What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2021-03-09 compared with 2020-03-17 · 349 added, 347 removed, 133 unchanged (84% of the section changed)

Market for Registrant’s ADSs, Related Stockholder Matters and Issuer Purchases of Equity Securities

for Registrant’s ADSs, Related Stockholder Matters and Issuer Purchases of Equity Securities

The ADSs, representing our ordinary shares,

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since February 12, 2019.

Prior to that date, there was no public

trading market for the ADSs.

Our ordinary shares were traded on the Tel Aviv Stock Exchange (“TASE”) until June 2019,

under the symbol “ANCN”.

As of February 18, 2020, there were seven

holders of record of our ordinary shares.

Selected Financial Data

Prior to that date, there was no

public trading market for the ADSs.

Our ordinary shares were traded on the Tel Aviv Stock Exchange (“TASE”) until

June 2019, under the symbol “ANCN”.

As of February 18, 2020, there were

seven holders of record of our ordinary shares.

Financial Data

Not applicable.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s

Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis of

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elsewhere in this Annual Report on Form 10-K.

Some of the information contained in this discussion and analysis, particularly with

respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks

and uncertainties.

Some of the information contained in this discussion and analysis, particularly

with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve

risks and uncertainties.

You should read “Risk Factors”

in Item 1A of this Annual Report on Form 10-K for a discussion of

important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking

in Item 1A of this Annual Report on Form 10-K for a discussion

of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking

statements contained in the following discussion and analysis.

We are an early-stage preclinical biopharmaceutical

company dedicated to the discovery, development, and commercialization of novel targeted therapies to treat cancer in areas of

significant clinical need.

Throughout most of 2019, we ran a Phase 2 study, designated Codex, evaluating the gene therapy inodiftagene

We are a preclinical biotechnology company

committed to discovering and developing new cancer therapies designed to target the products of mutated genes that are drivers

of human malignancies.

Throughout most of 2019, we ran a Phase 2 study, designated Codex, evaluating inodiftagene vixtepasmid

in patients with BCG-unresponsive NMIBC.

However, in November 2019, after a thorough evaluation of data, we determined there was

a low probability of surpassing the pre-defined futility threshold at the planned interim analysis of the study, and announced

the discontinuation of the study and of active clinical development of inodiftagene.

We recently acquired two developmental programs

targeting oncogenic pathways (small-molecule pan-RAS inhibitors and inhibitors of PDE10 and the β-catenin pathway) pursuant

to the Collaboration Agreement into which we entered with ADT on September 20, 2019.

Our operations are focused on the successful

development, regulatory approval and commercialization of products derived from the compounds contemplated thereby, which are in

the concept, research and preclinical stages.

Under the agreement, we are primarily responsible for the research, development,

manufacturing and regulatory activities with respect to the Compounds.

However, in November 2019, after a thorough evaluation of data, we determined there

was a low probability of surpassing the pre-defined futility threshold at the planned interim analysis of the study, and announced

the discontinuation of the study and of active clinical development of inodiftagene vixtepasmid.

On September 13, 2019, we entered

into a Collaboration and License Agreement (the “License Agreement”) with ADT Pharmaceuticals, LLV (“ADT”),

pursuant to which we acquired the rights to two small molecule developmental programs targeting oncogenic pathways, focused on

pan-mutant RAS inhibitors (our “pan-RAS-inhibitor program”) and inhibitors of PDE10 and the β-catenin pathway,

respectively.

Under the License Agreement, we are primarily responsible for the research, development, manufacturing, regulatory

and commercial activities with respect to the compounds conveyed and contemplated thereunder.

Our operations are focused on the

successful development, regulatory approval and commercialization of products derived from such compounds.

For further information regarding our business

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(formerly BioCanCell USA, Inc.), incorporated in Delaware.

We currently maintain offices in Cambridge,

MA and an office and laboratory in Jerusalem, Israel.

However in January 2020, our board of directors approved our management’s

recommendation to close our Israeli office and laboratories in 2020, with our operations to continue from our Cambridge office.

Acquisition Agreement

September 2019, we announced that we had entered into the option to license Agreement with ADT.

Pursuant to the terms and conditions

set forth in the agreement, we have mutually agreed to use commercially reasonable efforts to conduct research and development

activities of novel small-molecule inhibitors (RAS and PDE10/β-catenin) .

As part of the arrangement, we will be primarily

responsible for the research, development, manufacturing and regulatory activities and ADT will assist with the research activities

as necessary in exchange for a quarterly fee.

In connection with the agreement, ADT also granted us exclusive rights to research,

develop, manufacture and commercialize the aforementioned compounds relating to patents owned by ADT and any products containing

such compounds worldwide.

In consideration for the rights granted under the agreement, we will pay ADT (i) a $3 million upfront

(ii) a fee upon transfer of the know-how and intellectual property rights to us;

and (iii) additional payments, including

milestone and royalty payments.

We may terminate the agreement at any time in its entirety or on a compound-by-compound basis after

providing 90 days written notice to ADT.

The upfront fee was paid in 2019.

Since there is no alternative future use for the upfront

fee, we accounted for it as a research and development expense.

Transition to U.S.

As of June 30, 2019,

we have no longer met the requirements to qualify as a foreign private issuer under the Exchange Act.

As a result, we began reporting

as a domestic issuer as of January 1, 2020 and we are now required under SEC rules to prepare our financial statements in accordance

GAAP, rather than IFRS.

The main impact of the transition from consolidated financial statements under IFRS to U.S.

on our consolidated financial statements as at December 31, 2018 included the treatment of our 2018 financing round.

financials, the warrants and the price protection rights were accounted for as two derivative financial instruments.

such derivatives were measured initially at fair value on the date of the transaction with the remaining balance, representing

the issued shares, being allocated to equity.

In the current US GAAP financials, on initial measurement, both of the freestanding

instruments (warrants and shares together with their price protections) were classified as equity instruments that are not subsequently

measured at fair value,

Functional currency

Items included in the

financial statements of our entities are measured using the currency of the primary economic environment in which we operate.

functional currency from inception through December 31, 2018 was the New Israeli Shekel (“NIS”), as this was the functional

currency of its significant operations.

Effective January 1, 2019, we, including our Israeli subsidiary, reassessed our functional

currency and determined to change our functional currency to the U.S.

dollar (“dollar”, “USD”

or “$”)

from the NIS.

The change in functional currency was accounted for prospectively from January 1, 2019, and the financial statements

prior to and including the period ended December 31, 2018 were not restated for the change in functional currency.

In late 2018 and the

beginning of 2019, we went through significant business developments and changes in its economic circumstances, that clearly indicate

that the functional currency has changed, beginning January 2019, include the following:

- There has been a significant increase in our activities in the USA, resulting from our management’s

strategic decision to shift our development, financing and ongoing operations from Israel to the USA, as evidenced, inter alia,

by the transfer of our operations and development activities, including our management, to the USA;

- The initiation of a pivotal clinical trial in the USA, which was substantially larger than any

previous clinical trial that we had performed, all of which result in a significant increase in expenses and financing denominated

in USD relative to other currencies;

- Our recent initial public offering on the Nasdaq Capital Market in USD, with additional funding

going forward also expected to be denominated in USD.

The Nasdaq listing has involved a significant increase in related USD expenses;

subsidiary entering into a license agreement with ADT Pharmaceuticals, LLC (“ADT”),

which will be managed solely in dollars.

Moreover, the discontinuation

of the Codex study in November 2019 led to the closure of our Israeli operations and the focus of our resources on programs related

to the ADT agreement.

In effecting the change

in functional currency to the U.S.

dollar, as of January 1, 2019, monetary assets and liabilities denominated in foreign currencies

have been translated into U.S.

dollars using exchange rates in effect at the balance sheet date.

Opening balances related to non-monetary

assets and liabilities were based on prior period translated amounts, and non-monetary assets acquired and non-monetary liabilities

incurred after January 1, 2019 were translated at the approximate exchange rate prevailing at the date of the transaction.

were translated at the approximate exchange rate in effect at the time of the transaction.

Foreign exchange gains and losses were

included in the consolidated statement of operations and comprehensive loss as foreign exchange gain (loss).

The exchange rate

on the date of the change became the historical rate for subsequent re-measurement of non-monetary assets and liabilities into

USD, our new functional currency.

For periods prior to

January 1, 2019, the effects of exchange-rate fluctuations on translating foreign currency monetary assets and liabilities into

NIS were included in the statement of operations and comprehensive loss as foreign exchange gain/loss.

Expense were translated

into USD reporting currency at the balance sheet date at average exchange rates during the period, and assets and liabilities were

translated at period-end exchange rates, except for equity transactions, which were translated at historical exchange rates.

gains and losses from the application of USD as our reporting currency, while NIS was the functional currency, are included as

part of the cumulative foreign currency translation adjustment, which is reported as a component of shareholders’

under accumulated other comprehensive loss.

Components of Operating

We currently maintain offices

in Cambridge, MA.

License Agreements

In September 2019, we publicly announced

that we had entered into the License Agreement with ADT.

Pursuant to the terms and conditions set forth in the License Agreement,

we mutually agreed to use commercially reasonable efforts to conduct research and development activities of novel small-molecule

inhibitors (RAS and PDE10/β-catenin).

As part of the arrangement, we are primarily responsible for the research, development,

manufacturing and regulatory activities and ADT will assist with the research activities as necessary in exchange for a quarterly

In connection with the License Agreement, ADT also granted us exclusive rights to research, develop, manufacture and commercialize

the aforementioned compounds relating to patents owned by ADT and any products containing such compounds worldwide.

In consideration

for the rights granted under the License Agreement, we paid ADT a $3 million upfront fee in 2019, and agreed to pay to ADT (i) a

fee upon transfer of the know-how and intellectual property rights to us;

and (ii) additional payments, including milestone

and royalty payments.

We have the ability to terminate the License Agreement at any time in its entirety or on a compound-by-compound

basis after providing 90 days written notice to ADT.

Since there is no alternative future use for the upfront fee, we accounted

for it as a research and development expense.

In April 2020, we notified Yissum

Technology Transfer Company of the Hebrew University Ltd.

(“Yissum”) that as a result of our previous decision to

discontinue clinical development of inodiftagene, we will cease payments to maintain intellectual property ("IP") we

licensed from Yissum under the licensing and development agreement between the parties.

In August 2020 we agreed with Yissum

on termination of the licensing and development agreement, we destroyed or returned all IP documentation to Yissum and we and

Yissum mutually waived, released and discharged each other from all claims of any type.

Recent Events

On July 2, 2020, our Chief Executive

Frank Haluska sent a letter to the Chairman of our board of directors outlining Dr.

Haluska’s belief

that events had occurred that were sufficient to trigger his ability to resign for “Good Reason”

under his employment

Our board of directors informed Dr.

Haluska that it disagreed with the letter’s assertions regarding “Good

Reason”

and treated the letter as a constructive resignation effective as of July 2, 2020.

On July 12, 2020, Dr.

Haluska tendered his written resignation from our board of directors, effective immediately.

Haluska referenced the matters

articulated in his letter of July 2, 2020, and the Company’s response and actions following receipt of the letter as

the basis for his resignation from the Board.

It is our position, based on our legal counsel, that the CEO resigned without Good

Reason, is not entitled to severance, and we will contest any and all claims for severance.

Prior to the appointment of Mr.

Cohen as CEO in October 2020 (see below) our board of directors handled all matters related to CEO duties.

In light of business circumstances, and

in order to conserve cash and preserve optionality while alternatives are being identified and assessed, we made a decision during

July 2020 to undertake reductions in headcount and other cost saving measures.

These included plans to temporarily reduce

its internal and external research and development work on the Company’s pan-RAS-inhibitor program until there is greater

clarity regarding Anchiano’s ability to fund the program.

We continue to undertake actions for the promotion of the program

and its assets and towards strengthening the protection of all related intellectual property.

We also engaged Oppenheimer &

to act as our financial advisor to review strategic alternatives focused on maximizing shareholder value.

This has resulted

in the contemplated merger with Chemomab

On October 20, 2020, we appointed

Neil Cohen as Chief Executive Officer of Anchiano.

Cohen continues to serve as a member of our board of directors.

The Company also appointed Andrew Fine to serve as our Chief Financial Officer.

Fine previously served as our Interim

Chief Financial Officer pursuant to a subcontracting agreement.

On December 14, 2020 we entered into

an Agreement and Plan of Merger with Chemomab, an Israeli limited company and a clinical-stage biotech company focusing on the

discovery and development of innovative therapeutics for fibrosis-related diseases with high unmet need, which included the proposed

Merger of CMB Acquisition Ltd., a wholly owned subsidiary of ours, with Chemomab as the surviving company, subject to shareholder

At the effective time of the Merger, we

anticipate that each share of Chemomab common stock outstanding immediately prior to the effective time of the Merger will be

converted into the right to receive approximately 1,028.99 shares of Anchiano common stock, subject to adjustment to account for

a reverse split of Anchiano common stock at a reverse split ratio to be determined by Anchiano’s board of directors, subject

to shareholder approval, and to be implemented prior to the consummation of the Merger.

Immediately following the merger, and prior

to any private investment as part of the merger, the former Chemomab security holders will own approximately 90% of the aggregate

number of shares of Anchiano common stock and the security holders of Anchiano as of immediately prior to the Merger will own

approximately 10% of the aggregate number of shares of Anchiano common stock on a fully diluted basis.

Components of Operating Results

To date, we have not generated any revenue.

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Research and development activities are

our primary focus.

Product candidates in later stages of clinical development generally have higher development costs than those

in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials.

do not believe that it is possible at this time to accurately project total expenses required for us to reach commercialization

of our product candidates.

Due to the inherently unpredictable nature of preclinical and clinical development, we are unable to

estimate with certainty the costs we will incur and the timelines that will be required in the continued development and approval

of our product candidates.

Clinical and preclinical development timelines, the probability of success and development costs can

differ materially from expectations.

In addition, we cannot forecast which product candidates may be subject to future collaborations,

if and when such arrangements will be entered into, if at all, and to what degree such arrangements would affect our development

plans and capital requirements.

We expect our research and development expenses to increase over the next several years as our

clinical programs progress and as we seek to initiate clinical trials of additional product candidates.

We also expect to incur

increased research and development expenses as we selectively identify and develop additional product candidates.

our primary focus, despite our strategic decision during 2020 to temporarily reduce development of the Company’s RAS program

and to institute various cost savings measures to preserve liquid resources.

Product candidates in later stages of clinical development

generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size

and duration of later-stage clinical trials.

We do not believe that it is possible at this time to accurately project total expenses

required for us to reach commercialization of our product candidates.

Due to the inherently unpredictable nature of preclinical

and clinical development, we are unable to estimate with certainty the costs we will incur and the timelines that will be required

in the continued development and approval of our product candidates.

Clinical and preclinical development timelines, the probability

of success and development costs can differ materially from expectations.

In addition, we cannot forecast which product candidates

may be subject to future collaborations, if and when such arrangements will be entered into, if at all, and to what degree such

arrangements would affect our development plans and capital requirements.

Should our strategic merger initiatives not come to

fruition we expect our research and development expenses to increase over the next several years as our clinical programs progress

and as we seek to initiate clinical trials of additional product candidates.

We also expect to incur increased research and development

expenses as we selectively identify and develop additional product candidates.

Research and development expenses include

the following:

employee-related expenses, such as salaries and share-based compensation;

expenses relating to outsourced and contracted services, such as CROs, external laboratories and

consulting, research and advisory services;

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

expenses incurred in operating our laboratories and small-scale equipment;

preclinical study expenses and related developmental costs;

costs associated with regulatory compliance.

employee-related

expenses, such as salaries and share-based compensation;

relating to outsourced and contracted services, such as CROs, external laboratories and consulting, research and advisory

development and manufacturing costs relating to clinical trial materials;

incurred in operating our laboratories and small-scale equipment;

study expenses and related developmental costs;

associated with regulatory compliance.

We recognize research and development expenses

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granted under the contract.

We have yet to generate taxable income in

We have yet to generate taxable income

We have historically incurred operating losses resulting in carry forward tax losses totaling approximately $117 million

as of December 31, 2020.

We anticipate that we will continue to generate tax losses for the foreseeable future and that we will

be able to carry forward these tax losses indefinitely to future taxable years.

Accordingly, we do not expect to pay taxes in Israel

until we have taxable income after the full utilization of our carry forward tax losses.

We have provided a full valuation allowance

with respect to the deferred tax assets related to these carry forward losses.

We anticipate that we will continue to generate tax losses for the foreseeable future and that we

will be able to carry forward these tax losses indefinitely to future taxable years.

Accordingly, we do not expect to pay taxes

in Israel until we have taxable income after the full utilization of our carry forward tax losses.

We have provided a full valuation

allowance with respect to the deferred tax assets related to these carry forward losses.

Results of Operations

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for the periods indicated:

Fiscal Year Ended December 31,

(USD, in thousands)

Year ended December 31,

Operating Expenses:

Research and development expenses

General and administrative expenses

Restructuring expenses

Operating loss

Financing income

Financing expense

Financing expense, net

Loss before income taxes

Research and development

General and administrative

Restructuring expense

Total operating expenses

Finance (income) expense,net

Net loss and comprehensive loss

Loss per share basic and diluted

Weighted average number of shares outstanding used in computation of basic and

diluted loss per share in thousands

Our results of operations have varied in

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Research and development expenses

increased by approximately $5.8 million, 77%, to approximately $13.3 million for the year ended December 31, 2019 compared to

approximately $7.5 million for the year ended December 31, 2018.

The increase resulted primarily due to an increase in

clinical trial expenses, manufacturing expenses and manpower expenses, as well as additional startup and initial ongoing

expenses in connection with the Collaboration Agreement with ADT.

Research and development expenses decreased

by approximately $9.5 million, 72%, to approximately $3.8 million for the year ended December 31, 2020 compared to approximately

$13.3 million for the year ended December 31, 2019.

The decrease resulted primarily from the restructuring decisions made

in July 2020 and the related decision to temporarily reduce our research activities on the RAS programs and sever our research

and development employees while continuing to undertake all necessary actions for the maintenance of the program, its assets and

all related intellectual property and licenses..

General and administrative expenses

General and administrative expenses increased

by approximately $0.7 million, 13%, to approximately $6.2 million for the year ended December 31, 2019 compared to approximately

by approximately $1.0 million, or 16%, to approximately $7.2 million for the year ended December 31, 2020 compared to approximately

$6.2 million for the year ended December 31, 2019.

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Restructuring expenses

In November 2019, we decided to discontinue

our Phase 2 Codex study in patients with BCG-unresponsive NMIBC.

In connection with this decision, we are required to make certain

payments under contracts with CROs and with other manufactures of the drug in order to terminate the contracts and close the trials.

Restructuring expenses decreased by approximately

$2.6 million, or 78%, to approximately $0.7 million for the year ended December 31, 2020 compared to approximately $3.4 million

for the year ended December 31, 2019

In November 2019,

we decided to discontinue our Phase 2 Codex study in patients with BCG-unresponsive NMIBC.

In connection with this decision, we

are required to make certain payments under contracts with CROs and with other manufactures of the drug in order to terminate

the contracts and close the trials.

Moreover the restructuring plan included a reduction in the workforce of seven employees.

Separately, in January 2020 our board of

directors approved management’s recommendation to close our office and laboratories located in Israel.

Restructuring expenses incurred during the

fourth quarter of 2019 were comprised principally of contract termination costs and employee severance and associated termination

costs related to the reduction of our workforce.

Separately, in January 2020

our board of directors approved management’s recommendation to close our office and laboratories located in Israel.

closure resulted in the termination of employment of the Company’s remaining Israeli employees.

In July 2020, we

made the strategic decision to temporarily reduce development of our RAS program and to institute various cost savings measures

to preserve liquid resources.

At the same time, we continued to actively pursue the maintenance of our Licensing Agreement with

ADT and protection of our intellectual property assets.

The cost saving activities included contract termination with outsourced

contractors working on clinical activities and to whom we are required to make certain payments to terminate the contracts.

Financing expense, net

Financing expense, net increased by approximately

$3.7 million, or 824%, to an expense of approximately $4.2 million for the year ended December 31, 2019 compared to approximately

$0.46 million for the year ended December 31, 2018, primarily due to revaluation of investor warrants at fair value during a period

where these could not be classified within shareholders’

Financing expense, net

decreased by approximately $4.3 million, or 102%, to reflect financing income of approximately $0.1 million for the year ended

December 31, 2020 compared to a financing expense of approximately $4.2 million for the year ended December 31, 2019.

Financing income for the year ended December 31, 2020 was primarily interest income, foreign currency exchange rate gains.

The financing costs in 2019 were primarily due to revaluation of investor warrants at fair value during a period where these could

not be classified within shareholders’

equity, due to the following circumstances:

On initial measurement, the warrants together

with their price protections were classified as equity instruments that are not subsequently measured at fair value, and thus we

allocated the proceeds according to the relative fair value of the instruments.

However, we changed our functional currency

from NIS to USD as of January 1, 2019.

Due to this change from this date, the exercise price of the warrants was no longer denominated

in our functional currency and the warrants were therefore not considered indexed to our own stock according to ASC 815-40 and

no longer met all the criteria to be classified within equity.

Therefore, the warrants were reclassified as a liability at their

fair value as of January 1, 2019, and any difference was accounted for as an adjustment to equity.

Upon our Nasdaq initial public

offering of February 14, 2019, the warrants’

On initial measurement,

the warrants together with their price protections were classified as equity instruments that are not subsequently measured at

fair value, and thus we allocated the proceeds according to the relative fair value of the instruments.

However, we changed our

functional currency from NIS to USD as of January 1, 2019.

Due to this change from this date, the exercise price of the warrants

was no longer denominated in our functional currency and the warrants were therefore not considered indexed to our own stock according

to ASC 815-40 and no longer met all the criteria to be classified within equity.

Therefore, the warrants were reclassified as

a liability at their fair value as of January 1, 2019, and any difference was accounted for as an adjustment to equity.

our Nasdaq initial public offering of February 14, 2019, the warrants’

exercise price currency was changed to USD.

As a result, the warrants were reclassified

within equity.

As a result, the warrants were reclassified within equity.

Consequently, the warrants were measured

at fair value from January 1, 2019 until February 14, 2019, with resulting finance expenses of $4.6 million, until they were reclassified

within equity.

Income tax decreased

by approximately $0.3 million to approximately $0 million for the year ended December 31, 2019 compared to approximately $0.3 million

for the year ended December 31, 2018.

This decrease was primarily due to a decrease in the taxable income of our US subsidiary.

subsidiary provides us with general and clinical trial management services.

For these services, our US subsidiary is compensated

on a cost-plus basis, and records income taxes accordingly.

In 2019, following our acquisition of the programs from ADT, these

expenses are not part of the cost-plus compensation and accordingly our US subsidiary does not have taxable income for the current

The table below shows a summary of our cash

flow activities for the periods indicated:

Fiscal Year Ended

at fair value from January 1, 2019 until February 14, 2019, with resulting finance expenses of $4.6 million, until they

were reclassified within equity.

Income tax remained at

$0 million for the year ended December 31, 2020 as for the year ended December 31, 2019.

Prior to 2019 our U.S.

provided us with general and clinical trial management services.

For these services, our US subsidiary was compensated on a cost-plus

basis, and recorded income taxes accordingly.

In 2019, following our acquisition of the programs from ADT, our U.S.

ceased to provide us with general clinical trial management services and expenses related to the ADT programs are not part of

the cost-plus compensation and accordingly our US subsidiary does not have taxable income for the current year.

The table below shows a summary of our

cash flow activities for the periods indicated:

Increase/(decrease)

(in thousands)

Net cash used in operating activities

Net cash used in investing activities

Net cash provided by (used in) investing activities

Net cash provided by financing activities

Net increase in cash and cash equivalents

(decrease) in cash, cash equivalents and restricted cash

Operating activities

Net cash used in operating activities increased

by approximately $2.2 million, to approximately $16.5 million for the year ended December 31, 2019 compared to approximately $14.2

million for the year ended December 31, 2018.

This increase is primarily due to increases in clinical trial expenses, manufacturing

expenses, manpower expenses and restructuring expenses.

Net cash used in operating

activities decreased by approximately $3.7 million, to approximately $12.7 million for the year ended December 31, 2020 compared

to approximately $16.5 million for the year ended December 31, 2019.

This decrease is primarily due to the decrease in clinical

trial expenses, manufacturing expenses, manpower expenses and as offset by restructuring expenses.

Investing activities

Net cash used in investing activities decreased

by $0.1 million, to approximately $0.1 million for the year ended December 31, 2019 compared to $0.2 million for the year ended

Net cash used in investing

activities decreased by approximately $0.2 million, to reflect approximately $0.1 million of net cash provided by investing activities

for the year ended December 31, 2020 compared to $0.1 million of net cash used in investing activities for the year ended

December 31, 2019.

This decrease was primarily due to a decrease in equipment purchases for our laboratory.

This decrease was primarily due to the sale of laboratory equipment from our now closed facility in Israel,

partially offset by purchases of fixed assets.

Financing activities

Net cash provided by financing activities

increased by $6.0 million, to approximately $26.6 million for the year ended December 31, 2019 compared to $20.6 million for the

year ended December 31, 2018.

This increase primarily reflects the size of our initial public offering in the first quarter of

2019, compared to our private placement of equities in the second quarter of 2018.

Effects of Currency

Net cash provided by

financing activities decreased by approximately $26.3 million, to approximately $0.3 million for the year ended December 31,

2020 compared to $26.6 million for the year ended December 31, 2019.

The net cash provided by financing activities for the

year ended December 31, 2020 reflects an adjustment of share issuance expenses that were expensed in 2019 in relation to

our initial public offering in the first quarter of 2019.

We had no other financing activities in 2020.

Effects of Currency Fluctuation

Currency fluctuations could affect us through

increased or decreased costs, mainly for goods and services acquired outside of the United States.

Currency fluctuations have not

had a material effect on our results of operations during the years ended December 31, 2019 or 2018.

Off-Balance Sheet

Currency fluctuations have

not had a material effect on our results of operations during the years ended December 31, 2020 or 2019.

Off-Balance Sheet Arrangements

We have not entered into any transactions

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under a variable interest in an unconsolidated entity that provides us with financing, liquidity, market risk or credit risk support.

Critical Accounting

Critical Accounting Policies

The discussion and analysis of our financial

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statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure

of contingent assets and liabilities at the date of the financial statements, as well as the reported revenues and expenses during

the reporting periods.

On an ongoing basis, we evaluate such estimates and judgments, including those described in greater detail

throughout this section.

We base our estimates on historical experience and on various other factors that we believe are reasonable

under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities

of contingent assets and liabilities at the date of the financial statements, as well as the reported expenses during the reporting

On an ongoing basis, we evaluate such estimates and judgments, including those described in greater detail throughout

this section.

We base our estimates on historical experience and on various other factors that we believe are reasonable under

the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities

that are not readily apparent from other sources.

Actual results may differ from these estimates under different assumptions or

Share-Based Compensation

account for employees’

and directors’

share-based payment awards classified as equity awards using the grant-date fair

value method.

The fair value of share-based payment transactions is recognized as an expense over the requisite service period.

As of December 31, 2019, we have elected to recognize compensation costs for awards conditioned only on continued service that

have a graded vesting schedule using the accelerated method based on the multiple-option award approach.

Forfeitures are accounted

for estimating the number of awards expected to be forfeited instead of as they occur.

Financial Derivatives

evaluate all financial instruments issued in connection with its equity offerings when determining the proper accounting treatment

for such instruments in our financial statements.

We evaluate all financial instruments issued

in connection with its equity offerings when determining the proper accounting treatment for such instruments in our financial

We consider a number of generally accepted accounting principles under U.S.

to determine such treatment and evaluates the features of the instrument to determine the appropriate accounting treatment.

utilize the Probability Weighted Expected Return Method (PWERM), Option Pricing Model (OM) or other appropriate methods to determine

the fair value of its derivative financial instruments such as the warrant liability.

For financial instruments indexed to and

potentially settled in our shares that are determined to be classified as liabilities on the consolidated balance sheet, changes

in fair value are recorded as a gain or loss in our consolidated statement of operations with the corresponding amount recorded

as an adjustment to the liability on its consolidated balance sheet.

GAAP to determine such treatment and evaluates

the features of the instrument to determine the appropriate accounting treatment.

We utilize the Probability Weighted Expected

Return Method (PWERM), Option Pricing Model (OM) or other appropriate methods to determine the fair value of its derivative financial

instruments such as the warrant liability.

For financial instruments indexed to and potentially settled in our shares that are

determined to be classified as liabilities on the consolidated balance sheet, changes in fair value are recorded as a gain or

loss in our consolidated statement of operations with the corresponding amount recorded as an adjustment to the liability on its

consolidated balance sheet.

Accrued Expenses

part of the process of preparing our consolidated financial statements, we are required to estimate our accrued expenses.

process involves reviewing open contracts and purchase orders, communicating with our personnel to identify services that have

been performed on our behalf and estimating the level of service performed and the associated cost incurred for the service when

we have not yet been invoiced or otherwise notified of the actual cost.

The majority of our service providers invoice us monthly

in arrears for services performed or when contractual milestones are met.

We make estimates of our accrued expenses as of each

balance sheet date in our consolidated financial statements based on facts and circumstances known to us at that time.

We periodically

confirm the accuracy of our estimates with the service providers and make adjustments if necessary.

Examples of estimated accrued

research and development expenses include fees payable to clinical research organizations and investigative sites in connection

with clinical trials, vendors in connection with preclinical development activities, vendors related to product manufacturing,

development, and distribution of clinical materials;

As part of the process of preparing our

consolidated financial statements, we are required to estimate our accrued expenses.

This process involves reviewing open contracts

and purchase orders, communicating with our personnel to identify services that have been performed on our behalf and estimating

the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise

notified of the actual cost.

The majority of our service providers invoice us monthly in arrears for services performed or when

contractual milestones are met.

We make estimates of our accrued expenses as of each balance sheet date in our consolidated financial

statements based on facts and circumstances known to us at that time.

We periodically confirm the accuracy of our estimates with

the service providers and make adjustments if necessary.

Examples of estimated accrued research and development expenses include

fees payable to clinical research organizations and investigative sites in connection with clinical trials, vendors in connection

with preclinical development activities, vendors related to product manufacturing, development, and distribution of clinical materials;

and professional service fees for consulting and related services.

base our expense accruals related to clinical trials on our estimates of the services received and efforts expended pursuant to

our contract arrangements.

The financial terms of these agreements are subject to negotiation, vary from contract to contract and

may result in uneven payment flows and expense recognition.

Payments under some of these contracts depend on factors such as the

successful enrollment of patients and the completion of clinical trial milestones.

In accruing service fees, we estimate the time

period over which services will be performed and the level of effort to be expended in each period.

If the actual timing of the

performance of services or the level of effort varies from our estimate, we adjust the accrual or prepaid accordingly.

Our understanding

of the status and timing of services performed relative to the actual status and timing of services performed may vary and may

result in our reporting changes in estimates in any particular period.

Recently-Issued

Accounting Pronouncements

We base our expense accruals related to

clinical trials on our estimates of the services received and efforts expended pursuant to our contract arrangements.

The financial

terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows and

expense recognition.

Payments under some of these contracts depend on factors such as the successful enrollment of patients and

the completion of clinical trial milestones.

In accruing service fees, we estimate the time period over which services will be

performed and the level of effort to be expended in each period.

If the actual timing of the performance of services or the level

of effort varies from our estimate, we adjust the accrual or prepaid accordingly.

Our understanding of the status and timing of

services performed relative to the actual status and timing of services performed may vary and may result in our reporting changes

in estimates in any particular period.

Recently-Issued Accounting Pronouncements

Certain recently-issued

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of this Annual Report.

Liquidity and Capital

Liquidity and Capital Resources

Following several fundraising rounds in

prior years, in June 2018, we completed a $22.9 million fundraising round from investors in the United States and Israel, as well

as existing shareholders, led by Shavit Capital Funds.

In consideration for the investment, we issued 5,960,787 ordinary shares

(constituting approximately 38% of our issued and outstanding share capital after completion of the transaction) at a price per

share of approximately $3.842, as well as warrants to acquire additional shares equal to 80% of the shares issued, at an exercise

prior years, in June 2018, we completed a $22.9 million fundraising round from investors in the United States and Israel,

as well as existing shareholders, led by Shavit Capital Funds.

In consideration for the investment, we issued 5,960,787 ordinary

shares (constituting approximately 38% of our issued and outstanding share capital after completion of the transaction) at a price

per share of approximately $3.842, as well as warrants to acquire additional shares equal to 80% of the shares issued, at an exercise

price per share of NIS 16.20 (approximately $4.32).

3 unchanged sentences

the adjusted price per share, if the price has already been adjusted).

In February 2019, we raised $30.5 million

in our Nasdaq initial public offering, allocating 2,652,174 ADSs, each representing five ordinary shares.

In accordance with price

protection rights granted in 2018 and activated in the offering, we allocated an additional 8,262,800 ordinary shares (equivalent

to 1,652,560 ADSs) to rights holders and adjusted their warrants to be exercisable for an additional 6,207,330 ordinary shares

(equivalent to 1,241,466 ADSs).

In February 2019, we raised $30.5

million in our Nasdaq initial public offering, allocating 2,652,174 ADSs, each representing five ordinary shares.

In accordance

with price protection rights granted in 2018 and activated in the offering, we allocated an additional 8,262,800 ordinary shares

(equivalent to 1,652,560 ADSs) to rights holders and adjusted their warrants to be exercisable for an additional 6,207,330 ordinary

shares (equivalent to 1,241,466 ADSs).

As shown in the accompanying consolidated

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deficit at December 31, 2020 of approximately $117 million.

We have financed operations to date primarily through public and

private placements of equity securities.

We have financed operations to date primarily through public

and private placements of equity securities.

We anticipate that we will continue to incur net losses for the foreseeable future.

believe that our existing cash and cash equivalents will only be sufficient to fund our projected cash needs until the end of 2020.

Accordingly, these factors, among others, raise substantial doubt about our ability to continue as a going concern.

future capital needs, we would need to raise additional capital through equity or debt financing or other strategic transactions.

any such financing may not be on favorable terms or even available to us.

Our failure to obtain sufficient funds on commercially

acceptable terms when needed would have a material adverse effect on our business, results of operations and financial condition.

The forecast of cash resources is forward-looking information that involves risks and uncertainties, and the actual amount of our

expenses could vary materially and adversely as a result of a number of factors.

We have based our estimates on assumptions that

may prove to be wrong, and our expenses could prove to be significantly higher than we currently anticipate.

We believe that our existing cash and cash equivalents will only be sufficient to fund our projected cash needs until the completion

of the contemplated merger with Chemomab during the first half of 2021.

Accordingly, these factors, among others, raise substantial

doubt about our ability to continue as a going concern.

To meet future capital needs, and should the contemplated merger

with Chemomab not be completed, we would need to raise additional capital through equity or debt financing or other strategic

transactions.

However, any such financing may not be on favorable terms or even available to us.

Our failure to obtain

sufficient funds on commercially acceptable terms when needed would have a material adverse effect on our business, results of

operations and financial condition.

The forecast of cash resources is forward-looking information that involves risks and uncertainties,

and the actual amount of our expenses could vary materially and adversely as a result of a number of factors.

We have based our

estimates on assumptions that may prove to be wrong, and our expenses could prove to be significantly higher than we currently

Current Outlook

We estimate that our current cash resources

will allow us to advance our pre-clinical development program through 2020, meaning that further fundraising will be required in

order to complete the research and development of our product candidates.

We expect to satisfy our future cash needs through capital

raising from the public, private investors and institutional investors, such as through the public offering of ordinary shares

that we completed in February 2019.

We may also engage with a partner in order to share the costs associated with the development

and manufacturing of our product candidates or seek to enter an out-licensing agreement.

will allow us to complete the contemplated merger with Chemomab during the first half of 2021, meaning that should the merger

not be completed further fundraising will be required in order to identify and pursue alternative strategic partnerships or complete

the research and development of our product candidates.

Should the contemplated merger not be completed we would expect to satisfy

our future cash needs through capital raising from the public, private investors and institutional investors, such as through

the public offering of ordinary shares that we completed in February 2019.

We may also engage with a partner in order to

share the costs associated with the development and manufacturing of our product candidates or seek to enter an out-licensing

Developing drugs, conducting preclinical

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Our future capital requirements will depend on many factors, including, but not limited to:

the progress and costs of our preclinical and clinical trials and other research and development

the scope, prioritization and number of our preclinical and clinical trials and other research

and development programs;

the amount of revenues and contributions we receive under future licensing, collaboration, development

and commercialization arrangements with respect to our product candidates;

the costs of development and expansion of our operational infrastructure;

the costs and timing of obtaining regulatory approval for one or more of our product candidates;

our ability, or that of our collaborators, to achieve development milestones, marketing approval

and other events or developments under potential future licensing agreements;

the costs of filing, prosecuting, enforcing and defending patent claims and other intellectual

property rights;

the costs and timing of securing manufacturing arrangements for clinical or commercial production;

the costs of contracting with third parties to provide sales and marketing capabilities for us

or establishing such capabilities ourselves;

the costs of acquiring or undertaking development and commercialization efforts for any future

products, product candidates or technology;

the magnitude of our general and administrative expenses;

any additional costs that we may incur under future in- and out-licensing arrangements relating

to one or more of our product candidates.

Until we can generate

significant recurring revenues, we expect to satisfy our future cash needs through capital raising or by out-licensing and/or co-developing

applications of one or more of our product candidates.

We cannot be certain that additional funding will be available to us on

acceptable terms, if at all.

If funds are not available, we may be required to delay, reduce the scope of or eliminate research

or development plans for, or commercialization efforts with respect to, one or more of our product candidates and make necessary

change to our operations to reduce the level of our expenditures in line with available resources.

We are a development-stage

company and it is not possible for us to predict with any degree of accuracy the outcome of our research and development efforts.

As such, it is not possible for us to predict with any degree of accuracy any significant trends, uncertainties, demands, commitments

or events that are reasonably likely to have a material effect on our net loss, liquidity or capital resources, or that would cause

progress and costs of our preclinical and clinical trials and other research and development activities;

scope, prioritization and number of our preclinical and clinical trials and other research and development programs;

amount of revenues and contributions we receive under future licensing, collaboration, development and commercialization arrangements

with respect to our product candidates;

costs of development and expansion of our operational infrastructure;

costs and timing of obtaining regulatory approval for one or more of our product candidates;

ability, or that of our collaborators, to achieve development milestones, marketing approval and other events or developments

under potential future licensing agreements;

costs of filing, prosecuting, enforcing and defending patent claims and other intellectual property rights;

costs and timing of securing manufacturing arrangements for clinical or commercial production;

costs of contracting with third parties to provide sales and marketing capabilities for us or establishing such capabilities

costs of acquiring or undertaking development and commercialization efforts for any future products, product candidates or

magnitude of our general and administrative expenses;

additional costs that we may incur under future in- and out-licensing arrangements relating to one or more of our product

Until we can generate significant recurring

revenues, and should the contemplated merger not be completed, we would expect to satisfy our future cash needs through capital

raising or by out-licensing and/or co-developing applications of one or more of our product candidates.

We cannot be certain that

additional funding will be available to us on acceptable terms, if at all.

If funds are not available, we may be required to delay,

reduce the scope of or eliminate research or development plans for, or commercialization efforts with respect to, one or more

of our product candidates and make necessary change to our operations to reduce the level of our expenditures in line with available

We are a development-stage company and

it is not possible for us to predict with any degree of accuracy the outcome of our research and development efforts.

it is not possible for us to predict with any degree of accuracy any significant trends, uncertainties, demands, commitments or

events that are reasonably likely to have a material effect on our net loss, liquidity or capital resources, or that would cause

financial information to not necessarily be indicative of future operating results or financial condition.

1 unchanged sentence

possible, certain trends, uncertainties, demands, commitments and events are described in this item.

Financial Statements and Supplementary Data

Statements and Supplementary Data

See the Index to Consolidated Financial Statements on Page F-1

attached hereto.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

in and Disagreements with Accountants on Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 5. Market for Registrant’s Common Equity