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Item 1A. Risk Factors

2020-11-24 compared with 2019-11-27 · 640 added, 611 removed, 21 unchanged (98% of the section changed)

RISK FACTORS.

An investment in our securities involves

a high degree of risk.

You should consider carefully the following information about these risks, together with the other information

contained in this Annual Report on Form 10-K before making an investment decision.

Our business, prospects, financial condition

and results of operations may be materially and adversely affected as a result of any of the following risks.

The value of our

securities could decline as a result of any of these risks.

You could lose all or part of your investment in our securities.

of the statements in “Item 1A.

investment in our securities involves a high degree of risk.

You should consider carefully the following information about these

risks, together with the other information contained in this Annual Report on Form 10-K before making an investment decision.

Our business, prospects, financial condition and results of operations may be materially and adversely affected as a result of

any of the following risks.

The value of our securities could decline as a result of any of these risks.

You could lose all or

part of your investment in our securities.

Some of the statements in “Item 1A.

Risk Factors”

are forward-looking statements.

The following risk factors are not the

only risk factors facing our Company.

Additional risks and uncertainties not presently known to us or that we currently deem immaterial

may also affect our business, prospects, financial condition and results of operations.

Risks Related to Our Business

We continue, and in the future expect, to

incur losses .

Successful completion of our development programs

and our transition to normal operations are dependent upon obtaining necessary regulatory approvals from the FDA prior to selling

our products within the United States, and foreign regulatory approvals must be obtained to sell our products internationally.

There can be no assurance that we will receive regulatory approval of any of our product candidates, and a substantial amount of

time may pass before we achieve a level of revenues adequate to support our operations.

We also expect to incur substantial expenditures

in connection with the regulatory approval process for each of our product candidates during their respective developmental periods.

Obtaining marketing approval will be directly dependent on our ability to implement the necessary regulatory steps required to

obtain marketing approval in the United States and in other countries.

We cannot predict the outcome of these activities.

Based on our current cash resources and commitments,

we believe we will be able to maintain our current planned development activities and the corresponding level of expenditures for

at least the next 12 months, although no assurance can be given that we will not need additional funds prior to such

If there are unexpected increases in our operating expenses, we may need to seek additional financing during the next 12

We will need substantial additional capital

in order to satisfy our business objectives.

To date, we have financed our operations principally

through offerings of securities and we will require substantial additional financing at various intervals in order to continue

our research and development programs, including significant requirements for operating expenses including intellectual property

protection and enforcement, for pursuit of regulatory approvals, and for commercialization of our products.

We can provide no assurance

that additional funding will be available on a timely basis, on terms acceptable to us, or at all.

In the event that we are unable

to obtain such financing, we will not be able to fully develop and commercialize our technology.

Our future capital requirements

will depend upon many factors, including:

● Continued scientific progress in our research and development programs,

● Costs and timing of conducting clinical trials and seeking regulatory approvals and patent prosecutions,

● Competing technological and market developments,

● Our ability to establish additional collaborative relationships, and

● Effects of commercialization activities and facility expansions if and as required.

If we cannot secure adequate financing when

needed, we may be required to delay, scale back or eliminate one or more of our research and development programs or to enter into

license or other arrangements with third parties to commercialize products or technologies that we would otherwise seek to develop

ourselves and commercialize ourselves.

In such event, our business, prospects, financial condition and results of operations may

be adversely affected as we may be required to scale-back, eliminate, or delay development efforts or product introductions or

enter into royalty, sales or other agreements with third parties in order to commercialize our products.

We have a history of losses and can provide

no assurance as to our future operating results.

We do not have sufficient revenues from our

research and development activities to fully support our operations.

Consequently, we have incurred net losses and negative cash

flows since inception.

We currently have only licensing revenues and no product revenues, and may not succeed in developing or

commercializing any products which could generate product revenues.

We do not expect to have any products on the market for several

In addition, development of our product candidates requires a process of pre-clinical and clinical testing, during which

our products could fail.

We may not be able to enter into agreements with one or more companies experienced in the manufacturing

and marketing of therapeutic drugs and, to the extent that we are unable to do so, we will not be able to market our product candidates.

Eventual profitability will depend on our success in developing, manufacturing, and marketing our product candidates.

31, 2019, August 31, 2018 and August 31, 2017, we had working capital of $28,016,000, $26,484,000 and $15,132,000, respectively,

and stockholders’

The following risk factors are not the only risk factors facing our Company.

Additional risks and uncertainties not presently

known to us or that we currently deem immaterial may also affect our business, prospects, financial condition and results of operations.

Related to Our Business

continue, and in the future expect, to incur losses .

completion of our development programs and our transition to normal operations are dependent upon obtaining necessary regulatory

approvals from the FDA prior to selling our products within the United States, and foreign regulatory approvals must be obtained

to sell our products internationally.

There can be no assurance that we will receive regulatory approval of any of our product

candidates, and a substantial amount of time may pass before we achieve a level of revenues adequate to support our operations.

We also expect to incur substantial expenditures in connection with the regulatory approval process for each of our product candidates

during their respective developmental periods.

Obtaining marketing approval will be directly dependent on our ability to implement

the necessary regulatory steps required to obtain marketing approval in the United States and in other countries.

We cannot predict

the outcome of these activities.

on our current cash resources and commitments, we believe we will be able to maintain our current planned development activities

and the corresponding level of expenditures for at least the next 12 months, although no assurance can be given that we will not

need additional funds prior to such time.

If there are unexpected increases in our operating expenses, we may need to seek additional

financing during the next 12 months.

will need substantial additional capital in order to satisfy our business objectives.

date, we have financed our operations principally through offerings of securities and we will require substantial additional financing

at various intervals in order to continue our research and development programs, including significant requirements for operating

expenses including intellectual property protection and enforcement, for pursuit of regulatory approvals, and for commercialization

of our products.

We can provide no assurance that additional funding will be available on a timely basis, on terms acceptable

to us, or at all.

In the event that we are unable to obtain such financing, we will not be able to fully develop and commercialize

our technology.

Our future capital requirements will depend upon many factors, including:

scientific progress in our research and development programs,

and timing of conducting clinical trials and seeking regulatory approvals and patent

prosecutions,

technological and market developments,

ability to establish additional collaborative relationships, and

of commercialization activities and facility expansions if and as required.

we cannot secure adequate financing when needed, we may be required to delay, scale back or eliminate one or more of our research

and development programs or to enter into license or other arrangements with third parties to commercialize products or technologies

that we would otherwise seek to develop ourselves and commercialize ourselves.

In such event, our business, prospects, financial

condition and results of operations may be adversely affected as we may be required to scale-back, eliminate, or delay development

efforts or product introductions or enter into royalty, sales or other agreements with third parties in order to commercialize

our products.

have a history of losses and can provide no assurance as to our future operating results.

do not have sufficient revenues from our research and development activities to fully support our operations.

Consequently, we

have incurred net losses and negative cash flows since inception.

We currently have only licensing revenues and no product revenues,

and may not succeed in developing or commercializing any products which could generate product revenues.

We do not expect to have

any products on the market for several years.

In addition, development of our product candidates requires a process of pre-clinical

and clinical testing, during which our products could fail.

We may not be able to enter into agreements with one or more companies

experienced in the manufacturing and marketing of therapeutic drugs and, to the extent that we are unable to do so, we will not

be able to market our product candidates.

Eventual profitability will depend on our success in developing, manufacturing, and

marketing our product candidates.

As of August 31, 2020, August 31, 2019 and August 31, 2018, we had working capital of $35,975,000,

$28,016,000 and $26,484,000, respectively, and stockholders’

equity of $32,879,000, $19,393,000 and $31,112,000, respectively.

During fiscal 2019 and the fiscal years

ended August 31, 2018, or fiscal 2018, and 2017, we generated revenues of $2,703,000, $2,449,000 and $2,456,000, respectively.

For the period from our inception on April 12, 2002 through August 31, 2019, and for fiscal 2019, fiscal 2018 and fiscal 2017,

we incurred net losses of $83,578,000, $14,355,000, $12,727,000 and $10,480,000, respectively.

We may never achieve profitability

and expect to incur net losses in the foreseeable future.

During fiscal 2020 and the fiscal years ended August 31, 2019, or fiscal 2019, and 2018, we generated revenues of $2,710,000,

$2,703,000 and $2,449,000, respectively.

For the period from our inception on April 12, 2002 through August 31, 2020, fiscal 2020,

fiscal 2019 and fiscal 2018, we incurred net losses of $92,614,000, $11,511,000, $14,355,000 and $12,727,000, respectively.

may never achieve profitability and expect to incur net losses in the foreseeable future.

See “Item 7.

Management’s Discussion and Analysis of Financial

Condition and Results of Operations.”

We rely upon patents to protect our technology.

The patent position of biopharmaceutical and

biotechnology firms is generally uncertain and involves complex legal and factual questions.

We do not know whether any of our

current or future patent applications will result in the issuance of any patents.

Even issued patents may be challenged, invalidated

or circumvented.

Patents may not provide a competitive advantage or afford protection against competitors with similar technology.

Competitors or potential competitors may have filed applications for, or may have received patents and may obtain additional and

proprietary rights to compounds or processes used by or competitive with ours.

In addition, laws of certain foreign countries do

not protect intellectual property rights to the same extent as do the laws of the United States.

Patent litigation is becoming widespread in

the biopharmaceutical and biotechnology industry and we cannot predict how this will affect our efforts to form strategic alliances,

conduct clinical testing or manufacture and market any products under development.

If challenged, our patents may not be held valid.

We could also become involved in interference proceedings in connection with one or more of our patents or patent applications

to determine priority of invention.

If we become involved in any litigation, interference or other administrative proceedings,

we will likely incur substantial expenses and the efforts of our technical and management personnel will be significantly diverted.

In addition, an adverse determination could subject us to significant liabilities or require us to seek licenses that may not be

available on favorable terms, if at all.

We may be restricted or prevented from manufacturing and selling our products in the event

of an adverse determination in a judicial or administrative proceeding or if we fail to obtain necessary licenses.

We may be unable to protect our intellectual

property rights and we may be liable for infringing the intellectual property rights of others.

Our ability to compete effectively will depend

on our ability to maintain the proprietary nature of our technologies.

We currently hold several pending patent applications in

the United States, Canada, Brazil, Europe, India, Hong Kong, Japan and China for our technologies covering oral administration

of insulin and other proteins and oral administration of exenatide and proteins and 77 patents issued by the United States, Australian,

Canadian, Chinese, Israeli, Japanese, New Zealand, South African, Russian, European, Hong Kong, Swiss, German, Spanish, French,

United Kingdom, Italian, Indian, Austrian, Belgian, Irish, Swedish, Denmark, Luxembourg, Monaco, Norway and Netherlands patent

offices for our technologies covering oral administration of insulin and other proteins, or for our technologies covering oral

administration of exenatide, or for methods and compositions for treating diabetes.

Further, we intend to rely on a combination

of trade secrets and non-disclosure and other contractual agreements and technical measures to protect our rights in our technology.

We intend to depend upon confidentiality agreements with our officers, directors, employees, consultants, and subcontractors, as

well as collaborative partners, to maintain the proprietary nature of our technology.

These measures may not afford us sufficient

or complete protection, and others may independently develop technology similar to ours, otherwise avoid our confidentiality agreements,

or produce patents that would materially and adversely affect our business, prospects, financial condition and results of operations.

We believe that our technology is not subject to any infringement actions based upon the patents of any third parties;

our technology may in the future be found to infringe upon the rights of others.

Others may assert infringement claims against

us or against companies to which we have licensed our technology, and if we should be found to infringe upon their patents, or

otherwise impermissibly utilize their intellectual property, our ability to continue to use our technology could be materially

restricted or prohibited.

If this event occurs, we may be required to obtain licenses from the holders of this intellectual property,

enter into royalty agreements, or redesign our products so as not to utilize this intellectual property, each of which may prove

to be uneconomical or otherwise impossible.

Licenses or royalty agreements required in order for us to use this technology may

not be available on terms acceptable to us, or at all.

These claims could result in litigation, which could materially adversely

affect our business, prospects, financial condition and results of operations.

Further, we may need to indemnify companies to which

we licensed our technology in the event that such technology is found to infringe upon the rights of others.

Our commercial success will also depend significantly

on our ability to operate without infringing the patents and other proprietary rights of third parties.

Patent applications are,

in many cases, maintained in secrecy until patents are issued.

The publication of discoveries in the scientific or patent literature

frequently occurs substantially later than the date on which the underlying discoveries were made and patent applications are filed.

In the event of infringement or violation of another party’s patent, we may be prevented from pursuing product development

or commercialization.

Management’s

Discussion and Analysis of Financial Condition and Results of Operations.”

rely upon patents to protect our technology.

patent position of biopharmaceutical and biotechnology firms is generally uncertain and involves complex legal and factual questions.

We do not know whether any of our current or future patent applications will result in the issuance of any patents.

patents may be challenged, invalidated or circumvented.

Patents may not provide a competitive advantage or afford protection against

competitors with similar technology.

Competitors or potential competitors may have filed applications for, or may have received

patents and may obtain additional and proprietary rights to compounds or processes used by or competitive with ours.

laws of certain foreign countries do not protect intellectual property rights to the same extent as do the laws of the United

litigation is becoming widespread in the biopharmaceutical and biotechnology industry and we cannot predict how this will affect

our efforts to form strategic alliances, conduct clinical testing or manufacture and market any products under development.

challenged, our patents may not be held valid.

We could also become involved in interference proceedings in connection with one

or more of our patents or patent applications to determine priority of invention.

If we become involved in any litigation, interference

or other administrative proceedings, we will likely incur substantial expenses and the efforts of our technical and management

personnel will be significantly diverted.

In addition, an adverse determination could subject us to significant liabilities or

require us to seek licenses that may not be available on favorable terms, if at all.

We may be restricted or prevented from manufacturing

and selling our products in the event of an adverse determination in a judicial or administrative proceeding or if we fail to

obtain necessary licenses.

may be unable to protect our intellectual property rights and we may be liable for infringing the intellectual property rights

ability to compete effectively will depend on our ability to maintain the proprietary nature of our technologies.

hold several pending patent applications in the United States, Canada, Brazil, Europe, India, Hong Kong, Japan and China for our

technologies covering oral administration of insulin and other proteins and oral administration of exenatide and proteins and

79 patents issued by the United States, Australian, Canadian, Chinese, Israeli, Japanese, New Zealand, South African, Russian,

European, Hong Kong, Swiss, German, Spanish, French, United Kingdom, Italian, Indian, Austrian, Belgian, Irish, Swedish, Denmark,

Luxembourg, Monaco, Norway and Netherlands patent offices for our technologies covering oral administration of insulin and other

proteins, or for our technologies covering oral administration of exenatide, or for methods and compositions for treating diabetes.

Further, we intend to rely on a combination of trade secrets and non-disclosure and other contractual agreements and technical

measures to protect our rights in our technology.

We intend to depend upon confidentiality agreements with our officers, directors,

employees, consultants, and subcontractors, as well as collaborative partners, to maintain the proprietary nature of our technology.

These measures may not afford us sufficient or complete protection, and others may independently develop technology similar to

ours, otherwise avoid our confidentiality agreements, or produce patents that would materially and adversely affect our business,

prospects, financial condition and results of operations.

We believe that our technology is not subject to any infringement actions

based upon the patents of any third parties;

however, our technology may in the future be found to infringe upon the rights of

Others may assert infringement claims against us or against companies to which we have licensed our technology, and if

we should be found to infringe upon their patents, or otherwise impermissibly utilize their intellectual property, our ability

to continue to use our technology could be materially restricted or prohibited.

If this event occurs, we may be required to obtain

licenses from the holders of this intellectual property, enter into royalty agreements, or redesign our products so as not to

utilize this intellectual property, each of which may prove to be uneconomical or otherwise impossible.

Licenses or royalty agreements

required in order for us to use this technology may not be available on terms acceptable to us, or at all.

These claims could

result in litigation, which could materially adversely affect our business, prospects, financial condition and results of operations.

Further, we may need to indemnify companies to which we licensed our technology in the event that such technology is found to

infringe upon the rights of others.

commercial success will also depend significantly on our ability to operate without infringing the patents and other proprietary

rights of third parties.

Patent applications are, in many cases, maintained in secrecy until patents are issued.

The publication

of discoveries in the scientific or patent literature frequently occurs substantially later than the date on which the underlying

discoveries were made and patent applications are filed.

In the event of infringement or violation of another party’s patent,

we may be prevented from pursuing product development or commercialization.

See “Item 1.

Business—Description of Business—Patents and Licenses.”

At present, our success depends primarily

on the successful commercialization of our oral insulin capsule.

The successful commercialization of our oral

insulin capsule is crucial for our success.

At present, our principal product is the oral insulin capsule.

Our oral insulin capsule

is in a clinical development stage and faces a variety of risks and uncertainties.

Business—Description of Business—Patents

and Licenses.”

present, our success depends primarily on the successful commercialization of our oral insulin capsule.

successful commercialization of our oral insulin capsule is crucial for our success.

At present, our principal product is the

oral insulin capsule.

Our oral insulin capsule is in a clinical development stage and faces a variety of risks and uncertainties.

Principally, these risks include the following:

● Future clinical trial results may show that the oral insulin capsule is not well tolerated by recipients at its effective doses

or is not efficacious as compared to placebo,

Future clinical trial results may be inconsistent with previous preliminary testing results and data from our earlier studies may be inconsistent with clinical data;

similarly, we may encounter discrepancies due to evidence of treatment-by-center interaction which could cause us to exclude certain results, as happened with the results of two sites in the initial cohort of our Phase IIb trial,

● Even if our oral insulin capsule is shown to be safe and effective for its intended purposes, we may face significant or unforeseen

clinical trial results may show that the oral insulin capsule is not well tolerated by recipients at its effective doses or is

not efficacious as compared to placebo,

clinical trial results may be inconsistent with previous preliminary testing results and data from our earlier studies may be

inconsistent with clinical data,

if our oral insulin capsule is shown to be safe and effective for its intended purposes, we may face significant or unforeseen

difficulties in obtaining or manufacturing sufficient quantities or at reasonable prices,

● Our ability to complete the development and commercialization of the oral insulin capsule for our intended use is significantly

dependent upon our ability to obtain and maintain experienced and committed partners to assist us with obtaining clinical and regulatory

ability to complete the development and commercialization of the oral insulin capsule for our intended use is significantly dependent

upon our ability to obtain and maintain experienced and committed partners to assist us with obtaining clinical and regulatory

approvals for, and the manufacturing, marketing and distribution of, the oral insulin capsule on a worldwide basis,

● Even if our oral insulin capsule is successfully developed, commercially produced and receives all necessary regulatory approvals,

if our oral insulin capsule is successfully developed, commercially produced and receives all necessary regulatory approvals,

there is no guarantee that there will be market acceptance of our product, and

● Our competitors may develop therapeutics or other treatments which are superior or less costly than our own with the result

that our products, even if they are successfully developed, manufactured and approved, may not generate significant revenues.

If we are unsuccessful in dealing with any of

these risks, or if we are unable to successfully commercialize our oral insulin capsule for some other reason, it would likely

seriously harm our business.

We have limited experience in conducting

clinical trials.

Clinical trials must meet FDA and foreign regulatory

requirements.

We have limited experience in designing, conducting and managing the preclinical studies and clinical trials necessary

to obtain regulatory approval for our product candidates in any country.

We have entered into agreements with Integrium LLC to

assist us in designing, conducting and managing our various clinical trials in the United States.

Any failure of Integrium LLC

or any other consultant to fulfill their obligations could result in significant additional costs as well as delays in designing,

consulting and completing clinical trials on our products.

Our clinical trials may encounter delays,

suspensions or other problems.

We may encounter problems in clinical trials

that may cause us or the FDA or foreign regulatory agencies to delay, suspend or terminate our clinical trials at any phase.

problems could include the possibility that we may not be able to conduct clinical trials at our preferred sites, enroll a sufficient

number of patients for our clinical trials at one or more sites or begin or successfully complete clinical trials in a timely fashion,

Furthermore, we, the FDA or foreign regulatory agencies may suspend clinical trials at any time if we or they believe

the subjects participating in the trials are being exposed to unacceptable health risks or if we or they find deficiencies in the

clinical trial process or conduct of the investigation.

If clinical trials of any of the product candidates fail, we will not be

able to market the product candidate which is the subject of the failed clinical trials.

The FDA and foreign regulatory agencies

could also require additional clinical trials, which would result in increased costs and significant development delays.

to adequately demonstrate the safety and effectiveness of a pharmaceutical product candidate under development could delay or prevent

regulatory approval of the product candidate and could have a material adverse effect on our business, prospects, financial condition

and results of operations.

Clinical trials of our products conducted

by third parties may encounter delays, suspensions or other problems and are outside of our control.

Third parties who conduct clinical trials of

our products may encounter problems that may cause delays, suspensions or other problems at any phase.

These problems could include

the possibility that they may not be able to conduct clinical trials at their preferred sites, enroll a sufficient number of patients

for their clinical trials at one or more sites or begin or successfully complete clinical trials in a timely fashion, if at all.

In addition, these third parties are not controlled by us and may conduct these trials in a manner in which we disagree or

which may prove to be unsuccessful.

Furthermore, domestic or foreign regulatory agencies may suspend clinical trials at any

time if they believe the subjects participating in the trials are being exposed to unacceptable health risks or if they find deficiencies

in the clinical trial process or conduct of the investigation.

If such clinical trials conducted by third parties fail, it could

have a material adverse effect on our business, prospects, financial condition and results of operations.

We can provide no assurance that our products

will obtain regulatory approval or that the results of clinical studies will be favorable.

The testing, marketing and manufacturing

of any of our products will require the approval of the FDA or regulatory agencies of other countries.

We have completed certain

non-FDA clinical trials and pre-clinical trials for our products.

In addition, we have completed a Phase IIb clinical trial in

patients with type 2 diabetes under an IND with the FDA and we have completed Phase IIa clinical trials of ORMD-0801 in patients

with type 1 diabetes under an IND with the FDA.

However, success in pre-clinical testing and early clinical trials does not ensure

that later clinical trials will be successful.

Even within a clinical trial there might be discrepancies from statistically significant

data, as occurred at two of the sites in the initial cohort of our Phase IIb trial, which we excluded while we investigate such

discrepancies.

Further, a number of companies in the pharmaceutical industry have suffered significant setbacks in advanced clinical

We cannot predict with any certainty the amount

of time necessary to obtain regulatory approvals, including from the FDA or other foreign regulatory authorities, and whether any

such approvals will ultimately be granted.

In any event, review and approval by the regulatory bodies is anticipated to take a

number of years.

Preclinical and clinical trials may reveal that one or more of our products are ineffective or unsafe, in which

event further development of such products could be seriously delayed or terminated.

Moreover, obtaining approval for certain products

may require the testing on human subjects of substances whose effects on humans are not fully understood or documented.

in obtaining necessary regulatory approvals of any proposed product and failure to receive such approvals would have an adverse

effect on the product’s potential commercial success and on our business, prospects, financial condition and results of operations.

In addition, it is possible that a product may be found to be ineffective or unsafe due to conditions or facts which arise after

development has been completed and regulatory approvals have been obtained.

In this event we may be required to withdraw such product

from the market.

competitors may develop therapeutics or other treatments which are superior or less costly than our own with the result that our

products, even if they are successfully developed, manufactured and approved, may not generate significant revenues.

we are unsuccessful in dealing with any of these risks, or if we are unable to successfully commercialize our oral insulin capsule

for some other reason, it would likely seriously harm our business.

have limited experience in conducting clinical trials.

trials must meet FDA and foreign regulatory requirements.

We have limited experience in designing, conducting and managing the

preclinical studies and clinical trials necessary to obtain regulatory approval for our product candidates in any country.

have entered into agreements with Integrium LLC to assist us in designing, conducting and managing our various clinical trials

in the United States and Europe.

Any failure of Integrium LLC or any other consultant to fulfill their obligations could result

in significant additional costs as well as delays in designing, consulting and completing clinical trials on our products.

clinical trials may encounter delays, suspensions or other problems.

may encounter problems in clinical trials that may cause us or the FDA or foreign regulatory agencies to delay, suspend or terminate

our clinical trials at any phase.

These problems could include the possibility that we may not be able to conduct clinical trials

at our preferred sites, enroll a sufficient number of patients for our clinical trials at one or more sites or begin or successfully

complete clinical trials in a timely fashion, if at all.

Furthermore, we, the FDA or foreign regulatory agencies may suspend clinical

trials at any time if we or they believe the subjects participating in the trials are being exposed to unacceptable health risks

or if we or they find deficiencies in the clinical trial process or conduct of the investigation.

If clinical trials of any of

the product candidates fail, we will not be able to market the product candidate which is the subject of the failed clinical trials.

The FDA and foreign regulatory agencies could also require additional clinical trials, which would result in increased costs and

significant development delays.

Our failure to adequately demonstrate the safety and effectiveness of a pharmaceutical product

candidate under development could delay or prevent regulatory approval of the product candidate and could have a material adverse

effect on our business, prospects, financial condition and results of operations.

Finally, the COVID-19 pandemic has impacted

clinical trials broadly.

We may experience delays in site initiation and patient enrollment, failures to comply with study protocols,

delays in the manufacture of our product candidates for clinical testing and other difficulties in starting or competing our clinical

trials of our products conducted by third parties may encounter delays, suspensions or other problems and are outside of our control.

parties who conduct clinical trials of our products may encounter problems that may cause delays, suspensions or other problems

at any phase.

These problems could include the possibility that they may not be able to conduct clinical trials at their preferred

sites, enroll a sufficient number of patients for their clinical trials at one or more sites or begin or successfully complete

clinical trials in a timely fashion, if at all.

In addition, these third parties are not controlled by us and may conduct these

trials in a manner in which we disagree or which may prove to be unsuccessful.

Furthermore, domestic or foreign regulatory agencies

may suspend clinical trials at any time if they believe the subjects participating in the trials are being exposed to unacceptable

health risks or if they find deficiencies in the clinical trial process or conduct of the investigation.

If such clinical trials

conducted by third parties fail, it could have a material adverse effect on our business, prospects, financial condition and results

of operations.

can provide no assurance that our products will obtain regulatory approval or that the results of clinical studies will be favorable.

testing, marketing and manufacturing of any of our products will require the approval of the FDA or regulatory agencies of other

We have completed certain non-FDA clinical trials and pre-clinical trials for our products.

In addition, we have completed

a Phase IIb clinical trial in patients with type 2 diabetes under an IND with the FDA and we have completed Phase IIa clinical

trials of ORMD-0801 in patients with type 1 diabetes under an IND with the FDA.

However, success in pre-clinical testing and early

clinical trials does not ensure that later clinical trials will be successful.

Even within a clinical trial there might be discrepancies

from statistically significant data, as occurred at two of the sites in the initial cohort of our Phase IIb trial, which we excluded

while we investigate such discrepancies.

For example, a number of companies in the pharmaceutical industry have suffered significant

setbacks in advanced clinical trials.

cannot predict with any certainty the amount of time necessary to obtain regulatory approvals, including from the FDA or other

foreign regulatory authorities, and whether any such approvals will ultimately be granted.

In any event, review and approval by

the regulatory bodies is anticipated to take a number of years.

Preclinical and clinical trials may reveal that one or more of

our products are ineffective or unsafe, in which event further development of such products could be seriously delayed or terminated.

Moreover, obtaining approval for certain products may require the testing on human subjects of substances whose effects on humans

are not fully understood or documented.

Delays in obtaining necessary regulatory approvals of any proposed product and failure

to receive such approvals would have an adverse effect on the product’s potential commercial success and on our business,

prospects, financial condition and results of operations.

In addition, it is possible that a product may be found to be ineffective

or unsafe due to conditions or facts which arise after development has been completed and regulatory approvals have been obtained.

In this event we may be required to withdraw such product from the market.

See “Item 1.

Business—Description of Business—Government Regulation.”

We are dependent upon third party suppliers

of our raw materials.

We are dependent on outside vendors for our

entire supply of the oral insulin and GLP-1 capsules and do not currently have any long-term agreements in place for the supply

of oral insulin or GLP-1 capsules.

While we believe that there are numerous sources of supply available, if the third party suppliers

were to cease production or otherwise fail to supply us with quality raw materials in sufficient quantities on a timely basis and

we were unable to contract on acceptable terms for these services with alternative suppliers, our ability to produce our products

and to conduct testing and clinical trials would be materially adversely affected.

Our future revenues from HTIT are dependent

upon third party suppliers and Chinese regulatory approvals.

Our future revenues from HTIT are dependent

upon the achievement of certain milestones and conditions, and the success of HTIT to implement our technology and to manufacture

the oral insulin capsule.

Our future revenues from HTIT are also dependent upon the ability of third parties to scale-up one of

our oral capsule ingredients and to scale-up the manufacturing process of our capsules.

Our future revenues from royalties from

HTIT are further dependent upon the granting of regulatory approvals in the Territory.

Accordingly, if any of the foregoing does

not occur, we may not be successful in receiving future revenues from HTIT and may not succeed with our business plans in China.

We are highly dependent upon our ability

to enter into agreements with collaborative partners to develop, commercialize and market our products.

Our long-term strategy is to ultimately seek

a strategic commercial partner, or partners, such as large pharmaceutical companies, with extensive experience in the development,

commercialization and marketing of insulin applications and/or other orally digestible drugs.

We anticipate such partner or partners

would be responsible for, or substantially support, late stage clinical trials (Phase III) and sales and marketing of our oral

insulin capsule and other products.

Such planned strategic partnership, or partnerships, may provide a marketing and sales infrastructure

for our products as well as financial and operational support for global clinical trials, post marketing studies, label expansions

and other regulatory requirements concerning future clinical development in the United States and elsewhere.

While our strategy is to partner with an appropriate

party, no assurance can be given that any third party would be interested in partnering with us.

We currently lack the resources

to manufacture any of our product candidates on a large scale and we have no sales, marketing or distribution capabilities.

the event we are not able to enter into a collaborative agreement with a partner, or partners, on commercially reasonable terms,

or at all, we may be unable to commercialize our products, which would have a material adverse effect upon our business, prospects,

financial condition and results of operations.

The biotechnology and biopharmaceutical industries

are characterized by rapid technological developments and a high degree of competition.

We may be unable to compete with more substantial

The biotechnology and biopharmaceutical industries

are characterized by rapid technological developments and a high degree of competition.

As a result, our products could

become obsolete before we recoup any portion of our related research and development and commercialization expenses.

These industries

are highly competitive, and this competition comes both from biotechnology firms and from major pharmaceutical and chemical companies.

Many of these companies have substantially greater financial, marketing and human resources than we do (including, in some cases,

substantially greater experience in clinical testing, manufacturing and marketing of pharmaceutical products).

We also experience

competition in the development of our products from universities and other research institutions and compete with others in acquiring

technology from such universities and institutions.

In addition, certain of our products may be subject to competition from products

developed using other technologies.

Business—Description of Business—Government

Regulation.”

are dependent upon third party suppliers of our raw materials.

are dependent on outside vendors for our entire supply of the oral insulin and GLP-1 capsules and do not currently have any long-term

agreements in place for the supply of oral insulin or GLP-1 capsules.

While we believe that there are numerous sources of supply

available, if the third party suppliers were to cease production, including as a result of the COVID-19 pandemic, or otherwise

fail to supply us with quality raw materials in sufficient quantities on a timely basis and we were unable to contract on acceptable

terms for these services with alternative suppliers, our ability to produce our products and to conduct testing and clinical trials

would be materially adversely affected.

future revenues from HTIT are dependent upon third party suppliers and Chinese regulatory approvals.

future revenues from HTIT are dependent upon the achievement of certain milestones and conditions, and the success of HTIT to

implement our technology and to manufacture the oral insulin capsule.

Our future revenues from HTIT are also dependent upon the

ability of third parties to scale-up one of our oral capsule ingredients and to scale-up the manufacturing process of our capsules.

Our future revenues from royalties from HTIT are further dependent upon the granting of regulatory approvals in the Territory.

Accordingly, if any of the foregoing does not occur, we may not be successful in receiving future revenues from HTIT and may not

succeed with our business plans in China.

If we do not resolve our dispute with

HTIT favorably, we may need to reverse deferred revenue of up to $2 million and may not receive an additional $4 million in royalties.

On August 21, 2020,

we received a letter from HTIT, disputing certain pending payment obligations of HTIT under the TLA.

We estimate this obligation

to be between $2 million and $6 million.

While we wholly dispute said claims and have been engaged in discussions and exchanges

with HTIT in an attempt to clarify and resolve disagreements between the parties regarding milestone payments and work plan implementation,

we may be subsequently required to repay to HTIT up to $2 million, which has been received and has been included in our deferred

revenue in each of the consolidated balance sheets fiscal years ended August 31, 2020 and 2019.

In addition, we may not receive

an additional $4 million in Royalties if HTIT is entitled to the full disputed amount of $6 million.

are highly dependent upon our ability to enter into agreements with collaborative partners to develop, commercialize and market

our products.

Our long-term strategy is to ultimately seek a strategic commercial

partner, or partners, such as large pharmaceutical companies, with extensive experience in the development, commercialization,

and marketing of insulin applications and/or other orally digestible drugs.

Although phase III clinical trials for our oral insulin

candidate, ORMD-0801 will start without a partner, if we engage such a partner, we anticipate such partner or partners would be

responsible for, or substantially support, late stage clinical trials, and sales and marketing of our oral insulin capsule and

other products.

Such planned strategic partnership, or partnerships, may provide a marketing and sales infrastructure for our products

as well as financial and operational support for global clinical trials, post marketing studies, label expansions and other regulatory

requirements concerning future clinical development in the United States and elsewhere.

While our strategy is to partner with an

appropriate party for our expected phase III clinical trials, no assurance can be given that any third party would be interested

in partnering with us.

We currently lack the resources to manufacture any of our product candidates on a large scale and we have

no sales, marketing or distribution capabilities.

In the event we are not able to enter into a collaborative agreement with a partner,

or partners, on commercially reasonable terms, or at all, we may be unable to commercialize our products, which would have a material

adverse effect upon our business, prospects, financial condition and results of operations.

biotechnology and biopharmaceutical industries are characterized by rapid technological developments and a high degree of competition.

We may be unable to compete with more substantial enterprises.

biotechnology and biopharmaceutical industries are characterized by rapid technological developments and a high degree of competition.

As a result, our products could become obsolete before we recoup any portion of our related research and development and commercialization

These industries are highly competitive, and this competition comes both from biotechnology firms and from major pharmaceutical

and chemical companies.

Many of these companies have substantially greater financial, marketing and human resources than we do

(including, in some cases, substantially greater experience in clinical testing, manufacturing and marketing of pharmaceutical

We also experience competition in the development of our products from universities and other research institutions

and compete with others in acquiring technology from such universities and institutions.

In addition, certain of our products

may be subject to competition from products developed using other technologies.

See “Item 1.

Business—Description of Business—Competition.”

We have limited senior management resources

and may be required to obtain more resources to manage our growth.

We expect the expansion of our business to place

a significant strain on our limited managerial, operational and financial resources.

We will be required to expand our operational

and financial systems significantly and to expand, train and manage our work force in order to manage the expansion of our operations.

Our failure to fully integrate our new employees into our operations could have a material adverse effect on our business, prospects,

financial condition and results of operations.

Our ability to attract and retain highly skilled personnel is critical to our operations

and expansion.

We face competition for these types of personnel from other technology companies and more established organizations,

many of which have significantly larger operations and greater financial, technical, human and other resources than we have.

may not be successful in attracting and retaining qualified personnel on a timely basis, on competitive terms or at all.

are not successful in attracting and retaining these personnel, our business, prospects, financial condition and results of operations

will be materially adversely affected.

Business—Description

of Business—Competition.”

have limited senior management resources and may be required to obtain more resources to manage our growth.

expect the expansion of our business to place a significant strain on our limited managerial, operational and financial resources.

We will be required to expand our operational and financial systems significantly and to expand, train and manage our work force

in order to manage the expansion of our operations.

Our failure to fully integrate our new employees into our operations could

have a material adverse effect on our business, prospects, financial condition and results of operations.

Our ability to attract

and retain highly skilled personnel is critical to our operations and expansion.

We face competition for these types of personnel

from other technology companies and more established organizations, many of which have significantly larger operations and greater

financial, technical, human and other resources than we have.

We may not be successful in attracting and retaining qualified personnel

on a timely basis, on competitive terms or at all.

If we are not successful in attracting and retaining these personnel, our business,

prospects, financial condition and results of operations will be materially adversely affected.

See “Item 7.

Management’s Discussion and Analysis of Financial Condition and

Results of Operations,”

Management’s

Discussion and Analysis of Financial Condition and Results of Operations,”

“Item 1.

Business—Description of Business—Strategy”

Business—Description of

Business—Strategy”

and “—Employees.”

We depend upon our senior management and

skilled personnel and their loss or unavailability could put us at a competitive disadvantage.

We currently depend upon the efforts and abilities

of our senior executives, as well as the services of several key consultants and other key personnel, including Dr.

Miriam Kidron,

our Chief Scientific Officer.

The loss or unavailability of the services of any of these individuals for any significant period

of time could have a material adverse effect on our business, prospects, financial condition and results of operations.

maintain “key man”

depend upon our senior management and skilled personnel and their loss or unavailability could put us at a competitive disadvantage.

currently depend upon the efforts and abilities of our senior executives, as well as the services of several key consultants and

other key personnel, including Dr.

Miriam Kidron, our Chief Scientific Officer.

The loss or unavailability of the services of

any of these individuals for any significant period of time could have a material adverse effect on our business, prospects, financial

condition and results of operations.

We do not maintain “key man”

life insurance policies for any of our senior executives.

In addition, recruiting and retaining

qualified scientific personnel to perform future research and development work will be critical to our success.

There is currently

a shortage of employees with expertise in developing, manufacturing and commercialization of products and related clinical and

regulatory affairs, and this shortage is likely to continue.

Competition for skilled personnel is intense and turnover rates are

In addition, recruiting and retaining qualified scientific personnel to perform future research and development work will be critical

to our success.

There is currently a shortage of employees with expertise in developing, manufacturing and commercialization of

products and related clinical and regulatory affairs, and this shortage is likely to continue.

Competition for skilled personnel

is intense and turnover rates are high.

Our ability to attract and retain qualified personnel may be limited.

Our inability to attract and retain qualified skilled

personnel would have a material adverse effect on our business, prospects, financial condition and results of operations.

Healthcare policy changes, including pending

legislation recently adopted and further proposals still pending to reform the U.S.

healthcare system, may harm our future business.

Healthcare costs have risen significantly over

the past decade.

There have been and continue to be proposals by legislators, regulators and third-party payors to keep these costs

Certain proposals, if passed, would impose limitations on the prices we will be able to charge for the products that we are

developing, or the amounts of reimbursement available for these products from governmental agencies or third-party payors.

limitations could in turn reduce the amount of revenues that we will be able to generate in the future from sales of our products

and licenses of our technology.

In 2010, the federal government enacted healthcare

reform legislation that has significantly impacted the pharmaceutical industry.

In addition to requiring most individuals to have

health insurance and establishing new regulations on health plans, this legislation requires discounts under the Medicare drug

benefit program and increased rebates on drugs covered by Medicaid.

In addition, the legislation imposes an annual fee, which has

increased annually, on sales by branded pharmaceutical manufacturers.

There can be no assurance that our business will not

be materially adversely affected by these increased rebates, fees and other provisions.

In addition, these and other initiatives

in the United States may continue the pressure on drug pricing, especially under the Medicare and Medicaid programs, and may also

increase regulatory burdens and operating costs.

The announcement or adoption of any such initiative could have an adverse effect

on potential revenues from any product that we may successfully develop.

An expansion in government’s role in the U.S.

industry may lower the future revenues for the products we are developing and adversely affect our future business, possibly materially.

In September 2017, members of the U.S.

introduced legislation with the announced intention to repeal and replace major provisions of the Patient Protection and Affordable

Care Act, or the ACA.

In addition to those efforts, on October 12, 2017, President Trump signed an executive order that modified

certain aspects of the ACA.

Attempts to repeal or to repeal and replace the ACA will likely continue.

In addition, various other

healthcare reform proposals have also emerged at the federal and state level.

We cannot predict what healthcare initiatives, if

any, will be implemented at the federal or state level, or the effect any future legislation or regulation will have on us.

Changes to tax laws could have a negative

effect on us or our stockholders.

At any time, the U.S.

federal or state income

tax laws, or the administrative interpretations of those laws, may be amended.

Federal and state tax laws are constantly under

review by persons involved in the legislative process, the U.S.

Internal Revenue Service, the U.S.

Department of the Treasury and

state taxing authorities.

Changes to the tax laws, regulations and administrative interpretations, which may have retroactive application,

could adversely affect us.

Tax reform legislation in December 2017 made

substantial changes to the Internal Revenue Code of 1986, as amended, or the Code, particularly as it relates to the taxation of

both corporate income and international income.

Among those changes are a significant permanent reduction in the generally applicable

corporate income tax rate and the modification of tax policies, credits and deductions for businesses and individuals.

This legislation

also imposes additional limitations on the deduction of net operating losses, which could negatively impact our ability to utilize

our net operating losses to offset our taxable income in future taxable years.

The effect of these and other changes made in this

legislation is still uncertain in many respects, both in terms of their direct effect on the taxation of an investment in our securities

and their indirect effect on the value of assets owned by us.

Furthermore, many of the provisions of the new law will require

additional guidance in order to assess their effect.

It is also possible that there will be technical corrections legislation proposed

with respect to the tax reform legislation, the effect of which cannot be predicted and may be adverse to us or our stockholders.

Our stockholders are encouraged to consult with their tax advisors about the potential effects that changes in law may have on

them and their ownership of our securities.

We are exposed to fluctuations in currency

exchange rates.

A considerable amount of our expenses are generated

in dollars or in dollar-linked currencies, but a significant portion of our expenses such as some clinical studies and payroll

costs are generated in other currencies such as NIS and Euro.

Most of the time, our non-dollar assets are not totally offset by

non-dollar liabilities.

Due to the foregoing and to the fact that our financial results are measured in dollars, our results could

be adversely affected as a result of a strengthening or weakening of the dollar compared to these other currencies.

fiscal years ended August 31, 2016, 2017 and 2019, the dollar depreciated in relation to the NIS, which raised the dollar cost

of our Israeli based operations and adversely affected our financial results, while during the fiscal years ended August 31, 2015

and 2018, the dollar increased in relation to the NIS, which reduced the dollar cost of our Israeli based operations costs.

addition, our results could also be adversely affected if we are unable to guard against currency fluctuations in the future.

we may in the future decide to undertake foreign exchange hedging transactions to cover a portion of our foreign currency exchange

exposure, we currently do not hedge our exposure to foreign currency exchange risks.

These transactions, however, may not adequately

protect us from future currency fluctuations and, even if they do protect us, may involve operational or financing costs we would

not otherwise incur.

Risks Related to our Common Stock

As the market price of our common stock may

fluctuate significantly, this may make it difficult for you to sell your shares of common stock when you want or at prices you

find attractive.

The price of our common stock is currently listed

on Nasdaq and on the Tel Aviv Stock Exchange and constantly changes.

In recent years, the stock market in general has experienced

extreme price and volume fluctuations.

We expect that the market price of our common stock will continue to fluctuate.

These fluctuations

may result from a variety of factors, many of which are beyond our control.

These factors include:

● Clinical trial results and the timing of the release of such results,

● The amount of cash resources and our ability to obtain additional funding,

● Announcements of research activities, business developments, technological innovations or new products by us or our competitors,

● Entering into or terminating strategic relationships,

● Changes in government regulation,

● Departure of key personnel,

● Disputes concerning patents or proprietary rights,

● Changes in expense level,

● Future sales of our equity or equity-related securities,

● Public concern regarding the safety, efficacy or other aspects of the products or methodologies being developed,

● Activities of various interest groups or organizations,

● Media coverage, and

● Status of the investment markets.

Future sales of common stock or the issuance

of securities senior to our common stock or convertible into, or exchangeable or exercisable for, our common stock could materially

adversely affect the trading price of our common stock, and our ability to raise funds in new equity offerings.

Future sales of substantial amounts of our common

stock or other equity-related securities in the public market or privately, or the perception that such sales could occur, could

adversely affect prevailing trading prices of our common stock and could impair our ability to raise capital through future offerings

of equity or other equity-related securities.

We anticipate that we will need to raise capital through offerings of equity and

equity related securities.

We can make no prediction as to the effect, if any, that future sales of shares of our common stock

or equity-related securities, or the availability of shares of common stock for future sale, will have on the trading price of

our common stock.

Our stockholders may experience significant

dilution as a result of any additional financing using our equity securities.

To the extent that we raise additional funds

by issuing equity securities, our stockholders may experience significant dilution.

Our management will have significant flexibility

in using the net proceeds of any offering of securities.

We intend generally to use the net proceeds

from any offerings of our securities for expenses related to our clinical trials, research and product development activities,

and for general corporate purposes, including general working capital purposes.

Our management will have significant flexibility

in applying the net proceeds of any such offering.

The actual amounts and timing of expenditures will vary significantly depending

on a number of factors, including the amount of cash used in our operations and our research and development efforts.

Management’s

failure to use these funds effectively would have an adverse effect on the value of our common stock and could make it more difficult

and costly to raise funds in the future.

Future sales of our common stock by our existing

stockholders could adversely affect our stock price.

The market price of our common stock could decline

as a result of sales of a large number of shares of our common stock in the market, or the perception that these sales could occur.

These sales also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem

As of November 26, 2019, we had outstanding 17,398,112 shares of common stock, a large majority of which are freely

Giving effect to the exercise in full of all of our outstanding warrants, options and restricted stock units, or RSUs,

including those currently unexercisable or unvested, we would have outstanding 21,882,225 shares of common stock.

Our issuance of warrants, options and RSUs

to investors, employees and consultants may have a negative effect on the trading prices of our common stock as well as a dilutive

We have issued and may continue to issue warrants,

options, RSUs and convertible notes at, above or below the current market price.

As of November 26, 2019, we had outstanding warrants

and options exercisable for 3,007,680 shares of common stock at a weighted average exercise price of $7.27.

We also had outstanding

RSUs exercisable for 164,636 shares of common stock at a total exercise price of $900.

In addition to the dilutive effect of a

large number of shares of common stock and a low exercise price for the warrants and options, there is a potential that a large

number of underlying shares of common stock may be sold in the open market at any given time, which could place downward pressure

on the trading of our common stock.

Delaware law could discourage a change in

control, or an acquisition of us by a third party, even if the acquisition would be favorable to you, and thereby adversely affect

existing stockholders.

The Delaware General Corporation Law contains

provisions that may have the effect of making more difficult or delaying attempts by others to obtain control of our Company, even

when these attempts may be in the best interests of stockholders.

Delaware law imposes conditions on certain business combination

transactions with “interested stockholders.”

These provisions and others that could be adopted in the future could

deter unsolicited takeovers or delay or prevent changes in our control or management, including transactions in which stockholders

might otherwise receive a premium for their shares of common stock over then current market prices.

These provisions may also limit

the ability of stockholders to approve transactions that they may deem to be in their best interests.

Because we will not pay cash dividends

in the foreseeable future, investors may have to sell shares of our common stock in order to realize their investment.

We have not paid any cash dividends on our common

stock and do not intend to pay cash dividends in the foreseeable future.

We intend to retain future earnings, if any, for reinvestment

in the development and expansion of our business.

Any credit agreements which we may enter into with institutional lenders or otherwise

may restrict our ability to pay dividends.

Whether we pay cash dividends in the future will be at the discretion of our Board and

will be dependent upon our financial condition, results of operations, capital requirements and any other factors that our Board

decides is relevant.

Because certain of our stockholders control

a significant number of shares of our common stock, they may have effective control over actions requiring stockholder approval.

As of November 26, 2019, our directors, executive

officers and principal affiliated stockholders beneficially own approximately 16.9% of our outstanding shares of common stock,

excluding shares issuable upon the exercise of options, warrants and RSUs.

As a result, these stockholders, should they act together,

may have the ability to control the outcome of matters submitted to our stockholders for approval, including the election of directors

and any merger, consolidation or sale of all or substantially all of our assets.

In addition, these stockholders, should they act

together, may have the ability to control our management and affairs.

Accordingly, this concentration of ownership might harm the

market price of our common stock by:

● Delaying, deferring or preventing a change in corporate control,

● Impeding a merger, consolidation, takeover or other business combination involving us, or

● Discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of us.

Risks Related to Conducting Business in Israel

We are affected by the political, economic

and military risks of having operations in Israel.

We have operations in the State of Israel, and

we are directly affected by political, economic and security conditions in that country.

Since the establishment of the State of

Israel in 1948, a number of armed conflicts have taken place between Israel and its Arab neighbors and a state of hostility, varying

in degree and intensity, has led to security and economic problems for Israel.

In addition, acts of terrorism, armed conflicts

or political instability in the region could negatively affect local business conditions and harm our results of operations.

cannot predict the effect on the region of any diplomatic initiatives or political developments involving Israel or the Palestinians

or other countries and territories in the Middle East.

Recent political events, including political uprisings, social unrest and

regime change, in various countries in the Middle East and North Africa have weakened the stability of those countries and territories,

which could result in extremists coming to power.

In addition, Iran has threatened to attack Israel and is widely believed to be

developing nuclear weapons.

Iran is also believed to have a strong influence among extremist groups in the region, such as Hamas

in Gaza and Hezbollah in Lebanon.

This situation has escalated in the past and may potentially escalate in the future to violent

events which may affect Israel and us.

Our business, prospects, financial condition and results of operations could be materially

adversely affected if major hostilities involving Israel should occur or if trade between Israel and its current trading partners

is interrupted or curtailed.

All adult male permanent residents of Israel,

unless exempt, may be required to perform military reserve duty annually.

Additionally, all such residents are subject to being

called to active duty at any time under emergency circumstances.

Some of our officers, directors and employees currently are or

in the future may be obligated to perform annual military reserve duty.

We can provide no assurance that such requirements will

not have a material adverse effect on our business, prospects, financial condition and results of operations in the future, particularly

if emergency circumstances occur.

Because we received grants from the Israel

Innovation Authority of the Israeli Ministry of Economy & Industry we are subject to ongoing restrictions.

We received royalty-bearing grants from the

Israel Innovation Authority of the Israeli Ministry of Economy & Industry, or IIA, for research and development programs that

meet specified criteria.

Our inability to

attract and retain qualified skilled personnel would have a material adverse effect on our business, prospects, financial condition

and results of operations.

policy changes, including pending legislation recently adopted and further proposals still pending to reform the U.S.

system, may harm our future business.

costs have risen significantly over the past decade.

There have been and continue to be proposals by legislators, regulators and

third-party payors to keep these costs down.

Certain proposals, if passed, would impose limitations on the prices we will be able

to charge for the products that we are developing, or the amounts of reimbursement available for these products from governmental

agencies or third-party payors.

These limitations could in turn reduce the amount of revenues that we will be able to generate

in the future from sales of our products and licenses of our technology.

2010, the federal government enacted healthcare reform legislation that has significantly impacted the pharmaceutical industry.

In addition to requiring most individuals to have health insurance and establishing new regulations on health plans, this legislation

requires discounts under the Medicare drug benefit program and increased rebates on drugs covered by Medicaid.

In addition, the

legislation imposes an annual fee, which has increased annually, on sales by branded pharmaceutical manufacturers.

no assurance that our business will not be materially adversely affected by these increased rebates, fees and other provisions.

In addition, these and other initiatives in the United States may continue the pressure on drug pricing, especially under the

Medicare and Medicaid programs, and may also increase regulatory burdens and operating costs.

The announcement or adoption of

any such initiative could have an adverse effect on potential revenues from any product that we may successfully develop.

in government’s role in the U.S.

healthcare industry may lower the future revenues for the products we are developing and

adversely affect our future business, possibly materially.

September 2017, members of the U.S.

Congress introduced legislation with the announced intention to repeal and replace major provisions

of the Patient Protection and Affordable Care Act, or the ACA.

In addition to those efforts, on October 12, 2017, President Trump

signed an executive order that modified certain aspects of the ACA.

Various litigation to invalidate parts of the ACA are pending

in court and, despite an upcoming change in presidential administration, attempts to repeal or to repeal and replace the ACA may

In addition, various other healthcare reform proposals have also emerged at the federal and state level.

We cannot predict

what healthcare initiatives, if any, will be implemented at the federal or state level, or the effect any future legislation or

regulation will have on us.

are exposed to fluctuations in currency exchange rates.

considerable amount of our expenses are generated in dollars or in dollar-linked currencies, but a significant portion of our

expenses such as some clinical studies and payroll costs are generated in other currencies such as NIS and Euro.

Most of the time,

our non-dollar assets are not totally offset by non-dollar liabilities.

Due to the foregoing and to the fact that our financial

results are measured in dollars, our results could be adversely affected as a result of a strengthening or weakening of the dollar

compared to these other currencies.

During the fiscal years ended August 31, 2016, 2017, 2019 and 2020, the dollar depreciated

in relation to the NIS, which raised the dollar cost of our Israeli based operations and adversely affected our financial results,

while during the fiscal years ended August 31, 2015 and 2018 the dollar increased in relation to the NIS, which reduced the dollar

cost of our Israeli based operations costs.

In addition, our results could also be adversely affected if we are unable to guard

against currency fluctuations in the future.

Although we may in the future decide to undertake foreign exchange hedging transactions

to cover a portion of our foreign currency exchange exposure, we currently do not hedge our exposure to foreign currency exchange

These transactions, however, may not adequately protect us from future currency fluctuations and, even if they do protect

us, may involve operational or financing costs we would not otherwise incur.

COVID-19 pandemic, or any other pandemic, epidemic or outbreak of an infectious disease, may materially and adversely affect our

business and operations.

outbreak of COVID-19 originated in Wuhan, China, in December 2019 and has since spread globally, including to the United States,

Israel and other European countries where we expected to initiate clinical trials.

On March 11, 2020, the World Health Organization

declared the outbreak a pandemic.

While COVID-19 is still spreading and the final implications of the pandemic are difficult to

estimate at this stage, it is clear that it has affected the lives of a large portion of the global population.

At this time, the

pandemic has caused states of emergency to be declared in various countries, travel restrictions imposed globally, quarantines

established in certain jurisdictions and various institutions and companies being closed.

On March 10, 2020, the Government of

Israel announced that effective March 12, 2020 foreign travelers arriving from any country will be required to remain in home quarantine

until 14 days have passed since the date of entry into Israel, and effective March 18, 2020, non-Israeli residents or citizens,

except for non-nationals whose lives are based in Israel, are not allowed to enter Israel.

In addition, the Ministry of Health

in the State of Israel issued guidelines on March 11, 2020, which were most recently updated in October 2020, recommending people

avoid gatherings in one space and providing that no gathering of more than 10 people should be held under any circumstances.

(including us) are also required to prepare and increase as much as possible the capacity and arrangement for employees to work

In addition, on March 11, 2020, the President of the United States issued a proclamation to restrict travel to the United

States from foreign nationals who have recently been in certain European and Latin America countries.

Although to date these restrictions

have not impacted our operations other than the delay of one of our trials, the effect on our business, from the spread of COVID-19

and the actions implemented by the governments of the State of Israel, the United States and elsewhere across the globe, may worsen

spread of COVID-19 may also result in the inability of our suppliers to deliver supplies to us on a timely basis.

health professionals may reduce staffing and reduce or postpone meetings with clients in response to the spread of an infectious

Though we have not yet experienced such events, if they would occur, they could result in a period of business disruption,

and in reduced operations, any of which could materially affect our business, financial condition and results of operations.

as of the date of this Annual Report on Form 10-K, we do not expect any material impact on our long-term activity, the extent

to which COVID-19 impacts our business will depend on future developments, which are highly uncertain and cannot be predicted,

including new information which may emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or treat its

impact, among others.

We are actively monitoring the pandemic and we are taking any necessary measures to respond to the situation

in cooperation with the various stakeholders.

outbreak of COVID-19 may materially and adversely affect our clinical trial operations and our financial results.

outbreak of COVID-19 originated in Wuhan, China, in December 2019 and has since spread to multiple countries, including the United

States, Israel and several European countries where we expected to initiate clinical trials.

The extent to which COVID-19 may

impact our clinical trial operations will depend on future developments, which are highly uncertain and cannot be predicted with

confidence, such as the duration of the outbreak, the severity of COVID-19, or the effectiveness of actions to contain and treat

for COVID-19.

The continued spread of COVID-19 globally could adversely impact our clinical trial operations in the United States,

Israel and in Europe, including our ability to recruit and retain patients and principal investigators and site staff who, as

healthcare providers, may have heightened exposure to COVID-19 if an outbreak occurs in their geography or due to government or

institutional quarantines or stay-at-home measures.

COVID-19 may also affect employees of third-party contract research organizations located in affected geographies that we rely

upon to carry out such enrollments and trials.

Any negative impact COVID-19 has to patient enrollment or treatment could cause

costly delays to clinical trial activities, which could adversely affect our ability to obtain regulatory approval for and to

commercialize our product candidates, increase our operating expenses, and have a material adverse effect on our financial results.

Related to our Common Stock

sales of our common stock by our existing stockholders could adversely affect our stock price.

The market price of our

common stock could decline as a result of sales of a large number of shares of our common stock in the market, or the perception

that these sales could occur.

These sales also might make it more difficult for us to sell equity securities in the future at

a time and at a price that we deem appropriate.

As of November 24, 2020, we had outstanding 23,675,530 shares of common stock,

a large majority of which are freely tradable.

Giving effect to the exercise in full of all of our outstanding warrants, options

and restricted stock units, or RSUs, including those currently unexercisable or unvested, we would have outstanding 28,948,286

shares of common stock.

issuance of warrants, options and RSUs to investors, employees and consultants may have a negative effect on the trading prices

of our common stock as well as a dilutive effect.

We have issued and may

continue to issue warrants, options, RSUs and convertible notes at, above or below the current market price.

As of November 24,

2020, we had outstanding warrants and options exercisable for 3,407,819 shares of common stock at a weighted average exercise price

We also had outstanding RSUs exercisable for 164,636 shares of common stock at a total exercise price of $900.

to the dilutive effect of a large number of shares of common stock and a low exercise price for the warrants and options, there

is a potential that a large number of underlying shares of common stock may be sold in the open market at any given time, which

could place downward pressure on the trading of our common stock.

we will not pay cash dividends in the foreseeable future, investors may have to sell shares of our common stock in order to realize

their investment.

have not paid any cash dividends on our common stock and do not intend to pay cash dividends in the foreseeable future.

to retain future earnings, if any, for reinvestment in the development and expansion of our business.

Any credit agreements which

we may enter into with institutional lenders or otherwise may restrict our ability to pay dividends.

Whether we pay cash dividends

in the future will be at the discretion of our Board and will be dependent upon our financial condition, results of operations,

capital requirements and any other factors that our Board decides is relevant.

certain of our stockholders control a significant number of shares of our common stock, they may have effective control over actions

requiring stockholder approval.

of November 24, 2020, our directors, executive officers and principal affiliated stockholders beneficially own approximately 16.7%

of our outstanding shares of common stock, excluding shares issuable upon the exercise of options, warrants and RSUs.

these stockholders, should they act together, may have the ability to control the outcome of matters submitted to our stockholders

for approval, including the election of directors and any merger, consolidation or sale of all or substantially all of our assets.

In addition, these stockholders, should they act together, may have the ability to control our management and affairs.

this concentration of ownership might harm the market price of our common stock by:

deferring or preventing a change in corporate control,

a merger, consolidation, takeover or other business combination involving us, or

● Discouraging

a potential acquirer from making a tender offer or otherwise attempting to obtain control

Related to Conducting Business in Israel

are affected by the political, economic and military risks of having operations in Israel.

have operations in the State of Israel, and we are directly affected by political, economic and security conditions in that country.

Since the establishment of the State of Israel in 1948, a number of armed conflicts have taken place between Israel and its Arab

neighbors and a state of hostility, varying in degree and intensity, has led to security and economic problems for Israel.

addition, acts of terrorism, armed conflicts or political instability in the region could negatively affect local business conditions

and harm our results of operations.

We cannot predict the effect on the region of any diplomatic initiatives or political developments

involving Israel or the Palestinians or other countries and territories in the Middle East.

Recent political events, including

political uprisings, social unrest and regime change, in various countries in the Middle East and North Africa have weakened the

stability of those countries and territories, which could result in extremists coming to power.

In addition, Iran has threatened

to attack Israel and is widely believed to be developing nuclear weapons.

Iran is also believed to have a strong influence among

extremist groups in the region, such as Hamas in Gaza and Hezbollah in Lebanon.

This situation has escalated in the past and may

potentially escalate in the future to violent events which may affect Israel and us.

Our business, prospects, financial condition

and results of operations could be materially adversely affected if major hostilities involving Israel should occur or if trade

between Israel and its current trading partners is interrupted or curtailed.

adult male permanent residents of Israel, unless exempt, may be required to perform military reserve duty annually.

Additionally,

all such residents are subject to being called to active duty at any time under emergency circumstances.

Some of our officers,

directors and employees currently are or in the future may be obligated to perform annual military reserve duty.

We can provide

no assurance that such requirements will not have a material adverse effect on our business, prospects, financial condition and

results of operations in the future, particularly if emergency circumstances occur.

we received grants from the Israel Innovation Authority of the Israeli Ministry of Economy & Industry we are subject to ongoing

restrictions.

received royalty-bearing grants from the Israel Innovation Authority of the Israeli Ministry of Economy & Industry, or IIA,

for research and development programs that meet specified criteria.

We did not recognize any grants in fiscals 2020, 2019 and

We do not expect to receive further grants

from the IIA in the future.

The terms of the IIA grants limit our ability to transfer know-how developed under an approved research

and development program outside of Israel, regardless of whether the royalties were fully paid.

It may be difficult to enforce a U.S.

against us or our officers and directors and to assert U.S.

securities laws claims in Israel.

Almost all of our directors and officers are

nationals and/or residents of countries other than the United States.

As a result, service of process upon us, our Israeli subsidiary

and our directors and officers, may be difficult to obtain within the United States.

Furthermore, because the majority of our assets

and investments, and most of our directors and officers are located outside the United States, it may be difficult for investors

to enforce within the United States any judgments obtained against us or any such officers or directors.

Additionally, it may be

difficult to assert U.S.

securities law claims in original actions instituted in Israel.

Israeli courts may refuse to hear a claim

based on a violation of U.S.

securities laws because Israel is not the most appropriate forum in which to bring such a claim.

addition, even if an Israeli court agrees to hear a claim, it may determine that Israeli law and not U.S.

law is applicable to

law is found to be applicable, the content of applicable U.S.

law must be proved as a fact, which can be a

time-consuming and costly process.

Certain matters of procedure will also be governed by Israeli law.

Subject to specified time limitations and legal

procedures, under the rules of private international law currently prevailing in Israel, Israeli courts may enforce a U.S.

in a civil matter, including a judgment based upon the civil liability provisions of the U.S.

securities laws, as well as

a monetary or compensatory judgment in a non-civil matter, provided that the following key conditions are met:

● subject to limited exceptions, the judgment is final and non-appealable;

● the judgment was given by a court competent under the laws of the state in which the court is located and is otherwise enforceable

in such state;

● the judgment was rendered by a court competent under the rules of private international law applicable in Israel;

● the laws of the state in which the judgment was given provides for the enforcement of judgments of Israeli courts;

● adequate service of process has been effected and the defendant has had a reasonable opportunity to present its arguments and

● the judgment and its enforcement are not contrary to the law, public policy, security or sovereignty of the State of Israel;

● the judgment was not obtained by fraud and does not conflict with any other valid judgment in the same matter between the same

● an action between the same parties in the same matter was not pending in any Israeli court at the time the lawsuit was instituted

If any of these conditions are not met, Israeli courts

will likely not enforce the applicable U.S.

We do not expect to receive further grants from the IIA in the future.

The terms of the IIA grants limit our ability to

transfer know-how developed under an approved research and development program outside of Israel, regardless of whether the royalties

were fully paid.

may be difficult to enforce a U.S.

judgment against us or our officers and directors and to assert U.S.

securities laws claims

all of our directors and officers are nationals and/or residents of countries other than the United States.

As a result, service

of process upon us, our Israeli subsidiary and our directors and officers, may be difficult to obtain within the United States.

Furthermore, because the majority of our assets and investments, and most of our directors and officers are located outside the

United States, it may be difficult for investors to enforce within the United States any judgments obtained against us or any

such officers or directors.

Additionally, it may be difficult to assert U.S.

securities law claims in original actions instituted

Israeli courts may refuse to hear a claim based on a violation of U.S.

securities laws because Israel is not the most

appropriate forum in which to bring such a claim.

In addition, even if an Israeli court agrees to hear a claim, it may determine

that Israeli law and not U.S.

law is applicable to such claim.

law is found to be applicable, the content of applicable

law must be proved as a fact, which can be a time-consuming and costly process.

Certain matters of procedure will also be

governed by Israeli law.

to specified time limitations and legal procedures, under the rules of private international law currently prevailing in Israel,

Israeli courts may enforce a U.S.

judgment in a civil matter, including a judgment based upon the civil liability provisions of

securities laws, as well as a monetary or compensatory judgment in a non-civil matter, provided that the following key

conditions are met:

to limited exceptions, the judgment is final and non-appealable;

judgment was given by a court competent under the laws of the state in which the court

is located and is otherwise enforceable in such state;

judgment was rendered by a court competent under the rules of private international law

applicable in Israel;

laws of the state in which the judgment was given provides for the enforcement of judgments

of Israeli courts;

service of process has been effected and the defendant has had a reasonable opportunity

to present its arguments and evidence;

judgment and its enforcement are not contrary to the law, public policy, security or

sovereignty of the State of Israel;

judgment was not obtained by fraud and does not conflict with any other valid judgment

in the same matter between the same parties;

action between the same parties in the same matter was not pending in any Israeli court

at the time the lawsuit was instituted in the U.S.

any of these conditions are not met, Israeli courts will likely not enforce the applicable U.S.

to tax laws could have a negative effect on us or our stockholders.

any time, the U.S.

federal or state income tax laws, or the administrative interpretations of those laws, may be amended.

and state tax laws are constantly under review by persons involved in the legislative process, the U.S.

Internal Revenue Service,

Department of the Treasury and state taxing authorities.

Changes to the tax laws, regulations and administrative interpretations,

which may have retroactive application, could adversely affect us.

reform legislation in December 2017 made substantial changes to the Internal Revenue Code of 1986, as amended, or the Code, particularly

as it relates to the taxation of both corporate income and international income.

Among those changes are a significant permanent

reduction in the generally applicable corporate income tax rate and the modification of tax policies, credits and deductions for

businesses and individuals.

This legislation also imposes additional limitations on the deduction of net operating losses, which

could negatively impact our ability to utilize our net operating losses to offset our taxable income in future taxable years.

The effect of these and other changes made in this legislation is still uncertain in many respects, both in terms of their direct

effect on the taxation of an investment in our securities and their indirect effect on the value of assets owned by us.

many of the provisions of the new law will require additional guidance in order to assess their effect.

It is also possible that

there will be technical corrections or other legislation proposed with respect to the tax reform legislation, the effect of which

cannot be predicted and may be adverse to us or our stockholders.

Further, a new presidential administration in 2021 may result

in additional amendments to the Code or reversal of 2017 changes.

Our stockholders are encouraged to consult with their tax advisors

about the potential effects that changes in law may have on them and their ownership of our securities.

the market price of our common stock may fluctuate significantly, this may make it difficult for you to sell your shares of common

stock when you want or at prices you find attractive.

price of our common stock is currently listed on Nasdaq and on the Tel Aviv Stock Exchange and constantly changes.

In recent years,

the stock market in general has experienced extreme price and volume fluctuations.

We expect that the market price of our common

stock will continue to fluctuate.

These fluctuations may result from a variety of factors, many of which are beyond our control.

These factors include:

trial results and the timing of the release of such results,

amount of cash resources and our ability to obtain additional funding,

● Announcements

of research activities, business developments, technological innovations or new products

by us or our competitors,

into or terminating strategic relationships,

in government regulation,

impact of the recent outbreak of COVID-19 on our business or on the economy generally,

of key personnel,

concerning patents or proprietary rights,

in expense level,

sales of our equity or equity-related securities,

concern regarding the safety, efficacy or other aspects of the products or methodologies

being developed,

of various interest groups or organizations,

coverage, and

of the investment markets.

sales of common stock or the issuance of securities senior to our common stock or convertible into, or exchangeable or exercisable

for, our common stock could materially adversely affect the trading price of our common stock, and our ability to raise funds

in new equity offerings.

sales of substantial amounts of our common stock or other equity-related securities in the public market or privately, or the

perception that such sales could occur, could adversely affect prevailing trading prices of our common stock and could impair

our ability to raise capital through future offerings of equity or other equity-related securities.

We anticipate that we will

need to raise capital through offerings of equity and equity related securities.

We can make no prediction as to the effect, if

any, that future sales of shares of our common stock or equity-related securities, or the availability of shares of common stock

for future sale, will have on the trading price of our common stock.

stockholders may experience significant dilution as a result of any additional financing using our equity securities.

the extent that we raise additional funds by issuing equity securities, our stockholders may experience significant dilution.

management will have significant flexibility in using the net proceeds of any offering of securities.

intend generally to use the net proceeds from any offerings of our securities for expenses related to our clinical trials, research

and product development activities, and for general corporate purposes, including general working capital purposes.

Our management

will have significant flexibility in applying the net proceeds of any such offering.

The actual amounts and timing of expenditures

will vary significantly depending on a number of factors, including the amount of cash used in our operations and our research

and development efforts.

Management’s failure to use these funds effectively would have an adverse effect on the value of

our common stock and could make it more difficult and costly to raise funds in the future.

law could discourage a change in control, or an acquisition of us by a third party, even if the acquisition would be favorable

to you, and thereby adversely affect existing stockholders.

Delaware General Corporation Law contains provisions that may have the effect of making more difficult or delaying attempts by

others to obtain control of our Company, even when these attempts may be in the best interests of stockholders.

Delaware law imposes

conditions on certain business combination transactions with “interested stockholders.”

These provisions and others

that could be adopted in the future could deter unsolicited takeovers or delay or prevent changes in our control or management,

including transactions in which stockholders might otherwise receive a premium for their shares of common stock over then current

market prices.

These provisions may also limit the ability of stockholders to approve transactions that they may deem to be in

their best interests.

UNRESOLVED STAFF COMMENTS.

Not applicable.

We believe that our existing facilities are

suitable and adequate to meet our current business requirements.

In the event that we should require additional or alternative

facilities, we believe that such facilities can be obtained on short notice at competitive rates.

believe that our existing facilities are suitable and adequate to meet our current business requirements.

In the event that we

should require additional or alternative facilities, we believe that such facilities can be obtained on short notice at competitive

LEGAL PROCEEDINGS.

From time to time we may become subject to litigation

incidental to our business.

We are not currently a party to any material legal proceedings.

time to time we may become subject to litigation incidental to our business.

We are not currently a party to any material legal

MINE SAFETY DISCLOSURES.

Not applicable.

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

What changed 10-K

Item 1A. Risk Factors