What changed in this filing

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Item 1. Financial Statements

2023-05-10 compared with 2022-11-08 · 110 added, 215 removed, 170 unchanged (66% of the section changed)

3 unchanged sentences

(USD in thousands, except per share and share amounts)

September 30,

CURRENT ASSETS:

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TOTAL CURRENT ASSETS

Deferred offering costs

Liabilities, Redeemable Convertible Preferred Shares and Stockholders’ Equity (Deficit)

Liabilities and Stockholders’ Equity

CURRENT LIABILITIES

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COMMITMENTS AND CONTINGENCIES, see Note 3

REDEEMABLE CONVERTIBLE PREFERRED SHARES:

Convertible preferred A stock, $ 0.00001 par value – Zero and 6,630,000 shares authorized as of September 30, 2022 and December 31, 2021, respectively.

As of September 30, 2022 all issued and outstanding preferred A stock was converted to common stock.

As of December 31, 2021, 5,012,280 preferred A stock shares were issued and outstanding.

STOCKHOLDERS’ EQUITY (DEFICIT), see Note 4 :

Common Stock, $ 0.00001 par value – 60,000,000 and 12,870,000 shares authorized as of September 30, 2022 and December 31, 2021, respectively 14,642,483 and 4,505,514 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively

STOCKHOLDERS’ EQUITY:

Common Stock, $ 0.00001 par value – 60,000,000 shares authorized as of March 31, 2023, and December 31, 2022, 15,886,139 , and 15,190,720 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively

Additional paid in capital

Notes received for common shares

Accumulated deficit

TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)

TOTAL LIABILITIES, REDEEMABLE COVERTIBLE PREFERRED SHARES AND STOCKHOLDERS’ EQUITY (DEFICIT)

TOTAL STOCKHOLDERS’ EQUITY

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

Represents an amount lower than $1,000 USD.

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(USD in thousands, except per share and share amounts)

Three Months Ended September 30

Nine Months Ended September 30

Three Months Ended March 31

OPERATING EXPENSES:

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Finance income

NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS

BASIC AND DILUTED NET LOSS PER COMMON SHARE OUTSTANDING, see Note 6

Basic and Diluted Weighted Average Number of Common Shares Outstanding

NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS

BASIC AND DILUTED NET LOSS PER COMMON STOCK OUTSTANDING, see Note 6

Basic and diluted weighted average number of common stock outstanding

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

NUVECTIS PHARMA, INC.

CONDENSED STATEMENTS OF CHANGES IN REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY/(DEFICIT)

CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(USD in thousands, except share amounts)

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Stockholders’

Equity/(Deficit)

BALANCES AT DECEMBER 31, 2021

Net loss for the period

BALANCES AT MARCH 31, 2021

Issuance of Series A Preferred shares

Share-based payments

Net loss for the period

BALANCES AT JUNE 30, 2021

Issuance of Series A Preferred shares

Conversion of Series A redeemable convertible preferred shares

( 5,012,280 )

Issuance of common stock upon initial public offering, net of offering costs of $ 2,892

Share based payments

Net loss for the period

BALANCES AT SEPTEMBER 30, 2021

BALANCES AT MARCH 31, 2022

Redeemable Convertible

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Stockholders’

Equity/(Deficit)

BALANCES AT DECEMBER 31, 2022

Conversion of Series A redeemable convertible preferred shares

( 5,012,280 )

Issuance of common stock upon initial public offering, net of offering costs of $ 2,892

Share based payments

Issuance of restricted stock awards

Exercise of preferred investment options

Exercise of warrants

Net loss for the period

BALANCES AT MARCH 31, 2023

Share based payments

Net loss for the period

BALANCES AT JUNE 30, 2022

Issuance of common stock, unexercised prefunded warrants and warrants in private placement, net of offering costs of $ 1,687

Exercise of prefunded warrants

Share based payments

Net loss for the period

BALANCES AT SEPTEMBER 30, 2022

Represents an amount lower than $1,000 USD.

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(USD in thousands, except per share and share amounts)

Nine Months Ended September 30,

Three Months Ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

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

Cost of share-based payments

Cost of stock-based payments

Changes in operating assets and liabilities:

Increase in other current assets

Increase in accounts payable and accrued liabilities

(Decrease)/increase in accounts payable, accrued compensation and benefits, and accrued liabilities

Net cash used in operating activities

2 unchanged sentences

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from issuance of redeemable convertible preferred shares

Proceeds from issuance of common stock upon initial public offering

Issuance costs related to initial public offering

Proceeds from issuance of common stock and pre-funded warrants in private placement

Proceeds from exercise of warrants/preferred investment option

Issuance costs related to private placement

Net cash provided by financing activities

INCREASE IN CASH AND CASH EQUIVALENTS

(DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

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Unpaid deferred offering costs

Issuance of common shares in return for note receivable

Represents an amount lower than $1,000 USD.

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

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The Company’s principal executive offices are located at Fort Lee in the state of New Jersey.

The Company is a biopharmaceutical company focused on the development of novel targeted small molecule therapeutics for the treatment of cancer in genetically defined patient populations.

The Company’s precision medicine approach translates key scientific insights relating to the oncogenic drivers and pathway addiction of cancer into potent and highly selective anticancer drugs.

The Company is a biopharmaceutical company focused on the development of innovative precision medicines for the treatment of serious conditions of unmet medical need in oncology.

In May 2021, the Company entered into a worldwide, exclusive license agreement with the CRT Pioneer Fund (“CRT”) (see Note 3a).

In May 2021, the Company’s board of directors approved and declared a 100 :1 stock split of common and preferred shares.

In addition, in October 2021 the Company’s board of directors approved a 39 :1 stock split of common stock.

All share and per share amounts reflected in these unaudited condensed financial statements and the notes thereto have been adjusted, on a retroactive basis, to reflect these share splits.

In August 2021, the Company entered into a worldwide, exclusive license agreement with the University of Edinburgh, Scotland for the Company’s second drug candidate (see Note 3a).

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Liquidity and Capital Resources

The Company has incurred net operating losses since its inception and had an accumulated deficit of $ 25.3 million as of September 30, 2022.

The Company had cash and cash equivalents of $ 23.6 million as of September 30, 2022 and has not generated positive cash flows from operations.

The Company has incurred net operating losses since its inception and had an accumulated deficit of $ 36 million as of March 31, 2023.

The Company had cash and cash equivalents of $ 15.5 million as of March 31, 2023 and has not generated positive cash flows from operations.

To date, the Company has been able to fund its operations primarily through the issuance and sale of common stock and redeemable convertible preferred shares.

On July 29, 2022, the Company completed a private placement in which it received approximately $ 14.2 million in net proceeds, after deducting placement agent fees and other offering expenses (see Note 4c).

Management believes that its existing cash, and cash equivalents as of September 30, 2022 enable the Company to fund planned operations for at least 12 months following the issuance date of these condensed financial statements.

Management believes that its existing cash, and cash equivalents as of March 31, 2023 enable the Company to fund planned operations for at least 12 months following the issuance date of these condensed financial statements.

The Company will need to raise additional capital in order to complete the clinical trials aimed at developing the product candidates until obtaining its regulatory and marketing approvals.

There can be no assurances that the Company will be able to secure such additional financing if at all, or at terms that are satisfactory to the Company, and that it will be sufficient to meet its needs.

There can be no assurances that the Company will be able to secure such additional financing, or at terms that are satisfactory to the Company, and that it will be sufficient to meet its needs.

In the event the Company is not successful in obtaining sufficient funding, this could force the Company to delay, limit, or reduce its products’ development, clinical trials, commercialization efforts or other operations, or even close down or liquidate.

Initial Public Offering

On February 8, 2022, the Company completed an initial public offering (“IPO”) in which it sold 3,200,000 shares of common stock at $ 5.00 per share and received net proceeds of $ 12.6 million, after underwriting discounts and commissions of $ 1.1 million, and expenses of $ 1.8 million.

The IPO also included $ 0.5 million in stock-based expense in relation to warrants issued to the underwriter.

Additionally, upon the IPO, the convertible preferred stock were converted on a 1 :1 basis into 5,012,280 shares of the Company’s common stock.

NUVECTIS PHARMA, INC.

Notes to the Unaudited Condensed Financial Statements (continued)

Coronavirus Pandemic

In March 2020, the World Health Organization declared the outbreak of COVID-19 to be a pandemic.

The COVID-19 pandemic is having widespread, rapidly evolving, and unpredictable impacts on global society, economies, financial markets, and business practices.

During 2021, there was a wide distribution of several vaccinations and medicines to overcome the pandemic.

The Company has shifted its operations to co-exist along with the pandemic, including encouragement of vaccinations to all of its employees worldwide.

The uncertainty to which the COVID-19 pandemic impacts the Company’s business, affects management’s judgment and assumptions relating to accounting estimates in a variety of areas that depend on these estimates and assumptions.

COVID-19 did not have a material influence on these estimates and judgements since the Company began operations in 2021.

The Company continues to face relative uncertainty as to the remaining intensity and duration of and the nature and timeline for recovery from the COVID-19 pandemic going forward and how all of that impacts the Company, including the extent to which potentially permanent changes clinical trial operations have been caused by the pandemic.

The Company has taken the approach of managing the pandemic (to the extent that it continues to remain a significant factor) via strengthening its balance sheet and cash assets and avoiding debt while focusing on cost controls.

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES :

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In the opinion of management, the unaudited condensed financial statements include all normal and recurring adjustments that are considered necessary for the fair statement of results for the interim periods.

The results for the period ended September 30, 2022 are not necessarily indicative of those expected for the year ending December 31, 2022 or for any future period.

The results for the period ended March 31, 2023 are not necessarily indicative of those expected for the year ending December 31, 2023 or for any future period.

The condensed balance sheet as of December 31, 2022 included herein was derived from the audited financial statements as of that date but does not include all disclosures required by U.S.

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The most significant estimates in the Company’s financial statements relate to accruals for research and development expenses, valuation of equity awards, and valuation allowances for deferred tax assets.

These estimates and assumptions are based on current facts, future expectations, and various other factors believed to

NUVECTIS PHARMA, INC.

Notes to the Unaudited Condensed Financial Statements (continued)

be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources.

These estimates and assumptions are based on current facts, future expectations, and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources.

Actual results may differ materially and adversely from these estimates.

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Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities in active markets or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

NUVECTIS PHARMA, INC.

Notes to the Unaudited Condensed Financial Statements (continued)

Unobservable inputs that are supported by little or no market activity.

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The money market accounts included in cash and cash equivalents are considered Level 1.

During the three and nine months ended September 30, 2022 and 2021, there were no transfers between fair value measure levels.

During the three months ended March 31, 2023 and 2022, there were no transfers between fair value measure levels.

Other financial instruments consist mainly of cash and cash equivalents, other current assets, accounts payable and accrued liabilities.

The fair value of these financial instruments approximates their carrying values.

The Company determines the accounting classification of warrants that are issued, as either liability or equity, by first assessing whether the warrants meet liability classification in accordance with ASC 480-10, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity, (“ASC 480-10”), and then in accordance with ASC 815-40, Derivatives and Hedging - Contracts in Entity’s Own Equity (“ASC 815-40”).

Under ASC 480-10, warrants are considered liability-classified if the warrants are mandatorily redeemable, obligate the issuer to settle the warrants or the underlying shares by paying cash or other assets, or must or may require settlement by issuing variable number of shares.

If the warrants do not meet liability classification under ASC 480-10, the Company assesses the requirements under ASC 815-40, which states that contracts that require or may require the issuer to settle the contract for cash are liabilities recorded at fair value, irrespective of the likelihood of the transaction occurring that triggers the net cash settlement feature.

If the warrants do not require liability classification under ASC 815-40, in order to conclude equity classification, the Company assesses whether the warrants are indexed to its common stock and whether the warrants are classified as equity under ASC 815-40 or other applicable GAAP.

After all relevant assessments are made, the Company concludes whether the warrants are classified as liability or equity.

Liability-classified warrants are required to be accounted for at fair value both on the date of issuance and on subsequent accounting period ending dates, with all changes in fair value after the issuance date recorded as a component of other income (expense), net in the

NUVECTIS PHARMA, INC.

Notes to the Unaudited Condensed Financial Statements (continued)

statements of operations.

Equity-classified warrants are accounted for at consideration received on the issuance date with no changes in fair value recognized after the issuance date.

As of September 30, 2022, all of the Company’s outstanding warrants are equity-classified warrants.

Recently Adopted Accounting Pronouncements

In August 2020, the FASB issued Accounting Standard Update No.

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):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (ASU 2020-06”), which simplifies accounting for convertible instruments by removing major separation models required under current GAAP.

ASU 2020-06 also removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception and it also simplifies the diluted earnings per share calculation in certain areas.

This guidance is effective for public business entities except for smaller reporting companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2021.

For all other entities, the standard will be effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years.

Early adoption is permitted.

The Company adopted ASU 2020-06 on January 1, 2022, using the modified retrospective method, and such adoption did not impact the Company’s financial position, results of operations, cash flows or net loss per share.

Stock Compensation

The Company accounts for employees’, directors’ and service providers’ share-based payment awards classified as equity awards using the grant-date fair value method.

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

The equity awards could come in the form of options, warrants, and RSAs.

The Company elected to recognize compensation costs for awards using the accelerated method based on the multiple-option award approach.

Performance based awards are expensed over the vesting period only if the achievement of performance criteria is probable.

The Company has elected to recognize forfeitures as they occur.

For stock options containing a market condition, the market conditions are required to be considered when calculating the grant date fair value.

ASC 718 requires selection of a valuation technique that best fits the circumstances of an award.

(see note 5).

In order to reflect the substantive characteristics of the market condition option award, a Monte Carlo simulation valuation model was used to calculate the grant date fair value of such stock options.

Expense for the market condition stock options is recognized over the derived service period as determined through the Monte Carlo simulation model.

Recently Issued Accounting Pronouncements Not Yet Adopted

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CRT Pioneer Fund License Agreement

There have been no material changes to the CRT Pioneer Fund License Agreement (the “License Agreement”) as previously disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 filed with the Securities and Exchange Commission on March 23, 2022 (see Note 5a in the Notes to the Financial Statements) except noted below.

In connection with the License Agreement, the Company agreed to provide Institute of Cancer Research in London, UK (“ICR”) with up to an additional $ 500,000 in research and development support over the next 18 months to conduct additional scientific research and preclinical testing for certain indications that the Company selects in connection with the NXP800 Program.

According to the License Agreement, the Company also has an exclusive license to intellectual property rights developed in the collaboration, to research, develop and commercialize products resulting from the collaboration.

On March 31, 2022, the Company and ICR revised the agreement for research and development support to a total of $ 865,000 (to allow for additional research activities).

$ 0.1 million and $ 0.2 million of expense of the research and development support was recognized during the three months and nine months ended September 30, 2022, respectively.

The expense from the revised agreement will be recognized over eighteen months beginning at the date of the revised agreement.

As of September 30, 2022, there are twelve months remaining for this expense to be recognized.

Any potential milestone or royalty payment amounts have not been accrued as of September 30, 2022 and December 31, 2021 due to the uncertainty related to the achievement of these events or milestones except for the research and development support discussed above.

During the three months ended September 30, 2022, the Company paid CRT $ 1.0 million associated with a patient enrollment milestone.

There have been no material changes to the CRT Pioneer Fund License Agreement (the “License Agreement”) as previously disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed with the Securities and Exchange Commission on March 8, 2023 (see Note 5a in the Notes to the Financial Statements).

Any potential milestone or royalty payment amounts have not been accrued as of March 31, 2023 and December 31, 2022 due to the uncertainty related to the achievement of these events or milestones.

NUVECTIS PHARMA, INC.

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University of Edinburgh License Agreement

There have been no material changes to the University of Edinburgh (“UoE”) License Agreement as previously disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 filed with the Securities and Exchange Commission on March 23, 2022 (see Note 5a in the Notes to the Financial Statements) except noted below.

As of September 30, 2022, the Company recorded an accrued liability of $ 0.5 million related to the one year anniversary milestone and $ 0.4 million associated with the July 2022 private placement.

Those expenses were recorded as research and development expenses during the quarter ended September 30, 2022.

Any potential future research support, milestone or royalty payment amounts have not been accrued as of September 30, 2022 and December 31, 2021 due to the uncertainty related to the achievement of these events, milestones or commitments to additional research.

There have been no material changes to the University of Edinburgh (“UoE”) License Agreement as previously disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed with the Securities and Exchange Commission on March 8, 2023 (see Note 5a in the Notes to the Financial Statements).

Any potential future research support, milestone or royalty payment amounts have not been accrued as of March 31, 2023 and December 31, 2022 due to the uncertainty related to the achievement of these events, milestones or commitments to additional research.

Related Party Transactions

As for related party transactions, see Note 7 and Note 8.

As for related party transactions, see Note 5.

Contingencies

As of September 30, 2022, and as of December 31, 2021, there are no contingent liabilities, therefore, no provision was made.

NOTE 4 – SHAREHOLDERS’ EQUITY/(DEFICIT):

In May 2021, the Company’s board of directors approved and declared a 100 :1 stock split of common stock with a par value of $ 0.00001 and preferred shares, with a par value of $ 0.00001 .

In addition, the Company increased the number of authorized common stock from 3,900,000 to 12,870,000 and preferred shares from 40,000 to 170,000 .

In addition, in October 2021, the Company’s board of directors approved a 39 :1 stock split.

As a result of the above splits, all shares, options and warrants exercisable into common stock and restricted stock units, exercise prices and income or loss per share amounts have been adjusted on a retroactive basis for all periods presented to reflect such stock splits.

Upon the completion of the Company’s IPO, all outstanding shares of the Company’s preferred A stock was converted into shares of the Company’s common stock on a 1 :1 basis.

As of March 31, 2023, and as of December 31, 2022, there are no contingent liabilities, therefore, no provision was made.

NOTE 4 – STOCKHOLDERS’ EQUITY:

Private Placement in Public Entity

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In connection with the July Private Placement, the Company issued 1,015,598 shares of common stock (the “Shares”), pre-funded warrants (the “Pre-Funded Warrants”) to purchase an aggregate of 909,091 shares of common stock and preferred investment options (the “Preferred Investment Options”) to purchase up to an aggregate of 1,924,689 shares of common stock.

The purchase price of each Share and each Pre-Funded Warrant was the $ 8.25 .

The purchaser received one Preferred Investment Option for no consideration, with each Share or Pre-Funded Warrant purchased.

The aggregate net cash proceeds to the Company from the July Private Placement were approximately $ 14.2 million, after deducting placement agent fees and other offering expenses.

Wainwright & Co., LLC (“Wainwright”) acted as the exclusive placement agent for the July Private Placement.

The Pre-Funded Warrants had an exercise price of $ 0.001 per share, were exercisable on or after August 24, 2022, and are exercisable until the Pre-Funded Warrants were exercised in full.

Pre-Funded Warrants totaling 710,000 were exercised on August 25, 2022, and as such the Company issued 710,000 shares of common stock on that date.

The Preferred Investment Options are exercisable at any time on or after January 23, 2023 through January 29, 2026, at an exercise price of $ 9.65 per share, subject to certain adjustments as defined in the Agreement.

The Company agreed to pay Wainwright a placement agent fee and

NUVECTIS PHARMA, INC.

Notes to the Unaudited Condensed Financial Statements (continued)

management fee equal to 7.0 % and 1.0 %, respectively, of the aggregate gross proceeds from the July Private Placement.

In addition, the Company issued warrants to Wainwright (the “Wainwright Warrants”) to purchase up to 115,481 shares of common stock.

The Wainwright Warrants are in substantially the same form as the Preferred Investment Options, except that the exercise price is $ 10.31 .

The Preferred Investment Options, the Pre-Funded Warrants, and the Wainwright Warrants are collectively referred to as the “Private Placement Warrants”.

The Company evaluated the terms of the Private Placement Warrants and determined that they should be classified as equity instruments based upon accounting guidance provided in ASC 480 and ASC 815-40.

Since the Company determined that the Private Placement Warrants were equity-classified, the Company recorded the proceeds from the July Private Placement, net of issuance costs, within common stock at par value and the balance of the net proceeds to additional paid in capital.

As of September 30, 2022, the outstanding Preferred Investment Options, and the Wainwright Warrants were not exercisable on that day.

In connection with the July Private Placement, the Company entered into a Registration Rights Agreement with the certain purchasers defined therein, dated July 27, 2022 (the “July Registration Rights Agreement”).

The July Registration Rights Agreement required the Company to file a registration statement covering the resale of all of the securities with the Securities and Exchange Commission (the “SEC”).

The Company filed a registration statement on Form S-1 with the SEC on August 15, 2022.

The registration statement on Form S-1 was declared effective on August 24, 2022.

The Preferred Investment Options became exercisable on January 23, 2023 and are exercisable through January 29, 2026, at an exercise price of $ 9.65 per share, subject to certain adjustments as defined in the Agreement.

4,000 Preferred Investment Options were exercised and $ 39,000 was received as of March 31, 2023.

NOTE 5 – SHARE BASED PAYMENTS:

Share Based Payments

In February 2022, the Company granted to H.C.

Wainwright & Co.

the underwriter of the IPO, 128,000 fully vested warrants upon the IPO, exercisable into common stock with an exercise price of $ 6.25 per share for 5 years after the grant date.

The 128,000 fully vested warrants have an estimated value (based on Black-Scholes model) of approximately $ 458,000 and were recognized as a reduction from gross proceeds of the IPO.

No warrants have been exercised as of September 30, 2022.

The following table summarizes assumptions used for the Black-Scholes model at the grant date:

Risk-free interest rate

Common share price

Expected dividend yield

Expected term (in years)

Expected volatility

In July 2022, the Company granted to H.C.

Wainwright & Co.

the private placement agent of July Private Placement, 115,481 warrants which become exercisable any time between January 23, 2023 and January 29, 2026, exercisable into common stock with an exercise price of $ 10.31 per share.

The 115,481 warrants have an estimated value (based on Black-Scholes model) of approximately $ 618,000 .

No warrants have been exercised as of September 30, 2022.

In January 2023, the Company granted to a service provider 43,500 options which become exercisable between January 19, 2023, and January 18, 2025, into common stock with an exercise price of $ 7.51 per share based on the achievement of service condition, market condition or performance condition.

As of March 31, 2023, 12,000 options were exercisable.

Service condition options totaled 22,500 , had an estimated value based on Black-Scholes of approximately $ 74,000 and were not exercisable as of March 31, 2023.

Performance condition options totaled 12,000 , had an estimated value based on Black-Scholes of approximately $ 39,000 and were exercisable as of March 31, 2023.

Market condition options totaling 9,000 options have a market condition which was not achieved by March 31, 2023, and an estimated value of $ 20,000 based on a Monte Carlo model.

No options have been exercised as of March 31, 2023.

The fair value of options was evaluated at the grant date using a Black-Scholes Option Pricing Model for various possible scenarios.

The following table summarizes assumptions used for the Black-Scholes model at the grant date:

Risk-free interest rate

Common share price

Common stock price

Expected dividend yield

Expected term (in years)

Expected volatility

NUVECTIS PHARMA, INC.

Notes to the Unaudited Condensed Financial Statements (continued)

Volatility was estimated based on the historic volatility of comparable public companies.

2021 Global Equity Incentive Plan

In May 2021, the Company’s board of directors approved a global equity incentive plan (hereafter — “Incentive Plan”), in which the Company has reserved a total amount of 408,486 common stock for issuance in connection with the Incentive Plan.

In February 2022, the Company’s board of directors approved an increase to total shares under the incentive plan to 1,500,000 .

On April 1, 2022, the Company granted Directors Hoberman, Oliviero and Kaplan 15,000 options each , to purchase common stock at the closing price on the day of the grant.

The options to the directors vest over three years with 1/3 vesting on each anniversary of the date of the grant.

The fair value of these options was determined to be $ 0.3 million.

The following table summarizes assumptions used for the Black-Scholes model at the grant date:

Risk-free interest rate

Common share price

Expected dividend yield

Expected term (in years)

Expected volatility

The following table summarizes the Company’s stock option activity in the Incentive Plan for the nine months ended September 30, 2022:

In February 2022, the Company granted to the underwriter of the IPO, 128,000 fully vested warrants upon the IPO, exercisable into common stock with an exercise price of $ 6.25 per share for 5 years after the grant date.

The 128,000 fully vested warrants have an estimated value (based on Black-Scholes model) of approximately $ 458,000 and were recognized as a reduction from gross proceeds of the IPO.

IPO warrants totaling 105,920 were exercised and the Company received $ 0.7 million as of March 31, 2023.

2021 Global Equity Incentive Plan (“Incentive Plan”)

The following table summarizes the Company’s stock option activity in the Incentive Plan for the three months ended March 31, 2023:

Weighted average

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Balance, December 31, 2022

Outstanding – September 30, 2022

Exercisable – September 30, 2022

Expected to vest – September 30, 2022

As of September 30, 2022, there was $ 0.7 million of unrecognized stock-based compensation expense related to unvested stock options that is expected to be recognized over a weighted-average period of 2.07 years.

Restricted Stock Units

Restricted stock units (“RSUs”) have been granted to employees.

The value of an RSU award is based on the Company’s stock price on the date of grant.

The shares underlying the RSU awards are not issued until the RSUs vest.

NUVECTIS PHARMA, INC.

Notes to the Unaudited Condensed Financial Statements (continued)

Upon vesting, each RSU converts into one share of the Company’s common stock.

The Company granted RSUs pursuant to the Incentive Plan.

On April 1, 2022, the Company issued 120,000 RSUs to Mr.

Ron Bentsur and 60,000 RSUs each to Dr.

Enrique Poradosu and Mr.

Shay Shemesh.

All RSUs granted to these founders of the Company vest over three years with 1/3 vesting on each anniversary of the date of the grant.

The fair value of these RSUs was determined to be $ 1.7 million.

The following table summarizes the Company’s RSU activity for the nine months ended September 30, 2022, as described above from the Incentive Plan:

Outstanding – March 31, 2023

Exercisable – March 31, 2023

Expected to vest – March 31, 2023

As of March 31, 2023, there was $ 0.7 million of unrecognized stock-based compensation expense related to unvested stock options that is expected to be recognized over a weighted-average period of 1.92 years.

Restricted Stock Awards

Restricted stock awards (“RSAs”) have been granted to employees.

The value of an RSA award is based on the Company’s stock price on the date of grant.

The Company granted RSAs pursuant to the Incentive Plan.

The following table summarizes the Company’s RSA activity for the three months ended March 31, 2023, as described above from the Incentive Plan:

Weighted average

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Balance, December 31, 2022

Outstanding – September 30, 2022

Expected to vest – September 30, 2022

As of September 30, 2022, there was $ 1.8 million of total unrecognized compensation cost related to RSUs expected to be recognized over a weighted average period of 2.45 years.

The RSUs granted during the quarter vest over three years with 1/3 vesting on each anniversary date of the grant.

Outstanding – March 31, 2023

Expected to vest – March 31, 2023

As of March 31, 2023, there was $ 4.6 million of total unrecognized compensation cost related to RSAs expected to be recognized over a weighted average period of 2.51 years.

NUVECTIS PHARMA, INC.

Notes to the Unaudited Condensed Financial Statements (continued)

On January 3, 2023, the Company issued 145,499 RSAs to employees and other service providers with a determined fair value of $ 1.1 million.

These RSAs vest over three years with 1/3 vesting on each anniversary of the date of the grant.

On January 12, 2023, the Company issued 210,000 RSAs to Mr.

Ron Bentsur and 115,000 RSAs to each of Dr.

Enrique Poradosu and Mr.

Shay Shemesh.

These RSAs vest over three years with 1/3 vesting on each anniversary of the date of the grant.

The fair value of these RSAs was determined to be $ 3.3 million.

On April 1, 2022, the Company issued 120,000 RSAs to Mr.

Ron Bentsur and 60,000 RSAs to each of Dr.

Enrique Poradosu and Mr.

Shay Shemesh.

These RSAs vest over three years with 1/3 vesting on each anniversary of the date of the grant.

On March 29, 2023, the vesting of the first 1/3 of the grant was extended to January 11, 2024, the second vesting extended to April 2, 2024 and the third vesting extended to April 2, 2025.

On July 27, 2021, Mr.

1 unchanged sentence

Enrique Poradosu, and Mr.

Shay Shemesh were granted 96,759 RSUs, 48,399 RSUs and 48,399 RSUs, respectively, which were not part of the Incentive Plan and excluded from the table above.

On July 1, 2022 the vesting of these grants was extended to January 1, 2023.

Shay Shemesh were granted 96,759 RSAs, 48,399 RSAs and 48,399 RSAs, respectively, which were not part of the Company’s Incentive Plan and excluded from the table above.

On March 29, 2023, the vesting of these grants was extended to January 11, 2024.

Share Compensation Expense

For the three months ended September 30, 2022, the Company recognized expenses of $ 0.2 million as part of general and administrative expenses and $ 0.3 million as part of research and development expenses.

For the three months ended September 30, 2021, the Company recognized expenses of $ 0.9 million as part of general and administrative expenses and $ 0.7 million as part of research and development expenses.

For the nine months ended September 30, 2022, the Company recognized expenses of $ 0.6 million as part of general and administrative expenses and $ 0.6 million as part of research and development expenses.

For the nine months ended September 30, 2021, the Company recognized expenses of $ 0.9 million as part of general and administrative expenses and $ 0.7 million as part of research and development expenses.

NUVECTIS PHARMA, INC.

Notes to the Unaudited Condensed Financial Statements (continued)

For the three months ended March 31, 2023, the Company recognized expenses of $ 0.7 million as part of general and administrative expenses and $ 0.7 million as part of research and development expenses.

For the three months ended March 31, 2022, the Company recognized expenses of $ 0.1 million as part of general and administrative expenses and $ 0.1 million as part of research and development expenses.

NOTE 6 – NET LOSS PER SHARE:

2 unchanged sentences

For the three months

For the nine months

ended September 30, 2022

ended September 30, 2021

ended September 30, 2022

ended September 30, 2021

in thousand U.S.

dollars except per share and share amounts

ended March 31, 2023

ended March 31, 2022

Loss attributable to common stockholders

2 unchanged sentences

Basic loss per share is calculated by dividing the result attributable to equity holders of the Company by the weighted average number of shares of common stock in issue during the year.

The following potentially dilutive securities were excluded from the calculation of diluted net loss per common share because their effect would have been anti-dilutive for the years presented:

For the nine months ending

September 30,

Common stock issuable in relation to:

Redeemable convertible preferred shares

The calculation of the loss per share includes 1,924,689 pre-funded warrants/shares issued as part of the private placement, as the Company considers these shares to be exercised for no additional consideration.

As of March 31, 2023 the amount of pre-funded warrants/shares issued were 1,924,689 , and as of March 31, 2022, zero .

NUVECTIS PHARMA, INC.

Notes to the Unaudited Condensed Financial Statements (continued)

The following potentially dilutive securities were excluded from the calculation of diluted net loss per common share because their effect would have been anti-dilutive for the years presented:

Common stock issuable in relation to:

Unvested RSAs *

* includes 193,557 of RSAs granted outside of the Incentive Plan

NOTE 7 – RELATED PARTY TRANSACTIONS:

Indemnification

The Company currently has directors’ and officers’ insurance coverage that reduces its exposure and enables the Company to recover a portion of any future amounts paid.

The Company believes the estimated fair value of these indemnification agreements in excess of applicable insurance coverage is minimal.

NOTE 8 – SUBSEQUENT EVENTS:

During April and May 2023, a certain investor exercised 34,000 Preferred Investment Options granted in July 2022 in association with the Securities Purchase Agreement.

Gross proceeds from the exercise of these options were approximately $ 0.3 million.

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-Q

Item 1. Financial Statements