RISK FACTORS

You should carefully consider the risks described below in evaluating whether to vote for or consent to the proposals discussed herein. The risks and uncertainties described below are not the only ones OphthaliX and Wize face, and these factors should be considered in conjunction with general investment risks and other information included in this proxy statement/prospectus, including the matters addressed in the section entitled “CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS” beginning on page 40 of this proxy statement/prospectus. You should read and consider the risks associated with the business of Wize beginning on page 23 of this proxy statement/prospectus because these risk factors will also affect the operations of OphthaliX post-Merger because the business of OphthaliX post-Merger will be Wize’s current business. In addition to the risks set forth below, new risks may emerge from time to time and it is not possible to predict all risk factors, nor can OphthaliX or Wize assess the impact of all factors on the merger and the combined company following the merger or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in or implied by any forward-looking statements. Where this proxy statement/prospectus uses the words describing either OphthaliX or Wize, as the case may be, it is referring to such entity as a standalone company or to their respective lines of business and industry as they relate to the combined company. 

Risks Related to the Proposed Merger

The issuance of shares of OphthaliX common stock to Wize shareholders in the Merger will substantially dilute the voting power of current OphthaliX stockholders. Having a minority share position may reduce the influence that OphthaliX stockholders have on the management of OphthaliX.

Pursuant to the terms of the Merger Agreement, at the Effective Time of the Merger, OphthaliX will issue 93,971,259 shares of its common stock to Wize shareholders as merger consideration. As a result, upon completion of the Merger, the current OphthaliX stockholders will continue to hold 10,441,251 shares, or 10% of the issued and outstanding common stock of OphthaliX, and former Wize shareholders will own 93,971,259 shares, or 90% of the issued and outstanding common stock of OphthaliX (both percentages excluding (i) shares of common stock issuable upon the exercise of the Convertible Loans, (ii) shares of common stock issuable upon the exercise of the Future Investment Rights, (iii) shares of common stock issuable upon the exercise of warrants to be issued in the 2017 PIPE (the “PIPE Warrants”), and (iv) shares of common stock issuable upon the exercise of certain options held by directors and officers of OphthaliX (the “OphthaliX Stock Options”). In the event Wize were to close the remaining NIS 3 million (approximately $858,000) in the 2017 PIPE and all the Convertible Loans, Future Investment Rights, PIPE Warrants and OphthaliX Stock Options were to be exercised in full, then current OphthaliX stockholders and option holders would own 10,558,751 shares, and their combined ownership percentage would be reduced to approximately 5.4% of the issued and outstanding common stock of OphthaliX, and the former Wize shareholders and holders of Convertible Loans on a combined basis would own 185,538,350 shares, or approximately 94.6% of the issued and outstanding common stock of OphthaliX, assuming, for the purposes of this calculation, a total of 196,097,101 shares of OphthaliX common stock issued and outstanding on a fully diluted basis. Accordingly, the issuance of the shares of OphthaliX common stock to Wize shareholders in the Merger or issuance of OphthaliX common stock upon conversion or the exercise of the Convertible Loans, Future Investment Rights or Warrants to the respective holders of those securities will significantly reduce the ownership stake and relative voting power of each share of OphthaliX common stock held by current OphthaliX stockholders. Consequently, following the Merger, the ability of OphthaliX’s current stockholders to influence the management of OphthaliX will be substantially reduced. For more information relating to the Convertible Loans, Future Investment Rights and the 2017 PIPE, please see “INFORMATION ABOUT WIZE — Management’s Discussion and Analysis of Financial Condition and Results of Operations” beginning on page 112 of this proxy statement/prospectus.  For more information regarding the beneficial ownership of Wize, please see “PRINCIPAL SHAREHOLDERS OF WIZE” beginning on page 135 of this proxy statement/prospectus

The exchange ratio in the Merger Agreement is not adjustable based on the market price of OphthaliX common stock so the merger consideration at the closing may have a greater or lesser value than at the time the Merger Agreement was signed.

Upon completion of the Merger, each Wize ordinary share will be converted into the right to receive shares of OphthaliX common stock based on the exchange ratio in the Merger Agreement. The exchange ratio in the Merger Agreement will not be adjusted in the event of any change in the stock price of OphthaliX prior to the Merger. Any changes in the market price of OphthaliX common stock before completion of the Merger will not affect the number of shares Wize shareholders will be entitled to receive pursuant to the Merger Agreement. Therefore, if before the completion of the Merger the market price of OphthaliX common stock declines from the market price on the date of the Merger Agreement, then Wize shareholders could receive merger consideration with substantially lower value. Similarly, if before the completion of the Merger the market price of OphthaliX common stock increases from the market price on the date of the Merger Agreement, then Wize shareholders could receive merger consideration with substantially more value for their ordinary shares. Because the rxchange ratio does not adjust as a result of changes in the value of OphthaliX common stock, for each one percentage point that the market value of OphthaliX common stock rises or declines, there is a corresponding one percentage point rise or decline, respectively, in the value of the total merger consideration issued to Wize shareholders.

There is no assurance when or if the Merger will be completed. Any delay in completing the Merger may substantially reduce the benefits that OphthaliX and Wize expect to obtain from the Merger.

Completion of the Merger is subject to the satisfaction or waiver of a number of conditions as set forth in the Merger Agreement. There can be no assurance that OphthaliX and Wize will be able to satisfy the closing conditions or that closing conditions beyond their control will be satisfied or waived. For a discussion of the conditions to the completion of the Merger, see the section entitled “THE MERGER AGREEMENT — Conditions to Completion of the Merger” beginning on page 81 of this proxy statement/prospectus. If the Merger is not completed within the expected timeframe, such delay could result in additional transaction costs or other effects associated with uncertainty about the Merger.

OphthaliX and Wize can agree at any time to terminate the Merger Agreement, even if OphthaliX stockholders and Wize shareholders have already adopted the Merger Agreement and approved the Merger and the other transactions contemplated by the Merger Agreement. OphthaliX and Wize can also terminate the Merger Agreement under other specified circumstances. See the section entitled “THE MERGER AGREEMENT — Termination of the Merger Agreement” beginning on page 82 of this proxy and consent solicitation statement/prospectus.

If the Merger is not completed within the expected timeframe, such delay could result in additional transaction costs or other effects associated with uncertainty about the Merger. Furthermore, if the Merger is not completed, the ongoing business of Wize could be adversely affected and each of OphthaliX and Wize will be subject to a variety of risks associated with the failure to complete the Merger, including without limitation the following:

In addition, if the Merger Agreement is terminated, OphthaliX and Wize might have an immediate financial need to raise additional capital to meet their cash needs, including both transactional and operational expenses.

Directors and officers of OphthaliX may have interests in the Merger that are different from, or in addition to, those of OphthaliX stockholders generally that may influence them to support or approve the Merger.

The officers and directors of OphthaliX may have interests in the Merger that are different from, or are in addition to, those of OphthaliX stockholders generally. As a condition to closing of the Merger, OphthaliX is required, pursuant to a Stock Purchase Agreement, to sell on an “as is” basis to Can-Fite all the ordinary shares of OphthaliX’s wholly-owned subsidiary, Eyefite, in exchange for the irrevocable cancellation and waiver of all indebtedness owed by OphthaliX and Eyefite to Can-Fite, including approximately $4.5 million of deferred payments owed by OphthaliX and Eyefite to Can-Fite and, as part of the purchase of Eyefite, Can-Fite will also assume certain accrued milestone payments in the amount of $175,000 under the Can-Fite License Agreement. Immediately following the sale of Eyefite to Can-Fite, and prior to closing of the Merger, it is expected that OphthaliX’s sole asset shall consist of 446,827 ordinary shares of Can-Fite. In addition, as a condition to closing of the Merger, that certain exclusive license of Can-Fite’s CF101 drug candidate for the treatment of ophthalmic diseases granted to OphthaliX under the Can-Fite License Agreement and that related services agreement is required to be terminated pursuant to a Termination of License Agreement and a Termination of Services Agreement. Certain of OphthaliX’s directors and officers serve as directors and/or officers of Can-Fite and one of OphthaliX’s existing directors is expected to continue to serve as a director of OphthaliX post-Merger. In addition, the directors and executive officers of OphthaliX also have certain rights to indemnification or to directors’ and officers’ liability insurance that will survive the completion of the Merger. These interests may have influenced the directors and executive officers of OphthaliX to support or recommend the proposals presented to OphthaliX shareholders. See the sections entitled “THE MERGER — Interests of OphthaliX’s Directors and Executive Officers in the Merger” beginning on page 69 of this proxy statement/prospectus.

Directors and officers of Wize may have interests in the Merger that are different from, or in addition to, those of Wize shareholders generally that may influence them to support or approve the Merger.

The officers and directors of Wize may have interests in the Merger that are different from, or are in addition to, those of Wize shareholders generally. One of Wize’s existing directors is expected to serve as the Chairman of the Board of OphthaliX post-Merger and is engaged by Wize pursuant to a services agreement which provides him with certain benefits as more fully described in the “MANAGEMENT OF OPHTHALIX FOLLOWING THE MERGER” beginning on page 119 of this proxy statement/prospectus. In addition, Noam Danenberg, Wize’s strategic advisor, who is expected to serve as OphthaliX's Chief Operating Officer following the Merger, is also the son-in-law of Mr. Avichay Harpaz, who owns 50% of Ridge Valley Corporation (“Ridge”). For more information about stock ownership, please see “PRINCIPAL SHAREHOLDERS OF WIZE” beginning on page 135 of this proxy statement/prospectus. In addition, the directors and executive officers of Wize also have certain rights to indemnification or to directors’ and officers’ liability insurance that will survive the completion of the Merger. These interests may have influenced the directors and executive officers of Wize to support or approve the Merger and the issuance of shares of OphthaliX common stock in the Merger.

OphthaliX’s board of directors relied solely on their own judgment in determining that the Merger is fair to its stockholders and, consequently, there is no independent corroboration of OphthaliX’s board of directors’ determination.

OphthaliX’s board of directors considered the factors set forth in the section entitled “THE MERGER —OphthaliX’s Reasons for the Merger” beginning on page 62 in determining that the Merger is fair to, and in the best interests of, its stockholders. OphthaliX is not required to and due to lack of funds has not obtained an opinion from a financial advisor that the shares to be issued to or issuable to Wize shareholders is fair to OphthaliX’s stockholders from a financial point of view. Accordingly, there is no independent corroboration of OphthaliX’s board of directors’ determination. Furthermore, OphthaliX’s directors have interests in the Merger that are different from, or in addition to, the interests of OphthaliX’s stockholders. See “THE MERGER— Interests of OphthaliX’s Directors and Executive Officers in the Merger” beginning on page 69 of this proxy statement/prospectus.

The fairness opinion obtained by Wize from its financial advisor will not reflect changes in circumstances after the date of the fairness opinion.

PBB, Wize’s financial advisor in connection with the Merger, has delivered to the board of directors of Wize its fairness opinion, dated June 20, 2017. The opinion stated to the effect that, based upon and subject to the assumptions, factors, qualifications and limitations set forth in the written opinion described in the opinion, as of May 21, 2017, the initial exchange ratio in the Merger was fair, from a financial point of view, to the holders of ordinary shares of Wize. As a result, Wize shareholders should be aware that the opinion does not address the fairness of the merger consideration at any time other than as of May 21, 2017. The opinion does not reflect changes that may occur or may have occurred after the date of such opinion, including changes to the operations and prospects of Wize, changes in general market and economic conditions or regulatory or other factors. Any such changes, or changes in other factors on which the opinion is based, may materially alter or affect the estimated valuation conclusions reached in such fairness opinion.

The announcement and pendency of the Merger could have an adverse effect on Wize’s business, financial condition, results of operations or business prospects.

The announcement and pendency of the Merger could disrupt Wize’s business in the following ways, among others:

Should they occur, any of these matters could adversely affect the business of, or harm the financial condition, results of operations or business prospects of Wize.

The ratio for the exchange of Wize ordinary shares for OphthaliX shares is fixed.

Each ordinary share of Wize will be exchanged for 4.1781 shares of OphthaliX common stock, assuming closing of the remaning portion of the 2017 PIPE which is expected to occur in the beginning of August 2017. This ratio of the number of ordinary shares of Wize to be exchanged for each share of OphthaliX common stock will not change, unless Wize issues shares as part of an equity financing prior to completion of the Merger. There will be no adjustment to this exchange ratio for changes in the market price of either OphthaliX common stock or Wize ordinary shares. In addition, neither OphthaliX nor Wize may terminate the Merger Agreement or “walk away” from the Merger solely because of changes in the market price of either company’s shares. Therefore, if the market value of OphthaliX common stock or Wize ordinary shares changes relative to the market value of the other, there will not be a change, either upward or downward, in the aggregate number of shares of OphthaliX common stock to be issued to Wize shareholders in the Merger. The share prices of OphthaliX common stock or Wize ordinary shares are by nature subject to the general price fluctuations in the market for publicly traded equity securities and have experienced significant volatility, and you should obtain recent market quotations for OphthaliX common stock or Wize ordinary shares. Neither OphthaliX nor Wize can predict or give any assurances as to the relative market prices of their shares before the closing of the Merger.

Covenants in the Merger Agreement place certain restrictions on each of OphthaliX’s and Wize’s conduct of business prior to the closing of the Merger, including entering into a business combination with another party.

The Merger Agreement restricts each of OphthaliX and Wize from taking certain specified actions with respect to the conduct of its business without the other party’s consent while the Merger is pending. These restrictions may prevent each of OphthaliX and Wize from pursuing otherwise attractive business opportunities or other capital structure alternatives and making other changes to its business or executing certain of its business strategies prior to the completion of the Merger, which could be favorable to OphthaliX stockholders or Wize shareholders. See “THE MERGER AGREEMENT— Covenants and Agreements” beginning on page 77 of this proxy statement/prospectus.

The rights of Wize shareholders who become OphthaliX stockholders in the Merger will be governed by the OphthaliX Certificate of Incorporation and the OphthaliX Bylaws, as amended.

Upon the consummation of the Merger, Wize’s outstanding ordinary shares will be converted into the right to receive shares of OphthaliX common stock. Wize shareholders who receive shares of OphthaliX common stock in the Merger will become OphthaliX stockholders. As a result, Wize shareholders who become stockholders in OphthaliX will be governed by the OphthaliX Certificate of Incorporation and the OphthaliX Bylaws, each as amended to reflect the proposals being voted on at the OphthaliX annual meeting, and the DGCL rather than being governed by the Wize Articles and the Israeli Companies Law. See the section entitled “COMPARISON OF RIGHTS OF HOLDERS OF OPHTHALIX SHARES AND WIZE SHARES” beginning on page 145 of this proxy statement/prospectus.

Because the market price of OphthaliX common stock will fluctuate, Wize shareholders cannot be sure of the trading price of the OphthaliX shares they will receive.

Upon completion of the Merger, each Wize ordinary share will be converted into the right to receive shares of OphthaliX common stock. The exchange ratio in the Merger Agreement will not be adjusted in the event of any change in the stock prices of OphthaliX or Wize prior to the Merger. There also will be a period of time between the date when stockholders of OphthaliX and shareholders of Wize vote on the Merger Agreement and the date when the Merger is completed. The relative prices of OphthaliX common stock and Wize ordinary shares may vary between the date of this proxy statement/prospectus, the dates of their respective shareholder meetings, and the date of completion of the Merger. The market price of OphthaliX common stock and Wize ordinary shares may change as a result of a variety of factors, including general market and economic conditions, changes in its business, operations and prospects, and regulatory considerations. Many of these factors are beyond the control of OphthaliX or Wize and are not necessarily related to a change in the financial performance or condition of OphthaliX or Wize. As OphthaliX and Wize market share prices fluctuate, based on numerous factors, the value of the shares of OphthaliX common stock that a Wize shareholder will receive will correspondingly fluctuate. Accordingly, the prices of OphthaliX common stock and Wize ordinary shares on the dates of their respective shareholder meetings may not be indicative of their prices immediately prior to completion of the Merger and the price of OphthaliX common stock after the Merger is completed. See the section entitled “MARKET PRICE AND DIVIDEND INFORMATION”. You are urged to obtain current market quotations for OphthaliX common stock and Wize ordinary shares.

Failure to complete the Merger could negatively affect the value of both OphthaliX common stock and Wize ordinary shares and the future business and financial results of both OphthaliX and Wize.

The Merger is subject to the satisfaction or waiver of certain closing conditions as described below in “THE MERGER AGREEMENT — Conditions to Completion of the Merger”.  No assurance can be given that each of the conditions will be satisfied.  In addition, the Merger Agreement may be terminated under the circumstances described below in “THE MERGER AGREEMENT — Termination of Merger Agreement.”

If the Merger is not completed, the ongoing businesses of OphthaliX and Wize could be adversely affected and each of OphthaliX and Wize will be subject to a variety of risks associated with the failure to complete the Merger, including without limitation the following:

If the Merger is not completed, these risks could materially affect the market price of both OphthaliX common stock and Wize ordinary shares and the business and financial results of both OphthaliX and Wize.

OphthaliX and Wize may be subject to litigation in connection with the Merger .

Lawsuits may be filed against OphthaliX and Wize, their respective subsidiaries, and/or their respective directors or officers in connection with the Merger and the other transactions contemplated under the Merger Agreement. If any such lawsuit is filed, it could result in substantial costs and diversion of management’s attention and resources, which could adversely affect the business, financial condition, or results of operations of OphthaliX and Wize, whether or not a settlement or other resolution is achieved.

In addition, one of the conditions to the closing of the Merger Agreement is that no order, injunction, decree or other legal restraint or prohibition will be in effect that prevents completion of any of the transactions contemplated under the Merger Agreement. Consequently, if a lawsuit is filed and the plaintiffs secure injunctive or other relief prohibiting, delaying or otherwise adversely affecting the consummation of the transactions contemplated under the Merger Agreement, that may prevent the Merger from becoming effective within the expected time frame or at all.

Risks Related to OphthaliX Following the Merger

If the Merger is consummated, the business operations, strategies and focus of OphthaliX will become those of Wize, and these changes may result in the depression in the value of its common stock.

Upon closing of the Merger, the business of OphthaliX shall become the current business of Wize. Consequently, if the Merger is consummated, an investment in OphthaliX’s common stock will represent an investment in the business operations, strategies and focus of Wize. While LO2A is approved for sale in certain jurisdictions for the treatment of DES, LO2A is only approved for sale for the treatment of CCH in Hungary and for the treatment of Sjögren’s in the Netherlands. LO2A may never be successfully developed and approved for sale or successfully commercialized for the treatment of CCH or for Sjögren’s in any other jurisdiction. The failure to successfully commercialize LO2A for the treatment of CCH and Sjögren’s will significantly diminish the anticipated benefits of the Merger and have a material adverse effect on the business of OphthaliX post-merger. OphthaliX cannot assure you that OphthaliX’s business operations, strategies or focus will be successful following the Merger, and the Merger could depress the value of OphthaliX’s common stock.

The unaudited pro forma consolidated financial statements are presented for illustrative purposes only, and future results of OphthaliX may differ materially from the unaudited pro forma financial statements presented in this proxy statement/prospectus.

The unaudited pro forma consolidated financial statements contained in this proxy statement/prospectus are presented for illustrative purposes only and may not be an indication of OphthaliX’s financial condition or results of operations following the completion of the Merger for several reasons. The unaudited pro forma consolidated financial statements have been derived from the historical financial statements of OphthaliX and Wize and adjustments and assumptions have been made regarding OphthaliX after giving effect to the Merger. The information upon which these adjustments and assumptions have been made is preliminary, and these kinds of adjustments and assumptions are difficult to make with accuracy. Moreover, the pro forma financial statements do not reflect all costs that are expected to be incurred by OphthaliX in connection with the Merger. For example, the impact of any incremental costs incurred in integrating OphthaliX and Wize are not reflected in the pro forma financial statements. As a result, the actual financial condition and results of operations of OphthaliX following the completion of the Merger may not be consistent with, or evident from, these pro forma financial statements. The assumptions used in preparing the pro forma financial information may not prove to be accurate, and other factors may affect OphthaliX’s financial condition or results of operations following the Merger. Any decline or potential decline in OphthaliX’s financial condition or results of operations may cause significant variations in the market price of OphthaliX common stock.

OphthaliX’s restricted shares are subject to resale restrictions imposed by Rule 144, including those set forth in Rule 144(i) which applies to a “shell company.”

OphthaliX is currently a “shell company” under applicable SEC rules and regulations, because it has no or nominal operations and either no or nominal assets, assets consisting solely of cash and cash equivalents, or assets consisting of any amount of cash and cash equivalents and nominal other assets.  Pursuant to Rule 144, promulgated under the Securities Act, sales of the securities of a shell company, such as OphthaliX under that rule are not permitted until at least 12 months have elapsed from the date on which OphthaliX files with the SEC Form 10 information in a Current Report on Form 8-K, reflecting its status as a non-shell company.  OphthaliX expects to file such Form 8-K following completion of the Merger. As a result, some of OphthaliX’s stockholders will be forced to hold their shares of common stock for at least that 12-month period before they are eligible to sell those shares, and even after that 12-month period, sales may not be made under Rule 144 unless OphthaliX and its stockholders are in compliance with other requirements of Rule 144.  Further, it will be more difficult for OphthaliX to raise funding to support its operations through the sale of debt or equity securities unless it agrees to register such securities under the Securities Act, which could cause OphthaliX to expend additional time and cash resources.  The lack of liquidity of OphthaliX’s securities as a result of the inability to sell under Rule 144 for a longer period of time could cause the market price of OphthaliX’s securities to decline.

OphthaliX may issue additional equity securities in the future, which may result in dilution to existing investors.

To the extent OphthaliX raises additional capital by issuing equity securities, including in a debt financing where OphthaliX issues convertible notes or notes with warrants and any shares of OphthaliX’s common stock to be issued in a private placement, OphthaliX’s stockholders may experience substantial dilution. OphthaliX may, from time to time, sell additional equity securities in one or more transactions at prices and in a manner it determines. If OphthaliX sells additional equity securities, existing stockholders may be materially diluted. In addition, new investors could gain rights superior to existing stockholders, such as liquidation and other preferences. Furthermore, the number of shares available for future grant under OphthaliX’s equity compensation plans may be increased in the future. Moreover, the exercise or conversion of outstanding options or warrants to purchase shares of capital stock may result in dilution to OphthaliX’s stockholders upon any such exercise or conversion.

Because OphthaliX’s common stock may be a “penny stock,” it may be more difficult for investors to sell shares of its common stock, and the market price of its common stock may be adversely affected.

OphthaliX’s common stock may be a “penny stock” if, among other things, the stock price is below $5.00 per share, it is not listed on a national securities exchange or it has not met certain net tangible asset or average revenue requirements.  Broker-dealers who sell penny stocks must provide purchasers of these stocks with a standardized risk-disclosure document prepared by the SEC. This document provides information about penny stocks and the nature and level of risks involved in investing in the penny-stock market. A broker must also give a purchaser, orally or in writing, bid and offer quotations and information regarding broker and salesperson compensation, make a written determination that the penny stock is a suitable investment for the purchaser, and obtain the purchaser’s written agreement to the purchase. Broker-dealers must also provide customers that hold penny stock in their accounts with such broker-dealer a monthly statement containing price and market information relating to the penny stock.  If a penny stock is sold to an investor in violation of the penny stock rules, the investor may be able to cancel its purchase and get its money back.

If applicable, the penny stock rules may make it difficult for investors to sell their shares of OphthaliX’s common stock.  Because of the rules and restrictions applicable to a penny stock, there is less trading in penny stocks and the market price of its common stock may be adversely affected.  Also, many brokers choose not to participate in penny stock transactions. Accordingly, investors may not always be able to resell their shares of its common stock publicly at times and prices that they feel are appropriate.

Because the Merger will be a reverse merger, OphthaliX may not be able to attract the attention of major brokerage firms, which may limit the liquidity of OphthaliX’s common stock and may make it more difficult for OphthaliX to raise additional capital in the future.

Additional risks may exist because the Merger will be a “reverse merger.” Certain SEC rules are more restrictive when applied to reverse merger companies, such as the ability of stockholders to resell their shares of common stock pursuant to Rule 144. In addition, securities analysts of major brokerage firms may not provide coverage of OphthaliX’s common stock because there may be little incentive for brokerage firms to recommend the purchase of OphthaliX common stock. As a result, OphthaliX’s common stock may have limited liquidity and investors may have difficulty selling it.  Furthermore, OphthaliX cannot assure you that brokerage firms will want to conduct any secondary offerings on OphthaliX’s behalf if it seeks to raise additional capital in the future.  OphthaliX’s inability to raise additional capital may have a material adverse effect on its business.

Wize shareholders may be required to pay taxes upon the receipt of shares of OphthaliX common stock in the Merger

Wize has filed an application to the Israel Tax Authority for a ruling, applicable to shareholders that are not otherwise exempt from Israeli tax on the Merger, to treat the Merger as a tax-deferred transaction for purposes of Israeli tax laws and, in accordance with Section 104H of the Israeli Tax Ordinance, to defer the tax event with respect to the exchange of the Wize ordinary shares for a limited period of two years from the date of exchange with respect to half of the Wize shares held by a shareholder and four years from the date of exchange with respect to such shareholder’s remaining Wize shareholdings, unless such shareholder sells its OphthaliX common stock received in the Merger earlier.  There is no assurance that such tax ruling will be obtained from the Israel Tax Authority prior to the Effective Time of the Merger, nor that, if it is obtained, it will provide the foregoing. If such tax ruling is not obtained prior to such time, OphthaliX or the applicable TASE member may deduct from the consideration payable for each Wize ordinary share withholding tax at the rate of twenty five per cent (25%) or in accordance with other instructions provided by the Israel Tax Authority.

Future sales of OphthaliX's common stock could reduce OphthaliX’s stock price.

Sales by stockholders of substantial amounts of OphthaliX common stock after the Merger, or the perception that these sales may occur in the future, especially considering the restrictions set forth in the 104(h) Tax Ruling, could materially and adversely affect the market price of OphthaliX's common stock. Furthermore, the market price of OphthaliX's common stock could drop significantly if its executive officers, directors, or certain large shareholders sell their shares, or are perceived by the market as intending to sell them. For a discussion of the 104(h) Tax Ruling, see the section titled “CERTAIN MATERIAL ISRAELI TAX CONSEQUENCES OF THE MERGER” beginning on page 141 of this proxy statement/prospectus.

The concentration of the capital stock ownership with insiders of OphthaliX after the Merger will likely limit the ability of the stockholders of OphthaliX to influence corporate matters.

Following the Merger, the executive officers, directors, five percent or greater stockholders, and their respective affiliated entities of OphthaliX will in the aggregate beneficially own approximately [●]% of OphthaliX’s outstanding common stock. As a result of such ownership, despite the fact that each one of them, to Wize’s knowledge, will continue to operate independently from the other with respect to its respective shareholding of OphthaliX’s shares, these stockholders, if acting together, will have control over matters that require approval by OphthaliX’s stockholders, including the election of directors and approval of significant corporate transactions. Corporate actions might be taken even if other stockholders oppose them. This concentration of ownership might also have the effect of delaying or preventing a corporate transaction that other stockholders may view as beneficial, including to prevent changes in control or in management. For more information about the current share ownership of Wize, please see “PRINCIPAL SHAREHOLDERS OF WIZE” beginning on page 135 of this proxy statement/prospectus.

OphthaliX may not be able to timely and effectively implement controls and procedures required by Section 404 of the Sarbanes-Oxley Act of 2002 that will be applicable to OphthaliX after the Merger.

Wize is not currently subject to Section 404 of the Sarbanes-Oxley Act of 2002. The standards required for a public company under Section 404 of the Sarbanes-Oxley Act of 2002 are different from those required of Wize as a public company whose shares are traded on the TASE. Management may not be able to effectively and timely implement controls and procedures that adequately respond to the regulatory compliance and reporting requirements that will be applicable to OphthaliX after the Merger. If management is not able to implement the additional requirements of Section 404 of the Sarbanes-Oxley Act of 2002 in a timely manner or with adequate compliance, it may not be able to assess whether its internal control over financial reporting is effective, which may subject OphthaliX to adverse regulatory consequences and could harm investor confidence and the market price of OphthaliX’s common stock.

Subsequent to the consummation of the Merger, OphthaliX may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on its financial condition, results of operations and stock price, which could cause you to lose some or all of your investment.

As a result of the Merger, Wize’s liabilities, including contingent liabilities, will be consolidated into OphthaliX’s financial statements. Although OphthaliX and Wize have conducted due diligence on each other, there can be no assurances that their diligence revealed all material issues that may be present in the other company’s business, that all material issues through a customary amount of due diligence will be uncovered, or that factors outside of OphthaliX’s and Wize’s control will not later arise. As a result, OphthaliX may be forced to later write-down or write-off assets, restructure operations, or incur impairment or other charges that could result in losses. Even if due diligence successfully identifies certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with each company’s preliminary risk analysis. Even though these charges may be non-cash items and not have an immediate impact on liquidity, the fact that OphthaliX reports charges of this nature could contribute to negative market perceptions about OphthaliX’s or its securities. In addition, charges of this nature may make future financing difficult to obtain on favorable terms or at all.

If unknown pre-Merger liabilities should arise, OphthaliX may be required to divert its cash from other business purposes to discharge such liabilities, which may have an adverse effect on its business.

As a condition to closing of the Merger, OphthaliX is required, pursuant to a Stock Purchase Agreement, to sell on an “as is” basis to Can-Fite all the ordinary shares of Eyefite, in exchange for the irrevocable cancellation and waiver of all indebtedness owed by OphthaliX and Eyefite to Can-Fite, including approximately $4.5 million of deferred payments owed by OphthaliX and Eyefite to Can-Fite. Nevertheless, there can be no assurance that this will release OphthaliX of all its liabilities.  If unknown liabilities arise, OphthaliX may be required to divert cash from other business purposes to discharge such liabilities, which may have an adverse effect on OphthaliX’s business. 

As an “emerging growth company” under the JOBS Act, OphthaliX is permitted to, and intends to, rely on exemptions from certain disclosure requirements.

As an “emerging growth company” under the JOBS Act, OphthaliX is permitted to, and intends to, rely on exemptions from certain disclosure requirements.  OphthaliX is an emerging growth company until the earliest of: (i) the last day of the fiscal year during which OphthaliX has total annual gross revenues of $1 billion or more, (ii) the last day of the fiscal year following the fifth anniversary of the date of the first sale of its common stock pursuant to an effective registration statement, (iii) the date on which OphthaliX has, during the previous three-year period, issued more than $1 billion in non-convertible debt or (iv) the date on which OphthaliX is deemed a “large accelerated issuer” as defined in Regulation S-K of the Securities Act.  For so long as OphthaliX remains an emerging growth company, it will not be required to:

Although OphthaliX intends to rely on the exemptions provided in the JOBS Act, the exact implications of the JOBS Act are still subject to interpretations and guidance by the SEC and other regulatory agencies.  In addition, as its business grows, OphthaliX may no longer satisfy the conditions of an emerging growth company.

OphthaliX has not paid, and does not intend to pay, dividends on its common stock and therefore, unless its common stock appreciates in value, its investors may not benefit from holding its common stock.

OphthaliX has not paid any cash dividends on its common stock since inception and does not anticipate paying any cash dividends its common stock in the foreseeable future.  As a result, investors in its common stock will not be able to benefit from owning its common stock unless the market price of its common stock becomes greater than the price paid for the stock by these investors.

Anti-takeover provisions under Delaware law could make an acquisition of OphthaliX, which may be beneficial to the stockholders of OphthaliX, more difficult and may prevent attempts by the stockholders to replace or remove management.

OphthaliX will be subject to the anti-takeover provisions of the DGCL, including Section 203. Under these provisions, if anyone becomes an “interested stockholder,” the combined company may not enter into a “business combination” with that person for three years without special approval, which could discourage a third party from making a takeover offer and could delay or prevent a change of control. For purposes of Section 203 of the DGCL, “interested stockholder” means, generally, someone owning 15% or more of the combined company’s outstanding voting stock or an affiliate of the combined company that owned 15% or more of the combined company’s outstanding voting stock during the past three years, subject to certain exceptions as described in Section 203 of the DGCL. In addition, the OphthaliX Certificate of Incorporation contains provisions, such as blank check preferred stock, advance notice, and stockholder action by written consent which could make it more difficult for a third party to acquire the combined company. These provisions may have the effect of preventing or hindering any attempts by the stockholders of the combined company to replace its board of directors or management.

The public trading market for OphthaliX’s common stock is volatile and may result in higher spreads in stock prices, which may limit the ability of its investors to sell their shares at a profit, if at all.

OphthaliX’s common stock trades in the over-the-counter market and is quoted on the OTC Pink and subsequent to the Merger will continue to be quoted on the OTC Pink.  The over-the-counter market for securities has historically experienced extreme price and volume fluctuations during certain periods.  These broad market fluctuations may adversely affect the market price of its common stock and result in substantial losses to its investors. In addition, the spreads on stock traded through the over-the-counter market are generally unregulated and higher than on stock exchanges, which mean that the difference between the price at which shares could be purchased by investors in the over-the-counter market compared to the price at which they could be subsequently sold would be greater than on these exchanges.  Significant spreads between the bid and asked prices of the stock could continue during any period in which a sufficient volume of trading is unavailable or if the stock is quoted by an insignificant number of market makers.  Historically OphthaliX’s trading volume has been insufficient to significantly reduce this spread and has had a limited number of market makers sufficient to affect this spread.  These higher spreads could adversely affect investors who purchase the shares at the higher price at which the shares are sold, but subsequently sell the shares at the lower bid prices quoted by the brokers.  Unless the bid price for the stock exceeds the price paid for the shares by the investor, plus brokerage commissions or charges, the investor could lose money on the sale.  For higher spreads such as those on over-the-counter stocks, this is likely a much greater percentage of the price of the stock than for exchange listed stocks.  There is no assurance that at the time an investor in its common stock wishes to sell the shares, the bid price will have sufficiently increased to create a profit on the sale.

Following the Merger, an active market for OphthaliX’s common stock may not develop.

Although OphthaliX’s common stock trades on the OTC Pink, it does not have an active trading market and following the Merger, an active trading market may not develop. If an active trading market does not develop, or is not sustained, it may be difficult for investors to sell their shares without depressing the market price for the shares or at all. Further, an inactive market may also impair OphthaliX’s ability to raise capital by selling shares of its common stock and may impair its ability to enter into strategic partnerships or acquire companies or products by using its shares of common stock as consideration.

OphthaliX’s board can, without stockholder approval, cause preferred stock to be issued on terms that adversely affect common stockholders or which could be used to resist a potential take-over of OphthaliX.

Under the OphthaliX Certificate of Incorporation, OphthaliX’s board is authorized to issue up to 1,000,000 shares of preferred stock, none of which are issued and outstanding as of the date of this proxy statement/prospectus.  Also, OphthaliX’s board, without stockholder approval, may determine the price, rights, preferences, privileges and restrictions, including voting rights, of those shares.  If the board causes shares of preferred stock to be issued, the rights of the holders of its common stock could be adversely affected.  The board’s ability to determine the terms of preferred stock and to cause its issuance, while providing desirable flexibility in connection with possible acquisitions and other corporate purposes, could have the effect of making it more difficult for a third party to acquire a majority of its outstanding voting stock.  Preferred shares issued by the board could include voting rights, or even super voting rights, which could shift the ability to control OphthaliX to the holders of the preferred stock.  Preferred shares could also have conversion rights into shares of common stock at a discount to the market price of the common stock which could negatively affect the market for its common stock.  In addition, preferred shares would have preference in the event of liquidation of the corporation, which means that the holders of preferred shares would be entitled to receive the net assets of the corporation distributed in liquidation before the common stock holders receive any distribution of the liquidated assets.  OphthaliX has no current plans to issue any shares of preferred stock.

The market price of OphthaliX’s common stock may fluctuate significantly, which could result in substantial losses by its investors.

The market price of OphthaliX’s common stock may fluctuate significantly in response to numerous factors, some of which are beyond its control, such as:

These factors and any corresponding price fluctuations may materially and adversely affect the market price of its common stock and result in substantial losses by its investors.

Further, the stock market in general, and the market for biotechnology companies in particular, has experienced extreme price and volume fluctuations in the past.  Continued market fluctuations could result in extreme volatility in the price of OphthaliX’s common stock, which could cause a decline in the value of its common stock.  Price volatility of its common stock might be worse if the trading volume of its common stock is low.   In the past, following periods of market volatility, stockholders have often instituted securities class action litigation. If OphthaliX is involved in securities litigation, it could have a substantial cost and divert resources and attention of management from its business, even if successful.  Future sales of its common stock could also reduce the market price of such stock.

Investors may have difficulties enforcing a U.S. judgment, including judgments based upon the civil liability provisions of the U.S. federal securities laws against OphthaliX and its officers and directors or asserting U.S. securities laws claims in Israel.

Following the Merger, it is expected that OphthaliX’s directors and officers will not be residents of the United States and its assets will be located outside the United States. Service of process upon OphthaliX’s non-U.S. resident directors and officers and enforcement of judgments obtained in the United States against OphthaliX, and some of OphthaliX’s directors and officers may be difficult to obtain within the United States. OphthaliX has been informed by its legal counsel in Israel that it may be difficult to assert claims under U.S. securities laws in original actions instituted in Israel or obtain a judgment based on the civil liability provisions of U.S. federal securities laws.  Israeli courts may refuse to hear a claim based on a violation of U.S. securities laws against OphthaliX’s officers and directors because Israel may not be 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.  There is little binding case law in Israel addressing the matters described above.  Israeli courts might not enforce judgments rendered outside Israel, which may make it difficult to collect on judgments rendered against OphthaliX and/or OphthaliX’s officers and directors.

Moreover, among other reasons, including but not limited to, fraud, a lack of due process, a judgment which is at variance with another judgment that was given in the same matter and if a suit in the same matter between the same parties was pending before a court or tribunal in Israel, an Israeli court will not enforce a foreign judgment if it was given in a state whose laws do not provide for the enforcement of judgments of Israeli courts (subject to exceptional cases) or if its enforcement is likely to prejudice the sovereignty or security of the State of Israel.

Risks Related to the Business of Wize

Wize has incurred operating losses since its inception and anticipates that it will continue to incur substantial operating losses for the foreseeable future.

Wize is a clinical-stage biopharmaceutical company currently focused on the treatment of ophthalmic disorders, including DES. Wize has in-licensed certain rights to LO2A, a drug developed for the treatment of DES, and other ophthalmological illnesses, including CCH and Sjögren's. Since April 2015, Wize has been financing its operations through numerous financing activities, including the issuance of ordinary shares and from loans from Ridge and Rimon Gold Assets Ltd. (“Rimon Gold”) and from third parties. Wize has historically incurred net losses, including net losses of approximately $1.1 million, $1.9 million and $0.7 million for the years ended 2016 and 2105 and for the three months ended March 31, 2017, respectively. At March 31, 2017, Wize had an accumulated deficit of approximately $24.2 million. Wize does not know whether or when it will become profitable. To date, Wize has not commercialized any products or generated any revenues from product sales and accordingly it does not have a revenue stream to support its cost structure. Wize’s losses have resulted principally from costs incurred in development and discovery activities. Wize expects to continue to incur losses for the foreseeable future, and these losses will likely increase as it:

No certainty exists that Wize will be able to complete the development of LO2A for CCH, Sjögren's or any other ophthalmic disorder, due to financial, technological or other difficulties. If LO2A fails in clinical trials or does not gain regulatory clearance or approval, or if LO2A does not achieve market acceptance, Wize may never become profitable. Even if Wize does achieve profitability, it may not be able to sustain or increase profitability on a quarterly or annual basis. Wize’s inability to achieve and then maintain profitability would negatively affect its business, financial condition, results of operations and cash flows. Moreover, Wize’s prospects must be considered in light of the risks and uncertainties encountered by an early-stage company and in highly regulated and competitive markets, such as the biopharmaceutical market, where regulatory approval and market acceptance of its products are uncertain. There can be no assurance that Wize’s efforts will ultimately be successful or result in revenues or profits.

Wize has substantial debt which may adversely affect Wize by limiting future sources of financing, interfering with Wize’s ability to pay interest and principal on the Convertible Loans and subjecting Wize to additional risks.

Wize has a significant amount of indebtedness. As of June 30, 2017, Wize had a total of NIS 5.1 million (approximately $1.5 million) of loans (including interest) outstanding under Convertible Loans, of which (1) Ridge extended a principal amount of NIS 1.0 million (approximately $0.3 million), (2) Rimon Gold extended a principal amount of NIS 3.0 million (approximately $0.9 million), and (3) Shimson Fisher (“Fisher”) extended a principal amount of NIS 1.0 million (approximately $0.3 million). If Wize incurs additional indebtedness to its current indebtedness levels, including other short or long-term credit facilities, the related risks that it now faces could increase. For more information relating to the Convertible Loans and the agreements relating thereto, please see “INFORMATION ABOUT WIZE – Management’s Discussion and Analysis of Financial Condition and Results of Operations” beginning on page 112 of this proxy statement/prospectus.  

Wize’s substantial debt could have important consequences, including:

Wize’s assets are subject to security interests in favor of Rimon Gold. Wize’s failure to repay the Convertible Loans, if required, could result in legal action against Wize, which could require the sale of all of its assets.

In order to secure its obligations and performance pursuant to the Convertible Loans from Rimon Gold, Wize recorded a first priority fixed charge in favor of Rimon Gold on all of Wize's rights, including its distribution rights, under the LO2A License Agreement, and a first priority floating charge on all of Wize's rights, title and interest in all of its assets, as exist from time to time. If Wize is unable to repay the Convertible Loans from Rimon Gold when due, Rimon Gold could foreclose on Wize’s assets in order to recover the amounts due. Any such action would require Wize to curtail or cease operations.

The Convertible Loans contain restrictive covenants that may limit Wize’s corporate activities, which could have an adverse effect on Wize’s financial condition and results of operations.

The Convertible Loans (including the Security Agreements associated therewith) contain a number of undertakings and restrictive covenants that, until the full repayment of such loans (including by way of conversion into Wize shares or, following the Effective Time, OphthaliX shares), limit its operating and financial flexibility. In addition, upon the closing of the Merger Agreement, OphthaliX is required to execute and deliver to Rimon Gold an Irrevocable Guaranty and Undertaking (the “OphthaliX Guaranty”) pursuant to which OphthaliX will irrevocably guarantee Wize's obligations to Rimon Gold under the Convertible Loans. Furthermore, the OphthaliX Guaranty contains a number of restrictive covenants that limit OphthaliX's operating flexibility. The covenants in the Convertible Loans (including the Security Agreements associated therewith) and the OphthaliX Guaranty include, among other things, limitations on the creations of liens; on the incurrence of indebtedness; on dispositions of assets, mergers, acquisitions and change of control transactions; on changes in the general nature of its business; and on the distribution of dividends. Such obligations may hinder each of Wize's and OphthaliX’s (post-Merger) future operations or the manner in which it operates its business, which could have a material adverse effect on Wize's business and OphthaliX’s (post-Merger) business, financial condition or results of operations. These restrictions could also limit Wize’s and OphthaliX’s (post-Merger) ability to plan for or react to market conditions or meet extraordinary capital needs or otherwise restrict corporate activities. These provisions, when taken as a whole, may also have the effect of making an acquisition of Wize or OphthaliX (post-Merger) more difficult and, consequently, also cause its shares to trade at prices below the price for which third parties might be willing to pay to gain control of Wize or OphthaliX, as applicable.

As a result of the restrictions in the Convertible Loans (including the Security Agreements associated therewith) and the OphthaliX Guaranty, or similar restrictions in Wize’s OphthaliX future financing arrangements, Wize and/or OphthaliX may need to seek permission from its lenders in order to engage in certain corporate actions. Wize’s lenders' interests may be different from Wize’s and/or OphthaliX’s and Wize and/or OphthaliX may not be able to obtain their permission when needed or at all. This may prevent Wize and/or OphthaliX from taking actions that it believes are in its best interest, which may adversely impact its revenues, results of operations and financial condition.

Wize will need to raise additional capital to meet its business requirements in the future, and such capital raising may be costly or difficult to obtain and will dilute current shareholders’ ownership interests.

The sources of financing at Wize’s disposal are insufficient (i) to conduct its ongoing business, (ii) to conduct any future clinical trials, and (iii) for LO2A’s commercial production and marketing. No certainty exists that Wize will be able to secure the additional sources of finance it needs to perform the advanced and necessary stages of receiving regulatory approvals for marketing and distributing its products, including the costs derived from performing clinical trials and the requirements of the regulatory authorities. The lack of satisfactory means of financing may bring Wize’s business activity to a halt. As of March 31, 2017, Wize had cash and cash equivalents of approximately $18,000. Wize has expended and believes that it will continue to expend substantial resources for the foreseeable future developing LO2A. These expenditures will include costs associated with research and development, manufacturing, conducting clinical trials, as well as commercializing any products approved for sale. Because the outcome of Wize’s planned and anticipated clinical trials is highly uncertain, it cannot reasonably estimate the actual amounts necessary to successfully complete the development and commercialization of LO2A. In addition, other unanticipated costs may arise. As a result of these and other factors currently unknown to Wize, it will require additional funds, through public or private equity or debt financings or other sources, such as strategic partnerships and alliances and licensing arrangements. In addition, Wize may seek additional capital due to favorable market conditions or strategic considerations even if it believes it has sufficient funds for its current or future operating plans.

Wize’s future capital requirements will depend on many factors, including the progress and results of its clinical trials, the duration and cost of discovery and preclinical development, and laboratory testing and clinical trials of LO2A, the timing and outcome of regulatory review of LO2A, the number and development requirements of other product candidates that Wize pursues, if any, and the costs of activities, such as product marketing, sales, and distribution. Because of the numerous risks and uncertainties associated with the development and commercialization of LO2A, it is unable to estimate the amounts of increased capital outlays and operating expenditures associated with its anticipated clinical trials.

Wize’s future capital requirements depend on many factors, including:

Additional funds may not be available when Wize needs them, on terms that are acceptable to Wize, or at all. If adequate funds are not available to Wize on a timely basis, Wize may be required to delay, limit, reduce or terminate preclinical studies, clinical trials or other research and development activities for LO2A or delay, limit, reduce or terminate its establishment of sales and marketing capabilities or other activities that may be necessary to commercialize LO2A.

Wize may incur substantial costs in pursuing future capital financing, including investment banking fees, legal fees, accounting fees, securities law compliance fees, printing and distribution expenses and other costs. Wize may also be required to recognize non-cash expenses in connection with certain securities it issues, such as convertible notes and warrants, which may adversely impact its financial condition.

According to management estimates, liquidity resources as of March 31, 2017 will not be sufficient to maintain Wize’s operations through December 31, 2017 which raises substantial doubt regarding its ability to continue as a going concern. If Wize does not continue as a going concern, investors could lose their entire investment.

According to management estimates, liquidity resources as of March 31, 2017, will not be sufficient to maintain Wize’s operations through December 31, 2017. Wize’s inability to raise funds to conduct its research and development activities will have a severe negative impact on its ability to remain a viable company. These conditions raise substantial doubt about Wize’s ability to continue as a going concern. As such, the report of Wize’s independent registered public accounting firm on its audited financial statements as of and for the year ended December 31, 2016 contains an explanatory paragraph regarding substantial doubt about Wize’s ability to continue as a going concern. This explanatory paragraph could materially limit its ability to raise additional funds through the issuance of debt or equity securities or otherwise. Future reports on Wize’s annual financial statements may include an explanatory paragraph with respect to its ability to continue as a going concern.

Raising additional capital may cause dilution to Wize’s existing shareholders, restrict its operations or require Wize to relinquish rights to LO2A.

Wize may seek additional capital through a combination of private and public equity offerings, debt financings, strategic partnerships and alliances and licensing arrangements. To the extent that Wize raises additional capital through the sale of equity or convertible debt securities, the ownership interests of existing shareholders will be diluted, and the terms may include liquidation or other preferences that adversely affect shareholder rights. Debt financing, if available, may involve agreements that include covenants limiting or restricting Wize’s ability to take certain actions, such as incurring debt, making capital expenditures or declaring dividends. If Wize raises additional funds through strategic partnerships and alliances and licensing arrangements with third parties, it may have to relinquish valuable rights to its LO2A, or grant licenses on terms that are not favorable. If Wize is unable to raise additional funds through equity or debt financing when needed, it may be required to delay, limit, reduce or terminate its product development or commercialization efforts or grant rights to develop and market LO2A that Wize would otherwise prefer to develop and market itself . 

If Wize fails to obtain necessary funds for its operations, it will be unable to maintain and improve its licensed technology, and it will be unable to develop and commercialize LO2A.

Wize’s present and future capital requirements depend on many factors, including:

If Wize is unable to obtain the funds necessary for its operations, Wize will be unable to maintain and improve its licensed technology, and it will be unable to develop and commercialize its products and technologies, which would materially and adversely affect its business, liquidity and results of operations.

Risks Related to the Wize’s Business and Regulatory Matters

Wize has not yet commercialized LO2A, and may never become profitable.

Although LO2A is approved for sale for certain indications in a limited number of jurisdictions, Wize has not yet commenced commercialization of LO2A, and may never be able to do so other than with respect to the entry into of distribution agreements in Israel and Ukraine, which are not expected to result in material revenues. Wize’s activity is influenced by the policies of regulatory authorities. Changes and developments in regulatory requirements or Wize’s failure to meet such requirements may lead to restrictions or delays in developing LO2A and cause material expenses for Wize. Wize does not know when or if it will complete any of its product development efforts of LO2A, obtain regulatory approval for any future product candidates incorporating its technologies or successfully commercialize any approved products. Even if Wize is successful in developing LO2A that is approved for marketing, it will not be successful unless these products gain market acceptance for appropriate indications at favorable reimbursement rates. The degree of market acceptance of these products will depend on a number of factors, including:

Physicians, patients, thirty-party payors or the medical community in general may be unwilling to accept, utilize or recommend, and in the case of third-party payors, cover any of Wize’s products or products incorporating its technologies. As a result, Wize is unable to predict the extent of future losses or the time required to achieve profitability, if at all. Even if Wize successfully develops one or more products that incorporate its technologies, it may not become profitable.

Wize’s current pipeline is based on a single compound, LO2A. Failure to develop LO2A will have a material adverse effect on Wize.

Wize has commenced two Phase II random, double-blind, placebo-controlled, clinical trials, in parallel groups and are intended for the repeated confirmation of the effectiveness and safety of LO2A for patients suffering from moderate to severe CCH. One trial is a multi-center trial in five different medical centers in Israel and the second trial is in a single medical center trial in Israel, with only Wize having access to the trial data. LO2A is at various stages of clinical development and may never be commercialized for the indications in the territories that Wize presently has rights under the LO2A License Agreement. The progress and results of any future clinical trials are uncertain, and the failure of LO2A to receive regulatory approvals will have a material adverse effect on Wize’s business, operating results and financial condition to the extent Wize is unable to commercialize LO2A. In addition, Wize faces the risks of failure inherent in developing therapeutic products.

Furthermore, LO2A must satisfy rigorous standards of safety and efficacy before it can be approved by the U.S. Food and Drug Administration (the “FDA”), and any applicable foreign regulatory authorities for commercial use. The FDA and foreign regulatory authorities have full discretion over this approval process. Wize will need to conduct significant additional research, involving testing in animals and in humans, before it can file applications for product approval. Typically, in the pharmaceutical industry, there is a high rate of attrition for product candidates in pre-clinical testing and clinical trials. Also, satisfying regulatory requirements typically takes many years, is dependent upon the type, complexity and novelty of the product and requires the expenditure of substantial resources. In addition, delays or rejections may be encountered based upon additional government regulation, including any changes in FDA policy, during the process of product development, clinical trials and regulatory reviews.

In order to receive FDA approval or approval from foreign regulatory authorities to market a product candidate, Wize must demonstrate through pre-clinical testing and through human clinical trials that the product candidate is safe and effective for its intended uses ( e.g. , treatment of a specific condition in a specific way subject to contradictions and other limitations). Even if Wize complies with all FDA requests, the FDA may ultimately reject one or more of its new drug applications (“NDA”) or grant approval for a narrowly intended use that is not commercially feasible.  Wize might not obtain regulatory approval for LO2A in a timely manner, if at all.  Failure to obtain FDA approval for LO2A in a timely manner or at all will severely undermine its business by reducing the number of salable products and, therefore, corresponding product revenues.

Results of earlier clinical trials may not be predictive of the results of later-stage clinical trials.

The results of preclinical studies and early clinical trials of product candidates may not be predictive of the results of later-stage clinical trials. Product candidates in later stages of clinical trials may fail to show the desired safety and efficacy results despite having progressed through preclinical studies and initial clinical trials. Many companies in the pharmaceutical industry have suffered significant setbacks in advanced clinical trials due to adverse safety profiles or lack of efficacy, notwithstanding promising results in earlier studies. Any delay in, or termination or suspension of, Wize’s clinical trials will delay the requisite filings with the FDA or any applicable foreign regulatory authority and, ultimately, its ability to commercialize LO2A and generate product revenues.  If the clinical trials do not support Wize’s product claims, the completion of development of such product candidates may be significantly delayed or abandoned, which will significantly impair its ability to generate product revenues and will materially adversely affect its results of operations.  

This drug candidate development risk is heightened by any changes in the planned clinical trials compared to the completed clinical trials. As product candidates are developed from preclinical through early to late stage clinical trials towards approval and commercialization, it is customary that various aspects of the development program, such as manufacturing and methods of administration, are altered along the way in an effort to optimize processes and results. While these types of changes are common and are intended to optimize the product candidates for late stage clinical trials, approval and commercialization, such changes do carry the risk that they will not achieve these intended objectives.

Changes in Wize’s clinical trials or future clinical trials could cause LO2A or any future product candidate to perform differently, including causing toxicities, which could delay completion of its clinical trials, delay approval of its product candidates, and/or jeopardize its ability to commence product sales and generate revenues.

Wize might be unable to develop LO2A that will achieve commercial success in a timely and cost-effective manner, or ever.

Even if regulatory authorities approve LO2A for the indications in the territories that Wize presently has rights under the LO2A License Agreement, they may not be commercially successful. LO2A may not be commercially successful because government agencies and other third-party payors may not cover the product or the coverage may be too limited to be commercially successful; physicians and others may not use or recommend its products, even following regulatory approval. A product approval, assuming one issues, may limit the uses for which the product may be distributed thereby adversely affecting the commercial viability of the product. Third parties may develop superior products or have proprietary rights that preclude Wize from marketing its products. Patient acceptance of and demand for LO2A for which Wize obtains regulatory approval or license will depend largely on many factors, including but not limited to the extent, if any, of reimbursement of costs by government agencies and other third-party payors, pricing, the effectiveness of its marketing and distribution efforts, the safety and effectiveness of alternative products, and the prevalence and severity of side effects associated with its products. If physicians, government agencies and other third-party payors do not accept Wize’s products, it will not be able to generate significant revenue.

Clinical trials are very expensive, time-consuming and difficult to design and implement, and, as a result, Wize may suffer delays or suspensions in future trials which would have a material adverse effect on its ability to generate revenues.

Human clinical trials are very expensive and difficult to design and implement, in part because they are subject to rigorous regulatory requirements. Regulatory authorities, such as the FDA, may preclude clinical trials from proceeding. Additionally, the clinical trial process is time-consuming, failure can occur at any stage of the trials, and Wize may encounter problems that cause it to abandon or repeat clinical trials. The commencement and completion of clinical trials may be delayed by several factors, including:

Wize has experienced the risks involved with conducting clinical trials, including but not limited to, increased expense and delay and failure to meet end points of the trial.

In addition, Wize or regulatory authorities may suspend its clinical trials at any time if it appears that Wize is exposing participants to unacceptable health risks or if the regulatory authorities find deficiencies in its regulatory submissions or the conduct of these trials. Any suspension of clinical trials will delay possible regulatory approval, if any, and adversely impact its ability to develop products and generate revenue.

If Wize acquires or licenses additional technology or product candidates, it may incur a number of costs, may have integration difficulties and may experience other risks that could harm its business and results of operations.

Wize may acquire and license additional product candidates and technologies. Any product candidate or technology Wize licenses from others or acquires will likely require additional development efforts prior to commercial sale, including extensive pre-clinical or clinical testing, or both, and approval by the FDA and applicable foreign regulatory authorities, if any. All product candidates are prone to risks of failure inherent in pharmaceutical product development, including the possibility that the product candidate or product developed based on licensed technology will not be shown to be sufficiently safe and effective for approval by regulatory authorities. In addition, Wize cannot assure you that any product candidate that it develops based on acquired or licensed technology that is granted regulatory approval will be manufactured or produced economically, successfully commercialized or widely accepted in the marketplace. Moreover, integrating any newly acquired product candidates could be expensive and time-consuming. If Wize cannot effectively manage these aspects of its business strategy, its business may not succeed.

If any third party upon whom Wize relies to manufacture LO2A is unable to timely manufacture LO2A in compliance with current Good Manufacturing Practices (“cGMP”) and other regulations its business will be harmed.

Wize does not currently have the ability to manufacture the compounds that it needs to conduct its clinical trials and, therefore, relies upon, and intends to continue to rely upon, a certain contract manufacturer to produce and supply LO2A (including the active pharmaceutical ingredients, or APIs) for use in clinical trials and for future sales. If such manufacturer is unable to manufacture the compounds in a timely fashion or in compliance with current good manufacturing practices (cGMP) and other applicable regulations or if there is a strain on the relationship with such manufacturer, Wize’s clinical development programs may be delayed which could have a detrimental effect on its business.

The manufacture of LO2A is a chemical synthesis process and if its manufacturer encounters problems manufacturing LO2A, its business could suffer.

Regulators throughout the world, including the FDA, require manufacturers to register manufacturing facilities. Such regulators also inspect these facilities to confirm compliance with requirements that such regulators establish. Wize has engaged a contract manufacturer to produce and supply LO2A and such third party manufacturer may face manufacturing or quality control problems causing product production and shipment delays or a situation where such manufacturer may not be able to maintain compliance with the applicable regulators’ requirements necessary to continue manufacturing LO2A. In addition, drug manufacturers may be subject to ongoing periodic unannounced inspections by regulators to ensure strict compliance with requirements and other regulations and applicable standards. Any failure to comply with such requirements could adversely affect Wize’s clinical research activities and its ability to market and develop LO2A.

Wize does not currently have sales, marketing or distribution capabilities or experience, and is unable to effectively sell, market or distribute LO2A now and does not expect to be able to do so in the future. The failure to enter into agreements with third parties that are capable of performing these functions would have a material adverse effect on its business and results of operations.

Wize intends to enter into agreements with pharmaceutical companies and distributors with relevant marketing capabilities in the field of pharmaceuticals in order to use them to sell LO2A in countries around the world where Wize holds rights to sell LO2A. To date, Wize has entered into two distribution agreements to market LO2A for DES only. Wize does not currently have and does not expect to develop its own sales, marketing and distribution capabilities. If Wize is unable to enter into agreements with third parties to perform these functions, Wize will not be able to successfully market LO2A. In order to successfully market LO2A, Wize must make arrangements with third parties to perform these services.

As Wize does not intend to develop a marketing and sales force with technical expertise and supporting distribution capabilities, it will be unable to market LO2A directly. To promote any of its potential products through third parties, Wize will have to locate acceptable third parties for these functions and enter into agreements with them on acceptable terms, and may not be able to do so. Any third-party arrangements Wize is able to enter into may result in lower revenues than it could achieve by directly marketing and selling its potential products. In addition, to the extent that Wize depends on third parties for marketing and distribution, any revenues it receives will depend upon the efforts of such third parties, as well as the terms of its agreements with such third parties, which cannot be predicted in most cases at this time.  As a result, Wize might not be able to market and sell LO2A in the United States or overseas, which would have a material adverse effect on its business.

Wize faces significant competition and continuous technological change, and developments by competitors may render its products or technologies obsolete or non-competitive. If Wize cannot successfully compete with new or existing products, its marketing and sales will suffer and may not ever be profitable.

Wize is active in a competitive market. The fierce competition in the field and the introduction of new competitors to the field may negatively impact Wize’s monetary results. Wize will compete against fully integrated pharmaceutical and biotechnology companies and smaller companies that are collaborating with larger pharmaceutical companies, academic institutions, government agencies and other public and private research organizations. In addition, many of these competitors, either alone or together with their collaborative partners, operate larger research and development programs than Wize, and have substantially greater financial resources, as well as significantly greater experience in:

If Wize’s competitors develop and commercialize products faster, or develop and commercialize products that are superior to LO2A, Wize’s commercial opportunities will be reduced or eliminated. The extent to which LO2A achieves market acceptance will depend on competitive factors, many of which are beyond its control. Competition in the biotechnology and biopharmaceutical industry is intense and has been accentuated by the rapid pace of technology development. Wize’s competitors include large integrated pharmaceutical companies, biotechnology companies that currently have drug and target discovery efforts, universities, and public and private research institutions. Almost all of these entities have substantially greater research and development capabilities and financial, scientific, manufacturing, marketing and sales resources than Wize. These organizations also compete with Wize to:

Wize’s competitors may succeed in developing and commercializing products earlier and obtaining regulatory approvals from the FDA and other foreign regulatory authorities more rapidly. Wize’s competitors may also develop products or technologies that are superior to those it is developing, and render LO2A or any future product candidate or technology obsolete or non-competitive. If Wize cannot successfully compete with new or existing products, its marketing and sales will suffer and may never be profitable.

Wize may suffer losses from product liability claims if LO2A causes harm to patients.

LO2A could cause adverse events. There is also a risk that certain adverse events may not be observed in clinical trials, but may nonetheless occur in the future. If any of these adverse events occur, they may render LO2A ineffective or harmful in some patients, and its sales would suffer, materially adversely affecting its business, financial condition and results of operations.

The clinical trials Wize carries out are with an insurance policy that allows the trials to be conducted. Accordingly, it is uncertain whether Wize will be able to complete its receipt of the regulatory approvals for marketing the drug. Furthermore, it is uncertain whether indemnification will be provided by the insurance companies. In addition, potential adverse events caused by LO2A could lead to product liability lawsuits. If product liability lawsuits are successfully brought against Wize, it may incur substantial liabilities and may be required to limit the marketing and commercialization of LO2A. Wize’s business is exposed to potential product liability risks, which are inherent in the testing, manufacturing, marketing and sale of pharmaceutical products. Wize may not be able to avoid product liability claims. Product liability insurance for the pharmaceutical and biotechnology industries is generally expensive, if available at all. If, at any time, Wize is unable to obtain sufficient insurance coverage on reasonable terms or to otherwise protect against potential product liability claims, Wize may be unable to clinically test, market or commercialize LO2A. A successful product liability claim brought against Wize in excess of its insurance coverage, if any, may cause Wize to incur substantial liabilities, and, as a result, its business, liquidity and results of operations would be materially adversely affected.

LO2A will remain subject to ongoing regulatory requirements even if it receives marketing approval, and if Wize fails to comply with these requirements, Wize could lose these approvals, and the sales of any approved commercial products could be suspended.

Even if Wize receives regulatory approval to market LO2A, the product will remain subject to extensive regulatory requirements, including requirements relating to manufacturing, labeling, packaging, adverse event reporting, storage, advertising, promotion, distribution and recordkeeping. Even if regulatory approval of a product is granted, the approval may be subject to limitations on the uses for which the product may be marketed or the conditions of approval, or may contain requirements for costly post-marketing testing and surveillance to monitor the safety or efficacy of the product, which could negatively impact Wize or its collaboration partners by reducing revenues or increasing expenses, and cause the approved product candidate not to be commercially viable. In addition, as clinical experience with a drug expands after approval, typically because it is used by a greater number and more diverse group of patients after approval than during clinical trials, side effects and other problems may be observed after approval that were not seen or anticipated during pre-approval clinical trials or other studies. Any adverse effects observed after the approval and marketing of a product candidate could result in limitations on the use of or withdrawal of any approved products from the marketplace. Absence of long-term safety data may also limit the approved uses of its products, if any. If Wize fails to comply with the regulatory requirements of the FDA and other applicable U.S. and foreign regulatory authorities, or previously unknown problems with any approved commercial products, manufacturers or manufacturing processes are discovered, Wize could be subject to administrative or judicially imposed sanctions or other setbacks, including the following:

If Wize or its collaborators are slow or unable to adapt to changes in existing regulatory requirements or adoption of new regulatory requirements or policies, marketing approval for LO2A may be lost or cease to be achievable, resulting in decreased revenue from milestones, product sales or royalties, which would have a material adverse effect on its results of operations.

Wize relies significantly on information technology and any failure, inadequacy, interruption or security lapse of that technology, including any cybersecurity incidents, could harm its ability to operate its business effectively.

Despite the implementation of security measures, Wize’s internal computer systems and those of third parties with which Wize contracts are vulnerable to damage from cyber-attacks, computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures. System failures, accidents or security breaches could cause interruptions in its operations, and could result in a material disruption of its clinical activities and business operations, in addition to possibly requiring substantial expenditures of resources to remedy. The loss of clinical trial data could result in delays in Wize’s regulatory approval efforts and significantly increase its costs to recover or reproduce the data. To the extent that any disruption or security breach were to result in a loss of, or damage to, Wize’s data or applications, or inappropriate disclosure of confidential or proprietary information, Wize could incur liability and its research and development programs and the development of LO2A could be delayed.

Wize may encounter difficulties in managing its growth.  Failure to manage its growth effectively will have a material adverse effect on its business, results of operations and financial condition.

Wize may not be able to successfully grow and expand. Successful implementation of its business plan will require management of growth, including potentially rapid and substantial growth, which will result in an increase in the level of responsibility for management personnel and place a strain on Wize’s human and capital resources. To manage growth effectively, Wize will be required to continue to implement and improve its operating and financial systems and controls to expand, train and manage its employee base. Wize’s ability to manage its operations and growth effectively requires Wize to continue to expend funds to enhance its operational, financial and management controls, reporting systems and procedures and to attract and retain sufficient numbers of talented personnel. If Wize is unable to scale up and implement improvements to its control systems in an efficient or timely manner, or if Wize encounters deficiencies in existing systems and controls, then it will not be able to make available the products required to successfully commercialize its technology. Failure to attract and retain sufficient numbers of talented personnel will further strain its human resources and could impede its growth or result in ineffective growth. Moreover, the management, systems and controls currently in place or to be implemented may not be adequate for such growth, and the steps taken to hire personnel and to improve such systems and controls might not be sufficient. If Wize is unable to manage its growth effectively, it will have a material adverse effect on its business, results of operations and financial condition.

If Wize is unable to obtain adequate insurance, its financial condition could be adversely affected in the event of uninsured or inadequately insured loss or damage. Wize’s ability to effectively recruit and retain qualified officers and directors could also be adversely affected if it experiences difficulty in obtaining adequate directors’ and officers’ liability insurance.

Wize may not be able to obtain insurance policies on terms affordable that would adequately insure its business and property against damage, loss or claims by third parties. To the extent Wize’s business or property suffers any damages, losses or claims by third parties, which are not covered or adequately covered by insurance, its financial condition may be materially adversely affected.

Wize may be unable to maintain sufficient insurance as a public company to cover liability claims made against its officers and directors. If Wize is unable to adequately insure its officers and directors, it may not be able to retain or recruit qualified officers and directors to manage its business.

Risks Related to Wize’s Intellectual Property

Wize’s ability to pursue the purchase, marketing, sale and distribution of LO2A depends upon the continuation of the LO2A License Agreement.

Wize does not own LO2A. Wize has entered into the LO2A License Agreement with Resdevco to license certain rights to LO2A (see the section entitled “INFORMATION ABOUT WIZE — LO2A License Agreement” beginning on page 92 of this proxy statement/prospectus). The LO2A License Agreement requires Wize to, among other things, make certain minimum royalty payments to Resdevco and meet certain regulatory milestones. If Wize does not meet its obligations under the LO2A License Agreement in a timely manner, or if Wize otherwise breaches the terms of the LO2A License Agreement, Resdevco could terminate the LO2A License Agreement and Wize would lose the rights to LO2A. From time to time, in the ordinary course of business, Wize may have disagreements with Resdevco regarding the terms of the LO2A License Agreement or ownership of proprietary rights, which could lead to delays in the research, development, collaboration and commercialization of LO2A, or could require or result in litigation or arbitration, which could be time-consuming and expensive. If the LO2A License Agreement is terminated, it would have a material adverse effect on Wize’s business, prospects and results of operations.

Wize’s inability to expand its rights under the LO2A License Agreement may have a detrimental effect on its business.

Pursuant to the LO2A License Agreement, Wize has (i) the right to add additional territories in the future, subject to a commitment by Wize to pay minimum royalties, (ii) the right to purchase Resdevco's agreements with its existing distributors of LO2A in other jurisdictions, subject to the payment by Wize of the amount set forth in the LO2A License Agreement, and (iii) a right of first negotiation with potential distributors to whom Resdevco may in the future grant distribution rights to LO2A in certain territories, subject to the payment by Wize of certain minimum royalties. The LO2A License Agreement historically included an option for Wize to purchase from Resdevco all remaining territories for a fixed amount and such option was cancelled on March 30, 2017. The ability of Wize to exercise its rights mentioned above and to expand its business is subject to Wize having sufficient cash resources to make the applicable payments to Resdevco. If Wize does not have sufficient cash resources to make such payments, it will not be able to exercise its expansion rights under the LO2A License Agreement and its business may suffer.

The failure to obtain or maintain patents and other intellectual property could impact Wize’s ability to compete effectively.

Wize’s success, competitive position, and future revenues, if any, depend in part on its ability to obtain and successfully leverage intellectual property covering LO2A, know-how, methods, processes, and other technologies, to protect its trade secrets, to prevent others from using its intellectual property and to operate without infringing the intellectual property rights of third parties.

The risks and uncertainties that Wize faces with respect to its intellectual property rights include, but are not limited to, the following:

If patent rights covering LO2A are not sufficiently broad or expire, they may not provide Wize with any protection against competitors with similar products and technologies. For example, a patent covering the composition and use of LO2A for treating or alleviating DES has expired.  Furthermore, if the United States Patent and Trademark Office (the “USPTO”), or foreign patent offices issue patents to Wize or its licensors, others may challenge the patents or design around the patents, or the patent office or the courts may invalidate the patents.  Thus, any patents Wize owns or licenses from or to third parties may not provide any protection against its competitors.

Wize cannot be certain that patents will be issued as a result of any pending applications, and cannot be certain that any of its issued patents, including those licensed from Resdevco or any other third-party in the future, will give Wize adequate protection from competing products. For example, issued patents, including the patents licensed by Wize, may be circumvented or challenged, declared invalid or unenforceable, or narrowed in scope.

In addition, since publication of discoveries in the scientific or patent literature often lags behind actual discoveries, Wize cannot be certain that it or Resdevco were or will be the first to make its inventions or to file patent applications covering those inventions.

It is also possible that others may obtain issued patents that could prevent Wize from commercializing LO2A or require Wize to obtain licenses requiring the payment of significant fees or royalties in order to enable Wize to conduct its business. As to those patents that Wize has licensed, its rights depend on maintaining its obligations to the licensor under the applicable license agreement, and Wize may be unable to do so.

In addition to patents and patent applications, Wize depends upon trade secrets and proprietary know-how to protect its proprietary technology. Wize requires its employees, consultants, advisors and collaborators to enter into confidentiality agreements that prohibit the disclosure of confidential information to any other parties. Wize requires its employees and consultants to disclose and assign their ideas, developments, discoveries and inventions to Wize. These agreements may not, however, provide adequate protection for Wize’s trade secrets, know-how or other proprietary information in the event of any unauthorized use or disclosure.

Costly litigation may be necessary to protect Wize’s or Resdevco’s intellectual property rights and Wize or Resdevco may be subject to claims alleging the violation of the intellectual property rights of others.

Wize’s activity in the field of life sciences exposes Wize to the possibility of legal proceedings connected with Wize’s business activities. Wize may face significant expense and liability as a result of litigation or other proceedings relating to patents and other intellectual property rights of others. In the event that another party has also filed a patent application or been issued a patent relating to an invention or technology claimed by Wize or Resdevco in pending applications, Wize may be required to participate in an interference proceeding declared by the USPTO to determine priority of invention, which could result in substantial uncertainties and costs for Wize, even if the eventual outcome was favorable to Wize. Wize, or its licensors, could be required to participate in interference proceedings involving issued patents and pending applications of another entity. An adverse outcome in an interference proceeding could require Wize to cease using the technology or to license rights from prevailing third parties.

The cost to Wize of any patent litigation or other proceeding relating to its licensed patents or patent applications, even if resolved in its favor, could be substantial. Wize’s and Resdevco’s ability to enforce its patent protection could be limited by its financial resources, and may be subject to lengthy delays. If Wize is unable to effectively enforce its or Resdevco’s proprietary rights, or if Wize is found to infringe the rights of others, Wize may be in breach of its LO2A License Agreement. 

A third party may claim that Wize or Resdevco is using inventions claimed by their patents and may go to court to stop Wize or Resdevco from engaging in its normal operations and activities, such as research, development and the sale of any future products. Such lawsuits are expensive and would consume time and other resources. There is a risk that the court will decide that Wize or Resdevco is infringing the third party’s patents and will order Wize or Resdevco to stop the activities claimed by the patents, redesign its products or processes to avoid infringement or obtain licenses (which may not be available on commercially reasonable terms). In addition, there is a risk that a court will order Wize to pay the other party damages for having infringed their patents.

Moreover, there is no guarantee that any prevailing patent owner would offer Wize or Resdevco a license so that Wize or Resdevco could continue to engage in activities claimed by the patent, or that such a license, if made available, could be acquired on commercially acceptable terms. In addition, third parties may, in the future, assert other intellectual property infringement claims against Wize or Resdevco with respect to its product candidates, technologies or other matters.

Wize relies on confidentiality agreements of Wize or Resdevco that could be breached and may be difficult to enforce, which could result in third parties using its intellectual property to compete against Wize.

Although Wize believes that it takes reasonable steps to protect its intellectual property, including the use of agreements relating to the non-disclosure of confidential information to third parties, as well as agreements that purport to require the disclosure and assignment of the rights to the ideas, developments, discoveries and inventions of its employees and consultants while they are employed by Wize and Wize believes that Resdevco also takes such measures, the agreements can be difficult and costly to enforce. Although Wize, and Wize believes that its licensors’, seek to obtain these types of agreements from its contractors, consultants, advisors and research collaborators, to the extent that employees and consultants utilize or independently develop intellectual property in connection with any of its projects, disputes may arise as to the intellectual property rights associated with its products. If a dispute arises, a court may determine that the right belongs to a third party. In addition, enforcement of Wize’s and Resdevco’s rights can be costly and unpredictable. Wize and Resdevco also rely on trade secrets and proprietary know-how that Wize, and Wize believes that Resdevco seeks to protect in part by confidentiality agreements with employees, contractors, consultants, advisors or others. Despite the protective measures Wize and Resdevco employs, Wize still faces the risk that:

Patent protection outside the United States is particularly uncertain, and if Wize is involved in opposition proceedings outside the United States, it may have to expend substantial sums and management resources.

Patent law outside the United States is different than in the United States. Further, the laws of some foreign countries may not protect Wize’s or Resdevco’s intellectual property rights to the same extent as the laws of the United States, if at all.  A failure to obtain sufficient intellectual property protection in any country could materially and adversely affect Wize’s business, results of operations and future prospects.  Moreover, Wize may participate in opposition proceedings to determine the validity of its foreign patents or its competitors’ foreign patents, which could result in substantial costs and divert management’s resources and attention.

Wize may not be able to enforce employees’ covenants not to compete and therefore may be unable to prevent its competitors from benefiting from the expertise of some of its former employees.

Wize has entered into non-competition agreements with its key employee and key consultant, in most cases within the framework of their employment agreements. These agreements prohibit such persons, if they cease working for Wize, from competing directly with Wize or working for its competitors for a limited period. Under applicable law, Wize may be unable to enforce these agreements. If Wize cannot enforce its non-competition agreements with such persons, then it may be unable to prevent its competitors from benefiting from the expertise of its former employees, which could materially adversely affect its business, results of operations and ability to capitalize on its proprietary information.

Intellectual property rights do not necessarily address all potential threats to Wize’s competitive advantage.

The degree of future protection afforded by Wize’s intellectual property rights is uncertain because intellectual property rights have limitations, and may not adequately protect its business, or permit Wize to maintain its competitive advantage. The following examples are illustrative:

Wize may be subject to claims challenging the inventorship of its patents and other intellectual property.

Wize may be subject to claims that former employees, collaborators or other third parties have an interest in its patents or other intellectual property as an inventor or co-inventor. For example, Wize may have inventorship disputes arise from conflicting obligations of consultants or others who are involved in developing its product candidates. Litigation may be necessary to defend against these and other claims challenging inventorship. If Wize fails in defending any such claims, in addition to paying monetary damages, it 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 its business. Even if Wize is successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees.

Risks Related to Wize’s Industry

Wize is subject to government regulations and it may experience delays in obtaining required regulatory approvals to market LO2A.

Various aspects of Wize’s operations are subject to federal, state or local laws, rules and regulations, any of which may change from time to time. Costs arising out of any regulatory developments could be time-consuming and expensive and could divert management resources and attention and, consequently, could adversely affect its business operations and financial performance.

Delays in regulatory approval, limitations in regulatory approval and withdrawals of regulatory approval may have a material adverse effect on Wize. If Wize experiences significant delays in testing or receiving approvals or sign-offs to conduct clinical trials, its product development costs, or its ability to license LO2A, will increase. If certain country's regulatory authority grants regulatory approval to market a product, this approval will be limited to those disease states and conditions for which the product has demonstrated, through clinical trials, to be safe and effective. Any product approvals that Wize receives in the future could also include significant restrictions on the use or marketing of its products. Product approvals, if granted, can be withdrawn for failure to comply with regulatory requirements or upon the occurrence of adverse events following commercial introduction of the products. Failure to comply with applicable regulatory requirements may result in criminal prosecution, civil penalties, recall or seizure of products, total or partial suspension of production or injunction, as well as other regulatory action against Wize or LO2A. If approval is withdrawn for a product, or if a product were seized or recalled, Wize would be unable to sell or license that product and its revenues would suffer.

Wize expects the healthcare industry to face increased limitations on reimbursement as a result of healthcare reform, which could adversely affect third-party coverage of its products and how much or under what circumstances healthcare providers will prescribe or administer its products.

In both the United States and other countries, sales of Wize’s products will depend in part upon the availability of reimbursement from third-party payors, which include governmental authorities, managed care organizations and other private health insurers. Third-party payors are increasingly challenging the price and examining the cost effectiveness of medical products and services.

Increasing expenditures for healthcare have been the subject of considerable public attention in the United States. Both private and government entities are seeking ways to reduce or contain healthcare costs. Numerous proposals that would effect changes in the U.S. healthcare system have been introduced or proposed in Congress and in some state legislatures, including reducing reimbursement for prescription products and reducing the levels at which consumers and healthcare providers are reimbursed for purchases of pharmaceutical products.

In 2010, the United States Congress enacted the Patient Protection and Affordable Care Act of 2010 or, Affordable Care Act. The Affordable Care Act seeks to reduce the federal deficit and the rate of growth in health care spending through, among other things, stronger prevention and wellness measures, increased access to primary care, changes in health care delivery systems and the creation of health insurance exchanges. Enrollment in the health insurance exchanges began in October 2013. The Affordable Care Act requires the pharmaceutical industry to share in the costs of reform, by, among other things, increasing Medicaid rebates and expanding Medicaid rebates to cover Medicaid managed care programs. Other components of healthcare reform include funding of pharmaceutical costs for Medicare patients in excess of the prescription drug coverage limit and below the catastrophic coverage threshold. Under the Affordable Care Act, pharmaceutical companies are now obligated to fund 50% of the patient obligation for branded prescription pharmaceuticals in this gap, or “donut hole.” Additionally, commencing in 2011, an excise tax was levied against certain branded pharmaceutical products. The tax is specified by statute to be approximately $3 billion in 2012 through 2016, $3.5 billion in 2017, $4.2 billion in 2018, and $2.8 billion each year thereafter. The tax is to be apportioned to qualifying pharmaceutical companies based on an allocation of their governmental programs as a portion of total pharmaceutical government programs.

Although Wize cannot predict the full effect on its business of the implementation of existing legislation, including the Affordable Care Act or the enactment of additional legislation, Wize believes that legislation or regulations that reduce reimbursement for or restrict coverage of its products could adversely affect how much or under what circumstances healthcare providers will prescribe or administer its products. This could materially and adversely affect its business by reducing its ability to generate revenue, raise capital, obtain additional collaborators and market its products. In addition, Wize believes the increasing emphasis on managed care in the United States has and will continue to put pressure on the price and usage of pharmaceutical products, which may adversely impact product sales.

Wize may be subject to U.S. and foreign anti-kickback laws and regulations. Wize’s failure to comply with these laws and regulations could have adverse consequences.

There are extensive U.S. federal and state laws and regulations prohibiting fraud and abuse in the healthcare industry that can result in significant criminal and civil penalties. These federal laws include: the anti-kickback statute, which prohibits certain business practices and relationships, including the payment or receipt of remuneration for the referral of patients whose care will be paid by Medicare or other federal healthcare programs; the physician self-referral prohibition, commonly referred to as the Stark Law; the anti-inducement law, which prohibits providers from offering anything to a Medicare or Medicaid beneficiary to induce that beneficiary to use items or services covered by either program; the False Claims Act, which prohibits any person from knowingly presenting or causing to be presented false or fraudulent claims for payment by the federal government, including the Medicare and Medicaid programs; and the Civil Monetary Penalties Law, which authorizes the U.S. Department of Health and Human Services to impose civil penalties administratively for fraudulent or abusive acts.

Sanctions for violating these federal laws include criminal and civil penalties that range from punitive sanctions, damage assessments, money penalties, imprisonment, denial of Medicare and Medicaid payments, or exclusion from the Medicare and Medicaid programs, or both, and debarment. As federal and state budget pressures continue, federal and state administrative agencies may also continue to escalate investigation and enforcement efforts to root out waste and to control fraud and abuse in governmental healthcare programs. Private enforcement of healthcare fraud has also increased, due in large part to amendments to the civil False Claims Act in 1986 that were designed to encourage private persons to sue on behalf of the government. A violation of any of these federal and state fraud and abuse laws and regulations or any similar law in a different jurisdiction which is applicable to Wize could have a material adverse effect on Wize’s liquidity and financial condition. An investigation into the use by physicians of any of its products once commercialized may dissuade physicians from either purchasing or using them, and could have a material adverse effect on its ability to commercialize those products.

Risks Related to Wize’s Operations in Israel

Potential political, economic and military instability in the state of Israel, where Wize’s senior management and its head executive office facilities are located, may adversely affect its results of operations.

Wize’s executive office where it conducts initial research and development activities, as well as some of its clinical sites and suppliers are located in Israel.  Wize’s officers and most of its directors are residents of Israel. Accordingly, political, economic and military conditions in Israel and the surrounding region may directly affect its business and operations.  Since the establishment of the State of Israel in 1948, a number of armed conflicts have taken place between Israel and its Arab neighbors. Any hostilities involving Israel or the interruption or curtailment of trade within Israel or between Israel and its trading partners could adversely affect its operations and results of operations and could make it more difficult for Wize to raise capital. During the summer of 2014 and the winter of 2012 and 2008, Israel was engaged in an armed conflict with Hamas, a militia group and political party operating in the Gaza Strip, and during the summer of 2006, Israel was engaged in an armed conflict with Hezbollah, a Lebanese Islamist Shiite militia group and political party. These conflicts involved missile strikes against civilian targets in various parts of Israel, and negatively affected business conditions in Israel. To date, Israel faces political tension with respect to its relationships with Turkey, Iran and other Arab neighbor countries. In addition, recent political uprisings and social unrest in various countries in the Middle East and North Africa are affecting the political stability of those countries. This instability may lead to deterioration of the political relationships that exist between Israel and these countries, and have raised concerns regarding security in the region and the potential for armed conflict. Any armed conflicts, terrorist activities or political instability in the region could adversely affect business conditions and could harm its results of operations. For example, any major escalation in hostilities in the region could result in a portion of Wize’s employees and service providers being called up to perform military duty for an extended period of time. Parties with whom Wize does business have sometimes declined to travel to Israel during periods of heightened unrest or tension, forcing Wize to make alternative arrangements when necessary. In addition, the political and security situation in Israel may result in parties with whom Wize has agreements involving performance in Israel claiming that they are not obligated to perform their commitments under those agreements pursuant to force majeure provisions in such agreements. Any future deterioration in the political and security situation in Israel will negatively impact its business.

Wize’s commercial insurance does not cover losses that may occur as a result of events associated with the security situation in the Middle East. Although the Israeli government currently covers the reinstatement value of direct damages that are caused by terrorist attacks or acts of war, Wize cannot assure you that this government coverage will be maintained. Any losses or damages incurred by Wize could have a material adverse effect on its business. Any armed conflicts or political instability in the region would likely negatively affect business conditions and could harm its results of operations.

Further, in the past, the State of Israel and Israeli companies have been subjected to an economic boycott. Several countries still restrict business with the State of Israel and with Israeli companies. These restrictive laws and policies may have an adverse impact on its operating results, financial condition or the expansion of its business.

Wize’s operations may be disrupted as a result of the obligation of Israeli citizens to perform military service.

Many Israeli citizens are obligated to perform one month, and in some cases more, of annual military reserve duty until they reach the age of 45 (or older, for reservists with certain occupations) and, in the event of a military conflict, may be called to active duty. In response to increases in terrorist activity, there have been periods of significant call-ups of military reservists. It is possible that there will be military reserve duty call-ups in the future. Wize’s operations could be disrupted by such call-ups. Such disruption could materially adversely affect its business, financial condition and results of operations.

Because a certain portion of Wize’s expenses is incurred in currencies other than the US Dollar, its results of operations may be harmed by currency fluctuations and inflation.

Wize’s reporting and functional currency is the U.S. Dollar, but some portion of its clinical trials and operations expenses are in NIS and Euro. As a result, Wize is exposed to some currency fluctuation risks, largely derived from Wize’s current and future engagements for financing and distribution. Fluctuation in the exchange rates of foreign currency has an influence on the cost of goods sold and Wize’s financing revenues and expenses. Wize may, in the future, decide to enter into currency hedging transactions to decrease the risk of financial exposure from fluctuations in the exchange rate of the currencies mentioned above in relation to the US Dollar. These measures, however, may not adequately protect Wize from adverse effects.