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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

2024-03-08 compared with 2023-03-31 · 546 added, 2210 removed, 102 unchanged (96% of the section changed)

1 unchanged sentence

Not required for smaller reporting companies.

STATEMENTS AND SUPPLEMENTARY DATA

FINANCIAL STATEMENTS

OF DECEMBER 31, 2022

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB ID No.

FINANCIAL STATEMENTS:

Balance Sheets

Statements of Operations

Statements of Changes in Shareholders' Equity

Statements of Cash Flows

to the Consolidated Financial Statements

of Independent Registered Public Accounting Firm

the Board of Directors and Shareholders of Entera Bio Ltd.

on the Financial Statements

have audited the accompanying consolidated balance

sheets of Entera

and its subsidiary (the

“Company”) as of December 31, 2022 and 2021 , and

the related consolidated statements of operations,

changes in shareholders' equity and cash flows for the years then ended , including

the related notes (collectively referred to as 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,

2022 and 2021 ,

and the results of its operations and its cash

flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

Doubt About the Company’s Ability to Continue as a Going Concern

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

in note 1d to the consolidated financial statements, the Company has suffered recurring losses from operations and has cash outflows from

operating activities that raise substantial doubt about its ability to continue as a going concern.

Management’s plans regarding

these matters are also described in note 1d.

The consolidated financial statements do not include any adjustments that might result from

the outcome of this uncertainty.

consolidated financial

statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company’s 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.

conducted our audits of these consolidated financial

statements in accordance with the standards of the PCAOB.

Those standards require

that we plan and perform the audit to obtain reasonable assurance about whether the consolidated

financial statements are free of material misstatement, whether due to error or fraud.

Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

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.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

ENTERA BIO LTD.

CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2023

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB ID 1309 )

CONSOLIDATED FINANCIAL STATEMENTS:

Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated Statements of Changes in Shareholders' Equity

Consolidated Statements of Cash Flows

Notes to the Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Entera Bio Ltd.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Entera Bio Ltd.

and its subsidiary (the “Company”) as of December 31, 2023 and 2022, and the related consolidated statements of operations, changes in shareholders' equity and cash flows for the years then ended, including the related notes (collectively referred to as 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, 2023 and 2022, and the results of its operations and its cash flows for each of the years then ended in conformity with accounting principles generally accepted in the United States of America.

Substantial Doubt About the Company’s 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 1c to the consolidated financial statements, the Company has suffered recurring losses from operations and has cash outflows from operating activities that raise substantial doubt about its ability to continue as a going concern.

Management’s plans in regard to these matters are also described in note 1c.

The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty .

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s 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 conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required 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.

audits included performing procedures

to assess the risks of material misstatement of the consolidated financial

statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining,

on a test basis, evidence regarding the amounts and disclosures in the consolidated financial

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as

evaluating the overall presentation of the consolidated

financial statements.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

/s/ Kesselman

Public Accountants (lsr.)

member firm of PricewaterhouseCoopers International Limited

have served as the Company’s auditor since 2010.

BALANCE SHEETS

Critical Audit Matters

Critical audit matters are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

We determined there are no critical audit matters.

/s/ Kesselman & Kesselman

Certified Public Accountants (lsr.)

A member firm of PricewaterhouseCoopers International Limited

Tel-Aviv, Israel

March 8, 2024

We have served as the Company’s auditor since 2010.

ENTERA BIO LTD.

CONSOLIDATED BALANCE SHEETS

dollars in thousands, except share data)

and cash equivalents

CURRENT ASSETS:

CURRENT ASSETS

and equipment, net

lease right-of-use assets

Deferred income taxes

in respect of employee rights upon retirement

Cash and cash equivalents

Accounts receivable

Other current assets

TOTAL CURRENT ASSETS

NON-CURRENT ASSETS:

i a b i l i t i e s and shareholders' equity

expenses and other payables

maturities of operating lease

Property and equipment, net

Operating lease right-of-use assets

Deferred income taxes

Funds in respect of employee rights upon retirement

TOTAL NON-CURRENT ASSETS

L i a b i l i t i e s and shareholders' equity

CURRENT LIABILITIES:

LIABILITIES :

lease liabilities

for employee rights upon retirement

Accounts payable

Accrued expenses and other payables

Current maturities of operating lease

TOTAL CURRENT LIABILITIES

NON-CURRENT LIABILITIES :

AND CONTINGENCIES

SHAREHOLDERS'

Shares, NIS 0.0000769

Authorized - as of December 31, 2022 and December 31, 2021, 140,010,000

issued and outstanding as of December 31, 2022, and December 31, 2021 28,809,922

and 28,804,411

shares, respectively

paid-in capital

other comprehensive income

Operating lease liabilities

Liability for employee rights upon retirement

TOTAL NON-CURRENT LIABILITIES

TOTAL LIABILITIES

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY:

LIABILITIES AND SHAREHOLDERS’ EQUITY

Ordinary Shares, NIS 0.0000769 par value:

Authorized - as of December 31, 2023 and

December 31, 2022, 140,010,000 shares;

issued and outstanding as of

December 31, 2023, and December 31, 2022, 35,476,341 and 28,809,922

shares, respectively

Additional paid-in capital

Accumulated other comprehensive income

Accumulated deficit

TOTAL SHAREHOLDERS' EQUITY

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

* Represents an amount less than one thousand US dollars

accompanying notes are an integral part of the unaudited condensed consolidated

financial statements.

STATEMENTS OF OPERATIONS

The accompanying notes are an integral part of the consolidated financial statements.

ENTERA BIO LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS

dollars in thousands, except share and per share data)

ended December 31

and development

and administrative

Year ended December 31

COST OF REVENUES

OPERATING EXPENSES:

EXPENSES (INCOME), net

BEFORE INCOME TAX

TAX EXPENSE (BENEFIT)

PER SHARE BASIC AND DILUTED

WEIGHTED-AVERAGE

NUMBER OF SHARES OUTSTANDING USED IN COMPUTATION OF BASIC AND DILUTED LOSS PER SHARE

accompanying notes are an integral part of the unaudited condensed consolidated

financial statements.

STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

in thousands, except share and per share data)

shares issued

Comprehensive

AT JANUARY 1, 2021

Exercise of warrants to ordinary shares

Issuance of shares due to the ATM program, net of issuance costs

Research and development

General and administrative

TOTAL OPERATING EXPENSES

OPERATING LOSS

FINANCIAL INCOME, net

LOSS BEFORE INCOME TAX

INCOME TAX EXPENSES

LOSS PER SHARE BASIC AND DILUTED

WEIGHTED-AVERAGE NUMBER OF SHARES OUTSTANDING USED IN COMPUTATION OF BASIC AND DILUTED LOSS PER SHARE

The accompanying notes are an integral part of the consolidated financial statements.

ENTERA BIO LTD.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

dollars in thousands, except share and per share data)

Ordinary shares

Number of shares issued

Additional paid-in capital

Accumulated other Comprehensive income

Accumulated deficit

BALANCE AT JANUARY 1, 2022

Exercise of options to ordinary shares

Share-based compensation

Vested restricted share units

AT DECEMBER 31, 2021

Exercise of options to ordinary shares

BALANCE AT DECEMBER 31, 2022

Issuance of ordinary shares, warrants and pre-funded warrants

due to a private placement, net of issuance costs

Issuance of shares under the ATM program, net of issuance costs

Share-based compensation

AT DECEMBER 31, 2022

BALANCE AT DECEMBER 31, 2023

* Represents an amount less than one thousand US dollars.

accompanying notes are an integral part of the unaudited condensed consolidated

financial statements.

STATEMENTS OF CASH FLOWS

The accompanying notes are an integral part of these consolidated financial statements.

ENTERA BIO LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

dollars in thousands)

ended December 31

FLOWS FROM OPERATING ACTIVITIES:

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

expenses (income), net

in operating asset and liabilities:

(increase) in accounts receivable

(increase) in other current assets

(decrease) in accounts payable

Year ended December 31

CASH FLOWS FROM OPERATING ACTIVITIES:

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

Deferred income taxes

Share-based compensation

Finance income, net

Changes in operating asset and liabilities:

Decrease (increase) in accounts receivable

Decrease (increase) in other current assets

Increase (decrease) in accounts payable

Decrease in accrued expenses and other payables

in contract liabilities

cash used in operating activities

FLOWS FROM INVESTING ACTIVITIES:

with respect to employee rights upon retirement

of property and equipment

cash used in investing activities

FLOWS FROM FINANCING ACTIVITIES:

from issuance of shares through ATM programs, net of issuance costs

of options and warrants into shares

cash provided by financing activities

Decrease in contract liabilities

Net cash used in operating activities

CASH FLOWS FROM INVESTING ACTIVITIES:

Funds with respect to employee rights upon retirement

Purchase of property and equipment

Net cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from issuance of shares through ATM programs, net of issuance costs

Issuance of ordinary shares and warrants due to a private placement

Issuance costs

Exercise of options into shares

Net cash provided by financing activities

DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED DEPOSITS

CASH EQUIVALENTS AND RESTRICTED DEPOSITS AT BEGINNING OF THE YEAR

CASH EQUIVALENTS AND RESTRICTED DEPOSITS AT END OF THE YEAR

Reconciliation

in amounts on consolidated balance sheets:

and cash equivalents

deposits included in other current assets

cash and cash equivalents and restricted deposits

DISCLOSURE OF CASH FLOW TRANSACTIONS:

taxes paid in cash during the year

SUPPLEMENTARY

INFORMATION ON INVESTING AND FINANCING ACTIVITIES NOT INVOLVING CASH FLOWS:

lease right of use assets obtained in exchange for new operating lease liabilities

accompanying notes are an integral part of the unaudited condensed consolidated

financial statements.

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

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

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

Reconciliation in amounts on consolidated balance sheets:

Cash and cash equivalents

Restricted deposits included in other current assets

Total cash and cash equivalents and restricted deposits

SUPPLEMENTAL DISCLOSURE OF CASH FLOW TRANSACTIONS:

Interest received

Income taxes paid in cash during the year

SUPPLEMENTARY INFORMATION ON INVESTING AND FINANCING ACTIVITIES NOT INVOLVING CASH FLOWS:

Issuance costs

Operating lease right of use assets obtained in exchange for new operating lease liabilities

The accompanying notes are an integral part of the consolidated financial statements.

ENTERA BIO LTD .

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

dollars in thousands, except share and per share amounts)

NOTE 1 - GENERAL

Entera Bio Ltd.

(collectively with its subsidiary, the "Company) was incorporated on September 30, 2009 and commenced operation on June 1, 2010.

On January 8, 2018, the Company incorporated Entera Bio Inc., a wholly owned subsidiary incorporated in Delaware United States.

is a leader in the development and commercialization of orally delivered large molecule therapeutics for use in areas with significant

unmet medical need where adoption of injectable therapies is limited due to cost, convenience and compliance challenges for patients.

The Company’s most advanced product candidates, EB613 for the treatment of osteoporosis and EB612 for the treatment of hypoparathyroidism,

are based on its proprietary technology platform and are both in clinical development.

Additionally, the Company intends to license its

oral delivery technology to biopharmaceutical companies for use with their proprietary compounds.

Company's ordinary shares, NIS 0.0000769

par value per share (“ordinary shares”), are listed on the Nasdaq Capital Market since July 2018 under the symbol “ENTX”.

December 10, 2018, the Company entered into a research collaboration and license agreement with Amgen (the “Amgen Agreement”)

for the use of the Company’s oral delivery platform in the field of inflammatory disease and other serious illnesses.

to the Amgen Agreement, the Company and Amgen have agreed to use the Company’s proprietary drug delivery platform to develop oral

formulations for one preclinical large molecule program that Amgen has selected.

Amgen is responsible for the clinical development, regulatory

approval, manufacturing and worldwide commercialization of the programs.

The Company granted Amgen an exclusive, worldwide,

sublicensable license under certain of its intellectual property relating to its drug delivery technology to develop, manufacture and

commercialize the applicable products.

The Company will retain all intellectual property rights to its drug delivery technology, and Amgen

will retain all rights to its large molecules and any subsequent improvements, and ownership of certain intellectual property developed

through the performance of the agreement is to be determined by U.S.

the Company is engaged in research and development activities, it has not

derived significant income from its activities and has incurred accumulated deficit in the amount of $ 95.5

million through December 31, 2022 and negative cash flows from operating activities.

The Company's management is of the opinion that its

available funds as of December 31, 2022 will allow the Company to operate under its current plans into the third quarter of 2024.

assumes the use of the Company’s capital to fund its ongoing operations, including R&D and the completion of the Phase 1 study

related to the new formulation EB612.

This does not include the capital required to fund the Company's proposed Phase 3 study for EB613

in osteoporosis and comparative study.

On January 8, 2018, the Company incorporated its wholly owned subsidiary, Entera Bio Inc., in Delaware, United States.

The Company is focused on developing first-in-class oral tablet formats of peptides or protein replacement therapies.

The Company focuses on underserved, chronic medical conditions for which oral administration of a protein therapy has the potential to significantly shift a treatment paradigm.

The Company’s most advanced product candidate, EB613, oral PTH (1-34), is being developed as the first oral, osteoanabolic (bone building) once-daily tablet treatment for post-menopausal women with low bone mineral density (“BMD”) and high-risk osteoporosis with no prior fracture.

The Company is preparing to initiate a Phase 3 registrational study for EB613 pursuant to the FDA’s qualification of a quantitative BMD endpoint.

The EB612 program is being developed as the first oral PTH(1-34) tablet peptide replacement therapy for hypoparathyroidism.

Additionally, the Company intends to license its N-Tab™ technology to biopharmaceutical companies for use with their proprietary compounds.

The Company's ordinary shares, NIS 0.0000769 par value per share (“ordinary shares”), have been listed on the Nasdaq Capital Market since July 2018 under the symbol “ENTX”.

Because the Company is engaged in research and development activities, it has not derived significant income from its activities and has incurred an accumulated deficit in the amount of $ 104.4 million as of December 31, 2023 and negative cash flows from operating activities.

The Company's management is of the opinion that its available funds as of December 31, 2023 will allow the Company to operate under its current plans through the second quarter of 2025.

This assumes the use of the Company’s capital to fund its ongoing operations, including research and development, the completion of the Phase 1 study related to the new generation platform and the GLP-2/OXM collaborative research the Company is conducting with OPKO Biologics, Inc., a subsidiary of OPKO Health Inc.

The Company’s current capital resources do not include the capital required to fund the Company's proposed Phase 3 study for EB613 in osteoporosis.

These factors raise substantial doubt as to the Company's ability to continue as a going concern.

Management is in the process of evaluating various financing alternatives in the public or private equity markets, debt financing and

strategic collaborations, as the Company will need to finance future research and development activities, general and administrative expenses

and working capital through fund raising.

Management is in the process of evaluating various financing alternatives in the public and private equity markets, debt financing and strategic collaborations, as the Company will need to finance future research and development activities, general and administrative expenses and working capital through capital raising.

However, there is no certainty about the Company's ability to obtain such funding.

The financial

statements do not include any adjustments that may be necessary should the Company be unable to continue as a going concern.

These consolidated financial statements do not include any adjustments that may be necessary should the Company be unable to continue as a going concern.

In October 2023, Hamas terrorists infiltrated Israel’s southern border from the Gaza Strip and conducted a series of attacks on civilian and military targets.

Hamas also launched extensive rocket attacks on the Israeli population and industrial centers located along Israel’s border with the Gaza Strip and in other areas within the State of Israel.

These attacks resulted in thousands of deaths and injuries, and Hamas additionally kidnapped many Israeli civilians and soldiers.

Following the attack, Israel’s security cabinet declared war against Hamas and commenced a military campaign against Hamas.

While the Company has a few employees who are in active military service, the ongoing war with Hamas has not, since its inception, materially impacted the Company's business or operations.

Furthermore, the Company does not expect any delays to any of its programs as a result of the situation.

However, the Company cannot currently predict the intensity or duration of Israel’s war against Hamas, nor can predict how this war will ultimately affect its business and operations or Israel’s economy in general.

ENTERA BIO LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

dollars in thousands, except share and per share amounts )

2 - SIGNIFICANT ACCOUNTING POLICIES

of presentation of the financial statements

consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States

Prior to 2021, the Company 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 in the rules promulgated by the

Securities and Exchange Commission (the “SEC”).

During 2021, the Company determined that it is no longer qualified as

a foreign private issuer under the SEC rules.

As a result, since January 1, 2022, the Company has been required to comply with all of

the disclosure and reporting requirements applicable to U.S.

domestic issuers, including preparing its financial statement in accordance

of estimates in the preparation of financial statements

preparation of the consolidated financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions

that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial

statements and the reported amounts of revenues and expenses during the reporting period.

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation of the financial statements

The consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S.

Use of estimates in the preparation of financial statements

The preparation of the consolidated financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Actual results may differ from those estimates.

and presentation currency

included in the financial statements of the Company are measured using the currency of the primary economic environment in which the entity

operates (the “functional currency”).

dollar is the currency of the primary economic environment in which the operations

of the Company are conducted.

Functional currency

Functional and presentation currency

Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”).

dollar is the currency of the primary economic environment in which the operations of the Company are conducted.

The consolidated financial statements are presented in U.S.

functional currency of the subsidiary is the U.S.

and balances originally denominated in U.S.

The functional currency of the subsidiary is the U.S.

Transactions and balances

Transactions and balances originally denominated in U.S.

dollars are presented at their original amounts.

Balances in non- U.S.

dollar currencies are

translated into U.S.

dollar currencies are translated into U.S.

dollars using historical and current exchange rates for non-monetary and monetary balances, respectively.

dollar transactions and other items in the statements of income (indicated below), the following exchange rates are used:

(i) for transactions

– exchange rates at transaction dates or average exchange rates;

and (ii) for other items (derived from non-monetary balance sheet

items such as depreciation and amortization) – historical exchange rates.

Currency transaction gains and losses are presented

in financial income (expenses), as appropriate.

(i) for transactions – exchange rates at transaction dates or average exchange rates;

and (ii) for other items (derived from non-monetary balance sheet items such as depreciation and amortization) – historical exchange rates.

Currency transaction gains and losses are presented in financial income (expenses), as appropriate.

Principles of consolidation

The consolidated financial statements include the accounts of the Company and its subsidiary Entera Bio Inc.

All inter-company transactions and balances have been eliminated in consolidation.

ENTERA BIO LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

dollars in thousands, except share and per share amounts )

SIGNIFICANT ACCOUNTING POLICIES (continued)

of consolidation

consolidated financial statements include the accounts of the Company and its subsidiary Entera Bio Inc.

All inter-company transactions

and balances have been eliminated in consolidation.

and cash equivalents

Company considers as cash equivalents all short-term, highly liquid investments, which include short-term bank deposits with original

maturities of three months or less from the date of purchase that are not restricted as to withdrawal or use and are readily convertible

to known amounts of cash.

cash deposited in an interest-bearing saving account which is used as a security for the Company's office rent and credit card.

Concentrations

of credit risk

instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents.

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued)

Cash and cash equivalents

The Company considers as cash equivalents all short-term, highly liquid investments, which include short-term bank deposits with original maturities of three months or less from the date of purchase that are not restricted as to withdrawal or use and are readily convertible to known amounts of cash.

Bank deposits

Bank deposits with original maturity dates of more than three months but less than one year are included in short-term deposits.

Such short-term deposits bore interest at an average annual rate of approximately 6% for the year ended December 31, 2023.

Bank deposits with maturity of more than one year are considered long-term.

Restricted cash

Restricted cash deposited in an interest-bearing saving account which is used as a security for the Company's office rent and credit card.

Concentrations of credit risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents.

The Company maintains cash held in checking accounts and deposits at financial institutions in major Israeli and U.S.

believes the Company is not exposed to significant credit risk to its current financial institution, but will continue to monitor regularly

and adjust, if needed, to mitigate risk.

The Company has established guidelines regarding diversification of its investments and their

maturities, which are designed to maintain principal and maximize liquidity.

To date, the Company has not experienced any losses associated

with this credit risk and continues to believe that this exposure is not significant.

value measurement

Company measures fair value and discloses fair value measurements for financial assets and liabilities.

Fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between

market participants at the measurement date.

The accounting standard establishes a fair value hierarchy that prioritizes observable and

unobservable inputs used to measure fair value into three broad levels, which are described below:

Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets

or liabilities.

Management believes the Company is not exposed to significant credit risk to its current financial institution, but will continue to monitor regularly and adjust, if needed, to mitigate risk.

The Company has established guidelines regarding diversification of its investments and their maturities, which are designed to maintain principal and maximize liquidity.

To date, the Company has not experienced any losses associated with this credit risk and continues to believe that this exposure is not significant.

Fair value measurement

The Company measures fair value and discloses fair value measurements for financial assets and liabilities.

Fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The accounting standard establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels, which are described below:

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 inputs that are based on inputs not quoted on active markets but corroborated by market

Observable inputs that are based on inputs not quoted on active markets but corroborated by market data.

Unobservable inputs are used when little or no market data is available.

The fair value hierarchy

gives the lowest priority to Level 3 inputs.

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

ENTERA BIO LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

dollars in thousands, except share and per share amounts )

2 - SIGNIFICANT ACCOUNTING POLICIES (continued)

severance benefits

the Israeli Severance Pay Law, 1963, the Company is required to make severance payments upon dismissal of an Israeli employee or

upon termination of employment in certain other circumstances.

The severance payment liability to the employees located in Israel (based

upon length of service and the latest monthly salary - one month’s salary for each year employed) is recorded on the Company’s

balance sheet under “Liability for employee rights upon retirement.” The liability is recorded as if it was payable at each

balance sheet date on an undiscounted basis.

accordance with Section 14 of the Israeli Severance Pay Law, 1963, the Company makes regular deposits with certain insurance companies

for accounts controlled by each applicable employee in order to secure the employee’s retirement benefit obligation.

is fully relieved from any severance pay liability with respect to each such employee after it makes the payments on behalf of the employee.

The liability accrued in respect of these employees and the amounts funded, as of the respective agreement dates, are not reflected in

the Company balance sheet, as the amounts funded are not under the control and management of the Company and the pension or severance

pay risks have been irrevocably transferred to the applicable insurance companies (the “Contribution Plan”).

regard to the period before December 2013, the liability is funded in part from the purchase of insurance policies or by the establishment

of pension funds with dedicated deposits in the funds.

The amounts used to fund these liabilities are included in the balance sheets under

“Funds in respect of employee rights upon retirement”.

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued)

Employee severance benefits

Under the Israeli Severance Pay Law, 1963, the Company is required to make severance payments upon dismissal of an Israeli employee or upon termination of employment in certain other circumstances.

The severance payment liability to the employees located in Israel (based upon length of service and the latest monthly salary - one month’s salary for each year employed) is recorded on the Company’s balance sheet under “Liability for employee rights upon retirement.” The liability is recorded as if it had been payable at each balance sheet date on an undiscounted basis.

In accordance with Section 14 of the Israeli Severance Pay Law, 1963, the Company makes regular deposits with certain insurance companies for accounts controlled by each applicable employee in order to secure the employee’s retirement benefit obligation.

The Company is fully relieved from any severance pay liability with respect to each such employee after it makes the payments on behalf of the employee.

The liability accrued in respect of these employees and the amounts funded, as of the respective agreement dates, are not reflected in the Company balance sheet, as the amounts funded are not under the control and management of the Company and the pension or severance pay risks have been irrevocably transferred to the applicable insurance companies (the “Contribution Plan”).

For periods prior to December 2013, the liability was funded in part from the purchase of insurance policies or by the establishment of pension funds with dedicated deposits in the funds.

The amounts used to fund these liabilities are included in the balance sheets under “Funds in respect of employee rights upon retirement”.

These policies are the Company’s assets.

amounts of severance payment expenses were $ 132 and

for the years ended December 31, 2022 and 2021, respectively.

Company expects to contribute to insurance companies approximately $ 132

for the year ending December 31, 2023 in connection with its expected severance liabilities for that year.

The amounts of severance payment expenses were $ 128 and $ 132 for the years ended December 31, 2023 and 2022, respectively.

The Company expects to contribute to insurance companies approximately $ 128 for the year ending December 31, 2024 in connection with its expected severance liabilities for that year.

ENTERA BIO LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

dollars in thousands, except share and per share amounts )

2 - SIGNIFICANT ACCOUNTING POLICIES (continued)

Company determines if an arrangement is a lease at inception.

Balances related to operating leases are included in operating lease right-of-use

(“ROU”) assets and current and non-current operating lease liabilities in the consolidated balance sheets.

assets represent the Company’s right to use an underlying asset for the lease term and lease

liabilities represent the Company’s obligation to make lease payments arising from the lease.

Operating lease ROU assets and liabilities

are recognized as of the commencement date based on the present value of lease payments over the lease term.

Lease terms will include

options to extend or terminate the lease when it is reasonably certain that the Company will either exercise or not exercise the option

to renew or terminate the lease.

discount rate for the lease is the rate implicit in the lease unless that rate cannot be readily determined.

As the Company’s leases do not provide an implicit rate, the Company’s uses its estimated incremental borrowing rate based

on the information available at the commencement date in determining the present value of lease payments.

Lease expense for lease payments

is recognized on a straight-line basis over the lease term.

income is recognized on a straight-line basis over the expected lease term and is included in other income in our consolidated statements

of operations .

and equipment

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

Company’s property and equipment are depreciated using the straight-line method, which approximates

the pattern of usage, over the term of the estimated useful life, as follows :

improvements are amortized by the straight-line method over the shorter of (i) the expected lease term and (ii) the estimated useful life

of the improvements.

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued)

The Company determines if an arrangement is a lease at inception.

Balances related to operating leases are included in operating lease right-of-use (“ROU”) assets and current and non-current operating lease liabilities in the consolidated balance sheets.

ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease.

Operating lease ROU assets and liabilities are recognized as of the commencement date based on the present value of lease payments over the lease term.

Lease terms will include options to extend or terminate the lease when it is reasonably certain that the Company will either exercise or not exercise the option to renew or terminate the lease.

The discount rate for the lease is the rate implicit in the lease unless that rate cannot be readily determined.

As the Company’s leases do not provide an implicit rate, the Company’s uses its estimated incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments.

Lease expense for lease payments is recognized on a straight-line basis over the lease term.

Sublease income is recognized on a straight-line basis over the expected lease term and is included in other income in our consolidated statements of operations.

Property and equipment

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

The Company’s property and equipment are depreciated using the straight-line method, which approximates the pattern of usage, over the term of the estimated useful life, as follows:

Computer equipment

Office furniture

Laboratory equipment

Leasehold improvements are amortized by the straight-line method over the shorter of (i) the expected lease term and (ii) the estimated useful life of the improvements.

ENTERA BIO LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

dollars in thousands, except share and per share amounts )

2 - SIGNIFICANT ACCOUNTING POLICIES (continued)

Impairment of

long-lived assets

Company tests long-lived assets for impairment whenever events or changes in circumstances indicate

that the carrying amount of an asset may no longer be recoverable.

Recoverability of long-lived assets is measured by comparing the carrying

amount of the long-lived asset to the estimated undiscounted future cash flows expected to be generated by the asset.

If the sum of the

expected undiscounted cash flow is less than the carrying amount of the asset, the Company recognizes an impairment loss, which is the

excess of the carrying amount over the fair value of the asset, using the expected future discounted cash flows.

of December 31, 2022 and 2021, the Company did not recognize an impairment loss on its long-lived assets.

Company grants share options and restricted share units (“RSU”) (together

“Share-Based Compensation”) to its employees, directors and non-employees in consideration for services rendered .

Company accounts for Share-Based Compensation awards classified as equity awards, including share-based option awards and RSUs, using

grant-date fair value.

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued)

Impairment of long-lived assets

The Company tests long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may no longer be recoverable.

Recoverability of long-lived assets is measured by comparing the carrying amount of the long-lived asset to the estimated undiscounted future cash flows expected to be generated by the asset.

If the sum of the expected undiscounted cash flow is less than the carrying amount of the asset, the Company recognizes an impairment loss, which is the excess of the carrying amount over the fair value of the asset, using the expected future discounted cash flows

As of December 31, 2023 and 2022, the Company did not recognize an impairment loss on its long-lived assets.

Share-based compensation

The Company grants share options and restricted share units (“RSU”) (together “Share-Based Compensation”) to its employees, directors and non-employees in consideration for services rendered.

The Company accounts for Share-Based Compensation awards classified as equity awards, including share-based option awards and RSUs, using grant-date fair value.

The Company recognize the value of the award as an expense over the requisite service period.

Company applies ASU 2018-07 (Topic 718) that expands the scope of Topic 718 to include Share-Based Compensation transactions for acquiring

goods and services from non-employees.

Under the provision of the amendment, the Company measures share-based compensation to non-employees

in the same manner as share-based compensation to employees.

Company calculates the fair value of stock-based option awards on the date of grant using the Black-Scholes option pricing model.

option-pricing model requires a number of assumptions, of which the most significant are the expected share price volatility and the expected

The Company applies ASU 2018-07 (Topic 718) that expands the scope of Topic 718 to include Share-Based Compensation transactions for acquiring goods and services from non-employees.

Under the provision of the amendment, the Company measures share-based compensation to non-employees in the same manner as share-based compensation to employees.

The Company calculates the fair value of stock-based option awards on the date of grant using the Black-Scholes option pricing model.

The option-pricing model requires a number of assumptions, of which the most significant are the expected share price volatility and the expected option term.

The computation of expected volatility is based on the historical volatility of the Company’s ordinary shares.

expected option term is calculated using the simplified method, as the Company has concluded that its historical share option exercise

experience does not provide a reasonable basis to estimate expected option terms.

The interest rate for periods within the expected term

of an award is based on the U.S.

The expected option term is calculated using the simplified method, as the Company has concluded that its historical share option exercise experience does not provide a reasonable basis to estimate expected option terms.

The interest rate for periods within the expected term of an award is based on the U.S.

Treasury yield curve in effect at the time of grant.

The Company’s expected dividend rate is zero

because the Company does not currently pay cash dividends on its shares and does not anticipate doing so in the foreseeable future .

Company elected to recognize compensation costs for awards granted to employees and directors conditioned only on continued service

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

The Company has elected

to account for forfeitures as they occur .

The Company’s expected dividend rate is zero because the Company does not currently pay cash dividends on its shares and does not anticipate doing so in the foreseeable future.

The Company elected to recognize compensation costs for awards granted to employees and directors conditioned only on continued service that have a graded vesting schedule using the accelerated method based on the multiple-option award approach.

The Company has elected to account for forfeitures as they occur.

ENTERA BIO LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

dollars in thousands, except share and per share amounts )

2 - SIGNIFICANT ACCOUNTING POLICIES (continued)

and development expenses

and development expenses include costs directly attributable to the conduct of research and development

programs, including the cost of salaries, share-based compensation expenses, payroll taxes and other employee benefits, lab expenses,

consumable equipment and consulting fees.

All costs associated with research and developments are expensed as incurred .

received from the Israel Innovation Authority (the “IIA”) are recognized when the grant becomes receivable, provided

there is reasonable assurance that the Company will comply with the conditions attached to the grant and there is reasonable assurance

the grant will be received.

At the time grants are received, successful development of the related projects is not assured, therefore,

grants are deducted from the research and development expenses as the applicable costs are incurred, and presented in R&D expenses,

Company recognized revenue from the Amgen Agreement according to ASC 606, "Revenues from Contracts with Customers”.

signing of the Amgen Agreement in 2018, the Company did not have revenue transactions.

606 Revenue from Contracts with Customer introduces a five-step model for recognizing revenue from contracts with customers, as follows:

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued)

Research and development expenses

Research and development expenses include costs directly attributable to the conduct of research and development programs, including the cost of salaries, share-based compensation expenses, payroll taxes and other employee benefits, lab expenses, consumable equipment and consulting fees.

All costs associated with research and development are expensed as incurred.

Revenue recognition

On December 10, 2018, the Company entered into a research collaboration and license agreement with Amgen (the “Amgen Agreement”) for the use of the Company’s oral delivery platform in the field of inflammatory disease and other serious illnesses.

Pursuant to the Amgen Agreement, the Company and Amgen had agreed to use the Company’s proprietary drug delivery platform to develop oral formulations for one preclinical large molecule program that Amgen had selected.

Additionally, the Company had granted Amgen an exclusive, worldwide, sublicensable license under certain of its intellectual property relating to its drug delivery technology to develop, manufacture and commercialize the applicable products.

On May 2, 2023, the Company and Amgen agreed to terminate the Amgen Agreement in accordance with its terms, effective on such date.

Neither party incurred any termination penalty or fees in connection with the termination of the Amgen Agreement.

Prior to its termination, the Company recognized revenue from the Amgen Agreement according to ASC 606, "Revenues from Contracts with Customers”.

The Company recognized no revenue prior to entering into the Amgen Agreement.

ASC 606 Revenue from Contracts with Customer introduces a five-step model for recognizing revenue from contracts with customers, as follows:

Identify the contract with a customer.

3 unchanged sentences

Recognize revenue when (or as) the entity satisfies a performance obligation.

to ASC 606, a performance obligation is a promise to provide a distinct good or service or a series of distinct goods or services.

and services that are not distinct are bundled with other goods or services in the contract until a bundle of goods or services that is

distinct is created.

A good or service promised to a customer is distinct if the customer can benefit from the good or service either

on its own or together with other resources that are readily available to the customer and the entity’s promise to transfer the

good or service to the customer is separately identifiable from other promises in the contract.

granted to the customer that do not provide a material right to the customer that it would not receive without entering into the contract

do not give rise to performance obligations.

December 10, 2018, the Company entered into the Amgen Agreement for the use of the Company’s oral delivery platform in the field

of inflammatory diseases and other serious illnesses.

As part of the agreement, the Company received non-refundable and non-creditable

initial access payment of $ 725 from

Amgen in January 2019.

Company identified two performance obligations in the agreement:

1) License to use the Company's proprietary drug delivery platform and

2) pre-clinical research and development services (“pre-clinical R&D services”).

The preclinical R&D services include

discovery, research and design preclinical activities relating to the programs selected by Amgen.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

dollars in thousands, except share and per share amounts )

2 - SIGNIFICANT ACCOUNTING POLICIES (continued)

recognition (continued)

Company determined the license to the intellectual property to be a right to use that has significant standalone functionality separately

from the pre-clinical R&D services since the Company is not required to continue to support, develop or maintain the intellectual

property transferred and will not undertake any activities to change the standalone functionality of the intellectual property.

the license to the intellectual property is a distinct performance obligation and as such revenue is recognized at the point in time that

control of the license was transferred to Amgen on December 10, 2018.

attributed to the preclinical R&Ds services are recognized during the period of the pre-clinical R&D services, over time according

to the input model method on a cost-to-cost basis, since the customer benefits from the research and development services as the entity

performs the service.

Company evaluated the standalone selling price of the pre-clinical R&D services at $ 225 and

the right to use the intellectual property at $ 500 .

transaction price was comprised of fixed consideration and variable consideration (capped research and development reimbursements).

Under ASC 606, the consideration that the Company would be entitled to upon the achievement of contractual milestones, which are contingent

upon the occurrence of future events of development and commercial progress, are a form of variable consideration.

Variable consideration

is included in the transaction price if, in the Company’s judgment, it is highly probable that a significant future reversal of

cumulative revenue under the contract will not occur.

Estimates of variable consideration and determination of whether to include estimated

amounts in the transaction price are based largely on an assessment of the Company’s anticipated performance and all information

(historical, current and forecasted) that is reasonably available.

As of December 31, 2022, the Company did not recognize any revenues

from any potential milestone payments .

entity should recognize revenue for a sales-based or usage-based royalty promised in exchange for a license of intellectual property only

when (or as) the later of the following events occurs:

subsequent sale or usage occurs;

performance obligation to which some or all of the sales based or usage-based royalty has been allocated has been satisfied (or partially

royalties are payable based on future commercial sales, as defined in the agreement, which did not

occur as of the financial statements date, the Company did not recognize any revenues from royalties.

attributed to preclinical R&D services are recognized during the period of the pre-clinical R&D services according to the input

model method on a cost-to-cost basis .

2022 and 2021, the Company recorded revenues of $ 89

respectively, related to services provided under the Amgen Agreement.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

dollars in thousands, except share and per share amounts )

2 - SIGNIFICANT ACCOUNTING POLICIES (continued)

Deferred income

taxes are computed using the asset and liability method.

Under the asset and liability method, deferred income tax assets and liabilities

are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using

the currently enacted 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 .

in income taxes

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 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 is computed on the basis of the net loss, adjusted to recognize the effect of a down-round feature when it is triggered,

for the period, divided by the weighted average number of outstanding ordinary shares during the period.

loss per share is based upon the weighted average number of ordinary shares and of ordinary shares

equivalents outstanding when dilutive.

Ordinary share equivalents include outstanding stock options and warrants, which are included under

the treasury stock method when dilutive.

The calculation of diluted loss per share does not include options, RSUs and warrants, exercisable

into an aggregate of 6,255,235

shares and 6,517,102 shares

for the years ended December 31, 2022 and 2021, respectively, because the effect would have been anti-dilutive.

and other contingencies

Management applies

the guidance in ASC 450-20, “Loss Contingencies” when assessing losses resulting from contingencies.

If the assessment of

a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then

the estimated liability is recorded as accrued expenses in the Company’s consolidated financial statements .

costs incurred in connection with loss contingencies are expensed as incurred .

According to ASC 606, a performance obligation is a promise to provide a distinct good or service or a series of distinct goods or services.

Goods and services that are not distinct are bundled with other goods or services in the contract until a bundle of goods or services that is distinct is created.

A good or service promised to a customer is distinct if the customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer and the entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract.

ENTERA BIO LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

dollars in thousands, except share and per share amounts )

2 - SIGNIFICANT ACCOUNTING POLICIES (continued)

issued and recently adopted accounting pronouncements:

issued accounting pronouncements adopted

2021, the FASB issued ASU 2021-10 “Government Assistance (Topic 832)”, which requires annual disclosures that increase the

transparency of transactions involving government grants, including (1) the types of transactions, (2) the accounting for those transactions,

and (3) the effect of those transactions on an entity’s financial statements.

The amendments in this update are effective for financial

statements issued for annual periods beginning after December 15, 2021.

The adoption of this

guidance did not have material impact on the Company’s consolidated financial statements.

August 2020, the FASB issued ASU 2020-06 “Debt – Debt with Conversion and Other

Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815 – 40).”

This guidance simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible

instruments and contracts on an entity’s own equity.

The amendments to this guidance are effective for fiscal years beginning after

December 15, 2021, and interim periods within those fiscal years.

The Company early adopted this guidance effective January 1, 2022

and the impact of the adoption on the Consolidated financial statements was immaterial.

issued accounting pronouncements, not yet adopted

June 2016, the FASB issued ASU 2016-13 “Financial Instruments—Credit Losses—Measurement

of Credit Losses on Financial Instruments.” This guidance replaces the current incurred loss impairment methodology with a methodology

that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform

credit loss estimates.

guidance will be effective for Smaller Reporting Companies (SRCs, as defined by the SEC) for the fiscal year beginning on January 1, 2023,

including interim periods within that year.

The adoption of this guidance will not have material impact on the Company’s consolidated

financial statements.

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued)

Deferred taxes

Deferred income taxes are computed using the asset and liability method.

Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted 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.

Uncertainty in income taxes

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 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

Basic loss per share is computed on the basis of the net loss, adjusted to recognize the effect of a down-round feature when it is triggered, for the period, divided by the weighted average number of outstanding ordinary shares during the period.

Diluted loss per share is based upon the weighted average number of ordinary shares and of ordinary shares equivalents outstanding when dilutive.

Ordinary share equivalents include outstanding stock options and warrants, which are included under the treasury stock method when dilutive.

The calculation of diluted loss per share does not include options, and warrants, exercisable into an aggregate of 7,458,542 shares and 6,255,235 shares for the years ended December 31, 2023 and 2022, respectively, because the effect would have been anti-dilutive.

Legal and other contingencies

Management applies the guidance in ASC 450-20, “Loss Contingencies” when assessing losses resulting from contingencies.

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability is recorded as accrued expenses in the Company’s consolidated financial statements.

Legal costs incurred in connection with loss contingencies are expensed as incurred.

ENTERA BIO LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

dollars in thousands, except share and per share amounts )

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued)

When the Company issues freestanding instruments, it first analyzes the provisions of ASC 480, “Distinguishing Liabilities From Equity” (“ASC 480”) in order to determine whether the instrument should be classified as a liability, with subsequent changes in fair value recognized in the consolidated statements of operations in each period.

If the instrument is not within the scope of ASC 480, the Company further analyzes the provisions of ASC 815-10 in order to determine whether the instrument is considered indexed to the entity’s own stock, and qualifies for classification within equity.

All warrants issued by the Company have been classified within stockholders’ equity as “Additional paid-in capital”.

Newly issued and recently adopted accounting pronouncements:

Recently issued accounting pronouncements, not yet adopted

In December 2023, the FASB issued ASU 2023-09 “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures”.

This guidance is intended to enhance the transparency and decision-usefulness of income tax disclosures.

The amendments in ASU 2023-09 address investor requests for enhanced income tax information primarily through changes to disclosure regarding rate reconciliation and income taxes paid both in the United States and in foreign jurisdictions.

ASU 2023-09 is effective for fiscal years beginning after December 15, 2024 on a prospective basis.

Early adoption is permitted, with the option to apply the standard retrospectively.

The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements disclosures.

In November 2023, the FASB issued ASU 2023-07 “Segment Reporting:

Improvements to Reportable Segment Disclosures”.

This guidance expands public entities’ segment disclosures primarily by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable.

The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements disclosures.

NOTE 3 - OPERATING LEASES

The Company leases office and research and development

space under several agreements.

The Company leases office and research and development space under several agreements.

The annual lease consideration is a total of $ 172 and is linked to the Israeli consumer price index.

In April 2023, the Company extended the period of the lease agreement for an additional five years, expiring on June 30, 2028, with two options for early termination by the Company subject to a notice period.

The annual lease consideration is a total of $ 180 .

and is linked to the Israeli CPI.

The lease agreement expires on June 30, 2023.

of December 31, 2022, the Company provided bank guarantees of approximately $ 37 ,

in the aggregate, to secure the fulfillment of its obligations under the lease agreements.

Company has entered into operating lease agreements for vehicles used by its employees.

The lease periods are generally for three years

and the payments are linked to the Israeli CPI.

To secure the terms of the lease agreements, the Company has made certain deposits to

the leasing company, representing approximately three months of lease payments.

The Company recorded the related asset and obligation at the present value of lease payments over the expected terms, discounted using the lessee’s incremental borrowing rate, which was 13.84 %.

The Company lease agreements do not provide a readily determinable implicit rate.

Therefore, the Company estimated the incremental borrowing rate to discount the lease payments based on information available at lease commencement.

As of December 31, 2023, the Company provided bank guarantees of approximately $ 52 , in the aggregate, to secure the fulfillment of its obligations under the lease agreements.

ENTERA BIO LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

dollars in thousands, except share and per share amounts )

NOTE 3 - OPERATING LEASES (continued)

The Company has entered into operating lease agreements for vehicles used by its employees.

The lease periods are generally for three years, and the payments are linked to the Israeli consumer price index.

To secure the terms of the lease agreement, the Company has made certain deposits to the leasing company, representing approximately three months of lease payments.

The annual lease consideration is a total of $ 22 .

lease cost was as follows:

cash flow information related to leases was as follows:

cash flows from operating leases

balance sheet information related to operating leases was as follows:

lease right-of-use assets

lease liabilities

Weighted-average

remaining lease term (in years)

Weighted-average

discount rate

of December 31, 2022, the maturity of lease liabilities under our non-cancelable operating leases are

to be paid in 2023.

The lease cost was as follows:

December 31, 2023

December 31, 2022

Operating lease cost

Supplemental cash flow information related to leases was as follows:

December 31, 2023

December 31, 2022

Operating cash flows from operating leases

Supplemental balance sheet information related to operating leases was as follows:

December 31, 2023

December 31, 2022

Operating Leases

Operating lease right-of-use assets

Current lease liabilities

Non-current lease liabilities

Total lease liabilities

Weighted-average remaining lease term (in years)

Weighted-average discount rate

As of December 31, 2023, the maturity of lease liabilities under our non-cancelable operating leases are $ 390 to be paid in 2024- 2026.

As of December 31, 2023, 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

ENTERA BIO LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

dollars in thousands, except share and per share amounts )

4 - COMMITMENTS AND CONTINGENCIES

Commitment to pay royalties

to the government of Israel

Company is committed to pay royalties to the IIA on proceeds from sales of products in the research and development of which the Government

participates by way of grants.

NOTE 4 - COMMITMENTS AND CONTINGENCIES

Commitment to pay royalties to the government of Israel

The Company is committed to pay royalties to the Israel Innovation Authority (the “IIA”) on proceeds from sales of products for which the government provided grants with respect to the research and development underlying such products.

At the time the grants were received, successful development of the related project was not assumed.

the case of failure of the project that was partly financed by the IIA, the Company is not obligated to pay any such royalties.

the terms of the Company’s funding from the IIA, royalties are payable on sales of products developed from IIA funded projects of

during the first three years from commencement of revenues, 4 %

during the subsequent three years and 5 %

commencing the seventh year up to 100% of the amount of the grant received by the Company (dollar linked) plus annual interest based on

The amount that must be repaid may be increased to three times the amount of the grant received, and the rate of royalties may

be accelerated, if manufacturing of the products developed with the grant money is transferred outside of the State of Israel.

if the Company undergoes a change of control or otherwise transfers the technology “know-how” (as defined under the Research

Law) in or outside of Israel, the amount that must be repaid will be increased up to six times.

IIA has not yet declared the alternative benchmark rate to replace LIBOR.

However, the Company does not believe it will have significant

impact on the Company’s financial position or results of operations.

of December 31, 2022, the total royalty amount that would be payable by the Company to the IIA, before the interest and payments as described

above, was approximately $ 460 .

These grants were allocated to research and development.

the signing of the Amgen Agreement, the IIA determined that the Company should pay 5.38 %

of each payment received by the Company from Amgen on the license of Intellectual Property up to six times the grant received.

As of December

31, 2022, the Company had paid a total amount of $ 83

In the case of failure of the project that was partly financed by the IIA, the Company is not obligated to pay any such royalties.

Under the terms of the Company’s funding from the IIA, royalties are payable on sales of products developed from IIA funded projects in the amount of 3 % of sales during the first three years following commencement of revenues, 4 % during the subsequent three years and 5 % commencing the seventh year up to 100% of the amount of the grant received by the Company (dollar linked) plus annual interest based on SOFR.

The interest had been based on LIBOR and it changed to SOFR.

The amount that must be repaid may be increased to three times the amount of the grant received, and the rate of royalties may be accelerated, if manufacturing of the products developed with the grant money is transferred outside of the State of Israel.

In addition, if the Company undergoes a change of control or otherwise transfers the technology “know-how” (as defined under the Research Law) in or outside of Israel, the amount that must be repaid will be increased up to six times.

As of December 31, 2023, the total royalty amount that would be payable by the Company to the IIA, before interest and potential increases as described above, was approximately $ 460 .

These grants were allocated to research and development in prior periods.

Following the signing of the Amgen Agreement, the IIA determined that the Company was required to pay 5.38 % of each payment received by the Company from Amgen under the agreement in an amount up to six times the grant received.

As of December 31, 2023, the Company had paid a total of $ 83 to the IIA.

As of December 31, 2023, we had liability of $ 13 thousand to the IIA, which were paid in February 2024.

On June 1, 2010, D.N.A.

Biomedical Solutions Ltd.

("D.N.A.") and Oramed Ltd., ("Oramed") entered into a joint venture agreement, (the "Joint Venture Agreement") for the establishment of

Entera Bio Ltd.

("D.N.A.") and Oramed Ltd., ("Oramed") entered into a joint venture agreement, (the "Joint Venture Agreement") for the establishment of Entera Bio Ltd.

According to the Joint Venture Agreement each of D.N.A.

and Oramed acquired 50 %

of the Company's ordinary shares.

D.N.A invested $ 600

in the Company, and Oramed and the Company entered into a Patent License Agreement pursuant to which Oramed licensed to the Company one

of Oramed’s patents (the “IPR&D”).

February 22, 2011, Oramed and the Company entered into a patent transfer agreement, (the "Patent Transfer Agreement") that superseded

the Patent License Agreement, whereby Oramed assigned to the Company all of its rights, title and interest to its patent that Oramed licensed

to the Company in 2010, under certain conditions.

Under this agreement, the Company is obligated to pay Oramed royalties equal to 3 %

of its net revenues (as defined in the Patent Transfer Agreement).

and Oramed acquired 50 % of the Company's ordinary shares.

D.N.A invested $ 600 in the Company, and Oramed and the Company entered into a Patent License Agreement pursuant to which Oramed licensed to the Company one of Oramed’s patents (the “IPR&D”).

On February 22, 2011, Oramed and the Company entered into a patent transfer agreement, (the "Patent Transfer Agreement") that superseded the Patent License Agreement, whereby Oramed assigned to the Company all of its rights, title and interest to its patent that Oramed licensed to the Company in 2010, under certain conditions.

Under this agreement, the Company is obligated to pay Oramed royalties equal to 3 % of its net revenues (as defined in the Patent Transfer Agreement).

In September 2023, the Company entered into a research collaboration agreement with OPKO Biologics, Inc., a subsidiary of OPKO.

Under the terms of this agreement, OPKO has agreed to supply its proprietary long-acting GLP-2 peptide and certain Oxyntomodulin (OXM) analogs for the development of oral tablet formulations using the Company’s proprietary oral delivery technology.

The Company and OPKO have each agreed to be responsible for specific phases of development of the two oral peptides to the point of demonstrated in vivo feasibility.

Work under this agreement commenced in the fourth quarter of 2023;

therefore there was no material financial impact as of December 31, 2023.

ENTERA BIO LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

dollars in thousands, except share and per share amounts )

5 - SHARE CAPITAL

the Company’s ordinary shares

ordinary share is entitled to one

The holder of an ordinary shares is also entitled to receive dividends whenever funds are legally available, when

and if declared by the Board of Directors.

holder of an ordinary share also has the right to receive upon liquidation of the Company, a sum equal to the nominal value of such share,

and if a surplus per share remains, to receive such surplus, subject to the rights conferred on any class of shares which may be issued

in the future.

NOTE 5 - SHARE CAPITAL

Rights of the Company’s ordinary shares

Each ordinary share is entitled to one vote .

The holder of an ordinary shares is also entitled to receive dividends whenever funds are legally available, when and if declared by the Board of Directors.

A holder of an ordinary share also has the right to receive upon liquidation of the Company, a sum equal to the nominal value of such share, and if a surplus per share remains, to receive such surplus, subject to the rights conferred on any class of shares which may be issued in the future.

Since its inception, the Company has not declared any dividends.

share capital:

connection with the Company’s initial public offering (“IPO”) in July 2018, the Company issued 1,400,000

IPO warrants to purchase 700,000

ordinary shares, and these warrants have been listed for trading on the Nasdaq Capital Market since August 12, 2018.

The IPO warrants

were immediately exercisable at an initial exercise price of $ 8.40

per ordinary share for a period of five

years , unless earlier repurchased by the Company under "Fundamental Transactions” as described in the warrant agreement

or earlier expired as described in the warrant agreement.

exercise price and number of ordinary shares issuable upon exercise of each warrant are subject to standard adjustments.

subject to certain exceptions, the exercise price was subject to reduction if, within two

years following the date of original issuance of the warrants, which ended in July 2020, the Company sold or granted any

warrant or option at an effective price per share of less than $ 8.00

(as adjusted in proportion with any adjustments made from time to time), based on a weighted average, as described in the warrant agreement.

As described in note 5b below, the Company completed a financing round during such two-year period at a price per share lower than the

$8.00, therefore, the exercise price of these warrants adjusted to $ 5.85

the IPO completion date, both of the instruments (warrants and shares) were classified as equity instruments as the warrants are considered

indexed to the entity's own stock based on the provision of ASC 815.

In March 2021, 4,500

IPO warrants were exercised into 2,250

ordinary shares for total consideration of $ 13

at an exercise price of $ 5.85

per ordinary share.

of the December 31, 2022 there were 1,395,500

traded warrants to purchase 697,750

ordinary shares outstanding with an exercise price of $ 5.85 .

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

dollars in thousands, except share and per share amounts )

NOTE 5 - SHARE CAPITAL (continued)

In December 2019 and February 2020,

the Company entered into subscription agreement with a selected group of accredited investors for the private placement of 6,047,706

ordinary shares for aggregate subscription proceeds to the Company of $ 14.3

million at a price of $ 2.37

In addition, the Company granted 3,023,871

warrants, exercisable over a three-year

period from the date of issuance to purchase up to 3,023,871

ordinary shares at a per share exercise price of $ 2.96

(“Investors Warrants”).

In addition, the exercise price was subject to reduction if, within one year of the date of original

issuance of the warrants which ended in December 2020, the Company issued ordinary shares at an effective price per share less than $ 2.96 .

the closing of the offering, the Company issued to a broker-dealer 184,515

warrants and 92,257

warrants with per share exercise prices of $ 2.37

respectively (“Broker Warrants”).

2020, upon issuance of shares through the Company’s At-the-market equity program at a price per share lower than the exercise price,

the exercise price of the Investors Warrants and the Broker Warrants adjusted to $ 1.05 .

On April 21, 2021, upon satisfaction of the sale price condition pursuant to the subscription agreement,

the Company’s Board of Directors elected to accelerate the termination date of the Investors Warrants and Broker Warrants.

In accordance

with the terms of the applicable agreements, the holders had the opportunity to exercise their warrants until June 23, 2021, following

which any unexercised warrants would terminate.

June 23, 2021, all warrants holders exercised 3,300,645

warrants into 3,172,800

ordinary shares, either through purchase or a cashless exercise.

The total consideration from the exercise of these warrants was $ 3,145

at an exercise price of $ 1.05

of December 31, 2021, all Investors Warrants and Broker Warrants had been exercised and none remain outstanding.

On July 4, 2020, the Company filed

a primary registration statement on form F-3 and established an at-the-market equity program (the " 2020 ATM Program") that allowed the

Company to issue up to $ 13.9

million of ordinary shares, at the Company’s discretion.

Distributions of the ordinary shares through 2020 ATM Program were made

pursuant to the terms of an equity distribution agreement dated July 13, 2020, among the Company and Canaccord Genuity LLC (the "Agent").

2020, the Company issued 2,802,731

ordinary shares pursuant to the 2020 ATM Program for net proceeds of $ 3.2

million at a weighted average price of $ 1.27

per ordinary share.

In 2021, the Company issued an additional 2,546,265

ordinary shares pursuant to the 2020 ATM Program for net proceeds of $ 9.9

million at a weighted average price of $ 3.99

per ordinary share.

On May 7, 2021, the Company entered

into a new at-the-market equity program (the "2021 ATM Program") that allowed the Company to issue up to additional five

million ordinary shares, at the Company's discretion.

Changes in share capital:

In connection with the Company’s initial public offering (“IPO”) in July 2018, the Company issued 1,400,000 IPO warrants to purchase 700,000 ordinary shares, and these warrants were listed for trading on Nasdaq Capital Market (“Nasdaq”) on August 12, 2018.

The IPO warrants were immediately exercisable at an initial exercise price of $ 8.40 per ordinary share for a period of five years , unless earlier repurchased by the Company as described in the warrant agreement.

The IPO warrants expired on July 2, 2023, in accordance with their original terms, and Nasdaq removed them from listing.

On September 2, 2022, the Company entered into a sales agreement with SVB Securities LLC, as sales agent, to implement an ATM program under which the Company may from time to time offer and sell up to 5,000,000 Ordinary Shares (the “SVB ATM Program”).

During the year ended December 31, 2023, the Company issued 4,030 ordinary shares pursuant to the SVB ATM Program for net proceeds of $ 5 at a weighted average price of $ 1.16 per ordinary share.

On December 20, 2023, the Company entered into a securities purchase agreement in connection with a private offering (the "2023 PIPE") with certain existing and new investors, including the Company's Chairman of the Board and the Chief Executive Officer (collectively, the "Investors") for the private placement of 7,916,879 units at a purchase price of $ 0.835 per unit, each unit consisting of (i) one ordinary share and (ii) one warrant to purchase one ordinary share (each an “ Investor Warrant”).

The Company received aggregate proceeds of approximately $ 6.6 million before expenses.

Certain Investors elected to receive pre-funded warrants (the “Pre-Funded Warrants”) in lieu of ordinary shares, as such warrants may not be exercised if the aggregate number of ordinary shares beneficially owned by the holder thereof would exceed 4.99 % or 9.99 %, as applicable, immediately after exercise thereof.

The 2023 PIPE closed on December 22, 2023, and the Company issued 6,662,389 ordinary shares, 1,254,490 Pre-Funded Warrants and 7,916,879 Investors Warrants.

Each Pre-Funded Warrant has an exercise price of NIS 0.0000769 per ordinary share, is immediately exercisable and may be exercised at any time and has no expiration date and is subject to customary adjustments.

ENTERA BIO LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1 unchanged sentence

NOTE 5 - SHARE CAPITAL (continued)

Distributions

of the ordinary shares through the 2021 ATM Program were made pursuant to the terms of an equity distribution agreement dated May 7, 2021

among the Company and B.

Riley Securities, Inc.

In June and July 2021, the Company

issued an aggregate of 1,840,463

ordinary shares pursuant to the 2021 ATM Program for net proceeds of $ 12.1

million at a weighted average price of $ 6.74

per ordinary share.

During the year ended December 31,

2021, several employees and service providers exercised 177,711

options into 177,711

ordinary shares for a total consideration of $ 418

at a weighted average price of $ 2.54

per ordinary share.

During the year ended December 31,

2022, one employee exercised 5,511

options into 5,511

ordinary shares for a total consideration of $ 13

at a price of $ 2.14

per ordinary share.

Each Investor Warrant has an exercise price of $ 1.00 per share, is immediately exercisable, and expires five years from the date of issuance, and is subject to customary adjustments.

The Company accounted for the Investors Warrant as a component of permanent equity, as part of Additional Paid in Capital.

The Investor Warrants are considered a separate instrument and they are indexed to the entity’s own stock based on the provision of ASC 815.

The Chairman of the Board and the Chief Executive Officer participated in the 2023 PIPE on the same terms and subject to the same conditions as all other Investors.

In connection therewith, the Company entered into a placement agency agreement with a registered U.S.

broker-dealer (the “Broker”), pursuant to which the Broker was entitled to the following consideration:

A cash fee equal to 10 % of the total proceeds paid by subscribers introduced by the Broker.

A cash fee equal to 5 % of the total proceeds paid by other subscribers that participated in the private placement.

Five-year warrants to purchase 487,496 ordinary shares, representing 10% of the ordinary shares issued to subscribers introduced by the Broker, at a per share exercise price of $ 0.71 (the “Broker Warrants”).

In addition, the Company entered into a finder agreement with a private non-U.S.

finder (the “Finder”), pursuant to which the Finder was entitled to a cash fee equal to 5 % of total proceeds paid by subscribers introduced by the Finder, as well as five-year warrants to purchase 179,640 ordinary shares, representing 10% of the ordinary shares issued to the subscribers introduced by the Finder, at a per share exercise price of $ 0.71 (the “Finder Warrants”).

The Pre-Funded Warrants, Investors Warrants, Broker Warrants and Finder Warrants (collectively, the “Warrants”) were classified as a component of permanent equity and recorded as part of the Additional Paid in Capital based on the provision of ASC 815.

The Warrants are freestanding financial instruments that are legally detachable and separately exercisable from the shares of common stock with which they were issued, are immediately exercisable, do not embody an obligation for the Company to repurchase its shares, and permit the Investor to receive a fixed number of shares of common stock upon exercise .

The Company had transaction costs of approximately $ 1.0 million, out of which $ 267 was stock-based compensation expenses due to issuance of Broker Warrants and Finder Warrants.

ENTERA BIO LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

dollars in thousands, except share and per share amounts )

6 - SHARE-BASED COMPENSATION

NOTE 6 - SHARE-BASED COMPENSATION

Share-based compensation plan

March 17, 2013, the Company's Board of Directors approved a Share Incentive Plan (the “2013 Plan”).

Under the 2013 Plan, the

Company reserves specified number of ordinary shares for allocation to stock options (each, an “Option”), restricted share

units, restricted share awards and performance-based awards, that had been awarded to employees and non-employees under the 2013 Plan.

On March 17, 2013, the Company's Board of Directors approved a Share Incentive Plan (the “2013 Plan”).

Under the 2013 Plan, the Company reserves specified number of ordinary shares for allocation to stock options (each, an “Option”), restricted share units, restricted share awards and performance-based awards, that had been awarded to employees and non-employees under the 2013 Plan.

Each Option is exercisable for one ordinary share.

Option granted under the 2013 Plan that is not exercised within six years from the date upon which it becomes exercisable will expire.

Any Option granted under the 2013 Plan that is not exercised within six years from the date upon which it becomes exercisable will expire.

Since adopting the 2018 Plan (as defined below), the Company has not granted any awards under the 2013 Plan.

July 2, 2018, the Company's Board of Directors and shareholders of the Company approved a new Share Incentive Plan (the “2018 Plan”)

and reserved 1,371,398

ordinary shares for allocation to stock options (each, a "2018 Plan Option"), restricted share units, restricted share awards and performance-based

awards, to employees and non-employees for issuance under the 2018 Plan.

On July 2, 2018, the Company's Board of Directors and shareholders of the Company approved a new Share Incentive Plan (the “2018 Plan”) and reserved 1,371,398 ordinary shares for allocation to stock options (each, a "2018 Plan Option"), restricted share units, restricted share awards and performance-based awards, to employees and non-employees for issuance under the 2018 Plan.

Each 2018 Plan Option is exercisable for one ordinary share.

2018 Plan Option that is not exercised within 10 years from the date of grant will expire.

2018 Plan Options granted to employees are subject to the terms stipulated by section 102(b)(2) of the Israeli Income Tax Ordinance (the

“Ordinance”).

According to these provisions, the Company will not be allowed to claim as an expense for tax purposes the amounts

credited to the employees as a capital gain benefit in respect of the options granted.

Plan Options granted to related parties or non-employees of the Company are governed by Section 3(i) of the Ordinance or Non-Qualified

Share Options ("NSO").

The Company will be allowed to claim as an expense for tax purposes in the year in which the related parties or

non-employees exercised the options into shares.

of December 31, 2022, 922,080

ordinary shares remain available for future grants under the 2018 Plan.

January 2, 2023, the Company’s Board of Directors approved an increase of 1,440,496

ordinary shares that may be issued under the Company’s 2018 Plan pursuant of the terms of the 2018 Plan,

Any 2018 Plan Option that is not exercised within 10 years from the date of grant will expire.

The 2018 Plan Options granted to employees are subject to the terms stipulated by section 102(b)(2) of the Israeli Income Tax Ordinance (the “Ordinance”).

According to these provisions, the Company will not be allowed to claim as an expense for tax purposes the amounts credited to the employees as a capital gain benefit in respect of the options granted.

2018 Plan Options granted to related parties or non-employees of the Company are governed by Section 3(i) of the Ordinance or Non-Qualified Share Options ("NSO").

The Company will be allowed to claim as an expense for tax purposes in the year in which the related parties or non-employees exercised the options into shares.

As of December 31, 2023, 638,598 ordinary shares remained available for future grants under the 2018 Plan.

On January 1, 2024, the Company’s Board of Directors approved an increase of 1,773,817 ordinary shares that may be issued under the Company’s 2018 Plan pursuant of the terms of the 2018 Plan.

ENTERA BIO LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

dollars in thousands, except share and per share amounts )

6 - SHARE-BASED COMPENSATION (continued)

share-based compensation

grants to employees and directors:

On January 4, 2021, options to purchase 1,314,218

ordinary shares were granted to the Company’s former Chief Executive Officer, Dr.

Spiros Jamas with an exercise price of $ 1.24

Prior to the terms of Dr.

Jamas’ separation agreement (as described below), the options were to vest over four years

from the date of grant;

vest on the first anniversary of the date of grant and the remaining 75 %

of the option to vest in twelve equal quarterly installments following the first anniversary of the grant date.

The grant was subject

to the approval by the Company’s shareholders, which approved the grant in March 2021.

The fair value of the options at the date

of grant was $ 1,320 .

July 15, 2022, the Company entered into a mutual separation agreement with Dr.

NOTE 6 - SHARE-BASED COMPENSATION (continued)

share-based compensation grants to employees and directors:

The below table summarizes the options grants to employees and directors during the years ended December 31, 2023 and 2022:

Exercise price

Vesting period

Fair value at the

Expiration period

For the year ended December 31, 2023

Employees and

Executive Officers

Quarterly over a period of one year

Quarterly over a period of three years

For the year ended December 31, 2022

Employees and

Executive Officers

$ 1.40 - $ 2.86

Quarterly over a period of one year

Quarterly over a period of three years

(1) 25% vest on the first anniversary of the date of grant and the remaining 75% of the option vest in twelve equal quarterly installments following the first anniversary of the grant date.

Upon the occurrence of a Triggering Event (as defined below) and subject to the approval of the Board of Directors, our CEO will be granted additional options to purchases 200,000 ordinary shares.

The exercise price will be determined at the time of the Board of Directors’ approval.

"Triggering Event" means the earlier of the following events:

(i) the execution by the Company of a binding strategic or partnership agreement with a strategic partner to fund the Company's Phase III FDA Trial;

or (b) raising sufficient funding to complete the Company's Phase III FDA Trial, in each case as such event is approved by the Board of Directors.

As of December 31, 2023, none of these events occurred.

On July 15, 2022, the Company entered into a mutual separation agreement with the Company’s former Chief Executive Officer, Dr.

Pursuant to the separation agreement, Dr.

received the following benefits:

a one-time lump sum payment of his annual base salary for a period of 13 months, for a total gross amount equal to $ 412 ;

and (ii) an extension of the exercise period for the vested portion of the options granted on January 4, 2021, based on the award original

terms, representing an aggregate of 492,832

ordinary shares, through the end of a two-year period commencing on July 15,

Jamas received the following benefits:

(i) a one-time lump sum payment of his annual base salary for a period of 13 months, for a total gross amount equal to $ 412 ;

and (ii) an extension of the exercise period for the vested portion of the options granted on January 4, 2021, based on the award original terms, representing an aggregate of 492,832 ordinary shares, through the end of a two-year period commencing on July 15, 2022.

Effective July 15, 2022, upon termination of the employment agreement with Dr.

Jamas, the remaining 821,386

unvested options were forfeited and recognized as a reverse of expense of $ 457

in general and administrative expenses.

On April 7, 2021, the Company’s Board of

Directors approved the following option grants:

grants to purchase 213,000

ordinary shares to certain employees and 70,000

options granted to service providers, with an exercise price of $ 3.61

The options vest over four

years from the date of grant;

vest on the first anniversary of the date of grant and the remaining 75 %

of the option will vest in twelve equal quarterly installments following the first anniversary of the grant date.

The fair value of the

options at the date of grant was $ 646 .

grant to purchase 33,368

ordinary shares to a non-executive director of the Company, with an exercise price of $ 3.61 .

The options will vest over three

years in twelve equal quarterly instalments starting on the vesting commencement date.

These options were subject to the

approval of the shareholders of the Company, which was approved on October 4, 2021.

The fair value of the options at the shareholders'

approval date was $ 104 .

On April 21, 2021, options to purchase 345,000

ordinary shares were granted to several executive officers of the Company, with an exercise price of $ 3.15 .

The options vest over four

years from the date of grant;

vest on the first anniversary of the date of grant and the remaining 75 %

of the option will vest in twelve equal quarterly installments following the first anniversary of the grant date.

These options were subject

to the approval of the shareholders of the Company, which was approved on October 4, 2021.

The fair value of the options at the shareholders'

approval date was $ 1,140 .

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

dollars in thousands, except share and per share amounts )

NOTE 6 - SHARE-BASED COMPENSATION

On August 23, 2021, the Company’s Board

of Directors approved the following option grants which were approved by the shareholders of the Company on October 4, 2021.

Grants of options to purchase ordinary shares

with a total fair value 0f $ 195

for each of the seven non-executive board members on January 1, 2022.

The options will vest over three

years in twelve equal quarterly instalments starting on January 1, 2022 the vesting commencement date.

On January 1, 2022,

which is considered the awards grant date, the Company granted 752,899

ordinary shares to non-executive directors with an exercise price of $ 2.815

Grants of options to purchase ordinary shares

with a total fair value 0f $ 65

for each of the seven non-executive board members on January 1, 2022.

The options will vest over one

year in four equal quarterly instalments starting on January 1, 2022 the vesting commencement date.

On January 1, 2022,

which is considered the awards grant date, the Company granted 250,964

ordinary shares to non-executive directors with an exercise price of $ 2.815

On March 31, 2022, the Company’s Board of

Directors approved the following option grants:

Options to purchase 80,000

ordinary shares to an executive officer and a service provider, in each case, with an exercise price of $ 2.86

The fair value of the options was $ 147 .

Options to purchase

ordinary shares to certain executive officers with an exercise price of $ 2.86

This grant was subject to shareholders' approval, which was obtained at a meeting of the Company’s shareholders held

on September 7, 2022.

The fair value of the options was $ 37 .

options vest over four

years from the date of grant;

25% vest on the first anniversary of the date of grant and the remaining 75% of the option

will vest in twelve equal quarterly installments following the first anniversary of the grant date.

On April 28, 2022, the Company’s Board of

Directors approved option grants to purchase 220,000

ordinary shares to employees with an exercise price of $ 2.57

options vest over four

years from the date of grant;

25% vest on the first anniversary of the date of grant and the remaining 75% of the option

will vest in twelve equal quarterly installments following the first anniversary of the grant date.

The fair value of

the options was $ 364 .

On May 11, 2022, the Company’s Board of

Directors approved a grant of options to purchase 500,000

ordinary shares to Ms.

Miranda Toledano, who was serving as the Company’s Chief Financial Officer at the time of the grant.

Toledano has since been appointed the Company’s Chief Executive Officer (as described in Note 6(2)l below).

grant was subject to shareholders' approval, which was obtained at a meeting of the Company’s shareholders held on September 7,

These options have an exercise price of $ 2.00

per share and vest over four

years from the date of grant;

25% vest on the first anniversary of the date of grant and the remaining 75% of the option

will vest in twelve equal quarterly installments following the first anniversary of the grant date.

The fair value of

the options was $ 390 .

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

dollars in thousands, except share and per share amounts )

NOTE 6 - SHARE-BASED COMPENSATION

On July 15, 2022, the Company’s Board of

Directors appointed Ms.

Miranda Toledano as the Company’s Chief Executive Officer and approved a grant of options to purchase 600,000

ordinary shares at an exercise price of $ 1.40

per share, which are in addition to the options described in note 6(2)k above.

grant was subject to shareholders' approval, which was obtained at a meeting of the Company’s shareholders held on September 7,

The options vest over four

years from the date of grant;

25% vest on the first anniversary of the date of grant and the remaining 75% of the option

will vest in twelve equal quarterly installments following the first anniversary of the applicable grant date.

value of the options was $ 524 .

addition, upon the occurrence of a Triggering Event (as defined below) and subject to the approval of the Board of Directors, Ms.

will be granted additional options to purchases 200,000

ordinary shares.

The exercise price will be determined at the time of the Board of Directors’ approval.

Event" means the earlier of the following events:

(i) the execution by the Company of a binding strategic or partnership agreement with

a strategic partner to fund the Company's Phase III FDA Trial;

or (b) raising sufficient funding to complete the Company's Phase III FDA

Trial, in each case as such event is approved by the Board of Directors.

On June 15, 2022, the Company entered into a separation

agreement with Dr.

Phillip Schwartz, the Company’s former President of R&D, under which Dr.

Schwartz agreed to continue to provide

services to the Company until July 21, 2022 (the “Separation Date”).

Pursuant to the terms of the separation agreement, which

were approved by the Company’s shareholders on September 7, 2022, Dr.

Schwartz received a full acceleration of his unvested options,

as of the Separation Date, to purchase 68,750

ordinary shares granted in April 2021 that otherwise would have been forfeited.

These options, together with 31,250

already vested options granted in April 2021 and 357,500

already vested options to purchase ordinary shares granted in 2017, will be exercisable for a period of 10

years from their respective initial grant dates .

acceleration described above was recognized as a "Type III" modification;

therefore, on the shareholder approval date, the Company recognized

the incremental costs of unvested options based on the fair value of the options on such date.

In addition, the extension of the exercise

period for the vested awards was recognized as a "Type I" modification.

The total expense amount was $ 112

thousand, which was classified as additional share-based compensation costs in the research and development expenses.

addition, the separation agreement provides for the following payments to Dr.

Schwartz, all of which would have otherwise been payable

in accordance with either Israeli law or pursuant to his existing employment agreement:

a one-time cash separation payment in an amount

equal to NIS 537,600

(approximately $ 156 )

and additional payments of NIS 737,771

(approximately $ 214 )

in respect of all other ongoing accrued benefits, subject to any mandatory deductions.

The foregoing payments were recognized in the research

and development expenses.

Jamas, the remaining 821,386 unvested options were forfeited and recognized as a reverse of expense of $ 457 in general and administrative expenses.

ENTERA BIO LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

dollars in thousands, except share and per share amounts )

6 - S HARE-BASED COMPENSATION (continued)

fair value of each option granted is estimated at the date of grant using the Black-Scholes option-pricing model, with the following weighted

average assumptions:

NOTE 6 - SHARE-BASED COMPENSATION (continued)

On June 15, 2022, the Company entered into a separation agreement with Dr.

Phillip Schwartz, a former executive officer of the Company, under which Dr.

Schwartz agreed to continue to provide services to the Company until July 21, 2022 (the “Separation Date”).

Pursuant to the terms of the separation agreement, which were approved by the Company’s shareholders on September 7, 2022, Dr.

Schwartz received a full acceleration of his unvested options, as of the Separation Date, to purchase 68,750 ordinary shares granted in April 2021 that otherwise would have been forfeited.

These options, together with 31,250 already vested options granted in April 2021 and 357,500 already vested options to purchase ordinary shares granted in 2017, will be exercisable for a period of 10 years from their respective initial grant dates.

The acceleration described above was recognized as a "Type III" modification;

therefore, on the shareholder approval date, the Company recognized the incremental costs of unvested options based on the fair value of the options on such date.

In addition, the extension of the exercise period for the vested awards was recognized as a "Type I" modification.

The total expense amount was $ 112 thousand, which was classified as additional share-based compensation costs in the research and development expenses.

In addition, the separation agreement provides for the following payments to Dr.

Schwartz, all of which would have otherwise been payable in accordance with either Israeli law or pursuant to his existing employment agreement:

a one-time cash separation payment in an amount equal to NIS 537,600 (approximately $ 156 ) and additional payments of NIS 737,771 (approximately $ 214 ) in respect of all other ongoing accrued benefits, subject to any mandatory deductions.

The foregoing payments were recognized in the research and development expenses.

The fair value of each option granted is estimated at the date of grant using the Black-Scholes option-pricing model, with the following weighted average assumptions:

Exercise price

$ 0.73 -$ 0.89

$ 1.40 -$ 2.86

interest rate

Dividend yield

Expected volatility

Risk-free interest rate

3.58 %- 4.37 %

1.35 %- 3.36 %

life - in years

at beginning of the year

at end of the year

Expected life - in years

Number of options

Weighted average exercise price

Number of options

Weighted average exercise price

Outstanding at beginning of the year

Outstanding at end of the year

Exercisable at end of the year

ENTERA BIO LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

dollars in thousands, except share and per share amounts )

6 - SHARE-BASED COMPENSATION (continued )

following tables summarizes information concerning outstanding and exercisable options as of December 31, 2022, in terms of ordinary shares:

aggregate intrinsic value of the total of the outstanding and exercisable options as of December

31, 2022, is $ 1 .

following table illustrates the effect of share-based compensation on

the statements of operations:

and development expenses

and administrative

NOTE 6 - SHARE-BASED COMPENSATION (continued)

The following tables summarizes information concerning outstanding and exercisable options as of December 31, 2023, in terms of ordinary shares for which the options may be exercised:

December 31, 2023

Options outstanding

Options exercisable

The aggregate intrinsic value of the total of the outstanding and exercisable options as of December 31, 2023 is $ 0 .

The following table illustrates the effect of share-based compensation on the statements of operations:

Cost of revenues

Research and development expenses

General and administrative

ENTERA BIO LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

dollars in thousands, except share and per share amounts )

7 - INCOME TAX

NOTE 7 - INCOME TAX

Corporate tax rate

2 unchanged sentences

is taxed separately under the U.S.

tax laws at a tax rate of 29 %

(Federal and state tax)

for tax purposes carried forward to future years

balance of carryforward losses as of December 31, 2022 and 2021 are approximately $ 67.1 million

and $ 56.1 million,

respectively.

Israeli tax law, tax loss carry forward have no expiration date.

Company and its subsidiary have tax assessments that are considered to be final through tax year 2017.

(income) before income taxes is composed of the following

ended December 31

loss before taxes

Income tax expense (benefit):

ended December 31

current income tax

deferred income taxes

income tax expense (benefit)

tax laws at a tax rate of 29 % (federal and state tax)

Losses for tax purposes carried forward to future years

The balance of carryforward losses as of December 31, 2023 and 2022 are approximately $ 75.8 million and $ 67.1 million, respectively.

Under Israeli tax law, tax loss carry-forward have no expiration date.

Tax assessments

The Company and its subsidiary have tax assessments that are considered to be final through tax year 2018.

Loss (income) before income taxes is composed of the following:

Year ended December 31

Entera Bio Ltd.

Entera Bio Inc.

Total loss before taxes

Income tax expense:

Year ended December 31

Total current income tax

Deferred income taxes - subsidiary

Total deferred income taxes

Total income tax expense

ENTERA BIO LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

dollars in thousands, except share and per share amounts )

7 - INCOME TAX (continued)

operating loss carry forward

and development

deferred tax assets before valuation allowance

NOTE 7 - INCOME TAX (continued)

Deferred income taxes

Deferred tax assets:

The Company has classified the net deferred tax assets as

In assessing the likelihood of realizing deferred tax assets, management considers whether it is more likely than not that

some portion or all of the deferred tax assets will not be realized.

The ultimate realization of deferred tax assets is dependent upon

the generation of future taxable income during the periods in which those temporary differences and carry forward losses become deductible.

Based on the taxable loss in the Israel, management believes it was more likely than not that the deferred tax assets will not be realized

in the Israel and believes it was more likely than not that deferred tax assets will be realized for the U.S.

of valuation allowance:

at January 1, 2021

at January 1, 2022

at December 31, 2022

Net operating loss carry forward

Research and development

Share-based compensation

Net deferred tax assets before valuation allowance

Valuation allowance

Net deferred tax assets

In assessing the likelihood of realizing deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences and carry forward losses become deductible.

Based on the taxable loss in the Israel, management believes it was more likely than not that the deferred tax assets will not be realized in the Israel and believes it was more likely than not that deferred tax assets will be realized for the U.S.

Roll-forward of valuation allowance:

Balance at January 1, 2022

Balance at January 1, 2023

Balance at December 31, 2023

Reconciliation of theoretical tax expenses to actual expenses

The primary difference between the statutory tax rate of the Company and the effective rate results virtually from the changes in valuation allowance in respect of carry forward tax losses and research and development expenses due to the uncertainty of the realization of such tax benefits.

Uncertain tax positions

As of December 31, 2023 and 2022, the Company does not have a provision for uncertain tax positions as existing uncertain tax positions as, based on the technical merits, they are not more likely than not to be sustained.

ENTERA BIO LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

dollars in thousands, except share and per share amounts )

NOTE 7 - INCOME TAX (continued)

Reconciliation of theoretical tax expenses

to actual expenses

primary difference between the statutory tax rate of the Company and the effective rate results virtually from the changes in valuation

allowance in respect of carry forward tax losses and research and development expenses due to the uncertainty of the realization of such

tax benefits.

tax positions

of December 31, 2022 and 2021, the Company does not have a provision for uncertain tax positions.

8 - SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION:

expenses and other payables:

and employees related

9 - SUBSEQUENT EVENT

On January 2, 2023, 534,246

options to purchase ordinary shares were granted to six non-executive board members with an exercise price of $ 0.73

The options will vest over one

year in four equal quarterly installments starting on January 1, 2023.

This grant was approved by the shareholders of

the Company on October 4, 2021.

IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

AND PROCEDURES

of Disclosure Controls and Procedures

management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our

disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act and regulations promulgated

thereunder) as of December 31, 2022, which we refer to as the Evaluation Date.

Based on such evaluation, those officers have concluded

that, as of the Evaluation Date, our disclosure controls and procedures were effective.

Report on Internal Control over Financial Reporting

management, under the supervision of our Chief Executive Officer and Chief Financial Officer, is responsible for establishing and maintaining

adequate internal control over our financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act.

The Company’s

internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial

reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Internal control over financial reporting includes policies and procedures that:

pertain to the maintenance of records that in

reasonable detail accurately and fairly reflect our transactions and asset dispositions;

provide reasonable assurance that transactions

are recorded as necessary to permit the preparation of our financial statements in accordance with generally accepted accounting principles;

provide reasonable assurance that receipts and

expenditures are made only in accordance with authorizations of our management and board of directors (as appropriate);

provide reasonable assurance regarding the prevention

or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on our financial statements.

to its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

In addition, projections

of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in

conditions, or that the degree of compliance with the policies or procedures may deteriorate.

management, including our Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of our internal control over

financial reporting as of December 31, 2022 based on criteria established in Internal Control-Integrated Framework (2013) by the Committee

of Sponsoring Organizations of the Treadway Commission (COSO).

on such assessment, our management concluded that the Company’s internal control over financial reporting was effective as of December

in Internal Control over Financial Reporting

There have been no changes

in our internal control over financial reporting that occurred during the last fiscal quarter that have materially affected, or are reasonably

likely to materially affect, our internal control over financial reporting.

REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.

EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

names of our directors and executive officers as of the date of this Annual Report and their respective ages, positions and biographies

are set forth below.

Executive Officer and Director

Yaacov-Garbeli

Financial Officer

Hillel Galitzer

Operating Officer

Arthur Santora

Medical Officer

Lieberman (1)

Director, Chairman of

the Board of Directors

Chairman of the Scientific Advisory Committee

Mayron (1) (2)

Chairman of the Compensation Committee

Ostrov (1) (2) (3)

Chairman of the Audit Committee

Ellis (1) (3) (4)

Malca (1)(2) (3) (4) (5)

Chairman of the Corporate Governance and Nomination Committee

Independent in accordance with SEC regulations and Nasdaq rules requirements applicable to us.

of the Compensation Committee.

of the Audit Committee.

of the Corporate Governance and Nomination Committee.

of the Scientific Advisory Committee.

Toledano has served as the Company's Chief Executive Officer, or CEO, since July

Prior to her appointment as CEO, Ms.

Toledano served as the Company’s Chief Business Officer, Chief Financial Officer and

Head of Corporate Strategy since May 2022.

Toledano has over 20 years of C-level leadership, principal investment and Wall Street/capital

market experience in the biotech sector.

Toledano has served as a member of our Board of Directors (the “Board”) since

2018, and as Member of the Scientific Advisory Committee since February 2022.

Previously, Miranda served as Chief Operating Officer, Chief

Financial Officer, and Director of TRIGR Therapeutics, an oncology focused, clinical stage bispecific antibody company, from August 2018

until its acquisition by Compass Therapeutics (Nasdaq:

CMPX) in June 2021.

At TRIGR, Miranda oversaw the clinical development of lead

asset TR009 (now CTX-009) and led strategic execution, including a $117 million China License Transaction and acquisition by CMPX.

Toledano served as Head of Healthcare Investment Banking at MLV & Co.

(acquired by B.

Riley FBR & Co.), where she completed

biotech equity financings (IPOs, ATMs, and follow-ons) totaling over $4 billion in aggregate value.

Earlier in her career, Ms.

served as vice president in the investment group of Royalty Pharma (Nasdaq:

RPRX) from 2004 to 2010.

Toledano is also a member of

the board of directors of Journey Medical (Nasdaq:

DERM) and NEXGEL (Nasdaq:

Toledano holds a B.A.

in Economics from Tufts

University and an MBA in Finance and Entrepreneurship from the NYU Stern School of Business.

Yaacov-Garbeli has served as our Chief Financial Officer since July 2022.

Prior that, Ms.

Yaacov-Garbeli served as our Israel-based

Chief Financial Officer from June 2019 through July 2022.

Yaacov-Garbeli has over 15 years of chief finance and accounting experience.

She previously served as Senior Manager at PwC Israel overseeing audits of public and private companies.

She has significant experience

in financial planning, operations management, external and internal audit for public multinational companies under US GAAP, IFRS and PCAOB

Yaacov-Garbeli is also a partner at A2Z-Finance, a company that provides financial and accounting services.

Yaacov-Garbeli

holds a B.A in accounting and business management and an MBA in financial management from The College of Management and Academic studies.

Yaacov-Garbeli is a Certified Public Accountant in Israel.

Hillel Galitzer has served as our Chief Operating Officer since February

2014, prior to which he served as our Director of Scientific Development from July 2012.

Galitzer has more than ten years of experience

in medical research and molecular biology.

Between August 2010 and February 2014, Dr.

Galitzer was an analyst and the chief operating

officer for Hadasit Bio Holdings Ltd., a publicly traded company on the Tel Aviv Stock Exchange (TASE:

HDST) and OTC markets.

co-founder and former chief operating officer of Optivasive Inc.

He has written numerous publications in peer-reviewed journals and has

lectured and presented in international conferences and universities.

Galitzer received his Ph.D.

from the Hebrew University Medical

School in Jerusalem, where he was mentored by two world renowned researchers in the areas of parathyroid hormone and calcium regulation,

from Bar Ilan University in Israel and his B.Med.Sc.

from the Hebrew University Medical School in Jerusalem.

Arthur Santora has served as our Chief Medical Officer since September 2018.

Santora has more than 30 years of experience in

the biopharmaceutical industry.

He spent the majority of his career in the clinical research team at Merck & Co., Inc., from June

1989 to March 2017, where he was the lead clinical research physician responsible for much of the clinical development of Fosamax ®

(alendronate sodium), one of the world’s most prescribed osteoporosis treatments.

He was closely involved in the clinical development

of Merck’s once-weekly Fosamax Plus D (alendronate sodium/ vitamin D3 combination tablets), the first drug/vitamin combination tablet

His position at Merck immediately prior to his termination of services in 2017 was Scientific Associate Vice President of Clinical

Research, where he was directly responsible for the technical and scientific support for all clinical research of Fosamax/Fosamax plus

D and contributed to the development of many other osteoporosis and endocrine marketed and investigational drugs.

Prior to joining Merck,

he served as a Medical Officer at the US FDA and subsequently was a faculty member at Wayne State University Medical School in Detroit.

Santora is a Clinical Associate Professor at the clinical faculty of Rutgers Robert Wood Johnson Medical School in New Brunswick,

He has graduate training in Internal Medicine at Emory, and its Endocrinology and Metabolism subspecialty at the NIH in Bethesda.

Santora received his M.D.

in biochemistry from Emory University in Atlanta.

Lieberman Mr.

Lieberman has served as a member of our Board since

April 2014 and became our Chairman in July 2019.

Lieberman is also a member of the board of directors of Teva Pharmaceutical Industries

(NYSE and TASE:

TEVA), a global leader in pharmaceuticals and the world’s largest generic drug developer and manufacturer,

where he chairs the Audit Committee and serves on both the Human Resources and Compensation Committee and the Finance Committee.

serves as Chairman of the Board of Directors of DosenRx, Ltd., a Digital health company that has developed a personalized, patient-controlled

device for delivering medication.

He is also currently a special advisor at Reverence Capital Partners, a private investment firm focused

on the middle-market financial services industry.

From 2000 to 2009, Mr.

Lieberman was an executive at Alliance Bernstein L.P., where

he served as President and Chief Operating Officer from 2004 to 2009, as Chief Operating Officer from 2003 to 2004 and as Executive Vice

President, Finance and Operations from 2000 to 2003.

From 1998 to 2000, he served as Senior Vice President, Finance and Administration

at Sanford C.

Bernstein & Co., Inc., until it was acquired by Alliance Capital in 2000, forming Alliance Bernstein L.P.

Prior to that,

he served in various executive positions at Fidelity Investments and at Citicorp.

Prior to joining Citicorp he was a certified public

accountant with Arthur Andersen.

He previously served on the board of directors of Forest Laboratories, LLC from 2011 to 2014, Computershare

from 2010 to 2012 and Alliance Bernstein L.P.

from 2004 to 2009.

Lieberman received a B.S.

Beta Gamma Sigma with honors in business

from the University of Connecticut.

Our Board believes that Mr.

Lieberman is qualified to serve as director based upon his experience

on boards of other pharmaceutical companies and his years of experience working with healthcare and pharmaceutical companies.

Garceau has served as a member of our Board since March 2016,

and he served as our interim CEO From August 2020 to January 4, 2021.

Garceau served also served as our Chief Development Advisor

from December 2016 to December 2021 (excluding the period he served as our interim CEO).

Garceau has more than 30 years of broad pharmaceutical

industry experience.

He has been a director of Enterome SA since December 2016, and a director of ArTara Therapeutics since January 2019.

Prior to joining Entera, Dr.

Garceau served as Chief Medical Officer and Executive Vice President of NPS Pharmaceuticals, Inc.

from December

2008 and January 2013 respectively, until February 2015, when NPS Pharmaceuticals, Inc., then traded on Nasdaq, was acquired by Shire

Previously, Dr.

Garceau served in several managerial positions with Sanofi-Aventis (NYSE:

SNY) from 2002 until 2008,

and Pharmacia Corporation from 1986 until 2002.

Garceau is a board-certified pediatrician and is a Fellow of the American Academy

of Pediatrics.

Garceau holds a B.S.

in Biology from Fairfield University in Fairfield, Connecticut and an M.D.

from the University

of Massachusetts Medical School.

Our Board believes that Dr.

Garceau is qualified to serve as director based upon his experience with

the Company and his years of experience working with healthcare and pharmaceutical companies.

Mayron has served as a member of our Board since April 2021 and is a global healthcare specialist who serves on the boards of numerous

public and privately-held pharma and medical device companies in Israel, including DNA BioMedical Solutions, Innocan Pharma, and IceCure

His prior executive experience includes several leadership positions culminating in CEO of Teva Israel & Africa from 2009

until 2013 and CEO of S.L.E from 1999 and until 2007.

His expertise within healthcare includes M&A, integration and implementation,

global business development, global operations, and supply chain management.

He earned a B.Sc.

from Ben-Gurion University, and an MBA

from the University of Tel Aviv, and attended several programs at Insead University Fontainebleu, France and the Massachusetts Institute

of Technology, Boston.

Our Board believes that Mr.

Mayron is qualified to serve as a director based upon his pharmaceutical industry experience

in multiple capacities from operations to chief executive positions as well as his experience on multiple boards of pharmaceutical and

medical device companies in Israel.

Ostrov has served as a member of our Board since January 2019.

Ostrov consults and invests in new technologies in the medical

device and consumer products fields.

Ostrov currently serves on the board of directors of several privately held companies, including

Mother’s Choice, a natural products company working with industry giants, Addon Optics, an innovative technology company, and Nuvo

Group Ltd., a developer of next generation baby and mother health monitoring for both hospital and home use.

From 2008 to 2010, he served

as Chairman and CEO of Bausch & Lomb.

Ostrov led the stabilization, streamlining and pipeline building of Bausch & Lomb

following its going-private transaction.

From 1998 until 2006, Mr.

Ostrov very successfully served as Company Group Chairman for Johnson

& Johnson’s Worldwide Vision Care businesses.

From 1991 to 1998, Mr.

Ostrov worked for Johnson & Johnson and quickly rose

to serve as Company Group Chairman of the Consumer and Personal Care businesses in North America.

From 1982 to 1991, he served as President

of CIBA Consumer Pharmaceuticals Company.

From 1976 to 1982, he worked for the Health Care Division of Johnson & Johnson.

Ostrov worked at Procter & Gamble.

Ostrov holds a B.S.

from Cornell and an M.B.A.

from Harvard.

Our Board believes

Ostrov is qualified to serve as a director based upon his years as an investor in healthcare related companies.

Ellis has served as a member of our Board since June 2019.

Ellis brings extensive knowledge of both life science industries

financial markets, with a longstanding history in asset management.

Ellis is a fund manager of Centillion Fund, a venture

capital fund dedicated to Israeli investments, with a primary focus on investments in the biotech and healthcare industries.

is one of Entera Bio’s earliest investors and largest shareholders.

He holds a BA from New York University and MBA from Columbia

Our Board believes that Mr.

Ellis is qualified to serve as a director based upon his years as an investor in healthcare related

Malca has served as a member of our Board since 2011.

Malca currently

serves as a Chief Executive Officer and director of NanoGohst Ltd.

Since 2010 until 2021, he served as a Chief Executive Officer and director

of D.N.A Biomedical Mr.

Malca also serves as a director of Nextgen-Biomed LTD.

NXGN) and Jungo Connectivity Ltd.

each of which is an Israeli public company.

Malca holds a B.A.

in Economics and Statistics from Bar-Ilan University and an M.A.

Economics and Finance from Bar Ilan University, Israel.

Our Board believes that Mr.

Malca is qualified to serve as a director based upon

his pharmaceutical industry experience as an executive as well as his experience on boards of multiple pharmaceutical companies.

Relationships

are no family relationships among any of our directors or executive officers.

in Certain Legal Proceedings

directors and executive officers are not parties to any material legal proceedings.

Role of the Board and Board Leadership Structure

the Israeli Companies Law, 1999 and the regulations promulgated thereunder (together, the “Companies Law”), our Board is responsible

for setting our general policies and supervising the performance of management.

Our Board may exercise all powers and may take all actions

that are not specifically granted by the Companies Law or our Amended and Restated Articles of Association (“Articles”) to

our shareholders or to management.

Our executive officers are responsible for our day-to-day management and have individual responsibilities

established by our Board.

Our chief executive officer is appointed by, and serves at the discretion of, our Board, subject to the terms

of the employment agreement that we have entered into with him.

All other executive officers are also appointed by our Board, and are

subject to the terms of any applicable employment agreements that we may enter into with them.

Board currently consists of seven directors.

According to our Articles, the number of members of our Board must be at least three and

cannot be more than ten.

Our Board is divided into three classes with staggered three-year terms, and one class comes up for election

The Class I directors were re-elected at our 2021 annual meeting of shareholders to serve until our annual meeting of shareholders

The Class II director was re-elected at our 2022 annual meeting of shareholders to serve until our annual meeting in 2025.

Class III directors have terms expiring at our annual meeting of shareholders in 2023.

The members of the classes as of the date hereof

are as follows:

the Class I directors are Miranda J.

Roger Garceau and Ron Mayron;

the Class II director is Yonatan Malca;

the Class III directors are Gerald Lieberman,

Ostrov and Mr.

each annual meeting of shareholders, directors will be elected to succeed the class of directors whose term has expired.

This classification

of our Board could have the effect of increasing the length of time necessary to change the composition of a majority of the Board.

general, at least two annual meetings of shareholders will be necessary for shareholders to effect a change in a majority of the members

of the Board.

the Companies Law and our Articles, nominees for directors may also be proposed by any shareholder holding at least one percent (1%) of

our outstanding voting power.

However, any such shareholder may propose a nominee only if a written notice of such shareholder’s

intent to propose a nominee has been given to our Secretary (or, if we have no such Secretary, our Chief Executive Officer).

any requirements under the Companies Law, to be considered timely and thereby be added to such agenda, such a request must be delivered,

either in person or by certified mail, postage prepaid, and received at the Company's offices, (i) in the case of an annual meeting, no

less than sixty (60) days nor more than one-hundred twenty (120) days prior to the date of the first anniversary of the preceding year’s

annual meeting, provided, however, that, in the event that the date of the annual meeting is advanced more than thirty (30) days prior

to or delayed by more than thirty (30) days after the anniversary of the preceding year’s annual meeting, notice by the proposing

shareholder, in order to be timely, must be received no earlier than the close of business one-hundred twenty (120) days prior to such

annual meeting and no later than the close of business on the later of ninety (90) days prior to such annual meeting or the tenth (10th)

day following the day on which public announcement of the date of such meeting is first made, and (ii) in the case of a Company meeting

of shareholders that is an extraordinary meeting, no earlier than one-hundred twenty (120) days prior to such extraordinary meeting and

no later than the close of business on the later of sixty (60) days prior to such extraordinary meeting or the tenth (10th) day following

the day on which public announcement of the date of such meeting is first made, subject to applicable law.

Any such notice must include

certain information, including, inter alia, a description of all arrangements between the nominating shareholder and the proposed director

nominee and any other person pursuant to which the nomination is to be made by the nominating shareholder, the consent of the proposed

director nominee to serve as our director if elected and a declaration signed by the nominee declaring that there is no limitation under

the Companies Law preventing his or her election, and that all of the information that is required under the Companies Law to be provided

to us in connection with such election has been provided.

Board is also authorized to appoint directors in order to fill vacancies, including filling empty board seats if the number of directors

is below the maximum number permitted under our Articles.

Each of our directors, other than our external directors, will serve from the

date of election or appointment until the next annual meeting of shareholders for which such director’s class is due for reelection.

The approval of at least a majority of the voting power in the Company is generally required to remove any of our directors from office

(other than external directors).

the Companies Law, our Board must also determine the minimum number of directors who are required to have accounting and financial expertise.

In determining the number of directors required to have such expertise, our Board must consider, among other things, the type and size

of the company and the scope and complexity of its operations.

Our Board has determined that the minimum number of directors of our company

who are required to have accounting and financial expertise is one.

Our Board has determined that Mr.

Gerald Lieberman and Ms.

Toledano have financial and accounting expertise as defined in the regulations promulgated under the Companies Law, or Financial and

Accounting Expertise.

than with respect to our directors that are also executive officers or employees, there are no arrangements or understandings between

us, on the one hand, and any of our directors, on the other hand, providing for benefits upon termination of their service as directors

of our Company.

For information with respect to compensation arrangements with our directors that are also executive officers or employees,

see the sections entitled “Item 11.

Executive Compensation”” included in this Annual Report.

Articles provide that, as permitted under the Companies law, any director may appoint another person, who is qualified to be appointed

as a director and who is not a director or an alternate director, to serve as his or her alternate director, subject to the approval of

a majority of the members of the Board, excluding such director.

The term of an alternate director could be terminated at any time by

the appointing director or our Board and would terminate under circumstances in which, according to our Articles, the term of any director

shall terminate or automatically terminate upon the termination of the term of the appointing director.

The Companies Law stipulates that

an external director may not appoint an alternate director, except under very limited circumstances.

An alternate director has the same

rights and responsibilities as a director, except for the right to appoint an alternate director.

Leadership Structure

Board currently separates the roles of Board Chairperson and Chief Executive Officer.

We believe that separation of the positions of Chairperson

of the Board and Chief Executive Officer reinforces the independence of the Board in its oversight of our business and affairs, is more

conducive to objective evaluation and oversight of management’s performance, increases management accountability, and improves the

Board’s ability to monitor whether management’s actions are in the best interests of the Company and its shareholders.

of the Board in Risk Oversight

Board is responsible for overseeing our risk management process.

Our Board focuses on our general risk management strategy, the most significant

risks facing us, and oversees the implementation of risk mitigation strategies by management.

Our Board is also apprised by management

of particular risk management matters in connection with its general oversight and approval of corporate matters and significant transactions.

The Board’s independent oversight function is further enhanced by the fact that all of the Board’s Committees are composed

entirely of independent directors, the directors have complete access to management and the Board and its committees may retain their

own respective advisors.

Governance Guidelines

Board strongly supports effective corporate governance and has developed and followed a program of strong corporate governance.

Our Nominating

and Corporate Governance Committee is responsible for overseeing our guidelines and reporting and making recommendations to the Board

concerning corporate governance matters.

Our guidelines are published on our website at www.enterabio.com and are available in print to

any shareholder who requests them from our Secretary.

Board undertook a review of the independence of each director.

Based on information provided by each director concerning his or her background,

employment, and affiliations, our Board has determined that the Board meets independence standards under the applicable rules and regulations

of the SEC and the listing standards of Nasdaq.

The Board has affirmatively determined that the following Directors are “independent”

as of the date of this Annual Report as defined in the listing standards of Nasdaq:

Gerald Lieberman, Ron Mayron, Gerald M.

Ellis and Yonatan Malca.

In making these determinations, our Board considered the current and prior relationships that each non-employee

director has with our Company and all other facts and circumstances our Board deemed relevant in determining their independence, including

the beneficial ownership of our capital stock by each non-employee director, and the transactions involving them described in the section

titled Item 13 “Certain Relationships and Related Party Transactions, and Director Independence” contained in this Annual

Report on Form 10-K.

have adopted a Code of Business Conduct and Ethics applicable to all of our directors, executive officers and employees, including our

Chief Executive Officer, Chief Financial Officer, controller or principal accounting officer, or other persons performing similar functions.

The full text of the Code of Business Conduct and Ethics can be found on our website at www.enterabio.com.

Information contained on, or

that can be accessed through, our website does not constitute a part of this report and is not incorporated by reference herein.

make any amendment to the Code of Business Conduct and Ethics or grant any waivers, including any implicit waiver, from a provision of

the code of ethics, we will disclose the nature of such amendment or waiver on our website to the extent required by the rules and regulations

Our Board has established

the following committees:

the Nasdaq rules and SEC regulations, we are required to maintain an Audit Committee consisting of at least three independent directors,

each of whom is financially literate and one of whom has accounting or related financial management expertise and would qualify as an

“audit committee financial expert” as such term is defined in Item 407(d)(5) of Regulation S-K.

Audit Committee consists of Gerald M.

Ostrov, who also serves as chairman, Yonatan Malca and Sean Ellis.

The Board has determined that

each of the members of our Audit Committee is an independent director in accordance with SEC regulations and satisfies the independent

director requirements under the Nasdaq rules.

All designated members of our Audit Committee meet the requirements for financial literacy

under the applicable Nasdaq rules and SEC regulations.

Our Board has determined that Gerald M.

Ostrov is an “audit committee financial

expert,” as such term is defined under applicable SEC rules.

responsibilities and procedures

Audit Committee provides assistance to our Board in fulfilling its legal and fiduciary obligations in matters involving our accounting,

auditing, financial reporting, internal control and legal compliance functions by, among other things, pre-approving the services performed

by our independent accountants and reviewing their reports regarding our accounting practices.

Our Audit Committee also oversees the audit

efforts of our independent accountants and takes those actions that it deems necessary to satisfy itself that the accountants are independent

of management.

Board has adopted an Audit Committee charter setting forth the responsibilities of the Audit Committee consistent with the applicable

rules and regulations of the SEC and Nasdaq, as well as the requirements for such committee under the Companies Law, including (a) oversight

of our independent registered public accounting firm and recommending the engagement, compensation or termination of engagement of our

independent registered public accounting firm to the Board in accordance with the Companies law;

(b) recommending the engagement or termination

of our internal auditor;

firm for pre-approval by our Board;

(d) identifying deficiencies in the business management practices of our Company, including, inter

alia, in consultation with our internal auditor or the independent auditor, and making recommendations to the Board as to how to correct

such practices;

(e) reviewing and considering the approval of related party transactions;

(f) determining whether related party transactions

are extraordinary or material under the Companies Law, including transactions in which an office holder has a “personal interest”,

under the Companies Law, and whether to approve such transactions;

(g) establishing the approval process for certain transactions with

a controlling shareholder or in which the controlling shareholder has a “personal interest”;

(h) examining and approving the

working plan of the internal auditor, subject to any modifications in its discretion;

(i) examining our internal audit controls and internal

auditor’s performance, including whether the internal auditor has sufficient resources and tools to fulfill his or her responsibilities;

(j) examining the scope of our auditor’s work and compensation and submitting its recommendations with respect thereto to our Board

or shareholders, depending on which of them is considering the appointment of our auditor;

(k) establishing procedures for the handling

of employees’ complaints as to the management of our business and the protection to be provided to such employees;

and (l) reviewing

the our annual audited financial statements and quarterly financial statements with management and the independent auditor, including

a review of our disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations”

copy of the Audit Committee Charter is available on our website at www.enterabio.com .

“personal interest” under the Companies Law includes an interest of any person in an action or transaction of a company, excluding

any interest arising solely from holding the Company’s shares, but including the personal interest of such person’s spouse,

sibling, parent, grandparent, descendant, spouse’s descendant, sibling or parent or the spouse of any of such persons, and the personal

interest of any entity in which such person or one of the aforementioned relatives of such person serves as a director or Chief Executive

Officer, owns 5% or more of such entity’s outstanding shares or voting rights or has the right to appoint one or more directors

or the Chief Executive Officer.

Further, in the case of a person voting by proxy, “personal interest” includes the personal

interest of either the proxy holder or the shareholder granting the proxy, whether or not the proxy holder has discretion how to vote.

We have a Compensation

Committee, the members of which are Ron Mayron, who also serves as chairman, Gerald M.

Ostrov and Yonatan Malca.

Each member of our Compensation

Committee is independent under Nasdaq rules.

responsibilities and procedures

Board has adopted a charter setting forth the Compensation Committee’s roles and responsibilities, which include (a) recommending

a compensation policy regarding the terms of engagement of office holders, which is recommended to the Board for approval and subsequently

to shareholders for their approval, in accordance with the Companies Law, and reviewing such policy from time to time, (b) recommending

to the Board periodic updates to the compensation policy and whether the compensation policy should continue in effect every three years;

(d) reviewing and approving the granting of options, restricted share units,

or RSUs, and other incentive awards to the extent such authority is delegated by the Board;

(e) reviewing, evaluating and making recommendations

regarding the compensation and benefits for non-executive directors, (f) determining whether to approve and recommend to the Board and

shareholders to approve transactions with office holders relating to their terms of compensation, as required under the Companies Law,

(g) determining whether changes to the compensation terms of the Chief Executive Officer of the Company are material and if the changes

are required to be brought to the shareholders for approval, (h) overseeing compliance reporting requirements of the SEC, (i) determining

whether to recommend to the Board to adopt a share ownership policy for directors and executive officers, and (j) performing such other

activities as may be required.

copy of the Compensation Committee Charter is available on our website at www.enterabio.com .

the Companies Law, the compensation policy must be adopted by the Board after considering the recommendations of the Compensation Committee

and needs to be further brought before the company’s shareholders for approval by a special majority, if necessary.

compensation policy must serve as the basis for decisions concerning the terms of employment or engagement of office holders, including

exculpation, insurance, indemnification and any monetary payment and obligation of payment in respect of employment or engagement.

compensation policy must relate to certain factors, including advancement of the Company’s objectives, the Company’s business

plan and its long-term strategy, and creation of appropriate incentives for office holders.

It must also consider, inter alia, the Company’s

risk management, size and the nature of its operations.

compensation policy must furthermore consider additional factors, as follows:

(a) the knowledge, skills, expertise and accomplishments

of the relevant office holder;

(b) the office holder’s roles and responsibilities and prior compensation agreements with him or

(c) the ratio between the terms offered and the average compensation of the other employees of the company, including those employed

through manpower companies;

(d) the impact of disparities in salary upon work relationships in the company;

(e) the possibility of reducing

variable compensation at the discretion of the Board;

(f) as to variable compensation, the possibility of setting a limit on the exercise

value of non-cash variable equity-based compensation;

and (g) as to severance compensation, the period of service of the office holder,

the terms of his or her compensation during such service period, the company’s performance during that period of service, the person’s

contribution towards the company’s achievement of its goals and the maximization of its profits, and the circumstances of termination

compensation policy must also include the following principles:

(a) the link between variable compensation and long-term performance and

measurable criteria;

(b) the ratio between variable and fixed compensation, and the ceiling for the value of variable compensation;

the conditions under which an office holder would be required to repay compensation paid to him or her if it was later shown that the

data upon which such compensation was based was inaccurate and was required to be restated in the company’s financial statements;

(d) the minimum holding or vesting period for variable, equity-based compensation, including bonuses;

and (e) maximum limits for severance.

the Companies Law, every three years we are required to re-obtain the approval of our Compensation Committee, Board and shareholders for

either the continuation of our existing compensation policy or adoption of a new compensation policy.

Our compensation policy was last

approved by our shareholders on October 4, 2021, after having been recommended by our Compensation Committee and approved by our Board,

and will therefore need to be either re-approved, amended, or replaced by a new policy in 2024.

Compensation Committee may conduct or authorize investigations into, or studies of, matters within its scope of responsibilities, and

may retain or obtain the advice of a compensation consultant, legal counsel or other advisor in its sole discretion.

The Compensation

Committee is directly responsible for the appointment, compensation and oversight of the work of any compensation consultant, legal counsel

or other advisor that it retains, at the expense of the Company.

The Compensation Committee may select, or receive advice from, a compensation

consultant, legal counsel or other advisor to the Compensation Committee, other than in-house legal counsel, only after conducting an

assessment of, and determining, the advisor’s independence, including whether the advisor’s work has raised any questions

of independence or conflicts of interest, taking into consideration the Exchange Act, the factors set forth in Nasdaq rules and any other

factors that the committee deems relevant.

2021, in determining the compensation of certain non-executive directors and in determining our compensation policy, the Compensation

Committee retained the services of a compensation consultant, Brightman Almagor Zohar & co., or Deloitte, to conduct a comparative

survey of the compensation of such office holders.

The 2021 comparative study consisted of:

(i) an executive compensation benchmark analysis

which included comparative data of the Company’s executive compensation, relative to the peer-group companies in Israel and (ii)

an executive compensation benchmark analysis which included comparative data of the Company’s executive compensation, relative to

the peer-group companies in the United States.

and Corporate Governance Committee

Board has adopted a Nominating and Corporate Governance Committee Charter that sets forth the responsibilities of the Nominating and Governance

Committee consistent with the rules and regulations of the SEC and Nasdaq, including (a) assisting in identifying, recruiting and, if

appropriate, interviewing candidates to fill positions on the Board, including persons suggested by shareholders or others, (b) establishing

procedures to be followed by shareholders in submitting recommendations for Board candidates, if appropriate, (c) reviewing the background

and qualifications of individuals being considered as director candidates, while considering the candidate’s experience, skills,

expertise, diversity, personal and professional integrity, character, business judgment, time availability in light of other commitments,

dedication, conflicts of interest and such other relevant factors that the committee considers appropriate in the context of the needs

of the Board, (d) recommending the Board nominees for election by shareholders or appointment by the Board, as the case may be, in a manner

consistent with the criteria for selecting directors, as established by the Board from time to time, (e) reviewing the suitability for

continued service as a director of each Board member, when the term of service of the director expires, and when the director has a change

in status (including, but not limited to, an employment change) and recommending whether or not the director should be re-nominated, (f)

making recommendations to the Board regarding the size and composition of each committee;

and (g) overseeing the performance of the Board

copy of the Nominating and Corporate Governance Committee Charter is available on our website at www.enterabio.com.

Nominating and Corporate Governance Committee consists of Yonatan Malca, who serves as chairman, and Sean Ellis.

Advisory Committee

Board has adopted a Scientific Advisory Committee Charter that sets forth the responsibilities of the Scientific Advisory Committee, including

(a) reviewing, evaluating and reporting to the Board regarding strategy, plans and goals, as well as progress and performance, of the

Company’s clinical programs, licensing activities, and research and development activities, (b) meeting with the Company’s

R&D and licensing teams to evaluate the plans, goals and performance of the Company’s clinical programs and research and development

projects, and make recommendations to the Board as appropriate in the opinion of the committee to fulfill the company strategic goals,

(c) identifying and discussing significant emerging regulatory, research and scientific issues and trends and competitive activity, including

their potential impacts on any Company programs, plans, or policies relating to its licensing opportunities, clinical programs and research

and development activities.

(d) evaluating the performance of the committee, including a review of the committee’s compliance with

its charter, and review and reassess the charter and submit any recommended changes to the Board for its consideration and approval, (e)

form external consulting panels to assist the committee in review of specific R&D programs either current or planned and (f) such

other duties and responsibilities as may be assigned to the committee, from time to time, by the Board.

copy of the Scientific Advisory Committee Charter is available on our website at www.enterabio.com.

Scientific Advisory Committee consists of Roger Garceau, who also serves as chairman of the committee, along with Yonatan Malca and Miranda

16(a) Beneficial Ownership Reporting Compliance

16(a) of the Exchange Act and the rules thereunder require our directors and executive officers and persons who beneficially own more

than 10% of a registered class of our equity securities, to file reports with the SEC relating to their share ownership and changes in

such ownership.

Section 16(a) Reports

solely upon our review of copies of filings or written representations from the reporting persons, we believe that certain reports for

our executive officers and directors that were required to be filed under Section 16(a) of the Exchange Act during the year ended December

31, 2022 were not filed on a timely basis.

Specifically, (i) Messrs.

Garceau, Mayron, Lieberman, Ostrov, Galitzer, Santora II, Malca,

Ellis, Jamas, Schwartz and Ratan as well as Mses.

Toledano and Yaacov-Garbeli each filed a late Form 3 and (ii) Messrs.

Garceau, Mayron,

Lieberman, Ostrov, Malca and Ellis as well as Ms.

Toledano each filed a late Form 4 disclosing two January 2022 option grants from the

Company in connection with their service as directors of the Company, in each case due to the delay in obtaining EDGAR codes in connection

with our transition from a foreign private issuer to a domestic reporting company.

Other than with respect to the aforementioned forms,

we believe that all other reports for our executive officers and directors and persons who beneficially own more than 10% of our common

stock that were required to be filed under Section 16(a) of the Exchange Act during the year ended December 31, 2022 were filed on a timely

compensation policy was adopted by our shareholders on October 4, 2021, after having been recommended by our Compensation Committee and

approved by our Board, and will therefore, under the Companies Law, need to be either re-approved, amended, or replaced by a new policy

no later than 2024, and every three years thereafter.

The compensation policy includes, among other matters prescribed by the Companies

Law, a framework for establishing the terms of office and employment of the directors and officers and guidelines with respect to the

structure of the variable pay of officers.

compensation policy is intended to align our objectives and work plans with appropriate goals and objectives of our officers and directors,

and to ensure that the overall financial and strategic objectives of the Company and its shareholders are met.

We recognize that strong

and effective leadership is fundamental to our continued growth and success.

Therefore, our compensation policy recognizes as a primary

objective the need to attract, retain, reward and motivate highly talented officers and directors in competitive labor markets.

regard to our executive officers, or “Officers,” (which includes our Named Executive Officers, as defined below) our compensation

policy is designed to provide a mix of compensation to pay Officers for individual and company performance as well as align their interests

with the interests of shareholders.

The compensation policy is also designed to provide flexibility in design.

It must also take into

consideration the fact that the appropriate mix of compensation may vary from period to period and from Officer to Officer.

this philosophy, our compensation policy generally includes:

(i) short-term incentives such as an annual base salary, benefits and perquisites,

(ii) short to medium-term incentives such as annual bonus based on target and above-target performance, and (iii) medium to long-term

incentives such as equity-based compensation, termination and retirement benefits.

salary for Officers is a fixed compensation element which provides compensation to an Officer for performance of his or her standard duties

and responsibilities that reflects the Officer’s education, skills, qualifications, expertise, professional experience and accomplishments,

as well as the position, areas and scope of responsibilities of such Officer and his or her prior compensation agreements.

to base salary are periodically reviewed by the Compensation Committee and the Board.

bonuses are generally paid annually, and are designed to reward Officers based on the performance of the Company and their individual

The target bonus amount and the performance measures and targets for each Officer are provided and calculated in an annual bonus

plan, to the extent it is determined and approved by the Company's Compensation Committee and Board, at the beginning of each calendar

year for which the bonus is paid.

However, the CEO has the power to determine the annual bonus's performance measures and targets for

any of the other Officers.

performance measures and targets for receiving the annual bonus are intended to be measurable and quantifiable and may include (but are

not limited to) (i) objectives such as capital investment, cash balance relative to equity, obtaining approval from the authorities in

the target markets;

and (ii) key performance indicators, determined for each Officer separately, according to the Officer's position.

The annual bonus also includes a non-measurable component of up to 20% of the Officer’s annual bonus, which is based on the evaluation

of each Officer's, according to qualitative measures provided in the annual bonus plan.

addition to the annual bonus, the Compensation Committee and the Board may elect to pay each Officer a special bonus, based on non-measurable

criteria, in recognition of a significant achievement or for completion of an assignment, such as completion of a major transaction or

achieving a major milestone with material effect over the Company's business.

Our compensation policy provides for a maximum cap for bonus

payments made to our Officers.

The maximum bonus cap for each of our Officers is six times the monthly base salary and with respect to

the CEO, up to three times the monthly base salary, determined by non-measurable criteria.

compensation policy also includes an equity incentive component designed, inter alia, to retain Officers, align Officers and shareholders’

interests and incentivize Officers to attain high level of business achievements without taking unreasonable risk, under which the Company

may grant Officers options to purchase shares, share appreciation rights, restricted shares, restricted share units, performance awards

or other share-based awards (collectively referred to as “equity awards”).

The equity awards are determined individually and

awarded from time to time, inter alia, according to each Officer’s (a) contribution to the Company's performance;

(b) ability to

influence the Company's future and performance;

(d) the Officer's

skills, qualifications, experience, roles and personal responsibilities;

and (e) the desired competitive levels and dilution or pool limits.

compensation policy caps the annual value of the equity awards to be granted to each Officer, measured at the applicable grant date, at

18 times the monthly base salary of each Officer.

The equity awards vesting period shall not be less than one year.

Options shall expire

up to 10 years from the grant date.

For option grants and share appreciation rights, the exercise price shall be no less than the fair

market value of the underlying ordinary shares on the date of grant, and subject to applicable law.

compensation policy provides that Officers and directors (to the extent granted equity awards) may be prohibited from hedging their equity

awards and any other Company securities held by them.

The no-hedging policy applies to each director and each Officer until one year following

their termination of employment.

The compensation policy further provides that Officers and directors are subject to certain restrictions

on pledging or using their equity awards and any other Company securities held by them (whether they are subject to transfer restrictions

or not) as collateral for loans, as the Company's Compensation Committee and Board shall determine.

and perquisites

the compensation policy, our Officers are further entitled to certain fringe benefits that we believe are commonly provided to similarly-situated

executives in the market in which we compete for talent and therefore are important to our ability to attract and retain top-level executive

This includes vacation days, paid sick leave, as well as additional benefits such as, but not limited to, health insurance,

a company car and cell phone, company-provided health insurance and meals.

Officers residing in Israel, these benefits may also include contributions to a pension fund, provident fund or insurance policy in accordance

with Israeli law, contributions to an education fund of 7.5% of the Officer’s monthly salary and recuperation pay as required under

applicable law.

An ‘education fund’ is a medium-term savings scheme that takes advantage of a unique tax break granted under

Israeli law, whereby a company’s contributions to such fund (which, despite its misleading name, may be used by the employee for

any purpose), as well as all capital gains accrued on such contributions, are free of tax if (a) the company contributes an amount equal

to 7.5% of the employee’s salary to such fund, up to a certain limit, and the employee further contributes 2.5% of his salary at

his expense, and (b) the fund remains undrawn for a period of at least six years from the time of the first contribution.

While some of

these contributions and benefits are not mandatory under Israeli law, the nature and amount of the benefits provided to our Israeli Officers

are customary and prevalent in the Israeli high-tech and bio-pharma market, especially among executives.

Non-Israeli Officers may receive

similar, comparable or customary benefits as applicable in the jurisdiction in which they are employed.

Officers are further entitled to certain termination payments and benefits.

Officers are entitled to an advance notice period, severance

payments and retirement and termination awards.

The retirement and termination awards are subject to the Compensation Committee and the

Board's approval, and may be provided only if:

(a) certain change of control related cases;

(b) the Officer has made a special contribution

to the advancement of the Company’s business during his employment period as shall be determined by the Compensation Committee;

and (d) in respect of Officers other than the CEO, the CEO has recommended granting a retirement bonus.

compensation policy provides that non-employee and non-executive directors’ compensation packages shall be determined pursuant to

the provisions of the Companies Law in accordance with the Company's objective to attract and retain talented directors with excellent

educational background, qualifications, skills, expertise, professional experience and achievements, by providing a fair and competitive

compensation program.

Such non-employee and non-executive directors’ may be eligible to receive an annual Board membership fee,

annual Committee membership fee and equity based compensation.

Notwithstanding, non-employee and non-executive directors shall also be

entitled to insurance, indemnification and release arrangements.

The chair of the Board and the chair of the Board committees may also

receive additional annual cash payments for their extra service in such capacities, subject to the provisions of applicable law.

May 2021, we elected to be governed by an exemption under the Companies Law regulations that exempts us from appointing external directors

and from complying with the Companies Law requirements related to the composition of the Audit Committee and Compensation Committee of

Our eligibility for that exemption is conditioned upon:

(i) the continued listing of our Ordinary Shares on the Nasdaq Capital

Market (or one of a few select other non-Israeli stock exchanges);

(ii) there not being a controlling shareholder of our company under

the Companies Law;

and (iii) our compliance with the Nasdaq Listing Rules requirements as to the composition of (a) our Board of Directors-which

requires that we maintain a majority of independent directors (as defined under the Nasdaq Listing Rules) on our Board of Directors (subject

to applicable cure periods under the Nasdaq Listing Rules) and (b) the Audit and Compensation Committees of our Board of Directors, which

rules require that such committees consist solely of independent directors (at least three and two members, respectively).

that it was determined to exempt our Company from the external director requirement, our Board affirmatively determined that we met the

conditions for exemption from the external director requirement.

As of the date hereof, we continue to meet the conditions for exemption

from the external director requirement.

a result of our election to be exempt from the external director requirement under the Companies Law, none of our directors are categorized

as external directors and as such the applicable requirements and restrictions relating to external directors (including certain compensation

related provisions) is no longer applicable.

compensation packages to Officers and directors are also subject to claw-back provisions, allowing for the Company’s recovery of

any payment made to an Officer or director if the payment was based on incorrect financial statements that subsequently required restatement.

The Officer or director will be required to repay to the Company the difference between the original payment and any payment due to the

officer or director based on the restatement.

Compensation Committee periodically reviews the compensation policy, monitors its implementation and recommends to our Board and shareholders

amendments to the compensation policy as it deems necessary from time to time.

The term of the compensation policy is for a period of

three years following the date of its adoption, during which, the Board is required to examine the compensation policy and revise it from

time to time if the circumstances under which it had been adopted have materially changed.

Following such three-year term, the compensation

policy, including any revisions recommended by our Compensation Committee and approved by our Board, as applicable, will be brought once

again to the shareholders for approval.

Compensation Table

table and summary below outline the compensation granted to our named executive officers (“Named Executive Officers”) during

our fiscal years ended December 31, 2022 and December 31, 2021.

As a “smaller reporting company,” we are required to provide

executive compensation information for the following individuals:

(i) all individuals who served as the Company’s principal executive

officer (“PEO”), during the last completed fiscal year, regardless of compensation;

(ii) the two most highly compensated executive

officers (other than the PEO) who were serving as executive officers of the Company at the end of the last completed fiscal year and whose

total compensation was greater than $100,000;

and (iii) up to two additional persons who served as executive officers (other than as the

PEO) during the last completed fiscal year but who were not serving in that capacity at the end of the fiscal year if their total compensation

is higher than any of the other two Named Executive Officers in the preceding group.

and Principal Position

Executive Officer and director

Spiros Jamas (3)

Chief Executive Officer

Phillip Schwartz (4)

President of R&D

Hillel Galitzer

Operating Officer

the associated annual expense recorded in our financial statements for the year ended December 31, 2022, based on the grant date fair

value of the share-based compensation granted in exchange for the directors’ and officers’ services computed in accordance

with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718, Compensation

- Stock Compensation (“ASC Topic 718”).

The assumptions used in calculating the amounts are discussed in the notes

of the Company’s audited financial statements for the year ended December 31, 2022 included in this Annual Report.

The fair value

amount is recognized as an expense over the course of the vesting period of the options (subject to any applicable accounting adjustments

during that period).

Toledano was appointed as our Chief Business Officer, Chief Financial Officer and Head of Corporate Strategy in May 2022.

was then appointed as our Chief Executive Officer in July 2022.

The compensation for fiscal year 2021 and until May 2022 represents her

compensation as a non-employee board member.

Jamas served as our Chief Executive Officer from January 4, 2021 until July 13, 2022.

Pursuant to the mutual separation agreement entered

into between us and Mr.

Jamas, he was entitled to a one-time lump sum payment of his annual base salary for a period of 13 months which

is included in the table above.

Schwartz served as the President of R&D during fiscal years 2021 and 2022 through his resignation on July 21, 2022.

On June 15, 2022,

Schwartz resigned from his position with the Company, effective July 21, 2022.

The compensation for fiscal year 2022 represents his

compensation received for services rendered through his resignation date.

Equity Awards at Fiscal Year End

following table sets forth the outstanding equity awards at December 31, 2022 for our Named Executive Officers.

of Securities

Unexercised Options

Unexercisable

Miranda Toledano

Executive Officer and director

Chief Executive Officer

Phillip Schwartz

President of R&D

Hillel Galitzer

Operating Officer

71,705 unexercisable options as of December 31, 2022 will vest in eight equal quarterly installments beginning on March 31, 2023.

the 500,000 unexercisable options as of December 31, 2022, 25% vest on May 16, 2023, the first anniversary of the grant date and the remaining

75% begin vesting in 12 equal quarterly installments over the following three years.

the 600,000 unexercisable options as of December 31, 2022, 25% vest on July 15, 2023, the first anniversary of the grant date and the

remaining 75% begin vesting in 12 equal quarterly installments over the following three years.

54,688 unexercisable options as of December 31, 2022 will vest in five equal quarterly installments beginning on March 16, 2023.

78,125 unexercisable options as of December 31, 2022 will vest in 10 equal quarterly installments from January 21, 2023.

the 60,000 unexercisable options as of December 31, 2022, 25% vest on March 31, 2023, the first anniversary of the grant date and the

remaining 75% will vest in 12 equal quarterly installments over the following three years.

Compensation Table

the Companies Law, our directors can be paid for their services as directors to the extent such payments are in accordance with the compensation

policy adopted by the Company after approval by the Compensation Committee, our Board and our shareholders by ordinary majority, or, if

their compensation deviates from our compensation policy, after approval by the Compensation Committee, our Board and our shareholders

by a special majority, if necessary, provided that (i) the majority of the votes includes at least a majority of all the votes of shareholders

who are not controlling shareholders of the Company or who do not have a personal interest in the compensation paid to the directors and

participating in the vote or (ii) the total of opposing votes from among the shareholders described in subsection (i) above does not exceed

2% of all the voting rights in the Company.

table below outlines compensation earned by our non-employee directors for the fiscal year ended December 31, 2022, including fees earned

in cash and options awarded for services provided as a director.

Toledano served as a non-employee director in 2022 until her appointment

as an officer in May 2022.

Her compensation received in connection with her service as a director is included in her 2022 compensation

described above in “Summary Compensation Table”, above.

the associated annual expense recorded in our financial statements for the year ended December 31, 2022, based on the grant date fair

value of the share-based compensation granted in exchange for the directors’ and officers’ services computed in accordance

with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718, Compensation

- Stock Compensation (“ASC Topic 718”).

The assumptions used in calculating the amounts are discussed in the notes

of the Company’s audited financial statements for the year ended December 31, 2022 included in this Annual Report.

The fair value

amount is recognized as an expense over the course of the vesting period of the options (subject to any applicable accounting adjustments

during that period).

table below sets forth the aggregate number of share options of each non-employee director outstanding as of December 31, 2022:

have entered into employment agreements with our Named Executive Officers.

A summary of the material terms of these agreements with each

of our Named Executive Officers is set forth below.

The below descriptions of employment agreements and separation agreements, as applicable,

are only summaries and are qualified in their entirety by reference to the full text of the applicable agreement, which are filed as exhibits

to this Annual Report on Form 10-K.

connection with Ms.

Toledano’s appointment as the Company’s Chief Business Officer, Chief Financial Officer and Head of Corporate

Strategy in May 2022, Ms.

Toledano entered into an employment agreement (the “Original Employment Agreement”) with the Company,

providing for an annual employer cost of $350,000 inclusive of base salary, pension payments, severance and disability benefits as required

under Israeli law.

Additionally, Ms.

Toledano was entitled to a grant of options pursuant to the Company’s 2018 Equity Incentive

Plan to purchase 500,000 Ordinary Shares of the Company’s Ordinary Shares at an exercise price of $2.02 per share, the closing price

of the Ordinary Shares on the date the option was approved by the Board.

The options vest over four years, with 25% of the options vesting

on May 16, 2023 and the remaining 75% vesting in quarterly increments over the remaining three-year period, subject to Ms.

continued employment.

In addition, Ms.

Toledano was eligible to receive an annual bonus in an amount equal to 50% of her annual base salary.

Under the Original Employment Agreement, Ms.

Toledano also agreed to customary non-disclosure and non-competition covenants,

connection with Ms.

Toledano’s appointment as Chief Executive Officer, on July 15, 2022, Ms.

Toledano and the Company entered into

an amended and restated employment agreement (the “A&R Employment Agreement”), which amends and restates the Original

Employment Agreement.

The material terms of the Original Employment Agreement remain unchanged, except that the A&R Employment Agreement

provides for (i) Ms.

Toledano’s service as Chief Executive Officer, (ii) an annual employer cost of $380,000 inclusive of base salary,

pension payments, severance and disability benefits as required under Israeli law, (iii) eligibility to receive an annual bonus in an

amount equal to 60% of Ms.

Toledano’s annual base salary, (iv) a one-time separation payment in the total amount of 12 months of

salary and an extension of the exercise period with respect to vested options for a period of up to two-years post-termination, in each

case in the event of the termination of Ms.

Toledano’s employment by the Company for any reason other than for Cause (as defined

in the A&R Employment Agreement), (v) an additional grant of options (the “Options”) pursuant to the Company’s 2018

Equity Incentive Plan to purchase 600,000 Ordinary Shares at an exercise price of $1.40, which was the closing price of the Ordinary Shares

on the date the Board approved such option grant and (vi), upon the Company’s achievement of certain performance or financial milestones,

a grant of options (the “Additional Options”) to purchase an additional 200,000 Ordinary Shares pursuant to the Company’s

2018 Equity Incentive Plan at an exercise price equal to the closing price of the Ordinary Shares on the date the Board approves such

option grant.

The Options will vest over four years, with 25% of the Options vesting on July 15, 2023 and the remaining 75% vesting in

quarterly increments over the remaining three-year period, subject to Ms.

Toledano’s continued employment.

The Additional Options

will vest over four years, with 25% of the Additional Options vesting on the first anniversary of the grant date and the remaining 75%

vesting in quarterly increments over the remaining three-year period, subject to Ms.

Toledano’s continued employment.

entered into an employment agreement, effective as of January 2021, with Dr.

Spiros Jamas, in connection with his appointment as our Chief

Executive Officer and in light of his previous membership in our Board.

Pursuant to the agreement, Dr.

Spiros Jamas was entitled to an

annual base salary of $380,000 and an annual bonus of up to 60% of his base salary (up to $228,000).

Additionally, Dr.

Jamas was eligible

to participate in the Company’s standard full-time employment benefits that are offered by the Company from time to time, which

currently include medical, short term disability and 401(k) benefits.

Jamas was also generally entitled to reimbursement for travel

and other business expenses and other benefits, including, vacation, holidays and sick leave.

Subject to applicable law, Dr.

also covered by our D&O insurance policy.

Jamas was also granted options to purchase 1,314,218 Ordinary Shares under the 2018

Plan, effective as of January 2021, at an exercise price of $1.24.

Salary and other benefits (including any bonus) shall immediately terminate

upon termination, provided, however, that in case Dr.

Jamas’s employment would have been terminated by the Company without Cause

Jamas resigned for Good Reason ("Cause" and Good Reason" as defined in the proxy statement of the Company’s extraordinary

general meeting dated March 3, 2021) at any time, he would have been entitled to (i) a one-time lump sum severance payment equal to a

period of twelve (12) months of his then-effective annual base salary and (ii) an extension of the exercise period with respect to his

vested options to purchase ordinary shares as of the date of termination for up to two (2) years post-termination (provided that in no

event shall such extension extend beyond 10 years from the applicable grant date), all subject to his execution and non-revocation of

a customary release of claims against the Company, its subsidiary, Entera Bio, Inc., or any applicable affiliates.

July 13, 2022, the Company and Dr.

Jamas entered into a mutual separation agreement (the “Separation Agreement”), pursuant

to which the parties agreed that Dr.

Jamas would resign from his position as the Company’s Chief Executive Officer, effective July

15, 2022 (the “Jamas Separation Date”).

Pursuant to the Separation Agreement, Dr.

Jamas’ employment agreement, dated

November 30, 2020, terminated, other than with respect to those provisions intended to survive termination, including those with respect

to confidentiality, non-competition, non-solicitation and intellectual property.

to the terms of the Separation Agreement, Dr.

Jamas was entitled to receive payment for all accrued but unpaid base salary through the

Jamas Separation Date, unused paid time off through the Jamas Separation Date, reimbursement for unreimbursed business expenses properly

incurred pursuant to the Company’s applicable expense reimbursement policy, and benefits provided under the Company’s employee

benefit plan.

In addition, in consideration for Dr.

Jamas’ execution of the Separation Agreement and non-revocation of a waiver

and release of claims relating thereto, Dr.

Jamas was entitled to the following benefits under the Separation Agreement:

a one-time lump sum payment of Dr.

annual base salary for a period of thirteen (13) months, for a total gross amount equal to $411,666.67, after the expiration of the revocation

an extension of the exercise period for the vested

portion of the share option granted to Dr.

Jamas on January 4, 2021 pursuant to the terms of the Company’s 2018 Equity Incentive

Plan, representing collectively 492,832 ordinary shares, through the end of a two-year period commencing on the Jamas Separation Date.

the Separation Agreement, Dr.

Jamas agreed to cooperate with and assist the Company regarding certain matters and transitioning his employment

duties and responsibilities.

Subject to certain exceptions and limitations, the Separation Agreement included a general release of claims

Jamas in favor of the Company and certain related persons and parties, and customary non-disparagement provisions.

The Separation

Agreement also included certain other customary representations, warranties and covenants of Dr.

The Separation Agreement superseded

all other agreements or arrangements between Dr.

Jamas and the Company regarding the subject matter of the agreement, including those

with respect to severance payments and benefits.

Phillip Schwartz was appointed as our President of Research and Development in August 2019

and served in this capacity until July 21, 2022, (the “Schwartz Separation Date”), and acted as a director from our inception

in 2010 until June 15, 2022, and as Chief Executive Officer from 2010 up until August 2019.

We entered into an employment agreement with

Schwartz as our Chief Executive Officer dated June 8, 2014 which was amended last and approved on April 6, 2021, and on April 21,

2021, by our Compensation Committee and the Board, respectively, and approved accordingly by our shareholders in the last annual meeting

of the shareholders of the Company on October 4, 2021.

Pursuant to the agreement as amended, effective as of January 1, 2021, Dr.

was entitled to an annual gross base salary of $312,889.

Additionally, Dr.

Schwartz was eligible to participate in the Company’s

standard full-time employment benefits that are offered by the Company from time to time, which currently include medical, short term

disability and pension fund benefits.

Schwartz was also generally entitled to reimbursement for travel and other business expenses

and other benefits, including, vacation, holidays and sick leave.

Subject to applicable law, Dr.

Schwartz was also covered by our D&O

insurance policy.

Schwartz was granted 357,000 Ordinary Shares under our 2013 Equity Incentive Plan, as of November 23, 2017, at an

exercise price of $6.31, which are as of today considered fully vested.

In April 2021, he was also granted options to purchase 100,000

Ordinary Shares of the Company under the 2018 Plan, at an exercise price of $3.15.

In addition, in case of termination of Dr.

employment, the Company agreed to pay Dr.

Schwartz an amount equal to six (6) months salaries as a severance payment, as well as all accrued

and unused vacation days and any accrued and unpaid bonuses (to the extent that Dr.

Schwartz is entitled to such bonus as of the termination

June 15, 2022, the Company entered into a separation agreement with Dr.

Phillip Schwartz, the Company’s former President of R&D,

under which Dr.

Schwartz agreed to continue to provide services to the Company until July 21, 2022 (the “Schwartz Separation Date”).

Pursuant to the terms of the separation agreement, which were approved by the Company’s shareholders on September 7, 2022, Dr.

received a full acceleration of his unvested options, as of the Shwartz Separation Date, to purchase 68,750 ordinary shares granted in

April 2021 that otherwise would have been forfeited.

These options, together with 31,250 already vested options granted in April 2021

and 357,500 already vested options to purchase ordinary shares granted in 2017, will be exercisable for a period of 10 years from their

respective initial grant dates.

The acceleration described above was recognized as a "Type III" modification;

therefore, on the shareholder

approval date, the Company recognized the incremental costs of unvested options based on the fair value of the options on such date.

addition, the extension of the exercise period for the vested awards was recognized as a "Type I" modification.

The total expense amount

was $112 thousand, which was classified as additional share-based compensation costs in the research and development expenses.

addition, the separation agreement provides for the following payments to Dr.

Schwartz, all of which would have otherwise been payable

in accordance with either Israeli law or pursuant to his existing employment agreement:

a one-time cash separation payment in an amount

equal to NIS 537,600 (approximately $155.9) and additional payments of NIS 737,771 (approximately $214.0) in respect of all other ongoing

accrued benefits, subject to any mandatory deductions.

The foregoing payments were recognized in the research and development expenses

entered into an employment agreement, effective as of June 8, 2014, with Dr.

Hillel Galitzer, in connection with his appointment as our

Chief Operating Officer, who prior to that served as our Director of Scientific Development from July 2012.

Pursuant to the agreement

as amended most recently and approved in the Company's annual meeting of shareholders dated October 4, 2021, Dr.

Galitzer is entitled

to an annual gross base salary of $246,547.

Additionally, Dr.

Galitzer is eligible to participate in the Company’s standard full-time

employment benefits that are offered by the Company from time to time, which currently include medical, short term disability and pension

fund benefits.

Galitzer is also generally entitled to reimbursement for travel and other business expenses and other benefits, including,

vacation, holidays, company car and sick leave.

Subject to applicable law, Dr.

Galitzer is also covered by our D&O insurance policy.

In November 2017, Dr.

Galitzer was granted options to purchase 143,000 Ordinary Shares of the Company, under the Company's 2013 Equity

Incentive Plan, with an exercise price of $6.31, all of which are fully vested.

also granted Dr.

Galitzer options to purchase 175,000 Ordinary Shares of the Company, under the Company’s 2018 Plan, as of March

16, 2020, at an exercise price of $2.14.

Additionally, Dr.

Galitzer received a grant of options to purchase 125,000 Ordinary Shares under

the Company’s 2018 Plan, as of April 28, 2021, at an exercise price of $3.15, under the 2018 Plan.

In addition, Dr.

Galitzer received

a grant of options to purchase 60,000 Ordinary Shares of the Company, under the Company’s 2018 Plan, as of March 31, 2022, at an

exercise price of $2.86.

Equity Incentive Plan

Incentive Plan

March 17, 2013, our Board approved our 2013 Plan for the granting of stock options, restricted share units, restricted share awards and

performance-based awards, in order to provide incentives to our employees, directors, consultants and/or service providers.

As of December

31, 2022, 1,518,262 Ordinary Shares were issuable upon the exercise of outstanding awards under the 2013 Plan, at a weighted-average exercise

price of$5.71 per share.

As of December 31, 2022, all of the foregoing outstanding options had vested under the 2013 Plan.

granted under the 2013 Plan are subject to vesting schedules and generally vest over a four-year period commencing from the applicable

grant date, such that 25% of the awards vest on the first anniversary of the applicable grant date and 75% of the awards vest in 12 equal

installments upon the lapse of each three-month period following the first anniversary of the applicable grant date.

Subject to the discretion

of the 2013 Plan administrator, if an award has not been exercised within six years after the date of the grant, the award expires.

period in which a grantee is not our employee or has taken a leave of absence will not be included in such vesting period.

2013 Plan provides for granting awards in compliance with Section 102 of the Israeli Income Tax Ordinance, 5721-1961, or the Ordinance,

which provides to employees, directors and officers, who are not controlling shareholders (as defined in the Ordinance) and are Israeli

residents, favorable tax treatment for compensation in the form of shares or equity awards issued or granted, as applicable, to a trustee

under the capital gains track, or Capital Gains Track, for the benefit of the relevant employee, director or officer and are, or were,

to be held by the trustee for at least two years after the date of grant or issuance.

Under the Capital Gains Track, any accounting expense

with respect to the grant or issuance of such shares or awards which relates to gain taxed as capital gains is not allowed as a deduction

for tax purposes.

2013 Plan addresses the treatment of vested and unvested awards upon the cessation of employment or engagement of the award holder as

well as upon consummation of a merger, consolidation or similar transaction, or sale of all or substantially all of our assets or sale

of at least 80% of our outstanding securities.

The 2013 Plan also provides for certain lock-up arrangements upon consummation of a public

2013 Plan is administered by our Board or by a committee appointed by our Board.

Upon the completion of our initial public offering, the

remaining pool of reserved Ordinary Shares under the 2013 Plan was cancelled, and the only reserved Ordinary Shares available for grants

to our employees, directors, consultants and service providers in the future are those under the 2018 Plan (which is described below).

Equity Incentive Plan

July 2, 2018, in connection with the consummation of our initial public offering, our Board approved our 2018 Plan, with the purpose of

advancing the interests of our shareholders by enhancing our ability to attract, retain and motivate individuals to perform at the highest

The 2018 Plan governs issuances of equity incentive awards from and after the closing of our initial public offering.

number of Ordinary Shares initially available for issuance under equity incentive awards granted pursuant to the 2018 Plan could not exceed

12% of the total outstanding Ordinary Shares as of the time of adoption.

On January 1, 2019 and on January 1 of each calendar year thereafter,

an additional number of shares equal to 5% of the total outstanding Ordinary Shares on such date (or any lower number of shares as determined

by our Board) have and will become available for issuance under the 2018 Plan.

In our shareholders meeting held September 7, 2022, our

shareholders approved an amendment to the 2018 Plan to increase the number of Ordinary Shares issuable under the 2018 Plan by a one-time

additional amount of 576,188 Ordinary Shares.

As of December 31, 2022, a total of 922,080 Ordinary Shares representing 3.2% of the total

outstanding shares as of that date remained available for issuance under the 2018 Plan.

On January 1, 2023, pursuant to the annual evergreen

provision and following the approval of our Board, an additional 1,440,496 Ordinary Shares, equal to 5% of the total outstanding shares

as of January 1, 2023, became available for issuance under the 2018 Plan.

incentive awards may be granted to our employees, non-employee directors, consultants or other advisors, as well as holders of equity

compensation awards granted by a company that may be acquired by us in the future.

Awards under the 2018 Plan may be granted in the form

of options, share appreciation rights, restricted shares, restricted share units, performance awards or other share-based awards.

and share appreciation rights will have an exercise price determined by the administrator but that is no less than fair market value of

the underlying Ordinary Shares on the date of grant.

of December 31, 2022, 4,214,825 Ordinary Shares were issuable upon the exercise of outstanding awards under the 2018 Plan, at a weighted-average

exercise price of $2.04 per share.

Of the foregoing outstanding awards, as of December 31, 2022, options to purchase 1,653,531 Ordinary

Shares, in the aggregate, had vested under the 2018 Plan, with a weighted-average exercise price of $2.47 per share.

vesting conditions for grants under the 2018 Plan will be determined by the administrator and, in the case of restricted shares and restricted

share units, will be set forth in the applicable award documentation.

the event of a participant’s termination of employment, the administrator may, in its discretion, determine the extent to which

an equity incentive award may be exercised, settled, vested, paid or forfeited.

In the event of a change in control (as defined in the

2018 Plan) of the Company, the Compensation Committee may, in its discretion, take a number of actions with respect to awards outstanding

under the 2018 Plan, including the following:

(i) continuing awards or converting such awards into an award or right with respect to shares

of the successor or surviving corporation;

(ii) immediately vesting and settling awards (or in the case of options and share appreciation

rights, providing that such awards will become fully exercisable);

(iii) cancelling unvested awards for no consideration;

(iv) terminating

or cancelling awards in exchange for a cash payment;

and (v) providing that awards may be assumed, exchanged, replaced or continued by

the successor or surviving corporation with cash, securities, rights or other property.

In the event of a structural change of the Company

(i.e., a transaction in which the Company’s shares immediately prior to the transaction are converted into or exchanged for shares

that represent at least a majority of the share capital of the surviving corporation, such as a re-domestication of the Company or a share

flip), outstanding awards will be exchanged or converted into awards to acquire shares of the company (if it is the surviving corporation)

or the successor company in accordance with the applicable exchange ratio.

2018 Plan is administered by the Board, provided that the Board may delegate its authority to the Compensation Committee to administer

the 2018 Plan.

2018 Plan provides for granting awards in compliance with Section 102 of the Ordinance, which provides to employees, directors and officers

of the Company, who are not controlling shareholders (as defined in the Ordinance) of the Company and are Israeli residents, potential

favorable tax treatment for compensation in the form of shares or equity awards issued or granted, as applicable, to a trustee under the

Capital Gains Track for the benefit of the relevant employee, director or officer, subject to compliance with the terms and conditions

of such tax track.

Under the Capital Gains Track, any accounting expense with respect to the grant or issuance of such shares or awards

which relates to gain taxed as capital gains is not allowed as a deduction for tax purposes.

OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS

Ownership of Certain Beneficial Owners and Management

following table sets forth information known to us with respect to the beneficial ownership of our Ordinary Shares as of March 27, 2023

each person or entity known by us to own beneficially

5% or more of our outstanding Ordinary Shares;

each of our directors and executive officers individually;

all of our executive officers and directors as

beneficial ownership of our Ordinary Shares is determined in accordance with the rules of the SEC, and the information is not necessarily

indicative of beneficial ownership for any other purpose.

Under such rules, beneficial ownership, generally, includes any shares over

which a person exercises sole or shared voting or investment power.

For purposes of the table and the related footnotes, unless described

otherwise within the footnotes, Ordinary Shares issuable pursuant to options or warrants that are currently exercisable will become exercisable

within 60 following March 27, 2023 to be outstanding and 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, except with respect to the percentage ownership of all executive officers and directors as a group.

percentage of Ordinary Shares beneficially owned is based on 28,809,922 Ordinary Shares outstanding as of March 27, 2023.

The beneficial

ownership data provided below is based solely on information available to our Company and, in the case of major shareholders who are not

otherwise officers or directors, has not been verified further.

Except where otherwise indicated, we believe, based on information furnished

to us by such owners, that the beneficial owners of the Ordinary Shares listed below have sole investment and voting power with respect

to such shares.

otherwise noted below, each shareholder’s address is c/o Entera Bio Ltd., Kiryat Hadassah, Minrav Building - Fifth Floor, Jerusalem,

and Percentage of

Greater Shareholders (other than directors and executive officers)

D.N.A Biomedical Solutions

Gakasa Holdings LLC.(2)

Centillion Fund (3)

Officers and Directors:

Yonatan Malca(4)

Gerald Lieberman(5)

Hillel Galitzer(7)

Arthur Santora(8)

Sean Ellis(11)

Dana Yaacov-Garbeli(12)

Ron Mayron(13)

All Directors and Executive

Officers as a Group (10 persons)(14)

Biomedical Solutions Ltd.’s holdings consisted of 3,762,960 Ordinary Shares.

D.N.A’s address is at Shimon Hatarsi 43 St.,

Tel Aviv, Israel.

on the Schedule 13G/A filed by Gakasa Holdings LLC with the SEC on June 14, 2021 regarding its holdings as of May 19, 2021.

Gakasa Holdings

LLC’s address is 201 S.

Biscayne Blvd., Suite 800, Miami, Florida.

on the Schedule 13G/A filed by Centillion Fund Inc.

with the SEC on November 18, 2022 regarding its holdings as of August 31, 2022.

Fund Inc’s address is 10 Manoel Street, Castries, Saint Lucia LC04 101

of (i) 7,232 Ordinary Shares and (ii) 136,566 Ordinary Shares underlying options to acquire Ordinary Shares.

of (i) 210,659 Ordinary Shares and (ii) 283,856 Ordinary Shares underlying options to acquire Ordinary Shares.

of (i) 4,940 Ordinary Shares and (ii) 459,258 Ordinary Shares underlying options to acquire Ordinary Shares.

of (i) 34,106 Ordinary Shares and (ii) 351,750 Ordinary Shares underlying options to acquire Ordinary Shares.

of 60,000 Ordinary Shares underlying options to acquire Ordinary Shares.

of (i) 56,800 Ordinary Shares and (ii) 239,305 Ordinary Shares underlying options to acquire Ordinary Shares.

of (i) 10,000 Ordinary Shares and (ii) 136,566 Ordinary Shares underlying options to acquire Ordinary Shares.

of (i) 62,100 Ordinary Shares (ii) 3,000 Ordinary Shares underlying warrant to acquire Ordinary Shares and (iii) 136,566 Ordinary Shares

underlying options to acquire Ordinary Shares.

of (i) 56,580 Ordinary Shares and (ii) 95,000 Ordinary Shares underlying options to acquire Ordinary Shares.

of (i) 7,000 Ordinary Shares and (ii) 125,353 Ordinary Shares underlying options to acquire Ordinary Shares.

of (i) 449,417 ordinary Shares (ii) 3,000 Ordinary Shares underlying warrant to acquire Ordinary Shares and (iii) options to acquire 1,899,220

Ordinary Shares.

Authorized for Issuance under Equity Compensation Plans

following table provides certain information as of December 31, 2022, with respect to our equity compensation plans under which our equity

securities are authorized for issuance:

of securities to be issued upon exercise of outstanding options, RSUs, warrants and rights

Weighted-average

exercise price of outstanding options, RSUs,

of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (#)

Equity compensation plans

approved by security holders

Equity compensation plans

not approved by security holders

RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

below are any transactions occurring since January 1, 2021, and any currently proposed transactions to which either the Company was a

party and in which:

The amounts involved exceeded or will exceed the

lesser of (i) $120,000 and (ii) one percent of the average of the Company’s total assets at year-end for the last two completed

fiscal years;

A director, executive officer, holder of more

than 5% of the outstanding share capital of the Company, or any member of such person’s immediate family had or will have a direct

or indirect material interest.

Indemnification

Agreements with Directors

Articles provide that we may indemnify each of our directors and officers to the fullest extent permitted by the Companies law.

we have entered into standard indemnification agreements with each of our directors, whereby we have undertaken to indemnify each such

director, in advance, for losses, damages, costs or expenses that such director may suffer or incur as a result of his or her actions

or omissions in such capacity on behalf of the Company in certain circumstances and events, subject to the terms, conditions and limitations

set out in the indemnification agreement.

of Related Party Transactions

Companies Law requires that an “office holder” (as defined in the Companies Law) of a company promptly disclose any personal

interest that he or she may have and all related material information known to him or her, in connection with any existing or proposed

transaction of the company.

to the Companies Law, any transaction with an office holder or in which the office holder has a personal interest must be brought before

the Audit Committee, in order to determine whether such transaction is an Extraordinary Transaction.

to the Companies Law, our Articles and Entera written policy, in the event that the Audit Committee determines that the transaction is

not an Extraordinary Transaction, the transaction will require only Audit Committee approval;

if, however, it is determined to be an Extraordinary

Transaction, Board approval is also required and, in some circumstances, shareholder approval may also be required.

Such a transaction

may only be approved if it is determined to be in the best interests of Entera.

person with a personal interest in the matter generally may not be present at meetings of the Board or certain committees where the matter

is being considered and, if a member of the Board or a committee, may generally not vote on the matter.

with Controlling Shareholders

the Companies law, Extraordinary Transactions with a controlling shareholder, or in which the controlling shareholder has a personal interest,

and any engagement with a controlling shareholder, or a controlling shareholder’s relative, with respect to the provision of services

to the company or their Terms of Office and Employment as an office holder or their employment, if they are not an office holder, generally

require the approval of the Audit Committee (or with respect to Terms of Office and Employment, the Compensation Committee), the Board

of Directors and the shareholders.

If required, shareholder approval must include (i) at least a majority of the shareholders who do not

have a personal interest in the transaction and are present and voting at the meeting (abstentions are disregarded), or, alternatively,

that (ii) the total shareholdings of the disinterested shareholders who vote against the transaction do not represent more than two percent

of the voting rights in the company.

Transactions for a period of more than three years generally need to be brought for approval in accordance

with the above procedures every three years.

A shareholder who holds 25% or more of the voting rights in a company is considered a controlling

shareholder for these purposes if no other shareholder holds more than 50% of the voting rights.

If two or more shareholders are interested

parties in the same transaction, their shareholdings are combined for the purposes of calculating percentages.

Board undertook a review of the independence of each director.

Based on information provided by each director concerning his or her background,

employment, and affiliations, our Board has determined that the Board meets independence standards under the applicable rules and regulations

of the SEC and the listing standards of Nasdaq.

The Board has affirmatively determined that the following Directors are “independent”

as of the date of this Annual Report as defined in the listing standards of Nasdaq:

Gerald Lieberman, Ron Mayron, Gerald M.

Ellis and Yonatan Malca.

In making these determinations, our Board considered the current and prior relationships that each non-employee

director has with our Company and all other facts and circumstances our Board deemed relevant in determining their independence, including

the beneficial ownership of our capital stock by each non-employee director, and the transactions involving them described in this Item

ACCOUNTING FEES AND SERVICES

& Kesselman (a member firm of PricewaterhouseCoopers International Limited, or PwC) has served as our independent registered public

accounting firm for 2022 and 2021.

The following table sets forth fees billed to us by our independent registered public accounting firm

during the fiscal years ended December 31, 2022 and 2021 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 during the period in connection with tax compliance, tax advice and tax planning;

and (iv) all other fees for services rendered.

professional services rendered in connection with the audit of our annual financial statements and the review of our interim financial

statements and services related to certain registration statements.

consulting services.

Committee Pre-approval Policies and Procedures

Audit Committee is responsible for pre-approving audit and non-audit services provided to us by our independent registered public accounting

All of the non-audit services provided to us by the independent auditors following the formation of our Audit Committee were pre-approved

by the Audit Committee.

FINANCIAL STATEMENT SCHEDULES.

Documents filed as part

of this report:

Financial statements

See Item 8 for Financial

Statements included with this Annual Report.

Financial Statement Schedules

and Restated Articles of Association of Entera Bio Ltd.

(incorporated by reference to Exhibit 1.1 to the Form 20-F, filed with the SEC

on March 18, 2021).

of rights of each applicable class of securities registered under Section 12 of the Securities Exchange Act of 1934 (incorporated by reference

to Exhibit 2.2 to the Form 20-F filed with the SEC on March 18, 2021).

Form of Ordinary Share Certificate (incorporated by reference to Exhibit 4.1 to the Registration Statement on Form F-1 (File No.

filed with the SEC on November 9, 2017)

of IPO Warrant (incorporated herein by reference to Exhibit 4.2 to the Company’s Registration Statement on Form F-1 (File No.

filed with the SEC on May 17, 2018)

of Underwriter Warrant issued by the Registrant to Maxim Group LLC (incorporated by reference to Exhibit 4.3 to the Registration Statement

on Form F-1 (File No.

333-221472) filed with the SEC on May 17, 2018)

of Warrant issued by the Registrant to GP Nurmenkari Inc.

(incorporated by reference to Exhibit 4.5 to the Registration Statement on Form

F-1 (File No.

333-221472) filed with the SEC on November 9, 2017)

and Restated Investor’s Rights Agreement, dated as of October 4, 2017, between the Registrant and the other parties thereto (incorporated

by reference to Exhibit 10.10 to the Registration Statement on Form F-1 (File No.

333-221472) filed with the SEC on November 9, 2017)

Transfer Agreement, dated as of February 22, 2011, between the Registrant and Oramed Ltd.

(incorporated by reference to Exhibit 10.1 to

the Registration Statement on Form F-1 (File No.

333-221472) filed with the SEC on November 9, 2017)

of Warrant Agency Agreement (incorporated by reference to Exhibit 10.18 to the Registration Statement on Form F-1 (File No.

filed with the SEC on June 15, 2018)

of Regulation D Private Placement Subscription Agreement (incorporated by reference to Exhibit 4.25 to the Form 20-F filed with the SEC

on March 18, 2021).

Agreement, dated December 13, 2019, between the Registrant and D.N.A Biomedical Solutions Ltd.

(incorporated by reference to Exhibit 4.26

to the Form 20-F filed with the SEC on March 18, 2021).

Rights Agreement, dated December 10, 2019, between the Registrant and the other parties thereto (incorporated by reference to Exhibit

4.28 to the Form 20-F filed with the SEC on March 18, 2021).

Agreement, dated September 2, 2022, between Entera Bio.

and SVB Securities LLC (incorporated by reference to Exhibit 10.1 to the

Form 8-K filed with the SEC on September 2, 2022)

Collaboration and License Agreement, dated as of December 10, 2018, between Amgen Inc.

and Entera Bio Ltd.

(incorporated by reference

to Exhibit 4.28 to the Amended Annual Report on Form 20-F/A (File No.

001-38556) filed with the SEC on April 17, 2019)

of indemnification agreement between the Registrant and its directors and executive officers (incorporated by reference to Exhibit 10.12

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

333-221472) filed with the SEC on November 20, 2017)

Entera Bio Ltd.

Share Incentive Plan (incorporated by reference to Exhibit 10.4 to the Registration Statement on Form F-1 (File No.

filed with the SEC on November 9, 2017)

Equity Incentive Plan (incorporated by reference to Exhibit 99 to the Registration Statement on Form S-8 (File No.

333-227488) filed with

the SEC on September 24, 2018)

of Stock Option Award Agreement under the 2018 Equity Incentive Plan (incorporated by reference to Exhibit 4.25 to the Annual Report on

Form 20-F (File No.

001-38556) filed with the SEC on March 28, 2019)

and Restated Employment Agreement, dated July 15, 2022, by and between Entera Bio Ltd.

and Miranda Toledano (incorporated by reference

to Exhibit 10.1 to the Form 8-K filed with the SEC on July 18, 2022)

agreement, dated June 2, 2019, between Entera Bio Ltd.

and Dana Yaacov Garbeli (through A2Z Finance Ltd.), as amended.

Agreement, dated as of June 8, 2014, between Entera Bio Ltd.

Hillel Galitzer, as amended.

Agreement, dated as of January 4, 2021 between Entera Bio Ltd.

Spiros Jamas (incorporated by reference to Exhibit 4.30 to the

Form 20-F, filed with the SEC on March 18, 2021).

Separation Agreement, dated July 13, 2022, by and between Entera Bio Ltd.

Spiros Jamas (incorporated by reference to Exhibit 10.2

to the Form 8-K filed with the SEC on July 18, 2022)

Separation Agreement, dated June 15, 2022, by and between Entera Bio Ltd.

Phillip Schwartz (incorporated by reference to Exhibit

10.1 to the Form 8-K filed with the SEC on June 17, 2022)

of Subsidiaries

of Kesselman & Kesselman, an independent registered public accounting firm in Israel and a member of PricewaterhouseCoopers International

Certification

of Principal Executive Officer of Entera Bio Ltd.

pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Certification

of Principal Financial and Accounting Officer of Entera Bio Ltd.

pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Certification

of Principal Executive Officer of Entera Bio Ltd.

pursuant to Section 906 of the Sarbanes-Oxley act of 2002

Certification

of Principal Financial and Accounting Officer of Entera Bio Ltd.

pursuant to Section 906 of the Sarbanes-Oxley act of 2002

XBRL Instance Document

XBRL Taxonomy Extension Schema Document

XBRL Taxonomy Extension Calculation Linkbase Document

XBRL Taxonomy Extension Definition Linkbase Document

XBRL Taxonomy Extension Label Linkbase Document

XBRL Taxonomy Extension Presentation Linkbase Document

XBRL for the cover page of this Annual Report on Form 10-K, included in the Exhibit 101 Inline XBRL Document Set.

_____________________

† Management contract

or compensatory plan or arrangement.

* Filed herewith.

** Furnished herewith.

†† Confidential

treatment granted as to portions of the exhibit.

Confidential materials omitted and filed separately with the Securities and Exchange

to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed

on its behalf by the undersigned, thereunto duly authorized.

March 31, 2023

ENTERA BIO LTD.

/s/ Miranda J.

Chief Executive Officer

ALL MEN BY THESE PRESENTS, that each of the undersigned constitutes and appoints each of Miranda J.

Toledano and Dana Yaacov-Garbelli,

or any of them, each acting alone, his true and lawful attorney-in-fact and agent, with full power of substitution and resubstituting,

for such person and in his name, place and stead, in any and all capacities, to sign 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, each acting alone, full power and authority to do and perform each and every act and thing requisite

and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying

and confirming that any such attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue

to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the

registrant and in the capacities and on the dates indicated.

Executive Officer and Director

Executive Officer)

Dana Yaacov-Garbeli

Financial Officer

Yaacov-Garbeli

Financial and Accounting Officer)

Gerald Lieberman

Yonatan Malca

NOTE 8 - SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION:

Balance sheets:

Accrued expenses and other payables:

Employees and employees related

Provision for vacation

Accrued expenses

NOTE 9 - SUBSEQUENT EVENTS

On January 1, 2024, an aggregate of 758,331 options to purchase ordinary shares were granted to seven non-executive board members with an exercise price of $ 0.60 per share.

The options will vest over one year in four equal quarterly installments starting on January 1, 2024.

This grant was approved by the shareholders of the Company on October 4, 2021.

On February 1, 2024, the Company entered into a consulting agreement.

Under the terms of the agreement, the Company agreed to pay a monthly fee of $ 5 and to issue the consultant 25,000 RSUs.

The RSUs vest over five months in five equal monthly installments starting on February 1, 2024.

On February 15, 2024, the Company entered into an investor relations consulting agreement.

Under the terms of the agreement, the Company agreed to issue the consultant 50,000 RSUs.

The RSUs vest over five months in five equal monthly installments starting on February 15, 2024.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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

What changed 10-K

Item 7A. Quantitative and Qualitative Disclosures About Market Risk