Entera Bio Ltd. 10-K

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA ENTERA BIO LTD. CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2025 TABLE OF CONTENTS Page REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB ID 1309 ) 92 CONSOLIDATED FINANCIAL STATEMENTS: Consolidated Balance Sheets 94 Consolidated Statements of Operations 95 Consolidated Statements of Changes in Shareholders' Equity 96 Consolidated Statements of Cash Flows 97 Notes to the Consolidated Financial Statements 98 91 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, 2025 and 2024, 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, 2025 and 2024, 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. 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 . This matter is also described in the “Critical Audit Matters” section of our report. 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 audits 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. 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. 92 Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. The Company’s ability to continue as a going concern As described above and in Note 1c to the consolidated financial statements, the Company has an accumulated deficit and cash outflows from operating activities. The Company's ability to continue its operations relies on securing the necessary funding to support its future research and clinical development activities. These conditions and events raise substantial doubt about the Company's ability to continue as a going concern. The principal considerations for our determination that performing procedures related to the Company’s ability to continue as a going concern is a critical audit matter are the estimation and execution uncertainty regarding the Company’s future cash flows and management’s judgments and assumptions in estimating these cash flows to conclude the Company would not have sufficient liquidity to fund its operations for at least one year from the date of issuance of the consolidated financial statements. This in turn led to a high degree of auditor subjectivity and judgment to evaluate the audit evidence supporting the liquidity conclusions. Addressing the matter involved performing procedures and evaluating audit evidence in connection with our overall opinion on the consolidated financial statements. Our audit procedures to evaluate the significant judgments and assumptions made by management included, among others, inquiries with management, testing the reasonableness of the forecasted inflows and operating expenses and the underlying management assumptions. We assessed the adequacy of the Company’s going concern disclosures included in Note 1c to the consolidated financial statements. /s/ Kesselman & Kesselman Certified Public Accountants (Isr.) A member firm of PricewaterhouseCoopers International Limited Tel-Aviv, Israel March 27, 2026 We have served as the Company’s auditor since 2010. 93 ENTERA BIO LTD. CONSOLIDATED BALANCE SHEETS (U.S. dollars in thousands, except share data) December 31 2025 2024 Assets CURRENT ASSETS: Cash and cash equivalents 7,108 8,660 Accounts receivable - 126 Restricted cash 7,775 - Other current assets 415 186 TOTAL CURRENT ASSETS 15,298 8,972 NON-CURRENT ASSETS: Property and equipment, net 134 57 Operating lease right-of-use assets 465 275 Restricted deposit 90 80 Funds in respect of employee rights upon retirement 6 6 TOTAL NON-CURRENT ASSETS 695 418 TOTAL ASSETS 15,993 9,390 Liabilities and shareholders' equity CURRENT LIABILITIES: Accounts payable 448 132 Accrued expenses and other payables 1,525 874 Current maturities of operating lease 230 170 TOTAL CURRENT LIABILITIES 2,203 1,176 NON-CURRENT LIABILITIES : Operating lease liabilities 260 102 Other long-term liability 393 - Liability for employee rights upon retirement 36 32 TOTAL NON-CURRENT LIABILITIES 689 134 TOTAL LIABILITIES 2,892 1,310 COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY: Ordinary Shares, NIS 0.0000769 par value: Authorized - as of December 31, 2025 and December 31, 2024, 140,010,000 shares; issued and outstanding as of December 31, 2025, and December 31, 2024, 46,178,630 and 38,837,220 shares, respectively 1 1 Additional paid-in capital 138,425 121,965 Accumulated other comprehensive income 41 41 Accumulated deficit ( 125,366 ) ( 113,927 ) TOTAL SHAREHOLDERS' EQUITY 13,101 8,080 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 15,993 9,390 The accompanying notes are an integral part of the consolidated financial statements. 94 ENTERA BIO LTD. CONSOLIDATED STATEMENTS OF OPERATIONS (U.S. dollars in thousands, except share and per share data) Year ended December 31 2025 2024 REVENUES 42 181 COST OF REVENUES 42 172 GROSS PROFIT - 9 OPERATING EXPENSES: Research and development, net 6,004 4,499 General and administrative 5,525 5,095 TOTAL OPERATING EXPENSES 11,529 9,594 OPERATING LOSS 11,529 9,585 FINANCIAL INCOME, NET ( 90 ) ( 58 ) LOSS BEFORE INCOME TAX 11,439 9,527 INCOME TAX EXPENSES - 14 NET LOSS 11,439 9,541 LOSS PER SHARE BASIC AND DILUTED 0.25 0.25 WEIGHTED-AVERAGE NUMBER OF SHARES OUTSTANDING USED IN COMPUTATION OF BASIC AND DILUTED LOSS PER SHARE 46,191,067 37,650,179 The accompanying notes are an integral part of the consolidated financial statements. 95 ENTERA BIO LTD. CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (U.S. dollars in thousands, except share and per share data) Ordinary shares Number of shares issued Amounts Additional paid-in capital Accumulated other Comprehensive income Accumulated deficit Total BALANCE AT JANUARY 1, 2024 35,476,341 1 114,730 41 ( 104,386 ) 10,386 Net loss - - - - ( 9,541 ) ( 9,541 ) Exercise of warrants to ordinary shares 89,820 * 90 - - 90 Exercise of options to ordinary shares 733,704 * 749 - - 749 Issuance of ordinary shares under the ATM program, net of issuance costs 2,236,126 * 3,840 - - 3,840 Vested restricted share units 301,229 * ( * ) - - - Share-based compensation - - 2,556 - - 2,556 BALANCE AT DECEMBER 31, 2024 38,837,220 1 121,965 41 ( 113,927 ) 8,080 Net loss - - - - ( 11,439 ) ( 11,439 ) Exercise of warrants to ordinary shares 546,028 * 508 - - 508 Exercise of options to ordinary shares 26,448 * 20 - - 20 Issuance of ordinary shares under the ATM program, net of issuance costs 2,731,574 * 6,067 - - 6,067 Issuance of ordinary shares under collaboration agreement, net 3,685,226 * 7,115 - - 7,115 Vested restricted share units 352,134 * ( * ) - - - Share-based compensation - - 2,750 - - 2,750 BALANCE AT DECEMBER 31, 2025 46,178,630 1 138,425 41 ( 125,366 ) 13,101 * Represents an amount less than one thousand U.S. dollars. The accompanying notes are an integral part of these consolidated financial statements. 96 ENTERA BIO LTD. CONSOLIDATED STATEMENTS OF CASH FLOWS (U.S. dollars in thousands) Year ended December 31 2025 2024 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss ( 11,439 ) ( 9,541 ) Adjustments required to reconcile net loss to net cash used in operating activities: Depreciation 30 46 Deferred income taxes 14 Share-based compensation 2,750 2,556 Finance income, net 32 ( 5 ) Changes in operating assets and liabilities: Decrease (increase) in accounts receivable 126 ( 126 ) Increase in other current assets ( 229 ) ( 14 ) Increase in accounts payable 316 49 Increase in accrued expenses and other payables and other long-term liability 1,044 203 Net cash used in operating activities ( 7,370 ) ( 6,818 ) CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment ( 107 ) ( 3 ) Net cash used in investing activities ( 107 ) ( 3 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from ordinary issuance of shares through ATM programs 6,254 3,960 Issuance of ordinary shares, under collaboration agreement 7,190 - Issuance costs ( 262 ) ( 323 ) Exercise of warrants into ordinary shares 508 90 Exercise of options into ordinary shares 20 749 Net cash provided by financing activities 13,710 4,476 EFFECT OF EXCHANGE RATE CHANGE ON CASH AND CASH EQUIVALENTS 36 - INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED DEPOSITS 6,197 ( 2,345 ) CASH, CASH EQUIVALENTS AND RESTRICTED DEPOSITS AT BEGINNING OF THE YEAR 8,740 11,085 CASH, CASH EQUIVALENTS AND RESTRICTED DEPOSITS AT END OF THE YEAR 14,973 8,740 Reconciliation in amounts on consolidated balance sheets: Cash and cash equivalents 7,108 8,660 Restricted cash 7,775 - Restricted deposit 90 80 Total cash and cash equivalents, restricted cash and restricted deposit 14,973 8,740 SUPPLEMENTAL DISCLOSURE OF CASH FLOW TRANSACTIONS: Interest received 180 68 SUPPLEMENTARY INFORMATION ON INVESTING AND FINANCING ACTIVITIES NOT INVOLVING CASH FLOWS: Operating lease right of use assets obtained in exchange for operating lease liabilities 386 32 The accompanying notes are an integral part of the consolidated financial statements. 97 ENTERA BIO LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (U.S. dollars in thousands, except share and per share amounts) NOTE 1 - DESCRIPTION OF BUSINESS a) 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 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 without prior fracture. The Company is also developing a next-generation formulation of EB613 utilizing its proprietary N-Tab ® platform, which is expected to provide significant advantages in administration, commercialization, and strategic partnering. The Company is preparing to submit final protocol to the FDA and initiate a Phase 3 registrational study for EB613 pursuant to the FDA’s qualification of a quantitative BMD endpoint. The Company’s product candidate, EB612, is being developed as the first oral PTH(1-34) tablet peptide replacement therapy for hypoparathyroidism. In February 2026, the Company amended and restated the 2025 Collaboration Agreement (as defined in Note 5) with OPKO Biologics, Inc., a subsidiary of OPKO Health, Inc. (“OPKO”), to advance the first oral long-acting PTH analog (“LA-PTH”) as a once-daily tablet for patients with hypoparathyroidism. In addition, EB618 is being developed pursuant to the Company’s collaboration with OPKO, pursuant to which the companies are advancing a proprietary novel dual agonist GLP-1/glucagon peptide as a once-daily tablet treatment and as a weekly subcutaneous injection for patients with obesity, metabolic and fibrotic disorders. The oral program combines OPKO’s proprietary long-acting oxyntomodulin (“OXM”) analog (OPK-88006) and the Company’s proprietary N-Tab ® platform. In addition to its internal product development programs, the Company intends to license its proprietary N-Tab ® platform to biopharmaceutical companies for use with their proprietary compounds. b) The Company's ordinary shares, NIS 0.0000769 par value per share (“ordinary shares”), are listed on the Nasdaq Capital Market under the symbol “ENTX”. c) Because the Company is engaged in research and development activities, it has not derived significant income from its activities and has incurred negative cash flows from operating activities. The Company has incurred an accumulated deficit in the amount of $ 125.4 million as of December 31, 2025. The Company's management is of the opinion that its available funds as of December 31, 2025 will be sufficient to support the Company’s ongoing operations under its current plans through the middle of the third quarter of 2026. 98 ENTERA BIO LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (U.S. dollars in thousands, except share and per share amounts) NOTE 1 - DESCRIPTION OF BUSINESS (continued) The Company’s current capital resources do not include the capital required to fund the Company's proposed Phase 3 program for EB613 in osteoporosis. These factors raise substantial doubt as to the Company's ability to continue as a going concern. Management continually evaluates various financing alternatives and strategic collaborations, as the Company will need to finance future research and clinical development with additional capital. However, there is no certainty that the Company will be able to obtain such funding. These consolidated financial statements do not include any adjustments that may be necessary should the Company be unable to continue as a going concern. d) In October 2023, Israel was attacked by Hamas, a terrorist organization and entered a state of war. Since the commencement of these events, there have been additional active hostilities, including with Hezbollah in Lebanon, the Houthi movement which controls parts of Yemen, and Iran. In response to ongoing Iranian aggression and support of proxy attacks against Israel, on June 12, 2025, Israel conducted a series of preemptive defensive air strikes in Iran targeting Iran’s nuclear program and military commanders. On June 21, 2025, U.S. President Donald Trump announced that the United States had conducted air strikes against three nuclear sites within Iran. On October 9, 2025, a ceasefire had been reached. Israel, Hamas, the United States and other countries in the region agreed to a framework for a ceasefire in Gaza between Israel and Hamas. On February 28, 2026, the United States and Israel conducted preemptive strikes targeting Iranian military infrastructure. Iran retaliated with extensive ballistic missile and drone attacks against Israel. On March 2, 2026, Hezbollah resumed hostilities by launching projectiles into northern Israel, ending the November 2024 ceasefire. Israel responded with airstrikes on Lebanon and ground operations in Southern Lebanon, marking a significant escalation in the regional conflict. How long and how severe the current conflicts in Gaza, Northern Israel, Lebanon, Iran or the broader region become is unknown at this time and any continued clash among Israel, Hamas, Hezbollah, Iran or other countries or militant groups in the region may escalate in the future into a greater regional conflict. The Company’s research personnel and certain management personnel are located in Israel, however other core activities including clinical, regulatory and supply chain are located outside of Israel. Currently, the Company’s activities in Israel remain largely unaffected by the foregoing events. During the years ended December 31, 2025 and December 31, 2024, the impact of such events on the Company’s results of operations and financial condition was immaterial. NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES a. 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. GAAP”). 99 ENTERA BIO LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (U.S. dollars in thousands, except share and per share amounts) NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued) b. 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. c. Functional currency 1) 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 Company operates (the “functional currency”). The U.S. 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. dollars. The functional currency of the subsidiary is the U.S. dollar. 2) 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. dollars using historical and current exchange rates for non-monetary and monetary balances, respectively. For non-U.S. 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, net, as appropriate. d. 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. e. 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. f. 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 1-4% for the years ended December 31, 2025 and 2024. Bank deposits with maturity of more than one year are considered long-term. 100 ENTERA BIO LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (U.S. dollars in thousands, except share and per share amounts) NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued) g. Restricted cash and deposits Restricted deposits are placed in an interest-bearing savings account and serve as security for the Company's office rent and credit card obligations. Restricted cash is designated specifically to fund the development costs under the 2025 Collaboration Agreement. h. Concentrations of credit risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents and restricted cash. The Company maintains cash held in checking accounts and deposits at financial institutions in major Israeli and U.S. banks. Management believes the Company is not exposed to significant credit risk with respect to its cash and cash equivalent deposits and restricted cash at its current financial institutions, 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. i. 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: Level 1: 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. Level 2: Observable inputs that are based on inputs not quoted on active markets but corroborated by market data. Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs. 101 ENTERA BIO LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (U.S. dollars in thousands, except share and per share amounts) NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued) j. 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. 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. 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’s 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”). The amounts of severance payment expenses were $ 181 and $ 144 for the years ended December 31, 2025 and 2024, respectively. The Company expects to contribute to insurance companies approximately $ 181 for the year ending December 31, 2026 in connection with its expected severance liabilities for that year. k. Leases 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. 102 ENTERA BIO LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (U.S. dollars in thousands, except share and per share amounts) NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued) l. Property and equipment 1) Property and equipment are stated at cost, net of accumulated depreciation and amortization. 2) 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: Years Computer equipment 3 - 5 Office furniture 10 Laboratory equipment 7 - 10 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. m. Share-based compensation The Company grants share options and restricted share units (“RSUs”) (together “Share-Based Compensation”) to its employees, directors and non-employees in consideration for services rendered. The Company classifies Share-Based Compensation as equity awards and accounts for such compensation using grant-date fair value. The Company recognizes the value of the Share-Based Compensation awards as an expense over the requisite service period. 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. 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. 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. 103 ENTERA BIO LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (U.S. dollars in thousands, except share and per share amounts) NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued) n. 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. o. Revenue recognition The Company recognizes revenues according to ASC 606, "Revenues from Contracts with Customers”. ASC 606 Revenue from Contracts with Customer introduces a five-step model for recognizing revenue from contracts with customers, as follows: 1. Identify the contract with a customer. 2. Identify the performance obligations in the contract. 3. Determine the transaction price. 4. Allocate the transaction price to the performance obligations in the contract. 5. Recognize revenue when (or as) the entity satisfies a performance obligation. Revenues attributed to the research services agreement are recognized over the duration of the research services agreement. p. Collaborative Arrangement The Company records the elements of a collaboration agreement that represent joint operating activities in accordance with ASC 808, Collaborative Arrangements (“ASC 808”). Accordingly, the elements of a collaboration agreement that represent activities in which both parties are active participants, and to which both parties are exposed to the significant risks and rewards that are dependent on the commercial success of the collaborative activities, are recorded as a collaborative arrangement. Generally, the classification of a transaction under a collaborative arrangement is determined based on the nature and contractual terms of the arrangement along with the nature of the operations of the participants. See Note 5b. 104 ENTERA BIO LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (U.S. dollars in thousands, except share and per share amounts) NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued) q. Income taxes 1) 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. 2) 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. r. Loss per share Basic loss per share is computed on the basis of the net loss for the period, divided by the weighted average number of outstanding ordinary shares, vested RSUs and pre-funded warrants during the period. Diluted loss per share is based upon the weighted average number of ordinary shares and ordinary share equivalents outstanding when dilutive. Ordinary share equivalents include outstanding stock options, warrants and RSUs, which are included under the treasury stock method when dilutive. The calculation of diluted loss per share does not include options, warrants and RSUs exercisable into 17,351,501 ordinary shares and 16,790,842 ordinary shares for the years ended December 31, 2025 and 2024, respectively, because the effect would have been anti-dilutive. s. 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. t. Warrants 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. To determine whether the freestanding equity instrument qualifies for classification within equity, the Company also considers the equity classification conditions in accordance with ASC 815-40. All warrants issued by the Company have been classified within stockholders’ equity as “Additional paid-in capital”. 105 ENTERA BIO LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (U.S. dollars in thousands, except share and per share amounts) NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued) u. Newly issued and recently adopted accounting pronouncements: Recently adopted accounting pronouncements 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 U.S. and in foreign jurisdictions. ASU 2023-09 became effective for fiscal years beginning after December 15, 2024 and may be applied either retrospectively or prospectively, at the Company’s discretion. The Company adopted this standard retrospectively. See Note 9. Recently issued accounting pronouncements, not yet adopted In November 2024, the FASB issued ASU 2024-03 “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses”, which requires disclosure about the types of costs and expenses included in certain expense captions presented on the income statement. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted, and may be applied either prospectively or retrospectively. The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements disclosures. In December 2025, the FASB issued ASU 2025-10 “Government Grants (Topic 832)“ to establish authoritative guidance on the accounting for government grants received by business entities. This update is effective beginning with the Company’s 2029 fiscal year annual reporting period, with early adoption permitted. The Company is currently evaluating the impact that the adoption of this standard will have on its consolidated financial statements. NOTE 3 - OPERATING LEASES 1) The Company leases office and research and development space under several agreements. The annual lease consideration is a total of $ 196 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 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, 2025, the Company provided bank guarantees of approximately $ 60 , in the aggregate, to secure the fulfillment of its obligations under the lease agreements. 2) 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 $ 44 . 106 ENTERA BIO LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (U.S. dollars in thousands, except share and per share amounts) NOTE 3 - OPERATING LEASES (continued) The lease cost was as follows: Year ended December 31, 2025 Year ended December 31, 2024 Operating lease cost 240 198 Supplemental cash flow information related to leases was as follows: Year ended December 31, 2025 Year ended December 31, 2024 Operating cash flows from operating leases 240 198 Supplemental balance sheet information related to operating leases was as follows: December 31, 2025 December 31, 2024 Operating Leases Operating lease right-of-use assets 465 275 Current lease liabilities 230 170 Non-current lease liabilities 260 102 Total lease liabilities 490 272 Weighted-average remaining lease term (in years) 2.43 1.54 Weighted-average discount rate 14 % 14 % As of December 31, 2025, the maturity of lease liabilities under our non-cancelable operating leases were as follows: 2026 238 2027 222 2028 107 Total future minimum lease payments 567 Less: interest ( 77 ) Present value of operating lease liabilities 490 107 ENTERA BIO LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (U.S. dollars in thousands, except share and per share amounts) NOTE 4 - COMMITMENTS AND CONTINGENCIES a. 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 of the PTH for osteoporosis. At the time the grants were received, successful development of the related project was not assumed. 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 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, 2025, 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 a former collaboration agreement in 2018, the IIA determined that the Company was required to pay 5.38 % of each payment received by the Company from the counterparty under such agreement in an amount up to six times the grant received. As of December 31, 2025, the Company had paid a total of $ 96 to the IIA. b. On June 1, 2010, D.N.A. Biomedical Solutions Ltd. ("D.N.A.") and Oramed Ltd., ("Oramed") entered into a joint venture agreement for the establishment of Entera Bio Ltd. According to such 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. On February 22, 2011, Oramed and the Company entered into a patent transfer agreement, which 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). 108 ENTERA BIO LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (U.S. dollars in thousands, except share and per share amounts) NOTE 5 - COLLABORATION AND RESEARCH AGREEMENTS a. In April 2024, the Company entered into a material transfer and research project agreement with a third party. According to the agreement, the third party will pay the Company a monthly payment for certain research services, as well as reimbursement for external expenses based on an agreed budget. During the first quarter of 2025, the Company completed the first stage of the research services under this agreement. For years ended December 31, 2025 and 2024, the Company recognized revenues of $ 42 and $ 181 , respectively, from this agreement. b. On March 16, 2025, the Company entered into a collaboration and license agreement (the “2025 Collaboration Agreement”) with OPKO and its wholly owned subsidiary, OPKO Biologics Ltd., to collaborate with respect to the preclinical and clinical development and decision making related to the oral delivery of a dual agonist GLP-1/glucagon peptide in an oral dosage form using the Company’s N-Tab ® platform for the treatment of obesity, metabolic and fibrotic disorders in humans (the “Program”). The Program combines OPKO’s proprietary long-acting oxyntomodulin (OXM, dual targeted GLP-1/Glucagon agonist, OPK-88006) analog and the Company’s proprietary N-Tab ® platform. Under the 2025 Collaboration Agreement, the Company granted to OPKO an exclusive, sublicensable and non-transferable, worldwide license to certain of the Company's intellectual property and technology solely to develop, manufacture, and commercialize any GLP-1/glucagon dual agonist as an oral treatment form for the treatment of obesity, metabolic, cardiovascular, and fibrotic disorders in humans, and OPKO granted to the Company a non-exclusive, non-sublicensable and non-transferable license to certain of OPKO’s intellectual property and technology to the extent necessary for the Company to perform its obligations in relation to the Program, in each case subject to the exceptions contained therein. Under the terms of the 2025 Collaboration Agreement, the Company and OPKO will retain 40% and 60%, respectively, of all proceeds deriving from the Program, and will be responsible for 40% and 60% of the Program’s development costs, respectively. Following the completion of the Phase 1 stage, the Company may continue to fund its 40% share of the Program to maintain its right to proceeds or to opt-out (the “Opt-Out”). If the Company exercises the Opt-Out, then the Company and OPKO will retain 15% and 85%, respectively, of all proceeds deriving from the Program, while OPKO will be solely responsible for ongoing development and commercialization funding of the Program. In connection with the execution of the 2025 Collaboration Agreement, the Company issued and sold to OPKO an aggregate of 3,685,226 ordinary shares for a total purchase price of $ 8.0 million, representing a purchase price per share equal to approximately $ 2.17 , which was the volume weighted average price per share for the 30 trading days immediately preceding the date of the 2025 Collaboration Agreement. OPKO has agreed to a customary lockup with respect to such shares, and may not sell or otherwise transfer them for a period of 12 months following the date of the 2025 Collaboration Agreement, and OPKO has additionally agreed to a customary “standstill” provision, pursuant to which, for a 24-month period following the date of the 2025 Collaboration Agreement, OPKO may not acquire additional equity in the Company or otherwise take certain other actions, in each case without the Company’s consent. The Company has agreed to use the proceeds from the sale of the foregoing ordinary shares solely to fund its development cost obligations under the 2025 Collaboration Agreement, and has entered into an escrow arrangement, together with OPKO and an escrow agent, into which such proceeds in an amount of $ 8,000 have been deposited. Such proceeds are presented under restricted cash in the consolidated balance sheet, and disbursed to fund such development costs. If the 2025 Collaboration Agreement expires or is terminated for any reason, any funds remaining in such escrow will be disbursed to the Company. 109 ENTERA BIO LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (U.S. dollars in thousands, except share and per share amounts) NOTE 5 - COLLABORATION AND RESEARCH AGREEMENTS (Cont.) The Company determined that the agreement is a collaboration arrangement under the scope of ASC 808, as the parties are active participants and exposed to the risks and rewards of the collaborative activity. The consideration received was allocated to the collaboration component and the equity component. The Company recognized as equity the fair value of the ordinary shares issued to OPKO net of issuance costs (issuance costs of $ 75 ) based on the fair value of the ordinary shares, which was the Nasdaq closing share price as of the date of the 2025 Collaboration Agreement. The remaining consideration was allocated to the agreement and presented under current other payables (an amount of $ 295 ) and Other long-term liabilities (an amount of $ 515 ) in the balance sheet and will be recognized as the program is performed. For the year ended December 31, 2025, the Company recognized net expenses of $ 437 relating to the 2025 Collaboration Agreement. See Note 11 for a discussion of the A&R Collaboration Agreement. NOTE 6 - SHARE CAPITAL 1) Rights of the Company’s ordinary shares Each ordinary share is entitled to one vote . The holder of an ordinary share 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. 2) Changes in share capital: a. On September 2, 2022, the Company entered into a sales agreement with Leerink Partners LLC (formerly known as SVB Securities LLC), as sales agent, to implement an ATM program under which the Company had originally been able from time to time offer and sell up to 5,000,000 ordinary shares (the “Leerink ATM Program”). On January 10, 2025, the Company filed Supplement No. 1 to the prospectus supplement relating to the Leerink ATM Program, which provides the Company with the ability to sell up to an additional 30,000,000 ordinary shares under the Leerink ATM Program. In June 2025, following the filing a new Registration Statement on Form S-3 to replace the Company’s prior expiring Registration Statement on Form S-3, the Company filed a new prospectus supplement that provides the Company with the ability, but not the obligation, to continue to sell up to 30,000,000 ordinary shares under the Leerink ATM Program. During the year ended December 31, 2025, the Company issued an aggregate of 2,731,574 ordinary shares pursuant to the Leerink ATM Program for net proceeds of $ 6,067 at a weighted average price of $ 2.29 per ordinary share. 110 ENTERA BIO LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (U.S. dollars in thousands, except share and per share amounts) NOTE 6 - SHARE CAPITAL (continued) As of December 31, 2025, approximately $ 29.95 million of ordinary shares remained available for sale under the Leerink ATM Program. b. On January 15, 2025, the Company issued 40,993 ordinary shares to five non-executive members of the board of directors in lieu cash board fees for the fourth quarter of 2024, which was approved by the Company’s shareholders at a meeting of the Company’s shareholders held on July 31, 2024. c. In March 2025, in connection with the execution the 2025 Collaboration Agreement with OPKO, the Company issued and sold to OPKO an aggregate of 3,685,226 ordinary shares for a total purchase price of $ 8.0 million, representing a purchase price per share equal to approximately $ 2.17 , which was the volume weighted average price per share for the 30 trading days immediately preceding the date of the 2025 Collaboration Agreement. For additional information, see Note 5b. d. During year ended December 31, 2025, 546,028 warrants were exercised for an aggregate of 546,028 ordinary shares for a total consideration of $ 508 . e. During the year ended December 31, 2025, two employees exercised options for an aggregate of 26,448 ordinary shares for total consideration of $ 20 . NOTE 7 - SHARE-BASED COMPENSATION 1) Share-based compensation 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”), RSUs, restricted share awards and performance-based awards, that are awarded to employees and non-employees under the 2013 Plan. Each Option is exercisable for one ordinary share. 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. 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"), RSUs, 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. 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. The 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. 111 ENTERA BIO LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (U.S. dollars in thousands, except share and per share amounts) NOTE 7 - SHARE-BASED COMPENSATION (continued) As of December 31, 2025, 2,052,375 ordinary shares remained available for future grants under the 2018 Plan. On January 1, 2026, the Company’s Board of Directors approved an increase of 2,308,931 ordinary shares that may be issued under the Company’s 2018 Plan pursuant of the evergreen provision contained in f the 2018 Plan. 2) Options grants to employees, directors and consultants: a) The following tables summarizes information concerning outstanding and exercisable options as of December 31, 2025, in terms of ordinary shares for which the options may be exercised: 2025 Number of options Weighted average exercise price Outstanding at beginning of the year 7,652,654 $ 2.32 Granted 1,926,545 2.28 Exercised ( 26,449 ) 0.80 Forfeited ( 170,250 ) 2.07 Expired ( 99,228 ) 2.91 Outstanding at end of the year 9,283,272 $ 2.32 Exercisable at end of the year 6,294,226 $ 2.47 1. As of December 31, 2025, the weighted-average remaining contractual life of exercisable options was 6.82 years. 2. The total intrinsic value of options exercised during 2025 and 2024 was approximately $ 35 thousand and $ 651 thousand, respectively. 3. As of December 31, 2025, the Company had 2,989,046 unvested options outstanding. The total unrecognized compensation cost of employee options as of December 31, 2025 is $ 1,735 thousand which is expected to be recognized over a weighted average period of 0.9 years. The fair value of each option granted is estimated at the date of grant using the Black-Scholes option-pricing model, with the following assumptions: 2025 2024 Exercise price $ 2.28 $ 0.60 -$ 1.99 share price $ 2.28 $ 0.60 -$ 1.99 Dividend yield - - Expected volatility 81.2 %- 82.2 % 74.28 %- 84.5 % Risk-free interest rate 3.9 %- 4.45 % 3.93 %- 4.66 % Expected life - in years 5.3 - 5.87 5.3 - 5.9 112 ENTERA BIO LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (U.S. dollars in thousands, except share and per share amounts) NOTE 7 - SHARE-BASED COMPENSATION (continued) The total fair value of options granted during the year ended December 31, 2025 and 2024 was $ 2,943 and $ 2,059 , respectively. December 31, 2025 Options outstanding Options exercisable Number of Weighted Number of Weighted options Average options Average Exercise outstanding Remaining exercisable Remaining prices per at end of Contractual at end of contractual share (USD) Year Life year Life 0.6 - 0.89 2,103,342 7.45 1,669,422 7.80 1.4 - 1.99 1,913,000 7.75 1,189,000 7.58 2.02 - 2.86 3,719,828 7.49 1,957,452 6.01 3.15 - 3.97 736,552 4.63 667,802 4.56 6.31 810,550 1.95 810,550 1.95 9,283,272 6,294,226 The aggregate intrinsic value of the outstanding and exercisable options as of December 31, 2025 was $ 3,121 and $ 3,632 , respectively. a) Restricted shares units grants to employees and consultants: The following tables summarize information concerning RSUs as of December 31, 2025: Year ended December 31 2025 Weighted Number Average of Grant Date RSUs Fair Value Outstanding at beginning of year 194,472 1.75 Changes during the year: Granted 300,643 2.09 Vested ( 352,134 ) 1.92 Outstanding at end of year 142,981 2.06 113 ENTERA BIO LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (U.S. dollars in thousands, except share and per share amounts) NOTE 7 - SHARE-BASED COMPENSATION (continued) As of December 31, 2025, the Company had 142,981 unvested RSUs. The total unrecognized compensation cost of employee RSUs as of December 31, 2025 was $ 57 , which is expected to be recognized over a weighted average period of 0.33 years. The total vesting-date value of equity classified RSUs that vested during 2025 was $ 676 . The following table illustrates the effect of share-based compensation on the statements of operations: Year ended December 31, 2025 Year ended December 31, 2024 Cost of revenues $ - $ 7 Research and development expenses 1,144 839 General and administrative 1,606 1,710 $ 2,750 $ 2,556 NOTE 8 - SEGMENT INFORMATION a. The Company operates in Israel as a single operating segment. The Company’s Chief Executive Officer is the chief operating decision marker (the “CODM”). The CODM makes decisions on resource allocation, assesses performance of the business and monitors budget versus actual results on a consolidated basis. b. Segment information: Year ended December 31 2025 2024 Revenues $ 42 $ 181 Less: Research and development, net: Sub-contractors and consulting expense (EB613) $ 2,095 $ 1,360 Net expenses related to 2025 Collaboration Agreement 437 - Payroll and related expenses 1,597 1,473 Share-based compensation 1,143 840 Rent and related expenses 398 340 Other development expenses* 334 486 Other segment expenses** 5,477 5,223 Segment net loss $ 11,439 $ 9,541 * Other development expenses include materials and productions and others. ** Other segment expenses include payroll and related expenses, share-based compensation, legal and audit and related fees and others. c. Long lived assets are located in Israel. 114 ENTERA BIO LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (U.S. dollars in thousands, except share and per share amounts) NOTE 9 - INCOME TAX a) Corporate tax rate i. Ordinary taxable income in Israel is subject to a corporate tax rate of 23 %. ii. The Company’s subsidiary Entera Bio, Inc. is taxed separately under the U.S. tax laws at a tax rate of 29 % (federal and state tax) b) Losses for tax purposes carried forward to future years The balance of carryforward losses of Entera Bio Ltd. as of December 31, 2025 and 2024 was approximately $ 91.8 million and $ 83.5 million, respectively. Under Israeli tax law, tax loss carry-forwards have no expiration date. The balance of carryforward losses of Entera Bio Inc. as of December 31, 2025 and 2024 was each approximately $ 0.15 million. c) Tax assessments The Company and its subsidiary have tax assessments that are considered to be final through tax year 2020. d) Loss before income taxes is composed of the following: Year ended December 31 2025 2024 Entera Bio Ltd.(domestic) 11,436 9,479 Entera Bio Inc.(foreign) 3 48 Total loss before taxes 11,439 9,527 e) Income tax expense: Year ended December 31 Current: 2025 2024 Subsidiary: (foreign) - - Total current income tax - - Deferred income taxes – subsidiary (foreign) - 14 Total deferred income taxes - 14 Total income tax expense - 14 115 ENTERA BIO LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (U.S. dollars in thousands, except share and per share amounts) NOTE 9 - INCOME TAX (continued) f) Deferred income taxes: December 31, Deferred tax assets: 2025 2024 Net operating loss carry forward 21,114 19,208 Research and development 1,027 854 Share-based compensation 687 639 Other 133 172 Net deferred tax assets before valuation allowance 22,961 20,873 Valuation allowance ( 22,961 ) ( 20,873 ) 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 and in the United States, management believes it was more likely than not that the deferred tax assets will not be realized. g) Roll-forward of valuation allowance: Balance at January 1, 2024 19,471 Additions 1,402 Balance at January 1, 2025 20,873 Additions 2,088 Balance at December 31, 2025 22,961 116 ENTERA BIO LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (U.S. dollars in thousands, except share and per share amounts) NOTE 9 - INCOME TAX (continued) h) Reconciliation of theoretical tax expenses to actual expenses: Following is a reconciliation of the theoretical provision for income tax, assuming all income is taxed at the statutory corporate tax rate applicable to Israeli corporations, and the actual tax on income: Year Ended December 31, 2025 Year Ended December 31, 2024 $ % $ % Statutory corporate tax rate ( 2,630 ) ( 23 ) ( 2,202 ) ( 23 ) Foreign tax effects United States ( 1 ) * ( 3 ) * Non-taxable or non-deductible items: Share-based compensation 535 ( 23 ) 815 ( 23 ) Other 8 ( 23 ) 2 ( 23 ) Change in valuation allowance 2,088 ( 23 ) 1,402 ( 23 ) Effective tax rate - - 14 * 117 ENTERA BIO LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (U.S. dollars in thousands, except share and per share amounts) NOTE 10 - SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION: Balance sheets: December 31, Other current assets: 2025 2024 Prepaid expenses 37 29 Receivable in respect of collaborative arrangement (See Note 5b) 219 - Other 159 157 415 186 December 31, Accrued expenses and other payables: 2025 2024 Employees and employees related 264 161 Provision for vacation 168 178 Accrued expenses 726 535 Other payables (See Note 5b) 367 - 1,525 874 NOTE 11 - SUBSEQUENT EVENTS a) On January 1, 2026, an aggregate of 167,525 options to purchase ordinary shares was granted to five non-executive board members with an exercise price of $ 1.94 per share. The options will vest over one year in four equal quarterly installments starting on January 1, 2026. This grant was approved by the shareholders of the Company on October 4, 2021. b) On January 1, 2026, the Company issued 148,872 ordinary shares to five non-executive members of the board of directors in lieu cash board fees for fiscal year 2025, which was approved by the Company’s shareholders at a meeting of the Company’s shareholders held on July 31, 2024. The fair value of the ordinary shares on the grant date was $ 289 using the market price of the ordinary shares on the grant date. c) On February 3, 2026, the Company and OPKO entered into an amended and restated collaboration and license agreement (the “A&R Collaboration Agreement”), which amends and restates the 2025 Collaboration Agreement to expand the scope of the agreement to include the collaboration with respect to the preclinical and clinical development of a daily LA-PTH tablets for the treatment of hypoparathyroidism and other indications in addition to the original oral dual agonist GLP-1/glucagon peptide program. Development costs incurred by the parties with respect to the development of the LA-PTH program will be shared equally between the Company and OPKO. Except for the forgoing, the material terms of the 2025 Collaboration Agreement remain unchanged and in full force and effect. d) On February, 2026, two former non-executive board members exercised options for an aggregate of 216,666 ordinary shares for a total consideration of $ 130 . 118 ITEM 9 . CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.