it.

 

41. Any person becoming entitled to a share in consequence of the death of any person, upon producing evidence of the grant of probate or letters of administration or declaration of succession or such other evidence as the Board of Directors may deem sufficient that he sustains the character in respect of which he proposes to act under this Article or of his title, shall be registered as a Shareholder in respect of such shares, or may, subject to the regulations as to transfer herein contained, transfer such shares.

 

42. The Company may recognize the receiver or liquidator of any Shareholder in winding-up or dissolution, or the trustee in bankruptcy or any official receiver of a bankrupt Shareholder as being entitled to the shares registered in the name of such Shareholder.

 

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43. The receiver or liquidator of a Shareholder in winding-up or dissolution, or the trustee in bankruptcy, or any official receiver of any bankrupt Shareholder, upon producing such evidence as the Board of Directors may deem sufficient that he sustains the character in respect of which he proposes to act under this Article or of his title, may, with the consent of the Board of Directors (which the Board of Directors may refuse to grant without giving any reason for its refusal), be registered as a Shareholder in respect of such shares, or may, subject to the regulations as to transfer herein contained, transfer such shares.

 

44. A person upon whom the ownership of a share devolves by transmission shall be entitled to receive, and may give a discharge for any dividends or other monies payable in respect of the share but he shall not be entitled in respect of it to receive notices, or to attend or vote at meetings of the Company, or, save as otherwise provided herein, to exercise any of the rights or privileges of a Shareholder unless and until he shall be registered in the Register.

PRE-EMPTIVE RIGHTS

 

45. Until the closing of the QIPO, subject to the provisions and limitations contained in the Israeli Securities Law of 1968, all holders of Preferred Shares and each holder of Ordinary Shares holding more than 0.5% of the outstanding and issued shares of the Company (“ Offered Shareholder ”) shall be entitled to a pre-emptive right (freely assignable by it to its Permitted Transferees) to purchase their pro rata portion of any New Shares, as defined below, which the Company may, from time to time, offer to sell or issue.

 

  45.1 Each time the Company proposes to offer any shares of, or securities convertible into or exchangeable or exercisable for any shares of, any class of its capital stock (“ New Shares ”), the Company shall first offer such New Shares to the Offered Shareholders of the Company in accordance with the following provisions.

 

  45.1.1 The Company shall deliver to each Offered Shareholder a pre-emptive notice (“ Pre-emptive Notice ”) stating: (i) its bona fide intention to offer such New Shares; (ii) the aggregate number of such New Shares to be offered; (iii) the identity of the proposed purchasers; (iv) the price and terms upon which it proposes to offer such New Shares; and

 

  45.1.2 the aggregate number of such New Shares to be offered to each Offered Shareholder, shall be the portion of the New Shares that equals the proportion between: (A) the number of shares then held, by each Offered Shareholder on an as converted basis; to (B) the total number of shares of Ordinary Shares of the Company then outstanding (assuming full conversion of all Preferred Shares), all as may be adjusted from time to time.

 

  45.1.3 Each Offered Shareholder or its Permitted Transferee shall then notify the Company, by written notification received by the Company, within fifteen (15) calendar days after receipt of the Pre-emptive Notice, of the number of New Shares it wishes to purchase or obtain, at the price and on the terms specified in the Pre-emptive Notice.

 

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  45.1.4 The Company may, during the ninety (90) day period following the expiration of the period provided above, offer New Shares unsubscribed for by the Offered Shareholders to any person or persons at a price not less than, and upon terms no more favorable to the offeree than those specified in the Pre-emptive Notice. If the Company does not consummate the sale of the New Shares within such period, the right provided hereunder shall be deemed to be revived and such New Shares shall not be offered unless first re-offered to the Offered Shareholders in accordance herewith.

The right of pre-emption hereunder shall not be applicable to, and the term “ New Shares ” for the purposes of this Article 45 shall not be construed to include: (i) options, warrants or Ordinary Shares issued to employees, consultants, officers or directors of the Company pursuant to stock option plans or restricted stock option plans approved by the Board of Directors; (ii) Ordinary Shares issued upon conversion of Preferred Shares or upon grant of anti dilution protection under the provisions of these Articles; (iii) shares issued to a Strategic Partner as determined by the affirmative vote of the majority of the Board of Directors. For purposes of this Article, the term “Strategic Partner” shall mean a person or entity who is active in the Company’s line of business, has substantial annual revenues and which concurrent with such issuance enters into a collaboration agreement with the Company to provide services in the Company’s line of business, (iv) shares issued for consideration other than cash, in connection with a bona fide merger, consolidation, acquisition or similar business combination by the Company whereby the shareholders of the Company on the date of such event will own not less than a majority of the voting power of the surviving entity; (v) the issuance of bonus shares distributed to all of the Company’s shareholders on an as-converted pro-rata basis, any dividend payable in shares of Ordinary Shares, the issuance of securities in connection with any subdivision, share split, combination, or any other recapitalization, reclassification or change of the Company’s Ordinary Shares into a different number of shares of the same or any other class or classes of stock; (vi) shares issued pursuant to exercise of options or warrants or other convertible securities issued by the Company; and (vii) the Preferred C Warrants and the shares issueable thereunder.

 

46. Should the performance of Article 45 be considered a “public offering” under applicable Israeli or US securities laws, entitlement to the rights therein shall be limited to the maximum number of shareholders allowed under such laws so that the exercise of such rights will not be considered a “public offering”, whereby eligible shareholders with the smallest numbers of Ordinary Shares (on an as converted basis) will be excluded from such entitlement to the extent required.

 

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TAG ALONG

 

47. Except for the transfer to Permitted Transferees, as such term is defined in Article 34 above and subject to Article 36 above, in the event that, at any time prior to the QIPO, (i) Prof. Dror Harats or any of his Permitted Transferees (the “ Selling Founder ”) desires to sell or transfer any or all of his shares or options in the Company, or (ii) any shareholder or group of shareholders desire to sell or transfer shares of the Company representing fifty percent (50%) or more of the issued and outstanding shares of the Company at such time, in a single or related transactions to the same purchaser or group of related purchasers (“ Selling Shareholder Group ”) then each holder of Preferred Shares other than any shareholders in the Selling Shareholder Group, if applicable (the “ Co-Sale Holders ”), in lieu of exercising its right of first refusal set forth in Article 36 above, by written notice to the Selling Shareholder granted within the 20-day period stated in Article 36.3 above, shall be entitled to require the Selling Founder or Selling Shareholder Group, as applicable, to provide, as part of his or its proposed sale, that each of the Co-Sale Holders be given the right to participate, on the same terms and conditions as the Selling Founder or Selling Shareholder Group, as applicable, in the sale pro rata to the respective number of Ordinary Shares (on an “as converted” basis) owned at such time by such Co-Sale Holder when compared to the number of Ordinary Shares (on an “as converted” basis) owned by all Co-Sale Holders and the Selling Founder or Selling Shareholder Group, as applicable. To the extent that any prospective purchaser or purchasers refuses to purchase shares or other securities from a Co-Sale Holder exercising its rights of co-sale hereunder, the Selling Founder or Selling Shareholder Group, as applicable, shall not sell to such prospective purchaser or purchasers any shares or options unless and until, simultaneously with such sale, the prospective purchaser shall purchase such shares or other securities from such Co-Sale Holder as such Co-Sale Holder elects as set forth above, for the same consideration and on the same terms and conditions as the proposed transfer described in the Notice of Sale.

BRING ALONG

 

48.

In the event that, prior to the QIPO, any person or entity makes a detailed offer to purchase all of the issued and outstanding share capital of the Company (the “ Proposed Transaction ”), the holders of more than seventy five percent (75%) of the issued and outstanding share capital of the Company indicate their acceptance of such offer, then, all Shareholders shall be deemed to have given an irrevocable proxy to such person as shall be designated by the Board to vote for the acceptance of such offer and at the closing of such offered purchase of all the issued and outstanding share capital of the Company, all of the holders of Ordinary Shares and Preferred Shares in the Company (including the Shareholders refusing to sell their shares at such time) will transfer all their Ordinary Shares and Preferred Shares to such person or entity at the same price and terms as the offer; provided , however , that the consideration received in the Proposed Transaction shall be allocated in accordance with the provisions of Article 134 of these Articles, as amended from time to time, and further provided that the holders of Preferred D Shares shall not be required to transfer its Preferred D Shares as aforesaid, unless such holders receive in such transaction a net amount per Preferred D Share, equal or greater to $50.46 (adjusted for share combinations or subdivisions or other recapitalizations of the

 

25


  Company’s shares) plus interest at a rate of LIBOR + 1% p.a. accruing from the date of purchase from the Company of the respective Preferred D Share and further provided that the holders of Preferred D-1 Shares shall not be required to transfer its Preferred D-1 Shares, as aforesaid, unless such holders receive in such transaction a net amount per Preferred D-1 Share, equal or greater to Preferred D-1 Preference Amount as defined in Article 134.1 below (adjusted for share combinations or subdivisions or other recapitalizations of the Company’s shares). In the event that a Shareholder fails to surrender its share certificate in connection with the consummation of such offer, such certificate shall be deemed canceled and the Company shall be authorized to issue a new certificate in the name of the person making the offer and the Board of Directors shall be authorized to establish an escrow account into which the consideration for such canceled shares shall be deposited and to a trust to administer such account; provided that the Company will provide Shareholders with prompt notice (a) to the extent that it is reasonably practicable under the circumstances, of any Shareholder vote or other action pursuant to which the proxy granted hereby is to be exercised and (b) of the identity of the member of the Board of Directors designated as proxyholder under this Article 48.

BEARER SHARES

 

49. The Company shall not issue bearer shares.

REDEEMABLE SHARES

 

50. The Company may, subject to the provisions of the Companies Law, or any modification thereof for the time being in force, issue redeemable shares and redeem them.

ALTERATION OF SHARE CAPITAL

 

51. Unless otherwise specified herein, the Company may from time to time, by Shareholders Resolution, whether or not all the shares authorized have been issued, and whether or not the whole of the shares then issued has been called up for payment, increase its share capital by the creation of new shares, and such increase shall be in such amount and shall be divided into shares of such nominal amounts, and be issued subject to such restrictions and terms and with such rights and preferences, as the ordinary resolution creating the same shall provide. In particular the shares may be issued with preferential or deferred rights as to dividends or the distribution of assets and with special, limited or no voting rights.

 

52. Unless otherwise provided in the Shareholders Resolution authorizing the increase of share capital, the new shares shall be subject to the same provisions applicable to the shares of the original capital with regard to the payment of calls, lien, forfeiture, transfer, transmission and otherwise.

 

53. The Company may, by Shareholders Resolution and in accordance with and subject to the Companies Law:

 

  (a) consolidate and divide its share capital or any portion thereof into shares of larger nominal value than its existing shares;

 

26


  (b) divide, by sub-division of its existing shares or any of them, the whole or any part of its share capital into shares of smaller nominal value than is fixed by the Memorandum of Association;

 

  (c) cancel any shares which, at the date of the passing of the resolution, have not been taken or agreed to be taken by any person;

 

  (d) reduce its share capital in any manner and subject to any condition and consent required by law.

 

54. With respect to any consolidation of issued shares into shares of larger nominal value, and with respect to any other action which may result in fractional shares, the Board of Directors may settle any difficulty which may arise with regard thereto, as it deems fit, including, inter alia, resort to one or more of the following actions, subject to applicable law:

 

  (a) determine, as to the holder of shares so consolidated, which issued shares shall be consolidated into each share of larger nominal value;

 

  (b) allot, in contemplation of or subsequent to such consolidation or other action, such shares or fractional shares sufficient to preclude or remove fractional share holders;

 

  (c) redeem in the case of redeemable shares, and subject to applicable law, such shares or fractional shares sufficient to preclude or remove fractional share holdings; and

 

  (d) cause the transfer of fractional shares by certain shareholders of the Company to other shareholders thereof so as to most expediently preclude or remove any fractional shareholdings, and cause the transferees to pay the transferors the fair value of fractional shares so transferred, and the Board of Directors is hereby authorized to act as agent for the transferors and transferees with power of substitution for purposes of implementing the provisions of this Article.

GENERAL MEETINGS

 

55. General meetings shall be held at least once in every calendar year, not later than fifteen (15) months after the previous general meeting, at such time and place as the Board of Directors may determine. Such general meetings shall be called “ordinary meetings”, and all other meetings of the Company shall be called “extraordinary meetings”.

 

56. The Board of Directors may whenever it thinks fit convene an extraordinary meeting, and shall be obliged to do so upon a request in writing as provided in the Companies Law.

 

57.

Unless a longer period is prescribed by applicable law, at least ten (10) days prior notice, specifying the place, the day and the hour of the meeting and the general nature of every matter on the agenda, shall be given to all Shareholders entitled to receive notices by

 

27


  notice sent by mail or otherwise served as hereinafter provided. Provided that all Shareholders entitled to receive notices of general meetings so agree, a general meeting may be held if less than ten (10) days notice or a longer period if otherwise required by law, as the case may be, is given and generally in such manner as such shareholders may approve. The accidental omission to give notice of a meeting to any Shareholder, or the non-receipt of notice by one of the Shareholders shall not invalidate the proceedings at any meeting.

PROCEEDINGS AT GENERAL MEETINGS

 

58. No business shall be transacted at a general meeting unless the requisite quorum is present at the commencement of the business, and no resolution shall be passed unless the requisite quorum is present when the resolution is voted upon. Unless otherwise provided in these Articles, at least two Shareholders, present in person or by proxy, holding between them at least a majority of the issued shares of the Company that grant voting rights, shall constitute a quorum provided, however, that such Shareholders constituting a quorum include holders of at least twenty five percent (25%) of the Preferred Shares. If within half an hour from the time appointed for the meeting a quorum is not present, the meeting shall stand adjourned to the same day in the following week, at the same time and place. If at such adjourned meeting a quorum is not present half an hour from the time stated, any Shareholders present in person or by proxy shall constitute a quorum.

 

59. Unless otherwise explicitly set forth herein, every Shareholders Resolution of the Company will be deemed adopted if passed by an ordinary majority of the votes of the Shareholders present at a meeting, personally or by proxy, at which a quorum is present and voting thereon.

 

60. The Chairman of the Board of Directors will serve as the Chairman of the general meetings of the Company. If the Board of Directors has no Chairman or if he is not present 15 minutes from the time stated for the commencement of the meeting, those present may choose from amongst them a person to chair the meeting.

 

61. The Chairman of any general meeting of the Company shall not be entitled to a second or casting vote.

 

62. Every question submitted to a general meeting shall be decided by a show of hands, but if a written ballot is demanded by a Shareholder, present in person or by proxy and entitled to vote at the meeting, the same shall be decided by a written ballot. A written ballot may be demanded before the proposed resolution is voted upon or immediately after the declaration by the Chairman of the results of the vote by a show of hands. If a written ballot is demanded after such declaration, the results of the vote by a show of hands shall be of no effect, and the proposed resolution shall be decided by a written ballot.

 

63.

If a written ballot is demanded as aforesaid, it shall be taken in such manner and at such time and place as the Chairman of the meeting directs, and either at once or after an interval or adjournment, or otherwise, and the result of the written ballot shall be deemed

 

28


  to be the resolution of the meeting at which the written ballot was demanded. The demand for a written ballot may be withdrawn at any time before the written ballot is taken.

 

64. The demand for a written ballot shall not prevent the continuance of a meeting for the transaction of any business other than the question on which the written ballot has been demanded. A written ballot demanded on the election of a Chairman and on a question of an adjournment of a meeting shall be taken forthwith.

 

65. A declaration by the Chairman of the meeting that a resolution has been carried unanimously, or carried by a particular majority, or rejected, and an entry to that effect in the book of proceedings of the Company, shall be conclusive evidence of the fact without proof of the number or proportion of the votes recorded in favor of or against such resolution.

 

66. The Chairman of a general meeting may adjourn the same from time to time and from place to place (but not more than once without the approval of the general meeting), and the Chairman shall do so if the meeting so demands; but no business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place. A notice of the adjournment and of the matters to be included on the agenda of the adjourned meeting shall be given to all Shareholders.

 

67. A resolution in writing signed by all Shareholders then entitled to receive notice of, and to attend and vote at general meetings or to which all such Shareholders have given their written consent (including, but not limited to, by letter, telegram, facsimile, email, or otherwise) shall be deemed to have been adopted as if it were adopted as a regular or extraordinary resolution (as the case may be) at a general meeting of the Company duly convened and held. Any such resolution may consist of several documents in like form and signed or consented to as aforesaid, by one or more Shareholders.

VOTES OF SHAREHOLDERS

 

68. Subject to any special conditions, rights or restrictions to voting rights set forth in the terms of issue of any shares or attached at the time to any class of shares and any special voting rights under these Articles, every Shareholder present in person or by proxy, whether in a vote by a show of hands or by written ballot, shall have one vote in respect of every share held by it that confers voting rights.

 

69. A company or other corporate body being a Shareholder of the Company may duly authorize any person it deems fit to be its representative at any meeting of the Company or to execute or deliver a proxy on its behalf, as provided for below. Any person so authorized shall be entitled to exercise on behalf of the corporation which he represents all the powers which the corporation could have exercised if it were an individual Shareholder. Upon the request of the Chairman of the meeting, written evidence of such authorization (in form acceptable to the Chairman) shall be delivered to him.

 

70. In case of joint holders, the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders; and for this purpose seniority shall be determined by the order in which the names stand in the Register.

 

29


71. Shareholders may vote either personally or by proxy, or, if the Shareholder is a company or other corporate body, by a representative pursuant to Article 69 or by a duly authorized proxy, as prescribed hereinafter.

 

72. Any instrument appointing a proxy or representative shall be in writing under the hand of the appointer or of his attorney duly authorized in writing, or, if such appointer is a corporation, under its common seal if any, or under the hand of some officer duly authorized in that behalf.

 

73. No Shareholder shall be entitled to vote at a general meeting unless all calls or other sums presently payable by it in respect of his shares in the Company have been paid.

 

74. Every instrument of proxy, whether for a specified meeting or otherwise shall, as nearly as circumstances will admit, be substantially in the following form and shall be submitted to the Company at least 12 hours before any Ordinary or Extraordinary or Adjourned General Meeting of the Company:

“I                      of                      being a shareholder of Vascular Biogenics Ltd. hereby appoint                      of                      or, failing him,                      of                      as my proxy to vote for me and on my behalf at the Ordinary or Extraordinary or Adjourned (as the case may be), General Meeting of the Company, to be held on the      day of              ,              and at any adjournment thereof.

IN WITNESS WHEREOF, I affix my signature this      day of              ,             

 

75. A vote given in accordance with the terms of an instrument of appointment of attorney or proxy shall be valid notwithstanding the previous death of the principal, or revocation of the appointment, or transfer of the share in respect of which the vote is given, unless notice in writing of the death, revocation or transfer shall have been received at the Office or by the Chairman of the meeting before the vote is given.

 

76. RESERVED

THE BOARD OF DIRECTORS

 

77. The number of members of the Board of Directors shall be up to seven directors (each a “ Director ”, and together, the “ Directors ”).

 

  77.1 One Director shall be appointed, replaced or removed by Prof. Dror Harats, for so long as Prof. Harats is either (i) the CEO of the Company; or (ii) the holder of three percent (3%) or more of the Company’s issued and outstanding share capital;

 

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  77.2 one Director shall be appointed, replaced or removed by J.J.D. Holdings G.P, A.J.J.G. Technology Investments 2003, Inspe Aktiengesellschaft, Mr. Jecheskiel Gonczarowski and their Permitted Transferees on behalf of the holders the Preferred A Shares (“ Series A Director ”);

 

  77.3 one Director shall be appointed, replaced or removed by the Aurum Group (the “ Aurum Director ”) and one Director shall be appointed, replaced or removed by Pitango (“ Pitango Director ”);

 

  77.4 one Director shall be appointed, replaced or removed by the Keffi Group V LLC on behalf of the holders the Preferred D Shares (“ Keffi Director ”);

 

  77.5 one Director shall be appointed, replaced or removed by a majority of the Directors appointed under Articles 77.1-77.4 above, who shall initially be Prof. Ruth Arnon; and

 

  77.6 one Director shall be an industry expert who shall be appointed, replaced or removed by a majority of the Directors appointed under Articles 77.1-77.4 above, who shall initially be Dr. Bennett Shapiro.

The Series A Director, Aurum Director, Pitango Director and Keffi Director (the “ Preferred Directors ”) shall be appointed, replaced or removed from the Board of Directors as aforesaid, for so long as the relevant appointing party (or its Permitted Transferees) continues to hold not less than eight percent (8%) of the issued and outstanding shares of the Company, on an as converted basis. When such shareholder drops below this threshold, such shareholder’s right to appoint a director to the Board of Directors set forth in this Article 77 shall expire.

 

78. Each committee of the Board of Directors shall include the Aurum Director, the Pitango Director and the Keffi Director (if such applicable director is serving on the Board at such time).

 

79. Directors shall be appointed, removed from office, and any vacancy, however created, in their position shall be filled, as provided in Article 77 above by written notice to the Company signed by the Shareholder(s) so entitled, as provided for therein. Any such act shall become effective on the date fixed in such notice, or upon the delivery thereof to the Company, whichever is later.

 

80. Every member of the Board of Directors shall hold office until he or she is removed in accordance with these Article(s) or the office is vacated as set forth in Article 83 below.

 

81.

 

  (a) A Director shall have the right, by written notice to the Company, to appoint a person as a substitute to act in his place, to remove the substitute and appoint another in his place and to appoint a substitute in place of a substitute whose office was vacated for any reason whatsoever. A person who is not qualified to be appointed as a Director, or a person who serves as a Director or a substitute Director, may not be appointed as a substitute Director.

 

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  (b) Any notice given to the Company as aforesaid shall become effective on the date fixed therein or upon delivery to the Company, whichever is later. Unless the appointing Director limits the time or scope of the appointment, the appointment is effective for all purposes until the appointing Director ceases to be a Director or terminates the appointment.

 

  (c) A substitute for a Director shall have, subject to any instructions or limitations contained in the instrument appointing him, all the authority and powers held by the Director for whom he acts as substitute, provided however, that he may not in turn appoint a substitute for himself (unless the instrument appointing him otherwise expressly provides), and provided further that a substitute shall have no standing at any meeting of the Board of Directors or any committee thereof at which the Director appointing him is personally present or at which the Director appointing him is not entitled to participate in accordance with Article 86 below.

 

  (d) The office of a substitute for a Director shall ipso facto be vacated if he is removed by the Director appointing him, or if the office of the Director for whom he acts as substitute is vacated for any reason whatsoever, or if one of the circumstances described in Sub-sections (a) - (d) of Article 83 should befall the substitute.

 

  (e) Subject to the Companies Law, a substitute Director shall alone be responsible for his actions and omissions, and shall not be deemed an agent of the Director(s) who appointed him.

 

  (f) Every substitute shall be entitled to receive, so long as he serves as a substitute, notice of meetings of the Board of Directors and of any relevant committees.

 

82. Subject to applicable law, a Director who has ceased to hold office shall be eligible for re-election.

 

83. The office of a Director shall ipso facto be vacated upon the occurrence of any of the following events:

 

  (a) Upon his death, or, if the Director is a company - upon its winding-up;

 

  (b) Should he be declared to be of unsound mind;

 

  (c) Should he become bankrupt;

 

  (d) Should he resign his office by notice in writing to the Company; or

 

  (e) He is removed from office by written notice to the Company pursuant to Article 79 above.

 

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84. If any Director is not appointed, or if the office of a Director is vacated, the continuing Directors may, as long as their number does not fall below one, act in every matter.

 

85. A Director shall not be required to hold qualification shares.

 

86. Subject to the provisions of the Companies Law, no Director or office holder (as defined below) of the Company shall be disqualified by his office from holding any office or place of profit under the Company or outside the Company or under any company in which the Company shall be a shareholder or otherwise interested, or under any company which is a shareholder of, or otherwise interested in, the Company or from contracting with the Company either as vendor, purchaser, or otherwise, either on his own behalf or as a director of another company or member of a firm or otherwise, nor (unless and to the extent provided otherwise in the Companies Law) shall any such contract, or any contract or arrangement entered into by or on behalf of the Company in which any Director or office holder shall be in any way interested, be void or voidable, nor shall he be liable to account to the Company for any profit arising from any such office or place of profit or realized by any such contract or arrangement by reason only of such Director or office holder holding that office or of the fiduciary relations thereby established, but it is declared that the nature of his interest must be disclosed by him as provided in the Companies Law and in any event not later than at the meeting of the Board of Directors at which the contract or arrangement is first taken into consideration, if his interest then exists, or in any other case - at the first meeting of the Board of Directors after the acquisition of his interest.

Unless and to the extent provided otherwise in the Companies Law, every Director shall be entitled, after such disclosure, to vote as a Director in respect of any contract or arrangement in which he is so interested as aforesaid. Unless and to the extent provided otherwise in the Companies Law, a general notice that a Director is a member of any firm or company and is to be regarded as interested in all transactions with that firm or company shall be a sufficient disclosure under this Article as regards such Director and the said transactions, and after such general notice, (unless and to the extent provided otherwise in the Companies Law) it shall not be necessary for such Director to give a special notice relating to any particular transaction with that firm or company.

A transaction referred to in this Article 86, which is not an “extraordinary transaction” (as defined below) shall be approved by the Board or by a committee authorized to do so by the Board. Such approval may be general in nature and may be given in advance. Notwithstanding the aforesaid, if according to the provisions of the Companies Law a specific or special approval for a particular transaction or type of transaction is required, such transaction shall also require such approval.

An “extraordinary transaction” requires approval as provided under the Companies Law.

 

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In this Article 86:

office holder ” means - a director, managing director, general manager, chief executive officer, executive vice-president, vice president, other managers directly subordinate to the managing director and any other person fulfilling or assuming any such positions or responsibilities without regard of such persons title.

extraordinary transaction ” means - a transaction not in the ordinary course of business of the Company, a transaction which is not on market terms, or a transaction that is likely to have a material impact on the profits, assets or liabilities of the Company.

 

87. A Director may be paid remuneration by the Company for his services as a Director to the extent such remuneration is approved by a shareholder resolution and pursuant to the Companies Law.

If a Director, willing to do so, is called upon to fulfill special services or make special efforts for any of the Company’s objects, by traveling abroad or staying there or otherwise, the Company may pay him a salary at a fixed rate or a percentage of its profits or otherwise as the Board of Directors may decide and subject to the provisions of the Companies Law, and such salary may be in addition to or in place of the fixed remuneration (if any).

PROCEEDINGS OF THE BOARD OF DIRECTORS

 

88. The Board of Directors may meet together and adjourn their meetings and otherwise regulate their meetings and proceedings as they think fit including by telephone or any other means of communication or a unanimous written resolution as described in Article 96. Until otherwise decided by the Board of Directors a majority of the Directors then in office (present personally or by a duly appointed substitute) shall constitute a quorum at meetings of the Board of Directors. Unless and to the extent provided otherwise in the Companies Law, a Director who is an interested party in any transaction, shall be counted for purposes of a quorum despite his interest. A Director may participate personally or by his substitute.

 

89. Any Director may at any time, and the Chairman of the Board, upon the request of such Director, shall convene a meeting of the Board of Directors.

 

90. Notice of a meeting of the Board of Directors may be sent to all Directors at their registered addresses, by facsimile, mail or hand delivered at least 72 hours prior to the meeting unless all Directors agree to shorter notice.

 

91.          (a) Each Director shall have one vote. The Chairman shall not have a casting vote.

 

  (b) Subject to Article 5.5 above, all resolutions of the Board will be adopted by a simple majority of the Directors present and voting (with the Directors participating by video or audio conference, if any, being deemed present and entitled to vote) at a meeting of the Board.

 

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92. The Board of Directors may from time to time elect one of its members to be the chairman of the Board of Directors, remove such Chairman from office and appoint another in his place. The Chairman of the Board of Directors shall take the chair at every meeting of the Board of Directors, but if there is no such Chairman, or if at any meeting he is not present within 15 (fifteen) minutes of the time appointed for the meeting, or if he is unwilling to take the chair, the Directors present shall choose one of their number to be the Chairman of such meeting.

 

93. A meeting of the Board of Directors at which a quorum is present shall be competent to exercise all the authorities, powers and discretions for the time being vested in or exercisable by the Board of Directors.

 

94. Subject to the provisions of the Companies Law, the Board of Directors may for any particular matter delegate any or all of its powers to committees consisting of one or several Directors, as the Board of Directors, subject to the provision of Article 78 above, may deem fit, and it may from time to time revoke such delegation.

Any committee so formed shall, in the exercise of the powers so delegated, conform to any regulations that may be imposed on it by the Board of Directors. The meetings and proceedings of any such Committee consisting of two (2) or more members, shall be governed by the provisions herein contained for regulating the meetings of the Board of Directors, so far as the same are applicable thereto, and so far as not superseded by any regulations made by the Board of Directors under this Article.

 

95. All acts performed at or in accordance with any meeting of the Board of Directors, or of a Committee of the Board of Directors, or by any person acting as Director or substitute for a Director, shall, notwithstanding that it may afterwards be discovered that there was some defect in the appointment of such Directors or members of a Committee of the Board of Directors or person acting as aforesaid or any of them, or that they or any of them were disqualified, be as valid as if every such person had been duly appointed and was qualified to be a Director, substitute or a member of such a Committee, as the case may be.

 

96. The Board of Directors may operate and adopt resolutions in writing, including by facsimile, mail or by telephone, provided that resolutions in writing adopted by telephone shall be followed up with a confirmation in writing no later than 7 days following the date of such resolution.

OFFICERS

 

97. The Board of Directors may, from time to time, appoint one or more persons, (whether a Director or not) to be Managing Director(s), General Manager(s), Chief Executive Officer(s) and/or President(s) (or any similar function with a different title) of the Company, either for a fixed term or without any limitation as to the period for which he is or they are to hold office, and may from time to time modify or revoke such titles or (subject to any provisions of any contract between him or them and the Company) remove or dismiss him or them from office and appoint another or others in his or their place or places.

 

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98. The remuneration of a Managing Director, General Manager, Chief Executive Officer and/or President shall from time to time (subject to any contract between him and the Company and subject to the provisions of the Companies Law) be fixed by the Board of Directors, and may be in the form of a fixed salary or commission on dividend, profits or turnover of the Company, or of any other company the Company has an interest in, or by participation in profits or in one or more of these forms.

 

99. Subject to the provisions of the Companies Law, the Board of Directors may from time to time entrust to and confer upon a Managing Director, General Manager, Chief Executive Officer and/or President for the time being such of the powers exercisable under these Articles by the Board of Directors as it may think fit, and may confer such powers for such time, and to be exercised for such objects and purposes, and upon such terms and conditions, and with such restrictions, as it thinks expedient; and it may confer such powers, either collaterally with, or to the exclusion of, and in substitution for, all or any of the powers of the Board of Directors in that behalf; and may from time to time revoke, withdraw, alter, or vary all or any of such powers.

ATTORNEYS

 

100. Subject to the provisions of the Companies Law, the Board of Directors may appoint a Secretary to the Company, and may appoint additional officers, personnel, agents and servants, for fixed, provisional or special duties, as the Board of Directors may from time to time deem fit, and may from time to time, in their absolute discretion, suspend the service of any one or more of such persons.

 

101. The Board of Directors may determine the powers and duties, as well as the salaries, of such persons and may demand security in such cases and in such amounts as it deems fit.

POWERS OF THE BOARD OF DIRECTORS

 

102. The management of the business of the Company shall be vested in the Board of Directors, and the Board of Directors may exercise all such powers and do all such acts and things as the Company is, by its Memorandum of Association and/or its Articles of Association or under the law, authorized to exercise and do, and are not hereby or by statute directed or required to be exercised or done by the Company in general meeting, but subject, nevertheless, to the provisions of the Companies Law, and to these Articles and any regulations or resolution not being inconsistent with these Articles made from time to time by the Company in general meeting; provided that no such regulation or resolution shall invalidate any prior act done by or pursuant to the directions of the Board of Directors which would have been valid if such regulation or resolution had not been made.

 

103. Without prejudice to any of the general powers granted to the Board of Directors in accordance with Article 102 and any other powers granted to it under these Articles, and without restricting or reducing in any way the above mentioned powers or any of them, it is hereby explicitly declared that the Board of Directors shall have the following powers:

 

  (a) To appoint a person or persons (whether they be incorporated or not) to receive and hold in trust for the Company any property whatsoever that belongs to the Company or that the Company has an interest in, or for any other purpose and to execute and perform all actions, deeds and necessary activities with relation to any such trust, and to see to the remuneration of any such trustee(s).

 

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  (b) To initiate, manage, defend, compromise or discontinue any and all legal proceedings on behalf of or against the Company or its officials or that pertain in any way to its affairs, and to compromise and extend the period for payment or discharge of any debt due or suits or claims by or against the Company.

 

  (c) To refer any suit or claim by or against the Company to arbitration.

 

  (d) To determine, from time to time, those authorized to sign in the Company’s name on bills of exchange, promissory notes, receipts, certificates of receipt, endorsements, checks, certificates of dividend, releases, contracts and other documents of any kind whatsoever.

 

  (e) To appoint, and, at its discretion, to remove or suspend, a general manager, manager, secretary, official, clerk, employee or delegate, whether permanently or temporarily employed or employed for specific services only, as the Board of Directors may, from time to time, deem fit and to define their powers and duties and determine their salaries and remuneration and to demand securities, in those instances and in those sums that the Board of Directors shall deem fit.

 

  (f) To appoint, from time to time and at any time, by power of attorney any person or persons to be the attorney(s) of the Company for the purposes and with the powers, authority and discretion (that shall not exceed those vested in the Board of Directors in accordance with these Articles and subject to the provisions of the Companies Law) and for the period and subject to the conditions that the Board of Directors shall deem fit from time to time, and any such appointment may be given (should the Board of Directors see fit), or to any company or its members, members of its Board of Directors, delegates or managers of any company or firm or to any one designated by any company or firm, or in any other manner to any variable group of people, whether appointed directly or indirectly by the Board of Directors. Every such power of attorney may contain those powers for the protection or comfort of those people who come into contact with the attorney(s) as the Board of Directors deems fit.

 

  (g) The Board of Directors may appoint a lawyer or lawyers in Israel and/or abroad to represent the Company before any court, legal or quasi-legal body, government or municipal offices or institutions in Israel or abroad and may vest any such lawyer with those powers as the Board of Directors deems fit, including the authority to delegate his powers, in whole or in part, to others.

 

  (h) In general and subject to the provisions of the Companies Law and these Articles, to delegate to any person, firm, company or variable group of people as mentioned, the powers, authority and discretion vested in the Board of Directors.

 

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BORROWING POWERS

 

104. The Board of Directors may from time to time, at its discretion, borrow or secure the payment of any sum or sums of money for the purposes of the Company. The Directors may raise or secure the repayment of such sum or sums in such manner, at such times and upon such terms and conditions in all respects as they think fit, and in particular, by the issue of bonds, perpetual or redeemable debentures, debenture stock, or any mortgages, charges, or other securities on the undertaking of the whole or any part of the property of the Company, both present and future, including its uncalled capital for the time being and its called but unpaid capital.

LOCAL MANAGEMENT

 

105. The Board of Directors may from time to time provide for the management and transaction of the affairs of the Company in any specified locality, whether in Israel or abroad, in such manner as they think fit, and the provisions contained in the next following Article shall be without prejudice to the general powers conferred by this Article on the Board of Directors.

 

106. The Board of Directors may from time to time, and at any time, establish any local board or agency for managing any of the affairs of the Company in any specified locality, in Israel or abroad, and may appoint any person to be a member of such local board, or any manager or agent, and may fix their remuneration. Subject to the provisions of the Companies Law, the Board of Directors may from time to time, and at any time, delegate to any person so appointed any of the powers, authority and discretion for the time being vested in the Board of Directors, and may authorize any member for the time being of any such local board to continue in his office notwithstanding any vacancy which may occur, and any such appointment or delegation may be made on such terms and subject to such conditions as the Board of Directors may think fit, and the Board of Directors may at any time remove any person so appointed and may annul or vary any such delegation. The Board of Directors may authorize any person to whom it has delegated powers, authority or discretion as mentioned, to delegate them or part of them further.

REGISTER OF SHAREHOLDERS

 

107.        (a) The Company shall keep a Register of Shareholders (the “ Principal Register ”) and record in it the following information:

 

  (i) The names and addresses of the Shareholders and a list of the shares held by each one, designating each share by its number, and the amount paid or the amount to be considered as paid on the shares of each Shareholder;

 

  (ii) The day each person was registered in the Register as a Shareholder;

 

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  (iii) The day each person ceased to be a Shareholder;

 

  (iv) The amounts called, if any, that are due on the shares of each Shareholder; and

 

  (v) Any other information required by the Companies Law or these Articles to be recorded in the Register.

 

  (b) The Principal Register shall be kept at the head office, and aside from the times the Register is closed in accordance with the provisions of the Companies Law or these Articles, they shall be open to the inspection of any Shareholder free of charge, and of any other person at a fee the Company shall determine for each matter, during regular business hours.

 

  (c) The Principal Register shall be closed for a period of 14 days immediately prior to an annual general meeting and during other periods, if any, that the Board of Directors shall determine from time to time, on the condition that the Principal Register shall not be closed for a period exceeding 30 days during any one year; and on the additional condition that the Principal Register shall not be closed unless a notice has been published in accordance with the provisions of the Companies Law, if required.

MINUTES AND THE SEAL

 

108.   (a)   The Board of Directors shall cause minutes to be duly recorded regarding: the names of the Directors present at each meeting of the Board of Directors and of any committee of the Board of Directors; the names of the Shareholders present at each general meeting, and the proceedings and resolutions of general meetings and of meetings of the Board of Directors and Committees of the Board of Directors. Any minutes as aforesaid of a meeting of the Board of Directors, of a meeting of a Committee of the Board of Directors or of a general meeting of the Company, if purporting to be signed by the Chairman of such meeting or by the Chairman of the next succeeding meeting, shall be accepted as prima facie evidence of the matters therein recorded.
  (b)    (i)    The Company may have one or more rubber stamps, for affixing on documents, and the Board of Directors shall provide for the safe custody of any such rubber stamp;

 

  (ii) The Board of Directors shall be entitled to authorize any person or persons (even if he or they is or are not Directors(s) of the Company) to act and sign on behalf of the Company, and the acts and signatures of such person or persons on behalf of the Company shall bind the Company insofar as such person or persons acted and signed within his or their powers aforesaid.

 

  (iii) The Board of Directors may provide for a seal. If the Board of Directors so provides, it shall also provide for the safe custody thereof; such seal shall not be used except by the authority of the Board of Directors.

 

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DIVIDENDS AND RESERVE FUND

 

109. The Board of Directors may, from time to time, set aside, out of the profits of the Company, such sums as it thinks proper, as a reserve fund to meet contingencies, or for equalizing dividends, or for special dividends, or for repairing, improving and maintaining any of the property of the Company, and for such other purposes as the Board of Directors shall in its absolute discretion think conducive to the interests of the Company, and may invest the sums so set aside in such investments as it may think fit, and from time to time deal with and vary such investments, and dispose of all or any part thereof for the benefit of the Company, and may divide the reserve fund into such special funds as it thinks fit, and employ the reserve fund or any part thereof in the business of the Company, and that without being bound to keep the same separate from the other assets of the Company. The Board of Directors may also, without placing the same to reserve, carry forward any profits which it deems prudent not to divide.

 

110. Subject to the rights of holders of shares with limited or preferred rights as to dividends, and subject to the provisions of these Articles as to the reserve fund, all the dividends shall be paid to the Shareholder in proportion to the amount paid up or credited as paid up on account of the nominal value of the shares held by them respectively and in respect of which such dividend is being paid, without regard to any premium paid in excess of the nominal value, if any, but if any share is issued on terms providing that it shall rank for dividend from a particular date, such share will rank for dividend accordingly.

 

111. Subject to the provisions of the Companies Law, the Board of Directors may from time to time declare such dividends as may appear to the Board of Directors to be justified by the profits of the Company and cause the Company to pay such dividends. The Board of Directors shall have the full authority to determine the time for payment of such dividends, and the record date for determining the Shareholders entitled thereto, provided such date is not prior to the date of the resolution to distribute the dividend and no Shareholder who shall be registered in the Register with respect to any shares after the record date so determined shall be entitled to share in any such dividend with respect to such shares.

 

112. No dividend shall be paid other than out of the profits of the Company, as defined in the Companies Law and no interest shall be paid by the Company on dividends.

 

113. A dividend may be paid, wholly or partly, by the distribution of specific assets, and, in particular, by distribution of paid-up shares, debentures or debenture stock of any other company, or in any one or more such ways.

 

114.

The Board of Directors may resolve that: any moneys, investments, or other assets forming part of the undivided profits of the Company standing to the credit of the reserve fund, or to the credit of any reserve fund for the redemption of capital, or to the credit of

 

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  a reserve fund for the revaluation of real estate or other assets of the Company or any other reserve fund or investment funds or assets in the hands of the Company and available for dividends, or representing premiums received on the issue of shares and standing to the credit of the share premium account, be capitalized and distributed among such of the Shareholders as would be entitled to receive the same if distributed by the way of dividend and in the same proportion on the basis that they become entitled thereto as capital; and that all or any part of such capitalized fund be applied on behalf of such Shareholders in paying up in full, either at par or at such premiums as the resolution may provide, any unissued shares or debentures or debenture stock of the Company which shall be distributed accordingly or in or towards the payment, in full or in part, of the uncalled liability on any issued shares or debentures or debenture stock; and that such distribution or payment shall be accepted by such Shareholders in full satisfaction of their share and interest in the said capitalized sum.

 

115. For the purpose of giving effect to any resolution under the two (2) last preceding Articles, the Board of Directors may settle any difficulty which may arise in regard to the distribution as it thinks expedient, and, in particular, without derogating from the generality of the foregoing, may issue fractional certificates or make payment in lieu of fractional shares in an amount determined by the Board, and may fix the value for distribution of any specific assets, and may determine that cash payments shall be made to any Shareholders upon the basis of the value so fixed, or that fractions of less than NIS 0.01 (one New Agora) in value may be disregarded in order to adjust the rights of all parties, and may vest any such cash, shares, debentures, debenture stock or specific assets in trustees for the persons entitled to the dividend or capitalized fund against such securities as may seem expedient to the Board of Directors. Where requisite, a proper contract shall be filed in accordance with the Companies Law, and the Board of Directors may appoint any person to sign such contract on behalf of such persons entitled to the dividend or capitalized fund, and such appointment shall be effective.

 

116. The Board of Directors may deduct from any dividend, bonus or other amount to be paid in respect of shares held by any Shareholder, whether alone or together with another Shareholder, any sum or sums due from him and payable by him alone or together with any other person to the Company on account of calls or the like.

 

117.        (a) The Board of Directors may retain any dividend or other monies payable or property distributable in respect of a share on which the Company has a lien, and may apply the same in or towards satisfaction of the debts, liabilities, or engagements in respect of which the lien exists.

 

  (b) The Board of Directors may, when paying any dividend, resolve to retain any dividend, or other monies payable or property distributable, for distribution with respect to a share in respect of which any person is under these Articles entitled to become a Shareholder, or which any person is under these Articles entitled to transfer, until such person shall become a Shareholder in respect of such share or shall transfer the same.

 

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118. All unclaimed dividends or other monies payable in respect of a share may be invested or otherwise made use of by the Board of Directors for the benefit of the Company until claimed. The payment by the Directors of any unclaimed dividend or such other monies into a separate account shall not constitute the Company a trustee in respect thereof. The principal (and only the principal) of an unclaimed dividend or such other moneys shall be, if claimed, paid to a person entitled thereto.

 

119. Any dividend or other monies payable in cash in respect of a share may be paid by check or warrant sent through the post to, or left at, the registered address of the person entitled thereto or by transfer to a bank account specified by such person (or, if two or more persons are registered as joint holders of such share to the one whose name appears first in the Register), or to such person and at such address as the person entitled thereto may by writing direct. Every such check or warrant shall be made payable to the order of the person to whom it is sent, or to such person as the person entitled thereto as aforesaid may direct, and payment of the check or warrant by the banker upon whom it is drawn shall be a good discharge to the Company.

 

120. If several persons are registered as joint holders of any share, any one of them may give effectual receipts for any dividend payable or property distributable, on the share.

BOOKS OF ACCOUNT

 

121. The Board of Directors shall cause accurate books of account to be kept in accordance with the provisions of the Companies Law and any other applicable law. The books of account shall be kept at the registered office of the Company, or at any other place or places as the Board of Directors may deem fit, and they shall always be open to inspection by Directors. No Shareholder not being a Director shall have the right to inspect any account or book or document of the Company except as conferred by law or authorized by the Board of Directors or by the Company in general meeting.

ACCOUNTS AND AUDIT

 

122. Once at least in every year the accounts of the Company shall be examined and the correctness of the profit and loss account and balance sheet ascertained by a duly qualified auditor.

 

123. The appointment, authorities, rights, salaries and duties of the auditor or auditors shall be regulated by the law in force for the time being and by the provisions of these Articles, provided, however, that in exercising its authority to fix the remuneration of the auditor(s), the Shareholders in general meeting may, by Shareholders Resolution, act (and in the absence of any action in connection therewith shall be deemed to have so acted), to authorize the Board of Directors to fix such remuneration subject to such criteria or standards, if any, as may be provided in such ordinary resolution, and if no such criteria or standards are so provided, such remuneration shall be fixed in an amount commensurate with the volume and nature of the services rendered by such auditor(s).

 

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NOTICES

 

124. Any notice or other document may be served by the Company upon any Shareholder either personally or, by sending it by prepaid mail (air mail if sent to a place outside Israel) addressed to such Shareholder), by facsimile or by e-mail at his address, fax number or e-mail address as described in the Register or such other address or contact details (if any) as he may have designated in writing for the receipt of notices and other documents. Any notice or other document may be served by any Shareholder upon the Company by tendering the same in person to the General Manager of the Company at the registered office of the Company or by sending it by prepaid registered mail (air mail if posted outside Israel) to the Company at its registered office. Any such notice or other document shall be deemed to have been served forty-eight (48) hours after it has been posted (seven (7) days if sent to a place, or posted at a place, outside Israel), or when actually received by the addressee if sooner than forty-eight (48) hours or seven (7) days, as the case may be, after it has been posted, or when actually tendered in person, to such Shareholder (or to the General Manager), provided, however, that, as applicable. Any notice may be or other document that was sent by mail, hand delivery, facsimile, and such notice or e-mail shall be deemed to have been given the first business day after such mail, hand delivery or facsimile, facsimile or e-mail was made or has been sent or when actually received by such Shareholder (or by the Company), if applicable, whichever is earlier. If a notice is, in fact, received by the addressee, it shall be deemed to have been duly served, when received, notwithstanding that it was defectively addressed or failed in some other respect, to comply with the provisions of this Article.

 

125. A notice may be given by the Company to the joint holders of a share by giving notice to the joint holder named first in the Register in respect of the share.

 

126. Any Shareholder whose address is not described in the Register, and who shall not have designated in writing an address for the receipt of notices, shall not be entitled to receive any notice from the Company.

 

127. The Company may declare that any document(s) will be delivered or be available for review at the registered office of the Company or any other place designated by the Board of Directors.

 

128. Whenever it is required to give prior notice a specified number of days in advance or where a notice is valid for a specified period, the day of service of the notice shall be included in such count or period. Where notice is given by more than one method, it will be deemed served on the earliest of such dates.

 

129. Service of notice to a relative of a Shareholder living under the same roof with him, will be deemed service to such Shareholder.

 

130. Subject to applicable law, any Shareholder, Director or any other person entitled to receive notice in accordance with these Articles or law, may waive notice, in advance or retroactively, in a particular case or type of cases or generally, and if so, notice will be deemed as having been duly served, and all proceedings or actions for which the notice was required will be deemed valid.

 

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131. Any person entitled to a share by operation of law or by transfer, transmission or otherwise, will be bound by any notice served with respect to such shares prior to his being registered in the Register as owner of the shares.

 

132. It shall not be necessary to set forth in detail in notice of any meeting the full text of any proposed resolutions and a general description of the nature of the matters on the agenda will suffice. The Company shall be entitled, however, but shall be under no obligation to specify in a notice of a meeting, a place and a time where and when the full text of proposed resolution(s) may be reviewed, rather than include in the notice a general description of the nature of the matters in the agenda as aforesaid.

 

133. The accidental omission to give notice of a meeting to any Shareholder or the non-receipt of notice by any Shareholder entitled to receive notice shall not invalidate the proceedings at any meeting or any resolution(s) adopted by such a meeting.

WINDING-UP

 

134.

 

  134.1

In the event of: (i) any dissolution or liquidation of the Company; (ii) the appointment of a receiver or liquidator with respect to all or substantially all of the Company’s assets; (iii) the sale of all or substantially all of the shares or assets of the Company, (iv) a merger of the Company (but excluding a merger after which the existing shareholders of the Company prior to such merger, hold more than 50% of the surviving entity’s share capital), or (v) the distribution of any dividends or other distributions to the shareholders (whether in cash, in specie or otherwise but excluding bonus shares), then, first , subject to Article 134.10, the holders of the Preferred D-1 Shares at such event, shall be entitled to receive for each Preferred D-1 Share held by them, prior to and in preference to any payments or distributions to any of the holders of any other classes of Shares of the Company: (a) in the events listed in Article 134.1 (i)- (v) representing a Company’s valuation (before any deductions due to liabilities or otherwise) of US$ 100,000,000 or more, an amount equal to two times the Preferred D-1 Share Original Issue Price in addition to an annual interest of LIBOR + 1% p.a. from the date of purchase from the Company of such shares until the date of distribution or closing of such event, as applicable; (b) in the events listed in Article 134.1 (i)- (v) representing a Company’s valuation (before any deductions due to liabilities or otherwise) of less than US$ 100,000,000, the Preferred D-1 Share Original Issue Price, in addition to an annual interest of LIBOR + 1% p.a. from the date of purchase from the Company of such shares until the date of distribution or closing of such event, as applicable (the “ Preferred D-1 Preference Amount ”). If the assets thus distributed among the holders of the Preferred D-1 Shares shall be insufficient to permit the payment to such holders of the full Preferred D-1 Preference Amount, then the entire assets available for distribution shall be

 

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  distributed pro-rata among the holders of the Preferred D-1 Shares in proportion to the Preferred D-1 Preference Amount each such holder would otherwise have been entitled to.

 

  134.2 Second , after payment of the Preferred D-1 Preference Amount, subject to Article 134.9, the holders of the Preferred D Shares at such event, shall be entitled to receive for each Preferred D Share held by them, prior to and in preference to any payments or distributions to any of the holders of any other classes of Shares of the Company, the Preferred D Share Original Issue Price, in addition to an annual interest of LIBOR + 1% p.a. from the date of purchase from the Company of such shares until the date of distribution or closing of such event, as applicable (the “ Preferred D Preference Amount ”). If the assets thus distributed among the holders of the Preferred D Shares shall be insufficient to permit the payment to such holders of the full Preferred D Preference Amount, then the entire assets available for distribution (after payment of the Preferred D-1 Preference Amount as aforesaid) shall be distributed pro-rata among the holders of the Preferred D Shares in proportion to the Preferred D Preference Amount each such holder would otherwise have been entitled to.

 

  134.3 Third , after payment of the Preferred D Preference Amount, subject to Article 134.7 and Article 134.8, the holders of the Preferred B Shares and Preferred C Shares at such event, shall be entitled to receive for each Preferred B Share or Preferred C Shares, as applicable, held by them, pari passu , prior to and in preference to any payments or distributions to any of the holders of any other classes of Shares of the Company, the applicable Preferred B Share Original Issue Price or Preferred C Share Original Issue Price, as applicable, in addition to an annual interest of LIBOR + 1% p.a. from the date of purchase from the Company of such shares until the date of distribution or closing of such event, as applicable (the “ Preferred B/C Preference Amount ”). If the assets thus distributed among the holders of the Preferred B Shares and Preferred C Shares shall be insufficient to permit the payment to such holders of the full Preferred B/C Preference Amount, then the entire assets available for distribution (after payment of the Preferred D Preference Amount and the Preferred D-1 Amount as aforesaid) shall be distributed pro-rata among the holders of the Preferred B Shares and Preferred C Shares in proportion to the Preferred B/C Preference Amount each such holder would otherwise have been entitled to.

 

  134.4

Fourth , after payment of the Preferred B/C Preference Amount, subject to Article 134.6, the holders of the Preferred A Shares shall be entitled to receive for each Preferred A Share held by them, prior to and in preference to any payments or distributions to any of the holders of any other classes of Shares of the Company, the applicable Preferred A Share Original Issue Price in addition to an annual interest of LIBOR + 1% p.a. from the date of purchase from the Company of such shares until the date of distribution or closing of such event, as applicable (the “ Preferred A Preference Amount ” and together with the Preferred B/C Preference Amount, the Preferred D Preference Amount and the Preferred D-1 Preference Amount, the “ Preferred Preference Amount ”). If the assets thus

 

45


  distributed among the holders of the Preferred A Shares shall be insufficient to permit the payment to such holders of the full Preferred A Preference Amount, then the entire assets available for distribution (after payment of the Preferred B/C Preference Amount, the Preferred D Preference Amount and the Preferred D-1 Preference Amount as aforesaid) shall be distributed pro-rata among the holders of the Preferred A Shares in proportion to the Preferred A Preference Amount each such holder would otherwise have been entitled to.

 

  134.5 Fifth , after payment in full of the Preferred Preference Amount (to the extent such Preference Amounts apply pursuant to the provisions of Articles 134.6-134.10), the entire remaining assets and funds of the Company legally available for distribution, if any, shall be distributed ratably to the holders of Ordinary Shares and Preferred Shares (on an as converted basis) in proportion to their respective percentage holdings of all of the issued as converted share capital of the Company.

 

  134.6 In the event that the amount to be distributed to the holders of the Preferred A Shares (including the Preferred A Preference Amount), entitles such holders to a distribution greater than US$73.923 (adjusted for share combinations or subdivisions or other recapitalizations of the Company’s Shares) together with interest at a rate of LIBOR + 1% p.a. accruing from December 31, 2002, per each Preferred A Share (“ Series A Threshold Amount ”), then the Series A Preference Amount referred to in Article 134.4 above shall not apply and the holders of Preferred A Shares shall only be entitled to receive the greater of (i) the Series A Threshold Amount (without further participation of the Preferred A Shares in any excess distribution), and (ii) the amount that would be payable to the Preferred A Shares if the Preferred A Shares were to participate pro rata (on an as converted basis) in such distribution together with the holders of Preferred B Shares, Preferred C Shares, Preferred D Shares, Preferred D-1 Shares and Ordinary Shares, pursuant to the provisions of Articles 134.5, 134.7, 134.8, 134.9 or 134.10 hereof, as applicable.

 

  134.7 In the event that the amount to be distributed to the holders of the Preferred B Shares (including the relative portion of the Preferred B/C Preference Amount) entitles such holders to a distribution greater than $108.759 (adjusted for share combinations or subdivisions or other recapitalizations of the Company’s Shares) together with interest at a rate of LIBOR + 1% p.a. accruing from December 15, 2004, per each Preferred B Share (“ Series B Threshold Amount ”), then the Series B/C Preference Amount referred to in Article 134.3 above shall not apply with respect to the Preferred B Shares, and the holders of Preferred B Shares shall only be entitled to receive the greater of (i) the Series B Threshold Amount (without further participation of the Preferred B Shares in any excess distribution), and (ii) the amount that would be payable to the Preferred B Shares if the Preferred B Shares were to participate pro rata (on an as converted basis) in such distribution together with the holders of Preferred A Shares, Preferred C Shares, Preferred D Shares, Preferred D-1 Shares and Ordinary Shares, pursuant to the provisions of Articles 134.5, 134.6, 134.8, 134.9 or 134.10 hereof, as applicable.

 

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  134.8 In the event that the amount to be distributed to the holders of the Preferred C Shares (including the relative portion of the Preferred B/C Preference Amount) entitles such holders to a distribution greater than $120.342 (adjusted for share combinations or subdivisions or other recapitalizations of the Company’s Shares) together with interest at a rate of LIBOR + 1% p.a. accruing from December 31, 2006, per each Preferred C Share (“ Series C Threshold Amount ”), then the Series B/C Preference Amount referred to in Article 134.3 above shall not apply with respect to the Preferred C Shares, and the holders of Preferred C Shares shall only be entitled to receive the greater of (i) the Series C Threshold Amount (without further participation of the Preferred C Shares in any excess distribution), and (ii) the amount that would be payable to the Preferred C Shares if the Preferred C Shares were to participate pro rata (on an as converted basis) in such distribution together with the holders of Preferred A Shares, Preferred B Shares, Preferred D Shares, Preferred D-1 Shares and Ordinary Shares, pursuant to the provisions of Articles 134.5, 134.6, 134.7, 134.9 or 134.10 hereof, as applicable.

 

  134.9 In the event that the amount to be distributed to the holders of the Preferred D Shares (including the Preferred D Preference Amount) entitles such holders to a distribution greater than $151.38 (adjusted for share combinations or subdivisions or other recapitalizations of the Company’s Shares) together with interest at a rate of LIBOR + 1% p.a. accruing from the date of purchase from the Company of such shares , per each Preferred D Share (“ Series D Threshold Amount ”), then the Series D Preference Amount referred to in Article 134.2 above shall not apply and the holders of Preferred D Shares shall only be entitled to receive the greater of (i) the Series D Threshold Amount (without further participation of the Preferred D Shares in any excess distribution), and (ii) the amount that would be payable to the Preferred D Shares if the Preferred D Shares were to participate pro rata (on an as converted basis) in such distribution together with the holders of Preferred A Shares, Preferred B Shares, Preferred C Shares, Preferred D-1 Shares and Ordinary Shares, pursuant to the provisions of Article 134.5, 134.6, 134.7, 134.8 or 134.10 hereof.

 

  134.10

In the event that the amount to be distributed to the holders of the Preferred D-1 Shares (including the Preferred D-1 Preference Amount) entitles such holders to a distribution greater than $201.84 (adjusted for share combinations or subdivisions or other recapitalizations of the Company’s Shares) together with interest at a rate of LIBOR + 1% p.a. accruing from the date of purchase from the Company of such shares , per each Preferred D-1 Share (“ Series D-1 Threshold Amount ”), then the Series D-1 Preference Amount referred to in Article 134.1 above shall not apply and the holders of Preferred D-1 Shares shall only be entitled to receive the greater of (i) the Series D-1 Threshold Amount (without further participation of the Preferred D-1 Shares in any excess distribution), and (ii) the amount that would be payable to the Preferred D-1 Shares if the Preferred D-1 Shares were to

 

47


  participate pro rata (on an as converted basis) in such distribution together with the holders of Preferred A Shares, Preferred B Shares, Preferred C Shares, Preferred D Shares and Ordinary Shares, pursuant to the provisions of Article 134.5, 134.6, 134.7, 134.8 or 134.9 hereof.

 

  134.11 Whenever the distribution provided for in this Article 134 shall be payable in securities or property other than cash, the value of such distribution shall be the fair market value of such securities or other property as determined in good faith by the Board of Directors, which determination shall be conclusive.

INDEMNITY, INSURANCE AND EXEMPTION

 

135.       (a)  

The Company may, subject and pursuant to the provisions of the Companies Law, indemnify an “office holder” of the Company (as such term is defined in Article 86) for all liabilities and expenses incurred by him arising from or as a result of any act (or omission) carried out by him as an office holder of the Company and which is indemnifiable pursuant to the Companies Law, to the maximum extent permitted by law. The Company may indemnify an office holder post-factum and may also undertake to indemnify an office holder in advance, provided such undertaking is limited to types of occurrences which, in the opinion of the Board of Directors, are, at the time of the undertaking, foreseeable and to an amount the Board of Directors has determined is reasonable in the circumstances.

 

  (b) The Company may, subject and pursuant to the provisions of the Companies Law, enter into contracts to insure the liability of office holders of the Company for any liabilities incurred by them arising from or as a result of any act (or omission) carried out by them as office holders of the Company and for which the Company may insure office holders pursuant to the Companies Law, to the maximum extent permitted by law.

 

  (c) The Company may, subject to the provisions of the Companies Law, procure insurance for or indemnify any person who is not an office holder including, without limitation, any employee, agent, consultant or contractor of the Company who is not an office holder.

 

  (d) The Company may, to the maximum extent permitted by law, exempt and release an office holder of the Company, including in advance, from and against all or part of their liability for monetary or other damages due to, arising or resulting from, a breach of their duty of care to the Company. The Directors of the Company are released and exempt from all liability as aforesaid to the maximum extent permitted by law with respect to any such breach, which has been or may be committed. Notwithstanding the foregoing, the Company may not exempt and release directors in advance from their responsibilities for damages due to the violation of their duty of care to the Company with respect to distributions as such term is defined in the Companies Law.

 

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Exhibit 4.1

AMENDED AND RESTATED INVESTOR RIGHTS’ AGREEMENT

THIS AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT (this “Agreement”) is entered into this 13th day of March, 2008 by and between VASCULAR BIOGENICS LTD., an Israeli private company No. 51-289976-6 (the “Company”), the holders of Series A Preferred Shares of the Company, NIS 0.01 par value each (the “Preferred A Shares” and “Preferred A Shareholders” respectively), the holders of Series B Preferred Shares of the Company (the “Preferred B Shares” and “Preferred B Shareholders” respectively), the holders of Series C Preferred Shares of the Company ((the “Preferred C Shares” and “Preferred C Shareholders” respectively), and the holders of Series D Preferred Shares of the Company (the “Preferred D Shares” and “Preferred D Shareholders” respectively). The Preferred A Shareholders, Preferred B Shareholders, Preferred C Shareholders and Preferred D Shareholders, shall be referred to herein as the “Preferred Shareholders” and the Preferred A Shares, Preferred B Shares, Preferred C Shares and Preferred D Shares shall be referred to herein as the “Preferred Shares”.

W I T N E S S E T H:

WHEREAS, the Company, the Preferred A Shareholders, Preferred B Shareholders and Preferred C Shareholders have entered into a certain Investors Rights Agreement, dated January 9, 2003, as amended (the “Original IRA”);

WHEREAS, the Company and the requisite Preferred A Shareholders, Preferred B Shareholders and Preferred C Shareholders wish to amend the Original IRA as set forth herein, and wish for certain new shareholders of the Company to join the Original ERA (as amended hereby) as Preferred Shareholders thereunder;

NOW, THEREFORE, in consideration of the mutual promises and covenants herein, the receipt and sufficiency are hereby acknowledged, the parties hereto agree as follows:

 

1. Definitions . As used in Sections in this Agreement, the following capitalized terms shall have the following respective meanings:

 

  1.1 “Commission” means the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act.

 

  1.2 “Conversion Shares” means the Company’s Ordinary Shares issued or issuable pursuant to conversion of the Preferred Shares.

 

  1.3 “Exchange Act” means the Securities Exchange Act of 1934, as amended, or any similar federal rule or statute and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time.

 

  1.4 “Form F-3” means such form under the Securities Act as in effect on the date hereof or any registration form under the Securities Act subsequently adopted by the Commission that permits inclusion or incorporation of substantial information by reference to other documents filed by the Company with the Commission.


  1.5 “Holder” means (i) any Preferred Shareholder holding Registrable Securities and (ii) any person holding Registrable Securities to whom the rights under this Agreement have been duly transferred in compliance with Section 15.

 

  1.6 “Initiating Holders” means any Holder or Holders who, in the aggregate, hold at least the majority of the Registrable Securities then outstanding (on an as-converted basis).

 

  1.7 “Ordinary Shares” means the ordinary shares of the Company, NIS 0.01 par value each.

 

  1.8 “Recapitalization Event” means any share combination or subdivision, bonus share issuance or any other recapitalization or reclassification of the Company’s shares.

 

  1.9 “Registrable Securities” means (i) the Conversion Shares, (ii) any Ordinary Shares or Preferred Shares issued or issuable in respect of any of the foregoing upon a Recapitalization Event, or (iii) any shares of the Company which have been duly transferred to a Preferred Shareholder in compliance with Section 15; provided , however , that securities shall only be treated as Registrable Securities if and so long as (A) they have not been registered or sold to or through a broker or dealer or underwriter in a public distribution or a public securities transaction, and (B) the rights with respect to such securities have not terminated pursuant to Section 13.

 

  1.10 “register,” “registered” and “registration” shall refer to a registration effected by preparing and filing a registration statement, or similar documents, in compliance with the Securities Act, and the declaration or ordering of the effectiveness of such registration statement or similar documents by the Commission.

 

  1.11 “Registration Expenses” shall mean all expenses incurred by the Company in effecting any registration pursuant to this Agreement, including without limitation, all registration, qualification and filing fees, printing expenses, escrow fees, fees and disbursements of counsel for the Company, blue sky fees and expenses, the expense of any special audits incident to or required by any such registration. Registration Expenses shall also include the reasonable fees and disbursements for one special counsel selected by a majority in interest of the Holders selling in such registration, and in any event not to exceed $50,000 per registration. Registration Expenses shall specifically exclude Selling Expenses.

 

  1.12 “Rule 144” and “Rule 145” shall mean Rules 144 and 145, respectively, promulgated under the Securities Act, or any similar federal rules thereunder, all as the same shall be in effect at the time.

 

  1.13 “Securities Act” shall mean the Securities Act of 1933, as amended, or any similar federal rule or statute and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time.

 

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  1.14 “Selling Expenses” shall mean all underwriting discounts, selling commissions and stock transfer taxes applicable to the securities registered by the Holders and Ordinary Shareholders and, except as set forth in the definition of Registration Expenses above, all fees and disbursements of counsel for any Holder or Ordinary Shareholders.

 

2. Demand Registration .

 

  2.1 Request for Registration . In case the Company shall receive from Initiating Holders a written request that the Company effect any registration with respect to all or part of the Initiating Holder’s Registrable Securities, the Company shall:

 

  2.1.1 promptly give written notice of the proposed registration to all other Holders and Ordinary Shareholders and offer them the opportunity to participate; and

 

  2.1.2 as soon as practicable, use commercially reasonable efforts to effect such registration as part of a firm commitment underwritten public offering with underwriters selected by a majority in interest of the Initiating Holders subject to the Company’s reasonable approval (including, without limitation, appropriate qualification under applicable state securities laws and appropriate compliance with applicable regulations issued under the Securities Act and any other governmental requirements or regulations) as may be so requested and as would permit or facilitate the sale and distribution of all or such portion of such Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities of any Holder joining in such request by delivering a written notice to such effect to the Company within twenty (20) days after the date of such written notice from the Company.

 

  2.2 Exemptions . Notwithstanding the foregoing, the Company shall not be obligated to take any action to effect or complete any such registration pursuant to this Section 2:

 

  2.2.1 Prior to six (6) months following the earlier of (a) the effective date of the Company’s first registered public offering of its Ordinary Shares (the “IPO” ) and (b) the date that the Company first becomes subject to the periodic reporting requirements of Section 12(g) and 15(d) of the Exchange Act.;

 

  2.2.2 Unless the requested registration would have an aggregate offering price of all Registrable Securities sought to be registered by all Holders, net of underwriting discounts and commissions, exceeding $6,000,000;

 

  2.2.3 During the period starting with the date of effectiveness of a registration effected pursuant to this Section 2.2 and ending on a date three hundred and sixty five (365) days thereafter;

 

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  2.2.4 After the Company has effected two registrations pursuant to this Section 2; or

 

  2.2.5 If the Company shall furnish to such Holders a certificate, signed by the CEO of the Company, stating that in the good faith judgment of the Board of Directors it would be seriously detrimental to the Company or its shareholders for a registration statement to be filed in the near future, then the Company’s obligations under this Section 2 shall be deferred for a period not to exceed one hundred and twenty (120) days from the date of receipt of written request from the Initiating Holders; provided, however, that the Company may not utilize this right more than once in any twelve (12) month period.

 

  2.3 Underwriting.

 

  2.3.1 In the event of a registration pursuant to Section 2.1, the right of any Holder to registration pursuant to Section 2.1 shall be conditioned upon such Holder’s participation in the underwriting arrangements required by this Section 2.3, and the inclusion of such Holder’s Registrable Securities in the underwriting to the extent requested shall be limited to the extent provided in this Section 2.3.

 

  2.3.2 The Company shall, together with all Holders proposing to distribute their securities through such underwriting, enter into an underwriting agreement in customary form with the managing underwriter selected in accordance with Section 2.1.2.

 

  2.3.3 Notwithstanding any other provision of this Section 2, if the managing underwriter determines that marketing factors require a limitation of the number of shares to be underwritten, the managing underwriter may limit the Registrable Securities to be included in such registration. The Company shall so advise all Holders requesting to be included in the registration and underwriting, and the number of Registrable Securities that may be included in the registration and underwriting shall be allocated pro rata among all Holders requesting to be included in the registration and underwriting in proportion, as nearly as practicable, to the respective amounts of Registrable Securities held by them at the time of filing the registration statement; provided , however , that the number of Registrable Securities to be included in such underwriting and registration shall not be reduced unless all other securities of the Company are first entirely excluded from the underwriting and registration.

 

  2.3.4 To facilitate the allocation of shares in accordance with the above provisions, the Company or the underwriters may round the number of shares allocated to any Holder to the nearest 100 shares.

 

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  2.3.5 If any Holder of Registrable Securities disapproves of the terms of the underwriting, such person may elect to withdraw therefrom by written notice to the Company. Any Registrable Securities excluded or withdrawn from such underwriting shall be withdrawn from registration.

 

3. Company Registration: Notice of Registration . If at any time or from time to time the Company shall determine to register any of its equity securities, either for its own account or the account of a Holder or other holders, other than (i) a registration relating solely to employee benefit plans, (ii) a registration relating solely to a Rule 145 transaction, or (iii) a registration in which the only equity security being registered is share capital issuable upon conversion of convertible debt securities which are also being registered, the Company shall:

 

  3.1.1 promptly give written notice of the proposed registration to all Holders and offer them the opportunity to participate; and

 

  3.1.2 include in such registration (and any related qualifications including compliance with Blue Sky laws), and in any underwriting involved therein, all the Registrable Securities specified in a written request or requests, made within twenty (20) days after the date of such written notice from the Company, by any Holder.

 

  3.2 Underwriting .

 

  3.2.1 If the registration of which the Company gives notice is for a registered public offering involving an underwriting, the Company shall so advise the Holders as a part of the written notice given pursuant to Section 3.1.1. In such event, the right of any Holder to registration pursuant to Section 3.1 shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of Registrable Securities in the underwriting shall be limited to the extent provided herein.

 

  3.2.2 All Holders proposing to distribute their securities through such underwriting shall (together with the Company and the other Holders distributing their securities through such underwriting) enter into an underwriting agreement in customary form with the managing underwriter selected for such underwriting by the Company.

 

  3.2.3

Notwithstanding any other provision of this Section 3, if the managing underwriter determines that marketing factors require a limitation of the number of shares to be underwritten, the managing underwriter may limit the Registrable Securities to be included in such registration. The Company shall so advise all Holders requesting to be included in the registration and underwriting, and the number of Registrable Securities that may be included in the registration and underwriting shall be allocated in the following priority: first , the Company’s securities; and second , pro rata among all Holders requesting to be included in the registration and

 

5


  underwriting in proportion, as nearly as practicable, to the respective amounts of Registrable Securities held by them at the time of filing the registration statement; provided , however , that the number of shares of Registrable Securities to be included in such underwriting and registration shall not be reduced unless all other securities held by Shareholders of the Company (other than the Holders) are first entirely excluded from the underwriting and registration, and further provided however, that the number of Registrable Securities included in the offering shall not be reduced below thirty percent (30%) of the total number of securities included in such offering, unless such offering is the IPO.

 

  3.2.4 To facilitate the allocation of shares in accordance with the above provisions, the Company or the underwriters may round the number of shares allocated to any Holder to the nearest 100 shares.

 

  3.2.5 If any Holder disapproves of the terms of any such underwriting, such person may elect to withdraw therefrom by written notice to the Company. Any Registrable Securities excluded or withdrawn from such underwriting shall be withdrawn from registration.

 

  3.3 Right to Terminate Registration . The Company shall have the right to terminate or withdraw any registration initiated by it under this Section 3 prior to the effectiveness of such registration whether or not any Holder has elected to include securities in such registration, with all expenses of such terminated or withdrawn registration borne by the Company.

 

4. Registration on Form F-3 .

 

  4.1 Request for Registration; Underwriting . In case the Company shall receive from any Holders, which hold, in the aggregate, not less than 20% of the Registrable Securities then outstanding (the “F-3 Initiating Holders” ), a written request that the Company file a registration statement on Form F-3 for a public offering of the Registrable Securities, and the Company is a registrant entitled to use Form F-3 to register the Registrable Securities for such an offering, then the Company shall:

 

  4.1.1 promptly give written notice of the proposed registration to all other Holders and offer them the opportunity to participate; and

 

  4.1.2 as soon as practicable, use commercially reasonable efforts to cause such Registrable Securities, as are specified in such request, together with all or such portion of the Registrable Securities of any Holder joining in such request, by delivering a written notice to such effect to the Company within twenty (20) days after the date of such written notice from the Company, to be registered for the offering on such form and to cause such Registrable Securities to be qualified in such jurisdictions as such Holder may reasonably request.

 

6


  4.2 Exemption . Notwithstanding the foregoing, the Company shall not be obligated to take any action pursuant to this Section 4.1:

 

  4.2.1 Prior to the first six (6) months following the effective date of a registration statement (other than with respect to a registration statement relating to a Rule 145 transaction or an offering solely to employees).

 

  4.2.2 Unless the requested registration would have an aggregate offering price of all Registrable Securities sought to be registered, net of underwriting discounts and commissions, exceeding $1,000,000.

 

  4.2.3 If one registration pursuant to this Section 4 has been effected in any twelve-month period.

 

  4.2.4 If the Company shall furnish to the F-3 Initiating Holders a certificate signed by the Chief Executive Officer of the Company (i) giving notice of its bona fide intention to effect the filing of a registration statement with the Commission within the following 90 days, or (ii) stating that, in the good faith judgment of the Board of Directors, it would be seriously detrimental to the Company or its Shareholders for a registration statement to be filed in the near future, then the Company’s obligation to use its commercially reasonable efforts to file a registration statement shall be deferred for a period not to exceed 120 days from the receipt of the request to file such registration by such F-3 Initiating Holders, provided that the Company may not exercise this deferral right more than once per twelve month period.

 

  4.2.5 In any particular jurisdiction in which the Company would be required to execute a general consent to service of process in effecting such registration, qualification or compliance unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act

 

  4.3 Underwriting

 

  4.3.1 If the distribution of Registrable Securities under this Section 4 is to be effected by means of an underwriting, the Company shall advise the Holders as part of the notice given pursuant to Section 4.1.1 that the right of any Holder to registration pursuant to Section 4.1 shall be conditioned upon such Holder’s participation in the underwriting arrangements required by this Section 4.3, and the inclusion of such Holder’s Registrable Securities in the underwriting to the extent requested shall be limited to the extent provided in this Section 4.3.

 

  4.3.2

The Company shall, together with all Holders proposing to distribute their securities through such underwriting, enter into an underwriting agreement in customary form with the managing underwriter selected by a majority in interest of the F-3 Initiating Holders subject to the Company’s reasonable

 

7


  approval (including, without limitation, appropriate qualification under applicable state securities laws and appropriate compliance with applicable regulations issued under the Securities Act and any other governmental requirements or regulations).

 

  4.3.3 Notwithstanding any other provision of this Section 4, if the managing underwriter determines that marketing factors require a limitation of the number of shares to be underwritten, the managing underwriter may limit the Registrable Securities to be included in such registration. The Company shall so advise all Holders requesting to be included in the registration and underwriting, and the number of Registrable Securities that may be included in the registration and underwriting shall be allocated pro rata among all Holders requesting to be included in the registration and underwriting in proportion, as nearly as practicable, to the respective amounts of Registrable Securities held by them at the time of filing the registration statement; provided , however , that the number of shares of Registrable Securities to be included in such underwriting and registration shall not be reduced unless all other securities held by the Company are first entirely excluded from the underwriting and registration.

 

  4.3.4 To facilitate the allocation of shares in accordance with the above provisions, the Company or the underwriters may round the number of shares allocated to any Holder or Ordinary Shareholders to the nearest 100 shares.

 

  4.3.5 If any Holder disapproves of the terms of the underwriting, such person may elect to withdraw therefrom by written notice to the Company. Any Registrable Securities excluded or withdrawn from such underwriting shall be withdrawn from registration.

 

5. Subsequent Registration Rights .

 

  5.1 Without the consent of any holder of Registrable Securities hereunder, the Company may grant to any holder of securities of the Company registration rights inferior to those granted hereunder; provided, however, that the Company shall not allow such holder of securities of the Company (i) to include such securities in any registration filed under Section 3 hereof, unless under the terms of such agreement, such holder may include such securities in any such registration only to the extent that the inclusion of such securities will not reduce the amount of the Registrable Securities of the Holders that are included; or (ii) to demand registration of their securities.

 

  5.2 The Company shall not enter into any agreement granting any holder or prospective holder of any securities of the Company registration rights superior to the rights granted to the Preferred Shareholders hereunder without the written consent of the holders of 65% in interest of the Registrable Securities, voting as a single class.

 

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6. Expenses of Registration . All Registration Expenses incurred in connection with (i) two registrations pursuant to Section 2, (ii) all registrations pursuant to Section 3, and (iii) all registrations pursuant to Section 4, shall be bome by the Company. Notwithstanding the foregoing, in the event that Initiating Holders cause the Company to begin a registration pursuant to Section 2, and the request for such registration is subsequently withdrawn by the Initiating Holders or such registration is not completed due to failure to meet the net proceeds requirement set forth in such section, all Holders shall be deemed to have forfeited their right to one registration under Section 2, unless the Holders requesting to register their Registrable Securities pay for, or reimburse the Company for, the Registration Expenses incurred in connection with such withdrawn or incomplete registration pro rata on the basis of the number of Registrable Securities to have been registered therein; provided, however, that if at the time of such withdrawal, such Holders have learned of a material adverse change in the condition, business or prospects of the Company from that known to such Holders at the time of their request, and have withdrawn the request with reasonable promptness following disclosure by the Company of such material adverse change, then such Holders shall not be required to pay any of such expenses and shall retain their rights pursuant to Section 2. Unless otherwise stated, all Selling Expenses relating to securities registered on behalf of the Holders and all other registration expenses shall be borne by the holders of such securities pro rata on the basis of the number of shares so registered or proposed to be so registered.

 

7. Registration Procedures . In the case of each registration effected by the Company pursuant to this Agreement, the Company will keep each Holder (in the event of a registration pursuant to Section 3 and 4), advised in writing as to the initiation of such registration and as to the completion thereof. The Company shall:

 

  7.1.1 prepare and file with the Commission a registration statement and such amendments and supplements as may be necessary and use commercially reasonable efforts to cause such registration statement to become and remain effective for at least 120 days, or up to 180 days in the event of registration under Sections 2 and 4, or until the distribution described in the registration statement has been completed, whichever first occurs;

 

  7.1.2 furnish to the Holders participating in such registration and to the underwriters (if any) of the securities being registered such reasonable number of copies of the registration statement, preliminary prospectus, final prospectus and such other documents as such underwriters may reasonably request in order to facilitate the public offering of such securities;

 

  7.1.3 use all reasonable efforts to register and qualify the securities covered by such registration statement under such other securities or Blue Sky laws of such jurisdictions as shall be reasonably requested by the Holders, provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions;

 

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  7.1.4 in the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing underwriter of such offering;

 

  7.1.5 notify each Holder of Registrable Securities covered by such registration statement at any time when a prospectus relating thereto is required to be delivered under the Act or the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing, and, at the request of any such Holder, the Company will promptly prepare and file, pursuant to Rule 424 under the Securities Act, a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus will not contain an untrue statement of a material fact or omit to state any fact necessary to make the statements therein not misleading;

 

  7.1.6 cause all such Registrable Securities registered pursuant hereunder to be listed on each securities exchange on which similar securities issued by the Company are then listed;

 

  7.1.7 provide a transfer agent and registrar for all Registrable Securities registered pursuant hereunder and a CUSEP number for all such Registrable Securities, in each case not later than the effective date of such registration;

 

  7.1.8

make available for inspection by each Holder of Registrable Securities covered by such registration statement, any underwriter participating in any disposition pursuant to such registration statement and any attorney, accountant or other agent retained by any such Holder or underwriter (collectively, the “Inspectors” ), all financial and other records, pertinent corporate documents and properties of the Company as shall be reasonably necessary to enable them to exercise their due diligence responsibility (the “Records” ), and cause the advisors, managers, officers, employees and independent accountants of the Company to supply all information reasonably requested by any such Inspector in connection with such registration statement. Records which the Company determines, in good faith, to be confidential and which it notifies the Inspectors are confidential shall not be disclosed by the Inspectors unless (i) the disclosure of such Records is necessary to avoid or correct a misstatement or omission in a registration statement, (ii) the release of such records is ordered pursuant to a subpoena or other order from a court of competent jurisdiction, or (iii) such Records have been generally made available to the public. Each Holder agrees that information obtained by it as a result of such inspections shall be deemed confidential and shall not be used by it as the basis for any market transactions in the securities of the Company or its

 

10


  affiliates or otherwise disclosed by it unless and until such is made generally available to the public. Each Holder further agrees that it will, upon learning that disclosure of such Records is sought in a court of competent jurisdiction, give notice to the Company, if legally permitted to do so, and allow the Company, at its sole expense, to undertake appropriate action to prevent disclosure of the Records that are deemed confidential, provided the same shall not subject Holder to civil or criminal liability or penalty;

 

  7.1.9 otherwise use its reasonable best efforts to comply with all applicable rules and regulations of the SEC, and make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least twelve months beginning with the first day of the first full calendar quarter of the Company after the effective date of such registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 promulgated thereunder;

 

  7.1.10 permit any Holder of Registrable Securities that, in such Holder’s good faith judgment (based upon advice of counsel), might be deemed to be an underwriter or a controlling person of the Company to participate in the preparation of such registration or comparable statement and to require the insertion therein of material, furnished to the Company in writing, which in the reasonable judgment of such Holder and its counsel should be included therein;

 

  7.1.11 in the event of the issuance of any stop order suspending the effectiveness of such registration statement, or of any order suspending or preventing the use of any related prospectus or suspending the qualification of any equity securities included in such registration statement for sale in any jurisdiction, or, in either case, the initiation or the threatening of any such proceeding, use its reasonable best efforts promptly to obtain the withdrawal of such order;

 

  7.1.12 use its reasonable best efforts to obtain a “cold comfort” letter from the independent public accountants of the Company in customary form and covering such matters of the type customarily covered by “cold comfort” letters as the Holders of at least sixty five percent (65%) of the Registrable Securities registered thereunder reasonably request; and

 

  7.1.13 within two business days after any Registration Statement is declared effective, the Company shall file a final prospectus with the SEC pursuant to Rule 424.

 

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8. Indemnification .

 

  8.1 The Company will indemnify each Holder, each of its officers and directors and partners, agents of such Holder (including its legal counsel and independent accountants) and each person controlling such Holder within the meaning of Section 15 of the Securities Act (for the purpose of this Section 8.1, collectively, the “Indemnitees” ), with respect to which registration has been effected pursuant to this Agreement, against all expenses, claims, losses, damages or liabilities (or actions in respect thereof), including any of the foregoing incurred in settlement of any litigation, commenced or threatened, arising out of or based upon any of the following statements, omissions, or violations (collectively a “Violation” ): (i) any untrue statement (or alleged untrue statement) of a material fact contained in any registration statement, prospectus, offering circular or other document, or any amendment or supplement thereto, incident to any such registration, or (ii) the omission (or alleged omission) to state in any registration a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading, or (iii) any violation by the Company of the Securities Act, the Exchange Act, state securities laws or any rule or regulation promulgated under such laws in connection with any such registration, and the Company will reimburse each of the Indemnitees, for any legal and any other expenses reasonably incurred, as such expenses are incurred, in connection with investigating, preparing or defending any such claim, loss, damage, liability or action, provided that the Company will not be liable in any such case to the extent that any such claim, loss, damage, liability or expense arises out of or is based upon a Violation made in reliance upon and in conformity with written information furnished to the Company by an instrument duly executed by such Holder or its relevant Indemnitees, and stated to be specifically for use therein.

 

  8.2 Each Holder will, if Registrable Securities held by such Holder are included in the securities as to which such registration is being effected, indemnify the Company, each of its directors, officers, agents (including its legal counsel and independent accountants) each person who controls the Company within the meaning of Section 15 of the Securities Act, and each other such Holder, each of its officers and directors and each person controlling such Holder within the meaning of Section 15 of the Securities Act, against all expenses, claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based upon a Violation, in each case to the extent (and only to the extent) that such Violation occurs in reliance upon and in conformity with written information furnished by such Holder expressly for use in connection with such registration; and each such Holder will reimburse the Company, such other Holders, such directors, officers, persons, underwriters or control persons for any legal or any other expenses reasonably incurred, as such expenses are incurred, in connection with investigating, preparing or defending any such claim, loss, damage, liability or action. Notwithstanding the foregoing, the liability of each Holder under this subsection 8.2 shall be limited in an amount equal to the gross proceeds before expenses and commissions from the offering received by such Holder.

 

12


  8.3 Each party entitled to indemnification under this Section 8 (the “Indemnified Party” ) shall give notice to the party required to provide indemnification (the “Indemnifying Party” ) promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting therefrom, provided that counsel for the Indemnifying Party, who shall conduct the defense of such claim or litigation, shall be approved by the Indemnified Party (whose approval shall not unreasonably be withheld), and the Indemnified Party may participate in such defense at such party’s expense, and provided further that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under this Agreement unless the failure to give such notice is materially prejudicial to an Indemnifying Party’s ability to defend such action and provided further, that the Indemnifying Party shall not assume the defense for matters as to which there is a conflict of interest or there are separate and different defenses. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party (whose consent shall not be unreasonably withheld), consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation.

 

  8.4 If the indemnification provided for in this Section 8 is held by a court of competent jurisdiction to be unavailable to an Indemnified Party with respect to any loss, liability, claim, damage or expense referred to herein, then the Indemnifying Party, in lieu of indemnifying such Indemnified Party hereunder, shall contribute to the amount paid or payable by such Indemnified Party as a result of such loss, liability, claim, damage or expense in such proportion as in appropriate to reflect the relative fault of the Indemnifying Party on the one hand and of the Indemnified Party on the other in connection with the statements or omissions that resulted in such loss, liability, claim, damage or expense, as well as any other relevant equitable considerations. The relative fault of the indemnifying party and of the Indemnified Party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the Indemnifying Party or by the Indemnified Party and the parties’ relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission. Notwithstanding the foregoing, the contribution from each Holder under this subsection 8.4 shall be limited in an amount equal to the gross proceeds from the offering received by such Holder.

 

  8.5 Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained on the underwriting agreement entered into in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control.

 

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  8.6 The obligations of the Company and the Holders under this Section 8 shall survive the completion of any offering of Registrable Securities in a registration statement under this Agreement, and otherwise.

 

9. Information bv Holder . Each Holder of Registrable Securities included in any registration shall furnish to the Company such information regarding such Holder and the Registrable Securities held by them and the distribution proposed by each such Holder as the Company may request in writing and as shall be required in connection with any registration referred to in this Agreement.

 

10. Rule 144 Reporting . With a view to making available to the Holders the benefits of certain rules and regulations of the Commission which may at any time permit the sale of the Registrable Securities to the public without registration, after such time as a public market exists for the Ordinary Shares of the Company, the Company agrees to use its best efforts to

 

  10.1.1 Make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act, at all times after the effective date that the Company becomes subject to the reporting requirements of the Securities Act or the Exchange Act;

 

  10.1.2 File with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements); and

 

  10.1.3 So long as a Holder owns any Registrable Securities, to furnish to the Holder forthwith upon request a written statement by the Company as to its compliance with the reporting requirements of said Rule 144 (at any time after 90 days after the effective date of the first registration statement filed by the Company for an offering of its securities to the general public), a copy of the most recent annual or quarterly report of the Company, and such other reports and documents of the Company and other information in the possession of or reasonably obtainable by the Company as the Holder may reasonably request in availing itself of any rule or regulation of the Commission allowing the Holder to sell any such securities without registration.

 

  10.1.4

At any time during the period commencing from the later of (i) six (6) month anniversary of the date of this Agreement, and (ii) the date upon which the Company becomes subject to the reporting requirements under the Exchange Act, and ending at such time that all of the Registrable Securities can be sold either pursuant to a registration statement, or if a registration statement is not available for the resale of all of the Registrable Securities, may be sold without the requirement for the Company to be in compliance with Rule 144(c)(1) and otherwise without restriction or limitation pursuant to Rule 144, if the Company shall fail for any reason to

 

14


  satisfy the current public information requirement under Rule 144(c) (a “Public Information Failure” ) then, as relief for the damages to any Holder by reason of any such delay in or reduction of its ability to sell the Registrable Securities (which remedy shall not be exclusive of any other remedies available at law or in equity), the Company shall pay to each such Holder an amount in cash equal to one percent (1.0%) of the aggregate purchase price of such holder’s Registrable Securities on the thirtieth day after a Public Information Failure and on every thirtieth day thereafter until the earlier of (i) the date such Public Information Failure is cured and (ii) such time that such public information is no longer required pursuant to Rule 144. The payments to which a holder shall be entitled pursuant to this Section 10.2 are referred to herein as “Public Information Failure Payments.” Public Information Failure Payments shall be paid on the earlier of (I) the last day of the calendar month during which such Public Information Failure Payments are incurred and (II) the third business day after the event or failure giving rise to the Public Information Failure Payments is cured. In the event the Company fails to make Public Information Failure Payments in a timely manner, such Public Information Failure Payments shall bear interest at the rate of 1.5% per month (prorated for partial months) or the highest amount permitted by applicable law, if less, until paid in full.

 

11.

Delay in Registration . Following the IPO, and without derogating from the Company’s right to delay a registration pursuant to Sections 2.2.5 and 4.2.4 above, in the event that the Company fails to fulfill any registration obligations hereunder other than during an Allowable Grace Period (as defined below), then unless otherwise agreed by the majority in interest of the Holders, the Company shall pay cash equal to (A) one percent (1.0%) of the amount originally paid for such Holder’s Registrable Securities on each of the following dates: (i) the day of a failure to effect a registration statement under Section 2.1 and 4.1 (an “Effectiveness Failure” ) and (ii) on the initial day after the effective date of each such registration statement in which sales of all of the Registrable Securities required to be included on such registration statement cannot be made pursuant to such registration statement or otherwise (including, without limitation, because of a failure to keep such registration statement effective, to disclose such information as is necessary for sales to be made pursuant to such registration statement or to maintain the listing of the ordinary shares of the Company) (a “Maintenance Failure” ), and (B) one percent (1.0%) of the amount originally paid for such Holder’s Registrable Securities on each of the following dates: (i) on every thirtieth day after the date of an Effectiveness Failure until such failure is cured and (ii) on every thirtieth day after the initial day of a Maintenance Failure and thereafter until such Maintenance Failure is cured, for each month that there is a delay in such fulfillment. The payments to which a Holder shall be entitled pursuant to this Section 11 are referred to herein as “Registration Default Payments.” Registration Default Payments shall be paid on the earlier of (I) the last day of the calendar month during which such Registration Default Payments are incurred and (II) the third business day after the event or failure giving rise to the Registration Default Payments is cured. In the event the Company fails to make Registration Default Payments in a timely manner, such Registration Default Payments shall bear interest at

 

15


  the rate of 1.5% per month (prorated for partial months)) or the highest amount permitted by applicable law, if less, until paid in full. Notwithstanding the foregoing no Registration Default Payments shall be due with respect to Registrable Securities that may be sold without the requirement to be in compliance with Rule 144(c)(1) and otherwise without restriction or limitation pursuant to Rule 144 of the Securities Act (or any successor provision thereof having similar effect).

 

12. Grace Periods. Notwithstanding anything to the contrary herein, at any time after a registration statement has been declared effective by the SEC, the Company may delay the disclosure of material, non-public information concerning the Company the disclosure of which at the time is not, in the good faith opinion of the Board of Directors of the Company and upon the advice of its counsel, in the best interest of the Company and, upon the advice of counsel to the Company, otherwise required (a “Grace Period” ); provided, that the Company shall promptly (i) notify the Holders in writing of the existence of material, non-public information giving rise to a Grace Period (provided that in each notice the Company will not disclose the content of such material, non-public information to the Holders) and the date on which the Grace Period will begin, and (ii) notify the Holders in writing of the date on which the Grace Period ends; and, provided further, that during any three hundred sixty five (365) day period such Grace Periods shall not exceed an aggregate of thirty-five (35) days (each, an “Allowable Grace Period” ). For purposes of determining the length of a Grace Period above, the Grace Period shall begin on and include the date the Holders receive the notice referred to in clause (i) and shall end on and include the later of the date the Holders receive the notice referred to in clause (ii) and the date referred to in such notice. The Company may delay the filing or effectiveness or suspend the use or effectiveness of any registration statement (and the Holders hereby agree not to offer or sell any Registrable Securities pursuant to such Registration Statement), and the provisions of Section 10 and 11 shall not be applicable, during the period of any Allowable Grace Period. Notwithstanding anything to the contrary, the Company shall cause its transfer agent to deliver unlegended Ordinary Shares to a transferee of a Holder for any sale of Registrable Securities made under a registration statement or pursuant to Rule 144 with respect to which a Holder has entered into a contract for sale, and delivered a copy of the prospectus included as part of the applicable registration statement, prior to the Holder’s receipt of the notice of a Grace Period and for which the Holders has not yet settled.

 

13. Termination of Registration Rights. The rights granted pursuant to Sections 2, 3, 4, 6, 7 and 10 of this Agreement shall terminate as to any Holder upon the earlier of (i) the date which is five years after the effective date of the Company’s IPO, or (ii) the date such Holder, as appropriate, is able to immediately sell all shares of Registrable Securities, respectively, held or entitled to be held upon conversion by such Holder or Ordinary Shareholder, respectively, under Rule 144 during any 90-day period.

 

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14. Lock-Up Agreement .

 

  14.1.1 Each Holder, and any transferee thereof, hereby agrees that, if so requested by the Company or any representative of the underwriters (the “Managing Underwriter” ), such Holders or transferees thereof, shall not without the prior consent of the Managing Underwriter (i) lend, offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any Registrable Securities , or (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Registrable Securities, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Ordinary Shares or such other securities, in cash or otherwise, during the period specified by the Company’s Board of Directors at the request of the Managing Underwriter (the “ Market Standoff Period ”), with such period not to exceed (a) in the case of a registration statement pertaining to the IPO - 180 days following the effective date of such statement; or (b) in the case of a registration statement following the IPO, and as long as the registration rights have not been terminated in accordance with Section 13-90 days following the effective date of such statement.

 

  14.1.2 The Company will use its best efforts to obtain the undertaking of each of the holders of Ordinary Shares of the Company as of the date hereof, and any of their transferees, to act in accordance with the provisions of Section 14.1 hereof.

 

  14.1.3 The Company may impose stop-transfer instructions with respect to securities subject to the foregoing restrictions until the end of such Market Standoff Period.

 

  14.1.4 The foregoing provisions of this Section 14 shall not apply to the sale of any shares to an underwriter pursuant to an underwriting agreement, and shall only be applicable to the Holders if all officers and directors, and greater than two percent (2%) Shareholders of the Company enter into similar agreements. None of the agreements specified in this Section 14.1.4 shall be revised or released without a similar revision or release being effected with respect to all Holders.

 

  14.1.5 The underwriters in connection with the registration statement so filed are intended third party beneficiaries of this Section 14 and shall have the right, power and authority to enforce the provisions hereof as though they were a party hereto.

 

15. Transfer of Rights . The rights granted under Sections 2, Section 3 and Section 4 of this Agreement may be assigned to any transferee or assignee, other than a competitor or potential competitor of the Company (as determined in good faith by the Company’s Board of Directors) in connection with any transfer or assignment of Registrable Securities by the Holder, provided that:

 

  15.1.1 such transfer or assignment is made pursuant to the provisions of the Company’s Articles of Association relating to transfer of securities, as shall be in effect;

 

17


  15.1.2 such transfer is otherwise effected in accordance with applicable securities laws and the terms of this Agreement;

 

  15.1.3 written notice is promptly given to the Company; and

 

  15.1.4 such transferee or assignee agrees to be bound by the provisions of this Agreement.

 

16. Foreign Offerings . The provisions of Sections 2 to 15 shall apply, mutatis mutandis, to any registration of securities of the Company outside of the United States of America.

 

17. Information Rights: Inspection Rights . Without derogating from any of the rights the Preferred Shareholder might have under the Israeli Companies Law, 1999, the Preferred Shareholders shall have the following information rights prior to the IPO:

 

  17.1 Financial Statements . Each Preferred Shareholder shall be entitled to receive from the Company: (i) annual financial statements (including a balance sheet, statement of income and statement of cash flow), in accordance with International Financing Reporting Procedures (IFRS), audited by an accounting firm associated with one of the “big four” accounting firms and a statement of shareholders’ equity as of the end of such year, within ninety (90) days after the end of each fiscal year; and (ii) un-audited, but reviewed, quarterly financial statements prepared in accordance with IFRS (including a balance sheet, statement of income and statement of cash flow, except for accompanying notes) within forty five (45) days from the end of each first, second and third quarterly period in each fiscal year, subject to changes resulting from normal year-end audit adjustments, all in reasonable detail and certified by the Chief Financial Officer of the Company;

 

  17.2 Annual Operating Plan . Within thirty (30) days prior to the end of each fiscal year, annual operating plan and budget for the next fiscal year, as approved by the Board of Directors and, as soon as prepared, any other budgets or revised budgets prepared by the Company;

 

  17.3 Other Information . Such other information relating to the financial condition, business or corporate affairs of the Company as each of the Preferred Shareholders and/or any of its assignees may from time to time reasonably request with reasonable confidentiality limitations or any other limitation under the Israeli Law.

 

  17.4 Access to Information . The Company shall permit each Preferred Shareholder, at such Preferred Shareholder’s own expense, to visit and inspect the Company’s and its subsidiaries’ properties and records and to discuss the consult with management of the Company and its subsidiaries, all at such reasonable times and upon reasonable notice and under confidentiality limitations.

 

18


  17.5 Accounting . The Company will maintain a system of accounting established and administered in accordance with IFRS consistently applied, and will set aside on its books all such proper reserves as shall be required by IFRS.

 

  17.6 No Limitation . The provisions of this Section 17 shall not be in limitation of any rights which any holder of the Company’s securities may have under the laws in which the Company is incorporated.

 

  17.7 PFIC . Upon request of any Preferred Shareholder, the Company shall, timely and at its sole expense, provide (or cause any subsidiary to provide) each Preferred Shareholder with such information and take such other actions as may be necessary to permit the Preferred Shareholder to make a timely “Qualified Electing Fund” election under section 1293 of the Code and the regulations thereunder, or any other election in respect to Passive Foreign Investment Company status. Further, at the request of any Preferred Shareholder, the Company shall, at the Company’s expense, provide such Preferred Shareholder on a timely basis with any information such Preferred Shareholder reasonably requests for purposes of completing United States federal, state or local income tax returns.

 

18. Miscellaneous .

 

  18.1 Entire Agreement . This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and contains all of the promises, undertakings, and other representations made by the Parties to each other prior to its execution. This Agreement shall prevail over any prior agreement, understanding, promise or undertaking of the Parties with respect to the subject matter hereof.

 

  18.2 Amendment . Without derogating from Section 5, additional parties may be added to this Agreement, any provision of this Agreement may be amended or the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the Holders of more than 65% of the Registrable Securities then outstanding. Any amendment or waiver effected in accordance with this Section shall be binding upon all parties of this Agreement and their respective successors and assignees.

 

  18.3 Notices . All notices hereunder will be in writing, mailed registered or certified, postage prepaid, addressed to the Parties at their respective addresses as set out below, or transmitted by courier, cable, telex or facsimile or other reliable method of transmission.

 

  If to the Company:    6 Yoni Netanyahu St.,
    

Or Yehuda, Israel

Fax: +972-3-634-6449

 

19


  with a copy to:    Yuval Horn, Adv.
    

Baratz, Horn & Co.

1 Azrieli Center,

Tel Aviv, Israel

Fax: +972-3-696-0986

If to the Preferred Shareholders:

 

    

to the addresses and fax numbers set

forth in Schedule A hereto;

Notices will be deemed received by the receiving party within seven (7) days of mailing, if mailed; within three (3) days of sending, if sent by courier; when actually delivered by hand, if so delivered, and on the first business day (at the receiving end) following transmission, if transmitted by cable, telex or facsimile.

 

  18.4 Assignment . Without derogating from Section 15, this Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors and assigns. Each Preferred Shareholder may only assign its rights and duties to a party that has acquired its shares, in accordance with the terms and conditions hereof and in the Company’s Articles of Association.

 

  18.5 Governing Law; Jurisdiction . This Agreement will be construed in accordance with and governed by the laws (but not the conflict of laws rules thereof) of the State of New York. The laws of the State of Israel (but not the conflict of laws rules thereof) shall continue to govern any issues relating to corporate law and shareholder rights herein. All disputes arising in connection with this Agreement shall be finally settled under the Rules of Conciliation and Arbitration of the International Chamber of Commerce by a panel of three arbitrators appointed in accordance with the said rules. Such proceedings shall be in London, England and in the English language.

 

  18.6 Severability . If any provision of this Agreement is held by a competent court to be invalid or unenforceable under applicable law, then such a provision shall be excluded from this Agreement and the remainder of this Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms; provided, however, that in such an event this Agreement shall be interpreted so as to give effect, to the greatest extent consistent with and permitted by applicable law, to the meaning and intention of the excluded provision as determined by such court of competent jurisdiction.

 

  18.7 Headings . All section headings herein are inserted for convenience only and shall not modify or affect the construction or interpretation of any provision of this Agreement.

 

  18.8 Counterparts . This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and enforceable against the parties actually executing such counterpart and all of which together shall constitute one and the same instrument.

 

20


  18.9 Aggregation of Shares . All Preferred Shares held or acquired by Aurum Ventures MKI Ltd., Benjamin Kahn and Semel Investments Holdings B.V. and each of their respective transferees of Company’s securities or, separately, by Pitango Venture Capital Fund IV L.P and Pitango Venture Capital Principals Fund IV L.P. and each of their respective transferees of Company’s securities, shall be aggregated together for the purpose of determining any rights of the holders thereof, or the applicability of any limitation under this Agreement.

 

  18.10 Titles and Subtitles . The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

- Signature Page Follows -

 

21


IN WITNESS WHEREOF, the parties have executed this Investors’ Rights Agreement as of the date first above written.

- Signature pages to the Investors’ Rights Agreement -

 

22


- Signature pages to the Investors’ Rights Agreement -

IN WITNESS WHEREOF, the parties have executed this Investors’ Rights Agreement as of the date first above written.

 

VASCULAR BIOGENICS LTD .
By:   /s/ Dror Harats
Name: Prof. Dror Harats
Title: CEO

 

23


[Signature pages to the Amended and Restated Investors’ Rights Agreement]

IN WITNESS WHEREOF, the parties have executed this Investors’ Rights Agreement as of the date first above written.

 

KEFFI GROUP LTD.
By:   /s/ Jide Zeitlin
Name: Jide Zeitlin
Title: President

 

24


EXHIBIT B

[Signature pages to the Amended and Restated Investors’ Rights Agreement]

IN WITNESS WHEREOF, the parties have executed this Investors’ Rights Agreement as of the date first above written.

 

J.J.D. HOLDINGS G.P.
By:   /s/ Jecheskiel Gonczarowski
Name:    Jecheskiel Gonczarowski
Title:    

 

A.J.J.G. TECHNOLOGY INVESTMENTS 2003
By:   /s/ Jecheskiel Gonczarowski
Name:    Jecheskiel Gonczarowski
Title:    

 

INSPE AKTBENGESELLSCHAFT
By:   /s/ Jecheskiel Gonczarowski
Name:    Jecheskiel Gonczarowski
Title:    

 

25


EXHIBIT B

[Signature pages to the Amended and Restated Investors’ Rights Agreement]

IN WITNESS WHEREOF, the parties have executed this Investors’ Rights Agreement as of the date first above written

 

/s/ Benjamin Kahn
BENJAMIN KAHN

 

26


EXHIBIT B

[Signature pages to the Amended and Restated Investors’ Rights Agreement]

IN WITNESS WHEREOF, the parties have executed this Investors’ Rights Agreement of the date first above written.

 

AURUM VENTURES M.K.I LTD.
By:   /s/ Dan Gelvan
Name:    Dan Gelvan
Title:    

 

27


EXHIBIT B

[Signature pages to the Amended and Restated Investors’ Rights Agreement]

IN WITNESS WHEREOF, the parties have executed this Investors’ Rights Agreement as of the dale first above written.

 

LEE HOLME SERVICES LTD.
By:   /s/ [Illegible]
Name:     
Title:    

 

28


EXHIBIT B

[Signature pages to the Amended and Restated Investors’ Rights Agreement]

IN WITNESS WHEREOF, the parties have executed this Investors’ Rights Agreement as of the dale first above written.

 

DR. MAX HERZBERG
By:   /s/ Max Herzberg
Name:    Dr. Max Herzberg
Title:    

 

29


EXHIBIT B

[Signature pages to the Amended and Restated Investors’ Rights Agreement]

IN WITNESS WHEREOF, the parties have executed this Investors’ Rights Agreement as of the dale first above written.

 

/s/ Leon Recanati
LEON RECANATI

 

30


EXHIBIT B

[Signature pages to the Amended and Restated Investors’ Rights Agreement]

IN WITNESS WHEREOF, the parties have executed this Investors’ Rights Agreement as of the dale first above written.

 

TAMIR FORER
By:   /s/ Tamir Forer
Name:    Tamir Forer
Title:    

 

31


EXHIBIT B

[Signature pages to the Amended and Restated Investors’ Rights Agreement]

IN WITNESS WHEREOF, the parties have executed this Investors’ Rights Agreement as of the dale first above written.

 

MUKI GURFINE
By:   /s/ Muki Gurfine
Name:   Muki Gurfine
Title:    

 

32


EXHIBIT B

[Signature pages to the Amended and Restated Investors’ Rights Agreement]

IN WITNESS WHEREOF, the parties have executed this Investors’ Rights Agreement as of the dale first above written.

 

PITANGO VENTURE CAPITAL FUND IV L.P
By:   /s/ [Illegible]
Name:    
Title:    

 

33


EXHIBIT B

[Signature pages to the Amended and Restated Investors’ Rights Agreement]

IN WITNESS WHEREOF, the parties have executed this Investors’ Rights Agreement as of the dale first above written.

PITANGO VENTURE CAPITAL PRINCPALS FUND IV L.P

By:   /s/ [Illegible]
Name:    
Title:    

 

34


EXHIBIT B

[Signature pages to the Amended and Restated Investors’ Rights Agreement]

IN WITNESS WHEREOF, the parties have executed this Investors’ Rights Agreement as of the dale first above written.

 

/s/ Hillel Bachrach
HILLEL BACHRACH

 

35


EXHIBIT B

[Signature pages to the Amended and Restated Investors’ Rights Agreement]

IN WITNESS WHEREOF, the parties have executed this Investors’ Rights Agreement as of the dale first above written.

BCI – BRACK CAPITAL INVESTMENTS LTC.

By:   /s/ [Illegible]
Name:    
Title:    

 

36


EXHIBIT B

[Signature pages to the Amended and Restated Investors’ Rights Agreement]

IN WITNESS WHEREOF, the parties have executed this Investors’ Rights Agreement as of the dale first above written.

 

DROR HARATS
By:   /s/ Dror Harats
Name:    Dror Harats
Title:    

 

37


EXHIBIT B

[Signature pages to the Amended and Restated Investors’ Rights Agreement]

IN WITNESS WHEREOF, the parties have executed this Investors’ Rights Agreement as of the dale first above written.

 

GRYP INVESTMENTS LTD.
By:   /s/ Dalia Prashker
Name:    Dalia Prashker
Title:    

 

38


EXHIBIT B

[Signature pages to the Amended and Restated Investors’ Rights Agreement]

IN WITNESS WHEREOF, the parties have executed this Investors’ Rights Agreement as of the dale first above written.

 

A. HEIFETZ TECHNOLOGIES LTD.
By:   /s/ Avi Heifetz
Name:    Avi Heifetz
Title:   CEO

 

39


EXHIBIT B

[Signature pages to the Amended and Restated Investors’ Rights Agreement]

IN WITNESS WHEREOF, the parties have executed this Investors’ Rights Agreement as of the dale first above written.

 

HOFT – BIOINVEST PARTNERSHIP
By:   /s/ Jacob Oren
Name:    Jacob Oren
Title:    

 

40


EXHIBIT B

[Signature pages to the Amended and Restated Investors’ Rights Agreement]

IN WITNESS WHEREOF, the parties have executed this Investors’ Rights Agreement as of the dale first above written.

 

KADIMA HIGH TECH LTD.
By:   /s/ Yossi Ben-Yosef
Name:    Yossi Ben-Yosef
Title:   CEO

 

41


Execution Copy

JOINDER AND AMENDMENT TO AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT

THIS JOINDER AND AMENDMENT TO AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT (this “ Joinder ”) is made effective as of the 29 day of July, 2010, by and between VASCULAR BIOGENICS LTD., an Israeli private company No. 51-289976-6 (the “ Company ”), and the investor specified in Exhibit A of this Joinder (the “ Additional Investors ”).

W I T N E S S E T H:

WHEREAS, on March 13, 2008, the Company and certain shareholders listed therein entered into that certain Amended and Restated Investors’ Rights Agreement (the “ Agreement ”), and the requisite majority according thereto wish that each of the Additional Investors joins and becomes a party to the Agreement as a Preferred D Shareholder in accordance with Section 18.2 thererof;

NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein, the Parties agree as follows:

 

1. Subject to the terms and conditions of the Agreement, each of the Additional Investors hereby joins in and agrees to be fully bound by, and subject to, all of the representations, covenants, terms and conditions of the Agreement, as a Preferred D Shareholder thereunder, and agrees to be deemed, for all intents and purposes under the Agreement, an original party thereto, all effective as of July 29, 2010.

 

2. Schedule A to the Agreement shall be updated to include the details of the Additional Investors as set forth in Exhibit B.

 

3. Sections 5.2 and 18.2 of the Agreement shall be amended in a manner that the consent of 60% of the Registrable Securities then outstanding shall be required and not 65%.

 

4. Capitalized terms not otherwise defined herein shall bear the meanings ascribed to them in the Agreement.

 

5. Unless amended hereby, all provisions of the Agreement shall remain in full force and effect.

IN WITNESS WHEREOF, this Joinder and Amendment to Amended and Restated Investors’ Rights Agreement has been executed as of the day and year first above written.

 

The Company :

 

VASCULAR BIOGENICS LTD.

By:   /s/ Dror Harats
Name:   Dror Harats
Title:   CEO

The Requisite Majority :

 

By:    
(Name & Title of Signatory)

 

1


Exhibit A

The Additional Investors

 

1. Herzberg & Co. Ltd.

 

2. Mr. Jechezkiel Gonczarowski

 

3. Aurum Holdings M.K.I. Ltd.

 

2


Exhibit B

Schedule A to the Agreement (Updated)

(local phone numbers are in Israeli international dial code)

 

NAME

  

ADDRESS

  

FAX

Herzberg & Co. Ltd.    1 Hagefen St., Sitria 76834    08-8633112
Mr. Jechezkiel Gonczarowski    27A HaBarzel St., Ramat HaHayal, Tel Aviv    03-7658023
Aurum Holdings M.K.I. Ltd   

Attn: Dr. Dan Gekvan

16 Abba Hillel St. Ramat Gan

52506, Israel

   03-5762605

 

3


[Signature pages to the Joinder and Amendment to Amended and Restated Investors’ Rights Agreement]

IN WITNESS WHEREOF, this Joinder and Amendment to Amended and Restated Investors’ Rights Agreement has been executed as of the day and year first above written.

 

HERZBERG & CO. LTD.
By:   /s/ [Illegible]
Name:        [Illegible]
Title:    

 

4


[Signature pages to the Joinder and Amendment to Amended and Restated Investors’ Rights Agreement]

IN WITNESS WHEREOF, this Joinder and Amendment to Amended and Restated Investors’ Rights Agreement has been executed as of the day and year first above written.

 

MR. JECHEZKIEL GONCZAROWSKI
By:   /s/ Jechezkiel Gonczarowski
Name:   Jechezkiel Gonczarowski
Title:    

 

5


[Signature pages to the Joinder and Amendment to Amended and Restated Investors’ Rights Agreement]

IN WITNESS WHEREOF, this Joinder and Amendment to Amended and Restated Investors’ Rights Agreement has been executed as of the day and year first above written.

 

MR. AVRAHAM JOSHUA NEUHAR AND MRS. ESTER NEUHAR
By:   /s/ Avraham Joshua Neuhar
  /s/ Ester Neuhar
Name:    
Title:    

 

6


[Signature pages to the Joinder and Amendment to Amended and Restated Investors’ Rights Agreement]

IN WITNESS WHEREOF, this Joinder and Amendment to Amended and Restated Investors’ Rights Agreement has been executed as of the day and year first above written.

 

AURUM VENTURES M.K.I LTD.
By:   /s/ [Illegible]
Name:    
Title:    

 

7


[Signature pages to the Joinder and Amendment to Amended and Restated Investors’ Rights Agreement]

IN WITNESS WHEREOF, this Joinder and Amendment to Amended and Restated Investors’ Rights Agreement has been executed as of the day and year first above written.

 

SEMEL INVESTMENTS HOLDINGS B.V.
By:   /s/ [Illegible]
Name:    
Title:  

Tradman Netherlands B.V., acting as

Managing Director

 

8


[Signature pages to the Joinder and Amendment to Amended and Restated Investors’ Rights Agreement]

IN WITNESS WHEREOF, this Joinder and Amendment to Amended and Restated Investors’ Rights Agreement has been executed as of the day and year first above written.

 

BCI - BRACK CAPITAL INVESTMENTS LTD.
By:   /s/ [Illegible]
Name:    
Title:    

 

9


[Signature pages to the Joinder and Amendment to Amended and Restated Investors’ Rights Agreement]

IN WITNESS WHEREOF, this Joinder and Amendment to Amended and Restated Investors’ Rights Agreement has been executed as of the day and year first above written.

 

BENJAMIN KAHN
By:   /s/ Benjamin Kahn
Name:   Benjamin Kahn
Title:    

 

10


[Signature pages to the Joinder and Amendment to Amended and Restated Investors’ Rights Agreement]

IN WITNESS WHEREOF, this Joinder and Amendment to Amended and Restated Investors’ Rights Agreement has been executed as of the day and year first above written.

 

LEON RECANATI
By:   /s/ Leon Recanati
Name:   Leon Recanati
Title:    

 

11


[Signature pages to the Joinder and Amendment to Amended and Restated Investors’ Rights Agreement]

IN WITNESS WHEREOF, this Joinder and Amendment to Amended and Restated Investors’ Rights Agreement has been executed as of the day and year first above written.

 

GRYP INVESTMENTS LTD.
By:   /s/ Dalia Prashker
Name:   Dalia Prashker
Title:    

 

12


[Signature pages to the Joinder and Amendment to Amended and Restated Investors’ Rights Agreement]

IN WITNESS WHEREOF, this Joinder and Amendment to Amended and Restated Investors’ Rights Agreement has been executed as of the day and year first above written.

 

HILLEL BACHRACH
By:   /S/ Hillel Bachrach
Name:   Hillel Bachrach
Title:    

 

13


[Signature pages to the Joinder and Amendment to Amended and Restated Investors’ Rights Agreement]

IN WITNESS WHEREOF, this Joinder and Amendment to Amended and Restated Investors’ Rights Agreement has been executed as of the day and year first above written.

 

PITANGO VENTURE CAPITAL FUND IV L.P
By:   /s/ Ruth Alon
Name:   Ruth Alon
Title:    

 

PITANGO VENTURE CAPITAL PRINCIPALS FUND IV L.P
By:   /s/ Ruth Alon
Name:   Ruth Alon
Title:    

 

14


[Signature pages to the Joinder and Amendment to Amended and Restated Investors’ Rights Agreement]

IN WITNESS WHEREOF, this Joinder and Amendment to Amended and Restated Investors’ Rights Agreement has been executed as of the day and year first above written.

 

THE KEFFI GROUP V LLC
By:   /s/ Jide Zeitlin
Name:   Jide Zetilin
Title:   President

 

15


SECOND JOINDER AND AMENDMENT TO AMENDED AND RESTATED INVESTORS’

RIGHTS AGREEMENT

THIS SECOND JOINDER AND AMENDMENT TO AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT (this “ Joinder ”) is made effective as of the 30 day of April, 2013, by and between VASCULAR BIOGENICS LTD., an Israeli private company No. 51-289976-6 (the “ Company ”), and the investors specified in Exhibit A of this Joinder (the “ Additional Investors ”).

W I T N E S S E T H:

WHEREAS, on March 13, 2008, the Company and certain shareholders listed therein entered into that certain Amended and Restated Investors’ Rights Agreement, as amended (including any Joinder Agreements executed thereafter relating to said Amended and Restated Investors’ Rights Agreement) (the “ Agreement ”);

WHEREAS the Company and the requisite majority of Preferred Shareholders according to the Agreement wish that each of the Additional Investors joins and becomes a party to the Agreement as a Preferred D-1 Shareholder in accordance with Section 18.2 thererof.

NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein, the parties agree as follows:

 

1. Subject to the terms and conditions of the Agreement, each of the Additional Investors hereby joins in and agrees to be fully bound by, and subject to, all of the representations, covenants, terms and conditions of the Agreement, as a Preferred D-1 Shareholder thereunder, and agrees to be deemed, for all intents and purposes under the Agreement, an original party thereto, all effective as of and subject to the conversion of the Loan Amount applicable to such Additional Investor into Preferred D-1 Shares under the Convertible Bridge Loan Agreement signed between the Company and certain Lenders dated as of April 30, 2013 (the “ CBLA ”) in accordance with the terms of the CBLA.

 

2. The holders of Series D-1 Preferred Shares of the Company shall be considered those Additional Investors which have converted their applicable Loan Amount under the CBLA into Preferred D-1 Shares in accordance with the terms of the CBLA (“ Preferred D-1 Shares” ) shall be referred to as “ Preferred D-1 Shareholders ” under the Agreement.

 

3. The term “ Preferred Shares ” shall refer to the Preferred A Shares, Preferred B Shares Preferred C Shares Preferred D Shares and Preferred D-1 Shares of the Company.

 

4. The term “ Preferred Shareholders ” shall refer to Preferred A Shareholders, Preferred B Shareholders, Preferred C Shareholders, Preferred D Shareholders and Preferred D-1 Shareholders.

 

5. Capitalized terms not otherwise defined herein shall bear the meanings ascribed to them in the Agreement.

 

6. Unless amended hereby, all provisions of the Agreement shall remain in full force and effect.

[Remainder of this Page left blank intentionally]

 

1


IN WITNESS WHEREOF, this Second Joinder and Amendment to Amended and Restated Investors’ Rights Agreement has been executed as of the day and year first above written.

 

The Company :

 

VASCULAR BIOGENICS LTD.

By:   /s/ Dror Harats
Name:   Dror Harats
Title:   CEO

The Requisite Majority : 60%

 

By:    
(Name & Title of Signatory)

 

2


Exhibit A

The Additional Investors

 

1. Bennett M. Shapiro and Fredericka F. Shapiro, JTWROS

 

2. Deborah Strassburger

 

3


Exhibit B

Schedule A to the Agreement (updated)

(local phone numbers are in Israeli international dial code)

 

NAME

  

ADDRESS

  

FAX

Bennett M. Shapiro and Fredericka F. Shapiro, JTWROS   

Mail:

PO Box 777

New Hope PA 18938

USA

Fedex:

2632 N. River Road

New Hope PA 18938

USA

   215-862-1465
Deborah Strassburger   

 

Hadas 8 St.

Ramat Gan 5264708

   972-3-5351273

 

4


[Signature pages to the Second Joinder and Amendment to Amended and Restated Investors’ Rights Agreement]

IN WITNESS WHEREOF, this Second Joinder and Amendment to Amended and Restated Investors’ Rights Agreement has been executed as of the day and year first above written.

 

AURUM HOLDINGS M.K.I. LTD.
By:   /s/ [Illegible]
Name:    
Title:    

 

5


[Signature pages to the Second Joinder and Amendment to Amended and Restated Investors’ Rights Agreement]

IN WITNESS WHEREOF, this Second Joinder and Amendment to Amended and Restated Investors’ Rights Agreement has been executed as of the day and year first above written.

 

AURUM VENTURES M.K.I. LTD.
By:   /s/ [Illegible]
Name:    
Title:    

 

6


[Signature pages to the Second Joinder and Amendment to Amended and Restated Investors’ Rights Agreement]

IN WITNESS WHEREOF, this Second Joinder and Amendment to Amended and Restated Investors’ Rights Agreement has been executed as of the day and year first above written.

 

JECHESKIEL GONCZAROWSKI

 

/s/ Jecheskiel Gonczarowski

 

7


[Signature pages to the Second Joinder and Amendment to Amended and Restated Investors’ Rights Agreement]

IN WITNESS WHEREOF, this Second Joinder and Amendment to Amended and Restated Investors’ Rights Agreement has been executed as of the day and year first above written.

 

THE KEFFI GROUP V LLC
By:   /s/ Jide Zeitlin
Name:   Jide Zeitlin
Title:   Member

 

8


[Signature pages to the Second Joinder and Amendment to Amended and Restated Investors’ Rights Agreement]

IN WITNESS WHEREOF, this Second Joinder and Amendment to Amended and Restated Investors’ Rights Agreement has been executed as of the day and year first above written.

 

PITANGO VENTURE CAPITAL FUND IV L.P
By:   /s/ [Illegible]
Name:    
Title:    

 

9


[Signature pages to the Second Joinder and Amendment to Amended and Restated Investors’ Rights Agreement]

IN WITNESS WHEREOF, this Second Joinder and Amendment to Amended and Restated Investors’ Rights Agreement has been executed as of the day and year first above written.

 

PITANGO VENTURE CAPITAL PRINCIPALSFUND IV L.P
By:   /s/ [Illegible]
Name:    
Title:    

 

10


[Signature pages to the Second Joinder and Amendment to Amended and Restated Investors’ Rights Agreement]

IN WITNESS WHEREOF, this Second Joinder and Amendment to Amended and Restated Investors’ Rights Agreement has been executed as of the day and year first above written.

 

GRYP INVESTMENT LTD.
By:   /s/ [Illegible]
Name:    
Title:    

 

11


[Signature pages to the Second Joinder and Amendment to Amended and Restated Investors’ Rights Agreement]

IN WITNESS WHEREOF, this Second Joinder and Amendment to Amended and Restated Investors’ Rights Agreement has been executed as of the day and year first above written.

 

TAMIR FORER

 

/s/ Tamir Forer

 

12


[Signature pages to the Second Joinder and Amendment to Amended and Restated Investors’ Rights Agreement]

IN WITNESS WHEREOF, this Second Joinder and Amendment to Amended and Restated Investors’ Rights Agreement has been executed as of the day and year first above written.

 

MUKI GURFINE

 

/s/ Muki Gurfine

 

13


[Signature pages to the Second Joinder and Amendment to Amended and Restated Investors’ Rights Agreement]

IN WITNESS WHEREOF, this Second Joinder and Amendment to Amended and Restated Investors’ Rights Agreement has been executed as of the day and year first above written.

 

AVRAHAM JOSHUA NEUHAR AND ESTAER NEUHAR

 

/s/ Avraham Joshua Neuhar

/s/ Estaer Neuhar

 

14


[Signature pages to the Second Joinder and Amendment to Amended and Restated Investors’ Rights Agreement]

IN WITNESS WHEREOF, this Second Joinder and Amendment to Amended and Restated Investors’ Rights Agreement has been executed as of the day and year first above written.

 

HILLEL BACHRACH
By:   /s/ Hillel Bachrach
Name:  
Title:  

 

15


[Signature pages to the Second Joinder and Amendment to Amended and Restated Investors’ Rights Agreement]

IN WITNESS WHEREOF, this Second Joinder and Amendment to Amended and Restated Investors’ Rights Agreement has been executed as of the day and year first above written.

 

BENNETT M. SHAPIRO AND

FREDERICKA F. SHAPIRO, JTWROS

/s/ Bennett M. Shapiro
/s/ Fredericka F. Shapiro

 

16


[Signature pages to the Second Joinder and Amendment to Amended and Restated Investors’ Rights Agreement]

IN WITNESS WHEREOF, this Second Joinder and Amendment to Amended and Restated Investors’ Rights Agreement has been executed as of the day and year first above written.

 

DEBORAH STRASSBURGER

 

/s/ Deborah Strassburger

 

17

Exhibit 4.3

VASCULAR BIOGENICS LTD.

(THE “COMPANY”)

WARRANT

THIS IS TO CERTIFY THAT S.R. HORN ASSETS LTD. (the “ Holder ”) or its assignee is entitled to purchase from the Company, subject to the provisions of this Warrant, 3,954 Ordinary Shares, NIS 0.01 par value each (the “ Warrant Shares ” and “ Shares ”, respectively) at any time on or after the date hereof (the “ Effective Date ”) and until March 26, 2017 (the “ Expiration Date ”), at a price per Share of $11.10 (the “ Purchase Price ”), as may be adjusted hereunder.

 

1. EXERCISE OF WARRANT

Subject to the provisions hereof, this Warrant may be exercised in whole or in part, at one time or from time to time or at any time on or after the Effective Date and until the Expiration Date (the “ Exercise Period ”).

 

  1.1. Exercise for Cash

This Warrant shall be exercised by presentation and surrender hereof to the Company at the principal office of the Company; accompanied by

 

  1.1.1. a written notice of exercise; and

 

  1.1.2. wire transfer to the Company s bank account or banker s check for the aggregate Purchase Price for the number of Shares specified in such notice.

Upon such presentation and surrender of the notice of exercise accompanied by the aggregate Purchase Price of the Shares purchased thereunder, the Company shall issue promptly to the Holder the Shares to which the Holder is entitled thereunder.

 

  1.2. Exercise on Net Issuance Basis

In lieu of payment to the Company as set forth in subsection 1.1 above, the Holder may convert this Warrant in whole or in part, into the number of Ordinary Shares calculated pursuant to the following formula, by surrendering this Warrant to the Company at the principal office of the Company, accompanied by a written notice of exercise, specifying the number of Shares into which the Holder desires to convert this Warrant:

 

     X =  

Y(A - B)

        
       A         

Where:

X = the number of Ordinary Shares to be issued to the Holder;

Y = the number of Ordinary Shares which would otherwise have been obtainable upon conversion of this Warrant;

A = the fair market value of one Ordinary Share; and

B = the Purchase Price


For purposes of this Section 1.2, the fair market value of one (1) Ordinary Share as of a particular date shall be average of the closing bid and asked prices of the Company‘s Ordinary Shares quoted on the AIM (or any other exchange upon which the Company‘s shares are listed), as published for the ten (10) trading days immediately prior to but not including the date of exercise, or as determined by the Company’s Board of Directors in good faith, if the Company’s shares shall not then be listed on a stock exchange.

 

  1.3. Notwithstanding any provision herein to the contrary, in the event that the Holder elects to exercise this warrant under an Exercise on Net Issuance Basis as set forth in Section 1.2 above such exercise to become effective only upon the closing of an IPO or a Sale (as defined below), as the case may be.

 

  1.4. If this Warrant should be exercised in part only, the Company shall, upon surrender of this Warrant for cancellation, execute and deliver a new Warrant evidencing the rights of the Holder to purchase the balance of the Shares purchasable hereunder. Upon receipt by the Company of (i) this Warrant, in proper form for exercise, and (ii) payment of the aggregate Purchase Price pursuant to the respective notice of exercise, the Holder shall be deemed to be the holder of record of the Shares issuable upon such exercise, notwithstanding that the Share transfer books of the Company shall then be closed or that certificates representing such Shares shall not then be actually delivered to the Holder.

 

  1.5. No fractions of Shares shall be issued in connection with the exercise of this Warrant, and the number of Shares issued shall be rounded up to the nearest whole number.

 

2. RESERVATION OF SHARES

The Company hereby agrees that at all times it will maintain and reserve such number of authorized but unissued Shares so that this Warrant may be exercised without additional authorization of Shares after giving effect to all other warrants, convertible securities and other rights to acquire shares of the Company.

 

3. EXCHANGE OR LOSS OF WARRANT CERTIFICATE

This Warrant is exchangeable, upon presentation and surrender hereof at the principal office of the Company, in connection with a partial exercise hereof. The term “Warrant” as used herein includes any Warrant or Warrants for which this Warrant may be exchanged. Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and (in the case of loss, theft or destruction) of reasonably satisfactory indemnification, and upon surrender and cancellation of this Warrant, if mutilated, the Company will execute and deliver a new Warrant of like tenor and date.

 

4. ADJUSTMENT

The number of Shares purchasable upon the exercise of this Warrant and the Purchase Price shall be subject to adjustment from time to time or upon exercise as provided in this Section 4.

 

- 2 -


  4.1. If, during the Exercise Period, the Company shall distribute a share dividend or reclassify of its shares to all of the holders of shares of the Company (i.e., bonus shares), the number of Shares purchasable upon exercise of this Warrant shall be increased by multiplying such number of Shares to be purchased under this Warrant by a fraction of which the denominator shall be the number of Ordinary Shares outstanding in the Company at the close of business on the day immediately preceding the date of such distribution and the numerator shall be the sum of such number of Ordinary Shares and the total number of bonus shares, such increase to become effective immediately after the opening of business on the date following such distribution, and upon the happening of such an event the Purchase Price shall be adjusted appropriately.

 

  4.2. If, during the Exercise Period, the outstanding share capital shall be subdivided into a greater number of shares, the number of Shares purchasable upon exercise of this Warrant at the opening of business on the day following the day upon which such subdivision becomes effective shall be proportionately increased, and, conversely, if the outstanding shares shall each be combined into a smaller number of shares, the number of Shares purchasable upon exercise of this Warrant at the opening of business on the day following the day upon which such combination becomes effective shall be proportionately decreased, and in each such case the Purchase price shall be adjusted appropriately.

 

  4.3. If at any time during the Exercise Period, a capital reorganization of the shares of the Company shall take place (other than a recapitalization, subdivision, combination, reclassification or exchange of shares provided for elsewhere in this Section) or a merger or consolidation of the Company with or into another corporation, or a sale of all or substantially all of the shares or assets of the Company (“ Sale ”), then, as a part of such reorganization, merger, consolidation or Sale, provision shall be made so that the Holder shall thereafter be entitled to receive upon exercise of this Warrant, the number of shares or other securities or property of the Company, or of the successor corporation resulting from such merger or consolidation or Sale, to which a holder of Shares would have been entitled on such capital reorganization, merger, consolidation or sale. In any such case (except to the extent any cash or property is received in such transaction), appropriate adjustment shall be made in the application of the provisions of this Subsection with respect to the rights of the Holder after the reorganization, merger, consolidation or Sale to the end that the provisions of this Subsection (including adjustment of the number of Shares issuable upon exercise of this Warrant) shall be applicable after that event and be as nearly equivalent to the provisions hereof as may be practicable.

 

  4.4. If the Company, at any time during the Exercise Period, shall change any of the securities as to which purchase rights under this Warrant exist into the same or a different number of securities of any other class or classes, this Warrant shall thereafter represent the right to acquire such number and kind of securities as would have been issuable as the result of such change with respect to the securities that were subject to the purchase rights under this Warrant immediately prior to such reclassification or other change and the Exercise Price therefor shall be appropriately adjusted, all subject to further adjustment as provided in this Section 4.

 

  4.5. In the event that the Company shall issue shares to its shareholders as a result of a split-off, spin-off or the like, then the Company shall only complete such issuance or other action if, as part thereof, allowance is made to protect the economic interest of the Holder either by increasing the number of Shares or by procuring that the Holder shall be entitled, on economically proportionate terms, to acquire additional shares of the spun-off or split-off entities.

 

- 3 -


  4.6. The Company will not, by amendment of its Articles of Association or through any reorganization, recapitalization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder, but will at all times in good faith assist in the carrying out of all the provisions hereof and in taking of all such actions and making all such adjustments as may be necessary or appropriate in order to protect the rights of the Holder against impairment.

 

5. NOTICE OF ADJUSTMENTS

Whenever the number of Shares for which this Warrant is exercisable is adjusted as provided in Section 4 hereof, the Company shall promptly compute such adjustment and deliver to the Holder a certificate setting forth the number of Shares for which this Warrant is exercisable and the Purchase Price as a result of such adjustment, a brief statement of the facts requiring such adjustment and the computation thereof and when such adjustment has or will become effective.

 

6. RIGHTS OF THE HOLDER

This Warrant shall not entitle the Holder to any voting rights or other rights as a shareholder of the Company, except the rights expressed herein and no dividend or interest shall be payable or accrue in respect of this Warrant.

 

7. EXPENSES

The Company will pay the Israeli Stamp Duty on the issuance of the Shares, and will notify the Israeli Companies Registrar of such issuance within the time period required by law. The Stamp Duty on this Warrant, if any, will be paid in full by the Company.

 

8. TERMINATION

This Warrant and all the rights conferred hereby shall terminate and expire immediately upon the Expiration Date.

 

9. MISCELLANEOUS

 

  9.1. No failure or delay on the part of any party in exercising any right, power or privilege hereunder and/or under any applicable laws or the exercise of such right or power in a manner inconsistent with the provisions of this Warrant or applicable law shall operate as a waiver thereof. Any waiver must be evidenced in writing signed by the party against whom the waiver is sought to be enforced.

 

  9.2. No modification or amendment of this Warrant will be valid unless signed by the parties hereto.

 

  9.3. This Warrant and the Agreement sets forth the entire understanding of the parties with respect to the subject matter hereof and supersedes all existing agreements among them concerning such subject matter. This Warrant cancels and replaces the Warrant issued by the Company to Baratz, Horn & Co. in March 26, 2007, as assigned and amended.

 

- 4 -


  9.4. All article and section headings herein are inserted for convenience only and shall not modify or affect the construction or interpretation of any provision of this Warrant.

 

  9.5. This Warrant shall be governed by the laws of the State of Israel, without regard to principles of conflicts of law thereof. The Holder and the Company hereby irrevocably submit to the exclusive jurisdiction of the appropriate courts in Tel Aviv in any suit, action, or proceeding pertaining to this Warrant.

 

  9.6. The addresses of the parties for the purposes of this Warrant are as set forth in the preamble to this Warrant or any other address provided in writing by a party hereto.

 

  9.7. Any notice or communication required or permitted hereunder shall be given in writing and sent by registered mail, personally delivered by hand, or telecopied.

 

  9.8. Any notice given in conformity with the provisions of Section 9.6 above shall be deemed given: four (4) business days after it was mailed by registered mail; when delivered if delivered by hand delivery, receipt acknowledged; or one business day if sent by facsimile transmission (provided that confirmation of receipt is provided).

 

  9.9. This Warrant may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which taken together shall constitute one and the same instrument.

 

  9.10. Except as otherwise expressly provided in this Warrant, all of the terms of this Warrant shall be binding upon and inure to the benefit of the parties named herein and their respective successors and permitted assigns. No party may assign either this Warrant or any of its rights, interests, or obligations hereunder without the prior written approval of the Company, provided that the Holder may transfer and assign all or any part of the Warrant to its Permitted Transferees (as such term is defined in the Articles of Association of the Company).

[THE REMAINDER OF THIS PAGE WAS INTENTIONALLY LEFT BLANK]

 

- 5 -


IN WITNESS WHEREOF, the Company has executed this Warrant as of May 8, 2014:

VASCULAR BIOGENICS LTD.

By: /s/ Dror Harats

Title: CEO

Date: May 8, 2014

Exhibit 4.4

 

To: Prof Dror Harats (the “ Holder ”)

WARRANT

To purchase up to an aggregate of

1,052 Ordinary Shares (subject to adjustment) of

VASCULAR BIOGENICS LTD. (the “ Company ”)

at a per share price as detailed below

VOID AFTER 17:00 p.m. Israel Standard Time

on the last day of the Option Period (defined below)

 

1. This is to certify that the Holder specified above is entitled to purchase, subject to the provisions of this Warrant, from the Company, an aggregate of up to One Thousand Fifty Two (1,052) (subject to adjustment) fully paid and non-assessable Ordinary Shares par value NIS 0.01 per share (the “ Warrant Shares ”) of the Company at an exercise price of NIS 0.01 per share (the “ Exercise Price ”), during the period from 1.4.2001 until 1.4.2005 (the “ Option Period ”), all subject to the terms and conditions set forth below.

 

2. Exercise of Warrant

 

  2.1 Exercise. Subject to the provisions hereof, this Warrant may be exercised in whole or in part, on one or more occasions at any time during the Option Period.

 

  2.2 Exercise for Cash . Unless the Holder elects to exercise this Warrant in accordance with the terms and conditions of Subsection 2.3 below, this Warrant shall be exercised by presentation and surrender thereof to the Company, at the principal office of the Company or at such other office or agency as the Company may designate, accompanied by: (i) a written notice of exercise in a form appended hereto as Exhibit A (the “ Exercise Notice ”); and (ii) payment to the Company, for1 the account of the Company, of the Exercise Price for the number of Warrant Shares specified in such notice. The Exercise Price for the number of Warrant Shares specified in the Exercise Notice shall be payable in immediately available good funds.

 

  2.3 Net Exercise . Alternatively, at any time following the consummation of: (i) a public offering of the Company shares (an “ Offering ”); (ii) a consolidation or merger1 of the Company with or into any other corporation or entity, other than a consolidation or merger in which the Company is the continuing corporation and which does not result in any change in the Ordinary Shares (a “ Merger ”); or (iii) the sale of all or substantially all of the assets of the Company or an offer to purchase all or substantially all of the shares of the Company (a “ Sale ”) (the terms Offering, Merger, and Sale shall be interpreted as set forth under1 the Company’s Articles of Association as in effect at the time of consummation of the said event), then, in lieu of exercising this Warrant as provided above, a Holder may elect to receive, by the surrender and cancellation of this Warrant, in whole or in part, Warrant Shares equal to the value of the Warrant (or the portion thereof being surrendered and canceled) by written notice of such election to the Company (which notice may state that such election shall be effective contingent upon and


  immediately prior to the closing of the Offering, Merger or Sale), at the principal office of the Company or at such other office or agency as the Company may designate, on the form appended hereto as Exhibit B (the “ Net Exercise Notice ”), in which event the Company shall issue to the Holder (without the payment by such Holder of any additional consideration), that number of Shares computed using the following formula:

 

LOGO

Where

 

X    =    The number of Warrant Shares to be issued to the Registered Holder
Y    =    The number of Warrant Shares which would otherwise have been purchasable under this Warrant
A    =    The issue price pursuant to the Offering of one (1) Ordinary Share of the Company or the value of such share(s) as determined for the proposed Merger or Sale.
B    =    The Exercise Price

In the event of an Offering the Warrant Shares issued to the Holder upon exercise of this Warrant may be subject to a lock-up period along with the other shareholders of the Company

 

  2.4 Partial Exercise, Etc . If this Warrant should be exercised in part only, the Company shall, upon surrender of this Warrant for cancellation, execute and deliver a new Warrant evidencing the rights of the Holder to purchase the balance of the shares purchasable hereunder

 

  2.5 Issuance of the Warrant Shares . Subject to a lock-up period as aforesaid in Subsection 2.3 above, within 7 business days following presentation and surrender of the Exercise Notice accompanied by (i) the payment of the applicable Exercise Price pursuant to Subsection 2.2 above, or (ii) the presentation of the Net Exercise Notice pursuant to Subsection 2.3 above, as the case may be, the Company shall issue to the Holder the shares to which the Holder is entitled thereto.

No fractions of shares shall be issued in connection with the exercise of this Warrant, and the number of shares issued shall be rounded to the nearest whole number.

Upon receipt by the Company of such notice of exercise (and the Exercise Price, if applicable), the Holder shall be deemed to be the Holder of the shares issuable upon such exercise, notwithstanding that the share transfer books of the Company shall then be closed and that certificates representing such shares shall not then be actually delivered to the Holder.

 

2


The Company shall pay all of the applicable taxes and other charges that are payable by the Company in connection with the issuance of the Warrant shares and the preparation and delivery of share certificates pursuant to this Section 2 in the name of the Holder, but shall not pay any taxes payable by the Holder by virtue of the holding, issuance, exercise of sale of this Warrant or the Warrant Shares by the Holder.

The Holder will sign any and all documents required by law and/or the Company’s Articles of Association to facilitate issuance of shares upon exercise of this Warrant.

 

3. Reservation of Shares: Preservation of Rights of Holder

The Company hereby agrees that at all times it will maintain and reserve, free from preemptive rights, such number of authorized but unissued Ordinary Shares so that this Warrant may be exercised without additional authorization of Ordinary Shares after giving effect to all other options, warrants, convertible securities and other rights to acquire shares of the Company. The Company further agrees that it will not, by amendment of its charter documents or through reorganization, consolidation, merger, dissolution or sale of assets, or by any other voluntary act avoid or1 seek to avoid the observance or performance of any of the covenants, stipulations or conditions to be observed or performed hereunder by the Company, or the provisions contained in the Company’s Articles of Association relating to the rights of the holders of the Ordinary Shares.

 

4. Exchange or Loss of Warrant

Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and (in the case of loss, theft or destruction) of reasonably satisfactory indemnification, and upon surrender and cancellation of this Warrant, if mutilated, the Company will execute and deliver a new Warrant of like tenor and date Any such new Warrant executed and delivered shall constitute an alternative contractual obligation on the part of the Company to the Holder, whether or not the Warrant so lost, stolen, destroyed or mutilated shall be at any time enforceable by anyone.

 

5. Adjustment

The number of Ordinary Shares purchasable upon the exercise of this Warrant and the applicable Exercise Price shall be subject to adjustment from time to time or upon exercise as provided in this Section 5:

 

  5.1

Consolidation and Division . If, during the Option Period, the Company consolidates its Ordinary Shares into shares of greater nominal value, or subdivides them into shares of lesser nominal value, the number of Warrant

 

3


  Shares to be allotted on exercise of this Warrant after such consolidation or subdivision shall be reduced or increased accordingly, as the case may be, such increase or decrease, as the case may be, to become effective immediately after the opening of business on the day following the day upon which such subdivision or combination becomes effective, and in each case the Exercise Price shall be adjusted appropriately.

 

  5.2 Bonus Shares . In the event of a distribution of bonus shares by the Company during the Option Period, this Warrant shall represent the right to acquire, in addition to the number of Warrant Shares indicated in the caption of this Warrant, and without payment of any additional consideration therefor, the amount of such bonus shares to which the Holder would have been entitled had this Warrant been exercised prior to the distribution of the bonus shares.

 

  5.3 Share Swap . Insofar as the Company is party to a share swap agreement or arrangement (such as a merger or consolidation of the Company with or into another corporation in which the Company is not the surviving entity or reorganization) (the “ Share Swap ”), in which an offer is made to the Company’s shareholders to swap their shares for securities of some other corporation, provision shall be made so that the Holder thereafter shall be entitled to receive, such securities as were swapped for the shares of the Company, as though the Holder had held the Warrant Shares on the record date of the Share Swap.

 

6. Limitation on Transfer

Except as otherwise limited herein, this Warrant shall be binding upon and inure to the benefit of and be enforceable by the Holder1 and its respective successors and assigns The Holder may not assign or transfer any of the specific rights, privileges, or obligations set forth in, arising under, or created by this Warrant without the prior written consent of the Company, except for assignments and transfers from the Holder to its Permitted Transferees, as such term is defined hereunder.

For the purposes of this Warrant, a “ Permitted Transferree ” shall mean: (i) the spouse or children (including step-children or adopted children) of the Holder; (ii) a trust, the beneficiaries of which are the Holder or any of the persons specified in clause (i); or (iii) an entity controlled by the Holder.

Upon notice to the Company of such transfer, any transferee hereunder shall be deemed a Holder for the purposes hereof.

 

7. Notice

Whenever the number of Ordinary Shares for which this Warrant is exercisable is adjusted as provided in Section 5 above, the Company shall promptly compute such adjustment and mail to the Holder at the last address provided to the Company in writing, a certificate signed by a principal officer of the Company, setting forth the number of Ordinary Shares for which this Warrant is exercisable and the exercise price as a result of such adjustment, a brief statement of the facts requiring such adjustment and the computation thereof and when such adjustment has or will become effective.

 

4


8. Rights of the Holder

Without limiting the foregoing or any remedies available to the Holder, the Holder shall be entitled to specific performance of the obligations hereunder, and injunctive relief against violations of the obligations of any person or entity subject to this Warrant.

The Holder shall not, by virtue hereof, be entitled to any rights of a shareholder in the Company.

 

9. Termination

This Warrant and the rights conferred hereby shall terminate at the aforementioned time on the last day of the Option Period.

 

10. Governing Law

This Warrant shall be governed by, and interpreted in accordance with, the laws of the State of Israel, without giving effect to the rules respecting conflict of law, and the parties hereto irrevocably submit to the exclusive jurisdiction of the competent court for Tel Aviv-Jaffa district in respect of any dispute or matter arising out of or connected with this Warrant.

 

11. Fees and Expenses

Except as otherwise limited herein, the Company shall bear the expenses and legal fees incurred by it or with respect to this Warrant, including any stamp tax due on this Warrant or the issue of the Warrant Shares pursuant to this Warrant.

Dated: 4/1/01

 

Vascular Biogenics Ltd.
By:  

/s/ Dror Harats

Title:  

CEO

AGREED AND ACCEPTED:

/s/ Dror Harats

Prof Dror Harats

 

5


Exhibit A

Exercise Notice

Date:                     

 

To: Vascular Biogenics Ltd.

The undersigned, pursuant to the provisions set forth in the attached Warrant, hereby elects to purchase                     of the Warrant Shares pursuant to Section 2.2 of the attached Warrant, and herewith makes payment of                     , representing the full Exercise Price for such shares as provided for in such Warrant.

 

Signature:

 

Address:

   
   
   


Exhibit B

Net Exercise Notice

Date:                     

To: Vascular Biogenics Ltd.

The undersigned, pursuant to the provisions set forth in the attached Warrant, hereby elects to exercise the attached Warrant for the purchase of                     of the Warrant Shares, pursuant to the provisions of Section 2.3 of the attached Warrant.

 

Signature:

 

Address:

   
   
   


 

LOGO

6 Yoni Netanyahu St. Or Yehuda, Israel Tel. +972-3-6346450 Fax. +972-3-6346449

August 10, 2011

Dear Dror,

RE: Warrants Extension Notice

We are pleased to inform you that Vascular Biogenics Ltd. (the “Company”) resolved that the exercise period under each of the warrants issued to you effective as of (i) April 1, 2001; (ii) May 1, 2001; and (iii) December 28, 2001, shall be extended such that the exercise period of each warrant shall be twenty (20) years from the date of respective grant

Sincerely yours,

Dr. Ben Shapiro, Chairman

Vascular Biogenics Ltd.

Confirmed and further agreed to bear all tax implications, if any, resulting from the above.

 

Name:   Prof. Dror Harats
Signature:  

/s/ Prof. Dror Harats

Date:   August 14, 2011

Exhibit 4.5

 

  To: Prof Dror Harats (the “ Holder ”)

WARRANT

To purchase up to an aggregate of

1,052 Ordinary Shares (subject to adjustment) of

VASCULAR BIOGENICS LTD . (the “ Company ”)

at a per share price as detailed below

VOID AFTER 17:00 p.m. Israel Standard Time

on the last day of the Option Period (defined below)

 

1. This is to certify that the Holder specified above is entitled to purchase, subject to the provisions of this Warrant, from the Company, an aggregate of up to One Thousand Fifty Two (1,052) (subject to adjustment) fully paid and non-assessable Ordinary Shares par value NIS 0.01 per share (the “ Warrant Shares ”) of the Company at an exercise price of NIS 0.01 per share (the “ Exercise Price ”), during the period from 14.5.2001 until 14.5.2005 (the “ Option Period ”), all subject to the terms and conditions set forth below.

 

2. Exercise of Warrant

 

  2.1 Exercise . Subject to the provisions hereof, this Warrant may be exercised in whole or in part, on one or more occasions at any time during the Option Period.

 

  2.2 Exercise for Cash . Unless the Holder elects to exercise this Warrant in accordance with the terms and conditions of Subsection 2.3 below, this Warrant shall be exercised by presentation and surrender thereof to the Company, at the principal office of the Company or at such other office or agency as the Company may designate, accompanied by: (i) a written notice of exercise in a form appended hereto as Exhibit A (the “ Exercise Notice ”); and (ii) payment to the Company, for the account of the Company, of the Exercise Price for the number of Warrant Shares specified in such notice. The Exercise Price for the number of Warrant Shares specified in the Exercise Notice shall be payable in immediately available good funds.

 

  2.3 Net Exercise. Alternatively, at any time following the consummation of: (i) a public offering of the Company shares (an “ Offering ”); (ii) a consolidation or merger of the Company with or into any other corporation or entity, other than a consolidation or merger in which the Company is the continuing corporation and which does not result in any change in the Ordinary Shares (a “ Merger ”); or (iii) the sale of all or substantially all of the assets of the Company or an offer to purchase all or substantially all of the shares of the Company (a “ Sale ”) (the terms Offering, Merger, and Sale shall be interpreted as set forth under the Company’s Articles of Association as in effect at the time of consummation of the said event), then, in lieu of exercising this Warrant as provided above, a Holder may elect to receive, by the surrender and cancellation of this Wan ant, in whole or in part, Warrant Shares equal to the value of the Warrant (or the portion thereof being surrendered and canceled) by written notice of such election to the Company


  (which notice may state that such election shall be effective contingent upon and immediately prior to the closing of the Offering, Merger or Sale), at the principal office of the Company or at such other office 01 agency as the Company may designate, on the form appended hereto as Exhibit B (the “ Net Exercise Notice ”), in which event the Company shall issue to the Holder (without the payment by such Holder of any additional consideration), that number of Shares computed using the following formula:

 

LOGO

Where

 

X    =    The number of Warrant Shares to be issued to the Registered Holder
Y    =    The number of Warrant Shares which would otherwise have been purchasable under this Warrant
A    =    The issue price pursuant to the Offering of one (1) Ordinary Share of the Company or the value of such share(s) as determined for the proposed Merger or Sale.
B    =    The Exercise Price

In the event of an Offering the Warrant Shares issued to the Holder upon exercise of this Warrant may be subject to a lock-up period along with the other shareholders of the Company.

 

  2.4 Partial Exercise , Etc. If this Warrant should be exercised in part only, the Company shall, upon surrender of this Warrant for cancellation, execute and deliver a new Warrant evidencing the rights of the Holder to purchase the balance of the shares purchasable hereunder.

 

  2.5 Issuance of the Warrant Shares . Subject to a lock-up period as aforesaid in Subsection 2.3 above, within 7 business days following presentation and surrender of the Exercise Notice accompanied by (i) the payment of the applicable Exercise Price pursuant to Subsection 2.2 above, or (ii) the presentation of the Net Exercise Notice pursuant to Subsection 2.3 above, as the case may be, the Company shall issue to the Holder the shares to which the Holder is entitled thereto.

No fractions of shares shall be issued in connection with the exercise of this Warrant, and the number of shares issued shall be rounded to the nearest whole number

 

2


Upon receipt by the Company of such notice of exercise (and the Exercise Price, if applicable), the Holder shall be deemed to be the Holder of the shares issuable upon such exercise, notwithstanding that the share transfer books of the Company shall then be closed and that certificates representing such shares shall not then be actually delivered to the Holder

The Company shall pay all of the applicable taxes and other charges that are payable by the Company in connection with the issuance of the Warrant shares and the preparation and delivery of share certificates pursuant to this Section 2 in the name of the Holder, but shall not pay any taxes payable by the Holder by virtue of the holding, issuance, exercise or sale of this Warrant or the Warrant Shares by the Holder.

The Holder will sign any and all documents required by law and/or the Company’s Articles of Association to facilitate issuance of shares upon exercise of this Warrant

 

3. Reservation of Shares: Preservation of Rights of Holder

The Company hereby agrees that at all times it will maintain and reserve, free from preemptive rights, such number of authorized but unissued Ordinary Shares so that this Warrant may be exercised without additional authorization of Ordinary Shares after giving effect to all other options, warrants, convertible securities and other rights to acquire shares of the Company The Company further agrees that it will not, by amendment of its charter documents or through reorganization, consolidation, merger, dissolution or sale of assets, or by any other voluntary act avoid or seek to avoid the observance or performance of any of the covenants, stipulations or conditions to be observed or performed hereunder by the Company, or the provisions contained in the Company’s Articles of Association relating to the rights of the holders of the Ordinary Shares.

 

4. Exchange or Loss of Warrant

Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and (in the case of loss, theft or destruction) of reasonably satisfactory indemnification, and upon surrender and cancellation of this Warrant, if mutilated, the Company will execute and deliver a new Warrant of like tenor1 and date. Any such new Warrant executed and delivered shall constitute an alternative contractual obligation on the part of the Company to the Holder, whether or not the Warrant so lost, stolen, destroyed or mutilated shall be at any time enforceable by anyone.

 

5. Adjustment

The number of Ordinary Shares purchasable upon the exercise of this Warrant and the applicable Exercise Price shall be subject to adjustment from time to time or upon exercise as provided in this Section 5:

 

3


  5.1 Consolidation and Division. If, during the Option Period, the Company consolidates its Ordinary Shares into shares of greater nominal value, or subdivides them into shares of lesser nominal value, the number of Warrant Shares to be allotted on exercise of this Warrant after such consolidation or subdivision shall be reduced or increased accordingly, as the case may be, such increase or decrease, as the case may be, to become effective immediately after the opening of business on the day following the day upon which such subdivision or combination becomes effective, and in each case the Exercise Price shall be adjusted appropriately.

 

  5.2 Bonus Shares . In the event of a distribution of bonus shares by the Company during the Option Period, this Warrant shall represent the right to acquire, in addition to the number of Warrant Shares indicated in the caption of this Warrant, and without payment of any additional consideration therefor, the amount of such bonus shares to which the Holder would have been entitled had this Warrant been exercised prior to the distribution of the bonus shares.

 

  5.3 Share Swap . Insofar as the Company is party to a share swap agreement or arrangement (such as a merger or consolidation of the Company with or into another corporation in which the Company is not the surviving entity or reorganization) (the “ Share Swap ”), in which an offer is made to the Company’s shareholders to swap their shares for securities of some other corporation, provision shall be made so that the Holder thereafter shall be entitled to receive, such securities as were swapped for the shares of the Company, as though the Holder had held the Warrant Shares on the record date of the Share Swap

 

6. Limitation on Transfer

Except as otherwise limited herein, this Warrant shall be binding upon and inure to the benefit of and be enforceable by the Holder and its respective successors and assigns. The Holder may not assign or transfer any of the specific rights, privileges, or obligations set forth in, arising under, or created by this Warrant without the prior written consent of the Company, except for1 assignments and transfers from the Holder to its Permitted Transferees, as such term is defined hereunder.

For the purposes of this Warrant, a “ Permitted Transferree ” shall mean: (i) the spouse or children (including step-children or adopted children) of the Holder; (ii) a trust, the beneficiaries of which are the Holder or any of the persons specified in clause (i); or (in) an entity controlled by the Holder.

Upon notice to the Company of such transfer, any transferee hereunder shall be deemed a Holder for the purposes hereof.

 

7. Notice

Whenever the number of Ordinary Shares for which this Warrant is exercisable is adjusted as provided in Section 5 above, the Company shall promptly compute such adjustment and mail to the Holder at the last address provided to the Company in writing, a certificate signed by a principal officer of the Company, setting forth the number of Ordinary Shares for which this Warrant is exercisable and the exercise price as a result of such adjustment, a brief statement of the facts requiring such adjustment and the computation thereof and when such adjustment has or will become effective.

 

4


8. Rights of the Holder

Without limiting the foregoing or any remedies available to the Holder, the Holder shall be entitled to specific performance of the obligations hereunder, and injunctive relief against violations of the obligations of any person or entity subject to this Warrant.

The Holder shall not, by virtue hereof, be entitled to any rights of a shareholder in the Company.

 

9. Termination

This Warrant and the rights conferred hereby shall terminate at the aforementioned time on the last day of the Option Period.

 

10. Governing Law

This Warrant shall be governed by, and interpreted in accordance with, the laws of the State of Israel, without giving effect to the rules respecting conflict of law, and the parties hereto irrevocably submit to the exclusive jurisdiction of the competent court for Tel Aviv-Jaffa district in respect of any dispute or matter arising out of or connected with this Warrant.

 

11. Fees and Expenses

Except as otherwise limited herein, the Company shall bear the expenses and legal fees incurred by it or with respect to this Warrant, including any stamp tax due on this Warrant or the issue of the Warrant Shares pursuant to this Warrant.

Dated: 5/14/01

 

Vascular Biogenics Ltd.
By:  

/s/ Dror Harats

Title:  

CEO

AGREED AND ACCEPTED:

/s/ Dror Harats

Prof Dror Harats

 

5


Exhibit A

Exercise Notice

Date:                     

 

To: Vascular Biogenics Ltd.

The undersigned, pursuant to the provisions set forth in the attached Warrant, hereby elects to purchase                     of the Warrant Shares pursuant to Section 2.2 of the attached Warrant, and herewith makes payment of                     , representing the full Exercise Price for such shares as provided for in such Warrant.

 

Signature:

 

Address:

   
   
   


Exhibit B

Net Exercise Notice

Date:                     

 

To: Vascular Biogenics Ltd.

The undersigned, pursuant to the provisions set forth in the attached Warrant, hereby elects to exercise the attached Warrant for the purchase of                     of the Warrant Shares, pursuant to the provisions of Section 2.3 of the attached Warrant.

 

Signature:

 

Address:

   
   
   


 

LOGO

6 Yoni Netanyahu St. Or Yehuda, Israel Tel. +972-3-6346450 Fax. +972-3-6346449

August 10, 2011

Dear Dror,

RE: Warrants Extension Notice

We are pleased to inform you that Vascular Biogenics Ltd. (the “Company”) resolved that the exercise period under each of the warrants issued to you effective as of (i) April 1, 2001; (ii) May 1, 2001; and (iii) December 28, 2001, shall be extended such that the exercise period of each warrant shall be twenty (20) years from the date of respective grant

Sincerely yours,

Dr. Ben Shapiro, Chairman

Vascular Biogenics Ltd.

Confirmed and further agreed to bear all tax implications, if any, resulting from the above.

 

Name:   Prof. Dror Harats
Signature:  

/s/ Prof. Dror Harats

Date:   August 14, 2011

Exhibit 4.6

 

To: Prof. Dror Harats (the “ Holder ”)

WARRANT

To purchase up to an aggregate of

4,992 Ordinary Shares (subject to adjustment) of

VASCULAR BIOGENICS LTD. (the “ Company ”)

at a per share price as detailed below

VOID AFTER 17:00 p.m. Israel Standard Time

on the last day of the Option Period (defined below)

 

1. This is to certify that the Holder specified above is entitled to purchase, subject to the provisions of this Warrant, from the Company, an aggregate of up to Four Thousand Nine Hundred and Ninety Two (4,992) (subject to adjustment) fully paid and non-assessable Ordinary Shares par value NIS 0.01 per share (the “ Warrant Shares ”) of the Company at an exercise price of NIS 0.01 per share (the “ Exercise Price ”), during the period from 28.12.2001 until 28.12.2005 (the “ Option Period ”), all subject to the terms and conditions set forth below.

 

2. Exercise of Warrant

 

  2.1 Exercise . Subject to the provisions hereof, this Warrant may be exercised in whole or in part, on one or1 more occasions at any time during the Option Period.

 

  2.2 Exercise for Cash . Unless the Holder elects to exercise this Warrant in accordance with the terms and conditions of Subsection 2.3 below, this Warrant shall be exercised by presentation and surrender thereof to the Company, at the principal office of the Company or at such other office or agency as the Company may designate, accompanied by: (i) a written notice of exercise in a form appended hereto as Exhibit A (the “ Exercise Notice ”); and (ii) payment to the Company, for the account of the Company, of the Exercise Price for the number of Warrant Shares specified in such notice. The Exercise Price for1 the number of Warrant Shares specified in the Exercise Notice shall be payable in immediately available good funds.

 

  2.3

Net Exercise . Alternatively, at any time following the consummation of: (i) a public offering of the Company shares (an “ Offering ”); (ii) a consolidation or merger of the Company with or into any other corporation or entity, other than a consolidation or merger in which the Company is the continuing corporation and which does not result in any change in the Ordinary Shares (a “ Merger ”); or (iii) the sale of all or substantially all of the assets of the Company or an offer to purchase all or substantially all of the shares of the Company (a “ Sale ”) (the terms Offering, Merger, and Sale shall be interpreted as set forth under the Company’s Articles of Association as in effect at the time of consummation of the said event), then, in lieu of exercising this Warrant as provided above, a Holder may elect to receive, by the surrender and cancellation of this Warrant, in whole or in part, Warrant Shares equal to the value of the Warrant (or the portion thereof being surrendered and canceled) by written notice of such election to the Company


  (which notice may state that such election shall be effective contingent upon and immediately prior to the closing of the Offering, Merger or Sale), at the principal office of the Company or at such other office or agency as the Company may designate, on the form appended hereto as Exhibit B (the “ Net Exercise Notice ”), in which event the Company shall issue to the Holder (without the payment by such Holder of any additional consideration), that number of Shares computed using the following formula:

 

LOGO

Where

 

X    =    The number of Warrant Shares to be issued to the Registered Holder
Y    =    The number of Warrant Shares which would otherwise have been purchasable under this Warrant
A    =    The issue price pursuant to the Offering of one (1) Ordinary Share of the Company or the value of such share(s) as determined for the proposed Merger or Sale.
B    =    The Exercise Price

In the event of an Offering the Warrant Shares issued to the Holder upon exercise of this Warrant may be subject to a lock-up period along with the other shareholders of the Company.

 

  2.4 Partial Exercise, Etc . If this Warrant should be exercised in part only, the Company shall, upon surrender of this Warrant for cancellation, execute and deliver a new Warrant evidencing the rights of the Holder to purchase the balance of the shares purchasable hereunder.

 

  2.5 Issuance of the Warrant Shares . Subject to a lock-up period as aforesaid in Subsection 2.3 above, within 7 business days following presentation and surrender of the Exercise Notice accompanied by (i) the payment of the applicable Exercise Price pursuant to Subsection 2.2 above, or (ii) the presentation of the Net Exercise Notice pursuant to Subsection 2 3 above, as the case may be, the Company shall issue to the Holder the shares to which the Holder is entitled thereto.

No fractions of shares shall be issued in connection with the exercise of this Warrant, and the number of shares issued shall be rounded to the nearest whole number.

Upon receipt by the Company of such notice of exercise (and the Exercise Price, if applicable), the Holder1 shall be deemed to be the Holder of the shares issuable upon such exercise, notwithstanding that the share transfer books of the Company shall then be closed and that certificates representing such shares shall not then be actually delivered to the Holder.

 

2


The Company shall pay all of the applicable taxes and other charges that are payable by the Company in connection with the issuance of the Warrant shares and the preparation and delivery of share certificates pursuant to this Section 2 in the name of the Holder, but shall not pay any taxes payable by the Holder by virtue of the holding, issuance, exercise or sale of this Warrant or the Warrant Shares by the Holder.

The Holder will sign any arid all documents required by law and/or the Company’s Articles of Association to facilitate issuance of shares upon exercise of this Warrant.

 

3. Reservation of Shares: Preservation of Rights of Holder

The Company hereby agrees that at all times it will maintain and reserve, free from preemptive rights, such number of authorized but unissued Ordinary Shares so that this Warrant may be exercised without additional authorization of Ordinary Shares after giving effect to all other options, warrants, convertible securities and other rights to acquire shares of the Company. The Company further agrees that it will not, by amendment of its charter documents or through reorganization, consolidation, merger, dissolution or sale of assets, or by any other voluntary act avoid or seek to avoid the observance or performance of any of the covenants, stipulations or conditions to be observed or performed hereunder by the Company, or the provisions contained in the Company’s Articles of Association relating to the rights of the holders of the Ordinary Shares

 

4. Exchange or Loss of Warrant

Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and (in the case of loss, theft or destruction) of reasonably satisfactory indemnification, and upon surrender and cancellation of this Warrant, if mutilated, the Company will execute and deliver a new Warrant of like tenor and date. Any such new Warrant executed and delivered shall constitute an alternative contractual obligation on the part of the Company to the Holder, whether or not the Warrant so lost, stolen, destroyed or mutilated shall be at any time enforceable by anyone.

 

5. Adjustment

The number of Ordinary Shares purchasable upon the exercise of this Warrant and the applicable Exercise Price shall be subject to adjustment from time to time or upon exercise as provided in this Section 5:

 

3


  5.1 Consolidation and Division . If, during the Option Period, the Company consolidates its Ordinary Shares into shares of greater nominal value, or subdivides them into shares of lesser nominal value, the number of Warrant Shares to be allotted on exercise of this Warrant after such consolidation or subdivision shall be reduced or increased accordingly, as the case may be, such increase or decrease, as the case may be, to become effective immediately after the opening of business on the day following the day upon which such subdivision or combination becomes effective, and in each case the Exercise Price shall be adjusted appropriately.

 

  5.2 Bonus Shares . In the event of a distribution of bonus shares by the Company during the Option Period, this Warrant shall represent the right to acquire, in addition to the number of Warrant Shares indicated in the caption of this Warrant, and without payment of any additional consideration therefor, the amount of such bonus shares to which the Holder would have been entitled had this Warrant been exercised prior to the distribution of the bonus shares.

 

  5.3 Share Swap . Insofar as the Company is party to a share swap agreement or arrangement (such as a merger or consolidation of the Company with or into another corporation in which the Company is not the surviving entity or reorganization) (the “ Share Swap ”), in which an offer is made to the Company’s shareholders to swap their shares for securities of some other corporation, provision shall be made so that the Holder thereafter shall be entitled to receive, such securities as were swapped for the shares of the Company, as though the Holder had held the Warrant Shares on the record date of the Share Swap.

 

6. Limitation on Transfer

Except as otherwise limited herein, this Warrant shall be binding upon and inure to the benefit of and be enforceable by the Holder and its respective successors and assigns. The Holder may not assign or transfer any of the specific rights, privileges, or obligations set forth in, arising under, or created by this Warrant without the prior written consent of the Company, except for assignments and transfers from the Holder to its Permitted Transferees, as such term is defined hereunder.

For the purposes of this Warrant, a “ Permitted Transferree ” shall mean: (i) the spouse or children (including step-children or adopted children) of the Holder; (ii) a trust, the beneficiaries of which are the Holder or any of the persons specified in clause (i); or (iii) an entity controlled by the Holder.

Upon notice to the Company of such transfer, any transferee hereunder shall be deemed a Holder for the purposes hereof.

 

7. Notice

Whenever the number of Ordinary Shares for which this Warrant is exercisable is adjusted as provided in Section 5 above, the Company shall promptly compute such adjustment and mail to the Holder at the last address provided to the Company in writing, a certificate signed by a principal officer of the Company, setting forth the number of

 

4


Ordinary Shares for which this Warrant is exercisable and the exercise price as a result of such adjustment, a brief statement of the facts requiring such adjustment and the computation thereof and when such adjustment has or will become effective.

 

8. Rights of the Holder

Without limiting the foregoing or any remedies available to the Holder, the Holder shall be entitled to specific performance of the obligations hereunder, and injunctive relief against violations of the obligations of any person or entity subject to this Warrant.

The Holder shall not, by virtue hereof, be entitled to any rights of a shareholder in the Company.

 

9. Termination

This Warrant and the rights conferred hereby shall terminate at the aforementioned time on the last day of the Option Period.

 

10. Governing Law

This Warrant shall be governed by, and interpreted in accordance with, the laws of the State of Israel, without giving effect to the rules respecting conflict of law, and the parties hereto irrevocably submit to the exclusive jurisdiction of the competent court for Tel Aviv-Jafra district in respect of any dispute or matter arising out of or connected with this Warrant.

 

11. Fees and Expenses

Except as otherwise limited herein, the Company shall bear the expenses and legal fees incurred by it or with respect to this Warrant, including any stamp tax due on this Warrant or the issue of the Warrant Shares pursuant to this Warrant.

Dated: 12/28/01

 

Vascular Biogenics Ltd.
By:   /s/ Dror Harats
Title:   CEO

 

AGREED AND ACCEPTED:

/s/ Dror Harats
Prof Dror Harats

 

5


Exhibit A

Exercise Notice

Date:                     

To: Vascular Biogenics Ltd.

The undersigned, pursuant to the provisions set forth in the attached Warrant, hereby elects to purchase                      of the Warrant Shares pursuant to Section 2.2 of the attached Warrant, and herewith makes payment of                     , representing the full Exercise Price for such shares as provided for in such Warrant.

 

Signature:

 

Address:

   
   
   


Exhibit B

Net Exercise Notice

Date:                     

 

To: Vascular Biogenics Ltd.

The undersigned, pursuant to the provisions set forth in the attached Warrant, hereby elects to exercise the attached Warrant for the purchase of                      of the Warrant Shares, pursuant to the provisions of Section 2.3 of the attached Warrant.

 

Signature:

 
Address:    
   
   


 

LOGO

6 Yoni Netanyahu St. Or Yehuda, Israel Tel. +972-3-6346450 Fax. +972-3-6346449

August 10, 2011

Dear Dror,

RE: Warrants Extension Notice

We are pleased to inform you that Vascular Biogenics Ltd. (the “Company”) resolved that the exercise period under each of the warrants issued to you effective as of (i) April 1, 2001; (ii) May 1, 2001; and (iii) December 28, 2001, shall be extended such that the exercise period of each warrant shall be twenty (20) years from the date of respective grant

Sincerely yours,

Dr. Ben Shapiro, Chairman

Vascular Biogenics Ltd.

Confirmed and further agreed to bear all tax implications, if any, resulting from the above.

 

Name:   Prof. Dror Harats
Signature:  

/s/ Prof. Dror Harats

Date:   August 14, 2011

Exhibit 10.1

VASCULAR BIOGENICS LTD.

EMPLOYEE SHARE OWNERSHIP AND OPTION PLAN (2011)


TABLE OF CONTENTS

 

         Page  

1.

 

PREAMBLE

     2   

2.

 

ADMINISTRATION OF THE PLAN

     3   

3.

 

SHARES SUBJECT TO THE PLAN

     4   

4.

 

DESIGNATION OF PARTICIPANTS

     4   

5.

 

OPTION EXERCISE PRICES

     5   

6.

 

EXCLUSIVITY OF THE PLAN

     5   

7.

 

DESIGNATION OF OPTIONS PURSUANT TO SECTION 102

     5   

8.

 

GRANT OF THE OPTIONS AND ISSUANCE OF THE SHARES TO THE TRUSTEE

     6   

9.

 

OPTION OR SHARE PURCHASE AGREEMENT; TERMINATION OF ENGAGEMENT

     9   

10.

 

ACCELERATION OF AN OPTION

     12   

11.

 

TERM OF OPTIONS; EXERCISE

     12   

12.

 

ADDITIONAL DOCUMENTS

     13   

13.

 

TAXATION

     14   

14.

 

DIVIDENDS

     15   

15.

 

RIGHTS AND/OR BENEFITS ARISING OUT OF THE EMPLOYEE/ EMPLOYER OR OTHER RELATIONSHIP AND THE ABSENCE OF AN OBLIGATION TO ENGAGE

     16   

16.

 

ADJUSTMENTS UPON CHANGES IN CAPITALIZATION

     16   

17.

 

TERM, TERMINATION AND AMENDMENT

     17   

18.

 

EFFECTIVENESS OF THE PLAN

     17   

19.

 

RELEASE OF THE TRUSTEE AND THE PROXY FROM LIABILITY AND INDEMNIFICATION

     17   

20.

 

GOVERNING LAW AND DISPUTE RESOLUTION

     18   

 

APPENDICES
Appendix A:    Grantee’s Notice to the Trustee as to Exercise of the Option (Section 11.2).
Appendix B:    Notice to the Company of Exercise of the Option by the Trustee (Section 11.4).
Appendix C:    Proxy and Power of Attorney (Section 12.2).


1. PREAMBLE

 

  1.1 This plan, as amended from time to time, shall be known as the “Vascular Biogenics Ltd. Employee Share Ownership and Option Plan (2011)” (the “Plan”). The purpose and intent of the Plan is to provide incentives to employees, directors, officers, service providers, consultants and/or advisors of the Company, the parent and/or of subsidiaries and/or of affiliated companies of the Company (each a “Related Company” and collectively, “Related Companies”) by providing them with the opportunity to purchase shares of the Company.

The Plan is designed to comply with Section 102 of the Israeli Income Tax Ordinance (New Version), 1961, as amended from time to time, or any provision which may amend or replace it (the “Ordinance” and “Section 102”) and the rules, regulations and orders or procedures promulgated thereunder from time to time, as amended or replaced from time to time (the “Rules”) and to enable the Company and grantees hereunder to benefit from Section 102 and the Rules and also to enable the Company to grant options and issue shares outside the context of Section 102. The Company, however, does not warrant that the Plan will be recognized by the income tax authorities or that future changes will not be made to the provisions of the law, regulations or the Rules, which are promulgated from time to time, or that any exemption or benefit currently available pursuant to Section 102 will not be abolished.

The Plan is further designed to enable the provision of incentives as set forth herein to grantees in jurisdictions other than the State of Israel, with respect to which the Board of Directors of the Company (the “Board”), in its sole discretion, shall determine the necessary changes to be made to the Plan and set forth the relevant conditions in the Agreements (as defined in Section 9 below) with the grantees in order to comply with the requirements of the tax regimes in any such other jurisdictions and its determination regarding these matters shall be final and binding.

 

  1.2 Should any provision of Section 102, regulations thereunder or the Rules which apply to employees or any such other grantees as applicable under the provisions of Section 102 and the Rules, be amended, such amendment shall be deemed included in the Plan with respect to options granted or shares issued in the context of Section 102. Where a conflict arises between any section of the Plan, the Agreement or their application, and the provisions of any tax law, rule or regulations, including without limitation the Ordinance and/or the Rules, whether relied upon for tax relief or otherwise, the latter shall prevail, and the Board in its sole discretion shall determine the necessary changes to be made to the Plan and its determination regarding this matter shall be final and binding.

 

  1.3

In the event the Company’s shares should be registered for trading on the Tel-Aviv Stock Exchange Ltd. or on any other stock exchange, whether in Israel or abroad, the options and/or shares allotted in accordance with the Plan may be made conditional to any requirement or instruction of the stock exchange


  authorities or of any other relevant authority acting pursuant to applicable law as shall exist from time to time. In such case, by means of a Board resolution, the Plan and any agreements prepared pursuant hereto, may be amended as necessary to meet such requirements. In the event of a contradiction between any such amendment and the Plan and/or any agreement’s provisions, the amendment shall prevail.

 

2. ADMINISTRATION OF THE PLAN

 

  2.1 The Plan shall be administered by the Board and/or by any committee of the Board so designated by the Board. Any subsequent references herein to the Board shall also mean any such committee if appointed and, unless the powers of the committee have been specifically limited by law or otherwise, such committee shall have all of the powers of the Board granted herein. Subject to Sections 5 and 17 and applicable law and without derogating from the generality of the foregoing, the Board shall have plenary authority to determine: (i) the terms and conditions (which need not be identical) of all grant of options (including, without limitation, the terms and conditions of the issuance of shares pursuant to the exercise thereof), including, without limitation, the purchase price of the shares covered by each option, (ii) the method of payment of the exercise price (whether by cash, check, promissory note, consideration received by the Company by cashless exercise, or any combination of the foregoing), (iii) the individuals to whom, and the time or times at which, options shall be granted, (iv) the number of shares to be subject to each option, (v) whether or not an option shall be granted pursuant to Section 102, and if so, whether such option be granted to a trustee under the Ordinance and the election of the “Ordinary Income Route” according to Section 102(b)(1) of the Ordinance or the “Capital Gains Route” according to Section 102(b)(2) of the Ordinance or otherwise (options granted either under the Ordinary Income Route or under the Capital Gains Route shall be referred to herein as “Approved 102 Options”), or without a trustee according to Section 102(c) of the Ordinance (the “Unapproved 102 Options”), (vi) when an option can be exercised and whether in whole or in installments, (vii) and to make any other elections with respect to the Plan pursuant to applicable law.

Subject to Section 17, the Board shall have plenary authority to construe and interpret the Plan, to prescribe, amend and rescind the rules and regulations relating to it and to make all other determinations deemed necessary or advisable for the administration of the Plan. All determinations and decisions of the Board pursuant to the provisions of the Plan and all related orders and resolutions of the Board shall be final, conclusive and binding on all persons, including the Company, its shareholders, grantees and their estates and beneficiaries.

 

  2.2 Any directive or notice signed by a member of the Board authorized therefore by the Board shall constitute conclusive proof and authority for every act or decision of the Company.

 

  2.3 No director or officer of the Company shall be personally liable or obligated to any grantee as a result of any decision made and/or action taken with respect to the Plan or its interpretation or execution.

 

3


3. SHARES SUBJECT TO THE PLAN

The shares subject to the Plan shall be Ordinary Shares of the Company, par value NIS 0.01 each (the “Ordinary Shares”). The maximum number of shares that may be issued under the Plan is 170,435 Ordinary Shares, as such number and class of shares may be adjusted in accordance with Section 17. Such shares may be in whole or in part, as the Board shall from time to time determine and subject to applicable law, authorized and un-issued Ordinary Shares or issued and fully paid Ordinary Shares which shall have been purchased by the trustee hereunder with funds provided by the Company or reacquired by the Company, subject to applicable law. If any option granted under the Plan shall expire, terminate or be canceled for any reason without having been exercised in full, such shares subject thereto shall again be available for the purposes of the Plan. Upon termination of the Plan, any such shares which may remain un-issued and which are not subject to outstanding options shall cease to be reserved for the purposes of the Plan.

 

4. DESIGNATION OF PARTICIPANTS

 

  4.1 The persons eligible for participation in the Plan as grantees shall include any employee, director, office holder, service provider, consultant and/or advisors of the Company or any Related Company or any other person or entity so designated by the Board, provided that for the purpose of the Israeli tax law, Israeli Employees (as defined herein) may only be granted options under Section 102 of the Ordinance; and Israeli Non-Employees (as defined below) may only be granted options under Section 3(i) of the Ordinance.

For the purpose of this Section:

“Israeli Employee” shall mean a person who is employed by the Company or its Related Company, which is an “employing company” within the meaning of Section 102(a) of the Ordinance, including an individual who is serving as a director or an office holder, but excluding Controlling Shareholder, who is an Israeli resident or deemed to be an Israeli resident for the payment of tax.

“Controlling Shareholder” shall have the meaning ascribed to it in Section 32(9) of the Ordinance.

“Israeli Non-Employees” shall mean a consultant, adviser, service provider, Controlling Shareholder or any other person who is not an Israeli Employee, who is an Israeli resident or deemed to be an Israeli resident for the payment of tax.

 

  4.2 The grant of an option hereunder shall neither entitle the grantee to participate nor disqualify the grantee from participating in, any other grant of options pursuant to the Plan or any other option or share plan of the Company or any Related Company.

 

  4.3 Anything in the Plan to the contrary notwithstanding, all grants of options to directors and office holders shall be authorized and implemented in accordance with the provisions of the Israeli Companies Law 5759-1999 or any successor act or regulation, as in effect from time to time.

 

4


5. OPTION EXERCISE PRICES

 

  5.1 The consideration to be paid by a grantee for each share purchased by exercising an option (the “Option Exercise Price”) shall be as determined by the Board or set forth in the grantee’s Agreement, provided that the Option Exercise Price shall not be less than the nominal value of the shares subject to the option.

 

  5.2 The Option Exercise Price shall be payable upon the exercise of the option in a form satisfactory to the Board, including without limitation, by cash or check or any other method of payment all as shall be determined by the Board. The Board shall have the authority to postpone the date of payment on such terms as it may determine.

 

6. EXCLUSIVITY OF THE PLAN

Unless otherwise determined by the Board in any particular instance or as part of the Agreement, each grantee hereunder will be required to declare and agree that all prior agreements, arrangements and/or understandings with respect to shares of the Company or options to purchase shares of the Company which have not actually been issued or granted prior to execution of the Agreement shall be null and void and that only the provisions of the Plan and/or the Agreement shall apply.

Notwithstanding the above, the adoption of this Plan, by itself, shall not be construed as amending, modifying or rescinding any incentive arrangement previously approved by the Board or as creating any limitations on the power of the Board to adopt such other incentive arrangements as it may deem desirable, including, without limitation, the granting of options otherwise than under this Plan, and such arrangements may be either applicable generally or only in specific cases.

 

7. DESIGNATION OF OPTIONS PURSUANT TO SECTION 102

 

  7.1 The Company may designate options granted to Israeli Employees pursuant to Section 102 as Unapproved 102 Options or Approved 102 Options.

 

  7.2 The grant of Approved 102 Options shall be made under this Plan adopted by the Board, and shall be conditioned upon the approval of this Plan by the ITA.

 

  7.3 Approved 102 Option may either be classified as Capital Gain Option (“CGO”) or Ordinary Income Option (“OIO”).

 

  7.4 Approved 102 Option elected and designated by the Company to qualify under the capital gain tax treatment in accordance with the provisions of Section 102(b)(2) shall be referred to herein as CGO.

 

5


  7.5 Approved 102 Option elected and designated by the Company to qualify under the ordinary income tax treatment in accordance with the provisions of Section 102(b)(1) shall be referred to herein as OIO.

 

  7.6 The Company’s election of the type of Approved 102 Options as CGO or OIO granted to Israeli Employees (the “Election”), shall be appropriately filed with the ITA before the date of grant of an Approved 102 Option. Such Election shall become effective beginning the first date of grant of an Approved 102 Option under this Plan and shall remain in effect at least until the end of the year following the year during which the Company first granted Approved 102 Options. The Election shall obligate the Company to grant only the type of Approved 102 Option it has elected, and shall apply to all grantees who were granted Approved 102 Options during the period indicated herein, all in accordance with the provisions of Section 102(g) of the Ordinance. For the avoidance of doubt, such Election shall not prevent the Company from granting Unapproved 102 Options or any other options simultaneously.

 

  7.7 All Approved 102 Options must be held in trust by a Trustee, as described in Section 8 below.

 

  7.8 For the avoidance of doubt, the designation of Unapproved 102 Options and Approved 102 Options shall be subject to the terms and conditions set forth in Section 102 of the Ordinance and the regulations promulgated thereunder.

 

  7.9 With regards to Approved 102 Options, the provisions of the Plan and/or the Agreement (as defined herein) shall be subject to the provisions of Section 102 and the Tax Assessing Officer’s permit, and the said provisions and permit shall be deemed an integral part of the Plan and of the Agreement. Any provision of Section 102 and/or the said permit which is necessary in order to receive and/or to keep any tax benefit pursuant to Section 102, which is not expressly specified in the Plan or the Agreement, shall be considered binding upon the Company and the grantees.

 

8. GRANT OF THE OPTIONS AND ISSUANCE OF THE SHARES TO THE TRUSTEE

 

  8.1 Shares issued upon exercise of an option shall be issued to the grantee or to the Trustee (as such term is defined below), in the name of the grantee and on his behalf, subject to the sole discretion of the Board. In the event that the Board grants an option to be held by the grantee directly, and unless determined otherwise with respect to a specific grant, then without derogating from any other rights or obligations conveyed to the grantee according to the Plan all rights and obligations conveyed to the Trustee according to this Plan shall be awarded to the said grantee.

 

  8.2

The Board shall appoint a Trustee for the purposes of this Plan (the “Trustee”). In case of a Trustee nominated under Section 102, the nomination of such Trustee

 

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  shall be subject to the approval of the Israeli Income Tax Authorities (the “ITA”) in accordance with the provisions of Section 102(a) of the Ordinance. The Trustee shall have all the powers provided by law, including, without limitation, the Ordinance, Section 102 and the Rules, the trust agreement with the Company and the Plan and shall act pursuant to the provisions thereof, as they shall apply from time to time. The Board shall be entitled to replace the Trustee and/or to nominate another person to serve as a Trustee in lieu of the existing Trustee at its sole discretion, subject to applicable law, and that the new Trustee shall have the same powers and authority which this Plan grants the Trustee.

 

  8.3 Unless otherwise determined by the Board, all option awards including, without limitation, the shares issued pursuant thereto, and all rights deriving from or in connection therewith, including, without limitation, any bonus shares (including stock dividends) issued in connection therewith, shall be issued by the Company in the name of the Trustee on behalf of the grantee and the share certificates representing any shares issued pursuant to options exercised hereunder, shall be issued by the Company in the name of the Trustee in trust for the designated grantee and shall be deposited with the Trustee, held by him and registered in his name in the register of shareholders of the Company for such period as determined by the Board but, in the case of Approved 102 Options, not less than the period set forth therein or otherwise required, or approved, with respect thereto pursuant to Israeli law, regulations promulgated thereunder, the Ordinance, Section 102 or the Rules, as shall be in effect from time to time (the “Restriction Period”) and the same tax route pursuant to Section 102 shall apply thereto. Furthermore, Approved 102 Options granted or shares issued pursuant to such Approved 102 Options shall not be sold or transferred until the end of the Restriction Period, unless otherwise allowed or determined by the Israeli tax authorities. Notwithstanding the above, if any such sale or transfer occurs during the Restriction Period, the sanctions under Section 102 of the Ordinance and under the Rules or regulation or orders or procedures promulgated thereunder shall apply to and shall be borne by such grantee.

Notwithstanding anything to the contrary, the Trustee shall not release any shares allocated or issued upon exercise of Approved 102 Options prior to the full payment of the grantee’s tax liabilities arising from Approved 102 Options which were granted to him and/or any shares allocated or issued upon exercise of such options.

 

  8.4

Without derogating from the provisions of Sections 8.3 above or 8.7 below, and unless otherwise determined by the Board generally or in any particular instance, the shares issued with respect to any options granted hereunder and all rights deriving from or in connection therewith including, without limitation, any bonus shares (including stock dividend) issued in connection therewith, will be held by the Trustee and registered in his name until the consummation of the initial public offering of the Company’ s shares, pursuant to an effective registration statement, prospectus or similar document in Israel or such other jurisdiction as is determined by the Board (the “IPO”), after which time the grantee for whom they

 

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  are being held may request their registration in his name and transfer to him, subject to the provisions of Section 102 and the Rules and regulations thereunder, if applicable, and the Plan, all as shall be in effect from time to time (e.g., payment of taxes, etc.). After the consummation of the IPO, Approved 102 Options will be held by the Trustee and registered in his name in trust for the designated grantee, for not less than the Restriction Period or the period approved with respect thereto pursuant to Israeli law, as shall be applicable from time to time as referred to in Section 8.3 above.

 

  8.5 Unless otherwise determined by the Board, options granted hereunder shall not confer upon the grantee any of the rights of a shareholder of the Company, for as long as they have not been exercised and, once exercised, for as long as the shares have not been issued, transferred and registered in the grantee’s name in the Company’s shareholder register.

 

  8.6 For as long as any shares are held by the Trustee or registered in his name or for as long as the certificates representing any shares are held by the Trustee, the Trustee alone shall be entitled to receive every notice to which a shareholder is entitled, or to demand any information and any financial and/or other report to which a shareholder is entitled from the Company, and only he or whomever he shall designate pursuant to the Proxy and Power of Attorney referred to in Section 12.2 below and attached as Appendix C hereto (the “Proxy”), shall be entitled to exercise every other right of the shareholders vis-a-vis the Company, including, without limitation, the right to participate and vote (or abstain) on all matters at all shareholders’ meetings (whether ordinary or extraordinary) and the right to sign any resolution in writing in the name of the shareholders, if and when applicable. Without derogating from the above, with respect to shares issued upon exercise of Approved 102 Options, such shares shall be voted in accordance with the provisions of Section 102 and the Rules, regulations or orders promulgated thereunder, if applicable.

The Trustee shall initially appoint Dr. Dror Harats as the Proxy to all meetings.

 

  8.7 Subject to the provisions of the Articles of Association of the Company, as amended form time to time (the “Articles”) and applicable law, shares registered in the Trustee’s name shall be represented at all meetings of shareholders of the Company and, until consummation of the IPO, shall either abstain or be voted by the Proxy in the same manner and proportion as the other shares of the Company represented at such meeting, at the Proxy’s discretion, and following the consummation of an IPO, in accordance with the instructions of the grantees on whose behalf they are held and in the absence of such instructions they shall abstain.

 

  8.8 Nothing in the aforegoing provisions shall derogate from the power of the Board to grant options or to allot shares to the Trustee otherwise than under the provisions of Section 102 and the Rules or to allot shares or grant options to grantees directly otherwise than through the Trustee or on terms which differ from those specified above or to approve the transfer of shares from the Trustee to the name of any grantee(s) upon such conditions as shall be determined by the Board.

 

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9. OPTION OR SHARE PURCHASE AGREEMENT; TERMINATION OF ENGAGEMENT

Unless otherwise determined by the Board, every grantee shall be required to sign an option or share purchase agreement or other document as shall be determined by the Board, in the form approved by the Board from time to time (the “Agreement”).

The Agreement need not be identical with respect to each grantee. The following terms, however, shall apply to all options, and, mutatis mutandis, shares, unless otherwise determined by the Board or set forth in the grantee’s Agreement:

 

  9.1 The Option Exercise Price shall be paid by the grantee to the Company no later than the date of exercise of the option. The Board shall have the authority to postpone the date of payment on such terms as it may determine.

 

  9.2 The grantee, whether as a holder of an option, or following the exercise of an option, as a shareholder of the Company, and whether the shares issued to the grantee are registered in his name or otherwise, shall have no right of first refusal to purchase shares of the Company which may be offered for sale by shareholders of the Company, and shall have no pre-emptive rights to purchase shares which are being allotted or shall in the future be allotted by the Company, to the extent any such rights otherwise exist. In addition, holders of options shall not be deemed a class of shareholders or creditors of the Company for purpose of the operation of Sections 350 and 351 of the Companies Law or any successor to such section.

 

  9.3 The option and/or the right to the option and/or to the shares are personal and except insofar as is specified in this Plan, and, where applicable, subject to Section 102 and the Rules, may not be transferred, assigned, pledged, withheld, attached or otherwise charged either voluntarily or pursuant to any law, except by way of transfer pursuant to the laws of inheritance or as otherwise determined by the Board, and no power of attorney or deed of transfer, whether the same has immediate effect or shall take effect on a future date, shall be given with respect thereto. During the lifetime of the grantee the option may only be exercised by the designated grantee or, if granted to the Trustee, by the Trustee on behalf of the designated grantee. A note as to the provisions of this sub-section or a legend may appear on any document which grants the option and in particular in the Agreement, and also on any share certificate.

 

  9.4

The right to exercise the option is granted to the Trustee on behalf of the grantee and shall be subject to a vesting schedule, and may be further subject to any performance goals and measurements as may be determined by the Board. Vesting shall be in installments, gradually over a period of 4 (four) years from the date of grant of the option or such other period or periods as determined by the

 

9


  Board. Unless otherwise determined, at the conclusion of each period for the exercise of the option as determined in the Agreement (“Vesting Periods”), the option may, from time to time, be exercised in relation to all the shares allocated for that period in such manner that upon the first anniversary of the grant of the Option the Trustee shall, in the absence of a contrary determination in the Agreement, be entitled to exercise on behalf of the grantee and at his request 1/4 (quarter) of the options and additional 1/16 at the end of each subsequent quarter over the course of the following three (3) years, provided that , unless otherwise determined by the Board or set forth in the respective Agreement, upon each of such vesting dates the grantee continues to be employed by, or provide services to, or serve as a director or officer of the Company or a Related Company on a continual basis from the date of the grant thereof.

In addition, during each of the Vesting Periods, the option may be exercised in relation to all or part of the shares allocated for any previous Vesting Period in which the option was not fully exercised, provided, subject to the provisions of Section 7.7 hereof, that at the time of the exercise of the option the grantee has continued to be employed by, or provide services to or serve as a director or officer of the Company or a Related Company on a continual basis from the date of the grant thereof and until the date of their exercise. After the end of the Vesting Periods and during the balance of the option period, the option may be exercised, from time to time, in relation to all or part of the shares which have not at that time been exercised and which remain subject to the option, subject to the provisions of Section 9.6 hereof and to any condition in the Agreement, including, without limitation, with respect to a minimum number of shares with respect to which the option may be exercised and any provision which determines the number of times that the Trustee may send the Company notice of exercise on behalf of the grantee in respect of the option. Without derogating from any discretionary authority granted to the Board under the Plan, the Board shall be entitled at any time to shorten the vesting schedule or any Vesting Period.

 

  9.5 The Board may determine at its sole discretion, that any grantee shall be entitled to receive the options or the shares, through the Trustee, pursuant to the provisions of this Plan or, subject to the provisions of Section 102, as applicable, directly in the name of the grantee, immediately upon execution of the Agreement or on such other date or dates as the Company has undertaken towards such grantee. The Board shall be entitled, subject to applicable law and the terms of the respective Agreement to repurchase the shares from the grantee.

 

  9.6 Termination of Engagement

 

  9.6.1

Unless otherwise determined by the Board and/or set forth in grantee’s Agreement, if the engagement of a grantee is terminated or if he ceases to serve as an officer or director of the Company or a Related Company (as the case may be) prior to the complete exercise of an option, (a) by reason of death or disability (as determined by the Board in its absolute discretion), the option shall remain exercisable for a period of one (1) year

 

10


  following such termination (but only to the extent exercisable at termination of engagement or appointment, as the case may be, and not beyond the scheduled expiration date); (b) by reason of retirement, pursuant to applicable law with the approval of the Board, the option shall remain exercisable for a period of one hundred and eight (180) days following such termination (but only to the extent exercisable at termination of engagement or appointment, as the case may be, and not beyond the scheduled expiration date); and (c) for any other reason other than for Cause, the option shall remain exercisable for a period of ninety (90) days following the earlier of such termination or notice of termination (but only to the extent exercisable at the earlier of termination or notice of termination of engagement or appointment, as the case may be, and not beyond the scheduled expiration date); or (d) for Cause (as such term is defined below), as shall be determined by the Board, all options held by or on behalf of such grantee shall immediately expire upon the earlier of such termination or notice of termination.

For purposes hereof, the term “Cause” shall mean any of (i) a material breach by the grantee of the grantee’s obligations under any agreement with the Company or any Related Company; (ii) the commission by the grantee of an act of fraud or embezzlement against the Company or any Related Company or the willful taking of action injurious to the business or prospects of the Company or any Related Company; (iii) the conviction of the grantee of a felony; and (iv) the grantee’s involvement in an act or omission which constitutes breach of trust between the grantee and the Company or any Related Company.

The Board may determine whether any given leave of absence constitutes a termination of employment engagement or appointment, as applicable. Options awarded under this Plan shall not be affected by any change of employment or engagement, as applicable, so long as the grantee continues to be an employee, director, officer, service provider, consultant and/or advisor of the Company or a Related Company (as the case may be).

 

  9.6.2 With respect to Unapproved 102 Options, if the grantee ceases to be engaged by the Company or any Related Company, the grantee shall extend to the Company and/or its Related Company a security or guarantee for the payment of tax due at the time of sale of shares, all in accordance with the provisions of Section 102 and the Rules, regulation or orders promulgated thereunder.

 

  9.6.3 Notwithstanding the foregoing, the Board may, in its absolute discretion but subject to Section 11.1, extend the period of exercise of an option by a grantee or grantees for such time as it shall determine either with or without conditions.

 

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10. ACCELERATION OF AN OPTION

 

  10.1 Unless so determined by the Board or set forth in the applicable Agreement, in the event of a liquidation, dissolution or winding-up of the Company, or a Significant Event, in which the surviving corporation or the controlling person or entity, as applicable, does not assume or substitute the outstanding options held by or for the benefit of any grantee and which have not yet vested, then notwithstanding anything to the contrary herein, upon the consummation of the applicable event, any unexercised portion of such outstanding options shall expire.

 

  10.2 The Board shall determine, at its absolute discretion, whether outstanding options held by or for the benefit of any grantee and which have not yet vested, has been assumed or substituted and whether any acceleration shall be applicable.

 

  10.3 Each of the following shall be a “Significant Event”: (a) any consolidation or merger of the Company in which the Company is not the continuing or surviving corporation, other than a transaction in which the holders of Ordinary Shares (on an as converted basis) immediately prior thereto have the same, or substantially similar, proportionate ownership of Ordinary Shares (on an as converted basis) of the surviving corporation immediately after the transaction and a transaction in which the holders of Ordinary Shares (on an as converted basis) immediately prior thereto own a majority of the voting power of the surviving corporation; or (b) any sale, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all the assets or all or substantially all of the outstanding and issued shares of the Company.

 

11. TERM OF OPTIONS; EXERCISE

 

  11.1 The term of each option shall be for such period as the Board shall determine, but not more than 20 (twenty) years from the date of grant thereof or such shorter period as is prescribed in Section 9.6 hereof.

 

  11.2 A grantee who desires that the Trustee exercise an option granted to the Trustee on his behalf shall so instruct the Trustee in writing in the form annexed hereto as Appendix A or in such other form as shall be approved by the Board from time to time. The notice shall be accompanied by payment of the full Option Exercise Price of such shares as provided in the Agreement.

 

  11.3 As a condition for the exercise of the option, the grantee shall pay, or otherwise make arrangements to the Company’s satisfaction, for the payment of the tax and other obligatory payments applicable to him (including all sums payable arising out of or in connection with the Company’s obligation to deduct tax and other obligatory payments at source) pursuant to applicable law and the provisions of the Plan.

 

  11.4

Upon receipt of all the requisite documents, approvals and payments from the grantee, including sufficient proof of payment or other arrangement with respect to the payment of any applicable taxes in form satisfactory to the Company and

 

12


  the Trustee, the Trustee shall deliver a notice to the Company in the form annexed hereto as Appendix B or in such other form as shall be approved by the Board, whereupon the Company shall allot the shares in the name of the Trustee.

 

  11.5 A grantee who desires to exercise an option granted directly to him (and not through the Trustee), subject to the approval of the Board, shall so notify the Company in writing in such form as shall be prescribed by the Board from time to time. As a condition for the exercise of the option, the grantee shall pay or otherwise make arrangements, to the Company’s satisfaction, for the payment of the tax and other obligatory payments applicable to him (including all sums payable by the Company arising out of its obligation to deduct tax and other obligatory payments at source) pursuant to applicable law and the provisions of the Plan. Upon receipt of all the requisite documents, approvals and payments from the grantee, including sufficient proof of payment or other arrangement with respect to the payment of any applicable taxes in form satisfactory to the Company, the Company shall allot the shares in the name of the grantee.

 

  11.6 Without limiting the foregoing, the Board may, with the consent of the grantee, from time to time cancel all or any portion of any option then subject to exercise, and the Company’s obligation in respect of such option may be discharged by: (i) payment to the grantee or to the Trustee on behalf of the grantee of an amount in cash equal to the excess, if any, of the Fair Market Value of the relevant shares at the date of such cancellation subject to the portion of the option so canceled over the aggregate Option Exercise Price of such shares; (ii) the issuance or transfer to the grantee or to the Trustee on behalf of the grantee of shares of the Company with a Fair Market Value at the date of such transfer equal to any such excess; or (iii) a combination of cash and shares with a combined value equal to any such excess, all as determined by the Board in its sole discretion.

For purposes hereof, the “Fair Market Value” of the Ordinary Shares shall mean, as of any date, the last reported sale price, on that date, of the Ordinary Shares of the Company on the principal securities exchange on which such shares are then traded, or, in the event that no sales of such shares took place on such date, the last reported sale price of such shares on such principal securities exchange on the most recent prior date on which a sale of shares took place; provided, however , that if such shares are not publicly traded on the date as of which Fair Market Value is to be determined, “Fair Market Value” of the Ordinary Shares shall mean the value as determined in good faith by the Board, in its sole discretion, and provided , further , that with respect to an option or share granted pursuant to Section 102, then the Fair Market Value shall be determined in accordance with the provisions of Section 102.

 

12. ADDITIONAL DOCUMENTS

 

  12.1

Until the consummation of the IPO, and whether the option or shares are granted or issued in the name of the Trustee or otherwise, the Company shall have the right to demand from the grantee at any time that the same shall provide, and the

 

13


  grantee shall provide, any certificate, declaration or other document which the Company and/or the Trustee shall consider to be necessary or desirable pursuant to any law, whether local or foreign, including any undertaking on the part of the grantee not to sell his shares during any period which shall be required by an underwriter or investment bank or advisor of the Company for the purpose of any share issue whether private or public and including any certificate or agreement which the Company shall require, if any, from the grantees or any certificate, declaration or other document the obtaining of which shall be deemed by the Board and/or the Trustee to be appropriate or necessary for the purpose of raising capital for the Company, of merging the Company with another company (whether the Company is the surviving entity or not), or of reorganization of the Company, including, in the event of a consolidation or merger of the Company or any sale, lease, exchange or other transfer of all or substantially all of the assets or shares of the Company the sale or exchange, as the case may be, of any shares the grantee (or the Trustee on his behalf) may have purchased hereunder all as shall be deemed necessary or desirable by the Board and/or the Trustee.

 

  12.2 Without derogating from the generality of the aforesaid and in order to guarantee the aforesaid, and because the rights of the Company and the other shareholders are dependent thereon, the grantee shall, upon signing the Agreement and as a condition to the grant of any options hereunder, execute the Proxy and Power of Attorney attached hereto as Appendix C, or in such other form as shall be approved by the Board, irrevocably empowering the Trustee and/or the Proxy, until consummation of the IPO, to sign any document and take any action in his name as aforesaid, and the grantee shall have no complaint or claim against the Trustee and/or the Proxy in respect of any such signature or action, or in respect of any determination of the Trustee pursuant hereto or to Section 10.1 above. The grantee will authenticate his signature in the presence of a notary if he shall be asked to do so by the Company, in order to give full validity to the power of attorney.

 

13. TAXATION

 

  13.1 General

Subject to applicable law, the grantee shall be liable for all taxes, duties, fines and other payments which may be imposed by the tax authorities (whether in Israel or abroad) and for every obligatory payment of whatever source in respect of the options, the shares (including, without limitation, upon the grant of options, the exercise of the options, the sale of the shares or the registration of the shares in the grantee’s name) or dividends or any other benefit in respect thereof and/or for all charges which shall accrue to the grantee, the Company, any Related Company and/or to the Trustee in connection with the Plan, the Options and/or the shares, or any act or omission of the grantee or the Company in connection therewith or pursuant to any determination of the applicable tax or other authorities.

 

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  13.2 Deduction at Source

The Company (including any Related Company) and/or the Trustee shall have the right to withhold or require the grantee to pay an amount in cash or to retain or sell without notice Ordinary Shares in value sufficient to cover any tax or obligatory payment required by a governmental entity administrative authority to be withheld or otherwise deducted and paid with respect to the options or the Shares subject thereto (including, without limitation, upon their grant, exercise or sale or the registration of the Ordinary Shares in the grantee’s name) or with respect to dividends or any other benefits in respect thereof (“Withholding Tax”), and to make payment (or to reimburse itself or himself for payment made) to the appropriate tax or other authority of an amount in cash equal to the amount of such Withholding Tax. Notwithstanding the foregoing, the grantee shall be entitled to satisfy the obligation to pay any Withholding Tax, in whole or in part, by providing the Company and/or the Trustee with funds sufficient to enable the Company and/or the Trustee to pay such Withholding Tax.

 

  13.3 Certificate of Authorization of Assessing Officer

The Company (including any Related Company) or the Trustee shall at any time be entitled to apply to the assessing officer, and in the case of a grantee abroad, to any foreign tax authority, for receipt of their certificate of authorization as to the amount of tax which the Company or any Related Company or the grantee or the Trustee is to pay to the tax authorities resulting from granting the options or allotting the shares, or regarding any other question with respect to the application of the Plan.

 

14. DIVIDENDS

The Ordinary Shares issued as a result of the exercise of the options shall participate equally with the Company’s other Ordinary Shares in every dividend which shall be declared and distributed subject to the following provisions:

 

  14.1 A cash dividend shall be distributed only to persons registered in the register of shareholders as shareholders on the record date fixed for the distribution of the dividend.

 

  14.2 A dividend with regard to shares which are registered in the name of the Trustee shall be paid to the Trustee, subject to any lawful deduction of tax, whether such rate is at the usual rate applicable to a dividend or at a higher rate. The Trustee shall transfer the dividend to the grantee in accordance with instructions that he shall receive from the Company. Alternatively, the Company shall be entitled to pay the dividend directly to the grantee subject to the deduction of the applicable tax and when applicable subject to the provisions of Section 102 and the Rules, regulations or orders promulgated thereunder.

 

  14.3

Without derogating from the provisions of Section 14.2 hereof, the Company or the Trustee shall be entitled to set off and deduct at source from any dividend any

 

15


  sum that the grantee owes to the Company (including any Related Company) or the Trustee, whether under the Plan or otherwise, and/or any sum that the grantee owes to the tax or other authorities.

 

15. RIGHTS AND/OR BENEFITS ARISING OUT OF THE EMPLOYEE/ EMPLOYER OR OTHER RELATIONSHIP AND THE ABSENCE OF AN OBLIGATION TO ENGAGE

 

  15.1 Other than with respect to social security payments if required to be made by the Company or a Related Company as a result of its choice of the tax treatment of the options pursuant to Section 102, no income or gain which shall be credited to or which purports to be credited to the grantee as a result of the Plan, shall in any manner be taken into account in the calculation of the basis of the grantee’s entitlements from the Company or any Related Company or in the calculation of any social welfare right or other rights or benefits arising out of the employee/employer relationship between the parties or any other engagement by the Company of the grantee. If, pursuant to any law, the Company or any Related Company shall be obliged for the purposes of calculation of the said items to take into account income or gain actually or theoretically credited to the grantee, the grantee shall indemnify the Company or any Related Company, against any expense caused to it in this regard.

 

  15.2 Nothing in the Plan shall be interpreted as obliging the Company or any Related Company to employ or otherwise engage the grantee and nothing in the Plan or any option granted pursuant thereto shall confer upon any grantee any right to continue in the employment (or other engagement or appointment, as applicable) of the Company or any Related Company or restrict the right of the Company or any Related Company to terminate such employment (or other engagement or appointment, as applicable) at any time. The grantee shall have no claim whatsoever against the Company or any Related Company as a result of the termination of his employment (or other engagement or appointment, as applicable), including, without limitation, any claim that such termination causes any options to expire or otherwise terminate and/or prevents the grantee from exercising the options and/or from receiving or retaining any shares pursuant to any agreement between him and the Company, or results in any loss due to an early imposition, or earlier than anticipated imposition, of tax or other liability pursuant to applicable law.

 

16. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION

Notwithstanding any other provisions of the Plan, the Board shall take such actions, if any, as it deems appropriate for the adjustment of the number and class of shares subject to each unexercised or unvested option and in the option prices in the event of an IPO, changes in the outstanding share capital of the Company by reason of any stock dividend (bonus shares), stock split, recapitalization, combination, exchange of shares, merger, consolidation, liquidation, split-up, split-off, spin-off or other similar change in capitalization. Upon the occurrence of any such event, the Board may make any adjustments it deems appropriate, including in the aggregate number and class of shares available under the Plan, and the Board’s determination in this regard shall be conclusive.

 

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17. TERM, TERMINATION AND AMENDMENT

Unless the Plan shall theretofore have been terminated as hereinafter provided, the Plan shall terminate on, and no option shall be granted after, the twentieth (20th) anniversary of the date the Plan is adopted by the Board. The Board may at any time terminate, modify or amend the Plan in such respects as it shall deem advisable. Notwithstanding, any amendment with respect to the maximum number of shares that may be issued under the Plan or extension of the term of the Plan shall be made solely by the Shareholders of the Company. Options granted prior to termination of the Plan may, subject to the terms of the Plan and any Agreement, be exercised thereafter. Unless otherwise provided for herein or in the Agreement, any amendment or modification of the Plan shall be deemed included in the Plan with respect to options granted or shares issued hereunder from time to time, provided, that, except as otherwise provided for herein, no amendment or modification of the Plan may, without the consent of the grantee to whom any option shall theretofore have been granted, adversely affect the rights of such grantee under such option.

 

18. EFFECTIVENESS OF THE PLAN

The Plan shall become effective as of the date determined by the Board.

 

19. RELEASE OF THE TRUSTEE AND THE PROXY FROM LIABILITY AND INDEMNIFICATION

In no event shall the Trustee or the Proxy be liable to the Company and/or any grantee under the Plan and/or any third party (including without prejudice to the generality of the aforegoing, to the income tax authorities and any other governmental or administrative authority), or to a purchaser of shares from any grantee with respect to any act or omission which has been or will be carried out in relation to the Plan, its execution and any matter connected thereto or arising therefrom, other than willful misconduct or ommission. The Company will not, and the grantee will be required to covenant upon signing the Agreement that he will not, make any claim against the Trustee or the Proxy in any manner whatsoever and on any ground whatsoever and they expressly agree that if the Trustee or the Proxy are sued by them, then the Trustee or the Proxy shall be entitled by virtue of this Section alone to apply to the court for dismissal of the action against them with costs. The Company covenants and agrees that if an action is commenced by any third party against the Trustee or the Proxy they shall be entitled, without any objection on the Company’s part to join the Company as a third party to any action and a judgment against them will be paid by the Company.

The Company covenants and the grantee will be required to covenant to indemnify the Trustee and/or the Proxy against any liability in relation to any claim and/or demand made against the Trustee and/or the Proxy by any person whatsoever, including the tax authorities, in relation to their acts or omissions in connection with the Plan, other than willful misconduct.

 

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20. GOVERNING LAW AND DISPUTE RESOLUTION

The Plan and all instruments issued thereunder shall be governed by and construed in accordance with the laws of the State of Israel.

Any dispute or disagreement which shall arise in connection with the under Plan and all instruments issued thereunder or as a result of any grant of options or issuance of shares thereunder shall be determined by the Board, or any committee designated by the Board, in its sole discretion and judgment and that any such determination and any interpretation by the Board or any such committee of the Plan and all instruments issued thereunder shall be final and shall be binding and conclusive for all purposes. In making any such determination or interpretation the Board or any such committee shall not be bound by the rules of procedure or evidence and shall not be required to give any reasons therefore.

Subject to the foregoing, the competent courts in the Tel-Aviv district shall have exclusive jurisdiction with respect to any matter or conflict with respect thereto.

 

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Appendix A

to Vascular Biogenics Ltd. Employee Share Ownership and Option Plan (2011)

(Section 11.2)

NOTICE OF EXERCISE

Date:                    

The Trustee under the Vascular Biogenics Ltd. Employee Share Ownership and Option Plan (2011) (the “Plan”)

Dear Sirs,

Re: Notice of Exercise

I hereby wish to inform you that it is my desire that of the Option which was granted to you on                      to acquire (                    ) Ordinary Shares of Vascular Biogenics Ltd. (the “ Company ”) on my behalf, you exercise and acquire on my behalf                      (                    ) of the Ordinary Shares subject to the said Option at a price of NIS                  per share, all in accordance with the Plan.

Attached to this Notice is a check in the amount of NIS                      (NIS                     ), as payment for the abovementioned shares.

I am aware that all the shares shall be allotted to you, registered in your name and that you shall hold all share certificates representing such shares.

Likewise, I am aware of and agree to all other provisions of the Plan and applicable law.

 

Yours sincerely,

 

Signature

 

Name


VASCULAR BIOGENICS LTD.

APPENDIX B

to Vascular Biogenics Ltd. Employee Share Ownership and Option Plan (2011) (the “Plan”)

(Section 11.4)

NOTICE OF EXERCISE

Date:                     

Dear Sirs,

Re: Notice of Exercise

Please be advised that I hereby exercise                      (                    ) of the Ordinary Shares subject to the Option which was granted to me on behalf of                      on                      to acquire                      (                    ) Ordinary Shares of Vascular Biogenics Ltd., at a price of NIS                  per share, all in accordance with the Plan.

Attached to this Notice is a check in the amount of NIS                     (NIS                     ) as payment for the abovementioned shares.

 

Yours sincerely,

 

The Trustee


VASCULAR BIOGENICS LTD.

Appendix C

to Vascular Biogenics Ltd. Employee Share Ownership and Option Plan (2011)

(Section 12.2)

IRREVOCABLE PROXY AND POWER OF ATTORNEY

I, the undersigned,                     , hereby appoint Mr.                      or whomever shall replace him as trustee pursuant to the Vascular Biogenics Ltd. (the “ Company ”) Employee Share Ownership and Option Plan (2011) or whomever they shall designate (the “ Trustee ” and the “ Plan ”, respectively) as my proxy to participate and vote (or abstain) for me and on my behalf as he, at his sole discretion, shall deem appropriate, on all matters at all meetings of shareholders (whether ordinary, extraordinary or otherwise), of the Company, on behalf of all the shares and/or options of the Company held by the Trustee on my behalf, if and when applicable, and hereby authorize and grant a power of attorney to the Trustee as follows:

I hereby authorize and grant power of attorney to the Trustee for as long as any shares and/or options which were allotted or granted on my behalf are held by the Trustee or registered in his/her name, or for as long as the certificates representing any shares are held by the Trustee, to exercise every right, power and authority with respect to the shares and/or options and to sign in my name and on my behalf any document (including any agreement, including a merger agreement of the Company or an agreement for the purchase or sale of assets or shares (including the shares of the Company held on my behalf) and any and all documentation accompanying any such agreements, such as, but not limited to, decisions, requests, instruments, receipts and the like), and any affidavit or approval with respect to the shares and/or options or to the rights which they represent in the Company in as much as the Trustee shall deem it necessary or desirable to do so. In addition and without derogating from the generality of the foregoing, I hereby authorize and grant power of attorney to the Trustee to sign any document as aforesaid and any affidavit or approval (such as any waiver of rights of first refusal to acquire shares which are offered for sale by other shareholders of the Company and/or any preemptive rights to acquire any shares being allotted by the Company, in as much as such rights shall exist pursuant to the Company’s Articles of Association as shall be in existence from time to time) and/or to make and execute any undertaking in my name and on my behalf if the Trustee shall, at his/her sole discretion, deem that the document, affidavit or approval is necessary or desirable for purposes of any placement of securities of the Company, whether private or public (including lock-up arrangements and undertakings), whether in Israel or abroad, for purposes of a merger of the Company with another entity, whether the Company is the surviving entity or not, for purposes of any reorganization or recapitalization of the Company or for purposes of any purchase or sale of assets or shares of the Company.

This Proxy and Power of Attorney shall be interpreted in the widest possible sense, in reliance upon the Plan and upon the goals and intentions thereof.


This Proxy and Power of Attorney shall expire and cease to be of force and effect immediately after the consummation of an IPO (as such term is defined in the Plan) and shall be irrevocable until such time as the rights of the Company and the Company’s shareholders are dependent hereon. The expiration of this Power of Attorney shall in no manner effect the validity of any document (as aforesaid), affidavit or approval which has been signed or given as aforesaid prior to the expiration hereof and in accordance herewith.

IN WITNESS WHEREOF , I have executed this Proxy and Power of Attorney on the      day of             , 20    .

 

 
Name:  

 

 

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102 CAPITAL GAINS OPTION AGREEMENT

THIS 102 CAPITAL GAINS OPTION AGREEMENT (this “ Agreement ”) is made and entered into as of ________, by and between Vascular Biogenics Ltd., a company registered under the laws of the State of Israel (the “ Company ”) and ____________ (the “ Grantee ”) (the Company and the Grantee shall sometimes be referred to, each as a “ Party ” and collectively, as the “ Parties ”).

 

WHEREAS: The Grantee is an employee of the Company and/or a Related Company; and

 

WHEREAS: The Company desires to grant the Grantee options to purchase shares in the Company and the Grantee is interested in receiving the aforesaid options, all in accordance with and subject to the Company’s Grantee Share Ownership and Option Plan (2011), as shall be amended from time to time, and the annexes thereto (the “ Plan ”) and the provisions of this Agreement, and their intention is that the provisions of the Ordinance, Section 102 and the Rules shall apply to the options granted and shares issued; and

 

WHEREAS: The Grantee has read Section 102, the Rules and the Plan, wishes to be bound by them and desires that they apply to the options and shares which shall be granted to him/her hereunder;

NOW, THEREFORE , it is agreed as follows:

 

1. Application of the Provisions of the Plan and the Ordinance

 

1.1. The Grantee hereby confirms that he/she has carefully read the Plan and that he/she acknowledges and agrees to all of the provisions, conditions, limitations, authorizations, declarations and commitments included therein, except and to the extent otherwise expressly provided herein.

 

1.2. All of the provisions, conditions, limitations and declarations included and specified in the Plan are hereby incorporated herein by reference and constitute an integral part of this Agreement and of the Grantee’s undertakings and obligations hereunder. Except and to the extent otherwise expressly provided herein, nothing in this Agreement or in the provisions hereof shall derogate from anything contained in the Plan.

 

1.3. The Grantee acknowledges, agrees and confirms that the Plan may be amended from time to time as provided for therein. The Grantee understands that any amendment to the Plan or any document connected to the Plan, shall bind him/her as if he/she was a party thereto, provided, that, except as otherwise provided for herein or in the Plan, no amendment or modification of the Plan may, without the consent of the Grantee, adversely affect the rights of the Grantee hereunder.

 

1.4. The Grantee declares, covenants and agrees that the Ordinance, Section 102 and the Rules, as the same shall be amended from time to time, including the trust agreement between the Company and the Trustee (the conditions whereof are accepted by the Grantee and upon signing this Agreement he/she approves them as an integral part of this Agreement) and the notice to the Tax Assessing Officer about the allotment, are fully binding on the Grantee and, notwithstanding the provisions of Section 1.3 above, shall prevail in case of contradiction over any other provision in this Agreement or in the Plan.

 

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1.5. A copy of the Plan is attached hereto as Exhibit A and constitutes an integral part hereof.

 

2. Grant of Option; Vesting; Exercise

 

2.1. Subject to this Agreement and the Plan, the Company shall grant to the Trustee on behalf of the Grantee, a CGO Approved 102 Option (the “ Option ”) to purchase ______ Ordinary Shares of the Company, par value NIS 0.01 each (“ Shares ”), at an exercise price equal to US$            , at the time and in the manner hereinafter provided.

 

2.2. The term of the Option shall be twenty (20) years from the date hereof or such shorter period as is prescribed herein or in the Plan (the “ Term ”).

 

2.3. The Option may be exercised during the Term, in whole or in part, by the Trustee in favor of the Grantee, pursuant to the Grantee’s instructions.

The Option shall vest in sixteen (16) quarterly installments over a period of four (4) years as of ______ until ___________.

The consideration shall be paid on the date of the exercise of the Option. The Option shall be exercisable by the Trustee on behalf of the Grantee in progressive stages on the exercise dates as aforesaid, provided , that the Grantee shall have been continuously employed by the Company and/or a Related Company, from the date hereof until each such date of exercise.

 

2.4. In the event that the Grantee’s employment with the Company is terminated, then the provisions of Section 9.6 of the Plan shall apply.

 

2.5. A Grantee who desires that the Trustee exercise the Option granted to the Trustee on his behalf shall so instruct the Trustee in writing in the form attached hereto as Exhibit B or in such other form as shall be approved by the Board from time to time. The notice shall be accompanied by payment of the full Option Exercise Price.

 

3. Non Assignability; Restriction Period

 

3.1. All of the Grantee’s rights hereunder, including without limitation, the Grantee’s rights to (a) receive and exercise the Option; (b) receive all or part of the Shares; (c) require that the same shall be registered in his/her name; (d) request that the Trustee sell all or part of the Shares on his/her behalf, are personal and except insofar as is specified in this Agreement and/or in the Plan, and, where applicable, subject to Section 102 and the Rules, may not be transferred, assigned, pledged, withheld, attached or otherwise charged either voluntarily or pursuant to any law, except by way of transfer pursuant to the laws of inheritance or as otherwise determined by the Board, and no power of attorney or deed of transfer, whether the same has immediate effect or shall take effect on a future date, shall be given with respect thereto. During the lifetime of the Grantee the Option may only be exercised by the designated Grantee or, if granted to the Trustee, by the Trustee on behalf of the designated Grantee.

 

3.2. Without derogating from the aforesaid, the Shares shall be transferable only in accordance with the Articles of Association of the Company, as amended from time to time.

 

3.3.

Without derogating from any provision contained herein, the Grantee declares and agrees that he/she is restricted from making any disposition of the Option or the Shares for a period of at least twenty-four (24) months from the end of the tax year in which the Options are allocated to the Trustee or a shorter period as approved by the tax authorities. The Grantee acknowledges and understands that the meaning of the above

 

2


  restriction for purposes of the tax authorities is that if the Grantee voluntarily sells (in accordance with the meaning of Section 102 and the Rules) the Option or the Shares before the end of the Restriction Period, the Option or the Shares shall be subject to tax as ordinary income as per Sections 2(1) and 2(2) of the Ordinance and the other provisions of Section 102 and the Rules. Furthermore, all rights related to the Option or the Shares will be held by the Trustee until the end of the Restriction Period, including, without limitation, bonus shares, and will be subject to the provisions of Section 102 and the Rules.

 

3.4. Notwithstanding the above, if any such sale or transfer occurs during the Restriction Period, the sanctions under Section 102 and under the Rules or regulation or orders or procedures promulgated thereunder shall apply to and shall be borne by the Grantee.

 

4. Grantee Representations, Warranties and Covenants

Without derogating in any manner from the provisions of the Plan or this Agreement, the Grantee hereby represents, warrants, agrees and undertakes as follows:

 

4.1. The Shares, if and when purchased, are purchased for the Grantee’s own account for investment purposes only and not with a view for resale or transfer, and all the rights pertaining to the Shares, by law or equity, shall be purchased and possessed by the Grantee (through the Trustee or otherwise) for the Grantee exclusively.

 

4.2. The Grantee acknowledges that the Company’s shares are not publicly traded and understands that the Company bears no responsibility and has made no commitment to register its shares, or the Options or Shares, for trading or to offer its shares to the public in any manner.

 

4.3. The Grantee acknowledges that the grant of the Option, the exercise thereof, the issuance of the Shares, the execution of this Agreement and the Grantee’s participation in the Plan shall have tax consequences to the Grantee, and that the Company is not able to ensure or represent to the Grantee the nature and extent of such tax consequences.

 

4.4. The Grantee acknowledges that nothing in this Agreement and/or in the Plan shall be interpreted as a commitment and/or an agreement by the Company and/or any Related Company to employ the Grantee, whether for a certain period or otherwise. The Grantee shall have no claim whatsoever against the Company and/or any Related Company (including, without limitation, any of its or their officers, directors or shareholders) with respect to the termination of his/her employment, even if such termination causes the Option or any other options, in whole or in part, to expire and/or prevents him/her from exercising the Option in whole or in part and/or from receiving or retaining the Shares, or results in any loss due to any imposition of tax liability (including any early imposition) pursuant to applicable law.

 

4.5. The Grantee acknowledges and agrees that no income or gain which the Grantee may be credited with or which purports to be credited to the Grantee as a result of the grant of the Option, the issue of the Shares, the transfer into the Grantee’s name thereof or the sale thereof, if any, shall in any manner be taken into account in the calculation of the basis for the Grantee’s entitlements from the Company or any Related Company or in the calculation of any social welfare right or other rights or benefits arising out of the employee/employer relationship, including without limitation, social security, manager’s insurance, educational fund, pension funds, severance pay, holiday pay, etc.

In the event that the Company and/or any Related Company shall be required, pursuant to any law, to take into account for purposes of calculating any such benefits, any of the aforesaid elements of income or gain actually or theoretically credited to the Grantee,

 

3


the Grantee shall promptly indemnify the Company and/or any Related Company against any liability or expense caused to it in this regard, and any such amount shall be deemed a debt of the Grantee to the Company and/or any Related Company, which may be deducted or set off from any amounts payable to the Grantee, subject to applicable law.

 

4.6. The Grantee acknowledges that he/she is aware of, and clearly understands: (a) the rights and limitations attached to the Shares as set forth in the Company’s Articles of Association, the Plan and this Agreement; (b) the limitations on transferability thereof set forth in the Articles of Association, the Plan and this Agreement; (c) that the Company’s Articles of Association may be amended from time to time as permitted by law; and (d) that the provisions of the Articles of Association of the Company which shall apply to the Shares shall be the provisions which shall be in effect from time to time; and that, as a result, inter alia , of these limitations, it may be difficult or impossible for the Grantee to realize his/her investment and/or to sell or otherwise transfer the Shares.

 

4.7. The Grantee shall have none of the rights of a shareholder of the Company, for as long as the Option has not been exercised and, once exercised, for as long as the Shares have not been transferred and registered in the Grantee’s name in the Company’s register of shareholders pursuant to the provisions of the Plan.

 

4.8. The shares issued with respect to the Option granted hereunder will be held by the Trustee and registered in its name until the consummation of an IPO, after which time the Grantee may request their registration in his/her name and transfer to him/her, subject to the provisions of the Ordinance, Section 102, the Rules and the Plan, all as shall be in effect from time to time.

 

4.9. In the event that the Company’s Articles of Association, now or at any time hereafter, provide for a right of first refusal to purchase shares of the Company which are offered for sale by other shareholders of the Company and/or a pre-emptive right to purchase shares which are being allotted or shall in the future be allotted by the Company, or any other similar right of co-sale or tag-along, the Grantee, whether as a holder of an option, or following the exercise of an option, as a shareholder of the Company, and whether the Shares issued to the Grantee are registered in his name or otherwise, hereby irrevocably waives such rights. For the purpose of the approval of any transfer or the execution of any issue as aforesaid, this Agreement shall constitute an authorization, for the benefit of the Company and the Company’s shareholders, to the Trustee or whomever he shall designate pursuant to the Proxy attached hereto as Exhibit C or as otherwise set forth in the Plan, or in such other form as shall be approved by the Board, until the consummation of an IPO, to sign any confirmation or waiver in the name of the Grantee and on his/her behalf. The Grantee shall not sell, and shall not instruct the Trustee to sell, the Shares or any part thereof to any third party, unless such third party signs a waiver and a power of attorney as aforesaid.

 

4.10.

In accordance with the Proxy and Power of Attorney, for as long as any of the Shares are held by the Trustee or registered in his name or for as long as the certificates representing any of the Shares are held by the Trustee, the Trustee alone shall be entitled to receive every notice to which a shareholder is entitled, or to demand any information, and any financial and/or other report to which a shareholder is entitled from the Company, and only the Trustee, or the Proxy (or any other person appointed as proxy according to the Proxy or the Plan), shall be entitled to exercise every other right of the shareholders vis-à-vis the Company, including, without limitation, the right to participate in and to vote (or abstain) at all shareholders’ meetings (whether ordinary or

 

4


  extraordinary) and the right to sign any resolution in writing in the name of the shareholders, if and to the extent such rights exist.

 

4.11. Until the consummation of an IPO, the Grantee shall provide at the Company’s request, without limitation, any certificate, declaration or other document and shall perform any act which the Company or the Trustee shall consider to be necessary or desirable pursuant to any law, whether local or foreign, in accordance with the provisions of Section 12 of the Plan.

In order to guarantee, and without derogating from, the aforesaid, and because the rights of the Company and the other shareholders are dependent thereon, the Grantee shall, upon signing this Agreement and as a condition to the grant of any options hereunder, execute the Proxy and Power of Attorney irrevocably empowering the Proxy, until consummation of an IPO, to sign in his/her name as aforesaid on any document as aforesaid, and the Grantee shall have no complaint or claim against the Trustee and/or the Proxy in respect of any such signature or action, or in respect of any determination of the Trustee pursuant hereto. The Grantee will authenticate his/her signature in the presence of a notary if he/she shall be asked to do so by the Company, in order to give full validity to the power of attorney.

 

4.12. The Grantee has full knowledge of the Company and its activities, and is aware that the Company operates in a sophisticated, high tech and high risk sector, and that the market thereof is restricted and highly competitive, and that the exercise of the Option constitutes an economic risk. The Grantee undertakes that he/she shall not have any claim against the Company and/or any Related Company or any of its or their officers, directors, Grantees, shareholders or advisors if the Grantee’s investment in the Shares shall fail or for the payment of any tax due or for any other reason.

 

5. Taxes; Indemnification of the Company, the Trustee and the Proxy

 

5.1. Without derogating from the provisions of the Plan, the Grantee hereby covenants, whether or not the provisions of the Ordinance, Section 102 or the Rules shall apply, to bear all tax obligations, duties, levies, fines and other payments which may be imposed by the tax authorities (whether in Israel or abroad) and any other obligation or expense from whatever source, including but not limited to, every obligatory payment of whatever source in respect of or arising out of the Plan (including granting of the Option, exercise of the Option, issue of the Shares, transfer of the Shares into the Grantee’s name and the sale thereof by the Grantee and/or by the Trustee) or dividends or any other benefit in respect thereof, and/or all other charges which may accrue to the Grantee, the Company, any Related Company and/or the Trustee in connection with the Plan, the Options and/or the Shares, or any act or omission of the Grantee or the Company or a Related Company in connection therewith or pursuant to any determination of the applicable tax or other authorities.

Without derogating from the generality of the aforesaid and subject to applicable law, the Grantee’s obligations in this regard shall include income tax, stamp tax, employer’s tax, capital gains tax, social security insurance and any other tax, levy or payment which the Grantee or the Company and/or any Related Company is or shall be obliged to pay in connection with the Option and/or the Shares (including deductions at source which the Company is obliged to make for tax imposed upon the Grantee) and the Grantee shall indemnify the Company and/or any Related Company and/or the Trustee for every charge or payment as aforesaid, which may be deducted or set off from any amounts payable to the Grantee, including, without limitation, dividends, consideration for the sale of shares or from any other source, at the Company and/or Related Company’s sole and absolute discretion, subject to applicable law.

 

5


5.2. Without derogating from the above, the Grantee hereby covenants to pay the Company and/or the Trustee promptly upon their first request, any sum for which they are responsible (or, in the Board’s opinion, they might be responsible for), and which is payable by the Grantee as set forth in Section 5.1 hereof to the income tax authorities and/or any other governmental or administrative authority, whether in Israel or abroad (including for deduction of tax at source) pursuant to the Plan and/or in respect of the Grantee’s participation in the Plan, whether the Company and/or the Trustee’s responsibility as aforesaid shall arise directly or in respect of any responsibility of the Grantee for such payment. The Grantee covenants to promptly indemnify the Company and/or any Related Company and/or the Trustee for any charge or payment as aforesaid, which may be deducted or set off from any amounts payable to the Grantee.

 

5.3. Furthermore, the Grantee acknowledges that the Grantee shall not have, and the Grantee hereby waives, any complaint and/or cause of action the same has or shall have in the future against the Trustee and/or against the Company in any way connected to any taxation resulting from the grant of the Option, the exercise thereof, the transfer of Shares into the Grantee’s name, the sale of Shares by the Grantee and/or by the Trustee and/or any other matter which is in any manner whatsoever connected to the Option, the Shares and/or the participation of the Grantee in the Plan.

 

5.4. In no event shall the Trustee or the Proxy be liable to the Company and/or the Grantee and/or to any third party (including, without derogating from the generality of the aforesaid, the income tax authorities and any other governmental or administrative authority, whether in Israel or abroad) or a purchaser of Shares from the Grantee (or the Trustee), with respect to any act which has been or which shall be carried out in relation to the Plan and any matter connected thereto or arising therefrom. The Company and/or any Related Company and the Grantee covenant, upon signing this Agreement, that they will not make, and they each hereby waive, any and all claims against the Trustee and the Proxy as aforesaid and each of the Company, Related Company and the Grantee expressly agree that if either shall make any claim against the Trustee or the Proxy the same shall then be entitled on the grounds of this section alone to apply to the competent court for dismissal of the action against them, with costs. The Company covenants and agrees that if a claim is brought by any third party against the Trustee or the Proxy the same will be entitled without objection by the Company, to join the Company as a third party to any such action and any judgment against them shall be paid by the Company.

The Company and the Grantee hereby covenant to indemnify the Trustee and/or the Proxy against any liability in relation to any claim and/or demand made against the Trustee and/or the Proxy by any person whatsoever, including the tax authorities, in relation to their acts or omissions in connection with the Plan.

The provisions of this section and the other provisions of this Agreement and the Plan which grant any right, power, immunity or any authority to the Trustee and/or the Proxy shall operate in favor of the Trustee and the Proxy and they shall be entitled to act pursuant to and enforce such provisions, and the Company and the Grantee shall be liable to the Trustee and the Proxy as if they were parties to this Agreement.

 

6. Miscellaneous

 

6.1. Preamble; Interpretation . The preamble to this Agreement is the basis and constitutes an integral part thereof. All article and section headings herein are inserted for convenience only and shall not modify or affect the construction or interpretation of any provision of this Agreement. Unless the context otherwise requires, capitalized terms not otherwise defined herein shall bear the meanings ascribed to them in the Plan.

 

6


6.2. Entire Agreement; Amendment . The Grantee declares and agrees that this Agreement including all schedules, exhibits attached thereto, and the Plan, prevail over any previous agreement, arrangement and/or understanding, whether written or oral, between the Grantee and the Company and/or any Related Company, or the officers and/or directors and/or the shareholders thereof with respect to the subject matters hereof and thereof and that any agreement, arrangement and/or understanding as aforesaid are null and void and of no further force or effect. Subject to the provisions of this Agreement and the Plan, no modification or amendment of this Agreement will be valid unless executed by the Company and the Grantee.

 

6.3. Disputes; Governing Laws . This Agreement shall be governed by and construed in accordance with the laws of the State of Israel and, subject to the provisions below, the competent courts in the Tel-Aviv district shall have exclusive jurisdiction with respect to any matter or conflict with respect thereto.

As a condition of the granting of the Option, the Grantee and the Grantee’s successors and assigns agree that any dispute or disagreement which shall arise under or as a result of this Agreement shall be determined by the Board, or any committee designated by the Board pursuant to the Plan, in its sole discretion and judgment and that any such determination and any interpretation by the Board or any such committee of the terms of this Agreement shall be final and shall be binding and conclusive for all purposes. In making any such determination or interpretation the Board or any such committee shall not be bound by the rules of procedure or evidence or substantive law and shall not be required to give any reasons therefore.

 

6.4. Notices and/or Instructions . Every notice and/or instruction required or permitted to be given pursuant to this Agreement shall be given in writing and shall be deemed to have been delivered (i) on the date of its delivery to the addressee by hand, (ii) three (3) days after having been sent by registered mail or (iii) one (1) day after having been sent by facsimile or email. The parties’ addresses for the purpose of this Section shall be as communicated by each Party to the other by written notice in advance.

A stamp or a receipt on behalf of the postal service which evidences the time of delivery of the notice or a confirmation of transmission shall constitute conclusive evidence as to the date of delivery and no party shall claim that a notice delivered as aforesaid has not been received by such party.

 

[THE REMAINDER OF THIS PAGE WAS INTENTIONALLY LEFT BLANK]

 

7


[Signature Page to Vascular Biogenics Ltd. Option Agreement]

IN WITNESS WHEREOF , the parties hereto have executed this Option Agreement as of the date written hereinabove.

 

 

 

     

 

VASCULAR BIOGENICS LTD.     THE GRANTEE

 

 

By:    
 

 

8


Exhibit A

The Plan

 

9


Exhibit B

NOTICE OF EXERCISE

Date: ______________

The Trustee under the Vascular Biogenics Ltd. Employee Share Ownership and Option Plan (2011) (the “Plan”)

Dear Sirs,

Re: Notice of Exercise

I hereby wish to inform you that it is my desire that of the Option which was granted to you on ________ to acquire ______ (            ) Ordinary Shares of Vascular Biogenics Ltd. (the “ Company ”) on my behalf, you exercise and acquire on my behalf ______ (            ) of the Ordinary Shares subject to the said Option at a price of NIS ____ per share, all in accordance with the Plan.

Attached to this Notice is a check in the amount of NIS ________ (NIS ________), as payment for the abovementioned shares.

I am aware that all the shares shall be allotted to you, registered in your name and that you shall hold all share certificates representing such shares.

Likewise, I am aware of and agree to all other provisions of the Plan and applicable law.

 

Yours sincerely,
 

 

Signature
 

 

Name

 

10


Exhibit C

IRREVOCABLE PROXY AND POWER OF ATTORNEY

I, the undersigned, ________, appoint Schwartz Lerner Duvshani Trustees (2003) or whomever shall replace it as trustee pursuant to the Vascular Biogenics Ltd. (the “ Company ”) Employee Share Ownership and Option Plan (2011) or whomever they shall designate (the “ Trustee ” and the “ Plan ”, respectively) as my proxy to participate and vote (or abstain) for me and on my behalf as he, at his sole discretion, shall deem appropriate, on all matters at all meetings of shareholders (whether ordinary, extraordinary or otherwise), of the Company, on behalf of all the shares and/or options of the Company held by the Trustee on my behalf, if and when applicable, and hereby authorize and grant a power of attorney to the Trustee as follows:

I hereby authorize and grant power of attorney to the Trustee for as long as any shares and/or options which were allotted or granted on my behalf are held by the Trustee or registered in his/her name, or for as long as the certificates representing any shares are held by the Trustee, to exercise every right, power and authority with respect to the shares and/or options and to sign in my name and on my behalf any document (including any agreement, including a merger agreement of the Company or an agreement for the purchase or sale of assets or shares (including the shares of the Company held on my behalf) and any and all documentation accompanying any such agreements, such as, but not limited to, decisions, requests, instruments, receipts and the like), and any affidavit or approval with respect to the shares and/or options or to the rights which they represent in the Company in as much as the Trustee shall deem it necessary or desirable to do so. In addition and without derogating from the generality of the foregoing, I hereby authorize and grant power of attorney to the Trustee to sign any document as aforesaid and any affidavit or approval (such as any waiver of rights of first refusal to acquire shares which are offered for sale by other shareholders of the Company and/or any preemptive rights to acquire any shares being allotted by the Company, in as much as such rights shall exist pursuant to the Company’s Articles of Association as shall be in existence from time to time) and/or to make and execute any undertaking in my name and on my behalf if the Trustee shall, at his/her sole discretion, deem that the document, affidavit or approval is necessary or desirable for purposes of any placement of securities of the Company, whether private or public (including lock-up arrangements and undertakings), whether in Israel or abroad, for purposes of a merger of the Company with another entity, whether the Company is the surviving entity or not, for purposes of any reorganization or recapitalization of the Company or for purposes of any purchase or sale of assets or shares of the Company.

This Proxy and Power of Attorney shall be interpreted in the widest possible sense, in reliance upon the Plan and upon the goals and intentions thereof.

This Proxy and Power of Attorney shall expire and cease to be of force and effect immediately after the consummation of an IPO (as such term is defined in the Plan) and shall be irrevocable until such time as the rights of the Company and the Company’s shareholders are dependent hereon. The expiration of this Power of Attorney shall in no manner effect the validity of any document (as aforesaid), affidavit or approval which has been signed or given as aforesaid prior to the expiration hereof and in accordance herewith.

 

11


IN WITNESS WHEREOF , I have executed this Proxy and Power of Attorney on the __ day of ___________.

 

 

 
Name:  

 

 

12

 

Exhibit 10.3

CRUCELL HOLLAND B.V. – VASCULAR BIOGENICS LTD.

COMMERCIAL GENE THERAPY LICENSE AGREEMENT

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Commercial License Agreement PER.C6 ®

Crucell Holland – Vascular Biogenics

 

COMMERCIAL GENE THERAPY LICENSE AGREEMENT

This Commercial Gene Therapy License Agreement (“Agreement”) is made and entered into on April 15, 2011 (“EFFECTIVE DATE”) by and between:

CRUCELL HOLLAND B.V. , a corporation organized under the laws of the Netherlands, having offices located at Archimedesweg 4, 2333 CN, Leiden, the Netherlands “CRUCELL”)

and

VASCULAR BIOGENICS Ltd. , with offices located at 6 Jonathan Netanyahu Street, 60376, Or-Yehuda, Israel (hereinafter referred to as “VBL” or “LICENSEE”),

the parties hereinafter individually referred to as “Party” and collectively as “Parties”.

PREAMBLE

 

    WHEREAS, CRUCELL is the owner of a PER.C6 ® cell line and of the associated information, know-how, and patents rights (as defined below);

 

    WHEREAS, LICENSEE is engaged in the business of biomedical research, and the manufacturing, testing and commercializing of pharmaceutical products and services;

 

    WHEREAS, LICENSEE and CRUCELL are parties to a Research License and Option Agreement dated March 24, 2005, granting LICENSEE the rights to conduct research under the PER.C6 ® PATENTS and to utilize PER.C6 ® KNOW HOW (as such terms are defined below) to prepare and evaluate gene therapeutics based on adenoviral vectors, and an option for a commercial license;

 

    WHEREAS, LICENSEE has exercised its option to a commercial license and the Parties have negotiated an agreement for commercial rights under the terms and conditions as set forth hereinafter;

NOW, THEREFORE , in consideration of the mutual covenants and promises set forth herein, the Parties, intending to be legally bound, agree as follows:

 

1. DEFINITIONS

Plural used in this Agreement shall mean singular and vice versa.

 

  1.1. AFFILIATE means any person, corporation, organization or other legal entity which, directly or indirectly, controls, or is controlled by, or is under common control with, a Party. CONTROL shall mean the ability, directly or indirectly, to direct the activities of the relevant entity, including the ownership or holding (directly or indirectly) of fifty percent (50%) or more of (i) the securities or other ownership interests representing the equity, the voting stock or general partnership interest, or (ii) the rights to elect or appoint directors (or other governing body).

 

  1.2. APPROVED COUNTRIES means the countries mentioned in Exhibit 1.2

 

  1.3. BMF means the PER.C6 ® Biologics Master File as filed with the United States Food and Drug Administration

 

  1.4. EFFECTIVE DATE has the meaning set forth in the first paragraph of this Agreement.

 

  1.5. FIELD means the treatment of cancer in human by administering to a subject an adenoviral vector including, but not limited to, therapeutic gene sequence(s), the therapeutic effect of which is principally caused by the expression product of said gene sequence(s) and will not serve as a vaccine.

 

1

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Commercial License Agreement PER.C6 ®

Crucell Holland – Vascular Biogenics

 

  1.6. FIRST COMMERCIAL SALE means the first sale of a PRODUCT in a country by LICENSEE or any of its SUBLICENSEES OR REGISTERED AFFILIATES.

 

  1.7. FUNCTIONAL GENOMICS means the identification and/or validation of the biological function(s) of human and animal genes, and/or gene fragments and/or proteins and/or fragments of proteins transcribed from such genes, by means of the construction and use of arrayed collections of said genes and/or gene fragments, in non-phage viral vectors, to enable the identification and validation of drug targets, nutriceuticals and/or protein therapeutics, for the treatment or prevention of human or animal disease(s) and/or the maintenance of nutritional health.

 

  1.8. GOVERMENTAL AUTHORITIES means the FDA and other foreign governmental equivalents.

 

  1.9. IMPROVEMENT KNOW HOW RIGHTS means know how rights owned or licensable by LICENSEE or its REGISTERED AFFILIATES, which are developed during the Term using the technology claimed by the IMPROVEMENT PATENT RIGHTS, and which (i) come into the possession of LICENSEE or its REGISTERED AFFILIATES during the course of PROGRAMS and during the TERM of this Agreement, (ii) are not generally known, (iii) are related to the subject matter(s) of the IMPROVEMENT PATENT RIGHTS and are necessary for CRUCELL’s practice of the IMPROVEMENT PATENT RIGHTS as permitted under Section 2.5, and (iv) are not subject to a good faith reasonable third party confidentiality obligation that prevents the disclosure of the same.

 

  1.10. IMPROVEMENT PATENT RIGHTS means any patent issued after the EFFECTIVE DATE only to the extent that it claims (i) a new use of the PACKAGING CELLS including a generic product by process using said cells, (ii) an improved cell line derived from the PACKAGING CELLS, (iii) culturing or processing of PACKAGING CELLS, or (iv) a new use of an improved cell line described in clause (ii) of this sentence, in each case that is developed during the course of PROGRAMS under this Agreement.

 

  1.11. MODIFIED CELLS means PER.C6 ® CELLS modified by incorporating therein VBL TECHNOLOGY, but excluding the integration thereof into the genome of the PER.C6 ® CELL.

 

  1.12. NET Sales means the gross amount invoiced on sales of the PRODUCTS by LICENSEE, SUBLICENSEES, REGISTERED AFFILIATES and/or their respective sub-licensees to customers, less the following deductions related to the sale and delivery of PRODUCTS: (i) any commercially reasonable credits and allowances, repayments or adjustments granted or made to customers; (ii) any commercially reasonable trade or cash discounts, rebates, charge-backs or administrative fees or other price reductions granted to customers; and (iii) any sales, transportation, import, export or other like taxes, duties and government charges (but specifically excluding any taxes based on net income imposed upon the sale of the PRODUCTS) to the extent included in the gross sales price, wherein rebates, charge-backs, administrative fees and sales or other like taxes are actually paid or incurred by LICENSEE, SUBLCENSEES, REGISTERED AFFILIATES and/or their respective sub-licensees. A sale of the Product to third party customers shall also include a transfer or other disposition for consideration other than case, in which case such consideration shall be valued at the fair market value thereof.

 

  1.13. NON-APPROVED COUNTRIES means any countries other than APPROVED COUNTRIES.

 

  1.14.

PACKAGING CELLS means PER.C6 ® CELLS and MODIFIED CELLS.

 

2

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Commercial License Agreement PER.C6 ®

Crucell Holland – Vascular Biogenics

 

  1.15. PACKAGING CELL-EXPRESSION SEQUENCE means (i) any recombinant DNA sequence used by LICENSEE, or expression product or any alteration or modification thereof, derived from or obtained by, or produced using PACKAGING CELLS; or (ii) a fragment of any recombinant DNA sequence or expression product derived from obtained by, or produced using PACKAGING CELLS, and (iii) provided that (i) and (ii) are based upon and/or are derived from VBL TECHNOLOGY in combination with the genome of a serotype 5 human adenovirus.

 

  1.16. PACKAGING CELL KNOW HOW means PER.C6 ® KNOW HOW, MODIFIED CELLS and all materials, information, experience and data, formulae, procedures, results and specifications, regulatory filings and clinical and pre-clinical data, in written or electronic form, which are specifically related to MODIFIED CELLS, which (i) are in the possession of the Parties at the EFFECTIVE DATE or come into the possession of the Parties during the TERM of this Agreement, (ii) are not generally known (iii) are necessary for the research use of the MODIFIED CELLS, and (iv) are not subject to a third party confidentiality obligation that prevents either Party from disclosing the same.

 

  1.17. PATENT means granted patents, including utility models and certificates of I vention, and reissues, reexaminations, supplementary protection certificates, extensions, and term restorations thereof, and patent applications therefor, including any continuations, continuations-in-parts, and/or divisionals applications thereof, and any and all patents issuing from any of the above.

 

  1.18. PER.C6 ® CELL LINE or PER.C6 ® CELL means the cells deposited under ECACC No. 96022940, as described in Exhibit 1.15, as updated by CRUCELL from time to time in accordance with Section 3 below to include additional CELLS deposited following the EFFECTIVE DATE.

 

  1.19. PER.C6 ® KNOW HOW means PER.C6 ® CELLS and all materials, information, experience and data, formulae, procedures, processes and techniques, results and specifications, know-how, regulatory filings and clinical and pre-clinical data, which are specifically related to PER.C6 ® CELLS, and which are described in the PER.C6 ® KNOW HOW FILE, as updated by CRUCELL from time to time in accordance with Section 3 below.

 

  1.20. PER.C6 ® KNOW HOW FILE means the written compilation of PER.C6 ® KNOW HOW and PACKAGING CELL KNOW HOW, which is provided to all PER.C6 ® licensees, and which includes but it not limited to processing and manufacturing information and data limited to using PER.C6 ® CELLS and/or MODIFIED CELLS for the production of replication defective adenoviral vectors therewith.

 

  1.21. PER.C6 ® PATENTS mean PATENTS that CRUCELL owns, or controls by license or otherwise, wherein said license has a sublicense right, or which CRUCELL has a right to assignment, and that claim PER.C6 ® CELLS or the use thereof for the manufacture of replication defective adenoviral vectors, identified on Exhibit 1.21.

 

  1.22. PRODUCT means a pharmaceutical product, intended for administration to human subjects, comprising of PACKAGING CELL-EXPRESSION SEQUENCE, in final finished form.

 

  1.23. PROGRAMS means research and development programs of LICENSEE or its SUBLICENSEES in the FIELD to develop PRODUCT in the FIELD, including but not limited to any and all pre-market-registration activities and post-market-approval studies.

 

  1.24. REGISTERED AFFILIATE means an AFFILIATE operating in APPROVED COUNTRIES to the extent identified in Exhibit 1.24 from time to time in accordance with the provisions of Section 2.1.5 below, providing full details of the name, offices and branches of such AFFILIATE or STRATEGIC PARTNER.

 

3

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Commercial License Agreement PER.C6 ®

Crucell Holland – Vascular Biogenics

 

  1.25. STRATEGIC PARTNER means a reputable company with whom VBL has entered into a collaboration agreement for the co-development and / or co-marketing of pharmaceutical products, substantially discovered, researched or developed by VBL in the FIELD which either (i) enters into a material transfer agreement with CRUCELL substantially in the form of Exhibit 1.25 hereto , or (ii) does not obtain access to the PACKAGING CELLS.

 

  1.26. SUBLICENSEE means a REGISTERED AFFILIATE to which LICENSEE grants a sublicense under and in accordance with this Agreement.

 

  1.27. TERM starts on the EFFECTIVE DATE and continues as described in Section 7.1.

 

  1.28. THIRD PARTIES means any person or entity other than VBL, CRUCELL, SUBLICENSEES, AFFILIATES or STRATEGIC PARTNER.

 

  1.29. VALID PATENT CLAIM shall mean a claim in any issued and unexpired PER.C6 ® PATENT, which claim has not been held invalid by a non-appealed or unappealable decision by a court or other appropriate body of competent jurisdiction, provided , however , that there exists no outstanding order, injunction or other action (including any temporary relief) that impairs the rights granted under such CLAIM by LICENSEE, its SUBLICENSEES or REGISTERED AFFILIATES, as contemplated under this Agreement. For the purpose of royalty determination and payment, any claim being prosecuted in a pending patent application in a particular country shall be deemed to be a VALID PATENT CLAIM provided such claim is not pending for more than ten (10) years from the earliest filing date to which the patent application is entitled to claim in such country (such as the first filed application based on a PCT application and claiming the PCT filing date, or the first national patent application from which subsequent patent applications claim filing date benefit) and in which case it shall cease to be considered a VALID PATENT CLAIM until a patent in the pertinent country based on such application is granted.

 

  1.30. VTS™ TECHNOLOGY means LICENSEE’s proprietary VTS™ (Vascular Targeting System) platform technology that enables control of gene expression to areas in which angiogenesis is taking place to either promote or destroy newly formed blood vessels.

 

  1.31. VBL PROPRIETARY RIGHTS shall mean, as between the Parties, all right and title in and to VBL TECHNOLOGY, LICENSEE’S INFORMATION, PACKAGING CELL-EXPRESSION SEQUENCE and PRODUCTS, including without limitation (i) all data, results, inventions, know-how, improvements, developments or other information arising from or in connection with the PROGRAM; and (ii) any applications, improvements, modifications and derivatives of any of the above and any know-how, proprietary rights and PATENTS relating thereto or arising therefrom.

 

  1.32 VBL TECHNOLOGY shall mean, as between the Parties, replication-deficient E1-and E3-deleted adenoviral 5 vector or adenovirus 3 vector and conditionally replicative adenovirus (CRAD) 3 and 5 Vector, containing either the FAS-Chimera transgene or Tyrosine Kinase and VTS™ TECHNOLOGY, and any know how related thereto and to the use thereof. At any time during the TERM, LICENSEE may provide CRUCELL with written notice of its wish for the transgene to be changed. Such change shall be deemed effective unless CRUCELL responds to LICENSEE’s notice within thirty (30) days of its receipt that is withholding consent, provided such consent may only be withheld if such change would result in a technology which is either (i) directly competitive with another technolofy under a then existing exclusive out-license by CRUCELL, or (ii) infringes any CRUCELL’s patent which are not otherwise covered in this Agreement. For the avoidance of doubt VBL technology will contain only one (1) Transgene in combination with aforementioned either Adenovirus 3 or 5 or (CRAD) and VTS™ TECHNOLOGY.

 

4

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Commercial License Agreement PER.C6 ®

Crucell Holland – Vascular Biogenics

 

2. LICENSES; SUBLICENSING; OWNERSHIP OF CERTAIN RIGHTS; GRANT BACK LICENSE

 

  2.1. CRUCELL Grant to LICENSEE .

 

  2.1.1. CRUCELL hereby grants to LICENSEE, a non-exclusive, worldwide license, under the PER.C6 ® PATENTS and PER.C6 ® KNOW HOW, without the right to grant sublicenses except to SUBLICENSEES in accordance with the provisions of Section 2.1.4 below, (1) to use and import PER.C6 ® CELLS and PER.C6 ® KNOW HOW for the sole purpose of making MODIFIED CELLS during the course and performance of PROGRAMS; and (2) to use and import MODIFIED CELLS and PACKAGING CELL KNOW HOW during the course and performance of PROGRAMS; and (3) to use and import PACKAGING CELLS and PACKAGING CELL KNOW HOW to manufacture and to have made, in facilities of LICENSEE or its SUBLICENSEES subject to Section 2.4 below, PRODUCTS for use in the FIELD. For the avoidance of doubt, and subject to such third party entering first into a Material Transfer Agreement with CRUCELL prior to the transfer of any PACKAGING CELLS or PACKAGING CELL KNOW HOW, LICENSEE is also granted hereunder the right to provide PACKAGING CELLS, PACKAGING CELL KNOW-HOW and PRODUCTS to third parties for bona fide contract service purposes in the course and performance of PROGRAMS and for the manufacture and making of PRODUCTS solely on LICENSEES’ behalf.

 

  2.1.2. CRUCELL hereby grants to LICENSEE, a non-exclusive, worldwide license, under the PER.C6 ® PATENTS and PER.C6 ® KNOW HOW, with the right to grant sublicenses, to develop, use, import, offer to sell, and sell PRODUCTS for use in the FIELD.

 

  2.1.3. Sublicense Requirements in General . Any agreement in which LICENSEE purports to sublicense the rights granted herein under the PER.C6 ® PATENTS and PER.C6 ® KNOW HOW, (i) shall not grant any further right to sublicense under the PER.C6 ® PATENTS and PER.C6 ® KNOW HOW nor grant any right to transfer the PER.C6 ® KNOW HOW or the sublicensed rights; and (ii) shall include terms at least as restrictive as those contained in this Agreement with respect to the use and exploitation of the rights granted under the PER.C6 ® PATENTS and PER.C6 ® KNOW HOW.

 

  2.1.4.

Certain Sublicense Requirements – REGISTERED AFFILIATES . LICENSEE shall be permitted to sublicense its rights and obligations pursuant to Section 2.1.1 to REGISTERED AFFILIATES (without the right to further sublicense), provided each such REGISTERED AFFILIATE acknowledges and assumes all of the rights, restrictions and obligations of this Agreement applicable to such SUBLICENSEE hereunder, except, as between the Parties, for those rights and obligations for which LICENSEE shall be solely responsible as provided for herein (e.g. indicated by wording such as “on its own behalf and on behalf of its SUBLICENSEES”), in a writing signed by a duly authorized representative of such REGISTERED AFFILIATE. LICENSEE shall be responsible for assuring that each REGISTERED AFFILIATE has become fully aware of, and complies with, its rights, restrictions and obligations under this Agreement as a SUBLICENSEE prior to such REGISTERED AFFILIATE exercising any right that LICENSEE may sublicense to such REGISTERED AFFILIATE hereunder. Irrespective of any written sublicense to a REGISTERED AFFILIATE, the exercise of any sublicenseable right hereunder by a REGISTERED

 

5

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Commercial License Agreement PER.C6 ®

Crucell Holland – Vascular Biogenics

 

  AFFILIATE shall be deemed to bind such REGISTERED AFFILIATE to comply with the applicable restrictions, obligations and duties hereunder, except for those obligations and duties for which LICENSEE is solely responsible as provided herein. Irrespective of the number of SUBLICENSEES, CRUCELL shall only be required to communicate with, and provide technical assistance to, LICENSEE, or one designated SUBLICENSEE, unless the Parties agree otherwise in a written and duly executed amendment hereto. LICENSEE and its REGISTERED AFFILIATES shall be jointly and severally liable towards CRUCELL for their compliance with the restrictions, obligations and duties hereunder.

 

  2.1.5. At any time during the TERM, LICENSEE may provide CRUCELL with written notice of its wish for a new AFFILIATE to become a REGISTERED AFFILIATE. If Parties agree in writing that such AFFILIATE shall become a REGISTERED AFFILIATE, such AFFILIATE shall be included in Exhibit 1.20, by way of a duly executed written amendment, after CRUCELL has received the document duly executed by the respective AFFILIATE as referred to in Section 2.1.4. CRUCELL shall respond to LICENSEE’s notice within fourteen (14) days of its receipt, and shall not unreasonably withhold its consent to the addition of an Affiliate as aforesaid.

 

  2.1.6. The license grant in this Section 2 shall be effective from the date that CRUCELL receives the License Fee specified in Section 4 herein until expiration of the TERM.

 

  2.2. Restricted Access to PACKAGING CELLS

The licenses grant herein is restricted such that LICENSEE and its SUBLICENSEES shall not be permitted under the terms of this Agreement to engage in the following activities:

 

  2.2.1. to use PACKAGING CELLS (i) in or for FUNCTIONAL GENOMICS studies, (ii) for the manufacture of RECOMBINANT PROTEIN, (iii) in or for the manufacture of vaccines against communicable infectious agents, or (iv) in or for the development of products to prevent or treat diseases caused by chicken anemia virus, or to produce vectors, or expression products thereof, containing all or a part of a chicken anemia virus gene;

 

  2.2.2. to use, store, hold or otherwise deliver PACKAGING CELLS or PACKAGING CELL KNOW HOW in or to NON-APPROVED COUNTRIES;

 

  2.2.3. to offer, provide, give access to or to otherwise make available to third parties or to AFFILIATES that are not SUBLICENSEES, PACKAGING CELLS and/or PACKAGING CELLS KNOW HOW, except as provided for in Section 2.3 and 2.4 below;

 

  2.2.4. to offer or provide services to third parties, or to AFFILIATES that are not SUBLICENSEES, relating to or using PACKAGING CELLS and/or PACKAGING CELLS KNOW HOW.

 

  2.3.

Permitted Access to PACKAGING CELLS . Sections 2.2.3 and 2.2.4 shall not apply to the extent that LICENSEE or its REGISTERED AFFILIATES will be required to provide, give access to or otherwise make available, by order or regulation of a governmental agency or court of competent jurisdiction, the results, materials, or know how obtained in the course of PROGRAMS, or incorporating

 

6

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Commercial License Agreement PER.C6 ®

Crucell Holland – Vascular Biogenics

 

  PACKAGING CELLS or PACKAGING CELL KNOW HOW, or the sale and/or distribution of PRODUCTS. Under such circumstances, LICENSEE shall promptly notify CRUCELL of such order or regulation requiring disclosure and shall make its best efforts to cooperate with CRUCELL to preserve the confidentiality of, and CRUCELL’s proprietary interest in, the PACKAGING CELL KNOW HOW.

 

  2.4. Supply of PACKAGING CELLS to Contractors .

 

  2.4.1. Subject to the conditions stated in this Section, LICENSEE shall have the right to deliver to a fee-for-service contractor (“Contractor”), PACKAGING CELLS and PACKAGING CELL KNOW HOW (1) to conduct authorized studies of and other tasks relating to PACKAGING CELLS, solely for use by LICENSEE in PROGRAMS, and/or (2) to use PACKAGING CELLS and PACKAGING CELL KNOW HOW to develop processes and perform other tasks for the manufacture and making of, and to manufacture and make, PACKAGING CELLS and PRODUCTS. LICENSEE shall not provide PACKAGING CELLS or PACKAGING CELL KNOW HOW to a fee-for-service Contractor except pursuant to a completely executed, written PER.C6 ® Material Transfer Agreement (“MTA”) with CRUCELL. The Contractor shall enter into a material transfer agreement substantially in the form of Exhibit 2.4.1 hereto.

 

  2.4.2. CRUCELL shall have the right to disapprove the choice of any fee-for-service third party that is not reputable and/or reliable or operates in a NON-APPROVED COUNTRY, which disapproval shall only be asserted reasonably and upon prompt notice to LICENSEE of no later than fourteen (14) days following receipt of such Contractor’s details with reference specifically to this section, setting forth the reasons for CRUCELL’S disapproval. For purposes of this Section 2.4.2, “not reputable and/or reliable” shall mean, by way of example, that such fee-for-service third party is located in a country or jurisdiction where CRUCELL has reason to believe in good faith (a) does not provide adequate protection for intellectual property and proprietary information or (b) does not provide adequate judicial recourse in case of misappropriation or misuse of intellectual property or proprietary information. Countries or jurisdictions that are on the U.S. Trade Representative’s annual “Special 301” Watch List shall be deemed to qualify as countries or jurisdictions that do not provide adequate protection or recourse as referred to under (i)(a) and (i)(b) above. CRUCELL has pre-approved on Exhibit 2.4.2 the third party contractors listed therein.

 

  2.5. Ownership of Certain Rights; Grant Back License

 

  2.5.1. Except where expressly stated otherwise in this Agreement to the contrary, CRUCELL shall have no right, title and interest in and to any VBL PROPRIETARY RIGHTS (including any right to be notified thereof), provided that LICENSEE may notify CRUCELL of such information from time to time, at its sole discretion.

 

  2.5.2. LICENSEE and its REGISTERED AFFILIATES hereby agree to grant to CRUCELL a perpetual, royalty-free, non-exclusive worldwide license, with the right to sublicense, under the IMPROVEMENT PATENT RIGHTS and IMPROVEMENT KNOW HOW RIGHTS, provided that the license right under this Section shall not extend to the manufacture, use or sale of the particular PACKAGING CELL- EXPRESSION SEQUENCE(S) and/or PRODUCT(S) or the VBL Technology that are developed by LICENSEE or its SUBLICENSEES and that are the subject of this Agreement or the VBL PROPRIETARY RIGHTS.

 

7

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Commercial License Agreement PER.C6 ®

Crucell Holland – Vascular Biogenics

 

3. SUPPLY OF CELLS AND KNOW-HOW; CERTAIN UPDATES; TECHNICAL ASSISTANCE; REPORTING

 

  3.1. Supply of Cells and Know-How . Within thirty (30) days after receipt of the License Issuance Fee payment under Section 4.1.1, CRUCELL shall disclose and transfer to LICENSEE PER.C6 ® CELLS and the PER.C6 ® KNOW HOW that is incorporated into the most recent version of the PER.C6 ® KNOW HOW FILE.

 

  3.2. Updates . During the TERM, CRUCELL shall promptly provide updates (i) of the PER.C6 ® KNOW HOW FILE to LICENSEE as it is revised and made available to all or substantially all PER.C6 ® licensees or to PER.C6 ® licensees conducting activities or granted rights similar to those contained in this Agreement, including without limitation new uses in the Field of PER.C6 ® CELLS and KNOW HOW, improved and updated techniques and know-how for the use of PER.C6 ® CELLS and PER.C6 ® LOW HOW, and any known problems relating to the use of PER.C6 ® CELLS and PER.C6 ® KNOW HOW or deviations from previously provided information, all as may be applicable to the license granted to LICENSEE hereunder and (ii) of any safety or regulatory concerns that come to CRUCELL’s attention relating to the PACKAGING CELL and PACKAGING CELL KNOW HOW.

 

  3.3. Technical Assistance . During the TERM, CRUCELL shall provide reasonable technical assistance (including guidance on know how related to the work with the PER.C6 ® CELLS) to LICENSEE, as may be necessary to use PACKAGING CELLS and PACKAGING CELL KNOW HOW in PROGRAMS, upon reasonable request and free of any additional cost to LICENSEE. To support the KNOW HOW transfer, LICENSEE shall be entitled, upon reasonable notice to CRUCELL, to visit CRUCELL’s facilities from time to time, but no more than five (5) days, once a year and view the production of the PER.C6 ® CELLS and other relevant processes and techniques relating to the making of MODIFIED CELLS, as well as to receive answers from CRUCELL’s employees regarding the use of such cells and of the PACKAGING CELL KNOW HOW, to the extent necessary for the purposes of a PROGRAM. LICENSEE shall compensate CRUCELL for technical assistance in excess of two (2) man-day visits by CRUCELL technical personnel to LICENSEE’s facilities, on an annual basis, for the first two (2) years of the TERM, on reasonable terms to be agreed in advance. A third man-day visit (or more) shall be at no additional cost if LICENSEE reports a material deviation from established PER.C6 KNOW HOW performance parameters, which deviation report requires such third man-day of technical assistance.

 

  3.4. Access and Reference to BMF; Conduct of Registration and Testing .

 

  3.4.1.

LICENSEE and its REGISTERED AFFILIATES acknowledge that the BMF is owned by CRUCELL, may be filed by CRUCELL with other foreign governmental equivalent to the FDA and is confidential and of crucial importance to the Parties as well as to all other licensees of PER.C6 ® CELL technology. LICENSEE and its REGISTERED AFFILIATES shall have the right to review CRUCELL’s copy of the BMF filed with the FDA and other Governmental Authorities after providing CRUCELL with thirty (30) days prior notice. LICENSEE has the right to cross-reference the BMF as may be required for any regulatory submissions to Governmental Authorities, and upon

 

8

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Commercial License Agreement PER.C6 ®

Crucell Holland – Vascular Biogenics

 

  LICENSEE’ request CRUCELL shall (i) notify the FDA (with a copy to LICENSEE) that LICENSEE is authorized to reference the data within the BMF; and (ii) provide LICENSEE with any and all existing BMF documentation in the possession of CRUCELL (provided that CRUCELL is legally able to do so) in so far required to support any regulatory submission LICENSEE makes to a Governmental Authority in a country where a BMF or its foreign equivalent has not been submitted or is not in effect or may not be referenced to. CRUCELL shall notify LICENSEE of any significant update to the BMF from time to time and shall provide LICENSEE with a copy thereof upon its request as set forth above.

 

  3.4.2. LICENSEE and its REGISTERED AFFILIATES shall not be entitled to, and agree that they will not, characterize, or issue releases or certificates of analysis for, or analyze the genome of, any PACKAGING CELLS, or engage in any research of PACKAGING CELLS that concern any safety, toxicity or tumorgenicity of PACKAGING CELLS without obtaining the prior written agreement of CRUCELL, provided that, if any Governmental Authority requests additional data or characterization of PACKAGING CELLS that CRUCELL chooses not to provide LICENSEE shall have the right to perform its own studies solely as required by the Governmental Authority, and to provide the results to the requesting Governmental Authority. Failure by CRUCELL to provide LICENSEE with such information or data for delivery to the applicable Governmental Authority within a reasonable period shall be deemed as CRUCELL choosing not to provide same. The aforementioned restrictions shall only apply with respect to PACKAGING CELLS, and not PACKAGING CELL-EXPRESSION SEQUENCE or PRODUCT, the analysis of which shall be at the sole discretion of LICENSEE and not subject to any approval of CRUCELL.

 

  3.4.3. LICENSEE further agrees to use its reasonable efforts to promptly notify CRUCELL of any and all communications to and from Governmental Authorities directly relating to the safety of PACKAGING CELLS and agrees to consult promptly with CRUCELL to resolve any such concerns with the FDA or such other Governmental Authorities, Noncompliance by LICENSEE with the obligation to use its reasonable efforts to obtain prior agreement of CRUCELL prior to any characterization, release or certificate issuances of PACKAGING CELLS as set forth in Section 3.4.2 above, or to promptly notify and consult with CRUCELL in its efforts to resolve any such issues with the FDA or other Governmental Authorities as set forth in this Section 3.4.3 shall be considered to constitute a failure to comply with a material condition or covenant of this Agreement to which Section 6.5 herein applies.

 

  3.5. Reporting .

 

  3.5.1. LICENSEE, on its own behalf and on behalf of its SUBLICENSEES, shall keep CRUCELL informed on a bi-yearly (six(6)-month) basis about (1) any communication with Regulatory Authorities about PACKAGING CELLS, and (2) results of any testing performed on the PACKAGING CELLS. A template for use in complying with the quarterly reporting obligation is attached as Exhibit 3.5.1.

 

  3.5.2.

LICENSEE, on its own behalf and on behalf of its SUBLICENSEES, shall keep CRUCELL informed on an annual basis, on or before the anniversary of the EFFECTIVE DATE, with a detailed report of the

 

9

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Commercial License Agreement PER.C6 ®

Crucell Holland – Vascular Biogenics

 

  data relating specifically to PACKAGING CELL performance, PACKAGING CELL KNOW HOW, as well as the operating, culturing and manufacturing parameters and data resulting from its use of the PACKAGING CELL during the course of the PROGRAM. To facilitate the mutually beneficial resolution of any PACKAGING CELL technical performance issue, if any, LICENSEE hereby agrees to discuss with CRUCELL technical personnel relevant technical data to assist in resolving such issues. A template for use in complying with the annual reporting obligation is attached as Exhibit 3.5.2.

 

  3.5.3. It is agreed and understood that LICENSEE shall not be obligated to disclose any information, data or know-how relating to VBL PROPRIETARY RIGHTS unless and to the extent it is related to PACKAGING CELLS and/or their use hereunder. In such event, any and all disclosed information, data or know-how shall not be used or disclosed without LICENSEE’s prior written consent, which consent may be withheld at its sole discretion.

 

  3.5.4. LICENSEE, on its own behalf and on behalf of its SUBLICENSEES, shall promptly notify CRUCELL in writing of any substantial deviations from established PER.C6 ® CELL characteristics and/or performance parameters included in PER.C6 ® KNOW HOW, prior to any notification by LICENSEE or its SUBLICENSEES to any other entity other than to the appropriate Regulatory Authorities such as the FDA.

 

  3.5.5. Subject to the provisions of Section 3.5.3, information reported to CRUCELL pursuant to Sections 3.5.1 through 3.5.4 may be used by CRUCELL to assist LICENSEE in the successful implementation of PACKAGING CELL KNOW HOW, resolving technical and regulatory issues respecting PACKAGING CELL and the BMF, to amend and/or annotate the collection of PER.C6 ® KNOW HOW for delivery to PER.C6 ® licensees and/or to update the BMF, which PER.C6 ® KNOW HOW and BMF shall only be disclosed under conditions of confidentiality. Except as expressly in Sections 2.5.2, 2.5.3 and 2.5.4 above, CRUCELL shall not use any information or know-how relating to PRODUCT(S) or PACKAGING CELL EXPRESSION SEQUENCE(S) that are developed by LICENSEE or its SUBLICENSEES, or relating to any VBL PROPRIETARY RIGHTS, nor disclose any of the above to any licensee or other third party (including any Regulatory Authority) without the prior written consent of LICENSEE, which consent may be withheld at its sole discretion.

 

4. LICENSE FEES

 

  4.1. License Fees . In consideration of the licenses granted and the PER.C6 ® KNOW HOW supplied hereunder, LICENSEE shall pay the following amounts to CRUCELL during the TERM:

 

  4.1.1. Within ten (10) days from the EFFECTIVE DATE, a License Issuance Fee of € 75,000 (seventy-five thousand Euros), exclusive of V.A.T.; and

 

  4.1.2. Starting on the first anniversary date of the EFFECTIVE DATE (TBD when the first anniversary date should start, since we are already paying an annual fee with a different anniversary date), an Annual License Maintenance Fee of € 100,000 (one hundred thousand Euros), exclusive of V.A.T., to be paid in arrears.

 

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Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Commercial License Agreement PER.C6 ®

Crucell Holland – Vascular Biogenics

 

  4.2. Development Milestone Payments : LICENSEE shall pay CRUCELL non-creditable and non-refundable payments of € 400,000 (four hundred thousand Euros), exclusive of V.A.T., with respect to each PRODUCT for which a governmental health regulatory authority grants marketing approval, within thirty (30) days of the issuance of the first regulatory marketing approval letter from such governmental health regulatory authority for the first indication for each such PRODUCT. Payment under this Section 4.2 shall be made once for each unique PRODUCT.

 

  4.3. Running Royalty . LICENSEE shall pay to CRUCELL a running royalty (the “Running Royalty”) as follows:

 

  4.3.1. If PACKAGING CELLS and/or PACKAGING CELL KNOW-HOW are, or were, used in the development, use, manufacture, importation or sale of the PRODUCT, a Running Royalty of one and half a percent (1.5%) of the NET SALES for the longer of (i) ten (10) years from the FIRST COMMERCIAL SALE of the PRODUCT;

 

  4.3.2. If the use, manufacture, importation or sale of the PRODUCT comes under the scope of at least one VALID PATENT CLAIM, on a country by country basis, a Running Royalty of half a percent (0.5%) of NET SALES.

 

  4.3.3. Only one Running Royalty, that may be either a Know-How Royalty (Section 4.3.1), or a Patent Royalty (Section 4.3.2) or a combination of the Know-How and Patent Royalties (1.5 + 0.5 = 2.0%), shall be due with respect to the same unit of PRODUCT.

 

5. PAYMENTS; BOOKS AND RECORDS

 

  5.1. Royalty Reports and Payments . After the FIRST COMMERCIAL SALE of the PRODUCT on which Running Royalties are required, LICENSEE shall submit quarterly written reports to CRUCELL within ninety (90) days after the end of each calendar quarter, stating in each such report the number, description, and aggregate NET SALES of the PRODUCT sold during the calendar quarter upon which a Running Royalty is payable under Section 4 above. Concurrently with the submission of such reports, LICENSEE shall pay to CRUCELL Running Royalties at the rate specified in Section 4.

 

  5.2. LICENSEE Obligations . LICENSEE shall be solely responsible for the payment to CRUCELL of any royalties, license fees and milestone or other payments due from its AFFILIATES and/or SUBLICENSEES, and for any payments to third parties under licenses or similar agreements between LICENSEE and such third parties necessary to allow the manufacture, use or sale of the PRODUCT by LICENSEE, or SUBLICENSEES;

 

  5.3. Method of Payment .

 

  5.3.1. All payments due hereunder to CRUCELL shall be paid in Euros in immediately available funds, for CRUCELL’s account, to a bank designated in writing by CRUCELL . CRUCELL shall provide LICENSEE with an invoice prior to the due dates specified in Section 4.1.2 and 4.2, and LICENSEE shall pay such invoices within the later of the applicable due date or thirty (30) days of receipt by LICENSEE. If the invoice is received later than the due date, then LICENSEE shall have thirty (30) days from the receipt of the invoice to pay the invoiced amount.

 

  5.3.2. CRUCELL shall submit an invoice to LICENSEE for all transportation, packing or other documented and reasonable costs incurred on LICENSEE’S benefit and at LICENSEE’S request pursuant to this Agreement in connection with providing PACKAGING CELL KNOW HOW to LICENSEE. LICENSEE shall pay invoices specifying these reasonable costs within thirty (30) days of receipt.

 

11

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Commercial License Agreement PER.C6 ®

Crucell Holland – Vascular Biogenics

 

  5.3.3. Inflation Index Adjustment: Commencing from the first (1st) anniversary date of the EFFECTIVE DATE, license fees due under Setion 4.1 shall be increased by two and one half percent (2.5%) upon each anniversary of the EFFFECTIVE DATE until and including the eighth anniversary of the EFFECTIVE DATE.

 

  5.4. Interest . If LICENSEE fails to make any payment under this Agreement within ninety (90) days of the date on which the same becomes due and payable, LICENSEE shall owe CRUCELL interest at the rate of twelve and a half percent (12.5%) per annum (as determined on the date the payment first become due) on any outstanding amount until payment is made in full. If parties are in dispute on the amount of the royalties payable pursuant to Clause 5.1. the penalty becomes due only after Parties have agreed on the exact royalty amount due.

 

  5.5. No Refunds . Payments referred to in this Section 5 shall not be refundable under any circumstances, including but not limited to the termination of this Agreement for whatever reason.

 

  5.6. Currency Conversion . If any currency conversion shall be required in connection with the calculation of royalties hereunder, such conversion shall be made using the following procedures. Sales recorded during a month will be translated to Euro values at the rate on the 1st working day of that month based on the exchange rates published on the OANDA website. Any changes to procedures for currency conversion shall only apply after such notice has been delivered and provided that such changes are consistently applied across LICENSEE’s operating units and continue to maintain a set methodology for currency conversion.

 

  5.7. Withholding Taxes . If LICENSEE is required by any applicable law, rule or regulation to make any deduction or withholding for or on account of any Tax (as defined below) from any payment to be made to CRUCELL under this Agreement, then LICENSEE shall (i) promptly notify CRUCELL of such requirement, (ii) pay to the relevant authorities the full amount required to be deducted or withheld promptly upon determining that such deduction or withholding is required or receiving notice that such amount has been assessed against CRUCELL, and (iii) promptly forward to CRUCELL an official receipt, or certified copy or other documentation reasonably acceptable to CRUCELL, evidencing such payment to such authorities.

 

  5.7.1. If CRUCELL is entitled to an exemption from or reduction of withholding tax under any applicable law or treaty with respect to any payments made hereunder, CRUCELL shall deliver to LICENSEE at the time or times prescribed by applicable law or reasonably requested by LICENSEE, such properly completed and executed documentation prescribed by applicable law as will permit such payments to be made without withholding or at a reduced rate.

 

  5.7.2. For purposes of this Section, the term “Tax” shall mean any present or future tax, levy, impost, duty, charge, assessment or fee of any nature (including interest, penalties and additions thereto) that is imposed by any government or other taxing authority in respect of a payment under this Commercialization Agreement.

 

12

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Commercial License Agreement PER.C6 ®

Crucell Holland – Vascular Biogenics

 

  5.8. Records; Inspection . LICENSEE shall and shall cause its REGISTERED AFFILIATES and its SUBLICENSEES shall keep complete, true and accurate books of account and records for the purpose of determining the Running Royalty amounts payable under this Agreement. Such books and records shall be kept at the principal place of business of LICENSEE, and SUBLICENSEES, as the case may be, for at least three (3) years following the end of the calendar quarter to which they pertain. Such records will be open for inspection during such three (3) year period by an independent public accounting firm of national prominence retained by CRUCELL and acceptable to LICENSEE for the purpose of verifying the Running Royalty statements. Such inspections may be made no more than once each calendar year, at reasonable times mutually agreed to by LICENSEE and CRUCELL. CRUCELL’s representative or agent will be obliged to execute a reasonable confidentiality agreement prior to commencing any such inspection. Inspections conducted under this Section shall be at CRUCELL’s expense, unless a variation or error producing an increase exceeding ten percent (10%) of the Running Royalty amount stated for any period covered by the inspection is established in the course of any such inspection, whereupon all reasonable and customary costs relating to the inspection for such period will be paid by LICENSEE.

 

6. TERM AND TERMINATION

 

  6.1. Agreement Term . This Agreement shall become effective as of the EFFECTIVE DATE and, unless earlier terminated pursuant to the other provisions of this Section, shall continue in full force and effect on a country-by-country basis, until LICENSEE has no remaining obligation to pay to CRUCELL the Running Royalty in accordance with Section 4.3. Thereafter, LICENSEE shall have a fully paid up, world wide, royalty free, perpetual license right under the PER.C6 ® PATENTS and PER.C6 ® KNOW HOW to continue to make, have made, import, use, offer for sale and sell the PRODUCT(S) in such countries.

 

  6.2. Termination by LICENSEE . LICENSEE may terminate this Agreement by giving CRUCELL three (3) months prior written notice, and payment of all outstanding monies owed to CRUCELL until the date of termination, such as partial payment of arrears obligations pursuant to Section 4.1.2, which payment is due prior to actual termination of the Agreement.

 

  6.3. Termination by Mutual Agreement . This Agreement may be terminated upon mutual written agreement between the Parties.

 

  6.4. Termination Upon Insolvency or Bankruptcy . Either Party may terminate this Agreement, by notice to the other Party with immediate effect, if (a) the other Party (i) pledges substantially all of its assets for the benefit of creditors, and the conditions for the creditors to enforce their rights to control those assets have been satisfied (such as the expiration of a cure period for an uncured default), institutes, consents to or fails to diligently oppose any proceeding seeking to adjudicate it a bankrupt or insolvent or (b) any proceeding is instituted against or in respect of the other Party by third parties seeking bankruptcy relief and such proceeding continues undismissed, or unstayed and in effect for a period of 60 days after the institution thereof.

 

  6.5.

Termination by Default . If either Party defaults in the performance of, or fails to be in compliance with, any material condition or covenant of this Agreement and any such default or noncompliance shall not have been remedied, or steps initiated to remedy the same, to the other Party’s reasonable satisfaction within three (3) months for payment defaults, and within six (6) months for other defaults or non-compliance, after receipt by the defaulting Party of a written notice thereof from the other Party, the Party not in default may, without further notice, forthwith terminate this Agreement at its option, provided however that in the event of breach by CRUCELL, accrual and payment

 

13

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Commercial License Agreement PER.C6 ®

Crucell Holland – Vascular Biogenics

 

  of any amounts due to it hereunder shall be suspended during the cure period; and provided, further, that in the event of a dispute as to default, non-compliance or right to terminate this Agreement, this Agreement shall continue until such dispute is finally resolved pursuant to Section 10.3 hereof.

 

  6.6. Rights and Obligations on Term, Termination, or Suspension .

 

  6.6.1. Unless expressly provided to the contrary, the following provisions shall survive the termination of this Agreement: Sections 1, 2.3, 2.5, 3.5.4, 3.5.5, 6.6, 6.7, 7, 8, 9 and 10 hereof.

 

  6.6.2. Return of PACKAGING CELL KNOW HOW . Except in the case of termination by LICENSEE for default pursuant to Section 6.5, upon early termination of this Agreement by either Party, at CRUCELL’S written request, LICENSEE and its AFFILIATES shall destroy all supplies of PACKAGING CELL KNOW HOW, and shall promptly thereafter confirm such destruction in writing to CRUCELL, except for one copy of such written information to be retained in confidential files and to be used solely to establish rights and obligations under this Agreement, and for no other use or purpose.

 

  6.7. Termination by either Party pursuant to this Article shall not prejudice any other remedy that a Party might have at law or equity.

 

7. CONFIDENTIALITY

 

  7.1. Confidentiality Obligations . Each Party shall maintain in confidence all information disclosed or otherwise made available by the other which is identified as confidential and which is confirmed in writing and marked “confidential” or otherwise properly labeled as confidential within thirty (30) days of such original disclosure, including without limitations, information relating to PACKAGING CELL KNOW HOW and PROGRAMS or results of PROGRAMS (all such information hereafter referred to as “INFORMATION”), and shall not use such INFORMATION or disclose the same to anyone, except (i) that LICENSEE may disclose CRUCELL’S INFORMATION to its REGISTERED AFFILIATES and SUBLICENSEES, those of its agents, direct employees, consultants and investigators for the execution of PROGRAMS and manufacturing and sale of PRODUCTS, as set out in this Agreement; (ii) that LICENSEE may disclose CRUCELL’S INFORMATION as required to governmental health regulatory authorities; (iii) that CRUCELL may disclose LICENSEE’S INFORMATION to its agents, direct employees, consultants and investigators who have a need-to-know for the performance of this Agreement; the foregoing as permitted by this Agreement and subject to the responsibilities and obligations as set forth in this Agreement. Either Party may disclose the other Party’s INFORMATION to potential investors and/or strategic partners within the course of a good faith due diligence inquiry to the extent relevant for the purpose of the inquiry. The foregoing is subject to the below:

 

  7.1.1. Prior to such permitted disclosure to such LICENSEE REGISTERED AFFILIATES and SUBLICENSEES, Contractors, agents, direct employees, consultants, investigators, potential investors and other financing sources, investment bankers, advisors, attorneys, accountants and strategic investors, disclosure must be subject to the provisions of a confidentiality agreement containing restrictions no less stringent than the obligations in this Section 7.1 as such restrictions apply to LICENSEE, provided that attorneys and accountants shall not be required to execute such agreement if so informed of the confidential obligations hereunder and provided their professional code of conduct requires that such confidentiality obligations be so observed.

 

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Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Commercial License Agreement PER.C6 ®

Crucell Holland – Vascular Biogenics

 

  7.1.2. Each Party shall use a similar effort to that which it uses to protect its own trade secrets or proprietary information (but that in any event be no less than customary industry standards) to protect the other Party’s INFORMATION and to ensure that its applicable AFFILIATES and SUBLICENSEES and Contractors (if any), agents, direct employees, consultants, investigators, potential investors and strategic investors do not disclose or make any unauthorized use of such INFORMATION. Each Party shall notify the other promptly of its knowledge of any unauthorized use or disclosure of the other’s INFORMATION and enable it to enforce rights against such use or disclosure.

 

  7.2. Exceptions . The confidentiality and non-use obligations under this Agreement shall not apply to the extent that:

 

  7.2.1. the Party who has received the INFORMATION (“RECIPIENT”) is required to disclose information by order or regulation of a governmental agency or court of competent jurisdiction subject to the provisions of Section 7.3.3 below; or

 

  7.2.2. the RECIPIENT can demonstrate that

 

  7.2.2.1. the party who has received the INFORMATION (“RECIPIENT”) is requited to disclose information by order or regulation of a governmental agency to court of competent jurisdiction subject to the provisions of Section 7.3.3 below or;

 

  7.2.2.2. the disclosed INFORMATION is independently developed without use or regard to the INFORMATION (as shown by RECIPIENT’s written records); or

 

  7.2.2.3. the disclosed INFORMATION was lawfully known by RECIPIENT (as shown by its written records) prior to the date of disclosure to RECIPIENT without an obligation of secrecy, from sources legally entitled to disclose the same without an obligation of secrecy or received by RECIPIENT (as shown by its written records) on an unrestricted basis from a source unrelated to any Party to this Agreement and not, to its knowledge, under a duty of confidentiality.

 

  7.3. Publications and Public Announcements :

 

  7.3.1. Each party shall have the right to publish the existence of this Agreement, but not the terms thereof, with the prior written consent of the other Party, which consent shall not be unreasonably withheld or delayed.

 

  7.3.2. Any disclosure which is required by law may be made without the prior consent of the other Party, although the other Party shall be given prompt notice of any such legally required disclosure and an opportunity to comment on, and attempt to challenge or limit the proposed disclosure reasonably in advance to the extent feasible.

 

  7.3.3. Furthermore, the disclosing Party shall make diligent efforts to limit the nature and scope of any disclosure to the extent reasonably possible and to otherwise prevent the disclosure of the non-disclosing Party’s INFORMATION.

 

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Commercial License Agreement PER.C6 ®

Crucell Holland – Vascular Biogenics

 

8. PATENTS

 

  8.1. CRUCELL shall be responsible and use commercially reasonable efforts for the prosecution, protection and maintenance of PER.C6 ® PATENTS throughout the TERM, and shall bear all costs, fees and expenses in connection thereto.

 

  8.2. If either Party after the EFFECTIVE DATE is warned or sued by a third party alleging or charging infringement of any patents or published patent applications or any other rights, due to or in connection with the use of PACKAGING CELLS, by either Party, the Party which is warned or sued, shall notify promptly the other Party.

 

  8.3. CRUCELL shall be responsible, at its expense, for settling and/or defending any warning or litigation for patent infringement in which the alleged infringing process or product giving rise to liability for damages involves or arises from use by CRUCELL of PACKAGING CELLS or the practice of any of the PACKAGING CELLS, PER.C6 ® PATENTS or PACKAGING CELL KNOW-HOW.

In so far as any such infringement action, or the settlement or defense thereof, might have an effect on LICENSEE activities, CRUCELL shall promptly inform LICENSEE of such claim and (i) CRUCELL and LICENSEE shall confer as to any modification of any right granted to LICENSEE hereunder, provided, that such modification shall not substantially alter LICENSEE’s rights hereunder; (ii) LICENSEE shall be entitiled, but shall not be obligated, to attempt to obtain a license from such third party for the right to use such third party’s patent or other applicable right and (iii) in the event that LICENSEE is named thereunder, it shall have the right to participate in the defense of such claim. In any event, if such infringement action might have an effect on LICENSEE activities (i) upon CRUCELL’s written request, LICENSEE agrees to reasonably assist CRUCELL in any such defense; and (ii) LICENSEE shall be entitled to immediately terminate this Agreement.

If LICENSEE should suffer any out of pocket costs and other expenses, including reasonable attorney’s fees, as a result of the assistance in such dispute, CRUCELL shall reimburse LICENSEE such out of pocket costs and expenses incurred by LICENSEE.

LICENSEE shall be responsible, at its expense, for settling and/or defending any warning or litigation for patent infringement made against CRUCELL, in which the alleged infringing process or product giving rise to liability for damages involves use by LICENSEE of PACKAGING CELLS, other than as set forth in Section 8.3 above. If CRUCELL should suffer any damages, losses, out of pocket costs and other expenses and liabilities as a result of such dispute, including reasonable attorney’s fees and payments of royalties to third parties, LICENSEE shall indemnify CRUCELL and it AFFILIATES and hold them harmless against any such expenses and liabilities.

 

  8.4. No Party shall enter into any settlement which admits or concedes that any aspect of the PATENT or know how of the other Party is invalid or unenforceable in any way, without the prior written consent of such other Party.

 

9. REPRESENTATIONS; WARRANTY, INDEMNIFICATION

 

  9.1.

CRUCELL Representations and Warranties . CRUCELL represents and warrants that (a) CRUCELL has the full legal right to enter in this Agreement and to perform its obligations thereunder; (b) CRUCELL will not be violating any law, regulation, order or contractual or other obligations of or applicable to CRUCELL or to the PER.C6 ® CELLS, PER.C6 ® PATENTS or PER.C6 ® KNOW-HOW by executing, delivering or performing this Agreement, and neither the execution or delivery of this Agreement shall not conflict with or violate any

 

16

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Commercial License Agreement PER.C6 ®

Crucell Holland – Vascular Biogenics

 

  such law, regulation, order or contractual or other obligation; (c) CRUCELL has duly executed and delivered this Agreement, which constitutes a legal valid and binding obligation of CRUCELL, enforceable against CRUCELL in accordance with its terms; (d) CRUCELL is the legal owner of all rights and title in and to the PER.C6 ® CELLS, PER.C6 ® PATENTS and PER.C6 ® KNOW HOW licensed hereunder, free and clear of any encumbrance, charge or restriction, and has the right to grant LICENSEE the licenses granted under this Agreement without conflicting with any third party rights and without creating any encumbrance, charge or restriction in connection therewith; (e) the PER.C6 ® CELLS provided to LICENSEE or to a designated contractor under 2.1.4 (i) comply with the certificates of analysis that accompany the cells, (ii) comply with the specifications as set forth in the Exhibits hereto, and (iii) have been manufactured, tested and maintained according to the current ICH, FDA and EMEA guidelines; (f) the terms of this Agreement do not create a conflict with or result in the breach of any right, obligation or agreement that CRUCELL has with any third party; (g) it has not received any communication alleging that the PER.C6 ® CELLS infringes the intellectual property rights of any third party; and (h) CRUCELL will prosecute, maintain and take other actions necessary, in the course of its exercise of good business judgment, to support the continued validity and enforceability of the PER.C6 ® PATENTS during the term. UNLESS OTHERWISE EXPRESSLY PROVIDED FOR IN THIS AGREEMENT, CRUCELL DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION, WARRANTIES OF MERCHANTABILITY, NON-INFRINGEMENT, FITNESS FOR ANY PARTICULAR PURPOSE, RESPECTING ANY MATERIALS PROVIDED TO LICENSEE PURSUANT TO, OR IN ASSOCIATION WITH THE PERFORMANCE OF THIS AGREEMENT, INCLUDING ANY WARRANTIES CONCERNING THE INHERENT PROPERTIES OF PACKAGING CELLS SUPPLIED UNDER THIS AGREEMENT. CRUCELL MAKES NO WARRANTY AS TO THE MERCHANTABILITY OF THE PRODUCTS, PER.C6 ® KNOW HOW OR PER.C6 ® PATENTS.

 

  9.2. LICENSEE Warranties . LICENSEE (a) is entitled to enter in this Agreement and to perform its obligations thereunder; (b) LICENSEE does not violate any law, regulation, order or its existing contractual obligations by executing, delivering and performing this Agreement; and (c) LICENSEE has duly executed this Agreement, which constitutes a legal valid and binding obligation of LICENSEE, enforceable against LICENSEE in accordance with its terms.

 

  9.3. Product Liability and Indemnification. CRUCELL shall not be liable for and LICENSEE shall indemnify CRUCELL and hold CRUCELL harmless against any and all liabilities (including product liability), damages, losses or injury, death, costs and expenses, including reasonable attorney’s fees, arising in any manner from the use by LICENSEE or its AFFILIATES of PACKAGING CELLS and/or the PACKAGING CELL KNOW HOW, or the use of any PRODUCT by any human being, regardless of whether such use was contemplated by the Parties, except to the extent such liabilities result from (i) the willful misconduct, gross negligence or written instructions of CRUCELL; and/or pursuant to Section 8.3 above; and/or (iii) any breach of this Agreement by CRUCELL. CRUCELL shall hold harmless LICENSEE and its AFFILIATES against losses arising from the events set forth in clauses (i) and (ii) immediately above.

 

10. MISCELLANEOUS/ RULES OF CONSTRUCTION

 

  10.1.   Amendment . This Agreement may not be changed, modified, amended, or supplemented except by a written instrument signed by authorized representatives of both Parties hereto.

 

17

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Commercial License Agreement PER.C6 ®

Crucell Holland – Vascular Biogenics

 

  10.2. Assignability . LICENSEE’s rights and obligations in this Agreement may not be assigned without the prior written consent of CRUCELL, except to an AFFILIATE, or in the event of a merger or sale of all, or substantially all, of LICENSEE’s assets relating to the subject matter of this Agreement to an assignee, provided that LICENSEE shall remain joint and severally liable with any such assignee for the performance of its assigned obligations hereunder if LICENSEE continues to conduct business following such merger or sale. Such assignment shall then be binding upon, inure to the benefit of the Parties, and be enforceable. Any attempted assignment contrary to the terms of this provision shall be void.

 

  10.3. Choice of Law and Dispute Resolution . This Agreement shall be governed by and construed under the laws of the Netherlands. If any dispute arises out of this Agreement, the Parties will themselves endeavor to settle such dispute amicably. If the Parties fail to arbitration before a single arbitrator, such arbitration to be held in accordance with the rules of arbitration of the International Chamber of Commerce and to be held in The Hague, Netherlands. The Parties shall use good faith efforts to expedite the arbitration. The parties agree that any judgment of the foregoing arbitrator shall be final and binding and shall be enforceable in any competent court having jurisdiction over the adjudged party. Nothing herein shall prevent either party from seeking injunctive relief or other equitable remedies in or out of law.

 

  10.4. Expenses . Each Party shall bear its own expenses, if not expressly agreed otherwise in this Agreement.

 

  10.5. Force Majeure . Neither LICENSEE nor CRUCELL shall be liable for any failure or delay in performance under this Agreement which is due in whole or in part directly or indirectly to any cause of any nature beyond the reasonable control of such Party.

 

  10.6. Further Assurances . Each Party hereto agrees to execute, acknowledge and/or deliver such further instruments, and to do all other acts, as may be necessary or appropriate in order to carry out the purposes and intent of this Agreement.

 

  10.7. Notice and Reports . All notices required by this Agreement shall be in writing. All notices and reports shall be sent by fax followed by registered airmail to the Parties at the following addresses or such other addresses as may be designated in writing by the respective Parties:

 

To CRUCELL:

  

CRUCELL HOLLAND B.V.

Archimedesweg 4

P.O. Box 2048

2301 CA Leiden

THE NETHERLANDS

Attn. Business Development

FAX: +31-71-5248702

 

To LICENSEE:

  

VASCULAR BIOGENICS Ltd.

6 Jonathan Netanyahu Street,

60376, Or-Yehuda,

ISRAEL

Attn. Emmanuel Elalouf

VP Business Development

FAX: 972-3-6346449

Any notices shall be deemed given when received by the other Party.

 

18

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Commercial License Agreement PER.C6 ®

Crucell Holland – Vascular Biogenics

 

  10.8. Relationships of the Parties . Both Parties are independent contractors under this Agreement. Nothing contained in this Agreement is intended nor is to be construed so as to constitute CRUCELL and LICENSEE as agents, partners or joint ventures with respect to this Agreement. Neither Party hereto shall have any express or implied right or authority to assume or create any obligations on behalf of or in the name of the other Party or to bind the other Party to any other contract, agreement, or undertaking with any third party.

 

  10.9. Rules Of Construction .

 

  10.9.1. Captions . Paragraph captions are inserted for convenience only and in no way are to be construed to define, limit or affect the construction or interpretation hereof.

 

  10.9.2. Entire Agreement. This Agreement contains the entire agreement of the Parties regarding the subject matter hereof, and supersedes all prior agreements, understandings, and negotiations between the Parties regarding the same.

 

  10.9.3. “Including” . The words “include”, “including” or “included” are used to indicate that the matters listed are not a complete enumeration of all matters covered and should be read such as “including but not limited to”.

 

  10.9.4. Singular, Plural, Gender . Words denoting the singular, shall include the plural and vice versa. Words denoting one gender shall include all others.

 

  10.9.5. Severability . If any part of this Agreement shall be held invalid and/or unenforceable, the remaining provisions of this Agreement shall nevertheless remain in full force and effect provided that such provisions will permit the transaction contemplated herein to take place in substantially the same manner as originally contemplated by the Parties.

 

  10.9.6. Translations . This Agreement has been written and executed in the English language. Any translation into any other language shall not be an official version of this Agreement. In the event of any conflict in interpretation between the English version and such translation of this Agreement, the English version shall prevail.

 

  10.9.7. Waiver . The waiver by either Party of a breach of any provisions contained herein shall be in writing and shall in no way be construed as a waiver of any prior or succeeding breach of such provision or the waiver of the provision itself.

 

  10.9.8. Trademarks. PER.C6 ® is a registered trademark of CRUCELL. All right title and interest therein shall remain with CRUCELL. CRUCELL is solely entitled to all goodwill accruing in the trademark PER.C6 ® as a consequence of the use thereof by LICENSEE or otherwise. LICENSEE may only use CRUCELL’s PER.C6 ® trademark upon the execution of a separate trademark license agreement with CRUCELL. Not withstanding the aforementioned, for the avoidance of doubt LICENSEE can use the PER.C6 ® trademark for reference purposes in connection with research publications as well as regulatory filings.

 

  10.9.9. Use of Party’s Name . No right, express or implied, is granted by tHIS AGREement to LICENSEE to use in any manner other than for regulatory submission purposes the name “CRUCELL” or “INTROGENE”, or to CRUCELL to use in any manner the name of LICENSEE or its Affiliates, or any other trade name, logo or trademark of the other party in connection with the performance of this Agreement without prior permission from such other party except as elsewhere permitted under this Agreement.

 

19

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Commercial License Agreement PER.C6 ®

Crucell Holland – Vascular Biogenics

 

IN WITNESS WHEREOF , the Parties hereto have executed this Agreement to be effective as of the date the last Party signs below.

 

VASCULAR BIOGENICS LTD.     CRUCELL HOLLAND B.V.
    For and on behalf of Crucell N.V.
By:   /s/ Dror Harats     By:   /s/ [Illegible]
        Crucell NV, represented by
Or Yehuda, April 14, 2011       Leiden April 13, 2011

 

20

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Commercial License Agreement PER.C6 ®

Crucell Holland – Vascular Biogenics

 

[***]

 

21

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Commercial License Agreement PER.C6 ®

Crucell Holland – Vascular Biogenics

 

Exhibit 1.2 – APPROVED COUNTRIES

United States of America

Canada

The member states of the European Union on the EFFECTIVE DATE

Israel

Japan

Australia

New Zealand

 

22

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Commercial License Agreement PER.C6 ®

Crucell Holland – Vascular Biogenics

 

[***]

 

23

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Commercial License Agreement PER.C6 ®

Crucell Holland – Vascular Biogenics

 

Exhibit 1.24 – REGISTERED AFFILIATES

 

24

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Commercial License Agreement PER.C6 ®

Crucell Holland – Vascular Biogenics

 

EXHIBIT 1.25 – FORM OF MATERIAL TRANSFER AGREEMENT FOR STRATEGIC PARTNER

 

25

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Commercial License Agreement PER.C6 ®

Crucell Holland – Vascular Biogenics

 

EXHIBIT 1.25 – FORM OF MATERIAL TRANSFER AGREEMENT FOR A CONTRACTOR

 

26

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Commercial License Agreement PER.C6 ®

Crucell Holland – Vascular Biogenics

 

Attachment I: Statement of Work to which the use of the MATERIAL is to be limited

Contractor may only use MATERIAL and INFORMATION for

 

27

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Commercial License Agreement PER.C6 ®

Crucell Holland – Vascular Biogenics

 

EXHIBIT 2.4.2 – PRE-APPROVED THIRD PARTY CONTRACTORS

 

28

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Commercial License Agreement PER.C6 ®

Crucell Holland – Vascular Biogenics

 

Exhibit 3.5.1– Quarterly reporting form

To:

CRUCELL HOLLAND B.V.

Archimedesweg 4

P.O.Box 2048

2301 CA Leiden

THE NETHERLANDS

Attn. Business Development

FAX: +31-71-5248702

From: ( Please fill in COMPANY name and address )

 

 

 

Date:                     

Subject: QUARTERLY REPORT LICENSE AGREEMENT

 

  1) Period covered by the report
       

 

  2) General culturing

 

    A short description on general cell culture activities.

 

    Have you encountered problems culturing the PER.C6 ® cell line?

 

    Have you seen substantial deviations from the culture protocols described in the PER.C6 ® KNOW HOW FILE?

 

       
       
       
       
       
       
       
       
       
       
       

 

29

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Commercial License Agreement PER.C6 ®

Crucell Holland – Vascular Biogenics

 

  3) VECTOR production

 

    Number and types of Protein/MAB produced in the PER.C6 ® cell line.

 

    Have you encountered problems or observed remarkable results when transfecting the PER.C6 ® cell line, or when creating MODIFIED CELLS?

 

    Any substantial deviations from and/or additions to the protocols provided in the PER.C6 ® KNOW HOW FILE?

 

    Code(s) for tracking the individual Protein/MAB in future reports.

 

       
       
       
       
       
       
       
       
       
       
       

 

  4) Interactions with regulatory authorities

 

    In the past three months, were there any communications with regulatory authorities that were NOT subject to Section 3.4.3 of the License Agreement? If YES, please provide a summary of the reason, the nature and the outcome of these discussions. Please provide copies of the communication.

 

    What safety, tumorgenicity and/or other tests have been performed on the PACKAGING CELLS for regulatory purposes? Please provide reason, nature and outcome of the tests.

 

       
       
       
       
       
       
       
       
       
       
       

 

30

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Commercial License Agreement PER.C6 ®

Crucell Holland – Vascular Biogenics

 

Exhibit 3.5.2. – Annual reporting form

To:

CRUCELL HOLLAND B.V.

Archimedesweg 4

P.O.Box 2048

2301 CA Leiden

THE NETHERLANDS

Attn. Business Development

FAX: +31-71-5248702

From: ( Please fill in COMPANY name and address )

 

 

 

 

Date:                     

Subject: ANNUAL REPORT LICENSE AGREEMENT

 

  1) Period covered by the report
                

 

  2) General culturing

 

    A short description on general cell culture activities.

 

    Media used.

 

    Cell banks prepared.

 

    General performance; cell growth, viabilities, doubling times.

 

    Scale and scale-up data.

 

    Systems used (Shake-flasks, Roller bottles, Bioreactors, Wave bags).

 

    Have you encountered problems culturing the PER.C6 ® cell line?

 

    Have you seen substantial deviations from the culture protocols described in the PER.C6 ® KNOW HOW files?

 

       
       
       
       
       
       
       
       
       
       
       

 

31

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Commercial License Agreement PER.C6 ®

Crucell Holland – Vascular Biogenics

 

  3) VECTOR production

 

    Number and type of vectors produced in the PER.C6 ® cell line.

 

    Yields reached per produced VECTOR.

 

    Have you encountered problems or observed remarkable results when transfecting the PER.C6 ® cell line, or when creating MODIFIED CELLS?

 

    Any substantial deviations from and/or additions to the protocols provided in the PER.C6 ® KNOW HOW FILE?

 

    Code(s) for tracking the individual new PRODUCT in future reports.

 

       
       
       
       
       
       
       
       
       
       
       

 

  4) Third party activities

 

    Have you performed CMO activities for third parties using the PER.C6 ® cell line or worked with the PER.C6 ® cell line in collaborations programs with third parties? If yes, please state the name of the company/companies and a short description of the project(s).

 

    Has a CMO performed any activities with the PER.C6 ® cell line? If yes, please state the name of the company/companies and a short description of the project(s).

 

       
       
       
       
       
       
       
       
       
       
       

 

32

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Commercial License Agreement PER.C6 ®

Crucell Holland – Vascular Biogenics

 

  5) Interactions with regulatory authorities / Clinical activities

 

    What pre-IND meetings and IND filings have taken place for products produced on PER.C6 ® ? For which products? What was the outcome (related to PER.C6 ® ) of those meetings?

 

    Were there any communications with regulatory authorities that were NOT subject to Section 3.4.3 of the License Agreement? If YES, please provide a summary of the reason, the nature and the outcome of these discussions. Please provide copies of the communication.

 

    What safety, tumorgenicity and/or other tests have been performed on the PACKAGING CELLS for regulatory purposes. Please provide reason, nature and outcome of the tests.

 

    Was clinical material produced using the PER.C6 ® cell line?

 

       
       
       
       
       
       
       
       
       
       
       

 

33

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].

Exhibit 10.4

AGREEMENT

This Agreement (“ Agreement ”) is made and entered into as of the 3 day of February 2013 (“ Effective Date ”), by and between:

Tel Hashomer - Medical Research, Infrastructure and Services Ltd. , a private company duly incorporated under the laws of the State of Israel having its registered office at Tel Hashomer, Israel, 52621, represented by its authorized representatives ( THM ”); and

Prof. Dror Harats, ID no. 054496641 of Ramat Gan, Israel (“ Prof. Harats ”); and

Vascular Biogenics Ltd. , Company no. 51-289976-6, a private company duly incorporated under the laws of the State of Israel having its registered office at 6 Yoni Netanyahu Street, Or Yehuda, Israel, 60376, represented by its authorized representatives (“ VBL ” or the “ Company ”).

 

WHEREAS : THM declares that it is a private company, whose purpose is to promote the welfare of the Sheba Medical Center (the “ Hospital ”); and

 

WHEREAS: THM declares that at the request of the Hospital and the Fund, as defined below, THM undertook to act as the operational body of the Hospital and Fund, with respect to promotion, development and commercialization of intellectual property deriving from inventions of Hospital’s and/or Fund’s employees;and

 

WHEREAS: Prof. Harats has been an employee of the Hospital and/or the Fund since 1995; and

 

WHEREAS : VBL was established in 1999; and

 

WHEREAS : The Hospital and the Fund have claims regarding the ownership of certain inventions and patent rights of the Company, developed in part by Prof. Harats, and certain other inventors defined herein as Inventors and VBL disagrees, denies and refutes all such claims in their entirety; and

 

WHEREAS : THM, on behalf of the Hospital, and the Fund reached an agreement resolving the above dispute as stipulated and set forth hereunder;

 

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [* * *].


NOW, THEREFORE , in consideration of the mutual covenants and undertakings herein contained, the parties hereby agree and stipulate as follows:

 

1. PREAMBLE AND DEFINITIONS

 

  1.1 The Preamble to this Agreement as well as all the Agreement’s appendices constitutes an integral part thereof.

 

  1.2 The descriptive headings of this Agreement are inserted for convenience only and shall not be considered a part or affect the interpretation of this Agreement.

 

  1.3 In addition to terms defined elsewhere in this Agreement or its appendices, the following terms shall have the meaning ascribed to them hereinafter:

 

  1.3.1 Affiliate ” shall mean, with respect to a Party , any person, organization or entity controlling, controlled by or under common control with, such party. For purposes of this definition only, “control” of another person, organization or entity shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the activities, management or policies of such person, organization or entity, whether through the ownership of voting securities, by contract or otherwise. Without limiting the foregoing, “control” shall be presumed to exist when a person, organization or entity (i) owns or directly controls fifty percent (50%) or more of the outstanding share capital or other ownership interest of the other organization or entity, or (ii) possesses, directly or indirectly, the power to elect or appoint fifty percent (50%) or more of the members of the governing body of the organization or other entity.

 

  1.3.2 The “ Fund ” shall mean Medical Research Infrastructure Development and Health Services Fund by the Sheba Medical Center (RA).

 

  1.3.3 Intellectual Property ” shall mean any or all intellectual property and similar proprietary rights in any jurisdiction throughout the world, including without limitation: (i) all United States, Israeli, international and foreign patents and applications therefor (including PCT), including any and all reissues, divisionals, patent of division applications, renewals, extensions, continuations, and continuity applications thereof, whether or not related to such divisionals, patent of division application, renewals, extensions, continuations or continuity applications through one or more intervening applications, and any patent or application acquired as a result of prevailing in any interference proceeding (the “ Patent Rights ”); (ii) all inventions (whether patentable or not), invention disclosures, trade secrets, proprietary information, know-how, technology, technical data and customer lists, and all documentation in any form or media relating to any of the foregoing; (iii) all copyrights, copyrights registrations and applications therefor, and all other rights corresponding thereto throughout the world; (iv) all databases and data collections and all rights therein throughout the world; (v) all trade names, logos, common law trademarks and service marks, trademark and service mark registrations and applications therefore throughout the world; and (vi) all domain names, uniform resource locators, and other names and locators associated with the internet.

 

2

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [* * *].


  1.3.4 The “ Inventors ” – As specifically detailed in Appendix A attached hereto and constituting an integral part thereof. Such Inventors are inventors who have been employed by Sheba.

 

  1.3.5 The “Company’s IP”: shall mean (i) the Intellectual Property owned, registered or controlled by the Company which is specified in Appendix B attached hereto ; (ii)any continuations in part of the Company’s IP listed in Appendix B ; and (iii) any Intellectual Property to the extent that it is dated prior to the date hereof and incorporates and /or based upon the patents specified in Appendix B and/or any Intellectual Property to the extent that it is dated prior to the date hereof and that the patents listed in Appendix B are based thereon.

 

  1.3.6 The “ Products ” shall mean any product, agent, process, or service device which is covered by or is produced or manufactured or rendered (as the case may be) using a process or method covered by the Company’s IP.

 

  1.3.7 Net Sales ” shall mean the total amount invoiced by or on behalf of VBL or any of its Affiliates or Licensees, in connection with the sale of a Product after deduction of: (i) value added taxes, excise and sales taxes, or other similar taxes imposed on such sales (excluding income or franchise taxes of any kind) (ii) amounts credited by a credit note; and (iii) reasonable quantities for promotional purposes, and compassionate uses; provided however that the Company doesn’t receive any consideration relating thereto;

 

     For the purpose hereof: (a) with respect to sales which are not at arm’s length and/or are not according to the current market conditions for such a sale, the term “Net Sales” shall mean the total amount that would have been paid in an arm’s length sale made according to the current market conditions for such sale or according to market conditions for sale of products similar to the Products; (b) with respect to sales by VBL and/or a Licensee, as applicable, to any Affiliate, the term, “Net Sales” shall mean the higher of: (i) “Net Sales”, as defined above in paragraph (a) and (ii) the total amount invoiced by such affiliated entity on resale to an independent third party purchaser and (c) with respect to sales for non-monetary consideration for any Products, “Net Sales” shall be calculated based on the higher of: (i) “Net Sales”, as defined in paragraph (a) above; and (ii) the total amount invoiced by the party acquiring the Products in such transaction in each case, after deducting the amounts permitted above, to the extent applicable.

 

  1.3.8 License ” shall mean the grant of any right or license and any agreement executed, by VBL to or with any entity, permitting any use of Company’s IP (or any part thereof) including for the development and/or manufacture and/or marketing and/or distribution and/or sale of Company’s IP, and/or the Products and the term “ Licensee ” shall be construed accordingly.

 

3

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [* * *].


  1.3.9 License Fee ” shall mean the consideration of any type or nature, received (for the removal of doubt, whether received before or after the First Commercial Sale in any country) by the Company in return for or in connection with the grant of Licences or the grant of an option for a Licence, and excluding amounts received by the Company which are included under the definition of “Net Sales” based on sales of the Products by Licensees, in respect of which the Company has paid royalties to THM according to this Agreement or otherwise constitute payment upon Exit Event according to this Agreement; License Fee shall include any lump sums, revenues from License Fees, milestone payments, etc. but shall specifically exclude reimbursement for research and development and patent related expenses/reimbursement for payments specifically committed to cover costs reasonably and actually incurred by Company under, and in accordance with detailed budgets and workplans included in, license agreements with Licensees. Any consideration other than cash payment shall be calculated based on the fair market value of such consideration assuming an arm’s length transaction made in the ordinary course of business. Upon request, the Company shall provide THM with all documents and figures reasonably necessary in order to verify Company’s compliance with this clause.

 

  1.3.10 First Commercial Sale ” shall mean with respect to any Product in any country, the first commercial sale of the Product in such country after FDA Approval for marketing or equivalent approval in such country has been obtained if such approval is required.

 

2. PARTIES’ DECLARATIONS AND UNDERTAKINGS

 

  2.1 THM undertakes and covenants as follows:

 

  2.1.1 Subject to the performance of the Company’s obligations hereunder, THM hereby irrevocably confirms on behalf of the Hospital and the Fund that such entities, or anyone on their behalf do not have any further right to receive any payment, compensation, funds or securities from Prof. Dror Harats and/or from the Company (including its officers, directors, shareholders, employees, affiliates, successors and assigns, whether current, past or in the future) and/or the Inventors (the “ Released Parties ”) deriving from any claim of ownership in the Company’s IP, and hereby irrevocably waives and releases acquits and forever discharges each of the Released Parties from any and all rights, claims, demands, commitments, actions, charges, complaints, promises, agreements, controversies, debts, counterclaims, suits, causes of action, damages, liabilities, obligations, costs and expenses of every kind and nature whatsoever, known or unknown, past, present or future, at law or in equity, contingent or otherwise (collectively, a “ Claim ”), such parties, including their successors and/or assigns, may have, as a result of a claim of ownership in the Company’s IP now or in the future, (“ Released Matters ”).

 

4

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [* * *].


       Notwithstanding anything to the contrary in this Agreement, it is hereby clarified that the above waiver specified in this clause 2.1.1, applies and relates only to any part of the Company’s IP which is created, conceived and/or developed by the Inventors and not to Company’s IP or any part thereof or any other Intellectual Property owned by the Company which is created, conceived and/or developed by any other inventors, employees, agents and/or contractors on behalf of the Company to the extent they are not listed in Appendix A .

 

  2.1.2 2.1.3 Prof Harats shall be entitled to serve as Chief Executive Officer and member of the Board of Directors of the Company to develop intellectual property that constitutes continuations in part of the Company IP and subject to duly filing the required reports to THM and to the Ministry of Health, to receive compensation in shares and in cash, without any further claim by the Releasing Parties.

 

  2.2 Each party hereby represents and warrants that: (a) it has the power and authority to execute and deliver this Agreement, and to perform its obligations hereunder, and that the execution, delivery and performance by it of this Agreement and its compliance with the terms and provisions hereof do not and will not conflict with or result in a breach of any of the terms and provisions of or constitute a default under (i) any loan agreement, guaranty, financing agreement, agreement affecting a product or other agreement or instrument binding or affecting it or its property; (ii) any other right or obligation provided under any other agreement or obligation that it has with any third party; or (iii) any order, writ, injunction or decree of any court or governmental authority entered against it or by which any of its property is bound; (b) the Agreement is a binding enforceable obligation of such Party; and (c) no consent, approval, authorization order, filing, registration, or qualification of or with any court, governmental authority, or third person is required to be made or obtained by a party in connection with the execution and delivery of this Agreement or the consummation by a party of the transactions contemplated hereby, which has not been received.

 

5

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [* * *].


3. LICENSE BY THE COMPANY

VBL undertakes that any License granted by it shall be subject to the following terms:

 

  3.1 The License is granted according to a written appropriate and binding agreement. The material terms of each License will be disclosed orally by the legal counsel of VBL to the head of THM prior to the execution of any License agreement. Following execution of any such agreement, the Company will either (i) provide a copy of such agreement to THM; or (ii) if the provision of a copy of such agreement is not allowed under the terms thereof, disclose to THM’s attorney and its accounting firm the material terms of such agreement, including without limitation, any terms that have bearing upon the consideration payable to THM hereunder. Such disclosure to THM’s attorney or CPA shall be subject to their execution of a non disclosure agreement. The Company shall verify that the License includes terms that will allow the disclosure of the material terms thereof to THM or to a third party to be designated by THM, and shall comply with such terms.

 

  3.2 The License is being granted in a bona fide arms-length commercial transaction.

 

  3.3 Non monetary consideration, if any, shall be valued as set forth in this Agreement.

 

4. CONSIDERATION TO THM

 

  4.1 VBL undertakes to pay THM the following amounts on a Product-by-Product and country-by-country basis until the later to occur of: (i) the last to expire or terminate of any of the Patent Rights covering such Product in such country; or (ii) fifteen (15) years from the date of the First Commercial Sale of such Product in such country:

 

  4.1.1 Royalties. VBL shall pay THM 1% (one percent) of Net Sales by or on behalf of VBL or any Affiliate or any Licensee (the “ Royalties ”).

 

  4.1.2 Licensing Consideration. VBL shall pay THM 2% (two percent) of any License Fee received by VBL (the “Licensing Consideration ”).

 

  4.2 The amounts payable to THM under clause 4.1 shall be paid as follows:

 

  4.2.1 Royalties, as specified in sub-clause 4.1.1 in connection with Net Sales by VBL and its Affiliate, shall be paid on a quarterly basis, within 60 (sixty) days after the end of each quarter in which the respective sale took place, commencing on the first quarter where the First Commercial Sale took place. Royalties in connection with Net Sales by a Licensee shall be paid on a quarterly basis, within 60 (sixty) days after the end of each quarter in which VBL receives payment on account of Net Sales.

 

  4.2.2 Licensing Consideration, as specified in sub-clause 4.1.2 shall be paid within 30 (thirty) business days from receipt of any License Fee by the VBL.

 

6

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [* * *].


  4.3 Consideration from Exit . Upon the closing of each Exit Event, as defined bellow, THM shall be entitled to receive from the Company 1% (one percent) of any and all consideration received by the Company and/or its shareholders as a result of or in connection with such Exit Event (“ Consideration From Exit” ).

Consideration from Exit Event under clause 4.3 shall be paid in cash within 15 (fifteen) days from the closing of the Exit Events defined above. To the extent that the applicable Exit Event is an IPO or the consideration is in kind and not cash payment then the Company may pay the Consideration From Exit within 12 months following the closing of the respective Exit Event.

Exit Event ” means any of the following events: (i) the closing of the merger or consolidation of VBL into or with other corporation or the acquisition of the Company thereby, excluding a transaction following which VBL is the surviving corporation and the shareholders of VBL prior to the transaction constitute the majority of the shareholders following such transaction; or (ii) the closing of the sale of all or substantially all of the assets of VBL or all or substantially all of its issued and outstanding share capital or (iii) the closing of an Initial Public Offering (“ IPO ”). Notwithstanding the above, in all cases, a transaction with a wholly owned subsidiary or a transaction effected for the purpose of changing the domicile or structure of VBL shall not be deemed an Exit Event.

 

  4.4. Payment obligations under clause 4 shall expire if the payment to THM upon or prior to such Exit Event (but not by way of payment of Royalties under clause 4.1.1) is or exceeds NIS100 million. In addition, at any time following the execution hereof the Company, its assignees or successors shall be entitled to terminate the payment obligations under clause 4 by payment to THM of the amount of NIS100 million after deduction of any amount previously received by THM, provided that such amounts were not received by THM as Royalties under clause 4.1.1. It is hereby clarified that termination of the obligation to pay Consideration From Exit, according to this clause 4.4 which did not exceed NIS 100 million, does not and shall not derogate from Company’s obligation for payments as specified in clauses 4.1.1 and 4.1.2 until an aggregate payment of NIS 100 million has been made (but not by way of payment of Royalties payable under clause 4.1.1).

 

  4.5 All amounts set forth herein are inclusive of any and all taxes. The Company (or the escrow agent, if applicable) shall be entitled to deduct at source or withhold from any amount payable hereunder any tax amount applicable to THM in connection with each payment.

 

  4.6 The Company shall report in writing to THM immediately upon execution of an agreement relating to the First Commercial Sale and upon the occurrence of such first Commercial Sale. The Company shall specify in such report the date of execution of such agreement and the date of the First Commercial Sale according to the agreement.

 

  4.7 In calculating Net Sales and License Fee, all amounts shall be expressed in US Dollars and any amount received or invoiced in a currency other than US Dollars shall be translated into US Dollars, for the purposes of calculation, in accordance with the exchange rate between the US Dollar and such currency on the date of such receipt or invoice, as the case may be.

 

7

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [* * *].


  4.8 The Company shall provide THM with the following written reports: (a) a detailed quarterly report, commencing with the first calendar quarter in which any Net Sales are made, or License Fee received, in a form reasonably acceptable to THM, signed by the chief financial officer of VBL, specifying all amounts payable to THM under this clause 4 in respect of the previous quarter to which the report refers. Such report shall include: (i) the sales made by the Company, Affiliates and Licensees with a breakdown of Net Sales according to country, identity of seller, currency of sales, dates of invoices, number and type of Products sold and; (ii) License Fee with a breakdown according to identity of Licensees, countries, the currency of the payment and date of receipt thereof; and (iii) deductions applicable, as provided in the definition of “Net Sales”; (b) a detailed report within twenty one (21) days of an Exit Event specifying the nature of the Exit Event, the consideration to be received by the Company or its shareholders in connection with such Exit Event and all other substantial terms and details of such Exit Event and enclose to the report any agreement executed in connection with such Exit Event immediately following the execution thereof; and (iv) any other matter, data and documents reasonably required by THM and existing with VBL in order to calculate and/or verify the amounts payable hereunder; and (c)Within four months after the end of each fiscal year, the Company will provide THM with a detailed report, certified by VBL’s Chairman of the Board and by its independent auditor, stating all amounts due to THM pursuant to this clause 4 in the reported year including relevant invoices issued and all invoices and all payments received by the Company with respect to details specified in the above reports; 21 days prior to an Exit Event he material terms of such Exit will be disclosed orally by the legal counsel of VBL to the head of THM.

 

  4.9 The Company shall keep and shall cause Licensees to keep complete, accurate and correct books of account and records consistent with sound business and accounting principles and practices.

 

  4.10 Following the First Commercial Sale, THM shall be entitled to appoint an independent auditor selected by it to inspect, after coordination with VBL and during VBL’s regular business hours, all records, and documents of VBL as may contain information bearing upon the amounts payable to THM under this clause 4. The Company shall take all steps necessary so that all such books of account, records and other documentation of VBL and its Licensees and Affiliates are available for inspection as aforesaid for each of the Company and its Licensees and Affiliates. The cost of such auditing shall be borne by VBL if the audit uncovers an underreporting of the corresponding amounts owed to THM by more than ten percent (10%). Otherwise, such costs and expenses shall be borne by THM. VBL shall remedy such discrepancy and pay (i) the shortfall within thirty (30) days of the date of discovery; and (ii) interest thereon at the rate of 4% above the London Interbank Offered Rate (LIBOR) applicable to a 12 month USD deposit, as such rate shall be in effect on each Disbursement Date. The Interest shall be compounded annually and computed on the basis of a 360 day year.

 

8

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [* * *].


  4.11 Upon THM’s request but not more than once every six months, the Company shall provide THM with a progress report specifying the following details, as updated from the last report: (i) the activities the Company conducted for the development of Products; and (ii) sales and marketing efforts.

 

5. INDEMNITY

 

  5.1 VBL undertakes to indemnify and hold harmless THM, the Fund, the Hospital, the State of Israel, and their employees, representatives, agents and contractors (the “ THM Beneficiaries ”) against and from any loss, liability, claims, damages or expenses of whatever kind or nature incurred by or imposed upon the THM Beneficiaries, to the extent arising out of or resulting from (i) the use and/or exploitation of the Company’s IP or any use of any products incorporating the Company’s IP or any part thereof and/or manufactured or developed based upon the Company’s IP; and (ii) to the extent that it is based on a claim that the Company’s IP, the Products or other material produced or developed or marketed by or on behalf of VBL or any of its Affiliates or Licensee infringes any third party’s intellectual property rights including copyright, trade secret, patent, trademark (a “THM Claim” ).

 

  5.2     

 

  5.3 The following mechanism shall apply to any THM Claim pursuant to clause 5.1. If any THM Beneficiary receives notice of any THM Claim, such THM Beneficiary shall, as promptly as is reasonably possible, give VBL notice of such THM Claim. The failure to give such notice promptly shall relieve VBL of any indemnification obligation it may have hereunder to the extent such failure diminishes its ability to respond to or to defend the Beneficiary against such THM Claim. VBL shall exclusively assume the defence or represent the interests of the THM Beneficiary in respect of such THM Claim, that shall include the right to select and direct legal counsel and other consultants to appear in proceedings on behalf of the THM Beneficiary and to propose, accept or reject offers of settlement, all at its sole cost and discretion.

 

  5.4 VBL, at its own expense, shall maintain insurance in an amount consistent with industry standards which provides VBL adequate coverage for (i) performing clinical studies of the Product in humans, (ii) product liability and (iii) commercial sales of applicable and relevant Products.

 

6. PATENT RIGHTS

In the event that the Company decides to abandon its patents in all applicable jurisdictions in connection with its intent to stop its entire business activities of either of its two business units, then with respect to such Patent Rights that are included in the Company’s IP, the Company will inform THM (“ VBL Notice ”) of its intention prior to the abandonment of any such Patent Rights.

 

9

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [* * *].


THM shall have the right to continue to support and maintain any such Patent Rights provided that it notifies VBL of its intention within 30 days following the receipt of VBL Notice, and provided further that within 60 days following the notice by THM, the parties reach an agreement for the assignment or license of such Patent Rights to THM. The parties shall negotiate such agreement in good faith. The parties further agree that such agreement shall provide VBL with payments similar to those set forth in clause 4 and that any such agreement shall be subject to any limitations and restrictions imposed by applicable third parties, including without limitation, the Office of the Chief Scientist and shall be subject to the assumption by THM of any repayment obligations thereto. THM right hereunder shall lapse and be of no further force and effect, in the event that THM fails to timely respond to VBL Notice, indicates that it is not interested in the Patent Rights or otherwise the parties fail to reach an agreement as aforesaid during the 90 day period.

 

7. MISCELLANEOUS

 

  7.1 Law and Venue . All disputes arising in connection with this Agreement shall be settled amicably in the first instance. If amicable settlement cannot be reached by the Parties within 15 (fifteen) days from the day either Party approached the other Parties specifying the essence of the dispute, the dispute shall be settled by 1 (one) arbitrator. If the Parties fail to reach an agreement on the nomination of the arbitrator within 30 (thirty) days of the date when the claimant’s request for arbitration was communicated by the other Parties, the appointment shall be made by the Head of the Israel Bar. The arbitration will be conducted in Tel Aviv, Israel. The Parties shall be entitled to seek interim measures of protection in the form of pre-award attachment of assets or injunctive relief. The tribunal shall issue a reasoned award. Such award may grant any relief appropriate under applicable law including without limitation declaratory relief and/or specific performance. As part of its award the tribunal may award attorneys fees and costs to the prevailing party. The award of the arbitrator shall be final and binding upon the Parties, but subject to appeal, with respect to the disputes so submitted and the costs of such arbitration. The law that shall apply shall be the statutes and laws of the State of Israel.

 

  7.2 Use of Names . The Company shall not use the names of the State Of Israel, Hospital, the Fund and/or THM and/or their employees, representatives, agents and contractors in any manner or in any publication including commercial publicity, without the prior written consent of THM.

 

  7.3 Assignment . This Agreement shall be personal to the parties and therefore the Parties may not assign any of their rights or obligations hereunder without the prior written consent of the other party. Notwithstanding the aforementioned, THM shall be entitled to assign the right to receive payments under this Agreement to any association and/or organization and or company that was established in connection with or for the benefit of the Hospital. In addition, VBL may, without the consent of THM, assign this Agreement and the rights, obligations and interests of VBL, in whole, to any purchaser of all or substantially all of its assets, or to any successor corporation resulting from any merger or consolidation of VBL with or into such corporation, provided that any such assignee agrees in writing to be bound by all the terms of this Agreement.

 

10

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [* * *].


  7.4 Notices . Except as otherwise provided in this Agreement, all notices permitted or required by this Agreement shall be in writing and shall be deemed to have been duly served (i) upon personal delivery (ii) upon facsimile transmission (receipt of which has been orally confirmed by the recipient) or (iii) Seven (7) business days after deposit, postage prepaid, return receipt requested, if sent by Registered Mail and addressed to the address of the parties first above stated or in accordance with such other address information as the party to receive notice may provide in writing to the other party in accordance with the above notice provisions. Any notice given by any other method will be deemed to have been duly served upon receipt thereof.

 

  7.5 Waivers . No course of dealing in respect of, nor any omission or delay in the exercise of, any right, power, or privilege by either Party shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any further or other exercise thereof or of any other, as each such right, power, or privilege may be exercised either independently or concurrently with others and as often and in such order as each party may deem expedient.

 

  7.6 Entire Agreement; Amendments . This Agreement, including, without limitation, its schedules, contains the entire agreement of the parties with respect to its subject matter. No oral or prior written statements or representations not incorporated herein shall have any force or effect, nor shall any part of this Agreement be amended, supplemented, waived or otherwise modified except in a writing signed by both parties.

 

  7.7 Confidentiality . Each party undertakes to the other party that all confidential information disclosed by a party to the other party hereunder or as a result of this Agreement, including the terms and conditions set forth herein, will be kept in the strictest confidence and will not, without the prior written consent of the disclosing party, be used by the receiving party or be disclosed to, or discussed with, any third party whatsoever. The above undertaking of confidentiality will not apply to information which: (i) is in the public domain at the time of disclosure; or (ii) subsequently becomes part of the public domain, except by breach by the receiving party of its obligations, or (iii) is received from a third party who is not under an obligation of confidentiality to the disclosing party. VBL may disclose, on a confidential basis, the terms of this Agreement to its Board of Directors, shareholders, potential investors, acquirers or licensees in the process of due diligence reviews of its contracted obligations, assets and undertakings.

 

  7.8 THM hereby declares that Sheba’s management reached an understanding with the management of Tel Aviv University (“ TAU ”), that as between the Hospital and TAU, inventions of TAU professors who work as medical doctors for Sheba such as Prof. Dror Charats, Prof. Shoenfeld and Prof. Gerge Jacob, shall belong to Sheba.

 

11

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [* * *].


[Remainder of the Page was left intentionally blank]

 

12

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [* * *].


IN WITNESS WHEREOF , the parties hereto have caused this Agreement to be duly executed and each of the undersigned hereby warrants and represents that it has been and is, on the date of this Agreement, duly authorized by all necessary and appropriate action to execute this Agreement.

 

Tel Hashomer - Medical Research,       Vascular Biogenics Ltd.
Infrastructure and Services Ltd.      
By:  

[Illegible]

      By:  

/s/ Dror Harats

/s/ Dror Harats

Prof. Dror Harats

       
Approved and Acknowledged        

[Illegible]

The Government of Israel

By the Ministry of Health

       

 

13

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [* * *].


Appendix A

INVENTORS

1. Prof. Dror Harats

2. Shoenfeld Yehuda

3. George Jacob

4. Halperin Gideon – up to 2003

5. Bloom Nira

6. Greenberger Shoshana

7. Tal Reshef

8. Peled Michael

 

* detailed list of inventions is provided under Appendix B .

 

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [* * *].


Appendix B’ up to 3 Feb 2013

 

METHODS AND COMPOSITIONS FOR ENHANCING TARGETING OF VIRAL VECTORS

 

Our Ref

   Country    Earliest Priority    Entry Date    Filing Date
Application No.
   Issue Date
Patent No.
   SKGF Ref    Status    Inventor

[* * *]

                       

 

ISOLATED POLYNUCLEOTIDES AND NUCLEIC ACID CONSTRUCTS FOR DIRECTING EXPRESSION OF A GENE-OF-INTEREST IN CELLS

 

Our Ref

   Country    Earliest Priority    Entry
Date
   Filing Date
Application No.
   Issue Date
Patent No.
   SKGF Ref    Status    Inventor

[* * *]

                       

52423

   PCT    19-Oct-2010       12/10/2011       3182.041PC01    Pending   

 

TREATMENT WITH VB-201

 

Our Ref

   Country    Earliest Priority    Entry
Date
   Filing Date
Application No.
   Issue Date
Patent No.
  SKGF Ref    Status    Inventor

[* * *]

                      

[* * *]

                      

50378

   PCT    05-Jan-2010

61/292,226

      05-Jan-2011

IL2011/000012

   Publ. Date: 14-Jul-2011

Publ. #: WO2011/083469

  3182.018PC05    Expired    YACOV Niva; BREITBART

Eyal; MENDEL Itzhak; FEIGE

Erez; COHEN Yael

 

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [* * *].


PAF-LIKE HOMOLOGS AND USES THEREOF

 

Our Ref

   Country    Earliest Priority    Entry Date    Filing Date
Application No.
   Issue Date
Patent No.
  SKGF Ref    Status    Inventor

[* * *]

                      

44504

   PCT    16-Oct-2007

60/960,846

      05-Oct-2008

IL2008/001315

   Publ. Date: 23-Apr-2009

Publ. #: WO2009/050692

     Expired    YACOV Niva; BREITBART
Eyal; MENDEL Itzhak

48215

   Israel

NP

   16-Oct-2007

60/960,846

   15-Apr-2010    05-Oct-2008

205144

     3182.019IL01    Aban    YACOV Niva; BREITBART
Eyal; MENDEL Itzhak

48216

   USA

NP

   16-Oct-2007

60/960,846

   15-Apr-2010    05-Oct-2008

12/738,097

     3182.0190001    Aban    YACOV Niva; BREITBART
Eyal; MENDEL Itzhak

48217

   Europe

NP

   16-Oct-2007

60/960,846

   14-May-2010    05-Oct-2008

08808113.8

     3182.019EP01    Aban    YACOV Niva; BREITBART
Eyal; MENDEL Itzhak

 

IMPROVED SYNTHESIS OF OXIDIZED PHOSPHOLIPIDS

 

Our Ref

   Country    Earliest Priority    Entry Date    Filing Date
Application No.
   Issue Date
Patent No.
   SKGF Ref    Status    Inventor

[* * *]

                       

 

3

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [* * *].


IMPROVED PROCESS FOR THE PREPARATION OF OXIDIZED PHOSPHOLIPIDS

 

Our Ref

   Country    Earliest Priority    Entry Date    Filing Date
Application No.
   Issue Date
Patent No.
  SKGF Ref    Status    Inventor

28367

   PCT    09-Jul-2004

60/586,219

      10-Jul-2005

IL2005/000735

   Publ. Date: 19-Jan-2006

Publ. #: WO2006/006161

     Expired    HALPERIN Gideon;
KOVALEVSKI-ISHAI Eti

33799

   Israel

NP

   09-Jul-2004

60/586,219

   09-Jan-2007    10-Jul-2005    1-Mar-2012

180628

  3182.020IL00    GRANTED    HALPERIN Gideon;
KOVALEVSKI-ISHAI Eti

50430

   Israel

DIV

   09-Jul-2004

60/586,219

   17-Mar-2011    10-Jul-2005

211795

        Pending    HALPERIN Gideon;
KOVALEVSKI-ISHAI Eti

50431

   Israel

DIV

   09-Jul-2004

60/586,219

   17-Mar-2011    10-Jul-2005

211796

        Pending    HALPERIN Gideon;
KOVALEVSKI-ISHAI Eti

33793

   Europe

NP

   09-Jul-2004

60/586,219

   09-Feb-2007    10-Jul-2005

05758938.4

        Pending    HALPERIN Gideon;
KOVALEVSKI-ISHAI Eti

33793 Div

   Europe

Div

   09-Jul-2004

60/586,219

   Oct 2012    10-Jul-2005      3182.020EP10    Pending    HALPERIN Gideon;
KOVALEVSKI-ISHAI Eti

33793 Div

   Europe

Div

   09-Jul-2004

60/586,219

   Oct 2012    10-Jul-2005

12179533.0

     3182.020EP20    Pending    HALPERIN Gideon;
KOVALEVSKI-ISHAI Eti

39643

   Hong Kong

NP

   09-Jul-2004

60/586,219

   31-May-2007    10-Jul-2005

07105789.7

        Pending    HALPERIN Gideon;
KOVALEVSKI-ISHAI Eti

33795

   Canada

NP

   09-Jul-2004

60/586,219

   09-Jan-2007    10-Jul-2005

2,573,396

        Pending    HALPERIN Gideon;
KOVALEVSKI-ISHAI Eti

 

4

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [* * *].


33796

   Japan

NP

   09-Jul-2004

60/586,219

   09-Jan-2007    10-Jul-2005

2007-519983

   24-Jun-2011

4,767,948

      Granted    HALPERIN Gideon;
KOVALEVSKI-ISHAI Eti

48896

   Japan

DIV

   09-Jul-2004

60/586,219

   21-May-2010    10-Jul-2005

2010-116964

         Pending    HALPERIN Gideon;
KOVALEVSKI-ISHAI Eti

33797

   Republic of Korea

NP

   09-Jul-2004

60/586,219

   09-Feb-2007    10-Jul-2005

2007-7003288

   9-Nov-2012

10-1201935

      Granted    HALPERIN Gideon;
KOVALEVSKI-ISHAI Eti

33798

   China

NP

   09-Jul-2004

60/586,219

   28-Feb-2007    10-Jul-2005

200580029218.9

   3-Aug-2011

200580029218.9

      Granted    HALPERIN Gideon;
KOVALEVSKI-ISHAI Eti

48018

   China

DIV

   09-Jul-2004

60/586,219

   11-Feb-2010    10-Jul-2005

201010128184.1

         Pending    HALPERIN Gideon;
KOVALEVSKI-ISHAI Eti

[* * *]

                       

[* * *]

                       

33801

   Russian Federation

NP

   09-Jul-2004

60/586,219

   09-Feb-2007    10-Jul-2005

2007105097

   20-Sep-2010

2399626

      Granted    HALPERIN Gideon;
KOVALEVSKI-ISHAI Eti

33802

   Mexico

NP

   09-Jul-2004

60/586,219

   08-Jan-2007    10-Jul-2005

MX/a/2007/000361

   17-Mar-2011

284830

      Granted    HALPERIN Gideon;
KOVALEVSKI-ISHAI Eti

33803

   Australia

DIV

   09-Jul-2004

60/586,219

   09-Jan-2007    10-Jul-2005

2007200090

   2007200090

5 Jan 2012

   3182.020AU00    Granted    HALPERIN Gideon;
KOVALEVSKI-ISHAI Eti

50536

   Mexico

DIV

   09-Jul-2004

60/586,219

   14-Jan-2011    10-Jul-2005

MX/a/2011/000630

   3 Sep 2012

303011

      Granetd    HALPERIN Gideon;
KOVALEVSKI-ISHAI Eti

 

5

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [* * *].


33804

   New Zealand

NP

   09-Jul-2004

60/586,219

   09-Feb-2007    10-Jul-2005

553147

   06-Nov-2010

553147

      Granted    HALPERIN Gideon;
KOVALEVSKI-ISHAI Eti

48999

   New Zealand

DIV

   09-Jul-2004

60/586,219

   29-Jun-2010    10-Jul-2005

586503

   10 Oct 2011

586503

      Granted    HALPERIN Gideon;
KOVALEVSKI-ISHAI Eti

33805

   South Africa

NP

   09-Jul-2004

60/586,219

      10-Jul-2005

2007/01178

   25-Sep-2008

2007/01178

      Granted    HALPERIN Gideon;
KOVALEVSKI-ISHAI Eti

 

PROMOTERS EXHIBITING ENDOTHELIAL CELL SPECIFICITY AND METHODS OF USING SAME

 

Our Ref

   Country    Earliest Priority    Entry Date    Filing Date
Application No.
   Issue Date
Patent No.
   SKGF Ref    Status    Inventor

02/23345

   USA

CIP

   17-Nov-2000

60/248,582

      01-May-2002

10/135,447

   27-Jun-2006

7,067,649

      Granted    HARATS Dror; BREITBART
Eyal; BLOOM Nira

28786

   USA

DIV

   17-Nov-2000

60/248,582

   29-Oct-2004    01-May-2002

10/975,619

   25-Aug-2009

7,579,327

      Granted    HARATS Dror; BREITBART
Eyal; BLOOM Nira

45023

   USA

DIV

   17-Nov-2000

60/248,582

   03-Jun-2009    01-May-2002

12/457,200

         Pending    HARATS Dror; BREITBART
Eyal; BLOOM Nira

50926

   USA

DIV

   17-Nov-2000

60/248,582

   27-Apr-2011    01-May-2002

13/094,900

         Pending    HARATS Dror; BREITBART
Eyal; BLOOM Nira

53777

   USA

DIV

   17-Nov-2000

60/248,582

   24-April
2012
   01-May-2002

13/454,171

      3182.0350004    Pending    HARATS Dror; BREITBART
Eyal; BLOOM Nira

 

6

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [* * *].


25974

   PCT    01-May-2002

10/135,447

      30-Apr-2003

IL03/00347

   Publ. Date: 13-Nov-2003

Publ. #: WO03/093409

     Expired    HARATS
Dror

28650

   Singapore

NP

   01-May-2002

10/135,447

   01-Nov-2004    30-Apr-2003

200406381-4

   30-May-2008

107841 [WO 03/093409]

     Granted    HARATS
Dror;
BREITBART
Eyal;
BLOOM
Nira

28655

   South Africa

NP

   01-May-2002

10/135,447

   05-Nov-2004    30-Apr-2003

2004/8989

   26-Jul-2006

2004/8989

     Granted    HARATS
Dror;
BREITBART
Eyal;
BLOOM
Nira

[* * *]

                      

[* * *]

                      

28646

   Japan

NP

   01-May-2002

10/135,447

   01-Nov-2004    30-Apr-2003

2004-501545

        Abandoned    HARATS
Dror

[* * *]

                      

[* * *]

                      

[* * *]

                      

28651

   Canada

NP

   01-May-2002

10/135,447

   01-Nov-2004    30-Apr-2003

2,483,996

        Abandoned    HARATS
Dror;
BREITBART
Eyal;
BLOOM
Nira

28652

   Mexico

NP

   01-May-2002

10/135,447

   28-Oct-2004    30-Apr-2003

PA/a/2004/010711

        Abandoned    HARATS
Dror;
BREITBART
Eyal;
BLOOM
Nira

[* * *]

                      

 

7

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [* * *].


COMBINED TREATMENT UTILIZING VB-201

 

Our Ref

   Country    Earliest Priority    Entry Date    Filing Date
Application No.
   Issue Date
Patent No.
  SKGF Ref    Status    Inventor

[* * *]

                      

50379

   PCT    05-Jan-2010

61/292,226

      05-Jan-2011

IL2011/000010

   Publ. Date: 14-Jul-2011

Publ. #: WO2011/083467

     Expired    YACOV Niva; BREITBART
Eyal; COHEN Yael
   US
NP
   05-Jan-2010

61/292,226

   5-July 2012    05-Jan-2011

13/520,713

     3182.0160005    Pending    YACOV Niva; BREITBART
Eyal; COHEN Yael
   EP
NP
   05-Jan-2010

61/292,226

   1-Aug 2012         3182.016EP05    Pending    YACOV Niva; BREITBART
Eyal; COHEN Yael
   JP
NP
   05-Jan-2010

61/292,226

   4-July 2012         3182.016JP05    Pending    YACOV Niva; BREITBART
Eyal; COHEN Yael

 

POLYPEPTIDES AND POLYNUCLEOTIDES ENCODING SAME AND USE THEREOF IN THE TREATMENT OF MEDICAL CONDITIONS ASSOCIATED WITH ISCHEMIA

 

Our
Ref

   Country    Earliest Priority    Entry Date    Filing Date
Application No.
   Issue Date
Patent No.
  SKGF Ref    Status    Inventor

[* * *]

                      

41795

   PCT    31-Jul-2006

60/834,157

      31-Jul-2007

IL2007/000959

   Publ. Date: 07-Feb-2008

Publ. #: WO/2008/015675

     Expired    TAL Reshef; BREITBART Eyal;
BANGIO Livnat

45501

   China

NP

   31-Jul-2006

60/834,157

   26-Mar-2009    31-Jul-2007

200780035863.0

   8-Aug 2012

ZL20078003 5863.0

  3182.040CN01    Granted    TAL Reshef; BREITBART Eyal;
BANGIO Livnat

 

8

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [* * *].


54283

   China

Div

   31-Jul-2006

60/834,157

   26-June-2012    31-Jul-2007

201210210646.3

      3182.040CN11    Pending    TAL Reshef; BREITBART
Eyal; BANGIO Livnat

45495

   USA

NP

   31-Jul-2006

60/834,157

   02-Feb-2009    31-Jul-2007

12/309,856

         Abandoned    TAL Reshef; BREITBART
Eyal; BANGIO Livnat

51521

   USA

DIV

   31-Jul-2006

60/834,157

   20-Jun-2011    31-Jul-2007

13/163,776

         Pending    TAL Reshef; BREITBART
Eyal; BANGIO Livnat

45496

   Israel

NP

   31-Jul-2006

60/834,157

   29-Jan-2009    31-Jul-2007

196792

         Pending    TAL Reshef; BREITBART
Eyal; BANGIO Livnat

[* * *]

                       

[* * *]

                       

[* * *]

                       

[* * *]

                       

45499

   Australia

NP

   31-Jul-2006

60/834,157

   02-Feb-2009    31-Jul-2007

2007280017

   26-July 2012

2007280017

   3182.040AU01    Granted    TAL Reshef; BREITBART Eyal;
BANGIO Livnat

54370

   Australia

Div

   31-Jul-2006

60/834,157

   12-July 2012    31-Jul-2007

2012204128

      3182.040AU11    Pending    TAL Reshef; BREITBART Eyal;
BANGIO Livnat

45500

   Japan

NP

   31-Jul-2006

60/834,157

   02-Feb-2009    31-Jul-2007

2009-522416

         Pending    TAL Reshef; BREITBART
Eyal; BANGIO Livnat

45502

   Republic of Korea

NP

   31-Jul-2006

60/834,157

   27-Feb-2009    31-Jul-2007

2009-7004288

         Abandoned    TAL Reshef; BREITBART Eyal;
BANGIO Livnat

 

9

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [* * *].


45503

   Mexico

NP

   31-Jul-2006

60/834,157

   29-Jan-2009    31-Jul-2007

MX/a/2009/001157

        Pending    TAL Reshef; BREITBART
Eyal; BANGIO Livnat

45504

   New Zealand

NP

   31-Jul-2006

60/834,157

   26-Jan-2009    31-Jul-2007

574410

   9 July 2012

574410

  3182.040NZ01    Granted    TAL Reshef; BREITBART
Eyal; BANGIO Livnat

45505

   South Africa

NP

   31-Jul-2006

60/834,157

   26-Jan-2009    31-Jul-2007

2009/00581

   31-Mar-2010

2009/00581

     Granted    TAL Reshef; BREITBART
Eyal; BANGIO Livnat

45506

   Singapore

NP

   31-Jul-2006

60/834,157

   30-Jan-2009    31-Jul-2007

200900642-0

   30-Jun-2011

149616[WO2008/015675]

     Granted    TAL Reshef; BREITBART Eyal;
BANGIO Livnat

 

TREATMENT WITH VB-201

 

Our Ref

   Country    Earliest Priority    Entry Date    Filing Date
Application No.
   Issue Date
Patent No.
  SKGF Ref    Status    Inventor

[* * *]

                      

[* * *]

                      

50377

   PCT    05-Jan-2010

61/292,226

      05-Jan-2011

IL2011/000008

   Publ. Date: 14-Jul-2011

Publ. #: WO2011/083465

     Expired    YACOV Niva; BREITBART
Eyal; MENDEL Itzhak; SHER
Naamit; COHEN Yael
   US NP    05-Jan-2010

61/292,226

   June 2012    05-Jan-2011      3182.0170005    Pending   
   AU NP    05-Jan-2010

61/292,226

   June 2012    05-Jan-2011      3182.017AU05    Pending   

 

10

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [* * *].


[* * *]

                       
   CANADA
NP
   05-Jan-2010

61/292,226

   June 2012    05-Jan-2011       3182.017CA05    Pending   
   China

NP

   05-Jan-2010

61/292,226

   June 2012    05-Jan-2011       3182.017CN05    Pending   
   HK

NP

   05-Jan-2010

61/292,226

   June 2012    05-Jan-2011       3182.017HK05    Pending   
   EP NP    05-Jan-2010

61/292,226

   June 2012    05-Jan-2011       3182.017EP05    Pending   

[* * *]

                       

[* * *]

                       
   Japan

NP

   05-Jan-2010

61/292,226

   June 2012    05-Jan-2011       3182.017JP05    Pending   
   South Korea

NP

   05-Jan-2010

61/292,226

   June 2012    05-Jan-2011       3182.017KR05    Pending   
   MX

NP

   05-Jan-2010

61/292,226

   June 2012    05-Jan-2011       3182.017MX05    Pending   

[* * *]

                       

[* * *]

                       

 

11

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [* * *].


ANTI-ANGIOGENIC ADENOVIRUS VECTOR SUITABLE FOR CLINICAL APPLICATIONS AND METHODS FOR PRODUCTION THEREOF

 

Our Ref

   Country    Earliest Priority    Entry Date    Filing Date
Application No.
   Issue Date
Patent No.
  SKGF Ref    Status    Inventor

[* * *]

                      

 

METHODS OF PRODUCING ADENOVIRUS VECTORS AND VIRAL PREPARATIONS GENERATED THEREBY

 

Our Ref

   Country    Earliest Priority    Entry Date    Filing Date
Application No.
   Issue Date
Patent No.
  SKGF Ref    Status    Inventor

49684

   PCT    12-Jan-2010

61/294,158

      12-Jan-2011

IB2011/050137

   Publ. Date: 21-Jul-2011

Publ. #: WO2011/086509

     Expired    BREITBART
Eyal;
BANGIO
Livnat;
SHER
Naamit
   US NP    12-Jan-2010

61/294,158

   June 2012    12-Jan-2011      3182.0330001    Pending    BREITBART
Eyal;
BANGIO
Livnat;
SHER
Naamit
   EP NP    12-Jan-2010

61/294,158

   June 2012    12-Jan-2011      3182.033EP01    Pending    BREITBART
Eyal;
BANGIO
Livnat;
SHER
Naamit

[* * *]

                      
   JP NP    12-Jan-2010

61/294,158

   June 2012    12-Jan-2011      3182.033JP01    Pending    BREITBART
Eyal;
BANGIO
Livnat;
SHER
Naamit

[* * *]

                      

 

12

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [* * *].


IMMUNOMODULATION (IMMUNIZATION AND TOLERANCE) OF APO-E DEFICIENT MICE WITH 1 HEXADECINYL 2-5’ OXOPENTYL PHOSPHATIDYCHLOLINE (2-5 ALLE-ALDEHYDE LECITIN ETHER) SUPPRESSES EARLY ATHEROGENESIS

 

Our Ref

   Country    Earliest Priority    Entry Date    Filing Date
Application No.
   Issue Date
Patent No.
  SKGF Ref    Status    Inventor

[* * *]

                      

 

METHODS EMPLOYING AND COMPOSITIONS CONTAINING DEFINED OXIDIZED PHOSPHOLIPIDS FOR PREVENTION AND TREATMENT OF ATHEROSCLEROSIS

 

Our Ref

   Country    Earliest Priority    Entry Date    Filing Date
Application No.
   Issue Date
Patent No.
  SKGF Ref    Status    Inventor

01/22753

   PCT    24-Nov-2000

60/252,574

      22-Nov-2001

IL01/01080

   Publ. Date: 30-May-2002

Publ. #: WO02/41827

     Expired    HARATS Dror; GEORGE
Jacob; HALPERIN Gideon

26035

   Europe

NP

   22-Nov-2000

60/252,574

   15-May-2003    22-Nov-2001

01997274.4

        Pending    HARATS Dror; GEORGE
Jacob; HALPERIN Gideon

52529

   EP Div    22-Nov-2000

60/252,574

   17-Nov 2011    22-Nov-2001

11189562.9

     3182.021EP11    Pending    HARATS Dror; GEORGE
Jacob; HALPERIN Gideon

27265

   Hong Kong

NP

   24-Nov-2000

60/252,574

   12-Dec-2003    22-Nov-2001

03109096.1

        Pending    HARATS Dror; GEORGE
Jacob; HALPERIN Gideon

26036

   Israel

NP

   22-Nov-2000

60/252,574

   20-May-2003    22-Nov-2001

156015

   10-May-2008

156015

     Granted    HARATS Dror; GEORGE
Jacob; HALPERIN Gideon

32434

   Israel

DIV

   24-Nov-2000

60/252,574

   20-Jul-2006    22-Nov-2001

176976

   1-Dec 2012

176976

  3182.021IL11    Granted    HARATS Dror; GEORGE
Jacob; HALPERIN Gideon

26037

   India

NP

   22-Nov-2000

60/252,574

   22-May-2003    22-Nov-2001

796/CHENP/2003

   19-Sep-2008

223638

     Granted    HARATS Dror; GEORGE
Jacob; HALPERIN Gideon

 

13

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [* * *].


26039

   Canada

NP

   22-Nov-2000

60/252,574

   22-May-2003    22-Nov-2001

2,429,817

      3182.021CA01    Pending    HARATS Dror; GEORGE
Jacob; HALPERIN Gideon

26040

   Australia

NP

   22-Nov-2000

60/252,574

   23-May-2003    22-Nov-2001

2002218461

   21-Dec-2006

2002218461

      Granted    HARATS Dror; GEORGE
Jacob; HALPERIN Gideon

26041

   Japan

NP

   22-Nov-2000

60/252,574

   23-May-2003    22-Nov-2001

2002-544008

   01-Aug-2008

4,162,486

      Granted    HARATS Dror; GEORGE
Jacob; HALPERIN Gideon

44299

   Japan

DIV

   24-Nov-2000

60/252,574

   10-Jun-2008    22-Nov-2001

2008-151301

   25 May 2012

5001906

      Granted    HARATS Dror; GEORGE
Jacob; HALPERIN Gideon

26042

   China

NP

   22-Nov-2000

60/252,574

   22-Jul-2003    22-Nov-2001

01822215.3

   06-Jan-2010

ZL01822215.3

      Granted    HARATS Dror; GEORGE
Jacob; HALPERIN Gideon

26043

   Republic of Korea

NP

   22-Nov-2000

60/252,574

   24-May-2003    22-Nov-2001

2003-7006991

   17-Oct-2008

865142

      Granted    HARATS Dror; GEORGE
Jacob; HALPERIN Gideon

26044

   Mexico

NP

   22-Nov-2000

60/252,574

   22-May-2003    22-Nov-2001

PA/a/2003/004517

   02-Sep-2009

269738

      Granted    HARATS Dror; GEORGE
Jacob; HALPERIN Gideon

46494

   Mexico

DIV

   24-Nov-2000

60/252,574

   12-Jun-2009    22-Nov-2001

MX/a/2009/006365

   2 December 2011

293020

   3182.021MX11    Granted    HARATS Dror; GEORGE
Jacob; HALPERIN Gideon

 

14

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [* * *].


PROMOTERS EXHIBITING ENDOTHELIAL CELL SPECIFICITY AND METHODS OF USING SAME FOR REGULATION OF ANGIOGENESIS

 

Our Ref

   Country    Earliest Priority    Entry Date    Filing Date
Application No.
   Issue Date
Patent No.
  SKGF Ref    Status    Inventor

36194

   USA

CIP

   17-Nov-2000

60/248,582

      30-Apr-2007

11/790,992

        Pending    HARATS Dror;
GREENBERGER Shoshana;
BREITBART Eyal;
BANGIO Livnat; PELED
Michael

43177

   PCT    30-Apr-2007

11/790,992

      27-Apr-2008

IL2008/000543

   Publ. Date: 06-Nov-2008

Publ. #: WO2008/132729

     Expired    HARATS Dror;
GREENBERGER Shoshana;
BREITBART
Eyal; BANGIO Livnat;
PELED Michael

47030

   Europe

NP

   30-Apr-2007

11/790,992

   27-Nov-2009    27-Apr-2008

08738245.3

        Pending    HARATS Dror;
GREENBERGER Shoshana;
BREITBART Eyal;
BANGIO Livnat; PELED
Michael

48882

   Hong Kong

NP

   30-Apr-2007

11/790,992

   11-Jun-2010    27-Apr-2008

10105838.3

        Pending    HARATS Dror;
GREENBERGER Shoshana;
BREITBART Eyal;
BANGIO Livnat; PELED
Michael

47031

   Japan

NP

   30-Apr-2007

11/790,992

   30-Oct-2009    27-Apr-2008

2010-505002

        Pending    HARATS Dror;
GREENBERGER Shoshana;
BREITBART Eyal;
BANGIO Livnat; PELED
Michael

47032

   Canada

NP

   30-Apr-2007

11/790,992

   27-Oct-2009    27-Apr-2008

2,685,394

        Pending    HARATS Dror;
GREENBERGER Shoshana;
BREITBART Eyal;
BANGIO Livnat; PELED
Michael

47033

   China

NP

   30-Apr-2007

11/790,992

   30-Dec-2009    27-Apr-2008

200880022935.2

     3182.039CN01    Pending    HARATS Dror;
GREENBERGER Shoshana;
BREITBART Eyal;
BANGIO Livnat; PELED
Michael

 

15

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [* * *].


47034

   Australia

NP

   30-Apr-2007

11/790,992

   27-Nov-2009    27-Apr-2008

2008243817

         Pending    HARATS Dror;
GREENBERGER Shoshana;
BREITBART Eyal;
BANGIO Livnat; PELED
Michael

47035

   Republic of Korea

NP

   30-Apr-2007

11/790,992

   18-Nov-2009    27-Apr-2008

2009-7024041

         Pending    HARATS Dror;
GREENBERGER Shoshana;
BREITBART Eyal;
BANGIO Livnat; PELED
Michael

[* * *]

                       

47037

   Israel

NP

   30-Apr-2007

11/790,992

   26-Oct-2009    27-Apr-2008

201760

         Pending    HARATS Dror;
GREENBERGER Shoshana;
BREITBART Eyal;
BANGIO Livnat; PELED
Michael

47038

   Mexico

NP

   30-Apr-2007

11/790,992

   29-Oct-2009    27-Apr-2008

MX/a/2009/011750

         Pending    HARATS Dror;
GREENBERGER Shoshana;
BREITBART Eyal;
BANGIO Livnat; PELED
Michael

47039

   New Zealand

NP

   30-Apr-2007

11/790,992

   27-Nov-2009    27-Apr-2008

581511

   5 June 2012

581511

   3182.039NZ01    Granetd    HARATS Dror;
GREENBERGER Shoshana;
BREITBART Eyal;
BANGIO Livnat; PELED
Michael

47040

   South Africa

NP

   30-Apr-2007

11/790,992

   25-Nov-2009    27-Apr-2008

2009/08331

   29-Dec-2010

2009/08331

      Granted    HARATS Dror;
GREENBERGER Shoshana;
BREITBART Eyal;
BANGIO Livnat; PELED
Michael

47041

   Singapore

NP

   30-Apr-2007

11/790,992

   30-Oct-2009    27-Apr-2008

200907209-1

   15 May 2012

156740

   3182.039SG01    Granted    HARATS Dror;
GREENBERGER Shoshana;
BREITBART Eyal;
BANGIO Livnat; PELED
Michael

 

16

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [* * *].


THE EFFECT OF MUCOSAL TOLERANCE WITH LIPID IPOPROTEIN AND PROTEIN ANTIGENS ON ATHEROSCLEROSIS IN LDL-RECEPTOR DEFICIENT MICE

 

Our Ref

   Country    Earliest Priority    Entry Date    Filing Date
Application No.
   Issue Date
Patent No.
  SKGF Ref    Status    Inventor

[* * *]

                      

 

METHODS EMPLOYING AND COMPOSITIONS CONTAINING PLAQUE ASSOCIATED MOLECULES FOR PREVENTION AND TREATMENT OF ATHEROSCLEROSIS

 

Our Ref

   Country    Earliest Priority    Entry Date    Filing Date
Application No.
   Issue Date
Patent No.
  SKGF Ref    Status    Inventor

01/23033

   PCT    04-Jan-2001

60/259,512

      03-Jan-2002

IL02/00005

   Publ. Date: 11-Jul-2002

Publ. #: WO02/053092

     Expired    HARATS Dror; GEORGE
Jacob

26046

   Israel

NP

   04-Jan-2001

60/259,512

   03-Jul-2003    03-Jan-2002

156770

        Allowed    HARATS Dror; GEORGE
Jacob

26047

   India

NP

   04-Jan-2001

60/259,512

   04-Jul-2003    03-Jan-2002

1044/CHENP/2003

   19-Sep-2008

223640

     Granted    HARATS Dror; GEORGE
Jacob

26048

   USA

NP

   04-Jan-2001

60/259,512

   02-Jul-2003    03-Jan-2002

10/451,370

   09-Oct-2007

7,279,459

     Granted    HARATS Dror; GEORGE
Jacob

26050

   Australia

NP

   04-Jan-2001

60/259,512

   11-Jul-2003    03-Jan-2002

2002225301

   03-Mar-2006

2002225301

     Granted    HARATS Dror; GEORGE
Jacob

26051

   Japan

NP

   04-Jan-2001

60/259,512

   03-Jul-2003    03-Jan-2002

2002-554043

   26-Sep-2008

4,191,997

     Granted    HARATS Dror; GEORGE
Jacob

26052

   China

NP

   04-Jan-2001

60/259,512

   04-Sep-2003    03-Jan-2002

02805950.6

        Pending    HARATS Dror; GEORGE
Jacob

 

17

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [* * *].


26054

   Mexico

NP

   04-Jan-2001

60/259,512

   01-Jun-2003    03-Jan-2002

PA/a/2003/006043

   17-Mar-2009

265173

      Granted    HARATS Dror; GEORGE
Jacob

26045

   Europe

NP

   04-Jan-2001

60/259,512

   18-Jul-2003    03-Jan-2002

02715682.7

         Abandoned    HARATS Dror; GEORGE
Jacob

27463

   Hong Kong

NP

   04-Jan-2001

60/259,512

   28-Jan-2004    03-Jan-2002

04100565.1

         Abandoned    HARATS Dror; GEORGE
Jacob

26049

   Canada

NP

   04-Jan-2001

60/259,512

   03-Jul-2003    03-Jan-2002

2,433,781

         Abandoned    HARATS Dror; GEORGE
Jacob

[* * *]

                       

 

FORMULATIONS AND DOSAGE FORMS OF CI-201 AND RELATED COMPOUNDS

 

Our Ref

   Country    Earliest Priority    Entry Date    Filing Date
Application No.
   Issue Date
Patent No.
   SKGF Ref    Status    Inventor

[* * *]

                       

[* * *]

                       
   PCT    Sept. 1, 2011

61/529,989

      Aug. 31, 2012

PCT/US2012/053533

      3182.013PC01    Pending    SHER Naamit; YOUNG Victor
M.; McNAUGHTON Alyn;
WILDING Ian; BAKHSHAEE
Massoud

 

18

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [* * *].


PROMOTERS EXHIBITING ENDOTHELIAL CELL SPECIFICITY AND METHODS OF USING SAME FOR REGULATION OF ANGIOGENESIS

 

Our Ref

   Country    Earliest Priority    Entry Date    Filing Date
Application No.
   Issue Date
Patent No.
       Status    Inventor

31577

   USA

CIP

   17-Nov-2000

60/248,582

      23-Feb-2006

11/359,513

   18 October 2011

8,039,261

  3182.0380000    Granted    HARATS Dror; GREENBERGER
Shoshana; BREITBART Eyal;
BANGIO Livnat; PELED Michael

37180

   PCT    23-Feb-2006

11/359,513

      22-Feb-2007

IL2007/000242

   Publ. Date: 30-Aug-2007

Publ. #: WO2007/096882

     Expired    HARATS Dror; GREENBERGER
Shoshana; BREITBART Eyal;
PELED Michael; BANGIO Livnat

44720

   USA

NP

   17-Nov-2000

60/248,582

   20-Aug-2008    22-Feb-2007

12/224,178

        Abandoned    HARATS Dror; GREENBERGER
Shoshana; BREITBART Eyal;
BANGIO Livnat; PELED Michael

44708

   Europe

NP

   23-Feb-2006

11/359,513

   28-Aug-2008    22-Feb-2007

07713267.8

        Pending    HARATS Dror; GREENBERGER
Shoshana; BREITBART Eyal;
PELED Michael; BANGIO Livnat

[* * *]

                      

44709

   Israel

NP

   23-Feb-2006

11/359,513

   19-Aug-2008    22-Feb-2007

193554

        Abandoned    HARATS Dror; GREENBERGER
Shoshana; BREITBART Eyal;
PELED Michael; BANGIO Livnat

[* * *]

                      

44711

   Canada

NP

   23-Feb-2006

11/359,513

   20-Aug-2008    22-Feb-2007

2,638,829

        Abandoned    HARATS Dror; GREENBERGER
Shoshana; BREITBART Eyal;
PELED Michael; BANGIO Livnat

 

19

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [* * *].


44712

   Australia

NP

   23-Feb-2006

11/359,513

   23-Sep-2008    22-Feb-2007

2007219088

         Abandoned    HARATS Dror; GREENBERGER
Shoshana; BREITBART Eyal;
PELED Michael; BANGIO Livnat

44713

   Japan

NP

   23-Feb-2006

11/359,513

   25-Aug-2008    22-Feb-2007

2008-555946

         Abandoned    HARATS Dror; GREENBERGER
Shoshana; BREITBART Eyal;
PELED Michael; BANGIO Livnat

44714

   China

NP

   23-Feb-2006

11/359,513

   21-Oct-2008    22-Feb-2007

200780014285.2

         Abandoned    HARATS Dror; GREENBERGER
Shoshana; BREITBART Eyal;
PELED Michael; BANGIO Livnat

44715

   Republic of Korea

NP

   23-Feb-2006

11/359,513

   22-Sep-2008    22-Feb-2007

2008-7023144

         Abandoned    HARATS Dror; GREENBERGER
Shoshana; BREITBART Eyal;
PELED Michael; BANGIO Livnat

44716

   Mexico

NP

   23-Feb-2006

11/359,513

   22-Aug-2008    22-Feb-2007

MX/a/2008/010859

         Abandoned    HARATS Dror; GREENBERGER
Shoshana; BREITBART Eyal;
PELED Michael; BANGIO Livnat

[* * *]

                       

[* * *]

                       

[* * *]

                       

 

PROCESS FOR THE PREPARATION OF OXIDIZED PHOSPHOLIPIDS

 

Our Ref

   Country    Earliest Priority    Entry Date    Filing Date
Application No.
   Issue Date
Patent No.
   SKGF Ref    Status    Inventor

33794

   USA CIP    09-Jul-2004

60/586,219

      09-Jan-2007

11/650,973

   05-Oct-2010

7,807,847

   3182.0200001    Granted    HALPERIN Gideon;
KOVALEVSKI-ISHAI Eti

49396

   USA DIV    09-Jul-2004

60/586,219

   24-Aug-2010    09-Jan-2007

12/861,921

   28-Feb 2012

8,124,800

   3182.0200002    Granted    HALPERIN Gideon;
KOVALEVSKI-ISHAI Eti

 

20

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [* * *].


52800

   USA DIV    09-Jul-2004

60/586,219

   May 24, 2012    January 26, 2012

13/358,573

      3182.0200003    Pending    HALPERIN Gideon;
KOVALEVSKI
   USA CIP    09-Jul-2004

60/586,219

      Nov. 9, 2012

13/672,811

      3182.0200004    Pending    HALPERIN Gideon;
KOVALEVSKI
   US CON    09-Jul-2004

60/586,219

      Dec. 10, 2012

13/709,198

      3182.0200005    Pending    HALPERIN Gideon;
KOVALEVSKI

 

IMPROVED PROCESS FOR THE PREPARATION OF OXIDIZED PHOSPHOLIPIDS

 

Our Ref

   Country    Earliest Priority    Entry Date    Filing Date
Application No.
   Issue Date
Patent No.
  SKGF Ref    Status    Inventor

43029

   PCT    09-Jan-2007

11/650,973

      02-Jan-2008

IL2008/000013

   Publ. Date: 17-Jul-2008

Publ. #: WO2008/084472

     Expired    HALPERIN Gideon;
KOVALEVSKI-ISHAI Eti

46756

   South Africa

NP

   09-Jan-2007

11/650,973

      02-Jan-2008

2009/05601

   26-May-2010

2009/05601

     Granted    HALPERIN Gideon;
KOVALEVSKI-ISHAI Eti

46755

   New Zealand

NP

   09-Jan-2007

11/650,973

   07-Aug-2009    02-Jan-2008

578947

   4-Dec 2011

578947

  3182.020NZ01    Granted    HALPERIN Gideon;
KOVALEVSKI-ISHAI Eti

51026

   New Zealand

DIV

   09-Jan-2007

11/650,973

   15-Jun-2011    02-Jan-2008

593529

     3182.020NZ11    Pending    HALPERIN Gideon;
KOVALEVSKI-ISHAI Eti

[* * *]

                      

 

21

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [* * *].


46754

   Australia

NP

   09-Jan-2007

11/650,973

   07-Aug-2009    02-Jan-2008

2008204238

         Pending    HALPERIN Gideon;
KOVALEVSKI-ISHAI Eti

46753

   Mexico

NP

   09-Jan-2007

11/650,973

   09-Jul-2009    02-Jan-2008

MX/a/2009/007422

   9-Jan 2012

294470

      Granted    HALPERIN Gideon;
KOVALEVSKI-ISHAI Eti

[* * *]

                       

46751

   Israel

NP

   09-Jan-2007

11/650,973

   09-Jul-2009    02-Jan-2008

199792

         Pending    HALPERIN Gideon;
KOVALEVSKI-ISHAI Eti

46750

   China

NP

   09-Jan-2007

11/650,973

   31-Aug-2009    02-Jan-2008

200880006707.6

         Pending    HALPERIN Gideon;
KOVALEVSKI-ISHAI Eti

46749

   Republic of Korea

NP

   09-Jan-2007

11/650,973

   27-Jul-2009    02-Jan-2008

2009-7015780

         Pending    HALPERIN Gideon;
KOVALEVSKI-ISHAI Eti

46748

   Japan

NP

   09-Jan-2007

11/650,973

   09-Jul-2009    02-Jan-2008

2009-545295

         Pending    HALPERIN Gideon;
KOVALEVSKI-ISHAI Eti

46747

   Canada

NP

   09-Jan-2007

11/650,973

   06-Jul-2009    02-Jan-2008

2,674,902

         Pending    HALPERIN Gideon;
KOVALEVSKI-ISHAI Eti

46746

   Europe

NP

   09-Jan-2007

11/650,973

   07-Aug-2009    02-Jan-2008

08700247.3

         Pending    HALPERIN Gideon;
KOVALEVSKI-ISHAI Eti
   Europe

Div

   09-Jan-2007

11/650,973

   July 27, 2012    02-Jan-2008

EP 12178298.1

      3182.020EP11    Pending    HALPERIN Gideon;
KOVALEVSKI-ISHAI Eti

48328

   Hong Kong

NP

      16-Mar-2010    02-Jan-2008

10102729.2

         Pending    HALPERIN Gideon;
KOVALEVSKI-ISHAI Eti

 

22

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [* * *].


COMPOSITIONS AND METHODS FOR TREATING GLIOBLASTOMA GBM

 

Our Ref

   Country    Earliest Priority    Entry Date    Filing Date
Application No.
   Issue Date
Patent No.
  SKGF Ref    Status    Inventor

[* * *]

                      

 

METHODS FOR USE OF A SPECIFIC ANTI-ANGIOGENIC ADENOVIRAL AGENT

 

Our Ref

   Country    Earliest Priority    Entry Date    Filing Date
Application No.
   Issue Date
Patent No.
  SKGF Ref    Status    Inventor

[* * *]

                      

50375

   PCT    05-Jan-2010

61/282,228

      05-Jan-2011

IL2011/000007

   Publ. Date: 14-Jul-2011

Publ. #: WO2011/083464

     Expired    BREITBART Eyal; BANGIO
Livnat; SHER Naamit; FEIGE
Erez; COHEN Yael
   US NP    05-Jan-2010

61/282,228

   June 2012    05-Jan-2011      3182.0310002    Pending    BREITBART Eyal; BANGIO
Livnat; SHER Naamit; FEIGE
Erez; COHEN Yael
   EP    05-Jan-2010

61/282,228

   June 2012    05-Jan-2011      3182.031EP02    Pending    BREITBART Eyal; BANGIO
Livnat; SHER Naamit; FEIGE
Erez; COHEN Yael
   IL    05-Jan-2010

61/282,228

   June 2012    05-Jan-2011      3182.031IL02    Pending    BREITBART Eyal; BANGIO
Livnat; SHER Naamit; FEIGE
Erez; COHEN Yael

[* * *]

                      
   JP    05-Jan-2010

61/282,228

   June 2012    05-Jan-2011      3182.031JP02    Pending    BREITBART Eyal; BANGIO
Livnat; SHER Naamit; FEIGE
Erez; COHEN Yael

 

23

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [* * *].


[* * *]

                       
   MX    05-Jan-2010

61/282,228

   June 2012    05-Jan-2011       3182.031MX02    Pending    BREITBART Eyal; BANGIO
Livnat; SHER Naamit; FEIGE
Erez; COHEN Yael

[* * *]

                       

[* * *]

                       

[* * *]

                       
   Canada    05-Jan-2010

61/282,228

   June 2012    05-Jan-2011       3182.031CA02    Pending    BREITBART Eyal; BANGIO
Livnat; SHER Naamit; FEIGE
Erez; COHEN Yael
   Au    05-Jan-2010

61/282,228

   June 2012    05-Jan-2011       3182.031AU02    Pending    BREITBART Eyal; BANGIO
Livnat; SHER Naamit; FEIGE
Erez; COHEN Yael

 

COMPOSITIONS AND METHODS FOR TREATING GLIOBLASTOMA GBM

 

Our Ref

   Country    Earliest Priority    Entry Date    Filing Date
Application No.
   Issue Date
Patent No.
  SKGF Ref    Status    Inventor

[* * *]

                      

50376

   PCT    05-Jan-2010

61/282,228

      05-Jan-2011

IL2011/000009

   Publ. Date: 14-Jul-2011

Publ. #: WO2011/083466

  3182.032PC02    Expired    BREITBART Eyal; BANGIO
Livnat; COHEN Yael;
BRENNER Andrew J.

 

24

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [* * *].


   US NP    05-Jan-2010

61/282,228

   June 2012    05-Jan-2011       3182.0320002    Pending    BREITBART Eyal; BANGIO
Livnat; COHEN Yael;
BRENNER Andrew J.
   EU NP    05-Jan-2010

61/282,228

   June 2012    05-Jan-2011       3182.032EP02    Pending    BREITBART Eyal; BANGIO
Livnat; COHEN Yael;
BRENNER Andrew J.
   IL NP    05-Jan-2010

61/282,228

   June 2012    05-Jan-2011       3182.032IL02    Pending    BREITBART Eyal; BANGIO
Livnat; COHEN Yael;
BRENNER Andrew J.

[* * *]

                       
   JP NP    05-Jan-2010

61/282,228

   June 2012    05-Jan-2011       3182.032JP02    Pending    BREITBART Eyal; BANGIO
Livnat; COHEN Yael;
BRENNER Andrew J.
   KR NP    05-Jan-2010

61/282,228

   June 2012    05-Jan-2011       3182.032KR02    Pending    BREITBART Eyal; BANGIO
Livnat; COHEN Yael;
BRENNER Andrew J.
   MX NP    05-Jan-2010

61/282,228

   June 2012    05-Jan-2011       3182.032MX02    Pending    BREITBART Eyal; BANGIO
Livnat; COHEN Yael;
BRENNER Andrew J.

[* * *]

                       

[* * *]

                       

[* * *]

                       
   CA NP    05-Jan-2010

61/282,228

   June 2012    05-Jan-2011       3182.032CA02    Pending    BREITBART Eyal; BANGIO
Livnat; COHEN Yael;
BRENNER Andrew J.
   AU NP    05-Jan-2010

61/282,228

   June 2012    05-Jan-2011       3182.032AU02    Pending    BREITBART Eyal; BANGIO
Livnat; COHEN Yael;
BRENNER Andrew J.

 

25

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [* * *].


OXIDIZED LIPIDS AND USES THEREOF IN THE TREATMENT OF INFLAMMATORY DISEASES AND DISORDERS

 

Our Ref

   Country    Earliest Priority    Entry Date    Filing Date
Application No.
   Issue Date
Patent No.
        Status    Inventor

32516

   USA

CIP

   27-May-2003

10/445,347

      28-Sep-2006

11/528,657

   01-Dec-2009

7,625,882

      Granted    HARATS Dror; GEORGE
Jacob; HALPERIN
Gideon; KOVALEVSKI-
ISHAI Eti; YACOV Niva;
MENDEL Itzhak

46643

   USA

DIV

   27-May-2003

10/445,347

   14-Oct-2009    28-Sep-2006

12/588,371

   05-Jul-2011

7,973,023

      Granted    HARATS Dror; GEORGE
Jacob; HALPERIN
Gideon; KOVALEVSKI-
ISHAI Eti; YACOV Niva;
MENDEL Itzhak

50968

   USA

CON

   27-May-2003

10/445,347

   13-Apr-2011    28-Sep-2006

13/085,542

         Pending    HARATS Dror; GEORGE
Jacob; HALPERIN
Gideon; KOVALEVSKI-
ISHAI Eti; YACOV Niva;
MENDEL Itzhak

 

AN IMMUNOLOGICAL AND ORAL TOLERANCE-INDUCING COMPOSITION AND USE THEREOF FOR THE PREVENTION AND/OR FOR THE TREATMENT OF ATHEROSCLEROSIS

 

Our Ref

   Country    Earliest Priority    Entry Date    Filing Date
Application No.
   Issue Date
Patent No.
   SKGF Ref    Status    Inventor

00/21414

   Israel

Basic

         04-Oct-1998

126447

   30-Dec-2004

126447

      Granted    HARATS Dror; SHOENFELD
Yehuda; GEORGE Jacob

 

26

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [* * *].


A COMPOSITION FOR THE PREVENTION AND/OR TREATMENT OF ATHEROSCLEROSIS

 

Our Ref

   Country    Earliest Priority    Entry Date    Filing Date
Application No.
   Issue Date
Patent No.
  SKGF Ref    Status   

Inventor

01/21558

   PCT    04-Oct-1998

126447

   01-Apr-2001    30-Sep-1999

IL99/00519

   Publ. Date: 13-Apr-2000

Publ. #: WO00/20019

     Expired   

HARATS Dror; SHOENFELD

Yehuda; GEORGE Jacob

01/21884

   Europe

NP

   04-Oct-1998

126447

      30-Sep-1999

99970026.3

   14-May-2003

1126867

     Granted   

HARATS Dror; SHOENFELD

Yehuda; GEORGE Jacob

01/21886

   Canada

NP

   04-Oct-1998

126447

      30-Sep-1999

2,345,445

   24-Aug-2010

2,345,445

     Granted   

HARATS Dror; SHOENFELD

Yehuda; GEORGE Jacob

01/21887

   Australia

NP

   04-Oct-1998

126447

      30-Sep-1999

59966/99

   28-Aug-2003

760582

     Granted   

HARATS Dror; SHOENFELD

Yehuda; GEORGE Jacob

01/21888

   China

NP

   04-Oct-1998

126447

   04-Apr-2001    30-Sep-1999

99814030.9

   24-Nov-2004

ZL99814030.9

     Granted   

HARATS Dror; SHOENFELD

Yehuda; GEORGE Jacob

02/23904

   Hong Kong

NP

   04-Oct-1998

126447

   19-Jul-2002    30-Sep-1999

02105365.4

   18-Nov-2005

HK1043743

     Granted   

HARATS Dror; SHOENFELD

Yehuda; GEORGE Jacob

28590

   China

DIV

   04-Oct-1998

126447

   23-Sep-2004    30-Sep-1999

200410011940.7

   05-Nov-2008

ZL200410011940.7

     Granted   

HARATS Dror; SHOENFELD

Yehuda; GEORGE Jacob

30562

   Hong Kong

DIV

   04-Oct-1998

126447

   28-Sep-2005    30-Sep-1999

05108561.7

   21-Aug-2009

HK1076600

     Granted   

HARATS Dror; SHOENFELD

Yehuda; GEORGE Jacob

01/21889

   Singapore

NP

   04-Oct-1998

126447

      30-Sep-1999

200101998-3

   30-Apr-2003

80182

     Granted   

HARATS Dror; SHOENFELD

Yehuda; GEORGE Jacob

 

27

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [* * *].


01/21890

   Japan

NP

   04-Oct-1998

126447

      30-Sep-1999

2000-573378

         Pending   

HARATS Dror; SHOENFELD

Yehuda; GEORGE Jacob

01/21891

   Hungary

NP

   04-Oct-1998

126447

   30-Sep-1999    30-Sep-1999

P0104410

         Pending   

HARATS Dror; SHOENFELD

Yehuda; GEORGE Jacob

[* * *]

                       

01/21893

   Republic of Korea

NP

   04-Oct-1998

126447

      30-Sep-1999

2001-7004285

   02-Feb-2007

680707

      Granted   

HARATS Dror; SHOENFELD

Yehuda; GEORGE Jacob

01/21885

   USA

NP

   04-Oct-1998

126447

   30-Mar-2001    30-Sep-1999

09/806,400

         Abandoned   

HARATS Dror; SHOENFELD

Yehuda; GEORGE Jacob

01/22498

   USA

CON

   04-Oct-1998

126447

   04-Sep-2001    30-Sep-1999

09/944,592

         Abandoned   

HARATS Dror; SHOENFELD

Yehuda; GEORGE Jacob

 

COMPOSITIONS CONTAINING BETA 2-GLYCOPROTEIN I FOR THE PREVENTION AND/OR TREATMENT OF VASCULAR DISEASE

 

Our Ref

   Country    Earliest Priority    Entry Date    Filing Date
Application No.
   Issue Date
Patent No.
   SKGF Ref    Status   

Inventor

28919

   USA

CIP

   04-Oct-1998

126447

      15-Apr-2005

11/106,665

         Abandoned   

HARATS Dror; SHOENFELD

Yehuda; GEORGE Jacob;

YACOV Niva

 

28

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [* * *].


METHODS EMPLOYING AND COMPOSITIONS CONTAINING DEFINED OXIDIZED PHOSPHOLIPIDS FOR PREVENTION AND TREATMENT OF ATHEROSCLEROSIS

 

Our Ref

   Country    Earliest
      Priority      
         Entry Date          Filing Date
  Application No.  
   Issue Date
    Patent No.    
   SKGF Ref    Status   

Inventor

26038

   USA

CIP

   22-Nov-2000

60/252,574

      27-May-2003

10/445,347

   04-Jan-2005

6,838,452

      Granted   

HARATS Dror; GEORGE

Jacob; HALPERIN Gideon;

KOVALEVSKI-ISHAI Eti; YACOV Niva

27041

   USA

DIV

   24-Nov-2000

60/252,574

   24-Nov-2003    27-May-2003

10/718,596

   06-Mar-2007

7,186,704

      Granted   

HARATS Dror; GEORGE

Jacob; HALPERIN Gideon;

KOVALEVSKI-ISHAI Eti;

YACOV Niva

29890

   USA

DIV

   24-Nov-2000

60/252,574

   19-Jul-2005    27-May-2003

11/183,884

   17-Mar-2009

7,504,388

      Granted   

HARATS Dror; GEORGE

Jacob; HALPERIN Gideon;

KOVALEVSKI-ISHAI Eti;

YACOV Niva

45347

   USA

DIV

   24-Nov-2000

60/252,574

   17-Feb-2009    27-May-2003

12/371,930

   22-Feb-2011

7,893,291

      Granted   

HARATS Dror; GEORGE

Jacob; HALPERIN Gideon;

KOVALEVSKI-ISHAI Eti;

YACOV Niva

50439

   USA

CON

   24-Nov-2000

60/252,574

   06-Jan-2011    27-May-2003

12/985,365

   17 April
2012

8,158,611

      Granted   

HARATS Dror; GEORGE

Jacob; HALPERIN Gideon;

KOVALEVSKI-ISHAI Eti;

YACOV Niva

53355

   USA

CON

   24-Nov-2000

60/252,574

   March 27, 2012    27-May-2003

13/431,262

         Pending   

HARATS Dror; GEORGE

Jacob; HALPERIN Gideon;

KOVALEVSKI-ISHAI Eti;

YACOV Niva

 

29

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [* * *].


 

OXIDIZED LIPIDS AND USES THEREOF IN THE TREATMENT OF INFLAMMATORY DISEASES AND DISORDERS

 

Our Ref

  Country        Earliest Priority              Entry Date          Filing Date
  Application No.  
   Issue Date
    Patent No.    
  SKGF Ref    Status   

Inventor

27909

  PCT    27-May-2003

10/445,347

      27-May-2004

IL2004/000453

   Publ. Date: 09-Dec-2004

Publ. #: WO2004/106486

     Expired   

HARATS Dror; GEORGE

Jacob; HALPERIN Gideon

31532

  USA

NP

   27-May-2003

10/445,347

   25-Apr-2008    27-May-2004

10/567,543

   08-Mar-2011

7,902,176

     Granted   

HARATS Dror; GEORGE

Jacob; HALPERIN Gideon;

KOVALEVSKI-ISHAI Eti;

YACOV Niva

30958

  Mexico

NP

   27-May-2003

10/445,347

   25-Nov-2005    27-May-2004

pa/A/2005/012784

   14-Oct-2008

261341

     Granted   

HARATS Dror; GEORGE

Jacob; HALPERIN Gideon

[* * *]

                     

30947

  Europe

NP

   27-May-2003

10/445,347

   07-Dec-2005    27-May-2004

04735088.9

        Pending   

HARATS Dror; GEORGE

Jacob; HALPERIN Gideon;

KOVALEVSKI-ISHAI Eti;

YACOV Niva

32340

  Hong Kong

NP

   27-May-2003

10/445,347

   03-Aug-2006    27-May-2004

06108608.1

        Pending   

HARATS Dror; GEORGE

Jacob; HALPERIN Gideon;

KOVALEVSKI-ISHAI Eti;

YACOV Niva

30948

  Japan

NP

   27-May-2003

10/445,347

   30-Nov-2005    27-May-2004

2006-531006

        Pending   

HARATS Dror; GEORGE

Jacob; HALPERIN Gideon;

KOVALEVSKI-ISHAI Eti;

YACOV Niva

[* * *]

                     

30949

  Canada

NP

   27-May-2003

10/445,347

   28-Nov-2005    27-May-2004

2,527,483

        Pending   

HARATS Dror; GEORGE

Jacob; HALPERIN Gideon;

KOVALEVSKI-ISHAI Eti;

YACOV Niva

30950

  China

NP

   27-May-2003

10/445,347

   01-Nov-2005    27-May-2004

200480021217.5

   22-Dec-2010

ZL200480021217.5

     Granted   

HARATS Dror; GEORGE

Jacob; HALPERIN Gideon;

KOVALEVSKI-ISHAI Eti;

YACOV Niva

 

30

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [* * *].


49865

  China

DIV

   27-May-2003

10/445,347

   25-Oct-2010    27-May-2004

201010537971.1

         Pending   

HARATS Dror; GEORGE

Jacob; HALPERIN Gideon;

KOVALEVSKI-ISHAI Eti;

YACOV Niva

30951

  Australia

NP

   27-May-2003

10/445,347

   13-Dec-2005    27-May-2004

2004243695

   17-Mar-2011

2004243695

      Granted   

HARATS Dror; GEORGE

Jacob; HALPERIN Gideon;

KOVALEVSKI-ISHAI Eti;

YACOV Niva

30952

  Republic of Korea

NP

   27-May-2003

10/445,347

   28-Nov-2005    27-May-2004

2005-7022741

   3-Nov 2011

1081977

      Granted   

HARATS Dror; GEORGE

Jacob; HALPERIN Gideon;

KOVALEVSKI-ISHAI Eti;

YACOV Niva

50809

  Republic of Korea

DIV

   27-May-2003

10/445,347

   18-Feb-2011    27-May-2004

2011-7003840

   23 Feb 2012

10-1122160

      Pending   

HARATS Dror; GEORGE

Jacob; HALPERIN Gideon;

KOVALEVSKI-ISHAI Eti;

YACOV Niva

30953

  New Zealand

NP

   27-May-2003

10/445,347

   01-Dec-2005    27-May-2004

544285

   12-Mar-2009

544285

      Granted   

HARATS Dror; GEORGE

Jacob; HALPERIN Gideon;

KOVALEVSKI-ISHAI Eti;

YACOV Niva

30954

  South Africa

NP

   27-May-2003

10/445,347

   01-Dec-2005    27-May-2004

2005/09929

   27-Dec-2006

2005/9929

      Granted   

HARATS Dror; GEORGE

Jacob; HALPERIN Gideon;

KOVALEVSKI-ISHAI Eti;

YACOV Niva

30955

  India

NP

   27-May-2003

10/445,347

   27-Dec-2005    27-May-2004

3555/CHENP/2005

   26-Mar-2009

232654

      Granted   

HARATS Dror; GEORGE

Jacob; HALPERIN Gideon;

KOVALEVSKI-ISHAI Eti;

YACOV Niva

[* * *]

                      

 

31

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [* * *].


[* * *]

                     

30957

  Russian Federation

NP

   27-May-2003

10/445,347

   01-Dec-2005    27-May-2004

2005140666

   27-Jul-2009

2362567

     Granted   

HARATS Dror; GEORGE

Jacob; HALPERIN Gideon;

KOVALEVSKI-ISHAI Eti;

YACOV Niva

46052

  Russian Federation

DIV

   27-May-2003

10/445,347

   06-Apr-2009    27-May-2004

2009112686

        Pending   

HARATS Dror; GEORGE

Jacob; HALPERIN Gideon;

KOVALEVSKI-ISHAI Eti;

YACOV Niva

 

OXIDIZED THIOPHOSPHOLIPID COMPOUNDS AND USES THEREOF

 

Our Ref

  Country    Earliest Priority    Entry Date    Filing Date
Application No.
   Issue Date
Patent No.
  SKGF Ref    Status   

Inventor

[* * *]

                     

46530

  PCT    08-Oct-2008

61/103,571

      01-Oct-2009

IL2009/000949

   Publ. Date: 15-Apr-2010

Publ. #: WO2010/041242

     Expired   

HALPERIN Gideon;

KOVALEVSKI-ISHAI Eti;

BREITBART Eyal; MENDEL

Itzhak; ZINIUK Zeev; FEIGE Erez

50053

  USA

NP

   08-Oct-2008

61/103,571

   06-Apr-2011    01-Oct-2009

13/122,766

        Pending   

HALPERIN Gideon;

KOVALEVSKI-ISHAI Eti;

BREITBART Eyal; MENDEL

Itzhak; ZINIUK Zeev; FEIGE Erez

50054

  Europe

NP

   08-Oct-2008

61/103,571

   20-Apr-2011    01-Oct-2009

09818874.1

        Pending   

HALPERIN Gideon;

KOVALEVSKI-ISHAI Eti;

BREITBART Eyal; MENDEL

Itzhak; ZINIUK Zeev; FEIGE Erez

 

32

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [* * *].


50055

  Israel

NP

   08-Oct-2008

61/103,571

   05-Apr-2011    01-Oct-2009

212153

        Pending   

HALPERIN Gideon;

KOVALEVSKI-ISHAI Eti;

BREITBART Eyal; MENDEL

Itzhak; ZINIUK Zeev; FEIGE

Erez

 

COMPOSITIONS CONTAINING BETA 2-GLYCOPROTEIN I-DERIVED PEPTIDES FOR THE PREVENTION AND/OR TREATMENT OF VASCULAR DISEASE

 

Our Ref

  Country          Earliest Priority                Entry Date          Filing Date
  Application No.  
   Issue Date
    Patent No.    
  SKGF Ref    Status   

Inventor

[* * *]

                     

31865

  PCT    15-Apr-2005

60/671,500

      11-Apr-2006

IL2006/000467

   Publ. Date: 19-Oct-2006

Publ. #: WO2006/109312

     Expired   

YACOV Niva; BREITBART

Eyal

41853

  Europe

NP

   15-Apr-2005

60/671,500

   24-Oct-2007    11-Apr-2006

06728268.1

        Abandoned   

YACOV Niva; BREITBART

Eyal

41854

  USA

NP

   15-Apr-2005

60/671,500

   10-Oct-2007    11-Apr-2006

11/918,141

        Abandoned   

YACOV Niva; BREITBART

Eyal

[* * *]

                     

[* * *]

                     

NOVEL DERIVATIVES OF OXIDIZED PHOSPHOLIPIDS

 

33

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [* * *].


Our Ref

   Country    Earliest Priority    Entry Date    Filing Date
Application No.
   Issue Date
Patent No.
  SKGF Ref    Status    Inventor

[* * *]

                      
OXIDIZED LIPID COMPOUNDS AND USES THEREOF

Our Ref

   Country    Earliest Priority    Entry Date    Filing Date
Application No.
   Issue Date
Patent No.
  SKGF Ref    Status    Inventor

45018

   PCT    06-Nov-2008

61/193,220

      05-Nov-2009

IL2009/001049

   Publ. Date: 14-May-2010

Publ. #: WO2010/052718

     Expired    HALPERIN Gideon;
KOVALEVSKI-ISHAI Eti;
YACOV Niva;
BREITBART Eyal;
MENDEL Itzhak; ZINIUK
Zeev; FEIGE Erez

50603

   USA

NP

   06-Nov-2008

61/193,220

   05-May-2011    05-Nov-2009

13/127,717

        Pending    HALPERIN Gideon;
KOVALEVSKI-ISHAI Eti;
YACOV Niva;
BREITBART Eyal;
MENDEL Itzhak; ZINIUK
Zeev; FEIGE Erez

[* * *]

                      

50605

   Europe

NP

   06-Nov-2008

61/193,220

   16-May-2011    05-Nov-2009

09824498.1

        Pending    HALPERIN Gideon;
KOVALEVSKI-ISHAI Eti;
YACOV Niva;
BREITBART Eyal;
MENDEL Itzhak; ZINIUK
Zeev; FEIGE Erez

51983

   Hong Kong

NP

         05-Nov-2009         Pending    HALPERIN Gideon;
KOVALEVSKI-ISHAI Eti;
YACOV Niva;
BREITBART Eyal;
MENDEL Itzhak; ZINIUK
Zeev; FEIGE Erez

 

34

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [* * *].


50606

   Canada

NP

   06-Nov-2008

61/193,220

   13-Apr-2011    05-Nov-2009

2,740,726

         Pending    HALPERIN Gideon;
KOVALEVSKI-ISHAI Eti;
YACOV Niva;
BREITBART Eyal;
MENDEL Itzhak; ZINIUK
Zeev; FEIGE Erez

[* * *]

                       

50608

   Australia

NP

   06-Nov-2008

61/193,220

   15-Apr-2011    05-Nov-2009

2009312355

         Pending    HALPERIN Gideon;
KOVALEVSKI-ISHAI Eti;
YACOV Niva;
BREITBART Eyal;
MENDEL Itzhak; ZINIUK
Zeev; FEIGE Erez

50609

   New Zealand

NP

   06-Nov-2008

61/193,220

   19-Apr-2011    05-Nov-2009

592357

         Pending    HALPERIN Gideon;
KOVALEVSKI-ISHAI Eti;
YACOV Niva;
BREITBART Eyal;
MENDEL Itzhak; ZINIUK
Zeev; FEIGE Erez

[* * *]

                       

50611

   Japan

NP

   06-Nov-2008

61/193,220

   06-May-2011    05-Nov-2009          Pending    HALPERIN Gideon;
KOVALEVSKI-ISHAI Eti;
YACOV Niva;
BREITBART Eyal;
MENDEL Itzhak; ZINIUK
Zeev; FEIGE Erez

50612

   Republic of Korea

NP

   06-Nov-2008

61/193,220

   02-Jun-2011    05-Nov-2009

2011-7012700

         Pending    HALPERIN Gideon;
KOVALEVSKI-ISHAI Eti;
YACOV Niva;
BREITBART Eyal;
MENDEL Itzhak; ZINIUK
Zeev; FEIGE Erez

 

35

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [* * *].


50613

   Mexico

NP

   06-Nov-2008

61/193,220

   04-May-2011    05-Nov-2009

MX/a/2011/004773

         Pending    HALPERIN Gideon;
KOVALEVSKI-ISHAI Eti;
YACOV Niva;
BREITBART Eyal;
MENDEL Itzhak; ZINIUK
Zeev; FEIGE Erez

50614

   Russian Federation

NP

   06-Nov-2008

61/193,220

   06-Jun-2011    05-Nov-2009

2011122729

         Pending    HALPERIN Gideon;
KOVALEVSKI-ISHAI Eti;
YACOV Niva;
BREITBART Eyal;
MENDEL Itzhak; ZINIUK
Zeev; FEIGE Erez

50615

   China

NP

   06-Nov-2008

61/193,220

   30-Jun-2011    05-Nov-2009

200980153378.2

         Pending    HALPERIN Gideon;
KOVALEVSKI-ISHAI Eti;
YACOV Niva;
BREITBART Eyal;
MENDEL Itzhak; ZINIUK
Zeev; FEIGE Erez

ENDOTHELIAL-SPECIFIC APOPTOSIS INDUCED BY AN ADENOVIRAL VECTOR CONTAINING A CHIMERIC RECEPTOR DRIVEN BY A TISSUE SPECIFIC PROMOTER

 

Our Ref

   Country    Earliest Priority    Entry Date    Filing Date
Application No.
  

Issue Date

Patent No.

   SKGF Ref    Status    Inventor

[* * *]

                       
POLYNUCLEOTIDE CONSTRUCTS, PHARMACEUTICAL COMPOSITIONS AND METHODS FOR TARGETED DOWNREGULATION OF ANGIOGENESIS AND ANTICANCER THERAPY

Our Ref

   Country    Earliest Priority    Entry Date    Filing Date
Application No.
  

Issue Date

Patent No.

   SKGF Ref    Status    Inventor

02/23346

   PCT    19-Oct-2001

60/330,118

      01-May-2002

IL02/00339

  

Publ. Date: 24-Apr-2003

Publ. #: WO03/033514

      Expired    HARATS Dror;
GREENBERGER Shoshana

27526

   USA

NP

   19-Oct-2001

60/330,118

   12-Apr-2004    01-May-2002

10/490,746

  

08-Sep-2009

7,585,666

      Granted    HARATS Dror;
GREENBERGER Shoshana;
BREITBART Eyal

 

36

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [* * *].


44506

   USA

DIV

   19-Oct-2001

60/330,118

   08-Aug-2008    01-May-2002

12/222,439

  

02-Aug-2011

7,989,427

      Granted    HARATS Dror;
GREENBERGER Shoshana;
BREITBART Eyal

51506

   USA

DIV

   19-Oct-2001

60/330,118

   20-Jun-2011    01-May-2002

13/163,767

         Pending    HARATS Dror;
GREENBERGER Shoshana;
BREITBART Eyal

27527

   Europe

NP

   19-Oct-2001

60/330,118

   21-Apr-2004    01-May-2002

02801473.6

  

22-Sep-2010

1436313

      Granted    HARATS Dror;
GREENBERGER Shoshana;
BREITBART Eyal

29028

   Hong Kong

NP

   19-Oct-2001

60/330,118

   06-Jan-2005    01-May-2002

05100081.5

  

01-Apr-2011

HK1067641

      Granted    HARATS Dror;
GREENBERGER Shoshana;
BREITBART Eyal

49785

   Europe

DIV

   19-Oct-2001

60/330,118

   17-Sep-2010    01-May-2002

EP10177257.2

         Pending    HARATS Dror;
GREENBERGER Shoshana;
BREITBART Eyal

47553

   Europe

DIV

   19-Oct-2001

60/330,118

   18-Nov-2009    01-May-2002

09176343.3

         Pending    HARATS Dror;
GREENBERGER Shoshana;
BREITBART Eyal

49931

   Hong Kong

DIV

   19-Oct-2001

60/330,118

   10-Dec-2010    01-May-2002

10111522.2

         Pending    HARATS Dror;
GREENBERGER Shoshana;
BREITBART Eyal

51004

   Hong Kong

DIV

   19-Oct-2001

60/330,118

   27-Apr-2011    01-May-2002

11104228.3

         Pending    HARATS Dror;
GREENBERGER Shoshana;
BREITBART Eyal

27528

   Japan

NP

   19-Oct-2001

60/330,118

   16-Apr-2004    01-May-2002

2003-536253

  

22-Aug-2008

4,173,446

      Granted    HARATS Dror;
GREENBERGER Shoshana;
BREITBART Eyal

 

37

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [* * *].


27529

   Republic of Korea

NP

   19-Oct-2001

60/330,118

   17-Apr-2004    01-May-2002

2004-7005720

  

24-Oct-2008

866117

      Granted    HARATS Dror;
GREENBERGER Shoshana;
BREITBART Eyal

27530

   India

NP

   19-Oct-2001

60/330,118

   19-Apr-2004    01-May-2002

801/CHENP/2004

  

26-Dec-2008

226357

      Granted    HARATS Dror;
GREENBERGER Shoshana;
BREITBART Eyal

27531

   China

NP

   19-Oct-2001

60/330,118

   09-Jun-2004    01-May-2002

02824547.4

  

01-Jul-2009

ZL02824547.4

      Granted    HARATS Dror;
GREENBERGER Shoshana;
BREITBART Eyal

46077

   China

DIV

   19-Oct-2001

60/330,118

   27-Apr-2009    01-May-2002

200910137707.6

         Pending    HARATS Dror;
GREENBERGER Shoshana;
BREITBART Eyal

27532

   Singapore

NP

   19-Oct-2001

60/330,118

   16-Apr-2004    01-May-2002

200402237-2

  

31-May-2006

103725

      Granted    HARATS Dror;
GREENBERGER Shoshana;
BREITBART Eyal

27533

   Canada

NP

   19-Oct-2001

60/330,118

   16-Apr-2004    01-May-2002

2,463,816

         Pending    HARATS Dror;
GREENBERGER Shoshana;
BREITBART Eyal

27534

   Mexico

NP

   19-Oct-2001

60/330,118

   19-Apr-2004    01-May-2002

PA/a/2004/003514

  

12-Nov-2010

280956

      Granted    HARATS Dror;
GREENBERGER Shoshana;
BREITBART Eyal

[* * *]

                       

27535

   Australia

NP

   19-Oct-2001

60/330,118

   20-Apr-2004    01-May-2002

2002307793

  

17-May-2007

2002307793

      Granted    HARATS Dror;
GREENBERGER Shoshana;
BREITBART Eyal

27536

   New Zealand

NP

   19-Oct-2001

60/330,118

   16-Apr-2004    01-May-2002

532348

  

12-Oct-2006

532348

      Granted    HARATS Dror;
GREENBERGER Shoshana;
BREITBART Eyal

27537

   South Africa

NP

   19-Oct-2001

60/330,118

   08-Apr-2004    01-May-2002

2004/2756

  

31-May-2006

2004/02756

      Granted    HARATS Dror;
GREENBERGER Shoshana;
BREITBART Eyal

 

38

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [* * *].


USING A MINI-GENE CONSTRUCT (3X-PPR-1) FOR ENDOTHELIAL CELLS SPECIFIC GENE THERAPY. IMPLICATIONS IN CARDIOVASCULAR, CANCER AND WOUND HEALING

 

Our Ref

   Country    Earliest Priority    Entry Date    Filing Date
Application No.
   Issue Date
Patent No.
  SKGF Ref    Status    Inventor

[* * *]

                      
                      

Our Ref

   Country    Earliest Priority    Entry Date    Filing Date
Application No.
   Issue Date
Patent No.
  SKGF Ref    Status    Inventor

01/22752

   PCT    17-Nov-2000

60/248,582

      15-Nov-2001

IL01/01059

   Publ. Date: 23-May-2002

Publ. #: WO02/40629

     Expired    HARATS Dror

26025

   Europe

NP

   17-Nov-2000

60/248,582

   15-May-2003    15-Nov-2001

01996590.4

   20-Jan-2010

1443970

     Granted    HARATS Dror; BLOOM Nira

29027

   Hong Kong

NP

   17-Nov-2000

60/248,582

   12-Jan-2005    15-Nov-2001

05100240.3

   20-Aug-2010

HK1068057

     Granted    HARATS Dror; BLOOM Nira

47088

   Europe

DIV

   17-Nov-2000

60/248,582

   04-Nov-2009    15-Nov-2001

09174998.6

        Pending    HARATS Dror; BLOOM Nira

49806

   Europe

DIV

   17-Nov-2000

60/248,582

   01-Oct-2010    15-Nov-2001

EP10185193.9

        Pending    HARATS Dror; BLOOM Nira

49498

   Hong Kong

DIV

   17-Nov-2000

60/248,582

   13-Oct-2010    15-Nov-2001

10109698.4

        Pending    HARATS Dror; BLOOM Nira

 

39

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [* * *].


52630

   Hong Kong

DIV

   17-Nov-2000

60/248,582

   2-Dec-2011    15-Nov-2001

11113094.5

      3182.034HK21    Pending    HARATS Dror; BLOOM Nira

26026

   Israel

NP

   17-Nov-2000

60/248,582

   15-May-2003    15-Nov-2001

155940

   30-Mar-2009

155940

      Granted    HARATS Dror; BLOOM Nira

26027

   India

NP

   17-Nov-2000

60/248,582

   14-May-2003    15-Nov-2001

743/CHENP/2003

   20-Nov-2007

211599

      Granted    HARATS Dror; BLOOM Nira

26028

   USA

NP

   17-Nov-2000

60/248,582

   16-May-2003    15-Nov-2001

10/416,917

         Abandoned    HARATS Dror

26029

   Canada

NP

   17-Nov-2000

60/248,582

   15-May-2003    15-Nov-2001

2,429,342

         Pending    HARATS Dror; BLOOM Nira

26030

   Australia

NP

   17-Nov-2000

60/248,582

   15-May-2003    15-Nov-2001

2002224002

   26-Jul-2007

2002224002

      Abandoned    HARATS Dror

28653

   Australia

DIV

   17-Nov-2000

60/248,582

   01-Dec-2004    15-Nov-2001

2003222427

   09-Sep-2010

2003222427

      Granted    HARATS Dror; BREITBART
Eyal; BLOOM Nira

49098

   Australia

DIV

   15-Nov-2001

2002224002

   25-Jun-2010    15-Nov-2001

2010202660

   1-Dec 2011

2010202660

      Granted    HARATS Dror; BREITBART
Eyal; BLOOM Nira

26031

   Japan

NP

   17-Nov-2000

60/248,582

   16-May-2003    15-Nov-2001

2002-543626

   16-Jan-2009

4,243,653

      Granted    HARATS Dror; BLOOM Nira

26032

   China

NP

   17-Nov-2000

60/248,582

   16-Jul-2003    15-Nov-2001

01822075.4

   04-Feb-2009

ZL0182275.4

      Granted    HARATS Dror; BLOOM Nira

 

40

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [* * *].


26033

   Republic of Korea

NP

   17-Nov-2000

60/248,582

   17-May-2003    15-Nov-2001

2003-7006728

   14-Nov-2008

869814

   Granted    HARATS Dror

44105

   Republic of Korea

DIV

   17-Nov-2000

60/248,582

   28-Jul-2008    15-Nov-2001

2008-7018598

   10-Sep-2009

917854

   Granted    HARATS Dror;  BLOOM Nira

26034

   Mexico

NP

   17-Nov-2000

60/248,582

   16-May-2003    15-Nov-2001

PA/a/2003/004325

   15-Aug-2008

259670

   Granted    HARATS Dror

COMPOSITIONS CONTAINING BETA 2-GLYCOPROTEIN I FOR THE PREVENTION AND/OR TREATMENT OF ATHEROSCLEROSIS

 

Our Ref

  

Country

   Earliest Priority    Entry Date    Filing Date
Application No.
   Issue Date
Patent No.
   SKGF Ref    Status   

Inventor

28918

  

USA

CIP

   04-Oct-1998

126447

      17-Nov-2004

10/989,724

         Abandoned    HARATS Dror; SHOENFELD Yehuda; GEORGE Jacob; YACOV Niva

COMPOSITIONS CONTAINING BETA 2-GLYCOPROTEIN I FOR THE PREVENTION AND/OR TREATMENT OF VASCULAR DISEASE

 

Our Ref

  

Country

   Earliest Priority    Entry Date    Filing Date
Application No.
   Issue Date
Patent No.
   SKGF Ref    Status   

Inventor

30236

   PCT    17-Nov-2004

10/989,724

      25-Sep-2005

IL2005/001022

   Publ. Date:

26-May-2006

Publ. #: |WO2006/054281

      Expired   

HARATS Dror;

SHOENFELD Yehuda;

GEORGE Jacob; YACOV Niva

39233

  

Europe

NP

   17-Nov-2004

10/989,724

   13-Jun-2007    25-Sep-2005

05788473.6

         Abandoned   

HARATS Dror;

SHOENFELD Yehuda;

GEORGE Jacob; YACOV Niva

42004

  

Hong Kong

NP

   17-Nov-2004

10/989,724

      12-Sep-2007

07109873.6

         Abandoned   

HARATS Dror;

SHOENFELD Yehuda;

GEORGE Jacob; YACOV Niva

 

41

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [* * *].


PROMOTERS EXHIBITING ENDOTHELIAL CELL SPECIFICITY AND METHODS OF USING SAME FOR REGULATION OF ANGIOGENESIS

 

Our Ref

   Country    Earliest Priority    Entry Date    Filing Date
Application No.
   Issue Date
Patent No.
   SKGF Ref    Status    Inventor

28376

   USA

CIP

   17-Nov-2000

60/248,582

      14-Nov-2004

10/988,487

   6-Dec 2011

8,071,740

      Granted    HARATS Dror;
GREENBERGER Shoshana;
BREITBART Eyal; BANGIO
Livnat; PELED Michael

50225

   USA

DIV

   17-Nov-2000

60/248,582

   01-Feb-2011    14-Nov-2004

13/018,447

   26-June 2012

8,206,743

      Granted    HARATS Dror;
GREENBERGER Shoshana;
BREITBART Eyal; BANGIO
Livnat; PELED Michael

50927

   USA

DIV

   17-Nov-2000

60/248,582

   02-May-2011    14-Nov-2004

13/098,512

         Aban    HARATS Dror;
GREENBERGER Shoshana;
BREITBART Eyal; BANGIO
Livnat; PELED Michael

47407

   USA

DIV

   17-Nov-2000

60/248,582

   13-Nov-2009    14-Nov-2004

12/591,252

         Pending    HARATS Dror;
GREENBERGER Shoshana;
BREITBART Eyal; BANGIO
Livnat; PELED Michael

60001

   USA

Con

   17-Nov-2000

60/248,582

   13-July 2012    14-Nov-2004

13/549,355

      3182.0370004    Pending    HARATS Dror;
GREENBERGER Shoshana;
BREITBART Eyal; BANGIO
Livnat; PELED Michael

30269

   PCT    14-Nov-2004       14-Nov-2005    Publ. Date: 18-May-2006       Expired    HARATS Dror;
GREENBERGER Shoshana

 

42

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [* * *].


      10/988,487       IL2005/001195    Publ. #: WO2006/051545     

[* * *]

                   

[* * *]

                   

47087

   Europe

DIV

   14-Nov-2004

10/988,487

   28-Aug-2009    14-Nov-2005

09168899.4

   2 Nov 2011

2174668

  Grnated    HARATS Dror;
GREENBERGER Shoshana;
BREITBART Eyal; BANGIO
Livnat; PELED Michael

49224

   Hong Kong

DIV

      12-Oct-2010    14-Nov-2005

10109638.7

   15 June 2012

HK1143078

  Granted    HARATS Dror;
GREENBERGER Shoshana;
BREITBART Eyal; BANGIO
Livnat; PELED Michael

49804

   Europe

DIV

   14-Nov-2004

10/988,487

   01-Oct-2010    14-Nov-2005

EP10185195.4

   26 Sep 2012

2301586

  Granted    HARATS Dror;
GREENBERGER Shoshana;
BREITBART Eyal; BANGIO
Livnat; PELED Michael

49805

   Europe

DIV

   14-Nov-2004

10/988,487

   30-Sep-2010    14-Nov-2005

EP10184033.8

     Pending    HARATS Dror;
GREENBERGER Shoshana;
BREITBART Eyal; BANGIO
Livnat; PELED Michael

39318

   Australia

NP

   14-Nov-2004

10/988,487

   08-Jun-2007    14-Nov-2005

2005303385

     Allowed    HARATS Dror;
GREENBERGER Shoshana;
BREITBART Eyal; BANGIO
Livnat; PELED Michael

51825

   Australia

DIV

   14-Nov-2004

10/988,487

      14-Nov-2005    28 June 2012

2011205076

  Granted    HARATS Dror;
GREENBERGER Shoshana;
BREITBART Eyal; BANGIO
Livnat; PELED Michael

53691

   Australia    14-Nov-2004    15 June 2012    14-Nov-2005      Pending    HARATS Dror;
GREENBERGER Shoshana;

 

43

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [* * *].


   DIV    10/988,487       2012203578          BREITBART Eyal; BANGIO
Livnat; PELED Michael

39323

   New Zealand

NP

   14-Nov-2004

10/988,487

   05-Jun-2007    14-Nov-2005

555612

   08-Apr-2010

555612

   Granted    HARATS Dror;
GREENBERGER Shoshana;
BREITBART Eyal; BANGIO
Livnat; PELED Michael

47297

   New Zealand

DIV

   14-Nov-2004

10/988,487

   09-Oct-2009    14-Nov-2005

580289

   05-Apr-2011

580289

   Granted    HARATS Dror;
GREENBERGER Shoshana;
BREITBART Eyal; BANGIO
Livnat; PELED Michael

39324

   South Africa

NP

   14-Nov-2004

10/988,487

   05-Jun-2007    14-Nov-2005

2007/04687

   31-Dec-2008

2007/04687

   Granted    HARATS Dror;
GREENBERGER Shoshana;
BREITBART Eyal; BANGIO
Livnat

[* * *]

                    

50629

   Singapore

DIV

   14-Nov-2004

10/988,487

   11-Apr-2011    14-Nov-2005

201102612-7

      Pending    HARATS Dror;
GREENBERGER Shoshana;
BREITBART Eyal; BANGIO
Livnat

39315

   Israel

NP

   14-Nov-2004

10/988,487

   14-May-2007    14-Nov-2005

183187

      Pending    HARATS Dror;
GREENBERGER Shoshana;
BREITBART Eyal; BANGIO
Livnat; PELED Michael

50104

   Israel

DIV

   14-Nov-2004

10/988,487

   31-Oct-2010    14-Nov-2005

209034

      Pending    HARATS Dror;
GREENBERGER Shoshana;
BREITBART Eyal; BANGIO
Livnat

[* * *]

                    

[* * *]

                    

 

44

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [* * *].


39317

   Canada

NP

   14-Nov-2004

10/988,487

   17-May-2007    14-Nov-2005

2,587,469

         Pending    HARATS Dror;
GREENBERGER Shoshana;
BREITBART Eyal; BANGIO
Livnat; PELED Michael

39319

   Japan

NP

   14-Nov-2004

10/988,487

   14-May-2007    14-Nov-2005

2007-540833

         Pending    HARATS Dror;
GREENBERGER Shoshana;
BREITBART Eyal; BANGIO
Livnat; PELED Michael

52137

   Japan

Div

   14-Nov-2004

10/988,487

   Sep 2011    14-Nov-2005

2011-191492

         Pending    HARATS Dror;
GREENBERGER Shoshana;
BREITBART Eyal; BANGIO
Livnat; PELED Michael

39320

   China

NP

   14-Nov-2004

10/988,487

   13-Aug-2007    14-Nov-2005

200580046412.8

         Aban    HARATS Dror;
GREENBERGER Shoshana;
BREITBART Eyal; BANGIO
Livnat; PELED Michael

39321

   Republic
of Korea

NP

   14-Nov-2004

10/988,487

   14-Jun-2007    14-Nov-2005

2007-7013464

         Pending    HARATS Dror;
GREENBERGER Shoshana;
BREITBART Eyal; BANGIO
Livnat; PELED Michael

39322

   Mexico

NP

   14-Nov-2004

10/988,487

   11-May-2007    14-Nov-2005

MX/a/2007/005783

   8 May 2012

299008

      Granted    HARATS Dror;
GREENBERGER Shoshana;
BREITBART Eyal; BANGIO
Livnat

52598

   Mexico

Div

   14-Nov-2004

10/988,487

      14-Nov-2005    4 Sep 2012

303042

   3182.037MX11    Granted    HARATS Dror;
GREENBERGER Shoshana;
BREITBART Eyal; BANGIO
Livnat

[* * *]

                       

 

45

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [* * *].


Method for treating vascular inflammation and psoriasis

 

Our Ref

   Country    Earliest Priority    Entry Date    Filing Date
Application No.
   Issue Date
Patent No.
   SKGF Ref    Status    Inventor

[* * *]

                       

[* * *]

                       

[* * *]

                       

 

Treatment Of Inflammation

 

Our Ref

   Country    Earliest Priority    Entry Date    Filing Date
Application No.
   Issue Date
Patent No.
   SKGF Ref    Status    Inventor

[* * *]

                       

[* * *]

                       

53305

   PCT    12 Dec 2011

61/569,545 and

12 Dec 2011

61/569,481

      11 Dec 2012

PCT/US2012/068995

      3182.014PC01    Pending    MENDEL, Itzhak;

FEIGE, Erez;

YACOV, Niva;

PROPHETE-MEIRAN, Oshrat;
BREITBART, Eyal;

SALEM, Yaniv

 

46

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [* * *].


Treatment Methods Using Adenovirus

 

Our Ref

   Country    Earliest Priority    Entry Date    Filing Date
Application No.
   Issue Date
Patent No.
   SKGF Ref    Status    Inventor

[* * *]

                       

 

TARGETED GENE EXPRESSION USING PREPROENDOTHELIN-1 PROMOTERS

 

Our
Ref

   Country    Earliest Priority    Entry Date    Filing Date
Application No.
   Issue Date
Patent No.
   SKGF Ref    Status    Inventor

N/A

   USA CIP    03-Mar-1994

08/254,015

      28-Feb-1995

08395742

   05-May-1998

5747340

   Originally assinged to Syntex
USA. Licensed to VBL
   Granted    HARATS Dror;

KURIHARA Hiroki;

NANETTE BELLONI Paula; SIGAL
Charles Elliott

 

METHOD AND COMPOSITION TO INCREASE RADIATION-INDUCED TUMOR THERAPEUTIC EFFECTS

 

Our Ref

   Country    Earliest Priority    Entry Date    Filing Date
Application No.
   Issue Date
Patent No.
 

SKGF Ref

   Status    Inventor

N/A

   PCT    08-Dec-2009

61/283,696

      07-Dec-2010

US2010/059204

   Publ. Date: 16-Jun-2011

Publ. #: WO/2011/071859

  As of June 2012, the applicant is also VBL    Pending    KOLESNICK, Richard, N.

STANCEVIC, Branka;

SADELAIN, Michel;

FUKS, Zvi;

VARDA-BLOOM, Nira;

HARATS, Dror;

 

47

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [* * *].


Trademark: VBL therapeutics & logo

 

Our Ref

Client Ref

   Country   Class    Earliest
Priority
   Filing Date
Application No.
   Registration Date
Registration No.
   SKGF Ref    Status

47638

   Europe   5, 42 & 44       03-Dec-2009

008730541

   02-Jun-2010

008730541

      Registered

 

Trademark: VASCULAR BIOGENICS

 

Our Ref

Client Ref

   Country   Class    Earliest
Priority
   Filing Date
Application No.
   Registration Date
Registration No.
   SKGF Ref    Status

42092

   Israel   42       23-Aug-2007

203346

   06-May-2009

203346

      Registered

43074

   USA

(Paris)

  42    23-Aug-2007

203346

   14-Feb-2008

77/397,305

   22-Jun-2010

3,805,239

      Registered

43075

   Europe

(Paris)

  5, 42 & 44    23-Aug-2007

203346

   18-Feb-2008

006675599

   20-Feb-2009

006675599

      Registered

 

48

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [* * *].


Trademark: VBL VASCULAR BIOGENICS LTD. & Device

 

Our Ref

Client Ref

   Country   Class    Earliest
Priority
   Filing Date
Application No.
   Registration Date
Registration No.
   SKGF Ref    Status

42199

   Israel   42       09-Sep-2007

203748

   10-May-2009

203748

      Registered

43602

   USA

(Paris)

  42    09-Sep-2007

203748

   03-Mar-2008

77/411,204

   22-Jun-2010

3,805,245

      Registered

43603

   Europe

(Paris)

  42    09-Sep-2007

203748

   04-Mar-2008

006721823

   04-Sep-2009

006721823

      Registered

 

Trademark: VTS

 

Our Ref

Client Ref

   Country   Class    Earliest
Priority
   Filing Date
Application No.
   Registration Date
Registration No.
   SKGF Ref    Status

42198

   Israel   5       09-Sep-2007

203747

   06-May-2009

203747

      Registered

43600

   USA

(Paris)

  5    09-Sep-2007

203747

   03-Mar-2008

77/411,151

   20-Oct-2009

3,697,519

      Registered

43601

   Europe

(Paris)

  5    09-Sep-2007

203747

   04-Mar-2008

006721484

   20-Feb-2009

006721484

      Registered

 

49

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [* * *].


Trademark: VASCULAR TARGETING SYSTEM VTS

 

Our Ref

Client Ref

   Country   Class    Earliest
Priority
   Filing Date
Application No.
   Registration Date
Registration No.
   SKGF Ref    Status

41864

   Israel   5       23-Aug-2007

203345

   08-Sep-2009

203345

      Registered

43072

   USA

(Paris)

  5    23-Aug-2007

203345

   14-Feb-2008

77/397,328

   18-May-2010

3,789,108

      Registered

43073

   Europe

(Paris)

  5, 42 & 44    23-Aug-2007

203345

   18-Feb-2008

006675896

   29-Jan-2009

006675896

      Registered

 

50

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [* * *].


Trademark: VBL

 

Our Ref

Client Ref

   Country   Class    Earliest
Priority
   Filing Date
Application No.
   Registration Date
Registration No.
   SKGF Ref    Status

42093

   Israel   42       23-Aug-2007

203347

   22-Jan-2009

203347

      Registered

43076

   USA

(Paris)

  42    23-Aug-2007

203347

   14-Feb-2008

77/397,293

   14-Jul-2009

3,653,176

      Registered

43077

   Europe

(Paris)

  5, 42 & 44    23-Aug-2007

203347

   18-Feb-2008

006673263

   22-Jan-2009

006673263

      Registered

 

Trademark: VBL therapeutics & logo

 

Our Ref

Client Ref

   Country   Class    Earliest
Priority
   Filing Date
Application No.
   Registration Date
Registration No.
   SKGF Ref    Status

47612

   Israel   42       30-Nov-2009

225329

   07-Feb-2011

225329

      Registered

47639

   USA

(Paris)

  42    30-Nov-2009

225329

   26-Apr-2010

85/023,397

   24-May-2011

3,964,829

      Registered

 

51

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [* * *].


Domains: VBL

vascularbiogenics.com

vascularbiogenicsltd.com

vbl-therapeutics.com

vbltherapeutics.com

vbltx.com

vascularbiogenics.net

vbl.co.il

vblrx.com

vascular-biogenics.com

 

52

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [* * *].

Exhibit 10.5

EXECUTION COPY

MANUFACTURING SERVICES AGREEMENT

This Manufacturing Services Agreement (the “ Agreement ”) is made as of January 5 , 2012, (the “ Effective Date ”) between Lonza Houston, Inc., a Delaware corporation having its principal place of business at 8066 El Rio St., Houston, TX 77054 (“ LHI ”), and Vascular Biologics, Ltd., an Israeli corporation , having an office at 6 Jonathan Netanyahu St., Or Yehuda, Israel 60376 (“ CLIENT ”) (each of LHI and CLIENT, a “ Party ” and, collectively, the “ Parties ”).

RECITALS

A. LHI operates multi-client research, testing and production facilities located at 8030, 8032 and 8066 El Rio, Houston, Texas 77054 (the “ Facility ”).

B. CLIENT desires to have LHI produce a product containing human cells and/or viruses intended for therapeutic use in humans, and LHI desires to produce such product.

C. CLIENT desires to have LHI conduct work according to individual Statement of Work, as further defined in Section 1.30 below.

NOW, THEREFORE, in consideration of the foregoing and the mutual promises and covenants hereinafter set forth, LHI and CLIENT, intending to be legally bound, hereby agree as follows:

AGREEMENT

 

1. D EFINITIONS

When used in this Agreement, capitalized terms will have the meanings as defined below and throughout the Agreement. Unless the context indicates otherwise, the singular will include the plural and the plural will include the singular.

 

  1.1. Acceptance Period ” shall have the meaning set forth in Section 5.2.2.

 

  1.2. Affiliate ” means, with respect to either Party, any other corporation or business entity that directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such Party. For purposes of this definition, the term “control” and, with correlative meanings, the terms “controlled by” and “under common control with” means direct or indirect ownership of more than fifty percent (50%) of the securities or other ownership interests representing the equity voting stock or general partnership or membership interest of such entity or the power to direct or cause the direction of the management or policies of such entity, whether through the ownership of voting securities, by contract, or otherwise.

 

CONFIDENTIAL

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


EXECUTION COPY

 

  1.3. Batch ” means a quantity of Product derived from a process which is the subject of an SOW that is intended to have uniform character and quality, within specified limits, and is produced according to a single manufacturing order during the same cycle of manufacture

 

  1.4. Batch Record ” means the production record pertaining to a Batch.

 

  1.5. cGMP ” means the regulatory requirements for current good manufacturing practices promulgated by the FDA under 21 CFR Parts 210 and 211, as amended from time to time.

 

  1.6. Change Order ” has the meaning set forth in Section 2.2.

 

  1.7. CLIENT Development Materials ” has the meaning set forth in Section 2.3.

 

  1.8. CLIENT Inventions ” means any know-how or inventions, whether or not patentable, conceived, developed or reduced to practice by CLIENT on or before the Effective Date.

 

  1.9. CLIENT Materials ” means the CLIENT Development Materials and the CLIENT Production Materials.

 

  1.10. CLIENT Personnel ” has the meaning set forth in Section 4.7.1.

 

  1.11. CLIENT Production Materials ” has the meaning set forth in Section 4.1.

 

  1.12. Commencement Date ” means the date set forth in the Statement of Work for the commencement of the production of the Product.

 

  1.13. Confidential Information ” has the meaning set forth in Section 10.1.

 

  1.14. Disapproval Notice ” shall have the meaning set forth in Section 5.2.2.

 

  1.15. FDA ” means the U.S. Food and Drug Administration, and any successor agency thereof.

 

  1.16. First Statement of Work ” has the meaning set forth in the definition of Statement of Work.

 

  1.17. Intellectual Property ” means all worldwide patents, copyrights, trade secrets, know-how and all other intellectual property rights, including all applications and registrations with respect thereto, but excluding all trademarks, trade names, service marks, logos and other corporate identifiers.

 

  1.18. LHI Inventions ” means any know-how, media, assays, methods or other inventions, whether or not patentable, conceived, developed or reduced to practice by LHI on or before the Effective Date.

 

CONFIDENTIAL

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


EXECUTION COPY

 

  1.19. LHI Operating Documents ” means the standard operating procedures, standard manufacturing procedures, raw material specifications, protocols, validation documentation, and supporting documentation used by LHI, such as environmental monitoring, for operation and maintenance of the Facility and LHI equipment used in the process of producing the Product, excluding any of the foregoing that are unique to the manufacture of Product.

 

  1.20. LHI Parties ” has the meaning set forth in Section 15.2.

 

  1.21. Materials ” means all raw materials and supplies to be used in the production of a Product.

 

  1.22. Process ” means the manufacturing process for a Product provided to LHI by CLIENT and further developed by LHI pursuant to the terms of this Agreement.

 

  1.23. Product ” has the meaning set forth in a Statement of Work.

 

  1.24. Product Warranties ” means those warranties as specifically stated in Section 5.2.2.

 

  1.25. Production Term ” shall have the meaning set forth in Section 4.3.

 

  1.26. Regulatory Approval ” means the approval by the FDA to market and sell the Product in the United States.

 

  1.27. SOP ” means a standard operating procedure.

 

  1.28. “SOW Documentation” means the compilation of documentation generated by LHI in preparation of and during the performance of a given SOW, including, without limitation, executed batch records, component records, test records and test record forms, certificates of analysis, study protocols, study summary reports, deviation reports, laboratory investigations, environment excursions, formulation records, and other related documents.

 

  1.29. Specifications ” means the Product specifications set forth in the Statement of Work or as modified by the Parties in connection with the production of a particular Batch of Product hereunder.

 

  1.30. Statement of Work ” or “ SOW ” means a plan to develop a Process or Product that is attached hereto as Appendix A or later becomes attached through an amendment by the Parties. The first Statement of Work, which is attached hereto, is numbered Appendix A-1 and is hereby incorporated and made a part of this Agreement (the “ First Statement of Work ”). It is contemplated that each separate project shall have its own Statement of Work. As each subsequent Statement of Work is agreed to by the Parties, each shall state that it is to be incorporated and made a part of this Agreement and shall be consecutively numbered as A-2, A-3, etc.

 

CONFIDENTIAL

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


EXECUTION COPY

 

  1.31. Technology Transfer ” means the transfer of documentation, specifications, and production process by CLIENT to LHI for the development of the SOW Documentation for the manufacture of the Product specifically for the CLIENT.

 

  1.32. Third Party ” means any party other than LHI, CLIENT or their respective Affiliates.

 

2. S TATEMENTS OF W ORK —P ROCESS AND P RODUCT D EVELOPMENT ; T ECHNOLOGY T RANSFER ; P ROCESS OR P RODUCT M ANUFACTURE

2.1 Statement of Work . Prior to performing any Process or Product development, Technology Transfer, or Process or Product manufacture, the Parties will collaborate to develop a Statement of Work, describing the activities to be performed by the Parties, or to be subcontracted by LHI to Third Parties. Once agreed to by the Parties, the Statement of Work shall be executed by each of the Parties and appended hereto as part of Appendix A . In the event of a conflict between the terms and conditions of this Agreement and any Statement of Work, the terms and conditions of this Agreement shall control.

2.2 Modification of Statement of Work . Should CLIENT want to change a Statement of Work, to reduce services not yet performed or to include additional services to be provided by LHI, CLIENT may propose to LHI an amendment to the Statement of Work with the desired changes or additional services (“ Change Order ”). If LHI determines that it has the resources and capabilities to accommodate such Change Order, LHI will prepare a modified version of the Statement of Work reflecting such Change Order (including, without limitation, any changes to the estimated timing, estimated charges or scope of a project) and will submit such modified version of the Statement of Work to CLIENT for review and comment. The modified Statement of Work shall be binding on the Parties only if it refers to this Agreement, states that it is to be made a part thereof, and is signed by both Parties. Thereafter such modified version of the Statement of Work will be deemed to have replaced the prior version of the Statement of Work. Notwithstanding the foregoing, if a modified version of the Statement of Work is not agreed to by both Parties, the existing Statement of Work shall remain in effect.

2.3 CLIENT Deliverables . Within the time period specified in a Statement of Work, CLIENT will provide LHI with (a) the materials listed in the Statement of Work for which CLIENT is responsible for delivering to LHI, and any handling instructions, protocols, SOPs and other documentation necessary to maintain the properties of such materials for the performance of the Statement of Work, and (b) any protocols, SOPs and other information and documentation in possession or control of CLIENT and necessary for the performance of the Statement of Work, and for the preparation of the SOW Documentation in conformance with cGMP, including, without limitation, process information, SOPs, development data and reports, quality control assays, raw material specifications (including vendor, grade and sampling/testing requirements), product and sample packing and shipping instructions, and product specific cleaning and decontamination information, (collectively, the “ CLIENT Development Materials ”). It is hereby agreed that CLIENT Development Materials are the proprietary and confidential information of the CLIENT and shall be used by LHI solely for the purpose of this Agreement.

 

CONFIDENTIAL

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


EXECUTION COPY

 

2.4 Performance by LHI . Subject to the provision by CLIENT of the CLIENT Development Materials pursuant to Section 2.3, LHI will use commercially reasonable efforts to perform, directly or, subject to the terms of the Statement of Work or approval by CLIENT (such approval not to be unreasonably withheld), through a Third Party contractor, the work described in a Statement of Work in a professional and workmanlike manner in accordance with the terms of this Agreement. LHI shall ensure, and at all times remain responsible and liable for the compliance of such Third Party contractor with the terms of this Agreement. LHI will use commercially reasonable efforts promptly to notify CLIENT of any material delays that arise during the performance of the Statement of Work. Subject to the exceptions in Section 17.2, delay of commencement of the Statement of Work due to delay by a Third Party contractor by more than 45 days shall be considered a breach of the Agreement.

 

3. T ECHNOLOGY T RANSFER

3.1 Based on the information provided by CLIENT and including process changes developed by LHI pursuant to any applicable Statement of Work, LHI will prepare the SOW Documentation for the Process in accordance with the schedule set forth in the Statement of Work. CLIENT will inform LHI of any specific requirements CLIENT may have relating to the SOW Documentation, including, without limitation, any information or procedures CLIENT wishes to have incorporated therein. If LHI intends to include in the SOW Documentation the use of any assay, medium, or other technology that is not commercially available, LHI will inform CLIENT of such intention and the Parties will meet to discuss and attempt to agree in good faith on the terms of use of such non-commercially available materials or technology in the Process. The SOW Documentation shall be completed and delivered by LHI at completion of a Batch.

3.2 CLIENT will cooperate with LHI to assist LHI to develop the SOW Documentation and Process, including, without limitation, by providing LHI with additional information and procedures as may be required to create the SOW Documentation, Process, and/or any of the following: (i) manufacturing process information, SOPs, development reports, (ii) quality control assays, (iii) raw material specifications (including vendor, grade and sampling/testing requirements), (iv) Product and sample packing and shipping instructions, (v) Product specific cleaning and decontamination information.

3.3 LHI will deliver a draft version of the SOW Documentation to CLIENT for its review and approval in accordance with the schedule set forth in the Statement of Work. CLIENT will notify LHI in writing of any objections it has to the draft Master Production Record, and upon such notification, representatives of LHI and CLIENT will meet promptly to resolve such objections. Upon CLIENT’s written acceptance of the draft SOW Documentation, or in the event that CLIENT does not submit a written notice setting forth CLIENT’s objections to the draft SOW Documentation within fifteen (15) working days following receipt of such draft by CLIENT, such draft will be deemed approved by CLIENT.

3.4 The Process, SOW Documentation, Specifications, and any improvements or modifications thereto developed during the term of this Agreement, but excluding any LHI Operating Documents, LHI Inventions or LHI Confidential Information included in any of the foregoing, will be deemed CLIENT Confidential Information and subject to the provisions set

 

CONFIDENTIAL

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


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forth in Article 10. Without derogating from Section 11.2.2, CLIENT shall be permitted to use the Process and/or the SOW Documentation for any research or commercial purpose solely related to the Product or Process and to manufacture and sell Product, either alone or by a Third Party on its behalf; provided, however, that if the Process and/or the SOW Documentation incorporates or contains any LHI Intellectual Property or LHI Confidential Information that does not solely relate to Product or Process, then prior to any disclosure of such LHI Intellectual Property or LHI Confidential Information to, or use by, a Third Party manufacturer, Client shall obtain LHI prior approval, which shall not be unreasonably withheld.

 

4. M ANUFACTURE O F P RODUCT ; O RDER P ROCESS ; D ELIVERIES

4.1 CLIENT Deliverables . Within any time period agreed to in any applicable Statement of Work, CLIENT will provide LHI with the materials listed in the Statement of Work required to be supplied by CLIENT for the production of the Product, and any handling instructions, protocols, SOPs and other documentation necessary to maintain the properties of such materials for the performance of the Statement of Work (collectively, the “ CLIENT Production Materials ”).

4.2 Commencement Date . The Statement of Work will include a Commencement Date agreed upon by the Parties.

4.3 Manufacture by LHI . During the time period specified in any Statement of Work during which Product will be manufactured (the “ Production Term ”), LHI will use commercially reasonable efforts to manufacture, package, ship, handle quality assurance and quality control for the Product, all as set forth in the Statement of Work, and to deliver to CLIENT the quantities of Product requested by CLIENT in the Statement of Work, all in accordance with the terms set forth in Section 4.4 below. Notwithstanding the foregoing, LHI shall have the right to revise the production schedule with respect to a Statement of Work provided that such schedule does not advance or delay commencement of the production of Batches under a Statement of Work by more than forty five (45) days.

4.4 Packaging and Shipping . LHI will package and label the Product for shipment in accordance with the SOW Documentation and LHI’s standard practices in effect at the time of performance by LHI. LHI will ship the Product FOB Shipping Point delivered at the Facility to a common carrier designated by CLIENT to LHI in writing not less than ten days prior to the applicable delivery date unless otherwise agreed to in a Statement of Work. CLIENT will provide to LHI its account number with the selected carrier and will pay for all shipping costs in connection with each shipment of Product. Each shipment will be accompanied by the documentation listed in the Statement of Work. LHI will use commercially reasonable efforts to deliver each shipment of Product to CLIENT or to any CLIENT-designated Third Party on its behalf on the requested delivery date for such shipment. CLIENT may ask to ship Batches in different shipments and to different locations. LHI will promptly notify CLIENT if LHI reasonably believes that it will be unable to meet a delivery date. CLIENT shall be required to take delivery of a Batch of Product within thirty (30) days after acceptance of such Batch in accordance with Section 5.2 (the “Delivery Period”), unless CLIENT requests in writing, and LHI consents in writing, to store the material on CLIENT’s behalf and at CLIENT’s expense.

 

CONFIDENTIAL

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


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4.5 Genetic Alterations . LHI is not responsible for any genetic alterations that occur during production of any product, except for those genetic alterations that result from a grossly negligent or intentionally wrongful act or omission of LHI and not as a result of the predisposition of any material provided by CLIENT. Unless they arise from a grossly negligent or intentionally wrongful act or omission of LHI, genetic alterations shall not be the basis for a breach of warranty claim by CLIENT. If LHI fails to deliver materials in accordance with the terms of this Agreement or a Statement of Work, or if materials produced pursuant to the Statement of Work fail to meet any technical specification required by the Statement of Work, and such failure is due to genetic alterations which do not arise from a grossly negligent or intentionally wrongful act or omission of LHI, LHI will re-perform the specific project at issue at the earliest practicable time, for an additional fee equal to the original fee for that part of the project.

4.6 Records . LHI will maintain accurate records for the production of the Product, as required by applicable laws and regulations. LHI will retain possession of the SOW Documentation, all Batch Records and LHI Operating Documents, and will make copies thereof available to CLIENT upon CLIENT’s request and at CLIENT’s expense. LHI Operating Documents will remain LHI Confidential Information provided that it shall not limit in any way the CLIENT rights to use the Product. CLIENT will have the right to use and reference any of the foregoing in connection with a filing for Regulatory Approval of the Product or as otherwise authorized by the Agreement.

4.7 CLIENT Access .

4.7.1 CLIENT’s employees and agents (including its independent contractors) (collectively, “ CLIENT Personnel ”) shall be entitled to participate in the production of the Product only in order to review the production process in such capacities as shall be agreed in writing in advance by the Parties, subject to mutually agreed scheduling. CLIENT Personnel working at the Facility are required to comply with LHI’s Operating Documents and any other applicable LHI facility and/or safety policies. For the avoidance of doubt, CLIENT Personnel may not physically participate in the production or manufacture of any Product that may be used in or on humans.

4.7.2 CLIENT Personnel working at the Facility will be and remain employees of CLIENT, and CLIENT will be solely responsible for the payment of compensation for such CLIENT Personnel (including applicable Federal, state and local withholding, FICA and other payroll taxes, workers’ compensation insurance, health insurance, and other similar statutory and fringe benefits). CLIENT covenants and agrees to maintain workers’ compensation benefits and employers’ liability insurance as required by applicable laws with respect to all CLIENT Personnel working at the Facility.

4.7.3 CLIENT will pay for the actual cost of repairing or replacing to its previous status (to the extent that LHI determines, in its reasonable judgment, that repairs cannot be adequately effected) any property of LHI damaged or destroyed by CLIENT Personnel, provided CLIENT shall not be liable for repair or replacement costs resulting from ordinary wear and tear.

 

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4.7.4 CLIENT Personnel visiting or having access to the Facility will abide by LHI standard policies, operating procedures and the security procedures established by LHI. CLIENT will be liable for any breaches of security by CLIENT Personnel. In addition, CLIENT will reimburse LHI for the cost of any lost security cards issued to CLIENT Personnel, at the rate of $50 per security card. All CLIENT Personnel will agree to abide by LHI policies and SOPs established by LHI, and will sign an appropriate confidentiality agreement.

4.7.5 CLIENT will indemnify and hold harmless LHI from and against any and all losses, damages, liabilities, costs and expenses (including reasonable attorneys’ fees and expenses) arising out of any injuries suffered by CLIENT Personnel while at the Facility or elsewhere, except to the extent caused by the gross negligence or willful misconduct on the part of any LHI Party.

4.8 Disclaimers . CLIENT acknowledges and agrees that LHI Parties will not engage in any Product refinement or development of the Product, other than as expressly set forth in this Agreement and the Statement of Work. CLIENT acknowledges and agrees that LHI Parties have not participated in the invention or testing of any Product, and have not evaluated its safety or suitability for use in humans or otherwise.

 

5. P RODUCT W ARRANTIES ; A CCEPTANCE A ND R EJECTION O F P RODUCTS

5.1 Product Warranties . LHI warrants that any Product manufactured by LHI pursuant to this Agreement, at the time of delivery pursuant to Section 4.4: (a) conforms to the Specifications; (b) was manufactured in accordance with the SOW Documentation; and (c) where applicable was manufactured in accordance with cGMP.

5.2 Approval of Completed Product .

5.2.1 When a Statement of Work has been completed, LHI will notify CLIENT and supply CLIENT with the required documentation set forth in the Statement of Work.

5.2.2 Within twenty one (21) calendar days after CLIENT’s receipt of substantially complete documentation and Batch Records regarding such Product (the “ Acceptance Period ”), Client shall determine by review of such documentation whether or not the given Batch conforms to the product warranties set forth in Section 5.1 above (“ Product Warranties ”). If CLIENT asserts that the Product does not comply with the Product Warranties set forth in Section 5.1 above, CLIENT will deliver to LHI, in accordance with the notice provisions set forth in Section 17.4 hereof, written notice of disapproval (the “ Disapproval Notice ”) of such Product, stating in reasonable detail the basis for such assertion of non-compliance with the Product Warranties. If a valid Disapproval Notice is received by LHI during the Acceptance Period, then LHI and CLIENT will provide one another with all related paperwork and records (including, but not limited to, quality control tests) relating to both the production of the Product and the Disapproval Notice. If a valid Disapproval Notice is not received during the Acceptance Period, the Product will be deemed accepted and ready for shipment to CLIENT, or storage for CLIENT, as applicable. If Product is to be shipped to CLIENT, then upon acceptance, the Product shall be delivered to CLIENT, and CLIENT shall accept delivery thereof, within 10-days after such acceptance. Title and risk of loss to such Product shall pass to CLIENT at the time of delivery to the common carrier pursuant to Section 4.4. If the Product is to be stored by LHI for CLIENT, LHI shall do so in accordance with agreed upon terms of a Statement of Work which covers all relevant details of a Product storage engagement.

 

CONFIDENTIAL

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5.3 Dispute Resolution . LHI and CLIENT will attempt to resolve any dispute regarding the conformity of a Batch of Product with the Product Warranties. If such dispute cannot be settled within 30 days of the submission by each Party of such related paperwork and records to the other Party, and if the Product is alleged not to conform with the Product Warranties set forth in Section 5.1(a), then CLIENT will submit a sample of the Batch of the disputed Product to an independent testing laboratory of recognized repute selected by CLIENT and approved by LHI (such approval not to be unreasonably withheld) for analysis, under quality assurance approved procedures, of the conformity of such Batch of Product with the Specifications. The costs associated with such analysis by such independent testing laboratory will be paid by the Party whose assessment of the conformity of the Batch of Product with the Specifications was mistaken.

5.4 Remedies for Non-Conforming, Damaged, or Destroyed Product .

5.4.1 In the event that the Parties agree, or an independent testing laboratory determines, pursuant to Section 5.3, that a Batch of Product materially fails to conform to the Product Warranties, or Product and/or Materials are destroyed or damaged by LHI Personnel, due to the failure of: (a) LHI personnel properly to execute the SOW Documentation, (b) LHI personnel to comply with cGMP, or (c) the Facility utilities, then, at CLIENT’s written request, LHI will commence, as soon as it is commercially practicable to do so and not later than 30 days after such written request, unless the Facility is not available due to prior obligations which cannot be postponed, produce one time for CLIENT sufficient quantities of Product to replace the non-conforming, damaged or destroyed portion of such Batch of Product (the “ Production Rerun ”), in accordance with the provisions of this Agreement and at no additional cost to CLIENT.

5.4.2 In the event that the Parties agree, or an independent testing laboratory determines, pursuant to Section 5.3, that a Batch of Product materially fails to conform to the Product Warranties, or Product and/or Materials are destroyed or damaged by LHI Personnel, for any reason other than as set forth in Section 5.4.1, then LHI shall have no liability to CLIENT with respect to such Batch, Product or Material and LHI will, at CLIENT’s request, produce for CLIENT a Production Rerun at CLIENT’s expense. Notwithstanding anything to the contrary set forth in Section 5.4, if during the manufacture of Product pursuant to this Agreement, Product or Materials are destroyed or damaged by LHI Personnel while LHI Personnel were acting at the written direction of CLIENT Personnel, then LHI will have no liability to CLIENT as the result of such destruction or damage.

5.4.3 CLIENT acknowledges and agrees that its sole remedy with respect to (i) the failure of Product to conform with any of the Product Warranties and (ii) damaged or destroyed Materials and/or Product, is as set forth in this Section 5.4, and in furtherance thereof, Client hereby waives all other remedies at law or in equity regarding the foregoing claims.

 

CONFIDENTIAL

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6. RESERVED

 

7. S TORAGE O F M ATERIALS

7.1 Pre-Production . LHI will store at the expense of CLIENT any CLIENT Materials, equipment or other property delivered pursuant to the Statement of Work to the Facility by CLIENT more than 30 days prior to the Commencement Date. The storage rates will be set forth in the Statement of Work and may be amended from time to time by LHI. No storage fees will be charged during the period starting 30 days prior to the Commencement Date and ending upon the expiration or termination of the Production Term.

7.2 Post-Production . LHI will store at the Facility free of charge any in–process materials, CLIENT Materials, equipment and other CLIENT property (other than Product manufactured hereunder) that remains at the Facility on the date of expiration or termination of the Production Term (collectively “ Remaining CLIENT Property ”), for up to 30 calendar days. If CLIENT has not provided any instructions as to the shipment or other disposition of Remaining CLIENT Property prior to the expiration of such thirty (30)-day period, LHI may, continue to store such Remaining CLIENT Property at the Facility or elsewhere. In the event that LHI continues to store such Remaining CLIENT Property, CLIENT will enter into a storage agreement with LHI and agree to pay to LHI a storage charge at LHI’s then-standard monthly storage rates for the period beginning on the thirty-first (31st) day after the expiration or termination of the Production Term through the date that the storage terminates.

7.3 Product . Notwithstanding the foregoing, if CLIENT fails to take delivery of a Product within the applicable Delivery Period as required by Section 4.4 and fail to enter into a storage agreement with LHI, CLIENT will pay to LHI a storage charge at one and a half times LHI’s then-standard monthly storage rate, which shall begin accruing on the first day following the expiration of the applicable Delivery Period.

 

8. R EGULATORY M ATTERS

8.1 Permits and Approvals . Upon the Commencement Date and during the Production Term, LHI will maintain any licenses, permits and approvals necessary for the manufacture of the Product in the Facility. LHI will promptly notify CLIENT if LHI receives notice that any such license, permit, or approval is or may be revoked or suspended.

8.2 Inspections/Quality Audit by CLIENT . Up to two times during the Production Term and upon not less than 15 days’ prior written notice, LHI will permit CLIENT to inspect and audit the parts of the Facility where the manufacture of the Product is carried out in order to assess LHI’s compliance with cGMP, and to discuss any related issues with LHI’s management personnel. CLIENT Personnel engaged in such inspection will abide by the terms and conditions set forth in Sections 4.7.4 and 10.

8.3 Inspections by Regulatory Agencies . LHI will allow representatives of any regulatory agency to inspect the relevant parts of the Facility where the manufacture of the Product is carried out and to inspect the SOW Documentation and Batch Records to verify

 

CONFIDENTIAL

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compliance with cGMP and other practices or regulations and will promptly notify CLIENT of the scheduling of any such inspection relating to the manufacture of Product. LHI will promptly send to CLIENT a copy of any reports, citations, or warning letters received by CLIENT in connection with an inspection of a regulatory agency to the extent such documents relate to or affect the manufacture of the Product.

 

9. F INANCIAL T ERMS

9.1 Payments . CLIENT will make payments to LHI in the amounts and on the dates set forth in the Statement of Work. In the event that CLIENT has not paid an invoice within thirty (30) business days of the applicable due date (as established by Section 9.2), CLIENT’s failure shall be considered a material breach under Section 14.2, subject to the cure provisions set forth therein. Further, in addition to all other remedies available to LHI, in the event that CLIENT has not paid an invoice within sixty (60) business days of the applicable due date (as established by Section 9.2), LHI may elect to suspend the provision of all or a portion of the services under this Agreement, provided that CLIENT shall remain liable for all fees owed pursuant to the Statement of Work during any such suspension. LHI will submit to the CLIENT a valid certificate of Tax Residency (Form 6166) at least 45 days prior to first payment under this Agreement, and thereafter shall provide such certificate annually upon the CLIENT’s written request.

9.2 Invoices . LHI will charge for the services in accordance with the price schedule in each individual Statement of Work. LHI will invoice CLIENT according to the schedule set forth in a Statement of Work. LHI will deliver invoices electronically by email, which shall be considered to be an original invoice. Invoices should be e-mailed to Dr. Eyal Breitbart (eyal@vblrx.com), and/or to such other e-mail address(es) as CLIENT may stipulate from time to time. LHI will not deliver a paper invoice. Payment of invoices is due as provided in the Statement of Work. .

9.3 Taxes . CLIENT agrees that it is responsible for and will pay any sales, use or other taxes (the “ Taxes ”) resulting from LHI’s production of Product under this Agreement (except for income or personal property taxes payable by LHI). To the extent not paid by CLIENT, CLIENT will indemnify and hold harmless the LHI Parties from and against any and all penalties, fees, expenses and costs whatsoever in connection with the failure by CLIENT to pay the Taxes. LHI will not collect any sales and use taxes from CLIENT in connection with the production of any Product hereunder if CLIENT provides to LHI the appropriate valid exemption certificates .

9.4 Interest . Any fee, charge or other payment due to LHI by CLIENT under this Agreement that is not paid within 30 days after it is due will accrue interest on a daily basis at a rate of 1.0% per month (or the maximum legal interest rate allowed by applicable law, if less) from and after such date.

 

CONFIDENTIAL

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9.5 Method of Payment . All payments to LHI hereunder by CLIENT will be in United States currency and will be by check, wire transfer, money order, or other method of payment approved by LHI. Bank information for wire transfers is as follows: [***]

9.6 Cost Adjustments . After the first anniversary of the Effective Date, LHI may annually adjust the various costs and rates set forth in the Statement of Work attached hereto to reflect changes in the cost of materials and/or labor rate paid by LHI in connection with the production of Product under this Agreement; provided, however, that any increase in labor rates shall not exceed any percentage increase in the US Consumer Price Index for the most recently published percentage change for the 12-month period preceding the applicable contract anniversary date. LHI agrees to provide CLIENT with written notice of any such cost adjustment.

 

10. C ONFIDENTIAL I NFORMATION

10.1 Definition . “ Confidential Information ” means all technical, scientific and other know-how and information, trade secrets, knowledge, technology, means, methods, processes, practices, formulas, instructions, skills, techniques, procedures, specifications, data, results and other material, pre-clinical and clinical trial results, manufacturing procedures, test procedures and purification and isolation techniques, and any tangible embodiments of any of the foregoing, and any scientific, manufacturing, marketing and business plans, any financial and personnel matters relating to a Party or its present or future products, sales, suppliers, customers, employees, investors or business, that has been disclosed by or on behalf of such Party to the other Party either in connection with the discussions and negotiations pertaining to this Agreement or in the course of performing this Agreement. Without limiting the foregoing, the terms of this Agreement will be deemed “Confidential Information” and will be subject to the terms and conditions set forth in this Article 10.

10.2 Exclusions . Notwithstanding the foregoing Section 10.1, any information disclosed by a Party to the other Party will not be deemed “Confidential Information” to the extent that such information:

(a) at the time of disclosure is in the public domain;

(b) becomes part of the public domain, by publication or otherwise, through no fault of the Party receiving such information;

(c) at the time of disclosure is already in possession of the Party who received such information, as established by contemporaneous written records;

 

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(d) is lawfully provided to a Party, without restriction as to confidentiality or use, by a Third Party lawfully entitled to possession of such Confidential Information; or

(e) is independently developed by a Party without use of or reference to the other Party’s Confidential Information, as established by contemporaneous written records.

10.3 Disclosure and Use Restriction . Except as expressly provided herein, the Parties agree that for the term of the Agreement and the five-year period following any termination of the Agreement, each Party and its Affiliates will keep completely confidential and will not publish or otherwise disclose any Confidential Information of the other Party, its Affiliates or sublicensees, except in accordance with Section 10.4. Neither Party will use Confidential Information of the other Party except as necessary to perform its obligations or to exercise its rights under this Agreement.

10.4 Permitted Disclosures . Each receiving Party agrees to (i) institute and maintain security procedures to identify and account for all copies of Confidential Information of the disclosing Party and (ii) limit disclosure of the disclosing Party’s Confidential Information to its U.S. and European Affiliates and each of its and their respective officers, directors, employees, agents, consultants and independent contractors having a need to know such Confidential Information for purposes of this Agreement; provided that such U.S. and European Affiliates and each of its and their respective officers, directors, employees, agents, consultants and independent contractors are informed of the terms of this Agreement and are subject to obligations of confidentiality, non-disclosure and non-use similar to those set forth herein. Each Party may disclose this Agreement during a due diligence process in connection with the proposed transfer of its assets or capital stock, whether through purchase, merger, consolidation or otherwise. Such disclosure will be subject to obligations of confidentiality, non-disclosure and non-use similar to those set forth herein.

10.5 Government-Required Disclosure . If a duly constituted government authority, court or regulatory agency orders that a Party hereto disclose information subject to an obligation of confidentiality under this Agreement, such Party shall comply with the order, but shall notify the other Party as soon as possible, so as to provide the said Party an opportunity to apply to a court of record for relief from the order.

10.6 Publicity . Neither Party will refer to, display or use the other’s name, trademarks or trade names confusingly similar thereto, alone or in conjunction with any other words or names, in any manner or connection whatsoever, including any publication, article, or any form of advertising or publicity, except with the prior written consent of the other Party or as otherwise set forth in Section 10.7.

10.7 Publications . The confidentiality provisions of this Section 10 are applicable to all publications, abstracts, and papers authored by either Party , or its respective employees, consultants or contractors (the “Submitting Party”) relating to services performed by LHI hereunder or to data created pursuant to or related to the Statement of Work. Manuscripts of all such publications shall be submitted to the other Party (the “Reviewing Party”) at least sixty (60) days prior to submission in final form to any publisher. The Reviewing Party shall promptly inform the Submitting Party of any alterations or deletions necessary to protect its rights under Section 10 and the Submitting Party shall be obligated to make such changes prior to submitting any manuscripts in final form. The Reviewing Party may further withhold its approval for such publication if necessary to protect its rights under

 

CONFIDENTIAL

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Section 10. For general business development purposes, each Party may announce on its website or in press releases the general nature of work performed for CLIENT under any given Statement of Work upon receiving permission from the other Party, such permission not being unreasonably withheld or delayed.

 

11. I NTELLECTUAL P ROPERTY

11.1 Ownership .

11.1.1 Neither party will acquire any right, title, or interest in any Intellectual Property that the other party owns or controls as of the Effective Date of this Agreement, or that the other party obtains separate and apart from this Agreement.

11.1.2 As between the Parties, CLIENT shall own any and all inventions or discoveries that are (i) made, conceived or reduced to practice in the course of or resulting from this Agreement by either Party alone or the Parties jointly and (ii) applicable to the Product or the Process (“ CLIENT New IP ”). LHI hereby assigns to CLIENT all of LHI’s right, title and interest in and to such CLIENT New IP.

11.1.3 As between the Parties, LHI shall own any and all inventions or discoveries that are (i) made, conceived or reduced to practice in the course of or resulting from this Agreement by LHI and (ii) capable of being applied to products or processes other than the Product or the Process, and (iii) relates generally to LHI’s business of producing biological materials and (iv) are not a part of CLIENT New IP and (v) do not make use of or any reference of CLIENT’s Confidential Information (“ LHI New IP ”). CLIENT hereby assigns to LHI all of CLIENT’s right, title and interest in and to such LHI New IP.

11.1.4 LHI shall own any know-how, media, assays, methods or other inventions, whether or not patentable that are conceived, acquired from a third party, developed or reduced to practice by LHI after the Effective Date that is not LHI New IP (“LHI Independent IP”). LHI may offer to CLIENT to include said LHI Independent IP into the Product or Process. If CLIENT elects to include such LHI Independent IP in the Product or Process, such use of LHI Independent IP shall be subject to a license to be negotiated in good faith by the Parties. For the avoidance of doubt, LHI Independent IP is Intellectual Property developed by or for LHI independently and outside the scope of this Agreement by persons (i) without using actual knowledge of or not having access to CLIENT Confidential Information, but excluding LHI New IP, or (ii) not performing Process or Product development activities under a Statement of Work pursuant to this Agreement.

11.2 License Grants .

11.2.1 During the term of this Agreement, CLIENT hereby grants to LHI a fully paid, non-exclusive license under any and all CLIENT Intellectual Property that is necessary for LHI to perform its obligations under this Agreement for the sole and limited purpose of LHI’s performance of its obligations under this Agreement, including, without limitation, the development of the Process and the manufacture of Product for CLIENT.

 

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11.2.2 LHI hereby grants to CLIENT an irrevocable, fully paid, non-exclusive license, with the right to grant and authorize sublicenses, under any and all (i) LHI Intellectual Property (including LHI Inventions and LHI New IP but excluding LHI Independent IP) that LHI incorporates into the Process, to make, have made, use, sell, offer for sale, have sold and import the Product, or for any other commercial or research purpose related solely to the Product or Process, either by the CLIENT or a Third Party on its behalf and (ii) know-how included in the LHI New IP and not claimed in a patent or patent application, to use for any purpose related solely to the Product or Process.

11.3 Further Assurances . Each Party agrees to take all necessary and proper acts, and will cause its employees, Affiliates, contractors, and consultants to take such necessary and proper acts, to effectuate the ownership provisions set forth in this Article 11.

11.4 Prosecution of Patents .

11.4.1 LHI will have the sole right and discretion to file, prosecute and maintain patent applications and patents claiming LHI Inventions at LHI’s expense. CLIENT will cooperate with LHI to file, prosecute and maintain patent applications and patents claiming LHI Inventions, and will have the right to review and provide comments to LHI relating to such patent applications and patents.

11.4.2 CLIENT will have the sole right and discretion to file, prosecute and maintain patent applications and patents claiming CLIENT Inventions at CLIENT’s expense. LHI will cooperate with CLIENT to file, prosecute and maintain patent applications and patents claiming CLIENT Inventions, and will have the right to review and provide comments to CLIENT relating to such patent applications and patents.

 

12. R EPRESENTATIONS AND W ARRANTIES

12.1 By CLIENT . CLIENT hereby represents and warrants to LHI that, to the best of its knowledge, (i) it has the requisite intellectual property and legal rights related to the CLIENT Deliverables and the Product to authorize the performance of LHI’s obligations under this Agreement, and (ii) the performance of the Statement of Work and the production by LHI of the Product as contemplated in this Agreement will not give rise to a potential cause of action by a Third Party against LHI for infringement or another violation of intellectual property rights. Such representation and warranty will not apply to any production equipment supplied by LHI, method used by LHI or any other material or data used by LHI in the provision of the Services and which were not received from the CLIENT or agreed by CLIENT to be used in the provision of the Services.

12.2 By LHI . LHI hereby represents and warrants to CLIENT that, to the best of its knowledge, (i) it has the requisite intellectual property rights to be able to perform its obligations under this Agreement, and (ii) that LHI Intellectual Property, including LHI Inventions and LHI New IP as contemplated in this Agreement will not give rise to a potential cause of action by a Third Party against CLIENT for infringement or another violation of intellectual property rights.

 

CONFIDENTIAL

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


EXECUTION COPY

 

13. D ISCLAIMER ; L IMITATION OF L IABILITY

13.1 DISCLAIMER. EXCEPT FOR THE EXPRESS WARRANTIES SET FORTH IN THIS AGREEMENT, INCLUDING WITHOUT LIMITATION THE EXPRESS PRODUCT WARRANTIES SET FORTH IN SECTION 5.1, LHI MAKES NO REPRESENTATIONS AND GRANTS NO WARRANTIES, EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW, BY STATUTE OR OTHERWISE, WITH RESPECT TO THE PRODUCTS, MATERIALS, AND SERVICES PROVIDED UNDER THIS AGREEMENT, AND LHI SPECIFICALLY DISCLAIMS ANY OTHER WARRANTIES, WHETHER WRITTEN OR ORAL, OR EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF QUALITY, MERCHANTABILITY OR FITNESS FOR A PARTICULAR USE OR PURPOSE WITH RESPECT TO SUCH PRODUCTS, MATERIALS, OR SERVICES.

13.2 Disclaimer of Consequential Damages. IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER OR ANY OF ITS AFFILIATES FOR ANY CONSEQUENTIAL, INCIDENTAL, INDIRECT, SPECIAL, PUNITIVE OR EXEMPLARY DAMAGES (INCLUDING, WITHOUT LIMITATION, LOST PROFITS, BUSINESS OR GOODWILL) SUFFERED OR INCURRED BY SUCH OTHER PARTY OR ITS AFFILIATES IN CONNECTION WITH THIS AGREEMENT, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

13.3 Limitation of Liability. BOTH PARTIES HEREBY AGREE THAT TO THE FULLEST EXTENT PERMITTED BY LAW, LHI’S LIABILITY TO CLIENT, FOR ANY AND ALL INJURIES, CLAIMS, LOSSES, EXPENSES, OR DAMAGES, WHATSOEVER, ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT FROM ANY CAUSE OR CAUSES, INCLUDING, BUT NOT LIMITED TO, NEGLIGENCE, ERRORS, OMISSIONS OR STRICT LIABILITY, SHALL BE LIMITED SOLELY TO LHI REPEATING ONE TIME, AT LHI’S EXPENSE, SERVICES WHICH WERE MUTUALLY DEEMED TO BE NON-CONFORMING. HOWEVER THIS SECTION SHALL NOT APPLY IN THE EVENT BUT ONLY TO THE EXTENT OF GROSS NEGLIGENCE OR WILLFULL MISCONDUCT UNDER THIS AGREEMENT. TO THE EXTENT THAT THIS CLAUSE CONFLICTS WITH ANY OTHER CLAUSE, THIS CLAUSE SHALL TAKE PRECEDENCE OVER SUCH CONFLICTING CLAUSE. IF APPLICABLE LAW PREVENTS ENFORCEMENT OF THIS CLAUSE, THEN THIS CLAUSE SHALL BE DEEMED MODIFIED TO PROVIDE THE MAXIMUM PROTECTION FOR LHI AS IS ALLOWABLE UNDER APPLICABLE LAW.

 

14. T ERM AND T ERMINATION

14.1 Term . The term of this Agreement will commence on the Effective Date and will continue until the fifth anniversary of the Effective Date unless terminated prior to that time or extended by the Parties.

14.2 Termination for Material Breach . Either Party may terminate this Agreement, by written notice to the other Party, for any material breach of this Agreement by the other Party, if such breach is not cured within thirty (30) days after the breaching Party receives written notice of such breach from the non-breaching Party; provided, however, that if such breach is not

 

CONFIDENTIAL

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


EXECUTION COPY

 

capable of being cured within such thirty-day period and the breaching Party has commenced and diligently continued actions to cure such breach within such thirty-day period, except in the case of a payment default, the cure period shall be extended to 60 days, so long as the breaching Party is making diligent efforts to do so. Such termination shall be effective upon expiration of such cure period.

14.3 Termination by Notice .

14.4 14.3.1 Without Cause . During the term of the Agreement, the CLIENT may terminate the Agreement upon 60 days notice. After the first anniversary of the Effective Date, either Party may terminate this Agreement by providing written notice of termination no less than two months in advance of the date of termination. For the avoidance of doubt, in the event of termination by CLIENT under this Section 14.3.1, CLIENT shall, at minimum, remain liable for all charges for materials that have already been purchased, all fees owed pursuant to actual services rendered, including all work in process, and un-cancellable costs, including un-cancellable labor commitments, related to any outstanding Statement of Work. In addition to the foregoing, in connection with any termination under this Section 14.3.1, CLIENT shall also pay to LHI a suite fee of Fifty Thousand Dollars ($50,000.00) per month for each of the three months prior to termination. Notwithstanding the foregoing, LHI will use commercially reasonable efforts to secure new projects (but excluding any project then under contract with LHI) for the suite space reserved for all cancelled CLIENT SOWs, for the same dates and duration that would have been occupied by CLIENT. If such new projects are secured by LHI, the suite fee due from CLIENT upon cancellation shall be reduced by an amount equal to one hundred percent (100%) of the production fees associated with such new projects; provided, however, in no event shall any such reduction result in a refund or credit to CLIENT.

14.3.2 Termination of Clinical Trials . Either Party may terminate this Agreement if such Party receives notice that the production of Product hereunder or the clinical trials for which Product is being produced hereunder have been or will be suspended or terminated by the FDA (or other regulatory authority) by providing written notice of termination not less than 2 months in advance of the date of termination. For the avoidance of doubt, in the event of termination by CLIENT under this Section 14.3.2, CLIENT shall, at minimum, remain liable for all charges for materials that have already been purchased, all fees owed pursuant to actual services rendered, including all work in process, and un cancellable costs, including un-cancellable labor commitments, related to any outstanding Statement of Work during such two-month period.

14.5 Termination by Insolvency . Either Party may terminate this Agreement upon notice to the other Party, upon (a) the dissolution, termination of existence, liquidation or business failure of the other Party; (b) the appointment of a custodian or receiver for the other Party who has not been terminated or dismissed within ninety (90) days of such appointment; (c) the institution by the other Party of any proceeding under national, federal or state bankruptcy, reorganization, receivership or other similar laws affecting the rights of creditors generally or the making by such Party of a composition or any assignment for the benefit of creditors under any national, federal or state bankruptcy, reorganization, receivership or other similar law affecting

 

CONFIDENTIAL

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


EXECUTION COPY

 

the rights of creditors generally, which proceeding is not dismissed within ninety (90) days of filing. All rights and licenses granted pursuant to this Agreement are, and shall otherwise be deemed to be, for purposes of Section 365(n) of Title 11 of the United States Code, licenses of rights of “intellectual property” as defined therein.

14.6 Effects of Termination .

14.6.1 Accrued Rights . Termination of this Agreement for any reason will be without prejudice to any rights that will have accrued to the benefit of a Party prior to such termination. Such termination will not relieve a Party of obligations that are expressly indicated to survive the termination of this Agreement.

14.6.2 Disposition of Remaining CLIENT Property and Confidential Information . Upon termination or expiration of this Agreement, LHI will store any Remaining CLIENT Property as set forth in Section 7.2 and, at CLIENT’s option, return or destroy any CLIENT Confidential Information in the possession or control of LHI. Likewise, CLIENT will, at LHI’s option, return or destroy any LHI Confidential Information in the possession or control of CLIENT. Notwithstanding the foregoing provisions: (i) LHI may retain and preserve, at its sole cost and expense, samples and standards of each Product following termination or expiration of this Agreement solely for use in determining LHI’s rights and obligations hereunder; and (ii) each Party may retain a single copy of the other Party’s Confidential Information for documentation purposes only and which shall remain subject to the obligations of nonuse and confidentiality set forth in this Agreement.

14.6.3 Survival . Sections 1, 3.4, 4.8, 7.2, 10, 11, 13, 14.4, 15, 16 and 17 of this Agreement, together with any appendices referenced therein, will survive any expiration or termination of this Agreement.

 

15. I NDEMNIFICATION

15.1 Indemnification of Client . LHI will indemnify CLIENT, its Affiliates, and their respective directors, officers, employees and agents, and defend and hold each of them harmless, from and against any and all losses, damages, liabilities, costs and expenses (including reasonable attorneys’ fees and expenses) in connection with any and all liability suits, investigations, claims or demands (collectively, “ Losses ”) to the extent such Losses arise out of or result from any claim, lawsuit or other action or threat by a Third Party arising out of: (a) any material breach by LHI of this Agreement, or (b) the gross negligence or willful misconduct on the part of one or more of the LHI Parties in performing any activity contemplated by this Agreement, except for those Losses for which CLIENT has an obligation to indemnify the LHI Parties pursuant to Section 15.2, as to which Losses each Party will indemnify the other to the extent of their respective liability for the Losses.

15.2 Indemnification of LHI . CLIENT will indemnify LHI and its Affiliates, and their respective directors, officers, employees and agents (the “ LHI Parties ”), and defend and hold each of them harmless, from and against any and all Losses to the extent such Losses arise out of or result from any claim, lawsuit or other action or threat by a Third Party arising out of: (a) any material breach by CLIENT of this Agreement, (b) the use or sale of Products, except to

 

CONFIDENTIAL

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


EXECUTION COPY

 

the extent such Losses arise out of or result from a breach by LHI of the Product Warranties, (c) the gross negligence or willful misconduct on the part of CLIENT or its Affiliates in performing any activity contemplated by this Agreement, or (d) the use or practice by LHI of any process, invention or other intellectual property supplied by CLIENT to LHI under this Agreement, except for those Losses for which LHI has an obligation to indemnify CLIENT pursuant to Section 15.1, as to which Losses each Party will indemnify the other to the extent of their respective liability for the Losses.

15.3 Indemnification Procedure .

15.3.1 An “ Indemnitor ” means the indemnifying Party. An “ Indemnitee ” means the indemnified Party, its Affiliates, and their respective directors, officers, employees and agents.

15.3.2 An Indemnitee which intends to claim indemnification under Section 15.1 or Section 15.2 hereof shall promptly notify the Indemnitor in writing of any claim, lawsuit or other action in respect of which the Indemnitee, its Affiliates, or any of their respective directors, officers, employees and agents intend to claim such indemnification. The Indemnitee shall permit, and shall cause its Affiliates and their respective directors, officers, employees and agents to permit, the Indemnitor, at its discretion, to settle any such claim, lawsuit or other action and agrees to the complete control of such defense or settlement by the Indemnitor; provided, however, that in order for the Indemnitor to exercise such rights, such settlement shall not adversely affect the Indemnitee’s rights under this Agreement or impose any obligations on the Indemnitee in addition to those set forth herein. No such claim, lawsuit or other action shall be settled without the prior written consent of the Indemnitor and the Indemnitor shall not be responsible for any legal fees or other costs incurred other than as provided herein. The Indemnitee, its Affiliates and their respective directors, officers, employees and agents shall cooperate fully with the Indemnitor and its legal representatives in the investigation and defense of any claim, lawsuit or other action covered by this indemnification, all at the reasonable expense of the Indemnitor. The Indemnitee shall have the right, but not the obligation, to be represented by counsel of its own selection and expense.

15.4 Insurance . LHI will maintain, at all times during the term of this Agreement and for five years thereafter, a sufficient insurance policy, including a products liability policy, to assure its obligations under this Agreement (the “ Insurance Policy ”), with a per occurrence limit of at least five million dollars ($5,000,000) and an aggregate limit of at least five million dollars ($5,000,000), and will provide a Certificate of Insurance to the CLIENT that the Insurance Policy has been endorsed to designate the CLIENT as an additional insured. LHI shall maintain the Insurance Policy with an insurance company having a minimum AM Best rating of A. CLIENT will maintain, during the term of its clinical trials and to the extent required by law thereafter, a Clinical trials insurance policy, with a per occurrence limit of at five million dollars ($5,000,000) and an aggregate limit of five million dollars ($5,000,000), and will provide a Certificate of Insurance evidencing that the CLIENTS Insurance Policy has been endorsed to include LHI as an additional insured. Should any of the above described policies be cancelled before the expiration date thereof, notice will be delivered in accordance with the policy provisions.

 

CONFIDENTIAL

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


EXECUTION COPY

 

16. A DDITIONAL C OVENANTS

16.1 Non-Solicitation . During the term of this Agreement and for two (2) years thereafter, each of the Parties agrees not to seek to induce or solicit any employee of the other Party or its Affiliates to discontinue his or her employment with the other Party or its Affiliate in order to become an employee or an independent contractor of the soliciting Party or its Affiliate; provided, however, that neither Party shall be in violation of this Section 16.1 as a result of making a general solicitation for employees or independent contractors. For the avoidance of doubt, the publication of an advertisement shall not constitute solicitation or inducement.

16.2 Commercial Scale Manufacture . In the event that CLIENT desires to commence commercial scale manufacture of Product, and following manufacture of the Product in accordance with the Process, the Parties agree to negotiate for the provision of such manufacturing services to CLIENT by LHI.

 

17. M ISCELLANEOUS

17.1 Independent Contractors . Each of the Parties is an independent contractor and nothing herein contained shall be deemed to constitute the relationship of partners, joint venturers, nor of principal and agent between the Parties. Neither Party shall at any time enter into, incur, or hold itself out to Third Parties as having authority to enter into or incur, on behalf of the other Party, any commitment, expense, or liability whatsoever.

17.2 Force Majeure . Neither Party shall be in breach of this Agreement if there is any failure of performance under this Agreement (except for payment of any amounts due under this Agreement) occasioned by any reason beyond the control and without the fault or negligence of the Party affected thereby, including, without limitation, an act of God, fire, flood, act of government or state, war, civil commotion, insurrection, acts of terrorism, embargo, sabotage, a viral, bacterial or mycoplasmal contamination which causes a shutdown of the Facility, prevention from or hindrance in obtaining energy or other utilities, a shortage of raw materials or other necessary components, labor disputes of whatever nature, or any other reason beyond the control and without the fault or negligence of the Party affected thereby (a “ Force Majeure Event ”). Such excuse shall continue as long as the Force Majeure Event continues. Upon cessation of such Force Majeure Event, the affected Party shall promptly resume performance under this Agreement as soon as it is commercially reasonable for the Party to do so. Each Party agrees to give the other Party prompt written notice of the occurrence of any Force Majeure Event, the nature thereof, and the extent to which the affected Party will be unable to fully perform its obligations under this Agreement. Each Party further agrees to use commercially reasonable efforts to correct the Force Majeure Event as quickly as practicable (provided that in no event shall a Party be required to settle any labor dispute) and to give the other Party prompt written notice when it is again fully able to perform such obligations.

17.3 Condemnation . If the Facility is condemned or taken as a result of the exercise of the power of eminent domain or will be conveyed to a governmental agency having power of eminent domain under the threat of the exercise of such power (any of the foregoing, a “ Condemnation ”), then this Agreement will terminate as of the date on which title to the Facility vests in the authority so exercising or threatening to exercise such power and CLIENT will not have any right to the Condemnation proceeds.

 

CONFIDENTIAL

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


EXECUTION COPY

 

17.4 Notices . Any notice required or permitted to be given under this Agreement by any Party shall be in writing and shall be (a) delivered personally, (b) sent by registered mail, return receipt requested, postage prepaid, (c) sent by a nationally-recognized courier service guaranteeing next-day or second day delivery, charges prepaid, or (d) delivered by facsimile (with documented evidence of transmission), to the addresses or facsimile numbers of the other Party set forth below, or at such other addresses as may from time to time be furnished by similar notice by any Party. The effective date of any notice under this Agreement shall be the date of receipt by the receiving Party.

If to LHI :

Lonza Houston, Inc.

Attn: Business Head

8066 El Rio St. Houston, TX 77056

With a copy to:

Assistant General Counsel

Lonza America, Inc.

90 Boroline Road

Allendale, NJ 07401

Fax: (201) 378-5630

If to Client :

Vascular Biogenics Ltd. Attn: Eyal Breitbart

6 Yonni Netanyahu St.

Or –Yehuda Israel

Fax: +972-3-6346449

Either Party may change its address for notice by giving notice thereof in the manner set forth in this Section 17.4.

17.5 Entire Agreement; Amendments . This Agreement, including the Appendices attached hereto and referenced herein, constitutes the full understanding of the Parties and a complete and exclusive statement of the terms of their agreement with respect to the specific subject matter hereof and supersedes all prior agreements and understandings, oral and written, among the Parties with respect to the subject matter hereof. No terms, conditions, understandings or agreements purporting to amend, modify or vary the terms of this Agreement (including any Appendix hereto) shall be binding unless hereafter made in a written instrument referencing this Agreement and signed by each of the Parties.

17.6 Governing Law . This Agreement will be governed by and construed in accordance with the internal laws of the Kingdom of England and Wales, without giving effect to its conflicts of laws provisions. Any dispute under this Agreement which cannot be resolved amicably shall be settled by the, shall be finally settled under the Rules of Arbitration of the

 

CONFIDENTIAL

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


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International Chamber of Commerce (“ICC”) by one arbitrator appointed in accordance with the said rules. The award shall be final and binding and enforceable in any court of competent jurisdiction. The arbitration shall be held in London, United Kingdom, in English language.

17.7 Counterparts . This Agreement and any amendment hereto may be executed in any number of counterparts, each of which shall for all purposes be deemed an original and all of which shall constitute the same instrument. This Agreement shall be effective upon full execution by facsimile or original, and a facsimile signature shall be deemed to be and shall be as effective as an original signature.

17.8 Severability . If any part of this Agreement shall be found to be invalid or unenforceable under applicable law in any jurisdiction, such part shall be ineffective only to the extent of such invalidity or unenforceability in such jurisdiction, without in any way affecting the remaining parts of this Agreement in that jurisdiction or the validity or enforceability of the Agreement as a whole in any other jurisdiction. In addition, the part that is ineffective shall be reformed in a mutually agreeable manner so as to as nearly approximate the intent of the Parties as possible.

17.9 Titles and Subtitles . All headings, titles and subtitles used in this Agreement (including any Appendix hereto) are for convenience only and are not to be considered in construing or interpreting any term or provision of this Agreement (or any Appendix hereto).

17.10 Exhibits . All “RECITALS”, “DEFINITIONS”, exhibits and appendices referred to herein form an integral part of this Agreement and are incorporated into this Agreement by such reference.

17.11 Pronouns . Where the context requires, (i) all pronouns used herein will be deemed to refer to the masculine, feminine or neuter gender as the context requires, and (ii) the singular context will include the plural and vice versa.

17.12 Assignment . This Agreement shall be binding upon the successors and assigns of the Parties and the name of a Party appearing herein shall be deemed to include the names of its successors and assigns. Neither Party may assign its interest under this Agreement without the prior written consent of the other Party, such consent not to be unreasonably withheld. Any permitted assignment of this Agreement by either Party will be conditioned upon that Party’s permitted assignee agreeing in writing to comply with all the terms and conditions contained in this Agreement. Any purported assignment without a required consent shall be void. No assignment shall relieve any Party of responsibility for the performance of any obligation that accrued prior to the effective date of such assignment.

17.13 Waiver . The failure of any Party at any time or times to require performance of any provision of this Agreement (including any Appendix hereto) will in no manner affect its rights at a later time to enforce the same. No waiver by any Party of any term, provision or condition contained in this Agreement (including any Appendix hereto), whether by conduct or otherwise, in any one or more instances, shall be deemed to be or construed as a further or continuing waiver of any such term, provision or condition or of any other term, provision or condition of this Agreement (including any Appendix hereto).

 

CONFIDENTIAL

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


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17.14 Dispute Resolution . If the Parties are unable to resolve a dispute, despite its good faith efforts, either Party may refer the dispute to the President of each Party’s respective business unit (or other designee). In the event that no agreement is reached by the Presidents (or other designees) with respect to such dispute within thirty (30) days after its referral to them, either Party may pursue any and all remedies available at law or in equity according to section 17.6 above.

17.15 No Presumption Against Drafter . For purposes of this Agreement, CLIENT hereby waives any rule of construction that requires that ambiguities in this Agreement (including any Appendix hereto) be construed against the drafter.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

CONFIDENTIAL

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


EXECUTION COPY

 

IN WITNESS WHEREOF , the parties have executed this Agreement as of the date last signed by the parties hereto.

 

    VASCULAR BIOLOGICS, LTD.
1/05/2012     By:  

/s/ Dror Harats

Date      

Name: Dror Harats

Title: CEO

    LONZA HOUSTON, INC.
1/05/2012                 By:  

/s/ J. David Enloe Jr.

Date       Name: J. David Enloe Jr.
      Title: Head of Viral-based Therapeutics

 

CONFIDENTIAL

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


 

LOGO

APPENDIX A

STATEMENT OF WORK

(TO BE ATTACHED)

 

CONFIDENTIAL

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


APPENDIX A-1

Statement of Work VBLT-001

Formulation Buffer Evaluations for VB-111 Final Product

January 31, 2012

 

I. Introduction and Background

This Statement of Work (SOW) between Vascular Biologics, Ltd. and Lonza Houston, Inc. is subject to the Manufacturing Services Agreement dated January 5, 2012, between Vascular Biogenics, Ltd. (“VBL”), and Lonza Houston, Inc. (“Lonza”) (the “Agreement”) and is incorporated therein and made a part of such Agreement. In the event of an inconsistency between the Agreement and this SOW, the Agreement shall control.

This SOW outlines the performance of [***]. The study will be performed by Lonza Process Development and/or Quality Control personnel, except for the execution of the [***] performed by VBL; assays will be performed under GLP conditions and documented in laboratory notebooks. In addition, a study to evaluate the [***] performed by VBL using samples generated by Lonza and transferred to VBL.

The [***] consist of the following components:

 

  1. [***]

 

  2. [***]

 

  3. [***]

[***]

 

II. Project Assumptions

In the development of this SOW, the following assumptions were made:

 

  1. The two batches of research and development-grade VB-111 provided by VBL will have been documented to be Mycoplasma-free and bioburden-free and/or sterile, prior to their arrival at Lonza;

 

  2. The VB-111 material provided for the study will be purified and formulated in [***]

 

  3. For each instance of physical virus particle titer determination, Lonza’s standard [***] method will be utilized. In addition, it is assumed that Lonza’s standard [***] standard curve generation procedure will be followed and will utilize VB-111 Reference Standard in the performance of this activity.

 

III. Scope of Work

The scope of the project includes the following tasks:

 

  a. Sample Preparation

[***]

 

  b. [***]

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


  c. Temperature Storage Condition Stability Study

Following preparation, samples will be transferred to storage [***] at Lonza and provided to VBL for transfer to proper storage temperature and analysis at each time point by VBL as desired by VBL, according to the following analysis plan:

 

Testing Time point

(month)

 

Storage Condition

 

4 o C

 

-20 o C

 

-80 o C

[***]   [***]   [***]   [***]
[***]   [***]   [***]   [***]
[***]   [***]   [***]   [***]
[***]   [***]   [***]   [***]
[***]   [***]   [***]   [***]

 

  d. Deliverables

In addition to sample preparation and study performance, Lonza will compose a Process Development Protocol (PDP) in standard Lonza format prior to study commencement, and upon completion of the [***], a summary report for the [***] in standard Lonza format which will describe the materials and procedures used in, and the results of, the study. Lonza will provide the report to VBL via electronic mail for review prior to report finalization. VBL will be provided with a signed copy of the report for its records.

 

IV. Fees and Terms

The fees and payment terms for the activities described above total [***], payable as follows:

1. [***];

2. [***]

Shipments from Lonza to VBL will be made via World Courier and utilize VBL’s World Courier account. In the event that shipments from Lonza to VBL utilize Lonza’s World Courier courier account, such shipment(s) will be invoiced for as pass-through costs and supporting documentation of associated fees will be provided along with the invoice.

Invoices will be provided via e-mail and associated payments are due upon invoice receipt. Payments are to be made via wire transfer using the Lonza account information set forth in the Agreement.

In the event of a termination of this SOW or the Agreement for any reason, VBL shall pay reasonable costs incurred by Lonza up to the effective date of termination (including out-of-pocket losses to Lonza for purchase of unmarketable materials which have become unusable by reason of termination), all uncancellable labor commitments and all work in process (including all professional services rendered) through the effective date of termination.

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


V. Acceptance

 

Lonza Houston, Inc.   Vascular Biologics, Ltd.
By:  

/s/ J. David Enloe, Jr.

    By:  

/s/ Amos Ron

J. David Enloe, Jr.     Name:  

Amos Ron

Head, Viral-based Therapeutics   Title:  

Chief Financial Officer

Date:  

 

    Date:  

 

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


APPENDIX A-2

Statement of Work VBLT-002

Small-scale [***] Process Development &

Downstream Process Technology Transfer for VB-111

February 14, 2012

 

I. Introduction

This Statement of Work (SOW) between Vascular Biologics, Ltd. and Lonza Houston, Inc. is subject to the Manufacturing Services Agreement dated January 5, 2012, between Vascular Biogenics, Ltd. (“VBL”), and Lonza Houston, Inc. (“Lonza”) (the “Agreement”) and is incorporated therein and made a part of such Agreement. In the event of an inconsistency between the Agreement and this SOW, the Agreement shall control.

 

II. Scope of Work

Lonza will provide the following services surrounding the process development activities for the VB-111 product:

[***]

Deliverable

Upon completion of the above activities, Lonza will compose a Technology Transfer Report in standard Lonza format, which will describe the materials and procedures used in, and the results of, the activities associated with this Project Component. Lonza will provide the report to VBL via electronic mail for review prior to report finalization. VBL will be provided with a signed copy of the report for its records.

 

III. Fees and Terms

The fees for the activities described above total [***], payable as follows:

 

  1. [***];

 

  2. [***]

 

  a. [***];

 

  b. [***].

 

  3. [***]

 

  a. [***];

 

  b. [***].

Courier fees for shipments from Lonza to VBL which utilize Lonza’s courier account will be invoiced for as pass-through costs and supporting documentation of associated fees will be provided along with the invoice.

Invoices will be provided via e-mail and associated payments are due upon invoice receipt. Payments are to be made via wire transfer using the Lonza account information set forth in the Agreement.

In the event of a termination of this SOW or the Agreement for any reason, VBL shall pay reasonable costs incurred by Lonza up to the effective date of termination (including out-of-pocket losses to Lonza for purchase of unmarketable materials which have become unusable by reason of termination), all uncancellable labor commitments and all work in process (including all professional services rendered) through the effective date of termination.

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].
Lonza Job Code VBLT-002       Page 1 of 2
   CONFIDENTIAL   


IV. Acceptance

 

Lonza Houston, Inc.     Vascular Biologics, Ltd.
By:  

/s/ J David Enloe, Jr.

    By:  

/s/ Amos Ron

J. David Enloe, Jr.     Name:  

Amos Ron

Head, Viral-based Therapeutics     Title:  

Chief Financial Officer

Date:  

 

    Date:  

 

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


LOGO

APPENDIX A-2

Change Order 1 to Statement of Work VBLT-002

Resin Capacity Study for IEX Chromatography Resin

June 12, 2012

 

I. Introduction and Background

This Change Order (CO) to Statement of Work (SOW) VBLT-002 between Vascular Biologics, Ltd. and Lonza Houston, Inc. is subject to the Manufacturing Services Agreement dated January 5, 2012, between Vascular Biologics, Ltd. (“VBL”), and Lonza Houston, Inc. (“Lonza”) (the “Agreement”) and is incorporated therein and made a part of such Agreement. In the event of an inconsistency between the Agreement and this CO, the Agreement shall control.

VBL has requested that Lonza perform analysis on samples taken during the performance of the activities as described in SOW VBLT-002, Section II., “Phase 2, [***]” which are incremental to the analyses included in the SOW. The analyses to be performed per this Change Order are listed in Section II.A., below.

In addition, VBL has requested that Lonza evaluate the capacity of the ion exchange (IEX) chromatography resin that is used for the purification of VBL’s VB-111 product, in consideration of the potential need for increasing the size of the column and/or the quantity of resin utilized to purify VB-111 when produced at larger (i.e., 500L) working volumes. VB-111 material produced by Lonza in the performance of the work described in SOW VBLT-002, Section II., “Phase 2, Small Scale Stirred-tank Bioreactor (STB) Process Development,” will be used as test article for the activities described in Section II.B., below.

 

II. Scope of Work

A., Incremental Analysis on VB-111 Material

Lonza will perform or coordinate the performance of the following assays, which are incremental to the work scope described in SOW VBLT-002, on two samples of VB-111 material [***] generated in the performance of the work scope described in SOW VBLT-002:

[***]

B., [***]

Deliverable

Upon completion of the above activities, Lonza will compose a Technology Transfer Report in standard Lonza format, which will describe the materials and procedures used in, and the results of, the activities described above, as well as the activities described in SOW VBLT-002. Lonza will provide the report to VBL via electronic mail for review prior to report finalization. VBL will be provided with a signed copy of the report for its records.

 

III. Fees and Terms

The fees for the activities described above total [***], payable as follows:

 

  1. [***];

 

  2. [***].

Invoices will be provided via e-mail and associated payments are due upon invoice receipt. Payments are to be made via wire transfer using the Lonza account information set forth in the Agreement.

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].
Lonza Job Code VBLT-002       Page 1 of 2
   CONFIDENTIAL   


In the event of a termination of this CO or the Agreement for any reason, VBL shall pay reasonable costs incurred by Lonza up to the effective date of termination (including out-of-pocket losses to Lonza for purchase of unmarketable materials which have become unusable by reason of termination), all uncancellable labor commitments and all work in process (including all professional services rendered) through the effective date of termination.

 

IV. Acceptance

 

Lonza Houston, Inc.     Vascular Biologics, Ltd.
By:  

/s/ J. David Enloe, Jr.

    By:  

/s/ Amos Ron

J. David Enloe, Jr.     Name:  

Amos Ron

Head, Viral-based Therapeutics     Title:  

Chief Financial Officer

Date:  

 

    Date:  

 

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].
Lonza Job Code VBLT-002       Page 2 of 2
   CONFIDENTIAL   


LOGO

APPENDIX A-3

Statement of Work VBLT-003

[***] Demonstration Run in

Process Development Laboratory Environment

May 7, 2012

 

I. Introduction

This Statement of Work (SOW) between Vascular Biologics, Ltd. (“Client”) and Lonza Houston, Inc. (“Lonza”) is subject to the Manufacturing Services Agreement dated January 5, 2012 (2012-01-05 VBL-Lonza MSA_fully executed.pdf), between Client, and Lonza (the “Agreement”) and is incorporated therein and made a part of such Agreement. In the event of an inconsistency between the Agreement and this SOW, the Agreement shall control.

 

II. Scope of Work

Lonza will provide the following services surrounding the process development activities for the VB-111 product:

Upon successful completion of the deliverables described in SOW-002, Lonza will perform [***].

[***]

Deliverable

Upon completion of the above activities, Lonza will compose a Report in standard Lonza format, which will describe the materials and procedures used in, and the results of, the activities associated with this Project Component. Lonza will provide the report to Client via electronic mail for review prior to report finalization. Client will be provided with a signed copy of the report for its records.

 

III. Fees and Terms

The fees for the activities described above total [***], payable as follows:

 

  1. [***];

 

  2. [***]

 

  3. [***]

Courier fees for shipments from Lonza to Client which utilize Lonza’s courier account will be invoiced for as pass-through costs and supporting documentation of associated fees will be provided along with the invoice.

Invoices will be provided via e-mail and associated payments are due upon invoice receipt. Payments are to be made via wire transfer using the Lonza account information set forth in the Agreement.

In the event of a termination of this SOW or the Agreement for any reason, Client shall pay reasonable costs incurred by Lonza up to the effective date of termination (including out-of-pocket losses to Lonza for purchase of unmarketable materials which have become unusable by reason of termination), all uncancellable labor commitments and all work in process (including all professional services rendered) through the effective date of termination.

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].
Lonza Job Code VBLT-003       Page 1 of 2
   CONFIDENTIAL   


IV. Acceptance

 

Lonza Houston, Inc.   Vascular Biologics, Ltd.
By:  

/s/ J. David Enloe, Jr.

    By:  

/s/ Amos Ron

J. David Enloe, Jr.   Name:  

Amos Ron

Head, Viral-based Therapeutics   Title:  

Chief Financial Officer

Date:  

 

    Date:  

 

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].
Lonza Job Code VBLT-003       Page 2 of 2
   CONFIDENTIAL   


LOGO

APPENDIX A4 -Statement of Work VBLT-004 Purchase of Cell Culture

Medium for VB-111 Production at the [***] Scale

June 12, 2012

 

I. Introduction

This Statement of Work (SOW) between Vascular Biologies, Ltd. and Lonza Houston, Inc. is subject to the Manufacturing Services Agreement dated January 5, 2012, between Vascular Biologies, Ltd. (“VBL”), and Lonza Houston, Inc. (“Lonza”) (the “Agreement”) and is incorporated therein and made a part of such Agreement. In the event of an inconsistency between the Agreement and this SOW, the Agreement shall control.

Lonza and VBL are currently planning for Lonza to perform a [***] production batch of VBL’s VB-111 product during Quarter 4 2012. To provide a sufficient quantity of medium to produce [***].

 

II. Scope of Work

Lonza will order [***]. The [***] to be produced as soon as possible; the second [***] is to be produced two to three months after the first batch.

 

III. Fees and Terms

The cost of each [***], supplied in [***] USD.

The Lonza fee for medium procurement and receiving is [***], in addition to the batch cost.

The total fee for the activities described above is [***], payable as follows:

 

  1. [***];

 

  2. [***].

Any shipping and handling fees and sales tax charged by [***] and/or FedEx to Lonza will be passed through to VBL at no mark-up.

Invoices will be provided via e-mail and associated payments are due upon invoice receipt. Payments are to be made via wire transfer using the Lonza account information set forth in the Agreement.

In the event of a termination of this SOW or the Agreement for any reason, VBL shall pay reasonable costs incurred by Lonza up to the effective date of termination (including out-of-pocket losses to Lonza for purchase of unmarketable materials which have become unusable by reason of termination), all uncancellable labor commitments and all work in process (including all professional services rendered) through the effective date of termination.

 

Lonza Job Code VBLT-004       Page 1 of 2
   CONFIDENTIAL   
Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


IV. Acceptance

 

Lonza Houston, Inc.     Vascular Biologics, Ltd.
By  

/s/ J. David Enloe, Jr.

    By:  

/s/ Amos Ron

J. David Enloe, Jr.     Name:  

Amos Ron

Head, Viral-based Therapeutics     Title:  

Chief Financial Officer

Date:       Date:  

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Lonza Job Code VBLT-004

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


LOGO

APPENDIX A-4 Statement of

Work VBLT-005 VB-111

Sample Analysis July 5, 2012

 

I. Introduction

This Statement of Work (SOW) between Vascular Biologies, Ltd. and Lonza Houston, Inc. is subject to the Manufacturing Services Agreement dated January 5, 2012, between Vascular Biologies, Ltd. (“VBL”), and Lonza Houston, Inc. (‘Lonza’) (the “Agreement”) and is incorporated therein and made a part of such Agreement, in the event of an inconsistency between the Agreement and this SOW, the Agreement shall control.

VBL has requested that Lonza analyze five samples of its VB-111 Drug Product using Lonza’s [***]. The samples and documentation of each sample’s Mycoplasma-free and sterile or bioburden-free status will be provided to Lonza by VBL, at VBL’s sole expense. The VB-111 samples to be analyzed are one sample from each of the following lots:

 

    [***]

 

    [***]

 

    [***]

 

    [***]

 

    [***]

 

II. Scope of Work

Lonza Quality Control (QC) personnel will perform two executions of assay [***] , analyzing three of the VB-111 samples on one assay and the other two VB-111 samples on one separate assay. Upon assay completion, the assay documentation will be audited by Lonza QC and Quality Assurance personnel.

VBL will be provided with QA-reviewed and -approved assay documentation for its records.

 

III. Pees and Terms

The fee for each [***] assay is [***] USD for the first sample [***] for each additional sample submitted and analyzed simultaneously on the same Test Record Form, up to three total samples per assay. To analyze [***] samples, two separate assays are required. Thus, the total fee for the activities as described above is [***] USD, 100% payable upon Lonza’s issuance of the assay documentation to VBL.

Invoices will be provided via e-mail and associated payments are due upon invoice receipt. Payments are to be made via wire transfer using the Lonza account information set forth in the Agreement.

In the event of a termination of this SOW or the Agreement for any reason, VBL shall pay reasonable costs incurred by Lonza up to the effective date of termination (including out-of-pocket losses to Lonza for purchase of unmarketable materials which have become unusable by reason of termination), all uncancellable labor commitments and aN work in process (including all professional services rendered) through the effective date of termination.

 

IV. Acceptance

 

Lonza Houston, Inc     Vascular Biologies, Ltd.
By   [Illegible]     By:   /s/ Amos Ron
Name:   [Illegible]     Name:   Amos Ron
Title:       Title:   Chief Financial Officer
Date:       Date:  

 

Lonza Job Code VBLT-005       Page 1 of 1
   CONFIDENTIAL   
Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


LOGO

APPENDIX A-6

Statement of Work VBLT-006

50L GMP Production & Analysis of VB-111

September 6, 2012

 

I. Introduction

This Statement of Work (SOW) between Vascular Biologics, Ltd. and Lonza Houston, Inc. is subject to the Manufacturing Services Agreement dated January 5, 2012, between Vascular Biologics, Ltd. (“VBL”), and Lonza Houston, Inc. (“Lonza”) (the “Agreement”) and is incorporated therein and made a part of such Agreement. In the event of an inconsistency between the Agreement and this SOW, the Agreement shall control.

VBL has requested that Lonza produce VBL’s VB-111 product under cGMP conditions at the [***], as well as perform in-process and release testing on the VB-111 material as outlined in Section III., below.

 

II. Project Assumptions

In the development of this SOW, the following assumptions were made:

 

  1. United States Pharmacopoeia (USP) and FDA, as well as European Pharmacopoeia (EP) and European Medicines Agency (EMA), guidelines will be followed in the manufacture and analysis of VB-111;

 

  2. PER.C6 cell and VB-111 materials provided by VBL will have been certified to be bioburden-free and/or sterile and Mycoplasma-free, prior to their arrival at Lonza;

 

  3. [***];

 

  4. [***];

 

  5. [***];

 

  6. [***];

 

  7. [***];

 

  8. [***];

 

  9. VB-111 Drug Product will be filled using a [***] in accordance with EMA guidelines into [***];

 

  10. Based on previous discussions with VBL, it is estimated that [***];

 

Lonza Job Code VBLT-006       Page 1 of 8
   CONFIDENTIAL   
Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


  11. Product release testing will be performed and/or coordinated by Lonza, with the exception of the assays designated in Section III., below, to be performed by VBL. Lonza will, at the written direction of VBL, sample the VB-111 material as needed for these assays and provide the samples to VBL for analysis by VBL or a VBL-designated third-party testing laboratory;

 

  12. [***].

 

  13. [***].

 

  14. The quality agreement signed between Lonza and VBL will be an addendum to this agreement.

 

III. Scope of Work

 

Project
Component

  

Description

  

Detailed Description

  

Estimated
Duration

  

Fee (USD)

a.    Materials Transfer from VBL to Lonza    [***]    [***]    N/A
b.   

Manufacturing

Preparation:

 

Project-Specific

GMP

Documentation

  

Lonza will create documents specific to the project, including but not limited to: Specifications and Part Numbers for VB-111 product intermediates, raw materials such as resins, filters, columns, buffers, etc.; Master Label for DP; Certificates of Analysis for BDS and DP; Sample Transfer Forms for BDS and DP; In-process Testing and Yield Form; Product-specific Master Flow Record; Formulation Records for the Final Formulation Buffer and various buffers for downstream processing; product-specific Manufacturing Batch Records, Component Assembly Records.

 

Information presented within summary reports developed by Lonza Process Development personnel, as well as information contained within the technical documentation provided by VBL, will be utilized and referenced in the development of the VB-111 project GMP documentation. Draft Manufacturing Batch Records and other draft GMP documentation, as appropriate and reasonably desired by VBL, will be provided to VBL for review and approval prior to implementation and use by Lonza.

  

 

[***]

  

 

[***]

 

Lonza Job Code VBLT-006       Page 2 of 8
   CONFIDENTIAL   
Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Project
Component

  

Description

  

Detailed Description

  

Estimated
Duration

  

Fee (USD)

c.   

Manufacturing Preparation:

 

Product-Dedicated Equipment Procurement

  

Lonza will purchase, install, and qualify (as appropriate) product-dedicated equipment, including but not limited to:

 

[***]

 

Product-dedicated equipment will be designated property of VBL and may be used for future GMP batches of VB-111.

 

Lonza shall have the right of possession and control of the equipment. Title to the equipment shall at all times remain with Client and the equipment shall be owned by Client. All costs for maintenance, service, repairs and replacements shall be borne by Client. Client shall bear all risk of loss of equipment in Lonza’s possession, except for losses due to the gross negligence or willful misconduct of Lonza.

   [***]    [***]

 

Lonza Job Code VBLT-006       Page 3 of 8
   CONFIDENTIAL   
Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Project
Component

  

Description

  

Detailed Description

  

Estimated
Duration

  

Fee (USD)

d.   

cGMP Manufacturing of VB-111

Clinical Lot

[***]

  

Upon successful completion of the [***] Process Development run currently underway at Lonza per SOW VBLT-005, and utilizing official GMP documentation and VB-111-dedicated equipment obtained and qualified during Project Components b. and c., Lonza Manufacturing personnel will produce VB-111 clinical trial material in one GMP production run at the [***] scale utilizing [***].

 

Cells from the [***] provided by VBL will be utilized in the production of the batch. VB-111 infection and harvest parameters as previously identified by VBL and by Lonza Process Development personnel in the performance of SOWs A-2 and A-3 will be utilized throughout the production process. Standard Lonza SOP’s will be used where possible, except those project-specific documents created during Project Component b.

 

As stated in Section II., Project Assumptions, above, it is estimated that approximately [***].

 

Production will occur in Lonza’s multi-product GMP manufacturing facility at 8076 El Rio Street in Houston, Texas USA. Copies of all controlled documents executed during batch preparation will be uploaded to the VBL Projects site on the Lonza Extranet following Lonza Quality Assurance review for compliance.

   [***]    [***]
e.   

Cleaning Verification

Study

   Post-production, Lonza will perform [***] testing [***].    [***]    [***]

 

Lonza Job Code VBLT-006       Page 4 of 8
   CONFIDENTIAL   
Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Project

Component

  

Description

  

Detailed Description

  

Estimated
Duration

  

Fee (USD)

f.

  

In-Process and

Release Testing,

VB-111 Bulk

Drug Substance

  

 

Lonza will coordinate the performance of required contract and in-house testing as required by the agreed-upon Bulk Certificate of Analysis. A list of recommended analyses is below; the price estimate assumes that the BDS will be analyzed using the methods listed. Should VBL desire to add to or remove tests from the list, or to use a version of a test that is different than the method listed, the price will be adjusted accordingly. Assay quantities are considered to be “1,” unless otherwise noted. In addition and as desired by VBL, Lonza will take VB-111 samples throughout the production process in addition to those listed herein, to be analyzed under separate SOW(s), as appropriate and as desired by VBL.

 

  

[***]

  

[***]

     

Assay

  

Vendor / Protocol

     
     

 

HARVEST

     
     

 

[***]

  

 

[***]

     
     

 

[***]

  

 

[***]

     
     

 

[***]

  

 

[***]

     
     

 

[***]

  

 

[***]

     
     

 

IN-PROCESS

     
     

 

[***]

  

 

[***]

     
     

 

[***]

  

 

[***]

     
     

 

[***]

  

 

[***]

     
     

 

[***]

  

 

[***]

     
     

 

[***]

  

 

[***]

     
     

 

FINAL FORMULATED BULK

     
     

 

[***]

  

 

[***]

     

 

  * Assay will be performed/coordinated by VBL and will not be reported on the Lonza-issued Certificate of Analysis.  
  y Assay will be performed/coordinated by Lonza and the results reported to VBL for information only. Results will not be included on the Lonza-issued Certificate of Analysis.  

 

Lonza Job Code VBLT-006       Page 5 of 8
   CONFIDENTIAL   
Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Project

Component

  

Description

  

Detailed Description

  

Estimated
Duration

  

Fee (USD)

g.

  

Release Testing,

VB-111

Drug Product

  

Lonza will coordinate the performance of required contract and in-house testing as required by the agreed-upon DP Certificate of Analysis. A list of recommended analyses is below; the price estimate assumes that the DP will be analyzed using the methods listed. Should VBL desire to add to or remove tests from the list, or to use a version of a test that is different than the method listed, the price will be adjusted accordingly.

 

  

[***]

  

[***]

     

Assay

  

Vendor / Protocol

     
     

 

[***]

  

 

[***]

     
     

 

[***]

  

 

[***]

     
     

 

[***]

  

 

[***]

     
     

 

[***]

  

 

[***]

     
     

 

[***]

  

 

[***]

     
     

 

[***]

  

 

[***]

     
     

 

[***]

  

 

[***]

     
     

 

[***]

  

 

[***]

     
     

 

[***]

  

 

[***]

     
     

 

[***]

  

 

[***]

     
     

 

[***]

  

 

[***]

     
     

 

[***]

  

 

[***]

     
     

 

[***]

  

 

[***]

     
     

 

[***]

  

 

[***]

     
     

 

(Continued below)

     

 

Lonza Job Code VBLT-006       Page 6 of 8
   CONFIDENTIAL   
Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Project
Component

  

Description

  

Detailed Description

  

Estimated
Duration

  

Fee (USD)

g.

(Cont’d)

 

  

Release Testing,

VB-111

Drug Product

(Cont’d)

 

  

Assay

  

Vendor / Protocol

  

See above

 

  

See above

 

     

 

[***]

  

 

[***]

     
     

 

[***]

  

 

[***]

     
     

 

[***]

  

 

[***]

     
     

 

[***]

  

 

[***]

     

 

  * Assay will be performed/coordinated by VBL and will not be reported on the Lonza-issued Certificate of Analysis.  
  ** Assay will be performed by both Lonza and VBL and the results compared. Only the Lonza result will be reported on the Lonza-issued Certificate of Analysis.  

 

Deliverable for Project

Components

f. and g.

   Lonza Quality Assurance representatives will review all testing records/reports and will issue Certificates of Analysis for VB-111 DS and DP for review by VBL or a VBL-designated Qualified Person (QP). VBL personnel or a delegate will be responsible for release of the DS and DP for use.    2 weeks    Included

 

TOTAL, VB-111: PROCESS DEVELOPMENT, GMP MANUFACTURE, AND ANALYSIS

   [***]    [***]

 

OTHER SERVICES

Regulatory Support    Lonza Viral has extensive Regulatory experience both with FDA and EMA, and if desired, will perform consulting services on VBL’s behalf. Examples of such activities include the assembly of documents or data-mining of information for inclusion in a Product Master File; writing, reviewing, or editing of Chemistry, Manufacturing, and Controls (CMC) sections of regulatory filings; participation in teleconferences with regulatory agencies, etc.    As needed    [***]

 

Lonza Job Code VBLT-006       Page 7 of 8
   CONFIDENTIAL   
Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Project
Component

  

Description

  

Detailed Description

  

Estimated
Duration

  

Fee (USD)

Product Storage   

Lonza will store vialed product in fully monitored, GMP conditions free of charge for a period of up to thirty (30) days after issuance of the product’s Certificate of Analysis.

 

[***]

   Monthly    To be

Determined

 

IV. Fees and Terms

The total fee for the activities described above, not inclusive of Regulatory Support and Product Storage services, is [***], payable as follows:

[***]

Fees for Regulatory Support services will be invoiced for on a monthly basis, as applicable. Fees for Product Storage, if applicable, will be invoiced for on a semi-annual basis, in advance.

Invoices will be provided via e-mail and associated payments are due upon invoice receipt. Payments are to be made via wire transfer using the Lonza account information set forth in the Agreement.

In the event of a termination of this SOW or the Agreement for any reason, VBL shall be responsible for any charges for all labor, testing and materials, including raw materials, that have already been purchased to perform the services detailed in this SOW and VBL shall pay all other reasonable costs incurred by Lonza up to the effective date of termination, including completed but unbilled services, all uncancellable labor commitments and all work in process (including all professional services rendered) through the effective date of termination.

 

V. Acceptance

 

Lonza Houston, Inc.     Vascular Biologics, Ltd.
By:  

/s/ J. David Enloe, Jr.

    By:  

/s/ Amos Ron

J. David Enloe, Jr.     Name:  

Amos Ron

Head, Viral-based Therapeutics     Title:  

Chief Financial Officer

Date:  

 

    Date:  

 

 

Lonza Job Code VBLT-006       Page 8 of 8

CONFIDENTIAL

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


LOGO

APPENDIX A-7 Statement of Work VBLT-007 Stability

Study [***] November 5, 2012

 

I. Introduction

This Statement of Work (SOW) between Vascular Biologies, Ltd. and Lonza Houston, Inc. is subject to the Manufacturing Services Agreement dated January 5, 2012, between Vascular Biologies, Ltd. (“VBL”), and Lonza Houston, Inc. (“Lonza”) (the “Agreement”) and is incorporated therein and made a part of such Agreement. In the event of an inconsistency between the Agreement and this SOW, the Agreement shall control.

VBL has requested that Lonza, via [***], perform a stability study on the [***], which is used in the manufacture of VBL’s VB-111 product. The lot of [***] be analyzed is currently being produced by [***] for Lonza on behalf of VBL under SOW VBLT-004, “Purchase of [***] for VB-111 Production at the [***],” dated June 12, 2012.

 

II. Scope of Work

Lonza will coordinate the performance of a stability study on one lot of [***] as described in the attached study protocol, “Product Chemical Stability Study” on GMP product number [***], to evaluate product stability over one year when stored at [***]. Client hereby agrees to the terms of such attached study protocol.

Lonza Quality Control and Quality Assurance personnel will review each report provided to Lonza by [***], and will provide an electronic copy of each report to VBL for its records upon completion of Lonza’s review of each report. The reports will be issued by [***] according to the following time schedule:

 

  a. An Interim Report will be provided within four weeks of completion of the tests at each of the 3-6-, , and 10-month time points;

 

  b. A Final Report will be provided within four weeks of completion of the tests at the 13-month time point.

Lonza shall not be responsible for any act or omission of [***], including any delay [***] in releasing any report.

 

III. Fees and Terms

The fee for the activities described herein is [***], payable as follows:

[***]

 

Lonza Job Code VBLT-007       Page 1 of 2

CONFIDENTIAL

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


 

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Invoices will be provided via e-mail and associated payments are due upon invoice receipt. Payments are to be made via wire transfer using the Lonza account information set forth in the Agreement.

In the event of a termination of this SOW or the Agreement for any reason, VBL shall pay reasonable costs incurred by Lonza up to the effective date of termination (including out-of-pocket losses to Lonza for purchase of (i) unmarketable materials which have become unusable by reason of termination and (ii) services from a third party), all uncancellable labor commitments and all work in process (including all professional services rendered) through the effective date of termination.

 

IV. Acceptance

 

Lonza Houston, Inc.   Vascular Biologies, Ltd.
By:  

/s/ J. David Enloe, Jr.

    By:  

/s/ Amos Ron

J. David Enloe, Jr.   Name:  

Amos Ron

Head, Viral-based Therapeutics   Title:  

Chief Financial Officer

Date:  

 

    Date:  

 

 

Lonza Job Code VBLT-007       Page 2 of 2

CONFIDENTIAL

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


LOGO

APPENDIX A-8

Statement of Work VBLT-008

Procurement of Dedicated Equipment for Large-Scale VB-111 GMP Production

September 21, 2012

 

I. Introduction

This Statement of Work (SOW) between Vascular Biologics, Ltd. and Lonza Houston, Inc. is subject to the Manufacturing Services Agreement dated January 5, 2012, between Vascular Biologics, Ltd. (“VBL”), and Lonza Houston, Inc. (“Lonza”) (the “Agreement”) and is incorporated therein and made a part of such Agreement. In the event of an inconsistency between the Agreement and this SOW, the Agreement shall control.

Production of VBL’s VB-111 product at the [***] at Lonza is planned to occur in the late 2012 to early 2013 timeframe under a separate SOW. The [***].

 

II. Scope of Work

The following items will be purchased by Lonza from [***] VBL’s behalf, in support of VB-111 production:

 

Item / Description

  

Qty

  

GEHC

Catalog No.

  

Cost, ea

(USD)

  

Total Cost

(USD)

[***]

   [***]    [***]    [***]    [***]

[***]

   [***]    [***]    [***]    [***]

[***]

   [***]    [***]    [***]    [***]

[***]

   [***]    [***]    [***]    [***]

[***]

   [***]    [***]    [***]    [***]

[***]

   [***]    [***]    [***]    [***]
         [***]    [***]

 

III. Fees and Terms

Should shipping and handling fees for the items listed above be assessed by [***], Lonza will invoice VBL for the charges as a pass-through cost.

The total fee for the items listed above, not inclusive of any shipping and handling charges, is [***], payable as follows:

[***]

These items will be designated property of VBL and may be used for future GMP batches of VB-111.

Lonza shall have the right of possession and control of the equipment. Title to the equipment shall at all times remain with Client and the equipment shall be owned by Client. All costs for maintenance, service, repairs and replacements shall be borne by Client. Client shall bear all risk of loss of equipment in Lonza’s possession, except for losses due to the gross negligence or willful misconduct of Lonza.

 

Lonza Job Code VBLT-008       Page 1 of 2

CONFIDENTIAL

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Invoices will be provided via e-mail and associated payments are due upon invoice receipt. Payments are to be made via wire transfer using the Lonza account information set forth in the Agreement.

In the event of a termination of this SOW or the Agreement for any reason, VBL shall be responsible for any charges for all labor, testing and materials, including raw materials and equipment, that have already been purchased to perform the services detailed in this SOW and VBL shall pay all other reasonable costs incurred by Lonza up to the effective date of termination, including completed but unbilled services, all uncancellable labor commitments and all work in process (including all professional services rendered) through the effective date of termination.

 

IV. Acceptance

 

Lonza Houston, Inc.   Vascular Biologics, Ltd.
By:  

/s/ J. David Enloe, Jr.

    By:  

/s/ Amos Ron

J. David Enloe, Jr.   Name:  

Amos Ron

Head, Viral-based Therapeutics   Title:  

Chief Financial Officer

Date:  

 

    Date:  

 

 

Lonza Job Code VBLT-008       Page 2 of 2

CONFIDENTIAL

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


LOGO

APPENDIX A-9

Statement of Work VBLT-009

Evaluation of [***]

December 22, 2012

 

I. Introduction

This Statement of Work (SOW) between Vascular Biologics, Ltd. and Lonza Houston, Inc. is subject to the Manufacturing Services Agreement dated January 5, 2012, between Vascular Biologics, Ltd. (“VBL”), and Lonza Houston, Inc. (“Lonza”) (the “Agreement”) and is incorporated therein and made a part of such Agreement. In the event of an inconsistency between the Agreement and this SOW, the Agreement shall control.

VBL has requested that Lonza evaluate the use of [***] in the VB-111 production process. Lonza has drafted and VBL has reviewed and approved the plan for this study, entitled, [***].

 

II. Scope of Work

Lonza Process Development (PD) personnel will perform the study as described in the attached study plan. The study includes [***]. The below table outlines the samples to be taken and the analyses to be performed on the sampled material:

 

Sample Material

  

Quantity

Samples

  

Assay

[***]    [***]    [***]
[***]    [***]    [***]
[***]    [***]    [***]
[***]    [***]    [***]
[***]    [***]    [***]

 

* [***] will be performed by PD; R&D-grade
** Retained samples will be stored at [***] in Lonza PD in anticipation of future analysis if VBL so requests in writing, in which case a Change Order to this SOW will be drafted to document the incremental work scope and associated fees.

Upon the completion of the study, Lonza will draft a brief Summary Report in standard Lonza format which will describe the materials, equipment, and procedures which were utilized throughout the study, as well as the study results and conclusions. An electronic copy of the report will be provided to VBL for review and approval prior to finalization. Upon its finalization VBL will be provided with a signed electronic copy of the report for its records.

 

III. Fees and Terms

The fee for the activities described herein is [***], payable as follows:

[***]

Invoices will be provided via e-mail and associated payments are due upon invoice receipt. Payments are to be made via wire transfer using the Lonza account information set forth in the Agreement.

In the event of a termination of this SOW or the Agreement for any reason, VBL shall pay reasonable costs incurred by Lonza up to the effective date of termination (including out-of-pocket losses to Lonza for purchase of

 

Lonza Job Code VBLT-009       Page 1 of 2

CONFIDENTIAL

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


unmarketable materials which have become unusable by reason of termination), all uncancellable labor commitments and all work in process (including all professional services rendered) through the effective date of termination.

 

IV. Acceptance

 

Lonza Houston, Inc.   Vascular Biologics, Ltd.
By:  

/s/ J. David Enloe, Jr.

    By:  

/s/ Amos Ron

J. David Enloe, Jr.   Name:  

Amos Ron

Head, Viral-based Therapeutics   Title:  

Chief Financial Officer

Date:  

 

    Date:  

 

 

Lonza Job Code VBLT-009       Page 2 of 2

CONFIDENTIAL

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


LOGO

APPENDIX A-10

Statement of Work VBLT-010

VB-111 Drug Product Room Temperature Stability Study and Sample Analysis

November 9, 2012

 

I. Introduction

This Statement of Work (SOW) between Vascular Biologics, Ltd. and Lonza Houston, Inc. is subject to the Manufacturing Services Agreement dated January 5, 2012, between Vascular Biologics, Ltd. (“VBL”), and Lonza Houston, Inc. (“Lonza”) (the “Agreement”) and is incorporated therein and made a part of such Agreement. In the event of an inconsistency between the Agreement and this SOW, the Agreement shall control.

 

II. Scope of Work

The work scope includes the execution of two activities, as described below:

 

  A. Drug Product Stability Study at Room Temperature

[***]

Lonza Process Development (PD) and Quality Control (QC) personnel will execute the study outlined in the attached file, [***].” In addition to study planning, set-up, sampling, and documentation, four samples will be tested using [***]. The assays will be performed on official Quality Assurance-issued Test Record Forms. Upon assay completion, the assay documentation will be audited by Lonza QC and Quality Assurance personnel.

Upon study completion, a Summary Report will be created by Lonza in standard Lonza format, which will be provided to VBL for review prior to finalization.

Should additional testing be desired by VBL, this testing would be captured under a separate SOW or via a Change Order to this SOW.

 

  B. Analysis of VB-111 for [***]

Lonza QC will analyze five samples of the VB-111 Drug Product using [***]:

[***]

[***] Upon assay completion, the assay documentation will be audited by Lonza QC and Quality Assurance personnel.

VBL will be provided with QA-reviewed and –approved assay documentation for its records.

 

III. Fees and Terms

The fee for the activities described above is as follows:

[***]

Invoices will be provided via e-mail and associated payments are due upon invoice receipt. Payments are to be made via wire transfer using the Lonza account information set forth in the Agreement.

In the event of a termination of this SOW or the Agreement for any reason, VBL shall pay reasonable costs incurred by Lonza up to the effective date of termination (including out-of-pocket losses to Lonza for purchase of unmarketable materials which have become unusable by reason of termination), all uncancellable labor commitments and all work in process (including all professional services rendered) through the effective date of termination.

 

Lonza Job Code VBLT-010       Page 1 of 2

CONFIDENTIAL

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


IV. Acceptance

 

Lonza Houston, Inc.   Vascular Biologics, Ltd.
By:  

/s/ J. David Enloe, Jr.

    By:  

/s/ Amos Ron

J. David Enloe, Jr.   Name:  

Amos Ron

Head, Viral-based Therapeutics   Title:  

Chief Financial Officer

Date:  

 

    Date:  

 

 

Lonza Job Code VBLT-010       Page 2 of 2

CONFIDENTIAL

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


LOGO

APPENDIX A-11

Statement of Work VBLT-011

Evaluation of [***]

December 5, 2012

 

I. Introduction

This Statement of Work (SOW) between Vascular Biologics, Ltd. and Lonza Houston, Inc. is subject to the Manufacturing Services Agreement dated January 5, 2012, between Vascular Biologics, Ltd. (“VBL”), and Lonza Houston, Inc. (“Lonza”) (the “Agreement”) and is incorporated therein and made a part of such Agreement. In the event of an inconsistency between the Agreement and this SOW, the Agreement shall control.

In consideration of the high cost of the [***]

 

II. Scope of Work

[***]

Upon the completion of the study as described in [***], Lonza will draft a Summary Report in standard Lonza format which will describe the materials, equipment, and procedures which were utilized throughout the study, as well as the study results and conclusions. An electronic copy of the report will be provided to VBL for review and approval prior to finalization. Upon its finalization VBL will be provided with a signed electronic copy of the report for its records.

 

III. Fees and Terms

The fee for the activities described herein is [***], payable as follows:

[***]

Invoices will be provided via e-mail and associated payments are due upon invoice receipt. Payments are to be made via wire transfer using the Lonza account information set forth in the Agreement.

In the event of a termination of this SOW or the Agreement for any reason, VBL shall pay reasonable costs incurred by Lonza up to the effective date of termination (including out-of-pocket losses to Lonza for purchase of unmarketable materials which have become unusable by reason of termination), all uncancellable labor commitments and all work in process (including all professional services rendered) through the effective date of termination.

 

Lonza Job Code VBLT-011       Page 1 of 2

CONFIDENTIAL

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


IV. Acceptance

 

Lonza Houston, Inc.   Vascular Biologics, Ltd.
By:  

/s/ J. David Enloe, Jr.

    By:  

/s/ Amos Ron

J. David Enloe, Jr.   Name:  

Amos Ron

Head, Viral-based Therapeutics   Title:  

Chief Financial Officer

Date:  

 

    Date:  

 

 

Lonza Job Code VBLT-011       Page 2 of 2

CONFIDENTIAL

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


 

LOGO

APPENDIX A-12

Statement of Work VBLT-012

[***]

February 26, 2013

 

I. Introduction

This Statement of Work (SOW) between Vascular Biologics, Ltd. and Lonza Houston, Inc. is subject to the Manufacturing Services Agreement dated January 5, 2012, between Vascular Biologics, Ltd. (“VBL”), and Lonza Houston, Inc. (“Lonza”) (the “Agreement”) and is incorporated therein and made a part of such Agreement. In the event of an inconsistency between the Agreement and this SOW, the Agreement shall control.

[***]

 

II. Scope of Work

Lonza Validation personnel will perform the study as described in the attached study plan.

Upon the completion of the study, Lonza will draft a brief Summary Report in standard Lonza format which will describe the materials, equipment, and procedures which were utilized throughout the study, as well as the study results and conclusions. An electronic copy of the report will be provided to VBL for review and approval prior to finalization. Upon its finalization VBL will be provided with a signed electronic copy of the report for its records.

 

III. Fees and Terms

The fee for the activities described herein is [***], payable as follows:

[***]

Invoices will be provided via e-mail and associated payments are due upon invoice receipt. Payments are to be made via wire transfer using the Lonza account information set forth in the Agreement.

In the event of a termination of this SOW or the Agreement for any reason, VBL shall pay reasonable costs incurred by Lonza up to the effective date of termination (including out-of-pocket losses to Lonza for purchase of unmarketable materials which have become unusable by reason of termination), all uncancellable labor commitments and all work in process (including all professional services rendered) through the effective date of termination.

 

Lonza Job Code VBLT-012       Page 1 of 2

CONFIDENTIAL

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


IV. Acceptance

 

Lonza Houston, Inc.   Vascular Biologics, Ltd.
By:  

/s/ J. David Enloe, Jr.

    By:  

/s/ Amos Ron

J. David Enloe, Jr.   Name:  

Amos Ron

Head, Viral-based Therapeutics   Title:  

Chief Financial Officer

Date:  

 

    Date:  

 

 

Lonza Job Code VBLT-012       Page 2 of 2

CONFIDENTIAL

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


 

LOGO

Amended and Restated APPENDIX A-13

Statement of Work VBLT-013

[***] GMP Production & Analysis of VB-111

May 23, 2013

 

I. Introduction

This Amended and Restated Statement of Work (SOW) between Vascular Biologics, Ltd. and Lonza Houston, Inc. is subject to the Manufacturing Services Agreement dated January 5, 2012, between Vascular Biologics, Ltd. (“VBL”), and Lonza Houston, Inc. (“Lonza”) (the “Agreement”) and is incorporated therein and made a part of such Agreement. In the event of an inconsistency between the Agreement and this SOW, the Agreement shall control.

VBL has requested that Lonza produce VBL’s VB-111 product under cGMP conditions at the [***], as well as perform in-process and release testing on the VB-111 material as outlined in Section II., below.

This Amended and Restated Appendix A-13, Statement of Work VBLT-013, [***] replaces in its entirety the original Appendix A-13, Statement of Work VBLT-013, [***] entered by the parties, dated December 20, 2012 (the “Original SOW”).

 

II. Scope of Work

 

Project
Component

  

Description

  

Detailed Description

  

Estimated
Duration

  

Fee (USD)

a.   

Manufacturing Preparation:

 

Project-Specific GMP

Documentation

  

Lonza will create documents specific to the project, including but not limited to: Specifications and Part Numbers for VB-111 product intermediates, raw materials such as [***]; In-process Testing and Yield Form; Product-specific Master Flow Record; Formulation Records for the Final Formulation Buffer and various buffers for downstream processing; product-specific Manufacturing Batch Records, Component Assembly Records.

 

Information presented within summary reports developed by Lonza Process Development personnel, as well as information contained within the technical documentation provided by VBL, will be utilized and referenced in the development of the VB-111 project GMP documentation. Draft Manufacturing Batch Records and other draft GMP documentation, as appropriate and reasonably requested by VBL, will be provided to VBL for prompt review and approval prior to implementation and use by Lonza.

   [***]    [***]

 

Lonza Job Code VBLT-0013       Page 1 of 12

CONFIDENTIAL

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Project
Component

  

Description

  

Detailed Description

  

Estimated
Duration

  

Fee (USD)

b.   

Manufacturing Preparation:

 

Product-dedicated Equipment Installation & Qualification

  

The following items which were purchased by VBL for this project per SOW A-8 will be utilized in the production of VB-111 at the [***]:

 

[***]

 

This product-dedicated equipment will be designated property of VBL and may be used for future GMP batches of VB-111.

 

Lonza shall have the right of possession and control of the equipment. Title to the equipment shall at all times remain with Client and the equipment shall be owned by Client. All costs for maintenance, service, repairs and replacements shall be borne by Client. Client shall bear all risk of loss of equipment in Lonza’s possession, except for losses due to the gross negligence or willful misconduct of Lonza.

 

The fee at right represents the fee for installing and qualifying the [***].

   [***]    [***]
c.    Refrigerated Storage Container Preparation & Rental    As the large quantity of refrigerated buffers and cell culture media that will be used throughout this project exceeds the quantity that Lonza’s cold room can accommodate at one time, a portable refrigerated storage container will be leased by Lonza from an equipment supply vendor for use throughout the duration of this project to supplement the cold room storage space. The container (20’ long x 8’ wide x 8.5’ high) is designed to maintain temperatures of [***] and will be transported and delivered to Lonza, where it will remain on-site until the project is complete. The fee at right represents the fee for container transport to Lonza; the monthly rental fee for up to 4 months; and for supplying electricity to the container. If the project extends beyond 4 months, VBL shall be charged an additional [***] per month. Temperature data will be electronically monitored regularly.    [***]    [***]

 

Lonza Job Code VBLT-013       Page 2 of 12

CONFIDENTIAL

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Project
Component

  

Description

  

Detailed Description

  

Estimated
Duration

  

Fee (USD)

d.   

cGMP Manufacturing of VB-111

Clinical Lot

[***]

  

Utilizing official GMP documentation created under Project Component a. and VB-111-dedicated equipment obtained and qualified during in the performance of SOW A-8 and Project Component b., Lonza Manufacturing personnel will produce VB-111 clinical trial material in one GMP production run at the [***] as the production reactor. [***].

 

[***] as previously identified by VBL and by Lonza Process Development and Manufacturing personnel in the performance of SOWs A-2, A-3, and A-6 will be utilized throughout the production process. Standard Lonza SOP’s will be used where possible, except those project-specific documents created during Project Component a.

 

[***]

 

Production will occur in Lonza’s multi-product GMP2 manufacturing facility at 8076 El Rio Street in Houston, Texas USA. Copies of all controlled documents executed during batch preparation will be uploaded to the VBL Projects site on the Lonza Extranet following Lonza Quality Assurance review for compliance.

   [***]    [***]

 

Lonza Job Code VBLT-013       Page 3 of 12

CONFIDENTIAL

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Project
Component

  

Description

  

Detailed Description

  

Estimated
Duration

  

Fee (USD)

e.

  

Additional

Harvest and

Downstream

Processing

Materials

  

Changes in quantities and types of some production raw materials from those originally contemplated have resulted in the need for Lonza to purchase additional materials in support of this [***]. These items are as follows:

 

  

[***]

  

[***]

     

Item

  

Purpose

   Manufacturer
/Vendor
   Qty      
     

 

[***]

  

 

[***]

  

 

[***]

  

 

[***]

     
     

 

[***]

  

 

[***]

  

 

[***]

  

 

[***]

     
     

 

[***]

  

 

[***]

  

 

[***]

  

 

[***]

     
     

 

[***]

  

 

[***]

  

 

[***]

  

 

[***]

     
      [***]    [***]    [***]    [***]      
     

 

[***]

  

 

[***]

  

 

[***]

  

 

[***]

     
     

 

[***]

  

 

[***]

  

 

[***]

  

 

[***]

     
     

 

[***]

              

 

Lonza Job Code VBLT-013       Page 4 of 12

CONFIDENTIAL

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Project
Component

  

Description

  

Detailed Description

  

Estimated
Duration

  

Fee (USD)

f.    Satellite Cultures in Process Development   

At the time the GMP culture is transferred from the [***]

 

The process and monitoring described above will be repeated when the culture is transferred [***]. This satellite culture will be discontinued after four days post-infection and will not be harvested or purified. Results of tests performed throughout the culture will be provided to VBL in summary table format.

   [***]    [***]

 

Lonza Job Code VBLT-013       Page 5 of 12

CONFIDENTIAL

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Project
Component

  

Description

  

Detailed Description

  

Estimated
Duration

  

Fee (USD)

g.   

Cleaning Verification

Study

   Post-production, Lonza will perform [***].    3 weeks    [***]

 

Lonza Job Code VBLT-013       Page 6 of 12

CONFIDENTIAL

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Project
Component

  

Description

  

Detailed Description

  

Estimated
Duration

  

Fee (USD)

h.

  

In-Process and Release Testing, VB-111 Harvest

  

Lonza will coordinate the performance of required contract and in-house testing on the VB-111 Harvest material as required by the agreed-upon Bulk Drug Substance Certificate of Analysis. A list of recommended analyses is below; the price estimate assumes that the Harvest will be analyzed using the methods listed. Should VBL desire to add to or remove tests from the list, or to use a version of a test that is different than the method listed, the price will be adjusted accordingly. Assay quantities are considered to be “1,” unless otherwise noted. In addition and as reasonably requested in writing by VBL, Lonza will take VB-111 samples throughout the production process in addition to those listed herein, to be analyzed under separate SOW(s), as appropriate and as reasonably requested in writing by VBL.

 

  

[***]

  

[***]

     

Assay

  

Vendor / Protocol

     
      HARVEST      
     

 

[***]

   [***]      
     

 

[***]

   [***]      
     

 

[***]

   [***]      
     

 

[***]

   [***]      
     

 

[***]

   [***]      
     

 

IN-PROCESS

     
     

 

[***]

   [***]      
     

 

[***]

   [***]      
     

 

[***]

   [***]      
     

 

[***]

   [***]      

 

  * Assay will be performed/coordinated by VBL, at VBL’s sole expense and responsibility, and will not be reported on the Lonza-issued Certificate of Analysis.  
  Y Assay will be performed/coordinated by Lonza and the results reported to VBL for information only. Results will not be included on the Lonza-issued Certificate of Analysis.  

 

Lonza Job Code VBLT-013       Page 7 of 12

CONFIDENTIAL

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Project
Component

  

Description

  

Detailed Description

  

Estimated
Duration

  

Fee (USD)

i.

   In-Process and Release Testing, VB-111 Bulk Drug Substance   

Lonza will coordinate the performance of required contract and in-house testing as required by the agreed-upon Bulk Certificates of Analysis. A list of recommended analyses is below; the price estimate assumes that the BDS will be analyzed using the methods listed. Should VBL desire to add to or remove tests from the list, or to use a version of a test that is different than the method listed, the price will be adjusted accordingly. Assay quantities are considered to be “1,” unless otherwise noted. In addition and as reasonably requested in writing by VBL, Lonza will take VB-111 samples throughout the production process in addition to those listed herein, to be analyzed under separate SOW(s), as appropriate and as reasonably requested in writing by VBL. Results of assays performed on the VB-111 material as described below will be included in the Certificate of Analysis for each Bulk Drug Substance.

 

  

[***]

  

[***]

     

Assay

  

Vendor / Protocol

     
      IN-PROCESS      
     

 

[***]

   [***]      
     

 

[***]

   [***]      
     

 

[***]

   [***]      
     

 

[***]

   [***]      
      FINAL FORMULATED BULK      
     

 

[***]

   [***]      
     

 

[***]

   [***]      

 

  * Assay will be performed/coordinated by VBL, at VBL’s sole expense and responsibility, and will not be reported on the Lonza-issued Certificate of Analysis.  
  Y Assay will be performed/coordinated by Lonza and the results reported to VBL for information only. Results will not be included on the Lonza-issued Certificate of Analysis.  

 

Lonza Job Code VBLT-013       Page 8 of 12

CONFIDENTIAL

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Project
Component

  

Description

  

Detailed Description

  

Estimated
Duration

  

Fee (USD)

j.    Release Testing, VB-111 Drug Product   

Lonza will coordinate the performance of required contract and in-house testing as required by the agreed-upon DP Certificate of Analysis. A list of recommended analyses is below; the price estimate assumes that the DP will be analyzed using the methods listed. Should VBL desire to add to or remove tests from the list, or to use a version of a test that is different than the method listed, the price will be adjusted accordingly.

 

  

[***]

  

[***]

     

Assay

  

Vendor / Protocol

     
     

 

[***]

   [***]      
     

 

[***]

   [***]      
     

 

[***]

   [***]      
     

 

[***]

   [***]      
     

 

[***]

   [***]      
     

 

[***]

   [***]      
     

 

[***]

   [***]      
     

 

[***]

   [***]      
     

 

[***]

   [***]      
     

 

[***]

   [***]      
     

 

[***]

   [***]      
     

 

[***]

   [***]      
     

 

[***]

   [***]      
     

 

[***]

   [***]      
      (Continued below)         

 

Lonza Job Code VBLT-013       Page 9 of 12

CONFIDENTIAL

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Project
Component

  

Description

      

Detailed Description

  

Estimated
Duration

  

Fee (USD)

j.

(Cont’d)

  

Release Testing,
VB-111 Drug
Product (Cont’d)

 

Assay

   Vendor / Protocol   

See above

  

See above

    

 

[***]

   [***]      
    

 

[***]

      [***]      
    

 

*       

  

 

Assay will be performed/coordinated by VBL, at VBL’s sole expense and responsibility, and will not be reported on the Lonza-issued Certificate of Analysis.

     
    

**     

  

Assay will be performed by both Lonza and VBL and the results compared. Only the Lonza result will be reported on the Lonza-issued Certificate of Analysis.

     
Deliverable for Project Components h., i., and j.   Lonza Quality Assurance representatives will review testing records/reports and will issue Certificates of Analysis for VB-111 Harvest, DS and DP for review by VBL or a VBL-designated Qualified Person (QP). VBL personnel or a delegate will be responsible for release of the Harvest, DS and DP for use.    [***]    [***]
k.   

R&D-grade VB-111 In-Process Testing

 

The following analyses will be performed by Lonza Process Development personnel on VB-111 samples taken throughout the GMP production process:

 

  

[***]

  

[***]

    

Assay

        Quantity      
    

 

[***]

  

 

[***]

     
    

 

[***]

   [***]      
    

 

[***]

   [***]      
    

 

Analysis activities will be documented in laboratory notebooks and the results reported to VBL in an electronic Excel file.

     
           [***]    [***]    [***]
OTHER SERVICES
Regulatory Support  

Lonza Viral has extensive Regulatory experience both with FDA and EMA, and if desired, will perform consulting services on VBL’s behalf. Examples of such activities include the assembly of documents or data-mining of information for inclusion in a Product Master File; writing, reviewing, or editing of Chemistry, Manufacturing, and Controls (CMC) sections of regulatory filings; participation in teleconferences with regulatory agencies, etc.

   As needed    [***]

 

Lonza Job Code VBLT-013       Page 10 of 12

CONFIDENTIAL

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Project
Component

  

Description

  

Detailed Description

  

Estimated
Duration

  

Fee (USD)

Product Storage   

Lonza will store vialed product in fully monitored, GMP conditions free of charge for a period of up to thirty (30) days after issuance of the product’s Certificate of Analysis.

 

After the 30-day complimentary storage period, Lonza will provide ongoing GMP product storage at £ -60ºC, as follows:

 

[***]

   Monthly    To be
Determined

 

III. Fees and Terms

The total fee for the activities described above, not inclusive of Regulatory Support and Product Storage services, is [***], payable as follows:

[***]

Fees for Regulatory Support services will be invoiced for on a monthly basis, as applicable. Fees for Product Storage, if applicable, will be invoiced for on a semi-annual basis, in advance.

For each shipment of final product or other VB-111 materials samples to VBL, BioReliance or other parties at VBL’s written request, Lonza will charge a fee of [***] for handling and shipment preparation. Courier fees will be charged in addition to the shipping and handling fee should Lonza’s World Courier account be used instead of VBL’s World Courier account. Courier fees will not be charged should VBL’s World Courier account be used instead of Lonza’s. Fees for shipping services will be invoiced for on a monthly basis, as applicable.

Fees for additional materials as outlined in Project Component e., “Additional Harvest and Downstream Processing Materials,” if applicable, will be invoiced for after completion of the downstream processing activities.

Invoices will be provided via e-mail and associated payments are due upon invoice receipt. Payments are to be made via wire transfer using the Lonza account information set forth in the Agreement.

In the event of a termination of this SOW or the Agreement for any reason, VBL shall be responsible for any charges for all labor, testing and materials, including raw materials, that have already been purchased to perform the services detailed in this SOW and VBL shall pay all other reasonable costs incurred by Lonza up to the effective date of termination, including completed but unbilled services, all uncancellable labor commitments and all work in process (including all professional services rendered) through the effective date of termination.

 

Lonza Job Code VBLT-013       Page 11 of 12

CONFIDENTIAL

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


IV. Acceptance

 

Lonza Houston, Inc.     Vascular Biologics, Ltd.
By:  

/s/ J. David Enloe, Jr.

    By:  

/s/ Amos Ron

J. David Enloe, Jr.     Name:  

Amos Ron

Head, Viral-based Therapeutics     Title:  

Chief Financial Officer

Date:  

 

    Date:  

 

 

Lonza Job Code VBLT-013       Page 12 of 12

CONFIDENTIAL

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


LOGO

APPENDIX A-14

Statement of Work VBLT-014

VB-111 Sample Analysis

January 31, 2013

 

I. Introduction

This Statement of Work (SOW) between Vascular Biologics, Ltd. and Lonza Houston, Inc. is subject to the Manufacturing Services Agreement dated January 5, 2012, between Vascular Biologics, Ltd. (“VBL”), and Lonza Houston, Inc. (“Lonza”) (the “Agreement”) and is incorporated therein and made a part of such Agreement. In the event of an inconsistency between the Agreement and this SOW, the Agreement shall control.

VBL has requested that Lonza coordinate the performance of integrity testing on the container/closure that will be used for vialing VBL’s VB-111 Drug Product. The container/closure unit consists of [***].

 

II. Scope of Work

Lonza Quality Control (QC) personnel will coordinate the performance of [***].

VBL will be provided with a scanned electronic copy of the Lonza QA-reviewed and –approved assay final report documentation from [***] for its records.

 

III. Fees and Terms

[***].

Invoices will be provided via e-mail and associated payments are due upon invoice receipt. Payments are to be made via wire transfer using the Lonza account information set forth in the Agreement.

In the event of a termination of this SOW or the Agreement for any reason, VBL shall pay reasonable costs incurred by Lonza up to the effective date of termination (including out-of-pocket losses to Lonza for purchase of unmarketable materials which have become unusable by reason of termination), all uncancellable labor commitments and all work in process (including all professional services rendered) through the effective date of termination.

 

IV. Acceptance

 

Lonza Houston, Inc.   Vascular Biologics, Ltd.
By:  

/s/ J. David Enloe, Jr.

    By:  

/s/ Amos Ron

J. David Enloe, Jr.   Name:  

Amos Ron

Head, Viral-based Therapeutics   Title:  

Chief Financial Officer

Date:  

 

    Date:  

 

 

Lonza Job Code VBLT-014       Page 1 of 1

CONFIDENTIAL

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


LOGO

APPENDIX A-15

Statement of Work VBLT-015

[***]

February 26, 2013

 

I. Introduction

This Statement of Work (SOW) between Vascular Biologics, Ltd. and Lonza Houston, Inc. is subject to the Manufacturing Services Agreement dated January 5, 2012, between Vascular Biologics, Ltd. (“VBL”), and Lonza Houston, Inc. (“Lonza”) (the “Agreement”) and is incorporated therein and made a part of such Agreement. In the event of an inconsistency between the Agreement and this SOW, the Agreement shall control.

[***]

 

II. Scope of Work

Lonza Process Development and Quality Control personnel will perform the study as described in the attached study plan. Sample analysis will be performed by Lonza QC personnel; testing documentation will be audited by Lonza QC and Quality Assurance personnel. The following analyses will be performed on the samples collected during the study:

 

    Lonza method [***] (one assay execution to analyze 4 samples)

 

    Lonza method [***] (one assay execution to analyze 4 samples)

Upon the completion of the study, Lonza will draft a brief Summary Report in standard Lonza format which will describe the materials, equipment, and procedures which were utilized throughout the study, as well as the study results and conclusions. An electronic copy of the report will be provided to VBL for review and approval prior to finalization. Upon its finalization VBL will be provided with a signed electronic copy of the report for its records.

 

III. Fees and Terms

The fee for the activities described herein is [***], payable as follows:

[***]

Invoices will be provided via e-mail and associated payments are due upon invoice receipt. Payments are to be made via wire transfer using the Lonza account information set forth in the Agreement.

In the event of a termination of this SOW or the Agreement for any reason, VBL shall pay reasonable costs incurred by Lonza up to the effective date of termination (including out-of-pocket losses to Lonza for purchase of unmarketable materials which have become unusable by reason of termination), all uncancellable labor commitments and all work in process (including all professional services rendered) through the effective date of termination.

 

Lonza Job Code VBLT-015       Page 1 of 2

CONFIDENTIAL

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


IV. Acceptance

 

Lonza Houston, Inc.     Vascular Biologics, Ltd.
By:  

/s/ J. David Enloe, Jr.

    By:  

/s/ Amos Ron

J. David Enloe, Jr.     Name:  

Amos Ron

Head, Viral-based Therapeutics     Title:  

Chief Financial Officer

Date:  

 

    Date:  

 

 

Lonza Job Code VBLT-015       Page 2 of 2

CONFIDENTIAL

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


LOGO

Amended and Restated APPENDIX A-16

Statement of Work VBLT-016

Analysis of VB-111

May 23, 2013

 

I. Introduction and Background

This Statement of Work (SOW) between Vascular Biologics, Ltd. and Lonza Houston, Inc. is subject to the Manufacturing Services Agreement dated January 5, 2012, between Vascular Biologics, Ltd. (“VBL”), and Lonza Houston, Inc. (“Lonza”) (the “Agreement”) and is incorporated therein and made a part of such Agreement. In the event of an inconsistency between the Agreement and this SOW, the Agreement shall control.

[***]. The purpose of this Amended and Restated Appendix A-16, Statement of Work VBLT-016, is to remove the cGMP Production of VB-111 Drug Product and GMP-grade Release Testing for VB-111 Drug Product from the Scope of Work of SOW VBLT-016. This Amended and Restated Appendix A-16, Statement of Work VBLT-016, “Analysis of VB-111,” replaces in its entirety the original Appendix A-16, Statement of Work VBLT-016, “GMP Filling & Analysis of VB-111,” entered by the parties, dated March 14, 2013 (the “Original SOW”).

 

II. Scope of Work

 

Project
Component

  

Description

  

Detailed Description

  

Estimated
Duration

  

Fee (USD)

a.
   GMP-grade In-Process and Release Testing, VB- 111 Bulk Drug Substance    Lonza will coordinate the performance of required contract and in-house testing as required by the agreed-upon Bulk Certificate of Analysis. A list of recommended analyses is below; the price estimate assumes that the BDS will be analyzed using the methods listed. Should VBL desire to add to or remove tests from the list, or to use a version of a test that is different than the method listed, the price will be adjusted accordingly. Assay quantities are considered to be “1,” unless otherwise noted. In addition and as requested by VBL, Lonza will take VB-111 samples throughout the production process in addition to those listed herein, to be analyzed under separate SOW(s), as appropriate and as desired by VBL.   

[***]

  

[***]

     

 

Assay

  

 

Vendor / Protocol

     
      HARVEST      
     

 

[***]

  

 

[***]

     
     

 

[***]

  

 

[***]

     
     

 

[***]

  

 

[***]

     
     

 

[***]

  

 

[***]

     
     

 

(Continued below)

        

 

Lonza Job Code VBLT-006b       Page 1 of 3

CONFIDENTIAL

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Project

Component

  

Description

  

Detailed Description

  

Estimated
Duration

  

Fee (USD)

         

Assay

  

Vendor / Protocol

         
a.,
Cont’d
   GMP-grade In-Process and Release Testing, VB- 111 Bulk Drug Substance, Cont’d    IN-PROCESS   

See above

  

See above

     

 

[***]

  

 

[***]

     
     

 

[***]

  

 

[***]

     
     

 

[***]

  

 

[***]

     
     

 

[***]

  

 

[***]

     
     

 

[***]

  

 

[***]

     
     

 

FINAL FORMULATED BULK

     
     

 

[***]

  

 

[***]

     
     

 

[***]

  

 

[***]

     
              
     

*       Assay will be performed/coordinated by VBL and will not be reported on the Lonza-issued Certificate of Analysis. Cost is not included in fee at right.

     
     

y        Assay will be performed/coordinated by Lonza and the results reported to VBL for information only. Results will not be included on the Lonza-issued Certificate of Analysis.

     
Deliverable for Project Component a.    Lonza Quality Assurance representatives will review all Lonza-performed or –coordinated testing records/reports and will issue a Certificate of Analysis for VB-111 BDS for review by VBL or a VBL-designated Qualified Person (QP).    [***]    Included
b.    R&D-grade VB- 111 In-Process Testing    The following analyses will be performed by Lonza Process Development personnel on VB-111 samples taken throughout the GMP production process:      
     

Assay

  

Quantity

         
     

 

[***]

  

 

[***]

  

[***]

  

[***]

     

 

[***]

  

 

[***]

     
     

 

[***]

  

 

[***]

     
     

 

Analysis activities will be documented in laboratory notebooks and the results reported to VBL in an electronic Excel file comparing the process step-yields for the production of lots S820002 and S820001.

     
     

TOTAL, VB-111 ANALYSIS

   [***]    [***]

 

Lonza Job Code VBLT-006b       Page 2 of 3

CONFIDENTIAL

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


III. Fees and Terms

The total fee for the activities described above is [***], payable as follows:

[***]

Invoices will be provided via e-mail and associated payments are due upon invoice receipt. Payments are to be made via wire transfer using the Lonza account information set forth in the Agreement.

For each shipment of final product or other VB-111 materials samples to VBL, BioReliance or other parties at VBL’s written request, as of the date of this Amended and Restated SOW VBLT-016, Lonza will charge a fee of [***] USD for handling and shipment preparation. Courier fees will be charged in addition to the shipping and handling fee should Lonza’s World Courier account be used instead of VBL’s World Courier account. Courier fees will not be charged should VBL’s World Courier account be used instead of Lonza’s. Fees for shipping services will be invoiced for on a monthly basis, as applicable.

In the event of a termination of this SOW or the Agreement for any reason, VBL shall be responsible for any charges for all labor, testing and materials, including raw materials, that have already been purchased to perform the services detailed in this SOW and VBL shall pay all other reasonable costs incurred by Lonza up to the effective date of termination, including completed but unbilled services, all uncancellable labor commitments and all work in process (including all professional services rendered) through the effective date of termination.

 

IV. Acceptance

 

Lonza Houston, Inc.     Vascular Biologics, Ltd.
By:  

/s/ J. David Enloe, Jr.

    By:  

/s/ Amos Ron

J. David Enloe, Jr.     Name:  

Amos Ron

Head, Viral-based Therapeutics     Title:  

Chief Financial Officer

Date:  

 

    Date:  

 

 

Lonza Job Code VBLT-006b       Page 3 of 3

CONFIDENTIAL

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


LOGO

APPENDIX A-17

Statement of Work VBLT-017

GMP Filling & Analysis of VB-111

May 23, 2013

 

I. Introduction and Background

This Statement of Work (SOW) between Vascular Biologics, Ltd. and Lonza Houston, Inc. is subject to the Manufacturing Services Agreement dated January 5, 2012, between Vascular Biologics, Ltd. (“VBL”), and Lonza Houston, Inc. (“Lonza”) (the “Agreement”) and is incorporated therein and made a part of such Agreement. In the event of an inconsistency between the Agreement and this SOW, the Agreement shall control.

 

II. Scope of Work

 

Project
Component

  

Description

  

Detailed Description

  

Estimated
Duration

  

Fee (USD)

a.

  

cGMP Production of VB-111 Drug Product

   [***]      
     

 

GMP documentation such as the DP Quality Control Sample Transfer Form, Master Label for DP, and BDS and DP Certificates of Analysis for VB-111, which were created during the performance of SOW 6, will be used throughout the performance of this SOW. Draft GMP documentation, as appropriate and reasonably requested by VBL, will be provided to VBL for review and approval prior to implementation and use by Lonza.

   [***]    [***]
     

 

Production of DP will occur in Lonza’s multi-product GMP manufacturing facility at 8066 El Rio Street in Houston, Texas USA. Copies of all controlled documents executed during batch preparation will be sent by air mail to VBL at VBL’s expense following Lonza Quality Assurance review for compliance.

     

 

Lonza Job Code VBLT-006c       Page 1 of 5

CONFIDENTIAL

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Project
Component

  

Description

  

Detailed Description

  

Estimated
Duration

  

Fee (USD)

b.    GMP-grade In-Process and Release Testing, VB-111 Bulk Drug Substance    Lonza will coordinate the performance of required contract and in-house testing as required by the agreed-upon Bulk Certificate of Analysis. A list of recommended analyses is below; the price estimate assumes that the BDS will be analyzed using the methods listed. Should VBL desire to add to or remove tests from the list, or to use a version of a test that is different than the method listed, the price will be adjusted accordingly. Assay quantities are considered to be “1,” unless otherwise noted. In addition and as requested by VBL, Lonza will take VB-111 samples through out the production process in addition to those listed herein, to be analyzed under separate SOW(s), as appropriate and as desired by VBL.   

[***]

  

[***]

     

 

Assay

  

 

Vendor / Protocol

     
     

 

HARVEST

     
     

 

[***]

  

 

[***]

     
     

 

[***]

  

 

[***]

     
     

 

[***]

  

 

[***]

     
     

 

[***]

  

 

[***]

     
     

 

[***]

     
     

 

[***]

  

 

[***]

     
     

 

[***]

  

 

[***]

     
     

 

[***]

  

 

[***]

     
     

 

[***]

  

 

[***]

     
     

 

[***]

  

 

[***]

     
     

 

[***]

     
     

 

[***]

  

 

[***]

     
     

 

[***]

  

 

[***]

     
     

 

[***]

        

 

Lonza Job Code VBLT-006c       Page 2 of 5

CONFIDENTIAL

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Project
Component

  

Description

  

Detailed Description

  

Estimated
Duration

  

Fee (USD)

c.

  

GMP-grade

Release

Testing, VB-111

Drug Product

   Lonza will coordinate the performance of required contract and in-house testing as required by the agreed-upon DP Certificate of Analysis. A list of recommended analyses is below; the price estimate assumes that the DP will be analyzed using the methods listed. Should VBL desire to add to or remove tests from the list, or to use a version of a test that is different than the method listed, the price will be adjusted accordingly.      
     

 

Assay

  

 

Vendor / Protocol

         
     

 

[***]

   [***]      
     

 

[***]

   [***]      
     

 

[***]

   [***]      
     

 

[***]

   [***]      
     

 

[***]

   [***]      
     

 

[***]

   [***]    [***]    [***]
     

 

[***]

   [***]      
     

 

[***]

   [***]      
     

 

[***]

   [***]      
     

 

[***]

   [***]      
     

 

[***]

   [***]      
     

 

[***]

   [***]      
     

 

[***]

   [***]      
     

 

[***]

   [***]      
     

 

(Continued below)

        

 

Lonza Job Code VBLT-006c       Page 3 of 5

CONFIDENTIAL

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Project
Component

  

Description

  

Detailed Description

  

Estimated
Duration

  

Fee (USD)

         

Assay

  

Vendor / Protocol

         
c.
(Cont’d)
  

Release

Testing, VB-111

Drug Product

(Cont’d)

   [***]    [***]   

See

above

  

See above

     

 

[***]

  

 

[***]

     
     

 

*       Assay will be performed/coordinated by VBL and will not be reported on the Lonza-issued Certificate of Analysis.

     
     

**     Assay will be performed by both Lonza and VBL and the results compared. Only the Lonza result will be reported on the Lonza-issued Certificate of Analysis.

     

 

Deliverable for Project

Components b. and c.

  

 

Lonza Quality Assurance representatives will review all Lonza-performed or –coordinated testing records/reports and will issue Certificates of Analysis for VB-111 DS and DP for review by VBL or a VBL-designated Qualified Person (QP). VBL personnel or a delegate will be responsible for release of the DP for use in the clinic.

   2 weeks    Included
     

 

The following analyses will be performed by Lonza Process Development personnel on VB-111 samples taken throughout the GMP production process:

     
         

Assay

  

Quantity

         
d.    R&D-grade VB- 111 In-Process Testing    [***]    [***]      
            [***]    [***]
     

 

[***]

   [***]      
     

 

[***]

   [***]      
     

 

[***]

        

TOTAL, VB-111: DRUG PRODUCT GMP MANUFACTURE AND ANALYSIS

   [***]    [***]
OTHER SERVICES
Regulatory Support    Lonza Viral has extensive Regulatory experience both with FDA and EMA, and if desired, will perform consulting services on VBL’s behalf. Examples of such activities include the assembly of documents or data-mining of information for inclusion in a Product Master File; writing, reviewing, or editing of Chemistry, Manufacturing, and Controls (CMC) sections of regulatory filings; participation in teleconferences with regulatory agencies, etc.    As needed    [***]

 

Lonza Job Code VBLT-006c       Page 4 of 5

CONFIDENTIAL

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Project

Component

  

Description

  

Detailed Description

  

Estimated
Duration

  

Fee (USD)

Product Storage    [***]    Monthly    To be

Determined

 

III. Fees and Terms

The total fee for the activities described above, not inclusive of Regulatory Support and Product Storage services, is [***], payable as follows:

[***]

Fees for Regulatory Support services will be invoiced for on a monthly basis, as applicable. Fees for Product Storage, if applicable, will be invoiced for on a semi-annual basis, in advance.

[***]

Invoices will be provided via e-mail and associated payments are due upon invoice receipt. Payments are to be made via wire transfer using the Lonza account information set forth in the Agreement.

In the event of a termination of this SOW or the Agreement for any reason, VBL shall be responsible for any charges for all labor, testing and materials, including raw materials, that have already been purchased to perform the services detailed in this SOW and VBL shall pay all other reasonable costs incurred by Lonza up to the effective date of termination, including completed but unbilled services, all uncancellable labor commitments and all work in process (including all professional services rendered) through the effective date of termination.

 

IV. Acceptance

 

Lonza Houston, Inc.     Vascular Biologics, Ltd.
By:  

/s/ J. David Enloe, Jr.

    By:  

/s/ Amos Ron

J. David Enloe, Jr.     Name:  

Amos Ron

Head, Viral-based Therapeutics     Title:  

Chief Financial Officer

Date:  

 

    Date:  

 

 

Lonza Job Code VBLT-006c       Page 5 of 5

CONFIDENTIAL

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


LOGO

APPENDIX A-18

Statement of Work VBLT-018

VB-111 Sample Analysis for [***]

August 22, 2013

 

I. Introduction

This Statement of Work (SOW) between Vascular Biologics, Ltd. and Lonza Houston, Inc. is subject to the Manufacturing Services Agreement dated January 5, 2012, between Vascular Biologics, Ltd. (“VBL”), and Lonza Houston, Inc. (“Lonza”) (the “Agreement”) and is incorporated therein and made a part of such Agreement. In the event of an inconsistency between the Agreement and this SOW, the Agreement shall control.

VBL has requested that Lonza coordinate the performance of VB-111 in-process sample analysis for determination [***].

 

II. Scope of Work

Lonza Quality Control (QC) personnel will coordinate the performance of “for information only” [***] Lonza will provide the following samples of VB-111 material [***] for analysis:

 

Lonza Part No.

  

Description

  

Qty

[***]    [***]    [***]
[***]    [***]    [***]
[***]    [***]    [***]
[***]    [***]    [***]

The samples will be analyzed by [***].

Deliverable: Lonza will provide VBL with an electronic copy of the report provided to Lonza by Dow, which will consist of a summary of results including a general description of test method, [***]. Follow-up consultation of up to 0.5 hours to clarify report content with [***] is included in the testing fee; consultation beyond [***] and any changes to the result reporting format and/or report will be charged at a rate [***].

 

III. Fees and Terms

The fee for this activity, exclusive of any additional fees for consultation or report or result reporting format revision, is [***], 100% payable upon Lonza providing a copy of the analysis report to VBL. Should consultation [***] hours or should Lonza be charged by [***] for report or result reporting format revisions, a separate invoice will be issued by Lonza to VBL for the applicable charges at [***] USD/hour.

Invoices will be provided via e-mail and associated payments are due upon invoice receipt. Payments are to be made via wire transfer using the Lonza account information set forth in the Agreement.

In the event of a termination of this SOW or the Agreement for any reason, VBL shall pay reasonable costs incurred by Lonza up to the effective date of termination (including out-of-pocket losses to Lonza for purchase of unmarketable materials which have become unusable by reason of termination), all uncancellable labor commitments and all work in process (including all professional services rendered) through the effective date of termination.

 

Lonza Job Code VBLT-018       Page 1 of 2

CONFIDENTIAL

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


IV. Acceptance

 

Lonza Houston, Inc.      Vascular Biologics, Ltd.
By:  

/s/ J. David Enloe, Jr.

     By:   

/s/ Eyal Breitbart

J. David Enloe, Jr.      Name:   

Eyal Breitbart

Head, Viral-based Therapeutics      Title:   

Vice President, Research and Operations

Date:  

 

     Date:   

 

 

Lonza Job Code VBLT-005       Page 2 of 2

CONFIDENTIAL

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


LOGO

APPENDIX A-19

Statement of Work VBLT-019

Regulatory Support Services

January 15, 2014 (“SOW Date”)

 

I. Introduction

This Statement of Work (SOW) between Vascular Biologies, Ltd. (“VBL”) and Lonza Houston, Inc. (“Lonza”) is subject to the Manufacturing Services Agreement dated January 5, 2012, between VBL., and Lonza (the “Agreement”) and is incorporated therein and made a part of such Agreement. In the event of an inconsistency between the Agreement and this SOW, the Agreement shall control.

 

II. Scope of Work

Lonza personnel will act as consultant(s) to VBL with respect to developing [***]. Lonza will perform these activities as directed by the Client in writing. It is estimated that these activities will take approximately 50 hours. Other activities can be performed under this SOW as mutually agreed by the parties in writing.

 

III. Fees and Terms

Fees will be charged on a monthly or less frequent basis. Lonza will charge a labor fee of [***]. All invoices are due upon receipt. Labor fees may be adjusted by Lonza upon written notice in accordance with Section 9.6 of the Agreement.

Either party may terminate this SOW upon sixty (60) days’ written notice to the other party. If this SOW is terminated for any reason, Client shall be responsible for any labor charges that have already been performed as detailed in this SOW, including completed but unbilled labor charges through the effective date of termination.

The pricing and terms offered in this SOW shall be valid until April 15, 2014. If this SOW is not accepted by both parties by this date, a revision of the SOW may be necessary prior to execution.

 

IV. Acceptance

IN WITNESS WHEREOF, the parties have caused their duly-authorized representatives to execute this SOW as of the dates below, effective as of the SOW Date.

 

Lonza Houston, Inc.   Vascular Biologics, Ltd.
By:  

/s/ Ryan Scanlon

    By:  

/s/ Eyal Breitbart

Ryan Scanlon     Name:  

Eyal Breitbart

Global Head of Business Development Viral Therapeutics, Custom Manufacturing Lonza Pharma & Biotech     Title:  

Vice President, Research and Operations

Date:       Date:  

 

Lonza SOW VLBT-019       Page 1 of 2

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


CONFIDENTIAL

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


LOGO

APPENDIX A-21

Statement of Work VBLT-021

Final Product Container/Closure Procurement & Media Fills

February 04, 2014 (“SOW Date”)

 

I. Introduction

This Statement of Work (SOW) between Vascular Biologics, Ltd. (“VBL”) and Lonza Houston, Inc. (“Lonza”) is subject to the Manufacturing Services Agreement dated January 5, 2012, between VBL, and Lonza (the “Agreement”) and is incorporated therein and made a part of such Agreement. In the event of an inconsistency between the Agreement and this SOW, the Agreement shall control.

 

II. Scope of Work

Lonza personnel will procure the final product container/closures and perform media fills as described below:

 

Item

  

Detailed Description

  Fee (USD)

1

 

Procurement of Final Product Vials

   Lonza will purchase, release for GMP use on arrival, and store, on VBL’s behalf, the following materials:       

[***]

    

Item

   Lonza Part
Number
 

Qty

   Unit  
     [***]    [***]   [***]    [***]  
     [***]    [***]   [***]    [***]  
     [***]    [***]   [***]    [***]  
     [***]    [***]   [***]    [***]  
    

[***]

 

These materials will be designated property of VBL and used by Lonza in the performance of projects for VBL as directed by VBL. Lonza shall have the right of possession and control of the materials. VBL shall bear all risk of loss of materials in Lonza’s possession, except for losses due to the gross negligence or willful misconduct of Lonza. All costs for maintenance, service, repairs and replacements shall be borne by VBL. VBL shall bear any expenses associated with transferring this equipment from Lonza to VBL or to a third party.

 

Fees for these items, until this stock is depleted, will not be included in fees for activities such as final product filling operations or fill line qualifications that are performed by Lonza related to VBL projects, as VBL will have already purchased these items under a separate Statement of Work (SOW).

 

 

Lonza SOW VLBT-021       Page 1 of 3

CONFIDENTIAL

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Item

 

Detailed Description

   Fee (USD)

2

  Fill Line Qualification using [***]   Lonza has previously performed [***].    [***]
    Accordingly, Lonza will execute [***]:   
                                [***]   

3

  Shipment of caps to VBL   VBL has requested Lonza to ship 1000 [***] to their site. The fee includes the materials and shipment but excludes courier costs. Courier costs will be applied as a pass thru cost or applied to the clients designated courier account.    [***]
    Total    [***]

 

III. Fees and Terms

The total fee for the activities described above is [***], payable as follows:

[***]

Any additional media fills beyond [***] identified above in early 2014, will be billed once initiated.

Invoices will be provided via e-mail and associated payments are due upon invoice receipt. Payments are to be made via wire transfer using the Lonza account information set forth in the Agreement.

In the event of a termination of this SOW or the Agreement for any reason, VBL shall be responsible for any charges for all labor, testing and materials, including raw materials, that have already been purchased to perform the services detailed in this SOW and VBL shall pay all other reasonable costs incurred by Lonza up to the effective date of termination, including completed but unbilled services, all uncancellable labor commitments and all work in process (including all professional services rendered) through the effective date of termination.

The pricing and terms offered in this SOW shall be valid until May 04, 2014. If this SOW is not accepted by both parties by this date, a revision of the SOW may be necessary prior to execution.

 

Lonza SOW VLBT-021       Page 2 of 3

CONFIDENTIAL

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


IV. Acceptance

IN WITNESS WHEREOF, the parties have caused their duly-authorized representatives to execute this SOW as of the dates below, effective as of the SOW Date.

 

 

Lonza Houston, Inc.

  Vascular Biologics, Ltd.
  By:  

/s/ Ryan Scanlon

    By:  

/s/ Dror Harats

  Ryan Scanlon   Name:  

Dror Harats

 

Global Head of Business Development Viral Therapeutics, Custom Manufacturing

Lonza Pharma & Biotech

  Title:  

Chief Executive Officer

  Date:       Date:  

 

Lonza SOW VLBT-021       Page 3 of 3

CONFIDENTIAL

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


LOGO

APPENDIX A-23

Statement of Work VBLT-023

Purchase of Cell Culture Medium for VB-111 Production at [***]

April 14, 2014

 

I. Introduction

This Statement of Work (SOW) between Vascular Biologics, Ltd. and Lonza Houston, Inc. is subject to the Manufacturing Services Agreement dated January 5, 2012, between Vascular Biologics, Ltd. (“VBL”), and Lonza Houston, Inc. (“Lonza”) (the “Agreement”) and is incorporated therein and made a part of such Agreement. In the event of an inconsistency between the Agreement and this SOW, the Agreement shall control.

Lonza and VBL are currently planning for Lonza to perform [***] production batches of VBL’s VB-111 product [***]. To provide a sufficient quantity of [***]to produce each batch and maintain a back-up supply for each batch, Lonza will order a total of [***]. The standard approximate lead time from the time the [***]order is placed with the vendor is [***]. In consideration of the duration of the lead time, Lonza will order [***] VB-111 batch being performed Q1 2015.

 

II. Scope of Work

Lonza will order [***] and [***].

 

III. Fees and Terms

The fee for the activities described herein is [***], payable as follows:

[***]

Any shipping and handling fees, storage fees, and/or sales tax charged by [***] and/or courier to Lonza will be billed to VBL as pass-through costs.

Invoices will be provided via e-mail and associated payments are due upon invoice receipt. Payments are to be made via wire transfer using the Lonza account information set forth in the Agreement.

In the event of a termination of this SOW or the Agreement for any reason, VBL shall be responsible for any charges for all labor, testing and materials, including raw materials, that have already been purchased to perform the services detailed in this SOW and VBL shall pay all other reasonable costs incurred by Lonza up to the effective date of termination, including completed but unbilled services, all uncancellable labor commitments and all work in process (including all professional services rendered) through the effective date of termination.

The pricing and terms offered in this SOW shall be valid until July 4, 2014. If this SOW is not accepted by both parties by this date, a revision of the SOW may be necessary prior to execution.

 

Lonza Job Code VBLT-023       Page 1 of 2

CONFIDENTIAL

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


IV. Acceptance

 

Lonza Houston, Inc.     Vascular Biologics, Ltd.
By:  

/s/ Ryan Scanlon

    By:  

/s/ Dror Harats

Ryan Scanlon     Name:  

Dror Harats

Global Head of Business Development Viral Therapeutics, Custom Manufacturing Lonza Pharma & Biotech     Title:  

Chief Executive Officer

Date:  

 

    Date:  

 

 

Lonza Job Code VBLT-023       Page 2 of 2

CONFIDENTIAL

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].

Exhibit 10.6

MASTER SERVICES AGREEMENT

The terms stated in this Master Services Agreement (“ Agreement ”) are agreed to apply to all projects performed in the past and after the date hereof for Vascular Biogenics, Ltd. located at 6 Jonathan Netanyahu Street, Or Yehuda, 60376, Israel (hereinafter referred to as “ Client ”), by Genzyme Pharmaceuticals., located at Eichenweg 1, CH-4410 Liestal, Switzerland (hereinafter referred to as “ Contractor ”).

 

1. Scope of Work. Contractor has prior to the date hereof, and will, after the date hereof, continue to perform services (each herein referred to as a “Project and collectively referred to as “Projects ) for Client in accordance with the terms of this Agreement. All previous projects conducted by Contractor for Client are listed in Schedule A. All future Projects conducted by Contractor for Client shall also be added to Schedule A and the amended schedule shall be signed by the parties. For each Project, the parties have developed or will develop a mutually agreed written protocol or statement of work which will include a task order (each a “Protocol”). Each Protocol will specify the scope of work or other services to be provided, the information, report or other services desired, estimated duration of the Project, milestones and all other matters pertinent to design, scheduling and completion of the Project. The Protocol shall also specify the cost and payment terms for the Project, anticipated period of performance and any other terms agreed to by the parties. Protocols will be deemed a part of this Agreement and are incorporated herein by reference.

 

2. Term of Agreement. This Agreement shall be in effect from the execution of the first Protocol between the parties and shall remain in effect until terminated in writing by either party upon at least thirty (30) days prior written notice, provided that no Projects are then outstanding. Projects may only be terminated in accordance with the terms thereof

 

3. Materials and Services Provided by Contractor. Contractor shall provide the facilities, supplies, staff and knowledge necessary to complete each Project as specified in the Protocol for such Project, and in accordance with the terms of this Agreement. In the event of any conflict, the terms of this Agreement shall control unless the Protocol specifically makes reference to this Agreement and the fact that the Protocol controls.

 

4. Materials Provided by Client.

 

  a. Client will provide Contractor with sufficient amounts of all compounds, materials, or other substances (“ Product ”) with which to perform the work required by the Protocol. Client shall also provide Contractor with all such data as may be reasonably necessary to apprise Contractor, prior to delivery of Product, of the stability, proper storage and safety and other characteristics and requirements of the Product.

 

-1-


  b. Upon completion of any Project, any remaining samples of the Product for such Project will be returned to Client or be destroyed or stored under Client’s direction and at Client’s expense. Client shall notify Contractor within sixty (60) days after completion of a Project whether the remaining samples shall be returned to Client or stored or destroyed. However samples may be retained by the Contractor for the sole purpose of monitoring its ongoing obligations hereunder.

 

5. Compliance with Government Regulations.

 

  a. Contractor will perform each Project in accordance with the Protocol. Contractor will conduct the Project in accordance with GMP and other applicable state and Federal laws and regulations.

 

  b. In the event of a conflict in government regulations, Contractor shall notify Client, and at Client’s request and at Client’s expense, contact the relevant governmental authorities to obtain clarification and guidance regarding compliance with the regulations in question.

 

6. Confidential Information

 

  a. The term “ Confidential Information ” shall refer to all confidential or proprietary information, whether in tangible form or not, provided by either party hereunder to the other, including but not limited to any information about testing/analysis methods or processes; any products (whether investigational or not, including but not limited to all Product, samples, specimens, and other materials or compounds, sub-samples, and retention samples); information on research and development compounds, products, and processes; technical know-how; formulas; studies; regulatory submissions and records; research data and information; financial, sales and marketing information; inventions; patent applications; and trade secrets, each in any form (including but not limited to information provided orally, electronically, or in writing); and all information developed, discovered or prepared by either party pursuant to the terms and conditions of this Agreement.

 

  b. Each party hereto shall use the Confidential Information received from the other party solely for purposes of entering into and carrying out this Agreement and the Projects hereunder. Each party hereto shall not disclose to any third party or otherwise use for its own benefit or for the benefit of a third party the other party’s Confidential Information, without the prior written consent of the disclosing party.

 

  c. A receiving party hereunder shall receive and hold any Confidential Information in confidence, and shall take all reasonable and necessary care to maintain the confidentiality of the Confidential Information. A receiving party shall limit the disclosure of Confidential Information to employees and consultants of receiving party who need to know the Confidential Information and who are bound in writing to observe obligations of nondisclosure and non-use in a form substantially similar to this Agreement.

 

-2-


  d. A party’s obligation of confidentiality shall not apply to that part of the Confidential Information which a receiving party can demonstrate by documentary evidence: (i) was in their possession prior to receipt from disclosing party; (ii) was in the public domain at the time of receipt from disclosing party; (iii) becomes part of the public domain without breach of any obligation of confidentiality to disclosing party; (iv) is lawfully received by receiving party from a third party, where the third party is wholly independent of receiving party and has no obligation of confidentiality to disclosing party with respect to such information disclosed; or (v) is required by law or court order to be disclosed. However, in the event that a receiving party is required to disclose Confidential Information pursuant to law or an order or requirement of a court, administrative agency, or other governmental body, the receiving party may disclose Confidential Information only after providing disclosing party with reasonable advance notice thereof to enable disclosing party to seek a protective order or otherwise prevent such disclosure, but nothing herein shall require a party to take or refrain from taking any action in violation of any such legal process.

 

  e. During the term of the agreement, a receiving party shall upon request of disclosing party, turn over to disclosing party all records of disclosing party’s Confidential Information in the receiving party’s possession or control (including any copies or extracts thereof) or destroy such records and certify the destruction thereof, except for any copy legally required to be retained for recordkeeping or archive purposes.

 

  f. Section 6 of this Agreement regarding confidentiality shall supersede any pre-existing agreement between the parties regarding Confidential Information and shall survive termination or expiration of this Agreement.

 

  g. The obligations of each party with respect to Confidential Information disclosed in connection with any Project shall continue in effect until completion or other termination of such Project and for seven (7) years thereafter.

 

7. Work Product. Client will own the data, GMP and R&D documentation records, results, data and other information generated by Contractor in the performance of the Project. All such data in Contractor’s possession will be archived by Contractor for a period of fifteen (15) years following submission of the final report to Client or other completion of the Project and shall be provided to Client upon request. Client may elect to have the materials retained in Contractor archives for an additional period of time, for which Contractor will charge a storage fee.

 

8. Payment. All payments by Client will be made in accordance with the Protocol.

 

-3-


9. Ownership of Inventions and Patents. Any ideas, inventions, methods, processes, results or other know-how, that may evolve from as a result of the Services and/or any Project performed pursuant to this Agreement, shall be the sole and exclusive property of the Client, and the Contractor agrees to assign or cause to be assigned all rights thereto to the Client. Notwithstanding the Client’s ownership of such property. Client hereby grants a perpetual, royalty free, personal, non transferable, non-sublicensable, non-exclusive license to Contractor as a result of services provided by Contractor to Client hereunder, so long as Contractor uses such methods and processes for non-competitive purposes only. As used here “non-competitive purposes” shall mean the use of such methods and processes other than for, or in connection with, drugs or treatments for cardiovascular inflammatory and/or immune-mediated diseased. The Contractor and its employees agree to cooperate with Client in taking all steps, which Client believes reasonably necessary or desirable to secure its rights on this property at Client’s cost. Contractor is the sole and exclusive owner of the methods and processes it has developed which may be used in connection with its performance of this Agreement and any Project hereunder and which were not developed or invented in connection with or arising from the Services or the Project. If requested by Contractor, Client shall execute any and all documents necessary to assign or perfect Contractor’s ownership in such inventions or discoveries at Contractor’s expense. This Article 9 shall survive termination or expiration of this Agreement.

 

10. Limited Warranty and Limitation of Remedies.

 

  a. Contractor warrants that the Project and the Material shall be manufactured in accordance with all applicable laws, rules and regulations, according to cGMPs, and in conformity with Specifications. THIS WARRANTY IS IN LIEU OF, AND GENZYME SPECIFICALLY DISCLAIMS AND EXCLUDES, ALL OTHER WARRANTIES, EXPRESS, IMPLIED OR STATORY, INCLUDING THE WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.

 

  b. In the event of a significant error by Contractor in the performance of the Project that renders the product invalid or otherwise unacceptable in any material respect or in the event of any other breach of the warranty set forth in Section 10a. above, Contractor’s sole and exclusive liability and obligation to the Client shall be (i) to repeat the Project at Contractor’s own cost to deliver the Product (if so agreed by the parties) or (ii) to refund the related fees paid

 

  c. No agent or employee of Contractor is authorized to give any other warranties or to assume any other liabilities on Contractor’s behalf. In no event shall Contractor be responsible or liable with respect to any Project, for any special, incidental, indirect, exemplary or consequential damages (including, without limitation, lost business or lost profits). In no event shall Contractor have, for any reason whatsoever, any monetary liability in connection with any Project exceeding the fees actually paid to the Contractor hereunder for such Project.

 

-4-


11. Indemnification.

Contractor hereby agrees to indemnify and hold harmless the Client and its officers, directors, representatives, agents and employees from and against any and all demands, claims, or actions of any character presented or brought on account of any injuries, losses, or damages sustained by any person or property arising out of the Contractor’s negligence or misconduct in performance of the Project.

Client hereby agrees to indemnify and hold harmless the Contractor and its officers, directors, representatives, agents and employees from and against any and all demands, claims, or actions of any character presented or brought on account of any injuries, losses, or damages sustained by any person or property arising out of the Contractor’s negligence or misconduct in performance of the Project.

 

12. Termination.

 

  a. Client may at any time terminate any Project prior to completion by giving written notice to Contractor. In such event, Contractor shall promptly comply with such notice to terminate work on the Project and use its best efforts to limit any further cost to Client, and Client shall pay Contractor upon receipt of Contractor’s invoice all of its costs incurred or irrevocably obligated to the date of termination and required to terminate the Project and dispose of Project materials. Projects cancelled or delayed within 6 weeks of initiation may be subject to non-refundable reservation fees if so stated in the applicable Protocol.

 

  b. Either party may terminate this Agreement or any Project hereunder in the event of a breach of a material obligation of the other party, if such breach remains uncured to the reasonable satisfaction of the non-defaulting party for thirty (30) days after delivery of written notice of such breach by the non-defaulting party to the defaulting party.

 

  c. The termination of this Agreement for any reason shall not relieve either party of its obligation to the other with respect to any obligation intended by its nature to survive, including but not limited to: confidentiality of information, as outlined in Article 8.; compensation for services performed, as outlined in Article 10; limitation of liability and indemnification, as outlined in Articles 13 and 14; intellectual property as outlined in Article 11; and any consents to use of name for advertising purposes and publications under Section 13.d.

 

-5-


13. Miscellaneous.

 

  a. Independent Contractor. Contractor is an independent contractor of Client and shall have complete and exclusive control over its employees and agents. Neither party shall act as an agent for the other party for any purpose whatsoever. The employees of one shall not be deemed to be the employees of the other for any purpose. It is expressly agreed and understood that the relationship of the parties hereto shall not be construed as creating a joint venture, partnership, consortium, or formal business entity of any type.

 

  b. Governing Law. This Agreement shall be deemed to be a contract made in and governed by the laws of the State of Israel without regard to conflicts of laws principles. Any dispute arising hereunder shall be exclusively determined in the competent court in the Tel Aviv-Jaffa district.

 

  c. Force Majeure. Either party shall be excused from performing its obligations under this Agreement if its performance is delayed or prevented by any event beyond such party’s reasonable control, including but not limited to, acts of God, terrorism, fire, explosion, weather, disease, war, insurrection, civil strife, riots, government action, or power failure, provided that such performance shall be excused only to the extent of and during such disability. Any time specified for completion of performance in any applicable Protocol falling due during or subsequent to the occurrence of any or such events shall be automatically extended for a period of time equal to the period of such disability. Contractor will promptly notify Client if, for any of the events referred to herein, Contractor is unable to meet any such time for performance specified in the applicable Protocol. If any part of the Project is invalid or must be re-run as a result of such disability, Contractor will, upon written request from the Client, but at Client’s sole cost and expense, repeat that part of the Project affected by the disability within the time frame agreed by the Client.

 

  d. Use of Names. Neither party shall use the name of the other party or the names of the employees of the other party in any advertising or sales promotional material or in any publication without prior written permission of such party.

 

  e. Assignment. Neither party may assign any of its rights or obligations under this Agreement without the prior written consent of the other party, which consent will not be unreasonably withheld, except that (a) either party may assign its rights and obligations hereunder to its successor in the case of a merger, consolidation, sale of substantially all of its assets, or other similar transaction, and (b) Contractor may assign its rights and obligations under this Agreement to any subsidiary or parent of Contractor.

 

  f. Severability. Whenever possible, each provision of this Agreement and each related document shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement or related document shall be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity without invalidating the remainder of such provision or the remaining provisions of this Agreement or such related document.

 

-6-


  g. Notice. Any notice to be given to a party under or in connection with this Agreement shall be in writing and shall be delivered (i) personally, (ii) by a nationally recognized overnight courier or by certified mail, postage prepaid, return receipt requested, (iii) via facsimile, with receipt confirmed, or (iv) by electronic mail, if actually received, to the party at the applicable address set forth above each party’s signature or to such other address as to which the party has given written notice thereof. Such notices shall be deemed given upon receipt.

 

  i. Waiver. No waiver of any provision of this Agreement, whether by conduct or otherwise, in any one or more instances shall be deemed to be or be construed as a further or continuing waiver of any such provision in any other instance, or of any other provision or condition of this Agreement.

 

  j. Entire Agreement; Modification. This Agreement (together with the Protocols) sets forth the entire agreement between the parties hereto with respect to the performance of Projects by Contractor for the Client and as such, supersedes all prior and contemporaneous negotiations, agreements, representations, understandings, and commitments with respect thereto.

To evidence their agreement to the terms hereto, the parties have caused this Agreement to be signed on behalf of each party by its duly authorized representative.

 

Genzyme Pharmaceuticals

Eichenweg 1,

CH-4410 Liestal,

Switzerland

   

Vascular Biogenics, Ltd.

6 Jonanthan Netanyahu Street

Or Yehuda, 60376

Israel

By:   /s/ Daniel Scheidegger     By:   /s/ Elalouf Emmanuel
Name:   Daniel Scheidegger     Name:   Elalouf Emmanuel

Title:

 

Vice President, Operations Liestal,

Managing Director

   

Title:

  COO, VP Business Development

Date:

  May 14, 2008    

Date:

  May 19, 2008
By:   /s/ Dr. Marc New      
Name:   Dr. Marc New      

Title:

 

Senior Directors, Commercial

Development, Europe & Asia

     

Date:

  May 14, 2008      

 

-7-

Page 1 of 13

EXHIBIT 10.7

TECHNICAL AGREEMENT ON THE

MANUFACTURE OF CAPSULES

CI-201

for

VASCULAR BIOGENICS

Prepared by: W Bowtle

ENCAP DRUG DELIVERY

Encap Ref: EN 0906; Vascular Biogenics Tech Agreement

Revision : 03

Print date: 29 April 2008

 

LOGO

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Page 2 of 13

 

 

Technical Agreement between Encap Drug Delivery and Vascular Biogenics

 

 

CONTENTS

 

1. Scope of agreement
2. Parties to agreement
3. Products
4. Quality standards
  4.1 Manufacturer’s Licence
  4.2 Compliance with GMP
  4.3 Product specifications
  4.5 Starting materials
  4.6 Batch Manufacture
  4.7 Storage and shipping
  4.8 Third party laboratory

 

5. Responsibilities
  5.1 General and regulatory responsibilities
  5.2 Product-related responsibilities
  5.3 Validation, deviations, changes, complaints and recalls
  5.4 Audit

 

6. Signatories

Attachments:

Attachment 1: Product manufacturing and technical release specifications

Attachment 2: Starting materials provided by Encap

Attachment 3: Manufacturing document references

Attachment 4: Contact Personnel

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Page 3 of 13

 

 

Technical Agreement between Encap Drug Delivery and Vascular Biogenics

 

 

1. SCOPE OF AGREEMENT

This Technical Agreement is made in support of Capsules CI-201 between Encap Drug Delivery and Vascular Biogenics Ltd (VBL)

Vascular Biogenics is investigating formulations of CI-201 for use in humans and requires manufacture of bulk capsules for use in clinical trails. The new formulations for these products has been identified from project work at Encap on behalf of VBL

This agreement details the technical terms under which the contract will operate. It defines the products, quality standards, identifies the responsibilities of each party and defines supporting documentation. It identifies contacts for quality issues The document is drawn up in accordance with Encap’s Standard Operating Procedure 0063 on generating a technical agreement for standard manufacture of licensed products ( SOP 0063).

Encap and VBL may, from time to time, agree Addenda to this agreement. The Addenda will apply for particular supplies (strengths and numbers) and will apply the Quality Standards and responsibilities described in this Technical Agreement. Such Addenda may also provide for related new strengths, as may be agreed from time to time.

 

2. PARTIES TO AGREEMENT

 

  Contract Giver:    Vascular Biogenics Ltd., 6 Jonathan Nethanyahu St. Or Yehuda, 60376 (Israel)
  Contract receiver    Encap Drug Delivery, Oakbank Park, Livingston, UK EH53 0TH

 

3. PRODUCT REGULATORY REFERENCES

 

Product

  

Investigative Medicinal Product Authorisations
held by Vascular Biogenics

  

Country

Capsules CI 201    (application in process)    Europe and / or USA/ and South America

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Page 4 of 13

 

 

Technical Agreement between Encap Drug Delivery and Vascular Biogenics

 

 

4. QUALITY STANDARDS

 

4.1 Manufacturer’s Licence

MW Encap Ltd, trading as Encap Drug Delivery, holds a Manufacturer’s Licence from the MHRA (UK) for the manufacture of Investigative Medicinal Products (IMP’s ) (reference MAIMP/13485).

 

4.2 Compliance with GMP

Batches will be manufactured and assembled to comply with all current European rules regarding Good Manufacturing Practices (EudraLex, Volume 4, 2003)

 

4.3 Product specifications

Specifications for finished products are listed in (Attachment 1). Responsibilities for testing and release are defined in Table 5.2

 

4.4 Starting materials and packaging components

Specifications for starting materials are listed in (Attachment 2). Responsibilities for sourcing and approval are defined in Table 5.2

 

4.5 Batch Manufacture

Batch manufacturing documents are defined in Attachment 3

 

4.6 [***]

 

4.7 Sampling and sample retention

Sampling and sample retention of starting materials and product will be done according to standard Encap procedures

 

4 .8 Third party laboratory

(not applicable).

 

5. RESPONSIBILITIES

 

5.1

   General and regulatory responsibilities      see Table 5.1      

5.2

   Product-related responsibilities      see Table 5.2      

5.3

   Validation, deviations, changes, complaints and recalls      see Table 5.3      

5.4

   Audit      see Table 5.4      

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Page 5 of 13

 

 

Technical Agreement between Encap Drug Delivery and Vascular Biogenics

 

 

[***]

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Page 6 of 13

 

 

Technical Agreement between Encap Drug Delivery and Vascular Biogenics

 

 

[***]

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Page 7 of 13

 

 

Technical Agreement between Encap Drug Delivery and Vascular Biogenics

 

 

[***]

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Page 8 of 13

 

 

Technical Agreement between Encap Drug Delivery and Vascular Biogenics

 

 

[***]

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Page 9 of 13

 

 

Technical Agreement between Encap Drug Delivery and Vascular Biogenics

 

 

[***]

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Page 10 of 13

 

 

Technical Agreement between Encap Drug Delivery and Vascular Biogenics

 

 

6. SIGNATURES

 

Vascular Biogenics     Encap Drug Delivery
/s/ Naamit Sher     /s/ J. Darling
Name: Naamit Sher     Name: J Darling
Title: (Quality)     Title: QA Manager
May 19, 2008     May 5, 2008
Date:     Date:
/s/ Dror Harats     /s/ W. Bowtle
Name: Dror Harats     Name: W Bowtle
Title: CEO     Title: (QP)
May 19, 2008     May 2, 2008
Date:     Date:

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Page 11 of 13

 

 

Technical Agreement between Encap Drug Delivery and Vascular Biogenics

 

 

[***]

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Page 12 of 13

 

 

Technical Agreement between Encap Drug Delivery and Vascular Biogenics

 

 

[***]

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Page 13 of 13

 

 

Technical Agreement between Encap Drug Delivery and Vascular Biogenics

 

 

ATTACHMENT 4

Contact Personnel

 

Vascular Biogenics     Encap Drug Delivery
Quality    
/s/ Genya Mor     /s/ J. Darling
Name: Genya Mor     Name: J Darling
Title: QA Manager     Title: QA Manager
Production    
/s/ Naamit Sher     /s/ J. Savage
Name: Naamit Sher     Name: J Savage
Title: Drug Development VP     Title: Production Director

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].

Exhibit 10.8

TECHNICAL AGREEMENT ON THE

MANUFACTURE OF CAPSULES

VB-201

for

VASCULAR BIOGENICS

Prepared by: J McLachlan

ENCAP DRUG DELIVERY

Encap Ref: EN1378;Vascular Biogenics Technical Agreement

Revision : 03

Print date: 03 Aug 2012

 

LOGO

 

Page 1 of 14

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


 

Technical Agreement between Encap Drug Delivery and Vascular Biogenics

 

 

CONTENTS

 

1.      Scope of agreement

     3   

2.      Parties to agreement

     3   

3.      Products

     3   

4.      Quality standards

     4   

4.1    Manufacturer’s Licence

     4   

4.2    Compliance with GMP

     4   

4.3    Product specifications

     4   

4.5    Starting materials

     4   

4.6    Batch Manufacture

     4   

4.7    Storage and shipping

     4   

4.8    Third party laboratory

     4   

5.      Responsibilities

     4   

5.1    General and regulatory responsibilities

     4   

5.2    Product-related responsibilities

     4   

5.3    Validation, deviations, changes, complaints and recalls

     4   

5.4    Audit

     4   

6.      Signatories

     10   
Attachments:   

Attachment 1: Product manufacturing and technical release specifications

     11   

Attachment 2: Starting materials provided by Encap

     12   

Attachment 3: Manufacturing document references

     13   

Attachment 4: Contact Personnel

     14   

 

Page 2 of 14

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


 

Technical Agreement between Encap Drug Delivery and Vascular Biogenics

 

 

1. SCOPE OF AGREEMENT

This Technical Agreement is made in support of Capsules VB-201 (also known as CI-201) between Encap Drug Delivery and Vascular Biogenics Ltd (VBL) and is subject to the Proposals and Standard Terms and Conditions executed between the parties in advance of each project related manufacture.

Vascular Biogenics is investigating formulations of VB-201 for use in humans and requires manufacture of bulk capsules for use in clinical trials. The new formulations for these products have been identified from project work at Encap on behalf of VBL.

This agreement details the technical terms under which the contract will operate. It defines the products, quality standards, identifies the responsibilities of each party and defines supporting documentation. It identifies contacts for quality issues The document is drawn up in accordance with Encap’s Standard Operating Procedure 0063 on generating a technical agreement for standard manufacture of licensed products (SOP 0063).

Encap and VBL may, from time to time, agree Addenda to this agreement in writing. The Addenda will apply for particular supplies (strengths and numbers) and will apply the Quality Standards and responsibilities described in this Technical Agreement. Such Addenda may also provide for related new strengths, as may be agreed from time to time.

 

2. PARTIES TO AGREEMENT

 

Contract Giver:    Vascular Biogenics Ltd.,6 Jonathan Nethanyahu St. Or Yehuda, 60376 (Israel)
Contract receiver    Encap Drug Delivery, Oakbank Park, Livingston, UK EH53 0TH

 

3. PRODUCT REGULATORY REFERENCES

 

Product

  

Investigative Medicinal Product Authorisations
held byVascular Biogenics

  

Country

Capsules VB-201    Individual references client responsibility.    Europe and/or USA

 

Page 3 of 14

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


 

Technical Agreement between Encap Drug Delivery and Vascular Biogenics

 

 

4. QUALITY STANDARDS

 

4.1 Manufacturer’s Licence

MW Encap Ltd, trading as Encap Drug Delivery, holds a Manufacturer’s Licence from the MHRA (UK) for the manufacture of Investigative Medicinal Products (IMP’s ) (reference MAIMP/13485).

 

4.2 Compliance with GMP

Batches will be manufactured and assembled to comply with all current European rules regarding Good Manufacturing Practices (EudraLex, Volume 4, 1997 and 21CFR parts 210 and 211).

 

4.3 Product specifications

Specifications for finished products are listed in (Attachment 1). Responsibilities for testing and release are defined in Table 5.2

 

4.4 Starting materials and packaging components

Specifications for starting materials are listed in (Attachment 2). Responsibilities for sourcing and approval are defined in Table 5.2

 

4.5 Batch Manufacture

Batch manufacturing documents are defined in Attachment 3

 

4.6 [***]

 

4.7 Sampling and sample retention

Sampling and sample retention of starting materials and product will be done according to standard Encap procedures

 

4 .8 Third party laboratory

(not applicable).

 

5. RESPONSIBILITIES

 

5.1 General and regulatory responsibilities    see Table 5.1
5.2 Product-related responsibilities    see Table 5.2
5.3 Validation, deviations, changes, complaints and recalls    see Table 5.3
5.4 Audit    see Table 5.4

 

Page 4 of 14

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


 

Technical Agreement between Encap Drug Delivery and Vascular Biogenics

 

 

Table 5.1: [***]

 

Page 5 of 14

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


 

Technical Agreement between Encap Drug Delivery and Vascular Biogenics

 

 

Table 5.2 : [***]

 

Page 6 of 14

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


 

Technical Agreement between Encap Drug Delivery and Vascular Biogenics

 

 

Table 2 [***]

 

Page 7 of 14

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


 

Technical Agreement between Encap Drug Delivery and Vascular Biogenics

 

 

Table 5.3 : [***]

 

Page 8 of 14

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


 

Technical Agreement between Encap Drug Delivery and Vascular Biogenics

 

 

Table 5.4: [***]

 

Page 9 of 14

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


 

Technical Agreement between Encap Drug Delivery and Vascular Biogenics

 

 

6. SIGNATURES

 

Vascular Biogenics     Encap Drug Delivery

[Illegible]

   

/s/ J Darling

Name:       Name:   J Darling
Title   (Quality)     Title:   QA Manager / QP

 

   

August 6, 2012

Date:       Date:  

 

Page 10 of 14

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


 

Technical Agreement between Encap Drug Delivery and Vascular Biogenics

 

 

[***]

 

Page 11 of 14

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


 

Technical Agreement between Encap Drug Delivery and Vascular Biogenics

 

 

[***]

 

Page 12 of 14

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


 

Technical Agreement between Encap Drug Delivery and Vascular Biogenics

 

 

[***]

 

Page 13 of 14

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


 

Technical Agreement between Encap Drug Delivery and Vascular Biogenics

 

 

ATTACHMENT 4

Contact Personnel

 

Vascular Biogenics     Encap Drug Delivery
Quality    

/s/ Genya Mor

   

/s/ J Darling

Name:   Genya Mor     Name:   J Darling
Title   Head of QA     Title:   QA Manager
Production      

/s/ Naamit Sher

   

/s/ J Savage

Name:   Dr. Naamit Sher     Name:   J Savage
Title   VP RA & Drug Development     Title:   Production Director

 

Page 14 of 14

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].

Commercial License Agreement PER.C6 ®

Crucell Holland – Vascular Biogenics

Page 1 of 6

 

Exhibit 10.9

MATERIAL TRANSFER AND CONFIDENTIALITY AGREEMENT

This Material and Confidentiality Agreement (“Agreement”) is by and between:

Crucell Holland B.V. , a dutch Company with offices located at Archimedesweg 4, 2333 CN, Leiden, the Netherlands, hereinafter referred to as “CRUCELL”; and

Vascular Biogenics Ltd. , with offices located at 6 Jonathan Netanyahu Street, 60376, Or-Yehuda, Israel (hereinafter referred to as “Vascular Biogenics”; and

BioReliance Ltd. , a company with offices located at Innovation Park, Hillfoots Road, Stirling FK9 4NF, hereinafter referred to as “Contractor”.

(hereinafter individually referred to as “Party” and collectively as “Parties”)

WHEREAS CRUCELL is the owner of a proprietary PER.C6 ® cell line (hereinafter referred to as “MATERIAL”), and of related proprietary and confidential information and patent rights;

WHEREAS CRUCELL and Vascular Biogenics have signed a research license and option agreement for the conduct of research & development programs that employ PER.C6 ® cells to manufacture, use and develop a pharmaceutical products in the gene therapy field, effective as of March 24 2000 (“License”);

WHEREAS under Vascular Biogenics’ rights under Section 2.1.4 of the License, Vascular Biogenics wishes Contractor to perform certain scientific work within the field described in Attachment I, hereinafter referred to as the “Statement of Work”, using the MATERIAL and related proprietary and confidential information (“INFORMATION”) (MATERIAL and INFORMATION hereinafter collectively referred to as “Know How”) on the condition that Contractor enter Into this Agreement with Vascular Biogenics and Crucell;

WHEREAS Crucell is willing to make available the Know How to Contractor for the performance of the Statement of Work on behalf of Vascular Biogenics;

WHEREAS the Parties wish to make arrangements with respect to the use by Contractor of the MATERIAL, and of the results of the Statement of Work Performed thereon.

NOW, THEREFORE , the Parties hereto, intending to be legally bound, agree as follows:

 

  1. Supply of Know How : Crucell agrees to provide and consents to Vascular Biogencs’s providing, the MATERIAL and the INFORMATION to Contractor upon the execution of this Agreement; solely for scientific use under the Statement of Work, If Crucell is requested to deliver MATERIAL and INFORMATION to Contractor, Crucell shall ship the MATERIAL and the INFORMATION to Contractor at Vascular Biogenics expense.

 

  2. Permitted and Restricted Uses: Contractor shall only use the MATERIAL:

 

  2.1. for scientific research solely in the performance of the statement of Work and solely in its own laboratories.

 

  2.2. solely for the purpose of the Statement of Work;

and not use the MATERIAL:

 

  2.3. for administering MATERIAL, or any materials produced therefrom, to humans;

 

  2.4. for purposes of commercial production or sale;

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Commercial License Agreement PER.C6 ®

Crucell Holland – Vascular Biogenics

Page 2 of 6

 

  2.5. with any other entity or organization other than Vascular Biogenics.

 

  2.6. to chemically or biologically modify MATERIAL, except as contemplated by this Agreement in accordance with the explicit purpose of the Statement of Work, unless otherwise agreed to in writing by Crucell.

 

  2.7. to modify, alter, change and/or reconstruct the MATERIAL, other than as further described in the Statement of Work in Attachment I.

 

  3. Ownership of results and materials : Subject to the terms and conditions agreed between Vascular Biogenics and Crucell in the License, all rights to any materials, data and any physical, chemical, or biological results (hereinafter referred to collectively as “RESULTS”) generated under the Statement of Work will vest in Vascular Biogenics. If during the course and performance of the Statement of Work, one or more employees of Contractor conceive or reduce to practice one or more inventions directly resulting from the Statement of Work, Contractor agrees that all right, title and interest in and to all such inventions, shall vest in Vascular Biogenics. For the avoidance of doubt, any RESULTS, including inventions and patent applications and patents emanating therefrom shall constitute IMPROVEMENT KNOW HOW RIGHTS and/or IMPROVEMENT PATENT RIGHTS as defined in the license and consequently shall be subject to the grant-back provision clause 2.3 of the License. Contractor shall promptly disclose such inventions to Vascular Biogenics, and at Vascular Biogenics’s cost and expense, including without limitation compensation for time expended by Contractor, shall diligently cooperate with Vascular Biogenics in the preparation of patent applications covering such Inventions, prosecution of such applications and any other acts necessary for the protection of rights to such inventions, Including but no limited to the execution of documents such as declarations and assignments to perfect Vascular Biogencis’s rights in and to such inventions, Contractor will refrain from any and all acts that may jeopardize the patentability of the invention in any jurisdiction.

Notwithstanding the foregoing the Parties agree and acknowledge that all methodological innovations solely related to Contractor’s assays, methods and technology and all know-how developed by Contractor solely related to Contractor’s assays, methods and technology arising as a result of work performed for Vascular Biogenics whether using the Materials or otherwise shall remain the property of Contractor and no rights to same shall pass to Vascular Biogenics or Crucell in terms of this Agreement or otherwise.

 

  4. Contractor Control and Legal Obligations : Contractor shall at all times maintain control over the MATERIAL and comply with all applicable laws, regulations and guidelines related to the MATERIAL (hereinafter collectively referred to as “the Rules”). Contractor will not, unless Crucell will have given prior written approval on conditions it deems fit, release, transfer or distribute the MATERIAL to any party other than Vascular Biogenics and its authorized employees.

 

  5. Reporting: All RESULTS obtained from the screening, testing or use of MATERIAL by Contractor will be reported, under the confidentiality terms of Section 7, to Vascular Biogenics without delay.

 

  6.

Termination : After the termination or expiration of this Agreement, Contractor shall transfer to Vascular Biogenics all remaining MATERIAL, derivates and any substances obtained from the Statement of Work and confirm such in writing to the other Parties, or shall –at the request of Vascular Biogenics – diligently destroy the MATERIAL, derivatives and any substances derived

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Commercial License Agreement PER.C6 ®

Crucell Holland – Vascular Biogenics

Page 3 of 6

 

  there from in accordance with the Rules referred to in Section 4, and confirm such in writing to the other Parties. Upon completion of review of Crucell’s INFORMATION by Contractor, upon the request of Crucell or in the absence of further agreement between Vascular Biogenics all the provided INFORMATION, and any copies thereof in Its possession, promptly by registered mail, certified mail, or courier service, for example. Federal Express, which retains record of the mailing, except that Contractor may retain one copy of such INFORMATION for the sole purpose of determining any continuing legal obligations to Crucell and Vascular Biogenics.

 

  7. Confidentiality Obligations :

 

  7.1. Contractor shall treat all RESULTS and INFORMATION as confidential and shall not itself use, except for the purposes of this Agreement, or disclose to any fourth party any of such RESULTS and INFORMATION, except as to any of such RESULTS and INFORMATION which Contractor can establish:

 

  (a) at the time of disclosure is in the public domain;

 

  (b) after disclosure becomes part of the public domain by publication or, except by breach of this Agreement by Contractor or breach by any other party under an agreement of confidentiality to Crucell or Vascular Biogenics;

 

  (c) by written records was in its possessions at the time of disclosure by Crucell or Vascular Biogenics and was not acquired directly or indirectly from Crucell, Vascular Biogenics or from any other party under an agreement of confidentiality to Crucell or Vascular Biogenics;

 

  (d) Contractor receives from a fourth party legally in a position to provide Contractor with the INFORMATION or RESULTS, provided, however, that such was not obtained by said fourth party directly or indirectly from Crucell or Vascular Biogenics under an obligation of secrecy;

 

  (e) is excepted by prior written approval of Crucell in the case of INFORMATION or RESULTS in the case of Vascular Biogenics;

 

  (f) is required by law to be disclosed; or

 

  (g) is Independently developed by Contractor without reference to the INFORMATION or RESULTS as evidence by records, however maintained.

 

  7.2. Contractor shall have the right to disclose RESULTS and INFORMATION to those directors, officers, employees and consultants of Contractor to whom such disclosure is necessary for the aforesaid purposes; provided that those persons to whom such RESULTS and INFORMATION may be disclosed under this paragraph have undertaken in writing confidentiality obligations with respect to such RESULTS and INFORMATION substantially similar to those undertaken by Contractor under this Agreement.

 

  7.3.

Contractor will take all reasonable steps, including but not limited to those steps taken to protect information, data or other tangible or Intangible property of its own that it regards as proprietary or confidential, to ensure that the RESULTS and INFORMATION are not

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Commercial License Agreement PER.C6 ®

Crucell Holland – Vascular Biogenics

Page 4 of 6

 

  disclosed or duplicated for any unauthorized party’s use and to prevent the directors, officers, employees and consultants of Contractor from violating this Agreement. Contractor shall notify Crucell and Vascular Biogenics promptly of its knowledge of any unauthorized use or unauthorized disclosure of RESULTS or INFORMATION.

 

  8. Title and all rights to all Crucell’s Know How disclosed under this Agreement remain vested in Crucell.

 

  9. Nothing in this Agreement is to be construed as a license to Contractor to utilize Crucell’s Know How, Trademarks, or trade names, except as provided in this Agreement, in any way whatsoever or under any patent or patent application owned by Crucell, unless a separate written license agreement is executed. Any modification to this Agreement shall be in writing.

 

  10. Use of Names : None of the parties will use the name of another party hereto in relation to this Agreement in any advertising or other form of publicity, without the prior written approval of such party.

 

  11. Limited Warranty :

 

  11.1. Vascular Biodenics and Crucell warrant that they own, possess, have access to, or are licensed under all patents, patent applications, inventions, improvements, trademarks, trade names, copyrights, licenses, information, proprietary rights, processes, know-how necessary to permit BioRellance’s use of the Materials and Information for the purpose of the Statement of Work.

 

  11.2. Contractor acknowledges that the MATERIAL is experimental in nature and is being made available by Crucell and Vascular Biogenics for research purposes. Except as otherwise provided herein, Crucell and Vascular Biogenics make no representation with regard to purity or biological activity of MATERIAL provided, MATERIAL is supplied “as is” with no warranties, express or implied, including any warranty of merchantability or fitness for a particular purpose.

 

  12. Indemnification : Crucell shall not be liable for any claim or damage arising from or in connection with Contractor’s use, handling or storage of MATERIAL and Contractor and Vascular Biogenics shall hold harmless and Indemnify Crucell for any such claim or damage, unless such claim or damage arises for any claim or damage arising from Vascular Biogenics’ use of RESULTS, and Vascular Biogenics shall hold harmless and indemnify Contractor for any such claim or damage, unless such claim or damage arises from the negligence or wrong doing of Vascular Biogenics.

 

  13. Each party warrants that it is permitted to enter into this Agreement and that the terms of this Agreement are not inconsistent with other contractual obligations it may have.

 

  14. Notwithstanding the terms of this Agreement, no party to this Agreement shall be obligated to enter into any further agreement with the other.

 

  15. This Agreement is binding upon the parties hereto and their successors in business, but is not otherwise assignable, other than in connection with a merger, consolidation or sale of all or substantially all assets related to the subject matter of this agreement.

 

  16. Effective Date, Termination Date and Survival : This Agreement will be effective on 19 th  September 2005 and will terminate after the earlier of (i) the completion of the Statement of Work described in Attachment I, or (ii) twelve (12) months after the effective date. Section 3, 5, 6, 7, 11, 12, 14, 16, 18, 19 and 20 will survive any termination of this Agreement.

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Commercial License Agreement PER.C6 ®

Crucell Holland – Vascular Biogenics

Page 5 of 6

 

  17. Except as otherwise set forth herein, this Agreement may not be modified, assigned or transferred in whole or in part by Contractor, unless Crucell will have given prior written approval on conditions it reasonably deems fit.

 

  18. Contractor agrees that its obligations set forth in Sections 2, 4 and 7 are necessary and reasonable to protect Crucell and expressly agrees that monetary damages may be inadequate to compensate Crucell for any breach of any covenant or agreement set forth in Sections 2, 4 or 7. Contractor agrees and acknowledges that any such violation or threatened violation may cause irreparable injury to Crucell and that in addition to any other remedies to seek injunctive relief against any threatened breach of this Agreement or the continuation of any such breach, without the necessity of proving actual damages.

 

  19. This Agreement shall be exclusively governed by and construed in accordance with the laws of the Netherlands. All disputes arising out of or in relation to this agreement shall, to the exclusion of all others, be referred exclusively to the competent Dutch Courts, and the Parties agree that judgments of the Parties. In the event of a dispute between the parties regarding this agreement, the parties shall first attempt to resolve their dispute through amicable discussion.

 

  20. In case of conflict between the License and this Agreement, the provisions of the License shall prevail, except with respect to Contractor in which case this Agreement shall prevail.

IN WITNESS WHEREOF , Contractor, Vascular Biogenics and Crucell have executed this Agreement by their respective, duly authorized, representatives of the date hereinafter written:

 

CRUCELL HOLLAND B.V.     Vascular Biogenics Ltd.
For and on behalf of Crucell N.V.    
By:   /s/ Ronald H.P. Brus     By:   /s/ Elalouf Emmanuel
Name:   Ronald H.P. Brus     Name:   Elalouf Emmanuel
Function:  

President & CEO

    Function:   VP Business Development
  Leiden, October 3, 2005       Gaithersburg, September 20, 2005

 

BioReliance Ltd.
By:   /s/ Diana Mrogan
Name:   Diana Morgan
Function:   Global Leader Manufacturing
  Glasgow, September 19, 2005

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Commercial License Agreement PER.C6 ®

Crucell Holland – Vascular Biogenics

Page 6 of 6

 

[***]

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].

Exhibit 10.10

GENERAL SERVICES AGREEMENT

BioClinica Agreement #40801

This General Services Agreement (this “Agreement”) effective as of the last date of signature hereof (the “Effective Date”), by and between BioClinica, Inc., a Delaware Corporation, with its principal place of business at 826 Newtown-Yardley Road, Newtown, Pennsylvania, 18940-1721 (“BIOCLINICA”) and Vascular Biogenics Ltd. with its principal place of business at 6 Jonathan Netanyahu Street, Or Yehuda, Israel 60376 (“VASCULAR BIOGENICS”). BIOCLINICA and VASCULAR BIOGENICS are individually referred to as a “Party” and collectively as the “Parties”.

PURPOSE

WHEREAS, BIOCLINICA has certain experience, knowledge and abilities that VASCULAR BIOGENICS wishes to utilize in developing and expanding various business and organizational considerations, policy formations and overall strategic planning.

WHEREAS, VASCULAR BIOGENICS is in the trade or business of the manufacture and sale of pharmaceutical, diagnostic and other scientific materials.

WHEREAS, BIOCLINICA is willing to provide consulting services to VASCULAR BIOGENICS and desires to accept the arrangement upon the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, the Parties agree as follows:

 

1. SCOPE OF SERVICES

 

  1.1 BIOCLINICA will provide medical imaging core laboratory services to VASCULAR BIOGENICS as more fully set forth in the attached Exhibit A, which is hereby made part of this Agreement as if fully included herein (the “Services”). Any special or related service which the Parties agree are outside the scope of the Services to be provided hereunder shall be covered under a separate agreement.

 

  1.2 In providing Services under this Agreement, BIOCLINICA shall report to the VASCULAR BIOGENICS employee designated by VASCULAR BIOGENICS.

 

  1.3 BIOCLINICA shall use commercially reasonable efforts and such working time as may be required for the satisfactory performance of the Services in accordance with this Agreement and shall comply with all applicable laws and regulations in the performance of the Services.

 

  1.4 BIOCLINICA shall perform the Services at BIOCLINICA facilities, such locations set forth on Exhibit A, or other such locations as are mutually agreed by the Parties.

 

1

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].

 


  1.5 BIOCLINICA represent and warrants that the execution and delivery of this Agreement and the fulfillment of the terms hereof will constitute the valid, binding and enforceable obligations of BIOCLINICA and will not constitute a default under or breach of any agreement and/or undertaking and/or other instrument to which BIOCLINICA is a party or by which it is bound, or any provision of law, rule or regulation applicable to BIOCLINICA, including without limitation, any confidentiality agreement; and in the performance of its obligations hereunder, BIOCLINICA will not make use of (i) any confidential or proprietary information belonging to any third party, or (ii) any information to which BIOCLINICA is restricted from disclosing or using due to contractual undertakings (or by law).

 

2. COMPENSATION

 

  2.1 VASCULAR BIOGENICS agrees to pay as a fee to BIOCLINICA, for the Services rendered during the project, the amount and at such times as indicated in Exhibit A.

 

  2.2 In addition to the fee specified in Exhibit A, VASCULAR BIOGENICS will reimburse BIOCLINICA for reasonable travel and out-of-pocket expenses related to the provision of the Services, provided that such expenses have been pre-approved by VASCULAR BIOGENICS. Invoices for the Services and out-of-pocket expenses will be detailed according to tasks completed and will include all relevant backup documentation. A 0.5% per month carrying charge will be billed for any undisputed fees and expenses not paid within thirty (30) days of invoice receipt.

 

  2.3 In order to allow payments, BIOCLINICA will provide to VASCULAR BIOGENICS upon the execution of this Agreement a Certificate of Residency from its Tax Authorities (form 6166).

 

3. INTELLECTUAL PROPERTY

BIOCLINICA agrees that any data, reports, materials, work product or other deliverables generated as a result of the performance of the services, or that are derived from the use or possession of VASCULAR BIOGENICS’ confidential information (collectively, the “Data”) shall be the sole and exclusive property of VASCULAR BIOGENICS. BIOCLINICA hereby assigns to VASCULAR BIOGENICS all right, title and interest to such Data, and all worldwide intellectual property rights therein, including without limitation, patents, copyrights, and trade secrets (“VASCULAR BIOGENICS’ Intellectual Property Rights”). It is recognized and understood that certain pre-existing inventions and technologies are the separate property of VASCULAR BIOGENICS or BIOCLINICA and are not affected by this Agreement, and neither Party shall have any claims to or rights in such separate pre-existing inventions or technologies of the other. It is also recognized and understood that in the event that any improvements or developments related to BIOCLINICA’s own technology are created by BIOCLINICA during the performance of the Services under this Agreement, including but not limited to BIOCLINICA’s source code, or other unique methodology, and are not part of VASCULAR BIOGENICS’ Intellectual Property Rights such improvements or developments shall be owned by BIOCLINICA.

 

4. CONFIDENTIALITY

With respect to any and all information indicated as being or which reasonably appears to be, of a confidential nature, including but not limited to protocols, data forms, material, study results and any proprietary information relating to a Party’s business, clinical trials activity, operations or products acquired by a Party from the other Party as a result of this Agreement or from performance of the Services to be rendered hereunder, each Party agrees that it and its respective employees (i) will use the confidential information solely for the purpose of this Agreement, (ii) will not use that information or disclose same to persons other than as may be necessary to carry out such Party’s duties hereunder and provided that such persons have been advised about the confidential nature of the information and agreed to be bound by

 

2

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].

 


confidentiality; and (iii) will maintain the confidential information in secure location . VASCULAR BIOGENICS’ Intellectual Property Rights shall be considered VASCULAR BIOGENICS’ confidential information. The foregoing obligation shall not apply to information which the receiving Party can demonstrate that:

 

  A. Which is known to the receiving Party prior to its receipt thereof from the disclosing Party;

 

  B. Which is or lawfully becomes generally available to the public;

 

  C. Which is lawfully acquired from third parties who have a right to disclose such information; or

 

  D. Which by mutual agreement in writing of the Parties hereto is released from a confidential status.

All employees of a Party who will have access to any of the foregoing information supplied by the disclosing Party have executed or shall have executed prior to undertaking performance under this Agreement, agreements with the receiving Party requiring them to maintain in confidence all such information which they receive.

 

5. RELATIONSHIP OF PARTIES

The relationship of BIOCLINICA to VASCULAR BIOGENICS is that of an independent contractor and nothing in this Agreement shall be construed as creating any other relationship.

 

6. AGREEMENT TERM/TERMINATION

The term of this Agreement is for the period of time mutually agreed upon by VASCULAR BIOGENICS and BIOCLINICA and set forth in Exhibit A to complete the Services.

Termination of this Agreement may be effected upon the giving of thirty (30) days written notice by VASCULAR BIOGENICS without any specified cause or reason. In the event that either Party commits a breach or default in any terms of this Agreement and such Party fails to remedy the breach or default within thirty (30) days after notification of the breach or default from the other Party, the Party giving notice may, at its option and in addition to any other remedies it may have in law or in equity, terminate this Agreement by sending written notice of immediate termination to the other Party.

In the event of a termination of this Agreement, VASCULAR BIOGENICS will be responsible for payments for all work completed at that time of termination. In the event of such close down, BIOCLINICA shall furnish to VASCULAR BIOGENICS a written estimate of close-down costs.

Upon the termination of the Agreement, BIOCLINICA shall return to VASCULAR BIOGENICS all VASCULAR BIOGENICS’ Data and confidential information. For the sole purpose of determining the scope of obligations incurred under this Agreement, BIOCLINICA may retain, in a secure location and, to the extent possible, segregated from unrelated materials, a single archival copy of Confidential Information returned to VASCULAR BIOGENICS.

 

7. ARBITRATION

Any controversy or claim arising out of or relating to this Agreement, or the breach thereof, which is not settled within a reasonable time, shall be settled by arbitration in accordance with the arbitration rules of the International Chamber Of Commerce (the “ICC Rules”) by one arbitrator appointed in accordance with the ICC Rules. Any arbitration proceedings shall take place in London, England unless otherwise agreed. The award of the arbitrator shall be by majority vote (if more than one arbitrator was appointed in accordance with the ICC Rules), shall be in writing and shall set forth the facts found by the arbitrator to exist. The arbitrator is authorized to grant pre-award and post-award interest at commercial rates. Notwithstanding

 

3

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].

 


other provisions of this agreement which may be interpreted to the contrary, the arbitrator appointed herein shall not have the authority to grant damages to either party that are disclaimed or limited under this agreement. Aside from the arbitrator’ fees and costs, which shall be shared equally by the parties unless the arbitrator for good cause determine otherwise, each party will be responsible for paying its own fees and costs (including attorney’s fees) incurred in connection with such arbitration. Each party shall cooperate in providing fully to each other all requested information and documents relating to the arbitration proceedings, except for information and documents subject to any privilege or to governmental export restrictions. The arbitration proceedings shall be conducted in the English language. The arbitral award must be consistent with the provisions of this Agreement and shall be exclusive, final, and binding upon both Parties, and enforcement of the award may be carried out in any court or other body of competent jurisdiction. The award of any such arbitral tribunal shall be final and binding upon the parties. Each Party acknowledges and agrees that any decision resulting from the arbitration proceedings contemplated hereunder would be enforceable in their respective countries and as specified by article 17. .

 

8. INDEMNIFICATION

 

  8.1 VASCULAR BIOGENICS Indemnification of BIOCLINICA

Except for any item for which BIOCLINICA is responsible to indemnify VASCULAR BIOGENICS under Section 8.2, VASCULAR BIOGENICS agrees to defend, indemnify and hold harmless BIOCLINICA and its employees, agents, contractors and subcontractors against and from any claims arising out of or in reference to the Services or for any claim arising out of bad faith, willful misconduct or negligent acts of VASCULAR BIOGENICS or its employees, agents, contractors and subcontractors or acts which are not in accordance with the terms of this Agreement or with ethical practices of the consultations specified herein. VASCULAR BIOGENICS agrees to bear all costs and expenses, including reasonable attorney’s fees, incurred in connection with the defense of any such claim.

VASCULAR BIOGENICS shall be promptly notified of any claim being made against BIOCLINICA and BIOCLINICA shall cooperate at the request of VASCULAR BIOGENICS in the defense of such claim. VASCULAR BIOGENICS will not enter into any settlement agreement without the written consent of BIOCLINICA.

 

  8.2 BIOCLINICA Indemnification of VASCULAR BIOGENICS

BIOCLINICA agrees to defend, indemnify and hold harmless VASCULAR BIOGENICS and its employees and agents against and from any third party claims arising out of or in reference to the bad faith, willful misconduct or grossly negligent acts of BIOCLINICA and its employees, agents, contractors and subcontractors or acts which are not in accordance with the terms of this Agreement or with ethical practices of the consultations specified herein. BIOCLINICA agrees to bear all costs and expenses, including reasonable attorney’s fees, incurred in connection with the defense of any such third party claim.

BIOCLINICA shall be promptly notified of any claim being made against VASCULAR BIOGENICS and VASCULAR BIOGENICS shall cooperate at the request of BIOCLINICA in the defense of such claim. BIOCLINICA will not enter into any settlement agreement without the written consent of VASCULAR BIOGENICS.

 

4

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9. COMMUNICATIONS AND PAYMENTS

Any notice or other communication required or permitted under this Agreement shall be in writing and shall be delivered by hand, first class mail, a nationally recognized overnight courier service, or facsimile transmission, to the Party at the address listed below or to any other address subsequently specified by such Party in writing:

To BIOCLINICA :

Mark L. Weinstein

President and CEO

BIOCLINICA, INC.

826 Newtown-Yardley Road

Newtown, PA 18940

Tel: (267) 757-3000

FAX: (267) 757-3007

To VASCULAR BIOGENICS:

Dr. Yael Cohen

VASCULAR BIOGENICS LTD.

6 Jonathan Netanyahu Street,

Or Yehuda, 60376

Israel

Tel: +972-3-6346450

FAX: +972-3-6346449

[***]

[***]

Any such notice shall be effective (i) in the case of hand delivery, when received; (ii) in the case of an overnight delivery service, on the next business day after being placed in the possession of such delivery service, with delivery charges prepaid; (iii) in the case of the mail, three days after deposit in the postal system, first class postage prepaid; and (iv) in the case of facsimile transmission, when electronic indication of receipt is received.

 

10. ASSIGNMENT

Neither Party shall have the right to assign this agreement or any of the rights or obligations hereunder without the prior written consent of the other, such consent not to be unreasonably withheld; provided, however, either Party may make an assignment to an affiliate or to an assignee of that part of its business to which this Agreement relates without the consent of the other Party, provided however that such party shall remain liable at all times for its obligations under this Agreement, including without limitation to the Confidentiality and intellectual property rights obligations. In no event will such an assignment relieve VASCULAR BIOGENICS of its financial obligation under this Agreement, in the event that such affiliate or assignment fails to make payment as promised for herein.

 

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11. LIMITATION OF LIABILITY

In no event neither Party shall be liable to the other Party for any special, exemplary, indirect, incidental, consequential or punitive damages of any kind or nature whatsoever.

 

12. HEADINGS

All section headings and sub-headings are for convenience only and do not in themselves define a scope of work or specific terms or conditions of this Agreement.

 

13. ENTIRE AGREEMENT

This Agreement, including Exhibit A, constitutes the entire Agreement between the Parties and, except as specified herein, supersedes all prior contracts, agreements and understandings relating to the same subject matter between the Parties. The Parties intend this Agreement to be a complete statement of the terms of their Agreement and no change or modification of any of the provisions of this Agreement shall be effective unless it is in writing and signed by a duly authorized officer of BIOCLINICA and VASCULAR BIOGENICS.

 

14. WAIVER

The failure of a Party in any instance to insist on the strict performance of the terms of this Agreement shall not be construed to be a waiver or relinquishment of any terms of this Agreement, either at the time of the Party’s failure to insist upon strict performance or at any subsequent time, and such terms shall continue in full force and effect.

 

15. SEVERANCE

Each clause of this Agreement is a distinct and severable clause and if any clause is deemed illegal, void, or unenforceable, the validity, legality, or enforceability of any other clause or portion of this Agreement shall not be affected thereby.

 

16. GOVERNING LAW

The construction and performance of this Agreement shall be governed by the laws of England.

 

17. SURVIVAL

Sections 2, 3, 4, and 6 through 16 will survive termination or expiration of this Agreement.

In WITNESS WHEREOF, the undersigned Parties have executed this Agreement on the dates set forth below.

 

BioClinica, Inc.     Vascular Biogenics Ltd.
By:   /s/ Maria T. Kraus     By:   /s/ Amos Ron
Print:   Maria T. Kraus     Print:   Amos Ron
Title:   VP & Corporate Controller     Title:   CFO
Date:   24-Sep-2012     Date:   September 24, 2012

 

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Exhibit A

Vascular Biogenics Ltd.

Medical Imaging Core Laboratory Services in Support of

a Study Entitled: “A Randomized, Double-Blind, 12-Week, Placebo-Controlled Study Followed

by a 12-Week Phase Without Placebo to Evaluate the Efficacy and Safety of Oral VB-201 in

Patients with Mild to Moderate Ulcerative Colitis.”

BioClinica Agreement #40801

Prepared for:

Vascular Biogenics Ltd.

6 Jonathan Netanyahu Street

Or Yehuda, Israel 60376

July 13, 2012 / Version 1

August 24, 2012 / Version 2

September 20, 2012 / Version 3

BioClinica, Inc., 826 Newtown Yardley Road, Newtown, PA 18940, www.bioclinica.com

This document contains information that is confidential and proprietary to Vascular Biogenics Ltd. and BioClinica, Inc.

It has been prepared solely for the information of Vascular Biogenics Ltd. and BioClinica, Inc. and therefore should not be duplicated or otherwise made available to third parties.

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].

 


Vascular Biogenics Ltd.

Ulcerative Colitis Study

 

TABLE OF CONTENTS

 

EXECUTIVE SUMMARY

     3   

1.

  PROJECT SCOPE OF WORK      4   

1.1.

 

SCOPE OF WORK

     4   

1.2.

 

PROJECT TIMELINE ASSUMPTIONS

     5   

2.

  CORE LABORATORY SERVICES      5   

2.1.

 

STUDY PREPARATION, SITE SET-UP AND STANDARDIZATION

     5   

2.2.

 

CENTRALIZED IMAGE DATA TRACKING AND QUALITY CONTROL

     7   

2.3.

 

IMAGE INTERPRETATION SERVICES

     7   

2.4.

 

DATA MANAGEMENT SERVICES

     10   

2.5.

 

PROJECT ADMINISTRATION

     11   

2.6.

 

PROJECT CLOSE-OUT SERVICES

     13   

2.7.

 

REGULATORY COMPLIANCE

     13   

3.

  PROJECT FEES AND EXPENSES      14   

3.1.

 

PROJECT FEES

     14   

3.2.

 

EXPENSES

     16   

3.3.

 

OVERALL TOTAL PROJECT BUDGET

     17   

4.

  PAYMENT SCHEDULE AND BILLING      17   

 

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Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Vascular Biogenics Ltd.

Ulcerative Colitis Study

 

EXECUTIVE SUMMARY

C OMPANY O VERVIEW

BioClinica, established in 1990, is an independent, financially stable, global clinical trials service organization, specializing in medical image management and eClinical services. The services include, site standardization, medical image collection and quality control, independent review, electronic data capture, IVR/IWR and clinical data management solutions for pharmaceutical, medical device companies and other organizations, including contract research organizations. BioClinica is a publicly traded corporation listed on the NASDAQ Global Market under the symbol BIOC. BioClinica has over 20 years of experience in providing comprehensive design and management of the medical imaging portion of clinical trials worldwide.

Please refer to Appendix A to learn more about our eClinical service offerings

M AIN O FFICE L OCATIONS

BioClinica’s HQ is located at 826 Newtown-Yardley Road, Newtown, PA 18940, USA.

Additional BioClinica offices involved in Image Management are located in:

 

    Leiden, The Netherlands (European Headquarters & imaging core laboratory)

 

    Lyon, France (software development for image analysis)

 

    Tianjin, China (Medical Image Management)

K EY D IFFERENTIATORS

The key differentiators that separate BioClinica from our competitors are:

 

    Publicly traded company audited by PricewaterhouseCoopers – this offers our clients financial transparency and reassurance on our company’s reliability for their long-term clinical trial projects.

 

    Full service imaging core lab locations in Europe and the USA which is critical for managing global studies due to language barriers and various time zones. Our 24/7 multilingual contact center offers around the clock support.

 

    We support ALL imaging modalities and therapeutic areas with certified technologists and highly experienced, trained Readers.

 

    BioClinica has a network of approximately 106 expert readers across all therapeutic areas. This network of readers has active confidentiality agreements and executed contracts.

 

    Project Managers are highly skilled, focusing on setting expectations via strong communication skills and pro-activeness via risk management. The Project Management teams are aligned by therapeutic areas which allow the project managers to utilize their prior experiences in developing risk management plans.

 

    Led by an extremely stable Management team - the President of BioClinica has been with the company since 1997 and the average tenure of the Bio-Imaging division senior manager is 10+ years.

S TUDY E XPERIENCE

BioClinica has extensive experience in supporting international multi-center clinical trials in the therapeutic areas of oncology, neurology, cardiology, endocrinology, gastrointestinal, women’s health, inflammation and orthopedics.

Inflammatory Bowel Diseases; Crohn’s and Ulcerative Colitis study Experience:

BIOCLINICA is presently performing an endoscopy trial with 60 global sites and over 100 patients.

In the past we have performed trials in Crohn’s disease and Ulcerative Colitis with different imaging modalities such as Ultrasound, MRI and Endoscopy, with patients ranging form 20-150 and sites ranging from 4 to 100.

[***]

P OINTS FOR C ONSIDERATION

BioClinica would welcome the opportunity to discuss the set-up in a meeting with Vascular Biogenics Ltd to design the imaging part of the project in the best possible way. There are several options for the set-up and the decision depends on the value and the associated costs and is best discussed in a meeting.

 

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Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Vascular Biogenics Ltd.

Ulcerative Colitis Study

 

1. PROJECT SCOPE OF WORK

Vascular Biogenics Ltd. (hereinafter referred to as “VASCULAR BIOGENICS”) has requested that BioClinica, Inc. and subsidiaries (hereinafter referred to as “BIOCLINICA”) provide medical imaging core laboratory services in support of an Ulcerative Colitis Study.

 

1.1. [***]

 

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Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Vascular Biogenics Ltd.

Ulcerative Colitis Study

 

[***]

 

1.2. [***]

 

2. CORE LABORATORY SERVICES

 

2.1. STUDY PREPARATION, SITE SET-UP AND STANDARDIZATION

 

2.1.1. Study Set-Up

If available, VASCULAR BIOGENICS will provide BIOCLINICA with the final study protocol and subsequent amendments at the start of the study.

BIOCLINICA will perform the following services upon commencement of the study:

 

    Preparation and set-up of internal clinical trial and regulatory files

 

    Preparation and set-up of required folders on the BIOCLINICA network

 

    Preparation and set-up of project specific BioPACS™ database

BioPACS™ is a custom designed enterprise system that provides image management and workflow, query capabilities, inventory and image archival, site and project management tools to automate and accelerate the process of evaluating images generated during a clinical trial. The BioPACS™ Image Core Laboratory technology system complies with FDA 21 CFR Part 11 requirements and adheres to the industry DICOM standard for compatibility with image viewers and other analysis software.

 

 

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Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Vascular Biogenics Ltd.

Ulcerative Colitis Study

 

BIOCLINICA will provide VASCULAR BIOGENICS with access to the BioPACS™ web portal which will allow VASCULAR BIOGENICS to view study documents, access real time project reports and follow the course of study progression within BIOCLINICA. The Web Portal will be password protected and VASCULAR BIOGENICS will have twenty-four (24) hour access to the site.

BIOCLINICA will establish a password protected FTP account for each site. The sites will submit 50% of the data to BIOCLINICA via FTP server.

 

2.1.2. Site Technical Evaluation and Coordination

BIOCLINICA will create a study specific site technical survey in an effort to capture all necessary contact and equipment information. BIOCLINICA will contact each of the sites to:

 

    Identify the technologist(s) who will be responsible for protocol implementation at each site

 

    Review the site’s imaging equipment at the site

 

    Review the site’s data transfer capabilities and archival procedures

Upon receipt of the completed site survey, a BIOCLINICA technologist will review the technical information and verify overall completeness. All site interaction will be logged, indicating the date the site was contacted, the method of contact and the number of communication attempts. In the event that any follow up or action items are required as a result of the site survey, BIOCLINICA will capture all related information in the tracking database.

If site equipment (hardware or software) is upgraded or changed during the course of the study, it will be the site’s responsibility to inform BIOCLINICA of the upgrade.

 

2.1.3. Development of Imaging Manual

BIOCLINICA will develop an imaging manual including image acquisition guidelines, site procedures for image transfer (courier or electronic) and image data transmittal forms (paper or electronic). These forms are required to establish an image data audit trail and are utilized by BIOCLINICA during the data collection and quality control process.

 

2.1.4. Study Kit Preparation and Provision to Sites

BIOCLINICA will prepare a study kit for delivery to the participating sites. The study kit will contain the imaging manual, supply re-order forms, sample data transmittal forms, a BIOCLINICA contact list, and for sites submitting data via courier, pre-addressed courier waybills, archival media, padded mailers and/or courier mailers. In addition to containing the imaging binder, the study kit may contain other client approved study specific materials that are needed per the protocol.

 

2.1.5. Investigator’s Meeting Preparation and Presentation

A BIOCLINICA Project Manager will attend and present at the Investigator’s Meeting(s) organized by VASCULAR BIOGENICS.

BIOCLINICA will prepare a PowerPoint presentation to be presented during the meeting which will include the study requirements, imaging guidelines and the process for submission of data to BIOCLINICA. BIOCLINICA will provide the presentation to VASCULAR BIOGENICS prior to the meeting for review and approval. BIOCLINICA will also prepare any supporting materials that are required for the meeting. (e.g. handouts, sample binders).

 

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Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Vascular Biogenics Ltd.

Ulcerative Colitis Study

 

During the meeting, BIOCLINICA will review the presentation and field any questions. Reasonable travel costs and expenses for the meeting will be billed separately. BIOCLINICA has assumed a project manager will be the designated representative at the Investigator’s Meeting.

 

2.2. CENTRALIZED IMAGE DATA TRACKING AND QUALITY CONTROL

BIOCLINICA has assumed that all image data for a given timepoint will be sent to BIOCLINICA from the sites as the timepoints are completed. Timely quality assurance of the data is not possible if data are not received in a timely manner. BIOCLINICA will notify VASCULAR BIOGENICS of data transmittal delays and of the potential impact on BIOCLINICA timelines if the delays are not corrected.

 

2.2.1a. Image Data Log-In

Upon receipt of the data, BIOCLINICA will review the demographic data (e.g. patient number, site number, scan date, timepoint description, imaging modality etc.) provided by the site and will perform a verification check that the correct image data has been received. The data will be uploaded into BioPACS™. Any discrepancies between the data received and the information provided by the site will be resolved directly with the site.

 

2.2.1b. Image Data Quality Control

Image data quality control will be performed by certified radiologic technologists. All image data will be saved into a standard file format (typically DICOM), so that the images may be read and archived digitally. This process may include the following tasks:

 

    Anonymization of imaging data (e.g. removal of site, subject, timepoint identifiers etc.)

 

    Conversion of digital image data into a standard file format

 

    Quality Control of the image data for protocol compliance

 

    Process endoscopy image data including selection of clips and streaming video to match read / analysis criteria

 

    Generate labels for the masked videotapes and prepare for use in the independent review

 

    Notification to VASCULAR BIOGENICS and participating sites of technical imaging adequacy issues and recommendation of appropriate action(s) to resolve the issues

 

    Fax/E-mail notification to site and VASCULAR BIOGENICS of Test Data

BIOCLINICA will generate a query in the event that data discrepancies are noted during the QC of the image data, which is performed by a certified radiologic technologist. The query is generated to document the following issues, but is not limited to, data quality, protocol compliance issues and missing data.

The query process includes the following:

 

    Preparation of a query including documentation of the issue

 

    Preparation and shipment of letter or email to site and VASCULAR BIOGENICS documenting the query

 

    Resolution and filing of query documentation

 

2.3. IMAGE INTERPRETATION SERVICES

 

2.3.1. Image Review Application Development and Validation

BIOCLINICA will develop a custom application, BioREAD™, to execute the independent image review session. The development of this application will include the following:

 

    Creation of a client business requirements specification document

 

    Creation of a technical design specification document

 

    Programing of the BioREAD application

 

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Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Vascular Biogenics Ltd.

Ulcerative Colitis Study

 

    Full unit testing

 

    Test script development and execution of test plan

 

    Validation report

 

    User acceptance testing

BIOCLINICA will work in collaboration with VASCULAR BIOGENICS to design this application. The timeline for the delivery of the application and the milestones for key deliverables (e.g. business requirements document) will be agreed upon by VASCULAR BIOGENICS and BIOCLINICA.

 

2.3.2. Image Interpretation Training Session

BIOCLINICA will conduct a training session prior to the first image interpretation session. Representatives from BIOCLINICA’s Project Management, Clinical Operations and Technical Services departments will attend and participate in this session. The training session is conducted in part for the purpose of familiarizing both VASCULAR BIOGENICS personnel and the reader(s) with the image review application as well as the independent image review design. During this meeting, VASCULAR BIOGENICS personnel and the independent reader(s) will review the operation of the BioREAD™ application, including the interrelationship between questions, sessions, and image display utilizing non-study subjects with relevant image sets. The BioREAD™ application is a custom-designed system that provides full automatic image display capabilities for independent reads and captures the reader’s interpretation and image evaluation all in one solution.

BIOCLINICA will develop a Read Rules Document. This document will include an overview of the clinical protocol, imaging requirements, and image review application questions/answers. It will also include rules for each reader to follow when completing the read electronic case report form (eCRF). This document will be developed by BIOCLINICA’s Clinical Operations personnel and reviewed by both reader(s) and VASCULAR BIOGENICS.

 

2.3.3. Conduct and Monitoring of the Image Interpretation Session

 

2.3.3a. Performance of Image Review Sessions and Management of Independent Readers

The review of the image data will be performed by independent readers not affiliated with the study either at the location of the independent reader or at a BIOCLINICA site. All reader image assessments will be captured electronically within the BioREAD™ application.

The following services will be performed in conjunction with the image review session:

 

    Testing of BioREAD™ System (hardware and software)

 

    Loading of the timepoints for the given image review session to the BioREAD™ application

 

    Independent reader training, including review of reader rules prior to the first read session

 

    Image review application back-up and export of reader image interpretations

All costs related to this service include BIOCLINICA licensing fees for the use of the BioREAD™ application during the image interpretation sessions. BIOCLINICA will procure the equipment that will be utilized during the image review sessions and will deploy the equipment and the image review application to the off-site read locations, if necessary. BIOCLINICA will provide technical support to the readers during the off-site read sessions.

Leasing fees are included for the use of the equipment as well as any related costs for dedicated communications lines that are required for remote reading sessions, in order to retrieve the data assessed by the readers from their remote location.

 

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Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Vascular Biogenics Ltd.

Ulcerative Colitis Study

 

BIOCLINICA will notify the site and VASCULAR BIOGENICS via fax or e-mail of patient eligibility results as well as the rolling read results within 3 – 5 business days of data receipt at BIOCLINICA (excluding public holidays and weekends). BIOCLINICA will notify the site and VASCULAR BIOGENICS via fax or e-mail of the results from the secondary read within 5 – 8 business days of data receipt at BIOCLINICA (excluding public holidays and weekends).

 

2.3.3b. Image Review Monitoring Plan

BIOCLINICA will perform an evaluation of the image review results to monitor read quality. Monitoring is also performed to ensure adherence to the response criteria as defined in the Imaging Charter, the Read Rules Document and the VASCULAR BIOGENICS clinical protocol. This evaluation will be conducted on an agreed upon basis as deemed appropriate by BIOCLINICA and as per the monitoring plan.

If necessary, BIOCLINICA and VASCULAR BIOGENICS will make a joint decision to determine if retraining of the reader is deemed appropriate. If so, BIOCLINICA will conduct a training session to review specific cases.

Further discussion is required between BIOCLINICA and VASCULAR BIOGENICS in order to finalize the image read plan.

 

2.3.4. Final Study Report

BIOCLINICA will prepare a study report, which will include:

 

    Protocol Overview

 

    Project Summary

 

    Summary of Subject Assessments

 

    Receipt and Preparation of Image Data for Image Review

 

    Description of the image review application

 

    Image Interpretation Training Session and Reader Training/Qualification

 

    Image Interpretation Sessions

 

    Transfer of Data to VASCULAR BIOGENICS

Appendices may include the following documents:

 

    Imaging Charter

 

    Listing of Image Data Received

 

    Business Requirements Specification Document

 

    Applicable Note to File(s)

 

    Curriculum Vitae of Radiologists and Designated Experts

 

    Read Rules Document

 

    Image Review Monitoring Plan

 

    Listing of Subjects Read

 

    Data Export Specifications Document

*Please note the Final Study Report does not include a statistical analysis of the data.

BIOCLINICA shall deliver the study report to VASCULAR BIOGENICS within thirty (30) business days following completion of the final data transfer. VASCULAR BIOGENICS will have a review period of thirty (30) business days, following delivery of the report. Within this period, VASCULAR BIOGENICS may request within-scope revisions to the report and BIOCLINICA will make requested within-scope revisions at no additional cost to VASCULAR BIOGENICS.

 

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Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Vascular Biogenics Ltd.

Ulcerative Colitis Study

 

2.4. DATA MANAGEMENT SERVICES

 

2.4.1. Development & Validation of Export Program

The results obtained from the independent image review session will be provided to VASCULAR BIOGENICS in BIOCLINICA’s standard export format, SAS datasets. BIOCLINICA will provide a detailed export specification document describing the data sets to be provided. Upon written approval of this specification document by VASCULAR BIOGENICS, BIOCLINICA will begin the programming and validation of the export program.

In the event VASCULAR BIOGENICS requests a custom export format, the export specification will be developed by BIOCLINICA in collaboration with VASCULAR BIOGENICS. The additional time and costs associated with a custom export are not reflected in this agreement. VASCULAR BIOGENICS will be notified of such increases in writing for approval.

 

2.4.2. Data Cleaning and Maintenance

BIOCLINICA will work in collaboration with VASCULAR BIOGENICS at the start of the study to define protocol-specific fields to be checked at regularly scheduled intervals. This includes but is not limited to the following:

 

    Comparison of demographic information (Site, Subject, Initials, Exam Date(s), etc.) collected by BIOCLINICA against those provided by the client enrollment log

 

    Chronological date progression (e.g., ensure that the date of Visit 2 is later than Visit 1, no images acquired after a Date of Death if applicable.)

 

    Data derived by the independent image review application

Standard Edit Checks

Standard edit checks are composed of checks for technical quality such as identifying duplicate records within a table and table-to-table comparisons by key parameters (e.g. site number, subject number) to assure subjects appear in all applicable tables. These checks also compare and reconcile key parameters of the data housed in BioREAD™ compared to BioPACS™.

Study Specific Checks

Study-specific edit checks are developed for each study based on the response criteria that is utilized as well as other study related requirements that are defined in the Read Management Plan.

Edit Check Management

Edit Checks are performed regularly on the image read data to allow identification of any data discrepancies. Any data discrepancies noted in the output are investigated by a BIOCLINICA Clinical Data Manager to identify the reason for the output. The Clinical Data Manager works with the internal project team (Medical Affairs, Clinical Operations, Applications Development, Clinical Application Technical Services, and Project Management) to resolve data discrepancies appropriately. If any database updates are performed in resolving the discrepancies, the edit checks are re-run to insure no new issues arise. This is an iterative process and continues until all edit checks are resolved.

 

2.4.3. Data Export

BIOCLINICA will export data as SAS datasets unless otherwise specified. BIOCLINICA will perform a final QC of the data prior to submission to VASCULAR BIOGENICS.

BIOCLINICA will perform a transfer of test data to ensure that VASCULAR BIOGENICS can successfully receive data and the data meets the provisions of the specification document. The final data will be sent to VASCULAR BIOGENICS within ten (10) business days after all the data for a given export has been acquired.

 

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Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Vascular Biogenics Ltd.

Ulcerative Colitis Study

 

If required, BIOCLINICA will follow up with VASCULAR BIOGENICS on issues related to each given export up until ninety (90) days post project completion as defined in Table 1.2. In the event export questions are received after this period, VASCULAR BIOGENICS will be billed on an ad-hoc basis as deemed appropriate by BIOCLINICA. BIOCLINICA will not perform any research or follow up on these inquiries without written authorization from VASCULAR BIOGENICS to proceed.

 

2.5. PROJECT ADMINISTRATION

 

2.5.1. Project Management Services

BIOCLINICA will provide in-house project management and administration for this project. A project manager and project team will be assigned to the study. This team may include the representatives from the following departments:

 

    Project Management

 

    Medical Affairs

 

    Clinical Operations

 

    Core Laboratory

 

    Product Development

 

    Regulatory

 

    Data Management

 

    Administrative support staff, as necessary

The assigned project manager serves as the primary contact for the project. The project manager oversees the day to day operations for projects in-house at BIOCLINICA. Regular internal project meetings are organized by the project manager to monitor resource planning and project progress. Administrative personnel provide support to the project managers and are included in the project management fee.

Additional responsibilities include:

Communication Plan

The project manager will develop a project communication plan that will describe the processes that will be followed during the course of the study including the levels of communication between BIOCLINICA, VASCULAR BIOGENICS, and other project related vendors. In addition, this document will outline details of the process to be followed for project issue resolution.

Teleconferences

The BIOCLINICA project manager will participate in teleconferences as needed with VASCULAR BIOGENICS to discuss the overall project progress, issues, timelines etc. The frequency and duration of the teleconferences may vary during the course of the study.

Work Instruction Development

The project manager will be responsible for the development of an internal project specific work instruction manual. The purpose of this manual is to provide BIOCLINICA employees a detailed description of the procedures to be utilized during the course of the study.

 

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Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Vascular Biogenics Ltd.

Ulcerative Colitis Study

 

2.5.2. Project Reporting Services

Web portal Reporting

BIOCLINICA will provide real time access to the web portal in order for VASCULAR BIOGENICS to have appropriate status updates. Presented below are standard summary reports:

 

    Project Start up Report – study startup details including the status of the site surveys and study kits

 

    Collection of Site Data Report – a detail listing of the responses, by the site, on the site surveys

 

    Image Status Report – details regarding data received, individual modalities received per timepoint, missing image data and query status, study sequence listings

 

    Query Status Report – report displaying all outstanding queries as well as resolved queries

 

    Read Summary Report – detailed information related to the project read status, including patient/timepoint/modality reviewed

 

    Project Metrics Report – a multifunctional report providing predefined metrics and projections including averages and study targets

 

    Program Metrics Report – predefined metrics including averages and study targets defined with metrics presented as collected on a monthly basis

Metrics Champion Consortium (MCC)

BIOCLINICA is an active member of the MCC, which is an organization that develops performance metrics within the Biotechnology and Pharmaceutical industry with the intent to jointly encourage performance improvement, effectiveness, efficiency, and appropriate levels of controls for both VASCULAR BIOGENICS and Service Providers in support of the drug development process.

BIOCLINICA participates in the continuous collaborative development of standardized performance metrics including process improvement tools. As a result, BIOCLINICA can provide the Imaging Metrics Report to VASCULAR BIOGENICS throughout the duration of the study.

 

2.5.3. Site Management and Image Archival Services

Site Management

BIOCLINICA will provide support services to manage, monitor and coordinate the imaging acquisition, collection and query resolution portion of the study. BIOCLINICA will interact directly with the site on image data tracking, follow-up on issues as necessary and maintain the image audit trail. Communication with the sites will be documented appropriately.

VASCULAR BIOGENICS will be responsible for providing BIOCLINICA with patient enrollment updates as well as participating site lists on an ongoing basis. These updates should visibly indicate new information since the last send. Incremental updates are preferred or if cumulative updates are sent all incremental changes from the prior report should be identified.

Based on enrollment logs sent from VASCULAR BIOGENICS, BIOCLINICA will follow up with each participating site on an ongoing basis regarding site surveys, outstanding image data and image data related queries. In the event that a site becomes unresponsive, BIOCLINICA will inform and seek assistance from VASCULAR BIOGENICS.

Data Back-up and Archive

Throughout the study an image data back-up will be performed on data storage systems. Off-site image data back-up will also be performed at two (2) geographically distant sites. Other electronic data (electronic CRFs, audit trails, database contents, electronic documents, etc.) will be stored on a dedicated database server and saved daily throughout the study, via a secure network connection at two (2) different geographical sites.

 

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Vascular Biogenics Ltd.

Ulcerative Colitis Study

 

All study data will be digitally archived in compliance with ICH Guidelines for at least 15 years at study end. Additional costs will apply for this long term archive and a separate cost estimate will be provided at the end of the study, based on the actual total size of the data to be archived (digital and paper data).

Audit Trails

BIOCLINICA will consistently maintain an audit trail for each step of image data collection, quality control, processing, image interpretation assessment, central and off-site archiving procedures and all site communication in compliance with the applicable regulatory requirements including GCP and FDA’s 21 CFR part 11.

 

2.6. PROJECT CLOSE-OUT SERVICES

 

2.6.1. Project Close-Out

Upon completion of the study, BIOCLINICA will perform independent departmental study close-out procedures. Project close-out procedures may include the following services:

 

    Archive the study materials and destroy any excess supplies

 

    Collate all study files which may include; correspondence, Notes to Files, DTFs etc… and forward to BIOCLINICA’s Records Management department

 

    Archive all study data from BIOCLINICA network to digital media; one (1) copy will be sent to long-term off-site storage. The storage facility is a secure environmental controlled facility.

 

    Perform official close-out of study-specific administrative accounts including generation of final invoice

BIOCLINICA’s Records Management department will facilitate the close-out process by organizing and cataloging project related documents, including any regulatory or internal BIOCLINICA filings. These materials will be stored off-site in long-term storage for fifteen (15) years. After the fifteen (15) year retention period, BIOCLINICA will have the materials destroyed in accordance with the appropriate Standard Operating Procedures and Work Instructions.

BIOCLINICA assumes that all original image data sent to BIOCLINICA will be returned to VASCULAR BIOGENICS upon completion of the project or sooner if no longer required by BIOCLINICA. Original image data is defined as the source data, acquired at the sites, that is forwarded to BIOCLINICA after the patient has been imaged for a specific timepoint. BIOCLINICA will need ample notice to comply with the request, should VASCULAR BIOGENICS require the image data to be blinded prior to shipping. In the event VASCULAR BIOGENICS requires all original image data to be sent back to the sites, additional courier fees will apply.

 

2.7. REGULATORY COMPLIANCE

BIOCLINICA’s custom designed enterprise system, BioPACS™, provides Image Core Laboratory technology of image, workflow, query, inventory, site and project management tools to automate and accelerate the process of evaluating images generated during a clinical trial. This system complies with FDA 21 CFR Part 11 requirements.

An audit trail will be consistently maintained for each step of the BIOCLINICA process in compliance with the applicable regulatory requirements including Good Clinical Practice (GCP) and FDA 21 CFR part 11.

 

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Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Vascular Biogenics Ltd.

Ulcerative Colitis Study

 

3. PROJECT FEES AND EXPENSES

 

3.1. PROJECT FEES

The estimated fees provided below are based upon the specific assumptions found within this document. Material alterations to the assumptions, including, but not limited to, a change in the number of patients, amount of data, level of support services or timeline, will impact final pricing. BIOCLINICA will only charge pro-rata for work performed at the rates quoted. BIOCLINICA fees will increase annually beginning with month 25 of the project as defined by the actual project start date. This increase will be equivalent to the percent increase in the Euro Harmonized Index of Consumer Prices (HICP).

In the event the study is canceled, BIOCLINICA will not charge a cancellation fee.

All the fees presented below are based on preliminary assumptions. Once a final protocol has been established, BIOCLINICA will collaborate with VASCULAR BIOGENICS on the image review design and the analyses required. Based on the outcome of these discussions BIOCLINICA may submit a revised proposal to VASCULAR BIOGENICS in which fees may be modified.

 

3.1.1. [***]

 

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Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Vascular Biogenics Ltd.

Ulcerative Colitis Study

 

[***]

 

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Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Vascular Biogenics Ltd.

Ulcerative Colitis Study

 

3.2. [***]

 

3.2.1. [***]

 

3.2.2. [***]

 

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Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Vascular Biogenics Ltd.

Ulcerative Colitis Study

 

3.3. [***]

 

4. [***]

 

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Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


 

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Vascular Biogenics Ltd.

Medical Imaging Core Laboratory Services in Support of

a Study Entitled: “A Randomized, Double-Blind, 12-Week, Placebo-Controlled Study Followed

by a 12-Week Phase Without Placebo to Evaluate the Efficacy and Safety of Oral VB-201 in

Patients with Mild to Moderate Ulcerative Colitis.”

Prepared for:

Vascular Biogenics Ltd.

6 Jonathan Netanyahu Street

Or Yehuda, Israel 60376

BioClinica Addendum #40801_1

November 19, 2012

BioClinica, Inc., 826 Newtown Yardley Road, Newtown, PA 18940, www.bioclinica.com

This document contains information that is confidential and proprietary to Vascular Biogenics Ltd. and BioClinica, Inc. It has been prepared solely for the information of Vascular Biogenics Ltd. and BioClinica, Inc. and therefore should not be duplicated or otherwise made available to third parties.

 

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].

 


Vascular Biogenics Ltd.

Ulcerative Colitis Study

 

TABLE OF CONTENTS

 

1. SCOPE OF WORK

     3   

1.1. ADDENDUM ASSUMPTIONS

     3   

2. ADDENDUM PROJECT FEES AND EXPENSES

     4   

2.1. ADDENDUM PROJECT FEES

     4   

2.2. ADDENDUM EXPENSES

     5   

2.3. BILLING POLICY

     6   

3. TERMS AND CONDITIONS

     7   

 

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Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Vascular Biogenics Ltd.

Ulcerative Colitis Study

 

1. SCOPE OF WORK

Vascular Biogenics Ltd. (hereinafter referred to as “VASCULAR BIOGENICS”) has requested that BioClinica, Inc. and subsidiaries (hereinafter referred to as “BIOCLINICA”) provide additional medical imaging core laboratory services in support of an Ulcerative Colitis study.

This Addendum serves to document the additional services requested for this study beyond those contained within the following:

 

    Agreement #40801 between BIOCLINICA and VASCULAR BIOGENICS, executed 24 September 2012

This Addendum also serves to document the fees for the additional services.

 

1.1. ADDENDUM ASSUMPTIONS

Presented below is an outline of the additional and modified services requested by VASCULAR BIOGENICS for an Ulcerative Colitis study that are not included within the original agreement.

 

    Additional two (2) sites, one (1) in Poland and one (1) in Hungary.

 

    Added one (1) web-based Image Interpretation Training session for eligibility.

 

    One hundred fifty-eight (158) fewer timepoints prepared for review.

 

    One hundred ten (110) fewer screening timepoints as screening will be prepared for review only once.

 

    Sixty-six (66) fewer timepoints re-read by a second reader if there is a discrepancy between the local and central review.

 

    Addition of 10% of screening timepoints (12 timepoints) reviewed by a second reader for eligibility plus 5% of screening timepoints (6 timepoints) reviewed for the primary review if read by the third reader.

 

    One hundred ten (110) fewer fax/e-mail notifications to site and VASCULAR BIOGENICS of rolling read results as screening will be read only once.

 

    Forty-eight (48) fewer fax/e-mail notifications to site and VASCULAR BIOGENICS of secondary read results.

 

    Removal of 20% or sixty-six (66) timepoints re-read by a second reader if there is a discrepancy between the local and central review.

 

    Addition of 10% of screening timepoints (12 timepoints) reviewed by a second reader for eligibility plus 5% of screening timepoints (6 timepoints) reviewed for the primary review if read by the third reader.

 

    Applicable pass-through and reader fees. Reader fees are updated to reflect US Dollars.

Eligibility Review:

 

    One (1) additional reader for a total pool of three (3) readers, sharing the workload, for the eligibility review.

 

    Screening timepoints will be re-read by a second reader for screening timepoints with a score of < 2, assuming 10% of timepoints will be re-read.

Primary Review:

 

    One (1) reader from a pool of two (2) readers for the primary review.

 

    Each screening timepoint will only be read once for eligibility review and then count as baseline in the primary review assuming the same two (2) readers that are reading for eligibility are the same as the primary review. Timepoints read by the third reader for eligibility will be re-read by reader one (1) or two (2) in the primary review, assuming 5% of timepoints will be re-read.

 

    Removal of 20% of timepoints re-read due to a discrepancy between the local and central assessment.

 

* All other assumptions from Original Agreement #40801 will remain the same.

 

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Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Vascular Biogenics Ltd.

Ulcerative Colitis Study

 

2. ADDENDUM PROJECT FEES AND EXPENSES

 

2.1. ADDENDUM PROJECT FEES

The fees for services detailed within this Addendum are summarized below. BIOCLINICA will only charge pro-rata for work performed at the rates quoted.

As per the original agreement, BIOCLINICA fees will increase annually beginning with month 25 of the project as defined by the actual (original) project start date. This increase will be equivalent to the percent increase in the Euro Harmonized Index of Consumer Prices (HICP).

 

2.1.1. [***]

 

2.1.2. [***]

 

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Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Vascular Biogenics Ltd.

Ulcerative Colitis Study

 

2.2. [***]

 

2.2.1. [***]

 

2.2.2. [***]

 

2.2.3. [***]

 

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Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Vascular Biogenics Ltd.

Ulcerative Colitis Study

 

[***]

 

2.2.5. [***]

 

2.3. BILLING POLICY

The above mentioned fees will continue to be billed to VASCULAR BIOGENICS on a monthly basis and will include relevant back-up documentation.

 

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Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Vascular Biogenics Ltd.

Ulcerative Colitis Study

 

3. TERMS AND CONDITIONS

All services will be performed by BIOCLINICA as an Addendum to BIOCLINICA Agreement #40801, and all terms and conditions of Agreement #40801 shall apply.

 

AGREED AND ACCEPTED:

 

VASCULAR BIOGENICS

    BIOCLINICA
By:   /s/ Amos Ron     By:   /s/ Ted Kaminer
Print:   Amos Ron     Print:   Ted Kaminer
Title:   CFO     Title:   Executive VP & CFO
Date:   December 31, 2012     Date:   02-Jan-2013

 

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7

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


 

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Vascular Biogenics Ltd.

Additional Medical Imaging Core Laboratory Services in Support of

a Study Entitled: “A Randomized, Double-Blind, 12-Week, Placebo-

Controlled Study Followed by a 12-Week Phase Without Placebo to

Evaluate the Efficacy and Safety of Oral VB-201 in Patients with Mild to

Moderate Ulcerative Colitis.”

BioClinica Addendum #40801_2

July 26, 2013 version one

August 29, 2013 version two

 

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Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].

 


Vascular Biogenics Ltd.

Ulcerative Colitis Study

 

TABLE OF CONTENTS

 

1. SCOPE OF WORK

     2   

1.1. ADDENDUM ASSUMPTIONS

     2   

2. ADDENDUM PROJECT FEES AND EXPENSES

     3   

2.1. ADDENDUM PROJECT FEES

     3   

2.2. ADDENDUM EXPENSES

     4   

2.3. BILLING POLICY

     5   

3. TERMS AND CONDITIONS

     5   

 

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1

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Vascular Biogenics Ltd.

Ulcerative Colitis Study

 

1. SCOPE OF WORK

Vascular Biogenics Ltd. (hereinafter referred to as “VASCULAR BIOGENICS”) has requested that BioClinica, Inc. and subsidiaries (hereinafter referred to as “BIOCLINICA”) provide additional medical imaging core laboratory services in support of an Ulcerative Colitis study.

This Addendum serves to document the additional services requested for this study beyond those contained within the following:

 

    Agreement #40801 between BIOCLINICA and VASCULAR BIOGENICS, executed 24 September 2012

 

    Addendum #40801_1 between BIOCLINICA and VASCULAR BIOGENICS, executed 02 January 2013

This Addendum also serves to document the fees for the additional services.

 

1.1. ADDENDUM ASSUMPTIONS

Presented below is an outline of the additional and modified services requested by VASCULAR BIOGENICS for an Ulcerative Colitis study that are not included within the original agreement.

 

    Timeline extension due to recruitment period being extended through December 2013

 

    Additional forty (40) Screening timepoints to be received. BIOCLINICA assumes that a total of 160 Patients will be screened in order to achieve 110 Patients enrolled on the study. 160 Total Screening timepoints to include the 120 Screening timepoints in the original contract plus 40 additional Screening timepoints.

Eligibility Review:

 

    Forty (40) additional Screening timepoints to be received

 

    Screening timepoints will be re-read by a second reader for screening timepoints with a score of < 2, assuming 20% or eight (8) of the 40 additional timepoints and an additional 10% or 12 of the 120 screening timepoints in the current contract will be re-read.

Primary Review:

 

    Each screening timepoint will only be read once for eligibility review and then count as baseline in the primary review assuming the same pool of two (2) readers that are reading for eligibility are the same as the primary review. Timepoints read by the third reader for eligibility will be re-read by reader one (1) or two (2) in the primary review, assuming 5% of timepoints (two (2) timepoints) will be re-read.

[***]

 

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Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Vascular Biogenics Ltd.

Ulcerative Colitis Study

 

2. ADDENDUM PROJECT FEES AND EXPENSES

 

2.1. ADDENDUM PROJECT FEES

The fees for services detailed within this Addendum are summarized below. BIOCLINICA will only charge pro-rata for work performed at the rates quoted.

As per the original agreement, BIOCLINICA fees will increase annually beginning with month 25 of the project as defined by the actual (original) project start date. This increase will be equivalent to the percent increase in the Euro Harmonized Index of Consumer Prices (HICP).

 

2.1.1. [***]

 

2.1.2. [***]

 

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Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Vascular Biogenics Ltd.

Ulcerative Colitis Study

 

2.2. [***]

 

2.2.1. [***]

 

2.2.2. [***]

 

2.2.3. [***]

 

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4

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].


Vascular Biogenics Ltd.

Ulcerative Colitis Study

 

2.2.4. [***]

 

2.3. BILLING POLICY

The above mentioned fees will continue to be billed to VASCULAR BIOGENICS on a monthly basis and will include relevant back-up documentation.

 

3. TERMS AND CONDITIONS

All services will be performed by BIOCLINICA as an Addendum to BIOCLINICA Agreement #40801, and all terms and conditions of Agreement #40801 shall apply.

AGREED AND ACCEPTED:

 

VASCULAR BIOGENICS     BIOCLINICA
By:   /s/ Amos Ron     By:   /s/ Ted Kaminer
Print:   Amos Ron     Print:   Ted Kaminer
Title:   CFO     Title:   Executive VP & CFO
Date:  

November 4, 2013

    Date:   17 Oct 2013

 

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Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].

Exhibit 10.11

CLINICAL TRIAL AGREEMENT

“A Randomized, Double-Blind, 24-Week, Dose-Ranging Study to Evaluate the Efficacy and Safety of Oral VB-201 in Patients with Moderate to Severe Plaque Psoriasis” (the “Study”)

Protocol No. VB-201-079

EudraCT No. 2012-002763-10

BETWEEN

Vascular Biogenics Ltd.

6, Jonathan Netanyahu St.

Or-Yehuda

Israel

duly represented by its Chief Executive Officer

(hereinafter called “SPONSOR”)

AND

SCIderm GmbH

Drehbahn 1-3

D-20354 Hamburg

duly represented by its Managing Directors

(hereinafter called “SCIDERM” or “INSTITUTION”)

Preamble

SCIDERM is a contract research organization (CRO) principally engaged in the design, set-up and management of human clinical trials and other related services on behalf of a Sponsor of the clinical study.

The SPONSOR has selected the services of SCIDERM to perform clinical tests and to provide assistance in respect of a clinical trial and has delegated and authorized SCIDERM to act on its behalf relative to the implementation, set-up and management of the trial. The clinical trial hereof will be performed at different sites in different countries. It is estimated that the whole clinical trial will include approximately 180 patients and that there are two (2) different European Countries involved.

 

CTA (engl.) ß10.6 (SCIderm/VBL)    page 1 of 29

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].

 


THE PARTIES HAVE AGREED AS FOLLOWS:

Art. 1

Definitions

As used in this agreement, the following terms shall have the meanings set out below:

Adverse Event

This means any untoward medical occurrence in a patient or clinical trial subject administered with a medicinal product and which does not necessarily have a causal relationship with the Project.

Case Report Form (CRF)

A printed, optical or electronic document designed to record all of the protocol required information to be reported to the sponsor on each trial subject. An electronical version of this is called “ eCRF ”.

Coordinating Investigator

An investigator assigned the responsibility for the coordination of investigators at different centers participating in a multicentre trial in a defined country.

Effective Date

The Effective Date is the date on which this agreement comes into effect. The Effective Date is the date of the last signature hereunder.

Eligible Participant (or Study Participant)

Any potential participant who upon entrance into the treatment phases of the trial meets all of the inclusion criteria and none of the exclusion criteria set forth in the Protocol and has signed a valid IRB/EC (as hereinafter defined) approved Informed Consent Form (as hereinafter defined).

Informed Consent

A process by which a Study Participant voluntarily confirms his or her willingness to participate in a particular trial, after having been informed of all aspects of the trial that are relevant to the subject’s decision to participate. Informed consent is documented by means of a written, signed and dated. This document is called “ Informed Consent Form ” (ICF).

IRB/EC (Institutional Review Board/ Ethics Committee)

An independent body constituted of medical, scientific, and non-scientific members, whose responsibility is to ensure the protection of the rights, safety and well-being of human subjects involved in a trial by, among other things, reviewing, approving, and providing continuing review of trial protocol and amendments and of the methods and material to be used in obtaining and documenting informed consent of the trial subjects.

 

CTA (engl.) ß10.6 (SCIderm/VBL)    page 2 of 29

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].

 


Investigator

A person with medical expertise in clinical trials who is responsible for the conduct of the trial at a site. If a trial is conducted by a team of individuals at a trial site, the investigator is the responsible leader of the team and may be called the “ Principal Investigator ”.

Monitoring

The act of overseeing the progress of a clinical trial, and of ensuring that it is conducted, recorded, and reported in accordance with the protocol, Standard Operating Procedures (SOP’s), Good Clinical Practice (GCP), and the applicable regulatory requirement(s).

Protocol

Generally it is a document that describes the objective(s), design, methodology, statistical considerations, and organization of a trial. The protocol usually also gives the background and rationale for the trial, but these could be provided in other protocol referred documents. Throughout the ICH GCP Guideline the term protocol refers to protocol and protocol amendments.

Here it details of the Study entitled “ A Randomized, Double-Blind, 24-Week, Dose-Ranging Study to Evaluate the Efficacy and Safety of Oral VB-201 in Patients with Moderate to Severe Plaque Psoriasis ”, together with any amendments (as agreed by the Parties) made thereto is incorporated herein by reference as part of this Agreement.

The details of the trial are contained in Protocol dated 17.06.2012.

Regulations

Any relevant legislation, codes or guidelines directly or indirectly related to the conduct of the Trial including but not limited to (as applicable) the Clinical Trials Directive 2001/20/EC and its transforming legislation in the relevant countries of the European Union, the ICH GCP Guideline (“ICH-GCP”), and/or any other relevant applicable legislation, codes or guidelines issued by any Regulatory Authority. For the avoidance of doubt such legislation, codes or guidance shall include those related to the protection and privacy of the personal data of individuals.

Regulatory Authorities

Bodies having the power to regulate. In the ICH GCP guideline the expression Regulatory Authorities includes the authorities that review submitted clinical data and those that conduct inspections. Theses bodies are sometimes referred to as competent authorities.

Serious Adverse Event (SAE)

Any untoward medical occurrence that at any dose: results in death, is life-threatening, requires inpatient hospitalization or prolongation of existing hospitalization, results in persistent or significant disability / incapacity is a congenital anomaly / birth defect and/or constitutes an important medical event.

Important medical events that may not result in death, be life-threatening, or require hospitalization may be considered a serious adverse event when, based upon appropriate medical judgment, they may jeopardize the physical health of the participant and may require medical or surgical intervention to prevent one of the outcomes listed in this definition.

Site

The locations where trial-related activities are actually conducted by an Investigator.

Study Synopsis

The details of the trial are contained in Synopsis dated 17.06.2012.

 

CTA (engl.) ß10.6 (SCIderm/VBL)    page 3 of 29

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].

 


Trial

The clinical trial known as Protocol-No VB-201-079 will be conducted according to the Protocol.

Trial Drug

An Investigational Medical Product (“Investigational Product”) as defined in Art. 2 lit. d) Directive 2001/20/EC and therefore including all products used in a clinical trial, no matter if it is just a placebo or a reference product.

All technical words not defined above shall match ICH-GCP standards and therefore be defined according to the Note for Guidance on Good Clinical Practice (CPMP/ICH/135/95) from July 2002.

Art. 2

Scope of Agreement

 

2.1 The agreement consists of this Clinical Trial Agreement (“Agreement”) and the following Appendices:

 

  a. Appendix 1 : Time Schedule

 

  b. Appendix 2 : Financial Provisions

 

  c. Appendix 3 : Distribution of Investigational Product

 

  d. Appendix 4 : Cost Estimate of INSTITUTION from 31.07.2012 (incl. separate lab offer from 13.07.2012)

 

2.2 The Parties agree that the performances under this Agreement will be made according to all applicable laws, rules, and regulations. The terms of the Protocol and the ICH-GCP Guidelines which by definition are no laws, are expressly considered terms of this Agreement, and therefore will be obeyed by the Parties.

 

2.3 Each party in performing its obligations and duties hereunder shall be conclusively deemed to be an independent contractor and not under the control and supervision of the other party hereto and nothing in this Agreement shall be read to create any agency, partnership, joint venture, trust or other fiduciary relationship between the parties.

 

2.4 Should there be any inconsistency between the Protocol and the other terms of this Agreement, or any other document incorporated therein, the terms of this Agreement shall prevail.

 

2.5 In the event of any substantial amendments being made to the Protocol, the amendments shall be signed by the Principal Investigator of each site and shall be implemented by the research staff as required by the INSTITUTION after trial authorization for the amendments.

 

CTA (engl.) ß10.6 (SCIderm/VBL)    page 4 of 29

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].

 


Art. 3

Obligations

 

3.1 No Party hereunder shall commit any acts that would cause another Party to be in violation of applicable legislation, especially but not limited to applicable anti-bribery / anti-corruption laws. The INSTITUTION certifies that it has not and will not use in any capacity in connection with this Agreement the services of any individual, corporation, partnership, or association which has been debarred, excluded, or disqualified from participation in clinical investigations under any applicable laws, regulations, or guidance. In the event that the INSTITUTION receives notice of the debarment or threatened debarment, exclusion or disqualification or threatened disqualification, of any individual, corporation, partnership or association providing services to the INSTITUTION, which relate to the Investigator’s activities under this Agreement, the INSTITUTION shall notify the SPONSOR immediately.

 

3.2 The INSTITUTION represents and warrants that it has obtained, and will maintain throughout the term of this Agreement, all governmental or regulatory approvals, licenses, registrations and insurances that may be required to complete the Trial, and that it has full right, power and authority to perform its obligations hereunder and to grant the rights set forth herein.

 

3.3 The INSTITUTION shall not during the term of this Agreement conduct any other trial which would adversely affect the ability of the INSTITUTION to perform their obligations under this Agreement.

 

3.4 The estimated schedule is written down in Appendix 1 .

 

3.5 The specific trial performance by INSTITUTION is set out in the Cost Estimate under Appendix 4 .

 

  3.5.1 The INSTITUTION will organize the Trial on behalf of the SPONSOR in the following countries: Germany and Spain, or as other countries as shall mutually agreed between the Parties. There shall be approx. 180 patients enrolled for the entire Study, meaning planned twelve to fourteen (12-14) sites in Germany, four to six (4-6) sites in Spain, having approximately ten (10) patients each. According to the internal competitive aspect of the Trial recruitment in a country, the INSTITUTION will notify any Investigator in writing when the total enrolment number is reached and therefore the enrolment of new subjects shall be stopped. Any change to the numbers of subjects enrolled or the period of enrolment requires the prior written approval by SPONSOR.

 

CTA (engl.) ß10.6 (SCIderm/VBL)    page 5 of 29

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].

 


  3.5.2 Subcontracting :

 

  3.5.2.1 The INSTITUTION will sub-contract on behalf of the SPONSOR:

 

  i. other Investigators and/or Sites in Germany; these sub-contracts will be made in German and be bound by German Law as it is required by national law.

The Corresponding Investigator under German Law (Leiter Klinische Prüfung, “LKP” ) will be Professor Ulrich Mrowietz from the University of Kiel, Germany.

The SPONSOR will execute an agreement directly with Professor Mrowietz solely in his capacity as Coordinating Investigator. INSTITUTION has no right under this Agreement, to set-up a special service agreement with LKP covering all LKP-duties and costs, independent from Site contract.

The Corresponding Investigator under Spanish Law will be Lluis Puig , MD from Hospital de la Santa Creu i Sant Pau, Barcelona, Spain.

The SPONSOR will execute an agreement directly with Dr. Puig solely in his capacity as Coordinating Investigator. INSTITUTION has no right under this Agreement, to set-up a special service agreement with Dr. Puig covering all Corresponding Investigator-duties and costs, independent from Site contract.

 

  ii. a central lab in; these sub-contracts will be made in English and be bound by German Law as it is required by national law.

 

  iii. an entity managing pharmacovigilance; these sub-contracts will be made in English and be bound by German Law as it is required by national law.

 

  iv. if necessary, other CROs in Spain (namely SCIderm HISPANIA S.L., C/Bailén 20, 3° 3 a ; 08010 Barcelona,which will contract local iInvestigators and/or Sites; these sub-contracts will be made in English , and the CROs will sub-contract Sites and Investigators in English, if possible, otherwise in local language.

 

  v. a provider for hosting of eCRF; these sub-contracts will be made in English , if possible.

 

  vi. In the event that an agreement shall not be executed in English, the INSTITUTION shall provide the SPONSOR with a translated copy on expense of SPONSOR of the draft agreement for the SPONSOR’s review for negotiation purposes, and a translated copy of the executed agreement.

 

  3.5.2.2 The INSTITUTION is responsible for selecting and contracting vendors, Sites/Investigator, central lab and data host, provided that the INSTITUTION shall submit for the SPONSOR’s prior review and approval any such sub-contractors and following the SPONSOR’s approval, shall provide to the SPONSOR the draft agreement for review and comments.

 

CTA (engl.) ß10.6 (SCIderm/VBL)    page 6 of 29

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  3.5.2.3 Subject to section 3.5.2.2 above, with signatures under this Agreement SPONSOR grants power of attorney to INSTITUITION to select and sub-contract CROs, sites and investigators subject to the SPONSOR’s approval. With termination of this Agreement according to Art. 6, the power of attorney ceases.

 

  3.5.2.4 Notwithstanding, the INSTITUTION has the right to sub-contract in its own name entities other then the above mentioned sub-contractors, to fulfill own duties hereunder, as long as these comply with all rules and legal obligations and subject to the SPONSOR’s approval.

 

  3.5.2.5 The INSTITUTION will ensure that sub-contractors are made aware of and acknowledge the obligations applicable to such sub-contractors according to this Agreement including without limitation confidentiality, Intellectual property rights and publications and the INSTITUTION shall remain liable for such sub-contractors compliance with such obligations.

 

  3.5.3 Conduct of Sites and Investigators

 

  3.5.3.1 The SPONSOR ensures that the Investigational Product will be supplied to the Sites/Investigators free of charge.

 

  3.5.3.2 The INSTITUTION is responsible for the clearing process to start the supply. The INSTITUTION will clear a shipment only after:

 

  i. approval of local Ethic Committees and Competent Authorities has been reached,

 

  ii. the Investigator has given a signed copy of the protocol to INSTITUTION,

 

  iii. the Investigator has given a recent, signed Curriculum Vitae (CV) to INSTITUTION

 

  iv. the Site/Investigator has signed a Clinical Study Contract (CSA) with INSTITUTION

 

  v. the Site was successfully initiated (Initiation Visit)

 

  3.5.3.3 The INSTITUTION ensures that the Investigational Product is properly recorded, handled, stored and dispensed to the trial subjects only and in accordance with the Protocol and applicable laws and regulations. The Investigational Product, medical equipment or supplies provided by or in the name of the SPONSOR shall not be used for any other purpose than the trial and shall remain the SPONSOR’s property.

 

CTA (engl.) ß10.6 (SCIderm/VBL)    page 7 of 29

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].

 


  3.5.3.4 The INSTITUTION ensures that the Investigators at each Site hold the necessary registration and have the necessary expertise, time and resources to perform the clinical trial (especially meaning the use of eCRF) and will ensure that the Investigators are made aware of and acknowledges the obligations applicable to the Investigator set out elsewhere in this Agreement.

 

  3.5.3.5 The INSTITUTION respects the applicable legal obligations concerning the anonymity of the subjects, and warrants that the Sites and Investigators will do the same.

 

3.6 The INSTITUTION will keep SPONSOR informed upon request by SPONSOR. The INSTITUTION will keep SPONSOR regularly informed every one to two (1-2) weeks in writing and via teleconference about the status of the Trial, especially with regard to the recruitment of subjects. In order to do that the INSTITUTION will obligate the Sites and Investigators to regularly inform the INSTITUTION about the status of the Trial, especially with regard to the recruitment of subjects.

 

3.7 In the event an Investigator becomes either unwilling or unable to perform the duties required, INSTITITION and Investigator will cooperate, in good faith and expeditiously, to find a replacement Investigator acceptable to the SPONSOR; however, Investigator shall continue to be bound by all obligations and conditions stipulated in section 6.4.7 of this Agreement.

 

3.8 Record keeping

 

  3.8.1 After the last close-out visit in investigational Sites located in each country, the local TMF of the study is sent to SPONSOR where the TMF is closed and archived. INSTITUTION shall archive all records required to be maintained in accordance with the Study Protocol and under applicable laws, regulations, and guidance.

 

3.9 Audit and inspection

 

  3.9.1 The INSTITUTION will permit Trial-related audits by auditors mandated by SPONSOR, and inspections by domestic or foreign regulatory authorities, after reasonable notice. The main purposes of an audit or inspection are to confirm that the rights and well-being of the enrolled subjects have been protected, and that all data relevant for the evaluation of the Investigational Product have been processed and reported in compliance with the present Agreement, the Trial Protocol, any amendments and any Trial-related instructions given by the SPONSOR, as well as all ICH GCP, EU, and applicable regulatory requirements. The INSTITUTION will provide direct access to all Trial documents and makes sure that this obligation is respected by Sites and Investigators.

 

CTA (engl.) ß10.6 (SCIderm/VBL)    page 8 of 29

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  3.9.2 The INSTITUTION shall notify SPONSOR immediately, but in no case more than twenty-four (24) hours after, if the EMA or any other regulatory authority inspects, requests an inspection, makes written, or oral inquiries regarding any aspect of Institute’s activities pursuant to this Agreement, or requests the suspension, termination or material alteration of the Study Protocol. The INSTITUTION shall notify SPONSOR immediately, but in no case more than twenty-four (24) hours thereafter, upon learning of any violation or deficiency noted by EMA or any other regulatory agency.

 

  3.9.3 The INSTITUTION shall immediately take appropriate action to address any violations or deficiencies identified by the EMA or other regulatory authority during such inspection and shall keep SPONSOR informed of its efforts to address any violations or deficiencies.

 

  3.9.4 Where any regulatory authority has objective grounds for considering that the conditions in the request for authorization of the Study are no longer met or has information raising doubts about the safety or scientific validity of the Study Protocol (and can, accordingly, suspend or prohibit the Study), the INSTITUTION shall, if permitted by the regulatory authority, deliver its, or his or her, opinion in accordance with Article 12 (1) of Directive 2001/20/EC.

 

  3.9.5 The INSTITUTION shall provide SPONSOR with a copy of all correspondence between them and the EMA or any regulatory authority pertaining to activities undertaken pursuant to this Agreement, purged only of confidential information that is unrelated to the activities under this Agreement.

 

  3.10 Reporting

 

  3.10.1 The INSTITUTION shall fully comply with adverse event provisions of the Protocol and make sure all participating Sites and Investigators do the same. In the event of any omission of or in such provisions or in the event of the conflict of such provisions with the local Regulations, then the local regulations shall apply in relation thereto.

 

  3.10.2 The INSTITUTION ensures that the duties of reporting according to the protocol will be obeyed by the Investigators and Sites.

 

  3.10.3 The INSTITUTION shall also inform any other investigators involved in the Study under INSTITUTION´s attendance of all SUSARs.

 

  3.10.4 In the case that the INSTITUTION has been wrongly informed of a AE/SAE/SUSAR by the Investigators and/or Sites instead of the responsible person described in the Protocol, the INSTITUTION shall report the SAE to the entity responsible for reporting within a maximum of twenty-four (24) hours of first knowledge by itself, and shall report all Adverse Events and/or laboratory abnormalities identified as critical to safety evaluations to SPONSOR according to the reporting requirements. The INSTITUTION shall keep detailed records of all Adverse Events which are reported to it. These records shall be submitted by the INSTITUTION to SPONSOR or the relevant competent authority(ies), upon request.

 

CTA (engl.) ß10.6 (SCIderm/VBL)    page 9 of 29

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].

 


  3.10.5 Following the ICH-GCP 4.11.1 (Safety Reporting), 5.16.2 (Safety Information) and 5.17 (ADR Reporting) and the relevant provisions of Directive 2001/20/EC, SPONSOR will inform INSTITUTION of any Suspected Unexpected Serious Adverse Reaction (SUSAR, as defined in Directive 2001/20/EC) occurring in any other trial involving VB-201 and INSTITUTION will forward it according to local laws and regulations to Competent Authorities, Sites, and Investigators.

 

3.11 SPONSOR Responsibilities

 

  3.11.1 The INSTITUTION´s employees data and the Investigator’s personal data are processed by SPONSOR in accordance with the applicable data protection laws for the purpose of complying with clinical practice regulations and for answering requests from the authorities. These data can be transmitted and processed under the responsibility of SPONSOR for the same purpose.

 

  3.11.2 The SPONSOR is responsible for holding in each of the performing countries separated insurance coverage, as required by applicable legislation. INSTITUTION will help the SPONSOR select and arrange insurance coverage for damages to Clinical Trial Subjects resulting from the Clinical Trial.

 

  3.11.3 SCIDERM warrants and declares that it has sufficient professional liability coverage.

 

  3.11.4 Notwithstanding the SPONSOR’s obligation to maintain Clinical Trials Insurance as provided under the respectively applicable Law, the INSTITUTION is responsible that all Investigators and Sites maintain adequate medical practice and/or other insurance to cover its obligations hereunder.

 

  3.11.5 SPONSOR is responsible for labeling and distribution of Investigational Product (incl. placebo).

 

  3.11.6 SPONSOR is responsible to contract with the Coordinating Investigator (LKP) of the Study (see Art. 3.5.2.1)

 

CTA (engl.) ß10.6 (SCIderm/VBL)    page 10 of 29

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].

 


Art. 4

Liability and Indemnification

 

4.1 INSTITUTION Liability & Indemnity

 

  4.1.1 The INSTITUTE shall compensate SPONSOR for any and all losses and claims caused by breach of this Agreement by the INSTITUTE or the Sites/Investigators.

 

  4.1.2 The liability of the INSTITUTION, its officers, employees and designees, Sites, and Investigators towards SPONSOR (i) with respect to the grounds of a claim shall be limited to damages caused by gross negligence or deliberate acts, and (ii) with respect to the scope of damages in case of gross negligence shall be limited to the value of the agreement. The aforementioned limitations of liability shall not apply in cases of compulsory liability (strict product liability), and damages occurring through the infliction of bodily harm (injuries or death). These limitations shall also not apply in case of infringement of major duties (e.g. documentation and reporting duties).

 

  4.1.3 The INSTITUTION agrees to indemnify and hold the SPONSOR and its officers, directors, employees and agents harmless from liability for any claim, demand or lawsuit arising out of any willful or negligent act or failure to act of Institution or any Investigator and/or any failure to comply with, (i) applicable law, rules and regulations, (ii) the terms of this Agreement, (iii) the Protocol or (iv) written instructions provided by SPONSOR including without limitation in instructions of the administration of the Investigational Product or (v) the use of reasonable medical judgment in the administration of the Investigational Product or (vi) the generally accepted standards of the medical community.

 

  4.1.4 The INSTITUTION shall have no obligation of indemnification hereunder for any loss or damages arising out of the gross negligence or willful misconduct or failure to act of SPONSOR in connection with the conduct of the Study. This does not count for bodily damages.

 

  4.1.5 The indemnification by the INSTITUTION is expressly conditioned upon adherence by the SPONSOR and its officers, directors, employees and agents in all respects to this Agreement and the respective Protocol as well as compliance with all applicable regulations and requirements of the EMA, local regulations which may apply and instructions provided by SPONSOR.

 

4.2 The Parties acknowledge that the liability for the Investigational Product lies with the SPONSOR and/or the Marketing Authorization Holder (MAH).

 

4.3 INSTITUTION holds adequate comprehensive general liability and property insurance for CRO activities and medical activities.

 

4.4 If any third party should make a claim against the SPONSOR, the INSTITUTION, a Site or an Investigator, arising—whether directly or indirectly—as a result of this Clinical Trial, then the Parties agree to notify each other immediately after becoming aware of such a claim.

 

4.5 The Parties shall provide each other with such assistance as it may reasonably require conducting and handling such a claim.

 

CTA (engl.) ß10.6 (SCIderm/VBL)    page 11 of 29

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].

 


Art. 5

Financial Provisions

 

5.1 In consideration of the services rendered hereunder and named in Appendix 4 , SPONSOR shall pay a budget described in Appendix 2 . The INSTITUTION will be responsible to pay the Sites and Investigators.

 

5.2 All payments will be made by SPONSOR according to Appendix 2 . Invoices shall include the Reverse Charge Method, according to tax law, if possible, otherwise plus (VAT). The Sponsor shall make payments only upon receipt of a valid Tax Residency Certificate from the INSTITUTION’s Tax Authority.

 

5.3     

[***]

 

5.4 In the event that agreed amendments to the Protocol require changes to the Clinical Trial financing arrangements, an amended financial schedule will be signed by the Parties.

Art. 6

Term and Termination

 

6.1 This Agreement commences on the Effective Date and shall continue in force until completion of the clinical trial (close-out of the sites and completion of the obligations of the Parties under this Agreement), until termination of the Study or until early termination in accordance with this article.

 

6.2 The Parties acknowledge the sole right of the SPONSOR to terminate the Study without the requirements of any special reason.

 

6.3 Either Party (the “ Terminating Party ”) may terminate this Agreement with immediate effect if justified by a legitimate reason. Such a legitimate reason is given, but not limited to, if the other Party (the “ Defaulting Party ”):

 

CTA (engl.) ß10.6 (SCIderm/VBL)    page 12 of 29

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].

 


  6.3.1 is in breach of any of the Defaulting Party’s obligations hereunder (including a failure without just cause to meet a Timeline) and fails to remedy such breach where it is capable of remedy within thirty (30) days of a written notice from the Terminating Party specifying the breach and requiring its remedy.

 

  6.3.2 becomes or is declared insolvent or a petition in bankruptcy has been filed against it.

Or, in the event that;

 

  6.3.3 the authorization and approval to conduct the trial is withdrawn by the relevant health authorities or EC.

 

6.4 Effect of Termination

 

  6.4.1 Immediately upon receipt of a notice of termination according to Art. 6.2 or 6.3, the INSTITUTION shall stop all associated Sites and Investigators from entering potential participants into the Study and shall cease conducting procedures, to the extent legally, medically, and ethically permissible, on participants already entered into the Study.

 

  6.4.2 In cases of termination by the SPONSOR following Art. 6.2 or in cases of early termination by SPONSOR following Art. 6.3 and subject to an obligation on the INSTITUTION to mitigate any loss, SPONSOR shall pay all costs incurred and falling due for payment up to the date of termination.

 

  6.4.3 If the early termination according to Art. 6.3. is justly declared by SPONSOR because of a willful breach of contract by INSTITUTION, the INSTITUTION only gets payment for the Services rendered until the termination date, which were conducted according to this Agreement, and which are from interest to the SPONSOR.

 

  6.4.4 If the Study is discontinued for any reason it is agreed that the amounts paid or payable under this Appendix 2 shall be prorated based on actual work duly performed pursuant to the Protocol in accordance with the explanations made hereunder. Any funds not due under this calculation, but already paid, shall be returned to SPONSOR, within thirty (30) days of the date of termination of the Study.

 

  6.4.5 In cases of termination according to Art. 6.1, 6.2, or 6.3, the INSTITUTION shall immediately deliver to SPONSOR on SPONSORS expense all Confidential Information, all records for the Study produced and any other unused materials and Investigational Product provided to the INSTITUTION, Site, and/or the Investigator pursuant to this Agreement and ensures that the Sites and Investigator comply with this clause.

 

CTA (engl.) ß10.6 (SCIderm/VBL)    page 13 of 29

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].

 


  6.4.6 Within ninety (90) days of the end of the Study the INSTITUTION shall notify the relevant competent authority(ies) and IRB/EC that the Study has ended. If the clinical trial is terminated early, this period shall be reduced to 15 days and the INSTITUTION shall provide clear explanations for the early termination to the relevant competent authority(ies) and IRB/EC.

 

  6.4.7 Sections 4, 6, 7, 8, 9, 11.1, 11.3, and 11.6 shall survive the termination or expiration of this Agreement.

Art. 7

Confidentiality

 

7.1 The INSTITUTION shall keep confidential any and all information and data concerning SPONSOR`s business or its activities (including reports and information as well as all clinical data about the Study or its progress produced by the INSTITUTION within the framework of this Agreement), or information obtained that may come to the knowledge of the INSTITUTION, its personnel or appointed representatives prior, during or in connection with the execution of this Agreement (“Sponsor’s Confidential Information”). The INSTITUTION shall use SPONSOR’s Confidential Information solely for the purpose of this Agreement. For the avoidance of any doubt, the Protocol, the Investigational Product, the Study results, and the Inventions (as defined below) shall be considered the Sponsor’s Confidential Information.

 

7.2 SPONSOR shall keep confidential any and all information and data concerning the INSTITUTION`s business or its activities (including information produced by SPONSOR within the framework of this Agreement) or information obtained that may come to the knowledge of SPONSOR, its personnel or appointed representatives prior, during or in connection with the execution of this Agreement, and is not considered Sponsor’s Confidential Information.

 

7.3 Neither Party shall divulge or reproduce such data and information obtained under Art. 7.1 and 7.2 or make the same available to Third Parties in any other way without the other Parties prior written consent.

 

7.4 The obligations referred to in Art. 7.1., 7.2., and 7.3 shall not apply insofar as the data and information:

 

  i. Were demonstrably already in the Party`s possession at the time that the other Party provided the data and information to the first one.

 

  ii. Were known in the public domain or subsequently enter into the public domain through no fault of the other Party or any of its sub-contractors, Sites or Investigators, which obtains the data and the information.

 

  iii. Were disclosed to the obtaining Party by a third Party, who was entitled to provide the data and information, without an obligation to secrecy.

 

  iv. Were developed by or for the Party independent of disclosure hereunder as evidenced by that Party`s written records.

 

CTA (engl.) ß10.6 (SCIderm/VBL)    page 14 of 29

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].

 


  v. Were required by law pursuant to an appropriate legal order by a court or government agency having the authority to compel such disclosure. Provided , however , that recipient shall provide discloser with prompt prior written notice thereof and any commercially reasonable assistance to enable the discloser to seek a protective order or otherwise prevent or contest such disclosure.

 

7.5 The Non–Disclosure Agreement executed between the parties on February 14 th , 2012 is void, and replaced by this Section 7.

Art. 8

(Intellectual) Property Rights

 

8.1 Investigational Product

The Investigational Product is owned by the SPONSOR.

 

8.2 Property Rights & Inventions

 

  8.2.1 Inventions or discoveries whether or not patentable, processes, trade secrets, data, improvements, and/or patents relating to the Investigational Product or otherwise arising from the Study, conceived, generated, developed or first reduced to practice, as the case may be, during the term of this Agreement (hereinafter called “ Inventions ”), either by the INSTITUTION, Sites, Investigator or any other Sub-Contractor shall be the property of the SPONSOR.

 

  8.2.2 All materials submitted to INSTITUTION from SPONSOR (formulas, etc.) are owned by SPONSOR.

 

8.3 Claims to Employee’s Inventions

 

  8.3.1 The SPONSOR acknowledges that INSTITUTION and any sub-contractor in Germany may be bound by the German Employee Inventions Act (Arbeitnehmererfindungsgesetz – ArbNErfG) for any inventions made by an employee.

 

  8.3.2 In case of an employee’s invention under the ArbNErfG, INSTITUTION assigns all of its rights under §§ 5 ff. ArbNErfG to the SPONSOR. INSTITUTION is responsible that the notification of such an employee´s invention will be made to SPONSOR properly. If the SPONSOR claims the Invention according to § 6 ArbNErfG, it shall indemnify the employee-inventor according to § 9 ArbNErfG.

 

  8.3.3 INSTITUTION will make sure, that such an article as Art. 8.3.2 will be included in every Clinical Study Agreement (CSA) with a Site in Germany in order to protect the right of the SPONSOR.

 

CTA (engl.) ß10.6 (SCIderm/VBL)    page 15 of 29

Portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request and are indicated by [***].

 


8.4 Intellectual Property Rights

 

  8.4.1 All intellectual property rights and know how owned by or licensed to any of the Parties prior to the date of this Agreement are and shall remain the property of that Party.

 

  8.4.2 The SPONSOR shall own the intellectual property rights and know how arising directly or indirectly from the clinical trial relating to the Investigational Product (including but not limited to its formulation and use alone or in combination with other drugs) or the Protocol to which INSTITUTION, Sites and/or Investigators are able to dispose of according to the applicable laws and regulations of each country, but excluding any clinical procedure and improvements thereto that are clinical procedures established at a Site which are not related to the Investigational Product.

 

  8.4.3 The INSTITUTION will promptly inform SPONSOR of any Invention or discovery arising directly from the Clinical Trial, and assign its rights in relation to all intellectual property rights and know how, and provide reasonable assistance to the SPONSOR in filing or prosecuting intellectual property rights, at the expense of the SPONSOR. The INSTITUTION shall disclose all own Study relating Inventions to the SPONSOR.

Art. 9

Publication

 

  (a) The parties understand and agree that participation in the Study will involve a commitment to publish the data from the Study in a cooperative publication with other Investigators participating in the Study prior to publication or oral presentations on an individual basis. Each Site conducting the Study may publish the results of the Study at the Site (without raw data, detailed patient CRFs, or patient identification) in any scientific journals, manuscripts or at scientific meetings after such cooperative publication, or latest twenty-four (24) months after SPONSOR`s final evaluation of all the Study data from all Sites, whichever occurs first, subject to compliance with the provisions of this Article below. It is further agreed by the Parties that SPONSOR is entitled to request the Site of a delay of such publication due to SPONSOR`s business or operational reasons.

 

  (b) The release or publication by the Site of any publication or presentation as aforesaid, shall be subject to the prior written consent of Sponsor. INSTITUTION and SPONSOR expressly acknowledge the fundamental interest of the Sites and the Investigators in a potential scientific publication and warrant not to restrict any such publication inequitably, but only on good grounds, including without limitation to protect its Confidential Information, to enable it to seek patent protection or to protect patient’s rights.

 

  (c) Each publication or presentation will adequately acknowledge and appropriately reflect the contribution of the Investigators, Researchers and/or Employees of each SPONSOR and INSTITUTION and/or the source of the information included therein, in accordance with customary scientific practice.

 

CTA (engl.) ß10.6 (SCIderm/VBL)    page 16 of 29

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  (d) Consent granted by SPONSOR in respect of any particular publication or presentation shall not be deemed to be consent to any other publication or presentation.

 

  (e) At least ninety (90) days prior to submitting a manuscript to a publisher or other outside persons (i.e., reviewer(s)) or prior to any public presentation, a copy of the abstract, manuscript, or presentation will be provided to SPONSOR by the Site for review and comment. SPONSOR shall have said ninety (90) day period to respond to the site with comments. If requested to do so by SPONSO, the Site shall remove from the manuscript any Confidential Information prior to submitting the manuscript for publication.

§ 10

Data safety

 

10.1 With signing this Agreement the Parties agree that all the relevant personal and non-personal data will be saved on the internal database, and that this data will be used to perform the services rendered hereunder. This data can be submitted to third parties if necessary. This data shall be used only for the following purposes:

 

    administration of study

 

    submission to competent authorities, local authorities and/or ethics committees

 

    internal data management

 

10.2 If personnel are required to submit personal data of employees, the submitting Party warrants that the employees who submit the data and/or work with the date know their duty to keep this data confidential. This is achieved by letting them sign a Confidential Agreement or by such a clause in the employment contracts.

Art. 11

Miscellaneous

 

11.1 The present Agreement is governed by laws of the plaintiff, like all other disputes that may arise out of the business connection between the Parties.

 

11.2 If any of the provisions of this Agreement are held to be rendered void or unenforceable, the Parties agree that the same shall not result in the nullity or unenforceability of the remaining provisions of this Agreement.

 

11.3 All disputes, controversies or claims arising out of or in connection with this Agreement and which cannot be settled amicably between the parties shall be settled according to the with the International Chamber of Commerce (“ICC”) Arbitration Rules as at present in force and shall be held at London England by an arbitrator. The appointing authority shall be the ICC acting in accordance with the Rules adopted by the ICC for this purpose. The award of such arbitration shall be final and binding on the parties hereto. The language of such an arbitration is English.

 

11.4 All Changes to the present Agreement have to be in writing. This holds true also for this clause.

 

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11.5 This Agreement is drawn up in the English language, which is exclusively authentic. Said language shall be the respective binding and controlling language for all matters pertaining to its meaning or interpretation.

 

11.6 The SPONSOR shall be a third-party beneficiary of this Agreement and may directly enforce the provisions of this Agreement relating to SPONSORS’s rights and interests, including SPONSOR’s rights and interests in the Inventions and its confidential and proprietary information.

IN WITNESS WHEREOF , the Parties have caused this Agreement to be executed by their duly authorized representatives.

 

Signature SPONSOR    
9-9-12     /s/ Dror Harats
Date     CEO

 

Signature INSTITUTION    
31-08-2012     /s/ Ina Zschocke
Date     Managing Director

 

CTA (engl.) ß10.6 (SCIderm/VBL)    page 18 of 29

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[***]

 

CTA (engl.) ß10.6 (SCIderm/VBL)    page 19 of 29

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APPENDIX 2

FINANCIAL PROVISIONS

The payments listed below represent all Study costs for services named in Appendix 4 .

 

1. Compensation of INSTITUTION

 

1.1 Compensation for the Professional Service Fees (with Study Performance, Additional Examinations, and Additional Expenses) of [***] (including PTC) equalling [***] without PTC will be paid by SPONSOR to INSTITUTION based on an Activity Based Costing (ABC) according to the following schedule upon receipt of an invoice by wire transfer within 30 days to the bank account stated under Art. 5.3:

[see table on page 21, 22, 23, and 24]

SPONSOR will pay an [***] as a so called “handling fee” to the amount of each invoice, covering all additionals not included under 1.2 and 1.3, such as printing, scanning, copying, and transport of study documents, phone calls with CA, EC, and Sites/Investigators, and accounting fees.

The INSTITUTION will inform SPONSOR up front, if the compensation described above will be exceeded. Then the Parties will negotiate a solution. But, without such notice, no extra costs to the budget will be paid.

 

CTA (engl.) ß10.6 (SCIderm/VBL)    page 20 of 29

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[***]

 

CTA (engl.) ß10.6 (SCIderm/VBL)    page 21 of 29

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[***]

 

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[***]

 

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[***]

Commentary :

 

(1) All remuneration is subject to actual services performed during each quarter ( pro rata temporis payment) until reaching maximum amount of each quarter stated hereunder.

 

(2) This Deliverable means: Database Transfer, as receipt of Data (but latest 2 weeks after Database Lock)

 

(3) This Deliverable means: Receipt of Final Study Report (but latest 6 weeks after receipt of Draft Study Report)

 

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1.2 All additionals will be paid according to the following rates (see below):

 

  1.2.1 Additional expenses crucial to the services rendered hereunder will be paid on a time and material basis, e.g. but not limited to

 

    Fees at national Competent Authorities,

 

    Fees at national Ethic Committees,

 

    Fees at federal Local Authorities (Germany),

 

    Fees at other Authorities,

 

    Fees for Licenses (e.g. DLQI etc.)

 

  1.2.2 Any additional services asked by SPONSOR via email, mail, or fax in addition to Art. 3, Appendix 2 and 4 will be paid according to the hourly rates listed for each expert under Appendix 4.

 

  1.2.3 For necessary travel costs for CRAs, Monitors etc.:

[***]

 

1.3 All additional examinations (for laboratory) will be paid on a time and material basis according to separate offer from 31.07.2012.

 

1.4 Invoices shall be made at the end of a quarter and include the Reverse Charge Method, according to tax law, if possible, otherwise plus (VAT).

All sums are in EURO . If an exchange rate needs to be set up, the exchange rate shall equal the average to the exchange rates, listed in the Wall Street Journal, for five (5) preceding business days including the date of payment.

 

2. Compensation of Site/Investigator

 

2.1 The compensations of sites/investigators are PTC and will be invoiced and paid on a time and material basis according to the following provisions by SPONSOR.

 

2.2 The INSTITUTION compensates the Sites/Investigators in the countries in which it conducts the study by wire transfer within 30 days after receipt of invoice by them. SPONSOR compensates the INSTITUTION by wire transfer within 14 days after receipt of the invoice by the INSTITUTION.

 

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2.3 The amount of remuneration of a Site/Investigator for execution of this Agreement shall be based on the number of patients properly enrolled into the Study (meaning: being randomized) in relation to whom the full program of the Study, defined in the Protocol, was carried out. The payment is due, at the end of the last visit of a patient and depending on the proper documentation (eCRF), which has been controlled by the Monitor.

A Screen Failure Subject Participant is a potential participant who has signed an ICF but has failed to satisfy the inclusion and/or exclusion criteria or was not enrolled in the Study for other reasons. An Investigator will receive payment for a maximum of two (2) screen failures during the study at a rate of [***] per screen failure (plus the patient refund).

If a subject does not complete the Clinical Trial then partial payment will be made based on the number of visits completed according to the following schedule (prices without VAT):

 

  2.3.1 [***]

Invoices shall include the Reverse Charge Method, according to tax law, if possible, otherwise plus (VAT). All sums are in EUR.

Unless otherwise agreed in writing by SPONSOR, the INSTITUTION shall make no payment for participants whom the Investigator entered into the Study in violation of the Protocol (i.e. the participant is not an Eligible Participant).

 

2.4 [***] to each Investigator compensation under 2.3 will be paid, if a site insists on such a fee and after SPONSOR has given written approval of such a payment. The SPONSOR acknowledges that such fees are mostly obligatory for governmental sites, such as universities or federal hospitals.

 

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[***]

 

2.6 The Sites will get an advertising-fee up to [***] due at conclusion of contract for becoming acquainted with protocol, attending necessary training, performing pre-study and initiation visits.

 

2.7. All non mentioned costs are already included within the rates under this 2. Section.

 

3. Patient Compensation / Patient Travel Expenses

 

3.1 The compensations of patients are PTC and will be invoiced and paid on a time and material basis according to the following provisions by SPONSOR.

 

3.2 The INSTITUTION compensates the national Sites/Investigators which compensate the patients first. The Sites/Investigators shall pay the patients at the end of the Study or by the time of drop-out. The INSTITUTION compensates the national Sites/Investigators within 30 days after receipt of invoice. SPONSOR compensates the INSTITUTION within 14 days after receipt of the invoice.

 

3.3 The patient receives a refund of max. [***] per capita. The refund includes [***]. If a subject does not complete the trial then the patient’s compensation will be all inclusive [***] for every performed visit. The payment of refund has to be documented and signed by the Site/Investigator.

 

4. Return of Funds Upon Early Termination

If the Study is discontinued for any reason it is agreed that the amounts paid or payable under this Appendix 2 shall be prorated based on actual work duly performed pursuant to the Protocol in accordance with the explanations made hereunder. Any funds not due under this calculation, but already paid, shall be returned to SPONSOR, within thirty (30) days of the date of termination of the Study (see Art. 6.4.4).

 

CTA (engl.) ß10.6 (SCIderm/VBL)    page 27 of 29

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APPENDIX 3

Distribution of Investigational Product

SPONSOR is responsible for producing, labeling, and distributing Investigational Product (incl. placebo).

It is planned, that SPONSOR will contract a third party which will take over the responsibilities of labeling and distributing the Investigational Product (incl. placebo) in Germany and Spain.

INSTITUTION will take no part in the agreement between SPONSOR and Distributor.

Selected distributor will be the GMP-Unite AMATSI , with business offices at 17, parc des Vautes, 34980 Saint Gély de Fesc, France.

SPONSOR, INSTITUTION, and Distributor will work together, to set-up a distribution plan, which will be part of the Protocol VB-201-079 and submitted to all participating CROs, Sites, and Investigators. The responsibility of setting up this distribution plan lies within the SPONSOR.

 

CTA (engl.) ß10.6 (SCIderm/VBL)    page 28 of 29

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APPENDIX 4

Cost Estimate from 31.07.2012 (incl. separate lab offer from 13.07.2012)

(The cost estimate follows attachment with its original numeration – separate lab offer follows behind CE with its original numeration)

 

CTA (engl.) ß10.6 (SCIderm/VBL)    page 29 of 29

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CONFIDENTIAL

 

Exhibit 10.12

SERVICE AGREEMENT

FOR A CLINICAL STUDY CONDUCT

concluded on 8 November 2012 (“Effective Date”) in Warsaw by and between:

KCR S.A. (Polish joint-stock company) with its registered office in Warsaw at 6 Postępu Str., 02-676 Warsaw, Poland, entered in the register of entrepreneurs kept by the District Court for the Capital City of Warsaw in Warsaw, 13th Commercial Division of the National Court Register, under number 0000289542, tax identification number NIP: 521-31-69-665, share capital (covered in total): PLN 700,000.00, hereinafter referred to as “ CRO ”, represented by Mr. Adam Kruszewski – President of the Management Board,

and

Vascular Biogenics Ltd., its principal place of business at 6 Jonathan Netanyahu Street, Or Yehuda, Israel 60376 hereinafter referred to as “ Sponsor ”, represented by Prof. Dror Harats - Chief Executive Officer,

hereinafter jointly referred to as “the Parties” and individually as a “Party”.

Whereas:

 

  a) Sponsor intends to conduct a clinical study of the investigational medicinal product VB-201 [“Investigational Medicinal Product”] entitled “A Randomized, Double-Blind, 12-Week, Placebo-Controlled Study Followed by a 12-Week Extension Phase Without Placebo to Evaluate the Efficacy and Safety of Oral VB-201 in Subjects with Mild to Moderate Ulcerative Colitis” [“Study”] according to the protocol number VB-201-064 [“Protocol”] on the territory of Poland, Bulgaria and Hungary,

 

  b) Legal Representative of the Sponsor is Gregory Fryer Associates Ltd with its seat at 30 St Thomas Place, Cambridgeshire Business Park, Ely, Cambs, CB7 4EX, United Kingdom,

 

  c) Sponsor wishes to engage CRO to provide services connected with the conduct of the Study as defined herein,

 

  d) fulfillment of CRO’s obligations resulting from this agreement is included in the scope of CRO’s business activity and CRO has an experience in providing services of similar nature as described herein, including the fact that CRO employs qualified employees in order to perform such obligations.

 

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CONFIDENTIAL

 

Now then , the Parties agree to conclude the agreement as follows [“Agreement”]:

§ 1. Subject of the Agreement

 

1. Sponsor hereby entrusts CRO with performance of activities connected with the conduct of the Study as defined in Attachment No. 1 hereto (Scope of Services), hereinafter referred to as “Services”, and CRO hereby accepts such entrusted responsibilities.

 

2. Services shall be performed within the timelines indicated in Attachment No. 2. Parties declare that these timelines shall be deemed as a forecast only and may be changed due to reasons which are not attributable to the CRO. In case of necessity to provide Services within different timelines than those anticipated in Attachment No. 2 for reasons not attributable to CRO, Sponsor waives its right to bring any claims against CRO for an untimely provision of Services.

§ 2. Manner of Providing Services

 

1. CRO shall perform its responsibilities, in the scope indicated in the Agreement, with due diligence and in compliance with laws and regulations in force applicable in the countries where the Services will be performed, guidelines of Good Manufacturing Practice, Good Laboratory Practice, Good Clinical Practice, ICH GCP in a version applicable during the term of the Study conduct, in compliance with the Agreement and a valid version of the Protocol, constituting Attachment No. 3 to the Agreement, CRO’s SOPs listed in Attachment No. 4 and any written instructions of the Sponsor.

 

2. The CRO represents and warrants that it has obtained, and will maintain throughout the term of this Agreement, all governmental or regulatory approvals, licenses, registrations and insurances that may be required to complete the Study, and that it has full right, power and authority to perform its obligations hereunder and to grant the rights set forth herein. During the term of this Agreement the CRO shall not conduct any other trial which, at the CRO’s discretion, would adversely affect the ability of the CRO to perform their obligations under this Agreement.

 

3. In order to perform Services, CRO undertakes an obligation to appoint from among its employees only persons with appropriate knowledge, experience and qualifications necessary to perform Services, and who have bound by confidentiality undertakings according to this Agreement.

 

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CONFIDENTIAL

 

4. The CRO certifies that it has not and will not use in any capacity in connection with this Agreement the services of any individual, corporation, partnership, or association which has been debarred, excluded, or disqualified from participation in clinical investigations under any applicable laws, regulations, or guidance. In the event that the CRO receives notice of the debarment or threatened debarment, exclusion or disqualification or threatened disqualification, of any individual, corporation, partnership or association providing services to the CRO, which relate to its activities under this Agreement, the CRO shall notify the Sponsor immediately.

 

5. If the Sponsor raises any objections regarding provision of Services by a particular CRO employee, the Sponsor shall notify CRO of that fact in writing and may request replacement of such employee solely due to material and reasonable objections against his/her work or behavior. CRO shall appoint a new employee with appropriate qualifications and experience in the shortest possible time.

 

6. Sponsor shall have the right to reject any Services that it deems in nonconformance with the Protocol or the Agreement. Sponsor shall provide CRO with written notification of the deficiency or non-conformance and, within thirty (30) days of receipt of such written notification, CRO shall correct the deficiency or non-conformance at CRO’s expense.

 

7. CRO has commenced providing the Services on the basis of Letter of Intent dated 1 st  August 2012.

 

8. During the term of the Agreement and subject to the prior approval of the Sponsor (e-mail form is acceptable), CRO may entrust a third party, such as sites, investigators, and other relevant sub-contractors (“Sub-contractors”) with performance of all or some of the Services while observing due diligence in this choice, provided that such Sub-contractors are made aware of and acknowledge the obligations applicable to such Sub-contractors according to this Agreement including without limitation confidentiality, Intellectual property rights and publications. The CRO shall ensure, and shall at all times remain jointly and severally responsible and liable, for the compliance of such Sub-contractors with the terms of this Agreement. For the avoidance of doubt, the Parties agree that this section shall not release the Sponsor or the investigators from liability for the Study conduct according to provisions of law in force.

 

9.

CRO acknowledge that the Sponsor may entrust third parties with performance of services, which are related to the Study but are not included in the Services, which shall be provided by the CRO. A list of such third parties attached hereto as Attachment 5 or as shall be

 

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CONFIDENTIAL

 

  amended by the Sponsor from time to time. CRO warrants that (i) it will fully cooperate with such third parties according to the Sponsor’s written instructions as necessary to the conduct of the Study and (ii) it will be obligated by the relevant written instructions imposed by such third parties as shall be presented to the CRO by such third party or the Sponsor.

 

10. CRO warrants that the assumptions underlying each Attachment and/or timeline have been arrived at in good faith by CRO, based upon its experience and professional judgment. In the event the CRO or Sponsor requests to amend the Services, timelines or budget for a Study, the Parties agree to negotiate in good faith a written change order signed by the duly authorized representatives of the Parties.

 

11. Both Sponsor and CRO shall carry, at its sole expense, with financially sound and reputable insurers, an insurance coverage with respect to the conduct of its business.

§ 3. Sponsor’s responsibilities

Sponsor undertakes an obligation in particular to:

 

a) provide CRO with all information in its possession about the Investigational Medicinal Product necessary for the conduct of the Study,

 

b) keep CRO informed on an ongoing basis about any new findings concerning safety of the Investigational Medicinal Product,

 

c) supply CRO with the Investigational Medicinal Product manufactured in compliance with Good Manufacturing Practice, adequately packed and labeled,

 

d) supply CRO with documentation necessary for conduct of the Study, including the valid version of the Protocol, Investigator’s Brochure and the Case Report Forms (CRF),

 

e) conclude insurance agreement on third party liability of the Sponsor and investigators for damages related to the conduct of the Study, in compliance with laws in force and provide CRO with a valid copy of the insurance policy confirming conclusion of such agreement,

 

f) notify CRO immediately of any suspension of the Study or withdrawal of the approval for the conduct of the Study ,

 

g) perform other responsibilities not assigned to the CRO and necessary for the conduct of the Study.

 

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CONFIDENTIAL

 

§ 4. Audits and inspections

 

1. On Sponsor’s reasonable request, CRO shall, at any time, provide the Sponsor with information on the status of the Services performed. In particular, the Sponsor may request CRO to prepare an activity report on the Services performed by CRO.

 

2. During the term of the Agreement, CRO undertakes an obligation to allow the Sponsor and any competent authorities and national, foreign and international bodies or organizations responsible for registration of medicinal products and supervision, audit or inspection of clinical studies to conduct an audit, control or inspection of the Study as well as to access the records related to the Study conduct, and to monitor and audit the activities of the investigators and members of the study teams during the Study (including inspection and audit of the facilities and procedures used in the Study by the investigators and the study teams, as well as the equipment, data registration method and storing the records), and to enable both Sponsor and any national, foreign and international bodies or organizations responsible for registration of medicinal products and supervision or inspection of clinical studies to obtain any and all information on the conduct of the Study.

 

3. CRO shall notify Sponsor if any competent authorities and national, foreign and international bodies or organizations responsible for registration of medicinal products and supervision, audit or inspection of clinical studies inform CRO about any scheduled, or begin an unscheduled inspection of any study site, CRO or bioethics committee. CRO shall immediately provide the Sponsor with any correspondence and/or communication related to a notification, conduct and results of an audit or inspection and shall inform the Sponsor of the measures to be taken following finding and recommendations of such inspection and audits and their results.

 

4. Sponsor agrees to cover the costs of CRO’s employees involvement in an audit, control or inspection based on real time spent on such activities according to the rates described in Attachment No. 6.

§ 5. Remuneration

 

1. For execution of all obligations resulting from the Agreement by CRO, Sponsor undertakes an obligation to pay remuneration as well as reimburse costs and expenses as defined in net amounts in Attachment No. 6. Due VAT shall be added to the above fee.

 

2. The Sponsor is obliged to make payments within 30 days from the receipt of a VAT invoice from CRO and provided that the CRO has provided upon the execution of this Agreement a Certificate of Residency from its Tax Authorities. If it is necessary to convert one currency into another, it shall be calculated by CRO on the basis of a current foreign exchange selling rate of the Polish National Bank announced on the date of the VAT invoice issuance.

 

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CONFIDENTIAL

 

3. The remuneration shall be calculated and paid on a monthly basis for the time committed to or a type of Services provided in a given month within 30 days from the delivery of the invoice issued by CRO to the Sponsor. CRO shall be entitled to issue and deliver a VAT invoice beginning with the last day of a given month for the amount covering time or type of Services performed in such month.

 

4. On Sponsor’s request, CRO shall submit a list of Services performed in a given month, including a timesheet of persons providing Services with a detailed description of activities performed.

 

5. The Sponsor shall reimburse CRO:

 

  a) for any costs incurred by CRO in connection with conclusion of the Agreement and providing the Services hereunder - so called “pass through costs”, including in particular costs of telephone connections, faxes, internet, courier and mail services, accommodation and travel expenses of persons appointed to perform Services, which will be incurred in connection with the execution of the Agreement. These expenses will be invoiced on a monthly basis and presented to the Sponsor with a detailed list.

 

  b) for any costs related to use of CRO company cars for business travels to and from study sites indicated by the Sponsor,

 

  c) for any other costs necessary for the proper conduct of the Study provided that such expenses have been pre-approved by the Sponsor.

 

6. Specification of expected costs and expenses (so called “pass through costs”) is included in Attachment No. 6 hereto. In case if costs, expenses or a scope of Services connected with the conduct of the Study appear to be higher than those anticipated on the Agreement date, the Sponsor undertakes an obligation to cover these costs and reimburse CRO for expenses incurred in relation to the execution of the Agreement provided that such expenses have been pre-approved by the Sponsor.

 

7. When CRO is in charge of investigators, sites, Study subject or IRB/EC fees or expenses payment or reimbursement, estimated or known amounts for such payments/reimbursements will be invoiced to the Sponsor, before paying such fees or expenses. The CRO has no obligation to advance funds and make these payments unless and until the funds are received from the Sponsor. If Sponsor does not provide funds in time to enable CRO to make timely payments, Sponsor agrees to be liable for and to reimburse CRO for any interest and other charges, costs, fees and expenses incurred by CRO because of such late payment. Any excess funds paid to CRO for such fees and expenses shall be refunded to Sponsor at the end of the Study or sooner, upon Sponsor’s request.

 

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CONFIDENTIAL

 

8. Sponsor is obliged to reimburse CRO for the costs and expenses incurred by CRO in relation to the execution of the Agreement within 30 days from the receipt of relevant documentary evidence supporting such costs and expenses from CRO.

 

9. Payment of the remuneration and reimbursement of costs incurred by CRO shall be made by a transfer to CRO bank account indicated on the invoice.

 

10. CRO rates included in the budget in Attachment 6 shall automatically increase each calendar year beginning from January 1, 2014 for the next 12 month period, according to year inflation rate published by Eurostat, the Statistical Office of the European Communities. The Parties agree that increase of rates shall be effective from the beginning of calendar year regardless of the date of publishing year inflation rate by Eurostat.

§ 6. Confidentiality

 

1. The CRO shall keep confidential any and all information and data concerning Sponsor`s business or its activities (including reports and information as well as all clinical data about the Study or its progress produced by the CRO or the sites within the framework of this Agreement), or information obtained that may come to the knowledge of the CRO, its personnel or appointed representatives during or in connection with the execution of this Agreement including without limitation third party confidential information received by the Sponsor (“Sponsor’s Confidential Information”). For the avoidance of any doubt, the Protocol, the Investigational Medicinal Product, the Study results, and the Inventions (as defined below) and Patient Questionnaire IBDQ shall be considered the Sponsor’s Confidential Information.

 

2. Sponsor shall keep confidential any and all information and data concerning the CRO`s business or its activities (including information produced by Sponsor within the framework of this Agreement) or information obtained that may come to the knowledge of Sponsor, its personnel or appointed representatives during or in connection with the execution of this Agreement, and is not considered Sponsor’s Confidential Information.

 

3. Parties undertake an obligation to keep strictly confidential any confidential information or data which came into possession of the other Party in any manner, were delivered or otherwise disclosed to the other Party in connection with the Agreement. Parties may use and make the above mentioned information available solely for the purpose of the execution of the Agreement.

 

4. The above provision does not apply to information which the receiving Party can demonstrate that:

 

  a) is known to the receiving Party at the moment of its disclosure,

 

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CONFIDENTIAL

 

  b) is publicly accessible at the time of its disclosure to the receiving Party or it becomes later publicly accessible without the Party’s fault,

 

  c) may be disclosed upon the other Party’s consent expressed in writing otherwise being void,

 

  d) was disclosed to the receiving Party by a third party that was not obliged to keep it confidential or

 

  e) is disclosed by virtue of laws in force.

 

5. If confidential information needs to be disclosed to a third party for the purpose of performance hereof, the Sponsor or CRO, prior to making any such disclosure, will cause such third party to undertake the confidentiality and non-use obligations in writing at least to the extent applicable to themselves under the Agreement. Any publication of data from the Study or oral presentations on an individual basis with respect to the Study data shall be subject to the Sponsor’s prior review and approval. The Sponsor is entitled at its sole discretion to delay or reject of such publication due to Sponsor’s business or operational reasons.

§ 7. Personal data processing

 

1. Sponsor undertakes to observe the provisions of Personal Data Protection Act of 29th of August 1997 (uniform text: Journal of Laws from 2002, No. 101, position 926 with later changes) as well as secondary regulations, regarding personal data of CRO’s employees, contractors and other individuals ( such as employees of CRO’s contractors), provided by CRO to Sponsor, in the scope of performance the obligations under the Agreement. The personal data of the CRO’s employees, contractors and other individuals will be processed by Sponsor on grounds of their consent or justified purposes of a data controller. However, for the purposes of processing by Sponsor of the personal data of the CRO’s employees or contractors in relation to the execution of obligations of CRO as an employer, CRO entrusts Sponsor with the processing of such personal data in accordance with the Agreement.

 

2. Sponsor appoints CRO as its representative within the meaning of article 31a of the Personal Data Protection Act.

 

3. The scope of the entrusted personal data includes the following categories: names, surnames, addresses, contact details, professional experience, current and past position, education, skills. Sponsor undertakes to process the personal data by collecting, recording, storing, deleting compiling, amending, transferring in paper form and by electronic means.

 

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CONFIDENTIAL

 

4. Sponsor cannot use entrusted personal data for any other purpose or in any other manner than necessary to execute the Agreement. Sponsor is also obliged neither to disclose nor to pass on the personal data to any entity without prior written CRO’s consent.

 

5. Sponsor is liable for the damages caused to CRO or any third party in the result of personal data processing against the Agreement by Sponsor or under its responsibility.

 

6. When the Agreement is finished/terminated/expired, Sponsor is obliged to finish personal data processing, return or destroy all received documents and their copies, and return all received electronic data mediums to CRO.

 

7. Sponsor entrusts CRO with the processing of personal data of the investigators and the members of study teams for the purposes of the performance of activities connected with the conduct of the Study. The scope of the entrusted personal data includes the following categories: names, surnames, addresses, place of work, telephone numbers, e-mail addresses, bank account numbers, PESEL numbers, tax identification numbers, professional experience, current and past position, education. CRO undertakes to process the personal data by collecting, recording, storing, deleting, compiling, amending, transferring in paper form and by electronic means. Sponsor hereby authorizes CRO to subcontract the processing of the personal data to a further data processor as shall be agreed in advance by the Sponsor.

 

8. CRO undertakes to observe the provisions of the Personal Data Protection Act and the secondary regulations. CRO cannot use the entrusted personal data for any other purpose or in any other manner than necessary to execute the Agreement.

 

9. In relations between CRO and Sponsor acting as data controllers / data processors towards each other, the following rules shall apply accordingly:

 

  a) the data processor is hereby obliged, prior to commencing the processing of the personal data and afterwards, during the term of this Agreement, to apply any technical and organizational measures that will ensure the security of the personal data being processed, as set forth in the Personal Data Protection Act and the secondary regulations, and any legislation that will supplement and/or replace them in the future; in particular, it should secure the personal data against access by unauthorized persons, its removal by unauthorized persons, and against it being damaged or destroyed;

 

  b) the data processor shall be obliged to ensure supervision of the following: when and by whom the personal data has been entered into the data filing system and to whom the data has been transferred;

 

  c) the data processor undertakes to preserve the confidentiality of the personal data entrusted to it under this Agreement;

 

  d) only persons who were authorized by the data processor shall be allowed to carry out the processing of personal data;

 

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  e) the data processor shall be obliged to take all necessary steps to ensure that the persons referred to in point (d) of this clause keep the personal data and the methods of their protection confidential;

 

  f) the data processor shall immediately inform the data controller of any instance of any breach, whatsoever, of the security of the personal data entrusted to the data processor and processed under this Agreement;

 

  g) the data processor shall grant the data controller, at its request, any necessary information concerning all personal data processed by the data processor;

 

  h) the data controller shall have the right to conduct inspections as to whether the data processor is observing the principles of processing the personal data specified in the Personal Data Protection Act, the secondary regulations and this Agreement, by accessing and inspecting any premises where the personal data is processed, as well as the documents, equipment and IT systems relating to the personal data processing;

 

  i) the data controller shall be entitled to review whether the above principles of the processing of the personal data are being observed and as such the data controller’s representatives will be entitled to demand that the data processor’s representatives provide to the data controller the necessary information concerning the way in which the data processor processes the personal data contained in the data filing system;

 

  j) any inspection of whether the above principles of the personal data processing are being observed may only take place after the data controller has notified the data processor of the intention of carrying out such an inspection at least two days in advance of the date of the commencement of the inspection, and has indicated in writing the persons designated to carry out the inspection; an inspection may be exercised by the data controller at the location where the personal data are being processed – between the hours of 9 a.m. and 4 p.m. on any business day;

 

  k) following the inspection, the data controller may draw up recommendations concerning the improvement of the quality of the safeguarding of the personal data, as well as the means of its processing by the data processor and the means of remedying any identified irregularities, which the data processor is obliged to immediately remedy not later than 30 days after the data controller’s notification of its observations;

 

  l) upon the expiry or termination of this Agreement the data processor shall be obliged to transfer the personal data to the data controller or delete all the personal data, within seven days of receiving the data controller’s instruction; the deletion of the personal data shall be understood as the erasing of the personal data, or their modification in such a way that the identity of the persons to whom the data refers cannot be established.

 

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§ 8. Intellectual property

 

1. The Parties acknowledge that all rights to materials, Investigational Medicinal Product, data bases, notes, analyses, lists, studies or any other documents, as well as names and graphic signs made available to CRO by the Sponsor in any manner whatsoever, shall remain the property of the Sponsor and CRO shall not acquire any rights thereto, except for the right of use thereof during execution of the Agreement for the purpose of conducting the Study in the manner permitted by the Sponsor.

 

2. Inventions or discoveries whether or not patentable, processes, trade secrets, data, improvements, and/or patents relating to the Investigational Medicinal Product or otherwise arising from the Study, conceived, generated, developed or first reduced to practice, as the case may be, during the term of this Agreement (hereinafter called “Inventions”), either by the CRO, its employees, sites, investigator or any other Sub-contractors related to this Agreement shall be the property of the Sponsor.

 

3. The CRO its employees, sites, investigator or any other Sub-contractors will promptly inform Sponsor of any Invention or discovery arising from the Study, and assign its rights in relation to all intellectual property rights and know how, and provide reasonable assistance to the Sponsor in filing or prosecuting intellectual property rights, at the expense of the Sponsor.

§ 9. Duration of the Agreement and its termination

 

1. The Agreement is concluded for a specified period of time and shall be valid from the Effective Date until the termination of the Study unless any circumstances indicated below should occur.

 

2. Each Party has a right to terminate the Agreement with immediate effect in case of a material breach by the other Party of the obligations resulting from the Agreement if a default is not cured within 30 (thirty) days from the date of delivery of a written notice on the discovered breach to the other Party.

 

3. The Sponsor has a right to terminate the Agreement upon 90 days’ written notice without giving cause and CRO has a right to terminate the Agreement upon 120 days’ written notice without giving cause.

 

4. Upon receipt of the notice of termination of the Agreement from the Sponsor by CRO or dispatch of the same to the Sponsor by CRO, CRO shall make all possible efforts to terminate or transfer further conduct of any unfinished Services as soon as possible, according to the Sponsor’s instructions. In such a case, CRO shall cease to provide Services or undertake further obligations in connection with the Services unless Parties agreed otherwise in writing.

 

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5. The Sponsor undertakes an obligation to reimburse CRO for all necessary and actual costs connected with the termination or expiration of the Agreement as well as to pay CRO due remuneration, in particular to reimburse CRO for any expenses incurred (so called “pass through costs”) or to be incurred in relation to provision of the Services from which CRO cannot withdraw. Promptly after the date of the Agreement termination or expiration, CRO shall issue an invoice for the above costs and expenses to the Sponsor.

§ 10. Non-Solicitation Clause

 

1. The Sponsor undertakes an obligation that it shall not employ any employee of the CRO , in its own enterprise or in any company under its control, during the term of the Agreement and for the period of 2 years from the date of termination or expiry hereof.

 

2. In the event of employing the above mentioned persons, the Sponsor shall be obliged to pay a contractual fine in the amount of Euro 50 000 (say: fifty thousands) per each person employed within 7 days from the receipt of the call for payment. Payment of contractual fine shall not deprive CRO of its right to claim damages exceeding the amount of the contractual fine reserved.

§ 11. Final provisions

 

1. Neither Party shall be liable to the other Party in connection with this Agreement for any indirect, consequential (including without limitation lost profits), incidental, special or punitive damages.

 

2. CRO shall not bear any liability connected with the Investigational Medicinal Product, including liability for administering the Investigational Medicinal Product. CRO’s liability due to negligence, non-adherence to professional standards or breach of the Agreement shall be limited to the double amount of the remuneration (CRO fee) received.

 

3.

Sponsor shall defend, indemnify, and hold harmless CRO, its affiliates and their respective directors, officers, employees, consultants, sub-contractors, independent contractors, and agents from and against any and all losses, claims (including third party claims), actions, damages, liabilities, awards, costs and expenses (including reasonable legal counsel fees and expenses), whether joint or several, relating to or arising from or in connection with this Agreement or the Services contemplated herein, including but not limited to, the Study, test, specifications,

 

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  compound, device, placebo or Investigational Medicinal Product, potential product or procedure performed or administered as a result of the Protocol and this Agreement or any litigation, investigation or other proceeding relating to any of the foregoing, unless as a result of CRO’s its affiliates and their respective directors, officers, employees, consultants, sub-contractors, independent contractors, and agents negligence, non-adherence to professional standards or breach of the Agreement.

 

4. CRO shall defend, indemnify, and hold harmless Sponsor, its affiliates and its and their respective directors, officers, employees, and agents from and against any and all losses, claims (including third party claims), actions, damages, liabilities, costs and expenses (including reasonable legal counsel fees and expenses) (“Sponsor Losses”) but only to the extent such Sponsor Losses are related to or arise from or in connection with CRO’s negligence, non-adherence to professional standards or breach of this Agreement, except to the extent that such Sponsor Losses arise from (i) the negligence or reckless or willful act or omission of Sponsor, its affiliates or its and their respective directors, officers, employees, contractors or agents; or (ii) any breach of this Agreement by Sponsor, its affiliates, or its and their respective directors, officers, employees, contractors or agents.

 

5. The Party seeking indemnity will give the indemnifying party prompt written notice (within 15 days knowledge) of any matter upon which such indemnified party intends to base a claim for indemnification (an “Indemnity Claim”). The indemnified party shall have the right to participate jointly with the indemnifying party, at its own expense, in the defense, settlement or other disposition of any Indemnity Claim.

 

6. In no event shall either Party be liable to the other in case of not being able to perform its obligations hereunder due to a natural disaster, general strike, war, riots, fire, order of the authorities or any other unforeseeable and unpreventable circumstances, provided that such Party unable to perform its obligation will do its best effort to fulfill its obligations. The Party affected by such circumstances shall immediately notify the other Party of this fact in writing, providing any relevant information regarding the matter.

 

7. No Party may assign any rights or obligations resulting from the Agreement to any third party without prior written consent of the other Party.

 

8. Any representations of the Parties as specified herein shall be made in writing, otherwise null and void.

 

9. Except for cases expressly indicated in the Agreement, all statements, notices, calls etc. connected with the Agreement must be delivered to the addresses of the Parties defined in the preamble hereof, otherwise void and ineffective. Either Party should notify the other of the change of its address in accordance with this paragraph. Such notice shall be deemed properly served by the Party after its receipt by the addressee. All and any notices and statements sent thus far in connection with this Agreement to the addresses given above shall be deemed as served effectively.

 

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10. Provisions of § 4, § 6, § 8 and § 10 of the Agreement shall remain in force despite its expiry or termination for any reason.

 

11. For the avoidance of doubt, this Agreement and the Protocol may only be amended by the agreement in writing of duly authorized signatories of Sponsor and CRO, otherwise being null and void. Changes in the Protocol may imply changes in the total course of the Study (costs, time-lines etc.).

 

12. If any one or more provisions of this Agreement shall be found to be illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

 

13. The Agreement and any matters connected herewith shall be governed by the laws of England, excluding its rules for choice of law. Any dispute relating to or arising in connection with this Agreement, which is not settled within a reasonable time, shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce (“ICC”) by one arbitrator appointed in accordance with the said rules. The award shall be final and binding and enforceable in any court of competent jurisdiction. The arbitration shall be held in London, United Kingdom, in English language.

 

14. The Agreement has been drawn up in two identical counterparts, one counterpart for each of the Parties.

 

CRO: /s/ Anna Baran    Sponsor: /s/ Amos Ron
/s/Mike Jagielski    Vascular Biogenics Ltd.
   Amos Ron, CFO
   January 1, 2014

 

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Attachment No. 1

Scope of Services:

Study Assumptions

Division of Responsibilities CRO - Sponsor

 

STUDY ASSUMPTIONS

 

Number of countries involved

     3            

COUNTRIES INVOLVED

     [***]         [***]         [***]         [***]   

CRA staff involved

     4         2         1         1   

STUDY SITES

     12         6         4         2   

PATIENTS ENROLLED (# of expected)

     110         45         27         38   

NUMBER OF PATIENT’s VISITs IN SITE DURING THE STUDY

     11            

PLANNED NUMBER OF PAYMENTS FOR PI AND SITES DURING THE STUDY

     4            

 

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Division of Responsibilities CRO - Sponsor

 

    

        KCR        

  

VBL
        Ltd.        

  

Comments

STUDY INIATIATION

        
Protocol development       X   
Protocol review    X    X    KCR Medical Director to review the draft of study protocol and provide VBL with comments.
Protocol approval       X   
Protocol printing    X      
Protocol distribution to sites    X      
Preparation of amendments       X   
CRF design and development (e CRF)       X   
CRF review & approval       X   
Preparation of master Informed Consent (IC) and Patient Information Sheet (PIS)       X   
Revision and translation of Informed Consent and Patient Information Sheet according to local Ethical Committee requirements    X      
Final approval of country specific IC and PIS       X    Based on back translation of local of Informed Consent and Patient Information Sheet. Approval process according to KCR SOP.
Monitoring Plan development    X       Draft of Monitoring Plan to be provided to VBL by 5 th November 2012.
Monitoring Plan approval       X    Final version of Monitoring Plan to be approved by VBL by 15 th November 2012
Recruitment Plan development    X       Recruitment Plan to be provided to VBL by 5 th November 2012.
Trial Master File Set-up    X      
Distribution of Site Documents    X      
Randomization schedule preparation    X       Task will be subcontracted to ALMAC.

 

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        KCR        

  

VBL
        Ltd.        

  

Comments

REGULATORY / ETHICS COMMITTEE SUBMISSIONS         
Preparation of the documentation for Ethics Committees    X    X   

VBL to provide :

- Investigator’s Brochure

- IMPD

- CRF

- Insurance certificate

- Patient rated scales/diaries

- Certificate of analysis

- Drug label

- Manufacturing authorisation

- GMP certificate

KCR to provide VBL with country specific requirements regarding submission and to prepare submission package.

Submission of the documentation for Ethics Committees and follow up until authorisation    X      
Preparation of the documentation for Regulatory Authorities    X    X   

VBL to provide :

- Investigator’s Brochure

- IMPD

- CRF

- Insurance certificate

- Patient rated

scales/diaries

- Certificate of analysis

   X    X   

- Drug label

- Manufacturing authorisation

- GMP certificate

KCR to provide VBL with country specific requirements regarding submission and to prepare submission package.

Submission of the documentation for Regulatory Authorities and follow up until authorisation    X      
TRANSLATIONS         
Translations    X       Relevant for patient-related documents, labels, Power of Attorney
SITE RECRUITMENT AND INITIATION         
Investigator Pre-Qualification    X      
Investigator’s Site Selection    X      

 

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        KCR        

  

VBL
        Ltd.        

  

Comments

Final Site Selection    X    X   

KCR to provide VBL with pre-study visit reports and lists of recommended sites in all selected countries.

VBL to approve selected sites.

Conduct Site Selection Visits    X      
Negotiate Investigators/Sites Contracts    X      
Final Approval for Investigators/Sites Contracts       X   
Signature on Investigators/Sites Contracts    X      
Regulatory Documents collection & review    X      
Conduct Site Initiation Visits    X      
INVESTIGATOR MEETING         
Investigator’s Meeting Planning    X      
Investigator ‘s Meeting Preparation    X    X   

VBL to present:

-VB-201: Scientific Background

-Phase I/II Experience & Development Plan

-Study Design & Objectives

-Protocol Overview

-Eligibility Criteria

-Study Specific Procedures

-Study Assessment Scales

-Sigmoidoscopy/

colonoscopy

KCR to present:

-Timelines & Recruitment Strategies

-ICH GCP Refreshment

Investigator’s Meeting Attendance    X    X   
CENTRAL LABORATORY MANAGEMENT         
Central Laboratory Supplies and Logistic Set-up/Courier Management    X    X   

Task to be subcontracted to SYNEVO managed by KCR.

VBL to subcontract the laboratory in charge of biomarkers and trough levels assessment.

Central Laboratory Management    X      
STUDY DRUG MANAGEMENT          Labeling, Packaging, Distribution and Data Services (including IXRS) tasks to be subcontracted to Almac managed by KCR.

Provide materials of sufficient quality for use in Almac’s processing facility (eg. dusty tablets are unacceptable)

unacceptable)

      X   

Ensure materials provided are suitable for use in GMP

facilities/operations and of sufficient quality for human clinical trials

      X   

 

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        KCR        

  

VBL
        Ltd.        

  

Comments

Notification to KCR and Almac, prior to receipt of the material and present on the delivery documentation regarding materials requiring any special handling requirements such as, Genetically Modified Organism (GMO), cytotoxic, antibiotics       X   
Provide specific testing specifications prior to arrival at ALMAC       X   
Provide source documentation (eg Certificates of Analysis) confirming the expiry date for each input material supplied       X   
Provide Transmissible Spongiform Encephalopathy (TSE) certification for manufacturing and primary packaging components prior to use       X   
Provide Material Safety Data Sheet(s) (MSDS) sufficiently describing potency, solubility, potential hazards and transportation information prior to arrival of material at Almac       X   
Arrangement of any relevant importation procedures       X   
Ensure materials are stored and shipped under appropriate conditions with temperature monitors (where applicable).       X   
Provide information on the cumulative time the product (refrigerated or frozen) can be out of its specified conditions for processing       X   
Tablets, shells, capsules and/or powdered substances will be provided in sealed, tamper evident drums       X   
Notification to Almac if the last day of the month is not the appropriate expiry date where format of month/year is used       X   

Each container of materials delivered to Almac will be labeled with the following information (at a minimum): Description (in English), including

Strength Batch/Lot Number

KCR name and address

Shipped from name and address Expiry/Retest/Valid until Date Quantity/Weight

Unit Weight

Container Number

Storage Conditions, e.g. 2 to 8°C Applicable protocol (if possible)

Special Handling Conditions, e.g. cytotoxic

If the information above cannot be included on the labels, it will be included with the shipping documents

      X   

 

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        KCR        

  

VBL
        Ltd.        

  

Comments

Shipments to Almac must include a delivery note or packing list which clearly state the contents and the storage conditions       X   
Deliveries of materials which require special handling per 1.3 must be clearly marked on documents and the container       X   

All materials classified as dangerous goods must be

delivered per International Air Transport Association

(IATA) regulations

      X   
Monitoring of recalls and notification to Almac within one working day should a recall occur (including comparator)       X   
Where the Sponsor is responsible for the supply of a Non-Investigational Medicinal Product which is manufactured outside the EU and will be handled by Almac Craigavon, the sponsor is responsible for ensuring that the product is manufactured in accordance with the principles and guidelines of Good Manufacturing Practice (GMP) and is of appropriate quality for the purposes of the trial       X   

Determination of the acceptability of drug products or

clinical kits after a temperature excursion during transit or storage based on data provided

      X   
Determination of appropriate kit design based on the clinical protocol       X   
Determination of expiry date associated with packaged materials (on label if applicable)       X   
Determination of quantity of clinical kits to manufacture within each operation, depending on drug product information (eg expiry date) and protocol information       X   
Review and/or approval of Interactive Response Technology (IRT) specifications       X   
Participation in IRT User Acceptance Testing (UAT)       X   
ALMAC SUPPLIED MATERIALS         
Review and Approval of specifications    X      
MEDICATION NUMBER (MED) LISTS         
Approval of the random schemes and Med Lists based on the clinical protocol requirements       X   
Provide Med Lists in an appropriate electronic format (per Attachment 2) at least three weeks prior to operations or prior to the first shipment if distribution only       X   
For multiple Med Lists supplied for a single project, provide Med Lists such that sequence numbers are not duplicated across lists       X   

 

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        KCR        

  

VBL
        Ltd.        

  

Comments

LABELS         
Ensure all electronic files provided use Arial Unicode as the default font       X   
Provide label text for each component and label type in electronic form AND as a fixed text (i.e. uneditable PDF). Name and version number should be included on all documents for ease of identification       X   
Provide sample labels in advance to assess compatibility with Almac equipment and materials (if applicable)       X   
Labels provided to Almac by the KCR for overstrike/overprinting or labeling operations will be considered approved (Quality and Regulatory) by KCR       X   
Provide label translations including a back translation of the label text to English.    X      
Provide country specific regulatory requirements, pertinent to labels, for each country within the protocol    X      
Approval of label proofs for each component and country within the protocol and verify acceptability of translations (where applicable)       X   
SAMPLES – GENERAL         
Generation of documentation which defines the standard retain and reserve samples to be obtained by Almac       X   
Determination of destruction or return of samples 10 years or older       X   
SAMPLES - ANNEX 13 SAMPLES FOR EU         
Provide Almac with information regarding the product origin and supply chain to enable Almac to determine sampling requirements on a study by study basis       X   
Perform sampling of reference and retention samples of Investigational Medicinal Product (IMP) and modified/repackaged Comparators in Europe in accordance with Annex 13       X   

Provide details of the site in Europe (if not Almac),

responsible for the storage of such samples, if the Almac QP is responsible for Final Release

      X   
PRODUCTION         

Pre-approval of primary and secondary master batch

documents (methods). Ensure batch documentation adequately describes a process to support the protocol. e.g. blindness and kit design

      X   

Pre-approval of batch-specific documents prior to any

labeling or production operations (Packaging Specifications)

      X   

 

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        KCR        

  

VBL
        Ltd.        

  

Comments

Pre-approval of any rework or reprocessing of finished materials prior to commencement       X   
For products packaged in the antibiotic facility (Craigavon only), VBL will confirm the appropriate environmental conditions and ensure this information is detailed in the batch document       X   
DISTRIBUTION AND DEPOT SERVICES         
Confirm regulatory and ethics approvals are in place prior to requesting supplies be dispatched    X      
Identify “do not ship after” date and ensure orders are not generated after such date       X   

Review and approve Distribution Instructions (Almac

generated) prior to the receipt of the first shipment order

      X   

Management of approval for each country or site

(Regulatory Release)

   X      

Responsible for the management of the in-country

distribution depots

   X      
RETURNS         

Confirmation in writing that finished product returned from

clinical depots/sites back into Almac inventory for reprocessing have been stored under appropriate conditions and justification is available for reuse

      X   
Retention of documentation to record the reason for any drug returns and disposition of returned material       X   

Performance of drug accountability at the clinical site

clinical site

   X      
PRODUCT DISPOSITION         
Review and approval of executed batch documentation       X   
Assign final product batch disposition relating to manufacturing activities performed by Almac       X   

IMPORTING QUALIFIED PERSON (QP) FOR DRUG PRODUCT

MANUFACTURED OUTSIDE OF THE EEA

        
Provide documentation to confirm that the Drug Substance (in the case of biological products only) and the drug product manufacturing (including packaging and labeling) and testing sites operate to the standards of EU/EEA GMP or equivalent       X   
Verify that the manufacturing (including packaging and labeling) and testing sites operate to the standards equivalent to EU GMP in support of a QP Declaration       X   

 

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        KCR        

  

VBL
        Ltd.        

  

Comments

Audit the manufacturing sites (including packaging and labeling) and testing sites (release and stability) in support of a QP Declaration where confirmation of GMP to the relevant standards cannot be provided       X   
Determine the requirement for testing of the IMP on import and communicate accordingly       X   
Provide sufficient samples to facilitate import testing       X   

Provide a QP Declaration in support of a request for

authorization of a clinical trial

      X   
INTERMEDIATE QUALIFIED PERSON (QP) RELEASE         
Verify all activities performed in the supply chain, up to receipt of the Drug Product at Almac, are in compliance with the relevant standards of GMP, the PSF and the submitted CTA       X   
FINAL QUALIFIED PERSON (QP) RELEASE         

Provide accurate and reliable information for product

evaluation to support Final QP Release

      X   
Supply all requested documentation necessary to facilitate Final QP Release in a timely manner       X   
Provide details of all manufacturing (including packaging and labelling), storage, testing sites (release and stability) including contractors involved in the supply chain       X   
Provide the Final Releasing QP with visibility of all factors that could potentially influence product quality and thus the decision to release the IMP. This includes information pertaining to the manufacture (including packaging and labeling), storage and testing. For example, deviations and out of specification results.       X   

For biological products, provide documentation to confirm compliance with EU/EEA GMP (or equivalent) for the following :

Storage sites for Working Cell Banks

Drug Substance and Drug Product manufacturing sites

(including packaging and labelling)

Drug Substance and Drug Product testing sites (release and stability)

      X   
For chemical products, provide documentation to confirm compliance with national GMP standards for the drug substance       X   

For chemical products, provide documentation to confirm compliance with EU/EEA GMP (or equivalent) for the following :

Drug Product manufacturing sites (including packaging and labelling)

Drug Product testing sites (release and stability)

      X   

 

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        KCR        

  

VBL
        Ltd.        

  

Comments

Audit the manufacturing sites (including packaging and labelling) and testing sites (release and stability) to support Final QP Release where confirmation of GMP to the relevant standards cannot be provided       X   
Ensure that Drug Substance and Drug Product processes and analytical methods are appropriately validated for the stage of development       X   
Maintain the Product Specification File (PSF) such that traceability to previous versions is retained and provide to the QP as requested       X   

Ensure that the PSF is consistent with the current

Investigational Medicinal Product Dossier (IMPD)

      X   

Update the Final Releasing QP of any pertinent

amendments to the PSF

      X   
Provide updates to the Final Releasing QP regarding the submission status of the Clinical Trial Application (CTA), including any withdrawals, refusals, issues, queries or remarks during assessment of the submitted CTA       X   
Inform the Final Releasing QP of any updates to the CTA in relation to the IMPD, protocol and label text       X   

Provide the Final Releasing QP with any pertinent

information regarding product stability that could impact the assigned expiry date

      X   
Provide stability data to the Final Releasing QP to support expiry updates that are managed via re-labeling or by Interactive Response Technology (IRT)       X   
FINAL QUALIFIED PERSON (QP) RELEASE         
Inform the Final Releasing QP of any major or critical issues regarding Drug Substance or Drug Product manufacturing (including packaging and labelling) or testing sites including issues highlighted by regulatory authorities       X   
Notification of the QP when a recall is being considered       X   
Involve the Almac QP in the decision to recall materials when the Almac QP is responsible for final release       X   
JUST-IN-TIME RELEASE AT ALMAC CRAIGAVON         
Provision of documented evidence that any expiry update being applied via JIT processes has been accepted by the relevant countries involved in the protocol       X   

Provide a document signed by the QP when JIT activities

involve the application of a printed label for studies where an Almac QP has no prior responsibilities. This is to verify that the content of the label is acceptable from a regulatory perspective.

      X   

 

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        KCR        

  

VBL
        Ltd.        

  

Comments

STUDY MONITORING         
Conduct Site Monitoring Visits    X      
Communication with Sites    X      
Monitoring visit reports preparation and review    X      
Monitoring visit reports final approval       X   
100 % SDV    X      
Periodic Regulatory Document Collection / Updates (Investigator’s Master File management)    X      
Data review/correction on all CRF’s    X      
Resolution of Queries with Sites    X      
SAE Reconciliation with Sites    X      
Conduct Site Close-out / Termination Visits    X      
Drug accountability during study and final drug record reconciliation    X      
End of Study Notification to Regulatory Agencies/ECs    X      
CLINICAL STUDY MANAGEMENT         
Maintain Central Trial Master File    X      
Fortnightly enrolment updates and Weekly Status Reports to Sponsor    X      
Administered Investigator’s Payments    X      
Prepare and Distribute Newsletter (if applicable)       X    Item will be agreed upon progress of recruitment in the study.
Central File Archiving       X   
Clinical Team Communication    X       KCR to provide Communication Plan.
MEDICAL MONITORING         
Development of Medical Monitoring Plan       X   
Provide Medical Oversight to CRO Project Team       X   
Medical Communication/Consultation with Sites       X   
Patient Eligibility - Medical Review       X   
Review Safety Data Listing       X   
Review CRFs for safety/efficacy       X   
Review Safety Laboratory Data       X   
Review of Data Management Coding       X   
Review of Data Management SAE reconciliation       X   
SAFETY MONITORING         
Safety Plan Preparation       X   
SAE Reporting Procedure and Database Set-up       X   

 

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        KCR        

  

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        Ltd.        

  

Comments

Receipt & Review of Initial SAE Report from Site    X      
Tracking /Analyzing SAE Report       X   
Entering SAE into Database       X   
Writing SAE Narrative       X   
Expectedness Judgment for SAE & Regulatory Reporting Assessment       X   
Final Medical and Regulatory Judgment       X   
Preparing Annual Report for Competent Authority in EU (inc. safety update)       X   
Submitting Annual Report to Competent Authority in EU (inc. safety update)    X      
Reporting Expedited SAEs to Regulatory Authorities       X   
Reporting Expedited SAEs to Investigators and EC       X   
Ongoing SAE File Maintenance       X   
DATA MANAGEMENT         
Preparation of Data Management Documentation such as Data Management Plan, Data Review Plan, Data Handling Guiding       X   
EDC collector development       X   
Data Review, Query Generation       X   
Query Resolution    X      
Import of Electronic (Laboratory) Data    X    X    Task will be subcontracted to Synevo managed by KCR.
Reconciliation of SAEs       X   
Provision of data extracts during study to support interim analyses       X   
Documentation Maintenance       X   
Archiving of EDC tool, Archiving of Data Management Material       X   
STATISTICS AND REPORTING         
Development of Statistical Analysis Plan       X   
Final Approval for Statistical Analysis Plan       X   
Creation of Analysis Dataset (Statistical analysis of the dataset)       X   
Programming of Tables, Figures and Listings       X   
PK parameters calculation       X   
Development of interim and final Integrated Statistical/Clinical Report in conformity to ICH guideline and CTD       X   
Review of final Integrated Statistical/Clinical Report in conformity to ICH guideline and CTD       X   
Final Approval for clinical Study Report       X   

 

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        KCR        

  

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        Ltd.        

  

Comments

Writing of SAE and AE Discontinuation Narratives       X   
AUDITS         
Conduct of GCP Audits of Investigator’s Sites    X      
Conduct of Quality Assurance Audit of Database       X   
Conduct of Quality Assurance Audit of Central Laboratory    TBD      
PROJECT MANAGEMENT         
Management of the study team    X      
Communication with study sponsor and vendors    X      
Coordination of start-up activities, realization phase and closure    X      
Oversees the regulatory document collection and submission process.    X      
Control and track the budget monthly and cumulative realization    X      
Preparation of Risk Management Plan and/or Contingency Plan, if required    X       KCR to provide Risk Management Plan till end of October 2012.
CONTRACTS AND PAYMENTS         
Preparation of study contracts    X      
Signature and payments    X    X   
Payment of Ethics Committees’ fees    X      

 

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[***]

 

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Attachment No. 4

List of SOPs applicable for the Study conduct

 

P/Z

  

Number

  

Range

  

#Z

  

FULL TITLE OF P / Z

  

Version

#

  

Date

Effective

    P        101.1    MED       Feasibility process    5    06.12.11
P    102.1    MED       Regulatory Submission for Clinical Study Application    2    03.01.10
P    102.3    MED.       Updating Clinical Study Documentation    1    03.01.10
P    102.5    MED.       Management of Regulatory Process    1    03.01.10
P    103.1    MED.       Pre-Study Visit    2    21.02.11
P    104.1    MED.       Informed Consent Form    3    10.11.11
P    105.1    MED.       Initiation Visit    2    04.03.11
P    106.1    MED.       Monitoring Visit    2    18.04.11
P    106.2    MED.       Taking Over The Study    2    14.03.11
P    106.3    MED.       Co-Monitoring Visit    2    25.07.11
P    106.4    MED       Reporting Protocol Deviations    1    14.04.10
P    107.1    MED.       Close-out Visit    2    30.04.11
P    108.1    MED       Translation    3    19.09.11
P    109.1    MED.       Clinial Trial Documents    2    09.08.10
P    109.2    MED.       Trial Master File    2    13.06.11
P    109.3    MED.       Investigator’s File    2    13.06.11
P    110.1    MED.       Clinical Supplies    2    06.04.11
P    111.1    MED       Clinical Trial Materials    2    14.04.11
P    112.1    MED       Serious Adverse Event Reporting    2    05.11.10
P    112.2    MED       Distribution of SUSAR reports    2    15.09.11
P    113.1    MED.       Training Clinical Operation Staff    3    15.09.11
P    114.1    MED       Insurance    2    07.12.10
P    115.1    MED       Milestones in Project Management    1    03.09.10
P    116.1    MED       Clinical Study Report    2    17.05.11
P    117.1    MED       Archiving Study Files    2    13.12.10
P    118.1    MED       Organization of MED SOP in Clinical Operations Dept.    2    05.11.10
P    118.2    MED       Management of Sponsors’ SOP    1    24.01.11
P    119.1    MED       Disaster Management in Clinical Operations Department    2    21.04.11
P    120.1    MED       Clinical Operations Staff Curriculum Vitae    4    23.05.11
P    120.2    MED       Completing Outlook Calendar    2    25.07.11
P    120.3    MED       Organization of meetings in Clinical Operations departments    2    25.07.11

 

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P/Z

  

Number

  

Range

  

#Z

  

FULL TITLE OF P / Z

  

Version

#

  

Date

Effective

    P        120.4    MED       Working at home    2    25.07.11
P    120.5    MED       Weekly reporting    2    25.07.11
P    120.6    MED       Returning from outsourcing    2    25.07.11
P    121.1    MED       Contracts with Investigators and Investigational Sites    4    01.02.10
P    122.1    MED.       Confidentiality Agreements and Confidentiality Obligation    3    14.03.11
P    123.1    MED.       Principles of drawing contracts and master service agreements    2    28.03.11
P    124.1    MED       Fraud and Misconduct    2    09.01.11
P    125.1    MED       Purchases Within a Project    1    25.07.11
P    127.1    MED       Legislation in Clinical Trials    1    04.05.11
P    128.1    MED       Communication with Subcontractor    1    01.09.11
P    129.1    MED       Annual Progress Report to Competent Authorities    1    19.08.11
P    130.1    MED       Preparing Monitoring Plan    1    25.11.11
P    131.1    MED       Communication Plan    1    30.04.12

 

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Attachment No. 5

List of third parties engaged by the Sponsor for the conduct of the Study

 

a. Legal representative (Gregory Fryer Associates Ltd): CRO shall undertake the following obligation, and shall indemnify the sponsor for any damage in case it will breach such obligation: notify immediately Gregory Fryer Associates Ltd and the Sponsor of any untoward occurrences, including serious breaches of the protocol, GCP or regulations, occurring in the clinical trial.

 

b. Pharmacovigilence group: CRO shall act according to the safety plan, as shall be determined for this clinical trial.

 

c. Data Management: CRO shall act according to the procedures, as shall be determined for this clinical trial.

Licensing of Patient Questionnaire (IBDQ): CRO shall undertake to use the Questionnaire by it and by any sites or investigator solely for the purpose of the Study and to maintain and enforce the confidentiality of the Questionnaire by such sites and investigators.

 

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[***]

 

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[***]

 

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[***]

 

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[***]

 

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[***]

 

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Exhibit 10.13

SERVICE AGREEMENT

FOR A CLINICAL STUDY CONDUCT

concluded on 16 December 2013 (“Effective Date”) in Warsaw by and between:

KCR S.A. (Polish joint-stock company) with its registered office in Warsaw at 6 Postępu Str., 02-676 Warsaw, Poland, entered in the register of entrepreneurs kept by the District Court for the Capital City of Warsaw in Warsaw, 13th Commercial Division of the National Court Register, under number 0000289542, tax identification number NIP: 521-31-69-665, share capital (covered in total): PLN 700,000.00, hereinafter referred to as “ CRO ”, represented by Mr. Mike Jagielski – President of the Management Board and Ms. Anna Baran – Vice President of the Management Board,

and

Vascular Biogenics Ltd., its principal place of business at 6 Jonathan Netanyahu Street, Or Yehuda, Israel 60376 hereinafter referred to as “ Sponsor ”, represented by Prof. Dror Harats - Chief Executive Officer,

hereinafter jointly referred to as „the Parties” and individually as a “Party”.

Whereas:

 

  a) Sponsor intends to conduct a clinical study of the investigational medicinal product VB-201 [„Investigational Medicinal Product”] entitled “A Randomized, Double-Blind, Dose-Ranging, Placebo-Controlled Study to Evaluate the Efficacy and Safety of Oral VB-201 in Patients with Moderate to Severe Plaque Psoriasis” [„Study”] according to the protocol number VB-201-079 [“Protocol”] on the territory of Poland,

 

  b) Legal Representative of the Sponsor is SCIderm GmbH, a company organized and existing under the laws of Federal Republic of Germany, entered in the Trade Register maintained by the District Court in Hamburg, under the number HRB 93824 with its registered office at Drehbahn 1-3, 20354 Hamburg, Germany,

 

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  c) Sponsor wishes to engage CRO to provide services connected with the conduct of the Study as defined herein,

 

  d) fulfillment of CRO’s obligations resulting from this agreement is included in the scope of CRO’s business activity and CRO has an experience in providing services of similar nature as described herein, including the fact that CRO employs qualified employees in order to perform such obligations.

Now then , the Parties agree to conclude the agreement as follows [„Agreement”]:

§ 1. Subject of the Agreement

 

1. Sponsor hereby entrusts CRO with performance of activities connected with the conduct of the Study as defined in Attachment No. 1 hereto (Scope of Services), hereinafter referred to as „Services”, and CRO hereby accepts such entrusted responsibilities.

 

2. Services shall be performed within the timelines indicated in Attachment No. 2. Parties declare that these timelines shall be deemed as a forecast only and may be changed due to reasons which are not attributable to the CRO. In case of necessity to provide Services within different timelines than those anticipated in Attachment No. 2 for reasons not attributable to CRO, Sponsor waives its right to bring any claims against CRO for an untimely provision of Services.

§ 2. Manner of Providing Services

 

1. CRO shall perform its responsibilities, in the scope indicated in the Agreement, with due diligence and in compliance with laws and regulations in force applicable in the countries where the Services will be performed, guidelines of Good Manufacturing Practice, Good Laboratory Practice, Good Clinical Practice, ICH GCP in a version applicable during the term of the Study conduct, in compliance with the Agreement and a valid version of the Protocol, constituting Attachment No. 3 to the Agreement, CRO’s SOPs listed in Attachment No. 4 and any written instructions of the Sponsor.

 

2. The CRO represents and warrants that it has obtained, and will maintain throughout the term of this Agreement, all governmental or regulatory approvals, licenses, registrations and insurances that may be required to complete the Study, and that it has full right, power and authority to perform its obligations hereunder and to grant the rights set forth herein. During the term of this Agreement the CRO shall not conduct any other trial which, at the CRO’s discretion, would adversely affect the ability of the CRO to perform their obligations under this Agreement.

 

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3. In order to perform Services, CRO undertakes an obligation to appoint from among its employees only persons with appropriate knowledge, experience and qualifications necessary to perform Services, and who have bound by confidentiality undertakings according to this Agreement.

 

4. The CRO certifies that it has not and will not use in any capacity in connection with this Agreement the services of any individual, corporation, partnership, or association which has been debarred, excluded, or disqualified from participation in clinical investigations under any applicable laws, regulations, or guidance. In the event that the CRO receives notice of the debarment or threatened debarment, exclusion or disqualification or threatened disqualification, of any individual, corporation, partnership or association providing services to the CRO, which relate to its activities under this Agreement, the CRO shall notify the Sponsor immediately.

 

5. If the Sponsor raises any objections regarding provision of Services by a particular CRO employee, the Sponsor shall notify CRO of that fact in writing and may request replacement of such employee solely due to material and reasonable objections against his/her work or behavior. CRO shall appoint a new employee with appropriate qualifications and experience in the shortest possible time.

 

6. Sponsor shall have the right to reject any Services that it deems in nonconformance with the Protocol or the Agreement. Sponsor shall provide CRO with written notification of the deficiency or non-conformance and, within thirty (30) days of receipt of such written notification, CRO shall correct the deficiency or non-conformance at CRO’s expense.

 

7. During the term of the Agreement and subject to the prior approval of the Sponsor (e-mail form is acceptable), CRO may entrust a third party, such as sites, investigators, and other relevant sub-contractors (“Sub-contractors”) with performance of all or some of the Services while observing due diligence in this choice, provided that such Sub-contractors are made aware of and acknowledge the obligations applicable to such Sub-contractors according to this Agreement including without limitation confidentiality, Intellectual property rights and publications. The CRO shall ensure, and shall at all times remain jointly and severally responsible and liable, for the compliance of such Sub-contractors with the terms of this Agreement. For the avoidance of doubt, the Parties agree that this section shall not release the Sponsor or the investigators from liability for the Study conduct according to provisions of law in force.

 

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8. CRO acknowledge that the Sponsor may entrust third parties with performance of services, which are related to the Study but are not included in the Services, which shall be provided by the CRO. A list of such third parties attached hereto as Attachment 5 or as shall be amended by the Sponsor from time to time. CRO warrants that (i) it will fully cooperate with such third parties according to the Sponsor’s written instructions as necessary to the conduct of the Study and (ii) it will be obligated by the relevant written instructions imposed by such third parties as shall be presented to the CRO by such third party or the Sponsor.

 

9. CRO warrants that the assumptions underlying each Attachment and/or timeline have been arrived at in good faith by CRO, based upon its experience and professional judgment. In the event the CRO or Sponsor requests to amend the Services, timelines or budget for a Study, the Parties agree to negotiate in good faith a written change order signed by the duly authorized representatives of the Parties.

 

10. Both Sponsor and CRO shall carry, at its sole expense, with financially sound and reputable insurers, an insurance coverage with respect to the conduct of its business.

§ 3. Sponsor’s responsibilities

Sponsor undertakes an obligation in particular to:

 

  a) provide CRO with all information in its possession about the Investigational Medicinal Product necessary for the conduct of the Study,

 

  b) keep CRO informed on an ongoing basis about any new findings concerning safety of the Investigational Medicinal Product,

 

  c) supply CRO with the Investigational Medicinal Product manufactured in compliance with Good Manufacturing Practice, adequately packed and labeled,

 

  d) supply CRO with documentation necessary for conduct of the Study, including the valid version of the Protocol, Investigator’s Brochure and the Case Report Forms (CRF),

 

  e) conclude insurance agreement on third party liability of the Sponsor and investigators for damages related to the conduct of the Study, in compliance with laws in force and provide CRO with a valid copy of the insurance policy confirming conclusion of such agreement,

 

  f) notify CRO immediately of any suspension of the Study or withdrawal of the approval for the conduct of the Study ,

 

  g) perform other responsibilities not assigned to the CRO and necessary for the conduct of the Study.

 

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§ 4. Audits and inspections

 

1. On Sponsor’s reasonable request, CRO shall, at any time, provide the Sponsor with information on the status of the Services performed. In particular, the Sponsor may request CRO to prepare an activity report on the Services performed by CRO.

 

2. During the term of the Agreement, CRO undertakes an obligation to allow the Sponsor and any competent authorities and national, foreign and international bodies or organizations responsible for registration of medicinal products and supervision, audit or inspection of clinical studies to conduct an audit, control or inspection of the Study as well as to access the records related to the Study conduct, and to monitor and audit the activities of the investigators and members of the study teams during the Study (including inspection and audit of the facilities and procedures used in the Study by the investigators and the study teams, as well as the equipment, data registration method and storing the records), and to enable both Sponsor and any national, foreign and international bodies or organizations responsible for registration of medicinal products and supervision or inspection of clinical studies to obtain any and all information on the conduct of the Study.

 

3. CRO shall notify Sponsor if any competent authorities and national, foreign and international bodies or organizations responsible for registration of medicinal products and supervision, audit or inspection of clinical studies inform CRO about any scheduled, or begin an unscheduled inspection of any study site, CRO or bioethics committee. CRO shall immediately provide the Sponsor with any correspondence and/or communication related to a notification, conduct and results of an audit or inspection and shall inform the Sponsor of the measures to be taken following finding and recommendations of such inspection and audits and their results.

 

4. Sponsor agrees to cover the costs of CRO’s employees involvement in an audit, control or inspection based on real time spent on such activities according to the rates described in Attachment No. 6.

 

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§ 5. Remuneration

 

1. For execution of all obligations resulting from the Agreement by CRO, Sponsor undertakes an obligation to pay remuneration as well as reimburse costs and expenses as defined in net amounts in Attachment No. 6. Due VAT shall be added to the above fee.

 

2. The Sponsor is obliged to make payments within 30 days from the receipt of a VAT invoice from CRO and provided that the CRO has provided upon the execution of this Agreement a Certificate of Residency from its Tax Authorities. If it is necessary to convert one currency into another, it shall be calculated by CRO on the basis of a current foreign exchange selling rate of the Polish National Bank announced on the date of the VAT invoice issuance.

 

3. The remuneration shall be calculated and paid on a monthly basis for the time committed to or a type of Services provided in a given month within 30 days from the delivery of the invoice issued by CRO to the Sponsor. CRO shall be entitled to issue and deliver a VAT invoice beginning with the last day of a given month for the amount covering time or type of Services performed in such month.

 

4. On Sponsor’s request, CRO shall submit a list of Services performed in a given month, including a timesheet of persons providing Services with a detailed description of activities performed.

 

5. The Sponsor shall reimburse CRO:

 

  a) for any costs incurred by CRO in connection with conclusion of the Agreement and providing the Services hereunder - so called “pass through costs”, including in particular costs of telephone connections, faxes, internet, courier and mail services, accommodation and travel expenses of persons appointed to perform Services, which will be incurred in connection with the execution of the Agreement. These expenses will be invoiced on a monthly basis and presented to the Sponsor with a detailed list.

 

  b) for any costs related to use of CRO company cars for business travels to and from study sites indicated by the Sponsor,

 

  c) for any other costs necessary for the proper conduct of the Study provided that such expenses have been pre-approved by the Sponsor.

 

6. Specification of expected costs and expenses (so called „pass through costs”) is included in Attachment No. 6 hereto. In case if costs, expenses or a scope of Services connected with the conduct of the Study appear to be higher than those anticipated on the Agreement date, the Sponsor undertakes an obligation to cover these costs and reimburse CRO for expenses incurred in relation to the execution of the Agreement provided that such expenses have been pre-approved by the Sponsor.

 

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7. When CRO is in charge of investigators, sites, Study subject or IRB/EC fees or expenses payment or reimbursement, estimated or known amounts for such payments/reimbursements will be invoiced to the Sponsor, before paying such fees or expenses. The CRO has no obligation to advance funds and make these payments unless and until the funds are received from the Sponsor. If Sponsor does not provide funds in time to enable CRO to make timely payments, Sponsor agrees to be liable for and to reimburse CRO for any interest and other charges, costs, fees and expenses incurred by CRO because of such late payment. Any excess funds paid to CRO for such fees and expenses shall be refunded to Sponsor at the end of the Study or sooner, upon Sponsor’s request.

 

8. Sponsor is obliged to reimburse CRO for the costs and expenses incurred by CRO in relation to the execution of the Agreement within 30 days from the receipt of relevant documentary evidence supporting such costs and expenses from CRO.

 

9. Payment of the remuneration and reimbursement of costs incurred by CRO shall be made by a transfer to CRO bank account indicated on the invoice.

 

10. CRO rates included in the budget in Attachment 6 shall automatically increase each calendar year beginning from January 1, 2015 for the next 12 month period, according to year inflation rate published by Eurostat, the Statistical Office of the European Communities. The Parties agree that increase of rates shall be effective from the beginning of calendar year regardless of the date of publishing year inflation rate by Eurostat.

§ 6. Confidentiality

 

1. The CRO shall keep confidential any and all information and data concerning Sponsor`s business or its activities (including reports and information as well as all clinical data about the Study or its progress produced by the CRO or the sites within the framework of this Agreement), or information obtained that may come to the knowledge of the CRO, its personnel or appointed representatives during or in connection with the execution of this Agreement including without limitation third party confidential information received by the Sponsor (“Sponsor’s Confidential Information”). For the avoidance of any doubt, the Protocol, the Investigational Medicinal Product, the Study results, and the Inventions (as defined below) shall be considered the Sponsor’s Confidential Information.

 

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2. Sponsor shall keep confidential any and all information and data concerning the CRO`s business or its activities (including information produced by Sponsor within the framework of this Agreement) or information obtained that may come to the knowledge of Sponsor, its personnel or appointed representatives during or in connection with the execution of this Agreement, and is not considered Sponsor’s Confidential Information.

 

3. Parties undertake an obligation to keep strictly confidential any confidential information or data which came into possession of the other Party in any manner, were delivered or otherwise disclosed to the other Party in connection with the Agreement. Parties may use and make the above mentioned information available solely for the purpose of the execution of the Agreement.

 

4. The above provision does not apply to information which the receiving Party can demonstrate that:

 

  a) is known to the receiving Party at the moment of its disclosure,

 

  b) is publicly accessible at the time of its disclosure to the receiving Party or it becomes later publicly accessible without the Party’s fault,

 

  c) may be disclosed upon the other Party’s consent expressed in writing otherwise being void,

 

  d) was disclosed to the receiving Party by a third party that was not obliged to keep it confidential or

 

  e) is disclosed by virtue of laws in force.

 

5. If confidential information needs to be disclosed to a third party for the purpose of performance hereof, the Sponsor or CRO, prior to making any such disclosure, will cause such third party to undertake the confidentiality and non-use obligations in writing at least to the extent applicable to themselves under the Agreement. Any publication of data from the Study or oral presentations on an individual basis with respect to the Study data shall be subject to the Sponsor’s prior review and approval. The Sponsor is entitled at its sole discretion to delay or reject of such publication due to Sponsor’s business or operational reasons.

§ 7. Personal data processing

 

1.

Sponsor undertakes to observe the provisions of Personal Data Protection Act of 29th of August 1997 (uniform text: Journal of Laws from 2002, No. 101, position 926 with later changes) as well as secondary regulations, regarding personal data of CRO’s employees, contractors and other individuals ( such as employees of CRO’s contractors), provided by CRO to Sponsor, in

 

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  the scope of performance the obligations under the Agreement. The personal data of the CRO’s employees, contractors and other individuals will be processed by Sponsor on grounds of their consent or justified purposes of a data controller. However, for the purposes of processing by Sponsor of the personal data of the CRO’s employees or contractors in relation to the execution of obligations of CRO as an employer, CRO entrusts Sponsor with the processing of such personal data in accordance with the Agreement.

 

2. Sponsor appoints CRO as its representative within the meaning of article 31a of the Personal Data Protection Act.

 

3. The scope of the entrusted personal data includes the following categories: names, surnames, addresses, contact details, professional experience, current and past position, education, skills. Sponsor undertakes to process the personal data by collecting, recording, storing, deleting compiling, amending, transferring in paper form and by electronic means.

 

4. Sponsor cannot use entrusted personal data for any other purpose or in any other manner than necessary to execute the Agreement. Sponsor is also obliged neither to disclose nor to pass on the personal data to any entity without prior written CRO’s consent.

 

5. Sponsor is liable for the damages caused to CRO or any third party in the result of personal data processing against the Agreement by Sponsor or under its responsibility.

 

6. When the Agreement is finished/terminated/expired, Sponsor is obliged to finish personal data processing, return or destroy all received documents and their copies, and return all received electronic data mediums to CRO.

 

7. Sponsor entrusts CRO with the processing of personal data of the investigators and the members of study teams for the purposes of the performance of activities connected with the conduct of the Study. The scope of the entrusted personal data includes the following categories: names, surnames, addresses, place of work, telephone numbers, e-mail addresses, bank account numbers, PESEL numbers, tax identification numbers, professional experience, current and past position, education. CRO undertakes to process the personal data by collecting, recording, storing, deleting, compiling, amending, transferring in paper form and by electronic means. Sponsor hereby authorizes CRO to subcontract the processing of the personal data to a further data processor as shall be agreed in advance by the Sponsor.

 

8. CRO undertakes to observe the provisions of the Personal Data Protection Act and the secondary regulations. CRO cannot use the entrusted personal data for any other purpose or in any other manner than necessary to execute the Agreement.

 

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9. In relations between CRO and Sponsor acting as data controllers / data processors towards each other, the following rules shall apply accordingly:

 

  a) the data processor is hereby obliged, prior to commencing the processing of the personal data and afterwards, during the term of this Agreement, to apply any technical and organizational measures that will ensure the security of the personal data being processed, as set forth in the Personal Data Protection Act and the secondary regulations, and any legislation that will supplement and/or replace them in the future; in particular, it should secure the personal data against access by unauthorized persons, its removal by unauthorized persons, and against it being damaged or destroyed;

 

  b) the data processor shall be obliged to ensure supervision of the following: when and by whom the personal data has been entered into the data filing system and to whom the data has been transferred;

 

  c) the data processor undertakes to preserve the confidentiality of the personal data entrusted to it under this Agreement;

 

  d) only persons who were authorized by the data processor shall be allowed to carry out the processing of personal data;

 

  e) the data processor shall be obliged to take all necessary steps to ensure that the persons referred to in point (d) of this clause keep the personal data and the methods of their protection confidential;

 

  f) the data processor shall immediately inform the data controller of any instance of any breach, whatsoever, of the security of the personal data entrusted to the data processor and processed under this Agreement;

 

  g) the data processor shall grant the data controller, at its request, any necessary information concerning all personal data processed by the data processor;

 

  h) the data controller shall have the right to conduct inspections as to whether the data processor is observing the principles of processing the personal data specified in the Personal Data Protection Act, the secondary regulations and this Agreement, by accessing and inspecting any premises where the personal data is processed, as well as the documents, equipment and IT systems relating to the personal data processing;

 

  i) the data controller shall be entitled to review whether the above principles of the processing of the personal data are being observed and as such the data controller’s representatives will be entitled to demand that the data processor’s representatives provide to the data controller the necessary information concerning the way in which the data processor processes the personal data contained in the data filing system;

 

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  j) any inspection of whether the above principles of the personal data processing are being observed may only take place after the data controller has notified the data processor of the intention of carrying out such an inspection at least two days in advance of the date of the commencement of the inspection, and has indicated in writing the persons designated to carry out the inspection; an inspection may be exercised by the data controller at the location where the personal data are being processed – between the hours of 9 a.m. and 4 p.m. on any business day;

 

  k) following the inspection, the data controller may draw up recommendations concerning the improvement of the quality of the safeguarding of the personal data, as well as the means of its processing by the data processor and the means of remedying any identified irregularities, which the data processor is obliged to immediately remedy not later than 30 days after the data controller’s notification of its observations;

 

  l) upon the expiry or termination of this Agreement the data processor shall be obliged to transfer the personal data to the data controller or delete all the personal data, within seven days of receiving the data controller’s instruction; the deletion of the personal data shall be understood as the erasing of the personal data, or their modification in such a way that the identity of the persons to whom the data refers cannot be established.

§ 8. Intellectual property

 

1. The Parties acknowledge that all rights to materials, Investigational Medicinal Product, data bases, notes, analyses, lists, studies or any other documents, as well as names and graphic signs made available to CRO by the Sponsor in any manner whatsoever, shall remain the property of the Sponsor and CRO shall not acquire any rights thereto, except for the right of use thereof during execution of the Agreement for the purpose of conducting the Study in the manner permitted by the Sponsor.

 

2. Inventions or discoveries whether or not patentable, processes, trade secrets, data, improvements, and/or patents relating to the Investigational Medicinal Product or otherwise arising from the Study, conceived, generated, developed or first reduced to practice, as the case may be, during the term of this Agreement (hereinafter called “Inventions”), either by the CRO, its employees, sites, investigator or any other Sub-contractors related to this Agreement shall be the property of the Sponsor.

 

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3. The CRO its employees, sites, investigator or any other Sub-contractors will promptly inform Sponsor of any Invention or discovery arising from the Study, and assign its rights in relation to all intellectual property rights and know how, and provide reasonable assistance to the Sponsor in filing or prosecuting intellectual property rights, at the expense of the Sponsor.

§ 9. Duration of the Agreement and its termination

 

1. The Agreement is concluded for a specified period of time and shall be valid from the Effective Date until the termination of the Study unless any circumstances indicated below should occur.

 

2. Each Party has a right to terminate the Agreement with immediate effect in case of a material breach by the other Party of the obligations resulting from the Agreement if a default is not cured within 30 (thirty) days from the date of delivery of a written notice on the discovered breach to the other Party.

 

3. The Sponsor has a right to terminate the Agreement upon 90 days’ written notice without giving cause and CRO has a right to terminate the Agreement upon 120 days’ written notice without giving cause.

 

4. Upon receipt of the notice of termination of the Agreement from the Sponsor by CRO or dispatch of the same to the Sponsor by CRO, CRO shall make all possible efforts to terminate or transfer further conduct of any unfinished Services as soon as possible, according to the Sponsor’s instructions. In such a case, CRO shall cease to provide Services or undertake further obligations in connection with the Services unless Parties agreed otherwise in writing.

 

5. The Sponsor undertakes an obligation to reimburse CRO for all necessary and actual costs connected with the termination or expiration of the Agreement as well as to pay CRO due remuneration, in particular to reimburse CRO for any expenses incurred (so called „pass through costs”) or to be incurred in relation to provision of the Services from which CRO cannot withdraw. Promptly after the date of the Agreement termination or expiration, CRO shall issue an invoice for the above costs and expenses to the Sponsor.

 

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§ 10. Non-Solicitation Clause

 

1. The Sponsor undertakes an obligation that it shall not employ any employee of the CRO , in its own enterprise or in any company under its control, during the term of the Agreement and for the period of 2 years from the date of termination or expiry hereof.

 

2. In the event of employing the above mentioned persons, the Sponsor shall be obliged to pay a contractual fine in the amount of Euro 50 000 (say: fifty thousands) per each person employed within 7 days from the receipt of the call for payment. Payment of contractual fine shall not deprive CRO of its right to claim damages exceeding the amount of the contractual fine reserved.

§ 11. Final provisions

 

1. Neither Party shall be liable to the other Party in connection with this Agreement for any indirect, consequential (including without limitation lost profits), incidental, special or punitive damages.

 

2. CRO shall not bear any liability connected with the Investigational Medicinal Product, including liability for administering the Investigational Medicinal Product. CRO’s liability due to negligence, non-adherence to professional standards or breach of the Agreement shall be limited to the double amount of the remuneration (CRO fee) received.

 

3. Sponsor shall defend, indemnify, and hold harmless CRO, its affiliates and their respective directors, officers, employees, consultants, sub-contractors, independent contractors, and agents from and against any and all losses, claims (including third party claims), actions, damages, liabilities, awards, costs and expenses (including reasonable legal counsel fees and expenses), whether joint or several, relating to or arising from or in connection with this Agreement or the Services contemplated herein, including but not limited to, the Study, test, specifications, compound, device, placebo or Investigational Medicinal Product, potential product or procedure performed or administered as a result of the Protocol and this Agreement or any litigation, investigation or other proceeding relating to any of the foregoing, unless as a result of CRO’s its affiliates and their respective directors, officers, employees, consultants, sub-contractors, independent contractors, and agents negligence, non-adherence to professional standards or breach of the Agreement.

 

4.

CRO shall defend, indemnify, and hold harmless Sponsor, its affiliates and its and their respective directors, officers, employees, and agents from and against any and all losses, claims (including third party claims), actions, damages, liabilities, costs and expenses (including

 

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  reasonable legal counsel fees and expenses) (“Sponsor Losses”) but only to the extent such Sponsor Losses are related to or arise from or in connection with CRO’s negligence, non-adherence to professional standards or breach of this Agreement, except to the extent that such Sponsor Losses arise from (i) the negligence or reckless or willful act or omission of Sponsor, its affiliates or its and their respective directors, officers, employees, contractors or agents; or (ii) any breach of this Agreement by Sponsor, its affiliates, or its and their respective directors, officers, employees, contractors or agents.

 

5. The Party seeking indemnity will give the indemnifying party prompt written notice (within 15 days knowledge) of any matter upon which such indemnified party intends to base a claim for indemnification (an “Indemnity Claim”). The indemnified party shall have the right to participate jointly with the indemnifying party, at its own expense, in the defense, settlement or other disposition of any Indemnity Claim.

 

6. In no event shall either Party be liable to the other in case of not being able to perform its obligations hereunder due to a natural disaster, general strike, war, riots, fire, order of the authorities or any other unforeseeable and unpreventable circumstances, provided that such Party unable to perform its obligation will do its best effort to fulfill its obligations. The Party affected by such circumstances shall immediately notify the other Party of this fact in writing, providing any relevant information regarding the matter.

 

7. No Party may assign any rights or obligations resulting from the Agreement to any third party without prior written consent of the other Party.

 

8. Any representations of the Parties as specified herein shall be made in writing, otherwise null and void.

 

9. Except for cases expressly indicated in the Agreement, all statements, notices, calls etc. connected with the Agreement must be delivered to the addresses of the Parties defined in the preamble hereof, otherwise void and ineffective. Either Party should notify the other of the change of its address in accordance with this paragraph. Such notice shall be deemed properly served by the Party after its receipt by the addressee. All and any notices and statements sent thus far in connection with this Agreement to the addresses given above shall be deemed as served effectively.

 

10. Provisions of § 4, § 6, § 8 and § 10 of the Agreement shall remain in force despite its expiry or termination for any reason.

 

11. For the avoidance of doubt, this Agreement and the Protocol may only be amended by the agreement in writing of duly authorized signatories of Sponsor and CRO, otherwise being null and void. Changes in the Protocol may imply changes in the total course of the Study (costs, time-lines etc.).

 

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12. If any one or more provisions of this Agreement shall be found to be illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

 

13. The Agreement and any matters connected herewith shall be governed by the laws of England, excluding its rules for choice of law. Any dispute relating to or arising in connection with this Agreement, which is not settled within a reasonable time, shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce (“ICC”) by one arbitrator appointed in accordance with the said rules. The award shall be final and binding and enforceable in any court of competent jurisdiction. The arbitration shall be held in London, United Kingdom, in English language.

 

14. The Agreement has been drawn up in two identical counterparts, one counterpart for each of the Parties.

 

CRO:    Sponsor:

Anna Baran /s/ Anna Baran

 

Mike Jagielski /s/ Mike Jagielski

  

/s/ Amos Ron

Vascular Biogenics Ltd.

Amos Ron, CFO

January 1, 2014

 

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Attachment No. 1

Scope of Services:

Part A

Study Assumptions

STUDY ASSUMPTIONS

 

 
Number of countries involved    1
COUNTRIES INVOLVED    Poland
CRA staff involved    3
STUDY SITES    10
PATIENTS ENROLLED (# of expected)    50
NUMBER OF PATIENT’s VISITs IN SITE DURING THE STUDY    9
PLANNED NUMBER OF PAYMENTS FOR PI AND SITES DURING THE STUDY    3

 

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Attachment No. 1

Scope of Services:

Part B

Division of Responsibilities CRO - Sponsor

 

     KCR    VBL
Ltd.
  

Comments

STUDY INITIATION         
Protocol development       X   
Protocol review    X    X    KCR to review the draft of study protocol and provide VBL with comments.
Protocol approval       X   
Protocol printing    X      
Protocol distribution to sites    X      
Preparation of amendments       X   
CRF design and development (e CRF)       X   
CRF review & approval       X   
Preparation of master Informed Consent (IC) and Patient Information Sheet (PIS)       X   
Revision and translation of Informed Consent and Patient Information Sheet according to local Ethical Committee requirements    X      
Final approval of country specific IC and PIS       X    Based on back translation of local of Informed Consent and Patient Information Sheet. Approval process according to KCR SOP.
Monitoring Plan development    X      
Monitoring Plan approval       X   
Recruitment Plan development    X      
Trial Master File Set-up    X      
Distribution of Site Documents    X      
Randomization schedule preparation    X      
REGULATORY / ETHICS COMMITTEE SUBMISSIONS         
Preparation of the documentation for Ethics Committees    X    X   

VBL to provide :

- Investigator’s Brochure

- IMPD

- CRF

- Insurance certificate

- Patient related scales/diaries

- Certificate of analysis

- Drug label

- Manufacturing authorisation

- GMP certificate

KCR to provide VBL with country specific requirements regarding submission and to prepare submission package.

 

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     KCR    VBL
Ltd.
  

Comments

Submission of the documentation for Ethics Committees and follow up until authorisation    X      
Preparation of the documentation for Regulatory Authorities    X    X   

VBL to provide :

- Investigator’s Brochure

- IMPD

- CRF

- Insurance certificate

- Patient rated

scales/diaries - Certificate of analysis

   X    X   

- Drug label

- Manufacturing authorisation

- GMP certificate

KCR to provide VBL with country specific requirements regarding submission and to prepare submission package.

Submission of the documentation for Regulatory Authorities and follow up until authorisation    X      
TRANSLATIONS         
Translations    X       Relevant for patient-related documents, labels, Power of Attorney
SITE RECRUITMENT AND INITIATION         
Investigator’s Site Identification    X      
Investigator’s Site Selection    X      
Final Site Selection    X    X   

KCR to provide VBL with pre-study visit reports and lists of recommended sites in all selected countries.

VBL to approve selected sites.

Conduct Site Selection Visits    X      
Negotiate Investigators/Sites Contracts    X      
Final Approval for Investigators/Sites Contracts       X   
Signature on Investigators/Sites Contracts    X      
Regulatory Documents collection & review    X      
Conduct Site Initiation Visits    X      
INVESTIGATOR MEETING         
Investigator’s Meeting Planning    X      
Investigator ‘s Meeting Preparation    X    X   

VBL to present:

-VB-201: Scientific Background

-Phase I/II Experience & Development Plan

-Study Design & Objectives

-Protocol Overview

-Eligibility Criteria

-Study Specific Procedures

-Study Assessment Scales KCR to present:

-Communication Plan

-Timelines & Recruitment Strategies

-ICH GCP Refreshment

Investigator’s Meeting Attendance    X    X   
STUDY DRUG MANAGEMENT/ CENTRAL LABORATORY MANAGEMENT         
Clinical Trial Supply Logistics Management       X   
Packaging and labeling of study medication       X   
Distribution of study medication to sites       X   
Destruction of unused supplies       X   
Randomization list management       X   
Central Laboratory Supplies and Logistic Set-up/Courier Management       X    By VBL subcontractor.
Central Laboratory Management       X    VBL subcontractor to manage the central laboratory.
STUDY MONITORING         
Conduct Site Monitoring Visits    X      
Communication with Sites    X      
Monitoring visit reports preparation and review    X      
Monitoring visit reports final approval       X   
S.D.V.: (100% of patients, 100% of key study parameters)    X      
Periodic Regulatory Document Collection / Updates (Investigator’s Master File management)    X      
Data review/correction on all CRF’s    X      
Resolution of Queries with Sites    X      

 

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     KCR    VBL
Ltd.
  

Comments

SAE Reconciliation with Sites    X      
Conduct Site Close-out / Termination Visits    X      
Drug accountability during study and final drug record reconciliation    X      
End of Study Notification to Regulatory Agencies/ECs    X      
CLINICAL STUDY MANAGEMENT         
Maintain Central Trial Master File    X      
Fortnightly enrolment updates and Weekly Status Reports to Sponsor    X      
Administered Investigator’s Payments    X       KCR will be responsible for bank transfers.
Prepare and Distribute Newsletter (if applicable)       X   
Central File Archiving       X   
Clinical Team Communication    X       KCR to provide Communication Plan.
MEDICAL MONITORING         
Development of Medical Monitoring Plan       X   
Provide Medical Oversight to CRO Project Team       X   
Medical Communication/Consultation with Sites       X   
Patient Eligibility - Medical Review       X   
Review Safety Data Listing       X   
Review CRFs for safety/efficacy       X   
Review Safety Laboratory Data       X   
Review of Data Management Coding       X   
Review of Data Management SAE reconciliation       X   
Organization of Data Safety Monitoring Board Meeting       X   
SAFETY MONITORING         
Safety Plan Preparation       X   
SAE Reporting Procedure and Database Set-up       X   
Receipt & Review of Initial SAE Report from Site    X      
Tracking /Analyzing SAE Report       X   
Entering SAE into Database       X   
Writing SAE Narrative       X   
Expectedness Judgment for SAE & Regulatory Reporting Assessment       X   
Final Medical and Regulatory Judgment       X   
Preparing Annual Report for Competent Authority in EU (inc. safety update)       X   
Reporting Expedited SAEs to Regulatory Authorities       X   
Reporting Expedited SAEs to Investigators and EC    X      
Ongoing SAE File Maintenance       X   
DATA MANAGEMENT         
Preparation of Data Management Documentation such as Data Management Plan, Data Review Plan, Data Handling Guiding       X   
EDC collector development       X   
Data Review, Query Generation       X   
Query Resolution    X      
Import of Electronic (Laboratory) Data       X    By VBL subcontractor
Reconciliation of SAEs       X   
Provision of data extracts during study to support interim analyses       X   
Documentation Maintenance       X   
Archiving of EDC tool, Archiving of Data Management Material       X   
STATISTICS AND REPORTING         
Development of Statistical Analysis Plan       X   
Final Approval for Statistical Analysis Plan       X   
Creation of Analysis Dataset (Statistical analysis of the dataset)       X   
Programming of Tables, Figures and Listings       X   
PK parameters calculation       X   

 

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     KCR    VBL
Ltd.
  

Comments

Development of interim and final Integrated Statistical/Clinical Report in conformity to ICH guideline and CTD       X   
Review of final Integrated Statistical/Clinical Report in conformity to ICH guideline and CTD       X   
Final Approval for clinical Study Report       X   
Writing of SAE and AE Discontinuation Narratives       X   
AUDITS         
Conduct of GCP Audits of Investigator’s Sites    X      
Conduct of Quality Assurance Audit of Database       X   
PROJECT MANAGEMENT         
Management of the study team    X      
Communication with study sponsor and vendors    X      
Coordination of start-up activities, realization phase and closure    X      
Oversees the regulatory document collection and submission process.    X      
Control and track the budget monthly and cumulative realization    X      
Preparation of Risk Management Plan and/or Contingency Plan, if required    X      
CONTRACTS AND PAYMENTS         
Preparation of study contracts    X      
Signature and payments    X    X   
Payment of Ethics Committees’ fees    X      

 

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[***]

 

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[***]

 

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Protocol VB-201-079    VB-201

CLINICAL PROTOCOL

 

Title:

A Randomized, Double-Blind, Dose-Ranging, Placebo-Controlled Study to Evaluate the Efficacy and Safety of Oral VB-201 in Patients with Moderate to Severe Plaque Psoriasis

 

Protocol No.

VB-201-079

 

Eudra CT No.:

2012-002763-10

 

Investigational Product:

VB-201

 

Indication:

Plaque Psoriasis

 

Development Phase:

2

 

Sponsor:

Vascular Biogenics Ltd.

6 Jonathan Netanyahu St.

Or Yehuda, Israel 60376

Phone: 972-3-6346450

Fax: 972-3-6346449

 

Version:

2.2 (Poland and Israel only)

 

Date:

December 2, 2013

CONFIDENTIAL

This document contains proprietary and confidential information of VBL. Acceptance of this document constitutes agreement by the recipient that no previously unpublished information contained herein will be published or disclosed without the prior written approval of Vascular Biogenics Limited with the exception that this document may be disclosed to study personnel under your supervision who need to know the contents for conducting the study and appropriate Institutional Review Boards (IRBs)ZEthics Committees (1EC) under the condition that the personnel have agreed to keep this information confidential. The foregoing shall not apply to disclosure required by governmental regulations or laws, however, VBL shall be promptly notified of any such disclosure.

 

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Attachment No. 4

List of SOPs applicable for the Study conduct

KCR SOP AND ASSOCIATED FORMS AND TEMPLATES

 

 
     Version    Effective date

101.1 MED. Feasibility process

   5    06 Dec 11

 

Associated Forms And Templates:

101.1 MED. 01 Short Feasibility Worksheet

   2    08 Mar 10

101.1 MED. 02 Feasibility Questionnaire

   3    06 Dec 11

101.1 MED. 03 Feasibility Results

   2    08 Mar 10

101.1 MED. 04 Thank You Letter

   1    06 Dec 11

102.1 MED. Regulatory Submission for Clinical Study Application

   4    13 Dec 12

102.3 MED. Updating Clinical Study Documentation

   2    13 Aug 12

102.5 MED. Management of Regulatory Process

   2    13 Aug 12

103.1 MED. Pre-Study Visit

   2    21 Feb 11

Associated Forms And Templates :

     

103.1 MED. 01 Confirmation Pre-study Letter

   2    21 Feb 11

103.1 MED. 02 Pre-study Visit Checklist

   2    21 Feb 11

103.1 MED. 03 Pre-study Visit Report

   2    21 Feb 11

103.1 MED. 04 Follow-up Pre-study Visit Letter

   2    21 Feb 11

103.1 MED. 05 Site Selection Summary

   2    21 Feb 11

103.1 MED. 06 Site Selection letter

   2    21 Feb 11

103.1 MED. 07 Site Exclusion Letter

   2    21 Feb 11

103.1 MED. 08 Declaration on Facilities

103.1 MED. 09 Curriculum Vitae form

103.1 MED. 10 Contact Data Form

103.1 MED. 11 Pre-study Visit Agenda

   2

3

2

1

   21 Feb 11

21 Jun 11

21 Feb 11

21 Feb 11

104.1 MED. Informed Consent Form

   3    10 Nov 11

Associated Forms And Templates :

     

104.1 MED. 01 Informed Consent Form Approval Process

   2    10 Nov 11

104.1 MED. 02 Informed Consent Form Checklist

   2    10 Nov 11

104.1 MED. 03 Patient Information and Informed Consent Form Version Log

   2    10 Nov 11

104.1 MED. 04 Informed Consent Form local adjustment

   3    10 Nov 11

 

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105.1 MED. Initiation Visit

 

Associated Forms And Templates:

105.1 MED. 01 Confirmation Initiation Visit Letter

105.1 MED. 02 Site Initiation Visit Checklist

105.1 MED. 03 IMP Release Form

105.1 MED. 04 Site Green Light Approval

105.1 MED. 05 Site Initiation Visit Report

105.1 MED. 06 Delegation of Responsibilities Log

105.1 MED. 07 Site Visit Log

105.1 MED. 08 Subject Identification Log

105.1 MED. 09 Subject Screening and Randomization Log

   2

 

2

2

2

2

2

2

2

3

3

   04 Mar 11

 

04 Mar 11

04 Mar 11

04 Mar 11

04 Mar 11

04 Mar 11

04 Mar 11

04 Mar 11

04 Mar 11

04 Mar 11

105.1 MED. 10 Follow-up Site Initiation Visit Letter

105.1 MED. 11 Financial Disclosure Form

105.1 MED. 12 Subject pre-screening Log

105.1 MED. 13 Site Initiation Visit Agenda

   2

2

2

2

   04 Mar 11

04 Mar 11

04 Mar 11

22 Jan 13

105.1 MED. 14 List of Site Initiation Visit Activities

   1    04 Mar 11

105.1 MED. 15 Consent to Processing Personal Data

   1    02 Jun 11

105.1 MED. 16 Instruction on How to Manage Consent for Personal Data in Clinical Operation Department

   1    27 Aug 12

106.1 MED. Monitoring Visit

   2    18 Apr 11

Associated Forms And Templates :

     

106.1 MED. 01 Confirmation Monitoring Visit Letter

   2    18 Apr 11

106.1 MED. 02 Monitoring Visit Report

   3    18 Apr 11

106.1 MED. 03 Contact Report

   2    18 Apr 11

106.1 MED. 04 Subject Visit Status

   2    18 Apr 11

106.1 MED. 05 Note to File

   3    18 Apr 11

106.1 MED. 06 Follow-up Monitoring Visit Letter

   2    18 Apr 11

106.1 MED. 07 Monitoring Visit and Reporting Plan

   2    18 Apr 11

106.1 MED. 08 Data Clarification Form

106.1 MED. 09 Site Personal Training Log

106.1 MED. 10 Confidentiality Violation Log

   1

1

1

   18 Jul 11

26 Jun 12

26 Jun 12

106.2 MED. Taking Over The Study

   3    31 May 13

Associated Forms And Templates :

     

106.2 MED. 01 CRA Site Take-Over Checklist

   5    31 May 13

106.2 MED. 02 CTA Take-Over Checklist

   2    31 May 13

106.3 MED. Co-Monitoring Visit

   2    25 Jul 11

106.3 MED. 02 Co-monitoring Visit Report: Quality Control Assessment

   2    25 Jul 11

106.4 MED. Reporting Protocol Deviations

   2    10Aug10

Associated Forms And Templates :

     

106.4 MED. 01 Protocol deviation report

106.4 MED. 02 Protocol Deviation Cumulative List

   2

1

   10Aug10

10Aug10

 

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107.1 MED. Close-out Visit

 

Associated Forms And Templates:

107.1 MED. 01 Confirmation Close-out Visit Letter

107.1 MED. 02 Close out Visits Plan

107.1 MED. 03 Close out Visit Checklist

107.1 MED. 04 Close out Visit Report

107.1 MED. 05 Record Retention Form

107.1 MED. 06 Site Close out Assessment

107.1 MED. 07 Follow-up Close out Visit Letter

   3    29 Dec 11
   2

2

2

2

2

2

2

   30 Apr 11

30 Apr 11

30 Apr 11

30 Apr 11

30 Apr 11

30 Apr 11

30 Apr 11

108.1 MED. Translation

Associated Forms And Templates:

108.1 MED. 01 Translation Certificate

   3

 

3

   19 Sep 11

 

19 Sep 11

109.1 MED. Clinial Trial Documents

   4    16 Sep 13

Associated Forms And Templates :

     

109.1 MED 01 Essential Documents

   4    16 Sep 13

109.3 MED. Trial Master File

   1    16 Sep 13

Associated Forms And Templates :

     

109.2 MED. 01 Trial Maser File Table of Content

   1    16 Sep 13

109.2 MED. 02 Trial Maser File and Shadow File Review Form

109.2 MED. 03 TMF Transfer Form

109 3 MED 04 Study Documentation Management Form

   1

1

1

   16 Sep 13

16 Sep 13

16 Sep 13

109.5 MED. Investigator’s File

   1    16 Sep 13

Associated Forms And Templates :

     

109.5 MED. 01 Investigator´s File Table of Content

   1    16 Sep 13

109.5 MED. Electronic Study Folder and Shadow File

 

109.7 MED.01 Shadow File Coordinators Log

109.7 MED.02 Electronic Folder Names

109.7 MED.03 Example of Electronic Study Folder and Shadow File Structure

   1

 

1

1

1

   16 Sep 13

 

16 Sep 13

16 Sep 13

16 Sep 13

110.1 MED. Clinical Supplies

   3    16 Sep 13

Associated Forms And Templates :

     

110.1 MED. 01 Temperature Log

   3    16 Sep 13

110.1 MED. 02 Clinical Supply Shipment Management Log

   3    16 Sep 13

110.1 MED. 03 Clinical Supply Accountability Form

   3    16 Sep 13

110.1 MED. 04 Re-labelling Report

   3    16 Sep 13

110.1 MED. 05 Investigational product RECALL form

   3    16 Sep 13

110.1 MED. 06 Investigational product RETURN form

   3    16 Sep 13

110.1 MED. 07 Clinical Supply Destruction Report

110.1 MED.08 Site Investigational Product Accountability Log

   3

1

   16 Sep 13

16 Sep 13

111.1 MED. Clinical Trial Materials

   2    30 Sep 13

Associated Forms And Templates:

     

111.1 MED.01 Trial Supply Shipment Form

   4    30 Sep 13

111.1 MED.02 Controlled Copy Distribution Log

   3    30 Sep 13

111.1 MED.03 Frozen Samples storage log

   3    30 Sep 13

111.1 MED.04 Investigator’s Brochure Acknowledgement of Receipt

   2    30 Sep 13

 

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112.1 MED. Serious Adverse Event Reporting

   3    08 Mar 13

Associated Forms And Templates :

     

112.1 MED. 01 SAE Pregnancy Report Form

   3    08 Mar 13

112.2 MED. Distribution of SUSAR reports

   2    15 Sep 11

Associated Forms And Templates :

     

112.2 MED. 01 SUSAR Reports Tracking Log

   2    15 Sep 11

112.5 MED. Safety Management Principles

   1    16 Sep 2013

114.1 MED. Insurance in Clinical Trial

 

Associated Forms And Templates :

114.1 MED. 01 Questionnaire for Insurance Purposes

   3

 

3

   15 Apr 13

 

15 Apr 13

116.1 MED. Clinical Study Report

   3    28 Jun 13

Associated Forms And Templates :

     

116.1MED. 01 Clinical Study Report Tracking Log

   3    28 Jun 13

117.1 MED. Archiving Study Files

   3    09 Sep 13

Associated Forms And Templates :

     

117.1 MED. 01 Archiving Facility Log

   3    09 Sep 13

117.1 MED. 02 Archiving Coordinator Log

   2    09 Sep 13

117.1 MED. 03 Archiving Coordinator Backup Log

   2    09 Sep 13

117.1 MED. 04 Archiving Coordinator Take Over

   2    09 Sep 13

117.1 MED. 05 Post Study Checklist

   3    09 Sep 13

117.1 MED. 06 Content of Archived Box

   2    09 Sep 13

117.1 MED. 07 List of Archived Studies

   2    09 Sep 13

117.1 MED. 08 Retrieve from Archives Request

   2    09 Sep 13

117.1 MED. 09 Confirmation of Destruction

   2    09 Sep 13

117.1 MED. 10 Inventory of Archiving Boxes

   2    09 Sep 13

117.1 MED. 11 Inventory of Archiving Locking Seals

   2    09 Sep 13

117.1 MED. 12 Content of Archiving File

   2    09 Sep 13

117.3 MED Management of Electronic Correspondence

   1    29 Mar 13

121.1 MED. Contracts with Investigators and Investigational Sites

   4    01 Feb 10

Associated Forms And Templates :

121.1 MED. 01 Bilateral contract (investigator)

121.1 MED. 02 Bilateral contract (centre)

   4

4

   08 Aug 11

08 Aug 11

121.1 MED. 03 Tripartite contract (investigator & centre)

121.1 MED. 04 Bilateral contract (investigator-coordinator)

121.1 MED. 06 Lend agreement (investigator)

121.1 MED. 07 Lend agreement (centre)

121.1 MED. 08 Service agreement (contractor with team)

   4

4

2

2

2

   08 Aug 11

08 Aug 11

08 Aug 11

08 Aug 11

08 Aug 11

121.1 MED. 09 Service agreement (single contractor)

121.1 MED. 10 Bilateral contract (investigator) – MD

121.1 MED. 11 Bilateral contract (centre) – MD

   2

2

2

   08 Aug 11

08 Aug 11

08 Aug 11

121.1 MED. 12 Tripartite contract (investigator & centre) – MD

   2    08 Aug 11

 

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121.1 MED. 13 Bilateral contract (investigator-coordinator) – MD

   2    08 Aug 11

122.1 MED. Confidentiality Agreements and Confidentiality Obligation

   3    14 Mar 11

Associated Forms And Templates:

122.1 MED. 01 CA general unilateral (investigator - centre)

122.1 MED. 02 CA study specific unilateral (investigator - centre)

122.1 MED. 03 CA general unilateral (sponsor - contractor - other)

122.1 MED. 04 CA study specific unilateral (sponsor - contractor - other)

122.1 MED. 05 CA general mutual (sponsor - contractor - other)

122.1 MED. 06 CO in feasibility only (investigator)

122.1 MED. 07 CA/CO explanatory notice

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2

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2

2

3

2

   15 Feb 11

15 Feb 11

15 Feb 11

15 Feb 11

15 Feb 11

15 Feb 11

01 Mar 11

123.1 MED. Principles of drawing contracts and master service agreements

   2    28 Mar 11

Associated Forms And Templates:

     

123.1 MED. 01 KCR Group Contract Template:

        Master Service Agreement

123.1 MED. 02 KCR Group Contract Template:

        Service Agreement for a clinical study conduct

   2

 

1

   28 Mar 11

 

20 Oct 08

124.1 MED. Fraud and Misconduct

   3    11 Feb 13

125.1 MED. Purchases Within a Project

   1    25 Jul 11

127.1 MED. Legislation in Clinical Trials

   2    31 Jul 13

127.3 MED Regulatory Intelligence

 

Associated Forms And Templates:

127.3 MED.01 Regulatory Intelligence Responsibilities

   1

 

1

   28 Dec 12

 

28 Dec 12

128.1 MED. Communication with Subcontractor

 

Associated Forms And Templates:

128.1 MED. 01 Subcontractor Tracking Log

   1

 

1

   01 Sep 11

 

01 Sep 11

129.1 MED. Annual Progress Report to Competent Authorities

   2    30 Sep 11

Associated Forms And Templates :

     

129.1 MED. 01 Annual Progress Report Template

   2    30 Sep 11

130.1 MED. Preparing Monitoring Plan

   1    25 Nov 11

Associated Forms And Templates :

     

130.1 MED. 01 Monitoring Plan

   1    25 Nov 11

131.1 MED. Communication Plan

 

Associated Forms And Templates :

 

   1    30 Apr 12

131.1 MED. 01 Communication GLOBAL Contact List

   1    30 Apr 12

131.1 MED. 02 Communication COUNTRY Contact List

   1    30 Apr 12

131.1 MED. 03 Communication VENDOR Contact List

   1    30 Apr 12

131.1 MED. 04 Study Team Delegation Log

   1    30 Apr 12

131.1 MED 05 Communication Plan

   1    30 Apr 12

 

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132.1 MED. Unbliding

   1    28 Aug 12

Associated Forms And Templates:

132.1 MED. 01 Unblinding Contact List

132.1 MED. 02 Unblinding Report

132.2 MED. 03 Unblinding Listing

   1

1

1

   28 Aug 12

28 Aug 12

28 Aug 12

134.1.MED Principal Investigator Change

Associated Forms And Templates:

134 1 MED 01 Principal Investigator Change Checklist 131.1.MED.03

134 1 MED 02 Letter to Competent Authorities About Principal Investigator Change

   1

 

1

1

   04 Apr 13

 

04 Apr 13

04 Apr 13

 

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Attachment No. 5

List of third parties engaged by the Sponsor for the conduct of the Study

 

  a. Legal representative (SCIderm GmbH): CRO shall undertake the following obligation, and shall indemnify the sponsor for any damage in case it will breach such obligation: notify immediately SCIderm GmbH and the Sponsor of any untoward occurrences, including serious breaches of the protocol, GCP or regulations, occurring in the clinical trial.

 

  b. Data Management: CRO shall act according to the procedures, as shall be determined for this clinical trial.

 

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[***]

 

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[***]

 

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[***]

 

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[***]

 

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[***]

 

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[***]

 

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Exhibit 10.14

Unprotected lease Agreement

Drawn up and signed in Or-Yehuda on the             day of the month of January 2013

 

Between:   

Maslavi Construction Co. Ltd.

1 Aviv Moshe St., Or-Yehuda Industrial Zone

Tel.: 03-5339212 ; Fax: 03-5338437

(hereinafter: “Landlord”)

 

Of the first part

And between:   

Vascular Biogenics Ltd Company No. 512899766

Of 6 Yonni Netanyahu St.

Or-Yehuda

(hereinafter: “Tenant”)

 

Of the second part

 

Whereas:    The Landlord is the registered lessee of the Leased Premises within their meaning hereunder;
And whereas:    The Tenant wishes to lease the property from the Landlord in unprotected lease for the period and under the terms as specified in this Agreement hereunder and the Landlord agreed to lease the said property to the Tenant, in accordance with the provisions set forth in this Agreement;

Therefore, it is Declared, Stipulated and Agreed between the Parties as Follows:

 

1. Introduction

 

  1.1. The preamble to this Agreement shall be deemed an integral part hereof.

 

  1.2. The headings of the clauses will serve for the purpose of orientation and convenience only, and will not serve for the purpose of interpreting the Agreement.

 

2. Definitions

 

  2.1. “Leased Premises” – a built area situated in a building known as the “Aviv 2000” building in 6 Yonni Netanyahu St. in the town of Or-Yehuda (hereinafter: “Building”) in gross area of 825sqm situated on the first and ground floor of the building and 20 parking spaces.

 

  2.2. “Term of Lease” – a period taking effect on 1.10.12 and expiring on 30.9.2013;

 

1


  2.3. “Option Term” – two periods of 12 months each;

 

  2.4. “Basic Index” – the consumer price index known on the date of signing this Agreement;

 

  2.5. “Known Index” – the consumer price index known on the date of making any payment, and in any event shall not fall below the Basic Index;

 

  2.6. “Monthly Rent” – the basic rent paid by the Tenant during the Term of Lease for each month of lease and that shall be in the amount of NIS 43,697 + VAT, index-linked as specified hereunder;

 

  2.7. “Management Fees”: the management fees paid by the Tenant during the Term of Lease for each month of lease, and that shall be in the amount of NIS 9,075 + VAT index-linked as specified hereunder;

 

  2.8. “Additional Parking Payment” – a monthly payment in the amount of NIS 6,127 + VAT in respect of 20 parking spaces;

 

  2.9. “Purpose of Lease” – biotechnology industries, laboratories for chemical and microbiological testing;

 

  2.10. “Term of Payment” – each month;

 

  2.11. “Bank Guarantee” – an autonomous bank guarantee in an amount equal to the monthly rent X 4, index-linked and in effect as of the lease commencement date and up to 3 months following expiration of the Term of Lease.

 

3. Term of Lease

 

  3.1. The Landlord hereby leases to the Tenant and the Tenant hereby leases from the Landlord the Leased Premises for the Term of Lease within its meaning hereinabove. In addition, the Tenant is granted the option to extend the Term of Lease for the option terms within their definition hereinabove (hereinafter: “Option Terms”) on the condition that the Tenant upheld the terms of lease during the previous Term and/or terms of lease fully and to the satisfaction of the Landlord.

 

  3.2. In the event the Tenant failed to deliver written notice to the Landlord regarding its wish to terminate the lease under this Agreement no later than three (3) months prior to expiration of the Term of Lease, this shall be deemed as if the Tenant delivered the Landlord a notice on extension of the Term of Lease by the additional term of lease and the lease shall be extended automatically under the terms set forth in this Agreement for additional unprotected terms of lease.

 

  3.3. The terms of lease in the additional term of lease shall be identical to the terms of lease in the first Term of Lease, subject to modifications that were set forth expressly in the Agreement and except for rent that shall vary as specified hereunder.

 

2


  3.4. Notwithstanding anything said or implied to the contrary in this Agreement, the parties agree that this Agreement shall be terminated upon delivery of a notice to the Tenant effective immediately, immediately upon the occurrence of one of the following events: a bankruptcy order was delivered against the Tenant and/or a receivership order was issued against any of the controlling shareholders in the Tenant and/or the Tenant made an arrangement with and/or in favor of his creditors and/or a receiver or a trustee or any other officer that is identical or similar in essence to any of the positions of the said officers was appointed, or a motion for bankruptcy of the Tenant was filed and the motion was not stricken within 30 days. The Tenant shall be granted a 30 days’ extension to strike any of the orders enumerated in this clause. To dispel any doubt it is clarified that termination of the Agreement under the circumstances specified hereinabove shall constitute a fundamental breach of the Agreement on behalf of the Tenant.

 

4. Purpose of Lease

 

  4.1. The Tenant shall use the Leased Premises solely for the Purpose of Lease as specified hereinabove, or for any other legal purpose agreed by the Landlord and not for any other purpose.

 

  4.2. The Tenant shall be responsible to obtain all the certificates and/or licenses that are required for the purpose of using the property for the Purpose of Lease. Failure to obtain a permit or a license shall not serve as cause to terminate this Agreement by the Tenant or as cause to terminate the lease subject matter of this Agreement or by virtue of this Agreement. The Landlord shall sign, at the Tenant’s request, any document that is required by the authorities and that requires the signature of the owners/leaseholders and this shall not impose on the Landlord any financial liability and provided that the said request complies with the provisions set forth in this Agreement and any relevant law. The foregoing shall not apply to payments that apply by law or practice to the owner and/or holder of lease rights in the property.

 

  4.3. The Landlord shall not be obligated to make any payment in connection with obtaining the certificates and licenses as said. In the event the Landlord was charged with such payment as said, the Tenant shall indemnify the Landlord in respect of any amount it is charged as specified hereinabove.

 

  4.4.

The Tenant affirms that it inspected the Leased Premises and found them suitable for its requirements and it hereby waives any allegations regarding lack of conformity or any other claims. At the time of signing this Agreement the Landlord undertakes to take measures to remove the

 

3


  humidity under the floor in the ground floor within 90 days and inquire the odor nuisance in the first floor as argued by the Tenant and make repairs if necessary.

 

  4.5. Inspection by the Landlord

 

  4.6. The Landlord and/or representative thereof shall be entitled to visit the Leased Premises at any time during regular business hours and following advance coordination in order to examine and see whether the terms set forth in this Agreement are fully observed.

 

5. Rent

 

  5.1. Monthly rent that the Tenant shall pay to the Landlord during the first Term of Lease within its meaning hereinabove shall be the monthly rent as specified hereinabove. Statutory VAT shall be added to the said rent.

 

  5.2. In addition to the Rent, the Tenant shall make additional payment for the parking spaces, within their meaning hereinabove. The additional Parking Payment shall be paid together with the monthly rent and all terms set forth with regard to the monthly rent shall also apply to the additional Parking Payment.

 

  5.3. At the time of signing this Agreement the Tenant shall furnish to the Landlord postdated checks for the entire Term of Lease in a manner that 7 days before commencement of each term of payment, within its meaning hereinabove, a check shall be repaid for each term of payment. The first check shall be a cash check as of the date of signing this Agreement. Two months prior to commencement of each Option Term, and to the extent that no notice was delivered regarding termination of lease, the Tenant shall furnish to the Landlord new checks in respect of the additional term, in accordance with the provisions set forth hereinabove, otherwise its right to exercise the option shall expire.

 

  5.4. Rent shall be paid in new Israeli shekels and shall be linked to the index in a manner that upon expiration of the Term of Lease and upon expiration of each Option Term the Tenant shall pay to the Landlord the difference between linkage of each payment to the Basic Index and the Known Index, within their meaning hereinabove. In any event of delay in payment, for any reason that is contingent on the Tenant, the Tenant shall make payment according to the index known on the payment date applicable in accordance with this Agreement, or on the date of payment – upon the higher.

 

  5.5. In the event the Tenant vacated the Leased Premises for any reason prior to expiration of the first Term of Lease, or in the middle of an Option Term, the Tenant shall be obligated to pay rent for the entire Term of Lease and/or Option Term.

 

4


  5.6. Without derogating from for any relief and/or remedy that Landlord may seek in accordance with the provisions set forth in this Agreement and/or in accordance with the provisions set forth in any law then any default in payment of any amount shall incur 1.5% interest per month.

 

  5.7. A one-time default in payment for a period of up to 7 days shall not grant interest to the Landlord as said. Default in payment for a period that is longer than 7 days shall entitle the Landlord with interest in arrears as of the first day of default and until payment is made.

 

  5.8. A default in payment for a period of 14 days shall constitute a fundamental breach of this Agreement, and in such circumstances the Landlord shall not be obligated to deliver to the Tenant any additional notice prior to termination of the Agreement.

 

  5.9. The said in this sub-clause shall not derogate or affect the provisions set forth in clause 16 hereunder. Interest shall be deemed as rent.

 

  5.10. To dispel any doubt, furnishing the checks shall not be deemed as payment however only 3 days after their cashing on the dates designated for that purpose. Rent shall be paid in the address of the Landlord or shall be deposited in the Landlord’s bank account in accordance with the instructions set forth by the Landlord.

 

6. Management Fees

 

  6.1. In addition to the monthly rent the Tenant undertakes to pay the Landlord, during the entire Term of Lease and/or the Option Term, Management Fees within their meaning hereinabove. Statutory VAT shall be added to the Management Fees. The Landlord shall be entitled, at its sole discretion, to provide current management and maintenance services for the Tenant and all other tenants/users of the Building whether by itself or by others acting on its behalf. Management and maintenance services that are provided by the Landlord or anyone acting on its behalf shall include, inter alia , cleaning and lighting of public areas; air conditioning in any thereof and at the discretion of the Management Company; gardening of the gardens and vegetation in the public areas, maintenance, repair and preservation of the public areas, and maintenance and repair of equipment (except for spare parts and the equipment itself or parts thereof, to the extent required) that are in service of the project and/or all tenants in the Building or majority thereof and that is not owned and/or under the responsibility of any tenant, such as generators, gas and fuel tanks, sewage systems, plumbing, electricity, drainage, lighting, elevators and escalators in the public areas, whitewashing and painting the public areas; sealing and repair of the roofs of the Building; security and protection of the Building.

 

5


  6.2. Management Fees shall be paid jointly with the monthly rent and all terms set forth with respect to the monthly rent shall also apply to the Management Fees.

 

  6.3. The Tenant is aware that due to the special nature of the Building and the diverse uses made therein different instructions and restrictions shall be set forth and shall apply to all units and possessors therein in the agreement with the Management Company and the instructions set forth by the Management Company as set forth from time to time. These restrictions will include, inter alia , and without derogating from the generality of the aforesaid, restrictions on the use of electricity and water according to permitted loads, transportation, loading and unloading procedures, use of elevators, signage, advertising, services and cleaning. The Tenant undertakes to uphold all the instructions set forth hereinabove on the condition that they do not affect the Tenant’s rights in accordance with this Agreement, and the Tenant shall be held liable for any damage and/or loss and/or expense caused to the Landlord and/or any other entity as a result of breach of this undertaking. Without derogating from the generality of the aforesaid, in any event the Tenant wishes to increase the electricity capacity that is allocated and in the event that the increase is made possible, it shall be implemented on the condition that the Tenant upholds all the instructions and requirements set forth by the Landlord and/or the Management Company, including the payment of any additional expenses or amounts required in respect of the change.

 

7. Taxes, Charges and Obligatory Payments

 

  7.1. The Tenant shall incur all taxes, charges, payments and municipal and/or other payments applicable to the property and/or relating to the property and/or the lease subject matter of this Agreement and that exist at present and/or that will be imposed in the future (except for government property tax and new taxes of similar nature that will be imposed on the owner of the property as opposed to a possessor or user or tenant etc. per se), and the Tenant shall pay the said payments regularly and timely. The Tenant shall further pay regularly and timely all other expenses including electricity, water, telephone, tenants committee etc. For the purpose of securing the said payments the Tenant shall deliver a copy of the Agreement to the different authorities (municipality and the electricity company), and shall be registered as the payer in the bills. In the event the Tenant failed to act in the said manner the Landlord shall be entitled, without derogating from the undertaking of the Tenant, to act in the said manner, to deliver a copy of this Agreement to any of the authorities and/or institutions in favor of which the said payments are made and to inform them about the existence of this Agreement, in a manner that the payer of the said bills shall be the Tenant.

 

6


  7.2. In the event that the Leased Premises have one electricity meter, together with another unit and/or units in the Building, then the Tenant shall pay the electricity bill jointly and severally with the other tenant(s) who are connected to the said meter. The Tenant shall pay the bills in proportion to the area of the Leased Premises, unless otherwise agreed between the parties.

 

  7.3. The Tenant shall furnish certificates and receipts attesting that the payments that the Tenant is obligated to pay in accordance with this Agreement were duly made, at the Landlord’s request. The Landlord shall be entitled (however not obligated) to pay any amount applicable to the Tenant in accordance with this Agreement and that was not paid by the Tenant within 10 days as of the date set forth for its payment or as of the date that payment was supposed or is supposed to be paid, provided that it delivered the Tenant a 7 days prior notice in respect whereof. The Tenant shall return to the Landlord any amount paid as said, in addition to a fine at a 25% rate at least, together with linkage differentials and interest as specified hereinabove, as of the date that the said amount was paid by the Landlord and until the said payment is returned to the Landlord by the Tenant. The amounts due to the Landlord from the Tenant in accordance with the provisions set forth hereinabove shall be deemed as rent. The provisions set forth in this clause shall not affect and/or derogate from the right of the Tenant to seek any relief or remedy it may seek in accordance with the provisions set forth in this Agreement and/or in accordance with the provisions set forth in any law.

 

  7.4. Statutory VAT shall be paid by the Tenant together with and in addition to payment of rent. The Landlord shall furnish licensed dealer invoices to the Tenant.

 

8. Use of the Leased Premises

 

  8.1. The Tenant undertakes to use the Leased Premises in a reasonable and cautious manner and to see that during the entire term of use the Leased Premises and all facilities and installations thereof are in kept in working order.

 

  8.2. Without derogating from the foregoing, the Tenant undertakes to repair within a reasonable time and at its expense any defect and/or malfunction that it caused in the Leased Premises, and/or any other facility in connection with the Leased Premises in any manner (provided that the defects do not require immediate repair, and then the Tenant undertakes to repair the defect and/or the malfunction it caused in the Leased Premises forthwith) except for defects or malfunctions deriving from reasonable wear (which the Landlord is responsible to repair).

 

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  8.3. The Landlord undertakes to repair any defect or malfunction that was caused to the Leased Premises and that derives from reasonable wear and ordinary use within a reasonable time, subject to receiving a written notice from the Tenant regarding the malfunction that was caused in the Leased Premises (provided that the said defects do not bar reasonable use of the Leased Premises, and in such circumstances the Landlord undertakes to repair the defect and/or the malfunction forthwith). The Tenant undertakes to notify the Landlord forthwith upon becoming aware of any defect or malfunction as said. Any damage caused as a result of failure by the Tenant to deliver notice to the Landlord as specified in this clause shall be solely incurred by the Tenant.

 

  8.4. The liability of the Landlord under this Chapter shall not apply where the Tenant caused a defect and/or damage by its act and/or omission and/or an act and/or omission committed by anyone acting on its behalf, and in the event the defect or the breakdown malfunction from faulty maintenance on behalf of the Tenant and/or anyone acting on its behalf and/or due to misuse and/or negligent use and/or by an act and/or omission of the Tenant and/or due to works and/or alterations that were implemented not by the Landlord and/or materials and/or products that were purchased directly by the Tenant and/or due to failure to observe instructions or warnings, to the extent provided by the Landlord, regarding special features of the Leased Premises and/or the common property, by the Tenant.

 

  8.5. In the event one of the parties failed to repair a defect and/or malfunction it was obligated to repair as said, the other party shall be entitled (however not obligated) to make the said repair at the expense of the other party and provided that it delivered a written notice to the other party regarding its intention to act in the said manner and the other party failed to make the repairs within 30 days as of the date of receiving notice, without derogating or affecting its rights to seek any relief or remedy in accordance with the provisions set forth in this Agreement and/or in accordance with the provisions set forth in any law. The foregoing with regard to return of amounts that were expended by the party that made the repair in addition to interest as specified hereinabove shall apply, mutatis mutandis as the case may be, also for the purpose of amounts that are expended by one of the parties in accordance with the provisions set forth in this sub-clause.

 

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9. Prohibition on Implementation of Alterations

 

  9.1. The Tenant is prohibited from implementing and/or adding any alteration and/or adding any construction addition in the Building wherein the Leased Premises are located without obtaining the prior and written consent of the Landlord. In the event the Tenant acted or attempted to act in contravention of the said, the Landlord shall be entitled to deny from the Tenant implementation of any alteration and/or any construction addition as specified hereinabove, and to demand their immediate disposal and/or dispose them by itself, and the Tenant shall be obligated to pay to the Landlord, immediately upon its first request, all expenses in connection with the disposal and demolition as said that shall constitute a debt of the Tenant to the Landlord in accordance with this Agreement.

 

  9.2. Any amounts that are due to the Landlord in accordance with the provisions set forth in this clause shall incur interest at the rate set forth in clause 7.6 hereinabove as of the date the payment was made by the Landlord and until these amounts are paid to the Landlord.

 

  9.3. The Tenant shall not be entitled to install any signs without obtaining the prior and written consent of the Landlord. In addition, and in the event the Landlord allows the Tenant to install signage, then any tax and/or expense incurred in connection with the installation of signage shall be incurred by the Tenant.

 

10. Assignment of Rights

 

  10.1. The Landlord shall be entitled to transfer its rights (or a part thereof) in the Leased Premises to another/others without obtaining the consent of the Tenant in connection therewith, provided that the Tenant’s rights in accordance with this Agreement shall not be affected as a result of and/or following the transfer of rights as said.

 

  10.2. The Tenant shall not be entitled to assign and/or transfer and/or convey his rights in accordance with this Agreement without obtaining the prior and written consent of the Landlord. For the sake of caution, and without derogating from the generality of the aforesaid, it is clarified that the Landlord shall be entitled to withhold consent to assignment of rights at its sole discretion. Any transfer and/or assignment of rights without obtaining the consent of the Landlord shall be null and void and the Landlord shall be entitled to terminate this Agreement forthwith, and this shall not be deemed as a fundamental breach of this Agreement by the Tenant.

 

  10.3. It is agreed that Section 22 of the Hire and Loan Law 5731-1971 shall not apply to this Agreement.

 

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11. Vacating the Leased Premises

 

  11.1. Upon expiration of the Term of Lease or in any other time in which the Tenant is obligated to vacate the Leased Premises or in which the Tenant vacates the Leased Premises, the Tenant shall return to the Landlord possession in the Leased Premises when the Leased Premises are vacated from any person and article and in the condition the Tenant received the Leased Premises (when all its fixtures and installations are in working order).

 

  11.2. The Tenant undertakes to whitewash the walls and clean the Leased Premises thoroughly upon expiration of the Term of Lease.

 

12. Non-Applicability of Tenancy Protection Laws

 

  12.1. The Tenant declares that he did not pay and will not pay key money to the Landlord and that the provisions set forth in the Tenant Protection Law [Consolidated Version] 5732-1972 will not apply to the Leased Premises and/or the lease subject matter of this Agreement or any other provisions added to or that come in lieu of the provisions set forth in the said law.

 

  12.2. The lease subject matter of this Agreement is unprotected lease in accordance with the Tenant Protection Law and the Tenant undertakes to refrain from arguing otherwise. It is agreed that any allegation made by the Tenant that does not comply with the foregoing shall not be heard.

 

13. Securities

 

  13.1. For the purpose of securing the full and accurate performance of each of the Tenant’s undertakings in accordance with this Agreement, the Tenant shall furnish a bank guarantee within its meaning hereinabove.

 

  13.2. 7 days prior to realizing the guarantee by the Landlord the Landlord shall notify the Tenant about its intention to realize the guarantee and will allow the Tenant to remedy the breach.

 

  13.3. The Landlord shall be entitled to use the bank guarantee for the purpose of collecting all payments, debts, taxes and charges due to the Landlord and/or that apply to the Tenant in accordance with the provisions set forth in this Agreement (including for the purpose of making payment to third parties) and for the collection of damages in respect of damage caused to the Leased Premises during the Term of Lease and/or for the purpose of covering for expenses, provided that the Tenant receives a notice 7 business days in advance to make the said payments.

 

14. Prerequisites for Delivery of Possession in the Leased Premises – Canceled

 

15. Breaches

 

  15.1.

Failure to make payment of Rent accurately and timely as specified in this Agreement and/or default in making any payment applicable to the Tenant (such as municipal taxes, electricity etc.) and/or using the Leased Premises

 

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  in contravention of the Purpose of Lease and/or failure to accept and/or extend any security, including and in particular the bank guarantee and/or failure to vacate the Leased Premises on the dates specified in this Agreement (including and in particular upon expiration of the Term of Lease) and/or implementation of alterations in the Leased Premises without obtaining the Landlord’s consent and/or assignment of rights without obtaining the Landlord’s prior and written consent shall be deemed as a fundamental breach of this Agreement with all ensuing consequences, and shall entitle the Landlord to demand eviction of the Tenant from the Leased Premises in addition to any other relief or remedy that the Landlord may seek in accordance with the provisions set forth in this Agreement and/or in accordance with the provisions set forth in any law. In such circumstances, the Landlord shall deliver to the Tenant a 14 days’ prior notice notifying the Tenant about the breach and a period of time for remedying the breach during the said period. In the event the Tenant fails to remedy the breach during the said period of time the Landlord shall be entitled to demand from the Tenant to vacate the Leased Premises and in such circumstances the Tenant shall vacate the Leased Premises within 72 hours as of the time of receiving notice to that effect, in accordance with the provisions set forth clause 13 hereinabove, and the Landlord shall be entitled to realize the securities.

 

  15.2. In addition, and without derogating from the provisions set forth in sub-clause (a) hereinabove, the Tenant shall pay the Landlord an amount equal to 250% of the monthly rent as liquidated damages and without proof of damage, for each month of delay (and for part of a month – part of the liquidated damages) in respect of each day of delay in making payment and/or vacating the Leased Premises, whether upon expiration of the Term of Lease and whether in any other time in which the Tenant is obligated to vacate the Leased Premises in accordance with the provisions set forth in this Agreement or in circumstances arising out of this Agreement, and after delivering a 14 days’ notice from the Landlord following which the breach was not remedied, in addition to the rent and the current payments applicable to the Leased Premises (such as municipal taxes, electricity etc.). The liquidated damages shall be paid to the Landlord within 7 days as of the date the Tenant is required to make that payment by the Landlord. Notwithstanding the said it is agreed that a delay in vacating the Leased Premises of up to 7 days and a onetime default in payment of the rent shall not entitle the Landlord with any compensation, except for rent in proportion to the period of delay, however a default in payment longer than 7 days or a repeated default in payment shall entitle the Landlord with the liquidated damages as specified hereinabove as of the first date of the default.

 

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  15.3. For the sake of caution it is clarified that the compensation specified hereinabove shall be in addition to any relief that the Landlord may seek in accordance with the provisions set forth in this Agreement and/or in accordance with the provisions set forth in any law.

 

  15.4. To dispel any doubt, a default in payment in the four first months of the lease deriving from a delay in signing this Agreement shall not be deemed as default in accordance with this clause.

 

16. Seizing Possession by the Landlord

 

  16.1. In addition to any other relief or remedy that the Landlord may seek in accordance with the provisions set forth in this Agreement and/or in accordance with the provisions set forth in any law, the Landlord shall be entitled, in the event of failure to vacate the Leased Premises by the Tenant upon expiration of the Term of Lease, and in circumstances of default in any payment of rent and/or obligatory payments imposed on the Tenant, and in any other circumstances in which the Tenant is obligated to vacate the Leased Premises, to enter and seize possession of the Leased Premises in any manner it deems fit and take all measures for the purpose of evicting the Tenant from the Leased Premises and shall be entitled to store, in any location it deems fit and at the Tenant’s expense, any of the Tenant’s possessions that are located in the Leased Premises or dispose the said possessions from the Leased Premises and leave them anywhere the Landlord deems fit. In addition, the Landlord shall be entitled to restore the Leased Premises to their condition as specified in clause 13 hereinabove and charge the Tenant with payment of expenses that the Landlord incurred in connection therewith.

 

  16.2. The Landlord shall not be held liable for any damage caused as a result of or following such action as said for any reason. After the date set forth or that will be set forth for vacating the Leased Premises (whether upon expiration of the Term of Lease or on any other date, including due to termination of the Agreement due to its breach by the Tenant) the Tenant shall be deemed as trespasser in the Leased Premises for all intents and purposes.

 

  16.3. The Tenant shall pay to the Landlord amounts expended by the Landlord as a result of actions of evacuation performed by the Landlord or anyone acting on its behalf and the Tenant grants its consent to the activities of the Landlord or anyone acting on its behalf in the circumstances in question within 7 days as of the date it is required by the Landlord to make the said payment. The amounts that were paid in default shall incur linkage differentials according to the linkage mechanism set forth for the rent.

 

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17. Liability

 

  17.1. Without derogating from the provisions set forth in the principal agreement and in addition to the provisions set forth thereat, it is agreed that the Tenant shall incur any liability imposed on it by law for any loss, damage or damage or loss to the body and/or property of any kind caused to the Tenant and anyone acting on its behalf and/or to the Landlord and anyone acting on its behalf and/or to any third party including, however without derogating from the generality of the aforesaid, the employees and/or suppliers and/or visitors and/or workers of the Landlord and/or anyone acting on its behalf due to an act and/or omission of the Tenant and/or anyone acting on its behalf in anything related to the Leased Premises provided that the damage was not caused by the Landlord negligently and/or willfully.

 

  17.2. The Tenant undertakes to indemnify the Landlord for the full amounts the Landlord was instructed to pay in a judgment whose performance was not stayed following a claim for loss or damage for which the Tenant is liable as specified in clause 18.1 hereinabove, and for reasonable costs that the Landlord incurred for the purpose of defending against the said claim. The Landlord shall notify the Tenant within a reasonable time about receiving any demand and/or claim in respect of the said in clause 18.1 and shall allow the Tenant or its authorized representative to defend against it.

 

18. Insurance

 

  18.1. In the event any works are implemented in the Leased Premises not by the Landlord however by the Tenant and/or anyone acting on his behalf at any time during the Term of Lease, the Tenant undertakes to furnish to the Landlord the Insurance Certificate for the Tenant’s works enclosed with this Addendum and constituting an inseparable part thereof, marked as Appendix 1 (hereinafter respectively: “Tenant’s Works Insurance Certificate” and “Tenant’s Works Insurance”) signed by its insurer. The Tenant declares that it is aware that furnishing the Tenant’s Works Insurance Certificate as said is a suspending condition and a prerequisite for implementing any works in the Leased Premises, and the Landlord shall be entitled (however not obligated) to deny from the Tenant implementation of the works in the Leased Premises, in the event the said Certificate was not furnished to it prior to commencement of the works.

 

  18.2.

Notwithstanding the said in clause 19.1 hereinabove, in the event the amount of the works implemented as specified hereinabove is not greater than NIS 200,000 then the Tenant shall be entitled, instead of arranging

 

13


  the Tenant’s Works Insurance, to furnish to the Landlord an Insurance Certificate as specified in Appendix 2 (Tenant’s Insurance Certificate) hereunder, provided that the following shall be added in the final part of the Certificate: “To dispel any doubt it is clarified that the insurance specified hereinabove shall also apply at the time of implementing any works during the insurance period by the Tenant and/or anyone acting on its behalf, including construction, adjustment, betterment, renovation, dismantling works etc.”

 

  18.3. Without derogating from the liability of the Tenant in accordance with the provisions set forth in this Agreement and/or in accordance with the provisions set forth in any law, the Tenant undertakes, without receiving any notice from the Landlord, to furnish to the Landlord Appendix 2 hereunder “Tenant’s Insurance Certificate,” signed by its insurer, no later than the date of receiving possession of the Leased Premises or before the date of bringing any assets to the Leased Premises (except for assets that are included in the works insured under clause 19.1 hereinabove) – upon the earlier. The Tenant declares that it is aware that furnishing the Tenant’s Insurance Certificate is a suspending condition and a prerequisite for receiving possession in the Leased Premises and/or bringing any assets into the Leased Premises and/or the area (except for assets that are included in the worked insured under clause 19.1 hereinabove) and the Landlord shall be entitled (however not obligated) to deny from the Tenant receiving possession in the Leased Premises and/or bringing assets as said in the event that the Certificate was not furnished prior to the date specified hereinabove.

 

  18.4. It is agreed that the Tenant may not arrange consequential loss insurance, in whole or in part, as specified in clause (4) of Appendix 2 of the Tenant’s Insurance Certificate, however the exemption specified in clause 19.8 hereunder shall apply as if the said insurance was fully arranged.

 

  18.5. It is agreed that the Tenant shall be entitled not to arrange insurance coverage for glass breakdown, in whole or in part, as specified in clause (1) of the Tenant’s Insurance Certificate, however the exemption specified in clause 19.8 hereunder shall apply as if the said insurance was fully arranged.

 

  18.6. If the Tenant is of the opinion that an additional and/or supplemental insurance is required in addition to the insurance of the Tenant’s works and/or the Tenant’s insurances, the Tenant undertakes to arrange and maintain the additional and/or supplemental insurance as said. In any additional or supplemental property insurance as said a clause shall be incorporated regarding the waiver of the right of subrogation towards the Landlord and/or the owners and/or anyone acting on their behalf.

 

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  18.7. The Tenant undertakes to update the insurance amounts in respect of the insurance made under clauses (1) and (4) of the Tenant’s Insurance Certificate, from time to time, so as to reflect the full value of the insured.

 

  18.8. The Tenant exempts the Landlord and/or anyone acting on its behalf and/or the other tenants and/or lessees and/or other right holders in the real estate (provided that a parallel waiver towards the Tenant is included in their agreements) from liability for damage for which it is entitled to indemnification in accordance with the insurance arranged under clause (1) of the Tenant’s Works Insurance Certificate and clauses (1) and (4) of the Tenant’s Insurance Certificate (or for which it was entitled to indemnification if it had not been for the deductible amounts specified in the policies) however the said exemption from liability as said shall not apply in favor of a person who caused willful damage.

 

  18.9. No later than expiration date of the Tenant’s insurances, the Tenant undertakes to furnish the Landlord the Tenant’s Insurance Certificate in respect of extension of the said Certificate by an additional year. The Tenant undertakes to furnish to the Landlord the Tenant’s Insurance Certificate each insurance year and as long as this Agreement is in effect.

 

  18.10. Whenever the Tenant’s insurer notifies the Landlord that any of the Tenant’s insurances is about to expire or undergo adverse change, as specified in the final part of Appendixes 1 and 2 as said, the Tenant undertakes to renew the said insurance and furnish a new Insurance Certificate 14 days prior to the expiration or the adverse change in the insurance as said.

 

  18.11. To dispel any doubt it is clarified that failure to furnish the Insurance Certificates on time as specified in clauses 19.1, 19.3, 19.9 and 19.20 hereinabove, shall not derogate from the Tenant’s undertakings in accordance with this Agreement including and without derogating from the generality of the aforesaid, any payment obligation applicable to the Tenant, and the Tenant undertakes to uphold all its undertakings in accordance with this Agreement even if implementing the works and/or receiving possession in the Leased Premises and/or bringing assets into the Leased Premises is denied from it due to failure to furnish the certificates on time.

 

  18.12.

The Landlord shall be entitled to inspect the Insurance Certificates furnished by the Tenant as specified in 19.1, 19.3, 19.9 and 19.10 hereinabove, and the Tenant undertakes to implement any modification or amendment that is required so as to adjust the said Insurance Certificates

 

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  to the Tenant’s undertakings as specified in this Agreement, and subject to obtaining the consent of the insurance company. The Tenant declares that the right of inspection of the Insurance Certificates granted to the Landlord and the right granted to the Landlord to instruct their amendment as specified hereinabove shall not impose on the Landlord and/or anyone acting on its behalf any obligation and/or liability in anything related to the Insurance Certificates as said, including their quality, scope and effect of the insurances arranged in accordance with the Certificates as said or regarding their absence, and it shall not derogate from any liability imposed on the Tenant in accordance with the provisions set forth in this Agreement and/or in accordance with the provisions set forth in any law.

 

  18.13. The Tenant undertakes to uphold the provisions set forth in the insurance policies it arranges, pay insurance premiums fully and timely, and assure that the Tenant’s insurances are renewed from time to time as needed and shall be in effect during the entire Term of Lease.

 

  18.14. The Tenant undertakes to observe the safety procedures/directions that are published (if published) by the Landlord from time to time.

 

  18.15. To dispel any doubt, it is hereby agreed that the liability limits that are required in accordance with the Insurance Certificates are a minimal requirement that is imposed on the Tenant. The Tenant declares and affirms that it shall be precluded from raising any claim and/or demand towards the Landlord and/or anyone acting on its behalf in anything related to the liability limits as said.

 

  18.16. The Landlord shall arrange and maintain the following insurances during the entire term of the principal agreement:

 

       Extended fire insurance, providing insurance coverage for loss or damage to the building of the Leased Premises in full reinstatement value (except for additions and alterations that were added or will be added by the Tenant or anyone acting on its behalf) and, without derogating from the generality of the aforesaid, including against the risks covered under extended fire insurance policy including fire, smoke, explosion, storm, flood, earthquake, fluid damage, impact by a vehicle and/or a hoisting device, riots, strikes, willful damage and burglary. The Tenant shall pay the Tenant’s share in the insurance as specified hereinabove for arranging the said insurance.

 

  18.17. The Tenant shall be entitled, however not obligated, to examine a copy of the insurance policy that was issued to the Landlord and that is kept in the offices of the Landlord, after advance coordination. The foregoing shall not derogate from the Landlord’s obligations in accordance with this Agreement and impose on the Tenant any obligation and/or liability in connection with the Landlord’s insurances.

 

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19. Miscellaneous

 

  19.1. This agreement expresses everything agreed between the parties and replaces and revokes any written or oral representation or understanding that existed, if at all, between the parties on the matters mentioned herein prior to the execution hereof. Any modification and/or amendment and/or addition to this Agreement shall be null and void unless executed in writing and signed by the parties.

 

  19.2. Any agreement or arrangement or understanding between the parties shall be null and void unless executed in writing and signed by the parties.

 

  19.3. Postponement or avoidance from exercising any right by any of the parties shall not be deemed as waiver of that party with respect to the said right unless that party waived its rights expressly and in writing.

 

  19.4. In the event the Tenant comprises of two or more members, all of their undertakings towards the Landlord shall be jointly and severally.

 

  19.5. The reliefs the Landlord may seek in accordance with the provisions set forth in this Agreement and/or in accordance with the provisions set forth in any law are cumulative and not interchangeable.

 

  19.6. As of the commencement date of the lease this Agreement shall prevail over and supersede the Lease Agreement that was signed between the parties on April 18, 2002 and addenda thereof and the Management Agreement enclosed therewith.

 

20. Addresses

 

  20.1. The addresses of the parties for the purpose of this Agreement are as specified hereunder and any notice delivered by one party to the other party shall be deemed to have reached its recipient 72 hours following its delivery in registered mail.

 

  20.2. Address of the Landlord – 1 Moshe Aviv St., Or-Yehuda Industrial Zone 60371.

 

  20.3. Address of the Tenant – during the Term of Lease – in the Leased Premises and in the address specified in the preamble to this Agreement at any other time.

And in witness hereof the parties are hereby undersigned:

 

/s/ Maslari Construction Co. Ltd.

   

/s/ Dror Harats

The Landlord     The Tenant

 

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Appendix 1: Tenant’s Works Insurance Certificate

Date:                             

To

Maslavi Construction Co. Ltd. (hereinafter: “ Landlord ”)

1 Moshe Aviv St., Or-Yehuda Industrial Zone             

Dear Sir/Madam,

 

  Re: Insurance Certificate in the name of             (hereinafter: “ Tenant ”), inter alia in connection with lease of a property in a building built on land known as block             parcel             in             (hereinafter respectively: “ Leased Premises ” and “ The Building ”)

We hereby certify that as of             and until             (hereinafter: “ Period of Works ”) and during an extended maintenance period of 12 months (the Period of Works and the maintenance period shall be referred to hereinafter jointly: “ Insurance Period ”) our company arranged contractor insurance (Policy No.             ) in the name of the Tenant, contractors and subcontractors (in any rank), and in the name of the Landlord and/or the management company of the Building (hereinafter: “ Management Company ”), providing insurance coverage for the works implemented by the Tenant and/or anyone acting on its behalf (hereinafter: “ Works ”) as specified hereunder, when the scope of insurance coverage provided under the insurance as said shall not fall below the scope of insurance coverage provided under the policy known as “Bit 2008” (or any “Bit” policy at the time of arranging the insurance), including all extensions constituting an inseparable part of the policy as said:

 

1.

Chapter 1 – insurance for the Works, in full value (including materials provided by the Landlord and/or the Management Company) against loss or damage caused during the period of implementing the Works in the work site and during the maintenance period for the purpose of upholding the undertakings of the Tenant during this period and/or discovery of damage during the maintenance period due to reasons contingent on the works implementation period. This Chapter includes a clause on waiver of the right of subrogation towards anyone acting on behalf of the Landlord and/or the Management Company and towards other tenants, lessees and other right holders in the Building (the other tenants, lessees, and right holders shall be referred to hereinafter: “ Other Right Holders ”) when in the property insurance of the Other Right Holders a parallel clause on waiver of the right of subrogation towards the Tenant and/or in an agreement granting rights in the Building to the Other Right Holders is included as said and there is an exemption from liability in favor of the Tenant in respect of damage or loss caused to the property of the Other

 

18


  Right Holders due to the customary risks in contractor insurance or in extended fire insurance, however the said waiver shall not apply in favor of a person who caused willful damage. In addition, the Chapter includes express extension regarding insurance coverage to adjacent property and property under work in a liability limit of $100,000 (one hundred thousand U.S. dollars).

 

2. Chapter 2 – third party liability insurance in respect of the legal liability deriving from works in a liability limit as specified hereunder. The said chapter includes a cross-liability clause according to which the insurance is deemed to have been arranged separately for each of the members of the insured. The chapter states expressly that the Building of the Leased Premises is deemed as third party property.

To dispel any doubt, it is clarified that the liability limit of the insurer in respect of adjacent property and property under work as specified in Chapter 1 of the policy and in respect of Chapter 2 shall not exceed $250,000.

Liability limit: $1,000,000 per event and cumulatively according to the chapter.

The said Chapter is extended to include the following:

 

  A. Claims of subrogation by the National Insurance Institute up to US$ 250,000 per event and in total.

 

  B. Bodily damages deriving from the use of heavy engineering equipment which is a motorized vehicle and that is not required to be insured under compulsory insurance up to an amount of $150,000.

 

  C. Liability for damage that was caused due to weakening and vibrations of foundations in a liability limit of $100,000 per event and in total.

 

3. Chapter 3 – employers’ liability insurance providing insurance coverage towards any of the workers employed in the implementation of the Works in respect of a bodily damage or occupational disease that could be caused to any of them in the course of or following their employment as said, in a liability limit of $5,000,000 per plaintiff, per event and cumulatively for the Insurance Period. This insurance does not include any limitation regarding works in depth and in height, hours of work, baits and poisons, contractors, subcontractors and their workers in the event they are deemed as the Tenant’s workers, and youth employment in accordance with the law. In addition, the said insurance includes waiver of the right of subrogation towards anyone acting on behalf of the Landlord and/or the Management Company, however the said waiver shall not apply in favor of a person who caused willful damage.

The policy specified hereinabove shall prevail over any insurance arranged by the Landlord and/or the Management Company and we waive any demand and/or claim

 

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regarding participation of the insurances of the Landlord and/or the Management Company. In addition, we undertake that the above noted policy shall not be terminated or adversely changed during the Insurance Period unless a prior notice is delivered to the Landlord at least 30 days in advance to that effect. To dispel any doubt, we affirm that the Tenant shall be solely liable for paying the insurance premiums in respect of the said policies and incur the deductible amount applicable in accordance with the said policy.

Subject to the terms and exclusions set forth in the original policy to the extent that they were not expressly modified in accordance with the foregoing.

Respectfully yours,

 

 

 

 

 

 

 

 

(Stamp of Insurer)   (Signature of the Insurer)   (Name of Signatory)   (Position of Signatory)

 

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Appendix 2: Tenant’s Works Insurance Certificate

Date:                             

To

Maslavi Construction Co. Ltd. (hereinafter: “ Landlord ”)

1 Moshe Aviv St., Or-Yehuda Industrial Zone             

Dear Sir/Madam,

 

  Re: Insurance Certificate in the name of             (hereinafter: “Tenant”), inter alia in connection with lease of a property in a building built on land known as block             parcel             in             (hereinafter respectively: “Leased Premises” and “The Building”)

We hereby certify that as of             and until             (hereinafter: “Insurance Period”) we arranged the insurance specified hereunder inter alia in connection with the Lease Agreement referenced hereinabove:

 

1. Policy No.             

Extended fire insurance providing insurance coverage in full value for loss or damage to the content and/or additions and improvements that were added to the Leased Premises and/or the property by the Tenant and/or anyone acting on his behalf of any kind and owned by the Tenant and/or under his responsibility and that is located in and/or adjacent to the Leased Premises (without derogating from the generality of the aforesaid, including furniture, equipment, facilities and inventories of any kind), against fire, smoke, lighting, explosion, storm, flood, earthquake, fluid damage and splitting of pipes, impact by a vehicle and/or hoisting device, impact by an aircraft, riots, strikes, willful damage and burglary. The insurance includes a clause on waiver of the right of subrogation by the insurer towards the Landlord and anyone acting on its behalf and/or towards the other tenants and/or lessees (if a parallel clause regarding waiver of the right of subrogation towards the Tenant is included in their insurances) provided that the waiver of the right of subrogation as said shall not apply in favor of a person who caused willful damage.

 

2. Policy No.             

Third party liability insurance in respect of liability for loss, damage or damage to the body and/or property of any person and/or entity, in a liability limit in the amount of NIS 8,000,000 in respect of one insurance event and cumulatively for an insurance period of one year. The insurance shall not be subject to any limitation regarding: fire, explosion, panic, hoisting, loading and unloading devices, liability

 

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  in respect of and towards contractors and subcontractors, defective sanitary fixtures, poisoning, anything harmful in foods and beverages, implementation of additions and improvements in the Leased Premises, strikes and lockouts, and claims of subrogation on behalf of the National Insurance Institute. The said insurance is extended to indemnify the Landlord in respect of its liability for the acts and/or omissions of the Tenant, subject to a cross-liability clause according to which the insurance was arranged separately for each of the members of the Insured.

 

3. Policy No.             

Employers’ liability insurance in respect of the liability of the Tenant towards its employees in a liability limit of NIS 20,000,000 per plaintiff, per event and for an annual insurance period, when the insurance does not include any limitation regarding the implementation of additions and improvements in the Leased Premises, baits and poisons, and youth employment by law. The insurance is extended to indemnify the Landlord in the event it is alleged, for the purpose of the occurrence of an accident and/or any occupational disease, that it is held liable as an employer towards any of the Tenant’s employees.

 

4. Policy No.             

Consequential loss insurance (except for rent for the Landlord) due to damage that was caused to the content of the Leased Premises and/or the Building where the Leased Premises are located, in full value, due to the risks enumerated in clause (1) hereinabove, for an indemnification period that shall not fall below 12 months. The insurance includes a clause regarding waiver of the insurer on the right of subrogation towards the Landlord and anyone acting on its behalf and/or towards the other lessees and/or tenants (provided that a parallel clause regarding waiver of the right of subrogation towards the Tenant is included in their insurances) provided that the said waiver of the right of subrogation as said shall not apply in favor of a person who caused willful damage.

We hereby confirm that all the insurances specified hereinabove prevail over any insurance arranged by the Landlord and that we waive any demand or claim regarding participation of the Landlord’s insurances.

We further confirm that the above noted insurances shall not be diminished or terminated during the term of the Agreement unless we deliver to you a notice to that effect in registered mail at least 30 days in advance.

Subject to the terms and exclusions of the original policy to the extent that they were not expressly modified in accordance with the foregoing.

 

22


Respectfully yours,

 

 

 

 

 

 

 

 

(Stamp of Insurer)   (Signature of the Insurer)   (Name of Signatory)   (Position of Signatory)

 

23

Exhibit 10.15

MATERIAL TRANSFER AND CONFIDENTIALITY AGREEMENT

This Material Transfer and Confidentiality Agreement (“Agreement”) is by and between:

Crucell Holland B.V. , a Dutch company with offices located at Archimedesweg 4, 2333 CN, Leiden, the Netherlands, hereinafter referred to as “CRUCELL”; and

Vascular Biogenics Ltd. , with offices located at 6 Jonathan Netanyahu Street, 60376, Or-Yehuda, Israel (hereinafter referred to as “Vascular Biogenics”; and

Lonza Houston Inc. , a company with offices located at 8066 El Rio Street, Houston, Texas 77054 U.S.A., hereinafter referred to as “Contractor”.

(hereinafter individually referred to as “Party” and collectively as “Parties”)

WHEREAS Crucell is the owner of a proprietary PER.C6 ® cell line (hereinafter referred to as “PER.C6 ® CELLS”), and of related proprietary and confidential information and patent rights (“Per.C6 ® CELL KNOW-HOW”);

WHEREAS Crucell and VBL have signed a commercial license agreement that employs PER.C6 ® CELLS and PER.C6 ® CELLS modified by incorporating technology of VBL (collectively with PER.C6 ® cELLS, “PACKGING CELLS”), to manufacture, use and develop a pharmaceutical products in certain fields, effective as of April 15, 2011 (the “License”);

WHEREAS under VBL’ rights under Section 2.4 of the License, VBL wishes Contractor to perform certain scientific work within the field described in Attachment I, hereinafter referred to as the “Statement of Work”, using the PACKAGING CELLS and related proprietary and confidential information (“INFORMATION”), including, without limitation, related know-how (“PACKAGING CELL KNOW HOW”) on the condition that Contractor enter Into this Agreement with VBL;

WHEREAS Crucell is willing to make available the PER.C6 ® CELL KNOW-HOW to Contractor for the performance of the Statement of Work;

WHEREAS the Parties wish to make arrangements with respect to the use by Contractor of the PACKAGING CELLS, and of the results of the Statement of Work Performed thereon.

NOW, THEREFORE , the Parties hereto, intending to be legally bound, agree as follows:

 

  1. Supply of Know How : Crucell agrees to provide and consents to VBL’s providing, the PACKAGING CELLS and the INFORMATION to Contractor upon the execution of this Agreement; solely for scientific use under the Statement of Work. If Crucell is requested to deliver PER.C6 ® and PER.C6 ® KNOW-HOW to Contractor, Crucell shall ship the PER.C6 ® and PER.C6 ® KNOW-HOW to Contractor at VBL’s expense.

 

  2. Permitted and Restricted Uses: Contractor shall only use the PACKAGING CELLS and PACKAGING CELLS KNOW HOW to (1) to conduct authorized studies of or other tasks relating to the PACKAGING CELLS solely for use by VBL and/or (2) to use this PACKAGING CELLS and PACKAGING CELL KNOW HOW to develop processes and perform other tasks for the manufacturing and making of, and to manufacture and make, PACKAGING CELLS and products of VBL. Contractor shall not modify, alter, change and/or reconstruct the PER.C6 ® CELLS, other than as further described in the Statement of Work.


Commercial License Agreement PER.C6 ®

Crucell Holland – Vascular Biogenics

Page 2 of 6

 

  3. Ownership of results and materials : Subject to the terms and conditions agreed between VBL and Crucell in the License, all rights to any materials, data and any physical, chemical, or biological results (hereinafter referred to collectively as “RESULTS”) generated under the Statement of Work will vest in VBL. If during the course and performance of the Statement of Work, one or more employees of Contractor conceive or reduce to practice one or more inventions directly resulting from the Statement of Work, Contractor agrees that all right, title and interest in and to all such inventions, shall vest VBL or its nominee. Without derogating from the foregoing, to the extent certain RESULTS, including inventions and patent applications and patents emanating therefrom are subject to a license grant-back to CRUCELL under the License, VBL will effect such grant-back. Contractor shall promptly disclose such inventions to VBL, and at VBL’s cost and expense, including without limitation compensation for time expended by Contractor, shall diligently cooperate with VBL in the preparation of patent applications covering such Inventions, prosecution of such applications and any other acts necessary for the protection of rights to such inventions, Including but not limited to the execution of documents such as declarations and assignments to perfect VBL’s rights in and to such inventions. Contractor will refrain from any and all acts that may jeopardize the patentability of the invention in any jurisdiction.

 

  4. Contractor Control and Legal Obligations : Contractor shall at all times maintain control over the PACKAGING CELLS and comply with all applicable laws, regulations and guidelines related to PACKAGING CELLS (hereinafter collectively referred to as “the Rules”). Contractor will not, unless Crucell and VBL will have given prior written approval on conditions it deems fit, release, transfer or distribute the PACKAGING CELLS to any party other than VBL and its authorized employees.

 

  5. Reporting: All RESULTS obtained from the screening, testing or use of PACKAGING CELLS by Contractor will be reported, under the confidentiality terms of Section 7, to VBL without delay.

 

  6. Termination : After the termination or expiration of this Agreement, Contractor shall transfer to VBL all remaining PACKAGING CELLS, derivates and any substances obtained from the Statement of Work and confirm such in writing to the other Parties, or shall –at the request of VBL – diligently destroy the PACKAGING CELLS, derivatives and any substances derived there from in accordance with the Rules referred to in Section 4, and confirm such in writing to the other Parties. Upon completion of review of Crucell’s and VBL’s INFORMATION by Contractor, upon the request of Crucell or in the absence of further agreement between VBL and the Contractor, Contractor shall return to VBL all the provided INFORMATION, and any copies thereof in Its possession, promptly by registered mail, certified mail, or courier service, for example. Federal Express, which retains record of the mailing, except that Contractor may retain one copy of such INFORMATION for the sole purpose of determining any continuing legal obligations to Crucell and VBL.

 

  7. Confidentiality Obligations :

 

  7.1. Contractor shall treat all RESULTS and INFORMATION as confidential and shall not itself use, except for the purposes of this Agreement, or disclose to any fourth party any of such RESULTS and INFORMATION, except as to any of such RESULTS and INFORMATION which Contractor can establish:

 

  (a) at the time of disclosure is in the public domain;

 

  (b) after disclosure becomes part of the public domain by publication or, except by breach of this Agreement by Contractor or breach by any other party under an agreement of confidentiality to Crucell or VBL;


Commercial License Agreement PER.C6 ®

Crucell Holland – Vascular Biogenics

Page 3 of 6

 

  (c) by written records was in its possessions at the time of disclosure by Crucell or VBL and was not acquired directly or indirectly from Crucell, VBL or from any other party under an agreement of confidentiality to Crucell or VBL;

 

  (d) Contractor receives from a fourth party legally in a position to provide Contractor with the INFORMATION or RESULTS, provided, however, that such was not obtained by said fourth party directly or indirectly from Crucell or VBL under an obligation of secrecy;

 

  (e) is excepted by prior written approval of Crucell in the case of INFORMATION or RESULTS in the case of VBL;

 

  (f) is required by law to be disclosed; or

 

  (g) is Independently developed by Contractor without reference to the INFORMATION or RESULTS as evidence by records, however maintained.

 

  7.2. Contractor shall have the right to disclose RESULTS and INFORMATION to those directors, officers, employees and consultants of Contractor to whom such disclosure is necessary for the aforesaid purposes; provided that those persons to whom such RESULTS and INFORMATION may be disclosed under this paragraph have undertaken in writing confidentiality obligations with respect to such RESULTS and INFORMATION substantially similar to those undertaken by Contractor under this Agreement.

 

  7.3. Contractor will take all reasonable steps, including but not limited to those steps taken to protect information, data or other tangible or Intangible property of its own that it regards as proprietary or confidential, to ensure that the RESULTS and INFORMATION are not disclosed or duplicated for any unauthorized party’s use and to prevent the directors, officers, employees and consultants of Contractor from violating this Agreement. Contractor shall notify Crucell and VBL promptly of its knowledge of any unauthorized use or unauthorized disclosure of RESULTS or INFORMATION.

 

  8. Title and all rights to all Crucell’s INFORMATION owned by Crucell (as determined under the License) disclosed under this Agreement remain vested in Crucell.

 

  9. Nothing in this Agreement is to be construed as a license to Contractor to utilize Crucell’s Know How, Trademarks, or trade names, except as provided in this Agreement, in any way whatsoever or under any patent or patent application owned by Crucell, unless a separate written license agreement is executed. Any modification to this Agreement shall be in writing.

 

  10. Use of Names : None of the parties will use the name of another party hereto in relation to this Agreement in any advertising or other form of publicity, without the prior written approval of such party.

 

  11. Limited Warranty : Except as otherwise provided herein, Crucell and VBL make no representation with regard to purity or biological activity of PACKAGING CELLS provided.


Commercial License Agreement PER.C6 ®

Crucell Holland – Vascular Biogenics

Page 4 of 6

 

  12. Indemnification : Crucell shall not be liable for any claim or damage arising from or in connection with Contractor’s use, handling or storage of PACKAGING CELLS and Contractor and VBL shall hold harmless and Indemnify Crucell for any such claim or damage, unless such claim or damage arises from the negligence or wrong-doing of Crucell. VBL shall hold harmless and indemnify Contractor for any such claim or damage, unless such claim or damage arises from the negligence or wrong-doing of Contractor.

 

  13. Each party warrants that it is permitted to enter into this Agreement and that the terms of this Agreement are not inconsistent with other contractual obligations it may have.

 

  14. Notwithstanding the terms of this Agreement, no party to this Agreement shall be obligated to enter into any further agreement with the other.

 

  15. This Agreement is binding upon the parties hereto and their successors in business, but is not otherwise assignable, other than in connection with a merger, consolidation or sale of all or substantially all assets related to the subject matter of this agreement.

 

  16. Effective Date, Termination Date and Survival : This Agreement will be effective on February 6, 2012 and will terminate after the earlier of (i) the completion of the Statement of Work described in Attachment I, (ii) 60 months after the effective date or (ii) upon termination of the License. Section 3, 5, 6, 7, 8, 10, 11, 12, 14, 16, 18, 19 and 20 will survive any termination of this Agreement.

 

  17. Except as otherwise set forth herein, this Agreement may not be modified, assigned or transferred in whole or in part by Contractor, unless Crucell will have given prior written approval on conditions it reasonably deems fit.

 

  18. Contractor agrees that its obligations set forth in Sections 2, 4 and 7 are necessary and reasonable to protect Crucell and expressly agrees that monetary damages may be inadequate to compensate Crucell for any breach of any covenant or agreement set forth in Sections 2, 4 or 7. Contractor agrees and acknowledges that any such violation or threatened violation may cause irreparable injury to Crucell and that in addition to any other remedies to seek injunctive relief against any threatened breach of this Agreement or the continuation of any such breach, without the necessity of proving actual damages.

 

  19. This Agreement shall be exclusively governed by and construed in accordance with the laws of the Netherlands. All disputes arising out of or in relation to this agreement shall, to the exclusion of all others, be referred exclusively to the competent Dutch Courts, and the Parties agree that judgments of the Parties. In the event of a dispute between the parties regarding this agreement, the parties shall first attempt to resolve their dispute through amicable discussion.

 

  20. In case of conflict between the License and this Agreement, the provisions of the License shall prevail, except with respect to Contractor in which case this Agreement shall prevail.

IN WITNESS WHEREOF , Contractor, VBL and Crucell have executed this Agreement by their respective, duly authorized, representatives of the date hereinafter written:


Commercial License Agreement PER.C6 ®

Crucell Holland – Vascular Biogenics

Page 5 of 6

 

CRUCELL HOLLAND B.V.

For and on behalf of Crucell N.V.

   

Vascular Biogenics Ltd.

By:  

[Illegible]

    By:  

/s/ Eyal Breitbart

Name:       Name:   Eyal Breitbart
Function:     Function: VP Research
Lonza Houston Inc.      
By:  

/s/ J. David Enloe, Jr.

      /s/ [Illegible]
Name:   J. David Enloe, Jr.       VP Strategy & Corporate Development
Function: Head, Viral-based Therapeutics      


Commercial License Agreement PER.C6 ®

Crucell Holland – Vascular Biogenics

Page 6 of 6

 

ATTACHMENT 1 STATEMENT OF WORK

[***]

Exhibit 10.16

AGREEMENT

THIS AGREEMENT is made and entered into as of this 24 day of January, 2010 by and between Vascular Biogenics Ltd., a company registered under the laws of the State of Israel (“ VBL ”) and Prof. Jacob George (“ George ”);

 

WHEREAS: George is a co-founder and employee of VBL, currently serving as VBL’s Chief Scientific Officer pursuant to that certain employment agreement between the parties dated March 2001 and as amended (the “ Employment Agreement ”). In addition, George serves as a senior cardiac researcher at the Tel Aviv Sourasky Medical Center (“ Sourasky ”);

 

WHEREAS: The parties acknowledge that the engagement by VBL and Sourasky in parallel may cause uncertainty in connection with the ownership of certain inventions developed by George during the course of his engagement and related intellectual property; and

 

WHEREAS: The parties wish to clarify the matter and set the understandings as between the parties according to the terms hereof;

NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:

 

1. Intellectual Property Rights

 

  1.1 Other than as specifically indicated in Appendix A , all right, title and interest in and to the intellectual property developed, conceived or reduced into practice by George since the commencement of George engagement with VBL belong exclusively to VBL in accordance with the terms of Section 6 of the Employment Agreement (“ VBL IP ”). The parties further believe that Sourasky has no or will not have any claim, basis for a claim, right or interest in and to the VBL IP.

 

  1.2 VBL hereby represents and warrants that it does not have any claim or right in and to the intellectual property specified in Appendix A or otherwise derived or resulting therefrom (“ Other IP ”) and hereby irrevocably waives any right in connection therewith. In the event that VBL is found to hold any rights in the Other IP, it hereby irrevocably sells, assigns, conveys and transfers to George, his assigns and successors all such right, title and interest anywhere in the world in and to such Other IP.

 

  1.3 VBL agrees to execute upon the request of such additional instruments, applications, declarations and forms, as may be necessary under any relevant law or as may be required by any official or authority, to continue, secure, defend, register and otherwise give full effect to, and perfect the foregoing assignment.

 

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  1.4 George agrees to support the position and VBL rights as set froth in Section 1.1 above in his correspondences with Sourasky and to assist VBL in any manner in connection with protecting VBL rights in the VBL IP against any claim made by Sourasky, if any.

 

2. Revenue Sharing

In the event that either Sourasky or George commercializes or provides any third party with the right to commercialize or otherwise exploit the Other IP or any other intellectual property if it is later found to be owned by Sourasky due to the engagement of George therewith, regardless of the parties agreement in Section 1 above, and as a result of such commercialization George receives any benefit, right or distribution (whether in cash or in kind), then George undertakes to transfer or ensure the receipt of 50% of such benefit, right or distribution by VBL within 30 days following the receipt thereof. In the event that the transfer of such portion of the benefit, right or distribution is not feasible, the parties shall agree on an appropriate mechanism to ensure VBL rights therein.

 

3. General Provisions.

 

  3.1 Governing Law; Arbitration . This Agreement shall be governed by and construed in accordance with the laws of the State of Israel. In the event that a settlement to a dispute hereunder cannot be reached within thirty (30) days, either party may request that such controversy be finally settled by arbitration pursuant to the Arbitration Law, 1968, by one arbitrator appointed by the Chairman of the Israeli Bar Association and acting in accordance with such law. The arbitrator will not be bound by rules of evidence or procedure and will give the reasons for his judgment. The arbitrator’s decision shall be final and enforceable in any court. This paragraph constitutes an agreement to arbitrate for purposes of the Arbitration Law, 1968.

 

  3.2 Entire Agreement . This Agreement, and all schedules attached hereto, constitutes the entire agreement of the parties with respect to the subject matter hereof. This Agreement may be amended only by a document executed by all parties purporting to effect such an amendment.

 

  3.3 Assignment . Neither party may assign or transfer its rights and obligations under this Agreement without the prior written consent of the other party, provided, however, that VBL may, without such consent, assign this Agreement and the rights, obligations and interests hereunder, in whole or in part, to any purchaser of all or substantially all of its assets or to any successor corporation resulting from any merger or consolidation.

 

  3.4 Non-Waiver . A failure by a party hereto to exercise or enforce any rights conferred upon it by this Agreement shall not be deemed to be a waiver of any such rights or operate so as to bar the exercise or enforcement thereof at any subsequent time or times.

 

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  3.5 Notice . For the purpose of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when personally delivered or sent by registered mail, postage prepaid, addressed to the respective addresses last given by each party to the other. All notices and communications shall be deemed to have been received on the date of delivery thereof, except that notice of change of address shall be effective only upon receipt.

{SIGNATURE PAGE FOLLOWS}

IN WITNESS WHEREOF the parties have caused this Agreement to be executed as of the day first written above.

 

VASCULAR BIOGENICS LTD.    
by:   /s/ Dror Harats       /s/ Jacob George
name:   Dror Harats                   PROF. JACOB GEORGE
title:   CEO      

 

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Appendix A

Monoclonal antibodies targeting Eotaxin and Eotaxin receptors as therapeutic agents.

 

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Eotaxin-2 (CCL24) inhibitors in inflammatory, autoimmune, and cardiovascular disorders

FIELD OF INVENTION

The present invention concerns the use of inhibitors of eotaxin-2 (CCL11) in the treatment of inflammatory, autoimmune, and cardiovascular disorders, in particular anti eotaxin-2 polyclonal or monoclonal antibodies.

BACKGROUND OF INVENTION

Chemokines are small cytokines which act as chemoattractants for leukocytes, coordinating both homeostatic trafficking of these cells as well as recruiting specific cell populations to sites of inflammation. Chemokine dysregulation is considered to play a part in a wide spectrum of human disease involving the immune system including inflammation and and autoimmunity (1).

The chemokine eotaxin-2 (also termed CCL11) is a potent chemo attractant for inflammatory cells. Eotaxin-2 binds the eosinophil receptor CCR3 and possesses a potent chemotactic activity for eosinophils (2-4), basophils (4), and Th2-type lymphocytes (5). There is abundant data on the pleiotropic effects of this chemokine. Eotaxin-2 is expressed in various types of endothelial cells (5-9), and induces angiogenic and migratory responses in endothelial (10) and smooth muscle cells (11).

Two additional cytokines having properties similar to eotaxin-2 (termed “eotaxin” and “eotaxin-3”) have been identified in humans. Eotaxin-2 is only 39% homologous to eotaxin, and the two polypeptides differ almost completely in the

 

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NH 2 -terminal region (12). Eotaxin-2 is located on chromosome 7q11.23 and eotaxin is located on chromosome 17q21.1. The eotaxin-3 gene lies close to the eotaxin-2 gene on chromosome 7 but shares only 33% homology with it. All these chemokines bind specifically to the CCR-3 receptor. CCR3, the eotaxin receptor, is a 7-transmembrane G protein-coupled receptor which, beside being expressed by eosinophils, is expressed by a wide array of cell types including macrophages and endothelial cells (13).

WO 97/00960 discloses nucleic acids which encode human eotaxin , as well as isolated or recombinant human eotaxin proteins. WO 97/00960 also discloses methods of use of the eotaxin proteins in the recruitment of eosinophils to a particular site or in the treatment of allergic conditions.

CCR3 expression was originally extensively studied in the pathogenesis of asthma and allergy, where it continues to serve as a therapeutic target (14). More recently however, a role for this pathway has emerged in the study of additional inflammatory and autoimmune disorders including inflammatory bowel disease (15), multiple sclerosis (16) and rheumatoid arthritis (RA).

Rheumatoid arthritis (RA) is a common, chronic inflammatory disease, characterized by intense, destructive infiltration of synovial tissue by a broad spectrum of inflammatory cells (17). Multiple cytokines, derived from macrophages and fibroblasts are responsible for the secretion of both cytokines and chemokines in (RA)(18). The accumulation of leukocytes in the joint space leads to secretion of tissue degrading factors, including cytokines and matrix degrading enzymes.

 

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Chemokine inhibition has previously been tested as a therapeutic option in adjuvant induced arthritis, a commonly used animal model of RA (19). Using the same model, CCR3 has been shown to play a role in recruitment of leukocytes to synovial tissue (20). Differential expression of many chemokines and chemokine receptors has also been demonstrated in serum and synovial tissue of RA patients (21).

Inflammation with involvement of cytokines and chemokines is thought to play a pivotal role also in promoting atherosclerotic plaque growth and propensity to destabilize and subsequently rupture (22, 23). Eotaxin/CCL24 receptor (CCR3) is expressed in plaque macrophages (24). A clinical study demonstrated that in a cohort of healthy men, a non-conservative polymorphism in the eotaxin gene has been associated with increased risk for myocardial infarction (25). In a subsequent study, it has been found that increased circulating eotaxin level is associated with the presence of coronary atherosclerosis and ischemia (26, 27).

Atherosclerosis is a process in which fat deposition progresses in the arterial wall leading to progressive narrowing of the lumen. The mature plaque is composed of two basic structures: the lipid core and the fibrous cap. The smaller the lipid core and the thicker the fibrous cap, the more stable the plaque is, meaning that its propensity to rupture and cause myocardial infarction or unstable angina are increased. It is now clear that most plaques that cause acute coronary syndromes (e.g., myocardial infarction and unstable angina) are angiographically shown to have <70% stenosis (reviewed in 28, 29). Approximately 60% of these lesions are caused by rupture of plaques with a large thrombogenic core of lipid and necrotic debris (including foci of macrophages, T cells, old hemorrhage, angiogenesis, and calcium). The ruptured cap is thin, presumably because macrophages secrete matrix metalloproteinases that digest it as they move across plaque, and because smooth muscle cells (the supporting element of the plaque) are depleted due to senescence or apoptosis caused by several factors, such as inflammatory cytokines.

 

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WO 06/93932 discloses methods for the detection or diagnosis of atherosclerosis by measuring the level of eotaxin in an individual’s serum. The application further suggests that detection of elevated eotaxin levels in serum may provide a means to diagnose atherosclerosis prior to the onset of symptoms.

None of the above publications teach or suggest eotaxin-2 as a target for therapeutic intervention for the treatment of autoimmune or cardiovascular diseases.

SUMMARY OF THE INVENTION

The present invention is based on the finding that inhibition of eotaxin-2 by polyclonal or monoclonal antibodies, has a significant protective effect in animal models of inflammatory diseases such as rheumatoid arthritis, experimental autoimmune encephalomyelitis (EAE), colitis, diabetes, and atherosclerosis. Without wishing to be bound by theory, the protective effects could be mediated, at least in part, by attenuation of the adhesive and migratory properties of the active inflamatory cells (lymphocytes and mononuclear cells). The present invention thus introduces eotaxin-2 as a novel target for developing therapeutics to treat inflammatory and/or autoimmune disorders. The invention also provides specific anti-eotaxin 2 antibodies for use alone or in combination with other therapeutic agents in the treatment of such disorders.

Inflammatory and/or autoimmune diseases include, for example, psoriasis, inflammatory bowel disease (ulcerative colitis and Crohn’s disease), rheumatoid arthritis, diabetes, multiple sclerosis, systemic lupus erythematosus (SLE), scleroderma and pemphigus.

 

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Accordingly, by a first of its aspects, the present invention provides a pharmaceutical composition for treating inflammatory or autoimmune diseases comprising an Eotaxin-2 antagonist and a pharmaceutically acceptable carrier or excipient.

In one embodiment said Eotaxin-2 antagonist is an anti Eotaxin-2 antibody.

The anti-eotaxin-2 antibody may be a monoclonal antibody or a polyclonal antibody. The anti-eotaxin-2 antibodies may be human antibodies, humanized antibodies or chimeric antibodies.

In certain specific embodiments, said anti-eotaxin-2 antibody is a monoclonal antibody secreted by hybridoma G7, or hybridoma G8. In another embodiment, the Eotaxin-2 antagonist is an antisense or a siRNA molecule directed against Eotaxin-2 mRNA.

In another embodiment, the Eotaxin-2 antagonist is a small molecule.

By another aspect, the present invention provides a method for treating inflammatory or autoimmune diseases comprising administering to a patient in need thereof an eotaxin-2 antagonist or the pharmaceutical composition of the invention.

In accordance with certain embodiments of the invention, said autoimmune disease is selected from the group consisting of rheumatoid arthritis, inflammatory bowel disease, colitis, and diabetes.

By yet another aspect, the present invention provides a method for inhibiting atherosclerotic plaque formation comprising administering to a patient in need thereof an Eotaxin-2 antagonist or the pharmaceutical composition of the invention.

 

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The invention also provides a method for stabilizing an atherosclerotic plaque comprising administering to a patient in need thereof an eotaxin-2 antagonist or the pharmaceutical composition of the invention.

The invention also provides a method for preventing major cardiovascular events in a patient with acute coronary syndrome comprising administering to said patient an eotaxin-2 antagonist or the pharmaceutical composition of the invention.

The term major cardiovascular events encompasses but is not limited to, ST- or NON-ST elevation, myocardial infarction, unstable angina and new onset angina.

The methods of the invention also encompass administration of said eotaxin-2 antagonist or said pharmaceutical composition in combination with at least one additional therapeutic agent.

In accordance with certain embodiments said at least one additional therapeutic agent is selected from a group consisting of chemotherapeutics, cytokines, peptides, antibodies and antibiotics.

For the treatment of Arthritis, the at least one additional therapeutic agent for administration in combination with said eotaxin-2 antagonist or said pharmaceutical composition includes, methotrexate, a steroid, anti-TNF a antibodies, anti-IL6 R antibodies, or anti-CD20 antibodies.

For the treatment of colitis, the at least one additional therapeutic agent for administration in combination with said eotaxin-2 antagonist or said pharmaceutical composition includes, but is not limited to, cyclosporine, NSAIDS (non-steroidal anti inflammatory drugs), or steroids.

 

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For the treatment of multiple sclerosis, the at least one additional therapeutic agent for administration in combination with said eotaxin-2 antagonist or said pharmaceutical composition includes, but is not limited to, copaxone, interferon-beta, IVIG, or a monoclonal antibody to VLA-4 (e.g. Tysabri).

In accordance with one embodiment of the invention said at least one additional therapeutic agent is administered simultaneously with the eotaxin-2 antagonist or said pharmaceutical composition.

In accordance with another embodiment of the invention said at least one additional therapeutic agent and said eotaxin-2 antagonist or said pharmaceutical composition are administered sequentially.

In another aspect, the present invention provides a hybridoma cell line secreting an anti-eotaxin 2 monoclonal antibody, wherein said hybridoma is selected from the group consisting of D8, G7 and G8.

The present invention also provides a monoclonal antibody directed against eotaxin-2, or any fragment thereof which retains the binding ability to eotaxin 2, wherein said monoclonal antibody is secreted from hybridoma D8, G7 or G8.

In another aspect, the present invention also provides use of eotaxin-2 antagonists in the treatment of inflammatory and autoimmune diseases. In one embodiment said eotaxin-2 antagonists are antibodies.

The invention also encompasses use of eotaxin-2 antagonists in the preparation of pharmaceutical compositions for treatment of inflammatory and autoimmune diseases. In one embodiment said eotaxin-2 antagonists are antibodies.

 

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BRIEF DESCRIPTION OF THE DRAWINGS

In order to understand the invention and to see how it may be carried out in practice, embodiments will now be described, by way of non-limiting example only, with reference to the accompanying drawings, in which:

Detailed description of the embodiments

MATERIALS AND METHODS

Production of monoclonal antibodies

Several clones of mAbs were produced according to standard protocols. In short, Balb/C mice were immunized with 20µg of eotaxin-2 (Peprotec, USA) followed by four additional boosts. After confirming the presence of polyclonal anti-eotaxin-2 Abs in the sera, mice were sacrificed, cells were isolated from their spleens and hybridized with an NS/0 myeloma line, followed by clonal screening for binding to eotaxin-2. The hybridomas were then grown in serum-free media for 2-3 weeks, media collected and concentrated by 100 kDa centricons (Biological Industries, Israel). Cross-reactivity of one of the mAbs (D8) with murine eotaxin-2 was confirmed by ELISA.

Binding assays

Plates were coated with 1µ/ml of either eotaxin or eotaxin-2 (in buffer Carbonate), overnight at 4°C. The plates were washed with PBS-t 3 times and blocked with 2%BSA for 45 minutes at 37°C. Anti eotaxin-2 antibodies (the D8 clone) was put in serial dilutions in PBS for 1.5 hour at 37°C. Washing was repeated as indicated above and the plates were incubated for 1 hour at 37°C with a goat anti-mouse peroxidase conjugated antibody. Washing was repeated as above and binding was detected using a colorimetric substrate.

Splenocyte adhesion assays

In adhesion assays, C57Bl mice and Lewis rat splenocytes were separated on ficoll gradient and plated in 10cm dishes for an overnight incubation. On the next day cells were harvested and pretreated with increasing concentrations of D8 or total mouse IgG (5-50ug/ml) for two hours with rotation. Cells were then centrifuged and plated

 

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on 96-well plates pre-coated with fibronectin. After one hour-incubation, non-adherent cells were washed away and the amount of adherent cells was analyzed using XTT kit (Biological Industries, Israel). Similar adhesion assays were performed using peripheral blood mononuclear cells (PBMCs) collected from healthy donors.

Migration assays

C57BL/6J-derived splenocytes, as well as rat splenocytes and human PBMCs pretreated with D8 (30ug/ml) were plated onto the upper chamber of a Trans-Well system. The lower chamber contained serum-free media supplemented with VEGF (vascular endothelial growth factor) (20ng/ml). Four hours later the media in the lower chamber was collected and cells counted using flow cytometry (number of cells collected per minute).

Plaques and cardiovascular in vitro studies

Human carotid plaque preparation and protein array

Human atherosclerotic plaques were recovered from two groups of patients. Stable plaques (n-4) were obtained from endarterectomy specimens of patients with asymptomatic severe carotid atherosclerosis. Representative of unstable plaques were specimens obtained upon percutaneous coronary angioplasty of culprit vessels from patients with acute myocardial infarctions (n=4). Thrombectomies were performed by dedicated suction devices. The obtained material consists of red thrombi, white thrombi and fragments of vulnerable plaques from the culprit artery. After washing and lysis, the remaining tissue comprises predominantly fragments of atherosclerotic ruptured plaques.

The RayBio™ Human Inflammation Antibody Array 3.1 (Ray Biotech, USA) was used for detection of 40 cytokines, chemokines and growth factors in stable and vulnerable human plaques. Briefly, plaques were homogenized in lysis buffer provided within the kit using pellet pestle. Arrays were incubated with 500 mg of protein of each sample and developed following the manufacturer’s instructions. The results were analyzed using TINA 2.0 program.

 

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Capillary cells

Murine capillary cells (H5V) were cultured in DMEM F-12 (Biological Industries, Israel) supplemented with 10% fetal calf serum (FCS) (Invitrogen) and 1% penicillin/streptomycin sulfate (Biological Industries, Israel). The cells were maintained at 37°C in a humid incubator with 8% CO 2 . Monocytoid U937 cells were cultured in complete medium RPMI 1640, containing 10% FCS and 1% penicillin/streptomycin sulfate at a concentration of 10 6 cells/ml. The cells were maintained at 37°C in 5% CO 2 humid incubator.

Adhesion assay with endothelial cells

In adhesion assays, H5V mouse endothelial cells were incubated for 72h in presence of oxLDL, 1ug/ml (prepared as previously described, 33). Then the cells were plated overnight in 96 well plates at concentration 4X10 3 cells/well in presence of oxLDL, 1µg/ml. On the next day, the cells were pretreated with the neutralizing goat anti mouse Eotaxin-2 antibody (Cytolab, USA) or goat IgG for one hour before U937 cells or spleen-derived lymphocytes from ApoE mice were added at a concentration of 8 X10 4 /well. After one hour-incubation, non-adherent cells were washed away and the amount of adherent cells was analyzed using XTT kit (Biological Industries, Israel).

PCR analysis of aortas and H5V endothelial cells

RNA from tissue samples and H5V endothelial cells was isolated by the guanidinium thiocyanate and phenol chloroform method using EZ-RNA kit (Biological Industries, Israel) following the manufacturer’s protocol. RT-PCR was carried out using AMV reverse transcriptase (TaKaRa RNA PCR kit, Takara,

 

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Japan) in a conventional thermocycler. Specific gene amplification was performed using hot start TaKaRa Ex Taq DNA polymerase. Specific primers that do span intronic sequences were designed for mouse mRNA of eotaxin-2 and TGF-beta (Table 1). The following PCR conditions were used for amplification of G3PDH and TGF-beta: incubation of the samples at 95 °C for 2min and then 27 cycles (for G3PDH) or 35 cycles (for TGFbeta) consisting of 95 °C for 30 s; 55 °C for 45 s and 72°C for 1min. Touchdown PCR amplification protocol was used for analysis of eotaxin-2 mRNA expression: with the starting temperature 70°C and amplification for 30 cycles at annealing temperature of 60°C. PCR samples were run on a 2% agarose gel stained with Gelstar Nucleic Acid Stain (Gambrex, USA), and the PCR products were visualized with 300 nm UV transilluminator and photographed with Polaroid camera system. The absence of genomic contamination of the isolated RNA was confirmed by performing glyceraldehyde-3-phosphate dehydrogenase (G3PDH) PCR reactions on the purified RNA samples prior to reverse transcription. A negative control of nuclease-free water was included with all sample runs. Each RNA sample was analyzed several times.

Immunohistochemical Analysis of aortic sinus

Cryostat sections (5 µm thick) of the aortic sinus were evaluated employing indirect immunoperoxidase staining. Slides were than counterstained with Mayer’s hematoxylin and mounted with glycerol (Dako). Immunohistochemical staining was performed employing affinity purified goat anti-murine eotaxin-2 (Cytolab, Israel).

Statistical analysis

Comparison between groups was done by the one-way Anova test. P<0.05 was considered statistically significant. Results are expressed as means and standard error.

 

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Examples

Example 1: Specificity and Anti-inflammatory effect of an anti eotaxin-2 mAb (D8)

Several clones of Anti eotaxin-2 murine monoclonal antibodies (mAbs) were prepared as described above in the Materials and Methods section.

The specificity of the novel anti eotaxin-2 antibody was assessed in a binding assay. Serial dilutions of the mAbs produced in clone D8 were added to plates coated with either eotaxin or eotaxin-2, for an overnight incubation. After washing, the plates were incubated with a goat anti-mouse peroxidase conjugated antibody, washed again and binding was detected using a colorimetric substrate.

As shown in Figure 1, mAbs of clone D8 showed significant binding to eotaxin-2 and no binding to eotaxin, in all the range of tested dilutions.

The antibodies were also tested for their capability to inhibit adhesion of murine or rat splenocytes as well as human PBMCs to fibronectin or to attenuate their migration towards VEGF. D8 (50 µg) was found to inhibit adhesion of murine and rat splenocytes as well as human PBMC to fibronectin (FN) by 35-55% (Figure 2A). Migration towards VEGF was also attenuated in a dose-dependant manner (Figure 2B), confirming the potential anti-inflammatory effects of the antibody.

Example 2: Anti-inflammatory potential of clone D8 mAb ( in vivo data)

A. Rheumatoid Arthritis model

Adjuvant arthritis was induced in Lewis rats (six-week-old male Lewis rats obtained from Harlan, Israel) by injection of incomplete Freund’s adjuvant. Freund’s incomplete adjuvant was prepared by suspending heat-killed Mycobacterium

 

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Tuberculosis (Difco, Detroit, MI) in mineral oil at 10 mg/ml. Rats were injected intradermally with 100 µl adjuvant at the base of the tail. Arthritis developed by day 10 post injection.

Evaluation of the effect of anti – eotaxin-2 antibodies, compared with nonspecific IgG and PBS as controls, on adjuvant induced arthritis:

Rats (8 per group) were treated by intraperitoneal (IP) injection with 3 monoclonal antibodies against Eotaxin-2, (G7, G8, D8) 3X/week. Controls were treated with total mouse (non specific) IgG or PBS. Injections were started on the third day after adjuvant administration and were performed three times a week until the rats were sacrificed.

Dose response experiments:

In a second set of experiments, D8, the anti-eotaxin-2 antibody showing best protective results in the adjuvant- induced arthritis model, was tested in a dose – response model. Adjuvant arthritis was induced according to the above described protocol. Animals (6 rats per arm) were treated with D8 intraperitonealy at a dose of 20µg, 100µg or 1000 µg, starting on day 3 after adjuvant injection, three times weekly (D8 prevention group). A separate set of animals (6 in each group) were treated with identical doses after arthritis onset, namely when arthritis was already evident (D8 treatment group).

In order to compare the anti-inflammatory efficacy of D8 with that of a traditional anti-inflammatory agent of known efficacy, one group was treated with methotrexate (ip), 0.25mg/kg, once weekly, starting on day 3 after adjuvant injection (methotrexate prevention group). An additional group was treated with methotrexate, 0.25 mg/kg once weekly, in combination with D8, 100 µg (ip injection) given 3 times a week, starting on day 3 (combined D8 – methotrexate prevention group). A control group was treated with PBS throughout the experiment.

 

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Evaluation of arthritis severity:

Arthritis severity was evaluated by measuring body weight, paw swelling, arthritic score and whole animal mobility. Sample joints were obtained for pathological evaluation, and post mortem X-ray of ankle joints was performed to document erosions.

Body weight in grams was measured every other day as an indicator of systemic inflammation.

Evaluation of Paw swelling : Ankle and wrist diameter in mm (to one place after the decimal point) were recorded three times a week using a caliper.

Arthritic score measurement : Each paw was scored on a scale of 0-4 for the degree of swelling, erythema, and deformity (maximum score 16 per animal accounting for all four paws) as follows: 0= normal; 1=slight erythema and/or swelling of the ankle or wrist; 2=moderate erythema and/or swelling of ankle or wrist; 3=severe erythema and/or swelling of ankle or wrist; 4=complete erythema and swelling of toes or fingers and ankle or wrist, and inability to bend the ankle or wrist.

Finger and toe swelling was recorded according to their partial contribution: Ankles (feet): each toe scored 0.2; Wrist: each finger scored 0.25 Sum of all joints was calculated.

 

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Mobility score:

Whole animal Mobility was scored between 0-4, according to the following definitions:

0= normal; 1= slightly impaired; 2= major impairment; 3= does not step on paw; 4= no movement.

Statistical analysis : QuickCalcs software (Graph-Pad Software, San Diego, CA) was used for statistical analysis. Student’s t-test was performed to identify significant differences between experimental groups.

RESULTS:

A. arthritis model

Significant inhibition of arthritis was observed in rats treated with the anti—eotaxin—2 antibodies, compared to those treated with immunoglobulin (IgG) or PBS. As demonstrated in Figures 3A-3C, inhibition by the antibodies was manifested in all the tested parameters (arthritic score, mobility score, and ankle diameter). The antibody marked D8 showed the most significant effect. In the the arthritic score test (Fig 3A) statistically significant differences (P < 0.05) were obtained at every measurement, from day 13 to day 21, when comparing rats treated with D8 to rats treated with PBS or to rats treated with IgG. The protective effect became evident immediately with appearance of arthritis, on day 17 after induction. It continued to increase in magnitude until the end of the experiment, on day 21.

In the mobility score test statistically significant differences (P < 0.05) were obtained at every measurement, from day 17, when comparing rats treated with D8 to rats treated with PBS, and from day 18 when comparing rats treated with D8 to rats treated with PBS or to rats treated with IgG. Thus, the average mobility score of animals treated with D8 was 1.37 on day 21 compared with 2.43 in animals treated with PBS (p=0.05).

 

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In the ankle diameter tests statistically significant difference (p<0.05) was obtained between D8 and PBS as of day 19. The difference between D8 and IgG did not reach statistical significance.

As indicated above, D8 treated rats had lower scores of arthritis which ranged from 2.6 to 3.0 than rats treated with PBS (Fig. 4A). For the histological scoring, each paw was scored on a scale of 0-4 for the degree of destruction: 0= normal; 1= inflammatory infiltrates and synovial hyperplasia; 2= pannus formation and cartilage erosion; 3= important cartilage erosion and bone destruction; 4= loss of joint integrity. Histological analysis of the joints of the arthritic rats revealed that joints of D8 treated rats had synovial hyperplasia and scattered inflammatory infiltrates (Fig. 4B), while most of the rats treated with PBS (control group) had severe synovitis with panus formation and an intense inflammatory infiltrate (Fig. 4C).

In order to evaluate the effect of treatment with anti-eotaxin-2 antibodies on the systemic inflammatory response, average weight of animals was documented. As shown in figure 5, anti-eotaxin-2 treatment significantly ameliorated the loss of weight caused by the systemic inflammatory response induced by adjuvant arthritis. Again, the maximal protective effect was observed in animals treated with the D8 antibody, which continued to gain weight throughout the experiment. Statistically significant difference in weight (p<0.05) between D8 and PBS was obtained on day 17.

 

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Dose response experiments:

D8 prevention of arthritis:

In the series of dose response experiments, D8 at a dose of 100 µg had a significantly superior protective effect, compared with the low dose (20µg) and high dose (1000µg) groups (Figure 6A). Similar results were obtained regarding the mobility scores, ankle diameter and animal weight (data not shown). Statistically significant differences (P < 0.05) were obtained at every determination, from day 17 to day 24 when comapring rats treated with D8 100µ to rats treated with PBS.

D8 treatment of arthritis:

Treatment with D8 antibody intraperitonealy beginning at the time of appearance of arthritis also resulted in a significant reduction in arthritic score severity (Figure 6B) compared with PBS treated animals. Similar results were obtained regarding mobility, weight and ankle diameter. As demonstrated in Figure 6B, in this experimental set up similar results were obtained at the 100 µg and 1000 µg dose groups.

Combined D8 – methotrexate (MTX) prevention of arthritis:

While both methotrexate and D8 100 µg produced significant, comparable protection against development of arthritis, as measured by the arthritic score (compared to PBS treated controls), the combination of methotrexate and D8 produced an enhanced (synergistic) protective effect, as demonstrated in Figure 7.

Both D8 100 µg and MTX treatment caused a statistically significant effect (p<0.05) compared with PBS as of day 13. By the end of the experiment, on day 24, a statistically significant difference in the arthritis score was observed between rats treated with MTX alone and rats treated with MTX + D8 100 µg. A significant difference was also observed on day 24 in the mean ankle width between these groups (not shown).

 

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X-ray results:

Post – mortem X-ray demonstrated an intense degree of peri-articular soft tissue swelling in PBS treated rats, compared with minimal swelling in rats treated with D8 (Figure 8). In addition, control rats showed signs of decalcification and early erosion, which was not evident in the D8 treated animals. This is indicative of a significant reduction of inflammation in D8 treated animals.

Similar results were seen in x-rays of the forefeet (not shown).

B. Colitis model

In order to induce chronic colitis, ten-week old C57BL mice underwent three cycles of exposure to dextrane sulfate (DSS) in their drinking water for five days followed by 10-day intervals with regular tap water. By the end of the first cycle, mice were randomized into six treatment arms: vehicle control (PBS), total mouse IgG, and D8 given at increasing doses of 5µM, 25µM, 100µM and 200µM. Treatment was given by intraperitoneal (ip) injection in a 3X/week regimen. Body weight was documented twice a week. By the end of the last cycle, mice were sacrificed; the proximal portions of the colon were taken for immunohistochemical analysis and the distal portion for myeloperoxidase (MPO) activity assay (according to standard protocols) in order to assess the degree of the induced inflammation. The levels of inflammatory cytokines in the animals’ sera were detected by flow cytometry.

Treatment with IgG or with D8 significantly attenuated body weight loss compared to vehicle-treated animals. Throughout the study, the highest body weight was observed in the 5µg D8 treatment arm (Figure 9A). MPO activity on day 34 was significantly reduced in the 5µg D8 treatment group compared to all other treatment arms including mIgG (Figure 9B). In addition, the level of inflammatory cytokines in the sera of the D8-treated animals was lower than that detected in control animals (Figure 9C). Immunohistochemical analysis of the proximal colon confirmed reduction in the level of damage to the colon tissue as well as reduction in the extent and degree of inflammation (Figure 9D). The extent of inflammatory infiltrate was evaluated by an expert pathologist.

 

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C. EAE

EAE serves as a typical animal model to study potential therapeutics for the human disease multiple sclerosis (30).

Ten-week old C57BL mice were injected subcutaneously (sc) with 200µg MOG (Myelin Oligodendrocyte Glycoprotein) peptide suspended in Complete Freund’s adjuvant, followed by a second injection one week later. One day after induction of the disease (namely, one day after the second injection) treatment with vehicle control (PBS), total mouse IgG, 25µg D8 and 100µg D8 (3X/week, ip injections) commenced. The severity and the progression of the disease was documented 3X/week according to the standard EAE scoring system (31).

Treatment with 25µg, and more significantly with 100µg of D8, attenuated the progression of EAE signs during the whole course of the experiment. Moreover, D8 at the higher dose (100 µg) reduced the incidence of the disease from about 90% (in all other treatment groups) to only 55% (Figure 10), thus shedding light on the potential therapeutic advantage of D8 in the treatment of EAE.

D. Diabetes

The non-obese diabetic (NOD) mouse serves as an animal model of autoimmune diabetes (32).

Six-week old NOD mice were treated 3X/week with D8 or with vehicle control (PBS). Between days 49 to 112, the disease incidence was tested using a commercial urine test and the eotaxin-2 levels in their sera on day 112 was determined using an ELISA (Mouse CCL24/Eotaxin-2/MPIF-2 DuoSet; R&D).

 

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Diabetic incidence was markedly reduced in the D8-treated group compared to the untreated control (Figure 11A). In line with the clinical improvement, the level of eotaxin-2 was greatly reduced in the sera of the anti-eotaxin-2-treated animals compared to the control ones (Figure 11B).

E. Inhibition of atherosclerotic plaque formation

The expression level of an array of inflammatory cytokines and chemokines was measured in atherosclerotic lesions (plaques). Vulnerable plaques recovered from culprit coronary arteries of patients with acute myocardial infarction were compared with stable plaques obtained from endarterectomy samples. An analysis of the plaques by protein arrays is shown in Fig. 12. Processing was done as described in the materials and methods section.

Among the differentially expressed proteins, a significant alteration was found in the following proteins: VCAM-1, Eotaxin-2, IL-10, MCP-1 and TIMP-2; all exhibited a more than twofold reduction in expression in vulnerable versus stable plaques (Fig12A).

In immunohistochemistry studies in atherosclerosis prone mice (apoE KO mice), fatty streaks and advanced lesions from young and older mice were stained with anti-eotaxin-2 abs as described in materials and methods. Eotaxin-2 was shown to be present within endothelial cells and within plaque macrophages (Fig. 13).

mRNA expression was measured in young (6 week old) and atherosclerotic apoE KO mice. Aortas were obtained from the mice and subjected to RT-PCR as described in materials and methods. mRNA levels of eotaxin-2 and TGF-beta were assayed comparatively. Eotaxin-2 mRNA levels were found to be significantly higher in the young versus the older mice and this expression pattern paralleled the one observed with regard to the anti-atherosclerotic agent TGF-beta. Fig. 14A shows representative examples from each group.

 

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Oxidized LDL is considered to play a key role in promoting atherogenesis. Mouse H5V endothelial cells were incubated with oxidized LDL (oxLDL) (1µg/ml). oxLDL significantly upregulated eotaxin-2 mRNA levels in murine H5V endothelial cells (Fig. 14B).

To determine whether eotaxin-2 has a role in the adhesion of cellular components of plaque inflammation, adhesion assays were performed on cultured endothelial cells. Splenocytes from either young or older atherosclerotic apoE KO mice were isolated from the spleen. Murine endothelial cells were incubated with oxLDL (1µg/ml) and the adhesion of the splenocytes onto the endothelial cells was examined in the presence of eotaxin 2 or control IgG antibodies (Fig 15A). Preincubation of the endothelial cells with blocking antibodies to eotaxin-2 was found to attenuate the adhesion of the splenocytes to these cells (Fig. 15A). This effect was more robust in lymphocytes from atherosclerotic (6 months old) apoE KO mice compared to those obtained from young non-atherosclerotic mice (aged 6 weeks). These findings were also evident when monocyte-macrophage cell line (U937 cells) was allowed to adhere to the cultured endothelial cells (H5V murine endothelial cell line) (Fig. 15B).

The effect of eotaxin-2 blockade on early and advanced atherosclerotic plaques was measured. In preliminary studies, it was found that administration of twice weekly doses of 5 µg of blocking anti-eotaxin-2 antibodies were sufficient to significantly reduce eotaxin-2 mRNA levels in the aortas of the mice. Next, the effect of short term administration of anti-eotaxin-2 abs was examined. Young apoE KO

 

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mice were treated with Eoaxin-2 antibodies twice a week (i.p injections of 5 µg), or with control IgG or with PBS for 4 weeks and the effect on fatty streaks was measured. The mice were sacrificed for analysis of plaque size after oil-red O staining. Anti-eotaxin-2 drastically reduced fatty streak formation as compared to mouse IgG by approximately 72 percent (Fig. 16A). This effect was not associated with a change in lipid profile as total cholesterol and triglycerides were similar in both groups (data not shown). Moreover, treatment with control murine IgG did not influence plaque progression in comparison with PBS injections.

Next the effects of eotaxin-2 blockade were tested in a long-term model in which plaque architecture is more complex. Herein, after 10 weeks of two weekly injections of eotaxin-2 antibodies (5µg/dose), no significant differences were evident with regard to plaque size as measured in the hearts of older apoE KO mice (Fig. 16B). However, when plaque stability measured by fibrous area was assayed, it was found that antibodies to eotaxin-2 induced a significantly more stable plaque phenotype evident by a larger fibrous area at the expense of a smaller lipid core (Fig. 16C). Again, these findings were irrespective of lipid levels that were not different between groups. Representative Oil-red O and masson’s trichrome stained sections are provided in figure 17.

Atherosclerosis is a process in which fat deposition progresses in the arterial wall leading to progressive narrowing of the lumen. The mature plaque is composed of two basic structures: the lipid core and the fibrous cap. The smaller the lipid core and the thicker the fibrous cap, the more stable the plaque is, meaning that its propensity to rupture and cause myocardial infarction or unstable angina are increased. It is now clear that most plaques that cause acute coronary syndromes (e.g., myocardial infarction and unstable angina) are angiographically shown to have <70%

 

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stenosis (reviewed in 28, 29). Approximately 60% of these lesions are caused by rupture of plaques with a large thrombogenic core of lipid and necrotic debris (including foci of macrophages, T cells, old hemorrhage, angiogenesis, and calcium). The ruptured cap is thin, presumably because macrophages secrete matrix metalloproteinases that digest it as they move across plaque, and because smooth muscle cells (the supporting element of the plaque) are depleted due to senescence or apoptosis caused by several factors, such as inflammatory cytokines.

In one of its aspects, the present invention is based on the finding that Eotaxin-2 is differentially expressed in stable versus vulnerable human atherosclerotic plaques. By blocking the Eotaxin-2 pathway in an apoE knockout (KO) [20] mouse model, the inventors were able to demonstrate both inhibition of fatty streak formation (which signifies early atherosclerotic lesions) and prolongation of plaque stabilization.

The inventors of the present invention found that eotaxin-2 is expressed in the endothelium of atherosclerotic and non atherosclerotic murine arteries supporting previous reports in the art. However, the inventors have also found that eotaxin-2 is expressed in plaque macrophages. Eotaxin-2 was more abundantly expressed in the aortas of young apoE KO mice as compared to atherosclerotic apoE KO mice. Suggesting that eotaxin-2 is involved in the initial steps of atherosclerosis that comprise cell to cell adhesion of monocytes/macrophages to the endothelium. Indeed, the in-vitro studies described below show that blocking eotaxin-2 reduces oxLDL induced adhesion of lymphocytes to endothelial cells, supporting a role for eotaxin-2 in plaque formation in vivo .

 

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Despite intensive research, the factors that govern the transition of a stable to vulnerable plaque remain elusive. Based on an inflammatory protein array analysis of stable versus vulnerable human plaques, the present invention provides a potential target protein, eotaxin-2, to be involved in the transition of the plaque between a stable and a vulnerable phenotype. Whereas solid data exists with respect to the association of atherosclerosis with VCAM-1, IL-10 and MCP-1, which were also found by the inventors to be differentially expressed in stable versus vulnerable plaques, no such data exists for eotaxin-2.

In addition, eotaxin-2 was found by the inventors to be expressed in the endothelium of atherosclerotic and non atherosclerotic murine arteries thus supporting previous reports. However, it was also found by the inventors to be expressed in plaque macrophages. Interestingly, eotaxin-2 was more abundantly expressed in the aortas of young versus atherosclerotic apoE KO mice corresponding to initial steps of atherosclerosis that comprise cell to cell adhesion of monocytes/macrophages to the endothelium. Indeed, the in-vitro studies support a role for eotaxin-2 blockade in oxLDL mediated adhesion as may well occur in vivo . The more robust expression of eotaxin-2 in early stages of murine atherosclerosis also explains the impressive effect of blocking this pathway in the short term fatty streak model. Without wishing to be bound by theory, blocking inflammatory cell adhesion to the endothelium may be principally responsible for this effect.

With respect to the effects of eotaxin-2 blockade on plaque stability as evident by fibrous area, if inflammatory cell recruitment is attenuated due to eotaxin-2 blockade, it may be anticipated that the cytokine milieu will be more favorable towards a stable phenotype. These findings may not necessarily be reflected in a reduced extent of atherosclerosis as plaque built up is more likely to be influenced by lipid profile that has not changed due to eotaxin-2 blockade.

 

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24. Haley KJ, Lilly CM, Yang JH, et al., Overexpression of eotaxin and the CCR3 receptor in human atherosclerosis: using genomic technology to identify a potential novel pathway of vascular inflammation, Circulation 2000; 102: 2185–2189.

25. Sheikine Y, Olsen B, Gharizadeh B, Jatta K, Tornvall P, Ghaderi M. Influence of eotaxin 67G>A polymorphism on plasma eotaxin concentrations in myocardial infarction survivors and healthy controls. Atherosclerosis. 2006; 189: 458-63.

26. Emanuele E, Falcone C, D’Angelo A, Minoretti P, Buzzi MP, Bertona M, Geroldi D. Association of plasma eotaxin levels with the presence and extent of angiographic coronary artery disease. Atherosclerosis. 2006 May;186(1):140-5.

27. E. Economou, D. Tousoulis and A. Katinioti et al., Chemokines in patients with ischaemic heart disease and the effect of coronary angioplasty, Int J Cardiol 80 (2001), pp. 55–60.

28. Naghavi M, et al. From vulnerable plaque to vulnerable patient: a call for new definitions and risk assessment strategies: Part I. Circulation. 2003; 108: 1664-72.

29. Naghavi M, et al. From vulnerable plaque to vulnerable patient: a call for new definitions and risk assessment strategies: Part II. Circulation. 2003; 108: 1772-8.

 

30. Mendel I et al. Eur J Immunol 1995 25:1951-9

 

31. Zargari M et al. Neurosci Lett. 2007. 412: 24-8

 

32. Delovitch TL, and Singh B. Immunity 1997 Dec; 7(6):727-38.

 

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33. George J, Afek A, Gilburd B, Aron-Maor A Shaish A, Levkovitz H, Blank M, Harats D, Shoenfeld Y. Induction of early atherosclerosis in LDL receptor deficient mice immunized with beta 2 glycoproein I. Circulation. 1998; 15: 1108-1115.

Table 1

 

mRNA target

  

primers

  

Product size

  

Accession no.

Eotaxin-2   

CTGTGCCTGACCTCCAGAAC

 

CTAAACCTCGGTGCTATTGC

   379bp    AF281075
TGFbeta   

CTTGGGCTTGCGACCCACGTAGTA

 

AGACGGAATACAGGGCTTTCGATTCA

   492bp    NM_011577
G3PDH   

AGCCCATCACCATCTTCCAG

 

CCTGCTTCACCACCTTCTTG

   585bp    NM_199472

 

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CLAIMS:

 

1. A pharmaceutical composition for treating inflammatory or autoimmune diseases comprising an Eotaxin-2 antagonist and a pharmaceutically acceptable carrier or excipient.

 

2. A pharmaceutical composition according to claim 1 wherein the Eotaxin-2 antagonist is an anti Eotaxin-2 antibody.

 

3. A pharmaceutical composition according to claim 2 wherein the anti-eotaxin-2 antibody is a monoclonal antibody or a polyclonal antibody.

 

4. A pharmaceutical composition according to claim 2 or 3 wherein said antibodies are human antibodies.

 

5. A pharmaceutical composition according to claim 2 wherein said antibody is a humanized antibody or a chimeric antibody.

 

6. A pharmaceutical composition according to claim 2 wherein said antibody is a monoclonal antibody secreted by hybridoma D8.

 

7. A pharmaceutical composition according to claim 1 wherein the Eotaxin-2 antagonist is an antisense or a siRNA molecule directed against Eotaxin-2 mRNA.

 

8. A pharmaceutical composition according to claim 1 wherein the Eotaxin-2 antagonist is a small molecule.

 

9. A method for treating inflammatory or autoimmune diseases comprising administering to a patient in need thereof an eotaxin-2 antagonist or a pharmaceutical composition according to any of claims 1-8.

 

10. A method according to claim 9 wherein said autoimmune disease is selected from the group consisting of rheumatoid arthritis, inflammatory bowel disease, colitis, and diabetes.

 

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11. A method for inhibiting atherosclerotic plaque formation comprising administering to a patient in need thereof an Eotaxin-2 antagonist or a pharmaceutical composition according to any of claims 1-8.

 

12. A method for stabilizing an atherosclerotic plaque comprising administering to a patient in need thereof an eotaxin-2 antagonist or a pharmaceutical composition according to any of claims 1-8.

 

13. A method for preventing major cardiovascular events in a patient with acute coronary syndrome comprising administering to said patient an eotaxin-2 antagonist or a pharmaceutical composition according to any of claims 1-8.

 

14. A method according to any of claims 9-13 wherein said eotaxin-2 antagonist or said pharmaceutical composition according to any of claims 1-8 is administered in combination with at least one additional therapeutic agent.

 

15. A method according to claim 14 wherein said at least one additional therapeutic agent is selected from a group consisting of chemotherapeutics, cytokines, peptides, antibodies and antibiotics.

 

16. A method according to claim 15 wherein said at least one additional therapeutic agent is selected from the group consisting of cyclosporine, a steroid, a NSAIDS (non-steroidal anti inflammatory drug), anti-TNF a antibodies, anti-IL6 R antibodies, anti-CD20 antibodies, anti- VLA-4 antibodies IVIG, copaxone, and interferon-ß.

 

17. A method according to claim 15 wherein said at least one additional therapeutic agent is methotrexate.

 

18. A method according to claim 14 wherein said at least one additional therapeutic agent is administered simultaneously with said eotaxin-2 antagonist or said pharmaceutical composition.

 

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19. A method according to claim 14 wherein said at least one additional therapeutic agent and said eotaxin-2 antagonist or said pharmaceutical composition are administered sequentially.

 

20. A hybridoma cell line secreting an anti-eotaxin 2 monoclonal antibody, wherein said hybridoma is D8, G7, or G8.

 

21. A monoclonal antibody directed against eotaxin-2, or any fragment thereof which retains the binding ability to eotaxin 2, wherein said monoclonal antibody is secreted from hybridoma D8, G7 or G8.

 

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LOGO

Fig. 1

 

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Fig. 2A

 

LOGO

Fig. 2B

 

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LOGO

Fig. 3A

 

LOGO

Fig. 3B

 

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LOGO

Fig. 3C

 

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LOGO

Fig. 4A

 

LOGO

Fig. 4B

 

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LOGO

Fig. 4C

 

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LOGO

Fig. 5

 

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LOGO

Fig. 6A

 

LOGO

Fig. 6B

 

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LOGO

Fig 11B

 

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LOGO

Fig 12

 

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LOGO

Fig 13

 

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LOGO

Fig 14

 

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LOGO

Fig 15

 

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LOGO

Fig 16

 

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LOGO

Fig 17

 

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AMENDMENT TO AGREEMENT

THIS AMENDMENT TO AGREEMENT (this “ Amendment ”) is made and entered into on August 1, 2012, by and between Vascular Biogenics Ltd., an company registered under the laws of the State of Israel (“ VBL ”) and Prof. Jacob George (“ George ”). VBL and George shall be sometimes referred to each as a “ Party ” and collectively as the “ Parties ”).

W I T N E S S E T H:

WHEREAS, the Parties entered into a certain Agreement dated January 24, 2010 (the “ Agreement ”); and

WHEREAS, the Parties wish to amend the Agreement according to the terms hereof;

 

1. Definitions; Effectiveness of Amended Agreement

 

  1.1. Capitalized terms used herein and not otherwise defined shall have the respective meaning ascribed to them in the Agreement.

 

  1.2. Other than as specifically amended hereby, the provisions of the Agreement shall remain in full force and effect. In the event of contradiction between any provision of the Agreement and an amendment thereto as set forth herein, such amendment shall prevail.

 

2. Amendment

Revenue Sharing. Effective as of August 1, 2012, Section 2 of the Agreement shall be deleted in its entirety and replaced with the following:

In the event that George, or anyone in his behalf, receives from Sourasky Royalties, defined below, in connection with and/or as a result from the commercialization or otherwise exploitation of the Other IP or any other intellectual property if it is later found to be owned by Sourasky due to the engagement of George therewith, regardless of the Parties agreement in Section 1 above, then George undertakes to transfer or ensure the receipt by VBL of 50% of the Royalties within 30 days following the receipt thereof. In the event that the transfer of such portion of the Royalties is not feasible, the Parties shall agree on an appropriate mechanism to ensure VBL rights therein.

“Royalties ” shall mean any proceeds or proprietary interest resulting from the commercial exploitation of any invention whether in cash or in kind.

 

1


[Signature Page to Amendment to Agreement]

IN WITNESS WHEREOF, the parties hereto have executed this Amendment to Agreement as of the date first written above.

 

/s/ Dror Harats     /s/ Jacob George
VASCULAR BIOGENICS LTD.     PROF. JACOB GEORGE

 

By:  

Dror Harats

Title:  

CEO

 

Exhibit 21.1

SUBSIDIARIES OF THE REGISTRANT

NONE

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the use in this Registration Statement on Form F-1 of Vascular Biogenics Ltd. of our report dated March 24, 2014 relating to the financial statements of Vascular Biogenics Ltd., which appears in such Registration Statement. We also consent to the reference to us under the heading “Experts” in such Registration Statement.

 

Tel-Aviv, Israel

June 6, 2014

  

/s/ Kesselman & Kesselman

Kesselman & Kesselman

   Certified Public Accountants (Isr.)
   A member firm of PricewaterhouseCoopers International Limited