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1、 Matam Park,Building#5,Haifa,3508409,Israel|Tel:+972-74-7108600|Fax:+972-74-7108765 2019 ANNUAL REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington,D.C.20549 FORM 10-K(Mark One)X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year en
2、ded June 30,2019 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 001-31392 PLURISTEM THERAPEUTICS INC.(Exact name of registrant as specified in its charter)Nevada 98-0351734(State or other jurisdiction o
3、f incorporation or organization)(I.R.S.Employer Identification No.)MATAM Advanced Technology Park,Building No.5,Haifa,Israel 3508409(Address of principal executive offices)(Zip Code)Registrants telephone number 011-972-74-7108600 Securities registered pursuant to Section 12(b)of the Act:Title of eac
4、h class Common Stock,par value$0.00001 Trading Symbol PSTI Name of each exchange on which registered Nasdaq Capital Market Securities registered pursuant to Section 12(g)of the Act:None.(Title of class)Indicate by check mark if the registrant is a well-known seasoned issuer,as defined in Rule 405 of
5、 the Securities Act.Yes No Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d)of the Act.Yes No 2 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 A
6、ct 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
7、 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 accelera
8、ted filer,a non-accelerated filer,a 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-acce
9、lerated 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 E
10、xchange Act.Indicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Act).Yes No State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold,or t
11、he average bid and asked prices of such common equity,as of the last business day of the registrants most recently completed second fiscal quarter.$85,199,084 Indicate the number of shares outstanding of each of the registrants classes of common stock,as of the latest practicable date.15,547,621 as
12、of September 4,2019 i TABLE OF CONTENTS Page PART I.3 Item 1.Business.3 Item 1A.Risk Factors.20 Item 1B.Unresolved Staff Comments.36 Item 2.Properties.37 Item 3.Legal Proceedings.37 Item 4.Mine Safety Disclosures.37 PART II.37 Item 5.Market for Registrants Common Equity,Related Stockholder Matters a
13、nd Issuer Purchases of Equity Securities.37 Item 6.Selected financial data.37 Item 7.Managements Discussion and Analysis of Financial Condition and Results of Operations.37 Item 7A.Quantitative and Qualitative Disclosures About Market Risk.44 Item 8.Financial Statements and Supplementary Data.46 Ite
14、m 9.Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.47 Item 9A.Controls and Procedures.47 Item 9B.Other Information.48 PART III.48 Item 10.Directors,Executive Officers and Corporate Governance.48 Item 11.Executive Compensation.53 Item 12.Security Ownership of Cer
15、tain Beneficial Owners and Management and Related Stockholders Matters.66 Item 13.Certain Relationships and Related Transactions and Director Independence.68 Item 14.Principal Accounting Fees and Services.68 PART IV.70 Item 15.Exhibits.70 Item 16.Form 10-K Summary.72 Our financial statements are sta
16、ted in thousands United States Dollars,or US$,and are prepared in accordance with United States Generally Accepted Accounting Principles,or U.S.GAAP.In this annual report,unless otherwise specified,all dollar amounts are expressed in U.S.dollars.As used in this annual report,the terms we,us,our,the
17、Company,and Pluristem mean Pluristem Therapeutics Inc.and our wholly owned Israeli subsidiary,unless otherwise indicated or required by the context.All information in this Annual Report on Form 10-K or Annual Report,relating to shares or price per share reflects the 1-for-10 reverse stock split effe
18、cted by us on July 25,2019.CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS The statements contained in this Annual Report that are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other federal securities laws.Suc
19、h forward-looking statements may be identified by,among other things,the use of forward-looking terminology such as believes,intends,plans,expects,may,will,should,or anticipates or the negative thereof or other variations thereon or comparable terminology,and similar expressions are intended to iden
20、tify forward-looking statements.We remind readers that forward-looking statements are merely predictions and therefore inherently subject to uncertainties and other factors and involve known and unknown risks that could cause the actual results,performance,levels of activity,or our achievements,or i
21、ndustry results,to be materially different from any future results,performance,levels of activity,or our achievements,or industry results,expressed or implied by such forward-looking statements.Such forward-looking statements appear in Item 1 Business and Item 7 Managements discussion and Analysis o
22、f Financial Condition and Results of Operations,(especially in the section titled Outlook)as well as elsewhere in this Annual Report and include,among other statements,statements regarding the following:the expected development and potential benefits from our products in treating various medical con
23、ditions;our plan to execute our strategy independently,using our own personnel,and through relationships with research and clinical institutions or in collaboration with other companies;our entering into certain contracts with third parties;the prospects of entering into additional license agreement
24、s,or other forms of cooperation with other companies and medical institutions;our pre-clinical and clinical trials plans,including timing of initiation,enrollment and conclusion of trials;the expected timing of the release of data from our various studies;achieving regulatory approvals,including und
25、er accelerated paths;receipt of future funding from the Israel Innovation Authority,or IIA,the European Unions Horizon 2020 program,the Biomedical Advanced Research and Development Authority,or BARDA,as well as grants from other independent third parties;3 our marketing plans,including timing of mar
26、keting our product candidates,PLX-PAD and PLX-R18,and the filing of any requests for marketing authorization;developing capabilities for new clinical indications of placenta expanded(PLX)cells and new products;the timing and development of our PLX-Immune product candidate;the potential manufacturing
27、 of cannabinoid-producing cells in our 3D bioreactors systems;our estimations regarding the size of the global market for our product candidates;our expectations regarding our production capacity,including the use of our serum-free formulation;our expectation to demonstrate a real-world impact and v
28、alue from our pipeline,technology platform and commercial-scale manufacturing capacity;our expectations regarding our short-and long-term capital requirements;our outlook for the coming months and future periods,including but not limited to our expectations regarding future revenue and expenses;and
29、information with respect to any other plans and strategies for our business.The factors discussed herein,including those risks described in Item 1A.Risk Factors,and expressed from time to time in our filings with the Securities and Exchange Commission,or SEC,could cause actual results and developmen
30、ts to be materially different from those expressed in or implied by such statements.In addition,historic results of scientific research,clinical and preclinical trials do not guarantee that the conclusions of future research or trials would not suggest different conclusions.Also,historic results ref
31、erred to in this Annual Report would be interpreted differently in light of additional research,clinical and preclinical trials results.The forward-looking statements are made only as of the date of this filing,and except as required by law we undertake no obligation to publicly update such forward-
32、looking statements to reflect subsequent events or circumstances.PART I Item 1.Business.Our Current Business Pluristem Therapeutics Inc.is a leading developer of placenta-based cell therapy product candidates for the treatment of multiple ischemic,inflammatory and hematologic conditions.Our lead ind
33、ications are critical limb ischemia,or CLI,muscle recovery following surgery for hip fracture,and acute radiation syndrome,or ARS.Each of these indications is a severe unmet medical need.We were incorporated in Nevada in 2001,and have a wholly owned subsidiary in Israel called Pluristem Ltd.We opera
34、te in one segment and our operations are focused on the research,development,clinical trials and manufacturing of cell therapeutics and related technologies.4 PLX cells are derived from a class of placental cells that are harvested from donated placenta at the time of full term healthy delivery of a
35、 baby.PLX cell products require no tissue matching prior to administration.They are produced using our proprietary three-dimensional expansion technology.Our manufacturing facility complies with the European,Japanese,Israeli,South Korean and U.S.Food and Drug Administration,or FDAs,current Good Manu
36、facturing Practice requirements and has been approved by the European and Israeli regulators for production of PLX-PAD for late stage trials.In December 2017,after an audit of our facilities,we were granted manufacturer/importer authorization and Good Manufacturing Practice Certification by Israels
37、Ministry of Health.If we obtain FDA and other regulatory approvals to market PLX cells,we expect to have in-house production capacity to grow clinical-grade PLX cells in commercial quantities.Our goal is to make significant progress with our clinical pipeline and our clinical pivotal trials in order
38、 to ultimately bring innovative,potent therapies to patients who need new treatment options.We expect to demonstrate a real-world impact and value from our pipeline,technology platform and commercial-scale manufacturing capacity.Our business model for commercialization and revenue generation include
39、s,but is not limited to,direct sale of our products,partnerships,licensing deals,and joint ventures with pharmaceutical companies.We aim to shorten the time to commercialization of our product candidates by leveraging unique accelerated regulatory pathways that exist in the United States,Europe and
40、other territories to bring innovative products that address life-threatening diseases to the market efficiently.We believe that these accelerated pathways create substantial opportunities for us and for the cell therapy industry as a whole.We have determined to invest our resources primarily on the
41、PLX-PAD Phase III clinical trials relating to CLI and muscle recovery following surgery for hip fracture,and focus on finalizing the clinical trials in the United States,Europe and Israel while we prepare for the marketing phase,with the initiation of such marketing phase subject to regulatory appro
42、val,in these territories.Two pivotal,Phase III multinational clinical trials are currently being conducted with our PLX-PAD product candidate:one in CLI,and the other in muscle recovery following surgery for hip fracture.In April 2019,we successfully enrolled over 50%of patients in our Phase III stu
43、dy in CLI,which allows for an interim analysis of efficacy after a one-year follow-up period under the European Medicines Agencys,or EMA,Adaptive Pathways pilot project,or the Adaptive Pathways Project,in which PLX-PAD was selected to participate.Based on our current patient enrollment progress,we e
44、xpect to complete the follow up of our Phase III study in CLI in the first half of 2020 with respect to Europe,and in the first half of 2021 with respect to the United States.In addition,based on our current patient enrollment progress,we expect to complete the efficacy follow up of our Phase III st
45、udy in muscle recovery following surgery for hip fracture in the second half of 2020.We expect to release the clinical trial results shortly after the conclusion of the follow ups.Our PLX-PAD cell program in CLI had been selected for the EMAs Adaptive Pathways Project,Japans Pharmaceuticals and Medi
46、cal Devices Agency,or PMDA,accelerated pathway,the FDA Fast Track Designation and FDA Expanded Access Program,or EAP,in the United States.The CLI program in the European Union was awarded a Euro 7,600,000(approximately$8,700,000)grant as part of the European Unions Horizon 2020 program and to date w
47、e have received a portion of such grant.Our PLX-PAD cell program in muscle recovery following surgery for hip fracture was also selected for the EMAs Adaptive Pathways Project and was awarded a Euro 7,400,000(approximately$8,400,000)grant as part of the European Unions Horizon 2020 program and to da
48、te we have received a portion of such grant.Our second product candidate,PLX-R18,is under development in the United States for ARS via the FDA Animal Rule regulatory pathway,and,based on our assessment,is expected to advance to a pivotal trial,which may also result in approval without the prior perf
49、ormance of human efficacy trials.The National Institutes of Healths National Institute of Allergy and Infectious Diseases has completed a dose selection trial with our PLX-R18 product candidate in the hematologic component of ARS.5 We are targeting to submit a proposal for a contract with the U.S.go
50、vernment in the second half of 2019 to fund an additional non-human primates,or NHPs study.We are also targeting to receive funding from BARDA for the full cost of the ARS pivotal trial during 2020.PLX-R18 is also under development in the United States and Israel for the treatment of incomplete hema
51、topoietic recovery following hematopoietic cell transplantation,or HCT.In March 2019,we announced that we had fully enrolled the second cohort of six patients in our ongoing Phase I clinical trial in HCT,and received data and safety monitoring board approval to continue to the final cohort of the tr
52、ial.In September 2018,we announced that the FDA granted orphan drug designation to our PLX cell therapy for the treatment of graft failure and incomplete hematopoietic recovery following HCT.Scientific Background Cell therapy is an emerging field within the regenerative medicine area.The characteris
53、tics and properties of cells vary as a function of tissue source and growth conditions.The human placenta from which our PLX cells are derived provides an uncontroversial source of non-embryonic,adult cells and represents an innovative approach in the cell therapy field.The different factors that PL
54、X cells release suggest that the cells can be used therapeutically for a variety of ischemic,inflammatory,autoimmune and hematological disorders.PLX cells do not require tissue matching prior to administration.This allows for the development of ready-to-use/off-the-shelf allogeneic products.Our Tech
55、nology We develop,and intend to commercialize,cell therapy production technologies and products that are derived from the human placenta.Our PLX cells are adherent stromal cells,or ASCs,that are expanded using a proprietary 3D process.This system utilizes a synthetic scaffold to create an artificial
56、 3D environment where placental-derived stromal cells can grow.Our 3D process enables the large-scale monitored and controlled production of reproducible,high quality cell products and is capable of manufacturing a large number of PLX doses originating from different placentas.Additionally,our manuf
57、acturing process has demonstrated batch-to-batch consistency,an important manufacturing challenge for biological products.Product Candidates Our primary objective is to be the leading provider of allogeneic placenta based cell therapy products that are true off-the-shelf products that do not require
58、 any matching or additional manipulation prior to administration.From the physicians and patients perspective,we believe that our PLX products are comparable to any other product delivered in a vial.Our PLX products are administered using a standard needle and syringe.Our PLX products are in clinica
59、l stage development for multiple indications.Our first product candidate,PLX-PAD,is currently in a Phase III multinational clinical trial in CLI,and in a Phase III multinational clinical trial in recovery following surgery for hip fracture.We have also completed Phase II multinational clinical trial
60、 in intermittent claudication,or IC,and a Phase I/II is currently conducted with our PLX-PAD by Tel Aviv Sourasky Medical Center(Ichilov Hospital)for the treatment of Steroid-Refractory Chronic Graft-Versus-Host-Disease.Our second product candidate,PLX-R18,is under development in the United States f
61、or ARS via the FDA Animal Rule regulatory pathway,as well as in a Phase I trial in the United States and Israel for incomplete hematopoietic recovery following HCT.Our third product candidate,PLX-Immune is under pre-clinical development for treatment of certain types of human cancer.6 We believe tha
62、t using the placenta as a unique cell source,combined with our innovative research,development and high-quality manufacturing capabilities,will be the engine that drives this platform technology towards the successful development of additional PLX cell therapy products and indications.Our Clinical D
63、evelopment Product Candidates Peripheral and Cardiovascular Diseases We are investigating the use of PLX-PAD cells for the treatment of various stages of peripheral arterial disease,or PAD,from early stage IC to advanced CLI.In May 2015,our CLI clinical development program was selected for the EMAs
64、Adaptive Pathways Project.The goal of the project is to improve timely access for patients to new medicines.During our fiscal year ended June 30,2017,the FDA and several EU regulatory agencies cleared our application to begin the pivotal Phase III trial of PLX-PAD cells in the treatment of CLI for p
65、atients with minor tissue loss(Rutherford Category 5)who are unsuitable for revascularization.This multinational Phase III trial is being conducted in the United States,Europe and Israel.In September 2017,we announced that the FDA granted a fast track designation to our ongoing Phase III study of PL
66、X-PAD for the treatment of CLI.The FDAs fast track designation is a process designed to facilitate the development and expedite the review of drug to treat serious conditions and unmet medical needs.With fast track designation,there is an increased possibility for a priority review by the FDA of PLX
67、-PAD cells for the treatment of CLI.Our intention is to file a request for marketing authorization in the United States and in Europe following a successful completion of this 246-patient trial.In April 2019,we successfully enrolled over 50%of patients in our Phase III study in CLI,which allows for
68、an interim analysis of efficacy after a one-year follow-up period.If the interim analysis yields positive results,it could lead to early conditional marketing approval in Europe.In January 2018,we announced that the FDA cleared our EAP for the use of our PLX-PAD cell treatment in patients with CLI.I
69、n October 2018,we announced that the FDA approved cost recovery for our PLX-PAD under an EAP held by Wide Trial,Inc.,or Wide Trial,a privately-held third-party sponsor.In April 2019,we announced the initiation of our FDA approved EAP,with several site initiations in the United States.Under the terms
70、 of the EAP,an initial cohort of 100 Rutherford-5 CLI patients who are ineligible for inclusion under our ongoing Phase III study protocol can be enrolled and treated.We have completed two Phase I safety/dose-escalating clinical trials for CLI,one in the United States and one in Germany.These CLI tr
71、ials demonstrated that no blood type or human leukocyte antigen matching is required,and that the administration of PLX-PAD cells is safe,even if two doses are administered to a patient on two different occasions.In addition,PLX-PAD cells are potentially effective in reducing the frequency of amputa
72、tions in CLI patients.Generally,the FDA and the EMA require the primary endpoint for pivotal CLI clinical trials to be Amputation Free Survival,or AFS,at one year.The pooled data from the two studies we conducted suggest an AFS rate at one year of 86%in PLX-treated patients versus an AFS ranging bet
73、ween 48%to 66%in patients from placebo arms in other CLI trials.In June 2018,we announced the results from our 172 patients,randomized,double blind,placebo controlled,and multinational Phase II clinical trial in IC.Analysis of the Phase II IC data,which was announced on November 2018,confirmed the o
74、ptimal dosing regimen of PLX-PAD in the treatment of PAD-two administrations of 300 million cells,each originating from a different donor.This is also the treatment regimen being administered to patients in the Companys ongoing multinational Phase III study in CLI,a more severe stage of PAD.PLX-PAD
75、treated patients showed a good safety profile in the study.In April 2015,Japans PMDA approved our large-scale manufacturing methods and quality for PLX-PAD cells for use in clinical trials.In August 2015,the PMDA granted safety clearance to PLX-PAD cells for use in clinical trials in Japan,and in De
76、cember 2015 we reached an agreement with the PMDA on the design of the final trial needed to apply for conditional marketing approval of PLX-PAD cells in the treatment of CLI.Currently,as part of our strategy to focus on our active clinical trials and marketing readiness,we have not initiated clinic
77、al trial activities in Japan.7 Orthopedic Diseases In April 2018,we announced that the FDA cleared our Investigational New Drug,or IND,for our Phase III trial for recovery following surgery for hip fracture.This multinational Phase III trial is being conducted in the United States,Europe and Israel.
78、The EMA confirmed that recovery following surgery for hip fracture is eligible for the Adaptive Pathways Project as well.Our Phase III trial protocol and design was based on our phase I/II,randomized,double-blind,placebo-controlled study(n=20)to assess the safety and efficacy of intramuscular inject
79、ions of allogeneic PLX-PAD cells for the regeneration of injured gluteal musculature after total hip replacement has been conducted in Germany under the approval of PEI.In this study,PLX-PAD cells or placebo were administered into the traumatized gluteal muscle during total hip replacement surgery.T
80、he study results met its primary efficacy endpoint,change in maximal voluntary isometric contraction force of the gluteal muscle at six months after total hip replacement.Patients treated with PLX-PAD had a significantly greater improvement of maximal voluntary muscle contraction force than the plac
81、ebo group(p=0.0067).In addition,the study demonstrated that PLX-PAD was safe and well tolerated by the patients.Recovery Following HCT In March 2015,we reported positive data from three independent preclinical trials of PLX-R18.Results from these trials,as well as those from nineteen prior studies c
82、onducted by the NIAID,Case Western University,Cleveland,Ohio,and Hadassah Medical Center,Jerusalem,Israel,collectively suggest that PLX-R18 is safe and may improve outcomes after bone marrow failure and/or support hematopoietic cell transplantation.Data collected on the mechanism of action show that
83、 PLX-R18 acts by enhancing production of platelets and white and red blood cells in cases of severely damaged bone marrow,and may also accelerate engraftment of transplanted hematopoietic cells.In February 2018,we announced that a peer-reviewed journal published key animal findings from a study of P
84、LX-R18 that demonstrate the cells efficacy in improving human hematopoietic engraftment.With these capabilities,PLX-R18 could potentially treat a broad range of indications related to bone marrow function which,taken together,constitute a substantial global market.PLX-R18 is under development in a P
85、hase I clinical trial in the United States and Israel for incomplete hematopoietic recovery following HCT,which was initiated in fiscal year 2017.ARS We have conducted several animal studies for the evaluation of PLX-R18 for the treatment of ARS,in collaboration with the NIAID.The U.S.National Insti
86、tutes of Health,or NIH,funded and conducted a pilot study in NHPs to evaluate the therapeutic effect of PLX-R18 on hematological aspects of ARS.In May 2017,we announced results of the NHPs pilot study for PLX-R18 as a treatment for ARS.Although study size was not designed to show significance,result
87、s showed a trend toward improved survival of PLX-R18 treated animals compared to control,placebo treated animals.The study,conducted and funded by the NIAID,was designed to assess the safety and efficacy of PLX-R18 following intramuscular injection into irradiated and non-irradiated NHPs.Efficacy me
88、asures included survival as well as hematological parameters which are affected by exposure to high levels of radiation as may occur in a nuclear accident or attack.These data will help the design of a pivotal study to fulfill the requirements for a Biologics License Application submission under the
89、 FDAs Animal Rule regulatory pathway.We plan to continue the discussions with the different government agencies with the goal of receiving their support for pivotal studies in large animals as well as conducting the safety studies required in order to file BLA for this indication.In October 2017,we
90、announced that the FDA granted us an orphan drug designation for our PLX-R18 cell therapy for the prevention and treatment of ARS.In April 2018,we announced that the FDA approved our IND application for PLX-R18 cell therapy in the treatment of ARS.The IND allows us to treat victims who may have been
91、 acutely exposed to high dose radiation due to nuclear attack or accident.8 In December 2015,we also signed a Memorandum of Understanding for a collaboration with Fukushima Medical University,Fukushima Global Medical Science Center.The purpose of the collaboration is to develop our PLX-R18 cells for
92、 the treatment of ARS,and for morbidities following radiotherapy in cancer patients.In June 2018,we reported positive animal data from studies conducted in collaboration with Fukushima Medical University evaluating PLX-R18 cells as a treatment for radiation damage to the gastrointestinal,or GI,tract
93、 and bone marrow.Data from these studies showed that PLX-R18 cells significantly increased survival rates,preserved GI stem cells activity that enhance the recovery of the GI system and prevented severe damage to the intestinal lining,suggesting PLX-R18 potential as a multi-organ therapy for ARS.In
94、July 2019,we presented positive results from a series of studies of our PLX-R18 cell therapy product conducted by the U.S.Department of Defenses,or DoD,Armed Forces Radiobiology Research Institute,part of the Uniformed Services University of Health Sciences.The studies were designed to evaluate PLX-
95、R18 as a potential prophylactic countermeasure against ARS administered prior to radiation exposure.These animal studies demonstrate that PLX-R18,administered 24 hours before radiation exposure,and again 72 hours after exposure,resulted in a significant increase in survival rates,from 4%survival rat
96、e in the placebo group to 74%in the treated group.In addition,the data show an increase in recovery of blood lineages and a favorable safety profile.Furthermore,histopathological analysis and hematopoietic progenitor clonogenic assay of tissues collected show a significant increase in bone marrow ce
97、ll numbers and improved regenerative capability into all blood lineages.Other Indications In September 2017,we signed an agreement with Tel Aviv Sourasky Medical Center(Ichilov Hospital)to conduct a clinical Phase I/II trial of PLX-PAD cell therapy for the treatment of Steroid-Refractory Chronic Gra
98、ft-Versus-Host-Disease.This trial is an investigator initiated study.As such,Tel Aviv Sourasky Medical Center supports the study and is responsible for its design and implementation.In January 2018,we announced the publication of a peer-reviewed article in a journal which examined the effect of PLX-
99、Immune cells on the proliferation of over 50 lines of human cancerous cells.Data showed that the PLX-Immune cells exhibited an anti-proliferative effect on a wide range of human cancer cell types,with a strong inhibitory effect on various lines of breast,colorectal,kidney,liver,lung,muscle and skin
100、cancers.We have also conducted a pre-clinical trial of female mice harboring human triple negative breast cancer.In this study,the results showed a statistically significant reduction in tumor size as well as complete tumor remission in 30%of treated recipients.In June 2018,we announced that we ente
101、red into collaboration with the U.S.DoD and its United States Army Medical Research Institute of Chemical Defense to study PLX-R18 in the treatment of long term lung injuries following exposure to mustard gas.These non-clinical trials will be funded by the NIH.In January 2019,we announced a successf
102、ul one-year follow up of a compassionate use treatment in a Buergers disease patient treated with our PLX-PAD cell therapy.Regulatory and Clinical Affairs Strategy Our cell therapy development strategy is to hold open and frequent discussions with regulators at all stages of development from preclin
103、ical trials to more advanced regulatory stages.We utilize this strategy in working with the FDA,the EMA,Germanys PEI as well as other European national competent authorities,the Israeli Minister of Health,or MOH and Japans PMDA,and we are also working with the Ministry of Food and Drug Safety,or MFD
104、S,of South Korea authority via our collaborator,CHA.The Adaptive Pathways Project is part of the EMAs efforts to improve timely access for patients to new therapies.It targets treatments with the potential to heal serious conditions with an unmet medical need,and may reduce the time to a medicines a
105、pproval or to its reimbursement for targeted patient groups.The pilot is open to clinical programs in early stages of development only.9 After a therapy is selected for the program,the Adaptive Pathways Projects discussion group provides detailed guidance to the applicant regarding the formal regula
106、tory processes that precede a trial targeting early approval and further expansion of the indications.We have applied early to this program and have been selected for it.In September 2017,we announced that the FDA granted“Fast Track”designation for PLX-PAD in CLI.The FDAs Fast Track designation is a
107、 process designed to facilitate the development and expedite the review of drugs to treat serious conditions and unmet medical needs.With Fast Track designation,there is an increased possibility for a priority review by the FDA of PLX-PAD cells for the treatment of CLI.In January 2018,we announced t
108、hat the FDA cleared our EAP for the use of our PLX-PAD cell treatment in patients with CLI.In October 2018,we announced that the FDA approved cost recovery for our PLX-PAD under an EAP held by Wide Trial,a privately-held third-party sponsor.EAP allows the use of an investigational medical product ou
109、tside of clinical trials and is usually granted in cases where patients are unsuitable for inclusion under the study protocol and the patients condition is life-threatening with an unmet medical need.As part of the EAP,our PLX-PAD cell therapy is available to a limited number of CLI patients in the
110、United States who are unsuitable for revascularization and cannot take part in the our ongoing Phase III clinical trial.Intellectual Property We understand that our success will depend,in part,on maintaining our intellectual property,and therefore we are committed to protecting our technology and pr
111、oduct candidates with patents and other methods described below.We are the sole owner of 139 issued patents and 89 pending patent applications in the United States,Europe,China and Japan,as well as in additional countries worldwide,including Israel,countries in the Far East and South America(in calc
112、ulating the number of issued patents,each European patent validated in multiple jurisdictions was counted as a single patent).In April 2016,the Subsidiary entered into a licensing agreement with TES Holdings Co.,Ltd.,a venture company derived from the University of Tokyo,to obtain a key patent in Ja
113、pan to cover the treatment of ischemic diseases with placental cell therapy.This license is subject to future single low-digit royalties from sales of our product for treatment in the field of ischemic diseases in Japan,until expiry of the patent in 2023.This license follows the grant of two key pat
114、ents to us by the Japanese Patent Office,which address three dimensional methods for expanding placental and adipose cells,and specified cell therapies produced from placental tissue using these methods.In February 2017,the Subsidiary signed an agreement with founders of a certain patent for a five
115、year option to purchase the certain patent for an amount of 1 million Euro.The agreement includes yearly payments of Euro 75,000,75,000 and 100,000 in February 2017,2018 and 2019,respectively,which have been paid.We are entitled to terminate the agreement for convenience upon providing the founders
116、30 days prior notice.In May 2019,we filed a U.S.provisional patent application titled“Methods and Compositions for Producing Cannabinoids,”which covers the use of our state-of-the-art,proprietary 3-D cell culturing technology for the potential manufacturing of cannabinoid-producing cells.Based on th
117、e well-established understanding that the characteristics and therapeutic potential of a cell product are largely determined by the source of the cells and by the methods and conditions used during their culturing,our patent portfolio includes different types of claims that protect the various uniqu
118、e aspects of our technology.Our multi-national portfolio of patent and patent applications includes the following claims:10 Our proprietary expansion methods for 3D stromal cells;Composition of matter claims covering the cells;The therapeutic use of PLX cells for the treatment of a variety of medica
119、l conditions;and Cell-culture,harvest,and thawing devices.Through our experience with ASC-based product development,we have developed expertise and know-how in this field and have established procedures for manufacturing clinical-grade PLX cells in our facilities.Certain aspects of our manufacturing
120、 process are covered by patents and patent applications.In addition,specific aspects of our technology are retained as know-how and trade secrets that are protected by our confidentiality agreements with our employees,consultants,contractors,manufacturers and advisors.These agreements generally prov
121、ide for protection of confidential information,restrictions on the use of materials,and an obligation to assign to us inventions conceived during the course of performing services for us.The following table provides a description of our key patents and patent applications and is not intended to repr
122、esent an assessment of claims,limitations or scope.In some cases,a jurisdiction is listed as both pending and granted for a single patent family.This is due to pending continuation or divisional applications of the granted case.There is a risk that our patents will be invalidated,and that our pendin
123、g patent applications will not result in issued patents.We also cannot be certain that we will not infringe on any patents that may be issued to others.See Risk Factors-We must further protect and develop our technology and products in order to become a profitable company.The expiration dates of the
124、se patents,based on filing dates,range from 2020 to 2036.Actual expiration dates will be determined according to extensions received based on the Drug Price Competition and Patent Term Restoration Act of 1984(P.L.98-417),commonly known as the Hatch-Waxman Act,that permits extensions of pharmaceutica
125、l patents to reflect regulatory delays encountered in obtaining FDA market approval.The Hatch-Waxman Act is based on a U.S.federal law and therefore only relevant to U.S.patents.Our Patent Portfolio Patent Name/Int.App.No.Pending Jurisdictions Granted Jurisdictions Expiry Date METHOD AND APPARATUS F
126、OR MAINTENANCE AND EXPANSION OF HAEMATOPOIETIC STEM CELLS AND/OR PROGENITOR CELLS PCT/US2000/02688 United States,Mexico,New Zealand February 4,2020 METHODS FOR CELL EXPANSION AND USES OF CELLS AND CONDITIONED MEDIA PRODUCED THEREBY FOR THERAPY PCT/IL2007/000380 United States,China,Hong Kong,Canada,B
127、razil Japan,Europe,Israel,Singapore,Russia,South Africa,Australia,India,South Korea,Mexico,Hong Kong,China March 23,2027 ADHERENT CELLS FROM PLACENTA TISSUE AND USE THEREOF IN THERAPY United States,Europe,Israel,China,Hong Kong,United States,Europe,Singapore,Australia,Hong September 2,2028 11 PCT/IL
128、2008/001185 Brazil,Russia Kong,South Africa,India,Mexico,Japan,South Korea,Canada,China,Israel METHODS OF TREATING INFLAMMATORY COLON DISEASES PCT/IL2009/000527 United States United States,Israel,Russia,South Africa May 26,2029 METHODS OF SELECTION OF CELLS FOR TRANSPLANTATION PCT/IL2009/000844 Euro
129、pe,Israel September 1,2029 ADHERENT CELLS FROM PLACENTA TISSUE AND USE THEREOF IN THERAPY PCT/IL2009/000846 Hong Kong,China United States,Russia,Australia,South Africa,Mexico,Europe,Canada,Singapore,Hong Kong,Israel,India September 1,2029 ADHERENT CELLS FROM PLACENTA TISSUE AND USE THEREOF IN THERAP
130、Y PCT/IL2009/000845 United States,Europe,Israel September 1,2029 ADHERENT STROMAL CELLS DERIVED FROM PLANCENTAS OF MULTIPLE DONORS AND USES THEREOF PCT/IB2011/001413 United States Israel,Europe,Hong Kong April 21,2031 ADHERENT CELLS FROM PLACENTA AND USE OF SAME IN DISEASE TREATMENT PCT/IB2010/00321
131、9 United States,China,Israel,India United States,Europe,China,Canada,Australia,New Zealand,South Africa,Hong-Kong,Mexico,Israel November 29,2030 METHODS AND SYSTEMS FOR HARVESTING ADHERENT STROMAL CELLS PCT/IB2012/000933 United States,China,Europe,Hong Kong,Israel,India United States,Canada,Israel,A
132、ustralia,Mexico,Singapore,South Africa,South Korea April 15,2032 METHODS FOR TREATING RADIATION OR CHEMICAL INJURY PCT/IB2012/000664 United States,Hong Kong,Israel Europe,Japan,South Korea,Israel,Hong Kong,Israel March 22,2032 SKELETAL MUSCLE REGENERATION USING MESENCHYMAL STEM CELLS United States,E
133、urope,Israel,Hong Kong May 27,2031 12 PCT/EP2011/058730 GENE AND PROTEIN EXPRESSION PROPERTIES OF ADHERENT STROMAL CELLS CULTURED IN 3D PCT/IB2014/059114 United States Israel February 20,2034 DEVICES AND METHODS FOR CULTURE OF CELLS PCT/IB2013/058184 India United States,Canada,China,Israel,Japan,Sin
134、gapore,Australia,Hong Kong,South Korea,Russia,Mexico August 31,2033 METHODS FOR PREVENTION AND TREATMENT OF PREECLAMPSIA PCT/IB2013/058186 Israel,Singapore,Hong Kong United States,Europe,China,Australia,South Africa,Japan,Korea,August 31,2033 METHOD AND DEVICE FOR THAWING BIOLOGICAL MATERIAL PCT/IB2
135、013/059808 Europe,China,South Korea,Canada,Israel,Hong Kong United States,Australia,Singapore,Japan,India,Russia October 31,2033 SYSTEMS AND METHODS FOR GROWING AND HARVESTING CELLS PCT/IB2015/051559 Europe,Israel United States March 3,2035 METHODS AND COMPOSITIONS FOR TREATING AND PREVENTING MUSCLE
136、 WASTING DISORDERS PCT/IB2015/059763 Israel United States December 18,2035 USE OF ADHERENT STROMAL CELLS FOR ENHANCING HEMATOPOIESIS IN A SUBJECT IN NEED THEREOF PCT/IB2016/051585 United States,China,Israel March 21,2036 ALTERED ADHERENT STROMAL CELLS AND METHODS OF PRODUCING AND USING SAME PCT/IB20
137、16/053310 United States,Europe,China,Israel June 6,2036 METHODS AND COMPOSITIONS FOR United States,Europe,Japan,February 16,2037 13 TREATING CANCERS AND NEOPLASMS PCT/IB2017/050868 Canada,Australia,Israel METHODS AND COMPOSITIONS FOR TREATING NEUROLOGICAL DISORDERS PCT/IB2018/052806 Patent Cooperati
138、on Treaty METHODS AND COMPOSITIONS FOR TUMOR ASSESSMENT PCT/IB2018/050984 United States,Israel METHODS AND COMPOSITIONS FOR TREATING ADDICTIONS PCT/IB2018/055473 Patent Cooperation Treaty METHODS AND COMPOSITIONS FOR DETACHING ADHERENT CELLS US 16/026,199 United States,Israel,Germany DRUG CONTAINING
139、 HUMAN PLACENTA-ORIGIN MESENCHYMAL CELLS AND PROCESS FOR PRODUCING VEGF USING THE CELLS JP20030579842 Japan March 28,2023 METHODS AND COMPOSITIONS FOR PRODUCING CANNABINOIDS United States(provisional)(Not yet determined)Research and Development Foundational Research Our initial technology,the PluriX
140、 Bioreactor system,was invented at the Technion-Israel Institute of Technologys Rappaport Faculty of Medicine,in collaboration with researchers from the Weizmann Institute of Science.This technology has been further significantly developed by our research and development teams over the ensuing years
141、.Collaborations and Ongoing Research and Development Plans Charit Agreement In July 2007,we entered into a five-year collaborative research agreement with the Berlin-Brandenburg Center for Regenerative Therapies at Charit-University Medicine Berlin,or Charit.14 In August 2012,we extended our collabo
142、rative research agreement with Charit for a period of five years through 2017.In June 2017,we extended our collaborative research agreement with Charit for a period of additional five 5 years,through June 2022.We and Charit are collaborating on a variety of indications utilizing PLX cells.According
143、to the agreement,we will be the exclusive owner of the technology and any products produced as a result of the collaboration.Charit will receive between 1%to 2%royalties from new developments that have been achieved during the joint development.Fukushima Medical University We signed an MOU for a col
144、laboration with Fukushima Medical University,Fukushima Global Medical Science Center.The purpose of the collaboration is to develop Pluristems PLX-R18 cells for the treatment of ARS,and for morbidities following radiotherapy in cancer patients.The collaboration will proceed alongside research suppor
145、ted by the NIH,which is studying PLX-R18 as a potential treatment for the hematologic component of ARS.The MOU for a collaboration with Fukushima will be renewed automatically on a yearly basis.Each party is entitled to terminate the agreement for convenience upon providing the other party 30 days p
146、rior notice.CHA Agreement On June 26,2013,we entered into an exclusive out-licensing and commercialization agreement,or the CHA Agreement,with CHA Biotech Co.Ltd.,or CHA,for conducting clinical trials and commercialization of our PLX-PAD product in South Korea in connection with two indications:the
147、treatment of CLI and IC.We will continue to retain rights to our proprietary manufacturing technology and cell-related intellectual property.The first clinical trial that was performed as part of the CHA Agreement was a Phase II trial in IC.Upon the first regulatory approval for a PLX product in Sou
148、th Korea,if granted,for the specified indications,we and CHA will establish an equally owned joint venture with the purpose of commercializing PLX cell products in South Korea.Additionally,we will be able to use the data generated by CHA to pursue the development of PLX product candidates outside of
149、 South Korea.The term of the CHA Agreement extends from June 24,2013 until the later of the expiration,lapse,cancellation,abandonment or invalidation of the last valid patent claim covering the development of the product indications.The CHA Agreement contains customary termination provisions,includi
150、ng in the event that the parties do not reach an agreement upon a development plan for conducting the clinical trials.Upon termination of the CHA Agreement,the license granted thereunder will terminate,and all rights included therein will revert to us,whereupon we will be free to enter into agreemen
151、ts with any other third parties for the granting of a license in or outside South Korea or to deal in any other manner with such rights as it shall see fit in our sole discretion.Horizon 2020 The Phase III study of PLX-PAD in CLI will be a collaborative project carried out by an international consor
152、tium led by the Berlin-Brandenburg Center for Regenerative Therapies,together with the Company and with the participation of additional third parties.Our Phase III study of PLX-PAD cell therapy in the treatment of muscle recovery following surgery for hip fracture will be a collaborative project car
153、ried out by an international consortium led by Charit,together with us and with the participation of additional third parties.In October 2017,we entered into a collaborative project,the nTRACK,carried out by an international consortium led by Leitat.The aim of this project is to examine gold nano pa
154、rticles labeling of stem cells to enable assessment of cells in vivo persistence and distribution in correlation to biological efficacy.Under the project,PLX cells,labeled and non-labeled will be characterized and examined in animal models for muscle injury.15 Indiana University In April 2018,NIAID
155、awarded a$2.5 million grant to Indiana University to conduct,together with us,studies of our PLX-R18 cell therapy in the treatment of ARS.The goal of this project is to extend the PLX-R18 ARS studies to include examination of survival in pediatric and geriatric populations as well as the ability of
156、PLX-R18 to alleviate delayed effects of radiation in survivors.Thermo Fisher In July 2018,we entered into a strategic collaboration agreement with Thermo Fisher Scientific Inc.,or Thermo Fisher,with the aim of advancing the fundamental knowledge of cell therapy industrialization and to improve quali
157、ty control of the end-to-end supply chain.The collaboration will combine Thermo Fishers experience in cell therapy development and bioproduction scaleup with our expertise in cell therapy manufacturing,clinical development and quality control.Chart Industries In November 2018,we entered into a licen
158、se agreement with a subsidiary of Chart Industries,Inc.,or Chart,regarding our thawing device for cell-based therapies.Pursuant to the terms of the agreement,Chart obtained the exclusive rights to manufacture and market the thawing device in all territories worldwide,excluding Greater China,and we a
159、re to receive royalties from sales of the product and supply of an agreed upon number of thawing devices.Royalties shall commence on the date of Charts first commercial sale of the thawing device.Burn injuries joint grant In January 2019,we announced the receipt of a joint grant awarded by the Israe
160、li Ministry of Defense and the IIA for the pre-clinical development of our PLX cells for the treatment of burn injuries.We have decided to suspend this current collaboration in the near term,as we focus our attention on our on-going Phase III clinical trials.NASA In February 2019,we entered into a c
161、ollaboration with NASAs Ames Research Center to evaluate the potential of our PLX cell therapies in preventing and treating medical conditions caused during space missions.U.S.DoD In August 2017,we announced that a pilot study of our PLX-R18 cell therapy was initiated by the U.S.DoD.The study is exa
162、mining the effectiveness of PLX-R18 as a treatment for ARS prior to,and within the first 24 hours of exposure to radiation.In July 2019,we presented positive results from a series of studies of our PLX-R18 cell therapy product conducted by the U.S.DoD.Israeli Duchenne Association We have performed p
163、roof of concept studies from April 2015 to December 2016 in conjunction with the Israeli Duchenne Association to assess the utility of PLX-PAD in alleviating symptoms of Duchenne muscular dystrophy.16 RESTORE In February 2019,we announced that the large-scale research initiative,the RESTORE project,
164、of which we are a member,has received funding of Euro 1,000,000(approximately$1,100,000)from the European Unions Horizon 2020 research and innovation program,to submit a full grant application for the development and advancement of transformative therapeutics.We expect the members of the RESTORE pro
165、ject to collectively submit the grant application in the first quarter of the 2020 calendar year.We plan to continue to collaborate with universities and academic institutions and corporate partners worldwide to fully leverage our expertise and explore the use of our cells in other indications.In-Ho
166、use Clinical Manufacturing We have the in-house capability to perform clinical cell manufacturing.Our state-of-the-art GMP grade manufacturing facility in Haifa has been in use since February 2013 for the main purpose of clinical grade,large-scale manufacturing.The facilitys new automated manufactur
167、ing process and products were approved for production of PLX-PAD for clinical use by the FDA,EMA,Korean MFDS,PMDA and the Israeli MOH.Our second product,PLX R18,was cleared by the FDA and the Israeli Ministry of Health for clinical use.Furthermore,the site was inspected and approved by an EU qualifi
168、ed person(European accreditation body),approving that the site and production processes meet the current GMP for the purpose of manufacturing clinical grade products.The site was also inspected and approved by Israels Ministry of Health and we received a GMP certification and manufacturer-importer a
169、uthorization.Following the clinical approval of the facility,we are moving forward with our planned clinical trials based on cells manufactured in the new,efficient and improved manufacturing processes.We obtain the human placentas used for our research and manufacturing activities from various hosp
170、itals in Israel after receiving a written informed consent by the mother and pathogen clearance.Any medical waste related to the use of placentas is treated in compliance with local environmental laws and standards.In June 2019,we announced that we developed a serum-free formulation to support the m
171、anufacturing of cell therapy products.This serum-free formulation was developed using our deep understanding in cell therapy industrial scale production standards,and the quality methods designed to support implementation in Phase III development and marketing.Achieving this significant technologica
172、l challenge is expected to provide us with large-scale,highly-consistent production capacity with operational independency from third party suppliers for standard serum,an expensive and quantity limited product.PLX-R18 is the first product candidate that we intend to manufacture using the serum-free
173、 media,which is expected to be followed by PLX-PAD.Government Regulation The development,manufacturing,and marketing of our cell therapy product candidates are subject to the laws and regulations of governmental authorities in the United States and the European Union as well as other countries in wh
174、ich our products will be marketed in the future like Japan,Israel and South Korea.In addition,the manufacturing conditions are specifically inspected by the Israeli Ministry of Health.The FDA in the United States and the EMA in Europe must approve the product for marketing.Furthermore,various govern
175、mental statutes and regulations also govern or influence testing,manufacturing,safety,labeling,storage and record keeping related to such products and their marketing.Governments in other countries have similar requirements for testing and marketing.The process of obtaining these approvals and the s
176、ubsequent compliance with appropriate statutes and regulations require the expenditure of substantial time,resources and money.17 There can be no assurance that our product candidates will ultimately receive marketing approval,or,if approved,will be reimbursed by public and private health insurance.
177、There are several stages every drug has to go through during its development process.Among these are:Performance of nonclinical laboratory and animal studies to assess a drugs biological activity and to identify potential safety problems,and to characterize and document the products chemistry,manufa
178、cturing controls,formulation,and stability.In accordance with regulatory requirements,nonclinical safety and toxicity studies are conducted under Good Laboratory Practice requirements to ensure their quality and reliability;Conducting adequate and well-controlled human clinical trials in compliance
179、with Good Clinical Practice,or GCP,to establish the safety and efficacy of the product for its intended indication;The manufacture of the product according to GMP regulations and standards;and Potential post-marketing clinical testing and surveillance of the product after marketing approval,which ca
180、n result in additional conditions on the approvals or suspension of clinical use.Approval of a drug for clinical trials in humans and approval of marketing are sovereign decisions of states,made by national,or,in case of the European Union,international regulatory competent authorities.The Regulator
181、y Process in the United States In the United States,our product candidates are subject to regulation as a biological product under the Public Health Service Act and the Federal Food,Drug and Cosmetic Act.The FDA,regulating the approval of clinical trials and marketing applications in the United Stat
182、es,generally requires the following steps prior to approving a new biological product either for clinical trials or for commercial sale:Submission of an Investigational New Drug Application,which must become effective before clinical testing in humans can begin;Obtaining approval of Institutional Re
183、view Boards,or IRBs,of research institutions or other clinical sites to introduce the drug candidate into humans in clinical trials;FDA may grant approval for EAP prior to the completion of clinical trials,in order to allow access for the investigational drug,for patients that are excluded from the
184、study.FDA may grant priority review status,in order to expedite the Biologics License Application,or BLA,review process.Obtaining of a Fast Track designation allows access for the request of priority review.Submission to the FDA of a BLA for marketing authorization of the product,which must include
185、adequate results of pre-clinical testing and clinical trials;Submission of BLA with a proof of efficacy that is based only on animal studies,where human efficacy studies cannot be conducted because the conduct of such trials is unethical and field trials after an accidental or deliberate exposure ar
186、e not feasible.FDA review of the BLA in order to determine,among other things,whether the product is safe and effective for its intended uses;and FDA inspection and approval of the product manufacturing facility at which the product will be manufactured.18 The Regulatory Process in Europe In the Eur
187、opean Union,our investigational cellular products are regulated under the Advanced Therapy Medicinal Product regulation,a regulation specific to cell and tissue products.This European Union regulation requires:Filing a Clinical Trial Application via a centralized procedure,which makes it possible to
188、 obtain a coordinated assessment of an application for a clinical trial that is to take place in several European countries;Obtaining approval of affiliated ethics committees of clinical sites to test the investigational product into humans in clinical trials;Adequate and well-controlled clinical tr
189、ials to establish the safety and efficacy of the investigational product for its intended use;and Since our investigational cellular products are regulated under the Advanced Therapy Medicinal Product regulation,the application for marketing authorization to the EMA is mandatory within the 28 member
190、 states of the EU.The EMA is expected to review and approve the marketing authorization application.In April 2015,the EMA designated PLX-PAD as a tissue-engineered product.In April 2015,the Pediatric Committee of the EMA granted PLX-PAD a waiver for the requirement to submit a pediatric investigatio
191、nal plan for all indications falling under treatment of peripheral atherosclerosis,including IC and CLI.In May 2015,we were selected by EMA for development of PLX-PAD cells via the EMA Adaptive Pathways Project,with the potential to reach the market several years faster than the traditional regulato
192、ry approval pathway.Representatives of the Adaptive Pathways Project at the EMA are advising us with respect to the clinical development of PLX-PAD in CLI and in recovery following surgery for hip fracture.Other Regulations In general,the approval procedure varies among countries,and may involve add
193、itional preclinical testing and clinical trials.The requirements and time required may differ from those required for FDA or EMA approval.Each country may impose certain procedures and requirements of its own.Most countries other than the United States,the European Union and Japan are willing to con
194、sider requests for marketing approval only after the product had been approved for marketing by either the FDA,the EMA or the PMDA.The decision regarding marketing approval is made following the submission of a dossier that is thoroughly assessed and critically addressed.In Japan,we have completed t
195、he required regulatory interactions with the PMDA,prior to the submission of clinical trial notification,in the framework of the new regulations for regenerative therapy effective in November 2014,which promote expedited approval for regenerative therapies that are being developed for seriously debi
196、litating/life-threatening indications.Clinical Trials Typically,in the United States,as well as in the European Union,clinical testing involves a three-phase process,although the phases may overlap.In Phase I,clinical trials are conducted with a small number of healthy volunteers,or patients in case
197、s of ethical issues with using healthy volunteers,and are designed to provide information about product safety and to evaluate the pattern of drug distribution and metabolism within the body.19 In Phase II,clinical trials are conducted with a homogenous group of patients afflicted with the specific
198、target disease,in order to determine preliminary efficacy,optimal dosages and expanded evidence of safety.In some cases,an initial trial is conducted in diseased patients to assess both preliminary efficacy and preliminary safety and patterns of drug metabolism and distribution,in which case it is r
199、eferred to as a Phase I/II trial.Phase III clinical trials are generally large-scale,multi-center,controlled trials conducted with a heterogeneous group of patients afflicted with the target disease,in order to provide statistically valid proof of efficacy,as well as safety and potency.The Phase III
200、 trials represent the trials that are considered for confirmation of efficacy and safety and are the most important ones for the approval.In some circumstances,a regulatory agency may require Phase IV,or post-marketing trials if it feels that additional information needs to be collected about the dr
201、ug after it is on the market.During all phases of clinical development,regulatory agencies require extensive monitoring and auditing of all clinical activities,clinical data and clinical trial investigators to minimize risks.The sponsor of a clinical trial is required to submit an annual safety repo
202、rt to the relevant regulatory agencies,in which serious adverse events must be reported,and also to submit in an expedited manner any individual serious adverse events that are suspected to be related to the tested drug.An agency may,at its discretion,re-evaluate,alter,suspend,or terminate the clini
203、cal trial based upon the data that have been accumulated to that point and its assessment of the risk/benefit ratio to the patient.Employees We presently employ a total of 160 full-time employees and 5 part-time employees,of whom 131 full-time employees and 5 part-time employees are engaged in resea
204、rch and development,manufacturing and clinical trials.Competition The regenerative medicine field is characterized by intense competition,as global pharma players are becoming more engaged in the cell therapy field based on the advancements made in clinical trials and due to the new favorable regene
205、rative medicine legislation in certain regions.We face competition from both allogeneic and autologous cell therapy companies,academic,commercial and research institutions,pharmaceutical companies,biopharmaceutical companies,and governmental agencies.Some of the clinical indications we currently hav
206、e under development are also being investigated in preclinical and clinical programs by others.While there are hundreds of companies in the regenerative medicine space globally,there are multiple participants in the cell therapy field based in the United States,Europe,Japan,Korea,and Australia such
207、as Athersys,Inc.,Capricor Therapeutics,Inc.,Celularity a spin-off of Celgene Corporation,Tigenix NV(acquired by Takeda),SanBio Inc.,Healios K.K.,Cytori Therapeutics,Cesca.and Mesoblast LTD.Among other things,we expect to compete based upon our intellectual property portfolio,our in-house manufacturi
208、ng efficiencies and capabilities,and the efficacy of our products.Our ability to compete successfully will depend on our continued ability to attract and retain experienced and skilled executives,scientific and clinical development personnel,to identify and develop viable cellular therapeutic candid
209、ates,and exploit these products commercially.Given the magnitude of the potential opportunity for cell therapy,we expect competition in this area to intensify.Available Information Additional information about us is contained on our Internet website at .Information on our website is not incorporated
210、 by reference into this report.Under the SEC Filings and“Financial Information”sections,under the Investors&Media section of our website,we make available free of charge our Annual Reports on Form 10-K,Quarterly Reports on Form 10-Q,Current Reports on Form 8-K,and amendments to those reports filed o
211、r furnished pursuant to Section 13(a)of the Securities Exchange Act of 1934,as amended(Exchange Act),as soon as reasonably practicable after we electronically file such material with,or furnish it to,the SEC.Our reports filed with the SEC are also made available on the SECs website at www.sec.gov.20
212、 The following Corporate Governance documents are also posted on our website:Code of Business Conduct and Ethics,and the Charters for each of the Committees of our Board of Directors.Item 1A.Risk Factors.The following risk factors,among others,could affect our actual results of operations and could
213、cause our actual results to differ materially from those expressed in forward-looking statements made by us.These forward-looking statements are based on current expectations and except as required by law we assume no obligation to update this information.You should carefully consider the risks desc
214、ribed below and elsewhere in this Annual Report before making an investment decision.Our business,financial condition or results of operations could be materially adversely affected by any of these risks.Our common stock is considered speculative and the trading price of our common stock could decli
215、ne due to any of these risks,and you may lose all or part of your investment.The following risk factors are not the only risk factors facing our Company.Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also affect our business.Our independent regi
216、stered public accounting firms report states that there is a substantial doubt that we will be able to continue as a going concern.We anticipate that our principal sources of liquidity as of June 30,2019,together with the funds received under the Open Market Sales AgreementSM,or the Sales Agreement,
217、with Jefferies LLC,or Jefferies,as agent,during July and August 2019,will only be sufficient to fund our activities into the first quarter of the Companys fiscal year 2021.As of June 30,2019,we had cash and cash equivalents,short-term bank deposits and restricted cash and long-term bank deposits of$
218、24.8 million.We need to obtain additional funding by the first quarter of our fiscal year 2021 in order to continue to fund our operations,and we cannot provide any assurance that we will be successful in doing so.Our independent registered public accounting firm,Kost Forer,Gabbay&Kassierer,a Member
219、 of Ernst&Young Global,has included an explanatory paragraph in their opinion that accompanies our audited consolidated financial statements as of and for the year ended June 30,2019,indicating that our current liquidity position raises substantial doubt about our ability to continue as a going conc
220、ern.We may need to raise additional financing to support the research,development and manufacturing of our cell therapy products and our products in the future but we cannot be sure we will be able to obtain additional financing on terms favorable to us when needed.If we are unable to obtain additio
221、nal financing to meet our needs,our operations may be adversely affected or terminated.It is highly likely that we will need to raise significant additional capital in the future.Although we were successful in raising capital in the past,our current financial resources are limited and may not be suf
222、ficient to finance our operations until we become profitable,if that ever happens.It is likely that we will need to raise additional funds in the near future in order to satisfy our working capital and capital expenditure requirements.Therefore,we are dependent on our ability to sell our common stoc
223、k for funds,receive grants,enter into collaborations and licensing deals or to otherwise raise capital.There can be no assurance that we will be able to obtain financing.Any sale of our common stock in the future will result in dilution to existing stockholders and could adversely affect the market
224、price of our common stock.Also,we may not be able to borrow or raise additional capital in the future to meet our needs or to otherwise provide the capital necessary to conduct the development and commercialization of our potential cell therapy products,which could result in the loss of some or all
225、of ones investment in our common stock.21 Our likelihood of profitability depends on our ability to license and/or develop and commercialize products based on our cell production technology,which is currently in the development stage.If we are unable to complete the development and commercialization
226、 of our cell therapy products successfully,our likelihood of profitability will be limited severely.We are engaged in the business of developing cell therapy products.We have not realized a profit from our operations to date and there is little likelihood that we will realize any profits in the shor
227、t or medium term.Any profitability in the future from our business will be dependent upon successful commercialization of our potential cell therapy products and/or licensing of our products,which will require additional research and development.If we are not able to successfully license and/or deve
228、lop and commercialize our cell therapy product candidates and obtain the necessary regulatory approvals,we may not generate sufficient revenues to continue our business operations.So far,the products we are developing have completed one Phase I/II clinical trial of Gluteal Musculature rehabilitation
229、 after total hip arthroplasty(efficacy,ongoing for safety),two Phase I clinical trials for CLI,and one Phase II clinical trial in IC.Our early stage cell therapy product candidates may fail to perform as we expect.Moreover,even if our cell therapy product candidates successfully perform as expected,
230、in later stages of development they may fail to show the desired safety and efficacy traits despite having progressed successfully through pre-clinical or initial clinical testing.We will need to devote significant additional research and development,financial resources and personnel to develop comm
231、ercially viable products and obtain the necessary regulatory approvals.If our cell therapy product candidates do not prove to be safe and effective in clinical trials,we will not obtain the required regulatory approvals.If we fail to obtain such approvals,we may not generate sufficient revenues to c
232、ontinue our business operations.Even if we obtain regulatory approval of a product,that approval may be subject to limitations on the indicated uses for which it may be marketed.Even after granting regulatory approval,the FDA,the EMA,and regulatory agencies in other countries continue to regulate ma
233、rketed products,manufacturers and manufacturing facilities,which may create additional regulatory barriers and burdens.Later discovery of previously unknown problems with a product,manufacturer or facility,may result in restrictions on the product or manufacturer,including a withdrawal of the produc
234、t from the market.Further,regulatory agencies may establish additional regulations that could prevent or delay regulatory approval of our products.We cannot market and sell our cell therapy product candidates in the United States,Europe,or in other countries if we fail to obtain the necessary regula
235、tory approvals or licensure.We cannot sell our cell therapy product candidates until regulatory agencies grant marketing approval,or licensure.The process of obtaining regulatory approval is lengthy,expensive and uncertain.It is likely to take at least several years to obtain the required regulatory
236、 approvals for our cell therapy product candidates,or we may never gain the necessary approvals.Any difficulties that we encounter in obtaining regulatory approval may have a substantial adverse impact on our operations and cause our stock price to decline significantly.To obtain marketing approvals
237、 in the United States and Europe for cell therapy product candidates we must,among other requirements,complete carefully controlled and well-designed clinical trials sufficient to demonstrate to the FDA,the EMA and the PMDA that the cell therapy product candidates is safe and effective for each dise
238、ase for which we seek approval.So far,we have successfully conducted Phase I/II and Phase I clinical trials for our PLX-PAD product.22 Several factors could prevent completion or cause significant delay of these trials,including an inability to enroll the required number of patients or failure to de
239、monstrate adequately that cell therapy product candidates are safe and effective for use in humans.Negative or inconclusive results from or adverse medical events during a clinical trial could cause the clinical trial to be repeated or a program to be terminated,even if other studies or trials relat
240、ing to the program are successful.The FDA or the EMA(or,if we seek to conduct development efforts in Japan,the PMDA)can place a clinical trial on hold if,among other reasons,it finds that patients enrolled in the trial are or would be exposed to an unreasonable and significant risk of illness or inj
241、ury.If safety concerns develop,we,the FDA,the EMA or other regulatory bodies could stop our trials before completion.If we are not able to conduct our clinical trials properly and on schedule,marketing approval by FDA,EMA,MOH and other regulatory authorities may be delayed or denied.The completion o
242、f our clinical trials may be delayed or terminated for many reasons,such as:The FDA,the EMA or the MOH does not grant permission to proceed or places additional trials on clinical hold;Subjects do not enroll in our trials at the rate we expect;The regulators may ask to increase subjects population i
243、n the clinical trials;Subjects experience an unacceptable rate or severity of adverse side effects;Third-party clinical investigators do not perform our clinical trials on our anticipated schedule or consistent with the clinical trial protocol,GCP and regulatory requirements,or other third parties d
244、o not perform data collection and analysis in a timely or accurate manner;Inspections of clinical trial sites by the FDA,EMA,MOH and other regulatory authorities find regulatory violations that require us to undertake corrective action,suspend or terminate one or more sites,or prohibit us from using
245、 some or all of the data in support of our marketing applications;or One or more IRBs suspends or terminates the trial at an investigational site,precludes enrollment of additional subjects,or withdraws its approval of the trial.Our development costs will increase if we have material delays in our c
246、linical trials,or if we are required to modify,suspend,terminate or repeat a clinical trial.If we are unable to conduct our clinical trials properly and on schedule,marketing approval may be delayed or denied by the FDA,EMA,MOH and other regulatory authorities.The results of our clinical trials may
247、not support our product candidates claims or any additional claims we may seek for our product candidates and our clinical trials may result in the discovery of adverse side effects.Even if any clinical trial that we need to undertake is completed as planned,or if interim results from existing clini
248、cal trials are released,we cannot be certain that such results will support our product candidates claims or any new indications that we may seek for our products or that the FDA or foreign authorities will agree with our conclusions regarding the results of those trials.The clinical trial process m
249、ay fail to demonstrate that our products or a product candidate is safe and effective for the proposed indicated use,which could cause us to stop seeking additional clearances or approvals for our product candidates.Any delay or termination of our clinical trials will delay the filing of our regulat
250、ory submissions and,ultimately,our ability to commercialize a product candidate.It is also possible that patients enrolled in clinical trials will experience adverse side effects that are not currently part of the product candidates profile.23 If our processing and storage facility or our clinical m
251、anufacturing facilities are damaged or destroyed,our business and prospects would be adversely affected.If our processing and storage facility,our clinical manufacturing facilities or the equipment in such facilities were to be damaged or destroyed,the loss of some or all of the stored units of our
252、cell therapy drug candidates would force us to delay or halt our clinical trial processes.We have one clinical manufacturing facilities located in Haifa,Israel.If these facilities or the equipment in them are significantly damaged or destroyed,we may not be able to quickly or inexpensively replace o
253、ur manufacturing capacity.If we encounter problems or delays in the research and development of our potential cell therapy products,we may not be able to raise sufficient capital to finance our operations during the period required to resolve such problems or delays.Our cell therapy products are cur
254、rently in the development stage and we anticipate that we will continue to incur substantial operating expenses and incur net losses until we have successfully completed all necessary research and clinical trials.We,and any of our potential collaborators,may encounter problems and delays relating to
255、 research and development,regulatory approval and intellectual property rights of our technology.Our research and development programs may not be successful,and our cell culture technology may not facilitate the production of cells outside the human body with the expected result.Our cell therapy pro
256、ducts may not prove to be safe and efficacious in clinical trials.If any of these events occur,we may not have adequate resources to continue operations for the period required to resolve the issue delaying commercialization and we may not be able to raise capital to finance our continued operation
257、during the period required for resolution of that issue.Accordingly,we may be forced to discontinue or suspend our operations.We may not be able to secure and maintain research institutions to conduct our clinical trials.We rely on research institutions to conduct our clinical trials.Specifically,th
258、e limited number of centers experienced with cell therapy product candidates heightens our dependence on such research institutions.Our reliance upon research institutions,including hospitals and clinics,provides us with less control over the timing and cost of clinical trials and the ability to rec
259、ruit subjects.If we are unable to reach agreements with suitable research institutions on acceptable terms,or if any resulting agreement is terminated,we may be unable to quickly replace the research institution with another qualified institution on acceptable terms.We may not be able to secure and
260、maintain suitable research institutions to conduct our clinical trials.Our product development programs are based on novel technologies and are inherently risky.We are subject to the risks of failure inherent in the development of products based on new technologies.The novel nature of our therapeuti
261、cs creates significant challenges in regards to product development and optimization,manufacturing,government regulation,third-party reimbursement and market acceptance.For example,the FDA,the EMA and other countries regulatory authorities have relatively limited experience with cell therapies.Very
262、few cell therapy products have been approved by regulatory authorities to date for commercial sale,and the pathway to regulatory approval for our cell therapy product candidates may accordingly be more complex and lengthy.As a result,the development and commercialization pathway for our therapies ma
263、y be subject to increased uncertainty,as compared to the pathway for new conventional drugs.There are very few drugs and limited therapies that the FDA or EMA and other regulatory authorities have approved as treatments for some of the disease indications we are pursuing.This could complicate and de
264、lay FDA,EMA or other countries regulatory authorities approval of our biologic drug candidates.24 There are very few drugs and limited therapies currently approved for treatment of CLI,IC,ARS,muscle recovery following surgery for hip fracture or HCT.As a result,the clinical efficacy endpoints,or the
265、 criteria to measure the intended results of treatment may be difficult to determine.Despite our eligibility for certain accelerated pathways,this could increase the difficulty of our obtaining FDA,EMA or other countries regulatory authorities approval to market our products.Our cell therapy drug ca
266、ndidates represent new classes of therapy that the marketplace may not understand or accept.Even if we successfully develop and obtain regulatory approval for our cell therapy candidates,the market may not understand or accept them.We are developing cell therapy product candidates that represent nov
267、el treatments and will compete with a number of more conventional products and therapies manufactured and marketed by others,including major pharmaceutical companies.The degree of market acceptance of any of our developed and potential products will depend on a number of factors,including:the clinic
268、al safety and effectiveness of our cell therapy drug candidates and their perceived advantage over alternative treatment methods,if any;adverse events involving our cell therapy product candidates or the products or product candidates of others that are cell-based;and the cost of our products and th
269、e reimbursement policies of government and private third-party payers.If the health care community does not accept our potential products for any of the foregoing reasons,or for any other reason,it could affect our sales,having a material adverse effect on our business,financial condition and result
270、s of operations.The clinical manufacturing process for cell therapy products is complex and requires meeting high regulatory standards.Any delay or problem in the clinical manufacturing of PLX may result in a material adverse effect on our business.Our manufacturing process,controls,equipment and qu
271、ality system for PLX-PAD have received approval from the FDA,EMA,Germanys PEI,the Korean MFDS and the PMDA.However,the clinical manufacturing process is complex and we have no experience in manufacturing our product candidates at a commercial level.There can be no guarantee that we will be able to s
272、uccessfully develop and manufacture our product candidates in a manner that is cost-effective or commercially viable,or that our development and manufacturing capabilities might not take much longer than currently anticipated to be ready for the market.In addition,if we fail to maintain regulatory a
273、pprovals for our manufacturing facilities,we may suffer delays in our ability to manufacture our product candidates.This may result in a material adverse effect on our business.Because we received grants from the IIA we are subject to on-going restrictions.We have received royalty-bearing grants fro
274、m the IIA,for research and development programs that meet specified criteria.The terms of the IIAs grants limit our ability to transfer know-how developed under an approved research and development program outside of Israel,regardless of whether the royalties are fully paid.Any non-Israeli citizen,r
275、esident or entity that,among other things,becomes a holder of 5%or more of our share capital or voting rights,is entitled to appoint one or more of our directors or our Chief Executive Officer,or CEO,serves as a director of our Company or as our CEO is generally required to notify the same to the II
276、A and to undertake to observe the law governing the grant programs of the IIA,the principal restrictions of which are the transferability limits described above.For more information,see“Item 7.Managements Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital
277、Resources”.25 We have limited operating history,which raises doubts with respect to our ability to generate revenues in the future.We have a limited operating history in our business of commercializing cell production technology.Until we entered into the United Agreement,which was terminated in Dece
278、mber 2015,we did not generate any revenues.While we generated minimal revenue for the year ended June 30,2018 and 2019,it is not clear when we will generate additional revenues or whether we will experience further delays in recognizing revenues such as if we experienced a clinical hold.Our primary
279、source of funds has been the sale of our common stock and government grants.We cannot give assurances that we will be able to generate any significant revenues or income in the future.There is no assurance that we will ever be profitable.If we do not keep pace with our competitors and with technolog
280、ical and market changes,our technology and products may become obsolete and our business may suffer.The cellular therapeutics industry,of which we are a part,is very competitive and is subject to technological changes that can be rapid and intense.We have faced,and will continue to face,intense comp
281、etition from biotechnology,pharmaceutical and biopharmaceutical companies,academic and research institutions and governmental agencies engaged in cellular therapeutic and drug discovery activities or funding,both in the United States and internationally.Some of these competitors are pursuing the dev
282、elopment of cellular therapeutics,drugs and other therapies that target the same diseases and conditions that we target in our clinical and pre-clinical programs.Some of our competitors have greater resources,more product candidates and have developed product candidates and processes that directly c
283、ompete with our products.Our competitors may have developed,or could develop in the future,new products that compete with our products or even render our products obsolete.We depend to a significant extent on certain key personnel,the loss of any of whom may materially and adversely affect our Compa
284、ny.Our success depends to a significant extent on the continued services of certain highly qualified scientific and management personnel,in particular,Zami Aberman,our Executive Chairman,and Yaky Yanay,our CEO and President.We face competition for qualified personnel from numerous industry sources,a
285、nd there can be no assurance that we will be able to attract and retain qualified personnel on acceptable terms.The loss of service of any of our key personnel could have a material adverse effect on our operations or financial condition.In the event of the loss of services of such personnel,no assu
286、rance can be given that we will be able to obtain the services of adequate replacement personnel.We do not maintain key person insurance on the lives of any of our officers or employees.The market for our products will be heavily dependent on third party reimbursement policies.Our ability to success
287、fully commercialize our product candidates will depend on the extent to which government healthcare programs,as well as private health insurers,health maintenance organizations and other third party payers will pay for our products and related treatments.Reimbursement by third party payers depends o
288、n a number of factors,including the payers determination that use of the product is safe and effective,not experimental or investigational,medically necessary,appropriate for the specific patient and cost-effective.Reimbursement in the United States or foreign countries may not be available or maint
289、ained for any of our product candidates.If we do not obtain approvals for adequate third party reimbursements,we may not be able to establish or maintain price levels sufficient to realize an appropriate return on our investment in product development.Any limits on reimbursement from third party pay
290、ers may reduce the demand for,or negatively affect the price of,our products.The lack of reimbursement for these procedures by insurance payers has negatively affected the market for our products in this indication in the past.26 Managing and reducing health care costs has been a general concern of
291、federal and state governments in the United States and of foreign governments.In addition,third party payers are increasingly challenging the price and cost-effectiveness of medical products and services,and many limit reimbursement for newly approved health care products.In particular,third party p
292、ayers may limit the indications for which they will reimburse patients who use any products that we may develop.Cost control initiatives could decrease the price for products that we may develop,which would result in lower product revenues to us.Our success depends in large part on our ability to de
293、velop and protect our technology and our cell therapy products.If our patents and proprietary rights agreements do not provide sufficient protection for our technology and our cell therapy products,our business and competitive position will suffer.Our success will also depend in part on our ability
294、to develop our technology and commercialize cell therapy products without infringing the proprietary rights of others.We have not conducted full freedom of use patent searches and no assurance can be given that patents do not exist or could not be filed which would have an adverse effect on our abil
295、ity to develop our technology or maintain our competitive position with respect to our potential cell therapy products.If our technology components,devices,designs,products,processes or other subject matter are claimed under other existing United States or foreign patents or are otherwise protected
296、by third party proprietary rights,we may be subject to infringement actions.In such event,we may challenge the validity of such patents or other proprietary rights or we may be required to obtain licenses from such companies in order to develop,manufacture or market our technology or products.There
297、can be no assurances that we would be able to obtain such licenses or that such licenses,if available,could be obtained on commercially reasonable terms.Furthermore,the failure to either develop a commercially viable alternative or obtain such licenses could result in delays in marketing our propose
298、d products or the inability to proceed with the development,manufacture or sale of products requiring such licenses,which could have a material adverse effect on our business,financial condition and results of operations.If we are required to defend ourselves against charges of patent infringement o
299、r to protect our proprietary rights against third parties,substantial costs will be incurred regardless of whether we are successful.Such proceedings are typically protracted with no certainty of success.An adverse outcome could subject us to significant liabilities to third parties and force us to
300、curtail or cease our development of our technology and the commercialization our potential cell therapy products.We have built the ability to manufacture clinical grade ASCs in-house.Through our experience with ASC-based product development,we have developed expertise and know-how in this field.To p
301、rotect these expertise and know-how,our policies require confidentiality agreements with our employees,consultants,contractors,manufacturers and advisors.These agreements generally provide for protection of confidential information,restrictions on the use of materials and assignment of inventions co
302、nceived during the course of performance for us.These agreements might not effectively prevent disclosure of our confidential information.The price of our common stock may fluctuate significantly.The market for our shares of common stock may fluctuate significantly.A number of events and factors may
303、 have an adverse impact on the market price of our common stock,such as:results of our clinical trials or adverse events associated with our products;the amount of our cash resources and our ability to obtain additional funding;changes in our revenues,expense levels or operating results;entering int
304、o or terminating strategic relationships;announcements of technical or product developments by us or our competitors;27 market conditions for pharmaceutical and biotechnology stocks in particular;changes in laws and governmental regulations,including changes in tax,healthcare,competition and patent
305、laws;disputes concerning patents or proprietary rights;new accounting pronouncements or regulatory rulings;public announcements regarding medical advances in the treatment of the disease states that we are targeting;patent or proprietary rights developments;regulatory actions that may impact our pro
306、ducts;disruptions in our manufacturing processes;and competition.In addition,a market downturn in general and/or in the biopharmaceutical sector in particular,may adversely affect the market price of our securities,which may not necessarily reflect the actual or perceived value of our Company.Future
307、 sales of our shares may cause the prevailing market price of our shares to decrease.Future sales of our common stock,or the perception that such sales may occur,could cause immediate dilution and adversely affect the market price of our common stock.We are exposed to fluctuations in currency exchan
308、ge rates.A significant portion of our business is conducted outside the United States.Therefore,we are exposed to currency exchange fluctuations in other currencies such as the New Israeli Shekel,or NIS,and the Euro,because a portion of our expenses in Israel and Europe are paid in NIS and Euros,res
309、pectively,which subjects us to the risks of foreign currency fluctuations.Our primary expenses paid in NIS are employee salaries,subcontractors and material suppliers,fees for consultants and lease payments on our facilities.During the year ended June 30,2019,or fiscal year 2019,we entered into opti
310、ons contracts to hedge against some of the risk of changes in future cash flows from payments of payroll and related expenses and costs of operations denominated in NIS.The dollar cost of our operations in Israel will increase to the extent increases in the rate of inflation in Israel are not offset
311、 by a devaluation of the NIS in relation to the dollar,which would harm our results of operations.Since a considerable portion of our expenses such as employees salaries are linked to an extent to the rate of inflation in Israel,the dollar cost of our operations is influenced by the extent to which
312、any increase in the rate of inflation in Israel is or is not offset by the devaluation of the NIS in relation to the dollar.As a result,we are exposed to the risk that the NIS,after adjustment for inflation in Israel,will appreciate in relation to the dollar.In that event,the dollar cost of our oper
313、ations in Israel will increase and our dollar-measured results of operations will be adversely affected.We cannot predict whether the NIS will appreciate against the dollar or vice versa in the future.Any increase in the rate of inflation in Israel,unless the increase is offset on a timely basis by
314、a devaluation of the NIS in relation to the dollar,will increase labor and other costs,which will increase the dollar cost of our operations in Israel and harm our results of operations.Potential product liability claims could adversely affect our future earnings and financial condition.28 We face a
315、n inherent business risk of exposure to product liability claims in the event that the use of our products results in adverse effects.We may not be able to maintain adequate levels of insurance for these liabilities at reasonable cost and/or reasonable terms.Excessive insurance costs or uninsured cl
316、aims would add to our future operating expenses and adversely affect our financial condition.Our principal research and development and manufacturing facilities are located in Israel and the unstable military and political conditions of Israel may cause interruption or suspension of our business ope
317、rations without warning.Our principal research and development and manufacturing facilities are located in Israel.As a result,we are directly influenced by the political,economic and military conditions affecting Israel.Since the establishment of the State of Israel in 1948,a number of armed conflic
318、ts have taken place between Israel and its Arab neighbors.During July and August 2014 and November 2012,Israel was engaged in an armed conflict with a militia group and political party which controls the Gaza Strip,and during the summer of 2006,Israel was engaged in an armed conflict with Hezbollah,
319、a Lebanese Islamist Shiite militia group and political party.These conflicts involved missile strikes against civilian targets in various parts of Israel,including areas in which our employees and some of our consultants are located,and negatively affected business conditions in Israel.In addition,I
320、sraeli-based companies and companies doing business with Israel,have been the subject of an economic boycott by members of the Arab League and certain other predominantly Muslim countries since Israels establishment.Although Israel has entered into various agreements with certain Arab countries and
321、the Palestinian Authority,and various declarations have been signed in connection with efforts to resolve some of the economic and political problems in the Middle East,we cannot predict whether or in what manner these problems will be resolved.Wars and acts of terrorism have resulted in significant
322、 damage to the Israeli economy,including reducing the level of foreign and local investment.Furthermore,certain of our employees may be obligated to perform annual reserve duty in the Israel Defense Forces and are subject to being called up for active military duty at any time.All Israeli male citiz
323、ens who have served in the army are subject to an obligation to perform reserve duty until they are between 40 and 49 years old,depending upon the nature of their military service.The trend towards consolidation in the pharmaceutical and biotechnology industries may adversely affect us.There is a tr
324、end towards consolidation in the pharmaceutical and biotechnology industries.This consolidation trend may result in the remaining companies having greater financial resources and technical discovery capabilities,thus intensifying competition in these industries.This trend may also result in fewer po
325、tential collaborators or licensees for our therapeutic product candidates.Also,if a consolidating company is already doing business with our competitors,we may lose existing licensees or collaborators as a result of such consolidation.This trend may adversely affect our ability to enter into license
326、 agreements or agreements for the development and commercialization of our product candidates,and as a result may materially harm our business.Our cash may be subject to a risk of loss and we may be exposed to fluctuations in the market values of our portfolio investments and in interest rates.Our a
327、ssets include a significant component of cash and cash equivalents and bank deposits.We adhere to an investment policy set by our investment committee which aims to preserve our financial assets,maintain adequate liquidity and maximize returns.We believe that our cash is held in institutions whose c
328、redit risk is minimal and that the value and liquidity of our deposits are accurately reflected in our consolidated financial statements as of June 30,2019.Currently,we hold part of our current assets in bank deposits.However,nearly all of our cash and bank deposits are not insured by the Federal De
329、posit Insurance Corporation,or the FDIC,or similar governmental deposit insurance outside the United States.29 Therefore,our cash and any bank deposits that we now hold or may acquire in the future may be subject to risks,including the risk of loss or of reduced value or liquidity,particularly in li
330、ght of the increased volatility and worldwide pressures in the financial and banking sectors.Although our internal control over financial reporting was considered effective as of June 30,2019,there is no assurance that our internal control over financial reporting will continue to be effective in th
331、e future,which could result in our financial statements being unreliable,government investigations or loss of investor confidence in our financial reports.Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002,we are required to furnish an annual report by our management assessing the effectivene
332、ss of our internal control over financial reporting.This assessment must include disclosure of any material weaknesses in our internal control over financial reporting identified by management.In addition,our independent registered public accounting firm must annually provide an opinion on the effec
333、tiveness of our internal control over financial reporting.Managements report as of the end of fiscal year 2019 concluded that our internal control over financial reporting was effective.In addition,our registered independent public accounting firm provided an opinion that our internal control over financial reporting was effective as of the end of fiscal year 2019.There is,however,no assurance tha
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