---

 

FORM 20-F ANNUAL REPORT FOR THE FISCAL YEAR ENDED DECEMBER 31, 2022

INTRODUCTION	i
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS	i
PART I
Item 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS	1
Item 2. OFFER STATISTICS AND EXPECTED TIMETABLE	1
Item 3. KEY INFORMATION	1
Item 4. INFORMATION ON THE COMPANY	40
Item 4A. UNRESOLVED STAFF COMMENTS	87
Item 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS	87
Item 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES	99
Item 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS	119
Item 8. FINANCIAL INFORMATION	123
Item 9. THE OFFER AND LISTING	124
Item 10. ADDITIONAL INFORMATION	125
Item 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	134
Item 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES	135
PART II
Item 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES	135
Item 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS	136
Item 15. CONTROLS AND PROCEDURES	136
Item 16A. AUDIT COMMITTEE FINANCIAL EXPERT	136
Item 16B. CODE OF ETHICS	136
Item 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES	137
Item 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES	137
Item 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS	137
Item 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT	137
Item 16G. CORPORATE GOVERNANCE	138
Item 16H. MINE SAFETY DISCLOSURE	138
Item 16I.  DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS	138
PART III
Item 17. FINANCIAL STATEMENTS	138
Item 18. FINANCIAL STATEMENTS	138
Item 19. EXHIBITS	139
SIGNATURES	142

	•	our commercialization, marketing and manufacturing capabilities and strategy and the ability of our marketing team to cover European regional burn centers and units;
	•	the timing and conduct of our trials of NexoBrid, EscharEx and our other pipeline product candidates, including statements regarding the timing, progress and results of current and future preclinical studies and clinical trials, and our research and development programs;
	•	the clinical utility, potential advantages and timing or likelihood of regulatory filings and approvals of EscharEx and our other pipeline products;
	•	our expectations regarding future growth, including our ability to develop new products;
	•	our estimates regarding expenses, future revenues, capital requirements and our need for additional financing;

	•	our ability to maintain adequate protection of our intellectual property;
	•	our estimates regarding the market opportunity for NexoBrid, EscharEx and our other pipeline products;
	•	our expectation regarding the duration of our inventory of intermediate drug substances and products;
	•	the impact of our research and development expenses as we continue developing product candidates; and
	•	the impact of government laws and regulations.

Item 1.

IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Item 2.

OFFER STATISTICS AND EXPECTED TIMETABLE

Item 3.

KEY INFORMATION

A.

[Reserved]

B.

Capitalization and Indebtedness

C.

Reasons for the Offer and Use of Proceeds

D.

Risk Factors

	•	regulators may not authorize us to conduct a clinical trial within a country or at a prospective trial site or may require us to change the design of a study;
	•	delays may occur in reaching agreement on acceptable clinical trial terms with regulatory authorities or prospective sites, or obtaining institutional review board or ethics committee approval or opinion;
	•	our preclinical tests or clinical trials may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional trials or to abandon strategic projects;
	•	the number of patients required for our clinical trials may be larger than we anticipate, enrollment in our clinical trials may be slower or more difficult than we expect, or patients may not participate in necessary follow-up visits to obtain required data, any of which would result in significant delays in our clinical testing process;
	•	our third-party contractors, such as a research institute, may fail to comply with regulatory requirements or meet their contractual obligations to us;
	•	we may be forced to suspend or terminate our clinical trials if the participants are being exposed, or are thought to be exposed, to unacceptable health risks or if any participant experiences an unexpected serious adverse event;
	•	regulators or institutional review boards may require that we hold, suspend or terminate clinical research for various reasons, including noncompliance with regulatory requirements;
	•	undetected or concealed fraudulent activity by a clinical researcher, if discovered, could preclude the submission of clinical data prepared by that researcher, lead to the suspension or substantive scientific review of one or more of our marketing applications by regulatory agencies, and result in the recall of any approved product distributed pursuant to data determined to be fraudulent;

	•	the cost of our clinical trials may be greater than we anticipate;
	•	an audit of preclinical or clinical studies by regulatory authorities may reveal noncompliance with applicable protocols or regulations, which could lead to disqualification of the results and the need to perform additional studies;
	•	political unrest and wars, such as the conflict between Russia and Ukraine, which could delay or disrupt business activity, and if such political unrest escalates or spills over to or otherwise impacts additional regions, it could also heighten many of the other risk factors described in this Annual Report;
	•	delays may occur in obtaining our clinical materials; and
	•	epidemics or pandemics, such as the COVID-19 pandemic that can affect the overall healthcare infrastructure, including the ability to recruit patients, the ability to conduct studies at medical sites and the pace with which governmental agencies, such as the FDA and foreign regulatory authorities, will review and approve regulatory submissions.

•

restrictions on the marketing or manufacturing of the product, withdrawal of the product from the market or voluntary or mandatory product recalls;

•

fines, warning letters or holds on clinical trials;

•

harm to our reputation, reduced demand for our products and loss of market acceptance;

•

refusal by the applicable regulatory authority to approve pending applications or supplements to approved applications filed by us, or suspension or revocation of product license approvals;

•

product seizure or detention, or refusal to permit the import or export of products; and

•

injunctions or the imposition of civil or criminal penalties.

•

the willingness of physicians, burn care teams and hospital administrators to administer our products and the acceptance of our products as part of the medical department routine;

•

the consent of hospitals to fund/purchase NexoBrid or obtain third-party coverage or reimbursement for our products;

•

the ability to offer NexoBrid, EscharEx and our pipeline product candidates for sale at an attractive value;

•

the efficacy and potential advantages of NexoBrid, EscharEx and our pipeline product candidates relative to current standard of care;

•

the prevalence and severity of any side effects; and

•

the efficacy, potential advantages and timing of introduction to the market of alternative treatments.

•

the market acceptance or demand for NexoBrid, EscharEx or any of our pipeline product candidates, if approved;

•

the ability to set a price that we believe is fair for NexoBrid, EscharEx or any of our pipeline product candidates, if approved;

•

our ability to generate revenues and achieve or maintain profitability;

•

the level of taxes that we are required to pay; and

•

the availability of capital.

•

an annual, nondeductible fee on any entity that manufactures or imports certain branded prescription drugs and biologic agents, apportioned among these entities according to their market share in certain government healthcare programs;

•

an increase in the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program to 23.1% and 13.0% of the average manufacturer price for branded and generic drugs, respectively;

•

addressed a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted or injected;

•

a new Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 70% point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D;

•

extension of manufacturers’ Medicaid rebate liability to covered drugs dispensed to individuals who are enrolled in Medicaid managed care organizations;

•

expansion of eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to additional individuals and by adding new mandatory eligibility categories for certain individuals with income at or below 133% of the Federal Poverty Level, thereby potentially increasing manufacturers’ Medicaid rebate liability;

•

expansion of the entities eligible for discounts under the Public Health Service pharmaceutical pricing program;

•

a new requirement to annually report drug samples that manufacturers and distributors provide to physicians; and

•

a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research.

•

accelerate our clinical development activities, particularly with respect to our clinical development of EscharEx for the debridement of chronic and other hard-to-heal wounds and our clinical trials for our other pipeline product candidates;

•

further scale-up the manufacturing process for NexoBrid;

•

seek regulatory and marketing authorizations for our products and any pipeline product candidate that successfully completes clinical trials;

•

initiate additional preclinical, clinical or other studies for NexoBrid, EscharEx and our pipeline product candidates, and seek to identify and validate new products;

•

commercialize NexoBrid and any pipeline product candidates for which we obtain marketing authorization;

•

acquire rights to other product candidates and technologies;

•

change or add suppliers;

•

maintain, expand and protect our intellectual property portfolio;

•

attract and retain skilled personnel; and

•

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

•

delay, scale back or discontinue the development, manufacturing scale-up or commercialization of NexoBrid, EscharEx or our pipeline product candidates;

•

seek additional corporate partners for NexoBrid, EscharEx or one or more of our pipeline product candidates on terms that are less favorable than might otherwise be available; or

•

relinquish or license to additional parties, on unfavorable terms, our rights to NexoBrid, EscharEx or our pipeline product candidates that we otherwise would seek to develop or commercialize ourselves.

•

any such consequence will have a material adverse effect on our business, operating results and prospects and on our ability to develop our pipeline product candidates.

•

the Federal Acquisition Regulations (“FAR”) and agency-specific regulations supplemental to the FAR, which comprehensively regulate the procurement, formation, administration and performance of government contracts;

•

business ethics and public integrity obligations, which govern conflicts of interest and the hiring of former government employees, restrict the granting of gratuities and funding of lobbying activities and include other requirements such as the Anti-Kickback Statute and Foreign Corrupt Practices Act;

•

export and import control laws and regulations; and

•

laws, regulations and executive orders restricting the use and dissemination of information classified for national security purposes and the exportation of certain products and technical data.

•

any of our present or future patents or patent claims or other intellectual property rights will not lapse or be invalidated, circumvented, challenged or abandoned;

•

our intellectual property rights will provide competitive advantages or prevent competitors from making or selling competing products;

•

our ability to assert our intellectual property rights against potential competitors or to settle current or future disputes will not be limited by our agreements with third parties;

•

any of our pending or future patent applications will be issued or have the coverage originally sought;

•

our intellectual property rights will be enforced in jurisdictions where competition may be intense or where legal protection may be weak; or

•

we will not lose the ability to assert our intellectual property rights against, or to license our technology to, others and collect royalties or other payments.

•

actual or anticipated variations in our and our competitors’ results of operations and financial condition;

•

market acceptance of our products;

•

general economic and market conditions and other factors, including factors unrelated to our operating performance;

•

the mix of products that we sell and related services that we provide;

•

changes in earnings estimates or recommendations by securities analysts, if our ordinary shares continue to be covered by analysts;

•

publication of the results of preclinical or clinical trials for NexoBrid, EscharEx or any of our pipeline product candidates;

•

failure by us to achieve a publicly announced milestone;

•

delays between our expenditures to develop and market new or enhanced products and the generation of sales from those products;

•

development of technological innovations or new competitive products by others;

•

announcements of technological innovations or new products by us;

•

regulatory developments and the decisions of regulatory authorities as to the marketing of our current products or the approval or rejection of new or modified products;

•

developments concerning intellectual property rights, including our involvement in litigation;

•

changes in our expenditures to develop, acquire or license new products, technologies or businesses;

•

changes in our expenditures to promote our products;

•

changes in the structure of healthcare payment systems;

•

our sale or proposed sale, or the sale by our significant shareholders, of our ordinary shares or other securities in the future;

•

changes in key personnel;

•

success or failure of our research and development projects or those of our competitors; and

•

the trading volume of our ordinary shares.

A.

History and Development of the Company

B.

Business Overview

	•	The extent of the surface that the burn occupies is usually referred to as percent of total body surface area (“TBSA”). A burn on an adult’s entire palm would generally amount to 1% TBSA, and the average hospitalized patient has a burn covering approximately 9% TBSA. Burns covering more than 15-20% TBSA usually require hospitalization and may result in dehydration, shock and increased risk of mortality.
	•	The depth of the burn, referred to in terms of “degree” is generally classified into four categories:

○

Superficial or first-degree burns. Such burns do not penetrate the basal membrane and usually heal naturally.

	○	Dermal/partial thickness or second-degree burns. Such burns are characterized by varying amounts of damaged dermis and can be further subdivided into superficial and deep partial-thickness burns. Superficial partial-thickness burns may heal spontaneously after removal of the covering thin eschar. Conversely, deep partial-thickness burns are often difficult for physicians to accurately diagnose before eschar removal and may progress and transform into full-thickness burns if not debrided in a timely manner, depending on the magnitude of latent tissue death of the surrounding skin.
	○	Full thickness or third-degree burns. Such burns are characterized by death of the entire dermal tissue down to the subcutaneous fat and must be debrided and treated by autografting, which is the process of harvesting skin from healthy donor sites on a patient’s body and transplanting it on the post-debridement, clean wound bed.

○

Fourth-degree burns. Such burns, which are rare, extend beyond the subcutaneous fat tissue into the underlying structures, such as muscle or bone, and also require debridement and further substantial treatment.

•

Other factors include the age of the victim, the body part where the burn occurred and any co-morbidities of the patient. For example, some patients may require hospitalization regardless of the TBSA or degree of the burn, such as children, the elderly or victims with burns to the extremities, joints or head/neck area or with co-morbidities such as smoke inhalation, diabetes or obesity.

	•	the prevention of local infection, sepsis (a systemic inflammatory response caused by severe infection) and additional damage to surrounding viable tissue; and
	•	the initiation of the body’s healing process and scar prevention.

•

Surgical debridement

○

Surgical debridement predominantly includes tangential excision, a procedure in which a surgeon amputates the entire dead tissue mass, layer after layer, down to healthy, viable tissue. The excision is extended into healthy intact tissue to make sure that no trace of the eschar remains, resulting in up to an estimated 30-50% of healthy tissue being excised during this procedure. Other methods include dermabrasion, in which a mechanically powered, hand-held rotating abrading cylinder is used to slowly scrape off tissue, and hydro surgery, in which a high-pressure flow of water abrades the tissue. These alternative methods have attempted to limit the trauma associated with tangential excision, but entail spray of contaminated eschar or take a significantly longer time to complete than tangential excision.

○

The benefits of surgical eschar removal are that it is usually fast and effective. Disadvantages include the significant trauma of the procedure, associated blood loss, risk of surgery in delicate areas of the body such as hands, added costs, and, most importantly, the loss of viable tissue that necessitates additional surgical procedures for harvesting skin from healthy donor sites and autografting.

○

Due to the disadvantages of surgery in extensive burns some surgeons limit their debriding surgery to only a part of the affected area in a single session (15-30% TBSA in most centers), thus delaying full debridement by days. After several days, complications related to eschar contamination may begin and some of the benefits of the earlier debridement may not be realized. On the other hand, when excising burns immediately, all suspected necrotic tissue will be excised, inevitably resulting in over-excision, especially in “indeterminate” burns, as after surgical excision, the remaining skin often no longer has any spontaneous healing potential and will heal only by autografting.

•

Non-surgical debridement

	○	Non-surgical debridement includes many different treatment options that do not require direct surgical removal of the skin to remove eschar. With non-surgical debridement, the eschar is naturally, but slowly, removed by contaminant microorganisms, tissue autolysis, or self-decomposition, and the inflammatory process that may lead to serious local and systemic complications. In seeking to facilitate such natural processes, topical medication, anti-microbial agents, enzymes and biological/chemical applications are often applied onto the eschar.
	○	The benefits of this approach are that it is non-surgical, reduces trauma to the patient and is easier to apply. Disadvantages include numerous dressing changes and mechanical scraping with limited debridement efficacy. This prolongs the eschar removal process, which may lead to death of the tissue surrounding the initial burn wound, causing partial-thickness wounds to transform into full-thickness wounds and forming granulation tissue that may develop into heavy scars.

	Trial 1	Trial 2	Trial 3	Trial 4	Trial 5	Trial 6	Trial 7	Trial 8	Trial 9
Study Type	Retrospective Phase II Investigator initiated	Dose range Phase II	Prospective Phase II IND/FDA	Phase II IND/FDA	Phase III EMA	Phase IIIb EMA	Phase II EMA	Post approval safety study EMA	Phase III IND/FDA
Design	Data collected from files of patients treated with NexoBrid	Parallel, controlled, observer- blind, randomized, single-center	Parallel, controlled, observer- blind, three-arm, randomized, multi-center	Parallel, controlled, open label, three-arm, randomized, single-center	Parallel, controlled, open label, two-arm, randomized, multi-center	Parallel, controlled, blinded, two-arm, multi-center	Open label, single-arm, multi-center	Observational retrospective data collection	Parallel, controlled, open label, three-arm, randomized, multi-center
Main Objectives	Safety and efficacy	Comparison of efficacy and safety	Safety and efficacy	Safety	Safety Efficacy	Long-term scar assessment Quality of life	Safety and pharmacokinetics Efficacy	Effectiveness of the risk minimization activities	Safety Efficacy
Wound Types	Deep partial/full thickness thermal burns	Deep partial /full thickness thermal burns	Deep partial /full thickness thermal burns	Deep partial /full thickness thermal burns	Deep partial/ full thickness thermal burns	Scar formation	Deep partial/full thickness thermal burns	Burns which were treated with NexoBrid in the market	Deep partial/ full thickness thermal burns
Number of Patients	154	20	140	30	182	89	36	160	175
Study Length	1985-2000	2002-2005	2003-2004	2006-2007	2006-2009	2011	2009-2015	2017-2019	2015-2020
Location	Israel	Israel	International	United States	International	International	International	Europe	International

•

Venous leg ulcers. VLUs develop as a result of vascular insufficiency, or the inability for the vasculature of the leg to return blood back toward the heart properly. Based on our comprehensive market research study on EscharEx that involved more than 200 healthcare professionals in the U.S. and Europe, which was last updated in 2022, the VLU overall prevalence is approximately 3.3 million (1% of total U.S. population). Furthermore, the annual incidence of VLUs in the U.S. alone, is approximately 960,000 (accounting for 45% recurrence), of which approximately 690,000 undergo debridement in a given year. These ulcers usually form on the sides of the lower leg, above the ankle and below the calf, and are slow to heal and often recur if preventative steps are not taken. The risk of VLUs can increase as a result of a blood clot forming in the deep veins of the legs, obesity, smoking, lack of physical activity or work that requires many hours of standing.

•

Diabetic foot ulcers. Diabetes can lead to a reduction in blood flow, which can cause patients to lose sensation in their feet and may prevent them from noticing injuries, sometimes leading to the development of DFUs, which are open sores or ulcers on the feet that may take several weeks to heal, if ever. Based on our comprehensive market research study conducted in 2015 on EscharEx that involved more than 200 healthcare professionals in the U.S. and Europe and, which was updated in 2019, there are estimated 31 million diabetics in 2019 (9.4% of the U.S. population). The annual incidence of DFUs in the United States alone, is approximately 990,000 (accounting for 45% recurrence), of which approximately 820,000 undergo debridement in a given year.

•

Pressure ulcers. Pressure ulcers form as a result of pressure sores, or bed sores, which are injuries to the skin or the tissue beneath the skin. Constant pressure on an area of skin reduces blood supply to the area and over time can cause the skin to break down and form an open ulcer. These often occur in patients who are hospitalized or confined to a chair or bed, and usually form over bony areas, where there is little cushion between the bone and the skin, such as lower parts of the body. Annually, 2.5 million pressure ulcers are treated in the United States in acute care facilities alone.

•

Surgical/traumatic wounds. Surgical wounds form as a result of various types of surgical procedures such as investigative or corrective, minor or major, open (traditional) or minimal access surgery, elective or emergency, and incisions (simple cuts) or excision (removal of tissue), among others. Traumatic wounds form as a result of cuts, lacerations or puncture wounds, which have caused damage to the skin and underlying tissue. Severe traumatic wounds may require surgical intervention to close the wound and stabilize the patient. Surgical/traumatic hard-to-heal wounds develop for various reasons, such as local surgical complications, suboptimal closure techniques, presence of foreign materials, exposed bones or tendons and infection. In the United States, millions receive post-surgical wound care annually.

	•	Basal cell carcinomas - BCC starts in the basal cell layer, which is the lower part of the epidermis. If not removed completely, basal cell carcinoma can come back (recur) in the same place on the skin. People who have had basal cell skin cancers are also more likely to get new ones in other places. BCCs are uncontrolled and abnormal growths that arise in the basal cells of the skin and the tumors primarily affect photo exposed areas, most commonly in the head, and infrequently appear on unexposed areas such as the genital and genitalia regions. The main cause of BCC is chronic ultraviolet (UV) exposure. BCC is the most common form of skin cancer, accounting for 75-80% of all skin cancers
	•	Squamous cell carcinomas - Squamous cell carcinomas (“SCC”) start in the flat cells in the upper (outer) part of the epidermis

•

Actinic keratosis - Actinic keratosis (“AK”), also known as solar keratosis, is a pre-cancerous skin condition caused by too much exposure to the sun. People who have them usually develop more than one. A small percentage of AKs may turn into squamous cell skin cancer.

•

Bowen disease - Bowen disease (squamous cell carcinoma in situ), is the earliest form of squamous cell skin cancer

•

laboratory tests, animal studies and formulation studies all performed in accordance with the applicable EU GLP or GMP regulations;

	•	submission to the relevant authorities of a CTA, which must be approved before human clinical trials may begin;
	•	performance of adequate and well‑controlled clinical trials to establish the safety and efficacy of the product for each proposed indication;
	•	submission to the relevant competent authorities of a marketing authorization application (“MAA”), which includes the data supporting preclinical and clinical safety and efficacy as well as detailed information on the manufacture and composition and control of the product development and proposed labeling as well as other information;

	•	inspection by the relevant national authorities of the manufacturing facility or facilities and quality systems (including those of third parties) at which the product is produced, to assess compliance with strictly enforced GMP;
	•	potential audits of the non‑clinical and clinical trial sites that generated the data in support of the MAA; and
	•	review and approval by the relevant competent authority of the MAA before any commercial marketing, sale or shipment of the product.

•

Phase I (Most typical kind of study: Human Pharmacology);

•

Phase II (Most typical kind of study: Therapeutic Exploratory);

•

Phase III (Most typical kind of study: Therapeutic Confirmatory); and

•

Phase IV (Variety of Studies: Therapeutic Use).

	•	medicines that have been authorized for marketing in the EU with the results of PIP studies included in the product information are eligible for an extension of their supplementary protection certificate extension (if any is in effect at the time of approval) by six months. This is the case even when the studies’ results are negative;
	•	for orphan medicines, such as NexoBrid, the incentive is an additional two years of market exclusivity instead of one;
	•	scientific advice and protocol assistance at the EMA are free of charge for questions relating to the development of medicines for children; and
	•	medicines developed specifically for children that are already authorized, but are not protected by a patent or supplementary protection certificate, can apply for a pediatric use marketing authorization (“PUMA”). If a PUMA is granted, the product will benefit from 10 years of market protection as an incentive.

	•	Mutual recognition procedure. If an authorization has been granted by one-member state, or the Reference Member State, an application may be made for mutual recognition in one or more other member states, or the Concerned Member State(s).
	•	Decentralized procedure. The decentralized procedure may be used to obtain a marketing authorization in several European member states when the applicant does not yet have a marketing authorization in any country.
	•	National procedure. Applicants following the national procedure will be granted a marketing authorization that is valid only in a single member state. Furthermore, this marketing authorization is not based on recognition of another marketing authorization for the same product awarded by an assessment authority of another member state. If marketing authorization in only one-member state is preferred, an application can be filed with the national competent authority of a member state. The national procedure can also serve as the first phase of a mutual recognition procedure.

	•	completion of laboratory tests, animal studies and formulation studies in compliance with the FDA’s GLP and GMP regulations, as applicable;
	•	submission to the FDA of an investigational new drug application (“IND”), which must become effective before clinical trials may begin;
	•	approval by an independent institutional review board (“IRB”) at each clinical site before each trial may be initiated;

	•	performance of adequate and well‑controlled clinical trials in accordance with GCP to establish the safety and efficacy of the product for each indication;
	•	preparation and submission to the FDA of a BLA;
	•	satisfactory completion of an FDA advisory committee review, if applicable;
	•	satisfactory completion of one or more FDA inspections of the manufacturing facility or facilities at which the product, or components thereof, are produced to assess compliance with cGMP requirements, and to assure that the facilities, methods and controls are adequate to preserve the product’s safety, purity and potency, and of selected clinical investigation sites to assess compliance with GCP; and

•

payment of user fees and FDA review and approval of the BLA to permit commercial marketing of the product for particular indications for use in the United States.

Phase I:

The investigational product is initially introduced into healthy human subjects or patients with the target disease or condition and tested for safety, dosage tolerance, absorption, metabolism, distribution, excretion and, if possible, to gain an early indication of its effectiveness and to determine optimal dosage.

Phase II:

The investigational product is administered to a limited patient population to identify possible adverse effects and safety risks, to preliminarily evaluate the efficacy of the product for specific targeted diseases and to determine dosage tolerance and optimal dosage.

Phase III:

The investigational product is administered to an expanded patient population, generally at geographically dispersed clinical trial sites, in well‑controlled clinical trials to generate enough data to statistically evaluate the efficacy and safety of the product for approval, to establish the overall risk‑benefit profile of the product, and to provide adequate information for the labeling of the product.

	•	increases the minimum level of Medicaid rebates payable by manufacturers of brand‑name drugs from 15.1% to 23.1%;
	•	requires collection of rebates for drugs paid by Medicaid managed care organizations; and
	•	imposes a non‑deductible annual fee on pharmaceutical manufacturers or importers who sell certain “branded prescription drugs” to specified federal government programs.

	•	the federal healthcare Anti‑Kickback Statute prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, order or recommendation of, any good or service for which payment may be made, in whole or in part, under a federal healthcare program such as Medicare and Medicaid. A person or entity does not need to have actual knowledge of this statute or specific intent to violate it in order to have committed a violation;
	•	the federal False Claims Act imposes civil penalties, and provides for civil whistleblower or qui tam actions, against individuals or entities for knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government. In addition, the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act;
	•	HIPAA, imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters;
	•	the federal false statements statute prohibits knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement in connection with the delivery of or payment for healthcare benefits, items or services;
	•	the federal physician payment transparency requirements under the Affordable Care Act require certain manufacturers of drugs, devices and medical supplies to report to Centers for Medicare & Medicaid Services information related to payments and other transfers of value to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain other non-physician practitioners such as physician assistants and nurse practitioners, and teaching hospitals and physician ownership and investment interests;
	•	analogous state and foreign laws and regulations, such as state anti‑kickback and false claims laws, may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non‑governmental third‑party payors, including private insurers.

Financial income, net		Years Ended December 31,
		2022				2021
		(in thousands)
Financial income		$	461			$	11
Financial expenses			(11,637	)			(2,314	)
			(11,176	)			(2,303	)

		Year Ended December 31,
		2022				2021
Net cash provided by (used in):
Operating activities		$	(11,885	)		$	(8,916	)
Investing activities			(481	)			3,548
Financing activities			35,764				(1,050	)

•

amortization of the cost of purchased a patent, rights to use a patent, and know-how, which are used for the development or advancement of the Industrial Enterprise, over an eight-year period, commencing on the year in which such rights were first exercised;

	•	under limited conditions, an election to file consolidated tax returns with related Israeli Industrial Companies controlled by it; and
	•	expenses related to a public offering are deductible in equal amounts over a three years period commencing on the year of the offering.

Name		Age		Position
Executive Officers
Ofer Gonen		50		Chief Executive Officer
Boaz Gur-Lavie		49		Chief Financial Officer
Ety Klinger Ph.D.		61		Chief Research and Development Officer
Robert Snyder		73		Chief Medical Officer
Tzvi Palash		67		Chief Operations Officer
Yaron Meyer		44		Executive Vice President, General Counsel and Corporate Secretary
Directors
Nachum (Homi) Shamir (3)(5)		68		Executive Chairman of the Board of Directors
Stephen T. Willis (1)(2)(4)(5)		66		Director
Assaf Segal		51		Director
Vickie R. Driver, M.D (4)(5)		69		Director
Nissim Mashiach (1)(2)(5)		62		Director
Sharon Kochan (1)(2)(5)		54		Director
David Fox (3)(5)		65		Director
Sharon Malka (4)		51		Director

(1)	Member of our audit committee.

(2)	Member of our compensation committee.

(3)	Member of our nominating, governance and sustainability committee.

Name and Position		Salary & Social Benefits(1)			Bonus			Share‑Based Payment(2)			Other Compensation(3)			Total
		( thousand U.S. dollars)(4)
Sharon Malka, Director and former CEO(5)		308			-			345			316			969
Ofer Gonen, Chief Executive Officer		253			200			365			32			850
Lior Rosenberg, M.D., Chief Medical Technology Officer		324			167			90			236			817
Ety Klinger, Chief Research & Development Officer		298			75			77			20			470
Boaz Gur-Lavie, Chief Financial Officer		255			60			76			18			409

(1)

Represents the officer’s gross salary plus payment of mandatory social benefits made by the company on behalf of such officer. Such benefits may include, to the extent applicable to the executive, payments, contributions and/or allocations for savings funds (e.g., Managers’ Life Insurance Policy), education funds (referred to in Hebrew as “keren hishtalmut”), pension, severance, risk insurances (e.g., life or work disability insurance) and payments for social security.

(2)	Represents the equity‑based compensation expenses recorded in the company’s consolidated financial statements for the year ended December 31, 2022 based on the options’ grant date fair value in accordance with accounting guidance for equity‑based compensation.
(3)	Represents the other benefits to such officer, which includes either or both of (i) car expenses, including lease costs, gas and maintenance, provided to the officers, (ii) vacation benefits and (iii) severance payment.
(4)	Converted (i) from NIS into U.S. dollars at the rate of NIS 3.358 = U.S$1, based on the average representative rate of exchange between the NIS and the U.S. dollar in the year ended December 31, 2022 as reported by the Bank of Israel in the year ended December 31, 2022.
(5)	The compensation received by Mr. Malka in respect of the year ended December 31, 2022 consists of compensation that he received as our CEO until June 30, 2022 and cash, equity awards and other compensation that he received in his role as active director commencing in July 2022.

•

oversight of our independent registered public accounting firm and recommending the engagement, compensation or termination of engagement of our independent registered public accounting firm to the board of directors in accordance with Israeli law;

	•	recommending the engagement or termination of the person filling the office of our internal auditor; and
	•	recommending the terms of audit and non‑audit services provided by the independent registered public accounting firm for pre‑approval by our board of directors.

	•	determining whether there are deficiencies in the business management practices of our company, including in consultation with our internal auditor or the independent auditor, and making recommendations to the board of directors to improve such practices;
	•	determining whether to approve certain related party transactions (including transactions in which an office holder has a personal interest and whether such transaction is extraordinary or material under the Israeli Companies Law) (see “—Approval of Related Party Transactions Under Israeli Law”);
	•	establishing the approval process (including, potentially, the approval of the audit committee and conducting a competitive procedure supervised by the audit committee) for certain transactions with a controlling shareholder or in which a controlling shareholder has a personal interest;
	•	where the board of directors approves the working plan of the internal auditor, examining such working plan before its submission to the board of directors and proposing amendments thereto;
	•	examining our internal audit controls and internal auditor’s performance, including whether the internal auditor has sufficient resources and tools to fulfill his responsibilities;
	•	examining the scope of our auditor’s work and compensation and submitting a recommendation with respect thereto to our board of directors or shareholders, depending on which of them is considering the appointment of our auditor; and
	•	establishing procedures for the handling of employees’ complaints as to the management of our business and the protection to be provided to such employees.

	•	the knowledge, skills, expertise and accomplishments of the relevant office holder;
	•	the office holder’s roles and responsibilities and prior compensation agreements with him or her;
	•	the relationship between the terms offered and the average compensation of the other employees of the company, including those employed through manpower companies;
	•	the impact of disparities in salary upon work relationships in the company;
	•	the possibility of reducing variable compensation at the discretion of the board of directors;
	•	the possibility of setting a limit on the exercise value of non-cash variable equity-based compensation; and
	•	as to severance compensation, the period of service of the office holder, the terms of his or her compensation during such service period, the company’s performance during that period of service, the person’s contribution towards the company’s achievement of its goals and the maximization of its profits, and the circumstances under which the person is leaving the company.

•

the link between variable compensation and long-term performance, which variable compensation shall, other than office holder who report to the CEO, be primarily based on measurable criteria;

	•	the relationship between variable and fixed compensation, and the ceiling for the value of variable compensation;
	•	the conditions under which an office holder would be required to repay compensation paid to him or her if it was later shown that the data upon which such compensation was based was inaccurate and was required to be restated in the company’s financial statements;

	•	the minimum holding or vesting period for variable, equity-based compensation; and
	•	maximum limits for severance compensation.

	•	recommending whether a compensation policy should continue in effect, if the then-current policy has a term of greater than three years (approval of either a new compensation policy or the continuation of an existing compensation policy must in any case occur every three years, other than following a company’s initial public offering, in which case such approval must occur within 5 years of the initial public offering);
	•	recommending to the board of directors periodic updates to the compensation policy and assessing implementation of the compensation policy;
	•	approving compensation terms of executive officers, directors and employees that require approval of the compensation committee;

•

determining whether the compensation terms of a chief executive officer nominee, which were determined pursuant to the compensation policy, will be exempt from approval of the shareholders because such approval would harm the ability to engage with such nominee; and

•

determining, subject to the approval of the board and under special circumstances, whether to override a determination of the company’s shareholders regarding certain compensation related issues.

	•	the responsibilities set forth in the compensation policy;
	•	reviewing and approving the granting of options and other incentive awards to the extent such authority is delegated by our board of directors; and
	•	reviewing, evaluating and making recommendations regarding the compensation and benefits for our non-employee directors.

	•	a person (or a relative of a person) who holds 5% or more of the company’s outstanding shares or voting rights;
	•	a person (or a relative of a person) who has the power to appoint a director or the general manager of the company (i.e., the chief executive officer);
	•	an office holder (including a director) of the company (or a relative thereof); or
	•	a member of the company’s independent accounting firm, or anyone on its behalf.

	•	information on the advisability of a given action brought for his or her approval or performed by virtue of his or her position; and
	•	all other important information pertaining to any such action.

	•	refrain from any conflict of interest between the performance of his or her duties to the company and his or her other duties or personal affairs;
	•	refrain from any activity that is competitive with the business of the company;
	•	refrain from exploiting any business opportunity of the company to receive a personal gain for himself or herself or others; and

•

disclose to the company any information or documents relating to the company’s affairs which the office holder received as a result of his or her position as an office holder.

	•	a transaction other than in the ordinary course of business;
	•	a transaction that is not on market terms; or
	•	a transaction that may have a material impact on a company’s profitability, assets or liabilities.

	•	at least a majority of the shares held by all shareholders who do not have a personal interest in the transaction and who are present and voting at the meeting approves the transaction, excluding abstentions; or
	•	the shares voted against the transaction by shareholders who have no personal interest in the transaction and who are present and voting at the meeting do not exceed 2% of the voting rights in the company.

•

an amendment to the company’s articles of association;

	•	an increase of the company’s authorized share capital;
	•	a merger; or
	•	the approval of related party transactions and acts of office holders that require shareholder approval.

•

financial liability imposed on him or her in favor of another person pursuant to a judgment, including a settlement or arbitrator’s award approved by a court. However, if an undertaking to indemnify an office holder with respect to such liability is provided in advance, then such an undertaking must be limited to events which, in the opinion of the board of directors, can be foreseen based on the company’s activities when the undertaking to indemnify is given, and to an amount or according to criteria determined by the board of directors as reasonable under the circumstances, and such undertaking shall detail the abovementioned foreseen events and amount or criteria;

	•	reasonable litigation expenses, including attorneys’ fees, incurred by the office holder (1) as a result of an investigation or proceeding instituted against him or her by an authority authorized to conduct such investigation or proceeding, provided that (i) no indictment was filed against such office holder as a result of such investigation or proceeding, and (ii) no financial liability was imposed upon him or her as a substitute for the criminal proceeding as a result of such investigation or proceeding or, if such financial liability was imposed, it was imposed with respect to an offense that does not require proof of criminal intent; and (2) in connection with a monetary sanction; and
	•	reasonable litigation expenses, including attorneys’ fees, incurred by the office holder or imposed by a court in proceedings instituted against him or her by the company, on its behalf, or by a third party, or in connection with criminal proceedings in which the office holder was acquitted, or as a result of a conviction for an offense that does not require proof of criminal intent.

	•	a breach of the duty of loyalty to the company, provided that the office holder acted in good faith and had a reasonable basis to believe that the act would not harm the company;
	•	a breach of duty of care to the company or to a third party, to the extent such a breach arises out of the negligent conduct of the office holder; and
	•	a financial liability imposed on the office holder in favor of a third party.

•

a breach of the duty of loyalty, except for indemnification and insurance for a breach of the duty of loyalty to the company to the extent that the office holder acted in good faith and had a reasonable basis to believe that the act would not harm the company;

	•	a breach of duty of care committed intentionally or recklessly, excluding a breach arising out of the negligent conduct of the office holder;
	•	an act or omission committed with intent to derive illegal personal benefit; or
	•	a fine or forfeit levied against the office holder.

D.

Employees

E.

Share Ownership

A.

Major Shareholders

	•	each person or entity known by us to own beneficially more than 5% of our outstanding shares;
	•	each of our directors and executive officers individually; and
	•	all of our executive officers and directors as a group.

Name of Beneficial Owner		Number of Shares Beneficially Held				Percentage of Class
Directors and Executive Officers
Nacchum (Homi) Shamir			*				*
Ofer Gonen			*				*
Assaf Segal			*				*
Vickie R. Driver			*				*
Nissim Mashiach			*				*
Sharon Kochan			*				*
David Fox			*				*
Stephen T. Wills			*				*
Sharon Malka			96,127				1.01	%
Boaz Gur-Lavie			*				*
Ety Klinger			*				*
Yaron Meyer			*				*
All executive officers and directors as a group (13 persons)( 1)			309,285				3.30	%
Principal Shareholders (who are not Directors or Executive Officers)
Clal Biotechnology Industries Ltd.(2)			1,497,414				15.80	%
Point72 Associates, LLC			821,500				8.70	%

*	Less than 1%.

(1)	Shares beneficially owned consist of 1,884,067 ordinary shares held directly or indirectly by such executive officers and directors and 268,394 ordinary shares issuable upon exercise of outstanding options that are currently exercisable or exercisable within 60 days of March 15, 2023.

(2)

Shares beneficially owned consist of: 1,172,710 ordinary shares held by Clal Life Sciences, LP, whose managing partner is Clal Application Center Ltd., a wholly-owned subsidiary of CBI; (ii) 308,811 ordinary shares held by CBI and (iii) 15,893 ordinary shares issuable upon exercise of outstanding options held directly by CBI that are currently exercisable or exercisable within 60 days of March 15, 2023. As reported on a Schedule 13D/A filed on February 13, 2023 by Access Industries Holdings LLC, Access Industries Holdings LLC indirectly owns 100% of the outstanding shares of Clal Industries Ltd., which owns 47.17% of the outstanding shares of CBI. The address of Clal Industries Ltd. is the Triangular Tower, 3 Azrieli Center, Tel Aviv 67023, Israel and the address of Access Industries Holdings LLC is c/o Access Industries Inc., 40 West 57th Street, New York, New York 10019, United States

(3)

As reported on a Schedule 13G filed on February 8, 2023, shares beneficially owned consist of: 821,500 ordinary shares held by Point72 Associates, LLC which are controlled by Point72 Asset Management, L.P. pursuant to an investment management agreement. Point72 Capital Advisors Inc. is the general partner of Point72 Asset Management.  Steven Cohen, as manager, controls each of Point72 Asset Management and Point72 Capital Advisors Inc. and their business address is 72 Cummings Point Road, Stamford, CT 06902.

B.

Related Party Transactions

C.

Interests of Experts and Counsel

Item 8.

FINANCIAL INFORMATION

A.

Consolidated Statements and Other Financial Information

B.

Significant Changes

Item 9.

THE OFFER AND LISTING

A.

Listing Details

B.

Plan of Distribution

C.

Markets

D.

Selling Shareholders

E.

Dilution

F.

Expenses of the Issue

Item 10.

ADDITIONAL INFORMATION

A.

Share Capital

B.

Articles of Association

C.

Material Contracts

D.

Exchange Controls

E.

Taxation

	•	banks, financial institutions or insurance companies;
	•	real estate investment trusts, regulated investment companies or grantor trusts;
	•	dealers or traders in securities, commodities or currencies;
	•	tax‑exempt entities or organizations, including an “individual retirement account” or “Roth IRA” as defined in Section 408 or 408A of the Code, respectively;
	•	certain former citizens or long‑term residents of the United States;
	•	persons that received our shares as compensation for the performance of services;
	•	persons that holds our shares as part of a “hedging,” “integrated” or “conversion” transaction or as a position in a “straddle” for U.S. federal income tax purposes;
	•	partnerships (including entities classified as partnerships for U.S. federal income tax purposes) or other pass‑through entities, or holders that will hold our shares through such an entity;
	•	S corporations;
	•	holders that acquired ordinary shares as a result of holding or owning our preferred shares;
	•	U.S. Holders (as defined below) whose “functional currency” is not the U.S. dollar;
	•	persons that are residents of ordinarily resident in or have a permanent establishment in a jurisdiction outside the United States; or
	•	holders that own directly, indirectly or through attribution 10.0% or more of the voting power or value of our shares.

	•	an individual who is a citizen or individual resident of the United States;
	•	a corporation, or other entity taxable as a corporation for U.S. federal income tax purposes, created or organized in or under the laws of the United States, any state thereof, or the District of Columbia;
	•	an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or

•

a trust that (1) is subject to the primary supervision of a U.S. Court and one or more U.S. persons that have the authority to control all substantial decisions of the trust or (2) has a valid election in effect under applicable Treasury regulations to be treated as a U.S. person.

	•	such gain is effectively connected with your conduct of a trade or business in the United States (or, if required by an applicable income tax treaty, the gain is attributable to a permanent establishment or fixed base that such holder maintains in the United States); or
	•	you are an individual and have been present in the United States for 183 days or more in the taxable year of such sale or exchange and certain other conditions are met.

	•	at least 75% of its gross income is “passive income”; or
	•	at least 50% of the average quarterly value of its total gross assets (which may be determined in part by the market value of our ordinary shares, which is subject to change) is attributable to assets that produce “passive income” or are held for the production of passive income.

		Appreciation (Devaluation) of
Period		Shekel against the U.S. dollar (%)				Euro against the U.S. dollar (%)
2020			7.0				8.0
2021			3.3				7.7
2022			(13.2	)			5.8

•

Quorum. As permitted under the Israeli Companies Law pursuant to our articles of association, the quorum required for an ordinary meeting of shareholders will consist of at least two shareholders present in person, by proxy or by other voting instrument in accordance with the Israeli Companies Law, who hold at least 25% of the voting power of our shares (and in an adjourned meeting, with some exceptions, at least two shareholders), instead of 33 1/3% of the issued share capital required under the Nasdaq Stock Market listing rules.

•

Shareholder approval.  We do not intend to follow Nasdaq Stock Market rules which require shareholder approval in order to enter into any transaction, other than a public offering, involving the sale, issuance or potential issuance by the Company of ordinary shares (or securities convertible into or exercisable for ordinary shares) equal to 20% or more of the outstanding share capital of the Company or 20% or more of the voting power outstanding before the issuance for less than the greater of book or market value of the ordinary shares. We will follow Israeli law with respect to any requirement to obtain shareholder approval in connection with any private placements of equity securities.