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Item 9A. Controls and Procedures

2021-03-09 compared with 2020-03-17 · 1307 added, 1409 removed, 624 unchanged (81% of the section changed)

Controls and Procedures

and Procedures

Management’s Annual Report on Internal Controls

Over Financial Reporting

Our management is

responsible for establishing and maintaining adequate internal control over our financial reporting.

Internal control over financial

reporting is defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the

supervision of, our principal executive and principal financial officers and effected by our board of directors, management and

other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial

statements for external purposes in accordance with GAAP and includes those policies and procedures that:

pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;

provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management;

provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Our management is responsible for establishing

and maintaining adequate internal control over our financial reporting.

Internal control over financial reporting is defined in

Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision

of, our principal executive and principal financial officers and effected by our board of directors, management and other personnel

to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for

external purposes in accordance with GAAP and includes those policies and procedures that:

pertain to the maintenance

of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;

provide reasonable assurance

that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that

our receipts and expenditures are being made only in accordance with authorizations of our management;

provide reasonable assurance

regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material

effect on the financial statements.

Because of its inherent limitations, internal

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with the policies or procedures may deteriorate.

Our management, including

our Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of our internal control over financial reporting

at December 31, 2019.

In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations

of the Treadway Commission (COSO) in Internal Control—Integrated Framework (2013).

Based on that assessment under those criteria,

management has determined that, as of December 31, 2019, our internal control over financial reporting was effective.

Other Information

Directors, Executive Officers and Corporate Governance

Our management, including our Chief Executive

Officer and Chief Financial Officer, assessed the effectiveness of our internal control over financial reporting at December 31,

In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway

Commission (COSO) in Internal Control—Integrated Framework (2013).

Based on that assessment under those criteria, management

has determined that, as of December 31, 2020, our internal control over financial reporting was effective.

Executive Officers and Corporate Governance

Our directors and executive officers, their

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Chief Executive Officer and Director

Jonathan Burgin

Chief Financial Officer and Chief Operating Officer

David Kerstein

Chief Medical Officer

Ron Knickerbocker

Senior Vice President of Clinical Development and Data Sciences

Michal Gilon Ohev-Zion

Vice President of Research and Development

Vice President of Clinical Operations

Head of Business Development

Dennison Veru (1)

Interim Chairman

Chief Financial Officer

Stan Polovets (1)(2)(3)

Ruth Alon (1)(2)(3)

Reginald Hardy (2)(3)

Lawrence Howard (1)

Isaac Kohlberg (1)(2)(3)

Member of the Audit Committee

Member of the Compensation Committee

Member of the Nominating and Governance

Member of the Audit

Member of the Compensation

Member of the Nominating

and Governance Committee

A brief biography of each person who serves

as an executive officer and/or director of our Company is set forth below:

Haluska has served as

our Chief Executive Officer since October 2016.

He most recently served as Chief Medical Officer and Senior Vice President of Clinical

R&D at ARIAD Pharmaceuticals, Inc.

from 2012 to 2016, where he held overall responsibility for clinical development strategy.

At ARIAD he led the clinical development and approval of ponatinib (marketed as Iclusig) in the United States, European Union and

other territories, as well as the development of brigatinib (marketed as Alunbrig) approved in the United States by the FDA.

Haluska graduated from Harvard College and the University of Pennsylvania School of Medicine, undertook medical training at Massachusetts

General Hospital (“MGH”) and the Dana-Farber Cancer Institute (“DFCI”), and a fellowship at the Massachusetts

Institute of Technology Center for Cancer Research.

He became assistant professor of medicine at Harvard Medical School, and leader

of the melanoma research programs at the MGH Cancer Center and the DFCI through the Dana-Farber Harvard Cancer Center.

he was deputy director of the Tufts New England Medical Center Cancer Center.

He served on the board of directors at Elicio Therapeutics,

between June 2017 and October 2019.

Jonathan Burgin served as our Chief

Financial Officer between June 2011 and June 2012, was our Chief Executive Officer from June 2012 through October 2016, and has

served as our Chief Financial Officer and Chief Operating Officer since October 2016.

Burgin was Chief Financial Officer of

RDCM), a service assurance provider, from 2006 to 2011, and was Chief Financial Officer of XTL Biopharmaceuticals

XTLB), a drug development company, from 1999 to 2006.

Between 1997 and 1999, he was Chief Financial Officer

of YLR Capital Markets Ltd., a publicly-traded Israeli investment bank, and rose to become a Senior Manager at Kesselman &

Kesselman, CPA (Israel), the Israeli member of PricewaterhouseCoopers International, Ltd., between 1984 and 1997.

serves on the board of directors of Cellect Biotechnology Ltd.

(Nasdaq:APOP).

Burgin earned an M.B.A.

in accounting

and economics from Tel Aviv University and is certified in Israel as a Certified Public Accountant.

David Kerstein has served as

our Chief Medical Officer since November 2018.

Prior to joining us, Dr.

Kerstein served as Senior Medical Director of Oncology

Clinical Research at Takeda Pharmaceuticals International Co.

(OTCMKTS:TKPHF), a global research and development-driven pharmaceutical

company, from February 2017 to November 2018.

At Takeda, he was the lung cancer clinical portfolio strategy lead and global clinical

lead for the anaplastic lymphoma kinase (“ALK”) inhibitor, brigatinib.

From 2014 to 2017, Dr.

Kerstein was Medical

Director and then Senior Medical Director of Clinical Research at ARIAD Pharmaceuticals, Inc., where he was the medical lead for

the brigatinib clinical development program, and led the initial New Drug Application submission and Marketing Authorization Application

submissions and approvals for brigatinib.

Prior to that, Dr.

Kerstein was Director of Clinical Development and Regulatory Affairs

at Boston Biomedical, Inc., a wholly-owned subsidiary of Sumitomo Dainippon Pharma Co.

(OTCMKTS:DNPUF), a Japanese pharmaceutical

company, where he led the clinical development of the STAT3 inhibitor napabucasin.

Kerstein received his M.D.

from Tufts University

School of Medicine and his B.S.

in biology, summa cum laude, from Tufts University.

Ron Knickerbocker has served

as our Senior VP of Clinical Development and Data Sciences since March 2018.

Prior to this, Dr.

Knickerbocker led the Biomedical

Data Sciences and Information group at ARIAD Pharmaceuticals from 2012 until its acquisition by Takeda Pharmaceutical Company Ltd.

At ARIAD, he led statistics and data management functions through multiple successful oncology submissions.

Prior to this,

Knickerbocker served as a Vice President at Genzyme Corporation from 2004 to 2012, where his positions included leading the

biostatistics, data management, and medical writing functions for the transplant/oncology business and global head of biostatistics

and statistical programming.

From 1999 to 2004, Dr.

Knickerbocker was the statistical site head for Pfizer Inc.

in Ann Arbor, MI.

From 1993 to 1999, he held positions at Eli Lilly and Company, leading projects in women’s health and oncology.

degree in applied mathematics and his M.S.

degrees in statistics from Texas A&M University.

Michal Gilon Ohev-Zion has served

as our VP Research and Development since February 2013.

She was previously an investigator at the Hebrew University of Jerusalem.

She holds B.Sc., M.Sc.

degrees, all in biology, from the Hebrew University of Jerusalem, as well as having performed

post-doctoral research there.

Sean Daly has served as our Vice

President of Clinical Operations since March 2018 and brings more than a decade of experience and an ample network of synergetic

relationships to his role.

Daly joined us from ARIAD Pharmaceuticals, where he most recently served as the Vice President of

Clinical Operations from 2004 to 2017.

Daly led the clinical operations group at ARIAD for five years, building upon various

operational roles held at ARIAD since 2004.

In addition to his experience at ARIAD, he has held positions with Wyeth Research (formerly

Genetics Institute) and Agouron Pharmaceuticals, Inc.

Daly is a graduate of the University of California at San Diego where

he received his B.S.

in biochemistry and cell biology.

Salar Roshan has served as our Head

of Business Development since May 2019.

Roshan leads the development of strategic partnerships and spearheaded the licensing

transaction surrounding our pan-RAS and PDE10/β-catenin programs.

Roshan joined us from Curis, Inc., an anti-cancer biotechnology

company, where he served as Head of Corporate Development from 2016 to 2019 and was responsible for overseeing all aspects of the

company’s corporate and business development strategy.

Prior to that, he served as a Portfolio Manager at Baxter Biosciences

(between April 2015 and September 2016), where he led a partial spin-off of the company’s R&D division, was responsible

for several product launches and oversaw valuation and long range planning for its hemophilia portfolio.

Roshan also held management

roles at Ironwood Pharmaceuticals (between June 2013 and March 2015), Millennium Pharmaceuticals (acquired by Takeda Pharmaceutical

Co.) (between August 2008 and May 2013), and Genzyme (between August 2006 and August 2008).

Roshan received his M.Sc.

and his M.B.A.

from Kelley School of Business at Indiana University, and his B.Sc.

in biotechnology from Northeastern University.

Dennison (Dan) Veru has served as

a director since August 2016 and as our Interim Chairman since November 2019.

Veru is Co-Chairman of Palisade Capital Management,

an asset management company, and has been its Chief Investment Officer (Institutional) since 2000, with oversight responsibilities

for all of Palisade’s investment strategies that trade publicly-traded securities.

Veru previously held a variety of

analytical positions at Drexel Burnham Lambert and later at Smith Barney.

From 1992 through 1999, Mr.

Veru was the President and

Director of Research at Awad Asset Management and helped oversee the firm’s growth from start-up to more than $1 billion

of small-cap institutional and high net worth assets.

Prior to Awad, Mr.

Veru held a variety of analytical roles at Drexel Burnham

Lambert and later at Smith Barney Harris Upham.

In addition to his professional responsibilities, Mr.

Veru is a member of the Board

of Overseers of the St.

Luke’s and Roosevelt Hospital, a member of the finance committee of the Dwight-Englewood School,

and a member of the Board of the McCarton School for autistic children.

He is a frequent guest on CNBC, Bloomberg News, Fox News

and CNN, and also contributes market opinions to various financial publications.

Veru holds a B.A.

in government from Franklin

& Marshall College.

Ruth Alon has served as a director

since September 2017.

Alon is the founder and Chief Executive Officer of Medstrada Israel, a venture capital fund focusing

on food and nutrition technologies.

Cohen has served as a member of Anchiano’s board of directors since April 2020 and as Anchiano’s interim

Chief Executive Officer since October 2020.

Cohen has served as the Chairman and Chief Executive Officer of Castel

Partners Ltd.

since January 2012.

In 1994, he co-founded Israel Seed Partners, a leading venture capital firm, and managed

the firm until 2019.

Cohen has invested in and served on the boards of directors of many private technology companies,

including a large number which were acquired or completed successful initial public offerings, including Compugen (Nasdaq:

Shopping.com (Nasdaq:

SHOP, acquired by EBAY), Broadlight (acquired by Broadcom, Nasdaq:

AVGO) and Cyota (acquired by RSA).

is a venture partner at SKY, an Israeli middle-market private equity firm, Hetz Ventures Management Ltd., an early-stage Israeli

venture capital fund, and Shavit Capital.

Cohen was previously the Business Editor of The Jerusalem Post and began his

career in the private equity group at N M Rothschild & Sons Limited in London.

Cohen received a B.A.

in Oriental Studies, with first class honors, from Oxford University.

Polovets has served as chairman of Anchiano’s board of directors since April 2020.

a graduate of Stanford Graduate School of Business, he also currently serves as a member of the Board of Overseers of New York

University (NYU) Tandon School of Engineering, NYU President’s Global Council, and the Council on Foreign Relations.

previously served as CEO of AAR, a private equity firm with a global energy portfolio valued in excess of $25 billion, and as

Vice President at TNK-BP, one of the world’s largest oil companies.

Polovets also held management, advisory,

M&A and various financial positions at ExxonMobil, KPMG, TNK-BP and EY.

Prior to joining Anchiano’s board, Mr.

served as Lead Non-Executive Director of Clal Industries, Lead Independent Director of L1 Energy, Lead Independent Director at

Taavura, member of the Board of Overseers at Stanford University’s Hoover Institution, Chairman for Eastern Europe at Edelman,

and director at oil companies Slavneft and TNK-BP.

He is a co-founder and chairman of The Genesis Prize Foundation, a prominent

international philanthropic group.

Fine has served as our Chief Financial Officer since October 2020 having previously served as our interim Chief

Financial Officer since July 2020.

Fine has over 20 years of experience in executive financial and operational roles

and is currently Co-Managing Director at Line Consulting Ltd.

Fine previously held roles as Chief Financial Officer at

Seeking Alpha, ScaleMP and Freightos, leading finance and operations for the companies’

global activities.

holds a BA and an MBA from the Hebrew University of Jerusalem.

Alon has served as a director since September 2017.

Alon is the founder and Chief Executive Officer of

Medstrada Israel, a venture capital fund focusing on food and nutrition technologies.

Between 1997 and 2016, Ms.

Alon served as a general partner of Pitango Venture Capital.

to her tenure at Pitango, Ms.

Alon held senior positions with Montgomery Securities from 1981 to 1987, Genesis Securities, LLC

from 1993 to 1996, and Kidder Peabody & Co.

from 1987 to 1993, as well as managing her own medical device independent consulting

business in San Francisco from 1995 to 1996.

Alon was the founder and chairperson of Israel Life Science Industry, a not-for-profit

organization then representing the mutual goals of approximately 700 Israeli life science companies.

She is also the co-founder

of IATI, Israel Advanced Technology Industries, an umbrella organization for all high-tech and life sciences companies in Israel.

as a general partner of Pitango Venture Capital.

Prior to her tenure at Pitango, Ms.

Alon held senior positions with Montgomery

Securities from 1981 to 1987, Genesis Securities, LLC from 1993 to 1996, and Kidder Peabody & Co.

from 1987 to 1993,

as well as managing her own medical device independent consulting business in San Francisco from 1995 to 1996.

the founder and chairperson of Israel Life Science Industry, a not-for-profit organization then representing the mutual goals

of approximately 700 Israeli life science companies.

She is also the co-founder of IATI, Israel Advanced Technology Industries,

an umbrella organization for all high-tech and life sciences companies in Israel.

She has a B.A.

in economics from The Hebrew University of Jerusalem, Israel and an M.B.A.

in economics from The Hebrew

University of Jerusalem, Israel and an M.B.A.

from Boston University.

Gonen has served as a director since November 2019.

Gonen is the Chief Executive Officer of CBI, a company that is publicly

traded in Israel.

Gonen has served as the Chief Executive Officer of CBI since 2016, having served previously as a Vice President

He serves as a director of MediWound Ltd.

MDWD), Gamida Cell Ltd.

GMDA) and several other companies.

Previously, Mr.

Gonen served as the general manager of Biomedical Investments and as a partner at Arte Venture Group.

also previously served as a member of our board of directors from 2015 to 2017.

Gonen holds a B.Sc.

in Physics, Mathematics

and Chemistry from the Hebrew University of Jerusalem and an M.A.

in Economics and Finance from Tel Aviv University.

Reginald Hardy has served as a director

since August 2016.

Hardy is the co-founder and Chairman of Brickell Biotech, Inc.

(“Brickell”), a pharmaceutical

company focused on developing novel drugs for the treatment of skin diseases.

Hardy served as Brickell’s Chief Executive

Officer from inception in 2009 through 2018.

Prior to Brickell, he was the co-founder and President of Concordia Pharmaceuticals,

Inc., an oncology drug development company acquired by Kadmon Corporation in 2011.

From 1992 to 1998, he was a co-founder and the

president of SANO Corporation, a pharmaceutical company focused on the development of novel transdermal drug delivery systems,

that was acquired by Elan Corporation in 1998.

Prior to SANO, Mr.

Hardy held various corporate roles with IVAX Corporation, Key

Pharmaceuticals, and Hoechst-Roussel Pharmaceuticals, Inc.

He earned his B.S.

in pharmacy from the University of North Carolina,

Chapel Hill and an M.B.A.

from the University of North Carolina, Greensboro.

Lawrence Howard has served as

a director since September 2016 and served as Chairman of our board of directors from February 2017 to November 2018.

a Senior Managing Director of Hudson Ventures since 1996.

After practicing medicine from 1981 to 1988, he co-founded Presstek,

Inc., a graphic arts technology company whose market value grew from $12 million to over $800 million under his direction.

Howard served as President and Chief Executive Officer of Presstek from 1987 until 1992, and served on the Presstek board of directors

for over 20 years.

He was a Clinical Professor in the Department of Psychiatry at the Morsani College of Medicine at the University

of South Florida, and the Entrepreneur-in-Residence and an Adjunct Professor at the University of South Florida Center for Entrepreneurship.

In addition, Dr.

Howard consulted to The Villages, the largest retirement community in the United States, assisting them in building

a “state of the art”

healthcare delivery system.

He holds a B.S.

in animal science from the University of New Hampshire

from New York Medical College.

Isaac Kohlberg has served as a director

since February 2017.

He is the Senior Associate Provost and Chief Technology Development Officer at Harvard University.

he was Chief Executive Officer of the Tel Aviv University Economic Corporation and Chief Executive Officer of RAMOT at Tel Aviv

University, a technology transfer company.

He served as Vice President at New York University Medical Center and Vice Provost of

New York University.

He also served as the Managing Director of Yeda R&D Company of the Weizmann Institute of Science.

Kohlberg serves on the board of directors of CBI and Elicio Therapeutics, a privately-held biotechnology company of which CBI is

a substantial shareholder.

Kohlberg received a diploma in French cultural and historical studies from the University of Strasbourg,

Kohlberg has served as a director since February 2017.

He is the Senior Associate Provost and Chief Technology

Development Officer at Harvard University.

Previously, he was Chief Executive Officer of the Tel Aviv University Economic Corporation

and Chief Executive Officer of RAMOT at Tel Aviv University, a technology transfer company.

He served as Vice President at New

York University Medical Center and Vice Provost of New York University.

He also served as the Managing Director of Yeda R&D

Company of the Weizmann Institute of Science.

Kohlberg serves on the board of directors of CBI and Elicio Therapeutics,

a privately-held biotechnology company of which CBI is a substantial shareholder.

Kohlberg received a diploma in French

cultural and historical studies from the University of Strasbourg, an M.B.A.

from INSEAD and an LL.B.

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Committees of the Board of Directors

Our board of directors has established the

following committees.

Our board of directors has established

the following committees.

Each committee operates in accordance with a written charter that sets forth the committee’s structure,

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In accordance with U.S.

law and Nasdaq requirements,

our Audit Committee is also responsible for the appointment, compensation and oversight of the work of our independent auditors

and for assisting our board of directors in monitoring our financial statements, the effectiveness of our internal controls and

our compliance with legal and regulatory requirements.

law and Nasdaq

requirements, our Audit Committee is also responsible for the appointment, compensation and oversight of the work of our independent

auditors and for assisting our board of directors in monitoring our financial statements, the effectiveness of our internal controls

and our compliance with legal and regulatory requirements.

Under the Companies Law and related regulations,

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as such term is defined in Rule 10A-3(b)(1) under the Exchange Act.

Our Audit Committee currently consists of

Ruth Alon, Dr.

Lawrence Howard and Mr.

Dennison Veru.

All of the members are independent as defined in the Companies Law, SEC

rules and Nasdaq listing requirements.

Our board of directors has determined that all members of our Audit Committee meet the requirements

for financial literacy under the applicable rules and regulations of the SEC and the Nasdaq rules.

Our board of directors has determined

Veru is an Audit Committee financial expert as defined by the SEC rules and has the requisite financial experience as

defined by the Nasdaq rules.

Our Audit Committee currently consists

Ruth Alon, Mr.

Stan Polovets and Mr.

Isaac Kohlberg.

All of the members are independent as defined in the

Companies Law, SEC rules and Nasdaq listing requirements.

Our board of directors has determined that all members of our Audit

Committee meet the requirements for financial literacy under the applicable rules and regulations of the SEC and the Nasdaq

Our board of directors has determined that Ms.

Ruth Alon is an Audit Committee financial expert as defined by the

SEC rules and has the requisite financial experience as defined by the Nasdaq rules.

Compensation Committee

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rules, we are required to establish a Compensation Committee.

The responsibilities of a Compensation Committee

under the Companies Law include recommending to the board of directors, for ultimate shareholder approval by a special majority,

a policy governing the compensation of directors and officers based on specified criteria, reviewing modifications to and implementing

such compensation policy from time to time, and approving the actual compensation terms of directors and officers prior to approval

by the board of directors.

The responsibilities of a Compensation

Committee under the Companies Law include recommending to the board of directors, for ultimate shareholder approval by a special

majority, a policy governing the compensation of directors and officers based on specified criteria, reviewing modifications to

and implementing such compensation policy from time to time, and approving the actual compensation terms of directors and officers

prior to approval by the board of directors.

In accordance with U.S.

law and Nasdaq requirements,

our Compensation Committee is also responsible for the appointment, compensation and oversight of the work of any compensation

consultant, independent legal counsel and other advisors retained by the Compensation Committee.

law and Nasdaq

requirements, our Compensation Committee is also responsible for the appointment, compensation and oversight of the work of any

compensation consultant, independent legal counsel and other advisors retained by the Compensation Committee.

The Companies Law and related regulations

require the appointment of a Compensation Committee that complies with the requirements of Nasdaq.

Under Nasdaq rules, we are required

to maintain a Compensation Committee consisting of at least two independent directors;

Under Nasdaq rules, we are

required to maintain a Compensation Committee consisting of at least two independent directors;

each of the members of the Compensation

Committee is required to be independent under Nasdaq rules relating to Compensation Committee members, which are different from

the general test for independence of board and committee members.

Committee is required to be independent under Nasdaq rules relating to Compensation Committee members, which are different

from the general test for independence of board and committee members.

Our Compensation Committee currently consists of Ms.

Reginald Hardy and Mr.

Stan Polovets and Mr.

Isaac Kohlberg.

All of the members are independent as defined in the Companies Law and the Nasdaq listing

requirements.

All of the members are independent as defined in the Companies Law and

the Nasdaq listing requirements.

Corporate Governance and Nominating Committee

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law and our articles of association.

Our Corporate Governance and Nominating Committee currently consists of Mr.

Reginald Hardy,

who is independent as defined in the Nasdaq listing requirements.

Our Corporate Governance and Nominating Committee currently consists of Ms.

Stan Polovets and Mr.

Isaac Kohlberg.

All of the members are independent as defined in the Nasdaq listing requirements.

Internal Auditor

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the internal auditor be our independent accountant or a representative thereof.

Joseph Ginossar, CPA, who is the chief executive

officer of Fahn Kanne Control Management Ltd.

(the Business Risk Services division of Grant Thornton Israel), currently serves

as our internal auditor.

Joseph Ginossar, CPA, who is the chief

executive officer of Fahn Kanne Control Management Ltd.

(the Business Risk Services division of Grant Thornton Israel), currently

serves as our internal auditor.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires

our directors, executive officers and holders of more than 10% of our ordinary shares to file with the SEC reports regarding their

ownership and changes in ownership of our equity securities.

We believe that all Section 16 filings requirements were met

by our officers and directors during 2019.

Section 16(a) of the Exchange

Act requires our directors, executive officers and holders of more than 10% of our ordinary shares to file with the SEC reports

regarding their ownership and changes in ownership of our equity securities.

We believe that all Section 16 filings requirements

were met by our officers and directors during 2020.

Code of Business Conduct and Ethics

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senior financial officers and members of our Board of Directors and is posted on our website.

We intend to post amendments to or

waivers from any such Code of Business Conduct and Ethics.

We intend to post amendments to

or waivers from any such Code of Business Conduct and Ethics.

Executive Compensation

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executive officers and directors for the year ended December 31, 2020 was approximately $2.7 million.

This amount includes amounts

paid, set aside or accrued to provide pension, severance, retirement or similar benefits or expenses, but does not include share-based

compensation expenses, or business travel, professional and business association dues and expenses reimbursed to office holders,

and other benefits commonly reimbursed or paid by companies in our industry.

As of December 31, 2019, options to purchase 3,570,014

ordinary shares granted to our officers and directors were outstanding under our share option plan at a weighted average exercise

price of $2.48 per share.

This amount includes

amounts paid, set aside or accrued to provide pension, severance, retirement or similar benefits or expenses, but does not include

share-based compensation expenses, or business travel, professional and business association dues and expenses reimbursed to office

holders, and other benefits commonly reimbursed or paid by companies in our industry.

As of December 31, 2020, options to

purchase 220,353 ordinary shares granted to our officers and directors were outstanding under our share option plan at a weighted

average exercise price of $0.6 per share.

Individual Compensation of Officers

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or termination payments, benefits and perquisites such as car, phone and social benefits and any undertaking to provide such compensation.

Name and Principal Position

and Principal Position

Salary (1) (USD

Bonus (2) (USD

Compensation (3)

Chief Executive Officer

(USD in thousands)

Jonathan Burgin

Ex.Chief Financial and Operating Officer

Ex.Chief Executive Officer

David Kerstein

Chief Medical Officer

Ex.Chief Medical Officer

Ron Knickerbocker

Senior Vice President of Clinical Development and Data Sciences

Vice President of Clinical Operations

Jonathan Burgin

Chief Financial and Operating Officer

Ex.Senior Vice President of Clinical Development and Data Sciences

Ex.Vice President of Clinical Operations

(1) Salary includes

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(3) Represents the

equity-based compensation expenses recorded in our consolidated financial statements for the year ended December 31, 2019, based

on the options’

equity-based compensation expenses recorded in our consolidated financial statements for the year ended December 31, 2020,

based on the options’

fair value on the grant date, calculated in accordance with applicable accounting guidance for equity-based

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statements included in this Annual Report on Form 10-K.

Outstanding Equity Awards

The table below outlines the unexercised

stock that has not vested;

and equity incentive plan awards for each executive officer outstanding as of December 31,

of securities

unesercised options

(#) exercisable

Burgin Jonathan

Haluska Frank

Director Compensation

The table below outlines the unexercised

stock that has not vested;

and equity incentive plan awards for each executive officer outstanding as of December 31,

earned or paid

incentive plan

compensation ($)

options as of

Veru Dennison

Howard Lawrance

Hardy Reginald

Polovets Stan

Kohlberg Isaac

Employment Agreements

The material employment terms for Dr.

our Chief Executive Officer, are as follows:

(1) an annual salary of $480,000 ($400,000 until April 30, 2019, when it was amended

by a general meeting of our shareholders);

(2) an annual bonus, subject to achievement of objectives set by the board of directors,

in the target amount of $200,000;

our former Chief Executive Officer, are as follows:

(1) an annual salary of $480,000 ($400,000 until April 30, 2019,

when it was amended by a general meeting of our shareholders);

(2) an annual bonus, subject to achievement of objectives

set by the board of directors, in the target amount of $200,000;

(3) payment of nine months’

of salary upon termination (or resignation for a good reason

event), a partial annual bonus (pro rata) and partial vesting acceleration of option warrants (and in the case of termination or

voluntary resignation with regard to changes in control of the company, a full annual bonus and full vesting acceleration of option

and (4) all employee benefit plans, programs and arrangements, and all fringe benefits and perquisites that are made

available to our senior executives, including health insurance coverage in accordance with the terms of our health insurance plan.

of salary upon termination

(or resignation for a good reason event), a partial annual bonus (pro rata) and partial vesting acceleration of option warrants

(and in the case of termination or voluntary resignation with regard to changes in control of the company, a full annual bonus

and full vesting acceleration of option warrants);

and (4) all employee benefit plans, programs and arrangements, and all

fringe benefits and perquisites that are made available to our senior executives, including health insurance coverage in accordance

with the terms of our health insurance plan.

In total, we have allocated Dr.

Haluska options to purchase 2,059,016 ordinary shares in connection with his employment agreement.

Of these, options to purchase 562,782, 164,942 and 909,203 ordinary shares vest in four annual tranches from the date of his employment

(May 2016) with respective exercise prices of $2.60, $2.90 and $3.67, and options to purchase 422,090 ordinary shares vest in 16

quarterly tranches from the date of approval by our Board with an exercise price of $1.03.

Our other employees are employed under the

terms prescribed in their respective employment contracts.

The employees are entitled to the social benefits prescribed by law

and as otherwise provided in their agreements.

Haluska options to purchase 2,059,016 ordinary

shares in connection with his employment agreement.

Of these, options to purchase 562,782, 164,942 and 909,203 ordinary shares

vest in four annual tranches from the date of his employment (May 2016) with respective exercise prices of $2.60, $2.90 and

$3.67, and options to purchase 422,090 ordinary shares vest in 16 quarterly tranches from the date of approval by our Board with

an exercise price of $1.03.

The material employment terms for Neil

Cohen, our interim Chief Executive Officer, as of October 20, 2020 consist of a monthly salary of $12,000.

Cohen’s

employment, and in his capacity as a Director, we allocated Mr.

Cohen options to purchase 55,000 ordinary shares.

These options

vest over a period of 3 years, with 33.33% vesting after 12 months from the date of approval by our Board and thereafter vest

in 8 quarterly tranches.

Our other employees are employed under

the terms prescribed in their respective employment contracts.

The employees are entitled to the social benefits prescribed by

law and as otherwise provided in their agreements.

These agreements each contain provisions standard for a company in our industry

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2011 Share Option Plan

On December 19, 2011, our board of directors

adopted a share option plan (the “2011 Plan”), to allocate options to purchase our ordinary shares to our directors,

officers, employees and consultants, and those of our affiliated companies (as such term is defined under the 2011 Plan), or the

The 2011 Plan is administered by our board of directors or a committee that was designated by our board of directors

for such purpose, or the Administrator.

On December 19, 2011, our board of

directors adopted a share option plan (the “2011 Plan”), to allocate options to purchase our ordinary shares to our

directors, officers, employees and consultants, and those of our affiliated companies (as such term is defined under the 2011

Plan), or the Grantees.

The 2011 Plan is administered by our board of directors or a committee that was designated by our board

of directors for such purpose, or the Administrator.

Under the 2011 Plan, we may grant options

to purchase ordinary shares (“Options”), under four tracks:

(i) Approved 102 capital gains Options through a trustee,

which was approved by the Israeli Tax Authority in accordance with Section 102(a) of the Israeli Income Tax Ordinance (“ITO”),

and granted under the tax track set forth in Section 102(b)(2) of the ITO, or the Approved 102 Capital Gains Options.

period under this tax track is 24 months from the date of allocation of Options to the trustee or such period as may be determined

in any amendment of Section 102 of the ITO, or any applicable tax ruling or guidelines;

(ii) Approved 102 Earned Income Options

through a trustee, granted under the tax track set forth is Section 102(b)(1) of the ITO, or the Approved 102 Earned Income Options.

The holding period under this tax track is 12 months from the date of allocation of Options to the trustee or such period as may

be determined in any amendment of Section 102 of the ITO;

(iii) Unapproved 102 Options (the Options will not be allocated through

a trustee and will not be subject to a holding period), or the Unapproved 102 Options;

and (iv) 3(i) Options (the Options will

not be subject to a holding period).

These Options shall be subject to taxation pursuant to Section 3(i) of the ITO, or Section

(i) Approved 102 capital gains Options through a

trustee, which was approved by the Israeli Tax Authority in accordance with Section 102(a) of the Israeli Income Tax

Ordinance (“ITO”), and granted under the tax track set forth in Section 102(b)(2) of the ITO, or the Approved

102 Capital Gains Options.

The holding period under this tax track is 24 months from the date of allocation of Options to the

trustee or such period as may be determined in any amendment of Section 102 of the ITO, or any applicable tax ruling or guidelines;

(ii) Approved 102 Earned Income Options through a trustee, granted under the tax track set forth is Section 102(b)(1) of

the ITO, or the Approved 102 Earned Income Options.

The holding period under this tax track is 12 months from the date of allocation

of Options to the trustee or such period as may be determined in any amendment of Section 102 of the ITO;

(iii) Unapproved

102 Options (the Options will not be allocated through a trustee and will not be subject to a holding period), or the Unapproved

and (iv) 3(i) Options (the Options will not be subject to a holding period).

These Options shall be subject

to taxation pursuant to Section 3(i) of the ITO, or Section 3(i).

Options pursuant to the first three tax

tracks (under Section 102 of the ITO) can be granted to our employees and directors and the grant of Options under Section 3(i)

can be granted to our consultants and controlling shareholders (a controlling shareholder is defined under the Section 102 of the

ITO is a person who holds, directly or indirectly, alone or together with a “relative,”

(i) the right to at least 10%

of the company’s issued capital or 10% of the voting power;

(ii) the right to hold at least 10% of the company’s issued

capital or 10% of the voting power, or the right to purchase such rights;

(iii) the right to receive at least 10% of the company’s

tracks (under Section 102 of the ITO) can be granted to our employees and directors and the grant of Options under Section 3(i) can

be granted to our consultants and controlling shareholders (a controlling shareholder is defined under the Section 102 of

the ITO is a person who holds, directly or indirectly, alone or together with a “relative,”

(i) the right to

at least 10% of the company’s issued capital or 10% of the voting power;

(ii) the right to hold at least 10% of the

company’s issued capital or 10% of the voting power, or the right to purchase such rights;

(iii) the right to receive

at least 10% of the company’s profits;

or (iv) the right to appoint a company’s director).

Grantees who are not Israeli residents may be granted options

that are subject to the applicable tax laws in their respective jurisdictions.

Grantees who are not

Israeli residents may be granted options that are subject to the applicable tax laws in their respective jurisdictions.

We determine, in our sole discretion, under

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company becomes Anchiano Therapeutics Ltd.’s parent company or that pursuant to which Anchiano Therapeutics Ltd.

is the surviving

company but another entity holds 50% or more of Anchiano Therapeutics Ltd.

voting rights, (ii) an acquisition of all or substantially

all of our ordinary shares, (iii) the sale of all or substantially all Company assets, or (iv) any other event with a similar impact,

the Company may exchange all of its outstanding Options granted under the 2011 Plan that remain unexercised prior to any such transaction

for options to purchase shares of the successor corporation (or those of an affiliated company) following the consummation of such

surviving company but another entity holds 50% or more of Anchiano Therapeutics Ltd.

voting rights, (ii) an acquisition of

all or substantially all of our ordinary shares, (iii) the sale of all or substantially all Company assets, or (iv) any

other event with a similar impact, the Company may exchange all of its outstanding Options granted under the 2011 Plan that remain

unexercised prior to any such transaction for options to purchase shares of the successor corporation (or those of an affiliated

company) following the consummation of such transaction.

Unless otherwise determined by the Administrator,

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Unless otherwise determined by our board of directors,

the Options may be exercised for ten years following the date of grant, unless terminated earlier, and as long as the Grantee is

employed by the Company (or by an affiliated company), or provides service to the Company (or an affiliated company).

The Administrator may, in its absolute discretion,

accelerate the time at which Options granted under the 2011 Plan or any portion of which will vest.

the Options may be exercised for ten years following the date of grant, unless terminated earlier, and as long as the Grantee

is employed by the Company (or by an affiliated company), or provides service to the Company (or an affiliated company).

The Administrator may, in its absolute

discretion, accelerate the time at which Options granted under the 2011 Plan or any portion of which will vest.

Unless otherwise determined by the Administrator,

in the event that the Grantee’s employment was terminated, not for Cause (as defined in the 2011 Plan), the Grantee may exercise

that portion of the Options that had vested as of the date of such termination until the end of the specified term in the grant

letter or the 2011 Plan.

The portion of the Options that had not vested at such date, will be forfeited and can be re-granted according

to the terms of the 2011 Plan.

in the event that the Grantee’s employment was terminated, not for Cause (as defined in the 2011 Plan), the Grantee may

exercise that portion of the Options that had vested as of the date of such termination until the end of the specified term in

the grant letter or the 2011 Plan.

The portion of the Options that had not vested at such date, will be forfeited and can be re-granted

according to the terms of the 2011 Plan.

2017 Equity-Based Incentive Plan

On February 22, 2017, our board of directors

adopted our 2017 Equity-Based Incentive Plan (the “2017 Plan”), to allocate a variety of share-based awards to our

directors, officers, employees, consultants, advisors and service providers, and those of our affiliates (companies that control

us, are controlled by us or are under common control with us), or the Participants.

The 2017 Plan is currently administered by

our board of directors, and may be administered by a committee designated by our board of directors for such purpose, or the Administrator.

On February 22, 2017, our board of

directors adopted our 2017 Equity-Based Incentive Plan (the “2017 Plan”), to allocate a variety of share-based awards

to our directors, officers, employees, consultants, advisors and service providers, and those of our affiliates (companies that

control us, are controlled by us or are under common control with us), or the Participants.

The 2017 Plan is currently administered

by our board of directors, and may be administered by a committee designated by our board of directors for such purpose, or the

Administrator.

Under the 2017 Plan, we may grant options

to purchase ordinary shares or ADSs, restricted shares or ADSs, restricted share units and other awards based on our ordinary shares,

all of which are referred to as Awards.

We may grant Awards under the same four tracks as described above with respect to the 2011

Plan, subject to the same conditions as apply for the 2011 Plan.

In addition, we may grant incentive stock options and nonqualified

stock options to Participants who are residents of the United States, and we may grant awards to Participants who are residents

of other countries that comply with the laws of those jurisdictions.

to purchase ordinary shares or ADSs, restricted shares or ADSs, restricted share units and other awards based on our ordinary

shares, all of which are referred to as Awards.

We may grant Awards under the same four tracks as described above with respect

to the 2011 Plan, subject to the same conditions as apply for the 2011 Plan.

In addition, we may grant incentive stock options

and nonqualified stock options to Participants who are residents of the United States, and we may grant awards to Participants

who are residents of other countries that comply with the laws of those jurisdictions.

The number of ordinary shares authorized

6 unchanged sentences

amalgamation or the like with or into another corporation, (ii) an acquisition (including an exchange) of all or substantially

all of our ordinary shares, (iii) the sale of all or substantially all of our assets, or (iv) any other event determined by the

Administrator to have a similar impact, then –

unless otherwise determined by our board of directors in its sole and absolute discretion –

any Award then outstanding will

be assumed or an equivalent Award shall be substituted by the successor corporation, under substantially the same terms as the

all of our ordinary shares, (iii) the sale of all or substantially all of our assets, or (iv) any other event determined

by the Administrator to have a similar impact, then –

unless otherwise determined by our board of directors in its sole

and absolute discretion –

any Award then outstanding will be assumed or an equivalent Award shall be substituted by the

successor corporation, under substantially the same terms as the Award.

The exercise price of an option granted

10 unchanged sentences

In accordance with the terms of the 2017

Plan, on January 1 of each calendar year during the term of the 2017 Plan, the number of shares available for issuance under the

2017 Plan shall be increased by 4% of the total number of company shares outstanding on December 31 of the immediately preceding

calendar year, or such lesser number as shall be determined by the administrator of the plan, subject to adjustments required for

recapitalization events.

As of February 18, 2020, our board of directors

has approved the issuance, under our incentive plans, of options to purchase 3,737,849 ordinary shares currently outstanding at

an average exercise price of $2.51 per share.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Plan, on January 1 of each calendar year during the term of the 2017 Plan, the number of shares available for issuance under

the 2017 Plan shall be increased by 4% of the total number of company shares outstanding on December 31 of the immediately

preceding calendar year, or such lesser number as shall be determined by the administrator of the plan, subject to adjustments

required for recapitalization events.

As of February 18, 2020, our board

of directors has approved the issuance, under our incentive plans, of options to purchase 3,737,849 ordinary shares currently

outstanding at an average exercise price of $2.51 per share.

Security Ownership of Certain Beneficial

Owners and Management and Related Stockholder Matters

The following table sets forth information,

as of February 18, 2020, regarding beneficial ownership of our ordinary shares (including ordinary shares represented by ADSs):

each person who is known by us to own beneficially more than 5% of our ordinary shares;

each director;

each executive officer;

all of our directors and executive officers collectively.

as of February 18, 2020, regarding beneficial ownership of our ordinary shares (including ordinary shares represented by

person who is known by us to own beneficially more than 5% of our ordinary shares;

executive officer;

of our directors and executive officers collectively.

Beneficial ownership is determined in accordance

with the rules of the SEC.

Under these rules, a person is deemed to be a beneficial owner of a security if that person has or shares

voting power, which includes the power to vote or to direct the voting of the security, or investment power, which includes the

power to dispose of or to direct the disposition of the security.

For purposes of the table below, we deem ordinary shares issuable

pursuant to options or warrants that are currently exercisable or exercisable within 60 days of the date of this Annual Report

on Form 10-K, if any, to be outstanding and to be beneficially owned by the person holding the options or warrants for the purposes

of computing the percentage ownership of that person, but we do not treat them as outstanding for the purpose of computing the

percentage ownership of any other person.

Unless otherwise noted below, each shareholder’s

address is c/o Anchiano Therapeutics Ltd., 5 Kiryat Hamada St., PO Box 45032, Jerusalem 9777401 Israel.

Shares Beneficially

Under these rules, a person is deemed to be a beneficial owner of a security if that person has

or shares voting power, which includes the power to vote or to direct the voting of the security, or investment power, which includes

the power to dispose of or to direct the disposition of the security.

For purposes of the table below, we deem ordinary shares

issuable pursuant to options or warrants that are currently exercisable or exercisable within 60 days of the date of this Annual

Report on Form 10-K, if any, to be outstanding and to be beneficially owned by the person holding the options or warrants

for the purposes of computing the percentage ownership of that person, but we do not treat them as outstanding for the purpose

of computing the percentage ownership of any other person.

Unless otherwise

noted, the address of each director and current and former executive officer of Anchiano is One Kendall Square, Building 1400E,

Suite 14-105, Cambridge, Massachusetts 02139.

NAME OF BENEFICIAL OWNER

Percentage (1)

Access Industries Holdings LLC (2)

Clal Biotechnology Industries Ltd.

Shavit Capital Funds (4)

Edgewater Partner Holdings Ltd.

Palisade Medical Equity I, LP (6)

5% and Greater Shareholders

Biotechnology Industries Ltd.

Capital Funds (2)

Industries Holdings LLC (3)

Partner Holdings Ltd.

Directors and Executive Officers

Jonathan Burgin (8)

David Kerstein (9)

Ron Knickerbocker (10)

Michal Gilon Ohev-Zion (11)

Sean Daly (12)

Ruth Alon (13)

Reginald Hardy

Lawrence Howard (14)

Isaac Kohlberg

Dennison Veru (15)

All directors and executive officers as a group (13 persons)

* Represents beneficial ownership of less than one percent (1%).

(1) Percentage ownership based on 37,099,352 ordinary shares outstanding as of the date of this Annual Report on Form 10-K.

(2) The beneficial ownership is based in part on the latest available filing made with the SEC on Schedule 13D/A on January 13,

2020, and consists entirely of (i) the ordinary shares, ADSs and warrants owned directly by CBI and (ii) 6,521,723 ordinary shares

represented by 1,304,347 ADSs owned directly by Access Industries Holdings LLC.

For more information on Access Industries Holdings

LLC and CBI, see footnote (3) below.

(3) The beneficial ownership is based in part on the latest available filing made with the SEC on Schedule 13D/A on January 13,

2020, and consists of 6,585,081 ordinary shares, 326,085 ordinary shares represented by 65,217 ADSs and warrants to purchase 2,396,496

ordinary shares.

Clal Industries Ltd.

owns 47% of the outstanding shares of, and controls CBI.

The remaining 53% of CBI’s

outstanding shares are publicly-held and listed on the TASE.

Stanislav Polovets

All current executive officers and directors as

a group (5 persons)

Percentage ownership based on 37,099,352 ordinary

shares outstanding as of the date of this Annual Report on Form 10-K.

The beneficial ownership is based in part on

the latest available filing made with the SEC on Schedule 13D on December 14, 2020 and consists of 6,911,166 ordinary

shares and warrants to purchase 2,396,496 ordinary shares.

To the best of our knowledge, Clal Industries Ltd.

the outstanding shares of, and controls CBI (TASE:

The remaining 53% of CBI’s outstanding shares are publicly-held

and listed on the TASE.

Clal Industries Ltd.

is wholly owned by Access AI Ltd., which is owned

by AI Diversified Holdings S.à

is wholly owned by Access AI Ltd., which is owned by AI Diversified Holdings

r.l., which is owned by AI Diversified Parent S.à

r.l., which is owned by AI Diversified

Holdings Limited (“AIDH Limited”).

(“AI SMS”) owns a majority of the equity of AIDH Limited.

AIH owns a majority of the equity of AI SMS, and LLC holds a majority of the outstanding voting interests in AIH.

Access Industries

Management, LLC controls LLC and AIH, and Len Blavatnik controls Access Industries Management, LLC.

The address of each of Clal

Industries Ltd.

and CBI is Triangle Tower, 3 Azrieli Center, Tel Aviv 67023, Israel and the address of each of foregoing other

than Clal Industries Ltd.

r.l., which is owned by AI Diversified Holdings Limited,

or AIDH Limited.

AI SMS owns a majority of the equity of AIDH Limited.

AIH owns a majority of the equity of AI SMS, and LLC

holds a majority of the outstanding voting interests in AIH.

AIM controls LLC and AIH, and Len Blavatnik controls AIM.

address of each of Clal Industries Ltd.

and CBI is Triangle Tower, 3 Azrieli Center, Tel Aviv 67023, Israel and the address

of each of foregoing other than Clal Industries Ltd.

and CBI is 40 West 57th Street, 28th Floor, New York, NY 10019.

(4) The beneficial ownership is based in part on the latest available filing made with the SEC on Schedule 13G on January 2, 2020,

and consists of 5,034,150 ordinary shares represented by 1,006,830 ADSs and warrants to purchase 3,834,396 ordinary shares.

general partner of Shavit Capital Fund III (US), L.P.

and Shavit Capital Fund 3 (Israel), L.P.

is Shavit Capital Fund 3 GP, L.P.,

which is managed by Shavit Capital Management 3 (GP) Ltd.

in its capacity as the general partner.

The general partner of Shavit

Capital Fund IV (US), L.P.

and Shavit Capital Fund 4 (Israel), L.P.

is Shavit Capital Fund 4 GP, L.P., which is managed by Shavit

Capital Management 4 (GP) Ltd.

in its capacity as the general partner.

The controlling shareholder of Shavit Capital Management

The beneficial ownership is based on the latest

available filing made with the SEC on Schedule 13G January 2, 2020 and consists of 5,034,150 ordinary shares and warrants

to purchase 3,834,395 ordinary shares.

Gabriel Capital Management Ltd.

(“GCM”) is the management company to Shavit

Capital Fund III (US), L.P.

(“Shavit III”), which holds 3,056,305 of the aforementioned ordinary shares and warrants

to purchase 2,314,286 ordinary shares, and certain other affiliated funds (collectively with Shavit III, the “Shavit

Funds”).

Gabriel Leibler is the sole shareholder of the sole shareholder of GCM.

Decisions regarding the voting and

disposition of securities held by the Shavit Funds are subject to approval by certain internal investment committees comprising

three or more individuals, of which Mr.

Leibler is a member.

As of December 31, 2019, other Shavit Funds held in

the aggregate 1,977,845 ordinary shares and warrants to purchase 1,520,110 ordinary shares.

GCM may be deemed to beneficially

own such securities held by the Shavit Funds.

To the best of our knowledge, the general partner of Shavit III and Shavit Capital

Fund 3 (Israel), L.P.

is Shavit Capital Fund 3 GP, L.P., which is managed by Shavit Capital Management 3 (GP) Ltd.

capacity as the general partner.

The general partner of Shavit Capital Fund IV (US), L.P.

and Shavit Capital Fund 4 (Israel),

is Shavit Capital Fund 4 GP, L.P., which is managed by Shavit Capital Management 4 (GP) Ltd.

in its capacity as the general

The controlling shareholder of Shavit Capital Management 3 (GP) Ltd.

and Shavit Capital Management 4 (GP) Ltd.

is a company, the controlling shareholder of which is Gary Leibler.

Leibler may be deemed to control the investment decisions of the Funds.

The address of each of the foregoing other than Mr.

Leibler is Jerusalem Technology Park, Building 1B, Box 70, Malha, Jerusalem, 96951 Israel.

The address of Mr.

Leibler is 4a Gidon

Street, Jerusalem 9350604 Israel.

(5) Consists entirely of ADSs representing ordinary shares.

Edgewater Partner Holdings Ltd.

a company, the controlling shareholder of which is Mr.

Neil Cohen holds a 3.45% interest in Shavit Capital Fund

3 (Israel), L.P.

and a 1.67% interest in Shavit Capital Fund 4 (Israel), L.P.

The address of each of the foregoing other than

Leibler and Mr.

Cohen is Jerusalem Technology Park, Building 1B, Box 70, Malha, Jerusalem, 96951 Israel.

address of Mr.

Leibler is 4a Gidon Street, Jerusalem 9350604 Israel.

The beneficial ownership is based on the latest

available filing made with the SEC on Schedule 13D on December 14, 2020 and consists of (i) the ordinary

shares, ADSs and warrants owned directly by CBI and (ii) 6,521,735 ordinary shares represented by 1,304,347 ADSs owned

directly by AIH.

For more information on AIH and CBI, see footnote (1) above.

Consists entirely of ordinary shares.

Partner Holdings Ltd.

is beneficially owned by Mr.

Yu, and as such, Mr.

Yu may be deemed to beneficially own the ordinary shares beneficially owned by Edgewater Partner Holdings

The shareholder’s business address is c/o Edgewater Partner Holdings Ltd., Novasage Chambers, Level 2, CCCS Building,

Beach Road, Apia, Samoa.

(6) The beneficial ownership is based on the latest available filing made with the SEC on Schedule 13D/A on June 26, 2019, and

consists of 369,640 ADSs representing 1,848,200 ordinary shares held by Palisade Medical Equity I, LP (“Palisade”)

and 6,900 ADSs representing 34,500 ordinary shares held by Dennison Veru, the managing member, co-chairman and chief investment

officer of Palisade Capital Management, L.L.C.

(“PCM”), Palisade’s investment manager, and a member and president

of Palisade Medical Equity Holdings I, L.L.C.

(“PMEH”), Palisade’s general partner.

In addition, Mr.

a member of our board of directors.

For his updated holdings to the best of our knowledge, see footnote (15) below.

beneficially owned by Alison Berman, the president and chief executive officer of PCM.

Berman may be deemed to beneficially

own the ordinary shares beneficially owned by Palisade.

The business address of Ms.

Berman and Mr.

Veru is c/o Palisade Medical

Equity, One Bridge Plaza, Suite 695, Fort Lee, NJ 07024.

(7) The beneficial ownership is based in part on the latest available filing made with the SEC on Form 3 on January 2, 2020, and

consists of 62,112 ordinary shares, warrants to purchase 47,931 ordinary shares, and options to purchase 422,086, 107,593, 16,113,

681,903 and 105,530 ordinary shares exercisable within 60 days of the date of this Annual Report on Form 10-K, with respective

exercise prices of $2.60, $2.90, $2.90, $3.67 and $1.03.

These options expire respectively on December 18, 2026, May 10, 2027,

July 19, 2027, June 28, 2028 and May 20, 2029, respectively.

(8) The beneficial ownership is based in part on the latest available filing made with the SEC on Form 3 on January 2, 2020, and

consists of options to purchase 3,533, 4,504, 6,000, 68,750 and 56,500 ordinary shares exercisable within 60 days of the date of

this Annual Report on Form 10-K, with respective exercise prices of NIS 246.27, NIS 23.44, NIS 12.10, NIS 9.10 and $1.03.

options expire on September 26, 2021, May 10, 2024, April 28, 2025, September 9, 2027 and July 2, 2029, respectively.

(9) The beneficial ownership is based in part on the latest available filing made with the SEC on Form 3 on January 2, 2020, and

consists entirely of options to purchase ordinary shares exercisable within 60 days of the date of this Annual Report on Form 10-K,

with an exercise price of $2.94.

These options expire on December 29, 2028.

(10) The beneficial ownership is based in part on the latest available filing made with the SEC on Form 3 on January 2, 2020, and

consists of options to purchase 47,813 and 37,500 ordinary shares exercisable within 60 days of the date of this Annual Report

on Form 10-K, with respective exercise prices of $4.00 and $1.03.

These options expire on March 4, 2028 and May 20, 2029, respectively,

respectively.

(11) The beneficial ownership is based in part on the latest available filing made with the SEC on Form 3 on January 2, 2020, and

consists of options to purchase 236, 1,766, 2,252, 3,000, 27,500 and 13,260 ordinary shares exercisable within 60 days of the date

of this Annual Report on Form 10-K, with respective exercise prices of NIS 242.03, NIS 86.62, NIS 23.44, NIS 12.10, NIS 9.10 and

These options expire on March 6, 2021, April 20, 2023, May 10, 2024, April 28, 2025, September 9, 2027 and July 2, 2029,

respectively.

(12) The beneficial ownership is based in part on the latest available filing made with the SEC on Form 3 on January 2, 2020, and

consists of options to purchase 25,313 and 8,760 ordinary shares exercisable within 60 days of the date of this Annual Report on

Form 10-K, with respective exercise prices of $4.00 and $1.03.

These options expire on March 4, 2028 and May 20, 2029, respectively.

(13) The beneficial ownership is based in part on the latest available filing made with the SEC on Form 3 on January 2, 2020, and

consists entirely of options to purchase ordinary shares exercisable within 60 days of the date of this Annual Report on Form 10-K,

with an exercise price of NIS 9.10.

These options expire on September 9, 2027.

(14) The beneficial ownership is based in part on the latest available filing made with the SEC on Form 3 on January 2, 2020, and

consists of 15,385 ADSs representing 76,925 ordinary shares, based

Howard’s percentage ownership in Patata Beroa, LLC, which directly holds 92,309 of our ADSs in total .

(15) The beneficial ownership is based in part on the latest available filing made with the SEC on Form 3 on January 2, 2020, and

consists of 26,900 ADSs representing 134,500 ordinary shares held directly and 369,640 ADSs representing 1,848,200 ordinary shares

held by Palisade.

Veru is the co-chairman

and Chief Investment Officer of PCM and is a member and president of PMEH.

Certain Relationships and Related Transactions, and Director Independence

Youqiang Yu, and as such, Mr.

Yu may be deemed to beneficially

own the ordinary shares beneficially owned by Edgewater Partner Holdings Ltd.

The shareholder’s business address is

c/o Edgewater Partner Holdings Ltd., Novasage Chambers, Level 2, CCCS Building, Beach Road, Apia, Samoa.

Represents 32,399 shares of Anchiano’s

issuable upon the exercise of options.

Represents 32,090 shares of Anchiano’s

issuable upon the exercise of options.

Certain Relationships and Related Transactions,

and Director Independence

Certain Relationships and Related Transactions

We have entered into employment agreements

19 unchanged sentences

of professional and personal conduct and assuring compliance with such responsibilities and standards.

We currently regularly monitor

developments in the area of corporate governance to ensure we are in compliance with the standards and regulations required by

Our board of directors consists of seven

directors, of whom four (Ruth Alon, Reginald Hardy, Dr.

Lawrence Howard and Dennison Veru) qualify as independent directors under

the corporate governance standards of the Nasdaq rules and the independence requirements of Rule 10A-3 of the Exchange Act.

our articles of association, our board of directors must consist of not less than three and no more than 11 directors.

to our articles of association, the vote required to appoint a director is a simple majority vote of holders of our voting shares

participating and voting at the relevant meeting.

We currently regularly

monitor developments in the area of corporate governance to ensure we are in compliance with the standards and regulations required

Our board of directors consists of four

directors, of whom three (Ms.

Ruth Alon, Mr.

Isaac Kohlberg and Mr.

Stan Polovets) qualify as independent directors

under the corporate governance standards of the Nasdaq rules and the independence requirements of Rule 10A-3 of the

Exchange Act.

Under our articles of association, our board of directors must consist of not less than three and no more than 11

Pursuant to our articles of association, the vote required to appoint a director is a simple majority vote of holders

of our voting shares participating and voting at the relevant meeting.

In addition, our articles of association

2 unchanged sentences

The appointment of

a director by the board shall be in effect until the following annual general meeting of the shareholders or until the end of his

tenure in accordance with our articles of association.

a director by the board shall be in effect until the following annual general meeting of the shareholders or until the end of

his tenure in accordance with our articles of association.

Our board of directors may continue to operate for as long as the number

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Our board of directors has determined that we require at least one director with the requisite financial and accounting

expertise and that Dr.

Lawrence Howard, Ms.

expertise and that Ms.

Ruth Alon, Mr.

Reginald Hardy and Mr.

Dennison Veru have such expertise.

Isaac Kohlberg, Mr.

Neil Cohen and Mr.

Stan Polovets have such expertise.

Private Financings

In February 2018, CBI ,

which at the time was our controlling shareholder, extended bridge financing to us in the principal amount of $1.0 million,

which was pending completion of the private placement of equity securities described below, and subsequently provided an additional

In February 2018, CBI, which at the

time was our controlling shareholder, extended bridge financing to us in the principal amount of $1.0 million, which was

pending completion of the private placement of equity securities described below, and subsequently provided an additional $2.0

million principal amount of bridge financing.

The unpaid principal amount of the bridge financing bore annual interest at

the rate payable on three-month U.S.

The unpaid principal amount of the bridge financing bore annual interest at the

rate payable on three-month U.S.

Treasury bills.

The repayment of the bridge financing was made by deducting the repayment

amount from the $5.0 million purchase price of the securities acquired by CBI pursuant to the Securities Purchase Agreement described

The repayment of the bridge financing was made by deducting the repayment amount

from the $5.0 million purchase price of the securities acquired by CBI pursuant to the Securities Purchase Agreement described

Pursuant to a Securities Purchase Agreement

(“SPA”), dated March 29, 2018, between us and the investors identified therein, in June 2018 we issued 5,960,787 ordinary

shares, and warrants to purchase an additional 4,768,629 ordinary shares, as well as price protection and certain other rights.

(“SPA”), dated March 29, 2018, between us and the investors identified therein, in June 2018 we issued 5,960,787

ordinary shares, and warrants to purchase an additional 4,768,629 ordinary shares, as well as price protection and certain other

The gross proceeds from the sale of the ordinary shares amounted to $22.9 million.

As a result of our February 2019 initial public

offering, price protection rights included in the SPA were triggered, resulting in the issuance of 8,262,800 ordinary shares and

adjustments to the warrants, whereby they can be exercised for 6,207,330 additional ordinary shares, each at a price of $1.932

As a result of our February 2019

initial public offering, price protection rights included in the SPA were triggered, resulting in the issuance of 8,262,800 ordinary

shares and adjustments to the warrants, whereby they can be exercised for 6,207,330 additional ordinary shares, each at a price

of $1.932 per share.

For information regarding the current shareholdings of Shavit Capital Funds and CBI, see “Item 12—Security

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effective as of December 19 2018, with one of our principal shareholders, CBI.

The information rights agreement provides CBI with

rights to receive our annual and quarterly financial statements, auditor consent letters and valuation reports, and other information

reasonably required by CBI to enable it to prepare its financial statements.

The information rights agreement also requires that

we provide CBI with information material to the Company and mandated to be disclosed by the requirements applicable to CBI, as

well as certain other material information of the Company.

The information rights agreement provides

CBI with rights to receive our annual and quarterly financial statements, auditor consent letters and valuation reports, and other

information reasonably required by CBI to enable it to prepare its financial statements.

The information rights agreement also

requires that we provide CBI with information material to the Company and mandated to be disclosed by the requirements applicable

to CBI, as well as certain other material information of the Company.

The information rights agreement contains customary confidentiality

provisions and terminates when CBI, and any company that controls CBI, is no longer required to issue public reports relating to

us pursuant to the Exchange Act.

provisions and terminates when CBI, and any company that controls CBI, is no longer required to issue public reports relating

to us pursuant to the Exchange Act.

Principal Accountant Fees and Services

following table sets forth fees billed to us by our independent registered public accounting firm during the fiscal years ended

December 31, 2019 and 2018 for (i) services rendered for the audit of our annual financial statements and the review of our

quarterly financial statements;

(ii) services by our independent registered public accounting firm that are reasonably related

to the performance of the audit or review of our financial statements and that are not reported as Audit Fees;

(iii) services rendered

in connection with tax compliance, tax advice and tax planning;

The following table sets forth fees billed

to us by our independent registered public accounting firm during the fiscal years ended December 31, 2020 and 2019 for (i) services

rendered for the audit of our annual financial statements and the review of our quarterly financial statements;

(ii) services

by our independent registered public accounting firm that are reasonably related to the performance of the audit or review of

our financial statements and that are not reported as Audit Fees;

(iii) services rendered in connection with tax compliance,

tax advice and tax planning;

and (iv) all other fees for services rendered.

Year Ended December 31,

Ended December 31,

Audit-Related Fees

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will not approve the engagement of the independent registered public accounting firm to perform any services that the independent

registered public accounting firm would be prohibited from providing under applicable laws, rules and regulations, including those

of self-regulating organizations.

The Audit Committee will approve permitted non-audit services by our independent registered public

accounting firm only if it determines that using a different firm to perform such services will be less efficient or cost-effective.

registered public accounting firm would be prohibited from providing under applicable laws, rules and regulations, including

those of self-regulating organizations.

The Audit Committee will approve permitted non-audit services by our independent registered

public accounting firm only if it determines that using a different firm to perform such services will be less efficient or cost-effective.

The Audit Committee reviews and pre-approves the statutory audit fees that can be provided by the independent registered public

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Exhibits and Financial Statement Schedules

Anchiano Therapeutics Ltd.

Therapeutics Ltd.

Amended and Restated Articles of Association (previously filed as Exhibit 3.2 of Amendment No.

to our Registration Statement on Form F-1 (File No.

333-229155) as filed with the SEC on February 11, 2019 and incorporated by reference herein).

Deposit Agreement between Anchiano Therapeutics Ltd., the Bank of New York Mellon as Depositary, and owners and holders from time to time of ADSs issued thereunder (previously filed as Exhibit 4.1 to our Current Report on Form 6-K (File No.

333-229155) as filed with the SEC on February 11, 2019

and incorporated by reference herein).

and Plan of Merger between Anchiano Therapeutics Ltd.

and CMB Acquisition Ltd.

and Chemomab Ltd., dated December 14,

2020 (previously filed as Exhibit 2.1 to our Current Report on Form 8-K (File No.

001-38807) as filed with

the SEC on December 15,2020 and incorporated by reference herein).

Agreement between Anchiano Therapeutics Ltd., the Bank of New York Mellon as Depositary, and owners and holders from time

to time of ADSs issued thereunder (previously filed as Exhibit 4.1 to our Current Report on Form 6-K (File No.

as filed with the SEC on February 14, 2019 and incorporated by reference herein).

Collaboration and License Agreement, dated as of September 13, 2019, by and between Anchiano Therapeutics Inc.

and ADT Pharmaceuticals, LLC (previously filed as Exhibit 10.1 to our Current Report on Form 6-K (File No.

001-38807) as filed with the SEC on September 23, 2019 and incorporated by reference herein).

2011 Incentive Plan for Employees, Officers and Consultants (previously filed as Exhibit 10.6 of our Registration Statement on Form F-1 (File No.

Collaboration

and License Agreement, dated as of September 13, 2019, by and between Anchiano Therapeutics Inc.

and ADT Pharmaceuticals,

LLC (previously filed as Exhibit 10.1 to our Current Report on Form 6-K (File No.

001-38807) as filed with

the SEC on September 23, 2019 and incorporated by reference herein).

Incentive Plan for Employees, Officers and Consultants (previously filed as Exhibit 10.6 of our Registration Statement

on Form F-1 (File No.

333-229155) as filed with the SEC on January 7, 2019 and incorporated by reference herein).

Compensation Policy for Officers, dated February 2017 (previously filed as Exhibit 10.7 of our Registration Statement on Form F-1 (File No.

Policy for Officers, dated February 2017 (previously filed as Exhibit 10.7 of our Registration Statement on Form F-1

333-229155) as filed with the SEC on January 7, 2019 and incorporated by reference herein).

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as filed with the SEC on January 7, 2019 and incorporated by reference herein).

Information Rights Agreement between Anchiano Therapeutics Ltd.

and Clal Biotechnology Industries Ltd., dated December 19, 2018 (previously filed as Exhibit 10.10 of our Registration Statement on Form F-1 (File No.

333-229155) as filed with the SEC on January 7, 2019 and incorporated by reference herein).

List of Subsidiaries (filed herewith).

Certification of the Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended (filed herewith).

Certification of the Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended (filed herewith).

Certification of the Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).

Certification of the Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).

Rights Agreement between Anchiano Therapeutics Ltd.

and Clal Biotechnology Industries Ltd., dated December 19, 2018 (previously

filed as Exhibit 10.10 of our Registration Statement on Form F-1 (File No.

333-229155) as filed with the SEC

on January 7, 2019 and incorporated by reference herein).

Statement / Prospectus (previously filed in our Registration Statement on form S-4 (File No.

335-252070) as filed with

the SES on February 12, 2021 .

List of Subsidiaries

(filed herewith).

of Independent Registered Public Accounting Firm8 3 (filed herewith).

Power of Attorney

(filed herewith).

Certification

of the Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange

Act of 1934, as amended (filed herewith).

Certification

of the Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange

Act of 1934, as amended (filed herewith).

Certification

of the Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).

Certification

of the Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).

XBRL Instance Document

XBRL Taxonomy Extension Schema Document

XBRL Taxonomy Extension Calculation Linkbase Document

XBRL Taxonomy Extension Definition Linkbase Document

XBRL Taxonomy Extension Calculation Linkbase

XBRL Taxonomy Extension Definition Linkbase

XBRL Taxonomy Extension Label Linkbase Document

XBRL Taxonomy Extension Presentation Linkbase Document

XBRL Taxonomy Extension Presentation Linkbase

Pursuant to the requirements of the Securities Exchange Act

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March 7, 2021

Frank Haluska

Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature

appears below constitutes and appoints Dr.

Frank Haluska and Jonathan

Burgin , and each of them, as his or her true and lawful attorneys-in-fact and agents, with full power of substitution and

re-substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments

to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith,

with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and

authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to

all intents and purposes as he or she might or could do in person, hereby ratifying and confirming that said attorneys-in-fact

and agents, or any of them, or their or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Neil Cohen and Andrew

Fine, and each of them, as his or her true and lawful attorneys-in-fact and agents, with full power of substitution and re-substitution,

for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this Annual

Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the

Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority

to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents

and purposes as he or she might or could do in person, hereby ratifying and confirming that said attorneys-in-fact and agents,

or any of them, or their or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act

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dates indicated.

Frank Haluska

Chief Executive Officer

March 17, 2020

Frank Haluska

(Principal Executive Officer) and Director

/s/ Jonathan Burgin

Chief Financial and Operating Officer

March 17, 2020

Jonathan Burgin

(Principal Financial and

Accounting Officer)

/s/ Dennison Veru

Interim Chairman

March 17, 2020

Dennison Veru

/s/ Ruth Alon

March 17, 2020

/s/ Ofer Gonen

March 17, 2020

/s/ Reginald Hardy

March 17, 2020

Reginald Hardy

Lawrence Howard

March 17, 2020

Lawrence Howard

/s/ Isaac Kohlberg

March 17, 2020

Executive Officer

Executive Officer) and Director

Financial Officer

Financial and Accounting Officer)

Stan Polovets

Isaac Kohlberg

ANCHIANO THERAPEUTICS LTD.

6 unchanged sentences

AS OF DECEMBER 31, 2020

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

CONSOLIDATED FINANCIAL STATMENTS

Consolidated Balance Sheets

Consolidated Statements of Operations and Comprehensive Loss

Statements of Changes in Shareholders’

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

FINANCIAL STATMENTS

Balance Sheets

Statements of Operations and Comprehensive Loss

of Changes in Shareholders’

Statements of Cash Flows

to Consolidated Financial Statements

Report of Independent Registered Public

3 unchanged sentences

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated

balance sheets of Anchiano Therapeutics Ltd.

and subsidiaries (the Company) as of December 31, 2019 and 2018, the related

consolidated statements of operations, comprehensive loss, shareholders’

equity, and cash flows for each of the years in

the two year period ended December 31, 2019, and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company

as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the years in the two year

period ended December 31, 2019, in conformity with U.S.

generally accepted accounting principles.

have audited the accompanying consolidated balance sheets of Anchiano Therapeutics Ltd.

and subsidiaries (the Company) as of December 31,

2020 and 2019, the related consolidated statements of operations and comprehensive loss, changes in shareholders’

equity, and cash flows for each of the years in the two year period ended December 31, 2020, and the related notes (collectively,

the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material

respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its

cash flows for each of the years in the two year period ended December 31, 2020, in conformity with U.S.

generally accepted

accounting principles.

Going Concern

The accompanying consolidated financial

statements have been prepared assuming that the Company will continue as a going concern.

As discussed in Note 1 to the consolidated

financial statements, the Company has suffered recurring losses and cash flow deficits from operations that together with other

matters described in the aforesaid note, raise substantial doubt about its ability to continue as a going concern.

The accompanying consolidated financial statements

have been prepared assuming that the Company will continue as a going concern.

As discussed in Note 1 to the consolidated financial

statements, the Company has suffered recurring losses and cash flow deficits from operations that together with other matters

described in the aforesaid note, raise substantial doubt about its ability to continue as a going concern.

Management’s

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that might result from the outcome of this uncertainty.

New Basis of Accounting

As discussed in Note 2a to the consolidated

financial statements, during 2019 the Company’s financial statements have been prepared in accordance with U.S.

accepted accounting principles.

The Company previously prepared its financial statements in accordance with International Financial

Reporting Standards, as issued by the International Accounting Standards Board.

Change in accounting principle

As discussed in Note 2s to the consolidated

financial statements, the Company has changed its method of accounting for leases in 2019 due to the adoption of ASC 842 Leases.

Basis for Opinion

These consolidated financial statements

are the responsibility of the Company’s management.

These consolidated financial statements are

the responsibility of the Company’s management.

Our responsibility is to express an opinion on these consolidated financial

statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United

States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws

and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We are a public accounting firm registered with the Public Company Accounting Oversight Board

(United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities

laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with

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to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits, we are

required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion

on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

As part of our audits, we

are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an

opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such

Our audits included performing procedures

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Somekh Chaikin

Certified Public Accountants (Isr.)

Member Firm of KPMG International

We have served as the Company’s auditor

We have served as the Company’s auditor since 2004.

Tel Aviv, Israel

March 17, 2020

ANCHIANO THERAPEUTICS LTD.

ANCHIANO THERAPEUTICS

AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE

dollars in thousands, except share

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Cash and cash equivalents

Funds in respect of employee rights upon retirement

expenses and other

Total current assets

NON-CURRENT ASSETS:

Long-term prepaid expenses

Long-term pledged deposits

Funds in respect of employee rights upon retirement

Property and equipment, net

Right-of-use assets

TOTAL NON-CURRENT ASSETS

L i a b i l i t i e s

Operating lease right-of-use

Long-term pledged deposits

Other non-current assets

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Trade payables

Other payables

Short-term employee benefits

Liability for employee rights upon retirement

Short-term lease liability

Accrued expenses and other

lease liability

Total current liabilities

LONG-TERM LIABILITIES:

Liability for employee rights upon retirement

Long-term lease liability

TOTAL LONG-TERM LIABILITIES

Non-current operating lease liability

Total liabilities

Commitments and contingencies

Shareholders' equity:

Ordinary shares, no par value - authorized 100,000,000 shares;

as of December 31,2019 and 2018, respectively;

issued and outstanding 37,099,352 and 15,575,682 shares at December 31,2019 and 2018, respectively

Ordinary shares, no par value - authorized 500,000,000

shares as of December 31, 2020 and 100,000,000 shares as of December 31,2019;

issued and outstanding 37,099,352

shares at December 31, 2020 and December 31,2019

Additional Paid-in capital

Currency translation differences reserve

Accumulated deficit

TOTAL SHAREHOLDERS' CAPITAL EQUITY

TOTAL LIABILITIES AND SHAREHOLDERS’

The accompanying notes are

an integral part of these consolidated financial statements

Currency translation differences

Total shareholders'

Total liabilities and shareholders'

The accompanying notes are an integral

part of these consolidated financial statements

ANCHIANO THERAPEUTICS LTD.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND

COMPREHENSIVE LOSS

CONSOLIDATED STATEMENTS

OF OPERATIONS AND COMPREHENSIVE LOSS

dollars in thousands, except share

and per share data)

Year ended December 31

ended December 31,

Operating Expenses:

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General and administrative

Restructuring expenses

TOTAL OPERATING EXPENSES

FINANCE EXPENSES, NET

LOSS BEFORE INCOME TAX

INCOME TAXES, NET

NET LOSS FOR THE YEAR

Restructuring

Total operating

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

OTHER COMPREHENSIVE INCOME:

Foreign currency translation adjustments

TOTAL COMPREHENSIVE LOSS

Weighted average number of shares

outstanding used in computation of basic and diluted loss per share in thousands

The accompanying notes are an integral

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AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

dollars in thousands, except share and per share data)

CONSOLIDATED STATEMENTS

OF CHANGES IN SHAREHOLDERS' EQUITY

dollars in thousands, except share

and per share data)

Ordinary shares

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Changes during 2019:

Issuance of shares and warrants, net

Exercise of share options

Issuance of shares, net

Reclassification of warrants due

to reassessment (see note 6b)

Reclassification of warrants due

to modification (see note 6b)

Share-based compensation

Other comprehensive income

Net loss for the year

Balance at December 31, 2019

Changes during 2020:

Issuance of shares, net

Reclassification of warrants due to reassessment (see note 6b)

Reclassification of warrants due to modification (see note 6b)

Share-based compensation

Net loss for the year

Refund on share issuance expenses

Balance at December 31, 2020

(*) No par value

The accompanying notes are an integral

part of these consolidated financial statements

The accompanying notes are an integral part of these consolidated

financial statements

ANCHIANO THERAPEUTICS LTD.

AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

CONSOLIDATED STATEMENT

OF CASH FLOWS

dollars in thousands, except share

and per share amounts)

Year ended December 31

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss for the year

Adjustments required to reconcile net loss to net cash used in operating activities:

ended December 31,

Operating activities:

Adjustments required to reconcile

net loss to net cash used in operating activities:

Financing costs, net

Taxes on income

Changes in accrued liability for employee severance benefits, net of retirement fund profit

Gain on sale of property and

Share-based payments

Changes in operating asset and liabilities:

Decrease (increase) in receivable

Increase in trade payables

Decrease (increase) in employee benefits

Increase (decrease) in other payables

Decrease (increase) in long-term prepaid expenses

Net cash used in operating activities

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase of fixed assets

Net cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from issuance of ordinary shares and warrants

Issuance costs

Receipt of loan

Repayment of loan

Net cash provided by financing activities

INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT THE BEGINNING OF THE YEAR

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT THE END OF THE YEAR

ANCHIANO THERAPEUTICS LTD.

AND SUBSIDIARIES

STATEMENTS OF CHANGES IN CASH FLOWS

dollars in thousands, except share and per share

Year ended December 31

SUPPLEMENTAL INFORMATION ON INTEREST PAID IN CASH

SUPPLEMENTAL INFORMATION ON TAXES PAID IN CASH

Reconciliation in amounts

on consolidated balance sheets:

Write-off of right-of-use

Changes in operating asset and

Prepaid and other current

Other non-current assets

Trade payables

expenses and other

used in operating activities

Investing activities:

Purchase of property and equipment

from sale of property and equipment

provided by (used in) investing activities

Financing activities:

Proceeds from issuance of ordinary

shares and warrants

Share issuance costs

provided by financing activities

Increase (decrease) in cash, cash equivalents and restricted

Cash, cash equivalents and restricted

cash at, beginning of period

Cash, cash equivalents and restricted

cash at, end of period

Reconciliation in amounts on consolidated balance sheets:

Cash and cash equivalents

Restricted cash

Total cash and cash equivalents and restricted cash

Supplemental disclosure of non-cash investing and financing activities

Reclassification of warrants due to reassessment

Reclassification of warrants due to modification

Total cash, cash equivalents

and restricted cash

ANCHIANO THERAPEUTICS LTD.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Notes to Consolidated

Financial Statements

dollars in thousands, except share

3 unchanged sentences

(the "Company")

is a biopharmaceutical company dedicated to the discovery, development, and commercialization of novel, targeted therapies to treat

cancer in areas of significant clinical need.

Anchiano is developing small-molecule pan-RAS inhibitors and inhibitors of PDE10

and the β-catenin pathway, having discontinued active clinical development of inodiftagene vixteplasmid in November 2019.

is a biopharmaceutical company dedicated to the discovery, development, and commercialization of novel, targeted therapies to

treat cancer in areas of significant clinical need.

Anchiano is developing small-molecule pan-RAS inhibitors and inhibitors of

PDE10 and the β-catenin pathway, having discontinued active clinical development of inodiftagene vixteplasmid in November 2019.

After a thorough evaluation of the data, the Company determined there was a low probability of surpassing the pre-defined futility

1 unchanged sentence

patients with BCG-unresponsive non-muscle-invasive bladder cancer (NMIBC), and announced the discontinuation of the study.

Group took steps to notify study investigators that enrollment and further treatment of patients on trial should stop immediately

and is working to close the study (see also Note 5b below).

In January 2020, the Board of Directors of the Company approved management’s

recommendation to close the Company’s office and laboratories located in Israel.

Following the closure of the Israeli facilities,

the Company’s sole remaining office will be located in Cambridge, Massachusetts (for details, see Note 10 below).

the last two years, there has been a significant increase in the Company’s activities in the USA, resulting from the Company’s

management’s strategic decision to shift its development, financing and ongoing operations from Israel to the USA.

January 2020, our Board of Directors approved management’s recommendation to close the Company’s office and laboratories

located in Israel.

Following the closure of the Israeli facilities at the end of May 2020, and as of December 31, 2020,

the Company’s sole remaining office was located at One Kendall Square, Building 1400E, Suite 14-105, Cambridge, Massachusetts.

In February 2021, in light of the effects the situation in which offices were no longer required under the circumstances,

the Company signed a lease termination agreement related to this office, effective as of February 28, 2021.

(for details,

see Note 10 below).

On July 2, 2020, the Company’s

Chief Executive Officer Dr.

Frank Haluska sent a letter to the Chairman of the Company’s board of directors outlining

Haluska’s belief that events had occurred that were sufficient to trigger his ability to resign for “Good

Reason”

under his employment agreement.

The company’s 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.

Frank Haluska tendered his written resignation from the Company’s

board of directors, effective immediately.

See Note 9 for further detail.

In light of business circumstances, and in

order to conserve cash and preserve optionality while alternatives are being identified and assessed, the Company made a decision

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

These included plans to temporarily

reduce the Company’s 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.

On October 20, 2020, the Company appointed

Neil Cohen as its Chief Executive Officer.

Cohen was a member of the Company’s board of directors prior

to his appointment as CEO and continues to serve in this capacity.

The Company also appointed Mr.

Andrew Fine to serve as

its Chief Financial Officer.

Fine previously served as the Company’s Interim Chief Financial Officer pursuant to

a subcontracting agreement as of July 2020.

On December 14, 2020 the Company 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.

The merger is, subject to

shareholder approval as well as, amongst other things, the completion of a financing of no less than $30 million concurrently

with the closing of the merger, and the listing of the Anchiano ADSs on Nasdaq,

At the effective time of the merger, the

Company anticipates 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.

The Company is incorporated and registered

In August 2018, the Company changed its name to Anchiano Therapeutics Ltd.

from BioCancell Ltd.

The Company's American

Depositary Shares ("ADSs"), each representing five ordinary shares of the Company with no par value (the "ordinary

shares"), began trading on the Nasdaq Capital Market (“Nasdaq”) in February 2019 under the symbol "ANCN".

Its ordinary shares were traded on the Tel Aviv Stock Exchange (“TASE”) between August 2006 and June 2019, at which

time the Company voluntarily delisted from the TASE.

The Company wholly owns a subsidiary, Anchiano Therapeutics Israel Ltd.

BioCanCell Therapeutics Israel Ltd.), which itself wholly owns a Delaware-incorporated subsidiary, Anchiano Therapeutics, Inc.

(formerly BioCanCell USA, Inc.) for the purposes of operating in the United States.

This subsidiary is subject to the tax laws

of the State of Delaware.

The Company's American Depositary Shares ("ADSs"), each representing five ordinary shares of the Company

with no par value (the "ordinary shares"), began trading on the Nasdaq Capital Market (“Nasdaq”) in February 2019

under the symbol "ANCN".

Its ordinary shares were traded on the Tel Aviv Stock Exchange (“TASE”) between

August 2006 and June 2019, at which time the Company voluntarily delisted from the TASE.

The Company wholly owns a subsidiary,

Anchiano Therapeutics Israel Ltd.

(formerly BioCanCell Therapeutics Israel Ltd.), which itself wholly owns a Delaware-incorporated

subsidiary, Anchiano Therapeutics, Inc.

(formerly BioCanCell USA, Inc.) for the purposes of operating in the United

This subsidiary is subject to the tax laws of the State of Delaware.

The Company is subject to a number of risks

including with regard to the successful development of therapeutics, the ability to obtain adequate financing, the ability to obtain

FDA approval and reimbursement for any products the Company may develop, protection of intellectual property, fluctuations in operating

results, dependence on key personnel and collaborative partners, rapid technological changes inherent in the target markets of

any products the Company may develop, product liability , the introduction of substitute products and competition from larger

including with regard to the successful development of therapeutics, the ability to obtain adequate financing, the ability to

obtain FDA approval and reimbursement for any products the Company may develop, protection of intellectual property, fluctuations

in operating results, dependence on key personnel and collaborative partners, rapid technological changes inherent in the target

markets of any products the Company may develop, product liability , the introduction of substitute products and competition

from larger companies.

March 2020 the World Health Organization declared the global novel coronavirus (COVID-19) outbreak a pandemic.

As of December

31, 2020, the Company’s operations have not been significantly impacted by the COVID-19 outbreak.

However, the Company cannot

at this time predict the specific extent, duration, or full impact that the COVID-19 outbreak will have on its financial condition

and operations, including ongoing and planned pre-clinical development activities.

The consolidated financial statements have

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cash flow deficits from operations since inception, resulting in an accumulated deficit at December 31, 2020 of $117 million.

Company has financed operations to date primarily through public and private placements of equity securities.

The Company anticipates

that it will continue to incur net losses for the foreseeable future.

The Company believes that its existing cash and cash equivalents

will only be sufficient to fund its projected cash needs until the end of 2020.

Accordingly, these factors, among others, raise

substantial doubt about the Company’s ability to continue as a going concern.

To meet future capital needs, the Company

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 the Company.

The Company has financed operations to date primarily through public and private placements of equity securities.

anticipates that it will continue to incur net losses for the foreseeable future.

The Company believes that its existing cash

and cash equivalents will only be sufficient to fund its 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 the Company’s

ability to continue as a going concern.

To meet future capital needs, and should the contemplated merger with Chemomab not

be completed, the Company 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 the Company.

The failure of the Company to obtain sufficient

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

Company has based its estimates on assumptions that may prove to be wrong, and the Company’s expenses could prove to be significantly

higher than it currently anticipates.

The Company has based its estimates on assumptions that may prove to be wrong, and the Company’s expenses could prove to

be significantly higher than it currently anticipates.

ANCHIANO THERAPEUTICS LTD.

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Basis of presentation

The Company’s financial

statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S.

The Company’s financial statements

have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S.

GAAP”).

The Company previously prepared

its financial statements in accordance with International Financial Reporting Standards (“IFRS”), as issued by the

International Accounting Standards Board (“IASB”), as permitted in the United States (“U.S.”) based on

the Company’s status as a foreign private issuer as defined by the U.S.

Securities and Exchange Commission (the “SEC”).

During 2019, the Company determined that it is no longer qualified as a foreign private issuer under the SEC rules.

as of January 1, 2020, the Company is required to comply with all of the disclosure and reporting requirements applicable to U.S.

domestic issuers.

Use of estimates in the preparation of financial statements

Use of estimates

in the preparation of financial statements

The preparation of financial statements

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and per share data)

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued):

Functional currency

Items included in the financial

statements of the Company's entities are measured using the currency of the primary economic environment in which the Company operates.

The Company's 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, the Company, as well as its Israeli subsidiary,

reassessed its functional currency and determined to change its functional currency to the U.S.

Items included in the financial statements

of the Company's entities are measured using the currency of the primary economic environment in which the Company operates.

Company's 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, due to significant business developments

and changes to its economic circumstances, the Company, as well as its Israeli subsidiary, reassessed its functional currency

and determined to change its 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, the Company 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 the Company’s activities in the USA, resulting from the Company’s management’s strategic decision to shift

its development, financing and ongoing operations from Israel to the USA, as evidenced, inter alia, by the transfer of its operations

and development activities, including the Company’s management, to the USA;

The initiation of a pivotal clinical trial

in the USA, which was substantially larger than any previous clinical trial performed by the Group, all of which result in a significant

increase in expenses and financing dominated in USD relative to other currencies;

The Company’s recent initial public

offering on the Nasdaq Capital Market in USD, with additional funding going forward also expected to be denominated in USD.

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 (see Note 5c for further details).

Moreover, the discontinuation

of the Codex study in November 2019 led to the closure of the Group’s Israeli operations (see Note 10 for further details)

and the focus of the Company’s 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, the Company’s 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.

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.

Translation gains and losses from the application of USD as the Company’s 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’

equity under accumulated other comprehensive loss.

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.

ANCHIANO THERAPEUTICS LTD.

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and per share data)

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

Principles of consolidation

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued):

Principles of

consolidation

The consolidated financial statements

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and balances have been eliminated upon consolidation.

Cash and cash equivalents

Cash and cash

Cash equivalents are short-term,

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Restricted cash

Restricted cash deposited in

an interest-bearing saving accounts which is used as a security for the Company's office rent and car leasing.

Cash expected to

be restricted for more than one year from the balance sheet date is classified as long-term restricted cash in the consolidated

balance sheets.

Restricted cash deposited in an interest-bearing

saving accounts which is used as a security for the Company's office rent and car leasing.

Cash expected to be restricted for

more than one year from the balance sheet date is classified as long-term restricted cash in the consolidated balance sheets.

1) Property and equipment

Property and equipment are stated at cost, net of accumulated depreciation and amortization.

The Company’s property and equipment are depreciated by the straight-line method on the basis of their estimated useful

Impairment of long-lived assets

Company tests long-lived assets for impairment whenever events or circumstances present an indication of impairment.

of expected future cash flows (undiscounted and without interest charges) of the assets is less than the carrying amount of such

assets, an impairment loss would be recognized.

The assets would be written down to their estimated fair values, calculated based

on the present value of expected future cash flows (discounted cash flows), or some other fair-value measure.

are stated at cost, net of accumulated depreciation and amortization.

2) The Company’s

property and equipment are depreciated by the straight-line method on the basis of their

estimated useful life.

Impairment of

long-lived assets

The Company tests long-lived assets

for impairment whenever events or circumstances present an indication of impairment.

If the sum of expected future cash flows

(undiscounted and without interest charges) of the assets is less than the carrying amount of such assets, an impairment loss

would be recognized.

The assets would be written down to their estimated fair values, calculated based on the present value of

expected future cash flows (discounted cash flows), or some other fair-value measure.

Measurement of derivative financial

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If a contract is reclassified from permanent or temporary equity to an asset or a liability,

the change in fair value of the contract during the period the contract was classified as equity shall be accounted for as an adjustment

to shareholders' equity.

the change in fair value of the contract during the period the contract was classified as equity shall be accounted for as an

adjustment to shareholders' equity.

The contract subsequently shall be marked to fair value through earnings.

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and per share data)

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued):

Derivatives (continued)

Issuance of parcel of securities

The consideration received from

the issuance of a parcel of equity securities is allocated according to the relative fair value of the instruments.

Direct issuance costs are attributed to the specific securities in respect of which they were incurred, whereas joint issuance

costs are attributed to the securities on a proportionate basis according to the allocation of the consideration from the issuance

of the parcel, as described above.

The consideration received from the

issuance of a parcel of equity securities is allocated according to the relative fair value of the instruments.

Direct issuance costs are attributed

to the specific securities in respect of which they were incurred, whereas joint issuance costs are attributed to the securities

on a proportionate basis according to the allocation of the consideration from the issuance of the parcel, as described above.

Severance pay

The Israeli Severance Pay Law, 1963

1963 (“Severance Pay Law”), specifies that employees are entitled to severance payment following the termination of

their employment.

Under the Severance Pay Law, the severance payment is calculated as one-month salary for each year of employment

(and pro rata for a portion thereof).

(“Severance Pay Law”), specifies that employees are entitled to severance payment following the termination of their

Under the Severance Pay Law, the severance payment is calculated as one-month salary for each year of employment (and

pro rata for a portion thereof).

Under Section 14 of the Severance Pay Law, employees are entitled to monthly deposits, at

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in accordance with Section 14 release the Group from any future severance payments in respect of those employees.

the Group does not recognize any liability for severance pay from the time Section 14 has been adopted with respect to an employee,

and the deposits under Section 14 are not recorded as an asset in the Company's balance sheet.

For the period during which the

Group’s employees in Israel were not subject to Section 14 are accounted for under the Shut Down method of accounting.

the Group does not recognize any liability for severance pay from the time Section 14 has been adopted with respect to an

employee, and the deposits under Section 14 are not recorded as an asset in the Company's balance sheet.

For the period during which the Group’s

employees in Israel were not subject to Section 14 are accounted for under the Shut Down method of accounting.

the Company calculated the liability for severance pay pursuant to the Severance Pay Law based on the most recent salary of these

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Contingencies

Certain conditions may exist,

as of the date of the financial statements, which may result in a loss to the Company but which will only be resolved when one

or more future events occur or fail to occur.

Certain conditions may exist, as

of the date of the financial statements, which may result in a loss to the Company but which will only be resolved when one or

more future events occur or fail to occur.

The Company’s management assesses such contingent liabilities, and such assessment

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of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be

Management applies the guidance

in ASC 450-20-25 when assessing losses resulting from contingencies.

Management applies the guidance in

ASC 450-20-25 when assessing losses resulting from contingencies.

If the assessment of a contingency indicates that it is probable

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together with an estimate of the range of possible loss if determinable and material, are disclosed.

Loss contingencies considered

to be remote by management are generally not disclosed unless they involve guarantees, in which case the guarantees are disclosed.

Loss contingencies considered to

be remote by management are generally not disclosed unless they involve guarantees, in which case the guarantees are disclosed.

ANCHIANO THERAPEUTICS LTD.

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and per share data)

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued):

Share-based compensation

3 unchanged sentences

on the grant date using the Black-Scholes-Merton option pricing model.

The Black-Scholes-Merton option pricing model requires the

input of highly subjective assumptions, including the expected term of the option, the expected volatility of the price of the

Company’s ordinary shares and the expected dividend yield of ordinary shares.

The assumptions used to determine the fair

value of the option awards represent management’s best estimates.

These estimates involve inherent uncertainties and the

application of management’s judgment.

The Company 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.

The Black-Scholes-Merton option pricing model requires

the input of highly subjective assumptions, including the expected term of the option, the expected volatility of the price of

the Company’s ordinary shares and the expected dividend yield of ordinary shares.

The assumptions used to determine the

fair value of the option awards represent management’s best estimates.

These estimates involve inherent uncertainties and

the application of management’s judgment.

The Company 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 by estimating the number of awards expected to be forfeited instead of as they occur.

Research and development

Research and development expenses

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with research and developments are expensed as incurred.

assets that are purchased from others for use in R&D activities in a transaction other than a business combination are capitalized

only if they have alternative future use.

Intangible assets that are purchased

from others for use in R&D activities in a transaction other than a business combination are capitalized only if they have

alternative future use.

Otherwise, such assets are expensed.

the two years ended December 31, 2019, the Company did not capitalize any intangible asset purchased at an asset acquisition.

For the two years ended December 31,

2020, the Company did not capitalize any intangible asset purchased at an asset acquisition.

Costs related to filing and pursuing

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and per share data)

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued):

Income taxes:

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tax rates and laws.

A valuation allowance is recognized to the extent that it is more likely than not that the deferred taxes will

not be realized in the foreseeable future.

A valuation allowance is recognized to the extent that it is more likely than not that the deferred taxes

will not be realized in the foreseeable future.

Given the Company’s losses, the Company has provided a full valuation allowance

with respect to its deferred tax assets.

2) Uncertainty in income tax

Uncertainty in income

The Company follows a two-step

approach in recognizing and measuring uncertain tax positions.

The first step is to evaluate the tax position for recognition by

determining if the available evidence indicates that it is more likely than not that the position will be sustained based on technical

If this threshold is met, the second step is to measure the tax position as the largest amount that has more than a 50%

likelihood of being realized upon ultimate settlement.

The first step is to evaluate the tax position for recognition

by determining if the available evidence indicates that it is more likely than not that the position will be sustained based on

technical merits.

If this threshold is met, the second step is to measure the tax position as the largest amount that has more

than a 50% likelihood of being realized upon ultimate settlement.

Loss per share

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effect would have been anti-dilutive for the years presented:

Year ended December 31

Outstanding stock options

ended December 31

stock options

ANCHIANO THERAPEUTICS LTD.

1 unchanged sentence

Notes to Consolidated Financial Statements

dollars in thousands, except share and per share data)

SIGNIFICANT ACCOUNTING POLICIES (continued):

dollars in thousands, except share

and per share data)

NOTE 2−SIGNIFICANT ACCOUNTING POLICIES (continued):

Fair value measurement

Fair value is based on the price that would be received

from the sale of an asset or that would be paid to transfer a liability in an orderly transaction between market participants at

the measurement date.

In order to increase consistency and comparability in fair value measurements, the guidance establishes a

fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels, which

are described as follows:

Fair value is based on the price

that would be received from the sale of an asset or that would be paid to transfer a liability in an orderly transaction between

market participants at the measurement date.

In order to increase consistency and comparability in fair value measurements, the

guidance establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into

three broad levels, which are described as follows:

Quoted prices (unadjusted)

in active markets that are accessible at the measurement date for assets or liabilities.

The fair value hierarchy gives the highest

priority to Level 1 inputs.

Observable prices

that are based on inputs not quoted on active markets, but corroborated by market data or active market data of similar or identical

The fair value hierarchy gives the

highest priority to Level 1 inputs.

Observable prices that

are based on inputs not quoted on active markets, but corroborated by market data or active market data of similar or identical

assets or liabilities.

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The fair value hierarchy gives the lowest priority to Level 3 inputs.

In determining fair value, the Company utilizes valuation

techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible and considers

counterparty credit risk in its assessment of fair value.

In determining fair value, the Company

utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent

possible and considers counterparty credit risk in its assessment of fair value.

Concentration of credit risks

Financial instruments that potentially subject the

Company to concentration of credit risk consist principally of cash and cash equivalents, and pledged deposits.

The Company deposits

cash and cash equivalents with highly-rated financial institutions and, as a matter of policy, limits the amounts of credit exposure

to any single financial institution.

The Company has not experienced any material credit losses in these accounts and does not

believe it is exposed to significant credit risk on these instruments.

Financial instruments that potentially

subject the Company to concentration of credit risk consist principally of cash and cash equivalents, and pledged deposits.

Company deposits cash and cash equivalents with highly-rated financial institutions and, as a matter of policy, limits the amounts

of credit exposure to any single financial institution.

The Company has not experienced any material credit losses in these accounts

and does not believe it is exposed to significant credit risk on these instruments.

ANCHIANO THERAPEUTICS LTD.

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Notes to Consolidated Financial Statements

dollars in thousands, except share and per share data)

dollars in thousands, except share

and per share data)

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Continued):

Newly issued and recently adopted accounting pronouncements:

Newly issued and recently adopted accounting

pronouncements:

Accounting pronouncements

recently adopted

1) In February 2016, the FASB issued ASU No.

In February 2016,

the FASB issued ASU No.

2016-02, Leases (Topic 842) (“ASU 2016-02”).

ASU 2016-02 requires

lessees to recognize most leases on their balance sheet as a right-of-use (ROU) asset and a lease liability.

Leases are classified

as either operating or finance based on criteria similar to existing lease accounting, with the classification affecting the pattern

and classification of expense recognition in the statement of operations.

ASU 2016-02 requires lessees to recognize

most leases on their balance sheet as a right-of-use (ROU) asset and a lease liability.

Leases are classified as either operating

or finance based on criteria similar to existing lease accounting, with the classification affecting the pattern and classification

of expense recognition in the statement of operations.

This standard became effective on January 1, 2019.

A modified retrospective transition approach is allowed, applying the new standard to all leases existing at the date of initial

The Company adopted the new standard on January 1,

2019 using the modified retrospective transition method and has not restated comparative periods.

The Company elected the short-term lease recognition

exemption for all leases that qualify.

This means, for those leases that qualify, that the Company will not recognize ROU assets

or lease liabilities, and this includes not recognizing ROU assets or lease liabilities for existing short-term leases of those

assets in transition.

Instead, the Company will continue to recognize the lease payments for those leases in profit or loss on

a straight-line basis over the lease term.

Operating-lease ROU assets and liabilities are recognized

at the commencement date based on the present value of lease payments over the lease term, while the ROU assets are also adjusted

for any prepaid or accrued lease payments.

The Company uses its incremental borrowing rate, based on the information available

at the commencement date, to determine the present value of the lease payments.

ANCHIANO THERAPEUTICS LTD.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

dollars in thousands, except share and per share data)

2 - SIGNIFICANT ACCOUNTING POLICIES (continued):

Newly issued and recently adopted accounting pronouncements (continued):

The lease term is the non-cancellable period of the

lease plus periods covered by an extension or termination option, if it reasonably certain that the Company will exercise the option.

After lease commencement, the Company measures the

lease liability at the present value of the remaining lease payments using the discount rate determined at lease commencement (as

long as the discount rate hasn’t been updated as a result of a reassessment event).

The Company subsequently measures the ROU asset at

the present value of the remaining lease payments, adjusted for the remaining balance of any lease incentives received, any cumulative

prepaid or accrued rent if relevant and any unamortized initial direct costs.

Lease expenses for lease payments are recognized

on a straight-line basis over the lease term.

Lease terms will include options to extend or terminate the lease when it is reasonably

certain that the Company will exercise or not exercise the option to renew or terminate the lease.

The most significant effects of adoption relate to:

(i) the recognition of approximately $1,199 thousand for ROU assets and $1,116 thousand for lease liabilities on the Company’s

balance sheet for its operating leases of real estate, vehicles and equipment (the difference between the additional lease assets

and lease liabilities did not impact the retained earnings), and (ii) the requirement to provide significant new disclosures

regarding the Company’s leasing activities and to enable users of financial statements to assess the amount, timing and uncertainty

of cash flows arising from leases.

However, the adoption of this standard does not have a material impact on the Company’s

consolidated statements of income and consolidated statements of cash flows.

Effects of the initial application of the new standard

on the Company’s consolidated balance sheet as of January 1, 2019:

January 1, 2019

Effect of change

Prepaid expense

Lease liabilities

ANCHIANO THERAPEUTICS LTD.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

dollars in thousands, except share and per share data)

2 - SIGNIFICANT ACCOUNTING POLICIES (continued):

Newly issued and recently adopted accounting pronouncements (continued):

Recently Issued Accounting

Pronouncements

2) In June 2018, the FASB issued ASU No.

2018-07, Improvements to Nonemployee Share-Based Payment Accounting, which

simplifies the accounting for share-based payments granted to non-employees for goods and services and aligns most of the guidance

on such payments to the non-employees with the requirements for share-based payments granted to employees.

The guidance will be

effective for the Company beginning January 1, 2020, and interim periods therein, using a modified retrospective approach.

Early adoption is permitted.

The Company adopted the guidance as of January 1, 2018, and the adoption did not have a material

impact on the Company’s consolidated financial statements.

3) In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820):

Disclosure Framework—Changes to

the Disclosure Requirements for Fair Value Measurement, which modifies the disclosure requirements on fair value measurements in

After the adoption of ASU 2018-13, an entity will no longer be required to disclose the amount of and reasons for transfers

between Level 1 and Level 2 of the fair value hierarchy;

the policy for timing of transfers between levels;

the valuation processes

for Level 3 fair value measurements;

The guidance will be effective for the Company beginning January 1, 2020, and interim

periods therein.

The amendments on changes in unrealized gains and losses should be applied prospectively for only the most recent

period presented in the initial fiscal year of adoption.

All other amendments should be applied retrospectively to all periods

presented on their effective date.

Early adoption is permitted, and an entity also is permitted to early adopt any removed or modified

disclosures on issuance of ASU 2018-13, and delay adoption of the additional disclosures until their effective date.

After adopting

ASU 2018-13, the Company’s financial statements will include fewer disclosures about fair value measurements;

Company does not expect the adoption of ASU 2018-13 to otherwise have a material effect on its consolidated financial statements.

In July 2017, the FASB issued ASU 2017-11,

Earnings Per Share (Topic 260);

Distinguishing Liabilities from Equity (Topic 480);

Derivatives and Hedging (Topic 815):

for Certain Financial Instruments with Down Round Features.

The amendments of this ASU update the classification analysis of certain

equity-linked financial instruments, or embedded features, with down round features, as well as clarify existing disclosure requirements

for equity-classified instruments.

When determining whether certain financial instruments should be classified as liabilities or

equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrument is indexed

to an entity’s own stock.

ASU 2017-11 is effective for fiscal years, and interim periods within those fiscal years, beginning

after December 15, 2018, and early adoption is permitted, including adoption in an interim period.

ASU 2017-11 provides that

upon adoption, an entity may apply this standard retrospectively to outstanding financial instruments with a down round feature

by means of a cumulative- effect adjustment to the opening balance of accumulated deficit in the fiscal year and interim period

The Company has early adopted ASU 2017-11 retrospectively.

retrospective transition approach is allowed, applying the new standard to all leases existing at the date of initial application.

Operating-lease ROU assets and liabilities

are recognized at the commencement date based on the present value of lease payments over the lease term, while the ROU assets

are also adjusted for any prepaid or accrued lease payments.

The Company uses its incremental borrowing rate, based on the information

available at the commencement date, to determine the present value of the lease payments.

For lease modifications that decrease

the scope of the lease, the Company recognizes a decrease in the carrying amount of the right-of-use asset in order to reflect

the partial or full cancellation of the lease, and recognizes in profit or loss a profit (or loss) that equals the difference

between the decrease in the right-of-use asset and re-measurement of the lease liability.

The lease term is the non-cancellable

period of the lease plus periods covered by an extension or termination option, if it reasonably certain that the Company will

exercise the option.

After lease commencement, the Company

measures the lease liability at the present value of the remaining lease payments using the discount rate determined at lease

commencement (as long as the discount rate hasn’t been updated as a result of a reassessment event).

The Company subsequently measures

the ROU asset at the present value of the remaining lease payments, adjusted for the remaining balance of any lease incentives

received, any cumulative prepaid or accrued rent if relevant and any unamortized initial direct costs.

Lease expenses for lease

payments are recognized on a straight-line basis over the lease term.

Lease terms will include options to extend or terminate

the lease when it is reasonably certain that the Company will exercise or not exercise the option to renew or terminate the lease.

Reclassifications

Certain prior year amounts shown

in the accompanying condensed consolidated financial statements have been reclassified to conform to the 2020 presentation.

reclassifications did not have any effect on total current assets, total assets, total current liabilities, total liabilities,

total shareholders’

equity, net loss, or loss per share.

NOTE 3 –

CASH AND CASH EQUIVALENTS:

Year ended December 31

In US dollars

1 unchanged sentence

In New Israeli Shekels

Cash equivalents are comprised of short-term bank deposits with

original maturities of three months or less, at the date acquired.

Cash equivalents are comprised of short-term

bank deposits with original maturities of three months or less, at the date acquired.

ANCHIANO THERAPEUTICS LTD.

1 unchanged sentence

Notes to Consolidated Financial Statements

dollars in thousands, except share and per share data)

The Group leases facilities, labs offices and cars

for use in its operations, which are classified as operating leases.

In addition to rent, the leases may require the Group to pay

directly for fees, insurance, maintenance and other operating expenses.

In January 2018, the Group signed an agreement

to rent a laboratory and offices in Jerusalem’s Har Hotzvim industrial zone through May 2023.

The Group has an option

to extend the agreement by another five years.

The annual rent (including management fees) is approximately $382 thousand and is

linked to the Israeli CPI.

Pursuant to the agreement, bank guarantees of $113 thousand were provided to the property owner.

January 2020, the agreement was modified such that it will terminate on October 31, 2020 and the Company will pay rent

until that date.

In November 2013, the Group signed a rental

agreement with the Development & Management of Jerusalem Industrial Zones Administration Ltd.

in the Edmund J.

Safra High-Tech

Village in Givat Ram, Jerusalem, which was extended until December 2019.

The total annual rent was approximately $65 thousand.

Under the agreement, a bank guarantee of $18 thousand was provided to the property owner.

dollars in thousands, except share

and per share data)

NOTE 4 - LEASES:

The Group leases facilities, labs

offices and cars for use in its operations, which are classified as operating leases.

In addition to rent, the leases may require

the Group to pay directly for fees, insurance, maintenance and other operating expenses.

In May 2018, Anchiano Therapeutics, Inc.

signed a new agreement to rent space for offices in Cambridge, Massachusetts, until December 2021.

The annual rent is approximately

$140 thousand.

The lease term and the discount rate related to Company’s

operating lease right-of-use assets and related lease liabilities are as follows:

Weighted-average remaining lease term (in years)

signed an agreement to rent space for offices in Cambridge, Massachusetts, until December 2021.

This agreement was amended

in October 2019 with the agreement ending in January 2022 with annual rent of approximately $185 thousand.

In February 2021, in light

of the situation in which offices were no longer required under the circumstances, the Company signed a lease termination agreement

(See note 10 below for further details).

Given that the Company is no longer using the asset as of December 31, 2020 there

is a need for an impairment of the asset.

As of December 31, 2020, the Company recognized a decrease of approximately $195

thousand in the carrying amount of the right-of-use asset to reflect the impairment of the right of use asset.

In addition to

this the Company recognized a decrease of approximately $83.0 thousand in Q1 2020 on account of impairment of its right of use

asset for its facilities in Israel that the Company vacated.

The cash flow information related

to operating leases and the lease term and the discount rate related to Company’s operating lease right-of-use assets and

related lease liabilities are as follows:

Operating cash flow

from operating leases

Weighted Average Remaining Lease

Weighted Average Discount rate

The components of lease expense and cash flows were

as follows (in thousands):

Fixed payment and variable payments that depend on an index or rate

cash flow information related to operating leases was as follows:

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from operating leases

Right-of-use assets obtained in exchange for new operating lease liabilities

Operating lease expense

Supplemental balance sheet information

related to operating leases was as follows

Operating lease right of use

lease liabilities, current portion

lease liabilities, non-current portion

ANCHIANO THERAPEUTICS LTD.

1 unchanged sentence

Notes to Consolidated Financial Statements

dollars in thousands, except share and per share data)

dollars in thousands, except share

and per share data)

LEASES (continued) :

As of December 31, 2019, the maturity of lease

liabilities under our non-cancelable operating leases were as follows:

Total future minimum lease payments

Present value of operating lease liabilities

Future minimum lease payments of the operating lease

liabilities under ASC 840 as of January 1, 2019 were as follows:

Total future minimum lease payments

As of December 31, 2020, the

maturity of lease liabilities under our non-cancelable operating leases were as follows:

Total future minimum lease payments, undiscounted

Imputed interest

Present value of future minimum

lease payments

5 - COMMITMENTS :

Royalty Commitments:

Liability for royalty payments to the Israel Innovation Authority

The Company is obligated to pay royalties to the Israel

Innovation Authority (the “IIA”) on proceeds from the sale of products developed from research and development activities

that were partially funded by grants from the IIA, relating to inodiftagene, development of which the Company discontinued in 2019.

Liability for royalty payments to the Israel

Innovation Authority

The Company is obligated to pay royalties

to the Israel Innovation Authority (the “IIA”) on proceeds from the sale of products developed from research and development

activities that were partially funded by grants from the IIA, relating to inodiftagene, development of which the Company discontinued

See Note 1 above for details.

Under the specific terms of the funding arrangements

with the IIA, royalties of 3.5% to 25% are payable on the sale of products developed with funding received from the IIA, which

payments shall not exceed, in the aggregate, 300% of the amount of the grant received (dollar linked), plus interest at annual

rate based on LIBOR.

As of December 31, 2019, the Company had recognized

and received grants (cumulatively) from the IIA in the amount of $4 million.

At the time the Company received the grants, successful

development of the program was not probable and, accordingly, no related liability has been recognized in the financial statements.

The Company did not receive any grants from the IIA

for the years ended December 31, 2019, and 2018.

Under the specific terms of the funding

arrangements with the IIA, royalties of 3.5% to 25% are payable on the sale of products developed with funding received from the

IIA, which payments shall not exceed, in the aggregate, 300% of the amount of the grant received (dollar linked), plus interest

at annual rate based on LIBOR.

As of December 31, 2020, the

Company had recognized and received grants (cumulatively) from the IIA in the amount of $4 million.

At the time the Company received

the grants, successful development of the program was not probable and, accordingly, no related liability has been recognized

in the financial statements.

The Company did not receive any grants

from the IIA for the years ended December 31, 2020 and 2019.

The Company did not successfully

commercialize the products developed from research and development activities related to inodiftagene that were partially funded

by grants from the IIA.

In January 2021 the Company submitted a request to the IIA to close its files with the IIA and to

receive approval from the IIA that the Company has no obligations to pay royalties as no commercialization resulted from the research

and development activities.

As of the date of these financial statements no response has been received from the IIA.

ANCHIANO THERAPEUTICS LTD.

1 unchanged sentence

Notes to Consolidated Financial Statements

dollars in thousands, except share and per share data)

dollars in thousands, except share

and per share data)

COMMITMENTS (continued) :

Royalty Commitments (continued):

Liability for royalty payments to the Israel Innovation Authority

The research and development activities of the Group

relating to inodiftagene, development of which the Company discontinued in 2019, were based on an exclusive license granted to

the Group to use patent-protected technology and/or applications for the registration of patents developed by the Group.

The rights to these patents originally belonged to

Yissum Technology Transfer, the research development Company of The Hebrew University of Jerusalem (hereinafter, “Yissum”).

Liability for royalty payments to Yissum

The research and development activities

of the Group relating to inodiftagene, development of which the Company discontinued in 2019, were based on an exclusive license

granted to the Group to use patent-protected technology and/or applications for the registration of patents developed by the Group.

The rights to these patents originally

belonged to Yissum Technology Transfer, the research development Company of The Hebrew University of Jerusalem (hereinafter, “Yissum”).

Under the 2005 license agreement between Yissum and the Group, as amended (the “License Agreement”), Yissum granted

5 unchanged sentences

a liability for these royalties.

In April 2020, the Company notified

Yissum that as a result of the Company’s decision to discontinue clinical development of inodiftagene, the Company will

cease payments to maintain the intellectual property that was licensed from Yissum that supported the development and as related

to a licensing and development agreement between the parties (“License Agreement”).

In August 2020 the Company

agreed with Yissum on termination of the License Agreement and the return of all intellectual property.

Restructuring

Restructuring provisions are recognized for the direct

expenditures arising from restructuring initiatives, where the plans are sufficiently detailed and where appropriate communication

has been made to those affected.

The Company has recorded restructuring expenses related

principally to contract termination costs due to the discontinuation of the clinical trials to clinical research organizations

(CRO’s) and manufacturers and contractual involuntary termination benefits to employees which have been accounted for as

ongoing benefit arrangements and associated termination costs related to the reduction of its workforce.

One-time termination benefits are expensed at the date

the employees are notified, unless the employees must provide future services beyond a minimum retention period, in which case

the benefits are expensed ratably over the future service periods.

A provision for contract termination costs, in which a contract

is terminated or the entity will continue to incur costs pursuant to contract for its remaining term without economic benefit,

is recognized only when the contract is terminated or when the entity permanently ceases using the rights granted under the contract.

November 2019 the Company decided to discontinue its Phase 2 Codex study in patients with BCG-unresponsive NMIBC.

In connection

with this decision, the Company is required to make certain payments under contracts with clinical research organizations

(CROs) and with manufactures of the drug in order to terminate the contracts and close the trials.

This restructuring plan included

a reduction in the workforce of seven employees.

January 2020 the Board of Directors approved management’s recommendation to close the Company’s office and laboratories

located in Israel.

See also Note 10 “Subsequent Events”

The following table represents a roll forward of the

restructuring and other activities noted above:

Restructuring provisions are recognized

for the direct expenditures arising from restructuring initiatives, where the plans are sufficiently detailed and where appropriate

communication has been made to those affected.

The Company has recorded restructuring

expenses related principally to contract termination costs due to the discontinuation of the clinical trials to clinical research

organizations (CRO’s) and manufacturers and contractual involuntary termination benefits to employees which have been accounted

for as ongoing benefit arrangements and associated termination costs related to the reduction of its workforce.

One-time termination benefits are

expensed at the date the employees are notified, unless the employees must provide future services beyond a minimum retention

period, in which case the benefits are expensed ratably over the future service periods.

A provision for contract termination

costs, in which a contract is terminated or the entity will continue to incur costs pursuant to contract for its remaining term

without economic benefit, is recognized only when the contract is terminated or when the entity permanently ceases using the rights

granted under the contract.

In November 2019 the Company

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

In connection with this decision, the

Company is required to make certain payments under contracts with clinical research organizations (CROs) and with manufactures

of the drug in order to terminate the contracts and close the trials.

This restructuring plan included a reduction in the workforce

of seven employees.

In January 2020 the Board of

Directors approved management’s recommendation to close the Company’s office and laboratories located in Israel.

connection with this restructuring, the employment of the remaining five Israeli employees was terminated in the second quarter

In July 2020, the Company made

the strategic decision to temporarily reduce development of the Company’s RAS program and to institute various cost savings

measures to preserve liquid resources.

At the same time the Company continued to actively pursue the maintenance of its Licensing

Agreement with ADT and protection of its intellectual property assets.

The cost saving activities included severing 3 employees

and contract termination with outsourced contractors working on clinical activities.

The following table represents

a roll forward of the restructuring and other activities noted above:

Manufacturing

Paid or utilized

December 31, 2019

and other related

Balance, January 1, 2020

Balance, December 31,

ANCHIANO THERAPEUTICS LTD.

1 unchanged sentence

Notes to Consolidated Financial Statements

dollars in thousands, except share and per share data)

dollars in thousands, except share

and per share data)

COMMITMENTS (continued) :

In September 2019, the Company announced that

its fully-owned subsidiary, Anchiano Therapeutics, Inc.

entered into an option to license agreement with ADT Pharmaceuticals,

LLC (“ADT”).

Pursuant to the terms and conditions set forth in the agreement, the parties agreed to conduct research

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

As part of the arrangement, the Group

is primarily responsible for the research, development, manufacturing and regulatory activities and ADT assists with the research

activities as necessary in exchange for a quarterly fee from Anchiano.

In connection with the agreement, ADT also granted Anchiano

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, Anchiano

committed to pay ADT (i) a $3 million upfront fee;

(ii) a fee upon transfer of the know-how and intellectual property

rights to the Company;

In September 2019, the Company

announced that its fully-owned subsidiary, Anchiano Therapeutics, Inc.

entered into an option to license agreement with ADT

Pharmaceuticals, LLC (“ADT”).

Pursuant to the terms and conditions set forth in the agreement, the parties agreed

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

As part of the

arrangement, the Group is primarily responsible for the research, development, manufacturing and regulatory activities and ADT

assists with the research activities as necessary in exchange for a quarterly fee from Anchiano.

In connection with the agreement,

ADT also granted Anchiano 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, Anchiano committed to pay ADT (i) a $3 million upfront fee;

(ii) a fee upon transfer of the know-how and

intellectual property rights to the Company;

and then (iii) additional payments, including milestone and royalty payments.

Anchiano 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.

Company accounted for the upfront fee as a research and development expense.

6 - SHARE CAPITAL:

Anchiano 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 Company accounted for the upfront fee as a research and development expense.

NOTE 6 - SHARE CAPITAL:

Rights of the Company’s ordinary shares

Each ordinary share is entitled to one vote.

holders of ordinary shares are also entitled to receive dividends if declared by the Board of Directors, whenever funds are legally

Each ordinary share is entitled to

The holders of ordinary shares are also entitled to receive dividends if declared by the Board of Directors, whenever

funds are legally available.

Since its inception, the Company has not declared any dividends.

2018 Private Placement

In June 2018, the Company completed a $22.9

million fundraising round from investors in the United States and Israel, led by Shavit Capital Funds.

In consideration for the

investment, the Company issued 5,960,787 ordinary shares (constituting approximately 38% of the Company’s 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).

are exercisable for five years from the closing date of the transaction, as of December 31, 2018, and may be exercised on

a cashless basis.

In addition, the investors were granted price protection

rights (to shares and warrants) in the event of a future share issuance by the Company wherein the price does not increase by at

least approximately 42.86% over the price per share in the fundraising (or is less than the adjusted price per share, if the price

has already been adjusted).

For details of an allocation that took place in 2019 pursuant to these rights, see Note 6c below.

The warrants and shares were recorded within equity

on the issuance date (see note 2s on the adoption of ASU2017).

As detailed in Note 2c, the Company changed its functional

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

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

no longer denominated in the Company’s functional currency and therefore not considered indexed to the Company’s own

stock according to ASC 815-40.

In June 2018, the Company completed

a $22.9 million fundraising round from investors in the United States and Israel, led by Shavit Capital Funds.

In consideration

for the investment, the Company issued 5,960,787 ordinary shares (constituting approximately 38% of the Company’s 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).

The warrants are exercisable for five years from the closing date of the transaction, as of December 31, 2018, and may be

exercised on a cashless basis.

In addition, the investors were granted

price protection rights (to shares and warrants) in the event of a future share issuance by the Company wherein the price does

not increase by at least approximately 42.86% over the price per share in the fundraising (or is less than the adjusted price

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

For details of an allocation that took place in 2019 pursuant to these rights,

see Note 6c below.

The warrants and shares were recorded

within equity on the issuance date (see note 2s on the adoption of ASU2017).

As detailed in Note 2c, the Company

changed its 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 the Company’s functional currency and therefore not considered indexed to the

Company’s own stock according to ASC 815-40

ANCHIANO THERAPEUTICS LTD.

1 unchanged sentence

Notes to Consolidated Financial Statements

dollars in thousands, except share and per share data)

6 - SHARE CAPITAL (continued):

dollars in thousands, except share

and per share data)

NOTE 6 - SHARE CAPITAL (continued):

2018 Private Placement (continued)

3 unchanged sentences

As a result, the warrants were reclassified within equity on that date.

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.

The following table summarizes the activity for the

warrants whose fair value measurements are estimated utilizing Level 3 inputs:

Fair value on January 1, 2019

Adjustments- finance expenses

Fair value on February 14, 2019

The Company has determined the fair value of the

warrants (a Level 3 valuation) as of January 1, 2019 and February 14, 2019.

The fair value of these warrants was estimated

by implementing the Probability-Weighted Expected Return Method or the Black-Scholes Method.

The following parameters were used:

Derivative Financial Instrument

February 14, 2019

January 1, 2019

Stock price (USD)

Expected term

Risk free rate

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.

The following table summarizes the

activity for the warrants whose fair value measurements are estimated utilizing Level 3 inputs:

value on January 1, 2019

finance expenses

value on February 14, 2019

The Company has determined the fair

value of the warrants (a Level 3 valuation) as of January 1, 2019 and February 14, 2019.

The fair value of these warrants

was estimated by implementing the Probability-Weighted Expected Return Method or the Black-Scholes Method.

The following parameters

Financial Instrument

In December 2020, in connection

with, and conditional on completion of the contemplated merger, investors in the June 2018 fundraising round executed an

agreement in which they agree to exercise all of their warrants upon the completion of the merger;

reduce the number of shares

in the Company to which they are entitled as a result of the merger pursuant to the price protection provisions and waive their

rights to the balance of the price protection.

Under this agreement the investors will (i) receive additional shares equal

to only 80% of the number shares currently held by each investor for no additional consideration;

and (ii) in respect of

the price protection rights applicable to warrants held by such investors, the number of shares into which the warrants shall

be exercisable shall be increased, for no additional consideration, only by the number shares necessary to ensure that, upon a

cashless exercise of the warrants upon the merger, the aggregate number of shares held by each investor shall equal 80% more than

the shares currently purchasable under the warrants;

What changed 10-K

Item 9A. Controls and Procedures