|
State of Israel
|
| |
2836
|
| |
Not Applicable
|
|
|
(State or Other Jurisdiction of
Incorporation or Organization) |
| |
(Primary Standard Industrial
Classification Code Number) |
| |
(I.R.S. Employer
Identification No.) |
|
|
Michael P. Kaplan, Esq.
Sophia Hudson, Esq. Davis Polk & Wardwell LLP 450 Lexington Avenue New York, New York 10017 (212) 450-4000 |
| |
Yair Geva, Adv.
Ron Ben Menachem, Adv. Tomer Farkash, Adv. Herzog Fox & Neeman 4 Weizmann Street Tel Aviv 6423904, Israel +972 (3) 692-2020 |
| |
Ivan K. Blumenthal, Esq.
Mintz, Levin, Cohn, Ferris, Glovsky, and Popeo PC 666 Third Avenue New York, New York 10017 (212) 935-3000 |
| |
Chaim Friedland, Adv.
Ari Fried, Adv. Gornitzky & Co. Zion House 45 Rothschild Blvd. Tel Aviv 6578403, Israel +972 (3) 710-9191 |
|
Title of Each Class of Securities to be Registered
|
| |
Amount To
Be Registered |
| |
Proposed Maximum
Aggregate Offering Price Per Share (1) |
| |
Proposed Maximum
Aggregate Offering Price |
| |
Amount of
Registration Fee (3) |
| ||||||||||||
Ordinary shares, par value NIS 0.0001117 per share
|
| | | | 5,750,000 (2 ) | | | | | $ | 12.00 | | | | | $ | 69,000,000 (2 ) | | | | | $ | 8,591 | | |
| | |
Price to Public
|
| |
Underwriting
Discounts and Commissions |
| |
Proceeds to
Company(1) |
| |||||||||
Per ordinary share
|
| | | $ | | | | | | $ | | | | | | $ | | | |
Total
|
| | | $ | | | | | | $ | | | | | | $ | | | |
| | |
Page
|
| |||
| | | | iii | | | |
| | | | iii | | | |
| | | | 1 | | | |
| | | | 13 | | | |
| | | | 52 | | | |
| | | | 54 | | | |
| | | | 55 | | | |
| | | | 56 | | | |
| | | | 58 | | | |
| | | | 60 | | | |
| | | | 61 | | | |
| | | | 63 | | | |
| | | | 79 | | |
| Ordinary shares offered by us | | | 5,000,000 ordinary shares (or 5,750,000 ordinary shares if the underwriters exercise in full their option to purchase additional ordinary shares) | |
|
Ordinary shares to be outstanding after this offering
|
| | 11,897,252 ordinary shares (or 12,647,252 ordinary shares if the underwriters exercise in full their option to purchase additional ordinary shares) | |
| Over-allotment option | | | We have granted the underwriters a 30-day option to purchase up to an additional 750,000 ordinary shares from us to cover over-allotments. | |
| Use of Proceeds | | | We estimate that we will receive net proceeds of approximately $49.9 million from our sale of ordinary shares in this offering, after deducting the estimated underwriting discount and the estimated offering expenses payable by us. This assumes an offering price of $11.00 per share, which is the midpoint of the estimated offering price range on the cover page of this prospectus. We intend to use the net proceeds from this offering, together with $11.7 million of cash and cash equivalents on hand as of December 31, 2017, as follows: | |
| | | |
•
approximately $45.0 million to fund research and development expenses of our oral PTH candidate, EB612;
|
|
| | | |
•
approximately $1.5 million to fund research and development expenses of our oral PTH candidate, EB613;
|
|
| | | |
•
approximately $2.5 million to fund other research and development expenses; and
|
|
| | | |
•
the remainder for working capital and general corporate purposes.
|
|
| | | | See “Use of Proceeds.” | |
| Dividend Policy | | | We have never paid or declared any cash dividends on our ordinary shares, and we do not anticipate paying any cash dividends on our ordinary shares in the foreseeable future. See “Dividend Policy.” | |
| Risk Factors | | | See “Risk Factors” and other information included in this prospectus for a discussion of factors you should carefully consider before deciding to invest in our ordinary shares. | |
| Proposed Listing | | | We have applied to list our ordinary shares on the NASDAQ Capital Market under the symbol “ENTX”. | |
| | |
(unaudited)
Nine Months Ended September 30, |
| |
(audited)
Year Ended December 31, |
| ||||||||||||||||||
| | |
2017
|
| |
2016
|
| |
2016
|
| |
2015
|
| ||||||||||||
| | |
(In thousands, except shares and per share data)
|
| |||||||||||||||||||||
Statements of comprehensive loss: | | | | | | | | | | | | | | | | | | | | | | | | | |
Research and development expenses
|
| | | $ | 1,686 | | | | | $ | 1,851 | | | | | $ | 2,648 | | | | | $ | 2,115 | | |
General and administrative expenses
|
| | | | 5,267 | | | | | | 2,296 | | | | | | 2,719 | | | | | | 1,586 | | |
Total operating loss
|
| | | | 6,953 | | | | | | 4,147 | | | | | | 5,367 | | | | | | 3,701 | | |
Financial (income) expenses:
|
| | | | | | | | | | | | | | | | | | | | | | | | |
(Income) loss from change in fair value of financial liabilities at fair value
|
| | | | 403 | | | | | | (3,917 ) | | | | | | (4,311 ) | | | | | | 447 | | |
Other financial expenses, net
|
| | | | 66 | | | | | | 112 | | | | | | 143 | | | | | | 134 | | |
Financial (income) expenses, net
|
| | | | 469 | | | | | | (3,805 ) | | | | | | (4,168 ) | | | | | | 581 | | |
Net comprehensive loss
|
| | | $ | 7,422 | | | | | $ | 342 | | | | | $ | 1,199 | | | | | $ | 4,282 | | |
Loss per ordinary share(1) | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic
|
| | | $ | 215 | | | | | $ | 10 | | | | | $ | 35 | | | | | $ | 124 | | |
Diluted
|
| | | $ | 220 | | | | | $ | 91 | | | | | $ | 102 | | | | | $ | 124 | | |
Weighted average number of ordinary shares used in computing loss per share(1)
|
| | | | | | | | | | | | | | | | | | | | | | | | |
Basic
|
| | | | 34,544 | | | | | | 34,396 | | | | | | 34,409 | | | | | | 34,396 | | |
Diluted
|
| | | | 37,098 | | | | | | 51,958 | | | | | | 51,972 | | | | | | 34,396 | | |
Pro forma loss per ordinary share(2) (unaudited) | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic
|
| | | $ | 1.37 | | | | | | | | | | | $ | 0.55 | | | | | | | | |
Diluted
|
| | | $ | 1.44 | | | | | | | | | | | $ | 0.94 | | | | | | | | |
Weighted average number of ordinary shares used in computing pro forma loss per share(2) (unaudited)
|
| | | | | ||||||||||||||||||||
Basic
|
| | | | 5,618,943 | | | | | | | | | | | | 5,071,663 | | | | | | | | |
Diluted
|
| | | | 5,847,526 | | | | | | | | | | | | 5,955,543 | | | | | | | | |
|
| | |
(unaudited)
As of September 30, 2017 |
| |||||||||||||||||||||
| | |
Actual
|
| |
Pro forma(1)
|
| |
Pro forma as
Adjusted(2) |
| |
Pro forma as
Further Adjusted(3) |
| ||||||||||||
| | |
(In thousands)
|
| |||||||||||||||||||||
Statements of financial position data: | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash and cash equivalents
|
| | | $ | 2,899 | | | | | $ | 13,735 | | | | | $ | 13,735 | | | | | $ | 63,760 | | |
Restricted deposits
|
| | | | 22 | | | | | | 22 | | | | | | 22 | | | | | | 22 | | |
Other current assets
|
| | | | 430 | | | | | | 430 | | | | | | 430 | | | | | | 430 | | |
Total current assets
|
| | | | 3,351 | | | | | | 14,187 | | | | | | 14,187 | | | | | | 64,212 | | |
Property and equipment
|
| | | | 215 | | | | | | 215 | | | | | | 215 | | | | | | 215 | | |
Intangible assets
|
| | | | 654 | | | | | | 654 | | | | | | 654 | | | | | | 654 | | |
Total assets
|
| | | $ | 4,220 | | | | | $ | 15,056 | | | | | $ | 15,056 | | | | | $ | 65,081 | | |
Accounts payable – Trade and other
|
| | | | 1,003 | | | | | | 1,303 | | | | | | 1,303 | | | | | | 1,303 | | |
Receipts on account of sale of Series B preferred shares
|
| | | | 1,575 | | | | | | — | | | | | | — | | | | | | — | | |
Short-term convertible loans
|
| | | | 11,695 | | | | | | — | | | | | | — | | | | | | — | | |
Total current liabilities
|
| | | | 14,273 | | | | | | 1,303 | | | | | | 1,303 | | | | | | 1,303 | | |
Long-term convertible loans
|
| | | | 3,919 | | | | | | 3,919 | | | | | | — | | | | | | — | | |
Preferred shares
|
| | | | 8,841 | | | | | | 33,517 | | | | | | — | | | | | | — | | |
Warrants to purchase preferred shares and shares
|
| | | | 4,723 | | | | | | 4,920 | | | | | | — | | | | | | — | | |
Liability to issue preferred shares and warrants
|
| | | | 1,044 | | | | | | 1,044 | | | | | | — | | | | | | — | | |
Severance pay obligations, net
|
| | | | 56 | | | | | | 56 | | | | | | 56 | | | | | | 56 | | |
Total liabilities
|
| | | $ | 32,856 | | | | | $ | 44,759 | | | | | $ | 1,359 | | | | | $ | 1,359 | | |
Equity (capital deficiency)
|
| | | $ | (28,636 ) | | | | | $ | (29,703 ) | | | | | $ | 13,697 | | | | | $ | 63,722 | | |
Working capital(4)
|
| | | $ | (10,922 ) | | | | | $ | 12,884 | | | | | $ | 12,884 | | | | | $ | 62,909 | | |
|
| | |
(unaudited)
As of September 30, 2017 |
| |||||||||||||||||||||
| | |
Actual
|
| |
Pro forma
|
| |
Pro forma as
Adjusted |
| |
Pro forma as
Further Adjusted |
| ||||||||||||
| | |
(In thousands)
|
| |||||||||||||||||||||
Cash and cash equivalents
|
| | | $ | 2,899 | | | | | $ | 13,735 | | | | | $ | 13,735 | | | | | $ | 63,760 | | |
Convertible loans
|
| | | $ | 15,614 | | | | | $ | 3,919 | | | | | $ | — | | | | | $ | — | | |
Series A preferred shares of NIS 0.01 par value; 25,000 authorized, 10,222 issued and outstanding, actual; 25,000 authorized, 10,222 issued and outstanding, pro forma; no shares authorized, issued and outstanding, pro forma as adjusted and pro forma as further adjusted
|
| | | | 8,841 | | | | | | 8,841 | | | | | | — | | | | | | — | | |
Series B preferred shares of NIS 0.01 par value; 35,000 authorized, no shares issued and outstanding, actual; 35,000 authorized, 14,283 issued and outstanding, pro forma; no shares authorized, issued and outstanding, pro forma as adjusted and pro forma as further adjusted
|
| | | | — | | | | | | 12,980 | | | | | | — | | | | | | — | | |
Series B-1 preferred shares of NIS 0.01 par value; 17,000 authorized, no shares issued and outstanding, actual; 17,000 authorized, 13,229 issued and outstanding, pro forma; no shares authorized, issued and outstanding, pro forma as adjusted and pro forma as further adjusted
|
| | | | — | | | | | | 11,695 | | | | | | — | | | | | | — | | |
Warrants to purchase preferred shares and shares
|
| | | | 4,723 | | | | | | 4,921 | | | | | | — | | | | | | — | | |
Liability to issue preferred shares and warrants
|
| | | | 1,044 | | | | | | 1,044 | | | | | | — | | | | | | — | | |
| | | | ||||||||||||||||||||||
| | |
Actual
|
| |
Pro forma
|
| |
Pro forma as
Adjusted |
| |
Pro forma as
Further Adjusted |
| ||||||||||||
| | |
(In thousands)
|
| |||||||||||||||||||||
Equity (capital deficiency): | | | | | | ||||||||||||||||||||
Ordinary shares; 1,000,000 authorized, 34,544 issued and outstanding, actual, of NIS 0.01 par value; 1,000,000 authorized, 35,544 issued and outstanding, pro forma of NIS 0.01 par value; 89,500,000 authorized, 6,897,252 issued and outstanding, pro forma as adjusted of NIS 0.0001117 par value; 89,500,000 authorized, 11,897,252 issued and outstanding, pro forma as further adjusted of NIS 0.0001117 par value
|
| | | | * | | | | | | * | | | | | | * | | | | | | * | | |
Other comprehensive income
|
| | | | 41 | | | | | | 41 | | | | | | 41 | | | | | | 41 | | |
Other reserves
|
| | | | 6,876 | | | | | | 6,876 | | | | | | 12,841 | | | | | | 12,841 | | |
Additional paid-in capital
|
| | | | 2,485 | | | | | | 2,485 | | | | | | 39,920 | | | | | | 89,945 | | |
Accumulated deficit
|
| | | | (38,038 ) | | | | | | (39,105 ) | | | | | | (39,105 ) | | | | | | (39,105 ) | | |
Total equity (capital deficiency)
|
| | | | (28,636 ) | | | | | | (29,703 ) | | | | | | 13,697 | | | | | | 63,722 | | |
Total capitalization
|
| | | $ | 1,586 | | | | | $ | 13,697 | | | | | $ | 13,697 | | | | | $ | 63,722 | | |
|
| | | |
Assumed initial public offering price
|
| | | | | | | | | $ | 11.00 | | |
| | | |
Pro forma as adjusted net tangible book value (deficit) per ordinary share
|
| | | $ | 1.89 | | | | | | | | |
| | | |
Increase in pro forma net tangible book value (deficit) per share attributable to this offering
|
| | | $ | 3.41 | | | | | | | | |
| | | |
Pro forma as further adjusted net tangible book value (deficit) per ordinary share after this offering
|
| | | $ | 5.30 | | | | | | | | |
| | | |
Dilution per ordinary share to new investors in this offering
|
| | | | | | | | | $ | 5.70 | | |
|
| | |
Shares Purchased
|
| |
Total Consideration
(thousands) |
| |
Average Price
Per Share |
| |||||||||||||||||||||
| | |
Number
|
| |
Percent
|
| |
Amount
|
| |
Percent
|
| ||||||||||||||||||
Existing shareholders
|
| | | | 6,897,252 | | | | | | 58 % | | | | | $ | 30,532 | | | | | | 36 % | | | | | $ | 4.40 | | |
New investors
|
| | | | 5,000,000 | | | | | | 42 % | | | | | | 55,000 | | | | | | 64 % | | | | | | 11.00 | | |
Total
|
| | | | 11,897,252 | | | | | | 100 % | | | | | $ | 85,532 | | | | | | 100 % | | | | | | | | |
|
| | |
Period-end
|
| |
Average for
Period |
| |
Low
|
| |
High
|
| ||||||||||||
| | |
(NIS per U.S. dollar)
|
| |||||||||||||||||||||
Year Ended December 31: | | | | | | ||||||||||||||||||||
2012
|
| | | | 3.7330 | | | | | | 3.8438 | | | | | | 3.7000 | | | | | | 4.0840 | | |
2013
|
| | | | 3.4710 | | | | | | 3.6023 | | | | | | 3.4710 | | | | | | 3.7910 | | |
2014
|
| | | | 3.8890 | | | | | | 3.5928 | | | | | | 3.4020 | | | | | | 3.9940 | | |
2015
|
| | | | 3.9020 | | | | | | 3.8869 | | | | | | 3.7610 | | | | | | 4.0530 | | |
2016
|
| | | | 3.8450 | | | | | | 3.8406 | | | | | | 3.7460 | | | | | | 3.9830 | | |
Nine Months Ended September 30: | | | | | | ||||||||||||||||||||
2016
|
| | | | 3.7580 | | | | | | 3.8432 | | | | | | 3.7460 | | | | | | 3.9830 | | |
2017
|
| | | | 3.5290 | | | | | | 3.5375 | | | | | | 3.5040 | | | | | | 3.5840 | | |
Month Ended: | | | | | | | | | | | | | | | | | | | | | | | | | |
July 31, 2017
|
| | | | 3.5580 | | | | | | 3.5509 | | | | | | 3.4930 | | | | | | 3.5900 | | |
August 31, 2017
|
| | | | 3.5960 | | | | | | 3.6011 | | | | | | 3.5740 | | | | | | 3.6280 | | |
September 30, 2017
|
| | | | 3.5290 | | | | | | 3.5375 | | | | | | 3.5040 | | | | | | 3.5840 | | |
October 31, 2017
|
| | | | 3.5210 | | | | | | 3.5124 | | | | | | 3.4910 | | | | | | 3.5420 | | |
November 30, 2017
|
| | | | 3.5190 | | | | | | 3.5210 | | | | | | 3.5060 | | | | | | 3.5440 | | |
December 31, 2017
|
| | | | 3.4670 | | | | | | 3.5035 | | | | | | 3.4670 | | | | | | 3.5500 | | |
January (through January 4, 2018)
|
| | | | 3.4480 | | | | | | 3.4550 | | | | | | 3.4480 | | | | | | 3.4600 | | |
| | |
(unaudited)
Nine Months Ended September 30, |
| |
(audited)
Year Ended December 31, |
| ||||||||||||||||||
| | |
2017
|
| |
2016
|
| |
2016
|
| |
2015
|
| ||||||||||||
| | |
(In thousands, except shares and per share data)
|
| |||||||||||||||||||||
Statements of comprehensive loss: | | | | | | | | | | | | | | | | | | | | | | | | | |
Research and development expenses
|
| | | $ | 1,686 | | | | | $ | 1,851 | | | | | $ | 2,648 | | | | | $ | 2,115 | | |
General and administrative expenses
|
| | | | 5,267 | | | | | | 2,296 | | | | | | 2,719 | | | | | | 1,586 | | |
Total operating loss
|
| | | | 6,953 | | | | | | 4,147 | | | | | | 5,367 | | | | | | 3,701 | | |
Financial (income) expense: | | | | | | | | | | | | | | | | | | | | | | | | | |
(Income) loss from change in fair value of financial liabilities at fair value
|
| | | | 403 | | | | | | (3,917 ) | | | | | | (4,311 ) | | | | | | 447 | | |
Other financial expenses, net
|
| | | | 66 | | | | | | 112 | | | | | | 143 | | | | | | 134 | | |
Financial (income) expenses, net
|
| | | | 469 | | | | | | (3,805 ) | | | | | | (4,168 ) | | | | | | 581 | | |
Net comprehensive loss
|
| | | $ | 7,422 | | | | | $ | 342 | | | | | $ | 1,199 | | | | | $ | 4,282 | | |
Loss per ordinary share(1) | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic
|
| | | $ | 215 | | | | | $ | 10 | | | | | $ | 35 | | | | | $ | 124 | | |
Diluted
|
| | | | 220 | | | | | | 91 | | | | | | 102 | | | | | | 124 | | |
Weighted average number of ordinary shares used in computing basic loss per ordinary share(1)
|
| | | | 34,544 | | | | | | 34,396 | | | | | | 34,409 | | | | | | 34,396 | | |
Weighted average number of ordinary shares used in computing diluted loss per ordinary share(1)
|
| | | | 37,098 | | | | | | 51,958 | | | | | | 51,972 | | | | | | 34,396 | | |
|
| | | | | | | | ||||
| | | | | | |
(In thousands)
|
| |||
| | | | Statements of financial position data: | | | |||||
| | | |
Cash and cash equivalents
|
| | | | 2,899 | | |
| | | |
Restricted deposits
|
| | | | 22 | | |
| | | |
Other current assets
|
| | | | 430 | | |
| | | |
Total current assets
|
| | | | 3,351 | | |
| | | |
Property and equipment
|
| | | | 215 | | |
| | | |
Intangible assets
|
| | | | 654 | | |
| | | |
Total assets
|
| | | $ | 4,220 | | |
| | | |
Accounts payable-Trade and other
|
| | | | 1,003 | | |
| | | |
Receipts on account of sale of Series B preferred shares
|
| | | | 1,575 | | |
| | | |
Short term convertible loans
|
| | | | 11,695 | | |
| | | |
Total current liabilities
|
| | | | 14,273 | | |
| | | |
Long term convertible loans
|
| | | | 3,919 | | |
| | | |
Preferred shares
|
| | | | 8,841 | | |
| | | |
Warrants to purchase preferred shares and shares
|
| | | | 4,723 | | |
| | | |
Liability to issue preferred shares and warrants
|
| | | | 1,044 | | |
| | | |
Severance pay obligations, net
|
| | | | 56 | | |
| | | |
Total liabilities
|
| | | $ | 32,856 | | |
| | | |
Capital deficiency
|
| | | $ | (28,636 ) | | |
| | | |
Working capital(1)
|
| | | $ | (10,922 ) | | |
|
| | | | |
(audited)
Year ended December 31, |
| |||||||||||||||||||
| | |
2017
|
| |
2016
|
| |
2016
|
| |
2015
|
| ||||||||||||
| | |
(in thousands)
|
| |
(in thousands)
|
| ||||||||||||||||||
Research and development
|
| | | $ | 142 | | | | | $ | 78 | | | | | $ | 130 | | | | | $ | 6 | | |
General and administrative
|
| | | | 3,890 | | | | | | 1,132 | | | | | | 1,360 | | | | | | 360 | | |
Total
|
| | | $ | 4,032 | | | | | $ | 1,210 | | | | | $ | 1,490 | | | | | $ | 366 | | |
|
| | | | | | |
September 30,
2017 |
| |||
| | | |
Series B preferred price per share
|
| | | $ | 908.78 | | |
| | | |
Volatility
|
| | | | 65 % | | |
| | | |
Probability of entering Phase 2b/3 trial for EB612
|
| | | | 70 % | | |
| | | |
Probability for IPO/shares registration
|
| | | | 85 % | | |
| | | | | | |
December 31,
|
| |||
| | | | | | |
2016
|
| |
2015
|
|
| | | |
WACC
|
| |
22%
|
| |
19%
|
|
| | | |
Value of equity*
|
| |
$71 million
|
| |
$76 million
|
|
| | | |
Volatility
|
| |
77%
|
| |
77%
|
|
| | | |
Commencement of sales
|
| |
2021 – 2025
|
| |
2018 – 2020
|
|
| | | |
Probability for success in phase 2
|
| |
—
|
| |
44%
|
|
| | | |
Probability of entering Phase 2b/3 trial for EB612
|
| |
70%
|
| | ||
| | | |
Probability for IPO/shares registration
|
| |
50%
|
| |
50%
|
|
| | | | | | |
December 31,
|
| |||
| | | | | | |
2016
|
| |
2015
|
|
| | | |
WACC
|
| |
22%
|
| |
19%
|
|
| | | |
Commencement of sales
|
| |
2021 – 2025
|
| |
2018 – 2020
|
|
| | | |
Probability of reaching sales
|
| |
20.1% – 37.9%
|
| |
30%
|
|
| | | | | | |
December 31,
|
| ||||||||||||
| | | | | | |
2016
|
| |
2015
|
| | ||||||||
| | | |
Risk free(1)
|
| | | | 0.99 % | | | | | | 0.81 % | | | | ||
| | | |
Market premium(2)
|
| | | | 5.69 % | | | | | | 5.81 % | | | | ||
| | | |
Specific risk(3)
|
| | | | 16.29 % | | | | | | 12.12 % | | | | ||
| | | |
Beta(4)
|
| | | | 0.84 | | | | | | 0.97 | | | | ||
| | | |
WACC
|
| | | | 22 % | | | | | | 19 % | | | |
| | | | | | |
September 30
2017 |
| |||
| | | |
Series B preferred price per share
|
| | | $ | 908.78 | | |
| | | |
Volatility
|
| | | | 65 % | | |
| | | |
Probability of entering Phase 2b/3 trial for EB612
|
| | | | 70 % | | |
| | | |
Probability for IPO/shares registration
|
| | | | 85 % | | |
| | | | | | |
December 31,
|
| ||||||
| | | | | | | | | |
2016
|
| |
2015
|
|
| | | |
WACC
|
| | | | |
22%
|
| |
19%
|
|
| | | |
Value of equity*
|
| | | | |
$71 million
|
| |
$76 million
|
|
| | | |
Volatility
|
| | | | |
77%
|
| |
77%
|
|
| | | |
Commencement of sales
|
| | | | |
2021 – 2025
|
| |
2018 – 2020
|
|
| | | |
Probability for success in phase 2
|
| | | | |
—
|
| |
44%
|
|
| | | |
Probability of entering Phase 2b/3 trial for EB612
|
| | | | |
70%
|
| | ||
| | | |
Probability for IPO/shares registration
|
| | | | |
50%
|
| |
50%
|
|
| | |
(unaudited)
Nine Months Ended September 30, |
| |
Increase (Decrease)
|
| ||||||||||||||||||
| | |
2017
|
| |
2016
|
| |
$
|
| |
%
|
| ||||||||||||
| | |
(In thousands, except for percentage information)
|
| |||||||||||||||||||||
Expenses: | | | | | | | | | | | | | | | | | | | | | | | | | |
Research and development
|
| | | $ | 1,686 | | | | | $ | 1,851 | | | | | $ | (165 ) | | | | | | (8.9 )% | | |
General and administrative
|
| | | | 5,267 | | | | | | 2,296 | | | | | | 2,971 | | | | | | 129.4 % | | |
Operating loss
|
| | | | 6,953 | | | | | | 4,147 | | | | | | 2,806 | | | | | | 67.7 % | | |
Financial (income) expenses, net
|
| | | | 469 | | | | | | (3,805 ) | | | | | | 4,274 | | | | | | — | | |
Net loss
|
| | | $ | 7,422 | | | | | $ | 342 | | | | | $ | 7,080 | | | | | | — | | |
|
| | |
Year Ended
December 31, |
| |
Increase (Decrease)
|
| ||||||||||||||||||
| | |
2016
|
| |
2015
|
| |
$
|
| |
%
|
| ||||||||||||
| | |
(In thousands, except for percentage information)
|
| |||||||||||||||||||||
Expenses: | | | | | | | | | | | | | | | | | | | | | | | | | |
Research and development
|
| | | $ | 2,648 | | | | | $ | 2,115 | | | | | $ | 533 | | | | | | 25.2 % | | |
General and administrative
|
| | | | 2,719 | | | | | | 1,586 | | | | | | 1,133 | | | | | | 71.4 % | | |
Operating loss
|
| | | | 5,367 | | | | | | 3,701 | | | | | | 1,666 | | | | | | 45.0 % | | |
Financial (income) expenses, net
|
| | | | (4,168 ) | | | | | | 581 | | | | | | (4,749 ) | | | | | | — | | |
Net loss (income)
|
| | | $ | 1,199 | | | | | $ | 4,282 | | | | | $ | (3,083 ) | | | | | | — | | |
|
| | | | | | |
Nine Months ended
September 30, |
| |||||||||
| | | | | | |
2017
|
| |
2016
|
| ||||||
| | | | | | |
(in thousands)
|
| |||||||||
| | | |
Cash used in operating activities
|
| | | $ | (2,865 ) | | | | | $ | (2,224 ) | | |
| | | |
Cash provided by (used in) investing activities
|
| | | | 1,006 | | | | | | (1,102 ) | | |
| | | |
Cash (used in) provided by financing activities
|
| | | | 595 | | | | | | 7,216 | | |
| | | |
Foreign exchange differences on cash and cash equivalents
|
| | | | — | | | | | | — | | |
| | | |
Net (decrease) increase in cash and cash equivalents
|
| | | $ | (1,264 ) | | | | | $ | 3,890 | | |
|
| | | | | | | | ||||||||||
| | | | | | |
2016
|
| |
2015
|
| ||||||
| | | | | | |
(in thousands)
|
| |||||||||
| | | |
Cash used in operating activities
|
| | | $ | (3,142 ) | | | | | $ | (3,495 ) | | |
| | | |
Cash used in investing activities
|
| | | | (1,116 ) | | | | | | (54 ) | | |
| | | |
Cash provided by financing activities
|
| | | | 7,216 | | | | | | 4,465 | | |
| | | |
Foreign exchange differences on cash and cash equivalents
|
| | | | — | | | | | | (1 ) | | |
| | | |
Net increase in cash and cash equivalents
|
| | | $ | 2,958 | | | | | $ | 915 | | |
|
| | |
Payments due by period
|
| |||||||||||||||||||||||||||
Contractual Obligations
|
| |
Total
|
| |
Less than
1 year |
| |
1 - 3
years |
| |
3 - 5
years |
| |
More than
5 years |
| |||||||||||||||
| | |
(In thousands)
|
| |||||||||||||||||||||||||||
Operating leases for facility and vehicles
|
| | | $ | 35 | | | | | $ | 35 | | | | | | — | | | | | | — | | | | | | — | | |
2012 Convertible loan
|
| | | | 1,288 | | | | | | 34 | | | | | | — | | | | | | — | | | | | | 1,254 | | |
2015 Convertible loan
|
| | | | 1,053 | | | | | | 1,053 | | | | | | — | | | | | | — | | | | | | — | | |
2016 Convertible loan
|
| | | | 9,135 | | | | | | 9,135 | | | | | | — | | | | | | — | | | | | | — | | |
Total
|
| | | $ | 11,511 | | | | | $ | 10,257 | | | | | $ | — | | | | | $ | — | | | | | $ | 1,254 | | |
|
Program
|
| |
Indication
|
| |
Description
|
| |
Stage of
Development |
| |
Status
|
|
EB612
|
| | Hypoparathyroidism | | | Oral PTH (1-34) | | | Phase 2a completed | | | Phase 2a successfully completed; results reported Q3 2015 | |
| | | | | | | | | | | | Pharmacokinetic/pharmacodynamic, or PK/PD, study head to head with Natpara in hypoparathyroid patients expected in H1 2018 | |
| | | | | | | | | | | | Phase 2b/3 initiation in United States, United Kingdom, Europe, Israel and Canada expected H2 2018 | |
| | | | | | | | | | | | Topline data expected H1 2020 | |
Program
|
| |
Indication
|
| |
Description
|
| |
Stage of
Development |
| |
Status
|
|
EB613
|
| | Osteoporosis | | | Oral PTH (1-34) | | | Phase 1 | | | Phase 2a initiation expected H1 2018 | |
| | | | | | | | | | | | In 2019, intend to partner with a larger biopharmaceutical company for the clinical development and commercialization | |
Oral PTH
|
| | Non-union fractures | | | Oral PTH (1-34) | | | Preclinical | | | Phase 2a initiation expected H2 2018 | |
Formulation
|
| |
Participants
|
| |
Cmax (pg/ml)
|
| |
Tmax (min)
|
| |
Coefficient of Variation (%)
|
|
EB612 Oral PTH
|
| |
10
|
| |
235.6 ± 36
|
| |
16.5 ± 1.2
|
| |
48
|
|
Injectable PTH
|
| |
10
|
| |
184.2 ± 26
|
| |
16 ± 1.8
|
| |
45
|
|
Class of Drug
|
| |
Name
(Producer) |
| |
Method of Action
|
| |
Known Side Effects
|
| |
2016
Branded Sales (in millions) |
|
Injectable PTH | | | Forteo (Eli Lilly) | | | Increases bone mineral density by inhibiting the resorption of bone, promotes new bone formation | | | Decrease in blood pressure, increase in serum calcium in the blood; nausea, joint aches, pain, leg cramps, injection site reactions | | |
$1,500
|
|
Monoclonal antibody | | |
Prolia (Amgen)
|
| | Blocks the breakdown of bones by binding to RANKL protein that is essential to activate osteoclasts | | | Hypocalcemia, serious infections, dermatologic adverse reactions, osteonecrosis of the jaw, back pain, pain in extremity, musculoskeletal pain, hypercholesterolemia, and cystitis | | |
$1,635
|
|
Selective estrogen receptor modulators (SERMs) | | | Evista (Eli Lilly) | | | Binds to estrogen receptors at a selective tissue, with an agonist effect on bone tissue | | | Deep vein thrombosis, pulmonary embolism, retinal vein thrombosis, increased risk of death due to stroke, endometrial cancer, cardiovascular disease | | |
$172
|
|
Bisphosphonate | | | Fosamax (Merck) Zometa (Novartis) | | | Prevent bone loss by inducing cell death (apoptosis) in the osteoclast cells | | | Irritation of the gastrointestinal mucosa, hypocalcemia, severe musculoskeletal pain, osteonecrosis of the jaw | | |
N/A (Generic) N/A (Generic)
|
|
Company/Technology
|
| |
Molecule
|
| |
API MW (g/mole)
|
| |
Bioavailability (F)
|
|
Entera Bio
|
| |
PTH (1-34)
|
| |
4118
|
| |
1.5%
|
|
Novartis/Emisphere (Eligen – CNAC)(1)
|
| |
PTH (1-34)
|
| |
4118
|
| |
0.2 – 0.5%
|
|
Enteris Biopharma – Unigen (Peptelligence)(2)
|
| |
PTH (1-31)
|
| |
3719
|
| |
0.52%
|
|
Multiple manufacturers(3)
|
| |
Desmopressin
|
| |
1069
|
| |
0.16%
|
|
Chiasma (TPE)(4)
|
| |
Octreotide
|
| |
1019 (Cyclic peptide)
|
| |
0.67%
|
|
Proxima Concepts (AXCESS)(5)
|
| |
Insulin
|
| |
5733
|
| |
0.7%
|
|
|
Name
|
| |
Age
|
| |
Position
|
|
| Executive Officers | | | | ||||
| Dr. Phillip Schwartz | | |
55
|
| | Chief Executive Officer and Director | |
| Mira Rosenzweig | | |
46
|
| | Chief Financial Officer | |
| Dr. Hillel Galitzer | | |
39
|
| | Chief Operating Officer | |
| Dr. Miriam Blum | | |
54
|
| | Chief Medical Officer | |
| Directors | | | | ||||
| Luke M. Beshar | | |
59
|
| | Chairman of the Board | |
| Roger Garceau | | |
64
|
| | Director | |
| Gerald Lieberman(1)(2)(3) | | |
70
|
| | Director | |
| Zeev Bronfeld(1)(2) | | |
66
|
| | Director | |
| David Ben Ami | | |
56
|
| | Director | |
| Chaim Davis | | |
40
|
| | Director | |
| Yonatan Malca(1)(2) | | |
51
|
| | Director | |
| | | | | |
Annual 2017 Compensation (unaudited)
|
| | ||||||||||||||||||||||||||
Name
|
| |
Position
|
| |
Base Salary
and Related Benefits(1) |
| |
Bonus
|
| |
Retirement,
Service Fees and Other Similar Benefits |
| |
Share Based
Compensation(2) |
| |
Total
|
| |||||||||||||||
Luke M. Beshar
|
| | Chairman of the board of directors | | | | $ | — | | | | | | — | | | | | | 278,922 | | | | | | 3,054,263 | | | | | | 3,333,185 | | |
Dr. Roger Garceau
|
| | Chief Development Advisor | | | | $ | — | | | | | | — | | | | | | 114,000 | | | | | | 886,925 | | | | | | 1,000,925 | | |
Dr. Phillip Schwartz
|
| | Chief Executive Officer and Director | | | | $ | 300,797 | | | | | | 150,000 | | | | | | 44,497 | | | | | | 120,289 | | | | | | 615,583 | | |
Gerald Lieberman
|
| | Director | | | | $ | — | | | | | | — | | | | | | 17,940 | | | | | | 482,177 | | | | | | 500,117 | | |
Dr. Hillel Galitzer
|
| | Chief Operating Officer | | | | $ | 197,993 | | | | | | 60,000 | | | | | | 24,808 | | | | | | 58,311 | | | | | | 341,112 | | |
| | |
Shares Beneficially
Owned Prior to the Offering(1) |
| |
Shares Beneficially
Owned After the Offering (Assuming No Exercise of the Over-Allotment Option)(1) |
| |
Shares Beneficially
Owned After the Offering (Assuming Full Exercise of the Over-Allotment Option)(1) |
| |||||||||||||||||||||||||||
Name of Beneficial Owner
|
| |
Number
|
| |
Percentage
|
| |
Number
|
| |
Percentage
|
| |
Number
|
| |
Percentage
|
| ||||||||||||||||||
Principal Shareholders: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
D.N.A Biomedical Solutions Ltd(2)
|
| | | | 2,739,237 | | | | | | 39.7 % | | | | | | 2,739,237 | | | | | | 23.0 % | | | | | | 2,739,237 | | | | | | 21.7 % | | |
Centillion Fund(3)
|
| | | | 1,509,151 | | | | | | 19.8 % | | | | | | 1,509,151 | | | | | | 12.0 % | | | | | | 1,509,151 | | | | | | 11.3 % | | |
Pontifax (Israel), Pontifax (Cayman) IV L.P. and Pontiax (China) IV Fund L.P. (collectively, “Pontifax”)(4)
|
| | | | 587,569 | | | | | | 8.3 % | | | | | | 587,569 | | | | | | 4.9 % | | | | | | 587,569 | | | | | | 4.6 % | | |
Capital Point Ltd.(5)
|
| | | | 868,956 | | | | | | 12.6 % | | | | | | 868,956 | | | | | | 7.3 % | | | | | | 868,956 | | | | | | 6.9 % | | |
Menachem Raphael(6)
|
| | | | 430,676 | | | | | | 6.2 % | | | | | | 430,676 | | | | | | 3.6 % | | | | | | 430,676 | | | | | | 3.4 % | | |
Executive Officers and Directors: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Zeev Bronfeld(7)
|
| | | | 2,739,237 | | | | | | 39.7 % | | | | | | 2,739,237 | | | | | | 23.0 % | | | | | | 2,739,237 | | | | | | 21.7 % | | |
Yonatan Malca(8)
|
| | | | 2,739,237 | | | | | | 39.7 % | | | | | | 2,739,237 | | | | | | 23.0 % | | | | | | 2,739,237 | | | | | | 21.7 % | | |
Dr. Phillip Schwartz(9)
|
| | | | 414,284 | | | | | | 5.7 % | | | | | | 414,284 | | | | | | 3.4 % | | | | | | 414,284 | | | | | | 3.2 % | | |
Dr. Miriam Blum(10)
|
| | | | 414,284 | | | | | | 5.7 % | | | | | | 414,284 | | | | | | 3.4 % | | | | | | 414,284 | | | | | | 3.2 % | | |
Luke M. Beshar(11)
|
| | | | 337,237 | | | | | | 4.7 % | | | | | | 337,237 | | | | | | 2.8 % | | | | | | 337,237 | | | | | | 2.6 % | | |
David Ben Ami(12)
|
| | | | 216,233 | | | | | | 3.1 % | | | | | | 216,233 | | | | | | 1.8 % | | | | | | 216,233 | | | | | | 1.7 % | | |
Gerald Lieberman(13)
|
| | | | 103,194 | | | | | | 1.5 % | | | | | | 103,194 | | | | | | 0.9 % | | | | | | 103,194 | | | | | | 0.8 % | | |
Chaim Davis(14)
|
| | | | 95,856 | | | | | | 1.4 % | | | | | | 95,856 | | | | | | 0.8 % | | | | | | 95,856 | | | | | | 0.8 % | | |
Dr. Roger J. Garceau(15)
|
| | | | 132,371 | | | | | | 1.9 % | | | | | | 132,371 | | | | | | 1.1 % | | | | | | 132,371 | | | | | | 1.0 % | | |
Mira Rosenzweig(16)
|
| | | | * | | | | | | * | | | | | | * | | | | | | * | | | | | | * | | | | | | * | | |
Dr. Hillel Galitzer(17)
|
| | | | * | | | | | | * | | | | | | * | | | | | | * | | | | | | * | | | | | | * | | |
All executive officers and directors as a group (11 persons)(18)
|
| | | | 4,100,480 | | | | | | 51.2 % | | | | | | 4,100,480 | | | | | | 31.5 % | | | | | | 4,100,480 | | | | | | 29.8 % | | |
| | | |
Underwriter
|
| |
Number of
Ordinary Shares |
| |||
| | | |
Oppenheimer & Co. Inc.
|
| | | | | | |
| | | |
Ladenburg Thalmann & Co. Inc.
|
| | | | | | |
| | | |
Total
|
| | | | | | |
|
| | | | | | |
Per
Ordinary Share |
| |
Total Without
Exercise of Over-Allotment Option |
| |
Total With Full
Exercise of Over-Allotment Option |
| |||||||||
| | | |
Public offering price
|
| | | $ | | | | | | $ | | | | | | $ | | | |
| | | |
Underwriting discounts and commissions
|
| | | $ | | | | | $ | | | | | $ | | | |||
| | | |
Proceeds, before expenses, to us
|
| | | $ | | | | | $ | | | | | $ | | |
| | | |
SEC registration fee
|
| | | $ | 10,062 | | |
| | | |
NASDAQ Capital Market listing fee
|
| | | $ | 50,000 | | |
| | | |
FINRA filing fee
|
| | | $ | 12,500 | | |
| | | |
Printing expenses
|
| | | $ | 100,000 | | |
| | | |
Legal fees and expenses
|
| | | $ | 700,000 | | |
| | | |
Accounting fees and expenses
|
| | | $ | 234,000 | | |
| | | |
Transfer agent’s fees
|
| | | $ | 25,000 | | |
| | | |
Miscellaneous
|
| | | $ | 100,000 | | |
| | | |
Total
|
| | | $ | 1,231,562 | | |
| | |
Page
|
| |||
Audited Financial Statements | | | | | | | |
| | | | F-2 | | | |
| | | | F-3 | | | |
| | | | F-4 | | | |
| | | | F-5 | | | |
| | | | F-6 | | | |
| | | | F-7 | | | |
Unaudited Financial Statements | | | | | | | |
| | | | F-30 | | | |
| | | | F-31 | | | |
| | | | F-32 | | | |
| | | | F-33 | | | |
| | | | F-35 | | |
|
Tel-Aviv, Israel
July 13, 2017 |
| |
/s/ Kesselman & Kesselman
Certified Public Accountants (lsr.) A member firm of PricewaterhouseCoopers International Limited |
|
| | | | | |
December 31
|
| |||||||||
| | |
Note
|
| |
2016
|
| |
2015
|
| ||||||
| | | | | |
U.S. dollars in thousands
|
| |||||||||
Assets
|
| | | | | | | | | | | | | | | |
CURRENT ASSETS: | | | | | | | | | | | | | | | | |
Cash and cash equivalents
|
| |
5
|
| | | | 4,163 | | | | | | 1,205 | | |
Restricted deposits
|
| |
7a2
|
| | | | 1,075 | | | | | | — | | |
Other current assets
|
| |
12a
|
| | | | 195 | | | | | | 695 | | |
TOTAL CURRENT ASSETS
|
| | | | | | | 5,433 | | | | | | 1,900 | | |
NON-CURRENT ASSETS: | | | | | | | | | | | | | | | | |
Property and equipment
|
| | | | | | | 199 | | | | | | 193 | | |
Intangible assets
|
| |
6
|
| | | | 654 | | | | | | 654 | | |
TOTAL NON-CURRENT ASSETS
|
| | | | | | | 853 | | | | | | 847 | | |
TOTAL ASSETS
|
| | | | | | | 6,286 | | | | | | 2,747 | | |
Liabilities net of capital deficiency
|
| | | | | | | | | | | | | | | |
CURRENT LIABILITIES: | | | | | | | | | | | | | | | | |
Accounts payable:
|
| | | | | | | | | | | | | | | |
Trade
|
| | | | | | | 53 | | | | | | 351 | | |
Other
|
| |
12b
|
| | | | 604 | | | | | | 453 | | |
Convertible loans
|
| |
7
|
| | | | 9,885 | | | | | | — | | |
TOTAL CURRENT LIABILITIES
|
| | | | | | | 10,542 | | | | | | 804 | | |
NON-CURRENT LIABILITIES: | | | | | | | | | | | | | | | | |
Convertible loans
|
| |
7
|
| | | | 4,835 | | | | | | 8,053 | | |
Preferred shares
|
| |
8
|
| | | | 11,031 | | | | | | 13,062 | | |
Warrants to purchase preferred shares and shares
|
| |
7,8
|
| | | | 4,800 | | | | | | 4,332 | | |
Liability to issue preferred shares and warrants
|
| |
8
|
| | | | 273 | | | | | | 2,154 | | |
Severance pay obligations, net
|
| | | | | | | 51 | | | | | | 29 | | |
TOTAL NON-CURRENT LIABILITIES
|
| | | | | | | 20,990 | | | | | | 27,630 | | |
TOTAL LIABILITIES
|
| | | | | | | 31,532 | | | | | | 28,434 | | |
COMMITMENTS AND CONTINGENCIES
|
| |
9
|
| | | | | | | | | | | | |
CAPITAL DEFICIENCY:
|
| |
10
|
| | | | | | | | | | | | |
Ordinary Shares, NIS 0.01 par value:
|
| | | | | | | | | | | | | | | |
Authorized – as of December 31, 2016 and 2015,
|
| | | | | | | | | | | | | | | |
1,000,000 shares; issued and outstanding
|
| | | | | | | | | | | | | | | |
as of December 31, 2016 – 34,544 shares and as of December 31, 2015 – 34,396 shares
|
| | | | | | | * | | | | | | * | | |
Accumulated other comprehensive income
|
| | | | | | | 41 | | | | | | 41 | | |
Other reserves
|
| | | | | | | 2,844 | | | | | | 1,354 | | |
Additional paid in capital
|
| | | | | | | 2,485 | | | | | | 2,335 | | |
Accumulated deficit
|
| | | | | | | (30,616 ) | | | | | | (29,417 ) | | |
TOTAL CAPITAL DEFICIENCY
|
| | | | | | | (25,246 ) | | | | | | (25,687 ) | | |
TOTAL LIABILITIES NET OF CAPITAL DEFICIENCY
|
| | | | | | | 6,286 | | | | | | 2,747 | | |
|
| | | | | |
Year ended December 31
|
| |||||||||
| | |
Note
|
| |
2016
|
| |
2015
|
| ||||||
| | | | | |
U.S. dollars in thousands
|
| |||||||||
RESEARCH AND DEVELOPMENT EXPENSES
|
| | | | | | | 2,648 | | | | | | 2,115 | | |
GENERAL AND ADMINISTRATIVE EXPENSES
|
| | | | | | | 2,719 | | | | | | 1,586 | | |
OPERATING LOSS
|
| | | | | | | 5,367 | | | | | | 3,701 | | |
FINANCIAL (INCOME) EXPENSES:
|
| |
7,8
|
| | | | | | | | | | | | |
(Income) loss from change in fair value of financial liabilities at fair value
|
| | | | | | | (4,311 ) | | | | | | 447 | | |
Other financial expenses, net
|
| | | | | | | 143 | | | | | | 134 | | |
FINANCIAL (INCOME) EXPENSES,
net
|
| | | | | | | (4,168 ) | | | | | | 581 | | |
NET COMPREHENSIVE LOSS
|
| | | | | | | 1,199 | | | | | | 4,282 | | |
|
| | | | | |
U.S. dollars (except for
share numbers) |
| |||||||||
LOSS PER ORDINARY SHARE – | | |
13
|
| | | | | | | | | | | | |
Basic
|
| | | | | | | 35 | | | | | | 124 | | |
Diluted
|
| | | | | | | 102 | | | | | | 124 | | |
WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES – | | | | | | | | | | | | | | | | |
Basic
|
| | | | | | | 34,409 | | | | | | 34,396 | | |
Diluted
|
| | | | | | | 51,972 | | | | | | 34,396 | | |
|
| | |
Number of
ordinary shares |
| |
Ordinary
Shares- Amount |
| |
Accumulated
other comprehensive income |
| |
Other
reserves |
| |
Additional
paid in capital |
| |
Accumulated
deficit |
| |
Total
|
| |||||||||||||||||||||
| | | | | |
U.S. dollars in thousands
|
| | | | |||||||||||||||||||||||||||||||||
BALANCE AT JANUARY 1, 2015
|
| | | | 34,396 | | | | | | * | | | | | | 41 | | | | | | 988 | | | | | | 2,335 | | | | | | (25,135 ) | | | | | | (21,771 ) | | |
CHANGES DURING THE YEAR | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
ENDED DECEMBER 31, 2015:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Loss for the year
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (4,282 ) | | | | | | (4,282 ) | | |
Share-based compensation
|
| | | | | | | | | | | | | | | | | | | | | | 366 | | | | | | | | | | | | | | | | | | 366 | | |
BALANCE AT DECEMBER 31, 2015
|
| | | | 34,396 | | | | | | * | | | | | | 41 | | | | | | 1,354 | | | | | | 2,335 | | | | | | (29,417 ) | | | | | | (25,687 ) | | |
CHANGES DURING THE YEAR | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
ENDED DECEMBER 31, 2016:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Issuance of shares
|
| | | | 148 | | | | | | * | | | | | | | | | | | | | | | | | | 150 | | | | | | | | | | | | 150 | | |
Loss for the year
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (1,199 ) | | | | | | (1,199 ) | | |
Share-based compensation
|
| | | | | | | | | | | | | | | | | | | | | | 1,490 | | | | | | | | | | | | | | | | | | 1,490 | | |
BALANCE AT DECEMBER 31, 2016
|
| | | | 34,544 | | | | | | * | | | | | | 41 | | | | | | 2,844 | | | | | | 2,485 | | | | | | (30,616 ) | | | | | | (25,246 ) | | |
|
| | |
Year ended December 31
|
| |||||||||
| | |
2016
|
| |
2015
|
| ||||||
| | |
U.S dollars in thousands
|
| |||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | | | | | | | | |
Loss for the year
|
| | | | (1,199 ) | | | | | | (4,282 ) | | |
Adjustments required to reflect net cash used in operating activities (see appendix A)
|
| | | | (1,943 ) | | | | | | 787 | | |
Net cash used in operating activities
|
| | | | (3,142 ) | | | | | | (3,495 ) | | |
CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | | | | | | | | | |
Investment in restricted deposits
|
| | | | (1,075 ) | | | | | | — | | |
Purchase of property and equipment
|
| | | | (41 ) | | | | | | (54 ) | | |
Net cash used in investing activities
|
| | | | (1,116 ) | | | | | | (54 ) | | |
CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | | | | | | | |
Proceeds from issuance of preferred shares and warrants
|
| | | | — | | | | | | 2,460 | | |
Proceeds from convertible loan and warrants, net
|
| | | | 7,216 | | | | | | 2,005 | | |
Net cash generated from financing activities
|
| | | | 7,216 | | | | | | 4,465 | | |
NET INCREASE IN CASH AND CASH EQUIVALENTS
|
| | | | 2,958 | | | | | | 916 | | |
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR
|
| | | | 1,205 | | | | | | 290 | | |
FOREIGN EXCHANGE DIFFERENCES ON CASH AND CASH EQUIVALENTS
|
| | | | | | | | |
|
(1
)
|
| |
CASH AND CASH EQUIVALENTS AT END OF THE YEAR
|
| | | | 4,163 | | | | | | 1,205 | | |
APPENDIX A: | | | | | | | | | | | | | |
Adjustments required to reflect net cash used in operating activities:
|
| | | | | | | | | | | | |
Depreciation
|
| | | | 35 | | | | | | 28 | | |
(Gain) loss from change in fair value of financial liabilities at fair value
|
| | | | (4,311 ) | | | | | | 447 | | |
Issuance costs related to convertible loan and warrants
|
| | | | 363 | | | | | | — | | |
Financial expenses
|
| | | | 105 | | | | | | 129 | | |
Net changes in severance pay
|
| | | | 22 | | | | | | — | | |
Share-based compensation
|
| | | | 1,490 | | | | | | 366 | | |
| | | | | (2,296 ) | | | | | | 970 | | |
Changes in working capital: | | | | | | | | | | | | | |
Decrease (increase) in other current assets
|
| | | | 500 | | | | | | (593 ) | | |
(Decrease) increase in accounts payable:
|
| | | | | | | | | | | | |
Trade
|
| | | | (298 ) | | | | | | 227 | | |
Other
|
| | | | 151 | | | | | | 183 | | |
| | | | | 353 | | | | | | (183 ) | | |
| | | | | (1,943 ) | | | | | | 787 | | |
SUPPLEMENTARY INFORMATION ON INVESTING AND FINANCING ACTIVITIES NOT INVOLVING CASH FLOWS:
|
| | | | | | | | | | | | |
| | |
December 31, 2016
|
| |||||||||||||||||||||||||||
| | |
Decrease
of 10% |
| |
Decrease
of 5% |
| |
Actual
Value |
| |
Increase
of 5% |
| |
Increase
of 10% |
| |||||||||||||||
| | |
U.S. dollars in thousands
|
| |||||||||||||||||||||||||||
Value of equity
|
| | | | 63,900 | | | | | | 67,450 | | | | | | 71,000 | | | | | | 74,550 | | | | | | 78,100 | | |
Convertible loans
|
| | | | 13,127 | | | | | | 13,422 | | | | | | 13,715 | | | | | | 14,009 | | | | | | 14,298 | | |
Preferred shares
|
| | | | 9,945 | | | | | | 10,492 | | | | | | 11,031 | | | | | | 11,584 | | | | | | 12,137 | | |
Warrants to purchase preferred shares and shares
|
| | | | 4,331 | | | | | | 4,568 | | | | | | 4,800 | | | | | | 5,035 | | | | | | 5,266 | | |
Liability to issue preferred shares and warrants
|
| | | | 227 | | | | | | 250 | | | | | | 273 | | | | | | 296 | | | | | | 319 | | |
| | | | | | |
Loans and
receivables |
| |||
| | | | | | |
U.S. dollars
in thousands |
| |||
| | | | | | | |||||
| | | | As of December 31, 2016: | | | | | | | |
| | | |
Cash and cash equivalents
|
| | | | 4,163 | | |
| | | |
Restricted deposits
|
| | | | 1,075 | | |
| | | |
Receivables (excluding prepaid expenses)
|
| | | | 157 | | |
| | | | | | | | | 5,395 | | |
| | | | As of December 31, 2015: | | | | | | | |
| | | |
Cash and cash equivalents
|
| | | | 1,205 | | |
| | | |
Receivables (excluding prepaid expenses)
|
| | | | 160 | | |
| | | | | | | | | 1,365 | | |
|
| | | | | | |
Financial
liabilities at fair value through profit or loss (Level 3) |
| |
Financial
liabilities at amortized cost |
| |
Total
|
| |||||||||
| | | | | | |
U.S. dollars in thousands
|
| |||||||||||||||
| | | | As of December 31, 2016: | | | | | | | | | | | | | | | | | | | |
| | | |
Trade and other payable
|
| | | | — | | | | | | 657 | | | | | | 657 | | |
| | | |
Convertible loans
|
| | | | 13,715 | | | | | | 1,005 | | | | | | 14,720 | | |
| | | |
Preferred shares
|
| | | | 11,031 | | | | | | — | | | | | | 11,031 | | |
| | | |
Warrants to purchase preferred shares and shares
|
| | | | 4,800 | | | | | | — | | | | | | 4,800 | | |
| | | |
Liability to issue preferred shares and warrants
|
| | | | 273 | | | | | | — | | | | | | 273 | | |
| | | | | | | | | 29,819 | | | | | | 1,662 | | | | | | 31,481 | | |
|
| | | | | | |
Financial
liabilities at fair value through profit or loss (Level 3) |
| |
Financial
liabilities at amortized cost |
| |
Total
|
| |||||||||
| | | | | | |
U.S. dollars in thousands
|
| |||||||||||||||
| | | | As of December 31, 2015: | | | | | | | | | | | | | | | | | | | |
| | | |
Trade and other payable
|
| | | | — | | | | | | 804 | | | | | | 804 | | |
| | | |
Convertible loan
|
| | | | 6,160 | | | | | | 1,893 | | | | | | 8,053 | | |
| | | |
Preferred shares
|
| | | | 13,062 | | | | | | — | | | | | | 13,062 | | |
| | | |
Warrants to purchase preferred shares and shares
|
| | | | 4,332 | | | | | | — | | | | | | 4,332 | | |
| | | |
Liability to issue preferred shares and warrants
|
| | | | 2,154 | | | | | | — | | | | | | 2,154 | | |
| | | | | | | | | 25,708 | | | | | | 2,697 | | | | | | 28,405 | | |
|
| | | | | | |
December 31,
|
| |||||||||
| | | | | | |
2016
|
| |
2015
|
| ||||||
| | | | | | |
U.S. dollars in thousands
|
| |||||||||
| | | |
Cash in bank
|
| | | | 4,159 | | | | | | 1,201 | | |
| | | |
Short-term bank deposits
|
| | | | 4 | | | | | | 4 | | |
| | | | | | | | | 4,163 | | | | | | 1,205 | | |
|
| | | | | | |
December 31,
|
| |||
| | | | | | |
2016
|
| |
2015
|
|
| | | |
Weighted average cost of capital (WACC)
|
| |
22%
|
| |
19%
|
|
| | | |
Commencement of sales
|
| |
2021 – 2025
|
| |
2018 – 2020
|
|
| | | |
Probability of reaching sales
|
| |
20.1% – 37.9%
|
| |
30%
|
|
| | | | | | |
December 31,
|
| |||
| | | | | | |
2016
|
| |
2015
|
|
| | | |
WACC
|
| |
22%
|
| |
19%
|
|
| | | |
Value of equity*
|
| |
$71 million
|
| |
$76 million
|
|
| | | |
Volatility
|
| |
77%
|
| |
77%
|
|
| | | |
Commencement of sales
|
| |
2021 – 2025
|
| |
2018 – 2020
|
|
| | | |
Probability for success in phase 2
|
| |
—
|
| |
44%
|
|
| | | |
Probability of entering Phase 2b/3 for Hypo
|
| |
70%
|
| |
—
|
|
| | | |
Probability for IPO
|
| |
50%
|
| |
50%
|
|
| | | | | | |
Convertible loans
|
| |||
| | | | | | |
U.S. dollars
in thousands |
| |||
| | | |
Balance as of January 1, 2015
|
| | | | 6,158 | | |
| | | |
Additions during 2015
|
| | | | 1,765 | | |
| | | |
Financial expenses
|
| | | | 128 | | |
| | | |
Changes in fair value
|
| | | | 2 | | |
| | | |
Balance as of December 31, 2015
|
| | | | 8,053 | | |
| | | |
Additions during 2016
|
| | | | 6,110 | | |
| | | |
Financial expenses
|
| | | | 105 | | |
| | | |
Changes in fair value
|
| | | | 452 | | |
| | | |
Balance as of December 31, 2016
|
| | | | 14,720 | | |
|
| | | | | | |
Warrants to
purchase preferred shares and shares |
| |||
| | | | | | |
U.S. dollars
in thousands |
| |||
| | | |
Balance as of January 1, 2015
|
| | | | — | | |
| | | |
Additions during 2015
|
| | | | 240 | | |
| | | |
Changes in fair value
|
| | | | (25 ) | | |
| | | |
Balance as of December 31, 2015
|
| | | | 215 | | |
| | | |
Additions during 2016
|
| | | | 1,319 | | |
| | | |
Changes in fair value
|
| | | | 103 | | |
| | | |
Balance as of December 31, 2016
|
| | | | 1,637 | | |
|
| | | | | | |
Preferred
shares |
| |
Warrants to
purchase preferred shares and shares |
| |
Liability to
issue preferred shares and warrants |
| |
Total
|
| ||||||||||||
| | | | | | |
U.S. dollars in thousands
|
| |||||||||||||||||||||
| | | |
Balance as of January 1, 2015
|
| | | | 6,550 | | | | | | 1,380 | | | | | | 8,473 | | | | | | 16,403 | | |
| | | |
Additions during 2015
|
| | | | 1,903 | | | | | | 557 | | | | | | — | | | | | | 2,460 | | |
| | | |
Changes in fair value
|
| | | | 4,609 | | | | | | 2,180 | | | | | | (6,319 ) | | | | | | 470 | | |
| | | |
Balance as of December 31, 2015
|
| | | | 13,062 | | | | | | 4,117 | | | | | | 2,154 | | | | | | 19,333 | | |
| | | |
Changes in fair value
|
| | | | (2,031 ) | | | | | | (954 ) | | | | | | (1,881 ) | | | | | | (4,866 ) | | |
| | | |
Balance as of December 31, 2016
|
| | | | 11,031 | | | | | | 3,163 | | | | | | 273 | | | | | | 14,467 | | |
|
| | | | | | |
December 31,
|
| |||
| | | | | | |
2016
|
| |
2015
|
|
| | | |
WACC
|
| |
22%
|
| |
19%
|
|
| | | |
Value of equity*
|
| |
$71 million
|
| |
$76 million
|
|
| | | |
Volatility
|
| |
77%
|
| |
77%
|
|
| | | |
Commencement of sales
|
| |
2021 – 2025
|
| |
2018 – 2020
|
|
| | | |
Probability for success in phase 2
|
| |
—
|
| |
44%
|
|
| | | |
Probability of entering Phase 2b/3 for Hypo
|
| |
70%
|
| | ||
| | | |
Probability for IPO
|
| |
50%
|
| |
50%
|
|
| | | | | | |
Number of shares
|
| |||||||||
| | | | | | |
December 31
|
| |||||||||
| | | | | | |
2016
|
| |
2015
|
| ||||||
| | | |
Authorized
|
| | | | 1,000,000 | | | | | | 1,000,000 | | |
| | | |
Issued
|
| | | | 34,544 | | | | | | 34,396 | | |
|
| | | | | | |
2016
|
| |
2015
|
| ||||||
| | | |
Ordinary share price
|
| | | $ | 1,018 | | | | | $ | 1,269 | | |
| | | |
Exercise price
|
| | | $ | 479 | | | | | $ | 463 | | |
| | | |
Dividend yield
|
| | | | — | | | | | | — | | |
| | | |
Expected volatility
|
| | | | 76 % | | | | | | 74 % | | |
| | | |
Risk-free interest rate
|
| | | | 1.05 % | | | | | | 1.28 % | | |
| | | |
Expected life – in years
|
| | | | 4.11 | | | | | | 3.8 | | |
|
| | | | | | |
Year ended December 31,
|
| |||||||||||||||||||||
| | | | | | |
2016
|
| |
2015
|
| ||||||||||||||||||
| | | | | | |
Number of
options |
| |
Weighted
average exercise price |
| |
Number of
options |
| |
Weighted
average exercise price |
| ||||||||||||
| | | |
Outstanding at beginning of year
|
| | | | 7,092 | | | | | $ | 119.7 | | | | | | 5,632 | | | | | $ | 50.69 | | |
| | | |
Granted
|
| | | | 1,651 | | | | | $ | 472.3 | | | | | | 1,460 | | | | | $ | 386 | | |
| | | |
Outstanding at end of year
|
| | | | 8,743 | | | | | $ | 186.3 | | | | | | 7,092 | | | | | $ | 119.7 | | |
| | | |
Exercisable at end of year
|
| | | | 6,426 | | | | | $ | 93.73 | | | | | | 5,097 | | | | | $ | 20.71 | | |
|
| | | |
December 31, 2016
|
| |
December 31, 2015
|
| ||||||||||||
| | | |
Number of
options outstanding at end of year |
| |
Exercise
price range |
| |
Weighted
average of remaining contractual life |
| |
Number of
options outstanding at end of year |
| |
Exercise
price range |
| |
Weighted
average of remaining contractual life |
|
| | | |
4,867
|
| |
*
|
| |
3.29
|
| |
4,843
|
| |
*
|
| |
4.3
|
|
| | | |
254
|
| |
$240.26
|
| |
2.7
|
| |
254
|
| |
$240.26
|
| |
3.7
|
|
| | | |
277
|
| |
$316
|
| |
3.42
|
| |
277
|
| |
$316
|
| |
4.42
|
|
| | | |
500
|
| |
$273.88
|
| |
1.54
|
| |
500
|
| |
$273.88
|
| |
4.08
|
|
| | | |
85
|
| |
$240
|
| |
4.21
|
| |
85
|
| |
$240
|
| |
5.21
|
|
| | | |
2,266
|
| |
$479.38
|
| |
5.11
|
| |
1,133
|
| |
$479.38
|
| |
5.98
|
|
| | | |
494
|
| |
$479
|
| |
5.65
|
| | | |
| | | | | | |
December 31,
|
| |||||||||
| | | | | | |
2016
|
| |
2015
|
| ||||||
| | | | | | |
U.S. dollars in thousands
|
| |||||||||
| | | |
Prepaid expenses
|
| | | | 38 | | | | | | 535 | | |
| | | |
Other
|
| | | | 157 | | | | | | 160 | | |
| | | | | | | | | 195 | | | | | | 695 | | |
|
| | | | | | |
Year ended December 31,
|
| |||||||||
| | | | | | |
2016
|
| |
2015
|
| ||||||
| | | | | | |
U.S. dollars in thousands
|
| |||||||||
| | | |
Employees and employees related
|
| | | | 139 | | | | | | 103 | | |
| | | |
Provision for vacation
|
| | | | 155 | | | | | | 107 | | |
| | | |
Accrued expenses and other
|
| | | | 310 | | | | | | 243 | | |
| | | | | | | | | 604 | | | | | | 453 | | |
|
| | |
Year ended December 31,
|
| |||||||||
| | |
2016
|
| |
2015
|
| ||||||
| | |
U.S. dollars
(except for share numbers) |
| |||||||||
Loss attributable to equity holders of the Company
|
| | | | 1,199,000 | | | | | | 4,282,000 | | |
Income from change in fair value of financial liabilities at fair value
|
| | | | 4,125,000 | | | | | | — | | |
Loss used for the computation of diluted loss per share
|
| | | | 5,324,000 | | | | | | 4,282,000 | | |
Weighted average number of Ordinary Shares used in the computation of basic loss per share
|
| | | | 34,409 | | | | | | 34,396 | | |
Add: | | | | | | | | | | | | | |
Weighted average number of additional shares issuable upon the assumed conversion of 2012 convertible loan, preferred shares and the assumed exercise of warrants to issue preferred shares
|
| | | | 17,563 | | | | | | — | | |
Weighted average number of Ordinary Shares used in the computation of diluted loss per share
|
| | | | 51,972 | | | | | | 34,396 | | |
Basic loss per Ordinary Share
|
| | | | 35 | | | | | | 124 | | |
Diluted loss per Ordinary Share
|
| | | | 102 | | | | | | 124 | | |
|
| | | | | | |
Year ended December 31,
|
| |||||||||
| | | | | | |
2016
|
| |
2015
|
| ||||||
| | | | | | |
U.S. dollars in thousands
|
| |||||||||
| | | |
3)
Key management compensation:
|
| | | | | | | | | | | | |
| | | |
Labor cost and related expenses
|
| | | | 830 | | | | | | 552 | | |
| | | |
Share-based compensation
|
| | | | 1,351 | | | | | | 363 | | |
| | | |
Others
|
| | | | 98 | | | | | | 28 | | |
| | | | | | | | | 2,279 | | | | | | 943 | | |
|
| | | | | | |
December 31,
|
| |||||||||
| | | | | | |
2016
|
| |
2015
|
| ||||||
| | | | | | |
U.S. dollars in thousands
|
| |||||||||
| | | | Key management: | | | | | | | | | | | | | |
| | | |
Payables and accrued expenses
|
| | | | 57 | | | | | | 29 | | |
| | | |
Severance pay obligations
|
| | | | 51 | | | | | | 29 | | |
| | | |
Provision for vacation
|
| | | | 138 | | | | | | 98 | | |
| | | |
Directors fee
|
| | | | 28 | | | | | | 23 | | |
|
| | |
Nine months ended
September 30 |
| |
Three months ended
September 30 |
| ||||||||||||||||||
| | |
2017
|
| |
2016
|
| |
2017
|
| |
2016
|
| ||||||||||||
| | |
U.S. dollars in thousands
|
| |
U.S. dollars in thousands
|
| ||||||||||||||||||
RESEARCH AND DEVELOPMENT EXPENSES
|
| | | | 1,686 | | | | | | 1,851 | | | | | | 406 | | | | | | 927 | | |
GENERAL AND ADMINISTRATIVE EXPENSES
|
| | | | 5,267 | | | | | | 2,296 | | | | | | 2,373 | | | | | | 507 | | |
OPERATING LOSS
|
| | | | 6,953 | | | | | | 4,147 | | | | | | 2,779 | | | | | | 1,434 | | |
FINANCIAL EXPENSES (INCOME): | | | | | | | | | | | | | | | | | | | | | | | | | |
Loss (income) from change in fair value of financial liabilities at fair value
|
| | | | 403 | | | | | | (3,917 ) | | | | | | 882 | | | | | | 248 | | |
Other financial expenses (income), net
|
| | | | 66 | | | | | | 112 | | | | | | (5 ) | | | | | | 56 | | |
FINANCIAL LOSS (INCOME)
, net
|
| | | | 469 | | | | | | (3,805 ) | | | | | | 877 | | | | | | 304 | | |
NET LOSS and NET COMPREHENSIVE LOSS FOR THE PERIOD
|
| | | | 7,422 | | | | | | 342 | | | | | | 3,656 | | | | | | 1,738 | | |
|
| | |
U.S. dollars
|
| |
U.S. dollars
|
| ||||||||||||||||||
LOSS PER ORDINARY SHARE – | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic
|
| | | | 214.86 | | | | | | 9.94 | | | | | | 105.84 | | | | | | 50.53 | | |
Diluted
|
| | | | 219.69 | | | | | | 90.67 | | | | | | 111.02 | | | | | | 50.53 | | |
WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES OUTSTANDING –
|
| | | | | | | | | | | | | | | | | | | | | | | | |
Basic
|
| | | | 34,544 | | | | | | 34,396 | | | | | | 34,544 | | | | | | 34,396 | | |
Diluted
|
| | | | 37,098 | | | | | | 51,958 | | | | | | 41,884 | | | | | | 34,396 | | |
|
| | |
Number of
Ordinary Shares |
| |
Ordinary
Shares- Amount |
| |
Accumulated
other comprehensive income |
| |
Other
reserve |
| |
Additional
paid in capital |
| |
Accumulated
deficit |
| |
Total
|
| |||||||||||||||||||||
| | |
U.S. dollars in thousands
|
| |||||||||||||||||||||||||||||||||||||||
BALANCE AT JANUARY 1, 2016
|
| | | | 34,396 | | | | | | * | | | | | | 41 | | | | | | 1,354 | | | | | | 2,335 | | | | | | (29,417 ) | | | | | | (25,687 ) | | |
CHANGES FOR NINE MONTHS ENDED SEPTEMBER 30, 2016:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net loss for the period
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (342 ) | | | | | | (342 ) | | |
Share-based compensation
|
| | | | — | | | | | | — | | | | | | — | | | | | | 1,211 | | | | | | — | | | | | | — | | | | | | 1,211 | | |
BALANCE AT SEPTEMBER 30, 2016
|
| | | | 34,396 | | | | | | * | | | | | | 41 | | | | | | 2,565 | | | | | | 2,335 | | | | | | (29,759 ) | | | | | | (24,818 ) | | |
BALANCE AT JANUARY 1, 2017
|
| | | | 34,544 | | | | | | * | | | | | | 41 | | | | | | 2,844 | | | | | | 2,485 | | | | | | (30,616 ) | | | | | | (25,246 ) | | |
CHANGES FOR NINE MONTHS ENDED SEPTEMBER 30, 2017:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net loss for the period
|
| | | | — | | | | | | — | | | | | | — | | | | | | | | | | | | — | | | | | | (7,422 ) | | | | | | (7,422 ) | | |
Share-based compensation
|
| | | | — | | | | | | — | | | | | | — | | | | | | 4,032 | | | | | | — | | | | | | — | | | | | | 4,032 | | |
BALANCE AT SEPTEMBER 30, 2017
|
| | | | 34,544 | | | | | | * | | | | | | 41 | | | | | | 6,876 | | | | | | 2,485 | | | | | | (38,038 ) | | | | | | (28,636 ) | | |
|
| | | | | | |
Financial
liabilities at fair value through profit or loss (Level 3) |
| |
Financial
liabilities at amortized cost |
| |
Total
|
| |||||||||
| | | | | | |
U.S. dollars in thousands
|
| |||||||||||||||
| | | | As of September 30, 2017: | | | | | | | | | | | | | | | | | | | |
| | | |
Trade and other payable
|
| | | | — | | | | | | 1,003 | | | | | | 1,003 | | |
| | | |
Receipts on account of sale of Preferred B shares
|
| | | | — | | | | | | 1,575 | | | | | | 1,575 | | |
| | | |
Convertible loans
|
| | | | 15,614 | | | | | | — | | | | | | 15,614 | | |
| | | |
Preferred shares A
|
| | | | 8,841 | | | | | | — | | | | | | 8,841 | | |
| | | |
Warrants to purchase preferred shares A and shares
|
| | | | 4,723 | | | | | | — | | | | | | 4,723 | | |
| | | |
Liability to issue preferred shares A and warrants
|
| | | | 1,044 | | | | | | — | | | | | | 1,044 | | |
| | | | | | | | | 30,222 | | | | | | 2,578 | | | | | | 32,800 | | |
| | | | As of December 31, 2016: | | | | | | | | | | | | | | | | | | | |
| | | |
Trade and other payable
|
| | | | — | | | | | | 657 | | | | | | 657 | | |
| | | |
Convertible loans
|
| | | | 13,715 | | | | | | 1,005 | | | | | | 14,720 | | |
| | | |
Preferred shares A
|
| | | | 11,031 | | | | | | — | | | | | | 11,031 | | |
| | | |
Warrants to purchase preferred shares A and shares
|
| | | | 4,800 | | | | | | — | | | | | | 4,800 | | |
| | | |
Liability to issue preferred shares A and warrants
|
| | | | 273 | | | | | | — | | | | | | 273 | | |
| | | | | | | | | 29,819 | | | | | | 1,662 | | | | | | 31,481 | | |
|
| | | | | | |
September 30
2017 |
| |||
| | | |
Preferred B price per share
|
| | | $ | 908.78 | | |
| | | |
Volatility
|
| | | | 65 % | | |
| | | |
Probability of entering Phase 2b/3 for Hypo
|
| | | | 70 % | | |
| | | |
Probability for IPO/shares registration
|
| | | | 85 % | | |
| | | | | | |
December 31
2016 |
|
| | | |
WACC
|
| |
22%
|
|
| | | |
Value of equity
|
| |
$71 million
|
|
| | | |
Volatility
|
| |
77%
|
|
| | | |
Commencement of sales
|
| |
2021 – 2025
|
|
| | | |
Probability of entering Phase 2b/3 for Hypo
|
| |
70%
|
|
| | | |
Probability for IPO/shares registration
|
| |
50%
|
|
| | |
Convertible
loans |
| |
Preferred
shares A |
| |
Warrants
to purchase preferred shares A and shares |
| |
Liability to
issue preferred shares A and warrants |
| |
Total
|
| |||||||||||||||
| | |
U.S. dollars in thousands
|
| |||||||||||||||||||||||||||
Balance as of December 31, 2016
|
| | | | 14,720 | | | | | | 11,031 | | | | | | 4,800 | | | | | | 273 | | | | | | 30,824 | | |
Maturity during period
|
| | | | (1,054 ) | | | | | | | | | | | | | | | | | | | | | | | | (1,054 ) | | |
Financial expenses
|
| | | | 49 | | | | | | | | | | | | | | | | | | | | | | | | 49 | | |
Changes in fair value
|
| | | | 1,899 | | | | | | (2,190 ) | | | | | | (77 ) | | | | | | 771 | | | | | | 403 | | |
Balance as of September 30, 2017
|
| | | | 15,614 | | | | | | 8,841 | | | | | | 4,723 | | | | | | 1,044 | | | | | | 30,222 | | |
Balance as of December 31, 2015
|
| | | | 8,053 | | | | | | 13,062 | | | | | | 4,332 | | | | | | 2,154 | | | | | | 27,601 | | |
Additions during period
|
| | | | 6,110 | | | | | | | | | | | | 1,319 | | | | | | | | | | | | 7,429 | | |
Financial expenses
|
| | | | 87 | | | | | | | | | | | | | | | | | | | | | | | | 87 | | |
Changes in fair value
|
| | | | (78 ) | | | | | | (2,522 ) | | | | | | (796 ) | | | | | | (521 ) | | | | | | (3,917 ) | | |
Balance as of September 30, 2016
|
| | | | 14,172 | | | | | | 10,540 | | | | | | 4,855 | | | | | | 1,633 | | | | | | 31,200 | | |
|
| | |
Nine months ended
September 30 |
| |
Three months ended
September 30 |
| ||||||||||||||||||
| | |
2017
|
| |
2016
|
| |
2017
|
| |
2016
|
| ||||||||||||
| | |
U.S. dollars
(except for share numbers) |
| |
U.S. dollars
(except for share numbers) |
| ||||||||||||||||||
Loss attributable to equity holders of the Company
|
| | | | 7,422,000 | | | | | | 342,000 | | | | | | 3,656,000 | | | | | | 1,738,000 | | |
Income from change in fair value of financial liabilities at fair value
|
| | | | 728,000 | | | | | | 4,369,000 | | | | | | 994,000 | | | | | | — | | |
Loss used for the computation of diluted loss per share
|
| | | | 8,150,000 | | | | | | 4,711,000 | | | | | | 4,650,000 | | | | | | 1,738,000 | | |
Weighted average number of Ordinary Shares used in the computation of basic loss per share
|
| | | | 34,544 | | | | | | 34,396 | | | | | | 34,544 | | | | | | 34,396 | | |
Add: | | | | | | | | | | | | | | | | | | | | | | | | | |
Weighted average number of additional shares issuable upon the assumed conversion of: 2012 convertible loan
|
| | | | — | | | | | | 4,786 | | | | | | 4,786 | | | | | | — | | |
Preferred shares A
|
| | | | — | | | | | | 10,222 | | | | | | — | | | | | | — | | |
Warrants to issue preferred shares A
|
| | | | 2,554 | | | | | | 2,554 | | | | | | 2,554 | | | | | | — | | |
| | | | | 2,554 | | | | | | 17,562 | | | | | | 7,340 | | | | | | — | | |
Weighted average number of Ordinary Shares used in the computation of diluted loss per share
|
| | | | 37,098 | | | | | | 51,958 | | | | | | 41,884 | | | | | | 34,396 | | |
Basic loss per Ordinary Share
|
| | | | 214.86 | | | | | | 9.94 | | | | | | 105.84 | | | | | | 50.53 | | |
Diluted loss per Ordinary Share
|
| | | | 219.69 | | | | | | 90.67 | | | | | | 111.02 | | | | | | 50.53 | | |
|
| | | | ENTERA BIO LTD. | | |||
| | | | By: | | |
/s/ Dr. Phillip Schwartz
Name: Dr. Phillip Schwartz
Title: Chief Executive Officer |
|
|
Signature
|
| |
Title
|
| |
Date
|
|
|
/s/ Dr. Phillip Schwartz
Dr. Phillip Schwartz
|
| |
Chief Executive Officer
(Principal Executive Officer) and Director |
| |
January 10, 2018
|
|
|
/s/ Mira Rosenzweig
Mira Rosenzweig
|
| |
Chief Financial Officer
(Principal Financial and Accounting Officer) |
| |
January 10, 2018
|
|
|
*
Luke M. Beshar
|
| |
Chairman of the Board
|
| |
January 10, 2018
|
|
|
*
David Ben Ami
|
| |
Director
|
| |
January 10, 2018
|
|
|
*
Chaim Davis
|
| |
Director
|
| |
January 10, 2018
|
|
|
*
Roger Garceau
|
| |
Director
|
| |
January 10, 2018
|
|
|
*
Gerald Lieberman
|
| |
Director
|
| |
January 10, 2018
|
|
|
*
Yonatan Malca
|
| |
Director
|
| |
January 10, 2018
|
|
|
*
Zeev Bronfeld
|
| |
Director
|
| |
January 10, 2018
|
|
| | | | By: | | |
/s/ Colleen A. DeVries
Name: Colleen A. DeVries
Title: SVP on behalf of Cogency Global |
|
Exhibit 1.1
______________ Ordinary Shares
ENTERA BIO LTD.
Ordinary Shares
FORM OF UNDERWRITING AGREEMENT
________, 2018
Oppenheimer & Co. Inc.
as Representative of the several
Underwriters named in Schedule I hereto
85 Broad Street
New York, New York 10004
Ladies and Gentlemen:
Entera Bio Ltd., an Israeli company (the "Company"), proposes, subject to the terms and conditions contained herein, to sell to you and the other underwriters (the "Underwriters") named on Schedule I to this Underwriting Agreement (the "Agreement"), for whom you are acting as Representative (the "Representative"), an aggregate of ________ ordinary shares (the "Firm Shares") of the Company, NIS 0.01 par value per share (the "Ordinary Shares"). The respective amounts of the Firm Shares to be purchased by each of the several Underwriters are set forth opposite their names on Schedule I hereto. In addition, the Company proposes to grant to the Underwriters an option to purchase up to an additional ___________ Ordinary Shares (the "Company Option Shares") from the Company for the purpose of covering over-allotments in connection with the sale of the Firm Shares. The Firm Shares and the Option Shares are collectively called the "Shares."
The Company has prepared and filed in conformity with the requirements of the Securities Act of 1933, as amended (the "Securities Act"), and the published rules and regulations thereunder (the "Rules") adopted by the Securities and Exchange Commission (the "Commission") a Registration Statement (as hereinafter defined) on Form F-1 (No. 333-221472), including a preliminary prospectus relating to the Shares, and such amendments thereof as may have been required to the date of this Agreement. Copies of such Registration Statement (including all amendments thereof) and of the related Preliminary Prospectus (as hereinafter defined) have heretofore been delivered by the Company to you. The term "Preliminary Prospectus" means any preliminary prospectus included at any time as a part of the Registration Statement or filed with the Commission by the Company pursuant to Rule 424(a) of the Rules. The term "Registration Statement" as used in this Agreement means the initial registration statement (including all exhibits and financial schedules), as amended at the time and on the date it becomes effective (the "Effective Date"), including the information (if any) contained in the form of final prospectus filed with the Commission pursuant to Rule 424(b) of the Rules and deemed to be part thereof at the time of effectiveness pursuant to Rule 430A of the Rules. If the Company has filed an abbreviated registration statement to register additional Shares pursuant to Rule 462(b) under the Rules (the "462(b) Registration Statement"), then any reference herein to the Registration Statement shall also be deemed to include such 462(b) Registration Statement. The term "Prospectus" as used in this Agreement means the prospectus in the form included in the Registration Statement at the time of effectiveness or, if Rule 430A of the Rules is relied on, the term Prospectus shall also include the final prospectus filed with the Commission pursuant to and within the time limits described in Rule 424(b) of the Rules.
The Company understands that the Underwriters propose to make a public offering of the Shares, as set forth in and pursuant to the Statutory Prospectus (as hereinafter defined) and the Prospectus, as soon after the Effective Date and the date of this Agreement as the Representative deems advisable. The Company hereby confirms that the Underwriters and dealers have been authorized to distribute or cause to be distributed each Preliminary Prospectus, and each Issuer Free Writing Prospectus (as hereinafter defined) and are authorized to distribute the Prospectus (as from time to time amended or supplemented if the Company furnishes amendments or supplements thereto to the Underwriters).
1. Sale, Purchase, Delivery and Payment for the Shares . On the basis of the representations, warranties and agreements contained in, and subject to the terms and conditions of, this Agreement:
(a) The Company agrees to issue and sell to each of the Underwriters, and each of the Underwriters agrees, severally and not jointly, to purchase from the Company, at a purchase price of $_____ per share (the "Initial Price"), the number of Firm Shares set forth opposite the name of such Underwriter under the column "Number of Firm Shares to be Purchased from the Company" on Schedule I to this Agreement, subject to adjustment in accordance with Section 8 hereof.
(b) The Company hereby grants to the several Underwriters an option to purchase, severally and not jointly, all or any part of the Option Shares at the Initial Price. The number of Option Shares to be purchased by each Underwriter shall be the same percentage (adjusted by the Representative to eliminate fractions) of the total number of Option Shares to be purchased by the Underwriters as such Underwriter is purchasing of the Firm Shares. Such option may be exercised only to cover over-allotments in the sales of the Firm Shares by the Underwriters and may be exercised in whole or in part at any time on or before 12:00 noon, New York City time, on the business day before the Firm Shares Closing Date (as defined below), and from time to time thereafter within 30 days after the date of this Agreement, in each case upon written, facsimile or telegraphic notice, or verbal or telephonic notice confirmed by written, facsimile or telegraphic notice, by the Representative to the Company no later than 12:00 noon, New York City time, on the business day before the Firm Shares Closing Date or at least two business days before the Option Shares Closing Date (as defined below), as the case may be, setting forth the number of Option Shares to be purchased and the time and date (if other than the Firm Shares Closing Date) of such purchase.
2 |
(c) Payment of the purchase price for, and delivery of certificates for, the Firm Shares shall be made at the offices of Oppenheimer & Co. Inc., 85 Broad Street, New York, New York 10004, at 10:00 a.m., New York City time, on the third business day following the date of this Agreement or at such time on such other date, not later than ten (10) business days after the date of this Agreement, as shall be agreed upon by the Company and the Representative (such time and date of delivery and payment are called the "Firm Shares Closing Date"). In addition, in the event that any or all of the Option Shares are purchased by the Underwriters, payment of the purchase price, and delivery of the certificates, for such Option Shares shall be made at the above-mentioned offices, or at such other place as shall be agreed upon by the Representative and the Company, on each date of delivery as specified in the notice from the Representative to the Company (such time and date of delivery and payment are called the "Option Shares Closing Date"). The Firm Shares Closing Date and any Option Shares Closing Date are called, individually, a "Closing Date" and, together, the "Closing Dates."
(d) Payment shall be made to the Company by wire transfer of immediately available funds or by certified or official bank check or checks payable in New York Clearing House (same day) funds drawn to the order of the Company, against delivery of the respective certificates to the Representative for the respective accounts of the Underwriters of certificates for the Shares to be purchased by them.
(e) The Shares shall be registered in such names and shall be in such denominations as the Representative shall request at least two full business days before the Firm Shares Closing Date or, in the case of Option Shares, on the day of notice of exercise of the option as described in Section 1(b), and shall be delivered by or on behalf of the Company to the Representative through the facilities of the Depository Trust Company ("DTC") for the account of such Underwriter.
2. Representations and Warranties of the Company . The Company represents and warrants to each Underwriter as of the date hereof, as of the Firm Shares Closing Date and as of each Option Shares Closing Date (if any), as follows:
(a) On the Effective Date, the Registration Statement complied, and on the date of the Prospectus, the date any post-effective amendment to the Registration Statement becomes effective, the date any supplement or amendment to the Prospectus is filed with the Commission and each Closing Date, the Registration Statement and the Prospectus (and any amendment thereof or supplement thereto) will comply, in all material respects, with the requirements of the Securities Act and the Rules and the Securities and Exchange Act of 1934, as amended (the "Exchange Act") and the rules and regulations of the Commission thereunder. The Registration Statement did not, as of the Effective Date, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading; and on the Effective Date and the other dates referred to above neither the Registration Statement nor the Prospectus, nor any amendment thereof or supplement thereto, will contain any untrue statement of a material fact or will omit to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading. When any Preliminary Prospectus was first filed with the Commission (whether filed as part of the Registration Statement or any amendment thereto or pursuant to Rule 424(a) of the Rules) and when any amendment thereof or supplement thereto was first filed with the Commission, such Preliminary Prospectus as amended or supplemented complied in all material respects with the applicable provisions of the Securities Act and the Rules and did not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading. If applicable, each Preliminary Prospectus and the Prospectus delivered to the Underwriters for use in connection with this offering was identical to the electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T. Notwithstanding the foregoing, none of the representations and warranties in this paragraph 2(a) shall apply to statements in, or omissions from, the Registration Statement, any Preliminary Prospectus or the Prospectus made in reliance upon, and in conformity with, information herein or otherwise furnished in writing by the Representative on behalf of the several Underwriters specifically for use in the Registration Statement, any Preliminary Prospectus or the Prospectus, as the case may be. With respect to the preceding sentence, the Company acknowledges that the only information furnished in writing by the Representative on behalf of the several Underwriters for use in the Registration Statement, any Preliminary Prospectus or the Prospectus consists of the statements contained in the [ ] and [ ] paragraphs under the caption "Underwriting" in the Prospectus (collectively, the "Underwriter Information").
3 |
(b) As of the Applicable Time (as hereinafter defined), none of (i) the price to the public and the number of Ordinary Shares offered and sold, as indicated on the cover page of the Prospectus and the Statutory Prospectus (as hereinafter defined), all considered together (collectively, the "General Disclosure Package"), (ii) any individual Issuer Free Writing Prospectus when considered together with the General Disclosure Package, and (iii) any individual Written Testing-the Waters Communication (as defined herein), when considered together with the General Disclosure Package, included, includes or will include any untrue statement of a material fact or omitted, omits or will omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were or will be made, not misleading; provided, however, that this representation and warranty shall not apply to statements in or omissions in the General Disclosure Package made in reliance upon and in conformity with the Underwriter Information.
Each Issuer Free Writing Prospectus (as hereinafter defined), including any electronic road show (including without limitation any “bona fide electronic road show” as defined in Rule 433(h)(5) under the Securities Act) (each, a “Road Show”) (i) is identified in Schedule III hereto and (ii) complied when issued, and complies, in all material respects with the requirements of the Securities Act and the Rules and the Exchange Act and the rules and regulations of the Commission thereunder. The Company has made at least one version of the Road Show available without restriction by means of graphic communication to any person, including any potential investor in the Shares (and if there is more than one version of a Road Show for the Offering that is a written communication, the version available without restriction was made available no later than the other versions).
As used in this Section and elsewhere in this Agreement:
“Applicable Time” means [ ]:00 [a.m.]/[p.m.] (Eastern time) on the date of this Agreement.
4 |
“Statutory Prospectus” as of any time means the Preliminary Prospectus relating to the Shares that is included in the Registration Statement immediately prior to the Applicable Time.
“Issuer Free Writing Prospectus” means each “free writing prospectus” (as defined in Rule 405 of the Rules) prepared by or on behalf of the Company or used or referred to by the Company in connection with the offering of the Shares, including, without limitation, each Road Show.
(c) The Registration Statement is effective under the Securities Act and no stop order preventing or suspending the effectiveness of the Registration Statement or suspending or preventing the use of any Preliminary Prospectus, the Prospectus or any “free writing prospectus”, as defined in Rule 405 under the Rules, has been issued by the Commission and no proceedings for that purpose have been instituted or are threatened under the Securities Act. Any required filing of any Preliminary Prospectus and/or the Prospectus and any supplement thereto pursuant to Rule 424(b) of the Rules has been or will be made in the manner and within the time period required by such Rule 424(b). Any material required to be filed by the Company pursuant to Rule 433(d) of the Rules has been or will be made in the manner and within the time period required by such Rules.
(d) Each Issuer Free Writing Prospectus, if any, as of its issue date and at all subsequent times through the completion of the public offer and sale of the Shares or until any earlier date that the Company notified or notifies the Representative as described in the next sentence, did not, does not and will not include any information that conflicted, conflicts or will conflict with the information contained in the Registration Statement, the Statutory Prospectus or the Prospectus.
If at any time following issuance of an Issuer Free Writing Prospectus there occurred or occurs an event or development as a result of which such Issuer Free Writing Prospectus conflicted or would conflict with the information contained in the Registration Statement, the Statutory Prospectus or the Prospectus or included or would include an untrue statement of a material fact or omitted or would omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances prevailing at the subsequent time, not misleading, the Company has promptly notified or will promptly notify the Representative and has promptly amended or will promptly amend or supplement, at its own expense, such Issuer Free Writing Prospectus to eliminate or correct such conflict, untrue statement or omission.
(e) The financial statements of the Company (including all notes and schedules thereto) included in the Registration Statement, the Statutory Prospectus and Prospectus present fairly the financial position of the Company and its consolidated subsidiaries at the dates indicated and the statement of operations, stockholders' equity and cash flows of the Company and its consolidated subsidiaries for the periods specified; and such financial statements and related schedules and notes thereto, and the unaudited financial information filed with the Commission as part of the Registration Statement, have been prepared in conformity with International Financial Reporting Standards (“IFRS”), consistently applied throughout the periods involved. The summary and selected financial data included in the Statutory Prospectus and Prospectus present fairly the information shown therein as at the respective dates and for the respective periods specified and have been presented on a basis consistent with the consolidated financial statements set forth in the Prospectus.
5 |
(f) Kesselman & Kesselman, a member firm of PricewaterhouseCoopers International Limited (the "Auditor"), whose reports are filed with the Commission as a part of the Registration Statement, are and, during the periods covered by their reports, were independent public accountants as required by the Securities Act and the Rules.
(g) The Company and each of its subsidiaries, including each entity (corporation, partnership, joint venture, association or other business organization) controlled directly or indirectly by the Company (each, a “subsidiary”), is duly organized, validly existing and in good standing under the laws of their respective jurisdictions of incorporation or organization and each such entity has all requisite power and authority to carry on its business as is currently being conducted as described in the Statutory Prospectus and the Prospectus, and to own, lease and operate its properties. The Company and each of its subsidiaries is duly qualified to do business and is in good standing as a foreign corporation in each jurisdiction in which the nature of the business conducted by it or location of the assets or properties owned, leased or licensed by it requires such qualification, except for such jurisdictions where the failure to so qualify individually or in the aggregate would not have a material adverse effect on the assets, properties, condition, financial or otherwise, or in the results of operations, business affairs or business prospects of the Company and its subsidiaries considered as a whole (a "Material Adverse Effect"); and to the Company’s knowledge, no proceeding has been instituted revoking, limiting, or curtailing, or seeking to revoke, limit or curtail, such power and authority or qualification. The Company or any of its subsidiaries is not designated as a "breaching company" (within the meaning of the Israeli Companies Law, 5759-1999, the "Companies Law") by the Registrar of Companies of the State of Israel (the "Israeli Registrar"). The certificate of incorporation, charter, articles of incorporation, by-laws, articles of association and other organizational documents of the Company and any of its subsidiaries comply with the requirements of applicable law of its jurisdiction of incorporation and are in full force and effect.
(h) (i) At the time of filing the Registration Statement and (ii) at the date hereof , the Company was not and is not an "ineligible issuer," as defined in Rule 405 of the Rules.
(i) Except as would not, singly or in the aggregate, have a Material Adverse Effect, and except as disclosed in the Registration Statement, the Statutory Prospectus and the Prospectus (i) the Company and each of its subsidiaries owns or possesses legally enforceable rights to use all patents, patent rights, inventions, trademarks, trademark applications, trade names, service marks, copyrights, copyright applications, licenses, know-how and other similar intellectual property rights and proprietary knowledge (collectively, "Intangibles") necessary for the conduct of its business and (ii) neither the Company nor any of its subsidiaries has received any written notice of, or is otherwise aware of, any infringement of or conflict with asserted rights of others with respect to any Intangibles.
(j) The Company and each of its subsidiaries has good and marketable title in fee simple to all real property, and good and marketable title to all other property owned by it, in each case free and clear of all liens, encumbrances, claims, security interests and defects, except such as do not materially affect the value of such property and do not materially interfere with the use made or proposed to be made of such property by the Company and its subsidiaries. All real property held under lease by the Company is held by them under valid, existing and enforceable leases, free and clear of all liens, encumbrances, claims, security interests and defects, except such as are not material and do not materially interfere with the use made or proposed to be made of such property by the Company and its subsidiaries.
6 |
(k) Subsequent to the respective dates as of which information is given in the Registration Statement, the Statutory Prospectus and the Prospectus, (i) there has not been any event which would have a Material Adverse Effect; (ii) neither the Company nor any of its subsidiaries has sustained any loss or interference with its assets, businesses or properties (whether owned or leased) from fire, explosion, earthquake, flood or other calamity, whether or not covered by insurance, or from any labor dispute or any court or legislative or other governmental action, order or decree which would have a Material Adverse Effect; and (iii) except as otherwise disclosed in the Registration Statement, the Statutory Prospectus and the Prospectus, since the date of the latest balance sheet included in the Registration Statement and the Prospectus, neither the Company nor its subsidiaries has (A) issued any securities or incurred any liability or obligation, direct or contingent, for borrowed money, except such liabilities or obligations incurred in the ordinary course of business, (B) entered into any transaction not in the ordinary course of business or (C) declared or paid any dividend or made any distribution on any shares of its stock or redeemed, purchased or otherwise acquired or agreed to redeem, purchase or otherwise acquire any shares of its capital stock.
(l) There is no document, contract or other agreement required to be described in the Registration Statement, the Statutory Prospectus or the Prospectus or to be filed as an exhibit to the Registration Statement which is not described or filed as required by the Securities Act or Rules. Each description of a contract, document or other agreement in the Registration Statement, the Statutory Prospectus or the Prospectus accurately reflects in all material respects the terms of the underlying contract, document or other agreement. Except as disclosed in the Registration Statement, the Statutory Prospectus and the Prospectus, each contract, document or other agreement described in the Registration Statement, the Statutory Prospectus or the Prospectus or listed in the exhibits to the Registration Statement as being in full force and effect is in full force and effect and is valid and enforceable by and against the Company or its subsidiary, as the case may be, in accordance with its terms. Neither the Company, nor to the Company’s knowledge, any other party, is in default in the observance or performance of any term or obligation to be performed by it under any such agreement, and no event has occurred which with notice or lapse of time or both would constitute such a default, in any such case which default or event, individually or in the aggregate, would have a Material Adverse Effect. No default exists, and no event has occurred which with notice or lapse of time or both would constitute a default, in the due performance and observance of any term, covenant or condition by the Company, of any other agreement or instrument to which the Company is a party or by which the Company or its properties or business may be bound or effected, which default or event, individually or in the aggregate, would have a Material Adverse Effect.
(m) The statistical and market related data included in the Registration Statement, the Statutory Prospectus or the Prospectus are based on or derived from sources that the Company believes to be reliable and accurate.
(n) Neither the Company nor any subsidiary is (i) in violation of its articles of incorporation, (ii) in default under, and no event has occurred which, with notice or lapse of time, or both, would constitute a default under, or result in the creation or imposition of any lien, charge, mortgage, pledge, security interest, claim, limitation on voting rights, equity, trust or other encumbrance, preferential arrangement, defect or restriction of any kind whatsoever, upon, any property or assets of the Company or any subsidiary of the Company pursuant to any bond, debenture, note, indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which it is a party or by which it is bound or to which any of its properties or assets is subject, including any instrument or approval granted to any of them by the Israel Innovation Authority (formerly the Office of the Chief Scientist) of the Israeli Ministry of the Economy and Industry (the "IAA"), or (iii) in violation of any statute, law, rule, regulation, ordinance, directive, judgment, decree or order of any judicial, regulatory or other legal or governmental agency or body, foreign or domestic, except (in the case of clauses (ii) and (iii) above) for violations or defaults that would not (individually or in the aggregate) reasonably be expected to have a Material Adverse Effect.
7 |
(o) This Agreement has been duly authorized, executed and delivered by the Company.
(p) Neither the execution, delivery and performance of this Agreement by the Company nor the consummation of any of the transactions contemplated hereby (including, without limitation, the issuance and sale by the Company of the Shares) will (i) give rise to a right to terminate or accelerate the due date of any payment due under, or conflict with or result in the breach of any term or provision of, or constitute a default (or an event which with notice or lapse of time or both would constitute a default) under, or require any consent or waiver under, or result in the execution or imposition of any lien, charge or encumbrance upon any properties or assets of the Company or its subsidiaries pursuant to the terms of, any indenture, mortgage, deed of trust or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which either the Company or its subsidiaries or any of their properties or businesses is bound, or any franchise, license, permit, judgment, decree, order, statute, rule or regulation applicable to the Company or any of its subsidiaries, except, in each case, as would not (individually or in the aggregate) reasonably be expected to have a Material Adverse Effect or (ii) violate any provision of the articles of association, charter or by-laws or other organizational documents of the Company or any of its subsidiaries, except for such consents or waivers which have already been obtained and are in full force and effect.
(q) The Company has authorized and outstanding capital stock as set forth under the caption "Capitalization" in the Statutory Prospectus and the Prospectus. The Shares have been duly authorized for issuance by the Company. All of the issued and outstanding shares of capital stock of the Company have been duly and validly issued and are fully paid and nonassessable and have been issued in compliance with all federal, state and local, including Israeli, securities laws. Except as disclosed in the Registration Statement, the Statutory Prospectus and the Prospectus, there are no statutory preemptive or other similar statutory rights to subscribe for or to purchase or acquire any shares of capital stock of the Company, including Ordinary Shares, or any such rights pursuant to its article of association, charter, certificate of incorporation or by-laws or any other applicable organizational documents or any agreement or instrument to or by which the Company or any of its subsidiaries is a party or bound. The Shares have been duly authorized for issuance and sale pursuant to this Agreement and when issued and sold pursuant to this Agreement, will be duly and validly issued, fully paid and nonassessable and none of them will be issued in violation of any preemptive or other similar right. Except as disclosed in the Registration Statement, the Statutory Prospectus and the Prospectus, there is no outstanding option, warrant or other right calling for the issuance of, and there is no commitment, plan or arrangement to issue, any share of capital stock of the Company or any of its subsidiaries or any security convertible into, or exercisable or exchangeable for, such shares. The exercise price of each option to acquire Ordinary Shares (each, a "Company Stock Option") is no less than the fair market value of an Ordinary Share as determined on the date of grant of such Company Stock Option. All grants of Company Stock Options were validly issued and properly approved by the Board of Directors of the Company (and, if required, by a committee of the Board of Directors of the Company and/or the shareholders of the Company) in material compliance with all applicable laws and the terms of the plans under which such Company Stock Options were issued and were recorded on the Company financial statements, in accordance with IFRS as issued by the International Accounting Standards Board, and no such grants involved any "back dating," "forward dating," "spring loading" or similar practices with respect to the effective date of grant. The Ordinary Shares and the Shares conform in all material respects to all statements in relation thereto contained in the Registration Statement and the Statutory Prospectus and the Prospectus.
8 |
(r) Except as disclosed in the Registration Statement, the Statutory Prospectus and the Prospectus, no holder of any security of the Company has any right, which has not been waived, to have any security owned by such holder included in the Registration Statement or to demand registration of any security owned by such holder for a period of 180 days after the date of this Agreement. Each director and executive officer of the Company and each stockholder of the Company listed on Schedule II hereto has delivered to the Representative his or her enforceable written lock-up agreement in the form attached to this Agreement as Exhibit A hereto (the “Lock-Up Agreement”).
(s) There are no legal or governmental proceedings pending to which the Company or any of its subsidiaries is a party or of which any property of the Company or any of its subsidiaries is the subject which, if determined adversely to the Company or any of its subsidiaries, would individually or in the aggregate have a Material Adverse Effect; and, to the knowledge of the Company, no such proceedings are threatened or contemplated by governmental authorities or threatened by others.
(t) All necessary corporate action has been duly and validly taken by the Company to authorize the execution, delivery and performance of this Agreement by the Company and the issuance and sale of the Shares by the Company, including Chapter 5 of the Part VI of the Companies Law.
(u) Neither the Company nor any of its subsidiaries is involved in any labor dispute nor, to the knowledge of the Company, is any such dispute threatened, which dispute would have a Material Adverse Effect. To the Company’s knowledge, there is no existing or imminent labor disturbance by the employees of any of its principal suppliers or contractors which would have a Material Adverse Effect. To the Company’s knowledge, there is no threatened or pending litigation between the Company or its subsidiaries and any of the Company’s executive officers which, if adversely determined, would have a Material Adverse Effect and has no reason to believe that such officers will not remain in the employment of the Company.
(v) No transaction has occurred between or among the Company and any of its officers or directors, shareholders or any affiliate or affiliates of any such officer or director or shareholder that is required to be described in and is not so described in the Registration Statement, the Statutory Prospectus and the Prospectus.
(w) The Company has not taken, nor will it take, directly or indirectly, any action designed to, or which might reasonably be expected to cause or result in, or which has constituted or which might reasonably be expected to constitute, the stabilization or manipulation of the price of the Ordinary Shares or any security of the Company to facilitate the sale or resale of any of the Shares. The Company has not engaged and will not engage in any form of solicitation, advertising or other action constituting an offer or a sale under the Israeli Securities Law, 5728-1968, as amended (the "Israeli Securities Law"), and the regulations promulgated thereunder in connection with the transactions contemplated hereby which would require the publication of a prospectus in the State of Israel under the laws of the State of Israel.
9 |
(x) Except as would not, in each case, individually or in the aggregate, have a Material Adverse Effect, the Company and each of its subsidiaries (i) has filed all federal, state, local and foreign tax returns which are required to be filed through the date hereof or has received timely extensions thereof, (ii) such returns are true and correct in all respects, and (iii) the Company has paid all taxes shown on such returns and all assessments received by it to the extent that the same have become due. There are no tax audits or investigations pending, which if adversely determined would have a Material Adverse Effect; nor is the Company aware of any proposed additional tax assessments against the Company or any of its subsidiaries, except as would not individually or in the aggregate have a Material Adverse Effect.
(y) The Shares have been approved for listing on the NASDAQ Capital Market. A registration statement has been filed on Form 8-A pursuant to Section 12 of the Exchange Act, which registration statement complies in all material respects with the Exchange Act.
(z) The books, records and accounts of the Company and its subsidiaries accurately and fairly reflect the transactions in, and dispositions of, the assets of, and the results of operations of, the Company and its subsidiaries. The Company maintains a system of internal accounting controls with respect to the Company and its subsidiaries sufficient to provide reasonable assurances that (i) transactions are executed in accordance with management's general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in accordance with IFRS and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management's general or specific authorization and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.
(aa) The Company has established and maintains disclosure controls and procedures (as such term is defined in Rule 13a-15 under the Exchange Act) that are designed to comply with the requirements of the Exchange Act applicable to the Company and that: (i) are designed to ensure that material information relating to the Company is made known to the Company’s principal executive officer and its principal financial officer by others within the Company, particularly during the periods in which the periodic reports required under the Exchange Act are required to be prepared; (ii) provide for the periodic evaluation of the effectiveness of such disclosure controls and procedures at the end of the periods in which the periodic reports are required to be prepared; and (iii) are effective in all material respects to perform the functions for which they were established.
(bb) Based on the evaluation of its disclosure controls and procedures, to the Company’s knowledge, there is no (i) material weakness or significant deficiency in the design or operation of internal controls which could adversely affect the Company's ability to record, process, summarize and report financial data or any material weaknesses in internal controls; or (ii) fraud, whether or not material, that involves management or other employees who have a role in the Company's internal controls.
10 |
(cc) Except as described in the Registration Statement, the Statutory Prospectus and the Prospectus, there are no material off-balance sheet arrangements (as defined in Item 303 of Regulation S-K) that have or are reasonably likely to have a material current or future effect on the Company’s financial condition, revenues or expenses, changes in financial condition, results of operations, liquidity, capital expenditures or capital resources.
(dd) The Company’s Board of Directors has validly appointed an audit committee whose composition satisfies the requirements of Rule 5605 of the Nasdaq Stock Market and the Board of Directors and/or the audit committee has adopted a charter that satisfies the requirements of Rule 5605 of the Nasdaq Stock Market. The audit committee has reviewed the adequacy of its charter within the past twelve months.
(ee) The Company is in compliance with all other applicable provisions of the Sarbanes-Oxley Act of 2002, as amended (the "Sarbanes-Oxley Act"), any related rules and regulations promulgated by the Commission and corporate governance requirements under applicable Nasdaq regulations upon the effectiveness of such provisions and has no reason to believe that it will not be able to comply with such provisions at the time of effectiveness. There has been no failure on the part of the Company or any of its directors or officers, in their capacities as such, to comply with any provision of the Sarbanes-Oxley Act, including, without limitation, Section 402 related to loans and Sections 302 and 906 related to certifications.
(ff) The Company and its subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are customary in the businesses in which they are engaged or propose to engage after giving effect to the transactions described in the Statutory Prospectus and the Prospectus; all policies of insurance and fidelity or surety bonds insuring the Company or any of its subsidiaries or the Company's or its subsidiaries’ respective businesses, assets, employees, officers and directors are in full force and effect; the Company and each of its subsidiaries are in compliance with the terms of such policies and instruments in all material respects; and neither the Company nor any subsidiary of the Company has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that is not materially greater than the current cost. Neither the Company nor any of its subsidiaries has been denied any insurance coverage which it has sought or for which it has applied, which would reasonably be expected to have a Material Adverse Effect.
(gg) Each approval, consent, order, authorization, designation, declaration or filing of, by or with any regulatory, administrative or other governmental body necessary in connection with the execution and delivery by the Company of this Agreement and the consummation of the transactions herein contemplated required to be obtained or performed by the Company (except such additional steps as may be required by the Financial Industry Regulatory Authority ("FINRA") or may be necessary to qualify the Shares for public offering by the Underwriters under the state securities or Blue Sky laws) has been obtained or made and is in full force and effect, except for, following the Firm Shares Closing Date and each Option Shares Closing Date (as applicable), (i) certain filings and notices with the Israeli Registrar regarding the issuance of the Shares and the Company becoming a "public company" (within the meaning of the Companies Law) and (ii) providing certain information to the IIA.
11 |
(hh) To the Company’s knowledge, there are no affiliations with FINRA among the Company's officers, directors or, to the best of the knowledge of the Company, any five percent or greater shareholder of the Company, except as set forth in the Registration Statement or otherwise disclosed in writing to the Representative.
(ii) (i) Except as would not reasonably be expected to have a Material Adverse Effect, the Company and each of its subsidiaries is in compliance with all rules, laws and regulations relating to the use, treatment, storage and disposal of toxic substances and protection of health or the environment ("Environmental Law") which are applicable to its business; (ii) neither the Company nor its subsidiaries has received any notice from any governmental authority or third party of an asserted claim under Environmental Laws; (iii) the Company and each of its subsidiaries has received all permits, licenses or other approvals required of it under applicable Environmental Laws to conduct its business and is in compliance with all terms and conditions of any such permit, license or approval; (iv) to the Company's knowledge, no facts currently exist that will require the Company or any of its subsidiaries to make future material capital expenditures to comply with Environmental Laws; and (v) no property which is or has been owned, leased or occupied by the Company or any of its subsidiaries has been designated as a Superfund site pursuant to the Comprehensive Environmental Response, Compensation of Liability Act of 1980, as amended (42 U.S.C. Section 9601, et. seq.) or otherwise designated as a contaminated site under other applicable Environmental Laws. Neither the Company nor any of its subsidiaries has been named as a "potentially responsible party" under the CERCLA 1980.
(jj) In the ordinary course of its business, the Company periodically reviews the effect of Environmental Laws on the business, operations and properties of the Company and its subsidiaries, in the course of which the Company identifies and evaluates associated costs and liabilities (including, without limitation, any capital or operating expenditures required for clean-up, closure of properties or compliance with Environmental Laws, or any permit, license or approval, any related constraints on operating activities and any potential liabilities to third parties). On the basis of such review, the Company has reasonably concluded that such associated costs and liabilities would not, singly or in the aggregate, have a Material Adverse Effect.
(kk) The Company is not and, after giving effect to the offering and sale of the Shares and the application of proceeds thereof as described in the Statutory Prospectus and the Prospectus, will not be required to register as an "investment company" within the meaning of the Investment Company Act of 1940, as amended (the "Investment Company Act").
(ll) Neither the Company, nor, to the Company’s knowledge, any director, officer, agent or employee of the Company or any other person acting on behalf of the Company or its subsidiaries, has, directly or indirectly, while acting on behalf of the Company or its subsidiaries (i) used any corporate funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity; (ii) made any unlawful payment to foreign or domestic government officials or employees or to foreign or domestic political parties or campaigns from corporate funds; (iii) violated any provision of the Foreign Corrupt Practices Act of 1977, as amended or any provision of any applicable non-U.S. anti-bribery or anti-corruption law or regulation; or (iv) made any other unlawful payment.
12 |
(mm) The operations of the Company and its subsidiaries are and have been conducted at all times in material compliance with applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the applicable money laundering statutes of any jurisdiction where the Company conducts business, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the "Money Laundering Laws") and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any of its subsidiaries with respect to the Money Laundering Laws is pending, or to the best knowledge of the Company, threatened.
(nn) Neither the Company nor any of its subsidiaries, nor, to the knowledge of the Company, any director, officer, agent or employee of the Company or any of its subsidiaries is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”); and the Company will not directly or indirectly use the proceeds of the offering, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity, for the purpose of financing the activities of any person currently subject to any U.S. sanctions administered by OFAC.
(oo) Except as described in the Statutory Prospectus and the Prospectus, the Company has not sold or issued any shares of capital stock during the six-month period preceding the date of the Prospectus, including any sales pursuant to Rule 144A under, or Regulations D or S of, the Securities Act, other than shares issued pursuant to employee benefit plans, qualified stock options plans or other employee compensation plans or pursuant to outstanding options, rights or warrants.
(pp) None of the Company, its directors or its officers has distributed nor will distribute prior to the later of (i) the Firm Shares Closing Date, or the Option Shares Closing Date, and (ii) completion of the distribution of the Shares, any offering material in connection with the offering and sale of the Shares other than any Preliminary Prospectus, the Prospectus, the Registration Statement and other materials, if any, permitted by the Securities Act and consistent with the terms of this Agreement.
(qq) Since the date of the preliminary prospectus included in the Registration Statement filed with the Commission on _________ (or, if earlier, the first date on which the Company engaged directly or through any Person authorized to act on its behalf in any Testing-the-Waters Communication (as defined herein)) through the date hereof, the Company has been and is an "emerging growth company," as defined in Section 2(a) of the Securities Act (an "Emerging Growth Company"). "Testing-the-Waters Communication" means any oral or written communication with potential investors undertaken in reliance on Section 5(d) of the Securities Act.
(rr) The Company (a) has not alone engaged in any Testing-the-Waters Communication other than Testing-the-Waters Communications with the consent of the Representative with entities that are qualified institutional buyers within the meaning of Rule 144A under the Securities Act or institutions that are accredited investors within the meaning of Rule 501 under the Securities Act, and (b) has not authorized anyone other than the Representative to engage in Testing-the-Waters Communications. The Company reconfirms that the Representative has been authorized to act on its behalf in undertaking Testing-the-Waters Communications. The Company has not distributed any Written Testing-the-Waters Communications (as defined herein) other than those listed on Schedule IV hereto. "Written Testing-the-Waters Communication" means any Testing-the-Waters Communication that is a written communication within the meaning of Rule 405 under the Securities Act.
13 |
(ss) The Company has the power to submit, and pursuant to Section 9 of this Agreement, has legally, validly, effectively and irrevocably submitted, to the personal jurisdiction of each Specified Court (as defined below), and the Company has the power to designate, appoint and authorize, and pursuant to Section 9 of this Agreement, has legally, validly, effectively and irrevocably designated, appointed and authorized an agent for service of process in any action arising out of or relating to this Agreement in any Specified Court, and service of process effected on such authorized agent will be effective to confer valid personal jurisdiction over the Company as provided in Section 9 hereof.
(tt) The Company is a "foreign private issuer" within the meaning of Rule 405 under the Securities Act.
(uu) The Company and each of its subsidiaries has all requisite corporate power and authority, and all necessary authorizations, approvals, consents, orders, licenses, certificates and permits of and from all governmental or regulatory bodies or any other person or entity (collectively, the "Permits"), to own, lease and license its assets and properties and conduct its business, all of which are valid and in full force and effect, except where the lack of such Permits, individually or in the aggregate, would not have a Material Adverse Effect. The Company and each of its subsidiaries has fulfilled and performed in all respects all of its obligations with respect to such Permits and no event has occurred that allows, or after notice or lapse of time would allow, revocation or termination thereof or results in any other impairment of the rights of the Company thereunder, except, in each case, as would not reasonably be expected to have a Material Adverse Effect. The Company has not received any written notice denying, revoking or modifying any grants or benefits from the IIA (including, in all such cases, notice of proceedings or investigations related thereto). All information supplied by the Company with respect to the applications or notifications relating to grants and benefits from the IIA was true, correct and complete in all material respects when supplied to the appropriate authorities.
3. Conditions of the Underwriters' Obligations . The obligations of the Underwriters under this Agreement are several and not joint. The respective obligations of the Underwriters to purchase the Shares are subject to each of the following terms and conditions:
(a) Notification that the Registration Statement has become effective shall have been received by the Representative and the Prospectus shall have been timely filed with the Commission in accordance with Section 4(a) of this Agreement and any material required to be filed by the Company pursuant to Rule 433(d) of the Rules shall have been timely filed with the Commission in accordance with such rule.
(b) No order preventing or suspending the use of any Preliminary Prospectus, the Prospectus or any Issuer Free Writing Prospectus, shall have been or shall be in effect and no order suspending the effectiveness of the Registration Statement shall be in effect and no proceedings for such purpose shall be pending before or threatened by the Commission, and any requests for additional information on the part of the Commission (to be included in the Registration Statement or the Prospectus or otherwise) shall have been complied with to the satisfaction of the Commission and the Representative. If the Company has elected to rely upon Rule 430A, Rule 430A information previously omitted from the effective Registration Statement pursuant to Rule 430A shall have been transmitted to the Commission for filing pursuant to Rule 424(b) within the prescribed time period and the Company shall have provided evidence satisfactory to the Underwriters of such timely filing, or a post-effective amendment providing such information shall have been promptly filed and declared effective in accordance with the requirements of Rule 430A.
14 |
(c) The representations and warranties of the Company contained in this Agreement and in the certificates delivered pursuant to Section 3(d) shall be true and correct when made and on and as of each Closing Date as if made on such date. The Company shall have performed all covenants and agreements and satisfied all the conditions contained in this Agreement required to be performed or satisfied by it at or before such Closing Date.
(d) The Representative shall have received on each Closing Date a certificate, addressed to the Representative and dated such Closing Date, of the chief executive and the chief financial officer or chief accounting officer of the Company in such capacity to the effect that: (i) the representations, warranties and agreements of the Company in this Agreement were true and correct when made and are true and correct as of such Closing Date; (ii) the Company has performed all covenants and agreements and satisfied all conditions contained herein; (iii) they have carefully examined the Registration Statement, the Prospectus, the General Disclosure Package, and any individual Issuer Free Writing Prospectus and, in their opinion (A) as of the Effective Date the Registration Statement and Prospectus did not include, and as of the Applicable Time, neither (i) the General Disclosure Package, nor (ii) any individual Issuer Free Writing Prospectus, when considered together with the General Disclosure Package, included, any untrue statement of a material fact and did not omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and (B) since the Effective Date, no event has occurred which should have been set forth in a supplement or otherwise required an amendment to the Registration Statement, the Statutory Prospectus or the Prospectus; (iv) no stop order suspending the effectiveness of the Registration Statement has been issued and, to their knowledge, no proceedings for that purpose have been instituted or are pending under the Securities Act and (v) there has not occurred any material adverse change in the assets, properties, condition, financial or otherwise, or in the results of operations, business affairs or business prospects of the Company and its subsidiaries, considered as a whole.
(e) The Representative shall have received: (i) simultaneously with the execution of this Agreement, a signed letter from the Auditor addressed to the Representative and dated the date of this Agreement, in form and substance reasonably satisfactory to the Representative, containing statements and information of the type ordinarily included in accountants' "comfort letters" to underwriters with respect to the financial statements and certain financial information contained in the Registration Statement and the Disclosure Package, and (ii) on each Closing Date, a signed bring-down letter from the Auditor addressed to the Representative and dated the date of such Closing Date(s), in form and substance reasonably satisfactory to the Representative containing statements and information of the type ordinarily included in accountants' "comfort letters" to underwriters with respect to the financial statements and certain financial information contained in the Registration Statement and the Prospectus.
15 |
(f) The Representative shall have received on each Closing Date from Davis Polk & Wardwell LLP, U.S. counsel for the Company, an opinion and negative assurance statement, addressed to the Representative and dated such Closing Date, in form and substance reasonably satisfactory to the Representative.
(g) The Representative shall have received on each Closing Date from Herzog Fox & Neeman, Israeli counsel for the Company, an opinion, addressed to the Representative and dated such Closing Date, in form and substance reasonably satisfactory to the Representative.
(h) The Representative shall have received on each Closing Date from Erlich & Fenster, intellectual property counsel for the Company, an opinion and written negative assurances statement, addressed to the Representative and dated such Closing Date, in form and substance satisfactory to the Representative.
(i) The Representative shall have received on the Closing Date from Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., as U.S. counsel for the Representative, a negative assurance statement, addressed to the Representative and dated as of such Closing Date, with respect to such matters as the Representative may reasonably require, and the Company shall have furnished or provided access to such counsel of such documents as they request for enabling them to pass upon such matters.
(j) All proceedings taken in connection with the sale of the Firm Shares and the Option Shares as herein contemplated shall be reasonably satisfactory in form and substance to the Representative and its counsel.
(k) The Representative shall have received copies of the Lock-up Agreements executed by each entity or person listed on Schedule II hereto. In the event that Oppenheimer & Co. Inc., in its sole discretion, agrees to release or waive any restriction set forth in a Lock-Up Agreement for an officer or director of the Company, and provides the Company with notice of the impending release or waiver at least three business days before the effective date of such release or waiver (which release or waiver shall be substantially in the Form found at Exhibit A-1 hereto), the Company agrees to announce the impending release or waiver by a press release substantially in the form of Exhibit A-2 hereto through a major news service at least two business days before the effective date of the release or waiver .
(l) The Shares shall have been approved for quotation on the Nasdaq Capital Market, subject only to official notice of issuance.
16 |
(m) The Representative shall be reasonably satisfied that since the respective dates as of which information is given in the Registration Statement, the Statutory Prospectus, the General Disclosure Package and the Prospectus, (i) there shall not have been any material change in the capital stock of the Company or any material change in the indebtedness (other than in the ordinary course of business) of the Company, (ii) except as set forth or contemplated by the Registration Statement, the Statutory Prospectus, the General Disclosure Package or the Prospectus, no material oral or written agreement or other transaction shall have been entered into by the Company that is not in the ordinary course of business or that would reasonably be expected to result in a material reduction in the future earnings of the Company, (iii) no loss or damage (whether or not insured) to the property of the Company shall have been sustained that had or would reasonably be expected to have a Material Adverse Effect, (iv) no legal or governmental action, suit or proceeding affecting the Company or any of its properties that is material to the Company or that affects or would reasonably be expected to affect the transactions contemplated by this Agreement shall have been instituted or threatened and (v) there shall not have been any material change in the assets, properties, condition, financial or otherwise, or in the results of operations, business affairs or business prospects of the Company or its subsidiaries, considered as a whole, that makes it impractical or inadvisable in the Representative's judgment to proceed with the purchase or offering of the Shares as contemplated hereby.
(n) FINRA shall have confirmed that it has not raised any objection with respect to the fairness and reasonableness of the underwriting terms and agreements in connection with the offering of the Shares.
(o) The Company shall have furnished or caused to be furnished to the Representative such customary certificates or documents as the Representative shall have reasonably requested.
4. Covenants and other Agreements of the Company and the Underwriters .
(a) The Company covenants and agrees as follows:
(i) The Company will use its best efforts to cause the Registration Statement, if not effective at the time of execution of this Agreement, and any amendments thereto, to become effective as promptly as possible. The Company shall prepare the Prospectus in a form approved by the Representative and file such Prospectus pursuant to Rule 424(b) under the Securities Act not later than the Commission's close of business on the second business day following the execution and delivery of this Agreement, or, if applicable, such earlier time as may be required by the Rules. The Company will file with the Commission all Issuer Free Writing Prospectuses in the time and manner required under Rules 433(d) or 163(b)(2), as the case may be.
(ii) The Company shall promptly advise the Representative in writing (A) when any post-effective amendment to the Registration Statement shall have become effective or any supplement to the Prospectus shall have been filed, (B) of any request by the Commission for any amendment of the Registration Statement or the Prospectus or for any additional information, (C) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or of any order preventing or suspending the use of any preliminary prospectus or any "free writing prospectus", as defined in Rule 405 of the Rules, or the institution or threatening of any proceeding for that purpose and (D) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Shares for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose. The Company shall not file any amendment of the Registration Statement or supplement to the Prospectus or any Issuer Free Writing Prospectus unless the Company has furnished the Representative a copy for its review prior to filing and shall not file any such proposed amendment or supplement to which the Representative reasonably objects. The Company shall use its best efforts to prevent the issuance of any such stop order and, if issued, to obtain as soon as possible the withdrawal thereof.
17 |
(iii) If, at any time when a prospectus relating to the Shares (or, in lieu thereof, the notice referred to in Rule 173(a) of the Rules) is required to be delivered under the Securities Act, any event occurs as a result of which the Prospectus as then amended or supplemented would include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein in the light of the circumstances under which they were made not misleading, or if it shall be necessary to amend or supplement the Prospectus to comply with the Securities Act or the Rules, the Company promptly shall prepare and file with the Commission, subject to the second sentence of paragraph (ii) of this Section 4(a), an amendment or supplement which shall correct such statement or omission or an amendment which shall effect such compliance.
(iv) If at any time following issuance of an Issuer Free Writing Prospectus there occurs an event or development as a result of which such Issuer Free Writing Prospectus would conflict with the information contained in the Registration Statement or would include an untrue statement of a material fact or would omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances prevailing at the subsequent time, not misleading, the Company will promptly notify the Representative and will promptly amend or supplement, at its own expense, such Issuer Free Writing Prospectus to eliminate or correct such conflict, untrue statement or omission.
(v) The Company shall make generally available to its security holders and to the Representative as soon as practicable, but not later than 45 days after the end of the 12-month period beginning at the end of the fiscal quarter of the Company during which the Effective Date occurs (or 90 days if such 12-month period coincides with the Company's fiscal year), an earnings statement (which need not be audited) of the Company, covering such 12-month period, which shall satisfy the provisions of Section 11(a) of the Securities Act or Rule 158 of the Rules.
18 |
(vi) Upon request, the Company shall furnish to the Representative and counsel for the Underwriters, without charge, two signed copies of the Registration Statement (including all exhibits thereto and amendments thereof) and to each other Underwriter a copy of the Registration Statement (without exhibits thereto) and all amendments thereof and, so long as delivery of a prospectus by an Underwriter or dealer may be required by the Securities Act or the Rules, as many copies of any Preliminary Prospectus, any Issuer Free Writing Prospectus and the Prospectus and any amendments thereof and supplements thereto as the Representative may reasonably request. If applicable, the copies of the Registration Statement, preliminary prospectus, any Issuer Free Writing Prospectus and Prospectus and each amendment and supplement thereto furnished to the Underwriters will be identical to the electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T.
(vii) The Company shall cooperate with the Representative and its counsel to use commercially reasonable efforts to qualify the Shares for offer and sale in connection with the offering under the laws of such jurisdictions in the United States as the Representative may reasonably designate and shall maintain such qualifications in effect so long as required for the distribution of the Shares; provided, however, that the Company shall not be required in connection therewith, as a condition thereof, to qualify as a foreign corporation or to execute a general consent to service of process in any jurisdiction or subject itself to taxation as doing business in any jurisdiction.
(viii) The Company, during the period when the Prospectus (or in lieu thereof, the notice referred to in Rule 173(a) of the Rules) is required to be delivered under the Securities Act and the Rules or the Exchange Act, will file all reports and other documents required to be filed with the Commission pursuant to Section 13, 14 or 15 of the Exchange Act within the time periods required by the Exchange Act and the regulations promulgated thereunder.
19 |
(ix) Without the prior written consent of Oppenheimer & Co. Inc., for a period of 180 days after the date of this Agreement (the “Restricted Period”), the Company shall not issue, sell or register with the Commission (other than on Form S-8 or on any successor form), or otherwise dispose of, directly or indirectly, any equity securities of the Company (or any securities convertible into, exercisable for or exchangeable for equity securities of the Company), except for (A) the issuance of the Shares pursuant to the Registration Statement, (B) the issuance of Ordinary Shares upon the exercise of an option or warrant or grants pursuant to the Company's existing stock option plan or bonus plan as described in the Registration Statement and the Prospectus or the filing by the Company of a registration statement with the Commission on Form S-8 in connection therewith, (C) the issuance of any Ordinary Shares to holders of preferred shares of the Company pursuant to the conversion of the Company’s Series A or Series B preferred shares into Ordinary Shares as described in the Registration Statement, the Statutory Prospectus and the Prospectus, (D) the issuance of any Ordinary Shares to lenders under the Company’s convertible loan agreements pursuant to the conversion of outstanding convertible loans into Ordinary Shares as described in the Registration Statement, the Statutory Prospectus and the Prospectus, (E) the resale of Ordinary Shares registered with the Commission pursuant to the Registration Statement, as described in the Registration Statement, the Statutory Prospectus and the Prospectus, (F) the entrance into an agreement providing for the issuance by the Company of Ordinary Shares or any security convertible into or exercisable for Ordinary Shares in connection with the acquisition by the Company of the securities, business, or other assets of another person or entity or pursuant to an employee benefit plan assumed by the Company in connection with such acquisition, and the issuance of any such securities pursuant to any such agreement and (G) the entry into an agreement providing for the issuance of Ordinary Shares or any security convertible into or exercisable for Ordinary Shares in connection with joint ventures, commercial relationships or other strategic transactions, and the issuance of any such securities pursuant to any such agreement; provided that in the case of clauses (F) and (G), any such issuances shall be approved by a majority of the independent members of the Company’s Board of Directors, and the aggregate number of Ordinary Shares that the Company may sell or issue or agree to sell or issue pursuant to clauses (F) and (G) shall not exceed 5.0% of the total number of Ordinary Shares issued and outstanding immediately following the completion of the transactions contemplated by this Agreement; and provided further, that each recipient of securities issued pursuant to clauses (C) through (G) shall execute a lock-up letter substantially in the form of Exhibit A hereto or (H) the establishment of a trading plan pursuant to Rule 10b5-1 under the Exchange Act for the transfer of Ordinary Shares, provided that (i) such plan does not provide for the transfer of Ordinary Shares during the Restricted Period and (ii) to the extent a public announcement or filing under the Exchange Act, if any, is required of or voluntarily made by the Company regarding the establishment of such plan, such announcement or filing shall include a statement to the effect that no transfer of Ordinary Shares may be made under such plan during the Restricted Period.
(x) On or before completion of this offering, the Company shall make all filings required under applicable securities laws and by the Nasdaq Capital Market (including any required registration under the Exchange Act).
20 |
(xi) The Company will apply the net proceeds from the offering of the Shares substantially in the manner set forth under "Use of Proceeds" in the Prospectus.
(xii) The Company will promptly notify the Representative if the Company ceases to be an Emerging Growth Company at any time prior to the later of (a) completion of the distribution of the Shares within the meaning of the Securities Act and (b) completion of the 180-day restricted period referred to in Section 4(a)(ix) hereof.
(xiii) If at any time following the distribution of any Written Testing-the-Waters Communication there occurred or occurs an event or development as a result of which such Written Testing-the-Waters Communication included or would include an untrue statement of a material fact or omitted or would omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing at that subsequent time, not misleading, the Company will promptly notify the Representative and will promptly amend or supplement, at its own expense, such Written Testing-the-Waters Communication to eliminate or correct such untrue statement or omission.
(b) The Company agrees to pay, or reimburse if paid by the Representative, whether or not the transactions contemplated hereby are consummated or this Agreement is terminated, all costs and expenses incident to the public offering of the Shares and the performance of the obligations of the Company under this Agreement including those relating to: (i) the preparation, printing, reproduction filing and distribution of the Registration Statement, including all exhibits thereto, each Preliminary Prospectus, the Prospectus, any Issuer Free Writing Prospectus, all amendments and supplements thereto, and the printing, filing and distribution of this Agreement, (ii) the preparation and delivery of certificates for the Shares to the Underwriters, (iii) the registration or qualification of the Shares for offer and sale under the securities or Blue Sky laws of the various jurisdictions referred to in Section 4(a)(vii), including the reasonable and documented fees and disbursements of counsel for the Underwriters in connection with such registration and qualification and the preparation, printing, distribution and shipment of preliminary and supplementary Blue Sky memoranda (up to a maximum amount, when taken together with the fees and disbursements of counsel for the Underwriters incurred in connection with clause (v) of this Section 4(b), of $[________]; (iv) the furnishing (including costs of shipping and mailing) to the Representative and to the Underwriters of copies of each Preliminary Prospectus, the Prospectus and all amendments or supplements to the Prospectus, any Issuer Free Writing Prospectus, and of the several documents required by this Section to be so furnished, as may be reasonably requested for use in connection with the offering and sale of the Shares by the Underwriters or by dealers to whom Shares may be sold; (v) the filing fees of FINRA in connection with its review of the terms of the public offering and reasonable and documented fees and disbursements of counsel for the Underwriters in connection with such review (up to a maximum amount, when taken together with the fees and disbursements of counsel for the Underwriters incurred in connection with clause (iii) of this Section 4(b), of $[________]); (vi) inclusion of the Shares for quotation on the Nasdaq Capital Market; (vii) all transfer taxes, if any, with respect to the sale and delivery of the Shares by the Company to the Underwriters; and (viii) all costs and expenses incident to the Offering and the performance of the obligations of the Company under this Agreement, and all reasonable out-of-pocket costs and expenses incident to the performance of the obligations of the Representative under this Agreement (including, without limitation, the reasonably incurred fees and expenses of the Underwriters' outside attorneys), provided that any such out-of-pocket costs and expenses shall not exceed (without the prior consent of the Company which shall not be unreasonably withheld) (A) $50,000 in the aggregate if the offering contemplated hereby is not consummated or (B) $_________ in the aggregate if the offering contemplated hereby is consummated.
21 |
(c) The Company acknowledges and agrees that each of the Underwriters has acted and is acting solely in the capacity of a principal in an arm's length transaction between the Company, on the one hand, and the Underwriters, on the other hand, with respect to the offering of Shares contemplated hereby (including in connection with determining the terms of the offering) and not as a financial advisor, agent or fiduciary to the Company or any other person. Additionally, the Company acknowledges and agrees that the Underwriters have not and will not advise the Company or any other person as to any legal, tax, investment, accounting or regulatory matters in any jurisdiction. The Company has consulted with its own advisors concerning such matters and shall be responsible for making its own independent investigation and appraisal of the transactions contemplated hereby, and the Underwriters shall have no responsibility or liability to the Company or any other person with respect thereto, whether arising prior to or after the date hereof. Any review by the Underwriters of the Company, the transactions contemplated hereby or other matters relating to such transactions have been and will be performed solely for the benefit of the Underwriters and shall not be on behalf of the Company. The Company agrees that it will not claim that the Underwriters, or any of them, has rendered advisory services of any nature or respect, or owes a fiduciary duty to the Company or any other person in connection with any such transaction or the process leading thereto.
(d) The Company represents and agrees that, unless it obtains the prior consent of the Representative, and each Underwriter represents and agrees that, unless it obtains the prior consent of the Company and the Representative, it has not made and will not make any offer relating to the Shares that would constitute an “issuer free writing prospectus,” as defined in Rule 433, or that would otherwise constitute a “free writing prospectus,” as defined in Rule 405, required to be filed with the Commission. The Company has complied and will comply with the requirements of Rule 433 under the Securities Act applicable to any Issuer Free Writing Prospectus, including timely filing with the Commission where required, legending and record keeping. The Company represents that is has satisfied and agrees that it will satisfy the conditions set forth in Rule 433 of the Rules to avoid a requirement to file with the Commission any Road Show.
(e) The Company acknowledges, understands and agrees that the Shares may be offered and sold in Israel only by the Underwriters and only to such Israeli investors listed in the First Addendum to the Israeli Securities Law (the "Addendum") who submit written confirmation to the Underwriters and the Company that such investor (i) falls within the scope of the Addendum, is aware of the meaning of same and agrees to it and (ii) is acquiring the Shares for investment for its own account or, if applicable, for investment for clients who are investors listed in the Addendum and in any event not as a nominee, market maker or agent and not with a view to, or for the resale in connection with, any distribution thereof (“Israel Accredited Investors”).
22 |
(f) The Underwriters acknowledge, understand and agree that the Shares may be offered and sold in Israel only by the Underwriters and only to Israeli Accredited Investors.
5. Indemnification .
(a) The Company agrees to indemnify and hold harmless each Underwriter, its officers and employees and each person, if any, who controls any Underwriter within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act against any and all losses, claims, damages and liabilities, joint or several (including any reasonable investigation, legal and other expenses incurred in connection with, and any amount paid in settlement of, any action, suit or proceeding or any claim asserted), to which they, or any of them, may become subject under the Securities Act, the Exchange Act or other federal or state law or regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in any preliminary prospectus, the Registration Statement, the Statutory Prospectus, the Prospectus, any Issuer Free Writing Prospectus or any "issuer-information" filed or required to be filed pursuant to Rule 433(d) of the Rules, any amendment thereof or supplement thereto, any Written Testing-the-Waters Communication, or arise out of or are based upon any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that such indemnity shall not inure to the benefit of any Underwriter (or any person controlling such Underwriter) on account of any losses, claims, damages or liabilities arising from the sale of the Shares to any person by such Underwriter if such untrue statement or omission or alleged untrue statement or omission was made in such preliminary prospectus, the Registration Statement, the Prospectus, the Statutory Prospectus, any Issuer Free Writing Prospectus or such amendment or supplement thereto, any Written Testing-the-Waters Communication, in reliance upon and in conformity with the Underwriter Information. This indemnity agreement will be in addition to any liability which the Company may otherwise have.
(b) Each Underwriter, severally and not jointly, agrees to indemnify and hold harmless the Company, and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, each director of the Company, and each officer of the Company who signs the Registration Statement, against any losses, claims, damages or liabilities to which such party may become subject, under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in any preliminary prospectus, the Registration Statement or the Prospectus, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in any Preliminary Prospectus, the Registration Statement, the Statutory Prospectus or the Prospectus or any such amendment or supplement in reliance upon and in conformity with the Underwriter Information; provided, however, that the obligation of each Underwriter to indemnify the Company (including any controlling person, director or officer thereof) shall be limited to the amount of the underwriting discount and commissions applicable to the Shares to be purchased by such Underwriter hereunder.
23 |
(c) Any party that proposes to assert the right to be indemnified under this Section 5 will, promptly after receipt of notice of commencement of any action, suit or proceeding against such party in respect of which a claim is to be made against an indemnifying party or parties under this Section 5, notify each such indemnifying party of the commencement of such action, suit or proceeding, enclosing a copy of all papers served. No indemnification provided for in Section 5(a) or 5(b) shall be available to any party who shall fail to give notice as provided in this Section 5(c) if the party to whom notice was not given was unaware of the proceeding to which such notice would have related and was prejudiced by the failure to give such notice but the omission so to notify such indemnifying party of any such action, suit or proceeding shall not relieve it from any liability that it may have to any indemnified party for contribution or otherwise than under this Section 5. In case any such action, suit or proceeding shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate in, and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party, and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof and the approval by the indemnified party of such counsel, the indemnifying party shall not be liable to such indemnified party for any legal or other expenses, except as provided below and except for the reasonable costs of investigation subsequently incurred by such indemnified party in connection with the defense thereof. The indemnified party shall have the right to employ its counsel in any such action, but the reasonably incurred fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the employment of counsel by such indemnified party has been authorized in writing by the indemnifying parties, (ii) the indemnified party shall have been advised by counsel that there may be one or more legal defenses available to it which are different from or in addition to those available to the indemnifying party (in which case the indemnifying parties shall not have the right to direct the defense of such action on behalf of the indemnified party) or (iii) the indemnifying parties shall not have employed counsel to assume the defense of such action within a reasonable time after notice of the commencement thereof, in each of which cases the reasonably incurred fees and expenses of counsel shall be at the expense of the indemnifying parties. An indemnifying party shall not be liable for any settlement of any action, suit, and proceeding or claim effected without its written consent, which consent shall not be unreasonably withheld or delayed.
24 |
6. Contribution . In order to provide for a just and equitable contribution in circumstances in which the indemnification provided for in Section 5(a) or 5(b) is due in accordance with its terms but for any reason is unavailable to or insufficient to hold harmless an indemnified party in respect to any losses, liabilities, claims, damages or expenses referred to therein, each indemnifying party shall contribute to the aggregate losses, liabilities, claims, damages and expenses (including any investigation, legal and other expenses reasonably incurred in connection with, and any amount paid in settlement of, any action, suit or proceeding or any claims asserted, but after deducting any contribution received by any person entitled hereunder to contribution from any person who may be liable for contribution) incurred by such indemnified party, as incurred, in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the Underwriters on the other hand from the offering of the Shares pursuant to this Agreement or, if such allocation is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to above but also the relative fault of the Company on the one hand and the Underwriters on the other hand in connection with the statements or omissions which resulted in such losses, liabilities, claims, damages or expenses, as well as any other relevant equitable considerations. The Company and the Underwriters agree that it would not be just and equitable if contribution pursuant to this Section 6 were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above. The aggregate amount of losses, liabilities, claims, damages and expenses incurred by an indemnified party and referred to above shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue or alleged untrue statement or omission or alleged omission. Notwithstanding the provisions of this Section 6, no Underwriter (except as may be provided in the Agreement Among Underwriters) shall be required to contribute any amount in excess of the underwriting discounts and commissions applicable to the Shares purchased by such Underwriter. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 6, each person, if any, who controls an Underwriter within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act shall have the same rights to contribution as such Underwriter, and each director of the Company, including any person who, with his or her consent, is named in the Registration Statement as about to become a director of the Company, each officer of the Company who signed the Registration Statement, and each person, if any, who controls the Company within the meaning of the Section 15 of the Securities Act or Section 20 of the Exchange Act, shall have the same rights to contribution as the Company. Any party entitled to contribution will, promptly after receipt of notice of commencement of any action, suit or proceeding against such party in respect of which a claim for contribution may be made against another party or parties under this Section 6, notify such party or parties from whom contribution may be sought, but the omission to so notify such party or parties from whom contribution may be sought shall not relieve the party or parties from whom contribution may be sought from any other obligation it or they may have hereunder or otherwise than under this Section 6. No party shall be liable for contribution with respect to any action, suit, proceeding or claim settled without its written consent. The Underwriter's obligations to contribute pursuant to this Section 6 are several in proportion to their respective underwriting commitments and not joint.
25 |
7. Termination .
(a) This Agreement may be terminated with respect to the Shares to be purchased on a Closing Date by the Representative by notifying the Company at any time at or before a Closing Date in the absolute discretion of the Representative if: (i) there has occurred any material adverse change in the securities markets or any event, act or occurrence that has materially disrupted, or in the opinion of the Representative, will in the future materially disrupt, the securities markets or there shall be such a material adverse change in general financial, political or economic conditions or the effect of international conditions on the financial markets in the United States is such as to make it, in the judgment of the Representative, inadvisable or impracticable to market the Shares or enforce contracts for the sale of the Shares, (ii) there has occurred any outbreak or material escalation of hostilities or acts of terrorism or other calamity or crisis the effect of which on the financial markets of the United States is such as to make it, in the judgment of the Representative, inadvisable or impracticable to market the Shares or enforce contracts for the sale of the Shares, (iii) trading in the Shares or any securities of the Company has been suspended or materially limited by the Commission or trading generally on the New York Stock Exchange, Inc. or the Nasdaq Stock Market has been suspended or materially limited, or minimum or maximum ranges for prices for securities shall have been fixed, or maximum ranges for prices for securities have been required, by any of said exchanges or by such system or by order of the Commission, FINRA, or any other governmental or regulatory authority, (iv) a banking moratorium has been declared by any state or federal authority or (v) in the judgment of the Representative, there has been, since the time of execution of this Agreement or since the respective dates as of which information is given in the Prospectus, any material adverse change in the assets, properties, condition, financial or otherwise, or in the results of operations, business affairs or business prospects of the Company and its subsidiaries, considered as a whole, whether or not arising in the ordinary course of business.
(b) If this Agreement is terminated pursuant to any of its provisions, the Company shall not be under any liability to any Underwriter, and no Underwriter shall be under any liability to the Company, except that (i) if this Agreement is terminated by the Representative or the Underwriters because of any failure, refusal or inability on the part of the Company to comply with the terms or to fulfill any of the conditions of this Agreement, the Company will reimburse the Underwriters for all out-of-pocket expenses (including the reasonably incurred fees and disbursements of their counsel) incurred by them in connection with the proposed purchase and sale of the Shares or in contemplation of performing their obligations hereunder and (ii) no Underwriter who shall have failed or refused to purchase the Shares agreed to be purchased by it under this Agreement, without some reason sufficient hereunder to justify cancellation or termination of its obligations under this Agreement, shall be relieved of liability to the Company or to the other Underwriters for damages occasioned by its failure or refusal.
8. Substitution of Underwriters . If any Underwriter shall default in its obligation to purchase on any Closing Date the Shares agreed to be purchased hereunder on such Closing Date, the Representative shall have the right, within 36 hours thereafter, to make arrangements for one or more of the non-defaulting Underwriters, or any other Underwriters, to purchase such Shares on the terms contained herein. If, however, the Representative shall not have completed such arrangements within such 36-hour period, then the Company shall be entitled to a further period of 36 hours within which to procure another party or other parties satisfactory to the Underwriters to purchase such Shares on such terms. If, after giving effect to any arrangements for the purchase of the Shares of a defaulting Underwriter or Underwriters by the Representative and the Company as provided above, the aggregate number of Shares which remains unpurchased on such Closing Date does not exceed one-eleventh of the aggregate number of all the Shares that all the Underwriters are obligated to purchase on such date, then the Company shall have the right to require each non-defaulting Underwriter to purchase the number of Shares which such Underwriter agreed to purchase hereunder at such date and, in addition, to require each non-defaulting Underwriter to purchase its pro rata share (based on the number of Shares which such Underwriter agreed to purchase hereunder) of the Shares of such defaulting Underwriter or Underwriters for which such arrangements have not been made; but nothing herein shall relieve a defaulting Underwriter from liability for its default. In any such case, either the Representative or the Company shall have the right to postpone the applicable Closing Date for a period of not more than seven days in order to effect any necessary changes and arrangements (including any necessary amendments or supplements to the Registration Statement or Prospectus or any other documents), and the Company agrees to file promptly any amendments to the Registration Statement or the Prospectus which in the opinion of the Company and the Underwriters and their counsel may thereby be made necessary.
26 |
If, after giving effect to any arrangements for the purchase of the Shares of a defaulting Underwriter or Underwriters by the Representative and the Company as provided above, the aggregate number of such Shares which remains unpurchased exceeds 10% of the aggregate number of all the Shares to be purchased at such date, then this Agreement, or, with respect to a Closing Date which occurs after the First Closing Date, the obligations of the Underwriters to purchase and of the Company to sell the Option Shares to be purchased and sold on such date, shall terminate, without liability on the part of any non-defaulting Underwriter to the Company, and without liability on the part of the Company, except as provided in Sections 4(b), 5, 6 and 7. The provisions of this Section 8 shall not in any way affect the liability of any defaulting Underwriter to the Company or the nondefaulting Underwriters arising out of such default. The term "Underwriter" as used in this Agreement shall include any person substituted under this Section 8 with like effect as if such person had originally been a party to this Agreement with respect to such Shares.
9. Miscellaneous . The respective agreements, representations, warranties, indemnities and other statements of the Company and the several Underwriters, as set forth in this Agreement or made by or on behalf of them pursuant to this Agreement, shall remain in full force and effect, regardless of any investigation (or any statement as to the results thereof) made by or on behalf of any Underwriter or the Company or any of their respective officers, directors or controlling persons referred to in Sections 5 and 6 hereof, and shall survive delivery of and payment for the Shares. In addition, the provisions of Sections 4(b), 5, 6 and 7 shall survive the termination or cancellation of this Agreement.
This Agreement has been and is made for the benefit of the Underwriters, the Company, and their respective successors and assigns, and, to the extent expressed herein, for the benefit of persons controlling any of the Underwriters, or the Company, and directors and officers of the Company, and their respective successors and assigns, and no other person shall acquire or have any right under or by virtue of this Agreement. The term "successors and assigns" shall not include any purchaser of Shares from any Underwriter merely because of such purchase.
All notices and communications hereunder shall be in writing and mailed or delivered or by telephone or facsimile if subsequently confirmed in writing, (a) if to the Representative, c/o Oppenheimer & Co. Inc., 385 Broad Street, New York, New York 10004 Attention: Equity Capital Markets, with a copy to Oppenheimer & Co. Inc., 385 Broad Street, New York, New York 10004 Attention: General Counsel, and to Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., 666 Third Avenue, New York, New York 10017, Attention: Ivan K. Blumenthal, Esq., Facsimile: 212-983-3115, and (b) if to the Company, to its agent for service as such agent's address appears on the cover page of the Registration Statement, with a copy to Davis Polk & Wardwell LLP, 450 Lexington Avenue, New York, New York 10017, Attention: Michael Kaplan and Sophia Hudson.
27 |
This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York applicable to agreements made and to be performed in such state. Any legal suit, action or proceeding arising out of or based upon this Agreement or the transactions contemplated hereby (“Related Proceedings”) may be instituted in the federal courts of the United States of America located in the Borough of Manhattan in the City of New York or the courts of the State of New York in each case located in the Borough of Manhattan in the City of New York (collectively, the “Specified Courts”), and each party irrevocably submits to the exclusive jurisdiction (except for proceedings instituted in regard to the enforcement of a judgment of any such court (a "Related Judgment"), as to which such jurisdiction is non-exclusive) of such courts in any such suit, action or proceeding. Service of any process, summons, notice or document by mail to such party’s address set forth above shall be effective service of process for any suit, action or other proceeding brought in any such court. The parties irrevocably and unconditionally waive any objection to the laying of venue of any suit, action or other proceeding in the Specified Courts and irrevocably and unconditionally waive and agree not to plead or claim in any such court that any such suit, action or other proceeding brought in any such court has been brought in an inconvenient forum. The Company has irrevocably appointed ___________, which currently maintains an office at __________, United States of America, as its agent to receive service of process or other legal summons for purposes of any such suit, action or proceeding that may be instituted in any state or federal court in the Borough of Manhattan in the City of New York, United States of America.
With respect to any Related Proceeding, each party irrevocably waives, to the fullest extent permitted by applicable law, all immunity (whether on the basis of sovereignty or otherwise) from jurisdiction, service of process, attachment (both before and after judgment) and execution to which it might otherwise be entitled in the Specified Courts, and with respect to any Related Judgment, each party waives any such immunity in the Specified Courts or any other court of competent jurisdiction, and will not raise or claim or cause to be pleaded any such immunity at or in respect of any such Related Proceeding or Related Judgment, including, without limitation, any immunity pursuant to the United States Foreign Sovereign Immunities Act of 1976, as amended.
28 |
The obligations of the Company pursuant to this Agreement in respect of any sum due to the Underwriters shall, notwithstanding any judgment in a currency other than United States dollars, not be discharged until the first business day, following receipt by the Underwriters of any sum adjudged to be so due in such other currency, on which the Underwriters may in accordance with normal banking procedures purchase United States dollars with such other currency. If the United States dollars so purchased are less than the sum originally due to the Underwriters in United States dollars hereunder, the Company agrees as a separate obligation and notwithstanding any such judgment, to indemnify the Underwriters against such loss. If the United States dollars so purchased are greater than the sum originally due to the Underwriters hereunder, the Underwriters agree to pay to the Company an amount equal to the excess of the dollars so purchased over the sum originally due to the Underwriters hereunder.
Each Underwriter shall be solely responsible for the payment of all income and similar taxes which apply to it under applicable law, on account of the provision of services provided hereunder, provided, however, that the Company may, only if required under applicable law and subject thereto, withhold, deduct or set-off any amounts as required by applicable law from payments hereunder or in connection with this Agreement. Should any payment required to be made to any Underwriter in accordance with the provisions of this Agreement be subject to withholding of any applicable taxes assessable upon such Underwriter, Company shall inform such Underwriter of such withholding requirement in advance of the first payment to be made by Company to such Underwriter hereunder, so as to allow such Underwriter to obtain and provide Company with an appropriate certificate of exemption or such other valid tax certificate in accordance with the applicable law. No withholding (or reduced withholding) shall be made if a valid exemption or tax certificate provided in accordance with the applicable law is timely obtained, and for as long as such exemption or tax certificate is valid.
[Remainder of Page Intentionally Left Blank. Signature Page Follows.]
29 |
This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.
Please confirm that the foregoing correctly sets forth the agreement among us.
Very truly yours, | ||
ENTERA BIO LTD. | ||
By: | ||
Title |
Confirmed: | |
OPPENHEIMER & CO. INC. | |
Acting severally on behalf of itself | |
and as representative of the several | |
Underwriters named in Schedule I annexed | |
hereto. |
[Signature Page to Underwriting Agreement]
30 |
SCHEDULE I
Name |
Number of
Firm Shares to Be Purchased |
|||
Oppenheimer & Co. Inc. | ||||
Ladenburg Thalmann & Co. Inc. | ||||
Total |
SCHEDULE II
Lock-up Signatories
SCHEDULE III
Issuer Free Writing Prospectuses
[None]
SCHEDULE IV
Testing-the-Waters Communications
Exhibit A
FORM OF LOCK-UP AGREEMENT
___, 2017
Oppenheimer & Co. Inc.
as Representative of the Several Underwriters
c/o Oppenheimer & Co. Inc.
85 Broad Street
New York, New York 10004
Re: | Initial Public Offering of Entera Bio Ltd. |
Ladies and Gentlemen:
The undersigned, a holder of ordinary shares, NIS 0.01 (“ Ordinary Shares ”), or securities convertible into or rights to acquire Ordinary Shares, of Entera Bio Ltd. (the “ Company ”), understands that Oppenheimer & Co. Inc. (the “ Representative ”), as Representative of the several Underwriters, proposes to enter into an Underwriting Agreement (the “ Underwriting Agreement ”) with the Company, providing for the initial public offering (the “ Offering ”) by the several underwriters named in Schedule I to the Underwriting Agreement (the “ Underwriters ”), of Ordinary Shares (the “ Securities ”) pursuant to a registration statement on Form F-1.
1 |
In consideration of the Underwriters’ agreement to enter into the Underwriting Agreement and to proceed with the Offering, and for other good and valuable consideration, receipt of which is hereby acknowledged, the undersigned hereby agrees for the benefit of the Company, you and the other Underwriters that, without the prior written consent of the Representative on behalf of the Underwriters, in accordance with the terms of the Underwriting Agreement, the undersigned will not, from the date hereof through the period ending 180 days (the “ Lock-Up Period ”) following the date of the Underwriting Agreement, directly or indirectly, unless otherwise provided herein, (1) offer, pledge, assign, encumber, announce the intention to sell, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, any Ordinary Shares or any securities convertible into or exercisable or exchangeable for Ordinary Shares either owned of record or beneficially owned (as defined in the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”)) by the undersigned on the date hereof or hereafter acquired (the “ Lock-Up Securities ”) or (2) enter into any swap, hedge or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of the Lock-Up Securities, whether any such transaction described in clauses (1) or (2) above is to be settled by delivery of Ordinary Shares or such other securities, in cash or otherwise, or publicly announce an intention to do any of the foregoing. In addition, the undersigned agrees that, without the prior written consent of the Representative, it will not, during the Lock-Up Period, make any demand for or exercise any right with respect to, the registration of any Ordinary Shares or any security convertible into or exercisable or exchangeable for Ordinary Shares. The foregoing shall not apply to (a) the Lock-Up Securities to be transferred as a bona fide gift or gifts (provided that any donee thereof agrees in writing to be bound by the terms hereof), (b) the transfer of the Lock-Up Securities (1) to any immediate family member (provided that any such recipient agrees in writing to be bound by the terms hereof) or to any trust for the direct or indirect benefit of the undersigned or the immediate family of the undersigned, (2) if the undersigned is a corporation, partnership, limited liability company, trust or other business entity (A) to another corporation, partnership, limited liability company, trust or other business entity that is a direct or indirect affiliate (as defined in Rule 405 promulgated under the Securities Act of 1933, as amended (the “ Securities Act ”)) of the undersigned or any investment fund or other entity controlled or managed by the undersigned or (B) to limited partners, limited liability company members or stockholders of the undersigned (provided that any such transfer in this clause (2) shall not involve a disposition for value), (3) if the undersigned is a trust, to the beneficiary of such trust, (4) by testate succession or intestate succession, (5) by operation of law or by an order of a court or regulatory agency, such as pursuant to a qualified domestic order or in connection with a divorce settlement, (6) pursuant to any contract, instruction or plan that satisfies all of the requirements of Rule 10b5-1 under the Exchange Act established prior to the date of this agreement (the “ Letter Agreement ”), (7) the exercise of an option to purchase any Ordinary Shares (including by way of “net” or “cashless” exercise of stock options) or the vesting, conversion, exchange, settlement or delivery of Ordinary Shares in connection with any stock incentive plan of the Company, provided that any Ordinary Shares received by the undersigned upon such exercise, vesting, conversion, exchange, settlement or delivery shall be subject to the restrictions on transfer set forth herein, (8) the exercise of a warrant to purchase Ordinary Shares (including by way of “net” or “cashless” exercise of warrants), provided that any Ordinary Shares received by the undersigned upon such exercise shall be subject to the restrictions on transfer set forth herein, (9) the exercise of an optional conversion right pursuant to the Company’s convertible loan agreements or Series A or Series B preferred share purchase agreements to convert outstanding convertible loan amounts or preferred shares into the Company’s Ordinary Shares, provided that any Ordinary Shares received by the undersigned upon such conversion shall be subject to the restrictions on transfer set forth herein, (10) transfers or dispositions of Ordinary Shares prior to the first filing of a prospectus for the Public Offering with a “price range” set forth on the cover of such prospectus, or (11) to a nominee or custodian of a person or entity to whom a disposition or transfer would be permissible under clauses (1)-(10) above; provided, in the case of clauses (1)-(3) and (10), that the transferee agrees in writing with the Representative to be bound by the terms of this Letter Agreement, (c) transfers of Ordinary Shares, warrants or Company stock options to the Company (including by way of “net” or “cashless” exercise of stock options or warrants), (d) with the prior written consent of the Representative on behalf of the Underwriters, and (e) the establishment of a trading plan pursuant to Rule 10b5-1 under the Exchange Act for the transfer of Ordinary Shares, provided that such plan does not provide for the transfer of Ordinary Shares during the Lock-Up Period, and to the extent a public announcement or filing under the Exchange Act, if any, is required of or voluntarily made by or on behalf of the undersigned or the Company regarding the establishment of such plan, such announcement or filing shall include a statement to the effect that no transfer of Ordinary Shares may be made under such plan during the Lock-Up Period.
2 |
Notwithstanding the foregoing, and subject to the conditions in this paragraph, the undersigned may also transfer the Lock-Up Securities during the Lock-Up Period without the prior written consent of the Representative if any such transfers are made by the undersigned: (i) to satisfy tax withholding obligations of the undersigned in connection with the vesting or exercise of equity awards outstanding as of the date of the preliminary prospectus by the undersigned pursuant to the Company’s equity compensation plans and arrangements; or (ii) pursuant to the conversion or sale of, or an offer to purchase, outstanding Ordinary Shares involving a change of control for the Company, whether pursuant to a merger, tender offer or otherwise; provided, however, that in the case of any transfer described in clause (i) of this paragraph, it shall be a condition to the transfer that if the undersigned is required to file a report under Section 16(a), the undersigned shall include a statement in such report to the effect that such transfer is being made for tax withholding obligations; and provided further that in the case of any conversion or sale described in clause (ii) of this paragraph, in the event that such transaction is abandoned, the Lock-Up Securities shall remain subject to the restrictions hereunder. Furthermore, the undersigned may sell Ordinary Shares of the Company purchased by the undersigned on the open market following the Offering during the Lock-Up Period if and only if (i) such sales are not required to be reported in any public report or filing with the Securities and Exchange Commission, or otherwise and (ii) the undersigned does not otherwise voluntarily effect any public filing or report regarding such sales.
In furtherance of the foregoing, the Company, and any duly appointed transfer agent for the registration or transfer of the Lock-Up Securities described herein, are hereby authorized to decline to make any transfer of securities if such transfer would constitute a violation or breach of this Letter Agreement.
The undersigned hereby represents and warrants that the undersigned has full power and authority to enter into this Letter Agreement. All authority herein conferred or agreed to be conferred and any obligations of the undersigned shall be binding upon the successors, assigns, heirs or personal representatives of the undersigned.
The undersigned understands that, if the Underwriting Agreement does not become effective by January 31, 2017, or if the Underwriting Agreement (other than the provisions thereof which survive termination) shall terminate or be terminated prior to payment for and delivery of the Securities to be sold thereunder, the undersigned shall be released from all obligations under this Letter Agreement.
The undersigned, whether or not participating in the Offering, understands that the Underwriters are entering into the Underwriting Agreement and proceeding with the Offering in reliance upon this Letter Agreement.
[Signature page follows.]
3 |
This Letter Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to the conflict of laws principles thereof (other than New York General Obligations Law § 5-1401).
Very truly yours, | ||
By: | ||
Name: | ||
Title: |
4 |
Exhibit A-1
[Form of Waiver of Lock-up]
[Oppenheimer Letterhead]
[corporation]
Public Offering of Ordinary Shares
[ ], 20[ ]
[Name and Address of
Officer or Director
Requesting Waiver]
Dear Mr./Ms. [Name]:
This letter is being delivered to you in connection with the offering by [Corporation] (the “Company”) of [ ] Ordinary Shares, NIS[ ] par value (the “Ordinary Shares”), of the Company and the lock-up agreement dated [ ], 20[ ] (the “Lock-up Agreement”), executed by you in connection with such offering, and your request for a [waiver] [release] dated [ ], 20[ ], with respect to [ ] Ordinary Shares (the “Shares”).
Oppenheimer & Co. Inc. hereby agrees to [waive] [release] the transfer restrictions set forth in the Lock-up Letter, but only with respect to the Shares, effective [ ], 20[ ][date to be 3 business days from date of letter]; provided , however , that such [waiver] [release] is conditioned on the Company announcing the impending [waiver] [release] by press release through a major news service at least two business days before effectiveness of such [waiver] [release]. This letter will serve as notice to the Company of the impending [waiver] [release].
Except as expressly [waived] [released] hereby, the Lock-up Agreement shall remain in full force and effect.
Yours very truly, | ||
OPPENHEIMER & CO. INC. | ||
By: | ||
Name: | ||
Title: |
cc: | [Company contact] |
Exhibit A-2
[Form of Lock Up Waiver/Release Company Press Release]
[Company]
[Date]
(“[Company]”) announced today that Oppenheimer & Co. Inc., the [lead book-running] manager in the Company’s recent public sale of [ ] ordinary shares, is [waiving] [releasing] a lock-up restriction with respect to [ ] ordinary shares of the Company held by [ ], an [officer/director] of the Company. The [waiver] [release] will take effect on [ ], 20[ ], and the related shares may be sold on or after such date.
This press release is not an offer for sale of the securities in the United States or in any other jurisdiction where such offer is prohibited, and such securities may not be offered or sold in the United States absent registration or an exemption from registration under the United States Securities Act of 1933, as amended.
Exhibit 21.1
List of Subsidiaries
The following is a list of Entera Bio Ltd.’s subsidiaries as of January 9, 2018.
1. Entera Bio, Inc. (United States)
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the use in this Amendment No. 3 to the Registration Statement on Form F-1 of Entera Bio Ltd. of our report dated July 13, 2017 relating to the financial statements, which appears in such Registration Statement. We also consent to the reference to us under the heading “Experts" in such Registration Statement.
Tel-Aviv, Israel | /s/ Kesselman & Kesselman |
January 10, 2018 | Certified Public Accountants (lsr.) |
A member firm of PricewaterhouseCoopers International Limited |