Form 10-Q - Quarterly report [Sections 13 or 15(d)]

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________________ to _________________

Commission File Number: 001-36581

Vascular Biogenics Ltd.

(Exact name of registrant as specified in its charter)

Israel		Not Applicable
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

8 HaSatat St. Modi’in, Israel		7178106
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: +972-8-9935000

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Ordinary Shares, par value NIS 0.01 per share		VBLT		The Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☒	Smaller reporting company	☒

		Emerging growth company	☐

If an emerging growth company, 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 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 11, 2023, the registrant had 77,640,467 ordinary shares, par value NIS 0.01 par value per share, outstanding.

Table of Contents

		Page
PART I.	FINANCIAL INFORMATION	6
Item 1.	Condensed Consolidated Balance Sheets (Unaudited)	6
	Condensed Consolidated Statements of Net Loss and Comprehensive Loss (Unaudited)	7
	Condensed Consolidated Statements of Changes in Ordinary Shares and Shareholders’ Equity (Unaudited)	8
	Condensed Consolidated Statements of Cash Flows (Unaudited)	10
	Notes to Unaudited Condensed Consolidated Financial Statements (Unaudited)	11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	21
Item 4.	Controls and Procedures	21
PART II.	OTHER INFORMATION	22
Item 1.	Legal Proceedings	22
Item 1A.	Risk Factors	22
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	22
Item 3.	Defaults Upon Senior Securities	22
Item 4.	Mine Safety Disclosures	22
Item 5.	Other Information	22
Item 6.	Exhibits	22
Signatures		23

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements that relate to future events or our future financial performance, which express the current beliefs and expectations of our management. Such statements involve a number of known and unknown risks, uncertainties and other factors that could cause our actual future results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements include all statements that are not historical facts and can be identified by words such as, but not limited to, “believe,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” “targets,” “likely,” “will,” “would,” “could,” and similar expressions or phrases. We have based these forward-looking statements largely on our management’s current expectations and future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. Forward-looking statements include, but are not limited to, express or implied statements about:

●	the completion of the proposed merger, or the Merger, with Notable Labs, Inc., or Notable;

●	our cash runway;

●	exploration and execution of additional strategic transactions to further maximize shareholder value, including the proposed VB-601 asset sale;

●	effects of discontinuation of the OVAL trial and ofra-vec program in all indications;

●	the initiation, timing, progress and results of our preclinical and clinical activities, including a first-in-human Phase 1 trial for VB-601 and our research and development program, subject to the Merger, and the proposed VB-601 Asset Sale, if at all;

●	our continued listing on The Nasdaq Capital Market;

●	our expectations about the availability and timing of data from any clinical trial;

●	our ability to advance product candidates into, and successfully complete, clinical trials;

●	our plans for future clinical trials;

●	our ability to manufacture our product candidate in sufficient quantities for clinical trials and, if appropriate, commercialization;

●	the timing or likelihood of regulatory filings and approvals, including data required to file for regulatory approval;

●	the commercialization of our product candidate, if approved;

●	potential advantages of our product candidate;

●	the pricing and reimbursement of our product candidate, if approved;

●	our ability to develop and commercialize additional product candidates;

●	our business strategy;

●	the implementation of our business model, strategic plans for our business, product candidate and technology;

●	the scope and duration of protection we are able to establish and maintain for intellectual property rights covering our product candidate and technology;

●	estimates of our expenses, future revenues, capital requirements and our needs for additional financing;

●	our ability to establish and maintain collaborations and the benefits of such collaborations;

●	our ability to maintain our level of grant funding or obtain additional grant or other non-dilutive sources of funding and commitments associated with such grants; and

●	developments relating to our competitors and our industry.

All forward-looking statements involve risks, assumptions and uncertainties. You should not rely upon forward-looking statements as predictors of future events. These forward-looking statements are subject to a number of known and unknown risks, uncertainties and assumptions, including risks described in the section titled “Risk Factors” contained in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the Securities and Exchange Commission, or SEC, on March 14, 2023, including, among other things, the following:

●	There is no assurance that the proposed Merger will be completed in a timely manner or at all. If the proposed Merger is not consummated, our business could suffer materially and our stock price could decline.

●	If the proposed Merger is not completed, we may be unsuccessful in completing an alternative transaction on terms that are as favorable as the terms of the proposed Merger with Notable, or at all, and we may otherwise be unable to continue to operate our business. Our board of directors may decide to pursue a dissolution and liquidation of our company. In such an event, the amount of cash available for distribution to our shareholders will depend heavily on the timing of such liquidation as well as the amount of cash that will need to be reserved for commitments and contingent liabilities.

●	The issuance of our ordinary shares to Notable stockholders in the proposed Merger will substantially dilute the voting power of our current shareholders.

●	We are exploring strategic alternatives to enhance shareholder value, including the proposed Merger, the proposed VB-601 asset sale and the recently completed sale of our Modi’in facility rights. We may not be successful in consummating such transactions or they may not deliver the value to our shareholders that we anticipate.

●	Historically, we have been highly dependent on the success of ofra-vec in oncology applications. The Phase 3 OVAL clinical trial evaluating ofra-vec in ovarian cancer has been discontinued after not meeting statistical significance in progression-free survival, or PFS, or overall survival, or OS, and we have ceased further development of ofra-vec in all indications. Such failure and discontinued internal development of ofra-vec has resulted in, and may result in future, workplace reduction measures, decrease anticipated near-term revenues and profitability, may cause reputational harm and result in a wind down of our operations.

●	We are not in compliance with The Nasdaq Stock Market LLC, or Nasdaq, minimum bid price requirement and if we fail to regain compliance with Nasdaq’s continued listing requirements (or if the Merger is completed and the combined company does not meet Nasdaq’s initial listing requirements), our ordinary shares could be delisted, which could adversely affect the liquidity of our ordinary shares and our ability to raise additional capital or enter into strategic transactions.

●	Our ordinary shares may be delisted from the Nasdaq and begin trading in the over-the-counter markets if we are not successful in regaining compliance with the Nasdaq’s continued listing standards, which may negatively impact the price of our ordinary shares and our ability to access the capital markets.

●	We have undergone a significant workforce reduction to reduce operating expenses and extend our cash runway, but such efforts may not yield the anticipated benefits, which could have a material effect on our operations.

●	We have incurred significant losses since our inception and anticipate that we will continue to incur significant losses for the foreseeable future.

●	We have never generated any revenue from product sales and may never be profitable.

●	We may need to raise additional funding, which may not be available on acceptable terms, or at all. Failure to obtain this necessary capital when needed may force us to delay, limit or terminate our product development efforts or other operations (or could impact our ability to complete the proposed Merger or the equity split in the proposed Merger).

●	We have received and may continue to receive Israeli government, EIC, or other governmental grants to assist in the funding of our research and development activities. If we lose our funding from these research and development grants and do not receive new grants, we may encounter difficulties in the funding of future research and development projects and implementing technological improvements, which would harm our operating results.

●	We are highly dependent on our technology in general, and we cannot be certain that our product candidate VB-601 will receive regulatory approval or be commercialized or that we will be able to realize any value from VB-601 through the proposed asset sale or otherwise. Any failure to successfully develop, obtain regulatory approval for and commercialize any current or future product candidates, independently or in cooperation with a third party collaborator, or the experience of significant delays in doing so, would compromise our ability to generate revenue and become profitable.

●	Our product candidate VB-601 is based on novel technology and is in very early stages of development, which makes it difficult to predict the time and cost of development and potential regulatory approval, and may make it more challenging to complete the successful disposition of such asset.

●	We may find it difficult to enroll patients in future clinical trials, and patients could discontinue their participation in our clinical trials, which could delay or prevent clinical trials of our product candidate.

●	We may encounter substantial delays in our clinical trials or we may fail to demonstrate safety and efficacy to the satisfaction of applicable regulatory authorities.

●	The results from our future clinical trials may not be sufficiently robust to support the submission for marketing approval for our product candidate. Before we submit our product candidates for marketing approval, the U.S. Food and Drug Administration, or FDA, and the European Medicines Agency, or EMA, may require us to conduct additional clinical trials, or evaluate subjects for an additional follow-up period.

●	Legislative and regulatory activity may exert downward pressure on potential pricing and reimbursement for our product candidate, if approved, that could materially affect the opportunity to commercialize.

●	We expect to rely on third parties to conduct all aspects of our product manufacturing, protocol development, research and preclinical and clinical testing, and these third parties may not perform satisfactorily.

●	We intend to rely on third-party manufacturers to produce commercial quantities of any of our product candidates that receive regulatory approval, but we have not entered into binding agreements with any such manufacturers to support commercialization. Additionally, these manufacturers do not have experience producing our product candidate at commercial levels and may not pass regulatory inspections or achieve the necessary regulatory approvals or produce our product candidate at the quality, quantities, locations and timing needed to support commercialization.

●	Our future success depends on our ability to retain key employees, consultants, and advisors and to attract, retain and motivate qualified personnel.

●	Pandemics or other global emergencies could have an adverse impact on our developmental programs and our financial condition.

●	The market price of our ordinary shares may be highly volatile, and you may not be able to resell your shares at the purchase price.

●	As of January 1, 2023, we lost our foreign private issuer status, and we are required to comply with (1) the Exchange Act’s domestic reporting regime and (2) accepted governance practices associated with U.S. domestic issuers in accordance with various SEC and Nasdaq rules, which will likely cause us to incur significant legal, accounting and other expenses. We also now qualify as a “smaller reporting company” and intend to use the scaled disclosures available to such companies, which may make an investment in our company less attractive to some investors.

These risks, assumptions and uncertainties are not necessarily all of the important factors that could cause actual results to differ materially from those expressed in any of our forward-looking statements. Other unknown or unpredictable factors also could harm our results.

All of the forward-looking statements we have included in this Quarterly Report are based on information available to us on the date of this Quarterly Report. We undertake no obligation, and specifically decline any obligation, to update publicly or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this Quarterly Report might not occur.

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

VASCULAR BIOGENICS LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

	June 30, 2023			December 31, 2022
	U.S. dollars in thousands
ASSETS
Current assets:
Cash and cash equivalents	$	24,264		$	17,665
Restricted Cash		-			360
Short-term bank deposits		-			3,054
Other current assets		284			1,070
Total current assets		24,548			22,149

Non-current assets:
Funds in respect of employee rights upon retirement		98			368
Property, plant and equipment, net		-			6,601
Operating lease right-of-use assets		-			541
Total non-current assets		98			7,510
Total assets	$	24,646		$	29,659

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:
Accounts payable and accruals:
Accounts payable	$	718		$	808
Accrued expenses		3,042			2,925
Other current liabilities		1,541			2,434
Current maturity of operating leases liability		-			564

Total current liabilities	$	5,301		$	6,731

Non-current liabilities:
Liability for employee rights upon retirement		108			477
Total non-current liabilities		108			477

Total liabilities	$	5,409		$	7,208

Shareholders’ equity:
Ordinary shares, NIS 0.01 par value; 200,000,000 Authorized as of June 30, 2023 and December 31, 2022; 70,500,117 and 69,750,117 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively.		175			174
Additional paid in capital		316,952			316,654
Accumulated deficit		(297,890	)		(294,377	)
Total equity		19,237			22,451

Total liabilities and equity	$	24,646		$	29,659

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

VASCULAR BIOGENICS LTD.

CONDENSED CONSOLIDATED STATEMENTS OF NET LOSS AND COMPREHENSIVE LOSS

(UNAUDITED)


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2023			2022			2023			2022
				U.S. dollars in thousands
Revenues	$	-		$	64		$	-		$	177
Cost of revenues		-			(34	)		(2	)		(89	)
Gross profit (loss)		-			30			(2	)		88
Research and development expenses, net	$	(1,546	)	$	6,721		$	(1,490	)	$	14,181
General and administrative expenses		1,873			2,923			5,112			6,085
Impairment loss of plant, property and equipment		349			-			349			-
Capital (gain) loss		187			-			(423	)		-
Operating loss		863			9,614			3,550			20,178
Financial income		-			(205	)		(67	)		(351	)
Financial expenses		11			25			30			35
Financial loss (income), net		11			(180	)		(37	)		(316	)
Net loss and comprehensive loss	$	874		$	9,434		$	3,513		$	19,862
	U.S. dollars
Loss per ordinary share
Basic and diluted	$	0.01		$	0.12		$	0.04		$	0.26
Basic	$	0.01		$	0.12		$	0.04		$	0.26
	Number of shares
Weighted average ordinary shares outstanding
Basic and diluted		78,393,524			77,398,939			78,098,460			77,392,922
Basic		78,393,524			77,398,939			78,098,460			77,392,922

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

VASCULAR BIOGENICS LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN ORDINARY SHARES SUBJECT TO POSSIBLE REDEMPTION AND SHAREHOLDERS’ EQUITY

(UNAUDITED)


																Ordinary shares subject
					Additional											to possible
	Ordinary shares in				paid					Accumulated			Total			redemption
	shares		Amount		capital		Warrants			deficit			equity			shares		Amount
					U.S. dollars in thousands
Balance at April 1, 2022		69,337,312	$	173	$	311,999	$	3,127		$	(272,501	)	$	42,798			-	$	-
Changes for the three months ended June 30, 2022
Net loss											(9,434	)		(9,434	)				-
Expired warrants						3,127		(3,127	)
Share based compensation		11,627		-*		1,010		-			-			1,010			-		-

Balance at June 30, 2022		69,348,939	$	173	$	316,136	$	-		$	(281,935	)	$	34,374			-	$	-

Less than $1


					Additional
	Ordinary shares in				paid		Accumulated			Total
	shares		Amount		capital		deficit			equity
	U.S. dollars in thousands
Balance at April 1, 2023		69,750,117	$	174	$	316,741	$	(297,016	)	$	19,899
Balance		69,750,117	$	174	$	316,741	$	(297,016	)	$	19,899
Changes for the three months ended June 30, 2023
Net loss								(874	)		(874	)
Issuance of ordinary shares		750,000		1		-		-			1
Share based compensation to employees		-		-		211		-			211
Balance at June 30, 2023		70,500,117	$	175	$	316,952	$	(297,890	)	$	19,237
Balance		70,500,117	$	175	$	316,952	$	(297,890	)	$	19,237

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

VASCULAR BIOGENICS LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN ORDINARY SHARES SUBJECT TO POSSIBLE REDEMPTION AND SHAREHOLDERS’ EQUITY

(UNAUDITED)


																Ordinary shares subject
					Additional											to possible
	Ordinary shares in				paid					Accumulated			Total			redemption
	shares		Amount		capital		Warrants			deficit			equity			shares			Amount
					U.S. dollars in thousands
Balance at January 1, 2022		68,711,584	$	171	$	309,355	$	3,127		$	(262,073	)	$	50,580			615,366		$	1,598
Changes for the six months ended June 30, 2022
Net loss											(19,862	)		(19,862	)
Expired warrants						3,127		(3,127	)
Reclassification of redemption shares into ordinary shares		615,366		2		1,596								1,598			(615,366	)		(1,598	)
Share based compensation		21,989		-*		2,058		-			-			2,058			-			-

Balance at June 30, 2022		69,348,939	$	173	$	316,136	$	-		$	(281,935	)	$	34,374			-		$	-

*	Less than $1


					Additional
	Ordinary shares in				paid		Accumulated			Total
	shares		Amount		capital		deficit			equity
	U.S. dollars in thousands
Balance at January 1, 2023		69,750,117	$	174	$	316,654	$	(294,377	)	$	22,451
Balance		69,750,117	$	174	$	316,654	$	(294,377	)	$	22,451
Changes for the six months ended June 30, 2023
Net loss								(3,513	)		(3,513	)
Issuance of ordinary shares		750,000		1		-		-			1
Share based compensation to employees		-		-		298		-			298
Balance at June 30, 2023		70,500,117	$	175	$	316,952	$	(297,890	)	$	19,237
Balance		70,500,117	$	175	$	316,952	$	(297,890	)	$	19,237

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

VASCULAR BIOGENICS LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


	Six Months Ended June 30,
	2023			2022
	U.S. dollars in thousands

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(3,513	)	$	(19,862	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		-			701
Impairment		349			-
Interest (income) expense		54			(31	)
Net gain on sale of long-term assets		(423	)		-
Net changes in operating leases		-			(266	)
Exchange losses (gain) on cash and cash equivalents and restricted cash		(2	)		141
Changes in accrued liability for employee rights upon retirement		(99	)		27
Share-based compensation		298			2,058
Changes in operating assets and liabilities:
Decrease in other current assets and long-term prepaid expenses		786			191
Increase (decrease) in accounts payable:
Trade		(254	)		(995	)
Other (including other non-current liability)		(1,246	)		160
Decrease in deferred revenue		-			(176	)
Net cash used in operating activities	$	(4,050	)	$	(18,052	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment	$	-		$	(843	)
Proceeds from the sale of long-term assets		7,286			-
Investment in short-term bank deposits		-			(3,000	)
Maturity of short-term bank deposits		3,000			15,108
Net cash provided by investing activities	$	10,286		$	11,265
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of ordinary shares	$	1		$	-
Net cash provided by financing activities	$	1		$	-
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH	$	6,237		$	(6,787	)
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD		18,025			22,348
EFFECT OF EXCHANGE RATE ON CASH AND CASH EQUIVALENTS AND RESTRICTED CASH		2			(141	)
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD	$	24,264		$	15,420

SUPPLEMENTARY INFORMATION OF INVESTING AND FINANCING ACTIVITIES NOT INVOLVING CASH FLOWS:
Purchase of property and equipment in payables		-			(11	)
RECONCILIATION OF CASH, CASH EQUIVALENTS, AND RESTRICTED CASH REPORTED IN THE STATEMENT OF FINANCIAL POSITION
Cash and cash equivalents		24,264			15,060
Restricted bank deposits included in non-current assets		-			360
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows	$	24,264		$	15,420

SUPPLEMENTARY DISCLOSURE ON CASH FLOWS
Reclassification of ordinary shares subject to possible redemption into ordinary shares	$	-		$	1,598
Interest received	$	74		$	86

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

VASCULAR BIOGENICS LTD.

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1 – GENERAL

Vascular Biogenics Ltd. (“VBL” or the “Company”) is a biopharmaceutical company that has historically focused on developing targeted therapies for immune-inflammatory diseases and cancer. VBL’s goal has been to provide differentiated targeted therapeutics to address the underlying cause of diseases where treatment options are limited.

VBL’s sole product candidate, VB-601, is a targeted antibody for immune-inflammatory applications that has shown disease-modifying activity across multiple preclinical models including multiple sclerosis, rheumatoid arthritis, non-alcoholic steatohepatitis (“NASH”) and inflammatory bowel disease. VB-601 was developed using VBL’s monocyte targeting technology (“MTT”) and is designed to specifically inhibit monocyte migration. VBL plans to monetize this asset prior to or concurrent with the Merger rather than pursue further clinical development internally. On June 30, 2023, VBL entered into a non-binding term sheet, as amended, for the proposed sale of the VB-601 Asset. However, as discussed below, there is no guarantee that VBL will be successful in completing the proposed transaction for VB-601 or that it will be able to otherwise monetize this asset.

In May 2023, VBL received an additional €1.4 million ($1.5 million) in grant funding from the EIC under the previously awarded ofra-vec grant.

Proposed Merger with Notable Labs, Inc.

On February 22, 2023, VBL entered into a Merger Agreement (the “Merger Agreement”) with Notable Labs, Inc., a Delaware corporation (“Notable”), and Vibrant Merger Sub, Inc., a Delaware corporation and VBL’s direct, wholly-owned subsidiary, pursuant to which, and subject to the satisfaction or waiver of the conditions set forth in the Merger Agreement, Notable will be merged with and into Merger Sub at the effective time (“Effective Time”), with Notable continuing after the merger as the surviving corporation and VBL’s wholly-owned subsidiary (such transaction, the “Merger”). The Merger is intended to qualify as a tax-free reorganization for U.S. federal income tax purposes.

At the Effective Time, each outstanding share of Notable capital stock will be converted into the right to receive VBL ordinary shares, as set forth in the Merger Agreement. Under the exchange ratio formula in the Merger Agreement, immediately following the Effective Time, the former Notable securityholders are expected to own approximately 76% of VBL ordinary shares outstanding on a fully diluted basis and subject to adjustment and securityholders of VBL as of immediately prior to the Effective Time are expected to own approximately 24% of the VBL ordinary shares outstanding on a fully diluted basis and subject to adjustment. Under certain circumstances further described in the Merger Agreement, the ownership percentages may be adjusted upward or downward based on VBL’s net cash at the closing of the Merger, the terms and net proceeds of Notable’s pre-closing financing, and the capitalization of VBL and Notable. There can be no assurances as to VBL’s level of net cash between the signing of the Merger Agreement and the closing of the Merger.

The Merger Agreement contains a customary “no-shop” provision under which neither VBL nor Notable is permitted to (i) solicit any alternative acquisition proposals, (ii) furnish any non-public information to any person in connection with or in response to any alternative acquisition proposal, (iii) engage in any negotiations or discussions with any person with respect to any alternative acquisition proposal, (iv) approve, endorse or recommend any alternative acquisition proposal, or (v) execute or enter into any agreement relating to any alternative acquisition proposal. The “no-shop” provision is subject to certain exceptions that permit the board of directors of either party to comply with its fiduciary duties, which, under certain circumstances, would enable VBL or Notable to provide information to, and enter into discussions or negotiations with, third parties in response to any alternative acquisition proposals.

The Merger Agreement contains customary representations, warranties and covenants made by Notable and VBL, including representations relating to obtaining the requisite approvals of the securityholders of Notable and VBL, agreements relating to indemnification of directors and officers, and covenants relating to Notable’s and VBL’s conduct of their respective businesses between the date of signing the Merger Agreement and the Effective Time.

The Merger Agreement provides each of VBL and Notable with specified termination rights, and further provides that, upon termination of the Merger Agreement under specified circumstances, the terminating party may be required to pay the other party a termination fee of $2,500,000. In addition, in connection with certain terminations of the Merger Agreement, VBL may be required to pay Notable’s out-of-pocket fees and expenses up to $500,000, or Notable may be required to pay VBL’s out-of-pocket fees and expenses up to $500,000.

The Merger Agreement provides that, immediately following the Effective Time, the board of directors of the combined organization will consist of up to seven directors, with one director designated by VBL. Upon the closing of the transaction, the combined organization will be led by Notable’s chief executive officer and executive management team. In connection with the Merger, VBL will seek to amend its articles of association to: (i) effect an increase of VBL’s registered share capital and/or effect a reverse split of VBL ordinary shares at a ratio to be determined; (ii) change VBL’s name to “Notable Labs, Ltd.”; and (iii) make other such changes as mutually agreeable to VBL and Notable.

VBL’s and Notable’s obligations to consummate the Merger are subject to the satisfaction or waiver of customary closing conditions, including, among others, obtaining the requisite approval of VBL’s shareholders, obtaining the requisite approval of Notable’s stockholders, proceeds of Notable’s pre-closing financing, net of certain specified expenses, not being less than $5,000,000 and VBL’s net cash not being less than $15,000,000.

In connection with the execution of the Merger Agreement, VBL and Notable entered into shareholder support agreements with VBL’s current directors and executive officers who currently collectively beneficially own or control an aggregate of approximately 2.5% of the outstanding VBL ordinary shares. These shareholder support agreements provide that, among other things, each of the shareholders has agreed to vote or cause to be voted all of its VBL ordinary shares beneficially owned by such shareholder in favor of the issuance of VBL ordinary shares in the Merger at the VBL shareholder meeting to be held in connection with the Merger.

Although VBL has entered into the Merger Agreement and intends to consummate the proposed Merger, there is no assurance that VBL will be able to successfully consummate the proposed Merger on a timely basis, or at all. If, for any reason, the proposed Merger is not completed, VBL will reconsider its strategic alternatives and could pursue other courses of action.

Asset Sale- Modi’in Facility

On February 15, 2023, VBL entered into a purchase agreement providing for the sale of VBL’s rights to the Modi’in manufacturing facility, along with certain tangible assets and equipment located therein for $7.1 million. In addition, VBL accrued a liability for a potential payment to the Israeli Innovation Authority (“IIA”) as a result of the sale, which was recorded against the capital gain. VBL intends to use the proceeds from the asset sale to meet the $15.0 million minimum net cash closing condition provided in the Merger Agreement and are disposing of such rights in contemplation of the Merger (although completion of such asset sale is not a condition to the Merger). There can be no guarantee that VBL will have sufficient funds to satisfy the minimum net cash closing required pursuant to the Merger Agreement. VBL completed the asset sale on March 9, 2023 and retained the right to use a portion of the space for a nominal fee until August 31, 2023, with a potential extension of an additional month. During the six months ended June 30, 2023, we recorded a gain on sale (net of fees paid to the IIA) resulting from the facility sale and other fixed asset sales of approximately $0.4 million.

Proposed Sale of VB-601 Asset

On June 30, 2023, VBL entered into a non-binding term sheet with Wellbeing Group Ltd. (“Wellbeing”) (as amended on July 25, 2023, the “VB-601 Offer”) for the proposed sale of the VB-601 Asset to Wellbeing, or one of its assignees, for total consideration of up to $5 million plus royalties (the “VB-601 Asset Sale”). The VB-601 Offer consists of a $250,000 upfront cash payment to be paid upon closing, up to a total of $4.75 million in clinical and commercial milestones, and a low to mid single digit percentage tiered royalty on annual net sales above $50 million. The VB-601 Offer includes a 90-day exclusivity period and other reasonable and customary closing conditions for a transaction of this type and nature. Wellbeing intends to form a new company and recruit Prof. Harats, Dr. Feige, and Mr. Backenroth (“Interested Parties”) as investors and partners to manage the company and develop VB-601 due to their historical knowledge of the program. Due to the involvement of the Interested Parties in the entity that will be moving forward with and developing the VB-601 Asset, the transaction is considered a related party transaction, and requires audit committee and board of directors approval and execution of definitive documentation. VBL’s board of directors also resolved that the closing of the VB-601 Asset Sale would be subject to the separate approval of the VBL shareholders at the VBL special meeting. The Interested Parties recused themselves from negotiations between VBL and Wellbeing regarding the VB-601 Offer. The VB-601 Asset Sale would be expected to close immediately prior to or concurrent with the Merger, however, it is not a condition to the closing of the Merger.

Nasdaq Listing

In August 2022, VBL received a deficiency letter from the Listing Qualifications Department of the Nasdaq Stock Market LLC (“Nasdaq”), notifying VBL that the Company’s listed securities did not maintain the minimum bid price requirement of $1.00 per ordinary share for continued listing on the Nasdaq Global Market for a period of 30 consecutive business days as required under Nasdaq Listing Rule 5450(a)(1). The Nasdaq deficiency letter does not result in the immediate delisting of VBL’s ordinary shares, and the Company’s ordinary shares will continue to trade uninterrupted under the symbol “VBLT.” Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), VBL had a compliance period of 180 calendar days, or until February 27, 2023, to regain compliance with Nasdaq’s minimum bid price requirement. If at any time during the compliance period, the Company’s ordinary shares had a closing bid price of at least $1.00 for 10 consecutive business days, Nasdaq would have provided the Company with a written confirmation of compliance and the matter would have closed. The Company did not regain compliance by February 27, 2023, requested the transfer of its listing to the Nasdaq Capital Market and received an additional 180 day period to regain compliance, or until August 28, 2023. Further, under Nasdaq Listing Rules 5810(c)(1) and 5810(c)(3)(A)(iii), if VBL’s trading price falls below $0.10 for ten consecutive trading days, the Company will receive a Staff Delisting Determination providing for automatic suspension and delisting. Upon a Staff Delisting Determination, VBL can appeal in writing to be granted an exception to remain listed for up to an additional 180 day period to regain compliance if the Hearings Panel believes the Company will be able to regain compliance with the $1.00 minimum bid price requirement within that timeframe. If the Company does not regain compliance with the bid price requirement by the end of the second compliance period, if its trading price falls below $0.10 for ten consecutive trading days, or if it is not granted an additional extension by the Hearings Panel after the second compliance period ends on August 28, 2023, VBL’s ordinary shares would be subject to delisting.

As of June 30, 2023, VBL wrote-off all remaining fixed assets and related accumulated depreciation and recorded an impairment loss of $0.3 million on the fixed assets.

Since inception, VBL has incurred significant losses, and it expects to continue to incur significant expenses and losses for at least the next several years. As of June 30, 2023, VBL had an accumulated deficit of $297.9 million and cash and cash equivalents of approximately $24.3 million. Based on its current cash resources, and successful implementation of its reduction in workforce, VBL believes its current cash will be sufficient to fund estimated operating expenses and capital expenditure requirements for at least 12 months from the date of the filing of these financial statements. VBL is undertaking a review of its strategic options and any transactions resulting from such review may impact this projection. Further, its losses may fluctuate significantly from quarter to quarter and year to year, depending on the timing of its potential future clinical trials, the receipt of payments under any future collaboration agreements it may enter into, its expenditures on other research and development activities, as well as any strategic options it may pursue. VBL may seek to raise more capital to pursue additional activities, including through a combination of private and public equity offerings, debt, government grants, strategic collaborations and licensing arrangements. Additional financing may not be available when VBL needs it or may not be available on terms that are favorable to VBL.

If VBL is unable to raise additional funds through equity or debt financings or through strategic alliances when needed or conclude any strategic transaction for its assets to maximize shareholder value, it may be required to delay, limit, reduce or terminate its product development efforts or cease operations altogether. Failure to obtain additional financing will have a material, adverse impact on the Company’s business operations and there can be no assurance that VBL will be able to obtain the needed financing to achieve its goals on acceptable terms or at all.

NOTE 2 – BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS

The accompanying unaudited condensed consolidated financial statements of VBL have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and notes required by GAAP for annual financial statements. In the opinion of management, all adjustments (of a normal recurring nature) considered necessary for the fair statement of the results for the interim periods presented have been included. Operating results for the interim period are not necessarily indicative of the results that may be expected for the full year.

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its subsidiary, VBL Inc. (U.S.-based subsidiary).

These unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements in the Annual Report on Form 10-K for the year ended December 31, 2022, filed by VBL with the U.S. Securities and Exchange Commission (the “SEC”) on March 14, 2023. The comparative balance sheet at December 31, 2022 has been derived from the audited financial statements at that date.

NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES

The accounting policies and calculation methods applied in the preparation of the condensed consolidated interim financial statements are consistent with those applied in the preparation of the annual financial statements as of December 31, 2022 and for the year then ended.

Net Loss Per Share

VBL complies with accounting and disclosure requirements of FASB Accounting Standards Codification (“ASC”) Topic 260, “Earnings Per Share.” Basic loss per ordinary share is computed by dividing the net loss by the weighted average number of ordinary shares outstanding (including fully vested pre-funded warrants and fully vested restricted stock units (“RSUs”)) during the period.

Potentially dilutive securities have been excluded from VBL’s computation of net loss per share as such securities would have been anti-dilutive. There were 5,334,440 ordinary shares underlying outstanding options and RSUs at June 30, 2023, and 10,459,480 ordinary shares underlying outstanding options and RSUs at June 30, 2022.

NOTE 4 – SHAREHOLDERS’ EQUITY

a. Ordinary Shares

The Company has 200 million ordinary shares, NIS 0.01 par value per share, authorized as of June 30, 2023. Each ordinary share is entitled to one voting right. Ordinary share owners are entitled to dividends when funds are legally available and declared by the Company’s board of directors.

b. Pre-funded Warrants

In April 2021, the Company issued 8,050,000 pre-funded warrants in lieu of ordinary shares in an underwritten public offering at a price per share of $1.89. The pre-funded warrants are exercisable for $0.01 per share and have no expiration date. As of June 30, 2023, none of the pre-funded warrants have been exercised. See Note 6 below for information on pre-funded warrants exercised subsequent to June 30, 2023.

c. Restricted Stock Units

During the six months ended June 30, 2023, 750,000 restricted stock units vested and were exercised into ordinary shares at an exercise price of 0.01 NIS.

NOTE 5 – CONTINGENT LIABILITIES

The Company is committed to pay royalties to the Government of Israel (the “Government”) on proceeds from sales of products in the research and development of which the Government participates by way of grants. At the time the grants were received, successful development of the related project was not assumed. In the case of failure of the project that was partly financed by the Government, the Company is not obligated to pay any such royalties. As the Company does not foresee any revenue from these projects, it believes it is no longer obligated to pay additional royalties, except for a potential repayment of support for assets that are monetized. Under the terms of the Company’s funding from the Government, royalties of 3%-3.5% are payable on sales of products developed from projects funded up to 100% of the amount of the grant received by the Company (dollar linked) with the addition of an annual interest. As of June 30, 2023, the total additional royalty amount that may be payable by the Company, before the additional interest, is approximately $29.4 million ($38.4 million including interest). To date, the Company has paid the IIA approximately $1.1 million in royalties.

NOTE 6 – SUBSEQUENT EVENTS

On July 28, 2023, 7,400,000 pre-funded warrants were exercised via cashless exercise resulting in the issuance of 7,140,350 ordinary shares.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated interim financial statements and related notes included in this Form 10-Q. Our audited financial statements as of and for the year ended December 31, 2022 have been prepared in accordance with U.S. Generally Accepted Accounting Principles, or U.S. GAAP, and our unaudited condensed consolidated interim financial statements for the three and six months ended June 30, 2023, or the period, have been prepared in accordance with U.S. GAAP, “Interim Reporting,” or ASC 270 and Article 10 of Regulation S-X. Unless stated otherwise, comparisons included herein are made to the three and six months period ended on June 30, 2022, or the parallel period. Unless the context requires otherwise, references in this Report on Form 10-Q to the “Company”, “VBL,” “we,” “us,” and “our” refer to Vascular Biogenics Ltd. and its consolidated subsidiary. You should read the “Risk Factors” section of this Quarterly Report on Form 10-Q and the “Risk Factors” section included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Overview

We are a biopharmaceutical company that has historically focused on developing targeted therapies for immune-inflammatory diseases and cancer. Our goal is to provide differentiated targeted therapeutics to address the underlying cause of diseases where treatment options are limited. Our sole product candidate, VB-601, is a targeted antibody for immune-inflammatory applications that has shown disease-modifying activity across multiple preclinical models including multiple sclerosis, rheumatoid arthritis, non-alcoholic steatohepatitis, or NASH, and inflammatory bowel disease. VB-601 was developed using our monocyte targeting technology, or MTT, and is designed to specifically inhibit monocyte migration. We plan to monetize this asset prior to or concurrent to the Merger (as defined below), rather than pursue clinical development internally. On June 30, 2023, we entered into a non-binding term sheet, as amended, for the sale of the VB-601 Asset to Wellbeing Group Ltd., or Wellbeing, or one of its assignees, for total cash consideration of up to $5 million plus royalties. However, there is no guarantee that we will be successful in consummating the proposed VB-601 Asset Sale, identifying any alternative strategic transaction for VB-601, or further develop this asset.

Proposed Merger with Notable Labs, Inc.

On February 22, 2023, we entered into a Merger Agreement, or the Merger Agreement, with Notable Labs, Inc., or Notable, and Vibrant Merger Sub, Inc., or Merger Sub, pursuant to which, and subject to the satisfaction or waiver of the conditions set forth in the Merger Agreement, Notable will be merged with and into Merger Sub (which transaction is referred to throughout this Quarterly Report as the Merger) at the effective time, or the Effective Time, with Notable continuing after the Merger as the surviving corporation and our wholly-owned subsidiary. The Merger is intended to qualify as a tax-free reorganization for U.S. federal income tax purposes.

At the Effective Time, each outstanding share of Notable capital stock will be converted into the right to receive our ordinary shares, par value NIS 0.01 per share, or Ordinary Shares, as set forth in the Merger Agreement. Under the exchange ratio formula in the Merger Agreement, immediately following the Effective Time, the former Notable securityholders are expected to own approximately 76% of the Ordinary Shares outstanding on a fully diluted basis and subject to adjustment, and our securityholders as of immediately prior to the Effective Time are expected to own approximately 24% of the Ordinary Shares outstanding on a fully diluted basis and subject to adjustment. Under certain circumstances further described in the Merger Agreement, the ownership percentages may be adjusted upward or downward based on the level of VBL’s Net Cash (as defined in the Merger Agreement) relative to Target Net Cash (as defined in the Merger Agreement) at the closing of the Merger, the terms and net proceeds of Notable’s pre-closing financing, and our capitalization and that of Notable. There can be no assurances as to our level of Net Cash between the signing of the Merger Agreement and the closing of the Merger.

The Merger Agreement also states that, immediately following the Effective Time, the board of directors of the combined organization will consist of up to seven directors, with one director designated by us. Upon the closing of the transaction, the combined organization will be led by Notable’s chief executive officer and executive management team. In connection with the Merger, we will seek to amend our articles of association to: (i) effect an increase of our registered share capital and/or effect a reverse split of our Ordinary Shares at a ratio to be determined; (ii) change our name to “Notable Labs, Ltd.”; and (iii) make other such changes as mutually agreeable to Notable and us.

While the accounting treatment of the Merger is not yet finalized, it is expected to be a reverse asset acquisition accounted for as a reverse recapitalization, as our assets at the time of the closing of the Merger are expected to be primarily cash and cash equivalents, and the historical financial statements of Notable will be our historical financial statements upon completion of the Merger.

Although we have entered into the Merger Agreement and intend to consummate the proposed Merger, there is no assurance that we will be able to successfully consummate the proposed Merger on a timely basis, or at all. If, for any reason, the proposed Merger is not completed, we will reconsider our strategic alternatives and could pursue one or more of the following courses of action:

●	Pursue potential collaborative, partnering or other strategic arrangements for our assets, including a sale or other divestiture of our remaining assets, such as VB-601; or in-licensing additional programs and assets to develop internally.

●	Pursue another strategic transaction like the proposed Merger. Our board of directors may elect to pursue an alternative strategy, one of which may be a strategic transaction similar to the proposed Merger.

●	Dissolve and liquidate our assets. If, for any reason, the proposed Merger is not consummated and we are unable to identify and complete an alternative strategic transaction like the Merger or potential collaborative, partnering or other strategic arrangements for our assets, or to continue to operate our business due to our inability to raise additional funding, we may be required to dissolve and liquidate our assets. In such case, we would be required to pay all of our debts and contractual obligations, and to set aside certain reserves for potential future claims, and there can be no assurances as to the amount or timing of available cash left to distribute to our shareholders after paying our debts and other obligations and setting aside funds for reserves.

Asset Sale- Modi’in Facility

On February 15, 2023, we entered into an Asset Purchase Agreement, or the Asset Purchase Agreement, providing for the sale of our rights to our former Modi’in manufacturing facility, along with certain tangible assets and equipment located therein for $7.1 million. We intend to use the proceeds from the asset sale to meet the $15.0 million minimum Net Cash closing condition provided in the Merger Agreement and are disposing of such rights in contemplation of the Merger (although completion of such asset sale is not a condition to the Merger). There can be no guarantee that we will have sufficient funds to satisfy the minimum Net Cash closing required pursuant to the Merger Agreement. We completed the asset sale on March 9, 2023 and retained the right to use a portion of the space for a nominal fee until August 31, 2023, with a potential extension of an additional month. During the six months ended June 30, 2023, we recorded a gain on sale (net of fees paid to the IIA) resulting from the facility sale and other fixed asset sales of approximately $0.4 million.

Proposed Sale of VB-601 Asset

On June 30, 2023, we entered into a non-binding term sheet with Wellbeing (as amended on July 25, 2023), or the VB-601 Offer, for the sale of the VB-601 Asset to Wellbeing, or one of its assignees, for total consideration of up to $5 million plus royalties, or the VB-601 Asset Sale. The VB-601 Offer consists of a $250,000 upfront cash payment to be paid upon closing, up to a total of $4.75 million in clinical and commercial milestones, and a low to mid single digit percentage tiered royalty on annual net sales above $50 million. The VB-601 Offer includes a 90-day exclusivity period and other reasonable and customary closing conditions for a transaction of this type and nature. Wellbeing intends to form a new company and recruit Prof. Harats, Dr. Feige, and Mr. Backenroth, or the Interested Parties, as investors and partners to manage the company and develop VB-601 due to their historical knowledge of the program. Due to the involvement of the Interested Parties in the entity that will be moving forward with and developing the VB-601 Asset, the transaction is considered a related party transaction, and requires audit committee and board of directors approval and execution of definitive documentation. Our board of directors also resolved that the closing of the VB-601 Asset Sale would be subject to the separate approval of our shareholders at the VBL special meeting. The Interested Parties recused themselves from negotiations between us and Wellbeing regarding the VB-601 Offer. The VB-601 Asset Sale would be expected to close immediately prior to or concurrent with the Merger, however, it is not a condition to the closing of the Merger.

Nasdaq Listing

In August 2022, we received a deficiency letter from the Listing Qualifications Department of the Nasdaq Stock Market LLC, or Nasdaq, notifying us that our listed securities did not maintain the minimum bid price requirement of $1.00 per ordinary share for continued listing on the Nasdaq Global Market for a period of 30 consecutive business days as required under Nasdaq Listing Rule 5450(a)(1). The Nasdaq deficiency letter did not result in the immediate delisting of our ordinary shares, and our ordinary shares continue to trade uninterrupted under the symbol “VBLT.” Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), we had a compliance period of 180 calendar days, or until February 27, 2023, to regain compliance with Nasdaq’s minimum bid price requirement. If at any time during the compliance period, our ordinary shares had a closing bid price of at least $1.00 for 10 consecutive business days, Nasdaq would have provided us with a written confirmation of compliance and the matter would have closed. We did not regain compliance by February 27, 2023, requested the transfer of our listing to the Nasdaq Capital Market and received an additional 180 day period to regain compliance, or until August 28, 2023. Further, under Nasdaq Listing Rules 5810(c)(1) and 5810(c)(3)(A)(iii), if our trading price falls below $0.10 for ten consecutive trading days, we will receive a Staff Delisting Determination providing for automatic suspension and delisting. If we do not regain compliance with the bid price requirement by the end of the second compliance period, or if our trading price falls below $0.10 for ten consecutive trading days, our ordinary shares will be subject to delisting. Because we do not expect to complete the Merger by the end of the second compliance period, we expect that we will receive a further delisting letter from Nasdaq, following which we expect that we will timely request a hearing with the Nasdaq Hearings Panel, or the Panel, at which hearing we will request a further extension with which to evidence compliance with all applicable requirements for continued listing on Nasdaq. Our timely request for a hearing will stay any suspension or delisting action pending the ultimate outcome of the hearing. Our plan to regain compliance will include the completion of the proposed Merger and reverse stock split. Notwithstanding, there can be no assurance that the Panel will grant our request for continued listing or that we will be able to evidence compliance within any extension period that may be granted by the Panel.

Financial Overview

Revenues and Cost of Revenues

Since inception, we have generated cumulative revenues of approximately $17.4 million primarily from an exclusive license agreement with NanoCarrier Co., Ltd., or NanoCarrier, for the development, commercialization, and supply of ofra-vec in Japan for all indications. In light of the determination to discontinue development of ofra-vec in all indications in the third quarter of 2022, this license agreement has been terminated and we do not expect to generate additional revenues from the achievement of new milestones or royalties under this agreement. The generated revenues comprise upfront and milestone payments. The cost of revenues associated with these revenues was approximately $1.6 million.

We do not expect to receive any revenue from VB-601 or any product candidates that we develop unless and until we obtain regulatory approval and commercialize our products, meet regulatory milestones in relation to our existing collaborative agreements, or enter into new collaborative agreements with third parties.

Research and Development Expenses

Research and development expenses consist of costs incurred for the development of our platform technologies and product candidates. Those expenses include:

●	employee-related expenses, including salaries and share-based compensation expenses for employees in research and development functions;

●	expenses incurred in operating our laboratories and manufacturing facility;

●	expenses incurred under agreements with clinical research organizations and investigative sites that conduct our clinical trials;

●	expenses relating to outsourced and contracted services, such as external laboratories, consulting and advisory services;

●	supply, development and manufacturing costs relating to clinical trial materials;

●	maintenance of facilities, depreciation and other expenses, which include direct and allocated expenses for rent and insurance; and

●	costs associated with preclinical and clinical activities.

Historically, research and development activities were the primary focus of our business. Our research and development expenses have decreased significantly since the termination of the OVAL study and ofra-vec program and embarking on the strategic process that resulted in the proposed Merger and facility sale.

Research and development expenses are recognized as incurred. An intangible asset arising from the development of our product candidates is recognized if certain capitalization conditions are met. As of June 30, 2023, we did not have any capitalized development costs.

We have received grants for the ofra-vec program and another historical program from the Israeli Office of Chief Scientist, which has later transformed to the Israeli Innovation Authority, or IIA, under the Israel Encouragement of Research and Development in Industry, or the Research Law, as part of the research and development programs. The requirements and restrictions for such grants are found in the Research Law. These grants are subject to repayment through future royalty payments on any products resulting from these research and development programs that received grant funding. The total gross amount of grants actually received by us from the IIA, including accrued interest as of June 30, 2023, totaled $38.4 million. On July 19, 2023, the IIA notified us that it has closed all of the grant funded programs.

Under applicable accounting rules, grants from the IIA have been accounted for as an off-set against the related research and development expenses in our financial statements. As a result, our research and development expenses are shown on our financial statements net of the IIA grants.

In August 2022 and May 2023, we received $1.1 million and $1.5 million, respectively, as part of the grant from the European Innovation Council, or EIC, for development of ofra-vec. The grant has been accounted for as an off-set against the related research and development expenses in the financial statements.

Due to the closure of our ofra-vec program, early nature of the VB-601 program, and our strategic process, we expect research and development expenses to be significantly less than prior periods.

General and Administrative Expenses

General and administrative expenses consist principally of salaries and related costs for personnel in executive and finance functions such as salaries, benefits and share-based compensation. Other general and administrative expenses include facility costs not otherwise included in research and development expenses, communication expenses, and professional fees for legal services, patents and portfolio maintenance, consulting, commercialization, auditing and accounting services. Given the significant reduction in our workforce, we expect our ongoing general and administrative expenses for personnel to decrease; however, we also expect a significant increase in legal, accounting, and administrative fees related to the Merger.

Financial Expenses (Income), Net

Financial income is comprised of interest income generated from interest earned on our cash, cash equivalents and short-term bank deposits and gains and losses due to fluctuations in foreign currency exchange rates, mainly in the appreciation and depreciation of the NIS exchange rate against the U.S. dollar.

Financial expenses primarily consist of calculated interest expenses from our lease liabilities and gains and losses due to fluctuations in foreign currency exchange rates.

Taxes on Income

We have not generated taxable income since our inception and had carry forward tax losses as of December 31, 2022 of $250.5 million. We anticipate that we will be able to carry forward these tax losses indefinitely to future tax years. Accordingly, we do not expect to pay taxes in Israel until we have taxable income after the full utilization of our carry forward tax losses.

We recognize full valuation allowance because we do not expect taxable income.

Results of Operations

Comparison of the three and six-month periods ended June 30, 2023 and 2022 (in thousands):

	Three Months Ended						Increase			Six Months Ended						Increase
	June 30,						(decrease)			June 30,						(decrease)
	2023			2022			$			2023			2022			$
	in thousands)									(in thousands)
	(unaudited)									(unaudited)
Revenues	$	-		$	64		$	(64	)	$	-		$	177		$	(177	)
Cost of revenues		-			(34	)		34			(2	)		(89	)		87
Gross profit					30			(30	)		(2	)		88			(90	)
Expenses:
Research and development, gross		(58	)		6,709			(6,767	)		(2	)		14,195			(14,197	)
Government grants		(1,488	)		12			(1,500	)		(1,488	)		(14	)		(1,474	)

Research and development, net		(1,546	)		6,721			(8,267	)		(1,490	)		14,181			(15,671	)
General and administrative		1,873			2,923			(1,050	)		5,112			6,085			(973	)
Impairment loss		349			-			349			349			-			349
Capital (gain) loss		187			-			187			(423	)		-			(423	)

Operating loss		863			9,614			(8,751	)		3,550			20,178			(16,628	)
Financial expense (income), net		11			(180	)		191			(37	)		(316	)		279
Loss	$	874		$	9,434		$	(8,560	)	$	3,513		$	19,862		$	(16,349	)

Revenues

Comparison of three-month periods ending June 30, 2023 and 2022

No revenues were recorded in the three months ended June 30, 2023, compared to $0.1 million for the parallel period in 2022. The decrease is due to the termination of the NanoCarrier license agreement.

No cost of revenues were recorded in the three months ended June 30, 2023, compared to $0.1 million for the parallel period in 2022. The cost of revenues is attributed to the labor costs and other expenses related to the performance obligations that were delivered during the period. Cost of revenues decreased due to the reduction of labor costs associated with the NanoCarrier license agreement.

Comparison of six-month periods ending June 30, 2023 and 2022

No revenues were recorded in the six months ended June 30, 2023, compared to $0.2 million for the parallel period in 2022. The decrease is due to the termination of the NanoCarrier license agreement.

Cost of revenues for the six months ended June 30, 2023 was $0.002 million compared to $0.1 million for the parallel period. Cost of revenues is attributed to the labor costs and other expenses related to the performance obligations that were delivered during the period.

Research and development expenses, net

Comparison of three-month periods ending June 30, 2023 and 2022

Research and development expenses are shown net of grants. Research and development expenses, net, for the three months ended June 30, 2022 were approximately $(1.5) million, compared to approximately $6.7 million in the parallel period, a decrease of approximately $8.3 million. The decrease in research and development expenses, net, in the three-month period was mainly related to the termination of the ofra-vec clinical trials and related activities as well as termination of the research and development labor workforce and the associated reversal of share based compensation expense in 2023 in addition to the $1.5 million grant received from the EIC during the second quarter of 2023.

Comparison of six-month periods ending June 30, 2023 and 2022

Research and development expenses are shown net of grants. Research and development expenses, net, for the six months ended June 31, 2023 were approximately $(1.5) million, compared to approximately $14.2 million in the parallel period, a decrease of approximately $15.7 million. The decrease in research and development expenses, net, was mainly related was mainly related to the termination of the ofra-vec clinical trials and related activities as well as termination of the research and development labor workforce and the associated reversal of share based compensation expense in 2023 in addition to the $1.5 million grant received from the EIC during the second quarter of 2023.

General and administrative expenses

Comparison of three-month periods ending June 30, 2023 and 2022

General and administrative expenses for the three months ended June 30, 2023 were $1.9 million, compared to $2.9 million for the parallel period, a decrease of $1.1 million. This decrease is mainly attributed to reversal of share based compensation expense as well as decrease in payroll as bonuses were not paid in 2023 compared to the parallel period, offset by an increase in legal costs related to the Merger.

Comparison of six-month periods ending June 30, 2023 and 2022

General and administrative expenses for the six months ended June 30, 2023 were $5.1 million, compared to $6.1 million for the parallel period, a decrease of $1.0 million. This decrease is mainly attributed to reversal of share based compensation expense and a decrease in commercialization activity as well as decrease in payroll as bonuses were not paid in 2023 compared to the parallel period, offset by an increase in legal costs related to the Merger.

Impairment Loss

Comparison of three-month periods ending June 30, 2023 and 2022

Impairment loss for the three months ended June 30, 2023 was $0.3 million compared to zero in the parallel period. The loss was due to the write down of the remaining fixed assets in 2023 in preparation for the Merger.

Comparison of six-month periods ending June 30, 2023 and 2022

Impairment loss for the six months ended June 30, 2023 was $0.3 million compared to zero in the parallel period. The loss was due to the write down of the remaining fixed assets in 2023 in preparation for the Merger.

Capital (gain) loss

Comparison of three-month periods ending June 30, 2023 and 2022

Capital loss for the three months ended June 30, 2023 was $0.2 million compared to zero in the parallel period. The loss in the three month period was a result of a capital loss from the sale of certain fixed assets to third parties in the second quarter of 2023.

Comparison of six-month periods ending June 30, 2023 and 2022

Capital gain for the six months ended June 30, 2023 was $0.4 million compared to zero in the parallel period. This increase is attributed to the gain on the sale of certain assets and rights as part of the facility sale offset by a payment to the IIA for those assets.

Financial expenses (income), net

Comparison of three-month periods ending June 30, 2023 and 2022

Financial expenses, net, was approximately $0.01 million for the three months ended June 30, 2023 compared to $0.2 million of income for the parallel period. The decrease was primarily attributable to a change in exchange rates and a decrease in deposit income.

Comparison of six-month periods ending June 30, 2023 and 2022

Financial income, net, was approximately $0.04 million for the six months ended June 30, 2022 compared to $0.3 million for the parallel period. The decrease was primarily attributable to a change in exchange rates and a decrease in deposit income.

Liquidity and Capital Resources

Since our inception and through June 30, 2023, we have raised an aggregate of $328.5 million to fund our operations, including $29.4 million from IIA grants and $2.6 million from the EIC. Our primary uses of cash have historically been to fund working capital requirements and research and development, and we expect these will continue to represent our primary uses of cash subject to our strategic process. Subject to the outcome of this process, we intend to use our cash resources, together with the proceeds from our previous offerings, to advance clinical programs, working capital, and other general corporate purposes.

On June 30, 2023, we had cash, cash equivalents, short-term bank deposits and restricted bank deposits totaling $24.3 million and working capital of $19.2 million. Based on our current cash resources, and successful implementation of our reduction in workforce, we believe our current cash as of June 30, 2023 will be sufficient to fund estimated operating expenses and capital expenditure requirements for at least 12 months from the date of the filing of these financial statements. We undertook a review of our strategic options and any transaction resulting therefrom (such as the Merger, the completed sale of our rights to lease the Modi’in facility and certain related assets, and on the proposed VB-601 Asset Sale) may impact our projection. Further, our losses may fluctuate significantly from quarter to quarter and year to year, depending on the timing of any clinical trials, the receipt of payments under any future collaboration agreements it may enter into, our expenditures on other research and development activities, as well as any strategic options we may pursue. We may seek to raise more capital to pursue additional activities, including through a combination of private and public equity offerings, debt, government grants, strategic collaborations and licensing arrangements. Additional financing may not be available when we need it or may not be available on terms that are favorable to us. We are unable to estimate the amounts of increased capital outlays and operating expenses associated with the development of VB-601.

Until such time, if ever, as we can generate substantial product revenue, we expect to finance our cash needs through a combination of equity offerings, debt financings, collaborations, strategic alliances and licensing arrangements. In any event, we will require additional capital to obtain regulatory approval for our product candidates. We do not currently have any committed external source of funds. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our shareholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a holder of our Ordinary Shares. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional funds through collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technology, future revenue streams or research program or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or grant rights to develop and market our product candidate that we would otherwise prefer to develop and market ourselves.

Cash Flows

The following table sets forth the primary sources and uses of cash for each of the periods set forth below:

	Six Months Ended June 30,
	2023			2022
	(in thousands)
	(unaudited)
Cash used in operating activities	$	(4,050	)	$	(18,052	)
Cash provided by (used in) investing activities		10,286			11,265
Cash provided by financing activities		1			-
	$	6,237		$	(6,787	)

Operating Activities

Net cash used in operating activities was approximately $4.1 million for the six months ended June 30, 2023 and was primarily the result of our $3.5 million net loss in addition to a net increase in working capital of $0.7 million, partially offset by an aggregate of $0.2 million in non-cash charges.

Net cash used in operating activities for the parallel period was $18.1 million and was primarily the result of our $19.9 million net loss and a net increase in working capital of $0.8 million, partially offset by an aggregate of $2.6 million in non-cash charges.

Investing Activities

Net cash used in investing activities was approximately $10.3 million for the six months ended June 30, 2023, and was primarily due to maturation of short-term bank deposits of $3.0 million and the proceeds of the sale of a long-term assets of $7.3 million.

Net cash used in investing activities in the parallel period was $11.3 million. This was primarily due to maturation of short-term bank deposits of $15.1 million, offset by investment in short-term bank deposits of $3.0 million and the purchase of fixed assets of $0.8 million.

Financing Activities

Cash provided by financing activities for the six months ended June 30, 2023 was $0.001 million and related to the issuance of shares to employees.

There were no financing activities for the six months ended June 30, 2022.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

Item 4. Controls and Procedures.

Management’s Evaluation of our Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, as of June 30, 2023. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of June 30, 2023, our Chief Executive Officer and Chief Financial Officer (our principal executive officer and principal financial officer, respectively) concluded that, as of such date, our disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act that occurred during the quarter ended June 30, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings

As of the date of this Quarterly Report on Form 10-Q, we are not involved in any material legal proceedings. However, from time to time, we could be subject to various legal proceedings and claims that arise in the ordinary course of our business activities. Regardless of the outcome, legal proceedings can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

Item 1A. Risk Factors.

Not applicable.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

Not applicable

Item 6. Exhibits.

Exhibit Number		Description

2.1+		Agreement and Plan of Merger, dated February 22, 2023, among Vascular Biogenics, Ltd., Notable Labs, Inc. and Vibrant Merger Sub, Inc. (incorporated by reference to Exhibit 2.1 to the Form 8-K filed with the Securities and Exchange Commission on February 23, 2023).

3.1		Articles of Association of the Registrant (incorporated by reference to Exhibit 3.1 to the Form 10-K filed with the Securities and Exchange Commission on March 14, 2023).

3.2		Memorandum of Association of the Registrant (incorporated by reference to Exhibit 3.1 to the Form 10-K filed with the Securities and Exchange Commission on March 14, 2023).

10.1		Non-Binding Term Sheet between Vascular Biogenics Ltd. and Wellbeing Group Ltd., dated June 30, 2023, as amended July 25, 2023 (incorporated by reference to Annex D to the proxy statement/prospectus/information statement included in the Form S-4 filed with the Securities and Exchange Commission on July 26, 2023).

31.1*		Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*		Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1¥		Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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* Filed herewith.

¥ This exhibit is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, nor shall such exhibit be deemed to be incorporated by reference in any registration statement or other document filed under the Securities Act or the Exchange Act, except as otherwise stated in such filing.

+ Schedules have been omitted from this filing pursuant to Item 601(b)(2) of Regulation S-K. VBL agrees to furnish supplementally a copy of any omitted schedule to the SEC upon its request; provided, however, that VBL may request confidential treatment pursuant to Rule 24b-2 of the Exchange Act for any schedule so furnished.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	VASCULAR BIOGENICS LTD.

Date: August 14, 2023	By:	/s/ Dror Harats
	Name:	Dror Harats
	Title:	Chief Executive Officer (Principal Executive Officer)

Date: August 14, 2023	By:	/s/ Sam Backenroth
	Name:	Sam Backenroth
	Title:	Chief Financial Officer (Principal Financial and Accounting Officer)

Exhibit 31.1

CERTIFICATION

I, Dror Harats, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Vascular Biogenics Ltd.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 14, 2023

/s/ Dror Harats
Dror Harats
Chief Executive Officer

Exhibit 31.2

CERTIFICATION

I, Sam Backenroth, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Vascular Biogenics Ltd.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 14, 2023

/s/ Sam Backenroth
Sam Backenroth
Chief Financial Officer

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Vascular Biogenics Ltd. (the “Company”) for the quarter ended June 30, 2023 as filed with the Securities and Exchange Commission (the “Report”), each of the undersigned officers hereby certifies in such capacity, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of such officer’s knowledge:

(1)	the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: August 14 , 2023

/s/ Dror Harats		/s/ Sam Backenroth
Dror Harats		Sam Backenroth
Chief Executive Officer		Chief Financial Officer

This certification accompanies the Quarterly Report on Form 10-Q to which it relates and is not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor incorporated by reference into any filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the Registrant specifically incorporates it by reference.

Cover - shares	6 Months Ended
Cover - shares	Jun. 30, 2023	Aug. 11, 2023
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Jun. 30, 2023
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2023
Current Fiscal Year End Date	--12-31
Entity File Number	001-36581
Entity Registrant Name	Vascular Biogenics Ltd.
Entity Central Index Key	0001603207
Entity Incorporation, State or Country Code	L3
Entity Address, Address Line One	8 HaSatat St.
Entity Address, City or Town	Modi’in
Entity Address, Country	IL
Entity Address, Postal Zip Code	7178106
City Area Code	+972
Local Phone Number	8-9935000
Title of 12(b) Security	Ordinary Shares, par value NIS 0.01 per share
Trading Symbol	VBLT
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		77,640,467

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Current assets:
Cash and cash equivalents	$ 24,264	$ 17,665
Restricted Cash		360
Short-term bank deposits		3,054
Other current assets	284	1,070
Total current assets	24,548	22,149
Non-current assets:
Funds in respect of employee rights upon retirement	98	368
Property, plant and equipment, net		6,601
Operating lease right-of-use assets		541
Total non-current assets	98	7,510
Total assets	24,646	29,659
Accounts payable and accruals:
Accounts payable	718	808
Accrued expenses	3,042	2,925
Other current liabilities	1,541	2,434
Current maturity of operating leases liability		564
Total current liabilities	5,301	6,731
Non-current liabilities:
Liability for employee rights upon retirement	108	477
Total non-current liabilities	108	477
Total liabilities	5,409	7,208
Shareholders’ equity:
Ordinary shares, NIS 0.01 par value; 200,000,000 Authorized as of June 30, 2023 and December 31, 2022; 70,500,117 and 69,750,117 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively.	175	174
Additional paid in capital	316,952	316,654
Accumulated deficit	(297,890)	(294,377)
Total equity	19,237	22,451
Total liabilities and equity	$ 24,646	$ 29,659

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - ₪ / shares	Jun. 30, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Common stock, par value	₪ 0.01	₪ 0.01
Common stock, shares authorized	200,000,000	200,000,000
Common stock, shares issued	70,500,117	69,750,117
Common stock, shares outstanding	70,500,117	69,750,117

Condensed Consolidated Statements of Net Loss and Comprehensive Loss (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Revenue from Contract with Customer [Abstract]
Revenues		$ 64		$ 177
Cost of revenues		(34)	(2)	(89)
Gross profit (loss)		30	(2)	88
Research and development expenses, net	(1,546)	6,721	(1,490)	14,181
General and administrative expenses	1,873	2,923	5,112	6,085
Impairment loss of plant, property and equipment	349		349
Capital (gain) loss	187		(423)
Operating loss	863	9,614	3,550	20,178
Financial income		(205)	(67)	(351)
Financial expenses	11	25	30	35
Financial loss (income), net	11	(180)	(37)	(316)
Net loss and comprehensive loss	$ 874	$ 9,434	$ 3,513	$ 19,862
Loss per ordinary share
Basic	$ 0.01	$ 0.12	$ 0.04	$ 0.26
Diluted	$ 0.01	$ 0.12	$ 0.04	$ 0.26
Weighted average ordinary shares outstanding
Basic	78,393,524	77,398,939	78,098,460	77,392,922
Diluted	78,393,524	77,398,939	78,098,460	77,392,922

Condensed Consolidated Statements of Changes in Ordinary Shares Subject to Possible Redemption and Shareholders' Equity (Unaudited) - USD ($)
$ in Thousands

Common Stock [Member]

Common Stock Subject to Mandatory Redemption [Member]

Additional Paid-in Capital [Member]

Warrant [Member]

Retained Earnings [Member]

Total

Balance at Dec. 31, 2021

$ 171

$ 1,598

$ 309,355

$ 3,127

$ (262,073)

$ 50,580

Balance, shares at Dec. 31, 2021

68,711,584

615,366

Net loss

(19,862)

Expired warrants

3,127

(3,127)

Share based compensation to employees

^[1]

2,058

Shares Issued, Shares, Share-Based Payment Arrangement, after Forfeiture

21,989

Reclassification of redemption shares into ordinary shares

$ 2

$ (1,598)

1,596

1,598

[custom:ReclassificationOfSharesRedemptionSharesIntoOrdinaryShares]

615,366

(615,366)

Balance at Jun. 30, 2022

$ 173

316,136

(281,935)

34,374

Balance, shares at Jun. 30, 2022

69,348,939

Balance at Mar. 31, 2022

$ 173

311,999

3,127

(272,501)

42,798

Balance, shares at Mar. 31, 2022

69,337,312

Net loss

(9,434)

Expired warrants

3,127

(3,127)

Share based compensation to employees

^[2]

1,010

Shares Issued, Shares, Share-Based Payment Arrangement, after Forfeiture

11,627

Balance at Jun. 30, 2022

$ 173

316,136

(281,935)

34,374

Balance, shares at Jun. 30, 2022

69,348,939

Balance at Dec. 31, 2022

$ 174

316,654

(294,377)

22,451

Balance, shares at Dec. 31, 2022

69,750,117

Net loss

(3,513)

Share based compensation to employees

298

Issuance of ordinary shares

$ 1

Issuance of ordinary shares, shares

750,000

Balance at Jun. 30, 2023

$ 175

316,952

(297,890)

19,237

Balance, shares at Jun. 30, 2023

70,500,117

Balance at Mar. 31, 2023

$ 174

316,741

(297,016)

19,899

Balance, shares at Mar. 31, 2023

69,750,117

Net loss

(874)

Share based compensation to employees

211

Issuance of ordinary shares

$ 1

Issuance of ordinary shares, shares

750,000

Balance at Jun. 30, 2023

$ 175

$ 316,952

$ (297,890)

$ 19,237

Balance, shares at Jun. 30, 2023

70,500,117

[1]	Less than $1
[2]	Less than $1

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (3,513)	$ (19,862)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		701
Impairment	349
Interest (income) expense	54	(31)
Net gain on sale of long-term assets	(423)
Net changes in operating leases		(266)
Exchange losses (gain) on cash and cash equivalents and restricted cash	(2)	141
Changes in accrued liability for employee rights upon retirement	(99)	27
Share-based compensation	298	2,058
Changes in operating assets and liabilities:
Decrease in other current assets and long-term prepaid expenses	786	191
Increase (decrease) in accounts payable:
Trade	(254)	(995)
Other (including other non-current liability)	(1,246)	160
Decrease in deferred revenue		(176)
Net cash used in operating activities	(4,050)	(18,052)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(843)
Proceeds from the sale of long-term assets	7,286
Investment in short-term bank deposits		(3,000)
Maturity of short-term bank deposits	3,000	15,108
Net cash provided by investing activities	10,286	11,265
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of ordinary shares	1
Net cash provided by financing activities	1
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH	6,237	(6,787)
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD	18,025	22,348
EFFECT OF EXCHANGE RATE ON CASH AND CASH EQUIVALENTS AND RESTRICTED CASH	2	(141)
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD	24,264	15,420
SUPPLEMENTARY INFORMATION OF INVESTING AND FINANCING ACTIVITIES NOT INVOLVING CASH FLOWS:
Purchase of property and equipment in payables		(11)
RECONCILIATION OF CASH, CASH EQUIVALENTS, AND RESTRICTED CASH REPORTED IN THE STATEMENT OF FINANCIAL POSITION
Cash and cash equivalents	24,264	15,060
Restricted bank deposits included in non-current assets		360
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows	24,264	15,420
SUPPLEMENTARY DISCLOSURE ON CASH FLOWS
Reclassification of ordinary shares subject to possible redemption into ordinary shares		1,598
Interest received	$ 74	$ 86

GENERAL

6 Months Ended

Jun. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

GENERAL

NOTE 1 – GENERAL

In May 2023, VBL received an additional €1.4 million ($1.5 million) in grant funding from the EIC under the previously awarded ofra-vec grant.

Proposed Merger with Notable Labs, Inc.

Asset Sale- Modi’in Facility

Proposed Sale of VB-601 Asset

Nasdaq Listing

As of June 30, 2023, VBL wrote-off all remaining fixed assets and related accumulated depreciation and recorded an impairment loss of $0.3 million on the fixed assets.

BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS

6 Months Ended

Jun. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS

NOTE 2 – BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its subsidiary, VBL Inc. (U.S.-based subsidiary).

SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Jun. 30, 2023

Accounting Policies [Abstract]

SIGNIFICANT ACCOUNTING POLICIES

NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES

Net Loss Per Share

SHAREHOLDERS’ EQUITY

6 Months Ended

Jun. 30, 2023

Equity [Abstract]

SHAREHOLDERS’ EQUITY

NOTE 4 – SHAREHOLDERS’ EQUITY

a. Ordinary Shares

b. Pre-funded Warrants

c. Restricted Stock Units

During the six months ended June 30, 2023, 750,000 restricted stock units vested and were exercised into ordinary shares at an exercise price of 0.01 NIS.

CONTINGENT LIABILITIES

6 Months Ended

Jun. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

CONTINGENT LIABILITIES

NOTE 5 – CONTINGENT LIABILITIES

SUBSEQUENT EVENTS

6 Months Ended

Jun. 30, 2023

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 6 – SUBSEQUENT EVENTS

On July 28, 2023, 7,400,000 pre-funded warrants were exercised via cashless exercise resulting in the issuance of 7,140,350 ordinary shares.

SIGNIFICANT ACCOUNTING POLICIES (Policies)

6 Months Ended

Jun. 30, 2023

Accounting Policies [Abstract]

Net Loss Per Share

Net Loss Per Share

GENERAL (Details Narrative) $ / shares in Units, € in Millions			1 Months Ended		6 Months Ended
	Jun. 30, 2023 USD ($)	Feb. 15, 2023 USD ($)	May 31, 2023 USD ($)	May 31, 2023 EUR (€)	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)	Dec. 31, 2022 USD ($)	Aug. 31, 2022 $ / shares
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Proceeds from grant			$ 1,500,000	€ 1.4
Specified expenses					$ 5,000,000
Net of cash acquired					$ 15,000,000
Beneficially ownship percentage	2.50%				2.50%
Gain on sale of other fixed assets					$ 400,000
Impairment loss					349,000
Accumulated deficit	$ 297,890,000				297,890,000		$ 294,377,000
Cash, cash equivalents, and short-term investments	24,300,000				24,300,000
Nasdaq Stock Market LLC [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Minimum bid price, per share \| $ / shares								$ 1.00
Closing bid price, per share \| $ / shares								1.00
Trading price, per share \| $ / shares								$ 0.10
Wellbeing [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Sale of productive assets	50,000,000
Consideration transferred					5,000,000
Upfront payment	250,000
Equity interest in acquiree	$ 4,750,000
Merger Agreement [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Termination fee					2,500,000
Out of pocket fees and expense					$ 500,000
Sale of productive assets		$ 15,000,000.0
Purchase Agreement [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Tangible assets and equipment		$ 7,100,000
Security Holder [Member] \| Maximum [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Ownership percentage	76.00%				76.00%
Security Holder [Member] \| Minimum [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Ownership percentage	24.00%				24.00%

SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - shares	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Options And Warrants [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share, amount	5,334,440	10,459,480

SHAREHOLDERS’ EQUITY (Details Narrative)	6 Months Ended
SHAREHOLDERS’ EQUITY (Details Narrative)	Jun. 30, 2023 ₪ / shares shares	Dec. 31, 2022 ₪ / shares shares	Apr. 30, 2021 $ / shares shares
Accumulated Other Comprehensive Income (Loss) [Line Items]
Ordinary shares, shares authorized	200,000,000	200,000,000
Ordinary shares, par value \| ₪ / shares	₪ 0.01	₪ 0.01
Restricted Stock Units (RSUs) [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Number of units vested	750,000
Ordinary shares exercise price \| ₪ / shares	₪ 0.01
Common Stock [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Ordinary shares, shares authorized	200,000,000
Ordinary shares, par value \| ₪ / shares	₪ 0.01
Common Stock [Member] \| Underwriting Agreement [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Ordinary shares, par value \| $ / shares			$ 0.01
Prefunded Warrants [Member] \| Underwriting Agreement [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Warrants to purchase shares	0		8,050,000
Warrants price per share \| $ / shares			$ 1.89

CONTINGENT LIABILITIES (Details Narrative) - Government of Israel [Member] - Research and Development Arrangement [Member] $ in Millions	6 Months Ended
	Jun. 30, 2023 USD ($)
Long-Term Purchase Commitment [Line Items]
Royalties percent	100.00%
Royalty payable	$ 29.4
Royalty payable interest	38.4
Royalties Payment	$ 1.1
Hundered Percent Funded Project [Member] \| Minimum [Member]
Long-Term Purchase Commitment [Line Items]
Royalties percent	3.00%
Hundered Percent Funded Project [Member] \| Maximum [Member]
Long-Term Purchase Commitment [Line Items]
Royalties percent	3.50%

SUBSEQUENT EVENTS (Details Narrative) - Subsequent Event [Member]	Jul. 28, 2023 shares
Subsequent Event [Line Items]
Stock Issued During Period, Shares, New Issues	7,140,350
Prefunded Warrants [Member]
Subsequent Event [Line Items]
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right	7,400,000

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