VBI Vaccines Inc/BC (Form: 10-Q, Received: 05/06/2020 08:07:36)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2020

[ ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to

Commission file number: 001-37769

VBI VACCINES INC.

(Exact name of registrant as specified in its charter)

British Columbia, Canada		N/A
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

222 Third Street, Suite 2241

Cambridge, Massachusetts

02142

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: 617-830-3031

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered

Common Stock, no par value per share	VBIV	Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [X] No [ ]

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [ ]	Accelerated filer [X]

Non-accelerated filer [ ]	Smaller reporting company [X]

	Emerging growth company [X]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common Shares, no par value per share		230,648,396
(Class)		Outstanding at May 5, 2020

VBI VACCINES INC.

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED March 31, 2020

TABLE OF CONTENTS

		Page

PART I - FINANCIAL INFORMATION		5

Item 1.	Condensed Consolidated Financial Statements	5

	Condensed Consolidated Balance Sheets - March 31, 2020 (unaudited) and December 31, 2019	5

	Condensed Consolidated Statements of Operations and Comprehensive Loss for the three months ended March 31, 2020 and 2019 (unaudited)	6

	Condensed Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 2020 and 2019 (unaudited)	7

	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2020 and 2019 (unaudited)	8

	Notes to Condensed Consolidated Financial Statements (unaudited)	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34

Item 4.	Controls and Procedures	34

PART II - OTHER INFORMATION		35

Item 1.	Legal Proceedings	35

Item 1A.	Risk Factors	35

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	38

Item 3.	Defaults Upon Senior Securities	38

Item 4.	Mine Safety Disclosure	38

Item 5.	Other Information	38

Item 6.	Exhibits	38

Signatures		40

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND OTHER INFORMATION
CONTAINED IN THIS REPORT

This quarterly report on Form 10-Q (this “Form 10-Q”) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and the provisions of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements give our current expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historical or current facts. You can find many (but not all) of these statements by looking for words such as “approximates,” “believes,” “hopes,” “expects,” “anticipates,” “estimates,” “projects,” “intends,” “plans,” “would,” “should,” “could,” “will,” “may,” or other similar expressions in this Form 10-Q. In particular, these include statements relating to future actions; prospective products, applications, customers and technologies; future performance or results of anticipated products; anticipated expenses; and projected financial results. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q and are subject to a number of risks, uncertainties and assumptions that could cause actual results to differ materially from our historical experience and our present expectations or projections described under the sections in this Quarterly Report on Form 10-Q entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2019 annual report on the Form 10-K filed with the Securities and Exchange Commission on March 5, 2020. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to:

●	the timing of, and our ability to, obtain and maintain regulatory approvals for our clinical trials, products and pipeline candidates;

●	the timing and results of our ongoing and planned clinical trials for products and pipeline candidates;

●	the amount of funds we require for our infectious disease and immuno-oncology pipeline candidates;

●	the potential benefits of strategic partnership agreements and our ability to enter into strategic partnership arrangements;

●	our ability to maintain compliance with the NASDAQ Capital Market’s listing standards;

●	the impact of the recent COVID-19 outbreak on our clinical studies, research programs, manufacturing, business plan and the global economy;
●	our ability to effectively execute and deliver our plans related to commercialization, marketing and manufacturing capabilities and strategy;

●	our ability to maintain a good relationship with our employees;

●	the suitability and adequacy of our office, manufacturing and research facilities and our ability to secure term extensions or expansions of leased space;

●	our ability to manufacture, or to have manufactured, any products we develop to the standards and requirements of regulatory agencies;

●	the ability of our vendors to manufacture and deliver materials that meet regulatory agency and our standards and requirements to meet planned timelines and milestones;

●	any disruption in the operations of our manufacturing facility where we manufacture all of our clinical and commercial supplies of Sci-B-Vac and clinical supplies of VBI-2601;

●	our compliance with all laws, rules and regulations applicable to our business and products;

●	our ability to continue as a going concern;

●	our history of losses;

●	our ability to generate revenues and achieve profitability;

●	emerging competition and rapidly advancing technology in our industry that may outpace our technology;

●	customer demand for our products and pipeline candidates;

●	the impact of competitive or alternative products, technologies and pricing;

●	general economic conditions and events and the impact they may have on us and our potential customers;

●	our ability to obtain adequate financing in the future on reasonable terms, as and when we need it;

●	our ability to implement network systems and controls that are effective at preventing cyber-attacks, malware intrusions, malicious viruses and ransomware threats;

●	our ability to secure and maintain protection over our intellectual property;

●	our ability to maintain our existing licenses, with licensors of intellectual property, or obtain new licenses for intellectual property;

●	changes to legal and regulatory processes for biosimilar approval and marketing that could reduce the duration of market exclusivity for our products;

●	our success at managing the risks involved in the foregoing items; and

●	other factors discussed in this Form 10-Q

Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified and some of which are beyond our control, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for us to predict all risk factors and uncertainties. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.

Unless otherwise stated or the context otherwise requires, the terms “VBI,” “we,” “us,” “our” and the “Company” refer to VBI Vaccines Inc. and its subsidiaries.

Unless indicated otherwise, all references to the U.S. Dollar, Dollar or $ are to the United States Dollar, the legal currency of the United States of America and all references to € mean Euros, the legal currency of the European Union. We may also refer to NIS, which is the New Israeli Shekel, the legal currency of Israel, and the Canadian Dollar or CAD, which is the legal currency of Canada.

Except for share and per share amounts or as otherwise specified to be in millions, amounts presented are stated in thousands.

PART I—FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

VBI Vaccines Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands, except share amounts)

	March 31, 2020			December 31, 2019
	(unaudited)
CURRENT ASSETS
Cash	$	35,803		$	44,213
Accounts receivable, net		134			201
Inventory, net		644			1,075
Prepaid expenses		1,026			1,024
Other current assets		262			450
Total current assets		37,869			46,963

NON-CURRENT ASSETS
Other long-term assets		598			620
Property and equipment, net		9,599			10,195
Right of use assets		1,218			1,459
Intangible assets, net		55,918			60,756
Goodwill		2,032			2,208
Total non-current assets		69,365			75,238

TOTAL ASSETS	$	107,234		$	122,201

CURRENT LIABILITIES
Accounts payable	$	1,313		$	1,127
Other current liabilities		12,007			12,261
Current portion of deferred revenues		750			882
Current portion of lease liability		579			642
Current portion of long-term debt, net of debt discount – related party		14,484			14,845
Total current liabilities		29,133			29,757

NON-CURRENT LIABILITIES
Lease liability, net of current portion		638			817
Liabilities for severance pay		459			463
Deferred revenues, net of current portion		2,573			2,909
Total non-current liabilities		3,670			4,189

COMMITMENTS AND CONTINGENCIES (NOTE 13)

STOCKHOLDERS’ EQUITY
Common shares (unlimited authorized; no par value) (March 31, 2020 - issued and outstanding 178,375,670; December 31, 2019 - issued and outstanding 178,257,199)		285,096			284,965
Additional paid-in capital		67,486			66,430
Accumulated other comprehensive loss		(7,405	)		(752	)
Accumulated deficit		(270,746	)		(262,388	)
Total stockholders’ equity		74,431			88,255

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	107,234		$	122,201

See accompanying Notes to Condensed Consolidated Financial Statements

VBI Vaccines Inc. and Subsidiaries

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

(in thousands, except share and per share amounts)

	Three Months Ended March 31
	2020			2019

Revenues	$	415		$	360

Operating expenses:
Cost of revenues		2,577			1,179
Research and development		3,193			9,040
General and administration		4,058			3,960
Total operating expenses		9,828			14,179

Loss from operations		(9,413	)		(13,819	)

Interest expense, net of interest income (including related party – see Note 8)		(582	)		(480	)
Foreign exchange gain (loss)		1,637			(307	)
Loss before income taxes		(8,358	)		(14,606	)

Income tax expense		-			-

NET LOSS	$	(8,358	)	$	(14,606	)

Other comprehensive (loss) income - currency translation adjustments		(6,653	)		1,727

COMPREHENSIVE LOSS	$	(15,011	)	$	(12,879	)

Net loss per share of common shares, basic and diluted	$	(0.05	)	$	(0.15	)

Weighted-average number of common shares outstanding, basic and diluted		178,289,746			97,481,625

See accompanying Notes to Condensed Consolidated Financial Statements

VBI Vaccines Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

(in thousands, except share amounts)

	Number of Common Shares		Share Capital		Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss) - Currency Translation Adjustments			Accumulated Deficit			Total Stockholders’ Equity

BALANCE AS OF DECEMBER 31, 2019		178,257,199	$	284,965	$	66,430	$	(752	)	$	(262,388	)	$	88,255

Stock-based compensation		118,471		131		1,056		-			-			1,187
Net loss		-		-		-		-			(8,358	)		(8,358	)
Currency translation adjustments		-		-		-		(6,653	)		-			(6,653	)

BALANCE AS OF MARCH 31, 2020		178,375,670	$	285,096	$	67,486	$	(7,405	)	$	(270,746	)	$	74,431

BALANCE AS OF DECEMBER 31, 2018		97,343,777	$	246,417	$	63,449	$	(4,158	)	$	(207,575	)	$	98,133

Stock-based compensation		318,110		431		831		-			-			1,262
Warrant modification in connection with debt amendment		-		-		179		-			-			179
Net loss		-		-		-		-			(14,606	)		(14,606	)
Currency translation adjustments		-		-		-		1,727			-			1,727

BALANCE AS OF MARCH 31, 2019		97,661,887	$	246,848	$	64,459	$	(2,431	)	$	(222,181	)	$	86,695

VBI Vaccines Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)

	For the Three Months Ended March 31
	2020			2019

CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(8,358	)	$	(14,606	)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization		406			124
Stock-based compensation		1,187			1,262
Amortization of debt discount		239			255
Net change in operating working capital items:
Change in accounts receivable		62			(59	)
Change in inventory		406			(143	)
Change in prepaid expenses		(30	)		327
Change in other current assets		188			(84	)
Change in other long-term assets		(4	)		4
Change in operating right of use assets		230			245
Change in accounts payable		227			(1,089	)
Change in deferred revenues		(211	)		(284	)
Change in other current liabilities		(1,761	)		273
Payments made on operating lease liabilities		(229	)		(245	)
Net cash flows used in operating activities		(7,648	)		(14,020	)

INVESTING ACTIVITIES
Purchase of property and equipment		(133	)		(1,896	)
Net cash flows used in investing activities		(133	)		(1,896	)

FINANCING ACTIVITIES
Repayment of long-term debt		(600	)		-
Net cash flows used in financing activities		(600	)		-

Effect of exchange rates on cash		(29	)		(46	)

CHANGE IN CASH FOR THE PERIOD		(8,410	)		(15,962	)

CASH, BEGINNING OF PERIOD		44,213			59,270

CASH, END OF PERIOD	$	35,803		$	43,308

Supplementary information:
Interest paid – related party	$	475		$	518
Non-cash investing and financing activities:
Warrant modification in connection with debt amendment		-			179
Capital expenditures included in accounts payable and other current liabilities		10			958

See accompanying Notes to Condensed Consolidated Financial Statements

VBI Vaccines Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(in thousands, except share and per share amounts)

1. NATURE OF BUSINESS AND CONTINUATION OF BUSINESS

Corporate Overview

VBI Vaccines Inc. (the “Company” or “VBI”) was incorporated under the laws of British Columbia, Canada on April 9, 1965.

The Company and its wholly-owned subsidiaries, VBI Vaccines (Delaware) Inc., a Delaware corporation (“VBI DE”); VBI DE’s wholly-owned subsidiary, Variation Biotechnologies (US), Inc., a Delaware corporation (“VBI US”); Variation Biotechnologies Inc. a Canadian company and the wholly-owned subsidiary of VBI US (“VBI Cda”); SciVac Ltd. an Israeli company (“SciVac”) and SciVac Hong Kong Limited (“SciVac HK”) are collectively referred to as the “Company”, “we”, “us”, “our” or “VBI”.

The Company’s registered office is located at Suite 1700, Park Place, 666 Burrard Street, Vancouver, BC V6C 2X8 with its principal office located at 222 Third Street, Suite 2241, Cambridge, MA 02142. In addition, the Company has manufacturing facilities located in Rehovot, Israel and research facilities located in Ottawa, Ontario, Canada.

Principal Operations

VBI is a commercial-stage, biopharmaceutical company developing a next generation of vaccines to address unmet needs in infectious disease and immuno-oncology. We are advancing the prevention and treatment of hepatitis B, with the only tri-antigenic hepatitis B vaccine, Sci-B-Vac, which is approved for use and commercially available in Israel, and recently completed a pivotal Phase III program in the United States, Europe, and Canada, and with VBI-2601 (BRII-179), an immunotherapeutic candidate in development in collaboration with Brii Biosciences Limited (“Brii Bio”) for a functional cure for chronic hepatitis B. Our enveloped virus-like particle (“eVLP”) platform technology allows for the development of eVLP vaccines that closely mimic the target virus to elicit a potent immune response. Integrating our cytomegalovirus (“CMV”) expertise with the eVLP platform technology, our lead eVLP program candidates include a glioblastoma (“GBM”) vaccine immunotherapeutic candidate, VBI-1901, our prophylactic CMV vaccine candidate, VBI-1501. We also recently announced a collaborative research agreement with the National Research Council of Canada (“NRC”) to develop a pan-coronavirus vaccine candidate, targeting COVID-19, severe acute respiratory syndrome (“SARS”), and Middle East respiratory syndrome (“MERS”).

In December 2019, a strain of coronavirus, SARS-CoV-2, was reported to have surfaced in Wuhan, China, and on March 12, 2020, the World Health Organization declared COVID-19, disease caused by SARS-CoV-2, to be a pandemic. The extent to which the pandemic will continue to impact our business will depend on future developments, which are highly uncertain and cannot be predicted. We do not yet know the full extent of potential delays or impacts on our business, our clinical studies, our research programs, and our manufacturing; however, the COVID-19 outbreak may materially disrupt or delay our business operations, including efforts relating to potential business development transactions and disrupt the marketplace which could have a material adverse effect on our operations.

Liquidity and Going Concern

The Company has a limited operating history and faces a number of risks, including but not limited to, uncertainties regarding the success of the development and commercialization of its products, demand and market acceptance of the Company’s products and reliance on major customers. The Company anticipates that it will continue to incur significant operating costs and losses in connection with the development of its products.

The Company has an accumulated deficit of $270,746 as of March 31, 2020 and cash outflows from operating activities of $7,648 for the three months ended March 31, 2020.

The Company will require significant additional funds to conduct clinical and non-clinical trials, achieve regulatory approvals, and, subject to such approvals, commercially launch its products. The Company plans to finance near term future operations with existing cash reserves. Additional financing may be obtained from the issuance of equity securities, the issuance of additional debt, structured asset financings, government grants or other subsidies and/or revenues from potential business development transactions, if any. There is no assurance the Company will manage to obtain these sources of financing, if required. The above conditions raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern.

Financial instruments recognized in the condensed consolidated balance sheet consist of cash, accounts receivable, other current assets, accounts payable and other current liabilities. The Company believes that the carrying value of its current financial instruments approximates their fair values due to the short-term nature of these instruments. The Company does not hold any derivative financial instruments.

The carrying amounts of the Company’s long-term assets approximate their respective fair values.

2. SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Consolidation

The Company’s fiscal year ends on December 31 of each calendar year. The accompanying unaudited condensed consolidated financial statements have been prepared in U.S. dollars (“USD”) and pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”), for interim reporting. Accordingly, certain information and footnote disclosures normally included in the financial statements prepared in accordance with United States of America generally accepted accounting principles (“U.S. GAAP”), have been condensed or omitted pursuant to such rules and regulations. The December 31, 2019 consolidated balance sheet in this document was derived from the audited consolidated financial statements. The condensed consolidated financial statements and notes included in this quarterly report on Form 10-Q (this “Form 10-Q”) does not include all of the disclosures required by U.S. GAAP and should be read in conjunction with the financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 (the “2019 10-K”), as filed with the SEC on March 5, 2020.

The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries: SciVac, VBI DE, VBI US, VBI Cda and SciVac HK. Intercompany balances and transactions between the Company and its subsidiaries are eliminated in the condensed consolidated financial statements.

In the opinion of management, these condensed consolidated financial statements include all adjustments and accruals of a normal and recurring nature necessary to fairly state the results of the periods presented. The results for the periods presented are not necessarily indicative of results to be expected for the full year or for any future periods.

Significant Accounting Policies

The significant accounting policies used in the preparation of these condensed consolidated financial statements are disclosed in the 2019 10-K, and there have been no changes to the Company’s significant accounting policies during the three months ended March 31, 2020.

3. NEW ACCOUNTING PRONOUNCEMENTS

Recently Adopted Accounting Pronouncements

Intangibles – Goodwill and Other, Internal-Use Software

In August 2018, the FASB issued ASU 2018-15: Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customers’ accounting for implementation costs incurred in a cloud computing arrangement that is a service contract. This ASU aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. Accordingly, the amendments require an entity (customer) in a hosting arrangement that is a service contract to follow the guidance in Subtopic 350-40 to determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense. Our adoption of this ASU, effective January 1, 2020, was applied prospectively and did not have a material impact on our condensed consolidated financial statements and the related footnote disclosures.

Recently Issued Accounting Standards, not yet Adopted

None

4. INVENTORY, NET

Inventory is stated at the lower of cost or market and consists of the following:

	March 31, 2020		December 31, 2019

Finished goods	$	36	$	58
Work-in-process		10		237
Raw materials		598		780
	$	644	$	1,075

5. INTANGIBLE ASSETS AND GOODWILL

			March 31, 2020
	Gross Carrying Amount		Accumulated Amortization			Cumulative Impairment Charge			Cumulative Currency Translation			Net Book Value
Patents	$	669	$	(536	)	$	-		$	24		$	157
IPR&D assets		61,500		-			(300	)		(5,439	)		55,761

	$	62,169	$	(536	)	$	(300	)	$	(5,415	)	$	55,918

			December 31, 2019
	Gross Carrying Amount		Accumulated Amortization			Cumulative Impairment Charge			Cumulative Currency Translation			Net Book Value
Patents	$	669	$	(521	)	$	-		$	30		$	178
IPR&D assets		61,500		-			(300	)		(622	)		60,578

	$	62,169	$	(521	)	$	(300	)	$	(592	)	$	60,756

The Company amortizes intangible assets with finite lives on a straight-line basis over their estimated useful lives.

The change in carrying value for IPR&D assets from December 31, 2019 relates to currency translation adjustments which decreased by $4,817 for the three-month period ended March 31, 2020.

			March 31, 2020
	Gross Carrying Amount		Cumulative Impairment Charge			Cumulative Currency Translation			Net Book Value

Goodwill	$	8,714	$	(6,292	)	$	(390	)	$	2,032

			December 31, 2019
	Gross Carrying Amount		Cumulative Impairment Charge			Cumulative Currency Translation			Net Book Value

Goodwill	$	8,714	$	(6,292	)	$	(214	)	$	2,208

The change in carrying value for goodwill from December 31, 2019 relates to currency translation adjustments which decreased by $176 for the three-month period ended March 31, 2020.

6. OTHER CURRENT LIABILITIES

Other current liabilities consisted of the following:

	March 31, 2020		December 31, 2019
Accrued research and development expenses (including clinical trial accrued expenses)	$	9,693	$	9,247
Payroll and employee-related costs		1,359		2,184
Other current liabilities		955		830

	$	12,007	$	12,261

7. LOSS PER SHARE OF COMMON SHARES

Basic loss per share is computed by dividing net loss applicable to common stockholders by the weighted average number of common shares outstanding during each period. Diluted loss per share includes the effect, if any, from the potential exercise or conversion of securities, such as warrants, and stock options, which would result in the issuance of incremental shares of common shares unless such effect is anti-dilutive. In computing the basic and diluted net loss per share applicable to common stockholders, the weighted average number of shares remains the same for both calculations due to the fact that when a net loss exists, dilutive shares are not included in the calculation as their effect would be anti-dilutive. These potentially dilutive securities are more fully described in Note 9, Stockholders’ Equity and Additional Paid-in Capital.

The following potentially dilutive securities outstanding at March 31, 2020 and 2019 have been excluded from the computation of diluted weighted average shares outstanding, as they would be antidilutive:

	March 31, 2020		March 31, 2019

Warrants		2,618,824		2,618,824
Stock options and equity awards		10,894,792		7,377,995
		13,513,616		9,996,819

8. LONG-TERM DEBT – RELATED PARTY

As at March 31, 2020 and December 31, 2019, the long-term debt is as follows:

	March 31, 2020		December 31, 2019

Long-term debt, net of debt discount	$	14,484	$	14,845

Less: current portion, net of debt discount		14,484		14,845

	$	-	$	-

On May 6, 2016, the Company through VBI US assumed a term loan facility with Perceptive Credit Holdings, LP, a related party, (the “Lender”) in the amount of $6,000 (the “Facility”). On December 6, 2016, the Company amended the Facility (the “Amended Credit Facility”) and raised the Lender’s commitment amount to $13,200, which was combined with the remaining balance from the Facility of $1,800. In connection with the Amended Credit Facility, on December 6, 2016, the Company issued to the Lender two warrants; the first warrant to purchase 363,771 shares of the Company’s common shares at an exercise price of $4.13, and the second warrant to purchase 1,341,282 shares of the Company’s common shares at an exercise price of $3.355. The total proceeds attributed to the warrants was $2,793 based on the relative fair value of the warrants as compared to the sum of the fair values of the warrants and debt. This resulted in the debt being issued at a discount. The Company incurred $360 of debt issuance costs and is required to pay an exit fee of $300 upon full repayment of the debt resulting in additional debt discount. Following the Amended Credit Facility and the warrant issuance, the total debt discount was $3,453.

On July 17, 2018, the Company amended the Amended Credit Facility (the “Second Amendment”) to extend the period the Company is required to pay only the interest on the loan from May 31, 2018 to December 31, 2018 and to extend the expiration date of certain warrants to purchase 363,771 common shares issued to the Lender with an original expiration date of July 25, 2019 to December 6, 2021. The Company accounted for this as a debt modification, and as a result of the extension of the warrant expiration date in connection with the Second Amendment, the debt discount was increased by $386. This amount represents the incremental fair value of the modified warrants.

On January 31, 2019, the Company further amended the Amended Credit Facility (the “Third Amendment”) to i) extend the period the Company is required to pay only the interest on the loan from December 31, 2018 to January 31, 2020, ii) extend the maturity of the term loan to June 30, 2020 and iii) reduce the exercise price on certain warrants to purchase common shares issued to the Lender to $2.75 from $4.13 for 363,771 warrants issued on July 25, 2014 and for 363,771 warrants issued on December 6, 2016 and from $3.355 for 1,341,282 warrants issued on December 6, 2016. The Company has accounted for this as a debt modification, and as a result of the amendment to the exercise price in connection with the Third Amendment, the debt discount was increased by $179. This amount represents the incremental fair value of the modified warrants.

The total principal amount of the loan under the Amended Credit Facility, as subsequently amended, outstanding at March 31, 2020, including the $300 exit fee discussed below, is $14,700. The principal amount of the loan made under the Amended Credit Facility accrues interest at an annual rate equal to the greater of (a) one-month LIBOR (subject to a 5.00% cap) or (b) 1.00%, plus the applicable margin. The applicable margin will be 11.00%. The Company was required to only pay interest initially until May 31, 2018, which date was extended to December 31, 2018, pursuant to the Second Amendment and further extended to January 31, 2020, pursuant to the Third Amendment. The interest rate as of March 31, 2020 was 12.625%. Upon the occurrence of an Event of Default (as defined in the Amended Credit Facility), and during the continuance of an Event of Default, the applicable margin, described above, will be increased by 4.00% per annum. This term loan facility maturity date has been extended from December 6, 2019 to June 30, 2020 and includes both financial and non-financial covenants, including a minimum cash balance requirement. The Company was in compliance with these covenants as of March 31, 2020. Pursuant to the Amended Credit Facility, the Company agreed that the Lender shall designate an individual who would be appointed to the Company’s board of directors (the “Board”). The Lender’s designee was also a portfolio manager of the Company’s largest shareholder. Effective January 2018, the Lender’s designee resigned from our Board.

The Company’s obligations under the Amended Credit Facility are secured on a senior basis by a lien on substantially all of the assets of the Company and its subsidiaries and are guaranteed by the Company and its subsidiaries. The Amended Credit Facility also contains customary events of default.

The total debt discount of $4,018 is being charged to interest expense using the effective interest method over the term of the debt. As of March 31, 2020, and December 31, 2019, the unamortized debt discount is $216 and $455, respectively.

At March 31, 2020 and December 31, 2019, the fair value of our outstanding debt, which is considered level 3 in the fair value hierarchy, is estimated to be approximately $14,376 and $15,272, respectively.

Interest expense, net of interest income recorded in the three months ended March 31, 2020 and 2019 was as follows:

	Three months ended March 31
	2020			2019

Interest expense – related party	$	475		$	518
Amortization of debt discount – related party		239			255
Interest income		(132	)		(293	)
Total interest expense, net of interest income	$	582		$	480

The following table summarizes the future principal payments due under long-term debt:

	Principal payments on Third Amendment and exit fee
Remaining 2020	$	14,700
	$	14,700

9. STOCKHOLDERS’ EQUITY AND ADDITIONAL PAID-IN CAPITAL

Stock option plans

The Company’s stock option plans are approved by and administered by the Company’s Board and its Compensation Committee. The Board designates, in connection with recommendations from the Compensation Committee, eligible participants to be included under the plan, and designates the number of options, exercise price and vesting period of the new options.

2006 VBI US Stock Option Plan

No further options will be issued under the 2006 VBI US Stock Option Plan (the “2006 Plan”). As at March 31, 2020, there were 993,666 options outstanding under the 2006 Plan.

2013 Equity Incentive Plan

No further options will be issued under the 2013 Equity Incentive Plan (the “2013 Plan”). As at March 31, 2020, there were no options outstanding under the 2013 Plan.

2014 Equity Incentive Plan

No further options will be issued under the 2014 Equity Incentive Plan (the “2014 Plan”). As at March 31, 2020, there were 521,242 options outstanding under the 2014 Plan.

2016 VBI Incentive Plan

The 2016 VBI Equity Incentive Plan (the “2016 Plan”) is a rolling incentive plan that sets the number of common shares issuable under the 2016 Plan, together with any other security-based compensation arrangement of the Company, at a maximum of 10% of the aggregate common shares issued and outstanding on a non-diluted basis at the time of any grant under the 2016 Plan. The 10% maximum is inclusive of options granted under all equity incentive plans. The 2016 Plan is an omnibus equity incentive plan pursuant to which the Company may grant equity and equity-linked awards to eligible participants in order to promote the success of the Company by providing a means to offer incentives and to attract, motivate, retain and reward persons eligible to participate in the 2016 Plan. Grants under the 2016 Plan include a grant or right consisting of one or more options, stock appreciation rights (“SARs”), restricted share units (“RSUs”), performance share units (“PSUs”), shares of restricted stock or other such award as may be permitted under the 2016 Plan. As at March 31, 2020, there were 9,136,027 options and 243,857 stock awards outstanding under the 2016 Plan.

The aggregate number of common shares remaining available for issuance for awards under the 2016 Plan total 5,709,125 at March 31, 2020.

Activity related to stock options is as follows:

	Number of Stock Options			Weighted Average Exercise Price

Balance outstanding at December 31, 2019		6,471,708		$	2.79

Granted		4,185,000		$	1.46
Forfeited		(5,773	)	$	2.20

Balance outstanding at March 31, 2020		10,650,935		$	2.25

Exercisable at March 31, 2020		4,064,032		$	3.41

Information relating to RSUs is as follow:

	Number of Stock Awards			Weighted Average Fair Value at Grant Date

Unvested shares outstanding at December 31, 2019		157,997		$	2.77

Granted		125,000		$	1.66
Vested		(39,140	)	$	3.36

Unvested shares outstanding at March 31, 2020		243,857		$	2.11

In determining the amount of stock-based compensation the Company used the Black-Scholes option pricing model to establish the fair value of options granted by applying the following weighted average assumptions:

	2020			2019

Volatility		90.12	%		118.12	%
Risk free interest rate		1.54	%		2.46	%
Expected term in years		5.77			5.77
Expected dividend yield		0.00	%		0.00	%
Weighted average fair value per option	$	1.04		$	1.43

The fair value of the options is recognized as an expense on a straight-line basis over the vesting period and forfeitures are accounted for when they occur. The total stock-based compensation expense recorded in the three months ended March 31, 2020 and 2019 was as follows:

	Three months ended March 31
	2020		2019

Research and development	$	244	$	228
General and administration		933		1,017
Cost of revenues		10		17
Total stock-based compensation expense	$	1,187	$	1,262

10. REVENUES AND DEFERRED REVENUE

Revenue is comprised of the following:

	Three months ended March 31
	2020		2019

Product revenues	$	180	$	93
R&D service revenues		235		267
Total revenue	$	415	$	360

The following table presents revenues expected to be recognized in the future related to performance obligations, based on current estimates, that are unsatisfied at March 31, 2020:

	Total		Current portion to March 31, 2021		Remaining portion thereafter

Product revenues	$	469	$	-	$	469
R&D service revenues		2,854		750		2,104
Total	$	3,323	$	750	$	2,573

The following table presents changes in the deferred revenue balance for the three months ended March 31, 2020:

Balance at December 31, 2019	$	3,791

Recognition of deferred revenue		(231	)
Currency translation		(237	)

Balance at March 31, 2020	$	3,323

Short Term	$	750
Long Term	$	2,573

Collaboration and License Agreement – Brii Bio

On December 4, 2018, we entered into a Collaboration and License Agreement with Brii Bio (the “Collaboration and License Agreement”), whereby:

	●	The Company and Brii Bio agreed to collaborate on the development of a hepatitis B recombinant protein-based immunotherapeutic in the licensed territory, which consists of China, Hong Kong, Taiwan and Macau (collectively, the “Licensed Territory”), and to conduct a Phase Ib/IIa collaboration clinical trial for the purpose of comparing VBI-2601 (BRII-179), which is a recombinant protein-based immunotherapeutic developed by VBI for use in treating chronic hepatitis B, with a novel composition developed jointly with Brii Bio (either being the “Licensed Product”); and

	●	The Company granted Brii Bio an exclusive royalty-bearing license to perform studies, and regulatory and other activities, as may be required to obtain and maintain marketing approval of the Licensed Product, for the treatment of hepatitis B in the Licensed Territory and to commercialize the Licensed Product for the diagnosis and treatment of chronic hepatitis B in the Licensed Territory.

Pursuant to the Collaboration and License Agreement, the Company is responsible for the R&D services and Brii Bio is responsible for costs relating to the clinical trials for the Licensed Territory.

The initial consideration of the Collaboration and License Agreement consisted of a $11 million non-refundable upfront payment. As part of the Collaboration and License Agreement, the Company and Brii Bio entered into a stock purchase agreement. Under the terms of the stock purchase agreement, the Company issued to Brii Bio 2,295,082 shares of its common stock valued at $3.6 million (based on the Company’s common stock price on December 4, 2018). The remaining $7.4 million, deemed to be the initial transaction price, was allocated to two performance obligations: i) the VBI-2601 (BRII-179) license and ii) R&D services. The R&D services were allocated $4.8 million of the transaction price using an estimated selling price based on an expected cost plus a margin approach and the remaining transaction price of $2.6 million was allocated to the VBI-2601 (BRII-179) license using the residual method.

In addition, the Company is also eligible to receive an additional $117.5 million in potential regulatory and sales milestone payments, along with royalties on commercial sales in the licensed territory. Milestone payments that are not within the control of the Company or the licensee, such as regulatory approvals, are not considered probable of being achieved until those approvals are received. Therefore, no variable consideration was included in the initial transaction price and no such amounts have been recognized to date.

On December 4, 2018, the Company recognized the VBI-2601 (BRII-179) license when it was granted and Brii Bio is able to use and benefit from the license, as it was determined to be distinct. The R&D Services will be satisfied over time as services are rendered using the “cost-to-cost” input method as this method represents the most accurate depiction of the transfer of services based on the types of costs expected to be incurred. As at March 31, 2020 R&D services related to Brii Bio that remain unsatisfied are $2.7 million, out of the $3.3 million total deferred revenue.

Upon termination of the Collaboration and License Agreement prior to the end of the term, there is no obligation for refund and any amounts in deferred revenue related to unsatisfied performance obligations will be immediately recognized.

11. COLLABORATON ARRANGEMENTS

GlaxoSmithKline Biologicals S.A. (“GSK”)

On September 10, 2019, we entered into a Clinical Collaboration Agreement (“Collaboration Agreement”) pursuant to which we will investigate the use of GSK’s proprietary AS01_B adjuvant system in our ongoing study of VBI-1901. As a result of the Collaboration Agreement, a second study arm was added to Part B of the ongoing Phase Ib/IIa clinical study to accommodate the AS01_Badjuvant.

This relationship is considered a collaborative relationship and not a customer relationship, and is therefore accounted for outside the scope of ASC Topic 606. Costs associated with the second study arm will be expensed as incurred in Research and Development expenses; year to date costs have been $142.

National Research Council of Canada (“NRC”)

On March 31, 2020, we announced a collaboration with the NRC, Canada’s largest federal research and development organization, to develop a pan-coronavirus vaccine candidate, targeting COVID-19, SARS, and MERS. The NRC and the Company will collaborate to evaluate and identify promising vaccine candidates. The collaboration will combine the Company’s viral vaccine expertise, eVLP technology platform and modified coronavirus antigens with the NRC’s proprietary SARS-CoV-2 antigens and assay development capabilities to identify the most immunogenic vaccine candidate for further development.

This relationship is considered a collaborative relationship and not a customer relationship, and is therefore accounted for outside the scope of ASC Topic 606. Costs associated with the collaboration will be expensed as incurred in Research and Development expenses; year to date costs have been de-minimis.

Brii Biosciences Limited

On December 4, 2018, we entered into the Collaboration and License Agreement with Brii Bio, as described in Note 10.

12. INCOME TAXES

The Company operates in U.S., Israel and Canadian tax jurisdictions. Its income is subject to varying rates of tax, and losses incurred in one jurisdiction cannot be used to offset income taxes payable in another.

The Company determines its annual effective tax rate at the end of each interim period based on the year to date period results. Since the Company is incorporated in Canada, it is required to use Canada’s statutory tax rate of 26.50% in the determination of the estimated annual effective tax rate.

The Company’s effective tax rate on loss before tax for the three months ended March 31, 2020 of 0.0% (0.0% for the three months ended March 31, 2019) differs from the Canadian statutory rate of 26.50% primarily due to recording a valuation allowance on the Canadian deferred tax assets in excess of the remaining Canadian deferred tax liability and the effect of recording a valuation allowance against deferred tax assets in all other jurisdictions.

The Company maintains a valuation allowance on all of its deferred tax assets. A valuation allowance is required when, based upon an assessment of various factors, including recent operating loss history, anticipated future earnings, and prudent and reasonable tax planning strategies, it is more likely than not that some portion of the deferred tax assets will not be realized.

13. COMMITMENTS AND CONTINGENCIES

Legal Proceedings

From time to time, the Company may be involved in certain claims and litigation arising out of the ordinary course and conduct of business. Management assesses such claims and, if it considers that it is probable that an asset had been impaired or a liability had been incurred and the amount of loss can be reasonably estimated, provisions for loss are made based on management’s assessment of the most likely outcome.

On September 13, 2018, two actions were brought in the District Court of the central district in Israel naming our subsidiary SciVac as a defendant. In one claim, two minors, through their parents, allege among other things, defects in certain batches of Sci-B-Vac discovered in July 2015; that Sci-B-Vac was approved for use in children and infants in Israel without sufficient evidence establishing its safety; that SciVac failed to provide accurate information about Sci-B-Vac to consumers and that each child suffered side effects from the vaccine. The claim was filed together with a motion seeking approval of a class action on behalf of 428,000 children vaccinated with Sci-B-Vac in Israel from April, 2011 and seeking damages in a total amount of NIS 1,879,500,000 (not in thousands) ($527,209). The second claim is a civil action brought by two minors and their parents against SciVac and the Israel Ministry of Health alleging, among other things, that SciVac marketed an experimental, defective, hazardous or harmful vaccine; that Sci-B-Vac was marketed in Israel without sufficient evidence establishing its safety; and that Sci-B-Vac was produced and marketed in Israel without approval of a western regulatory body. The claim seeks damages for past and future losses and expenses as well as punitive damages.

SciVac believes these matters to be without merit and intends to defend these claims vigorously.

The District Court has accepted SciVac’s motion to suspend reaching a decision on the approval of the class action pending the determination of liability under the civil action. Preliminary hearings for the trial of the civil action began on January 15, 2020.

Operating leases

The Company has entered into various non-cancelable lease agreements for its office, lab and manufacturing facilities, which are classified as operating leases. The office facility lease agreement in the United States expires on April 30, 2020, with no option to extend. Our manufacturing facility lease agreement expires on January 31, 2022, which includes one five-year option to extend until January 31, 2027. The lease agreement for our research facility in Canada, which comprises of office and laboratory space, had an initial term ending on December 31, 2019 with the option to extend the term for two periods of three years. Effective September 5, 2019, the term of the lease was extended until December 31, 2022, with an option to extend the lease for one additional period of three years.

Effective April 30th, 2020, the Company entered into the seventh amendment to the lease agreement for the office facilities in Cambridge, Massachusetts, which extends the lease for a term of three years expiring on April 30, 2023 with no option to extend, and for a base rent of $25 per month, subject to a 3% annual increase.

Options to extend are not recognized as part of the lease liabilities or recognized as right to use assets. There are no residual value guarantees, no variable lease payments, and no restrictions or covenants imposed by leases. The discount rate used in measuring the lease liabilities and right of use assets was determined by reviewing our incremental borrowing rate at the initial measurement date.

Lease cost:
Operating lease costs:
Three months ended March 31, 2020	$	288

Other information:
Weighted average remaining lease term		2.19 years
Weighted average discount rate		12	%

Operating lease costs are included in general and administration (“G&A”) expenses in the statement of operation and comprehensive loss.

The following table summarizes future undiscounted cash payments reconciled to the lease liabilities:

Year ending December 31
2020		522
2021		673
2022		154

Total	$	1,349

Effect of discounting		(132	)

Total lease liability	$	1,217

Less: current portion		(579	)

Long term lease liability	$	638

14. SEGMENT INFORMATION

The Company’s Chief Executive Officer (“CEO”) has been identified as the chief operating decision maker. The CEO evaluates the performance of the Company and allocates resources based on the information provided by the Company’s internal management system at a consolidated level. The Company has determined that it has only one operating segment.

Revenues from external customers are attributed to geographic areas based on location of the contracting customers:

	Three Months Ended March 31,
	2020		2019

Israel	$	132	$	99
China / Hong Kong		231		261
Europe		52		-
Total	$	415	$	360

There was no revenue attributed to our country of domicile, Canada, for the three months ended March 31, 2020 and 2019.

15. SUBSEQUENT EVENTS

In April 2020, the Company closed an underwritten public offering of 52,272,726 common shares at a price of $1.10 per share for total gross proceeds of $57,500. The Company incurred $3,600 of share issuance costs related to the offering resulting in net cash proceeds of $53,900. The Company has engaged National Securities Corporation (“National”) to provide financial advisory services in connection with the offering. As consideration for such services, the Company agreed to issue to National or its designees warrants to purchase up to an aggregate of 705,000 common shares (the “National Warrants”), subject to the terms and conditions set forth in the form of warrant agreement. The National Warrants are exercisable immediately upon issuance and terminate three years following issuance. The National Warrants have an exercise price of $1.50 per share.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion of our financial condition and results of operations in conjunction with the consolidated financial statements and the related notes included elsewhere in this Form 10-Q and with our audited consolidated financial statements included in our 2019 10-K as filed with the SEC.

Except for share and per share amounts or as otherwise specified to be in millions, amounts presented are stated in thousands.

Overview

We are a commercial-stage, biopharmaceutical company developing a next generation of vaccines to address unmet needs in infectious disease and immuno-oncology. We are advancing the prevention and treatment of hepatitis B, with the only tri-antigenic hepatitis B vaccine, Sci-B-Vac, which is approved for use and commercially available in Israel, and recently completed a pivotal Phase III program in the United States, Europe and Canada, and with VBI-2601 (BRII-179), an immunotherapeutic candidate in development in collaboration with Brii Biosciences Limited (“Brii Bio”) for a functional cure for chronic hepatitis B. Our enveloped virus-like particle (“eVLP”) platform technology allows for the development of eVLP vaccines that closely mimic the target virus to elicit a potent immune response. Integrating our cytomegalovirus (“CMV”) expertise with the eVLP platform technology, our lead eVLP program candidates include a glioblastoma (“GBM”) vaccine immunotherapeutic candidate, VBI-1901, and a prophylactic CMV vaccine candidate, VBI-1501. We also recently announced a collaborative research agreement with the National Research Council of Canada (“NRC”) to develop a pan-coronavirus vaccine candidate, targeting COVID-19, severe acute respiratory syndrome (“SARS”), and Middle East respiratory syndrome (“MERS”). We are headquartered in Cambridge, Massachusetts, with research operations in Ottawa, Canada, and manufacturing operations in Rehovot, Israel.

Product Pipeline – Lead Program Candidates

Program: Indication		Current Development Stage
Hepatitis B Portfolio:
●	Sci-B-Vac: Prophylactic Hepatitis B	Phase III Complete
●	VBI-2601: Therapeutic Hepatitis B	Phase Ib/IIa
eVLP Platform Portfolio:
●	VBI-1901: Therapeutic CMV-Associated Cancers (GBM)	Phase I/IIa
●	VBI-1501: Prophylactic CMV	Phase I Complete
●	VBI-2901: Prophylactic Pan-Coronavirus	Preclinical

A summary of these programs and recent developments follows.

Hepatitis B Portfolio

Sci-B-Vac: Tri-antigenic Prophylactic Hepatitis B Vaccine

Sci-B-Vac is a tri-antigenic prophylactic hepatitis B vaccine, which is approved for use and commercially available in Israel, and recently completed its pivotal Phase III program in the United States, Europe, and Canada. In contrast to other commercially-available hepatitis B vaccines, which contain only one surface antigen (the S antigen) of hepatitis B, Sci-B-Vac contains all three of the hepatitis B surface antigens: the S antigen, the pre-S1 antigen, and the pre-S2 antigen. Moreover, Sci-B-Vac is distinguished from other commercially-approved hepatitis B vaccines because it is produced in mammalian cells (Chinese hamster ovary “CHO” cells) rather than in yeast. Published data demonstrate that T cell responses to the pre-S1 and pre-S2 antigens can further boost responses to the S antigen, resulting in a more immunogenic response.

Sci-B-Vac has not yet been approved for use by the United States Food and Drug Administration (“FDA”), European Medicines Agency (“EMA”) or Health Canada. The recently completed global Phase III clinical program was designed to achieve FDA, EMA, and Health Canada market approvals for commercial sale of Sci-B-Vac in the United States, Europe, and Canada, respectively. Our wholly-owned subsidiary, SciVac Ltd., in Rehovot, Israel, manufactures and sells Sci-B-Vac.

On June 17, 2019, we announced positive top-line results from the randomized, double-blind, controlled pivotal Phase III study, PROTECT, designed to evaluate the efficacy and safety of a 10µg dose of Sci-B-Vac compared with a 20µg dose of the standard of care vaccine, Engerix-B. The study, which enrolled a total of 1,607 adults, of which 81% were age ≥ 45 years, met both of its co-primary endpoints: (1) non-inferiority of seroprotection rate (“SPR”) of Sci-B-Vac (91.4%) vs. Engerix-B (76.5%) in all subjects age ≥ 18 years, 4 weeks after 3rd vaccination (SPR difference: 14.9%; 95% confidence interval (“CI”) [11.2%, 18.5%]); and (2) superiority of SPR of Sci-B-Vac (89.4%) vs. Engerix-B (73.1%) in subjects age ≥ 45 years, 4 weeks after 3rd vaccination (SPR difference: 16.4%; 95% CI [12.2%, 20.7%]). Moreover, the SPR of Sci-B-Vac compared to Engerix-B was higher in all key subgroup analyses of adults age ≥ 18 years, including by age, gender, body mass index (“BMI”), diabetic status, and smoking status, four weeks after 3rd vaccination.

On January 9, 2020 we reported positive top-line results from CONSTANT, the second pivotal Phase III study, designed to assess lot-to-lot manufacturing consistency of Sci-B-Vac, and compare the safety and immunogenicity of Sci-B-Vac to Engerix-B. The CONSTANT Phase III study, which enrolled 2,838 adults, age 18-45 years, met both the primary and secondary endpoints. The primary endpoint of CONSTANT study was directed to the manufacturing consistency of Sci-B-Vac. For this primary endpoint, the study evaluated the vaccine immune response, as measured by geometric mean concentration (“GMC”) of antibodies across three independent, consecutively-manufactured lots of Sci-B-Vac, four weeks after the third vaccination. Together with the positive safety and immunogenicity results of the PROTECT Phase III study, we expect these data to comprise the basis for the regulatory submissions in the United States, Europe, and Canada.

A secondary endpoint of the CONSTANT study demonstrated non-inferiority of SPR of Sci-B-Vac (99.3%) vs. Engerix-B (94.8%), one month after completion of the full course of vaccination (SPR difference: 4.49%; 95% CI [2.90%, 6.63%] – up from 90.4% for Sci-B-Vac and 51.6% for Engerix-B at day 168, after only two vaccinations. In addition to demonstrating non-inferiority, the SPR achieved with Sci-B-Vac compared to Engerix-B was higher after both two and three vaccinations. An exploratory analysis in CONSTANT also compared the SPR after two doses of Sci-B-Vac (90.4%) to the SPR after three doses of Engerix-B (94.8%) (SPR difference: -4.3%; 95% CI [-6.48%, -1.90%]). As per the commonly-used statistical margin of non-inferiority for hepatitis B vaccines, defined as the lower limit of the 95% CI being above -10%, this analysis demonstrated non-inferiority after two doses of Sci-B-Vac (at day 168) compared with three doses of Engerix-B (at day 196). Similarly, at these time points, preliminary data from the integrated immunogenicity analysis of both the PROTECT and CONSTANT studies in subjects age 18-45 years demonstrate a difference in SPR of -4.2%; 95% CI [-6.38%, -1.99%]. The two versus three dose comparison is not part of the regulatory approval process and will not be included in the expected indication we will seek, but we believe it contributes to the robust immunogenicity profile of Sci-B-Vac.

The safety and tolerability seen in CONSTANT and PROTECT studies were consistent with the known safety profile of Sci-B-Vac. No new safety risks were identified, and no safety signals were observed in either study cohort. The integrated safety data analysis from both the PROTECT and CONSTANT studies is underway.

The completed Phase III studies are expected to support the Biologics License Application (“BLA”) to the FDA, the Marketing Authorization Application (“MAA”) to the EMA and the New Drug Submission (“NDS”) to Health Canada. We expect pre-BLA discussions with the FDA to take place in the second quarter of 2020, and subject to the outcome of such discussion and discussions with other regulatory bodies plan to submit applications for regulatory approvals in the United States, Europe and Canada beginning the fourth quarter of 2020.

VBI-2601: Hepatitis B Immunotherapeutic Candidate

VBI-2601 (BRII-179) is our novel, recombinant, protein-based immunotherapeutic candidate in development for the treatment of chronic hepatitis B infection, a disease that affects more than 250 million people worldwide. Chronic hepatitis B infection can lead to cirrhosis of the liver, hepatocellular cancer, and other liver disease, making it a life-threatening global health problem. VBI-2601 (BRII-179) is formulated to induce broad immunity against hepatitis B virus, including T-cell immunity which plays an important role in controlling hepatitis B infection.

On December 6, 2018, the Company announced that it had entered into a Collaboration and License Agreement (“License Agreement”) with Brii Bio, pursuant to which, among other things, subject to terms and conditions set forth in the License Agreement, we and Brii Bio agreed to collaborate on the development of a hepatitis B recombinant protein-based immunotherapeutic candidate in China, Hong Kong, Taiwan and Macau (the “Licensed Territory”), and to conduct a Phase Ib/IIa collaboration clinical trial for the purpose of comparing VBI-2601 (BRII-179) with a novel composition developed jointly with Brii Bio.

On November 14, 2019, we announced initiation of enrollment in a Phase Ib/IIa Study of VBI-2601 (BRII-179) in patients with chronic hepatitis B infection. The Phase Ib/IIa clinical study of VBI-2601 (BRII-179) is a randomized, controlled study designed to assess the safety, tolerability, antiviral and immunological activity of VBI-2601 (BRII-179). The study is designed as a two-part dose-escalation study assessing different dose levels of VBI-2601 (BRII-179) with and without an immunomodulatory adjuvant, and is expected to enroll up to 65 patients. Initial human proof-of-concept data from the clinical study is anticipated in the second half of 2020. The study is sponsored by Brii Bio and will be conducted at multiple study sites in New Zealand, Australia, Thailand, South Korea, Hong Kong SAR, and China.

eVLP Platform Portfolio

The eVLP technology enables the synthetic manufacture of an “enveloped” virus-like particle, or “eVLP”. Many viruses are “enveloped” in that they are surrounded by a lipid bilayer membrane. Such viruses display antigenic proteins on the surface of their “envelope” which can be targets for vaccine development. The ability to synthetically manufacture an “enveloped” virus-like particle is different from previously developed VLP technologies, which did not include the lipid bilayer membrane, and thus these technologies were unable to express antigenic proteins within an “envelope” as they occur in nature.

VBI-1901: Cancer Vaccine Immunotherapeutic Candidate

Our cancer vaccine immunotherapeutic program, VBI-1901, targets CMV proteins present in tumor cells. CMV is associated with a number of solid tumors including GBM, breast cancer, and pediatric medulloblastoma. We initiated dosing in a multi-center Phase I/IIa clinical study evaluating VBI-1901, in combination with granulocyte-macrophage colony stimulating factor (“GM-CSF”), in patients with recurrent GBM in January 2018. Enrollment in Part A of the study was completed in December 2018. In April 2019, the independent data safety monitoring board completed reviews of all safety data from our fully-enrolled Part A portion of the Phase I/IIa trial in recurrent GBM subjects, which included 6 subjects in each of 3 different dose cohorts. The data safety monitoring board unanimously recommended the continuation of the study without modification and had no safety concerns about any of the 3 dose levels of VBI-1901. On April 23, 2019, we announced that, based on safety and immunogenicity data, the highest dose tested in Part A of the ongoing Phase I/IIa study in recurrent GBM patients, 10µg, was selected as the optimal dose level to test in Part B of the study. Where Part A was designed as a dose-escalation phase to assess safety, tolerability, and to define the optimal dose level of VBI-1901, Part B is a subsequent extension phase of the optimal dose level defined in Part A.

On September 10, 2019, we entered into a Clinical Collaboration Agreement (“Collaboration Agreement”) with GlaxoSmithKline Biologicals S.A. (“GSK”) pursuant to which we will investigate the use of GSK’s proprietary AS01_Badjuvant system in our ongoing study of VBI-1901. As a result of the Collaboration Agreement, a second study arm was added to Part B of the ongoing Phase I/IIa clinical study. Part B is now a two-arm open-label study, enrolling 20 first recurrent GBM patients to receive VBI-1901 in combination with either granulocyte-macrophage colony-stimulating factor (“GM-CSF”) or AS01_Bas immunomodulatory adjuvants. Enrollment of the 10 patients in the VBI-1901 with GM-CSF arm was initiated at the end of July 2019. Initiation of enrollment of the 10 patients in the VBI-1901 with AS01_Bwas announced in March 2020.

Safety, immunologic responses, and clinical and tumor responses from the VBI-1901 with GM-CSF in Part A and in the GM-CSF arm of Part B of the study were announced throughout 2019 and early 2020, respectively. In the high-dose cohort of Part A, vaccine response correlated with tumor response, with all three vaccine responders demonstrating stable disease for greater than 12 weeks. Two patients in the high-dose cohort of Part A experienced a 60% reduction in the size of primary tumor. VBI-1901 also induced and expanded robust T cell responses in these two patients. For patients who were vaccines responders, the 12-month overall survival (“OS”) rate was 83% (n = 5/6), compared to 33% (n = 3/9) for vaccine non-responders. Similarly, among patients evaluable for response and survival in Part A, vaccine responders saw a 6.25-month improvement in median OS (14.0 months) compared to vaccine non-responders (7.75 months). VBI-1901 continues to be safe and well tolerated at all doses tested, with no safety signals observed.

Based on the data announced in November 2019, the early tumor and immunologic responses seen in Part B appear similar to the responses observed in Part A of the study. Correlations between immunologic biomarkers and tumor/clinical responses will continue to be refined throughout the duration of Part B of the study.

We expect expanded immunologic data and tumor imaging data from the VBI-1901 with GM-CSF arm in Part B of the study mid-year 2020, and initial immunologic data from the VBI-1901 with AS01_Barm in Part B of the study in the fourth quarter of 2020.

VBI-1501: Prophylactic CMV Vaccine Candidate

Another of our eVLP programs is a vaccine candidate that aims to prevent CMV infections. CMV may cause severe infections in newborn children (congenital CMV) and may also cause serious infections in people with weakened immune systems, such as solid organ or bone marrow transplant recipients. Our prophylactic CMV vaccine candidate uses the eVLP platform to express a modified form of the CMV glycoprotein B (“gB”) antigen and is adjuvanted with alum, an adjuvant used in FDA-approved products.

In May 2018, we announced positive top-line results from the randomized, placebo-controlled Phase I study of VBI-1501. The final Phase I study results demonstrated that VBI-1501 was safe and well-tolerated at all doses, with and without the adjuvant alum. The highest dose of VBI-1501, 2.0µg, with alum, elicited CMV-neutralizing antibodies against fibroblast cell infection in 100% of subjects after the third vaccination, up from 81% of subjects after the second vaccination, inducing titers comparable to those observed in patients protected as a result of natural infection. Neutralizing antibodies against epithelial cell infection were also seen in 31% of subjects after the third vaccination of VBI-1501 2.0µg with alum. The data also showed the formulation of the vaccine with alum enhanced antibody titers. The highest dose of VBI-1501 tested, 2.0µg with alum, contains approximately 10-fold less antigen content than that used in several other VLP-based vaccines or in previous CMV vaccine candidates developed by other companies.

On December 20, 2018 we announced plans for a Phase II clinical study evaluating VBI-1501 following positive discussions with Health Canada. We received similarly positive guidance from the FDA in July 2019. The Phase II study is expected to assess the safety and immunogenicity of dosages of VBI-1501 up to 20µg with alum. The Company is currently evaluating the timing of next steps for the program.

VBI-2901: Prophylactic Pan-Coronavirus Vaccine Candidate

On March 31, 2020, we announced a collaboration with the NRC, Canada’s largest federal research and development organization, to develop a pan-coronavirus vaccine candidate, targeting COVID-19, SARS, and MERS. Based on past clinical experience with the eVLP platform, we expect that a multivalent eVLP vaccine candidate, co-expressing SARS-CoV-2, SARS-CoV, and MERS-CoV spike proteins on the same particle, will be possible to develop. Moreover, we believe the multivalent construct could allow for the production of broadly reactive antibodies, which offer potential for protection from mutated strains of coronavirus that may emerge over time.

The collaboration will combine VBI’s viral vaccine expertise, eVLP technology platform and coronavirus antigens with the NRC’s uniquely designed SARS-CoV-2 antigens and assay development capabilities to identify the most immunogenic vaccine candidate for further development.

The NRC and VBI will collaborate to evaluate and select the optimal vaccine candidate. Following IND-enabling pre-clinical studies conducted at both the NRC core facilities and at VBI’s research facility in Ottawa, Canada, VBI believes that clinical study materials could be available in the fourth quarter of 2020.

We may also seek to in-license clinical-stage vaccines or vaccine-related technologies that we believe complement our product and pipeline portfolio, in addition to technologies that may supplement our therapeutic vaccination efforts in immuno-oncology.

At present, our operations are focused on:

	●	preparing marketing authorization applications for Sci-B-Vac in the United States, Europe and Canada;

	●	preparing for commercialization of Sci-B-Vac in additional markets, including the United States, Europe, and Canada, where we may obtain regulatory approval;

	●	increasing sales of Sci-B-Vac in territories where it is currently registered or available on a named-patient basis;

	●	conducting the Phase I/IIa clinical study of our GBM vaccine immunotherapeutic candidate, VBI-1901;

	●	developing VBI-2601 (BRII-179), our protein-based immunotherapeutic candidate for treatment of chronic hepatitis B, in collaboration with Brii Bio;

	●	developing, VBI-2901, our prophylactic pan-coronavirus vaccine candidate for targeting COVID-19, SARS, and MERS, in collaboration with the NRC;

	●	preparation for further development of VBI-1501, our preventative CMV vaccine candidate

	●	ensuring our recently modernized manufacturing facility in Rehovot, Israel obtains all required regulatory approvals;

	●	continuing the research and development (“R&D”) of our pipeline candidates, including the exploration and development of new pipeline candidates,

	●	implementing operational, financial and management information systems, including through third party partners, to support our commercialization activities;

	●	maintaining, expanding and protecting our intellectual property portfolio; and

	●	developing our internal systems and processes for regulatory affairs and compliance.

VBI’s revenue generating activities have been the sale of Sci-B-Vac product in markets where it is approved or on a named patient basis where it is not approved, though those markets have generated a limited number of sales to-date, various business development transactions, and R&D services generating fees. VBI has incurred significant net losses and negative operating cash flows since inception and expects to continue incurring losses and negative cash flows from operations as we carry out planned clinical, regulatory, R&D, sales and manufacturing activities with respect to the advancement of our Sci-B-Vac and new pipeline candidates. As of March 31, 2020, VBI had an accumulated deficit of approximately $270.8 million and stockholders’ equity of approximately $74.4 million. Our ability to maintain our status as an operating company and to realize our investment in our In-Process Research and Development (“IPR&D”) assets is dependent upon obtaining adequate cash to finance our clinical development, manufacturing, our administrative overhead and our research and development activities, and ultimately to profitably monetize our IPR&D. We plan to finance near term future operations with existing cash reserves. We expect that we will need to refinance the current term loan obligations and secure additional financing to finance our business plans, which may be a combination of proceeds from the issuance of equity securities, the issuance of additional debt, structured asset financings, government grants or subsidies, and revenues from potential business development transactions, if any. There is no assurance the Company will manage to obtain these sources of financing, if required. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements have been prepared assuming that we will continue as a going concern. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should we be unable to continue as a going concern.

We have incurred operating losses since inception, have not generated significant product sales revenue and have not achieved profitable operations. We incurred net losses of $8.4 million for the three months ended March 31, 2020 and we expect to continue to incur substantial losses in future periods. We anticipate that we will continue to incur substantial operating expenses as we continue our research and development, clinical studies and as we take steps to commercialize our product. These include expenses related to:

	●	preparing marketing authorization applications for Sci-B-Vac in the United States, Europe and Canada;

	●	preparing for commercialization and commercialization of Sci-B-Vac in additional markets, including the United States, Europe, and Canada, where we may obtain approval;

	●	continuing the research and development of our pipeline candidates, including further development of VBI-1901, our cancer vaccine immunotherapeutic candidate, VBI-2601 (BRII-179), our hepatitis B immunotherapeutic candidate, VBI-2901, our pan-coronavirus vaccine candidate and VBI-1501, our prophylactic CMV vaccine candidate;

	●	manufacturing, obtaining and maintaining required regulatory approvals at our recently modernized manufacturing facility in Rehovot, Israel;

	●	maintaining, expanding and protecting our intellectual property portfolio;

	●	hiring additional clinical, manufacturing, and scientific personnel or contractors; and

	●	implementing operational, financial and management information systems and adding human resources support, including additional personnel, to support our product development; and

	●	developing our internal systems and processes for regulatory affairs and compliance.

In addition, we have incurred and will continue to incur significant expenses as a public company, which subjects us to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act and the rules and regulations of the NASDAQ Capital Market and the Canadian securities regulators.

Amended Credit Facility

In 2016, the Company through VBI US assumed the Facility with the Lender, a related party, in the amount of $6,000. On December 6, 2016, the Company amended the Facility by the Amended Credit Facility and raised the Lender’s commitment amount to $13,200, which was combined with the remaining balance from the Facility of $1,800. On July 17, 2018, the Company amended the Amended Credit Facility by the Second Amendment to extend the period the Company is required to pay only the interest on the loan from May 31, 2018 to December 31, 2018 and to extend the expiration date of certain warrants to purchase 363,771 common shares issued to the Lender with an original issue date of July 25, 2014, from July 25, 2019 to December 6, 2021. The Company accounted for this as a debt modification, and as a result of the extension of the warrant expiration date in connection with the Second Amendment, the debt discount was increased by $386. This amount represents the incremental fair value of the modified warrants. On January 31, 2019 we further amended the Amended Credit Facility by the Third Amendment to i) extend the period we are required to pay only the interest on the loan from December 31, 2018 to January 31, 2020; ii) to extend the maturity date of the term loan from December 31, 2019 to June 30, 2020 and iii) reduce the exercise price on certain warrants to purchase common shares issued to the Lender to $2.75 from $4.13 for 363,771 warrants issued on July 25, 2014 and for 363,771 warrants issued on December 6, 2016 and from $3.355 for 1,341,282 warrants issued on December 6, 2016. Commencing January 2020, we began making capital repayments of $200 per month. These monthly capital repayments continue until June 2020, when the entire remaining amount of $14,300 (including the exit fee) is due.

Research and Development (“R&D”) Services

Pursuant to an agreement with the Israel Innovation Authority (formerly the Office of the Chief Scientist of Israel), the Company is required to make services available for the biotechnology industry in Israel. These services include relevant activities for development and manufacturing of therapeutic proteins according to international standards and GMP quality level suitable for toxicological studies in animals and clinical studies (Phase I & II) in humans. Service activities include analytics/bio analytics methods for development and process development of therapeutic proteins starting with a candidate clone through the upstream, purification, formulation and filling processes and manufacturing for Phase I & II clinical trials.

These R&D services are primarily marketed to the Israeli research community in academia and Israeli biotechnology companies in the life sciences lacking the infrastructure or experience in the development and production of therapeutic proteins to the standards and quality required for clinical trials for human use. In the first quarter of 2020, the Company provided services to biotechnology companies including analytical development, upstream development process, protein purification and formulation and filling for Phase I clinical studies.

In addition, pursuant to the Collaboration and License Agreement with Brii Bio we provide R&D services to Brii Bio as part of the development of VBI-2601 (BRII-179).

Non-Binding Term Sheet for Secured Term Loan

We have recently entered into a non-binding term sheet with a potential lender, pursuant to which we expect to receive $20 million of secured term loan up front, and we expect to be able to draw up to an additional $20 million of secured term loan upon achievement of certain milestones through 2021. An additional $10 million would be available at the discretion of the potential lender. However, as the term sheet is non-binding, there is no assurance that the parties will enter into a definitive agreement for such loans and that we will be able to obtain such loans. In addition, the final terms of the definitive agreement may be significantly different from those set forth in the term sheet.

Modernization and Capacity Increases of Our Manufacturing Facility

In 2018, we temporarily closed our manufacturing facility in Rehovot, Israel, for modernization and capacity increase. We re-commenced operations in May 2019 and the review of the modernization and the capacity increase by the Israeli Ministry of Health (“IMoH”) occurred in December of 2019. We received our certificate of Good Manufacturing Practice (“GMP”) compliance from the IMoH on January 27, 2020. In addition to the GMP compliance certification, the IMoH will also need to review and approve the process validation submission and provide approval for us to sell Sci-B-Vac manufactured at the modernized facility. We increased the capacity of our manufacturing facility to be able to supply commercial quantities of Sci-B-Vac upon FDA, and/or EMA and/or Health Canada approval and to supply clinical materials of VBI-2601 (BRII-179).

Third Party License and Assignment Agreements

We currently are dependent on licenses from third parties for certain of our key technologies, including the license granted pursuant to an agreement between Savient Pharmaceuticals Inc. and SciGen Ltd dated June 2004, as subsequently amended (the “ the Ferring License Agreement”) and a license from L’Universite Pierre et Marie Curie, now Sorbonne Université (“UPMC”), Institut National de la Santé et de la Recherche Médicale (“INSERM”) and L’école Normale Supérieure de Lyon (collectively the “Licensor”). Under the Ferring License Agreement, we are committed to pay Ferring royalties equal to 7% of net sales (as defined therein) of HBsAg “Product” (as defined therein). Under an Assignment Agreement between FDS Pharm LLP and SciGen Ltd., dated February 14, 2012 (the “SciGen Assignment Agreement”), we are required to pay royalties to SciGen Ltd. equal to 5% of net sales (as defined in the Ferring License Agreement) of Product. Under the Ferring License Agreement and the SciGen Assignment Agreement, we originally were to pay royalties on a country-by-country basis until the date 10 years after the date of commencement of the first royalty year in respect of such country. In April 2019, we exercised our option to extend the Ferring License Agreement in respect of all the countries that still make up the territory for an additional 7 years by making a one-time payment to Ferring of $100. Royalties under the Ferring License Agreement and SciGen Assignment Agreement will continue to be payable for the duration of the extended license periods. Under our license agreement with UPMC and other licensors relating to eVLP technology, we have an exclusive license to a family of patents that is expected to expire in the United States in 2022 and 2021 in other countries. Under this agreement, we are required to pay UPMC between 0.75% to 1.75% of net sales and certain lump-sum milestone payments. UPMC is also a co-owner of the patent family covering our VBI-1501 CMV vaccine and we are currently negotiating extension of our existing license to cover this patent family.

Financial Overview

Overall Performance

The Company had net losses of approximately $8,358 and $14,606 for the three months ended March 31, 2020 and 2019, respectively. The Company has an accumulated deficit of $270,746 at March 31, 2020. The Company had $35,803 of cash at March 31, 2020 and net working capital of approximately $8,736.

Cost of revenues

Cost of revenues consist primarily of costs incurred for manufacturing the Sci-B-Vac vaccine, which includes cost of materials, consumables, supplies, contractors and manufacturing salaries. Certain cost of revenues related to the temporary closure of the manufacturing facility, during the modernization and capacity increase, of approximately $348 was allocated to G&A expenses in the three-months ended March 31, 2019.

Research and Development Expenses

R&D expenses consist primarily of costs incurred for the development of Sci-B-Vac, VBI-1901, our GBM vaccine immunotherapeutic candidate, VBI-1501, our CMV candidate and VBI-2601 (BRII-179), and VBI-2901, our pan-coronavirus candidate, which include:

	●	the cost of acquiring, developing and manufacturing clinical study materials and other consumables and lab supplies used in our pre-clinical studies;

	●	expenses incurred under agreements with contractors or Contract Manufacturing Organizations or Contract Research Organizations to advance the vaccines into and through completion of clinical studies; and

	●	employee-related expenses, including salaries, benefits, travel and stock-based compensation expense.

We expense R&D costs when we incur them.

General and Administration Expenses

G&A expenses consist principally of salaries and related costs for executive and other administration personnel and consultants, including stock-based compensation, impairment charges and travel expenses. Other general and administration expenses include professional fees for legal, patent protection, consulting and accounting services, travel and conference fees, including board and scientific advisory board meeting costs, rent, maintenance of facilities, depreciation, office supplies, information technology costs and expenses, insurance and other general expenses. G&A expenses are expensed when incurred.

We expect that our general and administration expenses will increase in the future as a result of adding employees and scaling our operations commensurate with advancing clinical candidates, commercializing products and continuing to support a public company infrastructure. These increases will likely include increased costs for insurance, hiring of additional personnel, board committees, outside consultants, investor relations, lawyers and accountants, among other expenses.

Interest Expense, net of interest income

Interest expense is associated with our Amended Credit Facility as discussed in Note 8 of the Notes to the Condensed Consolidated Financial Statements.

Results of Operations

Three Months Ended March 31, 2020 Compared to the Three Months Ended March 31, 2019

All dollar amounts stated below are in thousands, unless otherwise indicated.

	Three months ending March 31
	2020			2019			Change $			Change %
Revenues	$	415		$	360		$	55			15	%

Expenses:
Cost of revenues		2,577			1,179			1,398			119	%
Research and development		3,193			9,040			(5,847	)		(65	)%
General and administration		4,058			3,960			98			2	%
Total operating expenses		9,828			14,179			(4,351	)		(31	)%

Loss from operations		(9,413	)		(13,819	)		4,406			(32	)%

Interest expense, net of interest income		(582	)		(480	)		(102	)		21	%
Foreign exchange gain (loss)		1,637			(307	)		1,944			(633	)%
Loss before income taxes		(8,358	)		(14,606	)		6,248			(43	)%

Income tax expense		-			-			-			-	%

NET LOSS	$	(8,358	)	$	(14,606	)	$	6,248			(43	)%

Revenues

Revenues for the three months ended March 31, 2020 was $415 as compared to $360 for the three months ended March 31, 2019. Revenues for the three months ended March 31, 2020 increased by $55 or 15% due to an increase in product revenue of Sci-B-Vac on a named patient basis during the three months ended March 31, 2020, compared to the three months ended March 31, 2019.

Revenues by Geographic Region

	Three months ending March 31
	2020		2019		$ Change			% Change
Revenue in Israel	$	132	$	99	$	33			33	%
Revenues in China / Hong Kong		231		261		(30	)		(11	)%
Revenue in Europe		52		-		52			100	%
Total Revenues	$	415	$	360	$	55			15	%

Cost of Revenues

Cost of revenues for the three months ended March 31, 2020 was $2,577 as compared to $1,179 for the three months ended March 31, 2019. The increase in the cost of revenues of $1,398 or 119%, is due to the following: the re-commencement of manufacturing subsequent to the temporary closure of our manufacturing facility in Rehovot; and a reclassification of certain costs of revenues to general and administration expenses in the three months ended March 31, 2019 which did not occur in the three months ended March 31, 2020.

Research and Development Expenses

R&D expenses for the three months ended March 31, 2020 were $3,193 as compared to $9,040 for the three months ended March 31, 2019. The decrease in R&D expenses of $5,847 or 65%, is a result of the decrease in the costs related to the Sci-B-Vac Phase III clinical studies. During the three months ended March 31, 2020 both studies had been completed whereas during the three months ended March 31, 2019 both studies were ongoing.

General and Administration Expenses

G&A expenses for the three months ended March 31, 2020 were $4,058 as compared to $3,960 for the three months ended March 31, 2019. The G&A expense increase of $98 or 2%, is a result of the increase in pre-commercial activities during the three months ended March 31, 2020 offset by the allocation of certain cost of revenues related to the temporary facility closure, to G&A expenses, as discussed above under “Cost of Revenues” during the three months ended March 31, 2019 that did not re-occur during the three months ended March 31, 2020.

Loss from Operations

The net loss from operations for the three months ended March 31, 2020 was $9,413 as compared to $13,819 for the three months ended March 13, 2019. The $4,351 decrease in the net loss from operations resulted from the items discussed above.

Interest Expense, net of interest income

The interest expense, net of interest income decreased by $102 for the three months ended March 31, 2020 largely resulting from a decrease in interest income for the three months ended March 31, 2019.

Foreign Exchange Gain (Loss)

The foreign exchange gain of $1,637 for the three months ended March 31, 2020 and the foreign exchange loss of ($307) for the three months ended March 31, 2019 are a result of the changes in the foreign currency exchange rates (NIS and CAD) in which the foreign currency transactions were denominated for each of those periods.

Net Loss

Net loss of $8,358 for the three months ended March 31, 2020 compared to $14,606 for the three months ended March 31, 2019 is a result of the items discussed above.

Liquidity and Capital Resources

	March 31, 2020			December 31, 2019			$ Change			% Change

Cash	$	35,803		$	44,213		$	(8,410	)		(19	)%
Current Assets		37,869			46,963			(9,094	)		(19	)%
Current Liabilities		29,133			29,757			(624	)		(2	)%
Working Capital		8,736			17,206			(8,470	)		(49	)%
Accumulated Deficit	$	(270,746	)	$	(262,388	)	$	(8,358	)		3	%

As at March 31, 2020, we had cash of $35,803 as compared to $44,213 as at December 31, 2019. As at March 31, 2020, the Company had working capital of $8,736 as compared to working capital of $17,206 at December 31, 2019. Working capital is calculated by subtracting current liabilities from current assets.

The report of our independent registered public accounting firm on our consolidated financial statements for the year ended December 31, 2019 contains an explanatory paragraph regarding our ability to continue as a going concern. VBI has incurred significant net losses and negative operating cash flows since inception and expects to continue incurring losses and negative cash flows from operations as we carry out our planned clinical, regulatory, R&D, sales and manufacturing activities with respect to the advancement of our Sci-B-Vac and new pipeline candidates. As of March 31, 2020, VBI had an accumulated deficit of approximately $270.8 million and stockholders’ equity of approximately $74.4 million. Our ability to maintain our status as an operating company and to realize our investment in our IPR&D assets is dependent upon obtaining adequate cash to finance our clinical development, manufacturing, our administration overhead and our research and development activities. We plan to finance near term future operations with existing cash reserves. We expect that we will need to re-finance the current term loan obligations and secure additional financing to finance our business plans, which may be a combination of proceeds from the issuance of equity securities, the issuance of additional debt, structured asset financings and revenues from potential business development transactions, if any. There is no assurance the Company will manage to obtain these sources of financing. The accompanying financial statements have been prepared assuming that we will continue as a going concern; however, the above conditions raise substantial doubt about our ability to do so. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should we be unable to continue as a going concern. Our long-term success and ability to continue as a going concern is dependent upon obtaining sufficient capital to fund the research and development of our products, to bring about their successful commercial release, to generate revenue and, ultimately, to attain profitable operations or, alternatively, to advance our products and technology to such a point that they would be attractive candidates for acquisition by others in the industry.

We will require additional funds to conduct clinical and non-clinical trials, achieve regulatory approvals, and, subject to such approvals, commercially launch our products, and will need to secure additional financing in the future to support our operations and to realize our investment in our IPR&D assets. We base this belief on assumptions that are subject to change, and we may be required to use our available cash resources sooner than we currently expect. Our actual future capital requirements will depend on many factors, including the progress and results of our ongoing clinical trials, the duration and cost of discovery and preclinical development, laboratory testing and clinical trials for our pipeline candidates, the timing and outcome of regulatory review of our products, obtaining regulatory approvals for our recently modernized manufacturing facility in Rehovot, Israel, product sales outside of Israel, the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing patent claims and other intellectual property rights, the number and development requirements of other pipeline candidates that we pursue and the costs of commercialization activities, including product marketing, sales and distribution.

We expect to finance our future cash needs through public or private equity offerings, debt financings, government grants or subsidies, or structured asset financings, or business development transactions. We have recently entered into a non-binding term sheet with a potential lender, pursuant to which we expect to receive $20 million of secured term loan up front, and we expect to be able to draw up to an additional $20 million of secured term loan upon achievement of certain milestones through 2021. An additional $10 million would be available at the discretion of the potential lender. However, as the term sheet is non-binding, there is no assurance that the parties will enter into a definitive agreement for such loans and that we will be able to obtain such loans. In addition, the final terms of the definitive agreement may be significantly different from those set forth in the term sheet. Although we are pursuing different opportunities, other than as disclosed in this report, we currently do not have any signed commitments for future external funding. We may need to raise additional funds more quickly if one or more of our assumptions prove to be incorrect or if we choose to expand our product development efforts more rapidly than we presently anticipate. We may also decide to raise additional funds even before we need them if the conditions for raising capital are favorable. Additional equity or debt or structured asset financing, grants, or business development transactions may not be available on acceptable terms, if at all. If adequate funds are not available, we may be required to delay, reduce the scope of or eliminate our R&D programs, reduce our planned commercialization efforts or obtain funds through arrangements with collaborators or others that may require us to relinquish rights to certain pipeline candidates that we might otherwise seek to develop or commercialize independently.

To the extent we raise additional capital by issuing equity securities or obtaining borrowings convertible into equity, ownership dilution to existing stockholders will result and future investors may be granted rights superior to those of existing stockholders. The incurrence of indebtedness or debt financing would result in increased fixed obligations and could also result in covenants that would restrict our operations. Our ability to obtain additional capital may depend on prevailing economic conditions and financial, business and other factors beyond our control. The COVID-19 pandemic has caused an unstable economic environment globally. Disruptions in the global financial markets may adversely impact the availability and cost of credit, as well as our ability to raise money in the capital markets. Current economic conditions have been, and continue to be volatile. Continued instability in these market conditions may limit our ability to access the capital necessary to fund and grow our business.

Net cash used in Operating Activities

The Company incurred net losses of $8,358 and $14,606 in the three months ended March 31, 2020 and 2019, respectively. The Company used $7,648 and $14,020 in cash for operating activities during the three months ended March 31, 2020 and 2019, respectively. The decrease in cash outflows is largely as a result of the completion of the Sci-B-Vac Phase III clinical studies.

Net cash used in Investing Activities

Cash flows used in investing activities decreased from $1,896 for the three months ended March 31, 2019 to $133 for the three months ended March 31, 2020. The investing activities for the three months ended March 31, 2019 were part of modernization and capacity increases of our manufacturing facility and for the three months ended March 31, 2020 were for routine capital purchases and replacement.

Net cash used in Financing Activities

Net cash used in financing activities increased by $600 during the three months ended March 31, 2020 due to the repayment of long-term debt compared to no net cash used or received from financing activities during the three months ended March 31. 2019.

The Company’s long-term success and ability to continue as a going concern is dependent upon obtaining sufficient capital to fund the research and development of its products, to bring about their successful commercial release, to generate revenue and, ultimately, to attain profitable operations or, alternatively, to advance its products and technology to such a point that they would be attractive candidates for acquisition by others in the industry.

To date, the Company has been able to obtain financing as and when it was needed; however, there is no assurance that financing will be available in the future, or if it is, that it will be available at acceptable terms.

Off-Balance Sheet Arrangements

As of March 31, 2020, the Company has no off-balance sheet transactions, arrangements, obligations (including contingent obligations), or other relationships with unconsolidated entities or other persons that have, or may have, a material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Critical Accounting Policies and Estimates

There have been no changes to our critical accounting policies during the three months ended March 31, 2020. Critical accounting policies and the significant accounting estimates made in accordance with such policies are regularly discussed with the Audit Committee of the Company’s board of directors. Those policies are discussed under “Critical Accounting Policies” in our “Management’s Discussion and Analysis of the Financial Condition and Results of Operations” included in Item 7, as well as in our consolidated financial statements and the footnotes thereto, included in our 2019 10-K.

Trends, Events and Uncertainties

As with other companies that are in the process of commercializing novel pharmaceutical products, we will need to successfully manage normal business and scientific risks. Research and development of new technologies is, by its nature, unpredictable. We cannot assure you that our technology will be adopted, that we will ever earn revenues sufficient to support our operations, or that we will ever be profitable. Furthermore, other than as discussed in this report, we have no committed source of financing and may not be able to raise money as and when we need it to continue our operations. If we cannot raise funds as and when we need them, we may be required to severely curtail, or even to cease, our operations.

Other than as discussed above and elsewhere in this Form 10-Q, we are not aware of any trends, events or uncertainties that are likely to have a material effect on our financial condition.

Recent Accounting Pronouncements

See Note 3 of Notes to the Condensed Consolidated Financial Statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

Our management has evaluated, under the supervision and with the participation of our Chief Executive Officer (our principal executive officer) and our Chief Financial Officer and Head of Business Development (our principal financial and accounting officer), the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Form 10-Q as defined in Rule 13a-15(e) or Rule 15d-15(e) under the Exchange Act. Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer and Head of Business Development have concluded that, as of the end of the period covered by this Form 10-Q, our disclosure controls and procedures are effective in ensuring that information required to be disclosed in our Exchange Act reports is (1) recorded, processed, summarized and reported in a timely manner, and (2) accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer and Head of Business Development, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There has been no change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the fiscal quarter ended March 31, 2020, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings

SciVac believes these matters to be without merit and intends to defend these claims vigorously.

Item 1A. Risk Factors

The following description of risk factors includes any material changes to risk factors associated with our business, financial condition and results of operations previously disclosed in “Item 1A. Risk Factors” of our annual report on Form 10-K for the fiscal year ended December 31, 2019, as filed with the SEC on March 5, 2020. Our business, financial condition and operating results can be affected by a number of factors, whether currently known or unknown, including but not limited to those described below, any one or more of which could, directly or indirectly, cause our actual financial condition and operating results to vary materially from past, or from anticipated future, financial condition and operating results. Any of these factors, in whole or in part, could materially and adversely affect our business, financial condition, operating results and stock price.

The following discussion of risk factors contains forward-looking statements. These risk factors may be important to understanding other statements in this Form 10-Q. The following information should be read in conjunction with the condensed consolidated financial statements and related notes in Part I, Item 1, “Financial Statements” and Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Form 10-Q.

Risks Related to Our Product Development

Our pursuit of a pan-coronavirus vaccine candidate is at an early stage. We may be unable to produce a vaccine that successfully treats the virus in a timely manner, if at all.

In response to the global outbreak of coronavirus, on March 31, 2020, we entered into a collaborative research agreement with the NRC to develop a pan-coronavirus vaccine candidate, targeting COVID-19, SARS, and MERS. Our development of the vaccine is in early stages, and we may be unable to produce a vaccine that successfully treats the virus in a timely manner, if at all. We are also committing financial resources and personnel to the development of a pan-coronavirus vaccine which may cause delays in or otherwise negatively impact our other development programs, despite uncertainties surrounding the longevity and extent of coronavirus as a global health concern. Our business could be negatively impacted by our allocation of significant resources to a global health threat that is unpredictable and could rapidly dissipate or against which our vaccine, if developed, may not be partially or fully effective. In addition, another party may be successful in producing a more efficacious vaccine or other treatment for COVID-19 which will reduce or eliminate the commercial opportunity for our vaccine candidate and may also lead to the diversion of potential future governmental and quasi-governmental funding away from us and toward other companies, which could have a material adverse effect on our operations.

Government involvement may limit the commercial success of our pan-coronavirus vaccine candidate.

The coronavirus outbreak has been classified as a pandemic by public health authorities, and it is possible that one or more government entities may take actions that directly or indirectly have the effect of abrogating some of our rights or opportunities. If we were to develop a pan-coronavirus vaccine, the economic value of such a vaccine to us could be limited.

Various government entities, including the U.S. and Canadian governments, are offering incentives, grants and contracts to encourage additional investment by commercial organizations into preventative and therapeutic agents against coronavirus, which may have the effect of increasing the number of competitors and/or providing advantages to known competitors. Accordingly, there can be no assurance that we will be able to successfully establish a competitive market share for our pan-coronavirus vaccine, if any.

The recent coronavirus outbreak has caused interruptions or delays of our business plan and may have a significant adverse effect on our business.

In December 2019, a strain of coronavirus, SARS-CoV-2, was reported to have surfaced in Wuhan, China, and on March 12, 2020, the World Health Organization declared COVID-19, disease caused by SARS-CoV-2, to be a pandemic. In an effort to contain and mitigate the spread of COVID-19, many countries, including the United States, Canada, China and Israel, have imposed unprecedented restrictions on travel, quarantines, and other public health safety measures. We and Brii Bio are conducting a Phase Ib/IIa clinical study of VBI-2601 (BRII-179) at multiple study sites located in New Zealand, Australia, Thailand, South Korea, Hong Kong SAR and China, and we have an ongoing Phase I/IIa study for our GBM brain cancer vaccine immunotherapeutic program, VBI-1901, at various hospitals in the United States. In addition, we manufacture Sci-B-Vac and VBI-2601 at our manufacturing facility located in Israel, and we carry out research activities at our laboratories in Ottawa, Canada, both of which facilities have been operating with fewer employees on site due to the COVID-19 outbreak. The extent to which the pandemic will continue to impact our business will depend on future developments, which are highly uncertain and cannot be predicted. The enrollment of patients at some of the clinical sites in our studies has been suspended and may continue to be suspended, and enrollment of patients at other clinical sites may be suspended or delayed as hospitals and clinics where we are conducting clinical trials reallocate resources and limit access to or close clinical facilities due to the COVID-19 pandemic. Additionally, if our trial participants are unable to travel or visit to our clinical study sites as a result of quarantines or other restrictions resulting from the COVID-19 pandemic, we will experience higher drop-out rates or delays in our clinical studies. Government-imposed quarantines and restrictions may also require us to temporarily close our clinical sites, our research laboratories or our manufacturing facility. Furthermore, if we determine that our trial participants may suffer from exposure to COVID-19 as a result of their participation in our clinical trials, we may voluntarily close certain clinical sites as a safety measure until we reasonably believe that the likelihood of exposure has subsided. As a result, our expected development timelines for VBI-2601 (BRII-179) and VBI-1901, and possibly our regulatory timelines for Sci-B-Vac, may be negatively impacted. We cannot predict the ultimate impact of the COVID-19 pandemic as consequences of such an event are highly uncertain and subject to change. We do not yet know the full extent of potential delays or impacts on our business, our clinical studies, our research programs and our manufacturing; however, the COVID-19 outbreak may materially disrupt or delay our business operations, further divert the attention and efforts of the medical community to coping with COVID-19, disrupt the marketplace in which we operate, which could have a material adverse effect on our operations.

Moreover, the various precautionary measures taken by many governmental authorities around the world in order to limit the spread of the coronavirus has had and may continue to have an adverse effect on the global markets and global economy generally, including on the availability and pricing of employees, resources, materials, manufacturing and delivery efforts and other aspects of the global economy. There have been business closures and a substantial reduction in economic activity in countries that have had significant outbreaks of COVID-19. Significant uncertainty remains as to the potential impact of the COVID-19 pandemic on the global economy as a whole. It is currently not possible to predict how long the pandemic will last or the time that it will take for economic activity to return to prior levels. The COVID-19 pandemic could materially disrupt our business and operations, interrupt our sources of supply, hamper our ability to raise additional funds or sell our securities, and continue to slow down the global economy.

If we are successful in producing a vaccine against COVID-19 and/or SARS and/or MERS, we may need to devote significant resources to its scale-up and development including for use by the Canadian or the U.S. government.

In the event that the preclinical and clinical trials for the pan-coronavirus vaccine candidate are perceived to be successful, we may need to work toward the large scale technical development, manufacturing scale-up and larger scale deployment of this potential vaccine through a variety of U.S. government mechanisms such as an Expanded Access Program or an Emergency Use Authorization program or Canadian government programs. In this case we may need to divert significant resources to this program, which would require diversion of resources from our other programs. In addition, since the path to licensure of any vaccine against coronavirus is unclear, if use of the vaccine is mandated by the Canadian or the U.S. government, we may have a widely used vaccine in circulation in Canada, the United States or another country prior to our full validation of the overall long-term safety and efficacy profile of our vaccine platform and technology. Unexpected safety issues in these circumstances could lead to significant reputational damage for us and our technology platform going forward and other issues, including delays in our other programs, the need for re-design of our clinical trials and the need for significant additional financial resources.

Risks Related to Our Capital Requirements and Financings

Our financial statements have been prepared on a going concern basis; we must raise additional capital to fund our operations in order to continue as a going concern.

In its report dated March 5, 2020, EisnerAmper LLP, our independent registered public accounting firm, expressed substantial doubt about our ability to continue as a going concern as we have suffered recurring losses from operations and have insufficient liquidity to fund our future operations. If we are unable to improve our liquidity position, we may not be able to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments that might result if we are unable to continue as a going concern and, therefore, be required to realize our assets and discharge out liabilities other than in the normal course of business which could cause investors to suffer the loss of all or a substantial portion of their investment. As of December 31, 2019, we had $44.2 million of cash, and based on the information and data currently available, as of March 31, 2020, we had approximately $35.8 million of cash. In order to have sufficient cash to fund our operations in the future, we will need to raise additional equity or debt capital and cannot provide any assurance that we will be successful in doing so.

Risks Related to Our Common Shares

The price of our common shares has been, and may continue to be, volatile. The COVID-19 pandemic has resulted in significant financial market volatility, and its impact on the global economy remains uncertain. A continuation or worsening of the pandemic could have a material adverse impact on the market price of our common shares. This may affect the ability of our investors to sell their shares, and the value of an investment in our common shares may decline.

During the 12-month period ended May 1, 2020, our common shares traded as high as $2.10 per share and as low as $0.4655 per share. The market prices of our common shares may continue to be volatile and could fluctuate widely in response to various factors, many of which are beyond our control, including the following:

	●	future announcements about us, our collaborators or competitors, including the results of testing, technological innovations, or new products and services;
	●	clinical trial results;
	●	depletion of cash reserves;
	●	additions or departures of key personnel;
	●	operating results that fall below expectations;
	●	announcements by us relating to any strategic relationship;
	●	sales of equity securities or issuance of additional debt;
	●	industry developments;
	●	changes in state, provincial or federal regulations affecting us and our industry;
	●	the continued large declines in major stock market indexes which causes investors to sell our common shares;
	●	economic, political and other external factors; and
	●	period-to-period fluctuations in our financial results.

Furthermore, the stock market in general and the market for biotechnology companies, in particular, have from time to time experienced extreme price and volume fluctuations that are unrelated or disproportionate to the operating performance of the affected companies. On March 12, 2020, the World Health Organization declared COVID-19 to be a pandemic, and the COVID-19 pandemic has resulted in significant financial market volatility and uncertainty in recent weeks. A continuation or worsening of the levels of market disruption and volatility seen in the recent past could have an adverse effect on our ability to access capital, on our business, results of operations and financial condition, and on the market price of our common shares.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

a) Sales of Unregistered Securities

There have been no unregistered sales of securities during the period covered by this Form 10-Q that have not been previously reported in a current report on Form 8-K. The Company has not made any purchases of its own securities during the time period covered by this Form 10-Q.

c) Issuer Purchases of Equity Securities

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosure

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

See the Exhibit Index following the signature page to this Form 10-Q for a list of exhibits filed or furnished with this Form 10-Q, which Exhibit Index is incorporated herein by reference.

EXHIBIT INDEX

Exhibit No.		Description

10.1*#		Collaborative Research Agreement between National Research Council of Canada and Variation Biotechnologies Inc effective March 30, 2020

10.2*		Seventh Amendment to lease agreement among American Twine Owner LLC and Variation Biotechnologies (US), Inc.

10.3*		Sixth Amendment to lease agreement among American Twine Limited Partnership and Variation Biotechnologies (US) Inc.

10.4*		Fifth Amendment to lease agreement among American Twine Limited Partnership and Variation Biotechnologies (US) Inc.

10.5+		Amendment to Consulting Agreement with F. Diaz-Mitoma Professional Corporation, effective January 1, 2020 (incorporated by reference to Exhibit 10.42 to the annual report on Form 10-K (SEC File No. 001-37769), filed with the SEC on March 5, 2020).
10.6		Waiver Agreement, dated February 25, 2020, by and among Variation Biotechnologies (US), Inc., the Guarantors party thereto, and Perceptive Credit Holdings, LP (incorporated by reference to Exhibit 10.43 to the annual report on Form 10-K (SEC File No. 001-37769), filed with the SEC on March 5, 2020).

10.7		Form of Warrant Agreement issued to National Securities Corporation or its designees (incorporated by reference to Exhibit 4.1 to the annual report on Form 8-K (SEC File No. 001-37769), filed with the SEC on April 27, 2020).

31.1*		Certificate of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934.

31.2*		Certification of Principal Financial and Accounting Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934.

32.1**		Certification of Chief Executive Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350.

32.2**		Certification of Principal Financial and Accounting Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350.

101.INS*		XBRL Instance Document.

101.SCH*		XBRL Taxonomy Extension Schema Document.

101.CAL*		XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF*		XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB*		XBRL Taxonomy Extension Labels Linkbase Document.

101.PRE*		XBRL Taxonomy Extension Presentation Linkbase Document.

* Filed herewith.

** Furnished herewith.

+ Indicates a management contract or compensatory plan.

# Certain portions of this exhibit have been redacted pursuant to Item 601(b)(10)(iv) of Regulation S-K. The omitted information is (i) not material and (ii) would likely cause competitive harm to the Company if publicly disclosed. The Company agrees to furnish supplementally an unredacted copy of the exhibit to the SEC upon its request.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: May 6, 2020	VBI VACCINES INC.

	By:	/s/ Jeffrey Baxter
		Jeffrey Baxter President & Chief Executive Officer (Principal Executive Officer)

	By:	/s/ Christopher McNulty
		Christopher McNulty
		Chief Financial Officer and Head of Business Development
		(Principal Financial and Accounting Officer)

Exhibit 10.1

PLEASE NOTE: CERTAIN INFORMATION INDICATED WITH [***] IN THIS DOCUMENT HAS BEEN OMITTED FROM THIS EXHIBIT BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED.

Business Confidential – Protected B

Non-Exclusive Licence Included ☑
Exclusive Licence Included ☑

BETWEEN:	NATIONAL RESEARCH COUNCIL OF CANADA
	a departmental corporation of the Government of Canada whose head office address is:
	1200 Montreal Road
	Ottawa, Ontario K1A 0R6	(called the “NRC”)

AND:	VARIATION BIOTECHNOLOGIES INC.

	A company incorporated under the Canada Business Corporations Act under number 393728-3 whose Registered Office Address is located in:
	310 Hunt Club Road East, 2^nd Floor
	Ottawa, Ontario K1V 1C1	(called the “Collaborator” or “VBI”)

		(Collectively known as the “Parties”)

In consideration of the mutual covenants hereunder, the Parties agree as follows:

1.	This Agreement concerns scientific research and development, called the “Project”, described as: COVID-19 vaccine evaluation.

2.	The Collaborator chooses to work with the NRC because of the NRC’s unique capabilities, and does not expect the NRC to perform work that would be in competition with Canadian firms. Except as otherwise specified in this Agreement, the name of the NRC, or any reference to the NRC, shall not be used in promotional activities of the Collaborator without the NRC’s prior written consent.

3.	The Parties will contribute to the Project by the performance of work as described in the attached “Statement of Work and Deliverables”, or by payments, or both. This Agreement is subject to the terms in the attached “General Conditions”.

4.	The total value of the Project is estimated to be minimum of $[*] (no option) to a maximum of $[*] (with option).

5.	The Collaborator is a Canadian Small and Medium Enterprise (SME), and benefits from a Fee Reduction of minimum of $[*] (no option) to a maximum of $[*] (with option). The Customer hereby warrants that, at the time of signing this Agreement, it is a SME with 500 or fewer full-time equivalent employees, or it is a Canadian educational institution.

6.	The Collaborator shall pay to the NRC in cash the sum of minimum of $[*] (no option) to a maximum of $[*] (with option) according to the attached “Schedule of Payments”. The Collaborator shall also pay applicable sales taxes.

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7.	The Collaborator has initiated work to design monovalent & multivalent coronavirus constructs, at its own costs, using their eVLP platform and will include, in its constructs, up to 4 protein antigens provided by NRC.

8.	The NRC shall make a co-investment to the Project by performing, at its own cost, work described in the Statement of Work and Deliverables at an estimated value of $[***].

9.	This Agreement shall become effective when the last Party has signed and expires on 15 November 2020, except for the following terms and conditions which shall survive the termination or expiration of this Agreement:

	(a)	payment obligations which accrued while this Agreement was in force, or upon its termination, and the interest provisions of this Agreement; and

	(b)	the terms and conditions with respect to Intellectual Property which are found in the attached Annex IU entitled “Intellectual Property” that forms part of this Agreement; and

	(c)	terms and conditions with respect to exclusion of certain liability, limited warranties, and dispute resolution, all of which are found in the attached General Conditions that form part of this Agreement.

10.	This Agreement shall be interpreted according to the laws of the Province of Ontario and the laws of Canada in force there. Subject to section GC-15, for any litigation concerning this Agreement, including litigation arising from arbitration, the Parties hereby irrevocably and unconditionally attorn to the exclusive jurisdiction of the Courts of the Province of Ontario, and all courts competent to hear appeals therefrom. The Parties expressly exclude any conflict of laws rules or principles that might refer disputes under this Agreement to the laws of another jurisdiction.

11.	This Agreement may be executed in one or more counterparts and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one valid and binding Agreement. A portable document format (PDF) copy of an executed counterpart signature page will be as valid as an originally executed counterpart for purposes of signing this Agreement.

SIGNED by the Collaborator

		VARIATION BIOTECHNOLOGIES INC.

Date:	March 30, 2020	Per:	/s/ Jeff Baxter
			Jeff Baxter
			CEO

SIGNED by the NRC at Ottawa, Ontario

		NATIONAL RESEARCH COUNCIL OF CANADA

Date:	March 30, 2020	Per:	/s/ Lakshmi Krishnan
			Lakshmi Krishnan, Ph.D.
			Human Health Therapeutics

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ANNEX SP – SCHEDULE OF PAYMENTS TO THE NRC

Billing address: See page 1

Billing contact:

Name:	Andrea McCrae
Title:	Project Manager
Telephone:	613 749 4200
Email:	amccrae@vbivaccines.com

SP-1

The Collaborator shall be invoiced as follows:

Schedule of Payments:

Work Task

Proposed Schedule of Payments

Task Value

NRC Co-investment

CAN SME Fee Reduction

NRC Pricing*

Final Price
Amount Due*

Task 1: Assay development

[***]

Task 2: Immunogenicity in vivo

Invoiced upon completion of task

[***]

Task 3: PRNT assay

Invoiced upon completion of task

[***]

Task 4: Reporter assay

Invoiced upon completion of task

[***]

Total Minimum (without options)*

[***]

Total Maximum (with options)*

[***]

* Plus applicable taxes

SP-2	All amounts shall be due 30 days from the date of the invoice.

SP-3	Payments must be made to: “Receiver General - National Research Council of Canada” and addressed to:

Accounts Receivable

National Research Council of Canada

1200 Montreal Road

Ottawa, Ontario, K1A 0R6

CANADA

SP-4	Payments can be made by cheque; MasterCard, Visa or American Express; or by wire transfer. Wire transfer information is available upon request. The Collaborator is responsible for all bank charges associated with wire transfers. Any inquiries may be directed to: AccountsReceivable@nrc-cnrc.gc.ca.

SP-5	The Collaborator shall provide any Invoicing Reference Number at the time of Agreement signature or promptly thereafter. The NRC will not delay or cancel invoicing nor defer accrual of interest due to the Collaborator’s failure to provide an Invoicing Reference Number.

SP-6	The NRC may suspend its performance of any obligations under this Agreement so long as any payment is overdue for any reason.

SP-7	If this Agreement is amended to increase the scope of the Project, the NRC reserves the right to calculate costing for its additional Project activities at its rates that are in effect at that time. Any such cost increases shall be approved, in writing, by both Parties.

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SP-8	If a Party expects that the value of its estimated contribution will be exceeded by more than 10%, it shall promptly notify the other Party. The Parties shall then negotiate a further agreement on costs or payments, and either Party may suspend the performance of any obligations, other than confidentiality, intellectual property and accrued obligations to pay, until a further agreement is reached. If the Parties fail to agree on an amendment within 60 days of the notice, then this Agreement shall terminate on the 60^thday after the notice, unless the Parties agree otherwise in writing.

SP-9	If a surplus of prepayment remains as a result of premature termination, it will be refunded.

SP-10	If an instrument tendered in payment or settlement of an amount due to the NRC is dishonoured for any reason, the NRC will invoice an additional administrative charge of CAD 25 and this amount will be due as invoiced.

SP-11	Interest is payable on all overdue amounts. Interest is calculated and compounded monthly at the average bank rate plus 3% and accrues during the period beginning on the due date and ending on the day before the day on which payment is received by the NRC. For purposes of this paragraph “bank rate” means the rate of interest established periodically by the Bank of Canada as the minimum rate at which the Bank of Canada makes short term advances to members of the Canadian Payments Association, and “average bank rate” means the weighted arithmetic average of the bank rates that are established during the month before the month in respect of which interest is being calculated.

	(Rate information may be found at http://www.tpsgc-pwgsc.gc.ca/recgen/txt/tipp-ppir-eng.html. This site provides information on the rate used by departments of the Government of Canada to calculate the interest on overdue accounts payable and is the same rate used by the NRC to charge interest on overdue accounts receivable under the Interest and Administrative Charges Regulations, SOR/96-188. This web site address, and the information set out there, is provided here for convenience. In case of rate discrepancy, the rates quoted by the Bank of Canada shall prevail.)

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ANNEX GC: GENERAL CONDITIONS

GC-1	INTERPRETATION OF AGREEMENT: This Agreement supersedes all prior communications, negotiations and agreements concerning the Project. Notwithstanding any language in a purchase order that is sent to the NRC by the Collaborator in respect of the Project, the purchase order is for administrative purposes only of the Collaborator and does not constitute an offer, a counter-offer, or an amendment to this Agreement nor does it create a new agreement in respect of the Project. The NRC shall include on the face of its invoice for the Project any purchase order number issued by the Collaborator for the Project. No amendment or waiver of terms in this Agreement, including the annexes thereto, is effective unless it is in writing, signed by all Parties, except that the Parties agree that the Agreement may be extended by an exchange of email from their authorized representatives. In case of inconsistency between the STATEMENT OF WORK AND DELIVERABLES and the rest of this Agreement, the rest of this Agreement prevails. No forbearance by a Party implies any broader, continuing, or future forbearance. If a court finds part of this Agreement invalid, the remainder is valid in accordance with its most reasonable interpretation. This Agreement does not create a relationship of agency, employment, partnership, or joint venture.

GC-2	ASSIGNMENT: This Agreement, and any licence granted pursuant to it, is personal to the Parties, so that neither its assignment, nor its assumption by a corporation formed by amalgamation of a Party with a third party, is valid except by written consent of all Parties, which consent shall not be unreasonably withheld.

GC-3	EXCLUSION OF CERTAIN LIABILITY: No Party shall be liable for failure or delay in performance caused by circumstances beyond its reasonable control, or for incorrectness or inaccuracy of data supplied, advice given, or opinions expressed unless directly attributable to gross negligence or willful misconduct. No claim may be made for indirect, consequential, or incidental damages. No claim shall exceed the cost of the Project.

GC-4	LIMITED WARRANTIES: Each Party warrants that it will conduct the Project work in a professional manner conforming to generally accepted practices for scientific research and development. However, because of the nature of such work, no specific result is promised.

	(a)	No Party warrants that technical information conveyed in the deliverables does not infringe the rights of third parties under a present or future patent.

	(b)	No Party warrants the validity of patents under which rights may be granted pursuant to this Agreement, or makes any representation as to the scope of patents or that those inventions may be exploited without infringing the rights of others.

GC-5	TERMINATION OF AGREEMENT FOR COST OVERRUNS: If following notification by one Party that costs expressed as estimates will be exceeded by more than 10%, if the Parties do not amend this Agreement to modify the total cost of the Project or the Statement of Work and Deliverables or both within sixty (60) days, then upon the expiration of that period this Agreement shall be terminated and upon such termination:

	(a)	the Collaborator shall pay to the NRC any costs pre-dating the effective date of the termination that were intended to be reimbursable to the NRC under this Agreement;

	(a)	any licence or option granted under this Agreement to any Party is also terminated;

	(b)	confidentiality obligations of each Party regarding the information that is part of its Arising IP are terminated except with respect to the Jointly Created Arising IP, both Parties continuing to be bound by all other confidentiality obligations under this Agreement.

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GC-6	TERMINATION OF AGREEMENT: This Agreement may be terminated as follows:

	(a)	by either Party if the other Party defaults in performance of any obligation under this Agreement and fails to cure the default within thirty (30) days after receipt of written notice of default, and termination will take effect at the expiration of the cure period;

	(b)	by the NRC forthwith if the Collaborator becomes bankrupt or has a receiver appointed to continue its operations, or passes a resolution for winding up;

	(c)	by the NRC forthwith if the Collaborator has made a false or misleading representation or warranty;

	(d)	upon termination:

		(i)	the Collaborator shall pay to the NRC any costs pre-dating the effective date of the termination that were intended to be reimbursable to the NRC under this Agreement;

		(ii)	the Collaborator shall also pay to the NRC any incurred costs by the NRC that result directly from the cancellation of obligations and from uncancellable obligations;

		(iii)	any licence or option granted under this Agreement is terminated;

		(iv)	confidentiality obligations of each Party regarding the information that is part of its Arising IP are terminated, both Parties continuing to be bound by all other confidentiality obligations under this Agreement.

GC-7	NOTICES: Any notice related to this Agreement, including a notice of change of address, must be sent to the addresses stated at the beginning of this Agreement, either by registered mail, which is deemed to be effective notice five days after mailing, or by courier or email, which are effective notices only when acknowledged by a courier’s delivery receipt or by a specific non-automatic return transmission.

GC-8	CONDITIONS: The Collaborator agrees that if there is any research work in the Project involving human subjects, human tissues, laboratory animals, or animal tissues, it shall not proceed without prior approval of the NRC’s Human Subjects Research Ethics Committee or Animal Care Committee and shall not be conducted in contravention of the respective Committee’s conditions of approval.

GC-9	NO BRIBES: The Collaborator represents and warrants to the NRC that no bribe, gift, reward, benefit or other inducement has been or will be paid, given, promised or offered directly or indirectly to any federal government official or employee or to a member of the family of such person, with a view to influencing the entry into this Agreement or the administration of this Agreement.

GC-10	NO DIRECT BENEFIT: The Collaborator represents and warrants to the NRC that the following individuals shall not derive a direct benefit from this Agreement:

	(a)	a current or former public office holder who is not in compliance with the Conflict of Interest Act, 2006, c.9, s.2;

	(b)	a current or former member of the House of Commons who is not in compliance with the Conflict of Interest Code for Members of the House of Commons;

	(c)	a current or former public servant who is not in compliance with the Values and Ethics Code for the Public Sector; or

	(d)	a current or former the NRC employee who is not in compliance with the NRC’s Conflict of Interest Policy.

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GC-11	NO MISREPRESENTATION: The Collaborator represents and warrants to the NRC that it, including its Directors, officers, employees or agents, has made no material misrepresentation, whether by omission or commission, with a view to the obtaining of this Agreement.

GC-12	NO CONTINGENCY FEE: The Collaborator represents and warrants to the NRC that it has not directly or indirectly paid or agreed to pay and that it will not directly or indirectly pay a contingency fee for the solicitation, negotiation or obtaining of this Agreement to any person, other than an employee acting in the normal course of the employee’s duties. In this section, “contingency fee” means any payment or other compensation that depends or is calculated based on the degree of success in soliciting, negotiating or obtaining this Agreement and “person” includes any individual who is required to file a return with the registrar pursuant to the Lobbying Act, R.S.C.,1985,c. 44 (4^th Supplement) as amended.

GC-13	VISITS: Subject to reasonable notice of the number and names and status of personnel, including employees, students and other persons working on behalf of the other Party and other requirements under this Agreement, a Party may, in its discretion, permit visits to its premises by one or more of the other Party’s personnel, if relevant to the Project and not likely to interfere with regular operations.

GC-14	PERSONNEL: The Collaborator shall be liable for the actions of its personnel, including its employees, contractors, agents or students and shall ensure that while working on the NRC premises, they are required to comply with the following requirements:

	(a)	regulations, policies and directives that the NRC may adopt from time to time to address access to the NRC facilities and activities thereon, and without limiting the generality of the foregoing, regulations, policies and directives addressing:

		(i)	protection of confidential information;

		(ii)	information management and information technology (IM/IT);

		(iii)	harassment and code of conduct in the NRC facilities;

		(iv)	protection of safety and health of the NRC employees, the Collaborator’s personnel and others; and

		(v)	security and emergency procedures;

	(b)	any and all security policies that the Government of Canada may promulgate from time to time including:

		(i)	any and all security conditions and requirements the NRC may request from time to time including, without limitation, undergoing a security screening, which may include a fingerprint check and if, following a security screening, an employee of the Collaborator is unable to obtain or maintain a level of security clearance that, in the sole opinion of the NRC, is adequate, such employee of the Collaborator will be denied access to the NRC facilities and IT Resources;

		(ii)	the requirement to display an identification badge as a condition of access to the NRC facilities with or without restrictions on hours of access;

		(iii)	restrictions on access to the NRC’s IT Resources; the “NRC’s IT Resources” include, but are not limited to, all computers, telecommunications systems, workstations, PCs, laptops, storage, software, peripheral devices, servers, network equipment, transmission equipment, Remote Access Systems, and internal and external communications systems—such as the Internet, e-mail and Intranet—e-mail accounts, messages and associated files created, sent received, or stored on the NRC IT resources; and

		(iv)	the requirement to follow security procedures at all times and not to do anything that may compromise the integrity of the NRC facilities or the NRC IT Resources, with the NRC reserving the right to modify or terminate the access privileges of the Collaborator’s personnel at any time;

	(c)	all confidentiality obligations under this Agreement.

The NRC shall provide the Collaborator with access to all relevant legislation, regulations, policies and procedures as well as notice of any changes, and shall provide security, health and safety training to the Collaborator’s personnel as soon as possible following permitted access to the NRC facilities.

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GC-15	DISPUTE RESOLUTION: Disputes concerning this Agreement shall not be litigated. All disputes arising in connection with this Agreement which cannot be resolved through negotiations to the mutual satisfaction of both Parties within thirty (30) days, or such longer period as may be mutually agreed upon, may be submitted by either Party to arbitration in accordance with the Commercial Arbitration Act of Canada, R.S.C., 1985, c. 17 (2nd Supp.), as amended, and shall be subject to the following:

	(a)	The Party requesting such arbitration shall do so by written notice to the other Party.

	(b)	The arbitration shall take place in Ottawa, Ontario before a single arbitrator to be chosen jointly by the Parties. Failing agreement of the Parties on a single arbitrator within thirty (30) days of such notice requesting arbitration, either party may apply to a judge of a court having jurisdiction in Ottawa, Ontario for the appointment of a single arbitrator.

	(c)	Each Party shall pay its own costs and an equal share of all of the costs of the arbitration and the fees of the arbitrator, except for the exceptional circumstance in which an arbitral award may require the payment of all costs by a Party who has brought a plainly frivolous dispute.

	(d)	The arbitrator shall issue a written decision as soon as practicable after the conclusion of the final hearing, but in any event no later than sixty (60) days thereafter, unless that time period is extended for a fixed period by the Arbitrator on written notice to each Party because of illness or other cause beyond the Arbitrator’s control. The decision shall be rendered in such form that judgment may be entered thereon in any court having jurisdiction.

	(e)	The decision shall be final and binding on the Parties in accordance with the Commercial Arbitration Act of Canada.

Neither Party may request arbitration in respect of a breach of this Agreement after the fourth anniversary of the day on which the requesting Party first discovered that breach, unless the other Party has agreed in writing to extend the period.

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ANNEX IU: INTELLECTUAL PROPERTY (Uncertain)

IU-1	NATURE OF THE PROJECT: By the nature of the Project, Arising Intellectual Property that may arise is difficult to predict, and the Parties consider it desirable to defer settling the terms on which it will be available until the Arising Intellectual Property is known.

IU-2	DEFINITIONS:

	2.1	“Arising Intellectual Property” or “Arising IP” is Intellectual Property that is developed in the Project and that is disclosed in the Deliverables. The possessive adjective “the NRC’s” or “other Party’s” or “VBI’s” indicates ownership or control by that Party.

	(a)	“Jointly Created Arising IP” is Intellectual Property created by employees of both Parties while carrying out the Project that is not NRC Arising IP or VBI Arising IP and shall include any Arising IP that relates to the combination of NRC-designed protein antigens and virus like particles produced by VBI.

	(b)	“NRC Arising IP” is any Arising Intellectual Property relating specifically to assays developed solely by NRC as described in Task 1 of the Workplan, or relating specifically to protein antigens designed solely by NRC but it does not include Intellectual Property owned or controlled by VBI prior to the date of this Agreement, VBI Arising IP or the Jointly Created IP.

	(c)	“VBI Arising IP” is any Arising Intellectual Property relating specifically to antigens designed solely by VBI, and to eVLPs and vaccines solely developed by VBI, which incorporate only those antigens solely developed by VBI, for use in the Project and any improvements to the Intellectual Property owned or controlled by VBI prior to date of this Agreement made during the course of carrying out the Project but it does not include Intellectual Property owned or controlled by NRC prior to the date of this Agreement, the NRC Arising IP or the Jointly Created IP.

	2.2	“Commercially Exploit” is to use, reproduce and modify Arising IP, and to manufacture, use, import, and sell articles embodying or made by use of any Deliverables and to provide services by the use of any Deliverables.

	2.3	“Confidential Non-Project Information” means any confidential or proprietary information, either of a business or technical nature, other than Arising Intellectual Property, disclosed by one Party to the other Party pursuant to this Agreement.

	2.4	“Deliverables” are the tangible results of the Project, such as reports, physical models, samples, data records, drawings, and machine-readable software that are specifically mentioned in the Statement of Work and Deliverables as being deliverable.

	2.5	“Intellectual Property” or “IP” is all rights in inventions (whether patentable or not), patents, copyright material, trade secrets, confidential information and bacterial, viral, plant, human, or animal material that has new genetic or other characteristics first produced by a Party..

IU-3	ARISING INTELLECTUAL PROPERTY: The Parties represent that, by law or contract, they will own any Arising IP created by their employees. A Party who is the sole owner of Arising IP is responsible for patenting and licensing its Arising IP, but is not obliged by this Agreement to patent its Arising IP. VBI has the right to seek patent protection for the Jointly Created Arising IP at its own expense. However, if VBI is unwilling to patent the Jointly Created Arising IP, NRC may do so at its own expense. Notwithstanding the foregoing, ownership of Arising IP shall be determined as follows:

	(a)	Any NRC Arising IP shall be owned by NRC, and shall be subject to the license terms described in IU-5 (a).

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	(b)	Any VBI Arising IP shall be owned by VBI, and no license shall be granted under this Agreement except as is required to permit NRC to complete the Workplan.

	(c)	Any Jointly Created Arising IP shall be owned jointly by NRC and VBI, and shall be subject to the license terms described in IU-5 (b).

	(d)	If the Parties cannot come to an unanimous agreement on each Party’s contribution regarding inventorship of the Jointly Created Arising IP, the Parties shall both agree to refer the matter in good faith to an inventorship analysis by an independent unbiased third party (“Un-Biased Expert”) to provide a non-binding expert opinion to assess each researcher’s contribution to the invention and determine which researchers should be named as inventors on any patent applications for the Jointly Created Arising IP.

IU-4	SHARING INFORMATION: The Parties shall keep each other promptly informed of Arising IP. Each Party shall give the other, for information only, a copy of any patent application for Jointly Created Arising IP immediately upon filing the application, and a copy of related correspondence with a patent office if requested, and the information contained in such documents and correspondence will be maintained in confidence until they become publicly available through no breach of this Agreement.

IU-5	LICENCE OF THE ARISING IP: Upon request by VBI no later than six (6) months after the end of the Project, the NRC undertakes to negotiate with VBI in good faith to settle the terms of a licence which will allow VBI to Commercially Exploit the NRC Arising IP and Jointly Created Arising IP on the following terms:

	(a)	NRC Arising IP: NRC hereby grants VBI a non-exclusive option for a license to Commercially Exploit the NRC Arising IP, such license to include standard commercial terms to be negotiated between the Parties.

	(b)	Jointly Created Arising IP: NRC hereby grants VBI an exclusive option for an exclusive license to Commercially Exploit the Jointly Created Arising IP, such license to include standard commercial terms to be negotiated between the Parties

	(c)	In the event that VBI exercises its option pursuant to subsection (a) or (b), the Parties shall negotiate the terms of a license agreement in good faith for a period of three months, which period may be extended upon mutual agreement of the Parties. If the Parties are unable to reach an agreement on the terms of the non-exclusive license referred to in subsection (a) within the aforementioned period, the option shall expire and NRC shall have no further obligations with respect thereto. If the Parties are unable to reach an agreement on the terms of the exclusive license referred to in subsection (b), neither Party shall be permitted to Commercially Exploit or licence its share of the Jointly Created Arising IP without the permission of the other Party. Notwithstanding the foregoing, each Party shall grant to the other Party a royalty-free, exclusive license to use its share of the Jointly Created Arising IP solely for internal research purposes and as required to perform the Project and any amendments or additions thereto which are agreed upon between the Parties in writing.

In addition, subject to the confidentiality provisions herein the NRC hereby licenses the other Party under Crown copyright, free and without time limit, to use and reproduce all documents and drawings that are deliverable under this Agreement.

IU-6	INTENTIONALLY OMITTED :

IU-7	NON-PROJECT TECHNOLOGY: If, in order to perform work in the course of the Project, a Party needs another Party’s IP that is not part of the Arising IP, a licence for that limited purpose is granted by this Agreement and terminates at the end of the Project. Any other licence must be negotiated and agreed to in writing.

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IU-8	CONFIDENTIAL NON-PROJECT INFORMATION RESTRICTIONS: Unless otherwise stipulated in a separate agreement, the following provisions apply to Confidential Non-Project Information that is in electronic, written, graphic or other tangible form, including a physical object, that is clearly marked “Proprietary” or “Confidential” or with an equivalent legend, or that is oral information provided that at the time of disclosure the disclosing Party clearly identifies the confidential nature of such information and confirms such confidential nature by transmitting the information, in a written version that is marked as above, to the receiving Party within 20 days of disclosure. The receiving Party agrees not to disclose any Confidential Non-Project Information, including to any director, officer or employee of the receiving Party unless that individual needs the information to perform work in the course of the Project and is legally bound to keep confidences. In protecting Confidential Non-Project Information, the receiving Party must use at least the same degree of care as it uses to protect its own information of a similar nature, but not less than a reasonable degree of care. Unless specifically licensed, Confidential Non-Project Information may only be used by the receiving Party to perform work in the course of the Project. These obligations of confidentiality and protection will initially apply to Confidential Non-Project Information in the form of oral information but will cease to apply if the information is not provided in a written version within 20 days of disclosure. Notwithstanding the foregoing, the receiving Party may disclose the particulars of this Agreement to others of its officers and employees for internal administrative and business purposes, to the extent that such disclosure does not result in a public release of such information.

IU-9	END OF CONFIDENTIAL NON-PROJECT INFORMATION RESTRICTIONS: Unless otherwise stipulated in a separate agreement, all obligations of confidentiality and restrictions on the use of Confidential Non-Project Information in this Agreement cease to apply five (5) years after the expiration of this Agreement and such obligations and restrictions do not apply to information that can be proved to be:

	9.1	independently developed by the receiving Party without reference to or use of the confidential information of the other Party;

	9.2	received from a third party without breach of any obligation of confidentiality;

	9.3	in the public domain at the time of its disclosure or that later enters the public domain without breach of this Agreement; or

	9.4	required to be disclosed by law, including, in the case of the NRC, the Access to Information Act, provided that the receiving Party first provides the other Party with notice of such requirements and of its intent to disclose the information.

IU-10	CONFIDENTIALITY AND USE OF ARISING IP: All Deliverables and Arising IP will be maintained in confidence and protected by both Parties with at least the same degree of care as they use to protect their own confidential information, but not less than a reasonable degree of care. Arising IP shall not be disclosed except:

	10.1	as required for a patent application or, where permitted by this Agreement, for a licence to a third party including disclosure to prospective licensees;

	10.2	if the Arising IP has entered the public domain without breach of this Agreement;

	10.3	as required to be disclosed by law, including, in the case of the NRC, the Access Information Act, provided that the receiving Party first provides the other Party with notice of such requirements and of its intent to disclose information;

	10.4	NRC may disclose the NRC Arising IP and VBI may disclose the VBI Arising IP to the extent that such disclosure does not lead to disclosure of the Jointly Created Arising IP; or

	10.5	As is permitted by Section IU-12 or as otherwise agreed to by the Parties.

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IU-11	PUBLICITY: No Party will publicly suggest that the other Party endorses or recommends any product or process or results of the Project.

IU-12	PUBLICATION: The Parties may jointly publish, or jointly agree in writing to allow one Party to publish, Confidential Information arising from the Project. If a Party requests in writing permission to publish and the other Party does not respond within thirty (30) days, permission is assumed. Such publications must fairly assign credit to the individual researchers involved. Any publication can be delayed by a period reasonable to allow the Parties to file for intellectual property protection. If a license is granted by NRC to VBI for the Jointly Created IP, VBI shall be expressly permitted to publish information regarding the Jointly Created IP without further permission.

IU-13	PRESS RELEASE: The Parties hereby acknowledge that VBI is a publicly traded entity and subject to Securities and Exchange Commission regulation on disclosure within five (5) days of execution without disclosing any confidential information protected under this Agreement. VBI will draft a press release for the NRC’s contributions, review and approval within a timely manner, which approval will not be unreasonably withheld and will be assumed if no response if received within four (4) business days of receipt.

IU-14	NO IMPLIED WARRANTIES: The NRC’s Arising IP is supplied and licensed on a “as is” basis, and there are no representations, warranties or conditions, express or implied by statute, including without limitation any with respect to:

	14.1	market readiness, merchantability, or fitness for any use or purpose;

	14.2	operational state, character, quality, or freedom from defects;

	14.3	validity of patents;

	14.4	non-infringement of rights of third parties under present or future patents.

IU-15	NO CONTESTATION OF VALIDITY: The Parties acknowledge the validity of the patents and copyright, if any licensed hereunder and agrees not to contest such validity, either directly or indirectly by assisting other parties.

IU-16	INDEMNITY: The NRC rejects all liability and responsibility relating to the consequences of using the NRC’s Arising IP. The other Party shall indemnify and save harmless the NRC, its employees and agents from and against, and be responsible for:

	16.1	all claims, demands, losses, damages, costs including solicitor and client costs, actions, suits or proceedings brought by any third party, that are in any manner based upon, arising out of, related to, occasioned by, or attributable to:

		(a)	the use by the other Party of the NRC’s Arising IP including without limitation, the manufacturing, distribution, shipment, offering for sale, sale, or use of products and services derived from the NRC’s Arising IP; and

		(b)	product liability and infringement of Intellectual Property rights other than copyright, if any, licensed hereunder;

	16.2	other costs, including extra-judicial costs, of the NRC defending such any action or proceeding, which the NRC shall have the right to defend with counsel of its choice.

This clause shall survive expiration or termination of this Agreement.

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STATEMENT OF WORK AND DELIVERABLES

Multivalent Coronavirus vaccine development

VBI and the NRC are proposing a collaborative effort to develop a multivalent Coronavirus vaccine (with the goal to cross-protect against known strains of SARS-2, SARS & MERS) which would have utility against current known and potential new strains of Coronavirus.

VBI has initiated work to design monovalent & multivalent coronavirus constructs using their eVLP platform and will include 3-4 protein antigens provided by NRC.

Phase 1 Objective: To establish the potency of VBI monovalent and multivalent Coronavirus eVLP vaccine preparations

Task 1: Assay Development – NRC ($[***] co-investment)

SARS-CoV-2 requires novel assays to evaluate immunogenicity. NRC is developing [***]. Depending on the time to development, [***]will be used to evaluate the immunogenicity of the vaccine candidates. The [***]assays to be developed are a PRNT assay [***] (using pseudovirus).

Task 2: Preclinical Potency Testing (per construct) – Price: $[***] (Task value: $[***])

Group assignments (n=[***]**):

	1)	[***]
	2)	[**]vaccine
	3)	[**]vaccine
	4)	[**]vaccine
	5)	[**] vaccine

*dose and [***]vs [***]to be determined by VBI

**choice of [***]to be discussed with VBI

Mice will be [***]. Blood will be sampled [***]after each immunization to conduct immunogenicity assays ([***] at VBI and [***]at NRC). [***]will only be done on serum samples [***].

Future Anticipated Work: It is anticipated that additional animal studies can be added as separate experiments as required. VBI anticipates developing [***] but these will be tested at a later date. VBI also remains open to testing [***]designs as [***]are available for coding in eVLP.

Task 3: PRNT Assay (per iteration of Task 1) – Price $[***] (Task value: $[***])

Task 4: Reporter assay using pseudovirus (per iteration of Task 1) – Price $[***] (Task value: $[***])

Total Estimated Budget (first iteration of Tasks 2-4): $[***]

Budget Summary: VBI Multivalent eVLP vaccine candidate against coronaviruses
Work Task	Task Value	NRC Co-investment	CAN SME Fee Reduction	NRC Task Price*
Task 1: Assay development	[***]	[***]
Task 2: Immunogenicity in vivo	[***]		[***]	[***]
Task 3: PRNT assay	[***]		[***]	[***]
Task 4: Reporter assay	[***]		[***]	[***]
Total Minimum (without options)*	[***]	[***]	[***]	[***]
Total Maximum (with options)*	[***]	[***]	[***]	[***]
* Plus applicable taxes

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OPTION: VBI may wish to exercise the option to execute another iteration of Tasks 1-3. This option is [***] in total ($[***]).

Assumptions:

	1)	Availability of sufficient material from VBI and suppliers to conduct experiments.
	2)	Resource availability
	3)	Relevant PRNT and reporter assays are established in-house.

Deliverables

	●	Experimental protocols and results, including raw data in Microsoft Office file format.
	●	A summary report for each study.

Contacts:

For the NRC:

Paul Payette, Ph.D., MBA, Client Relationship Leader

Email: [***]

Anh Tran, Ph.D., Assistant Research Officer - HHT

Email: [***]

Rhonda Kuo Lee, Project Manager, HHT

Email: [***]

For the Collaborator:

Adam Buckley, VP – Business Development

Email: [***]

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Exhibit 10.2

SEVENTH AMENDMENT TO LEASE

This SEVENTH AMENDMENT TO LEASE (this “Amendment”), is made as of the 30^th day of April, 2020 (“Effective Date”) by and between AMERICAN TWINE OWNER LLC, a Delaware limited liability company (“Landlord”) and VARIATION BIOTECHNOLOGIES (US), INC., a Delaware corporation (“Tenant”).

WITNESSETH:

Reference is hereby made to the following facts:

A. Landlord (as successor-in-interest to American Twine Limited Partnership) and Tenant are parties to that certain lease agreement dated May 31, 2012, as amended by a First Amendment to Lease dated as of June 28, 2013, a Second Amendment to Lease dated as of October 2, 2013, a Third Amendment to Lease dated as of January, 2014, a Fourth Amendment to Lease dated as of August 7, 2014 (“Fourth Amendment”), a Fifth Amendment to Lease dated as of May 9, 2017 (“Fifth Amendment”), and a Sixth Amendment to Lease dated as of March 23, 2018 (“Sixth Amendment”) (collectively, the “Existing Lease”) for premises consisting, in the aggregate, of 3,475 rentable square feet, comprised of 1,116 rentable square feet, known as Suite 2240 and 2,359 rentable square feet, known as Suite 2241 (“Suite 2241”), located on the second (2nd) floor (collectively the “Premises”) of that certain building having an address of 222 Third Street, Cambridge, Massachusetts (as more particularly described in the Lease, the “Building”). All capitalized words and phrases not otherwise defined herein shall have the meanings ascribed to them in the Existing Lease. The Existing Lease, as modified and amended by this Amendment, is referred to herein as the “Lease”.

B. The Term of the Lease is scheduled to expire on April 30, 2020.

C. Landlord and Tenant have agreed to extend the Term of the Lease and modify and amend the Existing Lease, all in the manner hereinafter set forth.

NOW THEREFORE, in consideration of Ten Dollars ($10.00) and other good and valuable consideration, the receipt, sufficiency and delivery of which are hereby acknowledged, the parties agree that the Existing Lease is hereby amended as follows:

1. Extension of Term of Lease. The Term of the Lease is hereby extended to expire on April 30, 2023 (“Expiration Date”). The period of time commencing as of May 1, 2020 (“Extension Term Commencement Date”) and continuing through the Expiration Date is referred to in this Amendment as the “Extension Term.” Without limitation, all references in the Lease to the “Term” shall be deemed to include the Extension Term in all respects. Tenant has no further rights or options to extend the Term of the Lease. The demise and use of the Premises for the Extension Term shall be upon and subject to all of the terms and conditions of the Existing Lease (including, without limitation, Tenant’s obligation to pay Tenant’s Pro Rata Share of the Property’s electric costs pursuant to Sections 4.2.8 and 4.3 of the Lease), except as expressly set forth in this Amendment.

2. Annual Fixed Rent for the Extension Term. For and with respect to the Extension Term, Tenant shall pay Annual Fixed Rent as follows:

Time Period	Annual Fixed Rent		Monthly Fixed Rent
5/1/20-4/30/21:	$	295,375.00	$	24,614.58
5/1/21-4/30/22:	$	304,236.25	$	25,353.02
5/1/22-4/30/23:	$	313,375.50	$	26,114.63

All such Annual Fixed Rent shall be paid in the manner and at the times set forth in Article IV of the Lease.

3. Real Estate Taxes and Expenses for the Extension Term. For and with respect to the Extension Term, Tenant shall pay, in accordance with Section 4.2 of the Lease, Tenant’s Pro Rata Share of the amount, if any, by which the real estate taxes exceed the real estate taxes for the Tax Base and Tenant’s Pro Rata Share of the amount, if any, by which Operating Expenses exceed the Operating Base (adjusted in accordance with Section 4.2.8 of the Lease); provided, however, during such period:

	(a)	The Tax Base shall mean the fiscal year 2021 (i.e., July 1, 2020 through June 30, 2021), the parties hereby acknowledging and agreeing that, for and with respect to the Extension Term, the Tax Base shall be based on a fiscal year and not a calendar year; and

	(b)	The Operating Base shall mean calendar year 2020.

4. As-Is Condition. Tenant acknowledges that from and after approximately July 1, 2012 for Suite 2241, and from and after April 1, 2018 for Suite 2240, through and including the Effective Date of this Amendment, the Premises have been under its control, subject to and in accordance with the terms and conditions of the Lease. Tenant has had a full and complete opportunity to review and inspect all aspects of the Premises and the condition thereof. Notwithstanding any provision contained in the Lease to the contrary, except for Landlord’s Work, as hereinafter defined, and Landlord’s ongoing repair and maintenance obligations pursuant to Section 5.3 of the Lease, Tenant shall lease the Premises for the Extension Term “as- is”, “where is”, and in all respects in the condition in which the Premises are in as of the Effective Date (provided that all Building systems serving the Premises shall be in good working order), without any obligation on the part of Landlord to prepare or construct the Premises for Tenant’s occupancy, or to provide any allowances or inducements, or to construct any additional work or improvements therein or in the Building and without any representation or warranty (express or implied) on the part of Landlord as to the condition of the Premises. Tenant shall, at its own cost and expense, in accordance with and subject to the terms and provisions of the Lease (including, without limitation, Section 5.2.3 thereof), perform or cause to be performed any and all work and improvements in the Premises during the Extension Term, except to the extent of Landlord’s obligations required by Section 5.3.2 of the Lease. All of such work and improvements shall be considered to be alterations or additions in accordance with the Lease, and shall be performed in accordance with the applicable terms and conditions of the Lease.

5. Landlord’s Work. Landlord shall, at Landlord’s cost and expense, install, in Suite 2241, a kitchenette and related plumbing using Building standard materials and finishes in the location shown on the plan attached hereto as Exhibit A (“Landlord’s Work”). Landlord shall perform Landlord’s Work as soon as practicable following the Effective Date, subject to delays caused by the action or inaction of Tenant and causes beyond Landlord’s reasonable control, as more particularly set forth in Section 9.4 of the Lease. Landlord shall, during the performance of Landlord’s Work, use reasonable efforts to minimize, to the extent practicable, any interference with Tenant’s use of the Premises. Tenant agrees to cooperate with Landlord and Landlord’s contractor and to follow all reasonable directions given by Landlord in connection with the performance of Landlord’s Work. Tenant shall not be entitled to any diminution in rental value on account of the performance of Landlord’s Work and any delay in the completion of Landlord’s Work shall not delay the Extension Term Commencement Date. In no event shall Landlord have any liability to Tenant based upon the performance of Landlord’s Work, except that obligations of Landlord as set forth in Section 3.2 of the Lease shall apply to Landlord’s Work for a period of one (1) year from substantial completion of Landlord’s Work.

6. Security Deposit. The parties hereby acknowledge that Landlord is currently holding a Security Deposit, in the amount of $19,184.00 pursuant to Article 1 of the Lease and Section 9.10 of the Lease, as amended by Section 11 of the Sixth Amendment. The parties hereby further acknowledge that Tenant shall, at the time that Tenant executes and delivers this Amendment to Landlord, provide an additional Security Deposit to Landlord in the amount of $5,430.58, thereby increasing the Security Deposit to $24,614.58. Landlord shall continue to hold said Security Deposit during the Extension Term in accordance with said Section 9.10 of the Lease.

7. Parking. During the Extension Term, Tenant shall continue to have the right to two (2) reserved parking spaces (“Reserved Parking Spaces”) pursuant to Section 9.9 of the Lease, as amended by Section 9 of the Sixth Amendment. In addition, during the Extension Term, Landlord shall use reasonable efforts to provide to Tenant two (2) “at will” parking passes (“At-Will Building Parking Spaces”) in the Parking Lot designated for tenants and invitees of the Building (the “Parking Area”) for use by Tenant and its employees, business invitees and agents on the following terms and conditions. If Landlord has such At-Will Building Parking Spaces available, Landlord will provide the same to Tenant, provided however, that, if such At- Will Building Parking Spaces are not available, Landlord shall have no obligation to provide said At-Will Building Parking Spaces to Tenant; provided, however, Landlord’s failure to provide the At-Will Building Parking Spaces to Tenant in the Parking Area shall not be a default by Landlord, and Tenant shall have no claim against Landlord, and Landlord shall have no liability to Tenant, by reason thereof. Said At-Will Building Parking Spaces shall be subject to the rules and regulations from time to time in force. Either party may terminate Tenant’s right to use the At-Will Building Parking Spaces, from time to time, by giving the other party at least thirty (30) days’ prior written notice. During the Extension Term, the charge for all of such Reserved Parking Spaces and At-Will Building Parking Spaces shall be at the current market rate.

8. Landlord Termination Right. Landlord shall have the right, at any time after June 30, 2021, upon nine (9) months’ written notice to Tenant (“Landlord’s Termination Notice”), to terminate the Term of the Lease, effective as of the date set forth in Landlord’s Termination Notice (“Effective Termination Date”), and by paying to Tenant a Termination Fee (as hereinafter defined) on the Effective Termination Date. For the avoidance of doubt, Landlord shall have the right to deliver the Landlord Termination Notice to Tenant at any time during the Term, but the Effective Terminate Date may not occur prior to June 30, 2021. Upon the timely giving of such notice, the Term of the Lease shall terminate as of said Effective Termination Date as if such date were the Expiration Date, and Annual Fixed Rent, Additional Rent and other charges due under the Lease shall be pro-rated as of said Effective Termination Date. On the Effective Termination Date, Tenant shall yield up and surrender the Premises in accordance with the requirements of the Lease. The “Termination Fee” shall be $50,000.00 if the Effective Termination Date is earlier than October 1, 2021. The Termination Fee shall be reduced by $86.66 per day for each day for the period from October 1, 2021 to the Effective Termination Date.

9. Tenant Termination Right. (a) Subject to the full and complete satisfaction of the Termination Conditions Precedent (as hereinafter defined), in accordance with the provisions of this Section 9, Tenant shall have the one-time irrevocable option to terminate the Lease (“Tenant Termination”). The conditions precedent (the “Termination Conditions Precedent”) to the effectiveness of any such Tenant Termination shall be as follows: (i) the effective date of any such Tenant Termination shall be April 30, 2022 (“Tenant Termination Date”); (ii) Tenant shall deliver written notice (“Tenant Termination Notice”) of such Tenant Termination to Landlord by not later than July 31, 2021; (iii) concurrent with the delivery of the Tenant Termination Notice, Tenant shall pay to Landlord, without deduction or offset, a non-refundable cash Termination Fee (as hereinafter defined); and (iv) on the Tenant Termination Date, no default of Tenant shall have occurred under the Lease. Said Termination Fee shall be Additional Rent under the Lease and shall be in addition to, and not in lieu of, any other payments due under the Lease. The “Termination Fee” shall be an amount equal to the sum of: (i) the Unamortized Portion (as hereinafter defined) as of the Tenant Termination Date of all costs and expenses incurred by Landlord in connection with this Amendment (the “Transaction Costs”), including the out-of-pocket costs associated with performing Landlord’s Work, all brokerage commissions paid by Landlord in connection with this Amendment, and all legal fees, in an amount not to exceed $5,000.00, paid by Landlord in connection with this Amendment, and (ii) $50,721.49 (i.e., two times the average of the monthly Fixed Rent payable over the Term of the Lease). The “Unamortized Portion” shall mean the unamortized portion of the Transaction Costs, amortized on a straight-line basis over the Extension Term, together with interest thereon at the rate of six percent (6%) per annum. Upon request by Tenant, Landlord shall provide Tenant, with a determination of the foregoing costs, along with Landlord’s calculation of the Unamortized Portion of the costs as of the Tenant Termination Date.

(b) Provided that all of the Termination Conditions Precedent have been fully and completely satisfied, then effective as of the Tenant Termination Date, the Lease, and the rights of the Tenant with respect to the Premises, shall terminate and expire with the same force and effect as if such Tenant Termination Date had originally been specified as the Expiration Date. Prior to the later of (such later date, the “Surrender Date”) (i) the Tenant Termination Date, and (ii) the date on which Tenant actually surrenders and yields-up the Premises, Tenant shall comply with all of the terms and provisions of the Lease and shall perform all of its obligations hereunder, including, without limitation, the obligation to pay when due all Annual Fixed Rent, Additional Rent and other charges due under the Lease. By not later than the Tenant Termination Date, Tenant shall surrender and yield-up the Premises in good and broom-clean order, repair and condition, free of all tenants and occupants, and otherwise in the condition in which the Premises are required to be surrendered pursuant to the Lease at the expiration of the Term of the Lease, including, without limitation, Section 5.1.9 thereof. All property and alterations of any kind, nature or description remaining in the Premises after the Surrender Date shall be and become the property of Landlord and may be disposed of by Landlord, without payment from Landlord and without the necessity to account therefor to Tenant.

(c) Effective as of the Tenant Termination Date, Landlord shall be released from any and all obligations and liabilities thereafter accruing under the Lease. Nothing contained herein shall constitute a waiver, limitation, amendment, or modification of any of the liabilities and obligations of Landlord under the Lease which accrue or arise prior to the Tenant Termination Date. Effective as of the Surrender Date, Tenant shall be released from any and all liabilities and obligations thereafter accruing under the Lease. Nothing contained herein shall constitute a waiver, limitation, amendment, or modification of any of the liabilities and obligations of Tenant under the Lease which accrue or arise prior to the Surrender Date.

(d) The foregoing provisions shall be self-operative; provided, however, on the request of either party Landlord and Tenant will enter into a mutually satisfactory amendment to the Lease evidencing such Tenant Termination of the Lease.

(e) Time is of the essence of this Section 9.

10. Relocation Right. (a) Landlord shall have the right, at any time and from time- to-time during the Term of the Lease, but not earlier than April 30, 2021, upon not less than six (6) months’ prior written notice to Tenant (a “Relocation Notice”), to provide and furnish Tenant with replacement premises elsewhere in the Building, with such replacement premises to be the same or greater size, and substantially the same buildout and visibility, as determined by Landlord in its reasonable discretion (the “Substitute Premises”), and to relocate Tenant from the Premises to the Substitute Premises. If Landlord relocates Tenant to the Substitute Premises, then on the date specified on the Relocation Notice Tenant shall move its equipment, personal property and personnel to the Substitute Premises and shall reinstall and reconstruct such improvements, equipment and personal property in the Substitute Premises in a manner and fashion reasonably comparable to the Premises. Landlord shall, at its sole cost and expense, prior to relocation of Tenant to the Substitute Premises and as a condition of such relocation, improve the Substitute Premises in a manner substantially comparable to the Premises immediately preceding such relocation. Upon receipt of invoices and evidence of payment thereof by Tenant, Landlord shall, within thirty (30) days of receipt of such invoices, reimburse Tenant for the reasonable costs and expenses incurred by Tenant in connection with the removal and relocation of said personnel, equipment and personal property and the reinstallation thereof in the Substitute Premises, together with the reasonable costs incurred in hiring a cleaning service to render the Premises in good order. Upon the exercise by Landlord of the foregoing relocation right, the Lease and each of the terms, covenants and conditions hereof shall remain in full force and effect and be applicable to the Substitute Premises. In such event, effective as of the date specified in the Relocation Notice, Tenant shall vacate and surrender the original Premises in accordance with the terms and conditions of the Lease, and the Substitute Premises shall thereafter be deemed to be substituted for the original Premises and Tenant shall have no further rights or interests in or to the original Premises. After delivery of a Relocation Notice, the provisions of this Section 10 shall be self-operative; however, at either party’s request, Landlord and Tenant shall enter into an amendment of the Lease confirming the relocation of the Premises.

(b) If Landlord provides Tenant with a Relocation Notice which is not acceptable to Tenant, acting reasonably, Tenant shall have the right to terminate the Lease by giving written notice of termination (a “Tenant’s Relocation Termination Notice”) to Landlord within twenty (20) days after delivery of the Relocation Notice, time being of the essence. Such termination shall be effective upon the date the Landlord intended to relocate the Tenant as defined in the Relocation Notice, provided that Landlord, within ten (10) days after receipt of Tenant’s Relocation Termination Notice, shall have the right to withdraw the Relocation Notice. In such event, the Lease shall continue in full force and effect as if Landlord had never provided Tenant with a Relocation Notice.

(c) Landlord shall have no right, pursuant to this Section 10, to relocate Tenant during the period commencing as of May 1, 2022 and ending on April 30, 2023.

11. Assignment/Subletting. The following is added at the end of Section 5.2.1 of the Lease:

“If Tenant desires to assign this Lease or sublet all or any portion of the Premises, then Tenant shall give notice thereof to Landlord, which notice shall be accompanied by (i) the date Tenant desires the assignment or sublease to be effective, (ii) the material business terms on which Tenant would assign or sublet such premises, (iii) a description of the portion of the Premises to be sublet, if applicable, (iv) a true and complete statement reasonably detailing the identity of the proposed assignee or subtenant, the nature of its business, and its proposed use of the Premises, (v) current financial information with respect to the proposed assignee or subtenant, including, without limitation, its most recent financial statements, and (vi) such other information Landlord may reasonably request. Such notice shall be deemed an offer from Tenant to Landlord whereby Landlord (or Landlord’s designee) shall be granted the right, at Landlord’s option (x) with respect to a proposed assignment, to terminate this Lease, upon the terms and conditions hereinafter set forth; and (y) with respect to a sublease, to terminate this Lease with respect to the portion of the Premises proposed to be sublet, upon the terms and conditions hereinafter set forth. If Landlord exercises its option to terminate this Lease (in whole or in part) pursuant to the foregoing provisions, then (a) this Lease (or that part of the Lease relating to the part of the Premises proposed to be sublet, as applicable) shall end and expire on the date that such assignment or sublease was to commence (as if such date were the expiration date of the term hereof), (b) Rent shall be pro-rated and paid or refunded as of such date, (c) Tenant, upon Landlord’s request, shall enter into an agreement confirming such termination, and (d) Landlord shall be free to lease the Premises or applicable part thereof, to any person or persons, including, without limitation, to Tenant’s prospective assignee or subtenant.

In no event shall Landlord be considered to have withheld its consent unreasonably to any proposed assignment or subletting if (it being understood that this is not an all-inclusive list):

1) the proposed assignee or subtenant is not a reputable person or entity of good character with sufficient financial means to perform all of its obligations under this Lease or the sublease, as the case may be, and/or Landlord has not been furnished with reasonable proof thereof;

2) the proposed assignee or sublessee may, in Landlord’s reasonable determination, use the Premises for (a) a use which does not comply with the conditions and restrictions set forth in this Lease, or (b) a use which could overburden the Premises, the Building, the parking areas or other common areas on the Property, or (c) a use which could cause an increase in the insurance premiums payable with respect to the Property or in the Operating Expenses;

3) the proposed assignee or subtenant (or an affiliate thereof) is then an occupant of the Building;

4) the aggregate consideration to be paid by the proposed assignee or subtenant under the terms of the proposed assignment or sublease is less than seventy-five percent (75%) of the fixed rent at which Landlord is then offering to lease other space in the Building;

5) the proposed assignee or subtenant is a person or entity (or affiliate of a person or entity) with whom Landlord or Landlord’s agent is then or has been within the prior six (6) months negotiating in connection with the rental of space in the Building;

6) the form of the proposed sublease or instrument of assignment is not reasonably satisfactory to Landlord;

7) there shall be more than two (2) subtenants of the Premises;

8) the proposed subtenant or assignee shall be entitled, directly or indirectly, to diplomatic or sovereign immunity, regardless of whether the proposed assignee or subtenant agrees to waive such diplomatic or sovereign immunity, and/or shall not be subject to the service of process in, and the jurisdiction of the courts of, the Commonwealth of Massachusetts; or

9) any mortgagee whose consent to such assignment or sublease is required fails to consent thereto.

If a default of Tenant shall occur at any time prior to the effective date of such assignment or subletting, then Landlord’s consent thereto, if previously granted, shall be immediately deemed revoked without further notice to Tenant, and such consent shall be void and without force and effect, and such assignment or subletting shall constitute a further default of Tenant hereunder.”

12. Inapplicable and Deleted Lease Provisions.

(a) Sections 3.1 and 3.3 of the Lease (Improvements), and Exhibit C to the Lease (Landlord’s Work) shall have no applicability with respect to this Amendment.

(b) Section 2.2 of the Lease, as amended by Section 3 of the Fifth Amendment (Extended Terms), and Section 3 of the Fourth Amendment (Termination Right) are hereby deleted and are of no further force or effect.

13. Brokerage. Tenant hereby represents to Landlord that it has dealt only with JLL and Colliers International (collectively, the “Brokers”) in connection with this Amendment. Landlord hereby represents to Tenant that it has dealt only with the Brokers in connection with this Amendment. Each of Tenant and Landlord shall indemnify and hold harmless the other from and against any and all loss, cost and expense (including attorneys’ fees) arising out of or resulting from any breach of said warranty and representation by the indemnifying party, including any claims for a brokerage commission, finder’s fee or similar compensation made by any person arising out of or in connection with this Amendment, other than the Brokers. Landlord shall be responsible for paying a brokerage commission to the Brokers, pursuant to separate agreements between Landlord and each of the Brokers.

14. Landlord’s Notice Addresses and Addresses for Payment of Rent. Landlord’s addresses for notices set forth in Sections 1.1 and 9.1 of the Lease are hereby deleted and the following addresses are substituted therefor:

American Twine Owner LLC c/o

New England Development 75 Park Plaza

Boston, Massachusetts 02116

With a copy to: Goulston & Storrs

PC 400 Atlantic Avenue

Boston, Massachusetts 02110-3333

Attn: NED American Twine

Addresses for payment of Rent:

For U.S. Mail:

American Twine Owner LLC

P.O. Box 842142 Boston, MA 02284-2142

For Overnight Courier:

American Twine Owner LLC 20 Commerce Way

Suite 800

Woburn, MA 01801-1057

Lockbox # 842142

15. REIT and UBTI Matters.

(a) Tenant recognizes and acknowledges that Landlord (and/or direct or indirect owners of Landlord) is or may from time to time seek to qualify as real estate investment trusts (each, a “REIT”) pursuant to Sections 856 et seq. of the Internal Revenue Code of 1986, as amended (the “Code”) or be subject to tax on unrelated business taxable income as defined in the Code. Tenant agrees to promptly provide such information in its possession or reasonably available to it as Landlord reasonably requests in order to determine whether Landlord’s receipt of any income derived or to be derived under any provision of the Lease may not constitute “rents from real property” as defined for purposes of Section 856(d) of the Code or for purposes of Section 512(b) of the Code, or otherwise adversely affect the status of Landlord or its direct or indirect owners under the real estate investment trust or unrelated business taxable income provisions of the Code (each an “Adverse Event”). If Landlord determines in good faith that the Lease or any document contemplated hereby presents an undue risk of an Adverse Event, Tenant agrees upon written notice from Landlord to reasonably cooperate with Landlord in avoiding such Adverse Event, including but not limited to entering into an amendment or modification of the Lease and entering into such other agreements (including with Landlord’s designees) as Landlord in good faith deems necessary to avoid or minimize the effect of an Adverse Event. Provided that provided that the Adverse Event does not arise due to the Tenant knowingly failing to fulfill its obligations under this Section 15, Landlord shall reimburse Tenant for its reasonable, out-of-pocket costs in connection with such amendments, modifications or other agreements, including the reasonable costs of its legal counsel and accountants. Except as provided in Section 15(c) below, any such cooperation shall be structured so that equivalent payments (in economic terms) are paid by Tenant and so that Tenant does not, to more than a de minimis extent, have materially greater obligations or receive materially diminished services, or services of a materially lesser quality, than it was entitled to receive under the Lease without such cooperation.

(b) Without limiting Landlord’s rights under Section 5.2.1 of the Lease, (i) Tenant expressly covenants and agrees not to enter into any sublease or assignment of the Premises which provides for rental or other payment for such use, occupancy, or utilization based in whole or in part on the net income or profits derived by any person from the property leased, used, occupied, or utilized (other than an amount based on a fixed percentage or percentages of receipts or sales), and that any such purported sublease or assignment shall be absolutely void and ineffective as a conveyance of any right or interest in the possession, use, occupancy, or utilization of any part of the Premises, (ii) Landlord may waive the receipt of any amount in subsection (b)(i) above payable to Landlord under the Lease and such waiver shall constitute an amendment or modification of the Lease with respect to such payment, and (iii) if Landlord determines that either Tenant has not fulfilled its obligations under this Section 15 or that avoiding an Adverse Event is not commercially feasible or reasonable, then Landlord shall have the option to terminate the Lease upon ninety (90) days’ prior written notice to Tenant. If such notice shall be given, then the Lease shall terminate on the ninetieth (90th) day after the date of such notice, all with the same force and effect as if such date had been the Expiration Date specified in the Lease. The parties agree to execute such further instrument as may reasonably be required by Landlord in order to give effect to the foregoing provisions of this Section 15(b).

(c) To the maximum extent permitted by law, Tenant shall indemnify and save harmless Landlord and its direct and indirect members, managers, partners, directors, officers, agents, and employees, against and from all claims, expenses, or liabilities of whatever nature actually incurred by Landlord arising directly or indirectly from (i) any breach of subsection 15(b)(i) of this Section 15 or (ii) the inaccuracy of any written information provided to Landlord in connection with any requirement for Landlord’s consent under this Lease for a proposed assignment of this Lease or a sublease of all or any portion of the Premises. The indemnification set forth in this Section 15 shall survive the expiration or termination of the Lease for a period of one (1) year.

16. OFAC Compliance.

(a) Tenant represents and warrants that (a) Tenant and each person or entity owning an interest in Tenant is (i) not currently identified on the Specially Designated Nationals and Blocked Persons List maintained by the Office of Foreign Assets Control, Department of the Treasury (“OFAC”) and/or on any other similar list maintained by OFAC pursuant to any authorizing statute, executive order or regulation (collectively, the “List”), and (ii) not a person or entity with whom a citizen of the United States is prohibited to engage in transactions by any trade embargo, economic sanction, or other prohibition of United States law, regulation, or Executive Order of the President of the United States, (b) none of the funds or other assets of Tenant constitute property of, or are beneficially owned, directly or indirectly, by any Embargoed Person (as hereinafter defined), (c) no Embargoed Person has any interest of any nature whatsoever in Tenant, (d) none of the funds of Tenant have been derived from any unlawful activity with the result that the investment in Tenant is prohibited by law or that the Lease is in violation of law, and (e) Tenant has implemented procedures, and will consistently apply those procedures, to ensure the foregoing representations and warranties remain true and correct at all times. The term “Embargoed Person” means any person, entity or government subject to trade restrictions under U.S. law, including but not limited to, the International Emergency Economic Powers Act, 50 U.S.C. §1701 et seq., The Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and any Executive Orders or regulations promulgated thereunder with the result that the investment in Tenant is prohibited by law or Tenant is in violation of law.

(b) Tenant covenants and agrees (a) to comply with all requirements of law relating to money laundering, anti-terrorism, trade embargos and economic sanctions, now or hereafter in effect, (b) to immediately notify Landlord in writing if any of the representations, warranties or covenants set forth in this paragraph or the preceding paragraph are no longer true or have been breached or if Tenant has a reasonable basis to believe that they may no longer be true or have been breached, (c) not to use funds from any “Prohibited Person” (as such term is defined in the September 24, 2001 Executive Order Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism) to make any payment due to Landlord under the Lease and (d) at the request of Landlord, to provide such information as may reasonably be requested by Landlord to determine Tenant’s compliance with the terms hereof.

(c) Tenant hereby acknowledges and agrees that Tenant’s inclusion on the List at any time during the Term shall be a material default of the Lease. Notwithstanding anything herein to the contrary, Tenant shall not knowingly permit the Premises or any portion thereof to be used or occupied by any person or entity on the List or by any Embargoed Person (on a permanent, temporary or transient basis), and that knowingly permitting such use or occupancy of the Premises by any such person or entity shall be a material default of the Lease.

17. Miscellaneous. Tenant hereby represents and warrants to Landlord as follows: (i) the execution and delivery of this Amendment by Tenant has been duly authorized by all requisite corporate action, (ii) neither the Lease nor the interest of Tenant therein has been assigned, sublet, encumbered or otherwise transferred; (iii) there are no defenses or counterclaims to the enforcement of the Lease or the liabilities and obligations of Tenant thereunder; (iv) Tenant is not in breach or default of any of its respective obligations under the Lease; (v) Landlord has made no representations or warranties, except as expressly and specifically set forth in the Lease and this Amendment. To Tenant’s knowledge, Landlord is not in breach or default of any of its respective obligations under the Lease. Except for Landlord’s Work as defined in Section 5 above, Landlord has performed all work and constructed all improvements required to be performed or constructed by Landlord pursuant to the Lease. The submission of drafts of this document for examination and negotiation does not constitute an offer, or a reservation of or option for, the Extension Term or any of the other terms and conditions set forth in this Amendment, and this Amendment shall not be binding upon Landlord or Tenant unless and until each party hereto has executed and delivered a fully executed copy of this Amendment to the other party. Except as expressly and specifically set forth in this Amendment, the Lease is hereby ratified and confirmed, and all of the terms, covenants, agreements and provisions of the Lease shall remain unaltered and unmodified and in full force and effect throughout the balance of the Term of the Lease, as extended hereby.

18. Counterparts. This Amendment may be executed in two (2) counterparts, which counterparts taken together shall constitute one and the same instrument. This Amendment may be executed by electronic signature, which shall be considered as an original signature for all purposes and shall have the same force and effect as an original signature. Without limitation, in addition to electronically produced signatures, “electronic signature” shall include electronically scanned and transmitted versions (e.g., via pdf) of an original signature.

[Signature Page Follows]

EXECUTED as of the Effective Date.

	LANDLORD:

	AMERICAN TWINE OWNER LLC,
	a Delaware limited liability company

	By:	/s/ Steven F. Fischman
	Name:	Steven F. Fischman
	Title:	Manager

	TENANT:

	VARIATION BIOTECHNOLOGIES (US), INC.,
	a Delaware corporation

	By:	/s/ Jeff Baxter
	Name:	Jeff Baxter
	Title:	President and CEO

EXHIBIT A

PLAN AND SCOPE OF LANDLORD’S WORK

222 THIRD STREET - SUITE 2241

Landlord shall, as part of Landlord’s Work, perform the following:

	●	Provide and install new 22” x 25” stainless steel sink and faucet in existing cabinet and counter
	●	Provide and install new sewage ejector pump in adjacent storage/IT closet
	●	Provide and install new 1.5-gallon under-counter electric water heater
	●	Provide and install all necessary plumbing connections, waste, water and vents
	●	Equipment has standard 120 volt plug connections, existing outlets to be utilized

Exhibit 10.3

SIXTH AMENDMENT TO LEASE

THIS SIXTH AMENDMENT TO LEASE (the “SIXTH Amendment”) is made as 23rd day of March 2018 by and between American Twine Limited Partnership, a Massachusetts limited partnership (the “Landlord”), having an address c/o Transatlantic Investment Management, Inc. 222 Third Street, Cambridge, Massachusetts and Variation Biotechnologies (US), Inc. (the “Tenant”), having an address at 222 Third Street. Cambridge, MA 02142.

WITINESSTH THAT

WHEREAS:	Landlord and Tenant are the current parties to that certain Lease dated May 31, 2012, as amended by the First Amendment dated June 28, 2013, the Second Amendment dated October 2, 2013, and the Third Amendment dated January 31. 2014, the Fourth Amendment dated August 7, 2014, the Fifth Amendment dated May 9, 2017 (together the “Lease”) with respect to approximately 2,359 rentable square feet, suite 2241, in the building located on the property known as 222 Third Street, Cambridge, Middlesex County, Massachusetts; and

WHEREAS:	Landlord and Tenant desire to amend the Lease to extend the term, expand into suite 2240 and other changes to the Lease as agreed to by the parties.

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged. the parties hereby agree to amend the Lease as follows:

1.	The Effective Date of this Sixth Amendment shall be April 1, 2018.

2.	As of the Effective Date Section 1.1 of the Lease Premises, will be amended to add Suite 2240 consisting of 1,116 rentable square feet.

	Suite 2240	Suite 2241
	1,116	2,359

3.	As of the Effective Date, Section 1.1 of the Lease, Term will be amended to extend the term by Two (2) Years and One (1) month, terminating on April 30, 2020.

4.	As of the Effective Date Section 1.1 of the Lease, Annual Fixed Rent will be amended to add the following:

Suite 2240

4/1/2018 – 3/31/2019: $77,004.00 ($69.00/sf)

4/1/2019 – 3/31/2020: $78,120.00 ($70.00/sf)

4/1/2020 – 4/30/2020: $79,236.00 ($71.00/sf)

Suite 2241

5/1/2018 – 4/30/2019: $148,617.00 ($63.00/sf)

5/1/2019 – 4/30/2020: $150,976.00 ($64.00/sf)

5.	As As of the Effective Date section 1.1 of the Lease under the heading “Pro-Rota” will be amended as follows:

	Suite 2240	Suite 2241
	.96%	2.04%

6.	As of the Effective date, section 1.1 Lease under the heading “Tax Base” will be amended to add suite 2240 for Calendar Year 2018.

7.	As of the Effective Date, section 1.1 of the Lease under the heading “Operating Base” will be amended to add suite 2240 for Calendar Year 2018.

8.	Landlord will complete the following work in suite 2240 prior to Effective Date. The modifications in suite 2240 are as shown in Exhibit A.

	●	Demo/remove two walls and kitchenette area.
	●	Paint entire office with two colors as selected by tenant from Landlord’s samples.
	●	Replace carpet in “reception area” where wall is being removed.
	●	Replace all light fixtures with building standard LED cable hung fixtures. All Leasehold improvements shall be mutually agreed upon using building standard procedures and materials.

As a Concession (as defined herein), Landlord shall cause to be performed the work defined above (“Landlord’s Work”). All such work shall be done in a good and workmanlike manner employing first quality materials, free from defects and so as to conform to all applicable building and zoning law s. Tenant agrees that Landlord may make any immaterial changes in such work which may become reasonably necessary or advisable, without approval of Tenant , provided written notice is promptly given to Tenant, and Landlord may make material changes in such work only with the prior written approval of Tenant.

Except for Landlord ‘s Work, Tenant hereby accepts the Premises “as is,” with all faults, whether latent. patent or otherwise, and hereby warrants and represents that it has caused such inspections to be made of the Premises by persons or companies of its choosing and has had such reports and evaluations of the Premises issued, as it has determined is appropriate, and is satisfied in all respects therewith.

9.	As of the Effective Date, section 1.1 of the Lease under the heading “Parking” will be amended to be Two (2) Reserved Parking Spaces at the current market rate of $200/month/space).

10.	Tenant understands and agrees that Landlord’s agreement to provide, grant, afford, and/or incur the cost of any “Concession” described within the Lease or this Amendment is expressly conditioned on Tenant’s full and timely performance of all terms, conditions, and obligations of the Lease and this Amendment and that accordingly, in the event of any default by Tenant beyond any applicable notice and cure period, Landlord shall recover from Tenant, as Additional Rent, and in addition to all other remedies available to Landlord under the Lease and/or under law, the Full Value of such Concessions. As used herein, the term “Full Value” shall mean the full dollar amount expended by Land lord with respect to those Concessions which required expenditure s by Landlord, and the amount the Land lord would have received from the Tenant but for those Concessions which involved payment waivers or abatements by Landlord.

11.	Landlord acknowledges that it currently holds $17,201.00 as a Security Deposit under the Lease. Upon execution of this Sixth Amendment Tenant shall to pay to Landlord as additional Security Deposit the sum of $1,981.00 for suite 2240. As of the Effective Date the information contained in Article 1 of the Lease, immediately following the heading “Security Deposit” shall be amended to $19,184.00.

12.	Tenant represents and warrants that Tenant has had no contact with any broker in connection with this Sixth Amendment to Lease. Landlord represents and warrants the Landlord has had no contact with any broker in connection with this Sixth Amendment. Landlord and Tenant will each indemnify and hold the other harmless in the event that any broker claims a commission from Landlord as a result of representing Tenant or from Tenant as a result of representing Landlord.

Except as expressly amended by this Sixth Amendment, all of the terms and conditions of the Lease shall remain unchanged and in full force and effect.

IN WITNESS WHEREOF, the parties have caused this Sixth Amendment to be executed as of the date first above written.

LANDLORD:	AMERCIAN TWINE LIMITED PARTNERSHIP

	By:	ATLP, Inc., its general partner

	By:	/s/ Anthony Goschalk
		Anthony Goschalk
		President

TENANT:	Variation Biotechnologies (US), Inc.

	By:	/s/ Jeff Baxter
		Jeff Baxter
		Chief Executive Officer

Exhibit A

Exhibit 10.4

FIFTH AMENDMENT TO LEASE

THIS FIFTH AMENDMENT TO LEASE (the “FIFTH Amendment”) is made as of the 9^th day of May by and between American Twine Limited Partnership, a Massachusetts limited partnership (the “Landlord”), having an address c/o Transatlantic Investment Management, Inc. 222 Third Street, Cambridge, Massachusetts and Variation Biotechnologies (US), Inc. (the “Tenant”), having an address at 222 Third Street, Cambridge, MA 02142.

WITTNESSTH THAT

WHEREAS, Landlord and Tenant are the current parties to that certain Lease dated May 31, 2012, as amended by the First Amendment dated June 28, 2013, the Second Amendment dated October 2, 2013, and the Third Amendment dated January 31, 2014, the Fourth Amendment dated August 7, 2014, (collectively, the “Lease, as amended”) with respect to approximately 2,359 rentable square feet, suite 2241, in the building located on the property known as 222 Third Street, Cambridge, Middlesex County, Massachusetts; and

WHEREAS, Landlord and Tenant desire to further amend the Lease, as amended, to extend the term and to make other changes to the Lease, as amended, as agreed to by the parties hereunder.

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree to amend the Lease, as amended, as follows:

1.	The Effective Date of this Fifth Amendment shall be May 1, 2017.

2.	As of the Effective Date, Section 1.1 of the Lease, Term will be amended to extend the term by One (1) Year, terminating on April 30, 2018

3.	As of the Effective Date, Section 2.2 of the Lease, Term will be amended to add the following.

Provided the Tenant shall not be in default beyond the expiration of any applicable grace period of any of the terms or provisions of this Lease on Tenant’s part to be performed or observed, both as at the date of exercise of any such option and as at the commencement of any such extended Term, unless such default is waived by Landlord, the Tenant may, at its option, extend the Term for up to two periods of one (1) year each, by written notice to the Landlord given at least three (3) months prior to the expiration of the original or then extended Term. All of the terms and provisions of this Lease shall be applicable during any such extended Term, except such terms and provisions as relate to any Landlord Work (if any) and any option(s) to extend the Term which have then been seasonably exercised, and the rent to be paid during such extended Term period shall be as provided for in Section 1.1, as such provision may be amended upon written agreement of the parties.

4.	As of the Effective Date, Section 1.1 of the Lease, Annual Fixed Rent will be amended to the following:

5/1/2017 – 4/30/2018:

$143,899.00 ($61.00 /sf), $11,992.00/month

Extension Periods:

	5/1/2018 – 4/30/2019:	$148,617.00 ($63.00 /sf), $12,385.00/month
	5/1/2019 – 4/30/2020:	$150,976.00 ($64.00/sf), $12,581.00/month

Tenant represents and warrants that Tenant has had no contact with any broker in connection with this Fifth Amendment to Lease. Landlord represents and warrants the Landlord has had no contact with any broker in connection with this Fifth Amendment. Landlord and Tenant will each indemnify and hold the other harmless in the event that any broker claims a commission from Landlord as a result of representing Tenant or from Tenant as a result of representing Landlord Except as expressly amended by this Fifth Amendment, all of the terms and conditions of the Lease, as amended, shall remain unchanged and in full force and effect.

IN WITNESS WHEREOF, the parties have caused this Fifth Amendment to be executed as of the date first above written.

LANDLORD:	AMERICAN TWINE LIMITED PARTNERSHIP

	By:	ATLP, Inc., its General Partner

	By:	/s/ Anthony Goschalk
		Anthony Goschalk,
		President

TENANT:	Variation Biotechnologies (US), Inc.

	By:	/s/ Jeff Baxter
	Name:	Jeff Baxter
	Title:	President and CEO

Exhibit 31.1

CERTIFICATION

I, Jeffrey Baxter, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of VBI Vaccines Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15-d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

	a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

	Date: May 6, 2020

	/s/ Jeffrey Baxter
	Jeffrey Baxter
	Chief Executive Officer (Principal Executive Officer)

Exhibit 31.2

CERTIFICATION

I, Christopher McNulty, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of VBI Vaccines Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15-d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

	a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

	Date: May 6, 2020

	/s/ Christopher McNulty
	Christopher McNulty
	Chief Financial Officer and Head of Business Development
	(Principal Financial and Accounting Officer)

Exhibit 32.1

CERTIFICATION

In connection with the quarterly report of VBI Vaccines Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2020 as filed with the Securities and Exchange Commission (the “Report”), I, Jeffrey Baxter, Chief Executive Officer (Principal Executive Officer) of the Company, hereby certify as of the date hereof, solely for purposes of Title 18, Chapter 63, Section 1350 of the United States Code, that to the best of my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated.

	Date: May 6, 2020

	/s/ Jeffrey Baxter
	Jeffrey Baxter
	Chief Executive Officer
	(Principal Executive Officer)

Exhibit 32.2

CERTIFICATION

In connection with the quarterly report of VBI Vaccines Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2020 as filed with the Securities and Exchange Commission (the “Report”), I, Christopher McNulty, Chief Financial Officer and Head of Business Development (Principal Financial and Accounting Officer) of the Company, hereby certify as of the date hereof, solely for purposes of Title 18, Chapter 63, Section 1350 of the United States Code, that to the best of my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated.

	Date: May 6, 2020

	/s/ Christopher McNulty
	Christopher McNulty
	Chief Financial Officer and Head of Business Development
	(Principal Financial and Accounting Officer)