As
filed with the Securities and Exchange Commission on December 27, 2019
Registration No. 333-_________
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
Form
F-1
REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933
KITOV
PHARMA LTD.
(Exact
Name of Registrant as Specified in its Charter)
State
of Israel
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2834
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Not
Applicable
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(State
or Other Jurisdiction of
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(Primary
Standard Industrial
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(I.R.S.
Employer
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Incorporation
or Organization)
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Classification
Code Number)
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Identification
No.)
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One
Azrieli Center, Round Tower
132
Menachem Begin Road, Tel Aviv 6701101, Israel
+972-3-933-3121
(Address,
including zip code, and telephone number, including area code, of Registrant’s principal executive offices)
Puglisi
& Associates
850 Library Avenue, Suite 204
Newark, DE 19715
(302) 738-6680
(Name, address, including area code, and telephone number, including area code, of agent for service)
Copies
to:
Avraham
Ben-Tzvi, Adv.
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Rick
A. Werner, Esq.
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Robert
L. Grossman, Esq.
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ABZ
Law Office
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Haynes
and Boone, LLP
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Drew
M. Altman, Esq.
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15
Yad Harutzim St.
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30
Rockefeller Plaza,
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Greenberg
Traurig, P.A.
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Suite
203
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26th
Floor
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333
S.E. 2nd Avenue
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Jerusalem
9342152, Israel
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New
York, New York 10112
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Miami,
Florida 33131
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Tel:
+972 79 572-2070
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Tel:
+1 212 659-7300
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Tel
+1 305 579-0500
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Approximate
date of commencement of proposed sale to the public:
As
soon as practicable after the effective date of this Registration Statement
If
any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933, check the following box. ☒
If
this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please
check the following box and list the Securities Act registration statement number of the earlier effective registration statement
for the same offering. ☐
If
this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If
this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
Indicate
by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933.
Emerging
growth company ☒
If
an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the
registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards†
provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐
†
The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards
Board to its Accounting Standards Codification after April 5, 2012.
CALCULATION
OF REGISTRATION FEE
Title
of Each Class of Securities to be Registered
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Proposed
Maximum
Aggregate
Offering Price(1)(2)
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Amount
of
Registration
Fee
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Units
consisting of:
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US$
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_________
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US$
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_________
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(i)_________ Ordinary
shares, no par value per share, represented by American Depositary Shares(3)(4)
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–
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–
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(ii) Warrants
to purchase American Depositary Shares(4)
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–
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–
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Ordinary
shares underlying the American Depositary Shares issuable upon exercise of warrants(5)
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US$
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_________
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US$
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_________
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Placement
agent warrants to purchase American Depositary Shares(6)
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–
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–
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Ordinary
shares underlying the American Depositary Shares issuable upon exercise of placement agent warrants(5)
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US$
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_________
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(7)
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US$
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_________
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Total
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US$
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3,500,000
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US$
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454.30
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(1)
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Estimated solely for the purpose of calculating the amount of the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended.
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(2)
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Pursuant to Rule 416 under the Securities Act of 1933, as amended, this registration statement also registers such indeterminate number of shares that may become issuable as a result of stock splits, stock dividends, recapitalizations or similar transactions.
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(3)
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American Depositary Shares, or ADSs, issuable upon deposit of ordinary shares registered hereby are registered under a separate registration statement on Form F-6 (Registration No. 333- 207858). Each ADS represents one ordinary share.
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(4)
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No additional registration fee is payable pursuant to Rule 457(i) under the Securities Act of 1933, as amended.
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(5)
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Represents the
aggregate exercise price of the ADSs issuable upon exercise of the warrants in accordance with Rule 457(i) under the
Securities Act of 1933, as amended, and Staff Compliance and Disclosure Interpretation 240.06.
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(6)
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Represents warrants issuable to Chardan Capital Markets, LLC or its designees (the “placement agent warrants”) to purchase a number of ADSs equal to _______% of the number of ADSs being offered at an exercise price equal to _______% of the public offering price per unit. No additional registration fee is payable pursuant to Rule 457(g) under the Securities Act of 1933, as amended.
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(7)
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Represents a number of ADSs underlying the placement agent warrants equal to ________% of the number of ADSs included in the units being offered at an exercise price equal to ______% of the public offering price per unit.
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The
Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until
the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become
effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until this Registration Statement shall
become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
The
information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement
filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is
not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
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PRELIMINARY
PROSPECTUS
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SUBJECT
TO COMPLETION
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DATED
DECEMBER 27, 2019
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_________ Units
(Each unit consists of_________
American Depositary Share(s) and_________ Warrant(s) to
purchase_________ American Depositary Share(s))
American
Depositary Shares underlying the Warrants
We are offering_________ units,
with each unit consisting of (i)_________ American Depositary Share(s), or ADS(s), and (ii)_________ warrant(s)
to purchase_________ ADS(s), or a 2020 warrant. Each ADS represents one ordinary share, no par value. The 2020 warrants will
have an exercise price of $_________ per full ADS, will be exercisable at any time after
the date of issuance and will expire five years from the date of issuance. Each unit will be sold at a negotiated price
of $_________ per unit. The units will not be issued or certificated. The ADSs and 2020 warrants comprising each unit are immediately
separable and will be issued separately, but will be purchased together in this offering.
The
ADSs issuable from time to time upon exercise of the 2020 warrants are also being offered by this prospectus. We refer to the
ADSs issued or issuable upon exercise of the 2020 warrants, and the ADSs and the 2020 warrants being offered hereby, collectively,
as the “securities.”
Our
ordinary shares are currently traded on the Tel Aviv Stock Exchange, or “TASE,” under the symbol “KTOV.”
The last reported sale price of our ordinary shares on TASE on December 25, 2019 was NIS 246.90, or $0.71, per share (based on
the exchange rate reported by the Bank of Israel as of that date, which was NIS 3.466 = $1.00).
Our
ADSs are currently listed on The NASDAQ Capital Market, or “NASDAQ,” under the symbols “KTOV”. The last
reported sale price of our ADSs on The NASDAQ Capital Market on December 23, 2019 was $0.75.
There
is no established public trading market for the 2020 warrants, and we do not expect a market to develop. In addition, we do not
intend to apply for a listing of the 2020 warrants on any national securities exchange or other nationally recognized trading
system.
The
actual public offering price per unit will be determined through negotiation between us and the investors in the offering and
may be at a discount to the current market price. Therefore, the recent market price used throughout this prospectus may not be
indicative of the offering price.
We
are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 and will be subject
to reduced public company reporting requirements.
Investing
in our securities involves a high degree of risk. See “Risk Factors” beginning on page 5 of this prospectus
for a discussion of information that should be considered in connection with an investment in our ADSs and warrants.
Neither
the Securities and Exchange Commission, the Israeli Securities Authority, nor any state securities commission has approved or
disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary
is a criminal offense.
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Per Unit
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Total (1)
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Public offering price
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$
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$
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Placement agent fees(2)
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$
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$
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Proceeds to us (before expenses)(3)
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$
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$
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(1)
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Assumes
that the maximum number of units offered by this prospectus is sold in this offering.
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(2)
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In addition, we have agreed
to reimburse the placement agent for certain expenses and to issue to the placement agent warrants equal to_________% of the ADSs
sold in this offering. See “Plan of Distribution” beginning on page 34 for a complete description of discounts, compensation
and fees payable to the placement agent.
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(3)
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Does
not include proceeds from the exercise of the 2020 warrants in cash, if any.
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We
have engaged Chardan Capital Markets, LLC (“Chardan” or the “placement agent”) to act as our exclusive
placement agent in connection with this offering. The placement agent is not purchasing or selling the securities offered by us,
and is not required to sell any specific number or dollar amount of securities, but will use its reasonable best efforts to arrange
for the sale of the securities offered by this prospectus. We have agreed to pay the placement agent a placement fee equal to
between 6.0% and 7.0% of the aggregate gross proceeds to us from the sale of the securities in this offering based on the total
gross proceeds of this offering, plus additional compensation as set forth under “Plan of Distribution”. The placement
agent may engage one or more sub-agents or selected dealers in connection with this offering. We estimate total expenses of this
offering, excluding the placement agent fees, will be approximately $_________. Because there is no minimum offering
amount required as a condition to closing in this offering, the actual public offering amount, placement agent fees, and proceeds
to us, if any, are not presently determinable and may be substantially less than the total maximum offering amounts set forth
above. This offering will terminate on_________, 2020, unless this offering
is fully subscribed before that date or we decide to terminate this offering prior to that date. In either event, this offering
may be closed without further notice to you. We have not arranged to place the funds from investors in escrow, trust or
similar account.
Delivery of the securities is expected to be made on or about_________ ,
2020, subject to customary closing conditions.
Chardan
The date of this prospectus is_________, 2020
TABLE
OF CONTENTS
ABOUT
THIS PROSPECTUS
You
should rely only on the information provided or incorporated by reference in this prospectus, as well as the additional information
described under “Incorporation of Certain Documents by Reference” on page 43 of this prospectus. Neither we
nor the placement agent have authorized anyone to provide you with different information. If anyone provides you with different
or inconsistent information, you should not rely on it. This prospectus does not constitute an offer to sell, or a solicitation
of an offer to purchase, the securities offered by this prospectus in any jurisdiction where it is unlawful to make such offer
or solicitation. You should not assume that the information contained in this prospectus, or any document incorporated by reference
in this prospectus, is accurate as of any date other than the date on the front cover of the applicable document. Neither the
delivery of this prospectus nor any distribution of securities pursuant to this prospectus shall, under any circumstances, create
any implication that there has been no change in the information set forth or incorporated by reference into this prospectus or
in our affairs since the date of this prospectus. Our business, financial condition, results of operations and prospects may have
changed since that date.
Before
purchasing any securities, you should carefully read this prospectus, together with the additional information described under
the headings, “Incorporation of Certain Documents by Reference,” and “Where You Can Find Additional Information”
on pages 43 and 43 of this prospectus.
We
have not authorized anyone to provide information different from that contained in this prospectus, any amendment or supplement
to this prospectus or in any free writing prospectus prepared by us or on our behalf. When you make a decision about whether to
invest in our securities, you should not rely upon any information other than the information in this prospectus and any free
writing prospectus prepared by us or on our behalf. Neither the delivery of this prospectus nor the sale of our securities means
that information contained in this prospectus is correct after the date of this prospectus. This prospectus is not an offer to
sell or solicitation of an offer to buy the securities being offered hereby in any circumstances under which the offer or solicitation
is unlawful.
For
investors outside of the United States: We have not done anything that would permit this offering or possession or distribution
of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. You are required
to inform yourselves about and to observe any restrictions relating to this offering and the distribution of this prospectus.
The
information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery
of this prospectus or any sale of our securities. Our business, financial condition, results of operations, and prospects may
have changed since that date.
This
prospectus includes statistical, market and industry data and forecasts which we obtained from publicly available information
and independent industry publications and reports that we believe to be reliable sources.
Unless
the context otherwise indicates or requires, all references to:
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the
terms “Registrant,” “Company,” “we,” “us,” “our,” and similar
designations refer to Kitov Pharma Ltd., together with its now dissolved wholly owned subsidiary, Kitov Pharmaceuticals, and
its majority owned subsidiary, TyrNovo, and, in the appropriate context in reference to situations following the completion
of the pending acquisition of FameWave, FameWave, except where otherwise stated or where it is clear that the terms mean only
Kitov Pharma Ltd. exclusive of any subsidiaries,
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“Kitov”
refer to the Registrant, together with its now dissolved wholly owned subsidiary, Kitov Pharmaceuticals, until completion
of the merger between the Registrant and Kitov Pharmaceuticals in December 2017, pursuant to which Kitov Pharmaceuticals merged
with and into the Registrant, with the Registrant remaining as the surviving entity,
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“Kitov
Pharma” refer to the Registrant, exclusive of its subsidiaries,
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“Kitov
Pharmaceuticals” refer to Kitov Pharmaceuticals Ltd., the now dissolved wholly owned subsidiary of the Registrant until
completion of the merger with the Registrant in December 2017, pursuant to which Kitov Pharmaceuticals merged with and into
the Registrant, with the Registrant remaining as the surviving entity,
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“TyrNovo”
refer to TyrNovo Ltd., the majority owned subsidiary of Kitov Pharma,
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“FameWave”
refer to FameWave Ltd., an Israeli private company which is being acquired by Kitov Pharma, and following the closing of such
transaction will become a wholly owned subsidiary of Kitov Pharma,
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“FameWave Transaction” refer to the acquisition of FameWave by Kitov Pharma pursuant to a stock purchase agreement, dated March 14, 2019, as amended (the “Acquisition Agreement”), together with the other transactions contemplated by the Acquisition Agreement.
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the
terms “shekels”, “Israeli shekels” and “NIS” refer to New Israeli Shekels, the lawful
currency of the State of Israel,
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the
terms “dollar”, “US$” or “$” refer to U.S. dollars, the lawful currency of the United
States of America,
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the
terms “Euro” or “€” refer to the Euro, the lawful currency of the European Union member states,
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“ordinary
shares,” “our shares” and similar expressions refer to the Registrant’s Ordinary Shares, no par value
per share,
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“ADSs”
refer to the Registrant’s American Depositary Shares,
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“public
warrants” or “Series A warrants” refer to the Registrant’s warrants listed on The NASDAQ Capital Market
under the symbol KTOVW,
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the
“Companies Law” refer to Israel’s Companies Law, 5759-1999, as amended,
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the
“SEC” refer to the United States Securities and Exchange Commission, and
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“NASDAQ”
refer to The NASDAQ Capital Market, except where otherwise stated or where it is clear that the term means any of the NASDAQ
exchanges.
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Unless
otherwise indicated, all information contained in this prospectus (i) gives retrospective effect to (i) a consolidation of Kitov
Pharma’s share capital at a ratio of 1:13, which was effected on November 30, 2014, or the “2014 Consolidation,”
so that: (A) each 13 ordinary shares of Kitov Pharma was consolidated into one ordinary share of Kitov Pharma; and (B) each of
Kitov Pharma’s options (tradable and non-tradable) outstanding immediately prior to the 2014 Consolidation was adjusted
by multiplying the number of ordinary shares into which such option was exercisable by 1/13 (rounded to 0.07692); and (ii) a consolidation
of Kitov Pharma’s share capital at a ratio of 1:20, which was effected on January 4, 2019, or the “reverse share split,”
so that: (A) each 20 ordinary shares of Kitov Pharma was consolidated into one ordinary share of Kitov Pharma and (B) each of
Kitov Pharma’s options (tradable and non-tradable) exercisable into ordinary shares outstanding immediately prior to the
reverse share split was consolidated so that each option exercisable into 20 ordinary shares would be exercisable for one ordinary
share of Kitov Pharma at an exercise price equal to the pre-reverse share split exercise price multiplied by 20.
PROSPECTUS
SUMMARY
This
summary highlights selected information about us, this offering and information contained in greater detail elsewhere in this
prospectus and in the documents incorporated by reference herein. This summary is not complete and does not contain all of the
information that you should consider before investing in our securities. You should carefully read and consider this entire prospectus
and the documents, including financial statements and related notes, and information incorporated by reference into this prospectus,
including the “Risk Factors” starting on page 5 of this prospectus,
before making an investment decision. If you invest in our securities, you are assuming a high degree of risk.
Overview
We
are a clinical-stage company advancing first-in-class therapies to overcome tumor immune evasion and drug resistance, seeking
to create successful long-lasting treatments for people with cancer.
We
currently have two operating segments:
(i)
Oncology, which includes NT219, a therapeutic candidate which is a small molecule that targets IRS1/2 and STAT3, two signal transduction
pathways involved in the development of cancer drug resistance mechanisms and CM-24, monoclonal antibody blocking Carcinoembryonic
Antigen Related Cell Adhesion Molecule 1 (“CEACAM1”), a novel immune checkpoint that supports tumor immune evasion
and survival through multiple pathways, which we expect to acquire in connection with the FameWave Transaction, which is expected
to close prior to the end of 2019 or shortly thereafter.
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We
completed the toxicology studies in animals and we are currently advancing NT219 to a clinical study in combination with cetuximab
as a third-line or second-line treatment option for the treatment of recurrent and metastatic squamous cell carcinoma of head
and neck cancer. Based on our current development plans, we expect to submit an Investigational New Drug application for NT219
during the first quarter of 2020.
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We
are also in the process of acquiring 100% of FameWave, which owns CM-24. We plan to advance CM-24 as a combination therapy
with anti-PD1 checkpoint inhibitors in a clinical collaboration agreement with Bristol Myers Squibb (NYSE:BMY) in a planned
Phase 1/2 clinical trial to evaluate the combination of CM-24 with the PD-1 inhibitor nivolumab (Opdivo®) for the treatment
of non-small cell lung cancer. All major closing conditions of the FameWave Transaction other than the finalization of the
tax ruling for the sellers have been completed.
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(ii)
Pain and Hypertension, which includes Consensi™, a combination drug approved by the FDA in May 2018 for the simultaneous
treatment of two clinical conditions, pain caused by osteoarthritis and hypertension (high blood pressure), which can be pre-existing
or caused by the treatment for osteoarthritis.
Now
that Consensi™ has been approved for marketing in the United States and we have executed marketing and distribution agreements
for the commercialization of Consensi™ in the United States, China and South Korea, we intend to shift our clinical and
regulatory focus to our oncology segment therapeutic candidates, NT219 and, subject to closing of the acquisition of FameWave,
CM-24. We intend to leverage our teams’ drug development expertise gained from the Consensi™ approval process to advance
the NT219 and, subject to closing of the acquisition of FameWave, CM-24, programs.
In addition, we may
consider the acquisition of oncology therapeutic candidates at various stages of development. Other than the Acquisition Agreement
in connection with the FameWave Transaction, we currently have no binding agreements or commitments to complete any transaction
for the possible acquisition of new therapeutic candidates or approved drug products.
NASDAQ Minimum Bid Price Requirement
On
July 8, 2019, we received a letter from the Listing Qualifications Department of NASDAQ indicating that, based upon the closing bid
price of our ADSs for the last 30 consecutive business days, we did not meet the minimum bid price of $1.00 per
share required for continued listing on NASDAQ pursuant to NASDAQ Listing Rule 5550(a)(2). In accordance with NASDAQ Listing Rule
5810(c)(3)(A), we can regain compliance with this requirement if at any time during a 180-day period ending on January 6, 2020,
the closing bid price for our ADSs is at least $1.00 per share for a minimum of ten consecutive business days. In the event we
do not regain compliance during the 180-day period ending on January 6, 2020, we intend to request additional time in order to
regain compliance. To qualify, we will be required to meet the continued listing requirement for market value of publicly held
shares and all other NASDAQ initial listing standards, with the exception of the bid price requirement, and we will provide NASDAQ
with written notice of our intention to cure the deficiency during the second compliance period, by effecting a reverse stock
split, if necessary. If we meet these requirements, NASDAQ will then inform us that it has been granted an additional 180 calendar
days. However, if it appears to NASDAQ that we will not be able to cure the deficiency, or if we are otherwise not eligible, NASDAQ
will provide notice that our securities will be subject to delisting.
Reverse
Share Split
On
January 4, 2019, we effected the reverse share split at an exchange ratio of 1-for-20. The reverse share split applied to all
of our outstanding ordinary shares and therefore did not affect any shareholders’ relative ownership percentage. All shares
and price per share numbers set forth in our Annual Report on Form 20-F for the year ended December 31, 2018, that are
incorporated by reference into this prospectus, are presented after giving effect to the reverse stock split. The reverse share
split was not a reverse split of our ADSs. Our ADSs continue to trade as before the reverse share split and represent the same
underlying portion of our share capital as they did prior to the reverse share split, however, after the reverse share split,
each ADS represents one ordinary share, as compared to 20 ordinary shares prior to the reverse share split.
Corporate
Information
Kitov
was incorporated under the laws of the State of Israel (under a previous name) on August 12, 1968, and its ordinary shares were
originally listed for trading on TASE in 1978. In November 2015, we completed an initial public offering of our ADSs and Series
A warrants on NASDAQ. Our principal executive offices are located at One Azrieli Center, Round Tower, 19th Floor, 132
Menachem Begin Road, Tel Aviv 6701101, Israel, and our telephone number is 972-3-933-3121. Our website is www.kitovpharma.com.
The information contained therein such website or connected thereto shall not be deemed to be incorporated into this prospectus.
THE
OFFERING
Units
offered by us
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__________________ units,
each consisting of (i) ____ ADS(s) and (ii) _____ 2020 warrant(s) to purchase ____ ADS(s). The units will not be certificated
and the ADSs and 2020 warrants comprising each unit are immediately separable and will be issued separately in this offering.
This
prospectus also relates to the offering of ADSs issuable upon the exercise of the 2020 warrants.
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The
ADSs
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Each
ADS represents one ordinary share. The ADSs initially will be evidenced by American
Depositary Receipts (“ADRs”), executed and delivered by The Bank of New York
Mellon, as depositary (the “Depositary”).
The
Depositary, as depositary, will be the holder of the ordinary shares underlying your ADSs and you will have rights as
provided in the Deposit Agreement dated as of November 25, 2015, among us, The Bank of New York Mellon, as Depositary,
and all owners and holders from time to time of ADSs issued thereunder (the “Deposit Agreement”), a form of
which has been filed as an exhibit to the registration statement for which this prospectus forms a part.
Subject
to compliance with the relevant requirements set out in this prospectus, you may turn in your ADSs to the Depositary in
exchange for ordinary shares underlying your ADSs.
The
Depositary will charge you fees for such exchanges pursuant to the Deposit Agreement.
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2020
Warrants
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Each
2020 warrant will have an exercise price of $_________ per full ADS, will be exercisable
at any time after the date of issuance and will expire on the fifth anniversary of the date of issuance. To better understand
the terms of the 2020 warrants, you should carefully read the “Description of Securities” section of this prospectus.
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Offering
Price
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The
offering price is $_________ per unit.
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Total
ordinary shares outstanding immediately after this offering
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__________________ ordinary
shares, assuming that the maximum number of units offered by this prospectus is sold in this offering (not including one ordinary
share held in treasury) (such number of ordinary shares would be represented by_________ ADSs).
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Use of Proceeds
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We intend to use the net proceeds of this
offering to fund the development of our oncology therapeutic candidates and for general working capital purposes.
See “Use of Proceeds” for additional information.
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Listing
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Our ADSs are listed on NASDAQ under the symbol “KTOV” and our ordinary shares currently trade on TASE in Israel under the symbol “KTOV”. The 2020 warrants being issued as part of the units are not listed on any securities exchange and we do not intend to list the 2020 warrants on NASDAQ, the TASE or any other national securities exchange or any other recognized trading system, and we do not expect a market to develop for the 2020 warrants.
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Risk factors
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Before deciding to invest in our securities, you should carefully consider the risks related to our business, this offering and our securities, and our location in Israel. See “Risk Factors” on page 5 of this prospectus.
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Dividend Policy
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We have never declared or paid any cash dividends to our shareholders, and we currently do not expect to declare or pay any cash dividends in the foreseeable future. See “Dividend Policy” for more information.
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Depositary
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The Bank of New York Mellon.
|
The
number of ordinary shares to be outstanding after this offering is based on 19,560,530 ordinary shares outstanding as of December
23, 2019 (such number of ordinary shares would be represented by 19,560,530 of our ADSs) and excludes:
|
●
|
4,463,553
ordinary shares issuable at a weighted average exercise price of NIS 5.49 (approximately $1.58) per share issuable to holders
of our options issued, as applicable, under our 2013 Option Plan, as amended, or our 2016 Equity Incentive Plan (such number
of ordinary shares would be represented by 4,463,553 of our ADSs);
|
|
|
|
|
●
|
7,134,790
ordinary shares underlying the ADSs issuable upon exercise of the Series A warrants and the representative’s warrants
issued in our initial public offering, and the Series A warrants and the placement agent warrants issued as part of our offering
in July 2016 (such number of ordinary shares would be represented by 7,134,790 of our ADSs);
|
|
●
|
529,427
ordinary shares underlying ADSs issuable upon exercise of the warrants issued in connection with our July 2017 private placement
of warrants and the placement agent warrants issued as part of our July 2017 public offering (such number of ordinary shares
would be represented by 529,427 of our ADSs);
|
|
|
|
|
●
|
1,858,200
ordinary shares underlying ADSs issuable upon exercise of the warrants issued in connection with our June 2018 private placement
of warrants and the placement agent warrants issued as part of our June 2018 public offering (such number of ordinary shares
would be represented by 1,858,200 of our ADSs);
|
|
|
|
|
●
|
2,571,430
ordinary shares issuable upon exercise of the warrants issued in our January 2019 private placement with an exercise price
of $2.00 and 240,000 ordinary shares underlying ADSs issuable upon exercise of placement agent warrants with an exercise price
of $2.1875 issued to the placement agent in our January 2019 offering;
|
|
|
|
|
●
|
10,921,139
ordinary shares underlying the ADSs to be issued by us in connection with the FameWave Transaction at the closing of such
transaction;
|
|
|
|
|
●
|
4,037,805 ordinary
shares underlying ADSs issuable upon the exercise of warrants to be issued by us in connection with the FameWave Transaction
at the closing of such transaction;
|
|
|
|
|
●
|
54,472
ordinary shares underlying ADSs issuable upon the exercise of options to purchase 54,472 ADSs to be awarded in connection
with the FameWave Transaction;
|
|
|
|
|
●
|
27,236
ordinary shares issuable upon the exercise of options to purchase 27,236 ordinary shares to be awarded in connection with
the FameWave Transaction;
|
|
|
|
|
●
|
_________
ordinary shares underlying ADSs issuable upon the exercise of 2020 warrants to be issued to investors in this offering at
an exercise price of $_________ per ADS; and
|
|
|
|
|
●
|
_________
ordinary shares underlying ADSs issuable upon the exercise of warrants to be issued to the placement agent at an exercise
price of _________% of the public offering price described in “Plan of Distribution.”
|
Unless
otherwise stated, outstanding share information throughout this prospectus excludes such outstanding securities.
RISK
FACTORS
An
investment in our securities involves certain risks. Before investing in our securities, you should carefully consider the risk
factors set forth below and in our most recent Annual Report on Form 20-F, or any updates in our Reports on Form 6-K, together
with all of the other information appearing in this prospectus or incorporated by reference into this prospectus. The risks so
described are not the only risks facing our company. Additional risks not presently known to us or that we currently deem immaterial
may also impair our business operations. Any of these risks could materially and adversely affect our business, financial condition,
results of operations and cash flows and could result in a loss of all or part of your investment. In any case, the value of the
securities offered by means of this prospectus could decline due to any of these risks, and you may lose all or part of your investment.
NASDAQ
has a listing requirement of a minimum closing bid price of $1.00 per share. If our ADSs cannot maintain the required minimum
closing bid price and we fail to correct the listing requirement deficiency within the provided cure period, our ADSs may be involuntarily
delisted from NASDAQ.
Our
ADSs are listed on NASDAQ, and the quantitative listing standards of NASDAQ require, among other things, that listed companies
maintain a minimum closing bid price of $1.00 per ADS. On July 8, 2019, we received a letter from the Listing Qualifications
Department of NASDAQ indicating that, based upon the closing bid price of our ADSs for the last 30 consecutive business
days, we did not meet the minimum bid price of $1.00 per share required for continued listing on NASDAQ pursuant to
NASDAQ Listing Rule 5550(a)(2). In accordance with NASDAQ Listing Rule 5810(c)(3)(A), we can regain compliance with this requirement
if at any time during a 180-day period ending on January 6, 2020, the closing bid price for our ADSs is at least $1.00 per share
for a minimum of ten consecutive business days. In the event we do not regain compliance during the 180-day period ending on January
6, 2020, we may be eligible for additional time. If we fail to regain compliance within our applicable cure period, or fail to
satisfy other listing requirements, our ADSs may be subject to delisting.
To
resolve the noncompliance, we may consider available options including a reverse share split, which may not result in a permanent
increase in the market price of our ADSs, which is dependent on many factors, including general economic, market and industry
conditions and other factors detailed from time to time in the reports we file with the Securities and Exchange Commission. It
is not uncommon for the market price of a company’s shares to decline in the period following a reverse share split.
Although
we expect to take actions intended to restore our compliance with the listing requirements, we can provide no assurance that any
action taken by us would be successful, or that any such action would stabilize the market price or improve the liquidity of our
ADSs. Should a delisting occur, an investor would likely find it significantly more difficult to dispose of, or to obtain accurate
quotations as to the value of our ADSs, and our ability to raise future capital through the sale of our ADSs could be severely
limited. Delisting would also impact some of our disclosure obligations under Israeli law. Following a delisting, we will remain
a publicly traded company on TASE and revert to being subject to full Israeli securities laws and disclosure requirements. Accordingly,
we will need to comply with U.S. and Israeli disclosure requirements and the resolution of any conflicts between those requirements
may lead to additional costs and require significant management time. Furthermore, we expect these additional reporting rules
and regulations would increase our legal and financial compliance costs.
In
the event that our ADSs are delisted from NASDAQ, U.S. broker-dealers may be discouraged from effecting transactions in shares
of our ADSs because they may be considered penny stocks and thus be subject to the penny stock rules.
The
SEC has adopted a number of rules to regulate “penny stock” that restrict transactions involving stock which is deemed
to be penny stock. Such rules include Rules 3a51-1, 15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6, 15g-7, and 15g-9 under the Securities
and Exchange Act of 1934, as amended (the “Exchange Act”). These rules may have the effect of reducing the liquidity
of penny stocks. “Penny stocks” generally are equity securities with a price of less than $5.00 per share (other than
securities registered on certain national securities exchanges or quoted on NASDAQ if current price and volume information with
respect to transactions in such securities is provided by the exchange or system). Following a delisting from NASDAQ our ADSs
may constitute “penny stock” within the meaning of these rules. The additional sales practice and disclosure requirements
imposed upon U.S. broker-dealers may discourage such broker-dealers from effecting transactions our ADSs, which could severely
limit the market liquidity of such ADSs and impede their sale in the secondary market.
A
U.S. broker-dealer selling penny stock to anyone other than an established customer or “accredited investor” (generally,
an individual with net worth in excess of $1,000,000 or an annual income exceeding $200,000, or $300,000 together with his or
her spouse) must make a special suitability determination for the purchaser and must receive the purchaser’s written consent
to the transaction prior to sale, unless the broker-dealer or the transaction is otherwise exempt. In addition, the “penny
stock” regulations require the U.S. broker-dealer to deliver, prior to any transaction involving a “penny stock”,
a disclosure schedule prepared in accordance with SEC standards relating to the “penny stock” market, unless the broker-dealer
or the transaction is otherwise exempt. A U.S. broker-dealer is also required to disclose commissions payable to the U.S. broker-dealer
and the registered representative and current quotations for the securities. Finally, a U.S. broker-dealer is required to submit
monthly statements disclosing recent price information with respect to the “penny stock” held in a customer’s
account and information with respect to the limited market in “penny stocks”.
Securities
holders should be aware that, according to the SEC, the market for “penny stocks” has suffered in recent years from
patterns of fraud and abuse. Such patterns include (i) control of the market for the security by one or a few broker-dealers that
are often related to the promoter or issuer; (ii) manipulation of prices through prearranged matching of purchases and sales and
false and misleading press releases; (iii) “boiler room” practices involving high-pressure sales tactics and unrealistic
price projections by inexperienced sales persons; (iv) excessive and undisclosed bid-ask differentials and markups by selling
broker-dealers; and (v) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated
to a desired level, resulting in investor losses. Our management is aware of the abuses that have occurred historically in the
penny stock market. Although we do not expect to be in a position to dictate the behavior of the market or of broker-dealers who
participate in the market, management will strive within the confines of practical limitations to prevent the described patterns
from being established with respect to our securities.
Risks
related to the offering
Our
management team will have immediate and broad discretion over the use of the net proceeds from this offering and may not use them
effectively.
We
currently intend to use the net proceeds of this offering to fund the development of our oncology therapeutic candidates and for
general working capital purposes. See “Use of Proceeds.” However, our management will have broad discretion in the
application of the net proceeds. Our shareholders may not agree with the manner in which our management chooses to allocate the
net proceeds from this offering. The failure by our management to apply these funds effectively could have a material adverse
effect on our business, financial condition and results of operation. Pending their use, we may invest the net proceeds from this
offering in a manner that does not produce income. The decisions made by our management may not result in positive returns on
your investment and you will not have an opportunity to evaluate the economic, financial or other information upon which our management
bases its decisions.
Because
the offering is being conducted on a “best efforts” basis, we may not raise the maximum proceeds set forth in this
prospectus, and even if we do, we will need additional capital in the future. If additional capital is not available, we may not
be able to continue to operate our business pursuant to our business plan or we may have to discontinue our operations entirely.
The
placement agent in this offering will offer the securities on a “best-efforts” basis with no minimum, meaning that
we may raise substantially less than the total maximum offering amount. As a “best efforts” offering, there can be
no assurance that the offering contemplated hereby will ultimately be consummated. If the offering is not consummated or we receive
less than the maximum proceeds, our business could be harmed.
We
have incurred losses in each year since our inception. If we continue to use cash at our historical rates of use and proceed with
potential acquisitions or in-licensing transactions we will need significant additional financing, which we may seek to raise
through, among other things, public and private equity offerings and debt financing. Any equity financings will likely be dilutive
to existing stockholders, and any debt financings will likely involve covenants restricting our business activities. Additional
financing may not be available on acceptable terms, or at all.
Because
there is no minimum required for the offering to close, investors in this offering will not receive a refund in the event that
we do not sell an amount of securities sufficient to pursue the business goals outlined in this prospectus.
We
have not specified a minimum offering amount nor have or will we establish an escrow account in connection with this offering.
Because there is no escrow account and no minimum offering amount, investors could be in a position where they have invested in
our business, but we are unable to fulfill our objectives due to a lack of interest in this offering. Further, because there is
no escrow account in operation and no minimum investment amount, any proceeds from the sale of securities offered by us will be
available for our immediate use, despite uncertainty about whether we would be able to use such funds to effectively implement
our business plan. Investor funds will not be returned under any circumstances whether during or after the offering.
You
may experience immediate and substantial dilution in the net tangible book value of the ADSs you purchase in this offering.
The assumed offering
price of the ADSs underlying the units offered pursuant to this prospectus is substantially higher than the net tangible book value
per ADS. Therefore, if you purchase units in this offering, you will incur immediate and substantial dilution in the pro forma
net tangible book value per ADS from the price per unit that you pay for the underlying ADS. If the holders of outstanding options
or warrants exercise those options or warrants at prices below the assumed offering price, you will incur further dilution. See
the section entitled “Dilution” below for a more detailed discussion of the dilution you will incur if you purchase
units in this offering.
There
is no public market for the 2020 warrants being offered in this offering.
There
is no established public trading market for the 2020 warrants being offered in this offering, and we do not expect a market to
develop. In addition, we do not intend to apply to list the 2020 warrants on any securities exchange or nationally recognized
trading system, including NASDAQ. Without an active market, the liquidity of the 2020 warrants will be limited.
Holders
of 2020 warrants purchased in this offering will have no rights as common shareholders or ADS holders until such holders exercise
such warrants and acquire our ADSs.
Until holders of 2020
warrants acquire our ADSs upon exercise thereof, holders of such warrants will have no rights with respect to the shares of our
ADSs underlying such warrants. Upon exercise of the 2020 warrants, such holders will be entitled to exercise the rights of an ADS
holder only as to matters for which the record date occurs after the exercise date.
The
2020 warrants are speculative in nature.
Following
this offering, the market value of the 2020 warrants will be uncertain and there can be no assurance that the market value of
the 2020 warrants will equal or exceed their public offering price. There can be no assurance that the market price of our ADSs
will ever equal or exceed the exercise price of the 2020 warrants, and consequently, whether it will ever be profitable for holders
of the 2020 warrants to exercise the 2020 warrants.
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus and the information incorporated by reference herein may include forward looking statements. These statements involve
known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be
materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.
In some cases, you can identify forward-looking statements by terms including “anticipates,” “believes,”
“could,” “estimates,” “expects,” “intends,” “may,” “plans,”
“potential,” “predicts,” “projects,” “should,” “will,” “would,”
and similar expressions intended to identify forward-looking statements. Forward-looking statements reflect our current views
with respect to future events and are based on assumptions and subject to risks and uncertainties. In addition, certain sections
of this prospectus and the information incorporated by reference herein contain information obtained from independent industry
and other sources that we have not independently verified. You should not put undue reliance on any forward-looking statements.
Unless we are required to do so under U.S. federal securities laws or other applicable laws, we do not intend to update or revise
any forward-looking statements.
Our
ability to predict our operating results or the effects of various events on our operating results is inherently uncertain. Therefore,
we caution you to consider carefully the matters described under the caption “Risk Factors” on page 5
of this prospectus, and certain other matters discussed in this prospectus and the information incorporated by reference
herein, and other publicly available sources. Such factors and many other factors beyond our control could cause our actual results,
performance or achievements to be materially different from any future results, performance or achievements that may be expressed
or implied by the forward-looking statements.
Factors
that could cause our actual results to differ materially from those expressed or implied in such forward-looking statements include,
but are not limited to:
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●
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the
initiation, timing, progress and results of our research, manufacturing, preclinical studies, clinical trials, and other therapeutic
candidate development efforts, as well as the extent and number of additional studies that we may be required to conduct;
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●
|
our
ability to advance our therapeutic candidates into clinical trials or to successfully complete our preclinical studies or
clinical trials;
|
|
●
|
our
receipt of regulatory clarity and approvals for our therapeutic candidates and the timing of other regulatory filings and
approvals;
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|
●
|
the
manner in which the parties to the transaction for our acquisition of FameWave plan to effect the closing of the transaction;
the expected benefits, synergies and costs of the transaction; management plans relating to the transaction; the expected
timing of the completion of the transaction; the parties’ ability to complete the transaction; the plans, strategies
and objectives of management for future operations; product development for CM-24; the potential future financial impact of
the transaction; and any assumptions underlying any of the foregoing;
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|
●
|
our
ability to successfully meet our post marketing commitments to FDA for Consensi™ and to obtain approvals for marketing
of Consensi™ in other territories than the U.S.;
|
|
●
|
a
delay or rejection of an NDA or BLA for one or more of our therapeutic candidates;
|
|
●
|
our
ability to regain and maintain compliance with the NASDAQ listing standards;
|
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●
|
the
regulatory environment and changes in the health policies and regimes in the countries in which we operate including the impact
of any change in regulation and legislation that could affect the pharmaceutical industry, and the difficulty of predicting
actions of the FDA or any other applicable regulator of pharmaceutical products;
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|
●
|
the
research, manufacturing, preclinical and clinical development, commercialization, and market acceptance of our therapeutic
candidates;
|
|
●
|
our
ability to successfully acquire, develop or commercialize our pharmaceutical products;
|
|
●
|
the
ability of our commercialization partners to successfully achieve substantial sales for our drug products;
|
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●
|
our
ability to establish and maintain corporate collaborations;
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|
●
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the
interpretation of the properties and characteristics of our therapeutic candidates and of the results obtained with our therapeutic
candidates in preclinical studies or clinical trials;
|
|
●
|
the
implementation of our business model, strategic plans for our business and therapeutic candidates;
|
|
●
|
the
scope of protection we are able to establish and maintain for intellectual property rights covering our therapeutic candidates
and our ability to operate our business without infringing the intellectual property rights of others;
|
|
●
|
estimates
of our expenses, revenues, capital requirements and our needs for additional financing;
|
|
●
|
the
impact of competitive companies, technologies and our industry; and
|
|
●
|
the
impact of the political and security situation in Israel, the U.S. and other countries in which we may obtain approvals for
our products or our business.
|
USE
OF PROCEEDS
We estimate
that our net proceeds from this offering will be approximately $_________ million, based on the sale of the maximum
amount of_________ units in this offering at an assumed public offering price of $_________ per unit (the last reported sale
price of our ADSs on NASDAQ on_________, 2020) after deducting the placement agent fees and estimated offering expenses
payable by us. However, this is a best efforts offering with no minimum, and we may not sell all or any of the securities we
are offering. As a result, we may receive significantly less in net proceeds. If a holder of 2020 warrants elects to exercise
the 2020 warrants issued in this offering, we may also receive proceeds from the exercise of the 2020 warrants. We cannot
predict when or if the 2020 warrants will be exercised. It is possible that the 2020 warrants may expire and may never be
exercised.
Each $0.25
increase or decrease in the assumed public offering price of $_________ per unit would increase or decrease,
respectively, our net proceeds by $_________ million, assuming the maximum number of units offered by us, as set forth on the
cover page of this prospectus, remains the same and after deducting placement agent fees and estimated offering expenses
payable by us. We may also increase or decrease the number of units we are offering. An increase or decrease of 1,000,000 in
the number of units we are offering would increase or decrease, respectively, the net proceeds from this offering, after
deducting placement agent fees and estimated offering expenses payable by us, by $_________ million, assuming the assumed
public offering price stays the same.
We
intend to use the net proceeds of this offering to fund the development of our oncology drug candidates and for general working
capital purposes.
Our
expected use of net proceeds from the offering represents our current intentions based upon our present plans and business condition.
Investors are cautioned, however, that expenditures may vary substantially from these uses. Investors will be relying on the judgment
of our management, who will have broad discretion regarding the application of the proceeds of this offering. The amounts and
timing of our actual expenditures will depend upon numerous factors, including the amount of cash generated by our operations,
the amount of competition and other operational factors. We may find it necessary or advisable to use portions of the proceeds
from this offering for other purposes.
DIVIDEND
POLICY
We
anticipate that, for the foreseeable future, we will retain any future earnings to support operations and to finance the growth
and development of our business. Therefore, we do not expect to pay cash dividends for at least the next several years. We did
not declare dividends during the three most recent fiscal years.
The
distribution of dividends may also be limited by the Companies Law, which permits the distribution of dividends only out of retained
earnings or earnings derived over the two most recent fiscal years, whichever is higher, provided that there is no reasonable
concern that payment of a dividend will prevent a company from satisfying its existing and foreseeable obligations as they become
due. Our amended and restated articles of association provide that dividends will be paid at the discretion of, and upon resolution
by, our Board of Directors, subject to the provision of the Companies Law.
CAPITALIZATION
The
following table sets forth our consolidated unaudited capitalization as of June 30, 2019 on
|
●
|
on
a pro forma basis, to give effect to the issuance of (i) 10,921,139 ordinary shares underlying ADSs, (ii) 4,037,805 ordinary shares
underlying ADSs issuable upon the exercise of warrants (iii) 54,472 ordinary shares underlying ADSs issuable upon the exercise
of options to purchase 54,472 ADSs and (iv) 27,236 ordinary shares issuable upon the exercise of options to purchase 27,236 ordinary
shares, in each case, to be issued by us in connection with the FameWave Transaction; and
|
|
●
|
on a pro forma as
adjusted basis, to give effect to the sale by us of the maximum amount of_________ units in this offering at an assumed
public offering price of $_________ per unit, which is the last reported sale price of our
ADSs on NASDAQ on_________, 2020, after deducting placement agent
fees and estimated offering expenses payable by us.
|
Our
capitalization following the closing of this offering will be adjusted based on the actual public offering price and other terms
of this offering determined at pricing. You should read this table together with our consolidated financial statements and the
related notes and the sections entitled “Management’s Discussion and Analysis of Financial Condition and Results of
Operations” in our Annual Report on Form 20-F and our interim unaudited financial reports for the six-month period
ended June 30, 2019 which were furnished on Form 6-K, which are incorporated by reference herein.
The
amounts shown below are unaudited. The information in the following table should be read in conjunction with and is qualified
in its entirety by reference to the financial statements and notes thereto included in our most recent Annual Report on Form 20-F and the other financial information incorporated by reference into this prospectus.
(In thousands, except share data)
|
|
Actual
|
|
|
Pro
Forma
|
|
|
Pro Forma As Adjusted
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents and short-term deposits
|
|
|
7,817
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders’ equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary shares
|
|
|
|
|
|
|
|
|
|
|
|
|
Share premium
|
|
|
46,945
|
|
|
|
|
|
|
|
|
|
Receipts on account of warrants
|
|
|
7,940
|
|
|
|
|
|
|
|
|
|
Capital reserves
|
|
|
2,350
|
|
|
|
|
|
|
|
|
|
Accumulated deficit
|
|
|
(46,247
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Shareholders’ equity
|
|
|
10,988
|
|
|
|
|
|
|
|
|
|
Non-controlling interest
|
|
|
450
|
|
|
|
|
|
|
|
|
|
Total capitalization
|
|
|
11,438
|
|
|
|
|
|
|
|
|
|
A $0.25 increase
or decrease in the assumed public offering price of $_________ per unit, which is the last reported sale price of our ADSs on
NASDAQ on_________, 2020, would increase or decrease, as appropriate, our as adjusted cash and cash equivalents, capital
reserves, total shareholders’ equity and total capitalization by approximately $_________ million, assuming the number
of units offered by us as set forth on the cover page of this prospectus remains the same, and after deducting placement
agent fees and estimated offering expenses payable by us, and excluding the proceeds, if any, from the exercise of 2020
warrants issued in this offering.
Similarly, a 1,000,000
unit increase or decrease in the number of units offered by us, based on the assumed combined public offering price of $_________
per unit, would increase or decrease our as adjusted cash and cash equivalents, capital reserves and total shareholders’
equity by approximately $_________ million, after deducting placement agent fees and estimated offering expenses payable by us,
and excluding the proceeds, if any, from the exercise of 2020 warrants issued in this offering.
The
number of ordinary shares to be outstanding after this offering is based on 19,532,143 ordinary shares outstanding as of June
30, 2019 (such number of ordinary shares would be represented by 19,532,143 of our ADSs) and excludes:
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●
|
4,063,553
ordinary shares issuable at a weighted average exercise price of NIS 5.51 (approximately $1.55) per share issuable to holders
of our options issued, as applicable, under our 2013 Option Plan, as amended, or our 2016 Equity Incentive Plan (such number
of ordinary shares would be represented by 4,063,553 of our ADSs);
|
|
|
|
|
●
|
7,134,790
ordinary shares underlying the ADSs issuable upon exercise of the Series A warrants and the representative’s warrants
issued in our initial public offering, and the Series A warrants and the placement agent warrants issued as part of our offering
in July 2016 (such number of ordinary shares would be represented by 7,134,790 of our ADSs);
|
|
●
|
529,427
ordinary shares underlying ADSs issuable upon exercise of the warrants issued in connection with our July 2017 private placement
of warrants and the placement agent warrants issued as part of our July 2017 public offering (such number of ordinary shares
would be represented by 529,427 of our ADSs);
|
|
|
|
|
●
|
1,858,200
ordinary shares underlying ADSs issuable upon exercise of the warrants issued in connection with our June 2018 private placement
of warrants and the placement agent warrants issued as part of our June 2018 public offering (such number of ordinary shares
would be represented by 1,858,200 of our ADSs);
|
|
|
|
|
●
|
2,571,430
ordinary shares issuable upon exercise of the warrants issued in our January 2019 private placement with an exercise price
of $2.00 and 240,000 ordinary shares underlying ADSs issuable upon exercise of placement agent warrants with an exercise price
of $2.1875 issued to the placement agent in our January 2019 offering;
|
|
|
|
|
●
|
__________________ ordinary
shares underlying ADSs issuable upon the exercise of 2020 warrants to be issued to investors in this offering at an exercise
price of $_________ per ADS; and
|
|
|
|
|
●
|
__________________ ordinary
shares underlying ADSs issuable upon the exercise of warrants to the placement agent at an exercise price of _________% of
the public offering price described in “Plan of Distribution.”
|
DILUTION
If
you invest in our ADSs and warrants, your interest will be diluted immediately to the extent of the difference between the public
offering price per unit and the as-adjusted net tangible book value per ADS after this offering.
The net tangible book value of our ADSs as of June 30, 2019 was approximately $5.3 million, or approximately
$0.267 per ADS. Net tangible book value per ADS represents the amount of our total tangible assets less total liabilities divided
by the total number of our ordinary shares outstanding as of June 30, 2019.
After giving effect
to (i) the issuance of (a) 10,921,139 ordinary shares underlying the ADSs, (b) 4,037,805 ordinary shares underlying ADSs issuable
upon the exercise of warrants, (c) 54,472 ordinary shares underlying ADSs issuable upon the exercise of options to purchase 54,472
ADSs and (d) 27,236 ordinary shares issuable upon the exercise of options to purchase 27,236 ordinary shares, in each case, to
be issued by us in connection with the FameWave Transaction and (ii) the sale of the maximum amount of_________ units in this offering
at the public offering price of $_________ per unit, which is the last reported sale price of our ADSs on NASDAQ on_________, 2020,
and after deducting the placement agent fees and estimated offering expenses payable by us in connection with this offering, our
as adjusted net tangible book value as of June 30, 2019 would have been approximately $_________million, or approximately $_________
per ADS. This calculation assumes that none of the 2020 warrants issued in offering are exercised and excludes the proceeds, if
any, from the exercise of 2020 warrants. This represents an immediate increase in net tangible book value of approximately $_________
per ADS to our existing security holders and an immediate dilution in as-adjusted net tangible book value of approximately $_________
per ADS to purchasers of units in this offering, as illustrated by the following table:
Assumed public offering price per unit
|
|
$
|
|
|
|
|
|
|
Consolidated net tangible book value per ADS as of June 30, 2019
|
|
$
|
0.267
|
|
|
|
|
|
Increase in consolidated net tangible book value per ADS attributable to the offering
|
|
$
|
|
|
|
|
|
|
As adjusted consolidated net tangible book value per ADS after this offering
|
|
|
|
|
|
$
|
|
|
Dilution per ADS to new investors participating in this offering
|
|
|
|
|
|
$
|
|
|
The information discussed
above is illustrative only, and the dilution information following this offering will depend on the actual public offering price
and other terms of this offering determined at pricing. Each $0.25 increase or decrease in the assumed public offering price of
$_________ per unit, based on the last reported sale price for our ADSs on NASDAQ on_________, 2020, would increase or decrease
the as adjusted net tangible book value per ADS after this offering by $_________ per ADS and the dilution per share to investors
participating in this offering by $_________ per ADS, assuming that the maximum number of units offered by us, as set forth on
the cover page of this prospectus, remains the same and after deducting placement agent fees and estimated offering expenses payable
by us and excluding the proceeds, if any, from exercise of the 2020 warrants issued in this offering.
We may also increase
or decrease the number of units we are offering. An increase of 1,000,000 in the number of units offered by us would increase or
decrease our as adjusted net tangible book value per ADS by approximately $_________, and the dilution per ADS to investors participating
in this offering by $_________, after deducting placement agent fees and estimated offering expenses payable by us and excluding
the proceeds, if any, from exercise of the 2020 warrants issued in this offering.
The
number of ordinary shares to be outstanding after this offering is based on 19,532,143 ordinary shares outstanding as of June
30, 2019 (such number of ordinary shares would be represented by 19,532,143 of our ADSs) and excludes:
|
●
|
4,063,553
ordinary shares issuable at a weighted average exercise price of NIS 5.51 (approximately $1.55) per share issuable to holders
of our options issued, as applicable, under our 2013 Option Plan, as amended, or our 2016 Equity Incentive Plan (such number
of ordinary shares would be represented by 4,063,553 of our ADSs);
|
|
|
|
|
●
|
7,134,790
ordinary shares underlying the ADSs issuable upon exercise of the Series A warrants and the representative’s warrants
issued in our initial public offering, and the Series A warrants and the placement agent warrants issued as part of our offering
in July 2016 (such number of ordinary shares would be represented by 7,134,790 of our ADSs);
|
|
|
|
|
●
|
529,427
ordinary shares underlying ADSs issuable upon exercise of the warrants issued in connection with our July 2017 private placement
of warrants and the placement agent warrants issued as part of our July 2017 public offering (such number of ordinary shares
would be represented by 529,427 of our ADSs);
|
|
|
|
|
●
|
1,858,200
ordinary shares underlying ADSs issuable upon exercise of the warrants issued in connection with our June 2018 private placement
of warrants and the placement agent warrants issued as part of our June 2018 public offering (such number of ordinary shares
would be represented by 1,858,200 of our ADSs);
|
|
|
|
|
●
|
2,571,430
ordinary shares issuable upon exercise of the warrants issued in our January 2019 private placement with an exercise price
of $2.00 and 240,000 ordinary shares underlying ADSs issuable upon exercise of placement agent warrants with an exercise price
of $2.1875 issued to the placement agent in our January 2019 offering;
|
|
|
|
|
●
|
__________________ ordinary shares underlying ADSs issuable upon the exercise of 2020 warrants to
be issued to investors in this offering at an exercise price of $_________ per ADS; and
|
|
|
|
|
●
|
__________________ ordinary shares underlying ADSs issuable upon the exercise of
warrants to the placement agent at an exercise price of _________% of the public offering price described in “Plan of
Distribution.”
|
DESCRIPTION
OF SHARE CAPITAL
The
following description of our share capital and certain provisions of our articles of association are summaries and do not purport
to be complete. The description is qualified by reference to our corporate documents, copies of which are filed with the SEC as
exhibits to the registration statement of which this prospectus forms a part.
Authorized Share
Capital. Our authorized share capital is 250,000,000 ordinary shares, with no par value, and 50,000,000 non-voting senior preferred
shares, with no par value, divided into 5 classes of 10,000,000 preferred shares in each class. As of December 31, 2018, we had
16,009,264 ordinary shares outstanding (after giving effect to a reverse share split of our ordinary shares, at an exchange ratio
of 1-for-20, which was completed on January 4, 2019, which ordinary shares would be represented by 16,009,264 of our ADSs) and
no non-voting senior preferred shares outstanding, and as of December 23, 2019 we had 19,560,529 ordinary shares outstanding (which
would be represented by 19,560,529 of our ADSs) and no non-voting senior preferred shares outstanding. The above amounts include
one dormant ordinary share held in treasury. The shares outstanding amounts above do not include the shares we expect to issue
following completion of the FameWave Transaction and the concurrent investment in the Company by certain shareholders of FameWave
in a private placement, pursuant to which we agreed to issue at closing of the transactions an additional 10,921,139 ADSs representing
an equivalent number of our ordinary shares.
Ordinary
Shares
The
following is a description of our ordinary shares.
The
ordinary shares do not have preemptive rights, preferred rights or any other right to purchase our securities. Neither our amended
and restated articles of association nor the laws of the State of Israel restrict the ownership or voting of ordinary shares by
non-residents of Israel, except under certain circumstances for ownership by nationals of certain countries that are, or have
been, in a state of war with Israel.
Transfer
of Shares. Our fully paid ordinary shares may generally be freely transferred under our amended and restated articles of association,
unless the transfer is restricted or prohibited by applicable law or the rules of the stock exchange on which the shares are traded.
Notices.
Under the Companies Law, and regulations promulgated thereunder, and our amended and restated articles of association, we are
required to publish notices on our website, at least 21 days’ prior notice of a shareholders’ meeting. However, under
regulations promulgated under the Companies Law, we are required to publish notices on our website at least 35 calendar days prior
any shareholders’ meeting in which the agenda includes matters which may be voted on by voting slips. Regulations under
the Companies Law exempt companies whose shares are listed for trading both on a stock exchange in and outside of Israel, from
some provisions of the Companies Law. These regulations exempt us from some of the requirements of the Israeli proxy regulations,
under certain circumstances.
According
to the Companies Law and the regulations promulgated thereunder, as applicable to the Company, for purposes of determining the
shareholders entitled to notice and to vote at such meeting, the board of directors may fix the record date not more than 40 nor
less than four calendar days prior to the date of the meeting, provided that an announcement regarding the general meeting shall
be given prior to the record date.
Election
of Directors. Under our amended and restated articles of association, the number of directors on our Board will be no less
than four and no more than nine (including any external directors, to the extent that we may be required to appoint external directors
in accordance with the Companies Law and any Regulations enacted thereunder) (“Maximum Number”). The majority of the
members of the Board shall be residents of Israel, unless our center of management shall have been transferred to another country
in accordance with a resolution of our Board by a majority of three quarters (75%) of the participating director votes. The number
of directors may be changed, at any time and from time to time, by our shareholders with a majority of (a) 75% of the voting rights
participating and voting on the matter in the applicable general meeting of our shareholders and (b) more than 47.9% of all of
the voting rights in the Company as of the record date established for the applicable general meeting of our shareholders (“Special
Majority”). Our directors shall generally be nominated by our Board of Directors, and then appointed at our general meeting
of shareholders with a regular majority. In accordance with our amended and restated articles of association, the directors elected
to serve are divided into three classes, with each class comprising one-third of the members of our Board of Directors (the “Board”)
(who are not external directors, if any were appointed), (hereinafter the “first class”; the “second class”;
and the “third class”). If the number of directors is not equally divisible by three, each of the first class and
the second class will be comprised of a different number, the closest and lowest to one-third, while the third class will be comprised
of the remaining directors (who are not external directors, if any were appointed). If the number of directors changes, the number
of directors in each class will change in accordance with the aforesaid rule. In the annual general meeting of our shareholders
that will take place each year, the shareholders shall be entitled to elect directors who shall be elected for a Three-Year Term
to replace the class of directors whose term in office has expired as of such annual general meeting of our shareholders, and
so on ad infinitum, so that the directors who shall be elected as stated above shall enter office at the end of the annual general
meeting of our shareholders at which they were elected, unless a later date for commencement of the term was decided at the time
of the appointment, and shall serve for Three-Year Terms (unless their appointment will be terminated in accordance with the provisions
of our amended and restated articles of association), and so that each year, the terms in office of one of the classes of directors
shall expire at the annual general meeting of our shareholders for such year. A “Three-Year Term” means a term of
office of a director until the third annual general meeting of our shareholders which shall be held following the date of their
election as director, provided that each director shall continue to serve in office until his or her successor is duly elected
and qualified, or until his or her retirement, death, resignation or removal. Our Board may appoint a director at any time to
fill any vacancies until the annual meeting of our shareholders set to take place at the end of the Three-Year Term for the class
of directors to which such director is so appointed by the Board, provided that the total number of the members of the Board serving
at such time will not exceed the Maximum Number. The shareholders may at all times, by a Special Majority vote of the shareholders,
replace or dismiss a director (in the case of replacement, only if the appointed director is not a corporation). A director to
be replaced shall be given a reasonable opportunity to address the shareholders at their meeting. The tenure of a director expires
pursuant to the provisions of our amended and restated articles of association and the Companies Law, upon death or if s/he becomes
incompetent, unless removed from office as described above.
Dividend
and Liquidation Rights. Subject to preferences that may be applicable to any then outstanding preferred shares, our profits,
in respect of which a resolution was passed to distribute them as dividend or bonus shares, shall be paid pro rata to the amount
of shares held by the shareholders. In the event of our liquidation, the liquidator may, with the general meeting’s approval,
and subject to any preferences that may be applicable to any then outstanding preferred shares, distribute parts of our property
in specie among the shareholders and he or she may, with similar approval, deposit any part of our property with trustees in favor
of the shareholders as the liquidator, with the approval mentioned above, deems fit.
Voting,
Shareholders’ Meetings and Resolutions. Holders of ordinary shares are entitled to one vote for each ordinary share
held on all matters submitted to a vote of shareholders. The quorum required for an ordinary meeting of shareholders consists
of at least two shareholders present, in person or by proxy, or by voting slip indicating the way in which he or she is voting,
who hold or represent, in the aggregate, at least 25% of the voting rights of our outstanding share capital. A meeting adjourned
for lack of a quorum is adjourned to the same day in the following week at the same time and place or any time and place as prescribed
by the board of directors in notice to the shareholders. At the reconvened meeting one shareholder at least, present in person
or by proxy constitutes a quorum except where such meeting was called at the demand of shareholders. With the agreement of a meeting
at which a quorum is present, the chairman may, and on the demand of the meeting he must, adjourn the meeting from time to time
and from place to place, as the meeting resolves. Annual general meetings of our shareholders are to be held once every year within
a period of not more than 15 months after the last preceding annual general shareholders’ meeting. Our board of directors
may call special general meetings of shareholders. The Companies Law provides that a special general meeting of shareholders may
be called by the board of directors or by a request of two directors or 25% of the directors in office, whichever is the lower,
or by shareholders holding at least 5% of our issued share capital and at least 1% of the voting rights, or of shareholders holding
at least 5% of our voting rights, subject to the provisions set forth in our amended and restated articles of association.
An
ordinary resolution requires approval by the holders of a majority of the voting rights present, in person or by proxy, at the
meeting and voting on the resolution.
Allotment
of Shares. Our Board of Directors has the power to allot or to issue shares to any person, with restrictions and condition
as it deems fit.
Preferred
Shares
Pursuant
to Israel’s securities laws, a company whose ordinary shares are registered for trade on TASE may not have more than one
class of shares for a period of one year following initial registration of the company on TASE. After a period of one year, it
is permitted to issue preferred shares if the preference of those shares is limited to a preference in the distribution of dividends
and these preferred shares have no voting rights, and if such issuance is otherwise in accordance with any then applicable TASE
regulations or directives with respect to the issuance of preferred shares by a company whose ordinary shares are listed on TASE.
We
presently do not have any issued and outstanding preferred shares. On December 5, 2016, our shareholders approved the amendment
to our amended and restated articles of association, as well as to our memorandum of association, for the addition to Kitov Pharma’s
registered share capital of 50,000,000 non-voting senior preferred shares, with no par value, divided into 5 classes of 10,000,000
preferred shares in each class (the “Preferred Shares”).
Pursuant
to our amended and restated articles of association, our Board of Directors is authorized to fix, by resolution of the Board of
Directors, (i) the number of issued Preferred Shares (subject to the maximum number of Preferred Shares authorized in such class),
(ii) the designation of such class of Preferred Shares, and (iii) the conversion, redemption, optional and other special rights,
qualifications, limitations or restrictions, if any, of the shares of such class of Preferred Shares. Consequently, the issuance
of Preferred Shares would be available for issuance without further actions by the Company’s shareholders, unless shareholder
approval is required by Israeli law, the rules of any exchange or other market on which the Company’s securities may then
be listed or traded, the Company’s Articles of Association then in effect, or any other applicable rules and regulations.
For so long as we are also listed on TASE, the issuance of any Preferred Shares will also be subject to the requirements of any
TASE regulations or directives governing the issuance of preferred shares by companies whose ordinary shares are listed on the
TASE. In March 2017, TASE issued principles for directives in connection with the issuance of preferred shares by a company whose
ordinary shares are listed on TASE.
Subject to the actual terms of issuance
determined by our Board of Directors for any Preferred Shares when issued, our Preferred Shares may be convertible into our ordinary
shares or another series of Preferred Shares. Each such series of Preferred Shares shall have such number of shares, designations,
preferences, voting powers, qualifications, and special or relative rights or privileges as shall be determined by the Board of
Directors, which may include, among others, dividend rights, voting rights, liquidation preferences, conversion rights and preemptive
rights, rights, qualifications, limitations and/or restrictions determined by our Board of Directors in accordance with our articles
of association in effect at the time of any such issuance, including, but not limited to, some or all of the following: (i) the
number of Preferred Shares constituting that series and the distinctive designation of that series, which number may be increased
or decreased (but not below the number of Preferred Shares then outstanding) from time to time by action of the Board of Directors;
(ii) the dividend rate and the manner and frequency of payment of dividends on the Preferred Shares of that series, whether dividends
will be cumulative, and, if so, from which date; (iii) subject to applicable law, whether that series will have voting rights,
in addition to any voting rights provided by law, and, if so, the terms of such voting rights; (iv) the terms and conditions of
any conversion privilege of the series, including provision for adjustment of the conversion rate in such events as the Board of
Directors may determine; (v) whether or not the shares of that series will be redeemable, and, if so, the terms and conditions
of such redemption; (vi) whether that series will have a sinking fund for the redemption or purchase of Preferred Shares of that
series, and, if so, the terms and amount of such sinking fund; (vii) whether or not the Preferred Shares of the series will have
priority over or be on a parity with or be junior to the Preferred Shares of any other series or class in any respect; (viii) the
rights of the Preferred Shares of that series in the event of voluntary or involuntary liquidation, dissolution or winding up of
the corporation, and the relative rights or priority, if any, of payment of Preferred Shares of that series; and any other relative
rights, preferences and limitations of that series.
Issuance of Preferred Shares by our Board
of Directors may result in such shares having dividend or liquidation preferences senior to the rights of the holders of our ordinary
shares and, Preferred Shares which are convertible into our ordinary shares could potentially dilute the voting rights of the holders
of our ordinary shares.
Once designated by our Board of Directors,
and offered hereby, each series of Preferred Shares may have specific financial and other terms that will be described in a prospectus
supplement. The description of the Preferred Shares that is set forth in any prospectus supplement is not complete without reference
to the documents that govern the Preferred Shares.
All Preferred Shares offered hereby will,
when issued, be fully paid and nonassessable, including Preferred Shares issued upon the exercise of Preferred Share warrants or
subscription rights, if any.
Each Preferred Share shall be entitled to
receive upon distribution, and in preference to our ordinary shares, (i) dividends in excess of the general dividends issued to
all shareholders including holders of Ordinary Shares, and/or (ii) amounts paid in a distribution of our surplus assets on winding
up, in an amount equal to the original issue price for such Preferred Shares as set forth in the Company’s share registrar
(adjusted for share combinations or subdivisions or other recapitalizations of the Company’s shares), and less the amount
of any dividend previously paid in preference, all pro rata to the number of the Company’s Preferred Shares of each specific
class of Preferred Shares issued and outstanding at such time, without having regard to any premium paid or discount thereon, and
all subject to the provisions hereof.
Furthermore, and after payment of the Preferred
Shares’ dividend preferences or liquidation preferences as aforesaid, each Preferred Share in the Company’s capital
shall be entitled to receive upon distribution, (i) a general dividend issued to all shareholders, (ii) bonus shares, and (iii)
amounts paid in a distribution of the Company’s surplus assets on winding up, all pro rata to the number of the Company’s
Shares (Ordinary Shares and Preferred Shares) issued and outstanding at such time, without having regard to any premium paid thereon
or discount, and all subject to the provisions hereof.
All Preferred Shares shall be non-voting
shares and shall not vest the holder thereof with any right to participate in the Company’s general meetings, to receive
notice thereof and/or to vote thereat. Without limitation to the above, the Preferred Shares shall not confer upon the holders
thereof any voting rights or any right to appoint directors or any other right with respect to general meetings, including without
limitation, attending, voting at or requesting to convene, such general meetings or proposing matters for the agenda of such general
meetings, except as expressly set forth below or as otherwise specifically provided by Israeli law.
So long as any Preferred Shares are outstanding,
the provisions of the section below titled “Modification of class rights”, and the provisions of this section shall
apply, such that the adoption of a resolution, by a regular majority in voting power of the Preferred Shares who are present, entitled
to vote thereon (if any) and voting thereon, voting together as a single class, given in person or by proxy or by an authorized
proxy holder, at a meeting of holders of Preferred Shares shall be necessary for effecting or validating:
(i) Authorization of Senior Shares.
Any amendment or alteration of the Memorandum of Association or Articles of Association of the Company so as to authorize or create,
or increase the authorized amount of, any class or series of shares to be so authorized, created or increased after the initial
issuance of any class of Preferred Shares, the terms of which expressly provide that such class or series will rank senior to the
outstanding class or classes of Preferred Shares as to dividend rights and distribution rights upon the liquidation, winding up
or dissolution of the Company (collectively, “Senior Shares”);
(ii) Amendment of the Preferred
Shares. Any amendment, alteration or repeal of any provision of the Articles of Association so as to adversely affect the special
rights, preferences, privileges or voting powers of the Preferred Shares.
(iii) Share Exchanges, Reclassifications,
Mergers and Consolidations. Any consummation of a binding share exchange or reclassification involving the Preferred Shares, or
of a merger or consolidation of the Company with or into another entity, unless in each case (x) the Preferred Shares remain outstanding
or, in the case of any such merger or consolidation with respect to which the Company is not the surviving or resulting entity
(or the Preferred Shares are otherwise exchanged or reclassified), are converted or reclassified into or exchanged for preferred
shares of the surviving or resulting entity or its ultimate parent, and (y) such Preferred Shares that remain outstanding or such
preferred shares, as the case may be, have rights, preferences, privileges and voting powers of the surviving or resulting entity
or its ultimate parent that, taken as a whole, are not materially less favorable to the holders thereof than the rights, preferences,
privileges and voting powers, taken as a whole, of the Preferred Shares immediately prior to the consummation of such transaction;
provided, however, that (A) for all purposes
of this section, (1) any increase in the amount of the Company’s authorized Ordinary Shares or Preferred Shares or the issuance
of any additional Ordinary Shares or Preferred Shares or (2) the authorization or creation of any class or series of shares established
after the initial issuance of any class of Preferred Shares, the terms of which do not expressly provide that such class or series
ranks senior to or on a parity with the previously issued and outstanding Preferred Shares as to dividend rights and distribution
rights upon any liquidation, winding up or dissolution of the Company (collectively, “Junior Shares”); or the authorization
or creation of any class or series of shares established after the initial issuance of any class of Preferred Shares the terms
of which expressly provide that such class or series will rank on a parity with the previously issued and outstanding Preferred
Shares as to dividend rights and distribution rights upon any liquidation, winding up or dissolution of the Company (collectively,
“Parity Shares”); and, any increase in the amount of authorized but unissued shares of such class or series of Parity
Shares or Junior Shares or the issuance of additional shares of such class or series of Parity Shares or Junior Shares, will be
deemed not to adversely affect (or to otherwise cause to be materially less favorable) the rights, preferences, privileges or voting
powers of the previously issued and outstanding Preferred Shares and shall not require the consent or the adoption of a resolution
by the holders of the previously issued and outstanding Preferred Shares; (B) in the event of a binding share exchange or reclassification
involving the Preferred Shares, or of a merger or consolidation of the Company with or into another entity, as described above
in which the provisions of sub-section (b)(iii)(x) and (y) above are complied with, the consent or the adoption of a resolution
by the holders of the previously issued Preferred Shares shall not be required in order to effect, validate or approve such share
exchange, reclassification, merger or consolidation; and (C) to the extent that, notwithstanding the provisions of immediately
preceding clauses (A) and (B), the consent or approval of the holders of Preferred Shares, voting together as a single class, is
nonetheless required by applicable law or the Articles of Association in such circumstances, or such consent or approval is otherwise
required by applicable law or the Articles of Association with respect to any matter that is not set forth in the provisions of
items (i)-(iii) of this section above, such approval or consent may be given by the adoption of a resolution, by a simple majority
of the voting power of the Preferred Shares who are present, entitled to vote thereon (if any) and voting thereon, voting together
as a single class, given in person or by proxy or by an authorized person, at a meeting of holders of Preferred Shares and the
legal quorum for any such meeting shall be as set forth above with respect to meeting of holders of our Ordinary Shares.
The rules and procedures for calling and
conducting any meeting of the holders of Preferred Shares (including, without limitation, the fixing of a record date in connection
therewith), the solicitation and use of proxies at such a meeting, the obtaining of written consents and any other procedural aspect
or matter with regard to such a meeting or such consents shall be governed by any rules the Board of Directors, in its discretion,
may adopt from time to time, which rules and procedures shall conform to the requirements of our amended and restated articles
of association (including the provisions set forth above), applicable law and, if applicable, the rules of any national securities
exchange or other trading facility on which the Preferred Shares are listed or traded at the time.
Although our Board of Directors has no intention
at the present time of doing so, it could authorize the issuance of a series of Preferred Shares that could, depending on the terms
of such series, impede the completion of a merger, tender offer, change of control or other takeover attempt.
Board of Directors
Under our amended and restated articles
of association, resolutions by the Board of Directors shall be decided by a majority of votes of the directors present, or participating,
in the case of voting by media, and voting, each director having one vote. In the event of a tie, the chairman of the Board does
not hold a casting vote.
Under the Companies Law, except as provided
below, companies incorporated under the laws of the State of Israel that are “public companies,” including Israeli
companies with shares listed on NASDAQ, are required to appoint at least two external directors who meet the qualification requirements
set forth in the Companies Law. On July 13, 2016, our Board of Directors resolved to adopt the corporate governance exception set
forth in Regulation 5D of the Israeli Companies Regulations (Relief for Public Companies with Shares Listed for Trading on a Stock
Market Outside of Israel), 5760-2000. In accordance with such Regulation, a public company with securities listed on certain foreign
exchanges, including NASDAQ, that satisfies the applicable foreign country laws and regulations that apply to companies organized
in that country relating to the appointment of independent directors and composition of audit and compensation committees and have
no controlling shareholder are exempt from the requirement to appoint external directors or comply with the audit committee and
compensation committee composition requirements under the Companies Law. In accordance with our Board’s resolution, for so
long as the Company does not have a controlling shareholder as defined in Section 1 of the Companies Law, the Company intends to
comply with the NASDAQ Listing Rules in connection with a majority of independent directors on the Board and in connection with
the composition of each of the Audit Committee and the Compensation Committee, in lieu of such requirements set forth under the
Companies Law. A majority of our Board members are independent as required by the NASDAQ Listing Rules. Furthermore, our Audit
Committee consists of at least three independent directors, and our Compensation Committee consists of at least two independent
directors. Should any person or entity become deemed to be a controlling shareholder as defined in Section 1 of the Companies Law,
then in accordance with Section 248(a) of the Companies Law, we will be required to convene a special general meeting of the shareholders
at the earliest possible date, the agenda of which shall include the appointment of at least two external directors. Following
such appointment, all of the external directors shall be appointed to each of our Audit Committee and Compensation Committee, and
at least one external director shall be appointed to each committee of the Board of Directors authorized to exercise any of the
powers of the Board of Directors.
The Companies Law requires that certain
transactions, actions and arrangements be approved as provided for in a company’s articles of association and in certain
circumstances by the audit committee or the compensation committee and by the board of directors itself. Those transactions that
require such approval pursuant to a company’s articles of association must be approved by its board of directors. In certain
circumstances, audit committee and shareholder approval is also required. The vote required by the audit committee and the board
of directors for approval of such matters, in each case, is a majority of the directors participating in a duly convened meeting.
Under the Companies Law, except as to certain companies listed on foreign stock exchanges, including NASDAQ, as described above,
the audit committee is to be comprised of at least three members appointed by the board of directors, which members must include
all of the external directors. The majority of members of the audit committee must be independent directors (as defined in the
Companies Law), and the chairman of the audit committee must be an external director.
The Companies Law requires
that a member of the board of directors or senior management of the company promptly and, in any event, not later than the first
board meeting at which the transaction is discussed, disclose any personal interest that he or she may have, either directly or
by way of any corporation in which he or she is, directly or indirectly, a 5% or greater shareholder, director or general manager
or in which he or she has the right to appoint at least one director or the general manager, as well as all related material information
known to him or her, in connection with any existing or proposed transaction by the company. In addition, if the transaction is
an extraordinary transaction, (that is, a transaction other than in the ordinary course of business, is not on market terms, or
is likely to have a material impact on the company’s profitability, assets or liabilities), the member of the board of directors
or senior management must also disclose any personal interest held by his or her spouse, siblings, parents, grandparents, descendants,
spouse’s descendants, siblings and parents, and the spouses of any of the foregoing. Furthermore, the extraordinary transaction
requires approval of the company’s audit committee followed by the approval of the board of directors.
Once the member of the board of directors
or senior management complies with the above disclosure requirement, a company may approve the transaction in accordance with the
provisions of its articles of association. Under the provisions of the Companies Law, whoever has a personal interest in a matter,
which is considered at a meeting of the board of directors or the audit committee, may not be present at this meeting or vote on
this matter, unless it is not an extraordinary transaction as defined in the Companies Law. However, if the chairman of the board
of directors or the chairman of the audit committee has determined that the presence of an office holder with a personal interest
is required for the presentation of a matter, such officer holder may be present at the meeting. Notwithstanding the foregoing,
if the majority of the directors have a personal interest in a matter, they shall be allowed to participate and vote on this matter,
but the approval of the transaction by the shareholders in the general meeting is required.
Our amended and restated articles of association
provide that, subject to the Companies Law, all actions executed in good faith by the Board of Directors or by a committee thereof
or by any person acting as a director or a member of a committee of the Board of Directors, will be deemed to be valid even if,
after their execution, it is discovered that there was a flaw in the appointment of these persons or that any one of these persons
was disqualified from serving at his or her office.
Our amended and restated articles of association
provide that, subject to the provisions of the Companies Law, the Board of Directors may appoint Board of Directors’ committees.
The committees of the Board of Directors shall report to the Board of Directors their resolutions or recommendations on a regular
basis, as shall be prescribed by the Board of Directors. The Board of Directors may cancel the resolution of a committee that has
been appointed by it; however, such cancellation shall not affect the validity of any resolution of a committee, pursuant to which
we acted, vis-à-vis another person, who was not aware of the cancellation thereof. Decisions or recommendations of the committee
of the Board which require the approval of the Board of Directors will be brought to the directors’ attention a reasonable
time prior to the discussion at the Board of Directors.
According to the Companies
Law, an arrangement between the company and its directors, regarding their conditions of service, including the grant to them
of exemption from liability from certain actions, insurance, and indemnification as well as an arrangement between the company
and its directors on conditions of their employment, in other capacities, generally requires the approval of the compensation
committee (or the audit committee acting in lieu of a compensation committee pursuant to the Companies Law), the board of directors,
and the shareholders.
Under the Companies
Regulations (Relief from Related Party Transactions), 5760-2000, promulgated under the Companies Law, as amended, certain extraordinary
transactions between a public company and its controlling shareholder(s) do not require shareholder approval. Such extraordinary
transactions must be approved by both the board of directors and the audit committee and (i) must involve the extension of an existing
transaction that was duly approved and does not involve any significant change in the terms of the existing transaction or the
change is solely for the benefit of the company; (ii) is solely for the benefit of the company; (iii) is with the controlling shareholder
or another person in which the controlling shareholder has an interest and the transaction is in accordance with the terms of a
framework agreement, which allows for a specific type of transactions, in the ordinary course of business, for a designated term,
that was duly approved; (iv) is with the controlling shareholder or another person in which the controlling shareholder has an
interest, the purpose of which is a transaction of theirs with a third party or a joint proposal to enter into a transaction with
a third party, and the terms of the transaction that apply to the controlling shareholder are not significantly different from
the terms that apply to the controlling shareholder or an entity controlled by him or her (while taking into account the extent
of their respective involvement in the transaction); (v) is among companies controlled by the controlling shareholder, or between
the public company and the controlling shareholder or another person in which the controlling shareholder has a personal interest,
and the transaction is on market terms, within the ordinary course of business and does not harm the company; or (vi) on the date
of approval of the extraordinary transaction by the board of directors and audit committee, the shareholders who do not have personal
interest in the approval of the said transactions do not hold more than 2% of the voting rights in the company. In addition, under
such regulations, directors’ compensation and employment arrangements in a public company do not require the approval of
the shareholders if both the compensation committee (or the audit committee acting in lieu of a compensation committee pursuant
to the Companies Law) and the board of directors agree that such arrangements are solely for the benefit of the company. Employment
and compensation arrangements for an office holder that is a controlling shareholder of a public company, or the provision of directors
and officers insurance for the chief executive officer, do not require shareholder approval if certain criteria are met. The Board,
following the prior determination of the Audit Committee or Compensation Committee, as applicable, may also determine that the
compensation being offered to certain office holders (including directors) is an engagement which, pursuant to the leniencies set
forth in the Relief Regulations, can be entered into by a company immediately, with the approval by the shareholders being deferred
to the next shareholder meeting to be called by the Company, is such compensation is consistent with compensation policy of the
company which was approved by the shareholders of the company in accordance with the Companies Law, and are no more beneficial
to the recipient as such similar compensation previously granted to other holders of the same office.
Exchange Controls
There are currently no material Israeli
currency control restrictions on payments of dividends or other distributions with respect to our securities or the proceeds from
the sale of our securities, except under certain circumstances, for shareholders who are subjects of countries that are, or have
been, in a state of war with Israel or otherwise as set forth in this section. However, legislation remains in effect pursuant
to which currency controls can be imposed by administrative action at any time. Israeli residents have an obligation to file reports
with the Bank of Israel regarding certain transactions.
Access to Corporate Records
Under the Companies Law, shareholders are
provided access to minutes of our general meetings, our shareholders register and principal shareholders register, our amended
and restated articles of association, our financial statements and any document that we are required by law to file publicly with
the Israeli Companies Registrar or the Israel Securities Authority. In addition, shareholders may request to be provided with any
document related to an action or transaction requiring shareholder approval under the related party transaction provisions of the
Companies Law. We may deny this request if we believe it has not been made in good faith or if such denial is necessary to protect
our interest or protect a trade secret or patent.
Modification of Class Rights
Under the Companies
Law and our amended and restated articles of association, the rights attached to any class of share, such as voting, liquidation
and dividend rights, may be amended by adoption of a resolution by the holders of a majority of the shares of that class present
at a separate class meeting, or otherwise in accordance with the rights attached to such class of shares, as set forth in our amended
and restated articles of association. The enlargement of an existing class of shares or the issuance of additional shares thereof,
shall not be deemed to modify the rights attached to the previously issued shares of such class or of any other class, unless otherwise
provided by the terms of the shares.
Acquisitions under Israeli Law
Full Tender Offer
A person wishing to acquire shares of an
Israeli public company and who would as a result hold over 90% of the target company’s issued and outstanding share capital
is required by the Companies Law to make a tender offer to all of the company’s shareholders for the purchase of all of the
issued and outstanding shares of the company.
A person wishing to acquire shares of an
Israeli public company and who would as a result hold over 90% of the issued and outstanding share capital of a certain class of
shares is required to make a tender offer to all of the shareholders who hold shares of the same class for the purchase of all
of the issued and outstanding shares of the same class.
If the shareholders who do not respond to
or accept the offer hold less than 5% of the issued and outstanding share capital of the company or of the applicable class of
the shares, and more than half of the shareholders who do not have a personal interest in the offer accept the offer, all of the
shares that the acquirer offered to purchase will be transferred to the acquirer by operation of law. However, a tender offer will
be accepted if the shareholders who do not accept it hold less than 2% of the issued and outstanding share capital of the company
or of the applicable class of the shares.
Upon a successful completion of such a full
tender offer, any shareholder that was an offeree in such tender offer, whether such shareholder accepted the tender offer or not,
may, within six months from the date of acceptance of the tender offer, petition the Israeli court to determine whether the tender
offer was for less than fair value and that the fair value should be paid as determined by the court. However, under certain conditions,
the offeror may determine in the terms of the tender offer that an offeree who accepted the offer will not be entitled to petition
the Israeli court as described above.
If the shareholders who did not respond
or accept the tender offer hold at least 5% of the issued and outstanding share capital of the company or of the applicable class,
the acquirer may not acquire shares of the company that will increase its holdings to more than 90% of the company’s issued
and outstanding share capital or of the applicable class from shareholders who accepted the tender offer.
The description above regarding a full tender
offer shall also apply, with necessary changes, when a full tender offer is accepted and the offeror has also offered to acquire
all of the company’s securities.
Special Tender Offer
The Companies Law provides that an acquisition
of shares of an Israeli public company must be made by means of a special tender offer if as a result of the acquisition the purchaser
would become a holder of at least 25% of the voting rights in the company. This rule does not apply if there is already another
holder of at least 25% of the voting rights in the company.
Similarly, the Companies Law provides that
an acquisition of shares in a public company must be made by means of a special tender offer if as a result of the acquisition
the purchaser would become a holder of more than 45% of the voting rights in the company, if there is no other shareholder of the
company who holds more than 45% of the voting rights in the company.
These requirements do not apply if the acquisition
(i) occurs in the context of a private offering, on the condition that the shareholders’ meeting approved the acquisition
as a private offering whose purpose is to give the acquirer at least 25% of the voting rights in the company if there is no person
who holds at least 25% of the voting rights in the company, or as a private offering whose purpose is to give the acquirer 45%
of the voting rights in the company, if there is no person who holds 45% of the voting rights in the company; (ii) was from a shareholder
holding at least 25% of the voting rights in the company and resulted in the acquirer becoming a holder of at least 25% of the
voting rights in the company; or (iii) was from a holder of more than 45% of the voting rights in the company and resulted in the
acquirer becoming a holder of more than 45% of the voting rights in the company.
The special tender offer may be consummated
only if (i) at least 5% of the voting power attached to the company’s outstanding shares will be acquired by the offeror
and (ii) the special tender offer is accepted by a majority of the votes of those offerees who gave notice of their position in
respect of the offer; in counting the votes of offerees, the votes of a holder in control of the offeror, a person who has personal
interest in acceptance of the special tender offer, a holder of at least 25% of the voting rights in the company, or any person
acting on their or on the offeror’s behalf, including their relatives or companies under their control, are not taken into
account.
In the event that a special tender offer
is made, a company’s board of directors is required to express its opinion on the advisability of the offer or shall abstain
from expressing any opinion if it is unable to do so, provided that it gives the reasons for its abstention.
An office holder in a target company who,
in his or her capacity as an office holder, performs an action the purpose of which is to cause the failure of an existing or foreseeable
special tender offer or is to impair the chances of its acceptance, is liable to the potential purchaser and shareholders for damages
resulting from his or her acts, unless such office holder acted in good faith and had reasonable grounds to believe he or she was
acting for the benefit of the company. However, office holders of the target company may negotiate with the potential purchaser
in order to improve the terms of the special tender offer, and may further negotiate with third parties in order to obtain a competing
offer.
If a special tender offer was accepted by
a majority of the shareholders who announced their stand on such offer, then shareholders who did not respond to the special offer
or had objected to the special tender offer may accept the offer within four days of the last day set for the acceptance of the
offer. In the event that a special tender offer is accepted, then the purchaser or any person or entity controlling it and any
corporation controlled by them shall refrain from making a subsequent tender offer for the purchase of shares of the target company
and may not execute a merger with the target company for a period of one year from the date of the offer, unless the purchaser
or such person or entity undertook to effect such an offer or merger in the initial special tender offer.
Under the Companies Regulations (Relief
for Public Companies whose Shares are Traded on Exchanges Outside of Israel), 5760-2000 (the “Foreign Listing Relief Regulations”),
the above requirements for a special tender offer do not apply in instances whereby according to the laws of the foreign jurisdiction
there are limitations regarding the acquisition of a controlling interest in the company of any specified portion or the acquisition
of a controlling interest of any specified portion necessitates an offer by the potential acquirer of a controlling interest to
acquire shares from amongst the publicly traded shares. The Israeli Securities Authority is of the view that U.S. securities laws
and exchange regulations of various exchanges do not purport to limit the acquisition of controlling interests in a company, do
not require the potential acquirer of a controlling interest to make an offer to acquire shares from the public, and as such Israeli
companies that are publicly traded in the United States of America cannot benefit from the special tender offer waiver pursuant
to the Foreign Listing Relief Regulations and are thus subject to the general provisions of the Companies Law which require a special
tender offer as outlined above.
Merger
The Companies Law permits merger transactions
if approved by each party’s board of directors and, unless certain requirements described under the Companies Law are met,
a majority of each party’s shareholders, by a majority of each party’s shares that are voted on the proposed merger
at a shareholders’ meeting.
The board of directors of a merging company
is required pursuant to the Companies Law to discuss and determine whether in its opinion there exists a reasonable concern that,
as a result of a proposed merger, the surviving company will not be able to satisfy its obligations towards its creditors, taking
into account the financial condition of the merging companies. If the board of directors has determined that such a concern exists,
it may not approve a proposed merger. Following the approval of the board of directors of each of the merging companies, the boards
of directors must jointly prepare a merger proposal for submission to the Israeli Registrar of Companies.
For purposes of the shareholder vote, unless
a court rules otherwise, the merger will not be deemed approved if a majority of the shares voting at the shareholders’ meeting
(excluding abstentions) that are held by parties other than the other party to the merger, any person who holds 25% or more of
the means of control of the other party to the merger or any one on their behalf including their relatives or corporations controlled
by any of them, vote against the merger.
In addition, if the non-surviving entity
of the merger has more than one class of shares, the merger must be approved by each class of shareholders, and such separate class
voting may also include any classes of otherwise non-voting shares.
If the transaction would have been approved
but for the separate approval of each class of shares or the exclusion of the votes of certain shareholders as provided above,
a court may still rule that the company has approved the merger upon the request of holders of at least 25% of the voting rights
of a company, if the court holds that the merger is fair and reasonable, taking into account the appraisal of the merging companies’
value and the consideration offered to the shareholders.
Under the Companies Law, each merging company
must send a copy of the proposed merger plan to its secured creditors. Unsecured creditors are entitled to receive notice of the
merger, as provided by the regulations promulgated under the Companies Law. Upon the request of a creditor of either party to the
proposed merger, the court may delay or prevent the merger if it concludes that there exists a reasonable concern that, as a result
of the merger, the surviving company will be unable to satisfy the obligations of the target company. The court may also give instructions
in order to secure the rights of creditors.
In addition, a merger may not be completed
unless at least 50 days have passed from the date that a proposal for approval of the merger was filed with the Israeli Registrar
of Companies and 30 days from the date that shareholder approval of both merging companies was obtained.
Private Placements
Under the Companies Law, if (i) as a result
of a private placement a person would become a controlling shareholder or (ii) a private placement will entitle investors to receive
20% or more of the voting rights of a company as calculated before the private placement, and all or part of the private placement
consideration is not in cash or in public traded securities or is not in market terms and if as a result of the private placement
the holdings of a substantial shareholder shall increase or as a result of it a person shall become a substantial shareholder,
then in either case, the allotment must be approved by the board of directors and by the shareholders of the company. A “substantial
shareholder” in connection with a private placement as set forth above, is defined as a shareholder who holds five percent
or more of the company’s outstanding share capital or voting rights, and which assumes the exercise of all of the securities
convertible into shares either held by that person prior to such private placement or offered to such person under the private
placement. In order for the private placement to be on “market terms” the board of directors has to determine, on the
base of detailed explanation, that the private placement is on market terms, unless proven otherwise. Otherwise, under the Companies
Law and the regulations promulgated thereunder, a private placement of securities does not require approval at a general meeting
of the shareholders of a company; provided however, that in other special circumstances, such as a private placement completed
in lieu of a special tender offer, or a private placement under circumstances which qualifies as a related party transaction requiring
shareholder approval, approval at a general meeting of the shareholders of a company is then also required. A Registered Direct
Offering in the United States is generally considered a private placement under the Companies Law.
Establishment
We were incorporated under the laws of the
State of Israel. We are registered with the Israeli Registrar of Companies in Jerusalem, Israel.
Transfer Agent and Registrar
Other than with respect
to certain restricted ordinary shares, the shares for a publicly traded company such as ours, which is listed on TASE (and has
ADSs listed on NASDAQ), are generally recorded in the name of our Israeli share registrar, Registration Company of United Mizrachi
Bank Ltd. Our transfer agent and registrar for our ADSs is the depositary for our ADSs, Bank of New York Mellon, and its address
is 101 Barclay Street, New York, NY.
Listing
Our ordinary shares are currently traded
on TASE under the symbol “KTOV.” Our ADSs and the Series A warrants issued in each of November 2015 and July 2016 are
listed on NASDAQ under the symbols “KTOV” and “KTOVW”, respectively.
DESCRIPTION OF SECURITIES WE ARE OFFERING
We are offering _________ units,
with each unit consisting of_________ ADS(s) and_________ 2020 warrant(s). The ADSs and accompanying 2020 warrants will be
issued separately. We are also registering the ordinary shares underlying the ADSs issuable from time to time upon exercise of
the 2020 warrants offered hereby. The material terms and provisions of our ordinary shares and each other class of our securities
that qualifies or limits our ordinary shares are described in the section entitled “Description of Share Capital”
beginning on page 13 of this prospectus.
DESCRIPTION OF AMERICAN DEPOSITARY SHARES
The Bank of New
York Mellon, as depositary, will register and deliver American Depositary Shares, also referred to as ADSs. Each ADS will represent
one ordinary share (or a right to receive one ordinary share) deposited with Bank Hapoalim or Bank Leumi, as custodian for the
depositary in Israel. Each ADS will also represent any other securities, cash or other property which may be held by the depositary.
The depositary’s office at which the ADSs will be administered is located at 101 Barclay Street, New York, New York 10286.
The Bank of New York Mellon’s principal executive office is located at One Wall Street, New York, New York 10286.
You may hold ADSs
either (A) directly (i) by having an American Depositary Receipt, also referred to as an ADR, which is a certificate evidencing
a specific number of ADSs, registered in your name, or (ii) by having uncertificated ADSs registered in your name, or (B) indirectly
by holding a security entitlement in ADSs through your broker or other financial institution that is a direct or indirect participant
in The Depository Trust Company, also called DTC. If you hold ADSs directly, you are a registered ADS holder, also referred to
as an ADS holder. This description assumes you are an ADS holder. If you hold the ADSs indirectly, you must rely on the procedures
of your broker or other financial institution to assert the rights of ADS holders described in this section. You should consult
with your broker or financial institution to find out what those procedures are.
Registered holders
of uncertificated ADSs will receive statements from the depositary confirming their holdings.
As an ADS holder,
we will not treat you as one of our shareholders and you will not have shareholder rights. Israeli law governs shareholder rights.
The depositary will be the holder of the shares underlying your ADSs. As a registered holder of ADSs, you will have ADS holder
rights. A deposit agreement among us, the depositary, ADS holders and all other persons indirectly or beneficially holding ADSs
sets out ADS holder rights as well as the rights and obligations of the depositary. New York law governs the deposit agreement
and the ADSs.
The following is
a summary of the material provisions of the deposit agreement. For more complete information, you should read the entire deposit
agreement and the form of ADR. Directions on how to obtain copies of those documents are provided under the heading “Where
You Can Find Additional Information”.
Dividends and Other Distributions
How will you receive dividends and
other distributions on the shares?
The depositary has agreed to pay or distribute
to ADS holders the cash dividends or other distributions it or the custodian receives on shares or other deposited securities,
upon payment or deduction of its fees and expenses. You will receive these distributions in proportion to the number of shares
your ADSs represent.
Cash. The depositary will convert
any cash dividend or other cash distribution we pay on the shares into U.S. dollars, if it can do so on a reasonable basis and
can transfer the U.S. dollars to the United States. If that is not possible or if any government approval is needed and cannot
be obtained, the deposit agreement allows the depositary to distribute the foreign currency only to those ADS holders to whom it
is possible to do so. It will hold the foreign currency it cannot convert for the account of the ADS holders who have not been
paid. It will not invest the foreign currency and it will not be liable for any interest.
Before making a distribution, any withholding
taxes, or other governmental charges that must be paid will be deducted. See “Taxation and Government Programs - Taxation
of our Shareholders” for more detail. It will distribute only whole U.S. dollars and cents and will round fractional cents
to the nearest whole cent. If the exchange rates fluctuate during a time when the depositary cannot convert the foreign currency,
you may lose some of the value of the distribution.
Shares. The depositary may distribute
additional ADSs representing any shares we distribute as a dividend or free distribution. The depositary will only distribute whole
ADSs. It will sell shares which would require it to deliver a fraction of an ADS (or ADSs representing those shares) and distribute
the net proceeds in the same way as it does with cash. If the depositary does not distribute additional ADSs, the outstanding ADSs
will also represent the new shares. The depositary may sell a portion of the distributed shares (or ADSs representing those shares)
sufficient to pay its fees and expenses in connection with that distribution.
Rights to purchase additional shares.
If we offer holders of our securities any rights to subscribe for additional shares or any other rights, the depositary may (i)
exercise those rights on behalf of ADS holders, (ii) distribute those rights to ADS holders or (iii) sell those rights and distribute
the net proceeds to ADS holders, in each case after deduction or upon payment of its fees and expenses. To the extent the depositary
does not do any of those things, it will allow the rights to lapse. In that case, you will receive no value for them. The depositary
will exercise or distribute rights only if we ask it to and provide satisfactory assurances to the depositary that doing so does
not require registration of any securities under the Securities Act of 1933, as amended, or the “Securities Act.” If
the depositary will exercise rights, it will purchase the securities to which the rights relate and distribute those securities
or, in the case of shares, new ADSs representing the new shares, to subscribing ADS holders, but only if ADS holders have paid
the exercise price to the depositary. U.S. securities laws may restrict the ability of the depositary to distribute rights or ADSs
or other securities issued on exercise of rights to all or certain ADS holders, and the securities distributed may be subject to
restrictions on transfer.
Other Distributions. The depositary
will send to ADS holders anything else we distribute on deposited securities by any means it thinks is legal and practical. If
it cannot make the distribution in that way, the depositary has a choice. It may decide to sell what we distributed and distribute
the net proceeds, in the same way as it does with cash. Or, it may decide to hold what we distributed, in which case ADSs will
also represent the newly distributed property. However, the depositary is not required to distribute any securities (other than
ADSs) to ADS holders unless it receives satisfactory assurances from us that such distribution does not require registration of
such securities under the Securities Act. The depositary may sell a portion of the distributed securities or property sufficient
to pay its fees and expenses in connection with that distribution. U.S. securities laws may restrict the ability of the depositary
to distribute securities to all or certain ADS holders, and the securities distributed may be subject to restrictions on transfer.
The depositary is not responsible if it
decides that it is unlawful or impractical to make a distribution available to any ADS holders. We have no obligation to register
ADSs, shares, rights or other securities under the Securities Act. We also have no obligation to take any other action to
permit the distribution of ADSs, shares, rights or anything else to ADS holders. This means that you may not receive the distributions
we make on our shares or any value for them if it is illegal or impractical for us to make them available to you.
Deposit, Withdrawal and Cancellation
How are ADSs issued?
The depositary will deliver ADSs if you
or your broker deposits shares or evidence of rights to receive shares with the custodian. Upon payment of its fees and expenses
and of any taxes or charges, such as stamp taxes or stock transfer taxes or fees, the depositary will register the appropriate
number of ADSs in the names you request and will deliver the ADSs to or upon the order of the person or persons that made the deposit.
How can ADS holders withdraw the deposited securities?
You may surrender your ADSs for the purpose
of withdrawal at the depositary’s office. Upon payment of its fees and expenses and of any taxes or governmental charges,
such as stamp taxes or stock transfer taxes or fees, the depositary will deliver the shares and any other deposited securities
underlying the ADSs to the ADS holder or a person the ADS holder designates at the office of the custodian. Or, at your request,
risk and expense, the depositary will deliver the deposited securities at its office, if feasible. The depositary may charge you
a fee and its expenses for instructing the custodian regarding delivery of deposited securities.
How do ADS holders interchange between certificated ADSs
and uncertificated ADSs?
You may surrender your ADR to the depositary
for the purpose of exchanging your ADR for uncertificated ADSs. The depositary will cancel that ADR and will send to the ADS holder
a statement confirming that the ADS holder is the registered holder of uncertificated ADSs. Alternatively, upon receipt by the
depositary of a proper instruction from a registered holder of uncertificated ADSs requesting the exchange of uncertificated ADSs
for certificated ADSs, the depositary will execute and deliver to the ADS holder an ADR evidencing those ADSs.
Voting Rights
How do you vote?
ADS holders may instruct the depositary
how to vote the number of deposited shares their ADSs represent. If we request the depositary to solicit your voting instructions
(and we are not required to do so), the depositary will notify you of a shareholders’ meeting and send or make voting materials
available to you. Those materials will describe the matters to be voted on and explain how ADS holders may instruct the depositary
how to vote. For instructions to be valid, they must reach the depositary by a date set by the depositary. The depositary will
try, as far as practical, subject to the laws of Israel and the provisions of our articles of association or similar documents,
to vote or to have its agents vote the shares or other deposited securities as instructed by ADS holders. If we do not request
the depositary to solicit your voting instructions, you can still send voting instructions, and, in that case, the depositary may
try to vote as you instruct, but it is not required to do so.
Except by instructing the depositary
as described above, you won’t be able to exercise voting rights unless you surrender your ADSs and withdraw the shares. However,
you may not know about the meeting enough in advance to withdraw the shares. In any event, the depositary will not exercise
any discretion in voting deposited securities and it will only vote or attempt to vote as instructed by the holder of the ADSs
or as described in the following sentence. If we asked the depositary to solicit your instructions at least 30 days before
the meeting date but the depositary does not receive voting instructions from you by the specified date, it will consider you to
have authorized and directed it to give a discretionary proxy to a person designated by us to vote the number of deposited securities
represented by your ADSs. The depositary will give a discretionary proxy in those circumstances to vote on all questions
at to be voted upon unless we notify the depositary that:
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we do not wish to receive a discretionary proxy;
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there is substantial shareholder opposition to the particular question; or
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the particular question would have an adverse impact on our shareholders.
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We are required to notify the depositary
if one of the conditions specified above exists.
We cannot assure you that you will receive
the voting materials in time to ensure that you can instruct the depositary to vote your shares. In addition, the depositary and
its agents are not responsible for failing to carry out voting instructions or for the manner of carrying out voting instructions.
This means that you may not be able to exercise voting rights and there may be nothing you can do if your shares are not voted
as you requested.
In order to give you a reasonable opportunity
to instruct the depositary as to the exercise of voting rights relating to deposited securities, if we request the depositary to
act, we agree to give the depositary notice of any such meeting and details concerning the matters to be voted upon at least 30
days in advance of the meeting date.
Fees and Expenses
Persons depositing or withdrawing shares or ADS holders must pay:
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For:
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$5.00 (or less) per 100 ADSs (or portion of 100 ADSs)
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● Issuance of ADSs, including issuances resulting from a distribution of shares or rights or other property
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● Cancellation of ADSs for the purpose of withdrawal, including if the deposit agreement terminates
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$.05 (or less) per ADS
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● Any cash distribution to ADS holders
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A fee equivalent to the fee that would be payable if securities distributed to you had been shares and the shares had been deposited for issuance of ADSs
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● Distribution of securities distributed to holders of deposited securities which are distributed by the depositary to ADS holders
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$.05 (or less) per ADS per calendar year
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● Depositary services
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Registration or transfer fees
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● Transfer and registration of shares on our share register to or from the name of the depositary or its agent when you deposit or withdraw shares
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Expenses of the depositary
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● Cable, telex and facsimile transmissions (when expressly provided in the deposit agreement)
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● converting foreign currency to U.S. dollars
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Taxes and other governmental charges the depositary or the custodian has to pay on any ADSs or shares underlying ADSs, such as stock transfer taxes, stamp duty or withholding taxes
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● As necessary
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Any charges incurred by the depositary or its agents for servicing the deposited securities
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● As necessary
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The depositary collects its fees for delivery
and surrender of ADSs directly from investors depositing shares or surrendering ADSs for the purpose of withdrawal or from intermediaries
acting for them. The depositary collects fees for making distributions to investors by deducting those fees from the amounts distributed
or by selling a portion of distributable property to pay the fees. The depositary may collect its annual fee for depositary services
by deduction from cash distributions or by directly billing investors or by charging the book-entry system accounts of participants
acting for them. The depositary may collect any of its fees by deduction from any cash distribution payable (or by selling a portion
of securities or other property distributable) to ADS holders that are obligated to pay those fees. The depositary may generally
refuse to provide fee-attracting services until its fees for those services are paid.
From time to time, the depositary may make
payments to us to reimburse us for costs and expenses generally arising out of establishment and maintenance of the ADS program,
waive fees and expenses for services provided to us by the depositary or share revenue from the fees collected from ADS holders.
In performing its duties under the deposit agreement, the depositary may use brokers, dealers, foreign currency or other service
providers that are owned by or affiliated with the depositary and that may earn or share fees, spreads or commissions.
The depositary may convert foreign currency
itself or through any of its affiliates and, in those cases, acts as principal for its own account and not as an agent, fiduciary
or broker on behalf of any other person and earns revenue, including, without limitation, fees and spreads that it will retain
for its own account. The spread is the difference between the exchange rate assigned to the currency conversion made under
the deposit agreement and the rate that the depositary or its affiliate receives in an offsetting foreign currency trade. The depositary
makes no representation that the exchange rate used or obtained in any currency conversion under the deposit agreement will be
the most favorable rate that could be obtained at the time or as to the method by which that rate will be determined, subject to
its obligations under the deposit agreement.
Payment of Taxes
You will be responsible for any taxes or
other governmental charges payable on your ADSs or on the deposited securities represented by any of your ADSs. The depositary
may refuse to register any transfer of your ADSs or allow you to withdraw the deposited securities represented by your ADSs until
those taxes or other charges are paid. It may apply payments owed to you or sell deposited securities represented by your ADSs
to pay any taxes owed and you will remain liable for any deficiency. If the depositary sells deposited securities, it will, if
appropriate, reduce the number of ADSs to reflect the sale and pay to ADS holders any proceeds, or send to ADS holders any property,
remaining after it has paid the taxes.
Tender and Exchange Offers; Redemption, Replacement or Cancellation
of Deposited Securities
The depositary will not tender deposited
securities in any voluntary tender or exchange offer unless instructed to do by an ADS holder surrendering ADSs and subject to
any conditions or procedures the depositary may establish.
If deposited securities are redeemed for
cash in a transaction that is mandatory for the depositary as a holder of deposited securities, the depositary will call for surrender
of a corresponding number of ADSs and distribute the net redemption money to the holders of called ADSs upon surrender of those
ADSs.
If there is any change in the deposited
securities such as a sub-division, combination or other reclassification, or any merger, consolidation, recapitalization or reorganization
affecting the issuer of deposited securities in which the depositary receives new securities in exchange for or in lieu of the
old deposited securities, the depositary will hold those replacement securities as deposited securities under the deposit agreement.
However, if the depositary decides it would not be lawful to hold the replacement securities because those securities could not
be distributed to ADS holders or for any other reason, the depositary may instead sell the replacement securities and distribute
the net proceeds upon surrender of the ADSs.
If there is a replacement of the deposited
securities and the depositary will continue to hold the replacement securities, the depositary may distribute new ADSs representing
the new deposited securities or ask you to surrender your outstanding ADRs in exchange for new ADRs identifying the new deposited
securities.
If there are no deposited securities underlying
ADSs, including if the deposited securities are cancelled, or if the deposited securities underlying ADSs have become apparently
worthless, the depositary may call for surrender of those ADSs or cancel those ADSs upon notice to the ADS holders.
Amendment and Termination
How may the deposit agreement be amended?
We may agree with the depositary to amend
the deposit agreement and the ADRs without your consent for any reason. If an amendment adds or increases fees or charges, except
for taxes and other governmental charges or expenses of the depositary for registration fees, facsimile costs, delivery charges
or similar items, or prejudices a substantial right of ADS holders, it will not become effective for outstanding ADSs until 30
days after the depositary notifies ADS holders of the amendment. At the time an amendment becomes effective, you are considered,
by continuing to hold your ADSs, to agree to the amendment and to be bound by the ADRs and the deposit agreement as amended.
How may the deposit agreement be terminated?
The depositary will initiate termination
of the deposit agreement if we instruct it to do so. The depositary may initiate termination of the deposit agreement if:
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60 days have passed since the depositary told us it wants to resign but a successor depositary has not been appointed and accepted its appointment;
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we delist our shares from an exchange on which they were listed and do not list the shares on another exchange;
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we appear to be insolvent or enter insolvency proceedings;
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all or substantially all the value of the deposited securities has been distributed either in cash or in the form of securities;
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there are no deposited securities underlying the ADSs or the underlying deposited securities have become apparently worthless; or
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there has been a replacement of deposited securities.
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If the deposit agreement will terminate,
the depositary will notify ADS holders at least 90 days before the termination date. At any time after the termination date, the
depositary may sell the deposited securities. After that, the depositary will hold the money it received on the sale, as well as
any other cash it is holding under the deposit agreement, unsegregated and without liability for interest, for the pro rata benefit
of the ADS holders that have not surrendered their ADSs. Normally, the depositary will sell as soon as practicable after the termination
date.
After the termination date and before the
depositary sells, ADS holders can still surrender their ADSs and receive delivery of deposited securities, except that the depositary
may refuse to accept a surrender for the purpose of withdrawing deposited securities if it would interfere with the selling process.
The depositary may refuse to accept a surrender for the purpose of withdrawing sale proceeds until all the deposited securities
have been sold. The depositary will continue to collect distributions on deposited securities, but, after the termination
date, the depositary is not required to register any transfer of ADSs or distribute any dividends or other distributions on deposited
securities to the ADSs holder (until they surrender their ADSs) or give any notices or perform any other duties under the deposit
agreement except as described in this paragraph.
Limitations on Obligations and Liability
The deposit agreement expressly limits our
obligations and the obligations of the depositary. It also limits our liability and the liability of the depositary.
We and the depositary:
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are only obligated to take the actions specifically set forth in the deposit agreement without negligence or bad faith;
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are not liable if we are or it is prevented or delayed by law or circumstances beyond our or its control from performing our or its obligations under the deposit agreement;
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are not liable if we or it exercises discretion permitted under the deposit agreement;
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are not liable for the inability of any holder of ADSs to benefit from any distribution on deposited securities that is not made available to holders of ADSs under the terms of the deposit agreement, or for any special, consequential or punitive damages for any breach of the terms of the deposit agreement;
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have no obligation to become involved in a lawsuit or other proceeding related to the ADSs or the deposit agreement on your behalf or on behalf of any other person;
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are not liable for the acts or omissions of any securities depository, clearing agency or settlement system; and
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may rely upon any documents we believe or it believes in good faith to be genuine and to have been signed or presented by the proper person.
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In the deposit agreement, we and the depositary
agree to indemnify each other under certain circumstances.
Requirements for Depositary Actions
Before the depositary will deliver or register
a transfer of ADSs, make a distribution on ADSs, or permit withdrawal of shares, the depositary may require:
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payment of stock transfer or other taxes or other governmental charges and transfer or registration fees charged by third parties for the transfer of any shares or other deposited securities;
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satisfactory proof of the identity and genuineness of any signature or other information it deems necessary; and
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compliance with regulations it may establish, from time to time, consistent with the deposit agreement, including presentation of transfer documents.
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The depositary may refuse to deliver ADSs
or register transfers of ADSs when the transfer books of the depositary or our transfer books are closed or at any time if the
depositary or we think it advisable to do so.
Right
to Receive the Shares Underlying your ADSs
ADS holders have the right to cancel their
ADSs and withdraw the underlying shares at any time except:
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when temporary delays arise because: (i) the depositary has closed its transfer books or we have closed our transfer books; (ii) the transfer of shares is blocked to permit voting at a shareholders’ meeting; or (iii) we are paying a dividend on our shares;
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when you owe money to pay fees, taxes and similar charges; or
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when it is necessary to prohibit withdrawals in order to comply with any laws or governmental regulations that apply to ADSs or to the withdrawal of shares or other deposited securities.
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This right of withdrawal may not be limited
by any other provision of the deposit agreement.
Pre-release of ADSs
The deposit agreement permits the depositary
to deliver ADSs before deposit of the underlying shares. This is called a pre-release of the ADSs. The depositary may also deliver
shares upon cancellation of pre-released ADSs (even if the ADSs are canceled before the pre-release transaction has been closed
out). A pre-release is closed out as soon as the underlying shares are delivered to the depositary. The depositary may receive
ADSs instead of shares to close out a pre-release. The depositary may pre-release ADSs only under the following conditions: (1)
before or at the time of the pre-release, the person to whom the pre-release is being made represents to the depositary in writing
that it or its customer owns the shares or ADSs to be deposited; (2) the pre-release is fully collateralized with cash or other
collateral that the depositary considers appropriate; and (3) the depositary must be able to close out the pre-release on not more
than five business days’ notice. In addition, the number of ADSs that may be outstanding at any time as a result of pre-release
will not normally exceed 30% of the total number of ordinary shares deposited under the deposit agreement, although the depositary
may disregard the limit from time to time if it thinks it is appropriate to do so. The depositary has full discretion as to how
and to what extent it may disregard the limit for the amount of ADSs that may be outstanding at any time as a result of the pre-release.
Direct Registration System
In the deposit agreement, all parties to
the deposit agreement acknowledge that the Direct Registration System, also referred to as DRS, and Profile Modification System,
also referred to as Profile, will apply to the ADSs. DRS is a system administered by DTC that facilitates interchange between registered
holding of uncertificated ADSs and holding of security entitlements in ADSs through DTC and a DTC participant. Profile is a feature
of DRS that allows a DTC participant, claiming to act on behalf of a registered holder of uncertificated ADSs, to direct the depositary
to register a transfer of those ADSs to DTC or its nominee and to deliver those ADSs to the DTC account of that DTC participant
without receipt by the depositary of prior authorization from the ADS holder to register that transfer.
In connection with and in accordance with
the arrangements and procedures relating to DRS/Profile, the parties to the deposit agreement understand that the depositary will
not determine whether the DTC participant that is claiming to be acting on behalf of an ADS holder in requesting registration of
transfer and delivery as described in the paragraph above has the actual authority to act on behalf of the ADS holder (notwithstanding
any requirements under the Uniform Commercial Code). In the deposit agreement, the parties agree that the depositary’s reliance
on and compliance with instructions received by the depositary through the DRS/Profile system and in accordance with the deposit
agreement will not constitute negligence or bad faith on the part of the depositary.
Shareholder Communications; Inspection of Register of Holders
of ADSs
The depositary will make available for your
inspection at its office all communications that it receives from us as a holder of deposited securities that we make generally
available to holders of deposited securities. The depositary will send you copies of those communications or otherwise make those
communications available to you if we ask it to. You have a right to inspect the register of holders of ADSs, but not for the purpose
of contacting those holders about a matter unrelated to our business or the ADSs.
Transfer Agent and Registrar
Our transfer agent and registrar will be
the depositary for our ADSs, Bank of New York Mellon, and its address is 101 Barclay Street, New York, NY.
Listing
Our ADSs are listed on The NASDAQ Capital
Market under the symbol “KTOV.”
2020 WARRANTS
The following summary
of certain terms and provisions of the 2020 warrants that are being offered hereby is not complete and is subject to, and qualified
in its entirety by, the provisions of the 2020 warrants, the form of which is or shall be filed as an exhibit to the registration
statement of which this prospectus forms a part. Prospective investors should carefully review the terms and provisions of the
form of 2020 warrant for a complete description of the terms and conditions of the 2020 warrants.
Duration and Exercise Price
Each 2020 warrant offered
hereby will have an initial exercise price per share equal to $ per ADS. The 2020 warrants will be immediately exercisable and
will expire on the fifth anniversary of the original issuance date. The exercise price and number of ADSs issuable upon exercise
is subject to appropriate adjustment in the event of stock dividends, stock splits, reorganizations or similar events affecting
our ordinary shares and the exercise price. The 2020 warrants will be issued separately from the ADSs, and may be transferred separately
immediately thereafter.
Exercisability
The 2020 warrants
will be exercisable, at the option of each holder, in whole or in part, by delivering a duly executed exercise notice accompanied
by payment in full for the number of ADSs purchased upon such exercise (except in the case of a cashless exercise as discussed
below). Subject to certain limitations and exceptions, a holder (together with its affiliates) may not exercise any portion of
a 2020 warrant to the extent that the holder would beneficially own more than 4.99/9.99% of the outstanding ordinary shares immediately
after exercise of such 2020 warrant, except that upon at least 61 days’ prior notice from the holder to us, the holder may
increase the amount of ownership of outstanding stock after exercising the holder’s 2020 warrants. No fractional ADSs will
be issued in connection with the exercise of a 2020 warrant. In lieu of fractional ADSs, we will pay the holder an amount in cash
equal to the fractional amount multiplied by the exercise price.
Cashless Exercise
If, at the time a holder
exercises its 2020 warrants, a registration statement registering the issuance of the ADSs underlying the 2020 warrants under the
Securities Act is not then effective or available, then in lieu of making the cash payment otherwise contemplated to be made to
us upon such exercise in payment of the aggregate exercise price, the holder may elect instead to receive upon such exercise (either
in whole or in part) the net number of ADSs determined according to a formula set forth in the 2020 warrants.
Fundamental Transaction
If, at any time while
the 2020 warrants are outstanding, (1) we, directly or indirectly, consolidate or merge with or into another person, (2) we, directly
or indirectly, sell, lease, license, assign, transfer, convey or otherwise dispose of all or substantially all of our assets, (3)
any direct or indirect purchase offer, tender offer or exchange offer (whether by us or another person) is completed pursuant to
which holders of our ordinary shares are permitted to sell, tender or exchange their ordinary shares for other securities, cash
or property and has been accepted by the holders of 50% or more of our outstanding shares of ordinary shares, (4) we, directly
or indirectly, effect any reclassification, reorganization or recapitalization of our ordinary shares or any compulsory share exchange
pursuant to which our ordinary shares are converted into or exchanged for other securities, cash or property, or (5) we, directly
or indirectly, consummate a stock or share purchase agreement or other business combination with another person whereby such other
person acquires more than 50% of our outstanding ordinary shares, each, a “Fundamental Transaction”, then upon any
subsequent exercise of the warrants, the holders thereof will have the right to receive the same amount and kind of securities,
cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Transaction if it had been,
immediately prior to such Fundamental Transaction, the holder of the number of ADSs then issuable upon exercise of the 2020 warrant,
and any additional consideration payable as part of the Fundamental Transaction.
Transferability
Subject to applicable
laws, a 2020 warrant may be transferred at the option of the holder upon surrender of the 2020 warrant together with the appropriate
instruments of transfer.
Exchange Listing
There is no trading
market available for the 2020 warrants on any securities exchange or nationally recognized trading system. We do not intend to
list the 2020 warrants on any securities exchange or nationally recognized trading system.
Rights as a Shareholder
Except as otherwise provided in the 2020
warrants or by virtue of such holder’s ownership of ADSs or ordinary shares, a holder of 2020 warrants does not have rights
or privileges of a holder of ADSs or ordinary shares, including any voting rights or dividends, until the holder exercises the
2020 warrants.
MATERIAL TAX CONSIDERATIONS
Taxation
Israeli Tax Considerations
General
The following is a
summary of the material tax consequences under Israeli law concerning the purchase, ownership and disposition of Ordinary Shares
and ADSs of our company.
This discussion does
not purport to constitute a complete analysis of all potential tax consequences applicable to investors upon purchasing, owning
or disposing of Ordinary Shares and ADSs of our company. In particular, this discussion does not take into account the specific
circumstances of any particular investor (such as tax-exempt entities, financial institutions, certain financial companies, broker-dealers,
investors that own, directly or indirectly, 10% or more of our outstanding voting rights, all of whom are subject to special tax
regimes not covered under this discussion). To the extent that issues discussed herein are based on legislation, which has yet
to be subject to judicial or administrative interpretation, there can be no assurance that the views expressed herein will accord
with any such interpretation in the future.
Potential investors
are urged to consult their own tax advisors as to the Israeli or other tax consequences of the purchase, ownership and disposition
of the Ordinary Shares or ADSs being offered hereby, including, in particular, the effect of any foreign, state or local taxes.
General Corporate Tax Structure in
Israel
The Israeli corporate
tax rate applicable to Israeli resident companies is 23%.
Taxation of Shareholders
Capital Gains
Capital gain tax is
imposed on the disposal of capital assets by an Israeli resident and on the disposal of such assets by a non-Israeli resident if
those assets are either (i) located in Israel; (ii) shares or a right to a share in an Israeli resident corporation, or (iii) represent,
directly or indirectly, rights to assets located in Israel, unless an exemption is available or unless an applicable double tax
treaty between Israel and the seller’s country of residence provides otherwise. The Israeli Income Tax Ordinance distinguishes
between “Real Gain” and the “Inflationary Surplus.” Real Gain is the excess of the total capital gain over
Inflationary Surplus computed generally on the basis of the increase in the Israeli Consumer Price Index between the date of purchase
and the date of disposal. Inflationary Surplus is not subject to tax.
Real Capital Gain accrued
by individuals on the sale of the Ordinary Shares or ADSs will be taxed at the rate of 25%. However, if the individual shareholder
is a “Controlling Shareholder” (i.e., a person who holds, directly or indirectly, alone or together with another,
10% or more of one of the Israeli resident company’s means of control) at the time of sale or at any time during the preceding
12-month period, such gain will be taxed at the rate of 30%.
Corporate and individual
shareholders dealing in securities in Israel are taxed at the tax rates applicable to business income which is 23% for corporations,
and a marginal tax rate of up to 47% for individuals.
Notwithstanding the
foregoing, real capital gains generated from the sale of our Ordinary Shares or ADSs by a non-Israeli shareholder may be exempt
from Israeli tax under the Israeli Income Tax Ordinance provided that the following cumulative conditions are met: (i) the Ordinary
Shares or ADSs were purchased upon or after the registration of the Ordinary Shares or ADSs on the stock exchange and (this condition
will not apply to shares purchased on or after January 1, 2009) (ii) the seller does not have a permanent establishment in Israel
to which the generated capital gain is attributed. However, non-Israeli resident corporations will not be entitled to the foregoing
exemption if Israeli residents: (i) hold more than 25% or more means of control in such non-Israeli corporation or (ii) are
the beneficiaries of, or are entitled to, 25% or more of the income or profits of such non-Israeli corporation, whether directly
or indirectly. In addition, such exemption would not be available to a person whose gains from selling or otherwise disposing of
the Ordinary Shares or ADSs are deemed to be business income.
In addition, the sale
of the Ordinary Shares or ADSs may be exempt from Israeli capital gain tax under the provisions of an applicable double tax treaty
(subject to the receipt in advance of a valid certificate from the Israel Tax Authority allowing for such an exemption). For example,
the Convention between the Government of the U.S. and the Government of the State of Israel with respect to Taxes on Income (the
“U.S.- Israel Double Tax Treaty”) exempts a U.S. resident (for purposes of the treaty) from Israeli capital gains tax
in connection with the sale of the Ordinary Shares or ADSs, provided that: (i) the U.S. resident owned, directly or indirectly,
less than 10% of the voting power of the company at any time within the 12 month period preceding such sale; (ii) the U.S. resident,
being an individual, is present in Israel for a period or periods of less than 183 days in the aggregate during the taxable year;
(iii) the capital gain from the sale, exchange or disposition was not derived through a permanent establishment of the U.S. resident;
and (iv) the capital gains arising from such sale, exchange or disposition is not attributed to real estate located in Israel or
a resident in Israel; however, under the U.S-Israel Double Tax Treaty, the taxpayer would be permitted to claim a credit for such
taxes against the U.S. federal income tax imposed with respect to such sale, exchange or disposition, subject to the limitations
under U.S. law applicable to foreign tax credits. The U.S-Israel Double Tax Treaty does not relate to U.S. state or local taxes.
Payers of consideration
for the Ordinary Shares or ADSs, including the purchaser, the Israeli stockbroker or the financial institution through which the
Ordinary Shares or ADSs are held, are obligated, subject to certain exemptions, to withhold tax upon sale of Ordinary Shares or
ADSs from the amount of consideration paid upon the sale of the securities (or on the Real Capital Gain realized on the sale, if
known), at a rate of 25% for an individual or at a rate of corporate tax for a corporation (23% in 2019 and thereafter).
Upon the sale of traded
securities, a detailed return, including a computation of the tax due, must be filed and an advanced payment must be paid to the
Israeli Tax Authority on January 31 and July 31 of every tax year in respect of sales of traded securities made within the previous
six months. However, if all tax due was withheld at source according to applicable provisions of the Israeli Income Tax Ordinance
and regulations promulgated thereunder, such return need not be filed and no advance payment must be paid. Capital gains are also
reportable on annual income tax returns.
Dividends
Dividends distributed
by a company from income, which is not attributed to an Approved Enterprise, a Benefited Enterprise or a Preferred Enterprise as
defined in the Israel’s Encouragement of Capital Investment Law (1959), to a shareholder who is an Israeli resident individual
will be generally subject to income tax at a rate of 25%. However, a 30% tax rate will generally apply if the dividend recipient
is a Controlling Shareholder, as defined above, at the time of distribution or at any time during the preceding 12-month period.
If the recipient of the dividend is an Israeli resident corporation, such dividend will generally not be subject to tax provided
that the income from which such dividend is distributed, derived or accrued within Israel. A distribution of dividend by a company
from income attributed to a Preferred Enterprise will generally be subject to withholding tax in Israel at the following tax rates:
Israeli resident individuals - 20% with respect to dividends distributed as of 2014, or such lower rate as may be provided in an
applicable tax treaty; and Israeli resident companies - 0%. Dividends distributed from income attributed to an Approved Enterprise
and/or a Benefited Enterprise are subject to a tax rate of 15%. If the dividend is attributable partly to income derived from an
Approved Enterprise, Benefited Enterprise or Preferred Enterprise, and partly from other sources of income, the income tax rate
will be a blended rate reflecting the relative portions of the types of income.
Non-Israeli residents
(either an individual or a corporation) are generally subject to Israeli tax on the receipt of dividends at the rate of 25% (30%
if the dividend recipient is a Controlling Shareholder at the time of distribution or at any time during the preceding 12-month
period). Dividends distributed by an Israeli resident company from income, which is attributed to a Preferred Enterprise, to a
non-Israeli resident (either an individual or a corporation) are generally subject to withholding tax at a rate of 20%. These rates
may be reduced under the provisions of an applicable double tax treaty. For example, under the U.S.-Israel Double Tax Treaty, the
following tax rates will apply in respect of dividends distributed by an Israeli resident company to a U.S. resident: (i) if the
U.S. resident is a corporation which holds during that portion of the taxable year which precedes the date of payment of the dividend
and during the whole of its prior taxable year (if any), at least 10% of the outstanding shares of the voting stock of the Israeli
resident paying corporation and not more than 25% of the gross income of the Israeli resident paying corporation for such prior
taxable year (if any) consists of certain types of interest or dividends the tax rate is 12.5%; (ii) if both the conditions mentioned
in clause (i) above are met and the dividend is paid from an Israeli resident company’s income which was entitled to a reduced
tax rate under The Law for the Encouragement of Capital Investments, 1959, the tax rate is 15%; and (iii) in all other cases, the
tax rate is 25%. The aforementioned rates under the U.S.-Israel Double Tax Treaty will not apply if the dividend income is attributed
to a permanent establishment of the U.S. resident in Israel.
A non-Israeli resident who receives dividend
income derived from or accrued from Israel, from which the full amount of tax was withheld at source, is generally exempt from
the obligation to file tax returns in Israel with respect to such income, provided that (i) such income was not generated from
business conducted in Israel by the taxpayer, (ii) the taxpayer has no other taxable sources of income in Israel with respect to
which a tax return is required to be filed and (iii) the taxpayer is not obliged to pay Excess Tax (as described below).
Payers of dividends
on our shares, including the Israeli stockbroker effectuating the transaction, or the financial institution through which the securities
are held, are required, subject to any of the foregoing exemptions, reduced tax rates and the demonstration of a shareholder of
his, her or its foreign residency, to withhold taxes upon the distribution of dividends at a rate of 25%, provided that the shares
are registered with a nominee company (for corporations and individuals).
Excess Tax
Individual holders
who are subject to tax in Israel (whether any such individual is an Israeli resident or non-Israeli resident) and who have taxable
income that exceeds a certain threshold in a tax year (NIS 649,560 for 2019), linked to the Israeli Consumer Price Index), which
is approximately $187,085, based on the representative NIS - U.S. dollar rate of exchange of 3.472 on December 23, 2019), will
be subject to an additional tax at the rate of 3% on his or her taxable income for such tax year that is in excess of such amount.
For this purpose, taxable income includes taxable capital gains from the sale of securities and taxable income from interest and
dividends, subject to the provisions of an applicable double tax treaty.
Estate and Gift Tax
Israeli law presently
does not impose estate or gift taxes.
U.S. Federal Income Tax Considerations
The following is a
description of certain U.S. federal income tax consequences relating to the acquisition, ownership and disposition of our ADSs
and warrants by a holder. This description addresses only the U.S. federal income tax consequences to holders that are initial
purchasers of our ADSs and warrants pursuant to this offering and that will hold such ADSs and warrants as capital assets. This
description does not address tax considerations applicable to holders that may be subject to special tax rules, including, without
limitation:
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banks, financial institutions or insurance companies;
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real estate investment trusts, regulated investment companies or grantor trusts;
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dealers or traders in securities, commodities or currencies;
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tax exempt entities or organizations;
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certain former citizens or residents of the United States;
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persons that received our ADSs or warrants as compensation for the performance of services;
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persons
that will hold our ADSs or warrants as part of a “hedging,” “integrated”
or “conversion” transaction or as a position in a “straddle”
for U.S. federal income tax purposes;
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partnerships
(including entities classified as partnerships for U.S. federal income tax purposes) or other pass- through entities, or holders
that will hold our ADSs or warrants through such an entity;
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U.S.
Holders (as defined below) whose “functional currency” is not the U.S. dollar; or
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holders
that own directly, indirectly or through attribution 10% or more of the voting power or value of our shares.
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Moreover,
this description does not address the U.S. federal estate, gift, or alternative minimum tax consequences, or any U.S. state, local
or non-U.S. tax consequences of the acquisition, ownership and disposition of our ADSs and warrants.
This
description is based on the U.S. Internal Revenue Code of 1986, as amended, or the Code, existing, proposed and temporary U.S.
Treasury Regulations promulgated thereunder and administrative and judicial interpretations thereof, in each case as in effect
and available on the date hereof. All the foregoing is subject to change, which change could apply retroactively and could affect
the tax consequences described below. There can be no assurances that the U.S. Internal Revenue Service, or IRS, will not take
a different position concerning the tax consequences of the acquisition, ownership and disposition of our ADSs and warrants or
that such a position would not be sustained. Holders should consult their own tax advisers concerning the U.S. federal, state,
local and foreign tax consequences of acquiring, owning and disposing of our ADSs and warrants in their particular circumstances.
For
purposes of this description, the term “U.S. Holder” means a beneficial owner of our ADSs or warrants that, for U.S.
federal income tax purposes, is (i) a citizen or resident of the United States, (ii) a corporation (or entity treated as a corporation
for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof, or the
District of Columbia, (iii) an estate the income of which is subject to U.S. federal income tax regardless of its source or (iv)
a trust (x) with respect to which a court within the United States is able to exercise primary supervision over its administration
and one or more U.S. persons have the authority to control all of its substantial decisions or (y) that has elected to be treated
as a domestic trust for U.S. federal income tax purposes.
A
“Non-U.S. Holder” is a beneficial owner of our ADSs or warrants that is neither a U.S. Holder nor a partnership (or
other entity treated as a partnership for U.S. federal income tax purposes).
If
a partnership (or any other entity treated as a partnership for U.S. federal income tax purposes) holds our ADSs and warrants,
the U.S. federal income tax consequences relating to an investment in our ADSs and warrants will depend in part upon the status
of the partner and the activities of the partnership. Such a partner or partnership should consult its tax advisor regarding the
U.S. federal income tax consequences of acquiring, owning and disposing of our ADSs and warrants in its particular circumstances.
Persons
considering an investment in our ADSs or warrants should consult their own tax advisors as to the particular tax consequences
applicable to them relating to the acquisition, ownership and disposition of our ADSs and warrants, including the applicability
of U.S. federal, state and local tax laws and non-U.S. tax laws.
Tax Basis of each
ADS and Warrant
The ADSs will be sold
together with_________ accompanying warrant(s). The initial tax basis of a beneficial owner in each ADS will be equal to the
amount paid for the ADS less the fair market value of their accompanying warrant(s). The initial basis in the accompanying warrant(s)
will equal the initial fair market value of the warrant(s).
Exchange
of ADSs for Ordinary Shares
In
general, if you hold ADSs, you will be treated as the holder of the underlying ordinary shares represented by those ADSs for U.S.
federal income tax purposes. Accordingly, gain or loss generally will not be recognized if you exchange ADSs for the underlying
ordinary shares represented by those ADSs. In addition, you will receive a basis in your ordinary shares equal to the basis of
your ADSs exchanged for such shares.
Taxation
of Dividends and Other Distributions on Our ADSs
Subject
to the discussion below under “Passive Foreign Investment Company Consequences,” if you are a U.S. Holder, the gross
amount of any distribution made to you with respect to our ADSs before reduction for any Israeli taxes withheld therefrom, generally
will be includible in your income as dividend income to the extent such distribution is paid out of our current or accumulated
earnings and profits as determined under U.S. federal income tax principles. Non-corporate U.S. Holders may qualify for the lower
rates of taxation with respect to dividends on ADSs applicable to “qualified dividends,” provided that certain conditions
are met, including certain holding period requirements and the absence of certain risk reduction transactions. Such lower rate
of taxation shall not apply if we are a PFIC for the taxable year in which we pay a dividend. Moreover, such dividends will not
be eligible for the dividends received deduction generally allowed to corporate U.S. Holders irrespective of PFIC status. To the
extent that the amount of any distribution by us exceeds our current and accumulated earnings and profits as determined under
U.S. federal income tax principles, it will be treated first as a tax-free return of your adjusted tax basis in our ADSs and thereafter
as either long-term or short-term capital gain depending upon whether the U.S. Holder has held our ADSs for more than one year
as of the time such distribution is received.
If
you are a U.S. Holder, dividends paid to you with respect to our ADSs will be foreign source income for foreign tax credit purposes.
Subject to certain conditions and limitations, Israeli tax withheld on dividends may be deducted from your taxable income or credited
against your U.S. federal income tax liability. The limitation on foreign taxes eligible for credit is calculated separately with
respect to specific classes of income. For this purpose, dividends generally constitute “passive category income.”
A foreign tax credit for foreign taxes imposed on distributions may be denied if you do not satisfy certain minimum holding period
requirements. The rules relating to the determination of the foreign tax credit are complex, and you should consult your tax advisor
to determine whether and to what extent you will be entitled to this credit.
The
amount of a distribution paid to a U.S. Holder in a foreign currency will be the dollar value of the foreign currency calculated
by reference to the spot exchange rate on the day the U.S. Holder receives the distribution, regardless of whether the foreign
currency is converted into U.S. dollars at that time. Any foreign currency gain or loss a U.S. Holder realizes on a subsequent
conversion of foreign currency into U.S. dollars will be U.S. source ordinary income or loss. If dividends received in foreign
currency are converted into U.S. dollars on the day they are received, a U.S. Holder generally should not be required to recognize
foreign currency gain or loss in respect of the dividend.
Subject
to the discussion below under “Backup Withholding Tax and Information Reporting Requirements,” if you are a Non-U.S.
Holder, you generally will not be subject to U.S. federal income (or withholding) tax on dividends received by you on your ADSs,
unless:
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you
conduct a trade or business in the U.S. and such income is effectively connected with that trade or business (and, if required
by an applicable income tax treaty, the dividends are attributable to a permanent establishment or fixed base that such holder
maintains in the U.S.); or
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you
are an individual and have been present in the U.S. for 183 days or more in the taxable year of such sale or exchange and
certain other conditions are met.
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Sale,
Exchange or Other Disposition of Our ADSs and Warrants
Subject to the discussion
below under “Passive Foreign Investment Company Consequences,” if you are a U.S. Holder, you generally will recognize
gain or loss on the sale, exchange or other disposition of our ADSs or warrants equal to the difference between the amount realized
on such sale, exchange or other disposition and your adjusted tax basis in our ADSs or warrants, as applicable, and such gain
or loss will be capital gain or loss. The adjusted tax basis in an ADS or warrant generally will be initially determined as described
above in “Tax Basis of each ADS and Warrant.” If you are a non-corporate U.S. Holder, capital gain from the sale,
exchange or other disposition of an ADS or warrant is generally eligible for a preferential rate of taxation applicable to capital
gains, if your holding period determined at the time of such sale, exchange or other disposition for such ADS or warrant exceeds
one year (i.e., such gain is long-term capital gain). The deductibility of capital losses is subject to limitations. Any such
gain or loss generally will be treated as U.S. source income or loss for foreign tax credit limitation purposes. A foreign tax
credit for foreign taxes imposed on capital gains may be denied if you do not satisfy certain minimum holding period requirements.
The rules relating to the determination of the foreign tax credit are complex, and it is possible that the ability of a U.S. Holder
to claim a foreign tax credit for any such Israeli tax will be limited. You should consult your tax advisor to determine whether,
and to what extent, you will be entitled to this credit.
Subject
to the discussion below under “Backup Withholding Tax and Information Reporting Requirements,” if you are a Non-U.S.
Holder, you generally will not be subject to U.S. federal income or withholding tax on any gain realized on the sale or exchange
of such ADSs or warrants unless:
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such
gain is effectively connected with your conduct of a trade or business in the United States (and, if required by an applicable
income tax treaty, the gain is attributable to a permanent establishment or fixed base that you maintain in the United States);
or
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you
are an individual and have been present in the United States for 183 days or more in the taxable year of such sale or exchange
and certain other conditions are met.
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Exercise
of a Warrant
The
exercise of a warrant for ADSs generally will not be a taxable event for the exercising U.S. Holder. A U.S. Holder will have a
tax basis in the ADSs received on exercise of a warrant equal to the sum of the U.S. Holder’s tax basis in the warrant surrendered,
reduced by any portion of the basis allocable to a fractional share, plus the exercise price of the warrant. A U.S. Holder generally
will have a holding period in ADSs acquired on exercise of a warrant that commences on the date of exercise of the warrant.
Passive
Foreign Investment Company Consequences
We
may be classified as a Passive Foreign Investment Company (PFIC) for the 2020 tax year. If we are indeed so classified for 2020
or in any other taxable year, a U.S. Holder would be subject to special rules generally intended to reduce or eliminate any benefits
from the deferral of U.S. federal income tax that a U.S. Holder could derive from investing in a non-U.S. company that does not
distribute all of its earnings on a current basis.
A
non-U.S. corporation will be classified as a PFIC for federal income tax purposes in any taxable year in which, after applying
certain look-through rules with respect to the income and assets of subsidiaries, either:
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at
least 75% of its gross income is “passive income”; or
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at
least 50% of the average quarterly value of its total gross assets (which may be determined in part by the market value of
our ADSs, which is subject to change) is attributable to assets that produce “passive income” or are held for
the production of passive income.
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Section 1298(a)(4) of
the Code provides that to the extent provided in regulations, if any person has an option to acquire stock in a PFIC, such stock
shall be considered as owned by such person. Certain proposed regulations provide rules for treatment of options to acquire stock
in a PFIC. It is not currently known if, when or the extent to which such proposed regulations will be finalized and become effective.
The discussion below assumes that regulations relating to options to acquire PFIC stock will become effective and would apply
to the warrants. Each prospective investor is urged to consult with its own tax advisor about the tax consequences of holding
warrants if we are classified as a PFIC.
Passive
income for this purpose generally includes dividends, interest, royalties, rents, gains from commodities and securities transactions,
the excess of gains over losses from the disposition of assets which produce passive income, and includes amounts derived by reason
of the temporary investment of funds raised in offerings of our ADSs and warrants. If a non-U.S. corporation owns at least 25%
by value of the stock of another corporation, the non-U.S. corporation is treated for purposes of the PFIC tests as owning its
proportionate share of the assets of the other corporation and as receiving directly its proportionate share of the other corporation’s
income. If we are classified as a PFIC in any year with respect to which a U.S. Holder owns our ADSs or warrants, we will generally
continue to be treated as a PFIC with respect to such U.S. Holder in all succeeding years during which the U.S. Holder owns our
ADSs or warrants, regardless of whether we continue to meet the tests described above.
Our
PFIC status determination is based on our income, assets and activities for the entire taxable year and therefore it is not possible
to determine whether we will be characterized as a PFIC for the 2019 taxable year until after the close of the year. In addition,
our status as a PFIC may depend on how quickly we utilize the cash proceeds from this offering in our business, which we cannot
currently determine with certainty.
If we are indeed properly
classified as a PFIC, and you are a U.S. Holder, then unless you make one of the elections described below, a special tax regime
will apply to both (a) any “excess distribution” by us to you (generally, your ratable portion of distributions in
any year which are greater than 125% of the average annual distribution received by you in the shorter of the three preceding years
or your holding period for our ADSs) and (b) any gain realized on the sale or other disposition of the ADSs or warrants. Under
this regime, any excess distribution and realized gain will be treated as ordinary income and will be subject to tax as if (i)
the excess distribution or gain had been realized ratably over your holding period, (ii) the amount deemed realized in each year
had been subject to tax in each year of that holding period at the highest marginal rate for such year (other than income allocated
to the current period or any taxable period before we became a PFIC, which would be subject to tax, at the U.S. Holder’s
regular ordinary income rate for the current year and would not be subject to the interest charge discussed below), and (iii) the
interest charge generally applicable to underpayments of tax had been imposed on the taxes deemed to have been payable in those
years. In addition, dividend distributions made to you will not qualify for the lower rates of taxation applicable to long-term
capital gains discussed above under “Distributions.” Certain elections may be available that would result in an alternative
treatment (such as mark-to-market treatment) of our ADSs or warrants.
If a U.S. Holder makes
the mark-to-market election, then, in lieu of being subject to the tax and interest charge rules discussed above, the U.S. Holder
generally will recognize as ordinary income any excess of the fair market value of the ADSs at the end of each taxable year over
their adjusted tax basis, and will recognize an ordinary loss in respect of any excess of the adjusted tax basis of the ADSs over
their fair market value at the end of the taxable year (but only to the extent of the net amount of income previously included
as a result of the mark-to-market election). If a U.S. Holder makes the election, the U.S. Holder’s tax basis in its ADSs
will be adjusted to reflect these income or loss amounts. Any gain recognized on the sale or other disposition of ADSs in a year
when we are a PFIC will be treated as ordinary income and any loss will be treated as an ordinary loss (but only to the extent
of the net amount of income previously included as a result of the mark-to-market election).
The mark-to-market election
is available only if we are a PFIC and our ADSs are “regularly traded” on a “qualified exchange.” Our
ADSs will be treated as “regularly traded” in any calendar year in which more than a de minimis quantity of our ADSs
are traded on a qualified exchange on at least 15 days during each calendar quarter. NASDAQ is a qualified exchange for this purpose.
Because a mark-to-market election cannot be made for any lower-tier PFICs that we may own, a U.S. Holder may continue to be subject
to the tax and interest charge rules discussed above with respect to such holder’s indirect interest in any investments
held by us that are treated as an equity interest in a PFIC for U.S. federal income tax purposes, including stock in any of our
subsidiaries that are treated as PFICs. If a U.S. Holder makes a mark-to-market election, it will be effective for the taxable
year for which the election is made and all subsequent taxable years unless our ADSs are no longer regularly traded on a qualified
exchange or the IRS consents to the revocation of the election.
We
do not intend to provide the information necessary for U.S. Holders to make qualified electing fund elections if we are classified
as a PFIC. U.S. Holders should consult their tax advisors to determine whether any of these elections would be available and if
so, what the consequences of the alternative treatments would be in their particular circumstances.
If
we are determined to be a PFIC, the general tax treatment for U.S. Holders described in this section would apply to indirect distributions
and gains deemed to be realized by U.S. Holders in respect of any of our subsidiaries that also may be determined to be PFICs.
A
U.S. Holder who owns ADSs during any year in which we are a PFIC, will be required to file an IRS Form 8621 (Information Return
by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund) with respect to us, generally with the U.S.
Holder’s federal income tax return for that year.
U.S.
Holders should consult their tax advisors regarding application of the PFIC rules.
Medicare
Tax
Certain U.S. Holders that
are individuals, estates or trusts are subject to a 3.8% tax on all or a portion of their “net investment income,”
which may apply to all or a portion of the following items with respect to ADSs and warrants: dividend or other distributions,
gains from dispositions and “excess distributions” and income from “mark-to-market” elections under the
PFIC rules, if applicable. Each U.S. Holder that is an individual, estate or trust is urged to consult its tax advisors regarding
the applicability of the Medicare tax to its income and gains in respect of its investment in our ADSs and warrants.
Backup
Withholding Tax and Information Reporting Requirements
U.S.
backup withholding tax and information reporting requirements may apply to certain payments to certain holders of our ADSs and
warrants. Information reporting generally will apply to payments of dividends on our ADSs, and to proceeds from the sale or redemption
of our ADSs and warrants made within the United States, or by a U.S. payer or U.S. middleman, to a holder of our ADSs and warrants,
other than an exempt recipient (including a payee that is not a U.S. person that provides an appropriate certification and certain
other persons). A payer may be required to withhold backup withholding tax from any payments of dividends on our ADSs, or the
proceeds from the sale or redemption of our ADSs and warrants within the United States, or by a U.S. payer or U.S. middleman,
to a holder, other than an exempt recipient, if such holder fails to furnish its correct taxpayer identification number or otherwise
fails to comply with, or establish an exemption from, such backup withholding tax requirements. Any amounts withheld under the
backup withholding rules will be allowed as a credit against the beneficial owner’s U.S. federal income tax liability, if
any, and any excess amounts withheld under the backup withholding rules may be refunded, provided that the required information
is timely furnished to the IRS.
Foreign
Asset Reporting
Certain
U.S. Holders who are individuals are required to report information relating to an interest in our ADSs, subject to certain exceptions
(including an exception for shares held in accounts maintained by financial institutions) by filing IRS Form 8938 (Statement of
Specified Foreign Financial Assets) with their federal income tax return. U.S. Holders are urged to consult their tax advisors
regarding their information reporting obligations, if any, with respect to their ownership and disposition of our ADSs and warrants.
Foreign
Account Tax Compliance Act
FATCA
imposes withholding tax on certain types of payments made to foreign financial institutions and certain other non-U.S.
entities. The legislation imposes a 30% withholding tax on dividends on, or, subject to the discussion of certain proposed
Treasury Regulations below, gross proceeds from the sale or other disposition of, our ADSs and warrants paid to a
“foreign financial institution” or to certain “non-financial foreign entities” (each as defined in
the Code), unless (i) the foreign financial institution undertakes certain diligence and reporting obligations, (ii) the
non-financial foreign entity either certifies it does not have any “substantial United States owners” (as defined
in the Code) or furnishes identifying information regarding each substantial United States owner, or (iii) the foreign
financial institution or non-financial foreign entity otherwise qualifies for an exemption from these rules. If the payee is
a foreign financial institution and is subject to the diligence and reporting requirements in (i) above, it must enter into
an agreement with the U.S. Treasury requiring, among other things, that it undertake to identify accounts held by
“specified United States persons” or “United States-owned foreign entities” (each as defined in the
Code), annually report certain information about such accounts, and withhold 30% on payments to account holders whose actions
prevent it from complying with these reporting and other requirements. If the country in which a payee is resident has
entered into an “intergovernmental agreement” with the United States regarding FATCA, that agreement may permit
the payee to report to that country rather than to the U.S. Department of the Treasury. The U.S. Treasury recently released
proposed Treasury Regulations which, if finalized in their present form, would eliminate the federal withholding tax of 30%
applicable to the gross proceeds of a sale or other disposition of our common stock or warrants. In its preamble to such proposed
Treasury Regulations, the U.S. Treasury stated that taxpayers may generally rely on the proposed regulations until final
regulations are issued. Prospective investors should consult their own tax advisors regarding the possible impact of these
rules on their investment in our ADSs and warrants, and the possible impact of these rules on the entities through which they
hold our ADSs and warrants, including, without limitation, the process and deadlines for meeting the applicable requirements
to prevent the imposition of this 30% withholding tax under FATCA.
THE
DISCUSSION ABOVE IS A GENERAL SUMMARY. IT DOES NOT COVER ALL TAX MATTERS THAT MAY BE OF IMPORTANCE TO A PROSPECTIVE INVESTOR.
EACH PROSPECTIVE INVESTOR IS URGED TO CONSULT ITS OWN TAX ADVISOR ABOUT THE TAX CONSEQUENCES TO IT OF AN INVESTMENT IN OUR ADSs
IN LIGHT OF THE INVESTOR’S OWN CIRCUMSTANCES.
EXPENSES
RELATED TO OFFERING
The
following table sets forth the costs and expenses, other than placement agent fees, payable by us in connection with the offer
and sale of the securities in this offering. All amounts listed below are estimates except the SEC registration fee, NASDAQ listing
fee and the Financial Industry Regulatory Authority, Inc., or FINRA, filing fee.
Itemized
expense
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Amount
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SEC
registration fee
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$
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FINRA
filing fee
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NASDAQ
Capital Market supplemental listing fee
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Printing
and engraving expenses
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Legal
fees and expenses
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Transfer
agent and registrar fees
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Accounting
fees and expenses
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Miscellaneous
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Total
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$
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PLAN
OF DISTRIBUTION
We
engaged Chardan Capital Markets, LLC (or the “placement agent”) to act as our exclusive placement agent to solicit
offers to purchase the securities offered by this prospectus. The placement agent is not purchasing or selling any securities,
nor are they required to arrange for the purchase and sale of any specific number or dollar amount of securities, other than to
use their “reasonable best efforts” to arrange for the sale of securities by us. Therefore, we may not sell the entire
amount of shares being offered. We may enter into a securities purchase agreement directly with certain institutional investors
who purchase our securities in this offering. We will not enter into securities purchase agreements with all other investors and
such investors shall rely solely on this prospectus in connection with the purchase of our securities in this offering.
Upon
the closing of this offering, we will pay the placement agent a cash transaction fee equal to between 6.0% and 7.0% of the gross
proceeds to us from the sale of the securities in the offering (excluding any proceeds from the exercise of the warrants issued
in the offering) based on the total gross proceeds to us from the sale of the securities in the offering (excluding any proceeds
from the exercise of the warrants issued in the offering). We will also issue to the placement agent a warrant as outlined below.
We have also agreed
to pay all expenses relating to the offering, including (a) all filing fees and expenses relating to the registration of the ADSs
to be sold in the offering with the Commission; (b) all fees associated with the review of the offering by FINRA and all fees and
expenses relating to the listing of such ADSs on NASDAQ; (c) all fees, expenses and disbursements relating to the registration,
qualification or exemption of securities offered under the “blue sky” securities laws designated by the placement agent;
(d) all fees, expenses and disbursements relating to the registration, qualification or exemption of securities offered under the
securities laws of foreign jurisdictions designated by the placement agent; (e) transfer and/or stamp taxes, if any, payable upon
the transfer of the ordinary shares from the Company to the placement agent; (f) fees and expenses of our legal counsel and accountants;
and (g) “road show” expenses, diligence fees and the fees and expenses of the placement agent’s legal counsel
not to exceed $175,000.
We estimate the total
expenses of this offering, which will be payable by us, excluding the placement agent fees, will be approximately $_________. After
deducting the fees due to the placement agent and our estimated offering expenses, we expect the net proceeds from this offering
to be approximately $_________ million.
In addition, we have
agreed to issue to the placement agent warrants, or the placement agent warrants, to purchase a number of ADSs equal to_________ %
of the number of ADSs sold in this offering (excluding any ADSs underlying the 2020 warrants issued in this offering). The placement
agent warrants will have an exercise price of $_________ (_________% of the per ADS equivalent paid by the investors in this offering)
and will terminate on the anniversary of the effective date of the registration statement of which this prospectus is a part. Pursuant
to FINRA Rule 5110(g), the placement agent warrants and any ADSs issued upon exercise of the placement agent warrants shall not
be sold, transferred, assigned, pledged, or hypothecated, or be the subject of any hedging, short sale, derivative, put, or call
transaction that would result in the effective economic disposition of the securities by any person for a period of 180 days immediately
following the effective date of the registration statement of which this prospectus is a part or commencement of sales of this
offering, except the transfer of any security:
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by
operation of law or by reason of reorganization of our company;
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to
any FINRA member firm participating in the offering and the officers or partners thereof, if all securities so transferred
remain subject to the lock-up restriction set forth above for the remainder of the time period;
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if
the aggregate amount of securities of our company held by the holder of the placement agent warrants or related persons do
not exceed 1% of the securities being offered;
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that
is beneficially owned on a pro-rata basis by all equity owners of an investment fund, provided that no participating member
manages or otherwise directs investments by the fund, and participating members in the aggregate do not own more than 10%
of the equity in the fund; or
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the
exercise or conversion of any security, if all securities received remain subject to the lock-up restriction set forth above
for the remainder of the time period.
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The placement agent
may be deemed an underwriter within the meaning of Section 2(a)(11) of the Securities Act and any fees received by it and any profit
realized on the sale of the securities by it while acting as principal might be deemed to be underwriting discounts or commissions
under the Securities Act. The placement agent will be required to comply with the requirements of the Securities Act and the Exchange
Act of 1934, as amended (the “Exchange Act”), including, without limitation, Regulation M under the Exchange Act. These
rules and regulations may limit the timing of purchases and sales of our securities by the placement agent. Under these rules and
regulations, the placement agent may not (i) engage in any stabilization activity in connection with our securities; and (ii) bid
for or purchase any of our securities or attempt to induce any person to purchase any of our securities, other than as permitted
under the Exchange Act, until they have completed their participation in the distribution.
Other
Relationships
The
placement agent may, from time to time, engage in transactions with or perform services for us in the ordinary course of its business
and may continue to receive compensation from us for such services, but we have no present agreements with the placement agent
to do so.
Determination
of offering price
The
public offering price of the units offered hereby was negotiated between us and the investors, in consultation with the placement
agent, and other advisors to us, based on the trading of our common stock prior to the offering, among other things. Other factors
considered in determining the public offering price of the units offered hereby include our history and prospects, the stage of
development of our business, our business plans for the future and the extent to which they have been implemented, an assessment
of our management, general conditions of the securities markets at the time of the offering and such other factors as were deemed
relevant.
Lock-up
Agreements
Our officers and directors
who are holders of our securities at the time of the offering, are expected, at the time of the offering, to enter into agreements
with the placement agent to be subject to a lock-up period of 90 days following the date of closing of this offering. This
means that, during the applicable lock-up period following the closing of the offering, such persons may not offer for sale, contract
to sell, sell, distribute, grant any option, right to warrant to purchase, pledge, hypothecate or otherwise dispose of, directly
or indirectly, any shares of our common stock or any securities convertible into, or exercisable or exchangeable for, shares of
our common stock. Certain limited transfers are permitted during the lock-up period if the transferee agrees to these lock-up
restrictions. We have also agreed, in the placement agent agreement, to similar lock-up restrictions on the issuance and sale
of our securities for 90 days following the date of this prospectus, although we will be permitted to issue equity-based incentive
compensation to directors, officers, employees and consultants under our existing plans, as well as securities to be issued under
any previously contracted arrangements. The placement agent may, in its sole discretion and without notice, waive the terms of
any of these lock-up agreements.
Tail
If prior to_________ ,
2020, we complete any public or private offering or other financing or capital-raising transaction of any kind to the extent that
such financing or capital is provided to us by investors whom the placement agent has introduced, directly or indirectly, to us,
subject to certain requirements, then we will pay to the placement agent upon the closing of such offering, financing or transaction
a fee of between 6.0% and 7.0% of the gross proceeds of such offering, financing or transaction based on the amount of the gross
proceeds received by us in such offering, financing or transaction.
Indemnification
We
have agreed to indemnify the placement agent against certain liabilities, including liabilities under the Securities Act, and
to contribute to payments that the placement agent may be required to make for these liabilities.
Offer
Restrictions Outside the United States
Other
than in the United States, no action has been taken by us or the placement agent that would permit a public offering of the securities
offered by this prospectus in any jurisdiction where action for that purpose is required. The securities offered by this prospectus
may not be offered or sold, directly or indirectly, nor may this prospectus or any other offering material or advertisements in
connection with the offer and sale of any such securities be distributed or published in any jurisdiction, except under circumstances
that will result in compliance with the applicable rules and regulations of that jurisdiction. Persons into whose possession this
prospectus comes are advised to inform themselves about and to observe any restrictions relating to the offering and the distribution
of this prospectus. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities offered
by this prospectus in any jurisdiction in which such an offer or a solicitation is unlawful.
European
Economic Area — Belgium, Germany, Luxembourg and Netherlands
The
information in this document has been prepared on the basis that all offers of securities will be made pursuant to an exemption
under the Directive 2003/71/EC (“Prospectus Directive”), as implemented in Member States of the European Economic
Area (each, a “Relevant Member State”), from the requirement to produce a prospectus for offers of securities.
An
offer to the public of securities has not been made, and may not be made, in a Relevant Member State except pursuant to one of
the following exemptions under the Prospectus Directive as implemented in that Relevant Member State:
(a)
to legal entities that are authorized or regulated to operate in the financial markets or, if not so authorized or regulated,
whose corporate purpose is solely to invest in securities;
(b)
to any legal entity that has two or more of (i) an average of at least 250 employees during its last fiscal year; (ii) a total
balance sheet of more than €€43,000,000 (as shown on its last annual unconsolidated or consolidated financial statements)
and (iii) an annual net turnover of more than €€50,000,000 (as shown on its last annual unconsolidated or consolidated
financial statements);
(c)
to fewer than 100 natural or legal persons (other than qualified investors within the meaning of Article 2(1)(e) of the Prospectus
Directive) subject to obtaining the prior consent of the Company or any underwriter for any such offer; or
(d)
in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of securities
shall result in a requirement for the publication by the Company of a prospectus pursuant to Article 3 of the Prospectus Directive.
Israel
In
the State of Israel, the securities offered hereby may not be offered to any person or entity other than the following who are
deemed Classified Investors pursuant to the Securities Law, 5728-1968:
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a
fund for joint investments in trust, i.e., mutual fund, as such term is defined in the Law for Joint Investments in Trust,
5754-1994, or a management company of such a fund;
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a
provident fund as defined in the Control of the Financial Services (Provident Funds) Law 5765-2005, or a management company
of such a fund;
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an
insurer, as defined in the Law for Oversight of Insurance Transactions, 5741-1981;
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a
banking entity or satellite entity, as such terms are defined in the Banking Law (Licensing), 5741-1981, other than a joint
services company, acting for its own account or for the account of investors of the type listed in Section 15A(b) of the Securities
Law, 1968;
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a
company that is licensed as a portfolio manager, as such term is defined in Section 8(b) of the Law for the Regulation of
Investment Advisors and Portfolio Managers, 5755-1995, acting on its own account or for the account of investors of the type
listed in Section 15A(b) of the Securities Law, 5728-1968;
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an
investment advisor or investment distributer, as such term is defined in Section 7(c) of the Law for the Regulation of Investment
Advisors and Portfolio Managers, 5755-1995, acting on its own account;
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a
member of the Tel Aviv Stock Exchange, acting on its own account or for the account of investors of the type listed in Section
15A(b) of the Securities Law, 5728-1968;
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an
underwriter fulfilling the conditions of Section 56(c) of the Securities Law, 5728-1968, acting on its own account;
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venture
capital fund, defined as an entity primarily involved in investments in companies which, at the time of investment, (i) are
primarily engaged in research and development or manufacture of new technological products or processes and (ii) involve above-average
risk;
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entity
fully owned by investors of the type listed in Section 15A(b) of the Securities Law, 5728-1968;
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an
entity, other than an entity formed for the purpose of purchasing securities in this offering, in which the shareholders’
equity is in excess of NIS 50 million; and
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an
individual who meets at least one of three following criteria:
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1)
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the
total value of the individual’s liquid assets exceeds NIS 8 million (currently approximately USD 2 million); the term
“liquid assets” is defined as cash, deposits, financial assets (units or shares in registered funds, options,
futures contracts, structures and professional training funds), and traded securities.
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2)
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The
individual’s income in each of the last two years exceeds NIS 1.2 million (currently approximately USD 308 thousand)
or the income of the individual’s family unit exceeds NIS 1.8 million (currently approximately USD 462 thousand); the
term “family unit” is defined in an individual and his/her family members who live with him or whose livelihoods
are dependent on each other. or
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3)
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the
total value of the individual’s liquid assets exceeds NIS 5 million (currently approximately USD 1.3 million) and either
the individual’s income in each of the last two years exceeds NIS 600,000 (currently approximately USD 154 thousand)
or such income of the individual’s family unit exceeds NIS 900,000 (currently approximately USD 231 thousand).
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and
the company is able to verify compliance of an individual with the eligibility criteria above as of the date of the sale of the
securities either by:
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i.
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obtaining
written approval of an accountant, lawyer, or in appropriate circumstances other external body, which the Company has reasonable
grounds to rely on, certifying that it took reasonable measures (apart from the individual’s declaration) to verify that
the individual complies with the criteria, and specifying those measures; or
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ii.
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carrying
out the examination of the individual’s compliance independently, while relying on external evidence and information
presented to it by the individual.
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Offerees
of the securities offered hereby, or the “Classified Investors,” in the State of Israel shall be required to submit
written confirmation that as of the date of any offer of securities, and as of the date of the sale of any securities, they fall
within the scope of one of the above criteria, that they are fully aware of the significance of being an Investor pursuant to
such criteria and that they have given their consent, or the Consent. An approach to an Investor for the Consent shall not be
considered a public offering. This prospectus will not be distributed or directed to investors in the State of Israel who do not
fall within one of the above criteria.
In
addition, if a purchase of securities is made within an institutional trading system, as that term is defined in the Tel Aviv
Stock Exchange regulations, a person giving a stock exchange member his prior Consent before submitting a purchase order to the
institutional trading system for the first time will be seen as acting within the provisions the above criteria with respect to
the Consent, provided that if such person is an investor pursuant to the sixth, ninth, tenth, eleventh or twelfth bullet points
specified above, such person committed in advance that, until the last business day of the third month in each year, he will renew
his Consent, and that if he withdraws his Consent, he will notify the stock exchange member immediately and will cease to give
purchase orders in such institutional trading institution.
The
securities offered by this prospectus have not been approved or disapproved by the Israeli Securities Authority, or the ISA, nor
have such securities been registered for sale in Israel. The shares may not be offered or sold, directly or indirectly, to the
public in Israel, absent the publication of a prospectus. The ISA has not issued permits, approvals, licenses or no-action letters
in connection with the offering or publishing the prospectus; nor has it authenticated the details included herein, confirmed
their reliability or completeness, or rendered an opinion as to the quality of the securities being offered. Any resale in Israel,
directly or indirectly, to the public of the securities offered by this prospectus is subject to restrictions on transferability,
including the resale restrictions e forth under Section 15C of the Israel Securities Law and Section 5 of the Israeli Securities
Regulations (Details Regarding Sections 15A-15C of the Securities Law-1968) – 2000, and must be effected only in compliance
with the Israeli securities laws and regulations. In March 2015, the ISA issued a no-action letter stating that under certain
circumstances in instances whereby the private placement of securities of a dual-listed company would otherwise be subject to
resale restrictions in Israel, but such securities have been released from resale restrictions to the public over an overseas
exchange, such as the NASDAQ Capital Market, then such securities may be freely sold over such overseas exchange, notwithstanding
the resale restrictions set forth under Section 15C of the Israel Securities Law and Section 5 of the Israeli Securities Regulations
(Details Regarding Sections 15A-15C of the Securities Law-1968) – 2000.
Any
Classified Investors in the State of Israel who acquire our securities offered hereby are urged to consult their own legal and
other advisors about the consequences of acquiring our securities offered hereby as Classified Investors, and of any reliance
upon the ISA’s no-action letter noted above, in light of the Classified Investor’s own circumstances. We have no intention
of seeking any no-action letter from the ISA in connection with this offering.
Sweden
This
document has not been, and will not be, registered with or approved by Finansinspektionen (the Swedish Financial Supervisory Authority).
Accordingly, this document may not be made available, nor may the securities be offered for sale in Sweden, other than under circumstances
that are deemed not to require a prospectus under the Swedish Financial Instruments Trading Act (1991:980) (Sw. lag (1991:980)
omhandel med finansiella instrument). Any offering of securities in Sweden is limited to persons who are “qualified investors”
(as defined in the Financial Instruments Trading Act). Only such investors may receive this document and they may not distribute
it or the information contained in it to any other person.
Switzerland
The
securities may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange (“SIX”) or
on any other stock exchange or regulated trading facility in Switzerland. This document has been prepared without regard to the
disclosure standards for issuance prospectuses under art. 652a or art.1156 of the Swiss Code of Obligations or the disclosure
standards for listing prospectuses under art. 27 ff. of the SIX Listing Rules or the listing rules of any other stock exchange
or regulated trading facility in Switzerland. Neither this document nor any other offering material relating to the securities
may be publicly distributed or otherwise made publicly available in Switzerland.
Neither
this document nor any other offering material relating to the securities have been or will be filed with or approved by any Swiss
regulatory authority. In particular, this document will not be filed with, and the offer of securities will not be supervised
by, the Swiss Financial Market Supervisory Authority.
This
document is personal to the recipient only and not for general circulation in Switzerland.
United
Kingdom
Neither
the information in this document nor any other document relating to the offer has been delivered for approval to the Financial
Services Authority in the United Kingdom and no prospectus (within the meaning of section 85 of the Financial Services and Markets
Act 2000, as amended (“FSMA”)) has been published or is intended to be published in respect of the securities. This
document is issued on a confidential basis to “qualified investors” (within the meaning of section 86(7) of FSMA)
in the United Kingdom, and the securities may not be offered or sold in the United Kingdom by means of this document, any accompanying
letter or any other document, except in circumstances which do not require the publication of a prospectus pursuant to section
86(1) FSMA.
This
document should not be distributed, published or reproduced, in whole or in part, nor may its contents be disclosed by recipients
to any other person in the United Kingdom.
Any
invitation or inducement to engage in investment activity (within the meaning of section 21 of FSMA) received in connection with
the issue or sale of the securities has only been communicated or caused to be communicated and will only be communicated or caused
to be communicated in the United Kingdom in circumstances in which section 21(1) of FSMA does not apply to us.
In
the United Kingdom, this document is being distributed only to, and is directed at, persons (i) who have professional experience
in matters relating to investments falling within Article 19(5) (investment professionals) of the Financial Services and Markets
Act 2000 (Financial Promotions) Order 2005 (“FPO”), (ii) who fall within the categories of persons referred to in
Article 49 (2)(a) to (d) (high net worth companies, unincorporated associations, etc.) of the FPO or (iii) to whom it may otherwise
be lawfully communicated (together “relevant persons”). The investments to which this document relates are available
only to, and any invitation, offer or agreement to purchase will be engaged in only with, relevant persons. Any person who is
not a relevant person should not act or rely on this document or any of its contents.
DIRECTORS
AND SENIOR MANAGEMENT
The
following table sets forth the name and position of each of our executive officers and directors. The inclusion of any individual
in this table does not necessarily imply that such individual is an officer or office holder as such terms are defined under applicable
law.
Name
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Age
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Position
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Eric
Rowinsky, M.D.
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63
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Independent
Director and Chairman of the Board of Directors
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Isaac
Israel
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41
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Chief
Executive Officer and Director
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Simcha
Rock, CPA, MBA(4)
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69
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Director
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Steven
Steinberg(1)(2)
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58
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Independent
Director
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Ido
Agmon, MBA(2)(3)
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42
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Independent
Director
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Ran
Tzror, CPA, MBA(1) (4)
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38
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Independent
Director
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Revital
Stern-Raff, CPA, MBA(1)(4)
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45
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Independent
Director
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Gil
Efron, CPA, MA
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54
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Deputy
CEO and Chief Financial Officer
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Gil
Ben-Menachem, Ph.D., MBA(3)
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52
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Vice
President of Business Development
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Hadas
Reuveni, Ph.D.(3)
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52
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Vice
President or Research and Development and Founder and Chief Technology Officer of TyrNovo
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(1)
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Member
of Kitov Pharma Audit Committee
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(2)
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Member
of Kitov Pharma Compensation Committee
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(3)
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Member
of Kitov Pharma Science and Technology Committee
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(4)
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Member
of Kitov Pharma Investment Committee
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Eric
Rowinsky, M.D. has been Chairman of Kitov Pharma’s Board since October 2019. Dr. Eric Rowinsky’s principal expertise
is in the development and registration of novel therapeutics to treat cancer. Since November 2015, Dr. Rowinsky has served as
Executive Chairman of the Board of Directors and President of Rgenix, Inc. He also serves as the Chief Scientific Officer of Clearpath
Development Inc., and has served as a consulting Chief Medical Officer of Oncotartis, Inc. since 2018 and Everest Medicines, Inc.
since 2017. Additionally, he has been an independent consultant since 2016 and works with many other life science companies in
providing expertise in developing and registering a wide range of novel cancer therapeutics. Dr. Rowinsky served as Executive
Vice President, Chief Medical Officer and Head of Research and Development of Stemline Therapeutics, Inc., a clinical-stage biopharmaceutical
company, from November 2011 until October 2015. Prior to joining Stemline, Dr. Rowinsky was co-founder and Chief Executive Officer
of Primrose Therapeutics, Inc., a start-up biotechnology company, from June 2010 until its acquisition in September 2011. He also
served as a drug development and regulatory strategy consultant to the ImClone-Lilly Oncology Business Unit and several other
biopharmaceutical and life sciences companies from 2010 to 2011. From 2005 to 2009, Dr. Rowinsky was Executive Vice President
and Chief Medical Officer of ImClone Systems Inc., where he led the FDA approval of Erbitux® for head and neck and colorectal
cancers and advanced eight other monoclonal antibodies through clinical development. From 1996 to 2004, Dr. Rowinsky held several
positions at the Cancer Therapy and Research Center, including Director of the Institute of Drug Development, or IDD, and the
SBC Endowed Chair for Early Drug Development at the IDD. From 1996 to 2006, he was a Clinical Professor of Medicine at the University
of Texas Health Science Center at San Antonio. From 1988 to 1996, Dr. Rowinsky was an Associate Professor of Oncology at The Johns
Hopkins University School of Medicine. He was a longstanding National Cancer Institute principal and co-principal investigator
from 1990 to 2004, and was integrally involved in pivotal clinical and preclinical investigations that led to the development
of numerous cancer therapeutics, including paclitaxel, docetaxel, topotecan, irinotecan, erlotinib, gefitinib and temsirolimus
among others. Dr. Rowinsky was also an Adjunct Professor of Medicine at New York University School of Medicine (2008-2018). Dr.
Rowinsky presently serves on the boards of directors of the public companies Biogen Idec, Inc., Fortress Biosciences, Inc., and
Verastem Inc. He formerly served on the boards of directors of the public companies Navidea Biopharmaceuticals Inc. (2010-2018),
BIND Therapeutics (2014-2016), and Biophytis S.A. (2018-2019), as well as at a number of privately held companies. Dr. Rowinsky
received a B.A. degree from New York University (1977) and an M.D. degree from Vanderbilt University School of Medicine (1981).
He completed his residency in internal medicine at the University of California, San Diego (1984) and completed his fellowship
in medical oncology at The Johns Hopkins Oncology Center (1987).
Isaac
Israel has served as our chief executive officer and a member of Kitov Pharma’s Board since October 2012. Mr. Israel
was the founding chief executive officer of BeeContact Ltd. (formerly TASE:BCNT), from 2001 until 2007. Since 2008 Mr. Israel
has served as founding chief executive officer of Uneri Capital Ltd., a consulting firm in the capital markets field, owned by
Mr. Israel, which specializes in the healthcare sector. Mr. Israel also provides consulting services to Capital Point Ltd. (TASE:CPTP)
and serves as a member of the board of directors of various private healthcare corporations. In the past Mr. Israel also served
as chairman of the board of a public healthcare corporation, NextGen Biomed Ltd., which is traded on TASE.
Simcha
Rock, CPA, MBA, has served a member of Kitov Pharma’s Board since July 2013. He also serves as a strategic consultant
to us. He served as our Chief Financial Officer from July 2013 until he retired from his position as Chief Financial Officer as
of December 31, 2018, following a transition period with Gil Efron, our new Chief Financial Officer. Prior to joining us, Mr.
Rock was a private equity manager at Edmond de Rothschild Private Equity Management, a firm specializing in the management of
venture capital and other private equity investments funds, from February 2000 until January 2011, with responsibility for all
financial, legal and administrative matters for several investment funds. Prior to 2000, Mr. Rock held financial management positions
at Intel Electronics Ltd., The Jerusalem College of Technology, and JC Technologies Ltd. Mr. Rock holds a BA from Yeshiva University
and an MBA from Cleveland State University.
Steven
Steinberg, has served as a member of Kitov Pharma’s Board since July 2016. Since April 2017, Mr. Steinberg has been
an independent financial consultant. From January 2015 through March 2017, Mr. Steinberg served as the chief financial officer
of Glide Talk Ltd., a technology company in the video messaging arena. From September 2013 to October 2014 he served as vice president,
finance at Client Connect Ltd., a subsidiary of Conduit Ltd., and subsequent to an acquisition, of Perion Network, Ltd. a NASADQ
listed company. Between August 2011 and August 2013, Mr. Steinberg acted as an independent consultant, providing start-ups and
mature organizations with advice in financial reporting, due diligence and business models. From December 2002 until July 2011
Mr. Steinberg was employed by Answers Corporation, a NASDAQ listed company, where he served as chief financial officer. Prior
to 2002 he held a number of finance and chief financial officer roles, following a ten-year period of service as an audit manager
at Coopers & Lybrand (currently Price Waterhouse Coopers) in New York City. Mr. Steinberg holds a Bachelor’s Degree
in Business Administration from Florida International University – School of Business Administration, and was granted a
CPA license in New York State.
Ido
Agmon, MBA, has served as a member of Kitov Pharma’s Board since June 2016. Since 2012, Mr. Agmon has been acting
as an independent consultant and investment manager, providing start-ups, investment funds and technology-based ventures with
advice in strategic& financial planning, fund-raising and related business development activities. He
serves as a member of the board of directors of an Israeli privately held start-up corporation. From 2014 until the end
of 2016, Mr. Agmon was a manager of Aviv New-Tech (formerly Aviv Bio-Invest), a private investment fund which manages a portfolio
of public Israeli & global biomed and technology companies, of which he was a co-founder, and where he was responsible for
analysis and evaluation of investments in Israeli and global biomed companies. From 2009 until 2011, Mr. Agmon served as the CEO
of Meytav Technology Incubator, an Israeli-based accelerator for biotech, pharma & medtech ventures with over 20 portfolio
companies. Mr. Agmon has served as a board member at a number of biomed ventures. From 2007 until 2009, he worked as the Director
of Business Development at ATI incubator, a technology incubator specializing in biomed and cleantech projects, responsible for
deal-flow and project evaluation. Mr. Agmon holds a Bachelor’s Degree in Business Administration & Life Sciences from
Tel Aviv University, Tel Aviv, Israel, and an MBA from The Hebrew University, Jerusalem, Israel.
Ran
Tzror, CPA, MBA has served as a member of Kitov Pharma’s Board since March 2017. Since
2014, Mr. Tzror has been the director of S.Y Glilot Ltd., a real-estate company owned by his family. Between 2010 and 2014 he
was employed by Teva Pharmaceuticals Industries Ltd. (NYSE:TEVA; TASE:TEVA) in various roles in corporate business development,
the office of the CEO & President of Teva Pharmaceuticals, and as Director of the Corporate Post Merger Integration Office.
Between 2007 and 2010 he was a senior associate at Somekh Chaikin Certified Public Accountants (Israel), a member firm of KPMG
International. Between 2006 and 2007 he was a legal intern at the commercial division of Yigal Arnon & Co., Advocates &
Notary. Mr. Tzror holds a B.A. in Accounting, LL.B. in Law, and MBA in Financial Management from Tel-Aviv University. He also
completed various courses at the Kellogg Graduate School of Management at Northwestern University in Illinois. Mr. Tzror was granted
a CPA license in the State of Israel, and was also admitted as a member of the Israeli Bar Association.
Revital
Stern-Raff, CPA, MBA has served as a member of Kitov Pharma’s Board since March 2017. Since August 2017, Ms. Stern-Raff
has been an independent financial and accounting consultant. Between 2013 and August 2017, Ms. Stern-Raff, was the Chief Financial
Officer of several municipal development and community association units of the City of Giv’atayim, Israel. Between 2006
and 2013, Ms. Stern-Raff held comptroller and economist positions at Ilex Medical Ltd., a publicly-traded medical diagnostic equipment
company (TASE:ILX). Prior to 2006, Ms. Stern-Raff held a number of comptroller and public accounting positions. Between 2009 and
2012, Ms. Stern-Raff was an independent director at Real Imaging Holdings Ltd., a publicly traded breast cancer diagnostics company
(TASE:RIMG). Ms. Stern-Raff is a licensed CPA in Israel, and holds an M.B.A. (Finance) and B.A. (Business Administration –
Information Technology and Finance) from the Rishon Letzion College of Management in Israel.
Gil
Efron has served as our Deputy Chief Executive Officer and Chief Financial Officer since October 2018. Prior to joining us
he served as Deputy CEO and CFO of Kamada, a NASDAQ and TASE dual-listed plasma-derived protein therapeutics company, from September
2011 to November 2017. Prior to that, he was the CFO of NASDAQ listed RRsat Global Communications LTD from September 2005 to March
2011. Prior to that Mr. Efron served in various finance executive positions. Mr. Efron holds a BA degree in Economics and Accounting
and an MA degree in Business Administration from the Hebrew University of Jerusalem and was granted a certified public accountant’s
license in Israel.
Gil
Ben-Menachem, Ph.D., MBA, has served as the Company’s vice president of business development since January 2016,
as a member of the Board’s Science and Technology Committee since August 2016, as a director at TyrNovo Ltd., the Company’s
majority owned subsidiary, from February 2017 until our 2019 Annual General Meeting of Shareholders held on December 23, 3019
(the “2019 AGM”), and as a director of the Company from July 2017 until our 2019 AGM. Dr. Ben-Menachem has over 15
years of experience in the pharmaceutical, biotechnology, and venture capital industries. Prior to joining the Company, from 2013
until 2015 he was head of innovative products at Dexcel Pharma, a large privately held Israeli pharmaceutical company. From 2012
to 2013, Dr. Ben-Menachem served as chief executive officer of OphthaliX, a company that developed drugs in the ophthalmology
space. From 2008 to 2012 he served as director of business development at Teva Pharmaceutical Industries Ltd. (NYSE:TEVA; TASE:TEVA),
where he was responsible for business development efforts in connection with partnering and acquisition deals for late stage innovative
drug candidates. Between 2005 and 2008 he served as director of business development at Paramount Biosciences, a New York based
merchant bank and biotechnology venture capital firm. Dr. Ben-Menachem received his Ph.D. from the Hebrew University, and MBA
from the University of Maryland. He concluded his postdoctoral training in immunology and microbiology at the National Institutes
of Health (NIH), the U.S. Department of Health and Human Services’ medical research agency.
The
business addresses of our directors and senior management is One Azrieli Center, Round Tower, 132 Menachem Begin Road, Tel Aviv,
6701101, Israel.
MAJOR
SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
As
of December 23, 2019, no person or entity known by us beneficially owns more than 5% of Kitov Pharma’s outstanding ordinary
shares.
The
beneficial ownership of Kitov Pharma’s ordinary shares is determined in accordance with the rules of the SEC. Under these
rules, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the
power to vote or to direct the voting of the security, or investment power, which includes the power to dispose of or to direct
the disposition of the security. For purposes of this section, we deem ordinary shares issuable pursuant to options or warrants
that are currently exercisable or exercisable within 60 days of December 23, 2019, if any, to be outstanding and to be beneficially
owned by the person holding the options or warrants for the purposes of computing the percentage ownership of that person, but
we do not treat them as outstanding for the purpose of computing the percentage ownership of any other person. The percentage
of ordinary shares beneficially owned is based on 19,560,528 ordinary shares (not including 1 share held in treasury). Our
disclosure is based on information provided to us by the holders, or disclosed in public regulatory filings in the United States
or Israel, in accordance with the applicable law.
None
of our shareholders has different voting rights from other shareholders. To the best of our knowledge, we are not owned or controlled,
directly or indirectly, by another corporation or by any foreign government. We are not aware of any arrangement that may, at
a subsequent date, result in a change of control of our company, and the pending transaction to acquire 100% of FameWave (described
below) is not expected to result in a change of control of the Company. Unless otherwise noted below, all references to “ordinary
shares” refers to ordinary shares of Kitov Pharma.
Changes
in Percentage Ownership by Major Shareholders
Empery
Asset Management, LP/ Mr. Ryan M. Lane/ Mr. Martin D. Hoe
Empery
Asset Management, LP (“Empery”) participated in our registered direct offering in January 2019, following which it
filed a Schedule 13G with the SEC setting forth the holdings of Empery affiliated entities after they surpassed a holding of 5%
of our ordinary shares. In August 2019 they notified us that they no longer hold any of our ADSs or ordinary shares. The Empery
affiliated entities own in aggregate 1,463,971 warrants to purchase 1,563,971 ADSs representing 1,563,971 ordinary shares. However,
other than with respect to 134,568 of our NASDAQ listed Series A warrants, pursuant to the terms of the above noted warrants,
the holders cannot exercise the warrants to the extent that such holders would beneficially own, along with any affiliates after
any such exercise, more than 4.99% of our outstanding ordinary shares. Consequently, as of the date set forth above, the Empery
affiliated shareholders are not able to exercise 538,128 of such warrants due to these blockers.
Sabby
Volatility Warrant Master Fund, Ltd./Sabby Management, LLC/Hal Mintz
Sabby
Volatility Warrant Master Fund, Ltd. participated in our registered direct offering in June 2018 after which they surpassed a
holding of 5% of Kitov Pharma’s ordinary shares. On January 4, 2019 Sabby Volatility Warrant Master Fund, Ltd., Sabby Management,
LLC and Hal Mintz filed a Schedule 13G/A with the SEC pursuant to which they notified the SEC that their holdings were reduced
to below 5% of our issued and outstanding share capital.
Sabby
Volatility Warrant Master Fund, Ltd. subsequently participated in our registered direct offering in January 2019, following which
it filed a new Schedule 13G with the SEC to report the holdings as described in the table above. In August 2019 it notified us
that as of August 15, 2019 it holds 6,782 of our ADSs as well as an aggregate of 2,045,175 unregistered warrants issued in each
of June 2018 (760,000 warrants) and January 2019 (1,285, 175 warrants). Pursuant to the terms of the above noted warrants, Sabby
Volatility Warrant Master Fund, Ltd. cannot exercise the warrants to the extent the Sabby Volatility Warrant Master Fund, Ltd.
and any affiliates would beneficially own, after any such exercise, more than 4.99% of our outstanding ordinary shares. Consequently,
as of the date set forth above, Sabby Volatility Warrant Master Fund, Ltd. is not able to exercise 1,077,934 of these warrants
due to the blockers.
Armistice
Capital, LLC/Armistice Capital Master Fund Ltd./Steven Boyd
Armistice
Capital Master Fund LLC participated in our registered direct offering in June 2018 after which it surpassed a holding of 5% of
Kitov Pharma’s ordinary shares. On June 11, 2018 Armistice Capital, LLC, Armistice Capital Master Fund Ltd. and Steven Boyd
filed a Schedule 13G with the SEC pursuant to which it notified the SEC that their holdings were reduced to below 5% of our issued
and outstanding share capital.
Rosalind
Advisors, Inc./ Steven Salamon/Rosalind Master Fund L.P.
Based
on a Schedule 13G filed by Rosalind Advisors, Inc. (“Advisor” to RMF), Rosalind Master Fund L.P. (“RMF”),
and Steven Salamon (“President”; Steven Salamon is the portfolio manager of the Advisor to RMF) with the SEC on February
1, 2018, RMF held 1,105,600 ordinary shares, which included (i) 950,000 ADSs and (ii) 155,600 of our Series A warrants. representing
the right to purchase 155,600 of our ADSs, and which were exercisable. As reported on the Schedules 13G, RMF was the record owner
of 950,000 of our ADSs and 155,600 of our Series A warrants. Rosalind Advisors, Inc. is the investment advisor to RMF and may
be deemed to be the beneficial owner of shares held by RMF. Steven Salamon is the portfolio manager of the Advisor and may be
deemed to be the beneficial owner of shares held by RMF. Notwithstanding the foregoing, as reported on the Schedule 13G filed
as aforesaid, the Advisor and Mr. Salamon disclaim beneficial ownership of the shares. We have no direct knowledge as to when
or under what circumstances Rosalind Master Fund L.P. acquired its holdings in Kitov Pharma. Based on their public filings, their
ownership of Kitov Pharma surpassed more than 5% of Kitov Pharma’s outstanding ordinary shares on January 25, 2018 and were
reduced to below 5% of our issued and outstanding share capital in May 2018.
Goldman
Hirsch Partners Ltd.
On
January 12, 2017, Kitov Pharma acquired a controlling equity stake in TyrNovo Ltd. from Goldman Hirsch Partners Ltd. (GHP), its
majority shareholder, for consideration of USD 2 million in cash and 564,625 ordinary shares of Kitov Parent, which was equivalent
to USD 1.8 million based on the closing price of Kitov Pharma’s ordinary shares on TASE on January 11, 2017. At closing
of the transaction on January 13, 2017, Kitov Pharma issued 564,625 ordinary shares to Katzenell Dimant Trustees Ltd. as
trustee holding such shares in escrow on behalf of Kitov Parent and GHP, which at such time represented approximately 6.8% of
Kitov Pharma’s issued and outstanding share capital. The ordinary shares were issued on a private placement basis in Israel
pursuant to exemptions from the prospectus requirements under applicable Israeli securities laws and from the registration requirements
of the Securities Act. GHP signed a Shareholder’s Undertaking in connection with the ordinary shares containing, amongst
other matters, a prohibition on transfer of such ordinary shares until January 13, 2018 and certain standstill limitations. Pursuant
to such undertaking, GHP has agreed to vote its ordinary shares, subject to certain exceptions relating to significant corporate
transactions, in accordance with the recommendation of our board of directors and in favor of persons nominated and recommended
to serve as directors by the board, and has granted Kitov Parent a proxy to ensure GHP’s compliance with such voting undertakings.
It is our understanding, to the best of our knowledge, that GHP is controlled by Dr. Gil Pogozelich, an Israeli citizen and resident.
GHP’s holdings of 564,625 ordinary shares that we issued to them in January 2017 were reduced to below 5% of our issued
and outstanding share capital in January 2018 as a result of subsequent share issuances by us.
Acquisition
of FameWave Ltd.
On
March 14, 2019, we entered into the Acquisition Agreement to acquire FameWave, a privately held Israeli biopharmaceutical company
(FameWave’s main asset is CM-24, a clinical stage humanized monoclonal antibody targeting CEACAM1, a novel immune checkpoint
protein belonging to the Human CEA (Carcino-Embryonic Antigen) protein family. The Acquisition Agreement was amended on August
16, 2019, pursuant to which the parties agreed that all major closing conditions have been met other than finalizing the tax ruling
for the sellers and the issuance and exchange of shares in the companies, and finalization of the closing of the transactions
for the acquisition of FameWave is expected to occur before the end of 2019 or shortly thereafter. Each of the selling FameWave
shareholders, including the investors in the concurrent private placement ADS issuance, has represented to us that other than
the applicable voting undertaking and the Registration Rights Agreement to be entered into at closing of the FameWave Transaction,
such party is not, and will not be, a party to any agreement or arrangement, whether written or oral, with us, any of the our
officers or shareholders or a corporation in which the our officers or shareholders are an Interested Party (as defined in the
Israeli Companies Law, 5759-1999), regulating the management of the Company, the shareholders’ rights in the Company, the
transfer of shares in the Company, including any voting agreements, shareholder agreements or any other similar agreement even
if its title is different or has any other relations or agreements with any of our shareholders, directors or officers. In addition,
each of the investment funds and any FameWave shareholders signing the Registration Rights Agreement as part of the transactions
being approved hereby, will at closing of the FameWave Transaction enter into the Shareholder’s Undertaking, which amongst
other matters, contains undertakings of the shareholder not to seek to become part of a bloc of shares of the Company which would
necessitate a special tender offer under the Israeli Companies Law, or would otherwise seek to effect a change of control in Kitov.
Furthermore, to the best of our knowledge it is the intention of all of the investment funds and the other FameWave shareholders
to be passive unaffiliated shareholders of the Company. Nonetheless, should the FameWave Transaction close in accordance with
its terms, we expect that the composition of our major shareholders will change following such closing. Upon closing of the acquisition,
FameWave will become a wholly owned subsidiary of Kitov Pharma. For more information on the transaction, including details of
the expected issuances of our securities to the significant shareholders of FameWave and the investment funds, please see Item
4.A. History and Development of the Company – Recent Developments – FameWave Acquisition of our Annual Report on Form 20-F for the year ended December 31, 2018. For more Information on the Acquisition Agreement in connection with this transaction
please see Item 10 – Additional Information – C. Material Contracts – FameWave Acquisition Agreement in our
Annual Report for the year ended December 31, 2018 on Form 20-F and our Report on Form 6-K from August 20, 2019.
Record
Holders
As
of December 23, 2019, there were (i) 11 shareholders of record of our ordinary shares, all of which were Israeli or other non-U.S.
persons or entities holding 100% of our ordinary shares; and (ii) one holder of record for the public warrants which was a U.S.
entity. As of November 18, 2019, there were 13,744,746 ADSs outstanding (or approximately 70% of our total issued and outstanding
ordinary shares), which were held by a number of different brokerage and other nominee holders of record as recorded on the records
of our ADS Depositary, The Bank of New York Mellon.
The
number of record holders is not representative of the number of beneficial holders of our ADSs, ordinary shares, and our warrants
because many of the ADSs, ordinary shares and our warrants are held by brokers or other nominees. Other than with respect to certain
restricted shares or ADS containing a legend, the shares for a publicly traded company such as ours, which is listed on TASE (and
with ADSs listed on NASDAQ), are generally recorded in the name of our Israeli share registrar, Registration Company of United
Mizrahi Bank Ltd. or in the name of our ADS Depositary, The Bank of New York Mellon.
B.
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Related
Party Transactions
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See Item 7. Major
Shareholders and Related Party Transactions—B. Related Party Transactions in our Annual Report on Form
20-F for the year ended December 31, 2018, which is incorporated by reference.
INCORPORATION
OF CERTAIN DOCUMENTS BY REFERENCE
The
SEC allows us to incorporate by reference the information we file with or furnish to the SEC, which means that we can disclose
important information to you by referring you to another document filed or furnished separately with the SEC. The information
incorporated by reference is considered to be part of this prospectus. This prospectus incorporates by reference the documents
listed below:
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The description of our ordinary shares, no par value per share, and the American Depositary Shares representing the ordinary shares, contained in Item 1 of the Registration Statement on Form 8-A (File No. 001-37643) filed with the SEC on November 18, 2015;
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our Annual Report on Form 20-F for the fiscal year ended December 31, 2018, filed with the SEC on March 26, 2019 (as amended by the Form 20-F/A amendment filed on April 3, 2019); and
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our reports on Form 6-K furnished to the SEC on April 1, 2019, April 8, 2019, April 12, 2019 (excluding Exhibits 99.1 and 99.2 thereto), April 29, 2019, May 2, 2019 (excluding Exhibit 99.1 thereto), May 10, 2019, June 27, 2019, July 2, 2019, July 12, 2019, August 8, 2019 (excluding Exhibit 99.1 thereto other than the text which is found under the heading entitled “Financial Results for Six-Month Period Ended June 30, 2019” in Exhibit 99.1 thereto), August 13, 2019, August 20, 2019, August 26, 2019, September 9, 2019, October 2, 2019, October 11, 2019, November 12, 2019, November 19, 2019, and December 23, 2019.
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The
information relating to us contained in this prospectus does not purport to be comprehensive and should be read together with
the information contained in the documents incorporated or deemed to be incorporated by reference in this prospectus.
As
you read the above documents, you may find inconsistencies in information from one document to another. If you find inconsistencies
between the documents and this prospectus, you should rely on the statements made in the most recent document. All information
appearing in this prospectus is qualified in its entirety by the information and financial statements, including the notes thereto,
contained in the documents incorporated by reference herein.
We
will provide, free of charge, to each person, including any beneficial owner, to whom this prospectus is delivered, a copy of
any or all information that has been incorporated by reference into this prospectus, but which has not been delivered with the
prospectus, upon written or oral request to us at the following address:
Kitov
Pharma Ltd.
One
Azrieli Center, Round Tower
132
Menachem Begin Rd.
Tel
Aviv 6701101, Israel
Tel:
+972-3-9333121
Attention:
Chief Financial Officer
LEGAL
MATTERS
The
validity of the ordinary shares being offered pursuant to this prospectus will be passed upon by the Law Office of Avraham Ben-Tzvi,
Adv., of Jerusalem, Israel. Certain legal matters with respect to U.S. federal securities law will be passed upon for us by Haynes
and Boone LLP, New York, New York. Greenberg Traurig, P.A., Miami, Florida, is acting as counsel to the placement agent in connection
with this offering.
EXPERTS
The
consolidated financial statements of Kitov Pharma Ltd. and its subsidiaries as of December 31, 2018 and 2017 and for each of the
years in the three-year period ended December 31, 2018, have been incorporated by reference herein in reliance upon the report
of Somekh Chaikin, a Member Firm of KPMG International, independent registered public accounting firm, incorporated by reference
herein, and upon the authority of said firm as experts in accounting and auditing. The audit report covering the December 31,
2018 consolidated financial statements refers to a change in the method of accounting of revenue recognition.
WHERE
YOU CAN FIND ADDITIONAL INFORMATION
We
have filed with the SEC a registration statement on Form F-1 under the Securities Act relating to the offering of our securities
offered hereby. This prospectus does not contain all of the information contained in the registration statement. The rules and
regulations of the SEC allow us to omit certain information from this prospectus that is included in the registration statement.
Statements made in this prospectus concerning the contents of any contract, agreement or other document are summaries of all material
information about the documents summarized, but are not complete descriptions of all terms of these documents. If we filed any
of these documents as an exhibit to the registration statement, you may read the document itself for a complete description of
its terms.
We
are required to file reports and other information with the SEC under the Exchange Act, and the regulations thereunder applicable
to foreign private issuers. We also furnish to the SEC under cover of Form 6-K material information required to be made public
in Israel, filed with and made public by any stock exchange or distributed by us to our shareholders. The SEC maintains an Internet
site that contains reports, proxy and information statements and other information regarding issuers that file electronically
with the SEC. Our filings with the SEC are available to the public through this web site at http://www.sec.gov. These
SEC filings are also generally available to the public on (i) the Israel Securities Authority’s Magna website at www.magna.isa.gov.il,
(ii) the Tel Aviv Stock Exchange website at http://www.maya.tase.co.il, and (iii) from commercial document retrieval services.
In
addition, since our ordinary shares are traded on TASE, we also presently report to ISA and TASE in accordance with the Securities
Regulations (Periodic and Immediate Reports of a Foreign Body Corporate) 5761-2000, promulgated thereunder (the “Dual-Listed
Reporting Requirements”). Pursuant to the Dual-Listed Reporting Requirements, we prepare our periodic and immediate reports
in accordance with U.S. securities laws and reporting requirements. Our major shareholders are required to make applicable ownership
disclosures in accordance with U.S. securities laws and reporting requirements. We generally initially file or furnish our reports,
as applicable, to the SEC. We then submit copies of the SEC filings and submissions to ISA and TASE, including any filings made
by our major shareholders with respect to their holdings in Kitov Pharma, in accordance with the Dual-Listed Reporting Requirements.
Such copies can be retrieved electronically through the websites for listed company reports of ISA (www.magna.isa.gov.il) and
TASE (www.maya.tase.co.il).
As
a foreign private issuer, we will be exempt from the rules under the Exchange Act relating to the furnishing and content of proxy
statements, and our officers, directors and principal shareholders will be exempt from the reporting and short-swing profit recovery
provisions contained in Section 16 of the Exchange Act. As permitted under the Companies Law, and the Notice Regulations which
were enacted pursuant to such law, and as set forth in our amended and restated articles of association, we are not required to
physically deliver a notice of a shareholders meeting, a proxy statement or a voting slip. We prepare notices of general meetings
of our shareholders, as well as the accompanying proxy statements, voting slips and voting instruction forms, (collectively, the
“Proxy Materials”) in accordance with applicable laws, rules and regulations and disclosure requirements in the State
of Israel, as such are applicable to a company whose shares are traded on both TASE and NASDAQ, and which reports to the SEC as
a foreign private issuer and to ISA and TASE in accordance with the Dual-Listed Reporting Requirements. Our Proxy Materials may
not necessarily be mailed to our beneficial shareholders in Israel, or to our beneficial ADS holders in the U.S. We will furnish
to the SEC on Form 6-K the forms of our Proxy Materials, and they will be made available to the public on the SEC’s website
at www.sec.gov. We will also submit the Proxy Materials to ISA and TASE and they will be made available to the public on their
respective websites for listed company reports: www.magna.isa.gov.il and www.maya.tase.co.il. We will also include the Proxy Materials
on our corporate website, to the extent required under the Companies Law and the applicable regulations enacted thereunder governing
publication of notices of general meetings of our shareholders and the distribution of the Proxy Materials. The circulation of
by us of any Proxy Materials should not be taken as an admission that we are subject to the proxy rules under the Exchange Act,
nor as an admission that in doing so we are not availing, nor that we may not avail, ourselves of any, or all of, the exemptions
set forth under Regulation 3 of the Companies Regulations (Relief Regulations for Companies Whose Securities are Listed for Trading
on an Exchange Outside of Israel), 5760-2000. Furthermore, nothing in the form or content of, and/or the language in, any of our
Proxy Materials should be taken as an admission by us with respect to that which is stated under Regulation 5 of the Notice Regulations
concerning the applicability (or lack thereof) of instructions under relevant non-Israeli law as to the content our Proxy Materials,
insofar as such may apply to certain matters on the agenda of the applicable meeting of securities holders.
In
addition, we will not be required under the Exchange Act to file periodic reports and financial statements with the SEC as frequently
or as promptly as U.S. companies whose securities are registered under the Exchange Act. However, we intend to file with the SEC,
within 120 days after the end of each fiscal year ending December 31, an annual report on Form 20-F containing financial statements
which will be examined and reported on, with an opinion expressed, by an independent registered public accounting firm. We also
furnish to the SEC under cover of Form 6-K material information required to be made public in Israel, filed with and made public
by any stock exchange or distributed by us to our shareholders. In addition, in accordance with the NASDAQ Listing Rules, as a
foreign private issuer we are required to submit on a Form 6-K an interim balance sheet and income statement as of the end of
the second quarter of each fiscal year.
We
maintain a corporate website at www.kitovpharma.com. Information contained on, or that can be accessed through, our website does
not constitute a part of this prospectus. We have included our website address in this prospectus solely as an inactive textual
reference. We will post on our website any materials required to be posted on such website under applicable corporate or securities
laws and regulations, including posting any notices of general meetings of our shareholders.
ENFORCEABILITY
OF CIVIL LIABILITIES
We
are incorporated under the laws of the State of Israel. Service of process upon us and upon our directors and officers and the
Israeli experts named in this prospectus, substantially all of whom reside outside the United States, may be difficult to obtain
within the United States. Furthermore, because substantially all of our assets and substantially all of our directors and officers
are located outside the United States, any judgment obtained in the United States against us or any of our directors and officers
may not be collectible within the United States.
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 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. If U.S. law
is applicable, then it 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, Israeli courts may enforce a United States judgment in a civil matter which,
subject to certain exceptions, is non-appealable, including judgments based upon the civil liability provisions of the Securities
Act and the Exchange Act and including a monetary or compensatory judgment in a non-civil matter, provided that:
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the
judgments are obtained after due process before a court of competent jurisdiction, according to the laws of the state in which
the judgment is given and the rules of private international law currently prevailing in Israel;
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the
prevailing law of the foreign state in which the judgments were rendered allows the enforcement of judgments of Israeli courts
(however, the Israeli courts may waive this requirement following a request by the attorney general);
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adequate
service of process has been effected and the defendant has had a reasonable opportunity to be heard and to present his or
her evidence;
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the
judgments are not contrary to public policy, and the enforcement of the civil liabilities set forth in the judgment does not
impair the security or sovereignty of the State of Israel;
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the
judgments were not obtained by fraud and do not conflict with any other valid judgment in the same matter between the same
parties;
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an
action between the same parties in the same matter is not pending in any Israeli court at the time the lawsuit is instituted
in the foreign court; and
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the
obligations under the judgment are enforceable according to the laws of the State of Israel and according to the law of the
foreign state in which the relief was granted.
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We
have irrevocably appointed Puglisi & Associates, 850 Library Avenue, Suite 204, Newark, DE 19715 Tel: +1 (302) 738-6680 as
our agent to receive service of process in any action against us in any United States federal or state court arising out of this
offering or any purchase or sale of securities in connection with this offering.
If
a foreign judgment is enforced by an Israeli court, it generally will be payable in Israeli currency, which can then be converted
into non-Israeli currency and transferred out of Israel. The usual practice in an action before an Israeli court to recover an
amount in a non-Israeli currency is for the Israeli court to issue a judgment for the equivalent amount in Israeli currency at
the rate of exchange in force on the date of the judgment, but the judgment debtor may make payment in foreign currency. Pending
collection, the amount of the judgment of an Israeli court stated in Israeli currency ordinarily will be linked to the Israeli
consumer price index plus interest at the annual statutory rate set by Israeli regulations prevailing at the time. Judgment creditors
must bear the risk of unfavorable exchange rates.
PART
II
INFORMATION
NOT REQUIRED IN PROSPECTUS
Item
6. Indemnification of Directors and Officers
Under
the Companies Law, a company may not exculpate an office holder from liability for a breach of a fiduciary duty. An Israeli company
may exculpate an office holder in advance from liability to the company, in whole or in part, for damages caused to the company
as a result of a breach of duty of care but only if a provision authorizing such exculpation is included in its articles of association.
Our amended and restated articles of association include such a provision. The company
may not exculpate in advance a director from liability arising out of a prohibited dividend or distribution to shareholders.
Under
the Companies Law and the Securities Law, 5728 – 1968 (“Securities Law”) a company may indemnify an office holder
in respect of the following liabilities, payments and expenses incurred for acts performed by him or her as an office holder,
either in advance of an event or following an event, provided its articles of association include a provision authorizing such
indemnification:
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a
monetary liability incurred by or imposed on him or her in favor of another person pursuant to a judgment, including a settlement
or arbitrator’s award approved by a court. However, if an undertaking to indemnify an office holder with respect to
such liability is provided in advance, then such an undertaking must be limited to events which, in the opinion of the board
of directors, can be foreseen based on the company’s activities when the undertaking to indemnify is given, and to an
amount or according to criteria determined by the board of directors as reasonable under the circumstances, and such undertaking
shall detail the abovementioned foreseen events and amount or criteria;
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reasonable
litigation expenses, including reasonable attorneys’ fees, incurred by the office holder as a result of an investigation
or proceeding instituted against him or her by an authority authorized to conduct such investigation or proceeding, provided
that (i) no indictment was filed against such office holder as a result of such investigation or proceeding; and (ii) no financial
liability was imposed upon him or her as a substitute for the criminal proceeding as a result of such investigation or proceeding
or, if such financial liability was imposed, it was imposed with respect to an offense that does not require proof of criminal
intent or in connection with a monetary sanction;
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a
monetary liability imposed on him or her in favor of a payment for a breach offended at an Administrative Procedure (as defined
below) as set forth in Section 52(54)(a)(1)(a) to the Securities Law;
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expenses
associated with an Administrative Procedure conducted regarding an office holder, including reasonable litigation expenses
and reasonable attorneys’ fees; and
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reasonable
litigation expenses, including attorneys’ fees, incurred by the office holder or imposed by a court in proceedings instituted
against him or her by the company, on its behalf, or by a third party, or in connection with criminal proceedings in which
the office holder was acquitted, or as a result of a conviction for an offense that does not require proof of criminal intent.
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An
“Administrative Procedure” is defined as a procedure pursuant to chapters H3 (Monetary Sanction by the Israeli Securities
Authority), H4 (Administrative Enforcement Procedures of the Administrative Enforcement Committee) or I1 (Arrangement to prevent
Procedures or Interruption of procedures subject to conditions) to the Securities Law.
Under
the Companies Law and the Securities Law, a company may insure an office holder against the following liabilities incurred for
acts performed by him or her as an office holder if and to the extent provided in the company’s articles of association:
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a
breach of a fiduciary duty to the company, provided that the office holder acted in good faith and had a reasonable basis
to believe that the act would not harm the company;
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a
breach of duty of care to the company or to a third party, to the extent such a breach arises out of the negligent conduct
of the office holder;
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a
monetary liability imposed on the office holder in favor of a third party;
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a
monetary liability imposed on the office holder in favor of an injured party at an Administrative Procedure pursuant to Section
52(54)(a)(1)(a) of the Securities Law; and
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expenses
incurred by an office holder in connection with an Administrative Procedure, including reasonable litigation expenses and
reasonable attorneys’ fees.
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Under
the Companies Law, a company may not indemnify, exculpate or insure an office holder against any of the following:
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a
breach of fiduciary duty, except for indemnification and insurance for a breach of the fiduciary duty to the company to the
extent that the office holder acted in good faith and had a reasonable basis to believe that the act would not prejudice the
company;
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a
breach of duty of care committed intentionally or recklessly, excluding a breach arising out of the negligent conduct of the
office holder;
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an
act or omission committed with intent to derive illegal personal benefit; or
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a
fine or forfeit levied against the office holder.
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Under
the Companies Law, exculpation, indemnification and insurance of office holders must be approved by the compensation committee
(or the audit committee acting in lieu of a compensation committee pursuant to the Companies Law) and the board of directors and,
with respect to directors or controlling shareholders, their relatives and third parties in which such controlling shareholders
have a personal interest, also by the shareholders.
The
compensation committee (or the audit committee acting in lieu of a compensation committee pursuant to the Companies Law) and board
of directors may approve the inclusion of each director under the coverage of our directors and officers insurance policy without
the need for shareholder approval, if they determine that, pursuant to the leniencies set forth in Regulation 1B1 of the Relief
Regulations, the provision of such insurance coverage to the directors under our directors and officers insurance policy is being
granted on market terms, and with no material adverse effect on our profits, assets or obligations, and is consistent with our
Compensation Policy which was approved by our shareholders in accordance with the Companies Law, and is the same as the coverage
provided to all of our other directors.
The
compensation committee (or the audit committee acting in lieu of a compensation committee pursuant to the Companies Law) and board
of directors may approve the issuance to directors of our standard letters of waiver of liability and indemnification, immediately,
as of the date of their respective appointments as directors, with the approval by our shareholders being deferred to the next
general meeting of our shareholders following such approval, if they determine that, pursuant to the leniencies set forth in Regulation
1B4 of the Relief Regulations, that the letters which we issue to the appointed directors are consistent with our Compensation
Policy which was approved by our shareholders in accordance with the Companies Law, and are no more beneficial to the Appointed
Directors as such letters previously issued to our other directors.
Our
amended and restated articles of association permit us to exculpate, indemnify and
insure our office holders to the fullest extent permitted or to be permitted by law. Our office holders are currently covered
by a directors’ and officers’ liability insurance policy.
Our
Audit Committee and Board of Directors approved the issuance of letters of indemnity (the “Indemnity Letters”) to
our office holders pursuant to which we agreed to indemnify such office holders, including an undertaking in advance for such
indemnification. The Indemnity Letters also received the approval of our shareholders. According to the Indemnity Letters, the
total accumulative sum of indemnification paid by us to all our office holders that were issued by Kitov Pharma will not exceed
a sum equal to 25% of our equity attributed to our shareholders according to our latest audited or reviewed consolidated financial
statements, as the case may be, as of the date of indemnification. The payment of the indemnity sum will not prejudice the right
of office holders to receive insurance coverage benefits. Once we have paid indemnity sums to our office holders at the maximum
indemnity sum, we will not bear additional indemnity sums unless the payment of these additional sums is approved by authorized
corporate bodies according to the law applicable at the time of payment of the additional indemnity sums, and subject to an amendment
in our articles of association if required by applicable law at such time.
In
addition, we have entered into agreements with each of our current office holders exculpating them from a breach of their duty
of care to us to the fullest extent permitted by law, subject to limited exceptions, and undertaking to indemnify them to the
fullest extent permitted by law, subject to limited exceptions, including with respect to liabilities resulting from our Registration
Statements on Form F-1 filed in connection with our initial public offering in the U.S. during November 2015, in connection with
our July 2016 public offering, and in connection with each of our July 2017, June 2018 and January 2019 registered direct offerings,
to the extent that these liabilities are not covered by insurance. This indemnification is limited to events determined as foreseeable
by the Board of Directors based on our activities, and to an amount or according to criteria determined by the Board of Directors
as reasonable under the circumstances. The maximum aggregate amount of indemnification that we may pay to our office holders based
on such indemnification agreement is with respect to all permitted indemnification, including in connection with a public offering
of our securities, an amount equal to 25% of our shareholders’ equity on a consolidated basis, based on our most recent
financial statements made publicly available before the date on which the indemnification payment was made. Such indemnification
amounts are in addition to any insurance amounts. Each office holder who agrees to receive this letter of indemnification also
gives his approval to the termination of all previous letters of indemnification that we have provided to him or her in the past,
if any.
We
have indemnified and we expect to continue to indemnify our officers and directors for obligations, including the deductibles
for our directors’ and officers’ liability insurance policy, and we may be required to pay costs and expenses they
may incur related to the ISA Investigation and the 2015 Motion, the 2017 Motions and U.S. Class Actions described in “Item
8. Financial Information – A. Financial Statements and Other Financial Information – Legal Proceedings” in our
Annual Report on Form 20-F for the fiscal year ended December 31, 2018, pursuant to the letters of indemnification issued
to our directors and officers.
Insofar
as indemnifications for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling
us pursuant to the foregoing provisions, we have been informed that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is therefore unenforceable.
Item
7. Recent Sales of Unregistered Securities
The
following is a summary of transactions during the three years preceding this offering, involving offers and sales of our securities
which, unless otherwise indicated, took place outside the United States and were not registered under the United States Securities
Act of 1933, as amended (the “U.S. Securities Act”):
In
January 2017, we acquired a controlling equity stake in TyrNovo Ltd. (“TyrNovo”) from Goldman Hirsch Partners Ltd.
(GHP), its majority shareholder, for consideration of USD 2 million in cash and 564,625 of our ordinary shares, which was equivalent
to USD 1.8 million based on the closing price of our ordinary shares on TASE on January 11, 2017. The ordinary shares were issued
on a private placement basis pursuant to exemptions from the registration requirements of the U.S. Securities Act provided by
Regulation S promulgated under the U.S. Securities Act. The issued shares have not been, and will not be, registered under
the U.S. Securities Act or any U.S. state securities laws, and may not be offered or sold in the United States or to, or for the
account or benefit of, United States persons absent registration or any applicable exemption from the registration requirements
of the U.S. Securities Act and applicable U.S. state securities laws.
In
July 2017 we issued to institutional and accredited investors unregistered warrants to purchase up to 1,215,873 ADSs in a private
placement completed concurrently with a registered direct offering. We also issued unregistered warrants to purchase up to 170,222
ADSs to H.C. Wainwright & Co., LLC, the exclusive placement agent for the offering. The ADSs were issued on a private
placement basis pursuant to exemptions from the registration requirements of the U.S. Securities Act provided by Regulation S,
Section 4(a)(2) and Regulation D (Rule 506) under the U.S. Securities Act. Of the above unregistered warrants issued by
us in July 2017, unexercised warrants to purchase 558,154 ADSs representing 558,154 of our ordinary shares were subsequently registered
by us in August 2018. H.C. Wainwright previously served as our exclusive placement agent for a registered offering of our securities
in each of January 2019, June 2018, July 2017 and July 2016. H.C. Wainwright also served as an underwriter for our initial public
offering on NASDAQ in November 2015.
In
October 2017, we issued 67,367 ADSs to a vendor of ours located in the U.S. in consideration for services provided to us. The
ADSs were issued on a private placement basis pursuant to exemptions from the registration requirements of the U.S. Securities
Act provided by Section 4(a)(2) and Regulation D (Rule 506) under the U.S. Securities Act. The issued ADSs have not been,
and will not be, registered under the U.S. Securities Act or any U.S. state securities laws, and may not be offered or sold in
the United States or to, or for the account or benefit of, United States persons absent registration or any applicable exemption
from the registration requirements of the U.S. Securities Act and applicable U.S. state securities laws.
In
March 2018 we closed the transaction for the acquisition of an additional 27% stake in TyrNovo, pursuant to an agreement with
certain unaffiliated minority shareholders of TyrNovo, previously announced in October 2017. Pursuant to the agreement, we acquired
4,024 ordinary shares, or approximately 27% of the outstanding shares of TyrNovo (the “Newly Acquired TyrNovo Shares”).
In exchange for the Newly Acquired TyrNovo Shares, we issued to these unaffiliated minority shareholders of TyrNovo, in aggregate,
658,484 of our newly issued ordinary shares (equivalent to 658,484 ADSs) (the “TyrNovo Minority Consideration Shares”).
The TyrNovo Minority Consideration Shares were issued on a private placement basis pursuant to exemptions from the registration
requirements of the U.S. Securities Act provided by Regulation S, Section 4(a)(2) and Regulation D (Rule 506) under the U.S. Securities
Act. The issued shares have not been, and will not be, registered under the U.S. Securities Act or any U.S. state securities
laws, and may not be offered or sold in the United States or to, or for the account or benefit of, United States persons absent
registration or any applicable exemption from the registration requirements of the U.S. Securities Act and applicable U.S. state
securities laws.
In
June 2018, we closed the acquisition of Taoz’s entire stake in TyrNovo, then representing 3.1% of the outstanding shares
of TyrNovo (following subsequent cash investments by us in TyrNovo), pursuant to an agreement with Taoz. Pursuant to this new
share exchange agreement with Taoz, in exchange for Taoz’s entire holding in TyrNovo and the termination of the existing
shareholder and investment agreements by and among us, TyrNovo and Taoz, we issued to Taoz 140,845 of our newly issued ordinary
shares (equivalent to 140,845 ADSs) (the “Taoz Shares”), which represented at such time approximately 0.9% of our
issued and outstanding share capital. The Taoz Shares were issued in Israel on a private placement basis pursuant to exemptions
from the registration requirements of the U.S. Securities Act provided by Regulation S promulgated under the U.S. Securities Act,
and were subsequently registered by us in August 2018.
In
June 2018 we issued to institutional investors unregistered warrants to purchase up to 1,630,000 ADSs representing 1,630,000 of
our ordinary shares in private placements completed concurrently with a registered direct offering. We also issued unregistered
warrants to purchase up to 228,200 ADSs representing 228,200 of our ordinary shares to H.C. Wainwright & Co., LLC, the
exclusive placement agent for the offering. All of these warrants remain unexercised and the ADS and shares underlying them have
been registered by us separately on a Registration Statement on Form F-3. They were issued on a private placement basis pursuant
to exemptions from the registration requirements of the U.S. Securities Act provided by Regulation S, Section 4(a)(2) and Regulation
D (Rule 506) under the U.S. Securities Act. H.C. Wainwright previously served as our exclusive placement agent for a registered
offering of our securities in each of January 2019, June 2018, July 2017 and July 2016. H.C. Wainwright also served as an underwriter
for our initial public offering on NASDAQ in November 2015.
In
January 2019 we issued to institutional investors unregistered warrants to purchase up to 2,571,430 ADSs representing 2,571,430
of our ordinary shares in private placements completed concurrently with a registered direct offering. We also issued unregistered
warrants to purchase up to 240,000 ADSs representing 240,000 of our ordinary shares to H.C. Wainwright & Co., LLC, the
exclusive placement agent for the offering. All of these unregistered warrants remain unexercised and the ADSs and shares underlying
them have been registered by us under a Registration Statement on Form F-1. They were issued on a private placement basis pursuant
to exemptions from the registration requirements of the U.S. Securities Act provided by Regulation S, Section 4(a)(2) and Regulation
D (Rule 506) under the U.S. Securities Act. H.C. Wainwright previously served as our exclusive placement agent for a registered
offering of our securities in each of January 2019, June 2018, July 2017 and July 2016. H.C. Wainwright also served as an underwriter
for our initial public offering on NASDAQ in November 2015.
On
March 14, 2019, we announced that we had entered into the Acquisition Agreement to acquire 100% of the shares of FameWave, a privately
held Israeli biopharmaceutical company, from its shareholders in exchange for newly issued ADSs subject to a 12-month lock-up
period, priced at $1.23 per ADS, plus the Kitov Warrants. In addition, we provided a loan to FameWave of approximately $2 million,
for the return of the intellectual property rights to CM-24 to FameWave, and to repay certain loans which may be provided by FameWave’s
shareholders to FameWave to conduct business pursuant to the approved business budget. In addition to the share exchange, in accordance
with the Acquisition Agreement, three leading life science focused investment funds, Orbimed, Pontifax Venture Capital, and Arkin
Holdings (collectively, the “investment funds”), which collectively (together with their respective affiliates) hold
approximately 90% of FameWave, have agreed to invest an aggregate of $3.5 million in the Company in exchange for newly issued
ADSs of the Company, priced at $1.23 per ADS. In addition, at closing of the FameWave Transaction, we agreed to approve grants
to Dr. Michael Schickler, the current CEO of FameWave, under Kitov’s Employees Stock Option Plan under the 102 Capital Gains
Track, or other eligible tax track as applicable, of the FameWave CEO Options. Immediately following the completion of the FameWave
Transaction, each of these investment funds, together with its respective affiliates, former minority shareholders of FameWave
(in aggregate), and other persons entitled to receive our securities in connection with the FameWave Transaction will hold approximately
10,921,139 of our ADS representing 10,921,139 of our ordinary shares, and 4,119,513 of the Kitov Warrants and FameWave CEO Options.
The above mentioned securities being offered and expected to be issued by us following closing of the transaction were offered,
and will be issued on a private placement basis pursuant to exemptions from the registration requirements of the U.S. Securities
Act provided by Regulation S, Section 4(a)(2) or Regulation D (Rule 506) under the U.S. Securities Act, as applicable. The ADSs
and ADSs issuable upon exercise of the Kitov Warrants will be subject a lock-up agreement at the closing of the FameWave Transaction,
and the ADSs Kitov will issue to the investment funds in return for their $3.5 million investment in the Company, will be subject
to a lock-up agreement restricting transfer or sale of the ADSs for a 12-month period commencing on the date of issuance by us;
provided, however, that during the period following 6 months after the date of issuance of the securities and until the end of
the such 12-month period, the holder will be allowed to sell the securities, subject to any statutory resale restrictions or limitations,
but only if (i) we have not publicly announced clinical data related to FameWave’s products, and (ii) the market price for
our ADSs on NASDAQ at the close of the preceding trading day was above $3.00 per ADS. In addition, we agreed that at the closing
of the FameWave Transaction, we will enter into a Registration Rights Agreement with the investment funds and any other holders
of the securities we issue who have agreed to the lock-up (the “Registration Rights Agreement”) providing for the
filing of a registration statement (the “Registration Statement”) with the Securities and Exchange Commission registering
the ADSs and the ADSs underlying the Kitov Warrants. Pursuant to the Registration Rights Agreement we will be obligated to file
a registration statement by no later than 120 days prior to the end of the above mentioned lock-up period and to cause the Registration
Statement to be declared effective no later than the end of such lock-up period. In addition, each FameWave shareholder that receives
our ADSs to be issued as part of the FameWave Transaction and has signed the lock-up agreement and the Registration Rights Agreement
shall be required to also sign a Shareholder’s Undertaking in connection with the ownership of our ordinary shares containing,
amongst other matters, an undertaking that during the above mentioned lock-up period, and, subsequent to such lock-up period until
the earlier of (a) for so long as the aggregate number of our ordinary share equivalents beneficially owned by the shareholder
and its group members, as a group, is greater than or equal to 2.5% of the our then issued and outstanding ordinary shares or
(b) 24 months following the date of the undertaking, the shareholder shall cause all of our voting securities beneficially owned
by it or any of its group members or over which it or any of its group members has voting control not to be voted (i) against
any person nominated and recommended to serve as our directors by our Board of Directors and/or any applicable committee thereof
and (ii) with respect to any other action, proposal or matter to be voted on by our shareholders, in a manner inconsistent with
the recommendation of our Board of Directors or any applicable committee thereof; provided, however, that the undertakings in
sub-clauses (i) and (ii) above shall not apply to: (1) matters under Sections 270(1), 270(2), 270(3) and 270(4) the Israeli Companies
Law governing related or interested party transaction and officeholder compensation, as well as matters which require the declaration
by officers or shareholders of a personal interest and/or affiliation with a controlling shareholder as defined in, and in accordance
with, the Israeli Companies Law, or (2) matters directly affecting the development of the technology controlled by FameWave or
(3) where, based on a legal advice opinion received in writing by the shareholder, the shareholder reasonably believes that such
vote by the shareholder may impose any liability on the shareholder. The transaction has been approved by the boards and
shareholders of each of the Company and FameWave, all major closing conditions have been met other than finalizing the tax ruling
for the sellers and the issuance and exchange of shares among the companies, and the acquisition is expected to close before the
end of 2019 or shortly thereafter. Upon closing of the acquisition, FameWave will become a wholly owned subsidiary of Kitov Pharma.
Item 8. Exhibits and Financial Statement Schedules.
(a) Exhibits
Exhibit
Number
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Exhibit Description
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1.1****
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Form of Placement Agent Agreement.
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3.1
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Memorandum of Association of the Registrant (originally filed as Exhibit 1.1 to the Registrant’s Annual Report on Form 20-F as filed with the Securities and Exchange Commission on March 26, 2019 and incorporated herein by reference thereto).
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3.2
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Amended and Restated Articles of Association of the Registrant (originally filed as Exhibit 1.2 to the Registrant’s Annual Report on Form 20-F as filed with the Securities and Exchange Commission on March 26, 2019 and incorporated herein by reference thereto).
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4.1
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Form of Deposit Agreement among the Registrant, the Bank of New York Mellon, as Depositary, and all Owners and Holders from time to time of American Depositary Shares issued hereunder (incorporated by reference to Exhibit 4.1 to our Registration Statement on Form F-1 as filed with the Securities and Exchange Commission on September 24, 2015).
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4.2
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Form of Warrant Agent Agreement (incorporated by reference to Exhibit 4.2 to our Registration Statement on Form F-1/A as filed with the Securities and Exchange Commission on November 18, 2015).
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4.3
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Form of American Depositary Receipt (incorporated by reference to prospectus filed with the Securities and Exchange Commission on January 4, 2019)
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4.4
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Form of Underwriters’ Warrant (incorporated by reference to Exhibit 4.4 to our Registration Statement on Form F-1/A as filed with the Securities and Exchange Commission on November 18, 2015).
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4.5
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Form of Placement Agent Warrant (incorporated by reference to Exhibit 4.5 to the Registrant’s Registration Statement on Form F-1/A as filed with the Securities and Exchange Commission on June 27, 2016).
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4.6
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Form of Letter Amendment to Warrant Agent Agreement with respect to Series A warrants (incorporated by reference to Exhibit 4.1 to the Registrant’s Form 6-K furnished to the Securities and Exchange Commission on June 29, 2016)
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4.7
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Form of Pre-Funded Series B Warrant Agreement (incorporated by reference to Exhibit 4.4 to the Registrant’s Registration Statement on Form F-1/A as filed with the Securities and Exchange Commission on June 27, 2016).
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4.8
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Stock Purchase Agreement, dated January 12, 2017, by and between the Registrant and Goldman Hirsh Partners Ltd. (incorporated by reference to Exhibit 2.8 to the Registrant’s Annual Report on Form 20-F as filed with the Securities and Exchange Commission on May 1, 2017).
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4.9
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Shareholder’s Undertaking by Goldman Hirsh Partners Ltd. dated January 13, 2017. (incorporated by reference to Exhibit 2.9 to the Registrant’s Annual Report on Form 20-F as filed with the Securities and Exchange Commission on May 1, 2017)
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4.10
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Form of Warrant issued to purchasers in the July 2017 offering (incorporated by reference to Exhibit 4.1 to the Registrant’s Form 6-K furnished to the Securities and Exchange Commission on July 14, 2017)
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4.11
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Form of Placement Agent Warrant (incorporated by reference to Exhibit 4.2 to the Registrant’s Form 6-K furnished to the Securities and Exchange Commission on July 14, 2017)
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4.12
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Stock Purchase Agreement, dated October 3, 2017, by and among the Registrant, Certain Stockholders of TyrNovo Ltd. and the Stockholders’ Representative (incorporated by reference to Exhibit 2.13 to the Registrant’s Annual Report on Form 20-F as filed with the Securities and Exchange Commission on March 5, 2018)
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4.13
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Form of Warrant issued to purchasers in the June 2018 offering (incorporated by reference to Exhibit 4.1 to the Registrant’s Form 6-K furnished to the Securities and Exchange Commission on June 5, 2018)
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4.14
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Form of Placement Agent Warrant (incorporated by reference to Exhibit 4.2 to the Registrant’s Form 6-K furnished to the Securities and Exchange Commission on June 5, 2018)
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4.15
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Form of Warrant issued to purchasers in the January 2019 offering (incorporated by reference to Exhibit 4.1 to the Registrant’s Form 6-K furnished to the Securities and Exchange Commission on January 18, 2019)
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4.16
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Form of Placement Agent Warrant (incorporated by reference to Exhibit 4.2 to the Registrant’s Form 6-K furnished to the Securities and Exchange Commission on January 18, 2019)
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4.17****
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Form of 2020 Warrant
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4.18****
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Form of Placement Agent Warrant
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5.1****
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Opinion of Law Office of Avraham Ben-Tzvi, Adv.
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5.2****
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Opinion of Haynes and Boone LLP, U.S. legal counsel to the Registrant.
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10.1
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Form of Letter of Exemption adopted on July 2013 (unofficial English translation from Hebrew) (incorporated by reference to Exhibit 10.5 to our Registration Statement on Form F-1 filed with the Securities and Exchange Commission on September 24, 2015).
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10.2
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Form of Letter of Indemnity adopted on July 2013 (unofficial English translation from Hebrew) (incorporated by reference to Exhibit 10.6 to our Registration Statement on Form F-1 as filed with the Securities and Exchange Commission on September 24, 2015).
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10.3
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Kitov Pharma Ltd. 2016 Equity-Based Incentive Plan (incorporated by reference to Annex C to the Proxy Statement included as Exhibit 99.1 to the Registrant’s Form 6-k furnished to the Securities and Exchange Commission on March 22, 2019)
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10.4
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Form of Underwriting Agreement (incorporated by reference to Exhibit 1.1 to our Registration Statement on Form F-1/A filed with the Securities and Exchange Commission on November 18, 2015).
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10.5
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Form of Share Purchase Agreement between Kitov Pharma and the purchasers (incorporated by reference to Exhibit 1.1 to the Registrant’s Form 6-K furnished to the Securities and Exchange Commission on June 29, 2016)
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10.6*
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License Agreement, dated as of August 15, 2013, by and between Yissum Research Development Company of The Hebrew University of Jerusalem, Ltd. and TyrNovo Ltd. (incorporated by reference to Exhibit 4.14 to the Registrant’s Annual Report on Form 20-F as filed with the Securities and Exchange Commission on May 1, 2017)
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10.7*
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First Amendment to License Agreement, dated as of April 8, 2014, by and between Yissum Research Development Company of The Hebrew University of Jerusalem, Ltd. and TyrNovo Ltd. (incorporated by reference to Exhibit 4.15 to the Registrant’s Annual Report on Form 20-F as filed with the Securities and Exchange Commission on May 1, 2017)
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10.8*
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Second Amendment to License Agreement, dated as of March 16, 2017, by and between Yissum Research Development Company of The Hebrew University of Jerusalem, Ltd. and TyrNovo Ltd. (incorporated by reference to Exhibit 4.16 to the Registrant’s Annual Report on Form 20-F as filed with the Securities and Exchange Commission on May 1, 2017)
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10.9
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Form of Securities Purchase Agreement dated as of July 11, 2017 by and between the Registrant and the purchasers in the offering (incorporated by reference to Exhibit 1.1 to the Registrant’s Form 6-K furnished to the Securities and Exchange Commission on July 14, 2017)
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10.10
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Kitov Pharma Ltd. Office Holder Compensation Policy approved the shareholders on July 12, 2017 (incorporated by reference to Exhibit A to the Proxy Statement included as Exhibit 99.1 to the Registrant’s Form 6-K furnished to the Securities and Exchange Commission on June 8, 2017)
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10.11
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Revolving Secured Facility and Pledge Agreement dated March 1, 2017 by and between TyrNovo Ltd., and Kitov Pharma Ltd. (incorporated by reference to Exhibit 4.18 to the Registrant’s Annual Report on Form 20-F as filed with the Securities and Exchange Commission on March 5, 2018)
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10.12
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Convertible Bridge Loan Agreement, dated September 15, 2017, by and between Kitov Pharma Ltd. and TyrNovo Ltd. (incorporated by reference to Exhibit 4.19 to the Registrant’s Annual Report on Form 20-F as filed with the Securities and Exchange Commission on March 5, 2018)
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10.13
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Form of Securities Purchase Agreement dated as of June 1, 2018 by and between the Registrant and the purchasers in the offering (incorporated by reference to Exhibit 1.1 to the Registrant’s Form 6-K furnished to the Securities and Exchange Commission on June 5, 2018)
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10.14
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Form of Securities Purchase Agreement dated as of January 16, 2019 by and between the Registrant and the purchasers in the offering (incorporated by reference to Exhibit 1.1 to the Registrant’s Form 6-K furnished to the Securities and Exchange Commission on January 18, 2019)
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10.15**
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Product Manufacturing Agreement, effective as of November 8, 2018, by and between Kitov Pharma Ltd. and Dexcel Ltd. (incorporated by reference to Exhibit 4.15 to the Registrant’s Form 20-F/A filed the Securities and Exchange Commission on April 3, 2019)
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10.16**
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Agreement dated as of December 27, 2018, by and between Kitov Pharma Ltd. and Coeptis Pharmaceuticals Inc. (incorporated by reference to Exhibit 4.16 to the Registrant’s Form 20-F/A filed the Securities and Exchange Commission on April 3, 2019)
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10.17**
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Stock Purchase Agreement by and among Kitov Pharma Ltd., The Stockholders of FameWave Ltd. and M. Arkin (1999) Ltd. dated as of March 14, 2019 (incorporated by reference to Exhibit 4.17 to the Registrant’s Form 20-F/A filed the Securities and Exchange Commission on April 3, 2019).
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10.18
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English Translation of Enforcement Arrangement entered into by and amongst the Israel Securities Authority, Kitov Pharma Ltd., Isaac Israel, Paul Waymack, and Simcha Rock (incorporated by reference to Exhibit 99.1 to the Registrant’s Form 6-K furnished to the Securities and Exchange Commission on August 13, 2019)
|
10.19
|
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Amendment dated August 16, 2019 to the Stock Purchase Agreement by and among Kitov Pharma Ltd., The Stockholders of FameWave Ltd. and M. Arkin (1999) Ltd. dated as of March 14, 2019 (incorporated by reference to Exhibit 10.19 to the Registrant’s Registration Statement on Form F-1 filed with the Securities and Exchange Commission on September 16, 2019).
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10.20 **
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Amendment dated October 8, 2019, to the Agreement by and between Kitov Pharma Ltd. and Coeptis Pharmaceuticals Inc (incorporated by reference to Exhibit 10.20 to the Registrant’s Registration Statement on Form F-3 filed with the Securities and Exchange Commission on December 2, 2019).
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10.21****
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Form of Securities Purchase Agreement
|
21.1
|
|
List of subsidiaries of the Registrant (incorporated by reference to Exhibit 21.1 to the Registrant’s Registration Statement on Form F-3 filed with the Securities and Exchange Commission on December 2, 2019).
|
23.1****
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Consent of Law Office of Avraham Ben-Tzvi, Adv. (included in Exhibit 5.1)
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23.2****
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Consent of Haynes and Boone, LLP (included in Exhibit 5.2)
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23.3±
|
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Consent of Somekh Chaikin, independent registered public accounting firm, a Member Firm of KPMG International
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24.1±
|
|
Power of Attorney (included on signature page)
|
|
*
|
Confidential
treatment granted with respect to portions of this Exhibit.
|
|
**
|
Portions
of this exhibit have been omitted because they are both (i) not material, and (ii) would
likely cause competitive harm to the Company if publicly disclosed.
|
|
****
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To
be filed, if applicable, by amendment, or as an exhibit to a report on Form 6-K and incorporated
herein by reference.
|
(b)
Financial Statement Schedules
All
schedules have been omitted because either they are not required, are not applicable or the information is otherwise set forth
in the consolidated financial statements and related notes thereto.
Item
9. Undertakings
The
undersigned Registrant hereby undertakes:
(1)
To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
|
(i)
|
To
include any prospectus required by Section 10(a)(3) of the Securities Act;
|
|
(ii)
|
To
reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information
set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered
(if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low
or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration
statement; and
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|
(iii)
|
To
include any material information with respect to the plan of distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement.
|
provided,
however, that paragraphs (1)(i), (1)(ii) and (1)(iii) do not apply if the information required to be included in
a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the Commission by the Registrant
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in this registration
statement or is contained in a form of prospectus filed pursuant to Rule 424(b) that is part of this registration statement;
(2)
That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3)
To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold
at the termination of the offering.
(4)
To file a post-effective amendment to the registration statement to include any financial statements required by Item 8.A. of
Form 20-F at the start of any delayed offering or throughout a continuous offering. Financial statements and information otherwise
required by Section 10(a)(3) of the Securities Act need not be furnished, provided that the Registrant includes in the prospectus,
by means of a post-effective amendment, financial statements required pursuant to this paragraph (4) and other information necessary
to ensure that all other information in the prospectus is at least as current as the date of those financial statements. Notwithstanding
the foregoing, with respect to registration statements on Form F-3, a post-effective amendment need not be filed to include financial
statements and information required by Section 10(a)(3) of the Securities Act or Rule 3-19 of this chapter if such financial statements
and information are contained in periodic reports filed with or furnished to the Commission by the Registrant pursuant to Section
13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the Form F-3.
(5)
That, for the purpose of determining liability of the Registrant under the Securities Act to any purchaser in the initial distribution
of the securities, the undersigned Registrant undertakes that in a primary offering of securities of the undersigned Registrant
pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if
the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned Registrant
will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser: (i) any preliminary
prospectus or prospectus of the undersigned Registrant to the offering required to be filed pursuant to Rule 424; (ii) any free
writing prospectus relating to the offering prepared by or on behalf of the undersigned Registrant or used or referred to by an
undersigned Registrant; (iii) the portion of any other free writing prospectus relating to the offering containing material information
about the undersigned Registrant or its securities provided by or on behalf of the undersigned Registrant; and (iv) any other
communication that is an offer in the offering made by the undersigned Registrant to the purchaser.
(6)
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed
in the Securities Act and will be governed by the final adjudication of such issue.
(7)
That,
|
(i)
|
for
purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed
as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant
pursuant to Rule 424(b) (1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement
as of the time it was declared effective.
|
|
(ii)
|
for
the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
|
SIGNATURES
Pursuant
to the requirements of the Securities Act, the Registrant certifies that it has reasonable grounds to believe that it complies
with all of the requirements for filing on Form F-1 and has duly caused this registration statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in Tel Aviv, Israel on December 27, 2019.
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KITOV
PHARMA LTD.
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|
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By:
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/s/
Isaac Israel
|
|
|
Name:
|
Isaac
Israel
|
|
|
Title:
|
Chief
Executive Officer
|
|
|
|
|
By:
|
/s/
Gil Efron
|
|
|
Name:
|
Gil
Efron
|
|
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Title:
|
Deputy
CEO and Chief Financial Officer
|
KNOW
ALL MEN BY THESE PRESENTS, that we, the undersigned officers and directors of Kitov Pharma Ltd., a company incorporated under
the laws of the State of Israel, do hereby constitute and appoint Isaac Israel and Gil Efron, and each of them, as his or her
true and lawful attorney-in-fact and agent, with full power of substitution and re-substitution, for him and in his name, place,
and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments, exhibits thereto and
other documents in connection therewith) to this Registration Statement and any subsequent registration statement filed by the
registrant pursuant to Rule 462(b) of the Securities Act, which relates to this Registration Statement, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary
to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
Pursuant
to the requirements of the Securities Act, this registration statement has been signed by the following persons in the capacities
and on the dates indicated.
Signatures
|
|
Title
|
|
Date
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|
|
|
|
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/s/ Eric K.
Rowinsky
|
|
Chairman
of the Board of Directors
|
|
December
27, 2019
|
Eric
K. Rowinsky
|
|
|
|
|
|
|
|
|
|
/s/
Isaac Israel
|
|
Chief
Executive Officer and Director (Principal Executive Officer)
|
|
December 27, 2019
|
Isaac
Israel
|
|
|
|
|
|
|
|
|
|
/s/ Simcha
Rock
|
|
Director
|
|
December 27, 2019
|
Simcha
Rock
|
|
|
|
|
|
|
|
|
|
/s/
Ido Agmon
|
|
Director
|
|
December 27, 2019
|
Ido
Agmon
|
|
|
|
|
|
|
|
|
|
/s/
Steven Steinberg
|
|
Director
|
|
December 27, 2019
|
Steven
Steinberg
|
|
|
|
|
|
|
|
|
|
/s/
Revital Stern-Raff
|
|
Director
|
|
December 27, 2019
|
Revital
Stern-Raff
|
|
|
|
|
|
|
|
|
|
/s/
Gil Efron
|
|
Deputy
CEO and Chief Financial Officer
|
|
December 27, 2019
|
Gil
Efron
|
|
(Principal
Financial Officer and Principal Accounting Officer)
|
|
|
Signature
of authorized representative in the United States
Pursuant
to the requirements of the Securities Act, the Registrant’s duly authorized representative has signed this Registration
Statement on Form F-1 on this December 27, 2019 day of December 2019.
|
Puglisi
& Associates
|
|
|
|
|
|
Authorized
U.S. Representative
|
|
|
|
|
|
By:
|
/s/
Donald J. Puglisi
|
|
|
Name:
|
Donald
J. Puglisi
|
|
|
Title:
|
Managing
Director
|
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